Notice to the Market - Public Meeting with Analysts - Belo Horizonte - Brazil

8/10/2019 Notice to the Market - Public Meeting with Analysts - Belo Horizonte - Brazil

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Corporate PresentationOctober 2014


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Light HoldingsDiversified structure which encompasses the distribution, generation and

commercialization segments.

2


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4

56

7

Light in numbers

Distribution RJ State ConcessionArea %

Population 16 mn 11 mn 68%

Area 44,000 Km 11,000 Km 25%

GDP R$ 407 bn R$ 207 bn 51%

# Consumers 7 mn 4 mn 57%

# Municipalities 92 31 34%1 IBGE (2010)

3

Amaznia Energia

Renova

Guanhes Energia

Generation

Complexo de Lajes

5

HPP Ilha dos Pombos

SHPP Paracambi

HPP Santa Branca

1

2

3

4

6

7


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Rankings Am ong the l arges t p layers in Brazi l

INTEGRATEDNet Revenues 2013* R$ Billion

GENERATION PRIVATE-OWNED COMPANIESInstalled Hydro-generation Capacity (MW) 2013

DISTRIBUTIONEnergy Consumption in Concession Area** (GWh) - 2013

4

15.6

10.69.2

7.1

14.6

5.560

2.652 2.241 2.219 1.799896

***

1 Source: Companies reports2 Source: Relatrio do Sistema de Apoioa ANEEL* Construction Revenue Included** Captive Market*** Considers the 9 MW of Renovas SHPPsand 19 MW of Brasil PCH

15.6

10.69.2

7.4 7.1

14.6

37,767

25,777 22,92621,783 20,391 15,634

5,560

2,652 2,241 2,219 1,799896


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Shareholders StructureEff ic ien t co mb ina t ion o f so l id indu s t ry and f inanc ia l p layers

5

11 Board members: 8 from the controllinggroup, 2 independents e 1 employeesnominated

A qualifying quorum of 7 members toapprove relevant proposals such as: M&A

and dividend policy


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Corporate GovernanceDecision process assures transparency and value creation

6LGSXY ADR-OTC

General Assembly

Fiscal Council

Board of Directors

Auditors

Committee

Governance andSustainability

Committee

HumanResourcesCommittee

Finances

Committee

Management

Committee

Chief ExecutiveOfficer

CorporateManagement Officer

Joo B. Zolini Carneiro Ricardo Cesar C. Rocha Evandro L. Vasconcelos Andreia Ribeiro Junqueira

Fernando Antnio F.Reis Paulo Carvalho Filho Evandro L. Vasconcelos*

Paulo Roberto R. Pinto

ChiefCommunications

Officer

Luiz Otavio Ziza Valadares

Interim*

Chief Financial and

Investor RelationsOfficer

Chief Legal Officer

Chief HR OfficerChief Distribution

Officer Chief Energy Officer

Chief BusinessOfficer


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Others captives13.6%

Commercialcaptive27.6%

Residentialcaptive35.2%

Industrial

captive5.1%

Free

18.6%

+5.5%

1H12H11

+5.1% p.a.

1H13 1H14

13,14511,934

25.7C

11,96013,869

25.2C25.1C 25.1C

Energy ConsumptionDistribution Semester

TOTAL MARKET (GWh)

1Note: To preserve comparability in the market approved by Aneel in the tariff adjustment process.the billed energy of the free customer CSN has been considered back.


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1,806

8

Market BreakdownELECTRICITY CONSUMPTION (GWh)

TOTAL MARKET SEMESTER

FREECAPTIVE

1H13 1H14

3,625

701 705

+5.5%

10,526 11,292

13,145

2,618 2,576

13,869

+4.2%

1,880

1,909

103 109

1,990

5.7%

4,055

430457

4,284

2,787

2,086 2,010

2,715

+11.1%

4,395

4,880

-2.6%

3,827

RESIDENTIAL INDUSTRIALCOMMERCIAL OTHERS TOTAL

1H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14


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Losses and Collection

9

LOSS (12 MONTHS)

99.5% 98.7%

Jun-13 Jun-14

2Q12 2Q1 4Q13

3.4%2.5%

1.7%

-0.8 p.p.

Jun/13 Sep/13 Mar/14 Jun/14ec13

43.7%

5,738

2,614

8,552

44.2%

5,972

2,843

8,352

41.9%

5,953

2,629

8,815

5,905

2,647

8,582

- 2.3 p.p.

42.2% 42.4%

5,955

2,793

8,748

% Non-technicallosses/ LV Market

Non-technical losses GWh Technical losses GWh

COLLECTION RATE12 MONTHS

PBD/GROSS REVENUE(BILLED SALES) - QUARTER


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Energy Losses CombatEfficient combination between technology and effective management

ELECTRONIC METERS INSTALLED(in thousands)

Outisde of Communities

Communities

Clientes comerciais eresidenciais

(Baixa tenso)4.100.000

10

2 9 2 2 2 2 2 3

351

2010 2011 2013012

307

79102

227122

432

197115

272330

Jun-14

116

509

393

CLIENTS ENERGY AND STATUS

Retail and residential clients(Low Voltage)

4,100,000

Low VoltageLargest Clients

22,000

LargeClients

(hight andmed voltage)

7,600

11,500 GWh (48%)100% Concluded

2,700 GWh (11%)1/3 as of today until 2015

10,000 GWh (41%)APZ


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Technology: Centralized MeasuringUse of new technologies in areas with a high level of losses

Display11


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Focused in areas with 10,000 to 20,000 clients with high level of losses and delinquency;

Fully-dedicated teams of technicians and commercial agents;Results constantly and accurately monitored by Light;

Result-linked remuneration for services provided;

29 units implemented with 505 thousand

clients (12% of total clients);200 thousands additional clients per year .

Zero Losses Area (APZ) Project: Light Legal

12

ELECTRONICMETERS

WORKFORCEMANAGEMENT

PARTNERSHIP WITH THE STATEGOVERNMENT


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Evolution of APZs ResultsSign i f i can t los s r educ t ion and inc reas ing co l l ec t ion rate

13

Before

50.2 %

20.7%

89.2%

95.9%

Before

96.0%98.2% 97.9% 98.3%

23.6%22.5%

21.2%

Ma1

J

1

Ma1

J

1

S

1

Ma1

Ma1

J

1

S

1

-30.2%

+6.8%

D

1

99.5%

D

1

20.3%

J

1

20.0%

APZ COLLECTIONAPZ LOSSES


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Regulatory Allowance for Non-Technical LossesHigher recogni t ion of los ses l inked to ta rge ts achievement

Addi t ion al revenues to be inves ted in losses comb at and boo ked asSpecial Obligations (ex-RAB )

2013 2014 2015 2016 2017 2018

14

Regulatory Losses

Target (every August) Regulatory Losses with Penalty

Final Proposal (according to methodology)


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Generation


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855 MW Installed CapacityConcessions Expiring Only in 2026

16

HPP Santa Branca56 MW

HPP Ilha dos Pombos187 MW

HPP Fontes Nova132 MW

Underground HPPNilo Peanha - 380 MW

HPP Pereira Passos100 MW

SPRJ

HPP Santa Branca

Paraiba do Sul River

HPP Ilha dos

Pombos

100%100%

100%100%100%

ISO 9001 Quality Management

14001 Environmental ManagementOHSAS 18001 - Occupational health and Safety Management


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Assured Energy: 549 MWaverageEnergy commercialization focused on the free market

Average selling price in 2014-2021: R$ 163/MWh (base date: January, 2014)

2014 2015 2016 2017 2018 2019 2020 2021

54939

510

28 28 28 28 28 28 28549 549 549 549 549 549 549

480 434 461

418317

242 232

42 88 61 103

205

280 290

Contracted Energy (Free) Hedgevailable Energy


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Generation ExpansionRenewable energy generation projects, mainly through partnerships

Project Installed Capacity(MW)Assured Energy

(MWaverage) Operational Start Stake

Paracambi 25 20 2012 51%

Renova425 (in operation)

1,806 (contracted)

235 (in operation)

921 (contracted)

2008 - 2012

2014 201821.86%

Belo Monte 11,223 4,571 2015 2.49%

Guanhes 44 25 2015 51%

Lajes 17 16 2016 100%

18


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Generation ExpansionInstalled Capacity (MW)

Light's proportional Participation

+74.3%

51% Light 21.86% Light 2.49% Light

Renova: +55

Guanhes: +17B.Monte: +3

Renova: +78B.Monte: +3




B.Monte: +46 B.Monte: +46


Renova: +37Guanhes: +5


19

1,0021,077

1,158 1,2111,300

1,371 1,4171,540

1,660 1,675

1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19


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RESULTS


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Financial Highlights(R$ MN)

2Q14 2Q13 1H14 1H13

NET OPERATING REVENUE 1,815.8 1,755.1 4,098.0 3,676.9

OPERATING EXPENSE (1,673.4) (1,574.3) (3,599.0) (3,234.8)

Manageable (249.9) (305.4) (541.6) (563.7)

No Manageable (1,423.5) (1,268.9) (3,057.4) (2,671.0)

OPERATING RESULT 142.4 180.8 499.0 442.1

EQUITY PICKUP (4.0) (0.5) (6.8) (1.1)

EBITDA 239.3 277.9 692.3 633.1

FINANCIAL RESULT (111.8) (95.5) (190.6) (234.3)

RESULT BEFORE TAXES AND INTEREST 26.5 84.8 301.3 206.7

NET INCOME 15.3 58.2 195.8 136.9

21


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Net Revenue

Commercial (Captive)42.6%

NET REVENUE (R$MN) Generation 7.5%

Distribution80.5%**

NET REVENUE BY SEGMENT (2Q14)*

Commercialization 12.0%

NET REVENUE FROM DISTRIBUTION (2Q14)

Industrial (Captive)5.9%

Others (Captive)12.2%

Network Use (TUSD)(Free + Concessionaires) 7.8%

Residential (Captive)31.5%

+3.5%

1,580 1,602

378

333

1,755

3,677

2Q14 1H13

3,344 3,72021476

1,816

4,098

2Q13 1H14

+11.5%

Construction Revenue

Revenue w/out constructionrevenue

* Eliminations not considered

** Construction revenue not considered


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23

Operating Costs and Expenses

Manageable(Distribution): R 309(18.8%)

Generation andCommercialization: R 249

(15.2%)Non manageable(Distribution**): R 1,084

(66.1%)

DISTRIBUTION PMSO COSTS (R$MN)COSTS (R$MN)*

2Q14

R$ MM 2Q14 2Q13 Var. 1H14 1H13 Var.

PMSO (207.1) (212.0) -2.3% (412.3) (412.7) -0.1%

Provisions (14.1) (66.6) -78.8% (79.4) (111.8) -29.0%PCLD (36.1) (48.4) -25.5% (61.4) (77.4) -20.8%

Contingencies 21.9 (18.2) - (18.0) (34.4) -47.5%

Depreciation (86.2) (83.8) 2.8% (171.6) (164.5) 4.3%

Otheroperational/revenuesexpenses

(1.2) (5.7) -79.5% (13.3) (12.9) 2.6%

Total (308.5) (368.0) -16.2% (676.6) (701.9) -3.6%

1H14H13Q14Q13

212 207

-2.3%

413 412

-0.1%

COSTS (R$MN)*1H14

Generation andCommercialization : R 506

(14.6%)Manageable(Distribution): R 677

(19.5%)

Non manageable(Distribution**): R 2,293

(66.0%)

* Eliminations not considered** Construction revenue not considered


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Tariff Deficit

24

TariffDeficit

BalanceDE Fund

ACR FUNDS -1H14 (R MN)

(250)

(1,635)

1,385

Decrees 8203(Jan/14) and

8221 (Apr/14)

Involuntary exposure to the spot market 1,238

Availability contracts with thermal plants 299

Hydrological risk 39

Auction A-1 Contract 30

Auction A-0 Contract 28

TOTAL 1,635

The exposure to the spot market, combined with its high prices, which reflect low reservoirlevels and higher thermal plants dispatch, caused an expressive tariff deficit for distribution

companies.

The remaining balance of R$ 250 MN refers to the portion of items not covered by the decrees, with emphasis on (i)availability contracts from January; (ii) energy contracted at the A-1 auction; (iii) part of the energy contracted at the A-0

auction, hydrological risk, revenue from hydrological risk deducted from the January and February transfers and from thecut in the April transfer.

84.7% ofdeficit

covered


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25

EBITDA PER SEGMENT(R$ MN)

239

-13.9%

278

45.8%

54.2%

37.4%

62.6%

2Q13 2Q14 1H13 1H14

63.3%

36.7% 44.7%

+9.3%

55.3%

633692

1Percentages do not consider eliminations

Generation and Commercialization 1

Distribution

CONSOLIDATEDEBITDA 2Q14 2Q13 Var. 1H14 1H13 Var.

Distribution 132.3 174.5 -24.2% 387.1 402.6 -3.9%

EBITDA Margin % 9.2% 12.5% -3.3 p.p. 12.2% 13.5% -1.3 p.p.

Generation 88.0 100.1 -12.1% 270.8 219.4 23.4%EBITDA Margin % 66.0% 75.9% -9.9 p.p. 78.6% 79.1% -0.6 p.p.

Commercialization 23.9 4.4 449.3% 41.5 14.3 190.6%

EBITDA Margin % 11.1% 2.8% 8.3 p.p. 9.2% 4.6% 4.6 p.p.Other andEliminations (4.9) (1.1) 360.2% (7.1) (3.3) 118.9%

TOTAL 239.3 277.9 -13.9% 692.3 633.1 9.3%

EBITDA Margin % 14.9% 17.6% -2.7 p.p. 18.6% 18.9% -0.3 p.p.


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EBITDA

EBITDA1H13

EBITDA1H14

NetRevenue

RegulatoryAssets andLiabilities


AdjustedEBITDA

1H13

AdjustedEBITDA

1H14

1.158

Non-Manageable

Costs

ManageableCosts

(PMSO)

Provisions OthersDETransfers

26

- 6.9%

+9.3%

854

220

633

376 (328)(10) (6) 32 (6)

692

102

794

Adjusted EBITDA - 1H13/1H14 (R$ MN)


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+ 43.1%

- 6.8%

282

145

137

59

44 (36) (8)

196

67

263

Net Income

1H13 1H14BITDA FinancialResult

Taxes Others

Adjusted Net Income - 1H13/1H14 (R$ MN)



Adjusted NetIncome1H13

Adjusted NetIncome1H14

27


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Dividends

28

Average payout of 86% in the last 5 years


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Indebtedness

Average Term: 3.9 years

AMORTIZATION SCHEDULE* (R$ MN)

NET DEBTWith Pension Fund

2.582.84

* Amountwithout hedge * Pincipal only

COST OF DEBT

TJLP13.3%

CDI

74.5%

IPCA11.0%

Others3.7%

U /Euro *

2.7%

29

408

7811,031

832

1,166

717 729

476573

2012011 2T14013

2.24%

8.21%

3.87%

10.49%

4.25%

11.03% 9.68%

3.55%

Jun/13

2.90 2.99

Jun/14ar/14

2.62

Nominal Cost Real Cost Net Debt / EBITDA(covenants)

5,122.7 5,341.8 5,229.6

After2021


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Investments

CAPEX BREAKDOWN(R MN)

1H14

Generation8.4

Administration

12.2

oTHERS5.0

Develop. of

DistributionSystem207.5

LossesCombat

119.7

Commerc./Energy

Eficiency5.0

CAPEX (R MN)

30

519

2010

701

2011 2012

797

694

103

519

182

775

154

713

132

845

+9.5%

2013

327

1H13 1H14

54 26

273 332

358

929

Investments in Electric Assets (Distribution)


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Why invest in Light?

Rio as a host of major events Communities pacification Pro-business environment Investment projects hubEnergy Market growth

EconomicTransformation

in theConcession Area

Progress in the TechnologyProgram (Smart Grid) New network and electronic metersin the pacified areas

Zero Losses Area Program

EnergyLosses

Reduction

Projects under construction withpartnerships: Renova, Belo Monte andGuanhes (total of 697 MW)

SHPP Lajes under construction(17MW).

Growth in theGenerationBusiness

Expiration of RegulatedContracts (Dec/2013)New contracts in 2014Energy available forcommercialization

EnergyCommercialization

focused on thefree market

Listed in Novo Mercado ofBovespa

Board Commitees with strongparticipation in the decision makingprocess Included in the SustainabilityIndex (ISE) for the 7th year

Best CorporateGovernance

Practices

Dividend Policy: minimum 50%of net income;

Average payout since 2009:86%

Dividend trackRecord

31


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Important Notice

32

This presentation may include declarations that represent forward-looking statements according to Brazilian regulations andinternational movable values. These declarations are based on certain assumptions and analyses made by the Company inaccordance with its experience, the economic environment, market conditions and future events expected, many of whichare out of the Companys control. Important factors that can lead to significant differences between the real results and thefuture declarations of expectations on events or business-oriented results include the Companys strategy, the Brazilian andinternational economic conditions, technology, financial strategy, developments of the public service industry, hydrological

conditions, conditions of the financial market, uncertainty regarding the results of its future operations, plain, goals,expectations and intentions, among others. Because of these factors, the Companys actual results may significantly differfrom those indicated or implicit in the declarations of expectations on events or future results.

The information and opinions herein do not have to be understood as recommendation to potential investors, and noinvestment decision must be based on the veracity, the updated or completeness of this information or opinions. None of theCompanys assessors or parts related to them or its representatives will have any responsibility for any losses that canelapse from the use or the contents of this presentation.

This material includes declarations on future events submitted to risks and uncertainties, which are based on currentexpectations and projections on future events and trends that can affect the Companys businesses. These declarationsinclude projections of economic growth and demand and supply of energy, in addition to information on competitive position,regulatory environment, potential growth opportunities and other subjects. Various factors can adversely affect the estimatesand assumptions on which these declarations are based on.


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Contacts

Joo Batista Zolini CarneiroCFO and IRO

Gustavo WerneckSuperintendent of Finance and Investor Relations+55 21 2211 2560

[email protected]

Mariana da Silva Rocha IR Manager

+ 55 21 2211 [email protected]

www.light.com.br/ri www.facebook.com/lightri twitter.com/LightRI

Documents

Notice to the Market - Public Meeting with Analysts - Belo Horizonte - Brazil