Corporate Presentation

March 2014

Light Holdings

Light in numbers
Distribution
Population Area GDP # Consumers # Municipalities
1

RJ State

Concession Area

16 mn 44,000 Km R$ 407 bn 7 mn 92

11 mn 11,000 Km R$ 207 bn 4 mn 31

68% 25% 51% 57% 34%

IBGE (2010)

Generation
1 2 3 4 5 Amaznia Energia Renova
4

Guanhes Energia
HPP Ilha dos Pombos SHP Paracambi

6 7

Complexo de Lajes HPP Santa Branca

7

Rankings
Among the largest players in Brazil
INTEGRATED Net Revenues 2012 R$ Billion DISTRIBUTION Energy Consumption in Concession Area (GWh) - 2012

18.5
37,626

15.0 11.8 8.5 6.9 6.6

Eletropaulo Cemig Copel CPFL Paulista Light

24,714 22,737 21,467 20,054 15,018

Cemig

CPFL

Neoenergia

Copel

Light

EDP

Celesc

GENERATION PRIVATE-OWNED COMPANIES Installed Hydro-generation Capacity (MW) 2012

5,560

2,658

2,241

2,219

2,012
EDP

877
Light

1 Source: Captive market 2 Source: Companies reports * Considers the 9 MW of Renovas SHPs

Tractebel

AES Tiete

Duke

CPFL

Shareholders Structure
Efficient combination of solid industry and financial players
BTG PACTUAL
14.29%
2.74% 28.57%

FIP REDENTOR
75%

SANTANDER

5.50% 28.57% 5.50% 28.57% 5.50%

CEMIG
25% 6.41%

11 Board members: 8 from the controlling group, 2 independents e 1 employees nominated A qualifying quorum of 7 members to approve relevant proposals such as: M&A and dividend policy

VOTORANTIM

19.23%

BANCO DO BRASIL

PARATI
25.64%* 100%

MINORITY
3.19% 0.42% 96.81%

REDENTOR ENERGIA
100% 13.03%

FOREIGN
58.34%

NATIONAL
41.66%

CEMIG
26.06%

RME
13.03%
Controller Group 52,1%

LEPSA
13.03%

BNDESPAR
10.30%

MARKET
37.57%
Free Float 47,9%

Light S.A. (Holding )

Stake in blue: indirect interest in Light

*12.61% (RME) + 13.03%(LEPSA)

Corporate Governance
General Assembly Fiscal Council Board of Directors

Finances Committee

Human Resources Committee

Auditors Committee
Chief Executive Officer
Paulo Roberto R. Pinto

Governance and Sustainability Committee

Management Committee

Chief Financial and Investor Relations Officer

Joo B. Zolini Carneiro

Chief Distribution Officer

Ricardo Cesar C. Rocha

Chief Energy Officer

Evandro L. Vasconcelos

Chief HR Officer
Andreia Ribeiro Junqueira

Chief Legal Officer Fernando Antnio F.Reis

Corporate Management Officer Paulo Carvalho Filho

Chief Business Officer Evandro L. Vasconcelos*

Interim*

Chief Communications Officer Luiz Otavio Ziza Valadares

LGSXY
ADR-OTC

Energy Consumption
Distribution Quarter

TOTAL MARKET (GWh)

+0.8% +1.8%

Free 20.6% 6,531 Others captives 14.0%

6,381

6,046

6,415

Industrial captive 5.5%

26.1C 24.6C 23.9C 24.6C Commercial captive 27.8% Residential 32.1%

4Q10

4Q11

4Q12

4Q13

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. .

Energy Consumption
Distribution 2013
TOTAL MARKET (GWh)
+1.5% +2.9%

Free 20.7%

Industrial captive 5.4%

24,588

24,658

24,997

25,717 Others captives 14.0%

24.5C 23.9C

24.7C

24.1C Commercial captive 27.6%

Residential captive 32.3%

2010

2011

2012

2013

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.

Market Breakdown
ELECTRICITY CONSUMPTION (GWh)
TOTAL MARKET QUARTER
+1.8%

6,415

6,531

+3.3%

+2.2%

1,031

1,348

2,032

2,099

1,988 192

2,031 216

-0.4%

1,446

1,440

+1.2%

5,114 949 961 49 880 912 47 847 903

5,182

1,795

1,815

1,062 370 384

1,083 338 356 4Q13

4Q12

4Q13

4Q12

4Q13

4Q12

4Q12

4Q13

4Q12

4Q13

RESIDENTIAL

COMMERCIAL

INDUSTRIAL

OTHERS

TOTAL

CAPTIVE

FREE 9

Total Market
ELECTRICITY CONSUMPTION (GWh) TOTAL MARKET 2013

+2.9%

24,997
+2.0%

25,717

+4.5%

4,943
+2.4%

5,326

8,149

8,312

7,599 743

7,939 853

5,538

5,668

+2.3%

6,856

7,086 4,009 1,528 4,273

3,712
191 3,521 2012

3,798

20,054

20,391

200
3,598

1,395
2013

2012

2013

2012

2013

2012

2013

2012

2013

RESIDENTIAL

COMMERCIAL

INDUSTRIAL

OTHERS

TOTAL

CAPTIVE

FREE

10

Losses and Colection

Encouraging results already appear from an integrated approach
LOSSES (12 MONTHS)
45.4%
- 3.2%

COLLECTION RATE - 12 MONTHS

98.0% 100.6%

44.9%

44.2%

43.7% 42.2% 32.0%

mar-12 Dec/12 mar-13 Dec/13

8,584

8,647

8,582

8,552

8,352

6,007

6,029

5,953

5,905

5,738
3.0%

PCLD/Gross Revenue (Billed Sales) - 12 Months

3.2%

2,577 Dec/12 dez/12

2,618 Mar/13

2,629 Jun/13

2,647 Sep/13

2,614 Dec/13

1.9%

mar/13

jun/13

set/13

dez/13

Non-technical losses GWh % Non-technical losses/ LV Market

Technical losses GWh % Non-technical losses / LV Market - Regulatory

dec/11

dec/12

dec/1 3

11

Macro Strategy
Revenue shielding through efficient combination of electronic meters and effective workforce management
INSTALLED METERS (Thousand Units)
432 351 Large Clients (hight and med voltage) 7,600 Low Voltage Largest Clients 22,000 227 102

CLIENTS

ENERGY AND STATUS

79

11,500 GWh (48%) 100% Concluded

30 80 2 78 2009 122 7 115 2010 197 272 330

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

2011

2012

2013

Retail and residential clients (Low Voltage) 4,100,000

2009
10,000 GWh (41%) APZ

2010

2011
Communities

2012

set/13

Out of Communities

12

New Technology Program

Light aims to reduce losses through investments in new technologies, integration of operational activities, increase of public awareness and institutional partnerships with interested agents.

Grid shielding projects

Technology used in regions in which conventional measures are not effective Areas that present high levels of non-technical losses
Control room

Actual grid
Medium voltage

Shielded grid
Medium voltage Centralized meter

Low voltage 9m

Low voltage

3m

Mechanical Meter

Display

13

Zero Losses Area

Project: Light Legal (APZ Zero Losses Area)

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; 26 units implemented with 416,000 clients (10% of total clients); Additional 200 thousands clients per year.
ELECTRONIC METERS WORKFORCE MANAGEMENT

PARTNERSHIP WITH THE STATE GOVERNMENT

14

Evolution of APZs Results

Significant loss reduction and increasing collection rate

APZ LOSSES
45.6 %
99.5%

APZ COLLECTION

100.7% 98.2% 97.9%

98.3%

99.5%

-25.3%

25.9%

90.2%
24.8% 23.6% 22.5% 21.2% 20.3%

+9.3%

Sep/13

Dec/12

Dec/13

Sep/12

Sep/12

Mar/13

Jun/13

Dec/12

Mar/13

Sep/13

Dec/13

Jun/13

Before Incio da Operao

Incio da Before Operao

15

Regulatory Allowance for Non-Technical Losses

Higher recognition of losses linked to targets achievement Additional revenues to be invested in losses combat and booked as special obligations (ex-RAB) 40,41%

40,41% 40,41% 40,41%

40,41% 40,41% 40,41%

39,92% 39,92% 39,92% 39,92% 39,13%

39,92% 39,92% 39,92%

39,13% 39,13% 39,13%

39,13% 39,13% 39,13%

31,80% 31,27% 31,80% 31,80% 31,80% 31,27% 31,80% 31,80% 31,27% 31,80% 31,37% 31,27% 30,60%
30,60% 30,60% 30,60%

30,60%29,40% 30,60% 30,60% 29,40% 29,40% 29,40%

30,95% 31,27% 31,27% 30,95% 31,27% 30,95% 30,95% 30,95%

36,41% 36,41% 36,41% 36,41%

38,33% 38,33% 38,33% 38,33%

40,41% 40,41% 40,41% 40,41%

40,41% 40,41% 40,41%

38,33% 38,33% 38,33% 34,49% 34,49% 36,41% 34,49% 36,41% 36,41% 34,49% 33,00%
33,00%

34,49% 34,49% 34,49%

33,00%

30,53% 30,95% 30,95% 30,53% 30,95% 30,53% 30,53% 30,53%

29,40%28,20% 29,40% 29,40% 28,20% 28,20% 28,20%

33,00% 33,00% 33,00% 30,11% 29,69% 30,53% 33,00% 30,11% 30,53% 30,11% 29,69% 30,53% 30,11% 30,11% 29,69% 30,11% 30,11% 29,69% 30,11% 29,69%

29,69% 29,69% 29,69%

28,20%27,01% 28,20% 28,20% 27,01% 27,01% 27,01%

2017

27,01% 27,01% 27,01%

25,81% 25,81% 25,81% 25,81%

2018

25, 25, 25,

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2013 2014 2016 2017 2018 2013 2014 2015 2015 2016 2016 2017 2018 2013 2014 (Flexible) 2015 2017 Regulatory NT Losses/LV Regulatory NT Losses/LV (Final) 2013 2014 2015 2016 2017 Regulatory Losses Final Proposal (according methodology) Regulatory NT Losses/LV (Flexible) Regulatory NT Losses/LV (Final) 2013 NT 2014 2015 2016 2017 to 2018 Regulatory Losses/LV (Flexible) Regulatory NT Losses/LV (Final) Regulatory NT Losses/LV (Flexible) Regulatory NT Losses/LV (Final) Regulatory NT Losses/LV (Flexible) Regulatory NT Losses/LV (Final) Real NT Losses/LV (forecast Light, Ref.(Flexible) August) Regulatory NT Losses/LV (AP) Regulatory NT Losses/LV Regulatory NT Losses/LV (Final) Regulatory NT Losses/LV (Flexible) Regulatory NT Losses/LV (Final) Real NT Losses/LV (forecast Light, Ref. August) Regulatory NT Losses/LV (AP) Real NT (forecast Light, Ref. Regulatory NT Losses/LV (AP) Preliminary NT Proposal (according to methodology) Target Real NT Losses/LV Losses/LV (forecast Light, Ref. Ref. August) August) Regulatory Regulatory NT Losses/LV Losses/LV (AP) Real NT Losses/LV Losses/LV (forecast Light, Ref. August) August) Losses/LV (AP) Regulatory NT Losses/LV w/ Penalty Real NT (forecast Light, Regulatory NT (AP) Real NT Losses/LV (forecast Light, Ref. August) Regulatory NT Losses/LV (AP) Regulatory NT Losses/LV w/ Penalty Regulatory Losses/LV w/ Penalty Regulatory NT Losses/LV w/ Penalty Penalty Regulatory NT NT Losses/LV w/ Penalty Regulatory NT Losses/LV w/ Regulatory Losses with Penalty Regulatory NT Losses/LV w/ Penalty

2013

2014

2015

2016

2018 2018 2018

16

GENERATION BUSINESS

855 MW Installed Capacity

Concessions Expiring Only in 2026

100% 100%
Paraiba do Sul River

HPP Santa Branca 56 MW

Lajes Complex
SP

RJ

HPP Ilha dos Pombos

HPP Ilha dos Pombos 187 MW

HPP Santa Branca

100%

100%

100%

HPP Fontes Nova 132 MW

HPP Underground Nilo Peanha - 380 MW

HPP Pereira Passos 100 MW

18

Re-pricing of existing energy

Significant price increase due to replacement of former regulated contracts for new ones with free clients

CONVENTIONAL ENERGY BALANCE Conventional Energy Balance ASSURED ENERGY (MW average) Assured energy (MW average)

539
25

535
25

535
25

535
25

535
25

535
25

535
25

535
25

535
25

122

32

111 220 239 276 271 282 282

479 392

399 290 272 234 239

228 228

2013 2013

2014 2014

2015 2015

2016

2016

2017

2017

2018 2018

2019

2019

2020 2020 Hedge

2021 2021

Contracted Energy (Regulated)

Contracted Energy (Free)

Contracted Energy (Regulated)

Contracted Energy (Free)

Available Energy

Available Energy

Hedge

19

Generation Expansion
Growth in renewable generation with experienced partners
Installed Capacity (MW) Assured Energy (MWaverage)

Project

Operational Start

Stake

Paracambi

25

20

2012

51%

Renova

336 (in operation) 1,468 (contracted)

172 (in operation) 773 (contracted)

2008 - 2012 2014 2018

21.86%

Belo Monte

11,223

4,571

2015

2.49%

Guanhes

44

25

2014

51%

Lajes

17

16

2015

100% 20

Evolution of Installed Capacity leading to a more balanced portfolio

(MW)

+ 68.1%

280

22

1,582

321
855 13 73* 941 17

(+) SHP Installed Capacity Paracambi (+) Renova

Current Capacity

(+) SHP Lajes

(+) Renova

Capacity (+) Belo (+) Guanhes After Monte Expansion

Considering 51% stake Considering 21.86% stake Considering 2.49% stake * 9 MW SHP + 65 MW Wind Farm (since jul/12)

21

RESULTS

Net Revenue
NET REVENUE BY SEGMENT (2013)*
Commercialization
8.5%

NET REVENUE (R$MN)

+3.3%

Generation 7,422 820

7.9%

000,0

7,182 669
+1.6%

Distribution
83.6%**

500,0

000,0

500,0

000,0

2,033 199
-7.2%

2,066 365 1,701 4Q13 2T13 2T13 3T13

+1.4%

* Eliminations not considered

6,513

6,602

** Construction revenue not considered

500,0

000,0

1,834 4Q12 2T12 2T12 3T12

NET REVENUE FROM DISTRIBUTION (2013)

2012 1S12 1S12 9M12 2013 1S13 1S13 9M13
(Free + Concessionaires) 8.4%

500,0

Network Use (TUSD)

Residential
43.0%

Construction Revenue Revenue w/out construction revenue

Others (Captive) 12.4% Commercial

5.8%

Industrial
30.3%

23

Operating Costs and Expenses

Generation and Commercialization: R$ 740
(11.9%)

COSTS (R$MN)* 2013

DISTRIBUTION PMSO COSTS (R$MN)

+13.1%

Non manageable (distribution**): R$ 3,753

Manageable (distribution): R$ 1,241
(21.6%) (65.5%)

+21.6%

692 214

783

176

* Eliminations not considered

4Q12
R$ MN PMSO Provisions
PCLD Contingencies

4Q13
Var. 21.6% -77.1%
-60.4% -90.1%

2012
2012 (692.0) (473.1)
(282.6) (190.5)

2013
2013 (782.9) (210.0)
(157.9) (52.1)

** Construction revenue not considered

4Q12 (176.0) (250.2)

(109.4) (140.8)

4Q13 (214.1) (57.2)

(43.3) (13.9)

Var. 13.1% -55.6%

-44.1% -72.7%

Depreciation Subtotal Other operational/ revenues expenses Total

(80.4) (506.6)

(84.7) (356.0)

5.4% -29.7%

(293.3) (1,458.4)

(355.2) (1,348.1)

14.3% -7.6%

357.5
(149.1)

102.2
(253.8)

-71.4%
70.3%

355.0
(1,103.4)

87.3
(1,240.8)

-75.4%
12.5%

24

EBITDA BY SEGMENT
(R$ MN)
+17.9%

1,697

-28.0%

1,439 27.5% 24.0%

474 16.7% 342 35.1%

Generation and Commercialization

72.5%

83.3%
64.9%

Distribution

76.0%

4Q12

4Q13

2012

2013

Consolidated EBITDA (R$ MN) Distribution Generation Commercialization Others and eliminations Total EBITDA Margin (%)

4Q13 4Q13 226.1 119.8 2.8 (6.9) 341.7 20.1%

4Q12 397.6 71.9 7.6 (2.7) 474.4 25.9%

Var.% -43.1% 66.5% -63.7% 160.5% -28.0% -5.8 p.p.

2013 1,237.7 444.1 26.3 (11.3) 1,696.8 25.7%

2012 1,101.4 322.5 25.7 (10.4) 1,439.1 22.1%

Var.% 12.4% 37.7% 2.4% 7.9% 17.9% 3.6 p.p.

25

EBITDA
Adjusted EBITDA 4Q12 / 4Q13 (R$ MN)

- 29.9% - 28.0%

(8)
138 (133) 612 474 104

(33)
(6) (258) 193 342

88 429

EBITDA Ajustado 2T11 Adjusted

EBITDA 4Q12

Ativos e EBITDA Receita Custos No Custos Provises EBITDA Ativos e EBITDA Passivos 2T11 Lquida Gerenciveis Gerenciveis 2T12 Passivos Ajustado Regulatrios (PMSO) 2T12 EBITDA Regulatrios Regulatory Adjusted Net NonRegulatory EBITDA CDE Fund Manageable Provisions Others

Assets and Liabilities

4Q12

Revenue

Manageable Costs

Costs (PMSO)

4Q13

Assets and Liabilities

EBITDA 4Q13

26

EBITDA
Adjusted EBITDA 2012 / 2013 (R$ MN)

- 5.3% + 17.9%

330 1,770 1,439

89

297

(93)

(272)

71

(27) 1,697

(21)

1,676

EBITDA Ativos e EBITDA Ajustado Passivos 2T11 2T11 Regulatrios Net Adjusted Regulatory EBITDA

Receita Lquida

EBITDA 2012

Assets and Liabilities

2012

Revenue

NonManageable Costs

Custos No Custos Provises EBITDA Ativos e EBITDA Gerenciveis Gerenciveis 2T12 Passivos Ajustado (PMSO) Provisions Others 2T12 EBITDA Regulatrios Regulatory Adjusted CDE Fund Manageable

Costs (PMSO)

2013

Assets and Liabilities

EBITDA 2013

27

Net Income
ADJUSTED NET INCOME 4Q12 / 4Q13 (R$ MN)
- 25.5% - 19.4%

91 (4) 160 (133) 30

EBITDA Ativos e EBITDA Ajustado Adjusted -Net Passivos Regulatory 2T11 4Q12 2T11 Regulatrios Income Assets and Receita Custos No Custos Gerenciveis Financial Gerenciveis Taxes (PMSO) Result Provises EBITDA Ativos e EBITDA 2T12 Passivos Ajustado 4Q13 Regulatory Adjusted Net Regulatrios 2T12 Assets and

58 187 129

251

76

Lquida EBITDA

Others

4Q12

Liabilities

Liabilities

Income 4Q13

28

Net Income
ADJUSTED NET INCOME 2012 / 2013 (R$ MN)

- 10.7% + 38.5%

37
218 258

(90)

(41)

(14)

642
424

587

573

EBITDA Ativos e EBITDA Ajustado Adjusted -Net Passivos Regulatory 2T11 2012 2T11 Regulatrios Income Assets and

Lquida EBITDA

Receita

2012

Liabilities

Custos No Custos Gerenciveis Financial Gerenciveis Taxes (PMSO) Result

Provises

Others

EBITDA Ativos e EBITDA 2T12 Passivos Ajustado 2013 Regulatory Adjusted Net Regulatrios 2T12 Assets and

Liabilities

Income 2013

29

Dividends

30

Indebtedness
R ea l Custo NET DEBT
4,151.6

AMORTIZATION SCHEDULE* (R$ MN) Average Term: 4.1 years

1,020 569

Without Pension Fund

4,024.9 2.84

2.58

777

817

675 438 444 444

557

2010 2009

3T10

Set/13

9M09

ea l sto R CuDez/13

2014

2015

2016

2017

2018

2019

2020

9M10

2021

After 2021

Net Debt / EBITDA

2010
Custo11.08% Nominal

* Principal only

2011

2012 COST OF DEBT

Custo Real 11.03%

IPCA 10.9% 9.68% 3.55%

U$/Euro 0.5%

TJLP 15.0% Others 1.4%

8.21% 4.87% 4.25% 2.24%

2010 2007

2011 2008 Nominal Cost

2009

2012 2009 Real Cost

2013 set/10

CDI 72.2%

*ConsideringHedge

2010

2011

2012

31

Investments
CAPEX (R$ MN)
+6.1%

CAPEX BREAKDOWN (R$ MN) 2013

Develop. of Distribution System 498.6

928.6 796.8 845.0 132.4

700.6
563.8 116.9 446.9 181.8

153.8

102.7

774.8 518.8

694.1

712.6 393.9 Others 21.8 Generation 31.3 Administration 40.2 Losses Combat 192.1

2009

2010

2011

2012

2013

Investments in Electric Assets (Distribution)

Commerc./ Energy Eficiency 61.0

32

Why invest in Light?

Major upcoming events Integration of favelas Pro-business environment New plants investments Expansion of the existing ones Market growth

Economic Transformation in the Concession Area

Repricing of Existing Energy

New PPAs starting in 2014 Revenues increase with no aditional costs. Very active trading subsidiary

Energy Losses Reduction

Progress in the Technology Program New network and meters in the pacified favelas Smart metering development Zero Losses Area Program

Best-in-Class Corporate Governance

Listed in Novo Mercado of Bovespa; Board Committees very active Included in the Sustainability Index (ISE) of Bovespa for the seventh year.

Growth in the Generation Business

Investment in Renova, Belo Monte and Guanhes (total of 623 MW) SHP Lajes under construction (17MW).

Dividend track Record

Sound Dividend Policy: minimum 50% of net income; Average payout since 2007: 90%

33

Important Notice
This presentation may include declarations that represent forward-looking statements according to Brazilian regulations and international movable values. These declarations are based on certain assumptions and analyses made by the Company in accordance with its experience, the economic environment, market conditions and future events expected, many of which are out of the Companys control. Important factors that can lead to significant differences between the real results and the future declarations of expectations on events or business-oriented results include the Companys strategy, the Brazilian and international 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 differ from 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 no investment decision must be based on the veracity, the updated or completeness of this information or opinions. None of the Companys assessors or parts related to them or its representatives will have any responsibility for any losses that can elapse 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 current expectations and projections on future events and trends that can affect the Companys businesses. These declarations include 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 estimates and assumptions on which these declarations are based on.

34

Contacts
Joo Batista Zolini Carneiro
CFO and IRO

Gustavo Werneck
Superintendent of Finance and Investor Relations +55 21 2211 2560 gustavo.souza@light.com.br

Mariana da Silva Rocha

IR Manager + 55 21 2211 2814 mariana.rocha@light.com.br

http://ri.light.com.br/

www.facebook.com/lightri

twitter.com/LightRI
35