Corporate Presentation BTG Pactual V LatAm CEO Conference October 2014

Transcription

1 Corporate Presentation BTG Pactual V LatAm CEO Conference October 2014

2 Light Holdings Diversified structure which encompasses the distribution, generation and commercialization segments. 2

3 Light in numbers Distribution RJ State Concession Area Population¹ 16 mn 11 mn 68% Area¹ 44,000 Km² 11,000 Km² 25% GDP¹ R$ 407 bn R$ 207 bn 51% # Consumers 7 mn 4 mn 57% # Municipalities % 1 IBGE (2010) % Generation 1 2 Amazônia Energia Renova 4 3 Guanhães Energia 6 Complexo de Lajes HPP Ilha dos Pombos 7 HPP Santa Branca 7 5 SHPP Paracambi 3

4 Rankings Among the largest players in Brazil INTEGRATED¹ Net Revenues 2013* R$ Billion DISTRIBUTION² Energy Consumption in Concession Area** (GWh) ,767 25,777 22,926 21,783 20,391 15,634 GENERATION PRIVATE-OWNED COMPANIES¹ Installed Hydro-generation Capacity (MW) , , , , , Source: Companies reports 2 Source: Relatório do Sistema de Apoio a ANEEL * Construction Revenue Included ** Captive Market *** Considers the 9 MW of Renova s SHPPs and 19 MW of Brasil PCH *** 4

5 Shareholders Structure Efficient combination of solid industry and financial players 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 5

6 Corporate Governance Decision process assures transparency and value creation General Assembly Board of Directors Fiscal Council Finances Committee Human Resources Committee Auditors Committee Governance and Sustainability Committee Management Committee Chief Executive Officer Paulo Roberto R. Pinto Chief Financial and Investor Relations Officer Chief Distribution Officer Chief Energy Officer Chief HR Officer João B. Zolini Carneiro Ricardo Cesar C. Rocha Evandro L. Vasconcelos Andreia Ribeiro Junqueira Chief Legal Officer Corporate Management Officer Chief Business Officer Chief Communications Officer Fernando Antônio F.Reis Paulo Carvalho Filho Evandro L. Vasconcelos* Luiz Otavio Ziza Valadares LGSXY ADR-OTC Interim* 6

7 Energy Consumption Distribution Semester TOTAL MARKET (GWh) ¹ +5.1% p.a. +5.5% 11,960 11,934 13,145 13,869 Others captives 13.6% Free 18.6% Industrial captive 5.1% 25.1ºC 25.2ºC 25.1ºC 25.7ºC Residential captive 35.2% Commercial captive 27.6% 1H11 1H12 1H13 1H14 1 Note: 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. 7

8 Market Breakdown ELECTRICITY CONSUMPTION (GWh) TOTAL MARKET SEMESTER 13, % 13, % 2,618 2,576 4, % 4,395 4, ,625 4, , % 2,787 2,715 2,086 2, % 1,909 1, ,526 11,292 1,806 1, H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14 RESIDENTIAL COMMERCIAL INDUSTRIAL OTHERS TOTAL CAPTIVE FREE 8

9 Losses and Collection LOSS (12 MONTHS) p.p. COLLECTION RATE 12 MONTHS 99.5% 98.7% 44.2% 43.7% 42.2% 42.4% 41.9% 8,582 8,552 8,352 8,748 8,815 Jun-13 Jun-14 5,953 5,905 5,738 5,955 5,972 PBD/GROSS REVENUE (BILLED SALES) - QUARTER 2,629 2,647 2,614 2,793 2, % 2.5% -0.8 p.p. Jun/13 Sep/13 Dec13 Mar/14 Jun/14 1.7% Non-technical losses GWh Technical losses GWh % Non-technical losses/ LV Market 2Q12 2Q13 2Q1 4 9

10 Energy Losses Combat Efficient combination between technology and effective management CLIENTS ENERGY AND STATUS ELECTRONIC METERS INSTALLED (in thousands) Large Clients (hight and med voltage) 7,600 Low Voltage Largest Clients 22,000 11,500 GWh (48%) 100% Concluded 2,700 GWh (11%) 1/3 as of today until Clientes comerciais e Retail and residential residenciais clients (Low (Baixa Voltage) tensão) 4,100, ,000 GWh (41%) APZ Jun Communities Outisde of Communities 10

11 Technology: Centralized Measuring Use of new technologies in areas with a high level of losses Display 11

12 Zero Losses Area ( APZ ) Project: Light Legal 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. ELECTRONIC METERS WORKFORCE MANAGEMENT PARTNERSHIP WITH THE STATE GOVERNMENT 12

13 Mar/13 Jun/13 Sep/13 Dec/13 Mar/14 Jun/14 Mar/13 Jun/13 Sep/13 Dec/13 Mar/14 Jun/14 Evolution of APZs Results Significant loss reduction and increasing collection rate APZ LOSSES APZ COLLECTION 50.2 % -30.2% 98.2% 97.9% 98.3% 99.5% 95.9% 96.0% 89.2% 23.6% 22.5% 21.2% 20.3% 20.7% 20.0% +6.8% Before Início da Operação Before Início da Operação 13

14 Regulatory Allowance for Non-Technical Losses 31,80% 31,80% Higher recognition of losses linked to targets achievement Additional revenues to be invested in losses combat and 40,41% booked as 39,92% 40,41% 40,41% 40,41% Special Obligations (ex-rab) 39,92% 39,92% 40,41% 40,41% 40,41% 39,92% 40,41% 39,92% 40,41% 39,13% 38,33% 39,13% 39,13% 38,33% 39,13% 38,33% 39,13% 38,33% 34,49% 36,41% 36,41% 34,49% 36,41% 36,41% 34,49% 34,49% 31,80% 31,27% 31,80% 33,00% 30,95% 31,80% 31,27% 33,00% 31,27% 33,00% 31,27% 31,27% 30,95% 33,00% 30,95% 30,95% 30,95% 30,53% 30,53% 30,53% 30,53% 30,11% 29,69% 30,11% 30,11% 30,60% 30,11% 29,69% 29,69% 29,69% 30,60% 30,60% 29,40% 30,60% 30,60% 29,40% 29,40% 29,40% 29,40% 28,20% 28,20% 28,20% 27,01% 27,01% 27,01% 25,81% 25,81% 25, 25, Regulatory NT Losses/LV 2017 (Flexible) Regulatory Regulatory NT NT Losses/LV NT Losses/LV (Flexible) NT Regulatory (Final) Regulatory Losses/LV Regulatory (Flexible) NT Losses/LV (Flexible) Real Regulatory Final NT Proposal Losses/LV NT (according Regulatory Losses/LV (forecast to NT (Final) methodology) NT Light, Losses/LV Losses/LV Ref. August) (Final) (Final) Real Real NT NT Losses/LV Losses/LV Real NT (forecast Losses/LV Light, (forecast Ref. August) Light, Ref. August) NT Losses/LV Regulatory (AP) Real NT Losses/LV (forecast Light, Ref. August) Regulatory w/ NT NT Penalty Losses/LV Losses/LV (AP) Target (forecast (every Light, August) Ref. August) Regulatory NT Losses Losses/LV with Penalty (AP) (AP) Regulatory Regulatory NT Losses/LV NT w/ Losses/LV Penalty Regulatory NT Regulatory Losses/LV w/ NT Penalty Losses/LV w/ w/ Penalty Penalty 14

15 Generation

16 855 MW Installed Capacity Concessions Expiring Only in % 100% Paraiba do Sul River HPP Santa Branca 56 MW RJ HPP Ilha dos Pombos HPP Ilha dos Pombos 187 MW HPP Santa Branca SP 100% 100% 100% HPP Fontes Nova 132 MW Underground HPP Nilo Peçanha MW HPP Pereira Passos 100 MW ISO 9001 Quality Management Environmental Management OHSAS Occupational health and Safety Management 16

17 Assured Energy: 549 MWaverage Energy commercialization focused on the free market Contracted Energy (Free) Available Energy Hedge Average selling price in : R$ 163/MWh (base date: January, 2014) 17

18 Generation Expansion Renewable energy generation projects, mainly through partnerships Project Installed Capacity (MW) Assured Energy (MWaverage) Operational Start Stake Paracambi % Renova 425 (in operation) 1,806 (contracted) 235 (in operation) 921 (contracted) % Belo Monte 11,223 4, % Guanhães % Lajes % 18

19 Generation Expansion Installed Capacity (MW) Light's proportional Participation +74.3% Renova: +37 Guanhães: +5 1,002 Renova: +55 Guanhães: +17 B.Monte: +3 1,077 Renova: +78 B.Monte: +3 1,158 Renova: +5 B.Monte: +30 1,211 Renova: +44 B.Monte: +46 1,300 Renova: +26 B.Monte: +46 B.Monte: +46 1,371 1,417 B.Monte: +46 1,540 Renova: +78 B.Monte: +46 Renova: +74 B.Monte: +15 1,660 1,675 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 ¹ 51% Light ² 21.86% Light ³ 2.49% Light 19

20 RESULTS

21 Net Revenue NET REVENUE (R$MN) NET REVENUE BY SEGMENT (2Q14)* Generation 7.5% +11.5% 4,098 3, Distribution 80.5%** Commercialization 12.0% +3.5% * Eliminations not considered 1, , ,344 3,720 ** Construction revenue not considered 1,580 1,602 2Q13 2Q14 1H13 1H14 NET REVENUE FROM DISTRIBUTION (2Q14) Commercial (Captive) 42.6% Construction Revenue Industrial (Captive) 5.9% Revenue w/out construction revenue Others (Captive) 12.2% Network Use (TUSD) (Free + Concessionaires) 7.8% Residential (Captive) 31.5% 21

22 Operating Costs and Expenses Generation and Commercialization: R$ 249 (15.2%) Manageable (Distribution): R$ 309 (18.8%) COSTS (R$MN)* 2Q14 COSTS (R$MN)* 1H14 Non manageable (Distribution**): R$ 1,084 (66.1%) Non manageable (Distribution**): R$ 2,293 (66.0%) DISTRIBUTION PMSO COSTS (R$MN) -0.1% -2.3% Q13 2Q14 1H13 1H14 R$ 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% Generation and Commercialization : R$ 506 (14.6%) * Eliminations not considered ** Construction revenue not considered Manageable (Distribution): R$ 677 (19.5%) Depreciation (86.2) (83.8) 2.8% (171.6) (164.5) 4.3% Other operational/ revenues expenses (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% 22

23 Tariff Deficit The exposure to the spot market, combined with its high prices, which reflect low reservoir levels and higher thermal plants dispatch, caused an expressive tariff deficit for distribution companies. Decrees 8203 (Jan/14) and 8221 (Apr/14) ACR FUNDS -1H14 (R$ MN) Involuntary exposure to the spot market 1,238 Availability contracts with thermal plants 299 Hydrological risk 39 (1,635) 1, % of deficit covered Auction A-1 Contract 30 Auction A-0 Contract 28 (250) TOTAL 1,635 Tariff Deficit CDE Fund Balance 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 the cut in the April transfer. 23

24 EBITDA PER SEGMENT (R$ MN) % 692 CONSOLIDATED EBITDA 2Q14 2Q13 Var. 1H14 1H13 Var. Distribution % % EBITDA Margin % 9.2% 12.5% -3.3 p.p. 12.2% 13.5% -1.3 p.p % 36.7% 44.7% Generation % % EBITDA Margin % 66.0% 75.9% -9.9 p.p. 78.6% 79.1% -0.6 p.p % % 63.3% 55.3% Commercialization % % EBITDA Margin % 11.1% 2.8% 8.3 p.p. 9.2% 4.6% 4.6 p.p. Other and Eliminations (4.9) (1.1) 360.2% (7.1) (3.3) 118.9% 62.6% 54.2% TOTAL % % EBITDA Margin % 14.9% 17.6% -2.7 p.p. 18.6% 18.9% -0.3 p.p. 2Q13 2Q14 1H13 1H14 Generation and Commercialization 1 Distribution 1 Percentages do not consider eliminations 24

25 EBITDA Adjusted EBITDA - 1H13/1H14 (R$ MN) - 6.9% +9.3% (328) (10) (6) 32 (6) Adjusted EBITDA 1H13 Regulatory Assets and Liabilities EBITDA 1H13 Net Revenue Non- Manageable Costs CDE Transfers Manageable Costs (PMSO) Provisions Others EBITDA 1H14 Regulatory Assets and Liabilities Adjusted EBITDA 1H14 25

26 Net Income Adjusted Net Income - 1H13/1H14 (R$ MN) - 6.8% % (36) (8) Adjusted Net Income 1H13 Regulatory Assets and Liabilities 1H13 EBITDA Financial Result Taxes Others 1H14 Regulatory Assets and Liabilities Adjusted Net Income 1H14 26

27 Dividends Average payout of 86% in the last 5 years 27

28 Indebtedness CDI 74.5% IPCA 11.0% U$/Euro * 2.7% TJLP 13.3% Others 3.7% 2.58 AMORTIZATION SCHEDULE* (R$ MN) Average Term: 3.9 years 1,166 1, * Amount without hedge COST OF DEBT 11.03% 9.68% 8.21% * Pincipal only 10.49% NET DEBT With Pension Fund Custo Real Custo Real After , , , % 2.24% 3.55% 3.87% T set/10 Jun/ Custo Real Mar/14 Nominal Cost Real Cost Net Debt / EBITDA (covenants) Custo Real Jun/14 28

29 Investments CAPEX (R$ MN) CAPEX BREAKDOWN (R$ MN) 1H % Commerc./ Energy Eficiency 5.0 Losses Combat Generation 8.4 Administration 12.2 others 5.0 Develop. of Distribution System H13 1H14 Investments in Electric Assets (Distribution) 29

30 Why invest in Light? Economic Transformation in the Concession Area Rio as a host of major events Communities pacification Pro-business environment Investment projects hub Energy Market growth Energy Commercialization focused on the free market Expiration of Regulated Contracts (Dec/2013) New contracts in 2014 Energy available for commercialization Energy Losses Reduction Progress in the Technology Program (Smart Grid) New network and electronic meters in the pacified areas Zero Losses Area Program Best Corporate Governance Practices Listed in Novo Mercado of Bovespa Board Commitees with strong participation in the decision making process Included in the Sustainability Index (ISE) for the 7th year Growth in the Generation Business Projects under construction with partnerships: Renova, Belo Monte and Guanhães (total of 697 MW) SHPP Lajes under construction (17MW). Dividend track Record Dividend Policy: minimum 50% of net income; Average payout since 2009: 86% 30

31 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 Company s 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 Company s 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 Company s 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 Company s 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 Company s 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. 31

32 Contacts João Batista Zolini Carneiro CFO and IRO Gustavo Werneck Superintendent of Finance and Investor Relations Mariana da Silva Rocha IR Manager mariana.rocha@light.com.br twitter.com/lightri 32