4q14 earnings release
TRANSCRIPT
Rio de Janeiro, March 6, 2015.
Consumption grows by 3.0% Quality indicators improve by 33.4% (DEC) and 21.1% (FEC)
Total energy consumption grew by 3.0% year-on-year, totaling 6,694 in 4Q14, 2.5% higher than in 4Q13, driven by the growth of 4.9% in the residential segment and 6.0% in the commercial segment.
In 2014, net revenue, excluding construction revenue, was R$8,289.9 million, an upturn of 25.6% in relation to 2013. In the quarter, also excluding construction revenue, net revenue totaled R$2,988.6 million, 75.7% above the figure recorded in 4Q13, primarily explained by the recognition of the regulatory asset or liability (CVA) balance in the distributor’s net revenue. Net revenue, excluding construction revenue and the booking of CVA, would have come to R$7,270.0 million in 2014, a 10.1% increase in relation to 2014, and R$1,968.8 million in 4Q14, a 15.7% increase in relation to 4Q13.
Consolidated EBITDA1 closed the year at R$1,809.7 million, moving up by 6.7% over 2013. In 4Q14, consolidated EBITDA was R$933.9 million, up 173.3% from 4Q13, chiefly due to the recognition of CVA balance in Light SESA and equity income gain from the dilution of the generation company’s stake in Renova Energia. Excluding these effects, EBITDA would have totaled R$1,332.4 million in 2014, down 14.1% on the adjusted EBITDA recorded in 2013, and R$288.0 million in 4Q14, a 5.5% decrease in relation to 4Q13.
In 2014, net income was R$662.8 million, a 12.9% increase over 2013. In 4Q14, net income totaled R$520.1 million, moving up by 303.2% in relation to 4Q13. Excluding the recognition of CVA balance and equity income gain, net income came to R$299.1 million in 2014, a 39.1% reduction in relation to 2013, and R$45.1 million in 4Q14, a 56.8% decrease from the adjusted income recorded in 4Q13 .
Non-technical energy losses in the last 12 months, calculated as a percentage of billed energy in the low-voltage market (ANEEL criterion), posted a reduction of 0.4 p.p. from 3Q14, reaching 40.9% in December 2014.
The Operating Quality Indicators DEC (equivalent length of interruption indicator) and FEC (equivalent frequency of interruption indicator) came to 12.25 hours and 6.56 times, respectively, an improvement of 33.4% and 21.1% in relation to the same period last year.
Collections totaled 98.6% of billed consumption in 2014, down 2.0 p.p. from 2013. Provisions for Past Due Accounts (PCLD) represented 1.3% of the distribution company’s gross billed energy in 2014.
The Company closed December with net debt of R$6,076.5 million, an increase of 9.6% over September 2014. The net debt/EBITDA ratio stood at 3.70x.
On March 6, 2015, the Board of Directors proposed the distribution of R$157.4 million, R$0.7719 per share, as dividends, referring to the results of fiscal year ended December 31, 2014. This proposal is subject to approval by the Annual Shareholders’ Meeting to be called.
BM&FBOVESPA: LIGT3 Conference Call: IR Contacts:OTC: LGSXY Date: 03/09/2015 Phone: +55 (21) 2211-7392/2828/2660Total shares: 203,934,060 shares Time: 3:00 p.m. Brazil // 2:00 p.m. US ET Fax: +55 (21) 2211-2787Free Float Total: 97,629,475 shares (47.87%) Phone: +55 (11) 2188 0155 // +1 (646) 843 6054 Email: [email protected] Cap (03/05/15): R$ 2.712 milhões Webcast: ri.light.com.br Website: ri.light.com.br
Presentation of 4Q13 results (comparative period)1 EBITDA is not a recognized measure under BRGAAP or IFRS. It is used by the Company as an additional measure of performance of its operations, and it should not be considered individually or as an alternative to net income or operating income, as a measure of operating performance, or as an indicator of liquidity. The EBITDA presented is calculated in accordance with CVM Instruction 527/2012 and represents net income +income and social contribution tax + net financial expenses + depreciation and amortization. The reconciliation is shown on Exhibit II.
4Q14 4Q13 Var. % 2014 2013 Var. %
Grid Load* 9,886 9,507 4.0% 38,006 36,600 3.8%Billed Energy - Captive Market 5,453 5,182 5.2% 21,500 20,391 5.4%Consumption in the concession area 6,694 6,531 2.5% 26,493 25,717 3.0%Transported Energy - TUSD 1,241 1,348 -7.9% 4,993 5,326 -6.3%Sold Energy - Generation 1,119 1,245 -10.1% 4,526 4,888 -7.4%Commercializated Energy (Esco) 1,358 1,022 32.8% 5,338 4,155 28.5%
4Q14 4Q13 Var. % 2014 2013 Var. %
Net Revenue** 2,989 1,701 75.7% 8,290 6,602 25.6%EBITDA 934 342 173.3% 1,810 1,697 6.7%EBITDA Margin** 31.2% 20.1% 11.2 p.p. 21.8% 25.7% -3.9 p.p.Net Income 520 129 303.2% 663 587 12.9%Net Debt 6,076 4,025 51.0% 6,076 4,025 51.0%Capex 425 155 173.4% 1,054 845 24.7%* Own Load + network use** Does not consider construction revenue
Operational Highlights (GWh)
Financial Highlights (R$ MN)
Management reassessed the criterion for the presentation of contractual debt amortization with the pension plan in the cash flow statement, which led to a reclassification of the 2013 period for comparison purposes.
For more information, see Exhibit VI of this report.
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Table of Contents1. The Company..........................................................................................................................................4
2.1 Distribution.......................................................................................................................................5Energy Balance................................................................................................................................7Operating Quality.........................................................................................................................13
2.2 Generation......................................................................................................................................142.3 Commercialization and Services......................................................................................................15
3. Financial Performance..........................................................................................................................163.1 Net Revenue....................................................................................................................................16
Consolidated......................................................................................................................................16Distribution........................................................................................................................................17Generation........................................................................................................................................18Commercialization and Services........................................................................................................18
3.2 Costs and Expenses.........................................................................................................................19Consolidated......................................................................................................................................19Distribution........................................................................................................................................19Generation........................................................................................................................................23Commercialization and Services........................................................................................................23
3.3 EBITDA.............................................................................................................................................24Consolidated.................................................................................................................................24Distribution...................................................................................................................................25Generation....................................................................................................................................26Commercialization and Services...................................................................................................26
3.4 Consolidated Financial Result..........................................................................................................273.5 Debt.................................................................................................................................................283.6 Net Income......................................................................................................................................313.7 Investments.....................................................................................................................................33
Generation Capacity Expansion Projects......................................................................................344. Cash Flow..............................................................................................................................................386. Capital Markets.....................................................................................................................................407. Recent Events........................................................................................................................................438. Disclosure Program...............................................................................................................................45EXHIBIT I....................................................................................................................................................46EXHIBIT II...................................................................................................................................................47EXHIBIT III..................................................................................................................................................47EXHIBIT IV..................................................................................................................................................49EXHIBIT V...................................................................................................................................................50EXHIBIT VI..................................................................................................................................................51
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1. The Company
Light S.A. is a holding company that controls subsidiaries and affiliated companies in three main business segments:
energy distribution, generation and commercialization/services. In order to increase the transparency of its results
and provide investors with a better basis for evaluation, Light also presents its results by business segment. The
Company’s corporate structure on December 31, 2014 is shown below:
OPERATING INDICATORS - DISTRIBUTION 4Q14 4Q13 Var. %
Nº of Consumers (thousand) 4,222 4,118 2.5%Nº of Employees 4,282 4,293 -0.3%Average provision tariff - R$/MWh 445 416 6.9%Average provision tariff - R$/MWh (w/out taxes) 316 287 10.0%Average energy purchase cost¹ - R$/MWh 163 133 22.9%OPERATING INDICATORS - GENERATION 4Q14 4Q13 Var. %
Installed generation capacity (MW)* 971 941 3.2%Assured energy (MW)* 694 685 1.2%Pumping and internal losses (MW) 87 87 -Available energy (Average MW)* 607 598 1.4%Net Generation (GWh) 820 1,226 -33.1%Load Factor 63.5% 61.8% 1.7 p.p.¹Does not include purchase on spot.* Includes proportionate share of associates
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2. Operating Performance
2.1 Distribution
Total energy consumption in Light SESA’s concession area (captive clients + transport of free clients) came to 6,694
GWh in 4Q14, 2.5% up from the same period in 2013, due to an increase in all classes, except for the industrial
segment, which posted a 7.9% decrease, reflecting the lower consumption by electro-intensive industries (steel and
aluminum producers and chemical companies).
In the residential segment, consumption reached 2,203 GWh in the quarter, accounting for 32.9% of the total
market, a growth of 4.9% in relation of 4Q13. In 4Q14, the average temperature was 1.1°C higher than in 4Q13.
Commercial clients consumed 2,153 GWh in the quarter, representing 32.2% of the total, 6.0% up from 4Q13. The
commercial segment’s constant growth in recent years has been fueled by the expansion of the consumer base and
the increasing use and ownership of refrigeration equipment in commercial establishments, especially retailers.
Industrial consumption amounted to 1,326 GWh in 4Q14, equivalent to 19.8% of the total market, 7.9% down from
the same period last year. The industrial segment’s captive clients maintained their consumption in line with 4Q13,
while free clients posted a decrease of 10.3% in relation to the same period last year.
The other consumption segments, which accounted for 15.1% of the total market, recorded an increase of 5.3% in
consumption in relation to the fourth quarter of 2013. The rural and public utility categories reported respective
increases of 9.3% and 3.1%, while the government category posted a reduction of 1.4% in relation to 4Q13.
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Total energy consumption in Light SESA’s concession area (captive clients + transport of free clients 2) came to 26,493
GWh in 2014, 3.0% up in relation to 2013.
Residential consumption accounted for 33.8% of the total market and totaled 8,950 GWh in 2014, 7.7% up over
2013, reflecting the upturn in consumption in all quarters of the year, led by the first quarter (+13.6%), due to the
high temperatures in the summer of 2014.
Commercial clients consumed 8,328 GWh in the year, 4.9% up over 2013. As with residential consumption,
commercial consumption recorded growth in all quarters of 2014.
In 2014, industrial consumption amounted to 5,296 GWh, 6.6% less than in 2013, due to reduced consumption in the
steel/aluminum and chemical sectors. Excluding this effect, industrial consumption would have recorded a growth of
1.0% in relation to 2013. The industrial segment’s captive clients maintained their consumption in line with 2013,
while free clients recorded a decrease of 8.7% over 2013.
The other consumption segments, which accounted for 14.8% of the total market, recorded an increase of 3.2% over
2013. The rural, government and public utility categories reported increases of 26.8%, 1.5% and 2.8%, respectively, in
relation to 2013. This higher consumption in the rural category is explained by the reclassification of some clients,
who were previously treated as industrial, as a result of Aneel Resolution 414.
2 In view of ANEEL’s market ratification during the tariff revision process, consumption by the free client CSN has been reincluded as of 4Q13.
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Energy Balance
521.3 8,949.8
Captive Billed IndustrialEnergy 1,395.8
5,239.8 21,500.4Commercial
30,523.9 7,449.3Losses + Non Billed
7,854.3 31,089.6 Energy (**) Others9,023.5 3,705.5
6,351.0
2,796.8
7,439.1
887.3
(*) Others = Purchase in Spot - Sale in Spot.(**) Includes unbilled energy.(***) Other transmission lines with less than 230 Kv
Note: 1) At Light S.A., there is intercompany power purchase/sale elimination.2) Power purchase data as of 01/12/2014 (subject to change).
DIT Losses 134.9
COTAS
ANGRA I & II
Required E.(CCEE)
DISTRIBUTION ENERGETIC BALANCE - GWhPosition: January - December 2014
PROINFAResidential
ITAIPU(CCEE)
Own load Light
AUCTIONS(CCEE)
NORTE FLU(CCEE)
Basic netw. Losses 430.7
OTHERS(*)(CCEE)
1,7%
16,9%
25,3%
20,4%
9,0%
24,0%
2,9%
Energy Balance (GWh) 4Q14 4Q13 Var. % 2014 2013 Var. %
= Grid Load 9,886 9,507 4.0% 38,006 36,600 3.8%- Energy transported to utilities 656 673 -2.4% 2,522 2,608 -3.3%- Energy transported to free customers 1,231 1,340 -8.1% 4,960 5,339 -7.1%
= Own Load 7,998 7,495 6.7% 30,524 28,653 6.5% - Captive market consumption 5,453 5,182 5.2% 21,500 20,391 5.4%
Low Voltage Market 3,651 3,446 6.0% 14,472 13,579 6.6%
Medium Voltage Market 1,801 1,737 3.7% 7,029 6,812 3.2%= Losses + Non Billed Energy 2,546 2,312 10.1% 9,024 8,262 9.2%
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Energy Losses
In the last 12 months, non-technical energy losses totaled 5,927 GWh, accounting for 40.9% of billed energy in the
low-voltage market (ANEEL criterion), 0.4 p.p. less than in the 12 months ended September 2014. In comparison with
the 12 months ended December 2013, when non-technical energy losses totaled 42.2% of the low-voltage market,
there was a reduction of 1.3 p.p.
Light SESA’s total energy losses amounted to 8,847 GWh, or 23.3% of the grid load, in the 12 months through
December 2014.
In order to continue reducing non-technical energy losses, Light is investing in initiatives that include conventional
fraud inspection procedures, the upgrading of network and measurement systems, and the Zero Loss Area program
(APZ). Among these initiatives, the following stand out:
Consumer unit regularizations: The Company conducted 61,219 regularization procedures in the low,
medium, and high-voltage segments in 2014, 5.6% up from 57,962 in 2013. Energy incorporation totaled 279.1 GWh
in 2014, 13.7% up from the 245.6 GWh reported in 2013. Recovered energy increased by 16.6% to 179.7 GWh in
2014, versus 154.1 GWh in 2013.
Number of Normalizations 4Q14 4Q13 Var. % 2014 2013 Var. %
= Total 14,288 13,598 5.1% 61,219 57,962 5.6%- High / Medium Voltage 247 167 47.9% 842 962 -12.5%- Low Voltage 14,041 13,431 4.5% 60,377 57,000 5.9%
Direct low voltage 11,344 12,570 -9.8% 50,664 52,666 -3.8%Indirect low voltage 2,697 861 213.2% 9,713 4,334 124.1%
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Installation of remote electronic metering devices:
SMC (centralized metering system) devices are installed in areas
with high loss rates, with or without the support of Pacifying
Police Units (UPPs). The UPPs give Light more room for
maneuver in regard to combating default or energy theft. The
Company installed 10,141 such devices in UPP-protected areas
in 4Q14, resulting in the incorporation of 15.0 GWh. In areas
outside the sphere of the UPPs, Light installed 41,195 devices,
with the incorporation of 26.9 GWh. As a result, the Company
closed 2014 with 622,000 installed electronic meters, 190,000
units (+44.0%) more than at the end of December 2013. In May 2014, the Company announced that Landis+Gyr
Equipamentos de Medição Ltda (“Landis+Gyr”) was chosen as the supplier of equipment and services for the
automation of overhead and underground networks for an Integrated System using smart grids and devices in the
distribution system (“Smart Grid Project”). After the work statement phase, the contract was signed in September
2014, encompassing the supply of approximately 1 million metering devices in the next five years for R$750 million.
Currently, Light and Landis+Gyr are adjusting the information technology environment in order to receive this new
communications solution.
Zero Loss Areas: In August 2012, the Company created the APZ Project, based on a combination of
electronic metering and a shielded network, supported by dedicated teams of technicians and commercial relations
personnel with clearly defined targets, whose compensation is tied to improving loss and default indicators in their
respective areas. A typical APZ has around 17,000 clients. The project, known commercially as "Light Legal", which
receives support from SEBRAE in regard to the training of partnering micro-entrepreneurs, has 37 operational APZs
and 624,000 clients in the Baixada Fluminense region and the city’s south, west and north sides.
In 4Q14, 113,000 electronic metering devices have been installed in the communities and the APZs in place
for more than 12 months have resulted in an average 29.0 p.p. reduction in non-technical energy losses over
the grid load and an average collection increase of 7.0 p.p. The table below shows the results through
December 2014 in the 20 areas where the results have been determined:
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The other APZs in areas where the results have been determined, but in place for less than 12 months, have
resulted in an average 26.0 p.p. reduction in non-technical energy losses over the grid load and an average
collection increase of 4.0 p.p., as shown in the table below.
Complementing the 26 areas where the results have already been determined, the table below shows the 11
APZs in the implementation phase, without recorded results, totaling 37 operating areas. The total of clients
still with no results is approximately 155,000.
Before Current Before Current
Curicica 2010 13,505 38% 10% 95% 97% N
Realengo/Batan 2010/201320,474
38%11% 94% 96% N/Y
Cosmos 1 2012 22,271 49% 15% 92% 97% NCosmos 2 2012 20,422 46% 15% 92% 101% NSepetiba 2012 21,172 57% 31% 88% 96% NCaxias 1 e 2 2012 14,579 59% 33% 83% 94% NBelford Roxo 1 e 2 2013 22,089 63% 23% 88% 96% NVigário Geral 2012 18,142 35% 13% 94% 96% NCaxias 3 2013 17,762 43% 17% 96% 96% NNova Iguaçu 1 2013 20,456 49% 28% 90% 98% NNova Iguaçu 2 2013 22,335 46% 21% 88% 98% NNilópolis 2013 10,882 42% 28% 90% 96% NMesquita + Nilópolis Convencional 2010 20,119 51% 12% 84% 98% NRicardo de Albuquerque 2013 26,224 35% 13% 94% 96% NCabritos/Tabajaras/Chapéu Mangueira/Babilônia/Santa Marta
2012 8,517 51% 11% 62% 97% Y
Coelho da Rocha 2013 18,913 68% 11% 92% 98% NCaxias 4 2013 19,984 41% 16% 90% 97% NCidade de Deus 1 2011 20,585 52% 31% 84% 89% YTomazinho 2013 12,787 43% 18% 87% 96% N
Formiga/Borel/Macaco/Salgueiro/Andaraí 2012 18,216 51% 27% 50% 91% Y
Total 369,434 49% 20% 89% 96%
UPP Area
* Reflects the accumulated results until Dec/14, since the beggining of the implementation of each APZ Subtitle: N = No / Y = Yes
Neighborhood Implementation YearNumber of
clients
Non-Technical Losses / Grid Load*
Collection Rate
Before Current Before Current
Monte Líbano 2014 11,506 36% 12% 92% 97% NCaxias 5 2014 22,298 49% 29% 94% 92% NCordovil 2014 12,735 28% 14% 93% 96% NÉden 2014 18,007 55% 14% 86% 96% NNova Iguaçu 3 2014 22,243 49% 30% 89% 96% NAlemão 2014 13,062 63% 30% 91% 93% YTotal 99,851 49% 23% 91% 95%* Reflects the accumulated results until Dec/14, since the beggining of the implementation of each APZ Subtitle: N = No / Y = Yes
Neighborhood Implementation YearNumber of
clients
Non-Technical Losses / Grid Load*
Collection RateUPP Area
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Rio das Pedras 2014 12,654 83% 75% NComunidades Centro 2014 17,005 62% 89% YVilar dos Teles 1 2014 13,046 61% 97% NComunidades Estácio 2014 12,388 70% 90% YRosali 1 2014 13,156 41% 94% NRosali 2 2014 14,282 33% 97% NRosali 3 2014 15,865 25% 97% NRosali 5 2014 15,036 54% 98% NCaxias 6 2014 14,544 39% 96% NAreia Branca 1 2014 15,463 65% 96% NAreia Branca 5 2014 11,627 40% 95% NTotal 155,066
Neighborhood Implementation YearNumber of
clientsNon-Technical
Losses / Grid Load*Collection Rate UPP Area
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Collection
The 4Q14 collection rate stood at 95.7% of billed consumption, 3.6 p.p. lower than in the same period last year,
primarily due to the mathematical effect from
time displacement of collection in relation to
billed consumption, the average tariff adjustment
of 19.23% in November 2014 and the 23.0 p.p.
drop in collection from the government in
relation to 4Q13, when there was an atypical
collection rate of 121.0% due to the settlement of
debt from a major client.
In 2014, collection rate was 98.6%, down 2.0 p.p.
from 2013, due to the two reasons mentioned
above.
In 4Q14, provisions for past due accounts (PCLD)
totaled R$36.3 million, representing 1.3% of gross
billed energy3, 7.5 million less than the R$43.8
million provisioned in 4Q13. In 2014, PCLD
represented 1.3% of gross billed energy, totaling
R$127.5 million, a reduction of R$30.8 million
over 2013.
3 The calculation of PCLD considers captive market’s gross revenue + TUSD + unbilled energy.
4Q14 4Q13 Var. (R$) 2014 2013 Var. (R$)PCLD 36.3 43.8 (7.5) 127.5 158.3 (30.8)
Provisions for Past Due Accounts - R$ MM
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Operating Quality
In 4Q14, in the overhead distribution network, 98 medium-voltage distribution circuits were inspected/maintained,
1,206 transformers were replaced and 33,169 trees were pruned. In the underground distribution network, 5,957
transformer vaults and 13,959 manholes were inspected. In addition, 98 transformers, 78 switches and 290
protectors were maintained.
In the last 12 months, the moving average of the equivalent length of interruption indicator (DEC), expressed in time,
registered 12.25 hours, 33.42% down from the same period last year, while that of the equivalent frequency of
interruption indicator (FEC), expressed in occurrences, stood at 6.56 times, a drop of 21.06% in relation to the same
period last year.
All indicators in 4Q14 reflect the improved performance of the network thanks to the reorganization of processes in
the distribution area and the initiatives implemented through the action plan initiated in June 2013. More intensive
tree pruning and energy network preventive maintenance measures are having a positive impact on results, ensuring
an improved DEC and FEC performance. The improvement in the quality indicators in 2014 reflected in the reduction
of 30.1% of expenses with DIC/FIC when compared with 2013.
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2.2 Generation
Light Energia sold 1,119.1 GWh in 4Q14, net of energy purchases, 10.1% down year-on-year.
No energy was sold on the captive market (ACR) in 2014, due to the expiration of the last existing captive energy sale
contracts in December 2013. These contracts were renegotiated on the free market (ACL), whose 4Q14 energy sales
moved up by 34.4% as a result.
Net spot market purchases came to 41.4 GWh in 4Q14, versus total sales net of purchases of 113.0 GWh in 4Q13.
This result was due to the low GSF (Generation Scaling Factors), in turn caused by the national system’s exceptionally
poor hydrological conditions, impacted by low average rainfall and the consequent period depletion of hydro plant
reservoirs.
The GSF in October, November and December 2014 came to 87.67%, 87.73% and 87.84%, respectively, versus
103.31%, 103.36% and 107.97% in the same months in 2013. The average GSF in 4Q14 was 87.24%, 17.64 p.p. lower
than the figure recorded in the same period in 2013. The average GSF in 2014 stood at 90.61%, 6.6 p.p. below the
average GSF reported in 2013.
In 2014, energy sales on the free market (ACL) increased by 25.6% over 2013, while spot market sales (net of
purchases) recorded a sharp reduction between the periods.
LIGHT ENERGIA (GWh) 4Q14 4Q13 Var. % 2014 2013 Var. %
Regulated Contracting Environment Sales - 268.1 - - 1,044.3 -Free Contracting Environment Sales 1,160.5 863.2 34.4% 4,556.5 3,627.5 25.6%Spot Sales (CCEE) (41.4) 113.4 - (30.1) 216.3 -113.9%Total 1,119.1 1,244.8 -10.1% 4,526.3 4,888.1 -7.4%
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2.3 Commercialization and Services
In the fourth quarter in 2014, direct energy sales by
Light Com and Light Esco from conventional and
subsidized sources totaled 1,357.7 GWh, 32.8% more
than the 1,022.0 GWh recorded in the same period
last year. In 2014, a energy sales amounted to 5,338.4
GWh, 28.5% higher than the 4,154.7 GWh reported in
2013.
In the services segment, the Company entered into
four contracts in 4Q14. In 2014, of the twelve (12)
service projects that were ongoing, six (6) were completed and delivered to clients. These include the Light Esco
Cogeneration Plant, for the Rio de Janeiro Refrescos factory.
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3. Financial Performance
3.1 Net Revenue
Consolidated
Consolidated net operating revenue totaled 3,294.7 million in 4Q14, 59.5% more than in 4Q13. Excluding revenue
from construction, which has a neutral effect on net income, consolidated net revenue totaled 2,988.6 million in
4Q14, moving up by 75.7%, due to market growth and the booking of CVA in the revenue. Excluding revenue from
construction and the booking of CVA, net revenue came to R$1,968.8 million in the quarter, an increase of 15.7% in
relation to 4Q13.
The distribution and commercialization/service segments recorded respective upturns of 82.2% and 62.6%, while net
operating revenue from the generation segment fell by 13.0%.
In 2014, net revenue moved up by 24.4%. Excluding revenue from construction, consolidated net revenue totaled
grew by 25.6% in relation to 2013, due to market growth and the booking of CVA in the revenue.
Net Revenue (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%DistributionBilled consumption 1,456.6 1,340.5 8.7% 5,591.1 5,354.1 4.4%Non billed energy 139.6 39.1 257.2% 104.7 (75.1) -Network use (TUSD) 129.0 109.3 18.1% 465.5 491.7 -5.3%Short-Term (Spot) - - - 60.6 37.8 60.5%Others 27.5 32.9 -16.3% 76.1 88.1 -13.6%CVA 1,019.8 - - 1,019.8 - - Subtotal (a) 2,772.6 1,521.8 82.2% 7,317.8 5,896.5 24.1% Construction Revenue¹ 306.1 365.0 -16.1% 940.5 820.3 14.7% Subtotal (a') 3,078.7 1,886.8 63.2% 8,258.3 6,716.8 23.0%
Generation Generation Sale (ACR+ACL) 126.7 119.6 5.9% 502.1 504.9 -0.6% Short-Term - 24.3 - 89.5 43.7 104.7% Others 2.6 4.6 -43.9% 9.9 10.0 -0.9% Subtotal (b) 129.2 148.5 -13.0% 601.6 558.7 7.7%Commercialization and Services
Energy Sales 214.7 121.8 76.3% 862.0 566.5 52.2%Services 6.4 14.2 -54.9% 37.2 35.2 5.8%Subtotal (c) 221.1 135.9 62.6% 899.2 601.7 49.5%
Others and Eliminations (d) (134.3) (105.2) 27.6% (528.7) (454.8) 16.2%Total w/out construction revenue (a+b+c+d) 2,988.6 1,701.0 75.7% 8,289.9 6,602.0 25.6%Total (a'+b+c+d) 3,294.7 2,066.0 59.5% 9,230.4 7,422.3 24.4%
¹ The subsidiary Light SESA counts revenues and costs, with zero margin, related to services of construction or improvement in infrastructure used in services of electricity distribution.
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In 2014, , excluding revenue from construction and the booking of CVA, net revenue came to R$7,270.0 million in
2014, 10.1% higher than in 2013.
Distribution
Net revenue from distribution totaled R$3,078.7 million in 4Q14, an increase of 63.2% in relation to 4Q13. Excluding
revenue from construction, net revenue came to R$2,772.6 million in 4Q14, 82.2% up on the same period last year.
This result can be explained by: (i) the R$1,019.8 million recognition of CVA balance in the distributor’s net revenue
as of December 20144 (excluding this effect, net revenue grew 15.2% in the quarter); (ii) the 257.2% increase in
unbilled energy, provisioned for in accordance with the billing scale, due to high temperatures in December 2014;
(iii) the average tariff adjustment of 19.23% as of November 7, 2014; (iv) the 2.5% upturn in energy in the quarter.
Revenue from demand surplus and exceeding reactive energy totaled R$13.0 million this quarter and revenue from
the tariff difference related to the special treatment of non-technical losses in the concession area amounted to
R$66.4 million, both of which treated as special obligations. Although they are billed, they have not been included in
net revenue since the last tariff revision in November 2013. The distribution market consists mostly of the
residential and commercial segments, which together accounted for 61.8% of 4Q14 energy consumption and 73.6%
of sales revenue.
4 On December 10, 2014, a fourth amendment was signed to the concession contract for distribution by the subsidiary Light SESA, which ensured the right and duty that the remaining balances of any insufficiency or reimbursement of the tariff at the end of the concession will be added or deducted from the compensation amount, which allowed for the recognition of the balances of these regulatory assets and liabilities.
17
Excluding revenue from construction, net revenue from distribution came to R$7,317.8 million in 2014, an increase
of 24.1% over 2013 explained by: (i) the recognition of CVA balance in the distributor’s net revenue as of December
(excluding this effect, net revenue grew 6.8% in 2014); (ii) the increase in unbilled energy; (iii) the annual tariff
adjustment as of November 7, 2014; (iv) the 3.0% upturn in energy consumption in the year. In 2014, revenue from
surplus demand and excess reactive energy totaled R$50.2 million, while revenue from the tariff difference related to
the special treatment of non-technical losses in the concession area amounted to R$186.5 million.
Generation
Net revenue from generation totaled R$129.2 million in 4Q14, 13.0% lower than the R$148.5 million recorded in
4Q13. This reduction is explained by the decreased availability of energy for sale, in view of a larger deficit in GSF in
relation to the same period in 2013. As a result, 41.4 GWh had to be purchased on the spot market in order to fulfill
the contracts entered into in 4Q14, while in 4Q13 the generator recorded sales, net of purchases, of 113.4 GWh.
The average sale price on the free market, net of taxes, was R$109.2/MWh in 4Q14, 3.2% higher than the
R$106.1/MWh recorded in 4Q13 (weighted by the free and captive markets). After the termination of contracts in
the regulated market in December 2013, the trading company became responsible for the sale to end clients.
In 2014, net revenue from generation totaled R$601.6 million, an upturn of 7.7% over 2013, explained by the higher
availability of energy sold on the spot market in the first quarter of 2014 for an average price of R$658.3/MWh.
Commercialization and Services
Net revenue from commercialization and services stood at R$221.1 million in 4Q14, 62.6% up from 4Q13.
In 4Q14, net revenue from energy resales increased by 76.3% over 4Q13, fueled by the 32.8% year-on-year upturn in
sales volume in 4Q14 versus 4Q13, due to the reallocation of Light Energia’s terminated contracts, as the sale to end
clients started to be performed by the trading company. The average sale price, net of taxes, was R$158.1/MWh in
4Q14, versus R$118.8/MWh in 4Q13.
2014 net revenue totaled 899.2 million, 49.5% higher than in 2013, due to the substantial period increase in energy
sales volume.
18
3.2 Costs and Expenses
Consolidated
In the fourth quarter of 2014, operating costs and expenses totaled R$2,611.6 million, 43.5% up year-on-year.
Excluding construction costs, consolidated costs and expenses climbed by 58.5% in relation to 4Q13, mainly due to
the higher volume of energy purchased by the distribution, generation and trading companies.
In 2014, consolidated operating costs and expenses, excluding construction costs, came to R$7,029.6 million, 32.9%
more than in 2013.
Distribution
Costs and Expenses (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%
Distribution (2,446.3) (1,745.4) 40.2% (7,364.7) (5,814.3) 26.7%Distribution w/out Construction Revenue (2,140.2) (1,380.4) 55.0% (6,424.2) (4,994.1) 28.6%
Generation (90.8) (41.3) 119.8% (302.0) (164.4) 83.7%Commercialization (205.3) (133.1) 54.2% (821.0) (575.4) 42.7%Others and Eliminations 130.8 100.1 30.7% 517.6 443.2 16.8%
Consolidated w/out Construction Revenue (2,305.4) (1,454.7) 58.5% (7,029.6) (5,290.6) 32.9%Consolidated (2,611.6) (1,819.7) 43.5% (7,970.1) (6,110.9) 30.4%
Costs and Expenses (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%
Non-Manageable Costs and Expenses (1,747.6) (1,126.5) 55.1% (5,052.2) (3,753.3) 34.6%Energy Purchase costs (1,716.4) (1,086.8) 57.9% (4,887.8) (3,846.1) 27.1%Costs with Charges and Transmission (145.2) (129.2) 12.4% (565.4) (535.8) 5.5%CDE Funds - (3.4) - - 303.4 -Others (Mandatory Costs) (3.2) (3.7) -13.6% (12.9) (17.4) -25.9%Credit PIS/COFINS on purchase 117.2 96.5 21.4% 413.8 342.6 20.8%
Manageable Costs and Expenses (392.6) (253.8) 54.7% (1,372.0) (1,240.8) 10.6%PMSO (191.2) (214.1) -10.7% (761.4) (782.9) -2.7% Personnel (57.9) (82.1) -29.4% (262.1) (286.0) -8.3% Material (2.9) (3.9) -25.5% (16.0) (15.5) 3.0% Outsourced Services (113.7) (114.8) -1.0% (405.6) (409.2) -0.9% Others (16.7) (13.3) 25.6% (77.7) (72.2) 7.6%
Provisions - Contingencies (50.0) (13.9) 260.6% (88.3) (52.1) 69.4% Provisions - PCLD (33.8) (43.3) -22.1% (125.0) (157.9) -20.8%
Depreciation and Amortization (93.5) (84.7) 10.4% (356.6) (335.2) 6.4%Other Operacional/Revenues Expenses (24.0) 102.2 - (40.7) 87.3 -
Total costs w/out Construction Revenue (2,140.2) (1,380.4) 55.0% (6,424.2) (4,994.1) 28.6%Construction Revenue (306.1) (365.0) -16.1% (940.5) (820.3) 14.7%Total Costs (2,446.3) (1,745.4) 40.2% (7,364.7) (5,814.3) 26.7%
19
In 4Q14, distribution costs and expenses moved up by 40.2% over 4Q13. Excluding construction costs, total costs and
expenses grew by 55.0% from 4Q13. In 2014, distribution costs and expenses moved up by 26.7%, while total costs
and expenses, excluding construction costs, increased by 28.6%.
Non-Manageable Costs and Expenses
In 4Q14, non-manageable costs and expenses came to R$1,747.6 million, 55.1% higher than in the same period in
2013, chiefly due to the increases of 57.9% in costs with energy
purchases and 12.4% in expenses related to charges and transmission.
The increase in purchased energy costs in 4Q14 was a reflection of: (i)
higher costs associated with hydrological risk resulting from quotas,
due to larger deficit in GSF; (ii) contracting through the A-1 Auction, in
December 2013, and the A-0 Auction, in April 2014, at R$
177.22/MWh and R$ 268.33/MWh, respectively, higher than the
prices covered by the tariff; (iii) annual contractual adjustments; (iv)
the increase in the average difference settlement price (PLD) from
R$333.3/MWh in 4Q13 to R$727.5/MWh in 4Q14, which resulted in
higher expenses with Availability Contracts, due to thermal plant
dispatch by the National System Operator (ONS) as a result of
depleted hydro plant reservoirs. Due to adverse hydrological
conditions, in April 2014, Conta-ACR (“Captive Market Account”) was
created, aiming to cover—partially or fully—the costs incurred by
energy distribution companies in the period from February to
December 2014 arising from involuntary exposure to the spot market
and thermal power acquisition linked to Availabilities Contract for Sale
of Electricity in the Regulated Environment (CCEAR-D). Since the funds
provided under the Account were sufficient for settlements only until
October 2014, settlements related to the November and December
2014, which in Light SESA’s case total R$471 million, were postponed
until March 31, 2015. A new disbursement of funds under the Account is being negotiated by the Government.
20
Costs with charges and transmission climbed by 12.4% in 4Q14, mainly due to the 63.1% upturn in energy
transmission expenses as a result of higher volumes contracted with the basic network, together with the increase in
the network usage charge.
The average purchased energy cost, excluding spot market purchases, amounted to R$163.4/MWh in 4Q14, 29.6%
more than the R$126.0/MWh recorded in 4Q13. Including spot market purchases, the average purchased energy
cost came to R$239.7/MWh in 4Q14, higher than the 4Q13 average of R$131.7/MWh. The following table gives a
breakdown of non-manageable costs:
In
2014, the 27.1% increase in purchased energy costs resulted from: (i) higher costs associated with hydrological risk
resulting from quotas; (ii) contracting at auctions for higher amounts than the prices covered by the tariff; (iii) annual
contractual adjustments; (iv) the increase in the average difference settlement price (PLD) from R$272.3/MWh in
2013 to R$690.0/MWh in 2014.
Costs with charges and transmission climbed by 5.5% in 2014, primarily due to the 44.8% surge in energy
transmission expenses as a result of higher volumes contracted with the basic network, together with the increase in
the network usage charge.
Manageable Costs and Expenses
Non-Manageable Costs and Expenses (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%
Energy Purchase costs (1,716.4) (1,086.8) 57.9% (4,887.8) (3,846.1) 27.1%Itaipu (195.6) (172.5) 13.4% (711.6) (654.7) 8.7%TPP Norte Fluminense (298.9) (279.0) 7.1% (1,139.9) (1,089.0) 4.7%Short-Term Energy (Spot) (809.0) (108.7) 644.5% (2,397.4) (443.1) 441.0% Risco Hidrológico (319.6) (0.6) 54805.8% (517.7) (102.6) 404.5% Exposição das Cotas - - - - (160.4) - Demais (489.5) (108.1) 352.8% (1,879.7) (180.1) 943.8%Energy auction (605.0) (498.5) 21.4% (2,424.2) (1,827.0) 32.7% Availabilities Contracts (269.3) (203.0) 32.7% (1,327.0) (870.2) 52.5% Others (335.7) (295.5) 13.6% (1,097.2) (956.8) 14.7%CDE Funds 99.6 27.3 264.9% 1,647.5 319.6 415.5% Hydrological risk 46.0 27.3 68.4% 82.8 159.2 -48.0% Quotas Exposure 81.1 - - 1,335.9 160.4 732.8% Availabilities Contracts 43.1 - - 312.2 - - CONER (Power Reserve) (70.6) - - (83.4) - -Other Credits 92.5 (55.4) - 137.9 (151.9) -
Costs with Charges and Transmission (145.2) (129.2) 12.4% (565.4) (535.8) 5.5% System Service Charge (ESS) (23.0) (41.6) -44.7% (95.1) (320.5) -70.3% CDE - ESS 13.4 9.1 47.6% 13.4 178.0 -92.5%
Transported Energy (93.6) (57.4) 63.1% (315.1) (217.7) 44.8% Other Charges (41.9) (39.3) 6.8% (168.5) (175.7) -4.1%CDE FundsOthers (Mandatory Costs) (3.2) (3.7) - (12.9) (17.4) -Credit PIS / COFINS on purchase 117.2 96.5 21.4% 413.8 342.6 20.8%Total (1,747.6) (1,126.5) 55.1% (5,052.2) (3,753.3) 34.6%
21
In 4Q14, manageable operating costs and expenses, comprising personnel, materials, outsourced services,
provisions, depreciation, other operating revenue/expenses and others, totaled R$392.6 million, 54.7% up from
4Q13.
Costs and expenses from personnel, materials, outsourced services and others (PMSO) totaled R$191.2 million in
4Q14, 10.7% less than in the same period last year, mainly due to the 29.4% reduction in the personnel line, partially
offset by the 25.6% in the others line. This 29.4% reduction in the personnel line was primarily due to: (i) the higher
volume invested in labor capitalization in the quarter, and (ii) recognition of bonus payments to the management in
December 2013. In 4Q14, costs and expenses from materials and outsourced services remained in line with 4Q13.
The 25.6% upturn in the others line can be explained by higher own electricity consumption, expenses with
advertising campaigns to raise awareness about efficient energy use and with cultural projects.
The provisions line totaled R$50.0 million in 4Q14, 260.6% higher than in 4Q13, mainly driven by provisions for risks
related to civil lawsuits amounting to R$39.0 million, partially offset by the 22.1% reduction in provisions for past
due accounts (PCLD), from R$43.3 million in 4Q13 to R$33.8 million in this quarter.
The depreciation and amortization line increased by 10.4% in 4Q14 over 4Q13, due to higher investments as a result
of the incorporation of more assets into the network in 2014.
In 4Q14, the other operating revenue/expenses line totaled expenses of R$24.0 million, versus revenue of R$102.2
million in 4Q13, reflecting the recognition of R$124.8 million related to the New Repositioning Value (VNR) which
took place in the 2013 Tariff Revision.
22
Generation
Light Energia’s 4Q14 costs and expenses amounted to R$90.8 million, 119.8% above the figure recorded in 4Q13, due
to the higher volume of spot market energy purchases as a result of the low GSF values in the quarter.
In 4Q14, costs and expenses were broken down as follows: personnel (6.9%), materials and outsourced services
(6.1%), CUSD/CUST/purchased energy (63.7%), and depreciation and others (23.3%). PMSO per MWh generated by
Light Energia’s plants in the quarter came to R$15.7/MWh, versus R$16.8/MWh in 4Q13.
In 2014, costs and expenses were broken down as follows: personnel (8.0%), materials and outsourced services
(6.0%), CUSD/CUST/ purchased energy (58.7%), and depreciation and others (27.3%). PMSO per MWh generated by
Light Energia’s plants came to R$14.6/MWh, versus R$15.4/MWh in 2013.
Commercialization and Services
Costs and expenses totaled R$205.3 million in 4Q14, 54.2% higher than in the fourth quarter of 2013, as a result of
the increase in the materials and outsourced services line, due to purchase of energy and carbon dioxide for co-
generation project, and the 49.4% upturn in costs from energy purchased for resale, due to the higher volume of
energy traded and purchase prices in 4Q14.
In 2014, costs and expenses increased by 42.7% over 2013, mainly due to the increase in energy purchased for sale.
Operating Costs and Expenses (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%Personnel (6.3) (6.4) -1.8% (24.0) (23.7) 1.4%Material and Outsourced Services (5.5) (4.8) 14.5% (18.3) (18.5) -1.5%CUSD / CUST / Purchased Energy (57.8) (7.4) 682.2% (177.3) (34.4) 415.4%Depreciation (13.7) (13.5) 1.3% (54.1) (55.4) -2.4%Other Operacional/Revenues Expenses (0.3) - - (0.4) (0.3) 52.8%Others (includes provisions) (7.2) (9.2) -21.8% (28.0) (32.1) -12.8%Total (90.8) (41.3) 119.8% (302.0) (164.4) 83.7%
Operating Costs and Expenses (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%Personnel (2.8) (2.2) 30.4% (9.8) (8.2) 19.6%Material and Outsourced Services (13.4) (0.8) 1633.2% (30.3) (18.0) 68.0%Purchased Energy (184.0) (123.2) 49.4% (764.3) (540.9) 41.3%Depreciation (1.3) (0.0) 2687.5% (4.1) (0.2) 2234.2%Other Operacional/Revenues Expenses (0.2) (5.7) -96.9% (7.2) (5.7) 25.3%Others (includes provisions) (3.5) (1.2) 192.6% (5.3) (2.3) 127.1%Total (205.3) (133.1) 54.2% (821.0) (575.4) 42.7%
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3.3 EBITDA5
Consolidated
Consolidated EBITDA totaled R$933.9 million in 4Q14, 173.3% above the consolidated EBITDA reported in 4Q13. This
upturn was mainly driven by the distribution and generation segments, with respective increases of 221.0% and
63.7%. The EBITDA margin expanded from 20.1% in 4Q13 to 31.2% in 4Q14.
The 4Q14 EBITDA can be primarily explained by the booking of CVA in the distribution company’s revenue and the
equity income gain of R$143.2 million in the generation company, due to the dilution of Light Energia’s stake in
Renova Energia, from 21.9% to 15.9% of the total capital stock.
Adjusting the 4Q14 EBITDA (i) for the R$502.8 million CVA balance until September 30, 2014, and (ii) the equity
income gain of R$143.2 million, adjusted EBITDA would total R$288.0 million in 4Q14, a decrease of 5.5% in
comparison with the 4Q13 EBITDA of R$304.7 million, also adjusted for (i) CVA, and (ii) the recognition totaling
R$124.8 million related to the New Repositioning Value (VNR) in 2013.
Adjusting the 2014
EBITDA (i) for the
R$334.2 million CVA balance until December 31, 2014, and (ii) the equity income gain of R$143.2 million, adjusted
EBITDA would total R$1332.4 million in 2014, a decrease of 14.1% in comparison with the 2013 EBITDA of R$1.551,1
million, also adjusted for (i) CVA, and (ii) the recognition totaling R$124.8 million related to the New Repositioning
Value (VNR) in 2013.
5 EBITDA is not a recognized measure under BRGAAP or IFRS. It is used by the Company as an additional measure of performance of its operations, and it should not be considered individually or as an alternative to net income or operating income, as a measure of operating performance, or as an indicator of liquidity. The EBITDA presented is calculated in accordance with CVM Instruction 527/2012 and represents net income +income and social contribution tax + net financial expenses + depreciation and amortization. The reconciliation is shown on Exhibit II..
Consolidated EBITDA (R$ MN) 4Q14 4Q13 Var.% 2014 2013 Var.%
Distribution 725.9 226.1 221.0% 1,250.2 1,237.7 1.0%Generation 196.0 119.8 63.7% 491.3 444.1 10.6%Commercialization 17.0 2.8 518.0% 88.8 26.3 237.5%Others and eliminations (5.1) (6.9) -26.9% (20.5) (11.3) -Total 933.9 341.7 173.3% 1,809.7 1,696.8 6.7%EBITDA Margin (%) 31.2% 20.1% 11.2 p.p. 21.8% 25.7% -3.9 p.p.Regulatory Assets and Liabilities - 87.8 - - (21.0) -Adjusted EBITDA 933.9 429.5 117.4% 1,809.7 1,675.8 8.0%
R$ MM 4Q14 4Q13 Var.% 2014 2013 Var.%
Reported EBITDA 933.9 341.0 173.9% 1,809.7 1,696.8 6.7%CVA Adjustment (502.8) 87.8 - (334.2) (21.0) -EBITDA Adjusted by CVA 431.1 428.8 0.5% 1,475.5 1,675.8 -12.0%Equity Pikup Adjustment (143.2) - - (143.2) - -VNR Adjustment - (124.8) - - (124.8) -Adjusted EBITDA 288.0 304.7 -5.5% 1,332.4 1,551.1 -14.1%
24
This decrease in the EBITDA can be explained by the water crisis, which impacted the generation company, as well as
by the third tariff revision cycle, with a reduction in the distribution company’s regulatory WACC.
Distribution
The distribution company’s EBITDA totaled R$725.9 million in 4Q14, 221.0% up year-on-year, mainly due to the
booking of CVA in the net revenue.
In 2014, the distribution company’s EBITDA was R$1,250.2 million, moving up by 1.0% in relation to 2013, impacted
by the booking of CVA. The EBITDA margin stood at 21.8% in 2014, 3.9 p.p. down from 2013.
Adjusting the distribution company’s EBITDA for the R$502.8 million CVA balance until September 30, 2014, and the
R$334.2 million CVA balance until December 31, 2014, Light SESA’s EBITDA would come to R$223.2 million in 4Q14
and R$916.0 million in 2014, posting an increase of 18.0% in relation to the R$189.2 million recorded in 4Q13 and a
25
reduction of 16.1% in relation to the R$1,091.9 million recorded in 2013, adjusted for the CVA and the booking of
R$124.8 million referring to the New Positioning Value (VNR) in 2013. The upturn in the 4Q14 EBITDA can be
explained by the reduction in Light SESA’s costs and expenses from personnel, materials, outsourced services and
others (PMSO) in relation to 4Q13, while the downturn in the 2014 EBITDA can be chiefly explained by the third tariff
revision cycle, with a reduction in the regulatory WACC.
Generation
In 4Q14, Light Energia’s EBITDA totaled R$196.0 million, climbing by 63.7% from the same quarter in 2013, due to
the equity income gain of R$143.2 million from the dilution of Light Energia’s stake in Renova Energia. In 4Q14, the
EBITDA margin stood at 151.7%, 71.0 p.p. higher than in 4Q13.
When adjusted for the equity income gain from the dilution in Renova Energia, the generation company’s EBITDA
came to R$52.1 million in 4Q14, a decrease of 56.5% from 4Q13, primarily explained by the lower GSF values in the
period.
In 2014, EBITDA totaled R$491.3 million, 10.6% up on 2013, accompanied by an EBITDA margin of 81.7%, 2.2 p.p. up
in relation to 2013.
When adjusted for the equity income gain, the generation company’s EBITDA came to R$353.7 million in 2014, a
reduction of 20.4% over 2013, which can also be explained by the lower GSF values in the period.
Commercialization and Services
EBITDA from commercialization and services totaled R$17.0 million in 4Q14, a surge of 518.0% in relation to
4Q13, driven by the growth of 32.8% in energy sales volume and higher prices in 4Q14.
In 2014, EBITDA came to R$82.1 million, 212.3% higher than in 2013.
EBITDA margin stood at 7.7% in 4Q14, 5.7 p.p. up from 4Q13, while the 2014 EBITDA margin stood at 9.1%, 4.8 p.p.
above the margin recorded in 2013.
26
3.4 Consolidated Financial Result
The 4Q14 financial result was a negative R$112.3 million, a 14.6% deterioration over the negative R$98.0 million
reported in the fourth quarter of 2013.
Financial revenue totaled R$167.6 million in 4Q14, 38.1% above the figure reported in the same period in 2013,
mainly driven by other financial revenues, which totaled R$77.1 million in 4Q14, an increase of 175.5% when
compared to 4Q13, mainly explained by the restatement of the distribution company’s asset base, in the amount of
R$68.4 milion, in line with the IGP-M inflation index, which serves as the basis for the New Repositioning Value
(VNR), and the restatement of R$37,0 million related to judicial deposits fully redeemed in December 2014.
Fourth-quarter financial expenses came to R$279.9 million, 27.6% higher than in 4Q13, primarily explained by the
increase in the benchmark interest rate, whose impact reflected on: (i) the 68.0% upturn in the currency and foreign
exchange variation line due to the devaluation of the Real against the Dollar, offset by the positive swap result, and
(ii) the 42.1% increase in debt charges.
In 2014, the financial result was a negative R$459.8 million, a 1.3% deterioration over 2013.
Financial Result (R$ MM) 4Q14 4Q13 Var.% 2014 2013 Var.%Financial Revenues 167.6 121.4 38.1% 360.5 338.2 6.6%
Income from financial investments 26.1 40.5 -35.5% 110.9 95.1 16.6%Net Swap Operations 46.2 35.2 31.3% 21.6 81.0 -73.3%Moratory Increase / Debts Penalty 18.2 17.7 2.7% 76.6 78.3 -2.2%Others Financial Revenues 77.1 28.0 175.5% 151.4 83.8 80.8%
Financial Expenses (279.9) (219.4) 27.6% (820.3) (791.9) 3.6%Debt Expenses (160.5) (112.9) 42.1% (563.3) (393.0) 43.3%Monetary and Exchange variation (99.2) (59.1) 68.0% (157.1) (138.6) 13.3%Restatement of provision for contingencies (3.3) 27.8 - (19.0) 0.5 -Restatement of R&D/PEE/FNDCT (3.7) (1.9) 93.3% (11.9) (11.2) 6.3%Interest and fines on taxes (1.3) (2.0) -34.8% (2.1) (9.1) -77.0%Installment payment - fines and interest rates Law 11.941/09 (REFIS) (3.0) 1.5 - (9.1) (7.2) 26.4%DIC/FIC Compensation (5.0) (3.6) 39.0% (33.9) (48.6) -30.1%Other Financial Expenses (Includes IOF) (3.9) (38.3) -89.7% (20.3) (62.7) -67.6%Braslight (private pension fund) - (31.0) - (3.5) (122.0) -97.1%
Charges - (15.5) - (3.5) (62.3) -94.3%Monetary and Exchange Variation - (15.4) - - (59.7) -
Total (112.3) (98.0) 14.6% (459.8) (453.8) 1.3%
27
3.5 Debt
R$ MM Short Term % Long Term % Total %
Brazilian Currency 455.2 6.9% 4,667.3 70.9% 5,122.6 77.8%Light SESA 411.5 6.3% 4,143.5 62.9% 4,555.0 69.2%
Debenture 4th Issue 0.0 0.0% 0.0 0.0% 0.0 0.0%Debenture 8th Issue 43.2 0.7% 430.5 6.5% 473.7 7.2%Debenture 9th Issue - series A 14.8 0.2% 996.0 15.1% 1,010.7 15.4%Debenture 9th Issue - series B 4.5 0.1% 650.6 9.9% 655.1 10.0%Debenture 10th Issue 13.3 0.2% 744.8 11.3% 758.1 11.5%Eletrobras 1.4 0.0% 4.7 0.1% 6.1 0.1%CCB Bradesco 80.9 1.2% 150.0 2.3% 230.9 3.5%BNDES (CAPEX) 236.5 3.6% 820.6 12.5% 1,057.0 16.1%BNDES Olympics 9.4 0.1% 55.3 0.8% 64.7 1.0%Banco do Brasil 6.5 0.1% 150.0 2.3% 156.5 2.4%Others 1.0 0.0% 141.1 2.1% 142.1 2.2%
Light Energia 32.0 0.5% 472.9 7.2% 505.0 7.7%Debenture 2nd Issue 19.1 0.3% 423.9 6.4% 443.0 6.7%Debenture 3rd Issue 2.7 0.0% 27.4 0.4% 30.1 0.5%BNDES (CAPEX) 10.2 0.2% 21.7 0.3% 31.9 0.5%Others 0.0 0.0% - - 0.0 0.0%
Light ESCO 11.7 0.2% 50.9 0.8% 62.6 1.0%BNDES - PROESCO 11.7 0.2% 50.9 0.8% 62.6 1.0%
Foreing Currency 124.6 1.9% 1,335.1 20.3% 1,459.7 22.2%Light SESA 122.9 1.9% 826.4 12.6% 949.2 14.4%
National Treasury 1.5 0.0% 34.8 0.5% 36.4 0.6%Merril Lynch 51.4 0.8% 47.8 0.7% 99.2 1.5%Citibank 1.0 0.0% 531.2 8.1% 532.2 8.1%Bank Tokyo - Mitsubishi 0.3 0.0% 212.5 3.2% 212.8 3.2%Itaú
Light Energia 1.8 0.0% 508.8 7.7% 510.5 7.8%Citibank 1.0 0.0% 212.5 3.2% 213.5 3.2%
BNPItaú
Gross Debt 579.8 8.8% 6,002.5 91.2% 6,582.3 100.0%Cash 505.8Net Debt (a) 6,076.5
R$ MM Dec-13 Sep-14 Dec-14 % sep 13 % jun 14Net Debt 4,024.9 5,543.6 6,076.5 51.0% 9.6%Braslight 1,224.7 - 31.98 - - Net Debt + Braslight 5,249.5 5,543.6 6,108.4 16.4% 10.2%
28
The Company closed 4Q14 with gross debt of R$6,582.3 million, 4.7% less than at the end of the previous
quarter. In relation to December 2013, gross debt increased
by 13.2%, or R$767.6 million, due to period funding as
follows: (i) the disbursement of R$418.0 million from the
BNDES to Light SESA in the last 12 months; (ii) a foreign-
currency loan of R$235.8 million from Citibank to Light SESA,
hedged by a Real swap transaction (February 2014); (iii) the
disbursement of FINEP resources totaling R$136.0 million in
May 2014, at 4% p.a.; (iv) Light SESA’s 10th debenture issue,
totaling R$750.0 million, with Banco do Brasil, Itaú, and
Bradesco, at 115% of the CDI interbank rate, in May 2014; (v)
a foreign-currency loan of R$156 million from BNP Paribas to
Light Energia, hedged by a Real swap transaction (October 2014); (vi) a foreign-currency loan of R$51
million from Bank Tokyo-Mitsubishi to Light SESA,
hedged by a Real swap transaction (November
2014); (vii) a foreign-currency loan of R$200
million from Banco Itaú, of which R$68 million to
Light SESA and R$132 million to Light Energia,
hedged by a Real swap transaction (December
2014). These funds were used for investments
and, especially, working capital needs. In 4Q14,
there was also the settlement of the 1st debenture
issue of Light Energia and 7th debenture issue of
Light SESA, totaling R$832 million.
The net debt/EBITDA ratio moved up from
3.39x in September 2014 to 3.70x in December
2014, while the EBITDA/interest expense ratio
stood at 2,69x in December 2014. The Company
has covenants for these indicators of 3.75x and
2.5x, respectively, although non-compliance is
only deemed to occur if the limits determined
for the indicators are not respected for two
consecutive or four alternate quarters.
Dec-14 Sep-14 2013
Gross Debt 6,582.3 6,905.7 5,815.3+ Swap (194.5) (163.3) (135.1)+ Pension Fund 31.98 0.0 1,224.7- Cash 505.8 1,362.1 1,790.4= Net Debt for covenants (a) 5,913.9 5,380.3 5,114.4
EBITDA (12 months) 1,809.7 1,217.5 1,696.8+ Provision 216.3 187.7 210.9- Other Operational Revenues/Expenses -41.3 74.7 81.3+ Regulatory Assets and Liabilities (CVA) (334.2) 256.4 (21.0)- Financial CVA - 0.0 5.1= EBITDA for covenants (b) 1,596.5 1,586.9 1,800.3
3.70 3.39 2.84
Covenants Multiple R$ MN
Net Debt / EBITDA (a/b)
29
The Company’s debt has an average term to maturity of 4.4 years and the average cost of Real-
denominated debt was 11.2% p.a. At the close of 4Q14, 22.2% of total debt was denominated in foreign
currency, but, considering the FX hedge horizon, only 0.45% of this total was exposed to foreign currency
risk. Light’s FX hedge policy consists of protecting cash flow from foreign-currency-denominated debt
falling due within the next 24 months (principal and interest) through the use of non-cash swap
instruments with premier financial institutions. Funding via Central Bank Resolution 4131, from Merrill
Lynch, BNP, Citibank, Bank Tokyo-Mitsubishi and Itaú, was contracted with swaps for the entire term of
the debt.
30
3.6 Net Income
Light reported a net income of R$520.1 million in 4Q14, 303.2% up over the R$129.0 million reported in 4Q13. This
result was mainly due to the recognition of CVA balance in Light SESA and the dilution of Light Energia’s stake in
Renova Energia.
In 2014, net income was R$662.8 million, 12.9% up over 2013.
Adjusting the 4Q14 net income (i) for the R$331.8 million CVA balance until September 30, 2014, after taxes, and (ii)
the equity income gain of R$143.2 million, net income would total R$45.1 million in 4Q14, a decrease of 56.8% when
compared to the 4Q13 net income of R$104.6 million, also adjusted for (i) CVA, and (ii) the recognition totaling
R$82.3 million related to the New Repositioning Value (VNR) in 2013.
Adjusting the 2014 net income (i) for the R$220.5 million CVA balance until December 31, 2014, after taxes, and (ii)
the equity income gain of R$143.2 million, net income would total R$299.1 million in 2014, a decrease of 39.1%
R$ MN 4Q14 4Q13 Var.% 2014 2013 Var.%
Consolidated Net Income 520.1 129.0 303.2% 662.8 587.3 12.9%Adjusted CVA (331.8) 57.9 - (220.5) (13.9) -Net Income Adjusted by CVA 188.3 186.9 0.7% 442.3 573.5 -22.9%Equity Pikup Adjustment (143.2) - - (143.2) - -VNR Adjustment - (82.3) - - (82.3) -Adjusted Net Income 45.1 104.6 -56.8% 299.1 491.1 -39.1%
31
when compared to the 2013 net income of R$491.1 million, also adjusted for (i) CVA, and (ii) the recognition totaling
R$82.3 million related to the New Repositioning Value (VNR) in 2013.
32
3.7 Investments
In
2014, Light invested R$1,054.0 million, 24.7% more than in 2013.
The distribution segment absorbed the lion’s share of R$932.1 million (representing 88.4% of the total), 30.8% up on
2013. Of this total: (i) R$548.9 million went to the development and expansion of distribution networks in order to
keep pace with market growth, strengthen the network and improve quality, including R$71.9 million for specific
investments in the World Cup and the Olympic Games; (ii) R$359.7 million went to the energy loss project (network
protection, electronic meters, and fraud regularization).
Commercialization and energy efficiency investments fell by 74.1% over 2013 to R$15.8 million in 2014, due to the
completion of a major co-generation project in April 2014.
Generation Capacity Expansion Projects
One of the pillars of Light’s Strategic Plan is to increase the share of energy generation in its results. With this in
mind, the Company has announced several projects to boost installed generating capacity, which now totals 971
MW. With the incorporation of the scheduled expansion projects, the position on December 31 was as follows:
CAPEX (R$MN) 2014 Partic. % 2013 Partic. % Var %
Distribution 932.1 88.4% 712.6 84.3% 30.8%Network reinforcement and expansion 548.9 58.9% 498.6 70.0% 10.1%Losses 359.7 38.6% 192.1 27.0% 87.2%Others 23.4 2.5% 21.8 3.1% 7.3%
Administration 57.0 5.4% 40.2 4.8% 41.7%Commercial./ Energy Efficiency 15.8 1.5% 61.0 7.2% -74.1%Generation 49.2 4.7% 31.3 3.7% 57.4%Total 1054.0 100.0% 845.0 100.0% 24.7%
33
The fourth quarter of 2014
was marked by the following events related to projects for expanding Light’s generating capacity:
Lajes SHP
Existing Power PlantsInstalled Capacity (MW)*
Assured Energy
(MWm)*
Operation Start
Act DateConcession / Authorization
Expiration Date
Fontes Nova 132 104 1942 jun-96 2026Nilo Peçanha 380 335 1953 jun-96 2026Pereira Passos 100 51 1962 jun-96 2026Ilha dos Pombos 187 115 1924 jun-96 2026Santa Branca 56 32 1999 jun-96 2026Elevatórias - (87) - - -SHPP Paracambi¹ 13 10 2012 fev-01 2031Renova² 104 47 2008 dez-03 2033Total 971 607
New ProjectsInstalled Capacity (MW)*
Assured Energy
(MWm)*
Operation Start
SHPP Lajes³ 17 15 May-16Belo Monte4 280 114 jul-05Guanhães¹ 22 13 jul-05Dores de Guanhães 7 4 -Senhora do Pôrto 6 3 -Jacaré 5 3 -Fortuna II 5 3 -Renova² 295 145A-3 2011 35 17 jun-15A-5 2012 3 2 jan-17LER 2013 25 12 set-15A-5 2013 56 29 May-18A-5 2014 17 9 Jan-19PPA 64 35 2015/2016Free Market I 3 2 jan-16Free Market II 16 8 jan-17Free Market III 5 3 set-15Free Market IV** 54 23 -LER 2014 (Wind Power) 7 3 out-17LER 2014 (Solar Power) 8 2 out-17HYBRID-SOLAR 1 0 jan-16Total 614 287*Light's proportional Participation
¹ 51% Light² 21.86% da Light / Considera que Renova detém 60% da Chipley, que por sua vez détem 51% da Brasi l PCH³Previsão de geração média de 15 MWm42.49% Light
2051205220502031
**Including the exercise of the option by Cemig GT for an interest of up to 50% in the
2037
20502050
20512038
2048
203220322031
2047
20372051
2032
Current Generation Park
Generation Capacity Expansion Projects
Concession / Authorization Expiration Date
20262045
34
• This project comprises the construction of the Lajes SHP, with an installed generating capacity of 17 MW, in the
old powerhouse of the Fontes Velha power plant, which was decommissioned in 1989. A Special Purpose Entity
(SPE), called Lajes Energia S.A., a closely-held company and wholly-owned subsidiary of Light Energia S.A., was
created to implement, construct, operate, and maintain the SHP. The project will not involve substantial works
related to dams, but the construction of a water main from the valve house and adjustments to the power house. In
addition to generating electric power, the SHP will directly benefit water supply in the Metropolitan Region of Rio de
Janeiro by significantly improving the reliability and operational flexibility of the Lajes Complex.
The basic project has already been approved by Aneel. In June 2013, Aneel altered the public service exploration
regime to independent energy producer. As a result, the SHP obtained a 50% reduction in TUSD and TUST fees. The
E.P.C. (Engineering, Procurement, Construction) contract was signed in August 2014, triggering the beginning of the
field activities. Operational start-up is scheduled for the first half of 2016, given that the project has already been
granted an installation license.
Guanhães Energia
• In February 2012, Light Energia acquired a 51% interest on Guanhães Energia S.A. and Cemig acquired the other
49%. Guanhães is responsible for the implementation and exploration of the following SHPs: Dores de Guanhães (14
MW), Senhora do Porto (12 MW), Fortuna II (9 MW) and Jacaré (9 MW), all of which located on the Guanhães and
Corrente Grande Rivers, in the state of Minas Gerais, with a joint installed capacity of 44 MW.
The project has been impacted by geological and environmental problems which have postponed the start-up date.
Belo Monte Hydroelectric Power Plant
• In October 2011, Amazônia Energia, owned by Light (25.5%) and Cemig (74.5%), acquired 9.77% of Norte Energia,
the consortium responsible for building and operating the Belo Monte Hydroelectric Power Plant. Located on the
Xingu River in the state of Pará, Belo Monte is the largest 100% Brazilian hydro plant and the fourth largest in the
world. It has an installed capacity of 11,233 MW and assured energy of 4,571 MW, sufficient to supply around 18
million homes. The energy generated by the Pimental and Belo Monte sites will supply the National Integrated
System through a 2,100-kilometer transmission Line to be constructed between the states of Para and Minas Gerais.
The concession for the construction of this line is held by a consortium comprising Furnas, State Grid Brazil Holding
and Eletronorte.
In November, Norte Energia concluded the concreting of the columns at the Pimental site. At the Belo Monte site,
the efforts are currently focused on the civil works required for the descent of the turbines’ pre-distributor.
35
In December, the National Water Agency (ANA) issued the Resolution 2,046 allowing the filling of the reservoir in any
month of 2015, provided that the recommendations are observed, an important landmark for the beginning of
generation at the Complementary Power House in November 2015. By December 2014, 70% of the civil works had
been concluded.
Additionally, with respect to the reports in the press in late 2014 pointing to a potential delay in the plant’s entry into
operation, Norte Energia released two official press releases stating that:
i. The generation in the Main Powerhouse of the power plant and Belo Monte, responsible for 97% of all of the
energy from the hydroelectric power plant, will begin in March 2016, which is the date set in the concession
contract;
ii. The Complementary Powerhouse (233MW), at the Pimental site, responsible for 3% of the power generation of
the Belo Monte Hydroelectric Power Plant, will begin operating in November 2015;
iii. The Company is taking and will take all reasonable steps to not be burdened by acts outside of its governance, as
they are a matter of law, which the administration cannot forgo.
iv. Independent of the request made to ANEEL to consider the facts to be without responsibility, Norte Energia has
worked tirelessly to minimize the impact of third parties on the scheduled work, in order to minimize any adverse
effects for the country and its shareholders.
Renova Energia (“Renova”)
• In July 2014, the wind farms which won Energy Reserve Auction 2009 (LER 2009), with 294.4 MW of installed
capacity, began commercial operations. Since then, their energy output has been booked in accordance with the
provisions set forth in the commercial contract entered into between Renova and the Electric Energy
Commercialization Chamber (CCEE). It is worth emphasizing that, pursuant to the contract, since the wind farms had
been ready in June 2012, they had already received the revenue from the amount of energy sold at the auction.
In September 2014, the 1st issue of non-share-convertible debentures, with security interest and an additional
personal guarantee, in two series, for public distribution with restricted placement efforts, by Renova’s indirect
subsidiary, Renova Wind Participações SA, totaling R$146.0 million, was approved. These debentures will
complement long-term financing and will be issued as infrastructure debentures, since the projects were prioritized
by the decrees published by the Ministry of Mines and Energy (MME). The funds will be allocated to the Alto Sertão II
Complex, comprising LER 2010 LEN and A-3 2011, totaling 386.1 MW of installed capacity.
On October 27, 2014, Renova’s Board of Directors held a meeting to approve Renova’s partial capital increase
totaling one billion, five hundred and fifty million, two hundred and sixty-four thousand, nine hundred and eighty-
36
three reais and nineteen centavos (R$1,550,264,983.19) through the issue of eighty-seven million, one hundred and
ninety-six thousand, nine hundred and one (87,196,901) non-par registered common shares, at an issue price of
R$17.7789 per share. As a result, Light Energia’s interest in Renova was reduced from 21.9% to 15.9% of the total
capital stock and from 32.2% to 21.2% of the total common stock, with all shares in the controlling block being
maintained.
On October 31, 2014, Renova Energia, a subsidiary of Light Energia S.A., traded at the 2014 Reserve Energy Auction
(“LER 2014”) 150.4 MW of installed capacity, corresponding to average 42.7 MW wind and solar energy. The
agreements will have 20-year duration, and energy will start to be supplied in October 2017. 43.5 MW of installed
capacity were traded, with 20.9 MW average wind energy to be generated by three wind parks, located in the state
of Bahia, by the average amount of R$138.90/MWh (reference date of October 2014). In addition, 106.9 MW of
installed capacity were traded, with 21.8 MW average solar energy to be generated by four solar parks, also located
in the state of Bahia, by the average amount of R$220.30/MWh (reference date of October 2014).
37
4. Cash Flow
The Company closed 4Q14 with a cash position of R$401.1 million, 26.6% down year-on-year. This quarter, cash from
operating activities fell by 80.2%, chiefly due to the impact from the higher cost of energy purchases of the
distribution and generation companies. In addition, there was redemption of financial investments and new funding
operations for early settlement of debentures, investments and payment of debts and dividends.
5.
Corporate Governance
R$ MN 4Q14 4Q13 2014 2013Cash in the Beginning of the Period (1) 376.2 1,787.3 546.4 230.4
Net Income 520.1 129.0 662.8 587.3 Social Contributions & Income Tax 192.8 16.4 272.3 264.8 Net Income before Social Contributions & Income Tax 713.0 145.4 935.1 852.1 Provision for Delinquency 36.3 43.3 127.5 157.9 Depreciation and Amortization 108.6 98.3 414.8 390.9
Loss (gain) on intangible sales / Residual value of disposals fixed asset 0.9 14.1
11.2 23.3
Losses (gains) on financing exchange activities 99.2 59.1 157.1 138.6 Net Interests and Monetary Variations 161.9 118.8 567.6 407.5 Braslight - 31.0 3.5 122.0 Atualization / provisions reversal 40.3 (29.4) 81.6 26.8 Equity Pikup (142.1) 2.9 (134.6) 5.5 Financial Assets of the Concession (36.4) (141.1) (68.4) (168.8) Parcel A and Other Financial AssetsOthers (46.2) (35.2) (21.6) (81.0) Subtotal (178.7) 307.2 959.7 1,874.9 Working Capital 309.2 195.1 320.8 229.8 Contingencies (28.4) (30.0) (92.7) (88.3) Deferred Taxes 233.6 116.7 216.9 109.5 Braslight (0.2) (7.1) (3.5) (10.4) CDE fund 169.0 303.4 - - Others (45.5) (43.7) (65.1) (205.1) Taxes Paid (35.7) (13.1) (157.4) (101.2) Interest Paid (295.3) (180.4) (593.7) (389.8)
Cash from Operating Activities (2) 128.0 648.0 585.1 1,419.4 Finance Obtained 788.9 9.8 1,992.8 2,444.5 Dividends (364.8) (185.1) (364.8) (259.9) Loans and financing payments (1,084.1) (149.8) (1,389.6) (1,037.4) Contractual debt amortization with the pension plan - (28.3) (1,224.7) (113.1)
Financing Activities (3) (660.1) (353.4) (986.3) 1,034.1 Fixed Assets/Intangible/Financial Assets (289.2) (294.9) (832.5) (830.2) Inflow/Acquisitions on Investment (22.6) (16.0) (51.2) (90.6) Redemption of Investments - - 1,139.6 (1,216.7)
Investment Activities (4) 557.0 (1,535.5) 255.9 (2,137.5) Cash in the End of the Period (1+2+3+4) 401.1 546.4 401.1 546.4 Cash Generation (2+3+4) 25.0 (1,240.9) (145.3) 316.1
38
On December 31, 2014, the capital stock of Light S.A. comprised 203,934,060 common shares, 97,629,475 of which
outstanding.
The following chart shows Light’s current shareholding structure:
On October 30, 2014, the Company’s Management elected Oscar Rodríguez Herrero as a sitting member of the Board
of Directors following the resignation of Luiz Carlos da Silva Júnior Cantídio, to complete the remainder of the
Board’s mandate, i.e. until the Annual Shareholder’s Meeting to resolve on the financial statements for the fiscal
year ended December 31, 2015.
39
6. Capital Markets
Light’s shares have been listed in the BM&FBovespa’s Novo Mercado trading segment since July 2005, therefore
adhering to best corporate governance practices and the principles of transparency and equity, in addition to
granting special rights to minority shareholders. Light S.A.’s shares are included in the following indices: Ibovespa,
IGC (Corporate Governance Index), IEE (Electric Power Index), IBrX (Brazil Index), ISE (Corporate Sustainability Index),
ITAG (Special Tag Along Stock Index) and IDIV (Dividend Index). They are also traded on the U.S. over-the-counter
(OTC) market as Level 1 ADRs under the ticker LGSXY.
At the end of December 2014, Light S.A.’s shares (LIGT3) were priced at R$17.02. The Company’s market cap (no. of
shares x share price) closed the quarter at approximately R$3,471 million.
On
November 26, 2014, Light S.A. was included, for the eighth consecutive year, in the portfolio of the Corporate
Sustainability Index (ISE) of BM&FBovespa.
The charts below give a breakdown of the Company’s free float in December 2014.
The chart below shows the performance of Light’s stock from December 30, 2013 to March 5, 2015.
Daily Average 4Q14 4Q13 2014 2013
Number of shares traded (Thousand) 678 830 828 909Number of Transactions 3,548 2,989 3,456 3,168Traded Volume (R$ Million) 13.4 16.8 16.3 17.1Quotation per shares: (Closing)* R$ 17.02 R$ 20.09 R$ 17.02 R$ 20.09Share Valuing -17.7% 19.8% -15.3% 4.0%IEE Valuing -1.6% -2.9% 3.5% -8.8%Ibovespa Valuing -7.6% -1.6% -2.9% -15.5%*Ajusted by earnings.
BM&F BOVESPA (spot market) - LIGT3
40
Dividends
On December 17, 2014, the dividends approved at the Annual Shareholders’ Meeting held on April 24, 2014 were
paid, in the amount of three hundred sixty-four million, eight hundred thirty-eight thousand, thirty-three reais and
thirty-four centavos (R$364,838,033.34), with thirty-two million, eighteen thousand, seven hundred ninety-three
reais and fifty-three centavos (R$32,018,793.53) corresponding to the mandatory minimum dividends, and three
hundred thirty-two million, eight hundred nineteen thousand, two hundred thirty-nine reais and eighty-one centavos
(R$332,819,239.81) related to net income for fiscal year 2013. The net amount per share is R$1.789, without the
retention of withholding tax, pursuant to Article 10 of Law 9249/95. Shares have been traded ex-dividends as of April
25, 2014.
On March 6, 2015, the Board of Directors approved the proposal to distribute R$157,422,432.59, R$0.7719 per
share, in dividends, related to the results from the fiscal year ended December 31, 2014. This amount represents a
dividend yield of 5,8% and corresponds to a payout equivalent to the mandatory minimum of 25% of the net income
for the year adjusted for the legal reserve. In accordance with the Company’s Board of Directors criterion, such
distribution is consistent with the lack of predictability of the hydrological situation and the current condition of the
Brazilian electric sector. The proposal will be submitted for approval by the Annual Shareholders’ Meeting.
41
Dividends paid, dividend yield and payout
7. Recent Events
On February 5, 2015, the Extraordinary Shareholders’ Meeting and the Board of Directors’ Meeting of
the Company resolved on the election of members for the Board of Directors and Board of Executive Officers of
Light S.A., which are now composed as follows:
Board of DirectorsSitting members Alternate members
Nelson José Hubner Moreira Samy Kopit MoscovitchGiles Carriconde Azevedo César Vaz de Melo FernandesFernando Henrique Schüffner Neto Fabiano Maia PereiraMarcello Lignani Siqueira Eduardo Lima Andrade FerreiraMarco Antônio de Rezende Teixeira Rogério Sobreira BezerraAna Marta Horta Veloso José Augusto Gomes CamposFabiano Macanhan Fontes Carlos Antonio DecezaroOscar Rodríguez Herrero Marcelo Pedreira OliveiraGuilherme Narciso de Lacerda Jálisson Lage MacielSilvio Artur Meira Starling Eduardo Maculan VincentiniCarlos Alberto da Cruz Magno dos Santos Filho
42
Board of Executive OfficersPaulo Roberto Ribeiro Pinto Chief Executive OfficerJoão Batista Zolini Carneiro CFO and Investor Relations OfficerAndreia Ribeiro Junqueira e Souza Human Resources OfficerAilton Fernando Dias Corporate Management OfficerLuis Fernando de Almeida Guimarães Energy OfficerCláudio Bernardo Guimarães de Moraes Business Development OfficerRicardo Cesar Costa Rocha Distribution OfficerFernando Antônio Fagundes Reis Legal OfficeLuiz Antônio Rodrigues Elias Communication Officer
At a public meeting held on February 27, the Brazilian Electricity Regulatory Agency (Aneel) approved the extraordinary average tariff increase of 22.48%, for the subsidiary Light SESA, in force as of March 2, 2015. It is worth mentioning that the residential consumers will notice a lower than the average increase, of 21.06%. The Extraordinary Tariff Revision (“RTE”) is envisaged in the distributors’ concession agreements, allowing Aneel to review their tariffs when there is a financial imbalance in the agreements resulting from changes in the concession’s non-manageable costs, such as charges and energy purchase costs. The items taken into consideration for the extraordinary readjustment of 22.48% were as follows: (i) new CDE Quotas (18.19%), and (ii) Itaipu Tariff and other Energy Contracts (4.29%).
At the Board of Directors’ Meeting held on March 6, 2014, the Annual Shareholder’ Meeting was called, to be held on April 10, 2015, to resolve on the following matters: (i) to take the Management’s accounts, to examine, discuss and vote on the financial statements referring to the fiscal year ended December 31, 2014; (ii) to resolve on the allocation of net income for fiscal year 2014; (iii) to elect and install the Fiscal Council’s members; (iv) to establish the overall annual compensation for the Management and Fiscal Council; and (v) the election of members for the Board of Directors.
43
8. Disclosure Program
Forward-looking statements
The information on the Company’s operations and its Management’s expectations regarding its future performance has not been
reviewed by the independent auditors.
Statements about future events are subject to risks and uncertainties. These statements are based on beliefs and assumptions of
our Management, and on information currently available to the Company. Statements about future events include information
about our intentions, beliefs or current expectations, as well as of the Company's Board of Directors and Officers. Exceptions
related to statements and information about the future also include information about operating results, likely or presumed, as
well as statements that are preceded by, followed by, or including words such as "believes", "might", "will", "continues",
"expects", "estimates", "intends", "anticipates", or similar expressions. Statements and information about the future are not a
guarantee of performance. They involve risks, uncertainties and assumptions because they refer to future events, thus depending
on circumstances that might or might not occur. Future results and creation of value to shareholders might significantly differ
from the ones expressed or suggested by forward-looking statements. Many of the factors that will determine these results and
values are beyond LIGHT S.A.'s control or forecast capacity.
Teleconference
Brazil: +55 (11) 2188 0155USA: +1 (646) 843-6054Other countries: +1 866 890 2584Access code: Light
Schedule
03/09/2015, Monday, at 3:00 p.m. (Brasília Time) and at 2:00 p.m.(Eastern Time), with simultaneous translation to English
Access conditions:Webcast: link on site www.light.com.br/ri (portuguese and english)Conference Call - Dial number:
Contact e-mail Phone
Gustavo Werneck Souza [email protected] +55 21 2211-2560Mariana da Silva Rocha [email protected] +55 21 2211-2814Bruna Dutra Alvarenga [email protected] +55 21 2211-2660Leonardo Dias Wanderley [email protected] +55 21 2211-28280 0 0
IR Team
44
EXHIBIT I
Selected Financial Information - R$ million
LIGHT SESA 4Q14 4Q13 Var. % 2014 2013 Var. %Net Operating Revenue 3,078.7 1,886.8 63.2% 8,258.3 6,716.8 23.0%Operating Expense (2,422.3) (1,847.6) 31.1% (7,323.9) (5,901.7) 24.1% Other Operating Revenues/Expenses (24.0) 102.2 - (40.7) 87.3 -Operating Result 632.4 141.4 347.2% 893.6 902.4 -1.0%EBITDA 725.9 226.1 221.0% 1,250.2 1,237.7 1.0%Financial Result (77.9) (66.1) 17.8% (367.4) (361.5) 1.6%Result before taxes and interest 554.5 75.3 636.8% 526.2 541.0 -2.7%Net Income 367.0 85.0 331.9% 349.1 386.4 -9.7%EBITDA Margin* 26.2% 14.9% 11.3 p.p. 45.1% 21.0% 24.1 p.p.* Does not consider Construction Revenue
LIGHT ENERGIA 4Q14 4Q13 Var. % 2014 2013 Var. %Net Operating Revenue 129.2 148.5 -13.0% 601.6 558.7 7.7%Operating Expense (90.5) (41.3) 119.1% (301.6) (164.1) 83.8% Other Operating Revenues/Expenses (0.3) - - (0.4) (0.3) 52.8%Operating Result 38.4 107.2 -64.1% 299.5 394.3 -24.0%Equity Pickup 143.9 (1.0) - 137.6 (5.6) -EBITDA 196.0 119.8 63.7% 491.3 444.1 10.6%Financial Result (36.9) (22.7) 63.0% (105.4) (89.0) 18.5%Result before taxes and interest 145.3 83.6 73.9% 331.8 299.7 10.7%Net Income 145.4 57.6 152.3% 267.7 199.2 34.4%EBITDA Margin 151.7% 80.6% 71.0 p.p. 81.7% 79.5% 2.2 p.p.
COMMERCIALIZATION AND SERVICES 4Q14 4Q13 Var. % 2014 2013 Var. %
Net Operating Revenue 221.1 135.9 62.6% 899.2 601.7 49.5%Operating Expense (205.1) (127.4) 61.0% (813.8) (569.7) 42.8% Other Operating Revenues/Expenses (0.2) (5.7) -96.9% (7.2) (5.7) 25.3%Operating Result 15.8 2.8 465.5% 78.2 26.2 198.2%Equity Pickup (0.1) (0.1) 23.3% (0.1) (0.1) 39.7%EBITDA 17.0 2.8 518.0% 82.1 26.3 212.3%Financial Result 2.0 1.8 15.0% 12.0 6.4 87.5%Result before taxes and interest 17.7 4.5 296.7% 90.0 32.5 177.0%Net Income 11.7 4.4 169.3% 58.6 23.2 152.9%EBITDA Margin 7.7% 2.0% 5.7 p.p. 9.1% 4.4% 4.8 p.p.
45
EXHIBIT II
Selected Consolidated Financial Information6 - R$ million
(*) EBITDA is not a recognized measure under BRGAAP or IFRS. It is used by the Company as an additional measure of performance of its operations, and it should not considered individually or as an alternative to net income or operating income, as a measure of operating performance, or as an indicator of liquidity. The table below presents the reconciliation in accordance with CVM Instruction 527/2012:
4Q14 4Q13 Var.% 2014 2013 Var.%
A Net Operating Revenue 520,1 129,0 303,2% 662,8 587,3 12,9%
B Social Contributions & Income Tax (26,7) (18,5) 44,5% (120,3) (122,0) -1,4%C Deferred Income Tax (166,1) 2,1 - (152,0) (142,8) 6,5%
A - (B + C) EBIT 713,0 145,4 390,4% 935,1 852,1 9,7%
D Depreciation (108,6) (98,3) 10,4% (414,8) (390,9) 6,1%
E Financial Expenses Revenue (112,3) (98,0) 14,6% (459,7) (453,8) 1,3%
(A) + (B) + (C ) + (D) + (E) EBITDA 933,9 341,7 173,3% 1.809,7 1.696,8 6,7%
EBITDA R$ MN
6 The consolidated financial statements include Light S.A. and its subsidiaries and affiliates. In these financial statements, the balances of receivables and payables, revenues and expenses between the companies were eliminated.
Consolidated - R$ MN 4Q14 4Q13 Var. % 2,014 2,013 Var. %NET OPERATING REVENUE 3,294.7 2,066.0 59.5% 9,230.4 7,422.3 24.4%
OPERATING EXPENSE (2,611.6) (1,819.7) 43.5% (7,970.1) (6,110.9) 30.4%PMSO (235.8) (248.2) -5.0% (902.2) (921.8) -2.1%Personnel (68.7) (92.8) -26.0% (302.1) (323.8) -6.7%Material (8.1) (3.5) 131.1% (27.0) (18.3) 47.9%Outsourced Services (130.8) (124.6) 5.0% (451.8) (456.2) -1.0%Others (28.2) (27.3) 3.3% (121.3) (123.6) -1.9%Purchased Energy (1,850.2) (1,146.9) 61.3% (5,448.0) (3,848.3) 41.6%Depreciation (108.6) (98.3) 10.4% (414.8) (390.9) 6.1%Provisions (86.3) (57.7) 49.6% (216.3) (210.9) 2.5%Construction Revenue (306.1) (365.0) -16.1% (940.5) (820.3) 14.7%Other Operating Revenuess/Expenses (24.5) 96.4 - (48.3) 81.3 -
OPERATING RESULT 683.2 246.3 177.4% 1,260.3 1,311.3 -3.9%
EQUITY PICKUP 142.1 (2.9) - 134.6 (5.5) -
EBITDA (1) 933.9 341.7 173.3% 1,809.7 1,696.8 6.7%
FINANCIAL RESULT (112.3) (98.0) 14.6% (459.7) (453.8) 1.3%Financial Income 192.5 121.4 58.6% 442.9 338.2 31.0%Financial Expenses (304.9) (219.4) 39.0% (902.7) (791.9) 14.0%
RESULT BEFORE TAXES AND INTEREST 713.0 145.4 390.4% 935.1 852.1 9.7%
SOCIAL CONTRIBUTIONS & INCOME TAX (26.7) (18.5) 44.5% (120.3) (122.0) -1.4%DEFERRED INCOME TAX (166.1) 2.1 - (152.0) (142.8) 6.5%
NET INCOME 520.1 129.0 303.2% 662.8 587.3 12.9%
46
EXHIBIT III Consolidated Balance Sheet - R$ million
ASSETS 12/30/2014 12/31/2013Current 2,955.3 3,495.8 Cash & Cash Equivalents 401.1 546.4 Marketable securities 104.7 1,244.0 Receivable Accounts 1,380.7 1,223.4 Inventories 34.0 29.7 Recoverable Taxes 120.2 161.0 Prepaid Expenses 14.9 15.8 Parcel A and Other Financial Assets 577.5 - Other Current Assets 322.2 275.5
Non-current 10,678.9 9,506.5 Receivable Accounts 211.5 209.4 Deferred Taxes 473.8 622.8 Parcel A and Other Financial Assets 536.7 - Concession financial assets 2,446.4 1,926.2 Others Non-current Assets 534.8 464.9 Investiments 826.6 642.2 Fixed Assets 1,705.1 1,678.7 Intangible 3,943.9 3,962.1 0.0 - Total Assets 13,634.2 13,002.2 0 0LIABILITIES 12/30/2014 12/31/20131/0/1900 0Current 2,924.8 3,318.5 Suppliers 1,560.4 907.3 Fiscal obligations 289.1 198.6 Loans and Financing 482.2 591.5 Debentures 97.7 51.0 Others Obligations 225.2 1,408.6 Provisions 112.8 129.5 Dividends and interest on equity to be paid 157.4 32.0 0 - Non-current 7,080.8 6,206.6 Loans and Financing 2,729.3 1,823.5 Debentures 3,273.1 3,349.3 Others Obligations 342.9 263.7 Deferred Taxes 222.7 226.4 Provisions 512.8 543.7 0 - Shareholders' Equity 3,628.6 3,477.1 Realized Joint Stock 2,225.8 2,225.8 Profit Reserves 1,090.7 565.6 Additional Proposed Dividend - 332.8 Asset Valuation Adjustments 409.8 429.5 Other comprehensive income (97.7) (76.6) Accumulated Profit/Loss of Exercise - - 0 - Total Liabilities 13,634.2 13,002.2
47
EXHIBIT IV
Regulatory Assets and Liabilities
On December 10, 2014, a fourth amendment was signed to the concession contract for distribution by the subsidiary Light SESA, which ensured the right and duty that the remaining balances of any insufficiency or reimbursement of the tariff at the end of the concession will be added or deducted from the compensation amount, which allowed for the recognition of the balances of these regulatory assets and liabilities.
R$ Million Dec-14 Sep-14 Jun-14 Mar-14 dec/13 sep/13 Jun-13 Mar-13 dec/12TOTAL ASSET 1316.7 619.7 501.7 361.4 428.7 627.6 653.0 500.6 365.7TOTAL LIABILITIES (296.9) (116.9) (65.4) (45.5) (94.5) (381.2) (77.4) (44.3) (10.6) TOTAL DIFFERENCE 1,019.8 502.8 436.2 315.9 334.2 246.4 575.6 456.3 355.2 Net difference (quarter) 517.1 66.5 120.3 (18.3) 87.8 (329.2) 119.3 101.2 138.0 Net difference (YTD) 685.7 168.6 102.1 (18.3) (21.0) (108.8) 220.4 101.2 330.4
48
EXHIBIT V
Complementary Information – Consolidated Financial Information on a Proportional Interest Basis
This information is complementary and is exclusively for comparative purposes, since it is not in accordance with
Brazilian accounting practices.
Consolidated - R$ MN RENOVA LIGHTGER EBL AXXIOM AMAZÔNIA4Q14 15.87% 51% 33% 51% 25.50%
OPERATING REVENUE 4,447 10 4 - 9 - - 4,471 REVENUE DEDUCTIONS (1,152) (1) (0) - (1) - - (1,153) NET REVENUE 3,295 10 4 - 9 - - 3,317 OPERATING EXPENSE (2,612) (4) (4) - (8) - - (2,628) OPERATING RESULT 683 6 (0) - 0 - - 689 EQUITY PICKUP 142 (2) - - - - (0) 140 EBITDA 934 4 1 - 0 - - 939 FINANCIAL RESULT (112) (1) (1) - (0) (1) - (116) RESULT BEFORE TAXES AND INTEREST 713 2 (1) - 0 (1) - 713 SOCIAL CONTRIBUTIONS & DIFERRED/INCOME TAX
(193) (0) (0) - 0 - - (193)
NET INCOME 520 2 (1) - 1 (1) (0) 520
REPORTED CONSOLIDATE
ELIMINATION TOTAL
Consolidated - R$ MN RENOVA LIGHTGER EBL AXXIOM AMAZÔNIA2014 15.87% 51% 33% 51% 25.50%OPERATING REVENUE 13,229 50 17 0 31 - - 13,327 REVENUE DEDUCTIONS (3,999) (2) (1) (0) (2) - - (4,004) NET REVENUE 9,230 48 16 0 28 - - 9,323 OPERATING EXPENSE (7,970) (34) (12) (0) (29) - - (8,046) OPERATING RESULT 1,260 13 4 (0) (0) - - 1,277 EQUITY PICKUP 135 (4) - - - - 5 135 EBITDA 1,810 22 9 (0) (0) - - 1,841 FINANCIAL RESULT (460) (9) (3) 0 (0) (2) - (474) RESULT BEFORE TAXES AND INTEREST 935 1 1 (0) (1) (2) - 934 SOCIAL CONTRIBUTIONS & DIFERRED/INCOME TAX
(272) (2) (1) (0) 0 - - (275)
REPORTED CONSOLIDATE
ELIMINATION TOTAL
49
EXHIBIT VI
The Management reassessed the criterion for presenting the amortization of the contractual debt with the pension
plan in the cash flow statement. The purpose of this reclassification was to align this presentation criterion with best
corporate practices in the same sector.
The consolidated financial information for the fourth quarter of 2014 is in accordance with the new practice.
However, for comparison purposes, the adjustments are presented below:
Cash Flow - R$ MNPublished
4Q13Adjustments
Reclassified4Q13
Cash in the Beginning of the Period (1) 1,787.3 - 1,787.3 Net Income 129.0 - 129.0 Social Contributions & Income Tax 16.4 - 16.4 Net Income before Social Contributions & Income Tax 145.4 - 145.4 Provision for Delinquency 43.3 - 43.3 Depreciation and Amortization 98.3 - 98.3 Loss (gain) on intangible sales / Residual value of disposals fixed asset 14.1 - 14.1
Losses (gains) on financing exchange activities 59.1 - 59.1 Net Interests and Monetary Variations 118.8 - 118.8 Braslight 31.0 - 31.0 Atualization / provisions reversal (29.4) - (29.4) Equity Pikup 2.9 - 2.9 Financial Assets of the Concession (141.1) - (141.1) Others (35.2) - (35.2) Subtotal 307.2 - 307.2 Working Capital 195.1 - 195.1 Contingencies (30.0) - (30.0) Deferred Taxes 116.7 - 116.7 Braslight (35.4) 28.3 (7.1) CDE fund 303.4 - 303.4 Others (43.7) - (43.7) Taxes Paid (13.1) - (13.1) Interest Paid (180.4) - (180.4)
Cash from Operating Activities (2) 619.8 28.3 648.0 Finance Obtained 9.8 - 9.8 Dividends (185.1) - (185.1) Loans and financing payments (149.8) - (149.8) Contractual debt amortization with the pension plan - (28.3) (28.3)
Financing Activities (3) (325.2) (28.3) (353.4) Fixed Assets/Intangible/Financial Assets (294.9) - (294.9) Inflow/Acquisitions on Investment (16.0) - (16.0) Redemption of Investments (1,224.7) - (1,224.7)
Investment Activities (4) (1,535.5) - (1,535.5) Cash in the End of the Period (1+2+3+4) 546.4 - 546.4 Cash Generation (2+3+4) (1,240.9) - (1,240.9)
50
Cash Flow - R$ MNPublished
2013Adjustments
Reclassified2013
Cash in the Beginning of the Period (1) 230.4 - 230.4 Net Income 587.3 - 587.3 Social Contributions & Income Tax 264.8 - 264.8 Net Income before Social Contributions & Income Tax 852.1 - 852.1 Provision for Delinquency 157.9 - 157.9 Depreciation and Amortization 390.9 - 390.9
Loss (gain) on intangible sales / Residual value of disposals fixed asset
23.3 - 23.3
Losses (gains) on financing exchange activities 138.6 - 138.6 Net Interests and Monetary Variations 407.5 - 407.5 Braslight 122.0 - 122.0 Atualization / provisions reversal 26.8 - 26.8 Equity Pikup 5.5 - 5.5 Financial Assets of the Concession (168.8) - (168.8) Dilution of Renova's Gain - - - Others (81.0) - (81.0) Subtotal 1,874.9 - 1,874.9 Working Capital 229.8 - 229.8 Contingencies (88.3) - (88.3) Deferred Taxes 109.5 - 109.5 Braslight (123.5) 113.1 (10.4) CDE fund - - - Others (205.1) - (205.1) Taxes Paid (101.2) - (101.2) Interest Paid (389.8) - (389.8)
Cash from Operating Activities (2) 1,306.3 113.1 1,419.4 Finance Obtained 2,444.5 - 2,444.5 Dividends (259.9) - (259.9) Loans and financing payments (1,037.4) - (1,037.4) Contractual debt amortization with the pension plan - (113.1) (113.1)
Financing Activities (3) 1,147.2 (113.1) 1,034.1 Fixed Assets/Intangible/Financial Assets (830.2) - (830.2) Inflow/Acquisitions on Investment (90.6) - (90.6) Redemption of Investments (1,216.7) - (1,216.7)
Investment Activities (4) (2,137.5) - (2,137.5) Cash in the End of the Period (1+2+3+4) 546.4 - 546.4
Cash Generation (2+3+4) 316.1 - 316.1
51