Corporate Presentation February 2011

Transcription

1 Corporate Presentation February

2 Light Holdings Holding Distribution Generation Trading/Services Technology Light Serviços de Eletricidade S.A. Light Energia S.A. Itaocara Energia S.A. Light Esco Prestação de Serviços S.A. Lightcom Comercializadora de Energia S.A. Axxiom Axxiom S.A. S.A. 100% 100% 51% 100% 100% 51% Lightger S.A. (SHPP Paracambi) 51% Lighthidro S.A. (Non Operational) 100% EBL 33% 2

3 Rankings Integrated Net Revenues 2009 R$ Billion Distribution Energy Consumption in Concession Area (2009) - GWh , ,786 41, , ,492 21,286 Generation Private-owned Companies Installed Hydro-generation Capacity (MW) ,175 2,651 2,237 1,737 1, Souce: Companies reports Note: 1 Captive market + free clients 2 It doesn t consider the consumption of CSN, Valesul and CSA 3

4 Shareholders Structure Dec 2010 Controlling shareholder [52.1%] Free Float [47.9%] LUCE LEPSA REDENTOR RME Market 26.06% 13.03% 13.03% 15.02% 32.88% Final Structure Controlling shareholder [52.1%] FIP REDENTOR <50% >50% Free Float [47.9%] SPV PARATI Market 11 Board members: 8 from the controlling group, 2 independent and 1 employees nominated A qualifying quorum of 7 members to approve relevant proposals such as: M&A and dividend policy % 26.06% 15.02% 32.88% 4

5 Corporate Governance Shareholders Controller group Controller discussion group Minority 11 Board members: 2 independent and 1 employees nominated 2 years term Fiscal Council Manual of Corporate Governance General Assembly Interface Board of Directors Fiscal Council Auditors Committee Governance and Sustainability Committee Management Committee Finances Committee Human Resources Committee Management 5

6 Distribution Business 5th largest energy distribution company in Brazil 4.0 million clients (attending over 10 million people) Energy sales (2009) 21,492 GWh 70% of the consumption of Rio de Janeiro state (Brazil s 2nd GDP) 6

7 Energy Consumption Distribution ELECTRICITY CONSUMPTION ¹ (GWh) +1.9% a.a. +3.1% +1.6% a.a. +6.0% 4,802 4,980 4,989 5,144 15,533 15,672 15,775 16, ºC 21.7 ºC 22.7 ºC 22.1 ºC 24.5 ºC 23.6 ºC 24.7 ºC 24.4 ºC 3Q07 3Q08 3Q09 3Q10 9M07 9M08 9M09 9M10 Free Customers 14.9% Others 15.6%, Industrial 8.0% Commercial 27.0% Residential 34.6% ¹ Note: To preserve comparability in the market approved by ANEEL in the tariff adjustment process, the billed energy of the free customers Valesul, CSN and CSA were excluded in view of these customers planned migration to the core network. 7

8 Total Market ELECTRICITY CONSUMPTION (GWh) (CAPTIVE + FREE MARKET) +6.0% 15,775 16, % +5.9% ,785 6, % 4,697 4, % 2,744 2, ,549 2,630 4,382 4,379 1,395 1,654 1,349 1,286 4,447 4, ,421 2,499 9M09 9M10 9M09 9M10 9M09 9M10 9M09 9M10 9M09 9M10 RESIDENTIAL INDUSTRIAL COMMERCIAL OTHERS TOTAL CAPTIVE FREE 8

9 Investments scheduled Till the World Cup in 2014 and the Olympics in 2016 Total estimated investments 1 of R$ 76 billion Infrastructure R$ 31 billion Private R$ 41 billion Olympics R$ 4 billion Revitalization of the Port zone Expansion of subway system Urbanization of slums Depollution of the Rodrigo de Freitas Lake Construction of the Metropolitan Arch Expansion of Tom Jobim airport Construction of 50,000 housing units by 2013 T5 Corridor Rio-São Paulo bullet train² Angra 3 Via Light (Road) Investments in optic fibers by 2016 Improvement and acquisition of new trains by Supervia Renovation of Hotel and Marina da Glória Expansion of hotel capacity (5 new hotels on the waterfront, 8,000 beds in ships) Construction of COMPERJ Expansion and modernization of REDUC Construction of CSA Eisa naval industry Sudeste Port Construction of Barra da Tijuca Complex Construction of Deodoro Complex Renovation and Expansion of Maracanã Stadium 1 Source: Firjan, Rio de Janeiro Town Hall, Light and Construction Industry Union of Rio de Janeiro. ² Considering the part inside of the State of Rio de Janeiro Gerdau Port Terminal Coquepar CSN Itaguaí Logistics Platform 9

10 Collection Rate COLLECTION RATE BY SEGMENT 9 MONTHS 97.8% 98.7% 94.0% 95.8% 101.3% 101.1% 105.4% 105.6% COLLECTION RATE 12 MONTHS 97.2% 98.0% Total Retail Large Customers Public Sector Sep/09 Sep/10 9M09 9M10 10

11 Losses LOSSES (12 months) 42.3% 42.5% 42.7% 42.4% 42.1% 37.3% 7,005 7,269 7,504 7,549 7,551 NON TECHNICAL LOSSES PROFILE Out of risk areas 61% Risk areas 39% 4,958 5,149 5,313 5,352 5,330 2,047 2,120 2,191 2,197 2,214 Sep/09 Dec/09 Mar/10 Jun/10 Sep/10 Non-technical losses GWh Techincal losses GWh % Non-technical losses / Low voltage market % Non-technical losses / Low voltage market - Regulatory 11

12 New Technology Program Light aims to reduce losses through investments in new technologies, integration of operational activities, increase of public awareness and institutional partnerships with interested agents Grid shielding projects Technology used in regions in which conventional measures are not effective Areas that present high levels of non-technical losses Control room Actual grid Medium voltage Shielded grid Medium voltage Low voltage Centralized meter Low voltage 3 m 9 m Analogic Meter Display 12

13 New Technology Program Meters Installed (as of Dec, 2010) 122,000 84,000 38,000 Monitoring, reading, cutting and reconnection of customers telemetry MCC (Measuring Center Centralized) Prioritization in areas of high losses and aggressiveness to the network TOTAL INDIVIDUAL CENTRALIZED Technology hindering inappropriate interference in networks 13

14 Results of New Technologies INDIVIDUAL METERING (ISM) CENTRALIZED METERING (CSM) TOTAL LOSSES AT AREAS WITH ISM BILLED CONSUMPTION GROWTH (2010/2009) CSM x Around Region 22.0% 29.2% 31.7% 22.7% 15.0% 11.0% 9.0% 6.1% 9.5% 3.6% 7.9% 12.3% 2.4% 16.0% 4.9% 3.4% 11.7% Feb/08 Dec/08 Jul/09 Dec/09 Oct/10 Apr May Jun Jul Aug Sep Around region CSM Regions of Barra da Tijuca and Jacarepaguá Region of Realengo 14

15 Pacification of risk areas 15

16 Action in Pacified Communities Regions with high losses and potential return Expansion of the PPU*'s police allows different actions in the risk areas Actions of energy efficiency in communities *PPU : Pacification Police Units LAMPS REFRIGERATORS 99.7 thousand 5.6 thousand Communities billed Light started to bill new communities in December: Babilônia, Casa Branca, Batam and Cantagalo. 16

17 Action in Pacified Communities SANTA MARTA CHAPÉU MANGUEIRA COMMUNITIES CIDADE DE DEUS BABILÔNIA CASA BRANCA BATAM CANTAGALO CLIENTS LOSSES DELINQUENCY RATE BEFORE 80 90% 70% AFTER 1,671 2% 2% BEFORE % 74% AFTER 540 1% 2% BEFORE 2,800 52% 68% AFTER 3,700 8% 0% BEFORE % 54% AFTER 850 TBD TBD BEFORE % 52% AFTER 740 TBD TBD BEFORE 0 62% 51% AFTER 500 TBD TBD BEFORE 1,054 66% 79% AFTER 2,003 TBD TBD 17

18 Tariff Review - Aneel s Proposal for 3rd cycle Regulatory WACC 3rd Tariff 2nd Tariff Revision (Aneel's Proposal) Capital Structure Equity 42.84% 40.00% Debt 57.16% 60.00% Cost of Equity Risk Free Rate 5.32% 4.96% Equity Risk Premium 6.09% 5.78% Beta Country Risk 4.91% 4.42% FX risk 1.78% eliminated US inflation 2.60% 2.48% Nominal Cost of Equity 16.71% 13.14% Real Cost of Equity 13.75% 10.40% Cost of Debt Credit Risk 2.96% 2.12% Nominal Cost of Debt 14.97% 11.50% Real Cost of Debt 12.06% 8.80% Weighted Average Cost Nominal WACC after tax 12.81% 9.81% Real WACC after tax 9.95% 7.15% Pre tax Regulatory Return 15.07% 10.84% 11.26% Distribution 2003 (1st Cycle) Regulatory returns for distribution and transmission 9.28% Transmission 2005 (1st Cycle) 9.95% Distribution 2007 (2nd Cycle) 7.24% Transmission 2009 (2nd Cycle) 7.15% Distribution 2011 (3rd Cycle) 18

19 Tariff Review - Aneel s Proposal for 3rd cycle Main periodic tariff review dates Last Revision Next Revision 2011 Coelce 22 Apr Apr 11 Eletropaulo 04 jul 07 4 Jul 11 EDB Bandeirante 23 Oct Oct 11 CPFL Piratininga 23 Oct Oct CPFL Jaguariuna 3 Feb 08 3 Feb 12 CPFL Santa Cruz 3 Feb 08 3 Feb 12 Copel 24 jun Jun 12 Celesc 7 Aug 08 7 Aug Cemig 8 Apr 08 8 Apr 13 CPFL Paulista 8 Apr 08 8 Apr 13 CPFL RGE 19 Apr Apr 13 EDB Escelsa 7 Aug 10 7 Aug 13 Equatorial Cemar 26 Aug Aug 13 Light 07 nov 08 7 Nov 13 Light EBITDA by segment Generation and Trading 30% Distribution 70% 19

20 Generation Business Installed capacity 855 MW 855 MW of installed capacity 5 power plants and 2 pump stations 537 MW average of assured capacity 20

21 Installed Capacity Installed Capacity 855 MW 100% 100% Paraiba do Sul River HPP Santa Branca 56 MW Lajes Complex RJ HPP Ilha dos Pombos HPP Ilha dos Pombos 187 MW SP HPP Santa Branca 100% 100% 100% HPP Fontes Nova 132 MW HPP Underground Nilo Peçanha MW HPP Pereira Passos 100 MW 21

22 Re-pricing of existing energy GENERATION Assured energy: 537MW average Contracted Energy Uncontracted Energy New Contracts Hedge 22

23 Strategy of growing in generation Installed Capacity Expansion Growth Opportunities +50% Greenfields Light is constantly looking for new opportunities in renewable energy Small Hydro Power Plants Hydro Power Plants Biomass Wind energy 306 1, Acquisition of Existing Assets Assets with potential for improvement and further expansion Assets belonging to investors that do not have a long-term commitment to Brazil Joint Venture with CEMIG Commitment to invest jointly in new generation projects Potential new projects already analyzed by CEMIG Generation capacity SHPP Paracambi¹ SHPP Lajes¹ HPP Itaocara¹ New Projets Future Generation capacity ¹ Corresponds to 51% Light s stake in each project. 23

24 SHPP Paracambi PROJECT HISTORICAL Oct/2009 Construction Beginning Nov/2010 Construction Status 45% done Nov/2011 Operational Start 24

25 Results 25

26 Net Revenues NET REVENUE GROWTH (R$ MN) NET REVENUE BY SEGMENT (9M10)* +4.3% a.a. Generation 5.1% Commercialization 3.0% 4,992 5,387 5, % Distribution 91.9% 3,930 4,429 *Eliminations not considered DISTRIBUTION NET REVENUE (9M10) M09 9M10 Others (Captive) 12.6% Network Usage (TUSD) 6.3% Industrial 7.6% ( Free Customers + Concessionaires) Commercial 25.5% Residential 44.1% 26

27 Operating Costs and Expenses COSTS (R$MM)* 9M10 MANAGEABLE DISTRIBUTION COSTS (R$ MN) 1, % Manageable (distribution): R$ (21.1%) Non Manageable (distribution): R$ 2,760.2 (73.6%) 1, , % 791 Generation and Commercialization : R$ (5.3%) M09 9M10 *Eliminations not considered R$ MN 3Q09 3Q10 Var. 9M09 9M10 Var. PMSO % % Provisions % % PDD % % Contingencies 9.1 (44.9) (54.3) - Depreciation % % Total % % 27

28 EBITDA 22.8% EBITDA (R$ Million) and EBITDA Margin 27.9% 21.9% 21.9% 21.6% EBITDA BY ACTIVITY* 9M10 1,138 1,504 1, Distribution 81.2% (EBITDA Margin: 19.2%) Generation 16.9% (EBITDA Margin: 71.5%) Commercialization 1.9% (EBITDA Margin: 13.6%) *Eliminations not considered M09 9M10 EBITDA EBITDA Margin ¹ Pro forma: does not consider profit sharing costs 28

29 Net Income NET INCOME (R$ MN) 1, % M09 9M10 non-recurring effects 29

30 Dividends 8.3% 12.3% 11.6% 16.2% 795 PAYOUT AND DIVIDEND POLICY % 100% 76.3% 50% Dividends (R$ MN) Dividend Yield* Payout Dividend Policy * Based on the closing price of the previous day to the announcement 30

31 Indebtedness leverage Net Debt¹ (R$ MM) and Net Debt / EBITDA 2,540 Rating (bra-) Investment Grade (bra) Rating (bra + ) Rating (Aa2.br) 3.4 1,462 1,580 1,637 1, Set/10 Net Debt Net Debt/ EBITDA ¹ Net debt = total debt (excludes pension fund liabilities) cash ² EBITDA Pro Forma, not considering costs of profit sharing costs 31

32 Indebtedness 1,805 NET DEBT 1,664 Duration: 3.2 years Amortization Schedule* Sep/10 (R$ MN) Jun/10 Sep/10 Debt Cost Evolution 12.17% 13.97% 7.39% 7.62% After 2015 * Only principal 9.84% 5.30% 11.32% 6.32% TJLP 23.2% US$/Euro 1.8%* CDI/Selic 75.0% Sep/10 Real Cost C Nominal Cost *Considering Hedge 32

33 Capital Expenditures INVESTMENTS (R$MN) INVESTMENTS (R$MN) 9M % Generation Maintenance R$ 17.4 Others R$ E M M10 New projects of generation R$ 60.0 Quality Improvements R$ 66.0 Distribution Development System R$ Losses Combat R$

34 Contacts João Batista Zolini Carneiro CFO and IRO Renato Rocha Head of Planning and IR renato.rocha@light.com.br Gustavo Werneck IR Manager gustavo.souza@light.com.br 34

35 Annex 35

36 Tariff Breakdown DISTRIBUTION TARIFF BREAKDOWN Distribution 23.1% Sector Charges 9.5%, Transmission 4.8% Energy Purchase 30.9% Taxes 31.8% Taxes and sector charges represent 46.1% of the tariff. Only 23.1% covers distribution expenses. 36

37 Distribution Companies 64 companies: 24 private owned (37%) 21 privatized (33%) 19 state owned (30%) AMPLA State-owned Companies Source: Private-owned Companies 37

38 Final Tariff Review - Losses Regulatory Losses Trend 19.15% 19.09% 15.95% 5.61% 5.61% 5.61% 5.61% 5.61% nov/08 out/09 nov/09 out/10 nov/10 out/11 nov/11 out/12 Technical Losses / Grid Load (%) nov/12 out/ PRELIMINARY DEFINITIVE 1 1 Total Losses / Grid Load (%) 38.98% 37.19% 35.40% 33.61% 31.82% Energy Balance (GWh) 9M10 9M09 Var.% = Grid Load ,5% - Energy transported to utilities ,1% - Energy transported to free customers ,5% = Own Load ,6% - Captive market consumption ,0% Low Voltage Market ,3% Medium Voltage Market ,0% - Losses + Non Billed Energy ,7% nov/08 out/09 nov/09 out/10 nov/10 out/11 nov/11 out/12 nov/12 out/13 Non Technical Losses / Low Voltage Market (%) 1- Preliminary announced on November 3, 2008 / 2008 definitive was approved in October 13,

39 Important Notice This presentation may include declarations that represent forward-looking statements according to Brazilian regulations and international movable values. These declarations are based on certain assumptions and analyses made by the Company in accordance with its experience, the economic environment, market conditions and future events expected, many of which are out of the Company s control. Important factors that can lead to significant differences between the real results and the future declarations of expectations on events or business-oriented results include the Company s strategy, the Brazilian and international economic conditions, technology, financial strategy, developments of the public service industry, hydrological conditions, conditions of the financial market, uncertainty regarding the results of its future operations, plain, goals, expectations and intentions, among others. Because of these factors, the Company s actual results may significantly differ from those indicated or implicit in the declarations of expectations on events or future results. The information and opinions herein do not have to be understood as recommendation to potential investors, and no investment decision must be based on the veracity, the updated or completeness of this information or opinions. None of the Company s assessors or parts related to them or its representatives will have any responsibility for any losses that can elapse from the use or the contents of this presentation. This material includes declarations on future events submitted to risks and uncertainties, which are based on current expectations and projections on future events and trends that can affect the Company s businesses. These declarations include projections of economic growth and demand and supply of energy, in addition to information on competitive position, regulatory environment, potential growth opportunities and other subjects. Various factors can adversely affect the estimates and assumptions on which these declarations are based on. 39