Download - 2Q14 Earnings Release
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Rio de Janeiro, August 13, 2014
Distributor’s Consumption Increases by 3.0% in 2Q14
Losses fall by 0.5 p.p. and operating quality improves.
Total energy consumption came to 6,495 GWh in 2Q14, 3.0% up on 2Q13, driven by increased consumption in the
residential and commercial segments, which moved up by 8.0% and 2.8%, respectively;
Consolidated net revenue, excluding revenue from construction, totaled R$1,601.5 million in 2Q14, 1.4% up on
2Q13;
Consolidated EBITDA1 amounted to R$239.3 million in the quarter, 13.9% lower than in 2Q13, mainly due to
higher energy purchases by the distributor – in the portion not covered by the transfer of the CDE – whose future
pass-through to tariffs is guaranteed by the regulations. When adjusted for the CVA (regulatory asset), EBITDA
came to R$359.7 million in 2Q14, 9.4% down on 2Q13.
Net income totaled R$15.3 million in the quarter, a decrease of 73.8% due to the increase in the distributor’s non-
manageable energy purchase costs. When adjusted for the CVA, the Company posted net income of R$94.7
million, 30.8% down on 2Q13.
Non-technical energy losses in the last 12 months reached 41.9% of billed energy in the low-voltage market (ANEEL
criterion) in June 2014, 0.5 p.p. down on 2Q13.
Operating Quality indicators DEC - equivalent
length of interruption indicator and FEC -
equivalent frequency of interruption indicator
amounted to 15.12 hours and 7.52 times,
respectively, in the last 12 months, with a
significant improvement of 26.21% and 16.91%,
respectively, compared to the same period in
the previous year.
Collections stood at 103.5% of billed
consumption in 2Q14, 0.7 p.p. down year-on-
year. Provisions for Past Due Accounts (PCLD)
represented 1.7% of gross billed energy, totaling
R$36.1 million, a 0.8 p.p. improvement over 2Q13.
The Company closed 2Q14 with net debt of R$5,229.6 million, 2.1% down on March 2014. The net debt/EBITDA
ratio stood at 2.99x.
1 EBITDA is calculated in accordance with CVM Instruction 527/2012 and represents net income +income and social contribution tax + net
financial expenses + depreciation and amortization.
BM&FBOVESPA: LIGT3 Conference Call: IR contacts: OTC: LGSXY Date: 08/14/2014 Phone: +55 (21) 2211-7392/2828 Total Shares: 203,934,060 shares Time: 4:00 p.m. Brazil // 3:00 p.m. US ET Fax: +55 (21) 2211-2787 Free Float: 76,264,255 shares (37.57%) Phone numbers: +55 (11) 2188 0155 // +1 (646) 843 6054 E-mail: [email protected] Market Cap (08/13/14): R$ 4.478 million Webcast: ri.light.com.br Website: ri.light.com.br
2Q14 2Q13 Var. % 1H14 1H13 Var. %
Grid Load* 8,796 8,619 2.1% 19,741 18,529 6.5%
Billed Energy - Captive Market 5,176 4,954 4.5% 11,292 10,526 7.3%
Consumption in the concession area 6,495 6,304 3.0% 13,869 13,145 5.5%
Transported Energy - TUSD 1,319 1,349 -2.3% 2,576 2,618 -1.6%
Sold Energy - Generation 1,093 1,175 -7.0% 2,358 2,442 -3.4%
Commercializated Energy (Esco) 1,314 1,036 26.8% 2,652 2,066 28.3%
2Q14 2Q13 Var. % 1H14 1H13 Var. %
Net Revenue** 1,601 1,579 1.4% 3,720 3,344 11.2%
EBITDA 239 278 -13.9% 692 633 9.3%
EBITDA Margin** 14.9% 17.6% -2,7 p.p. 18.6% 18.9% -0,3 p.p.
Net Income 15 58 -73.8% 196 137 43.1%
Net Debt 5,230 4,056 28.9% 5,230 4,056 28.9%
Capex 182 164 11.1% 358 327 9.5%
* Own Load + network use
** Does not consider construction revenue
Operational Highlights (GWh)
Financial Highlights (R$ MN)
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Presentation of 2Q13 results (comparison period)
The Company’s results for the second quarters and first half of 2013 were reclassified due to Management’s decision
to present PIS and COFINS tax credits on purchased energy as a reduction factor for purchased energy costs instead
of presenting them as a reduction in PIS and COFINS on revenue. The purpose of this reclassification was to align this
presentation criterion with the best corporate practices in the same sector.
The reclassification affected net revenue and non-managerial costs, but did not affect EBITDA or net income.
Management also 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 further information, see Exhibit VI of this report.
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Table of Contents
Presentation of 2Q13 results (comparison period) ........................................................................................ 2 Table of Contents ............................................................................................................................................ 3 1. The Company............................................................................................................................................... 4 2. Operating Performance ............................................................................................................................... 5
2.1 Distribution .......................................................................................................................................... 5
Energy Balance ........................................................................................................................................ 8
Energy Losses........................................................................................................................................... 9
Collection ............................................................................................................................................... 12
Operating Quality .................................................................................................................................. 13
2.2 Generation ......................................................................................................................................... 14
2.3 Commercialization and Services ........................................................................................................ 15
3. Financial Performance ............................................................................................................................... 16 3.1 Net Revenue ....................................................................................................................................... 16
Consolidated .......................................................................................................................................... 16
Distribution ............................................................................................................................................ 16
Generation ............................................................................................................................................. 17
Commercialization and Services ............................................................................................................ 18
3.2 Costs and Expenses ............................................................................................................................ 19
Consolidated .......................................................................................................................................... 19
Distribution ............................................................................................................................................ 19
Generation ............................................................................................................................................. 22
Commercialization and Services ............................................................................................................ 23
3.3 EBITDA ................................................................................................................................................ 24
Consolidated .......................................................................................................................................... 24
Distribution ............................................................................................................................................ 26
Generation ............................................................................................................................................. 26
Commercialization and Services ............................................................................................................ 26
3.4 Consolidated Financial Result ............................................................................................................ 27
3.5 Debt .................................................................................................................................................... 28
3.6 Net Income ......................................................................................................................................... 30
3.7 Investments ........................................................................................................................................ 32
Generation Capacity Expansion Projects ............................................................................................... 33
4. Cash Flow .................................................................................................................................................. 36 5. Corporate Governance .............................................................................................................................. 37 6. Capital Market ........................................................................................................................................... 38
Dividends ............................................................................................................................................... 39
7. Recent Events ............................................................................................................................................ 41 8. Disclosure Program ................................................................................................................................... 42
Forward-looking Statements ................................................................................................................. 42
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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 August 13, 2014 is shown below:
OPERATING INDICATORS - DISTRIBUTION 2Q14 2Q13 Var. %
Nº of Consumers (thousand) 4,156 4,128 0.7%
Nº of Employees 4,268 4,242 0.6%
Average provision tariff - R$/MWh 423 361 17.2%
Average provision tariff - R$/MWh (w/out taxes) 293 252 16.3%
Average energy purchase cost¹ - R$/MWh 153 139 10.3%
OPERATING INDICATORS - GENERATION 2Q14 2Q13 Var. %
Installed generation capacity (MW)* 961 942 2.0%
Assured energy (MW)* 698 687 1.7%
Pumping and internal losses (MW) 87 87 -
Available energy (Average MW)* 611 600 1.9%
Net Generation (GWh) 944 1,404 -32.8%
Load Factor 62.4% 62.3% 0,1 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 clients2) came to 6,495
GWh in 2Q14, 3.0% up on the same period in 2013, driven by the residential segment, with growth of 8%.
Residential consumption totaled 2,128 GWh, accounting for 32.8% of the total market. Although the average
temperature remained flat over 2Q13, dropping by just 0.1°C, the residential segment recorded robust growth,
climbing by 8.0% year-on-year.
Commercial clients consumed 2,017 GWh, 2.8% up on 2Q13 and representing 31.1% of the total. 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.
2 In view of ANEEL’s market ratification during the tariff revision process, consumption by the free client CSN was reincluded as of 4Q13.
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Industrial consumption amounted to 1,385 GWh, equivalent to 21.3% of the total market, 3.0% down on 2Q13, due
to the reduced consumption by electro-intensive industries (steel and aluminum producers and certain chemical
companies), partially as a result of interruptions on World Cup game days.
The other consumption segments, which accounted for 14.8% of the total market, posted an upturn of 2.3% over
2Q13. The rural and public utility categories reported respective increases of 36.1% and 5.7%, while government
consumption fell by 0.1%. The rural, government, and public utility segments accounted for 0.3%, 6.1%, and 4.6% of
the total market, respectively.
Total energy consumption in Light SESA’s concession area (captive clients + transport of free clients3) came to 13,869
GWh in 1H14, 5.5% up on 1H13, fueled by the residential and commercial segments.
Residential consumption accounted for 35.2% of the total market and totaled 4,880 GWh in the first half, 11.1% up
year-on-year due to the substantial temperature increase in the summer of 2014.
Commercial clients consumed 4,284 GWh, 5.7% up on the same period last year. In 1H14, 11 clients migrated from
the captive market to the free market, adding period consumption of 27 GWh.
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Industrial consumption amounted to 2,715 GWh in 1H14, 2.6% less than in 1H13 due to reduced consumption in the
steel/aluminum and chemical sectors. The other sectors recorded growth of 3.8% in the same period.
The other consumption segments, which accounted for 14.3% of the total market, posted an increase of 4.2% over
1H13, with the rural, government and public utility categories recording growth of 39.6%, 3.6% and 4.2%,
respectively.
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Energy Balance
Energy Balance (GWh) 2Q14 2Q13 Var. % 1H14 1H13 Var. %
= Grid Load 8,796 8,619 2.1% 19,741 18,529 6.5%
- Energy transported to utilities 612 596 2.6% 1,226 1,229 -0.3%
- Energy transported to free customers 1,261 1,318 -4.4% 2,545 2,641 -3.7%
= Own Load 6,924 6,705 3.3% 15,970 14,659 8.9%
- Captive market consumption 5,176 4,954 4.5% 11,292 10,526 7.3%
Low Voltage Market 3,471 3,262 6.4% 7,701 7,058 9.1%
Medium Voltage Market 1,704 1,692 0.7% 3,591 3,468 3.6%
= Losses + Non Billed Energy 1,748 1,750 -0.1% 4,677 4,132 13.2%
240.5 4,880.4
Captive Billed Industrial
Energy 704.7
2,597.3 11,292.4
Commercial
15,969.5 3,826.9
Losses + Non Billed
3,795.1 16,255.0 Energy (**) Others
4,677.2 1,880.3
3,150.1
2,166.7
3,865.1
440.1
(*) Others = Purchase in Spot - Sale in Spot.
(**) Includes unbilled energy.
Note: 1) At Light S.A., there is intercompany power purchase/sale elimination.
2) Power purchase data as of 04/07/2014 (subject to change).
Adjustment 31.2
COTAS
ANGRA I & II
Required E.
(CCEE)
DISTRIBUTION ENERGETIC BALANCE - GWh
Position: January - June 2014
PROINFAResidential
ITAIPU
(CCEE)
Own load
Light
AUCTIONS
(CCEE)
NORTE FLU
(CCEE)
Basic netw. Losses 254.2
OTHERS(*)
(CCEE)
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Energy Losses
In the last 12 months, non-technical energy losses totaled 5,972 GWh, accounting for 41.9% of billed energy in the
low-voltage market (ANEEL criterion), 0.5 p.p. down on the 12 months ended March 2014. In comparison with the 12
months ended June 2013, when non-technical energy losses totaled 44.2% of the low-voltage market, there was a
reduction of 2.3 p.p.
Light SESA’s total energy losses amounted to 8,815 GWh, or 23.3% of the grid load, in the 12 months through June
2014.
In order to improve the reduction in non-technical energy losses, Light has been continuously investing in initiatives
that include conventional fraud inspection procedures, the upgrading of network and measurement systems, and the
Zero Loss Area program (APZ). These initiatives include:
Consumer unit regularizations: The Company conducted 15,088 regularization procedures in the low, medium,
and high-voltage segments in 2Q14, 1.3% less than the 15,290 recorded in 2Q13. Energy incorporation in the first
half totaled 87.9 GWh, 24.4% up on the 70.7 GWh reported in 1H13. In the same period, recovered energy fell by
15.8%, from 78.8 GWh, in 1H13, to 66.4 GWh.
Normalizations 2Q14 2Q13 Var. % 1H14 1H13 Var. %
= Total 15,088 15,290 -1.3% 29,583 27,815 6.4%
- High / Medium Voltage 148 266 -44.4% 382 538 -29.0%
- Low Voltage 14,940 15,024 -0.6% 29,201 27,277 7.1%
Direct low voltage 12,712 13,834 -8.1% 24,749 25,039 -1.2%
Indirect low voltage 2,228 1,190 87.2% 4,452 2,238 98.9%
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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
allows Light to have a stronger presence in combating default as well
as energy theft. The Company installed 7,380 such devices in UPP-
protected areas in 2Q14, resulting in the incorporation of 18.1 GWh.
In areas outside the sphere of the UPPs, Light installed 34,176
devices, with the incorporation of 18.7 GWh. As a result, the
Company closed 2Q14 with 509,000 installed electronic meters,
35.4% more than at the close of June 2013.
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,
closed June 2014 with 29 operational APZs and 505,000 clients in the Baixada Fluminense region and the
city’s south, west and north sides.
Since the beginning of the project until the end of 2Q14, 116,000 electronic meters have been installed in
the communities, and the APZs in place have already resulted in an average 30.0 p.p. reduction in non-
technical energy losses on low-voltage billings and an average revenue increase of 6.8 p.p. The table below
shows the results per installed APZ through June 2014 in the 22 areas where the results have been
determined:
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Complementing the 22 areas where the results have already been determined, the table below shows the 7 APZs,
which account for 146 thousand clients, in the implementation phase, without recorded results, totaling 29
operating areas.
Non-Technical Losses
/ Grid Load*Collection Rate
Before Before
Monte Líbano 36% 92% N
Caxias 5 49% 94% N
Cordovil 28% 93% N
Éden 55% 86% N
Rio das Pedras 83% 75% N
Comunidades Centro 62% 89% Y
Nova Iguaçu 3 49% 89% N
UPP AreaNeighborhood
Before Current Before Current
Curicica 2010 13,174 38% 10% 95% 98% N
Realengo/Batan 2010/2013 20,122 38% 11% 94% 98% N/Y
Cosmos 1 2012 18,392 49% 15% 92% 97% N
Cosmos 2 2012 19,737 46% 15% 92% 106% N
Sepetiba 2012 20,849 57% 31% 88% 96% N
Caxias 1 e 2 2012 14,377 59% 33% 83% 94% N
Belford Roxo 1 e 2 2013 21,859 63% 23% 88% 95% N
Vigário Geral 2012 17,697 35% 13% 94% 101% N
Caxias 3 2013 17,433 43% 17% 96% 95% N
Nova Iguaçu 1 2013 20,431 49% 28% 90% 97% N
Nova Iguaçu 2 2013 21,995 46% 21% 88% 98% N
Nilópolis 2013 10,564 42% 28% 90% 96% N
Nilópolis Convencional 2010 11,156 38% 12% 94% 98% N
Ricardo de Albuquerque 2013 25,915 35% 13% 94% 98% N
Mesquita 2013 8,924 51% 23% 84% 96% N
Cabritos/Tabajaras/Chapéu
Mangueira/Babilônia/Santa Marta2012 8,310 68% 11% 62% 96% Y
Coelho da Rocha 2013 18,724 41% 11% 92% 97% N
Caxias 4 2013 19,789 42% 16% 90% 99% N
Alemão 2014 13,519 63% 33% 91% 94% Y
Cidade de Deus 1 2011 6,458 52% 32% 23% 98% Y
Tomazinho 2013 12,865 43% 18% 87% 95% N
Formiga/Borel/Macaco/Salgueiro/Andarai 2012 17,539 51% 27% 50% 89% Y
Média 359,829 50% 20% 89% 96%
UPP Area
* Reflects the results accumulated until mar/14 since the begining of the implementation of each APZ.
Subtitle: N = N / Y = Yes.
NeighborhoodImplementation
Year
Number of
clients
Non-Technical Losses /
Grid Load*Collection Rate
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Collection
The 2Q14 collection rate stood at 103.5% of
billed consumption, 0.7 p.p. down on the same
period last year, primarily due to the 10.8 p.p.
reduction in government collection and the large
volume of medium-voltage client bills maturing
on the last day of June, which were cleared on
the first day of July.
The first-half collection rate came to 98.7%, 3.8
p.p. down on 2H13, mostly due to the
extraordinary tariff adjustment of January 24,
2013, which reduced tariffs by 19.63%, resulting
in an atypical collection rate in the first quarter of
2013.
In 2Q14, provisions for past due accounts (PCLD)
totaled R$36.1 million, represented 1.7% of gross
billed energy, R$12.4 million less than the R$48.4
million provisioned in 2Q13, or 2.5% of gross
billed energy.
2Q14 2Q13 Var. % 1H14 1H13 Var. %
PCLD 36.1 48.4 (12.4) 61.4 77.4 (16.1)
Provisions for Past Due Accounts
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Operating Quality
In 2Q14, in the overhead distribution network, 193 medium-voltage distribution circuits were inspected/maintained,
572 transformers were replaced and 41,433 trees were pruned. In the underground distribution network, 4,433
transformer vaults and 14,789 manholes were inspected. In addition, 43 transformers, 28 switches and 230
protectors were maintained.
In the last 12 months, the moving average of the equivalent length of interruption indicator (DEC), expressed in time,
registered 15.12 hours, 26.21% down on the 12 months through June 2013, while that of the equivalent frequency of
interruption indicator (FEC), expressed in occurrences, stood at 7.52 times, down by 16.91% in the same period.
All indicators in 2Q14 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 maintenance measures are having a positive impact on results, ensuring a better
DEC and FEC performance in 2Q14 than in 2Q13.
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2.2 Generation
Light Energia sold 1,092.7 GWh in 2Q14, net of energy purchases, 7.0% down year-on-year. No energy was sold on
the captive market (ACR) in the quarter, due to expiration of the last existing captive energy sale contracts in
December 2013. These contracts were renegotiated on the free market (ACL), whose 2Q14 energy sales moved up by
26.4% as a result.
The energy purchase balance, net of spot market sales, came to 20.3 GWh in 2Q14, versus total sales of 40.6 GWh in
2Q13. Such result is explained by the low GSF (Generation Scaling Factors), due to the national system’s
exceptionally poor hydrological conditions, impacted by low average rainfall, except in the North and South
submarkets.
GSF in April, May, and June 2014 came to 98.74%, 93.61%, and 88.86%, respectively, versus 101.65%, 100.21%, and
97.79% in the same months in 2013. The average GSF in 2Q14 was 93.74%, 6.1 p.p. down year-on-year.
First-half energy sales on the free market (ACL) increased by 20.7% over the same period the year before, while spot
market sales climbed by a substantial 78.7%, due to less expressive ACL contract seasonality in 2014 than in 2013,
resulting in a greater difference between verified energy volumes and contracted energy volumes than in the
previous year.
LIGHT ENERGIA (GWh) 2Q14 2Q13 Var. % 1H14 1H13 Var. %
Regulated Contracting Environment Sales - 254.5 - - 518.1 -
Free Contracting Environment Sales 1,113.0 880.2 26.4% 2,244.1 1,859.8 20.7%
Spot Sales (CCEE) (20.3) 40.6 - 114.2 63.9 78.7%
Total 1,092.7 1,175.2 -7.0% 2,358.3 2,441.9 -3.4%
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2.3 Commercialization and Services
In the second quarter of 2014, direct energy sales by Light Esco
and LightCom from conventional and subsidized sources totaled
1,313.5 GWh, 26.8% up on the 1,035.6 GWh recorded in the same
period in 2013. Year-to-date energy sales amounted to 2,651.5
GWh, 28.3% higher than the 2,066.4 Gwh reported in 1H13.
Currently, eight service projects are being implemented, two of
which related to retrofits in chilled water plants and the
implementation of energy generating plants in shopping malls in
Rio de Janeiro and São Paulo. Light Esco also maintains
operational and maintenance contracts with five shopping malls,
a hotel, and a business center in several Brazilian states.
In 2Q14, Light Esco’s cogeneration plant installed on the premises of Rio de Janeiro Refrescos, began supplying
energy to the entire factory, as well as producing steam, food quality CO2 and nitrogen. The solar power plant in the
Maracanã soccer stadium, a project undertaken in association with EDF Consultoria em Projetos de Geração de
Energia Ltda., was also concluded and inaugurated this quarter.
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3. Financial Performance
3.1 Net Revenue
Consolidated
Consolidated net operating revenue totaled R$1,815.8 million in 2Q14, 3.5% down on 2Q13. Excluding revenue from
construction, which has a neutral effect on net income, consolidated net revenue moved up by 1.4% to R$1,601.5
million. All the Company’s segments recorded growth.
First-half consolidated net revenue increased by 11.5% year-on-year, or 11.2% excluding revenue from construction.
Distribution
Net revenue from distribution totaled R$1,652.8 million in 2Q14, a 5.3% decrease when compared to 2Q13.
Excluding revenue from construction, net revenue from distribution amounted to R$1,438.5 million, an increase of
3.2%.
Net Revenue (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Distribution
Billed consumption 1,341.8 1,275.6 5.2% 2,943.0 2,792.3 5.4%
Non billed energy (61.1) (44.0) 38.6% (45.0) (120.0) -62.5%
Network use (TUSD) 113.7 138.5 -17.9% 228.9 270.7 -15.4%
Short-Term (Spot)¹ 23.7 4.8 390.7% 23.7 4.8 390.7%
Others 20.4 19.4 5.1% 34.5 36.1 -4.4%
Subtotal (a) 1,438.5 1,394.3 3.2% 3,185.2 2,983.9 6.7%
Construction Revenue² 214.3 175.6 22.1% 377.8 332.8 13.5%
Subtotal (a') 1,652.8 1,569.9 5.3% 3,563.0 3,316.8 7.4%
Generation
Generation Sale (ACR+ACL) 119.7 117.1 2.2% 250.0 260.7 -4.1%
Short-Term¹ 11.1 13.2 -15.7% 89.5 13.2 578.2%
Others 2.6 1.7 52.4% 5.1 3.4 49.5%
Subtotal (b) 133.4 132.0 1.1% 344.6 277.3 24.3%
Commercialization and Services
Energy Sales 203.5 150.3 35.4% 430.4 299.1 43.9%
Services 11.4 2.6 329.7% 21.3 11.0 93.6%
Subtotal (c) 214.9 152.9 40.5% 451.6 310.1 45.6%
Others and Eliminations (d) (185.3) (99.7) 85.8% (261.3) (227.3) 14.9%
Total w/out construction revenue (a+b+c+d) 1,601.5 1,579.5 1.4% 3,720.2 3,344.0 11.2%
Total (a'+b+c+d) 1,815.8 1,755.1 3.5% 4,098.0 3,676.9 11.5%
¹ Balance of the settlement on the CCEE
² 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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The increase was primarily due to market growth of 3.0% and the average 1.3% upturn in the energy tariff as of
November 7, 2013 (excluding special obligations), ratified by the tariff revision process.
Revenue from demand surplus and exceeding reactive energy totaled R$10.9 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$38.7 million, both of which are treated as special obligations. Although they are billed, they have not been
included in net revenue since the last tariff revision in November 2013.
The distribution market consists mostly of the residential and commercial segments, which together accounted for
60.4% of 2Q14 energy consumption and 74.1% of sales revenue.
Excluding revenue from construction, net revenue from distribution came to R$ 3,185.2 million in the first half, 6.7%
up on 1H13, primarily due to the 5.5% increase in total market consumption and the average 1.3% upturn in the
energy tariff following the November 2013 tariff revision.
Year-to-date revenue from exceeding demand and surplus reactive energy totaled R$28.0 million while revenue
regarded as special obligations for combating energy theft came to R$85.5 million.
Generation
Net revenue from generation totaled R$133.4 million in the quarter, 1.1% more than the R$132.0 million recorded in
2Q13, given that the ACL energy sales price, net of taxes, averaged R$107.5/MWh in 2Q14, 4.2% higher than the
R$103.2MWh, weighted by both markets (ACL and ACR), recorded in 2Q13.
First-half net revenue totaled R$344.6 million, 24.3% up on 1H13, due to the greater availability of energy sold on the
spot market in 1H14, at an average price of R$658.3/MWh.
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Commercialization and Services
Net revenue from commercialization and services stood at R$214.9 million in 2Q14, 40.5% up on 2Q13.
Net revenue from energy resales increased by 35.4% in the same period, fueled by the 26.8% upturn in sales volume.
The average sale price, net of taxes, was R$154.9/MWh, versus R$145.1/MWh in 2Q13.
Net revenue from the service segment recorded a 329.7% increase in comparison to the same period of the previous
year, thanks to the operational start-up of four Light Esco’s projects this quarter, including the cogeneration plant on
the premises of Rio De Janeiro Refrescos.
First-half net revenue totaled R$451.6 million, 45.6% up on 1H13, as a result of the substantial upturn in this period
sales volume, together with higher prices, primarily due to the migration of Light Energia contracted energy to the
free market.
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3.2 Costs and Expenses
Consolidated
In the second quarter of 2014, operating costs and expenses totaled R$1,673.4 million, 6.3% up year-on-year.
Excluding construction costs, consolidated costs and expenses climbed by 4.3% over 2Q13, due to the higher volume
of energy purchased by the distribution and commercialization companies.
Consolidated distribution costs and expenses, excluding construction costs, came to R$3,221.2 million in the first
half, 11.0% more than in 1H13.
Distribution
Costs and Expenses (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Distribution (1,606.7) (1,479.2) 8.6% (3,347.5) (3,078.6) 8.7%Distribution w/out Construction Revenue (1,392.4) (1,303.6) 6.8% (2,969.7) (2,745.8) 8.2%
Generation (56.3) (43.2) 30.2% (94.7) (81.4) 16.4%
Commercialization (192.3) (148.7) 29.3% (411.5) (296.0) 39.0%
Others and Eliminations 181.9 96.8 87.8% 254.7 221.2 15.1%
Consolidated w/out Construction Revenue (1,459.1) (1,398.7) 4.3% (3,221.2) (2,901.9) 11.0%
Consolidated (1,673.4) (1,574.3) 6.3% (3,599.0) (3,234.8) 11.3%
Costs and Expenses (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Non-Manageable Costs and Expenses (1,083.9) (935.6) 15.8% (2,293.1) (2,043.8) 12.2%
Energy Purchase costs (1,057.5) (913.6) 15.8% (2,246.6) (1,959.3) 14.7%
Costs with Charges and Transmission (125.6) (118.2) 6.3% (255.0) (289.8) -12.0%
Others (Mandatory Costs) 3.1 4.8 -35.0% 17.5 17.4 1.0%
Credit PIS/COFINS on purchase 96.2 91.4 5.3% 191.0 187.9 1.7%
Manageable Costs and Expenses (308.5) (368.0) -16.2% (676.6) (701.9) -3.6%
PMSO (207.1) (212.0) -2.3% (412.3) (412.7) -0.1%
Personnel (75.3) (65.2) 15.6% (144.3) (138.3) 4.4%
Material (4.0) (3.9) 0.8% (9.2) (7.6) 20.8%
Outsourced Services (100.8) (108.6) -7.2% (191.7) (197.2) -2.8%
Others (26.9) (34.2) -21.3% (67.2) (69.6) -3.5%
Provisions - Contingencies 21.9 (18.2) - (18.0) (34.4) -47.5%
Provisions - PCLD (36.1) (48.4) -25.5% (61.4) (77.4) -20.8%
Depreciation and Amortization (86.2) (83.8) 2.8% (171.6) (164.5) 4.3%
Other Operacional/Revenues Expenses (1.2) (5.7) -79.5% (13.3) (12.9) 2.6%
Total costs w/out Construction Revenue (1,392.4) (1,303.6) 6.8% (2,969.7) (2,745.8) 8.2%
Construction Revenue (214.3) (175.6) 22.1% (377.8) (332.8) 13.5%
Total Costs (1,606.7) (1,479.2) 8.6% (3,347.5) (3,078.6) 8.7%
20
In 2Q14, distribution costs and expenses moved up by 7.8% over 2Q13. Excluding construction costs, total costs and
expenses grew by 5.9%.
The distributor’s year-to-date distribution costs increased by 8.6%, while total costs and expenses, excluding
construction costs, moved up by 8.0%.
Non-manageable Costs and Expenses
In 2Q14, non-manageable costs and expenses came to R$1,083.9 million,
15.8% up on the same period in 2013, mainly due to the 15.8% upturn in
purchased energy costs. This result already includes the transfer of CDE
funds related to April and May 2014, totaling R$224.3 million, in
accordance with Order 1696/14 and Official Letter 92/2014.
The increase in purchased energy costs was a reflection of: (i) higher
costs associated with hydrological risk , given that the average GSF4 in
2Q14 was 6.1 p.p. lower than in 2Q13; (ii) contracting through the A-1
Auction, held in December 2013, and the A-0 Auction, held in April 2014,
at R$ 177.22/MWh and R$ 268.33/MWh, respectively, higher than the
prices covered by the tariff; (iii) contractual adjustments; (iv) the increase
in the average difference settlement price (PLD) from R$249.5/MWh in
2Q13 to R$680.8/MWh in 2Q14, 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. The
2Q14 PLD upturn also impacted spot market purchases to offset
increased consumption in the concession area, which purchase volume
was of 198 GWh in 2Q14, as opposed to 3 GWh in 2Q13.
Costs with charges and transmission climbed by 6.3%, mainly due to the
23.9% upturn in energy transmission expenses as a result of a higher
volumes contracted with the basic network, together with the increase in the network usage charge.
Non-manageable costs are passed on to consumer tariffs and any increase or reduction in relation to the regulatory
level constitutes a regulatory asset or liability (CVA) balance, to be taken into account in the next tariff adjustment,
3 GSF in April, May, and June 2014 came to 98.74%, 93.61%, and 88.86%, respectively, versus 101.65%, 100.21%, and 97.79% in the same
months in 2013.
21
but which is not recorded in the income statement in accordance with International Financial Reporting Standards
(IFRS). In 2Q14, net regulatory assets totaled R$120.3 million, versus R$119.3 million in 2Q13.
The average purchased energy cost, excluding spot market purchases, amounted to R$153.4/MWh in 2Q14, 27.6%
up on the R$120.2/MWh recorded in 2Q13. Considering Spot market purchases, the average purchased energy cost
was of R$ 214.4 / MWh in 2Q14, higher than the R$124.7 / MWh registered in 2Q13.
The following table gives a breakdown of non-manageable costs:
Tariff Deficit
The unprecedented level of exposure to the spot market due the substitution of the auctions stipulated in the
legislation with the insufficient allocation of assured physical energy quotas and the cancellation of certain new
energy contracts entered into in previous years, together with the high prices in this market, reflecting low reservoir
levels and higher dispatch by the thermal plants, led to a substantial deficit in the distribution concessionaires.
In the first half of 2014 alone, Light SESA’s tariff deficit totaled R$1,635 million, comprising the following items: (i)
involuntary exposure to the spot market, accounting for R$1,238 million; (ii) the hydrological risk of the quotas, R$
39 million; (iii) availability contracts with thermal plants, R$299 million; (iv) energy contracted at the A0 auction,
R$28 million; and (v) energy contracted at the A1 auction, R$ 30 million.
In order to mitigate the impact of this deficit, the government issued, in 2014, Decrees 8203 and 8221, aimed at
totally or partially covering the additional costs arising from the involuntary spot-market exposure and the
Non-Manageable Costs and Expenses (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Energy Purchase costs (1,057.5) (913.6) 15.8% (2,246.6) (1,959.3) 14.7%
Itaipu (163.3) (165.0) -1.0% (331.3) (309.9) 6.9%
TPP Norte Fluminense (280.3) (270.0) 3.8% (557.6) (537.0) 3.8%
Short-Term Energy (Spot) (271.3) 18.9 - (1,516.9) (343.3) 341.9%
Energy auction (599.1) (457.2) 31.0% (1,205.9) (1,000.7) 20.5%
Availabilities Contracts (289.5) (236.5) 22.4% (581.3) (462.2) 25.8%
Others (309.6) (220.7) 40.3% (624.7) (538.5) 16.0%
CDE Funds 224.3 (1.6) - 1,377.1 290.3 374.4%
Hydrological risk - (1.6) - (51.1) 129.8 -
Quotas Exposure 138.1 - - 1,221.5 160.4 661.4%
Availabilities Contracts 86.2 - - 219.6 - -
CONER (Power Reserve) - - - (12.8) - -
Other Credits 32.0 (38.8) - (12.0) (58.6) -79.6%
Costs with Charges and Transmission (125.6) (118.2) 6.3% (255.0) (289.8) -12.0%
System Service Charge (ESS) (19.6) (85.1) -77.0% (46.2) (300.4) -84.6%
CDE - ESS - 57.4 - - 193.6 -
Transported Energy (62.8) (50.7) 23.9% (125.3) (103.5) 21.1%
Other Charges (43.2) (39.7) 8.8% (83.4) (79.6) 4.9%
Others (Mandatory Costs) 3.1 4.8 -35.0% 17.5 17.4 1.0%
Credit PIS / COFINS on purchase 96.2 91.4 5.3% 191.0 187.9 1.7%
Total (1,083.9) (935.6) 15.8% (2,293.1) (2,043.8) 12.2%
22
availability contracts. As a result Light received a total transfer of R$1,385 million in the first half, reducing its period
tariff deficit to R$250 million, which was covered by its cash position and which will be passed on to consumers in
the next tariff adjustment through the CVA.
Manageable Costs and Expenses
In 2Q14, manageable operating costs and expenses, comprising personnel, materials, outsourced services,
provisions, depreciation, other operating revenue /expenses and others totaled R$308.5 million, 16.2% down on
2Q13.
Costs and expenses from personnel, materials, outsourced services and others (PMSO) totaled R$207.1 million, 2.3%
down on the same period last year, due to the 21.3% reductions in the "others" line and the 7.2% decline in
outsourced services, partially offset by the 15.6% increase in personnel expenses.
The 15.6% upturn in the personnel line was primarily due to the lower volume invested in labor capitalization in
comparison with 2Q13.
The 7.2% reduction in costs from outsourced services was due to lower expenses with emergency and call center
services, reflecting the period decrease in distribution network interruptions.
The 21.3% year-on-year reduction in the “others” line was due to: (i) the R$3.2 million decline in various software
license renewals, which were concentrated in the second quarter last year; (ii) the R$1.0 million reduction in
expenses with cultural projects; and (iii) the R$1.0 million downturn in fleet costs due to the review of practices at
the end of 2013 aiming at optimizing vehicle use.
The provisions line totaled R$14.2 million, 78.8% down on 2Q13, mainly driven by the reversals of a tax provision and
two labor provisions amounting to R$33.0 million and R$8.9 million, respectively, due to a change in the expected
losses. In addition, provisions for past due accounts (PCLD) fell by 25.5%, from R$48.4 million, in 2Q13, to R$36.1
million.
The depreciation and amortization line increased by 2.8%, due to higher investments as a result of the incorporation
of more assets into the network in 2013.
The other operating revenue/expenses line totaled R$1.2 million, 79.5% down on the R$5.7 million recorded in 2Q13
due to the deactivation of intangible assets.
23
Generation
In 2Q14, Light Energia’s costs and expenses amounted to R$56.3 million, an increase of 30.2% over 2Q13 due to the
higher volume of purchased energy. As the GSF values were low in April, May, and June, energy had to be purchased
on the spot market to meet contractual obligations, which had an impact on the purchased energy cost
Second-quarter costs and expenses were broken down as follows: personnel (12.1%), materials and outsourced
services (8.3%), CUSD/CUST/purchased Energy (42.3%), and depreciation and others (37.4%). PMSO per MWh
generated by Light Energia plants in the quarter came to R$15.5/MWh, versus R$16.1/MWh in 2Q13.
Commercialization and Services
Costs and expenses totaled R$192.3 million in 2Q14, 29.3% higher than in the second quarter of 2013, due to the
23.1% increase in the cost of energy purchased for resale, due to the combination of higher volume and purchase
price.
Year-to-date costs and expenses increased by 39.0% over 1H13, mainly due to the increase in energy purchased for
resale and higher spot market prices in the first half. The 156.9% upturn in the materials and outsourced services line
was due to the operational start-up of several Light Esco projects this year, including the cogeneration plant installed
on the premises of Rio de Janeiro Refrescos.
Operating Costs and Expenses (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Personnel (2.2) (2.0) 11.4% (4.8) (3.9) 21.8%
Material and Outsourced Services (6.1) (4.2) 44.6% (18.0) (7.0) 156.9%
Purchased Energy (174.7) (141.9) 23.1% (378.9) (284.0) 33.4%
Depreciation (1.3) (0.0) 3329.7% (1.4) (0.1) 1676.4%
Other Operacional/Revenues Expenses (7.1) - - (7.1) - -
Others (includes provisions) (0.9) (0.6) 61.3% (1.4) (1.0) 40.8%
Total (192.3) (148.7) 29.3% (411.5) (296.0) 39.0%
Operating Costs and Expenses (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Personnel (6.8) (6.3) 7.6% (12.5) (11.6) 7.6%
Material and Outsourced Services (4.7) (5.2) -10.6% (8.3) (8.8) -5.1%
Purchased Energy (CUSD) (23.8) (10.3) 131.4% (31.7) (17.9) 77.2%
Depreciation (13.5) (13.7) -2.0% (27.0) (27.5) -1.9%
Other Operacional/Revenues Expenses (0.4) 0.2 - (0.4) 0.2 -
Others (includes provisions) (7.2) (7.8) -8.3% (14.9) (15.8) -5.7%
Total (56.3) (43.2) 30.2% (94.7) (81.4) 16.4%
24
3.3 EBITDA5
Consolidated
Consolidated EBITDA totaled R$239.3 million in 2Q14, 13.9% down on 2Q13, while the EBITDA margin6 decreased
from 17.6% to 14.9% in the same period. Distribution and generation EBITDA fell by 24.2% and 12.1%, respectively,
while EBITDA from commercialization and services moved up by 449.3%.
This quarter’s EBITDA can be largely explained by energy purchase costs. Both the distributor and the generation
company suffered substantial increases in these costs. In the case of the distributor, this occurred in the portion not
covered by the CDE transfer, while the market difference generator was penalized by the deterioration in the
system’s hydrological condition, being forced to settle difference on the spot market in order to comply with its
contractual obligations.
4 EBITDA is calculated in accordance with CVM Instruction 527/2012 and refers to net income + income and social contribution taxes + the net
financial expense + depreciation and amortization. 5 Revenue from construction was not considered in the calculation of the consolidated and distribution EBITDA margins, due to the booking of
revenues and costs with a zero margin.
Consolidated EBITDA (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var.%
Distribution 132.3 174.5 -24.2% 387.1 402.6 -3.9%
Generation 88.0 100.1 -12.1% 270.8 219.4 23.4%
Commercialization 23.9 4.4 449.3% 41.5 14.3 190.6%
Others and eliminations (4.9) (1.1) 360.2% (7.1) (3.3) 118.9%
Total 239.3 277.9 -13.9% 692.3 633.1 9.3%
EBITDA Margin (%) 14.9% 17.6% -2,7 p.p 18.6% 18.9% -0,3 p.p
Regulatory Assets and Liabilities 120.3 119.3 0.9% 102.1 220.4 -53.7%
Adjusted EBITDA 359.7 397.2 -9.4% 794.3 853.5 -6.9%
25
The distribution segment’s share of consolidated EBITDA fell from 62. 6%, in 2Q13, to 54.2%, while the share of the
generation and commercialization segments climbed from 35.9% to 36.0% and from 1.6% to 9.8%, respectively, in
the same period.
When adjusted for the CVA, i.e. regulatory assets and liabilities that will be taken into account in the distributor’s
next tariff adjustment, adjusted EBITDA came to R$359.7 million, 9.4% down on 2Q13. Consolidated EBITDA totaled
R$692.3 million in the first half, 9.3% down on 1H13. Including the CVA, EBITDA came to R$794.3 million, 6.9% down
year-on-year.
26
Distribution
The distribution company’s EBITDA totaled R$132.3 million in 2Q14, 24.2% down on 2Q13, mainly explained by (i)
increase in energy purchase costs, especially in the portion not covered by the transfer of the CDE; and (ii) reduction
in the regulatory EBITDA due to the last tariff revision process, ratified in November 2013, in which a 7.5% actual net
WACC was applied, inferior to the 9.95% WACC from the previous cycle (2008 to 2013). The EBITDA margin7 stood at
9.2%, 3.3 p.p. less than in 2Q13. When adjusted for the CVA, distribution EBITDA came to R$252.7 million, 14.0%
down on the same period last year.
In the first half, the distribution company posted EBITDA of R$387.1 million, 3.9% down on 1H13, due to the tariff
revision process impacts. Including regulatory assets and liabilities (CVA), distribution EBITDA came to R$489.2
million, 21.5% less than in the same period last year. The year-to-date EBITDA margin stood at 12.2%, 1.3 p.p. lower
than in 1H13.
Generation
Light Energia recorded an EBITDA of R$88.0 million in 2Q14, 12.1% down on 2Q13, due to spot market energy
purchases as a result of the low Generation Scaling Factor GSF levels resulting from the worsening of the system’s
hydrological situation. The EBITDA margin came to 66.0%, 9.9 p.p. down year-on-year.
In 1H13, EBITDA totaled 270.8 million, 23.4% up on the first half of 2013, due to the sale of energy on the spot
market in the opening months of the year, accompanied by an EBITDA margin of 78.6%, down by 0.5 p.p.
Commercialization and Services
EBITDA from commercialization and services totaled R$23.9 million in 2Q14, 449.3% higher than in 2Q13, thanks to
the 26.8% increase in energy sales volume and higher prices in 2Q14.
EBITDA in the first six months came to R$41.5 million, 190.6% up on 1H13.
The EBITDA margin stood at 11.1% in the second quarter, 8.3 p.p. up on 2Q14, and 9.2% in the first half, a 4.6 p.p.
year-on-year improvement.
6 Revenue from construction was not considered in the calculation of the consolidated and distribution EBITDA margins, due to the booking of
revenues and costs with a zero margin.
27
3.4 Consolidated Financial Result
The 2Q14 financial result was a negative R$111.8 million, a 17.1% deterioration over the negative R$95.5 million
posted in 2Q13.
Financial revenue totaled R$66.4 million, 49.3% down year-on-year, mainly due to the net swap result of R$76.9
million in 2Q13 as a result of the depreciation of the Real against the Dollar in this period.
Second-quarter financial expenses came to R$178.6 million, 21.1% down on 2Q13, mainly due to the settlement of
the debt with Braslight in 1Q14, as well as the reduction in the monetary and currency variation resulting from the
appreciation of the Real against the dollar, partially offset by the swap result.
The first-half financial result was a negative R$190.6 million, an 18.7% improvement over the negative result in 2H13.
Financial Result (R$ MN) 2Q14 2Q13 Var.% 1H14 1H13 Var. %
Financial Revenues 66.8 130.9 -49.0% 163.8 147.0 11.5%
Income from financial investments 28.2 12.2 131.6% 44.7 15.5 188.7%
Moratory Increase / Debts Penalty 20.0 24.0 -16.8% 41.4 45.2 -8.5%
Others Financial Revenues 18.6 17.8 4.3% 77.8 31.8 144.4%
Financial Expenses (178.6) (226.4) -21.1% (354.5) (381.3) -7.0%
Debt Expenses (131.0) (89.9) 45.7% (247.4) (162.4) 52.4%
Monetary and Exchange variation 24.7 (71.7) - 49.0 (62.9) -
Net Swap Operations (47.2) - - (94.5) - -
Restatement of provision for contingencies (9.3) (6.3) 47.3% (15.1) (25.3) -40.2%
Restatement of R&D/PEE/FNDCT (2.4) (4.9) -51.5% (4.5) (6.0) -24.8%
Interest and fines on taxes (0.8) (5.4) -85.9% (0.8) (7.2) -88.7%
Installment payment - fines and interest rates Law 11.941/09 (REFIS) (3.7) (2.8) 30.5% (7.4) (5.5) 34.4%
Present value adjustment 0.7 0.6 5.6% 2.0 0.9 109.8%
DIC/FIC Compensation (7.0) (12.5) -44.5% (26.3) (37.6) -30.1%
Other Financial Expenses (Includes IOF) (2.7) (3.0) -11.5% (5.8) (5.6) 3.6%
Braslight (private pension fund) - (30.5) - (3.5) (69.9) -94.9%
Charges - (15.6) - (3.5) (31.2) -88.7%
Monetary and Exchange Variation - (14.8) - - (38.6) -
Total (111.8) (95.5) 17.1% (190.6) (234.3) -18.7%
28
3.5 Debt
R$ MN Short Term % Long Term % Total %
Brazilian Currency 946.0 13.9% 4,881.9 71.5% 5,827.9 85.4%
Light SESA 810.1 11.9% 4,261.8 62.5% 5,071.9 74.3%
Debenture 4th Issue 0.0 0.0% 0.0 0.0% 0.0 0.0%
Debenture 7th Issue 337.1 4.9% 323.7 4.7% 660.7 9.7%
Debenture 8th Issue 42.8 0.6% 430.5 6.3% 473.3 6.9%
Debenture 9th Issue - series A 14.1 0.2% 995.7 14.6% 1,009.8 14.8%
Debenture 9th Issue - series B 4.4 0.1% 636.1 9.3% 640.5 9.4%
Debenture 10th Issue 11.7 0.2% 744.3 10.9% 756.0 11.1%
Eletrobras 1.2 0.0% 5.4 0.1% 6.6 0.1%
CCB Bradesco 98.1 1.4% 225.0 3.3% 323.1 4.7%
Working Capital - Santander 87.4 1.3% - - 87.4 1.3%
BNDES (CAPEX) 121.2 1.8% 448.0 6.6% 569.1 8.3%
BNDES FINEM 82.5 1.2% 135.9 2.0% 218.4 3.2%
BNDES Olympics 2.2 0.0% 26.2 0.4% 28.5 0.4%
Banco do Brasil 5.7 0.1% 150.0 2.2% 155.7 2.3%
Others 1.7 0.0% 141.1 2.1% 142.8 2.1%
Light Energia 126.8 1.9% 581.7 8.5% 708.5 10.4%
Debenture 1st Issue 89.2 1.3% 84.7 1.2% 173.9 2.5%
Debenture 2nd Issue 17.0 0.2% 423.8 6.2% 440.7 6.5%
Debenture 3rd Issue 2.7 0.0% 27.4 0.4% 30.1 0.4%
BNDES (CAPEX) 7.0 0.1% 19.2 0.3% 26.2 0.4%
BNDES FINEM 10.9 0.2% 26.7 0.4% 37.6 0.6%
Others 0.0 0.0% - - 0.0 0.0%
Light ESCO 9.1 0.1% 38.4 0.6% 47.5 0.7%
BNDES - PROESCO 9.1 0.1% 38.4 0.6% 47.5 0.7%0.0 0.0% 0.0 0.0% 0.0 0.0%
Foreing Currency 154.4 2.3% 841.2 12.3% 995.6 14.6%
Light SESA 153.6 2.3% 665.0 9.7% 818.6 12.0%
National Treasury 1.3 0.0% 32.8 0.5% 34.1 0.5%
Merril Lynch 45.5 0.7% 59.5 0.9% 104.9 1.5%
BNP 105.9 1.6% - - 105.9 1.6%
Citibank 0.8 0.0% 440.5 6.5% 441.3 6.5%
Bank Tokyo - Mitsubishi 0.1 0.0% 132.2 1.9% 132.3 1.9%
Light Energia 0.8 0.0% 176.2 2.6% 177.0 2.6%
Citibank 0.8 0.0% 176.2 2.6% 177.0 2.6%
Gross Debt 1,100.4 16.1% 5,723.0 83.9% 6,823.5 100.0%
Cash 1,593.9
Net Debt (a) 5,229.6
R$ MN jun/13 mar/14 jun/14 % jun 13 % mar 14
Net Debt 4,056.1 5,341.8 5,229.6 28.9% -2.1%
Braslight 1,066.6 - - - -
Net Debt + Braslight 5,122.7 5,341.8 5,229.6 2.1% -2.1%
29
The Company’s gross debt in June 2014 was of R$6,823.5
million, 12.8% more than at the end of 1Q14, and 11.8%, or
R$722.2 million, up year-on-year due to the raising of funds
in the period: (i) the disbursement of R$87.1 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.
The funds were used for investments, working
capital and, especially, the prepayment of more
expensive liabilities, including the February 2014
settlement of the R$1,224.7 million debt with the
Braslight pension fund, and settlement of the 5th
debenture issue, at the CDI plus 1.5%.
The Net debt/EBITDA ratio moved up from 2.90x in
March 2014 to 2.99x in June 2014, still within the
Company’s net debt/EBITDA covenant
limit of 3.0x. The Company also has a
covenant for the EBITDA/interest
expense ratio, which should be higher
than 2.5x. The result for this indicator in
March was 3.31x. It is worth noting that
non-compliance with this covenant only
occurs if the limits determined by the
indicators are not respected for two
consecutive or four alternate quarters.
The Company’s debt has an average term to maturity of 3.9 years and the average cost of Real-denominated debt
was 10.5% p.a., both in line with the end-of-March figure. At the close of the quarter, 16.4% of total debt was
denominated in foreign currency, but, considering the FX hedge horizon, only 0.3% of this total was exposed to
foreign currency risk, 0.2 p.p. less than at the end of March. Light’s FX hedge policy consists of protecting cash flow
jun/14 dec/13 2012
Gross Debt 6,823.5 5,815.3 4,666.0
+ Swap (74.6) (135.1) -29.4
+ Pension Fund 0.0 1,224.7 1,054.7
- Cash 1,593.9 1,790.4 392.9
= Net Debt for covenants (a) 5,155.0 5,114.4 5,298.4
EBITDA (12 months) 1,756.0 1,696.8 1,456.2
+ Provision 185.1 210.9 475.2
- Other Operational Revenues/Expenses 75.5 (20.7) 375.6
+ Regulatory Assets and Liabilities (CVA) (139.3) (21.0) 330.4
- Financial CVA 0 5.1 14.0
= EBITDA for covenants (b) 1,726.3 1,902.4 1,872.2
2.99 2.69 2.83
Covenants Multiple R$ MN
Net Debt / EBITDA (a/b)
30
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, and Bank Tokyo-Mitsubishi, was contracted with swaps for the entire term of the
debt.
3.6 Net Income
Light posted a net profit of R$15.3 million in 2Q14, 73.8% down on the net income of R$58.2 million reported in the
second quarter of 2013. When adjusted for regulatory assets and liabilities (CVA), not recorded in the income
statement, adjusted net income came to R$94.7 million, 30.8% down on 2Q13.
Such result can be explained, mostly, by the increase in purchased energy costs, especially from the distributor, with
an impact in the portion not covered by the CDE transfer. On the other hand, the generator was penalized by the
deterioration of the system’s hydrological condition, being forced to settle difference on the spot market to comply
with contractual obligations. Another relevant impact was the reduction in the regulatory EBITDA due to the last
tariff revision process, ratified in November 2013, in which a 7.5% actual net WACC was applied, inferior to the
9.95% WACC from the previous cycle (2008 to 2013).
31
First-half net income amounted totaled R$195.8 million, 43.1% up year-on-year, or R$263.2 million when adjusted
for regulatory assets and liabilities (CVA), 6.8% down year-on-year.
32
3.7 Investments
Light invested R$357.8 million in 1H14, 9.5% more than in 1H13.
The distribution segment absorbed 92.8% of the total, or R$332.2 million, 21.8% up on 1H13. Of this total: (i)
R$154.8 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 in the underground network; (ii) R$119.7 million
went to the energy loss project (network protection, electronic meters, and fraud regularization); and (iii) R$36.4
million went to specific investments related to the World Cup and Olympic Games.
Commercialization and energy efficiency Investments fell from R$33.1 million in 1H13 to R$5.0 million in 1H14, due
to the conclusion of a major co-generation project in April this year.
CAPEX (R$MN) 1H14 Partic. % 1H13 Partic. % Var %
Distribution 332.2 92.8% 272.8 83.5% 21.8%
Network reinforcement and expansion 207.5 62.5% 175.0 64.2% 18.6%
Losses 119.7 36.0% 92.6 33.9% 29.3%
Others 5.0 1.5% 5.2 1.9% -4.7%
Administration 12.2 3.4% 13.7 4.2% -10.8%
Commercial./ Energy Efficiency 5.0 1.4% 33.1 10.1% -84.9%
Generation 8.4 2.3% 7.1 2.2% 17.9%
Total 357.8 100.0% 326.7 100.0% 9.5%
33
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 961
MW. With the incorporation of the scheduled expansion projects, the position on June 30 was as follows:
Existing Power Plants
Installed
Capacity
(MW)*
Assured
Energy
(MW)*
Operation
Start Act Date
Concession /
Authorization
Expiration Date
Fontes Nova 132 104 1942 jun-96 2026
Nilo Peçanha 380 335 1953 jun-96 2026
Pereira Passos 100 51 1962 jun-96 2026
Ilha dos Pombos 187 115 1924 jun-96 2026
Santa Branca 56 32 1999 jun-96 2026
Elevatórias - (87) - - -
SHPP Paracambi¹ 13 10 2012 fev-01 2031
Renova² 93 51 2008 dez-03 2033
Total 961 611
New Projects
Installed
Capacity
(MW)*
Assured
Energy
(MW)*
Operation
Start
SHPP Lajes³ 17 15 mai/16
Belo Monte4 280 114 fev-15
Guanhães¹ 22 13
Dores de Guanhães 7 4 -
Senhora do Pôrto 6 3 -
Jacaré 5 3 dez-14
Fortuna II 5 3 mar-15
Renova² 395 201
LER 2010 37 18 set-14
A-3 2011 48 23 mai-15
A-5 2012 5 3 jan-17
LER 2013 35 18 set-15
A-5 2013 78 40 mai/18
PPA 87 48 2015/2016
Mercado Livre I 5 3 jan-16
Mercado Livre II 21 11 jan-17
Mercado Livre III 6 4 abr-15
Mercado Livre IV** 74 32 -
Total 714 343
*Light's proportional Participation
¹ 51% Light
² 21.86% da Light / Considera que Renova detém 60% da Chipley, que por sua vez détem 51% da Brasil PCH
³Previsão de geração média de 15 MW
42.49% Light
**Including the exercise of the option by Cemig GT for an interest of up to 50% in the
2051
2052
2050
2031
2047
2048
2050
2050
2051
2032
2032
2032
2031
2046
Current Generation Park
Generation Capacity Expansion Projects
Concession / Authorization
Expiration Date
2026
2045
34
The second quarter of 2014 was marked by the following events related to projects for expanding Light’s generating
capacity:
Lajes SHP
• 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
process of contracting the construction company is under way and once this is defined, it will be possible to begin
the works, with start-up scheduled for the first half of 2016, given that the project has already been granted an
installation license. The 17 MW turbine will be installed in the old powerhouse of the Fontes Velha power plant. In
addition to increasing generating capacity, the project also brings certain other benefits, such as increasing
operational flexibility, upgrading the supply of the CEDAE water main, controlling the Piraí River’s water level, and
improving the quality of the water in the Lajes Reservoir.
Guanhães Energia
• Guanhães Energia S.A. is a special purpose entity (SPE) set up to implant four small hydroelectric power plants
(SHPs) – Dores de Guanhães, Senhora do Porto, Jacaré and Fortuna II, all of which in the state of Minas Gerais, with a
joint installed capacity of 44 MW. Guanhães Energia’s shareholders are Light Energia S.A. (51%) and CEMIG Geração
e Transmissão S.A. (49%).
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 average MW. So far, 56% of the
construction works have been concluded, as has 20% of the spillway, which will take water from the Xingu River to
the Belo Monte powerhouse. Soil and rock excavation are 68.20% and 38.16% complete, respectively.
In May 2014, Norte Energia submitted a report to Aneel detailing the various stoppages, due to various reasons, that
have jeopardized progress of the works and their effects on the project schedule. The request, currently being
analyzed by the regulatory authority, is directly related to the impacts caused by the blocking of access to and
occupation of the construction sites, strikes and temporary injunctions. Norte Energia is fully committed to
minimizing the impact of the problems on the Belo Monte schedule.
35
The concession agreement for Transmission Line Auction 11/2013 was signed in June 2014. This line will connect the
Belo Monte plant to the Southeast region of the country and will be constructed by the IE Belo Monte consortium,
comprising Furnas, State Grid Brazil Holding and Eletronorte.
Renova Energia (“Renova”)
In 2013, Renova announced the acquisition of 51% of Brasil PCH and the entry of Cemig GT into Renova’s controlling
block. Brasil PCH has 13 SHPs with a joint installed capacity of 291 MW and assured energy of 194 average MW. The
acquisition was strategic for Renova, since it added operational assets to its base, increasing its operating cash flow
generation, thus improving the balance between operational projects and projects under construction and
development.
In February 2014, the Company paid R$739.9 million for the above acquisition. The amount remaining from the
capital increase to be subscribed until September of this year by Cemig GT or a specific purpose entity, in which
Cemig GT will retain an interest of at least 50% and a private equity investment fund will hold an interest of 50% at
most, totaling R$810.1 million, was transferred to Renova in March 2014 as an advance for a future capital increase
by Cemig GT.
After the capital increase, a new shareholders’ agreement will be executed, through which Cemig GT or the SPE, RR
Participações and Light Energia. will become part of the Company’s controlling block.
Currently, the Company has a 60% interest in the specific purpose entity, Chipley SP Participações S.A., which owns
51% of Brasil PCH.
On June 4, long-term financing of R$1,044.1 million was approved for Alto Sertão II, comprising those wind farms
that sold energy at the Reserve Energy Auction in 2010 (“LER 2010”) and the New Energy Auction in 2011 (“LEN 2011
(A-3)”), with an installed capacity of 386.1 MW. The contracting and disbursement of this financing will permit
settlement of the bridge loans from the BNDES and the Promissory Notes issued this year.
Also in June, Renova’s 14 wind farms that sold energy at the Reserve Energy Auction in 2009 (“LER 2009”), with a
total installed capacity of 294.4 MW, began the commissioning process, with commercial start-up scheduled for July
4, when their energy should be available to the system.
36
4. Cash Flow
The Company closed 2Q14 with a cash position of R$1,579.1 million, 22.5% down year-on-year, primarily due to
funding of R$1.6 billion in 2Q13, which increased the cash position in the latter period, plus the reduction in working
capital and net profit, both of which were pressured by the high cost of energy purchases.
R$ MN 2Q14 2Q13 1H14 1H13
Cash in the Beginning of the Period (1) 694.4 435.9 546.4 230.4
Net Income 15.3 58.2 195.8 136.9
Social Contributions & Income Tax 11.2 26.6 105.8 69.8
Net Income before Social Contributions & Income Tax 26.5 84.8 301.6 206.7
Provision for Delinquency 36.1 48.4 61.4 77.4
Depreciation and Amortization 101.0 97.7 200.0 192.1
Loss (gain) on intangible sales / Residual value of disposals
fixed asset 3.0 7.0 3.0 8.9
Losses (gains) on financing exchange activities (24.7) 72.3 (49.0) 62.9
Net Interests and Monetary Variations 131.3 86.4 248.2 171.8
Braslight - 30.5 3.5 69.9
Atualization / provisions reversal (15.3) 21.0 24.1 55.8
Equity Pikup 4.0 0.5 6.8 1.1
Financial Assets of the Concession 1.8 (6.7) (44.8) (13.1)
Others 47.2 (76.9) 94.5 (54.5)
Subtotal 310.9 365.0 849.3 779.1
Working Capital (800.4) (314.0) (134.1) 197.0
Contingencies (14.2) (22.2) (35.6) (37.8)
Deferred Taxes 29.6 36.5 (4.6) (8.1)
Braslight 0.1 (0.9) (3.5) (1.2)
CDE fund 971.6 428.3 - -
Others (115.5) (25.4) (28.6) (114.1)
Taxes Paid (17.8) (13.3) (111.3) (80.4)
Interest Paid (176.0) (98.0) (230.7) (147.3)
Cash from Operating Activities (2) 188.3 356.0 301.0 587.1
Finance Obtained 913.6 2,158.4 1,172.2 2,433.5
Dividends - (74.8) - (74.8)
Loans and financing payments (81.3) (595.6) (152.5) (658.1)
Contractual debt amortization with the pension plan - (28.3) (1,224.7) (56.6)
Financing Activities (3) 832.3 1,459.7 (204.9) 1,644.0
Fixed Assets/Intangible/Financial Assets (130.8) (186.0) (271.0) (372.6)
Inflow/Acquisitions on Investment (5.1) (28.3) (17.1) (59.6)
Financial Investments - - 1,224.7 8.0
Investment Activities (4) (135.9) (214.4) 936.6 (424.2)
Cash in the End of the Period (1+2+3+4) 1,579.1 2,037.3 1,579.0 2,037.3
Cash Generation (2+3+4) 884.7 1,601.4 1,032.6 1,807.0
37
5. Corporate Governance
On June 30, 2014, the capital stock of Light S.A. comprised 203,934,060 common shares, 97,629,463 of which
outstanding.
The following chart shows Light’s shareholding structure in June 2014:
38
6. Capital Market
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 June 2014, Light S.A.’s shares (LIGT3) were priced at R$21,756. The Company’s market cap (no. of
shares x share price) closed the quarter at approximately R$4,397 million.
The charts below give a breakdown of the Company’s free float in June 2014.
Daily Average 2Q14 2Q13 1H14 1H13
Number of shares traded (Thousand) 796.9 1,156.7 933.2 1,004.3
Number of Transactions 3,315.0 3,935.1 3,338 3,409
Traded Volume (R$ Million) 15.7 20.7 17.5 18.9
Quotation per shares: (Closing)* R$ 21.56 R$ 15.17 R$ 21.56 R$ 15.17
Share Valuing 15.0% -20.4% -0.4% -28.3%
IEE Valuing 13.3% -8.4% 9.8% -13.2%
Ibovespa Valuing 5.5% -15.8% 5.6% -24.1%
*Ajusted by earnings.
BM&F BOVESPA (spot market) - LIGT3
39
The chart below shows the performance of Light’s stock from December 28, 2012 to May 14, 2014.
Dividends
Light’s dividend payment policy establishes a minimum payout equivalent to 50% of adjusted net income, calculated
in compliance with article 189 of Brazilian Corporate Law and pursuant to Brazilian accounting practices and the
regulations of the Brazilian Securities and Exchange Commission (CVM).
On April 24, 2014, the Annual Shareholders’ Meeting approved the proposal to distribute dividends in the amount of
thirty-two million, eighteen thousand, seven hundred and ninety-three reais and fifty-three centavos
(R$32,018,793.53) corresponding to the mandatory minimum dividends, and three hundred and thirty-two million,
eight hundred and nineteen thousand, two hundred and thirty-nine reais and eighty-one centavos
(R$332,819,239.81), related to net income for fiscal year 2013, to be paid by December 31, 2014, with the Board of
Directors being responsible for establishing the precise payment dates. 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.
40
Dividends paid, dividend yield and payout
41
7. Recent Events
On July 8, 2014, Authoritative Resolution 4734/2014 was issued, transferring the Lajes SHP concession from Light
Energia S.A. to SPE Lajes Energia S.A., a wholly owned Light Energia subsidiary.
On July 18, 2014, the Company approved the contracting of a loan by Light SESA. totaling five hundred and eighty
million, fifty-six thousand and five hundred and forty-five reais (R$580,056,545.00) from the BNDES in order to
finance investments in 2013 and 2014 totaling R$1.2 billion, guaranteed by a suretyship from Light S.A. and the
fiduciary assignment of 2.30% of Light SESA’s net operating revenue.
On July 24, 2014, Light S.A. sold its entire interest in CR Zongshen E-Power Fabricadora de Veículos S.A. (“E-
Power”), representing 20% of E-Power’s total capital, to CR Zongshen Fabricadora de Veículos S.A. (“CR
Zongshen”) for one million, ninety-six thousand, five hundred and eighty-nine reais and twelve centavos
(R$1.096.589.12), to be restated by the IGP-M general market price index, plus eight percent (8%) per year until
the effective payment date. As a result, the E-Power Shareholders’’ Agreement entered into between the
Company and CR Zongshen was annulled, with no remaining obligations for either signatory.
On July 25, 2014, Renova announced a 60-day extension to the term for exercising pre-emptive rights in relation
to the capital increase approved in February 2014, governing the entry of Cemig GT into Renova’s controlling
block. As a result, the period for exercising pre-emptive rights, which would have expired on July 29, 2014,
pursuant to the Notice to Shareholders of March 31, 2014, will now close on September 29, 2014.
42
8. Disclosure Program
Forward-looking Statements
The information on the Company’s operations and its Management’s expectations regarding its future performance
was not reviewed by 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 0155
USA: +1 (646) 843-6054
Other countries: +1 866 890 2584
Access code: Light
Schedule
08/14/2014, thursday, at 4:00 p.m. (Brasília Time) and at 3:00 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 2211-2560
Mariana da Silva Rocha [email protected] +55 21 2211-2814
Marcelle Pelajo [email protected] +55 21 2211-7392
Leonardo Dias Wanderley [email protected] +55 21 2211-2828
IR Team
43
EXHIBIT I
Selected Information per Company – R$ million
LIGHT SESA 2Q14 2Q13 Var. % 1H14 1H13 Var. %
Net Operating Revenue 1,652.8 1,569.9 5.3% 3,563.0 3,316.8 7.4%
Operating Expense (1,605.5) (1,473.5) 9.0% (3,334.2) (3,065.7) 8.8%
Other Operating Revenues/Expenses (1.2) (5.7) -79.5% (13.3) (12.9) 2.6%
Operating Result 46.2 90.7 -49.1% 215.5 238.2 -9.5%
EBITDA 132.3 174.5 -24.2% 387.1 402.6 -3.9%
Financial Result (96.5) (74.7) 29.1% (154.1) (194.7) -20.8%
Result before taxes and interest (50.3) 16.0 - 61.4 43.5 41.2%
Net Income (32.6) 13.3 - 41.2 30.9 33.4%
EBITDA Margin* 9.2% 12.5% -3,3 p.p. 12.2% 13.5% -1,3 p.p.
* Does not consider Construction Revenue
LIGHT ENERGIA 2Q14 2Q13 Var. % 1H14 1H13 Var. %
Net Operating Revenue 133.4 132.0 1.1% 344.6 277.3 24.3%
Operating Expense (55.9) (43.4) 28.9% (94.3) (81.5) 15.7%
Other Operating Revenues/Expenses (0.4) 0.2 - (0.4) 0.2 -
Operating Result 77.1 88.7 -13.1% 249.9 195.9 27.6%
Equity Pickup (2.5) (2.4) 7.7% (6.1) (4.0) 53.6%
EBITDA 88.0 100.1 -12.1% 270.8 219.4 23.4%
Financial Result (19.7) (21.0) -6.1% (42.6) (40.6) 4.9%
Result before taxes and interest 54.8 65.4 -16.2% 201.3 151.4 33.0%
Net Income 35.9 42.8 -16.0% 132.0 98.9 33.5%
EBITDA Margin 66.0% 75.9% -9,9 p.p. 78.6% 79.1% -0,5 p.p.
COMMERCIALIZATION AND SERVICES 2Q14 2Q13 Var. % 1H14 1H13 Var. %
Net Operating Revenue 214.9 152.9 40.5% 451.6 310.1 45.6%
Operating Expense (185.2) (148.7) 24.6% (404.4) (296.0) 36.6%
Other Operating Revenues/Expenses (7.1) - - (7.1) - -
Operating Result 22.6 4.2 431.9% 40.1 14.1 184.7%
Equity Pickup (0.0) 0.1 - (0.0) 0.1 -
EBITDA 23.9 4.4 449.3% 41.5 14.3 190.6%
Financial Result 4.1 (0.1) - 5.6 (0.1) -
Result before taxes and interest 26.7 4.2 529.6% 45.6 14.0 224.9%
Net Income 16.7 3.0 455.3% 29.3 9.4 209.9%
EBITDA Margin 11.1% 2.8% 8,3 p.p. 9.2% 4.6% 4,6 p.p.
44
EXHIBIT II
Selected Consolidated Financial Information* - R$ million
Consolidated - R$ MN 2Q14 2Q13 Var. % 1H14 1H13 Var. %
NET OPERATING REVENUE 1,815.8 1,755.1 3.5% 4,098.0 3,676.9 11.5%- - 0.0% - - 0.0%
OPERATING EXPENSE (1,673.4) (1,574.3) 6.3% (3,599.0) (3,234.8) 11.3%
PMSO (235.7) (238.8) -1.3% (461.9) (451.7) 2.3%
Personnel (86.0) (74.9) 14.7% (164.5) (156.3) 5.3%
Material (5.1) (3.1) 62.8% (19.5) (7.0) 179.0%
Outsourced Services (112.7) (123.0) -8.4% (211.9) (219.5) -3.4%
Others (32.0) (37.8) -15.2% (65.8) (68.9) -4.4%
Purchased Energy (1,099.6) (989.1) 11.2% (2,458.8) (2,131.2) 15.4%
Depreciation (101.0) (97.7) 3.4% (200.0) (192.1) 4.1%
Provisions (14.2) (66.6) -78.7% (79.8) (112.0) -28.8%
Construction Revenue (214.3) (175.6) 22.1% (377.8) (332.8) 13.5%
Other Operating Revenuess/Expenses (8.6) (6.5) 31.9% (20.7) (14.9) 39.5%
OPERATING RESULT 142.4 180.8 -21.2% 499.0 442.1 12.9%
EQUITY PICKUP (4.0) (0.5) 766.3% (6.8) (1.1) 510.2%
EBITDA (1) 239.3 277.9 -13.9% 692.3 633.1 9.3%
FINANCIAL RESULT (111.8) (95.5) 17.1% (190.6) (234.3) -18.7%
Financial Income 52.5 124.3 -57.7% 133.4 153.9 -13.3%
Financial Expenses (164.4) (219.8) -25.2% (324.0) (388.2) -16.5%
RESULT BEFORE TAXES AND INTEREST 26.5 84.8 -68.7% 301.6 206.7 46.0%
SOCIAL CONTRIBUTIONS & INCOME TAX (25.9) (40.1) -35.3% (101.1) (76.0) 33.0%
DEFERRED INCOME TAX 14.7 13.5 9.0% (4.8) 6.2 -176.8%
NET INCOME 15.3 58.2 -73.8% 195.8 136.9 43.1%
(1) EBITDA as of CVM Instruction 527/2012: Net Income + Social Contributions and Income Taxes + Net Financial Result +
Depreciation/Amortization
(*) The consolidated financial statements include the Light S.A. and its subsidiaries and affiliates. These financial statements were
eliminated from equity consolidated companies, the balances of receivables and payables, revenues and expenses between the
companies.
45
EXHIBIT III
Consolidated Balance Sheet – R$ million
ASSETS 06/30/2014 12/31/2013
Current 3,516.8 3,495.8
Cash & Cash Equivalents 1,579.1 546.4
Marketable securities 14.8 1,244.0
Receivable Accounts 1,411.2 1,223.4
Inventories 37.4 29.7
Recoverable Taxes 144.0 161.0
Prepaid Expenses 16.5 15.8
Other Current Assets 313.9 275.5 -
Non-current 9,639.0 9,506.5
Receivable Accounts 227.7 209.4
Deferred Taxes 606.8 622.8
Concession financial assets 2,056.1 1,926.2
Others Non-current Assets 433.6 464.9
Investiments 652.5 642.2
Fixed Assets 1,651.6 1,678.7
Intangible 4,010.8 3,962.1 0.0 -
Total Assets 13,155.8 13,002.2 0 0
LIABILITIES 06/30/2014 12/31/201300/01/1900 0
Current 3,072.3 3,318.5
Suppliers 1,080.9 907.3
Fiscal obligations 177.4 198.6
Loans and Financing 581.4 591.5
Debentures 519.0 51.0
Others Obligations 220.7 1,408.6
Provisions 128.1 129.5
Dividends and interest on equity to be paid 364.8 32.0 0 -
Non-current 6,743.4 6,206.6
Loans and Financing 2,056.9 1,823.5
Debentures 3,666.1 3,349.3
Others Obligations 276.3 263.7
Deferred Taxes 219.3 226.4
Provisions 524.8 543.7 0 -
Shareholders' Equity 3,340.1 3,477.1
Realized Joint Stock 2,225.8 2,225.8
Profit Reserves 565.6 565.6
Additional Proposed Dividend - 332.8
Asset Valuation Adjustments 419.6 429.5
Other comprehensive income (76.6) 76.6-
Accumulated Profit/Loss of Exercise 205.7 - 0 -
Total Liabilities 13,155.8 13,002.2
46
EXHIBIT IV
Regulatory Assets and Liabilities
R$ Million jun/14 mar/14 dec/13 sep/13 jun/13 mar/13 dec/12 sep/12
TOTAL ASSET 501.7 361.4 428.7 627.6 653.0 500.6 365.7 262.7
TOTAL LIABILITIES (65.4) (45.5) (94.5) (381.2) (77.4) (44.3) (10.6) (45.6)
TOTAL DIFFERENCE 436.2 315.9 334.2 246.4 575.6 456.3 355.2 217.1
Net difference (quarter) 120.3 (18.3) 87.8 (329.2) 119.3 101.2 138.0 118.7
Net difference (YTD) 102.1 (18.3) (21.0) (108.8) 220.4 101.2 330.4 192.4
47
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 AMAZÔNIA
2nd QUARTER - 2014 21.86% 51% 33% 51% 25.50%
OPERATING REVENUE 2,732 12 4 0 7 - - 2,756
REVENUE DEDUCTIONS (916) (0) (0) - (1) - - (918)
NET REVENUE 1,816 12 4 0 7 - - 1,838
OPERATING EXPENSE (1,673) (8) (3) (0) (8) - - (1,692)
OPERATING RESULT 142 3 1 (0) (1) - - 146
EQUITY PICKUP (4) (1) - - - - 1 (4)
EBITDA 239 6 3 (0) (1) - - 247
FINANCIAL RESULT (112) (1) (1) 0 (0) (0) - (114)
RESULT BEFORE TAXES AND INTEREST 27 1 1 (0) (1) (0) - 26
SOCIAL CONTRIBUTIONS &
DIFERRED/INCOME TAX(11) (1) (0) (0) (0) - - (12)
NET INCOME 15 0 0 (0) (1) (0) 1 15
REPORTED
CONSOLIDATEELIMINATION TOTAL
Consolidated - R$ MN RENOVA LIGHTGER EBL AXXIOM AMAZÔNIA
1st HALF 2014 21.86% 51% 33% 51% 25.50%
OPERATING REVENUE 6,123 24 9 0 13 - - 6,169
REVENUE DEDUCTIONS (2,025) (1) (0) (0) (1) - - (2,027)
NET REVENUE 4,098 23 8 0 12 - - 4,142
OPERATING EXPENSE (3,599) (17) 8 (0) (13) - - (3,621)
OPERATING RESULT 499 6 17 (0) (1) - - 521
EQUITY PICKUP (7) (1) - - - - (15) (23)
EBITDA 692 13 17 (0) (1) - - 721
FINANCIAL RESULT (191) (5) - 0 (0) (1) - (197)
RESULT BEFORE TAXES AND INTEREST 302 (0) 17 (0) (1) (1) - 316
SOCIAL CONTRIBUTIONS &
DIFERRED/INCOME TAX(106) (1) 2 (0) (0) - - (106)
NET INCOME 196 (2) 18 (0) (1) (1) (15) 196
REPORTED
CONSOLIDATEELIMINATION TOTAL
48
EXHIBIT VI
The Company’s results for the second quarters and first half of 2013 were reclassified due to Management’s decision
to present PIS and COFINS tax credits on purchased energy as a reduction factor for purchased energy costs instead
presenting them as a reduction in PIS and COFINS on revenue. 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 second quarter of 2014 is in accordance with the new practice>
However, for comparison purposes, the adjustments are presented below:
Consolidated Income Statements- R$ MNPublished
2Q13Adjustments
Reclassified
2Q13
NET OPERATING REVENUE 1,846.5 (91.4) 1,755.1
OPERATING EXPENSE (1,665.7) 91.4 (1,574.3)
Personnel (74.9) - (74.9)
Material (3.1) - (3.1)
Outsourced Services (123.0) - (123.0)
Purchased Energy (1,080.6) 91.4 (989.1)
Depreciation (97.7) - (97.7)
Provisions (66.6) - (66.6)
Construction Revenue (175.6) - (175.6)
Other Operating Revenuess/Expenses (6.5) - (6.5)
Others (37.8) - (37.8)
OPERATING RESULT 180.8 - 180.8
EQUITY PICKUP (0.5) - (0.5)
EBITDA (1) 277.9 - 277.9
FINANCIAL RESULT (95.5) - (95.5)
RESULT BEFORE TAXES AND INTEREST 84.8 - 84.8
SOCIAL CONTRIBUTIONS & INCOME TAX (40.1) - (40.1)
DEFERRED INCOME TAX 13.5 - 13.5
NET INCOME 58.2 - 58.2
49
Consolidated Income Statements- R$ MNPublished
1H13Adjustments
Reclassified
1H13
NET OPERATING REVENUE 3,864.8 (188.0) 3,676.9
OPERATING EXPENSE (3,422.7) 188.0 (3,234.8)
Personnel (156.3) - (156.3)
Material (7.0) - (7.0)
Outsourced Services (219.5) - (219.5)
Purchased Energy (2,319.2) 188.0 (2,131.2)
Depreciation (192.1) - (192.1)
Provisions (112.0) - (112.0)
Construction Revenue (332.8) - (332.8)
Other Operating Revenuess/Expenses (14.9) - (14.9)
Others (68.9) - (68.9)
OPERATING RESULT 442.1 - 442.1
EQUITY PICKUP (1.1) - (1.1)
EBITDA (1) 633.1 - 633.1
FINANCIAL RESULT (234.3) - (234.3)
RESULT BEFORE TAXES AND INTEREST 206.7 - 206.7
SOCIAL CONTRIBUTIONS & INCOME TAX (76.0) - (76.0)
DEFERRED INCOME TAX 6.2 - 6.2
NET INCOME 136.9 - 136.9
50
Cash Flow - R$ MNPublished
2Q13Adjustments
Reclassified
2Q13
Cash in the Beginning of the Period (1) 435.9 - 435.9
Net Income 58.2 - 58.2
Social Contributions & Income Tax 26.6 - 26.6
Net Income before Social Contributions & Income Tax 84.8 - 84.8
Provision for Delinquency 48.4 - 48.4
Depreciation and Amortization 97.7 - 97.7 Loss (gain) on intangible sales / Residual value of
disposals fixed asset7.0 - 7.0
Losses (gains) on financing exchange activities 72.3 - 72.3
Net Interests and Monetary Variations 86.4 - 86.4
Braslight 30.5 - 30.5
Atualization / provisions reversal 21.0 - 21.0
Equity Pikup 0.5 - 0.5
Financial Assets of the Concession (6.7) - (6.7)
Others (76.9) - (76.9)
Subtotal 365.0 - 365.0
Working Capital 114.1 - 114.1
Contingencies (22.2) - (22.2)
Deferred Taxes 36.5 - 36.5
Braslight (29.1) 28.3 (0.9)
CDE fund - - -
Others (25.2) - (25.2)
Taxes Paid (13.3) - (13.3)
Interest Paid (98.0) - (98.0)
Cash from Operating Activities (2) 327.8 28.3 356.0
Finance Obtained 2,158.4 - 2,158.4
Dividends (74.8) - (74.8)
Contractual debt amortization with the pension plan (595.6) - (595.6)
Loans and financing payments - (28.3) (28.3)
Financing Activities (3) 1,488.0 (28.3) 1,459.7
Fixed Assets/Intangible/Financial Assets (186.0) - (186.0)
Inflow/Acquisitions on Investment (28.3) - (28.3)
Financial Investments - - -
Investment Activities (4) (214.4) - (214.4)
Cash in the End of the Period (1+2+3+4) 2,037.3 - 2,037.3
Cash Generation (2+3+4) 1,601.4 - 1,601.4
51
Cash Flow - R$ MNPublished
1H13Adjustments
Reclassified
1H13
Cash in the Beginning of the Period (1) 230.4 - 230.4
Net Income 136.9 - 136.9
Social Contributions & Income Tax 69.8 - 69.8
Net Income before Social Contributions & Income Tax 206.7 - 206.7
Provision for Delinquency 77.4 - 77.4
Depreciation and Amortization 192.1 - 192.1
Loss (gain) on intangible sales / Residual value of
disposals fixed asset8.9 - 8.9
Losses (gains) on financing exchange activities 62.9 - 62.9
Net Interests and Monetary Variations 171.8 - 171.8
Braslight 69.9 - 69.9
Atualization / provisions reversal 55.8 - 55.8
Equity Pikup 1.1 - 1.1
Financial Assets of the Concession (13.1) - (13.1)
Dilution of Renova's Gain - - -
Others (54.5) - (54.5)
Subtotal 779.1 - 779.1
Working Capital 197.0 - 197.0
Contingencies (37.8) - (37.8)
Deferred Taxes (8.1) - (8.1)
Braslight (57.8) 56.6 (1.2)
CDE fund - - -
Others (114.1) - (114.1)
Taxes Paid (80.4) - (80.4)
Interest Paid (147.3) - (147.3)
Cash from Operating Activities (2) 530.5 56.6 587.1
Finance Obtained 2,433.5 - 2,433.5
Dividends (74.8) - (74.8)
Loans and financing payments (658.1) - (658.1)
Contractual debt amortization with the pension plan - (56.6) (56.6)
Financing Activities (3) 1,700.6 (56.6) 1,644.0
Disposal of Assets/Intangible (372.6) - (372.6)
Fixed Assets/Intangible/Financial Assets (59.6) - (59.6)
Inflow/Acquisitions on Investment 8.0 - 8.0
Investment Activities (4) (424.2) - (424.2)
Cash in the End of the Period (1+2+3+4) 2,037.3 - 2,037.3
Cash Generation (2+3+4) 1,807.0 - 1,807.0