notice to the market - public meeting with analysts - belo horizonte - brazil
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8/10/2019 Notice to the Market - Public Meeting with Analysts - Belo Horizonte - Brazil
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Corporate PresentationOctober 2014
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Light HoldingsDiversified structure which encompasses the distribution, generation and
commercialization segments.
2
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4
56
7
Light in numbers
Distribution RJ State ConcessionArea %
Population 16 mn 11 mn 68%
Area 44,000 Km 11,000 Km 25%
GDP R$ 407 bn R$ 207 bn 51%
# Consumers 7 mn 4 mn 57%
# Municipalities 92 31 34%1 IBGE (2010)
3
Amaznia Energia
Renova
Guanhes Energia
Generation
Complexo de Lajes
5
HPP Ilha dos Pombos
SHPP Paracambi
HPP Santa Branca
1
2
3
4
6
7
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Rankings Am ong the l arges t p layers in Brazi l
INTEGRATEDNet Revenues 2013* R$ Billion
GENERATION PRIVATE-OWNED COMPANIESInstalled Hydro-generation Capacity (MW) 2013
DISTRIBUTIONEnergy Consumption in Concession Area** (GWh) - 2013
4
15.6
10.69.2
7.1
14.6
5.560
2.652 2.241 2.219 1.799896
***
1 Source: Companies reports2 Source: Relatrio do Sistema de Apoioa ANEEL* Construction Revenue Included** Captive Market*** Considers the 9 MW of Renovas SHPPsand 19 MW of Brasil PCH
15.6
10.69.2
7.4 7.1
14.6
37,767
25,777 22,92621,783 20,391 15,634
5,560
2,652 2,241 2,219 1,799896
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Shareholders StructureEff ic ien t co mb ina t ion o f so l id indu s t ry and f inanc ia l p layers
5
11 Board members: 8 from the controllinggroup, 2 independents e 1 employeesnominated
A qualifying quorum of 7 members toapprove relevant proposals such as: M&A
and dividend policy
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Corporate GovernanceDecision process assures transparency and value creation
6LGSXY ADR-OTC
General Assembly
Fiscal Council
Board of Directors
Auditors
Committee
Governance andSustainability
Committee
HumanResourcesCommittee
Finances
Committee
Management
Committee
Chief ExecutiveOfficer
CorporateManagement Officer
Joo B. Zolini Carneiro Ricardo Cesar C. Rocha Evandro L. Vasconcelos Andreia Ribeiro Junqueira
Fernando Antnio F.Reis Paulo Carvalho Filho Evandro L. Vasconcelos*
Paulo Roberto R. Pinto
ChiefCommunications
Officer
Luiz Otavio Ziza Valadares
Interim*
Chief Financial and
Investor RelationsOfficer
Chief Legal Officer
Chief HR OfficerChief Distribution
Officer Chief Energy Officer
Chief BusinessOfficer
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Others captives13.6%
Commercialcaptive27.6%
Residentialcaptive35.2%
Industrial
captive5.1%
Free
18.6%
+5.5%
1H12H11
+5.1% p.a.
1H13 1H14
13,14511,934
25.7C
11,96013,869
25.2C25.1C 25.1C
Energy ConsumptionDistribution Semester
TOTAL MARKET (GWh)
1Note: To preserve comparability in the market approved by Aneel in the tariff adjustment process.the billed energy of the free customer CSN has been considered back.
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1,806
8
Market BreakdownELECTRICITY CONSUMPTION (GWh)
TOTAL MARKET SEMESTER
FREECAPTIVE
1H13 1H14
3,625
701 705
+5.5%
10,526 11,292
13,145
2,618 2,576
13,869
+4.2%
1,880
1,909
103 109
1,990
5.7%
4,055
430457
4,284
2,787
2,086 2,010
2,715
+11.1%
4,395
4,880
-2.6%
3,827
RESIDENTIAL INDUSTRIALCOMMERCIAL OTHERS TOTAL
1H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14
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Losses and Collection
9
LOSS (12 MONTHS)
99.5% 98.7%
Jun-13 Jun-14
2Q12 2Q1 4Q13
3.4%2.5%
1.7%
-0.8 p.p.
Jun/13 Sep/13 Mar/14 Jun/14ec13
43.7%
5,738
2,614
8,552
44.2%
5,972
2,843
8,352
41.9%
5,953
2,629
8,815
5,905
2,647
8,582
- 2.3 p.p.
42.2% 42.4%
5,955
2,793
8,748
% Non-technicallosses/ LV Market
Non-technical losses GWh Technical losses GWh
COLLECTION RATE12 MONTHS
PBD/GROSS REVENUE(BILLED SALES) - QUARTER
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Energy Losses CombatEfficient combination between technology and effective management
ELECTRONIC METERS INSTALLED(in thousands)
Outisde of Communities
Communities
Clientes comerciais eresidenciais
(Baixa tenso)4.100.000
10
2 9 2 2 2 2 2 3
351
2010 2011 2013012
307
79102
227122
432
197115
272330
Jun-14
116
509
393
CLIENTS ENERGY AND STATUS
Retail and residential clients(Low Voltage)
4,100,000
Low VoltageLargest Clients
22,000
LargeClients
(hight andmed voltage)
7,600
11,500 GWh (48%)100% Concluded
2,700 GWh (11%)1/3 as of today until 2015
10,000 GWh (41%)APZ
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Technology: Centralized MeasuringUse of new technologies in areas with a high level of losses
Display11
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Focused in areas with 10,000 to 20,000 clients with high level of losses and delinquency;
Fully-dedicated teams of technicians and commercial agents;Results constantly and accurately monitored by Light;
Result-linked remuneration for services provided;
29 units implemented with 505 thousand
clients (12% of total clients);200 thousands additional clients per year .
Zero Losses Area (APZ) Project: Light Legal
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ELECTRONICMETERS
WORKFORCEMANAGEMENT
PARTNERSHIP WITH THE STATEGOVERNMENT
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Evolution of APZs ResultsSign i f i can t los s r educ t ion and inc reas ing co l l ec t ion rate
13
Before
50.2 %
20.7%
89.2%
95.9%
Before
96.0%98.2% 97.9% 98.3%
23.6%22.5%
21.2%
Ma1
J
1
Ma1
J
1
S
1
Ma1
Ma1
J
1
S
1
-30.2%
+6.8%
D
1
99.5%
D
1
20.3%
J
1
20.0%
APZ COLLECTIONAPZ LOSSES
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Regulatory Allowance for Non-Technical LossesHigher recogni t ion of los ses l inked to ta rge ts achievement
Addi t ion al revenues to be inves ted in losses comb at and boo ked asSpecial Obligations (ex-RAB )
2013 2014 2015 2016 2017 2018
14
Regulatory Losses
Target (every August) Regulatory Losses with Penalty
Final Proposal (according to methodology)
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Generation
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855 MW Installed CapacityConcessions Expiring Only in 2026
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HPP Santa Branca56 MW
HPP Ilha dos Pombos187 MW
HPP Fontes Nova132 MW
Underground HPPNilo Peanha - 380 MW
HPP Pereira Passos100 MW
SPRJ
HPP Santa Branca
Paraiba do Sul River
HPP Ilha dos
Pombos
100%100%
100%100%100%
ISO 9001 Quality Management
14001 Environmental ManagementOHSAS 18001 - Occupational health and Safety Management
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Assured Energy: 549 MWaverageEnergy commercialization focused on the free market
Average selling price in 2014-2021: R$ 163/MWh (base date: January, 2014)
2014 2015 2016 2017 2018 2019 2020 2021
54939
510
28 28 28 28 28 28 28549 549 549 549 549 549 549
480 434 461
418317
242 232
42 88 61 103
205
280 290
Contracted Energy (Free) Hedgevailable Energy
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Generation ExpansionRenewable energy generation projects, mainly through partnerships
Project Installed Capacity(MW)Assured Energy
(MWaverage) Operational Start Stake
Paracambi 25 20 2012 51%
Renova425 (in operation)
1,806 (contracted)
235 (in operation)
921 (contracted)
2008 - 2012
2014 201821.86%
Belo Monte 11,223 4,571 2015 2.49%
Guanhes 44 25 2015 51%
Lajes 17 16 2016 100%
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Generation ExpansionInstalled Capacity (MW)
Light's proportional Participation
+74.3%
51% Light 21.86% Light 2.49% Light
Renova: +55
Guanhes: +17B.Monte: +3
Renova: +78B.Monte: +3
Renova: +5B.Monte: +30
Renova: +44B.Monte: +46
Renova: +26B.Monte: +46
B.Monte: +46 B.Monte: +46
Renova: +78B.Monte: +46
Renova: +37Guanhes: +5
Renova: +74B.Monte: +15
19
1,0021,077
1,158 1,2111,300
1,371 1,4171,540
1,660 1,675
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19
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RESULTS
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Financial Highlights(R$ MN)
2Q14 2Q13 1H14 1H13
NET OPERATING REVENUE 1,815.8 1,755.1 4,098.0 3,676.9
OPERATING EXPENSE (1,673.4) (1,574.3) (3,599.0) (3,234.8)
Manageable (249.9) (305.4) (541.6) (563.7)
No Manageable (1,423.5) (1,268.9) (3,057.4) (2,671.0)
OPERATING RESULT 142.4 180.8 499.0 442.1
EQUITY PICKUP (4.0) (0.5) (6.8) (1.1)
EBITDA 239.3 277.9 692.3 633.1
FINANCIAL RESULT (111.8) (95.5) (190.6) (234.3)
RESULT BEFORE TAXES AND INTEREST 26.5 84.8 301.3 206.7
NET INCOME 15.3 58.2 195.8 136.9
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22
Net Revenue
Commercial (Captive)42.6%
NET REVENUE (R$MN) Generation 7.5%
Distribution80.5%**
NET REVENUE BY SEGMENT (2Q14)*
Commercialization 12.0%
NET REVENUE FROM DISTRIBUTION (2Q14)
Industrial (Captive)5.9%
Others (Captive)12.2%
Network Use (TUSD)(Free + Concessionaires) 7.8%
Residential (Captive)31.5%
+3.5%
1,580 1,602
378
333
1,755
3,677
2Q14 1H13
3,344 3,72021476
1,816
4,098
2Q13 1H14
+11.5%
Construction Revenue
Revenue w/out constructionrevenue
* Eliminations not considered
** Construction revenue not considered
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23
Operating Costs and Expenses
Manageable(Distribution): R 309(18.8%)
Generation andCommercialization: R 249
(15.2%)Non manageable(Distribution**): R 1,084
(66.1%)
DISTRIBUTION PMSO COSTS (R$MN)COSTS (R$MN)*
2Q14
R$ MM 2Q14 2Q13 Var. 1H14 1H13 Var.
PMSO (207.1) (212.0) -2.3% (412.3) (412.7) -0.1%
Provisions (14.1) (66.6) -78.8% (79.4) (111.8) -29.0%PCLD (36.1) (48.4) -25.5% (61.4) (77.4) -20.8%
Contingencies 21.9 (18.2) - (18.0) (34.4) -47.5%
Depreciation (86.2) (83.8) 2.8% (171.6) (164.5) 4.3%
Otheroperational/revenuesexpenses
(1.2) (5.7) -79.5% (13.3) (12.9) 2.6%
Total (308.5) (368.0) -16.2% (676.6) (701.9) -3.6%
1H14H13Q14Q13
212 207
-2.3%
413 412
-0.1%
COSTS (R$MN)*1H14
Generation andCommercialization : R 506
(14.6%)Manageable(Distribution): R 677
(19.5%)
Non manageable(Distribution**): R 2,293
(66.0%)
* Eliminations not considered** Construction revenue not considered
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Tariff Deficit
24
TariffDeficit
BalanceDE Fund
ACR FUNDS -1H14 (R MN)
(250)
(1,635)
1,385
Decrees 8203(Jan/14) and
8221 (Apr/14)
Involuntary exposure to the spot market 1,238
Availability contracts with thermal plants 299
Hydrological risk 39
Auction A-1 Contract 30
Auction A-0 Contract 28
TOTAL 1,635
The exposure to the spot market, combined with its high prices, which reflect low reservoirlevels and higher thermal plants dispatch, caused an expressive tariff deficit for distribution
companies.
The remaining balance of R$ 250 MN refers to the portion of items not covered by the decrees, with emphasis on (i)availability contracts from January; (ii) energy contracted at the A-1 auction; (iii) part of the energy contracted at the A-0
auction, hydrological risk, revenue from hydrological risk deducted from the January and February transfers and from thecut in the April transfer.
84.7% ofdeficit
covered
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25
EBITDA PER SEGMENT(R$ MN)
239
-13.9%
278
45.8%
54.2%
37.4%
62.6%
2Q13 2Q14 1H13 1H14
63.3%
36.7% 44.7%
+9.3%
55.3%
633692
1Percentages do not consider eliminations
Generation and Commercialization 1
Distribution
CONSOLIDATEDEBITDA 2Q14 2Q13 Var. 1H14 1H13 Var.
Distribution 132.3 174.5 -24.2% 387.1 402.6 -3.9%
EBITDA Margin % 9.2% 12.5% -3.3 p.p. 12.2% 13.5% -1.3 p.p.
Generation 88.0 100.1 -12.1% 270.8 219.4 23.4%EBITDA Margin % 66.0% 75.9% -9.9 p.p. 78.6% 79.1% -0.6 p.p.
Commercialization 23.9 4.4 449.3% 41.5 14.3 190.6%
EBITDA Margin % 11.1% 2.8% 8.3 p.p. 9.2% 4.6% 4.6 p.p.Other andEliminations (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.
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EBITDA
EBITDA1H13
EBITDA1H14
NetRevenue
RegulatoryAssets andLiabilities
RegulatoryAssets andLiabilities
AdjustedEBITDA
1H13
AdjustedEBITDA
1H14
1.158
Non-Manageable
Costs
ManageableCosts
(PMSO)
Provisions OthersDETransfers
26
- 6.9%
+9.3%
854
220
633
376 (328)(10) (6) 32 (6)
692
102
794
Adjusted EBITDA - 1H13/1H14 (R$ MN)
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+ 43.1%
- 6.8%
282
145
137
59
44 (36) (8)
196
67
263
Net Income
1H13 1H14BITDA FinancialResult
Taxes Others
Adjusted Net Income - 1H13/1H14 (R$ MN)
RegulatoryAssets andLiabilities
RegulatoryAssets andLiabilities
Adjusted NetIncome1H13
Adjusted NetIncome1H14
27
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Dividends
28
Average payout of 86% in the last 5 years
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Indebtedness
Average Term: 3.9 years
AMORTIZATION SCHEDULE* (R$ MN)
NET DEBTWith Pension Fund
2.582.84
* Amountwithout hedge * Pincipal only
COST OF DEBT
TJLP13.3%
CDI
74.5%
IPCA11.0%
Others3.7%
U /Euro *
2.7%
29
408
7811,031
832
1,166
717 729
476573
2012011 2T14013
2.24%
8.21%
3.87%
10.49%
4.25%
11.03% 9.68%
3.55%
Jun/13
2.90 2.99
Jun/14ar/14
2.62
Nominal Cost Real Cost Net Debt / EBITDA(covenants)
5,122.7 5,341.8 5,229.6
After2021
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Investments
CAPEX BREAKDOWN(R MN)
1H14
Generation8.4
Administration
12.2
oTHERS5.0
Develop. of
DistributionSystem207.5
LossesCombat
119.7
Commerc./Energy
Eficiency5.0
CAPEX (R MN)
30
519
2010
701
2011 2012
797
694
103
519
182
775
154
713
132
845
+9.5%
2013
327
1H13 1H14
54 26
273 332
358
929
Investments in Electric Assets (Distribution)
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Why invest in Light?
Rio as a host of major events Communities pacification Pro-business environment Investment projects hubEnergy Market growth
EconomicTransformation
in theConcession Area
Progress in the TechnologyProgram (Smart Grid) New network and electronic metersin the pacified areas
Zero Losses Area Program
EnergyLosses
Reduction
Projects under construction withpartnerships: Renova, Belo Monte andGuanhes (total of 697 MW)
SHPP Lajes under construction(17MW).
Growth in theGenerationBusiness
Expiration of RegulatedContracts (Dec/2013)New contracts in 2014Energy available forcommercialization
EnergyCommercialization
focused on thefree market
Listed in Novo Mercado ofBovespa
Board Commitees with strongparticipation in the decision makingprocess Included in the SustainabilityIndex (ISE) for the 7th year
Best CorporateGovernance
Practices
Dividend Policy: minimum 50%of net income;
Average payout since 2009:86%
Dividend trackRecord
31
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Important Notice
32
This presentation may include declarations that represent forward-looking statements according to Brazilian regulations andinternational movable values. These declarations are based on certain assumptions and analyses made by the Company inaccordance with its experience, the economic environment, market conditions and future events expected, many of whichare out of the Companys control. Important factors that can lead to significant differences between the real results and thefuture declarations of expectations on events or business-oriented results include the Companys strategy, the Brazilian andinternational economic conditions, technology, financial strategy, developments of the public service industry, hydrological
conditions, conditions of the financial market, uncertainty regarding the results of its future operations, plain, goals,expectations and intentions, among others. Because of these factors, the Companys actual results may significantly differfrom 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 noinvestment decision must be based on the veracity, the updated or completeness of this information or opinions. None of theCompanys assessors or parts related to them or its representatives will have any responsibility for any losses that canelapse 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 currentexpectations and projections on future events and trends that can affect the Companys businesses. These declarationsinclude 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 estimatesand assumptions on which these declarations are based on.
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Contacts
Joo Batista Zolini CarneiroCFO and IRO
Gustavo WerneckSuperintendent of Finance and Investor Relations+55 21 2211 2560
gustavo.souza@light.com.br
Mariana da Silva Rocha IR Manager
+ 55 21 2211 2814mariana.rocha@light.com.br
www.light.com.br/ri www.facebook.com/lightri twitter.com/LightRI
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