Professional Documents
Culture Documents
1,615 1,556 3.8% 5,147 4,946 722 277 161.1% 1,355 966 44.7% 17.8% 26.9 p.p. 26.3% 19.5% 321 84 282.1% 458 264 4,152 3,365 23.4% 4,152 3,365 155 199 -22.1% 482 528
* Own Load + network use ** Does not consider CSN, due to its migration to the basic network *** Does not consider construction revenue
BM&FBOVESPA: LIGT3 OTC: LGSXY Total shares: 203,934,060 Free Float: 76,262,655 shares (37.40%) Market Cap (11/07/13): R$4,095 million
Conference Call: Date: 11/11/2013 Time: 4:00 p.m. (Brazil) // 1:00 p.m. (US ET) Phone numbers: +55 (11) 2188 0155 // +1 (646) 843 6054 Webcast: www.light.com.br
IR Contacts: Phone: +55 (21) 2211-2828/2560 Fax: +55 (21) 2211-2787 E-mail: ri@light.com.br Website: ri.light.com.br
EBITDA is calculated in accordance with CVM Instruction 527/2012 and represents net income + income and social contribution tax + the net financial expense + depreciation and amortization.
Exhibit VI to this release. This information should be regarded as complementary, exclusively for comparative
purposes, since it is not in accordance with Brazilian accounting practices.
Table of Contents
1. The Company............................................................................................................................. 4 2. Operating Performance ............................................................................................................ 4 2.1 Distribution .......................................................................................................................... 5 Energy Balance ................................................................................................................... 9 Energy Losses ..................................................................................................................... 9 Collection ........................................................................................................................... 9 Operating Quality ............................................................................................................ 13 2.2 Generation ......................................................................................................................... 14 2.3 Commercialization and Services ........................................................................................ 14 3. Financial Performance............................................................................................................. 14 3.1 Net Revenue ...................................................................................................................... 15 Consolidated .................................................................................................................... 15 Distribution ...................................................................................................................... 16 Generation ....................................................................................................................... 16 Commercialization and Services .................................................................................... 17 3.2 Costs and Expenses............................................................................................................ 17 Consolidated .................................................................................................................... 17 Distribution ...................................................................................................................... 18 Generation ....................................................................................................................... 20 Commercialization and Services ..................................................................................... 21 3.3 EBITDA ...................................................................................Error! Bookmark not defined. Consolidated ........................................................................Error! Bookmark not defined. Distribution ..........................................................................Error! Bookmark not defined. Generation ...........................................................................Error! Bookmark not defined. Commercialization and Services .........................................Error! Bookmark not defined. 3.4 Consolidated Financial Results ..............................................Error! Bookmark not defined. 3.5 Debt .......................................................................................Error! Bookmark not defined. 3.6 Net Income ............................................................................Error! Bookmark not defined. 3.7 Investments ...........................................................................Error! Bookmark not defined. Generation Capacity Expansion Projects ...........................Error! Bookmark not defined. 4. Cash Flow ....................................................................................Error! Bookmark not defined. 5. Corporate Governance ................................................................Error! Bookmark not defined. 6. Capital Markets ...........................................................................Error! Bookmark not defined. 7. Recent Events ..............................................................................Error! Bookmark not defined. 8. Disclosure Program .....................................................................Error! Bookmark not defined.
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 Companys corporate structure in September 2013 is shown below:
100%
100%
51%
100%
25.5%
100%
100%
100%
100%
51%
20%
Lightger S.A.
Amaznia Light Esco Lightcom Energia Prestao de Comercializadora de Energia S.A. Servios S.A. S.A.
Instituto Light
21.99%
100%
100%
9.77%
33%
EBL Cia de
Eficincia Energtica S.A.
51%
Distribution
Generation
Institutional Systems
Electric Vehicles
OPERATING INDICATORS N of Consumers (thousand) N of Employees Average provision tariff - R$/MWh Average provision tariff - R$/MWh (w/out taxes) Average energy purchase cost - R$/MWh Installed generation capacity (MW)* Assured energy (MW)* Pumping and internal losses (MW) Available energy (Average MW) Net Generation (GWh) Load Factor
Does not include purchase on spot. * Includes proportionate share of associates
3Q13 4,093 4,245 399 281 124 942 685 87 598 1,142 62.4%
3Q12 4,011 4,203 443 308 117 942 685 87 598 1,132 66.0%
2. Operating Performance
2.1 Distribution
TOTAL ENERGY CONSUMPTION (GWh) (CAPTIVE + FREE) - QUARTER
5,486 840
1.7% 5,581
899
0.9%
2.5% 1,818 1,808 181 1,627 1,854 207 1,647 983 613 370 -0.2% 982 643 338 3Q13 894 47
847
1,801
4,682
3Q12
3Q13
3Q12
3Q13
3Q12
3Q12
3Q13
Residential
Commercial
Others
Total
Total energy consumption in Light SESAs concession area (captive clients + transport of free clients2) came to 5,581 GWh in 3Q13, 1.7% up on 3Q12, chiefly due to the 2.5% increase in commercial consumption and the 3.8% upturn in the others segment, mainly driven by government. If consumption by the free client CSN is taken into account, total consumption came to 6,042 GWh in 3Q13, 2.4% higher than the 5,900 GWh recorded in 3Q12. Residential consumption totaled 1,818 GWh in the quarter, accounting for 32.6% of the total market, 0.9% up on 3Q12 despite the 0.8 C year-on-year average temperature drop. Commercial clients consumed 1,854 GWh in 3Q13, 2.5% more than in 3Q12, accounting for 33.2% of the total. Another 19 clients joined the free market in 3Q13, having been recorded under captive clients in 3Q12, resulting in a 13.7 GWh period increase in free market consumption. Industrial consumption amounted to 982 GWh, equivalent to 17.6% of the total market, stable in relation to the same period last year. This performance was driven by the free market, which recorded growth of 5.0%, chiefly due
2
To preserve comparability with the market approved by ANEEL in the traffic adjustment process, the billed energy of the free consumer CSN was excluded, in view of this clients then planned migration to the core network. Energy consumption by CSN totaled 461 GWh in 3Q13 and 414 GWh in 3Q12.
to the steel industry. Between July and September 2013, five clients migrated from the captive to the free market, totaling 15.4 GWh. The others category, which accounted for 16.6% of the total market, posted an upturn of 3.8% over 3Q12. All segments recorded an improvement, with the rural, government and public utility categories, which represented 0.2%, 6.5% and 6.1% of the total market, respectively, reporting respective increases of 7.9%, 1.1% and 4.2%.
2.7%
2,837
15,209
5,271
9M12
9M13
9M12
9M13
9M13
9M12
9M13
Residential
Commercial
Others
Total
Total energy consumption in Light SESAs concession area (captive clients + transport of free client s3) amounted to 17,884 GWh in 9M13, 2.7% up on the same period in 2012, primarily influenced by the performance of the commercial sector. Excluding the effect of the suspension of long-term default clients in 2012, which reduced 9M13 billed consumption by 43 GWh, consumption increased by 2.9% between the periods. If consumption of the free client CSN is taken into account, total consumption came to 19,186 GWh in 9M13, versus 18,587 GWh in 9M12. Residential consumption totaled 6,212 GWh in 9M13, 1.5% up on 9M12 and accounting for 34.7% of the total market, due to the termination of contracts with clients with long-term default and the reclassification of
To preserve comparability with the market approved by ANEEL in the tariff adjustment process, the billed energy of the free consumer CSN was excluded, in view of this clients then planned migration to the core network. Energy consumption by CSN totaled 1,302 GWh in 9M13 and 1,168 GWh in 9M12.
condominiums from the residential to the commercial segment. Excluding these effects, residential consumption increased by 4.9%. Average monthly consumption climbed from 180.4 kWh in 9M12 to 184.9 kWh in 9M13. Commercial clients consumed 5,909 GWh, 5.2% up year-on-year and accounting for 33.0% of the total, fueled by the reclassification of condominiums from the residential to the commercial segment and the excellent performance of the retail segment, which recorded upturn of 2.3%, corresponding to share of 29.4%. Excluding the condominium reclassification effect, commercial consumption grew by 2.4%. In 9M13, twelve clients migrated to the free market, representing total consumption of 28 GWh. In addition, the 66 existing free market clients consumed 71 GWh more than in 9M12. In 9M13, industrial consumption amounted to 2,927 GWh, in line with 9M12. Five clients migrated to the free market between the two periods, representing consumption of 38 GWh. In the others category, which accounted for 15.9% of the total market, consumption increased by 2.7% year-onyear. All segments recorded an upturn, with the rural, government and public utility categories, which represented 0.2%, 6.6% and 5.7% of the total market, respectively, reporting respective increases of 1.0%, 2.1% and 2.9%.
Energy Balance
DISTRIBUTION ENERGETIC BALANCE - GWh Position: January - September 2013
PROINFA 376.5 CCEAR Light Energia 35.5 ITAIPU (CCEE) 3,995.1 AUCTIONS (CCEE) 5,415.7 NORTE FLU (CCEE) 4,750.9 OTHERS(*) (CCEE) 839.3 SHARES 5,434.1 ANGRA I & II 667.3 Billed Energy 15,208.6
Residential 6,212.1 Industrial 1,039.1 Commercial 5,271.4 Losses + Non Billed Energy 5,949.9 Others 2,685.9
Required E. (CCEE)
21,514.4
296.7 59.2
(*) Others = Purchase in Spot - Sale in Spot. Note: 1) At Light S.A., there is intercompany power purchase/sale elimination 2) Power purchase data as of 10/08/2013 (subject to change)
Energy Balance (GWh) = Grid Load - Energy transported to utilities - Energy transported to free customers* = Own Load
- Captive market consumption Low Voltage Market Medium Voltage Market
3Q12 Var. % 9M13 9M12 Var. % 8,501 0.7% 27,092 26,784 1.2% 741 -4.7% 1,935 2,054 -5.8% 1,285 5.6% 3,999 3,712 7.7% 6,475 0.4% 21,159 21,018 0.7% 4,645 0.8% 15,209 14,940 1.8%
3,032 1,613 1.4% -0.4% 10,133 5,075 9,856 5,085 2.8% -0.2%
Energy Losses
Non-technical energy losses totaled 5,905 GWh in the last 12 months, accounting for 43.7% of billed energy in the low-voltage market (ANEEL criterion), 1.7 p.p. down on the 12 months ended December 2012. Light SESAs total energy losses amounted to 8,552 GWh, or 23.3% of the grid load, in the 12 months ended September 2013, 0.3 p.p. down on December 2012.
Non tecnical losses / Low Voltage market 12 months
5,615 43.1% 6,007
6,029
44.9%
5,953 44.2%
5,615 43.1%
6,007
6,029
44.9%
5,953 44.2%
5,905
43.7%
45.4%
33.3%
45.4%
33.3%
33.8%
32.8%
32.4%
32.0%
33.8%
32.8%
32.4%
32.0%
Sep-12
Dec-12 Mar-13 Jun-13 Sep-13 Non-Technical Losses % Low Voltage Mkt Regulatory Losses Losses (GWh)
Sep-12
Dec-12 Mar-13 Jun-13 Sep-13 Non-Technical Losses % Low Voltage Mkt Regulatory Losses Losses (GWh)
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). The main highlights are as follows: Consumer unit inspections: this initiative is directed at low-voltage residential clients, who are selected by an intelligence system. The Company conducted 44,308 regularization procedures in 9M13, 15.5% up on the 38,372 recorded in 9M12), resulting in the incorporation of 143.5 GWh, versus 92.3 GWh in the same period last year. However, recovered energy climbed by 39.5%, from 92.7 GWh, in 3Q12, to 129.3 GWh. The assertiveness ratio increased 11 p.p. year-on-year, demonstrating the improved efficiency of the potential fraudulent client selection process. Indirect low-voltage inspections: the inspection of major clients through indirect low-voltage measurement systems, accounts for an important share of Lights energy incorporation and recovery. In 3Q13, the Company conducted 1,235 such regularizations, up from 1,382 in the same period in 2012, despite this reduction, there was a gain in efficiency with incorporated and recuperation witch increased
9M12 9M13 92.7 129.3 39.5%
Normalized Costumers
15.5% 38,372
44,308
9M12
9M13
7.8 GWh to 16.1 GWh and recovered energy fell from 3.3 GWh to 6.1 GWh, respectively. Installation of remote electronic metering devices: SMC (centralized metering system) devices are installed in areas with high loss rates, with or without the support of Pacifying Police Units (UPPs). The UPPs give Light more room for maneuver in regard to combating default or energy theft. The Company installed 9,917 such devices in UPPprotected areas in 3Q13, resulting in the incorporation of 26 GWh. In areas outside the sphere of the UPPs, Light installed 24,462 devices, with the incorporation of 40.9 GWh. The goal is achieve 460,000 by year-end. Zero Loss Areas (APZ): 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 customer 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 15,000 clients. The project, known commercially as Light Legal, which receives
92.3
9M12
9M13
44.9% 283
set-12
set-13
support from SEBRAE in regard to the training of partnering micro-entrepreneurs, closed September 2013 with 22 operational APZs and 364,000 clients in the Baixada Fluminense region, and the citys west and north sides. The 2013 goal is to reach a total of 30,000 Light Legal units, comprising around 400,000 clients (10% of the total clients of Light). Since the beginning of the project, the APZs in place have already resulted in an average 26.5 p.p. reduction in non-technical energy losses on low-voltage billings and an average revenue increase of 6.6 p.p. The results per installed APZ through September are shown below:
10
Communities
Neighborhood Curicica Realengo Cosmos Sepetiba Caxias 1 e 2 Belford Roxo 1 e 2 Vigrio Geral Caxias 3 Nova Iguau 1 Nova Iguau 2 Nilpolis Nilpolis Convencional Ricardo de Albuquerque Mesquita Cabritos/Tabajaras/Chapu Mangueira/Babilnia Coelho da Rocha Batan Total
Client Numbers 13,125 10,182 38,132 19,857 13,935 20,436 16,198 17,675 33,129 20,756 10,388 11,089 25,701 9,038 6,387 17,738 8,625 292,391
Non-Technical Losses / Low Voltage Market * 11.2% 15.0% 19.3% 30.6% 25.8% 26.6% 15.2% 20.7% 29.9% 23.5% 27.9% 13.7% 16.3% 30.2% 11.5% 14.3% 9.6% 21.2%
Collection Rate 98.8% 98.6% 105.3% 97.4% 95.1% 95.5% 99.5% 98.4% 97.7% 96.8% 94.9% 97.2% 97.9% 95.8% 97.1% 95.8% 105.2% 98.6%
* Reflects the results accumulated until sep/13 since the begining of the implementation of each APZ.
Since
the
beginning
of
the
Areas Santa Marta Cidade de Deus 1 Chapu Mangueira Babilnia Cabritos Tabajaras Formiga Batan Borel
Losses Before Current 95.00% 52.10% 62.70% 62.30% 73.30% 61.80% 60.50% 8.30% 34.67% 14.60% 12.80% 10.12% 11.47% 9.71%
Collection Before Current 0.20% 23.10% 16.20% 5.40% 1.40% 9.50% 31.40% 1.20% 9.40% 97.61% 95.69% 101.88% 97.05% 97.18% 95.74% 93.10% 105.24% 88.96%
pacification process in low-income communities in the state of Rio de Janeiro in 2009, Light has
increased its presence in these areas in order to improving the quality of supply and avoid energy theft.
Up to September 2013, the Company had installed 89,000 electronic meters in the communities. Of the 34 communities with Pacifying Police Units, Light is present in 17 and has already concluded the remodeling of the network in nine, recording an average 52.9 p.p. loss reduction (from 64.1% to 11.2%) and an average 87.5 p.p. increase in timely payments (from 9.6% to 97.1%), as can be seen in the adjacent table.
11
Collection
The third-quarter collection rate stood at 97.9% of billed consumption, 0.1 p.p. on 3Q12. Collection in the retail segment increased by 1.7 p.p., mainly reflecting the ongoing program to combat default. The decline from 99.8% to 95.7% in government segment collection can be explained by the collection of the lot due in the last business day of September, which was received on the following day and consequently booked only in October. Without this effect, collection came to 99.1% in 3Q13. The year-to-date collection rate came to 101.1%, 2.3 p.p. more than in 9M12, once again with all segments recording more than 100%, primarily due to the ongoing program to combat default with the progressive installation of electronic meters, more efficient collection procedures, the implementation of the APZs, the increasing number of disconnections, and the change in the criterion for treating clients with long-term default. In 3Q13, provisions for past due accounts (PCLD) totaled R$37.1 million, representing 2.0% of gross billed energy, virtually flat in relation to the amount provisioned in 3Q12. In the 12-month period ended September 2013, excluding the non-recurring provisioning in 4Q12, PCLD represented 1.3% of
Dec-11
95.7%
Retail
Large Costumers
Public Sector
Total
3Q11
3Q12
3Q13
Retail
Total
3.0%
Dec-12
Sep-11
Sep-12
Mar-12
gross billed energy, 1.1 p.p. down year-on-year, once again reflecting the constant initiatives to reduce default and the change in the criterion for treating clients with long-term default as of February 2012.
PCLD/ROB
Mar-13
12
Sep-13
Jun-12
Jun-13
Operating Quality
In 3Q13, 321 medium-voltage distribution circuits were inspected/maintained, 617 transformers were replaced and 23,762 trees were pruned. In the underground distribution network, 6,563 transformer vaults and 13,864 manholes were inspected. In addition, 51 transformers, 41 switches and 368 protectors were maintained. In the 12 months through September, the moving average of the equivalent length of interruption indicator (DEC), expressed in time, registered 20.53 hours, while that of the equivalent frequency of interruption indicator
(FEC), expressed in occurrences, stood at 9.15 times. Despite the increase in the 12-month moving average
due to the poor results in December 2012, the emergency action plan, implemented in June 2013 and characterized by more intensive tree pruning and energy network maintenance measures, is already showing results, enabling a year-on-year improvement in DEC and FEC in 3Q13.
16.14
9.15
7.64
DEC
FEC
DEC 3Q12
FEC 3Q13
Sep-12
Sep-13
13
2.2 Generation
LIGHT ENERGIA (GWh) Regulated Contracting Environment Sales Free Contracting Environment Sales Spot Sales (CCEE) Total 3Q13 258.0 904.4 39.0 1,201.4 3Q12 1,004.5 216.3 65.9 1,286.6 % -74.3% 318.2% -40.8% -6.6% 9M13 776.1 2,764.3 102.9 3,643.3 9M12 3,033.6 541.9 528.2 4,103.6 % -74.4% 410.2% -80.5% -11.2%
Light Energia sold 1,201.4 GWh in 3Q13, 6.6% down year-on-year, primarily reflecting lower spot market sales, which came to 39.0 GWh this quarter, 40.8% less than in 3Q12, due to the systems exceptionally poor hydrological conditions, impacted by low reservoir levels. The Generation Scaling Factors (GSF) in July, August and September came to 102.80%, 102.47% and 101.07%, respectively, versus 106.04%, 105.44% and 98.26%, in the same months in 2012. Energy sold on the captive market (ACR) totaled 258.0 GWh, 74.3% down year-on-year, chiefly due to the maturity of the energy sale contracts acquired at the mega-auction in 2004, equivalent to 345 average MW. These contracts were renegotiated on the free market (ACL), whose energy sales moved up by 318.2% as a result, reaching 904.4 GWh, with better price conditions. Year-to-date energy sales totaled 3,646.3 GWh, 11.2% down on 9M12, mainly due to poor hydrological conditions, impacted by the delayed start of the rainy season and the consequent low level of hydro plant reservoirs.
Volume (GWh)
3,175.0
143.6%
1,303.3 1,052.1
518.7
3Q13
9M12
9M13
Also in 3Q13, in the service segment, the Company entered into an agreement for the sale of surplus energy from the co-generation project with a large beverage company. Currently, Light Esco has 12 projects under development, including the above-mentioned co-generation project, with total investments of around R$85 million.
14
In the first nine months of 2013, energy sales totaled 3,175.0 GWh, 143.6% up on the 1,303.3 GWh recorded in 9M12.
3. Financial Performance
3.1 Net Revenue Consolidated
Net Revenue (R$ MN) Distribution Billed consumption Non billed energy Network use (TUSD) Short-Term (Spot) Others Subtotal (a) Construction Revenue Subtotal (a') Generation Generation Sale (ACR+ACL) Short-Term Others Subtotal (b) Commercialization and Services Energy Sales Services Subtotal (c) Others and Eliminations (d) Total w/out construction revenue (a+b+c+d) Total (a'+b+c+d) 3Q13 1,273.2 5.8 116.0 34.2 19.6 1,448.9 122.4 1,571.3 124.6 6.2 2.0 132.9 162.7 11.1 173.9 (140.4) 1,615.2 1,737.6 3Q12 1,244.6 3.7 142.7 10.5 14.7 1,416.2 170.3 1,586.5 90.5 4.2 2.4 97.0 68.5 17.3 85.8 (42.7) 1,556.4 1,726.7 Var.% 2.3% 58.0% -18.8% 226.5% 33.7% 2.3% -28.1% -1.0% 37.7% 49.4% -13.1% 37.0% 137.4% -35.7% 102.5% 229.2% 3.8% 0.6% 9M13 4,615.0 (120.1) 401.7 39.2 57.4 4,993.3 455.2 5,448.5 385.3 19.4 5.5 410.2 497.3 23.4 520.7 (777.0) 5,147.1 5,602.3 9M12 4,012.6 6.7 423.6 28.1 56.7 4,527.6 470.0 4,997.6 261.2 38.6 5.8 305.5 173.8 30.3 204.1 (91.7) 4,945.6 5,415.5 Var.% 15.0% -5.2% 39.7% 1.3% 10.3% -3.1% 9.0% 47.5% -49.8% -5.8% 34.2% 186.1% -22.7% 155.1% 747.3% 4.1% 3.4%
Balance of the settlement on the CCEE 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.
Consolidated net operating revenue totaled 1,737.6 million in 3Q13, 0.6% up on 3Q12. Excluding revenue from construction, which has a neutral effect on net income, consolidated net revenue increased by 3.8% to 1,615.2 million. All of the Companys operational segments recorded growth, led by generation and commercialization, thanks to energy sales to the free market at higher prices, replacing older sales contracts to the captive market. Excluding construction revenue, consolidated net revenue totaled R$5,147.1 million in 9M13, 4.1% up on 9M12.
15
Distribution
Net revenue from distribution totaled R$1,571.3 million in 3Q13, 1.0% less than in 3Q12. Excluding revenue from construction, net revenue from distribution amounted to R$1,448.9 million, 2.3% up year-on-year. The improvement was mainly due to the 1.7% upturn in total market consumption and the average 12.27% increase in the captive market energy tariff as of November 7, 2012, partially offset by the extraordinary tariff review of January 24, 2013, which reduced tariffs by 19.63% on average.
Residential 33%
1,817.5
TUSD 8%
Others 13%
180.5
567.7
434.4
The distribution market consists mostly of the residential and commercial segments, which together accounted for 72% of 3Q13 energy sales revenue. Free market sales accounted for 8%.
Excluding revenue from construction, net revenue from distribution came to R$4,993.3 million in 9M13,
Generation
Net revenue from generation totaled R$132.9 million, 37.0% more than in 3Q13, chiefly due to the substantial 318.2% increase in the volume of energy sold on the free market (ACL), whose contract prices are higher than on the captive market, where this energy was previously sold. The average sale price, net of taxes, weighted by both markets, stood at R$107.5/MWh in 3Q13, 45.0% up on the R$74.1/MWh recorded in the same period in 2012. In 9M13, net revenue totaled R$410.2 million, 34.2% up on 9M12, primarily due to the higher price and volume of energy contracts traded on the free market (ACL), as well as the increase in the average spot market price.
16
chiefly due to the substantial period increase in energy prices and sales volume, primarily as a result of the reallocation of Light Energias captive market contracts terminated at the close of last year to the free market. The average sales price, net of taxes, totaled R$154.7/MWh in 3Q13, 17.0% more than the R$132.3/MWh recorded in 2Q12.
Year-to-date net revenue totaled R$520.7 million, 155.1% up on the first nine months of last year.
In the third quarter of 2013, operating costs and expenses totaled R$1, 114.6 million, 28.2% down year-on-year. Excluding construction costs, consolidated costs and expenses also declined by 28.2% in relation to 3Q12, mainly driven by the 28.8% reduction in costs and expenses from the distribution segment, reflecting the transfer of CDE funds, ratified by ANEEL in the tariff review, totaling R$303.4 million. Without this effect, operating costs and expenses excluding construction costs fell by 6.2%. Eliminations totaled R$140.1 million, 242.4% up year-on-year, chiefly due to Light Escos energy purchases from Light Energia. In 9M13, consolidated costs and expenses, excluding construction costs, totaled R$ 4,082.0 million, 4.1% less than in 9M12.
17
Distribution
Costs and Expenses (R$ MN) Non-Manageable Costs and Expenses Energy Purchase costs Costs with Charges and Transmission CDE Fund Others (Mandatory Costs) Manageable Costs and Expenses PMSO Personnel Material Outsourced Services Others Provisions Depreciation and Amortization Other Operacional/Revenues Expenses Construction Revenue Total costs w/out Construction Revenue Total Costs 3Q13 (614.6) (811.2) (102.3) 303.4 (4.6) (311.5) (182.5) (65.6) (4.0) (97.2) (15.7) (41.0) (86.0) (1.9) (122.4) (926.1) (1,048.5) 3Q12 (1,003.1) (781.3) (217.6) (4.2) (298.6) (178.5) (69.3) (5.8) (86.3) (17.1) (52.3) (69.3) 1.5 (170.3) (1,301.8) (1,472.1) Var.% -38.7% 3.8% -53.0% 7.3% 4.3% 2.3% -5.3% -30.8% 12.7% -8.4% -21.6% 24.1% -28.1% -28.9% -28.8% 9M13 (2,872.8) (2,756.0) (406.6) 303.4 (13.6) (987.0) (568.8) (203.9) (11.6) (294.4) (58.9) (152.8) (250.5) (14.8) (455.2) (3,859.8) (4,315.0) 9M12 (3,082.4) (2,440.5) (629.4) (12.5) (954.3) (516.0) (195.8) (13.2) (260.6) (46.4) (222.9) (212.9) (2.5) (470.0) (4,036.7) (4,506.7) Var.% -6.8% 12.9% -35.4% 9.2% 3.4% 10.2% 4.1% -11.7% 13.0% 26.8% -31.4% 17.7% 489.8% -3.1% -4.4% -4.3%
In 3Q13, distribution costs and expenses fell by 28.8% over 3Q12. Excluding construction costs, total costs and expenses declined by 28.9%, reflecting the non-recurring effect of the transfer of CDE funds, ratified by ANEEL in the tariff review, totaling R$303.4 million. Without this effect, distribution costs and expenses, excluding construction costs, fell by 5.6% over 3Q12. Year-to-date distribution costs and expenses, excluding construction costs, totaled R$3,859.8 million, 4.4% lower than in 9M12. Non-Manageable Costs and Expenses In 3Q13, non-manageable costs and expenses came to R$731.8 million, 27.0% down on the same period in 2012. This result already includes
2,440.5
the effects of Decree 7945/13, which are: (i) the reversal of the provision for the monthly transfer of CDE funds totaling R$22.7 million, and (ii) the booking of R$303.4 million from the transfer of CDE funds related to purchased energy costs through August, defined in the tariff review process, which will be transferred in a lump sum in November 2013. Purchased energy costs increased by 3.8% over 3Q12, chiefly due to
1.5% 17.2%
29.0%
52.3%
51.6%
9M12
AUCTIONS NORTE FLU
9M13
ITAIPU SPOT
the increase in the difference settlement price (PLD) from R$131.1/MWh, in 3Q12, to R$183.6/MWh, which resulted
in higher expenses with Availability Contracts, due to thermal plant dispatch by the National System Operator (ONS). Other contributing factors included the contract adjustment with UTE Norte Fluminense in November 2012, and the depreciation of the Real, which impacted the cost of energy acquired from Itaipu.
Costs with charges and transmission fell by 53.0%, mainly due to the reduction in the network usage charge, as a result of the renewal of certain transmission companies contracts. The following table gives a breakdown of non-manageable costs:
Non-Manageable Costs and Expenses (R$ MN) Energy Purchase costs Itaipu TPP Norte Fluminense Short-Term Energy (Spot)
Hydrological Risk CDE - Hydrological Risk Quotas Exposure CDE - Quotas Exposure Others
9M12 AUCTIONS SPOT NORTE FLU PROINFA 9M13 ITAIPU
Energy Auctions
Availabilities Contracts Others
(376.8)
(205.0) (171.8)
(400.7)
(106.8) (293.9)
-6.0%
91.9% -41.5%
(1,421.7)
(667.2) (754.5)
(1,277.2)
(305.9) (971.2)
11.3%
118.1% -22.3%
(102.3)
21.5 (24.7) (56.7) (42.4)
(217.6)
(21.4) (131.8) (64.4) -
-53.0%
-200.3% -57.0% -34.2% -
(406.6)
(278.9) 168.9 (160.2) (136.4)
(629.4)
(67.4) (392.4) (169.6) -
-35.4%
313.8% -59.2% -19.6% -
(4.2) (1,003.1)
7.3% -38.7%
(12.5) (3,082.4)
9.2% -6.8%
Non-manageable costs are passed on to consumer tariffs and any increase or reduction in such costs in relation to the regulatory level constitutes a regulatory asset or liability (CVA) balance, to be taken into account in the next tariff readjustment, but which is not recorded in the income statement in accordance with International Financial Reporting Standards (IFRS). These regulatory liabilities totaled R$329.2 million in 3Q13, mainly due to the booking of the one-off transfer of CDE funds in the amount of R$303.4 million, versus regulatory assets of R$118.7 million in 3Q12. The average purchased energy cost, excluding spot market purchases, amounted to R$131.5/MWh in 3Q13, 3.5% up on the R$127.0/MWh recorded in 3Q12.
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Manageable Costs and Expenses In 3Q13, manageable operating costs and expenses, comprising personnel, material, outsourced services, provisions, depreciation and others, totaled R$311.5 million, 4.3% up on 3Q12.
Costs and expenses from personnel, materials, outsourced services and others (PMSO) totaled R$182.5
million in 3Q13, 2.3% up on 3Q12, chiefly due to the 12.7% increase in outsourced services, in turn mainly due to higher expenses with: (i) the success fee for consulting firms related to the improvement in the collection processes and compensation of amounts paid due to the non-achievement of the quality indicators, totaling R$5.0 million; and (ii) the progress of the APZ project, totaling R$4.0 million. The provisions line amounted to R$41.0 million, 21.6% down on 3Q12, mainly explained by a non-recurring reversal of R$10.7 million in labor provisions. Provisions for past due accounts (PCLD) amounted to R$37.1 million in the quarter, virtually iddentical to the 3Q12 figure. The depreciation and amortization line increased by 24.1%, chiefly due to the high volume of investments and intensive use of assets.
Generation
Operating Costs and Expenses (R$ MN) Personnel Material and Outsourced Services Purchased Energy (CUSD) Depreciation Other Operacional/Revenues Expenses Others (includes provisions) Total 3Q13 (5.7) (4.9) (9.1) (14.4) (0.4) (7.1) (41.7) 3Q12 (5.8) (4.6) (9.7) (14.0) (0.1) (7.6) (41.8) Var.% -2.5% 6.6% -5.8% 3.1% 193.1% -6.1% -0.4% 9M13 (17.3) (13.7) (27.0) (41.9) (0.3) (22.9) (123.1) 9M12 (16.4) (12.7) (21.1) (42.0) 1.8 (24.4) (114.8) Var.% 5.6% 7.9% 27.9% -0.3% -114.5% -6.2% 7.2%
In 3Q13, Light Energias costs and expenses amounted to R$41.7 million, in line with 3Q12. The increase in the materials and outsourced services, depreciation and other operational revenues/expenses lines were offset by the reductions in the personnel, purchased energy and others lines. Third-quarter costs and expenses were broken down as follows: personnel (13.6%), materials and outsourced services (11.9%), CUSD/CUST distribution/transmission system usage/purchased energy (21.9%), depreciation and others (52.6%). PMSO per MWh generated by Light Energias plants stood at R$14.7/MWh in 3Q13, versus R$15.0/MWh in 3Q12. In 9M13, Light Energias costs and expenses came to R$123.1 million, 7.2% up on 9M12, due to the purchase of energy generated by Paracambi SHP totaling R$11.4 million.
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Costs and expenses totaled R$164.5 million in 3Q13, 108.1% higher than in the third quarter of 2012, mainly due to purchased energy costs, which grew by 127.7% over 3Q12, due to the higher volume of energy purchased for commercialization. Year-to-date costs and expenses totaled R$497.2 million, a year-on-year upturn of 166.9%, also explained by higher purchased energy costs.
Consolidated EBITDA totaled R$722.0 million in 3Q13, 161.1% up on 3Q12, accompanied by an EBITDA margin5 of 44.7%, up by 26.9 p.p. The transfer of CDE funds, ratified by ANEEL in the tariff review, totaling R$303.4 million, contributed to the growth of the distribution companys EBITDA, as well as to the consolidated figure. Excluding this effect, consolidated EBITDA increased by 51.4% over 3Q12. All the Companys business segments posted an upturn in
EBITDA is calculated in accordance with CVM Instruction 527/2012 and refers to net income + income and social contribution taxes + net financial expenses + 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.
21
EBITDA and distribution increased its period share of consolidated EBITDA from 66.3% to 84.1%, while the share of the generation segment fell from 31.2% to 14.3%.
EBITDA per segment* 3Q13
Generation - 14.3% (EBITDA margin: 79.0%)
Distribution - 66.3% (EBITDA margin: 13.0%) Generation - 31.2% (EBITDA margin: 89.0%)
Commercialization - 1.6% (EBITDA margin: 6.8%)
( 2)
12
EBITDA 3Q12
Net Revenue
NonManagable Costs
Provisions
Equity Pikup
EBITDA 3Q13
When adjusted for the CVA, i.e. regulatory assets and liabilities that are taken into account in the next cycle of distribution tariff adjustments, reflecting, therefore, potential gross cash generation, adjusted EBITDA came to R$392.8 million in 3Q13, 0.6% down year-on-year. Note that third-quarter CVA was impacted by the transfer of CDE funds, ratified by ANEEL in the tariff review, totaling R$303.4 million.
22
7.6% 40.3%
71 213
192
(60)
(15)
(21)
(109)
202
1,158
1,355
966
1,246
1,246
Net Revenue
EBITDA 9M12
Equity Pickup
EBITDA 9M13
NonManageable Costs
In 9M13, EBITDA came to R$1,355.1 million, 40.3% up year-on-year, with an EBITDA margin of 26.3%. Including the
CVA, EBITDA totaled R$1,246.4 million, 7.6% higher than in 9M12.
Distribution
The distribution companys EBITDA totaled R$618.8 million in 3Q13, 236.7% up on 3Q12. This result was
impacted by the transfer of CDE funds, ratified by ANEEL in the tariff review, totaling R$303.4 million. Excluding this effect, the distribution companys EBITDA moved up by 71.6% over 3Q12, chiefly due to the increase in net revenue, influenced by the market growth associated with the reduction of expenses with provisions. The EBITDA margin6 stood at 42.7%, 26.9 p.p. up on 3Q12. When adjusted for the CVA, distribution EBITDA came to R$289.6 million, 4.3% down year-on-year. In 9M13, the distribution company posted EBITDA of R$1,021.5 million, 45.1% up year-on-year. This result was impacted by the transfer of CDE funds, ratified by ANEEL in the tariff review, totaling R$303.4 million. Excluding this effect, EBITDA grew by 2.0% over 9M12. Including the CVA, adjusted year-to-date EBITDA came to R$912.7 million, 1.8% higher than in the same period in 2012. The EBITDA margin came to 26.3%, 6.8 p.p. up on 9M12.
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.
Provisions
23
Generation
Light Energia recorded 3Q13 EBITDA of R$104.9 million, 21.5% up on 3Q12, due to the repricing of energy sales contracts and the increased volume of energy sold on the free market (ACL), where contract prices are higher than on the captive market (ACR). The EBITDA margin stood at 79.0%, 10.0 p.p. down on 3Q12. In 9M13, EBITDA from generation amounted to R$324.4 million, up 29.5% in relation to 9M12. EBITDA margin stood at 79.1% in 9M13, 2.9 p.p. lower than in 9M12.
24
The 3Q13 financial result was a negative R$121.4 million, 7.8% more than the negative R$112.6 million recorded in 3Q12. Financial revenue totaled R$78.5 million in 3Q13, 155.7% higher than in the same period in 2012, mainly due to income from financial investments, which increased by 246.2% in the same period. Further upward pressure came from the other financial revenues line, whose main effect was the updating of the distribution asset base in line with the new repositioning value (VNR), totaling R$14.6 million, and the adjustment of escrow deposits in the amount of R$2.9 million. Financial expenses came to R$199.9 million, 39.5% up on 3Q12, chiefly due to: (i) the 31.9% upturn in debt expenses due to the Companys increased leverage, reflecting the upturn in the benchmark interest rate (Selic), and (ii) the R$19.2 million increase in expenses from the monetary and exchange variation, mainly impacted by the negative semiannual adjustment of the guarantee of the loan from the National Treasury. The 9M13 financial result was a negative R$355.8 million, a 2.1% improvement over 9M12.
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3.5 Debt
R$ MN Brazilian Currency Light SESA Debenture 4th Issue Debenture 7th Issue Debenture 8th Issue Debenture 9th Issue - series A Debenture 9th Issue - series B Eletrobras CCB Bradesco Working Capital - Santander BNDES (CAPEX) BNDES FINEM Banco do Brasil Others Light Energia Debenture 1st Issue Debenture 2st Issue Debenture 3st Issue BNDES (CAPEX) BNDES FINEM Others Light ESCO BNDES - PROESCO Foreing Currency Light SESA National Treasury Merril Lynch BNP Citibank Bank Tokyo - Mitsubishi Light Energia Citibank Gross Debt Cash Net Debt (a) Braslight Debt (b) Adjusted Net Debt (a+b) Short Term 566.8 529.6 0.0 25.2 14.4 24.2 12.4 0.5 104.5 80.6 121.0 142.8 1.5 2.6 33.2 7.5 4.8 0.9 7.0 12.9 0.0 4.0 4.0 19.8 19.0 10.6 5.9 1.9 0.5 0.1 0.8 0.8 586.6 % 9.5% 8.9% 0.0% 0.4% 0.2% 0.4% 0.2% 0.0% 1.8% 1.4% 2.0% 2.4% 0.0% 0.0% 0.6% 0.1% 0.1% 0.0% 0.1% 0.2% 0.0% 0.1% 0.1% 0.3% 0.3% 0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 9.9% Long Term 4,584.3 3,885.0 0.0 649.1 469.6 995.2 597.1 6.2 300.0 535.5 182.3 150.0 683.5 171.4 423.6 29.9 24.4 34.3 15.7 15.7 784.2 605.8 37.9 105.9 105.2 223.0 133.8 178.4 178.4 5,368.5 % 77.0% 65.2% 0.0% 10.9% 7.9% 16.7% 10.0% 0.1% 5.0% 9.0% 3.1% 2.5% 11.5% 2.9% 7.1% 0.5% 0.4% 0.6% 0.3% 0.3% 13.2% 10.2% 0.6% 1.8% 1.8% 3.7% 2.2% 3.0% 3.0% 90.1% Total 5,151.1 4,414.7 0.0 674.3 484.0 1,019.4 609.5 6.7 404.5 80.6 656.5 325.1 151.5 2.6 716.7 178.9 428.4 30.8 31.4 47.2 0.0 19.7 19.7 804.0 624.8 48.5 111.8 107.1 223.5 133.9 179.2 179.2 5,955.1 1,803.5 4,151.6 1,058.4 5,210.0 % 86.5% 74.1% 0.0% 11.3% 8.1% 17.1% 10.2% 0.1% 6.8% 1.4% 11.0% 5.5% 2.5% 0.0% 12.0% 3.0% 7.2% 0.5% 0.5% 0.8% 0.0% 0.3% 0.3% 13.5% 10.5% 0.8% 1.9% 1.8% 3.8% 2.2% 3.0% 3.0% 100.0%
117.9
940.5
The Company closed 3Q13 with gross debt of R$5,955.1 million, 2.4% less than at the end of June 2013, and 31.1%, or R$1.4 billion, up year-on-year, due to period funding operations: (i) the disbursement of R$145 million from the
26
BNDES to Light SESA in the last 12 months; (ii) the disbursement of R$150 million from Banco do Brasil to Light SESA (February 2013); (iii) a foreign-currency loan of R$121 million from Banco Tokyo-Mitsubishi to Light SESA, hedged against foreign exchange exposure through a Real swap transaction (March 2013); (iv) the disbursement of R$56 million from the BNDES to Light SESA (May 2013); and (v) Light SESAs 9th debenture issue, totaling R$1.6 billion, with Banco do Brasil (June 2013), divided into two series, the first comprising R$1.0 billion at the CDI interbank rate plus 1.15% and the second, of R$600 million, at the variation in the IPCA consumer price index plus 5.74%. The funds were used for investments, working capital and the prepayment of R$500 million in
+ + =
Covenants Multiple R$ MN
Gross Debt Swap Pension Fund Cash Net Debt for covenants (a) EBITDA (12 months) Provision Other Operational Revenues/Expenses Regulatory Assets and Liabilities (CVA) Financial CVA EBITDA for covenants (b)
Sep-13 Jun-13
5,955.1 (97.1) 1,058.4 1,803.5 5,112.8 1,839.0 404.0 348.1 29.3 14.0 1,910.2 2.68
2012
Commercial Notes issued in May 2013 and R$375 million in more expensive debt, including R$160 million from the 5
th
6,101.3 4,666.0 (97.5) (29.4) 1,066.6 1,054.7 2,045.2 392.9 5,025.2 5,298.4 1,402.5 1,456.2 416.2 475.2 363.0 375.6 477.2 330.4 14.0 14.0 1,918.9 1,872.2 2.62 2.83
debenture issue, at a cost of the CDI plus 1.5%. The net debt/EBITDA ratio moved up from 2.62x in June 2013 to 2.68x in September 2013. As a result, the Company is still respecting its 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 September was 4.46x. It is worth noting that non-
+ + =
149.7
2013
2014
2015
2016
2017
2018
2019
2020
2021
After 2021
compliance with the covenant only occurs if the limits determined by the indicators are not respected for two consecutive or four alternate quarters. The Companys debt has an average term to maturity of 4.3 years, 0.1 of a year above the average term in 2Q13. The average cost of Real-denominated debt was 8.8% p.a., in line with the end-of-June figure. In September, 13.5% of total debt was denominated in foreign currency, but considering hedges against exchange exposure, only 0.4% of this total was exposed to foreign currency risk, in line with the previous quarter. Lights FX hedge policy consists of protecting cash flow from foreign-currency-denominated debt falling due within the next 24 months (principal and interest) through the use of non-cash swap instruments with premier financial institutions. Funding via Central Bank
27
Resolution 4131, from Merrill Lynch, BNP, Citibank and Bank Tokyo-Mitsubishi, was contracted with swaps for the entire term of the debt.
84 Adjusted NI3Q12 Regulatory Assets and Liabilities 3Q12 EBITDA Financial Result Taxes Others 3Q13
Light posted net income of R$321.5 million in 3Q13, 282.1% up on the R$84.1 million recorded in 3Q12, with an impact of R$200.3 million from the transfer of CDE funds, ratified by ANEEL in the tariff review. Excluding this effect, third-quarter net income came to R$1212 million, 44.1% up year-on-year, explained by market growth and a reduction in provisions. Adjusting for the portion of purchased energy costs to be passed on in the next tariff adjustment through the creation of regulatory assets and liabilities (CVA) not recorded in the income statement, adjusted net income came to R$104.2 million, 35.9% down on 3Q12. Year-to-date net income amounted to R$458.3 million, 73.6% more than in 9M12. Including the CVA, adjusted 9M13 net income stood at R$386.5 million, 1.1% down year-on-year.
28
390
127
(36) (72)
391
458 264
387
9M12
EBITDA
Financial Result
Taxes
Others
9M13
3.7 Investments
CAPEX (R$MN) Distribution Network reinforcement and expansion Losses Others Administration Commercial./ Energy Efficiency Generation Total 9M13 393.9 253.5 133.4 7.1 20.3 53.8 14.1 482.2 Partic. % 81.7% 64.3% 33.9% 1.8% 4.2% 11.2% 2.9% 100.0% 9M12 482.0 304.5 156.4 21.1 28.8 3.8 13.2 527.8 Partic. % 91.3% 63.2% 32.5% 4.4% 5.4% 0.7% 2.5% 100.0% Var % -18.3% -16.8% -14.7% -66.4% -29.3% 1298.0% 7.1% -8.6%
Light invested R$482.2 million in the first nine months of 2013, 8.6% less than in 9M12.
The distribution segment absorbed R$393.9 million (representing 81.7% of the total), 18.3% down on 9M12. Of this total: (i) R$253.5 million went to the development of distribution and expansion networks, including the underground network, to keep pace with market growth, strengthen the network and improve quality; and (ii) R$133.4 million went to the energy loss combat project (network protection, electronic meters and fraud regularization). Commercialization and energy efficiency Investments increased from R$3.8 million in 9M12 to R$53.8 million in 9M13, due to the co-generation project with a major beverage company.
29
Generation Capacity Expansion Projects New Projects Installed Capacity (MW)* Assured Energy (MW)* 8 114 13 4 3 3 3 127 19 23 19 24 24 3 11 4 262 Operation Start 2015 feb-15 sep-14 sep-14 dec-14 mar-15 jan-14 mar-14 jan-17 sep-15 2015/2016 jan-16 jan-17 apr-15 Concession / Authorization Expiration Date 2031 2045 2032 2032 2032 2031 2046 2047 N/a 2050 N/a 2051 2052 2050
SHPP Lajes 9 Belo Monte 280 Guanhes 22 Dores de Guanhes 7 Senhora do Prto 6 Jacar 5 Fortuna II 5 Renova 245 LER 2010 37 A-3 2011 48 A-5 2012 5 LER 2013 35 PPA 88 Mercado Livre I 5 Mercado Livre II 21 Mercado Livre III 7 Total 556 *Light's proportional Participation 51% Light 21.99% Light 2.49% Light
30
The third quarter of 2013 was marked by the following events related to projects for expanding Lights 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. Once the construction company is defined, it will be possible to begin the works, with start-up scheduled for 2015, 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 supply of the CEDAE water main, controlling the Pira Rivers water level, and improving the quality of the water in the Lajes Reservoir.
Guanhes Energia Guanhes Energia S.A. is a special purpose company created to implement the Dores de Guanhes, Senhora do Porto, Jacar and Fortuna II SHPs, all of which located in the state of Minas Gerais, with a joint installed capacity of 44 MW. Guanhes Energias shareholders are Light Energia S.A (51%) and CEMIG Gerao e Transmisso S.A (49%). The Senhora do Porto and Dores de Guanhes SHPs are scheduled for start-up in the third quarter of 2014, while the Jacar and Fortuna II SHPs are expected to begin operations in the fourth quarter of 2014 and first quarter of 2015, respectively.
Renova Energia (Renova) Alto Serto II - LER 2010 and A-3 2011 The 2010 LER and 2011 A-3 wind farms make up the Alto Serto II wind farm complex, with 386.1 MW of installed capacity, which is located in Bahia, in the same region where the Renovas Alto Serto I wind farm complex is located. In January 2013, Renova began to assemble and install the LER 2010 wind turbines. The 2010 LER wind farms are composed of 100 wind turbines, and the ongoing works include construction and electromechanical works and turbine delivery and assembly. All foundations have already been laid and 99 turbines have already been delivered, 79 of which are already fully assembled. The medium-voltage networks, substations and 230kV transmission lines are also being installed. The ongoing works at A-3 2011 refer to construction works and the delivery of turbines. Of the total of 130 wind turbines, 45 have already been delivered, including 11 ready, and 106 foundations have been laid.
31
Sale of 73.7 average MW (installed capacity of 159.0 MW) in the 2012 Reserve Energy Auction (LER 2013). At the 2013 Reserve Energy Auction (LER 2013), Renova sold 73.7 average MW to be g enerated by nine wind farms located in the state of Bahia, with a joint installed capacity of 159.0 MW. The contracts resulting from this sale will be executed with the Electricity Commercialization Chamber (CCEE). The contracts will have a term of 20 years, with electricity supply beginning on September 1, 2015. The lots were sold for an average price of R$106.02 per MWh, which will be adjusted annually as of September 1, 2013 in line with the IPCA consumer price index. Following the LER 2013 auction, the Renova had a contracted installed capacity of 1,449.4 MW, 1,407.6 MW of which from wind farms and 41.8 MW from SHPs, commercialized in the captive and free markets.
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4. Cash Flow
R$ MN Cash in the Beginning of the Period (1) Net Income Social Contributions & Income Tax Net Income before Social Contributions & Income Tax Provision for Delinquency Depreciation and Amortization Loss (gain) on intangible sales / Residual value of disposals fixed asset Losses (gains) on financing exchange activities Net Interests and Monetary Variations Braslight Atualization / provisions reversal Equity Pikup Financial Assets of the Concession Others Subtotal Working Capital Contingencies Deferred Taxes Braslight CDE fund Others Taxes Paid Interest Paid Cash from Operating Activities (2) Finance Obtained Dividends Loans and financing payments Financing Activities (3) Disposal of Assets/Intangible Fixed Assets/Intangible/Financial Assets Inflow/Acquisitions on Investment Investment Activities (4) Cash in the End of the Period (1+2+3+4) Cash Generation (2+3+4) 3Q13 2,037.3 321.5 178.6 500.1 37.1 100.5 (1.1) 16.7 108.1 21.2 (4.0) 1.5 (14.6) 8.7 774.2 (162.3) (20.4) 0.9 (30.3) (303.4) (51.7) (7.6) (62.1) 137.1 1.2 (229.4) (228.2) (143.8) (15.0) (158.8) 1,787.3 (250.0) 3Q12 473.1 84.1 (3.7) 80.4 39.3 84.1 1.6 (2.6) 96.2 25.4 19.1 (18.3) 6.0 331.2 (83.6) (25.9) 91.7 (28.1) (21.5) (9.8) (70.9) 183.1 863.3 (88.8) 774.4 3.1 (300.5) (44.7) (342.0) 1,088.5 615.5 9M13 230.4 458.3 248.4 706.7 114.6 292.6 9.2 79.6 288.7 91.1 56.2 2.6 (27.7) (45.8) 1,567.7 34.7 (58.3) (7.2) (88.1) (303.4) (161.4) (88.1) (209.4) 686.6 2,434.7 (74.8) (887.6) 1,472.4 (535.3) (66.6) (601.9) 1,787.3 1,557.0 9M12 652.5 264.0 82.1 346.1 173.2 256.2 3.9 13.4 312.7 85.6 72.2 (18.5) (11.6) 1,233.0 (165.0) (64.2) 3.2 (117.5) (54.5) (70.2) (219.6) 545.1 863.3 (73.7) (260.9) 528.6 4.9 (597.9) (44.7) (637.7) 1,088.5 436.0
The Company closed 3Q13 with a cash position of R$1,787.3 million, after a negative cash generation of R$250 million in the period. Financing activities contributed to this result, given the amortization of loans and financing totaling R$229.4 million. From the operational standpoint, purchased energy costs impacted the working capital account, and cash from operating activities amounted to R$137.1 million in 3Q13, versus R$183.1 million in 3Q12.
5. Corporate Governance
On September 30, 2013, the capital stock of Light S.A. comprised 203,934,060 common shares, 97,629,463 of which outstanding. The following chart shows Lights current shareholding structure:
BTG PACTUAL
14.29%
2.74% 28.57%
SANTANDER
FIP REDENTOR
75%
CEMIG
25% 6.41%
VOTORANTIM
19.23%
BANCO DO BRASIL
PARATI
25.64%* 100%
MINORITY
3.19% 0.42% 96.81%
REDENTOR ENERGIA
100% 13.03%
FOREIGN
55.19%
NATIONAL
44.81%
CEMIG
26.06%
RME
13.03%
Controller Group 52,1%
LEPSA
13.03%
BNDESPAR
11.86%
MARKET
36.01%
Free Float 47,9%
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6. Capital Markets
Lights shares have been listed in the BM&FBovespas Novo Mercado trading segment since July 2005, therefore adhering to the 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 1ADRs, under the ticker LGSXY. At the end of September, Light S.A.s shares (LIGT3) were priced at R$18.93. The Companys market cap (no. of shares x share price) closed the quarter at R$3,860 million.
BM&F BOVESPA (spot market) - LIGT3 Daily Average Number of shares traded (Thousand) Number of Transactions Traded Volume (R$ Million) Quotation per shares: (Closing)* Share Valuing (Quarter) IEE Valuing (Quarter) Ibovespa Valuing (Quarter)
*Ajusted by earnings.
9M13
9M12
934.2 727.3 3,226 2,694 17.2 18.7 R$ 18.93 R$ 23.51 -13.2% -14.1% -6.1% -7.7% -14.1% 4.3%
The charts below give a breakdown of the Companys free float in September 2013.
Foreigners
Europe 23.4%
Foreign 55.2%
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The chart below shows the performance of Lights stock between January 2, 2012 and November 7, 2013.
140 130
Mar/12
Mar/13
Dividends
Lights 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).
100%
100.0%
97.2%
50%
2007
2008 Payout
2009
2010
2011
2012
Nov/13
Jan/12
Sep/12
Jan/13
Dec/11
Dec/12
Aug/12
Aug/13
Sep/13
Jun/12
Jun/13
Apr/12
Apr/13
Oct/13
Oct/12
Jul/12
Jul/13
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8.2% 4.2%
9.9% 1.7%
8.1%
8.1%
6.1%
3.4%
3.3%
5.4% 2.4%
351 203
408 187
432
363
1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13
Dividends Interest on Equity Dividend Yeld*
7. Recent Events
The Extraordinary Shareholders Meeting of October 16, 2013, approved the election of Carlos Antonio Decezaro as an alternate member of the Companys Board of Directors due to the resignation of Mrcio Lus Domingues da Silva.
On October 8, 2013, Aneel decided to submit to the Ministry of Mining and Energy MME the application filed by the Lights subsidiary Itaocara Energia to termination of the Concession Agreement 12/2001, which regulates the construction and operation of hydroelectric Itaocara, with favorable pronouncement to it. The auction of HPP Itaocara is expected to take place on December 13, 2013, as the edict Auction n 10/2013, still in Public Hearing.
On August 8, 2013, Light Energia approved the execution of an Investment Agreement with RR Participaes S.A. (RR), Cemig GT, Renova Energia and Chipley SP Participaes S.A. (Chipley), aiming to regulate the entry of Cemig GT in Renovas controlling block, as well as the partial or full acquisition by Chipley of the capital stock of Brasil PCH S.A. (Brasil PCH), pursuant to the Brasil PCHs Stock Purchase Agreement, executed between Cemig GT and Petrleo Brasileiro S.A. Petrobras on June 14, 2013 and assigned by Cemig GT to Chipley. The capital of Renova will be increased, with the assignment by Light Energia and RR to Cemig GT of the preemptive right related to the subscription to
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new common shares issued by Renova, and a new shareholders agreement will be entered into between RR, Light Energia and Cemig GT. The share issue price on the reference date of December 31, 2012 will be R$16.23 per share, which would be equivalent to R$48.68 per unit, totaling R$1,414,732,900 to be subscribed and paid up by Cemig GT. The amounts will be restated based on the CDI variation as from December 31, 2012. After the transaction, Light Energia will hold equity interest between 11.7% and 15.9% in Renovas total capital stock. Brasil PCHs acquisition was subject to the preemptive and tag along rights of the other shareholders of Brasil PCH. In accordance with the Material Facts disclosed by Renova and Companhia Energtica de Minas Gerais Cemig, shareholders of Chipley, having ended the term for exercising the preemptive and tag along rights related to the transaction for the acquisition of 49% of all shares of Brasil PCH held by Petrleo Brasileiro S.A. (Petrobras), no shareholder exercised his preemptive right and only the shareholder Jobelpa S.A. (Jobelpa), holder of 2% of the shares of Brasil PCH, exercised his tag along right. Consequently, Chipley will acquire an interest of 51% in Brasil PCH (49% stake of Petrobras and 2% stake of Jobelpa), sand the control of Brasil PCH will be shared with the other shareholder, which holds the remaining 49%. The price for the acquisition of 51% of Brasil PCH is R$676,530,600, on the reference date of December 31, 2012, and will be restated based on the CDI variation plus 2% p.a. until the date of effective payment. Funds raised from the capital increase and not used for the acquisition of 51% of Brasil PCH will strengthen Renovas cash and may be used in Renovas wind farm projects already contracted and/or other opportunities for growth in renewable energy assets. Brasil PCH has the ownership of 13 small hydroelectric power plants located in the states of Minas Gerais, Rio de Janeiro, Esprito Santo and Gois, all of them operational, with total installed capacity of 291 MW and assured energy of 194 average-MW, contracted until 2028 and 2029 through Proinfa. Tanto a operao quanto o aumento de capital esto sujeitos a uma srie de condies suspensivas e comerciais, dentre as quais a aprovao pelo Conselho Administrativo de Defesa Econmica CADE e pela Aneel.
On November 5, 2013, the Brazilian Electricity Regulatory Agency (ANEEL or Agency) has approved the tariff repositioning of Light SESA, considering the new financial component, applicable only in the next 12 months, and the elimination of the financial component currently present in Light SESAs tariffs, consumers will see an average increase of 3.65% in electricity bills as from November 7, 2013. With reference to non-technical energy losses, the percentage to be recognized in the tariff will be 40.41% on the low voltage market, remaining unchanged over the cycle. The amount corresponding to
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the difference between this percentage and a reference figure that starts from 31.37%, at the beginning of the cycle, until it reaches 30.5% in 2018, will be invested in the Companys energy -losscombating program and addressed as Special Obligations, outside the Regulatory Remuneration Base. The progress of the energy-loss-combating program will be monitored by ANEEL as a condition for maintaining the level of 40.41%. Regarding the Regulatory Asset Base (RAB), the amounts approved were R$ 11,974,212 for the gross RAB and R$ 6,711,307, for the net RAB. The average depreciation rate for the 4th cycle was defined as 3.81%.
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8. Disclosure Program
Schedule Teleconference 11/11/2013, Monday, at 4:00 p.m. (Brazilian Time) and at 1:00 p.m. (NY Time), with simultaneous translation to English Access conditions: Webcast: link on site www.light.com.br/ri (portuguese and english) Conference Call - Dial number: Brazil: +55 (11) 2188 0155 EUA: +1 (646) 843-6054 Other countries: +1 866 890 2584 Access code: Light
Contact Luis Felipe Negreiros de S Gustavo Werneck Souza Carlos Cotrim Rodrigues Pereira Marcelle Henriques Pelajo
Forward-looking Statements
The information on the Companys operations and its Managements 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.
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3Q13 1,571.4 (1,046.6) (1.9) 522.9 608.9 (100.7) 422.2 270.5 42.0%
3Q12 1,586.5 (1,473.6) 1.5 114.5 183.8 (88.6) 25.8 43.0 13.0%
9M13 5,076.0 (4,300.2) (14.8) 761.0 1,011.5 (295.3) 465.7 301.4 20.3%
9M12 4,997.6 (4,504.2) (2.5) 490.9 703.8 (300.9) 190.1 156.7 15.5%
LIGHT ENERGIA Net Operating Revenue Operating Expense Other Operating Revenuess/Expenses Operating Result Equity Pickup EBITDA Financial Result Result before taxes and interest Net Income EBITDA Margin COMMERCIALIZATION AND SERVICES Net Operating Revenue Operating Expense Operating Result EBITDA Financial Result Result before taxes and interest Net Income EBITDA Margin
3Q13 132.9 (41.3) (0.4) 91.2 (0.7) 104.9 (25.7) 66.6 42.6 79.0% 3Q13 173.9 (162.1) 11.7 11.8 4.8 14.0 9.4 6.8%
3Q12 97.0 (41.7) (0.1) 55.2 17.2 86.4 (17.3) 55.1 43.8 89.0% 3Q12 85.8 (78.7) 7.2 6.9 0.3 7.1 4.9 8.1%
Var. % 37.0% -1.0% 193.1% 65.3% 21.5% 49.2% 20.7% -2.7% Var. % 102.5% 106.0% 64.1% 70.1% 98.1% 89.5% -
9M13 410.2 (122.8) (0.3) 287.1 (4.6) 324.4 (66.3) 217.9 141.5 79.1% 9M13 520.7 (489.8) 30.9 31.0 4.6 28.0 18.8 6.0%
9M12 305.5 (116.6) 1.8 190.7 17.8 250.6 (58.9) 149.6 107.2 82.0% 9M12 204.1 (185.2) 18.8 18.4 0.3 18.1 12.4 9.0%
Var. % 34.2% 5.3% 50.5% 29.5% 12.5% 45.7% 32.0% Var. % 155.1% 164.4% 63.8% 68.8% 54.5% 52.3% -
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(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.
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44
EXHIBIT V
Light has ceased to consolidate the results of its jointly-owned subsidiaries in its financial statements since January 1st, 2013, in accordance with accounting pronouncement CPC 19 and as approved by CVM Resolution 694/12. Pursuant to the new rule, these results should be regarded as investments and recognized in accordance with the equity income method, replacing the pro-rata consolidation method adopted up to the end of 2012. As a result, the Company no longer consolidates the following jointly-held direct and indirect subsidiaries on a pro-rata basis: Renova Energia, Guanhes Energia, Lightger, Axxiom, Amaznia Energia, and E-Power. The change had no impact on the Companys net income, resulting only in alterations to individual accounts in the consolidated income statement as a counter-entry to the equity income account.
The consolidated financial information for 3Q13 is in accordance with the new accounting practice; however, for comparative purposes, the information for the third quarter of 2012 was duly adjusted to retrospectively reflect the change.
Consolidated Income Statement - R$ MN NET OPERATING REVENUE OPERATING EXPENSE Other Operating Revenues/Expenses OPERATING RESULT EQUITY PICKUP EBITDA FINANCIAL RESULT Other Operating Revenues/Expenses RESULT BEFORE TAXES AND INTEREST SOCIAL CONTRIBUTIONS & INCOME TAX DEFERRED INCOME TAX NET INCOME
Published 3Q12 1,748.0 (1,566.4) 181.5 269.5 (116.6) 16.4 81.4 (30.0) 32.7 84.1
Adjustments (21.3) 12.7 1.7 (6.9) 18.3 7.1 4.0 (16.4) (1.0) 0.6 0.3 -
Reclassified 3Q12 1,726.7 (1,553.7) 1.7 174.7 18.3 276.6 (112.6) 80.4 (29.4) 33.1 84.1
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Consolidated Income Statement - R$ MN NET OPERATING REVENUE OPERATING EXPENSE Other Operating Revenues/Expenses OPERATING RESULT EQUITY PICKUP EBITDA FINANCIAL RESULT Other Operating Revenues/Expenses RESULT BEFORE TAXES AND INTEREST SOCIAL CONTRIBUTIONS & INCOME TAX DEFERRED INCOME TAX NET INCOME
Published 9M12 5,450.2 (4,751.7) 698.5 959.1 (363.2) 14.2 349.5 (93.2) 7.7 264.0
Adjustments (34.6) 27.5 (0.5) (7.1) 18.5 (43.5) (0.2) (14.2) (3.4) 2.8 0.6 -
Reclassified 9M12 5,415.5 (4,724.2) (0.5) 691.4 915.5 (363.3) 346.1 (90.4) 8.3 264.0
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REPORTED CONSOLIDATED
RENOVA 22.0%
LIGHTGER 51.0%
EBL 33.0%
AXXIOM 51.0%
AMAZNIA 25.5%
ELIMINATION
TOTAL
NET REVENUE OPERATING EXPENSE OPERATING RESULT EQUITY PICKUP EBITDA FINANCIAL RESULT RESULT BEFORE TAXES AND INTEREST SOCIAL CONTRIBUTIONS & DIFERRED/INCOME TAX NET INCOME
REPORTED CONSOLIDATED
RENOVA 22.0%
LIGHTGER 51.0%
EBL 33.0%
AXXIOM 51.0%
AMAZNIA 25.5%
ELIMINATION
TOTAL
NET REVENUE OPERATING EXPENSE OPERATING RESULT EQUITY PICKUP EBITDA FINANCIAL RESULT RESULT BEFORE TAXES AND INTEREST SOCIAL CONTRIBUTIONS & DIFERRED/INCOME TAX NET INCOME
(1.4) (1.4)
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