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JP Morgan2021 Global Emerging Markets Corporate Conference
March 3, 2021
2
Light at a GlanceLight is one of the largest private utility companies in Brazil
Source: Company, AneelNotes:1 873 MW of total installed capacity are in full control of the company
2 Proportional to Light’s stake3 Considers the average price of 3Q20; Figures of LightCom only4 Source Aneel
Light SESA
Distribution Generation + Commercialization
25,881 GWh
Total Billed Market (3Q20 LTM)
4.3 mm
Number of clients (3Q20)
R$9.4 bn4
Net RAB (Mar ‘20)
31
Municipalities Served (3Q20)
~11 mm
People Served (3Q20)
1,188 MW
Installed Capacity1 (3Q20)
R$176.6/MWh
Average Sales Price3
627 MWavg
Volume Sold (3Q20)
882 MWavg
Assured Energy2 (3Q20)
Recurring EBITDA 3Q20 LTM5
R$1.0 billionRecurring EBITDA 3Q20 LTM5
R$0.7 billion
SP
43 RJ
Rio Paraíba do Sul
2
1 Amazônia Energia
2 HPP Ilha dos Pombos
3 Complexo de Lajes
4 HPP Santa Branca
Generation
Light Energia + LightCom
1
5. Considers R$21 mm and R$637 mm of extraordinary PDV and PECLD, respectively, in 4Q19 . As a result, there is a total EBITDA of R$1.0 bn for Light SESA and R$0.7 bn for Light Energia + LightCom
3
Recent equ i ty t ransact ion
4
2.8 Brl
Total offering
Bln
1.34 Brl
In proceeds to Light
Bln
Largest follow-on in the history of the electric sector in Brazil and 4th largest equity1
offering in the sector
High adherence to the priority offer reveals confidence in the company by the
shareholder base
Substantial demand from local and international investors with 2.5 times subscribed
book
Secondary tranches allowed CEMIG to fully divest Light
Now Light has a strengthened capital structure allowing it to
continue with its liability management agenda
Transaction highlights of the R$2.8 Bln equity offering concluded on Jan 19th
Notes:1 4th largest equity offering in the electric sector in Brazil since 2005
5
Light is a true corporation!
Cemig22,58%
Samambaia FIA17,53%
Santander PB FIA 110,07%
Atmos Capital5,62%
Other44,20%
Samambaia FIA20,01%
Santander PB FIA 1
10,16%
Atmos Capital
6,26%
Other63,57%
New shareholding structure with Cemig divestment and several investors engagement
Before the offering After the offering
6
Light ’s New Management Team St ra tegy
77
Management team fully committed with delivering results to Light
CEO
Nonato Castro
Distribution
Daniel Negreiros
Commercial
Thiago Guth
CFO & IRO
Roberto Barroso
Energy, Trading and Regulation
Alessandra Amaral
Carlos Parcias Jr.
Carlos Ferreira
PatríciaBentes
DavidZylbersztajn
Deputy Chairman
CarlosCruz
Professionals with great market experience
Independence and agility for decision-
making
Complementary experiences to drive Light’s operational
development
Fully Committed Management Team Independent and Professional Board of Directors
Helio Paulo Ferraz
People & Corporate Management
Carla Medrardo
Legal
Déborah Brasil
New Management Team and Board of Directors
Firmino Sampaio
Chairman
Yuiti
Lopes
RicardoReisen
Administrative and Controlling
Gisomar Marinho
8
Pill
ars
Ach
ieve
me
nts
DistributionImprovement
Generation Efficiency
Fair Regulation
Relationship with
Stakeholders
Organizational structure
Losses reduction plan
Review of processes
Adequacy of systems
InstitutionalTariff
review
Processes optimization, people
and resources
Technical expertise benefiting processes
potential
Concession authority
enforcement
Strong leadership:process and innovation
Losses plan in risk areas
Corporate Culture, People, Management / Processes
Operational Efficiency: Cost Reduction, Contract Review
Concession Sustainability
Maximizing Consumer Satisfaction
100 Days Plan to be Concluded in April 2021 – Continuous Transformation
9Corporativo | Interno
Over the last year, Light’s management has been successfully delivering the recent operational development
Losses Combat1
Reduction of Contingencies²
Reduction & Control of PMS2;3
Liability Management1;4
9,736 GWh 9,087 GWh -650 GWh
R$270 mm R$137 mm -R$133 mm
R$752 mm R$688 mm -R$64 mm
8.84% 6.85% -2.0 p.p.
Sep 2019 Sep 2020
9
Notes:1 Considers 12 months2 Considers 9 months3 Nominal cost4 Weighted Average Nominal Cost of Debt
Losses Combat in Non-Risk Areas
5,408 GWh 4,160 GWh -1,248 GWh
Recent Operational Development with Additional Improvements in the Future
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Recent Opera t iona l Deve lopment
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Reduction & Control of PMS
Losses Combat
Non-core Assets Sale
11Source: Company
Liability Management
Quality Indicators
Improvements
Legal Contingencies
Reduction
Recent Operational Development with Good Results So Far
12Source: AneelNote:1 DEC and FEC figures refer to internal DEC and internal FEC (DECi and FECi) respectively
After a substantial reduction in DEC and FEC in recent years, Light has become a reference in the sector, with one of the best indicators among all distributors in Brazil
Self-healing installation for automatic system reconfiguration
New drivers with focus on the reduction of global indicators
Use of thermal imaging cars and drones to improve maintenance efficiency
Adequacy of distribution transformers
Installation of protection equipment (reclosers, sectionalizers and fuses)
Increase in tree pruning
DEC1 12 Months – (hours) FEC1 12 Months – (times)
Main Initiatives Accomplished
FECDEC
12
Top 3 Top 10
1 Improvement in Quality Operational Indicators
8,38
6,60 6.42 6,00
5,134.38 4,31 4,27 4.29
7,01 6,87 6,646,44
6,09 6,055,72 5,43 5,43 5,15 4,86
2013 2014 2015 2016 2017 2018 2019 2T20 3T20 2021 2022
Regulatory Target
18,54
12,35 12.6111,44
9,07 7,76 7,776,41 6,19
9,07 8,99 8,88 8,73 8,54 8,39 8.23
8,14 8,14
8,02 7,84
2013 2014 2015 2016 2017 2018 2019 2T20 3T20 2021 2022
Regulatory Target
13
Sold
17.2%
108 MW
PPA settled and concession contract
terminated
51.0%
77 MW
Source: CompanyNote:1 Proportional stake of Light in Belo Monte (25.5% stake in Amazônia Energia which holds 9.8% of Norte Energia)
With all the non-core assets developed, Light's management started to focus on the distribution segment
Companies
Non-Core Assets
51.0%
22 MW
Considerations
Stake of Light
Proportional Installed Capacity
2 Non-Core Assets Being Addressed
2.5%1
281 MW
51.0%
13 MW
SPA Discussion Ongoing
M&A Process
Operational AssetSPA
Discussion
14
2.9% of losses
in the region
43.3%of losses in the region
2,883 GWh | 31.7%of Light’s losses
36.4%of losses in the region
11.3%of losses in the region
810 GWh | 8.9%of Light’s losses
Baixada
Center South
Vale do Paraíba
192 GWh | 2.1%of Light’s losses
35.0%of losses in the region
2,344GWh | 25.8%of Light’s lossesWest East
Losses Combat
Mapping the Losses by Region to Identify the Different Challenges
14Source: Company
26.0%Total Losses/ Grid Load
9,087 GWhTotal Losses (Sep’ 20)
6,608 GWhNon-technicalLosses (Sep’ 20)
33% in non-risk areas
67% in risk areas
3
31.5% | 2,859 GWhof Light’s losses
15
Strong reduction in energy loss in risk-free areas
Total Losses in non-risk Areas (GWh, 12 months)
Actions initiated in Aug/19
Reduction of Losses in Non-risk Areas in 23.1% in 1 year
Losses Combat: Impressive Results in 12 Months
Reduction of 1,248 GWh
in 1 yearor
2.3% p.p
Precedent Turnarounds in Distributors
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5.584 5.408 5.3034.729
4.218 4.160
17,1% 16,8% 16,6%15,3% 14,5% 14,5%
Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
Source: Companies
17%12%
2013 2019
29%19%
2008 2013
17%15%
Jun/19 Sep/20
-2% in 1 year-8% in 5 years
36%30%
2013 2019
-6% in 6 years -5% in 6 years
28% 23%
2018 3T20
-5% in 2 years
Piauí
3
16
Focus on energy incorporation (IEN)
Recovery Energy - REN and Incorporated Energy - IEN (GWh)
Greater accuracy in target identification
Insourcing of teams Improvement of training
Losses Combat: Planning
How We Did it?
234
135167
1645
8464
4279
105
5789 106
21 3050
186142 127 121
0,6 1,42,5
1,0 1,1 1,8
13,311,8
9,1
6,4
2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Quarterly REN (GWh) Quarterly IEN (GWh) IEN / TOIs (GWh / '000 TOIs)
Source: Company Releases
3
17
Objectives
Reduction in new lawsuits filing
Reduction in the stock of lawsuits (increase in termination)
Higher number of processes
submitted to agreements
Reduction of provisions, Opex and contingencies
Legal Contingencies Reduction4
Improvement of processes related to
customer relations (shops, call center
and ombudsman)
Greater synergy and collaborative
environment between the Legal and
Commercial areas
Extensive restructuring of the Legal
area, with the hiring of new
professionals and law firms
Initiatives
Improvement of subsidies for the
Company’s defenses
Achievements in Customer Satisfaction (3Q20 vs 3Q19)
Improved level of DEC and FEC indicators
Better quality of TOIs
-32% complaints via call
centers
-24% complaints via ombudsman
-24% complaints via Aneel
17Source: Company
18
Number of JEC lawsuits
59% reduction in the number of new lawsuits in 3Q20 vs. 3Q19
R$129 mm reduction in contingencies in 3Q20
47% reduction in the amount of provisions related to JEC lawsuits (3Q20 vs. 3Q19)
Legal Contingencies Reduction4
Improved customer relationship management has led to a decrease in the number of lawsuits
Source: Company
21,9
20,0
13,3 12,7
4,8
8,1
18,9
20,7
16,3
11,6
7,8
9,6
25,024,2
21,322,4
19,4 18,8
2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
# New Lawsuits # Closed Lawsuits # Stock of Lawsuits
19Source: FactSet as of June 27th, 2019
Light SESA Adjusted PMS - R$ mm
236
223230
217
240
216
233
208
4Q18 4Q19 1Q19 1Q20 2Q19 2Q20 3Q19 3Q20
PMS Control and Reduction
Significant results already achieved on manageable expenses
5
Optimization of main processes with better use of synergy
between areas
Primarization of field activities: increased productivity and
better ethical control
Renegotiation of contracts with suppliers
Staff reduction, including the completion of a voluntary
termination plan
Improvement of the variable remuneration policy linked to
objective goals, including field workforce
19Source: Company
20
R$ mm
Opportunities in the debt Market to continue the liability management agenda
Nominal Cost of Debt
Net Debt and Net Debt / EBITDA (Covenant)
3Q20 Amortization Schedule (Consolidated)
August ’19 – December ‘19
Early redemption of the 14th debenture from Light Sesa
Prepayment of swap transactions
Rollover of debt with Citibank at cost reduction
Issue of the 17th debentures from Light Sesa (R$700 mn)
Early redemption of 35% of bonds
Issue of 5th Promissory Notes from Light Sesa (R$300 mn)
2020
Issue of the 18th debentures from Light Sesa (R$400mn)
Issue of the 19th debentures from Light Sesa (R$500 mn)
Issue of the 20th debentures from Light Sesa (R$600 mn)
20
12 months; R$ mm
9,34%8,84% 8,79% 8,31%
7,12% 6,85%
2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
R$ mm; 12 months (x)
7.206 8.0176.750 6.699
5.754
2017 2018 2019 2Q20 3Q20
3.1x 3.6x 3.0x 3.1x
2.969
200
2.3541.941
3.070
760
1.615
132
Cash 2020 2021 2022 2023 2024 2025 2026
Liability Management6
COVID account proceeds of R$1.128 bn received
as of Sep ‘20
2.4x
Source: Company
Most recent
Issue of the 21st debentures from Light Sesa (R$360 mn) in Feb ’21 with partial early redemption of the 9th debenture from Light Sesa
Early redemption of all BNDES facilities (R$300 mn) in Feb ‘21
21
Potent ia l Addi t iona l Ups ides
22
A positive decision on the exclusion of ICMS from the PIS / COFINS calculation base represents an important advantage for Light
Remarks
✓ Judicial decision: Established the recovery of PIS / COFINS credits
✓ Light’s stake (Jan 02-Aug 09): recognized into the operating and financial result
✓ Part of the credits to Light and to its customers
✓ Reimbursement criteria being discussed with Aneel
✓ Tax credits have already been enabled
✓ Light is already using tax credits to offset the federal taxes payable
PIS / COFINS Tax Case
R$6.2 bn of total credit1
R$2.5 bn to Light2
Notes: 1. R$6.2bn of recoverable PIS/COFINS credits (out of which 3.6bn to be returned to customers)2. The portion corresponding to Light, in connection with the period between January 2002 and August 2009, was recorded in other revenue (R$1,086 million) and financial revenues (R$1,461 million)
23
Light is working to recognize the extraordinary effects of the pandemic as a financial asset on its results of operations
Economic Equilibrium
• Light has been discussing the financial alternatives related to the economic equilibrium since March
• An amount of R$264 mm (9M20) would be classified as a regulatory asset to be incorporated into the tariff later (RTR process)
• Current concession contracts allows the proposed mechanism for economic equilibrium
Restoring Economic Equilibrium
COVID
March
COVIDAccount
July
Economic Equilibrium
1H21
Discussion of the COVID Effect
• Market Size Reduction• Decrease in Collection• Higher Deliquency
Financial Equilibrium
Timeline
24Source: FactSet as of June 27th, 2019 24
GSF Settlement / Extension of Generation Concessions
GENERATION
GSF SETTLEMENT / CONCESSIONS EXTENSION
• Bill 3,975/19 (formerly known as Bill 10,985/18) sanctioned by the Presidency of
the Republic
• Regulated by Aneel on December 1, 2020
• End of a regulatory issue that started many years ago
• Potential Impacts for Light:
Net liabilities of R$800 mm (100% provisioned)
Extension of the Generation concessions
Accounting impact on EBITDA
