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MarketScreener Homepage  >  Equities  >  Bolsa de Valores de Sao Paulo  >  Light SA    LIGT3   BRLIGTACNOR2

LIGHT SA

(LIGT3)
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Light S A : 21st Santander Conference Presentation

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08/20/2020 | 01:11pm EDT

21st Santander Annual Conference

August 20 and 21, 2020

TURNAROUND

generating results in 1 year

jun/19 jun/20

Losses Combat

9,739 GWh

8,825 GWh

-914GWh

(12 months)

Reduction of Contingencies

R$164 mn

R$157 mn

-R$7mn

(6 months)

PMS control and drop

R$501 mn

R$464 mn

-R$37mn

(6 months)

Liability Management

9.34%

7.12%

-2.2p.p.

(Nominal cost, 12 months)

2

NOTAS: (1) Consolidated values of Light S.A.; (2) Contingencies and PMS adjusted for PDV expenses incurred in 1Q20 e 2Q20

L O S S E S C O M B AT

RESTRUCTURING

COMMERCIAL AREA

Change approx. 80% of the leadership

Descentralization of the management of the comercial area with the creation of regional

Structuring of a plan to combat diagnosed by region

Improved target identification process for inspections and normalization

Qualification and training of operational teams

Primarization of teams with increased productivity and better ethical control

Normalisations supported by the Police

Training of field teams

3

L O S S E S C O M B AT

SHIELD

OF POWER GRID

CHALLENGES

Invest in shielded grid where measurement has already been modernized

Regularize customers

and recover market

DIAGNOSTIC

Rede elétrica vulnerável em áreas de telemedição

High loss

High commercial debt

Low presence of public authorities

Moderate income

ACTIONS

Change in grid topology making it difficult to acess the BT grid

Educational actions

Energy efficiency (replacement of lamps and refrigerators)

Registration of customers in the

Social Tariff

REGULARIZATION

OF CLANDESTINE INSTALLATIONS

Use the registration system to identify buildings without a

power grid

Regularization of clandestine installations in condominiums

and "irregular" buildings

Loss reduction focusing on energy incorporation

4

L E G A L C O N T I N G E N C I E S R E D U C T I O N

Objectives

Reduction in the entry of new lawsuits

Reduction in the stock of lawsuits (increase in clousures)

Higher number of processes submitted to conciliation (agreements)

Reduction of provisions, Opex and contingencies

Initiatives

1

Improvement of processes related to

customer relations (agency, call center and

ombudsman)

2

Greater synergy and collaborative

environment between the legal and

commercial areas

3

Extensive restructuring of the Legal area,

with the hiring of new profissionals and

offices

4 Training of internal lawyers, agents and

judicial experts

5

Improvement of subsidies for the

Company`s defenses

5

L E G A L C O N T I N G E N C I E S R E D U C T I O N

Number of JEC processes

('000)

25.0

24.2

22.4

21.9

20.7

21.3

20.0

19.4

18.9

16.3

13.3

12.711.6

7.8

4.8

2Q19

3Q19

4Q19

1Q20

2Q20

# new lawsuits

# closed lawsuits

# stock of lawsuits

78% Reduction in the number of new processes in 2Q20 over 2Q19

Maintenance of the reduction path for the fourth consecutive quarter

62% Reduction in the amount of provisions related to JEC processes (2Q20 x 2Q19)

Average closing time of JEC Court process is 4 months

6

L I A B I L I T Y M A N A G E M E N T

August/19

Early redemption of the 14th debenture from Light Sesa

Prepayment of swap transactions

September/19

Rollover of debt with Citibank at cost reduction

November/19

Early redemption of 35% of bonds

December/19

Issue of the 17th debentures from Light Sesa (R$700 mn in 3 series)

Issue of 5th Promissory Notes from Light Sesa (R$300 mn)

April/20

Issue of the 18th debentures from Light Sesa (R$400 mn)

July/20

Issue of the 19th debentures from Light SESA (R$500 mn)

Continuos market monitoring

Opportunities in the debt Market following the liability management agenda

7

L I A B I L I T Y M A N A G E M E N T

2Q20 Amortization schedule (Consolidated)

R$ mn

3500,0

3000,0

Subsequent Events 2500,0

2000,0

COVID Account R$1,010 MN1500,0

+

th1000,0 19 Issuance of

Debentures 500,0

R$500 MN

,0

3,003

Maturity

3.1 years

2,505

2,331

1,932

1,510

1,007

Maturity of the

19th issuance of

756

Debentures

995

357

132

Cash

2020

2021

2022

2023

2024

2025

2026

Robust cash position to face future debt maturities

Nominal cost of debt

12 months, R$ mn

9.34%

8.84% 8.79%

8.31%

7.12%

2Q19

3Q19

4Q19

1Q20

2Q20

15.000

13.000

11.000

9.000

7.000

5.000

3.000

1.000

-1.000

10,00

Net Debt | Net Debt / EBITDA

9,00

R$ mn | 12 months (x)

8,00

8,017

7,00

7,206

6,750

6,699

6,00

Leverage

5,00

<<

4,00

3.63x

3,00

3.14x

2.98x

3.07 x

Covenant

2,00

3.75 x

1,00

2017

2018

2019

2Q20

-

8

P M S C O N T R O L A N D R E D U C T I O N

Light SESA Adjusted PMS

R$ mn

Δ: -5.5%

Δ:-5.7%

Δ: -10.0%

236

240

230

223

217

216

4Q18

4Q19

1Q19

1Q20

2Q19

2Q20

Light SESA Capex

Realized 2Q20

R$ mn

Planned

733

750

627

660

416

334

2017

2018

2019

2020

9

S E R V I C E Q U A L I T Y

Excellence

in providing service

DEC (12 months, jun/20)

9.07 8.99 8.88

18.54 12.35 12.59

8.73

8.54

8.39

8.23

11.44 9.07 7.76 7.77

8.14 8.02 7.84

6.42

Historical Results

Best results in Light's history and below the limit established by ANEEL

2013

2014

2015

2016

2017

2018

2019

2T20

2021

2022

Regulatory Target

FEC (12 months, jun/20)

7.01

6.87

6.64

6.44

6.09

6.05

5.72

5.43

5.15

4.86

8.38

6.6

6.41

6.00

5.13

4.38

4.31

4.27

2013

2014

2015

2016

2017

2018

2019

2T20

2021

2022

Regulatory Target

10

2Q20 RESULTS

Grid load decrease due to the effects of Covid-19, as well as lower temperature and reduction of losses

Grid Load (GWh)

Billed Market by segment (GWh)

6,913

: +4.9 %

620

5,837

980

: -16.5 %

506

9.195

1.269

831

8.762

1.161

1.967

1.403

7.681

2.077

1.936

2Q19

2Q20

2Q18

2Q19

2Q20

Residencial

Comercial

Industrial

Outros

Concessionárias

Billed Market (GWh)

: -2.2 %

: -15.6%

7.066

6.913

5.837

2Q18

2Q19

2Q20

The effects of measures to combat the pandemic led to a reduction in the Commercial, Industrial and Other markets

The economic impact of Covid-19 in the market reduction is estimated at approx. R$119 mm

2

Reduction of energy losses for the second consecutive quarter

Total Losses Evolution (12 months)

9,532

9,706

10,102

10,050

9,945

9,397

9,499

9,336

Loss Ex-REN

9,094

9,739

9,737

9,736

9,264

8,827

9,153

8,825

8,392

8,529

26,72%

26,76%

26,60%

25,86%

25,97%

26,09%

26,06%

25,56%

25,51%

25,76%

25,93%

26,04%

25,44%

25,29%

Regulatory

24,49%

23,95%

Gap

22,98%

23,15%

20,62%

20,62%

20,62%

19,62%

19,62%

19,62%

19,62%

19,20%

19,20%

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Loss (GWh)

REN

Loss/Grid Load (%)

Regulatory Target

Loss ex-REN/Grid Load (%)

Continuity of actions initiated in Aug' 19

Reduction of Total Losses by 439 GWh in 2Q20 and 911GWh in 1H20

Loss combat teams strengthened with teams that were with suspended activities

Specific actions to combat losses, according to the characteristics of each regional

Total Losses Evolution - Possible Areas

Total Losses in Possible Areas (GWh, 12 months)

6.000

5.000

5.584

5.408

5.303

4.000

4.729

4.218

3.000

2.000

1.000

-

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Reduction of

24.5%

in 1 year

Total Losses / Grid Load - Possible Areas (12 months)

17,1% 16,8% 16,6%

15,3%

14,5%

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Reduction of

2.6 p.p.

in 1 year

3

Reduction of energy losses for the second consecutive quarter (Cont'd)

Non-technical Losses Evolution (12 months)

Non-technical Losses (GWh, 12 months)

7,070

7,412

7,396

7,295

6,917

6,832

6,838

6,918

6,517

7,048

7,084

7,085

6,682

6,517

6,351

6,212

55.36%

54.37%

5,965

52.92%

5,895

55.30%

52.68%

52.27%

52.00%

52.96%

52.92%

51.86%

52.05%

50.25%

49.53%

46.90%

51.25%

42.06%

45.18%

42.62%

36.06%

36.06%

36.06%

36.06%

36.06%

36.06%

36.06%

36.06%

36.06%

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

REN

Non-Techinical Loss (GWh)

Non-Techinical Loss/Low Voltage Market %

Regulatory Target

Non-Techinical Loss/Low Voltage Market ex-REN ( %)

Non-Techinical Loss Ex-REN

7,048

7,084

7,085

6,682

6,351

2,923

3,177

3,087

2,595

2,201

(45%)

(44%)

(45%)

(47%)

(39%)

3,748

3,999

4,088

4,150

3,906

(61%)

(55%)

(56%)

(53%)

(55%)

2Q19

3Q19

4Q19

1Q20

2Q20

Risk Areas

Possible Areas

Non-technical loss in the possible areas presented the best figure since verification started (2016)

Installation of border metering in risk areas brought more robust data

4

IEN increase in line with the main pillar of the loss combat plan: focus on energy incorporation

Recovery Energy - REN and Incorporated Energy - IEN (GWh)

Bad Debt Provision / Gross Revenue (12 months)

600

New Commercial Strategy

500

943

868

400

705

300

553

200

363

106

234

57

89

100

135

167

162221

452830

102

0

62

42

2T18

3T18

4T18

1T19

2T19

1200

6,6%

800

5,0%

5,4%

400

3,3%

1,8%

1,8%

2,3%

1,9%

0

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

REN Trimestral (GWh) # TOIs (Mil) IEN Trimestral (GWh) REN 12 meses (GWh)

2Q20 IEN 4.2 times higher YoY

Low number of TOIs and

=

Increased productivity of

increased energy recovered

field teams

Insourcing of

Improvement of

Greater accuracy

in target

teams

training

identification

Increase in Bad debt/Gross revenue due to the expectation of non-collection of future bills associated with higher increase in delinquency during the pandemic

The isolated effect of Covid-19 on Bad debt is estimated at approx. R$93 mm, considering the aging of accounts receivable

5

Historic result in quality service, in line with the top and largest DisCos in the country

DEC 12 months (hours)

FEC 12 months (times)

DEC (hours) 12 months

FEC (times)

8.36

8.40

12 months

8.09

8.14

5.43

7.83

7.67

7.78

7.77

-21.4%

4.71

4.60

4.44

4.36

4.38

4.36

4.31

4.27

4.27

6.96

-21.1%

6.42

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Target set at the 5th amendment to the concession contract (dec/20)

Target set at the 5th amendment to the concession contract (dec/20)

6

Consolidated EBITDA impacted by the effects of the pandemic on the Distribution business, despite the operational improvement

Amounts in R$ mn

450

400

350

300

250

-276

20

-132

200

385

147

150

100

145

50

0

Adjusted EBITDA 1Q19

Net Revenue

Non Manageable Expenses Manageable Expenses

Provisions

Adjusted EBITDA 1Q20

(PMSO)

Estimated economic impact, exclusive of the pandemic, on Disco's EBITDA

Impact on EBITDA (R$ MN)

Parcel B + Non-technical losses

(119)

PECLD

(93)

7

Reduction in JEC provisions due to lower new litigation for the third quarter in a row

Provisions (R$ MN)

2Q20

2Q19

% Change

2Q20/2Q19

JEC

(21)

(54)

-61.9%

Civil

(38)

(32)

18.8%

Others

(9)

(3)

254.0%

Total

(68)

(88)

-23.4%

Number of JEC processes ('000)

25.0

24.2

22.4

21.9

20.0 20.7

21.3

18.9

19.4

16.3

13.3

12.7 11.6

7.8

4.8

2Q19

3Q19

4Q19

1Q20

2Q20

# new lawsuits

# closed lawsuits

# stock of lawsuits

8

Improvement in the Distribution business hurt by the effects of the pandemic

Amounts in R$ mn

-230

385

+5

-1

-14

145

Adjusted EBITDA 2Q19

EBITDA Light SESA

EBITDA Light Energia

EBITDA LightCom

Others

Adjusted EBITDA 2Q20

The reduction in the DisCo's EBITDA is due to the impacts of the pandemic, despite the Company's operating improvement (decrease in losses, OPEX and legal contingencies)

The increase in the GenCo's EBITDA is explained by the reduction in

operating costs and expenses in 2Q20

9

Net Result also negatively impacted by the pandemic

Amounts in R$ mn

11

-45

87

-240

1

96

1

2Q19 Result

Adjusted EBITDA

Financial Result

Taxes

Depreciation

Equity Income

2Q20 Result

Net Result impacted by the pandemic, despite the lower tax collection

and improved Equity Income

10

Impacts of the pandemic overshadowed the DisCo's turnaround result

Amounts in R$ mn

DisCo's turnaround result (1H20 vs 1H19)

Estimated impacts of the pandemic

Result

+6

Impact of

+37

-93

+R$132

+89

-R$212

million

million

-119

Reduction of losses

PMS Reduction

Contingencies Reduction

PECLD

Parcel B + Non-technical losses

The positive effects of turnaround will remain, while the impacts of the pandemic are transient and should be addressed at the regulatory level.

11

Robust cash position to face future debt maturities

2Q20 Consolidated debt amortization, with subsequent events (R$ mn)

Net debt (R$ mn) & Net Debt/EBITDA (x)

3500,0

3000,0

Subsequent Events 2500,0

2000,0

COVID Account

R$1,010 MN1500,0

+

19th issuance of

1000,0

Debentures

R$500 MN 500,0

,0

Maturity: 3.1 years

3,003

2,331

Maturity of the

19th issuance

1,932

of Debentures

1,510

1,007

756

995

357

132

Cash

2020

2021

2022

2023

2024

2025

2026

18000,0

3.75

3.75

3.75

3.75

3.75

4,000

16000,0

3,5000

3.69

14000,0

3,000

3.06

3.07

12000,0

3.00

2.98

2,5000

10000,0

9,140

8,593

8,428

8,255

7,989

7,694

2,000

8000,0

6,750

6,721

6,541

6,699

1,5000

6000,0

4000,0

1,000

2000,0

,5000

-

-

2Q19

3Q19

4Q19

1Q20

2Q20

Gross Debt

Net Debt

Net Debt/EBITDA

Contractual Cap for Net Debt/EBITDA

Debt costs

Debt Indexes

TJLP

Others*

1%

1%

9.34%

8.84%

8.79%

8.31%

IPCA

7.12%

31%

4.88%

CDI

5.78%

5.78%

67%

4.30%

4.14%

2Q19

3Q19

4Q19

1Q20

2Q20

Actual Cost

Nominal Cost

* Equivalent to the sum of fixed cost, Libor and the U.S. dollar exchange rate variation

12

Important Notice

This presentation may include declarations that represent forward-looking statements according to Brazilian regulations and international movable values. These declarations are based on certain assumptions and analyses made by the Company in accordance with its experience. the economic environment. market conditions and future events expected. many of which are out of the Company's control. Important factors that can lead to significant differences between the real results and the future declarations of expectations on events or business-oriented results include the Company's strategy. the Brazilian and international economic conditions. technology. financial strategy. developments of the public service industry. hydrological conditions. conditions of the financial market. uncertainty regarding the results of its future operations. plain. goals. expectations and intentions. among others. Because of these factors. the Company's actual results may significantly differ from those indicated or implicit in the declarations of expectations on events or future results.

The information and opinions herein do not have to be understood as recommendation to potential investors. and no investment decision must be based on the veracity. the updated or completeness of this information or opinions. None of the Company's assessors or parts related to them or its representatives will have any responsibility for any losses that can elapse from the use or the contents of this presentation.

This material includes declarations on future events submitted to risks and uncertainties. which are based on current expectations and projections on future events and trends that can affect the Company's businesses. These declarations include projections of economic growth and demand and supply of energy. in addition to information on competitive position. regulatory environment. potential growth opportunities and other subjects. Various factors can adversely affect the estimates and assumptions on which these declarations are based on.

13

Disclaimer

Light SA published this content on 20 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 August 2020 17:11:58 UTC


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Financials
Sales 2020 10 715 M 1 916 M 1 916 M
Net income 2020 305 M 54,6 M 54,6 M
Net Debt 2020 7 386 M 1 320 M 1 320 M
P/E ratio 2020 18,6x
Yield 2020 1,60%
Capitalization 5 687 M 1 018 M 1 017 M
EV / Sales 2020 1,22x
EV / Sales 2021 1,10x
Nbr of Employees 5 321
Free-Float 72,4%
Chart LIGHT SA
Duration : Period :
Light SA Technical Analysis Chart | MarketScreener
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Technical analysis trends LIGHT SA
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 10
Average target price 16,60 BRL
Last Close Price 18,71 BRL
Spread / Highest target 6,89%
Spread / Average Target -11,3%
Spread / Lowest Target -35,9%
EPS Revisions
Managers
NameTitle
Ana Marta Horta Veloso Chief Executive & Investor Relations Officer
David Zylbersztajn Independent Chairman
Roberto Caixeta Barroso Chief Financial Officer
Marcus Auguste Pimenta Engineering Director
Carlos Alberto da Cruz Director
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