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  • 1. 1Q10 Resultados Operating and Financial Operacionais Results e Financeiros 1Q10 1T08 May 18, 2010 1
  • 2. 1Q10Agenda ► Introduction ► Highlights ► Operating Results ► Financial Results ► Spin-Off 2
  • 3. 1Q10Agenda ► Introduction ► Highlights ► Operating Results ► Financial Results ► Spin-Off 3
  • 4. 1Q10Introduction Presentation of Operating and Financial Information ► The financial and operating information contained herein is presented in consolidated figures, pursuant to Brazilian Corporate Law, based on revised financial information. The consolidated financial information represents 100% of CEMAR’s results, excluding 34.86% related to minority interests, 13.03% of Light’s results, and not 25% as we used to present, and 25% of Geramar (previously known as Geranorte) ► The consolidated operating information represents 100% of CEMAR’s and 13.03% of Light’s results. ► In order to facilitate comparisons with 1Q09, the financial information is presented on a pro forma basis considering the same interest held by Equatorial in RME and by RME in Light at the end of 1Q10. ► Equatorial’s pro forma results for 1Q09 are based on Light’s pro forma results for the same period, which were adjusted to reflect the changes introduced by Law 11,638/07, pursuant to CVM Instruction 565/08, together with Profit Sharing, which is no longer recorded as personnel costs/expenses and is now recognized after the Income Tax line. ► The following information was not reviewed by the independent auditors: i) non-financial information relating to CEMAR, Light and the PLPT (Programa Luz para Todos - Light for All Program); ii) pro forma information and its comparison with the results presented in the period; and iii) management expectations regarding the future performance of the Companies. 4
  • 5. 1Q10Agenda ► Introduction ► Highlights ► Operating Results ► Financial Results ► Spin-off 5
  • 6. 1Q10Operating Highlights ► CEMAR’s and Light SESA’s total energy volume amounted to 1,753 GWh in 1Q10, 13.8% more than in 1Q09. CEMAR’s quarterly volume grew by 17.5%, while Light’s increased by 9.5% (considering both captive and free markets). ► CEMAR’s last-12-month energy losses totaled 24.2% of required energy by the end of 1Q10, 4.3 p.p. less than in 1Q09 and thereby lower than the Regulatory Target of 25.6% for the period between August/09 and July/10. Light’s last-12-month losses came to 22.1%, 1.3 p.p. up compared with 1Q09. ► CEMAR’s last-12-month 1Q10 DEC index improved 21.8%, to 21.9 hours, while last-12-month FEC index improved 17.7%, to 14.4 times, in comparison to 1Q09. Light’s last-12-month DEC increased by 14.4%, to 11.1 hours whereas FEC stayed at the same level as 1Q09, at 6.2 times. ► On April 29, 2010, the Annual and Extraordinary General Meeting approved the proposal for the partial spin-off of Equatorial, transferring its indirect stake in Light (by means of RME) to a new company called Redentor. This company is currently under constitution and will be further listed in the BM&FBovespa’s Novo Mercado segment. We expect the listing process to take up to 90 days to be concluded. 6
  • 7. 1Q10Financial Highlights ► Net operating revenues (NOR) reached R$483.5 million in 1Q10, 7.3% up over 1Q09, reflecting a 1.6% increase by CEMAR and a 10.9% upturn by Light. ► Adjusting for non-recurring effects, 1Q10 EBITDA reached R$125.3 million, up by 16.7% over 1Q09. ► Adjusted net income came to R$42.4 million in 1Q10, reflecting a 33.0% decrease over 1Q09. ► In 1Q10, Equatorial’s consolidated investments totaled R$91.1 million, 6.4% lower in comparison to 1Q09. CEMAR’s investments (excluding direct investments in the PLPT program) totaled R$36.7 million in 1Q10, while Light’s investments came to R$15.0 million in the period, up by 44.3% over 1Q09. Geramar’s investments reached R$6.3 million in 1Q10. 7
  • 8. 1Q10Agenda ► Introduction ► Highlights ► Operating Results ► Financial Results ► Spin-off 8
  • 9. 1Q10 Distribution – Electricity MarketConsolidated► CEMAR: 1Q10 energy sales moved up by 17.5%, fueled by the 17.3% increase of the residential consumption and 18.0% increase of the commercial consumption.► Light: Consumption at Light’s concession area (captive + free clients*) increased 9.5% on the 1Q10, reaching 793.1 GWh, largely due to the residential (11.7%) class. Electricity Consumption (GWh) Electricity Consumption per Segment (GWh) CONSUMPTION CLASS AND 1Q09 4Q09 1Q10 Chg. FREE CLIENTS (GWh) 1,753 Residential 664.9 728.3 764.2 14.9% 1,541 13.8% Industrial 147.0 169.8 155.9 6.1% Commercial 367.5 399.6 412.2 12.2% Others 289.0 349.7 335.1 16.0% 793 9.5% Free Clients 72.4 82.9 85.6 18.2% 724 Total 1,540.8 1,730.2 1,753.1 13.8% *To preserve comparability with the market approved by Aneel in the Tariff Review process, the energy and demand measured 816 17.5% 959 of free customers Valesul, CSN and CSA were excluded as the exit of these customers to the core network is planned. 1Q09 1Q10 CEMAR Light 9
  • 10. 1Q10Distribution – Energy Losses in CEMAR Total Losses over Required Energy (last 12 months) 28.7% 28.9% 28.6% 28.9% 28.5% 28.1% 28.1% 26.4% 25.6% 24.2% 25.2% 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1T10 Regulatory Target Série1 (from Aug-09 until Jul-10) Non-technical Losses over Low-Voltage Market (last 12 months) 33.5% 30.4% 30.6% 29.9% 30.0% 29.0% 28.7% 30.8% 27.3% 28.0% 24.2% 25.3% 22.5% 23.7% 21.5% 19.8% 19.8% 17.0% 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1T10 Regulatory Target Non-technical Losses (from Aug-09 until Jul-10) 10
  • 11. 1Q10Distribution – Energy Balance and Losses Total Losses over Wire Load (*) - Light Non-technical Losses over Low Voltage Market - Light 43.1% 22.1% 42.3% 42.4% 21.5% 21.8% 41.8% 41.8% 21.2% 20.8% 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 (*) required energy + free clients Energy Balance ENERGY BALANCE (GWh) 1Q09 4Q09 1Q10 Chg. Required Energy 1,115 1,295 1,240 11.2% CEMAR Sales (*) 818 987 960 17.3% Losses 297 308 280 -5.6% Energia Requerida 7,148 7,160 7,750 8.4% LIGHT Energia Vendida 5,002 5,080 5,430 8.6% Perdas (**) 2,146 2,080 2,320 8.1% (*) Includes sales to the market, own consumption and sales to CEPISA. (**) Does not include network losses 11
  • 12. 1Q10Distribution – DEC and FEC (Last 12 months) ► CEMAR: The DEC index improved 21.8% compared to the 1Q09 and the FEC index fell 17.7% on the same period. ► LIGHT: The DEC increased 14.1% whereas FEC remained at the same level. CEMAR LIGHT 28.0 -21.8% 21.9 14.4% 11.1 9.7 DEC (hours) 1Q09 1Q10 1Q09 1Q10 17.5 -17.7% 14.4 6.2 0.0% 6.2 FEC (times) 1Q09 1Q10 1Q09 1Q10 12
  • 13. 1Q10Generation and Trading Light Energia ► The volume of electricity sold on the 1Q10 was 26.7% greater in comparison to the 1Q09 figure. GENERATION - Light Energia (GWh) 1Q09 4Q09 1Q10 Chg. Regulated Market Sales 136 143 136 0.5% Free Market Sales 11 21 11 0.0% Spot Sales (CCEE) 18 15 61 242.3% Total 165 180 208 26.7% Light Esco ► The 1Q10 sales, on Trading and Broker totaled 120 GWh, 159.3% more than in the 1Q09. Volume - GWh 1Q09 4Q09 1Q10 Chg. Trading 15 32 27 84.8% Broker 32 36 93 193.4% Total 46 68 120 159.3% 13
  • 14. 1Q10Agenda ► Introduction ► Highlights ► Operating Results ► Financial Results ► Spin-off 14
  • 15. 1Q10Consolidated Performance Net Operating Revenues* EBITDA* Net Income* 7.3% 483.5 15 0 .5 450.5 1.6% - 17.5% 12 4 .2 2.9% 63.0 41.6% 43.0% 31.8% -33.8% 30.3% 37.5% 41.7 1.4% 32.5% 68.2% 58.4% 55.4% 66.7% 62.5% 66.0% 1Q09 1Q10 1Q09 1Q10 1Q09 1Q10 CEMAR Light Geramar CEM A R Light Geramar CEMAR Light Geramar *As from this quarter, only operating companies are considered in these graphs. 15
  • 16. 1Q10 Consolidated Performance Breakdown by Segment Net Operating Revenues EBITDA Net Income 0.9% 0.2% 6.6% 0.5% 3.6% 7.6% 95.6% 92.1% 92.8% Distribuition Generation Distribuition Generation Distribuition Generation Trading Trading Trading 16
  • 17. 1Q10 Pro-forma EBITDA Pro-forma EBITDA -10.1% 10.0 1.1 150.5 135.3 124.2 1Q09 EBITDA 1Q10 Pro-forma Low Income Legal Settlement 1Q10 EBITDA EBITDA Provision► In 1Q10, there was a non-recurring expense due to Light’s Legal Settlement Provision with the municipality of Barra do Piraí over the dredging of the Piraí River, which affected Equatorial’s EBITDA by R$1.1 million.The main factors that affected the EBITDA are: • Low Income Grant: change in the accounting standards relating to the Low Income Grant as from 3Q09. This change negatively affected the EBITDA by R$10 million. • Recognition of extraordinary costs incurred with the Company’s Stock Options Plan, which totaled R$6.2 million in 1Q10. • Increase of CEMAR operational costs due to a strong growth in the number of consumers, improvements in the quality of the service and a change in the accounting standards relating to personnel costs arising from the Normative Law 396/2010. 17
  • 18. 1Q10 Consolidated Performance Adjusted Net Income -23.3% 5.9 0.7 63.0 48.3 41.7 1Q09 Pro-forma 1Q10 Pro-forma Low Income Legal Settlement 1Q10 Net Income Net Income Net Income Provision► Legal Settlement Provision with the municipality of Barra do Piraí over the dredging of the Piraí River negatively affected the Net Income by R$0.7 million.The other main factors that affected the Net Income are:► Low Income Grant: net impact of R$5.9 million due to changes in the accounting standards relating to this subsidy as from 3Q09.► Company’s Stock Options Plan: net impact of R$6.2 million due to recognition of extraordinary costs incurred with the plan. 18
  • 19. 1Q10Debt: Schedule of Gross Debt Maturities Consolidated Gross Debt (100% CEMAR + 13.3% Light + 25% Geramar) 151.3 108.5 Geramar (ex-Geranorte) 39.6 185.6 57.2 Light 317.7 50.9 86.2 167.0 59.6 278.3 65.1 1,186.4 CEMAR 102.3 45.3 42.8 367.0 Debt Short Term 2011 2012 2013 2014 After 2014 19
  • 20. 1Q10Net Debt - Consolidated 100% CEMAR + 13.03% Light + 25% Geramar Net Debt (R$MM)(*) and Net Debt/ EBITDA Net Debt Reconciliation (R$MM) (Last 12 months) 1.5 1.4 1.6 1.6 0.9 1,035.8 57.8 965.1 956.7 954.6 643.1 680.2 1,655.4 954.6 1Q09 2Q09 3Q09 4Q09 1Q10 Debt Regulatory Cash and Net Debt Assets Equivalents (*) Not considering debt with Braslight 20
  • 21. 1Q10Net Debt – Pro-Rata 65.12% CEMAR + 13.03% Light + 25% Geramar Net Debt (R$MM)(*) and Net Debt/ EBITDA Net Debt Reconciliation (R$MM) (Last 12 months) 1.6 1.5 1.6 1.6 0.9 719.9 680.0 36.9 688.7 695.0 509.9 425.4 1,241.8 695.0 1Q09 2Q09 3Q09 4Q09 1Q10 Debt Regulatory Cash and Net Debt Assets Equivalents (*) Not considering debt with Braslight 21
  • 22. 1Q10 Capex - Equatorial► CEMAR: In the 1Q10, total capex reached R$69.8 million, of which R$36.7 million are own capex and R$33.1 million regarding the Light for All Program (PLPT).► In the 1Q10, Light invested R$15.0 million, amount 44.3% higher when compared to the 1Q09 figure.► Geramar invested R$6.3 million in the final steps of its plants’ construction. CAPEX (R$MM) 1Q09 4Q09 1Q10 Chg. CEMAR Own (*) 43.3 63.6 36.7 -15.1% PLPT 35.8 69.2 33.1 -7.7% Total 79.1 132.8 69.8 -11.7% Light Distribution 9.4 19.6 12.6 34.7% Generation 0.6 4.0 2.1 267.4% Energy Trading 0.1 0.2 0.0 0.0% Administration 0.3 3.7 0.3 0.0% Total 10.4 27.5 15.0 44.3% Geramar Generation 7.9 13.5 6.3 -20.1% TOTAL EQUATORIAL 97.3 173.8 91.1 -6.4% * Includes indirect PLPT investments. 22
  • 23. 1Q10Agenda ► Introduction ► Highlights ► Operating Results ► Financial Results ► Spin-off 23
  • 24. 1Q10Spin-off ► Since the Equatorial’s partial spin-off approved by the Annual and Extraordinary General Meeting, held on 04/29/2010, the company’s corporate structure is as presented bellow: PCP Latin America Minorities Power S.A. 54.1% 45.9% Redentor Equatorial Energia S.A. Energia S.A. 100% 65.1% 25% 100% RME Equatorial CEMAR Geramar Rio Minas Energia Soluções 13.03% Light S.A. 24
  • 25. 1Q10 After spin-off – Pro-forma Income Statement and Net Debt► We adjusted the Income Statement and the Net Debt to reflect the effect of the partial spin-off. Equatorial Equatorial RME (without RME) Consolidated Net Operating Revenue 275.7 207.8 483.5 Non-manageable costs (122.3) (132.3) (254.6) PMSO + Provisions (68.7) (36.0) (104.7) EBITDA 84.7 39.5 124.2 Depreciation / Others Expenses (25.2) (8.8) (34.0) Equity Income (0.9) 1.2 0.3 Financial Income (6.7) (12.8) (19.4) Income Taxes and Social Contritbution (6.9) (1.9) (8.8) Profit Sharing (3.1) (0.3) (3.4) Minority Interests (17.1) - (17.1) Net Income 24.9 16.8 41.7 Equatorial Equatorial RME (without RME) Consolidated Debt 1,337.7 317.7 1,655.4 Cash 426.7 119.3 546.0 Cash - Holdings 92.8 0.4 93.2 Cash - Equatorial Soluções 4.0 - 4.0 Net Reg. Assets 59.9 (2.1) 57.8 Net Debt 754.4 200.2 954.6 25
  • 26. 1Q10 Contacts Eduardo Haiama CFO and IRO Thomas Newlands Investor Relations Telephone 1: +0 55 (21) 3206-6635 Telephone 2: +0 55 (21) 3217-6607 Email: ir@equatorialenergia.com.br Website: http://www.equatorialenergia.com.br/ir 26
  • 27. 1Q10 Disclaimer • This presentation may contain forward-looking statements, which are subject to risks and uncertainties, as they were based on the expectations of Company’s management and on available information. These prospects include statements concerning the Company’s current intentions or expectations for our clients; this presentation will also be available at our website www.equatorialenergia.com.br/ir and in the IPE system of the Brazilian Securities and Exchange Commission (CVM). • Forward-looking statements refer to future events which may or may not occur. Our future financial situation, operating results, market share and competitive positioning may differ substantially from those expressed or suggested by said forward-looking statements. Many factors and values that can establish these results are outside Company’s control or expectation. The reader/investor is advised not to completely rely on the information above. • The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are intended to identify estimates, which refer only to the date on which they were expressed. Hence, the Company has no obligation to update said statements. • This presentation does not constitute any offering, invitation or request of subscription offer or purchase of any marketable securities. And, this statement or any other information herein, does not constitute the basis for any contract or commitment of any kind. 27