6-K 1 d858466d6k.htm 6-K 6-K

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of January, 2020

Commission File Number: 1-15224

 

 

Energy Company of Minas Gerais

(Translation of Registrant’s Name Into English)

 

 

Avenida Barbacena, 1200

30190-131 Belo Horizonte, Minas Gerais, Brazil

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒                 Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐                No ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

 

 

 


Index

 

Item

  

Description of Items

1.   

Market Notice Dated November 11, 2019: Reply to B3 Inquiry Letter 1003/2019-SLS of November 11, 2019

2.   

Market Notice Dated November 11, 2019: Resignation of board member

3.   

Market Announcement Dated November  13, 2019: Reply to CVM Inquiry Letter 338/2019-CVM/SEP/GEA-1 of November 12, 2019

4.   

Market Notice Dated November  13, 2019: No change in Cemig GT’s equity interest in Renova

5.   

3Q19 Results – Earnings Release

6.   

Presentation of 3Q19 Results

7.   

Material Announcement Dated December  17, 2019: Renova files Recovery Plan

8.   

Notice to Stockholders Dated December  18, 2019: Payments of Interest on Equity

9.   

Material Annoucement Dated December  27, 2019: Renova obtains authorization to contract DIP loan

10.   

2Q19 Financial Statements

 

 


Forward-Looking Statements

This report contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Actual results could differ materially from those predicted in such forward-looking statements. Factors which may cause actual results to differ materially from those discussed herein include those risk factors set forth in our most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission. CEMIG undertakes no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof, and claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

 

By:

 

/s/ Maurício Fernandes Leonardo Jr.

 

Name: Maurício Fernandes Leonardo Júnior

Title: Chief Finance and Investor Relations Officer

Date: January 6, 2020

 


 

1. MARKET NOTICE DATED NOVEMBER 11, 2019: REPLY TO B3 INQUIRY LETTER 1003/2019-SLS OF NOVEMBER 11, 2019

 

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127

MARKET NOTICE

Reply to B3 Inquiry Letter 1003/2019-SLS, of November 11, 2019

Inquiry by B3

Cia. Energética de Minas Gerais – CEMIG

To Mr. Maurício Fernandes Leonardo Júnior

Chief Investor Relations Officer

Subject: Request for information on news media report

Dear Sirs,

A report published by the newspaper Valor Econômico on November 11, 2019, under the headline “Cemig decides not to buy stake held by Light in Renova” states, among other matters, that Cemig has decided not to exercise its right of first refusal in the sale of the equity interest held by Light in Renova Energia, which is in the process of Judicial Recovery.

We request information/explanations on the item indicated, by November 12, 2019, including your confirmation of it or otherwise, and also any other information that is considered to be important.

Reply by CEMIG

Dear Ms. Ana Lucia da Costa Pereira,

Issuer Listing and Supervision Management Unit

B3 S.A. – Brasil, Bolsa, Balcão

Cemig (Companhia Energética de Minas Gerais) (‘Cemig’ or ‘the Company’), in response to Official Inquiry Letter 1003/2019-SLS, of November 11, 2019, reports that in the Board Meeting held on November 8, 2019, no decision was made on immediate exercise of the right of first refusal, or of joint sale, in relation to the equity interest held by Light in Renova Energia.

Under the Stockholders’ Agreement of Renova Energia, the period for this expires on November 13, 2019.

Cemig takes this opportunity to reiterate its commitment to transparency and best market practices in communication with the market, when applicable law and regulations so require.

Belo Horizonte, November 11, 2019.

Daniel Faria Costa

Acting Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

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2. MARKET NOTICE DATED NOVEMBER 11, 2019: RESIGNATION OF BOARD MEMBER

 

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127

MARKET NOTICE

Resignation of board member

As part of its commitment to best corporate governance practices and in accordance with Article 151 of Law 6404 of December 15, 1976 as amended, Cemig (Companhia Energética de Minas Gerais – listed with securities traded on the exchanges of São Paulo, New York and Madrid) – hereby informs the public as follows:

 

   

On November 9, 2019 Cemig received from Renata Bezerra Cavalcanti a letter of resignation from membership of the Board of Directors.

Belo Horizonte, November 11, 2019

Daniel Faria Costa

Acting Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

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3. MARKET ANNOUNCEMENT DATED NOVEMBER 13, 2019: REPLY TO CVM INQUIRY LETTER 338/2019-CVM/SEP/GEA-1 OF NOVEMBER 12, 2019

 

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 338/2019-CVM/SEP/GEA-1, of Nov. 12, 2019

Question asked by the Brazilian Securities Commission (CVM)

Cia. Energética de Minas Gerais – CEMIG

To Mr. Maurício Fernandes Leonardo Júnior

Chief Investor Relations Officer

Subject: Request for information on news report

Dear Sir,

We refer to the news item published on October 9, 2019, in the newspaper Valor Econômico, in the Empresas section, under the headline:

“Cemig creates subsidiary to operate in solar generation”.

We request information/explanations on this item, by November 12, 2019, including your confirmation of it or otherwise, and also any other information that is considered to be important. The report contains the following statements:

 

Cemig plans to invest approximately R$ 300 million by 2020 in the construction of solar electricity generation plants in Minas Gerais. The project will be part of a new distributed generation company which has been given the name of Cemig S!M, the creation of which was announced yesterday in Belo Horizonte. The company will have 49% of the plants and the private group Mori Energia will have 51%.

The announcement of the new company takes place on the eve of the governor of Minas Gerais state, Cemig’s controlling stockholder, announcing a plan for privatizations. The plan is expected to include the sale of Cemig, which is currently controlled by the State of Minas Gerais.

Cemig S!M is the result of bringing together two other companies of the group, Cemig GD and Efficientia. In all there will be 32 solar plants, nine already planned to start operating by the end of the year, and the rest early in 2020. They will be installed in the North and North-west Regions of the state of Minas, spread over 17 municipalities.

With estimated total installed generation capacity of 150 MW, the plants are expected to generate 300 gigawatt-hours per year. The clients, in the first phase, will be commercial and industrial companies using supply at low voltage, and will be able to save up to 18% on their purchases of energy.

By the end of the year, the investment planned by Cemig S!M is approximately R$ 200 million, possibly rising to R$ 300 million – of a total likely to be around R$ 600 million. The first part of these funds of Cemig will come from the company’s own cash position, but the directors of the company are already discussing future credit lines with banks – public and private.        

We request a statement by the company on the truthfulness of this report, and if it is true, reasons why Cemig believed that this was not a matter for a Material Announcement, and also commentaries on other information considered important on the subject.

 

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

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Reply by CEMIG

Dear Ms. Nilza Maria Silva de Oliveira,

Company Monitoring Management Unit 1

In response to Official Inquiry Letter 338/2018-SAE, of November 12, 2019, Cemig (Companhia Energética de Minas Gerais) (‘Cemig’ or ‘the Company’), informs you that on October 8, 2019 the brand name Cemig S!M was launched, a trading name under which two pre-existing wholly-owned subsidiaries of Cemig operate: Cemig Geração Distribuída S.A. (‘Cemig GD’) and Efficientia S.A. (‘Efficientia’).

It is important to point out that no new company has been created arising from bringing together these two existing companies of the group: Cemig GD and Efficientia.

The Company further explains that, as published in item 10.8 of its 2019 Reference Form, cash injections of R$ 261.6 million are planned for the period 2019–2021, almost the entirety of this allocated for acquisition of assets already existing, especially distributed generation assets.

Thus, it can be seen that, as of today’s date, there has been no fact or event which, in the light of CVM Instruction 358/2002, could justify publication to the market of a Material Announcement about this subject.

Cemig takes this opportunity to reiterate its commitment to transparency and best market practices in communication with the market.

Belo Horizonte, November 13, 2019

Daniel Faria Costa

Acting Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

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4. MARKET NOTICE DATED NOVEMBER 13, 2019: NO CHANGE IN CEMIG GT’S EQUITY INTEREST IN RENOVA

 

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127

MARKET NOTICE

No change in Cemig GT’s equity interest in Renova

In accordance with its commitment to best corporate government practices, Cemig (Companhia Energética de Minas Gerais – listed with securities traded on the stock exchanges of São Paulo, New York and Madrid) – hereby informs the CVM (the Brazilian Securities Commission), the São Paulo stock exchange (B3) and the public in general as follows:

Pursuant to the information contained in the Material Announcement published on October 15, 2019, Cemig’s wholly-owned subsidiary Cemig Geração e Transmissão S.A. (‘Cemig GT’) has decided not to make any change in its stockholding interest in Renova Energia S.A. (‘Renova’).

Cemig takes this opportunity to reaffirm its commitment to transparency and best practice in publication of information to the market.

Belo Horizonte, November 13, 2019.

Daniel Faria Costa

Acting Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

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5. 3Q19 RESULTS – EARNINGS RELEASE

 

 

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PUBLICATION OF RESULTS

CEMIG REPORTS 3Q19

ADJUSTED EBITDA: R$ 984 MN

Highlights of 3Q19:

 

 

Provision expense of R$ 1,182,613, for legal action on social security contributions.

 

 

Capital gain on sale and restatement of holding: net R$ 224,067 (gross value R$309,144).

 

Indicators – GWh

   3Q19     3Q18     %  

Electricity sold (excluding CCEE)

     13,965       14,185       -1.55  

Total energy carried

     4,898       4,870       0.57  
                    

Indicators – R$ ‘000

   3Q19     3Q18     %  

Sales on CCEE

     9,811       29,157       -66.35  

Net debt

     13,613,445       13,691,017       -0.57  

Gross revenue

     9,179,829       9,672,241       -5.09  

Net revenue

     6,070,786       6,252,282       -2.9  

Ebitda (IFRS)

     110,281       902,311       -87.78  

Adjusted Ebitda

     983,750       902,311       9.03  

Net profit

     -281,834       244,540        

Ebitda margin

     1.81     14.43     -12.62 p.p.  

 

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Conference call

Publication of 3Q19 results

Webcast and Conference call

Monday, November 18, 2019, at 2:00 PM (Brasília time)

The transmission will have simultaneous translation in English and can be seen by Webcast, at http://ri.cemig.com.br, or through conference call on:

+ 55 (11) 2188-0155 (1st option) or

+ 55 (11) 2188-0188 (2nd option)

Password: CEMIG

 

Playback of Video Webcast:

http://ri.cemig.com.br

Click on the banner and download.

Available for 90 days.

 

Conference call – Playback:

Tel: (+55-11) 2188-0400

Password:

CEMIG Português

Available from Nov. 18 to Nov. 24, 2019

Cemig Investor Relations

http://ri.cemig.com.br/

ri@cemig.com.br

Tel.: +55 (31) 3506-5024

Fax: +55 (31) 3506-5025

Cemig’s Executive Investor Relations Team

 

 

Chief Finance and Investor Relations Officer

    Maurício Fernandes Leonardo Júnior

 

 

General Manager, Investor Relations

    Antônio Carlos Vélez Braga

 

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Summary

 

CONFERENCE CALL

     12  

CEMIG INVESTOR RELATIONS

     12  

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

     12  

SUMMARY

     13  

DISCLAIMER

     14  

OUR SHARES

     14  

CEMIG’S LONG-TERM RATINGS

     15  

PROFIT AND LOSS ACCOUNTS

     16  

3Q19 RESULTS

     17  

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

     18  

THE ELECTRICITY MARKET OF CEMIG D

     20  

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION – MWH

     22  

THE ELECTRICITY MARKET OF CEMIG GT

     22  

SUPPLY QUALITY INDICATORS – DECI AND FECI

     23  

CONSOLIDATED OPERATIONAL REVENUE

     23  

TAXES AND CHARGES REPORTED AS DEDUCTIONS FROM REVENUE

     26  

OPERATING COSTS AND EXPENSES

     26  

DEFAULT

     29  

SHARE OF PROFIT (LOSS) OF ASSOCIATES AND JOINT VENTURES, NET

     29  

FINANCIAL REVENUE (EXPENSES)

     30  

EBITDA

     31  

DEBT

     32  

COVENANTS – EUROBONDS

     33  

PROFIT AND LOSS ACCOUNTS SEGREGATED BY SEGMENT – 9M19

     34  

APPENDICES

     35  

CAPEX

     35  

SOURCES AND USES OF POWER – BILLED MARKET

     36  

PLANTS

     38  

RAP (PERMITTED ANNUAL REVENUE – TRANSMISSION) – 2019-20 CYCLE

     39  

CEMIG D – TABLES (R$ MN)

     40  

CEMIG GT – TABLES (R$ MN)

     41  

TABLES – CEMIG CONSOLIDATED (R$ MILLION)

     42  

 

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Disclaimer

Certain statements and estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties that may be known or unknown. There is no guarantee that the events or results will take place as referred to in these expectations.

These expectations are based on the present assumptions and analyses from the point of view of our management, in accordance with their experience and other factors such as the macroeconomic environment, market conditions in the electricity sector, and expected future results, many of which are not under Cemig’s control.

Important factors that could lead to significant differences between actual results and the projections about future events or results include Cemig’s business strategy, Brazilian and international economic conditions, technology, Cemig’s financial strategy, changes in the electricity sector, hydrological conditions, conditions in the financial and energy markets, uncertainty on our results from future operations, plans and objectives, and other factors. Due to these and other factors, Cemig’s results may differ significantly from those indicated in or implied by such statements.

The information and opinions herein should not be understood as a recommendation to potential investors, and no investment decision should be based on the veracity, currentness or completeness of this information or these opinions. None of Cemig’s professionals nor any of their related parties or representatives shall have any liability for any losses that may result from use of the content of this material.

To evaluate the risks and uncertainties as they relate to Cemig, and to obtain additional information about factors that could give rise to different results from those estimated by Cemig, please consult the section on Risk Factors included in the Reference Form filed with the Brazilian Securities Commission (CVM) – and in the 20-F form filed with the U.S. Securities and Exchange Commission (SEC).

Our shares

 

Security

   Ticker    Currency      September
2019
     Close of
2018
     Change
in
9M19,
%
 

Cemig PN

   CMIG4:      R$        14.33        13.43        6.70

Cemig ON

   CMIG3:      R$        15.90        14.65        8.56

ADR PN

   CIG      US$        3.39        3.45        -1.74

ADR ON

   CIG.C      US$        3.77        3.83        -1.70

Ibovespa

   IBOV      —          104,745        87,887        19.18

Power industry index

   IEEX      —          68,122        49,266        38.27

 

Source: Economática – Adjusted for corporate action, including dividends.

Trading volume in Cemig’s preferred shares (CMIG4) in 9M19 was R$ 27.61 billion, of which R$ 8.78 billion was traded in the third quarter, corresponding to a daily average of R$ 135.09 million – 95.86% higher than in 3Q18. Trading volume in the Company’s common shares in 9M19 was R$ 5.46 billion, with daily trading volume of R$ 24.83 million. Cemig’s shares, by volume (aggregate of common (ON) and preferred (PN) shares), were the second most liquid in Brazil’s electricity sector in the period, and among the most traded in the whole Brazilian equity market.

On the New York Stock Exchange the volume traded in ADRs for Cemig’s preferred shares (CIG) in full-year 2019 was US$2.96 billion – reflecting recognition by the investor market of Cemig as a global investment option.

 

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The Ibovespa index of the São Paulo Stock Exchange (B3) was up 19.18% in the 9M19, closing September at 104,745 points. Cemig’s shares also rose in market price in the half-year: the common (ON) shares rose 8.56%, in 9M19, and the preferred (PN) shares rose 6.70%. In New York the ADRs for Cemig’s common shares were down 1.70% over the nine months, and the ADRs for the preferred shares were down 1.74%.

 

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Cemig’s long-term ratings

This table shows long-term credit risk ratings and outlook for Cemig’s companies as provided by the principal rating agencies:

Brazilian rating:

 

     Cemig    Cemig D    Cemig GT

Agency

   Rating    Outlook    Rating    Outlook    Rating    Outlook

Fitch

   A+(bra)    Stable    A+(bra)    Stable    A+(bra)    Stable

S&P

   brA+    Stable    brA+    Stable    brA+    Stable

Moody’s

   Baa1.br    Positive    Baa1.br    Positive    Baa1.br    Positive

Global rating:

 

     Cemig    Cemig D    Cemig GT

Agency

   Rating    Outlook    Rating    Outlook    Rating    Outlook

Fitch

   BB-    Stable    BB-    Stable    BB-    Stable

S&P

   B    Stable    B    Stable    B    Stable

Moody’s

   B1    Positive    B1:    Positive    B1    Positive

Ratings of Eurobonds:

 

     Cemig    Cemig GT

Agency

   Rating    Outlook    Rating    Outlook

Fitch

   B+    Positive    B+    Positive

S&P

   B    Stable    B    Stable

 

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Adoption of IFRS

The results presented below are prepared in accordance with Brazilian accounting rules, which now embody harmonization to IFRS (International Financial Reporting Standards). In thousands of Reais (R$ ’000).

PROFIT AND LOSS ACCOUNTS

 

Consolidated – R$’000

   3Q19     3Q18     %  

GOING CONCERN OPERATIONS

      

Revenue

     6,070,786       6,252,282       (2.93

OPERATING COSTS

      

Personnel

     (304,350     (308,141     (1.23

Employees’ and managers’ profit shares

     14,572       (94     —    

Post-retirement obligations

     (105,397     (80,931     30.23  

Materials

     (20,450     (40,713     (49.77

Outsourced services

     (307,976     (262,489     17.33  

Electricity purchased for resale

     (3,034,108     (3,493,463     (13.15

Depreciation and amortization

     (244,023     (207,804     17.43  

Operating provisions

     (1,297,043     (134,799     862.21  

Charges for use of the national grid

     (376,216     (332,323     13.21  

Gas bought for resale

     (375,140     (341,445     9.87  

Infrastructure construction costs

     (341,503     (208,563     63.74  

Other operating expenses, net

     (94,741     (111,533     (15.06
  

 

 

   

 

 

   

 

 

 

TOTAL COST

     (6,486,375     (5,522,298     17.46  

Share of profit (loss) of associates and joint ventures, net

     57,780       (49,753     —    

Operational profit before financial revenue (expenses) and taxes

     (357,809     680,231       —    

Finance income

     618,975       362,795       70.99  

Finance expenses

     (852,766     (695,493     22.61  
  

 

 

   

 

 

   

 

 

 

Pre-tax profit

     (591,600     347,533       —    

Current and deferred income tax and Social Contribution tax

     85,699       (117,269     —    
  

 

 

   

 

 

   

 

 

 

Profit for the period from going concern operations

     (505,901     230,264       —    

Profit for the period from discontinued operations

     224,067       14,276       1,469,54  
  

 

 

   

 

 

   

 

 

 

NET PROFIT (LOSS) FOR THE PERIOD

     (281,834     244,540       —    
  

 

 

   

 

 

   

 

 

 

 

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3Q19 Results

Cemig reports a net loss for 3Q19 of R$ 281,834, which compares with net profit of R$ 244,540 in 3Q18.

There were several major items in the 3Q19 result:

 

 

Recognition of a contingency of R$ 1,182,613 for a legal action relating to payment of profit shares.

 

 

A net gain of R$ 224,067 resulting from the sale of control of Light.

Social Security contributions on profit sharing payments

The Brazilian tax authority (Receita Federal) opened administrative and court proceedings against the Company, relating to social security contributions on the payment of profit shares to its employees over the period 1999 to 2016, alleging that the Company did not comply with the requirements of Law 10,101/2000, arguing that it did not previously establish clear and objective rules for the distribution of these amounts. In August 2019, the Regional Federal Court of the First Region published a decision against the Company on this dispute. As a result the Company, based on the opinion of its legal advisers, reassessed the chances of loss on this action from ‘possible’ to ‘probable’ for certain amounts paid as profit sharing.

The total of the contingencies is approximately R$ 1,434,023 (R$ 1,264,460 on December 31, 2018), of which R$ 1,182,613 has been provisioned – the amount estimated to settle these disputes.

 

     Consolidated      Cemig D      Cemig GT  

Provision

     1,182,613        763,728        258,625  
  

 

 

    

 

 

    

 

 

 

Current and deferred income tax and Social Contribution tax

     -320,301        -196,895        -79,373  
  

 

 

    

 

 

    

 

 

 

Effect on net income

     862,312        566,833        179,252  
  

 

 

    

 

 

    

 

 

 

Disposal of equity interest Light

On July 17, 2019, together with the public offering of shares by Light, the Company sold 33,333,333 shares that it held in that investee, at the price per share of R$ 18.75, in the total amount of R$ 625,000. The capital gain net of taxes arising from this transaction was R$ 72,866.

Additionally, with completion of the public offering of shares by Light, the Company’s equity interest in the total capital of this investee was reduced from 49.99% to 22.58%. This limited its right of voting in meetings of stockholders, and consequently its capacity to direct material activities of the investee.

Thus, as from that date, with the alteration of the equity interest in Light, the Company ceased to have the power ensuring it control over that investee. In these circumstances, the Company wrote down the values of assets and liabilities of its former subsidiary, and recognized, at fair value, its remaining equity interest as an investment in an affiliate or jointly-controlled subsidiary, in accordance with IFRS 10 / CPC 36 (R3) – Consolidated financial statements.

The Company also wrote down the assets and liabilities of the former subsidiaries Itaocara, Guanhães, LightGer and Axxiom, and recognized its remaining equity interest in these investees at fair value as investments in jointly-controlled subsidiaries, valued by the equity method. These investments, which are jointly controlled with Light, were not classified under Held for sale and Discontinued operations, since the company does not have the intention of selling these interests.

 

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The accounting effects arising from the equity interest in and control of Light are shown in this table:

 

Consolidated

   Profit/loss on disposal of
equity interest
     Restatement of value of remaining interest  
   Light      Light      Lightger      Guanhães      Axxiom      Itaocara      Total  

Prior equity interest – assets held for sale

     -514,597        -1,059,370        -125,858        -141,357        -4,397        -5,195        -1,850,774  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue disposal of equity interest

     625,000        —          —          —          —          —          625,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Remeasurement at fair value of remaining equity interest

     0        1,258,111        127,970        131,260        4,438        4,812        1,526,591  

Other items

     —          —          —          3,234        5,093        —          8,327  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Effect on the income statement, before tax

     110,403        198,741        2,112        -6,863        5,134        -383        309,144  

Income tax and Social Contribution tax

     -37,537        -47,540        —          —          —          —          -85,077  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     72,866        151,201        2,112        -6,863        5,134        -383        224,067  

Cemig’s consolidated electricity market

The Cemig Group sells electricity through its distribution company, Cemig Distribuição (‘Cemig D’), its generation and transmission company, Cemig Geração e Transmissão (‘Cemig GT’), and other wholly-owned subsidiaries: Horizontes Energia, Sá Carvalho, Cemig PCH, Rosal Energia, CE Praias de Parajuru, CE Volta do Rio, Cemig Geração Camargos, Cemig Geração Itutinga, Cemig Geração Salto Grande, Cemig Geração Três Marias, Cemig Geração Leste, Cemig Geração Oeste, and Cemig Geração Sul.

These companies sell electricity to:

 

  (I)

Captive consumers in Cemig’s concession area in the State of Minas Gerais;

 

  (II)

Free Consumers in both the State of Minas Gerais and other States of Brazil, in the Free Market (Ambiente de Contratação Livre, or ACL);

 

  (III)

other agents of the electricity sector – traders, generators and independent power producers, also in the ACL; and

 

  (IV)

Distributors, in the Regulated Market (Ambiente de Contratação Regulada, or ACR).

In 3Q19 Cemig sold a total of 13,965,280 MWh, this figure being 1.55% lower than the total in 3Q18, reflecting the total sold by Cemig D being 0.70% lower, and the total sold by Cemig GT and other subsidiaries being 2.24% lower.

In September 2019 the Cemig Group invoiced 8,506,326 clients – a growth of 1.1% in the consumer base since the end of September 2018. Of these, 8,505,973 were in the group comprising final consumers and Cemig’s own consumption; and 353 were other agents in the Brazilian power industry.

 

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The chart below itemizes the Cemig Group’s sales to final consumers in the year, by consumer category:

 

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Total consumption of electricity (GWh) – changes

 

LOGO

 

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     MWh      Change,%      Average
price
3Q19
MWh
     Average
price
3Q18
MWh
 

Consolidated R$ ’000

   3Q19      3Q18  

Residential

     2,557,935        2,497,296        2.43        961.19        961.99  

Industrial

     4,144,538        4,581,890        -9.55        299.05        291.13  

Commercial, Services and Others

     2,347,906        1,996,913        17.58        569.40        619.43  

Rural

     1,054,819        1,057,426        -0.25        562.96        546.07  

Public authorities

     205,123        207,162        -0.98        771.94        759.13  

Public lighting

     348,477        349,429        -0.27        481.07        492.94  

Public services

     315,588        323,919        -2.57        619.40        576.96  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     10,974,386        11,014,035        -0.36        560.42        550.85  

Own consumption

     11,012        9,602        14.68        —          —    

Wholesale supply to agents in Free and Regulated Markets (*)

     2,979,882        3,160,972        -5.73        -0.81        12.12  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     13,965,280        14,184,609        -1.55        440.23        430.42  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(*)

Includes CCEARs (Regulated Market Sales Contract), ‘bilateral contracts’ with other agents, and the revenues from management of generation assets (‘GAG’ revenues) for the 18 hydroelectric plants of Lot D of Auction 12/2015.

The electricity market of Cemig D

Cemig D’s market comprises electricity billed to captive clients, and electricity transported for Free Clients and distributors with access to Cemig D’s networks.

In 3Q19 this totaled 11,164,087 GWh. The increase has two components: consumption by the captive market 0.70% lower YoY, and use of the network by Free Clients 0.58% higher.

 

Captive clients + Transmission service – MWh

   3Q19      3Q18      %  

Residential

     2,557,935        2,497,296        2.43  

Industrial

     5,078,919        5,165,874        -1.68  

Commercial, Services and Others

     1,499,900        1,476,712        1.57  

Rural

     1,056,389        1,059,985        -0.34  

Public authorities

     205,123        207,162        -0.98  

Public lighting

     348,476        349,429        -0.27  

Public services

     315,588        323,918        -2.57  

Concession holders (Distributors)

     90,744        88,560        2.47  
  

 

 

    

 

 

    

 

 

 

Total

     11,153,075        11,168,935        -0.14  
  

 

 

    

 

 

    

 

 

 

 

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Residential

The 2.43% increase in 3Q19 relative to 3Q18, mainly reflects addition of 94,490 new consumer units.

Industrial

The Industrial sector was negatively affected by reclassification of approximately 50% of the consumers in the Industrial class to Commercial and Residential, and also by migration of clients to the Free Market. Total energy distributed to the Industrial category of consumers was 13.69% lower in 3Q19, at 573,101 MWh, than in 3Q18 (664,027 MWh). In the Free Market segment, energy transported in the quarter was effectively flat YoY – at 4,505,818 MWh in 3Q19, and 4,501,847 MWh in 3Q18 – a positive difference of 0.09%.

Commercial and Services

Energy distributed to Commercial consumers was 1.57% higher than in 3Q18, reflecting the significant increase in consumption by the Free Market, and migration of clients from the captive market. Volume in the captive market was practically stable year-on-year, but was 8.18% higher in the Free Market.

Rural

Volume sold to Rural consumers was 0.34% lower in 3Q19 than 3Q18, mainly reflecting a lower number of consumers billed this year.

Number of clients

The Cemig group billed a total of 8,505,135 customers in September 2019 (this excludes the group’s own consumption). Of this total, 1,372 are Free Clients that use Cemig D’s distribution network.

 

Cemig D

   Number of clients      Change,%  
   Sep. 30,
2019
     Sep. 30,
2018
 

Residential

     6,918,015        6,823,525        1.38

Industrial

     29,797        72,870        -59.11

Commercial, Services and Others

     768,469        720,339        6.68

Rural

     701,915        710,689        -1.23

Public authorities

     65,421        64,503        1.42

Public lighting

     6,542        6,252        4.64

Public services

     13,604        12,948        5.07
  

 

 

    

 

 

    

 

 

 
     8,503,763        8,411,126        1.10
  

 

 

    

 

 

    

 

 

 

Total energy carried

        

Industrial

     680        565        20.35

Commercial

     682        530        28.68

Rural

     7        5        40.00

Concession holder

     3        3        0.00
  

 

 

    

 

 

    

 

 

 
     1,372        1,103        24.39
  

 

 

    

 

 

    

 

 

 

Total

     8,505,135        8,412,229        1.10

 

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Physical totals of transport and distribution – MWh

 

Metered market

   MWh      Change  
   3Q19      3Q18      %  

Total energy carried

        

Transported for distributors (metered)

     91,229        88,089        3.56  

Transported for Free Clients (metered)

     4,778,136        4,926,237        -3.01  

Own load + Distributed generation (1)(2)

     8,141,957        7,976,407        2.08  

Consumption by captive market – Billed supply

     6,266,263        6,308,909        -0.68  

Losses in distribution network

     1,875,694        1,667,499        12.49  
  

 

 

    

 

 

    

 

 

 

Total energy carried

     13,011,322        12,990,733        0.16  
  

 

 

    

 

 

    

 

 

 

 

(1)

Includes Distributed Microgeneration.

(2)

Includes own consumption.

The electricity market of Cemig GT

Cemig GT billed a total of 7,731,554 MWh in 3Q19, 0.29% more than in 3Q18.

Consumption by industrial clients was 4.88% lower in 3Q19 than 3Q18. Meanwhile, consumption in the Commercial market segment was 45.38% higher year-on-year, due to an increasing number of clients migrating from the captive market to the Free Market. From September 2018 to end-September 2019, Cemig GT added 146 new commercial clients. Sales of energy in the Regulated Market were 10.80% lower, reflecting termination of sale contracts in the 15th ‘Existing Plants’ auction.

 

Cemig GT

   MWh      Change
%
 
   3Q19      3Q18  

Free Clients

        

Industrial

     3,571,438        3,754,720        -4.88  

Commercial

     1,146,786        788,799        45.38  

Rural

     911        480        89.79  

Free Market – Free contracts

     2,489,754        2,582,963        -3.61  

Free Market

     490,128        549,444        -10.80  

Regulated Market – Cemig D

     32,538        32,660        -0.37  
  

 

 

    

 

 

    

 

 

 

Total

     7,731,555        7,709,066        0.29  
  

 

 

    

 

 

    

 

 

 

The figures for 2018 do not include the plants of Sá Carvalho, Horizontes Energia, Rosal Energia, Cemig PCH, Empresa de Serviços de Comercialização de Energia Elétrica, Usina Termelétrica do Barreiro, Cemig Comercializadora de Energia Incentivada and Cemig Trading – since these were transferred to Cemig GT after the end of 3Q18.

 

Plants transferred

   3Q18  

Free Clients

  

Industrial

     163,143  

Commercial

     7,585  

Free Market – Free contracts

     28,565  
  

 

 

 
     199,293  
  

 

 

 

 

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SUPPLY QUALITY INDICATORS – DECi and FECi

Cemig is continuously taking action to improve operational management, organization of the logistics of its emergency services, and its permanent routine of preventive inspection and maintenance of substations, and distribution lines and networks. It also invests in training of its staff for improved qualifications, state-of-the-art technologies, and standardization of work processes, aiming to maintain the quality of electricity supply, and as a result maintain satisfaction of clients and consumers.

The charts below show Cemig’s indicators for duration and frequency of outages – DECi (Average Outage Duration per Consumer, in hours), and FECi (Average Outage Frequency per Consumer, in number of outages), since January 2016. Quality indicators are linked to the current concession contract of Cemig D (distribution), signed in 2015.

Note: Figures for 2016 and 2017 are according to recalculation presented by the Company to Aneel.

 

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Consolidated operational revenue

Revenue from supply of electricity:

Total revenue from supply of electricity in 3Q19 was R$ 6,875,079, or 0.76% lower than in 3Q18 (R$ 6,927,638).

 

     3Q19      3Q18      Change %  
   MWh      R$      Average
price
(R$/MWh)

(1)
     MWh      R$      Average
price
(R$/MWh)
(1)
     MWh      R$  

Residential

     2,557,935        2,458,671        961.19        2,497,296        2,402,379        962        2.43        2.34  

Industrial

     4,144,538        1,239,412        299.05        4,581,890        1,333,933        291.13        -9.55        -7.09  

Commercial, services and others

     2,347,906        1,336,909        569.4        1,996,913        1,236,950        619.43        17.58        8.08  

Rural

     1,054,819        593,821        562.96        1,057,426        577,424        546.07        -0.25        2.84  

Public authorities

     205,123        158,343        771.94        207,162        157,262        759.13        -0.98        0.69  

Public lighting

     348,477        167,642        481.07        349,429        172,248        492.94        -0.27        -2.67  

Public services

     315,588        195,474        619.4        323,919        186,888        576.96        -2.57        4.59  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     10,974,386        6,150,272        560.42        11,014,035        6,067,084        550.85        -0.36        1.37  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Own consumption

     11,012        —          —          9,602        —          —          14.68        —    

Supply not yet invoiced, net

     —          -2,403        —          —          38,312        —          —          -106.27  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     10,985,398        6,147,869        559.64        11,023,637        6,105,396        553.85        -0.35        0.7  
                       

Wholesale supply toagents in Free and Regulated Markets

     2,979,882        755,593        253.56        3,160,972        783,975        248.02        -5.73        -3.62  
        

 

 

          

 

 

       

Wholesale supply not yet invoiced, net

     —          -28,383        —          —          38,267        —          —          -174.17  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     13,965,280        6,875,079        494.5        14,184,609        6,927,638        488.39        -1.55        -0.76  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Includes Regulated Market Electricity Sale Contracts (CCEARs) and ‘bilateral contracts’ with other agents.

 

 

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Final consumers

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, in 3Q19 was R$ 6,147,869, or 0.70% more than in 3Q18 (R$ 6,105,396).

The main factors in this revenue were:

 

 

The annual tariff adjustment for Cemig D effective May 28, 2019, with an average upward effect of 8.73% on consumer tariffs.

 

 

Volume of energy sold 0.36% lower year-on-year in the period.

Revenue from Use of Distribution Systems (the TUSD charge)

This revenue in 3Q19 was R$ 711,185, or 17.43% higher than in 3Q18 (R$ 605,618), mainly reflecting the Company’s annual tariff adjustment, as from May 28, 2019, the average impact of which for Free Clients was an increase of 17.28%.

CVA and Other financial components in tariff adjustment

In its financial statements Cemig recognizes the difference between non-controllable costs (in which the CDE, and electricity bought for resale, are significant components) and the costs that were used as the basis for decision on the rates charged to consumers. In 3Q19 amounts totaling R$ 35,122 were recognized, to be passed through to the Company in the next tariff adjustment, compared to a R$ 633,118 arising in 3Q18. The difference is mainly due to lower costs of energy in 3Q19 than 3Q18, due to a lower spot price, which generated a financial liability to be paid to consumers through the next tariff adjustment.

Changes in balances of financial assets and liabilities:

 

     R$ ’000  

Balance at June 30, 2018 (re-presented)

     835,715  

Net constitution of financial assets

     666,680  

Realized

     -33,562  

Others – R&D Reimbursement

     0  

Payments from the Flag Tariff Centralizing Account

     -287,979  

Inflation adjustment – Selic rate (Note 30)

     23,894  
  

 

 

 

Balance at September 30, 2018

     1,204,748  

Balance at Sunday, June 30, 2019

     1,130,865  

Net constitution of financial assets

     201,653  

Realized

     -236,775  

Advances from the Flag Tariff Centralizing Account

     -27,594  

Updating – Selic rate

     31,825  
  

 

 

 

Balance at September 30, 2019

     1,099,974  

Transmission Concession revenue

This revenue, at R$ 132,134 in 3Q19, was 27.41% higher than in 3Q18 (R$ 103,711). The higher figure arises from (i) the inflation adjustment of the annual RAP, applied in July 2019, plus (ii) the new revenues related to the investments authorized to be included. The percentages and indices applied for the adjustment are different for different concessions: the IPCA index is applied to the contract of Cemig GT, and the IGP–M index to the contract of Cemig Itajubá.

 

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In 2019, the adjustments made to the RAP were: positive 10.53% for Cemig GT’s concession contracts; and positive 14.60% for the concession contracts of Cemig Itajubá. The adjustments comprised (i) application of the inflation adjustment index, plus (ii) recognition of works to upgrade and improve the facilities.

Revenue from transactions on the Wholesale Trading Exchange (CCEE)

Revenue from transactions in electricity on the CCEE in 3Q19 was R$ 9,811, compared to R$ 29,157 in 3Q18 – a year-on-year reduction of 66.35%. This difference mainly reflects a lower GSF (Generation Scaling Factor) in the period, and the Company’s seasonalization profile.

 

Period

  

Spot price

     GSF  
  

Sub-market

   Average
price
R$/MWh
 

July

   Southeast /Center-West      185.52        0.546  

August

   Southeast /Center-West      237.29        0.488  

September

   Southeast / Center-West      219.57        0.531  

Revenue from supply of gas

In 3Q19 this was R$ 581,869, 5.14% more than in 3Q18 (R$ 53,448), mainly due to passthrough of the increase in cost of gas acquired from Petrobras.

 

Market (’000 m3/day)

   2014      2015      2016      2017      2018      9M19  

Residential

     0.72        1.04        3.38        11.44        17.73        21.01  

Commercial

     23.15        22.42        24.68        32.67        39.37        44.22  

Industrial

     2,849.24        2,422.78        2,173.76        2,453.22        2,400.41        2,142.86  

Other expenses

     99.64        119.87        120.19        126.15        155.14        150.24  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total market excluding thermal plants

     2,972.75        2,566.11        2,322.01        2,623.47        2,612.65        2,358.34  

Thermal generation

     1,223.99        1,309.13        591.52        990.89        414.04        649.25  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     4,196.74        3,875.24        2,913.53        3,614.36        3,026.69        3,007.58  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supply of gas to the residential market began in 2013. In September 2019, a total of 48,010 households were invoiced.

 

Number of clients

   2014      2015      2016      2017      2018      September 30,
2019
 

Residential

     1,446        3,820        14,935        30,605        41,377        48,010  

Commercial

     177        218        394        591        756        937  

Industrial

     111        113        112        107        109        108  

Other expenses

     88        62        49        50        57        59  

Thermal generation

     2        2        2        2        2        2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,824        4,215        15,492        31,355        42,301        46,116  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Taxes and charges reported as Deductions from revenue

The total of these taxes and charges reported as deductions from revenue in 3Q19 was R$ 3,109,043 – or 9.09% less than in 3Q18 (R$ 3,419,959). The lower total primarily reflects lower consumer charges for the ‘Flag’ tariff band system, and also the legal action won by Cemig, Cemig D and Cemig GT, in which the judiciary recognized these companies’ right to exclude ICMS tax amounts (paid or still payable) from the basis for calculation of the PIS, Pasep and Cofins taxes. As a result of the court judgment, ICMS amounts are no longer included in the basis for calculation of PIS, Pasep and Cofins in electricity bills delivered to clients of Cemig D.

Consumer charges – the ‘Flag’ Tariff system

The ‘Flag’ Tariff bands are activated as a result of low levels of water in the system’s reservoirs – tariffs are temporarily increased due to scarcity of rain.

The charges to the consumer related to the Flag Tariffs were 70.54% lower in 3Q19, at R$ 73,474, than in 3Q18 (R$ 249,422).

 

The ‘Flag’ Tariff component – history

June 2019

  

July 2019

  

August 2019

  

9M19

Green    Yellow    Red 1    Red 1

June 2018

  

July 2018

  

August 2018

  

9M18

Red 2    Red 2    Red 2    Red 2

Operating costs and expenses

Operational costs and expenses in 3Q19 totaled R$ 6,486,375, or 17.46% more than in 3Q18 (R$ 5,522,298).

 

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The following paragraphs comment on the main variations:

Personnel

The expense on personnel in 3Q19 was R$ 304,350, or 1.23% lower than in 3Q18 (R$ 308,141). This mainly reflects the average number of employees in 3Q19 being 2.82% lower than in 3Q18.

Number of employees – by company

 

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Employees’ and managers’ profit shares

The item recorded for employees’ and managers’ profit shares in the income statement for 3Q19 was a positive amount of R$ 14,572, compared to an expense of R$ 94 in 3Q18. The lower figure is due to consolidated profit (loss) of Cemig in 3Q19 – the basis of calculation for profit shares (the collective agreements are unified).

Electricity purchased for resale

The expense on electricity bought for resale in 3Q19 was R$ 3,034,108, or 13.15% less than in 3Q18 (R$ 3,493,463). This arises mainly from the following items:

 

 

Expenses on supply acquired at auction were 24.24% lower, at R$ 816,193 in 3Q19, compared to R$ 1,077,340 in 3Q18, mainly due to replacement, in 2019, of contracts with higher prices for contracts with lower prices.

 

 

Expenses on spot supply purchases were 33.69% lower, at R$ 386,177 in 3Q19, compared to R$ 733,160 in 3Q18 – mainly reflecting the spot price being 56.72% lower year-on-year.

 

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For Cemig D, purchased energy is a non-manageable cost: the difference between the amounts used as a reference for calculation of tariffs and the costs actually incurred is compensated for in the subsequent tariff adjustment.

 

Consolidated R$ ’000

   3Q19      3Q18      %  

Supply from Itaipu Binacional

     372,296        374,255        -0.52  

Physical guarantee quota contracts

     163,052        189,251        -13.84  

Quotas for Angra I and II nuclear plants

     67,293        66,712        0.87  

Spot market

     486,177        733,160        -33.69  

Proinfa

     95,308        79,847        19.36  

‘Bilateral’ contracts

     79,750        149,543        -46.67  

Electricity acquired in Regulated Market auctions

     816,193        1,077,340        -24.24  

Acquired in Free Market

     1,168,392        1,121,959        4.14  

Distributed generation

     54,491        24,354        123.75  

Credits of PIS, Pasep and Cofins taxes

     -268,844        -322,958        -16.76  
  

 

 

    

 

 

    

 

 

 
     3,034,108        3,493,463        -13.15  

 

Cemig D

   3Q19      3Q18      %  

Supply from Itaipu Binacional

     372,296        374,255        -0.52  

Physical guarantee quota contracts

     192,498        189,251        1.72  

Quotas for Angra I and II nuclear plants

     67,294        66,712        0.87  

Spot market – CCEE

     420,843        596,536        -29.45  

‘Bilateral’ contracts

     79,750        73,813        8.04  

Supply acquired in auctions on Regulated Market

     805,067        1,085,207        -25.81  

Proinfa

     95,308        79,848        19.36  

Distributed generation

     54,491        24,354        123.75  

Credits of PIS, Pasep and Cofins taxes

     -161,575        -205,382        -21.33  
  

 

 

    

 

 

    

 

 

 
     1,925,972        2,284,594        -15.70  

Post-retirement obligations

The impact of the Company’s post-retirement obligations was an expense of R$ 105,397 in 3Q19 – or 30.23% more than the expense of R$ 80,931 in 3Q18. This is mainly the result of reduction in the discount rate used in the actuarial calculation – which generated an increase in liabilities, and consequently in the expense reported.

Operating provisions

Operational provisions were significantly higher in 3Q19, at R$ 1,297,043, compared to R$ 134,799 in 3Q18. This arises mainly from the following factors:

 

 

Recognition in 3Q19 of a tax contingency for legal actions arguing the applicability of social security contributions to payments of profit shares, in a total amount of R$ 1.182.613.

 

 

Estimated losses on doubtful receivables were R$ 101,383 in 3Q19, compared to R$ 60,232 in 3Q18.

 

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Default

In 2019 the economy was marked by two main features: instability in the financial market, and continuation of the slow process of recovery in economic activity.

To overcome the effects of a still unfavorable economic scenario, and to combat the level of default, in 2019 Cemig is maintaining its high levels of effort for collection from consumers that are in default. This activity appears to be having positive results: the default situation has improved considerably in recent months. The average of the indices for default in this last quarter has improved by 7.5% from that of 3Q18, and by 12% from 2017. The main contribution came from a significant reduction in short-term debt (up to 3 months past due). In view of this, Cemig expects the downward trend begun in 2019 to be maintained, and that it will thus be able to reduce the level of this index continuously, converging to historic levels.

Cemig uses various tools of communication and collection to prevent increase in default. These include contact by telephone and email, collection requests by text and by letter, negative posting on credit registers, collection through the courts and, principally, disconnection of supply. Aneel Resolution 414 allows supply to be cut off after 15 days from receipt of a notice by a defaulting consumer.

The company is continuing with a robust plan for consumer disconnections in 2019, under which it expects to carry out more than 1 million consumer disconnections – over the aggregate of all the types of consumer – in a year, for the second year running.

As well as the collection methods Cemig already uses to combat default over the long term, it is in the process of contracting a company specialized in out-of-court solutions to disputes, to negotiate these receivables through technology platforms.

With more intense application of the tools for collection, the Company is even more confident that default indices will be reduced in the coming periods.

 

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Share of profit (loss) of associates and joint ventures, net

The result of equity method gains in non-consolidated investees in 3Q19 was a gain of R$ 49,753, compared to a loss of R$ 49,753 in 3Q18. The losses in 2018 mainly came from the interests in Renova and Madeira Energia. No equity method gain or loss was reported in 3Q19 for the investment in Renova, since the entire value of that investment was written down in December 2018, as a result of that investee’s negative net equity.

 

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Consolidated R$ ’000

   3Q19      3Q18  

Companhia de Transmissão Centroeste de Minas

     1,438        1,276  

Hidrelétrica Cachoeirão

     4,189        1,608  

Guanhães Energia

     -208        -265  

Hidrelétrica Pipoca

     1,476        1,191  

Madeira Energia (Santo Antônio plant)

     -29,176        -41,344  

FIP Melbourne (Santo Antônio plant)

     -24,005        -35,101  

LightGer

     -549        -218  

Baguari Energia

     4,891        6,427  

Amazônia Energia (Belo Monte Plant)

     24,612        27,456  

Aliança Norte (Belo Monte plant)

     14,162        15,687  

Ativas Data Center

     502        1,903  

Taesa

     77,027        56,305  

Itaocara Hydroelectric Plant

     -21,900        -328  

Aliança Geração

     1,011        2,391  

Retiro Baixo

     4,730        2,553  

Janaúba photovoltaic plant – distributed generation

     480        0  

Axxiom Soluções Tecnológicas

     -900        -1,735  

Renova

     0        -87,332  

Others

     0        -227  
  

 

 

    

 

 

 

Total of investments

     57,780        -49,753  
  

 

 

    

 

 

 

Application to the court by Renova for Judicial Recovery

In the context of: the financial difficulties faced by Renova; termination of the negotiation with AES for sale of the Alto Sertão III complex, in which agreement was not reached; and the non-settlement of the bridge loan contracted with the BNDES for funds for execution of the works on Alto Sertão III, Renova Energia applied to the court for Judicial Recovery proceedings, which were granted by the 2nd Bankruptcy and Recovery Court on October 16, 2019. For more details, see this link:

http://ri.cemig.com.br/enu/18349/Fato_Relevante_Renova_Ajuiza_Pedido_RJ_ing.pdf

Financial revenue (expenses)

Cemig reported net financial expenses in 3Q19 of R$ 233,791, which compares with net financial expenses of R$ 332,698 in 3Q18. Combined with the results of the hedge transactions, the effects arising from the debt in Eurobonds had only a small net impact on the total of Financial revenue (expenses) for 3Q19. The main components in the differences between Financial revenue (expenses) in 3Q18 and 3Q19 are as follows:

 

 

Gain on the hedge transaction contracted to protect the Eurobond issue from exchange rate variation: the gain in 3Q19 was R$ 485,836, compared to a gain of R$ 142,451 in 3Q18. This improvement mainly reflects lowering of the yield curve over the period of the contract, which helped reduce expectations for the amount of payments of Cemig’s obligations, which are indexed to the CDI rate – increasing the fair value of the option.

 

 

Higher FX variation on loans in foreign currency – which in 3Q19 represented a financial expense of R$ 499,769, compared to a financial expense of R$ 229,580 in 3Q18.

 

 

Updating of the tax credits in PIS, Pasep and Cofins taxes, recognized in 3Q19, in the amount of R$ 22,169.

 

 

Lower expense on monetary updating, due to the lower inflation rate, and the lower CDI rate in the period.

 

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Ebitda

Cemig’s consolidated Ebitda was 87.78% lower in 3Q19 than 3Q18 – the main component being recognition of a contingency for a legal action relating to payment of profit shares. Ebitda margin in 3Q19 was 1.81%, compared to 14.43% in 3Q18.

 

EBITDA R$ ’000

   3Q19      3Q18      Change,%  

Net profit for the period

     -281,834        244,540        -215.25  

+ Income tax and the Social Contribution tax

     -85,699        117,269        -173.08  

+ Net financial revenue (expenses)

     233,791        332,698        -29.73  

+ Depreciation and amortization

     244,023        207,804        17.43  
  

 

 

    

 

 

    

 

 

 

Ebitda

     110,281        902,311        -87.78  
  

 

 

    

 

 

    

 

 

 

 

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DEBT

 

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The Company’s total consolidated debt at September 30, 2019 was R$ 15,184,307. This is 2.79% higher than at December 31, 2018. In 3Q19 a total amount of R$ 3,900,371 was amortized, and loans in the amount of R$ 4,510,000 were obtained. The proceeds of the Cemig D’s Seventh Debenture Issue were used for payment of debts. Also in the period, Gasmig raised R$ 850,000 for payment of a concession grant fee.

 

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     Sep. 30, 2019      Dec. 31, 2018      %  

Cemig

        

Total debt

     15,184,307        14,771,828        2.79  

Net debt

     13,613,445        13,068,790        4.17  

Cemig GT

        

Total debt

     8,298,371        8,198,912        1.21  

Net debt

     7,455,158        7,713,870        -3.35  

Cemig D

        

Total debt

     5,759,520        6,263,408        -8.04  

Net debt

     5,574,218        5,347,136        4.25  

Gasmig

        

Total debt

     1,082,034        274,916        293.59  

Net debt

     916,168        180,323        408.07  

 

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Covenants – Eurobonds

 

12 months

   9M19  

R$ (in million)

   GT      H  

Net income for the period/year

     1,547        3,633  

Net financial expenses

     -1,025      -2,232  

Income tax and Social Contribution tax

     1,032      1,918  

depreciation and amortization; minus

     261      975  

EBTIDA

     1,815        4,294  

minority interest result; minus

     113      134  

provisions for the variation in value of put option obligations;  minus

     78      64  

non-operating result (which includes any gains on asset sales and  any asset write-off or impairments); plus

     107      147  

non-cash revenues related to transmission and generation indemnification;  plus

     -139      -139  

cash dividends received from minority investments (as measured in  the statement of cash flows); minus

     118      263  

monetary updating of concession grant fees; plus

     -320      320  

cash inflows related to concession grant fees; plus

     257      257  

cash inflows related to transmission revenue for cost of capital  coverage; plus

     179      179  

cash inflows from generation indemnification, provided that such amount  shall not exceed 30.0% of the sum of clauses (i) through (xvii) of this definition

     1,027        521  
  

 

 

    

 

 

 

Covenant EBITDA

     3,235        5,132  
  

 

 

    

 

 

 

 

12 months

   9M19  

R$ (in million)

   GT      H  

Consolidated Indebtedness

     8,298        15,184  

debt contracts with Forluz; plus

     134      590  

the carrying liability of any put option obligation, less

     467      467  

consolidated cash and cash equivalents and consolidated marketable  securities recorded as current assets

     -843      -1,558  

Covenant Net Debt

     8,056      14,683  

Covenant Net Debt to Covenant EBITDA Ratio

     2.49        2.86  

Limit Covenant Net Debt to Covenant EBITDA Ratio

     5.00      4.25  

Total Secured Debt

        1,000  

Total Secured Debt to Covenant EBITDA Ratio

        0.19  

 

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Profit and loss accounts segregated by segment – 9M19

 

INFORMATION BY SEGMENT 9M 2019

 
     ELECTRICITY                       

DESCRIPTION – R$ ‘000

   GENERATION      TRANSMISSION      DISTRIBUTION      GAS      OTHER      ELIMINATIONS      TOTAL  

ASSETS OF THE SEGMENT

     15,467,907        4,142,829        24,924,804        2,786,918        3,202,639        -462,425        50,062,672  

INVESTMENT IN AFFILIATES AND JOINTLY-CONTROLLED ENTITIES

     4,304,218        1,254,441                      25,900               5,584,559  

ADDITIONS TO THE SEGMENT

                   1,258,111                             1,258,111  

ADDITIONS TO FINANCIAL ASSETS

     70,006               21,190        891,833        5,810               988,839  

ADDITIONS TO THE CONTRACT

            150,158        605,141        30,239                      785,538  

GOING CONCERN OPERATIONS

                    

NET REVENUE

     5,347,651        520,203        11,694,909        1,375,996        289,486        -227,488        19,000,757  

COST OF ELECTRICITY AND GAS

                    

Electricity purchased for resale

     -2,825,618               -5,381,699     

 

 

     -6        53,015        -8,154,308  

Charges for use of the national grid

     -142,377               -1,098,492                      163,482        -1,077,387  

Gas bought for resale

                          -1,100,302                      -1,100,302  

Total 

     -2,967,995               -6,480,191        -1,100,302        -6        216,497        -10,331,997  

OPERATING COSTS AND EXPENSES

                    

Personnel

     -158,424        -88,190        -673,710        -33,336        -27,762               -981,422  

Employees’ and managers’ profit shares

     -22,484        -15,656        -109,480               -12,323               -159,943  

Post-retirement obligations

     -37,011        -28,303        -205,866               -32,916               -304,096  

Materials

     -11,297        -3,763        -43,788        -1,668        -210        20        -60,706  

Outsourced services

     -87,137        -31,990        -733,969        -13,951        -32,846        5,948        -893,945  

Depreciation and amortization

     -166,688        -4,543        -489,012        -59,370        -3,709               -723,322  

Operational provisions (reversals)

     -920,261        -114,596        -1,048,610        -1,117        -190,838               -2,275,422  

Construction costs

            -150,159        -626,330        -30,239                      -806,728  

Other operational expenses net

     303        -11,937           -6,776        3        5,023     

Total cost of operation

     -1,402,999        -449,137           -146,457        -300,601        10,991        -6,394,179  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

OPERATING COSTS AND EXPENSES

     -4,370,994        -449,137        -10,586,167        -1,246,759        -300,607        227,488        -16,726,176  

Share of profit (loss) in associates and joint ventures

     -16,940        179,032                      -812               161,280  

OPER. PROFIT BEFORE FIN. REV. (EXP.) AND

TAXES

     959,717        250,098        1,108,742        129,237        -11,933               2,435,861  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Financial revenues

     1,361,418        106,995        1,401,937        57,378        314,235               3,241,963  

Financial expenses

     -1,013,462        -111,769        -506,395        -18,928        -18,173               -1,668,727  

PRE-TAX PROFIT

     1,307,673        245,324        2,004,284        167,687        284,129               4,009,097  

Income tax and Social Contribution tax

     -642,708        -32,163        -752,665        -56,642        -118,595               -1,602,773  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

RESULT OF GOING CONCERN OPERATIONS

     664,965        213,161        1,251,619        111,045        165,534               2,406,324  

Discontinued operations

                    

Profit for the period from discontinued operations

                   224,067                             224,067  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net profit for the period 

     664,965        213,161        1,475,686        111,045        165,534               2,630,391  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Interest of the controlling shareholders

     664,965        213,161        1,475,686        110,518        165,534               2,629,864  

Interest of non-controlling shareholder

                          527                      527  
     664,965        213,161        1,475,686        111,045        165,534               2,630,391  

 

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Gasmig – Amendment to the concession contract

On September 19, 2019 the Third Amendment was signed to the concession contract for commercial operation of piped gas by the subsidiary Gasmig, replacing the contractual obligation to build the gas pipeline to serve the Nitrogenated Fertilizer Unit (UFN‐V), to be built by Petrobras in the Minas Triangle region, for payment of a consideration to the concession‐granting power, as a concession grant fee, of R$ 891,168. This amendment extended the period of Gasmig’s concession contract to 2053. The grant fee was paid on September 26, 2019. Its amount will be added to the Remuneration Base of Assets of Gasmig, being taken into account in the process of tariff review by the concession‐granting power as an intangible asset to be amortized up till the end of the concession contract, producing immediate effects in terms of setting and review of tariffs.

On September 26, 2019, Gasmig concluded its First Issue of Commercial Promissory Notes, in the amount of R$ 850,000, with maturity at 12 months and remuneratory interest at 107% of the DI rate. The proceeds from this issue were used in their entirety for payment of the concession grant fee.

Appendices

Capex

 

R$ ’000

   2019
Realized
     2019
Proposed
 

GENERATION

     77,497        76,245  

Investment program

     18,447        28,621  

Cash injections

     43,050        47,624  

Aliança Norte

     953        953  

SPC – Guanhães

     19,766        19,766  

SPC – Amazônia Energia Participações (Belo Monte)

     75        282  

Itaocara Hydroelectric Plant

     22,256        26,583  

Baguari Energia

     —          40  

Acquisitions of wind farms in Ceará

     16,000        —    

TRANSMISSION

     150,341        263,352  

Investment program

     150,341        263,352  

Cemig D

     643,771        1,078,417  

Investment program

     643,771        1,078,417  

Holding company

     16,139        97,800  

Infrastructure

        240  

Cash injections

     16,139        95,402  

Axxiom

     5,765        10,000  

Cemig GD (Distributed Generation)

     10,337        60,337  

Cemig Overseas

     37        46  

Gas consortia

     —          19  

Efficientia – Distributed generation

     —          25,000  

Acquisitions – Centroeste

     2,158        2,158  
  

 

 

    

 

 

 

TOTAL

     889,906        1,515,814  
  

 

 

    

 

 

 

 

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Sources and uses of power – billed market

 

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Power Losses

 

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Plants

 

Power Plant

   Company    Type    Cemig’s
Stake
    Installed
Capacity
(MW)
     Assured
Energy

(MW médio)
     Expiration of
Concession
 

Emborcação

   CEMIG GT    HPP      100.0     1,192        500        23-jul-25  

Belo Monte

   Norte    HPP      12.3     1,152        560        26-ago-45  

Santo Antônio

   SAE    HPP      15.5     553        376        12-jun-46  

Nova Ponte

   CEMIG GT    HPP      100.0     510        270        23-jul-25  

Irapé

   CEMIG GT    HPP      100.0     399        208        28-fev-35  

Três Marias

   CEMIG G. TRÊS MARIAS    HPP      100.0     396        72        4-jan-46  

Aimorés

   ALIANÇA    HPP      45.0     149        82        20-dez-35  

Igarapé

   CEMIG GT    HPP      100.0     131        71        13-ago-24  

Salto Grande

   CEMIG G. SALTO GRANDE    HPP      100.0     102        23        4-jan-46  

Amador Aguiar I (Capim Branco I)

   ALIANÇA    HPP      39.3     94        61        29-ago-36  

Queimado

   CEMIG GT    HPP      82.5     87        56        2-jan-33  

Nilo Peçanha

   Light Energia    HPP      22.6     86        75        4-jun-26  

Amador Aguiar II (Capim Branco II)

   ALIANÇA    HPP      39.3     83        52        29-ago-36  

Funil

   ALIANÇA    HPP      45.0     81        38        20-dez-35  

Sá Carvalho

   Sá Carvalho S.A    HPP      100.0     78        56        1-dez-24  

Rosal

   Rosal Energia S. A    HPP      100.0     55        29        8-mai-32  

Itutinga

   CEMIG G. ITUTINGA    HPP      100.0     52        8        4-jan-46  

Igarapava

   ALIANÇA    HPP      23.7     50        32        30-dez-28  

Baguari

   BAGUARI ENERGIA    HPP      34.0     48        29        15-ago-41  

Camargos

   CEMIG G. CAMARGOS    HPP      100.0     46        6        4-jan-46  

Ilha dos Pombos

   Light Energia    HPP      22.6     42        25        4-jun-26  

Volta do Rio

   CEMIG GT    Wind farm      100.0     42        18        26-dez-31  

Retiro Baixo

   Retiro Baixo Energética S.A.    HPP      49.9     42        18        25-ago-41  

Porto Estrela

   ALIANÇA    HPP      30.0     34        19        10-jul-32  

Fontes Nova

   Light Energia    HPP      22.6     30        22        4-jun-26  

Praias de Parajuru

   CEMIG GT    Wind farm      100.0     29        8        24-set-32  

Pai Joaquim

   CEMIG PCH S.A    SHP      100.0     23        14        1-abr-32  

Pereira Passos

   Light Energia    HPP      22.6     23        11        4-jun-26  

Piau

   CEMIG G. SUL    SHP      100.0     18        4        4-jan-46  

Gafanhoto

   CEMIG G. OESTE    SHP      100.0     14        2        4-jan-46  

Outras

             317        130     

Total

             5,955        2,875     

 

38


LOGO

 

RAP (Permitted Annual Revenue – Transmission) – 2019-20 cycle

 

REH - Resolução Homologatoria ANEEL – nº 2.565/2019 (ciclo 2019/2020)

 

Receita Anual Permitida – RAP

   RAP      % Cemig      Cemig  

Cemig GT

     704.516.559        100,00%        704.516.559  

Cemig GT

     678.468.095        100,00%        678.468.095  

Cemig Itajuba

     26.048.464        100,00%        26.048.464  

Centroeste

     19.527.260        51,00%        9.958.903  

Taesa

     2.601.459.469        21,68%        563.996.413  

Novatrans 2

     292.844.092           63.488.599  

TSN

     300.992.176           65.255.104  

Munirah

     40.946.624           8.877.228  

GTESA

     5.515.544           1.195.770  

PATESA

     18.078.709           3.919.464  

ETAU

     38.500.280           8.346.861  

ETEO

     98.933.020           21.448.679  

NTE

     86.286.553           18.706.925  

STE

     48.636.153           10.544.318  

ATE I

     167.264.727           36.262.993  

ATE II

     258.668.882           56.079.414  

EATE

     122.242.974           26.502.277  

ETEP

     27.562.990           5.975.656  

ENTE

     101.996.568           22.112.856  

ECTE

     10.186.476           2.208.428  

ERTE

     19.483.764           4.224.080  

Lumitrans

     11.959.851           2.592.896  

Transleste

     24.728.188           5.361.071  

Transirapé

     20.073.621           4.351.961  

Transudeste

     15.326.765           3.322.843  

ATE III

     125.389.196           27.184.378  

São Gotardo

     5.416.349           1.174.265  

Mariana

     15.362.098           3.330.503  

Miracema

     65.032.990           14.099.152  

Janaúba

     194.059.383           42.072.074  

Aimorés

     39.686.900           8.604.120  

Paraguaçu

     59.239.231           12.843.065  

Brasnorte

     24.355.953           5.280.371  

STC

     18.932.098           4.104.479  

EBTE

     34.360.035           7.449.256  

ESDE

     7.046.946           1.527.778  

ETSE

     4.026.515           872.948  

ESTE

     56.088.981           12.160.091  

Ivaí

     147.000.350           31.869.676  

EDTE

     34.500.301           7.479.665  

Sant’Ana

     60.734.185           13.167.171  

Light

     10.181.318        22,58%        2.298.942  

RAP TOTAL CEMIG

           1.280.770.816  

 

*

Valores (em R$) consolidados das parcelas das receitas anuais permitidas das concessionárias de transmissão.

 

39


LOGO

 

Cemig D – tables (R$ mn)

 

CEMIG D Market

 
     (GWh)      GW  

Quarter

   Captive
Consumers
     TUSD
ENERGY(1)
     T.E.D(2)      TUSD
PICK(3)
 

1Q17

     6,249        4,274        10,523        30  

2Q17

     6,314        4,287        10,601        30  

3Q17

     6,232        4,586        10,817        31  

4Q18

     6,259        4,591        10,850        31  

1Q18

     6,213        4,637        10,850        31  

2Q18

     6,343        4,873        11,216        30  

3Q18

     6,309        4,870        11,179        30  

4Q18

     6,406        4,906        11,313        31  

1Q19

     6,529        4,760        11,289        33  

2Q19

     6,288        4,910        11,198        33  

3Q19

     6,266        4,898        11,164        34  

 

(1)

Refers to the quantity of electricity for calculation of the regulatory charges charged to free consumer clients (“Portion A”).

(2)

Total electricity distributed.

(3)

Sum of the demand on which the TUSD is invoiced, according to demand contracted (“Portion B”).

 

Operating Revenues (R$ million)

   3Q19      2Q19      3Q18      QoQ      YoY  

Sales to end consumers

     5,070        4,653        5,052        8.96%        0.36%  

Revenue from Use of Distribution Systems (the TUSD charge)

     718        640        612        12.19%        17.32%  

CVA and Other financ ial c omponents in tariff adjustment

     -35        - 40        633        -12.50%        -105.53%  

Construction revenue

     263        203        182        29.56%        44.51%  

PIS/PASEP AND COFINS TAXES CREDITS OVER ICMS

     0        830        0                

Others

     415        342        316        21.35%        31.33%  

Subtotal

     6,431        6,628        6,795        -2.97%        -5.36%  

Deductions

     2,522        2,393        2,879        5.39%        -12.40%  

Net Revenues

     3,909        4,235        3,916        -7.70%        -0.18%  

 

Operating Expenses (R$ million)

   3Q19      2Q19      3Q18      QoQ      YoY  

Personnel

     210        216        209        -2.78%        0.48%  

Employees’ and managers’ profit sharing

     - 11        75        0        -114.67%         

Forluz – Post-retirement obligations

     71        66        54        7.58%        31.48%  

Materials

     15        15        11        0.00%        36.36%  

Outsourced services

     247        247        209        0.00%        18.18%  

Amortization

     164        163        148        0.61%        10.81%  

Operating provisions

     854        136        103        527.94%        729.13%  

Charges for Use of Basic Transmission Network

     385        374        338        2.94%        13.91%  

Energy purchased for resale

     1,926        1,627        2,285        18.38%        -15.71%  

Construction Cost

     263        203        182        29.56%        44.51%  

Other Expenses

     94        39        66        141.03%        42.42%  

Total

     4,218        3,161        3,605        33.44%        17.00%  

 

40


LOGO

 

 

Statement of Results (R$ million)

   3Q19      2Q19      3Q18      QoQ      YoY  

Net Revenue

     3,909        4,235        3,916        -7.70%        -0.18%  

Operating Expenses

     4,218        3,161        3,605        33.44%        17.00%  

EBIT

     -309        1,074        311        -128.77%        -199.36%  

EBITDA

     -145        1,237        459        -111.72%        -131.59%  

Financial Result

     -26        - 55        -61                

Provision for Inc ome Taxes, Social Cont & Deferred Income Tax

     19        -101        -82        -118.81%        -123.17%  

Net Income

     -316        918        168        -134.42%        -288.10%  

Cemig GT – tables (R$ mn)

 

Operating Revenues

   3Q19      2Q19      3Q18      QoQ      YoY  

Sales to end consumers

     1073        996        1021        7.7%        5.1%  

Supply

     746        697        783        7.0%        -4.7%  

Revenues from Trans. Network

     184        173        148        6.4%        24.3%  

Gain on monetary updating of Concession Grant Fee

     68        95        88        -28.4%        -22.7%  

Transactions in the CCEE

     9        145        14        -93.8%        -35.7%  

Construction revenue

     67        55        8        21.8%        737.5%  

Transmission indemnity revenue

     34        58        62        -41.4%        -45.2%  

Generation indemnity revenue

                   48                

PIS/PASEP AND COFINS TAXES CREDITS OVER ICMS

     0        424        -        100.0%        100.0%  

Others

     52        46        84        13.0%        -38.1%  

Subtotal

     2,233        2,689        2,256        -17.0%        -1.0%  

Deductions

     467        447        410        4.5%        13.9%  

Net Revenues

     1,766        2,242        1,846        -21.2%        -4.3%  

 

Operating Expenses

   3Q19      2Q19      3Q18      QoQ      YoY  

Personnel

     78        77        74        1.3%        5.4%  

Employees’ and managers’ profit sharing

     -4        27        0        -114.8%        100.0%  

Forluz – Post-retirement obligations

     23        21        17        9.5%        35.3%  

Materials

     5        5        28        0.0%        -82.1%  

Outsourced services

     40        44        36        -9.1%        11.1%  

Depreciation and Amortization

     57        67        36        -14.9%        58.3%  

Operating provisions

     289        713        38        -59.5%        660.5%  

Charges for Use of Basic Transmission Network

     50        46        44        8.7%        13.6%  

Energy purchased for resale

     1126        916        1173        22.9%        -4.0%  

Construction Cost

     67        55        8        21.8%        737.5%  

Other Expenses

     -3        11        43        -127.27%        -107.0%  

Total

     1,728        1,982        1,497        -12.8%        15.4%  

 

Sta tement of Results

   3Q19      2Q19      3Q18      QoQ      YoY  

Net Revenue

     1,766        2,242        1,846        -21.2%        -4.3%  

Operating Expenses

     1,728        1,982        1,497        -12.8%        15.4%  

EBIT

     38        260        349        -85.4%        -89.1%  

Equity gain in subsidiaries

     -20        -28        -110               -81.8%  

EBITDA

     75        299        275        -74.9%        -72.7%  

Financial Result

     -213        624        -291                

Provision for Income Taxes, Social Cont & Deferred Income Tax

     61        -514        -10        -111.9%        -710.0%  

Net Income

     -134        342        -62        -139.2%         

 

41


LOGO

 

Tables – Cemig Consolidated (R$ million)

 

Energy Sales (Consolidated)(GWh)

   3Q19      2Q19      3Q18      QoQ      YoY  

Residential

     2,558        2,547        2,497        0.43%        2.44%  

Industrial

     4,145        3,947        4,582        5.02%        -9.54%  

Commercial

     2,348        2,375        1,997        -1.14%        17.58%  

Rural

     1,055        915        1,057        15.30%        -0.19%  

Others

     869        906        880        -4.08%        -1.25%  

Subtotal

     10,975        10,690        11,013        2.67%        -0.35%  

Own Consumption

     11        7        10        57.14%        10.00%  

Supply

     2,979        2,422        3,161        23.00%        -5.76%  

TOTAL

     13,965        13,119        14,184        6.45%        -1.54%  

 

Energy Sales

   3Q19      2Q19      3Q18      QoQ      YoY  

Residential

     2,459        2,207        2,403        11.42%        2.33%  

Industrial

     1,239        1,155        1,334        7.27%        -7.12%  

Commercial

     1,337        1,281        1,237        4.37%        8.08%  

Rural

     594        461        577        28.85%        2.95%  

Others

     520        465        516        11.83%        0.78%  

Electricity sold to final consumers

     6,149        5,569        6,067        10.41%        1.35%  

Unbilled Supply, Net

     -30        119        76               -139.47%  

Supply

     756        642        784        17.76%        -3.57%  

TOTAL

     6,875        6,330        6,927        8.61%        -0.75%  

 

Operating Revenues

   3Q19      2Q19      3Q18      QoQ      YoY  

Sales to end consumers

     6.147        5.648        6.105        8,83%        0,69%  

TUSD

     711        636        606        11,79%        17,33%  

CVA and Other financial components in tariff adjustment

     -35        -40        633        -12,50%        -105,53%  

Transmission concession revenue

     132        126        104        4,76%        26,92%  

Transmission Indemnity Revenue

     33        58        62        -43,10%        -46,77%  

Generation Indemnity Revenue

     0        0        48                

Gain on monetary updating of Concession Grant Fee

     68        95        89        -28,42%        -23,60%  

Transactions in the CCEE

     10        145        29        -93,10%        -65,52%  

Supply

     756        642        784        17,76%        -3,57%  

Gas supply

     581        535        553        8,60%        5,06%  

Construction revenue

     341        266        209        28,20%        63,16%  

Others

     435        424        451        2,59%        -3,55%  

Subtotal

     9.179        9.973        9.673        -7,96%        -5,11%  

Deductions

     3.109        2.956        3.420        5,18%        -9,09%  

Net Revenues

     6.070        7.017        6.253        -13,50%        -2,93%  

 

42


LOGO

 

 

Operating Expenses

   3Q19      3Q19      3Q18      QoQ      YoY  

Personnel

     304        312        308        -2.56%        -1.30%  

Employees’ and managers’ profit sharing

     -15        108        0        -113.89%         

Forluz – Post-retirement Employee Benefits

     105        98        81        7.14%        29.63%  

Materials

     20        20        41        0.00%        -51.22%  

Outsourced services

     308        302        262        1.99%        17.56%  

Energy purchased for resale

     3,034        2,526        3,493        20.11%        -13.14%  

Depreciation and Amortization

     244        248        208        -1.61%        17.31%  

Operating Provisions

     1,297        869        135        49.25%        860.74%  

Charges for use of the national grid

     376        368        332        2.17%        13.25%  

Gas bought for resale

     375        330        341        13.64%        9.97%  

Construction costs

     342        266        209        28.57%        63.64%  

Other Expenses

     96        42        112        128.57%        -14.29%  

Total

     6,486        5,489        5,522        18.16%        17.46%  

 

Financial Result Breakdown

   3Q19      3Q19      3Q18      QoQ      YoY  

FINANCE INCOME

              

Income from cash investments

     32        26        39        23.08%        -17.95%  

Arrears fees on sale of energy

     90        96        92        -6.25%        -2.17%  

Monetary variations – CVA

     31        32        23        -3.13%     

Monetary updating on Court escrow deposits

     12        13        3        -7.69%        300.00%  

Pasep and Cofins charged on finance income

     -13        -41        -13        -68.29%        0.00%  

Gain on Financial instruments - Swap

     486        461        142        5.42%        242.25%  

Updating of the tax credits in PIS, Pasep and Cofins taxes

     22        1,553        0                

Liabilities with related parties

     2        23        -17        -91.30%     

Others

     26        109        93        -76.15%        -72.04%  
     618        2,272        362        -72.80%        70.72%  

FINANCE EXPENSES

              

Costs of loans and financings

     339        303        352        11.88%        -3.69%  

Foreign exchange variations

     429        -33        227        -1400.00%        88.99%  

Monetary updating – loans and financings

     17        39        45        -56.41%        -62.22%  

Charges and monetary updating on post-retirement obligation

     11        18        20        -38.89%        -45.00%  

Others

     56        37        51        51.35%        9.80%  
     852        364        695        134.07%        22.59%  

NET FINANCE INCOME (EXPENSES)

     -234        1,908        -333        -112.26%        -29.73%  

Statement of Results

   3Q19      3Q19      3Q18      QoQ      YoY  

Net Revenue

     6,070        7,017        6,253        -13.50%        -2.93%  

Operating Expenses

     6,486        5,489        5,522        18.16%        17.46%  

EBIT

     -416        1,528        731        -127.23%        -156.91%  

Share of profit (loss) in associates and joint ventures

     58        36        -50        61.11%        -216.00%  

EBITDA

     -114        1,812        902        -106.29%        -112.64%  

Financial Result

     -234        1,908        -333        -112.26%        -29.73%  

Provision for Income Taxes, Social Cont & Deferred Income Tax

     86        -1,357        -118        -106.34%        -172.88%  

Net profit for the period attributable to equity holders of the parent

     -506        2,115        230        -123.92%        -320.00%  

Net profit for the period attributable to non-controlling interests

     224        0        14               1500.00%  

NET PROFIT

     -282        2,115        244        -113.33%        -215.57%  

 

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Cash Flow Statement

   9M19      9M18  

Cash at beginning of period

     891        1,030  

Cash generated by operations

     1,149        776  

Net income for the period from going concern operations

     2,630        698  

Current and deferred income tax and Social Contribution tax

     294        -91  

Depreciation and amortization

     723        619  

CVA and other financial components

     66        -1,216  

Equity gain (loss) in subsidiaries

     -161        76  

Provisions (reversals) for operational losses

     2,275        402  

Dividends received from equity holdings

     187        235  

Interest and monetary variation

     881        964  

Interest paid on loans and financings

     -845        -834  

credits of taxes awarded in the ICMS tax case

     -2,963        0  

Others

     -1,938        -77  

Financing activities

     -401        49  

Lease payments

     -49        0  

Payments of loans and financings

     -4,750        -2,505  

Financings obtained and capital increase

     4,477        2,444  

Interest on Equity, and dividends

     -79        0  

Capital Increase / Subscription of shares to be capitalized

     0        110  

Investment activity

     -944        -361  

Cash generated from discontinued operations

     625        -8  

Securities - Financial Investment

     32        437  

Contract assets - Distribution and gas infrastructure

     -1,527        -563  

Financial assets

     -29        -176  

Fixed and Intangible assets

     -45        -51  
     0        0  

Cash at end of period

     695        1,494  

 

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BALANCE SHEETS (CONSOLIDATED) - ASSETS

   9M19      2018  

CURRENT

     10,296        27,796  

Cash and cash equivalents

     695        891  

Securities

     863        704  

Consumers and traders

     4,564        4,092  

Financial assets of the concession

     1,124        1,070  

Contractual assets

     180        131  

Tax offsetable

     99        124  

Income tax and Social Contribution tax recoverable

     632        387  

Dividends receivable

     41        120  

Restricted cash

     16        91  

Inventories

     38        36  

Advances to suppliers

     30        7  

Refund tariff subsidies

     415        30  

Low Income Subsidy

     29        69  

Derivative financial instruments – Swaps

     216        90  

Other credits

     96        19,446  

Assets classified as held for sale

     1,258        32,058  

NON-CURRENT

     39,765        109  

Securities

     12        109  

Consumers and traders

     80        81  

Tax offsetable

     2,534        2,501  

Income and Social Contribution taxes recoverable

     6,308        242  

income tax and Social Contribution tax

     1,960        2,152  

Escrow deposits in legal actions

             

Derivative financial instruments – Swaps

     1,654        744  

Other credits

     718        1,031  

Financial assets of the concession

     4,991        4,927  

Contractual assets

     1,724        1,598  

Investments

     5,585        5,235  

Property, plant and equipment

     2,560        2,661  

Intangible assets

     11,639        10,777  

TOTAL ASSETS

     50,061        59,854  

 

 

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BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

   9M19      2018  

CURRENT

     7,774        23,393  

Suppliers

     2,059        1,801  

Regulatory charges

     480        514  

Profit sharing

     110        79  

Taxes

     334        410  

Income tax and Social Contribution tax

     111        112  

Interest on Equity, and dividends, payable

     767        864  

Loans and financings

     2,769        2,198  

Payroll and related charges

     252        284  

Post-retirement liabilities

     281        253  

Other obligations

     517        528  

Liabilities classified as held for sale

     0        16,272  

NON-CURRENT

     94        78  

Regulatory charges

     162        178  

Loans and financings

     12,415        12,574  

Taxes

     2        29  

Income tax and Social Contribution tax

     919        728  

Provisions

     1,852        641  

Post-retirement liabilities

     4,808        4,736  

PASEP / COFINS to be returned to consumers

     4,155        1,124  

Derivative financial instruments

     452        419  

Leasing - rights of use

     213        0  

Others

     98        94  

TOTAL EQUITY

     17,211        15,938  

Share capital

     7,294        7,294  

Capital reserves

     2,249        2,249  

Profit reserves

     6,361        6,362  

Equity valuation adjustments

     -1,344        -1,327  

Subscription of shares, to be capitalized

     2,647        0  

Non-Controlling Interests

     4        1,360  

TOTAL LIABILITIES AND EQUITY

     50,061        59,854  

 

46


 

6. PRESENTATION OF 3Q19 RESULTS

 

 

47


RESULTSRESULTS


Disclaimer Certain statements and estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties that may be known or unknown. There is no guarantee that the events or results will take place as referred to in these expectations. These expectations are based on the present assumptions and analyses from the point of view of our management, in accordance with their experience and other factors such as the macroeconomic environment, and market conditions in the electricity sector; and on our expectations for future results, many of which are not under our control. Important factors that could lead to significant differences between actual results and the projections about future events or results include our business strategy, Brazilian and international economic conditions, technology, our financial strategy, changes in the electricity sector, hydrological conditions, conditions in the financial and energy markets, uncertainty on our results from future operations, plans and objectives, and other factors. Because of these andother factors, our real results may differ significantly from those indicated in or implied by such statements. The information and opinions herein should not be understood as a recommendation to potential investors, and no investment decision should be based on the veracity, currentness or completeness of this information or these opinions. None of our professionals nor any of their related parties or representatives shall have any liability for any losses that may result from the use of the content of this presentation. To evaluate the risks and uncertainties as they relate to Cemig, and to obtain additional information about factors that could give rise to different results from those estimated by Cemig, please consult the section on Risk Factors included in the Reference Form filed with the Brazilian Securities Commission (CVM) – and in the 20-F form filed with the U.S. Securities and Exchange Commission (SEC). In this material, financial amounts are in R$ million (R$ mn) unless otherwise stated. Financial data reflect the adoption of IFRS.Disclaimer Certain statements and estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties that may be known or unknown. There is no guarantee that the events or results will take place as referred to in these expectations. These expectations are based on the present assumptions and analyses from the point of view of our management, in accordance with their experience and other factors such as the macroeconomic environment, and market conditions in the electricity sector; and on our expectations for future results, many of which are not under our control. Important factors that could lead to significant differences between actual results and the projections about future events or results include our business strategy, Brazilian and international economic conditions, technology, our financial strategy, changes in the electricity sector, hydrological conditions, conditions in the financial and energy markets, uncertainty on our results from future operations, plans and objectives, and other factors. Because of these andother factors, our real results may differ significantly from those indicated in or implied by such statements. The information and opinions herein should not be understood as a recommendation to potential investors, and no investment decision should be based on the veracity, currentness or completeness of this information or these opinions. None of our professionals nor any of their related parties or representatives shall have any liability for any losses that may result from the use of the content of this presentation. To evaluate the risks and uncertainties as they relate to Cemig, and to obtain additional information about factors that could give rise to different results from those estimated by Cemig, please consult the section on Risk Factors included in the Reference Form filed with the Brazilian Securities Commission (CVM) – and in the 20-F form filed with the U.S. Securities and Exchange Commission (SEC). In this material, financial amounts are in R$ million (R$ mn) unless otherwise stated. Financial data reflect the adoption of IFRS.


Highlights Cemig quality indicators th Cemig GT - 4 Auction to Provision for social Gain on disposal and re- purchase renewable- security contributions measurement of equity source supply on profit shares interestHighlights Cemig quality indicators th Cemig GT - 4 Auction to Provision for social Gain on disposal and re- purchase renewable- security contributions measurement of equity source supply on profit shares interest


¾ ƒƒƒ Provision for tax claim 4 – Social Security contributions on profit shares The federal tax authority opened administrative and judicial proceedings against Cemig relating to: Social security contributions on profit sharing payments, in 1999–2016. The authority argues that Cemig had not complied with Law 10101/2000, by allegedly not previously established clear rules and objectives for distribution of these amounts. The chances of loss in this dispute have been reassessed, from ‘possible’ to ‘probable’. Amounts provisioned – R$ ’000 Cemig H Cemig D Cemig GT Total 160,259 763,729 258,625 1,182,613 Impact on net profit (R$ ’000 ) 116,277 566,833 179,252 862,313¾ ƒƒƒ Provision for tax claim 4 – Social Security contributions on profit shares The federal tax authority opened administrative and judicial proceedings against Cemig relating to: Social security contributions on profit sharing payments, in 1999–2016. The authority argues that Cemig had not complied with Law 10101/2000, by allegedly not previously established clear rules and objectives for distribution of these amounts. The chances of loss in this dispute have been reassessed, from ‘possible’ to ‘probable’. Amounts provisioned – R$ ’000 Cemig H Cemig D Cemig GT Total 160,259 763,729 258,625 1,182,613 Impact on net profit (R$ ’000 ) 116,277 566,833 179,252 862,313


9 ƒƒ th 4 auction to acquire renewable supply 5 Successful auctions to buy incentive-bearing supply – solar and/or wind – in the Free Market Incentive is 50% discount on TUSD and TUST. Total acquired: 798.97 MW average Auctions Period of Date MW Start average supply st 1 Jun. 6, 2018 431.49 Jan. 2022 20 years nd 2 Oct. 4, 2018 152.50 Jan. 2022 20 years rd 3 Sep. 13, 2019 196.98 Jan. 2023 19 years th 4 Nov. 14, 2019 18.00 Jan. 2023 19 years Total 798.97 MW average9 ƒƒ th 4 auction to acquire renewable supply 5 Successful auctions to buy incentive-bearing supply – solar and/or wind – in the Free Market Incentive is 50% discount on TUSD and TUST. Total acquired: 798.97 MW average Auctions Period of Date MW Start average supply st 1 Jun. 6, 2018 431.49 Jan. 2022 20 years nd 2 Oct. 4, 2018 152.50 Jan. 2022 20 years rd 3 Sep. 13, 2019 196.98 Jan. 2023 19 years th 4 Nov. 14, 2019 18.00 Jan. 2023 19 years Total 798.97 MW average


9 99 ƒƒ Recalculation of DEC 6 Aneel served infringement notice on Cemig Disagreement on details of method used for calculation of the indicators for 2016 and 2017 Cemig was fined R$ 29 million. In October 2019 Cemig re-presented calculation of the indicators to Aneel. Indicators remained within the required limits. 11.62 11.32 11.03 10.73 11.57 11.18 10.42 2.23 2.16 1.85 7.98 1.58 9.34 9.02 8.57 9M19 6.4 2016 2017 2018 2019 DECi - Accidental DECi - Programmed DECi Upper limit++9 99 ƒƒ Recalculation of DEC 6 Aneel served infringement notice on Cemig Disagreement on details of method used for calculation of the indicators for 2016 and 2017 Cemig was fined R$ 29 million. In October 2019 Cemig re-presented calculation of the indicators to Aneel. Indicators remained within the required limits. 11.62 11.32 11.03 10.73 11.57 11.18 10.42 2.23 2.16 1.85 7.98 1.58 9.34 9.02 8.57 9M19 6.4 2016 2017 2018 2019 DECi - Accidental DECi - Programmed DECi Upper limit++


9999 ƒƒ Disposal of shares in Light 7 Cemig maintains commitment to execute its Disinvestment Program Sold: 33,333,333 shares in Light at R$ 18.75 per share. Total: R$ 625 million. Gain from the disposal of this position was R$ 224 million. Capital gain: R$ 73 million. Result of remeasurement: R$ 151 million. Other stockholders 22.6% 6.3% 71.1%9999 ƒƒ Disposal of shares in Light 7 Cemig maintains commitment to execute its Disinvestment Program Sold: 33,333,333 shares in Light at R$ 18.75 per share. Total: R$ 625 million. Gain from the disposal of this position was R$ 224 million. Capital gain: R$ 73 million. Result of remeasurement: R$ 151 million. Other stockholders 22.6% 6.3% 71.1%


Electricity market of 3Q19 - GWh 8 Cemig D Cemig GT 2.2% Market of Cemig GT Cemig D: Billed market + Transmission 0.1% 92 88 4.5% 7,908 7,730 880 868 1.4% 11,168 11,153 10.3% 582 1,060 1,056 522 0.4% 1,477 1,500 1.6% 4.7% 2,611 4,869 2,489 4,898 0.6% 1.7% 5,166 5,078 0.7% 0.1% 4,715 4,719 6,299 6,255 2.5% 2,497 2,559 3Q18* 3Q19 3Q18 3Q19 Free Clients Free Market 3Q18 3Q19 Regulated Market Residential Industrial Commercial Sales in Free Market: traders and generators; and Final consumers Transported Rural Other Distributors ‘bilateral’ contracts with other agents. * Includes sales of: Cemig PCH, Horizontes, Sá Carvalho, Rosal, and the Praias de Parajuru and Volta do Rio Wind farms.Electricity market of 3Q19 - GWh 8 Cemig D Cemig GT 2.2% Market of Cemig GT Cemig D: Billed market + Transmission 0.1% 92 88 4.5% 7,908 7,730 880 868 1.4% 11,168 11,153 10.3% 582 1,060 1,056 522 0.4% 1,477 1,500 1.6% 4.7% 2,611 4,869 2,489 4,898 0.6% 1.7% 5,166 5,078 0.7% 0.1% 4,715 4,719 6,299 6,255 2.5% 2,497 2,559 3Q18* 3Q19 3Q18 3Q19 Free Clients Free Market 3Q18 3Q19 Regulated Market Residential Industrial Commercial Sales in Free Market: traders and generators; and Final consumers Transported Rural Other Distributors ‘bilateral’ contracts with other agents. * Includes sales of: Cemig PCH, Horizontes, Sá Carvalho, Rosal, and the Praias de Parajuru and Volta do Rio Wind farms.


99 ƒ Consolidated net revenue in 3Q19 9 R$ mn Cemig, Consolidated Cemig D Cemig GT 3Q18–3Q19: –2.9% 3Q18–3Q19: 0.2% 3Q18–3Q19: –4.3% 1,846 6,252 1,766 6,071 3,915 3,909 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 CVA and Other financial components: Total impacting revenue in 3Q19 is down R$ 668 million compared to 3Q18. In 3Q19 – Negative item: (–) R$ 35 million In 3Q18 – Positive item (gain): (+) R$ 633 million 99 ƒ Consolidated net revenue in 3Q19 9 R$ mn Cemig, Consolidated Cemig D Cemig GT 3Q18–3Q19: –2.9% 3Q18–3Q19: 0.2% 3Q18–3Q19: –4.3% 1,846 6,252 1,766 6,071 3,915 3,909 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 CVA and Other financial components: Total impacting revenue in 3Q19 is down R$ 668 million compared to 3Q18. In 3Q19 – Negative item: (–) R$ 35 million In 3Q18 – Positive item (gain): (+) R$ 633 million


Operating costs and expenses – consolidated 10 R$ mn Changes, 3Q18–3Q19 17.5% 1,092 0.69% PMSO 133 45 44 36 34 24 6,486 5,522 -4 -15 -20 -17 -459 3Q18 3Q19Operating costs and expenses – consolidated 10 R$ mn Changes, 3Q18–3Q19 17.5% 1,092 0.69% PMSO 133 45 44 36 34 24 6,486 5,522 -4 -15 -20 -17 -459 3Q18 3Q19


PMSO 11 R$ mn 925 887 723 743 734 728 717 3Q18–3Q19 PMSO 707 700 676 649 0.69% 542 422 400 359 349 344 332 308 312 304 3Q18–3Q19 Personnel 352 1.30% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19PMSO 11 R$ mn 925 887 723 743 734 728 717 3Q18–3Q19 PMSO 707 700 676 649 0.69% 542 422 400 359 349 344 332 308 312 304 3Q18–3Q19 Personnel 352 1.30% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19


Cemig D: Ebitda, Opex: regulatory vs. real – 9M19 12 109 2,927 129 824 R$ mn 485 764 764 2,133 Opex: Profit shares 26 94 206 Regulatory vs. Real 2,163 Opex Regulatory vs. Real adj 137.2% 101.4% Opex Difference: R$ 794mn Difference: R$ 30mn Regulatory PMSO Pension Voluntary Fines, etc. Provisions AFDA* Real Profit plan Retirement shares Program ( * Allowance for doubtful accounts ) 62 30 1,691 764 1,598 R$ mn 830 126 Ebitda: 65 Adjusted vs. Regulatory, Ebitda 94.5% Difference: R$ -93mn Regulatory Other revenues Opex Provisions for Non- Other Adjustment Real Ebitda Ebitda profit sharing technical losses differences ICMS* case * Exclusion of ICMS tax from the taxable base for Pasep and Cofins taxesCemig D: Ebitda, Opex: regulatory vs. real – 9M19 12 109 2,927 129 824 R$ mn 485 764 764 2,133 Opex: Profit shares 26 94 206 Regulatory vs. Real 2,163 Opex Regulatory vs. Real adj 137.2% 101.4% Opex Difference: R$ 794mn Difference: R$ 30mn Regulatory PMSO Pension Voluntary Fines, etc. Provisions AFDA* Real Profit plan Retirement shares Program ( * Allowance for doubtful accounts ) 62 30 1,691 764 1,598 R$ mn 830 126 Ebitda: 65 Adjusted vs. Regulatory, Ebitda 94.5% Difference: R$ -93mn Regulatory Other revenues Opex Provisions for Non- Other Adjustment Real Ebitda Ebitda profit sharing technical losses differences ICMS* case * Exclusion of ICMS tax from the taxable base for Pasep and Cofins taxes


Ebitda – 3Q19 13 R$ mn Cemig D Cemig GT Cemig, Consolidated 3Q18–3Q19 % 3Q18–3Q19 72.5% 3Q18–3Q19 87.8% Ebitda of Cemig D Ebitda of Cemig GT 3Q18–3Q19 Adjusted: 34.9% 3Q18 to 3Q19 Adjusted 21.5% 3Q18–3Q19 Adjusted: 9.1% 334 258 309 2 275 1,183 984 618 763 902 458 76 110 3Q18 3Q19 Provisions 3Q19 3Q18 3Q19 adju Ga sted in on disposProvi al* sions - 3Q19 -145 3Q18 3Q19 Gain on Provisions 3Q19 adjusted - profit profit… adjusted disposal* - profit sharing sharing 3Q18 3Q19 Provisions - 3Q19 case adjusted profit sharing case • Disposal of interest in and control of Light – details in Note 36 to the financial statements. Ebitda – 3Q19 13 R$ mn Cemig D Cemig GT Cemig, Consolidated 3Q18–3Q19 % 3Q18–3Q19 72.5% 3Q18–3Q19 87.8% Ebitda of Cemig D Ebitda of Cemig GT 3Q18–3Q19 Adjusted: 34.9% 3Q18 to 3Q19 Adjusted 21.5% 3Q18–3Q19 Adjusted: 9.1% 334 258 309 2 275 1,183 984 618 763 902 458 76 110 3Q18 3Q19 Provisions 3Q19 3Q18 3Q19 adju Ga sted in on disposProvi al* sions - 3Q19 -145 3Q18 3Q19 Gain on Provisions 3Q19 adjusted - profit profit… adjusted disposal* - profit sharing sharing 3Q18 3Q19 Provisions - 3Q19 case adjusted profit sharing case • Disposal of interest in and control of Light – details in Note 36 to the financial statements.


Net profit, 3Q19 14 R$ mn Cemig, Consolidated Cemig GT Cemig D 3Q18–3Q19 % 3Q18–3Q19 % 3Q18–3Q19 119.7% 3Q18–3Q19 Adjusted: 45.3% 3Q18–3Q19 Adjusted: 49.4% 3Q18–3Q19 % 224 862 251 566 356 168 245 45 179 -282 -61 -315 -134 3Q18 3Q19 Gain on Provision - 3Q19 adjusted disposal* profit sharing 3Q18 3Q19 adjusted Provision - 3Q19 case profit sharing 3Q18 3Q19 adjusted Provision – 3Q19 case profit sharing case • Disposal of interest in and control of Light – details in Note 36 to the financial statements. Net profit, 3Q19 14 R$ mn Cemig, Consolidated Cemig GT Cemig D 3Q18–3Q19 % 3Q18–3Q19 % 3Q18–3Q19 119.7% 3Q18–3Q19 Adjusted: 45.3% 3Q18–3Q19 Adjusted: 49.4% 3Q18–3Q19 % 224 862 251 566 356 168 245 45 179 -282 -61 -315 -134 3Q18 3Q19 Gain on Provision - 3Q19 adjusted disposal* profit sharing 3Q18 3Q19 adjusted Provision - 3Q19 case profit sharing 3Q18 3Q19 adjusted Provision – 3Q19 case profit sharing case • Disposal of interest in and control of Light – details in Note 36 to the financial statements.


Cemig, consolidated: debt profile 15 Maturities timetable – Average tenor: 4.4 years Main indexors Total net debt: R$ 13.6 billion 6,720 42% 31% 2% 25% 2,333 1,795 1,177 973 797 650 CDI IPCA US Dollar Others 2019 2020 2021 2022 2023 2024 2025 Main indexors Cost of debt – % Net debt 15.89 4.98 14.28 3.52 3.46 3.01 3.03 2.82 Adjusted 9.32 9.09 9.12 Ebitda* 9.04 7.96 50.4 46.1 44.3 43.2 44.1 39.8 8.40 Net debt 6.01 5.23 5.53 4.84 4.58 3.74 Stockholders’ 2015 2016 2017 2018 Mar-19 Jun-19 Sep-19 equity + Net 2016 2017 2018 Mar-19 Jun-19 Sep-19 debt Real Nominal * Adjustments: ICMS tax ruling, discontinued operation, Renova provision, profit sharing.Cemig, consolidated: debt profile 15 Maturities timetable – Average tenor: 4.4 years Main indexors Total net debt: R$ 13.6 billion 6,720 42% 31% 2% 25% 2,333 1,795 1,177 973 797 650 CDI IPCA US Dollar Others 2019 2020 2021 2022 2023 2024 2025 Main indexors Cost of debt – % Net debt 15.89 4.98 14.28 3.52 3.46 3.01 3.03 2.82 Adjusted 9.32 9.09 9.12 Ebitda* 9.04 7.96 50.4 46.1 44.3 43.2 44.1 39.8 8.40 Net debt 6.01 5.23 5.53 4.84 4.58 3.74 Stockholders’ 2015 2016 2017 2018 Mar-19 Jun-19 Sep-19 equity + Net 2016 2017 2018 Mar-19 Jun-19 Sep-19 debt Real Nominal * Adjustments: ICMS tax ruling, discontinued operation, Renova provision, profit sharing.


Cemig D – Debt profile 16 Maturities timetable – Average tenor: 4.1 years Main indexors Total net debt: R$ 5.6 billion 62% 1,080 973 802 778 777 738 524 1% 37% 88 2019 2020 2021 2022 2023 2024 2025 2026 CDI IPCA Others Cost of debt – % Leverage – % 15.87 14.31 Net debt 12.55 Adjusted 5.84 9.28 3.49 8.93 8.94 8.86 2.99 3.06 2.91 Ebitda* 6.65 68.5 56.5 53.5 51.5 8.06 48.4 46.0 Net debt 5.87 5.37 5.08 4.56 4.01 3.68 Stockholders’ equity + Net 2015 2016 2017 2018 Mar-19 Jun-19 Sep-19 debt 2016 2017 2018 Mar-19 Jun-19 Sep-19 Real Nominal * Adjustments for ICMS tax ruling.Cemig D – Debt profile 16 Maturities timetable – Average tenor: 4.1 years Main indexors Total net debt: R$ 5.6 billion 62% 1,080 973 802 778 777 738 524 1% 37% 88 2019 2020 2021 2022 2023 2024 2025 2026 CDI IPCA Others Cost of debt – % Leverage – % 15.87 14.31 Net debt 12.55 Adjusted 5.84 9.28 3.49 8.93 8.94 8.86 2.99 3.06 2.91 Ebitda* 6.65 68.5 56.5 53.5 51.5 8.06 48.4 46.0 Net debt 5.87 5.37 5.08 4.56 4.01 3.68 Stockholders’ equity + Net 2015 2016 2017 2018 Mar-19 Jun-19 Sep-19 debt 2016 2017 2018 Mar-19 Jun-19 Sep-19 Real Nominal * Adjustments for ICMS tax ruling.


Cemig GT – debt profile 17 Maturities timetable – Average tenor: 4.4 years Main indexors Total net debt: R$ 7.5 billion 77% 6,196 2% 8% 13% 634 502 618 348 0 CDI IPCA Dólar Others 2019 2020 2021 2022 2023 2024 Hedge instrument transformed debt in US dollars into percentage of CDI rate, within an FX variation band. Cost of debt – % Leverage – % Net debt 16.03 14.41 5.60 5.14 Adjusted 3.78 3.95 3.58 9.36 9.46 9.30 9.23 9.12 Ebitda* 62.9 60.6 60.7 8.59 57.7 Net debt 56.4 6.14 5.77 5.89 55.1 5.45 4.71 3.66 Stockholders’ 2015 2016 2017 2018 Mar-19 Jun-19 Sep-19 equity + Net debt 2016 2017 2018 Mar-19 Jun-19 Sep-19 Real Nominal * Adjustments for: ICMS tax ruling, Renova provision.Cemig GT – debt profile 17 Maturities timetable – Average tenor: 4.4 years Main indexors Total net debt: R$ 7.5 billion 77% 6,196 2% 8% 13% 634 502 618 348 0 CDI IPCA Dólar Others 2019 2020 2021 2022 2023 2024 Hedge instrument transformed debt in US dollars into percentage of CDI rate, within an FX variation band. Cost of debt – % Leverage – % Net debt 16.03 14.41 5.60 5.14 Adjusted 3.78 3.95 3.58 9.36 9.46 9.30 9.23 9.12 Ebitda* 62.9 60.6 60.7 8.59 57.7 Net debt 56.4 6.14 5.77 5.89 55.1 5.45 4.71 3.66 Stockholders’ 2015 2016 2017 2018 Mar-19 Jun-19 Sep-19 equity + Net debt 2016 2017 2018 Mar-19 Jun-19 Sep-19 Real Nominal * Adjustments for: ICMS tax ruling, Renova provision.


Investor Relations Tel: +55 (31) 3506-5024 ri@cemig.com.br http://ri.cemig.com.br.Investor Relations Tel: +55 (31) 3506-5024 ri@cemig.com.br http://ri.cemig.com.br.


 

7. MATERIAL ANNOUNCEMENT DATED DECEMBER 17, 2019: RENOVA FILES RECOVERY PLAN

 

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127

MATERIAL ANNOUNCEMENT

Renova files Recovery Plan

Cemig (Companhia Energética de Minas Gerais, listed in São Paulo, New York and Madrid), in compliance with CVM Instruction 358 of January 3, 2002 as amended, hereby reports to the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (B3) and the market as follows:

Today, Cemig’s affiliated company Renova Energia S.A. (‘Renova’) published the following Material Announcement:

 

 

In compliance with CVM Instruction 358/2002, Renova Energia S.A. – in Judicial Recovery (RNEW3; RNEW4 and RNEW11) (‘the Company’ or ‘Renova’), informs its stockholders and the public that on today’s date it has filed its Recovery Plan in its proceedings on Judicial Recovery, Nº 1103257-54.2019.8.26.0100, before the 2nd Bankruptcy and Judicial Recovery Court of the Legal District of São Paulo State.

All the documents required by the Corporate Law and the applicable CVM rules, related to the subject of this Material Announcement are available to stockholders of the Company at (www.ri.renovaenergia.com.br). All this material is also available in copy on the Empresas.NET system of the CVM (www.cvm.com.br) and on the website of B3 (www.b3.com.br).

The Company reiterates its commitment to keeping stockholders and the market in general fully and timely informed in accordance with the applicable legislation.        ”

Belo Horizonte, December 17, 2019

Maurício Fernandes Leonardo Júnior

Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

67


 

8. NOTICE TO STOCKHOLDERS DATED DECEMBER 18, 2019: PAYMENTS OF INTEREST ON EQUITY

 

 

68


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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127

NOTICE TO STOCKHOLDERS

Payments of Interest on Equity

Cemig advises its stockholders:

The Executive Board has decided that the Company will pay Interest on Equity in the amount of R$ 400,000,000.00 (four hundred million Reais), corresponding to R$ 0.27431232108 per share, to be accounted as part of the minimum obligatory dividend for 2019. Of this amount income tax of 15% will be withheld at source, in accordance with the legislation, except for stockholders exempt from this retention, in accordance with the legislation.

For shares traded on the São Paulo stock exchange (B3), this benefit will be paid to stockholders of record on December 23, 2019, in two equal installments, by June 30, 2020 and December 30, 2020. The shares will trade ‘ex–’ these rights on December 26, 2019.

Stockholders whose shares are not held in custody by CBLC and whose registration details are not up to date should visit any branch of Banco Itaú Unibanco S.A. (the institution which administers Cemig’s Nominal Share Registry System), carrying their personal identification documents, for the necessary updating.

Belo Horizonte, December 18, 2019.

Maurício Fernandes Leonardo Júnior

Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

69


 

9. MATERIAL ANNOUCEMENT DATED DECEMBER 27, 2019: RENOVA OBTAINS AUTHORIZATION TO CONTRACT DIP LOAN

 

 

70


LOGO

 

 

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127

MATERIAL ANNOUNCEMENT

Renova obtains authorization to contract DIP loan

Cemig (Companhia Energética de Minas Gerais, listed in São Paulo, New York and Madrid), in compliance with CVM Instruction 358 of January 3, 2002 as amended, hereby reports to the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (B3) and the market as follows:

Cemig’s affiliated company Renova Energia S.A. (‘Renova’) today published the following Material Announcement:

 

 

Renova Energia S.A. – In Judicial Recovery (RNEW3; RNEW 4 and RNEW11) (‘the Company’ or ‘Renova’), in accordance with CVM Instruction 358/2002 as amended, hereby informs its stockholders and the public as follows:

On today’s date the 2nd Court for Bankruptcies and Judicial Recovery of the Legal District of São Paulo State, in Judicial Recovery proceedings Nº 1103257-54.2019.8.26.0100, gave authorization for contracting of a debtor-in-possession (‘DIP’) loan with Companhia Energética de Minas Gerais – CEMIG, in the amount of R$ 6,500,000.00, necessary to support the essential expenses for maintaining the activities of the Company and its subsidiaries. The terms of the DIP obey the precise parameters and limitations established by the 2nd Court for Bankruptcies and Judicial Recovery of the Legal District of São Paulo State.

All the documents required by the Corporate Law, and the applicable CVM rules, related to the subject of this Material Announcement are available to stockholders of the Company on its website – at www.ri.renovaenergia.com.br. All this material is also available in copy on the Empresas.NET system of the CVM (www.cvm.com.br) and on the website of the B3 (www.b3.com.br).

The Company reiterates its commitment to keeping stockholders and the market duly and timely informed in accordance with the applicable legislation.        

Belo Horizonte, December 27, 2019.

Maurício Fernandes Leonardo Júnior

Chief Finance and Investor Relations Officer

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

71


 

10. 2Q19 FINANCIAL STATEMENTS

 

 

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LOGO

 

CONTENTS

 

STATEMENTS OF FINANCIAL POSITION      74  
STATEMENTS OF INCOME      76  
STATEMENTS OF COMPREHENSIVE INCOME      78  
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY      79  
STATEMENTS OF CASH FLOWS      80  
STATEMENTS OF ADDED VALUE      82  

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS      83  
1.      OPERATING CONTEXT      83  
2.      BASIS OF PREPARATION      84  
3.      PRINCIPLES OF CONSOLIDATION      88  
4.      CONCESSIONS AND AUTHORIZATIONS      89  
5.      CASH AND CASH EQUIVALENTS      90  
6.      MARKETABLE SECURITIES      90  
7.      CUSTOMERS, TRADERS AND POWER TRANSPORT CONCESSION HOLDERS      91  
8.      RECOVERABLE TAXES      92  
9.      PIS/PASEP AND COFINS TAXES CREDITS OVER ICMS – FINAL COURT JUDGMENT      93  
10.    INCOME AND SOCIAL CONTRIBUTION TAXES      95  
11.    RESTRICTED CASH      98  
12.    ACCOUNTS RECEIVABLE FROM THE STATE OF MINAS GERAIS      98  
13.    ESCROW DEPOSITS      98  
14.    REIMBURSEMENT OF TARIFF SUBSIDIES      99  
15.    CONCESSION FINANCIAL AND SECTOR ASSETS AND LIABILITIES      99  
16.    CONCESSION CONTRACT ASSETS      105  
17.    INVESTMENTS      107  
18.    PROPERTY, PLANT AND EQUIPMENT      117  
19.    INTANGIBLE ASSETS      119  
20.    LEASING TRANSACTIONS      121  
21.    SUPPLIERS      123  
22.    TAXES AND AMOUNTS TO BE RESTITUTED TO CUSTOMERS      123  
23.    LOANS, FINANCINGS AND DEBENTURES      124  
24.    REGULATORY CHARGES      129  
25.    POST-EMPLOYMENT OBLIGATIONS      130  
26.    PROVISIONS      131  
27.    EQUITY AND REMUNERATION TO SHAREHOLDERS      139  
28.    SUBSIDIARIES WITH SIGNIFICANT INTERESTS HELD BY NON-CONTROLLING SHAREHOLDERS      141  
29.    REVENUE      142  
30.    OPERATING COSTS AND EXPENSES      147  
31.    FINANCE INCOME AND EXPENSES      153  
32.    RELATED PARTY TRANSACTIONS      155  
33.    FINANCIAL INSTRUMENTS AND RISK MANAGEMENT      159  
34.    THE ANNUAL TARIFF ADJUSTMENT FOR CEMIG D      172  
35.    OPERATING SEGMENTS      172  
36.    ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS      177  
37.    NON-CASH TRANSACTIONS      179  
38.    SUBSEQUENT EVENTS      179  

 

CONSOLIDATED RESULTS      181  
OTHER INFORMATION THAT THE COMPANY BELIEVES TO BE MATERIAL      196  
INDEPENDENT AUDITOR’S REVIEW REPORT ON QUARTERLY INFORMATION—ITR      203  

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

73


LOGO

 

STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2019 AND DECEMBER 31, 2018

ASSETS

(Thousands of Brazilian Reais)

 

     Note      Consolidated      Parent company  
   Jun. 30, 2019      Dec. 31, 2018      Jun. 30, 2019      Dec. 31, 2018  

CURRENT

              

Cash and cash equivalents

     5        748,540        890,804        35,146        54,330  

Marketable Securities

     6        665,710        703,551        91,498        80,781  

Customers and traders and concession holders – Transport of energy

     7        4,498,657        4,091,722        2,713        5,813  

Concession financial and sector assets

     15        1,239,932        1,070,384        —          —    

Contract assets

     16        131,989        130,951        —          —    

Recoverable taxes

     8        99,359        124,183        3,026        3,020  

Income and Social Contribution taxes recoverable

     10a        8,143        386,668        —          41,274  

Dividends receivable

     32        45,519        119,743        936,555        945,584  

Restricted cash

     11        100,936        90,993        129        129  

Inventories

        33,592        35,619        10        10  

Advances to suppliers

        30,198        6,785        —          —    

Reimbursement of tariff subsidy payments

     14        96,373        90,845        —          —    

Low-income subsidy

        27,696        30,232        —          —    

Derivative financial instruments

     33        114,916        69,643        —          —    

Others

        399,065        507,918        9,608        13,801  
     

 

 

    

 

 

    

 

 

    

 

 

 
        8,240,625        8,350,041        1,078,685        1,144,742  

Assets classified as held for sale

     36        19,376,525        19,446,033        1,573,967        1,573,967  
     

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL, CURRENT

        27,617,150        27,796,074        2,652,652        2,718,709  
     

 

 

    

 

 

    

 

 

    

 

 

 

NON-CURRENT

              

Marketable Securities

     6        12,256        108,683        —          10,691  

Advances to suppliers

        20,150        87,285        —          —    

Customers and traders and concession holders – Transport of energy

     7        84,808        80,889        —          —    

Recoverable taxes

     8        6,235,934        242,356        488,098        3,672  

Income and Social Contribution taxes recoverable

     9a        2,102        5,516        409        2,401  

Deferred income tax and Social Contribution tax

     9c        1,898,417        2,146,863        778,178        809,270  

Escrow deposits

     13        2,487,900        2,501,512        304,309        326,345  

Derivative financial instruments

     33        1,269,354        743,692        —          —    

Accounts receivable from Minas Gerais State

     12        238,428        245,566        238,428        245,566  

Concession financial and sector assets

     15        4,909,814        4,927,498        —          —    

Contract assets

     16        1,692,113        1,597,996        —          —    

Investments

     17        5,286,346        5,234,578        14,885,254        12,405,706  

Property, plant and equipment

     18        2,603,120        2,661,585        2,055        2,250  

Intangible assets

     19        10,718,616        10,777,191        5,293        6,125  

Leasing – rights of use

     20        306,052        —          5,303        —    

Others

        173,423        697,389        25,713        35,756  
     

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL NON-CURRENT

        37,938,833        32,058,599        16,733,040        13,847,782  
     

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

        65,555,983        59,854,673        19,385,692        16,566,491  
     

 

 

    

 

 

    

 

 

    

 

 

 

The Condensed Explanatory Notes are an integral part of the Interim financial information.

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

74


LOGO

 

STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2019 AND DECEMBER 31, 2018

LIABILITIES

(Thousands of Brazilian Reais)

 

     Note      Consolidated     Parent company  
   Jun. 30,
2019
    Dec. 31,
2018
    Jun. 30,
2019
    Dec. 31,
2018
 

CURRENT

           

Suppliers

     21        1,840,794       1,801,252       7,562       9,285  

Regulatory charges

     24        510,867       514,412       5,660       5,671  

Employees’ and managers’ profit shares

        133,462       78,759       6,461       4,813  

Taxes payable

     22a        334,636       409,825       7,230       45,014  

Income tax and Social Contribution tax

     22b        542,010       112,063       57,308       —    

Interest on Capital, and dividends, payable

        767,593       863,703       765,266       861,420  

Loans, financings and debentures

     23        2,949,083       2,197,566       —         —    

Payroll and related charges

        256,310       283,730       12,858       17,446  

Post-employment obligations

     25        277,531       252,688       23,093       13,774  

Leasing

     20        91,572       —         2,646       —    

Advances from customers

     7        —         79,405       —         —    

Payable to related parties

     32        —         —         376,363       408,114  

Other obligations

        481,443       527,942       2,785       12,084  
     

 

 

   

 

 

   

 

 

   

 

 

 
        8,185,301       7,121,345       1,267,232       1,377,621  

Liabilities directly related to assets held for sale

     36        16,162,392       16,272,239       —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL, CURRENT

        24,347,693       23,393,584       1,267,232       1,377,621  
     

 

 

   

 

 

   

 

 

   

 

 

 

NON-CURRENT

           

Regulatory charges

     24        164,286       178,525       —         —    

Loans, financings and debentures

     23        10,927,306       12,574,262       46,704       45,081  

Taxes payable

     22a        30,606       29,396       —         —    

Deferred income and Social Contribution

     10b        890,476       728,419       —         —    

Provisions

     26        687,801       640,671       74,017       64,204  

Post-employment obligations

     25        4,780,053       4,735,656       500,488       495,677  

Pasep and Cofins taxes to be reimbursed to customers

     22a        4,110,513       1,123,680       —         —    

Derivative financial instruments – Options

     33b        441,094       419,148       —         —    

Leasing

        219,640       —         2,554       —    

Other obligations

        96,223       92,005       5,185       5,189  
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL, NON-CURRENT

        22,347,998       20,521,762       628,948       610,151  
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

        46,695,691       43,915,346       1,896,180       1,987,772  
     

 

 

   

 

 

   

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY

     27           

Share capital

        7,293,763       7,293,763       7,293,763       7,293,763  

Capital reserves

        2,249,721       2,249,721       2,249,721       2,249,721  

Profit reserves

        6,360,856       6,362,022       6,360,856       6,362,022  

Equity valuation adjustments

        (1,339,234     (1,326,787     (1,339,234     (1,326,787

Retained earnings

        2,924,406       —         2,924,406       —    

ATTRIBUTABLE TO CONTROLLING SHAREHOLDERS

     27        17,489,512       14,578,719       17,489,512       14,578,719  
     

 

 

   

 

 

   

 

 

   

 

 

 

ATTRIBUTABLE TO NON-CONTROLLING STOCKHOLDER

        1,370,780       1,360,608       —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY

        18,860,292       15,939,327       17,489,512       14,578,719  
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

        65,555,983       59,854,673       19,385,692       16,566,491  
     

 

 

   

 

 

   

 

 

   

 

 

 

The Condensed Explanatory Notes are an integral part of the Interim financial information.

 

 

 

Av. Barbacena 1200        Santo Agostinho        30190-131        Belo Horizonte, MG        Brazil        Tel.: +55 31 3506-5024        Fax +55 31 3506-5025

 

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

 

75


LOGO

 

STATEMENTS OF INCOME

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

(In thousands of Brazilian Reais – except Net earnings per share)

 

     Note      Consolidated     Parent company  
   Jan to Jun
2019
    Jan to Jun
2018
    Jan to
Jun 2019
    Jan to
Jun 2018
 

CONTINUING OPERATIONS

           

NET REVENUE

     29        12,929,971       10,541,969       186,932       146  

OPERATING COSTS

           

COST OF ENERGY AND GAS

     30           

Energy bought for resale

        (5,120,200     (5,082,598     —         —    

Charges for use of the national grid

        (701,171     (808,580     —         —    

Gas bought for resale

        (725,162     (556,459     —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (6,546,533     (6,447,637     —         —    

OTHER COSTS

     30           

Personnel and managers

        (534,273     (532,260     —         —    

Materials

        (34,076     (22,966     —         —    

Outsourced services

        (512,676     (413,971     —         —    

Depreciation and amortization

        (407,737     (374,523     —         —    

Operating provisions

        (100,827     (1,901     —         —    

Infrastructure construction cost

        (465,225     (383,643     —         —    

Others

        (31,795     (41,227     —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (2,086,609     (1,770,491     —         —