Table of Contents

 

 

 

FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2014

 

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  x  Form 40-F  o

 

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): o

 

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): o

 

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  o  No  x

 

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

 

 

 



Table of Contents

 

Index

 

Item

 

Description of Item

 

 

 

1.

 

Summary of Minutes of the 564th Meeting of the Board of Directors Held on April 11, 2013

 

 

 

2.

 

Summary of Minutes of the 574th Meeting of the Board of Directors Held on August 8, 2013

 

 

 

3.

 

Summary of Principal Decisions of the 601st Meeting of the Board of Directors Held on July 17, 2014

 

 

 

4.

 

Material Announcement Dated July 17, 2014: Cemig signs agreement to participate in construction of wind farms

 

 

 

5.

 

Material Announcement Dated July 21, 2014: Increase in equity interest in Gasmig

 

 

 

6.

 

Summary of Minutes of the 602nd Meeting of the Board of Directors Held on August 4, 2014

 

 

 

7.

 

Summary of Principal Decisions of the 602nd Meeting of the Board of Directors Held on August 4, 2014

 

 

 

8.

 

Summary of Principal Decisions of the 603rd Meeting of the Board of Directors Held on August 4, 2014

 

 

 

9.

 

Second Quarter 2014 Results — Presentation

 

 

 

10.

 

2Q 2014 Results - Earnings Release

 

 

 

11.

 

Summary of Principal Decisions of the 604th Meeting of the Board of Directors Held on August 14, 2014

 

 

 

12.

 

Market Announcement Dated August 14, 2014: Judgment on Jaguara Plant concession adjourned further

 

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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.

 

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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/ Luiz Fernando Rolla

 

 

Name:

Luiz Fernando Rolla

 

 

Title:

Chief Officer for Finance and Investor Relations

Date: August 22, 2014

 

 

 

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1. Summary of Minutes of the 564th Meeting of the Board of Directors Held on April 11, 2013

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

 

BOARD OF DIRECTORS

 

SUMMARY OF MINUTES OF THE 564TH MEETING

 

Date, time and place:

April 11, 2013 at 2 p.m. at the company’s head office.

 

 

Meeting Committee:

Chair:

Dorothea Fonseca Furquim Werneck;

 

Secretary:

Anamaria Pugedo Frade Barros

 

Summary of proceedings:

 

I                               Conflict of interest: The Chair asked the Board Members present whether they had any conflict of interest in the matter on the agenda of this meeting, and all said there was no such conflict of interest.

 

II                          The Board approved:

 

a)                  The proposal, by the board member Lauro Sérgio Vasconcelos David, that the members of the Board of Directors should authorize their Chair to call an Extraordinary General Meeting of Stockholders to be held on May 23, 2013 at 11 a.m., for decision on the matter of a financial limit in the bylaws being exceeded; and that in the absence of a quorum she should be authorized to make second convocation, within the legal period.

b)                  The minutes of this meeting.

 

II                          Proposal to EGM: The Board submitted a proposal to the Extraordinary General Meeting of Stockholders that the Meeting should ratify the limit in Subclause ‘d’ of Paragraph 7 of Article 11 of the by-laws being exceeded in 2012, in that the consolidated ratio of funds allocated to capital expenditure and acquisition of any assets was 54% of the Company’s Ebitda (Earnings before interest, taxes, depreciation and amortization).

 

IV                      Comment: The following spoke on subjects and business of interest to the Company.

 

The Chair; and the Board members Eduardo Borges de Andrade and Djalma Bastos de Morais.

 

IV                      The following were present:

 

Board members:

Dorothea Fonseca Furquim Werneck,

Djalma Bastos de Morais,

Arcângelo Eustáquio Torres Queiroz,

Eduardo Borges de Andrade,

Fuad Jorge Noman Filho,

Guy Maria Villela Paschoal,

João Camilo Penna,

Joaquim Francisco de Castro Neto,

Paulo Roberto Reckziegel Guedes,

Saulo Alves Pereira Junior,

Wando Pereira Borges,

Bruno Magalhães Menicucci,

Leonardo Maurício Colombini Lima,

Newton Brandão Ferraz Ramos,

Adriano Magalhães Chaves,

Christiano Miguel Moysés,

José Augusto Gomes Campos,

Lauro Sérgio Vasconcelos David,

Luiz Augusto de Barros,

Marco Antonio Rodrigues da Cunha,

Paulo Sérgio Machado Ribeiro;

Secretary:

Anamaria Pugedo Frade Barros.

 

 

(Signed by:)  Anamaria Pugedo Frade Barros.

 

Registered at:

 

Commercial Board of the State of Minas Gerais

I certify registry on:  July 31, 2014

Under the number: 5346989

Filing Receipt number: 14/529.640-7

Marinely de Paula Bomfim

General Secretary

 

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. Summary of Minutes of the 574th Meeting of the Board of Directors Held on August 8, 2013

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY

CNPJ 17.155.730/0001-64 — NIRE 31300040127

 

BOARD OF DIRECTORS

 

SUMMARY OF MINUTES

OF THE

574TH MEETING

 

Date, time and place:

August 8, 2013 at 10 a.m. at the company’s head office.

 

 

Meeting Committee:

Chairs:

Dorothea Fonseca Furquim Werneck; Djalma Bastos de Morais;

 

Secretary:

Anamaria Pugedo Frade Barros.

 

Summary of proceedings:

 

I                         Conflict of interest:

 

The Chair asked the Board Members present whether any of them had conflict of interest in relation to the matters on the agenda of this meeting, and all stated there was no such conflict of interest, except the Board Members:

 

Dorothea Fonseca Furquim Werneck, Marco Antonio Rodrigues da Cunha, and Paulo Sérgio Machado Ribeiro,

 

· who stated conflict of interest in relation to the assignment of employees to INDI;

 

Dorothea Fonseca Furquim Werneck,
Adriano Magalhães Chaves and

Marco Antonio Rodrigues da Cunha,
Paulo Sérgio Machado Ribeiro,

 

· who stated that they had conflict of interest in relation to:

 

·           signature of a Letter of Intent and amendment with the Minas Gerais State Economic Development Department (SEDE), the State’s Finance Department (SEF), its Development Bank (BDMG), the Minas Gerais State Integrated Development Institute (INDI) and Guanhães Energia S.A.;

·           signature of a mutual cooperation working agreement with Minas Gerais State, through SEMAD; and

 

Arcângelo Eustáquio Torres Queiroz,
Franklin Moreira Gonçalves and

Adriano Magalhães Chaves,
Lauro Sérgio Vasconcelos David

 

· who stated that they had conflict of interest in relation to the collective agreement for profit sharing.

 

These Board Members withdrew from the meeting room at the time of discussion and voting on this matter, returning to proceed with the meeting after the vote on the matter had been taken.

 

II                    The Board approved:

 

a)                 The proposal, by the board member Lauro Sérgio Vasconcelos David, that the members of the Board of Directors should authorize their Chair to call an Extraordinary General Meeting of Stockholders to be held on September 9, 2013 at 11 a.m., and that in the absence of a quorum she should be authorized to make second convocation, within the legal period, for decision on:

 

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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·           Orientation of vote of the representative of Cemig in the Extraordinary General Meeting of Stockholders of Cemig GT referred to in item V below.

 

b)                 The proposal, by the board member Lauro Sérgio Vasconcelos David, that the members of the Board of Directors should authorize their Chair to call an Extraordinary General Meeting of Stockholders to be held on a date to be decided by the Executive Board; and that in the absence of a quorum she should be authorized to make second convocation, within the legal period, for decision on:

 

·           Orientation of the vote of the representative of Cemig in the Extraordinary General Meeting of Stockholders of Cemig GT, in relation to the Jequitibá II Project.

 

c)                 Orientation of vote in favor of the agenda by the representatives of Cemig GT in the meeting of the Board of Directors of Taesa that decides on:

 

·           Ratification of the Binding Proposal made by Empresa Amazonense de Transmissão de Energia S.A. — EATE; and

 

·           authorization for acquisition, by EATE, of a stockholding interest.

 

d)                 The minutes of this meeting.

 

III               The Board authorized:

 

a)                Signature, conditional on actual transfer to the Company of the equity interest held by Cemig GT in Taesa, of:

 

·            the Term of Assignment of Rights and Obligations and Adhesion to the Stockholders’ Agreement of Taesa, signed by the Company with Cemig GT, with Fundo de Investimento em Participações Coliseu, Taesa and Santander Participações S.A. as consenting parties, to formalize the assignment by Cemig GT to the Company of all the rights and obligations specified in the said Stockholders’ Agreement, with the Company accepting and unconditionally adhering to all the terms and conditions in that instrument, as amended, including the arbitration clause, and undertaking to comply with and obey that agreement as if it were one of its original signatories, and Cemig GT being jointly liable for all the obligations therein established; and

 

·            the Term of Assignment of Rights and Obligations of the Commitment Undertaking, signed with Cemig GT, and having Fundo de Investimento em Participações Coliseu and Taesa as consenting parties, to formalize the assignment by Cemig GT to the Company of all the rights and obligations referred to in the said Commitment Undertaking, with the Company accepting and unconditionally adhering to all the terms and conditions in that instrument, as amended, undertaking to comply with it and obey it as if it were one of its original signatories, and Cemig GT being jointly liable for all the obligations therein established;

 

· the signature of these documents to be conditional upon actual transfer to Cemig, in Taesa’s Share Registry system, of the said shares owned by Taesa.

 

b)                 Renewal of the 2013—4 Specific Collective Profit Sharing Agreement, with the benefits which will be established by it, within the annual financial limit to be oriented by the Human Resources Committee, for Cemig, Cemig D and Cemig GT, jointly.

 

c)                  Filing of legal actions related and inherent to the process of negotiation of the Agreement referred to in sub-clause ‘b’ of this item and any such developments from it as are necessary for preservation of the Company’s interests.

 

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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d)                 Signature with INDI of a Working Agreement for Assignment of Employees, for assignment of employees of this Company to that Institute, to be in effect for twelve months, able to be extended, by amendment, such that the maximum total period may be up to sixty months.

 

e)                  Signature of the First Amendment to the Letter of Intent referred to in Item VII, which shall:

 

·           change its preamble, altering the name of Cemig D to Cemig, and the timetable of implementation of the Small Hydro Plants (PCHs) to the end of 2014;

 

·           include the Minas Gerais State Planning and Management Department (Seplag) as signatory to the Letter of Intent;

 

·           exclude Clause Twelve (which is in Section IV, Final Provisions), the subsequent clauses being re-numbered;

 

·           establish commitment by the State of Minas Gerais to allocate funds from two projects — Structuring Project 040 (Competitive Investment to Strengthen and Diversify the Economy of Minas Gerais); and Strategic Project 4629 (Promotion, Attraction and Retention of Investment) — for works of extension of the 138kV Distribution System from the existing Guanhães 2 Substation to the new 138kV Jacaré Substation; and

 

·           include: installation of a new connection span from the Guanhães 2 Substation; construction of the distribution line from the Guanhães 2 Substation to the 138kV Jacaré Substation, with length of approximately 25 km: and construction of the 138kV Jacaré Substation.

 

f)                   Signature, as guarantor, of the Corporate Guarantee Letter, with Ventos Potiguares Comercializadora de Energia S.A. and Cemig GT, up to the limit of an amount sufficient to settle two months of billing under the Contract to Purchase Incentive-bearing Electricity, in the period August 8, 2013 to December 31, 2014.

 

g)                  Signature with MDU Resources Luxembourg II-LLC, S.À.R.L. (‘MDU Lux’), of

 

·           a Term of Agreement for Banco Bradesco S.A. to lift the block on access in the Information System of the Brazilian Central Bank, to allow MDU Lux to make adjustments to the Electronic Declarations (RDEs) of Foreign Direct Investment (FDI) in relation to the operation to acquire shares in Empresa Norte de Transmissão de Energia S.A., Empresa Regional de Transmissão de Energia S.A. and Empresa Catarinense de Transmissão de Energia S.A., through temporary suspension of the registry of settlement of currency exchange contracts, which, after the due rectification of acts carried out subsequently by MDU Lux, will be re-inserted, in their original terms, as provided for in the Transaction Closing Documents; and

 

·           a Guarantee Document, with MDU Lux, through its parent company, Centennial Energy Holdings, Inc., under which the latter undertakes to be responsible for any demand, losses or fines/penalty payments that may arise from the implementation of the adjustments referred to above.

 

h)                 Holding by Cemig GT of an equity interest in Chipley SP Participações S.A. (Chipley), with 40% of the voting and total stock of that Company.

 

i)                     Holding by Cemig GT of an equity interest in Renova Energia S.A. (Renova), through subscription of eighty seven million one hundred eighty six thousand thirty five common shares issued by Renova;

 

j)                    Signature of the Term of Assignment, by Cemig GT to Chipley, of the share purchase agreement signed with Petrobras, the object of which is purchase of 49% of the voting stock

 

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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and 42.32% of the total capital of Brasil PCH S.A. (Brasil PCH), with Cemig, Renova and Renovapar S.A. (Renovapar) as consenting parties.

 

k)                 Signature of the Counter-guarantee Agreement between Cemig, Renova and Renovapar, with Cemig GT and Chipley as consenting parties, to govern the transfer to Cemig, or to any party indicated by Cemig, of all the shares issued by Chipley and all the shares in Chipley owned by Renova and Renovapar, in the event that Cemig is obliged to make the payment for the shares of Brasil PCH.

 

IV                The Board ratified the assignment of employees of Cemig to INDI since November 1, 2012.

 

V                     The Board submitted to the Extraordinary General Meeting of Stockholders (of Cemig) a proposal to orient the representative of Cemig in the Extraordinary General Meeting of Stockholders of Cemig GT to vote in favor of:

 

a)                 Ratification of the appointment of the accounting technical experts who prepared the Valuation Opinion on the Investment in Taesa, registered in the accounts of Cemig GT.

 

b)                 Approval of the said Valuation Opinion, recognized by the equity method, to be adjusted in accordance with the results of Taesa up to the actual date of transfer.

 

c)                  Reduction of the share capital of Cemig GT to nine hundred sixty three million three hundred seventy one thousand seven hundred eleven Reais and eighty centavos, and consequent alteration of the head paragraph of Article 5 of the by-laws of Cemig GT — the final value of the reduction of the share capital to be adjusted in accordance with the results of Taesa up to the actual date of transfer, thus affecting the value of the share capital that will appear in the head paragraph of Article 5 of the by-laws of Cemig GT.

 

VI                The Board gave the following orientations:

 

a)                 That the representatives of Cemig should abstain from voting in the meetings of the Board of Directors or General Meetings of Stockholders of Light S.A., Light Energia S.A. and Parati S.A. that deal with signature of the documents of the transaction.

 

b)                 Vote in favor, by the representatives of the Company in the meeting of the Board of Directors of Light S.A. that decides on orientation of vote of the representatives of that company in the General Meeting of Stockholders of Itaocara Energia Ltda., that decides on the rescission of Concession Contract Nº 012/2001.

 

VII           The Board ratified:

 

a)                 Signature of a Letter of Intent, between the State of Minas Gerais, SEDE, SEF, BDMG, INDI, Cemig and Guanhães Energia S.A., to ensure full implementation of the plans of Guanhães Energia for construction of the four Small Hydroelectric Plants Dores do Guanhães, Senhora do Porto, Jacaré and Fortuna II, all with completion planned for 2011.

 

b)                 Signature of the mutual cooperation working agreement with the State of Minas Gerais, through the State’s Environment and Sustainable Development Department (Semad), for assignment of an electricity to that Department, for the period August 1, 2013 to July 31, 2015, able to be extended for an equal period.

 

c)                  Appointment of Mr. João Bosco Papaléo Paes and Mr. Mário Assad, as sitting members, and Mr. Leonardo Maurício Colombini Lima, as substitute member, of the Board of Directors of Gasmig, to serve for the period beginning at the AGM/EGM of April 27, 2012.

 

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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d)                 Appointment of the chief officer José Carlos de Mattos to serve, concurrently and without remuneration, as a substitute member of the Board of Directors of Gasmig, to complete the period of office begun with the AGM/EGM of April 27, 2012.

 

e)                  Vote in favor by the representatives of Cemig in the Extraordinary General Meeting of Stockholders of Gasmig held on July 11, 2013, which elected the Chief Officer José Carlos de Mattos as substitute member of the Board of Directors of Gasmig.

 

f)                  Orientation of vote, in favor of the agenda, at the meeting of the Board of Directors of Light that oriented vote in favor, at the meeting of the Board of Directors of Renova, held on July 18, 2013, that decided on the acquisition of Chipley.

 

VIII      Waiver of right: The Board waived such right of acquisition of the equity interest owned by Orteng in Transleste as arises from non-exercise of the right of first refusal conferred upon Transminas Holding S.A. by the Stockholders’ agreement in effect for Transleste.

 

IX               Withdrawn from the agenda: The matter relating to contracting of group life insurance was withdrawn from the agenda.

 

X                    Comment: The following spoke on subjects and business of interest to the Company:

 

The Chair;

 

 

Board members:

Arcângelo Eustáquio Torres Queiroz,

Djalma Bastos de Morais;
Eduardo Borges de Andrade

Chief Officers:

Fernando Henrique Schüffner Neto,

Luiz Fernando Rolla;

 

 

 

The following were present:

 

 

 

 

Board members:

Dorothea Fonseca Furquim Werneck,

Djalma Bastos de Morais,

Arcângelo Eustáquio Torres Queiroz,

Eduardo Borges de Andrade,

Guy Maria Villela Paschoal,

João Camilo Penna,

Joaquim Francisco de Castro Neto,

Paulo Roberto Reckziegel Guedes,

Tadeu Barreto Guimarães,

Wando Pereira Borges,

Bruno Magalhães Menicucci,

José Augusto Gomes Campos,

Luiz Augusto de Barros,

Adriano Magalhães Chaves,

Christiano Miguel Moysés,

Franklin Moreira Gonçalves,

Lauro Sérgio Vasconcelos David,

Marco Antonio Rodrigues da Cunha,

Paulo Sérgio Machado Ribeiro,

Tarcísio Augusto Carneiro;

Member of the Audit Board:

Bruno Gonçalves Siqueira;

 

Chief Officers:

Fernando Henrique Schüffner Neto,

Luiz Fernando Rolla;

Secretary:

Anamaria Pugedo Frade Barros.

 

 

Signed by:)  Anamaria Pugedo Frade Barros.

 

Registered at:

 

Commercial Board of the State of Minas Gerais

I certify registry on:  July 31, 2014

Under the number: 5346984

Filing Receipt number: 14/529.649-1

Marinely de Paula Bomfim

General Secretary

 

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. Summary of Principal Decisions of the 601st Meeting of the Board of Directors Held on July 17, 2014

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

 

LISTED COMPANY

CNPJ 17.155.730/0001-64  –  NIRE 31300040127

 

BOARD OF DIRECTORS

 

Meeting of July 17, 2014

 

SUMMARY OF PRINCIPAL DECISIONS

 

At its 601st Meeting, held on July 17, 2014, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

1.              Nomination of Managers for companies of the Cemig Group.

 

2.              Zeus Project.

 

3.              Signature of an amendment, with Terceiriza Serviços Ltda.

 

4.              Signature of partnership undertakings between Cemig, Cemig D, and Cemig GT and the Municipal Councils for the Rights of Children and Adolescents participating in the AI6 Program.

 

5.              Signature of an amendment related to the Glória Project.

 

6.              Gasmig: Increase in share capital, and orientation of vote at meetings.

 

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. Material Announcement Dated July 17, 2014:  Cemig signs agreement to participate in construction of wind farms

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

 

MATERIAL ANNOUNCEMENT

 

Cemig signs agreement to participate in construction of wind farms

 

Cemig (Companhia Energética de Minas Gerais), a listed company with securities traded on the stock exchanges of São Paulo, New York and Madrid – in accordance with CVM Instruction 358 of January 3, 2002, as amended – hereby informs the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (BM&F Bovespa S.A.) and the market in general, as follows:

 

As sole stockholder of Cemig Geração e Transmissão S.A. (“Cemig GT”), Cemig has signed agreements with Renova Energia S.A. (“Renova”) to acquire a 50% interest in the project to build 25 wind farms, with total installed generation capacity of 676.2 MW, in the municipality of Jacobina, in the Brazilian State of Bahia (‘the Project’).

 

The option to participate in this project was one of the components in the tender auction held by Renova Comercializadora on February 7, 2014, and won by Cemig GT.

 

Under the agreement Cemig will acquire 50% of the voting and total stock of a corporation to be created by Renova, which will hold all contracts related to the Project (‘the Acquisition’).

 

The value of the acquisition will be a maximum of R$ 113,450,409.32 (one hundred thirteen million four hundred fifty thousand four hundred and nine Reais and thirty two centavos). The amount refers to 50% of the amounts of the advances on contracts already signed by Renova, with monetary updating by the CDI rate (the Brazilian Interbank CD rate) from the date of disbursement by Renova up to the date of payment by Cemig.

 

From the date of the Acquisition, Cemig and Renova will share the future investment in the Project in the proportion of their equity ownership in the company.

 

Cemig will keep its stockholders and the market opportunely and appropriately informed on the progress of this operation.

 

Belo Horizonte, July 17, 2014

 

Luiz Fernando Rolla

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. Material Announcement Dated July 21, 2014:  Increase in equity interest in Gasmig

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

 

MATERIAL ANNOUNCEMENT

 

Increase in equity interest in Gasmig

 

Cemig (Companhia Energética de Minas Gerais), a listed company with securities traded on the stock exchanges of São Paulo, New York and Madrid – in accordance with CVM Instruction 358 of January 3, 2002, as amended – hereby informs the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (BM&F Bovespa S.A.) and the market in general, as follows:

 

In the next few days, Cemig expects to sign a share purchase agreement with Petrobras (Petróleo Brasileiro S.A.) for acquisition of the 40% equity interest held by the Petrobras subsidiary Gaspetro in Gasmig (Companhia de Gás de Minas Gerais). This has been approved by the Board of Directors of Cemig.

 

The transaction, for a planned amount of R$ 600 million, is subject to certain conditions precedent, including approval by the Brazilian monopolies authority (Conselho Administrativo de Defesa Econômica – CADE), and consent from the State of Minas Gerais, the grantor of Gasmig’s gas distribution concession.

 

This acquisition by Cemig is part of Cemig’s strategy for the creation, in partnership with Gás Natural Fenosa (“GNF”), of Gas Natural do Brasil S.A.  (“GNB”), which will be its platform for consolidation of investments in natural gas projects.

 

Gasmig is holder of the exclusive concession for distribution of piped natural gas in the State of Minas Gerais. It currently distributes 4.1 million cubic meters per day of natural gas through a network of more than 850km of gas pipelines.

 

Cemig will keep its stockholders and the market opportunely and appropriately informed on the progress of this transaction.

 

Belo Horizonte, July 21, 2014

 

Luiz Fernando Rolla

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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6. Summary of Minutes of the 602nd Meeting of the Board of Directors Held on August 4, 2014

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY

 

CNPJ 17.155.730/0001-64 – NIRE 31300040127

 

BOARD OF DIRECTORS

 

SUMMARY OF MINUTES

OF THE

602ND MEETING

 

Date, time and place:

 

August 4, 2014 at 4.30 p.m. at the company’s head office.

 

 

 

Meeting Committee:

 

Chair:        Djalma Bastos de Morais;

 

 

Secretary:  Anamaria Pugedo Frade Barros.

 

Summary of proceedings:

 

I                                 Conflict of interest: The Chair asked the Board Members present whether they had any conflict of interest in the matter on the agenda of this meeting, and all said there was no such conflict of interest.

 

II                            The Board approved:

 

a)        The by-laws of Cemig Participações Minoritárias S.A. – CemigPar.

 

b)        The minutes of this meeting.

 

III                       The Board authorized:

 

a)        Constitution, by public deed, of a wholly-owned subsidiary, to be named Cemig Participações Minoritárias S.A. – CemigPar, the objects of which shall be exclusively the holding of minority interests in the share capital of other companies that have activities related to electricity, oil and gas services, in their various fields, and development and commercial operation of telecommunications and information systems, with initial capital of one thousand Reais, represented by one thousand nominal common shares without par value.

 

b)        Subscription of the one thousand common shares initially issued, for one Real each, to be fully paid up by bank deposit of that amount.

 

c)         Execution of all acts necessary for the constitution of CemigPar.

 

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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IV                        The Board approved appointment of Mr. Arlindo Porto Neto as CEO of CemigPar and Mr. Luiz Fernando Rolla and Mr. Luiz Henrique de Castro Carvalho as Chief Officers without portfolio, to serve a period of office of three years, as from the constitution of the Company, able to be re-elected by the General Meeting of Shareholders.

 

V                             The Chair reported that the Board member Lauro Sérgio Vasconcelos David had requested unpaid leave from his position as a substitute member of the Board of Directors of the Company, in the period from July 29 through October 31, 2014, as per a letter in the Company’s possession.

 

VI                        Comment: The Chair spoke on a subject of interest to the Company.

 

The following were present:

 

Board members:

 

Djalma Bastos de Morais,

 

Bruno Magalhães Menicucci,

 

 

Fuad Jorge Noman Filho,

 

Franklin Moreira Gonçalves,

 

 

Guy Maria Villela Paschoal,

 

Marina Rosenthal Rocha,

 

 

João Camilo Penna,

 

Newton Brandão Ferraz Ramos,

 

 

José Pais Rangel,

 

Paulo Sérgio Machado Ribeiro,

 

 

Saulo Alves Pereira Junior,

 

Tarcísio Augusto Carneiro,

 

 

Tadeu Barreto Guimarães,

 

Flávio Miarelli Piedade,

 

 

Wando Pereira Borges,

 

José Augusto Gomes Campos,

 

 

 

 

Marco Antonio Rodrigues da Cunha;

 

 

 

 

 

Secretary:

 

Anamaria Pugedo Frade Barros.

 

 

 

(Signed:) Anamaria Pugedo Frade Barros

 

Registered at:

 

Commercial Board of the State of Minas Gerais

I certify registry on:  August 8, 2014

Under the number: 5351786

Filing Receipt number: 14/550.086-1

Marinely de Paula Bomfim

General Secretary

 

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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7. Summary of Principal Decisions of the 602nd Meeting of the Board of Directors Held on August 4, 2014

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY

CNPJ 17.155.730/0001-64  —  NIRE 31300040127

 

BOARD OF DIRECTORS

 

Meeting of August 4, 2014

 

SUMMARY OF PRINCIPAL DECISIONS

 

At its 602nd meeting, held on August 4, 2014, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

·                  Creation of the wholly-owned subsidiary Cemig Participações Minoritárias S.A. — CemigPar.

 

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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8. Summary of Principal Decisions of the 603rd Meeting of the Board of Directors Held on August 4, 2014

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY

CNPJ 17.155.730/0001-64  —  NIRE 31300040127

 

BOARD OF DIRECTORS

 

Meeting of August 4, 2014

 

SUMMARY OF PRINCIPAL DECISIONS

 

At its 603rd meeting, held on August 4, 2014, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

1                 Further developments in the Neptune Project.

 

2                 Further developments in the Prothea Project.

 

3                 Orientation of vote at a meeting of Light S.A.

 

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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9. Second Quarter 2014 Results — Presentation

 

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Second Quarter 2014 Results Presentation

 

Cemig

(BM&FBOVESPA: CMIG3, CMIG4; NYSE: CIG, CIG.C; Latibex: XCMIG)

announces its

TIMETABLE for Release of 2Q2014 Results:

 

1 — Publication

 

August 13, 2014 (Wednesday)

(after the closing of markets in São Paulo and New York)

The information will be available on our website:  http://ri.cemig.com.br

 

2 — Video Webcast and Conference call

 

August 18, 2014 (Monday), at 2:00 p.m. (Brasília time)

Transmission of the results with simultaneous translation into English

by video webcast at:

http://ri.cemig.com.br

or

by conference call at:

+ 55 11 2188-0155 (1st option) or + 55 11 2188-0188 (2nd option)

Password: CEMIG

 

3 — Video Webcast Playback:

 

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

Available for 90 days

Click on the banner and download

 

4 — Conference Call Playback:

 

Phone: + 55 11 2188-0155

Password: CEMIG PORTUGUÊS (Portuguese)

Password: CEMIG INGLÊS (English)

Available: August 18 — September 1, 2014

For any questions please call +55 31 3506-5024. Thank you.

 

Av. Barbacena 1200    Santo Agostinho    30190-131 Belo Horizonte, MG    Brazil    Tel.: +55 31 3506-5024    Fax +55 31 3506-5026

 

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10. 2Q 2014 Results - Earnings Release

 

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PUBLICATION OF RESULTS

 

SECOND QUARTER 2014

 

CEMIG REPORTS 2Q14 NET PROFIT OF R$ 741 MILLION

 

Highlights:

 

·  2Q14 cash flow, measured as Ebitda (IFRS):

 

R$ 1.6 billion

 

 

 

·  2Q14 net revenue:

 

R$ 4.7 billion

 

 

 

·  2Q14 CCEE (wholesale market) sales revenue :

 

R$ 940 million

 

Indicators (R$ ‘000)

 

2Q14

 

2Q13

 

Change %

 

Electricity sold, GWh (excluding CCEE)

 

12,242

 

11,125

 

10.04

 

Sales on CCEE

 

940,377

 

261,641

 

259.41

 

Gross revenue

 

6,102,157

 

4,638,708

 

31.55

 

Net revenue

 

4,737,758

 

3,438,990

 

37.77

 

Ebitda (IFRS)

 

1,576,907

 

1,252,406

 

25.91

 

Ebitda adjusted for regulatory items **

 

1,859,479

 

1,383,088

 

34.44

 

Np in the quarter

 

740,874

 

617,238

 

20.03

 

Net profit adjusted for non-recurring items*

 

740,874

 

510,560

 

45.11

 

Net profit adjusted for regulatory items**

 

943,497

 

723,161

 

30.47

 

 


*Adjusted for non-recurring items - see Page 10

**Adjusted for regulatory assets and liabilities - see Page 23

 

 

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Conference call

 

Publication of 2Q14 results

 

Video webcast and conference call

 

August 18, 2014 (Monday), at 2pm (Brasília time)

 

This transmission on Cemig’s results will have simultaneous translation into English and can be seen in Video Webcast, at http://ri.cemig.com.br -

or heard by conference call on:

 

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

 

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

 

Password: CEMIG

 

Playback of Video Webcast:

 

Playback of conference call:

 

 

 

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

 

Tel.: (11) 2188-0155

 

 

Password:

Click on the banner and download.

 

CEMIG Português

Available for 90 days

 

 

 

 

Available from August 18 to Sep. 1, 2014

 

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

Luiz Fernando Rolla

 

·                  General Manager, Investor Relations

Antonio Carlos Vélez Braga

 

·                  Manager, Investor Market

Stefano Dutra Vivenza

 

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Contents

 

CONFERENCE CALL

 

30

CEMIG INVESTOR RELATIONS

 

30

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

 

30

DISCLAIMER

 

32

FROM THE CEO AND CFO

 

33

THE ECONOMIC CONTEXT

 

34

PERFORMANCE OF CEMIG’S SHARES

 

37

CAPITAL MARKETS

 

38

CEMIG’S LONG-TERM RATINGS

 

38

ADOPTION OF IFRS

 

39

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

 

40

THE ELECTRICITY MARKET OF CEMIG D

 

43

THE ELECTRICITY MARKET OF CEMIG GT

 

44

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION — MWH

 

45

CONSOLIDATED OPERATIONAL REVENUE

 

45

SECTOR AND SIMILAR CHARGES ON REVENUE

 

47

OPERATIONAL COSTS AND EXPENSES

 

47

FINANCIAL REVENUE (EXPENSES)

 

50

INCOME TAX AND THE SOCIAL CONTRIBUTION TAX

 

50

REGULATORY ASSETS AND LIABILITIES

 

51

EBITDA

 

52

DEBT

 

53

ACQUISITIONS

 

55

DIVIDENDS

 

56

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

 

57

FINANCIAL STATEMENTS SEPARATED BY COMPANY

 

61

TRANSMISSION: ANNUAL PERMITTED REVENUE (‘RAP’)

 

64

GENERATING PLANTS

 

65

APPENDICES

 

66

ELECTRICITY LOSSES IN 1Q14

 

66

 

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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 originate 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.

 

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From the CEO and CFO

 

Cemig’s Chief Executive Officer, Mr. Djalma Bastos de Morais, says:

 

“The results for second quarter 2014 are in line with the guidelines laid down in our Long-term Strategic Plan. Our strategy of sustainable growth has been successfully translated into numerous transactions that focus on providing stockholders with maximized returns on their investments, while at all times satisfying all the parties involved. One such important transaction is the increase in our equity interest in Gasmig — which is part of our strategy of creating, in partnership with Gás Natural Fenosa, the new company Gás Natural do Brasil S.A., which will be a new platform for consolidation of assets and investments in natural gas projects. Another is our purchase of a 50% interest in the Jacobina Wind Power Project — a joint enterprise with Renova for construction of 25 wind farms in Bahia, through which we are structuring the group for the challenges of the electricity sector. As well as growing through mergers and acquisitions, we continue to invest strongly in our concession area.”

 

Cemig Chief Financial and Investor Relations Officer Luiz Fernando Rolla comments:

 

“In this second quarter of 2014 Cemig has continued to produce robust cash flow, as a result of our diversified portfolio of businesses, and our high level of operational efficiency. Ebitda — a measure of operational cash flow — was R$ 1.6 billion, or 25.9% more than in second quarter 2013. Net profit in this quarter is R$ 741 million, and we have a cash position of R$ 3.2 billion. Our solid balance sheet ensures execution of our Long-term Strategic Plan, and the success of the path that we take under its guidance — this success is reflected in the prices of our shares, which have outperformed the Bovespa index and the index of the Brazilian electricity sector.”

 

On the following pages, we present the highlights of this quarter.

 

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The economic context

 

The US economy has a strong influence on the economy of Brazil — and US indicators can lead to significant changes in the policies adopted by Brazil’s government. Analysts’ views of the US economy early this year were pessimistic, since US economic growth had been around 2% p.a. for a significant period of time — and a severe winter caused a contraction of 2.9% in US GDP in the first quarter — its worst performance in five years. On the other hand analysts now believe there is a possibility of US economic growth above 3% this year, and improvement in the US job market.

 

With inflation and employment figures continuing to be unsatisfactory, we now expect the US Federal Reserve to keep the basic interest rate low for longer than many analysts previously expected. This limits the Fed’s room for maneuver, but encourages hiring and tends to stabilize prices.

 

An optimistic analysis by two economists of the San Francisco Federal Reserve expects US inflation to continue below the target of 2% until the end of 2015. Using a model known as the Phillips curve, they forecast persistently low inflation, and unemployment falling to 5.5% at the end of 2015. Charles Evans, Chairman of the Chicago Federal Reserve, also said he considered these figures to be reasonable forecast targets.

 

The US equities market closed higher in the quarter, and in the half-year. This was the first time the US bond market has posted two consecutive quarters of falling interest rates since 2012. Investors bought US debt securities due to the overall instability of the global economy, geopolitical tensions, and interest rates at historic lows around the world. Also, the bonds of the US are offering a higher return than the interest rates offered by bonds of comparable governments, such as Germany and Japan.

 

In the international market, the dollar has risen against most of the emerging currencies, after reported data showed the US real estate sector strengthening. The US currency appreciated 0.70% against the Real in June, closing the month at R$ 2.2099/US$. Even so it was down 1.38% at the close of July, and down 6.19% year to date.

 

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In Europe: Although the GDP of the Eurozone has grown for four successive quarters, its investment and activity have not yet returned to pre-crisis levels. According to the IMF, recovery of the Eurozone is in progress, but is not strong.

 

The economic scenario in Europe is similar to that of the previous quarter, with a danger of deflation. June was the ninth consecutive month in which inflation was in what ECB President Mario Draghi called the ‘danger zone’, below 1% — at 0.5%, according to Eurostat, the statistics agency of the European Union. In spite of the ECB insisting that there is no risk of deflation, three countries reported falling prices in May.

 

The IMF recommends the ECB should consider adoption of a large-scale program of purchase of securities if inflation remains low. This would aim to produce a significant impact on demand, and thus inflation. Also, it would be necessary to focus on structural reforms and banking reforms in the Union.

 

However, in spite of this overall scenario, the unemployment rate in the Eurozone is at its lowest since 2012 — down from 11.6% in May to 11.5% in June, according to Eurostat. Eurostat estimates that 18,412 million people were unemployed in the Eurozone in June — a reduction of 152,000. The member-states with the lowest unemployment rates are Austria, Germany, and Malta, and at the other end of the scale, those with the highest are Greece and Spain.

 

In the domestic Brazilian context: Indicators of economic activity in the first half of 2014 point to a scenario of low growth. In the second quarter the fiscal situation continued to be under pressure, mainly reflecting the dynamics of prices in the services sector. Average inflation as measured by the Expanded National Consumer Price Index (IPCA) was 0.40% in June, or 0.14 percentage points higher than in June 2013. Over the quarter the basic interest rate — Selic — has remained at 11% p.a., with no stated bias. In this context, the forecast for inflation in full-year 2014 is now higher than in the previous month, and is still above the 4.5% target set by the National Monetary Council (CMN).

 

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Higher inflation reduces the purchasing power of wages, and has negative effects on confidence, and private consumption. The Consumer Confidence Index (ICC) rose by 1.0% from May to June 2014, but is trending downward. At the same time, the business confidence index fell by 3.9% in June, to its lowest level since May 2009.

 

According to the monthly industrial production volume survey (PIM-PF) made by the IBGE (Brazilian Geography and Statistics Institute), industrial activity declined further from April to May (seasonally adjusted), corroborating the weak performance of industrial production — which is already down 4.5% from last October. The IBGE also reports retail sales down 0.4%, reflecting a flat trend in creation of new jobs, and reduction in growth of average real wages — tending to postpone private individuals’ decisions on new debt, affecting the demand for credit and negatively affecting retailers.

 

Brazil’s external accounts behaved well in the first half of 2014. The Brazilian currency appreciated against the dollar by 8% from January to June, with an increase in the stock of international reserves. This was due to higher inflow of foreign capital, in both direct and portfolio investment, while there was a high outflow of funds for Brazilian investment outside Brazil.

 

In Minas Gerais, the growth of the state’s contribution to GDP mainly reflected growth in the volume output of mining (2.9%), and in the total volume of transport and storage (3.4%). The services sector also contributed, in contrast to the construction industry, which was weak by comparison.

 

IBGE reports the unemployment rate in the Metropolitan Region of Belo Horizonte — the number of people unemployed as a percentage of those who are economically active — as 3.9%, or 0.2% lower than in June 2013.

 

In the first half of 2014 total exports from Minas Gerais were up 6.0% compared to the first of 2013. Sectors contributing to this growth were mining, dairy farming and coffee. Further improvement in the state’s economy is expected by the end of the year.

 

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Performance of Cemig’s shares

 

Name 

 

Ticker

 

Currency

 

Close of Dec.
31, 2013

 

Close of June
30, 2014

 

Change %

 

Cemig PN

 

CMIG4

 

R$

 

12.46

 

16.14

 

29.53

 

Cemig ON

 

CMIG3

 

R$

 

12.40

 

15.82

 

27.58

 

ADR PN

 

CIG

 

U$

 

5.37

 

7.61

 

41.71

 

ADR ON

 

CIG.C

 

U$

 

5.48

 

7.38

 

34.67

 

Ibovespa

 

Ibovespa

 

 

51,107

 

53,168

 

4.03

 

IEEX

 

IEEX

 

 

26,250

 

28,133

 

7.17

 

 

Source: Economática.

 

Average daily trading in Cemig’s preferred shares (CMIG4) on the São Paulo exchange was R$ 70.4 million in 2Q14.  This level maintains Cemig as one of the most liquid stocks in Brazil’s electricity sector, and one of the most trading in Brazil’s capital markets.

 

On the NYSE, the ADRs for Cemig’s preferred shares (CIG) traded a total of US$ 2.3 billion in 2Q14 - reflecting recognition by the investor market that Cemig continues to be a global investment option.

 

The Bovespa, index (Ibovespa), the index of the São Paulo stock exchange, rose by 3% in 2Q14, to 53,168 points.  This was an optimistic result, in spite of the outlook for low growth of the Brazilian economy.

 

During this same period, Cemig’s shares significantly outperformed the Brazilian stock index: Cemig’s common shares (Cemig ON) were up 28% in the quarter, and Cemig’s preferred shares (Cemig PN) were up 30% in the quarter.

 

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Capital markets

 

 

In 2014 to August 5. Source: Economática.

 

Cemig’s long-term ratings

 

Cemig’s Brazilian scale long-term credit ratings are unchanged:

 

Rating 

 

Cemig

 

Cemig D

 

Cemig GT

agency

 

Rating

 

Outlook

 

Rating

 

Outlook

 

Rating

 

Outlook

Fitch

 

AA(bra)

 

Negative

 

AA(bra)

 

Negative

 

AA(bra)

 

Negative

S&P

 

BrAA+

 

Stable

 

BrAA+

 

Stable

 

BrAA+

 

Stable

Moody´s

 

Aa2.br

 

Negative

 

Aa1.br

 

Negative

 

Aa1.br

 

Negative

 

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Adoption of IFRS

 

The financial results presented below are prepared in accordance with the new Brazilian accounting rules, which embody a process of harmonization between Brazilian accounting rules and IFRS (International Financial Reporting Standards).

 

PROFIT AND LOSS ACCOUNT

 

Consolidated

 

2Q14

 

2Q13

 

Change %

 

REVENUE

 

4,737,758

 

3,438,990

 

37.77

 

 

 

 

 

 

 

 

 

OPERATIONAL COSTS

 

 

 

 

 

 

 

Electricity purchased for resale

 

(1,869,266

)

(1,301,923

)

43.58

 

Charges for the use of the national grid

 

(164,684

)

(127,867

)

28.79

 

Personnel and managers

 

(305,104

)

(262,802

)

16.10

 

Employees’ and managers’ profit shares

 

(78,602

)

(15,582

)

404.44

 

Post-retirement liabilities

 

(52,979

)

(41,957

)

26.27

 

Materials

 

(104,695

)

(23,740

)

341.01

 

Outsourced services

 

(219,280

)

(249,302

)

(12.04

)

Depreciation and amortization

 

(202,491

)

(184,140

)

9.97

 

Operational provisions

 

(42,040

)

(71,060

)

(40.84

)

Royalties for use of water resources

 

(28,489

)

(28,812

)

(1.12

)

Infrastructure construction cost

 

(212,171

)

(261,057

)

(18.73

)

Others

 

(104,768

)

(90,245

)

16.09

 

TOTAL COST

 

(3,384,569

)

(2,658,487

)

34.30

 

 

 

 

 

 

 

 

 

Gain (loss) in subsidiaries by equity method

 

21,227

 

84,424

 

(74.86

)

Unrealized profit

 

 

(80,959

)

 

Gain on disposal of shares in TBE

 

 

284,298

 

 

 

 

 

 

 

 

 

 

EBITDA

 

1,576,907

 

1,252,406

 

25.91

 

 

 

 

 

 

 

 

 

Profit before Financial revenue (expenses) and taxes

 

1,374,416

 

1,068,266

 

28.66

 

 

 

 

 

 

 

 

 

Financial revenues

 

39,423

 

144,450

 

(72.71

)

Financial expenses

 

(317,004

)

(296,036

)

7.08

 

Pretax profit

 

1,096,835

 

916,680

 

19.65

 

 

 

 

 

 

 

 

 

Current and deferred income tax and Social Contribution tax

 

(355,961

)

(299,442

)

(18.87

)

NET PROFIT FOR THE PERIOD

 

740,874

 

617,238

 

20.03

 

 

 

 

 

 

 

 

 

Non-recurring

 

 

 

 

 

 

 

Unrealized profit

 

 

80,959

 

 

Gain on disposal of shares in TBE

 

 

(187,637

)

 

NET PROFIT FOR THE PERIOD

 

740,874

 

510,560

 

45.11

 

 

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Table of Contents

 

Cemig’s consolidated electricity market

 

The Cemig Group(1) sells electricity through its wholly-owned subsidiaries Cemig Distribuição (Cemig Distribution, referred to as “Cemig D”), Cemig Geração e Transmissão (Cemig Generation and Transmission, or “Cemig GT”), and Horizontes Energia, Termelétrica Ipatinga, Sá Carvalho, Termelétrica de Barreiro, Cemig PCH, Rosal Energia and Cemig Capim Branco Energia.

 

Our total for sales in Cemig’s consolidated electricity market comprises sales to:

 

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

 

(II)                  Free Consumers both in 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;

 

(IV)             Distributors, in the Regulated Market (Ambiente de Contratação Regulada, or ACR); and

 

(V)                 the wholesale trading chamber (Câmara de Comercialização de Energia Elétrica, or CCEE) ( — eliminating transactions between companies of the Cemig Group).

 

The total volume of electricity sold by the Cemig group in the first six months of 2014 was 34,673 GWh, or 11.2% more than in the first half of 2013.

 

Sales of electricity to final consumers totaled 24,205 GWh, or 10.4% more than in first half 2013.

 

The number of clients billed by the Cemig Group in June 2014 was 7,901,218 — an increase of 3.5% over the number at the end of June 2013.

 

This chart shows the breakdown of final consumers of the Cemig Group by consumer category:

 

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Total consumption of electricity (MWh) - changes

 

The volume of electricity sold to final consumers of Cemig in 2Q14 was 3.93% higher than in 2Q13:

 

 

 

 

MWh

 

Change

 

Average
price 
2Q14

 

Average
price 
2Q13

 

Consolidated

 

2Q14

 

2Q13

 

%

 

R$

 

R$

 

Residential

 

2,459,539

 

2,383,392

 

3.19

 

524.95

 

474.90

 

Industrial

 

6,525,802

 

5,683,850

 

14.81

 

184.72

 

172.29

 

Commercial, Services and Others

 

1,576,085

 

1,503,197

 

4.85

 

440.86

 

388.75

 

Rural

 

844,996

 

702,258

 

20.33

 

269.09

 

242.87

 

Public authorities

 

224,262

 

217,861

 

2.94

 

432.17

 

378.68

 

Public illumination

 

313,329

 

320,156

 

(2.13

)

279.38

 

242.15

 

Public service

 

288,676

 

305,469

 

(5.50

)

302.31

 

260.05

 

Subtotal

 

12,232,689

 

11,116,183

 

10.04

 

301.69

 

279.37

 

Own consumption

 

9,286

 

8,750

 

6.13

 

 

 

Wholesale supply to other concession holders (*)

 

3,224,840

 

3,775,989

 

(14.07

)

135.81

 

119.65

 

Total

 

15,486,815

 

14,900,922

 

3.93

 

270.20

 

237.12

 

 


(*) Includes Regulated Market Electricity Sales Contracts (CCERAs) and ‘bilateral contracts’ with other agents.

 

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These comments describe the main changes between the two years in each consumer category:

 

Residential:

 

Residential consumption, at 12,233 GWh, was 16.22% of the total electricity sold by Cemig in 2Q14, and was 3.19% higher in absolute terms than in 2Q13.

 

The level of consumption in this category is associated with the addition of 46,268 new consumers in the figure for 2Q14.

 

Industrial:

 

 

 

MWh

 

Change

 

Average
price 
2Q14

 

Average
price 
2Q13

 

 

 

2Q14

 

2Q13

 

%

 

R$

 

R$

 

Cemig GT (generation and transmission)

 

5,260,970

 

4,437,693

 

18.55

 

153.38

 

140.23

 

Cemig D (Distribution)

 

1,022,283

 

1,018,347

 

0.39

 

454.17

 

330.16

 

Other subsidiaries

 

242,549

 

227,810

 

6.47

 

59.98

 

91.24

 

Total

 

6,525,802

 

5,683,850

 

14.81

 

184.72

 

172.29

 

 

Electricity used by captive clients and the electricity transported to free clients in the industrial category, at 6,526 GWh in 2Q14, was 42.14% of the total of electricity distributed in the period, and was 14.81% higher by volume than in 2Q13.

 

The behavior of this consumer category is associated with the level of industrial activity in Minas Gerais: the total in this consumption category has been increasing as the number of Free Consumers has risen.

 

Commercial:

 

 

 

MWh

 

Change

 

Average
price 
2Q14

 

Average
price 
2Q13

 

 

 

2Q14

 

2Q13

 

%

 

R$

 

R$

 

Cemig GT (generation and transmission)

 

81,921

 

74,957

 

9.29

 

228.16

 

213.50

 

Cemig D (Distribution)

 

1,483,945

 

1,418,035

 

4.65

 

454.17

 

399.39

 

Other subsidiaries

 

10,219

 

10,205

 

0.14

 

213.82

 

196.96

 

Total

 

1,576,085

 

1,503,197

 

4.85

 

440.86

 

388.75

 

 

The commercial consumer category accounted for 10.18% of Cemig’s electricity sales in 2Q14, totaling 1,576 GWh in the quarter — this was 4.85% higher than in 2Q13.

 

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Rural:

 

Consumption by the rural consumer category, at 844,996 MWh, was 5.46% of the total electricity sold by Cemig, and 17.52% higher by volume than in 2Q13.

 

The higher consumption by this category mainly reflects significant demand for electricity for irrigation, due to atypical climate — lower rainfall levels in the rainy season in this quarter.

 

Other consumer categories:

 

Total consumption by the other consumer categories — Public Authorities, Public Illumination, Public Services, and Cemig’s own consumption — totaling 5.40% of the total electricity transacted, was 1.96% lower than in 2Q13.

 

The electricity market of Cemig D

 

The concession area of Cemig D (Cemig Distribution — Cemig Distribuição S.A.), approximately 97% of the Brazilian state of Minas Gerais, totals an area of 567,478 km². Cemig D has four electricity concessions in the state, under four separate concession contracts (West, East, South, and North).

 

Electricity billed to captive clients and electricity transported for Free Clients and distributors with access to Cemig D’s networks totaled 11,132 GWh in 2Q14.

 

In June 2014 Cemig billed 7,901,103 consumers, 3.53% more than in June 2013. Of this total, 7,900,686 are captive consumers, and 417 are Free Clients that use Cemig D’s distribution network.

 

The 6.7% year-on-year increase in the captive market in the first half of 2014 reflects two factors that are temporary: (i) high temperatures with low rainfall; and (ii) the billing cycle of low-voltage consumers, which had 1.3 more days’ billing than the first half of 2013.

 

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The electricity market of Cemig GT

 

The figure for total sales to the market of Cemig GT comprises sales made:

 

(I)                 in the Free Market (Ambiente de Contratação Livre or ACL) to Free Clients, either located in Minas Gerais or in other States; and to other generation companies and traders;

 

(II)            in the Regulated Market (ACR), to distributors; and

 

(III)       in the wholesale market — through the Electricity Trading Chamber (CCEE).

 

The total volume of electricity transacted by Cemig GT in 2Q14 was 10,008 GWh, or 12.9% more than in 2Q13.

 

The number of clients billed by Cemig GT in June 2014 was 513, or 26.0% more than in June 2013. Of this total, 465 are industrial and commercial clients, located in the Minas Gerais and in other states.

 

The volume of electricity sold to Free Clients totaled 5,342,891 GWh in 2Q14, or 18.4% more than 2Q13 — mainly reflecting addition of new clients by Cemig GT.

 

Sale of electricity to other agents in the sector, in the Free Market, totaled 1,990,879 MWh, which was 189.19% more than in 2Q14. The increase reflects Cemig taking advantage of commercial opportunities, which resulted in new contracts in the short-term market.

 

The year-on-year reduction of 60.6% in sales in the Regulated Market was the result of termination of contracts related to the 2005 Regulated Market Auction — which were for the period 2006 through 2013.

 

Sales in the CCEE were 191.68% higher, due to settlement of a higher volume of available supply from Cemig GT than in 2Q13.

 

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Physical totals of transport and distribution — MWh

 

 

 

MWh

 

Change

 

R$ ‘000

 

2Q14

 

2Q13

 

%

 

Total energy carried

 

12,453,867

 

12,610,807

 

(1.24

)

Electricity transported for distributors

 

85,287

 

73,886

 

15.43

 

Electricity transported for free clients

 

4,322,194

 

4,809,596

 

(10.13

)

Own load

 

8,046,386

 

7,727,325

 

4.13

 

Consumption by captive market

 

6,646,316

 

6,374,267

 

4.27

 

Losses in distribution network

 

1,400,070

 

1,353,058

 

3.47

 

 

Consolidated operational revenue

 

Revenue from supply of electricity:

 

Total revenue from supply of electricity in 2Q14 was R$ 4.184 billion, 18.43% higher than in 2Q13 (R$ 3.533bn).

 

Final consumers

 

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, in 2Q14 was R$ 3.744 billion — this was 21.50% more than the figure for 2Q13, of R$ 3.081 billion.

 

The main factors in revenue in 2Q14 were:

 

·                  The quantity of electricity supplied to final consumers was 10.04% higher year-on-year.

 

·                  Annual tariff adjustment, with average effect on consumer tariffs of 2.99%, effective from April 8, 2013 (full effect in 2014).

 

·                  Annual tariff adjustment, with average effect on consumer

 

·                  tariffs of 14.76%, effective from April 8, 2014.

 

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R$

 

Change

 

Average
price 
2Q14

 

Average
price 
2Q13

 

Change

 

 

 

2Q14

 

2Q13

 

%

 

R$

 

R$

 

%

 

Residential

 

1,291,127

 

1,131,871

 

14.07

 

524.95

 

474.90

 

10.54

 

Industrial

 

1,205,424

 

979,298

 

23.09

 

184.72

 

172.29

 

7.21

 

Commercial, Services and Others

 

694,834

 

584,369

 

18.90

 

440.86

 

388.75

 

13.40

 

Rural

 

227,378

 

170,554

 

33.32

 

269.09

 

242.87

 

10.80

 

Public authorities

 

96,920

 

82,500

 

17.48

 

432.17

 

378.68

 

14.13

 

Public illumination

 

87,538

 

77,525

 

12.92

 

279.38

 

242.15

 

15.38

 

Public service

 

87,271

 

79,436

 

9.86

 

302.31

 

260.05

 

16.25

 

Subtotal

 

3,690,492

 

3,105,553

 

18.84

 

301.69

 

279.37

 

7.99

 

Supply not yet invoiced, net

 

53,399

 

(24,106

)

 

 

 

 

Wholesale supply to other concession holders (*)

 

440,692

 

451,791

 

(2.46

)

135.81

 

119.65

 

13.51

 

Total

 

4,184,583

 

3,533,238

 

18.43

 

270.20

 

237.12

 

13.95

 

 


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

 

Revenue from transactions in the Wholesale Electricity Trading Chamber (CCEE)

 

Revenue from electricity sales on the CCEE in 2Q14 was R$ 940,377, compared to R$ 261,641 in 2Q13 — an increase of 259.41%. The change reflects a higher availability of electricity for settlement in the CCEE in the period, associated within an average spot price (Preço de Liquidação de Diferenças, or PLD) 172.25% higher, at R$ 682.20/MWh, in 2Q14, than in 1Q13 (R$ 250.58/MWh).

 

Transmission indemnity revenue

 

In June 2014 the Company reversed a provision of R$ 63,315 made in 2012 for the investments in transmission made over the period of May through December 2012 which were included in the Valuation Opinion received by Aneel on July 31, 2014. This provision was made at the time due to uncertainties related to the process of indemnity to be made for the assets relating to that period, in light of the option chosen by the Company under Law 12783/13.

 

Other operational revenues

 

The Company’s Other operational revenues line was 42.14% higher in 2Q14 than 2Q13 (R$ 351 million, vs. R$ 247 million), mainly due to two factors:

 

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·                  Revenue from funding to subsidize low-income consumers and to offset the subsidies in the Tariff for Use of the Distribution System (TUSD) were R$ 20 million higher; and

 

·                  A higher amount was permitted by the CCEE in 2Q14 than in 2Q13 for omissions from electricity invoices of thermal-sourced electricity purchases, due to a lower level of generation than specified by the National System Operator (Operador Nacional do Sistema Elétrico, ONS).

 

Sector and similar charges on revenue

 

The sector charges that are effectively deductions from revenue totaled R$ 1.364 billion in 2Q14, 13.73% more than in 2Q13 (R$ 1.200bn).  The figure in this quarter was mainly charges calculated as a percentage of total billing — so that their year-on-year variations were largely in line with the variations in revenue.

 

Operational costs and expenses

 

Operational costs and expenses, excluding Financial revenue (expenses), totaled R$ 3.385 billion in 2Q14, 27.31% more than in 2Q13 (R$ 2.658 billion).

 

 

The following paragraphs comment on the main variations:

 

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Electricity bought for resale

 

The expense on electricity bought for resale in 2Q14 was R$ 1.869 billion, which compares to R$ 973 billion in 2013, an increase of 43.55%. The main factors in the increase:

 

·                  Involuntary exposure of the Company to the spot market in 2014, together with the higher price of electricity in the wholesale market, due to the low level of reservoirs of the hydroelectric plants. As a result the Company had an expense of R$ 522 million in 2Q14, compared to R$ 51 million in 2Q13.

 

·                  Higher volume of purchase of electricity in the Free Market in 2Q14 - the total was R$ 144 million higher - due to higher trading and sale activity by Cemig GT, associated with the higher cost of acquisition due to the higher cost of electricity in the Brazilian market.

 

·                  Expense of acquisition of electricity from Itaipu Binacional 19.75% lower, at R$ 198 million in 2Q14, compared to R$ 247 million in 2Q13, due among other factors to the volume of electricity purchased being 29.64% lower, at 1,556,946 MWh in 2Q14, vs. 2,212,830 MWh in 2Q13. This expense is expressed in US dollars, and the affect of the reduction was partially mitigated by the higher value of the dollar against the Real in 2Q14 than in 2Q13: The average dollar exchange rate on invoices in 2Q14 was R$ 2.214/US$, a variation of 6.34% from R$ 2.082/US$ in 2Q13.

 

Charges for use of the transmission network

 

Charges for use of the transmission network totaled R$ 165 million in 2Q14, a reduction of 28.79%, vis-à-vis R$ 128 million in 2Q13.

 

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Personnel (excluding voluntary retirement programs and costs of personnel transferred to works in progress)

 

 

 

2Q14

 

2Q13

 

Δ%

 

Remuneration and salary-related charges and expenses

 

269,986

 

265,375

 

1.74

 

Supplementary pension contributions — Defined-contribution plan

 

19,508

 

19,097

 

2.15

 

Assistance benefits

 

32,522

 

30,755

 

5.75

 

 

 

322,016

 

315,227

 

2.15

 

 

The total expense on personnel (excluding voluntary retirement programs and costs of personnel transferred to works in progress) was 2.15% higher than in 2Q13, reflecting the 6.85% employee wage increase agreed in the 2013-14 Collective Work Agreement in November 2013.

 

The total number of employees was 2.88% higher, at 7,962, on June 30, 2014 than at the end of June 2013 (7,739).

 

Number of employees

 

 

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Table of Contents

 

Financial revenue (expenses)

 

 

Cemig reports net financial expenses of R$ 278 million in 2Q14, compared to net financial expenses of R$ 152 million in 2Q13.

 

On March 25, 2014, the Director-General of Aneel issued Director-General’s Dispatch 729, which partially granted the Company’s requests for reconsideration in the Administrative Appeal filed by Cemig D against Dispatch 689/2013 — approving a new value for the Remuneration Base of Assets (Base Regulatória de Remuneração, or BRR) of the Company, with an increase of R$ 337 million in the net amount, to R$ 5.849 billion.

 

The Company has analyzed the result of the judgment and the additional possibilities for challenging it. As a result of this analysis it has decided to adjust its amount for the Remuneration Base of Assets in 2Q14 to the figure approved by Aneel, to reflect acceptance of the judgment. The effect of this was reversal of an updating of Financial assets of the concession, in the amount of R$ 110 million. This was recognized with a counterpart in Financial revenue (expenses).

 

Income tax and the Social Contribution tax

 

In 2Q14 Cemig reported income tax and Social Contribution tax totaling R$ 356 million, on reported pre-tax profit of R$ 1.097 billion, representing a percentage rate of 32.45%.

 

In 2Q13, the expense on income tax and the Social Contribution tax was R$ 299 million, on pre-tax profit of R$ 917 million, representing a rate of 32.67%.

 

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Table of Contents

 

Regulatory assets and liabilities

 

Following the alignment of Brazilian accounting practices with IFRS, as from 2010 regulatory assets and liabilities are no longer recorded in the Company’s financial statements. They are recognized in the profit and loss account of a year only after their actual inclusion in the Company’s tariff.

 

This table shows the effects that regulatory assets and liabilities would have had if they had been recognized in the Company’s financial statements:

 

STATEMENT OF FINANCIAL POSITION
R$ ‘000 

 

Amounts already
included in tariff
increases

 

Amounts to be included in
next tariff adjustments

 

Jun. 30,
2014

 

Dec. 30,
2013

 

Assets

 

1,156,229

 

969,139

 

2,125,368

 

1,307,970

 

Liabilities

 

(850,518

)

(511,386

)

(1,361,904

)

(963,869

)

Regulatory gain by the equity method gain

 

 

 

 

 

116,309

 

76,899

 

 

 

305,711

 

457,753

 

879,773

 

421,000

 

 

R$ ‘000 

 

Jun. 30, 2014

 

Dec. 30, 2013

 

Assets

 

 

 

 

 

Prepaid expenses — CVA (1)

 

2,030,109

 

1,257,729

 

Reduction of Tariff for Use of Transmission and Distribution Systems

 

 

26,096

 

Discounts for irrigation clients

 

 

4,913

 

Other regulatory assets

 

95,259

 

19,232

 

 

 

2,125,368

 

1,307,970

 

Equity method gains (losses) arising from regulatory assets and liabilities

 

116,309

 

76,899

 

Deferred income tax and Social Contribution tax

 

(296,530

)

(128,556

)

 

 

1,945,147

 

1,256,313

 

Liabilities

 

 

 

 

 

Regulatory liabilities — CVA (1)

 

(1,358,144

)

(950,346

)

Other regulatory liabilities

 

(3,760

)

(13,523

)

 

 

(1,361,904

)

(963,869

)

 

 

583,243

 

292,444

 

 


(1) ‘Portion A Costs Variation Compensation Account’ (CVA).

 

The net effects of the Company’s regulatory assets and liabilities in 2Q14, if they had been recognized, would have been as follows:

 

R$ ‘000  

 

2Q14

 

2Q13

 

Profit (loss) for the period

 

576,553

 

617,238

 

Operational profit arising from regulatory assets and liabilities

 

485,301

 

105,110

 

Net financial revenue (expenses) arising from regulatory assets and liabilities

 

610

 

16,633

 

Equity method gains (losses) arising from regulatory assets and liabilities

 

46,242

 

25,572

 

Income tax and Social Contribution on regulatory assets and liabilities

 

(165,209

)

(41,392

)

Net profit for the period taking into account regulatory assets and liabilities

 

943,497

 

723,161

 

 

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REGULATORY EBITDA — R$ million

 

2Q14

 

2Q13

 

Change %

 

Net profit for the period taking Regulatory assets and liabilities into account

 

943,497

 

723,161

 

30.47

 

+ Expense on income tax and Social Contribution tax

 

436,520

 

340,834

 

28.07

 

+ Financial revenue (expenses)

 

276,971

 

134,953

 

105.23

 

+ Amortization

 

202,491

 

184,140

 

9.97

 

= EBITDA

 

1,859,479

 

1,383,088

 

34.44

 

 

EBITDA

 

Cemig’s consolidated Ebitda in 2Q14 was 25.91% higher than in 2Q13:

 

Ebitda — R$ ‘000 

 

2Q14

 

2Q13

 

Change %

 

Profit (loss) for the period

 

740,874

 

617,238

 

20.03

 

+ Income tax and Social Contribution tax

 

355,961

 

299,442

 

18.87

 

+ Net financial revenue (expenses)

 

277,581

 

151,586

 

83.12

 

+ Amortization

 

202,491

 

184,140

 

9.97

 

= EBITDA

 

1,576,907

 

1,252,406

 

25.91

 

 

 

 

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Consolidated Ebitda was 25.91% higher, year-on-year, mainly due to revenue 37.77% higher (this in turn had a large component of revenue from transactions on the CCEE — the wholesale market), partially offset by operational costs and expenses 28.60% higher (excluding the effects of depreciation and amortization).  Ebitda margin was 36.42% in 2Q13, and 33.74% in 2Q14.

 

DEBT

 

 

Cemig’s consolidated total debt at June 30, 2014 was R$ 11.554 billion, 22.17% less than at December 31, 2013.

 

 

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ACQUISITIONS

 

Strategy: creation of Gás Natural Brasileiro (“GNB”)

 

On June 16, 2014, Cemig signed agreements with Gas Natural Fenosa (“GNF”) — an international company operating in gas and electricity — formalizing an association for the creation of the company Gás Natural do Brasil S.A. (“GNB”), which will be a platform for consolidation of assets, and investment, in natural gas projects.

 

As part of the strategy of creation of the new company, on July 21, 2014 Cemig signed a share purchase agreement with Petrobras (Petróleo Brasileiro S.A.) (‘the Share Purchase Agreement’) for acquisition of the 40% equity interest held by the Petrobras subsidiary Gaspetro in Gasmig (Companhia de Gás de Minas Gerais). This has been approved by the Board of Directors of Cemig.

 

The amount to be paid for the acquisition is R$ 600 million. The transaction is subject to certain usual conditions precedent, including approval by the Brazilian monopolies authority (Conselho Administrativo de Defesa Econômica — CADE), and consent from the State of Minas Gerais, the grantor of Gasmig’s gas distribution concession.

 

http://cemig.infoinvest.com.br/ptb/11576/FatoRelevante_Aumento_Participao_Gasmig_por.pdf

 

Interests in wind farms

 

Cemig Geração e Transmissão S.A. (“Cemig GT”) signed agreements with Renova Energia S.A. (‘Renova’) to acquire a 50% interest in the project to build 25 wind farms with total installed generation capacity of 676.2 MW in the municipality of Jacobina, in the Brazilian State of Bahia — ‘the Jacobina Project’. The option to participate in this project was a condition of the winning tender in the auction held by Renova Comercializadora and won by Cemig GT on February 7, 2014.

 

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The value of the acquisition will be a maximum of R$ 113,450 (one hundred thirteen million four hundred fifty thousand Reais), which refers to 50% of the amounts of the advances on contracts already signed by Renova, with monetary updating by the variation resulting from application of the CDI Rate (the Brazilian Interbank CD rate) from the date of disbursement by Renova up to the date of payment by Cemig. From the date of the acquisition, Cemig and Renova will share the future investment in the Jacobina Project in the proportion of their equity ownership in the company.

 

http://cemig.infoinvest.com.br/ptb/11570/FatoRelevante_ParticipaoZeus_por.pdf

 

DIVIDENDS

 

Cemig’s dividend policy is that 50% of the net profit will be distributed as obligatory dividend to the Company’s stockholders, subject to the other provisions of the By-laws, and the applicable legislation; and the balance, after any retention specified in a capital and/or investment budget prepared by Cemig’s management, which complies with the Long-term Strategic Plan and the dividend policy stated in it, and has been duly approved, will be applied to constitute a profit reserve to be used for distribution of extraordinary dividends, up to the maximum limit specified by law.

 

Without prejudice to the obligatory dividend, every two years Cemig will use this profit reserve for distribution of extraordinary dividends, up to the limit of available cash.

 

Cemig’s Board of Directors may declare interim dividends, in the form of Interest on Equity, on account of retained earnings, profit reserves or profit reported in half-yearly or interim balance sheets.

 

The table below shows the history of our distribution of stockholder corporate action payments over the last five years.

 

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Data of approval 

 

Type

 

Amount (R$) per share

 

June 27, 2014

 

Extraordinary dividend

 

1.35

 

April 30, 2014

 

Dividend

 

0.89

 

December 05, 2013

 

Interest on Equity

 

0.55

 

April 30, 2013

 

Dividend

 

1.43

 

December 20, 2012

 

Interest on Equity

 

1.99

 

December 20, 2012

 

Extraordinary dividend

 

1.88

 

April 27, 2012

 

Dividend

 

1.90

 

December 9, 2011

 

Extraordinary dividend

 

1.25

 

April 29, 2011

 

Dividend

 

1.75

 

December 16, 2010

 

Extraordinary dividend

 

1.32

 

April 29, 2010

 

Dividend

 

1.50

 

 

Cemig’s dividend yield, shown below, illustrates its commitment to seek business strategies that ensure an adequate return for stockholders.

 

 

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

 

 

 

CEMIG — Generation portfolio, MW*

 

Stage

 

Hydroelectric 
plants

 

Small 
hydroelectric 
plants

 

Wind 
power

 

Solar

 

Thermal

 

TOTAL

 

In operation

 

6,954

 

259

 

70

 

1

 

184

 

7,468

 

Under construction / contracted

 

1,177

 

29

 

153

 

1

 

 

1,360

 

In development

 

7,270

 

208

 

1,052

 

15

 

1,500

 

10,044

 

Total

 

15,400

 

497

 

1,274

 

17

 

1,684

 

18,872

 

 


*The figures refer only to the direct or indirect equity interest held by Cemig, on June 30, 2014.

 

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Highlights of second quarter 2014:

 

Santo Antônio hydro plant:

· startup of two rotors,

· acquisition by Cemig of interest in SAAG

 

The Santo Antônio hydroelectric plant, in the municipality of Porto Velho, in Brazil’s northern state of Rondônia, comprises 50 generator rotors with total capacity of 3,568 MW, and average assured physical offtake of 2,424 MW. Currently 28 of these units are in commercial operation — providing a total of approximately 2,000 MW. The other 22 generation units are under construction, with completion scheduled for July 2016.

 

On June 6, 2014 a transaction was completed to transfer 83% of the share capital of SAAG Investimentos to FIP Melbourne, in which Cemig GT and private pension fund entities are unit holders. SAAG Investimentos owns 12.4% of the Santo Antônio hydroelectric plan.

 

Cemig’s directly-held equity interest in the plant is 10%.

 

Belo Monte hydroelectric plant: under construction

 

The Belo Monte hydro plant, in the municipality of Altamira in the northern Brazilian state of Pará, comprises 24 generation rotors with total capacity for 11,233 MW. Its assured offtake power level is 4,571 average MW. The timetable for startup of the 24 rotor units covers the period February 2015 to January 2019. The sum of Cemig’s direct and indirect equity interests in the project is 8.12%.

 

Guanhães Energia: 4 Small Hydro Plants — under construction

 

The holding company Guanhães Energia has the authorization to build four small hydro plants (PCHs) in the municipalities of Virginópolis and Dores de Guanhães, in the state of Minas Gerais: Fortuna II (9 MW), Senhora do Porto (12 MW), Jacaré (9 MW)

 

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and Dores de Guanhães (14 MW). The total installed capacity is thus 44 MW. The offtake power guarantee level is 25 average MW. Scheduled start dates for the four PCHs range from November 2014 through April 2015. Cemig has a total direct and indirect equity interest of 65.56%.

 

Alto Sertão II wind power complex — under construction

 

The Alto Sertão II wind complex comprises a group of 6 and a group of 9 wind farms, built under contracts won, respectively, at the ‘Reserve’ Auction (Leilão de Reserva, or LER) of 2010 and the ‘A—3’ Auction of 2011. They are in the state of Bahia in Brazil’s Northeast, with aggregate installed capacity of 386.1 MW, and guaranteed offtake level of 181.6 average MW. In a recent development, the start of the period for the 15 wind farms to start operation was postponed to coincide with the availability of the transmission lines for outflow of their production. The current forecasts for initial operation dates of the farms built under the results of the 2011 A—3 auction are between September 2014 and May 2015. Cemig owns an equity interest, held indirectly, of 7.10%.

 

The Alto Sertão III wind power complex — contracted

 

Alto Sertão III is a complex of 46 wind farms, also in the state of Bahia, which placed their output on the Free Market or the Regulated Market, at the A—5 auction of 2012 and the LER (‘Reserve’) Auction of 2013. They have aggregate installed capacity of 741.5 MW, and physical guarantee offtake level of 363.2 average MW. Scheduled startup dates of the 46 wind farms are over the period September 2015 through January 2017. Cemig has an indirectly held equity stake of 7.10%.

 

Wind farms contracted at the 2013 A—5 auction

 

A total of 17 wind farms in Bahia were contracted at the 2013 A—5 auction, for total installed generation capacity of 355.5 MW, and physical offtake guarantee level of 183.9 average MW. This supply was sold for an average price of R$ 118.75/MWh, undergoing monetary updating from January 2014. The scheduled date for start of commercial operation is May 2018. Cemig has an equity interest, held indirectly, of 7.10%.

 

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Sale of contracted supply by Renova to Cemig GT in the Free Market — contracted

 

On March 21, 2014, Renova Energia placed a contract to sell supply of 295 average MW up to the year 2031. The total installed capacity involved is 676.2 MW, and Cemig GT owns an option to acquire a stockholding of up to 50%. Scheduled startup date for commercial operation is September 2018. Cemig has an indirectly held equity stake of 7.10%.

 

Sete Lagoas experimental solar plant — under construction

 

The experimental photovoltaic solar generation plant at Sete Lagoas, Minas Gerais, has installed capacity for 3.3 MWp. Works began in March 2013 and are scheduled for completion in December 2014.

 

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FINANCIAL STATEMENTS SEPARATED BY COMPANY

 

FINANCIAL STATEMENTS SEPARATED BY COMPANY AT JUNE 30, 2014

 

 

 

HOLDING
COMPANY

 

CEMIG GT

 

CEMIG D

 

CEMIG
TELECOM

 


CARVALHO

 

ROSAL

 

OTHER
SUBSIDIARIES

 

ELIMINATIONS
/ TRANSFERS

 

TOTAL,
SUBSIDIARIES

 

TAESA

 

LIGHT

 

MADEIRA

 

GASMIG

 

OTHER
JOINTLY
CONTROLLED
SUBSIDIARIES

 

ELIMINATIONS/
TRANSFERS

 

SUBSIDIARIES
AND JOINTLY-
CONTROLLED
SUBSIDIARIES

 

ASSETS

 

14,338,525

 

12,364,692

 

13,230,895

 

331,302

 

184,744

 

148,656

 

551,610

 

(8,415,176

)

32,735,248

 

4,560,443

 

4,286,301

 

2,229,824

 

1,020,672

 

2,339,783

 

(5,927,657

)

41,244,614

 

Cash and cash equivalents

 

500,860

 

867,549

 

535,070

 

27,048

 

7,644

 

8,128

 

42,478

 

 

1,988,777

 

139,612

 

517,814

 

30,758

 

62,441

 

92,545

 

 

2,831,947

 

Accounts receivable

 

 

1,060,057

 

1,787,961

 

 

5,472

 

3,592

 

34,583

 

(24,492

)

2,867,173

 

89,332

 

532,433

 

23,423

 

62,436

 

32,336

 

(7,409

)

3,599,724

 

Securities — cash investments

 

364,025

 

299,404

 

432,317

 

1,344

 

25,971

 

11,707

 

144,639

 

 

1,279,407

 

88,093

 

 

 

41,655

 

57,523

 

 

1,466,678

 

Taxes

 

488,338

 

117,729

 

1,548,891

 

28,203

 

558

 

102

 

1,974

 

 

2,185,795

 

299,980

 

317,958

 

7,951

 

55,404

 

7,095

 

 

2,874,183

 

Other assets

 

752,190

 

314,681

 

1,833,129

 

21,384

 

4,030

 

383

 

44,074

 

(482,345

)

2,487,526

 

56,179

 

410,108

 

153,113

 

158,111

 

142,664

 

(296,285

)

3,111,416

 

Investments / PP&E / Intangible / Financial Assets of Concession

 

12,233,112

 

9,705,272

 

7,093,527

 

253,323

 

141,069

 

124,744

 

283,862

 

(7,908,339

)

21,926,570

 

3,887,247

 

2,507,988

 

2,014,579

 

640,625

 

2,007,620

 

(5,623,963

)

27,360,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

14,338,525

 

12,364,692

 

13,230,895

 

331,302

 

184,744

 

148,656

 

551,610

 

(8,415,176

)

32,735,248

 

4,560,443

 

4,286,301

 

2,229,824

 

1,020,672

 

2,339,783

 

(5,927,657

)

41,244,614

 

Suppliers and supplies

 

6,784

 

247,160

 

1,194,008

 

17,054

 

6,159

 

4,544

 

6,662

 

(38,559

)

1,443,812

 

20,780

 

348,265

 

58,118

 

39,920

 

25,212

 

(8,551

)

1,927,556

 

Loans, financings and debentures

 

 

5,521,853

 

5,929,738

 

28,221

 

 

 

74,017

 

 

11,553,829

 

2,064,071

 

2,216,384

 

1,281,566

 

241,631

 

571,687

 

 

17,929,168

 

Interest on Equity, and dividends

 

1,331,673

 

385,302

 

 

 

30,013

 

18,794

 

20,205

 

(454,314

)

1,331,673

 

2,771

 

128,931

 

 

1,094

 

42,686

 

(175,482

)

1,331,673

 

Post-retirement liabilities

 

128,778

 

571,131

 

1,818,936

 

 

 

 

 

 

2,518,845

 

 

43

 

 

 

 

 

2,518,888

 

Taxes

 

20,847

 

496,437

 

1,161,898

 

10,153

 

40,014

 

1,430

 

30,872

 

 

1,763,651

 

662,090

 

242,057

 

32,270

 

56,499

 

37,348

 

 

2,793,915

 

Other liabilities

 

146,521

 

363,940

 

698,352

 

42,367

 

607

 

671

 

16,706

 

(13,969

)

1,255,195

 

29,346

 

292,201

 

194,671

 

150,185

 

(26,565

)

(19,862

)

1,875,171

 

Stockholders’ equity

 

12,703,922

 

4,778,869

 

2,425,963

 

233,507

 

107,951

 

123,217

 

403,148

 

(7,908,334

)

12,868,243

 

1,781,385

 

1,058,420

 

663,199

 

531,343

 

1,689,415

 

(5,723,762

)

12,868,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT AND LOSS ACCOUNT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operational revenue

 

160

 

4,530,266

 

4,840,189

 

57,411

 

28,511

 

22,707

 

173,067

 

(153,781

)

9,498,530

 

277,157

 

1,278,231

 

109,275

 

395,066

 

107,914

 

(49,362

)

11,616,811

 

Operational costs and expenses

 

(48,322

)

(1,591,500

)

(4,709,725

)

(46,224

)

(13,681

)

(18,354

)

(53,887

)

148,128

 

(6,333,565

)

(61,020

)

(1,140,774

)

(98,706

)

(356,754

)

(73,076

)

28,631

 

(8,035,264

)

Electricity purchased for resale

 

 

(766,790

)

(2,761,716

)

 

(6,999

)

(11,193

)

(27,048

)

75,764

 

(3,497,982

)

 

(823,888

)

(52,972

)

 

(8,069

)

19,069

 

(4,363,842

)

Charges for the use of the national grid

 

 

(131,123

)

(258,837

)

 

 

(1,401

)

(2,673

)

59,808

 

(334,226

)

 

 

(18,443

)

 

(2,597

)

20,657

 

(334,609

)

Gas bought for resale

 

 

 

 

 

 

 

 

 

 

 

 

 

(327,595

)

 

 

(327,595

)

Construction cost

 

 

(37,092

)

(324,149

)

 

 

 

 

 

(361,241

)

(11,560

)

(69,623

)

 

 

(3,455

)

 

(445,879

)

Personnel

 

(19,787

)

(147,403

)

(422,119

)

(6,417

)

(648

)

(780

)

(2,731

)

 

(599,885

)

(19,973

)

(53,456

)

(2,762

)

(7,955

)

(21,723

)

 

(705,754

)

Employee profit shares

 

(7,756

)

(30,113

)

(97,679

)

(717

)

(66

)

(77

)

(1

)

 

(136,409

)

(2,718

)

 

(400

)

 

(98

)

 

(139,625

)

Post-retirement liabilities

 

(5,534

)

(24,078

)

(76,346

)

 

 

 

 

 

(105,958

)

 

 

 

 

 

 

(105,958

)

Materials

 

(58

)

(132,327

)

(24,247

)

(38

)

(255

)

(144

)

(189

)

 

(157,258

)

(10,782

)

(6,351

)

(186

)

(618

)

(135

)

 

(175,330

)

Outsourced services

 

(8,372

)

(67,266

)

(341,886

)

(10,894

)

(1,903

)

(1,580

)

(10,466

)

17,679

 

(424,688

)

(10,736

)

(68,848

)

(3,191

)

(2,029

)

(13,730

)

315

 

(522,907

)

Royalties for use of water resources

 

 

(66,774

)

 

 

(821

)

(781

)

(1,248

)

 

(69,624

)

 

 

(905

)

 

(439

)

 

(70,968

)

Depreciation and amortization

 

(254

)

(139,729

)

(210,387

)

(17,679

)

(2,745

)

(2,190

)

(8,777

)

(2,763

)

(384,524

)

(619

)

(64,557

)

(18,271

)

(10,292

)

(18,221

)

(7,555

)

(504,039

)

Operational provisions

 

5,216

 

(8,273

)

(43,752

)

(12

)

 

(2

)

 

 

(46,823

)

605

 

(25,922

)

 

 

(306

)

 

(72,446

)

Other expenses, net

 

(11,777

)

(40,532

)

(148,607

)

(10,467

)

(244

)

(206

)

(754

)

(2,360

)

(214,947

)

(5,237

)

(28,129

)

(1,576

)

(8,265

)

(4,303

)

(3,855

)

(266,312