6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

Report of foreign private issuer pursuant to rule 13a-16 or 15d-16 of the securities exchange act of 1934

For the month of December 2016

Commission File Number 1-15224

 

 

ENERGY COMPANY OF MINAS GERAIS

(Translation of Registrant’s Name Into English)

 

 

Avenida Barbacena, 1200

30190-131 Belo Horizonte, Minas Gerais, Brazil

(Address of Principal Executive Offices)

 

 

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

Form 20-F  ☒                 Form  40-F   ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper

as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper

as permitted by Regulation S-T Rule 101(b)(7):  ☐

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

Yes  ☐                No   ☒

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

 

 

 


Index

 

Item

  

Description of Items

 

1.

  

 

Summary of Minutes of the 198th Meeting of the Board of Directors Held on June 12, 2014

 

2.   

Summary of Minutes of the 223rd Meeting of the Board of Directors Held on July 17, 2014

 

3.   

Summary of Minutes of the 611th Meeting of the Board of Directors Held on October 30, 2014

 

4.   

Summary of Minutes of the 626th Meeting of the Board of Directors Held on February 25, 2015

 

5.   

Summary of Minutes of the 668th Meeting of the Board of Directors Held on June 29, 2016

 

6.   

Summary of Principal Decisions of the 677th Meeting of the Board of Directors Held on October 31, 2016

 

7.   

Market Announcement Dated November  3, 2016: Reply to CVM Inquiry Letter 517/2016-CVM/SEP/GEA-1,
of November 1, 2016

 

8.   

Summary of Minutes of the 678th Meeting of the Board of Directors Held on November 11, 2016

 

9.   

Market Announcement Dated November 12, 2016: Completion of 20-F Form for 2015

 

10.   

Market Announcement Dated November 14, 2016: Filing of 2015 20-F Form with the SEC

 

11.   

Market Announcement Dated November  18, 2016: Reply to CVM Inquiry Letter 3261/2016-SAE/GAE-2,
of November 17, 2016

 

12.   

Material Announcement Dated November 21, 2016: Capital increase in RME and Lepsa

 

13.   

Market Announcement Dated November 21, 2016: News report published in the media

 

14.   

Material Announcement Dated November 30, 2016: Increase in Stockholding Interest

 

15.   

Summary of Principal Decisions of the 679th Meeting of the Board of Directors Held on December 6, 2016

 

16.   

Market Announcement Dated December  7, 2016: Reply to CVM Inquiry Letter 554/2016-CVM/SEP/GEA-1,
of December 6, 2016

 

17.   

Summary of Principal Decisions of the 680th Meeting of the Board of Directors Held on December  15, 2016

 

18.   

Notice to Stockholders Dated December  15, 2016: Payments of dividends and Interest on Equity: December 29

 

19.   

Convocation and Proposal of Extraordinary General Meeting of Stockholders to be Held on December  20, 2016

 

20.   

Earnings Release: 2015 Results

 

21.   

Earnings Release: 1Q 2016 Results

 

22.   

Earnings Release: 2Q 2016 Results

 

23.   

Earnings Release: 3Q 2016 Results

 

24.   

Earnings Release: 3Q 2016 Presentation

 

25.   

Minutes of the Extraordinary General Meeting of Stockholders Held on December 20, 2016

 

26.   

Notice to Stockholders Dated December 21, 2016: Interest on Equity for 2016

 

27.   

Market Announcement Dated December  21, 2016: Reply to CVM Inquiry Letter 567/2016-CVM/SEP/GEA-1,
of December 20, 2016

 

28.   

Summary of Principal Decisions of the 681st Meeting of the Board of Directors Held on December  21, 2016

 

29.   

Summary of Principal Decisions of the 682nd Meeting of the Board of Directors Held on December  21, 2016

 

30.   

Material Announcement Dated December 22, 2016: Interim injunction given for Miranda Plant

 

31.   

Market Announcement Dated December 22, 2016: Changes to the Executive Board

 

32.   

Market Announcement Dated December  23, 2016: Reply to CVM Inquiry Letter 574/2016-CVM/SEP/GEA-1,
of December 22, 2016

 

33.   

Market Announcement Dated December  23, 2016: Reply to CVM Inquiry Letter 575/2016-CVM/SEP/GEA-1,
of December 22, 2016

 

 


FORWARD-LOOKING STATEMENTS

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


SIGNATURES

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

 

    COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG
Date: December 29, 2016     By:   /s/    Franklin Moreira Gonçalves
    Name:   Franklin Moreira Gonçalves
    Title:   Acting Chief Finance and Investor Relations Officer


 

1. SUMMARY OF MINUTES OF THE 198TH MEETING OF THE BOARD OF DIRECTORS HELD ON JUNE 12, 2014

 

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CEMIG DISTRIBUIÇÃO S.A.

LISTED COMPANY – CNPJ: 06.981.180/0001-16 – NIRE: 31300020568

BOARD OF DIRECTORS

SUMMARY OF MINUTES

OF THE

198TH MEETING

 

Date, time and place:   June 12, 2014, at 10 a.m., at the head office.

 

Meeting Committee:  

Chair: Djalma Bastos de Morais;

Secretary: Anamaria Pugedo Frade Barros.

Summary of proceedings:

 

I Conflict of interest: The Board Members listed below stated they had no conflict of interest with the matters on the agenda of this meeting.

 

II The Board approved the minutes of this meeting.

 

III The Board authorized:

 

  a) Opening of Administrative Tender Proceedings for, and contracting of, rental of the real estate property owned by Forluz at Av. Barbacena 1200, Belo Horizonte, Minas Gerais, for sixty months, able to be extended for equal successive periods up to a limit of twenty years, by signature of amendments; and ratified all actions taken in this matter since March 1, 2014, i.e. the rental of the said property.

 

  b) Signature of the First Amendment to the Contract with Axxiom Soluções Tecnológicas S.A., to adapt the form of execution of the services of sustaining, updating and developing of the necessary developments in the GDIS System.

 

  c) Opening of Administrative Tender Proceedings for, and contracting of services of, in-person customer care, in approximately one hundred and fifty six Customer Care branches and in approximately one hundred and fifty three municipalities, and service of automated control and management of customer care service including both software and hardware, for approximately one hundred and fifty six branches and approximately six hundred and twenty Cemig Fácil customer service posts, for thirty six months, able to be extended for up to a total of sixty months.

 

  

 

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 nominated the employee Mirian Paula Ferreira Rodrigues to be a sitting member of the Board of Directors of Empresa Paraense de Transmissão de Energia S.A., to serve the remainder of the period of office, begun at the Annual General Meeting of April 19, 2013, from the date of the Extraordinary General Meeting of Stockholders that elects her until her duly elected successor is sworn in.

 

V The Board ratified the nomination of the employee Mirian Paula Ferreira Rodrigues, as substitute member of the Board of Directors of STC – Sistema de Transmissão Catarinense S.A., for a period of office of three years, from the Ordinary and Extraordinary General Meetings of Stockholders of April 11, 2014 until her duly elected successor is sworn in.

 

VI Abstention: The Board member

Arcângelo Eustáquio Torres Queiroz

abstained from voting on the matter referred to in subclause ‘c’ of Item III above.

 

VII Unpaid leave: The Chair reported that the Board member

Luiz Augusto de Barros

had delivered correspondence to the Company formalizing his request for unpaid leave from the post of substitute member of this Board, for the period from June 16 to October 31, 2014, for private reasons.

 

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

The following were present:

 

Board members:   

Djalma Bastos de Morais,

Arcângelo Eustáquio Torres Queiroz,

Fuad Jorge Noman Filho,

Guy Maria Villela Paschoal,

João Camilo Penna,

Joaquim Francisco de Castro Neto,

José Pais Rangel,

Paulo Roberto Reckziegel Guedes,

Saulo Alves Pereira Junior,

Tadeu Barreto Guimarães,

   Wando Pereira Borges,

Bruno Magalhães Menicucci,

Newton Brandão Ferraz Ramos,

Paulo Sérgio Machado Ribeiro,

Tarcísio Augusto Carneiro,

Custódio Antonio de Mattos,

Franklin Moreira Gonçalves,

José Augusto Gomes Campos,

Lauro Sérgio Vasconcelos David,

Luiz Augusto de Barros,

Marina Rosenthal Rocha;

     
Secretary:    Anamaria Pugedo Frade Barros.     

(Signed) Anamaria Pugedo Frade Barros

Registered at:

Commercial Board of the State of Minas Gerais

I certify registry, under Nº: 5877087,

on September 27, 2016.

Receipt No: 16/574.391-3.

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 223RD MEETING OF THE BOARD OF DIRECTORS HELD ON JULY 17, 2014

 

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CEMIG GERAÇÃO E TRANSMISSÃO S.A.

CNPJ 06.981.176/0001-58—NIRE 31300020550

BOARD OF DIRECTORS

SUMMARY OF MINUTES

OF THE

223RD MEETING

 

Date, time and place:  

July 17, 2014, at 12 noon, at the Company’s head office,

Av. Barbacena 1200 – 12th Floor, B1 Wing, Belo Horizonte, Minas Gerais, Brazil.

 

Meeting Committee:  

Chair: Djalma Bastos de Morais;

Secretary: Anamaria Pugedo Frade Barros.

Summary of proceedings:

 

I Unpaid leave: The General Manager Anamaria Pugedo Frade Barros reported that Mr. Danilo de Castro had delivered correspondence to the Company formalizing his request for unpaid leave from the post of substitute member of this Board, for the period from July 15 to October 6, 2014, for private reasons, and that the Board members present had consented to this request.

 

III Conflict of interest: The Board Members listed below stated they had no conflict of interest with the matter on the agenda of this meeting.

 

III The Board approved:

 

  a) Review of the Project: Hydroelectric Plants of the Tapajós River Basin – Pre-feasibility Studies for the Hydroelectric Plants of the Tapajós River Basin.

 

  b) The minutes of this meeting.

 

IV The Board Authorized:

 

  a) signature, out of time, of the Third Amendment to the Contract with Terceiriza Serviços Ltda., to extend the period of contracting of the provision of services of conservation and cleaning, maintenance of gardens and mowing at the premises of the Company in the Metropolitan Region of Belo Horizonte, for up to thirty five months and five days, and alteration of the global amount contracted, ratifying the provision of the said services.

 

  b) Signature of Terms of Partnership, between Cemig, Cemig D, Cemig GT and the Municipal Councils for the rights of Children and Adolescents participants in the AI6% Program, for passthrough of donations raised from the employees of those companies, with a maximum of one million eight hundred thousand Reais and a 1% portion of the income tax payable by Cemig, Cemig D and Cemig GT, for application in programs and projects in the ambit of the Municipality, in effect until August 31, 2015.

 

  

 

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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  c) Signature of the Third Amendment to the Technical Cooperation Agreement with

 

Centrais Elétricas Brasileiras S.A.,    Centrais Elétricas do Norte do Brasil S.A.,
Construções e Comércio Camargo Corrêa S.A.,    Electricité de France S.A.,
Copel Geração e Transmissão S.A.,    Endesa Brasil S.A.,
GDF Suez Energy Latin America Participações Ltda.    and Neoenergia Investimentos S.A.,

for updating of the estimate of costs specified for the preparation of environmental assessments and feasibility studies for hydroelectric complexes, and extension of the period of validity until December 31, 2015.

 

  b) Opening of administrative tender proceedings for, and acquisition, through the Price Registry System, of

 

  three hundred and sixty seven thousand tons of A1 Fuel Oil,

 

  two hundred and eight eighty thousand liters of Type D diesel oil, and

 

  input materials and chemical products;

and contracting of thermal isolation services, for the Igarapé Thermoelectric Plant, for two years, starting in January 2015.

 

  e) Signature of amendment N° 3 to the Contract for Use of the Transmission System with the National Electricity System Operator and the Transmission Concessions represented by that Operator, to alter the installed potential of the Irapé Hydroelectric Plant and the amount of use to be contracted, and indicate the load level, with effect from April 15, 2014.

 

VI The board delegated to the Executive Board, until March 31, 2015, the competency to authorize entering into:

 

  a) contracts for sale of electricity, after hearing the opinion of the Energy Risks Management Committee, with individual values of sixteen million seven hundred thirty eight thousand one hundred thirty nine Reais and twelve centavos or more, and also terms of assignment, amendments, memoranda of termination of contracts by rescission, resilement or similar methods, including any cases where penalty payments are made by any of the parties, arising from negotiation, service contracts or contracts to constitute guarantees and counter-guarantees associated with them, and the other instruments necessary for their completion in practice;

 

  b) and any such agreements entered into between the Company and any of its stockholders, or companies that are controlling stockholders of the latter, whether controlled by them singly or under joint control, of any value. In both cases, the Board of Directors must be informed of the instruments signed at its first meeting subsequent to the approval.

 

VI The Board ratified the following nominations for appointments, to serve the respective periods of office or until their duly elected successors are sworn in:

 

  1) João Procópio Campos Loures Vale – as:

 

  a) Member of the Board of Directors of Companhia Transudeste de Transmissão, for a period of office of three years, i.e. until the Annual General Meeting of 2017;

 

  a) Member of the Board of Directors of Companhia de Transmissão Centroeste de Minas (Centroeste), for a period of office of three years, i.e. until the AGM of 2017; and

 

  c) Substitute member of the Board of Directors of Ativas Data Center S.A., for a period of office of two years, until the AGM of 2016.

 

  

 

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) Flávio de Almeida Araújo, as Substitute member of the Board of Directors of Companhia de Gás de Minas Gerais (Gasmig), for a period of office of two years, until the Annual General Meeting of 2016.

 

  3) José Cleber Teixeira, as member of the Board of Directors of Centroeste, for a period of office of three years, i.e. until the Annual General Meeting of 2017;

 

  4) Brunno Viana dos Santos Sant’Anna, as member of the Board of Directors of Companhia Transirapé de Transmissão, for a period of office of three years, i.e. until the Annual General Meeting of 2017, nominating the employee Alexandre Vidigal Pereira Pinto as his Substitute member as from the Extraordinary General Meeting of Stockholders that deals with that subject.

 

  5) Eliana Soares da Cunha Castello Branco, as a member of the Board of Directors of Cemig Telecomunicações S.A., for a period of office of three years, i.e. until the Annual General Meeting of 2017.

 

VII The Board re-ratified: Board Spending Decision (CRCA) 034/2014, as to its Subclause C, relating to the signature of the Fourth Amendment to the Stockholders’ Agreement of Retiro Baixo Energética S.A., to alter Clause Five of the Stockholders’ Agreement, the other provisions of that CRCA remaining unchanged.

 

VIII Withdrawn from the agenda: The matter of re-scaling of the value of Personnel, Material, Outsourced services and Other Expenses, and additional budgetary allocation for 2014, was withdrawn from the agenda.

 

IX Unpaid leave: The Chair informed the Board that the Chief Officers

 

Frederico Pacheco de Medeiros

 

and

   José Carlos de Mattos,

have filed correspondence with the Company formalizing requests for unpaid leave from their positions as Chief Officers, for personal reasons, in the periods, respectively, from June 16 to October 31, 2014 and from June 25 to August 31, 2014, respectively.

 

X Comment: The following made comments on subjects of interest to the Company:

 

The Chair;

         

Chief Officer:

   Luiz Fernando Rolla,    Luiz Henrique de Castro Carvalho;

General Managers:

   Leonardo George Magalhães,    Wagner Delgado Costa Reis;

The following were present:

 

Board members:

  

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,

José Pais Rangel,

Saulo Alves Pereira Junior,

Tadeu Barreto Guimarães,

   Bruno Magalhães Menicucci,

Marina Rosenthal Rocha,

Newton Brandão Ferraz Ramos,

Paulo Sérgio Machado Ribeiro,

Custódio Antonio de Mattos,

Flávio Miarelli Piedade,

Franklin Moreira Gonçalves,

José Augusto Gomes Campos,

Lauro Sérgio Vasconcelos David,

Tarcísio Augusto Carneiro;

Chief Officers:

   Luiz Fernando Rolla,    Luiz Henrique de Castro Carvalho;

Secretary:

   Anamaria Pugedo Frade Barros.     

(Signed by:) Anamaria Pugedo Frade Barros.

 

  

 

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 MINUTES OF THE 611TH MEETING OF THE BOARD OF DIRECTORS HELD ON OCTOBER 30, 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

611TH MEETING

 

Date, time and place:  

October 30, 2014 at 8 a.m. at the company’s head office,

Av. Barbacena 1200, 21st floor, Belo Horizonte, Minas Gerais, Brazil.

 

Meeting Committee:  

Chair: Djalma Bastos de Morais;

Secretary: Anamaria Pugedo Frade Barros.

Summary of proceedings:

 

I Conflict of interest: The board members listed below said they had no conflict of interest in the matters on the agenda of this meeting

 

II The Board approved the minutes of this meeting.

 

III In relation to Renova Energia S.A. (‘Renova’):

 

  1) The Board ratified the orientation given to the Board members appointed by the Company to vote in favor of the agenda at the meeting of the Board of Directors of Light S.A. (‘Light’) and the orientation given to the Board members appointed by the Company to vote in favor of the agenda at the meeting of the Board of Directors of Cemig GT, in relation to Renova participating in the 2014 LER (Reserve Energy) Auction held by the Brazilian National Electricity Agency, Aneel, for sale of electricity in the Regulated Market by Renova or by companies constituted by Renova.

 

  2) The Board authorized constitution by Renova of special-purpose companies (‘SPCs’) and sub-holding companies for construction, financing and commercial operation of any wind power projects whose output is sold at the 2014 LER.

 

  3) The Board ratified the orientation given to the Board members appointed by the Company to vote in favor of the agenda at the meeting of the Board of Directors of Light, and the orientation to the Board members appointed by the Company to vote in favor of the agenda at the meeting of the Board of Directors of Cemig GT, for a partnership to be entered into by a Joint Venture Agreement, between Renova and SunEdison Brasil Projetos Montagem e Instalação de Empreendimentos de Energia Solar Ltda. (‘SunEdison’), for construction, financing and commercial operation of up to 16 new solar generation undertakings the output of which may be sold at the 2014 LER, based on the projects registered by Renova and SunEdison, through formation of an unlisted corporation (‘NewCo’), to absorb all the SPCs created for commercial operation of the projects that are successful in the Auction, and also those that are unsuccessful (‘the Joint Venture’)

 

  

 

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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  subject to it being a condition precedent for formation of the Joint Venture that there has been a sale or sales at the Auction by Renova or by SunEdison, or by both, and authorization by Aneel for transfer of the SPCs to ‘NewCo’.

 

  4) Subject to the conditions in Item 3 above being met, the Board authorized Renova to participate in ‘NewCo’, for implementation of the Joint Venture.

 

IV The Board oriented vote in favor of the agenda, by the Board Members appointed by the Company, at the meeting of the Boards of Directors of:

 

  a) Taesa (Transmissora Aliança de Energia Elétrica S.A.), on:

 

  (i) authorization for ERTE (Empresa Regional de Transmissão de Energia S.A.) to increase its share capital by up to thirty eight million Reais, to one hundred nine million nine hundred forty thousand eight hundred Reais, through issuance of twenty one million seven hundred thirty two thousand two hundred and six nominal preferred shares without par value, not convertible into common shares, not carrying the right to vote in General Meetings of Stockholders, and with priority in reimbursement of capital, without premium;

 

  (ii) assignment by Taesa and by EATE (Empresa Amazonense de Transmissão de Energia S.A.), to ENTE (Empresa Norte de Transmissão de Energia S.A.) of the right to subscribe preferred shares to be issued by ERTE, as above;

 

  (iii) authorization for ENTE to subscribe and pay up 100% of the preferred shares to be issued by ERTE; and

 

  (iv) appropriate changes to the by-laws of ERTE to reflect these changes in its share capital.

 

  b) Light and Cemig GT, for participation by Renova in the A–5 LEN (New-build) Auction to be held by Aneel, for sale in the Regulated Market by Renova or by companies constituted by Renova of electricity generated by wind power projects yet to be built; and in the event of success in the Auction, authorizing constitution by Renova of SPCs and sub-holding companies, for construction, financing and commercial operation of the wind power projects of which the output is sold in the Auction.

 

IV Leave of absence: The Chair reported that the Deputy CEO, Mr. Arlindo Porto Neto, had filed correspondence with the Company formalizing his request for unpaid leave from the position of Deputy CEO, for personal reasons, for the period October 22-24, 2014, and that the Chief Corporate Management Officer, Mr. Frederico Pacheco de Medeiros, had filed correspondence with the Company requesting alteration of the period of his unpaid leave, for personal reasons, from the position of Chief Corporate Management Officer, which began on June 17, 2014, bringing forward its termination from October 31 to October 26, 2014.

 

V Comment: The Chair made comments on a subject of interest to the Company.

The following were present:

 

Board members:   

Djalma Bastos de Morais,

Guy Maria Villela Paschoal,

João Camilo Penna,

Joaquim Francisco de Castro Neto,

José Pais Rangel,

Paulo Roberto Reckziegel Guedes,

Wando Pereira Borges,

   Bruno Magalhães Menicucci,

Franklin Moreira Gonçalves,

José Augusto Gomes Campos,

Luiz Augusto de Barros,

Newton Brandão Ferraz Ramos,

Paulo Sérgio Machado Ribeiro,

Tarcísio Augusto Carneiro,

Flávio Miarelli Piedade;

Secretary:    Anamaria Pugedo Frade Barros.     

(Signed) Anamaria Pugedo Frade Barros

 

  

 

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. SUMMARY OF MINUTES OF THE 626TH MEETING OF THE BOARD OF DIRECTORS HELD ON FEBRUARY 25, 2015

 

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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

626TH MEETING

 

Date, time and place:  

Opened 8.30 a.m., Feb. 25, 2015; resumed 8 a.m. and closed, Feb. 27, 2015;

at the head office, Av. Barbacena 1200, 21st floor, Belo Horizonte, MG, Brazil.

 

Meeting Committee:  

Chair:            José Afonso Bicalho Beltrão da Silva;

Secretaries:  Anamaria Pugedo Frade Barros;

                      Alexandre de Queiroz Rodrigues

Summary of proceedings:

 

I Conflict of interest: The board members listed below said they had no conflict of interest in the matters on the agenda of this meeting.

 

II The Board approved the minutes of this meeting.

 

II The Board authorized:

 

  b) Signature of the Term of Closure of the Final Contract for Association, between Vale and Cemig GT, which completes closure of the agreement in the terms of the Final Contract.

 

  a) Signature, as consenting party, of the Fifth Amendment to the Contract for Constitution of the Capim Branco Consortium, to formalize the entry of Aliança Geração de Energia S.A. (‘Aliança Geração’) into the Consortium, taking over the participation of Vale, Epícares and Cemig GT, and substituting them in all their rights and obligations.

 

IV The Board oriented votes in favor of the following agenda items:

 

  a) By the members of the Board of Directors of Cemig GT appointed by the Company, at the meeting of the Board of Directors of Cemig GT, to authorize increase in the share capital of Aliança Geração, by one billion two hundred seventy million eight hundred eight thousand five hundred thirty eight Reais, with issuance of nominal common shares without par value, of which Cemig GT will subscribe five hundred seventy one million eight hundred sixty three thousand eight hundred forty two nominal common shares without par value, at issue price of one Real per share, paying for this subscription with Cemig GT Assets.

 

  b) By the members of the Board of Directors of Cemig GT appointed by the Company: orientation of vote by the representatives of Cemig GT in the Extraordinary General Meeting of Stockholders of Aliança Geração of February 27, 2015, on:

 

  the increase in the share capital of Aliança Geração;

 

  the Valuation Opinion prepared by PricewaterhouseCoopers Auditores Independentes;

 

  and the consequent alteration of By-laws.

 

 

  

 

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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  c) By the members of the Board of Directors of Cemig GT appointed by the Company, on orientation of vote by the representatives of Cemig GT in the Extraordinary General Meeting of Stockholders of Aliança Geração of February 27, 2015, on:

 

  the Protocol of Absorption and Justification, between Aliança Geração and Epícares Empreendimentos e Participações Ltda. (Epícares);

 

  ratification of the appointment of the specialized company Prosper Outsourcing e Assessoria Empresarial Ltda., responsible for the valuation of the net equity of Epícares;

 

  approval of the Valuation Opinion prepared on January 31, 2015; and

 

  absorption of Epícares by Aliança Geração.

 

V Withdrawn from the agenda: The matter of injection of assets by Cemig GT into Aliança Norte Energia Participações S.A. (‘Aliança Norte’), from February 27, 2015 to December 31, 2016, conditional upon acquisition of 49% of that company by Cemig GT, was withdrawn from the agenda.

 

VI Comments: The Chair spoke on matters of interest to the Company.

The following were present:

 

Board members:

  

José Afonso Bicalho Beltrão da Silva,

Mauro Borges Lemos,

Allan Kardec de Melo Ferreira,

Arcângelo Eustáquio Torres Queiroz,

Helvécio Miranda Magalhães Junior,

Marco Antônio de Rezende Teixeira,

Marco Antônio Soares da Cunha Castello Branco,

Guy Maria Villela Paschoal,

Paulo Roberto Reckziegel Guedes,

Saulo Alves Pereira Junior,

José Pais Rangel,

   Bruno Magalhães Menicucci,

Carlos Fernando da Silveira Vianna,

Newton Brandão Ferraz Ramos,

Tarcísio Augusto Carneiro,

Antônio Dirceu Araújo Xavier,

Franklin Moreira Gonçalves,

José Augusto Gomes Campos,

Luiz Guilherme Piva,

Marina Rosenthal Rocha,

Ricardo Wagner Righi de Toledo,

Wieland Silberschneider;

Secretary:

   Alexandre de Queiroz Rodrigues.     

(Signed by:) Alexandre de Queiroz Rodrigues.

Registered at:

Commercial Board of the State of Minas Gerais

I certify registry on: November 11, 2016

Under the number: 6120340

Filing Receipt number: 16/640.268-1

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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5. SUMMARY OF MINUTES OF THE 668TH MEETING OF THE BOARD OF DIRECTORS HELD ON JUNE 29, 2016

 

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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

668TH MEETING

 

Date, time and place:  

June 29, 2016 at 11 a.m. at the company’s head office,

Av. Barbacena 1200, 21st floor, Belo Horizonte, Minas Gerais, Brazil.

 

Meeting Committee:  

Chair: José Afonso Bicalho Beltrão da Silva;

Secretary: Alexandre de Queiroz Rodrigues.

Summary of proceedings:

 

I Conflict of interest: The Board Members listed below stated that they had no conflict of interest with the matters on the agenda of the meeting.

 

II The Board approved:

 

  a) The proposal by the Chair, as follows:

 

  i) Change of post: the Chief Corporate Management Officer,

 

Márcio Lúcio Serrano

   – Brazilian, doctor, married, domiciled in Belo Horizonte, Minas Gerais, at Av. Barbacena 1200, 18th floor, B2 Wing, Santo Agostinho, CEP 30190-131, Bearer of Identity Card M575788 issued by SSP/MG, and CPF 110906186-20,

to be Chief Officer for Human Relations and Resources.

 

  ii) Election of

 

Luís Fernando Paroli Santos

   – Brazilian, married, Systems Analyst, domiciled in Belo Horizonte, Minas Gerais, at Av. Barbacena 1200, 21st floor, A1 Wing, Santo Agostinho, CEP 30190-131, Bearer of Identity Card MG5307664 issued by SSP/MG, and CPF 903562416-53,

as Chief Corporate Management Officer, on an interim basis together with his functions as Chief Institutional Relations and Communication Officer,

both to serve the rest of the present period of office, i.e. until the first meeting of the Board of Directors after the Annual General Meeting of 2018.

 

  

 

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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  b) The minutes of this meeting.

 

III The Board authorized:

 

  a) Injections of cash into Ativas Data Center S.A. (‘Ativas’), by Cemig Telecomunicações S.A. (‘CemigTelecom’), of:

 

  up to forty five million Reais                                                                                           (‘capital increase No. 1’)

 

  and up to thirty nine million two hundred thousand Reais                                              (‘capital increase No. 2’);

waiver, by CemigTelecom, of its right of first refusal for subscription of the rest of the capital to which it would have been entitled in proportion to its equity interest, which will cause dilution of its equity interest in Ativas from 49% to 19.6%;

signature of the Investment Contract, and Stockholders’ Agreement, between CemigTelecom, Ativas Participações S.A. (‘Ativas Participações’) and Sonda do Brasil S.A. (‘Sonda’);

signature of the Stockholders’ Agreement by CemigTelecom and Ativas Participações;

and a temporary waiver enabling Ativas Participações to make payment of its subscription of capital in Ativas.

 

  b) Signature of the Second Amendment to the Stockholders’ Agreement of Transmissora Aliança de Energia Elétrica S.A. (‘Taesa’), with Fundo de Investimentos em Participações Coliseu (‘FIP Coliseu’), to formalize conditions agreed in the Commitment Undertaking signed by the parties on May 31, 2016.

 

VI The Board oriented the members of the Board of Directors of CemigTelecom appointed by the Company to vote in favor of the agenda in the meeting of the Board of Directors of CemigTelecom, on the subjects referred to in subclause ‘a’ of Item I, above.

 

V Vote against: The Board member Arcângelo Eustáquio Torres Queiroz voted against the item referred to in subclause ‘b’ of Item III, above.

 

VI The Chair reported that, as a result of the decision of the Extraordinary General Meeting of Stockholders of Cemig begun on June 14, 2016 and resumed and completed on June 17, 2016, the office of Chief Officer for the Gas Division was abolished, and the post and Office of Chief Officer for Human Relations and Resources was created. Consequently, since June 17, 2016, Mr. Felipe Torres do Amaral, until then Chief Officer for the Gas Division, has not been a member of the Company’s Executive Board.

 

  

 

Av. Barbacena 1200

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

 

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VI The members of the Executive Board are now as follows:

 

Chief Executive Officer:

   Mauro Borges Lemos;

Deputy CEO:

   Mateus de Moura Lima Gomes;

Chief Trading Officer:

   Evandro Leite Vasconcelos;

Chief Business Development Officer:

   César Vaz de Melo Fernandes;

Chief Distribution and Sales Officer:

   Ricardo José Charbel;

Chief Finance and Investor Relations Officer:

   Fabiano Maia Pereira;

Chief Generation and Transmission Officer:

   Franklin Moreira Gonçalves;

Chief Corporate Management Officer:

   Luís Fernando Paroli Santos*;

Chief Counsel:

   Raul Lycurgo Leite;

Chief Officer for Human Relations and Resources:

   Márcio Lúcio Serrano;

Chief Institutional Relations and Communication Officer:

   Luís Fernando Paroli Santos.

 

* On interim basis, while also serving as Chief Institutional Relations and Communication Officer

 

VII Statement by Chief Officers: The Chief Officers taking new posts declared – in advance – that they are not subject to any prohibition on exercise of commercial activity, that they do not occupy any post in a company which could be considered to be a competitor of the Company, and that they do not have nor represent any interest conflicting with that of Cemig; and made a solemn commitment to become aware of, obey and comply with the principles, ethical values and rules established by the Code of Professional Conduct of Cemig and the Code of Ethical Conduct of Government Workers and Senior Administration of the State of Minas Gerais.

 

VIII Unpaid leave: The Chair reported receipt by the Company of correspondence from the Board member Marcelo Gasparino da Silva, requesting unpaid leave from his functions on this Board, for personal reasons, from June 29, 2016 for 300 days, that is to say until April 28, 2017.

 

IX Comments: The Chair, and the Board Member Arcângelo Eustáquio Torres Queiroz, made comments on matters of interest to the Company.

The following were present:

 

Board members:   

José Afonso Bicalho Beltrão da Silva,

Mauro Borges Lemos,

Allan Kardec de Melo Ferreira,

Arcângelo Eustáquio Torres Queiroz,

Helvécio Miranda Magalhães Junior,

José Henrique Maia,

José Pais Rangel,

Marco Antônio de Rezende Teixeira,

Marco Antônio Soares da Cunha Castello Branco,

Nelson José Hubner Moreira,

   Saulo Alves Pereira Junior,

Aloísio Macário Ferreira de Souza,

Bruno Magalhães Menicucci,

José Augusto Gomes Campos,

Bruno Westin Prado Soares Leal,

Daniel Alves Ferreira,

Carlos Fernando da Silveira Vianna,

Luiz Guilherme Piva,

Marina Rosenthal Rocha,

Samy Kopit Moscovitch,

Wieland Silberschneider;

Secretary:    Anamaria Pugedo Frade Barros.     

(Signed) Alexandre de Queiroz Rodrigues

 

  

 

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 PRINCIPAL DECISIONS OF THE 677TH MEETING OF THE BOARD OF DIRECTORS HELD ON OCTOBER 31, 2016

 

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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 October 31, 2016

SUMMARY OF PRINCIPAL DECISIONS

At its 677th meeting, held on October 31, 2016, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

    Change in the composition of the Executive Board: Mr. Evandro Leite Vasconcelos to cease to be Chief Distribution and Sales Officer, and election, to this post, of Mr. Luís Fernando Paroli Santos, who will also temporarily hold the post of Chief institutional Relations and Communication 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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7. MARKET ANNOUNCEMENT DATED NOVEMBER 3, 2016: REPLY TO CVM INQUIRY LETTER 517/2016-CVM/SEP/GEA-1, OF NOVEMBER 1, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 517/2016-CVM/SEP/GEA-1, of November 1, 2016

Question asked by the Brazilian Securities Commission (CVM)

Rio de Janeiro, November 1, 2016

To Mr. Fabiano Maia Pereira

Investor Relations Director

Cia. Companhia Energética de Minas Gerais – CEMIG

Av. Barbacena 1200 – 5th floor, B1 Wing, Santo Agostinho,

Belo Horizonte, Minas Gerais

CEP: 30190-131

Fax: (31) 3506-5026

Tel.: (31) 3506-5024

E-mail: ri@cemig.com.br

Subject: Request for information on decree

Dear Sir,

 

  1. I refer to Minas Gerais State Decree NE 582 of October 26, 2016, published in the Official Gazette of Minas Gerais State, through which there was established a “supplementary credit in favor of the investment budget of the Holding Company Companhia Energética de Minas Gerais – Cemig, in the amount of R$ 650,200,000.00.”

 

  2. I request you to clarify the transaction, and comment on any other information considered to be important relating to the subject.

 

  3. The statement should be given through the Empresas.NET system, in the category: Market Announcement, under the sub-category: Responses to consultations by CVM/Bovespa; subject heading: Minas Gerais State Decree NE 582 of October 26, 2016; and should include a transcription of this letter.

 

  4. We highlight that, under Article 3 of CVM Instruction 358/02 it is the responsibility of the Chief Investor Relations Officer to disclose to and advise the CVM, and as the case may be, the stock exchange and/or any organized over-the-counter market on which securities issued by the company are traded, of any material event or fact which takes place or is related to its business, and to make best efforts for its immediate and wide dissemination, simultaneously to all the markets in which such securities are traded.

 

  5. We notify you that the Company Relations Supervision Management may, under Sub-item II of Article 9 of Law 6385/1976 and CVM Instruction 452/2007, apply a coercive fine of R$ 1,000 (one thousand Reais), without prejudice to other administrative sanctions, in the event of non-compliance with the demand made in this Official Letter within 24 hours from becoming aware of the content of this communication, now sent by fax and by e-mail.

 

  

 

Av. Barbacena 1200

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

 

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

 

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Reply by CEMIG

Dear Madam,

In response to Official Letter Nº 517/2016-CVM/SEP/GEA-1, of November 1, 2016, we inform you that the budget supplementation decree published in the newspaper Minas Gerais complies with a legal procedural requirement. The publication obeys the legal requirements included in the following state laws: Law 21736 of August 4, 2015 (the Budget Directives Law, or LDO), Law 21971 of January 18, 2016 (the Annual Budget Law, or 2016 LOA), and Federal Law 4320 of March 17, 1964, in particular its Article 42.

Basically, Cemig is part of the investment budget of the companies controlled by Minas Gerais State, as specified in State Law 21736 of August 4, 2015. Due to this, following the orientations of Law 21971, Cemig prepared the annual budget proposal for the 2016 business year during July and August 2015. Considering that the dividends for the 2015 business year would be approved only after calculation of the net profit for the business year at the Annual General Meeting, which would take place in April 2016, the budget proposal referred to above was prepared with symbolic amounts for the distribution of dividends. Subsequently, to make the adjustments, Cemig asked the Central Corporate Governance Support Directorate of the State Finance Department for a supplementary budget decree, under Article 42 of Law 4320 of March 17, 1964.

We would point out that this budget process is carried out publicly and with transparency – the principles followed by the public sector, as can be seen in the following links:

http://www.planejamento.mg.gov.br/banco-de-noticias-banco/3657-estado-disponibiliza-lei-de-diretrizes-orcamentarias-referente-a-2016

http://www.planejamento.mg.gov.br/banco-de-noticias-banco/3878-governador-sanciona-lei-orcamentaria-com-estimativas-de-receita-e-despesas

http://politicaspublicas.almg.gov.br/

Cemig takes this opportunity of reiterating its commitment to opportune and timely disclosure of all and any facts that are of interest to its stockholders, in accordance with Article 2 of CVM Instruction 358/2002.

Belo Horizonte, November 3, 2016

Fabiano Maia Pereira

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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8. SUMMARY OF MINUTES OF THE 678TH MEETING OF THE BOARD OF DIRECTORS HELD ON NOVEMBER 11, 2016

 

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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

678TH MEETING

 

Date, time and place:  

November 11, 2016 at 9 a.m. at the Company’s head office,

Av. Barbacena 1200, 21st floor, Belo Horizonte, Minas Gerais, Brazil.

 

Meeting Committee:  

Chair: José Afonso Bicalho Beltrão da Silva;

Secretary: Anamaria Pugedo Frade Barros.

Summary of proceedings:

 

I Conflict of interest: The Board Members listed below stated that they had no conflict of interest with the matters on the agenda of the meeting.

 

II The Board approved:

 

  1) The proposal of the Board member Samy Kopit Moscovitch that the members of the Board of Directors should authorize their Chair to call an Extraordinary General Meeting of Stockholders, to be held on December 20, 2016 at 11 a.m., and that in the absence of a quorum the Chair be authorized to make second convocation, within the legal period, to deal with:

 

    the Report of Management and Adjusted Financial Statements for the year 2015; and

 

    re-ratification of the allocation of the Net profit for 2015.

 

  2) The Compliance Program for the 2016–2018 period;

 

  3) Changes in the composition of the Committees of the Board of Directors.

 

  4) The minutes of this meeting.

 

III The Board approved the Report of Management and the Adjusted Financial Statements for the business year 2015, and the related complementary documents, also adjusted, and submitted them to the Extraordinary General Meeting of Stockholders.

 

  

 

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 authorized:

 

  1) Increase in the share capital of RME – Rio Minas Energia Participações S.A. (‘RME’)

            by up to

two hundred thirty five million fifty three thousand four hundred thirty five Reais and nineteen centavos,

            through issuance of up to

six hundred eighty three million three hundred four thousand nine hundred fifty four

nominal shares without par value,

            for issue price of

R$ 0.34399492322 per share,

            of which

one hundred seventy million eight hundred twenty six thousand two hundred thirty nine are common shares

            and

five hundred twelve million four hundred seventy eight thousand seven hundred fifteen are preferred shares,

increasing the total share capital

            from

two hundred eleven million nine hundred ninety eight thousand one hundred eighty four Reais and seventy two centavos

            to a maximum of

four hundred forty seven million fifty one thousand six hundred nineteen Reais and ninety one centavos,

with consequent subscription of the totality of the shares issued, resulting in the Company holding

            an equity interest of up to

61.61% in the total capital of RME,

and the need to alter the head paragraph of Clause 5 of the by-laws of RME to reflect the increase in share capital.

 

  2) Subscription by Cemig, in cash, of nominal shares without par value in RME,

            in the amount of up to

two hundred thirty five million fifty three thousand four hundred thirty five Reais and nineteen centavos,

increasing the Company’s holding in the share capital of RME

  from 25% to a maximum of 61.61%.

 

  3) Increase in the share capital of Luce Empreendimentos e Participações S.A. (‘Lepsa’)

            by up to

two hundred twenty eight million seven hundred thirty eight thousand five hundred forty five Reais and three centavos,

            through issuance of up to

six hundred sixty seven million one hundred forty nine thousand and sixty nominal shares without par value,

            at issue price of

R$ 0.34285972768 per share,

            of which:

one hundred sixty six million seven hundred eighty seven thousand two hundred sixty five will be common shares

            and

five hundred million three hundred sixty one thousand seven hundred ninety five will be preferred shares,

increasing the total share capital

            from

two hundred eleven million six hundred ninety one thousand six hundred ninety two Reais and fifty five centavos

            to a maximum of

four hundred forty million four hundred thirty thousand two hundred thirty seven Reais and fifty eight centavos,

thus, consequently, subscription of the totality of the shares issued,

increasing the Company’s holding in the share capital of Lepsa

            to a maximum of

61.16%,

and requiring alteration of the head paragraph of Clause 5 of the by-laws of Lepsa to reflect the increase in the share capital.

 

  4) Subscription by Cemig in cash, of nominal shares without par value in Lepsa,

            in the amount of up to

two hundred twenty eight million seven hundred thirty eight thousand five hundred forty five Reais and three centavos,

increasing the Company’s holding in the share capital of Lepsa

            from 25% to a maximum of

61.16%.

 

  

 

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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V The Board submitted a proposal to the Extraordinary General Meeting of Stockholders for:

 

  1) Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000), as follows;

 

  a) R$ 633,968,000 to be allocated as mandatory minimum dividend, to be paid to the Company’s stockholders, as follows:

 

  R$ 200,000,000 in Interest on Equity, under Board Spending Decision (CRCA) 099/2015 of December 17, 2015, and CRD-432/2015, of January 4, 2016, in two equal installments, by June 30 and December 30, 2016, as part of the minimum mandatory dividend for 2016, the Executive Board to obey these dates and to decide the places and processes of payment,

 

  to stockholders whose names were on the Company’s Nominal Share registry on December 30, 2015 (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 in the form of dividends for the 2015 business year, to stockholders whose names were on the Company’s nominal share registry on April 29, 2016, the date on which the Ordinary and Extraordinary General Meetings were held this year;

 

  b) R$ 622,529,000 to be held in Stockholders’ equity in the Reserve for mandatory dividends not distributed, to be paid as and when the Company’s financial situation permits;

 

  c) R$ 1,250,843,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s consolidated investments planned for 2016, in accordance with a capital budget; and

 

  d) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentives earned in 2015 as a result of investments in the region of Sudene. The other terms related to the payments of dividends decided in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016 are unchanged.

 

  2) Vote, by the Company’s representatives at the Extraordinary General Meeting of Stockholders of Cemig Geração e Transmissão S.A. to be held on December 20, 2016, in favor of:

 

  the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted; and

 

  re-ratification of the allocation of the net profit for 2015, approved in the Annual General Meeting of April 29, 2016, reducing it from R$ 2,337,663,000 to R$ 2,316,273,000, the balance of Retained Earnings, of R$ 47,761,000, being unchanged.

 

  

 

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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VI The Board oriented the representatives appointed by the Company, in the Annual General Meetings of Stockholders of RME and Lepsa, to vote in favor of the matters referred to in Item V, above.

 

VIII Abstention

The Board member Patricia Gracindo Marques de Assis Bentes abstained from voting on the matters referred to in items III, IV, V and VI, above; and

the Board member Arcângelo Eustáquio Torres Queiroz abstained from voting on the matter referred to in Subclause 3 of Item II above.

 

VIII Comments: The following made comments on matters of interest to the Company:

 

The Chair;

    

Board member:

   Fabiano Maia Pereira;

Controller:

   Leonardo George de Magalhães;

Deloitte Touche Tohmatsu Auditores Independentes:

   Marcelo Salvador;

External advisor:

   João Roriz.

The following were present:

 

Board members:

  

José Afonso Bicalho Beltrão da Silva,

Mauro Borges Lemos,

Allan Kardec de Melo Ferreira,

Arcângelo Eustáquio Torres Queiroz,

Daniel Alves Ferreira

Helvécio Miranda Magalhães Junior,

José Pais Rangel,

Marco Antônio de Rezende Teixeira,

Marco Antônio Soares da Cunha Castello Branco,

Nelson José Hubner Moreira,

Ms. Patricia Gracindo Marques de Assis Bentes

   Saulo Alves Pereira Junior,

Aloísio Macário Ferreira de Souza

Bruno Magalhães Menicucci,

Antônio Dirceu Araújo Xavier

Bruno Westin Prado Soares Leal,

Carlos Fernando da Silveira Vianna,

Luiz Guilherme Piva,

Marina Rosenthal Rocha,

Ricardo Wagner Righi de Toledo,

Tarcísio Augusto Carneiro,

Samy Kopit Moscovitch

Wieland Silberschneider;

Audit Board:

  

Rafael Amorim de Amorim,

Manuel Jeremias Leite Caldas,

   Marcos Túlio de Melo;

Chief Officer:

   Fabiano Maia Pereira;     

General Manager:

   Leonardo George de Magalhães;     

Deloitte Touche Tohmatsu:

   Marcelo Salvador:

External Advisor:

   João Roriz;     

Secretary:

   Anamaria Pugedo Frade Barros.     

(Signed) Anamaria Pugedo Frade Barros

 

  

 

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. MARKET ANNOUNCEMENT DATED NOVEMBER 12, 2016: COMPLETION OF 20-F FORM FOR 2015

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Completion of 20-F Form for 2015

As part of its commitment to best corporate governance practices, and in accordance with CVM Instruction 358 of January 3, 2002, Cemig (Companhia Energética de Minas Gerais), a listed company with equity securities traded on the stock exchanges of São Paulo, New York and Madrid, hereby informs the public as follows:

Cemig has now completed preparation of its 20-F Form for the year ended December 31, 2015 – ‘the 2015 20-F Form’.

The Company intends to file the 2015 20-F Form with the U.S. Securities and Exchange Commission (‘SEC’) on Monday, November 14, 2016, in the morning.

Cemig will keep its stockholders and the market duly informed on all new information related to this subject.

Belo Horizonte, November 12, 2016

Fabiano Maia Pereira

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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10. MARKET ANNOUNCEMENT DATED NOVEMBER 14, 2016: FILING OF 2015 20-F FORM WITH THE SEC

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Filing of 2015 20-F Form with the SEC

As part of its commitment to best corporate governance practices, and in accordance with CVM Instruction 358 of January 3, 2002, Cemig (Companhia Energética de Minas Gerais), a listed company with equity securities traded on the stock exchanges of São Paulo, New York and Madrid, hereby informs the public as follows:

Today, November 14, 2016, Cemig has filed its 20-F Form for the business year ended December 31, 2015 with the U.S. Securities and Exchange Commission (SEC) and with the Brazilian Securities Commission (CVM), in English. The version of the 2015 20-F Form translated into Portuguese will be filed shortly with the CVM and made available on the Company’s website.

The 2015 20-F Form in English can be accessed on the SEC site (www.sec.gov), or on the Investor Relations site of Cemig (http://ri.cemig.com.br).

Stockholders may receive a printed copy of the report including the financial statements for the business year ended December 31, 2015, free of charge, on request made via our Investor Relations site (http://ri.cemig.com.br), in the section Informações FinanceirasRelatórios SEC.

For any further information on the 2015 20-F Form, please contact the Investor Relations Department, on +55 31 3506-5024 or by email on ri@cemig.com.br.

Belo Horizonte, November 14, 2016

Fabiano Maia Pereira

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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11. MARKET ANNOUNCEMENT DATED NOVEMBER 18, 2016: REPLY TO CVM INQUIRY LETTER 3261/2016-SAE/GAE-2, OF NOVEMBER 17, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 3261/2016-SAE/GAE-2, of November 17, 2016

Question asked by BM&FBovespa

November 17, 2016

3261/2016-SAE/GAE 2

Companhia Energética de Minas Gerais – CEMIG

At.: Mr. Fabiano Maia Pereira

Investor Relations Director

Subject: Request for information on media news report

Dear Sirs,

A news item published by the newspaper Valor Econômico on November 17, 2016 contains, among other information, the following statement:

 

    Companhia Energética de Minas Gerais (Cemig) is seeking a partner in the private sector in an attempt to keep control of three hydroelectric plants: Jaguara, Miranda and São Simão;

 

    it intends, together with a private-sector partner, to pay the federal government the Concession Grant Fee for the plants – which would total R$ 10 billion.

We have not seen this information in the documents sent by your Company through the Empresas.NET System. If this is not the case, please state the document, the pages on which the information is to be found, and the date and time it was sent.

We would note that your Company should publish periodic or one-off information and other information of interest to the market, through the Empresas.NET System, ensuring it receives wide and immediate dissemination and equitable treatment of investors and other market participants.

Having said this, we request explanation on the items indicated, by November 18, 2016, without prejudice to the provisions of the sole sub-paragraph of Article 6 of CVM Instruction 358/02, with your confirmation or otherwise, and any other information deemed to be important.

Your response should be given through the IPE Module, selecting the category Material Announcement, or the category Market Announcement; the Type: Responses to consultations by CVM/Bovespa; and Subject heading: Media News Reports. This will result in simultaneous transmission of the file to the BM&FBovespa and to the CVM.

 

  

 

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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We note the obligation, stated in the sole sub-paragraph of Article 4 of CVM Instruction 358/02, to question managers and controlling stockholders of the Company to ascertain whether they may have knowledge of information that should be disclosed to the market.

The file to be sent should contain the question that is asked above, preceding your company’s reply.

This request is made under the Cooperation Working Agreement made between the CVM and BM&FBovespa on December 13, 2011. Non-compliance with the request may make your company subject to an incentive fine by the Company Relations Management Unit (SEP) of the CVM, subject to CVM Instruction 452/07.

Reply by CEMIG

In reply to Official Letter Nº 3261/2016-SAE/GAE 2, of November 17, 2016, we inform you that it is the Company’s intention to renew the concessions of the Jaguara, Miranda and São Simão plants, specified in concession contracts 007/1997, as has been widely publicized to the market, since 2013, through various Market Notices and Material Announcements.

In a dispatch of the Federal Supreme Court (STF) published on October 28, 2015 (Action for Provisional Remedy AC 3980), Supreme Court Justice Dias Toffoli made the following recommendation: “In view of the complexity and importance of the debate raised by this case, and the need to encourage self-resolution within the judiciary, the Parties shall state whether they have interest in the holding of a conciliation hearing.” Since then, the Company has been seeking courses of action to resolve the case.

During the conference call for publication of its results for the third quarter 2016, held on November 16, 2016, the Company informed the market that it continues to negotiate with the federal government, believing that it will find a positive solution for both parties.

The news report published in the newspaper Valor Econômico, which is the subject of the question asked in the above-mentioned official letter, reflects one of the alternatives for a solution that might make an agreement possible for maintaining the concessions referred to. It is only a course of action that the Company is considering – an intention. No transaction has been agreed, nor does it constitute a Material Event, in the terms of Article 2 of CVM Instruction 358/2002.

Cemig takes this opportunity of reiterating its commitment to opportune and timely disclosure of all and any facts that are of interest to its stockholders, in the terms of Article 2 of CVM Instruction 358/2002.

Belo Horizonte, November 18, 2016

Fabiano Maia Pereira

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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12. MATERIAL ANNOUNCEMENT DATED NOVEMBER 21, 2016: CAPITAL INCREASE IN RME AND LEPSA

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MATERIAL ANNOUNCEMENT

Capital increase in RME and Lepsa

Cemig (Companhia Energética de Minas Gerais), a listed company 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:

On today’s date, General Meetings of Stockholders held by

 

    RME – Rio Minas Energia Participações S.A. (‘RME’) and

 

    Luce Empreendimentos e Participações S.A. (‘Lepsa’),

approved the following:

 

(i) Conversion, by RME, of 162,241,527 preferred shares, and by Lepsa, of 165,846,151 preferred shares, held by the following stockholders:

 

Banco Santander (Brasil) S.A. (‘Santander’), BB Banco de Investimento S.A. (‘BB BI’)

and BV Financeira S.A. – Crédito, Financiamento e Investimento (‘BV’)

into the same number of common shares.

 

(ii) •   Increase in the share capital of RME, by private subscription,

 

                    by    up to    R$ 221,772,018.14   
      (two hundred twenty one million seven hundred seventy two
      thousand eighteen Reais and fourteen centavos),
                    through issuance of    up to    162,241,527    new common shares
                                               and    up to    486,724,579    new preferred shares,
         all nominal shares without par value,
                    for issue price of       R$ 0.3417312799    per share;         and

 

    increase in the share capital of Lepsa, by private subscription,

 

                    by    up to    R$ 225,946,197.37   
      (two hundred twenty five million nine hundred forty six thousand
      one hundred ninety seven Reais and thirty seven centavos),
                    through issuance of    up to    165.846.151    new common shares
                                               and    up to    497.538.451    new preferred shares,
         all nominal shares without par value,
                    for issue price per share of    R$ 0.3405960838 – this price having been set in accordance with Art. 170, §1º, Sub-item II of Law 6404/76, as amended;

– all the shares issued to be in every way identical to the previously existing shares.

 

  

 

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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(iii) Such alterations to the by-laws of RME and Lepsa as are necessary to reflect the changes in the share capital just approved.

The following stockholders:

 

Santander, BV, BB BI and Banco BTG Pactual S.A.

waived their right of first refusal to subscribe the shares issued, and Cemig opted to subscribe the totality of those shares.

As a result Cemig has increased its holding in the total share capital of RME from 25% to 60.65%, while continuing to hold a 50% equity interest in the voting shares of RME;

and has increased its holding in the total share capital of Lepsa from 25% to 61.06%,

while maintaining its 50% interest in the voting shares of Lepsa.

As a result the indirect interest held by Cemig in the share capital of Light S.A. (‘Light’), through RME and Lepsa, has increased from 6.41% to 15.86%.

Cemig also has a directly-held stockholding interest of 26.06% in the share capital of Light.

Cemig will keep its stockholders and the market duly informed on all new information related to this subject.

Belo Horizonte, November 21, 2016.

Fabiano Maia Pereira

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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13. MARKET ANNOUNCEMENT DATED NOVEMBER 21, 2016: NEWS REPORT PUBLISHED IN THE MEDIA

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

News report published in the media

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:

With reference to the news report published by the Estado de São Paulo newspaper on November 20, 2016, to the effect that Cemig is preparing “a further offering, to take place in early 2017”, the Company reports that it is studying various possibilities for improving its debt structure, but that an issue of shares is not one of the options that has so far been studied.

Cemig takes this opportunity of reiterating its commitment to opportune and timely disclosure of all and any facts that are of interest to its stockholders, in the terms of Article 2 of CVM Instruction 358/2002.

Belo Horizonte, November 21, 2016.

Fabiano Maia Pereira

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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14. MATERIAL ANNOUNCEMENT DATED NOVEMBER 30, 2016: INCREASE IN STOCKHOLDING INTEREST

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MATERIAL ANNOUNCEMENT

INCREASE IN STOCKHOLDING INTEREST

In continuity of its Material Announcement of September 7, 2016, Cemig (Companhia Energética de Minas Gerais), a listed company 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:

On today’s date Cemig acquired all the 153,634,195 preferred shares held by

Banco BTG Pactual S.A. (“BTG”) in

 

    RME – Rio Minas Energia Participações S.A. (‘RME’) and

 

    Luce Empreendimentos e Participações S.A. (‘Lepsa’)

 

for consideration of R$ 201,961,743.54

   (two hundred and one million nine hundred sixty one thousand seven hundred forty three Reais and fifty four centavos).

This acquisition:

 

    increases Cemig’s holding in the total capital of RME from 60.65% to 66.27%,

while its holding in the voting stock remains at 50%; and

 

    increases Cemig’s holding in the total capital of Lepsa from 61.06% to 66.62%,

while its holding in the voting stock remains at 50%.

Cemig will keep its stockholders and the market duly informed on all new information related to this subject.

Belo Horizonte, November 30, 2016

Fabiano Maia Pereira

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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15. SUMMARY OF PRINCIPAL DECISIONS OF THE 679TH MEETING OF THE BOARD OF DIRECTORS HELD ON DECEMBER 6, 2016

 

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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 December 6, 2016

SUMMARY OF PRINCIPAL DECISIONS

At its 679h meeting, held on December 6, 2016, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

1. Guarantee for rollover of debt of Cemig GT.

 

  

 

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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16. MARKET ANNOUNCEMENT DATED DECEMBER 7, 2016: REPLY TO CVM INQUIRY LETTER 554/2016-CVM/SEP/GEA-1, OF DECEMBER 6, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 554/2016-CVM/SEP/GEA-1, of December 6, 2016

Question asked by the Brazilian Securities Commission (CVM)

Rio de Janeiro, December 6, 2016.

To Mr. Fabiano Maia Pereira

Investor Relations Director

Cia. Energética de Minas Gerais – CEMIG

Av. Barbacena, 1200 – 5th floor, B1 Wing

Santo Agostinho

30130-145 Belo Horizonte, Minas Gerais

E-mail: ri@cemig.com.br

Fax: (31) 3506-5026

Tel.: (31) 3506-5024

cc: emissores@bvmf.com.br; ccarajoinas@bvmf.com.br; apereira@bvmf.com.br

Subject: request for information on news report

Dear Sir,

 

  1. We refer to the report published on the G1 Portal on November 9, under the headline:

“TCU sees indications of over-invoicing of R$ 3.4bn in construction of Belo Monte”,

which contains the following statements:

The Federal Audit Court (TCU) has found indications of overinvoicing of R$ 3.384 billion in the works on construction of the Belo Monte hydroelectric plant, in Pará. The Audit Court has given Norte Energia, the consortium responsible for the plant and for the Belo Monte Construction Consortium, which was contracted by Norte Energia to build it, 15 days to make a statement on the irregularities.

According to the Audit Court, of the total overinvoicing found, R$ 2.893 billion is overpricing found in the civil engineering works, and a further R$ 490 million relates to issues in the Second Amendment signed between Norte Energia and the Belo Monte Construction Consortium.

 

  

 

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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At the time of the last update of this report the offices of Norte Energia had not responded to calls from G1.

Belo Monte is the world’s third largest hydroelectric plant, after Three Gorges, in China, and Itaipu, built on the frontier between Brazil and Paraguay.

In view of the above, and the equity interest that Cemig holds in Norte Energia, we require you to make a statement in relation to this report and the possible impact on Cemig’s financial statements, and to comment on any other information considered to be important on the subject.

 

  3. This statement should be given through the Empresas.NET system, in the category: Market Announcement, under the sub-category: Responses to consultations by CVM/Bovespa; subject heading: Media News Reports, and should include a transcription of this letter.

 

  4. We warn you that, by order of our Company Relations Supervision Management, using its legal powers under Sub-item II of Article 9 of Law 6385/1976 and CVM Instruction 452/07, a coercive fine of R$ 1,000 (one thousand Reais) is applicable, without prejudice to other administrative sanctions, for non-compliance with the requirement contained in this Official Letter, within 24 hours from becoming aware of the content of this communication, which is sent exclusively by e-mail, notwithstanding the provisions of §1 of Article 6 of CVM Instruction 358/02.

Reply by CEMIG

Dear Ms. Nilza Maria Silva de Oliveira,

In response to Official Letter 554/2016-CVM/SEP/GEA-1, of December 6, 2016, we inform you that the reports of the Federal Audit Board are public documents, and that we are not aware of any consequences arising from the matters stated in the above report.

Cemig (‘the Company’) has an indirectly-held equity interest of 12.5% in Norte Energia S.A. (‘Norte Energia’), the company that is the holder of the concession for commercial operation of the Belo Monte Hydroelectric Plant.

In relation to this indirect investment that the Company holds in Norte Energia, we inform you that as a result of the conclusions and results found by the independent investigation contracted by Eletrobras in projects and companies in which it has a stockholding interest, it was found to be necessary to adjust the financial statements of Norte Energia at December 31, 2015. The resulting effects for the Company were recognized by the equity method in proportion to the Company’s stockholding interest.

This information is given in detail in the Company’s financial statements for the year ended December 31, 2015, which were re-presented on November 12, 2016.

Belo Horizonte, December 7, 2016

Fabiano Maia Pereira

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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17. SUMMARY OF PRINCIPAL DECISIONS OF THE 680TH MEETING OF THE BOARD OF DIRECTORS HELD ON DECEMBER 15, 2016

 

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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 December 15, 2016

SUMMARY OF PRINCIPAL DECISIONS

At its 680th meeting, held on December 15, 2016, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

    Guarantee in rollover of debt of Cemig GT; cancellation of CRCA (Board Spending Decision.

 

  

 

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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18. NOTICE TO STOCKHOLDERS DATED DECEMBER 15, 2016: PAYMENTS OF DIVIDENDS AND INTEREST ON EQUITY: DECEMBER 29

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS CEMIG

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

NOTICE TO STOCKHOLDERS

Payments of dividends and Interest on Equity: December 29

Cemig advises its stockholders that the payments of Interest on Equity and dividends previously scheduled to take place on December 20, 2016, as stated in the Notice to Stockholders of November 23, 2016, will now be made on December 29, 2016.

The other information in the said Notice to Stockholders of December 23, 2016 is unchanged.

Belo Horizonte, December 15, 2016

Fabiano Maia Pereira

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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19. CONVOCATION AND PROPOSAL OF EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 20, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

DECEMBER 20, 2016

CONVOCATION

Stockholders are hereby called to an Extraordinary General Meeting of Stockholders to be held on December 20, 2016 at 11 a.m., at the company’s head office, Av. Barbacena 1200, 21st floor, Belo Horizonte, Minas Gerais, Brazil, to decide on the following matters:

 

  1 Examination, debate and voting on the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted.

 

  2 Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000).

 

  3 Orientation of vote by the representative(s) of the Company in the Extraordinary General Meeting of Stockholders of Cemig Geração e Transmissão S.A., also to be held on December 20, 2016, in favor of the following:

 

  Examination, debate and voting on the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted; and

 

  Re-ratification of the allocation of the Net profit for 2015, approved in the Ordinary Annual General Meetings of Stockholders held on April 29, 2016, the amount being adjusted from R$ 2,337,663,000 to R$ 2,316,273,000, the balance of Retained earnings remaining the same (at R$ 47,761,000).

Any stockholder who wishes to be represented by proxy at the said General Meeting of Stockholders should obey the precepts of Article 126 of Law 6406 of 1976, and of the sole paragraph of Clause 9 of the Company’s by-laws, by exhibiting at the time, or depositing, preferably by December 16, 2016, proofs of ownership of the shares, issued by a depositary financial institution, and a power of attorney with specific powers, at Cemig’s Corporate Executive Office (Superintendência da Secretaria Geral) at Av. Barbacena 1200 – 19th Floor, B1 Wing, Belo Horizonte, Minas Gerais.

Belo Horizonte, November 11, 2016

José Afonso Bicalho Beltrão da Silva

Chair of the Board of Directors

 

  

 

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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PROPOSAL

BY THE BOARD OF DIRECTORS

TO THE

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 20, 2016

Dear Stockholders:

The Board of Directors of Companhia Energética de Minas Gerais—Cemig:

Whereas –

 

a) the Company’s financial statements for the business year ended December 31, 2015 were made available to the CVM (Comissão de Valores Mobiliários) on March 30, 2016 and approved by the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016;

 

b) those financial statements were filed at the CVM with the following qualification by the external auditors:

Absence of sufficient auditing evidence in relation to the investment, and the equity method gain (or loss) arising, in Amazônia Energia S.A., and Aliança Norte Energia Participações S.A., on December 31, 2015 and for the business year end on that date.

As mentioned in Notes 1 and 14 to the financial statements, the Company has an indirect investment in Norte Energia S.A. (‘Norte Energia’), which is the subject of an investigation carried out by the stockholder Centrais Elétricas Brasileiras S.A. (Eletrobras). Due to that investigation not having been finalized, the audit examinations of the financial statements of Amazônia Energia S.A. and Aliança Norte Energia Participações S.A. (which have investments in Norte Energia S.A.), for the business year ended December 31, 2015, have not been concluded at today’s date. Consequently, we have not obtained sufficient auditing evidence in relation to the investment held by the Company in Amazônia Energia S.A. and Aliança Norte Energia Participações S.A., valued by the equity method at R$ 871,442,000 on December 31, 2015, and in relation to the equity loss reported by the equity method corresponding to R$ 10,261,000 for the period ending on that date.”;

 

c) those Meetings of Stockholders approved the following allocation of the Net profit for 2015, of R$ 2,491,375,000, and of the balance of Retained earnings of R$ 59,536,000:

 

  1) R$ 633,968,000 as minimum mandatory dividends, as follows:

 

  R$ 200,000,000 in the form of Interest on Equity, under Board Spending Decisions CRCA 088/2015 of December 17, 2015, and CRD 432/2015, of January 4, 2016, to be paid in two equal installments, by June 30, 2016 and December 30, 2016, to stockholders on the Company’s Nominal Share Registry on December 30, 2015, the Executive Board to obey the periods and to decide the places and processes of payment and to allocate the amount of the Interest on Equity against the minimum mandatory dividend (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 in the form of dividends for the 2015 business year, to stockholders of record on the date on which the Ordinary General Meeting is held.

 

  

 

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) R$ 633,967,000 to be held in Equity in the Reserve for mandatory dividend not distributed, to be paid as and when the Company’s financial situation permits;

 

  3) R$ 1,262,280,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s planned investments in 2016, in accordance with a capital budget; and

 

  4) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentive gains obtained in 2015 as a result of investments in the region of Sudene –

 

  payments of the dividends to be made by December 30, 2016, in accordance with the availability of cash and at the decision of the Executive Board;

 

d) Cemig owns 100% of the share capital of Cemig Geração e Transmissão S.A. (Cemig GT), which in turn holds an equity interest of 74.50% in the total share capital of Amazônia Energia Participações S.A. (‘Amazônia Energia’), which in turn holds 9.77% of the share capital of Norte Energia S.A. (Norte Energia);

 

e) Cemig GT further holds 49.00% of the share capital of Aliança Norte Energia Participações S.A. (‘Aliança Norte’), which in turn holds 9.00% of the share capital of Norte Energia;

 

f) as a result of conclusion of investigations into Norte Energia, Cemig has adjusted the results of the said financial statements by the amount of R$ 22,875,000, so that the Net profit for 2015 is adjusted from R$ 2,491,375,000 to R$ 2,468,500,000;

 

g) due to this adjustment, it is necessary to re-ratify the allocation of the Company’s net profit for 2015 (the impacts of this are restricted to the Retained earnings reserve, and the Reserve for mandatory dividends not distributed);

 

h) Cemig GT is a wholly-owned subsidiary of the Company and will hold an Extraordinary General Meeting of Stockholders by December 20, 2016 to re-ratify the allocation of Net profit for the 2015 business year; and

 

i) Clause 21, Paragraph 4, Subclause ‘g’ of the by-laws of Cemig states:

“Clause 21—.

§4 The following maters shall require a decision by the Executive Board: .

 

  g) approval, upon proposal by the Chief Executive Officer, prepared jointly with the Chief Business Development Officer and the Chief Finance and Investor Relations Officer, of the statements of vote in the General Meetings of the wholly-owned and other subsidiaries, affiliated companies and in the consortia in which the Company participates, except in the case of the wholly-owned subsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A., for which the competency to decide on these matters shall be that of the General Meeting of Stockholders, and decisions must obey the provisions of these Bylaws, the decisions of the Board of Directors, the Long-term Strategic Plan and the Multi-year Strategic Implementation Plan.”;

– do now propose to you as follows:

 

  

 

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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Proposal:

 

I) Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000), as follows:

 

  a) R$ 633,968,000 to be paid to the stockholders as mandatory minimum dividend, as follows:

 

  R$ 200,000,000 as Interest on Equity, under Board Spending Decisions CRCA 088/2015 of December 17, 2015, and CRD 432/2015, of January 4, 2016, to be paid in two equal installments, by June 30, 2016 and December 30, 2016 to stockholders on the Company’s Nominal Share Registry on December 30, 2015, and allocated as part of the mandatory minimum dividend, the Executive Board to obey the periods and to decide the places and processes of payment (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 as dividends for the 2015 business year, to stockholders on the Company’s nominal share registry on April 29, 2016, the date on which the Ordinary and Extraordinary General Meetings were held this year;

 

  b) R$ 622,529,000 to be held in Stockholders’ equity in the Reserve for mandatory dividends not distributed, to be paid as and when the Company’s financial situation permits;

 

  c) R$ 1,250,853,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s planned investments for 2016, in accordance with a capital budget; and

 

  d) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentives gains obtained in 2015 as a result of investments in the region of Sudene;

 

  the other terms related to the payment of dividends decided in the Ordinary and Extraordinary General meetings of stockholders held, concurrently, on April 29, 2016 being unchanged.

 

II) Orientation of the representative(s) of Cemig at the General Meeting of Stockholders of Cemig Geração e Transmissão S.A. to be held, also, on December 20, 2016, to vote in favor of the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted;

 

III) Orientation of the representative(s) of Cemig at the General Meeting of Stockholders of Cemig Geração e Transmissão S.A. to be held, also, on December 20, 2016, to vote in favor of re-ratification of the allocation of the Net profit for 2015, approved in the Ordinary Annual General Meetings of Stockholders held on April 29, 2016, the amount being adjusted from R$ 2,337,663,000 to R$ 2,316,273,000, the balance of Retained earnings remaining the same (at R$ 47,761,000).

As can be seen, the objective of this proposal is to meet legitimate interests of the stockholders and of the Company, and as a result Board of Directors hope that it will be approved by the Stockholders.

Belo Horizonte, November 11, 2016

 

Signed:   

José Afonso Bicalho Beltrão da Silva

Mauro Borges Lemos

Allan Kardec de Melo Ferreira

Arcângelo Eustáquio Torres Queiroz

Daniel Alves Ferreira

Helvécio Miranda Magalhães Junior

José Pais Rangel

  

Marco Antônio de Rezende Teixeira

Marco Antônio Soares da Cunha Castello Branco

Nelson José Hubner Moreira

Saulo Alves Pereira Junior

Aloísio Macário Ferreira de Souza

Bruno Magalhães Menicucci

 

  

 

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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APPENDIX 1

OPINION OF THE AUDIT BOARD

The undersigned members of the Audit Board of Companhia Energética de Minas Gerais – Cemig, in performance of their functions under the law and under the by-laws, have examined the Proposal made by the Board of Directors to the Extraordinary General Meeting of Stockholders to be held on December 20, 2016, which is for the following:

Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000), as follows;

 

  a) R$ 633,968,000 to be allocated as mandatory minimum dividend, to be paid to the Company’s stockholders, as follows:

 

  R$ 200,000,000 in the form of Interest on Equity, under Board Spending Decisions CRCA 088/2015 of December 17, 2015, and CRD 432/2015, of January 4, 2016, to be paid in two equal installments, by June 30, 2016 and December 30, 2016, to stockholders on the Company’s Nominal Share Registry on December 30, 2015, and allocated as part of the mandatory minimum dividend, the Executive Board to obey the periods and to decide the places and processes of payment (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 in the form of dividends for the 2015 business year, to stockholders whose names were on the Company’s nominal share registry on April 29, 2016, the date on which the Ordinary and Extraordinary General Meetings were held this year; and

 

  b) R$ 622,529,000 to be held in Stockholders’ equity in the Reserve for mandatory dividend not distributed, to be paid as and when the Company’s financial situation permits;

 

  c) R$ 1,250,853,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s planned investments planned for 2016, in accordance with a capital budget; and

 

  d) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentive gains obtained in 2015 as a result of investments in the region of Sudene

 

  the other terms related to the payments of dividends decided in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016 being unchanged.

The members of the Audit Board, after carefully analyzing the said proposal and further taking into account that the applicable rules governing the subject have been complied with, are of the opinion that the proposal should be approved by the said General Meeting of Stockholders.

Belo Horizonte, November 11, 2016.

 

Signed:   

Edson Moura Soares

Newton Brandão Ferraz Ramos

Bruno Cirilo Mendonça de Campos

  

Manuel Jeremias Leite Caldas

Rafael Amorim de Amorim

 

  

 

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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20. EARNINGS RELEASE: 2015 RESULTS

 

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2015 RESULTS

CEMIG REPORTS

2015 NET INCOME OF

R$ 2.469 BILLION

Highlights

 

  Cash flow, as measured by Ebitda: R$ 4.9 billion in 2015

 

  2015 Net revenue R$ 21.2 billion

 

  R$ 1.7 billion contribution from CVA/Other financial tariff components in 2015

 

  Gain on Aliança stockholding transaction R$ 729 million in 2015

 

  R$ 1.2 billion provision for loss on investments in the year

 

Indicators (GWh)

   2015      2014      Change %  

Electricity sold, GWh (excluding CCEE)

     56,904         63,470         –10.35   

Indicators – R$ ’000

   2015      2014      Change %  

Sales on the CCEE

     2,425         2,348         3.28   

Net debt

     11,732         11,610         1.05   

Gross revenue

     32,842         25,165         30.51   

Net revenue

     21,292         19,540         8.97   

Ebitda (IFRS)

     4,932         6,381         -22.71   

Net income

     2,469         3,137         -21.29   

Profit per share

     1.96         2.49         -21.29   

Ebitda margin

     22.72%         32.66%         -9.94p.a.   

 

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Conference call

Publication of 2015 results

Video webcast and conference call

March 30, 2016 – Wednesday – at 11 am (Brasília time)

This transmission on Cemig’s results will have simultaneous translation into English and can be seen in real time by Video Webcast, at http://ri.cemig.com.br or heard by conference call on:

+ 55 (11) 2188-0155 (1st option) or

+ 55 (11) 2188-0188 (2nd option)

Password: CEMIG

 

Playback of Video Webcast:

Site:

http://ri.cemig.com.br

Click on the banner and download.

Available for 90 days

  

Conference call – Playback:

Telephone: (+55-11) 2188-0400

Password:

CEMIG Português

Available from March 30 to April 13, 2016

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

Fabiano Maia Pereira

 

General Manager, Investor Relations

Antônio Carlos Vélez Braga

 

Manager, Investor Market

Robson Laranjo

 

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Contents

 

CONFERENCE CALL

     59   

CEMIG INVESTOR RELATIONS

     59   

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

     59   

CONTENTS

     60   

DISCLAIMER

     61   

CEMIG STOCK PRICE PERFORMANCE

     62   

CEMIG: LONG TERM RATINGS

     63   

ADOPTION OF IFRS

     64   

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

     66   

THE ELECTRICITY MARKET OF CEMIG D

     68   

THE ELECTRICITY MARKET OF CEMIG GT

     70   

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION – MWH

     71   

QUALITY INDICATORS – SAIDI AND SAIFI

     71   

CONSOLIDATED OPERATIONAL REVENUE

     72   

TAXES AND CHARGES APPLIED TO REVENUE

     74   

OPERATIONAL COSTS AND EXPENSES

     75   

FINANCIAL REVENUE (EXPENSES)

     80   

EBITDA

     81   

DEBT

     82   

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

     84   

FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT

     85   

GENERATING PLANTS

     87   

GENERATION PLANTS: CONCESSION CONTRACT EXPIRY PERIODS

     88   

EXCHANGE OF SHAREHOLDERS’ DEBENTURES OWNED BY AGC ENERGIA FOR SHARES IN CEMIG

     89   

GENERATION: ANNUAL PERMITTED REVENUE (RAP)

     91   

APPENDICES

     92   

 

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Disclaimer

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

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

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

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

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

 

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Cemig stock price performance

 

Security

   Ticker      Currency    Close of
2015
     Close of
2014
     Change in the
period %
 

Cemig PN

     CMIG4       R$      5.97         12.40         -51.86%   

Cemig ON

     CMIG3       R$      6.28         13.04         -51.84%   

ADR PN

     CIG       US$      1.46         4.60         -68.38%   

ADR ON

     CIG.C       US$      1.74         5.11         -65.96%   

Ibovespa

     Ibovespa       —        43,349         50,007         -13.31%   

IEEX

     IEEX       —        24,803         27,161         -8.68%   

 

Source: Economática.

Trading volume in Cemig’s preferred shares (CMIG4) totaled R$ 10.93 billion in full-year 2015, a daily average of R$ 44.46 million. At this level, Cemig continues to be one of the most liquid companies in the Brazilian electricity sector, and one of the most traded in the Brazilian capital markets.

On the New York Stock Exchange, the volume traded in ADRs for Cemig’s preferred shares (CIG) in full-year 2015 was US$ 3.11 billion. We see this as reflecting recognition by the investor market of Cemig as a global investment option.

The São Paulo stock exchange Ibovespa index was down 13.31% in 2015, closing the year at 43,349 points. The negative result directly reflects Brazil’s current adverse economic phase.

Cemig’s shares underperformed the Ibovespa. Over the year the price of Cemig’s common shares (Cemig ON) declined 51.84%, and the preferred stock (Cemig PN) was down 51.86%. A major factor adversely affecting Cemig’s stock price was the conclusion, with a judgment against Cemig, of the legal action on the Jaguara Hydroelectric Plant in the Higher Appeal Court (STJ), even though the case has now been taken to the Federal Supreme Court on an appeal. Other factors affecting the stock price in the year included: designation by the Mining and Energy Ministry (published September 15), of Cemig GT as responsible for operation of the São Simão hydroelectric plant under the quota regime; the fall in electricity consumption; the water supply crisis affecting the country; and the country’s macroeconomic situation.

 

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Cemig: long term ratings

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

Brazilian ratings:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating   Outlook    Rating   Outlook    Rating   Outlook

Fitch

   AA–(bra)   Negative    AA–(bra)   Negative    AA–(bra)   Negative

S&P

   brA   Negative    brA   Negative    brA   Negative

Moody’s

   A2.br   Negative    A2.br   Negative    A2.br   Negative

Global ratings:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating    Outlook    Rating    Outlook    Rating    Outlook

S&P

   BB–    Negative    BB–    Negative    BB–    Negative

Moody’s

   Ba3    Negative    Ba3    Negative    Ba3    Negative

 

(Fitch gives only Brazilian – not global – ratings.)

On February 25, 2016, Moody’s downgraded its Brazilian ratings for Cemig, its wholly-owned subsidiaries Cemig D and Cemig GT, and their debenture issues from Aa2.br to A2.br; and their global ratings from Ba1 to Ba3, changing the outlook to negative.

 

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Impact on the financial statements arising from the conclusions of the independent investigation into Belo Monte

Based on the conclusions and results identified by the internal independent investigation, which resulted in an adjustment reported in Nesa of R$ 183 million, on December 31, 2015 Cemig recorded an adjustment of R$ 23 million in the account line Investments, with counterpart in the Profit and loss account in the line Equity gain (loss) from subsidiaries, comprising: R$ 21 million arising from the adjustment made by Cemig GT, and R$ 2 million from the adjustment made by Light S.A. – in accordance with the requirements of IAS-8 –Accounting Policies, Changes in Accounting Estimates and Errors.

Considering that the independent internal investigation was concluded on a date subsequent to the approval of issuance of the financial statements for the year ended December 31, 2015 and the interim accounting information for the periods ended March 31 and June 30, 2016, the Management of Cemig and Cemig GT concluded that it was necessary to re-present the financial statements referred to and the Earnings Release.

Adoption of IFRS

The 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).

 

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PROFIT AND LOSS ACCOUNTS

 

Consolidated – R$ ’000

   2015     2014     Change %  

REVENUE

     21,292,211        19,539,578        8.97   

OPERATIONAL COSTS

      

Personnel

     (1,435,001     (1,252,458     14.57   

Employees’ and managers’ profit shares

     (137,364     (249,369     -44.92   

Post-retirement liabilities

     (156,009     (211,916     -26.38   

Materials

     (69,522     (98,660     -29.53   

Raw materials and inputs for production of electricity

     (83,723     (282,447     -70.36   

Outsourced services

     (899,470     (953,033     -5.62   

Electricity purchased for resale

     (9,541,940     (7,428,381     28.45   

Depreciation and amortization

     (834,830     (800,918     4.23   

Operational provisions

     (1,401,455     (580,720     141.33   

Charges for use of national grid

     (998,756     (744,431     34.16   

Gas bought for resale

     (1,050,925     (254,488     312.96   

Infrastructure construction costs

     (1,251,836     (941,795     32.92   

Other operational expenses, net

     (457,159     (651,993     -29.88   
  

 

 

   

 

 

   

 

 

 

TOTAL COST

     (18,317,990     (14,450,609     26.76   

Equity gain (loss) in subsidiaries

     392,990        210,484        86.7   

Fair value gain (loss) on stockholding transaction

     729,442        —          —     

Gain (loss) on combination of businesses

     —          280,945        —     

Operational profit before Financial revenue (expenses) and taxes

     4,096,653        5,580,398        -26.59   

Financial revenues

     1,469,277        592,684        147.90   

Financial expenses

     (2,204,344     (1,693,672     30.15   
  

 

 

   

 

 

   

 

 

 

Pretax profit

     3,361,586        4,479,410        -24.95   

Current and deferred income tax and Social Contribution tax

     (892,583     (1,342,507     -33.51   
  

 

 

   

 

 

   

 

 

 

NET INCOME FOR THE PERIOD

     2,469,003        3,136,903        -21.29   
  

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     2,468,500        3,136,639     

Interest of non-controlling stockholder

     503        264     
  

 

 

   

 

 

   
     2,469,003        3,136,903        -21.29   
  

 

 

   

 

 

   

NET INCOME FOR THE PERIOD

     2,491,878        3,136,903        -20.56   
  

 

 

   

 

 

   

Fair value gain (loss) on stockholding transaction

     (573,182     —       

Transmission indemillionity revenue

     —          (235,421  

Employment-law provision – 2012 annual salary increase

     —          84,091     

Equity method less – Madeira Energia

     —          167,022     

Gain (loss) on combination of businesses – Gasmig

     —          (185,424  
  

 

 

   

 

 

   

ADJUSTED NET INCOME FOR THE PERIOD

     1,895,821        3,125,205        -39.34   

 

* AFAC = Advance against future capital increase.

 

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Cemig’s consolidated electricity market

The Cemig Group sells electricity through its distribution company, Cemig Distribuição (‘Cemig D’), its generation and transmission company Cemig Geração e Transmissão (‘Cemig Generation and Transmission’, or ‘Cemig GT’), and the wholly-owned subsidiaries Horizontes Energia, Termelétrica Ipatinga (up to January 2015), Sá Carvalho, Termelétrica de Barreiro, Cemig PCH, Rosal Energia and Cemig Capim Branco Energia (up to March 2015).

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

 

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

 

(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).

In 2015 this Cemig group sold a total volume of 56,903,594 MWh, which was 10.3% less than in 2014.

Overall, electricity consumption in 2015 was affected by adverse Brazilian political and economic circumstances; and, in the captive market, by the successive increases in electricity rates charged to consumers, associated with application of the ‘Tariff Flag’ system – resulting in significant increases in consumers’ electricity invoices.

Sales to distributors, traders, other generating companies and independent power producers totaled 10,831,194 MWh – or 23.4% less than in 2014.

 

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In December 2015 the Cemig Group invoiced 8,079,771 customers – a growth of 0.9% in the customer base in the year since December 2014. Of these, 8,079,719 were final consumers (including Cemig’s own consumption); and 52 were other agents of the Brazilian electricity sector.

This chart shows the breakdown of sales to final consumers of the Cemig Group in the quarter, by consumer category:

 

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Total consumption of electricity (GWh)

 

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The volume of electricity sold to final consumers of Cemig in 2015 was 10.35% lower than in 2014.

 

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Consolidated

   MWh      Change, %      Average
price

2015 R$
     Average
price

2014 R$
 
   2015      2014           

Residential

     9,829,992         10,013,757         –1.84         742.38         517.60   

Industrial

     22,968,931         26,025,584         –11.74         251.67         184.18   

Commercial, Services and Others

     6,433,728         6,395,473         0.60         614.94         435.57   

Rural

     3,379,734         3,390,096         –0.31         416.18         267.97   

Public authorities

     892,368         891,454         0.10         613.77         427.55   

Public lighting

     1,325,525         1,298,047         2.12         401.81         275.72   

Public service

     1,204,461         1,272,365         –5.34         448.66         289.33   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     46,034,739         49,286,776         –6.60         435.80         299.83   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Own consumption

     37,661         37,590         0.19         —           —     

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

     10,831,194         14,146,109         –23.43         197.90         159.16   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     56,903,594         63,470,475         –10.35         395.87         271.50   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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

The electricity market of Cemig D

Electricity billed to captive clients and electricity transported for Free Clients and distributors with access to Cemig D’s networks totaled 42,124 GWh in 2015, or 5.3% less than in 2014.

There are two components of this reduction: Consumption by the captive market 2.1% lower in the year; and use of the network by Free Clients 10.2% lower by volume.

Overall, consumption of electricity in 2015 was affected by adverse Brazilian political and economic circumstances; and, in the captive market, by the successive increases in electricity rates charged to consumers, associated with application of the ‘Tariff Flag’ system, resulting in significant increases in consumers’ electricity invoices.

In December 2015 Cemig billed 8,079,645 consumers, or 0.9% more than in December 2014. Of this total, 422 are Free Consumers using Cemig D’s distribution network.

Comments on the various consumer categories:

 

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Residential

Residential consumption was 17.27% of the total volume of electricity transacted by Cemig, and totaled 9,830 GWh, or 1.84% less than in 2014.

Average monthly consumption per consumer in 2015 was 126.5 KWh/month, or 3.6% less than the average in 2014 (131.2 KWh/month) – this is the first year-on-year reduction in this variable since 2008.

Industrial

Electricity used by captive industrial clients was 7.84% lower in total volume than in 2014, and the total of electricity transported for Free Clients was 10.0% lower.

The main Brazilian and international macroeconomic factors that could have influenced consumption by the industrial sector are:

 

In Brazil: Retraction of domestic demand, accumulation of inventories, idle manufacturing capacity, loss of competitiveness, reduction of the number of employees and/or reduction of the use of labor (e.g. forced vacations, shorter work shifts), lack of entrepreneur confidence, low levels of public and private investment, uncertainties in the Brazilian political and economic situation, high cost of corporate credit due to high interest rates, and banks being more selective in granting loans.

 

International: Lower exports due to lower external demand.

In manufacturing there was a reduction in consumption across all sectors – led by: steel (–2.0%), non-metallic minerals (–7.7%), chemicals (–9.6%), ferroalloys (–44.6%), non-ferrous metals (–10.8%), auto industry (–16.1%), and textiles (–11.9%).

The year-on-year comparison is affected by two factors in 2014: (i) a group of Free Clients migrated to the national grid; and (ii) some Free Clients stopped using the Cemig D network.

 

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The electricity market of Cemig GT

One factor in Cemig GT’s total sales volume in 2015 was termination of concession of plants. Following this change, payment for the output from these plants was redirected to the Physical Guarantee Quota regime, and to settlement on the spot market.

Cemig GT’s market comprises sales of power as follows:

 

(I) sales in the Free Market, to Free Clients, in Minas Gerais or other States;

 

(II) sales in the Free Market to other agents in the electricity sector – traders, generators and independent power producers ;

 

(III) sales to electricity distributors (in the Regulated Market); and

 

(IV) sales in the CCEE (Electricity Trading Chamber).

The total supply billed by Cemig GT in 2015 was 29,966 GWh, or 15.6% less than in 2014.

Free Clients consumed 18,832 GWh in 2015, 11.8%% less than in 2014, reflecting:

 

termination of contracts with clients at the end of 2014 that were not renewed with Cemig GT; and

 

reduction of consumption by clients due to weak demand in the Brazilian economy, with lower domestic demand for goods and services, also affected by the speed of recovery of the international market.

Cemig GT added 28 new free market clients in 2015, mainly outside Minas Gerais.

Trading of electricity to other agents in the electricity sector in the Free Market totaled 6,443 GWh in 2015, 24.5% less than in 2014; and the total sold in the Regulated Market was 4,690 GWh, 16.9% less than in 2014.

 

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Physical totals of transport and distribution – MWh

 

Description

   MWh      Change, %  
   2015      2014     

Total energy carried

     48,067,296         49,899,186         –3.67   

Electricity transported for distributors

     361,487         355,204         7.84   

Electricity transported for free clients

     15,315,122         16,736,754         –8.47   

Own load

        

Consumption by captive market

     26,453,478         27,010,669         –2.06   

Losses in distribution network

     5,933,209         5,816,560         2.01   

QUALITY INDICATORS – SAIDI AND SAIFI

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

The charts below show Cemig’s indicators for duration and frequency of outages – SAIDI (System Average Interruption Duration Index, in hours), and SAIFI (System Average Interruption Frequency Index, in number of outages), since January 2014. These results reflect the investments made by the company in preventive maintenance, such as cleaning of power line pathways, tree pruning, replacement of cross-arms, maintenance of structures, replacement of poles, transformers and cables, and other work such as network shielding, and overhaul and interconnection of circuits. Another important initiative is the change of technological level, with systematic investment in automation of the electricity system, which will enable automatic remote re-establishment of supply after outages.

 

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Consolidated operational revenue

Revenue from supply of electricity:

Total revenue from supply of electricity to final consumers in 2015 was R$ 22.526 billion, or 30.72% more than the total revenue of R$ 17.232 billion in 2014.

Final consumers

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, was R$ 20.319 billion in 2015 – or 36.17% more than the total of R$ 14.922 billion in 2014.

The main factors affecting revenue were:

 

  The Annual Tariff Adjustment for Cemig D, with average effect of 14.76% on consumer tariffs, effective from April 8, 2014 (full effect in 2015).

 

  The Extraordinary Tariff Adjustment for Cemig D, which resulted in an average impact on consumers’ tariffs of 28.76%, applicable from March 2, 2015.

 

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The Annual Tariff Adjustment effective from April 8, 2015, with average effect on consumer tariffs of 7.07%.

 

Creation, in 2015, of the ‘Tariff Flag’ mechanism – at the following rates per 100 kWh consumed: (i) as from January 2015, R$ 1.50 per 100kWh for the Yellow Flag tariff, and R$ 3.00 for the Red Flag tariff; (ii) as from March 2015, R$ 2.50 per 100kWh for the Yellow Flag tariff and R$ 5.50 for the Red Flag tariff; and finally (iii) from September 2015, R$ 2.50 for the Yellow Flag tariff and R$ 4.50 for the Red Flag tariff. In practice, the Red Flag rates were in effect for the whole of 2015.

 

Total volume of electricity sold in 2015 was 10.35% lower than in 2014.

 

     R$      Change %      Average price
2015 R$
     Average price
2014 R$
     Change %  
   2015     2014              

Residential

     7,297,557        5,183,149         40.79         742.38         517.60         43.43   

Industrial

     5,780,660        4,793,414         20.60         251.67         184.18         36.64   

Commercial, Services and Others

     3,956,344        2,785,659         42.03         614.94         435.57         41.18   

Rural

     1,406,590        908,436         54.84         416.18         267.97         55.31   

Public authorities

     547,707        381,144         43.70         613.77         427.55         43.55   

Public lighting

     532,603        357,892         48.82         401.81         275.72         45.73   

Public service

     540,338        368,136         46.79         448.66         289.33         55.07   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     20,061,849        14,777,830         35.76         435.80         299.83         45.35   

Supply not yet invoiced, net

     256,753        144,162         78.10         —           —           —     

Wholesale supply to other concession holders (*)

     2,358,466        2,251,431         4.75         217.75         159.16         24.34   

Wholesale supply not yet invoiced, net

     (150,793     58,682         —           —           —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     22,526,275        17,232,105         30.72         395.87         271.50         45.81   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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

Revenue from Use of Distribution Systems (the TUSD charge)

The revenue of Cemig D (Distribution) from the TUSD in 2015 was R$ 1.465 billion, or 71.35% higher than in 2014 (R$ 855 million). This reflects the impact of the tariff adjustments in 2015 – an increase of 96.21% for Free Consumers. The 2015 increases were mainly due to passing through of the CDE (Energy Development Account) amounts to the tariffs paid by consumers. The effect of the increase in tariffs was partially offset by the effect of lower activity in the industrial sector – which consumed 11.74% less electricity, year-on-year, in the period.

 

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Revenue from transactions in the Wholesale Trading Chamber (CCEE)

Revenue from transactions in electricity on the CCEE was R$ 2.425 billion in 2015, compared to R$ 2.348 billion in 2014 – an increase of 3.28%. The components of this figure were: Higher total volume sold, at 7,157,641 MWh in 2015 – compared to 3,354,224 MWh in 2014; and the Spot Price (Preço de Liquidação de Diferenças – PLD) in the wholesale market 58.31% lower (at R$ 287.20/MWh in 2015, vs. R$ 688.89/MWh in 2014).

CVA and Other financial components in the tariff adjustment calculation

Due to the alteration in the concession contracts of the distributors, Cemig started to recognize certain balances of non-controllable costs to be passed through to Cemig D’s next tariff adjustment – these represented an operational revenue of R$ 1.704 billion in 2015, compared to R$ 1.107 billion in 2014.

Revenue from supply of gas

Cemig reports revenue from supply of gas totaling R$ 1.667 billion in 2015, compared to R$ 422 million in 2014 – an increase of 295.02%. The variation basically reflects the fact that figures for Gasmig began to be consolidated into Cemig’s results in October 2014.

Taxes and charges applied to Revenue

The sector charges that are effectively deductions from reported revenue were 105.28% higher in 2015, at R$ 11.549 billion – compared to R$ 5.626 billion in 2014. The increase mainly reflects the higher charges under the Energy Development Account (CDE), and also the Tariff Flag charges.

The Energy Development Account – CDE

Payments to the Energy Development Account (CDE) are decided by an Aneel Resolution. The expenses included are: concession indemillionities, tariff subsidies, the subsidy for balanced tariff reduction, the low-income consumer subsidy, the coal consumption subsidy, and the Fuels Consumption Account (CCC).

 

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Charges for the CDE in 2015 were R$ 2.870 billion, compared to R$ 211 million in 2014. This is the result of the new budget for the CDE in 2015, in which Aneel increased the annual amount to be paid by Cemig D, which is passed through to the consumer in the Sector Charges component of tariffs.

Consumer charges – the ‘Tariff Flag’ system

In 2015, with the Tariff Flag mechanism coming into force, Cemig had an account under Consumer Charges related to the Tariff Flag payments, totaling R$ 1.067 billion.

The ‘Flag Account’ (Conta Bandeira) was created on February 5, 2015, to manage the funds collected from captive customers of utilities holding electricity distribution concessions and permissions – these funds are paid, on account of the CDE, directly to the Flag Account. The Wholesale Trading Chamber (CCEE) passes the proceeds through to distribution agents, based on the difference between the realized amounts of costs of thermal generation and the exposure to spot prices, and the amount covered by the tariff.

The other deductions from revenue are taxes, calculated as a percentage of amounts invoiced. Thus their variations are, substantially, proportional to the changes in revenue.

Operational costs and expenses

Operational costs and expenses, excluding Financial revenue (expenses), totaled R$ 18.318 billion in 2015, compared to R$ 14.451 billion in 2014 – an increase of 26.76%.

 

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The following paragraphs comment on the main variations:

Electricity purchased for resale

The expense on electricity bought for resale in 2015 was R$ 9.542 billion, or 28.46% more than in 2014 (R$ 7.428 billion). Over the course of 2015, this cost has been more than 50% of the Company’s total costs. The main factors in the higher figure are:

Cemig D:

 

  Expense on electricity acquired in auctions 20.74% higher, at R$ 4.098 billion, in 2015, compared to R$ 3.394 billion in 2014 – arising mainly from availability contracts, due to the expenditure on fuel for generation by the thermal plants.

 

  Expense on electricity from Itaipu Binacional was 108.92% higher. This amount is indexed to the US dollar, and was R$ 1.734 billion in 2015, compared to R$ 830 million in 2014. This reflects both an increase in the tariff – which was US$ 26.05/kW-month in 2014, and rose to US$ 38.07/kW-month as from January 2015 – and also the increase in the dollar exchange rate against the Real from 2014 to 2015. The average exchange rate used for the dollar in invoices in 2015 was R$ 3.38, compared to R$ 2.35 in 2014 – an increase of 43.83%.

 

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Purchases of supply in the short-term market were 24.67% lower – at R$ 849 million in 2015, compared to R$ 1.127 billion in 2014, due to the lower cost of electricity in the wholesale market in 2015.

Cemig GT:

The expense on electricity bought for resale in 2015 was R$ 2.601 billion, or 53.72% more than in 2014 (R$ 1.692 billion). The difference mainly reflects electricity bought for resale 48.10% higher in 2015 (at 15,273,685 MWh), than in 2014 (10,313,226 MWh) – reflecting lower generation capacity, with the termination of the concessions of some plants.

Operational provisions

Operational provisions in 2014 totaled R$ 1.401 billion, compared to R$ 581 million in 2014, an increase of 141.14%. This change mainly reflected a provision of R$ 1.079 billion made in 2015 for losses relating to the put options for the equity interests in Parati and a provision of R$ 119 million for SAAG – Santo Antonio Investment.

 

a) Put options for Units in FIP Melbourne

Option contracts for sale of Units (‘put options’) were signed between Cemig GT and the pension plan entities that participate in the investment structure of SAAG, which those entities may exercise in the 84th month from June 2014. The exercise price of the put options will correspond to the amount invested by each pension plan company in the Investment Structure, updated pro rata temporis by the IPCA inflation index (Índice National de Preços ao Consumidor Amplo, published by the Brazilian Geography and Statistics Institute – IBGE), plus 7% per year, less such dividends and Interest on Equity as have been paid by SAAG to the pension plan entities.

To decide the method to be used for measuring the fair value of the put options, since Madeira Energia is an unlisted company, the Company adopted the discounted cash flow method to measure the fair value of those options. The fair value of this option has been calculated on the basis of the estimated exercise price on the day of exercise of the option, less the fair value of the shares that are the subject of the put option, also estimated for the date of exercise, brought to present value at the interim reporting date, at the effective rate of 8% p.a. (discounting inflation effects). Based on the studies made, the amount of R$ 148 million is recorded in Cemig GT as the best estimate of the loss on these options.

 

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b) FIP Redentor

Cemig has granted to Fundo de Participações Redentor, which is a stockholder of Parati, an option to sell the totality of the shares which that fund holds in Parati, exercisable in May 2016. The price of the option is calculated using the sum of the value of the injections of capital by the fund into Parati, plus the running expenses of the fund, less any Interest on Equity, and dividends, distributed by Parati. The exercise price is subject to monetary updating by the CDI (Interbank CD) Rate plus financial remuneration at 0.9% per year.

For the purposes of determining the method to be used to measure the fair value of this option, the Company observed the daily trading volume of the shares of Light, and also the fact that such option, if exercised by the Fund, will require the sale to the Company, in a single transaction, of shares in Light in a quantity higher than the daily exchange trading averages. Thus, the Company has adopted the discounted cash flow method for measurement of the fair values of the option. The fair value of this option has been calculated on the basis of the estimated exercise price on the day of exercise of the option, less the fair value of the underlying shares, also estimated for the date of exercise, brought to present value at the interim reporting date, at the effective rate of 7.5% p.a. (discounting inflation effects).

Based on the studies carried out, a liability in the amount of R$ 1.245 billion has been recorded in the financial statements, for the best estimate of the loss on this option.

 

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Personnel

Personnel expenses were R$ 1.435 billion in 2015, compared to R$ 1.252 billion in 2014, an increase of 14.62%. This arises mainly from the following items:

 

  Salary increases, under the Collective Agreement, of 6.34%, coming into effect in November 2014 (full effect in 2015).

 

  Salary increases of 3% from March 2015, as a result of the collective negotiation decided by the courts on application from organizations representing the employees.

 

  Salary adjustments applied at the 10.33%, from November 2015, under the Collective Agreement.

Cemig: number of employees

 

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Gas bought for resale

The expense that Cemig reports for Gas bought for resale was R$ 1.051 billion in 2015, vs. R$ 254 million in 2014. Cemig started consolidating the results of Gasmig in October 2014, after Cemig acquired the 40% interest in Gasmig held by Petrobras.

 

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Raw materials and inputs for production of electricity

The expense on raw material and inputs for production of electricity in 2015 was R$ 84 million, compared to R$ 282 million in 2014 – a reduction of 70.21%. This reflects the temporary stoppage of the Igarapé thermal plant in 2015, due to the need for maintenance and installation of new equipment, and the federal government’s decision to stop generation by thermal plants that have the highest Variable Unit Cost (CVU).

Financial revenue (expenses)

 

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Cemig reports net financial expenses of R$ 735million in 2015, compared to net financial expenses of R$ 1.101 billion in 2014. The main factors are:

 

  Recognition, as from 2015, of the foreign exchange variation and monetary updating on the balances of the CVA and the Other financial components elements of tariff adjustments, representing and increase in financial revenue of R$ 68 million in 2015.

 

 

A higher gain on updating of financial assets of the Remuneration Base of Assets (Base Regulatória de Remuneração, or BRR): R$ 606 million in 2015, vs. R$ 58 million in 2014. In November 2015 Aneel ordered an alteration of the indexor of the BRR, from the IGP-M inflation index to the IPCA inflation index. This change generated an updating adjustment backdated to January 2013. The effect of this change in financial revenue recorded in December 2015 was R$ 143 million. This difference also arises from the higher variation in the

 

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  present indexor of the BRR – the IPCA index – which was 10.67% in 2015, compared to variation of 3.69% in the IGP-M index in 2014. Additionally, in June 2014 there was a reversal in the monetary updating of the BRR, totaling R$ 110 million, due to the final, definitive, homologation of the value of the BRR of Cemig D.

 

Recognition, starting in 2015, of monetary updating on deposits linked to legal actions, representing a gain in financial revenue of R$ 212 million in 2015.

 

Higher expenses of exchange rate variations on loans and financings, and on Itaipu Binacional, which totaled R$ 172 million in 2015, vs. R$ 26 million in 2014. This mainly reflects the effects on Cemig D of the higher variation of the US dollar in 2015 (47.01% in full-year 2015, compared to 13.39% in 2014);

 

Charges for loans and financings 48.44% higher, at R$ 1.382 billion in 2015, compared to R$ 931 million in 2014. This mainly reflects higher debt indexed to the CDI Rate; and also the higher CDI rate itself, in 2015 – representing 13.23% in the year, compared to 10.81% in 2014.

 

Expense on monetary updating of loans and financings 42.80% higher, at R$ 387 million in 2015, compared to R$ 271 million in 2014. This is mainly the effect of higher variation in the IPCA inflation index in the period (10.67% in 2015, compared to 6.41% in 2014).

Ebitda

Cemig’s consolidated Ebitda in 2015 was 22.36% lower than in 2014. This mainly reflects operational costs and expenses (excluding depreciation and amortization) 28.08% higher in 2015 – an outstanding element of this expense being provisions totaling R$ 1.198 billion for losses on investments.

 

Ebitda – R$mn

   2015      2014      Change, %  

Profit (loss)

     2,469         3,137         -21.29   

+ Income tax and Social Contribution tax

     893         1,343         -33.51   

+ Net financial revenue (expenses)

     735         1,101         -33.24   

+ Depreciation and amortization

     835         801         4.24   
  

 

 

    

 

 

    

 

 

 

= Ebitda

     4,932         6,382         -22.72   
  

 

 

    

 

 

    

 

 

 

 

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DEBT

 

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The Company’s consolidated total debt on December 31, 2015 was R$ 15.167 billion, 12.27% more than at December 31, 2014.

 

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THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

 

Cemig – generation portfolio, in MW*

 

Stage

   Hydro
plants
     Small
Hydro
Plants
     Wind
power
     Solar      Thermal
plants
     Total  

In operation

     7,195         257         158         31         144         7,785   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Under construction / contracted

     1,699         29         658         45         —           2,431   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     8,894         286         816         76         144         10,216   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* The amounts refer only to direct or indirect equity interests held by Cemig on December 31, 2015.

4Q15 HIGHLIGHTS:

Santo Antônio Hydroelectric Plant

Rotor 35 of the Santo Antônio Hydroelectric plant started operation in December. The original physical offtake guarantee level of 2,218 MW average was reached in September 2014.

 

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FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT

 

FINANCIAL STATEMENTS SEPARATED BY COMPANY: DECEMBER 31, 2015

 

R$ ’000

   Holding
Company
    CEMIG
GT
    CEMIG D     GASMIG     CEMIG
TELECOM
   
CARVALHO
    ROSAL     Other
subsidiaries
    Eliminations
/ transfers
    Total,
subsidiaries
    TAESA     LIGHT     MADEIRA     ALIANÇA
GERAÇÃO
    Other
jointly-
controlled
subsidiaries
    Eliminations
/ transfers
    Subsidiaries
and jointly-
controlled
subsidiaries
 

ASSETS

     16,319,138        15,348,364        16,191,234        2,054,460        317,346        152,827        129,487        264,987        (9,920,754     40,857,089        4,728,754        5,050,947        2,496,533        1,044,606        4,553,631        (7,847,490     50,884,070   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents

     256,484        283,703        318,834        33,746        5,015        1,254        1,082        24,514        —          924,632        130,575        196,844        29,996        31,394        126,019        —          1,439,460   

Accounts receivable

     —          1,008,021        2,785,980        88,774        16,172        5,774        3,617        5,568        (15,738     3,898,168        100,346        787,420        30,093        70,590        52,748        (14,715     4,924,650   

Securities – cash investments

     129,665        1,916,804        288,759        71,381        17,655        6,126        4,902        75,020        —          2,510,312        1,588        —          —          —          54,446        —          2,566,346   

Taxes

     995,131        142,328        1,227,384        59,741        17,255        136        449        685        —          2,443,109        309,497        410,182        67,323        2,568        13,523        —          3,246,202   

Other assets

     1,521,682        853,410        1,671,470        471,741        4,957        4,905        1,277        30,770        (973,122     3,587,090        154,536        840,753        151,648        27,017        375,566        (204,865     4,931,745   

Investments, PP&E, Intangible and Financial assets of concession

     13,416,176        11,144,098        9,898,807        1,329,077        256,292        134,632        118,160        128,430        (8,931,894     27,493,778        4,032,212        2,815,748        2,217,473        913,037        3,931,329        (7,627,910     33,775,667   

LIABILITIES AND STOCKHOLDERS’ EQUITY

     16,319,138        15,348,364        16,191,234        2,054,460        317,346        152,827        129,487        264,987        (9,920,754     40,857,089        4,728,754        5,050,947        2,496,533        1,044,606        4,553,631        (7,847,490     50,884,070   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Suppliers and supplies

     8,765        331,823        1,307,893        244,551        11,405        7,670        4,210        5,318        (20,482     1,901,153        22,102        472,122        144,636        16,528        171,518        (106,904     2,621,155   

Loans, financings and debentures

     —          7,739,072        7,020,042        368,398        39,023        —          —          2        —          15,166,537        1,860,409        2,468,539        1,451,202        —          1,215,707        —          22,162,394   

Interest on Equity, and dividends

     1,306,584        718,137        185,105        45,667        —          2,464        —          90        (951,232     1,306,815        5,012        43,966        —          —          21,779        (70,757     1,306,815   

Post-retirement liabilities

     303,191        721,470        2,228,710        —          —          —          —          —          —          3,253,371        —          10,436        —          —          —          —          3,263,807   

Taxes

     53,123        759,122        1,742,350        306,265        10,381        38,975        2,782        10,115        —          2,923,113        837,599        486,479        37,982        17,414        73,965        —          4,376,552   

Other liabilities

     1,663,777        394,928        1,011,285        167,028        87,531        792        674        9,580        (17,171     3,318,424        107,285        374,205        137,604        140,148        79,533        8,472        4,165,671   

STOCKHOLDERS’ EQUITY

     12,983,698        4,683,812        2,695,848        922,551        169,006        102,926        121,821        239,883        (8,931,869     12,987,676        1,896,347        1,195,200        725,109        870,516        2,991,129        (7,678,301     12,987,676   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributed to controlling stockholders

     12,983,698        4,683,812        2,695,848        918,573        169,006        102,926        121,821        239,883        (8,931,869     12,983,698        1,896,347        1,195,200        725,109        870,516        2,991,129        (7,678,301     12,983,698   

Interest of non-controlling stockholder

     —          —          —          3,978        —          —          —          —          —          3,978        —          —          —          —          —          —          3,978   

PROFIT AND LOSS ACCOUNT

                                

Net operational revenue

     292        7,377,198        12,386,671        1,394,725        122,569        58,197        51,800        169,056        (268,297     21,292,211        855,669        3,459,848        254,173        408,846        697,693        (231,129     26,737,311   

Operational costs and expenses

     (1,157,525     (4,133,629     (11,779,022     (1,235,867     (111,828     (41,877     (28,121     (59,477     229,356        (18,317,990     (121,383     (3,209,417     (216,366     (257,816     (511,512     22,209        (22,612,275
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Electricity purchased for resale

     —          (2,601,484     (6,992,822     —          —          (30,970     (13,551     (23,395     120,282        (9,541,940     —          (2,326,933     (50,617     (158,895     (53,562     148,842        (11,983,105

Charges for use of national grid

     —          (293,484     (813,313     —          —          —          (3,065     (1,179     112,285        (998,756     —          —          (53,100     (15,388     (271,035     59,542        (1,278,737

Gas bought for resale

           (1,050,925     —          —          —          —          —          (1,050,925     —          —          —          —          —          —          (1,050,925

Construction cost

     —          (146,030     (1,043,806     (62,000     —          —          —          —          —          (1,251,836     (17,060     (304,413     —          —          (3,817     —          (1,577,126

Personnel

     (31,895     (334,845     (999,655     (43,092     (15,431     (1,362     (1,221     (7,500     —          (1,435,001     (44,205     (110,654     (7,564     (10,064     (35,057     —          (1,642,545

Employee profit shares

     (4,816     (35,383     (94,815     —          (2,062     (139     (149     —          —          (137,364     (5,888     —          —          (1,467     (97     —          (144,816

Post-retirement liabilities

     (3,867     (30,939     (121,203     —          —          —          —          —          —          (156,009     —          —          —          —          —          —          (156,009

Materials

     (262     (99,312     (50,651     (1,830     (129     (368     (404     (314     25        (153,245     (20,764     (5,904     (1,631     (863     (2,961     —          (185,368

Outsourced services

     (10,991     (159,432     (697,484     (15,035     (25,491     (3,239     (5,112     (13,673     30,987        (899,470     (22,309     (155,676     (10,546     (22,133     (56,794     4,076        (1,162,852

Depreciation and amortization

     (1,601     (252,897     (443,766     (54,177     (48,968     (5,526     (4,391     (10,243     (13,261     (834,830     (1,296     (149,282     (48,076     (51,255     (75,112     (174,073     (1,333,924

Operational provisions

     (1,084,757     (106,443     (209,072     —          (1,181     —          (1     (1     —          (1,401,455     484        (92,148     (36,771     —          (1,124     —          (1,531,014

Other expenses, net

     (19,336     (73,380     (312,434     (8,808     (18,566     (273     (227     (3,173     (20,962     (457,159     (10,345     (64,407     (8,061     2,249        (11,953     (16,178     (565,854
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational profit before Equity gains (losses) and Financial revenue (expenses)

     (1,157,233     3,243,569        607,649        158,858        10,741        16,320        23,679        109,579        (38,941     2,974,221        734,286        250,431        37,807        151,030        186,181        (208,920     4,125,036   

Equity gain (loss) in subsidiaries

     3,273,869        16,735          —          (27,769     —          —          1,343        (2,871,188     392,990        6,884        (41,183     (79,312     (455     (38,603     (345,732     (105,411

Gain on stockholding reorganization

       729,442          —          —          —          —          —          —          729,442        —          —          —          —          16,375        —          745,817   

Financial revenue

     65,180        204,741        1,148,437        23,082        4,054        2,966        4,545        16,272        —          1,469,277        333,487        446,993        94,983        13,711        26,705        —          2,385,156   

Financial expenses

     (36,024     (990,235     (1,129,969     (41,531     (5,794     (172     (85     (534     —          (2,204,344     (577,332     (612,626     (113,173     (21,877     (107,287     —          (3,636,639
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income and Social Contribution tax

     2,145,792        3,204,252        626,117        140,409        (18,768     19,114        28,139        126,660        (2,910,129     3,361,586        497,325        43,615        (59,695     142,409        83,371        (554,652     3,513,959   

Income tax and Social Contribution tax

     322,708        (887,979     (255,908     (23,339     (16,096     (5,392     (3,431     (23,146     —          (892,583     (104,542     (29,214     61,498        (13,788     (66,327     —          (1,044,956
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss)

     2,468,500        2,316,273        370,209        117,070        (34,864     13,722        24,708        103,514        (2,910,129     2,469,003        392,783        14,401        1,803        128,621        17,044        (554,652     2,469,003   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     2,468,500        2,316,273        370,209        116,567        (34,864     13,722        24,708        103,514        (2,910,129     2,468,500        392,783        14,401        1,803        128,621        17,044        (554,652     2,468,500   

Interest of non-controlling stockholder

     —          —          —          503        —          —          —          —          —          503        —          —          —          —          —          —          503   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2,468,500        2,316,273        370,209        117,070        (34,864     13,722        24,708        103,514        (2,910,129     2,469,003        392,783        14,401        1,803        128,621        17,044        (554,652     2,469,003   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

85


LOGO

 

 

INFORMATION BY MARKET SEGMENT AT DECEMBER 31, 2015

 

R$ ’000

   ELECTRICITY     TELECOM     GAS     OTHERS     Eliminations     TOTAL  
   GENERATION     TRANSMISSION     DISTRIBUTION            

ASSETS OF THE SEGMENT

     13.381.523        4.880.161        17.738.194        317.346        2.529.757        2.986.477        (976.369     40.857.089   

ADDITIONS TO THE SEGMENT

     577.330        146.030        1.043.806        42.488        62.000        —          —          1.871.654   

INVESTMENTS IN JOINTLY-CONTROLLED SUBSIDIARIES

     5.750.963        2.423.084        1.546.960        —          —          23.840        —          9.744.847   

NET REVENUE

     7.046.513        518.671        12.386.671        122.569        1.394.725        91.358        (268.296     21.292.211   

COSTS

                

Electricity purchased for resale

     (2.669.371     —          (6.992.822     —          —          (29     120.282        (9.541.940

Charges for use of national grid

     (297.423     (305     (813.313     —          —          —          112.285        (998.756

Gas bought for resale

     —          —          —          —          (1.050.925     —          —          (1.050.925
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operational costs

     (2.966.794     (305     (7.806.135     —          (1.050.925     (29     232.567        (11.591.621

OPERATIONAL COSTS AND EXPENSES

                

Personnel

     (224.197     (113.230     (999.655     (15.431     (43.092     (39.396     —          (1.435.001

Employees’ and managers’ profit shares

     (23.552     (12.119     (94.815     (2.062     —          (4.816     —          (137.364

Post-retirement liabilities

     (21.274     (9.664     (121.204     —          —          (3.867     —          (156.009

Materials

     (95.381     (4.969     (50.651     (129     (1.830     (310     25        (153.245

Outsourced services

     (142.931     (36.844     (697.484     (25.491     (15.035     (12.672     30.987        (899.470

Depreciation and amortization

     (273.053     —          (443.766     (48.968     (54.177     (14.866     —          (834.830

Operational provisions (reversals)

     (108.728     2.283        (209.072     (1.181     —          (1.084.757     —          (1.401.455

Construction costs

     —          (146.030     (1.043.806     —          (62.000     —          —          (1.251.836

Other operational expenses, net

     (60.692     (15.983     (312.434     (18.566     (8.808     (45.393     4.717        (457.159
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of operation

     (949.808     (336.556     (3.972.887     (111.828     (184.942     (1.206.077     35.729        (6.726.369

OPERATIONAL COSTS AND EXPENSES

     (3.916.602     (336.861     (11.779.022     (111.828     (1.235.867     (1.206.106     268.296        (18.317.990

OPERATIONAL PROFIT BEFORE EQUITY GAIN (LOSS) IN SUBSID. AND FINANCIAL REV (EXP.)

     3.129.911        181.810        607.649        10.741        158.858        (1.114.748     —          2.974.221   

Equity gain (loss) in subsidiaries

     16.593        410.052        (6.408     (27.769     —          522        —          392.990   

Gain on stockholding reorganization

     729.442          —          —          —          —          —          729.442   

Financial revenues

     199.200        21.892        1.148.437        4.054        23.082        72.612        —          1.469.277   

Financial expenses

     (984.018     (6.875     (1.129.969     (5.794     (41.531     (36.157     —          (2.204.344
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PRETAX PROFIT

     3.091.128        606.879        619.709        (18.768     140.409        (1.077.771     —          3.361.586   

Income tax and Social Contribution tax

     (835.791     (71.104     (255.908     (16.096     (23.339     309.655        —          (892.583
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PROFIT AND LOSS ACCOUNT

     2.255.337        535.775        363.801        (34.864     117.070        (768.116     —          2.469.003   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     2.255.337        535.775        363.801        (34.864     116.567        (768.116     —          2.468.500   

Interest of non-controlling stockholder

     —          —          —          —          503        —          —          503   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2.255.337        535.775        363.801        (34.864     117.070        (768.116     —          2.469.003   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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Generating plants

 

Plant

   Type    Company    Cemig’s
Interest
    Installed
Capacit
(MW)
     Assured
Energy
(average
MW)
     Installed
Capacit
(MW)*
     Assured
Energy
(average
MW)*
     Year
Concession or
Authorization
Expires
 

São Simão

   Hydroelectric    CEMIG GT      100.0     1,710.00         1,281.00         1,710.00         1,281.00         1/11/2015   

Emborcação

   Hydroelectric    CEMIG GT      100.0     1,192.00         497.00         1,192.00         497.00         7/23/2025   

Nova Ponte

   Hydroelectric    CEMIG GT      100.0     510.00         276.00         510.00         276.00         7/23/2025   

Jaguara

   Hydroelectric    CEMIG GT      100.0     424.00         336.00         424.00         336.00         8/28/2013   

Miranda

   Hydroelectric    CEMIG GT      100.0     408.00         202.00         408.00         202.00         12/23/2016   

Irapé

   Hydroelectric    CEMIG GT      100.0     399.00         210.70         399.00         210.70         2/28/2035   

Três Marias

   Hydroelectric    CEMIG GT      100.0     396.00         239.00         396.00         239.00         1/4/2046   

Volta Grande

   Hydroelectric    CEMIG GT      100.0     380.00         229.00         380.00         229.00         2/23/2017   

lgarapé

   Thermal    CEMIG GT      100.0     131.00         71.30         131.00         71.30         8/13/2024   

Salto Grande

   Hydroelectric    CEMIG GT      100.0     102.00         75.00         102.00         75.00         1/4/2046   

ltutinga

   Hydroelectric    CEMIG GT      100.0     52.00         28.00         52.00         28.00         1/4/2046   

Camargos

   Hydroelectric    CEMIG GT      100.0     46.00         21.00         46.00         21.00         1/4/2046   

Piau

   SHP    CEMIG GT      100.0     18.01         13.53         18.01         13.53         1/4/2046   

Gafanhoto

   SHP    CEMIG GT      100.0     14.00         6.68         14.00         6.68         1/4/2046   

Peti

   SHP    CEMIG GT      100.0     9.40         6.18         9.40         6.18         1/4/2046   

Rio de Pedras

   SHP    CEMIG GT      100.0     9.28         2.15         9.28         2.15         9/19/2024   

Poço Fundo

   SHP    CEMIG GT      100.0     9.16         5.79         9.16         5.79         8/19/2025   

Tronqueiras

   SHP    CEMIG GT      100.0     8.50         3.39         8.50         3.39         1/4/2046   

Joasal

   SHP    CEMIG GT      100.0     8.40         5.20         8.40         8.40         1/4/2046   

Martins

   SHP    CEMIG GT      100.0     7.70         1.84         7.70         1.84         1/4/2046   

Cajuru

   SHP    CEMIG GT      100.0     7.20         2.69         7.20         2.69         1/4/2046   

Ervália

   SHP    CEMIG GT      100.0     6.97         3.03         6.97         3.03         1/4/2046   

São Bernado

   SHP    CEMIG GT      100.0     6.82         3.42         6.82         3.42         8/19/2025   

Neblina

   SHP    CEMIG GT      100.0     6.47         4.66         6.47         4.66         1/4/2046   

Cel. Domiciano

   SHP    CEMIG GT      100.0     5.04         3.59         5.04         3.59         1/4/2046   

Paraúna

   SHP    CEMIG GT      100.0     4.28         1.90         4.28         1.90         —     

Pandeiros

   SHP    CEMIG GT      100.0     4.20         0.47         4.20         0.47         9/22/2021   

Paciência

   SHP    CEMIG GT      100.0     4.08         2.36         4.08         2.36         1/4/2046   

Marmelos

   SHP    CEMIG GT      100.0     4.00         2.74         4.00         2.74         1/4/2046   

Dona Rita

   SHP    CEMIG GT      100.0     2.40         1.03         2.40         1.03         1/4/2046   

Salto de Moraes

   SHP    CEMIG GT      100.0     2.39         0.60         2.39         0.60         7/1/2020   

Sumidouro

   SHP    CEMIG GT      100.0     2.12         0.53         2.12         0.53         —     

Anil

   SHP    CEMIG GT      100.0     2.08         1.10         2.08         1.10         —     

Xicão

   SHP    CEMIG GT      100.0     1.81         0.61         1.81         0.61         8/19/2025   

Luiz Dias

   SHP    CEMIG GT      100.0     1.62         0.61         1.62         0.61         8/19/2025   

Sinceridade

   SHP    CEMIG GT      100.0     1.42         0.35         1.42         0.35         1/4/2046   

Central Mineirão

   Solar    CEMIG GT      100.0     1.42         —           1.42         —           —     

Poquim

   SHP    CEMIG GT      100.0     1.41         0.39         1.41         0.39         7/8/2015   

Santa Marta

   SHP    CEMIG GT      100.0     1.00         0.58         1.00         0.58         7/8/2015   

Pissarrão

   SHP    CEMIG GT      100.0     0.80         0.55         0.80         0.55         —     

Jacutinga

   SHP    CEMIG GT      100.0     0.72         0.57         0.72         0.57         —     

Santa Luzia

   SHP    CEMIG GT      100.0     0.70         0.23         0.70         0.23         2/25/2026   

Lages*

   SHP    CEMIG GT      100.0     0.68         —           0.68         —           —     

Bom Jesus do Galho

   SHP    CEMIG GT      100.0     0.36         0.13         0.36         0.13         —     

Pai Joaquim

   SHP    CEMIG PCH      100.0     23.00         4.26         23.00         4.26         4/1/2032   

Salto Voltão

   SHP    Horizontes Energia      100.0     8.20         6.63         8.20         6.63         10/4/2030   

Salto do Paraopeba

   SHP    Horizontes Energia      100.0     2.46         —           2.46         —           10/4/2030   

Salto do Passo Velho

   SHP    Horizontes Energia      100.0     1.80         1.06         1.80         1.06         10/4/2030   

Machado Mineiro

   SHP    Horizontes Energia      100.0     1.72         1.03         1.72         1.03         7/8/2025   

Rosal

   Hydroelectric    Rosal Energia      100.0     55.00         30.00         55.00         30.00         5/8/2032   

Sá Carvalho

   Hydroelectric    Sá Carvalho      100.0     78.00         58.00         78.00         58.00         12/1/2024   

Barreiro

   Thermal    Usina Termelétrica Barreiro      100.0     12.90         11.37         12.90         11.37         4/30/2023   

Queimado

   Hydroelectric    CEMIG GT      82.5     105.00         58.00         86.63         47.85         1/2/2033   

Praias de Parajuru

   Wind Farm    CEMIG GT      49.0     28.80         8.39         14.11         4.11         9/24/2032   

Praia do Morgado

   Wind Farm    CEMIG GT      49.0     28.80         13.20         14.11         6.47         12/26/2031   

Paracambi

   SHP    CEMIG GT      49.0     25.00         19.53         12.25         9.57         2/16/2031   

Volta do Rio

   Wind Farm    CEMIG GT      49.0     42.00         18.41         20.58         9.02         12/26/2031   

Santo Antônio

   Hydroelectric    Santo Antônio Energia      17.7     2,714.72         2,218.00         480.06         392.22         6/12/2046   

Aimorés

   Hydroelectric    ALIANÇA      45.0     330.00         172.00         148.50         77.40         12/20/2035   

Amador Aguiar I (Capim Bra)

   Hydroelectric    ALIANÇA      39.3     240.00         155.00         94.36         60.94         8/29/2036   

Amador Aguiar II (Capim Br)

   Hydroelectric    ALIANÇA      39.3     210.00         131.00         82.56         51.50         8/29/2036   

lgarapava

   Hydroelectric    ALIANÇA      23.7     210.00         136.00         49.75         32.22         12/30/2028   

Funil

   Hydroelectric    ALIANÇA      45.0     180.00         89.00         81.00         40.05         12/20/2035   

Candonga

   Hydroelectric    ALIANÇA      22.5     140.00         64.50         31.50         14.51         5/25/2035   

Porto Estrela

   Hydroelectric    ALIANÇA      30.0     112.00         55.80         33.60         16.74         7/10/2032   

Baguari

   Hydroelectric    BAGUARI ENERGIA      34.0     140.00         80.20         47.60         27.27         8/15/2041   

Cachoeirão

   SHP    Hidrelétrica Cachoeirão      49.0     27.00         16.37         13.23         8.02         7/25/2030   

Pipoca

   SHP    Hidrelétrica Pipoca      49.0     20.00         11.90         9.80         5.83         9/10/2031   

Retiro Baixo

   Hydroelectric    Retiro Baixo Energética      25.0     82.00         38.50         20.46         9.61         8/25/2041   
   Hydroelectric    Lightger      49.0     855.14         637.00         419.02         312.13      
   SHP    Lightger      25.0     25.00         19.53         6.25         4.88      
   SHP    Brasil PCH      31.2     291.00         188.85         90.67         20.31      
   Wind Farm    Renova Energia      35.2     680.50         325.91         239.21         114.56      
   SHP    Renova Energia      35.2     41.80         18.74         14.69         6.59      

 

* The installed capacit and the assured energy are already on cemig’s share

 

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Generation plants: Concession contract expiry periods

In November 2015 Cemig was the winner of Lot D in the first auction of concessions held by Aneel with a new structure: placement of concessions for hydroelectric plants under a regime of allocation of generating capacity and physical offtake guarantees.

 

Number of generation plants: 18 (eighteen).

 

Total installed generation capacity: 699.57 MW.

 

Percentage of the guaranteed physical power offtake allocated to the Regulated Market: 100% (one hundred per cent), from January 1 to December 31, 2016; and 70% (seventy per cent), on and after January 1, 2017.

 

Payment: R$ 2.216 billion in Concession Grant Fee (Bonificação pela Outorga), of which R$ 1.4 billion (65%) was paid on January 5, 2016 and R$ 770 million is to be paid within 180 days.

 

Revenue received by Cemig GT for provision of the service: R$ 498.6 million/year.

Under that contract, as from this termination the assets of each plant that had not been fully depreciated are to be returned to the concession-granting power, and the company is to be indemillionified for them, on terms specified in the contract. The accounting balances corresponding to these assets, including the Deemed Cost, were transferred from Fixed assets to Financial assets on the date of termination of the concession in July 2015, and total R$ 546 million.

As specified in Aneel Normative Resolution 615/2014, the Valuation Opinions proposing the amounts of the indemillionity of the assets were delivered to Aneel on December 31, 2015. The company is in the process of preparation of these Opinions. Based on the discussions and valuations currently in progress, management believes that there is no indication that the amounts to be indemillionified by the Grantor Power will be lower than those recognized in its interim financial statements at December 31, 2015

 

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Power Plant

   Installed Capacit (MW)      Assured Energy
(average MW)
 

Três Marias

     396,0         239,0   

Salto Grande

     102,0         75,0   

Itutinga

     52,0         28,0   

Camargos

     46,0         21,0   

Piau

     18,0         13,5   

Gafanhoto

     14,0         6,7   

Peti

     9,4         6,2   

Tronqueiras

     8,5         3,4   

Joasal

     8,4         5,2   

Martins

     7,7         1,8   

Cajuru

     7,2         3,7   

Ervália

     7,0         3,0   

Neblina

     6,5         4,7   

Coronel Domiciano

     5,0         3,6   

Paciência

     4,1         2,4   

Marmelos

     4,0         2,7   

Dona Rita

     2,4         1,0   

Sinceridade

     1,4         0,4   
  

 

 

    

 

 

 

Total

     699,6         421,3   
  

 

 

    

 

 

 

Exchange of Shareholders’ Debentures owned by AGC Energia for shares in Cemig

On March 3, 2016, BNDES Participações (‘BNDESPar’) exchanged the totality of its holding of debentures issued under the Deed of the First Private Issue by AGC Energia of Non-convertible Permanent Asset-guaranteed Exchangeable Shareholders’ Debentures, in a Single Series, dated February 28, 2011 and amended January 17, 2012, for 54,342,992 common shares and 16,718,797 preferred shares in Cemig, owned by AGC Energia.

After the exchange, the equity interest held by BNDESPAR in Cemig — which on March 2, 2016 totaled 0% of the common shares and 1.13% of the preferred shares — increased to 12.9% and 3.13%, respectively. This characterizes a material transaction in the stock of Cemig in the terms of Article 12, §1º, of CVM Instruction 358/02. On March 2, 2016 BNDESPAR held an equity interest of 0.75% in the total capital of Cemig. This percentage has risen to 6.4%.

http://cemig.infoinvest.com.br/enu/13329/c-13329-enu.html?idioma=enu

 

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After this exchange, the stockholders’ agreement between Cemig and AGC Energia remains unchanged.

http://cemig.infoinvest.com.br/ptb/8867/AcordodeAcionistas_por.pdf

 

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Generation: Annual Permitted Revenue (RAP)

 

Resolução Homologatoria ANEEL—nº 1.313*

 

Receita Anual Permitida—RAP

   RAP      % Cemig      Cemig
Consolidado
     Cemig GT  

Cemig GT

     234,340,198         100.0%         234,340,198         234,340,198   

Cemig Itajuba

     36,345,194         100.0%         36,345,194         36,345,194   

Centroeste

     15,420,427         51.0%         7,864,418      

Transirapé

     26,287,112         24.5%         6,440,342      

Transleste

     36,163,304         25.0%         9,040,826      

Transudeste

     22,414,358         24.0%         5,379,446      

Taesa

        43.36%         

ETEO

     155,851,060         43.4%         67,576,823      

ETAU

     38,433,513         22.8%         8,762,945      

NOVATRANS

     460,994,392         43.4%         199,886,586      

TSN

     449,086,299         43.4%         194,723,252      

GTESA

     8,238,429         43.4%         3,572,172      

PATESA

     18,930,852         43.4%         8,208,394      

Munirah

     32,335,023         43.4%         14,020,425      

Brasnorte

     22,865,011         16.8%         3,833,291      

São Gotardo

     4,594,930         43.4%         1,992,356      

Abengoa

           

NTE

     135,672,013         43.4%         58,827,214      

STE

     72,452,041         43.4%         31,415,113      

ATEI

     132,046,398         43.4%         57,255,152      

ATEII

     204,000,305         43.4%         88,454,275      

ATEIII

     102,659,854         43.4%         44,513,183      

TBE

           

EATE

     381,289,719         21.7%         82,634,235      

STC

     36,934,709         17.3%         6,403,873      

Lumitrans

     23,591,101         17.3%         4,090,187      

ENTE

     199,517,005         21.7%         43,245,595      

ERTE

     44,785,760         21.7%         9,706,942      

ETEP

     86,906,931         21.7%         18,835,509      

ECTE

     84,200,833         8.3%         6,970,657      

EBTE

     40,614,511         32.3%         13,118,164      

ESDE

     11,542,416         21.7%         2,501,610      

ETSE

     19,741,437         8.3%         1,634,316      

Light

     7,924,732         32.6%         2,581,878      

Transchile**

     21,396,000         49.0%         10,484,040      
        

 

 

    

 

 

 

RAP TOTAL CEMIG

           1,284,658,610         270,685,392   
        

 

 

    

 

 

 

 

* Receita s a nua is permititida s com vigência entre 1º de julho de 2015 e 30 de junho de 2016.
** A receita de tra ns mis s ã o da Tra ns chile é da da em Dóla r Norte America no e é corrigida , a nua lmente, de a cordo com o Decreto Nº 163 (http://www.cne.cl/ima ges/stories/norma tiva s /otros %20niveles /electricida d/DOC65_-_decreto163obra surgentes.pdf).

 

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Appendices

Electricity losses – 4Q15

Control of electricity losses is one of Cemig D’s strategic objectives, and the Company has a structure dedicated to this – its Distribution Losses Measurement and Control Management Unit. Compliance with the objective is monitored monthly through the Total Distribution Losses Index (Índice de Perdas Totais da Distribuição, or IPTD): the result at December 31, 2015 was 11.52% – compared to a regulatory target of 10.48% by the end of 2017. In the decision on the regulatory target, taken during the 3rd Tariff Review Cycle, the regulator, Aneel, made significant changes in the method of calculation of technical losses, imposing extremely challenging limits for Cemig D. Total losses are composed of technical losses plus non-technical losses. The indicators for measurement are the PPTD (Distribution Technical Losses Percentage –percentual de perdas técnicas da distribuição), and the PPNT (Distribution Non-technical Losses Percentage – or percentual de perdas não técnicas da distribuição). The projected result for the PPTD on December 31, 2015 was 9.46%, for a regulatory target of 7.84 %, and the projected result for the PPNT was 3.06%, for a regulatory target of 2.64%.

Aneel measures non-technical losses with reference to the low-voltage market. Taking this into account, the result for the PPNT in relation to the low voltage market as invoiced at December 31, 2015 was 7.85%, for a regulatory target of 7.63% (2.88% above the limit set by the Regulator).

 

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Cemig D Tables (R$ million)

 

CEMIG D Market

 
     (GWh)      GW  

Quarter

   Captive Consumers      TUSD ENERGY1      T.E.D2      TUSD PICK3  

3Q13

     6,486         5,017         11,503         29   

4Q13

     6,615         4,975         11,591         29   

1Q14

     6,744         4,464         11,208         29   

2Q14

     6,646         4,485         11,132         29   

3Q14

     6,686         4,298         10,984         27   

4Q14

     6,935         4,201         11,136         29   

1Q15

     6,780         4,034         10,814         30   

2Q15

     6,371         3,896         10,268         28   

3Q15

     6,471         3,803         10,274         29   

4Q15

     6,850         3,937         10,787         28   

 

1. Refers to the quantity of electricity for calculation of the regulatory charges charged to free consumer clients (“Portion A”)
2. Total electricity distributed
3. Sum of the demand on which the TUSD is invoiced, according to demand contracted (“Portion B”).

 

Operating Revenues

   4Q15     4Q14     Change%     2015     2014     Change%  

Sales to end consumers

     4,498        3,050        47        16,515        11,443        44   

TUSD

     296        254        17        1,500        893        68   

Transactions in the CCEE

     —          —          —          50        —          —     

CVA and Other financial components in tariff adjustment

     397        1,107        (64     1,704        1,107        54   

Construction revenue

     353        315        12        1,044        861        21   

Others

     301        256        18        1,194        1,039        15   

Subtotal

     5,846        4,982        17        22,007        15,344        43   

Deductions

     (2,753     (1,168     136        (9,620     (4,103     134   

Net Revenues

     3,093        3,814        (19     12,387        11,241        10   

 

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Operating Expenses

   4Q15     4Q14      Change%     2015      2014      Change%  

Personnel/Administrators/Councillors

     316        252         25        1,000         886         13   

Employee Participation

     (48     47         —          95         184         (48

Forluz – Post-Retirement Employee Benefits

     (4     38         —          121         153         (21

Materials

     13        43         (69     51         80         (37

Contracted Services

     199        256         (22     697         737         (5

Purchased Energy

     1,619        1,730         (6     6,993         5,748         22   

Depreciation and Amortization

     108        110         (1     444         428         4   

Operating Provisions

     31        191         (84     209         300         (30

Charges for Use of Basic Transmission Network

     183        159         16        813         573         42   

Cost from Operation

     353        315         12        1,044         861         21   

Other Expenses

     10        31         (68     312         299         4   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     2,781        3,173         (12     11,779         10,249         15   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Statement of Results

   4Q15     4Q14     Change%     2015     2014     Change%  

Net Revenue

     3,093        3,814        (19     12,387        11,241        10   

Operating Expenses

     2,781        3,173        (12     11,779        10,249        15   

EBIT

     312        641        (51     608        992        (39

EBITDA

     421        751        (44     1,051        1,420        (26

Financial Result

     191        (70     —          18        (393     —     

Provision for Income Taxes, Social Cont & Deferred Income

     (199     (148     34        (256     (169     51   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     305        424        (28     370        430        (14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cemig GT Tables (R$ million)

 

Operating Revenues

   4Q15     4Q14     Change%     2015     2014     Change%  

Sales to end consumers

     943        634        49        3,716        3,394        9   

Supply

     426        851        (50     2,199        2,225        (1

Transactions in the CCEE

     535        61        775        2,356        2,281        3   

Revenues from Trans. Network

     97        410        (76     339        629        (46

Construction revenue

     57        32        77        146        80        82   

Transmission indemnity revenue

     40        357        (89     101        420        (76

Others

     12        11        8        26        26        (2

Subtotal

     2,111        2,357        (10     8,883        9,055        (2

Deductions

     (386     (243     58        (1,506     (1,341     12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

     1,725        2,114        (18     7,377        7,715        (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Operating Expenses

   4Q15     4Q14      Change%     2015      2014      Change%  

Personnel/Administrators/Councillors

     97        82         18        335         304         10   

Employee Participation

     (17     12         —          35         55         (36

Forluz – Post-Retirement Employee Benefits

     (7     12         —          31         48         (36

Materials

     3        5         (48     16         16         (5

Raw Materials and Supplies Energy Production

     2        79         (97     84         282         (70

Contracted Services

     63        63         1        159         172         (7

Depreciation and Amortization

     51        78         (35     253         297         (15

Operating Reserves

     50        53         (5     106         84         26   

Charges for Use of Basic Transmission Network

     76        73         4        293         273         7   

Purchased Energy

     621        415         50        2,601         1,692         54   

Construction Cost

     57        32         77        146         80         82   

Other Expenses

     19        209         (91     73         283         (74
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     1,015        1,113         (9     4,134         3,588         15   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

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Statement of Results

   4Q15     4Q14     Change%     2015     2014     Change%  

Net Revenue

     1,725        2,114        (18     7,377        7,715        (4

Operating Expenses

     (1,015     (1,113     (9     (4,134     (3,588     15   

EBIT

     710        1,001        (29     3,244        4,127        (21

Equity equivalence results

     26        (61     143        17        (388     —     

Fair value gain (loss) on stockholding transaction

     —          —          —          729        —          —     

EBITDA

     787        1,018        (23     4,242        4,035        5   

Financial Result

     (167     (224     (25     (785     (534     47   

Provision for Income Taxes, Social Cont & Deferred Income Tax

     (104     (170     (38     (888     (1,115     (20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     465        546        (15     2,316        2,089        11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cemig Tables (R$ million)

 

Energy Sales (Consolidated)(GWh)

   4Q15      4Q14      Change%     2015      2014      Change%  

Residential

     2,517         2,556         (2     9,830         10,014         (2

Industrial

     5,685         6,701         (15     22,969         26,026         (12

Commercial

     1,691         1,678         1        6,434         6,395         1   

Rural

     907         854         6        3,380         3,390         —     

Others

     879         885         (1     3,422         3,462         (1

Subtotal

     11,679         12,674         (8     46,035         49,287         (7

Own Consumption

     10         10         —          38         38         —     

Supply

     1,880         4,007         (53     10,831         14,146         (23
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     13,568         16,691         (19     56,904         63,470         (10
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Energy Sales

   4Q15      4Q14      D%     2015      2014      D%  

Residential

     1,994         1,379         45        7,298         5,183         41   

Industrial

     1,500         1,027         46        5,781         4,793         21   

Commercial

     1,085         765         42        3,956         2,786         42   

Rural

     399         240         66        1,407         908         55   

Others

     446         298         50        1,621         1,107         46   

Electricity sold to final consumers

     5,424         3,709         46        20,062         14,778         36   

Unbilled Supply, Net

     65         103         (37     106         203         (48

Supply

     439         784         (44     2,358         2,251         5   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     5,928         4,596         29        22,526         17,232         31   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Operating Revenues

   4Q15     4Q14     D%     2015     2014     D%  

Sales to end consumers

     5,464        3,723        47        20,319        14,922        36   

TUSD

     288        225        28        1,465        855        71   

Supply

     464        872        (47     2,208        2,310        (4

Transactions in the CCEE

     539        70        665        2,425        2,348        3   

CVA and Other financial components in tariff adjustment

     397        1,107        (64     1,704        1,107        54   

Revenues from Trans. Network

     76        395        (81     261        557        (53

Construction revenue

     472        348        36        1,252        942        33   

Gas supply

     401        422        (5     1,667        422        295   

Transmission Indemnity Revenue

     40        357        (89     101        420        (76

Others

     367        325        13        1,441        1,282        12   

Subtotal

     8,508        7,844        8        32,842        25,165        31   

Deductions

     (3,242     (1,513     114        (11,549     (5,626     105   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

     5,267        6,331        (17     21,292        19,540        9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

95


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Operating Expenses

   4Q15     4Q14      D%     2015      2014      D%  

Personnel/Administrators/Councillors

     448        354         27        1,435         1,252         15   

Employee Participation

     (70     56         —          137         249         (45

Forluz – Post-Retirement Employee Benefits

     (17     53         —          156         212         (26

Materials

     17        49         (66     70         99         (30

Raw materials and inputs for production of electricity

     2        79         (97     84         282         (70

Contracted Services

     282        339         (17     899         953         (6

Purchased Energy

     2,274        2,146         6        9,542         7,428         28   

Depreciation and Amortization

     206        213         (3     835         801         4   

Operating Provisions

     977        433         126        1,401         581         141   

Charges for Use of Basic Transmission Network

     231        208         11        999         744         34   

Gas bought for resale

     261        254         3        1,051         254         313   

Cost from Operation

     472        348         36        1,252         942         33   

Other Expenses

     49        269         (82     457         652         (30
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     5,133        4,803         7        18,318         14,451         27   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Financial Result Breakdown

   4Q15     4Q14     D%     2015     2014     D%  

Financial revenues

     629        171        269        1,469        593        148   

Revenue from cash investments

     91        62        47        251        298        (16

Arrears penalty payments on electricity bills

     72        41        76        230        166        38   

Exchange rate

     21        1        1,537        76        15        405   

Monetary updating

     233        36        547        248        53        367   

Monetary updating—CVA

     (72     —          —          68        —          —     

Taxes applied to Financial Revenue

     (66     (38     75        (84     (38     125   

Monetary updating of the Financial Asset of the Concession

     323        58        455        606        58        941   

Other

     28        10        190        75        39        90   

Financial expenses

     (559     (700     (20     (2,204     (1,694     30   

Costs of loans and financings

     (384     (300     28        (1,386     (931     49   

Exchange rate

     (8     (16     (48     (172     (26     553   

Monetary updating – loans and financings

     (108     (81     34        (387     (271     43   

Monetary updating – paid concessions

     (2     (9     —          (11     (17     (35

Charges and monetary updating on Post-employment obligations

     (31     (24     31        (129     (99     30   

Other

     (25     (270     (91     (120     (349     (66
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial revenue (expenses)

     71        (529     (113     (735     (1,101     (33
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Statement of Results

   4Q15     4Q14     D%     2015     2014     D%  

Net Revenue

     5,267        6,331        (17     21,292        19,540        9   

Operating Expenses

     5,133        4,803        7        18,318        14,451        27   

EBIT

     134        1,528        (91     2,974        5,089        (42

Equity gain in subsidiaries

     133        177        (25     393        210        87   

Gain on stockholding reorganization

     —          —          —          729        —          —     

Gain on change of accounting status in subsidiary

     —          281        —          —          281        —     

Depreciation and Amortization

     206        213        (3     835        801        4   

EBITDA

     473        2,200        (78     4,932        6,382        (23

Financial Result

     71        (529     —          (735     (1,101     (33

Tax

     (55     (340     (84     (893     (1,343     (34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     283        1,117        (75     2,469        3,137        (21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

96


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Cash Flow Statement

   2015      2014      Change%  

Cash at beginning of period

     887         2,202         (60)   

Cash generated by operations

     3,007         3,734         (19)   

Net profit

     2,469         3,137         (21)   

Current and deferred income tax and Social Contribution tax

     893         1,343         (34)   

Depreciation and amortization

     835         801         4   

Gain on the Aliança stockholding reorganization

     (729)         —           —     

Passthrough from CDE

     (1,704)         (1,107)         54   

Equity gain (loss) in subsidiaries

     (393)         (210)         87   

Provisions (reversals) for operational losses

     1,401         581         141   

Dividends received from equity holdings

     487         683         (29)   

Other adjustments

     (252)         (1,493)         (83)   

Financing activities

     247         (750)         (133)   

Financings obtained and capital increase

     5,739         4,562         26   

Interest on Equity, and dividends

     (796)         (3,918)         (80)   

Payments of loans and financings

     (4,696)         (1,394)         237   

Investment activity

     (3,217)         (4,299)         (25)   

Securities—Financial Investment

     (1,644)         37         —     

Acquisition of ownership interest and future capital commitments

     (490)         (3,416)         (86)   

Fixed and Intangible assets

     (1,083)         (920)         18   

Cash at end of period

     924         887         4   
  

 

 

    

 

 

    

 

 

 

Total Cash

     3,435         1,898      
  

 

 

    

 

 

    

 

BALANCE SHEETS (CONSOLIDATED) - ASSETS

   12/31/2015      12/31/2014  

CURRENT

     9,377         6,554   

Cash and cash equivalents

     925         887   

Securities

     2,427         994   

Consumers and traders

     3,581         2,142   

Concession holders – transport of electricity

     184         248   

Financial assets of the concession

     874         848   

Tax offsetable

     175         214   

Income tax and Social Contribution tax recoverable

     306         295   

Dividends receivable

     62         73   

Linked funds

     —           1   

Inventories

     37         40   

Passthrought from CDE (Energy Development Account)

     72         345   

Other credits

     735         468   

NON-CURRENT

     31,480         28,446   

Securities

     84         17   

Consumers and traders

     58         203   

Receivables Investment Fund

     75         6   

Tax offsetable

     258         387   

Income tax and Social Contribution tax recoverable

     206         207   

Deferred income tax and Social Contribution tax

     1,498         1,246   

Escrow deposits in legal actions

     1,813         1,535   

Other credits

     868         408   

Financial assets of the concession

     2,660         7,475   

Investments

     9,745         8,040   

PP&E

     3,940         5,544   

Intangible assets

     10,275         3,379   
  

 

 

    

 

 

 

TOTAL ASSETS

     40,857         35,000   
  

 

 

    

 

 

 

 

97


LOGO

 

 

BALANCE SHEETS LIABILITIES AND SHAREHOLDERS’ EQUITY

   12/31/2015      12/31/2014  

CURRENT

     13,074         10,123   

Suppliers

     1,901         1,604   

Regulatory charges

     517         106   

Profit shares

     114         116   

Taxes

     740         555   

Income tax and Social Contribution tax

     11         43   

Interest on Equity, and dividends, payable

     1,307         1,643   

Loans and financings

     5,145         4,151   

Debentures

     1,156         1,140   

Payroll and related charges

     221         195   

Post-retirement liabilities

     167         153   

Other obligations

     551         419   

Provisions for losses on investments

     1,245         —     

NON-CURRENT

     14,795         13,592   

Regulatory charges

     226         252   

Loans and financings

     1,792         1,832   

Debentures

     7,074         6,386   

Taxes

     740         723   

Income tax and Social Contribution tax

     689         611   

Provisions

     755         755   

Post-retirement liabilities

     3,086         2,478   

Provisions for losses on investments

     148         195   

Other obligations

     285         359   

STOCKHOLDERS’ EQUITY

     12,984         11,281   

Share capital

     6,294         6,294   

Capital reserves

     1,925         1,925   

Profit reserves

     4,663         2,594   

Adjustments to Stockholders’ equity

     102         468   

Retained earnings

     —           —     

NON- CONTROLLING STOCKHOLDER´S EQUITY

     4         4   
  

 

 

    

 

 

 

TOTAL LIABILITIES

     40,857         35,000   
  

 

 

    

 

 

 

 

98


 

21. EARNINGS RELEASE: 1Q 2016 RESULTS

 

99


LOGO

 

PUBLICATION OF RESULTS

CEMIG REPORTS

1Q16 EBITDA

OF

R$ 643 MILLION

Main factors in the quarter

 

  Change in profile of allocation of supply in 2016

 

  Spot price significantly lower this year

 

  Significantly lower sales of gas to industry and thermal generation plants

 

  Negative equity contribution from Renova: significant impact

 

Indicators (GWh)

   1Q16      1Q15      Change %  

Electricity sold, GWh (excluding CCEE)

     13,284         15,782         (15.83

Indicators – R$ ’000

   1Q16      1Q15      Change %  

Sales on CCEE

     2,630         1,010,932         (99.74

Net debt

     13,249,246         11,731,593         12.94   

Gross revenue

     7,354,294         7,941,700         (7.40

Net revenue

     4,451,660         5,849,279         (23.89

Ebitda (IFRS)

     643,331         2,578,893         (75.05

Net profit in the quarter

     5,207         1,484,627         (99.65

Earnings per share

     (0.004      1.18         —     

Ebitda margin

     14.44         44.09         (29.65 p.p.

 

LOGO

 


 

100


LOGO

 

Conference call

Publication of 1Q16 results

Video webcast and conference call

May 17, 2016 (Tuesday) : 11 AM, Brasília time

This transmission on Cemig’s results will have simultaneous translation into English and can be seen in real time by Video Webcast, at http://ri.cemig.com.br or heard by conference call on:

+ 55 (11) 2188-0155 (1st option) or

+ 55 (11) 2188-0188 (2nd option)

Password: CEMIG

 

Playback of Video Webcast:

Site:

http://ri.cemig.com.br

Click on the banner and download.

Available for 90 days

  

Conference call – Playback:

Telephone: (+55-11) 2188-0400

Password:

CEMIG Português

Available from May 17 to June 1, 2016

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

Fabiano Maia Pereira

 

General Manager, Investor Relations

Antônio Carlos Vélez Braga

 

Manager, Investor Market

Robson Laranjo

 

101


LOGO

 

Contents

 

CONFERENCE CALL

   101

CEMIG INVESTOR RELATIONS

   101

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

   101

CONTENTS

   102

CEMIG STOCK PRICE PERFORMANCE

   103

CEMIG’S LONG-TERM RATINGS

   103

ADOPTION OF IFRS

   104

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

   105

THE ELECTRICITY MARKET OF CEMIG D

   108

THE ELECTRICITY MARKET OF CEMIG GT

   109

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION – MWH

   111

QUALITY INDICATORS – SAIDI AND SAIFI

   112

CONSOLIDATED OPERATIONAL REVENUE

   113

SECTOR / REGULATORY CHARGES – DEDUCTIONS FROM REVENUE

   114

OPERATIONAL COSTS AND EXPENSES

   116

EQUITY GAIN (LOSS) IN SUBSIDIARIES

   121

FINANCIAL REVENUE (EXPENSES)

   122

EBITDA

   123

DEBT

   124

FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT

   126

GENERATING PLANTS

   129

DEFAULT

   131

 

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Cemig stock price performance

 

Security

   Ticker    Currency    Close of
March 31,
2016
     Close of
2015
     Change in
the period %
 

Cemig PN

   CMIG4    R$      7.68         5.67         35.49%   

Cemig ON

   CMIG3    R$      7.42         5.98         24.18%   

ADR PN

   CIG    US$      2.15         1.38         55.28%   

ADR ON

   CIG.C    US$      2.15         1.70         26.74%   

Ibovespa

   Ibovespa    —        50,055         43,349         15.47%   

IEEX

   IEEX    —        27,859         24,803         12.32%   

 

Source: Economática.

Trading volume in Cemig’s preferred shares (CMIG4) totaled R$ 2.84 billion in 1Q16, a daily average of R$ 47.40 million. They handle in both its common (ON) and preferred (PN) shares, Cemig was the Brazilian electricity company with the highest trading liquidity, and one of the most traded Brazilian stock market.

On the New York Stock Exchange the volume traded in ADRs for Cemig’s preferred shares (CIG) in 1Q16 was US$ 442.3 million: we see this as reflecting recognition by the investor market of Cemig as a global investment option.

The São Paulo stock exchange (Bovespa) index – the Ibovespa – rose 15.47% in the quarter, closing the quarter at 50,055 points. Cemig’s shares outperformed the principal Brazilian stock index and also the electricity sector index: the common (ON) shares rose 24.18% in the quarter, and the preferred (PN) shares rose 35.49%. The strengthening of both the Bovespa index and Cemig’s share prices reflected the change in market expectations.

Cemig’s long-term ratings

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

 

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Brazilian rating:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating   Outlook    Rating   Outlook    Rating   Outlook

Fitch

   AA–(bra)   Negative    AA–(bra)   Negative    AA–(bra)   Negative

S&P

   brA   Negative    brA   Negative    brA   Negative

Moody’s

   A2.br   Negative    A2.br   Negative    A2.br   Negative

Global Rating:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating    Outlook    Rating    Outlook    Rating    Outlook

S&P

   BB-    Negative    BB-    Negative    BB-    Negative

Moody’s

   Ba3    Negative    Ba3    Negative    Ba3    Negative

 

Note: Fitch gives only Brazilian – not global – ratings.

On February 25, 2016, Moody’s downgraded its Brazilian ratings for Cemig and its wholly-owned subsidiaries Cemig D and Cemig GT, and their debenture issues, from Aa2.br to A2.br; and their global ratings from Ba1 to Ba3. The outlook was changed to negative.

Adoption of IFRS

The 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).

 

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PROFIT AND LOSS ACCOUNTS

 

Consolidated – R$ ’000

   1Q16     1Q15     Change %  

REVENUE

     4,451,660        5,849,279        (23.89

OPERATING COSTS

      

Personnel

     (413,407     (336,438     22.88   

Employees’ and managers’ profit shares

     —          (80,973     —     

Post-retirement liabilities

     (75,186     (57,609     30.51   

Materials

     (10,980     (13,882     (20.90

Raw materials and inputs for production of electricity

     (18     (77,518     (99.98

Outsourced services

     (208,004     (198,829     4.61   

Electricity purchased for resale

     (1,931,361     (2,421,404     (20.24

Depreciation and amortization

     (199,033     (247,121     (19.46

Operating provisions

     (251,770     (43,164     483.29   

Charges for use of the National Grid

     (258,706     (241,389     7.17   

Gas bought for resale

     (237,863     (262,008     (9.22

Infrastructure construction costs

     (235,021     (233,573     (0.62

Other operational expenses, net

     (128,086     (128,221     (0.11
  

 

 

   

 

 

   

 

 

 

TOTAL COST

     (3,949,435     (4,342,129     (9.04

Equity method gain (loss)

     (57,927     90,092        —     

Gain (loss) on reorganization – Aliança

     —          734,530        —     

Operational profit before Financial income (expenses) and taxes

     444,298        2,331,772        (80.95

Financial revenues

     226,580        290,302        (21.95

Financial expenses

     (639,138     (563,752     13.37   
  

 

 

   

 

 

   

 

 

 

Profit before income tax and Social Contribution tax

     31,740        2,058,322        —     

Current and deferred income tax and Social Contribution tax

     (26,533     (573,695     (95.38
  

 

 

   

 

 

   

 

 

 

NET PROFIT FOR THE PERIOD

     5,207        1,484,627        (99.65
  

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     5,119        1,484,482     

Interest of non-controlling stockholder

     88        145     
  

 

 

   

 

 

   

NET PROFIT FOR THE PERIOD

     5,207        1,484,627     
  

 

 

   

 

 

   

Fair value gain (loss) on stockholding transaction

     —          (573,182  
  

 

 

   

 

 

   

ADJUSTED NET PROFIT FOR THE PERIOD

     5,207        911,445        (99.43
  

 

 

   

 

 

   

Cemig’s consolidated electricity market

The Cemig Group sells electricity through its distribution company, Cemig Distribuição S.A. (‘Cemig D’), its generation and transmission company Cemig Geração e Transmissão S.A. (‘Cemig GT’), and other wholly-owned subsidiaries: Horizontes Energia, Termelétrica Ipatinga (up to January 2015), Sá Carvalho, Termelétrica de Barreiro, Cemig PCH, Rosal Energia and Cemig Capim Branco Energia (up to March 2015).

 

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

 

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

 

(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 ).

In 1Q16 the Cemig group sold a total volume of 13,284 GWh. This volume was 15.8% less than its total sales volume in 1Q15.

Sales of electricity to final consumers plus Cemig’s own consumption totaled 10,587 GWh, or 9.9% less than in 1Q15.

Overall, electricity consumption has been affected since 1Q15 by adverse Brazilian political and economic circumstances; and, in the captive market, by the successive increases in electricity rates charged to consumers, associated with application of the ‘Tariff Flag’ system, resulting in significant increases in consumers’ electricity bills.

Sales to distributors, traders, other generating companies and independent power producers totaled 2,697 GWh – or 33.2% less than in 1Q16.

In March 2016 the Cemig group invoiced 8,120,322 clients – a growth of 1.9% in the consumer base in the year since March 2015. Of these, 8,120,262 are final consumers, including Cemig’s own consumption; and 60 are other agents in the Brazilian electricity sector.

 

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This chart shows the breakdown of the Cemig Group’s sales to final consumers in the quarter, by consumer category:

 

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Total consumption of electricity (GWh)

 

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Consolidated

   MWh      Change,
%
    Average
price

1Q16
R$
     Average
price

1Q15
R$
 
   1Q16      1Q15          

Residential

     2,490,519         2,563,143         (2.83     812.54         603.46   

Industrial

     4,837,976         5,816,894         (16.83     278.43         220.93   

Commercial, Services and Others

     1,687,814         1,696,604         (0.52     689.19         499.13   

Rural

     723,827         794,723         (8.92     445.62         319.80   

Public authorities

     215,405         217,588         (1.00     624.15         486.26   

Public lighting

     329,062         331,051         (0.60     418.96         302.52   

Public service

     292,885         316,384         (7.43     467.58         343.97   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

     10,577,488         11,736,387         (9.87     497.82         361.92   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Own consumption

     9,452         9,819         (3.74     —           —     

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

     2,696,632         4,035,551         (33.18     204.61         209.96   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

     13,283,572         15,781,757         (15.83     445.27         325.63   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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

 

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The electricity market of Cemig D

Electricity billed to captive clients and electricity transported for Free Clients and distributors with access to Cemig D’s networks in 1Q16 totaled 10,460 GWh, or 3.3% less than in 1Q16.

There are two components of this reduction: Consumption by the captive market 5.5% lower year-on-year, and use of the network by Free Clients 0.5% lower.

In March 2016 Cemig billed 8,120,073 consumers, or 1.9% more consumers than in March 2015. Of this total, 445 are Free Consumers using the distribution network of Cemig D.

 

Consolidated

   Number of clients      Change,
%
 
   1Q16      1Q15     

Residential

     6,566,165         6,429,953         2.1   

Industrial

     74,922         75,736         -1.1   

Commercial, Services and Others

     713,951         713,759         —     

Rural

     684,988         671,531         2.0   

Public authorities

     62,994         62,506         0.8   

Public lighting

     4,438         3,794         17.0   

Public service

     11,414         10,459         9.1   
  

 

 

    

 

 

    

 

 

 

Total

     8,118,872         7,967,738         1.9   
  

 

 

    

 

 

    

 

 

 

Comments on the various consumer categories:

Residential

Residential consumption was 2,491 GWh of the electricity transacted by Cemig, or 2.83% less than in 1Q15.

The lower level of residential consumption is due to:

 

  Increases in rates, and application of the ‘Tariff Flag’ rates as from January 2015.

 

  Reduction in families’ disposable income over the year 2005 and in the first quarter of 2016.

 

  Deterioration in family confidence.

 

  Fewer calendar days in first quarter 2016 (90.2 days) that in first quarter 2015 (91.8 days).

 

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  Lower temperatures in 1Q16 than 1Q15, resulting in less use by consumers of air conditioners and ventilators in their homes.

Average monthly consumption per consumer in 1Q16 was 126.4 KWh/month, or 4.6% lower than the average for 2015 (132.4 KWh/month).

Industrial

Electricity used by captive clients was 7.9% of the volume of electricity distributed by Cemig, totaling 831 GWh in 1Q16, 12.6% less than 1Q15.

This is in line with the continuing retraction of economic activity both in Minas Gerais and in the whole of Brazil, and the performance of the international market:

 

  lower physical production, reflecting undesired inventory levels and less demand, leading to idle manufacturing capacity and lower use of labor;

 

  lack of entrepreneur confidence, and low levels of public and private investment;

 

  uncertainties in the Brazilian political and economic situation; and

 

  high cost of corporate credit due to high interest rates, and banks being more selective in granting loans.

The decline in consumption is seen in most areas of economic activity: food products (-3.9%), nonmetallic minerals (–17.0%), mining (–8.6%), chemicals (–11.6%), metallurgy/pig-iron (–30.1%) and metal products (–13.8%).

The electricity market of Cemig GT

Cemig GT’s sales volume in 1Q16 was affected by termination of concession of plants. As from the termination, Cemig GT received payment for this output was under the Physical Guarantee Quota regime, and via settlement on the spot market.

 

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Cemig GT’s market comprises sales of power as follows:

 

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

 

  (II) to other agents in the electricity sector – traders, generators and independent power producers (in the Free Market);

 

  (III) to electricity distributors (in the Regulated Market – ACR); and

 

  (IV) sales in the CCEE (Wholesale Electricity Trading Chamber).

The total supply billed by Cemig GT in 1Q16 was 6,703 GWh, or 24.6% less than in 1Q15.

The number of clients billed by Cemig GT was 28.6% higher than at the end of March 2015, totaling 684. Of these: 623 were industrial and commercial clients, 47 were distribution companies, and 14 were companies in the category of traders, generators and independent power producers.

Free clients consumed 3,975 GWh in 1Q16, or 59.3% of the total electricity provided by Cemig GT, and 16.9% less than in 1Q15 – on the following main factors:

 

  reduction of consumption by industrial clients due to the continuous retraction in economic activity at state and national level in Brazil, and the performance of the international economy;

 

  lower availability of power for sale due to the conditions for renewal of concessions, as per Law 1303/2050 – this supply was redirected to the Physical Guarantee Quota regime; and

 

  shutdown of a mining operation in Minas Gerais state.

In 1Q16 Cemig GT added 113 new clients in the Commercial category, mainly outside the state of Minas Gerais.

 

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Sales and trading transactions in electricity with other agents of the electricity sector in the Free Market lead to selling opportunities, which lead to short-term sales contracts. In 1Q16 total sales of electricity were 2,049 GWh, or 18.7% less than in 1Q15.

Sales in the Regulated Market, including sales to Cemig D, were 57.3% lower than in 1Q15, for several reasons:

 

  Cessation of contracts entered into as a result of the corporate reorganization of the Cemig group, with the transfer of assets from Cemig GT to Aliança Energia; and

 

  Termination of contracts made at the 18th Adjustment Auction, held in the first half of 2015, and the second ‘Existing Supply’ Auction, held in 2005 at governing the period 2005–2015.

Since September 15, 2015 the São Simão Plant has been serving the Regulated Market under the ‘quota’ regime, in accordance with Ministerial Order 432/2015. The company now recognizes only the revenue from provision of the services of operation and maintenance of the plant.

Physical totals of transport and distribution – MWh

 

Description

   MWh      Change
%
 
   1Q16      1Q15     

Total energy carried

        

Electricity transported for distributors

     84,955         87,127         (2.49

Electricity transported for free clients

     4,141,925         3,837,319         7.94   

Own load

        

Consumption by captive market

     6,407,724         6,722,478         (4.68

Losses in distribution network

     NA         1,397,458         —     

 

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QUALITY INDICATORS – SAIDI AND SAIFI

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

The charts below show Cemig’s indicators for duration and frequency of outages – SAIDI (System Average Interruption Duration Index, in hours), and SAIFI (System Average Interruption Frequency Index, in number of outages), since January 2015.

 

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Consolidated operational revenue

Revenue from supply of electricity:

Total revenue from supply of electricity to final consumers in 1Q16 was R$ 5.915 billion, or 15.10% more than the total revenue of R$ 5.139 billion in 2015.

Final consumers

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, in 1Q16 was R$ 5.307 billion, or 23.65% more than the figure for 1Q16, of R$ 4.292 billion.

The main factors affecting revenue in 1Q16 were:

 

  The Extraordinary Tariff Adjustment (RTE) for Cemig D (Distribution), which resulted in an average impact on consumers’ tariffs of 28.76%, applicable from March 2, 2015.

 

  An annual tariff adjustment, with average effect on consumer tariffs of 7.07%, effective from April 8, 2015.

 

  Volume of electricity sold 15.83% lower.

 

     R$      Change
%
    Average
price

1Q16
R$
     Average
price

1Q15
R$
     Change
%
 
   1Q16      1Q15             

Residential

     2,023,634         1,546,762         30.83        812.54         603.46         34.65   

Industrial

     1,347,060         1,285,151         4.82        278.43         220.93         26.03   

Commercial, Services and Others

     1,163,232         846,832         37.36        689.19         499.13         38.08   

Rural

     322,553         254,149         26.91        445.62         319.80         39.35   

Public authorities

     134,446         105,804         27.07        624.15         486.26         28.36   

Public lighting

     137,865         100,151         37.66        418.96         302.52         38.49   

Public service

     136,947         108,826         25.84        467.58         343.97         35.94   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Subtotal

     5,265,737         4,247,675         23.97        497.82         361.92         37.55   

Supply not yet invoiced, net

     41,021         44,055         (6.89     —           —           —     

Wholesale supply to other concession holders (*)

     551,762         847,299         (34.88     204.61         209.96         (2,55

Wholesale supply not yet invoiced, net

     56,293         212         26.453.3        —           —           —     
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     5,914,813         5,139,029         15,09        445.27         325.63         36.74   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

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

 

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Revenue from Use of Distribution Systems (the TUSD charge)

The revenue of Cemig D (Distribution) from the TUSD in 1Q16 was R$ 409 million, or 94.76% higher than in 1Q15 (R$ 210 million). This reflects the impact of the tariff adjustments in 2015 – an increase of 96.21% for Free Consumers. The 2015 increases were mainly due to passing through of the CDE (Energy Development Account) amounts to the tariffs paid by consumers.

Revenue from transactions in the Wholesale Trading Chamber (CCEE)

Revenue from transactions in electricity on the CCEE in 1Q16 was R$ 3 million, compared to R$ 1.01 billion – a reduction of 99.7% year-on-year. This is mainly due to the spot price (Preço de Liquidação de Diferenças, or PLD) being 91.07% lower year-on-year in the wholesale market (at R$ 34.69/MWh in 2016 compared to R$ 388.48/MWh in 2015); and the lower quantity of electricity available for settlement in the wholesale market in 2016.

CVA and Other financial components in tariff adjustment

Due to the alteration in the concession contracts of the distributors, Cemig started to recognize balances of non-controllable costs to be passed through to Cemig D’s next tariff adjustment. These comprised a reversal of R$ 132 million in operational revenue in 1Q16. This compares with operational revenue of R$ 550 million in 2015. This variation is principally due to the reduction of the costs of electricity acquired in auctions.

Sector / Regulatory charges – deductions from revenue

The sector charges that are effectively deductions from reported revenue totaled R$ 2.903 billion in 1Q16, compared to R$ 2.092 billion in 2015 – an increase of 38.77%. This principally results from the increase in the charges under the Energy Development Account (CDE), and the Tariff Flag charges.

 

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The Energy Development Account – CDE

Payments to the Energy Development Account (CDE) are decided by an Aneel Resolution. The expenses included in the CDE are: concession indemnities, tariff subsidies, subsidy for balanced tariff reduction, low-income consumer subsidy, coal consumption subsidy, and the Fuels Consumption Account (CCC).

Charges for the CDE in 1Q16 were R$ 600 million, compared to R$ 298 million in 1Q15. This is the result of the new budget for the CDE since March 2015, in which Aneel increased the annual amount to be paid by Cemig D (which is passed through to the consumer in the Sector Charges component of tariffs).

Consumer charges – the ‘Tariff Flag’ system

With the creation of the Tariff Flag mechanism, Cemig had an account under Consumer Charges related to the Tariff Flag payments, totaling R$ 273 million in 1Q16, compared to R$ 87 million in 1Q15.

The ‘Flag Account’ (‘Conta Bandeira’) was created on February 5, 2015, to manage the funds collected from captive customers of utilities of the national grid holding electricity distribution concessions and permissions – these were paid, on behalf of the CDE, directly to the Flag Account. The resulting funds are passed through by the Wholesale Trading Chamber (CCEE) to distribution agents, based on the differences between:

 

(i) realized costs of thermal generation and exposure to short term market prices, and

 

(ii) the amounts covered by the tariff.

The other deductions from revenue are taxes, calculated as a percentage of amounts invoiced. Thus their variations are, substantially, proportional to the changes in revenue.

 

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Operational costs and expenses

Operational costs and expenses, excluding Financial revenue (expenses), totaled R$ 3.949 billion in 1Q16, or 9.05% more than in 1Q15 (R$ 4.342 billion).

 

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The following paragraphs comment on the main variations:

Electricity purchased for resale

The expense on electricity bought for resale in 1Q16 was R$ 1.931 billion, or 20.24% more than in 1Q15 (R$ 2.421 billion). The main factors in the higher figure are:

Cemig D:

 

  Expense on electricity acquired in auctions 42.57% lower, at R$ 665 million in 1Q16, compared to R$ 1.159 billion in 1H15, mainly on on lower expenditure on fuel for generation by the thermal plants.

 

  Expense on electricity from Itaipu Binacional 14.36% lower, at R$ 316mn in 1Q16, compared to R$ 370mn in 1Q15. This is mainly due to (i) the lower tariff, which was US$38.07/kw/month in 1Q15, but US$25.78/kw/month as from January 2016; and (ii) the volume of electricity bought being 5.25% lower.

 

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  The cost of purchases of supply in the short-term market was lower by 64.74% – at R$ 86 million in 1Q16, vs. R$ 245 million in 1Q15) – reflecting the lower cost of electricity in the wholesale market in 2015.

Cemig GT:

The expense on electricity bought for resale in 1Q16 was R$ 660 million, or 8.55% more than in 1Q15 (R$ 608 million). This reflects a higher average price per MWh (R$ 134.74 in 2016, vs. R$ 179.94 in 2015), with an offsetting effect from volume of electricity purchased in 1Q16 25.12% lower (4,510,660 MWh), compared to 1Q15 (3,669,685 MWh).

Operating provisions

Operational Provisions 486.05% higher year-on-year in the quarter – an expense of R$ 252mn in 1Q16, compared to R$ 43mn in 1Q15. The main factors in this result are:

 

  Higher provisions for doubtful receivables: R$ 76 million in 1Q16, compared to R$ 27 million in 1Q15 – mainly reflecting a higher level of default, influenced by the significant increase in consumer electricity rates put in place in 2015, and also the Brazilian macroeconomic context.

 

  Higher provisions for contingencies: in particular for employment-law litigation – totaling R$ 50 million in 1Q16, compared to R$ 16 million in 1Q15. There was also an increase in regulatory provisions – at R$ 21 million in 1Q16, compared to R$ 3 million in 2015, reflecting an infringement claim issued by Aneel, in the administrative sphere, related to assessment of electricity distribution services.

 

  This change mainly reflected provisions for the put options on equity interests in Parati (R$ 79 million), and SAAG R$ 9 million), respectively.

 

  a) Put options for Units in FIP Melbourne

Option Contracts for sale of Units (‘the Put Options’) were signed between Cemig GT and the pension plan entities that participate in the investment structure of SAAG, which those entities may exercise in the 84th month from June 2014. The exercise price of the Put Options will correspond to the amount invested by each pension plan company in the Investment Structure, updated pro rata temporis by the IPCA inflation index (Índice National de Preços ao Consumidor Amplo, published by the Brazilian Geography and Statistics Institute – IBGE), plus 7% per year, less such dividends and Interest on Equity as have been paid by SAAG to the pension plan entities.

 

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To decide the method to be used for measuring the fair value of that option, since Madeira Energia is an unlisted company, the Company adopted the discounted cash flow method to measure the fair value of the options. The fair value of this option has been calculated on the basis of the estimated exercise price on the day of exercise of the option, less the fair value of the shares that are the subject of the put option, also estimated for the date of exercise, brought to present value at the interim reporting date, at the effective rate of 8% p.a. (discounting inflation effects). Based on the studies made, a liability of R$ 157 million is recorded in Cemig GT, for the difference between the the exercise price and the estimated fair value of the assets.

 

  b) FIP Redentor

Cemig granted to Fundo de Participações Redentor, which is a stockholder of Parati, an option to sell the totality of the shares which that fund holds in Parati, exercisable in May 2016. The exercise price of the option is calculated from the sum of the value of the amounts injected by the Fund into Parati, plus the running expenses of the fund, less Interest on Equity, and dividends, distributed by Parati. The exercise price is subject to monetary updating by the CDI (Interbank CD) Rate plus financial remuneration at 0.9% per year.

To decide the method to be used in measuring the fair value of this option, the Company observed the daily trading volume of the shares of Light, and also the fact that such option, if exercised by the Fund, will require the sale to the Company, in a single transaction, of shares in Light in a quantity higher than the daily exchange trading averages. Thus, the Company has adopted the discounted cash flow method for measurement of the fair values of the options. The fair value of that option was calculated as the amount of the exercise price estimated on the date of exercise, less the fair value of the shares subject of the put option, also estimated on the date of the exercise of the option, brought to present value on the reporting date, at an effective rate of 7.5% p.a. (discounting inflation effects).

 

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Based on the studies made, a liability of R$ 1.324 billion is recorded in Cemig itself (the holding company), for the difference between the the exercise price and the estimated fair value of the assets.

On May 27, 2016, there will be an Extraordinary General Meeting of Stockholders to decide on changes in the agreement with FIP Redentor, including postponement of the date of exercise of the put option. For more details see the Convocation Notice:

http://cemig.infoinvest.com.br/enu/13511/conv_proposta_AGE27-05-16_ing.pdf

Personnel

Personnel expenses were R$ 413 million in 1Q16, compared to R$ 336 million in 1Q15, an increase of 22.92%. This arises mainly from the following items:

 

  Salary increases of 3% from March 2015, as a result of the collective negotiation decided by the courts on application from organizations representing the employees;

 

  Salary increases, under the Collective Agreement, of 10.33%, as from November 2015.

Number of employees

 

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Gas bought for resale

The expense Cemig reports for Gas bought for resale was R$ 238 million in 1Q16, vs. R$ 262 million in 1Q15. This is basically due to a lower quantity of gas purchased (287,594m³ in 1Q16, compared to 380,666m³ in 1Q15) reflecting Brazil’s economic downturn, which affected the industrial market, and also led to gas-fired thermoelectric generation plants being de-activated.

 

Market (’000 m3/day)

   2012      2013      2014      2015      1Q16  

Residential

     —           0.17         0.72         1.04         1.57   

Commercial

     24.73         20.38         23.15         22.42         20.63   

Industrial

     2,740.00         2,734.95         2,849.24         2,422.78         2,116.84   

Other

     114.09         106.33         99.64         119.87         118.13   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total market excluding thermal plants

     2,878.82         2,861.83         2,972.75         2,566.11         2,257.17   

Thermal plants

     746.09         1.214.50         1.223.99         1.309.13         918.21   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3,624.91         4,076.33         4,196.74         3,875.24         3,175.38   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

In the industrial market, the lower daily average of sales reflects reductions in economic activity in many of the industries served by Gasmig. Examples are:

 

  Metallurgy (–32%);

 

  Manufacture of machines and equipment (–26%); and

 

  Textiles and textile products (–16%).

The thermoelectric generation plants, which had been operating uninterruptedly since 2012, and now less in demand due to the lower demand for electricity, and also the higher levels of rainfall in the current rainy period.

 

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Supply of gas for the residential market, which began in 2013, was connected to 4,645 homes in March 2016 (3,820 homes at December 31, 2015).

Fair value gain (loss) on stockholding transaction

In 2015 the Company posted a gain of R$ 735 million arising from the constitution of Aliança Geração de Energia. On February 27, 2015, the transaction of association between Vale S.A. and Cemig GT by subscription of shares in Aliança Geração de Energia S.A. was completed. The two companies subscribed their shares in Aliança by transfer to it of their interests in the following generation assets: Porto Estrela, Igarapava, Funil, Capim Branco I, Capim Branco II, Aimorés and Candonga. Aliança has installed hydroelectric generation capacity of 1,158 MW in operation (assured offtake level 652 MW), as well as other generation projects.

Since its creation, Aliança Geração de Energia has made a positive contribution to Cemig GT. In 1Q16 this interest provided Cemig GT with a gain of R$ 24 million.

Equity gain (loss) in subsidiaries

In 1Q16 Cemig posted a net equity method gain of R$ 58 million, which compares with a net gain of R$ 90 million in 1Q15. This is mainly due to a loss of R$ 152 million in 1Q16 in the jointly-controlled entity Renova Energia.

Investment in Renova – Loss due to impairment of assets available for sale

Option contract

A contract was signed on September 18, 2015 giving Renova the option to sell to SunEdison up to 7,000,000 shares in TerraForm Global, which Renova had received under the agreement in the first phase of the related asset exchange transaction.

 

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The exercise price of this option was set at R$ 50.48 or US$15.00, at the exchange rate of the day, at SunEdison’s choice. The contract also gave SunEdison an option to buy the same 7 million shares on the same terms.

Renova priced the option using the Black-Scholes mathematical model, the future expectation for the exchange rate, and the credit risk. Based on this valuation, a loss of R$ 217 million has been recognized in 1Q16. Cemig´s impact is R$ 59 million, according to its 27.35% interest in Renova’s stake.

Investment in TerraForm – pricing of the shares

The company also posted a loss in 1Q16, of R$ 272 million, resulting from the fall in the stock price of TerraForm, in which Renova holds an equity interest of 11.42%, valued on the basis of the market price of the shares.

The figures above refer to the full impact on the financial statements of Renova. The effect for Cemig was proportional to its interest in the investee, valued by the equity method.

Financial revenue (expenses)

 

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Cemig reports net financial expenses of R$ 413 mn in 1Q16, compared to net financial expenses of R$ 273mn in 1Q15. The main factors are:

 

  Lower gain on updating of financial assets reported for the Remuneration Assets Base (BRR): R$ 2mn in 1Q16, vs. R$ 92mn in 1Q15. This is due to the BRR being lower, following the renewal of the concession contract in December 2015: on March 31, 2016 the amount of R$ 164 million was classified in Financial assets (compared to R$ 6.21 billion on March 31, 2015).

 

  Recognition of monetary updating on deposits linked to legal actions, representing a gain in Financial revenue of R$ 31mn in 1Q16.

 

 

Charges for loans and financings 46.08% higher, at R$ 428 million in 1Q16, compared to R$ 293mn in 1Q15. This mainly reflects higher debt indexed to the

 

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CDI Rate; and also the higher variation provided by the CDI rate, itself, at 3,25% in 1Q16 compared to 2.81% in 1Q15.

EBITDA

Cemig’s consolidated Ebitda in 1Q16 was 24.95% of its value in 1Q15 – a reduction of 75.05%. This mainly reflects: (i) recognition in 1Q15 of a gain of R$ 735 million from calculation of fair value in a stockholding transaction; and (ii) much lower revenue from wholesale transactions on the CCEE – at R$ 3 million in 1Q16, compared to R$ 1.01 billion in 1Q15, due to the lower volume of supply de-contracted.

 

Ebitda – R$ ’000

   1Q16      1Q15      Change, %  

Profit (loss) for the quarter

     5,207         1,484,627         (99.65

+ Income tax and Social Contribution tax

     26,533         573,695         (95.38

+ Net financial revenue (expenses)

     412,558         273,450         50.87   

+ Depreciation and amortization

     199,033         247,121         (19.46
  

 

 

    

 

 

    

 

 

 

= EBITDA

     643,331         2,578,893         (75.05
  

 

 

    

 

 

    

 

 

 

 

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DEBT

 

LOGO

The Company’s consolidated total debt on March 31, 2016 was R$ 15.300 billion, 0.88% less than at December 31, 2015.

 

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Cemig D has rolled over the greater part of its short-term debt: the balance payable in 2016 is R$ 918 million. On March 22, 2016, Cemig D contracted with Caixa Econômica Federal a debt of R$ 750 million at 132.14% of the CDI rate for a total of 48 months, with grace period of 18 months. On March 28, 2016, Cemig D concluded its fourth issue of non-convertible debentures, for a total of R$ 1.615 billion, with maturity at three years. These funds were used to settle its eighth issue of Notes. Both these contracts allow for early payment without penalty.

On April 22, 2016 Cemig D rolled over debt of R$ 600 million with Banco do Brasil, for interest of 128.00% of the CPI rate, and final maturity in April 2018.

 

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Cemig GT has loans of R$ 2.919 billion maturing in 2016, most of it in December.

 

Cemig GT

   Maturity     

Annual financial cost %

   Total
R$ mn
 

Promissory Notes – 6th Issue

     12/2016       120% of the CDI Rate      1,472   

Debentures – 4th Issue, 1st Series

     12/2016       CDI + 0.85%      519   

 

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FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT

 

FINANCIAL STATEMENTS SEPARATED BY COMPANY AT MARCH 31, 2016

 

Item

   Holding
company
    Cemig GT     Cemig D     Gasmig     Cemig
Telecom
   
Carvalho
    Rosal     Other
subsidiaries
    Eliminations
/ transfers
    Total,
subsidiaries
    Taesa     Light     Madeira     Aliança
Generation
    Other
jointly-
controlled
entities
    Eliminations
/ transfers
    Subsidiaries
and jointly-
controlled
entities
 

ASSETS

     16,358,669        15,991,748        16,272,718        2,045,269        314,112        158,008        136,541        291,495        (10,146,584     41,421,976        4,742,200        4,955,128        2,506,664        1,191,731        4,866,417        (8,020,814     51,663,302   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents

     43,333        441,232        595,146        57,610        1,712        5,596        4,413        43,934        —          1,192,976        262,513        243,930        14,250        187,050        180,065        —          2,080,784   

Accounts receivable

     —          630,663        2,815,168        83,935        16,528        6,384        5,656        3,636        (17,116     3,544,854        101,294        853,458        32,327        39,868        66,170        (15,399     4,622,572   

Securities – cash investments

     87,852        247,924        344,435        52,657        17,655        13,039        10,237        83,536        —          857,335        2,213        —          —          —          58,212        —          917,760   

Taxes

     997,888        185,453        1,223,301        56,910        16,855        136        459        1,181        —          2,482,183        289,362        389,849        68,339        3,438        16,524        —          3,249,695   

Other assets

     1,376,835        780,902        1,690,813        470,918        5,619        4,956        1,642        33,318        (833,004     3,531,999        42,993        639,513        160,843        63,453        509,483        42,341        4,990,625   

Investments, PP&E, Intangible, and Financial assets of concession

     13,852,761        13,705,574        9,603,855        1,323,239        255,743        127,897        114,134        125,890        (9,296,464     29,812,629        4,043,825        2,828,378        2,230,905        897,922        4,035,963        (8,047,756     35,801,866   

LIABILITIES AND STOCKHOLDERS’ EQUITY

     16,358,669        15,991,748        16,272,718        2,045,269        314,112        158,008        136,541        291,495        (10,146,584     41,421,976        4,742,200        4,955,128        2,506,664        1,191,731        4,866,417        (8,020,814     51,663,302   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Suppliers and supplies

     5,465        319,312        994,149        237,137        8,729        8,920        3,884        3,507        (21,690     1,559,413        15,507        453,517        137,214        18,097        174,049        (44,938     2,312,859   

Loans, financings and debentures

     —          7,864,924        7,046,209        350,376        38,048        —          —          —          —          15,299,557        1,777,201        2,366,183        1,473,947        114,824        1,398,614        —          22,430,326   

Interest on Equity, and dividends

     1,295,775        562,736        185,105        45,667        —          2,464        —          25,466        (821,207     1,296,006        1        14,287        —          —          22,793        (37,081     1,296,006   

Post-retirement liabilities

     310,474        732,975        2,262,831        —          —          —          —          1        —          3,306,281        —          14,491        —          —          —          —          3,320,772   

Taxes

     20,918        710,994        1,696,343        301,325        10,175        38,087        2,654        10,457        —          2,790,953        833,985        393,608        41,725        18,887        94,674        —          4,173,832   

Other liabilities

     1,752,327        1,182,120        1,009,374        167,682        76,776        722        681        9,548        (7,240     4,191,990        107,619        521,502        104,153        139,413        57,787        29,267        5,151,731   

TOTAL EQUITY

     12,973,710        4,618,687        3,078,707        943,082        180,384        107,815        129,322        242,516        (9,296,447     12,977,776        2,007,887        1,191,540        749,625        900,510        3,118,500        (7,968,062     12,977,776   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributed to controlling stockholders

     12,973,710        4,618,687        3,078,707        939,016        180,384        107,815        129,322        242,515        (9,265,402     12,973,710        2,007,887        1,191,540        749,625        900,510        3,118,500        (7,968,062     12,973,710   

Interest of non-controlling stockholder

     —          —          —          4,066        —          —          —          —          —          4,066        —          —          —          —          —          —          4,066   

NET PROFIT (LOSS)

                                  

Net operational revenue

     365        1,401,062        2,689,600        312,235        24,124        16,458        14,763        38,853        (45,800     4,451,660        231,420        828,034        64,162        89,894        97,548        (70,326     5,692,392   

Operational costs and expenses

     (110,785     (983,292     (2,575,718     (275,477     (22,006     (9,457     (6,866     (7,192     41,358        (3,949,435     (22,827     (753,981     (44,528     (41,755     (90,038     (86,506     (4,989,070
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Electricity purchased for resale

     —          (660,318     (1,276,015     —          —          (1,296     (260     122        6,406        (1,931,361     —          (510,714     (3,973     (9,685     (27,450     47,152        (2,436,031

Charges for use of the National Grid

     —          (73,976     (213,345     —          —          —          (829     (84     29,528        (258,706     —          —          (13,015     (4,231     (3,265     16,164        (263,053

Gas bought for resale

     —          —          —          (237,863     —          —          —          —          —          (237,863     —          —          —          —          —          —          (237,863

Construction cost

     —          (6,688     (218,594     (9,739     —          —          —          —          —          (235,021     (352     (104,405     —          —          (267     —          (340,045

Personnel

     (10,082     (97,462     (288,395     (9,737     (4,728     (270     (374     (2,359     —          (413,407     (12,645     (28,578     (1,813     (3,418     (16,396     —          (476,257

Post-retirement liabilities

     (8,642     (16,581     (49,963     —          —          —          —          —          —          (75,186     —          —          —          —          —          —          (75,186

Materials

     (20     (2,228     (8,215     (297     (19     (72     (72     (75     —          (10,998     (1,360     (4,900     (379     (112     (964     —          (18,713

Outsourced services

     (1,820     (35,505     (166,977     (2,719     (5,446     (942     (1,169     (2,082     8,656        (208,004     (4,487     (42,348     (2,466     (6,860     (10,037     2,350        (271,852

Depreciation and amortization

     (130     (46,959     (121,845     (13,124     (8,123     (1,404     (1,093     (2,541     (3,814     (199,033     (535     (39,723     (15,688     (15,443     (17,477     (160,795     (448,694

Operating provisions

     (85,534     (21,839     (144,560     —          163        —          —          —          —          (251,770     64        (25,801     (6,173     —          623        —          (283,057

Other expenses, net

     (4,557     (21,736     (87,809     (1,998     (3,853     (5,473     (3,069     (173     582        (128,086     (3,512     2,488        (1,021     (2,006     (14,805     8,623        (138,319
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational profit before Equity gains (losses) and Financial revenue (expenses)

     (110,420     417,770        113,882        36,758        2,118        7,001        7,897        31,661        (4,442     502,225        208,593        74,053        19,634        48,139        7,510        (156,832     703,322   

Equity method gain (loss)

     63,434        (150,174     —          —          (7,398     —          —          —          36,211        (57,927     258        (27,811     —          (904     (127,400     169,495        (44,289

Gain on the stockholding reorganization

     —          —          —          —          —          —          —          —          —          —          —          —          —          —          28,868        —          28,868   

Financial revenue

     30,249        42,637        143,918        4,249        1,042        455        306        3,724        —          226,580        68,471        (1,599     4,938        3,582        12,669        —          314,641   

Financial expenses

     (9,577     (332,506     (283,675     (11,738     (1,522     (62     (9     (49     —          (639,138     (134,363     (30,612     (42,173     (8,200     (46,270     —          (900,756
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income tax and Social Contribution tax

     (26,314     (22,273     (25,875     29,269        (5,760     7,394        8,194        35,336        31,769        31,740        142,959        14,031        (17,601     42,617        (124,623     12,663        101,786   

Income tax and Social Contribution tax

     31,433        (39,024     (1,266     (8,738     (539     (2,505     (693     (5,201     —          (26,533     (32,962     (13,568     3,116        (12,622     (14,010     —          (96,579
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     5,119        (61,297     (27,141     20,531        (6,299     4,889        7,501        30,135        31,769        5,207        109,997        463        (14,485     29,995        (138,633     12,663        5,207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     5,119        (61,297     (27,141     20,443        (6,299     4,889        7,501        30,135        31,769        5,119        109,997        463        (14,485     29,995        (138,633     12,663        5,119   

Interest of non-controlling stockholder

     —          —          —          88        —          —          —          —          —          88        —          —          —          —          —          —          88   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     5,119        (61,297     (27,141     20,531        (6,299     4,889        7,501        30,135        31,769        5,207        109,997        463        (14,485     29,995        (138,633     12,663        5,207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

126


LOGO

 

 

INFORMATION BY MARKET SEGMENT ON MARCH 31, 2016

 

Item

   Electricity     Telecoms     Gas     Others     Eliminations     TOTAL  
   GENERATION     TRANSMISSION     DISTRIBUTION            

ASSETS OF THE SEGMENT

     14,563,360        4,449,991        17,800,671        314,112        2,520,566        2,614,718        (841,442     41,421,976   

ADDITIONS TO THE SEGMENT

     2,696,071        6,688        218,594        7,574        9,739        —          —          2,938,666   

Investments in subsidiaries and jointly-controlled entities

     6,084,311        2,516,500        1,527,953        —          —          23,483        —          10,152,247   

NET REVENUE

     1,333,349        106,559        2,689,600        24,124        312,235        31,599        (45,806     4,451,660   

COST OF ELECTRICITY AND GAS

                

Electricity purchased for resale

     (661,751     —          (1,276,015     —          —          —          6,405        (1,931,361

Charges for use of the National Grid

     (74,801     (88     (213,345     —          —          —          29,528        (258,706

Gas bought for resale

     —          —          —          —          (237,863     —          —          (237,863
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational costs, total

     (736,552     (88     (1,489,360     —          (237,863     —          35,933        (2,427,930

OPERATIONAL COSTS AND EXPENSES

                

Personnel

     (68,237     (29,869     (288,395     (4,728     (9,737     (12,441     —          (413,407

Post-retirement liabilities

     (11,712     (4,869     (49,963     —          —          (8,642     —          (75,186

Materials

     (1,990     (446     (8,215     (19     (297     (31     —          (10,998

Outsourced services

     (32,902     (6,635     (166,977     (5,446     (2,719     (1,981     8,656        (208,004

Depreciation and amortization

     (51,995     —          (121,845     (8,123     (13,124     (3,946     —          (199,033

Operational provisions (reversals)

     (19,349     (2,490     (144,560     163        —          (85,534     —          (251,770

Construction costs

     —          (6,688     (218,594     —          (9,739     —          —          (235,021

Other operational expenses, net

     (29,141     (1,252     (87,809     (3,853     (1,998     (5,250     1,217        (128,086
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of operation

     (215,326     (52,249     (1,086,358     (22,006     (37,614     (117,825     9,873        (1,521,505

OPERATIONAL COSTS AND EXPENSES

     (951,878     (52,337     (2,575,718     (22,006     (275,477     (117,825     45,806        (3,949,435

Operational profit before Equity gains (losses) and Financial revenue (expenses)

     381,471        54,222        113,882        2,118        36,758        (86,226     —          502,225   

Equity method gain (loss)

     (150,175     113,116        (13,163     (7,398     —          (307     —          (57,927

Financial revenues

     44,636        603        143,918        1,042        4,249        32,132        —          226,580   

Financial expenses

     (330,941     (1,662     (283,675     (1,522     (11,738     (9,600     —          (639,138
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PRE-TAX PROFIT

     (55,009     166,279        (39,038     (5,760     29,269        (64,001     —          31,740   

Income tax and Social Contribution tax

     (27,028     (16,221     (1,266     (539     (8,738     27,259        —          (26,533
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net profit

     (82,037     150,058        (40,304     (6,299     20,531        (36,742     —          5,207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     (82,037     150,058        (40,304     (6,299     20,443        (36,742     —          5,119   

Interest of non-controlling stockholder

     —          —          —          —          88        —          —          88   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (82,037     150,058        (40,304     (6,299     20,531        (36,742     —          5,207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

127


LOGO

 

Mining and Energy Ministry Ministerial Order 120

The Mining and Energy Ministry, through its Ministerial Order 120, of April 20, 2016, has set the criteria for indemnity of transmission assets. It states that the amounts that are approved shall be received in a period of eight years as from the 2017 tariff adjustment, and will be updated by the variation in the IPCA inflation index, and remunerated on the basis of the specific cost of capital of the transmission segment as defined by Aneel in the processes of periodic Tariff Review, estimated at 10.44% p.a. The Companies in the sector are in the process of obtaining more detailed explanations from the regulator on the criteria related to monetary updating and receipt of the indemnity.

The Valuation Opinion delivered to Aneel on July 31, 2014 represented an indemnity to the Company of R$ 1.169 billion, at the base date of December 31, 2012.

On February 23, 2015, Aneel sent the Company the Report of Inspection with the preliminary review of the Opinion sent by the Company, corresponding to a price of R$ 1.157 billion, of which R$ 285 million was received in the first quarter of 2013 – the remaining balance being R$ 872 million. Updating of this amount by the IGP–M inflation index to March 31, 2016 results in the amount of R$ 1.085 billion (R$ 1.054 billion at December 31, 2015).

Cemig GT is still in process of assessing the effects of the Ministerial Order, and has an estimate of an impact of approximately R$ 500 million in financial revenue – which will be posted in the second quarter of 2016.

 

128


LOGO

 

Generating plants

 

Plant

   Type    Company    Cemig’s
Interest
    Installed Capacit
(MW)
     Assured Energy
(average MW)
     Installed
Capacit (MW)*
     Assured Energy
(average MW)*
     Year Concession
or Authorization
Expires
 

São Simão

   Hydroelectric    CEMIG GT      100.0     1,710.00         1,281.00         1,710.00         1,281.00         1/11/2015   

Emborcação

   Hydroelectric    CEMIG GT      100.0     1,192.00         497.00         1,192.00         497.00         7/23/2025   

Nova Ponte

   Hydroelectric    CEMIG GT      100.0     510.00         276.00         510.00         276.00         7/23/2025   

Jaguara

   Hydroelectric    CEMIG GT      100.0     424.00         336.00         424.00         336.00         8/28/2013   

Miranda

   Hydroelectric    CEMIG GT      100.0     408.00         202.00         408.00         202.00         12/23/2016   

Irapé

   Hydroelectric    CEMIG GT      100.0     399.00         210.70         399.00         210.70         2/28/2035   

Três Marias

   Hydroelectric    CEMIG GT      100.0     396.00         239.00         396.00         239.00         1/4/2046   

Volta Grande

   Hydroelectric    CEMIG GT      100.0     380.00         229.00         380.00         229.00         2/23/2017   

Igarapé

   Thermal    CEMIG GT      100.0     131.00         71.30         131.00         71.30         8/13/2024   

Salto Grande

   Hydroelectric    CEMIG GT      100.0     102.00         75.00         102.00         75.00         1/4/2046   

Itutinga

   Hydroelectric    CEMI G GT      100.0     52.00         28.00         52.00         28.00         1/4/2046   

Camargos

   Hydroelectric    CEMIG GT      100.0     46.00         21.00         46.00         21.00         1/4/2046   

Piau

   SHP    CEMI G GT      100.0     18.01         13.53         18.01         13.53         1/4/2046   

Gafanhoto

   SHP    CEMIG GT      100.0     14.00         6.68         14.00         6.68         1/4/2046   

Peti

   SHP    CEMIG GT      100.0     9.40         6.18         9.40         6.18         1/4/2046   

Rio de Pedras

   SHP    CEMIG GT      100.0     9.28         2.15         9.28         2 15         9/19/2024   

Poço Fundo

   SHP    CEMIG GT      100.0     9.16         5.79         9.16         5.79         8/19/2025   

Tronqueiras

   SHP    CEMIG GT      100.0     8.50         3.39         8.50         3.39         1/4/2046   

Joasal

   SHP    CEMIG GT      100.0     8.40         5.20         8.40         8.40         1/4/2046   

Martins

   SHP    CEMIG GT      100.0     7.70         1.84         7.70         1.84         1/4/2046   

Cajuru

   SHP    CEMIG GT      100.0     7.20         2.69         7.20         2.69         1/4/2046   

Ervalia

   SHP    CEMIG GT      100.0     6.97         3.03         6.97         3.03         1/4/2046   

São Bernardo

   SHP    CEMIG GT      100.0     6.82         3.42         6.82         3.42         8/19/2025   

Neblina

   SHP    CEMIG GT      100.0     6.47         4.66         6.47         4.66         1/4/2046   

Cel. Domiciano

   SHP    CEMIG GT      100.0     5.04         3.59         5.04         3.59         1/4/2046   

Paraúna

   SHP    CEMIG GT      100.0     4.28         1.90         4.28         1.90           

Pandeiros

   SHP    CEMIG GT      100.0     4.20         0.47         4.20         0.47         9/22/2021   

Paciência

   SHP    CEMIG GT      100.0     4.08         2.36         4.08         2.36         1/4/2046   

Marmelos

   SHP    CEMIG GT      100.0     4.00         2.74         4.00         2.74         1/4/2046   

Dona Rita

   SHP    CEMIG GT      100.0     2.40         1.03         2.40         1.03         1/4/2046   

Salto de Moraes

   SHP    CEMIG GT      100.0     2.39         0.60         2.39         0.60         7/1/2020   

Sumidouro

   SHP    CEMIG GT      100.0     2.12         0.53         2.12         0.53           

Anil

   SHP    CEMIG GT      100.0     2.08         1.10         2.08         1.10           

Xicão

   SHP    CEMIG GT      100.0     1.81         0.61         1.81         0.61         8/19/2025   

Luiz Dias

   SHP    CEMIG GT      100.0     1.62         0.61         1.62         0.61         8/19/2025   

Sinceridade

   SHP    CEMIG GT      100.0     1.42         0.35         1.42         0.35         1/4/2046   

Central Mineirão

   Solar    CEMIG GT      100.0     1.42                 1.42                   

Poquim

   SHP    CEMIG GT      100.0     1.41         0.39         1.41         0.39         7/8/2015   

Santa Marta

   SHP    CEMIG GT      100.0     1.00         0.58         1.00         0.58         7/8/2015   

Pissarrão

   SHP    CEMIG GT      100.0     0.80         0.55         0.80         0.55           

Jacutinga

   SHP    CEMIG GT      100.0     0.72         0.57         0.72         0.57           

Santa Luzia

   SHP    CEMIG GT      100.0     0.70         0.23         0.70         0.23         2/25/2026   

Lages*

   SHP    CEMIG GT      100.0     0.68                 0.68                   

Bom Jesus do Galho

   SHP    CEMIG GT      100.0     0.36         0.13         0.36         0.13           

Pai Joaquim

   SHP    CEMIG PCH      100.0     23.00         4.26         23.00         4.26         4/1/2032   

Salto Voltão

   SHP    Horizontes Energia      100.0     8.20         6.63         8.20         6.63         10/4/2030   

Salto do Paraopeba

   SHP    Horizontes Energia      100.0     2.46                 2.46                 10/4/2030   

Salto do Passo Velho

   SHP    Horizontes Energia      100.0     1.80         1.06         1.80         1.06         10/4/2030   

Machado Mineiro

   SHP    Horizontes Energia      100.0     1.72         1.03         1.72         1.03         7/8/2025   

Rosal

   Hydroelectric    Rosal Energia      100.0     55.00         30.00         55.00         30.00         5/8/2032   

Sá Carvalho

   Hydroelectric    Sá Carvalho      100.0     78.00         58.00         78.00         58.00         12/1/2024   

Barreiro

   Thermal    Usina Termelétrica Barrei      100.0     12.90         11.37         12.90         11.37         4/30/2023   

Queimado

   Hydroelectric    CEMIG GT      82.5     105.00         58.00         86.63         47.85         1/2/2033   

Praias de Parajuru

   Wind Farm    CEMIG GT      49.0     28.80         8.39         14.11         4.11         9/24/2032   

Praia do Morgado

   Wind Farm    CEMIG GT      49.0     28.80         13.20         14.11         6.47         12/26/2031   

Paracambi

   SHP    CEMIG GT      49.0     25.00         19.53         12.25         9.57         2/16/2031   

Volta do Rio

   Wind Farm    CEMIG GT      49.0     42.00         18.41         20.58         9.02         12/26/2031   

Santo Antônio

   Hydroelectric    Santo Antônio Energia      17.7     2,714.72         2,218.00         480.06         392.22         6/12/2046   

Aimorés

   Hydroelectric    ALIANÇA      45.0     330.00         172.00         148.50         77.40         12/20/2035   

Amador Aguiar I (Capim Bra

   Hydroelectric    ALIANÇA      39.3     240.00         155.00         94.36         60.94         8/29/2036   

Amador Aguiar II (Capim Br

   Hydroelectric    ALIANÇA      39.3     210.00         131.00         82.56         51.50         8/29/2036   

Igarapava

   Hydroelectric    ALIANÇA      23.7     210.00         136.00         49.75         32.22         12/30/2028   

Funil

   Hydroelectric    ALIANÇA      45.0     180.00         89.00         81.00         40.05         12/20/2035   

Candonga

   Hydroelectric    ALIANÇA      22.5     140.00         64.50         31.50         14.51         5/25/2035   

Porto Estrela

   Hydroelectric    ALIANÇA      30.0     112.00         55.80         33.60         16.74         7/10/2032   

Baguari

   Hydroelectric    BAGUARI ENERGIA      34.0     140.00         80.20         47.60         27.27         8/15/2041   

Cachoeirão

   SHP    Hidrelétrica Cachoeirão      49.0     27.00         16.37         13.23         8.02         7/25/2030   

Pipoca

   SHP    Hidrelétrica Pipoca      49.0     20.00         11.90         9.80         5.83         9/10/2031   

Retiro Baixo

   Hydroelectric    Retiro Baixo Energética      25.0     82.00         38.50         20.46         9.61         8/25/2041   
   Hydroelectric    Lightger      49.0     855.14         637.00         419.02         312.13      
   SHP    Lightger      25.0     25.00         19.53         6.25         4.88      
   SHP    Brasil PCH      31.2     291.00         188.85         90.67         20.31      
   Wind Farm    Renova Energia      35.2     680.50         325.91         239.21         114.56      
   SHP    Renova Energia      35.2     41.80         18.74         14.69         6.59      

 

* The installed capacit and the assured energy are already on cemig’s share.

 

129


LOGO

 

Generation: Annual Permitted Revenue (RAP)

 

Resolução Homologatoria ANEEL—nº 1.313*

 

Receita Anual Permitida—RAP

   RAP      % Cemig      Cemig
Consolidado
     Cemig GT  

Cemig GT

     234.340.198         100,0%         234.340.198         234.340.198   

Cemig Itajuba

     36.345.194         100,0%         36.345.194         36.345.194   

Centroeste

     15.420.427         51,0%         7.864.418      

Transirapé

     26.287.112         24,5%         6.440.342      

Transleste

     36.163.304         25,0%         9.040.826      

Transudeste

     22.414.358         24,0%         5.379.446      

Taesa

     43,36%            

ETEO

     155.851.060         43,4%         67.576.823      

ETAU

     38.433.513         22,8%         8.762.945      

NOVATRANS

     460.994.392         43,4%         199.886.586      

TSN

     449.086.299         43,4%         194.723.252      

GTESA

     8.238.429         43,4%         3.572.172      

PATESA

     18.930.852         43,4%         8.208.394      

Munirah

     32.335.023         43,4%         14.020.425      

Brasnorte

     22.865.011         16,8%         3.833.291      

São Gotardo

     4.594.930         43,4%         1.992.356      

Abengoa

           

NTE

     135.672.013         43,4%         58.827.214      

STE

     72.452.041         43,4%         31.415.113      

ATEI

     132.046.398         43,4%         57.255.152      

ATEII

     204.000.305         43,4%         88.454.275      

ATEIII

     102.659.854         43,4%         44.513.183      

TBE

           

EATE

     381.289.719         21,7%         82.634.235      

STC

     36.934.709         17,3%         6.403.873      

Lumitrans

     23.591.101         17,3%         4.090.187      

ENTE

     199.517.005         21,7%         43.245.595      

ERTE

     44.785.760         21,7%         9.706.942      

ETEP

     86.906.931         21,7%         18.835.509      

ECTE

     84.200.833         8,3%         6.970.657      

EBTE

     40.614.511         32,3%         13.118.164      

ESDE

     11.542.416         21,7%         2.501.610      

ETSE

     19.741.437         8,3%         1.634.316      

Light

     7.924.732         32,6%         2.581.878      

Transchile**

     21.396.000         49,0%         10.484.040      
        

 

 

    

 

 

 

RAP TOTAL CEMIG

           1.284.658.610         270.685.392   
        

 

 

    

 

 

 

 

* Receitas anuais permititidas com vigência entre 1º de julho de 2015 e 30 de junho de 2016.
** A receita de transmissão da Transchile é da da em Dólar Norte Americano e é corrigida, anualmente, de acordo com o Decreto Nº 163 (http://www.cne.cl/images/stories/normativas/otros%20niveles/electricidad/DOC65_-_decreto163obrasurgentes.pdf).

 

130


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DEFAULT

In 2015, to achieve economic and financial equilibrium for the companies of the sector, and synchronization between tariffs and the real variable costs of electricity, Aneel implemented the system of ‘Tariff Flags’, and also enacted an Extraordinary Tariff Increase, in March. These measures had an impact on electricity rates, involving as it did a pass-through of costs to final consumers.

In this context of an exceptional increase in electricity rates, Cemig has seen an increase in amounts invoiced that are not paid by final consumers, and this has resulted in growth in the stock of debt to levels higher than the average of recent months.

The average level of default during the month of January 2016 was 25% higher than in January 2015. This increased percentage of default has had a negative effect on the Company’s cash flow.

Due to the present economic context, default has remained at a level that is high for the Company. The rate of default in January was 3.91%.

The Company uses various tools of communication and collection to prevent increase in default. These include telephone contact, sending of e-mails, use of text messages, and collection letters. We are also making efforts with the credit protection services – Serasa (Serviço de Proteção ao Crédito) and CDL (Câmara de Dirigentes Lojistas) – to register these arrears on their records for defaulting clients; and we are also applying disconnection of supply. Aneel Resolution 414 allows supply to be cut off after 15 days from receipt of a notice to the defaulting consumer.

 

131


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Appendices

Cemig D Tables (R$ million)

 

CEMIG D Market

     (GWh)    GW

Quarter

   Captive Consumers    TUSD ENERGY1    T.E.D2    TUSD PICK3

4Q13

   6.615    4.975    11.591    29

1Q14

   6.744    4.464    11.208    29

2Q14

   6.646    4.485    11.132    29

3Q14

   6.686    4.298    10.984    27

4Q14

   6.935    4.201    11.136    29

1Q15

   6.780    4.034    10.814    30

2Q15

   6.371    3.896    10.268    28

3Q15

   6.471    3.803    10.274    29

4Q15

   6.850    3.937    10.787    28

1Q16

   6.408    4.053    10.460    29

 

1. Refers to the quantity of electricity for calculation of the regulatory charges charged to free consumer clients (“Portion A”).
2. Total electricity distributed.
3. Sum of the demand on w hich the TUSD is invoiced, according to demand contracted (“Portion B”).

 

Operating Revenues

   1Q16     1Q15     Change%  

Sales to end consumers

     4.331        3.389        28   

TUSD

     417        226        84   

CVA and Other financial components in tariff adjustment

     (132     550        (124

Construction revenue

     219        203        8   

Others

     297        248        20   

Subtotal

     5.131        4.616        11   

Deductions

     (2.442     (1.551     57   

Net Revenues

     2.690        3.065        (12

 

Operating Expenses

   1Q16      1Q15      Change%  

Personnel/Administrators/Councillors

     288         228         26   

Employee Participation

     —           62         —     

Forluz – Post-Retirement Employee Benefits

     50         42         20   

Materials

     8         10         (16

Contracted Services

     167         157         6   

Purchased Energy

     1.276         1.838         (31

Depreciation and Amortization

     122         112         9   

Operating Provisions

     145         40         260   

Charges for Use of Basic Transmission Network

     213         195         9   

Cost from Operation

     219         203         8   

Other Expenses

     88         98         (10
  

 

 

    

 

 

    

 

 

 

Total

     2.576         2.984         (14
  

 

 

    

 

 

    

 

 

 

 

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Statement of Results

   1Q16     1Q15     Change%  

Net Revenue

     2.690        3.065        (12

Operating Expenses

     2.576        2.984        (14

EBIT

     114        81        40   

EBITDA

     236        193        22   

Financial Result

     (140     (65     117   

Provision for Income Taxes, Social Cont & Deferred Income

     (1     (11     (89

Net Income

     (27     5        —     

Cemig GT Tables (R$ million)

 

Operating Revenues

   1Q16     1Q15     Change%  

Sales to end consumers

     945        913        3   

Supply

     592        808        (27

Gain on monetary updating of Concession Grant Fee

     81        —          —     

Transactions in the CCEE

     4        1.000        (100

Revenues from Trans. Network

     94        80        18   

Construction revenue

     7        31        (78

Transmission indemnity revenue

     31        —          —     

Others

     6        5        28   

Subtotal

     1.760        2.837        (38

Deductions

     (359     (434     (17

Net Revenues

     1.401        2.403        (42

 

Operating Expenses

   1Q16      1Q15     Change%  

Personnel/Administrators/Councillors

     97         83        17   

Employee Participation

     —           15        —     

Forluz – Post-Retirement Employee Benefits

     17         13        31   

Materials

     2         3        (34

Raw Materials and Supplies Energy Production

     —           78        (100

Contracted Services

     36         32        11   

Depreciation and Amortization

     47         76        (38

Operating Reserves

     22         (5     —     

Charges for Use of Basic Transmission Network

     74         72        2   

Purchased Energy

     660         608        9   

Construction Cost

     7         31        (78

Other Expenses

     22         9        131   

Total

     983         1.015        (3

 

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Statement of Results

   1Q16     1Q15     Change%  

Net Revenue

     1,401        2,403        (42

Operating Expenses

     (983     (1,015     (3

EBIT

     418        1,388        (70

Equity equivalence results

     (150     (37     303   

Fair value gain (loss) on stockholding transaction

     —          735        —     

EBITDA

     315        2,161        (85

Financial Result

     (290     (212     37   

Provision for Income Taxes, Social Cont & Deferred Income Tax

     (39     (560     (93

Net Income

     (61     1,313        —     

Cemig Tables (R$ million)

 

Energy Sales (Consolidated)(GWh)

   1Q16      1Q15      Change%  

Residential

     2,491         2,563         (3

Industrial

     4,838         5,817         (17

Commercial

     1,688         1,697         (1

Rural

     724         795         (9

Others

     837         865         (3

Subtotal

     10,577         11,736         (10

Own Consumption

     9         10         (4

Supply

     2,697         4,036         —     
  

 

 

    

 

 

    

 

 

 

TOTAL

     13,284         15,782         (16
  

 

 

    

 

 

    

 

 

 

 

Energy Sales

   1Q16      1Q15      D%  

Residential

     2,024         1,547         31   

Industrial

     1,347         1,285         5   

Commercial

     1,163         847         37   

Rural

     323         254         27   

Others

     409         315         30   

Electricity sold to final consumers

     5,266         4,248         24   

Unbilled Supply, Net

     97         44         120   

Supply

     552         847         (35
  

 

 

    

 

 

    

 

 

 

TOTAL

     5,915         5,139         15   
  

 

 

    

 

 

    

 

 

 

 

134


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Operating Revenues

   1Q16     1Q15     D%  

Sales to end consumers

     5,307        4,292        24   

TUSD

     409        210        95   

Supply

     608        848        (28

Transactions in the CCEE

     3        1,011        (100

CVA and Other financial components in tariff adjustment

     (132     550        —     

Gain on monetary updating of Concession Grant Fee

     81        —          —     

Revenues from Trans. Network

     73        63        16   

Construction revenue

     235        234        1   

Gas supply

     379        426        (11

Transmission Indemnity Revenue

     31        —          —     

Others

     361        309        17   

Subtotal

     7,354        7,942        (7

Deductions

     (2,903     (2,092     39   

Net Revenues

     4,452        5,849        (24

 

Operating Expenses

   1Q16      1Q15      D%  

Personnel/Administrators/Councillors

     413         336         23   

Employee Participation

     —           81         —     

Forluz – Post-Retirement Employee Benefits

     75         58         31   

Materials

     11         14         (21

Raw materials and inputs for production of electricity

     —           78         —     

Contracted Services

     208         199         5   

Purchased Energy

     1,931         2,421         (20

Depreciation and Amortization

     199         247         (19

Operating Provisions

     252         43         483   

Charges for Use of Basic Transmission Network

     259         241         7   

Gas bought for resale

     238         262         (9

Cost from Operation

     235         234         1   

Other Expenses

     128         128         —     
  

 

 

    

 

 

    

 

 

 

TOTAL

     3,949         4,342         (9
  

 

 

    

 

 

    

 

 

 

 

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Financial Result Breakdow n

   1Q16     1Q15     D%  

Financial revenues

     227        290        (22

Revenue from cash investments

     59        39        51   

Arrears penalty payments on electricity bills

     74        47        58   

Exchange rate

     15        53        (72

Monetary updating

     48        5        943   

Monetary updating—CVA

     20        40        (51

Taxes applied to Financial Revenue

     (12     —          —     

Monetary updating of the Financial Asset of the Concession

     2        92        (98

Other

     22        15        47   

Financial expenses

     (639     (564     13   

Costs of loans and financings

     (428     (293     46   

Exchange rate

     (17     (62     (72

Monetary updating—loans and financings

     (116     (135     (14

Monetary updating—paid concessions

     (1     (6     —     

Charges and monetary updating on Post-employment obligations

     (37     (38     (1

Other

     (38     (31     25   

Financial revenue (expenses)

     (413     (273     51   

 

Statement of Results

   1Q16      1Q15      D%  

Net Revenue

     4,452         5,849         (24)   

Operating Expenses

     3,949         4,342         (9)   

EBIT

     502         1,507         (67)   

Equity gain in subsidiaries

     (58)         90         —     

Gain on stockholding reorganization

     —           735         —     

Depreciation and Amortization

     199         247         (19)   

EBITDA

     643         2,580         (75)   

Financial Result

     (413)         (273)         51   

Tax

     (27)         (574)         (95)   

Net Income

     5         1,485         (100)   

 

136


LOGO

 

 

Cash Flow Statement

   2015     2014     Change%  

Cash at beginning of period

     925        887        4   

Cash generated by operations

     600        332        80   

Net profit

     5        1,485        (100

Current and deferred income tax and Social Contribution tax

     27        574        (95

Depreciation and amortization

     199        247        (19

Gain on the Aliança stockholding reorganization

     —          (735     —     

Passthrough from CDE

     404        (63     (740

Equity gain (loss) in subsidiaries

     58        (90     (164

Provisions (reversals) for operational losses

     252        43        483   

Dividends received from equity holdings

     42        27        58   

Other adjustments

     (387     (1,155     (67

Financing activities

     147        (583     (125

Financings obtained and capital increase

     1,921        200        861   

Interest on Equity, and dividends

     (22     (26     (15

Payments of loans and financings

     (1,752     (757     131   

Investment activity

     (478     (19     2,460   

Securities—Financial Investment

     206        524        —     

Acquisition of ownership interest and future capital commitments

     (480     (331     45   

Fixed and Intangible assets

     (205     (211     (3

Cash at end of period

     1,193        618        93   
  

 

 

   

 

 

   

Total Cash

     2,050        3,435     
  

 

 

   

 

 

   

 

BALANCE SHEETS (CONSOLIDATED) - ASSETS

   03/31/2016      12/31/2015  

CURRENT

     7,479         9,377   

Cash and cash equivalents

     1,193         925   

Securities

     796         2,427   

Consumers, Traders and Concession holders – Transport of electricity

     3,409         3,764   

Financial assets of the concession

     704         874   

Tax offsetable

     207         175   

Income tax and Social Contribution tax recoverable

     345         306   

Dividends receivable

     35         62   

Inventories

     38         37   

Passthrough from CDE (Energy Development Account)

     72         72   

Other credits

     681         735   

NON-CURRENT

     33,920         31,503   

Securities

     61         84   

Consumers, Traders and Concession holders – Transport of electricity

     136         134   

Tax offsetable

     220         258   

Income tax and Social Contribution tax recoverable

     175         206   

Deferred income tax and Social Contribution tax

     1,535         1,498   

Escrow deposits in legal actions

     1,856         1,813   

Other credits

     851         868   

Financial assets of the concession

     4,752         2,660   

Investments

     10,129         9,768   

PP&E

     3,885         3,940   

Intangible assets

     10,320         10,275   
  

 

 

    

 

 

 

TOTAL ASSETS

     41,399         40,880   
  

 

 

    

 

 

 

 

137


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BALANCE SHEETS LIABILITIES AND SHAREHOLDERS’ EQUITY

   03/31/2016      12/31/2015  

CURRENT

     11,988         13,086   

Suppliers

     1,559         1,901   

Regulatory charges

     439         517   

Profit shares

     89         114   

Taxes

     670         740   

Income tax and Social Contribution tax

     9         11   

Interest on Equity, and dividends, payable

     1,285         1,318   

Loans, financings and debentures

     4,911         6,300   

Payroll and related charges

     217         221   

Post-retirement liabilities

     178         167   

Other obligations

     1,307         551   

Provisions for losses on investments

     1,324         1,245   

NON-CURRENT

     16,445         14,795   

Regulatory charges

     253         226   

Loans, financings and debentures

     10,389         8,866   

Taxes

     740         740   

Income tax and Social Contribution tax

     681         689   

Provisions

     828         755   

Post-retirement liabilities

     3,128         3,086   

Provisions for losses on investments

     157         148   

Other obligations

     269         285   

STOCKHOLDERS’ EQUITY

     12,962         12,995   

Share capital

     6,294         6,294   

Capital reserves

     1,925         1,925   

Profit reserves

     4,664         4,674   

Adjustments to Stockholders’ equity

     60         102   

Retained earnings

     19         —     

NON- CONTROLLING STOCKHOLDER´S EQUITY

     4         4   
  

 

 

    

 

 

 

TOTAL LIABILITIES

     41,399         40,880   
  

 

 

    

 

 

 

 

138


 

22. EARNINGS RELEASE: 2Q 2016 RESULTS

 

139


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PUBLICATION OF RESULTS

CEMIG REPORTS

2Q16 EBITDA

OF R$ 677 MILLION

Main factors in the quarter:

◾     Recognition of R$ 561 million in Transmission Indemnity Revenue

◾     Change in profile of allocation of supply in 2016

◾     Average spot price significantly lower, year-on-year, in the quarter

◾     Significantly lower sales of gas to industry and thermal generation plants

◾     Higher provision for the put option in Light due to adoption of the Black-Scholes method to measure fair value of the option

 

Indicators (GWh)

   2Q16     2Q15     Change %  

Electricity sold (excluding CCEE)

 

    

 

13,874,405

 

  

 

   

 

14,197,815

 

  

 

   

 

(2.28

 

 

Indicators – R$ ’000

   2Q16     2Q15     Change %  

Sales on the CCEE

     49,042        701,158        (93.01

Net debt

     12,960,625        11,731,593        10.48   

Gross revenue

     7,275,577        8,444,281        (13.84

Net revenue

     4,754,147        5,392,480        (11.84

Ebitda (IFRS)

     676,670        1,232,272        (45.09

Net profit in the quarter

     202,124        534,264        (62.17

Earnings per share

     0.16        0.42        (61.90

Ebitda margin

     14.24     22.85     -8.61p.p.   

 

LOGO

 

 


 

140


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Conference call

Publication of 2Q16 results

Video webcast and conference call

August 17, 2016 (Wednesday) : 3 PM, Brasília time

This transmission on Cemig’s results will have simultaneous translation into English and can be seen in real time by Video Webcast, at http://ri.cemig.com.br or heard by conference call on:

+ 55 (11) 2188-0155 (1st option) or

+ 55 (11) 2188-0188 (2nd option)

Password: CEMIG

 

Playback of Video Webcast:

Site:

http://ri.cemig.com.br

Click on the banner and download.

Available for 90 days

 

  

Conference call – Playback:

Telephone: (+55-11) 2188-0400

Password:

CEMIG Português

Available from August 17 to September 1,

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

Fabiano Maia Pereira

 

General Manager, Investor Relations

Antônio Carlos Vélez Braga

 

Manager, Investor Market

Robson Laranjo

 

 

141


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Contents

 

CONFERENCE CALL

     141   

CEMIG INVESTOR RELATIONS

     141   

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

     141   

CONTENTS

     142   

DISCLAIMER

     143   

CEMIG STOCK PRICE PERFORMANCE

     144   

CEMIG’S LONG-TERM RATINGS

     145   

ADOPTION OF IFRS

     145   

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

     146   

THE ELECTRICITY MARKET OF CEMIG D

     149   

THE ELECTRICITY MARKET OF CEMIG GT

     150   

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION – MWH

     152   

CONSOLIDATED OPERATIONAL REVENUE

     152   

SECTOR / REGULATORY CHARGES – DEDUCTIONS FROM REVENUE

     156   

OPERATIONAL COSTS AND EXPENSES

     156   

EQUITY METHOD GAIN

     161   

FINANCIAL REVENUE (EXPENSES)

     162   

EBITDA

     163   

DEBT

     164   

TAESA: REMOVAL OF SHARES FROM CONTROLLING BLOCK; MONETIZATION OF SHARES AND UNITS

     166   

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

     167   

DEFAULT

     167   

APPENDICES

     169   

GENERATING PLANTS – MARCH, 2016

     169   

GENERATION: ANNUAL PERMITTED REVENUE (RAP)

     170   

FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT

     171   

 

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Disclaimer

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

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

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

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

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

 

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Cemig stock price performance

 

Security

   Ticker    Currency    Close of
June 30, 2016
     Close of
December 31, 2015
     Change in the
period %
 

Cemig PN

   CMIG4    R$      7.28         5.67         28.40

Cemig ON

   CMIG3    R$      7.10         5.98         18.73

ADR PN

   CIG    US$      2.21         1.38         60.14

ADR ON

   CIG.C    US$      2.20         1.62         35.80

Ibovespa

   Ibovespa         51,526         43,349         18.86

IEEX

   IEEX         30,786         24,803         24.12

 

Source: Economática.

Trading volume in Cemig’s preferred shares (CMIG4) in the first half of 2016 (1H16) totaled R$ 5.87 billion, a daily average of R$ 47.78 million. Cemig’s shares, by volume (aggregate of common (ON) and preferred (PN) shares), were the second most liquid in Brazil’s electricity sector in the period, and among the most traded in the Brazilian market as a whole.

On the New York Stock Exchange the volume traded in ADRs for Cemig’s preferred shares (CIG) in 1H16 was US$985.6 million. We see this as reflecting the investor market’s recognition of Cemig as a global investment option.

The São Paulo Stock Exchange (Bovespa) Index – the Ibovespa – was up 18.86% in the first half of 2016, closing June at 51,526 points. Cemig’s preferred shares outperformed the principal Brazilian stock index and also the electricity sector index, rising 28.39% in the half-year. The common shares rose 18.82%.

 

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Cemig’s long-term ratings

These tables show credit risk ratings and outlook for Cemig’s companies as provided by the principal rating agencies:

Brazilian ratings:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating   Outlook    Rating   Outlook    Rating   Outlook

Fitch

   A (bra)   Negative    A (bra)   Negative    A (bra)   Negative

S&P

   brA   Negative    brA   Negative    brA   Negative

Moody’s

   Baa1.br   Negative    Baa1.br   Negative    Baa1.br   Negative

Global Ratings:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating    Outlook    Rating    Outlook    Rating    Outlook

S&P

   BB-    Negative    BB-    Negative    BB-    Negative

Moody’s

   B1    Negative    B1    Negative    B1    Negative

 

Note: Fitch gives only Brazilian – not global – ratings.

Adoption of IFRS

The 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).

 

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PROFIT AND LOSS ACCOUNTS

 

Consolidated – R$ ’000

   2Q16     2Q15     Change %  

REVENUE

     4,754,147        5,392,480        (11.84
      

OPERATING COSTS

      

Personnel

     429,808        332,709        29.18   

Employees’ and managers’ profit shares

     6,200        64,243        (90.35

Post-retirement obligations

     84,091        57,609        45.97   

Materials

     12,898        17,445        (26.06

Raw materials and inputs for production of electricity

     9        -2,547        —     

Outsourced services

     192,779        214,124        (9.97

Electricity purchased for resale

     2,024,749        2,312,277        (12.43

Depreciation and amortization

     199,684        181,587        9.97   

Operating provisions

     481,842        229,841        109.64   

Charges for use of the National Grid

     267,206        251,254        6.35   

Gas bought for resale

     189,146        261,914        (27.78

Infrastructure construction costs

     348,712        266,090        31.05   

Other operational expenses, net

     112,006        160,967        (30.42
  

 

 

   

 

 

   

 

 

 

TOTAL COST

     4,349,130        4,347,513        0.04   
      

Equity method gain (loss)

     71,969        5,718        1.158.64   
      

Operational profit before Financial income (expenses) and taxes

     476,986        1,050,685        (54.60
      

Financial revenues

     353,189        242,751        45.49   

Financial expenses

     (565,218     (494,332     14.34   
  

 

 

   

 

 

   

 

 

 

Profit before income tax and Social Contribution tax

     264,957        799,104        (66.84
      

Current and deferred income tax and Social Contribution tax

     (62,833     (264,840     (76.28
  

 

 

   

 

 

   

 

 

 

NET PROFIT FOR THE PERIOD

     202,124        534,264        (62.17
  

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     202,047        534,132     

Interest of non-controlling stockholder

     77        132     
  

 

 

   

 

 

   

NET PROFIT FOR THE PERIOD

     202,124        534,264     
  

 

 

   

 

 

   

Cemig’s consolidated electricity market

The Cemig Group sells electricity through its distribution company, Cemig Distribuição (‘Cemig D’), its generation and transmission company Cemig Geração e Transmissão (Cemig Generation and Transmission, or ‘Cemig GT’), and wholly-owned subsidiaries: Horizontes Energia, Termelétrica Ipatinga (up to January 2015), Sá Carvalho, Termelétrica de Barreiro, Cemig PCH, Rosal Energia and Cemig Capim Branco Energia (up to March 2015).

 

 

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

 

(III) other agents of the electricity sector – traders, generators and independent power producers, also in the Free Market;

 

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

 

(V) the wholesale trading market (Câmara de Comercialização de Energia Elétrica, or CCEE)

( – eliminating transactions between companies of the Cemig Group).

In 2Q16 the Cemig group sold a total volume of 13,874 GWh, which was 2.28% less than in 2Q15.

Sales of electricity to final consumers plus Cemig’s own consumption totaled 10,755 GWh, or 4.9% less than in 2Q15.

Overall, electricity consumption has been affected since 1Q15 by adverse Brazilian political and economic circumstances; and, in the captive market, by the successive increases in electricity rates charged to consumers, associated with application of the ‘Tariff Flag’ system, resulting in significant increases in consumers’ electricity bills.

Sales to distributors, traders, other generating companies and independent power producers in 2Q16 totaled 3,110 GWh – or 7.85% less than in 2Q15.

In June 2016 the Cemig group invoiced 8,204,884 clients – a growth of 2.4% in the consumer base in the year since June 2015. Of these, 8,204,818 are final consumers, including Cemig’s own consumption; and 66 are other agents in the Brazilian electricity sector.

 

 

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This chart shows the breakdown of the Cemig Group’s sales to final consumers in the quarter, by consumer category:

 

 

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Total consumption of electricity (GWh)

 

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Consolidated

   MWh      Change,
%
    Average
price

2Q16
R$
     Average
price

2Q15
R$
 
   2Q16      2Q15          

Residential

     2,526,223         2,386,270         5.86        766.38         775.08   

Industrial

     4,671,891         5,771,862         (19.06     281.70         257.78   

Commercial, Services and Others

     1,697,134         1,563,963         8.51        660.84         652.35   

Rural

     959,912         749,687         28.04        371.11         456.93   

Public authorities

     236,278         223,734         5.61        599.36         640.31   

Public lighting

     344,358         329,545         4.49        374.29         424.28   

Public service

     319,218         280,302         13.88        412.66         490.33   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

     10,755,014         11,305,363         (4.87     477.18         452.95   
  

 

 

    

 

 

         

Own consumption

     9,634         9,095         5.93        —           —     

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

     3,109,757         2,883,357         7.85        210.73         217.83   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

     13,874,405         14,197,815         (2.28     404.58         409.82   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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

 

 

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The electricity market of Cemig D

Electricity billed to captive clients and electricity transported for Free Clients and distributors with access to Cemig D’s networks in 2Q16 totaled 11,227 GWh, or 1.75% more than in 2Q15.

This result is the joint effect of consumption in the captive market 5.6% higher year-on-year, and use of the network by Free Clients 15.41% higher by volume than in 2015.

In June 2016 Cemig D was invoicing 8,203,327 captive clients.

 

Cemig D

   Number of clients      Change,
%
 
   2Q16      2Q15     

Residential

     6,641,995         6,466,760         2.71   

Industrial

     75,112         75,508         -0.52   

Commercial, Services and Others

     717,394         714,200         0.45   

Rural

     687,966         677,458         1.55   

Public authorities

     64,349         63,220         1.79   

Public lighting

     4,704         3,867         21.64   

Public service

     11,807         10,547         11.95   
  

 

 

    

 

 

    

 

 

 

Total

     8,203,327         8,011,560         2.39   
  

 

 

    

 

 

    

 

 

 

Comments on the various consumer categories:

Residential

Consumption by residential consumers totaled 2,526 GWh, or 5.86% more than in 2Q15.

The higher level of residential consumption is due to:

 

  the invoicing calendar – a larger number of days invoiced;

 

  higher temperatures in 2Q16 than 2Q15, causing more use by consumers of air conditioners and ventilators in their homes.

 

 

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Industrial

Electricity used by captive clients was 12.6% of the volume of electricity distributed by Cemig, totaling 852 GWh in 2Q16, 8.8% less than in 2Q15.

This is in line with the continuing retraction of economic activity both in Minas Gerais and in the whole of Brazil, and the performance of the international market.

Electricity transported for Free Clients was 38.0% of the volume of electricity distributed by Cemig D, totaling 4,270,854 MWh in 2Q16, or 15.4% more than in 2Q15 – as a result of resumption of activity in the Metallurgy and Ferro-alloys sectors.

The electricity market of Cemig G T

Cemig GT’s sales volume in 2Q16 was affected by termination of concession of plants. As from the termination, the output of these plants was redirected to the Physical Guarantee Quota regime, and to settlement on the spot market.

Cemig GT’s market comprises sales of power as follows:

 

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

 

  (II) to other agents in the electricity sector – traders, generators and independent power producers (in the Free Market); and

 

  (III) to electricity distributors (in the Regulated Market); and

 

  (IV) sales in the CCEE (Wholesale Electricity Market).

The total supply billed by Cemig GT in 2Q16 was 6,946 GWh, or 10.5% less than in 2Q15.

 

Cemig GT

   MWh      Change,
%
 
   2Q16      2Q15     

Free Clients

        

Industrial

     3,602,752         4,650,249         (22.53

Commercial

     207,548         94,984         118.51   

Free Market – Free contracts

     2,488,003         1,570,964         58.37   

Regulated Market:

     613,159         1,268,482         (51.66

Regulated Market – Cemig D

     34,905         171,942         (79.70
  

 

 

    

 

 

    

 

 

 

Total

     6,946,367         7,756,621         (10.45
  

 

 

    

 

 

    

 

 

 

 

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The number of clients billed by Cemig GT was 48.8% higher than at the end of June 2015, totaling 793. Of these: 728 were industrial and commercial clients, 47 were distribution companies, and 18 were companies in the category of traders, generators and independent power producers.

Free Clients in the industrial and commercial categories consumed 3,810 GWh in 2Q16, down 19.7%, due to:

 

  reduction of consumption by industrial clients due to the continuous retraction in economic activity at state and national level in Brazil, and the performance of the international economy;

 

  lower availability of power for sale due to the conditions for renewal of concessions, as per Law 13.203/2015 – this supply was redirected to the Physical Guarantee Quota regime; and

 

  temporary shutdown of activity at a mining plant in Minas Gerais state.

Free Market sales and trading transactions in electricity with other agents of the sector lead to selling opportunities, which lead to short-term sales contracts. In 2Q16 total sales of electricity were 2,488 GWh, or 58.37% more than in 2Q15.

Sales in the Regulated Market, including sales to Cemig D, were 55.01% lower than in 2Q15, for several reasons:

 

  Cessation of contracts entered into as a result of the corporate reorganization of the Cemig group, with the transfer of assets from Cemig GT to Aliança Energia; and

 

  Termination of contracts made at the 18th Adjustment Auction, held in the first half of 2015, and the second ‘Existing Supply’ Auction, held in 2005 and in effect for the period 2008–2015.

Since September 15, 2015 the São Simão Plant has been serving the Regulated Market (‘ACR’), but under the ‘quota’ regime, in accordance with the requirements of Ministerial Order 432/2015. The company now recognizes only the revenue from provision of the services of operation and maintenance of the plant.

 

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Physical totals of transport and distribution – MWh

 

Description

   MWh      Change
%
 
   2Q16      2Q15     

Total energy carried

     12,423,702         11,618,317         6.93   

Electricity transported for distributors

     93,666         88,006         6.43   

Electricity transported for free clients

     4,270,676         3,809,032         12.12   

Own load

        

Consumption by captive market

     6,710,787         6,409,820         4.70   

Losses in distribution network

     1,348,573         1,311,460         2.83   

Consolidated operational revenue

Revenue from supply of electricity:

Total revenue from supply of electricity to final consumers in 2Q16 was R$ 5.613 billion, or 3.53% less than the revenue of R$ 5.819 billion in 2Q15.

Final consumers

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, in 2Q16 was R$ 4.972 billion, or 5.79% less than the figure for 2Q15, of R$ 5.278 billion.

The main factors affecting revenue in 2Q16 were:

 

  The annual tariff adjustment, with average effect on consumer tariffs of 3.78%, effective from May 28, 2016.

 

  Volume of electricity sold to final consumers was 4.86% lower year-on-year.

 

  The revenue from the ‘Tariff Flag’ system was lower, due to the alteration of the ‘flag’ is in effect: the ‘Green Flag’ was in force in 1Q16, whereas the ‘Red Flag’ was in force in 2Q15. As a result the amount received in 2016 was only R$ 29 million, compared to R$ 387 million in 2015 – a reduction of 92.60%.

 

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     R$     Change
%
    Average
price

2Q16
R$
     Average
price

1Q15
R$
     Change
%
 
   2Q16     2Q15            

Residential

     1,936,040        1,849,553        4.68        766.38         775.08         (1.12

Industrial

     1,316,086        1,487,893        (11.55     281.70         257.78         9.28   

Commercial, Services and Others

     1,121,528        1,020,258        9.93        660.84         652.35         1.30   

Rural

     356,233        342,554        3.99        371.11         456.93         (18.78

Public authorities

     141,615        143,258        (1.15     599.36         640.31         (6.40

Public lighting

     128,891        139,821        (7.82     374.29         424.28         (11.78

Public service

     131,728        137,440        (4.16     412.66         490.33         (15.84
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Subtotal

     5,132,121        5,120,777        0.22        477.18         452.95         5.35   

Supply not yet invoiced, net

     (159,590     157,212        —          —           —           —     

Wholesale supply to other concession holders (*)

     655,322        628,072        4.34        210.73         217.83         (3.26

Wholesale supply not yet invoiced, net

     (14,501     (87,556     (83.44     —           —           —     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

     5,613,352        5,818,505        (3.53     404.58         409.82         (1.28
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

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

Revenue from Use of Distribution Systems (the TUSD charge)

The revenue of Cemig D (Distribution) from the TUSD in 2Q16 was R$ 427 million, or 17.91% less than in the same period of 2015 (R$ 521 million). In the second quarter of 2015, Aneel decided the new CDE charges, in compliance with a court injunction that suspended part of the payment of the CDE charge for members of the Brazilian Association of Large Industrial Consumers and Free Consumers of Electricity (Associação Brasileira de Grandes Consumidores Industriais de Energia e de Consumidores Livres, or Abrace). This suspension resulted in the company’s Revenue from Use of the Network in the second quarter 2016 being lower than in second quarter 2015.

Revenue from transactions in the Wholesale Trading Market (CCEE)

Revenue from Transactions in the Wholesale Electricity Market (CCEE) was R$ 49 million in 2Q16, compared to R$ 701 million in 2Q15 – a reduction of 93.01% year-on-year. This is mainly due to (a) the spot price (Preço de Liquidação de Diferenças, or PLD) being 82.52% lower year-on-year in the wholesale market (at R$ 62.37/MWh in 2016 compared to R$ 356.81/MWh in 2015); and (b) the lower quantity of electricity available for settlement in the wholesale market in 2016, mainly because of the output from the São Simão Plant being allocated to serve the Regulated Market under the ‘quota’ regime, as from September 16, 2015. The company now recognizes only the revenue from provision of the services of operation and maintenance of that plant.

 

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Supply of gas

The Company reported revenue from supply of gas 25.02% lower, at R$ 319 million in 2Q16, compared to R$ 425 million in 2Q15, mainly due to a lower volume of gas sold (216,135m³) in 2Q16, compared to 2Q15 (380,536m³).

 

Market (’000 m3/day)

   2012      2013      2014      2015      June 30,
2016
 

Residential

     —           0.17         0.72         1.04         1.92   

Commercial

     24.73         20.38         23.15         22.42         22.34   

Industrial

     2,740.00         2,734.95         2,849.24         2,422.78         2,088.84   

Other

     114.09         106.33         99.64         119.87         118.00   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total market excluding thermal plants

     2,878.82         2,861.83         2,972.75         2,566.11         2,231.10   

Thermal

     746.09         1,214.50         1,223.99         1,309.13         544.15   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3,624.91         4,076.33         4,196.74         3,875.24         2,775.25   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Demand for electricity from the thermoelectric generation plants, which had been operating uninterruptedly since 2012, was lower due to lower demand for electricity, and also due to the stronger rainfall in the current rainy season.

Supply of gas to the residential market, which began in 2013, totaled 6,190 households invoiced in June 2016 (vs. 3,820 at December 31, 2015).

Transmission indemnity revenue

In the 2Q16 Cemig recognized revenue of R$ 561 million, as follows:

 

  R$ 12 million for monetary updating by the IGP-M index, up to May 2016, of the balance of indemnity receivable;

 

  R$ 20 million relating to the difference between the amount of the preliminary Revision made by Aneel of the Opinion sent by the Company, on February 23, 2015, of R$1.157 billion, and the final Revision;

 

  R$ 90 million difference between the results of the IGP-M and the IPCA indices – the Company had updated the balance receivable, to May 2016, by the IGP-M;

 

  R$ 438 million, cost of own capital, calculated on the basis of 10.44% p.a.

 

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Aneel Normative Resolution 589, of December 10, 2013 set the criteria for calculation of the New Replacement Value (Valor Novo de Reposição, or VNR) of the transmission facilities, for the purposes of indemnity.

The Valuation Opinion delivered to Aneel on July 31, 2014 represented an indemnity to the Company of R$ 1.169 billion, at the base date of December 31, 2012.

On July 12, 2016, Aneel sent to the Company the Report of Inspection with final Review of the Opinion sent by the Company, deciding the value of the indemnity at R$ 1.177 billion. Of this amount, R$ 285 million was received in the first quarter of 2013.

On April 22, 2016 the Mining and Energy Ministry published its Ministerial Order 120, setting the deadline and method of payment of the remaining amount of the indemnity. This Order determined that the amounts homologated by Aneel should become part of the Regulatory Asset Base for Remuneration (Base de Remuneração Regulatória, or BRR) and that the cost of capital should be added to the respective Permitted Annual Revenues. The updating of the amount will be by application of the IPCA (Expanded National Consumer Price) Index, and the cost of capital will not be incorporated for the period from the extensions of the concessions up to the tariff-setting process of 2017. The latter is to be updated and remunerated at the real cost of own capital, currently 10.44% per year, to be paid over eight years. The Ministerial Order still depends on decisions that will be the subject of Public Hearings held by Aneel, which are listed in Aneel’s Regulatory Agenda for the second half of 2016 and the first half of 2017.

For the new assets consisting of improvements and strengthening of facilities implemented by the transmission concession holders, Aneel calculates an additional portion of Permitted Annual Revenue (RAP) in accordance with methodology specified in the Tariff Regulation Procedures (Procedimentos de Regulação Tarifária, or Proret).

 

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Sector / Regulatory charges – deductions from revenue

The sector charges that are effectively deductions from reported revenue totaled R$ 2.521 billion in 2Q16, or 17.38% less than their total of R$ 3.052 billion in 2Q15. This was mainly due to the lower values of the Energy Development Account (Conta de Desenvolvimento Energético, or CDE) and the ‘Tariff Flag’ charges (the ‘Green Flag’ was in effect in 2Q16, whereas the ‘Red Flag’ was in effect in 2Q15).

Operational costs and expense s

Operational costs and expenses, excluding Financial revenue (expenses), totaled R$ 4.349 billion in 2Q16, or only 0.05% more than in 2Q15 (R$ 4.347 billion).

 

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The following paragraphs comment on the main variations:

Electricity purchased for resale

The expense on electricity bought for resale in 2Q16 was R$ 2.025 billion, or 12.41% less than in 2Q15 (R$ 2.312 billion). The main factors in the higher figure are:

 

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Cemig D:

 

  Expenses on electricity acquired at auctions 46.06% lower, at R$ 561 million in 2Q16, vs. R$ 1.040 billion in 2Q15, mainly due to some of the thermoelectric plants being deactivated in 2016 due to the improvement in the level of the reservoirs of the hydroelectric plants in the system, with a resulting reduction in the expense on combustion fuel for those plants.

 

  Expense on electricity from Itaipu Binacional 27.43% lower year-on-year, at R$ 291mn in 2Q16, compared to R$ 401mn in 2Q15. This change basically reflects the reduction of the tariff, which was US$ 38.07/kW-month in 2Q15, and was US$ 25.78/kW-month from January 2016.

 

  The cost of purchases of supply in the short-term market was 19.9% lower – at R$ 161 million in 2Q16, vs. R$ 201 million in 2Q15) – reflecting the lower cost of electricity in the wholesale market in 2016.

Cemig GT:

The expense on electricity bought for resale in 2Q16 was R$ 808 million, or 29.28% more than in 2Q15 (R$ 625 million). This reflects an average price per MWh 5.27% higher in 2Q16 (R$ 164.15, vs. R$ 155.93 in 2Q15), and the volume of electricity purchased in 2Q16 being 22.78% higher (at 4,921,224 MWh), compared to 4,008,140 MWh in 2Q15.

Operating provisions

Operational Provisions 109.57% higher year-on-year in the quarter – an expense of R$ 482mn in 2Q16, compared to R$ 230mn in 2Q15. The main factors in this change are:

 

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  Provisions, of R$ 355 million and R$ 16 million, respectively, made for the put options on the investments in Parati and SAAG.

The Equity Fund owns common and preferred shares in Light, and at present exercises joint control, with Cemig, over the activities of that company. This being so, this option has been considered to be a derivative instrument which should be accounted at fair value through profit or loss.

For the purposes of determination of the method to be used in measuring the fair value of this option, the Company, up to the first quarter of 2016, observed the daily trading volume of the shares of Light, and also the fact that such option, if exercised by the Fund, will require the sale to the Company, in a single transaction, of shares in Light in a quantity higher than the daily exchange trading averages. Thus, the Company had adopted the discounted cash flow method for measurement of the fair values of the options. The fair value of this option has been calculated on the basis of the estimated exercise price on the day of exercise of the option, less the fair value of the shares that are the subject of the put option, also estimated for the date of exercise, brought to present value at the interim reporting date, at the effective rate of 7.5% p.a. (discounting inflation effects). As a result of the changes in the Stockholders’ Agreement of Parati in the second quarter of 2016, described below, with consequences for the conditions and periods for exercise of the put option, the Company then began to use the Black–Scholes method for measurement of the fair value of the options, which resulted in the provision being higher in 2Q16.

a) FIP Redentor

Changes in the Stockholders’ Agreement of Parati

In the second quarter of 2016 Amendments were signed to the Stockholders’ Agreement of Parati. The principal changes arising from these amendments are:

 

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1. The maturity of the Put Option granted in 2011 by Cemig in favor of the unit holders of FIP Redentor, initially specified to be May 31, 2016, was postponed, to two separate exercise dates:

o First option exercise window: The intention to exercise may be stated by any direct stockholders who decide to do so, independently of the exercise of the Put Option by the other direct stockholders, up to September 23, 2016, inclusive, and shall cover only preferred shares in Parati, up to a limit of 153,634,195 preferred shares in Parati, representing 14.30% of the total shares in Parati held by the other direct stockholders. Cemig must make payment by November 30, 2016.

o Second payment window: The intention to exercise may be stated by any direct stockholders who decide to do so, independently of the exercise of the Put Option by the other direct stockholders, up to September 23, 2017, inclusive, And may cover the totality of the shares in Parati, being independent of any exercise, or not, of the Put Option in the first payment window. Cemig must make payment by November 30, 2017.

2. The Put Option may now be exercised not only by FIP Redentor, but by any person who becomes a direct stockholder of Parati, including but not limited to the unit holders of FIP Redentor, and/or their affiliates, who shall become holders of a Put Option and/or of the rights arising therefrom, under which each one of the direct stockholders shall individually have the right to sell any shares in Parati that they own; and

3. Inclusion of conditions for bringing forward the date of exercise of the put option: in the event of any occurrence resulting in bringing forward of the option referred to, any direct stockholder may present to Cemig the notice of bringing forward of the option, at which moment the option shall be considered exercised by all the direct stockholders, over the totality of their shares. Cemig Does not have the expectation that any of the events resulting in bringing forward of the option will occur.

 

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4. As guarantee for the full payment of the Put Option, on May 31, 2016 Cemig offered to the holders of the Put Option:

 

    55,234,637 common shares and 110,469,274 preferred shares that Cemig directly holds in Transmissora Aliança de Energia S.A. (Taesa),

 

    and as further guarantee, 53,152,298 shares that Cemig directly holds in Light.

 

    Higher provisions for doubtful receivables: R$ 98 million in 2Q16, compared to R$ 31 million in 2Q15 – mainly reflecting a higher level of default, influenced by the significant increase in elecricity tariffs put in place in 2015, and also the Brazilian macroeconomic context;

Personnel

Personnel expenses were R$ 430 million in 2Q16, compared to R$ 333 million in 2Q15, an increase of 29.13%. This arises mainly from the following factors:

 

    Salary increases, under the Collective Work Agreement, of 10.33%, as from November 2015.

 

    Recognition, in 2Q16, of an expense of R$ 64 million on the voluntary retirement plan.

 

 

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The PDVP Programmed Voluntary Retirement Plan

Cemig created the PDVP to apply in the period April 18 to May 31, 2016. Those eligible to take part were any employees who will have worked with Cemig for 25 years or more by December 31, 2016. The PDVP offers the normal severance payments specified by law, including payment for the period of notice, deposit of the ‘penalty’ payment of 40% of the FGTS Base Value to the employee’s FGTS fund, further to the payments specified by the legislation. Severance of the employees will take place over the period from June 2 to October 20, 2016, in accordance with guidelines set by the Company. A total of 621 employees have signed up for the program. The amounts of the severance payments have been 100% provisioned.

 

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Gas bought for resale

The expense on gas bought for resale in 2Q16 was R$ 189 million, or 27.86% less than in 2Q15 (R$ 262 million). This is basically due to a lower quantity of gas purchased (215,901m³ in 2Q16, compared to 377,681m³ in 2Q15), reflecting Brazil’s economic downturn, which affected Cemig’s industrial market, and also led to gas-fired thermoelectric generation plants being taken out of production.

Equity method gain

In 2Q16 Cemig posted a net equity method gain of R$ 72 million, which compares with a net gain of R$ 6 million in 2Q15. The variation mainly comprises equity method gains of:

 

    R$ 86 million in the subsidiary Taesa;

 

    R$ 41 million in the subsidiary Aliança Geração; and

 

    R$ 8 million in Madeira Energia, in 2Q16.

 

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Financial revenue (expenses)

 

LOGO

Cemig reports net financial expenses of R$ 212mn in 2Q16, compared to net financial expenses of R$ 252mn in 2Q15. The main factors are:

 

  Higher revenue from monetary variation on the CVA balances and Other financial components of tariffs as a result of the higher balance of these assets in 2016: R$ 168 million in 2Q16, vs. R$ 8 million in 2Q15.

 

  Higher revenue from financial investments, of R$ 77 million in 2Q16, compared to R$ 54 million in 2Q15, primarily due to a higher level of financial investments in 2016, and a higher variation from the CDI rate in the period (3.31% in 2Q16, vs. 2.98% in 2Q15).

 

  Lower gain from updating of the Remuneration Base of Assets (BRR): R$ 3mn in 2Q16, compared to R$ 102mn in 2Q15. This reflects the reduction in the BRR after the renewal of the concession contract in December 2015.

 

  Expense on monetary updating of loans and financings 24.18% lower, at R$ 69mn in 2Q16, compared to R$ 92mn in 2Q15. This is due to the lower variation in the IPCA index in the period (1.75% in 2Q16, compared to 2.26% in 2Q15).

 

  Charges for loans and financings 51.10% higher, at R$ 479 million in 2Q16, compared to R$ 317mn in 2Q15. This mainly reflects higher debt indexed to the CDI rate; and also the higher variation provided by the CDI rate, itself, at 3.31% in 2Q16 compared to 2.98% in 2Q15.

 

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EBITDA

Cemig’s consolidated Ebitda in 2Q16 was 45.09% lower than in 2Q15. This was mainly due to: lower volume of electricity available for sale in the wholesale market in 2016; and increased provisions; partially offset by recognition of transmission indemnity revenue.

 

Ebitda – R$ ’000

   2Q16      2Q15      Change, %  

Profit (loss) for the period

     202,124         534,264         (62.17

+ Income tax and Social Contribution tax

     62,833         264,840         (76.28

+ Net financial revenue (expenses)

     212,029         251,581         (15.72

+ Depreciation and amortization

     199,684         181,587         9.97   
  

 

 

    

 

 

    

 

 

 

= EBITDA

     676,670         1,232,272         (45.09
  

 

 

    

 

 

    

 

 

 

 

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DEBT

 

LOGO

The Company’s consolidated total debt on June 30, 2016 was R$ 15.448 billion, 1.85% more than at December 31, 2015.

 

LOGO

On April 22, 2016 Cemig D rolled over debt of R$ 600 million with Banco do Brasil, for interest of 128.00% of the CPI rate, and final maturity in April 2018.

On July 1, 2016 Cemig GT concluded its 7th issue of promissory notes, for a total of R$ 620 million. The net proceeds will be allocated to payment of the second portion of the Concession Grant Fee for the hydroelectric plants in Lot D of Aneel Auction 12/2015, and to strengthen working capital. The Promissory Notes have maturity at 360 days, on June 26, 2017, and pay remuneratory interest equal to 128% of the average one-day over extra-grupo DI rate for interbank deposits, to be paid on the maturity date. This issue has a surety guarantee from the controlling stockholder, Cemig.

 

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Cemig GT has loans of R$ 2.919 billion maturing in 2016, most of this total maturing in December:

 

Cemig GT

   Expiration     

Annual financial cost
%

   Total
R$ mn
 

Promissory Notes – 6th Issue

     Dec. 2016       120% of CDI rate      1,472   

Debentures – 4th Issue, 1st Series

     Dec. 2016       CDI Rate + 0.85%      519   

 

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Taesa: Removal of shares from controlling block; monetization of shares and Units

Cemig and Fundo de Investimento em Participações Coliseu (‘FIP Coliseu’), as direct stockholders and controlling stockholders of the Cemig affiliated company Transmissora Aliança de Energia Elétrica S.A. (‘Taesa’), signed a Commitment Undertaking on May 31, 2016, changing some of the terms of the Stockholders’ Agreement of the company, previously signed by the parties on December 28, 2009 and amended on April 20, 2010. One of the changes was to remove from the condition of being bound by the Stockholders’ Agreement, as from May 31, 2016: (a) 77,525,322 common shares and 155,050,644 preferred shares in Taesa owned by Cemig; and (b) 75,000,000 common shares in Taesa held by Coliseu.

This agreement changed the numbers of shares bound by the Stockholders’ Agreement to the following: (a) 215,546,907 common shares owned by Cemig, and (b) 153,775,790 common shares owned by Coliseu; together comprising a total of 57.64% of the Company’s common shares on May 31, 2016.

On August 3, 2016 the Executive Board of Cemig decided to submit to the Board of Directors a proposal for monetization of 22,273,452 Units – comprising 22,273,452 common shares and 44,546,904 preferred shares in Taesa, owned by Cemig. All these shares are outside the controlling stockholding block.

 

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THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

 

Cemig – generation portfolio, in MW*

 

Stage

   Hydro
plants
     Small Hydro
Plants
     Wind      Solar      Thermal
plants
     Total  

In operation

     7,299         257         158         31         144         7,889   

Under construction/contracted

     1,595         29         658         45                 2,327   

In development:

     10,802                 392         42         1,000         12,236   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,696         286         1,208         118         1,144         22,452   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* The amounts refer only to direct or indirect equity interests held by Cemig on June 30, 2016.

Highlights of 2Q16

Santo Antônio Hydroelectric Plant

In June, generation unit 43 of the Santo Antônio Hydroelectric Plant, with capacity for 73.29 MW, started operating, bringing the total number of rotors operating to 43, with total installed generation capacity of 3,077.49 MW. There are only seven rotors yet to start operation, to complete the total of 50 generation units. The plant, on the Madeira River, will have total installed capacity of 3,568 MW.

The Belo Monte Hydroelectric Plant

The first rotor started commercial operation in April, with generating capacity of 611 MW. The plant’s total generating capacity will be 11,233 MW.

DEFAULT

In 2015, to achieve economic and financial equilibrium for the companies of the sector, and synchronization between tariffs and the real variable costs of electricity, Aneel implemented the system of ‘Tariff Flags’, and also ruled an Extraordinary Tariff Increase, in March. These measures had an impact on electricity rates, since they involved a pass-through of costs to final consumers.

 

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In this context of an exceptional increase in electricity rates, Cemig has seen an increase in amounts invoiced that are not paid by final consumers, and this has resulted in growth in the stock of debt to levels higher than the average of recent months.

The situation has been further complicated by Brazil’s entering a period of financial stress, and its most significant consequence, increase in the rate of unemployment.

In this context, the average level of default during the month of June 2016 was more than 15% higher than in June 2015. This increased percentage of default has had a negative effect on Cemig’s cash flow.

Due to the present economic context, default has remained at a level that is high for the Company. The rate of default in January was 4.05%.

The Company uses various tools of communication and collection to prevent increase in default. These include telephone contact, sending of e-mails, use of text messages, and collection letters. We are also making efforts with the credit protection services – Serasa and the Store Operators’ Association (Câmara de Dirigentes Lojistas, or CDL) – to register these arrears on their records for defaulting clients; and we are also using disconnection of supply. Aneel Resolution 414 allows supply to be cut off after 15 days from receipt of a notice to the defaulting consumer.

A campaign of negotiation is planned for the month of August which will use differentiated rules for negotiation of the debits owed by low voltage clients. This aims to recover revenue, and contain the occurrence of default, and fraud.

 

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Appendices

Generating plants – March, 2016

 

Plant

   Type    Company    Cemig’s
Interest
    Installed
Capacit
(MW)
     Assured
Energy
(average
MW)
     Installed
Capacit
(MW)*
     Assured
Energy
(average
MW)*
     Year
Concession or
Authorization
Expires
 

São Simão

   Hydroelectric    CEMIG GT      100.0     1,710.00         1,281.00         1,710.00         1,281.00         1/11/2015   

Emborcação

   Hydroelectric    CEMIG GT      100.0     1,192.00         497.00         1,192.00         497.00         7/23/2025   

Nova Ponte

   Hydroelectric    CEMIG GT      100.0     510.00         276.00         510.00         276.00         7/23/2025   

Jaguara

   Hydroelectric    CEMIG GT      100.0     424.00         336.00         424.00         336.00         8/28/2013   

Miranda

   Hydroelectric    CEMIG GT      100.0     408.00         202.00         408.00         202.00         12/23/2016   

Irapé

   Hydroelectric    CEMIG GT      100.0     399.00         210.70         399.00         210.70         2/28/2035   

Três Marias

   Hydroelectric    CEMIG GT      100.0     396.00         239.00         396.00         239.00         1/4/2046   

Volta Grande

   Hydroelectric    CEMIG GT      100.0     380.00         229.00         380.00         229.00         2/23/2017   

Igarapé

   Thermal    CEMIG GT      100.0     131.00         71.30         131.00         71.30         8/13/2024   

Salto Grande

   Hydroelectric    CEMIG GT      100.0     102.00         75.00         102.00         75.00         1/4/2046   

Itutinga

   Hydroelectric    CEMIG GT      100.0     52.00         28.00         52.00         28.00         1/4/2046   

Camargos

   Hydroelectric    CEMIG GT      100.0     46.00         21.00         46.00         21.00         1/4/2046   

Piau

   SHP    CEMIG GT      100.0     18.01         13.53         18.01         13.53         1/4/2046   

Gafanhoto

   SHP    CEMIG GT      100.0     14.00         6.68         14.00         6.68         1/4/2046   

Peti

   SHP    CEMIG GT      100.0     9.40         6.18         9.40         6.18         1/4/2046   

Rio de Pedras

   SHP    CEMIG GT      100.0     9.28         2.15         9.28         2.15         9/19/2024   

Poço Fundo

   SHP    CEMIG GT      100.0     9.16         5.79         9.16         5.79         8/19/2025   

Tronqueiras

   SHP    CEMIG GT      100.0     8.50         3.39         8.50         3.39         1/4/2046   

Joasal

   SHP    CEMIG GT      100.0     8.40         5.20         8.40         8.40         1/4/2046   

Martins

   SHP    CEMIG GT      100.0     7.70         1.84         7.70         1.84         1/4/2046   

Cajuru

   SHP    CEMIG GT      100.0     7.20         2.69         7.20         2.69         1/4/2046   

Ervália

   SHP    CEMIG GT      100.0     6.97         3.03         6.97         3.03         1/4/2046   

São Bernardo

   SHP    CEMIG GT      100.0     6.82         3.42         6.82         3.42         8/19/2025   

Neblina

   SHP    CEMIG GT      100.0     6.47         4.66         6.47         4.66         1/4/2046   

Cel. Domiciano

   SHP    CEMIG GT      100.0     5.04         3.59         5.04         3.59         1/4/2046   

Paraúna

   SHP    CEMIG GT      100.0     4.28         1.90         4.28         1.90         —     

Pandeiros

   SHP    CEMIG GT      100.0     4.20         0.47         4.20         0.47         9/22/2021   

Paciência

   SHP    CEMIG GT      100.0     4.08         2.36         4.08         2.36         1/4/2046   

Marmelos

   SHP    CEMIG GT      100.0     4.00         2.74         4.00         2.74         1/4/2046   

Dona Rita

   SHP    CEMIG GT      100.0     2.40         1.03         2.40         1.03         1/4/2046   

Salto de Moraes

   SHP    CEMIG GT      100.0     2.39         0.60         2.39         0.60         7/1/2020   

Sumidouro

   SHP    CEMIG GT      100.0     2.12         0.53         2.12         0.53         —     

Anil

   SHP    CEMIG GT      100.0     2.08         1.10         2.08         1.10         —     

Xicão

   SHP    CEMIG GT      100.0     1.81         0.61         1.81         0.61         8/19/2025   

Luiz Dias

   SHP    CEMIG GT      100.0     1.62         0.61         1.62         0.61         8/19/2025   

Sinceridade

   SHP    CEMIG GT      100.0     1.42         0.35         1.42         0.35         1/4/2046   

Central Mineirão

   Solar    CEMIG GT      100.0     1.42         —           1.42         —           —     

Poquim

   SHP    CEMIG GT      100.0     1.41         0.39         1.41         0.39         7/8/2015   

Santa Marta

   SHP    CEMIG GT      100.0     1.00         0.58         1.00         0.58         7/8/2015   

Pissarrão

   SHP    CEMIG GT      100.0     0.80         0.55         0.80         0.55         —     

Jacutinga

   SHP    CEMIG GT      100.0     0.72         0.57         0.72         0.57         —     

Santa Luzia

   SHP    CEMIG GT      100.0     0.70         0.23         0.70         0.23         2/25/2026   

Lages*

   SHP    CEMIG GT      100.0     0.68         —           0.68         —           —     

Bom Jesus do Galho

   SHP    CEMIG GT      100.0     0.36         0.13         0.36         0.13         —     

Pai Joaquim

   SHP    CEMIG PCH      100.0     23.00         4.26         23.00         4.26         4/1/2032   

Salto Voltão

   SHP    Horizontes Energia      100.0     8.20         6.63         8.20         6.63         10/4/2030   

Salto do Paraopeba

   SHP    Horizontes Energia      100.0     2.46         —           2.46         —           10/4/2030   

Salto do Passo Velho

   SHP    Horizontes Energia      100.0     1.80         1.06         1.80         1.06         10/4/2030   

Machado Mineiro

   SHP    Horizontes Energia      100.0     1.72         1.03         1.72         1.03         7/8/2025   

Rosal

   Hydroelectric    Rosal Energia      100.0     55.00         30.00         55.00         30.00         5/8/2032   

Sá Carvalho

   Hydroelectric    Sá Carvalho      100.0     78.00         58.00         78.00         58.00         12/1/2024   

Barreiro

   Thermal    Usina Termelétrica Barreiro      100.0     12.90         11.37         12.90         11.37         4/30/2023   

Queimado

   Hydroelectric    CEMIG GT      82.5     105.00         58.00         86.63         47.85         1/2/2033   

Praias de Parajuru

   Wind Farm    CEMIG GT      49.0     28.80         8.39         14.11         4.11         9/24/2032   

Praia do Morgado

   Wind Farm    CEMIG GT      49.0     28.80         13.20         14.11         6.47         12/26/2031   

Paracambi

   SHP    CEMIG GT      49.0     25.00         19.53         12.25         9.57         2/16/2031   

Volta do Rio

   Wind Farm    CEMIG GT      49.0     42.00         18.41         20.58         9.02         12/26/2031   

Santo Antônio

   Hydroelectric    Santo Antônio Energia      17.7     2,714.72         2,218.00         480.06         392.22         6/12/2046   

Aimorés

   Hydroelectric    ALIANÇA      45.0     330.00         172.00         148.50         77.40         12/20/2035   

Amador Aguiar I (Capim Bra)

   Hydroelectric    ALIANÇA      39.3     240.00         155.00         94.36         60.94         8/29/2036   

Amador Aguiar II (Capim Br)

   Hydroelectric    ALIANÇA      39.3     210.00         131.00         82.56         51.50         8/29/2036   

lgarapava

   Hydroelectric    ALIANÇA      23.7     210.00         136.00         49.75         32.22         12/30/2028   

Funil

   Hydroelectric    ALIANÇA      45.0     180.00         89.00         81.00         40.05         12/20/2035   

Candonga

   Hydroelectric    ALIANÇA      22.5     140.00         64.50         31.50         14.51         5/25/2035   

Porto Estrela

   Hydroelectric    ALIANÇA      30.0     112.00         55.80         33.60         16.74         7/10/2032   

Baguari

   Hydroelectric    BAGUARI ENERGIA      34.0     140.00         80.20         47.60         27.27         8/15/2041   

Cachoeirão

   SHP    Hidrelétrica Cachoeirão      49.0     27.00         16.37         13.23         8.02         7/25/2030   

Pipoca

   SHP    Hidrelétrica Pipoca      49.0     20.00         11.90         9.80         5.83         9/10/2031   

Retiro Baixo

   Hydroelectric    Retiro Baixo Energética      25.0     82.00         38.50         20.46         9.61         8/25/2041   

 

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Generation: Annual Permitted Revenue (RAP)

 

Resolução Homologatoria ANEEL—nº 1.313*

 

Receita Anual Permitida—RAP

   RAP      % Cemig     Cemig
Consolidado
     Cemig GT  

Cemig GT

     234.340.198         100,0     234.340.198         234.340.198   

Cemig Itajuba

     36.345.194         100,0     36.345.194         36.345.194   

Centroeste

     15.420.427         51,0     7.864.418      

Transirapé

     26.287.112         24,5     6.440.342      

Transleste

     36.163.304         25,0     9.040.826      

Transudeste

     22.414.358         24,0     5.379.446      

Taesa

        43,36     

ETEO

     155.851.060         43,4     67.576.823      

ETAU

     38.433.513         22,8     8.762.945      

NOVATRANS

     460.994.392         43,4     199.886.586      

TSN

     449.086.299         43,4     194.723.252      

GTESA

     8.238.429         43,4     3.572.172      

PATESA

     18.930.852         43,4     8.208.394      

Munirah

     32.335.023         43,4     14.020.425      

Brasnorte

     22.865.011         16,8     3.833.291      

São Gotardo

     4.594.930         43,4     1.992.356      

Abengoa

          

NTE

     135.672.013         43,4     58.827.214      

STE

     72.452.041         43,4     31.415.113      

ATEI

     132.046.398         43,4     57.255.152      

ATEII

     204.000.305         43,4     88.454.275      

ATEIII

     102.659.854         43,4     44.513.183      

TBE

          

EATE

     381.289.719         21,7     82.634.235      

STC

     36.934.709         17,3     6.403.873      

Lumitrans

     23.591.101         17,3     4.090.187      

ENTE

     199.517.005         21,7     43.245.595      

ERTE

     44.785.760         21,7     9.706.942      

ETEP

     86.906.931         21,7     18.835.509      

ECTE

     84.200.833         8,3     6.970.657      

EBTE

     40.614.511         32,3     13.118.164      

ESDE

     11.542.416         21,7     2.501.610      

ETSE

     19.741.437         8,3     1.634.316      

Light

     7.924.732         32,6     2.581.878      

Transchile**

     21.396.000         49,0     10.484.040      
       

 

 

    

 

 

 

RAP TOTAL CEMIG

          1.284.658.610         270.685.392   
       

 

 

    

 

 

 

 

* Receitas anuais permititidas com vigência entre 1º de julho de 2015 e 30 de junho de 2016.
** A receita de transmissão da Transchile é dada em Dólar Norte Americano e é corrigida, anualmente, de acordo com o Decreto Nº 163 (http://www.cne.cl/images/stories/normativas/otros%20niveles/electricidad/DOC65_-_decreto163obrasurgentes.pdf).

 

170


LOGO

 

FINANCIAL STATEMENTS SEPARATED BY COMPANY AND BY OPERATIONAL SEGMENT

 

FINANCIAL STATEMENTS SEPARATED BY COMPANY AT JUNE 30, 2016

 

Item

   Holding
company
    Cemig GT     Cemig D     Gasmig     Cemig
Telecom
   
Carvalho
    Rosal     Other
subsidiaries
    Eliminations
/ transfers
    Total,
subsidiaries
    Taesa     Light     Madeira     Aliança
Geração
    Other
jointly-
controlled
entities
    Eliminations
/ transfers
    Subsidiaries
and jointly-
controlled
entities
 

ASSETS

     16,806,839        16,878,602        16,578,724        1,993,083        319,448        167,101        148,058        2,619,591        (12,753,215     42,758,231        4,594,169        4,734,930        2,519,607        1,188,680        5,355,030        (8,241,499     52,909,148   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents

     280,338        373,901        759,370        22,298        3,270        6,631        5,650        48,957        —          1,500,415        118,835        214,651        51,076        128,653        176,891        —          2,190,521   

Accounts receivable

     —          650,565        2,662,897        61,959        15,916        6,372        5,260        47,686        (16,715     3,433,940        100,540        725,414        31,936        39,822        55,170        (15,838     4,370,984   

Securities – cash investments

     90,515        292,487        380,203        60,222        18,744        22,400        21,955        100,197        —          986,723        51,772        —          —          —          72,292        —          1,110,787   

Taxes

     1,105,860        214,181        1,268,164        53,991        17,596        153        460        2,560        —          2,662,965        270,336        434,080        62,284        5,804        21,268        —          3,456,737   

Other assets

     986,950        889,125        1,697,188        475,799        5,776        4,947        1,649        34,087        (446,458     3,649,063        40,791        520,798        141,159        131,133        463,228        (216,120     4,730,052   

Investments, PP&E, Intangible, and

Financial assets of concession

     14,343,176        14,458,343        9,810,902        1,318,814        258,146        126,598        113,084        2,386,104        (12,290,042     30,525,125        4,011,895        2,839,987        2,233,152        883,268        4,566,181        (8,009,541     37,050,067   

LIABILITIES AND STOCKHOLDERS’ EQUITY

     16,806,839        16,878,602        16,578,724        1,993,083        319,448        167,101        148,058        2,619,591        (12,753,215     42,758,231        4,594,169        4,734,930        2,519,607        1,188,680        5,355,030        (8,241,499     52,909,148   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Suppliers and supplies

     5,915        368,100        955,902        224,158        13,306        10,411        4,823        3,692        (20,558     1,565,749        14,946        394,889        90,786        18,731        214,771        (73,645     2,226,227   

Loans, financings and debentures

     —          8,057,399        7,051,893        301,144        37,323        —          —          4        —          15,447,763        1,800,032        2,207,018        1,489,342        119,633        1,543,081        —          22,606,869   

Interest on Equity, and dividends

     572,641        350,000        —          45,667        —          —          —          25,467        (420,903     572,872        1        15,098        —          —          21,156        (36,255     572,872   

Post-retirement obligations

     317,823        744,913        2,296,540        —          —          —          —          —          —          3,359,276        —          15,109        —          —          —          —          3,374,385   

Taxes

     26,242        891,860        1,731,090        296,684        10,282        40,670        2,840        15,711        —          3,015,379        816,209        414,885        41,611        28,561        103,427        —          4,420,072   

Other liabilities

     2,067,320        1,249,106        1,417,553        164,490        87,399        856        739        10,417        (21,729     4,976,151        101,219        513,888        143,000        139,040        69,592        (55,208     5,887,682   

STOCKHOLDERS’ EQUITY

     13,816,898        5,217,224        3,125,746        960,940        171,138        115,164        139,656        2,564,300        (12,290,025     13,821,041        1,861,762        1,174,043        754,868        882,715        3,403,003        (8,076,391     13,821,041   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributed to controlling stockholders

     13,816,898        5,217,224        3,125,746        956,797        171,138        115,164        139,656        2,564,300        (12,290,025     13,816,898        1,861,762        1,174,043        754,868        882,715        3,403,003        (8,076,391     13,816,898   

Non-controlling stockholder

     —          —          —          4,143        —          —          —          —          —          4,143        —          —          —          —          —          —          4,143   

NET PROFIT (LOSS)

                                  

Net operational revenue

     453        3,298,971        5,184,255        569,887        48,950        32,514        29,922        131,298        (90,443     9,205,807        414,008        1,543,937        128,648        184,801        203,150        (185,510     11,494,841   

Operational costs and expenses

     (491,029     (2,135,844     (5,155,823     (505,481     (47,831     (15,235     (11,550     (17,952     82,180        (8,298,565     (54,407     (1,461,036     (69,754     (77,741     (311,627     121,608        (10,151,522
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Electricity purchased for resale

     —          (1,468,153     (2,495,624     —          —          (4,033     (1,122     (1,405     14,227        (3,956,110     —          (992,973     (8,075     (12,718     (48,848     130,810        (4,887,914

Charges for use of the National Grid

     —          (147,875     (436,904     —          —          —          (1,641     (107     60,615        (525,912     —          —          (31,068     (8,726     (6,602     34,989        (537,319

Gas bought for resale

     —          —          —          (427,009     —          —          —          —          —          (427,009     —          —          —          —          —          —          (427,009

Construction cost

     —          (31,634     (533,039     (19,060     —          —          —          —          —          (583,733     (4,347     (168,923     —          —          (2,281     —          (759,284

Personnel

     (17,157     (197,865     (587,896     (20,271     (13,122     (706     (702     (5,496     —          (843,215     (26,701     (61,823     (3,761     (6,660     (32,262     —          (974,422

Employee profit shares

     4,234        (626     (9,511     —          —          (72     (130     (95     —          (6,200     (3,129     —          —          (1,566     (67     —          (10,962

Post-retirement obligations

     (17,808     (35,575     (105,894     —          —          —          —          —          —          (159,277     —          —          —          —          —          —          (159,277

Materials

     (45     (7,034     (17,437     (812     (47     (186     (105     (168     1,929        (23,905     (4,191     (9,916     (733     (390     (1,666     11        (40,790

Outsourced services

     (3,829     (69,246     (312,807     (6,543     (10,900     (1,937     (2,583     (5,091     12,153        (400,783     (11,246     (81,619     (5,042     (15,688     (25,406     9,718        (530,066

Depreciation and amortization

     (260     (94,083     (243,855     (26,536     (16,338     (2,823     (2,184     (5,010     (7,628     (398,717     (886     (79,502     (32,349     (30,907     (166,340     (60,193     (768,894

Operating provisions

     (446,201     (51,640     (236,124     —          354        —          (1     —          —          (733,612     62        (63,313     11,866        642        1,760        —          (782,595

Other expenses, net

     (9,963     (32,113     (176,731     (5,250     (7,778     (5,478     (3,082     (580     883        (240,092     (3,969     (2,967     (592     (1,728     (29,915     6,273        (272,990
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational profit before Equity gains (losses) and Financial revenue (expenses)

     (490,576     1,163,127        28,432        64,406        1,119        17,279        18,372        113,346        (8,263     907,242        359,601        82,901        58,894        107,060        (108,477     (63,902     1,343,319   

Equity method gain (loss)

     502,706        (86,061       —          (15,506     —          —          —          (387,097     14,042        514        (31,716     —          (671     (11,878     (16,850     (46,559

Financial revenue

     71,455        82,785        434,121        7,824        2,195        1,304        1,032        8,544        —          609,260        106,777        (14,245     11,161        8,815        62,564        —          784,332   

Financial expenses

     (3,204     (651,896     (555,716     (19,462     (3,419     (69     (13     (68     —          (1,233,847     (223,759     (50,073     (75,629     (11,923     (93,894     —          (1,689,125
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income tax and

Social Contribution tax

     80,381        507,955        (93,163     52,768        (15,611     18,514        19,391        121,822        (395,360     296,697        243,133        (13,133     (5,574     103,281        (151,685     (80,752     391,967   

Income tax and Social Contribution tax

     126,785        (197,312     15,258        (14,379     66        (6,275     (1,555     (11,954     —          (89,366     (43,291     (6,245     (3,667     (26,293     (15,774     —          (184,636
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     207,166        310,643        (77,905     38,389        (15,545     12,239        17,836        109,868        (395,360     207,331        199,842        (19,378     (9,241     76,988        (167,459     (80,752     207,331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     207,166        310,643        (77,905     38,224        (15,545     12,239        17,836        109,868        (395,360     207,166        199,842        (19,378     (9,241     76,988        (167,459     (80,752     207,166   

Non-controlling stockholder

     —          —          —          165        —          —          —          —          —          165        —          —          —          —          —          —          165   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     207,166        310,643        (77,905     38,389        (15,545     12,239        17,836        109,868        (395,360     207,331        199,842        (19,378     (9,241     76,988        (167,459     (80,752     207,331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

171


LOGO

 

 

INFORMATION BY MARKET SEGMENT AT JUNE 30, 2016

 

Item

   Electricity     Telecoms     Gas     Other     Eliminations     Total  
   Generation     Transmission     Distribution            

ASSETS OF THE SEGMENT

     14,935,003        4,845,708        18,078,585        319,448        2,468,380        2,568,787        (457,680     42,758,231   

Additions to the segment

     2,097,928        31,634        533,039        18,461        19,060        —          —          2,700,122   

Investments in subsidiaries and jointly-controlled entities

     6,215,924        2,362,913        1,499,861        —          —          22,085        —          10,100,783   

NET REVENUE

     2,670,416        761,129        5,184,255        48,950        569,887        61,613        (90,443     9,205,807   

COST OF ELECTRICITY AND GAS

                

Electricity purchased for resale

     (1,474,709     —          (2,495,624     —          —          (3     14,226        (3,956,110

Charges for use of the National Grid

     (149,463     (161     (436,904     —          —          —          60,616        (525,912

Gas bought for resale

     —          —          —          —          (427,009     —          —          (427,009
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational costs, total

     (1,624,172     (161     (2,932,528     —          (427,009     (3     74,842        (4,909,031

OPERATIONAL COSTS AND EXPENSES

                

Personnel

     (137,414     (62,380     (587,896     (13,122     (20,271     (22,132     —          (843,215

Employees’ and managers’ profit shares

     (213     (614     (9,511     —          —          4,138        —          (6,200

Post-retirement obligations

     (24,528     (11,047     (105,895     —          —          (17,807     —          (159,277

Materials

     (5,510     (1,962     (17,437     (47     (812     (66     1,929        (23,905

Outsourced services

     (63,812     (14,644     (312,807     (10,900     (6,543     (4,230     12,153        (400,783

Depreciation and amortization

     (111,045     6,952        (243,855     (16,338     (26,536     (7,895     —          (398,717

Operational provisions (reversals)

     (46,339     (5,301     (236,124     354        —          (446,202     —          (733,612

Construction costs

     —          (31,634     (533,039     —          (19,060     —          —          (583,733

Other operational expenses, net

     (37,933     (2,970     (176,731     (7,778     (5,250     (10,949     1,519        (240,092
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of operation

     (426,794     (123,600     (2,223,295     (47,831     (78,472     (505,143     15,601        (3,389,534

OPERATIONAL COSTS AND EXPENSES

     (2,050,966     (123,761     (5,155,823     (47,831     (505,481     (505,146     90,443        (8,298,565

OPERATIONAL PROFIT BEFORE EQUITY GAINS (LOSSES) AND FINANCIAL REVENUE (EXPENSES)

     619,450        637,368        28,432        1,119        64,406        (443,533     —          907,242   

Equity method gain (loss)

     (131,375     205,066        (42,437     (15,506     —          (1,706     —          14,042   

Financial revenues

     87,092        2,174        434,121        2,195        7,824        75,854        —          609,260   

Financial expenses

     (649,533     (2,478     (555,716     (3,419     (19,462     (3,239     —          (1,233,847
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PRE-TAX PROFIT

     (74,366     842,130        (135,600     (15,611     52,768        (372,624     —          296,697   

Income tax and Social Contribution tax

     (11,354     (197,661     15,258        66        (14,379     118,704        —          (89,366
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET PROFIT (LOSS)

     (85,720     644,469        (120,342     (15,545     38,389        (253,920     —          207,331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     (85,720     644,469        (120,342     (15,545     38,224        (253,920     —          207,166   

Non-controlling stockholder

     —          —          —          —          165        —          —          165   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (85,720     644,469        (120,342     (15,545     38,389        (253,920     —          207,331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

172


LOGO

 

Cemig D Tables (R$ million)

 

 

CEMIG D Market

 
     (GWh)      GW  

Quarter

   Captive Consumers      TUSD ENERGY1      T.E.D2      TUSD PICK3  

4Q13

     6,615         4,975         11,591         29   

1Q14

     6,744         4,464         11,208         29   

2Q14

     6,646         4,485         11,132         29   

3Q14

     6,686         4,298         10,984         27   

4Q14

     6,935         4,201         11,136         29   

1Q15

     6,780         4,034         10,814         30   

2Q15

     6,371         3,896         10,268         28   

3Q15

     6,471         3,803         10,274         29   

4Q15

     6,850         3,937         10,787         28   

1Q16

     6,408         4,053         10,460         29   

2Q16

     6,711         4,497         11,208         29   

 

1. Refers to the quantity of electricity for calculation of the regulatory charges charged to free consumer clients (“Portion A”)
2. Total electricity distributed
3. Sum of the demand on which the TUSD is invoiced, according to demand contracted (“Portion B”).

 

Operating Revenues

   2Q16     2Q15     Change%     1H2016     1H2015     Change%  

Sales to end consumers

     4,064        4,313        (6     8,395        7,702        9   

TUSD

     436        522        (17     853        749        14   

CVA and Other financial components in tariff adjustment

     (531     212        —          (664     762        —     

Construction revenue

     314        241        31        533        443        20   

Others

     277        324        (15     573        572        —     

Subtotal

     4,560        5,612        (19     9,691        10,228        (5

Deductions

     (2,065     (2,572     (20     (4,506     (4,123     9   

Net Revenues

     2,495        3,040        (18     5,184        6,105        (15

 

Operating Expenses

   2Q16      2Q15      Change%     1H2016      1H2015      Change%  

Personnel/Administrators/Councillors

     300         234         28        588         462         27   

Employee Participation

     10         40         (76     10         102         (91

Forluz – Post-Retirement Employee Benefits

     56         42         34        106         84         27   

Materials

     9         12         (26     17         22         (22

Contracted Services

     146         176         (17     313         333         (6

Purchased Energy

     1,220         1,741         (30     2,496         3,579         (30

Depreciation and Amortization

     122         113         8        244         224         9   

Operating Provisions

     92         53         72        236         93         153   

Charges for Use of Basic Transmission Network

     224         205         9        437         400         9   

Cost from Operation

     314         241         31        533         443         20   

Other Expenses

     89         122         (27     177         220         (20
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     2,580         2,980         (13     5,156         5,963         (14
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Statement of Results

   2Q16     2Q15     Change%     1H2016     1H2015     Change%  

Net Revenue

     2,495        3,040        (18     5,184        6,105        (15

Operating Expenses

     2,580        2,980        (13     5,156        5,963        (14

EBIT

     (85     60        —          28        142        (80

EBITDA

     37        173        (79     272        366        (26

Financial Result

     18        (52     —          (122     (116     (4

Provision for Income Taxes, Social Cont &

     17        (9     —          15        (20     —     

Net Income

     (51     —          —          (78 )      5        —     

 

173


LOGO

 

Cemig GT Tables (R$ million)

 

Operating Revenues

   2Q16     2Q15     Change%     1H2016     1H2015     Change%  

Sales to end consumers

     875        918        (5     1,819        1,831        (1

Supply

     624        608        3        1,215        1,416        (14

Gain on monetary updating of Concession Grant Fee

     68        —          —          149        —          —     

Transactions in the CCEE

     48        700        (93     52        1,700        (97

Revenues from Trans. Network

     98        81        20        192        162        19   

Construction revenue

     25        25        (1     32        56        (44

Transmission indemnity revenue

     561        55        923        592        55        980   

Others

     7        4        80        14        9        51   

Subtotal

     2,305        2,391        (4     4,065        5,228        (22

Deductions

     (359     (373     (4     (718     (807     (11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

     1,946        2,018        (4     3,347        4,421        (24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Operating Expenses

   2Q16      2Q15     Change%     1H2016      1H2015      Change%  

Personnel/Administrators/Councillors

     101         78        30        198         161         23   

Employee Participation

     1         23        (97     1         38         (98

Forluz – Post-Retirement Employee Benefits

     19         13        50        36         25         41   

Materials

     5         4        13        7         8         (8

Raw Materials and Supplies Energy Production

     —           (3     —          —           75         —     

Contracted Services

     34         32        6        70         64         8   

Depreciation and Amortization

     47         68        (31     94         144         (35

Operating Reserves

     30         47        (37     52         42         23   

Charges for Use of Basic Transmission Network

     74         71        4        148         144         3   

Purchased Energy

     808         625        29        1,468         1,233         19   

Construction Cost

     25         25        (1     32         56         (44

Other Expenses

     10         22        (52     32         31         3   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

     1,154         1,006        15        2,137         2,021         6   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

Statement of Results

   2Q16     2Q15     Change%     1H2016     1H2015     Change%  

Net Revenue

     1,946        2,018        (4     3,347        4,421        (24

Operating Expenses

     (1,154     (1,006     15        (2,137     (2,021     6   

EBIT

     792        1,012        (22     1,210        2,401        (50

Equity equivalence results

     19        (66     —          (131     (103     27   

Fair value gain (loss) on stockholding transaction

     —          —          —          —          735        —     

EBITDA

     858        1,015        (15     1,173        3,176        (63

Financial Result

     (279     (205     36        (569     (417     36   

Provision for Income Taxes, Social Cont & Deferred Income Tax

     (160     (270     (41     (199     (830     (76
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     372        472        (21     311        1,051        (83
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cemig Tables (R$ million)

 

Energy Sales (Consolidated)(GWh)

   2Q16      2Q15      Change%      1H2016      1H2015      Change%  

Residential

     2,526         2,386         6         5,017         4,949         1   

Industrial

     4,672         5,772         (19)         9,510         11,589         (18)   

Commercial

     1,697         1,564         9         3,385         3,261         4   

Rural

     960         750         28         1,684         1,544         9   

Others

     900         834         8         1,737         1,699         2   

Subtotal

     10,755         11,305         (5)         21,333         23,042         (7)   

Own Consumption

     10         9         6         19         19         —     

Supply

     3,110         2,883         8         5,806         6,919         (16)   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

     13,874         14,198         (2)         27,158         29,980         (9)   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

174


LOGO

 

Energy Sales

   2Q16     2Q15      D%     1H2016     1H2015      D%  

Residential

     1,936        1,850         5        3,960        3,396         17   

Industrial

     1,316        1,488         (12     2,663        2,773         (4

Commercial

     1,122        1,020         10        2,285        1,867         22   

Rural

     356        343         4        679        597         14   

Others

     402        421         (4     811        735         10   

Electricity sold to final consumers

     5,132        5,121                10,398        9,368         11   

Unbilled Supply, Net

     (174     70                (77     114           

Supply

     655        628         4        1,207        1,475         (18
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

TOTAL

     5,613        5,819         (4 )      11,528        10,958         5   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

Operating Revenues

   2Q16     2Q15     D%     1H2016     1H2015     D%  

Sales to end consumers

     4,973        5,278        (6     10,279        9,570        7   

TUSD

     427        521        (18     837        731        14   

Supply

     641        541        19        1,249        1,388        (10

Transactions in the CCEE

     49        701        (93     52        1,712        (97

CVA and Other financial components in tariff adjustment

     (531     212        —          (664     762        —     

Gain on monetary updating of Concession Grant Fee

     68        —          —          149        —          —     

Revenues from Trans. Network

     75        64        17        148        127        17   

Construction revenue

     349        266        31        584        500        17   

Gas supply

     319        425        (25     697        851        (18

Transmission Indemnity Revenue

     561        55        923        592        55        980   

Others

     346        382        (9     707        691        2   

Subtotal

     7,276        8,444        (14     14,630        16,386        (11

Deductions

     (2,521     (3,052     (17     (5,424     (5,144     5   

Net Revenues

     4,754        5,392        (12     9,206        11,242        (18

 

Operating Expenses

   2Q16      2Q15     D%     1H2016      1H2015      D%  

Personnel/Administrators/Councillors

     430         333        29        843         669         26   

Employee Participation

     6         64        —          6         145         (96

Forluz – Post-Retirement Employee Benefits

     84         58        —          159         115         38   

Materials

     13         17        (26     24         31         (24

Raw materials and inputs for production of electricity

     —           (3     —          —           75         —     

Contracted Services

     193         214        (10     401         413         (3

Purchased Energy

     2,025         2,312        (12     3,956         4,734         (16

Depreciation and Amortization

     200         182        10        399         429         (7

Operating Provisions

     482         230        110        734         273         169   

Charges for Use of Basic Transmission Network

     267         251        6        526         493         7   

Gas bought for resale

     189         262        (28     427         524         (18

Cost from Operation

     349         266        31        584         500         17   

Other Expenses

     112         161        (30     240         289         (17
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     4,349         4,348        —          8,299         8,690         (5
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

175


LOGO

 

 

Financial Result Breakdown

   2Q16     2Q15     D%     1H2016     1H2015     D%  

Financial revenues

     390        243        61        609        525        16   

Revenue from cash investments

     77        54        43        135        93        46   

Arrears penalty payments on electricity bills

     69        50        36        142        97        47   

Exchange rate

     29        16        86        44        69        (36

Monetary updating

     20        5        297        67        9        608   

Monetary updating—CVA

     168        —          —          188        32        481   

Taxes applied to Financial Revenue

     (27     —          —          (39     —          —     

Monetary updating of the Financial Asset of the Concession

     3        102        (97     5        194        (97

Other

     52        16        226        67        31        114   

Financial expenses

     (602     (494     22        (1,234     (1,050     18   

Costs of loans and financings

     (479     (317     51        (908     (610     49   

Exchange rate

     (0     (11     (100     (17     (72     (76

Monetary updating—loans and financings

     (69     (91     (24     (185     (226     (18

Monetary updating—paid concessions

     (1     (1     —          (3     (7     (61

Charges and monetary updating on Post-employment obligations

     (27     (34     (22     (64     (72     (11

Other

     (26     (40     (36     (56     (62     (10

Financial revenue (expenses)

     (212     (252     (16     (625     (525     19   

 

Statement of Results

   2Q16     2Q15     D%     1H2016     1H2015     D%  

Net Revenue

     4,754        5,392        (12     9,206        11,242        (18

Operating Expenses

     4,349        4,348        0        8,299        8,690        (5

EBIT

     405        1,045        (61     907        2,552        (64

Equity gain in subsidiaries

     72        6        1,159        14        96        (85

Gain on stockholding reorganization

     —          —          —          —          735        —     

Depreciation and Amortization

     200        182        10        399        429        (7

EBITDA

     677        1,233        (45     1,320        3,812        (65

Financial Result

     (212     (252     16        (625     (525     (19

Tax

     (63     (265     (76     (89     (839     (89

Net Income

     202        534        (62     207        2,019        (90

 

 

176


LOGO

 

 

Cash Flow Statement

   1H2016     1H2015     Change%  

Cash at beginning of period

     925        887        4   

Cash generated by operations

     1,585        970        63   

Net profit

     207        2,019        (90

Current and deferred income tax and Social Contribution tax

     89        839        (89

Depreciation and amortization

     399        429        (7

Gain on the Aliança stockholding reorganization

     —          (735     —     

Passthrough from CDE

     1,005        44        2,163   

Equity gain (loss) in subsidiaries

     (14     (96     85   

Provisions (reversals) for operational losses

     734        273        169   

Dividends received from equity holdings

     345        151        128   

Interest paid on loans and financings

     (1,085     (847     28   

Other adjustments

     (96     (1,108     91   

Financing activities

     95        (705     114   

Financings obtained and capital increase

     2,252        3,097        (27

Interest on Equity, and dividends

     (111     (129     (13

Payments of loans and financings

     (2,045     (3,674     (44

Investment activity

     (1,105     (395     180   

Securities—Financial Investment

     1,524        485        180   

Acquisition of ownership interest and future capital commitments

     (643     (394     63   

Financial assets

     (1,472     (56     2,517   

Fixed and Intangible assets

     (513     (429     19   

Cash at end of period

     1,500        757        98   
  

 

 

   

 

 

   

 

 

 

Total Cash

     2,487        3,435     
  

 

 

   

 

 

   

 

177


LOGO

 

 

BALANCE SHEETS (CONSOLIDATED) – ASSETS

   06/30/2016      12/31/2015  

CURRENT

     8,156         9,377   

Cash and cash equivalents

     1,500         925   

Securities

     932         2,427   

Consumers and traders

     3,294         3,764   

Financial assets of the concession

     998         874   

Tax offsetable

     193         175   

Income tax and Social Contribution tax recoverable

     386         306   

Dividends receivable

     34         62   

Linked funds

     1           

Inventories

     41         37   

Passthrough from CDE (Energy Development Account)

     64         72   

Other credits

     712         735   

NON-CURRENT

     34,579         31,503   

Securities

     54         84   

Consumers and traders

     139         134   

Tax offsetable

     254         258   

Income tax and Social Contribution tax recoverable

     177         206   

Deferred income tax and Social Contribution tax

     1,653         1,498   

Escrow deposits in legal actions

     1,874         1,813   

Other credits

     923         868   

Financial assets of the concession

     5,091         2,660   

Investments

     10,078         9,768   

PP&E

     3,849         3,940   

Intangible assets

     10,487         10,275   
  

 

 

    

 

 

 

TOTAL ASSETS

     42,735         40,880   
  

 

 

    

 

 

 

 

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BALANCE SHEETS LIABILITIES AND SHAREHOLDERS’ EQUITY

   06/30/2016      12/31/2015  

CURRENT

     11,385         13,086   

Suppliers

     1,566         1,901   

Regulatory charges

     433         517   

Profit shares

     16         114   

Taxes

     672         740   

Income tax and Social Contribution tax

     13         11   

Interest on Equity, and dividends, payable

     573         1,318   

Loans and financings

     4,619         6,300   

Payroll and related charges

     276         221   

Post-retirement liabilities

     186         167   

Other obligations

     1,353         551   

Provisions for losses on investments

     1,679         1,245   

NON-CURRENT

     17,552         14,795   

Regulatory charges

     303         226   

Loans and financings

     10,829         8,866   

Taxes

     740         740   

Income tax and Social Contribution tax

     854         689   

Provisions

     785         755   

Post-retirement liabilities

     3,173         3,086   

Provisions for losses on investments

     174         148   

Other obligations

     693         285   

STOCKHOLDERS’ EQUITY

     13,794         12,995   

Share capital

     6,294         6,294   

Capital reserves

     1,925         1,925   

Profit reserves

     5,285         4,674   

Adjustments to Stockholders’ equity

     61         102   

Retained earnings

     229         —     

NON- CONTROLLING STOCKHOLDER´S EQUITY

     4         4   

TOTAL LIABILITIES

     42,735         40,880   

 

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23. EARNINGS RELEASE: 3Q 2016 RESULTS

 

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PUBLICATION OF RESULTS

CEMIG REPORTS

3Q16 EBITDA

OF R$ 1.193 BILLION

Main factors in the quarter:

 

  Change in profile of allocation of supply in 2016

 

  Significantly lower sales of gas to industry and thermal generation plants

 

  Reversal, of R$ 167 million, in the provision for options on the investment in Parati due to adoption of the Black-Scholes method to measure fair value of the option

 

Indicators (GWh)

   3Q16      3Q15      Change %  

Electricity sold (excluding CCEE)

     13,841         13,356         3.63   

Indicators – R$ ’000

   3Q16      3Q15      Change %  

Sales on the CCEE

     87,198         173,791         (49.83

Net debt

     13,629,868         11,731,593         16.18   

Gross revenue

     7,404,163         7,947,161         (6.83

Net revenue

     4,894,293         4,783,876         2.31   

Ebitda (IFRS)

     1,192,614         647,198         84.27   

Net profit in the quarter

     433,502         166,954         159.65   

Earnings per share

     0.34         0.13         161.54   

Ebitda margin

     24.38         13.53%         10.85p.p.   

 


 

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Conference call

Publication of 3Q16 results

Video webcast and conference call

November 16, 2016 (Wednesday) : 2 PM, Brasília time

This transmission on Cemig’s results will have simultaneous translation into English and can be seen in real time by Webcast, at http://ri.cemig.com.br or heard by conference call on:

+ 55 (11) 2188-0155 (1st option) or

+ 55 (11) 2188-0188 (2nd option)

Password: CEMIG

 

Playback of Video Webcast:

Site:

http://ri.cemig.com.br

Click on the banner and download.

Available for 90 days

  

Conference call – Playback:

Telephone: (+55-11) 2188-0400

Password:

CEMIG Português

Available from November 16 to November 30, 2016

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

Fabiano Maia Pereira

 

General Manager, Investor Relations

Antônio Carlos Vélez Braga

 

Manager, Investor Market

Robson Laranjo

 

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Contents

 

CONFERENCE CALL

   182

CEMIG INVESTOR RELATIONS

   182

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

   182

CONTENTS

   183

DISCLAIMER

   184

CEMIG STOCK PRICE PERFORMANCE

   185

CEMIG’S LONG-TERM RATINGS

   186

ADOPTION OF IFRS

   186

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

   187

THE ELECTRICITY MARKET OF CEMIG D

   190

THE ELECTRICITY MARKET OF CEMIG GT

   191

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION – MWH

   192

CONSOLIDATED OPERATIONAL REVENUE

   192

SECTOR / REGULATORY CHARGES – DEDUCTIONS FROM REVENUE

   196

OPERATIONAL COSTS AND EXPENSES

   197

EQUITY GAIN (LOSS) IN SUBSIDIARIES

   201

FINANCIAL REVENUE (EXPENSES)

   203

EBITDA

   204

DEBT

   205

MONETIZATION OF UNITS IN TAESA

   209

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

   210

DEFAULT

   210

GENERATING PLANTS – MARCH, 2016

   214

GENERATION: ANNUAL PERMITTED REVENUE (RAP)

   215

 

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Disclaimer

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

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

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

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

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

 

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Cemig stock price performance

 

Security

   Ticker    Currency    Close of
September 30,
2016
     Close of
June 30,
2016
     Change in the
period %
 

Cemig PN

   CMIG4    R$      8.58         7.28         17.86%   

Cemig ON

   CMIG3    R$      8.56         7.10         20.56%   

ADR PN

   CIG    US$      2.59         2.21         17.19%   

ADR ON

   CIG.C    US$      2.82         2.20         28.18%   

Ibovespa

   Ibovespa    —        58,367         51,526         13.28%   

IEEX

   IEEX    —        36,307         30,786         17.93%   

 

Source: Economática.

Trading volume in Cemig’s preferred shares (CMIG4) totaled R$ 10.17 billion in the first nine months of 2016, a daily average of R$ 54.08 million. Adding the volume traded in its common (ON) and preferred (PN) shares, Cemig was the company with the highest stock trading liquidity in the Brazilian electricity sector in the period, and among the most traded in the Brazilian market as a whole.

On the New York Stock Exchange the volume traded in ADRs for Cemig’s preferred shares (CIG) in first nine months of 2016 was US$ 1.83 billion: we see this as reflecting recognition by the investor market – and maintaining Cemig’s position as a global investment option.

The São Paulo stock exchange (Bovespa) index – the Ibovespa – was up 13.28% in the third quarter, closing the quarter at 58,367 points. The price of Cemig’s preferred shares outperformed the principal Brazilian stock index with a rise of 17.86% in the quarter, and was in line with the index for the Brazilian electricity sector, which rose 17.93%. The common shares rose 20.56%.

 

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Cemig’s long-term ratings

These tables show credit risk ratings and outlook for Cemig’s companies as provided by the principal rating agencies:

Brazilian ratings:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating    Outlook    Rating    Outlook    Rating    Outlook

Fitch

   A (bra)    Negative    A (bra)    Negative    A (bra)    Negative

S&P

   brA    Negative    brA    Negative    brA    Negative

Moody’s

   Baa1.br    Negative    Baa1.br    Negative    Baa1.br    Negative

Global Ratings:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating    Outlook    Rating    Outlook    Rating    Outlook

S&P

   BB-    Negative    BB-    Negative    BB-    Negative

Moody’s

   B1    Negative    B1    Negative    B1    Negative

 

Note: Fitch gives only Brazilian – not global – ratings.

Adoption of IFRS

The 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).

 

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Consolidated – R$ ’000

   3Q16     3Q15     Change %  

REVENUE

     4,894,293        4,783,876        2.31   

OPERATING COSTS

      

Personnel

     (373,986     (318,057     17.58   

Employees’ and managers’ profit shares

     (24,217     (62,158     (61.04

Post-retirement obligations

     (89,306     (57,609     55.02   

Materials

     (17,057     (21,560     (20.89

Raw materials and inputs for production of electricity

     (8     (6,532     (99.88

Outsourced services

     (201,023     (204,826     (1.86

Electricity purchased for resale

     (2,170,348     (2,534,554     (14.37

Depreciation and amortization

     (202,480     (200,123     1.18   

Operating provisions

     19,375        (151,424     —     

Charges for use of the National Grid

     (215,504     (274,972     (21.63

Gas bought for resale

     (196,494     (265,694     (26.04

Infrastructure construction costs

     (334,122     (279,701     19.46   

Other operational expenses, net

     (132,206     (118,547     11.52   
  

 

 

   

 

 

   

 

 

 

TOTAL COST

     (3,937,376     (4,495,757     (12.42

Equity method gain (loss)

     33,218        164,044        (79.75

Fair value gain (loss) on stockholding transaction

     —          (5,088     —     

Operational profit before Financial income (expenses) and taxes

     990,135        447,075        121.47   

Financial revenues

     232,569        315,204        (26.22

Financial expenses

     (654,168     (595,957     9.77   
  

 

 

   

 

 

   

 

 

 

Profit before income tax and Social Contribution tax

     568,536        166,322        241.83   

Current and deferred income tax and Social Contribution tax

     (135,034     632        —     
  

 

 

   

 

 

   

 

 

 

NET PROFIT FOR THE PERIOD

     433,502        166,954        159.65   
  

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     433,397        166,863     

Interest of non-controlling stockholder

     105        91     
  

 

 

   

 

 

   

NET PROFIT FOR THE PERIOD

     433,502        166,954     
  

 

 

   

 

 

   

Cemig’s consolidated electricity market

The Cemig Group sells electricity through its distribution company, Cemig Distribuição (‘Cemig D’), its generation and transmission company Cemig Geração e Transmissão (Cemig Generation and Transmission, or ‘Cemig GT’), and wholly-owned subsidiaries: Horizontes Energia, Termelétrica Ipatinga (up to January 2015), Sá Carvalho, Termelétrica de Barreiro, Cemig PCH, Rosal Energia and Cemig Capim Branco Energia (up to March 2015),

The 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;

 

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

 

(III) other agents of the electricity sector – traders, generators and independent power producers, also in the Free Market;

 

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

 

(V) and sales made in the wholesale trading market (Câmara de Comercialização de Energia Elétrica, or CCEE)

( – eliminating transactions between companies of the Cemig Group),:

In 3Q16 the Cemig group sold a total volume of 13,841 GWh, which was 3.63% more than in 3Q15.

Sales of electricity to final consumers (excluding Cemig’s own consumption) totaled 10,826 GWh, or 4.32% less than in 3Q15.

Overall, electricity consumption has been affected since 1Q15 by adverse Brazilian political and economic circumstances; and, in the captive market, by the successive increases in electricity rates charged to consumers, associated with application of the ‘Tariff Flag’ system, resulting in significant increases in consumers’ electricity bills.

Sales to distributors, traders, other generating companies and independent power producers in 3Q16 totaled 3,007 GWh – 47.92% more than in 3Q15.

In September 2016 the Cemig group invoiced 8,228,889 clients – a growth of 2.1% in the consumer base since the end of September 2015, Of these, 8,228,062 are final consumers, including Cemig’s own consumption; and 74 are other agents in the Brazilian electricity sector.

This chart shows the breakdown of the Cemig Group’s sales to final consumers in the quarter, by consumer category:

 

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Consolidated

   MWh      Change, %     Average
price

3Q16
R$
     Average
price

3Q15
R$
 
   3Q16      3Q15          

Residential

     2,389,353         2,363,902         1.08        778.08         806.64   

Industrial

     5,031,850         5,695,265         (11.65     274.17         264.79   

Commercial, Services and Others

     1,522,936         1,482,339         2.74        647.15         677.50   

Rural

     1,015,555         928,036         9.43        388.46         442.70   

Public authorities

     208,314         209,647         (0.64     617.59         677.37   

Public lighting

     338,892         333,947         1.48        380.70         446.91   

Public service

     318,605         301,214         5.77        427.07         491.71   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

     10,825,505         11,314,350         (4.32     463.03         465.72   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Own consumption

     8,528         8,808         (3.18     —           —     

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

     3,006,675         2,032,579         47.92        225.28         218.48   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

     13,840,708         13,355,737         3.63        418.16         422.35   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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

 

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The electricity market of Cemig D

Electricity billed to captive clients by Cemig D, and electricity transported for Free Clients and distributors with access to Cemig D’s networks, totaled 10,797 GWh in 3Q16, or 5,09 more than in 3Q16.

This result reflects higher use of the network by Free Clients – an increase of 16,30% compared to 3Q15.

In September 2016 Cemig D was invoicing 8,227,191 captive clients.

 

Cemig D

   Number of clients      Change,
%
 
   3Q16      3Q15     

Residential

     6,663,027         6,510,314         2.35   

Industrial

     74,768         75,365         (0.79

Commercial, Services and Others

     717,977         714,981         0.42   

Rural

     689,765         677,567         1.80   

Public authorities

     64,141         63,367         1.22   

Public lighting

     5,250         3,999         31.28   

Public service

     12,263         10,729         14.30   
  

 

 

    

 

 

    

 

 

 

Total

     8,227,191         8,056,322         2.12   
  

 

 

    

 

 

    

 

 

 

Comments on the various consumer categories:

Residential

Consumption by residential consumers totaled 2,389 GWh, or 1.08% more than in 3Q15.

Industrial

Electricity used by captive industrial clients was 7.33% of the volume of electricity distributed by Cemig D, and totaled 791 GWh in 3Q16 – a reduction of 15.94% when compared to 3Q15.

This is in line with the continuing retraction of economic activity both in Minas Gerais and in the whole of Brazil, and the performance of the international market,

Electricity transported for Free Clients was 40.97% of the volume of electricity distributed by Cemig D, totaling 4,423,552 MWh in 3Q16, or 16.30% more than in 3Q15 – as a result of resumption of activity in the Metallurgy and Ferro-alloys sector.

 

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The electricity market of Cemig GT

Cemig GT’s sales volume was affected by the termination of concessions of some plants, As from this termination, the output of these plants was redirected to the Physical Guarantee Quota regime, with settlement on the spot market.

Since September 15, 2015 the São Simão Plant has been serving the Regulated Market in accordance with the ‘quota’ regime, under the requirements of Ministerial Order 432/2015. The revenues that the company recognizes from that plant are, currently, only the revenues from provision of the services of operation and maintenance of the plant.

Cemig GT’s market comprises sales of power as follows:

 

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

 

(II) to other agents in the electricity sector – traders, generators and independent power producers (in the Free Market); and

 

(III) to electricity distributors (in the Regulated Market);

 

(IV) and sales in the CCEE (Wholesale Electricity Market).

The total supply billed by Cemig GT in 3Q16 was 7,281 GWh, which was 8.09% less than in 3Q15.

 

Cemig GT

   MWh      Change,
%
 
   3Q16      3Q15     

Free Clients

        

Industrial

     4,039,479         4,557,126         (11.36

Commercial

     212,847         88,009         141.85   

Free Market – Free contracts

     2,427,309         1,153,907         110.36   

Regulated Market:

     566,118         852,022         (33.56

Regulated Market – Cemig D

     35,441         85,271         (58.44
  

 

 

    

 

 

    

 

 

 

Total

     7,281,194         6,736,335         (5.36
  

 

 

    

 

 

    

 

 

 

The number of clients billed by Cemig GT was 74.91% higher than in September 2015, totaling 934, Of these: 861 were industrial and commercial clients; 46 were distribution companies; and 27 were companies in the category of traders, generators and independent power producers.

 

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Free Clients in the industrial and commercial categories consumed 4,252 GWh in 3Q16 – down 8.46% year-on-year, due to the contraction of economic activity.

Sales and trading transactions in electricity with other agents of the electricity sector in the Free Market lead to selling opportunities, which lead to short-term sales contracts, In 3Q16 total sales of electricity were 2,427 GWh, or 110.36% more than in 3Q15.

Physical totals of transport and distribution – MWh

 

Description

   MWh      Change
%
 
   3Q16      3Q15     

Total energy carried

     12,590,397         11,994,627         4.97   

Electricity transported for distributors

     95,111         94,820         0.31   

Electricity transported for free clients

     4,379,423         3,799,314         15.27   

Own load

        

Consumption by captive market

     6,364,941         6,470,646         (1.63

Losses in distribution network

     1,750,922         1,629,847         7.43   

Consolidated operational revenue

Revenue from supply of electricity

Total revenue from supply of electricity to final consumers in 3Q16 was R$ 5,788 million, or 2.60% more than the total revenue of R$5,641 million in 3Q15.

Final consumers

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, in 3Q16 was R$ 5,026 million, or 4.90% less than the figure for 3Q15, of R$ 5,285 million.

The main factors affecting revenue in 3Q16 were:

 

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the Annual Tariff Adjustment, with average effect on consumer tariffs of 3.78%, effective from May 28, 2016;

 

volume of electricity sold to final consumers 4.32% lower year-on-year; and

 

lower revenue received under the ‘flag tariff’ system: a negative amount (i.e. a reversal) of R$ 429,000 in 2016, compared to a total revenue of R$ 348 million in 2015. This reflected the change in the applicable ‘flag’ – it was ‘red’ in 3Q15, and ‘green’ in 3Q16 – i.e. the amount received was higher in the previous year.

 

     R$     Change
%
    Average
price

3Q16
R$
     Average
price

3Q15
R$
     Change
%
 
   3Q16      3Q15            

Residential

     1,859,109         1,906,812        (2.50     778.08         806.64         (3.54

Industrial

     1,379,561         1,508,064        (8.52     274.17         264.79         3.54   

Commercial, Services and Others

     985,574         1,004,288        (1.86     647.15         677.50         (4.48

Rural

     394,504         410,839        (3.98     388.46         442.70         (12.25

Public authorities

     128,652         142,009        (9.41     617.59         677.37         (8.83

Public lighting

     129,015         149,245        (13.55     380.70         446.91         (14.82

Public service

     136,068         148,111        (8.13     427.07         491.71         (13.15
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Subtotal

     5,012,483         5,269,368        (4.88     463.03         465.72         (0.58

Supply not yet invoiced, net

     13,261         15,602        (15.00     —           —           —     

Wholesale supply to other concession holders (*)

     677,340         444,084        52.53        225.28         218.48         3.11   

Wholesale supply not yet invoiced, net

     84,484         (88,244     —          —           —           —     
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

     5,787,568         5,640,810        2.60        418.16         422.35         (0.99
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Revenue from Use of Distribution Systems (the TUSD charge)

The revenue of Cemig D (Distribution) from the TUSD in 3Q16 was R$ 552 million, compared to R$ 446 million in 3Q15. This difference mainly reflected volume of electricity transported 16.30% higher – which was in turn mainly due to resumption of production by the ferro-alloys sector in 2016.

Revenue from transactions in the Wholesale Trading Market (CCEE)

Revenues from Transactions in the Wholesale Electricity Market (CCEE) in 3Q16 was R$ 87 million, compared to R$ 174 million in 3Q15 – a reduction of 49.83% year-on-year. This is mainly due to (a) the spot price (Preço de Liquidação de Diferenças, or PLD) being 43.57% lower year-on-year in the wholesale market (at R$ 115.01/MWh in 2016 compared to R$ 203.82/MWh in 2015); and (b) the lower volume of electricity available for settlement in the wholesale market in 2016, mainly because of the output from the São Simão Plant being allocated to serve the Regulated Market under the ‘quota’ regime, as from September 16, 2015. The revenues that the company recognizes from that plant are, currently, only the revenues from provision of the services of operation and maintenance of the plant.

 

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Supply of gas

The Company reported revenue from supply of gas 18.20% lower year-on-year in 3Q16, at R$ 340 million, compared to R$ 415 million in 3Q15, mainly due to the lower volume of gas sold (238,440m³ in 3Q16, compared to 330.557m³ in 3Q15).

 

Market (‘000 m3/day)

   2012      2013      2014      2015      9M16  
              

Residential

     —           0.17         0.72         1.04         2.62   

Commercial

     24.73         20.38         23.15         22.42         23.60   

Industrial

     2,740.00         2,734.95         2,849.24         2,422.78         2,127.84   

Other

     114.09         106.33         99.64         119.87         118.25   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total market excluding thermal plants

     2,878.82         2,861.83         2,972.75         2,566.11         2,272.30   

Thermal

     746.09         1,214.50         1,223.99         1,309.13         441.32   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3,624.91         4,076.33         4,196.74         3,875.24         2,713.62   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Thermal plants: Due to the lower demand for electric power and the higher level of the reservoirs than in previous years (especially 2014 and 2015), demand for supply from the thermoelectric plants – which had been dispatched uninterruptedly since 2012 – is now lower.

The industrial sector, which is the most important client for Gasmig, was another contributor to lower total volume in the first nine months of the year – at 15% less than in 9M15. In the comparison between 3Q15 and 3Q16, the reduction was 4%.

Supply of gas to the residential market, which began in 2013, totaled 10,064 households invoiced in June 2016 – compared to 3,820 on December 31, 2015.

 

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Transmission indemnity revenue

In 3Q16, the Company recognized revenue of R$ 100,000 million, compared to R$ 6 million in 3Q15.

One factor affecting the amounts recorded in 2016 was Mining and Energy Ministry (MME) Ministerial Order 120, which laid down that the amount of the indemnity owed should be made up of (i) a portion of Remuneration, and (ii) a portion of Depreciation (known as ‘QRR’ – Quota de Reintegração Regulatória, or Regulatory Reintegration Quotient’), updated by the IPCA inflation index and taking into account the ‘cost of own capital’. Up to May 2016, monetary updating was by the IGP-M index, based on the value of the indemnity.

The Ministerial Order still requires certain decisions and definitions, and as a result Public Hearing 068/2016 was opened on October 14, 2016 to obtain input proposals for improvement of the regulations for calculation of cost of capital to be added to the RAP (Permitted Annual Revenue) of the transmission concession holders. The period for sending of contributions runs from October 14, 2016 to November 14, 2016.

Considering that Ministerial Order 120 specifies that cost of capital is to comprise two portions – Remuneration and Depreciation (QRR), the Company, based on the best information available, made the necessary adjustments, arriving at the following values for indemnity:

 

     R$ ’000  

Regulatory Remuneration Base (BRR) – Dispatch 2181 or 2016

     1,177,488   

Amount of the indemnity received so far

     (285,438
  

 

 

 

Net value of the assets for purposes of indemnity

     892,050   

Updating in accordance with MME Order 120/16

– IPCA index/cost of own capital – Jan. 2013 to Sep. 2016

     854,290   
  

 

 

 

Total indemnity

     1,746,340   
  

 

 

 

For new assets – improvements, and strengthening of facilities – implemented by the transmission concession holders, Aneel calculates an additional portion of Permitted Annual Revenue (RAP) in accordance with a methodology specified in the Tariff Regulation Procedures (Procedimentos de Regulação Tarifária, or Proret).

 

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CVA and Other financial components in tariff adjustment

The balance of the difference between (i) actual non-manageable costs – in which CDE and energy purchased are important components – and (ii) the costs that were used as the basis for deciding the tariffs represents the amounts that will be passed through in the next following tariff adjustments of Cemig D. Cemig D accounted realization of R$ 273 million in 3Q16, compared to accrual of R$ 544 million in 3Q15. This variation is mainly due to the lower costs of electricity acquired in auctions in 2016, in relation to the costs used as a basis for tariffs.

Sector / Regulatory charges – deductions from revenue

The sector charges that are reported as deductions from revenue totaled R$ 2,510 million in 3Q16, or 20.64% less than their total of R$ 3,163 million in 3Q15.

Global Reversion Reserve (RGR)

Cemig GT applied to Aneel for a review of the amounts paid as quota for the RGR for the business years 2010, 2011 and 2012, due to undue accounting of the deemed cost in Fixed assets in service. In its Technical Note No. 162/2016 of September 23, Aneel accepted the Company’s request for recalculation of the amounts, and the result was a total of R$ 119 million returnable. Since part of this amount has already been accounted, the gross effect, in September, was a recovery of expense in the amount of R$ 50 million.

Consumer charges – the ‘Flag Tariff’ system

Lower expenses under the ‘Flag Tariff’ system: the ‘Green Flag’ was in force in 3Q16, while the ‘Red Flag’ was in force in 3Q15. In 3Q16 there was a reversal of R$ 430,000 in Consumer Charges relating to the Flag Tariff, which compares with a deduction from revenue of R$ 348 million in 3Q15.

 

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Operational costs and expenses

Operational costs and expenses, excluding Financial revenue (expenses), totaled R$ 3,937 million in 3Q16, or 12.43% less than in 3Q15 (R$ 4,496 million).

 

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The following paragraphs comment on the main variations:

Electricity purchased for resale

The expense on electricity bought for resale in 3Q16 was R$ 2,170 million, or 14.37% less than in 3Q15 (R$ 2,535 million). The main factors in the higher figure are:

Cemig D:

 

  Expenses on electricity acquired at auctions 32.91% lower, at R$ 672 million in 3Q16, vs. R$ 1,002 million in 3Q15, mainly due to some of the thermoelectric plants being deactivated in 2016 due to the improvement in the level of the reservoirs of the hydroelectric plants in the system, with a resulting reduction in the expense on fuel for those plants.

 

  Expense on electricity from Itaipu Binacional 43.41% lower year-on-year, at R$ 273 million in 3Q16, compared to R$ 483 million in 3Q15. This change basically reflects the lower tariff: this tariff was US$38.07/kW-month in 2015, and US$ 25.78/kW-month from January 2016.

 

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The cost of purchases of supply in the spot market was 27.46% lower – at R$ 192 million in 3Q16, vs. R$ 264 million in 3Q15) – reflecting the lower cost of electricity in the wholesale market in 2016.

Cemig GT:

The expense on electricity bought for resale in 3Q16 was R$ 824 million, or 10.16% more than in 3Q15 (R$ 748 million). This mainly reflects electricity purchased for resale 27.99% higher in 2016 (5,103 GWh) than in 2015 (3,987 GWh), partially offset by average price per MWh 13.92% lower in 2016 (R$ 161.39, compared to R$ 187.49 in 2015).

 

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Operating provisions

Operational provisions in 3Q16 comprised a reversal of R$ 19 million – vs. an expense of R$ 151 million in 3Q15. The change mainly arises from reversal, of R$ 167 million, in the provision for options on the investment in Parati S.A. – Participações em Ativos de Energia Elétrica S.A. (‘Parati’).

Provision for loss on investments – Put option in Parati

For the purposes of determination of the method to be used in measuring the fair value of this option, the Company, up to the first quarter of 2016, observed the daily trading volume of the shares of Light, and also the fact that such option, if exercised by the Fund, will require the sale to the Company, in a single transaction, of shares in Light in a quantity higher than daily exchange trading averages. Thus, the Company had adopted the discounted cash flow method for measurement of the fair values of the options. The fair value of this option has been calculated on the basis of the estimated exercise price on the day of exercise of the option, less the fair value of the shares that are the subject of the put option, also estimated for the date of exercise, brought to present value at the interim reporting date, at the effective rate of 7.5% p.a. (discounting inflation effects). As a result of the changes in the Stockholders’ Agreement of Parati in the second quarter of 2016, with consequences for the conditions and periods for exercise of the put option, the Company then began to use the Black & Scholes method for measurement of the fair value of the options, which resulted in a larger provision in 2Q16 and a reversal of R$ 167 million in 3Q16.

Notice of intention to exercise put option

On September 6, 2016 Cemig received from Banco BTG Pactual (‘BTG Pactual’) a Notice of Intention to Exercise a Put Option, giving irrevocable notice of exercise of BTG Pactual’s right to sell to Cemig 153,634,195 preferred shares held by Pactual in Parati (‘Shares subject of the Put Option’). This exercise of option was under the ‘First Exercise Window’ specified in Clauses 6.1 and 6.2 of the Stockholders’ Agreement of Parati, signed on April 11, 2011 between Cemig, Banco Santander (Brasil) S.A., BV Financeira S.A. – Crédito, Financiamento e Investimento, BB – Banco de Investimento S.A., and Banco BTG Pactual S.A., with Parati as consenting party (‘the Parati Stockholders’ Agreement’), as amended. Cemig has until November 30, 2016 to effect the acquisition of the shares or indicate a third party which will do so.

 

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Exercise of BTG Pactual’s put option

Amount of the Company’s exposure

Based on the studies made, a liability of R$ 1,513 million is recorded in the holding company (Companhia Energética de Minas Gerais), for the difference between the exercise price and the estimated fair value of the assets.

In the calculation of the fair value of the option based on the Black-Scholes-Merton model the following variables are taken into account: the exercise price; the market closing price of the stock of Light on September 30, 2016 (as a proxy for the value of the indirect interest held by the direct stockholders of Parati in Light); the risk-free interest rate; the volatility of the price of the subject asset; and the time to maturity of the option.

The Company has made an analysis of the sensitivity of the exercise price of the option, varying the risk-free interest rate and the volatility, keeping the other variables of the model unchanged. In this context, scenarios for the risk-free interest rate at 7.9% p.a. and 17.6% p.a., and for volatility between 15% and 60% p.a., were used, resulting in estimates of minimum and maximum price for the put option of R$ 1,497 million and R$ 1,531, respectively.

Personnel

Personnel expenses were R$ 374 million in 3Q16, compared to R$ 318 million in 3Q15, an increase of 17.58%. This arises mainly from the following factors:

 

Salary increases, under the Collective Work Agreement, of 10.33%, as from November 2015.

 

Recognition, in 3Q16, of an expense of R$ 29 million on the voluntary retirement plan.

 

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Gas purchased for resale

The expense on gas bought for resale in 3Q16 was R$ 196 million, or 26.04% less than in 3Q15 (R$ 265 million). This is basically due to a lower quantity of gas purchased (234,926m³ in 3Q16, compared to 330,606m³ in 3Q15) – reflecting Brazil’s economic recession, which affected the industrial market, and also led to gas-fired thermoelectric generation plants being taken out of production.

Equity gain (loss) in subsidiaries

In 3Q16 the Company posted a net equity method gain of R$ 33 million, which compares with a net gain of R$ 164 million in 3Q15. The difference mainly reflects the interest in Renova which had an equity method result of R$ 26 million negative in 3Q16, compared to a gain of R$ 119 million in 3Q15.

Renova Energia:

On September 30, 2016 Renova had consolidated current liabilities over current assets of R$ 1.451 billion; and it has continued to present operational losses and negative cash flow. The main reasons for this situation are:

 

(i) transactions to purchase supply of electricity, to honor commitments related to the delays in wind farms coming into operation;

 

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(ii) significant investments that are being allocated in construction of the Alto Sertão III wind farm complex; and

 

(iii) delay in release of a long-term financing agreement with the BNDES.

The management of Renova is taking a range of measures to rebalance its liquidity structure and cash flow. These actions and the Company’s plan are as follows: significant restructuring of administrative expenditure is in progress, with reduction of the Company’s administrative and operational structure, and a long-term financing contract with the BNDES; the Company is finalizing understandings for signature of a long-term financing contract for approximately R$ 930 million.

 

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Financial revenue (expenses)

 

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Cemig reports net financial expenses of R$ 422 million in 3Q16, compared to net financial expenses of R$ 281 million in 3Q15. The main factors are:

 

  Lower gain from updating of the Remuneration Base of Assets (BRR): R$ 1 million in 3Q16, compared to R$ 89 million in 3Q15. This reflects the reduction in the BRR of Cemig D after the renewal of the concession contract in December 2015.

 

  Charges for loans and financings were 39.17% higher, at R$ 525 million in 3Q16, compared to R$ 377 million in 3Q15. This is mainly due to the higher debt indexed to the CDI rate in 2016.

 

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EBITDA

Cemig’s consolidated Ebitda was 84.27% higher in 3Q16 than 3Q15. This was mainly due to: lower expenses with energy purchased and the reversal, of R$ 167 million, in the provision for options on the investment in Parati.

 

Ebitda – R$ ’000

   3Q16      3Q15      Change, %  

Results for the first half of 2016 (1H16)

     433,501         166,954         159.65   

+ Income tax and Social Contribution tax

     135,034         –632         —     

+ Net financial revenue (expenses)

     421,599         280,753         50.17   

+ Depreciation and amortization

     202,480         200,123         1.18   
  

 

 

    

 

 

    

 

 

 

= EBITDA

     1,192,614         647,198         84.27   
  

 

 

    

 

 

    

 

 

 

 

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DEBT

 

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The Company’s consolidated total debt on September 30, 2016 was R$ 16,269 million, or 7.88% higher than at December 31, 2015.

 

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Settlement of loans – Cemig D

On October 21, 2016 Cemig D settled two Commercial Credit Notes (and their amendments) contracted with Banco do Brasil S.A. with final maturities in April 2018, paying a total of: R$ 600 million of principal, plus interest of R$ 25 million calculated up to the date of settlement. The payment was made from the Company’s own funds.

 

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Debt position on October 5, 2016

The balance of debt becoming due up to December 31, 2016 will be paid using the Company’s own funds.

 

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Payment of loans – Cemig GT

On October 24, 2016 Cemig GT made payment, to Banco do Brasil S.A., of the installments of two Fixed Credit Contracts, in the amount of R$ 286 million, and Bank Credit Notes in the amount of R$ 430 million, totaling R$ 716 million. The payments were made with funds from a new lending transaction, also with Banco do Brasil S.A., and complemented with the Company’s own funds.

Issue of Bank Credit Note

On October 24, 2016 Cemig GT issued a Bank Credit Note in favor of Banco do Brasil, in the total amount of R$ 600 million, for the purpose of making payments and/or amortization of transactions entered into with Banco do Brasil itself. This loan has an annual interest rate of 132.90% of the CDI rate, and will be paid in four half-yearly

 

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Debt position on October 5, 2016

 

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Monetization of units in Taesa

On May 31, 2016 Cemig and Fundo de Investimento em Participações Coliseu, as direct (controlling) stockholders of the Cemig affiliated company Transmissora Aliança de Energia Elétrica S.A. (‘Taesa’), signed a Commitment Undertaking, changing some of the terms of the Stockholders’ Agreement of the company (which they signed on December 28, 2009 and amended on April 20, 2010), removing the condition of being bound by the Agreement from the following shares as from May 31, 2016:

 

(a) 77,525,322 common and 155,050,644 preferred shares in Taesa owned by Cemig;

 

(b) 75,000,000 common shares in Taesa owned by Coliseu.

This agreement changed the numbers of shares bound by the Stockholders’ Agreement to the following:

 

(a) 215,546,907 common shares owned by Cemig, and

 

(b) 153,775,790 common shares owned by Coliseu,

– together comprising a total of 57.64% of the common stock of Taesa on May 31, 2016.

The Board of Directors approved a proposal for monetization of 40,702,230 Units – comprising 40,703,230 common shares and 81,404,460 preferred shares owned by Cemig in Taesa. All these shares are outside the controlling stockholding block.

On October 24, 2016 the Public Offering was settled, at a price of R$ 19.65 per unit.

Following the settlement, Cemig is the owner of 252,369,999 (two hundred fifty two million three hundred sixty nine thousand nine hundred ninety nine) common shares in the Company, (forty-two point seven two per cent of the Company’s voting stock), and 73,646,184 (seventy three million six hundred forty six thousand one hundred eighty four) preferred shares in Taesa, which with the common shares jointly represents an aggregate 31.54% (thirty-one point five four per cent) of the Company’s share capital. The Units in circulation (other than those held by FIP Coliseu, by Cemig, by the Company’s managers and the shares held in treasury) are now 53.58% (fifty three point five eight per cent) of the Company’s total share capital, and 31.24% (thirty-one point two four per cent) of the Company’s total voting stock.

 

    

APÓS Follow-on

      
    

Acionista

   Qtde. Ações Ordinárias      Qtde. Ações Preferenciais      Qtde. Total de Ações      Total de Ações (%)  
Bloco de controle    FIP Coliseu      153.776         —           153.776         14,88   
              
  

CEMIG

     215.547         —           215.547         20,86   
  

CEMIG (em garantia)

     36.823         73.646         110.469         10,69   
              
  

Mercado

     184.568         369.136         553.704         53,58   
  

Total

     590.714         442.782         1.033.496         100,00   

 

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THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

 

Cemig – generation portfolio, in MW*

 

Stage

   Hydro
plants
     Small
Hydro
Plants
     Wind      Solar      Thermal
plants
     Total  

In operation

     7,469         257         158         31         144         8,059   

Under construction/contracted

     1,595         29         658         45         —           2,327   

In development:

     10,802         —           392         42         1,000         12,236   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,866         286         1,208         118         1,144         22,622   

 

* The amounts refer only to direct or indirect equity interests held by Cemig on September 30, 2016.

Destaques do 3T16:

The Belo Monte Hydroelectric Plant

The second rotor started commercial operation in June, adding 611 MW of generating capacity. The plant’s total generating capacity will be 11,233 MW.

DEFAULT

In 2015, to achieve economic and financial equilibrium for the companies of the sector, and synchronization between tariffs and the real variable costs of electricity, Aneel implemented the system of ‘Tariff Flags’, and also ruled an Extraordinary Tariff Increase, in March. These measures had an impact on electricity rates, since they involved a pass-through of costs to final consumers.

In this context of an exceptional increase in electricity rates, Cemig has seen an increase in amounts invoiced that are not paid by final consumers, and this has resulted in growth in the stock of debt to levels higher than the average of recent months.

The situation has been further complicated by Brazil’s entering a period of financial stress, and its most significant consequence, increase in the rate of unemployment.

 

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In this context, the average level of default during the month of September 2016 was more than 27% higher than in September 2015. This increased percentage of default has had a negative effect on Cemig’s cash flow.

Due to the present economic context, default has remained at a level that is high for the Company. The rate of default in September was 4.37%.

The Company uses various tools of communication and collection to prevent increase in default. These include telephone contact, sending of e-mails, use of text messages, and collection letters. We are also making efforts with the credit protection services – Serasa and the Store Operators’ Association (Câmara de Dirigentes Lojistas, or CDL) – to register these arrears on their records for defaulting clients; and we are also using disconnection of supply. Aneel Resolution 414 allows supply to be cut off after 15 days from receipt of a notice to the defaulting consumer.

A campaign of negotiation is planned for the month of August which will use differentiated rules for negotiation of the debits owed by low voltage clients. This aims to recover revenue, and contain the occurrence of default, and fraud.

Electricity losses – 3Q16

Control of electricity losses is one of Cemig D’s strategic objectives, and the Company has a structure dedicated to this – its Distribution Losses Measurement and Control Management Unit. Compliance with the objective is monitored monthly through the Total Distribution Losses Index (Índice de Perdas Totais da Distribuição, or IPTD): the result at September 30, 2016 was 13.52% – compared to a regulatory target of 10.48% by the end of 2017. In the decision on the regulatory target, taken during the 3rd Tariff Review Cycle, the regulator, Aneel, made significant changes in the method of calculation of technical losses, imposing extremely challenging limits for Cemig D. Total losses are composed of technical losses plus non-technical losses. The indicators for measurement are the PPTD (Distribution Technical Losses Percentage – percentual de perdas técnicas da distribuição), and the PPNT (Distribution Non-technical Losses Percentage – or percentual de perdas não técnicas da distribuição). The projected result for the PPTD on September 30, 2016 was 9.56%, for a regulatory target of 7.84 %, and the projected result for the PPNT was 3.96%, for a regulatory target of 2.64%.

 

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Aneel measures non-technical losses with reference to the low-voltage market. Taking this into account, the result for the PPNT in relation to the low voltage market as invoiced at September 30, 2016 was 10.46%, for a regulatory target of 7.63% (2.83% above the limit set by the Regulator).

 

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Sale of stockholding interest relating to Transchile

On September 12, 2016, Cemig signed a share purchase agreement for sale of the whole of its stockholding interest relating to Transchile Charrúa Transmisión S.A. – corresponding to 49% of the share capital – to Ferrovial Transco Chile SpA., a company controlled by Ferrovial S.A., for US$56.6 million. On October 6, 2016, all of the shares

 

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in Transchile Charrúa Transmisión S.A. held by Cemig, corresponding to 49% (forty nine percent) of the total capital, were transferred to Ferrovial Transco Chile SpA., a company controlled by Ferrovial S.A., and the sale completed R$ 180 million – representing a gross gain of R$ 132 million.

Appendices

SPCs of Cemig GT – Aneel Auction 012/2015

In June, 2016, title to Concession Contracts 08 to 16/2016, relating to the Auction won by Cemig GT on November 25, 2015, was transferred to the related specific-purpose companies (SPCs), wholly-owned subsidiaries of Cemig GT, as follows:

Stockholding structure

 

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Generating plants – March, 2016

 

Plant

   Type    Company    Cemig’s
Interest
    Installed
Capacit
(MW)
     Assured Energy
(average MW)
     Installed
Capacit
(MW)*
     Assured Energy
(average MW)*
     Year
Concession or
Authorization
Expires
 

São Simão

   Hydroelectric    CEMIG GT      100.0     1,71000         1,281.00         1,710.00         1,281.00         1/11/2015   

Emborcação

   Hydroelectrlc    CEMIG GT      100.0     1,192.00         497.00         1,192.00         497.00         7/23/2025   

Nova Ponte

   Hydroelectric    CEMIG GT      100.0     510.00         276.00         510.00         276.00         7/23/2025   

Jaguara

   Hydroelectric    CEMIG GT      100.0     424.00         336.00         424.00         336.00         8/28/2013   

Miranda

   Hydroelectric    CEMIG GT      100.0     408.00         202.00         408.00         202.00         12/23/2016   

Irapé

   Hydroelectric    CEMIG GT      100.0     399.00         210.70         399.00         210.70         2/28/2035   

Três Marias

   Hydroelectric    CEMIG GT      100.0     396.00         239.00         396.00         239.00         1/4/2046   

Volta Grande

   Hydroelectric    CEMIG GT      100.0     380.00         229.00         380.00         229.00         2/23/2017   

Igarapé

   Thermal    CEMIG GT      100.0     131.00         71.30         131.00         71.30         8/13/2024   

Salto Grande

   Hydroelectric    CEMIG GT      100.0     102.00         75.00         102.00         75.00         1/4/2046   

Itutinga

   Hydroelectric    CEMIG GT      100.0     52.00         28.00         52.00         28.00         1/4/2046   

Camargos

   Hydroelectric    CEMIG GT      100.0     46.00         21.00         46.00         21.00         1/4/2046   

Piau

   5HP    CEMIG GT      100.0     18.01         13.53         18.01         13.53         1/4/2046   

Gafanhoto

   SHP    CEMIG GT      100.0     14.00         6.68         14.00         6.68         1/4/2046   

Peti

   SHP    CEMIG GT      100.0     9.40         6.18         9.40         5.18         1/4/2046   

Rio de Pedras

   SHP    CEMIG GT      100.0     9 28         2.15         9 28         2.15         9/19/2024   

Poço Fundo

   5HP    CEMIG GT      100.0     9.16         5.79         9.16         5.79         8/19/2025   

Tronqueiras

   SHP    CEMIG GT      100.0     8.50         3.39         8.50         3.39         1/4/2046   

Joasal

   SHP    CEMIG GT      100.0     8.40         5.20         8.40         8.40         1/4/2046   

Martins

   5HP    CEMIG GT      100.0     7.70         1.84         7.70         1.84         1/4/2046   

Cajuru

   SHP    CEMIG GT      100.0     7.20         2.69         7.20         2.69         1/4/2046   

Ervália

   SHP    CEMIG GT      100.0     6.97         3.03         6.97         3.03         1/4/2046   

São Bernardo

   SHP    CEMIG GT      100.0     6.82         3.42         6.82         3.42         8/19/2025   

Neblina

   SHP    CEMIG GT      100.0     6.47         4.66         6.47         4.66         1/4/2046   

Cel. Domiciano

   SHP    CEMIG GT      100.0     5.04         3.59         5.04         3.59         1/4/2046   

Paraúna

   SHP    CEMIG GT      100.0     4.28         1.90         4.28         1.90         —     

Pandeiros

   SHP    CEMIG GT      100.0     4.20         0.47         4.20         0.47         9/22/2021   

Paciência

   SHP    CEMIG GT      100.0     4.08         2.36         4.08         2.36         1/4/2046   

Marmelos

   SHP    CEMIG GT      100.0     4.00         2.74         4.00         2.74         1/4/2046   

Dona Rita

   SHP    CEMIG GT      100.0     2.40         1.03         2.40         1.03         1/4/2046   

Salto de Moraes

   SHP    CEMIG GT      100.0     2.39         0.60         2 39         0.60         7/1/2020   

Sumidouro

   SHP    CEMIG GT      100.0     2.12         0.53         2.12         0.53         —     

Anil

   SHP    CEMIG GT      100.0     2.08         1.10         2.08         1.10         —     

Xicão

   SHP    CEMIG GT      100.0     1.81         0.61         1.81         0.61         8/19/2025   

Luiz Dias

   SHP    CEMIG GT      100.0     1.62         0.61         1.62         0.61         8/19/2025   

Sinceridade

   SHP    CEMIG GT      100.0     1.42         0.35         1.42         0.35         1/4/2046   

Central Mineirão

   Solar    CEMIG GT      100.0     1.42         —           1.42         —           —     

Poquim

   SHP    CEMIG GT      100.0     1.41         0.39         1.41         0.39         7/8/2015   

Santa Marta

   SHP    CEMIG GT      100.0     1.00         0.58         1.00         0.58         7/8/2015   

Pissarrão

   SHP    CEMIG GT      100.0     0.80         0.55         0.80         0.55         —     

Jacutinga

   SHP    CEMIG GT      100.0     0.72         0.57         0.72         0.57         —     

Santa Luzia

   SHP    CEMIG GT      100.0     0.70         0.23         0.70         0.23         2/25/2026   

Lages *

   SHP    CEMIG GT      100.0     0.68         —           0.68         —           —     

Bom Jesus do Galho

   SHP    CEMIG GT      100.0     0.36         0.13         0.36         0.13         —     

Pai Joaquim

   5HP    CEMIG PCH      100.0     23.00         4.26         23.00         4.26         4/1/2032   

Salto Voltão

   SHP    Horizontes Energia      100.0     8.20         6.63         8.20         6.63         10/4/2030   

Salto do Paraopeba

   SHP    Horizontes Energia      100.0     2.46         —           2.46         —           10/4/2030   

Salto do Passo Velho

   SHP    Horizontes Energia      100.0     1.80         1.06         1.80         1.06         10/4/2030   

Machado Mineiro

   SHP    Horizontes Energia      100.0     1.72         1.03         1.72         1.03         7/8/2025   

Rosal

   Hydroelectric    Rosal Energia      100.0     55.00         30.00         55.00         30.00         5/8/2032   

Sá Carvalho

   Hydroelectric    Sá Carvalho      100.0     78.00         58.00         78.00         58.00         12/1/2024   

Barreiro

   Thermal    Usina Termelétrica Barreiro      100.0     12.90         11.37         12 90         11.37         4/30/2023   

Queimado

   Hydroelectric    CEMIG GT      82.5     105.00         58.00         86.63         47.85         1/2/2033   

Praias de Parajuru

   Wind Farm    CEMIG GT      49.0     28.80         8.39         14.11         4.11         9/24/2032   

Praia do Morgado

   Wind Farm    CEMIG GT      49.0     28.80         13.20         14.11         6.47         12/26/2031   

Paracambi

   SHP    CEMIG GT      49.0     25.00         19.53         12.25         9.57         2/16/2031   

Volta do Rio

   Wind Farm    CEMIG GT      49.0     42.00         18.41         20.58         9.02         12/26/2031   

Santo Antônio

   Hydroelectric    Santo Antônio Energia      17.7     2,714.72         2,218.00         480.06         392.22         6/12/2046   

Aimorés

   Hydroelectric    ALIANÇA      45.0     330.00         172.00         148.50         77.40         12/20/2035   

Amador Aguiar 1 (Capim Bra)

   Hydroelectric    ALIANÇA      39.3     240.00         155.00         94.36         60.94         8/29/2036   

Amador Aguiar II (Capim Br)

   Hydroelectric    ALIANÇA      39.3     210.00         131.00         82.56         51.50         8/29/2036   

Igarapava

   Hydroelectric    ALIANÇA      23.7     210.00         136.00         49.75         32.22         12/30/2028   

Funil

   Hydroelectric    ALIANÇA      45.0     180.00         89.00         81.00         40.05         12/20/2035   

Candonga

   Hydroelectric    ALIANÇA      22.5     140.00         64.50         31.50         14.51         5/25/2035   

Porto Estrela

   Hydroelectric    ALIANÇA      30.0     112.00         55.80         33.60         16.74         7/10/2032   

Baguari

   Hydroelectric    BAGUARI ENERGIA      34.0     140.00         80.20         47.60         27.27         8/15/2041   

Cachoeirão

   SHP    Hidrelétrica Cachoeirão      49.0     27.00         16.37         13.23         8.02         7/25/2030   

Pipoca

   SHP    Hidrelétrica Pipoca      49.0     20.00         11.90         9.80         5.83         9/10/2031   

Retiro Baixo

   Hydroelectric    Retiro Baixo Energética      25.0     82.00         38.50         20.46         9.61         8/25/2041   

 

214


LOGO

 

Generation: Annual Permitted Revenue (RAP)

 

Resolução Homologatoria ANEEL—nº 2.098/16*

 

Receita Anual Permitida—RAP

   RAP      % Cemig     Cemig
Consolidado
     Cemig GT  

Cemig GT

     296,435,871         100.0     296,435,871         296,435,871   

Cemig Itajuba

     37,434,741         100.0     37,434,741         37,434,741   

Centroeste

     17,129,836         51.0     8,736,216      

Transirapé

     29,201,132         24.5     7,154,277      

Transleste

     40,172,135         25.0     10,043,034      

Transudeste

     24,899,069         24.0     5,975,777      

Taesa

        43.36        842,485,180   

ETEO

     112,775,455         100.0     48,899,295      

ETAU

     42,527,356         52.6     9,696,352      

NOVATRANS

     512,214,141         100.0     222,095,405      

TSN

     494,919,285         100.0     214,596,377      

GTESA

     9,216,414         100.0     3,996,225      

PATESA

     23,933,818         100.0     10,377,673      

Munirah

     35,919,476         100.0     15,574,639      

Brasnorte

     24,904,755         38.7     4,175,252      

São Gotardo Abengoa

     5,023,232         100.0     2,178,067      

NTE

     151,048,516         100.0     65,494,446      

STE

     80,334,482         100.0     34,832,930      

ATEI

     146,729,702         100.0     63,621,814      

ATEII

     226,671,244         100.0     98,284,365      

ATEIII

     112,228,974         100.0     48,662,341      

TBE

          

EATE

     422,269,558         50.0     211,060,363      

STC

     41,521,642         40.0     16,603,306      

Lumitrans

     26,206,259         40.0     10,478,809      

ENTE

     221,643,644         50.0     110,797,315      

ERTE

     49,750,421         50.0     24,868,593      

ETEP

     96,563,389         50.0     48,266,682      

ECTE

     79,722,528         19.1     15,221,253      

EBTE

     44,400,267         74.5     33,074,203      

ESDE

     12,639,916         50.0     6,317,992      

ETSE

     21,581,574         19.1     4,120,524      

Light

     8,803,216         32.6     2,868,088      
       

 

 

    

 

 

 

RAP TOTAL CEMIG

          1,691,942,224         1,176,355,792   
       

 

 

    

 

 

 

 

* Receitas anuais permititidas com vigência entre 1º de julho de 2016 e 30 de junho de 2017.

 

215


LOGO

 

 

FINANCIAL STATEMENTS SEPARATED BY COMPANY At SEPTEMBER 30, 2016

 

Item

   Holding
company
    Cemig GT     Cemig D     Gasmig     Cemig
Telecom
   
Carvalho
    Rosal     Other
subsidiaries
    Eliminations
/ transfers
    Total,
subsidiaries
    TAESA     LIGHT     MADEIRA     ALIANÇA
GERAÇÃO
    Other
jointly-
controlled
entities
    Eliminations
/ transfers
    Subsidiaries
and jointly-
controlled
entities
 

ASSETS

   17,079,675     17,046,754     16,822,401     2,014,114     339,820     167,751     154,959     2,738,354     (13,176,284)     43,187,544     4,695,273     4,901,533     2,501,622     1,238,647     5,242,020     (8,110,781)     53,655,858  

Cash and cash equivalents

     397,333        296,356        866,632        24,777        5,176        10,002        9,821        82,981        —          1,693,078        255,376        326,325        28,544        153,441        150,962        —          2,607,726   

Accounts receivable

     —          749,052        2,720,204        74,685        32,203        6,378        5,616        56,387        (18,851     3,625,674        109,830        770,586        33,055        56,076        62,307        (17,704     4,639,824   

Securities – cash investments

     118,280        154,616        442,128        63,440        9,194        21,083        25,418        195,415        (83,469     946,105        45,313        —          —          —          75,858        (27,574     1,039,702   

Taxes

     1,051,800        182,164        1,299,701        54,635        15,920        156        460        1,597        —          2,606,433        266,388        429,002        63,136        7,275        18,122        —          3,390,356   

Other assets

     974,462        974,215        1,871,497        477,851        6,233        4,951        1,645        44,019        (455,699     3,899,174        46,105        534,294        144,345        151,936        539,042        (92,678     5,222,218   

Investments, PP&E, Intangible, and Financial assets of concession

     14,537,800        14,690,351        9,622,239        1,318,726        271,094        125,181        111,999        2,357,955        (12,618,265     30,417,080        3,972,261        2,841,326        2,232,542        869,919        4,395,729        (7,972,825     36,756,032   

LIABILITIES AND STOCKHOLDERS’ EQUITY

     17,079,675        17,046,754        16,822,401        2,014,114        339,820        167,751        154,959        2,738,354        (13,176,284     43,187,544        4,695,273        4,901,533        2,501,622        1,238,647        5,242,020        (8,110,781     53,655,858   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Suppliers and supplies

     8,455        339,216        1,029,342        231,061        11,994        11,965        5,601        10,668        (28,094     1,620,208        15,435        478,958        72,779        9,918        187,708        (21,349     2,363,657   

Loans, financings and debentures

     —          8,821,918        7,207,488        286,589        36,521        —          —          4        (83,469     16,269,051        1,875,242        2,215,066        1,501,351        138,348        1,555,968        (27,574     23,527,452   

Interest on Equity, and dividends

     572,601        350,000        —          45,667        —          —          —          32,771        (428,207     572,832        2        15,098        —          —          3,867        (18,967     572,832   

Post-retirement obligations

     325,173        757,052        2,332,780        —          —          —          —          —          —          3,415,005        —          15,521        —          —          —          —          3,430,526   

Taxes

     20,754        936,551        1,589,174        298,088        8,125        42,635        3,433        21,465        —          2,920,225        831,153        567,861        39,888        40,569        66,055        —          4,465,751   

Other liabilities

     1,901,052        401,905        1,572,573        167,260        98,372        943        1,132        9,364        (18,266     4,134,335        103,432        451,391        152,313        139,398        67,026        (8,143     5,039,752   

STOCKHOLDERS’ EQUITY

     14,251,640        5,440,112        3,091,044        985,449        184,808        112,208        144,793        2,664,082        (12,618,248     14,255,888        1,870,009        1,157,638        735,291        910,414        3,361,396        (8,034,748     14,255,888   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributed to controlling stockholders

     14,251,640        5,440,112        3,091,044        981,201        184,808        112,208        144,793        2,664,082        (12,618,248     14,251,640        1,870,009        1,157,638        735,291        910,414        3,361,396        (8,034,748     14,251,640   

Non-controlling stockholder

     —          —          —          4,248        —          —          —          —          —          4,248        —          —          —          —          —          —          4,248   

NET PROFIT (LOSS)

                                  

Net operational revenue

     582        4,925,144        7,994,319        847,565        99,711        49,025        45,572        296,590        (158,408     14,100,100        616,802        2,313,133        198,134        266,611        320,404        (242,533     17,572,651   

Operational costs and expenses

     (349,589     (3,255,570     (7,886,967     (741,892     (72,204     (23,848     (15,580     (36,622     146,331        (12,235,941     (91,091     (2,180,244     (126,909     (117,997     (278,648     85,103        (14,945,727
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Electricity purchased for resale

     —          (2,291,737     (3,857,716     —          —          (7,484     (1,689     (4,093     36,261        (6,126,458     —          (1,493,548     (17,846     (19,888     (79,555     169,407        (7,567,888

Charges for use of the National Grid

     —          (227,533     (605,478     —          —          —          (2,195     (2,992     96,782        (741,416     —          —          (51,743     (13,740     (10,679     50,036        (767,542

Gas bought for resale

     —          —          —          (623,503     —          —          —          —          —          (623,503     —          —          —          —          —          —          (623,503

Construction cost

     —          (36,405     (854,060     (27,390     —          —          —          —          —          (917,855     (14,101     (226,202     —          —          (3,250     —          (1,161,408

Personnel

     (26,587     (280,858     (852,103     (30,424     (17,546     (1,557     (1,016     (7,110     —          (1,217,201     (38,074     (94,804     (5,981     (10,140     (49,328     —          (1,415,528

Employee profit shares

     3,024        (6,135     (26,939     —          —          (107     (163     (97     —          (30,417     (4,971     —          (847     (2,141     (89     —          (38,465

Post-retirement obligations

     (27,188     (55,550     (165,845     —          —          —          —          —          —          (248,583     —          —          —          —          —          —          (248,583

Materials

     (52     (9,276     (29,226     (1,387     (74     (402     (159     (422     28        (40,970     (11,075     (14,560     (1,194     (673     (1,929     —          (70,401

Outsourced services

     (6,226     (96,443     (472,356     (11,135     (16,523     (4,506     (3,612     (13,868     22,863        (601,806     (15,965     (120,858     (8,289     (24,867     (37,597     8,845        (800,537

Depreciation and amortization

     (382     (141,468     (367,753     (40,402     (24,949     (4,257     (3,275     (7,268     (11,443     (601,197     (1,225     (120,273     (50,032     (44,418     (61,237     (150,775     (1,029,157

Operating provisions

     (280,532     (63,106     (370,553     —          294        —          (341     1        —          (714,237     65        (101,197     10,670        642        1,634        —          (802,423

Other expenses, net

     (11,646     (47,059     (284,938     (7,651     (13,406     (5,535     (3,130     (773     1,840        (372,298     (5,745     (8,802     (1,647     (2,772     (36,618     7,590        (420,292
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational profit before Equity gains (losses) and Financial revenue (expenses)

     (349,007     1,669,574        107,352        105,673        27,507        25,177        29,992        259,968        (12,077     1,864,159        525,711        132,889        71,225        148,614        41,756        (157,430     2,626,924   

Equity method gain (loss)

     842,337        3,601        —          —          (25,648     —          —          —          (773,030     47,260        782        (35,651     —          (1,364     (61,872     (4,510     (55,355

Financial revenue

     77,057        124,567        604,032        11,548        3,275        2,407        2,188        16,755        —          841,829        125,421        33,343        12,684        14,366        (24,945     —          1,002,698   

Financial expenses

     (4,332     (1,002,164     (847,214     (29,073     (5,047     (80     (18     (87     —          (1,888,015     (292,003     (170,063     (109,631     (15,780     (139,922     —          (2,615,414
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income tax and Social Contribution tax

     566,055        795,578        (135,830     88,148        87        27,504        32,162        276,636        (785,107     865,233        359,911        (39,482     (25,722     145,836        (184,983     (161,940     958,853   

Income tax and Social Contribution tax

     74,508        (260,649     23,223        (25,250     (1,962     (9,324     (2,574     (22,372     —          (224,400     (65,737     707        (3,097     (41,149     15,656        —          (318,020
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     640,563        534,929        (112,607     62,898        (1,875     18,180        29,588        254,264        (785,107     640,833        294,174        (38,775     (28,819     104,687        (169,327     (161,940     640,833   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     640,563        534,929        (112,607     62,628        (1,875     18,180        29,588        254,264        (785,107     640,563        294,174        (38,775     (28,819     104,687        (169,327     (161,940     640,563   

Non-controlling stockholder

     —          —          —          270        —          —          —          —          —          270        —          —          —          —          —          —          270   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     640,563        534,929        (112,607     62,898        (1,875     18,180        29,588        254,264        (785,107     640,833        294,174        (38,775     (28,819     104,687        (169,327     (161,940     640,833   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

216


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INFORMATION BY MARKET SEGMENT AT SEPTEMBER 30, 2016

 

DESCRIÇÃO

   Electricity     Telecoms     Gas     Other     Eliminations     Total  
   Generation     Transmission     Distribution            

ASSETS OF THE SEGMENT

     14,974,281        4,969,016        18,296,107        339,820        2,489,411        2,660,231        (541,322     43,187,544   

Additions to the segment

     2,995,898        36,405        854,060        27,630        27,390        —          —          3,941,383   

Investments in subsidiaries and jointly-controlled entities

     6,275,420        2,374,564        1,473,706        —          —          20,456        —          10,144,146   

    NET REVENUE

     4,268,400        953,846        7,994,319        99,711        847,565        89,562        (153,303     14,100,100   

COST OF ELECTRICITY AND GAS

                

Electricity purchased for resale

     (2,305,000     —          (3,857,716     —          —          (3     36,261        (6,126,458

Charges for use of the National Grid

     (232,477     (243     (605,478     —          —          —          96,782        (741,416

Gas bought for resale

     —          —          —          —          (623,503     —          —          (623,503
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational costs, total

     (2,537,477     (243     (4,463,194     —          (623,503     (3     133,043        (7,491,377

    OPERATIONAL COSTS AND EXPENSES

                

Personnel

     (202,412     (81,019     (852,103     (17,546     (30,424     (33,697     —          (1,217,201

Employees’ and managers’ profit shares

     (4,095     (2,311     (26,939     —          —          2,928        —          (30,417

Post-retirement obligations

     (39,975     (15,575     (165,845     —          —          (27,188     —          (248,583

Materials

     (8,118     (2,115     (29,226     (74     (1,387     (78     28        (40,970

Outsourced services

     (91,502     (21,295     (472,356     (16,523     (11,135     (6,752     17,757        (601,806

Depreciation and amortization

     (156,261     —          (367,753     (24,949     (40,402     (11,832     —          (601,197

Operational provisions (reversals)

     (56,512     (6,935     (370,553     294        —          (280,531     —          (714,237

Construction costs

     —          (36,405     (854,060     —          (27,390     —          —          (917,855

Other operational expenses, net

     (48,224     (7,898     (284,938     (13,406     (7,651     (12,656     2,475        (372,298
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of operation

     (607,099     (173,553     (3,423,773     (72,204     (118,389     (369,806     20,260        (4,744,564

    OPERATIONAL COSTS AND EXPENSES

     (3,144,576     (173,796     (7,886,967     (72,204     (741,892     (369,809     153,303        (12,235,941

OPERATIONAL PROFIT BEFORE EQUITY GAINS (LOSSES) AND FINANCIAL REVENUE (EXPENSES)

     1,123,824        780,050        107,352        27,507        105,673        (280,247     —          1,864,159   

Equity method gain (loss)

     (155,226     301,402        (69,934     (25,648     —          (3,334     —          47,260   

Financial revenues

     134,676        4,100        604,032        3,275        11,548        84,198        —          841,829   

Financial expenses

     (998,640     (3,673     (847,214     (5,047     (29,073     (4,368     —          (1,888,015
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

    PRE-TAX PROFIT

     104,634        1,081,879        (205,764     87        88,148        (203,751     —          865,233   

Income tax and Social Contribution tax

     (65,006     (217,859     23,223        (1,962     (25,250     62,454        —          (224,400
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

    NET PROFIT (LOSS)

     39,628        864,020        (182,541     (1,875     62,898        (141,297     —          640,833   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     39,628        864,020        (182,541     (1,875     62,628        (141,297     —          640,563   

Non-controlling stockholder

     —          —          —          —          270        —          —          270   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     39,628        864,020        (182,541     (1,875     62,898        (141,297     —          640,833   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

217


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Cemig D Tables (R$ million)

 

CEMIG D Market

 
     (GWh)      GW  

Quarter

   Captive
Consumers
     TUSD
ENERGY1
     T.E.D2      TUSD
PICK3
 

1Q14

     6,744         4,464         11,208         29   

2Q14

     6,646         4,485         11,132         29   

3Q14

     6,686         4,298         10,984         27   

4Q14

     6,935         4,201         11,136         29   

1Q15

     6,780         4,034         10,814         30   

2Q15

     6,371         3,896         10,268         28   

3Q15

     6,471         3,803         10,274         29   

4Q15

     6,850         3,937         10,787         28   

1Q16

     6,408         4,053         10,460         29   

2Q16

     6,711         4,497         11,208         29   

3Q16

     6,365         4,424         10,788         29   

 

1. Refers to the quantity of electricity for calculation of the regulatory charges charged to free consumer clients (“Portion A”)
2. Total electricity distributed
3. Sum of the demand on which the TUSD is invoiced, according to demand contracted (“Portion B”).

Operating Revenues (consolidated)—CEMIG D

Values in million of Reais

 

Operating Revenues

   3Q16     3Q15     Change%     9M2016     9M2015     Change%  

Sales to end consumers

     4,032        4,316        (7     12,427        12,018        3   

TUSD

     521        455        15        1,374        1,203        14   

CVA and Other financial components in tariff adjustment

     (273     544        —          (937     1,306        —     

Construction revenue

     321        247        30        854        691        24   

Others

     278        371        (25     851        943        —     

Subtotal

     4,878        5,933        (18     14,569        16,161        (10

Deductions

     (2,068     (2,744     (25     (6,575     (6,867     (4

Net Revenues

     2,810        3,189        (12     7,994        9,294        (14

Operating Expenses (consolidated)—CEMIG D

Values in millions of reais

 

Operating Expenses

   3Q16      3Q15      Change%     9M2016      9M2015      Change%  

Personnel/Administrators/Councillors

     264         222         19        852         684         25   

Employee Participation

     17         41         (58     27         143         (81

Forluz—Post-Retirement Employee Benefits

     60         42         44        166         125         32   

Materials

     12         15         (22     29         38         (22

Contracted Services

     160         165         (3     472         499         (5

Purchased Energy

     1,362         1,796         (24     3,858         5,374         (28

Depreciation and Amortization

     124         111         12        368         335         10   

Operating Provisions

     134         84         59        371         178         108   

Charges for Use of Basic Transmission Network

     169         230         (27     605         630         (4

Cost from Operation

     321         247         30        854         691         24   

Other Expenses

     108         82         31        285         302         (6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     2,731         3,035         (10     7,887         8,998         (12
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

218


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Statement of Results (Consolidated)—CEMIG D

Values in millions of reais

 

Statement of Results

   3Q16     3Q15     Change%     9M2016     9M2015     Change%  

Net Revenue

     2,810        3,189        (12     7,994        9,294        (14

Operating Expenses

     2,731        3,035        (10     7,887        8,998        (12

EBIT

     79        154        —          107        296        (64

EBITDA

     203        265        (23     475        631        (25

Financial Result

     (121     (57     —          (243     (174     (40

Provision for Income Taxes, Social Cont &

     8        (37     —          23        (57     —     

Net Income

     (34     60        —          (113     65        —     

Cemig GT Tables (R$ million)

 

Operating Revenues

   3Q16     3Q15     Change%     9M2016     9M2015     Change%  

Sales to end consumers

     963        943        2        2,782        2,774        —     

Supply

     758        357        112        1,974        1,774        11   

Gain on monetary updating of Concession Grant Fee

     63        —          —          212        —          —     

Transactions in the CCEE

     85        121        (29     137        1,820        (92

Revenues from Trans. Network

     107        80        33        299        242        24   

Construction revenue

     5        32        (85     36        89        (59

Transmission indemnity revenue

     100        6        1,657        692        61        1,043   

Others

     8        5        62        21        14        55   

Subtotal

     2,089        1,544        35        6,155        6,773        (9

Deductions

     (343     (313     10        (1,062     (1,120     (5

Net Revenues

     1,746        1,231        42        5,093        5,652        (10

 

Operating Expenses

   3Q16      3Q15      Change%     9M2016      9M2015      Change%  

Personnel/Administrators/Councillors

     82         77         7        281         238         18   

Employee Participation

     6         15         (62     6         52         (88

Forluz – Post-Retirement Employee Benefits

     20         13         58        56         38         47   

Materials

     2         5         (54     9         13         (27

Raw Materials and Supplies Energy Production

     —           7         —          —           82         —     

Contracted Services

     29         32         (11     98         96         2   

Depreciation and Amortization

     47         58         (18     141         202         (30

Operating Reserves

     11         14         (19     63         56         13   

Charges for Use of Basic Transmission Network

     83         74         11        230         218         6   

Purchased Energy

     824         748         10        2,292         1,980         16   

Construction Cost

     5         32         (85     36         89         (59

Other Expenses

     15         23         (34     47         54         (13

Total

     1,124         1,098         2        3,261         3,118         5   

 

Statement of Results

   3Q16     3Q15     Change%     9M2016     9M2015     Change%  

Net Revenue

     1,746        1,231        42        5,093        5,652        (10

Operating Expenses

     (1,124     (1,098     2        (3,261     (3,118     5   

EBIT

     622        133        367        1,832        2,534        (28

Equity equivalence results

     (24     94        (126     (155     (10     1,490   

Fair value gain (loss) on stockholding transaction

     —          (5     —          —          729        —     

EBITDA

     646        280        131        1,818        3,456        (47

Financial Result

     (306     (201     52        (875     (618     41   

Provision for Income Taxes, Social Cont & Deferred Income Tax

     (68     46        —          (267     (784     (66

Net Income

     224        71        239        535        1,122        (71

 

219


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Cemig Tables (R$ million)

 

Energy Sales (Consolidated)(GWh)

   3Q16      3Q15      Change%     9M2016      9M2015      Change%  

Residential

     2,389         2,364         1        7,406         7,313         1   

Industrial

     5,032         5,695         (12     14,542         17,284         (16

Commercial

     1,523         1,482         3        4,908         4,743         3   

Rural

     1,016         928         9        2,699         2,472         9   

Others

     866         845         2        2,603         2,543         2   

Subtotal

     10,826         11,314         (4     32,158         34,356         (6

Own Consumption

     9         9         (3     28         28         —     

Supply

     3,007         2,033         48        8,813         8,951         (2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     13,841         13,356         4        40,999         43,335         (5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Energy Sales

   3Q16      3Q15     D%     9M2016      9M2015      D%  

Residential

     1,859         1,907        (3     5,819         5,303         10   

Industrial

     1,380         1,508        (9     4,043         4,281         (6

Commercial

     986         1,004        (2     3,270         2,871         14   

Rural

     395         411        (4     1,073         1,008         7   

Others

     394         439        (10     1,205         1,175         3   

Electricity sold to final consumers

     5,012         5,269        —          15,410         14,638         5   

Unbilled Supply, Net

     98         (73     —          21         41         (49

Supply

     677         444        53        1,884         1,919         (2
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     5,788         5,641        3        17,316         16,599         4   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

220


LOGO

 

 

Operating Revenues

   3Q16     3Q15     D%     9M2016     9M2015     D%  

Sales to end consumers

     5,026        5,285        (5     15,305        14,855        3   

TUSD

     512        446        15        1,348        1,177        15   

Supply

     762        356        114        2,011        1,744        15   

Transactions in the CCEE

     87        174        (50     139        1,886        (93

CVA and Other financial components in tariff adjustment

     (273     544        —          (937     1,306        —     

Gain on monetary updating of Concession Grant Fee

     63        —          —          212        —          —     

Revenues from Trans. Network

     80        59        36        228        186        23   

Construction revenue

     334        280        19        918        779        18   

Gas supply

     340        415        (18     1,037        1,266        (18

Transmission Indemnity Revenue

     100        6        1,657        692        61        1,043   

Others

     374        383        (2     1,081        1,074        1   

Subtotal

     7,404        7,947        (7     22,034        24,333        (9

Deductions

     (2,510     (3,163     (21     (7,934     (8,308     (4

Net Revenues

     4,894        4,784        2        14,100        16,026        (12

 

Operating Expenses

   3Q16     3Q15      D%     9M2016      9M2015      D%  

Personnel/Administrators/Councillors

     374        318         18        1,217         987         23   

Employee Participation

     24        62         (61     30         207         (85

Forluz – Post-Retirement Employee Benefits

     89        58         55        249         173         44   

Materials

     17        22         (21     41         53         (23

Raw materials and inputs for production of electricity

     —          7         —          —           82         —     

Contracted Services

     201        205         (2     602         618         (3

Purchased Energy

     2,170        2,535         (14     6,126         7,268         (16

Depreciation and Amortization

     202        200         1        601         629         (4

Operating Provisions

     (19     151         —          714         424         68   

Charges for Use of Basic Transmission Network

     216        275         (22     741         768         (3

Gas bought for resale

     196        266         (26     624         790         (21

Cost from Operation

     334        280         19        918         779         18   

Other Expenses

     132        119         12        372         408         (9

TOTAL

     3,937        4,496         (12     12,236         13,185         (7

 

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Financial Result Breakdown

   3Q16     3Q15     D%     9M2016     9M2015     D%  

Financial revenues

     233        315        (26     842        840        —     

Revenue from cash investments

     85        68        25        220        160        37   

Arrears penalty payments on electricity bills

     70        61        16        212        158        35   

Exchange rate

     12        70        (83     56        139        (60

Monetary updating

     36        6        558        104        15        590   

Monetary updating—CVA

     19        24        (20     207        57        266   

Taxes applied to Financial Revenue

     (15     (19     (18     (54     (19     192   

Monetary updating of the Financial Asset of the Concession

     1        89        (99     7        283        (98

Other

     24        16        44        90        47        90   

Financial expenses

     (654     (596     10        (1,888     (1,646     15   

Costs of loans and financings

     (525     (377     39        (1,433     (1,002     43   

Exchange rate

     (2     (91     (98     (19     (163     (88

Monetary updating – loans and financings

     (47     (53     (11     (232     (279     (17

Monetary updating – paid concessions

     (0     (2     —          (3     (9     (67

obligations

     (22     (25     (11     (87     (98     (11

Other

     (58     (48     21        (114     (95     20   

Financial revenue (expenses)

     (422     (281     (50     (1,046     (806     (30

 

Statement of Results

   3Q16     3Q15     D%     9M2016     9M2015     D%  

Net Revenue

     4,894        4,784        2        14,100        16,026        (12

Operating Expenses

     3,937        4,496        (12     12,236        13,185        (7

EBIT

     957        288        232        1,864        2,840        (34

Equity gain in subsidiaries

     33        164        (80     47        260        (82

Gain on stockholding reorganization

     —          (5     —          —          729        —     

Depreciation and Amortization

     202        200        1        601        629        (4

EBITDA

     1,193        648        84        2,513        4,459        (44

Financial Result

     (422     (281     (50     (1,046     (806     (30

Income Tax

     (135     1        —          (224     (838     (73

Net Income

     434        167        160        641        2,186        (71

 

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Cash Flow Statement

   9M2016     9M2015     Change%  

Cash at beginning of period

     925        887        4   

Cash generated by operations

     2,521        2,389        6   

Net profit

     641        2,186        (71

Current and deferred income tax and Social Contribution tax

     224        838        (73

Depreciation and amortization

     601        629        (4

Gain on the Aliança stockholding reorganization

     —          (729     —     

Passthrough from CDE

     937        (1,306     (172

Equity gain (loss) in subsidiaries

     (47     (260     82   

Provisions (reversals) for operational losses

     714        424        68   

Dividends received from equity holdings

     117        7        1,477   

Interest paid on loans and financings

     (1,320     (851     55   

Other adjustments

     654        1,452        55   

Financing activities

     641        (341     288   

Financings obtained and capital increase

     2,859        4,092        (30

Interest on Equity, and dividends

     (111     (129     (13

Payments of loans and financings

     (2,106     (4,304     (51

Investment activity

     (2,393     (1,328     80   

Securities—Financial Investment

     1,465        (105     80   

Acquisition of ownership interest and future capital commitments

     (725     (453     60   

Financial assets

     (2,292     (89     2,483   

Fixed and Intangible assets

     (842     (681     24   

Cash at end of period

     1,693        1,607        5   

Total Cash

     2,639        3,349     

 

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Values in millions of reais

 

BALANCE SHEETS (CONSOLIDATED)—ASSETS

   09/30/2016      12/31/2015  

CURRENT

     8,624         9,377   

Cash and cash equivalents

     1,693         925   

Securities

     911         2,427   

Consumers and traders

     3,473         3,764   

Financial assets of the concession

     938         874   

Tax offsetable

     230         175   

Income tax and Social Contribution tax recoverable

     357         306   

Dividends receivable

     18         62   

Linked funds

     1         —     

Inventories

     38         37   

Passthrough from CDE (Energy Development Account)

     64         72   

Other credits

     901         735   

NON-CURRENT

     34,563         31,480   

Securities

     35         84   

Consumers and traders

     152         134   

Tax offsetable

     237         258   

Income tax and Social Contribution tax recoverable

     176         206   

Deferred income tax and Social Contribution tax

     1,606         1,498   

Escrow deposits in legal actions

     1,891         1,813   

Other credits

     986         868   

Financial assets of the concession

     4,879         2,660   

Investments

     10,144         9,745   

PP&E

     3,798         3,940   

Intangible assets

     10,658         10,275   

TOTAL ASSETS

     43,188         40,857   

 

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Values in millions of reais

 

BALANCE SHEETS LIABILITIES AND SHAREHOLDERS’ EQUITY

   09/30/2016      12/31/2015  

CURRENT

     10,276         11,829   

Suppliers

     1,620         1,901   

Regulatory charges

     395         517   

Profit shares

     38         114   

Taxes

     555         740   

Income tax and Social Contribution tax

     21         11   

Interest on Equity, and dividends, payable

     573         1,307   

Loans and financings

     5,933         6,300   

Payroll and related charges

     280         221   

Post-retirement liabilities

     192         167   

Other obligations

     168         —     

Provisions for losses on investments

     502         551   

NON-CURRENT

     17,143         14,795   

Regulatory charges

     338         226   

Loans and financings

     10,337         8,866   

Taxes

     740         740   

Income tax and Social Contribution tax

     872         689   

Provisions

     3,223         3,086   

Post-retirement liabilities

     800         755   

Provisions for losses on investments

     324         —     

Other obligations

     510         433   

STOCKHOLDERS’ EQUITY

     14,252         12,984   

Share capital

     6,294         6,294   

Capital reserves

     1,925         1,925   

Profit reserves

     5,286         4,663   

Adjustments to Stockholders’ equity

     78         102   
  

 

 

    

 

 

 

Retained earnings

     669         —     
  

 

 

    

 

 

 

NON- CONTROLLING STOCKHOLDER´S EQUITY

     4         4   
  

 

 

    

 

 

 

TOTAL LIABILITIES

     41,675         40,857   
  

 

 

    

 

 

 

 

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24. EARNINGS RELEASE: 3Q 2016 PRESENTATION

 

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Cemig
3Q16 Results

 

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

 

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3Q16 results
Cemig
A Melhor Energia do Brasil
Net revenue
Ebitda
Net profit
167 434 3Q15 3Q16 647 1.193 3Q15 3Q16 4.784 4.894 3Q15 3Q16
2.3% 84.4% 159.9%
Highlights
•Filing of 2015 20-F Form with the SEC
•Resubmission of 2015 Financial Report
•Resubmission of 1Q16 and 2Q16
Leverage – %
Net debt Stockholders’ equity + Net debt
50,7 43,8 47,4 50,5 48,4 48,9 2014 set/15 2015 mar/16 jun/16 set/16 1,80 1,67 2,40 4,39 5,26 4,53
Net debt Ebitda

 

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Results of Cemig GT
Cemig
A Melhor Energia do Brasil
Net revenue R$1,746 R$1,231 41.8%
Ebitda R$646 R$280 130.7%
Net Profit R$224 R$66 239.4%
3Q16 3Q15 %
Highlights
•Profile: contracting for long term, low exposure to risk
•Strategy for sales, contracting, trading is a success
•Change in the supply allocation curve: seasonalization
•Average spot price in 3Q16: R$ 116.01 – vs. R$ 34.69 in 1Q16
•Average GSF (Generation Scaling Factor) in 3Q16: 0.8281

 

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Market of Cemig GT
Cemig
A Melhor Energia do Brasil
Supply of electricity by – GW/h
6.6%
6.736 518 125 837 7.180
3Q15 Industrial Commercial Supply** 3Q16
GWh (*) GWh (*)
Jul a Se t/16 Jul a Se t /15
Industrial 4.039 4.557
Commercial 213 88
Wholesale** 2.927 2.091
7.180 6.736
Supply of electricity by type of consumer - R$
32.5%
1.300 1.721 5 34 204 188
3Q15 Industrial Comercial Supply** Supply not yet invoiced, net 3Q16
R$ R$
Jul a Se t /16 Jul a Se t /15
Industrial 908 913
Commercial 55 21
Supply (**) 632 427
Supply not yet invoiced, net 127 - 62
1.721 1.300
(**) Includes: Contracts for sale in the Regulated Market to distributors; Sales in the Free Market to traders and generators; and ‘Bilateral contracts’ with other agents.

 

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Cemig GT - debt profile
Cemig
A Melhor Energia do Brasil
Maturities timetable – Average tenor: 1.6 years
Main indexors
Total net debt : R$8.2 bn
Roll over of R$ 716 million in Oct/16
3.244 2.709 1.728 161 329 314 324 28
2016 2017 2018 2019 2020 2021 2022 2023 on
1% 15% 84%
CDI IPCA Others
Cost of debt – %
Leverage – %
11,14 10,76 12,11 13,42 13,63 14,41 14,77 15,15 15,41
5,09 4,66 5,37 4,19 4,35 3,66 5,05 5,22 5,41
2012 2013 2014 jun/15 set/15 2015 mar/16 jun/16 set/16
1,36 1,15 1,30 2,97 3,26 3,13
63,8 48,3 54,1 60,8 58,6 60,2
2014 set/15 2015 mar/16 jun/16 set/16
Net debt Ebitda
Net debt Stockholders’ equity + Net debt
Real Nominal

 

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Results of Cemig D
Cemig
A Melhor Energia do Brasil
3Q16 3Q15 %
Net revenue R$2,810 R$3,189 11.9%
Ebitda R$203 R$265 23.4%
Net Profit R$-35 R$60 -
Highlights
•Credits receivable through future tariffs: in CVA and ‘Other financial components’, a total of R$ 273 million was realized in 3Q16 – vs. R$ 544 million credited in 3Q15
•Level of overcontracting of supply is within the regulatory limit
•Volume transported in the concession area 16% higher YoY in 3Q16
•Recovery in metals and ferro-alloys sector softened impact on sales to industrial sector
•Spot prices favorable in the quarter.

 

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Market of Cemig D
Cemig
A Melhor Energia do Brasil
Highlights
•Captive consumers migrating to free market
•Lower total revenue due to lower tariff ‘Flag’
•’Red Flag’ in 3Q15 – but ‘Green’ in 3Q16
Supply of electricity
GW/h
6.471 6.373 25 150 81 88 20
3Q15 Residential Industrial Commercial Rural Public authorities 3Q16
R$ million
4.316 4.032 48 129 52 16 45 6
3Q15 Residential Industrial Commercial Rural Public authorities other 3Q16
R$ million

 

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Cemig D - operational costs and expenses
Cemig
A Melhor Energia do Brasil
•Operational costs and expenses 10.02% lower in 3Q16 than 3Q15
•Programmed Voluntary Retirement Plan (PDVP)
•Offered the severance payment advantages normally paid only for dismissal
•R$ 20 million provisioned in 3Q16
.A total of 176 employees accepted the plan - Total of 648 employees accepted in 2016
•Provision for doubtful receivables 107.8% higher
Change in consolidated operational expenses
43 -24 18 -3 -6 -433 13 50 -61 74 26
Personnel Profit shares Post-retirement Materials Outsourced services Electricity purchased for resale Amortization
Provisions National grid Construction costs Other expenses

 

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Cemig D - debt profile
Cemig
A Melhor Energia do Brasil
Maturities timetable – Average tenor: 3.1 years
Main indexors
Total net debt: R$5.9 billion
Cost of debt – %
Payment of R $ 659 million in Oct/16
$ 176 of 2016, $ 328 of 2017
and $ 155 from 2018
Balance of 2016 will be fully paid
1% 1% 39% 59%
CDI IPCA RGR
Cost of debt – %
9,56 9,98 11,47 14,24 14,31 15,68 16,45 16,46
5,19 4,40 4,79 4,68 4,01 6,04 5,55 4,85
2012 2013 2014 set/15 2015 mar/16 jun/16 set/16
Real Nominal
Leverage – %
3,90 4,51 6,10 5,58 6,17 6,59
69,4 69,4 70,4 66,5 65,4 65,6
2014 set/15 2015 mar/16 jun/16 set/16
Net debt Ebitda
Net debt
Stockholders’ equity + Net debt

 

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Investment
Cemig
A Melhor Energia do Brasil
Planned
Realized 2016 Sept/16 %
GENERATION 3,316 2,986 90.0%
Investment program 76 29 38.2%
Capital injections 1,024 741 72.4%
Renova Energia S.A. 340 240 70.6%
Aliança Norte 200 146 73.0%
Madeira Energia S/A - MESA 102 79 77.5%
SPC - Amazônia Energia Participações S.A. (Belo Monte) 324 235 72.5%
Others 58 41 70.7%
Auction 012/2015 - Grant of concessions 2,216 2,216 100.0%
Cemig GT – Transmission 77 38 49.4%
Investment program 77 38 49.4%
Cemig D – Distribution 1,083 644 59.5%
Investment program 1,083 644 59.5%
Cemig – Holding company 21 - -
Investment program 1 - -
Capital injections 20 - -
Total of investments 4,728 3,414 72,2%
June 2015 R$ million

 

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Execution of our disinvestment plan
Cemig
A Melhor Energia do Brasil
•Disposal of interest related to Transchile
•Sale of the whole stockholding interest related to Transchile Charrúa Transmisión S.A., corresponding to 49% of the total share capital
•Total of US$56.6 million; equivalent of R$180 million
•Disposal of shares in Taesa owned by Cemig
•Monetization of 40,702,230 Units at R$ 19.65 per Unit
•R$ 114 million subscribed in Ativas Data Center by Sonda
•Ownership of Ativas Data Center is now:
•Sonda 60%; Cemig Telecom 19.6%; Ativas Participações 20.4%.

 

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Cemig
A Melhor Energia do Brasil
Investor relations
Tel: +55 (31) 3506-5024
Fax: +55 (31) 3506-5025
ri@cemig.com.br
http://ri.cemig.com.br

 

239


 

25. MINUTES OF THE EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS HELD ON

DECEMBER 20, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

CNPJ 17.155.730/0001-64 – NIRE 31300040127

MINUTES

OF THE

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

HELD ON DECEMBER 20, 2016

At 11 a.m. on the twentieth of December 2016, at the head office of Companhia Energética de Minas Gerais – Cemig, Av. Barbacena 1200, 21st Floor, Santo Agostinho, Belo Horizonte, Minas Gerais, Brazil, stockholders representing more than two thirds of the voting stock of the Company met in Extraordinary General Meeting, on first convocation, as verified in the Stockholders’ Attendance Book, where all placed their signatures and made the required statements.

The stockholder The State of Minas Gerais was represented by Mr. Danilo Antônio de Souza Castro, Procurator of the State of Minas Gerais, in accordance with the current legislation.

Also present were:

Mr. Marcos Túlio de Melo, member of the Audit Board;

Deloitte Touche Tohmatsu Auditores Independentes, represented by Mr. Marcelo Salvador, CRC-1MG 089422/O-0; and

the Chief Trading Officer, Mr. Dimas Costa.

Initially, Ms. Anamaria Pugedo Frade Barros, General Manager of Cemig’s Corporate Executive Office, stated that there was a quorum for an Extraordinary General Meeting of Stockholders, and that the stockholders present should choose the Chair of this Meeting, in accordance with Clause 10 of the Company’s by-laws.

Asking for the floor, the representative of the Stockholder The State of Minas Gerais put forward the name of the stockholder João Alan Haddad to chair the Meeting. The proposal of the representative of the stockholder The State of Minas Gerais was put to debate, and to the vote, and approved unanimously.

The Chair then declared the Meeting open, and invited me, Anamaria Pugedo Frade Barros, a stockholder, to be Secretary of the meeting, asking me to read the convocation notice, published on November 18, 19 and 22, 2016, in Minas Gerais, official publication of the powers of the State, on pages 36, 47 and 39 respectively, and in the newspaper O Tempo, on pages 28, 30 and 20, respectively.

The content of these documents is as follows:

 

  

 

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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“ COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

CONVOCATION

Stockholders are hereby called to an Extraordinary General Meeting of Stockholders to be held on December 20, 2016 at 11 a.m., at the company’s head office, Av. Barbacena 1200, 21st floor, Belo Horizonte, Minas Gerais, Brazil, to decide on the following matters:

 

1 Examination, debate and voting on the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted.

 

2 Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000).

 

3 Orientation of vote by the representative(s) of the Company in the Extraordinary General Meeting of Stockholders of Cemig Geração e Transmissão S.A., also to be held on December 20, 2016, in favor of the following:

 

  Examination, debate and voting on the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted; and

 

  Re-ratification of the allocation of the Net profit for 2015, approved in the Ordinary Annual General Meetings of Stockholders held on April 29, 2016, the amount being adjusted from R$ 2,337,663,000 to R$ 2,316,273,000, the balance of Retained earnings remaining the same (at R$ 47,761,000).

Any stockholder who wishes to be represented by proxy at the said General Meeting of Stockholders should obey the precepts of Article 126 of Law 6406 of 1976, and of the sole paragraph of Clause 9 of the Company’s by-laws, by exhibiting at the time, or depositing, preferably by December 16, 2016, proofs of ownership of the shares, issued by a depositary financial institution, and a power of attorney with specific powers, at Cemig’s Corporate Executive Office (Superintendência da Secretaria Geral) at Av. Barbacena 1200 – 19th Floor, B1 Wing, Belo Horizonte, Minas Gerais.

Belo Horizonte, November 11, 2016

José Afonso Bicalho Beltrão da Silva

Chair of the Board of Directors “

In accordance with Item 1 of the Agenda, the Chair then placed in debate the Report of Management and the Adjusted Financial Statements for the business year 2015, and the related complementary documents – also adjusted. He reported that they were published, on December 15, 2016, in the newspapers Minas Gerais, the official publication of the Powers of the State, on pages 33 to 67; and in O Tempo, on pages 1 to 35 in the section Balanço.

He then put to the vote the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the respective complementary documents, also adjusted, and they were approved unanimously.

The Chair then asked the Secretary to read the Proposal by the Board of Directors, which deals with items 2 and 3, and the Opinion of the Audit Board thereon.

The contents of these documents are as follows:

 

  

 

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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“ PROPOSAL

BY THE BOARD OF DIRECTORS

TO THE

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 20, 2016

Dear Stockholders:

The Board of Directors of Companhia Energética de Minas Gerais—Cemig:

Whereas –

 

a) the Company’s financial statements for the business year ended December 31, 2015 were made available to the CVM (Comissão de Valores Mobiliários) on March 30, 2016 and approved by the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016;

 

b) those financial statements were filed at the CVM with the following qualification by the external auditors:

Absence of sufficient auditing evidence in relation to the investment, and the equity method gain (or loss) arising, in Amazônia Energia S.A., and Aliança Norte Energia Participações S.A., on December 31, 2015 and for the business year end on that date.

As mentioned in Notes 1 and 14 to the financial statements, the Company has an indirect investment in Norte Energia S.A. (‘Norte Energia’), which is the subject of an investigation carried out by the stockholder Centrais Elétricas Brasileiras S.A. (Eletrobras). Due to that investigation not having been finalized, the audit examinations of the financial statements of Amazônia Energia S.A. and Aliança Norte Energia Participações S.A. (which have investments in Norte Energia S.A.), for the business year ended December 31, 2015, have not been concluded at today’s date. Consequently, we have not obtained sufficient auditing evidence in relation to the investment held by the Company in Amazônia Energia S.A. and Aliança Norte Energia Participações S.A., valued by the equity method at R$ 871,442,000 on December 31, 2015, and in relation to the equity loss reported by the equity method corresponding to R$ 10,261,000 for the period ending on that date.”;

 

c) those Meetings of Stockholders approved the following allocation of the Net profit for 2015, of R$ 2,491,375,000, and of the balance of Retained earnings of R$ 59,536,000:

 

  1) R$ 633,968,000 as minimum mandatory dividends, as follows:

 

  R$ 200,000,000 in the form of Interest on Equity, under Board Spending Decisions CRCA 088/2015 of December 17, 2015, and CRD 432/2015, of January 4, 2016, to be paid in two equal installments, by June 30, 2016 and December 30, 2016, to stockholders on the Company’s Nominal Share Registry on December 30, 2015, the Executive Board to obey the periods and to decide the places and processes of payment and to allocate the amount of the Interest on Equity against the minimum mandatory dividend (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 in the form of dividends for the 2015 business year, to stockholders of record on the date on which the Ordinary General Meeting is held.

 

  2) R$ 633,967,000 to be held in Equity in the Reserve for mandatory dividend not distributed, to be paid as and when the Company’s financial situation permits;

 

  3) R$ 1,262,280,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s planned investments in 2016, in accordance with a capital budget; and

 

  4) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentive gains obtained in 2015 as a result of investments in the region of Sudene –

 

  payments of the dividends to be made by December 30, 2016, in accordance with the availability of cash and at the decision of the Executive Board;

 

  

 

Av. Barbacena 1200

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

 

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d) Cemig owns 100% of the share capital of Cemig Geração e Transmissão S.A. (Cemig GT), which in turn holds an equity interest of 74.50% in the total share capital of Amazônia Energia Participações S.A. (‘Amazônia Energia’), which in turn holds 9.77% of the share capital of Norte Energia S.A. (Norte Energia);

 

e) Cemig GT further holds 49.00% of the share capital of Aliança Norte Energia Participações S.A. (‘Aliança Norte’), which in turn holds 9.00% of the share capital of Norte Energia;

 

f) as a result of conclusion of investigations into Norte Energia, Cemig has adjusted the results of the said financial statements by the amount of R$ 22,875,000, so that the Net profit for 2015 is adjusted from R$ 2,491,375,000 to R$ 2,468,500,000;

 

g) due to this adjustment, it is necessary to re-ratify the allocation of the Company’s net profit for 2015 (the impacts of this are restricted to the Retained earnings reserve, and the Reserve for mandatory dividends not distributed);

 

h) Cemig GT is a wholly-owned subsidiary of the Company and will hold an Extraordinary General Meeting of Stockholders by December 20, 2016 to re-ratify the allocation of Net profit for the 2015 business year; and

 

i) Clause 21, Paragraph 4, Subclause ‘g’ of the by-laws of Cemig states:

“Clause 21–....

 

  §4 The following maters shall require a decision by the Executive Board: .

 

  g) approval, upon proposal by the Chief Executive Officer, prepared jointly with the Chief Business Development Officer and the Chief Finance and Investor Relations Officer, of the statements of vote in the General Meetings of the wholly-owned and other subsidiaries, affiliated companies and in the consortia in which the Company participates, except in the case of the wholly-owned subsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A., for which the competency to decide on these matters shall be that of the General Meeting of Stockholders, and decisions must obey the provisions of these Bylaws, the decisions of the Board of Directors, the Long-term Strategic Plan and the Multi-year Strategic Implementation Plan.”;

– do now propose to you as follows:

Proposal:

 

I) Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000), as follows:

 

  a) R$ 633,968,000 to be paid to the stockholders as mandatory minimum dividend, as follows:

 

  R$ 200,000,000 as Interest on Equity, under Board Spending Decisions CRCA 088/2015 of December 17, 2015, and CRD 432/2015, of January 4, 2016, to be paid in two equal installments, by June 30, 2016 and December 30, 2016 to stockholders on the Company’s Nominal Share Registry on December 30, 2015, and allocated as part of the mandatory minimum dividend, the Executive Board to obey the periods and to decide the places and processes of payment (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 as dividends for the 2015 business year, to stockholders on the Company’s nominal share registry on April 29, 2016, the date on which the Ordinary and Extraordinary General Meetings were held this year;

 

  b) R$ 622,529,000 to be held in Stockholders’ equity in the Reserve for mandatory dividends not distributed, to be paid as and when the Company’s financial situation permits;

 

  c) R$ 1,250,853,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s planned investments for 2016, in accordance with a capital budget; and

 

  d) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentives gains obtained in 2015 as a result of investments in the region of Sudene;

 

  

 

Av. Barbacena 1200

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

 

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  the other terms related to the payment of dividends decided in the Ordinary and Extraordinary General meetings of stockholders held, concurrently, on April 29, 2016 being unchanged.

 

II) Orientation of the representative(s) of Cemig at the General Meeting of Stockholders of Cemig Geração e Transmissão S.A. to be held, also, on December 20, 2016, to vote in favor of the Report of Management and the Adjusted Financial Statements for the year ended December 31, 2015, and the related complementary documents – also adjusted;

 

III) Orientation of the representative(s) of Cemig at the General Meeting of Stockholders of Cemig Geração e Transmissão S.A. to be held, also, on December 20, 2016, to vote in favor of re-ratification of the allocation of the Net profit for 2015, approved in the Ordinary Annual General Meetings of Stockholders held on April 29, 2016, the amount being adjusted from R$ 2,337,663,000 to R$ 2,316,273,000, the balance of Retained earnings remaining the same (at R$ 47,761,000).

As can be seen, the objective of this proposal is to meet legitimate interests of the stockholders and of the Company, and as a result Board of Directors hope that it will be approved by the Stockholders.

Belo Horizonte, November 11, 2016

 

Signed:

  

José Afonso Bicalho Beltrão da Silva

Mauro Borges Lemos

Allan Kardec de Melo Ferreira

Arcângelo Eustáquio Torres Queiroz

Daniel Alves Ferreira

Helvécio Miranda Magalhães Junior

  

Marco Antônio de Rezende Teixeira

Marco Antônio Soares da Cunha Castello Branco

Nelson José Hubner Moreira

Saulo Alves Pereira Junior

Aloísio Macário Ferreira de Souza

Bruno Magalhães Menicucci

José Pais Rangel

“ OPINION OF THE AUDIT BOARD

The undersigned members of the Audit Board of Companhia Energética de Minas Gerais – Cemig, in performance of their functions under the law and under the by-laws, have examined the Proposal made by the Board of Directors to the Extraordinary General Meeting of Stockholders to be held on December 20, 2016, which is for the following:

Re-ratification of the allocation of the Net profit for the business year 2015, approved in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016, the amount being adjusted from R$ 2,491,375,000 to R$ 2,468,500,000, the balance of Retained earnings remaining the same (R$ 59,536,000), as follows;

 

  a) R$ 633,968,000 to be allocated as mandatory minimum dividend, to be paid to the Company’s stockholders, as follows:

 

  R$ 200,000,000 in the form of Interest on Equity, under Board Spending Decisions CRCA 088/2015 of December 17, 2015, and CRD 432/2015, of January 4, 2016, to be paid in two equal installments, by June 30, 2016 and December 30, 2016, to stockholders on the Company’s Nominal Share Registry on December 30, 2015, and allocated as part of the mandatory minimum dividend, the Executive Board to obey the periods and to decide the places and processes of payment (the shares began to trade ‘ex–’ these rights on January 4, 2016); and

 

  R$ 433,968,000 in the form of dividends for the 2015 business year, to stockholders whose names were on the Company’s nominal share registry on April 29, 2016, the date on which the Ordinary and Extraordinary General Meetings were held this year; and

 

  b) R$ 622,529,000 to be held in Stockholders’ equity in the Reserve for mandatory dividend not distributed, to be paid as and when the Company’s financial situation permits;

 

  

 

Av. Barbacena 1200

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

 

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  c) R$ 1,250,853,000 to be held in Stockholders’ equity in the Retained earnings reserve, to provide funding for the Company’s planned investments planned for 2016, in accordance with a capital budget; and

 

  d) R$ 20,696,000 to be held in Stockholders’ equity in the Tax incentives reserve, for tax incentive gains obtained in 2015 as a result of investments in the region of Sudene

 

  the other terms related to the payments of dividends decided in the Ordinary and Extraordinary General Meetings of Stockholders held concurrently on April 29, 2016 being unchanged.

The members of the Audit Board, after carefully analyzing the said proposal and further taking into account that the applicable rules governing the subject have been complied with, are of the opinion that the proposal should be approved by the said General Meeting of Stockholders.

Belo Horizonte, November 11, 2016.

 

Signed:

  

Edson Moura Soares

Newton Brandão Ferraz Ramos

Bruno Cirilo Mendonça de Campos

  

Manuel Jeremias Leite Caldas

Rafael Amorim de Amorim

The above proposal was put to debate, and subsequently to a vote, and was approved unanimously.

The representative of the stockholder BNDES Participações S.A. (BNDESPar), Guilherme Garcia de Freitas, recommended that the Company should:

 

  claim, and cause its Subsidiaries also to claim, reparation for any damages caused by third parties to the Company and/or to its investees;

 

  monitor the developing results of the investigations not yet concluded involving its investees, so as to measure any additional impacts on its financial results and/or those of its investees, and also seek reparation for the damages caused by third parties;

 

  publicize, in a timely manner, the minutes of the meetings of the Audit Board and the Board of Directors, drawing attention to votes against items, abstentions and matters recorded in the minutes, so as to give stockholders a greater possible supply of input for their decision-making; and

 

  comply with the commitment established in the Extraordinary General Meeting of Stockholders held on October 25, 2016 and recorded in the minutes of that Meeting, to call a General Meeting of Stockholders to rectify the number of votes recorded in the Ordinary and Extraordinary General Meetings of Stockholders held, concurrently, on April 29, 2016.

There being no further business, the Chair opened the meeting to the floor, and since no-one further wished to speak, ordered the meeting to be suspended for the time necessary for the writing of the minutes.

The session being reopened, the Chair, after putting the said minutes to debate and to the vote and verifying that they had been approved and signed, closed the meeting.

For the record, I, Anamaria Pugedo Frade Barros, Secretary, wrote these minutes and sign them together with all those present.

 

  

 

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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26. NOTICE TO STOCKHOLDERS DATED DECEMBER 21, 2016: INTEREST ON EQUITY FOR 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY – CNPJ 17.155.730/0001-64

NOTICE TO STOCKHOLDERS

Interest on Equity for 2016

Cemig advises its stockholders as follows:

At its meeting on December 21, 2016, the Board of Directors decided to pay:

 

Interest on Equity in the amount of

   R$ 380,000,000.00
   (three hundred eighty million Reais),

corresponding to

   R$ 0.301999330 per share,

on account of the minimum mandatory dividend for 2016.

From this amount, income tax at 15% will be withheld at source, except in the case of stockholders exempt from this retention under current legislation.

For shares traded on the BM&FBovespa, this benefit will be paid to stockholders of record on December 26, 2016, in two equal installments, by June 30, 2017 and December 30, 2017. The shares will trade ‘ex–’ these rights on December 27, 2016.

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

Belo Horizonte, December 21, 2016

Fabiano Maia Pereira

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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27. MARKET ANNOUNCEMENT DATED DECEMBER 21, 2016: REPLY TO CVM INQUIRY LETTER 567/2016-CVM/SEP/GEA-1, OF DECEMBER 20, 2016

 

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CEMIG GERAÇÃO E TRANSMISSÃO S.A.

Listed company – CVM Nº 02032-0

CNPJ 06.981.176/0001-58 – NIRE 31300020550

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 567/2016-CVM/SEP/GEA-1, of December 20, 2016

Question asked by the Brazilian Securities Commission (CVM)

Rio de Janeiro, December 20, 2016.

To Mr. Fabiano Maia Pereira

Investor Relations Director

Companhia Energética de Minas Gerais – CEMIG

Av. Barbacena 1200 – 5th floor, B1 Wing, Santo Agostinho,

CEP: 30190-131 Belo Horizonte, MG

E-mail: ri@cemig.com.br

Fax:      (31) 3506-5026

Tel.:      (31) 3506-5024

cc:         emissores@bvmf.com.br

Subject: Request for information on news report

Dear Sir,

 

1. I refer to the news reports published today, December 20, 2016, in certain newspapers – including the Folha de São Paulo and Valor Econômico – on expectation of an imminent change of manager of Companhia Energética de Minas Gerais.

 

2. In view of the above, we request you to state whether the news reports are true, in particular in relation to the change of manager; and, if their truth is confirmed, you should explain for what reasons you believed that this was not a case of Material Information, and also comment on any other information considered to be important on the subject.

 

3. Your statement should be given through the Empresas.net system, in the category: Market Announcement, under the sub-category: Responses to consultations by CVM/Bovespa; subject heading: Media News Reports; and should include a transcription of this letter.

 

 

  

 

Av. Barbacena 1200

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

 

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4. We highlight that, under Article 3 of CVM Instruction 358/2002 it is the responsibility of the Chief Investor Relations Officer to disclose to and advise the CVM, and as the case may be, the stock exchange and/or any organized over-the-counter market on which securities issued by the company are traded, of any material event or fact which takes place or is related to its business, and to make best efforts for its immediate and wide dissemination, simultaneously to all the markets in which such securities are traded.

 

5. Further, §1 of Article 4 of CVM Instruction 358/2002 specifies the obligation to seek information from the managers and controlling stockholders of the company, and from all the other people who have access to material facts and events, to ascertain whether they have knowledge of information that ought to be published to the market.

 

6. We warn you that the Company Relations Supervision Management, using its powers under law and based on Sub-item II of Article 9 of Law 6385/1976 and CVM Instruction 452/07, may decide to apply a coercive fine of R$ 1,000 (one thousand Reais), without prejudice to other administrative sanctions, for any non-compliance with the requirement contained in this Official Letter within one business day from becoming aware of the content of this communication, sent exclusively by e-mail.

Reply by CEMIG

Dear Ms. Nilza Maria Silva de Oliveira,

In response to Official Letter 567/2016-CVM/SEP/GEA-1, of December 20, 2016, we inform you that it is the Company’s understanding is that “expectation of an imminent change of manager” does not characterize publication of a Material Fact or Event in the terms of Article 2 of CVM Instruction 358/2002.

Since this is a matter for the Board of Directors, which has the sole competency to elect and dismiss Executive Officers of the Company, such information may be published only after a meeting of that board has been held and a change of Chief Officer confirmed. Cemig takes this opportunity of reiterating its commitment to opportune and timely disclosure of all and any facts that are of interest to its stockholders, in the terms of Article 2 of CVM Instruction 358/2002.

Belo Horizonte, December 21, 2016.

Fabiano Maia Pereira

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

 

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28. SUMMARY OF PRINCIPAL DECISIONS OF THE 681ST MEETING OF THE BOARD OF DIRECTORS HELD ON DECEMBER 21, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

LISTED COMPANY

CNPJ 17.155.730/0001-64 – NIRE 31300040127

BOARD OF DIRECTORS

Meeting held on December 21, 2016

SUMMARY OF PRINCIPAL DECISIONS

At its 681st meeting, held on December 21, 2016, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

  Extension of the maturity of Cemig GT’s 6th issue of promissory Notes, with surety guarantee by Cemig.

 

  

 

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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29. SUMMARY OF PRINCIPAL DECISIONS OF THE 682ND MEETING OF THE BOARD OF DIRECTORS HELD ON DECEMBER 21, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

BOARD OF DIRECTORS

Meeting held on December 21, 2016

SUMMARY OF PRINCIPAL DECISIONS

At its 682nd meeting, held on December 21, 2016, the Board of Directors of Cemig (Companhia Energética de Minas Gerais) decided the following:

 

1. Authorization for the Executive Board to make decisions to pay Interest on Equity, subject to the maximum value specified by the legislation.

 

2. Announcement of payment of Interest on Equity, on account of the full amount of the minimum mandatory dividend, the amount of which is within the limit authorized for declaration by the Executive Board.

 

3. Expenses on PMSO – Personnel, Materials, Outsourced Services and Other expenses – for 2017.

 

4. Updating of Cemig’s Long-Term Strategic Plan.

 

5. Signature of an amendment to a works and services contract with Minas Gerais State.

 

6. Changes in the composition of the Executive Board, as follows:

 

  a) As of December 22, 2016:

Mr. Mauro Borges Lemos no longer to be Chief Executive Officer (CEO);

Mr. Fabiano Maia Pereira no longer to be Chief Finance and Investor Relations Officer;

 

  b) From December 22, 2016, and to serve the full remaining period of the respective current period of office:

 

  Mr. Paulo Roberto Castellari Porchia, Deputy CEO, appointed to the position of Chief Finance and Investor Relations Officer;

 

  Election of Mr. Bernardo Afonso Salomão de Alvarenga as Chief Executive Officer;

 

  Mr. Paulo Roberto Castellari Porchia to be Acting Deputy CEO on an interim basis, concurrently with his position as Chief Finance and Investor Relations Officer; and

 

  Mr. Dimas Costa to serve as Chief Corporate Management Officer on an interim basis, concurrently with his position as Chief Trading 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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30. MATERIAL ANNOUNCEMENT DATED DECEMBER 22, 2016: INTERIM INJUNCTION GIVEN FOR MIRANDA PLANT

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MATERIAL ANNOUNCEMENT

Interim injunction given for Miranda Plant

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:

The Chair of the Higher Appeal Court (STJ), Justice Laurita Vaz, has granted an interim injunction to Cemig Geração e Transmissão S.A. (Cemig GT) maintaining Cemig GT in control of the Miranda Hydroelectric Plant, in Minas Gerais, on the initial bases stated in Concession Contract 007/97, until conclusion of judgment on the application for mandamus filed by Cemig GT.

The following is an excerpt from the transcript of the decision given by the STJ (from Certificate 1722447, generated today at 7.13.01 p.m.):

“... the interim injunction applied for by Cemig Geração e Transmissão S.A. is granted, until conclusion of judgment on the current application for mandamus, enabling the now applicant to continue to hold the concession for the Miranda Plant, on the initial bases of the concession contract, Nº 007/97. The information from the authority indicated as coercing party is requested urgently, within ten days...”

Cemig will keep its stockholders and the market timely and appropriately informed on the progress of this case.

Belo Horizonte, December 22, 2016.

Franklin Moreira Gonçalves

Acting Chief Finance and Investor Relations Officer

 

  

 

Av. Barbacena 1200

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

 

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31. MARKET ANNOUNCEMENT DATED DECEMBER 22, 2016: CHANGES TO THE EXECUTIVE BOARD

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

CEMIG

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

MARKET ANNOUNCEMENT

Changes to the Executive Board

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:

The meeting of the Board of Directors on December 21, 2016 made changes to the composition of the Executive Board of Cemig, which is now as follows:

 

EXECUTIVE BOARD

Name

  

Position

Bernardo Afonso Salomão de Alvarenga

  

Chief Executive Officer

Paulo Roberto Castellari Porchia

  

Acting Deputy CEO *

César Vaz de Melo Fernandes

  

Chief Business Development Officer

Dimas Costa

  

Acting Chief Corporate Management Officer *

Márcio Lúcio Serrano

  

Chief Officer for Human Relations and Resources

Luís Fernando Paroli Santos

  

Acting Chief Distribution and Sales Officer *

Dimas Costa

  

Chief Trading Officer

Paulo Roberto Castellari Porchia

  

Chief Finance and Investor Relations Officer

Franklin Moreira Gonçalves

  

Chief Generation and Transmission Officer

Luís Fernando Paroli Santos

  

Chief Institutional Relations and Communication Officer

Raul Lycurgo Leite

  

Chief Counsel

 

* Position held jointly with another position, on interim basis.

Belo Horizonte, December 22, 2016

Franklin Moreira Gonçalves

Acting Chief Finance and Investor Relations Officer

 

  

 

Av. Barbacena 1200

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

 

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

 

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32. MARKET ANNOUNCEMENT DATED DECEMBER 23, 2016: REPLY TO CVM INQUIRY LETTER 574/2016-CVM/SEP/GEA-1, OF DECEMBER 22, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 574/2016-CVM/SEP/GEA-1, of December 22, 2016

Question asked by the Brazilian Securities Commission (CVM)

Rio de Janeiro, December 22, 2016.

To Mr. Fabiano Maia Pereira

Investor Relations Director

Cia. Energética de Minas Gerais – CEMIG

Av. Barbacena 1200 – 5th floor, B1 Wing, Santo Agostinho,

30190-131 Belo Horizonte, MG

E-mail: ri@cemig.com.br

Tel.:      (31) 3506-5024

cc:         emissores@bvmf.com.br

Subject: Request for additional explanation

Dear Sir,

 

1. I refer to news reports published on December 20, 21 and 22, 2016, in some newspapers – such as the Folha de São Paulo and Valor Econômico – mentioning, among other subjects, motivation for the change in the Executive Board of Companhia Energética de Minas Gerais, and also to the market announcement of December 12, 2016, in response to Official Letter 567/2016/CVM/SEP/GEA-1 of December 20, 2016.

 

2. I request you to clarify whether the reports are true, in particular in relation to the following statements:

 

  I In November, Mauro Borges, at the time CEO of Cemig, and Fabiano Pereira, at that time financial director, had communicated to Governor Fernando Pimentel offers to resign if necessary as a response to those pressures and against the strengthening position of the PMDB in the company.

 

  II Allegedly, Fernando Pimentel was being pressured to change the principal appointments in the company to please the parties in his alliance, at a delicate moment when the Judiciary is imminently to decide on consequences of a legal action in which he is accused of corruption and money laundering, allegedly while he was Minister of Development, from 2011 to 2014.

 

  III The new Chief Executive Officer and Deputy CEO are seen as people that are close to the PMDB, indicating an increase in the power of that party in relation to Fernando Pimentel, who would, allegedly, be opening up spaces in important positions in the company to please allies.

 

  IV The changes, allegedly, were not related to dissatisfaction on the part of the government with the management of Mauro Borges, but rather – allegedly – reflect a pressure that the parties of the governor’s allied base have exercised on him to maintain their support for his government.

 

  

 

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. I request your statement on the items stated above, principally in relation to the criteria applied in the choice of managers, and any other information considered to be important on the subject.

 

4. Your statement should be given through the Empresas.net system, in the category: Market Announcement, under the sub-category: Responses to consultations by CVM/Bovespa; subject heading: Media News Reports; and should include a transcription of this letter.

 

5. We highlight that, under Article 3 of CVM Instruction 358/2002 it is the responsibility of the Chief Investor Relations Officer to disclose to and advise the CVM, and as the case may be, the stock exchange and/or any organized over-the-counter market on which securities issued by the company are traded, of any material event or fact which takes place or is related to its business, and to make best efforts for its immediate and wide dissemination, simultaneously to all the markets in which such securities are traded.

 

6. Further, §1 of Article 4 of CVM Instruction 358/2002 specifies the obligation, also, to seek information from the managers and controlling stockholders of the company, and from all other persons who have access to material facts or events, to ascertain whether they have knowledge of information that ought to be published to the market.

 

7. We warn you that the CVM Company Relations Supervision Management, using its powers under law and based on Sub-item II of Article 9 of Law 6385/1976 and CVM Instruction 452/07, may decide to apply a coercive fine of R$ 1,000 (one thousand Reais), without prejudice to other administrative sanctions, for any non-compliance with the requirement contained in this Official Letter within one business day from becoming aware of the content of this communication, which is sent exclusively by e-mail.

Reply by CEMIG

Dear Ms. Nilza Maria Silva de Oliveira,

In response to Official Letter 574/2016/CVM/SEP/GEA-1 of December 22, 2016, we inform you that the company is not aware of any information that gave rise to the above news report published in the media.

Mr. Mauro Borges Lemos and Mr. Fabiano Maia Pereira requested to leave the Company for personal reasons, and it is the function of the Board of Directors to dismiss and elect members of the Executive Board.

Further we would explain that in the composition of the new Executive Board, the only new member who was not already a member of the previous Executive Board was the CEO elected at the meeting of the Board of Directors of December 21, 2016, Mr. Bernardo Afonso Salomão de Alvarenga; and he was an employee of the Company from 1980 to 2007, and its Chief Trading Officer from 2007 to 2010.

Belo Horizonte, December 23, 2016.

Franklin Moreira Gonçalves

Acting Chief Finance and Investor Relations Officer

 

  

 

Av. Barbacena 1200

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

 

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

 

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33. MARKET ANNOUNCEMENT DATED DECEMBER 23, 2016: REPLY TO CVM INQUIRY LETTER 575/2016-CVM/SEP/GEA-1, OF DECEMBER 22, 2016

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MARKET ANNOUNCEMENT

Reply to CVM Inquiry Letter 575/2016-CVM/SEP/GEA-1, of December 22, 2016

Question asked by the Brazilian Securities Commission (CVM)

Rio de Janeiro, December 22, 2016.

To Mr.

Fabiano Maia Pereira

Investor Relations Director,

Cia. Energética de Minas Gerais – CEMIG

Av. Barbacena 1200, 5th floor, B1 Wing, Santo Agostinho,

30190-131 Belo Horizonte, MG

E-mail: ri@cemig.com.br

Fax:      (31) 3506-5026

Tel.:      (31) 3506-5024

cc:         emissores@bvmf.com.br

Subject: Request for information on news report

Dear Sir,

I refer to the report published in the newspaper Valor Econômico on December 22, 2016, entitled:

“Cemig uses injunction to hold on to Miranda hydroelectric plant concession”.

We request you to state whether the report is true, and if its truth is confirmed, the Company should explain for what reasons it believed that this was not a case of Material Information, and also comment on any other information considered to be important on the subject.

Your statement should be given through the Empresa.net system, in the category: Market Announcement, under the sub-category: Responses to consultations by CVM/Bovespa; subject heading: Media News Reports; and should include a transcription of this letter.

We highlight that, under Article 3 of CVM Instruction 358/2002 it is the responsibility of the Chief Investor Relations Officer to disclose to and advise the CVM, and as the case may be, the stock exchange and/or any organized over-the-counter market on which securities issued by the company are traded, of any material event or fact which takes place or is related to its business, and to make best efforts for its immediate and wide dissemination, simultaneously to all the markets in which such securities are traded.

 

  

 

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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Further, §1 of Article 4 of CVM Instruction 358/2002 specifies the obligation to seek information from the managers and controlling stockholders of the company, and from all the other people who have access to material facts and events, to ascertain whether they have knowledge of information that ought to be published to the market.

We warn you that the Company Relations Supervision Management, using its powers under law and based on Sub-item II of Article 9 of Law 6385/1976 and CVM Instruction 452/07, may decide to apply a coercive fine of R$ 1,000 (one thousand Reais), without prejudice to other administrative sanctions, for any non-compliance with the requirement contained in this Official Letter within one business day from becoming aware of the content of this communication, sent exclusively by e-mail.

Reply by CEMIG

Dear Ms. Nilza Maria Silva de Oliveira,

In response to Official Letter 575/2016/CVM/SEP/GEA-1, of December 22, 2016, we state as follows:

On December 21, 2016 Cemig Geração e Transmissão applied to the Higher Appeal Court (Superior Tribunal de Justiça – STJ) for an order of mandamus, requesting interim relief in the form of an injunction with the objective of maintaining the concession for the Miranda Hydroelectric Plant, which has a concession expiry date on December 23, 2016.

It is the Company’s understanding that filing of a legal action is an ordinary act in the life of a Company, and the mere act of applying for interim relief, since it does not automatically generate any immediate effect for the Company, does not characterize a material event or fact, in the terms of Article 2 of CVM Instruction 358/2002.

It was only on December 22, 2016, at 19:13:01 (7.13 p.m.), with the issuance of STJ Certificate 1722447, on the granting of an interim injunction giving Cemig Geração e Transmissão, on a temporary basis, control of the Miranda Hydroelectric Plant, that a material event took place; and the related Material Announcement was filed with the CVM before the end of the same day, namely yesterday, December 22, 2016.

It is, thus, our understanding that, in accordance with the requirement which you state, the material event was communicated as soon as it came into existence, on the same day, December 22, 2016.

Cemig takes this opportunity of reiterating its commitment to opportune and timely disclosure of all and any facts that are of interest to its stockholders, in the terms of Article 2 of CVM Instruction 358/2002.

Belo Horizonte, December 23, 2016.

Franklin Moreira Gonçalves

Acting Chief Finance and Investor Relations Officer

 

  

 

Av. Barbacena 1200

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

 

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

 

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