6-K

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of February, 2019

Commission File Number: 1-15224

 

 

Energy Company of Minas Gerais

(Translation of Registrant’s Name Into English)

 

 

Avenida Barbacena, 1219

30190-131 Belo Horizonte, Minas Gerais, Brazil

(Address of Principal Executive Offices)

 

 

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

Form 20-F ☒                 Form 40-F ☐

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

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

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

Yes ☐                No ☒

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

 

 

 

 

 


Index

 

Item

 

Description of Items

1. Market Announcement Dated November  27, 2018: CEMIG and CEMIG D submit restated ITR for 2Q and 3Q 2018

2. Revision of Quarterly Information (ITR) for 2Q 2018 (Restatement)

3. Revision of Quarterly Information (ITR) for 3Q 2018 (Restatement)

4. Market Announcement Dated December  20, 2018: Cross-holding elimination between CEMIG GT and Energimp is completed

5. Summary of Minutes of the 750th Meeting of the Board of Directors Dated December 28, 2018

6. Market Announcement Dated January  2, 2019: Renova’s Board of Directors does not approve AES’s offer for Power Generation Complex

7. Market Announcement Dated January  3, 2019: TAESA’s Extraordinary General Meeting approves acquisition of transmission companies

8. Market Announcement Dated January  15, 2019: TAESA places winning bid on Eletrobras Auction

9. Market Announcement Dated January  15, 2019: Eletrobras accepts CEMIG’s exercise of first refusal right on Auction 01/2018

10. Summary of Minutes of the 751th Meeting of the Board of Directors Dated January 18, 2019

11. Market Announcement Dated January  29, 2019: Cemig named most sustainable electricity company in the Americas

 


Forward-Looking Statements

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

 


SIGNATURES

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

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

 

By:

 

/s/ Maurício Fernandes Leonardo Júnior

 

Name: Maurício Fernandes Leonardo Júnior

Title: Chief Finance and Investor Relations Officer

Date: February 8, 2019

 


 

1. MARKET ANNOUNCEMENT DATED NOVEMBER 27, 2018: CEMIG AND CEMIG D SUBMIT RESTATED ITR FOR 2Q AND 3Q 2018

 

 

 

 

1


LOGO

 

 

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

MATERIAL ANNOUNCEMENT

Revision of Quarterly Information (ITR) for 2Q and 3Q 2018

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

On today’s date Cemig and its wholly-owned subsidiary Cemig Distribuição S.A. (Cemig D) have voluntarily re-presented their formal Quarterly Information (ITR) reports for the second and third quarters of 2018.

The re-presentation arose from differences identified in the manner of accounting of the amortization of certain concession financial assets and liabilities related to the CVA (Portion A Compensation) Account and Other Financial Components in the tariff-setting process, approved in Cemig D’s 4th Periodic Tariff Review.

The adjustments result in higher net profit for Cemig D than in the figures published to the market in the Quarterly Information (ITR) for the second and third quarters of 2018.

The Company has opted to re-present this Interim Accounting Information, so as to better reflect its equity situation and operational performance.

Cemig invites its investors to participate in a webcast and conference call on its third quarter 2018 results, on Wednesday, November 28, 2018 at 2 p.m., as specified in its Corporate Events Calendar.

Belo Horizonte, November 27, 2018.

Maurício Fernandes Leonardo Júnior

Diretor de Finanças e Relações com Investidores

 

  

 

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.

 

2


 

2. REVISION OF QUARTERLY INFORMATION (ITR) FOR 2Q 2018 (RESTATEMENT)

 

 

 

 

3


LOGO

 

CONTENTS

 

STATEMENTS OF FINANCIAL POSITION      5  
STATEMENTS OF INCOME      7  
STATEMENTS OF COMPREHENSIVE INCOME      9  
STATEMENTS OF CHANGES IN EQUITY—CONSOLIDATED      11  
STATEMENTS OF CASH FLOWS      13  
STATEMENTS OF ADDED VALUE      15  
CONDENSED NOTES TO THE INTERIM FINANCIAL INFORMATION      16  
1.  

OPERATING CONTEXT

     16  
2.  

BASIS OF PREPARATION

     18  
3.  

PRINCIPLES OF CONSOLIDATION

     28  
4.  

CONCESSIONS AND AUTHORIZATIONS

     29  
5.  

CASH AND CASH EQUIVALENTS

     30  
6.  

SECURITIES

     30  
7.  

CUSTOMERS, TRADERS AND TRANSPORT OF ENERGY CONCESSION HOLDERS

     31  
8.  

RECOVERABLE TAXES

     32  
9.  

INCOME AND SOCIAL CONTRIBUTION TAXES

     33  
10.  

RESTRICTED CASH

     35  
11.  

ACCOUNTS RECEIVABLE FROM THE STATE OF MINAS GERAIS

     35  
12.  

ESCROW DEPOSITS

     36  
13.  

REIMBURSEMENT OF TARIFF SUBSIDIES

     37  
14.  

CONCESSION FINANCIAL ASSETS AND LIABILITIES

     37  
15.  

INVESTMENTS

     44  
16.  

PROPERTY, PLANT AND EQUIPMENT

     54  
17.  

INTANGIBLE ASSETS

     56  
18.  

SUPPLIERS

     58  
19.  

TAXES PAYABLE, INCOME TAX AND SOCIAL CONTRIBUTION TAX AND AMOUNTS TO BE REIMBURSED TO CUSTOMERS

     58  
20.  

LOANS, FINANCINGS AND DEBENTURES

     60  
21.  

REGULATORY CHARGES

     65  
22.  

POST-RETIREMENT OBLIGATIONS

     65  
23.  

PROVISIONS

     66  
24.  

EQUITY AND REMUNERATION TO SHAREHOLDERS

     75  
25.  

REVENUE

     77  
26.  

OPERATING COSTS AND EXPENSES

     82  
27.  

FINANCE INCOME AND EXPENSES

     87  
28.  

RELATED PARTY TRANSACTIONS

     88  
29.  

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

     92  
30.  

ASSETS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS

     105  
31.  

OPERATING SEGMENTS

     106  
32.  

THE ANNUAL TARIFF ADJUSTMENT

     109  
33.  

NON-CASH TRANSACTIONS

     109  
34.  

SUBSEQUENT EVENTS

     109  
CONSOLIDATED RESULTS      112  
OTHER INFORMATION THAT THE COMPANY BELIEVES TO BE MATERIAL      126  
REPORT ON THE REVIEW OF INTERIM INFORMATION—ITR      133  

 

4


LOGO

 

STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017

ASSETS

(Thousands of Brazilian Reais)

 

     Note      Consolidated      Holding company  
   June 30, 2018
(Restated)
     Dec. 31, 2017      June 30, 2018
(Restated)
     Dec. 31, 2017  

CURRENT

              

Cash and cash equivalents

     5        940,937        1,030,257        63,045        38,672  

Securities

     6        288,035        1,058,384        37,107        63,960  

Customers and traders and Concession holders – Transport of electricity

     7        3,759,200        3,885,392        24,274        —    

Concession financial assets

     14        646,904        847,877        —          —    

Recoverable taxes

     8        150,367        173,790        3,402        43  

Income and Social Contribution taxes recoverable

     9a        389,828        339,574        25,889        19,722  

Dividends receivable

        9,648        76,893        409,398        603,049  

Restricted cash

     10        111,220        106,227        90,663        87,872  

Inventories

        33,730        38,134        10        10  

Advances to suppliers

        96,563        116,050        —          —    

Accounts receivable from the State of Minas Gerais

     11               235,018        —          235,018  

Reimbursement of tariff subsidies

     13        85,827        77,086        —          —    

Low-income subscriber subsidy

        25,140        26,660        —          —    

Derivative financial instruments—Swaps

     29        6,854        —          —          —    

Other

        487,047        525,961        9,250        10,473  
     

 

 

    

 

 

    

 

 

    

 

 

 
        7,031,300        8,537,303        663,038        1,058,819  

Assets classified as Held for sale

     30        281,578        —          281,578        —    
     

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL, CURRENT

        7,312,878        8,537,303        944,616        1,058,819  
     

 

 

    

 

 

    

 

 

    

 

 

 

NON-CURRENT

              

Securities

     6        63,847        29,753        9,525        1,737  

Advance to suppliers

     28        99,118        6,870        —          —    

Customers and traders and Concession holders – Transport of electricity

     7        76,594        255,328        —          —    

Recoverable taxes

     8        230,781        230,678        4,100        1,810  

Income and Social Contribution taxes recoverable

     9a        11,248        20,617        11,248        20,617  

Deferred income and Social Contribution taxes

     9b        1,936,021        1,871,228        791,360        756,739  

Escrow deposits

     12        2,380,376        2,335,632        280,876        277,791  

Derivative financial instruments—Swaps

     29        125,577        8,649        —          —    

Accounts receivable from the State of Minas Gerais

     11        248,100        —          248,100        —    

Other

        666,606        628,443        29,150        34,978  

Concession financial assets

     14        7,277,562        6,604,625        —          —    

Investments – Equity method

     15        7,703,552        7,792,225        14,101,036        13,692,183  

Property, plant and equipment

     16        2,420,914        2,762,310        2,506        1,810  

Intangible assets

     17        11,184,952        11,155,928        6,730        2,458  
     

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL, NON-CURRENT

        34,425,248        33,702,286        15,484,631        14,790,123  
     

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

        41,738,126        42,239,589        16,429,247        15,848,942  
     

 

 

    

 

 

    

 

 

    

 

 

 

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

 

5


LOGO

 

STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017

LIABILITIES

(Thousands of Brazilian Reais)

 

     Note      Consolidated     Holding company  
   June 30, 2018
(Restated)
    Dec. 31, 2017     June 30, 2018
(Restated)
    Dec. 31, 2017  

Suppliers

     18        2,152,676       2,342,757       8,812       4,667  

Regulatory charges

     21        434,349       512,673       5,836       —    

Profit sharing

        19,490       9,089       1,135       348  

Taxes payable

     19a        294,755       704,572       6,546       5,841  

Income and Social Contribution tax

     19b        67,648       115,296       —         —    

Interest on Equity and Dividends payable

     24        427,790       427,832       425,832       425,838  

Loans, financings and debentures

     20        2,740,647       2,370,551       18,653       —    

Payroll and related charges

        222,530       207,091       15,921       11,072  

Post-retirement obligations

     22        236,663       231,894       12,906       12,974  

Concessions payable

        2,326       2,987       —         —    

Concession financial liabilities

     14        16,751       414,800       —         —    

Derivative financial instruments—put options

     29        569,286       507,232       569,286       507,232  

Advances from clients

     7        150,728       232,762       —         —    

Derivative financial instruments—Swaps

     29        1,214       12,596       —         —    

Other obligations

        523,782       570,152       12,990       6,218  
     

 

 

   

 

 

   

 

 

   

 

 

 
        7,860,635       8,662,284       1,077,917       974,190  

Liabilities directly associated with assets classified as held for sale

     30        5,905       —         5,905       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL, CURRENT

        7,866,540       8,662,284       1,083,822       974,190  
     

 

 

   

 

 

   

 

 

   

 

 

 

NON-CURRENT

           

Regulatory charges

     21        278,888       249,817       —         —    

Loans, financings and debentures

     20        11,863,407       12,027,146       43,484       —    

Taxes payable

     19a        28,267       28,199       —         —    

Deferred income tax and Social Contribution tax

     9b        717,902       734,689       —         —    

Provisions

     23        668,434       678,113       75,316       63,194  

Post-retirement obligations

     22        4,004,593       3,954,287       460,706       446,523  

Concessions payable

        16,151       18,240       —         —    

Concession financial liabilities

     14        6,295       —         —         —    

Pasep and Cofins taxes to be reimbursed to customers

     19a        1,105,572       1,087,230       —         —    

Derivative financial instruments—put options

     29        336,199       307,792       —         —    

Derivative financial instruments—Swaps

     29        —         28,515       —         —    

Other obligations

        117,575       133,141       41,713       39,049  
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL, NON-CURRENT

        19,143,283       19,247,169       621,219       548,766  
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

        27,009,823       27,909,453       1,705,041       1,522,956  
     

 

 

   

 

 

   

 

 

   

 

 

 

EQUITY

     24           

Share capital

        7,293,763       6,294,208       7,293,763       6,294,208  

Capital reserves

        2,249,721       1,924,503       2,249,721       1,924,503  

Profit reserves

        5,728,574       5,728,574       5,728,574       5,728,574  

Equity valuation adjustments

        (836,528     (836,522     (836,528     (836,522

Subscription of shares, to be capitalized

        —         1,215,223       —         1,215,223  

Retained earnings

        288,676       —         288,676       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

        14,724,206       14,325,986       14,724,206       14,325,986  
     

 

 

   

 

 

   

 

 

   

 

 

 

NON-CONTROLLING INTERESTS

        4,097       4,150       —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL EQUITY

        14,728,303       14,330,136       14,724,206       14,325,986  
     

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

        41,738,126       42,239,589       16,429,247       15,848,942  
     

 

 

   

 

 

   

 

 

   

 

 

 

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

 

6


LOGO

 

STATEMENTS OF INCOME

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017

(Thousands of Brazilian Reais except earnings per share)

 

            Consolidated     Holding company  
     Note      Jan to Jun 2018
(Restated)
    Jan to Jun 2017     Jan to Jun 2018
(Restated)
    Jan to Jun 2017  

GOING CONCERN OPERATIONS

           

NET REVENUE

     25        10,541,969       10,017,959       146       178  

OPERATING COSTS

           

COST OF ENERGY AND GAS

     26           

Energy purchased for resale

        (5,082,598     (4,742,418     —         —    

Charges for use of the national grid

        (808,580     (404,261     —         —    

Gas purchased for resale

        (556,459     (485,163     —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (6,447,637     (5,631,842     —         —    

OTHER COSTS

     26           

Personnel and managers

        (532,260     (688,847     —         —    

Materials

        (22,966     (17,599     —         —    

Outsourced services

        (413,971     (341,397     —         —    

Depreciation and amortization

        (374,523     (385,455     —         —    

Operating provisions, net

        (1,901     (172,079     —         —    

Infrastructure construction cost

        (383,643     (441,034     —         —    

Other

        (41,227     (21,314     —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (1,770,491     (2,067,725     —         —    

TOTAL COST

        (8,218,128     (7,699,567     —         —    

GROSS PROFIT

        2,323,841       2,318,392       146       178  

OPERATING EXPENSES

     26           

Selling expenses

        (167,557     (141,472     —         —    

General and administrative expenses

        (313,117     (437,894     (34,438     (28,293

Operating provisions

        (102,795     (56,954     (78,189     (15,311

Other operating revenues (expenses)

        (256,325     (313,114     (29,545     (25,030
     

 

 

   

 

 

   

 

 

   

 

 

 
        (839,794     (949,434     (142,172     (68,634

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

     15        (26,233     60,118       529,803       511,625  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income before finance income (expenses) and taxes

        1,457,814       1,429,076       387,777       443,169  

Finance income

     27        491,169       348,901       18,792       33,018  

Finance expenses

     27        (1,345,801     (1,083,201     (3,085     (1,961
     

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax and social contribution tax

        603,182       694,776       403,484       474,226  

Current income and Social Contribution taxes

     9c        (196,419     (292,722     —         (2,533

Deferred income and Social Contribution taxes

     9c        25,574       78,794       38,569       8,885  
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period from going concern operations

        432,337       480,848       442,053       480,578  
     

 

 

   

 

 

   

 

 

   

 

 

 

DISCONTINUED OPERATIONS

           

Net income for the period from discontinued operations

     30        21,372       —         11,358       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME FOR THE PERIOD

        453,709       480,848       453,411       480,578  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total of net income for the period attributed to:

           

Equity holders of the parent

           

Net income for the period from going concern operations

        432,039       480,578       442,053       480,578  

Net income for the period from discontinued operations

        21,372       —         11,358       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

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

        453,411       480,578       453,411       480,578  
     

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interests

           

Net income for the period from going concern operations

        298       270       —         —    

Net income for the period from discontinued operations

        —         —         —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period attributable to non-controlling interests

        298       270       —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        453,709       480,848       453,411       480,578  
     

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings per preferred share – R$

     24        0.31       0.38       0.31       0.38  

Basic and diluted earnings per common share – R$

     24        0.31       0.38       0.31       0.38  

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

 

7


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STATEMENTS OF INCOME

FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017

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

 

            Consolidated     Holding company  
     Note      Apr to Jun 2018
(Restated)
    Apr to Jun 2017     Apr to Jun 2018
(Restated)
    Apr to Jun 2017  

GOING CONCEERN OPERATIONS

           

NET REVENUE

     25        5,606,538       5,205,029       73       84  

OPERATING COSTS

           

COST OF ENERGY AND GAS

     26           

Energy purchased for resale

        (2,818,905     (2,649,330     —         —    

Charges for use of the national grid

        (416,038     (197,764     —         —    

Gas purchased for resale

        (293,225     (262,651     —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (3,528,168     (3,109,745     —         —    

OTHER COSTS

     26           

Personnel and managers

        (291,458     (401,340     —         —    

Materials

        (15,811     (11,301     —         —    

Outsourced services

        (243,201     (194,961     —         —    

Depreciation and amortization

        (179,837     (199,011     —         —    

Operating provisions, net

        10,876       (93,147     —         —    

Infrastructure construction cost

        (202,974     (240,475     —         —    

Other

        (37,941     (14,159     —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (960,346     (1,154,394     —         —    

TOTAL COST

        (4,488,514     (4,264,139     —         —    

GROSS PROFIT

        1,118,024       940,890       73       84  

OPERATING EXPENSES

     26           

Selling expenses

        (91,374     (75,277     —         —    

General and administrative expenses

        (96,468     (231,896     (24,842     (8,789

Operating provisions

        (59,109     6,450       (38,878     1,157  

Other operating expenses

        (124,165     (140,437     (15,170     (11,630
     

 

 

   

 

 

   

 

 

   

 

 

 
        (371,116     (441,160     (78,890     (19,262

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

     15        (83,107     30,477       (31,433     152,163  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income before finance income (expenses) and taxes

        663,801       530,207       (47,384     132,985  

Finance income

     27        249,315       169,010       7,544       9,438  

Finance expenses

     27        (946,147     (510,564     (2,191     (834
     

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax and social contribution tax

        (33,031     188,653       (42,031     141,589  

Current income and Social Contribution taxes

     9c        (11,393     (59,265     —         (2,533

Deferred income and Social Contribution taxes

     9c        12,166       8,726       19,635       (1,074
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) for the period from going concern operations

        (32,258     138,114       (22,396     137,982  

DISCONTINUED OPERATIONS

           

Net income (loss) for the period from discontinued operations

     30        21,372       —         11,358       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) FOR THE PERIOD

        (10,886     138,114       (11,038     137,982  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total of net income for the period attributed to:

           

Equity holders of the parent

           

Net income for the period from going concern operations

        (32,410     138,114       (22,396     137,982  

Net income for the period from discontinued operations

        21,372       —         11,358       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

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

        (11,038     137,982       (11,038     137,982  
     

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interests

           

Net income for the period from going concern operations

        152       132       —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period attributable to non-controlling interests

        152       132       —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 
        (10,886     138,114       (11,038     137,982  
     

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings (loss) per preferred share – R$

     24        (0.01     0.11       (0.01     0.11  

Basic and diluted earnings (loss) per common share – R$

     24        (0.01     0.11       (0.01     0.11  

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

 

8


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STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017

(Thousands of Brazilian Reais)

 

     Consolidated     Holding company  
     Jan to Jun 2018
(Restated)
    Jan to Jun 2017     Jan to Jun 2018
(Restated)
    Jan to Jun 2017  

NET INCOME FOR THE PERIOD

     453,709       480,848       453,411       480,578  

OTHER COMPREHENSIVE INCOME

        

Items not to be reclassified to statements of income in subsequent periods

        

Post retirement obligations – premeasurement of obligations of the defined benefit plans, net of taxes

     (416     (680     —         —    

Equity gain (loss) on other comprehensive income in subsidiary and jointly-controlled entity, net of taxes

     —         (4,851     (416     (5,531
  

 

 

   

 

 

   

 

 

   

 

 

 
     (416     (5,531     (416     (5,531

Items to be reclassified to statements of income in subsequent periods

        

Equity gain on other comprehensive income, in subsidiary and jointly-controlled entity, relating to fair value of financial asset, net of taxes

     —         (38,134     —         (38,134
  

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME FOR THE PERIOD

     453,293       437,183       452,995       436,913  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total of comprehensive income for the period attributed to:

        

Equity holders of the parent

     452,995       436,913       452,995       436,913  

Non-controlling interests

     298       270       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 
     453,293       437,183       452,995       436,913  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

 

9


LOGO

 

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017

(Thousands of Brazilian Reais)

 

     Consolidated     Holding company  
     Apr to Jun 2018
(Restated)
    Apr to Jun 2017     Apr to Jun 2018
(Restated)
    Apr to Jun 2017  

NET INCOME FOR THE PERIOD

     (10,886     138,114       (11,038     137,982  

OTHER COMPREHENSIVE INCOME

        

Items not to be reclassified to statements of income in subsequent periods

        

Equity gain (loss) on other comprehensive income in jointly-controlled entity, net of tax

     —         (3,984     —         (3,984
  

 

 

   

 

 

   

 

 

   

 

 

 
     —         (3,984     —         (3,984

Items to be reclassified to statements of income in subsequent periods

        

Equity gain on other comprehensive income, in subsidiary and jointly-controlled entity, relating to fair value of financial assets, net of taxes

     —         (73,825     —         (73,825
  

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME FOR THE PERIOD

     (10,886     60,305       (11,038     60,173  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total of comprehensive income for the period attributed to:

        

Equity holders of the parent

     (11,038     60,173       (11,038     60,173  

Non-controlling interests

     152       132       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 
     (10,886     60,305       (11,038     60,173  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

 

10


LOGO

 

STATEMENTS OF CHANGES IN EQUITY - CONSOLIDATED

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017

(Thousands of Brazilian Reais)

 

     Share
capital
     Subscription
of shares to
be
capitalized
    Capital
reserves
     Profit
reserves
     Equity
valuation
adjustments
    Retained
earnings
    Total
equity
holders of
the parent
    Non-controlling
interests
    Total
Equity
 

BALANCES ON DEC. 31, 2017

     6,294,208        1,215,223       1,924,503        5,728,574        (836,522     —         14,325,986       4,150       14,330,136  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

First adoption CPC 48

     —          —         —          —          —         (181,846     (181,846     —         (181,846

Net income for the period

     —          —         —          —          —         453,411       453,411       298       453,709  

Other comprehensive income

                     

Measurement of obligations of the defined benefit plans, net of taxes

     —          —         —          —          (416     —         (416     —         (416
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —          —         —          —          (416     453,411       452,995       298       453,293  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subscription of Shares to be Capitalized

     —          109,550       —          —          —         —         109,550       —         109,550  

Capital subscribed

     999,555        (999,555     —          —          —         —         —         —         —    

Constitution of reserves

        (325,218     325,218        —          —         —         —         —         —    

Other changes in Equity:

                     

Interest on Equity

     —          —         —          —          —         —         —         (351     (351

Realization of reserves

                     

Realization of deemed cost of PP&E

     —          —         —          —          410       17,111       17,521       —         17,521  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCES ON JUNE 30, 2018 (RESTATED)

     7,293,763        —         2,249,721        5,728,574        (836,528     288,676       14,724,206       4,097       14,728,303  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

11


LOGO

 

STATEMENTS OF CHANGES IN EQUITY—CONSOLIDATED

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

(Thousands of Brazilian Reais)

 

     Share
capital
     Capital
reserves
     Profit
reserves
     Equity
valuation
adjustments
    Retained
earnings
    Total equity
holders of
the parent
    Non-controlling
interests
    Total Equity  

BALANCES ON DECEMBER 31, 2016

     6,294,208        1,924,503        5,199,855        (488,285     —         12,930,281       4,090       12,934,371  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period

     —          —          —          —         480,578       480,578       270       480,848  

Other comprehensive income

                   

Measurement of obligations of the defined benefit plans, net of taxes

     —          —          —          (680     —         (680     —         (680

Equity gain (loss) on Other comprehensive income in subsidiary and jointly-controlled entity

     —          —          —          (42,985     —         (42,985     —         (42,985
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —          —          —          (43,665     480,578       436,913       270       437,183  

Other changes in Equity:

                   

Additional dividends proposed to non-controlling interests

     —          —          —          —         —         —         (424     (424

Tax incentives reserve

     —          —          2,192        —         (2,192     —         —         —    

Realization of reserves

                   

Realization of deemed cost of PP&E

     —          —          —          (854     598       (256     —         (256
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCES ON JUNE 30, 2017

     6,294,208        1,924,503        5,202,047        (532,804     478,984       13,366,938       3,936       13,370,874  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

12


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STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2018 AND 2017

(Thousands of Brazilian Reais)

 

            Consolidated     Holding company  
     Note      Jan to Jun 2018
(Restated)
    Jan to Jun 2017     Jan to Jun 2018
(Restated)
    Jan to Jun 2017  

CASH FLOW FROM OPERATIONS

           

Net income for the period from going concern operations

        432,337       480,848       442,053       480,578  

Adjustments to reconcile net income to net cash flows:

           

Income tax and Social Contribution taxes

        170,845       213,928       (38,569     (6,352

Depreciation and amortization

     26        411,300       410,800       216       236  

Loss on write off of net residual value of unrecoverable Concession financial assets, PP&E and Intangible assets

        14,818       14,651       155       23  

Share of profit (loss) in associates and joint ventures

     15        26,233       (60,118     (529,803     (511,625

Interest and monetary variation

        279,744       624,221       (23,933     (952

Foreign exchange variation on loans

     20        554,278       121             —    

Amortization of loans’ transaction costs

     20        15,548       29,827       153       —    

Provisions for operating losses, net

     26        267,319       369,918       78,189       15,311  

Fair value adjustment of derivative financial instruments – Swap

     29        (180,429     —               —    

CVA (Portion A Compensation) Account and Other Financial Components in tariff adjustments

     25        (1,150,672     331,896             —    

Post-retirement obligations

     22        202,556       228,012       21,990       21,242  
     

 

 

   

 

 

   

 

 

   

 

 

 
        1,043,877       2,644,104       (49,549     (1,539
     

 

 

   

 

 

   

 

 

   

 

 

 

(Increase) / decrease in assets

           

Customers and traders and Concession holders

        (14,147     (220,199     3,928       —    

CVA (Portion A Compensation) Account and

Other Financial Components, in tariff adjustments

     14        280,453       145,502             —    

Energy Development Account (CDE)

        (8,741     (9,594           —    

Recoverable taxes

        (45,383     526       285       (141

Income and Social Contribution taxes credit

        (72,663     55,284       3,652       79,081  

Escrow deposits

        (29,521     (13,655     9,472       6,448  

Dividends received from investments

        197,247       157,445       484,408       228,196  

Concession financial assets

        379,893       (36,162           —    

Advances to suppliers

        (63,707     5,656             —    

Gas drawing rights

        317       366,954             —    

Others

        92,759       30,053       (1,110     5,857  
     

 

 

   

 

 

   

 

 

   

 

 

 
        716,507       481,810       500,635       319,441  
     

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in liabilities

           

Suppliers

        (190,081     (23,660     (552     594  

Taxes payable

        (307,204     (225,049     831       (80,821

Income and Social Contribution taxes payable

        —         128,753             (452

Payroll and related charges

        15,439       9,357       2,869       1,309  

Regulatory charges

        (49,253     15,439       5,836       —    

Advances from clients

        (88,849     57,560             —    

Post-retirement obligations

     22        (147,481     (133,592     (7,875     (7,381

Others

        (86,407     (193,594     59       (9,202
     

 

 

   

 

 

   

 

 

   

 

 

 
        (853,836     (364,786     1,168       (95,953
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated by going concern operations

        906,548       2,761,128       452,254       221,949  
     

 

 

   

 

 

   

 

 

   

 

 

 

Interest paid on loans and financings

     20        (671,651     (711,474     (438     —    

Income and Social Contribution taxes paid

        (292,981     (283,024     (38     (2,081

Settlement of derivative financial instruments (Swap)

        12,981       —         —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) GOING CONCERN OPERATIONS

        (45,103     1,766,630       451,778       219,868  
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash from (used in) Discontinued operations

     30        36,602       —         18,944       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) OPERATING ACTIVITIES

        (8,501     1,766,630       470,722       219,868  
     

 

 

   

 

 

   

 

 

   

 

 

 

 

13


LOGO

 

     Note      Consolidated     Holding company  
   Jan to Jun 2018
(Restated)
    Jan to Jun 2017     Jan to Jun 2018
(Restated)
    Jan to Jun 2017  

INVESTING ACTIVITIES

           

Marketable securities

        738,632       (103,864     19,065       117,226  

Restricted cash

        (4,993     (20,810     (2,500     (20,719

Investments

           

Capital contributions in investees

        (149,918     (186,231     (569,105     (100,111

Cash received through merger

        —         —         428        

Property, plant and equipment

     16        (18,641     (31,364            

Intangible assets

     17        (368,570     (407,733     (15      
     

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) INVESTING IN GOING CONCERN OPERATIONS

        196,510       (750,002     (552,127     (3,604
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investment activities—discontinued operations

     30        (7,631     —         —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) INVESTING ACTIVITIES

        188,879       (750,002     (552,127     (3,604
     

 

 

   

 

 

   

 

 

   

 

 

 

FINANCING ACTIVITIES

           

New loans and debentures

     20        395,860       60,109       —          

Capital increase

     24        109,550             109,550        

Payment of loans, financings and debentures

     20        (774,715     (855,057     (3,766      

Interest on capital and dividends paid

        (393     (270,709     (6     (270,709
     

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) FINANCING ACTIVITIES

        (269,698     (1,065,657     105,778       (270,709
     

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

        (89,320     (49,029     24,373       (54,445
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at the beginning of the period

     5        1,030,257       995,132       38,672       69,352  
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

     5        940,937       946,103       63,045       14,907  
     

 

 

   

 

 

   

 

 

   

 

 

 

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

 

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STATEMENTS OF ADDED VALUE

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2018 AND 2017

(Thousands of Brazilian Reais)

 

     Consolidated      Holding company  
     Jan to Jun
2018
(Restated)
           Jan to Jun
2017
           Jan to
Jun 2018
(Restated)
          Jan to
Jun
2017
       

REVENUES

                  

Sales of electricity, gas and services (1)

     15,214,311          14,282,104          161         196    

Distribution construction revenue

     378,911          434,009          —           —      

Transmission construction revenue

     4,732          7,025          —           —      

Gain on financial updating of the Concession Grant Fee

     156,980          150,476          —           —      

Adjustment to expectation of cash flow from the indemnifiable Financial assets of the distribution concession

     3,066          1,511          —           —      

Transmission indemnity revenue

     146,519          269,855          —           —      

Generation indemnity revenue

     34,463          —            —           —      

Investments in PP&E

     28,539          12,149          —           —      

Other revenues

     3,717          1,479          —           —      

Provision for Doubtful Receivables (PECLD)

     (162,063        (140,885        —           —      
  

 

 

      

 

 

      

 

 

     

 

 

   
     15,809,175          15,017,723          161         196    

INPUTS ACQUIRED FROM THIRD PARTIES

                  

Energy purchased for resale

     (5,575,380        (5,197,883        —           —      

Charges for use of national grid

     (900,253        (451,216        —           —      

Outsourced services (1)

     (663,913        (638,744        (9,377       (3,602  

Gas purchased for resale

     (556,458        (485,163        —           —      

Materials (1)

     (195,821        (217,936        3,707         (66  

Other operational costs (1)

     (229,758        (356,713        (82,895       (20,872  
  

 

 

      

 

 

      

 

 

     

 

 

   
     (8,121,583        (7,347,655        (88,565       (24,540  

GROSS VALUE ADDED

     7,687,592          7,670,068          (88,404       (24,344  

RETENTIONS

                  

Depreciation and amortization (1)

     (411,300        (410,800        (216       (236  
  

 

 

      

 

 

      

 

 

     

 

 

   

NET ADDED VALUE PRODUCED BY GOING CONCERN OPERATIONS

     7,276,292          7,259,268          (88,620       (24,580  

NET ADDED VALUE PRODUCED BY DISCONTINUED OPERATIONS

     21,372          —            11,358         —      

ADDED VALUE RECEIVED BY TRANSFER

                  

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

     (26,233        60,118          529,803         511,625    

Finance income (1)

     491,169          348,901          18,792         33,018    
  

 

 

      

 

 

      

 

 

     

 

 

   

ADDED VALUE TO BE DISTRIBUTED

     7,762,600          7,668,287          471,333         520,063    
  

 

 

      

 

 

      

 

 

     

 

 

   

DISTRIBUTION OF ADDED VALUE

                  
       %          %          %         %  
    

 

 

      

 

 

      

 

 

     

 

 

 

Employees

     816,235       10.52        1,072,781       13.99        43,703       9.27       39,991       7.69  

Direct remuneration

     521,283       6.72        600,072       7.83        19,122       4.06       14,217       2.73  

Post-employment obligations and Other benefits

     236,605       3.05        270,294       3.52        21,998       4.67       20,729       3.99  

FGTS

     32,681       0.42        36,993       0.48        762       0.16       682       0.13  

Programmed Voluntary Retirement Plan

     25,666       0.33        165,422       2.16        1,821       0.38       4,363       0.84  

Taxes

     5,079,531       65.44        4,945,812       64.50        (35,652     (7.56     (4,071     (0.78

Federal

     2,551,327       32.87        2,285,738       29.81        (36,137     (7.67     (4,613     (0,89

State

     2,520,154       32.47        2,652,340       34.59        267       0.06       392       0.08  

Municipal

     8,050       0.10        7,734       0.10        218       0.05       150       0.03  

Remuneration of external capital

     1,413,125       18.20        1,168,846       15.24        9,871       2.09       3,565       0.69  

Interest

     1,360,908       17.53        1,122,148       14.63        3,085       0.65       1,961       0.38  

Rentals

     52,217       0.67        46,698       0.61        6,786       1.44       1,604       0.31  

Remuneration of own capital

     453,709       5.84        480,848       6.27        453,411       96.20       480,578       92.40  

Retained earnings

     453,411       5.84        480,578       6.27        453,411       96.20       480,578       92.40  

Non-controlling interest in Retained earnings

     298       —          270       —          —         —         —         —    
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     7,762,600       100.00        7,668,287       100.00        471,333       100.00       520,063       100.00  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Includes the effect of net incomes arising from the discontinued operations.

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

 

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CONDENSED NOTES TO THE INTERIM FINANCIAL INFORMATION

FOR THE SIX-MONTH PERIOD ENDED AS OF JUNE 30, 2018

(In Thousands of Brazilian Reais – except where otherwise indicated)

 

1.

OPERATING CONTEXT

 

a)

The Company

Companhia Energética de Minas Gerais (´Parent company’ or ‘Holding Company’) is a listed corporation, registered in the Brazilian Registry of Corporate Taxpayers (CNPJ) under number 17.155.730/0001-64, with shares traded on the São Paulo Stock Exchange (‘B3’) at Corporate Governance Level 1; through ADRs on the New York Stock Exchange (‘NYSE’); and on the stock exchange of Madrid (‘Latibex’). It is domiciled in Brazil, Belo Horizonte, Minas Gerais. It operates exclusively as a holding company, with subsidiaries and investments in associates or jointly controlled entities (collectively referred to as “Cemig” or the “the Company”), which are engaged in the construction and operation of infrastructure used in the generation, transformation, transmission, distribution and sale of electricity, and also activities in the various fields of the energy sector, for the purpose of commercial operation.

As of June 30, 2018 Company´s current liabilities exceeded its current assets by R$ 553,662 and R$ 139,206, respectively, in the consolidated and the Holding Company. In the half-year then ended, the Company generated negative consolidated operating cash flow in the amount of R$ 8,501 (positive in the amount of R$ 1,766,630 in the same period of 2017), arising mainly from higher than budgeted costs on purchase of energy – which will be the subject of reimbursement in the next tariff adjustment. The Holding Company generated a positive operating cash flow of R$ 470,722 (R$ 219,868 in the same period of 2017). Additionally, as of June 30, 2018, Cemig’s consolidated indebtedness from loans, financings and debentures on current and non-current liabilities comprised R$ 2,740,647 and R$ 11,863,407, respectively. The Company’s Management monitors its cash flow and, in that way, studies actions in order to the adjustment of its current financial position to the levels considered adequate to meet its necessities.

As part of the Company’s indebtness management, in December 2017 and July 2018 the subsidiary Cemig GT issued Eurobonds for an amount of US$ 1 billion (R$ 3.2 billion) and US$ 500 million (R$ 1.9 billion), respectively, which mature in 2024. In addition, at the end of 2017, Cemig entered into negotiations with its main creditors aiming at a Bank Debt Refinancing representing up to R$ 3.4 billion of which R$ 2.7 billion of the subsidiary Cemig D and R$ 741 million of the subsidiary Cemig GT. These initiatives have balanced the Company’s cash flows, extended average debt maturities, and improved its credit quality.

 

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Based on the facts and circumstances that existed on this reporting date, Management has evaluated the Company’s ability to continue on a going concern basis and is convinced that its operations have the capacity to generate funds to continue its business in the future. In addition, Management is not aware of any material uncertainties that could generate significant doubts about its ability to continue operating. Therefore, these interim financial information have been prepared on a going concern basis.

Merger of Cemig Telecomunicações S.A. (‘Cemig Telecom’) and sale of telecom assets

On March 31, 2018, Cemig completed the merger of its wholly-owned subsidiary Cemig Telecom at book value. As a result, Cemig Telecom has been wound up and Cemig has taken over all the subsidiary’s assets, rights and obligations. Considering this is a wholly-owned subsidiary merger there has not been capital increase nor new shares issuance. The Cemig Telecom shares have been extinguished on the merger date.

The balance sheet of Cemig Telecom used for the merger, at March 31, 2018, is as follows:

 

     Mar. 31, 2018           Mar. 31, 2018  

Assets

      Liabilities   

Current

     24,986     

Current

     33,816  

Non-current

     

Non-current

     55,407  

Non-current assets

     15,313        

Investments

     17,116        

Net PP&E

     271,766        

Intangible assets

     11,716        
  

 

 

       
     315,911      Equity      251,674  
  

 

 

       

 

 

 

Total assets

     340,897      Total liabilities and Equity      340,897  
  

 

 

       

 

 

 

The Company’s Management is in the process of sale of the assets merged from Cemig Telecom. See details in Note 30.

Changes in the Company’s by-laws – improvement of corporate governance

On June 11, 2018 a General Meeting of Shareholders approved changes to the Company’s by-laws, to formalize best corporate governance practices and meet the requirements of Law 13303/2016 (the ‘State Companies Law’). The improvements now formally incorporated in the by-laws include:

 

Reduction of the number of members of the Board of Directors from 15 to 9, in line with the IBGC Best Corporate Governance Practices Code, and the Corporate Sustainability Evaluation Manual of the Dow Jones Sustainability Index.

 

Creation of the Audit Committee (Comitê de Auditoria). The Fiscal Council (Conselho Fiscal) remains in existence.

The changes in the by-laws have had no effect on the Company’s dividend policy.

 

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2.

BASIS OF PREPARATION

 

2.1

Statement of compliance

The interim financial information has been prepared in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), Technical Pronouncement 21 (R1) – ‘CPC 21’, which applies to interim financial information, and the rules issued by the Brazilian Securities Commission (Comissão de Valores Mobiliários, or CVM), applicable to preparation of Interim Financial Information (Informações Trimestrais, or ITR).

This interim financial information have been prepared according to principles, practices and criteria consistent with those adopted in the preparation of the December 31, 2017 financial statements, except for the adoption of new pronouncements that came into force as from January 1, 2018, which impacts are presented in Note 2.2 to this interim financial information.

Thus, this consolidated interim financial information should be read in conjunction with the said financial statements, approved by the Company’s Fiscal Council on March 28, 2018.

Material information in the interim financial information is being disclosed, which is used by Management in its administration of the Company.

On August 13, 2018, the Company’s Executive Board authorized the issuance of this interim financial information for the six-month period ended on June 30, 2018. On November 27, 2018 the Company’s Executive Board authorized its restatement to reflect the effect of adjustments described in note 2.3.

 

2.2

Adoption of new pronouncements effective as from January 1, 2018

IFRS 15/CPC 47 – Revenue from contracts with customers

IFRS 15/CPC 47 – Revenue from contracts with customers establishes a five-step model to account for revenues arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount which reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. This new pronouncement will supersede all current requirements for recognition of revenue under the CPCs/IFRS. Additionally, IFRS 15/CPC 47 establishes requirements for more detailed presentation and disclosure than the standards currently in effect.

The Company and its subsidiaries adopted the new standard based on the prospective method, with the impacts accounted for as of January 1, 2018.

The Company and its subsidiaries performed an assessment of the five steps for recognition and measurement of revenue, as required by IFRS 15/CPC 47:

 

  1.

Identify the contracts signed with its customers;

 

  2.

Identify the performance obligations in each type of contract;

 

  3.

Determine the price of each type of transaction;

 

  4.

Allocate the price to the performance obligations contained in the contract; and

 

  5.

Recognize the revenue when (or to the extent that) the entity satisfies each performance obligation of the contract.

 

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The impact of the adoption of this pronouncement occurred in the recognition of reimbursements to customers resulting from the penalties for breach of quality indicators in the electricity supply, mainly the indicators DIC, FIC, DMIC and DICRI, as a reduction of revenues from use of the distribution network (TUSD). Until December 31, 2017, these reimbursements were recognized as operating expense.

This table shows the impact of adoption of IFRS 15 (CPC 47) on the statement of income for the periods of six and three months ended June 30, 2018:

 

     Jan to Jun 2018
with adoption of
IFRS 15/CPC 47
    Adjustment (1)
IFRS 15/CPC 47
    Jan to Jun 2018
without
adoption of IFRS
15/CPC 47
 

GOING CONCERN OPERATIONS

      

NET REVENUE

     10,541,969       25,681       10,567,650  

OPERATING COSTS

     (8,218,128     —         (8,218,128

OPERATING EXPENSES

     (839,794     (25,681     (865,475

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

     (26,233     —         (26,233

Net Finance income (expenses)

     (854,632     —         (854,632

Income and Social Contribution taxes

     (170,845     —         (170,845
  

 

 

   

 

 

   

 

 

 

Net income from going concern operations in the period

     432,337       —         432,337  
  

 

 

   

 

 

   

 

 

 

 

     Apr to Jun 2018
with adoption of

IFRS 15/CPC 47
    Adjustment (1)
IFRS 15/CPC 47
    Apr to Jun 2018
without
adoption of IFRS
15/CPC 47
 

GOING CONCERN OPERATIONS

      

NET REVENUE

     5,606,538       9,235       5,615,773  

OPERATING COSTS

     (4,488,514     —         (4,488,514

OPERATING EXPENSES

     (371,116     (9,235     (380,351

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

     (83,107     —         (83,107

Net Finance income (expenses)

     (696,832     —         (696,832

Income and Social Contribution taxes

     773       —         773  
  

 

 

   

 

 

   

 

 

 

Net income from going concern operations in the period

     (32,258     —         (32,258
  

 

 

   

 

 

   

 

 

 

 

(1)

Refers to penalties for violation of energy supply quality indicators, mainly the indicators DIC, FIC, DMIC and DICRI, reclassified from Other operational revenue (expenses).

IFRS 9/CPC 48 – Financial instruments

IFRS 9/CPC 48 establishes that all financial activities recognized that are within the scope of IAS 39 (equivalent to CPC 38) should subsequently be measured at amortized cost or fair value, reflecting the business model in which the assets are administered, and their cash flow characteristics, not affecting accounting recognition of the Company’s financial assets and liabilities. IFRS 9/CPC 48 contains three categories of accounting for financial instruments: Amortized cost; Fair value through other comprehensive income; and fair value through profit or loss. The standard has eliminated the existing categories under IAS 39/CPC 38 and, thus, the Company and its subsidiaries have reclassified those categories to comply with the new standard, as follows:

 

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Consolidated

   Classification  
   IFRS 39/CPC 38     IFRS 9/CPC 48  

Financial assets:

    

Cash equivalents – Investments

     Loans and receivables       Amortized cost  

Securities – Investments (1)

     Held to maturity       Amortized cost  

Securities – Investments (1)

     Available for sale       Fair value through profit or loss  

Customers and Traders; Concession holders (Transport of energy)

     Loans and receivables       Amortized cost  

Restricted cash

     Loans and receivables       Amortized cost  

Advances to suppliers

     Loans and receivables       Amortized cost  

Accounts receivable from the State of Minas Gerais

     Loans and receivables       Amortized cost  

Receivables from related parties

     Loans and receivables       Amortized cost  

Concession financial assets – CVA (Portion ‘A’ Costs Variation Compensation) Account, and Other financial components, in tariff adjustments

     Loans and receivables       Amortized cost  

Reimbursement of tariff subsidies

     Loans and receivables       Amortized cost  

Low-income subsidy

     Loans and receivables       Amortized cost  

Escrow deposits

     Loans and receivables       Amortized cost  

Derivative financial instruments (swap transactions)

     Fair value through profit or loss       Fair value through profit or loss  

Concession financial assets – Transmission infrastructure

     Loans and receivables       Amortized cost  

Concession financial assets – Distribution infrastructure

     Available for sale       Fair value through profit or loss  

Indemnities receivable – Transmission

     Loans and receivables (2)       Fair value through profit or loss  

Indemnities receivable – Generation

     Loans and receivables (2)       Fair value through profit or loss  

Concession grant fee – Generation concessions

     Loans and receivables       Amortized cost  

Other

     Loans and receivables       Amortized cost  

Financial liabilities

    

Loans, financings and debentures

     Amortized cost       Amortized cost  

Debt agreed with pension fund (Forluz)

     Amortized cost       Amortized cost  

Concession financial liabilities – CVA (Portion ‘A’ Costs Variation Compensation) Account, and Other financial components, in tariff adjustments

     Amortized cost       Amortized cost  

Concessions payable

     Amortized cost       Amortized cost  

The Minas Gerais State Tax Debits Regularization Plan (PRCT)

     Amortized cost       Amortized cost  

Suppliers

     Amortized cost       Amortized cost  

Advances from clients

     Amortized cost       Amortized cost  

Derivative financial instruments (swap transactions)

     Fair value through profit or loss       Fair value through profit or loss  

Derivative financial instruments – Put options

     Fair value through profit or loss       Fair value through profit or loss  

 

(1)

The Company has ‘securities’ with various classifications under IFRS 9 / CPC 48.

(2)

Recognized at their nominal realization values, which are similar to fair value.

Impairment

The material impact resulting from the adoption of the standard as from January 1, 2018 is related to the impairment of trade accounts receivable. The new pronouncement also establishes that in relation to the impairment losses of financial assets, the expectation of loss model in the credit is no longer losses incurred, but a prospective model of expected credit losses, based on probabilities. Based on the new pronouncement, provisions for expected losses were measured based on the losses expected in the next 12 months, as a function of the potential default events, or losses of credit expected for the whole life of a financial instrument, if the credit risk has significantly increased since its initial recognition.

 

 

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The Company and its subsidiaries have adopted, in its analyses, a simplified approach, considering that the balance of its accounts receivable from clients do not have a significant financial component, and have calculated the expectation of loss considering the historic average of non-collection over the total billed in each month (based on the last 12 months of billing), segregated by type of customers and projected for the next 12 months, taking into account the aging of receivables, including those not yet due. The estimated loss for the past due balances of customers who renegotiated their debt has been calculated based on the maturity date of the original invoice, with the new terms negotiated not being taken into account. For the balances that are more than 12 months past due, expectation of total loss was assumed.

The estimated effects at January 1, 2018 arising from adoption of IFRS 9/CPC 48, resulted in an increase in the provision for doubtful accounts and a corresponding effect in Equity, as follows:

 

     Jan. 1, 2018  

Customers and Traders; Transport of energy (a)

     150,114  

Reflex of the adjustment due to the jointly controlled—Light

     82,770  

Deferred income and Social Contribution taxes (a)

     (51,038
  

 

 

 
     181,846  
  

 

 

 

 

(a)

Refers to estimated losses on doubtful accounts receivable from customers of Cemig D.

 

2.3

Restatement of the interim financial information

As mentioned in Note 32, on May 28, 2018 Aneel confirmed the result of the Fourth Tariff Review of Cemig Distribuição S.A. (‘Cemig D’), a wholly-owned subsidiary of the Company. Part of this result comprised direct pass-throughs to the tariff of amounts arising from variations in non-manageable costs (‘Portion A’), arising primarily from: purchase ofpower supply, transmission charges, and other financial components of the tariff, for which Cemig D recorded the accounting effects as from May 2018.

After publication of the interim financial information for the quarter and six months ended June 30, 2018, differences were identified in the accounting of the amortization of certain concession financial assets and liabilities related to CVA Account (Portion A Compensation) and Other Financial Components approved in the tariff review referred to above. The effect of these differences on the individual interim financial information of the Company is limited to the share of profit, recorded by the equity method, related to the equity ownership that the company holds in Cemig D. As a result, Cemig and its subsidiary have opted to re-present the individual and consolidated interim financial information, so as to better reflect their financial position and operational performance. These changes caused no effects on the individual and consolidated financial statements for the year ended December 31, 2017, which are presented for the purposes of comparison, nor in the individual and consolidated financial statements for the quarter ended March 31, 2018.

Based on the orientation given in CPC 23 / IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, the interim financial information is being restated with the following adjustments:

 

(a)

Correction of the divergences in the accounting of the amortization of certain Concession financial assets and liabilities related to the CVA (Variation in ‘Portion A’ Items) account and Other Financial Components approved in the Tariff Review of May 28, 2018 – in the net amount of R$ 81,623 for the six and three-month periods ended June 30, 2018.

 

(b)

Effects of the adjustment indicated in item (a) on calculations of current and deferred income tax and Social Contribution tax, in the amount of R$ 16,375 and R$ 7,480, respectively, for the six and three-month periods ended June 30, 2018.

 

(c)

Effects of the adjustment indicated in item (a) on calculations of Pasep and Cofins taxes, in the amounts of R$ 7,550 for the six and three-month periods ended June 30, 2018.

 

(d)

Effects of the adjustment indicated in item (a) on calculations of the regulatory charges, in the amounts of R$ 734 for the six and three-month periods ended June 30, 2018.

 

(e)

Net aggregate effects, of the adjustments indicated in items (a), (b), (c), and (d), in the amount of R$ 49,484, in calculation of the gain by the equity method arising from the Company’s investment in Cemig D, for the six and three-month periods ended June 30, 2018.

 

(f)

Net effect of all the adjustments, in the amount of R$ 49,484, in the profit of the six and three-month periods ended June 30, 2018.

 

21


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STATEMENTS OF FINANCIAL POSITION

 

Assets

   Consolidated      Holding company  
   Jun. 30, 2018      Adjustments     Jun. 30, 2018
(Restated)
     Jun. 30, 2018      Adjustments      Jun. 30, 2018
(Restated)
 

CURRENT

                

Concession financial assets (a)

     565,281        81,623       646,904        —          —          —    

Income and Social Contribution taxes recoverable (b) and (e)

     406,203        (16,375     389,828        25,889        —          25,889  

Other

     5,994,568        —         5,994,568        637,149        —          637,149  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
     6,966,052        65,248       7,031,300        663,038        —          663,038  

Assets classified as Held for sale

     281,578        —         281,578        281,578        —          281,578  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL, CURRENT

     7,247,630        65,248       7,312,878        944,616        —          944,616  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

NON-CURRENT

                

Deferred income and Social Contribution taxes (b)

     1,943,501        (7,480     1,936,021        791,360        —          791,360  

Investments – Equity method (g)

     7,703,552        —         7,703,552        14,051,552        49,484        14,101,036  

Other

     24,785,675        —         24,785,675        592,235        —          592,235  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL, NON-CURRENT

     34,432,728        (7,480     34,425,248        15,435,147        49,484        15,484,631  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     41,680,358        57,768       41,738,126        16,379,763        49,484        16,429,247  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

Liabilities

   Consolidated     Holding company  
   Jun. 30, 2018     Adjustments      Jun. 30, 2018
(Restated)
    Jun. 30, 2018     Adjustments      Jun. 30, 2018
(Restated)
 

CURRENT

              

Regulatory charges (d)

     434,129       220        434,349       5,836       —          5,836  

Taxes payable (c)

     287,205       7,550        294,755       6,546       —          6,546  

Other obligations

     7,131,531       —          7,131,531       1,065,535       —          1,065,535  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 
     7,852,865       7,770        7,860,635       1,077,917          1,077,917  

Liabilities directly associated with assets classified as held for sale

     5,905       —          5,905       5,905       —          5,905  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

TOTAL, CURRENT

     7,858,770       7,770        7,866,540       1,083,822       —          1,083,822  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

NON-CURRENT

              

Regulatory charges (d)

     278,374       514        278,888       —         —          —    

Other obligations

     18,864,395       —          18,864,395       621,219       —          621,219  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

TOTAL, NON-CURRENT

     19,142,769       514        19,143,283       621,219       —          621,219  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

TOTAL LIABILITIES

     27,001,539       8,284        27,009,823       1,705,041       —          1,705,041  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

EQUITY

              

Share capital

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

Capital reserves

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

Profit reserves

     5,728,574       —          5,728,574       5,728,574       —          5,728,574  

Equity valuation adjustments

     (836,528     —          (836,528     (836,528     —          (836,528

Subscription of shares, to be capitalized

     —         —          —         —            —    

Retained earnings (f)

     239,192       49,484        288,676       239,192       49,484        288,676  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

     14,674,722       49,484        14,724,206       14,674,722       49,484        14,724,206  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

NON-CONTROLLING INTERESTS TOTAL EQUITY

     4,097       —          4,097       —         —          —    
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

TOTAL EQUITY

     14,678,819       49,484        14,728,303       14,674,722       49,484        14,724,206  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

TOTAL LIABILITIES AND EQUITY

     41,680,358       57,768        41,738,126       16,379,763       49,484        16,429,247  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

22


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STATEMENTS OF INCOME

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2018

 

     Consolidated     Holding company  
     Jan to Jun
2018
    Adjustments     Jan to Jun 2018
(Restated)
    Jan to
Jun 2018
    Adjustments      Jan to
Jun 2018
(Restated)
 

Going concern operations

             

Net revenue (a), (c) and (d)

     10,468,630       73,339       10,541,969       146       —          146  

Total cost

     (8,218,128     —         (8,218,128     —         —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

GROSS PROFIT

     2,250,502       73,339       2,323,841       146       —          146  

Operating expenses

     (839,794     —         (839,794     (142,172     —          (142,172

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

     (26,233     —         (26,233     480,319       49,484        529,803  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Income before finance income (expenses) and taxes

     1,384,475       73,339       1,457,814       338,293       49,484        387,777  

Finance income

     491,169       —         491,169       18,792       —          18,792  

Finance expenses

     (1,345,801     —         (1,345,801     (3,085     —          (3,085
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Income before income tax and Social Contribution tax

     529,843       73,339       603,182       354,000       49,484        403,484  

Current income and Social Contribution taxes (b)

     (180,044     (16,375     (196,419     —         —          —    

Deferred income and Social Contribution taxes (b)

     33,054       (7,480     25,574       38,569       —          38,569  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) for the period from going concern operations

     382,853       49,484       432,337       392,569       49,484        442,053  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) for the period from discontinued operations

     21,372       —         21,372       11,358       —          11,358  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) for the period (f)

     404,225       49,484       453,709       403,927       49,484        453,411  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Basic and diluted earnings (loss) per share – R$

     0.28       0.03       0.31       0.28       0.03        0.31  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

23


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STATEMENTS OF INCOME

FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2018

 

     Consolidated     Holding company  
     Apr to Jun
2018
    Adjustments     Apr to Jun
2018
(Restated)
    Apr to
Jun
2018
    Adjustments      Apr to
Jun 2018
(Restated)
 

Net revenue (a), (c) and (d)

     5,533,199       73,339       5,606,538       73       —          73  

Total cost

     (4,488,514     —         (4,488,514     —         —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

GROSS PROFIT

     1,044,685       73,339       1,118,024       73       —          73  

Operating expenses

     (371,116     —         (371,116     (78,890     —          (78,890

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

     (83,107     —         (83,107     (18,051     49,484        31,433  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Income before finance income (expenses) and taxes

     590,462       73,339       663,801       (96,868     49,484        (47,384

Finance income

     249,315       —         249,315       7,544       —          7,544  

Finance expenses

     (946,147     —         (946,147     (2,191     —          (2,191
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Income before income tax and Social Contribution tax

     (106,370     73,339       (33,031     (91,515     49,484        (42,031

Current income and Social Contribution taxes (b)

     4,982       (16,375     (11,393     —         —          —    

Deferred income and Social Contribution taxes (b)

     19,646       (7,480     12,166       19,635       —          19,635  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) for the period from going concern operations

     (81,742     49,484       (32,258     (71,880     49,484        (22,396
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) for the period from discontinued operations

     21,372       —         21,372       11,358       —          11,358  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) for the period (f)

     (60,370     49,484       (10,886     (60,522     49,484        (11,038
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Basic and diluted earnings (loss) per share – R$

     (0.04     0.03       (0.01     (0.04     0.03        (0.01
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2018

 

     Consolidated     Holding company  
     Jan to
Jun 2018
    Adjustments      Jan to
Jun 2018
(Restated)
    Jan to
Jun 2018
    Adjustments      Jan to
Jun 2018

(Restated)
 

Net income for the period (f)

     404,225       49,484        453,709       403,927       49,484        453,411  

Other comprehensive income

     (416     —          (416     (416     —          (416
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Comprehensive income for the period

     403,809       49,484        453,293       403,511       49,484        452,995  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2018

 

     Consolidated     Holding company  
     Apr to
Jun 2018
    Adjustments      Apr to
Jun 2018

(Restated)
    Apr to Jun
2018
    Adjustments      Apr to
Jun 2018

(Restated)
 

Net income for the period (f)

     (60,370     49,484        (10,886     (60,522     49,484        (11,038
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Comprehensive income for the period

     (60,370     49,484        (10,886     (60,522     49,484        (11,038
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

24


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STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2018

 

     Consolidated     Holding company  
   Jan to Jun
2018
    Adjustments     Jan to Jun
2018
(Restated)
    Jan to
Jun 2018
    Adjustments     Jan to
Jun 2018
(Restated)
 

CASH FLOW FROM OPERATIONS

            

Net income for the period from going concern operations (f)

     382,853       49,484       432,337       392,569       49,484       442,053  

Adjustments to reconcile net income to net cash flows

            

Income tax and Social Contribution taxes (b)

     146,990       23,855       170,845       (38,569       (38,569

Share of profit (loss) in associates and joint ventures (e)

     26,233         26,233       (480,319     (49,484     (529,803

CVA (Portion A Compensation) Account and Other Financial Components in tariff adjustments (a)

     (1,069,049     (81,623     (1,150,672     —         —         —    

Others

     1,565,134       —         1,565,134       76,770       —         76,770  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     1,052,161       (8,284     1,043,877       (49,549     —         (49,549
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Increase) / decrease in assets

     716,507       —         716,507       500,635       —         500,635  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in liabilities

            

Taxes payable (c)

     (314,754     7,550       (307,204     831         831  

Regulatory charges (d)

     (49,987     734       (49,253     5,836         5,836  

Others

     (497,379     —         (497,379     (5,499     —         (5,499
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (862,120     8,284       (853,836     1,168         1,168  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated by going concern operations

     906,548       —         906,548       452,254       —         452,254  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest paid on loans and financings

     (671,651     —         (671,651     (438     —         (438

Income and Social Contribution taxes paid

     (292,981     —         (292,981     (38     —         (38

Settlement of derivative financial instruments (Swap)

     12,981       —         12,981       —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) GOING CONCERN OPERATIONS

     (45,103     —         (45,103     451,778       —         451,778  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash from (used in) Discontinued operations

     36,602       —         36,602       18,944       —         18,944  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) OPERATING ACTIVITIES

     (8,501     —         (8,501     470,722       —         470,722  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) INVESTING IN GOING CONCERN OPERATIONS

     196,510       —         196,510       (552,127     —         (552,127

Net cash used in investment activities—discontinued operations

     (7,631     —         (7,631     —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH FROM (USED IN) INVESTING ACTIVITIES

     188,879       —         188,879       (552,127     —         (552,127

NET CASH FROM (USED IN) FINANCING ACTIVITIES

     (269,698     —         (269,698     105,778       —         105,778  

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (89,320     —         (89,320     24,373       —         24,373  

Cash and cash equivalents at the beginning of the period

     1,030,257       —         1,030,257       38,672       —         38,672  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

     940,937       —         940,937       63,045       —         63,045  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

25


LOGO

 

STATEMENTS OF ADDED VALUE

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2018

 

     Consolidated     Holding company  
     Jan to Jun
2018
    Adjustments      Jan to Jun
2018

(Restated)
    Jan to
Jun 2018
    Adjustments      Jan to
Jun 2018

(Restated)
 

Gross value added (a)

     7,605,969       81,623        7,687,592       (88,404     —          (88,404

Retentions

     (411,300     —          (411,300     (216     —          (216
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net added value produced by going concern operations

     7,194,669       81,623        7,276,292       (88,620     —          (88,620

Net added value produced by discontinued operations

     21,372       —          21,372       11,358       —          11,358  

Added value received by transfer (e)

     464,936       —          464,936       499,111       49,484        548,595  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Added value to be distributed

     7,680,977       81,623        7,762,600       421,849       49,484        471,333  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Distribution of added value

              

Employees

     816,235       —          816,235       43,703       —          43,703  

Taxes (b), (c) and (d)

     5,047,392       32,139        5,079,531       (35,652     —          (35,652

Remuneration of external capital

     1,413,125       —          1,413,125       9,871       —          9,871  

Remuneration of own capital (f)

     404,225       49,484        453,709       403,927       49,484        453,411  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 
     7,680,977       81,622        7,762,600       421,849       49,484        471,333  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

2.4

Correlation between the Explanatory Notes published in the annual financial statements and those in the interim financial information

The table below shows the correlation between the Explanatory Notes published in the financial statements at December 31, 2017 and the interim financial information at June 30, 2018.

The Company understands that this interim financial information presents the material updating of information relating to its financial position, and its results for the six-month period ended June 30, 2018, in compliance with the requirements for disclosure stated by the CVM (Brazilian Securities Commission).

 

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Number of the Note

  

Title of the Note

Dec. 31,
2017

   Jun. 30,
2018

1

   1   

Operational context

2

   2   

Basis of preparation

3

   3   

Consolidation principles

4

   4   

Concessions and authorizations

5

   31   

Operational segments

6

   5   

Cash and cash equivalents

7

   6   

Securities

8

   7   

Customers and traders; Concession holders (transport of energy)

9

   8   

Recoverable taxes

10

   9   

Income and Social Contribution tax

11

   10   

Restricted cash

12

   11   

Accounts Receivable from the State of Minas Gerais

13

   12   

Escrow deposits

14

   13   

Reimbursement of tariff subsidies

15

   14   

Concession financial assets and liabilities

16

   15   

Investments

17

   16   

Property, plant and equipment

18

   17   

Intangible assets

19

   18   

Suppliers

20

   19   

Taxes payable, Income tax and Social Contribution tax and amounts to be reimbursed to customers

21

   20   

Loans, financings and debentures

22

   21   

Regulatory charges

23

   22   

Post-retirement obligations

24

   23   

Provisions

25

   24   

Equity and remuneration to shareholders

26

   25   

Revenue

27

   26   

Operating costs and expenses

28

   27   

Finance income and expenses

29

   28   

Related party transactions

30

   29   

Financial instruments and risk management

31

   29   

Measurement at fair value

—  

   30   

Assets classified as held for sale

35

   33   

Transactions not involving cash

36

   34   

Subsequent events

 

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The Notes to the 2017 financial statements that have not been included in these interim financial information because they had no material changes, and/or were not applicable to the interim information, are as follows:

 

Number

  

Title of the Note

32

  

Insurance

33

  

Commitments

34

  

Annual tariff adjustment

 

3.

PRINCIPLES OF CONSOLIDATION

The reporting dates for the interim financial information of subsidiaries and jointly-controlled entities used for the purposes of consolidation and equity method gains (losses), respectively, coincide with those of the Company. Accounting practices are applied uniformly in line with those used by the Company.

The following subsidiaries are included in the consolidated interim financial information:

 

Subsidiary

   Criteria      Jun. 30, 2018      Dec. 31, 2017  
   Direct interest,%      Direct interest,%  

Cemig Geração e Transmissão

     Consolidated        100.00        100.00  

Cemig Distribuição

     Consolidated        100.00        100.00  

Gasmig

     Consolidated        99.57        99.57  

Cemig Telecom (2)

     Consolidated        —          100.00  

Rosal Energia

     Consolidated        100.00        100.00  

Sá Carvalho

     Consolidated        100.00        100.00  

Horizontes Energia

     Consolidated        100.00        100.00  

Cemig Geração Distribuída (Usina Térmica Ipatinga) (1)

     Consolidated        100.00        100.00  

Cemig PCH

     Consolidated        100.00        100.00  

Cemig Trading

     Consolidated        100.00        100.00  

Efficientia

     Consolidated        100.00        100.00  

Cemig Comercializadora de Energia Incentivada

     Consolidated        100.00        100.00  

UTE Barreiro

     Consolidated        100.00        100.00  

Empresa de Serviços e Comercialização de Energia Elétrica

     Consolidated        100.00        100.00  

Luce Empreendimentos e Participações S.A.

     Consolidated        100.00        100.00  

 

(1)

In 2018, the corporate name of UTE Ipatinga was changed to Cemig Geração Distribuída S.A.

(2)

Company merged into Cemig on March 31, 2018.

 

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4.

CONCESSIONS AND AUTHORIZATIONS

Cemig and its subsidiaries hold the following concessions and authorizations with Aneel:

 

     Company holding
concession or authorization
   Concession or authorization
contract
   Expiration
date

POWER GENERATION

        

Hydroelectric plants

        

Emborcação (1)

   Cemig GT    07/1997    07/2025

Nova Ponte (1)

   Cemig GT    07/1997    07/2025

Santa Luzia (1)

   Cemig GT    07/1997    02/2026

Sá Carvalho (1)

   Sá Carvalho    01/2004    12/2024

Rosal (1)

   Rosal Energia    01/1997    05/2032

Machado Mineiro (1)

Salto Voltão (1)

Salto Paraopeba (1)

Salto do Passo Velho (1)

   Horizontes Energia    Resolution 331/2002    07/2025

10/2030

10/2030

10/2030

PCH Pai Joaquim (1)

   Cemig PCH    Resolution 377/2005    04/2032

Irapé (1)

   Cemig GT    14/2000    02/2035

Queimado (Consortium) (1)

   Cemig GT    06/1997    01/2033

Salto Morais (1)

   Cemig GT    02/2013    07/2020

Rio de Pedras (1)

   Cemig GT    02/2013    09/2024

Luiz Dias (1)

   Cemig GT    02/2013    08/2025

Poço Fundo (1)

   Cemig GT    02/2013    08/2025

São Bernardo (1)

   Cemig GT    02/2013    08/2025

Xicão (1)

   Cemig GT    02/2013    08/2025

Três Marias (2)

   Cemig Geração Três Marias    08/2016    01/2046

Salto Grande (2)

   Cemig Geração Salto Grande    09/2016    01/2046

Itutinga (2)

   Cemig Geração Itutinga    10/2016    01/2046

Camargos (2)

   Cemig Geração Camargos    11/2016    01/2046

Coronel Domiciano, Joasal, Marmelos, Paciência and Piau (2)

   Cemig Geração Sul    12/2016 and 13/2016    01/2046

Dona Rita, Ervália, Neblina, Peti, Sinceridade and Tronqueiras (2)

   Cemig Geração Leste    14/2016 and 15/2016    01/2046

Cajurú, Gafanhoto and Martins (2)

   Cemig Geração Oeste    16/2016    01/2046

Thermal plants

        

Igarapé (1)

   Cemig GT    07/1997    08/2024

POWER TRANSMISSION

        

National grid (3)

   Cemig GT    006/1997    01/2043

Itajubá Substation (3)

   Cemig GT    79/2000    10/2030

ELECTRICITY DISTRIBUTION (4)

   Cemig D    002/1997

003/1997

004/1997

005/1997

   12/2045

GAS DISTRIBUTION (4)

   Gasmig    State Law 11,021/1993    01/2053

 

(1)

Generation concession contracts that are not within the scope of ICPC 01/IFRC 12, whose infrastructure assets are recorded as PP&E since the concession grantor does not have control over whom the service is provided to as the output is being sold mainly in the Free Market (‘ACL’).

(2)

Generation concession contracts whose revenue related to the Concession Grant Fee is within the scope of ICPC 01 /IFRIC 12, and is classified as concession financial assets.

(3)

Transmission concession contracts that are within the scope of ICPC 01 /IFRIC 12, considering the financial asset model, andthe income and costs of the construction works related to the formation of the financial asset is recognized as expenses are incurred. The financial asset to be reimbursed is identified when the implementation of the infrastructure is finalized and included as remuneration for the services of implementation of the infrastructure.

(4)

Concession contracts that are within the scope of ICPC 01 /IFRIC 12 and under which the concession infrastructure assets are recorded under the intangible and financial assets bifurcation model.

 

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5.

CASH AND CASH EQUIVALENTS

 

     Consolidated      Holding Company  
     Jun. 30,
2018
     Dec. 31,
2017
     Jun. 30,
2018
     Dec. 31,
2017
 

Bank accounts

     43,984        113,495        4,669        4,645  

Cash equivalents

           

Bank certificates of deposit (CDBs) (1)

     786,378        685,826        44,748        20,799  

Overnight (2)

     110,575        226,629        13,628        13,228  

Others

     —          4,307        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
     896,953        916,762        58,376        34,027  
  

 

 

    

 

 

    

 

 

    

 

 

 
     940,937        1,030,257        63,045        38,672  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Bank Certificates of Deposit (Certificados de Depósito Bancário, or CDBs), accrued interest at 60% to 106% of the CDI Rate (Interbank Rate for Interbank Certificates of Deposit or Certificados de Depósito Inter-bancário – CDIs) published by the Custody and Settlement Chamber (Câmara de Custódia e Liquidação, or Cetip) on June 30, 2018 (50% to 106% on December 31, 2017). For these CDBs, the Company has repo transactions which state, on their trading notes, the bank’s commitment to repurchase the security, on demand, on the maturity date of the transaction, or earlier, at the Company’s option.

(2)

Overnight transactions are repos available for redemption on the following day.They are usually backed by Treasury Bills, Notes or Bonds and referenced to a pre-fixed rate of 6.39%, on June 30, 2018 (6.89% on December 31, 2017). Their purpose is to settle the Company’s short-term obligations, or to be used in the acquisition of other assets with better return to replenish the portfolio.

The Company’s exposure to interest rate risks and sensitivity analysis for financial assets and liabilities are disclosed in Note 29.

 

6.

SECURITIES

 

     Consolidated      Holding Company  
     Jun. 30,
2018
     Dec. 31,
2017
     Jun. 30,
2018
     Dec. 31,
2017
 

Investments

           

Current

           

Bank certificates of deposit (CDBs) (1)

     935        2,652        115        144  

Financial Notes (LFs) – Banks (2)

     158,949        303,355        19,589        17,706  

Treasury Financial Notes (LFTs) (3)

     121,124        739,945        14,928        43,189  

Debentures (4)

     4,775        10,663        1,825        2,142  

Others

     2,252        1,769        650        779  
  

 

 

    

 

 

    

 

 

    

 

 

 
     288,035        1,058,384        37,107        63,960  

Non-current

           

Bank certificates of deposit (CDBs) (1)

     234               43         

Financial Notes (LFs) – Banks (2)

     57,957               7,143         

Debentures (4)

     4,951        29,753        2,339        1,737  

Others

     705        —          —          —