FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November, 2003
Commission File Number 1-15224
Energy Company of Minas Gerais
--------------------------------------------------------
(Translation of registrant's name into English)
Avenida Barbacena, 1200
30190-131 Belo Horizonte, Minas Gerais, Brazil
--------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X 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 X
--------- ----------
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A
CEMIG
A Melhor Energia do Brasil.
Cemig : Growth and Prospects
Mr. Wilson Nelio Brumer
Chairman
Board of Directors
2 CEMIG
A Melhor Energia do Brasil.
Disclaimer
o Certain statements contained in this presentation are "Forward-Looking
Statements" within the meaning of the US Securities Laws, and are thus
prospective and subject to risks and uncertainties. "Forward-Looking
Statements" are matters that are not historical facts and are beyond our
control. For a discussion of risks and uncertainties as they relate to
us, please refer to our 2002 Form 20F, and in particular Item 3 under
"Key information - Risk Factors".
All figures comply with BRGAAP
3 CEMIG
A Melhor Energia do Brasil.
Key Issues
Streamlined Operations
o New Strategic Directives
o Corporate Governance
o Growth and Goals
o Regulatory Review
All figures comply with BRGAAP
4 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Keys to our Success
o Unchanged business focus
o Low risk business model
o Pursue financial strength
o Careful evaluation of non-regulated business opportunities
o Highest standards of Corporate Governance and integrity
All figures comply with BRGAAP
5 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Regulated business assets are the Major Part of CEMIG
---------------------------------------------
| CEMIG |
| Compania Energetica de Minas Gerais |
---------------------------------------------
|
-------------------------------------------------------------------------------------------
| |
| ----------------------------------------------------------------
| | | |
| ------------------- --------------------- --------------------- ---------------------
| | Electric Energy | | Natural Gas | | Telecommunication | | Efficientia |
- | | | Distribution | | | | |
------------------- --------------------- --------------------- ---------------------
| | |
| ------------------------------ ------------------------------ ------------------------------
| | Non-regulated | | Investment | | Investment |
-| Investment | | R$ 92 million | | R$ 250 million |
| | R$ 301 million | | GASMIG | | Empresa de |
| | | | | | Infovias S.A. |
| | | | | | |
| ------------------------------ ------------------------------ ------------------------------
| | |
| | ---------------------- ---------------------
| -| Sa Carvalho | | W@y TV |
| | | | | |
| | ---------------------- ---------------------
| | ----------------------
| -| Ipatinga |
| | | |
| | ----------------------
| | ----------------------
| -| Horizontes |
| | | |
| | ----------------------
| | ----------------------
| -| UTE Barreiro |
| | | |
| | ----------------------
| | ----------------------
| | | Cemig PCH | Cemig owns:
| -| | o 100% of the electric energy business,
| ---------------------- o 95% stake in Gasmig and
| o 99% stake in Infovias
| ------------------------------
| | Public Service |
-| |
| | PPE |
| | R$ 7.322 million |
| ------------------------------
| |
| | ----------------------
| | | Power Plants |
| -| |
| | ----------------------
| | ----------------------
| | | Transmission Grid |
| -| |
| | ----------------------
| | ----------------------
| -| Distribution Network |
| | |
| ----------------------
|
| ------------------------------
| | Power Plants under Consortia |
-| Investment |
| R$ 701 million |
------------------------------
All figures comply with BRGAAP
6 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Minas Gerais State is the Majority Shareholder
[GRAPHIC SHOWING SHARE OWNERSHIP AS OF JUNE 30, 2003 OMITTED]
Outstanding shares 162,153,819,025
ON 70,874,167,923
PN 91,279,651,102
ADR (as of June 30th 2003)
All figures comply with BRGAAP
7 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Cemig Has a Low-risk Business Structure
o Cost-efficient generating assets o Sizable transmission grid
o 98% hydropower plant park o Covers 100% of Minas Gerais
o Supply 60 % of the total client o Installed transformer capacity:
demand 15,163 MVA
o High service continuity o Transmission grid length: 4.872 km
o Lowest operating cost in the industry o Largest electricity distribution market share
o Sixth-largest generating capacity in Brazil o Supplies 96% of electricity in MG
o Installed Capacity: o 5.7 million client base
5,742 MW, 7.01% market share
o Sales represent 12.3% of country's
o Effective capacity: total electricity consumption
3,330 MW
o Distribution network length
o Transformer capacity:
6,145 MVA o Subtransmission: 16,361 km
o Urban and rural distribution
grid: 334,161 km
All figures comply with BRGAAP
8 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
A Profitable Quarter
----------------------------------------------------------------------------------------------------------------------------------
Values in million of Reais
----------------------------------------------------------------------------------------------------------------------------------
2003 2002
------------------------------ -------------------------------------------- ------------------------------------------------------
Year to Date 2nd Q. 1st Q. Year Year to Date 2nd Q. 1st Q.
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Net Revenue 2,544 1,456 1,088 5,119 2,282 1,043 1,239
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Operating Expenses (2,113) (1,148) (965) (4,593) (1,917) (954) (963)
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
EBIT 431 308 123 525 365 89 276
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
EBITDA 712 449 263 1,076 635 227 408
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Financial Result 431 273 158 (616) (308) (374) 66
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Non-Operating Result (13) (4) (9) (27) (14) (7) (7)
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Extraordinary Loss - - - (1,045) (1,045) (1,045) -
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Income Tax, Social
Contribution and Deferred
Income Tax (314) (194) (120) (71) (22) 93 (115)
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Interest on Capital Reversal - - - 220 120 120 -
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Minority Interest - - - 12 9 9 -
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
Net Income 535 383 152 (1,002) (895) (1,115) 220
------------------------------ ---------------- ------------- ------------- ------------ -------------- ------------ -------------
All figures comply with BRGAAP
9 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Quarterly Retail Sales Decreased 2% YoY
o Total quarterly retail sales dropped 2% YoY [BAR CHART SHOWING QUARTERLY RETAIL SALES
FOR THE FIRST, SECOND, THIRD AND FOURTH QUARTERS
o Weak residential consumption: OF 2002 AND THE FIRST AND SECOND QUARTERS OF 2003
OMITTED.]
- Down 0.4% 2Q03 over 2Q02
- Down 4.8% 2Q03 over 1Q03
o YoY quarterly industrial consumption down
3.4% due to clients with power projects.
[BAR CHART SHOWING QUARTERLY INDUSTRIAL CONSUMPTION [BAR CHART SHOWING QUARTERLY RESIDENTIAL
FOR THE FIRST, SECOND, THIRD AND FOURTH QUARTERS OF CONSUMPTION FOR THE FIRST, SECOND, THIRD AND FOURTH
2002 AND THE FIRST AND SECOND QUARTERS OF 2003 QUARTERS OF 2002 AND THE FIRST AND SECOND QUARTERS
OMITTED] OF 2003 OMITTED.]
All figures comply with BRGAAP
10 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Cemig Has Extremely Solid Fundamentals
o Strong cash flow o Low leverage
o Six-month EBITDA of R$ 711 million o Debt-to-equity ratio is 33%
o Six-month EBITDA margin o Debt maturity
up to 28%
o Short-term (12 months):
o Growing operating income: R$ 680 million
18% up from R$ 365 million
o Long-term:
R$ 2,494 million
----------------------------------------------------------------------------------------------------------------------------------
2003
--------------------------------------------- Outstanding Debt
Debt Paid To Mature TOTAL 2004 2005 Beyond 2005 as of June 30 2003
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
Foreign Currency 207,534 298,176 505,710 623,240 170,727 341,299 1,433,442
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
Local currency 113,937 74,853 188,790 151,615 626,358 857,497 1,710,323
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
Total 321,471 373,029 694,500 774,855 797,085 1,198,796 3,143,765
---------------------- ------------- --------------- --------------- ------------- -------------- ------------- ------------------
Values in R$ thousand
All figures comply with BRGAAP
11 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Outstanding Debt as of June 30, 2003
[BAR CHART COMPARING EBITDA, DEBT AND NET REVENUE IN 1998, 1999, 2000, 2001, 2002 AND THE FIRST HALVES OF 2002 AND 2003 OMITTED]
------------------------------------------
The goals of the restructuring plan are to: | |
| Outstanding Debt |
o Reduce FX debt | ---------------- |
| |
o Extend the term of the local debt | R$ million 6/30/03 6/30/02 |
| |
o Hedge short-term FX debt. | . Domestic 1.710 1.704 |
| |
Ratios are in the historical levels: | |-- . Foreign 1.434 1.787 |
Jun 03 Dec 03 | | |
Net Debt/EBITDA: 2.8 1.5 | |--> US$ Million 478 550 |
EBITDA/Interest: 3.6 5.7 | |
------------------------------------------
All figures comply with BRGAAP
12 Streamlined Operations CEMIG
A Melhor Energia do Brasil.
Addressing Cash Flow Management
----------------------------------------------- ------------ -------------
Description 6 mo 03 6 mo 02
Liquidity is a concern: ----------------------------------------------- ------------ -------------
1 - Operating Activities 513 244
-- Short-term loans Net Income (Loss) 535 (895)
Depreciation and Amortization 262 258
o Maturing debt rollover Extraordinary Revenue for Rationing Loss 0 (261)
Energy Purchased on MAE (24) (32)
o Short-term hedge transactions Energy Purchased at Spot Market 0 43
Net Asset Disposal 21 11
-- BNDES CVA-related loan still pending Equity Income (15) (0)
Long-term Interest and Monetary Variation (426) 34
-- Tight cash flow management Defered Income Tax and Contribution 87 (87)
Loss Provision 47 20
-- Curb expenditures CRC Loss Provision 0 1,045
Post-employment Obligations 24 108
2 - Changes in Current Assets (140) (259)
3 - Changes in Current Liabilities 180 238
4 - Cash Provided by Operating Activities 553 224
5 - Financing Activities 119 (30)
Proceeds of New Debt 407 148
Debt Repayment (321) (214)
Special Obligations 33 67
Advanced Sales (0) (30)
Dividends and Interest on Equity (0) (0)
6 - Total Cash Available 672 194
7 - Investment Activities 525 468
Investments 180 224
PP&E 345 245
8 - Net change of cash 147 (275)
At the Beginning of the Year 50 642
On June 30, 2003 197 368
Total Cash Available 147 (274)
----------------------------------------------- ------------ -------------
All figures comply with BRGAAP
13 CEMIG
A Melhor Energia do Brasil.
Key Issues
o Streamlined Operations
New Strategic Directives
o Corporate Governance
o Growth and Goals
o Regulatory Review
All figures comply with BRGAAP
14 New Strategic Directives CEMIG
A Melhor Energia do Brasil.
Strategic Directives
Key strategy: deliver sustainable growth and add value to current shareholder investment through:
o Portfolio analyses o Corporate Governance best practices
- Reviewing business plans - Focus on the shareholders' long-term interest
o Internal business value - New dividend policy
o Size business to market reality o Higher dividend yield
- Careful business opportunity evaluation o Performance management
o Target setting - Performance monitoring
- Evaluation of business enablers
- Streamline operations o Training program
- Reduce WACC o Technology
- Focus on total shareholder value - Balanced scorecard
o Business organization
- Improve core competency
o Strengthen relationships with customers
All figures comply with BRGAAP
15 CEMIG
A Melhor Energia do Brasil.
Key Issues
o Streamlined Operations
o New Strategic Directives
Corporate Governance
o Growth and Goals
o Regulatory Review
All figures comply with BRGAAP
16 Corporate Governance CEMIG
A Melhor Energia do Brasil.
Corporate Governance as a Cultural Value
o Understand the market perception o Board membership
o Transparency o 14 members
o Scrutiny o 6 members meet independence criteria
o Comprehensive IR program o PN share holders appointed one member
o Guidance o Highly educated members in various fields
o Broaden the investor base o Politics
o Social responsibility o Economy
o Pursuit of environmentally sound projects o Business
o Universality of service for the concession territory o Accounting
o Affordable rates o Electricity
o Dividend policy which meets shareholder interest o Research and Development
o Continual scanning for global class practices o Strengthened relationship with different
tiers of government
All figures comply with BRGAAP
17 Corporate Governance CEMIG
A Melhor Energia do Brasil.
Related Party Transactions
o Arms length relationship with the majority shareholder
o Face problems directly
o Seek viable solutions for CRC receivables
o Repay dividend-backed contract
- Total amount: R$ 837 million
- Due in 2003: R$ 117 million
o Negotiate the accrued contract with Minas Gerais State
Government and the Federal Government
- Total amount: R$ 1,425 million
o Address tax charges
All figures comply with BRGAAP
18 CEMIG
A Melhor Energia do Brasil.
Key Issues
o Streamlined Operations
o New Strategic Directives
o Corporate Governance
Growth and Goals
o Regulatory Review
19 Growth and Goals CEMIG
A Melhor Energia do Brasil.
Drivers of Value Creation at CEMIG
------------------------------------------------------------------ ------------------------------------- -----------------------
Drivers Six months ending June 30, 2003 Change YoY
------------------------------------------------------------------ ------------------------------------- -----------------------
Operating Income (R$ million) 431
------------------------------------------------------------------ ------------------------------------- -----------------------
Retail Sale Revenue Growth (%) 29
------------------------------------------------------------------ ------------------------------------- -----------------------
Free Cash Flow (R$ million) 197
------------------------------------------------------------------ ------------------------------------- -----------------------
WACC (%) 14
------------------------------------------------------------------ ------------------------------------- -----------------------
Total Shareholder Value (%) 4.7
------------------------------------------------------------------ ------------------------------------- -----------------------
Market Capitalization (R$ million) 3,901
------------------------------------------------------------------ ------------------------------------- -----------------------
EBITDA Margin (%) 28
------------------------------------------------------------------ ------------------------------------- -----------------------
Customer Satisfaction Index (%) 71.1
------------------------------------------------------------------ ------------------------------------- -----------------------
Sales to Final Consumers as % of Total Sales 91.1
------------------------------------------------------------------ ------------------------------------- -----------------------
Electricity Distribution Market Share (%) 12.15
------------------------------------------------------------------ ------------------------------------- -----------------------
All figures comply with BRGAAP
20 Growth and Goals CEMIG
A Melhor Energia do Brasil.
Scenario for CEMIG's EBITDA from 2003 to 2008
-----------------------
[EBITDA GRAPHIC OMITTED] | Average yearly |
| consumption |
| growth ranging |
-----> | from 1% to 3% |
| causes expressive |
| impacts on the |
| Company's results. |
-----------------------
Prices as of June 2003
Additional rate recovery of 10% See disclaimer
Deferred CVA and rate revision in 2008
All figures comply with BRGAAP
21 Growth and Goals CEMIG
A Melhor Energia do Brasil.
Strategic Actions to Meet Shareholder Long-term Interest
[GRAPHIC OMITTED]
See disclaimer
All figures comply with BRGAAP
22 Growth and Goals CEMIG
A Melhor Energia do Brasil.
Capital Expenditure
o Expand generating capacity
4-year Plan Amounts to R$4.2 Billion over the next 3 years by 10%
------------------------------------ to replace electricity
purchase contract expiring
-------------------------------------------------------------------------------------------------- in the same period.
Items Actual Estimated
------------------------------ ------------- ----------------------------------------------------- o Connect another 200,000 new
2002 2003 2004 2005 2006 clients per year
------------------------------ ------------- ------------- ------------- ------------- -----------
Power Projects 448 434 351 216 97 o Achieve 100% penetration
Transmission 76 95 99 252 308 in rural areas in 3 years
Subtransmission 79 48 64 161 186
Distribution * 248 215 411 446 431 o Improve transmission grid
Other Facilities 35 31 66 44 38 reliability
Non-electric Facilities 189 75 53 4 4
Total afforded by Cemig 1,074 898 1,045 1,123 1,064 o Reduce outages in number
and duration
------------------------------ ------------- ------------- ------------- ------------- ----------- o Reduce energy losses
Expansion Afforded by
o In all cases, return must be
Consumers 76 84 greater than WACC
TOTAL 1,150 982 1,045 1,123 1,064
------------------------------ ------------- ------------- ------------- ------------- -----------
o Funds to finance part of distribution expansion will come from Federal Government and Eletrobras.
Values in millions of reais See disclaimer
All figures comply with BRGAAP
23 CEMIG
A Melhor Energia do Brasil.
Key Issues
o Streamlined Operations
o New Strategic Directives
o Corporate Governance
o Growth and Goals
Regulatory Review
All figures comply with BRGAAP
24 CEMIG
A Melhor Energia do Brasil.
CEMIG has Adopted a Cooperative Approach
Summary of the proposal disclosed by the Federal Government
The major objectives are to:
o ensure a sustainable growth for the generating capacity
o rate affordability
Key aspects:
o Creation of a "Virtual Pool"
- Execution of the capacity auctions
- Coordination of the distributors' power purchase agreement
o Vertical separation of the distribution business
o Federal Government-driven long-term planning
- Long-term generating capacity growth forecast
o Bidding process for new power plants based on lower price
o Roles of free customer and independent power producer lose substance
All figures comply with BRGAAP
25 CEMIG
A Melhor Energia do Brasil.
Proposed Regulatory Framework
------------------------------------------------------------------------------- --------------------------------------------------
Generation Distribution
Benefits
- Long-term contracts - No competition for free consumers
- Lowest revenue bid-based concession auction - Guarantee of energy cost pass-through
- Capacity auctions
- No operating risks
- Higher capacity reserve
Threats
- Price review every 5 years - No self dealing
- New inflation adjustment index - Penalties on poor demand forecast
- Poor credit quality of the distributors - Higher price for electricity purchased
- Penalties on poor asset operation - Guarantees pledged on energy contracts
- Concession expiration - Delinquency risk taken by distributors
------------------------------------------------------------------------------- --------------------------------------------------
All figures comply with BRGAAP
26 CEMIG
A Melhor Energia do Brasil.
Keys to our Success
o Unchanged business focus
o Low-risk business model
o Pursue financial strength
o Careful evaluation of non-regulated business opportunities
o Highest standards of Corporate Governance and integrity
All figures comply with BRGAAP
27 CEMIG
A Melhor Energia do Brasil.
Committed to the Best Practices of Corporate Governance
[CIG LISTED NYSE LOGO] [LEVEL 1 BOVESPA LOGO] [DOW JONES SUSTAINABILITY INDEXES LOGO]
[LATIBEX LOGO] [INSTITUTIONAL INVESTOR LOGO]
o BOVESPA Level I: CMIG3 and CMIG4 Best Corporate Governance
o NYSE Level II ADR: CIG In Latin America for Electric
o Latibex: XCMIG Utilities
o Dow Jones Sustainability Index 2000, 2001 and 2002
All figures comply with BRGAAP
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 ENERGETICA DE MINAS
GERAIS - CEMIG
By: /s/ Flavio Decat de Moura
--------------------------------
Name: Flavio Decat de Moura
Title: Chief Financial Officer
and Investor Relations Officer
Date: November 10, 2003