SECURITIES AND EXCHANGE COMMISSION

WASHINGTON , D . C . 20549

 

 

FORM 6-K

 

 

report of foreign private issuer

pursuant to rule 13a-16 or 15d-16 of

the securities exchange act of 1934

For the month of May 2017

Commission File Number 1-15224

 

 

ENERGY COMPANY OF MINAS GERAIS

(Translation of Registrant’s Name Into English)

 

 

Avenida Barbacena, 1200

30190-131 Belo Horizonte, Minas Gerais, Brazil

(Address of Principal Executive Offices)

 

 

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

Form 20-F  ☒                 Form  40-F   ☐

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

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

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

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

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

Yes  ☐                No   ☒

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

 

 

 


Index

 

Item

 

Description of Items

1.

  Minutes of the Extraordinary Meeting of Stockholders Held on March 30, 2017

2.

  Convocation of Ordinary and Extraordinary General Meeting of Stockholders Dated April 11, 2017 to Be Held on May 12, 2017

3.

  Earnings Release Results 2016 Dated April 11, 2017

4.

  Summary of Minutes of the 607th Meeting of the Board of Directors Held on September 25, 2014

5.

  Summary of Minutes of the 612th Meeting of the Board of Directors Held on November 6, 2014

6.

  Summary of Minutes of the 625th Meeting of the Board of Directors Held on February 11, 2015

7.

  Material Announcement Dated March 28, 2017: Light—Deliberations of the Board of Directors

8.

  Material Announcement Dated April 18, 2017: Renova Signs Contract for Sale of Alto Sertão II Wind Complex

9.

  Material Announcement Dated March 22, 2017: Jaguara Plant: Interim Injunction in Supreme Court Provisional Remedy Action No. 3,980 Revoked

10.

  Material Announcement Dated March 29, 2017: Miranda Plant Injunction Lifted

11.

  Material Announcement Dated March 29, 2017: São Simão Injunction Lifted; Cemig Continues to Operate Plant

12.

  Convocation and Proposal of Ordinary and Extraordinary General Meeting of Stockholders Dated April 11, 2017 to Be Held on May 12, 2017

13.

  Convocation of Extraordinary General Meeting of Stockholders Dated April 11, 2017 to Be Held on May 12, 2017

14.

  Reply to CVM Inquiry Letter 336/2017-CVM/SEP/GEA-1, of March 13, 2017

15.

  Market Announcement Dated April 28, 2017: Postponement of Filing of 20-F Form

16.

  Notice to Stockholders Dated April 11, 2017: Proposed Dividends

17.

  Market Announcement Dated March 13, 2017: Reply to CVM Inquiry Letter 123/2017-CVM/SEP/GEA-1, of March 10, 2017

18.

  Material Announcement Dated April 28, 2017: Cemig GT: Board Approval of Possible International Issue

19.

  Market Announcement Dated April 12, 2017: Presentation of 2016 Results

20.

  Summary of Minutes of the 610th Meeting of the Board of Directors Held on October 9, 2014

21.

  Summary of Minutes of the 623rd Meeting of the Board of Directors Held on January 15, 2015

22.

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

23.

  Summary of Principal Decisions of the 693rd Meeting of the Board of Directors Held on May 5, 2017

24.

  Summary of Principal Decisions of the 690th Meeting of the Board of Directors Held on March 28, 2017

25.

  Summary of Principal Decisions of the 691st Meeting of the Board of Directors Held on April 19, 2017

26.

  Summary of Principal Decisions of the 692nd Meeting of the Board of Directors Held on April 19, 2017

 


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/ Adézio de Almeida Lima
  Name: Adézio de Almeida Lima
  Title: Chief Finance and Investor Relations Officer

Date: May 12, 2017


 

1. MINUTES OF THE EXTRAORDINARY MEETING OF STOCKHOLDERS HELD ON MARCH 30, 2017

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS –

CEMIG

CNPJ 17.155.730/0001-64 – NIRE 3130004012 7

MINUTES

OF THE

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

HELD ON MARCH 30, 2017

On the thirtieth day of March two thousand seventeen, at 10 a.m. at the Company’s head office, at Av. Barbacena 1200, 21 st Floor, Santo Agostinho, Belo Horizonte, Minas Gerais, Brazil, stockholders representing more than two-thirds of the voting stock of Companhia Energética de Minas Gerais – Cemig met in Extraordinary General Meeting, on first convocation, as verified in the Stockholders’ Attendance Book, where all placed their signatures and made the required statements. The stockholder The State of Minas Gerais was represented by Ms. Ana Paula Muggler Rodarte, State Procurator, for the office of the Advocate-General of the State, in accordance with legislation.

Initially, Ms. Anamaria Pugedo Frade Barros, General Manager of Cemig’s Corporate Executive Office, stated that there was a quorum for an Extraordinary General Meeting of Stockholders; and that the stockholders present should choose the Chair of this Meeting, in accordance with Clause 10 of the Company’s by-laws.

Asking for the floor, the representative of the Stockholder The State of Minas Gerais put forward the name of the stockholder Alexandre Eustáquio Sydney Horta to chair the meeting. This proposal was put to debate, and to the vote, and approved unanimously.

The Chair then declared the Meeting open, and invited me, Anamaria Pugedo Frade Barros, a stockholder, to be Secretary of the meeting, asking me to read the convocation notice, published on February 23, 24, and 25, 2017 in Minas Gerais , official publication of the Powers of the State, on pages 24, 54 and 32, respectively; and in the newspaper O Tempo , on pages 38, 28 and 28, respectively, the content of which is as follows:

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

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

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS – MARCH 30, 2017

CONVOCATION

Stockholders are hereby called to an Extraordinary General Meeting of Stockholders to be held on March 30, 2017 at 10 a.m., at the company’s head office, Av. Barbacena 1200, 21st floor, Belo Horizonte, Minas Gerais, Brazil to decide on the following matters:

 

  1) authorization to exceed, in 2017, the targets specified in sub- clauses ‘a’, ‘b’, and ‘d’ of Paragraph 7 of Article 11 of the Company’s by-laws;

 

  2) ratification of these same targets being exceeded from January 1, 2017 to the date of this Extraordinary General Meeting of Stockholders;

 

  3) re-ratification of the drafting of the minutes of the Ordinary and Extraordinary General Meetings of Stockholders held, concurrently, on April 29, 2016, improving their drafting to correct the information recorded in them as to the quantity of votes in favor and against, and abstentions, in election of members of the Board of Directors.

 

  

 

Av. Barbacena 1200

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

 

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

 

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Any stockholder who wishes to be represented by proxy at the said General Meeting of Stockholders should obey the precepts of Article 126 of Law 6406 of 1976, as amended, and of the sole Paragraph of Clause 9 of the Company’s by-laws, by exhibiting at the time, or depositing, preferably by March 28, 2017, proofs of ownership of the shares, issued by a depositary financial institution, and a power of attorney with specific powers, at Cemig’s Corporate Executive Secretariat Office ( Superintendência da Secretaria Geral e Executiva Empresarial ) at Av. Barbacena 1200 – 19th Floor, B1 Wing, Belo Horizonte, Minas Gerais.

Belo Horizonte, February 20, 2017

José Afonso Bicalho Beltrão da Silva

Chair of the Board of Directors ”

The Chair then asked the Secretary to read the Proposal by the Board of Directors, which deals with the agenda. The content of that document is as follows:

PROPOSAL

BY THE BOARD OF DIRECTORS

TO THE

EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS

TO BE HELD ON MARCH 30, 2017

Dear Stockholders:

 

  whereas:

 

  a) in its management of the Company and in the exercise of the right to vote in the wholly-owned subsidiaries, subsidiaries, affiliated companies and consortia, the Board of Directors and the Executive Board are required at all times faithfully to comply with certain targets, as stated in Clause 11, § 7, of the Company’s by-laws:

 

  to keep the Company’s consolidated indebtedness equal to or less than 2 (two) times the Company’s Ebitda (Earnings before interest, taxes, depreciation and amortization);

 

  to keep the consolidated ratio of (Net debt) / (Net debt + Stockholders’ equity) to a maximum of 40% (forty per cent); and

 

  to limit the consolidated amount of funds allocated to capital investment and acquisition of any assets in each business year to the equivalent of 40% (forty per cent) of Ebitda (profit before interest, taxes, depreciation and amortization);

 

  b) under Clause 11, Paragraph 9, of the by-laws the said target values of these indicators may be exceeded for reasons related to temporarily prevailing conditions, upon prior justification and specific approval by the Board of Directors, up to the following limits:

 

  Consolidated indebtedness less than or equal to 2.5 times Ebitda (profit before interest, taxes, depreciation and amortization); and

 

  Consolidated (Net debt) / (Net debt + Stockholders’ equity): maximum of 50%;

 

  c) above these limits, including the case of limitation of (Consolidated funds allocated to capital investment and acquisition of any assets) to 40% of Ebitda (profit before interest, taxes, depreciation and amortization), the targets may be exceeded upon prior justification with grounds and specific approval by the stockholders in a General Meeting of Stockholders;

 

  

 

Av. Barbacena 1200

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

 

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

 

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  d) authorization was obtained from the stockholders meeting in an Extraordinary General Meeting of Stockholders on May 30, 2016, for exceeding, in 2016,

 

  the target of keeping the Company’s consolidated indebtedness as specified in Subclause ‘a’ of Paragraph 7 of Clause 11 of the Company’s by-laws to less than or equal to 4.12 (four point one two) times the Company’s Ebitda (profit before interest, taxes, depreciation and amortization);

 

  the target of keeping the ratio established in Subclause ‘b’ of Paragraph 7 of Clause 11 of the by-laws, namely the consolidated ratio of (Net debt) / (Net debt + Stockholders’ equity) to a maximum of 52%; and

 

  the target of keeping the amount stated in Subclause ‘d’ of Paragraph 7 of Clause 11 of the by-laws, namely the consolidated amount of funds allocated to capital investment and acquisition of any assets in the business year to a limit of 146% of Cemig’s Ebitda;

 

  e) for 2017, the Company expects to obtain a further authorization from the stockholders, after approval of the annual budget by the Board of Directors, since the indicators continue to be, and will continue to be, above the limits stated in the bylaws;

 

  f) the budget for 2017 is in the process of analysis, discussion and decision by the Board of Directors, making it difficult to calculate the related indicators to provide information for a new decision by the stockholders on the final limits for the current year; and this makes it necessary for the stockholders, in General Meeting, to authorize passage of targets for Paragraph 7 of Clause 11 of the bylaws at preliminary levels, until a further General Meeting of Stockholders can decide on exceeding of the indicators calculated as a function of the 2017 budget, and ratify those targets having been exceeded from January 1, 2017 until the General Meeting of Stockholders that decides on this proposal;

 

  g) the Ordinary and Extraordinary General Meetings of Stockholders of Cemig held concurrently on April 29, 2016 elected members of the Board of Directors for a new period of office of two years, that is to say, until the AGM of 2018;

 

  h) the stockholder José Pais Rangel , as holder of preferred shares, nominated a sitting member of the Board of Directors and his substitute member;

 

  i) it was not explicit that these nominations were approved by the votes of the stockholders José Pais Rangel and Geração Futuro L. Par FIA ;

 

  j) the stockholder José Pais Rangel and the representative of Geração Futuro L. Par FIA , for the minority of stockholders with voting shares, nominated a sitting member and a substitute member for the Board of Directors;

 

  k) at those concurrent Ordinary and Extraordinary General Meetings of Stockholders, the chair stated that, to complete the Board of Directors, the following stockholders had the rights to put forward numbers of sitting members of the Board of Directors (and related substitute members) in the following proportions:

FIA Dinâmica Energia ,                   1.4 members and their respective substitute members;

AGC Energia S.A.                           2.9 members and their substitute members;

BNDESPar                                       1.9 members and their substitute members; and

The State of Minas Gerais               7.5 members and their substitute members;

 

 

  

 

Av. Barbacena 1200

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

 

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

 

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  l) the representative of the stockholder BNDESPar also nominated a sitting member for the Board of Directors, stating that the substitute member would be appointed later, the seat remaining vacant;

 

  m) the representatives of the stockholder FIA Dinâmica Energia and the representative of the stockholder AGC Energia S.A. made nominations of four sitting members and their related substitute members for the Board of Directors;

 

  n) the representative of the stockholder The State of Minas Gerais and the representative of the stockholder FIA Dinâmica Energia made nominations of eight sitting members and their related substitute members for the Board of Directors;

 

  o) the minutes of the said Ordinary and Extraordinary General Meetings of Stockholders were approved unanimously;

 

  p) an Extraordinary General Meeting of Stockholders was held on October 25, 2016, to make new appointments to the Board of Directors;

 

  q) in that Extraordinary General Meeting, the representative of BNDESPar , for the purpose of verifying that that election by multiple vote was regular, especially in view of the fact that the Board Members previously elected in a separate vote will be maintained in their positions, asked the meeting committee to provide the record of the stockholders present in the said Ordinary/Extraordinary Meetings, as specified in Paragraph 8 of Article 141 of Law 6404/1976, and the respective number of shares that participated in the said separate voting;

 

  r) it having been found that there was a mistake in the record of the number of votes for election of the stockholders José Pais Rangel and José João Abdalla Filho in the said Meetings, the representative of the stockholder BNDESPar stated that it had not been possible to check that matter, and then requested that Cemig should call a further General Meeting of Stockholders to rectify that number of votes and to ratify the other decisions, and the other stockholders consented to this request;

 

  s) the Board Members José Pais Rangel (sitting member) and José João Abdalla Filho (substitute) were elected with the votes of the stockholder José Pais Rangel and of Geração Futuro L. Par FIA , and these shares were not used in the election of the other members of the Board;

 

  t) there is a need to improve the drafting of the minutes of the said Ordinary and Extraordinary meetings, so as to correct the information recorded in them on the number of votes in favor, against, and abstentions, in election of members of the Board of Directors;

 

  the Board of Directors now proposes to you as follows:

 

  1) authorization to exceed, in 2017:

 

  the target for the Company’s consolidated indebtedness as specified in Subclause ‘a’ of Paragraph 7 of Clause 11 of the Company’s by-laws, with an upper limit of 4.44 (four point four four) times the Company’s Ebitda (profit before interest, taxes, depreciation and amortization);

 

  the target for the ratio established in Subclause ‘b’ of Paragraph 7 of Clause 11 of the by-laws, namely the consolidated ratio of (Net debt) / (Net debt + Stockholders’ equity), keeping it to a maximum of 55%; and

 

  the target for the quantity established in Subclause ‘d’ of Paragraph 7 of Clause 11 of the by-laws, namely the consolidated amount of funds allocated to capital investment and acquisition of any assets in the business year, keeping it to a limit of 192% of the Company’s Ebitda (profit before interest, taxes, depreciation and amortization);

 

  such limits, after being reviewed at the time of the approval of the budget for 2007 by the Board of Directors, to be again submitted to the stockholders in a General Meeting;

 

 

  

 

Av. Barbacena 1200

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

 

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

 

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  2) ratification of the fact of these ratios having being exceeded, subject to the limits stated above, in the period from January 1, 2017 until the Extraordinary General Meeting of Stockholders that decides on this proposal;

 

  3) re-ratification of the drafting of the minutes of the Ordinary and Extraordinary General Meetings of Stockholders held, concurrently, on April 29, 2016, improving their drafting to correct the information recorded in them as to the quantity of votes in favor and against, and abstentions, in election of members of the Board of Directors, as follows:

 

  a) nomination by the stockholder José Pais Rangel , as holder of preferred shares, of a sitting member and a substitute member for the Board of Directors, altering the record from: 342,287,674 votes in favor, 83,711,741 abstentions and 20,702,073 votes against, to: use of 130,000 votes of the said stockholder, accompanied by Mr. Daniel Alves Ferreira , representing a number of investment funds, with 60,353,489 votes in favor, 57,490,173 abstentions and 20,702,073 votes against;

 

  b) nomination by the stockholder José Pais Rangel and by the representative of Geração Futuro L. Par FIA , for the minority of stockholders having the right to vote, of a sitting member and substitute member for the Board of Directors, altering the record from: 342,993,338 votes in favor, 59,146,793 abstentions and 51,496 votes against, to: use of 110,000 votes in this election by the said representatives;

 

  c) election, with adoption of the Multiple Vote, by the representative of the stockholder BNDESPar , of a sitting member for the Board of Directors, the representative stating that the nomination of this member’s substitute would take place at a later date, the seat remaining vacant, with alteration from: 396,406,730 votes in favor, 847,070 abstentions and 1,908,941 votes against, to: the use of 54,342,992 votes in this election by the said representative;

 

  d) election, with adoption of the Multiple Vote, by the representatives of the stockholder FIA Dinâmica Energia using 31,845,985 votes, and of AGC Energia S.A. , of four sitting members and their substitutes to the Board of Directors, which were accompanied by Mr. Daniel Alves Ferreira, representative of several investment funds, with 47,337 votes, with alteration from: 342,063,738 votes in favor, 55,190,062 abstentions and 1,908,941 votes against, to 116,251,178 Votes in this election by the said representatives;

 

  e) election to the Board of Directors, with the adoption of the Multiple Vote, by the representatives of the majority stockholder, The State of Minas Gerais , and of FIA Dinâmica Energia , using the rest of the shares, that is to say, 8,685,269 votes, of a total of eight sitting members and their substitutes, with alteration from: 342,063,738 votes in favor, 55,190,062 abstentions and 1,908,941 votes against, to: 223,100,008 votes in this election by the said representatives.

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

Belo Horizonte, February 20, 2017

 

 

José Afonso Bicalho Beltrão da Silva

   Marco Antônio Soares da Cunha Castello Branco
 

Allan Kardec de Melo Ferreira

   Nelson José Hubner Moreira
 

Arcângelo Eustáquio Torres Queiroz

   Patrícia Gracindo Marques de Assis Bentes
 

Daniel Alves Ferreira

   Paulo Roberto Reckziegel Guedes
 

Helvécio Miranda Magalhães Junior

   Saulo Alves Pereira Junior
 

José Pais Rangel

   Bruno Magalhães Menicucci
 

Marcelo Gasparino da Silva

   Samy Kopit Moscovitch
 

Marco Antônio de Rezende Teixeira ”

  

The above proposal was put to debate, and subsequently to a vote, and was approved by a majority.

 

  

 

Av. Barbacena 1200

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

 

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

 

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The representative of the stockholder BNDES Participações S.A. – BNDESPar stated as follows:

 

a) The representative of BNDESPar voted

 

  in favor of authorization to exceed, in 2017, the targets specified in sub-items ‘a’ and ‘b’ of §7 of Article 11 of the Company’s by-laws,

 

  and against authorization to exceed, in 2017, the target specified in sub-item ‘d’ of §7 of Article 11 of the by-laws;

 

  and requested that the Company should:

 

  follow the path of increased efficiency and disposal of assets for reduction of leverage so as to return to the limit levels specified in the by-laws;

 

  present more detail in the statement of the calculation for 2017 in the proposal by Management relating to the amounts for 2017, also taking into account the budget approved for the current year; and

 

  obey the correct order of instances for approval in its processes, avoiding submission of matters for decision by the stockholders before all the decisions on such matters in the Board of Directors;

 

b) The representative of BNDESPar voted

 

  in favor of backdated authorization for the targets specified in sub-clauses ‘a’ and ‘b’ of §7 of Article 11 of the Company’s by-laws having been exceeded since January 1, 2017, and

 

  against backdated authorization for the target specified in sub- item ‘d’ of §7 of Article 11 of the Company’s by-laws having been exceeded since January 1, 2017.

 

c) The representative of BNDESPar voted against re-ratification of the drafting of the minutes of the Ordinary and Extraordinary General meetings of stockholders held, concurrently, on April 29, 2016, to improve the drafting to correct the information recorded in them on the number of votes in favor, against, and abstentions, in election of members of the Board of Directors.

There being no further business, the Chair opened the meeting to the floor, and since no-one wished to speak, ordered the meeting suspended for the time necessary for the writing of the minutes.

The session being reopened, the Chair, after putting the said minutes to debate and to the vote and verifying that they had been approved and signed, closed the meeting.

For the record, I, Anamaria Pugedo Frade Barros, Secretary, wrote these minutes and sign them together with all those present.

 

  

 

Av. Barbacena 1200

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

 

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

 

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2. CONVOCATION OF ORDINARY AND EXTRAORDINARY GENERAL MEETING OF STOCKHOLDERS DATED APRIL 11, 2017 TO BE HELD ON MAY 12, 2017

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS

CEMIG

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

ORDINARY AND EXTRAORDINARY

GENERAL MEETINGS OF STOCKHOLDERS

MAY 12, 2017

CONVOCATION

Stockholders are hereby called to Ordinary and Extraordinary General Meetings of Stockholders to be held on May 12, 2017 at 11 a.m. (herein referred to as ‘AGM’ and ‘EGM’) at the Company’s head office, Av. Barbacena 1200, 21 st floor, Belo Horizonte, Minas Gerais, Brazil, to decide on the following matters:

 

1 Authorization, until approval of the budget for 2018, for the Company to exceed the target for the quantity established in Subclause ‘d’ of Paragraph 7 of Clause 11 of the by-laws, namely the consolidated amount of funds allocated to capital investment and acquisition of any assets in the business year, keeping it to a maximum limit of 90% of the Company’s Ebitda (profit before interest, taxes, depreciation and amortization). (EGM – ON Shares)

 

2 Examination, debate and voting on the Report of Management and the Financial Statements for the year ended December 31, 2016, and the related complementary documents. (AGM – ON Shares)

 

3 Allocation of the Net profit for the business year 2016, in the amount of R$ 334,334,000, and of the balance of Retained earnings in the amount of R$ 37,258,000. (AGM – ON Shares)

 

4 Decision on the form and date of payment of the minimum obligatory dividends, in the amount of R$ 203,986,000. (AGM – ON Shares)

 

5 Election of the sitting and substitute members of the Audit Board, as a result of completion of the period of office. (AGM – ON and PN Shares)

 

6 Decision on the remuneration of the Managers and the members of the Audit Board. (AGM – ON Shares)

 

7 Orientation of the vote(s) of the representative(s) of the Company in the Ordinary and Extraordinary General Meetings of Stockholders of Cemig Distribuição S.A., to be held, concurrently, on May 12, 2017, at 1 p.m. (EGM – ON Shares)

 

8 Orientation of the vote(s) of the representative(s) of the Company in the Ordinary General Meeting of Stockholders of Cemig Geração e Transmissão S.A., to be held, on May 12, 2017, at 2 p.m. (EGM – ON Shares)

 

  

 

Av. Barbacena 1200

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

 

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

 

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Remote voting

Any stockholder who wishes to do so may exercise the right to vote using the remote voting system, under CVM Instruction 481/09, by sending the corresponding Remote Voting Statement ( Boletim de Voto à Distância , or BVD), through the stockholder’s custodian institution or mandated bank, or directly to the Company.

Proxy votes

Any stockholder who wishes to be represented by proxy at the said General Meetings of Stockholders should obey the precepts of Article 126 of Law 6406 of 1976, and of the sole paragraph of Clause 9 of the Company’s by-laws, by exhibiting at the time, or depositing, preferably by May 10, 2017, proofs of ownership of the shares, issued by a depositary financial institution, and a power of attorney with specific powers, at Cemig’s Corporate Executive Office ( Superintendência da Secretaria Geral ), Av. Barbacena 1200 – 19th Floor, B1 Wing, Belo Horizonte, Minas Gerais.

Belo Horizonte, April 11, 2017.

 

  

 

Av. Barbacena 1200

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

 

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

 

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PROPOSAL

BY THE BOARD OF DIRECTORS

TO THE

ORDINARY AND EXTRAORDINARY GENERAL MEETINGS OF STOCKHOLDERS

TO BE HELD ON MAY 12, 2017, AT 11 A.M.

Dear Stockholders:

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

Whereas –

 

a) in its management of the Company and in the exercise of the right to vote in wholly-owned and other subsidiaries, affiliated companies and consortia, the Board of Directors and the Executive Board are required at all times faithfully to comply with certain targets stated in Clause 11, Paragraph 7, of the Company’s by-laws – including the following:

 

  to keep the Company’s consolidated indebtedness equal to or less than 2 (two) times the Company’s Ebitda (Earnings before interest, taxes, depreciation and amortization);

 

  to keep the consolidated ratio of (Net debt) / (Net debt + Stockholders’ equity) to a maximum of 40% (forty per cent); and

 

  to limit the consolidated amount of funds spent on capital investment and/or the acquisition of any assets, in each business year, to the equivalent of a maximum of 40% (forty per cent) of the Company’s Ebitda (Earnings before interest, taxes, depreciation and amortization);

 

b) under Clause 11, Paragraph 9, of the by-laws the said targets for indicators may be exceeded for reasons related to temporarily prevailing conditions, upon prior justification and specific approval by the Board of Directors, up to the following limits:

 

  Consolidated indebtedness less than or equal to 2.5 times Ebitda (profit before interest, taxes, depreciation and amortization); and

 

  Consolidated (Net debt) / (Net debt + Stockholders’ equity): maximum of 50%;

 

c) above these limits, including the case of limitation of (Consolidated funds allocated to capital investment and acquisition of any assets) to 40% of Ebitda the targets may be exceeded upon prior justification with grounds and specific approval by a General Meeting of Stockholders;

 

d) The annual budget for 2017, which was on the agenda of the meeting of the Board of Directors held in March 2017, will cause indicators higher than the levels that can be approved by the Board of Directors, as shown:

 

Ratios – Consolidated

  

2017

Capex / Ebitda

   0.90

 

e) Article 192 of Law 6404 of December 15, 1976 as amended, and Clauses 27 to 31 of the by-laws, make provisions for these and associated matters;

 

f) the Financial Statements for 2016 present net profit of R$ 334,334,000, and a balance of Retained earnings of R$ 37,258,000 arising from realization of the Stockholders’ Equity Valuation Reserve;

 

g) it is the duty of the Board of Directors to make a proposal to the Ordinary (Annual) General Meeting for allocation of the Company’s net profit;

 

  

 

Av. Barbacena 1200

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

 

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

 

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h) the preferred shares have preference in the event of reimbursement of capital and participate in profits on the same conditions as the common shares: and under Clause 5 of the by-laws they carry the right to a minimum annual dividend equal to the greater of: (a) 10% of their par value and (b) 3% of the portion of equity that they represent;

 

i) using the above criteria, the preferred shares are entitled to a minimum dividend of R$ 419,039,000.

 

j) the dividends shall be distributed in the following order:

 

  a) the minimum annual dividend guaranteed to the preferred shares;

 

  b) the dividend for the common shares, up to a percentage equal to that guaranteed to the preferred shares – under Clause 29 of the by-laws;

 

k) by Board Spending Decision (CRCA) 086/2016, of December 22, 2016, the Company declared payment of Interest on Equity in a total of R$ 380,000,000, using the balance of the Retained Earnings Reserve, payable to stockholders whose names were on the Nominal Share Registry on December 26, 2016.

 

l) of this amount of Interest on Equity, R$ 253,004,000 will be paid to holders of preferred shares;

 

m) Sub-item III of CVM Decision 683/2012 establishes that Interest on Equity paid or credited may be imputed against the minimum obligatory dividend only at its value net of withholding income tax;

 

n) as decided in CRCA 086/2015, of December 17, 2015, Cemig paid to Cemig D an Advance Against Future Capital Increase (AFAC) of R$ 410,000,000.00 (four hundred and ten million Reais);

 

o) under Article 166 of Law 6404/1976 the share capital may be increased by decision of an Extraordinary General Meeting of Stockholders that is called and held to decide on a change to the by-laws;

 

p) Cemig D will hold an Extraordinary General Meeting of Stockholders to alter its share capital;

 

q) it is a function of the Board of Directors to approve the declarations of vote in the General Meetings of Stockholders, and the orientations for voting in the meetings of the boards of directors, of the subsidiaries, affiliated companies and the consortia in which the Company participates, when participation in the capital of other companies or consortia is involved, and the decisions must, in any event and not only in matters relating to participation in the capital of other companies or consortia, obey the provisions of these Bylaws, the Long-term Strategic Plan and the Multi-year Strategic Implementation Plan, as specified in Subclause ‘p’ of Clause 7 of Cemig’s by-laws;

 

r) it is also a function of the Board of Directors of Cemig to authorize the exercise of the right of preference and rights under stockholders’ agreements or voting agreements in wholly-owned or other subsidiaries, affiliated companies and the consortia in which the Company participates, except in the cases of the wholly-owned subsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A., for which the General Meeting of Stockholders has the competency for decision on these matters – under Subclause ‘o’ of Clause 17 of Cemig’s by-laws; and

 

s) Cemig Distribuição S.A. will hold an Ordinary (Annual) and an Extraordinary General Meeting of Stockholders, concurrently, in 2017 and Cemig Geração e Transmissão S.A. will hold its Ordinary (Annual) General Meeting of Stockholders in 2017, and both are wholly-owned subsidiaries of Companhia Energética de Minas Gerais – Cemig;

 

  

 

Av. Barbacena 1200

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

 

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

 

12


– do now propose to you as follows:

 

I) Authorization, until approval of the budget for 2018, for the Company to exceed the target for the quantity established in Subclause ‘d’ of Paragraph 7 of Clause 11 of the by-laws, namely the consolidated amount of funds allocated to capital investment and acquisition of any assets in the business year, keeping it to a maximum limit of 90% of the Company’s Ebitda (profit before interest, taxes, depreciation and amortization).

 

II) Allocation of the Net profit for the business year 2016, in the amount of R$ 334,334,000, and the balance of Retained earnings, in the amount of R$ 37,258,000, as follows:

 

  a) R$ 203,986,000 as minimum obligatory dividend, to be paid to the Company’s stockholders, to be paid in two equal installments, by June 30 and December 30, 2017, depending on availability of cash and at the discretion of the Executive Board, to stockholders whose names are on the Company’s Nominal Share registry on the date on which the Ordinary (Annual) General Meeting is held;

 

  b) R$ 160,538,000 to be held in Stockholders’ equity in the Retained Earnings Reserve, to provide funding for the Company’s consolidated planned investments in 2017, in accordance with a capital budget;

 

  c) R$ 7,068,000 to be held in Stockholders’ equity in the Tax incentives reserve, relating to tax incentives obtained in 2016 as a result of investments made in the region of Sudene.

Appendix I summarizes the calculation of the dividends proposed by Management, in accordance with the by-laws; Appendix II presents the capital budget for the 2017 business year.

 

III) That the representatives of the Company should vote in favor of the matters on the agenda in the Ordinary and Extraordinary General Meetings of Stockholders of Cemig Distribuição S.A., to be held, concurrently, in 2017.

 

IV) That the representatives of the Company should vote in favor of the matters on the agenda in the Ordinary (Annual) General Meeting of Stockholders of Cemig Geração e Transmissão S.A. to be held in 2017.

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

Belo Horizonte, April 11, 2017

 

José Afonso Bicalho Beltrão da Silva

   Marco Antônio Soares da Cunha Castello Branco

Arcângelo Eustáquio Torres Queiroz

   Patrícia Gracindo Marques de Assis Bentes

Daniel Alves Ferreira

   Antônio Dirceu Araujo Xavier

Helvécio Miranda Magalhães Junior

   Bruno Magalhães Menicucci

José Pais Rangel

   Carolina Alvim Guedes Alcoforado

Marcelo Gasparino da Silva

   Luiz Guilherme Piva

 

13


 

3. EARNINGS RELEASE RESULTS 2016 DATED APRIL 11, 2017

 

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PUBLICATION OF RESULTS

CEMIG REPORTS

2016 EBITDA

OF R$ 2.638 BILLION

 

  Disinvestment strategy – execution:
  Transchile – R$ 180 million

 

  Taesa – R$ 791 million

 

  Debt of R$ 5.8bn rolled over at average cost of 134.48% of CDI Rate

 

  Stockholding reorganization in Light: Cemig now holds 43.38% of total stock

 

  R$ 1.075 billion impairment on investment in Renova and Guanhães

 

  Operation of São Simão plant transferred to Quota regime:

R$ 250 million in Annual Generation Revenue (RAG)

 

Indicators (GWh)

   2016      2015      Variação %  

Electricity sold (excluding CCEE)

     55,592        56,904        (2.31

Indicators – R$ ’000

   2016      2015      Variação %  

Sales on the CCEE

     161        2,425        (93.36

Net debt

     13,139        11,732        11.99  

Gross revenue

     29,269        33,417        (12.41

Net revenue

     18,773        21,868        (14.15

Ebitda (IFRS)

     2,638        5,538        (52.37

Net profit in the quarter

     334        2,469        (86.47

Ebitda margin

     14.05%        25.32%        -11.27 p.p.  

 

 


 

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Conference call

Publication of 2016 results

Video webcast and conference call

April 12, 2017 (Wednesday) : 2 PM, Brasília time

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

+ 55 (11) 2188-0155 (1st option) or

+ 55 (11) 2188-0188 (2nd option)

Password: CEMIG

 

Playback of Video Webcast:

Site:

http://ri.cemig.com.br

Click on the banner and download.

Available for 90 days

 

  

Conference call – Playback:

Telephone: (+55-11) 2188-0400

Password:

CEMIG

Available fromApril 12 to April 26, 2017

Cemig Investor Relations

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

ri@cemig.com.br

Tel.:(+55-31) 3506-5024

Fax:(+55-31) 3506-5025

Cemig’s Executive Investor Relations Team

 

Chief Finance and Investor Relations Officer

Adézio de Almeida Lima

 

General Manager, Investor Relations

Antônio Carlos Vélez Braga

 

Manager, Investor Market

Robson Laranjo

 

 

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Contents

 

CONFERENCE CALL

     16  

CEMIG INVESTOR RELATIONS

     16  

CEMIG’S EXECUTIVE INVESTOR RELATIONS TEAM

     16  

CONTENTS

     17  

DISCLAIMER

     18  

OUR SHARES – IN 2016

     19  

CEMIG’S LONG-TERM RATINGS

     20  

ADOPTION OF IFRS

     20  

CEMIG’S CONSOLIDATED ELECTRICITY MARKET

     22  

THE ELECTRICITY MARKET OF CEMIG D

     25  

THE ELECTRICITY MARKET OF CEMIG GT

     26  

PHYSICAL TOTALS OF TRANSPORT AND DISTRIBUTION – MWH

     28  

CONSOLIDATED OPERATIONAL REVENUE

     28  

SECTOR / REGULATORY CHARGES – DEDUCTIONS FROM REVENUE

     33  

OPERATIONAL COSTS AND EXPENSES

     33  

ADJUSTMENT FOR IMPAIRMENT OF INVESTMENTS

     38  

FAIR VALUE GAIN (LOSS) ON STOCKHOLDING TRANSACTION

     38  

EQUITY GAINS IN NON-CONSOLIDATED INVESTEES

     39  

FINANCIAL REVENUE AND EXPENSES

     40  

EBITDA

     40  

DEBT

     41  

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

     43  

ELECTRICITY LOSSES—4Q16

     44  

APPENDICES

     45  

GENERATING PLANTS – DECEMBER, 2016

     45  

GENERATION: ANNUAL PERMITTED REVENUE (RAP)

     46  

FINANCIAL STATEMENTS SEPARATED BY OPERATIONAL SEGMENT

     47  

 

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Disclaimer

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

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

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

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

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

 

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Our shares – in 2016

 

Security

   Ticker    Currency    Close of
2016
     Close of
2015
     Change in
the period
%
 

Cemig PN

   CMIG4    R$      7.71        5.44        41.75%  

Cemig ON

   CMIG3    R$      7.88        5.75        37.15%  

ADR PN

   CIG    US$      2.28        1.32        72.69%  

ADR ON

   CIG.C    US$      2.53        1.55        63.70%  

Ibovespa

   Ibovespa         60,227        43,349        38.94%  

IEEX

   IEEX         36,108        24,803        45.58%  

 

Source: Economática.

Trading volume in Cemig’s preferred shares (CMIG4) in full-year 2016 totaled R$ 13.32 billion, a daily average of R$ 53.49 million. Adding the volume traded in its common (ON) and preferred (PN) shares, Cemig was the company with the third highest stock trading liquidity in the Brazilian electricity sector in the period, and among the most traded in the Brazilian market as a whole.

On the New York Stock Exchange the volume traded in ADRs for Cemig’s preferred shares ( CIG ) in full-year 2016 was US$2.45 billion – reflecting recognition by the investor market of Cemig as a global investment option.

The São Paulo stock exchange (Bovespa) index – the Ibovespa – was up 38.94% in 2016, closing the quarter at 60,227 points. The price of Cemig’s preferred shares outperformed the Ibovespa with a gain of 41.75% in 2016, close to the performance of the index for the Brazilian electricity sector, which rose 45.58%. Cemig’s common (ON) shares rose 37.15% in the year. Cemig’s ADRs, traded in New York, rose by more than the related shares on the Bovespa, reflecting the strengthening of the Real against the dollar. The ADR CIG – representing Cemig’s preferred (PN) shares – rose 72.69% in the year.

 

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Cemig’s long-term ratings

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

Brazilian rating:

 

Agency

  

Cemig

   Cemig D    Cemig GT
    

Rating

   Outlook    Rating    Outlook    Rating    Outlook

Fitch

   BBB(bra)    Negative    BBB(bra)    Negative    BBB(bra)    Negative

S&P

   BrBB+    Stable    BrBB+    Stable    BrBB+    Stable

Moody’s

   Baa1.br    Negative    Baa1.br    Negative    Baa1.br    Negative

Global Rating:

 

Agency

   Cemig    Cemig D    Cemig GT
     Rating    Outlook    Rating    Outlook    Rating    Outlook

S&P

   B    Stable    B    Stable    B    Stable

Moody’s

   B1    Negative    B1    Negative    B1    Negative

 

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

Adoption of IFRS

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

 

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PROFIT AND LOSS ACCOUNTS

 

Consolidated – R$ ‘000

   2016     2015     Change %  

REVENUE

     18,772,656       21,867,842       (14.15

OPERATING COSTS

      

Personnel

     (1,643,253     (1,435,001     14.51  

Employees’ and managers’ profit shares

     (7,327     (137,364     (94.67

Post-retirement obligations

     (344,559     (156,009     (120.86

Materials

     (57,915     (69,522     (16.70

Raw materials and inputs for production of electricity

     (40     (83,723     (99.95

Outsourced services

     (867,370     (899,470     (3.57

Electricity purchased for resale

     (8,272,911     (9,541,940     (13.30

Depreciation and amortization

     (834,291     (834,830     (0.06

Operating provisions

     (703,979     (1,401,455     (49.77

Charges for use of the national grid

     (947,479     (998,756     (5.13

Gas bought for resale

     (877,118     (1,050,925     (16.54

Infrastructure construction costs

     (1,193,140     (1,251,836     (4.69

Other operating expenses, net

     (153,621     (427,241     (64.04
  

 

 

   

 

 

   

 

 

 

TOTAL COST

     (15,903,003     (18,288,072     (13.04

Equity method gains

     (301,844     392,990       —    

Adjustment for impairment of Investments

     (762,691     0       —    

Fair value results in Corporate Operation

     0       729,442       —    
      

 

 

 

Operational profit before Financial income (expenses) and taxes

     1,805,118       4,702,202       (61.61

Financial revenues

     1,041,304       863,728       (20.56

Financial expenses

     (2,478,495     (2,204,344     12.44  
  

 

 

   

 

 

   

 

 

 

Pre-tax profit

     367,927       3,361,586       (89.05

Current and deferred income tax and Social Contribution tax

     (33,173     (892,583     (96.28
  

 

 

   

 

 

   

 

 

 

NET PROFIT FOR THE PERIOD

     334,754       2,469,003       (86.44
  

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     334,334       2,468,500    

Interest of non-controlling stockholder

     420       503    

Non-recurring

      

Fair value results in Corporate Operation

     0       (568,094     —    

Adjustment for impairment of Investments

     503,376       0       —    

Impairment in Renova

     215,608       0       —    

Profit on sale of shares in Taesa

     (119,311     0       —    

Impairment in Guanhães

     98,782       0       —    

Profit on sale of Transchile

     (62,329     0       —    
  

 

 

   

 

 

   

 

 

 

ADJUSTED NET PROFIT FOR THE PERIOD

     970,880       1,900,909       (48.93
  

 

 

   

 

 

   

 

 

 

 

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Cemig’s consolidated electricity market

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

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

 

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

 

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

 

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

 

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

 

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

In 2016 the “Cemig Group” sold a total of 55,591,690 MWh, or 2.3% less than in 2015, while the total of power transported by the group for Free Clients was 10.9% higher, at 17,381,808 MWh.

Sales of electricity to final consumers plus Cemig’s own consumption totaled 43,083,238 MWh, or 6.5% less than in 2015.

 

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

Sales to distributors, traders, other generating companies and independent power producers in 2016 totaled 12,508,453 MWh – or 15.5% more than in 2015.

In December 2016 the “Cemig Group” invoiced 8,260,336 customers – a growth of 2.2% in the customer base in the year since December 2015. Of these, 8,259,504 are final consumers, including Cemig’s own consumption; and 82 are other agents in the Brazilian electricity sector.

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

 

LOGO

Total consumption of electricity (GWh)

 

LOGO

 

 

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Consolidated

   MWh      Change,
%
    Average
price

2016
R$
     Average
price

2015
R$
 
   2016      2015          

Residential

     9,915,807        9,829,992        0.87       788.56        742.38  

Industrial

     19,494,391        22,968,931        (15.13     276.78        251.67  

Commercial, Services and Others

     6,572,980        6,433,728        2.16       663.16        614.94  

Rural

     3,574,724        3,379,734        5.77       409.39        416.18  

Public authorities

     885,748        892,368        (0.74     614.80        613.77  

Public lighting

     1,350,405        1,325,525        1.88       391.27        401.81  

Public services

     1,252,043        1,204,461        3.95       436.70        448.66  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

     43,046,098        46,034,739        (6.49     479.88        435.80  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Own consumption

     37,140        37,661        (1.38     —          —    

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

     12,508,453        10,831,194        15.49       216.90        217.75  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

     55,591,691        56,903,594        2.31       421.46        395.87  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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

 

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The electricity market of Cemig D

Electricity billed to captive clients by Cemig D, and electricity transported for Free Clients and distributors with access to Cemig D’s networks, totaled 43,304 GWh in 2016, or 2.80% more than in 2015.

There are two components of this reduction: Consumption by the captive market 2.0% lower year-on-year; and use of the network by Free Clients 10.9% higher by volume.

In December 2016 Cemig D was invoicing 8,258,534 captive clients.

 

Cemig D

   Number of clients      Change,
%
 
   2016      2015     

Residential

     6,691,673        6,532,169        2.44  

Industrial

     74,535        75,085        (0.73

Commercial, Services and Others

     716,602        714,433        0.30  

Rural

     694,026        678,742        2.25  

Public authorities

     63,483        62,854        1.00  

Public lighting

     5,667        4,146        36.69  

Public services

     12,548        11,038        13.68  
  

 

 

    

 

 

    

 

 

 

Total

     8,258,534        8,078,467        2.23  
  

 

 

    

 

 

    

 

 

 

Comments on the various consumer categories:

Residential

Consumption by residential users in 2016, at 9,915,807 MWh, was 0.9% higher than in full-year 2015.

The average monthly consumption per consumer in 2016 was 124.6 kWh, 1.4% less than 2015 (126.3 kWh).

Industrial

Total consumption by industrial users in 2016, at 19,627,640 MWh, 5.2% more than in 2015 – mainly reflecting the significant resumption of activity in the Met allergy and ferro-alloys sector.

Supply used by captive clients, totaling 3,194,872 MWh, was 7.4% of the total volume of electricity distributed by Cemig D in 2016 – this total was 15.0% less than in 2015; the total of electricity transported for Free Clients, at 16,432,768 MWh, was 10.3% higher than in 2015, and represented 38.0% of the total volume of electricity distributed.

 

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The performance of this segment reflects migration to the Free Market of captive clients using supply at medium voltage, and also a continuous retraction in economic activity both in the state of Minas Gerais and the whole of Brazil, and also the performance of the world economy.

The electricity market of Cemig GT

Cemig GT billed a total of 28,928,513 MWh in 2016, 3.5% less than in 2015.

The number of clients billed by Cemig GT was 94.0% higher than at the end of December 2015 – this total reached 1,040. Of these: 960 were industrial and commercial clients, 46 were distribution companies, and 34 were companies in the category of traders, generators and independent power producers.

 

Cemig GT

   (MWh)      Change
%
    (MWh)      Change
%
 
   4Q16      4Q15        2016      2015     

Free Clients

                

Industrial

     4,042,638        4,567,744        (11.50     15,494,833        18,465,652        (16.09

Commercial

     247,449        93,093        165.81       832,443        366,787        126.96  

Free Market – Free contracts

     3,080,410        1,197,596        157.22       10,044,817        6,442,747        55.91  

Regulated Market

     598,413        682,120        (12.27     2,425,228        4,252,099        (42.96

Regulated Market – Cemig D

     29,532        41,725        (29.22     131,192        438,670        (70.09
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     7,998,442        6,582,278        21.51       28,928,513        29,965,955        (3.46
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Free clients in the industrial and commercial categories consumed 16,327,276 GWh in 2016 – or 56.4% of the total electricity provided by Cemig GT, and 13.3% less than in 2015 – on the following main factors:

 

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  1) lower availability of power for sale due to the terms specified for renewal of concessions, as per Law 1303/2015 – this supply was redirected to the Physical Guarantee Quota regime;

 

  2) a stoppage at a mining plant in Minas Gerais state;

 

  3) lower consumption by industrial clients due to the continuous retraction in economic activity in Minas Gerais and Brazil as a whole, and the performance of the international economy.

Cemig GT added 260 new clients in the commercial category in 2016 – mostly outside the state of Minas Gerais – and 218 new industrial clients.

Sales and trading transactions in electricity with other agents of the electricity sector in the Free Market lead to selling opportunities, which lead to short-term sales contracts. In 2016 total sales of electricity were 10,044,817 MWh, or 55.9% more than in 2015.

Sales in the Regulated Market, including sales to Cemig D, were 45.5% lower than in 2015, for several reasons:

 

  1) cessation of certain contracts, as a result of the corporate reorganization of the Cemig group – with the transfer of assets from Cemig GT to Aliança Energia; and

 

  2) termination of contracts made at the 18th Adjustment Auction, held in the first half of 2015, and at the second ‘Existing Supply’ Auction, held in 2005 and governing the period 2008–2015.

Since September 15, 2015 the São Simão Plant has been serving the Regulated Market (‘ACR’) in accordance with the ‘quota’ regime, under the requirements of Ministerial Order 432/2015. The revenues that the company recognizes from that plant currently comprise only the revenues from provision of the services of operation and maintenance of the plant.

 

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Physical totals of transport and distribution – MWh

 

Position

   MWh      MWh      Change
%
 
   4Q16      4Q15      2016      2015     

Total energy carried

     12,174,713        12,402,868        49,469,543        48,067,296        2.92  

Electricity transported for distributors

     80,827        91,534        354,558        361,487        (1.92

Electricity transported for Free Clients

     4,185,897        3,872,121        17,026,724        15,319,122        11.15  

Own load

              

Consumption by captive market

     6,401,792        6,850,106        25,885,245        26,453,478        (2.15

Losses in distribution network

     1,506,197        1,589,107        6,203,016        5,933,209        4.55  

Consolidated operational revenue

Revenue from supply of electricity:

Total revenue from supply of electricity to final consumers in 2016 was R$ 23,430 million, or 4.01% more than the total revenue of R$ 22,526 million in 2015.

Final consumers

Total revenue from electricity sold to final consumers, excluding Cemig’s own consumption, was R$ 20,458 million in 2016 – or 0.68% more than in 2015 (R$ 20.319 million).

The main factors were:

 

  The Extraordinary Tariff Adjustment for Cemig D, which resulted in an average increase in consumers’ tariffs of 28.76%, applicable from March 2, 2015 (full effect in 2016).

 

  The Annual Tariff Adjustment for Cemig D, with average effect on consumer tariffs of 7.07%, effective from April 8, 2015 (full effect in 2016).

 

  The Annual Tariff Adjustment for Cemig D, with average effect on consumer tariffs of 3.78%, effective from May 28, 2016.

 

  Reduction of revenue from the ‘Tariff Flag’ system, to R$ 360 million in 2016, compared to R$ 1.067 billion in 2015, due to the improvement in the hydroelectric reservoir water storage levels – enabling lower additional charges to be made in 2016 under the ‘Flag’ system of temporary additional tariffs.

 

  Volume of electricity sold was 6.49% lower.

 

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     R$     Change
%
    Average
price

2016
R$
     Average
price

2015
R$
     Change
%
 
   2016     2015            

Residential

     7,819,174       7,297,557       7.15       788.56        742.38        6.22  

Industrial

     5,395,586       5,780,660       (6.66     276.78        251.67        9.98  

Commercial, Services and Others

     4,358,938       3,956,344       10.18       663.16        614.94        7.84  

Rural

     1,463,470       1,406,590       4.04       409.39        416.18        (1.63

Public authorities

     544,554       547,707       (0.58     614.80        613.77        0.17  

Public lighting

     528,378       532,603       (0.79     391.27        401.81        (2.62

Public services

     546,763       540,388       1.18       436.70        448.66        (2.67
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Subtotal

     20,656,863       20,061,849       2.97       479.88        435.80        10.11  

Supply not yet invoiced, net

     (198,785     256,753       —         —          —          —    
  

 

 

   

 

 

           
     20,458,078       20,318,602       0.69       —          —          —    

Wholesale supply to other concession holders (*)

     2,713,083       2,358,466       15.04       216.90        217.75        (0.39

Wholesale supply not yet invoiced, net

     258,552       (150,793     —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

     23,429,713       22,526,275       4.01       421.46        395.87        6.46  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

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

Revenue from Use of Distribution Systems (the TUSD charge)

This is revenue from charging of the Tariff for Use of the Distribution System ( Tarifa de Uso do Sistema de Distribuição , or TUSD), to Free Consumers, for transport of electricity sold. In 2016 this revenue was R$ 1.705 billion, 16.38% more than in 2015 (R$ 1.465 billion).

The main factors were:

 

A tariff effect of 96.21% in 2015, due to the Extraordinary Tariff Adjustment as from March 2, 2015, and the Annual Tariff Adjustment of April 2015 (full effect in 2016).

 

Reduction of 0.52% in the tariff for Free Consumers, given in the annual tariff adjustment of May 28, 2016.

 

Volume of electricity distributed 10.92% higher, mainly due to resumption of production by the Ferro-alloys sector in 2016.

Revenue from transactions in the Wholesale Trading Market (CCEE)

Revenue from transactions in electricity on the CCEE was R$ 161 million in 2016 – a year-on-year reduction of 93.36% from its total of R$ 2.425 billion in 2015.

 

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In 2016 there was a lower quantity of electricity available for settlement in the wholesale market, mainly due to the allocation of the power generated by the São Simão plant to the Regulated Market (ACR) from September 16, 2015, under the ‘Quota’ regime, in accordance with the requirements of Ministerial Order 432/2015. The revenues that the company recognizes from that plant currently comprise only the revenues from provision of the services of operation and maintenance of the plant. Thus, the volume of electricity becoming available from the Company was used basically in complying with its contracts with final consumers and other concession holders.

Supply of gas

The Company reported revenue from supply of gas 13.38% lower year-on-year in 2016, at R$ 1.444 billion, compared to R$ 1.667 billion in 2015, mainly due to the lower volume of gas sold (1,066,351m³ in 2016, compared to 1,414,464m³ in 2015).

 

Market (’000 m3/day)

   2012      2013      2014      2015      2016  
              

Residential

     —          0.17        0.72        1.04        3.38  

Commercial

     24.73        20.38        23.15        22.42        24.68  

Industrial

     2,740.00        2,734.95        2,849.24        2,422.78        2,173.76  

Other

     114.09        106.33        99.64        119.87        120.19  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total market excluding thermal plants

     2,878.82        2,861.83        2,972.75        2,566.11        2,322.01  

Thermal

     746.09        1,214.50        1,223.99        1,309.13        591.52  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3,624.91        4,076.33        4,196.74        3,875.24        2,913.53  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Due to the lower demand for electric power and the higher level of the reservoirs than in previous years (especially 2014 and 2015), demand for supply from the thermoelectric plants – which had been dispatched uninterruptedly since 2012 – is now lower. The industrial sector, which is the most important client for Gasmig, was another contributor to lower total volume in 2016.

 

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Supply of gas to the residential market, which began in March 2013, expanded to supply 14,935 households at the end of 2016 – compared to 3,820 at the end of 2015.

Gasmig’s debt

 

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Transmission indemnity revenue

In 2016 Cemig recognized revenue of R$ 751 million in relation to the following events:

 

R$ 20 million relating to the difference between the amount of the Preliminary Revision made by Aneel on February 23, 2015 of the Opinion sent by the Company, of R$ 1.157 billion, and the Final Revision;

 

R$ 90 million representing the difference between the variations resulting from the IGP-M index and the IPCA index – since the Company had updated the balance receivable, up to May 2016, by the IGP-M;

 

R$ 438 million, representing the cost of own capital, calculated on the basis of 10.44% p.a.;

 

R$ 44 million for monetary updating by the IGP-M index, up to May 2016, of the balance of indemnity receivable; and

 

R$ 159 million for updating of the balance of indemnity receivable, by the IPCA index and by the cost of capital, in accordance with Mining and Energy Ministry Order 120, in the period July through December 2016.

On August 16, 2016 Aneel, through its Dispatch 2181, homologated the amount of R$ 892,050, in currency of December 2012, for the portion of the reversible assets not yet amortized, for the purposes of indemnity to Cemig GT.

 

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The portions of remuneration and depreciation not paid in the period from the extensions of the concessions up to the tariff-setting process of 2017 are to be updated by the IPCA index and remunerated at the real cost of own capital of the transmission segment of the industry as decided by Aneel in the methodologies for Periodic Tariff Reviews of Revenues for Existing Concession Holders, currently 10.44% per year, to be paid over eight years by reimbursement through the RAP.

The Company has calculated the following amounts as indemnity:

 

     R$ ’000  

Regulatory Remuneration Base (BRR) – Dispatch 2181/2016

     1,177,488  

Amount of the indemnity received so far

     (285,438
  

 

 

 

Net value of the assets for purposes of indemnity

     892,050  

Updating in accordance with MME Order 120/16 – IPCA index/cost of own capital – Period Jan. 2013 to Dec. 2016

     913,180  
  

 

 

 

Total indemnity

     1,805,230  
  

 

 

 

CVA and Other financial components in tariff adjustment

In its financial statements Cemig recognizes the difference between actual non-controllable costs (in which the CDE, and electricity bought for resale, are significant components) and the costs that were used as the basis of decision of the rates charged to consumers. The amount of this difference is passed through to clients in Cemig D’s next tariff adjustment – in 2016 this represented a reduction of R$ 1.455 billion in revenue, compared to an increase, in 2015, of R$ 1,704 billion. This difference between the two years mainly reflects the reduction, in 2016, of the costs of acquiring electricity at auction, compared to the costs used as the basis for tariffs – this generated a financial liability for the Company, representing the amount to be rested tutored to consumers in the next tariff adjustment.

Fair value of an Indemnifiable Asset of the distribution concession

In 2016 the Company posted a gain on fair value of an indemnifiable asset of the distribution concession of R$ 8 million. This compares with a gain of R$ 576 million in 2015. This is due to the reduction in the estimate of the financial assets to be indemnified at the end of the concession, following the renewal of the concession contract in December 2015.

 

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Sector / Regulatory charges – Deductions from revenue

In 2016, the total of sector and regulatory charges and taxes reported as deductions from operational revenue was R$ 10.497 billion, 9.11% higher than in 2015 (R$ 11.549 billion). This mainly reflects reduction of the extra charges imposed on consumers by the ‘Flag’ system of additional tariffs (R$ 360 million in 2016, compared to R$  1.067 billion in 2015) and Energy Development Account – CDE (R$ 2.074 billion in 2016, compared to R$ 2.870 billion in 2015).

Operational costs and expenses

Operational costs and expenses, excluding Financial Revenue (expenses) in 2016 were R$ 15.903 billion, 13.04% less than in 2015 (R$ 18.288 billion).

 

LOGO

The following paragraphs comment on the main variations:

Electricity purchased for resale

The expense on electricity purchased for resale in 2016 was R$ 8.273 billion, which compares to R$ 9.542 billion in 2015 – a reduction of 13.30%. The main factors are:

 

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Cemig D:

 

  The expense on electricity acquired at auctions was 36.90% lower, at R$ 2.586 billion in 2016, vs. R$ 4.098 billion in 2015, mainly due to some of the thermoelectric plants being deactivated in 2016 due to the improvement in the level of the reservoirs of the hydroelectric plants in the system, with a resulting reduction in the expense on fuel for those plants.

 

  The expense on electricity from Itaipu Binacional was 34.03% lower: R$ 1.144 billion in 2016, compared to R$ 1.734 billion in 2015. This change basically reflects the the reduction of the tariff, which was US$ 38.07/kW-month in 2015, and was US$ 25.78/kW-month from January 2016.

 

  The cost of purchases of supply in the spot market was 19.91% lower – at R$ 680 million in 2016, vs. R$ 849 million in 2015 – reflecting the lower cost of electricity in the wholesale market in 2016.

Cemig GT:

The expense on electricity purchased for resale in 2016 was R$ 3.052 billion, 17.49% more than the figure of R$ 2.601 billion in 2015. The difference mainly reflects volume of electricity bought for resale 17.34% higher in 2016 (at 19,002,578 MWh), than in 2015 (15,273,685 MWh) – reflecting lower generation capacity, with the termination of the concession of some plants.

Operating provisions

Operational provisions in 2016 totaled R$ 704 million, compared to R$ 1,401 million in 2015, a reduction of 49.75%. This variation principally arises from the positive adjustment in the losses recorded previously for the Parati investment options, in the amount of R$ 55 million, which compares with a provision of R$ 1.079 billion in 2015 – primarily reflecting the increase of 76.24% in 2016 in the stock price of Light (an important variable in calculating the fair value of the put option on the Black-Scholes-Merton model), and also the payment of R$ 498 million in dividends of the companies of the Parati group in the 2016 business year, which made possible the reduction of R$ 702 million in the option exercise price.

 

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We highlight the higher total of Provisions for doubtful receivables of Cemig D, at R$ 382 million in 2016, compared to R$ 175 million in 2015. This mainly reflects higher default, influenced by the increase in tariffs and also the reduction in economic activity, which had its effect on unemployment rates and disposable income.

Default

In this context of an exceptional increase in electricity rates, Cemig has seen an increase in amounts invoiced and not paid by final consumers, to levels higher than the averages of recent months.

The situation has been further complicated by Brazil’s entering a period of financial stress, and its most significant consequence, increase in the rate of unemployment. This increased percentage of default has had a negative effect on the Company’s cash flow.

Due to the present economic context, default has remained at a level that is high for the Company.

The Company uses various tools of communication and collection to prevent increase in default. Measures include contact by telephone and email, text and collection letters, negative references for defaulting clients, collection through the courts and, principally, disconnection of supply. Aneel Resolution 414 allows supply to be cut off after 15 days from receipt of a notice to the defaulting consumer.

 

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The Company is confident that, with more intense collection and disconnection, the levels of default will be reduced in 2017.

 

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Investment in Light through Parati, RME and Lepsa

Corporate reorganization of Parati

In 2016 the shareholders decided to put in place a series of measures to simplify the stockholding structure of the Parati group, as follows:

    Extinction of Redentor Energia S.A., through reverse absorption by Rio Minas Energia Participações S.A. (‘RME’);

 

    Total split of Parati, with absorption by RME and Luce Empreendimentos e Participações S.A. (‘LEPSA’) of the separated assets and liabilities;

 

    Extinction of Parati, through reverse absorption by RME and LEPSA;

In November 2016, RME and LEPSA declared an aggregate total of R$ 463 million in dividends, using retained earnings reserves from prior years. In the same month both companies called for an aggregate capital subscription of R$ 446 million, which was paid up exclusively by Cemig.

 

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Personnel

Personnel expenses were R$ 1,643 million in 2016, compared to R$ 1,435 million in 2015, an increase of 14.49%. This arises mainly from the following factors:

 

  Salary increases of 3% from March 2015 (full effect in 2016), as a result of the court negotiation decided by the courts on application from organizations representing the employees.

 

  Salary increases, under the Collective Agreement, of 10.33%, coming into effect in November 2015 (full effect in 2016).

 

  Salary increase of 8.50% under the Collective Work Agreement, as from November 2016.

 

  Recognition, in 2016, of an expense of R$ 93 million on the voluntary retirement plan.

 

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Post-retirement obligations

The impact of the Company’s post-retirement liabilities on the bottom line was a expense, in the amount of R$ 345 million, in 2016, compared to an expense of R$ 156 million in 2015.

 

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This is mainly due to the higher cost arising from the Pension Fund and the Health Plan in 2016. Further, alterations were made to the life insurance structure in 2015, which changed the maximum limit of capital insured. This caused a reduction in the post-retirement obligations for 2015, of R$ 74 million, which is posted in the profit and loss account.

Gas bought for resale

In 2016 the company reported an expense of R$ 877 million on acquisition of gas, compared to an expense of R$ 1.051 billion in 2015 – a reduction of 16.56%. The lower figure reflects a lower volume of gas purchased (1,063,677m³ in 2016 compared to 1,405,732m³ in 2015).

Adjustment for impairment of investments

In 2016 the company made an adjustment for losses on impairment of investments totaling R$ 763 million relating to the goodwill on concessions which had been calculated at the time of injection of capital into Renova. As a result of the studies on impairment related to discounted cash flow of the investee, management of Cemig GT judged it necessary to make a full adjustment of the amount referred to, in the statement of income for 2016.

Fair value gain (loss) on stockholding transaction

In 2015 the Company posted a gain of R$ 729 million arising from the constitution of Aliança Geração de Energia.

 

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Equity gains in non-consolidated investees

In 2016 the Company reported a loss by the equity method of R$ 302 million, which compares with a gain of R$ 393 million reported in 2015. This mainly reflects the loss of R$ 373 million reported by Renova Energia in 2016, which in turn basically results from impairment of the investment in TerraForm and write-off of the put option with SunEdison; and also impairment of R$ 68 million posted by Guanhães.

 

Consolidated

   12/31/2015     Gain (loss)
by equity
method

(Income
statement)
    Gain (loss) by
equity method
(Other
comprehensive
income)
    Dividends     Injections /
acquisitions
     Disposal     Incorporation     Other     12/31/2016  

Companhia Transleste de Transmissão

     18,307       5,325       —         (2,044     —          —         —         —         21,588  

Companhia Transudeste de Transmissão

     17,536       3,783       —         (813     —          —         —         (1     20,505  

Companhia Transirapé de Transmissão

     19,298       4,654       —         —         —          —         —         —         23,952  

Transchile

     108,230       1,776       (22,988     —         —          (87,018     —         —         0  

Companhia de Transmissão Centroeste de Minas

     17,528       5,667       —         (2,024     —          —         —         —         21,171  

Light

     1,187,722       (120,512     2,948       320       —          —         —         (1     1,070,477  

Axxiom Soluções Tecnológicas

     23,840       (4,528     —         (49     —          —         —         1       19,264  

Luce

     —         (17,890     513       (57,185     251,977        —         166       —         177,581  

RME

     —         (17,757     510       (58,763     247,941        —         168       —         172,099  

Hidrelétrica Cachoeirão

     40,844       11,122       —         (1,555     —          —         —         —         50,411  

Guanhães Energia

     18,444       (102,108     —         —         24,593        —         —         59,071       0  

Hidrelétrica Pipoca

     26,237       5,571       —         —         —          —         —         1       31809  

Madeira Energia (Santo Antônio Plant)

     675,983       (71,093     —         —         39,000        —         —         —         643,890  

FIP Melbourne (Santo Antônio Plant)

     703,403       (63,755     —         —         40,214        —         —         (2,680     677,182  

Lightger

     37,454       4,088       —         —         —          —         —         1       41,543  

Baguari Energia

     187,227       41,037       —         (14,118     —          —         —         (52,040     162,106  

Central Eólica Praias de Parajuru

     63,045       287       —         (25     —          —         —         —         63,307  

Central Eólica Volta do Rio

     85,101       (3,838     —         (35     —          —         —         —         81,228  

Central Eólica Praias de Morgado

     62,071       (2,440     —         (45     —          —         —         —         59,586  

Amazônia Energia (Belo Monte Plant)

     495,768       (6,659     —         —         291,913        —         —         —         781,022  

Ativas Data Center

     —         (31,424     —         —         98,900        —         —         (49,735     17,741  

Parati

     357,753       (24,305     850       221       —          —         (335     —         334,184  

Taesa

     2,242,186       341,081       —         (381,609     —          (619,025     —         —         1,582,633  

Renova

     1,527,435       (373,313     19,330       —         277,864        —         —         (762,691     688,625  

Usina Hidrelétrica Itaocara S.A.

     —         —         —         —         2,782        —         —         —         2,782  

Aliança Geração

     1,327,246       103,849       —         (112,040     —          —         —         —         1,319,055  

Aliança Norte (Belo Monte Plant)

     354,284       (6,551     —         —         179,765        —         —         —         527,498  

Retiro Baixo

     147,905       16,089       —         (2,146     —          —         —         —         161,848  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     9,744,847       (301,844     1,163       (631,910     1,454,949        (706,043     0       (808,074     8,753,088  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Ativas Data Center (Uncovered liabilities of jointly-controlled entity)

     (27,769     —         —         —         —          —         —         —         (27,769

Guanhães (Uncovered liabilities of jointly-controlled entity)

     —         —         —         —         —          —         —      

 

(59,071

 

 

(59,071

  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     9,717,078       (301,844     1,163       -631,91       1,604,709        (706,043     —         (1,016,905     8,694,017  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

39


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Financial revenue and expenses

 

LOGO

Cemig reports Net financial expenses of R$ 1.437 billion in 2016, compared to net financial expenses of R$ 1.341 billion in 2015. The main factors are:

 

  Costs of loans and financings 39.11% higher at R$ 1.928 billion, compared to R$ 1.386 billion in 2015. The higher cost of debt indexed to the CDI rate in 2016, and also the higher variation in the CDI rate itself: 14.06% in 2016, compared to 13.23% in 2015.

 

  Expense on monetary variation in loans and financings 36.69% lower, at R$ 245 million in 2016, compared to R$ 387 million in 2015 – mainly due to the lower inflation rate posted by the IPCA index (6.29% in 2016, compared to 10.67% in 2015).

 

  The expense on foreign exchange variation was 79.65% lower in 2016, at R$ 35 million, compared to R$ 172 million in 2015 – reflecting appreciation of the Real against the dollar in 2016 (by 16.54%), compared to its depreciation of 47.01% in 2015.

EBITDA

Cemig’s consolidated Ebitda in 2016 was 52.33% lower than in 2015.

 

Ebitda – R$ ‘000

   4Q16     4Q15      Change, %     2016      2015      Change, %  

Net profit for the period

     (306,079     283,158        —         334,334        2,468,500        (86.46

+ Income and Social Contribution taxes

     (191,277     54,680        —         33,173        892,583        (96.28

+ Net financial revenue (expenses)

     391,005       534,832        (26.89     1,437,191        1,340,616        7.20  

+ Depreciation and amortization

     233,094       205,999        13.15       834,291        834,830        (0.06
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

= EBITDA

     126,793       1,078,669        (88.25     2,638,989        5,536,529        (52.33
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

40


LOGO

 

 

LOGO

 

LOGO LOGO

DEBT

 

LOGO

 

41


LOGO

 

The Company’s consolidated total debt on December 31, 2016 was R$ 15.179 billion, 0.08% more than at December 31, 2015.

 

LOGO

Payment of loans – Cemig GT

On February 15, 2017, Cemig GT amortized in full the 1st Series of the 3rd Debenture Issue, in the amount of R$ 553 million (principal, plus interest, calculated up to the date of the actual amortization). The interest on the 2nd and 3rd Series of the 3rd Debenture Issue totaling R$ 76 million, was paid on the same date. These payments were made from the Company’s own funds.

 

LOGO

 

42


LOGO

 

 

LOGO

THE CEMIG GROUP’S PORTFOLIO OF GENERATION ASSETS

 

Cemig – generation portfolio, in MW*

 

Stage

   Hydro
plants
     Small
Hydro
Plants
     Wind      Solar      Thermal
plants
     Total  

In operation

     7,799        258        158        31        131        8,377  

Under construction/contracted

     1,072        31        658        3        —          1,278  

In development:

     10,802        —          392        52        1,000        12,497  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,673        9        1,208        186        1,131        22,152  

 

* The amounts refer only to direct or indirect equity interests held by Cemig on September 30, 2016.

Highlights of 4Q16:

Belo Monte Hydroelectric Plant

In December the third rotor of the principal machine room and the fourth turbine of the complementary machine room started commercial operation. The completed project will have installed generation capacity of 11,233 MW.

Santo Antônio Hydroelectric Plant

In December 2016, the last 6 of the 50 rotors of the Santo Antônio Plant started operating.

 

43


LOGO

 

Electricity losses—4Q16

Control of electricity losses is one of Cemig D’s strategic objectives, and the Company has a structure dedicated to this: its Distribution Losses Measurement and Control Management Unit. Compliance with the target is monitored monthly, and measured by the Distribution Total Losses Index ( Índice de Perdas Totais da Distribuição , IPTD).

In the decision on the regulatory target, taken during the 3 rd Tariff Review Cycle, the regulator, Aneel, made significant changes in the method of calculation of technical losses, imposing extremely challenging limits for Cemig D.

The parameter Total losses comprises two components: (i)  Technical losses , and (ii)  Non-technical losses . The indicators for measurement of the two components: are the PPTD ( Distribution Technical Losses Percentage ); and the PPNT ( Distribution Non-technical Losses Percentage ).

 

LOGO

 

44


LOGO

 

Appendices

Generating plants – December, 2016

 

Plant

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

São Simão

     CEMIG GT        Hydroelectric        100.00     1,710.00        1,281.00        1,710.00        1,281.00        1/11/2015  

Emborcação

     CEMIG GT        Hydroelectric        100.00     1,192.00        497.00        1,192.00        497.00        7/23/2025  

Nova Ponte

     CEMIG GT        Hydroelectric        100.00     510.00        276.00        510.00        276.00        7/23/2025  

Jaguara

     CEMIG GT        Hydroelectric        100.00     424.00        336.00        424.00        336.00        8/28/2013  

Miranda

     CEMIG GT        Hydroelectric        100.00     408.00        202.00        408.00        202.00        12/23/2016  

Irapé

     CEMIG GT        Hydroelectric        100.00     399.00        210.70        399.00        210.70        2/28/2035  

Volta Grande

     CEMIG GT        Hydroelectric        100.00     380.00        229.00        380.00        229.00        2/23/2017  

Igarape

     CEMIG GT        Thermal        100.00     131.00        71.30        131.00        71.30        8/13/2024  

Rio de Pedras

     CEMIG GT        SHP        100.00     9.28        2.15        9.28        2.15        9/19/2024  

Poço Fundo

     CEMIG GT        SHP        100.00     9.16        5.79        9.16        5.79        8/19/2025  

São Bernardo

     CEMIG GT        SHP        100.00     6.82        3.42        6.82        3.42        8/19/2025  

Paraúna

     CEMIG GT        SHP        100.00     4.28        1.90        4.28        1.90        —    

Pandeiros

     CEMIG GT        SHP        100.00     4.20        0.47        4.20        0.47        9/22/2021  

Salto Morais

     CEMIG GT        SHP        100.00     2.39        0.74        2.39        0.74        7/1/2020  

Sumidouro

     CEMIG GT        SHP        100.00     2.12        0.34        2.12        0.34        7/8/2015  

Anil

     CEMIG GT        SHP        100.00     2.08        1.16        2.08        1.16        7/8/2015  

Xicão

     CEMIG GT        SHP        100.00     1.81        0.61        1.81        0.61        8/19/2025  

Luiz Dias

     CEMIG GT        SHP        100.00     1.62        0.61        1.62        0.61        8/19/2025  

Central Mineirão

     CEMIG GT        Solar        100.00     1.42        —          1.42        —          —    

Poquim

     CEMIG GT        SHP        100.00     1.41        0.58        1.41        0.58        7/8/2015  

Santa Marta

     CEMIG GT        SHP        100.00     1.00        0.58        1.00        0.58        7/8/2015  

Pissarrão

     CEMIG GT        SHP        100.00     0.80        0.55        0.80        0.55        11/19/2004  

Jacutinga

     CEMIG GT        SHP        100.00     0.72        0.47        0.72        0.47        —    

Santa Luzia

     CEMIG GT        SHP        100.00     0.70        0.23        0.70        0.23        2/25/2026  

Lages

     CEMIG GT        SHP        100.00     0.68        0.54        0.68        0.54        6/24/2010  

Bom Jesus do Galho

     CEMIG GT        SHP        100.00     0.36        0.13        0.36        0.13        —    

Queimado

     CEMIG GT        Hydroelectric        82.50     105.00        58.00        86.63        47.85        1/2/2033  

Praias de Parajuru

     CEMIG GT        Wind Farm        49.00     28.80        8.39        14.11        4.11        9/24/2032  

Praia do Morgado

     CEMIG GT        Wind Farm        49.00     28.80        13.20        14.11        6.47        12/26/2031  

Volta do Rio

     CEMIG GT        Wind Farm        49.00     42.00        18.41        20.58        9.02        12/26/2031  

Três Marias

     CEMIG G. TRÊS MARIAS        Hydroelectric        100.00     396.00        239.00        396.00        239.00        1/4/2046  

Salto Grande

     CEMIG G. SALTO GRANDE        Hydroelectric        100.00     102.00        75.00        102.00        75.00        1/4/2046  

Itutinga

     CEMIG G. ITUTINGA        Hydroelectric        100.00     52.00        28.00        52.00        28.00        1/4/2046  

Camargos

     CEMIG G. CAMARGOS        Hydroelectric        100.00     46.00        21.00        46.00        21.00        1/4/2046  
     CEMIG G. SUL        SHPs        100.00     39.53        27.00        39.53        27.00        1/4/2046  
     CEMIG G. LESTE        SHPs        100.00     35.16        19.95        35.16        19.95        1/4/2046  
     CEMIG G. OESTE        SHPs        100.00     28.90        12.68        28.90        12.68        1/4/2046  

Sá Carvalho

     Sá Carvalho S.A        Hydroelectric        100.00     78.00        58.00        78.00        58.00        12/1/2024  

Rosal

     Rosal Energia S. A        Hydroelectric        100.00     55.00        30.00        55.00        30.00        5/8/2032  

Pai Joaquim

     CEMIG PCH S.A        SHP        100.00     23.00        2.41        23.00        2.41        4/1/2032  

Barreiro

     Usina Termelétrica Barreiro        Thermal        100.00     12.90        11.37        12.90        11.37        4/30/2023  

Salto Voltão

     Horizontes Energia        SHP        100.00     8.20        6.63        8.20        6.63        10/4/2030  

Salto do Paraopeba

     Horizontes Energia        SHP        100.00     2.46        —          2.46        —          10/4/2030  

Salto do Passo Velho

     Horizontes Energia        SHP        100.00     1.80        1.48        1.80        1.48        10/4/2030  

Machado Mineiro

     Horizontes Energia        SHP        100.00     1.72        1.14        1.72        1.14        7/8/2025  

Aimorés

     ALIANÇA        Hydroelectric        45.00     330.00        172.00        148.50        77.40        12/20/2035  

Funil

     ALIANÇA        Hydroelectric        45.00     180.00        89.00        81.00        40.05        12/20/2035  

Amador Aguiar I (Capim Branco I)

     ALIANÇA        Hydroelectric        39.32     240.00        155.00        94.36        60.94        8/29/2036  

Amador Aguiar II (Capim Branco II)

     ALIANÇA        Hydroelectric        39.32     210.00        131.00        82.56        51.50        8/29/2036  

Porto Estrela

     ALIANÇA        Hydroelectric        30.00     112.00        55.80        33.60        16.74        7/10/2032  

Igarapava

     ALIANÇA        Hydroelectric        23.69     210.00        136.00        49.75        32.22        12/30/2028  

Candonga

     ALIANÇA        Hydroelectric        22.50     140.00        64.50        31.50        14.51        1/0/1900  

Santo Antônio

     Santo Antônio Energia        Hydroelectric        18.13     3,568.30        2,424.00        646.90        439.45        6/12/2046  

Belo Monte

     Norte Energia        Hydroelectric        12.77     2,677.54        2,525.30        341.87        322.43        26/08/2045  

Baguari

     BAGUARI ENERGIA        Hydroelectric        34.00     140.00        80.20        47.60        27.27        8/15/2041  

Retiro Baixo

     Retiro Baixo Energética        Hydroelectric        49.90     82.00        38.50        40.92        19.21        8/25/2041  

Cachoeirão

     Hidrelétrica Cachoeirão        SHP        49.00     27.00        16.37        13.23        8.02        7/25/2030  

Pipoca

     Hidrelétrica Pipoca        SHP        49.00     20.00        11.90        9.80        5.83        9/10/2031  
     Light Energia        Hydroelectric        43.33     855.14        637.00        370.53        275.85     
     Lightger        SHP        71.10     25.00        19.53        17.77        13.89     
     Renova Energia        Wind Farm        40.94     386.10        191.30        158.09        78.33     
     Renova Energia        SHP        40.94     41.80        24.40        17.11        9.99     
     Brasil PCH        SHPs        20.88     291.00        192.68        60.77        40.23     
          

 

 

    

 

 

    

 

 

    

 

 

    

Total

             15,828.01        10,719.40        8,468.82        5,258.24     
          

 

 

    

 

 

    

 

 

    

 

 

    

 

45


LOGO

 

Generation: Annual Permitted Revenue (RAP)

 

Resolução Homologatoria ANEEL—n° 2.098/16*

 

Annual Permitted Revenue (RAP)

   RAP      % Cemig     Cemig
Consolidado
     Cemig GT  

Cemig GT

     296,435,871        100.0     296,435,871        296,435,871  

Cemig Itajuba

     37,434,741        100.0     37,434,741        37,434,741  

Centroeste

     17,129,836        51.0     8,736,216     

Transirapé

     29,201,132        24.5     7,154,277     

Transleste

     40,172,135        25.0     10,043,034     

Transudeste

     24,899,069        24.0     5,975,777     

Taesa

        43.36        842,485,180  

ETEO

     112,775,455        100.0     48,899,295     

ETAU

     42,527,356        52.6     9,696,352     

NOVATRANS

     512,214,141        100.0     222,095,405     

TSN

     494,919,285        100.0     214,596,377     

GTESA

     9,216,414        100.0     3,996,225     

PATESA

     23,933,818        100.0     10,377,673     

Munirah

     35,919,476        100.0     15,574,639     

Brasnorte

     24,904,755        38.7     4,175,252     

São Gotardo

     5,023,232        100.0     2,178,067     

Abengoa

          

NTE

     151,048,516        100.0     65,494,446     

STE

     80,334,482        100.0     34,832,930     

ATEI

     146,729,702        100.0     63,621,814     

ATEII

     226,671,244        100.0     98,284,365     

ATEIII

     112,228,974        100.0     48,662,341     

TBE

          

EATE

     422,269,558        50.0     211,060,363     

STC

     41,521,642        40.0     16,603,306     

Lumitrans

     26,206,259        40.0     10,478,809     

ENTE

     221,643,644        50.0     110,797,315     

ERTE

     49,750,421        50.0     24,868,593     

ETEP

     96,563,389        50.0     48,266,682     

ECTE

     79,722,528        19.1     15,221,253     

EBTE

     44,400,267        74.5     33,074,203     

ESDE

     12,639,916        50.0     6,317,992     

ETSE

     21,581,574        19.1     4,120,524     

Light

     8,803,216        32.6     2,868,088     
       

 

 

    

 

 

 

RAP TOTAL CEMIG

          1,691,942,224        1,176,355,792  
       

 

 

    

 

 

 

 

* Receitas anuais permititidas com vigência entre 1° de julho de 2016 e 30 de junho de 2017.

 

46


LOGO

 

FINANCIAL STATEMENTS SEPARATED BY OPERATIONAL SEGMENT

 

INFORMATION BY MARKET SEGMENT AT DECEMBER 31, 2016

 

 

Item

   Electricity     Telecoms     Gas     Other     Eliminations     Total  

R$ ’000

   Generation     Transmission     Distribution            

ASSETS OF THE SEGMENT

     14,414,449       4,267,418       18,165,610       337,745       2,737,182       2,388,972       (275,523     42,035,853  

Additions to the segment

     909,459       —         1,464,313       162,014       51,806       —         —         2,587,592  

Additions to Financial Assets

     2,216,888       53,823       —         —         —         —         —         2,270,711  

Investments in subsidiaries and jointly-controlled entities

     5,291,892       1,669,849       1,754,342       17,741       —         19,264       —         8,753,088  

NET REVENUE

     5,874,926       1,112,853       10,596,503       125,170       1,180,537       116,21       (233,543     18,772,656  

COST OF ELECTRICITY AND GAS

                

Electricity purchased for resale

     (3,071,153     —         (5,260,411     —         —         (3     58,656       (8,272,911

Charges for use of the National Grid

     (320,917     (336     (759,929     —         —         —         133,703       (947,479

Gas bought for resale

     —         —         —         —         (877,118     —         —         (877,118
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operational costs, total

     (3,392,070     (336     (6,020,340     —         (877,118     (3     192,359       (10,097,508

OPERATIONAL COSTS AND EXPENSES

                

Personnel

     (271,462     -111,07       (1,146,685     (22,811     (46,666     (44,559     —         (1,643,253

Employees’ and managers’ profit shares

     (585     (208     (9,790     (640     —         3,896       —         (7,327

Post-retirement obligations

     (54,387     (22,647     (230,630     —         —         (36,895     —         (344,559

Materials

     (11,248     (2,845     (41,820     (94     (1,858     (122     32       (57,955

Outsourced services

     -129,25       (30,354     (673,823     (22,997     (15,987     (31,881     36,922       -867,37  

Depreciation and amortization

     (201,871     —         (524,584     (37,742     (54,308     (15,786     —         (834,291

Operational provisions (reversals)

     (88,144     (9,973     (544,090     (4,373     —         (66,571     —         (713,151

Construction costs

     —         (53,824     (1,101,966     —         (37,350     —         —         (1,193,140

Other operational expenses, net

     (57,492     (12,950     (394,628     10,740       (7,755     313,406       4,230       (144,449
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of operation

     (814,439     (243,871     (4,668,016     (77,917     (163,924     121,488       41,184       (5,805,495

OPERATIONAL COSTS AND EXPENSES

     (4,206,509     (244,207     (10,688,356     (77,917     (1,041,042     121,485       233,543       (15,903,003

OPERATIONAL PROFIT BEFORE EQUITY GAINS (LOSSES) AND FINANCIAL REVENUE (EXPENSES)

     1,668,417       868,646       (91,853     47,253       139,495       237,695       —         2,869,653  

Equity method gain (loss)

     (447,714     362,286       (180,464     (31,424     —         (4,528     —         (301,844

Adjustment for impairment of Investments

     (762,691     —         —         —         —         —         —         (762,691

Fair value gain (loss) on stockholding transaction

     —         —         —         —         —         —         —         —    

Financial revenues

     190,338       6,659       742,972       3,999       14,987       82,349       —         1,041,304  

Financial expenses

     (1,320,422     (3,773     (1,077,899     (9,066     (49,112     (18,223     —         (2,478,495
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PRE-TAX PROFIT

     (672,072     1,233,818       (607,244     10,762       105,370       297,293       —         367,927  

Income tax and Social Contribution tax

     (24,269     4,760       102,829       (5,929     (7,680     (102,884     —         (33,173
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET PROFIT (LOSS)

     (696,341     1,238,578       (504,415     4,833       97,690       194,409       —         334,754  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest of the controlling stockholders

     (696,341     1,238,578       (504,415     4,833       97,270       194,409       —         334,334  

Non-controlling stockholder

     —         —         —         —         420       —         —         420  
     (696,341     1.238.578       (504,415     4,833       97,690       194,409       —         334,754  

 

47


LOGO

 

Cemig D Tables (R$ million)

 

CEMIG D Market

 
     (GWh)      GW  

Quarter

   Captive Consumers      TUSD ENERGY1      T.E.D2      TUSD PICK3  

1Q14

     6,744        4,464        11,208        29  

2Q14

     6,646        4,485        11,132        29  

3Q14

     6,686        4,298        10,984        27  

4Q14

     6,935        4,201        11,136        29  

1Q15

     6,780        4,034        10,814        30  

2Q15

     6,371        3,896        10,268        28  

3Q15

     6,471        3,803        10,274        29  

4Q15

     6,850        3,937        10,787        28  

1Q16

     6,408        4,053        10,460        29  

2Q16

     6,711        4,497        11,208        29  

3Q16

     6,365        4,424        10,788        29  

4Q16

     6,402        4,409        10,811        30  

 

 

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

Operating Revenues (consolidated)—CEMIG D

Values in million of Reais

 

Operating Revenues

   4Q16     4Q15     Change%     2016     2015     Change%  

Sales to end consumers

     4,260       4,498       (5     16,687       16,515       1  

TUSD

     367       296       24       1,741       1,500       16  

CVA and Other financial components in tariff adjustment

     (518     397       —         (1,455     1,704       —    

Construction revenue

     248       353       (30     1,102       1,044       6  

Updating of financial assets—Remuneration Assets Base (BRR)

     1       293       (100     8       576       (99

Others

     283       301       (6     1,134       1,244       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     4,640       6,139       (24     19,216       22,583       (15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deductions

     (2,045     (2,753     (26     (8,620     (9,620     (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

     2,596       3,386       (23     10,597       12,962       (18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses (consolidated)—CEMIG D

Values in millions of reais

 

Operating Expenses

   4Q16     4Q15     Change%     2016      2015      Change%  

Personnel/Administrators/Councillors

     295       316       (7     1,147        1,000        15  

Employees’ and managers’ profit shares

     (17     (48     —         10        95        (90

Forluz—Post-Retirement Employee Benefits

     65       (4     —         231        121        90  

Materials

     13       13       —         42        51        (17

Contracted Services

     201       199       1       674        697        (3

Purchased Energy

     1,403       1,619       (13     5,260        6,993        (25

Depreciation and Amortization

     157       108       45       525        444        18  

Operating Provisions

     174       31       455       544        209        160  

Charges for Use of Basic Transmission Network

     154       183       (16     760        813        (7

Cost from Operation

     248       353       (30     1,102        1,044        6  

Other Expenses

     110       (20     —         395        283        40  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

     2,801       2,751       2       10,688        11,749        (9
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

48


LOGO

 

Statement of Results (Consolidated)—CEMIG

Values in millions of reais

 

Statement of Results

   4Q16     4Q15     Change%     2016     2015     Change%  

Net Revenue

     2,596       3,386       (23     10,597       12,962       (18

Operating Expenses

     2,801       2,751       2       10,688       11,749       (9

EBIT

     (206     635       (132     (92     1,213       —    

EBITDA

     (49     743       —         433       1,657       (74

Financial Result

     (85     (414     79       (335     (587     43  

Provision for Income Taxes, Social Cont &

     80       (199     —         103       (256     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     (211     22       —         (324     370       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cemig GT Tables (R$ million)

Operating Revenues (consolidated)—CEMIG GT

Values in million of Reais

 

Operating Revenues

   4Q16     4Q15     Change%     2016     2015     Change%  

Sales to end consumers

     864       943       (8     3,647       3,716       (2

Supply

     956       426       124       2,930       2,199       33  

Gain on monetary updating of Concession Grant Fee

     87       —         —         300       —         —    

Transactions in the CCEE

     15       535       (97     152       2,356       (94

Revenues from Trans. Network

     111       97       14       410       339       21  

Construction revenue

     17       57       (70     54       146       (63

Transmission indemnity revenue

     59       40       47       751       101       647  

Others

     16       12       30       37       26       43  

Subtotal

     2,126       2,111       1       8,281       8,883       (7

Deductions

     (410     (386     6       (1,472     (1,506     (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

     1,716       1,725       (1     6,809       7,377       (8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses (consolidated)—CEMIG GT

Values in millions of reais

 

Operating Expenses

   4Q16     4Q15     Change%     2016      2015      Change%  

Personnel/Administrators/Councillors

     98       97       1       379        335        13  

Employees’ and managers’ profit shares

     (5     (17     —         1        35        (98

Forluz—Post-Retirement Employee Benefits

     21       (7     —         77        31        149  

Materials

     4       3       43       13        16        (15

Raw Materials and Supplies Energy Production

     0       2       —         0        84        —    

Contracted Services

     42       63       (33     141        159        (12

Depreciation and Amortization

     41       51       (19     183        253        (28

Operating Reserves

     30       50       (41     93        106        (13

Charges for Use of Basic Transmission Network

     88       76       16       318        293        8  

Purchased Energy

     760       621       22       3,052        2,601        17  

Construction Cost

     17       57       (70     54        146        (63

Other Expenses

     35       19       83       83        73        13  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

     1,132       1,015       12       4,393        4,134        6  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Statement of Results (Consolidated)—CEMIG GT

Values in millions of reais

 

Statement of Results

   4Q16     4Q15     Change%     2016     2015     Change%  

Net Revenue

     1,716       1,725       (1     6,809       7,377       (8

Operating Expenses

     (1,132     (1,015     12       (4,393     (4,134     6  

EBIT

     584       710       (18     2,416       3,244       (26

Equity equivalence results

     (292     26       (1,203     (448     17       (2,774

Fair value gain (loss) on stockholding transaction

     —         —         —         —         729       —    

Adjustment for impairment of Investments

     (763     —         —         (763     —         —    

EBITDA

     (430     787       (155     1,389       4,243       (67

Financial Result

     (268     (167     (60     (1,142     (785     (45

Provision for Income Taxes, Social Cont & Deferred Income Tax

     274       (104     —         7       (888     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     (465     465       (200     70       1,587       (97
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

49


LOGO

 

Cemig Tables (R$ million)

Energy Sales (Consolidated)

 

Energy Sales (Consolidated)(GWh)

   4Q16      4Q15      Change%     2016      2015      Change%  

Residential

     2,510        2,517        —         9,916        9,830        1  

Industrial

     4,953        5,685        (13     19,494        22,969        (15

Commercial

     1,665        1,691        (2     6,573        6,434        2  

Rural

     875        907        (4     3,575        3,380        6  

Others

     885        879        1       3,488        3,422        2  

Subtotal

     10,888        11,679        (7     43,046        46,035        (6 )  

Own Consumption

     10        10        —         37        38        (1

Supply

     3,695        1,880        97       12,508        10,831        15  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     14,593        13,568        8       55,592        56,904        (2 )  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

Energy Sales

   4Q16      4Q15      D %     2016      2015      D %  

Residential

     2,000        1,994        —         7,819        7,298        7  

Industrial

     1,353        1,500        (10     5,396        5,781        (7

Commercial

     1,089        1,085        —         4,359        3,956        10  

Rural

     390        399        (2     1,463        1,407        4  

Others

     414        446        (7     1,620        1,621        (0

Electricity sold to final consumers

     5,247        5,424        (3     20,657        20,062        3  

Unbilled Supply, Net

     39        65        (40     60        106        (44

Supply

     829        439        89       2,713        2,358        15  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     6,114        5,928        3       23,430        22,526        4  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Operating Revenues (consolidated)

Values in million of Reais

 

Operating Revenues

   4Q16     4Q15     Change%     2016     2015     Change%  

Sales to end consumers

     5,153       5,464       (6     20,458       20,319       1  

TUSD

     357       288       24       1,705       1,465       16  

Supply

     961       464       107       2,972       2,208       35  

Transactions in the CCEE

     22       539       (96     161       2,425       (93

CVA and Other financial components in tariff adjustment

     (518     397       —         (1,455     1,704       (185

Gain on monetary updating of Concession Grant Fee

     87       —         —         300       —         —    

Revenues from Trans. Network

     84       76       10       312       261       19  

Construction revenue

     275       472       (42     1,193       1,252       (5

Gas supply

     407       401       2       1,444       1,667       (13

Transmission Indemnity Revenue

     59       40       47       751       101       647  

Others

     348       943       (63     1,429       2,017       (29

Subtotal

     7,235       9,084       (20 )       29,269       33,417       (12 )  

Deductions

     (2,563     (3,242     (21     (10,497     (11,549     (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

     4,673       5,842       (20 )       18,773       21,868       (14 )  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses (consolidated)

Values in R$ million

 

Operating Expenses

   4Q16     4Q15     D %     2016      2015      D %  

Personnel/Administrators/Councillors

     426       448       (5     1,643        1,435        15  

Employees’ and managers’ profit shares

     (23     (70     —         7        137        (95

Forluz - Post-Retirement Employee Benefits

     96       (17     (671     345        156        121  

Materials

     17       17       2       58        70        (17

Raw materials and inputs for production of electricity

     —         2       —         —          84        —    

Contracted Services

     266       282       (6     867        899        (4

Purchased Energy

     2,146       2,274       (6     8,273        9,542        (13

Depreciation and Amortization

     233       206       13       834        835        (0

Operating Provisions

     (10     977       (101     704        1,401        (50

Charges for Use of Basic Transmission Network

     206       231       (11     947        999        (5

Gas bought for resale

     254       261       (3     877        1,051        (17

Cost from Operation

     275       472       (42     1,193        1,252        (5

Other Expenses

     (219     20       (1,221     154        427        (64
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

TOTAL

     3,667       5,103       (28 )       15,903        18,288        (13 )  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

50


LOGO

 

Financial Result Breakdown

Values in millions of reais

 

Financial Result Breakdown

   4Q16     4Q15     A%     2016     2015     A%  

Financial revenues

     206       306       (33     1,041       864       21  

Revenue from cash investments

     97       91       7       317       251       26  

Arrears penalty payments on electricity bills

     65       72       (10     277       230       21  

Exchange rate

     6       (63     —         62       76       (19

Monetary updating

     48       233       (79     152       248       (39

Monetary updating—CVA

     (3     12       —         204       68       200  

Taxes applied to Financial Revenue

     (34     (66     (49     (88     (84     4  

Other

     27       28       (3     117       75       56  

Financial expenses

     (590     (559     6       (2,478     (2,204     12  

Costs of loans and financings

     (496     (384     29       (1,928     (1,386     39  

Exchange rate

     (16     (8     90       (35     (172     (79

Monetary updating—loans and financings

     (13     (108     (88     (245     (387     (37

Monetary updating—paid concessions

     (0     (2     —         (3     (11     (69

obligations

     (16     (31     (49     (103     (129     (20

Other

     (49     (25     97       (163     (120     36  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial revenue (expenses)

     (384     (252     (52     (1,437     (1,341     (7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Statement of Results (Consolidated)

Values in millions of reais

 

Statement of Results

   4Q16     4Q15     a%     2016     2015     a%  

Net Revenue

     4,673       5,842       (20     18,773       21,868       (14

Operating Expenses

     3,667       5,103       (28     15,903       18,288       (13

EBIT

     1,005       740       36       2,870       3,580       (20

Equity gain in subsidiaries

     (349     133       (362     (302     393       (177

Adjustment for impairment of Investments

     (763     —         —         (763     —         —    

Gain on stockholding reorganization

     —         —         —         —         729       —    

Depreciation and Amortization

     233       206       13       834       835       —    

EBITDA

     127       1,080       (88     2,638       5,538       (52

Financial Result

     (384     (252     (52     (1,437     (1,341     (7

Income Tax

     191       (55     (450     (33     (893     (96
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

     (299     566       (153     335       2,469       (86
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Cash Flow Statement (consolidated)

Values in million of Reais

 

Cash Flow Statement

   2016     2015     Change%  

Cash at beginning of period

     925       887       4  

Cash generated by operations

     1,213       3,007       (60

Net profit

     335       2,469       (86

Current and deferred income tax and Social Contribution tax

     33       893       (96

Depreciation and amortization

     834       835       —    

Gain on the Alianga stockholding reorganization

     —         (729     —    

Passthrough from CDE

     1,796       (175     —    

Equity gain (loss) in subsidiaries

     302       (393     177  

Provisions (reversals) for operational losses

     704       1,401       (50

Dividends received from equity holdings

     683       487       40  

Interest paid on loans and financings

     (2,369     (1,331     78  

Financial assets of the concession

     (1,941     10       —    

Other adjustments

     837       (459     282  

Financing activities

     (529     247       314  

Financings obtained and capital increase

     5,737       5,739       —    

Interest on Equity, and dividends

     (675     (796     (15

Payments of loans and financings

     (5,592     (4,696     19  

Investment activity

     (614     (3,217     (81

Securities—Financial Investment

     1,401       (1,499     (81

Acquisition / Disposal of ownership interest and future capital commitments

     (506     (490     3  

Financial assets

     —         (146     —    

Fixed and Intangible assets

     (1,508     (1,082     39  

Cash at end of period

     995       925       8  
  

 

 

   

 

 

   

Total Cash

     2,040       3,435    
  

 

 

   

 

 

   

 

 

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Values in millions of reais

 

BALANCE SHEETS (CONSOLIDATED)—ASSETS

   2016      2015  

CURRENT

     8,285        9,377  

Cash and cash equivalents

     995        925  

Securities

     1,014        2,427  

Consumers and traders

     3,425        3,764  

Financial assets of the concession

     730        874  

Tax offsetable

     236        175  

Income tax and Social Contribution tax recoverable

     590        306  

Dividends receivable

     11        62  

Linked funds

     367        —    

Inventories

     49        37  

Passthrough from CDE (Energy Development Account)

     64        72  

Other credits

     803        735  

NON-CURRENT

     33,750        31,480  

Securities

     31        84  

Consumers and traders

     146        134  

Tax offsetable

     178        258  

Income tax and Social Contribution tax recoverable

     112        206  

Deferred income tax and Social Contribution tax

     1,797        1,498  

Escrow deposits in legal actions

     1,887        1,813  

Other credits

     1,279        868  

Financial assets of the concession

     4,971        2,660  

Investments

     8,753        9,745  

PP&E

     3,775        3,940  

Intangible assets

     10,820        10,275  
  

 

 

    

 

 

 

TOTAL ASSETS

     42,036        40,857  
  

 

 

    

 

 

 

 

 

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Values in millions of reais

 

BALANCE SHEETS LIABILITIES AND SHAREHOLDERS’ EQUITY

   2016     2015  

CURRENT

     11,447       13,074  

Suppliers

     1,940       1,901  

Regulatory charges

     381       517  

Profit shares

     18       114  

Taxes

     794       740  

Income tax and Social Contribution tax

     27       11  

Interest on Equity, and dividends, payable

     467       1,307  

Loans and financings

     4,837       6,300  

Payroll and related charges

     225       221  

Post-retirement liabilities

     199       167  

Financial liabilities of the concession

     482       —    

Provisions for losses on investments

     1,150       1,245  

Other obligations

     930       551  

NON-CURRENT

     17,654       14,795  

Regulatory charges

     455       226  

Loans and financings

     10,342       8,866  

Taxes

     724       740  

Income tax and Social Contribution tax

     582       689  

Provisions

     815       755  

Post-retirement liabilities

     4,043       3,086  

Provisions for losses on investments

     323       —    

Other obligations

     370       433  

STOCKHOLDERS’ EQUITY

     12,930       12,984  

Share capital

     6,294       6,294  

Capital reserves

     1,925       1,925  

Profit reserves

     5,200       4,663  

Adjustments to Stockholders’ equity

     (488     102  

Retained earnings

     —         —    

NON- CONTROLLING STOCKHOLDERS EQUITY

     4       4  
  

 

 

   

 

 

 

TOTAL LIABILITIES

     42,036       40,857  
  

 

 

   

 

 

 

 

 

54


 

4. SUMMARY OF MINUTES OF THE 607TH MEETING OF THE BOARD OF DIRECTORS HELD ON SEPTEMBER 25, 2014

 

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COMPANHIA ENERGÉTICA DE MINAS GERAIS –

CEMIG

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

BOARD OF DIRECTORS

SUMMARY OF MINUTES

OF THE

607 TH MEETING

 

Date, time and place :  

September 25, 2014 at 8.30 a.m. at the company’s head office,

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

 

Meeting Committee :  

Chair: Djalma Bastos de Morais;

Secretary: Anamaria Pugedo Frade Barros.

Summary of proceedings:

 

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

 

II The Board approved:

 

  a) Alteration of the Internal Regulations of this Board of Directors.

 

  b) Subscription by Cemig GT of eighty seven million one hundred eighty six thousand thirty five common shares in Renova, by September 29, 2014.

 

  c) Signature by Cemig GT of the Term of Assent to the Stockholders’ Agreement of Renova Energia S.A. (Renova), between RR Participações S.A. (‘RR’), Ricardo Lopes Delneri, Renato do Amaral Figueiredo, Light Energia S.A., Light S.A. and BNDES Participações S.A. (‘BNDESPar’).

 

  d) The minutes of this meeting.

 

III The Board ratified the transfer of eight hundred ten million one hundred twenty eight thousand six hundred fifty four Reais and fifty six centavos by Cemig GT to Renova as an Advance against Future Capital Increase.

 

IV Comment: The Chair spoke on subjects of interest to the Company.

The following were present:

 

Board members:   

Djalma Bastos de Morais,

Arcângelo Eustáquio Torres Queiroz,

Guy Maria Villela Paschoal,

João Camilo Penna,

Joaquim Francisco de Castro Neto,

José Pais Rangel,

  

Tadeu Barreto Guimarães,

Wando Pereira Borges,

Bruno Magalhães Menicucci,

José Augusto Gomes Campos,

Marina Rosenthal Rocha,

Newton Brandão Ferraz Ramos,

Tarcísio Augusto Carneiro;

     
Secretary: