FORM 6-K

 

securities and exchange commission
washington, d.c.  20549

 

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

 

For the month of September, 2006

 

Commission File Number 1-15224

 

Energy Company of Minas Gerais

(Translation of Registrant’s Name Into English)

 

Avenida Barbacena, 1200

30190-131 Belo Horizonte, Minas Gerais, Brazil

(Address of Principal Executive Offices)

 

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

 

Form 20-F

x

Form 40-F

o

 

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

 

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

 

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

 

Yes

o

No

x

 

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

 

 



 

Index

 

Item

 

Description of Item

 

 

 

1.

 

Summary of Minutes of the 368th meeting of the Board of Directors, December 21, 2005

 

 

 

2.

 

Summary of Minutes of the 381st meeting of the Board of Directors, April 12, 2006

 

 

 

3.

 

Material Announcement, August 10, 2006

 

 

 

4.

 

Fundamentals Ensure Sustainable Growth – Results for the First Half 2006

 

 

 

5.

 

Earnings Release Q2 2006 – Cemig Geração e Transmissão

 

 

 

6.

 

Earnings Release Q2 2006 – Cemig D

 

 

 

7.

 

Earnings Release Q2 2006 – CEMIG

 

1



 

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

Listed company – CNPJ 17.155.730/0001-64 – NIRE 31300040127

 

Summary of the Minutes of the 368th meeting of the Board of Directors.

 

Date, time and place: December 21, 2005, at 3 p.m., at the company’s head office, Av. Barbacena 1200, 18th Floor, Belo Horizonte, Minas Gerais, Brazil.

 

Meeting Committee: Chairman: Wilson Nélio Brumer; Secretary: Anamaria Pugedo Frade Barros.

 

Summary of business:

 

I-             The Board approved:

 

a)             The Annual Budget for 2006, and also the Corporate Guidelines for Execution of Budgets, contained in Part III of the Annual Budget: 12 – Guidelines for capital expenditure; 13 – Guidelines for execution of the expenses budget; and 14 – Guidelines for inventories of materials and equipment.

 

b)            The content of the Memorandum of Agreement which establishes the relationship between the parties for presentation of the bid for acquisition, in an auction to be held on a securities exchange, of the stockholding interest owned by the government of São Paulo State in CTEEP (Companhia de Transmissão de Energia Elétrica Paulista); and also for joint management of the business of that company, if the bid made is successful.

 

c)             The content of the Memorandum of Agreement establishing the relationship between the parties for the process of preparation and delivery of a final binding proposal, in the event of being admitted by EDF Internacional S.A. to the subsequent phase, and also for the management of the business of, UTE Norte Fluminense S.A., if the bid is successful.

 

d)            The Economic and Financial Opinion valuing WAY TV Belo Horizonte S.A., prepared by the specialized independent entity Ernst & Young Consultores Associados Ltda.

 

e)             Payment of Interest on Equity, on account of the minimum obligatory dividend, in the amount of R$ 157 million, to stockholders on the company’s Nominal Stockholder Registry on January 2, 2006, in two equal installments on June 30 and December 30, 2006, it being the duty of the Executive Board to obey these payment periods, and decide the locations and processes of payment.

 

f)             The Minutes of this meeting.

 

II-            The Board authorized:

 

a)             Payment of an Advance against future capital increase, up to a limit of R$3 million, to cover costs associated with the economic-financial valuation of Light Serviços de Eletricidade S.A.

 

b)            Signing of a Confidentiality Agreement with CTEEP (Companhia de Transmissão de Energia Elétrica Paulista) and with CESP (Companhia

 

2



 

Energética de São Paulo), with confidentiality obligation for two years from the date of signing, so that Cemig may have access to confidential information making possible the economic-financial valuation of CTEEP, for the purposes of a potential acquisition of a stake in that company.

 

c)             Disposal, through an auction on a securities exchange, of the totality of the shares owned by Empresa da Infovias S.A. in Way TV Belo Horizonte S.A., establishing a minimum value for the disposal of said shares, such authorization being conditional upon the sale of 100% of the shares of that company by all its stockholders, through an auction on a securities exchange.

 

III-           The Chairman; the Vice-Chairman; the Board members Andréa Paula Fernandes Pansa, Carlos Augusto Leite Brandão, Haroldo Guimarães Brasil, José Augusto Pimentel Pessôa, Andréa Leandro Silva and Alexandre Heringer Lisboa; the Directors Flávio Decat de Moura and Celso Ferreira; and the Superintendents Pedro Carlos Hosken Vieira and Manoel Bernardino Soares made comments on general subjects and matters of interest to the company. The following were present: Board members: Wilson Nélio Brumer, Djalma Bastos de Morais, Aécio Ferreira da Cunha, Alexandre Heringer Lisboa, Andréa Paula Fernandes Pansa, Carlos Augusto Leite Brandão, Francelino Pereira dos Santos, Haroldo Guimarães Brasil, José Augusto Pimentel Pessôa, Nilo Barroso Neto, Andréa Leandro Silva and Luiz Henrique de Castro Carvalho; Members of the Audit Board: Directors: Itamaury Teles de Oliveira, Flávio Decat de Moura and Celso Ferreira; Superintendents: Pedro Carlos Hosken Vieira and Manoel Bernardino Soares; and Anamaria Pugedo Frade Barros, Secretary.

 

Anamaria Pugedo Frade Barros

 

3



 

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS - CEMIG

 

Listed Company – CNPJ (corporate taxpayer number) 17.155.730/0001-64; NIRE

(business registration number) 31300040127

 

Extract of the minutes of the 381st meeting of the Board of Directors.

 

Date, time and place: 12 April 2006, 1pm, company headquarters – at Av. Barbacena, 1.200, 18th floor, Belo Horizonte (Minas Gerais state).

 

Presiding officers: Chairman: Wilson Nélio Brumer / Secretary: Anamaria Pugedo Frade Barros.

 

Summary: I- The Board approved the minutes of this meeting.

 

II- The Board authorized: a) the resubmittal to Banco Itaú BBA S.A., together with Brascan Energética S.A. and the Brasil Energia Private Equity Fund, of a preliminary and non-binding proposal to acquire 100% of the capital stock of Usina Termelétrica Juiz de Fora S.A.. Submittal of the definitive proposal, by CEMIG, will depend on prior authorization from the Board, and its terms and conditions will prevail, in all circumstances, over the terms and conditions of the preliminary and non-binding proposal, including the price; and b) filing an action for rescission (i.e. to overrule a final judgment), with request for anticipated judicial protection, against Rima Industrial S.A., with the aim of achieving the total or partial rescission of the decision condemning CEMIG to reimburse that consumer in the amounts related to the tariff additions resulting from DNAEE Order 045/86, adjusted by TR (reference rate) inflation + 2% and delinquent interest, and the installation of a Non-Requirement of Bid Tender Administrative Process and the hiring of Professor João Dácio Rolim, through the law firm Escritório Gaia, Silva, Rolim & Associados Advocacia e Consultoria Jurídica, to support said lawsuit. III- The Vice-Chairman; the Board members Andréa Paula Fernandes Pansa, Antônio Luiz Barros de Salles, Carlos Augusto Leite Brandão, Haroldo Guimarães Brasil and José Augusto Pimentel Pessôa; the Director Flávio Decat de Moura; and the Superintendent Manoel Bernardino Soares made comments on general matters and businesses in the interest of the Company. Present: Board members Wilson Nélio Brumer, Djalma Bastos de Morais, Andréa Paula Fernandes Pansa, Antônio Adriano Silva, Antônio Luiz Barros de Salles, Alexandre Heringer Lisboa, Carlos Augusto Leite Brandão, Francelino Pereira dos Santos, Haroldo Guimarães Brasil, José Augusto Pimentel Pessôa, Nilo Barroso Neto, Eduardo Lery Vieira, Guy Maria Villela Paschoal, Luiz Henrique de Castro Carvalho and Fernando Lage de Melo; Flávio Decat de Moura, Director; Manoel Bernardino Soares, Superintendent; and, Anamaria Pugedo Frade Barros, Secretary.

 

Anamaria Pugedo Frade Barros

 

4



 

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS - CEMIG

 

BRAZILIAN LISTED COMPANY - CNPJ 17.155.730/0001-64

 

MATERIAL ANNOUNCEMENT

 

Cemig (Companhia Energética de Minas Gerais), a listed company holding public service concessions, with share securities traded on the stock exchanges of New York, Madrid and São Paulo, in accordance with its commitment to best corporate governance practices, and Instructions 358 and 359 (of 3 and 22 January, 2002) of the Brazilian Securities Commission (CVM), hereby informs the public that the shares held by EDF International S.A. (“EDFI”) in Light S.A. (“Light”) and in Lidil Comercial Ltda. (“Lidil”) were today transferred to RME – Rio Minas Energia Participações S.A (“RME”), in which Cemig holds 25% (twenty five per cent) of the registered capital.

 

RME, a corporation with head office at Avenida Rio Branco 123, Suite 1901, in Rio de Janeiro, Brazil, registered as in the Brazilian Registry of Corporate Taxpayers under N° (CNPJ) 07.925.628/0001-47, is a holding company whose objects are to invest in companies operating in the electricity sector. Its present stockholders are: Companhia Energética de Minas Gerais – Cemig; Andrade

Gutierrez Concessões S.A.; Pactual Energia Participações; and Luce Brasil Fundo de Investimento em Participações (“Luce”). Luce acquired the shares in RME until then held by JLA Participações S.A.(“JLA”), and has the same controlling stockholder as JLA.

 

The transaction involved the purchase of 100,719,912,442 common shares in Light and the totality of the shares of Lidil, a company which holds 5,584,685,447 common shares in Light, resulting in the transfer of a total of 106,304,597,889 commons hares in Light, representing, on today’s date, 79.39% of the registered capital, and of the voting stock, of Light.

 

The total price was R$ 697,953,064.46, corresponding to US$319,809,871.91, for the purchase of 106,304,597,889 common shares in Light, representing an approximate price of R$ 6.56 per share, corresponding to US$3.01 per thousand shares. The price was paid in full by RME in cash, on today’s date, and the shares were also transferred on today’s date.

 

Also today an amendment was signed to the Stock Purchase Agreement providing that in the event that RME disposes of shares in Light acquired from EDFI within one year, it will, under such amendment, have to pay EDFI 50% of the amount of profit obtained on the sale of such shares.

 

5



 

Additionally, on a date to be announced, RME will carry out a public offering for acquisition of the shares of Light S.A that are in circulation in the market, in accordance with Law 6404/76, CVM Instruction 361/2002 and the Regulations of the Novo Mercado, thus guaranteeing to the other stockholders of Light the same treatment accorded to EDFI.

 

Light is a holding company which indirectly operates in electricity generation, transmission and distribution in Rio de Janeiro State. Thus, for RME and its stockholders, the transaction to purchase Light represents an opportunity to invest in a market with great growth potential, and which is at present the third largest electricity distribution market in Brazil.

 

Belo Horizonte, August 10, 2006

 

Flávio Decat de Moura

Chief Financial and Investor Relations Officer

 

6



 

 

Fundamentals Ensure Sustainable Growth

 

Results for the First Half 2006

 

7



 

Disclaimer

 

                              Some statements in this presentation may be regarded under U.S. Securities law as forward-looking statements, i.e., statements that are subject to risks and uncertainties.

 

                              Forward-looking statements are forecasts which may differ from the final figures and which are not under our control.

 

                              For a discussion of the risks and uncertainties as they relate to us, please see our 20-F form for 2005, and in particular item 3 which contains “Basic Information – Risk Factors.”

 

All figures are expressed in Brazilian GAAP.

 

8



 

Agenda

 

1.              Strategy and Results

                  Fundamentals ensure sustainable growth

 

2.              Outlook of the Businesses

                  Generation

                  Transmission

                  Distribution

                  Investment Program

 

3.              Financial Condition

                  Debt Profile

                  Ratios

                  Cash Flow

 

4.              Review of Results

 

9



 

1.              Strategy and Results

                  Fundamentals ensure sustainable growth

 

10



 

Net Income and EBITDA Impacted by Non-Recurring Items

 

                        Net Income reached R$ 665 million in the first half of 2006:

             R$ 4.10 per lot of 1,000 shares

             Net in come declined 36% compared to R$ 1,042 million reported in the same period of 2005.

             Cash flow generation, measured by EBITDA, decreased 29% to R$ 1,198 million.

 

                        Non-Recurring Items:

             Investment in the purchase of salaried bonus increase of employees (R$177 million).

             Recomposition of CVA for TUST in 2006 (R$93 million).

             Deferred Tariff Re adjustment in the first quarter of 2005 (R$583 million).

 

 

11



 

Fundamentals Ensure Sustainable Growth

 

                              We are implementing our strategy to attain the maximum market share in the segments in which we operate:

                        Acquisition of controlling stake of Light S.A. through Rio Minas Energia Participações S.A. in which we have a 25% ownership.

                        Acquisition of stakeholding of Grupo Schahin on five transmission companies, in partnership with private investors.

                        Commenced operations at Irapé and Capim Branco I plants;

 

                              We are focusing on our main business-electricity:

                              Sale of participation of Infovias in Way for R$91 million;

 

                              We sold our generation capacity for the highest value permitted in the second new energy auction:

                        355 MW average

                        Average price of R$125.48 / MWh

                        Contract term of 30 years

 

12



 

                              Record sales of 24,331 GWh in the first half of 2006

                        Increase of 4.7% in sales to final customers;

                        Sales to other utilities, as the Initial Contracts expired.

 

                              17% growth of the network revenues compared to the first half of 2005

                        62% increase of network transmission revenue (“TUST”);

                        3% increase of TUSD network revenue.

 

                              90 thousand newly connected customers

 

13



 

Consolidated Results R$ thousands

 

Company

 

Net Income

 

EBITDA

 

Cemig Geração/Transmissâo

 

292,650

 

619,971

 

Cemig Distribuição

 

343,905

 

548,417

 

Cemig Holding **

 

(38,860

)

(74,367

)

Gasmig

 

17,299

 

24,091

 

Infovias

 

3,958

 

23,101

 

Sá Carvalho

 

11,004

 

15,605

 

Efficientia

 

7

 

(10

)

Ipatinga

 

3,300

 

5,727

 

Horizontes

 

5,747

 

6,667

 

Pai Joaquim

 

111

 

(87

)

Transleste

 

1,539

 

2,257

 

Cogeração

 

1,572

 

1,680

 

Rosal Energia

 

11,281

 

11,209

 

Capim Branco

 

7,127

 

8,218

 

Cemig PCH

 

5,455

 

5,686

 

UTE Barreiro

 

(1,018

)

(434

)

Cemig Consolidated

 

665,077

 

1,197,731

 

 

Earnings per Share
(lots of 1,000 shares)

 

 

Consolidated EBITDA Margin (%)

 

 

14



 

Accelerated Growth through Acquisitions: Transmission - TBE

 

ANEEL: approved on 07/18/06

 

                         BNDES: approval date 07/27/06

 

                         CADE: moving forward

 

                         Eletrobrás was notified without restrictions

 

                         Payment on the part of Brascan depends on the sale approval of its PCH’s in Proinfa

 

15



 

Accelerated Growth through Acquisitions: Distribution - Light

In France

 

                  Approved by the EDF Board

 

                  Approved by CPT on 06/15/06 with amendment that partitions future profits with the eventual sale of shares within one year

 

                  Decree from the Ministry of Finance – published on July 31

 

In Brazil

 

                  BNDES: Approved on 06/14/06

 

                  ANEEL: Approved on 07/25/2006

 

16



 

Agenda

 

2.              Outlook of the Businesses

 

                  Generation

 

                  Transmission

 

                  Distribution

 

                  Investment Program

 

17



 

First Half Sales Volume: 29% higher year-on-year

 

1st Half 2006 (MWh)

 

 

 

 

 

 

 

Change

 

 

 

2006

 

2005

 

%

 

Residential

 

3,310,420

 

3,293,423

 

0.5

%

Industrial

 

11,892,578

 

11,060,150

 

7.5

%

Commercial

 

1,947,818

 

1,888,914

 

3.1

%

Rural

 

859,973

 

828,961

 

3.7

%

Others

 

1,332,325

 

1,280,526

 

4.0

%

Wholesale

 

4,988,425

 

521,583

 

856.4

%

TOTAL

 

24,331,539

 

18,873,557

 

28.9

%

 

                  Results reflect the accelerated growth of the industrial class, the end of initial contracts and the migrations of free consumers in January 2005.

 

                  Growth has continued in the last 5 quarters.

 

18



 

Sales – GWh CEMIG Consolidated

 

 

19



 

Outlook for Generation

 

                  We are expanding our generation capacity by 455 MW in 2006.

 

                  The addition of the last UHE de Capim Branco I machine and two UHE Irapé machines contributed to the increase of 257 MW of installed capacity.

 

                  Secured the concession of UHE de Baguari of 140 MW.

 

                  We are already the fifth largest generator in Brazil.

 

Plant

 

Installed Capacity

 

Assured Energy

 

 

 

(MW)

 

(MW médios)

 

Major Hydroelectric plants

 

 

 

 

 

São Simão

 

1,710

 

1,281

 

Emborcação

 

1,192

 

497

 

Nova Ponte

 

510

 

276

 

Jaguara

 

424

 

336

 

Miranda

 

408

 

202

 

Três Marias

 

396

 

239

 

Volta Grande

 

380

 

229

 

Aimorés

 

162

 

84

 

Outras

 

1,036

 

603

 

 

 

 

 

 

 

Total hydroelectrics

 

6,218

 

3,609

 

Total thermoelectrics

 

184

 

115

 

Eólica

 

1

 

0

 

Total

 

6,403

 

3,724

 

 

20



 

Results of the 2nd New Energy Auction

 

                              Sale Prices obtained were the maximum permitted by the auction.

 

2nd New Energy Auction of MME

CEMIG GT

 

Undertaking

 

Mwave.

 

Sale Price

 

 

 

 

 

R$/MWh

 

UHE Aimorés

 

84

 

125.00

 

UHE Irapé

 

206

 

125.00

 

UHE Porto Estrela

 

18

 

134.42

 

UHE Queimado

 

47

 

125.00

 

Total

 

355

21.11% of the energy negotiated in the auction

 

 

 

 

 

 

R$/MWh

 

Average Sale Price

 

 

 

125.48

 

 

CEMIG D

 

Fonte

 

MWmed

 

R$/MWh

 

Hydro

 

60.45

 

126.77

 

Thermo

 

19.23

 

132.39

 

Total

 

79.68

5.88% of the energy negotiated in the auction

 

 

Prices

 

R$/MWh

 

Average

 

 

 

128.13

 

Marginal

 

 

 

134.42

 

 

Total Energy Negotiated in the Leilão: 1.682 MWave.

 

21



 

CEMIG GT – Regional Sales Distribution

 

 

22



 

Perspectives of Energy Distribution

 

                  Most extensive distribution network

 

                  Operational performance

 

                  Losses are minimal

 

                  DEC/FEC below regulatory limits

 

                  We supply 96% of the needs of Minas Gerais state

 

                  We attend to a concession area greater than any European country

 

                  567 thousand Km2

 

                  5.415 cities and towns

 

                  774 municipalities

 

                  Concession expires 2/18/16

 

                  It can be prolonged by 20 years

 

                  Next tariff revision : 2008

 

Extense of Subtransmission Network - Km

 

 

 

2003

 

2004

 

2005

 

06/2006

 

Total

 

16,185

 

16,086

 

16,040

 

16,080

 

161 KV

 

55

 

55

 

55

 

55

 

138 KV

 

10,500

 

10,504

 

10,521

 

10,556

 

69 KV

 

4,647

 

4,544

 

4,481

 

4,513

 

Under 69 KV

 

983

 

983

 

983

 

956

 

 

Extense of Distribution Network - Km

 

 

 

2003

 

2004

 

2005

 

06/2006

 

Total

 

359,304

 

367,437

 

379,400

 

386,785

 

Urban Distribution Networks

 

82,160

 

82,819

 

83,826

 

84,667

 

Subterranean Distribution Networks

 

707

 

708

 

759

 

759

 

Rural Distribution Networks

 

276,437

 

283,910

 

294,815

 

301,359

 

 

Transformation Capacity of Distribution Sites

 

 

 

2003

 

2004

 

2005

 

06/2006

 

Number of Substations

 

348

 

350

 

354

 

355

 

MVA

 

7,987

 

8,050

 

8,070

 

8,085

 

 

23



 

Investment Program R$ million

 

 

 

 

 

 

 

1st sem.

 

 

 

Business

 

2005

 

2006

 

2006

 

2007

 

Generation

 

397

 

130

 

60

 

98

 

Transmission

 

20

 

93

 

40

 

16

 

Distribution

 

691

 

1,136

 

546

 

1,335

 

Distribution

 

665

 

1,009

 

507

 

1,005

 

 

 

 

 

 

 

 

 

 

 

Extention and reinforcement of existing networks

 

276

 

288

 

122

 

544

 

Light for All

 

291

 

711

 

379

 

461

 

Other

 

98

 

10

 

6

 

 

Sub-transmission

 

26

 

127

 

39

 

330

 

Holding

 

57

 

40

 

12

 

82

 

Subtotal

 

1,165

 

1,399

 

658

 

1,531

 

Other Businesses

 

 

 

 

 

 

Reconciliation to Cash Flow*

 

191

 

 

 

 

Subtotal

 

1,356

 

1,399

 

658

 

1,531

 

INVESTMENT IN ADQUISITIONS

 

 

528

 

 

 

 

LIGHT

 

 

184

 

 

 

 

TBE

 

 

344

 

 

 

 

TOTAL (1 + 2)

 

1,356

 

1,927

 

658

 

1,531

 

 


* Includes advancement of suppliers and warehouse.

 

                  Light for All Program:

 

                  We connected 94,000 low-income families;

 

                  Total investment: R$ 694,6 million.

 

 

UHE Capim Branco II

 

24



 

Agenda

 

3. Financial Condition

 

                  Debt profile

 

                  Ratios

 

                  Cash Flow

 

25



 

Financial Management Strictly Obeying Strategic Plan

 

                  Our strategic plan resulted in are vision of risk classification:

 

                  Elevationo four Fitch rating, from A- to A+ (6/29/06);

                  Moody’s is preparing to review its classification;

 

                  We are revolving our debts, lengthening the maturity and reducing costs:

 

                  Emission of CEMIG D (R$300 MM) and CEMIG GT (R$ 900 MM) in Promissory Notes, at a cost of 103% of CDI (26/06/06).

 

                  On January 27, 2006, CRC credits placed in a FIDC in the value of R$ 1.659 million:

 

                  R$ 900 million in senior shares

                  R$ 759 million in subordinate shares

 

26



 

Cemig Consolidated Debt – June 2006

 

Main Indexers

 

 

Principal Creditors

 

Banco ItaúBBA

 

R$

1.290 million

 

(22

)%

Debenturistas

 

R$

1.287 million

 

(22

)%

Unibanco

 

R$

701 million

 

(12

)%

Bradesco

 

R$

616 million

 

(11

)%

Banco do Brasil

 

R$

592 million

 

(10

)%

Eletrobrás

 

R$

274 million

 

(5

)%

BNDES

 

R$

234 million

 

(4

)%

 

Average cost of debt is 10.96% p.a., as of June ‘06

 

27



 

Lengthened Debt Maturity Profile

 

R$ million

 

Values referring to June 2006

 

 

28



 

CEMIG Debt
June 2006

 

           The indicators of debt continue rising, therefore, for a satisfactory credit quality of the Company

 

Description

 

CEMIG Consolidated

 

CEMIG GT

 

CEMIG D

 

 

 

 

 

 

 

 

 

Debt

 

R$ 5.852 million

 

R$ 2.684million

 

R$ 2.068 million

 

Debt in foreign currency

 

R$ 701 million (12%)

 

R$ 196 million (7%)

 

R$ 463 million (22%)

 

Net Debt

 

R$ 4.563 million

 

R$ 2.082 million

 

R$ 1.695 million

 

EBITDA/interest

 

2.96

 

2.54

 

3.70

 

Debt/EBITDA

 

3.00

 

2.75

 

1.98

 

Debt / (shareholder’s equity + Debt)

 

43.51

%

46.34

%

44.77

%

 


(1)  Net Debt = Total Debt – cash and equivalents – Regulatory Assets (RTE/BNDES)

 

29



 

Strong Cash Flow Guarantees Expansion

 

Income Statement (consolidated)
Values in millions of Reais

 

 

 

2nd Q, 06

 

1st Q 06

 

1st Sem 06

 

2nd Q 05

 

1st Sem 05

 

2005

 

Cash at start of period

 

1,440

 

1,344

 

1,344

 

919

 

896

 

896

 

Cash from operations

 

474

 

411

 

885

 

96

 

394

 

1,657

 

Net Income

 

325

 

340

 

665

 

487

 

1,042

 

2,003

 

Depreciation and amoritization

 

152

 

151

 

303

 

147

 

295

 

595

 

Suppliers

 

22

 

(111

)

(89

)

(1

)

18

 

91

 

Deferred tariff adjustment

 

 

 

 

-8

 

(591

)

(591

)

Other adjustments

 

(31

)

31

 

 

(308

)

(149

)

(220

)

ICMS (IVA) on TUSD

 

 

 

 

(221

)

(221

)

(221

)

Financing activity

 

(521

)

(93

)

(614

)

207

 

108

 

147

 

Financing obtained

 

58

 

912

 

970

 

776

 

776

 

1,556

 

Payment of loans and financing

 

(76

)

(59

)

(135

)

(255

)

(350

)

(818

)

Other

 

(503

)

(946

)

(1,449

)

(314

)

(318

)

(591

)

Investment activity

 

(338

)

(222

)

(560

)

(251

)

(427

)

(1,356

)

Investments outside of concession area

 

(6

)

(9

)

(15

)

(23

)

(32

)

(69

)

Investments in concession area

 

(413

)

(233

)

(646

)

(242

)

(420

)

(1,360

)

Special obligations - consumer contributions

 

82

 

19

 

101

 

14

 

25

 

73

 

Other

 

(1

)

1

 

 

 

 

 

 

Cash at the end of the period

 

1,055

 

1,440

 

1,055

 

971

 

971

 

1,344

 

 

30



 

Agenda

 

4.              Analysis of Results

 

31



 

Fundamentals Ensure Recovery after the impact of Non-Recurring Items

 

Statement of Results (Consolidated)
Values in millions of Reais

 

 

 

2º Tri 2006

 

1º Tri 2006

 

1º Semestre 06

 

2º Tri 2005

 

1º Semestre 05

 

2005

 

Net Revenue

 

2,128

 

2,243

 

4,371

 

2,007

 

4,202

 

8,236

 

Operating Expenses

 

(1,783

)

(1,693

)

(3,476

)

(1,341

)

(2,695

)

(6,342

)

EBIT

 

345

 

550

 

895

 

666

 

1390

 

1,894

 

EBITDA

 

497

 

701

 

1,198

 

814

 

1685

 

2,488

 

Financial Result

 

(108

)

(15

)

(123

)

(316

)

(166

)

(3

)

Non-operating Result

 

(8

)

(12

)

(20

)

(12

)

(20

)

(53

)

Provision for Income Taxes, Social Cont and Deferred Income Tax

 

(73

)

(183

)

(256

)

(134

)

(445

)

(471

)

Interest on own Capital Reversal

 

169

 

 

169

 

283

 

283

 

635

 

Minority Shareholders

 

 

 

 

 

1

 

 

 

Net Income

 

325

 

340

 

665

 

487

 

1,042

 

2,003

 

 

Investment made by the first annual salary increase brought into consideration:

                  Elimination of benefits not related to discharge

                  Compatible return with a policy of investments in the company (TIR = 16%)

 

32



 

Earnings/Losses NPV and cost of  annual salary increase

 

Alternative cost - R$

 

 

 

NPV

 

 

 

 

 

12

%

Purchased annual salaries increase

 

600,289,636

 

 

 

Total NPV

 

 

 

349,886,200

 

 

 

 

 

 

 

Purchased annual salaries increase new employees

 

1,252,591,437

 

 

 

Total NPV

 

 

 

222,667,219

 

 

 

 

 

 

 

Purchased annual salaries increase - total

 

1,852,881,073

 

 

 

Total NPV

 

 

 

222,667,219

 

 

IRR = 16.05 %

 

33



 

Net Profit adjusted to reach 22%

 

Values in millions of R$

 

1st Sem 2006

 

1st Sem 2005

 

Net Profit

 

665.077

 

1.041.590

 

(a) Deferred Adjusted Payment

 

 

(412.597

)

(b) CVA Recomposition of TUST

 

61.555

 

 

(c) Annual Salary Increase

 

117.040

 

 

 

(d) Reversal of Provision of RGR

 

(43.402

)

 

 

(e) Income from overdue bills Ind. clients.

 

(31.869

)

 

 

Adjusted Net Profit

 

768.401

 

628.993

 

 

 

 

 

 

 

EBITDA

 

1.197.732

 

1.684.895

 

(a) Deferred Tarrif Adjustment

 

 

(487.576

)

(b) CVA Recomposition of TUST

 

93.265

 

 

(c) Annual Salary Increase

 

177.333

 

 

 

(d) Reversal of Provision of RGR

 

(65.760

)

 

 

Adjusted EBITDA

 

1.402.570

 

1.197.319

 

 

Adjusted EBITDA grew 17%.

 

34



 

Integrated Business Structure Drives Results

 

Statement of Results (Consolidated)
Values in millions of Reais

 

 

 

Ist Half, 2006

 

 

 

 

 

 

 

Cemig H

 

Cemig D

 

Cemig GT

 

Net Revenue

 

4.371

 

3.063

 

1.114

 

Operating Expenses

 

(3.476

)

(2.699

)

584

 

EBIT

 

895

 

364

 

530

 

EBITDA

 

1.198

 

548

 

620

 

Financial Result

 

(123

)

76

 

(211

)

Non-Operating Result

 

(20

)

(15

)

(1

)

Provision for Income Taxes, Social Cont and Deferred Income Tax

 

(256

)

(147

)

(108

)

Interest of Own Capital Reversal

 

169

 

66

 

83

 

Minority Shareholders

 

 

 

 

 

Net Income

 

665

 

344

 

293

 

 

35



 

Cemig Geração e Transmissão

 

Statement of Results
Values in millions of Reais

 

 

 

1º Sem. 2006

 

1º Sem. 2005

 

Net Revenue

 

1,113,902

 

933,135

 

Operating Expenses

 

(583,838

)

(392,696

)

EBIT

 

530,064

 

540,439

 

EBITDA

 

619,971

 

631,378

 

EBITDA Margin (%)

 

55.7

%

67.7

%

Financial Result

 

(211,387

)

(299,501

)

Non-operating Result

 

(1,347

)

(1,773

)

Provision for Income Taxes, Social Cont & Deferred Income Tax

 

(107,822

)

(81,480

)

Interest on Own Capital

 

83,142

 

137,000

 

Net Income

 

292,650

 

294,685

 

Net Margin

 

26.3

%

31.6

%

 

36



 

Net Sales Revenue
Values in millions of Reais

 

 

 

2º Q 2006

 

1º Q 2006

 

1º Sem. 06

 

2º Q 2005

 

1º Sem. 05

 

2005

 

Sales to end consumers

 

366

 

325

 

691

 

355

 

717

 

1,489

 

Wholesale supply

 

194

 

179

 

373

 

154

 

278

 

597

 

Network transmission revenue

 

138

 

148

 

286

 

94

 

178

 

396

 

Other

 

3

 

2

 

5

 

3

 

5

 

11

 

Subtotal

 

701

 

654

 

1,355

 

606

 

1,178

 

2,493

 

Deductions

 

(109

)

(132

)

(241

)

(134

)

(245

)

(529

)

Net Revenues

 

592

 

522

 

1,114

 

472

 

933

 

1,964

 

 

37



 

Operational Expenses
Values in millions of Reais

 

 

 

2º Q 2006

 

1º Q 2006

 

1º Sem. 06

 

2º Q 2005

 

1º Sem. 05

 

2005

 

Bought Energy

 

 

 

 

 

 

 

 

 

Personnel, managers, Board, profit shares

 

103

 

47

 

150

 

48

 

93

 

235

 

Depreciation and amoritization

 

45

 

45

 

90

 

44

 

91

 

181

 

Fuel Consumption Account - CCC

 

11

 

20

 

31

 

14

 

15

 

29

 

Energy Development Account - CDE

 

7

 

13

 

20

 

7

 

8

 

17

 

Charges for Use of the Basic Transmission Network

 

56

 

52

 

108

 

30

 

58

 

157

 

Third Party Services

 

20

 

15

 

35

 

15

 

25

 

78

 

Pension Fund (Forluz) - employee, post-retirement benefits

 

9

 

8

 

17

 

9

 

17

 

35

 

Materials

 

5

 

3

 

8

 

 

3

 

17

 

Royalties

 

29

 

30

 

59

 

27

 

56

 

109

 

Operational Provisions

 

1

 

1

 

2

 

(5

)

(8

)

200

 

Other Expenses

 

31

 

33

 

64

 

17

 

24

 

95

 

Total

 

317

 

267

 

584

 

206

 

382

 

1,153

 

 

38



 

Cemig Distribuição

 

Statement of Results
Values in thousands of Reais

 

 

 

1º Sem. 2006

 

1º Sem. 2005

 

Net Revenue

 

3.062.787

 

3.302.124

 

Operating Expenses

 

(2.698.972

)

(2.467.201

)

EBIT

 

363.815

 

834.923

 

EBITDA

 

548.417

 

1.014.507

 

Margin EBITDA

 

17,9

%

30,7

%

Financial Result

 

75.796

 

80.224

 

Non-Operating Result

 

(14.571

)

(13.761

)

Provision for Income Taxes, Social Cont & Deferred Income Tax

 

(146.946

)

(308.471

)

Interest on Own Capital

 

65.811

 

107.000

 

Net Income

 

343.905

 

699.915

 

Net Margin

 

11,2

%

21,2

%

 

39



 

Sales Revenue
Values in millions of Reais

 

 

 

2º Q 2006

 

1º Q 2006

 

1º Sem. 06

 

2º Q 2005

 

1º Sem. 05

 

2005

 

Sales to end users

 

1,923

 

1,920

 

3,843

 

1,877

 

3,397

 

7,335

 

TUSD

 

287

 

301

 

588

 

389

 

572

 

1,201

 

Subtotal

 

2,210

 

2,221

 

4,431

 

2,266

 

3,969

 

8,536

 

Wholesale

 

 

6

 

6

 

8

 

30

 

95

 

Other

 

13

 

13

 

26

 

6

 

31

 

53

 

Subtotal

 

2,223

 

2,240

 

4,463

 

2,280

 

4,030

 

8,684

 

Deferred Tariff Adjustment (RTD)

 

 

 

 

8

 

591

 

591

 

Deductions

 

(707

)

(693

)

(1,400

)

(731

)

(1,319

)

(2,878

)

Net Revenue

 

1,516

 

1,547

 

3,063

 

1,557

 

3,302

 

6,397

 

 

              Revenue related to industrial customers fell 12% as a result of migration from contracted consumers

 

              Supply adjusted from the second quarter: R$87 million

 

40



 

Operational Expenses
Value in millions of Reais

 

 

 

2º Tri 2006

 

1º Tri 2006

 

1º Semestre 06

 

2º Tri 2005

 

1º Semestre 05

 

2005

 

Personnel

 

277

 

158

 

435

 

157

 

308

 

595

 

Profit Shares

 

 

 

14

 

28

 

16

 

30

 

188

 

Pension Fund

 

 

 

27

 

54

 

2

 

55

 

111

 

Materials

 

15

 

14

 

29

 

(499

)

34

 

74

 

Third-Party Services

 

84

 

72

 

156

 

39

 

129

 

312

 

Electric Energy Purchased for Resale

 

459

 

561

 

1,020

 

943

 

953

 

1,890

 

Depreciation and Amoritization

 

93

 

92

 

185

 

139

 

180

 

364

 

Operational Provisions

 

16

 

42

 

58

 

19

 

47

 

133

 

Fuel Consumption Account (CCC)

 

102

 

76

 

178

 

103

 

181

 

387

 

Charges for the Use of the Bassic Transmission Network

 

114

 

196

 

310

 

152

 

334

 

554

 

Energy Development Account (CDE)

 

75

 

56

 

131

 

123

 

138

 

279

 

Provision for Losses - tariff recomposition

 

3

 

3

 

6

 

(64

)

 

 

82

 

Energy Efficiency R&D

 

23

 

 

 

23

 

 

 

 

173

 

PROINFA

 

25

 

 

 

25

 

 

 

 

 

 

Other Expenses

 

23

 

37

 

60

 

54

 

78

 

165

 

Total

 

1,309

 

1,348

 

2,698

 

1,341

 

2,467

 

5,307

 

 

41



 

 

Fundamentals Ensure Sustainable Growth

 

Results for the First Half 2006

 

42



 

 

 

Companhia Energética de Minas Gerais - Cemig
CNPJ 06.981.176/0001-58

 

 

 

EARNINGS RELEASE

 

 

 

Q2 2006

 

43



 

 

           Net Profit

 

Cemig Geração e Transmissão posted Q2 2006 net profit of R$ 172mn, 11% higher year on year.

 

Net profit in H1 2006 was R$ 293mn, slightly lower (0.68%) than the R$ 295mn recorded in H1 2005.

 

The decline in profit basically reflects the increase in operational costs, including non requiring items, which rose 51%, mainly due to:

 

      higher regulatory costs

 

      higher personnel expenses

 

           EBITDA

 

Cemig G/T posted EBITDA of R$ 620mn in H1 2006, 1.81% lower year on year.

 

 

This decline was due to the increase in the company’s operational costs, which mainly impacted EBITDA in Q2 2006, when EBITDA totaled R$ 319mn – still 4.6% higher than the R$ 305mn posted in Q2 2005.

 

As a result, Cemig G/T’s EBITDA margin fell: from 67.7% in H1 2005 to 55.7% in H1 2006. If we exclude the effects of non-recurring items, EBITDA margin would be 59.4%

 

 

44



 

Despite the decline in EBITDA in Q2 2006, we highlight the significant increase (+19.6%) in net revenues in this period versus last year.

 

Net revenue grew to R$ 592mn in Q2 2006, signaling the success of the management of the generation/transmission business, which has successfully been consolidating itself within the new Brazilian electricity sector model.

 

           Gross Supply of Electricity

 

In H1 2006, revenue from the gross supply of electricity of Cemig G/T totaled R$ 1.064bn, almost 7% higher year on year.

 

The main factor that influenced this growth was the revenue from the supply of energy to other concession holders, which posted strong growth in H1 2006 (+44.2% year on year).

 

This amount totaled R$ 337mn in H1 2006, versus R$ 234mn in H1 2005.

 

This growth is the result of the energy auction held in 2005, with the energy being sold to distribution companies when the so-called “initial contracts” expire.

 

           Revenue from network usage

 

Revenue from network usage in H1 2006 was R$ 286mn, 60.7% higher than the R$ 178mn obtained in H1 2005. This revenue relates to the charges imposed by Cemig Geração e Transmissão on the agents connected to the basic network.

 

The increase in network usage revenue is mainly a result of the following factors:

 

      increase in the annual revenue of the transmission business (+18%)

 

      increase in the following charges:

 

      CCC (+106.7%)

 

      CDE (+150%)

 

      PROINFA

 

45



 

           Operational costs and expenses

 

Operational costs and expenses in H1 2006 totaled R$ 584mn, 50.7% higher than the R$ 388mn posted in H1 2005.

 

This result is mainly due to the variation in the following costs:

 

      Personnel (+64.7%)

 

      CCC – fuel consumption account (+106.7%)

 

      CDE – energy development account (+150.0%)

 

      Network usage charges (+103.8%); and

 

      Provision for losses in free energy amounts (R$ 26mn)

 

The main variations in the expenses are described below:

 

Personnel

 

Personnel expenses in H1 2006 totaled R$ 140mn, 64.7% higher than the R$ 85mn posted in H1 2005.

 

This result is mainly due to the annual wage increase of 7.6% in November 2005 and the provision for indemnity payments of future additional time-of-service payments of employees, made in June 2006, in the amount of R$ 42mn.

 

Depreciation / Amortization

 

Depreciation and amortization expenses did not vary significantly in the comparison between the two periods, totaling R$ 90mn in H1 2006 (1.10% lower than the R$ 91mn posted in H1 2005).

 

Post-Employment Obligations

 

Expenses incurred in post-employment obligations in H1 2006 totaled R$ 17mn, 2.3% lower than the R$ 17.4mn posted in H1 2005.

 

46



 

These expenses basically represent the interest incident on the actuarial obligations of Cemig Geração e Transmissão, net of the earnings expected from the assets of the plans, estimated by an external actuary. The decline in expenses is due to higher growth in assets than in obligations.

 

Fuel Consumption Account – CCC

 

CCC expenses in H1 2006 were R$ 31mn, 106.7% higher than the R$ 15mn posted in H1 2005.

 

These expenses relate to the operating costs of the thermo plants of the Brazilian interlinked and isolated energy systems, divided up between energy concession holders as stipulated by an ANEEL Resolution. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed on to the tariff.

 

Transmission Network Usage Charges

 

Expenses related to these charges totaled R$ 108mn in H1 2006, 103.8% higher than the R$ 53mn level posted in H1 2005. These expenses relate to the charges owed by electricity distribution and generation players for use of the installations, components of the basic network, as established through an ANEEL Resolution.

 

The increase in expenses is mainly due to the average 18% adjustment in the transmission tariff in June 2005 and the start-up of the Aimorés plant.

 

Energy Development Account - CDE

 

CDE expenses totaled R$ 20mn in H1 2006, versus R$ 8mn in H1 2005. These expenses relate to the passthrough to Eletrobrás by transmission concessionaires of the levies charged on consumers connected to the basic network, as established by the ONS (National Grid Operator).

 

47



 

The increase in this expense is due to the growth in the number of consumers and retroactive charging, as previously mentioned in the “CCC” expense item.

 

Provision for Losses – Free Energy Reimbursement Right

 

Based on its own studies, Cemig Geração e Transmissão recorded a provision for losses of R$ 26mn in H1 2006.

 

Considering that the assumptions used in this study may be altered during the reimbursement period, Management will periodically revise these forecasts and, consequently, the provision level.

 

Energy Efficiency and Research and Development

 

Spending on energy efficiency and research and development in H1 2006 was R$ 9mn, 200% higher than the R$ 3mn level posted in H1 2005. This increase was mainly due to the new criteria adopted at the start of 2006 for recognizing these expenses.

 

Starting this year, the Company provisions 1% of its net revenue for investment in energy efficiency and research and development programs.

 

Alternative Energy Sources Incentive Program – PROINFA

 

PROINFA, implemented via Decree nº 5.025 of 30 March 2004, aims to increase the share of electricity produced by projects of Autonomous Independent Producers, involving wind-powered energy, small hydroelectric plants and biomass energy, in the National Interlinked System.

 

The amounts are paid by the transmission and distribution concessionaires to ELETROBRÁS, which administers the PROINFA account, in accordance with calculations made by ELETROBRÁS itself.

 

48



 

In H1 2006, Cemig Geração e Transmissão registered PROINFA expenses of R$ 2.4mn. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed on to the tariff.

 

           Financial Revenues (Expenses)

 

The company went from a net financial expense of R$ 300mn in H1 2005 to a net financial expense of R$ 211mn in H1 2006 (a decline of 29.7%). The items comprising the financial result and that posted the strongest variations are listed below:

 

      Increase in financial investment revenues, due to a greater volume of funds invested (R$ 34mn in H1 2006 versus R$ 3.3mn in H1 2005).

 

      19.2% increase in charges on loans and financings in Brazil as a result of the Company’s debt rollover criteria, with several foreign currency debt contracts being replaced by local currency debt contracts, starting in H2 2005.

 

      Net gains from FX variation in H1 2006 of R$ 12mn, versus R$ 49mn in H1 2005, basically resulting from loans and financings in foreign currency.

 

The reduction in gains is due to the debt rollover criteria, with several foreign currency debt contracts being replaced by local currency debt contracts, and to FX rate variation. In H1 2006, the Brazilian Real appreciated 7.5% against the US$, versus 11.4% appreciation in H1 2005.

 

49



 

Charts 1 and 2: SALES (GWh) – CEMIG Geração e Transmissão

 

Last Six Quarters

 

Half-Year Sales

 

 

50



 

Chart I

 

Breakdown by Consumption Segment

 

Cemig GT

 

Sales in H1 2006

 

GWh

 

Free Consumers

 

8.958

 

Supply

 

5.308

 

- Cemig Group Supply

 

448

 

- Bilateral Supply Contract

 

4.860

 

Total

 

14.266

 

 

Chart II

 

Income Statement

R$ ‘000

 

 

 

H1 2006

 

H1 2005

 

Net revenue

 

1.113.902

 

927.972

 

Operational

 

(583.838

)

(387.533

)

Operational result

 

530.064

 

540.439

 

EBITDA

 

619.971

 

631.378

 

EBITDA margin

 

55,7

%

68,0

%

Financial result

 

(211.387

)

(299.501

)

Non-operational result

 

(1.347

)

(1.773

)

Income tax provision, social contribution and deferred income tax

 

(107.822

)

(81.480

)

Reversal of interest on own equity

 

83.142

 

137.000

 

Net profit

 

292.650

 

294.685

 

Net margin

 

26,3

%

31,8

%

 

51



 

Chart III

 

Operational revenues

R$ mn

 

 

 

Q2 2006

 

Q1 2006

 

H1 2006

 

Q2 2005

 

H1 2005

 

2005

 

Sales to Final Consumers

 

366

 

325

 

691

 

355

 

717

 

1.489

 

Supply

 

194

 

179

 

373

 

154

 

278

 

597

 

Revenue from Transmission Network Usage

 

138

 

148

 

286

 

94

 

178

 

396

 

Others

 

3

 

2

 

5

 

3

 

5

 

11

 

Subtotal

 

701

 

654

 

1.355

 

606

 

1.178

 

2.493

 

Deductions

 

(109

)

(132

)

(241

)

(111

)

(250

)

(529

)

Net revenue

 

592

 

522

 

1.114

 

495

 

928

 

1.964

 

 

Chart IV

 

Operational Expenses – R$ mn

 

 

 

Q2

 

Q1

 

H1

 

Q2

 

H1

 

 

 

 

 

2006

 

2006

 

2006

 

2005

 

2005

 

2005

 

Energy Purchased

 

 

 

 

 

 

 

 

 

Personnel / Management / Board members / Profit-sharing

 

103

 

47

 

150

 

49

 

94

 

235

 

Depreciation and Amortization

 

45

 

45

 

90

 

44

 

91

 

181

 

Fuel Consumption Account - CCC

 

11

 

20

 

31

 

14

 

15

 

29

 

Energy Development Account - CDE

 

7

 

13

 

20

 

7

 

8

 

17

 

Charges from Use of the Basic Transmission Network

 

56

 

52

 

108

 

25

 

53

 

157

 

Third-party Services

 

20

 

15

 

35

 

15

 

27

 

78

 

Forluz – Employees’ Post-Retirement Benefits

 

9

 

8

 

17

 

9

 

17

 

35

 

Materials

 

5

 

3

 

8

 

 

6

 

17

 

Royalties

 

29

 

30

 

59

 

27

 

56

 

109

 

Operational Provisions

 

1

 

1

 

2

 

4

 

1

 

200

 

Other Expenses and Provision for Losses from Tariff Rebuilding

 

31

 

33

 

64

 

13

 

20

 

95

 

Total

 

317

 

267

 

584

 

207

 

388

 

1.153

 

 

52



 

 

 

Companhia Energética de Minas Gerais - Cemig

CNPJ 06.981.180/0001-16

 

 

 

EARNINGS RELEASE

 

 

 

Q2 2006

 

53



 

Net Profit

 

Cemig D posted net profit of R$ 199mn in Q2 2006, 32.5% lower year on year due to the impact of non-recurring items.

 

Net profit in H1 2006 was R$ 344mn, versus R$ 700mn in H1 2005.

 

The main factors that negatively affected the result were:

 

      Recognition of revenue from the deferred tariff readjustment, in the amount of R $591mn in H1 2005.

 

      A 14.6% year-on-year increase in operational expenses in H1 2006, mainly due to:

 

      the transfer of R$ 93mn related to the CVA item (charges for usage of the transmission network), as described in the section “Operational Costs and Expenses;

 

      the increase in personnel expenses, due to the provision for indemnity payments to employees for future additional time-of-service payments, acquired by CEMIG in the approximate amount of R$ 127mn;

 

      In terms of positive effects on H1 2006 results, we highlight the reversal of RGR expenses, retroactive to 2004, in the amount of R$ 28mn due to ANEEL approval of said expense in an amount less than that estimated by the Company.

 

 

 

54



 

EBITDA

 

EBITDA totaled R$ 258mn in Q2 2006, bringing H1 2006 EBITDA to R$ 548mn (45.9% lower year on year).

 

The chart below shows the behavior of EBITDA between H1 2005 and H1 2006:

 

 

This decline in EBITDA mainly stems from the extraordinary revenue of R$ 591mn posted in H1 2005.

 

Excluding this non-recurring item, EBITDA actually rose by 29.6%. EBITDA margin fell from 31.8% in H1 2005 to 17.9% in H1 2006. Excluding the non-recurring items this margin reaches 22.1%.

 

Gross Supply of Electricity

 

Revenue from gross supply of electricity totaled R$ 3.85bn in H1 2006, 12.3% higher than the R$ 3.43bn posted in H1 2005.

 

The main impacts on 2006 revenues stemmed from the following factors:

 

      Average tariff increase of 23.9%, effective as of 8 April 2005 (with full impact in annual 2006 result);

 

      Average tariff increase of 6.7%, effective as of 8 April 2006; and

 

55



 

      3.5% decline in the volume of energy billed to final consumers (excluding own consumption).

 

Amount of Energy Sold to Final Consumers (MWh)

 

 

 

MWh

 

Breakdown

 

2T06

 

2T05

 

Var. %

 

 

 

 

 

 

 

 

 

Residential

 

3.310.420

 

3.293.423

 

0,52

 

Industrial

 

2.391.539

 

2.908.360

 

(17,77

)

Retailing, Services, Others

 

1.947.818

 

1.888.914

 

3,12

 

Rural

 

859.973

 

828.961

 

3,74

 

Public Power

 

294.581

 

276.657

 

6,48

 

Public Illumination

 

523.272

 

506.271

 

3,36

 

Public Service

 

499.600

 

483.399

 

3,35

 

Total

 

9.827.203

 

10.185.985

 

(3,52

)

 

56



 

The charts below show the breakdown of energy consumption in H1 2006 and in 2005.

 

Breakdown of energy consumption by segment in

H1 2006

 

 

Breakdown of energy consumption by segment in

H1 2005

 

 

The decline is mainly due to the migration of industrial consumers, who have become free clients of Cemig Geração e Transmissão. This change is illustrated above, showing that the share of the industrial sector declined from 29% to 24% between 2005 and 2006.

 

Despite the decline in energy sales, we stress that some segments posted growth (especially the commercial and residential segments: +3.1% and +0.51%, respectively).

 

57



 

Considering the seasonable load shape from Distribution, we expect H2 2006 results to show growth in energy consumption in the main segments in relation to the H1 2006.

 

Deferred Tariff Increase

 

The result of CEMIG’s periodic tariff revision, retroactive to April 2003, was announced in April 2005, granting CEMIG the right to raise tariffs by 44.4%.

 

The average increase applied to CEMIG’s tariffs on 8 April 2003 was 31.5%. To compensate CEMIG for the lower revenues billed from April 2003 to April 2005, sector regulator ANEEL is incorporating an additional percentage in the tariff increases for the 2004-2007 period.

 

The difference between the tariff increase to which Cemig Distribuição was entitled and the tariff effectively charged from consumers between 2003 and 2005 was recognized as a regulatory asset in counterpart to the result of 2005, in the amount of R$ 591mn.

 

Network usage revenues

 

The revenue obtained from charging for the use of the Electricity Distribution Systems (known as TUSD) was R$ 587mn in H1 2006, 2.7% higher year on year.

 

The TUSD item is charged from unit generators on distribution voltage and free consumers located in Cemig D’s concession area.

 

58



 

Operational costs and expenses

 

Operational costs and expenses (excluding financial income) in H1 2006 totaled R$ 2.69bn, 14.6% higher than the R$ 2.35bn posted in H1 2005. This is mainly due to the 17% increase in energy bought for resale (equivalent to R$ 148mn), (from the end of the initial contracts) and the variation in personnel expenses due to the provision for indemnity payments to employees for future special additional payments (for time of service) made in June 2006 – equivalent to R$ 127mn.

 

The differences between the sum totals of the non-controllable costs (also called “CVA”), used as a reference in calculating tariff increased, and the amounts effectively disbursed are compensated in the subsequent tariff revisions, and registered in Current Assets and Long-Term Liabilities as prepaid expenses.

 

OPERATIONAL COSTS AND EXPENSES ON 30 JUNE 2006 – R$ Thousands

 

 

 

30/06/2006

 

 

 

 

 

 

 

CVA

 

 

 

 

 

 

 

 

 

amounts

 

Effective

 

 

 

Operational

 

CVA amounts

 

excluded

 

expense

 

 

 

expenses

 

transferred to

 

from the

 

recognized

 

 

 

without

 

the result of

 

result of the

 

in the result

 

 

 

effects of

 

the period

 

period

 

of the

 

 

 

CVA

 

(*)

 

(**)

 

period

 

Personnel

 

435.390

 

 

 

435.390

 

Profit-sharing

 

28.483

 

 

 

28.483

 

Post-Employment Obligations

 

54.315

 

 

 

54.315

 

Materials

 

28.783

 

 

 

28.783

 

Third-party services

 

156.055

 

 

 

156.055

 

Electricity purchased for resale

 

884.287

 

165.053

 

(29.403

)

1.019.937

 

Depreciation and amortization

 

184.602

 

 

 

184.602

 

Operational Provisions

 

57.526

 

 

 

57.526

 

Fuel Consumption Account – CCC

 

246.643

 

(26.276

)

(29.528

)

190.839

 

Transmission Network Usage Charges

 

196.271

 

5.678

 

108.200

 

310.149

 

Energy Development Account – CDE

 

145.511

 

(7.349

)

(7.296

)

130.866

 

Provision for Losses in the Recovery of the RTE amounts

 

6.402

 

 

 

6.402

 

Energy Efficiency and Research and Development

 

35.801

 

 

 

35.801

 

PROINFA

 

22.358

 

2.465

 

(12.049

)

12.774

 

Other Operating Expenses

 

53.157

 

(6.107

)

 

47.050

 

Total

 

2.535.584

 

133.464

 

29.924

 

2.698.972

 

 


(*)  Relate to the non-controllable costs comprising the CVA that were transferred to the result due to their inclusions in the calculation of the tariff increase of Cemig Distribuição.

(**)  Relate to the variations in the non-controllable costs comprising the CVA, and which were not included in the calculation of the tariff increase of Cemig D, thus being excluded from the result

 

59



 

The main variations in expenses are described below:

 

Personnel

 

Personnel expenses in H1 2006 were R$ 435mn, 41.2% higher than the R$ 308mn posted in H1 2005. This is mainly due to the provision for indemnity payments to employees for future additional time-of-service payments, as commented above, partially compensated by the increased transfer of personnel expenses to ongoing works (R$ 51mn in June 2006 versus R$ 16mn in 2005). This investment for future additional time-of-service payments will bring economy when the automatic adjustments of 1% for personnel salary will cease.

 

Electricity Purchased for Resale

 

Expenses related to electricity purchased for resale totaled R$ 1.02bn in H1 2006, 17% higher than expense of R$ 871mn recorded in H1 2005. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed through to the tariff.

 

Depreciation/Amortization

 

Depreciation and amortization expenses did not vary significantly between H1 2006 (R$ 184mn) and R$ 179mn (H1 2005), increasing only 2.8% - mainly due to the entry into operation of new distribution networks and lines.

 

Post-Employment Obligations

 

Expenses incurred in post-employment obligations in H1 2006 totaled R$ 54mn, 3.6% lower than expenses of R$ 56mn posted in H1 2005. These expenses basically represent the interest incident on the actuarial obligations of Cemig Distribuição, net of the earnings expected from the assets of the plans, estimated by an external actuary. The decline in expenses is due to higher growth in assets than in obligations.

 

60



 

Operational Provisions

 

Operational provisions in H1 2006 totaled R$ 58mn, 23.4% higher than the R$ 47mn posted in H1 2005. The main provision registered in 2006 relates to non-performing loans, in the amount of R$ 52mn.

 

Fuel Consumption Account – CCC (a levy on all electricity distributors, to subsidize thermal plants)

 

CCC expenses in H1 2006 totaled R$ 191mn, 5.5% higher than the R$ 181mn level posted in H1 2005. These expenses relate to the operating costs of the thermo plants of the Brazilian interlinked and isolated energy systems, divided up between energy concession holders as stipulated by an ANEEL Resolution. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed on to the tariff.

 

Transmission Network Usage Charges

 

Expenses related to these charges totaled R$ 310mn in H1 2006, 2.1% higher than the R$ 303mn level posted in H1 2005. These expenses relate to the charges owed by electricity distribution and generation players for use of the installations, components of the basic network, as established through an ANEEL Resolution. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed on to the tariff.

 

Due to a new ANEEL ruling on the criteria for constituting the CVA related to basic transmission network usage charges, in H1 2006 Cemig Distribuição reversed part of the CVA item constituted as of April 2005, in the amount of R$ 93mn, ensuring an increase in these expenses in H1 2006.

 

61



 

Energy Development Account - CDE

 

CDE expenses totaled R$ 131mn in H1 2006, 5% lower than the R$ 138mn level obtained in H1 2005. Payments are defined by an ANEEL Resolution. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed on to the tariff.

 

Energy Efficiency and Research and Development

 

Spending on energy efficiency and research and development in H1 2006 totaled R$ 36mn, 414% higher than the R$ 7mn level posted in H1 2005. This increase was mainly due to the new criteria adopted at the start of 2006 for recognizing these expenses. Starting this year, the Company provisions 1% of its net revenue for investment in energy efficiency and research and development programs.

 

Alternative Energy Sources Incentive Program – PROINFA

 

PROINFA, implemented via Decree nº 5.025 of 30 March 2004, aims to increase the share of electricity produced by projects of Autonomous Independent Producers, involving wind-powered energy, small hydroelectric plants and biomass energy, in the National Interlinked System.

 

The amounts are paid by the transmission and distribution concessionaires to ELETROBRÁS, which administers the PROINFA account, in accordance with calculations made by ELETROBRÁS itself.

 

In H1 2006, Cemig Distribuição registered PROINFA expenses of R$ 13mn. This is a non-controllable cost, and the expense recognized in the result corresponds to the amount effectively passed on to the tariff and the energy amount is related to Cemig Distribuição.

 

62



 

Financial Revenues (Expenses)

 

In H1 2006, Cemig Distribuidora posted net financial revenue of R$ 76mn, versus net financial revenue of R$ 80mn in H1 2005. The main factors that impacted the financial result are listed below:

 

      In H1 2006, revenue from monetary variation and interest incident on the Deferred Tariff Increase totaled R$ 102mn, 34.6% lower than the R$ 156mn level obtained in H1 2005. In 2005, Cemig Distribuição posted higher revenue due to the announcement of the definitive result of CEMIG’s tariff review, which led to the registering of a regulatory asset called “Deferred Tariff Increase” and to the updating of this asset retroactive to 2003.

 

      Growth of R$ 53mn in revenue from interest on bills paid in arrears: R$ 82mn in H1 2006 versus R$ 29mn in H1 2005. This variation stems from the revenue registered in Q2 2006, in the amount of R$ 48mn, related to the write-off of accounts received from large industrial consumers related to previous years, whose principal amount was considerably less than the accrued amount related to financial charges.

 

63



 

Charts 1 and 2: SALES (GWh) - CEMIG Distribuição

 

Last Six Quarters

 

 

Half-Year Sales

 

 

64



 

Chart I

 

Breakdown by consumption segment

 

Cemig D

 

Sales breakdown for H1 2006

 

GWh

 

Industrial

 

2.392

 

Residential

 

3.310

 

Rural

 

860

 

Commercial

 

1.948

 

Others

 

1.332

 

Subtotal

 

9.842

 

Supply

 

 

Total

 

9.842

 

 

Chart II

 

Income Statement

R$ ‘000

 

 

 

H1 2006

 

H1 2005

 

Net revenue

 

3.062.787

 

3.190.026

 

Operational expenses

 

(2.698.972

)

(2.355.103

)

Operational result

 

363.815

 

834.923

 

EBITDA

 

548.417

 

1.014.507

 

EBITDA margin

 

17,9

%

31,8

%

Financial result

 

75.796

 

80.224

 

Non-operational result

 

(14.571

)

(13.761

)

Income tax provision, social contribution and deferred income tax

 

(146.946

)

(308.471

)

Reversal of equity on own interest

 

65.811

 

107.000

 

Net profit

 

343.905

 

699.915

 

Net margin

 

11,2

%

21,9

%

 

65



 

Chart III

 

Operating revenues

R$ mn

 

 

 

Q2 2006

 

Q1 2006

 

H1 2006

 

Q2 2005

 

H1 2005

 

2005

 

Sales to Final Consumers

 

1.923

 

1.920

 

3.843

 

1.877

 

3.397

 

7.335

 

TUSD

 

287

 

301

 

588

 

389

 

572

 

1.201

 

Sub-total

 

2.210

 

2.221

 

4.431

 

2.266

 

3.969

 

8.536

 

Supply

 

 

6

 

6

 

8

 

30

 

95

 

Others

 

13

 

13

 

26

 

6

 

31

 

53

 

Sub-total

 

2.223

 

2.240

 

4.463

 

2.280

 

4.030

 

8.684

 

Deferred Tariff Increase - RTD

 

 

 

 

8

 

591

 

591

 

Deductions

 

(707

)

(693

)

(1.400

)

(777

)

(1.431

)

(2.878

)

Net revenue

 

1.516

 

1.547

 

3.063

 

1.511

 

3.190

 

6.397

 

 

Chart IV

 

Operational Expenses – R$ mn

 

 

 

Q2 2006

 

Q1 2006

 

H1 2006

 

Q2 2005

 

H1 2005

 

2005

 

Personnel

 

277

 

158

 

435

 

151

 

308

 

595

 

Profit-sharing

 

14

 

14

 

28

 

15

 

30

 

188

 

Post-Employment Obligations

 

27

 

27

 

54

 

28

 

55

 

111

 

Materials

 

15

 

14

 

29

 

14

 

34

 

74

 

Third-party services

 

84

 

72

 

156

 

53

 

129

 

312

 

Electricity purchased for resale

 

459

 

561

 

1.020

 

483

 

871

 

1.890

 

Depreciation and amortization

 

93

 

92

 

185

 

90

 

180

 

364

 

Operational provisions

 

16

 

42

 

58

 

41

 

47

 

133

 

Quota for the Fuel Consumption Account – CCC

 

115

 

76

 

191

 

78

 

181

 

387

 

Transmission Network Usage Charges

 

114

 

196

 

310

 

166

 

304

 

554

 

Energy Development Account - CDE

 

75

 

56

 

131

 

64

 

138

 

279

 

Provision for Losses in Recovering Amounts from Extraordinary Tariff Rebuilding Process

 

3

 

3

 

6

 

 

 

82

 

Energy Efficiency and Research and Development

 

36

 

 

36

 

4

 

7

 

173

 

PROINFA

 

13

 

 

13

 

 

 

 

 

Other Net Expenditures

 

10

 

37

 

47

 

30

 

71

 

165

 

Total

 

1.351

 

1.348

 

2.699

 

1.217

 

2.355

 

5.307

 

 

66



 

 

Companhia Energética de Minas Gerais - Cemig

Companhia Aberta - CNPJ 17.155.730/0001-64

 

 

CEMIG ANNOUNCED NET INCOME

OF R$ 325 MILLION IN 2Q 2006

 

 

Belo Horizonte, Brazil, August 9, 2006 – Companhia Energética de Minas Gerais – CEMIG – (BOV: CMIG4, CMIG3; NYSE: CIG e LATIBEX: XCMIG), a leading concessionaire in Brazil, and its subsidiaries (“CEMIG Companies”), today announced net income of R$ 665 million in the period of January to June 2006, or R$ 4.10 per lot of 1,000 shares. In the second quarter 2006, net income was R$ 325 million, or R$ 2.01 per lot of 1,000 shares.

 

67



 

 

The Chairman of the Board of Directors, Dr. Wilson Nélio Brumer, commented, “Second quarter results clearly demonstrate that our strategies, substantiated in our Strategic Plan, are correct and will enable us to attain our sustainable growth objectives, despite the impact caused by certain non-recurring items. The 67% increase our net income in the last three years proves that aligning with the interests of our shareholders has had a beneficial effect on everyone: shareholders, employees, and the communities we serve. During the first half of 2006, our shareholders have received, in accordance with our previously announced dividends, a total of R$ 8.92 per lot of 1,000 shares. In the first half of the year, we grew with added value. Our energy sales increased 29%, driven by the evolution of the Minas Gerais economy. In May 2006, the state industry grew 8.5% when compared with the month of May 2005 whereas the national industry grew 4.8% in the same period. The number of Cemig consumers increased 2.8% in the first half of the year. Cash flow measured by EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) reached R$ 1,198 million, and net income was R$ 665 million. We look for the best opportunities to accelerate our growth and we have been successful with this initiative. Our two most recent acquisitions clearly show our continued focus on the electricity sector and on projects that create value, above and beyond our ability to evaluate opportunities that have attractive returns vis à vis their risk. Cash generation, due to operational improvements that we have implemented, especially in the case of Light SA, will continue to leverage our continued growth in line with our long-term strategy. We will make further advancements in this quarter, without doubt.”

 

President and CEO, Dr. Djalma Bastos de Morais stated, “In the first half of 2006, we achieved net income of R$ 665 million, or R$ 4.10 per thousand shares, a 36% reduction when compared to the same period of last year. It is important to note that a large portion of this reduction is from non-recurring items that will not affect our future results. In fact, a good example was the opportunity to obtain for our employees a salaried bonus that impacted our payroll by increasing it independently of performance. Although this is reflected in our results in the short-term, we treat this as a R$ 177 million investment in the Company, and for our shareholders, it provides the long-term benefit of significantly reducing personnel expenses. We estimate a return of more than 12%. We must also point out our ability to take on new projects. We are constructing two additional electricity

 

 

68



 

generation plants that, when completed, will add more than 455 MW to our installed capacity, representing a 7% increase. During this half, we started operating in two more units in Usina de Capim Branco and the units in Usina de Irapé. Usina de Irapé (Hidrelétrica Presidente Juscelino Kubitschek) started commercial operation on July 20, 2006. This is the most important venture realized in Jequitinhonha Valley, with installed capacity of 360 MW and investments of more than R$ 1.3 billion. This commitment to growth by the Company considers the desires of our shareholders who are looking for value in their investments and also the communities we serve through the installment of an essential service for social and economic development.

 

Chief Financial Officer and Director of Investor Relations, Dr. Flávio Decat de Moura, commented, “Once again, we were successful in our strategy to sell our electricity generated capacity in the auctions organized by ANEEL, our regulatory agency. As everyone knows, on June 29, 2006 we were able to sell practically all of the generation capacity that we had. We negotiated an average of 355 MW that will generate annual revenue of R$ 390 million. Commercialized energy from hydroelectrics Aimorés (84 MW average), Irapé (206 MW average) and Queimado (47 MW average), at a price of R$ 125 per MWh. We also sold, for R$ 134.42 per MWh, energy from the Porto Estrela plant (18 MW average) with the recuperation of Uso de Bem Público – UBP. Cemig D already purchased 98.90 MW average, being 60.50 MW average of hydraulic energy and 38.50 MW average for thermo energy. The demand by the Distributor for this auction was fully attended. In relation to the financial highlights, I can say that we are continuing to rollover our debt, with R$ 1.2 billion issued in promissory notes. Our strategy is to extend the maturity of our bonds and reduce the cost by optimizing the utilization of generated cash in the period generating overages to finance the acquisition of assets to attain the objectives established in our Strategic Plan.”

 

•  2Q 2006 Highlights

 

                  Record sales volume in one quarter in the history of CEMIG

 

                  22.7% growth in the quantity of energy sold to final customers

 

                  90 thousand new consumers added in first half

 

                  Successful New Energy Auction

 

69



 

                  Significant Increase in Income from Wholesale

 

  Economic Summary (R$ millions)

 

 

 

2T06

 

2T05

 

Change %

 

 

 

 

 

 

 

 

 

Quantity of Energy Sold MWh

 

12,457,770

 

10,148,745

 

22.8

 

Gross Revenue

 

2,965

 

2,986

 

(0.70

)

Net Revenue

 

2,128

 

2,007

 

6.02

 

EBITDA

 

497

 

701

 

(29

)

Net Income

 

325

 

487

 

(33

)

Earnings per Share

 

2.01

 

3.00

 

(33

)

Number of Customers

 

6,101,000

 

5,938,320

 

2.75

 

 

  Share Performance in 2Q 2006

 

BOVESPA

 

Ticker

 

2Q 2006

 

2005

 

Cmig 3

 

5.84

%

50

%

Cmig 4

 

- 4.72

%

60

%

IBOV

 

-5.39

%

30

%

IEE

 

-7.94

%

45

%

 

NYSE

 

Ticker

 

2Q 2006

 

2005

 

CIG

 

-8.85

%

54

%

DJIA

 

0.047

%

0

%

 

  Net Income

 

CEMIG’s net income for the second quarter 2006 was R$ 325 million, in comparison with R$ 487 million reported in the second quarter of 2005, representing a 33% decline.

 

For the first six months of 2006, net income was R$ 665 million, a decrease of 36.2% in relation to the first half of 2005.

 

This reduction in net income was primarily due to the following factors:

 

                  Recognition of revenue due to the readjustment of the deferred tariff in the amount of R$591 million during the first half of 2005.

 

70



 

                  An increase of 23.6% in operational expenses in the first half of 2006 compared to the same period of the prior year. This increase is mainly due to:

 

                  as an extraordinary event that affected the results of the first quarter 2006, excluded from the sum results was R$ 93 million for the CVA charge of use of the transmission network, as described in the “Operating Costs and Expenses” section;

 

                  the increase in uncontrollable costs, principally in energy purchased for resale that increased 50.6% in the comparable periods;

 

                  the increased in personnel expenses, mainly due to the provision for the indemnity of employees for future salary increases, attained by CEMIG for the amount of approximately R$177 million.

 

The table below illustrates the individual contribution of each company to consolidated income for the 2Q 2006.

 

Company

 

Net Income*

 

EBITDA*

 

Cemig Geração/Transmissâo

 

171.739

 

319.478

 

Cemig Distribuição

 

146.738

 

177.706

 

Cemig Holding **

 

(24.967

)

(55.545

)

Gasmig

 

7.981

 

12.130

 

Infovias

 

76

 

12.078

 

Sá Carvalho

 

5.149

 

7.572

 

Efficientia

 

91

 

89

 

Ipatinga

 

1.358

 

2.852

 

Horizontes

 

2.833

 

3.472

 

Pai Joaquim

 

105

 

82

 

Transleste

 

876

 

1.493

 

Cogeração

 

1.239

 

1.227

 

Rosal Energia

 

5.142

 

5.375

 

Capim Branco

 

5.963

 

6.705

 

Cemig PCH

 

2.650

 

2.749

 

UTE Barreiro

 

(1.624

)

(1.319

)

Cemig Consolidado

 

325.350

 

496.144

 

 


* In R$ thousands

 

71



 

When analyzing the table above, it is possible to observe that together, Cemig G/T as much as Cemig D are responsible for approximately 98% of total income. This participation has been constant in the most recent quarters, noting however an important increase in the contribution from Gasmig, who in the first half generated a net income of R$ 17 million.

 

At the end of July, Cemig sold its participation in Way TV, following the Company’s strategy to concentrate and expand in synergistic operations, so that any obtained resources could then be used for business expansion.

 

  EBITDA

 

Cash generation for Cemig reached R$ 1.197 billion in the first half of 2006, representing a 28.9% decline versus the same period last year. The reduction in EBITDA is primarily due to the extraordinary income registered in the first half of 2005 for the amount of R$591 million.

 

Excluding this extraordinary income, EBITDA would have been in line with the comparable period or 2005. EBITDA margin was 27.4% in June 2006 compared with 41.2% in June 2005.

 

 

72



 

In the second quarter 2006, EBITDA was R$ 495.7 million, representing a 30% decline when compared to the first quarter 2006. em relação ao 1ºTri 2006. It is important to note that the main negative impacts occur in the second quarter 2006.

 

  Market

 

The quantity of energy sold in the second quarter 2006 was 12.5 million MWh, a record sales volume for one quarter in the history of Cemig. This volume represents an increase of 22.8% in relation to the same period of 2005.

 

 

 

Energy Sold (Consolidated) MWh - 2º Quarter

 

Consumption by Class

 

2006

 

2005

 

Change %

 

Residential

 

1.653.546

 

1.676.101

 

-1,35

 

Industrial

 

5.875.324

 

5.977.769

 

-1,71

 

Commercial

 

958.053

 

957.081

 

0,10

 

Rural

 

455.745

 

463.569

 

-1,69

 

Others

 

676.672

 

655.906

 

3,17

 

Wholesale

 

2.838.430

 

418.319

 

578,53

 

TOTAL

 

12.457.770

 

10.148.745

 

23

 

 

In the first six months of 2006, the quantity of energy sold reached 24.4 million MWh, representing an almost 30% increase in only one year.

 

Factors that contributed to this increase included:

 

                  Economic Improvement: the economic improvement of Minas Gerais that has ocurred in the most recent quarters demonstrates a trend of continued growth, which is one of the most prominent in the country. It is interesting to note that through exports, the secondary sector continues to expand, especially in siderurgy, iron and metal industries. These sectors, which consume a significant amount of electricity, are contributing to the further increase in energy sold by Cemig.

 

                  Free Consumers: The amount of energy sold to free consumers was one of the principal sources that contributed to the energy sales volume growth in the first six months of 2006.

 

                  Wholesale: Wholesale energy reached 2.8 million MWh in the second quarter 2006. Thie increase of almost 580% in comparison with the same quarter of last year, was from energy sold to other utilities and also to commercial users.

 

73



 

An adjustment of R$ 87 million in the supply not billed that was registered in the 1Q 2006 as a part of the reevaluation of the calculated revenue registered in the aforementioned quarter. It was necessary to have a reclassification of the automatically improved values through the information system of the Company, making the adjustments in the second quarter 2006. Additionally, the calculation procedures were reevaluated with a revision by the internal auditor of the respective internal controls.

 

  Wholesale Revenue

 

The quantitly of energy sold to other utilities reached 4.9 milhões MWh in the first half 2006.

 

This increase was mainly due to the energy sale from Cemig Generation and Transmission to other distributors in 2006.

 

In the past, a large portion of these sales were made between Cemig G/T e Cemig D, and by consolidating the Company’s results, these activities were eliminated. It is interesting to note the optimal prices achieved by Cemig G/T for these contracts, accomplished in large part because of the Company’s strategy to take advantage of market opportunities.

 

  Revenues from Network Use

 

In the first half of 2006, revenues from network use increased 16.8% when compared with the same period of 2005. Of this R$ 875 million, Cemig Distribution contributed approximately 67% with the remaining contribution from Cemig G/T.

 

Also adding to this amount are the revenues from the use of the installations comprising the basic transmission network of Cemig Generation and Transmission by the electricity generators and distributors that are part of the Brazilian interconnected system, as per values defined through ANEEL Resolution (R$ 223 million in 2006 compared with R$ 157 million in 2005).

 

74



 

  Operating Costs and Expenses

 

Operating costos and expenses (excluding financial results) were R$3.47 billion in the first six months of 2006, compared to R$2.69 million reported in the same period of 2005. This represents an increase of 28.9%.

 

This results is mainly due to the following factors:

 

                  Uncontrollable costs

 

                  Personnel expenses

 

                  Operational provisions

 

Costs and expenses are described in the below table:

 

Consolidated Operating Costs and Expenses as of June 30, 2006

 

 

 

 

 

 

 

CVA

 

 

 

 

 

 

 

CVA Amounts

 

amountsnot

 

Effective

 

 

 

Operating

 

transferred to

 

included in

 

expense

 

 

 

Expenses

 

the period’s

 

the period’s

 

recognized in

 

 

 

without

 

results

 

results

 

the period’s

 

 

 

Effects of CVA

 

(*)

 

(**)

 

results

 

 

 

 

 

 

 

 

 

 

 

Personnel, Adminstrators and Board Members

 

614.226

 

 

 

614.226

 

Employee Shares

 

38.726

 

 

 

38.726

 

Post-employment benefits

 

75.055

 

 

 

75.055

 

Materials

 

38.302

 

 

 

38.302

 

Third-Party Services

 

217.131

 

 

 

217.131

 

Electricity Purchased for Resale

 

852.159

 

165.053

 

(29.403

)

987.809

 

Depreciation and Amoritization

 

302.812

 

 

 

302.812

 

Financial Compensation for Use of Hydro Resources

 

61.156

 

(6.107

)

 

55.049

 

Operating Provisions

 

79.992

 

 

 

79.992

 

 

 

 

 

 

 

 

 

 

 

Fuel Consumption Account - CCC

 

277.853

 

(26.276

)

(29.528

)

222.049

 

 

 

 

 

 

 

 

 

 

 

Charges for Transmission Network Usage

 

307.857

 

5.678

 

108.200

 

421.735

 

Gas Purchased for Resale

 

76.399

 

 

 

76.399

 

Energy Development Account - CDE

 

165.780

 

(7.349

)

(7.296

)

151.135

 

Provision of Losses in the Recovery of RTE Values

 

47.149

 

 

 

47.149

 

PROINFA

 

24.726

 

2.465

 

(12.049

)

15.142

 

Energy Efficiency Expenses

 

45.276

 

 

 

45.276

 

Other

 

88.433

 

 

 

88.433

 

Total

 

3.313.032

 

133.464

 

29.924

 

3.476.420

 

 


( * )         Refers to the fixed costs that comprise the CVA that were transferred to the results as a function of their inclusion in the calculation of CEMIG’s tariff adjustment

( ** )       Refers to the variation of fixed costs that comprise CVA that were not included in the calculations of CEMIG’s tariff adjustment, and thus were excluded from the results

 

75



 

The main variations in expenses are described below:

 

Personnel

 

Personnel expenses in the first half of 2006 were R$ 614 million compared to R$ 440 million in the first half of 2005, an increase of 39.58%.

 

This was substantially due to the provision for indemnity of future salaried bonus for employees, which represents R$ 177 million, with R$ 41 million being expensed by Cemig G/T and R$ 127 million by distribution, and the remaining amount allocated to other Cemig companies.

 

Electricity Purchased for Resale

 

The expense for electricity purchased for resale was R$ 987.8 million in the first half of this year. This compares with R$655.5 million reported in the period from January to June 2005, an increase of 50.6%.

 

This is an uncontrollable cost, and the expense recognized in the results corresponds with the amount effectively passed through the tariff.

 

Additionally, it needs to be pointed out that in 2005, a substantial portion of the electricity purchased for resale through Distribution was derived from Cemig Generation and Transmission, and as a result, in the presentation of consolidated results, were eliminated as operations between the companies.

 

Post-Employment Obligations

 

The expense for post-employment obligations was R$ 75 million in the 1H 2006 versus R$ 76.7 million in the first half of 2005, a 2.2% decline.

 

These expenses basically represent the interest on actuarial obligations, net of the income expected from plan assets, estimated by an outside actuary. The reduction of expenses shows a greater growth in assets in relation to obligations.

 

76



 

Operating Provisions

 

Operating provisions for the period from January to June 2006 were R$ 80 million, compared to R$15.2 million in the same period of 2005, an increase of 426.3%.

 

The principle provisions registered in 2006 originate from:

 

                  credits from doubtful accounts (R$ 43.5 million)

 

                  worker contingencies (R$16.7 million)

 

                  judicial contingencies– civil actions (R$11.4 million)

 

Fuel Consumption Account – CCC

 

The CCC expense in the period from January to June 2006 was R$ 222 million compared to R$195,6 million in the first half of 2005, representing an increase of 13.5%.

 

The CCC refers to the operating costs of the thermal plants on the Brazilian interconnected and isolated system, divided proportionately between the electricity concessionaries through the ANEEL Resolution. This is an uncontrollable cost, as the expense recognized in the result corresponds to the value effectively passed through to the tariff.

 

Charges for Transmission Network Use

 

The expense for transmission network use in the first six months of 2006 was R$ 421.7 million compared to R$ 357.2 million in the period from January – June 2005, a variation of 18%.

 

This expense is related to the charges paid by electricity distribution and generation agents for use of installations and components of the basic network, as defined by the ANEEL Resolution. This is an uncontrollable cost, as the expense recognized in the result corresponds to the value effectively passed through the tariff.

 

77



 

In accordance with a new interpretation of ANEEL as it relates to the CVA criteria with reference to tariff to use the integrated transmission installations and the basic network, CEMIG returned, in the first half of 2006, a portion of the CVA constituted in the amount of R$ 93,2 million, which served to increase the value of the expense of the current semester.

 

Energy Development Account – CDE

 

The CDE expense from the period of January to June 2006 was R$ 151.135 million compared to R$ 146.2 million in the first semester of 2005, representing an increase of 3.3%.

 

The payments are defined through the ANEEL Resolution. This is an uncontrollable cost, as the expense recognized in the results corresponds to the value effectively passed through the tariff.

 

Incentive Program for Sources of Alterative Energy – PROINFA

 

PROINFA, instituted by Decree 5.025 from March 30, 2004, maintains the objectives to increase the use of energy produced by Autonomous and Independent Businesses, such as wind, small hydroelectric and biomass, within the National Interlinked System.

 

The values are captured by the concessionaries of tranmission and distribution to ELETROBRAS, adminstrator of the PROINFA Account, in accordance with values determined by the former.

 

CEMIG registered within the period of January – June 2006, an expense with PROINFA in the amount of R$ 15 million. This is a uncontrollable cost, as the expense recognized in the result corresponds to the value effectively passed through to the tariff.

 

78



 

Energy Efficiency Research & Development

 

The expenses with energy efficiency within the period of January to June 2006 were R$ 45.2 million compared to R$ 10.2 million in the same period in 2005, representing an increas of 343.1%.

 

This expense originated principally from new criteria adopted at the beginning of 2006, for which the Company provisioned 1% of their net revenue for the creation of programs in energy efficiency research and development.

 

Other Operating Expenses

 

Other operating expenses in the first six months of 2006 were R$ 88.4 million compared to R$ 74.2 million in the same period in 2006, resulting in an increase of 19.1%.

 

  Financial Revenues (Expenses)

 

The financial result from January to June 2006 was a net financial expense of R$ 123.4 million compared to a net financial expense of R$ 166.6 million in the first half of 2005.

 

The main factors impacting the financial result were the following:

 

                  Income from the monetary update and interest on accounts receivable from the State of Minas Gerais, was in the amount of R$ 41 million in the first half of 2006, compared to R$ 215.8 million from January to June of 2005, resulting in a reduction of 80.8%.

 

With the transfer of the CRC to the Direct Creditor’s Fund, this income will not be booked in the results for 2006, also considering that the income to be registered with FIDC will be less than the amount stipulated in the update.

 

                  Growth of R$ 52.6 million in the income from energy (R$ 83.7 million in the period of January – June 2006 compared to R$ 31 million in the same period in 2005.)

 

This variation originates from the registered income in the second quarter of 2006, in the amount of R$ 48.2 million, referring to the decrease of accounts receivable from large industrial consumers related to previous years, whose value of principal was considerably inferior in the higher amount referring to financial charges.

 

79



 

                  Income from monetary variation and interest on the Deferred Tariff Adjustment (RTD) in the amount of R$ 102.9 million compared to R$ 155.6 million from January to June 2005.

 

In 2005, CEMIG reporterd higher income as a result of the tariff review being finalized, which led to the creation of the asset line item Deferred Tariff Adjustment and the realization of the asset back to 2003 resulted in the considerable amount of financial income booked in 2005.

 

                  Increase of 26.2% in charges related to loans and financing in the country due to the increase in the amount due as a function of the debt rollover criteria, with the substitution of various debt contracts in foreign currency to Brazilian currency, as of the second half of 2005.

 

  Second New Energy Acution

 

In the second quarter 2006, the second auction for New Energy took place. The prices obtained by Cemig G/T were the maximum permitted, with the Generator attaining an average price of R$ 125.48/MWh, with UHE Porto Estrela attaining a selling price of R$ 134.42/MWh. Total energy sold by Cemig G/T reached 355 MW, or 21.11% of the energy sold in the auction.

 

Cemig D also was able to ensure a demand for its energy, attaining 79.68 MW, with an average price of R$ 128.13/MWh.

 

  Investment Program

 

Investments made during the 2Q 2006 reached R$ 411 million, a 66% increase over the first three months of this year.

 

Investments made during the first six months of 2006 were R$ 658 million, part of the total of R$ 1.927 billion of investments slated for the year.

 

The majority of the investments made during the first half of 2006, or 83%, were in Cemig D, with the majority of this investment focused on the universalization of electricity consumption through the “Luz Para Todos,” or “Light for Everyone” program.

 

Additional details regarding investments can be seen in the following table.

 

80



 

Multiyear Investment Program

in millions of Reais

 

Description

 

2005

 

2006

 

1º sem/06

 

2007

 

GENERATION

 

397

 

130

 

60

 

98

 

TRANSMISSION

 

20

 

93

 

40

 

16

 

DISTRIBUTION

 

691

 

1,136

 

546

 

1,335

 

Distribution

 

665

 

1,009

 

507

 

1,005

 

Extension and reinforcement of existing networks

 

276

 

288

 

122

 

544

 

Light for All

 

291

 

711

 

379

 

461

 

Others

 

98

 

10

 

6

 

 

Sub-transmission

 

26

 

127

 

39

 

330

 

HOLDING

 

57

 

40

 

12

 

82

 

Other Businesses

 

 

 

 

 

 

Cash Flow Reconciliation

 

191

 

 

 

 

 

sub-total

 

1,356

 

1,399

 

658

 

1,531

 

Investments in Acquisitions

 

 

528

 

 

 

 

LIGHT

 

 

184

 

 

 

 

TBE

 

 

344

 

 

 

 

Total

 

1,356

 

1,927

 

658

 

1,531

 

 

Included in this table are the values to be invested in 2006 for the Company’s recent acuisitions which are a part of the strategy of Cemig to grow generation, transmission and distribution of electricity proportionately, with the objective of becoming one of the major players within the consolidation trend within the electricity sector.

 

Income Tax and Social Contribution

 

Cemig made provisions during the period from January to June 2006 for Income Tax and Social Contribution of R$ 255.6 million in relation to income of R$ 751.4 million, before fiscal effects, representing a 34% rate. In ther first half of 2005, the Company recorded Income Tax and Social Contribution expenses of R$445.2 million for income of R$ 1.203 billion, before fiscal effects, a rate of 37.0%.

 

Disclaimer

 

Some of the statements and assumptions contained herein are forecasts based on the views and assumptions of hte management, and involved both known and unknown risks and uncertainties. The actual results may be materially different from those expressed or implied in such statements.

 

81



 

Contact:                 Luiz Fernando Rolla

Director of Investor Relations

Tel. +55-31-3299-3930

Fax +55-31-3299-3933

lrolla@cemig.com.br

 

82



 

Chart I

 

Statement of Results (consolidated)

Values in millions of reais

 

 

 

2Q 2006

 

1Q 2006

 

1H 2006

 

2Q 2005

 

1H 2005

 

2005

 

Net Revenue

 

2.128

 

2.243

 

4.371

 

1.956

 

4.085

 

8.236

 

Operating Expenses

 

(1.783

)

(1.693

)

(3.476

)

(1.290

)

(2.695

)

(6.342

)

EBIT

 

345

 

550

 

895

 

666

 

1390

 

1.894

 

EBITDA

 

497

 

701

 

1.198

 

814

 

1685

 

2.488

 

Financial Result

 

(108

)

(15

)

(123

)

(316

)

(166

)

(3

)

Non-Operating Result

 

(8

)

(12

)

(20

)

(12

)

(20

)

(53

)

Provision for Income Taxes, Social Cont & Deferred Income Tax

 

(73

)

(183

)

(256

)

(134

)

(445

)

(471

)

Interest on Own Capital Reversal

 

169

 

 

169

 

283

 

283

 

635

 

Minority Shareholders

 

 

 

 

 

 

1

 

Net Income

 

325

 

340

 

665

 

487

 

1.042

 

2.003

 

 

Chart II

 

Operating Revenues (consolidated)
Values in millions of reais

 

 

 

2Q 2006

 

1Q 2006

 

1H 2006

 

2Q 2005

 

1H 2005

 

2005

 

Sales to end consumers

 

2.225

 

2.362

 

4.587

 

2.237

 

4.156

 

8.919

 

TUSD

 

286

 

301

 

587

 

389

 

572

 

1.201

 

Subtotal

 

2.511

 

2.663

 

5.174

 

2.626

 

4.728

 

10.120

 

Supply

 

197

 

177

 

374

 

68

 

109

 

237

 

Revenues from Trans. Network

 

139

 

149

 

288

 

93

 

177

 

322

 

Gas Supply

 

70

 

69

 

139

 

70

 

131

 

265

 

Others

 

48

 

46

 

94

 

31

 

78

 

168

 

Subtotal

 

2.965

 

3.104

 

6.069

 

2.888

 

5.223

 

11.112

 

Deferred Tariff Readjusment - RTD

 

 

 

 

8

 

591

 

591

 

Deductions

 

(837

)

(861

)

(1.698

)

(940

)

(1.729

)

(3.467

)

Net Revenues

 

2.128

 

2.243

 

4.371

 

1.956

 

4.085

 

8.236

 

 

83



 

Chart III

 

Operating Expenses (consolidated)

Values in millions of reais

 

 

 

2Q 2006

 

1Q 2006

 

1H 2006

 

2Q 2005

 

1H 2005

 

2005

 

Purchased Energy

 

443

 

545

 

988

 

271

 

656

 

1.455

 

Personnel/Administrators/Councillors/Employee Participation

 

415

 

238

 

653

 

237

 

481

 

1.106

 

Depreciation and Amortization

 

152

 

151

 

303

 

147

 

295

 

595

 

Fuel Consumption Account - CCC

 

126

 

96

 

222

 

117

 

196

 

416

 

Energy Development Account - CDE

 

82

 

69

 

151

 

81

 

146

 

296

 

Charges for Use of Basic Transmission Network

 

173

 

249

 

422

 

163

 

357

 

641

 

Contracted Services

 

116

 

101

 

217

 

106

 

176

 

423

 

Forluz – Post-Retirement Employee Benefits

 

37

 

38

 

75

 

39

 

77

 

153

 

Materials

 

21

 

17

 

38

 

24

 

42

 

96

 

Royalties

 

33

 

22

 

55

 

39

 

79

 

145

 

Gas Purchased for Resale

 

37

 

39

 

76

 

39

 

76

 

156

 

Operating Provisions

 

38

 

42

 

80

 

(24

)

15

 

127

 

Other Expenses and Provision for Losses from Tariff Recomposition

 

110

 

86

 

196

 

51

 

99

 

733

 

Total

 

1.783

 

1.693

 

3.476

 

1.290

 

2.695

 

6.342

 

 

Chart IV

Ener Sales (Consolidated)

 

 

 

No. of consumers

 

MWh

 

R$ thousand

 

 

 

1st half

 

1st half

 

1st half

 

 

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

Residential

 

4.984.274

 

4.877.730

 

3.310.420

 

3.293.423

 

1.670.582

 

1.459.696

 

Industrial

 

69.496

 

68.690

 

11.892.579

 

11.190.243

 

1.377.865

 

1.390.210

 

Commercial

 

541.673

 

534.358

 

1.947.818

 

1.888.914

 

831.074

 

717.521

 

Rural

 

446.266

 

400.415

 

859.973

 

828.961

 

236.480

 

202.983

 

Others

 

58.382

 

56.347

 

1.317.453

 

1.266.327

 

376.793

 

326.738

 

Own Consumption

 

768

 

783

 

14.872

 

14.199

 

 

 

Low-Income Consumers Subsidy

 

 

 

 

 

 

 

 

 

61.268

 

 

 

Unbilled Supply, Net

 

 

 

 

 

32.818

 

12.533

 

Supply

 

43

 

8

 

4.988.424

 

391.490

 

324.108

 

49.562

 

Transactions on the CCEE

 

 

 

 

 

49.995

 

59.200

 

TOTAL

 

6.100.902

 

5.938.331

 

24.331.539

 

18.873.557

 

4.960.983

 

4.264.435

 

 

Chart V

 

Financial Result Breakdown

Values in millions of reais

 

 

 

2Q 2006

 

1Q 2006

 

1H 2006

 

2Q 2005

 

1H 2005

 

2005

 

Financial Revenues

 

321

 

310

 

631

 

336

 

693

 

1.706

 

Income from Investments

 

49

 

50

 

99

 

24

 

56

 

197

 

Fines on Energy Accounts

 

66

 

18

 

84

 

16

 

31

 

81

 

CRC Contract/State (interest + monetary variation)

 

 

21

 

21

 

41

 

101

 

500

 

Monetary variation of Extraordinary Tariff Recomposition and RTD

 

162

 

153

 

315

 

142

 

390

 

663

 

Exchange Rate Variations

 

22

 

62

 

84

 

132

 

148

 

164

 

Others

 

22

 

6

 

28

 

(19

)

(33

)

101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Charges on Loans and Financing

 

(156

)

(164

)

(320

)

(139

)

(254

)

(565

)

Monetary variation of Extraordinary Tariff Recomposition and Suppliers

 

(29

)

(36

)

(65

)

(65

)

(84

)

(158

)

Exchange Rate Variations

 

(7

)

 

(7

)

(1

)

(13

)

(18

)

Monetary Variarion Liabilities - Loans and Financing

 

(6

)

(6

)

(12

)

(5

)

(27

)

(16

)

CPMF

 

(14

)

(21

)

(35

)

(23

)

(28

)

(66

)

Provision for Losses from Derivatives

 

(10

)

(72

)

(82

)

(80

)

(101

)

(168

)

Others

 

(37

)

(27

)

(64

)

(57

)

(70

)

(83

)

Interest on Own Capital

 

(169

)

 

(169

)

(283

)

(283

)

(635

)

Financial Result

 

(107

)

(16

)

(123

)

(317

)

(167

)

(3

)

 

84



 

Chart VI

 

Related party transactions
Values in millions of reais

 

 

 

State of Minas Gerais

 

 

 

Government

 

 

 

2nd Q. 2006

 

1st Q. 2006

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Customers and distributors

 

10

 

12

 

Tax Recoverable -

 

 

 

State VAT recoverable

 

12

 

21

 

Noncurrent assets

 

 

 

Accounts receivable from Minas Gerais State

 

1.619

 

1.571

 

Government

 

 

 

 

 

Tax Recoverable -

 

 

 

VAT recoverable

 

238

 

212

 

Customers and distributors

 

40

 

42

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities

 

 

 

Taxes, fees and charges

 

 

 

VAT - ICMS payable

 

245

 

221

 

Interest on capital and Dividends

 

177

 

261

 

Debentures

 

104

 

104

 

Financing

 

15

 

15

 

 

Chart VII

 

Share Ownership

 

 

 

Number of shares as of june 30, 2006

 

Shareholders

 

Common

 

%

 

Preferred

 

%

 

Total

 

%

 

State of Minas Gerais

 

36.125.857.399

 

51,0

 

2.392.006.570

 

2,6

 

38.517.863.969

 

23,8

 

Southern Electric Brasil Part. Ltda.

 

23.362.956.173

 

33,0

 

 

 

23.362.956.173

 

14,4

 

Other:

 

 

 

 

 

 

 

Local

 

7.043.833.357

 

9,9

 

27.148.129.505

 

29,7

 

34.191.962.862

 

21,1

 

Foreigners

 

4.341.520.994

 

6,1

 

61.739.515.027

 

67,6

 

66.081.036.021

 

40,8

 

Total

 

70.874.167.923

 

100,0

 

91.279.651.102

 

100

 

162.153.819.025

 

100,0

 

 


* Southern Electric Brasil Ltda

 

85



 

Chart VIII

 

BALANCE SHEETS

ASSETS

Values in millions of reais

 

 

 

2006

 

 

 

2nd Qtr

 

1st Qtr

 

CURRENT ASSETS

 

6.014

 

5.615

 

Cash and Cash Equivalents

 

1.005

 

1.440

 

Consumers and Distributors

 

1.597

 

1.563

 

Consumers – Rate Adjustment

 

294

 

279

 

Dealership - Energy Transportation

 

358

 

350

 

Dealers - Transactions on the MAE

 

188

 

161

 

Tax Recoverable

 

710

 

550

 

Materials and Supplies

 

28

 

28

 

Prepaid Expenses - CVA

 

506

 

440

 

Tax Credits

 

155

 

130

 

Regulatory Assets

 

181

 

66

 

Deferred Tariff Adjustment

 

606

 

400

 

Other

 

386

 

208

 

 

 

 

 

 

 

NONCURRENT ASSETS

 

4.278

 

4.700

 

Account Receivable from Minas Gerais State Government

 

1.619

 

1.571

 

 

 

 

 

 

 

Consumers – Rate Adjustment

 

944

 

980

 

Regulatory Assets

 

233

 

378

 

Prepaid Expenses - CVA

 

56

 

62

 

Tax Credits

 

451

 

433

 

Deferred Tariff Adjustment

 

 

 

 

 

 

 

 

 

Dealers - Transactions on the MAE

 

43

 

100

 

Recoverable Taxes

 

238

 

213

 

Escrow Account re: Lawsuits

 

129

 

99

 

Consumers and Distributors

 

57

 

61

 

Other Receivables

 

19

 

15

 

 

 

 

 

 

 

PERMANENT ASSETS

 

10.189

 

10.005

 

Investments

 

990

 

985

 

Property, Plant and Equipment

 

9.141

 

8.961

 

Deferred Charges

 

58

 

59

 

 

 

 

 

 

 

TOTAL ASSETS

 

20.481

 

20.320

 

 

86



 

 

 

2006

 

 

 

2nd Qtr

 

1st Qtr

 

CURRENT LIABILITIES

 

5.422

 

4.934

 

Suppliers

 

748

 

674

 

Taxes payable

 

1.236

 

832

 

Loan, Financing and Debentures

 

1.140

 

1.197

 

Payroll and related charges

 

286

 

172

 

Interest on capital and dividends

 

784

 

1.118

 

Employee post-retirement benefits

 

124

 

120

 

Regulatory charges

 

312

 

124

 

Other

 

464

 

473

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

7.358

 

7.842

 

Loan, Financing and Debentures

 

4.713

 

4.700

 

Employee post-retirement benefits

 

1.278

 

1.301

 

Suppliers -wholesale

 

303

 

336

 

Taxes and social charges

 

549

 

780

 

Reserve for contingencies

 

405

 

377

 

Other

 

61

 

311

 

Prepaid expenses - CVA

 

49

 

37

 

 

 

 

 

PARTICIPATION IN ASSOCIATE COMPANIES

 

20

 

20

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

7.681

 

7.524

 

Paid-in Capital

 

1.622

 

1.622

 

Capital reserves

 

4.059

 

4.059

 

Income reserves

 

2.000

 

1.843

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

20.481

 

20.320

 

 

87



 

Chart IX

 

Income Statement (consolidated)

Values in millions of reais

 

 

 

2Q 2006

 

1Q 2006

 

1H 2006

 

2Q 2005

 

1H 2005

 

2005

 

Cash at start of period

 

1.440

 

1.344

 

1.344

 

919

 

896

 

896

 

Cash from operations

 

425

 

411

 

836

 

96

 

394

 

1.657

 

Net income

 

325

 

340

 

665

 

487

 

1.042

 

2.003

 

Depreciation and amortization

 

152

 

151

 

303

 

147

 

295

 

595

 

Suppliers

 

22

 

(111

)

(89

)

(1

)

18

 

91

 

Deferred tariff adjustment

 

 

 

 

(8

)

(591

)

(591

)

Other adjustments

 

(31

)

31

 

 

(308

)

(149

)

(220

)

ICMS (IVA) on TUSD

 

 

 

 

(221

)

(221

)

(221

)

Financing activity

 

(521

)

(93

)

(614

)

207

 

108

 

147

 

Financing obtained

 

58

 

912

 

970

 

776

 

776

 

1.556

 

Payment of loans and financing

 

(76

)

(59

)

(135

)

(255

)

(350

)

(818

)

Other

 

(503

)

(946

)

(1.449

)

(314

)

(318

)

(591

)

Investment activity

 

(338

)

(222

)

(560

)

(251

)

(427

)

(1.356

)

Investments outside the concession area

 

(6

)

(9

)

(15

)

(23

)

(32

)

(69

)

Investments in the concession area

 

(413

)

(233

)

(646

)

(242

)

(420

)

(1.360

)

Special obligations - consumer contributions

 

82

 

19

 

101

 

14

 

25

 

73

 

Other

 

(1

)

1

 

 

 

 

 

Cash at the end of period

 

1.006

 

1.440

 

1.006

 

971

 

971

 

1.344

 

 

88



 

SIGNATURES

 

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

 

 

 

COMPANHIA ENERGETICA DE MINAS
GERAIS – CEMIG

 

 

 

 

 

By:

/s/ Flávio Decat de Moura

 

 

 

Name:

Flávio Decat de Moura

 

 

Title:

Chief Financial Officer and Investor
Relations Officer

 

Date: September 12, 2006