Companhia Energetica De Minas Gerais Sa · BMFBOVESPA:CMIG3
Companhia Energetica De Minas Gerais Sa — Energy Co of Minas Gerais — FY2013 Earnings Presentation
55 slides from Companhia Energetica De Minas Gerais Sa's earnings presentation, Apr 9, 2014
Slide 1: Cemig’s long-term ratings
Cemig’s long-term ratings The leading risk rating agencies maintained their long-term outlook for Cemig’s credit rating, as follows: Cemig Cemig D Cemig GT Agency Rating Outlook Rating Outlook Rating Outlook Fitch AA(bra) Negative AA(bra) Negative AA(bra) Negative S&P - - BrAA+ Stable BrAA+ Stable M
Slide 2: Total electricity consumption (MWh)
Total electricity consumption (MWh)
Slide 3: Electricity sold to final consumers in 2013
Table of Contents Volume of electricity sold to Cemig’s final consumers in 2013 was up 3.25% from 2012: MWh Change Average price Average price Consolidated 2013 2012 % 2013 2012 R$ R$ Residential 9,473,426 8,870,990 6.79 476.87 551.28 Industrial 23,451,590 25,472,685 (7.93 ) 171.56 172.26 Commercial
Slide 4: The electricity market of Cemig D
The electricity market of Cemig D The concession area of Cemig Distribuição S.A. – Cemig Distribution, or Cemig D – is 567,478km², approximately 97% of the Brazilian State of Minas Gerais. Cemig D has four concessions for electricity distribution in the State, under four concession contracts — West,
Slide 5: Projection for the result for January—December 2013
(i) Projection for the result for January—December 2013. Control of electricity losses is one of Cemig D’s strategic objectives: The company has a team — the Distribution Losses Measurement and Control Management Unit — structured and dedicated for this alone. Success in the objective is monitored m
Slide 6: Consolidated operational revenue
Table of Contents Consolidated operational revenue Gross supply of electricity: Cemig’s revenue from total supply of electricity to final consumers in 2013 was R$14.741 billion, 4.15% less than in 2012 (R$15.380 billion). The main factors in total revenue in the year were: · Tariff adjustment for Ce
Slide 7: Main variations in expenses
Table of Contents The main variations in expenses are described here: Electricity bought for resale The expense on electricity bought for resale in 2013 was R$5.207 billion, which compares to R$4.683 billion in 2012, an increase of 11.19%. This reflects mainly: · Higher purchase of electricity in th
Slide 8: Operational provisions
Table of Contents Operational provisions Operational provisions in 2013 totaled R$305 million, 54.50% less than in 2012 (R$671 million) — this reflects mainly the following: · A provision of R$403 million made in 2012 for settlement of a legal action between the Company and the federal government re
Slide 9: Cemig Consolidated
Cemig Consolidated cn Rte omen mon
Slide 10: Consolidated Ebitda and debt
Table of Contents The significant increase in consolidated Ebitda — of 22.38% — mainly reflects: operational revenue of R$490 million; operational costs (excluding depreciation and amortization) R$357 million lower, and a gain of R$284 million on disposal of an investment; reduced by non-realized pr
Slide 11: Cemig’s total consolidated debt at the end of 2013
Cemig’s total consolidated debt at the end of 2013 was R$9.457 billion, 9.20% less than at the end of 2012. At the end of 2013 consolidated stockholders’ equity was R$12.638 billion; debt was 74.83% of consolidated stockholders’ equity; and book value per share was R$10.04. Table of Contents
Slide 12: Amortization timetable (R$ mn)
2,238 2014 Amortization timetable (R$ mn) 1,464 1,306 939 639 a 7 2015 20162017 2018 = 2019» 2020 After 2020
Slide 13: Net debt
Net debt under IFRS 10 (R$ bn) 7.740 6.232 ow Net debt without IFRS 10 (R$ bn) 11,965 11.128 2012 2013 Debt under IFRS 10 (R$ bn) 10.416 9.457 2012 2013 Debt without IFRS 10 (R$ bn) 16.170 15.410 5% 2012 2013 2012 2013
Slide 14: New acquisitions
NEW ACQUISITIONS BRASIL PCH On June 14, 2013 Cemig GT signed a share purchase agreement with Petrobras (Petróleo Brasileiro S.A.) governing the purchase of 49% of the voting shares of Brasil PCH (“the Petrobras Share Purchase Agreement”). On February 14, 2014, Chipley SP Participações S.A. (“Chipley
Slide 15: Proposal for allocation of net profit
PROPOSAL FOR ALLOCATION OF NET PROFIT The Board of Directors will propose to the Annual General Meeting, to be held in April 2014, that the profit for 2013, in the amount of R$3,104,000,000, and the balance of retained earnings, related to realization of the Valuation Adjustments Reserve in the amou
Slide 16: Notice to Stockholders: Proposal for Payments of Dividends
Table of Contents 9. Notice to Stockholders Dated March 24, 2014: Proposal for Payments of Dividends Table of Contents
Slide 17: Operational efficiency: an integral part of Cemig’s strategy
Operational efficiency: an integral part of Cemig’s strategy
Slide 18: Forward-looking statements
2 Certain statements and estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties that may be known or unknown. There is no guarantee that the events or results will take place as referred to in these expectations. These expec
Slide 19: Challenges in 2013 generated operations for sustainable growth
3 Challenges in 2013 generated operations for sustainable growth TRANSMITINDO ENERGIA PARA O FUTURO Renova Energia A vehicle for growth in renewable sources Alianca Geracao de Energia Platform for consolidation of generation assets Taesa Structured to grow while adding value Cemig D Ready for the Wo
Slide 20: Cemig GT: Generator of new businesses
4 Cemig GT : Generator of new businesses * - On completion of the transaction Vale will have 55% and Cemig GT 45%. Enters control block of wind power leader Renova Vehicle for growth in renewable energy R$1.5bn injected, in partnership with equity fund (FIP) Acquisition of Brasil PCH Expansion of th
Slide 21: Taesa: Investments that generate dividends
5 Taesa: Investments that generate dividends Revenue, Ebitda both predictable, stable Growth on the basis of excellent assets Through M&A and greenfield Robust dividend policy Average payout in last three years is 90% Winner of Aneel auction 013/2013 85km of 500kV transmission lines: 30-year concess
Slide 22: Cemig D: Quality in serving the public
R$ 527mn invested in improvements to state electricity system, in time for World Cup Investments reaffirm commitment to energy supply quality Indicators prove quality of services provided 6 Cemig D: Quality in serving the public 14.09 12.99 14.32 14.74 12.49 13.25 13.19 12.99 12.59 12.11 2009 2010 2
Slide 23: Cemig: 2013 results
7 Cemig: 2013 results +3.5% +22.4% +15.0% Portfolio of businesses guarantees robust results Higher exposure to spot market boosts revenue Ebitda in line with management’s target Correct strategic decisions translate into results 14,137 14,627 4,238 5,186 Net revenue Ebitda Net income 2012 2013 2012
Slide 24: Gasmig: A vital business
8 Gasmig: A vital business 2013 gross revenue: R$ 1.5 bn – up 15% from 2012 Natural gas volume sold in 2013 up 12% from 2012 Number of clients tripled in the year: From 406 to 1,501 1,137 are residential Construction started on Brazil’s largest gas distribution pipeline Serving the “Triangle” and Ce
Slide 25: Recognition for our commitment to sustainability
9 Recognition for our commitment to sustainability Best annual report – Winner of 15th Abrasca Award Included in DJSI World Sustainability Index for last 14 years: named utilities world leader in 2 years BM&FBovespa ISE Corporate Sustainability Index: included for 9th year running. BNDES/Bovespa ICO
Slide 26: 2013 results in detail
2013 results in detail
Slide 27: Consolidated net revenue
11 Consolidated net revenue Cemig’s expertise in electricity sector ensures robust revenue Highest volume of sales to traders and generators Gain from high spot market prices Growth in number of clients Cemig GT: +14.7% 42 industrial clients outside concession area Cemig D: +3.3% approximately 250 n
Slide 28: Operational expenses
Operational expenses -2.6% Personnel expenses down 15.5%, in 4Q13 Cost reduction program shows results Substantial fall in operational provisions Agreement between Cemig and federal government in 2012 Compensating funds from CDE minimize cost of electricity
Slide 29: Ebitda and guidance
13 *Calculation of Ebitda uses the proportional consolidation adopted in Cemig’s guidance given to 18th annual Cemig/Apimec meeting with investors. 13 1,851 2,137 1,731 2,127 2013 Ebitda guidance limit exceeded We met 2013 Ebitda target +22.4% -9.7% Management Ebitda guidance* Ebitda by company, 201
Slide 30: Consolidated net income
14 Consolidated net income Successful acquisitions contribute strongly to profit R$ 764mn in equity method gain, 24.6% of 2013 net profit Net gain of R$ 203mn on disposal of investments By segment -27.3% -14.5% Generation Transmission Distribution Other
Slide 31: Consolidated debt profile
15 Consolidated debt profile Total net debt: R$ 6.2bn Net debt Ebitda Net debt Stockholders’ equity + Net debt Maturities timetable Average tenor: 4.3 years Main indexors Real cost of debt – % Leverage – %
Slide 32: Cemig GT – 2013 results
16 Cemig GT – 2013 results +2.2% +12.7% -8.6% -5.6%
Slide 33: Cemig GT – Debt profile, 2013
17 Cemig GT – Debt profile, 2013 Net debt Ebitda Net debt Stockholders’ equity + Net debt Total net debt: R$ 2.4bn
Slide 34: Cemig D – 2013 results
18 Cemig D – 2013 results -3.1% +4.1% +44.8% +157%
Slide 35: Cemig D – Debt profile, 2013
Net debt Stockholders’ equity + Net debt 19 Cemig D – Debt profile, 2013 Net debt Ebitda Total net debt: R$ 4.5bn
Slide 36: Cash flow
20 Total cash available = cash+ securities 20 Cash flow Cash flow statement 2013 2012 Cash at start of period 1,919 2,103 Cash from operations 3,515 2,428 Net profit 3,104 4,272 Depreciation and amortization 824 763 Gain on disposal of investments (284) - Equity method gain on holdings (764) (865) O
Slide 37: Cemig shares in 2013
21 Cemig shares in 2013 Stockholders in more than 40 countries Average daily trading: Bovespa: R$ 78 million NYSE: US$ 27 million Winner of 15th annual Abrasca Award - Best Annual Report Capital market 54.1%
Slide 38: Investor Relations
Investor Relations Tel.: (55-31) 3506-5024 Table of Contents 11. Summary of Principal Decisions of the 591st Meeting of the Board of Directors Held on March 27, 2014 Table of Contents
Slide 39: Taxes and similar charges included in consumer electricity bills
Taxes and similar charges included in consumer electricity bills Under Brazil’s Constitution, Cemig is obliged to charge certain taxes directly on the consumer’s electricity bill, and pass them on to the related authorities. The PIS , Pasep and Cofins taxes are examples of taxes charged directly on
Slide 40: Market Announcement: Aneel decides tariff increases for Cemig Distribution
Belo Horizonte, April 7, 2014 Luiz Fernando Rolla Chief Finance and Investor Relations Officer Table of Contents 15. Market Announcement Dated April 7, 2014: Aneel decides tariff increases for Cemig Distribution - Presentation
Slide 41: Cemig Distribuição 2014 Tariff Adjustment
CEMIG DISTRIBUIÇÃO S.A. 2014 TARIFF ADJUSTMENT FINANCIAL AND ECONOMIC REGULATION DEPARTMENT (RE) TARIFF MANAGEMENT OFFICE (RE/TF) APRIL 7, 2014 1
Slide 42: Basis of this presentation
This presentation is based on the result of the 2014 tariff adjustment of Cemig D (Distribution) – published yesterday, Monday April 7 – and also partly on some of Cemig’s own internal data. A few slides from some of our previous material are included to show the mechanisms involved. The source mate
Slide 43: About Brazil’s electricity regulator, Aneel
The mission of Aneel is: to provide favorable conditions for the electricity market to develop, with a proper balance between the interests of the agents operating in the sector, to the benefit of society. Balance Government Regulated Agents Consumers Public Interest ABOUT BRAZIL’S ELECTRICITY REGUL
Slide 44: How electricity reaches the consumer
HOW ELECTRICITY REACHES THE CONSUMER TRANSMISSION DISTRIBUTION PURCHASE SECTOR CHARGES 4 Transformer Transformer Substation Distribution lines Transmission towers Substation Generation plant
Slide 45: Components of the electricity tariff
COMPONENTS OF THE ELECTRICITY TARIFF 5 NON MANAGEABLE COSTS PORTION A R$ 6.3 BILLION PURCHASE OF ELECTRICITY TRANSMISSION SECTOR CHARGES MANAGEABLE COSTS PORTION B R$ 3.4 BILLION OPERATIONAL COSTS REMUNERATION OF INVESTMENT DEPRECIATION OF INVESTMENT
Slide 46: The annual tariff adjustment
Annual adjustment period Portion B VPB0 Portion A VPA1 Portion B VPB1 REQUIRED REVENUE = RA1 Passed on to consumer 100% (IGP–M inflation) minus (X Factor) 2013 2014 Financial components Financial components THE ANNUAL TARIFF ADJUSTMENT * The ‘financial components’ are costs that the distribution com
Slide 47: Variation in non-manageable costs
VARIATION IN NON-MANAGEABLE COSTS Portion A: 15.33% 7 The non-manageable costs account for 9.65 percentage points of the economic adjustment of 11.91% – i.e. they account for 81% of the tariff increase. NON-MANAGEABLE ITEMS - PORTION A 2013 2014 Change, 2013-14 Weight in the adjustment SECTOR CHARGE
Slide 48: Cost of purchase of electricity rose 15%
COST OF PURCHASE OF ELECTRICITY ROSE 15% – accounts for 53% of Cemig D’s costs 8 Factors in the change in total cost of electricity purchased: Termination of some ‘existing energy’ contracts (hydroelectric – CCEAR contracts). Participation of ‘availability contracts’ (thermal). Updating of prices of
Slide 49: Variation in distributor’s costs: manageable costs
VARIATION IN DISTRIBUTOR’S COSTS: Manageable costs: 6.11% Tariff adjustment index – and impact 9 Manageable costs account for only 2.26 percentage points of the economic adjustment of 11.91% – i.e. they account for 19% of the tariff increase. New revenue (2014) – R$ MM R$ 9,742 Prior revenue (2013)
Slide 50: The annual tariff adjustment
Annual adjustment period Portion B VPB0 Portion A VPA1 Portion B VPB1 REQUIRED REVENUE = RA1 9.65% 2.26% 2013 2014 Financial components Financial components THE ANNUAL TARIFF ADJUSTMENT 10 16.33% 11.91% (4.42%) 14.76% 11.91%: Economic adjustment to the tariff. 16.33%: Total adjustment (economic adju
Slide 51: Structure of components of Cemig D’s revenue after 2014 adjustment
STRUCTURE OF THE COMPONENTS OF CEMIG D’S REVENUE AFTER THE 2014 TARIFF ADJUSTMENT 11
Slide 52: Average effect perceived by consumers
Average effect perceived by consumers 12 * High voltage captive consumers are mainly industrial clients. ** B3 – Others: includes industrial and commercial consumers, public authorities, and public services. *** Free Clients: large number of industrial clients; and a smaller number of commercial cli
Slide 53: Invoice of a residential client before and after adjustment
INVOICE OF A RESIDENTIAL CLIENT – BEFORE AND AFTER THE 2014 ANNUAL ADJUSTMENT 13 * For reference: The average consumption level of a residential client is 130 kWh/month. Invoice of a low - income residential consumer (R$) Full residential consumer invoice (R$) Period April 8, 2013 to April 7, 2014 A
Slide 54: Residential consumers by value of invoice
Residential consumers: No. of consumers by value of invoice 14 In 2013, half of Cemig D’s residential consumers were billed less than R$ 60 per month – representing a total cost of less than R$ 2 /day per household, for these families. The adjustment of April 8, 2014 will increase that monthly expen
Slide 55: Thank you
CEMIG DISTRIBUIÇÃO S.A. THE 2014 RETAIL TARIFF ADJUSTMENT ( THIS SPACE IS FOR YOUR QUESTIONS: ) THANK YOU! 15 TODO DIA, A CEMIG ESTA AO SEU LADO. E EM MAIS LUGARES DO QUE VOCE IMAGINA.TODO DIA, A CEMIG ESTA AO SUE LADO. E EM MAIS LUGARES DO QUE VOCE IMAGINA. THANK YOU!
Energy Co of Minas Gerais — FY2013 Earnings Presentation on 6ix