Companhia Energetica De Minas Gerais Sa · BMFBOVESPA:CMIG3
Companhia Energetica De Minas Gerais Sa — Energy Co of Minas Gerais — FY2012 Earnings Presentation
70 slides from Companhia Energetica De Minas Gerais Sa's earnings presentation, Apr 4, 2013
Slide 1: Earnings Release: 2012
Earnings Release: 2012 * Thinking for the future . — Acting for the world
Slide 2: Cemig's Executive Investor Relations Team
CENIG —Cemig’s Executive Investor Relations Team ® Chief Finance and Investor Relations Officer Luiz Femando Rolla ™ General Manager, Investor Relations Antonio Carlos Vélez Braga ™ Manager, Investor Market Stefano Dutra Vivenza — Cemig: your IR contacts http://ri cemig.com.br/ 1i@cemig.com.br Tel.:
Slide 3: 2012 Results Presentation webcast and conference call invitation
cymes nce GIS, SIS.S Coa sani Bow Jones SEMIS O sic O cs tla HE pr a SE ia UD a 2012 Results Presentation Cemig (BMBFBOVESPA: CMIG3, CMIG4; NYSE: CIG, CIG.C; Latibex: XCMIG) invites to the Presentation of its 2012 Result: Video webcast and Conference call April 3, 2013 (Wednesday), at 2:00 p.m. (Bra
Slide 4: Index
Index — DISCLAIMER. MESSAGE FROM MANAGEMENT MESSAGE FROM THE CEO AND CFO. — HIGHLIGHTS OF 2012. — SUMMARY ECONOMIC OUTLOOK.. —PROVISIONAL MEASURE 579 (FEDERAL LAW 12783). — PERFORMANCE OF CEMIG'S SHARES IN 2012. — SUMMARY OF THE YEAR — ADOPTION OF IFRS ——CEMIG’S CONSOLIDATED ELECTRICITY MARKET. —THE
Slide 5: Disclaimer
CEMIG — Disclaimer Certain statements and estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties that may be known or unknown. There is no guarantee that the events or results will take place as referred to in these expectat
Slide 6: Message from Management
CEMIG — MESSAGE FROM MANAGEMENT This has been a year of great changes, complexity and challenges. Once again, we would like to express our confidence in the Executive Board's ability to deliver on the commitments which it has made to the shareholders of the company to generate value and growth This
Slide 7: Message from Management (continued)
CEMIG Our net income for 2012 of RS 4.3 billion, or RS 5.37 per share, is significant on account of its size, translating into a price-earnings ratio of 4x. By comparison with last year, net income increased by almost 80%. The greatest impact came from the advance settlement of the agreement for the
Slide 8: Message from Management (concession renewal)
CEMIG Convinced of the benefits to its consumers, Cemig decided to accept the new concession agreements for public electricity transmission and distribution service, believing that by so doing, it would also protect the interests of its shareholders. The reimbursement for the residual value of the t
Slide 9: Message from the CEO and CFO
CEMIG — Message from the CEO and CFO Cemig's Chief Executive Officer, Mr. Djalma Bastos de Morais, comments as follows: “2012 presented major challenges for the management and the entire team of professionals of the Company, when we underwent profound changes in the regulatory framework of the elect
Slide 10: Highlights of 2012
CMG —Highlights of 2012 — Cash flow in 2012, as measured by Ebitda: R$ 5.1 billion. — 2012 net income: 76.89% higher than in 2011, at R$ 4.3 billion. — Net revenue of more than R$ 18.5 billion in 2012 — robust growth of 17.22% year-on-year. = Anon-recurring gain, of RS 264 million, in 2012, arising
Slide 11: Summary Economic Outlook
CEMIG —Summary Economic Outlook At global level, the outstanding feature that we see is the continuing high degree of uncertainty associated with the low capacity for economic recovery of the Eurozone countries, due to low rates of growth and high unemployment. In parallel, there was a recovery in t
Slide 12: Summary Economic Outlook (continued)
CAMIG minimum Basel index from 8% to 10.5%, this should not result in any reduction in the supply of credit in Brazil, since Brazilian financial institutions were already practicing an index of 11%. Hence, these new rules merely aim to mitigate the risk of contagion in the event of a financial crisi
Slide 13: Electricity consumption by user category
CAMIG Electricity consumption by user category GWh 183575 453,498 111970 117,56: 91,698 96,391 79,286, . was 64,005 67,391 Residential Industrial «Comercial Ruraland Other Losses Jan/2011-Dec/2011.__t4Jan/2012-Dec/2012 ‘Av Bafncem 1200 Suto Agoiinbo 3090-131 Belo azote MG Bra Tels+S830 3506-9024 Fax
Slide 14: Provisional Measure 579 (Federal Law 12783)
CEMIG —PROVISIONAL MEASURE 579 (FEDERAL LAW 12783) On September 11, 2012 the Brazilian federal goverment issued Provisional Measure 579 ("PM 579"), iss and distribution concessions, and aiming to reduce the industry's sector charges, and contain tariffs. 1g new rules governing electricity generation
Slide 15: Performance of Cemig's shares in 2012
CEMIG contract for the previous concession contract, under which there was remuneration for the ‘operation and maintenance, and remuneration for the investments of the company that have not yet been amortized. These amounts are net of tax. ‘As a consequence of the renewal of the conce: ions, the Com
Slide 16: Share price and dividend yield in 2012
opinion this positive movement can be seen as reflecting the continuing, though currently modest, growth of Brazilian economic activity In 2012 the prices of Cemig’s two stocks traded in Brazil - the common stock (CMIG3) and the preferred stock (CMIG4) — appreciated by 23.53%, and 3.07%, respectivel
Slide 17: Profit and loss accounts 2012 and 2011
CEMIG PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 (R$ ’000, except net income per share) REVENUE OPERATIONAL COSTS ‘COST OF ELECTRICITY AND GAS Electcty bought for resale (6,951,272) (4,277,980) ‘Charges fr the use ofthe national gid (7,010,596) (30,028) Gas purchased for
Slide 18: Cemig's consolidated electricity market
MIG —Cemig’s consolidated electricity market The figures we report for Cemig's market comprise the sale of electricity by: + Cemig D; * Cemig GT consolidated: Cemig GT, plus its proportional shares in Cachoeirao, Pipoca, Baguari Energia, and the Praias do Parajuru, Praia do Morgado and Volta do Rio
Slide 19: Consolidated market by consumer class
CEMIG personal subsidy funds paid by the government largely reflects not only continuation of the government's income distribution transfer programs but especially the continuing increase in the minimum wage (in real terms) Industrial: Electricity used by free and captive industrial clients in 2012
Slide 20: Electricity sold and sales breakdown
CEMIG (7) The miwh column includes a percentage ofthe total elect sld by Light equivalent tothe Company's stockholdng (ata not reviewed by external auditors) (77) Includes Contracts for Sale of Electricity inthe Regulated Market (CCEARS) and bilateral contracts’ with other agents. The total of elect
Slide 21: The electricity market of Cemig GT
CEMIG —The electricity market of Cemig GT The consolidated total of electricity sold by Cemig GT means the total of: + Sales to Free Consumers, both in the state of Minas Gerais and outside it; * sales under the Proinfa program to encourage new energy sources; ‘+ wholesale sales in the Regulated and
Slide 22: The electricity market of Cemig D
CEMIG —The electricity market of Cemig D The concession area of Cemig Distribuigéo S.A. (Cemig D) covers 567,748 km?, approximately 97% of the Brazilian State of Minas Gerais. Cemig D has four electricity distribution concessions in Minas Gerais, under four concession contracts - for the Westem, Eas
Slide 23: Cemig D consumer categories
CEMIG Commercial and Services: The volume of electricity sold to this consumer category accounted for 22.11% of the electricity sold by Cemig D in 2012, and was 4.97% higher than in 2011. This growth reflects increased private consumption due to increased salaries and credit, and increased ‘consumpt
Slide 24: Consolidated operational revenue
CMG — Consolidated operational revenue Total revenue from supply of electricity Revenue from total supply of electricity in 2012 was RS 16.6 billion, compared to RS 14.9 billion in 2011 — an increase of 11.6%. The main factors affecting revenue in 2012 were: "Tariff increase for Cemig D with average
Slide 25: Wholesale, TUSD and transmission revenue
CEMIG Revenue from wholesale electricity sales Although the volume of electricity sold to other concession holders was 4.08% lower year-on-year, revenue from electricity sold to other concession holders was 20.67% higher, at RS 1.9 billion in 2012, compared to RS 1.6 billion in 2011. Most of this di
Slide 26: Other operational revenues and sector charges
CEMIG Other operational revenues This total includes charged services, supply of gas, sharing of infrastructure, the subsidy for the low-income electricity tariff, and other services provided under the concession. It was 34.62% higher, at R$ 1.4 billion, in 2012 than in 2011 (RS 1 billion). The diff
Slide 27: Taxes, charges and operational costs
CEMIG | mp al ‘Taxes on revenue ICMS tax 3054319 3.675208 «106% Cofns tax 4,655,724 149552 «10.7% PAS and Pasep taxes 959,496, 324824 10.7% ISS value added tax on services, and other taxes 7472 5.591 33.6% Sa77011 _6401,565 10.7% Sector charges Global Reversion Reserve RGR 207,248 204887 40.2% Energ
Slide 28: Electricity bought for resale
CEMIG Electricity bought for resale The expense on electricity bought for resale in 2012 was R$ 5.95 billion, 39.11% higher than the figure of R$ 4.28 billion for 2011. This primarily reflects: "Financial exposure of Cemig D to the spot market 164.09% higher — R$ 890mn in 2012, ‘compared to R$ 337mn
Slide 29: Post-retirement liabilities, depreciation, provisions
is 4 CMG Employee post-retirement liabilities The expense on post-employment obligations in 2012 was R$ 134mn, compared to R§ 124 million in 2011, an increase of 8.06%. This expense represents the updating of the obligation, calculated in accordance with an actuarial opinion prepared by external con
Slide 30: Outsourced services, gas and financial revenues
CEMIG Outsourced services The expense on outsourced services in 2012 was R$1.127bn, compared to R§ 1.031 million in 2011, an increase of 9.31%. The main variations arise from higher volume of services for communications, maintenance, and conservation and cleaning. A detailed breakdown of outsourced
Slide 31: Net financial revenue (expenses)
CEMIG ™ Revenue from Late Payment Charges on electricity bills 18.54% higher, at RS 179 jon in 2012, compared to R$ 151 million in 2011, resulting from improvement of the process of collection and negotiation of these debits. = Revenue arising from foreign exchange variations: R$ 44 million in 2012
Slide 32: Income tax and EBITDA
CEMIG ——Income tax and Social Contribution tax In 2012 Cemig's expense on income tax and the Social Contribution tax totaled R$ 1 billion, on profit of R$5.3 billion before tax, a percentage of 19.93%. In 2011, the Company's expenses on income tax and the Social Contribution tax were R$ 918 million,
Slide 33: Light - Highlights of 2012
CEMIG —Light - Highlights of 2012 ™ Total consumption of electricity in the year was 2% higher than in 2011, at 23,384 GWh "Net revenue in the year, excluding construction revenue, was R$ 6.944bn, up 12.9% from 2011 = Ebitda was R$ 1.456 billion, 17.7% more than in 2011, with Ebitda margin of 21.0%,
Slide 34: Taesa - Highlights of 2012
CEMIG —Taesa - Highlights of 2012 ™ Net income in 2012 was R$ 589 million, 19% more than in 2011. Adjusted Ebitda margin, without IFRS, was 87.6%. ™ Dividends: The company paid its shareholders R$ 429.0 million for the result for 2011, and interim dividends of R$ 160.0 million relating to the result
Slide 35: ‘A Bbc 1200 Soo Aonaho 3019-18 BeloHozns, MG Brat Tels+8851 38065004 Fax 8831 3058008
‘A Bbc 1200 Soo Aonaho 3019-18 BeloHozns, MG Brat Tels+8851 38065004 Fax 8831 3058008 Page 32 040 ‘This textisatransaton, provided for information only. The orginal text in Portuguese is the lgally valid version.
Slide 36: Information by operational segments
——INFORMATION BY OPERATIONAL SEGMENTS. ‘A Bbc 1200 So Aontaho 301-18 BloHozo MG Brat Tels$831 38065004 Fax 8831 3055008 Page 33 of 40 ‘This textisatransaton, provided for information only. The orginal text in Portuguese is the lgally valid version.
Slide 37: Values of RAP (Permitted Annual Revenue)
Values of RAP (Permitted Annual Revenue) Specified by Aneel Homologating Resolution N2 1313* ~ Reais copay nap SEIE% conaoiated emg GT result Tae 0% 855 03 =o wosssae7 000% 30927 EAU moi Se 72708 Novatine miariss woe —ses0%6.70 " asiacisor 00% 15538557 Gres 3s10056 000% 20030 mar sSers208 ox 62650 m
Slide 38: Appendices: Tables: Cemig D
— Appendices 1) Tables: Cemig D (Rs '000) Chart! ait 6.036. 4737 10831 25. 2a10 5.959 Sr “1.096 26 sat 6.166 5214 Haat ca ETT 6.003 5.49 “zee 26 aI 5.570 4902 70871 25) aie 6.114 3020 SIRE] 2 rar2 6.198 Si “307 ar ar 6.357 4897 BEE zr 7. Ries othe quay of abi or cas aton of rear hares charge Tos Gs
Slide 39: Tables: Cemig GT
2) Tables: Cemig GT (Rs '000) = IV Ss esas 3 = —— = 3 Ss ——— ca [Subtotal [tess [515 2] 6760 nm = ——— 3 [Net Revers [493 4.160, ar] sae 2» [Personnel Adminsirsie Councilor: 78 cm “(Q]——312) 200 _e = = ee es i —— a — == — —s —o = — ie sees ji a = a Eeesstomes S S{—ts|— ae —e = = a = = oo == a — —— —
Slide 40: Tables: Cemig, consolidated
3) Tables: Cemig, consolidated (Rs million) Resort zor] zor] un] anare | 10722 7 [nau err] — err | 25900 | asi |] Free Consumers 3.570 [whcesale suply 4440 2.57 [Whtesale supply oes 9679 PY [Wisse supply Cemig Gum 2.008, 3m, [whcesale supply Blatoral contracts 2762. 2a Transactions inthe COEE (PLO)
Slide 41: fruso sis a8 | 2216 1978]
fr fruso 56 sis a8 | 2216 1978] 12 [supty + Wansactons he COEE: ra sis 2] 2300] 1046 26] [Reverses for Tas, Noor 72 614 | ager [aor | 3 [ozs Sept 208 sso[ | 754 ‘sre [ 30 [consiveton sens “00. sa] 0] a0 [a sae[ loners “8 anf fen au [30 [Subtou Foes [ere [1 [26 0re [za 8 [18 [osauctons auso5[ caso a]
Slide 42: Cash flow and statement of financial position
|Cash at beginning of period 2,862 2,980 (4) [cash generated by operations atta [ 3.808 [ (0) [Not peoft azn {245 [ 77 Depreciation and amorization 4,001 985, 2 Suppliers 548 co 604 Provisions for operational losses 638 a2 [ er [other adjustments (6.344) so| 857 Financing activities (1,390) 4 : Fina
Slide 43: Market Announcement - Bank Reports Fund Holding 5% of Cemig ON
14. Market Announcement - Bank Reports Fund Holding 5% of Cemig ON, March 26, 2013
Slide 44: Slide 44
Slide 45: Disclaimer
Disclaimer Some statements or estimates in this material may represent expectations about future events or results, which are subject to risks and uncertainties both known and unknown. There is no guarantee that the events or results referred to in these expectations will in fact take place. These e
Slide 46: 2012: A year of delivery
2012: A year of delivery Santo Antonio in operation RS7.2 billion in funding
Slide 47: Strategic decisions boost 2012 results
Net Revenue EBITDA Net income mas Pr Bs 6210 7 1460 ps ir eae 5,084 5,042 pei 15,242 7 f i U : mi 701220112012 mu 2012202012 Pai ieaTiir aig a TT Adjusted Adjusted Adjusted Adjusted Ade Ade a ro GC Strategic decisions boost 2012 results @ Results adjusted for non-recurring effects comprove the solid
Slide 48: Indicators show improvement in processes
Mf Indicators show improvement in processes M 2nd place in Aneel consumer satisfaction index in 2012 (IASC) © 65% approval — above Brazilian average of 62% SAIDI: accident-related SAD sted + acer Total of outages due to accidents lasting more than 3 min 109 ni | | : “| } 2008 2009 72010 1201 11 2012
Slide 49: Included in Dow Jones World Sustainability Index for 13th consecutive year
Pf InDow Jones World Sustainability Index for 13th consecutive year © The only LATAM utility company in the “DJSI World” every year since it began A Included in BM&FBovespa Corporate Sustainability Index for 8th consecutive year PF National Quality Prize: Cemig GT wins top award in 2012 4 Gimate cha
Slide 50: Renewal of concessions
Renewal of conces: A Concessions expiring between 2013-17: Extension for 30 years on condition of immediate renewal (early 2013) ® Revenue does not adequately remunerate operation of the concession assets ® Cemig GT generation concessions expiring in the period © 21 generation plants - 2.4 GW of ass
Slide 51: Dividends timeline
foe dg Bama aH, Dec./2012 Jan,/2013 Paid: £.0.-R$1.2bn Mar./2013 Dec./2013 ‘Apr./2013 Jun./2013 IOE- RS16 0.D.-RS29: AD. - RS:
Slide 52: 2012 Results
Slide 53: Net income
Net income R$ 4,272 38% +17%4 428%
Slide 54: Non-recurring adjustments
Non-recurring adjustments _ 5 \ ‘ i.-----; I Q joer Bs ean ctng te
Slide 55: Consolidated net revenue
ated net revenue 2012 consolidated nt revenue - RS ilion GC Balanced portfolio of businesses returns 17% net revenue growth in 2012 GC Sales strategy contributes effectively to expansion of net revenue @P Gasmig net revenue grows R$ 176 million due to the expansion of demand for natural gas in Minas
Slide 56: Expenses in 2012
Expenses in 2012 ? RSmillion PF Increase in operational expenses in 2012 +20% “> ® Non-controllable costs - passed through to consumer rates © Operational provision show: © R$ 403 million CRC account 2012 © R$159 million ICMS tax on TUSD Q Q Changesin components of consolidated costs/expenses 201 ?2
Slide 57: Consolidated debt profile
Consolidated debt profile Debt mati: rege tener 9 years Leading Indicators Bawon Brann ust (0%) cet 3.0%) ec 3.08) p 1% pay as ode 1:08) ica Miow0s9008) | 5 BO BOM BIS 1G 17 THEA * a utpes Average real cost of debt, % p.a. neste Bou np Boa Net dot DM ne wa 730-7472 horoblde’s equips 455 sg - + Net D
Slide 58: Generation, transmission and distribution
WH ceragiot Generation Hl Tronsmsséor Transmssion Wi det euicdo Datroiinn
Slide 59: Cemig GT results
tenant manger 99 or ws ws Margin Margin 1 Netinceme Q Q Electricity sold, GWh 35,364 34,038 2012 Adjusted Q
Slide 60: Cemig GT: Debt profile
Cemig GT: Debt profile he Leading Indicators we ott fi rye Era miso) 2 Qa Q Mutiples Average real cost of debt, % p.a. Not dott ida Moo Moar on yy ay ayer verereeee ‘se TSS 56 56 hetersl sia . S148 (Ghercholdr's 539 TT i TH Dec10 Mari11 Junv/11 Sep/1T Dec/I1 Mar/12 Jun/T2 Sep/T2 Dect? Q 410 tan 20 o
Slide 61: Cemig D results
1-537 (307 17711 manana rancor me Mergin(4) ie =m Net revenue Quolity indicators: SAIDI,SAIFI eso 9,934 8,510 1713 | ont Te 998 m0 ao or 2010 2 20122012 Adjusted aw. Bs) on a Qa
Slide 62: Cemig D: debt profile
Cemig D: debt profile mney "oO Average real cost of debt, % p.a. 1 73 67 DeeT0 MariT1 Jun/11 Sep/1T Dec11 Mar/12 Jun/T2 Sep/T2 DeoT2 Cente Oeenber 17 ps nding hing Main indexors % oar) Muites 4 % Netdin hide & © uo ow Be Nt debt / (Shoreholders “{ittill (-) Net debt = (Tol di) — (Cash + cash equival
Slide 63: Gasmig continues to expand its operations
Gasmig continues to expand its operations Volume sold by Gosmig ? million m3 onmecl go pli tema gat 135 1065 962 a a rT Q VC 2012 gross revenue R$ 1.4 billion — strong 15.3% increase from 2011 GC Record natural gas volume supplied in 2012: total of 1.323 billion m? & “Steel Valley’ pipeline now in o
Slide 64: Strong cash position sustains investments
(eee eeneerer ener Strong cash position sustains investments Niet income 4m 2415 Depreciation and amortization 1.001 983 Other adjustments 2158 500 Financings obtained and capital increase 7.195 4.256 Interest on Equity, and dividends “47 “2036 Payment of oans and financings. ung Investments / Cash
Slide 65: Recognition by the capital market
Recognition by the capital market Ff 2013 CEO Rankings by Harvard Business Review: © Dr. Djalma Bastos de Morais voted World’s 26th best CEO, 4th in Brazil IR Magazine 2012 and Apimec © Best Investor Relations — Energy and Basic Services © Best conference call and investment community analysts meeti
Slide 66: Cemig summary figures
Cemig summary figures ‘Market value ~ Source: Econométca, March 26,2013. RS billion
Slide 67: Forthcoming events
orthcoming events VP Ind tariff review cycle AC Renewal of Jaguara concession A Restructuring of transmission assets A Rollover of debt A Post-retirement benefits © R$ 496,956 effect (net of tax) on 2013 net shareholders’ equity
Slide 68: Investor Relations
Investor Relations ri@cemig.com.br Phone: (55-31) 3506-5024 Fax: (55-31) 3506-5025 CEMIG A Melhor Energia do Brasil. xemig AVSE RIVSE Oise, Oar Vs WEF SiSe ZISE (QE
Slide 69: Glossary
lossary ‘ACR: Regulated Contracting Emionment in which purchases and sles imohing Détibutrs acu by means of pub actos. ‘AG: Free Catracing Environment, in which purchases and sales of electity among Free Clint, Marites and Genero cc, troogh fee negotiated biateal contradts. ‘ANEEL The rian ener sect
Slide 70: Glossary (continued)
Payout - Percent fet income to be distributed es didends IL (Price to Earnings Ratio) -Relaorstip between share ric and profit pe share PL—Sharehodes Equity PLD — Price for iguidaton of iferences, cle Spot pice TD. Defered Tif Adjustment: ANEEL defined the recut ofthe prndc tari adustmet of Cemig Di
Energy Co of Minas Gerais — FY2012 Earnings Presentation on 6ix