Companhia Energetica De Minas Gerais Sa · BMFBOVESPA:CMIG3
Companhia Energetica De Minas Gerais Sa — Energy Co of Minas Gerais — XV Annual Meeting Cemig-Apimec 2010
45 slides from Companhia Energetica De Minas Gerais Sa's conference presentation, Jun 9, 2010
Slide 1: Fifteenth Annual Meeting Cemig-Apimec 2010 presentations
On the Fifteenth Annual Meeting Cemig-Apimec 2010, besides the presentation of the Chief Officer for Finance, Investor Relations and Control of Holdings, annexed hereto, the following presentations are also available on our website, http://ri.cemig.com.br: Presentation of the Chairman of the Board o
Slide 2: Chief Officer for Finance, Investor Relations and Control of Holdings – Annual Meeting
Luiz Fernando Rolla Chief Officer for Finance, Investor Relations and Control of Holdings Annual Meeting
Slide 3: Our shareholders' base ensures stock liquidity
Brunei China Cingapura Coreia do Sul Japão Malásia Ásia North America Canada United States Mexico Central America Bermuda Europe Luxembourg UK Spain Switzerland Island Guernsey Jersey Romania Holland France Norway Denmark Italy Sweden Germany Belgium Austria Portugal Felons Our shareholders’ base en
Slide 4: Long-term commitment to shareholders: Cemig stock performance
Indicator (1) CMIG3 CMIG4 CDI IBOV Appreciation 689% 437% 355% 295% Long-term commitment to shareholders Cemig: stock performance December 1999 – April 2010 dez/99 dez/01 dez/03 dez/05 dez/07 dez/09 CMIG3 CMIG4 CDI IBOV Beta (2) 0.8 0.8 - 1 Sharpe ratio (3) 19.0% 5.3% - -6.1% Alpha (3) 6.2% 1.8% -1.
Slide 5: Cash management aims to maximize shareholders' return
591 2.072 1.360 865 944 931 6,763 7 14 9 5 6 5 Dividends*, R$ mn Dividend yield % Cash management aims to maximize shareholders’ return 5 1.356 1.720 1.185 1.353 3.612 3.137 12,363 Investments*, R$ mn Dividends paid in past six years add up to more than 40% of Cemig’s present market cap. * 2005 to 2
Slide 6: Holdings' Management structure
Position on March 15, 2010 Holdings’ Management CIA. ENERGÉTICA DE MINAS GERAIS Usina Térmica Ipatinga S.A. 100% Cemig PCH S.A. 100% Horizontes Energia S.A. 100% Sá Carvalho S.A. 100% Cia. Transleste de Transmissão 25% Cia. Transirapé de Transmissão 24.5% Cia. de Transmissão Centroeste de Minas 51%
Slide 7: Cemig Group grows through management of assets
In addition to being operators, Cemig has become an asset manager in all the segments of the electricity sector: Generation (MW) Cemig Group grows though management of assets 6,754 1,752 Installed capacity 8.506 Distribution (MWh) Transmission (km) 7,506 4,952 Total length 37,632 6,194 Energy distri
Slide 8: Portfolio of businesses ensures balance in results
•18 companies • Net revenue: R$3.0 billion • Net profit R$ 1.3 billion • Ebitda: R$ 2.1 billion • Third largest group in Brazil • Electricity sold: 34.268 GWh • 2 companies • Net revenue: R$ 7.8 billion • Net profit: R$ 417 million • Ebitda: R$ 1.2 billion • Largest in Brazil (energy transported. nu
Slide 9: Target Ebitda contribution by business
Target Ebitda contribution by business CIA. ENERGÉTICA DE MINAS GERAIS Generation Transmission Distribution Gas Telecom Services 9 40% 20% 40%
Slide 10: Acquisitions leverage results
Aquisitions leverage results Assets 2004 2005 2006 2007 2008 2009 Total Amount invested in acquisitions Total Rosal 136.7 136.7 TBE 349.3 3.6 3.6 356.6 Light 174.6 174.6 Total 136.7 - 523.9 3.6 3.6 667.8 Contribution to net profit Rosal (5.6) 18.9 18.7 18.9 20.5 23.4 TBE 24.7 28.9 36.4 79.1 Light (1
Slide 11: Cemig's growth model
Cemig’s growth model Structuring partnerships with Equity Investment Funds (FIPs) facilitate the growth strategy implementation while optimizing capital. Strategic decision with minority shareholders contribute to Cemig’s greater access to funding. • Attractive to investors due to low risk • Investo
Slide 12: Financial management
Financial management Structuring of funding for acquisitions Analysis and implementation of debt pre-payment Financial risk management (volatility of the indexors) Cemig’s Long-term Strategic Plan locks in limits: • Net debt / Ebitda limited to 2.5 • Net debt / (Stockholders’ equity + Net debt) limi
Slide 13: Debt profile lengthened to reduce costs
Debt profile lengthened to reduce costs Maturities timetable Average cost in real terms (%) Average cost of debt: 5.7 % p.a. at March 2010 prices, including holdings 7,3 5,8 5,4 5,3 5,7 Mar. 09 Dec. 09 Mar. 09 Jun. 09 Sep. 09 1.583 1.393 3.231 1.444 1.211 1.783 334 846 2010 2011 2012 2013 2014 2015
Slide 14: Benefits of long-term reduction of interest rates captured
Benefits of long-term reduction of interest rates captured Funding of R$ 2.7 billion by Cemig GT guarantees funds for expansion Preservation of credit quality in the long term at levels sufficient for low risk rating • Moody’s: Aa2.br Fitch: A+(bra) Low exposure to exchange rate risk Exposure to CDI
Slide 15: Robust cash flow
Robust cash flow Cash Flow Statement 1Q 10 1Q 09 Cash at start of period 4,425 2,284 Cash generated by operations 1,287 638 Net profit 419 336 Depreciation and amortization 190 171 Suppliers (77) 67 RTD – Deferred Tariff Adjustment - 119 15 Other adjustments 755 (55) Financing activities 73 76 Finan
Slide 16: Operational Efficiency Program – Personnel cost reduction
Operational Efficiency Program – Personnel cost reduction PPD and PDV voluntary retirement programs: Reduction in the number of employees 2008 2009 2010 Total gain expected from PPD + PDV by Sep. 2010 396 676 673 1745 16 10,818 10,422 9,073 2008 2009 2010 (P) Number of employees 1,247,902 1,189,703
Slide 17: Operational Efficiency Program: Gains and initiatives
Operational Efficiency Program: Gains and initiatives Program identified gains of approximately R$ 200 million. 9 22 N ° of initiatives 36% Expected gain by business To achieve expected gains, the Program has 135 initiatives to make costs more efficient; distributed over all the businesses Corporate
Slide 18: Investor Relations
Investor Relations ri@cemig.com.br Fax: (55-31) 3506-5025 Telephone: (55-31) 3506-5024 Table of Contents 9. Presentation, XV Annual Meeting, CEMIG—APIMEC, “CEMIG GT: Supply and Demand Balance and National Grid & Financial Guidance”
Slide 19: CEMIG GT: Supply and Demand Balance and National Grid & Financial Guidance
XV Annual Meeting CEMIG-APIMEC CEMIG GT: Supply and Demand Balance and National Grid & Financial Guidance
Slide 20: CEMIG GT: Supply and Demand Balance and National Grid
XV Annual Meeting CEMIG-APIMEC CEMIG GT: Supply and Demand Balance and National Grid Bernardo Afonso Salomão de Alvarenga Chief Commercial Officer
Slide 21: Disclaimer – Guidance 2010-2014
Disclaimer Guidance 2010-2014 Some of the statements in this presentation are ‘forecasts’ in the definition of the US Securities Laws, and are subject to risks and uncertainties. ‘Forecasts’ are projections which could differ from the final numbers and are not under our control. For a discussion of
Slide 22: Brazilian National Grid Structural Energy Balance
Brazilian National Grid Structural Energy Balance (Average MW) 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2009 2010 2011 2012 2013 2014 TERM 10.067 12.487 14.542 15.779 18.872 HIDR 46.387 48.250 49.944 50.670 52.271 MERCADO 53.606 56.972 59.719 62.358 65.005 BALANCO 2.848 3.765 4.767
Slide 23: Brazilian National Grid Structural Energy Balance
Brazilian National Grid Structural Energy Balance (Average MW) 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2009 2010 2011 2012 2013 2014 TERM 11.340 13.385 14.923 18.385 18.407 HIDR 48.017 50.370 51.783 53.882 55.321 MERCADO 55.922 59.347 62.018 66.320 69.332 BALANCO 3.435 4.408 4.687
Slide 24: Brazilian National Grid Structural Energy Balance
Brazilian National Grid Structural Energy Balance (Average MW) 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2009 2010 2011 2012 2013 2014 RESERVA 620 768 1.563 1.563 1.563 TERM 11.340 13.385 14.923 18.385 18.407 HIDR 47.397 49.602 50.220 52.319 53.758 MERCADO 55.922 59.347 62.018 66.320
Slide 25: Brazilian National Grid Structural Energy Balance
Brazilian National Grid Structural Energy Balance (Average MW) 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 TERM 11.340 13.385 14.923 18.385 18.407 18.407 18.407 18.407 18.407 18.407 HIDR 48.017 50.370 51.783 53.882 5
Slide 26: Brazilian National Grid Structural Energy Balance
Brazilian National Grid Structural Energy Balance (Average MW) 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 BELO MONTE 99 1640 4388 4571 4571 TERM 11.340 13.385 14.923 18.385 18.407 18.407 18.407 18.407 18.407 18.407
Slide 27: Brazilian National Grid Structural Energy Balance
Brazilian National Grid Structural Energy Balance (Average MW) FONTE: EPE. Copy of Graph 29 – National Grid (SIN) structural balance, including reserve energy Source: EPE/MME – Minute from the 10-Year Expansion Plan 2010/2019 offered to the public. 9
Slide 28: CEMIG GT: Supply and Demand Balance
CEMIG GT: Supply and Demand Balance Requirement details Planned purchases Probable renewals MW-Average 5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 APIMEC 2009 Uncontracted power for sale Free Market New Contracts (market share i
Slide 29: CEMIG GT: Supply and Demand Balance
CEMIG GT: Supply and Demand Balance Requirement details Planned purchases MW-Average 5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Verified data for 2008 and 2009 Uncontracted power for sale Free Market New Contracts (market share
Slide 30: CEMIG GT: Supply and Demand Balance
CEMIG GT: Supply and Demand Balance MW-Average 5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Updated for additional years Uncontracted power for sale Free Market New Contracts Intermediaries (transfers to Cemig Trading) Free Marke
Slide 31: CEMIG GT: Supply and Demand Balance
CEMIG GT: Supply and Demand Balance Conventional Energy APIMEC 2009 Planned purchases MW Average 5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Probable Renewals Ongoing negotiations Uncontracted power for sale Free Market–Intermed
Slide 32: Alternative Energy Supply and Demand Balance
Alternative Energy Supply and Demand Balance Alternative Energy MW Average 260 240 220 200 180 160 140 120 100 80 60 40 20 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Free Market (negotiated) Free Market (in negotiation) Sales in Negotiation Wind power (conditional purchases) Trading Sm
Slide 33: Financial Guidance
XV CEMIG-APIMEC Annual Meeting Financial Guidance Arthur Saraiva Sette Câmara Financial Planning and Budget Manager
Slide 34: Key Assumptions
A Melhor Energia do Brasil. Key Assumptions 16
Slide 35: General assumptions – Guidance 2010-2014
General assumptions Guidance 2010-2014 The financial guidance presented in this document does not reflect the new accounting principles corresponding to the international IFRS principles, including the ICPC-01 (concession contracts). 17
Slide 36: Assumptions: Financial Indicators
Assumptions: Financial Indicators Guidance 2010-2014 2010 2011 – 2014 Planned Average Variables BACEN FEBRABAN BACEN scenario scenario PIB 5.7% 6.3% 6.3% 4.5% 4.5% IGP-M 6.8% 8.5% 8.4% 4.6% 4.6% IPCA 5.0% 5.5% 5.5% 4.5% 4.6% Average Selic 9.9% 10.4% 10.2% 11.1% 10.7% FX 2.0 1.8 1.8 2.3(*) 2.0(*) FSo
Slide 37: Assumptions: Distribution market
Assumptions: Distribution market CEMIG D Supply Market (Captive) - TWh 30 25 20 15 2010 2011 2012 2013 2014 27.8 26.9 26.0 25.2 24.0 25.2 24.4 23.6 22.9 22.9 Total Distributed Energy (Captive + Free market) - TWh 60 50 40 30 2010 2011 2012 2013 2014 50.2 48.6 47.6 46.2 43.0 45.5 44.1 43.2 41.9 40.9
Slide 38: Assumptions: Generation Market
Assumptions: Generation Market CEMIG GT MARKET - TWh 50 40 30 20 10 0 2010 2011 2012 2013 2014 39.6 37.3 38.1 36.5 35.1 3.2 34.1 Own Resources Secondary Energy 2010: Participation in the Secondary Energy Market - generation is above the physical guarantees as a result of the favorable hydro scenario
Slide 39: Assumptions: Generation average prices
Assumptions: Generation average prices CEMIG GT Guidance for Average Prices – Cemig GT (R$/MWh) Settlement of a large amount of secondary power at spot prices (PLD) in 2010; • If excluded, the average price would be of approximately 100.00 R$/MWh Expected contract renewals and new contracts were sec
Slide 40: Assumptions: Transmission Revenues
Assumptions: Transmission Revenues CEMIG GT Transmission Revenue Trend 650 550 450 350 2010 2011 2012 2013 2014 511 513 513 514 470 Transmission Tariff Review: 2010: • Retroactive to the 2nd tariff review in compliance with AP ANEEL nº 010/2010, which proposes a repositioning index of -16.8% in the
Slide 41: Cost Assumptions PMSO
Cost Assumptions PMSO PMSO – Personnel, Material, Outsourced Services and Others Distribution Driver: reference company for Distribution company Transmission Business (GT Company) Driver: regulated reference company Generation Business (GT Company) Driver: better market practices 23
Slide 42: Results
A Melhor Energia do Brasil. Results 24
Slide 43: EBITDA Guidance 2010-2014 Consolidated
EBITDA Guidance 2010-2014 Consolidated 6000 5250 4500 3750 3000 2010 2011 2012 2013 2014 Year Lower limit Upper limit 2010 3,825 4,400 2011 4,773 5,491 2012 4,832 5,560 2013 4,483 5,158 2014 4,879 5,614 Consolidated figures include values from Holding and other holdings. Million R$ in constant price
Slide 44: EBITDA Guidance 2010-2014 by business
EBITDA Guidance 2010-2014 Cemig Distribuição 1800 1550 1300 1050 800 2010 2011 3000 2500 2000 1500 1000 2010 2011 Participation in other companies – Cemig Holding 1100 950 800 650 500 2010 2011 Million R$ in constant prices as of June 2010 Cemig GT - Consolidated 26
Slide 45: Investor Relations
Investor Relations ri@cemig.com.br Telephone: (55-31) 3506-5024 Fax: (55-31) 3506-5025 CEMIG A Melhor Energia do Brasil. Table of Contents 10. Market Announcement, Settlement Agreement Reached with Rima Industrial S.A., Companhia Energética de Minas Gerais – CEMIG, May 31, 2010
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