Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
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.
If “Yes” is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b): N/A
This report contains statements about expected future events and financial
results that are forward-looking and subject to risks and uncertainties. Actual results could differ materially from those predicted in
such forward-looking statements. Factors which may cause actual results to differ materially from those discussed herein include those
risk factors set forth in our most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission. CEMIG undertakes
no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof, and claims the protection
of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
NOTES TO THE CONSOLIDATES INTERIM
FINANCIAL INFORMATION
FOR THE SIX-MONTH PERIOD ENDED
AS OF JUNE 30, 2021
(In thousands of Brazilian Reais,
except where otherwise indicated)
a)
The Company
Companhia Energética
de Minas Gerais (‘Cemig’, ´Parent company’ or ‘Company’) is a listed corporation registered in the
Brazilian Registry of Corporate Taxpayers (CNPJ) under number 17.155.730/0001-64, with shares traded on the São Paulo Stock Exchange
(‘B3’) at Corporate Governance Level 1; on the New York Stock Exchange (‘NYSE’); and on the stock exchange of
Madrid (‘Latibex’). The Company is an entity domiciled in Brazil, with head office in Belo Horizonte/MG. Constituted to operate
exclusively as a holding company, with interests in subsidiaries or jointly controlled entities, whose objects are: construction and operation
of systems for generation, transformation, transmission, distribution and sale of energy, and also activities in the various fields of
energy sector and gas distribution, for the purpose of commercial operation.
Management has assessed the capacity
of the Company to continue as a going concern, and believes that its operations will generate sufficient future cash flows to enable continuity
of its businesses. In addition, Management is not aware of any material uncertainties that could generate significant doubts about its
ability to continue as a going concern. Therefore, this interim financial information has been prepared on a going concern basis.
b)
Covid-19
General Context
On March 11, 2020, the World Health
Organization characterized Covid-19 as a pandemic, reinforcing the restrictive measures recommendations to prevent the virus dissemination
worldwide. These measures are based, mainly, on social distancing, which have been causing major negative impact on entities, affecting
their production process, interrupting their supply chains, causing workforce shortages and closing of stores and facilities. The economies
around the world are developing measures to handle the economic crisis and reduce any possible effect.
On March 23, 2020, the Company established
the Coronavirus Crisis Management Committee (‘Comitê Diretor de Gestão da Crise do Coronavírus’) to ensure
its readiness to making decisions because of the fast-changing situation, which became more widespread, complex and systemic.
Also, in connection with recommendations
of the World Health Organization (WHO) and the Ministry of Health, aiming to contribute to the population and Brazilian authorities’
efforts to prevent the disease outbreak, the Company has implemented an operational contingency plan and several precautionary measures
to keep its employees healthy and safe, including: security and health technicians contacting operational staff on a daily basis; interacting
daily with subcontractors Social Service department to monitor the evolution of suspicious cases; changing the schedule to prevent gatherings;
restricting national and international travel; suspending technical visits and events at Company’s facilities; using remote means
of communication; adopting work-from-home policies for a substantial number of employees, providing face masks for employees in external
service or in service into its facilities, and requiring outsourcings providers to put the same procedures in place.
The Company
also adopted the follow measures in order to contribute with society:
|
|
§
|
Flexible terms for the flow
of payments and installments of amounts collected from clients, under the programs launched by the Company during 2020;
|
|
|
§
|
Launch, on April 20, 2021, of
a campaign for negotiation enabling payment by low-voltage commercial customers in default in up to 12 monthly installments without interest,
including exemption for 45 days from inflation updating not yet posted on invoices, aiming to keep the payment flow from small traders
and services sector, to ensure their sustainability and contribute to their survival in the most critical period of the pandemic;
|
|
|
§
|
Joining of the civil society
movement named ‘Unidos Pela Vacina’ (‘United for the Vaccine’), in order to collaborate effectively with the process
of vaccination in the State of Minas Gerais, providing direct support to 425 municipalities. The Company’s participation took the
form of voluntary involvement by its employees in support for transport and professional traveling to various municipalities to deliver
vaccines to rural regions, including people who were bedridden, as well as the donation of R$2,783, to promote access to the vaccine to
combat Covid-19 in municipalities of the State.
|
The Company’s management continues
to be committed to strengthening its resilience, and decided on a series of measures to preserve and increase liquidity, including:
|
|
§
|
Comfortable
cash position to meet commitments assumed and face the economic uncertainties of the current scenario;
|
|
|
§
|
Continuous
reduction of net indebtedness;
|
|
|
§
|
Strengthening
of Cemig D’s Investment Program;
|
|
|
§
|
Optimization
of capital allocation.
|
Impact of Covid-19 on Financial
Information
Since March, 2020, the Company has
been monitoring the Covid-19 pandemic impact on its business and the market in which it operates. The Company has implemented a series
of precautionary measures to protect the health of its employees and to prevent the spread of the novel coronavirus in its operational
and administrative facilities. The measures are in accordance with the recommendations of World Health Organization (WHO) and Brazilian
Ministry of Health and aim to contribute with the populations and Brazilian authorities efforts, in order to prevent the virus outbreak.
Due to the retraction in industrial
and commercial activity, in the first quarters of 2020 we suffered a higher impact from the pandemic in our energy trading business, with
the need to offer flexibility in our contracts with our large clients – affecting the profitability of this business. These impacts
were temporary, and in the fourth quarter of 2020 we saw consumption returning to near expected levels. Additionally, some factors indicate
favorable economic outlook for 2021, such as partial recovery of economic agents confidence, employment and income protection measures,
and the vaccination campaign progress.
As of June 30, 2021, from the observation
of the pandemic’s economic effects, the Company assessed the assumptions used for calculating fair value and recoverable amount
of certain financial and non-financial assets, as follows:
|
|
§
|
The subsidiary
Cemig GT assessed whether the greater pressure on the exchange rate, combined with a lack of financial market liquidity, will have a negative
impact on derivative financial instruments hired to protect its operations against the risks arising from foreign exchange rate changes.
At this point, given the current market conditions, the change in derivative instrument’s fair value, based on the forecasts of
future interest and exchanges rates, and the semiannual settlement of derivatives instruments, cannot offset the Company’s total
exposure to foreign exchange rate variability, resulting in a net loss of R$321 million in the six months period ended on June 30, 2021.
The long-term projections carried out for the foreign exchange rate are lower than the current dollar quotation, which may represent a
decrease in Company’s foreign exchange variation expense, if the projected scenario occurs. In addition, Cemig GT began studies
and contracted services in order to take measures aimed to diligent managing its liabilities, and reducing its liquidity risk and exposure
to the US dollar. On July 19, 2021 Cemig GT lauched its Cash Tender Offer to acquire its debt securities issued in the external market,
maturing in 2024, with 9.25% annual coupon, until an amount of US$500 million. On July 30, 2021 offers from holders of Notes representing
a total of US$774 million had been received, and were accepted proportionally pro rata, until the maximum amount of US$500 million. Settlement
of this Cash Tender transaction occurred on August 5, 2021. Aligned with the Cash tender offer process, on June 7 and 8, 2021 the hedge
transactions contracted were partially undone, for a volume of US$500 million. This resulted in a reported gain in favor of the Company
of US$774 million. For more details, see note 30 (b).
|
|
|
§
|
In measuring the expected loss
from doubtful receivables, the Company assessed the circumstances of the Covid-19 pandemic, and the measures taken to reduce the impact
of the economic retraction on default. The Company has intensified measures to mitigate risks of default, with a specific campaign of
negotiation with clients, individual collections through the courts, expansions of the channels for negotiation, and diversification of
means of payment. The company believes that the measures adopted mitigated the effects of the economic crisis on collection of receivables.
Aneel Resolution 928 extended the rule on suspension of supply of energy to the low-income sub-category of residential users, and certain
other customers.
|
|
|
§
|
The management’s
assumptions applied to determine the recoverable amount of the relevant investments in subsidiaries, joint-controlled entities and associates
were not influenced significantly by the Covid-19 situation, since these investees’ cash flows are mainly related to long-term rights
to commercial operation of the regulated activity. Therefore, no impairment losses were recognized to its investments in subsidiaries,
joint-controlled entities and associates due to the economic crisis.
|
|
|
§
|
Despite the
uncertainties related to the crisis unfolding and its potential long-term effects, the Company does not expect that the negative impact
on its projections of likely future taxable profits might compromise the recoverability of its deferred tax assets.
|
|
|
§
|
The Company
has assessed the behavior of the interest rates and discount rates that are the basis for calculation of Post-employment obligations,
and believes that these are not significantly affected by macroeconomic issues in the short and medium term, since the main assumptions
used are long-term.
|
|
|
§
|
The Company’s
management reviewed the financial assets and liabilities measured at fair value to reflect the conditions and current rates projected,
which impacts are presented in Note 30.
|
|
|
§
|
In the energy
market, the volume of energy sold to captive customers, and transported for Free Clients and distributors with access to Cemig D’s
networks, was up 7.4% in the first semester of 2021, compared to the same period of 2020, reflecting the easing of social isolation requirements.
This increase has two components: consumption by the captive market 1.7% higher, and use of the network by Free Clients 14.6% higher.
|
The impacts of the Covid-19 pandemic disclosed in this
interim financial information were based on the Company’s best estimates and significant long-term effects are not expected.
|
|
2.1
|
Statement of compliance
|
The interim financial information
has been prepared in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board
(IASB), Technical Pronouncement 21 (R1) (‘CPC21’), which applies to interim financial information, and the rules issued by
the Brazilian Securities Commission (Comissão de Valores Mobiliários, or CVM), applicable to preparation of Quarterly Information
(Informações Trimestrais, or ITR).
This interim financial information
has been prepared according to principles, practices and criteria consistent with those adopted in the preparation of the financial statements
on December 31, 2020.
Thus, this interim financial information
should be read in conjunction with the said financial statements, approved by the Company’s management on March 26, 2021.
Management certifies that all the
material information in the interim financial information is being disclosed herein, and is the same information used by management in
its administration of the Company.
The Company's Board of Directors
authorized the issuance of this Interim financial information on August 16, 2021.
2.2
Correlation between the Explanatory Notes published
in the Financial Statements and those in the Interim Financial Information
Number of the Note
|
Title of the Note
|
|
Dec. 31, 2020
|
Jun. 30, 2021
|
|
1
|
1
|
Operational context
|
|
2
|
2
|
Basis of preparation
|
|
3
|
3
|
Consolidation principles
|
|
4
|
4
|
Concessions and authorizations
|
|
5
|
31
|
Operational segments
|
|
|
5
|
Cash and cash equivalents
|
|
|
6
|
Marketable Securities
|
|
|
7
|
Customers and traders; Concession holders (power transport)
|
|
|
8
|
Recoverable taxes
|
|
10
|
9
|
Income tax and social contribution tax
|
|
|
10
|
Accounts receivable from the State of Minas Gerais
|
|
12
|
11
|
Escrow deposits
|
|
13
|
12
|
Reimbursement of tariff subsidies
|
|
14
|
13
|
Concession financial assets and liabilities
|
|
15
|
14
|
Contract assets
|
|
16
|
15
|
Investments
|
|
17
|
16
|
Property, plant and equipment
|
|
18
|
17
|
Intangible assets
|
|
|
18
|
Leasing – Right of Use
|
|
20
|
19
|
Suppliers
|
|
21
|
20
|
Taxes and social security
|
|
22
|
21
|
Loans, financings and debentures
|
|
23
|
22
|
Regulatory charges
|
|
24
|
23
|
Post-employment obligations
|
|
25
|
24
|
Provisions
|
|
26
|
25
|
Equity and remuneration to shareholders
|
|
27
|
26
|
Revenue
|
|
28
|
27
|
Operating costs and expenses
|
|
29
|
28
|
Financial revenue and expenses
|
|
30
|
29
|
Related party transactions
|
|
31
|
30
|
Financial instruments and risk management
|
|
32
|
32
|
Assets and liabilities classified as held for sale; profit (loss) from discontinued operations
|
|
35
|
33
|
Transactions not involving cash
|
|
-
|
34
|
Parliamentary Committee of Inquiry (CPI)
|
|
36
|
35
|
Subsequent events
|
The Notes to the 2020 financial statements
that have not been included in this consolidated interim financial information because they had no material changes, and/or were not applicable
to the interim financial information, are as follows:
|
Number
|
Title of the Note
|
|
33
|
Insurance
|
|
34
|
Commitments
|
|
|
2.3
|
Retrospective application of accounting policy and reclassification
of items in interim financial information
|
On June 30, 2020, Aneel ratified
the results of the Periodic Tariff Review (RTP), resetting the amount of the Permitted Annual Revenue (RAP) to be applied to the revenue
in effect on July 1, 2018. In this tariff review, considering the results and criteria applied by the grantor in the formulation of the
regulations to be applied for the National Grid assets – which among other factors include subjection of the amounts of the National
Grid assets to operational efficiency measurement mechanisms, no longer having indemnity nature, clarifying certain elements for determination
of accounting policy, which were not evident in 2018, time when the RTP should have occurred and the Company made the initial adoption
of the CPC 47/IFRS 15. The Company decided to retrospective application the following items, in connection with the clarifications, the
CVM issued CVM/SNC/SEP Circular Nº 04/2020, issued on December 01, 2020 and the procedures also to be adopted by the other companies
of the Brazilian power transmission sector: (i) classification of the National Grid assets as contract assets, relating to the renewal
of the concession under Law 12,783/14; (ii) allocation of the margin to performance obligations under the concession contract; and (iii)
determination of the discount rate to be used for recognition of the financial component in the contract asset.
Thus, the Company used the retrospective
method, with cumulative effect recognized on December 31, 2020 financial statements, in accordance with items 14 and 22 of CPC 23 / IAS
08 – Accounting policies, changes in accounting estimates and errors, as well as in the interim financial information as
of June 30, 2020, as presented below.
The adjustments made to the restated
interim financial information, due to the change in accounting policy, were related to:
|
|
§
|
Allocation
of margin to the performance obligation for construction of transmission infrastructure, based on the expected cost plus margin approach;
|
|
|
§
|
Standardization
of the criteria for definition of the implicit rate used in the calculation of the financing component of the contract;
|
|
|
§
|
Reclassification
of the financial component of the national grid (‘BNES’ - Basic Network of the Existing System) assets to contract assets,
due to the inclusion of the consideration associated with these assets in the regulatory remuneration base, subjecting them to efficiency
mechanisms for the performance obligations to operate and maintain the transmission infrastructure.
|
|
|
§
|
Inclusion of
current and deferred PIS/Pasep and Cofins taxes in the calculation of the revenues under the contracts.
|
The main effects in the restated
interim financial information to comparative effect due to the changing in accounting policy are as follows:
|
STATEMENT OF INCOME
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2020
|
Jan to Jun, 2020
|
|
As presented
|
Adjustment
|
Restated
|
As presented
|
Adjustment
|
Restated
|
|
CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
NET REVENUE (1)
|
11,993,629
|
(451,528)
|
11,542,101
|
6
|
-
|
6
|
|
TOTAL COST
|
(9,043,238)
|
-
|
(9,043,238)
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
2,950,391
|
(451,528)
|
2,498,863
|
6
|
-
|
6
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES (2)
|
(903,813)
|
11,778
|
(892,035)
|
(113,102)
|
-
|
(113,102)
|
|
|
|
|
|
|
|
|
|
Periodic tariff review, net (3)
|
-
|
479,703
|
479,703
|
-
|
-
|
-
|
|
Share of profit, net, of affiliates and jointly-controlled entities
|
164,476
|
-
|
164,476
|
1,106,407
|
26,369
|
1,132,776
|
|
Result of business combinations
|
51,736
|
-
|
51,736
|
51,736
|
-
|
51,736
|
|
Impairment of assets held for sale
|
(134,023)
|
-
|
(134,023)
|
(134,023)
|
-
|
(134,023)
|
|
Net finance income
|
(762,063)
|
-
|
(762,063)
|
13,121
|
-
|
13,121
|
|
Income before income tax and social contribution tax
|
1,366,704
|
39,953
|
1,406,657
|
924,145
|
26,369
|
950,514
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution tax
|
(394,319)
|
-
|
(394,319)
|
(19)
|
-
|
(19)
|
|
Deferred income tax and social contribution tax (4)
|
14,763
|
(13,584)
|
1,179
|
62,565
|
-
|
62,565
|
|
NET INCOME FOR THE PERIOD
|
987,148
|
26,369
|
1,013,517
|
986,691
|
26,369
|
1,013,060
|
|
|
|
|
|
|
|
|
|
Total net income for the period attributed to:
|
|
|
|
|
|
|
|
Equity holders of the parent
|
|
|
|
|
|
|
|
Net income for the period attributed to equity holders of the parent
|
986,691
|
26,369
|
1,013,060
|
986,691
|
26,369
|
1,013,060
|
|
Non-controlling interests
|
457
|
-
|
457
|
-
|
-
|
-
|
|
Net income from the period
|
987,148
|
26,369
|
1,013,517
|
986,691
|
26,369
|
1,013,060
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per preferred share – R$ (5)
|
0.68
|
(0.04)
|
0.64
|
0.68
|
(0.04)
|
0.64
|
|
Basic and diluted earnings (loss) per common share – R$ (5)
|
0.68
|
(0.04)
|
0.64
|
0.68
|
(0.04)
|
0.64
|
|
|
|
|
|
|
|
|
|
|
STATEMENT OF INCOME
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2020
|
Apr to Jun, 2020
|
|
As presented
|
Adjustment
|
Restated
|
As presented
|
Adjustment
|
Restated
|
|
CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
NET REVENUE (1)
|
5,934,414
|
(434,297)
|
5,500,117
|
1
|
-
|
1
|
|
TOTAL COST
|
(4,516,350)
|
-
|
(4,516,350)
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
1,418,064
|
(434,297)
|
983,767
|
1
|
-
|
1
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES (2)
|
(412,438)
|
11,648
|
(400,790)
|
(78,141)
|
|
(78,141)
|
|
|
|
|
|
|
|
|
|
Periodic tariff review, net (3)
|
-
|
479,703
|
479,703
|
-
|
-
|
-
|
|
Share of profit (loss), net, of affiliates and jointly-controlled entities
|
82,534
|
-
|
82,534
|
777,614
|
37,656
|
815,270
|
|
Impairment of assets held for sale
|
475,137
|
-
|
475,137
|
475,137
|
-
|
475,137
|
|
Net finance income
|
(35,317)
|
|
(35,317)
|
5,349
|
-
|
5,349
|
|
Income before income tax and social contribution tax
|
1,527,980
|
57,054
|
1,585,034
|
1,179,960
|
37,656
|
1,217,616
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution tax
|
(198,803)
|
-
|
(198,803)
|
-
|
-
|
-
|
|
Deferred income tax and social contribution tax (4)
|
(285,183)
|
(19,398)
|
(304,581)
|
(136,154)
|
-
|
(136,154)
|
|
NET INCOME FOR THE PERIOD
|
1,043,994
|
37,656
|
1,081,650
|
1,043,806
|
37,656
|
1,081,462
|
|
|
|
|
|
|
|
|
|
Total net income for the period attributed to:
|
|
|
|
|
|
|
|
Equity holders of the parent
|
|
|
|
|
|
|
|
Net income for the period attributed to equity holders of the parent
|
1,043,806
|
37,656
|
1,081,462
|
1,043,806
|
37,656
|
1,081,462
|
|
Non-controlling interests
|
188
|
-
|
188
|
-
|
-
|
-
|
|
Net income from the period
|
1,043,994
|
37,656
|
1,081,650
|
1,043,806
|
37,656
|
1,081,462
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per preferred share – R$ (5)
|
0.72
|
(0.08)
|
0.64
|
0.72
|
(0.08)
|
0.64
|
|
Basic and diluted earnings (loss) per common share – R$ (5)
|
0.72
|
(0.08)
|
0.64
|
0.72
|
(0.08)
|
0.64
|
|
|
|
|
|
|
|
|
|
(1)
Recognition of the profit margin associated to
the performance obligation to construct and upgrade the transmission infrastructure, as well as the interest revenue resulting from the
financing component, which had been taken into account in operational
revenue in 2Q20.
(2)
Reversal of expected losses recorded in others expenses in prior periods.
(3)
The result of the periodic tariff review was classified in Other operational
revenues, so as not to impact net margin in the period.
(4)
Deferral of income tax and social contribution
tax over the adjustments;
(5)
The basic and diluted earnings per share for the
period ended in June 30, 2020 was also adjusted retrospectively in order to reflect the increase in the number of shares in 2020 and 2021.
For more information, see Note 25.
|
STATEMENTS OF COMPREHENSIVE INCOME
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2020
As presented
|
Adjustment
|
Jan to Jun, 2020
Restated
|
Jan to Jun, 2020
As presented
|
Adjustment
|
Jan to Jun, 2020
Restated
|
|
NET INCOME FOR THE PERIOD
|
987,148
|
26,369
|
1,013,517
|
986,691
|
26,369
|
1,013,060
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
Items not to be reclassified to profit or loss in subsequent periods
|
(702)
|
-
|
(702)
|
(702)
|
-
|
(702)
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME FOR THE PERIOD
|
986,446
|
26,369
|
1,012,815
|
985,989
|
26,369
|
1,012,358
|
|
Total of comprehensive income for the period attributed to:
|
|
|
|
|
|
|
|
Equity holders of the parent
|
985,989
|
26,369
|
1,012,358
|
985,989
|
26,369
|
1,012,358
|
|
Non-controlling interests
|
457
|
-
|
457
|
-
|
-
|
-
|
|
Total of comprehensive income for the period attributed to:
|
986,446
|
26,369
|
1,012,815
|
985,989
|
26,369
|
1,012,358
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF COMPREHENSIVE INCOME
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2020
As presented
|
Adjustment
|
Apr to Jun, 2020
Restated
|
Apr to Jun, 2020
As presented
|
Adjustment
|
Apr to Jun, 2020
Restated
|
|
NET INCOME FOR THE PERIOD
|
1,043,994
|
37,656
|
1,081,650
|
1,043,806
|
37,656
|
1,081,462
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME FOR THE PERIOD
|
1,043,994
|
37,656
|
1,081,650
|
1,043,806
|
37,656
|
1,081,462
|
|
Total of comprehensive income for the period attributed to:
|
|
|
|
|
|
|
|
Equity holders of the parent
|
1,043,806
|
37,656
|
1,081,462
|
1,043,806
|
37,656
|
1,081,462
|
|
Non-controlling interests
|
188
|
-
|
188
|
-
|
-
|
-
|
|
Total of comprehensive income for the period attributed to:
|
1,043,994
|
37,656
|
1,081,650
|
1,043,806
|
37,656
|
1,081,462
|
|
STATEMENT OF CASH FLOWS - Consolidated
|
Jan to Jun, 2020
As presented
|
Adjustment
|
Jan to Jun, 2020
Restated
|
|
CASH FLOW FROM OPERATIONS
|
|
|
|
|
Net income for the period (1)
|
987,148
|
26,369
|
1,013,517
|
|
Adjustments to reconcile net income to net cash flows:
|
|
|
|
|
Deferred income tax and social contribution tax (2)
|
(14,763)
|
13,584
|
(1,179)
|
|
Loss on write-off of net residual value of unrecoverable concession financial assets, concessional contract asset, PP&E and Intangible assets (3)
|
20,655
|
(11,778)
|
8,877
|
|
Adjustment to expectation of contract asset and financial concession asset (4)
|
(227,404)
|
(63,324)
|
(290,728)
|
|
Periodic tariff reset adjustments
|
(429,840)
|
(98,758)
|
(528,598)
|
|
Deferred PIS/Pasep and Cofins over contract revenues (6)
|
-
|
43,680
|
43,680
|
|
Others
|
1,813,197
|
-
|
1,813,197
|
|
TOTAL
|
2,148,993
|
(90,227)
|
2,058,766
|
|
Increase in assets
|
|
|
|
|
Concession contract and financial assets (5)
|
250,114
|
90,227
|
340,341
|
|
Others
|
1,984,323
|
-
|
1,984,323
|
|
TOTAL
|
2,234,437
|
90,227
|
2,324,664
|
|
Increase (decrease) in liabilities
|
473,699
|
-
|
473,699
|
|
Cash generated by operating activities
|
4,857,129
|
-
|
4,857,129
|
|
|
(1)
|
Effects of retrospective
application of accounting policy, recorded as retained earnings, for the period ended on June 30, 2020.
|
|
|
(2)
|
Deferral of income tax
and social contribution tax over the adjustments;
|
|
|
(3)
|
Others immaterial adjustments
referring to impairment losses and others expected losses.
|
|
|
(4)
|
Recognition of the profit
margin associated to the performance obligation to construct and upgrade the transmission infrastructure, as well as the interest revenue
resulting from the financing component and the result of the periodic tariff revision;
|
|
|
(5)
|
Adjustments in the amounts
of the contract assets that were received, due to the reallocation of the consideration to performance obligation to construct and upgrade.
|
|
|
(6)
|
Effects of PIS/Pasep
and Cofins over contract revenues, including the taxes deferral;
|
|
STATEMENT OF CASH FLOWS
|
Parent company
|
|
Jan to Jun, 2020
As presented
|
Adjustment
|
Jan to Jun, 2020
Restated
|
|
CASH FLOW FROM OPERATIONS
|
|
|
|
|
Net income for the period (1)
|
986,691
|
26,369
|
1,013,060
|
|
Expenses (revenues) not affecting cash and cash equivalents
|
|
|
|
|
Share of loss, net, of subsidiaries and joint ventures (2)
|
(1,106,407)
|
(26,369)
|
(1,132,776)
|
|
Others
|
78,616
|
-
|
78,616
|
|
TOTAL
|
(41,100)
|
-
|
(41,100)
|
|
|
(1)
|
Effects of retrospective application of accounting
policy, recorded as retained earnings, for the period ended on June 30, 2020.
|
|
|
(2)
|
This refers to the adjustment
to the equity income (gain on interests in non-consolidated investees) of Cemig GT, due to backdated application of an accounting policy.
|
|
STATEMENTS OF ADDED VALUE
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2020
As presented
|
Adjustment
|
Jan to Jun, 2020
Restated
|
Jan to Jun, 2020
As presented
|
Adjustment
|
Jan to Jun, 2020
Restated
|
|
REVENUES (1)
|
17,508,003
|
71,855
|
17,579,858
|
9
|
-
|
9
|
|
INPUTS ACQUIRED FROM THIRD PARTIES (2)
|
(9,149,303)
|
11,778
|
(9,137,525)
|
(203,136)
|
|
(203,136)
|
|
GROSS VALUE ADDED
|
8,358,700
|
83,633
|
8,442,333
|
(203,127)
|
-
|
(203,127)
|
|
RETENTIONS
|
(488,449)
|
-
|
(488,449)
|
(1,552)
|
-
|
(1,552)
|
|
NET
ADDED VALUE PRODUCED BY THE COMPANY FROM CONTINUING OPERATIONS
|
7,870,251
|
83,633
|
7,953,884
|
(204,679)
|
-
|
(204,679)
|
|
ADDED VALUE RECEIVED BY TRANSFER
|
2,369,025
|
-
|
2,369,025
|
1,173,536
|
26,369
|
1,199,905
|
|
ADDED VALUE TO BE DISTRIBUTED
|
10,239,276
|
83,633
|
10,322,909
|
968,857
|
26,369
|
995,226
|
|
DISTRIBUTION OF ADDED VALUE
|
|
|
|
|
|
|
|
Employees
|
868,004
|
-
|
868,004
|
38,942
|
-
|
38,942
|
|
Taxes (3)
|
5,440,041
|
57,264
|
5,497,305
|
(59,498)
|
-
|
(59,498)
|
|
Remuneration of external capital
|
2,944,083
|
-
|
2,944,083
|
2,722
|
-
|
2,722
|
|
Remuneration of own capital
|
987,148
|
26,369
|
1,013,517
|
986,691
|
26,369
|
1,013,060
|
|
|
10,239,276
|
83,633
|
10,322,909
|
968,857
|
26,369
|
995,226
|
|
|
(1)
|
Recognition of the profit
margin associated to the performance obligation to construct and upgrade the transmission infrastructure, as well as the interest revenue
resulting from the financing component and the result of the periodic tariff revision;
|
|
|
(2)
|
Others immaterial adjustments
referring to impairment losses and others expected losses.
|
|
|
(3)
|
Effects of PIS/Pasep
and Cofins over contract revenues, including the taxes deferral.
|
The income tax and social contribution
tax over the adjustments were recognized.
The adjustment did not have an impact
on the Company’s operating, investing and financing cash flows for the period ended on June 30, 2020. The retrospective application
only affected the transmission segment, presented in Note 31.
|
|
3.
|
PRINCIPLES OF CONSOLIDATION
|
The reporting dates of interim financial
information of the subsidiaries used for the purposes of calculation of consolidation and jointly-controlled entities and affiliates used
for calculation of this equity method contribution are prepared in the same reporting date of the Company. Accounting practices are applied
uniformly in line with those used by the parent company.
The Company uses the criteria of
full consolidation. The direct equity investments of Cemig, included in the consolidation, are the following:
|
Subsidiary
|
Jun. 30, 2021
|
Jun. 30, 2020
|
|
Form of valuation
|
Direct interest, %
|
Indirect interest, %
|
Form of valuation
|
Direct interest, %
|
Indirect interest, %
|
|
Cemig Geração e Transmissão
|
Consolidation
|
100.00
|
-
|
Consolidation
|
100.00
|
-
|
|
Cemig Distribuição
|
Consolidation
|
100.00
|
-
|
Consolidation
|
100.00
|
-
|
|
Gasmig
|
Consolidation
|
99.57
|
-
|
Consolidation
|
99.57
|
-
|
|
Cemig Geração Distribuída (Ipatinga Power Plant) (1)
|
-
|
-
|
-
|
Consolidation
|
100.00
|
-
|
|
Cemig Sim
|
Consolidation
|
100.00
|
-
|
Consolidation
|
100.00
|
-
|
|
Cetroeste
|
Consolidation
|
100.00
|
-
|
Consolidation
|
100.00
|
-
|
(1)
On October 19, 2020, an Extraordinary General Meeting of Shareholders
approved the merger of this wholly-owned subsidiary, at book value, and as a result the investee ceased to exist and the Company took
over of all its rights and liabilities.
|
|
4.
|
CONCESSIONS AND AUTHORIZATIONS
|
Cemig, through its subsidiaries,
holds the following concessions or authorizations:
|
|
Company holding concession or authorization
|
Concession or authorization contract
|
Expiration date
|
|
POWER GENERATION
|
|
|
|
|
|
|
|
|
|
Hydroelectric plants
|
|
|
|
|
Emborcação (1) (2)
|
Cemig GT
|
07/1997
|
07/2025
|
|
Nova
Ponte (1) (2)
|
Cemig
GT
|
07/1997
|
07/2025
|
|
Santa
Luzia (1)
|
Cemig
GT
|
07/1997
|
02/2026
|
|
Sá
Carvalho (1)
|
Sá
Carvalho
|
01/2004
|
12/2024
|
|
Rosal
(1)
|
Rosal
Energia
|
01/1997
|
05/2032
|
|
Machado Mineiro (1)
Salto Voltão (1)
Salto Paraopeba (1)
Salto do Passo Velho (1)
|
Horizontes
Energia
|
Resolution
331/2002
|
07/2025
10/2030
10/2030
10/2030
|
|
PCH
Pai Joaquim (1)
|
Cemig
PCH
|
Authorizing
Resolution 377/2005
|
04/2032
|
|
Irapé
(1)
|
Cemig
GT
|
14/2000
|
02/2035
|
|
Queimado
(Consortium) (1)
|
Cemig
GT
|
06/1997
|
01/2033
|
|
Rio
de Pedras (1)
|
Cemig
GT
|
02/2013
|
09/2024
|
|
Poço
Fundo (1) (8)
|
Cemig
Geração Poço Fundo
|
01/2021
|
08/2045
|
|
São
Bernardo (1)
|
Cemig
GT
|
02/2013
|
08/2025
|
|
Três
Marias (3)
|
Cemig
Geração Três Marias
|
08/2016
|
01/2046
|
|
Salto
Grande (3)
|
Cemig
Geração Salto Grande
|
09/2016
|
01/2046
|
|
Itutinga
(3)
|
Cemig
Geração Itutinga
|
10/2016
|
01/2046
|
|
Camargos
(3)
|
Cemig
Geração Camargos
|
11/2016
|
01/2046
|
|
Coronel
Domiciano, Joasal, Marmelos, Paciência and Piau (3)
|
Cemig
Geração Sul
|
12/2016
and 13/2016
|
01/2046
|
|
Dona
Rita, Ervália, Neblina, Peti, Sinceridade and Tronqueiras (3)
|
Cemig
Geração Leste
|
14/2016
and 15/2016
|
01/2046
|
|
Cajurú,
Gafanhoto and Martins (3)
|
Cemig
Geração Oeste
|
16/2016
|
01/2046
|
|
|
|
|
|
|
Thermal
plants
|
|
|
|
|
Igarapé
(6)
|
Cemig
GT
|
07/1997
|
08/2024
|
|
|
|
|
|
|
Wind
power plants
|
|
|
|
|
Central
Geradora Eólica Praias de Parajuru (4)
|
Parajuru
|
Resolution
526/2002
|
09/2032
|
|
Central
Geradora Eólica Volta do Rio (4)
|
Volta
do Rio
|
Resolution
660/2001
|
01/2031
|
|
|
|
|
|
|
POWER
TRANSMISSION
|
|
|
|
|
National
grid (5)
|
Cemig
GT
|
006/1997
|
01/2043
|
|
Itajubá
Substation (5)
|
Cemig
GT
|
79/2000
|
10/2030
|
|
Furnas
– Pimenta - Transmission line (5)
|
Centroeste
|
004/2005
|
03/2035
|
|
|
|
|
|
|
ENERGY
DISTRIBUTION (7)
|
Cemig
D
|
002/1997
003/1997
004/1997
005/1997
|
12/2045
|
|
|
|
|
|
|
GAS
DISTRIBUTION (7)
|
Gasmig
|
State
Law 11,021/1993
|
01/2053
|
|
|
(1)
|
Generation concession contracts
that are not within the scope of IFRIC 12, whose infrastructure assets are recorded as PP&E since the concession grantor does not
have control over whom the service is provided to as the output is being sold mainly in the Free Market (‘ACL’).
|
|
|
(2)
|
On July 17, 2020, Cemig GT filed
a statement of its interest in extending these plants concession, under the independent producer regime, outside the regime of quotas,
to ensure its right of option under the legislative changes currently under discussion, relating to the group of measures to modernize
the energy sector. Any actual decision will only be made after publication by the Brazilian Mining and Energy Ministry and by the grantor,
Aneel, of the conditions for extension, which will be submitted to decision by Cemig’s governance bodies at the due time.
|
|
|
(3)
|
Generation concession contracts
within the scope of IFRIC 12, under which Cemig has the right to receive cash and therefore, recognizes a concession financial assets.
|
|
|
(4)
|
This refers to concessions,
given by the process of authorization, for generation, as an independent power producer, of wind power, sold under the Proinfa program.
The assets tied to the right of commercial operation are recorded in PP&E. The rights of authorization of commercial operation that
are classified as an Intangible.
|
|
|
(5)
|
These refer to transmission
concession contracts, for which a contract asset was recognized upon the application of IFRS 15/CPC 47, are recognized as contract asset
for being subject to satisfaction of performance obligations.
|
|
|
(6)
|
On December 6, 2019, Aneel suspended
Igarapé Plant commercial operation upon Cemig GT’s claim for early termination of its concession contract, and, as a result,
the corresponding assets were written-off from Cemig GT’s financial statement position. In February, 2021, the Thermal Plant Igarapé
concession of was extinct by the Brazilian Mining and Energy Ministry, in consideration of the termination request submitted by Cemig
GT.
|
|
|
(7)
|
Concession contracts that are
within the scope of IFRIC 12/ICPC 01 and under which the concession infrastructure assets are recorded under the intangible and financial
assets bifurcation model, and in compliance with IFRS 15, the infrastructure under construction has been classified as a contract asset.
|
|
|
(8)
|
By its Authorizing Resolution
9,735 of February 23, 2021, Aneel authorized transfer of ownership of the concession of the Poço Fundo Small Hydro Plant from Cemig
Geração e Transmissão S.A. to Cemig Geração Poço Fundo S.A. The transfer was formalized by signature
of a new concession contract, Nº. 01/2021, on April 16, 2021.
|
Cemig generate energy from nine hydroelectric
plants that have the capacity of 5MW or less– having a total installed capacity of 11.53MW, and thus under Law 9,074/95, these are
dispensed from concession, permission or authorization, and do not have a final concession date.
5.
CASH AND CASH EQUIVALENTS
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Bank accounts
|
50,813
|
93,060
|
4,227
|
4,577
|
|
Cash equivalents
|
|
|
|
|
|
Bank certificates of deposit (CDBs) (1)
|
1,303,253
|
1,415,964
|
507,442
|
412,136
|
|
Overnight (2)
|
1,305,286
|
171,373
|
385,996
|
5,934
|
|
Others
|
2,244
|
-
|
-
|
-
|
|
|
2,610,783
|
1,587,337
|
893,438
|
418,070
|
|
|
2,661,596
|
1,680,397
|
897,665
|
422,647
|
|
|
(1)
|
Bank Certificates of Deposit (Certificados de Depósito Bancário, or CBDs),
accrued interest at 70% to 109%, of the CDI Rate (Interbank Rate for Interbank Certificates of Deposit or Certificados de Depósito
Inter-bancário – CDIs) published by the Custody and Settlement Chamber (Câmara de Custódia e Liquidação,
or Cetip) on June 30, 2021 (50% to 108% on December 31, 2020). For these CDBs, the Company and its subsidiaries have repo transactions
which state, on their trading notes, the bank’s commitment to repurchase the security, on demand, on the maturity date of the transaction,
or earlier.
|
|
|
(2)
|
Overnight transactions are repos available for redemption on the following day. They are usually
backed by Treasury Bills, Notes or Bonds and referenced to a pre-fixed rate of 4.14% on June 30, 2021 (1.89% on December 31, 2020). Their
purpose is to settle the short-term obligations of the Company and its subsidiaries, or to be used in the acquisition of other assets
with better return to replenish the portfolio.
|
Note 30 provides information
in relation to the exposure of the Company and its subsidiaries to interest rate risks, and a sensitivity analysis of their effects on
financial assets and liabilities.
6.
MARKETABLE SECURITIES
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Investments
|
|
|
|
|
|
Current
|
|
|
|
|
|
Bank certificates of deposit (CDBs) (1)
|
129,459
|
545,366
|
38,283
|
18,884
|
|
Financial Notes (LFs) – Banks (2)
|
1,947,220
|
2,073,551
|
575,828
|
71,799
|
|
Treasury Financial Notes (LFTs) (3)
|
1,379,682
|
730,806
|
407,997
|
25,305
|
|
Others
|
12,059
|
10,547
|
2,293
|
873
|
|
|
3,468,420
|
3,360,270
|
1,024,401
|
116,861
|
|
Non-current
|
|
|
|
|
|
Financial Notes (LFs) – Banks (2)
|
834,101
|
729,767
|
246,658
|
25,269
|
|
Debentures (4)
|
24,913
|
24,789
|
7,367
|
858
|
|
Others
|
9,045
|
10,237
|
-
|
-
|
|
|
868,059
|
764,793
|
254,025
|
26,127
|
|
|
4,336,479
|
4,125,063
|
1,278,426
|
142,988
|
|
|
(1)
|
Bank Certificates of Deposit (Certificados de
Depósito Bancário, or CBDs), accrued interest at 111.04% a 115.97% of the CDI Rate (Interbank Rate for Interbank Certificates
of Deposit or Certificados de Depósito Inter-bancário – CDIs) published by the Custody and Settlement Chamber (Câmara
de Custódia e Liquidação, or Cetip) on June 30, 2021.
|
|
|
(2)
|
Bank Financial Notes (Letras Financeiras, or LFs) are fixed-rate fixed-income securities, issued
by banks and that accrued interest a percentage of the CDI rate published by Cetip. The LFs had remuneration rates varying between 103.10%
and 136.14% of the CDI rate on June 30, 2021 (99.50% and 130% on December 31, 2020).
|
|
|
(3)
|
Treasury Financial Notes (LFTs) are fixed-rate
securities, their yield follows the daily changes in the Selic rate between the date of purchase and the date of maturity. The LFTs had
remuneration rates varying between 4.07% and 4.50% on June 30, 2021 (1.86% and 1.90% on December 31, 2020).
|
|
|
(4)
|
Debentures are medium and long term debt securities, which give their holders a right of credit
against the issuing company. The debentures have remuneration varying from TR+1% to 109% of the CDI Rate on June 30, 2021 and December
31, 2020.
|
Note 30 provides a classification
of these marketable securities. Investments in marketable securities of related parties are shown in Note 29.
|
|
7.
|
CUSTOMERS, TRADERS AND POWER TRANSPORT CONCESSION HOLDERS
|
|
|
Consolidated
|
|
Balances not yet due
|
Up to 90 days past due
|
More than 91 up to 360 days past due
|
More than 361 days past due
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
|
|
|
|
|
|
|
|
Billed supply
|
1,716,314
|
637,788
|
429,284
|
538,767
|
3,322,153
|
3,124,555
|
|
Unbilled supply
|
1,115,950
|
-
|
-
|
-
|
1,115,950
|
1,144,906
|
|
Other concession holders – wholesale supply
|
20,021
|
27,793
|
1,037
|
903
|
49,754
|
50,086
|
|
Other concession holders – wholesale supply, unbilled
|
185,404
|
-
|
-
|
-
|
185,404
|
260,521
|
|
CCEE (Power Trading Chamber)
|
22,956
|
-
|
37,442
|
-
|
60,398
|
210,271
|
|
Concession Holders – power transport
|
47,339
|
11,630
|
26,400
|
88,227
|
173,596
|
161,340
|
|
Concession Holders – power transport, unbilled
|
293,752
|
-
|
-
|
-
|
293,752
|
294,734
|
|
(–) Provision for doubtful receivables
|
(237,734)
|
(18,015)
|
(16,022)
|
(508,223)
|
(779,994)
|
(712,369)
|
|
|
3,164,002
|
659,196
|
478,141
|
119,674
|
4,421,013
|
4,534,044
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
4,313,779
|
4,373,075
|
|
Non-current assets
|
|
|
|
|
107,234
|
160,969
|
The Company and its subsidiaries’
exposure to credit risk related to customers and traders is provided in Note 30.
The allowance for doubtful accounts
is considered to be sufficient to cover any potential losses in the realization of accounts receivable, and the breakdown by type of customers
is as follows:
|
Consolidated
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Residential
|
115,506
|
110,149
|
|
Industrial
|
203,511
|
187,927
|
|
Commercial, services and others
|
205,065
|
189,769
|
|
Rural
|
30,356
|
30,355
|
|
Public authorities
|
106,529
|
82,715
|
|
Public lighting
|
2,708
|
2,434
|
|
Public services
|
35,697
|
34,803
|
|
Charges for use of the network (TUSD)
|
80,622
|
74,217
|
|
|
779,994
|
712,369
|
Considering the pandemic effects
on levels of delinquency, and the emergence of new factors such as the vaccination progress in the country, mutations of the virus, and
changes in government support policy, the Company, taking into account the changes in 2020 and in the 1H2021, believes that the current
assumptions represent its best estimate, at this moment, for expected losses on doubtful receivables for the period ended on June 30,
2021.
On July 31, 2020 Cemig D filed an
application to the tax authority of State of Minas Gerais to offset debts for energy consumption and service owed by the direct and indirect
administrations of Minas Gerais State, using amounts of ICMS tax payable, under Article 3 of Minas Gerais State Decree 47,908/2020, which
regulated State Law 47,891/2020. The debts from the State of Minas Gerais that qualify for offset are those past due at June 30,
2019, an amount of R$222,266. Following ratification by the State Finance Secretary and formalization of the Debt Recognition Agreement,
which both took place on March, 31, 2021, offsetting will begin in April 2021. Up to June 2021, were offset 3 (three) out of 21 (twenty
one) installments, in the amount of R$10,584 each. The offsetting is expected to take place monthly, in this amount, up to December 2022.
Changes in the allowance for doubtful
accounts are as follows:
|
|
Consolidated
|
|
Balance at December 31, 2020
|
712,369
|
|
Additions, net (Note 27 e)
|
42,168
|
|
Reversals of disposals
|
25,457
|
|
Balance at June 30, 2021
|
779,994
|
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Current
|
|
|
|
|
|
ICMS (VAT)
|
99,738
|
97,272
|
-
|
-
|
|
PIS/Pasep (a) (b)
|
334,788
|
310,927
|
24
|
219
|
|
Cofins (a) (b)
|
1,536,394
|
1,425,796
|
121
|
1,018
|
|
Others
|
16,961
|
16,062
|
104
|
104
|
|
|
1,987,881
|
1,850,057
|
249
|
1,341
|
|
Non-current
|
|
|
|
|
|
ICMS (VAT) (b)
|
279,605
|
257,160
|
-
|
-
|
|
PIS/Pasep (a)
|
453,177
|
588,257
|
109,327
|
108,878
|
|
Cofins (a)
|
1,971,781
|
2,594,428
|
388,323
|
386,713
|
|
Others
|
-
|
2,226
|
-
|
1,795
|
|
|
2,704,563
|
3,442,071
|
497,650
|
497,386
|
|
|
4,692,444
|
5,292,128
|
497,899
|
498,727
|
|
|
a)
|
Pis/Pasep and Cofins taxes credits over ICMS
|
On May 8, 2019 the Regional Federal
Appeal Court of the First Region gave final judgment – against which there is no appeal – on the Ordinary Action, deciding
in favor of the Company and its subsidiaries, Cemig D and Cemig GT, and recognizing their right to exclude the ICMS amounts from the calculation
basis of PIS/Pasep and Cofins taxes, backdated as from five years prior to the action initial filing– that is, from July 2003.
Thus, the Company recorded the PIS/Pasep
and Cofins credits corresponded to the amount of these taxes over ICMS paid in the period of July 2003 to May 2019.
Final court judgment has also been
given, against which there is no further appeal, in favor of the similar actions filed by Cemig’s wholly-owned subsidiaries Sá
Carvalho, Cemig Geração Distribuída (former UTE Ipatinga S.A.), Cemig Geração Poço Fundo S.A.
(previously denominated UTE Barreiro S.A.) and Horizontes Energia S.A..
The Company and its subsidiaries
has two ways to recover the tax credit: (i) offsetting of the amount receivable against amounts payable of PIS/Pasep and Cofins taxes,
monthly, within the five-year period specified by the relevant law of limitation; or (ii) receipt of specific credit instruments ‘precatórios’
from the federal government.
Cemig D and Cemig GT, prioritized
the credits offsetting, to accelerate recovery. For the Company itself, priority will be given to receipt of the credits through precatório
letters of credit, since the Company does not make enough monthly payments of PIS/Pasep and Cofins taxes to enable offsetting.
On May 12, 2020, the Brazilian tax
authority (Receita Federal) granted the Company’s request for ratification of the credits of PIS/Pasep and Cofins taxes arising
from the legal action on which final judgment, subject to no further appeal, was given in favor of Cemig D and Cemig GT in 2019 and the
subsidiaries are offsetting the amount receivable against amounts of federal taxes payable on a monthly basis, starting in May, 2020,
within the five-year period specified by the relevant law of limitation.
On May 13, 2021 the Brazilian Federal
Supreme Court (‘STF’) ruled on the motion for clarification filed by the federal government, modulating the effects of the
decision that ICMS tax (paid or payable) is not part of the base amount for calculation of the PIS, Pasep and Cofins taxes. The court
ruled that only those who filed legal actions claiming this judgment on or before March 15, 2017 (date on which the argument was established)
should have the right to reimbursement of the tax unduly paid, excluding legal and administrative actions filed after that date and before
the date on which the judgment was given. Thus the changes made by the Supreme Court in the effects of the judgment do not affect the
credits recognized by the Company. Further, the new ruling decided that the amounts of ICMS tax to be excluded from the basis for calculation
of PIS, Pasep and Cofins taxes should be the ICMS tax stated on invoices this is in agreement with the criterion adopted by the Company.
Based on the opinion of its legal
advisers, the Company’s management believes that a portion of the tax credits to be received by Cemig D should be refunded to its
customers, considering a maximum period for calculation of the reimbursement of 10 years. Thus, Cemig D has constituted a liability corresponding
to the total amount of the tax credits comprising the period of the last 10 years, from June 2009 to May 2019, net of PIS/Pasep and Cofins
taxes over monetary updating.
Considering the modulation of effects
derived from STF, the subsidiary Gasmig recognized PIS/Pasep and Cofins taxes credits totaling R$219,753 related to exclusion of ICMS
from the basis of computation of theses taxes from the periods included in the legal action on that matter. In the absence of a final
judgment by the courts, Gasmig recorded a liability corresponding to the amounts to be reimbursed to its customers considering a 10 years
period, from the date of the end of the quarter.
For more information about the amounts
to be refunded by Cemig D and Gasmig to customers, see Note 20.
The Company recorded in current asset
and non-current asset the amounts of R$1,860,738 and R$2,421,903, respectively, corresponding to the tax credits of PIS/Pasep and Cofins
over ICMS, with updating by the Selic rate to the date of their actual offsetting.
In the second quarter 2021, credits
of PIS/Pasep and Cofins taxes were offset against payable federal taxes in the amount of R$875,964 (R$1,274,636 on 2020).
|
|
b)
|
Other recoverable taxes
|
The ICMS (VAT) credits that are reported
in non-current assets arise mainly from acquisitions of property, plant and equipment, and intangible assets, and can be offset against
taxes payable in the next 48 months. The transfer to non-current is made in accordance with management's best estimate of the
amounts which will likely be realized in 12 months after this interim financial information reporting date.
Credits of PIS/Pasep and Cofins generated
by the acquisition of machinery and equipment can be offset immediately.
9.
INCOME AND SOCIAL CONTRIBUTION TAXES
a)
Income tax and social contribution tax recoverable
The balances of income tax
and social contribution tax refer to tax credits in the corporate income tax returns of previous years and to advance payments which will
be offset against federal taxes eventually payable. Current tax assets and current tax liabilities related to income tax and social contribution
tax are offset in the statement of financial position subject to criteria established in CPC 32/IAS 12.
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Income tax
|
521,569
|
697,923
|
200,134
|
245,996
|
|
Social contribution tax
|
156,495
|
246,210
|
34,096
|
33,860
|
|
|
678,064
|
944,133
|
234,230
|
279,856
|
|
|
|
|
|
|
|
Current
|
375,554
|
597,610
|
-
|
-
|
|
Non-current
|
302,510
|
346,523
|
234,230
|
279,856
|
The balances of income tax and social
contribution tax posted in non-current assets arise from advanced payments required by tax law and withholding taxes, which the expectation
of offsetting is greater than 12 months.
|
|
b)
|
Income tax and social contribution
tax payable
|
The balances of income tax and social
contribution tax recorded in current liabilities refer mainly to the taxes owed by the subsidiaries which report by the Real Profit method
and have opted to make monthly payments based on estimated revenue, and also by the subsidiaries that have opted for the Presumed Profit
method, in which payments are made quarterly.
|
|
Consolidated
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Current
|
|
|
|
Income tax
|
108,548
|
108,262
|
|
Social contribution tax
|
34,650
|
31,796
|
|
|
143,198
|
140,058
|
|
|
c)
|
Deferred income tax and
social contribution tax
|
The Company and its subsidiaries
have deferred taxed assets and liabilities from unused tax loss carryforwards, negative base for the social contribution tax, and deductible
temporary differences, at the statutory rates applicable to
each legal entity in Brazil of 25% (for Income tax) and 9% (for the social contribution tax), as follows:
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Deferred tax assets
|
|
|
|
|
|
Tax loss carryforwards
|
599,452
|
400,758
|
472,961
|
114,666
|
|
Provisions for contingencies
|
540,532
|
537,661
|
67,764
|
66,362
|
|
Impairment on investments
|
308,023
|
639,739
|
1,495
|
382,904
|
|
Provision PUT SAAG
|
186,834
|
182,293
|
-
|
-
|
|
Post-employment obligations
|
2,199,694
|
2,167,566
|
249,267
|
243,280
|
|
Estimated provision for doubtful receivables
|
283,676
|
256,130
|
8,477
|
7,578
|
|
Others
|
52,613
|
138,599
|
1,666
|
4,055
|
|
Total
|
4,170,824
|
4,322,746
|
801,630
|
818,845
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
Deemed cost
|
(222,042)
|
(224,610)
|
-
|
-
|
|
Acquisition costs of equity interests
|
(457,601)
|
(486,335)
|
(105,304)
|
(126,934)
|
|
Borrowing costs capitalized
|
(168,684)
|
(168,909)
|
-
|
-
|
|
Adjustment to expectation of cash flow – Concession assets
|
(244,686)
|
(242,424)
|
-
|
-
|
|
Adjustment of contract assets
|
(842,667)
|
(768,126)
|
-
|
-
|
|
Adjustment to fair value: Swap/Gains
|
(438,839)
|
(1,002,636)
|
-
|
-
|
|
Updating on escrow deposits
|
(6,304)
|
(6,129)
|
-
|
-
|
|
Reimbursement of costs – GSF
|
(299,957)
|
-
|
-
|
-
|
|
Others
|
(16,562)
|
(10,720)
|
(1,249)
|
(1,016)
|
|
Total
|
(2,697,342)
|
(2,909,889)
|
(106,553)
|
(127,950)
|
|
Total, net
|
1,473,482
|
1,412,857
|
695,077
|
690,895
|
|
|
|
|
|
|
|
Total assets
|
2,464,775
|
2,452,860
|
695,077
|
690,895
|
|
Total liabilities
|
(991,293)
|
(1,040,003)
|
-
|
-
|
The changes in deferred income tax
and social contribution tax were as follows:
|
|
Consolidated
|
Parent company
|
|
Balance at December 31, 2020
|
1,412,857
|
690,895
|
|
Effects allocated to net profit from continuing operations
|
65,593
|
4,182
|
|
Others
|
(4,968)
|
-
|
|
Balance at June 30, 2021
|
1,473,482
|
695,077
|
|
|
d)
|
Reconciliation of income
tax and social contribution tax effective rate
|
This table reconciles the statutory
income tax (rate 25%) and social contribution tax (rate 9%) with the current income tax expense in the statement of income:
|
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
Restated
|
Jan to Jun, 2021
|
Jan to Jun, 2020
Restated
|
|
|
|
|
|
|
|
Profit before income tax and social contribution tax
|
3,168,663
|
1,406,657
|
2,364,087
|
950,514
|
|
Income tax and social contribution tax – nominal expense (34%)
|
(1,077,345)
|
(478,263)
|
(803,790)
|
(323,174)
|
|
Tax effects applicable to:
|
|
|
|
|
|
Gain (loss) in subsidiaries by equity method (net of effects of Interest on Equity)
|
42,615
|
48,863
|
675,944
|
399,892
|
|
Tax incentives
|
31,296
|
17,754
|
-
|
-
|
|
Difference between Presumed Profit and Real Profit
|
91,635
|
45,484
|
-
|
-
|
|
Non-deductible penalties
|
(10,608)
|
(12,145)
|
(254)
|
(282)
|
|
Income arising from the Light sale
|
133,663
|
-
|
133,663
|
-
|
|
Estimated losses on doubtful accounts receivable from related parties
|
-
|
(12,703)
|
-
|
(12,703)
|
|
Others
|
(10,929)
|
(2,130)
|
(1,381)
|
(1,187)
|
|
Income tax and Social Contribution – effective gain (expense)
|
(799,673)
|
(393,140)
|
4,182
|
62,546
|
|
|
|
|
|
|
|
Current tax
|
(865,266)
|
(394,319)
|
-
|
(19)
|
|
Deferred tax
|
65,593
|
1,179
|
4,182
|
62,565
|
|
|
(799,673)
|
(393,140)
|
4,182
|
62,546
|
|
Effective rate
|
(25.24%)
|
(27.95%)
|
0.18%
|
6.58%
|
|
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
Restated
|
Apr to Jun, 2021
|
Apr to Jun, 2020
Restated
|
|
Profit before income tax and social contribution tax
|
2,826,985
|
1,585,034
|
2,021,627
|
1,217,616
|
|
Income tax and social contribution tax – nominal expense (34%)
|
(961,174)
|
(538,911)
|
(687,354)
|
(413,989)
|
|
Tax effects applicable to:
|
|
|
|
|
|
Gain in subsidiaries by equity method (net of effects of Interest on Equity)
|
3,859
|
22,274
|
611,580
|
290,813
|
|
Tax incentives
|
21,952
|
8,896
|
-
|
-
|
|
Difference between Presumed Profit and Real Profit
|
63,222
|
23,927
|
-
|
-
|
|
Non-deductible penalties
|
(6,893)
|
(5,151)
|
(269)
|
(13)
|
|
Estimated losses on doubtful accounts receivable from related parties
|
-
|
(12,703)
|
-
|
(12,703)
|
|
Others
|
(1,312)
|
(1,716)
|
653
|
(262)
|
|
Income tax and Social Contribution – effective gain (expense)
|
(880,346)
|
(503,384)
|
(75,390)
|
(136,154)
|
|
|
|
|
|
|
|
Current tax
|
(601,560)
|
(198,803)
|
-
|
-
|
|
Deferred tax
|
(278,786)
|
(304,581)
|
(75,390)
|
(136,154)
|
|
|
(880,346)
|
(503,384)
|
(75,390)
|
(136,154)
|
|
Effective rate
|
(31.14%)
|
(31.76%)
|
(3.73%)
|
(11.18%)
|
10.
ACCOUNTS RECEIVABLE FROM THE STATE OF MINAS GERAIS
The Company has accounts receivable
from the State of Minas Gerais, arising from return of an administrative deposit made for a dispute on the rate of inflation and other
adjustment to be applied to an advance for future capital increase (‘AFAC’), made in prior years, which was the subject of
a debt recognition agreement. The agreement provided for payment by the Minas Gerais State in 12 consecutive monthly installments, each
updated by the IGP–M index up to the date of actual payment, the first to become due on November 10, 2017. The agreement states
that, in the event of arrears or default by the State in payment of the agreed consecutive monthly installments, Cemig is authorized to
retain dividends or Interest on Equity distributable to the State in proportion to the State’s equity interest, for as long as the
arrears and/or default continues.
However, the State of Minas Gerais
government is contesting the Debt Recognition Agreement (‘TARD’) signed, in the previous years, once it believes that it was
signed without obeying the legal requirements for validity of administrative acts, and has notified Cemig to reimburse the 2 installments previously settled,
and also the dividends retained, totaling R$299,005.
To solve the issue through a negotiated
solution for impasses, the dispute on the TARD was submitted to the Chamber of Administrative Prevention and Resolution of Conflicts (‘Câmara
de Prevenção e Resolução Administrativa de Conflitos’ – CPRAC) of State of Minas Gerais, which
is currently in the initial stages.
The balance receivable on June 30,
2021, amounts R$13,366 (R$11,614 on December 31, 2020). On June 30, 2021, the Company retained the remaining portion of dividends to be
paid to State of Minas Gerais, and awaits development of the issue with CPRAC for the definitive write-off from accounts receivable of
this remaining balance.
Regarding the discussion on the merits
of the criterion used in the past for AFAC’s monetary updating, if a solution is not successfully reached either through CPRAC or
any legal proceedings on the merits, Management has assessed the chances of loss as ‘possible’.
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Labor claims
|
266,079
|
277,980
|
30,400
|
29,859
|
|
|
|
|
|
|
|
Tax contingencies
|
|
|
|
|
|
Income tax on Interest on Equity
|
29,179
|
29,045
|
293
|
290
|
|
PIS/Pasep and Cofins taxes (1)
|
66,998
|
66,452
|
-
|
-
|
|
Donations and legacy tax (ITCD)
|
54,875
|
54,497
|
53,920
|
53,547
|
|
Urban property tax (IPTU)
|
84,660
|
84,248
|
61,272
|
60,872
|
|
Finsocial tax
|
40,468
|
40,349
|
40,468
|
40,349
|
|
Income and Social Contr. Tax on indemnity for employees’ ‘Anuênio’ benefit (2)
|
287,006
|
285,836
|
13,743
|
13,727
|
|
Income tax withheld at source on inflationary profit
|
8,676
|
8,652
|
8,676
|
8,652
|
|
Income tax and contribution tax effective rate (3)
|
76,155
|
18,062
|
-
|
-
|
|
Others (4)
|
99,002
|
97,508
|
66,878
|
67,050
|
|
|
747,019
|
684,649
|
245,250
|
244,487
|
|
|
|
|
|
|
|
Others
|
|
|
|
|
|
Regulatory
|
51,786
|
51,605
|
19,834
|
19,690
|
|
Third party
|
9,089
|
9,105
|
3,414
|
3,469
|
|
Customer relations
|
7,760
|
7,595
|
1,241
|
1,214
|
|
Court embargo
|
16,956
|
12,881
|
4,682
|
2,583
|
|
Others
|
12,353
|
11,982
|
3,332
|
3,374
|
|
|
97,944
|
93,168
|
32,503
|
30,330
|
|
|
1,111,042
|
1,055,797
|
308,153
|
304,676
|
|
|
(1)
|
This refers to escrow deposits in the action
challenging the constitutionality of inclusion of ICMS tax within the amount to which PIS/Pasep and Cofins taxes are applied.
|
|
|
(2)
|
See more details in Note 24 – Provisions
under the section relating to the ‘Anuênio indemnity’.
|
|
|
(3)
|
Court escrow deposit in the proceedings challenging
charging of corporate income tax and the Social Contribution tax on payments of Interest on Equity, and application of the Social Contribution
tax to cultural and artistic donations and sponsorship, expenses on punitive fines, and taxes with enforceability suspended.
|
|
|
(4)
|
Includes escrow deposits from legal actions
related to INSS and PIS/Pasep and Cofins taxes
|
|
|
12.
|
REIMBURSEMENT OF TARIFF SUBSIDIES
|
Subsidies on tariffs charged to users
of distribution services – TUSD and EUST (Charges for Use of the Transmission System) are reimbursed to distributors through the
funds from the Energy Development Account (CDE).
On June 30, 2021, the amount recognized
as subsidies revenues was R$494,424 (R$1,056,810 on December 31, 2020). Of such amounts, Cemig D has a receivable of R$81,981, as of June
30, 2021 (R$82,616 on December 31, 2020) and Cemig GT has a receivable of R$3,865 (R$5,733 on December 31, 2020) in current assets.
|
|
13.
|
CONCESSION FINANCIAL AND SECTOR ASSETS AND LIABILITIES
|
|
Consolidated
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Concession financial assets
|
|
|
|
Energy distribution concessions (13.1)
|
582,655
|
530,058
|
|
Gas distribution concessions (13.1)
|
33,584
|
29,183
|
|
Indemnifiable receivable – Generation (13.2)
|
816,202
|
816,202
|
|
Concession grant fee – Generation concessions (13.3)
|
2,658,162
|
2,549,198
|
|
|
4,090,603
|
3,924,641
|
|
Sector financial assets
|
|
|
|
Amounts receivable from Parcel A (CVA) and Other Financial Components (13.4)
|
824,624
|
132,681
|
|
Total
|
4,915,227
|
4,057,322
|
|
|
|
|
|
Current assets
|
446,477
|
258,588
|
|
Non-current assets
|
4,468,750
|
3,798,734
|
|
Consolidated
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Sector financial liabilities
|
|
|
|
Amounts receivable from Parcel A (CVA) and Other Financial Components (13.4)
|
138,808
|
231,322
|
|
Total
|
138,808
|
231,322
|
|
|
|
|
|
Current liabilities
|
138,808
|
231,322
|
The changes in concession financial
assets related to infrastructure are as follows:
|
|
Generation
|
Distribution
|
Gas
|
Total
|
|
Balances at December 31, 2020
|
3,365,400
|
530,058
|
29,183
|
3,924,641
|
|
Transfers of contract assets
|
-
|
32,743
|
15
|
32,758
|
|
Monetary updating
|
243,404
|
20,026
|
4,386
|
267,816
|
|
Disposals
|
-
|
(172)
|
-
|
(172)
|
|
Amounts received
|
(134,440)
|
-
|
-
|
(134,440)
|
|
Balances at June 30, 2021
|
3,474,364
|
582,655
|
33,584
|
4,090,603
|
|
|
13.1
|
Distribution - Financial assets
|
The energy and gas distribution
concession contracts are within the scope of ICPC 01 (IFRIC 12). The financial assets under these contracts refer to the investments made
in infrastructure that will paid by grantor at the end of the concession period and they are measured at fair value through profit or
loss, in accordance with regulation of the energy segment and concession contracts executed by Cemig and its subsidiaries and the granting
authorities.
|
|
13.2
|
Generation – Indemnity
receivable
|
As from August 2013, with the extinction
of the concession for various plants operated by Cemig GT under Concession Contract 007/1997, the subsidiary has a right to receive an
amount corresponding to the residual value of the infrastructure assets, as specified in the concession contract. These balances are recognized
in financial assets, at fair value through profit or loss, and totaled R$816,202 on June 30, 2021 and December 31, 2020.
|
Generation plant
|
Concession expiration date
|
Installed capacity (MW)
|
Net balance of assets based on historical cost
|
Net balance of assets based on fair value (replacement cost)
|
|
|
|
|
Lot D
|
|
|
|
|
|
|
UHE Três Marias
|
July 2015
|
396
|
71,694
|
413,450
|
|
|
UHE Salto Grande
|
July 2015
|
102
|
10,835
|
39,379
|
|
|
UHE Itutinga
|
July 2015
|
52
|
3,671
|
6,589
|
|
|
UHE Camargos
|
July 2015
|
46
|
7,818
|
23,095
|
|
|
PCH Piau
|
July 2015
|
18.01
|
1,531
|
9,005
|
|
|
PCH Gafanhoto
|
July 2015
|
14
|
1,232
|
10,262
|
|
|
PCH Peti
|
July 2015
|
9.4
|
1,346
|
7,871
|
|
|
PCH Dona Rita
|
Sep. 2013
|
2.41
|
534
|
534
|
|
|
PCH Tronqueiras
|
July 2015
|
8.5
|
1,908
|
12,323
|
|
|
PCH Joasal
|
July 2015
|
8.4
|
1,379
|
7,622
|
|
|
PCH Martins
|
July 2015
|
7.7
|
2,132
|
4,041
|
|
|
PCH Cajuru
|
July 2015
|
7.2
|
3,576
|
4,252
|
|
|
PCH Paciência
|
July 2015
|
4.08
|
728
|
3,936
|
|
|
PCH Marmelos
|
July 2015
|
4
|
616
|
4,265
|
|
|
Others
|
|
|
|
|
|
|
UHE Volta Grande
|
Feb. 2017
|
380
|
25,621
|
70,118
|
|
|
UHE Miranda
|
Dec. 2016
|
408
|
26,710
|
22,546
|
|
|
UHE Jaguara
|
Aug. 2013
|
424
|
40,452
|
174,203
|
|
|
UHE São Simão
|
Jan. 2015
|
1,710
|
1,762
|
2,711
|
|
|
|
|
3,601.70
|
203,545
|
816,202
|
|
As specified by the grantor (Aneel)
in Normative Resolution 615/2014, the valuation reports that support the amounts in relation to the residual value of the plants, previously
operated by Cemig GT, that were included in Lot D and for the Volta Grande plant have been submitted to the grantor. The Company
does not expect any losses in the realization of these amounts.
On June 30, 2021, investments made
after the Jaguara, São Simão and Miranda plants came into operation, in the amounts of R$174,203, R$2,711 and R$22,546,
respectively, are recorded as concession financial assets, and the determination of the final amounts to be paid to the Company is in
a process of discussion with Aneel (the grantor). The Company does not expect losses in realization of these amounts.
In 2019, Plubic Hearing 003/2019
was opened to obtain inputs on improvement of the regulation of criteria and procedures for calculation of investments in revertible assets,
not yet amortized or not depreciated, of generation concessions (whether extended or not), under Law 12,783/2013, which resulted in the
publication, on July 13, 2021, of Normative Resolution 942, by Aneel.
Under Normative Resolution 942, concession
holders must attest the respective investments linked to reimbursable assets, based on an evaluation report, by July 12, 2022, – this period may be extended by Aneel for an
equal period. According to regulator rules, the evaluation report must be prepared by a company accredited by Aneel, to be hired by the
concession holder. Additionaly, the concession holders are required to state interest in receipt of the complementary amount until August
20, 2021. This statement was aproved by Cemig GT’s Chief Executive Board on August 03, 2021.
Appendix I of the said Resolution
details the methodology and general criteria for calculation of investment portion linked to reversible assets, which must be based on
the New Replacement Value – which is calculated, preferably, based on the reference database of prices, then, if it is not possible,
by the concession holder’s prices database, and, as the last alternative, by the updated inspected accounting cost.
The Company is assessing the effects of this resolution,
and does not expect losses in its financial assets as a result of application of these new requirements.
|
|
13.3
|
Concession grant fee –
Generation concessions
|
The concession grant fee for a 30-year
concession contracts Nº. 08 to 16/2016, related to 18 hydroelectric plants of Auction 12/2015, won by Cemig GT, was an amount of
R$2,216,353. The amount of the concession fee was recognized as a financial asset measured at amortized cost, as Cemig GT has an unconditional
right to receive the amount paid, updated by the IPCA Index and remuneratory interest (the total amount of which is equal to the internal
rate of return on the project), during the period of the concession.
The changes in concession financial
assets are as follows:
|
SPC
|
Plants
|
Dec. 31, 2020
|
Monetary updating
|
Amounts received
|
Jun. 30, 2021
|
|
Cemig Geração Três Marias S.A.
|
Três Marias
|
1,447,210
|
133,257
|
(72,235)
|
1,508,232
|
|
Cemig Geração Salto Grande S.A.
|
Salto Grande
|
454,256
|
41,962
|
(22,780)
|
473,438
|
|
Cemig Geração Itutinga S.A.
|
Itutinga
|
170,460
|
17,137
|
(9,685)
|
177,912
|
|
Cemig Geração Camargos S.A.
|
Camargos
|
127,814
|
12,787
|
(7,210)
|
133,391
|
|
Cemig Geração Sul S.A.
|
Coronel Domiciano, Joasal, Marmelos, Paciência and Piau
|
167,206
|
17,574
|
(10,144)
|
174,636
|
|
Cemig Geração Leste S.A.
|
Dona Rita, Ervália, Neblina, Peti, Sinceridade and Tronqueiras
|
113,807
|
12,883
|
(7,703)
|
118,987
|
|
Cemig Geração Oeste S.A.
|
Cajurú, Gafanhoto and Martins
|
68,445
|
7,804
|
(4,683)
|
71,566
|
|
Total
|
|
2,549,198
|
243,404
|
(134,440)
|
2,658,162
|
Of the energy produced by these plants, 70% is sold in
the Regulated Market (ACR) and 30% in the Free Market (ACL).
Sector assets and liabilities
|
|
13.4
|
Account for compensation of variation of
parcel A items (CVA) and Other financial components
|
The balances on the CVA (Compensation
for Variation of Parcel A items) Account, the account for Neutrality of Sector Charges, and Other financial components in the
tariff calculation, refer to the positive and negative differences between the estimate of the Company’s non-manageable costs and
the payments actually made. The variations are subject to adjustment using the Selic rate and considered in the subsequent tariff adjustments.
The balance of these sector financial
assets and liabilities, which are presented at net value, in assets or liabilities, in accordance with the tariff adjustments that have
been authorized or are to be ratified, are as follows:
|
Balance sheet
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Amounts ratified by Aneel in the last tariff adjustment
|
Amounts to be ratified by Aneel in the next tariff adjustments
|
Total
|
Amounts ratified by Aneel in the last tariff adjustment
|
Amounts to be ratified by Aneel in the next tariff adjustments
|
Total
|
|
Assets
|
2,099,388
|
1,342,517
|
3,441,905
|
83,984
|
1,561,906
|
1,645,890
|
|
Current assets
|
2,099,388
|
215,934
|
2,315,322
|
83,984
|
834,093
|
918,077
|
|
Non-current assets
|
-
|
1,126,583
|
1,126,583
|
-
|
727,813
|
727,813
|
|
|
|
|
|
|
|
|
|
Liabilities
|
(2,238,196)
|
(517,893)
|
(2,756,089)
|
(246,242)
|
(1,498,289)
|
(1,744,531)
|
|
Current liabilities
|
(2,238,196)
|
(44,102)
|
(2,282,298)
|
(246,242)
|
(903,157)
|
(1,149,399)
|
|
Non-current liabilities
|
-
|
(473,791)
|
(473,791)
|
-
|
(595,132)
|
(595,132)
|
|
|
|
|
|
|
|
|
|
Total current, net
|
(138,808)
|
171,832
|
33,024
|
(162,258)
|
(69,064)
|
(231,322)
|
|
Total non-current, net
|
-
|
652,792
|
652,792
|
-
|
132,681
|
132,681
|
|
Total, net
|
(138,808)
|
824,624
|
685,816
|
(162,258)
|
63,617
|
(98,641)
|
|
|
|
|
|
|
|
|
|
Financial components
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Amounts ratified by Aneel in the last tariff adjustment
|
Amounts to be ratified by Aneel in the next tariff adjustments
|
Total
|
Amounts ratified by Aneel in the last tariff adjustment
|
Amounts to be ratified by Aneel in the next tariff adjustments
|
Total
|
|
Items of ‘Parcel A’
|
|
|
|
|
|
|
|
Energy Development Account (CDE) quota
|
55,034
|
(905)
|
54,129
|
879
|
-
|
879
|
|
Tariff for use of transmission facilities of grid participants
|
317,518
|
126,524
|
444,042
|
847
|
217,778
|
218,625
|
|
Tariff for transport of Itaipu supply
|
28,431
|
10,534
|
38,965
|
103
|
17,618
|
17,721
|
|
Alternative power source program (Proinfa)
|
26,282
|
-
|
26,282
|
(138)
|
5,857
|
5,719
|
|
ESS/EER System Service/Energy Charges
|
66,289
|
149,024
|
215,313
|
(1,465)
|
38,549
|
37,084
|
|
Energy bought for resale
|
838,890
|
201,304
|
1,040,194
|
4,078
|
448,720
|
452,798
|
|
|
|
|
|
|
|
|
|
Other financial components
|
|
|
|
|
|
|
|
Over contracting of supply (1)
|
(148,644)
|
255,202
|
106,558
|
(55,828)
|
165,793
|
109,965
|
|
Neutrality of Parcel A
|
53,392
|
125,628
|
179,020
|
(2,706)
|
109,965
|
107,259
|
|
Billing return – Covid Account (2)
|
(816,970)
|
-
|
(816,970)
|
-
|
(504,476)
|
(504,476)
|
|
Other financial items
|
(506,101)
|
(31,703)
|
(537,804)
|
(86,248)
|
(394,367)
|
(480,615)
|
|
Excess demand and reactive power
|
(52,929)
|
(10,984)
|
(63,913)
|
(21,780)
|
(41,820)
|
(63,600)
|
|
TOTAL
|
(138,808)
|
824,624
|
685,816
|
(162,258)
|
63,617
|
(98,641)
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cemig D was over contracted in 2017 and 2018 and the gain arising from the sale of the excess of energy
in the spot market was provisionally passed through to customers by Aneel in the tariff adjustments of 2018 and 2019, including the portion
in excess of the limit of 105% of the regulatory load – thus reducing the tariff that was determined. To establish whether this
is a voluntary over contracting, the Company considers that the portion above the regulatory limit will be recovered in the subsequent
tariff adjustment. On August 27, 2020, Aneel published the Dispatch 2,508/2020-SRM-SGT, which set new amounts for distributors’
over contracting for the years 2016 and 2017, based on a new valuation criterion established by Aneel Technical Note 97/2020-SRM-SGT –
not contained in the regulatory rules which were currently in force. As a result, Cemig D filed an appeal with the Council of Aneel, for
the amounts of distribution agents’ over contracting to be reset in accordance with the calculation criteria based on maximum effort
contained in Aneel Normative Resolution 453/2011. The Company’s position on this case is reinforced by the fact that the Brazilian
Energy Distributors’ Association (Abradee) filed a similar appeal, supported by the opinion of contracted legal advisers. The Company
has no expectation of loss in relation to realization of these amounts. The Company recognizes this receivable asset, in the amount of
R$186,344 on June 30, 2021, as ‘Other financial components’ to be ratified. At the reporting date for this interim financial
information, this matter was pending analysis by Aneel, however, the decision of SGT/SEM Dispatch 2508 of 2020 is in force, and was considered
in the last tariff process, in which part of the amount relating to over contracting in 2017 was ratified, totaling R$39,270.
|
|
|
(2)
|
This is a financial component created for return to customers of the amounts that were invoiced to them
but received by Cemig from the Covid Account in 2020. These amounts will be returned to customers in the tariff process of 2021, duly
updated by the Selic rate, with guarantee of neutrality.
|
Changes in balances of sector financial
assets and liabilities are as follow:
|
|
|
|
Balance at December 31, 2020
|
(98,641)
|
|
Additions
|
612,231
|
|
Amortization
|
180,420
|
|
Transfer of other liabilities (1)
|
(15,121)
|
|
Updating – Selic rate (Note 28)
|
6,927
|
|
Balance at June 30, 2021
|
685,816
|
|
|
(1)
|
Amounts relating to the reversal of the credits that could not be returned
to customers in final billing, for the purpose of moderation of tariffs, as specified in §6 of Article 88 of REN 414/2010, included
by REN 714/2016.
|
Tariff adjustment – Cemig
D
On May 25, 2021 Aneel approved the
Cemig D Annual Tariff Adjustment, effective from May 28, 2021 to May 27, 2022, with an average increase perceived by customers of 1.28%
– its components included average increases of: 2.14% for high-voltage customers, and 0.89% for customers connected at low voltage.
There was no adjustment to tariffs for residential customers connected at low voltage. This result arises from: (i) variation of 2.64%
in the Parcel B costs, and the direct pass-throughs within the tariff, which were reduced by 1.37% – the latter having zero economic
effect for the Company, not affecting profitability – relating to the following items: (a) increase of 8.84% in non-manageable costs
(Parcel A), mainly related to purchase of energy supply, regulatory charges and transmission charges; (b) decrease of 8.80% in financial
components of the current process, led by the reduction of R$1,573,000 relating to credits of PIS/Pasep and Cofins taxes, which generated
a negative variation in the tariff of 9.67%, and the reversal of the Covid account (8.78%); and (c) withdrawal of 1.41% from the financial
components of the prior process.
|
|
14.
|
CONCESSION CONTRACT ASSETS
|
Under IFRS 15 / CPC 47 – Revenue
from contracts with customers, concession infrastructure assets recognized during the period of construction for which the right to
consideration depends on satisfaction of a performance obligations related to the completion of its construction, or its future operation
and maintenance are classified as contract assets. The balances of these on June, 30, 2021 were as follows:
|
Consolidated
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Distribution – Infrastructure assets under construction
|
1,465,334
|
1,141,599
|
|
Gas – Infrastructure assets under construction
|
89,175
|
94,115
|
|
National Grid (‘BNES’ - Basic Network of the Existing System) - Law 12,783/13
|
1,988,006
|
1,895,854
|
|
Transmission – Assets remunerated by tariff
|
1,998,478
|
1,848,504
|
|
|
5,540,993
|
4,980,072
|
|
|
|
|
|
Current
|
540,876
|
737,110
|
|
Non-current
|
5,000,117
|
4,242,962
|
Changes in concession
contract assets are as follows:
|
|
Transmission
|
Distribution
|
Gas
|
Total
|
|
Balance at December 31, 2020
|
3,744,358
|
1,141,599
|
94,115
|
4,980,072
|
|
|
|
|
|
|
|
Additions
|
62,133
|
706,125
|
18,918
|
787,176
|
|
Inflation adjustment
|
297,122
|
-
|
-
|
297,122
|
|
Results of the Periodic Tariff Revision
|
238,815
|
-
|
-
|
238,815
|
|
Amounts received
|
(351,957)
|
-
|
-
|
(351,957)
|
|
Disposals
|
(3,987)
|
-
|
(1,999)
|
(5,986)
|
|
Others additions
|
-
|
-
|
2,371
|
2,371
|
|
Transfers to financial assets
|
-
|
(32,743)
|
(15)
|
(32,758)
|
|
Transfers to intangible assets
|
-
|
(353,369)
|
(24,215)
|
(377,584)
|
|
Impairment
|
-
|
3,722
|
-
|
3,722
|
|
Balance at June 30, 2021
|
3,986,484
|
1,465,334
|
89,175
|
5,540,993
|
The amount of additions in the period
ended June 30, 2021 includes R$12,872 under the heading capitalized borrowing costs, as presented in Note 21.
The Company has not identified any evidence of impairment
of the others contract assets, with definite expected useful life.
Energy and gas
distribution activities
The concession
infrastructure assets still under construction are recognized initially as contract assets, measured at amortized cost, including capitalized
borrowing costs. When the asset start operations, the construction performance obligation is concluded, and the assets are split into
financial assets and intangible assets.
The transmission
activity
For transmission
concessions, the consideration to be paid to the Company arises from the concession contracts n. 006/97, n. 079/00 and n. 004/05, as follows:
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Current
|
|
|
|
Concession contract - 004/05
|
26,145
|
18,680
|
|
Concession contract - 079/00
|
35,613
|
28,600
|
|
Concession contract - 006/97
|
|
|
|
National Grid (‘BNES’ - Basic Network of the Existing System)
|
291,998
|
533,430
|
|
National Grid - new facilities (RBNI)
|
187,120
|
156,400
|
|
|
540,876
|
737,110
|
|
Non-current
|
|
|
|
Concession contract - 004/05
|
93,327
|
90,977
|
|
Concession contract - 079/00
|
156,529
|
132,589
|
|
Concession contract - 006/97
|
|
|
|
National Grid (‘BNES’ - Basic Network of the Existing System)
|
1,696,008
|
1,362,424
|
|
National Grid - new facilities (RBNI)
|
1,499,744
|
1,421,259
|
|
|
3,445,608
|
3,007,249
|
|
|
3,986,484
|
3,744,359
|
|
|
a)
|
Concession contract nº. 006/97
|
The contract regulates the public
service of commercial operation of transmission facilities that are classified as parts of the National Grid, pursuant to Law 9,074/1995
and to the regulation applicable, in effect until December 31, 2042.
The contract was renewed on December
4, 2012, for 30 years, from January 1, 2013, under Provisional Act 579 of September 11, 2012 (converted into Law 12,783/2013), which specified
reimbursement for the assets that had not been depreciated on December, 31, 2012.
On June 30, 2020, Aneel ratified
the results of the Periodic Tariff Review for Contract 006/1997, through Ratifying Resolution 2,712/2020, setting the repositioning of
the Permitted Annual Revenue (RAP), to be applied from July 1, 2018. In this process the RAP of the 2018-19 cycle was increased by 9.13%
from the provisional amount of RAP for the same period. Although this revision was finalized only in 2020, its effects were backdated
to July 2018.
As a result of the Periodic Tariff
Review, the company recognized gains of R$528,598 in its 2020 results, comprising R$321,453 for the RBNI assets and R$ 207,145 for the
BNES assets, corresponding to the extension of the concessions,
under Law 12,783/13, included in the Regulatory Remuneration Base.
On April 22, 2021, Resolution 2,852
altered the repositioning of the RAP set by Resolution 2,712/2020, with effect backdated to July 1, 2018, and also the Adjustment Portion
of the Review, with financial effects on the adjustment of RAP for the 2021-22 cycle, to be in effect from July 1, 2021 to June 30, 2022.
On December 31, 2020, as described
in Note 2.3, the Company reclassified to contract asset the amounts recorded as financial asset at the first adoption of CPC 47/ IFRS
15, related to the National Grid (‘BNES’ - Basic Network of the Existing System) financial portion, which represents the amount
to be paid since the extension of the concessions until its incorporation into the tariff, to be received in 8 years, starting in June,
2017, and exclusively represented installments not paid from January 1, 2013 to June 30, 2017, updated by the regulatory cost of capital
of the transmission sector. The amounts reclassified for the period ended on June 30, 2020 is R$1,265,445.
The next Periodic Tariff Review (RTP)
will take place in June 2023, with effect from July 1, 2023. The indexer used to update the contract is the Expanded Consumer Price Index
(Índice de Preços ao Consumidor Amplo –IPCA).
National Grid Assets- ‘BNES’
- Basic Network of the Existing System – the regulatory cost of capital updating
On April 10, 2017, a preliminary
injunction was granted to the Brazilian Large Free Customers’ Association (Associação Brasileira de Grandes Consumidores
Livres), the Brazilian Auto Glass Industry Technical Association (Associação Técnica Brasileira das Indústrias
Automáticas de Vidro) and the Brazilian Ferro-alloys and Silicon Metal Producers’ Association (Associação
Brasileira dos Produtores de Ferroligas e de Silicio Metálico) in their legal action against the grantor and the Federal Government
requesting suspension of the effects on their tariffs of remuneration at cost of equity of portions of “National Grid” assets
not yet paid from 2013 to 2017 owned to the agents that accepted the terms of Law 12,783/13.
On June 2020, due to revocation of
the majority of the injunctions, and in compliance with the Execution Opinions issued by the Federal Public Attorneys’ Office to
Aneel, the effects caused by the reversal of these injunctions were calculated, for inclusion of the cost of equity in the transmission
revenue starting with the 2020-21 cycle, considering all retrospective effects, including those arising from the assumptions adopted in
the 2018 RAP periodic reset.
At this moment Aneel provisionally
ratified only the inclusion of the cost of equity updated by IPCA index of the period between the 2017-18 and 2019-20 tariff cycles, considering
the need for deeper examination of the legal conditions for analysis of the Company’s appeal, which require the inclusion of the
WACC remuneration for the periods in which it was suspended.
On January 06, 2021, the Brazilian
General Attorney's Office issued a legal opinion about the effects of the reversal of the court decision that had suspended the cost of
equity remuneration of the transmission agents determined by Ministerial Order 120, of April 20, 2016. The legal opinion concluded that
the interest not received in the period of January, 2013 to June, 2017 – cost of capital remuneration – must be updated by
the cost of equity rate, as established in the MME Ministerial Order 120/2016 and in the Aneel Resolution 762/2017, until July 01, 2020,
which is the date that the payment took place, and must be included to RAP as of July 1, 2020 (2020-2021 cycle) for eight years.
On April 22, 2021, Aneel published
Ratifying Resolution 2,852, which altered Ratifying Resolution 2,712/2020, defining, among other provisions, the financial component referred
to. The judgment vote attached to the Resolution states that, in compliance with the Execution Order Opinion issued by the Federal Procurator
applying to Aneel, the cost of own capital associated with the financial components was incorporated into the calculation of the Periodic
Review processes of 2018 deciding the RAP of the transmission concessions that were extended under Law 12,783/2013. This caused 2 effects:
(i) A new value for the component to be considered in the RAP of the tariff cycles for 2020-21 to 2025-26; and (2) a residual value for
the difference between the amount paid to the transmission companies in the 2017-18 and 2019-20 tariff cycles and the amount payable after
the injunctions were overturned.
Thus, the debt balance of this component
was recalculated, using remuneration at the rate of cost of own capital, up to the date of actual payment (July 1, 2020), after discounting
the amounts paid, brought to present value.
However, owing to the pandemic scenario
and its potential impacts on energy sector liquidity, Aneel opted the alternative of ‘reprofiling’ these payments, for payment
gradually over a period of 8 years, guaranteeing the net present value of the transaction. In the proposed profile the minimum payment
is made in the 2021-22 cycle, that is, say, with zero amortization of the debt portion of the balance; in the 2022-23 cycle there is amortization
at a rate of 3.0%, so as to amortize part of the debt and keep the level of payments stable; and there are then constant payments over
the cycles of 2023-24 to 2027-28, with amortization rates of 16.11% per year. Thus, to achieve regulatory stability and mitigate sector
risk, this RAP’s financial component might not be included in 2023 periodic review. The effects on short-term contractual assets
due to the reduction of amortization in the two annual cycles of 2021–2022 and 2022–2023, corresponding to R$276,197, which
was reclassified to long-term.
On second quarter of 2021, the
Company recognized the effects of the decision by Aneel put into effect by Ratifying Resolution 2,852/2021, based on recalculation
of the financial component including the remuneration of capital at the rate of cost of own capital, substituting the weighted
average regulatory cost of capital, for the period from June 2017 to June 2020, and the new amounts of the component for the cycles
of 2020-21 and 2025-26, taking into account the reprofiling of the payments
under the terms of the Resolution. Considering that Aneel’s decision resulted in an increase of the financial component to be received
by the Company, the company recognized the effects of the resolution mentioned above in the second quarter of 2021, in the amount of R$211,246.
|
|
b)
|
Concession contract nº.
079/00
|
The contract regulates commercial
operation of public transmission service, comprising construction, maintenance and operation of transmission of the following facilities:
The Itajubá 3 Substation; the Itajubá 3 – Poços de Caldas Transmission Line; and the Itajubá 3–Cachoeira
Paulista Transmission Line, in effect until October 4, 2034.
On December 15, 2020, the Resolution
2,825/2020 ratified the RAP Periodic Tariff Review of bid contracts of energy transmission, whose tariff review was scheduled for July,
2019. Only of the revenues provisionally established, arising from enhancements and upgrades authorizations are reset. The Periodic Tariff
Review resulted in recognition of a gain of R$23,254 in the Company’s net profit for 2020.
In response to the results decided
by the Ratifying Resolution, Cemig GT presented an application for reconsideration, which resulted in Aneel recognizing the following
inconsistencies: (i) no discount on the reassessed amount of the rates of PIS, Pasep and Cofins taxes relating to the benefit under REIDI
(the Special Infrastructure Development Incentives Regime – Regime Especial de Incentivos para o Desenvolvimento da Infraestrutura),
and (ii) material error in the recognition of the amounts of the average annual depreciation rate. As a result, the amounts of the RAPs
and the Adjustment Portions for contract 079/00 of Cemig GT were altered, in accordance with Ratifying Resolution 2,839 of March 30, 2021,
generating a positive adjustment of R$6,036 in Contractual assets at March 31, 2021. The total amount of revenue recognized in the profit
for the period in relation to the Tariff Review, net of applicable taxes, is R$5,816.
The amounts will comprise the new
RAP as from the adjustment for the 2021/2022 cycle and the adjustment portion relating to the backdating will be paid in 3 installments
during the next adjustment processes.
The next Periodic Tariff Review (RTP)
of the enhancements that have been approved will take place in June 2024, and be in effect from July 1, 2024. The indexer used for adjustment
of the contract is the General Market Prices Index (Índice Geral de Preços do Mercado – IGPM).
|
|
c)
|
Concession contract nº.
004/2005
|
The contract regulates the concession
for the second-circuit 345kV transmission facility which runs between the Furnas and Pimenta substations, a distance of approximately
75 km, for a period of 30 years from March 2005. For making the transmission facilities available for commercial operation, Centroeste
will receive the Permitted Annual Revenue (RAP), adjusted annually, in the first 15 years of commercial operation. In the 16th year of
commercial operation, its RAP will be reduced by 50%, until the end of the concession.
The indexer used for adjustment of
the contract is the IGP-M (Índice Geral de Preços do Mercado – General Market Prices Index).
|
Investees
|
Control
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Cemig Geração e Transmissão
|
Subsidiary
|
-
|
-
|
6,917,732
|
5,921,159
|
|
Hidrelétrica Cachoeirão
|
Jointly-controlled
|
50,173
|
53,215
|
-
|
-
|
|
Guanhães Energia
|
Jointly-controlled
|
131,401
|
131,391
|
-
|
-
|
|
Hidrelétrica Pipoca
|
Jointly-controlled
|
40,179
|
35,552
|
-
|
-
|
|
Retiro Baixo
|
Jointly-controlled
|
197,246
|
195,235
|
-
|
-
|
|
Aliança Norte (Belo Monte Plant)
|
Jointly-controlled
|
614,553
|
631,227
|
-
|
-
|
|
Amazônia Energia (Belo Monte Plant)
|
Jointly-controlled
|
938,619
|
965,255
|
-
|
-
|
|
Madeira Energia (Santo Antônio Plant)
|
Affiliated
|
116,762
|
209,374
|
-
|
-
|
|
FIP Melbourne (Santo Antônio Plant)
|
Affiliated
|
82,168
|
157,476
|
-
|
-
|
|
Lightger
|
Jointly-controlled
|
132,966
|
130,794
|
-
|
-
|
|
Baguari Energia
|
Jointly-controlled
|
158,441
|
159,029
|
-
|
-
|
|
Aliança Geração
|
Jointly-controlled
|
1,225,510
|
1,166,240
|
-
|
-
|
|
Cemig Distribuição
|
Subsidiary
|
-
|
-
|
6,579,338
|
6,021,630
|
|
TAESA
|
Jointly-controlled
|
1,517,515
|
1,467,445
|
1,517,515
|
1,467,445
|
|
Ativas Data Center
|
Affiliated
|
16,927
|
16,799
|
16,927
|
16,799
|
|
Gasmig
|
Subsidiary
|
-
|
-
|
1,539,328
|
1,495,599
|
|
Cemig Sim
|
Subsidiary
|
-
|
-
|
107,266
|
94,098
|
|
UFV Janaúba Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
9,559
|
10,467
|
-
|
-
|
|
UFV Manga Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
11,099
|
11,416
|
-
|
-
|
|
UFV Corinto Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
9,092
|
9,212
|
-
|
-
|
|
UFV Bonfinópolis Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
6,311
|
6,144
|
-
|
-
|
|
UFV Lagoa Grande Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
14,860
|
15,059
|
-
|
-
|
|
UFV Lontra Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
17,288
|
16,899
|
-
|
-
|
|
UFV Mato Verde Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
6,145
|
6,182
|
-
|
-
|
|
UFV Mirabela Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
4,074
|
3,989
|
-
|
-
|
|
UFV Porteirinha I Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
5,220
|
6,075
|
-
|
-
|
|
UFV Porteirinha II Geração de Energia Elétrica Distribuída
|
Jointly-controlled
|
6,452
|
6,382
|
-
|
-
|
|
UFV Brasilândia Geração de Energia Elétrica Distribuída (1)
|
Jointly-controlled
|
14,765
|
-
|
-
|
-
|
|
Companhia de Transmissão Centroeste de Minas
|
Subsidiary
|
-
|
-
|
118,060
|
118,217
|
|
Axxiom Soluções Tecnológicas
|
Jointly-controlled
|
4,083
|
4,436
|
4,083
|
4,436
|
|
Total of investments
|
|
5,331,408
|
5,415,293
|
16,800,249
|
15,139,383
|
|
Itaocara – equity deficit (2)
|
Jointly-controlled
|
(29,298)
|
(29,615)
|
-
|
-
|
|
Total
|
|
5,302,110
|
5,385,678
|
16,800,249
|
15,139,383
|
|
|
(1)
|
On March 31, 2021, through its wholly-owned
subsidiary Cemig Soluções Inteligentes em Energia S.A. (Cemig Sim), the Company acquired 49% of the specialized generation
company UFV Brasilândia Geração de Energia Elétrica Distribuída S.A. (‘Brasilândia’),
which operates in photovoltaic solar generation for the distributed generation market, with installed capacity of 7.35 MWp, for R$12,558,
achieving a fair value gain of R$1,961.
|
|
|
(2)
|
On June 30, 2021 and December 31, 2020, the investee has negative net equity.
Thus, after reducing the accounting value of its interest to zero, the Company recognized the provision for losses to the extent of its
obligations, in the amount of R$29,298 (R$29,615 on December 31, 2020), resulting from contractual obligations assumed with the jointly-controlled
entity and the other shareholders. The loss is recorded in the balance sheet in Other obligations.
|
The Company’s investees that
are not consolidated are jointly-controlled entities, with the exception of the interests in the affiliates Madeira Energia (Santo Antônio
plant), Ativas Data Center and Light, the latter was classified as an asset held for sale at December, 31, 2020, and its sale was completed
on January 22, 2021. See Note 32 for more information.
For the semester ended of June 30,
2021, management evaluates if the economic shock of the Covid-19 pandemic (Note 1b), of potential decline in value of assets, as referred
to in IAS 36 – Impairments of Assets. As a result of the analyzes, the Company concluded that the pandemic brought cyclical
effects and the long-term expectation of assets realization underwent no change, with no losses in the recoverable value of its investments.
Thus, the reported assets net carrying amount is recoverable, and thus that there was no need to recognize any impairment loss in the
Company nor its subsidiaries as a result of the current economic scenario.
Additionally, in relation to the
above, the Company’s management has assessed the risk threatening all its investments ability to continue as a going concern, taking
substantially into consideration: the economic-financial clauses of Cemig D and Gasmig; the guarantee of revenues of the transmission
companies; the protection against force majeure reduction in regulated generation contracts; and all the legal measures that have
been applied by the federal government and by Aneel – and has concluded that the Company and its subsidiaries’ ability to
continue as going concern is secure.
|
|
a)
|
Right to
exploitation of the regulated activity
|
In the process of allocating the
purchase price for of the acquisition of the jointly-controlled subsidiaries and affiliates, a valuation was made for the intangible assets
relating to the right to operate the infrastructure. This asset is presented together with the acquisition cost of the investments. These
assets will be amortized over the remaining period of the concessions on a straight-line basis.
The rights of authorization to generate
wind energy granted to Parajuru and Volta do Rio, valued at R$51,549 (R$53,858 on December 31, 2020) and R$70,594 (R$73,983 on December
31, 2020), respectively, are included in the interim financial information of the subsidiary Cemig GT and of the Company, respectively,
and in accordance with Technical Interpretation ICPC 09, the investments and are classified in the consolidated balance sheet under Intangibles.
These concession assets are amortized by the straight-line method, during the period of the concession. For further information see Note
17.
Changes in these assets are as follows:
|
PARENT COMPANY
|
|
Investees
|
Dec. 31, 2020
|
Amortization
|
Jun. 30, 2021
|
|
Lightger
|
78,989
|
(1,250)
|
77,739
|
|
TAESA
|
160,783
|
(4,661)
|
156,122
|
|
Gasmig
|
411,503
|
(7,629)
|
403,874
|
|
TOTAL
|
651,275
|
(13,540)
|
637,735
|
|
CONSOLIDATED
|
|
Investees
|
Dec. 31, 2020
|
Amortization
|
Jun. 30, 2021
|
|
Cemig Geração e Transmissão
|
|
|
|
|
Retiro Baixo
|
29,187
|
(695)
|
28,492
|
|
Madeira Energia (Santo Antônio Plant)
|
16,526
|
(368)
|
16,158
|
|
Lightger
|
78,989
|
(1,250)
|
77,739
|
|
Aliança Geração
|
326,915
|
(12,655)
|
314,260
|
|
Aliança Norte (Belo Monte Plant)
|
48,632
|
(986)
|
47,646
|
|
TAESA
|
160,783
|
(4,661)
|
156,122
|
|
TOTAL
|
661,032
|
(20,615)
|
640,417
|
|
|
b)
|
Changes in investments in
subsidiaries, jointly-controlled entities and affiliates:
|
|
PARENT COMPANY
|
|
Investees
|
Dec. 31, 2020
|
Gain (loss) by equity method
(Income statement)
|
Dividends
|
Additions / acquisitions
|
Others
|
Jun. 30, 2021
|
|
Cemig Geração e Transmissão
|
5,921,159
|
1,131,707
|
(135,134)
|
-
|
-
|
6,917,732
|
|
Cemig Distribuição
|
6,021,630
|
739,794
|
(182,086)
|
-
|
-
|
6,579,338
|
|
Ativas Data Center
|
16,799
|
128
|
-
|
-
|
-
|
16,927
|
|
Gasmig
|
1,495,599
|
159,316
|
(115,756)
|
-
|
169
|
1,539,328
|
|
Cemig Sim
|
94,098
|
1,392
|
(782)
|
12,558
|
-
|
107,266
|
|
Companhia de Transmissão Centroeste de Minas
|
118,217
|
10,881
|
(11,038)
|
-
|
-
|
118,060
|
|
Axxiom Soluções Tecnológicas
|
4,436
|
(1,774)
|
-
|
1,421
|
-
|
4,083
|
|
Taesa
|
1,467,445
|
273,013
|
(222,943)
|
-
|
-
|
1,517,515
|
|
|
15,139,383
|
2,314,457
|
(667,739)
|
13,979
|
169
|
16,800,249
|
|
CONSOLIDATED
|
|
Investees
|
Dec. 31, 2020
|
Gain (loss) by equity method
(Income statement)
|
Dividends
|
Additions / acquisitions
|
Jun. 30, 2021
|
|
Hidrelétrica Cachoeirão
|
53,215
|
5,289
|
(8,331)
|
-
|
50,173
|
|
Guanhães Energia
|
131,391
|
10
|
-
|
-
|
131,401
|
|
Hidrelétrica Pipoca
|
35,552
|
4,627
|
-
|
-
|
40,179
|
|
Madeira Energia (Santo Antônio Plant)
|
209,374
|
(92,612)
|
-
|
-
|
116,762
|
|
FIP Melbourne (Santo Antônio Plant)
|
157,476
|
(75,308)
|
-
|
-
|
82,168
|
|
Lightger
|
130,794
|
2,172
|
-
|
-
|
132,966
|
|
Baguari Energia
|
159,029
|
10,247
|
(10,835)
|
-
|
158,441
|
|
Amazônia Energia (Belo Monte Plant)
|
965,255
|
(26,636)
|
-
|
-
|
938,619
|
|
Aliança Norte (Belo Monte Plant)
|
631,227
|
(16,674)
|
-
|
-
|
614,553
|
|
Ativas Data Center
|
16,799
|
128
|
-
|
-
|
16,927
|
|
Taesa
|
1,467,445
|
273,013
|
(222,943)
|
-
|
1,517,515
|
|
Aliança Geração
|
1,166,240
|
59,270
|
-
|
-
|
1,225,510
|
|
Retiro Baixo
|
195,235
|
5,940
|
(3,929)
|
-
|
197,246
|
|
UFV Janaúba Geração de Energia Elétrica Distribuída
|
10,467
|
987
|
(1,895)
|
-
|
9,559
|
|
UFV Corinto Geração de Energia Elétrica Distribuída
|
9,212
|
383
|
(503)
|
-
|
9,092
|
|
UFV Manga Geração de Energia Elétrica Distribuída
|
11,416
|
(16)
|
(301)
|
-
|
11,099
|
|
UFV Bonfinópolis II Geração de Energia Elétrica Distribuída
|
6,144
|
167
|
-
|
-
|
6,311
|
|
UFV Lagoa Grande Geração de Energia Elétrica Distribuída
|
15,059
|
236
|
(435)
|
-
|
14,860
|
|
UFV Lontra Geração de Energia Elétrica Distribuída
|
16,899
|
389
|
-
|
-
|
17,288
|
|
UFV Mato Verde Geração de Energia Elétrica Distribuída
|
6,182
|
98
|
(135)
|
-
|
6,145
|
|
UFV Mirabela Geração de Energia Elétrica Distribuída
|
3,989
|
130
|
(45)
|
-
|
4,074
|
|
UFV Porteirinha I Geração de Energia Elétrica Distribuída
|
6,075
|
(855)
|
-
|
-
|
5,220
|
|
UFV Porteirinha II Geração de Energia Elétrica Distribuída
|
6,382
|
163
|
(93)
|
-
|
6,452
|
|
UFV Brasilândia Geração de Energia Elétrica Distribuída (2)
|
-
|
2,520
|
(313)
|
12,558
|
14,765
|
|
Axxiom Soluções Tecnológicas
|
4,436
|
(1,774)
|
-
|
1,421
|
4,083
|
|
Total of investments
|
5,415,293
|
151,894
|
(249,758)
|
13,979
|
5,331,408
|
|
Itaocara – equity deficit (1)
|
(29,615)
|
(415)
|
-
|
732
|
(29,298)
|
|
Total
|
5,385,678
|
151,479
|
(249,758)
|
14,711
|
5,302,110
|
|
|
(1)
|
On December 31, 2020, the investee had negative
shareholders’ equity. Thus, after reducing the accounting value of its interest to zero, the Company recognized the provision for
losses on investments, in the amount of R$29,615, resulting from contractual obligations assumed with the subsidiary and the other shareholders.
|
|
|
(2)
|
Includes the amount of R$1,961 of the acquisition of the jointly-controlled
subsidiary UFV Brasilândia.
|
Changes in dividends receivable are as follows:
|
|
Consolidated
|
Parent company
|
|
Balance at December 31, 2020
|
188,327
|
1,272,878
|
|
Investees’ dividends proposed
|
249,758
|
667,739
|
|
Amounts received
|
(324,677)
|
(991,336)
|
|
Withholding income tax received from subsidiary
|
(2,113)
|
(49,696)
|
|
Balance at June 30, 2021
|
111,295
|
899,585
|
|
|
c)
|
Information This table gives
the main information on the subsidiaries and affiliates, not adjusted for the percentage represented by the Company’s ownership
interest:
|
|
Investee
|
Number of shares
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Cemig interest (%)
|
Share capital
|
Equity
|
Cemig interest (%)
|
Share capital
|
Equity (Restated)
|
|
Cemig Geração e Transmissão
|
2,896,785,358
|
100.00
|
4,000,000
|
6,839,993
|
100.00
|
4,000,000
|
5,842,171
|
|
Madeira Energia
(Santo Antônio Plant)
|
12,034,025,147
|
15.51
|
10,619,786
|
1,178,625
|
15.51
|
10,619,786
|
2,259,093
|
|
Hidrelétrica Cachoeirão
|
35,000,000
|
49.00
|
35,000
|
102,395
|
49.00
|
35,000
|
108,602
|
|
Guanhães Energia
|
548,626,000
|
49.00
|
548,626
|
268,166
|
49.00
|
548,626
|
268,144
|
|
Hidrelétrica Pipoca
|
41,360,000
|
49.00
|
41,360
|
81,998
|
49.00
|
41,360
|
72,554
|
|
Baguari Energia (1)
|
26,157,300,278
|
69.39
|
186,573
|
228,342
|
69.39
|
186,573
|
229,189
|
|
Central Eólica Praias de Parajuru
|
85,834,843
|
100.00
|
85,835
|
114,606
|
100.00
|
70,560
|
107,204
|
|
Central Eólica Volta do Rio
|
274,867,441
|
100.00
|
274,867
|
166,710
|
100.00
|
117,230
|
171,453
|
|
Lightger
|
79,078,937
|
49.00
|
79,232
|
112,708
|
49.00
|
79,232
|
105,724
|
|
Aliança Norte
(Belo Monte Plant)
|
41,923,360,811
|
49.00
|
1,209,043
|
1,156,954
|
49.00
|
1,209,043
|
1,188,963
|
|
Amazônia Energia
(Belo Monte Plant) (1)
|
1,322,697,723
|
74.50
|
1,322,698
|
1,259,890
|
74.50
|
1,322,698
|
1,295,644
|
|
Aliança Geração
|
1,291,582,500
|
45.00
|
1,291,488
|
2,017,599
|
45.00
|
1,291,488
|
1,857,905
|
|
Retiro Baixo
|
225,350,000
|
49.90
|
225,350
|
338,183
|
49.90
|
225,350
|
324,810
|
|
Renova (1) (2)
|
41,719,724
|
15.09
|
3,295,173
|
(844,112)
|
36.23
|
2,960,776
|
(1,107,637)
|
|
Usina Hidrelétrica Itaocara S.A.
|
71,708,500
|
49.00
|
73,203
|
(59,790)
|
49.00
|
71,709
|
(60,438)
|
|
Cemig Baguari
|
406,000
|
100.00
|
406
|
96
|
100.00
|
356
|
55
|
|
Cemig Ger. Três Marias S.A.
|
1,291,423,369
|
100.00
|
1,291,423
|
1,531,561
|
100.00
|
1,291,423
|
1,452,217
|
|
Cemig Ger. Salto Grande S.A.
|
405,267,607
|
100.00
|
405,268
|
488,649
|
100.00
|
405,268
|
455,480
|
|
Cemig Ger. Itutinga S.A.
|
151,309,332
|
100.00
|
151,309
|
194,437
|
100.00
|
151,309
|
179,745
|
|
Cemig Geração Camargos S.A.
|
113,499,102
|
100.00
|
113,499
|
150,211
|
100.00
|
113,499
|
143,704
|
|
Cemig Geração Sul S.A.
|
148,146,505
|
100.00
|
148,147
|
194,109
|
100.00
|
148,147
|
174,006
|
|
Cemig Geração Leste S.A.
|
100,568,929
|
100.00
|
100,569
|
127,929
|
100.00
|
100,569
|
127,128
|
|
Cemig Geração Oeste S.A.
|
60,595,484
|
100.00
|
60,595
|
95,027
|
100.00
|
60,595
|
83,870
|
|
Rosal Energia S.A.
|
46,944,467
|
100.00
|
46,944
|
127,901
|
100.00
|
46,944
|
127,019
|
|
Sá Carvalho S.A.
|
361,200,000
|
100.00
|
36,833
|
132,366
|
100.00
|
36,833
|
115,486
|
|
Horizontes Energia S.A.
|
39,257,563
|
100.00
|
39,258
|
57,964
|
100.00
|
39,258
|
55,461
|
|
Cemig PCH S.A.
|
45,952,000
|
100.00
|
45,952
|
96,827
|
100.00
|
45,952
|
89,898
|
|
Cemig Geração Poço Fundo S.A.
|
1,602,000
|
100.00
|
1,602
|
25,246
|
100.00
|
1,402
|
3,801
|
|
Empresa de Serviços de Comercialização de Energia Elétrica S.A.
|
486,000
|
100.00
|
486
|
131,228
|
100.00
|
486
|
56,838
|
|
Cemig Trading S.A.
|
1,000,000
|
100.00
|
1,000
|
2,045
|
100.00
|
1,000
|
30,315
|
|
Cemig Distribuição
|
2,359,113,452
|
100.00
|
5,371,998
|
6,579,338
|
100.00
|
5,371,998
|
6,021,630
|
|
TAESA
|
1,033,496,721
|
21.68
|
3,042,035
|
6,378,766
|
21.68
|
3,042,034
|
6,025,904
|
|
Ativas Data Center
|
456,540,718
|
19.60
|
182,063
|
86,361
|
19.60
|
182,063
|
85,711
|
|
Gasmig
|
409,255,483
|
99.57
|
665,430
|
1,140,358
|
99.57
|
665,429
|
1,079,410
|
|
Cemig Sim
|
24,431,845
|
100.00
|
102,153
|
107,266
|
100.00
|
24,432
|
94,098
|
|
Companhia de Transmissão Centroeste de Minas
|
28,000,000
|
100.00
|
28,000
|
118,060
|
100.00
|
28,000
|
118,217
|
|
Axxiom Soluções Tecnológicas
|
65,165,000
|
49.00
|
65,165
|
8,334
|
49.00
|
65,165
|
9,054
|
|
UFV Janaúba Geração de Energia Elétrica Distribuída
|
18,509,900
|
49.00
|
18,510
|
21,396
|
49.00
|
18,510
|
21,362
|
|
UFV Corinto Geração de Energia Elétrica Distribuída
|
18,000,000
|
49.00
|
18,000
|
18,530
|
49.00
|
18,000
|
18,798
|
|
UFV Manga Geração de Energia Elétrica Distribuída
|
21,660,575
|
49.00
|
21,661
|
21,722
|
49.00
|
21,661
|
22,128
|
|
UFV Bonfinópolis Geração de Energia Elétrica Distribuída
|
13,197,187
|
49.00
|
13,197
|
12,940
|
49.00
|
13,197
|
12,514
|
|
UFV Lagoa Grande Geração de Energia Elétrica Distribuída
|
25,471,844
|
49.00
|
25,472
|
26,065
|
49.00
|
25,472
|
25,997
|
|
UFV Lontra Geração de Energia Elétrica Distribuída
|
29,010,219
|
49.00
|
29,010
|
28,137
|
49.00
|
29,010
|
27,334
|
|
UFV Mato Verde Geração de Energia Elétrica Distribuída
|
11,030,391
|
49.00
|
11,030
|
11,291
|
49.00
|
11,030
|
11,135
|
|
UFV Mirabela Geração de Energia Elétrica Distribuída
|
9,320,875
|
49.00
|
9,321
|
9,582
|
49.00
|
9,321
|
9,306
|
|
UFV Porteirinha I Geração de Energia Elétrica Distribuída
|
12,348,392
|
49.00
|
12,348
|
12,399
|
49.00
|
12,348
|
12,236
|
|
UFV Porteirinha II Geração de Energia Elétrica Distribuída
|
11,702,733
|
49.00
|
11,703
|
11,973
|
49.00
|
11,703
|
11,750
|
|
UFV Brasilândia Geração de Energia Elétrica Distribuída
|
25,629,900
|
49.00
|
25,879
|
26,478
|
-
|
-
|
-
|
|
|
(1)
|
Jointly-control under a Shareholders’ Agreement.
|
|
|
(2)
|
In view of Renova’s negative net equity, the Company reduced to zero the carrying amount of its
equity interests in this investee, at December 31, 2018. Renova adjusted its equity interest in the joint-venture Brasil PCH and recognized
adjustments in its financial statements related to shares in profits and losses arising from this investee from the year of 2018, which
resulted in restatement of its financial statements of December, 31, 2019. On May 6, 2021 the Board of Directors of Renova ratified
the amount of the increase in its share capital to R$3,295,178, divided into 100,142,466 shares, of which 50,854,986 are common shares
and 49,287,480 are preferred shares. Since Cemig did not take part in the capital increase, its equity interest was reduced to 29.72%
of the voting share and 15.09% of the total share.
|
|
|
(3)
|
By its Authorizing Resolution 9,735 of February
23, 2021, Aneel authorized transfer of ownership of the concession of the Poço Fundo Small Hydro Plant from Cemig Geração
e Transmissão S.A. to Cemig Geração Poço Fundo S.A. The transfer was formalized by signature of a new concession
contract, Nº. 01/2021, on April 16, 2021.
|
Madeira Energia S.A. (‘MESA’)
and FIP Melbourne
MESA is the parent
company of Santo Antônio Energia S.A (‘SAESA’), whose objects are operation and maintenance of the Santo Antônio
Hydroelectric Plant and its transmission system, on the Madeira River, and all activities necessary for operation of the plant and its
transmission system. Between the shareholders include Furnas, Odebrecht Energia, SAAG and the Company.
On June 30, 2021, MESA reported a
loss of R$1,080,468 (R$548,082 on June 30, 2020) and negative net working capital of R$406,473 (R$204,792 on December 31, 2020). It should
be noted that hydroelectric projects constituted using project finance structurally present negative net working capital in the first
years of operation, because they are built using high levels of financial leverage. On the other hand, they have firm contracts for sales
of energy supply over the long term as support and guarantee of payment of their debts. To balance the situation of negative working capital,
in addition to its long-term sale contracts that ensure regularity in its operational cash flow, MESA count with the benefits of its debt
reprofiling, which adjusted the flow of payments of the debt to its cash generation capacity, so that the investee does not depend on
additional investment from the shareholders.
Arbitration proceedings
In 2014, Cemig GT and SAAG Investimentos
S.A. (SAAG), a vehicle through which Cemig GT holds an indirect equity interest in MESA, opened arbitration proceedings, in the Market
Arbitration Chamber, challenging the following: (a) the adjustment for impairment carried out by the Executive Board of MESA, in the amount
of R$678 million, relating to certain credits owed to Mesa by CCSA, based on absence of quantification of the amounts supposedly owed,
and absence of prior approval by the Board of Directors, as required by the by laws and Shareholders’ Agreement of MESA; and also
on the existence of credits owed to MESA by CCSA, for an amount greater than the claims; and (b) against the adjustment for impairment
carried out by the Executive Board of MESA, in the amount of R$678 million, relating to certain credits owed to Mesa by CCSA, on the grounds
that those credits are owed in their totality by express provision of contract.
The arbitration judgment recognized
the right of Cemig GT and SAAG in full, and ordered the annulment of the acts being impugned. As a consequence of this decision, MESA
reversed the impairment, and posted a provision for receivables in the amount of R$678 million in its financial statements as of
December 31, 2017. On June 30, 2021, the investee confirmed its assets recoverability expectation and maintained the provision for receivables
in the amount of R$678 million.
To resolve
the question of the liability of the CCSA consortium to reimburse the costs of re-establishment of the collateral and use of the contractual
limiting factor, the affiliated company opened arbitration
proceedings with the International Chamber of Commerce (ICC) against CCSA, which are in progress. This process is confidential under the
Arbitration Regulations of the ICC.
Cemig GT and SAAG Investimentos S.A.
applied to the judiciary for provisional remedy prior to the arbitration proceeding, to suspend the effects of the capital increase approved
by an Extraordinary General Meeting of Shareholders of Mesa held on August 28, 2018. This process is confidential under the Arbitration
Regulations of the Market Arbitration Chamber.
Renova Energia S.A. (‘Renova’)
– In-court supervised reorganization
For 2Q21, Renova reported: a loss
of R$84,354 in the quarter (R$104,625 in 2Q20); accumulated losses to June 30, 2021 of R$ 4,078,541 (R$3,994,187 to December 31, 2020);
and negative equity (uncovered liabilities) of R$844,112 (R$1,107,637 at December 31, 2020). On the other hand on June 30, 2021, Renova
had positive working capital of R$451,943 (R$272,539 at December, 31, 2020), reflecting the effects of the Judicial Recovery Plan, which
enabled signature of agreements to resolve the situation of the group’s liabilities, with renegotiation of interest rates and lengthening
of periods for settlement of debt.
In view of the
investee’s negative net equity, the Cemig GT reduced the carrying amount of its equity interests in Renova, at December 31, 2018,
to zero. No further losses have been recognized, considering the non-existence of any legal or constructive obligations to the investee.
Additionally, the Cemig GT recognized,
since June 30, 2019, an impairment of the receivable with jointly-controlled entity, in the amount of R$688 million.
Renova for in-court supervised
reorganization
On October 16, 2019, was granted
court-supervised reorganization petition applied by Renova, and by the other companies of the group (‘the Renova Group’).
On October 25, 2019, Cemig GT made
an Advance for Future Capital Increase to Renova, of R$5,000 and subsequently was agreeded between the Company and Renova a Debtor in
Possession (DIP) loan agreements in the total amount of R$36.5 million. The funds of these loans, made under specific rules of court-supervised
reorganization proceedings, were necessary to support the expenses of maintaining the activities of Renova, and were authorized by the
second State of São Paulo Bankruptcy and Court-supervised Reorganization Court. They are guaranteed by a fiduciary assignment of
shares in a company owning assets of a wind power project owned by Renova, in the approximate amount of R$60 million, and they also have
priority of receipt in the court-supervised reorganization process, in the sale of this asset given as guarantee.
On September 21, 2020, Renova approved
the proposal made by the Company for suspension of the obligations in the PPA signed between them, as amended from time to time, for incentive-bearing
wind power which were linked to phase A of the Alto Sertão III Wind Complex. The suspension will remain in effect
until the beginning of the commercial operation of the facilities aimed at the Free Market, planned for December 2022, and is duly aligned
with the strategic planning set out for compliance with the Renova reorganization plan.
On December 18, 2020, the General
Meeting of Creditors approved the court-supervised reorganization plans submitted to the court by Renova. The economic and financial reasonableness
of the two plans was presented at the creditors’ meeting, as follows:
|
|
(i)
|
raising of a bridge loan for completion of the Alto Sertão III wind complex – this was signed
on December 17, 2020, in the amount of R$350 million, in the Debtor in Possession (DIP) financing form, by the subsidiary Chipley SP Participações
S.A., with co-obligations by Renova Energia S.A. And Renova Participações S.A., to be allocated specifically to resumption
of the works on Phase A of the Alto Sertão III Wind Complex;
|
|
|
(ii)
|
sale of assets, principally the shareholding in Brasil PCH, and some wind power ongoing projects;
|
|
|
(iii)
|
renegotiation of the period for settlement of liabilities, with alteration only of maturities, and not
amounts; and
|
|
|
(iv)
|
conclusion of the works on the Alto Sertão III Wind Complex.
|
In this sense, the plans describe
the means of recovery in detail, give details of the DIP bridge loan, identify the Isolated Production Units (UPIs) and specify the procedure
for resources disposal and allocation.
On February 11, 2021, PSS Principal
Fundo de Investimento em Participações Multiestratégia, managed by Prisma Capital Ltda., won the competitive
tender for sale of the Phase B UPI specified in the Renova Group’s court-supervised reorganization Plan, with the proposal of R$58,386,
16.77% higher than the minimum value specified in the Plan. Renova and the PSS Principal Fund was signed the final instruments for acquisition,
on March 2, 2021, the contract for sale of shares of the Phase B UPI on the terms specified in the Tender of that UPI and in the Renova
Group’s court-supervised reorganization Plan, with the conclusion of the sale process on April 5, 2021.
On March 5, 2021, in the context
of the court-supervised reorganization, Renova received R$362,465 from the Debtor in Possession financing contracted by its subsidiary
Chipley SP Participações S.A. – in court-supervised reorganization with co-obligations by Renova and Renova Participações
S.A. – in court-supervised reorganization, through a Bank Credit Note structured by Quadra Gestão de Recursos S.A.
(‘Quadra Capital’) and issued in favor of QI Sociedade de Crédito Ltda., as specified and authorized
in the court-supervised reorganization proceedings of the Renova Group, currently under the 2nd Court for Bankruptcies and Court-Supervised
Reorganization of the Legal District of São Paulo State. The funds obtained will enable resumption of the works for conclusion
of construction and start of commercial operation of Phase A of Alto Sertão III.
On May 6, 2021 the Board of Directors
of Renova approved partial ratification of the increase of R$334,397 in the share capital, corresponding to the amount of the credits
to be capitalized under the terms of the court-supervised
reorganization plan. The Company was not part of the group of creditors that requested conversion of their credits into equity, and also
will not subscribe any part of the capital increase. As a result, the equity interest held by the Company in Renova was reduced to 29.72%
of the voting share and 36.23% to 15.09% of the total share. There was no effect on the present jointly control of Renova.
On June 22, 2021 the Renova’s
Board of Directors approved a capital increase by private subscription of shares, equivalent to the sum of the amounts subscribed by holders
of subscription rights and the amount of the credits capitalized, with an upper limit of R$345,286, with partial ratification to be accepted
if the amount subscribed was greater than or equal to R$44,928. This ‘2nd Process of Capital Increase and Conversion’ enables
creditors to convert their credits into shares of Renova, and will thus facilitate compliance with the Plans, reducing indebtedness and
strengthening the investee’s capital structure. Cemig GT did not participate in the group of creditors that requested conversion
of their credits into shares, and thus will not follow the capital increase into the jointly control. Although this is only a remote possibility,
Cemig GT will be subject to a potential dilution of 50% for the common shares and 8.66% for the preferred shares or, if there is partial
ratification of the minimum amount (a probable scenario), 5.75% in common shares and 8.66% in preferred shares. In the most probable scenario,
the interest of Cemig GT in the equity of Renova would be reduced to 27.33% of the common share, and from 15.09% to 13.83% of the total
share. In spite of the dilution, there are no plans to alter the Renova’s control structure. Additionally, Cemig GT may request
conversion of part of its credits in the next three ‘window’ periods, if there is a need to rebalance its ownership of common
shares for maintenance of control.
With the approval of the court-supervised
reorganization Plan, the main effects on Renova’s 2020 financial statements of were: (i) investments in the UPIs Brasil PCH, Enerbras,
AS III Phase B, and Mina de Ouro, and other projects in development, are presented as held for sale, in current assets; (ii) liabilities
were updated from the date of the application for court-supervised reorganization until December 31, 2020, as specified in the plan; (iii)
liabilities to controlling shareholders were updated from the date of approval of the application for court-supervised reorganization,
at 100% of the CDI rate; and (iv) the interest amounts accrued for the period between approval of the application and approval of the
plan was reversed.
On July 20, 2021, the Board of Directors
of Renova approved acceptance of a binding proposal presented by Mubadala Consultoria Financeira e Gestora de Recursos Ltda, for acquisition
of 100% of Renova’s holding in the common shares (all book-entry, without par value) of Brasil PCH S.A., for R$1,100,000. On August
4, 2021, the Court Administrator declared SF 369 Participações Societárias S.A., a subsidiary of Mubadala Consultoria
Financeira e Gestora de Recursos Ltda., as the winner of the Competitive Procedure for acquisition of the UPI Brasil PCH, specified in
court-supervised reorganization Plan of the Renova Group Consolidated Companies, awaiting ratification of the Competitive Procedure by
the 2nd Bankruptcy and Court-Supervised Reorganization Court of the Central Legal District of São Paulo State, which is conducting
the court-supervised reorganization of Renova Group. The absence of any statement of interest in the Competitive Procedure by any parties until August 1, 2021 enabled the Court
Administrator to declare the winning bidder early, as specified in the Sale Announcement of that Procedure.
The transaction is fully in line
with the Company’s strategy for healthy recovery and reduction of its liabilities. Renova will allocate the proceeds of the transaction
especially to: pre-payment of the DIP bridge loan contracted with Quadra Capital, disbursed at the beginning of this year; payment of
certain creditors outside the court-supervised reorganization plan; compliance with its obligations under the court-supervised reorganization
Plan; and completion of Phase A of the Alto Sertão III Wind Farm Complex.
Considering the non-existence of
any legal or constructive obligations to the investee, the Company has concluded that the granted of in-court supervised reorganization
filed by Renova and approved by the court and the transactions occurred in the period of six months ended on June 30, 2021 does not have
any additional impact in its interim financial information.
Amazônia Energia S.A. and
Aliança Norte Energia S.A.
Amazônia Energia and Aliança
Norte are shareholders of Norte Energia S.A. (‘NESA’), which holds the concession to operate the Belo Monte Hydroelectric
Plant. Through the jointly-controlled entities referred to above, Cemig GT owns an indirect equity interest in NESA of 11.69%.
On June 30, 2021 NESA had negative
net working capital of R$151,481 (R$160,351 on December 31, 2020) and will spend further amounts on projects specified in its concession
contract, even after conclusion of the construction and full operation of the Belo Monte Hydroelectric Plant. According to the estimates
and projections, the situation of negative net working capital, and the future demands for investments in the hydroelectric plant, will
be supported by revenues from future operations and/or raising of bank loans.
On September 21, 2015, NESA was awarded
a preliminary injunction ordering the grantor to abstain, until hearing of the application for an injunction made in the original case,
from applying to Appellant any penalties or sanctions in relation to the Belo Monte Hydroelectric Plant not starting operations on the
date established in the original timetable for the project, including those specified in an the grantor (Aneel) Normative Resolution 595/2013
and in the Concession Contract for the Belo Monte Hydroelectric Plant’. The legal advisers of NESA have classified the probability
of loss as ‘possible’ and estimated the potential loss on June 30, 2021 to R$2,765,000 (R$2,407,000 on December 31, 2020).
d)
Risks related to compliance with law and regulations
Jointly controlled investees:
Norte Energia S.A. (‘NESA’)
- through Amazônia Energia and Aliança Norte
Investigations and other legal measures
are in progress since 2015, conducted by the Federal Public Attorneys’ Office, which involve other shareholders of NESA and certain
executives of those other shareholders. In this context, the Federal Public Attorneys have started investigations on irregularities involving
contractors and suppliers of NESA and of its other shareholders, which are still in progress. At present, it is not possible to determine
the outcome of these investigations, and their possible consequences. These might at some time in the future affect the investee. In addition,
based on the results of the independent internal investigation conducted by NESA and its other shareholders, an infrastructure write-down
of the R$183,000 was already recorded at NESA, and reflected in the Cemig GT consolidated financial statements through the equity pick
effect in 2015.
On March 9, 2018 ‘Operação
Fortuna’ started, as a 49th phase of ‘Operation Lava Jato’ (‘Operation Carwash’). According to
what has been disclosed by the media this operation investigates payment of bribes by the construction consortium of the Belo Monte
power plant, comprising the companies Camargo Corrêa, Andrade Gutierrez, Odebrecht, OAS and J. Malucelli. Management of NESA believes
that so far there are no new facts that have been disclosed by the 49th phase of ‘Operation Carwash’ that require additional
procedures and internal investigation in addition to those already carried out.
The Company’s management, based
on its knowledge of the matters described above and on the independent procedure carried out, believes that the conclusions presented
in the report of the independent investigation are adequate and appropriate; as a result no adjustment has been made in the interim financial
information. The effects of any future alterations in the existing scenario will be reflected appropriately in the Company’s interim
financial information.
Madeira Energia S.A. (‘MESA’)
Investigation and other legal
measures are in progress, conducted by the Federal Public Attorneys’ Office, which involve other indirect shareholders of MESA
and certain executives of those other indirect shareholders. In this context, the Federal Public Attorneys have started
investigations searching for irregularities involving contractors and suppliers of MESA and of its other shareholders. In response
to allegations of possible illegal activities, the investee and its other shareholders
started an independent internal investigation.
The independent internal investigation,
concluded in February 2019, in the absence of any future developments such as any leniency agreements by third parties that may come to
be signed or collaboration undertakings that may be signed by third parties with the Brazilian authorities, found no objective evidence
enabling it to be affirmed that there were any supposed undue payments by MESA (SAESA) that should be considered for possible accounting
write-off, pass-through or increase of costs to compensate undue advantages and/or linking of MESA with the acts of its suppliers, in
the terms of the witness accusations and/or cooperation statements that have been made public.
The Company’s management, based
on its knowledge of the matters described above and on the independent procedures carried out, believes that the conclusions presented
in the report of the independent investigation are adequate and appropriate; as a result no adjustment has been made in the interim financial
information. The effects of any future changes in the existing scenario will be reflected appropriately in the Company’s interim
financial information.
Renova Energia S.A. (‘Renova’)
Since 2017 Renova is part of a formal
investigation by the Civil Police of Minas Gerais State and other public authorities related to certain capital injections made by some
of its controlling shareholders, including the Company and its subsidiaries Cemig GT, and capital injections made by Renova in certain
projects under development in previous years.
On April 11, 2019, within the ‘Operação
Descarte’ scope, the Brazilian Federal Police commenced the ‘Operation E o Vento Levou’ as part of the ‘Lava
Jato’ Investigation, and executed a search and seizure warrant issued by a Federal Court of São Paulo at Renova’s
head office in São Paulo, based on allegations and indications of misappropriation of funds harmful to the interests of Cemig.
Based on the allegations being investigated, these events are alleged to have taken place before 2015. On July 25, 2019, the second phase
of the operation occurred.
The ‘Operation E o Vento Levou’
and the police investigation of the Minas Gerais State Civil Police have not yet been concluded. Thus, there is a possibility that material
information may be revealed in the future. If a criminal action is filed against agents who could have damaged Renova, Renova intends
to act as auxiliary to the prosecution in any criminal proceedings, and subsequently sue for civil reparation of the damages suffered.
Due to these third party
investigations, the governance bodies of Renova have requested opening of an internal investigation, conducted by an independent
company with the support of an external law firm, the scope of which
comprises assessment of the existence of irregularities, including noncompliance with: the Brazilian legislation related to acts of corruption
and money laundering; Renova’s Code of Ethics; and its integrity policies. Additionally, a Monitoring Committee was established
in Renova which, jointly with the Audit Committee, accompanied this investigation. The internal investigation was concluded on February
20, 2020, and no concrete evidences of acts of corruption or diversion of funds to political campaigns were identified.
However, the independent investigators
identified irregularities in the conducting of business and agreement of contracts by Renova, including: (i) payments without evidence
of the consideration of services, in the total amount of approximately R$40 million; (ii) payments not in accordance with the company’s
internal policies and best governance practices, in the total amount of approximately R$137 million; and (iii) deficiencies in the internal
controls of the investee.
As a result of the analysis of the
above mentioned values, Renova concluded that R$35 million relates to effective assets and therefore no impairment is necessary. The remaining
amount of R$142 million was already impaired in previous years, producing no impact on the interim financial information for the period
ended June 30, 2021 and the financial statements for the year ended December 31, 2020.
In response to the irregularities
found, and based on the recommendations of the monitoring Committee and legal advisers, the Board of Directors of Renova decided to take
all the steps necessary to preserve the rights of the investee, continue with the measures to obtain reimbursement of the losses caused,
and strengthen the company’s internal controls.
Since the investment at Renova is
fully impaired at June 30, 2021, and since no contractual or constructive obligations in relation to the investee have been assumed by
the Company and its subsidiaries, it is not expected that any effects resulting from the in-court supervised reorganization process, or
the investigations, or the operational activities of this investee can significantly impact the Company’s interim financial information
even if eventually not yet recorded by Renova.
Other investigations
In addition to the cases above, there
are investigations being conducted by the Public Attorneys’ Office of the State of Minas Gerais (‘MPMG’) and by the
Civil Police of the State of Minas Gerais (‘PCMG’), which aim to investigate possible irregularities in the investments made
by Cemig GT at Guanhães Energia and also at MESA. Additionally, on April 11, 2019 agents of the Brazilian Federal Police were in
the Company’s head office in Belo Horizonte to execute a search and seizure warrant issued by a São Paulo Federal Court in
connection with the operation entitled “E o Vento Levou”, as described above.
These proceedings are being investigated
through the analysis of documents demanded by the respective authorities, and by hearing of witnesses.
Internal procedures for risks
related to compliance with law and regulations
Taking into account the investigations
that are being conducted by public authorities at the Company and at certain investees, as described above, the governance bodies of the
Company have authorized contracting a specialized company to analyze the internal procedures related to these investments, as well as
the factors that led the Company to be assessed by federal tax authority for not paying withholding income tax in the acquisition of Light’s
interest from Enlighted (see Note 24). This independent investigation was subject to oversight of an independent investigation committee
whose creation was approved by our Board of Directors.
The Company’s internal investigation
was completed and the corresponding report was issued on May 8, 2020. Considering the results of the internal investigations, no objective
evidence was identified to affirm that there were illegal acts on the investments made by Company that were subject to the investigation,
therefore, there was no impact in the Company consolidated the interim financial information, nether for the period ended in June 30,
2021 nor in its prior financial statements.
In the second semester of 2019, Company
signed tooling agreements with the Securities and Exchange Commission (SEC) and US Department of Justice (DOJ), which was extended until
August, 2021 and is currently under a renewal process of additional six months. Cemig has complied with the requests and intends to continue
contributing to the SEC and the DOJ.
Due to the completion of the investigations
for which the Special Investigating Committee was constituted, from the delivery of the final report by the specialized company, the governance
bodies of the Company decided to extinguish that Committee. If there are any future needs resulting from developments in this matter,
the Committee can be reinstated.
In the end of 2020 the Company began
internal procedures for investigation of allegations received by the Minas Gerais State Public Attorneys’ Office, through Official
Letters, the content of which basically refers to alleged irregularities in public bidding purchasing processes. The investigation is
being conducted by a new Special Investigation Committee (Comitê Especial de Investigação – CEI), with support
from specialized advisers.
Investigations are ongoing, and until
the present moment no matter has been identified that could present any material impact on the interim financial information at June 30,
2021, or the financial statements for prior periods.
The Company will evaluate any changes
in the future scenario and eventual impacts that could affect the interim financial information, when applicable. The Company continues
to cooperate with domestic and foreign authorities in their analysis related to the ongoing investigations.
|
|
16.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
Consolidated
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Historical cost
|
Accumulated depreciation
|
Net value
|
Historical cost
|
Accumulated depreciation
|
Net value
|
|
In service
|
|
|
|
|
|
|
|
Land
|
246,857
|
(24,510)
|
222,347
|
246,857
|
(22,624)
|
224,233
|
|
Reservoirs, dams and watercourses
|
3,304,298
|
(2,320,094)
|
984,204
|
3,299,589
|
(2,279,878)
|
1,019,711
|
|
Buildings, works and improvements
|
1,100,764
|
(844,943)
|
255,821
|
1,100,469
|
(835,848)
|
264,621
|
|
Machinery and equipment
|
2,659,123
|
(1,963,690)
|
695,433
|
2,646,844
|
(1,929,584)
|
717,260
|
|
Vehicles
|
20,602
|
(18,993)
|
1,609
|
20,602
|
(18,756)
|
1,846
|
|
Furniture and utensils
|
13,791
|
(11,121)
|
2,670
|
13,813
|
(10,991)
|
2,822
|
|
|
7,345,435
|
(5,183,351)
|
2,162,084
|
7,328,174
|
(5,097,681)
|
2,230,493
|
|
|
|
|
|
|
|
|
|
In progress
|
230,797
|
-
|
230,797
|
176,650
|
-
|
176,650
|
|
Net property, plant and equipment
|
7,576,232
|
(5,183,351)
|
2,392,881
|
7,504,824
|
(5,097,681)
|
2,407,143
|
|
Parent company
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Historical cost
|
Accumulated depreciation
|
Net value
|
Historical cost
|
Accumulated depreciation
|
Net value
|
|
In service
|
|
|
|
|
|
|
|
Land
|
82
|
-
|
82
|
82
|
-
|
82
|
|
Buildings, works and improvements
|
55
|
(23)
|
32
|
55
|
(22)
|
33
|
|
Machinery and equipment
|
5,220
|
(4,814)
|
406
|
5,220
|
(4,645)
|
575
|
|
Furniture and utensils
|
748
|
(711)
|
37
|
748
|
(706)
|
42
|
|
|
6,105
|
(5,548)
|
557
|
6,105
|
(5,373)
|
732
|
|
|
|
|
|
|
|
|
|
In progress
|
460
|
-
|
460
|
460
|
-
|
460
|
|
Net property, plant and equipment
|
6,565
|
(5,548)
|
1,017
|
6,565
|
(5,373)
|
1,192
|
Changes in PP&E are as follows:
|
Consolidated
|
Dec. 31, 2020
|
Additions
|
Disposals
|
Depreciation
|
Transfers / capitalizations
|
Jun. 30, 2021
|
|
In service
|
|
|
|
|
|
|
|
Land (1)
|
224,233
|
-
|
-
|
(1,886)
|
-
|
222,347
|
|
Reservoirs, dams and watercourses
|
1,019,711
|
-
|
-
|
(40,274)
|
4,767
|
984,204
|
|
Buildings, works and improvements
|
264,621
|
-
|
-
|
(9,094)
|
294
|
255,821
|
|
Machinery and equipment
|
717,260
|
-
|
(98)
|
(34,445)
|
12,716
|
695,433
|
|
Vehicles
|
1,846
|
-
|
-
|
(237)
|
-
|
1,609
|
|
Furniture and utensils
|
2,822
|
-
|
-
|
(152)
|
-
|
2,670
|
|
|
2,230,493
|
-
|
(98)
|
(86,088)
|
17,777
|
2,162,084
|
|
In progress
|
176,650
|
71,924
|
-
|
-
|
(17,777)
|
230,797
|
|
Net property, plant and equipment
|
2,407,143
|
71,924
|
(98)
|
(86,088)
|
-
|
2,392,881
|
|
|
(1)
|
Certain land sites linked to concession contracts and without provision
for reimbursement are amortized in accordance with the period of the concession.
|
|
Parent company
|
Dec. 31, 2020
|
Depreciation
|
Jun. 30, 2021
|
|
In service
|
|
|
|
|
Land
|
82
|
-
|
82
|
|
Buildings, works and improvements
|
33
|
(1)
|
32
|
|
Machinery and equipment
|
575
|
(169)
|
406
|
|
Furniture and utensils
|
42
|
(5)
|
37
|
|
|
732
|
(175)
|
557
|
|
In progress
|
460
|
-
|
460
|
|
Net property, plant and equipment
|
1,192
|
(175)
|
1,017
|
Consortium
The Company is a partner in an energy
generation consortium for the Queimado plant, for which no separate company with independent legal existence was formed to manage
the object of the concession. The Company’s portion in the consortium is recorded and controlled individually in the respective
categories of PP&E and Intangible assets.
|
|
Stake in power output (%)
|
Average annual depreciation rate (%)
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
In service
|
|
|
|
|
|
Queimado Power Plant
|
82.50
|
3.94
|
218,448
|
218,111
|
|
Accumulated depreciation
|
|
|
(122,036)
|
(117,271)
|
|
Total operation
|
|
|
96,412
|
100,840
|
|
|
|
|
|
|
|
In progress
|
|
|
|
|
|
Queimado Power Plant
|
82.50
|
-
|
1,523
|
1,580
|
|
Total construction
|
|
|
1,523
|
1,580
|
|
Total
|
|
|
97,935
|
102,420
|
|
Consolidated
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Historical cost
|
Accumulated amortization
|
Residual value
|
Historical cost
|
Accumulated amortization
|
Residual value
|
|
In service
|
|
|
|
|
|
|
|
Useful life defined
|
|
|
|
|
|
|
|
Temporary easements
|
14,692
|
(4,423)
|
10,269
|
13,217
|
(4,045)
|
9,172
|
|
Onerous concession
|
18,614
|
(13,184)
|
5,430
|
19,169
|
(13,288)
|
5,881
|
|
Assets of concession (1)
|
21,082,719
|
(9,413,423)
|
11,669,296
|
20,781,598
|
(9,107,068)
|
11,674,530
|
|
Assets of concession - GSF
|
909,601
|
-
|
909,601
|
-
|
-
|
-
|
|
Others
|
78,046
|
(72,148)
|
5,898
|
78,015
|
(70,286)
|
7,729
|
|
|
22,103,672
|
(9,503,178)
|
12,600,494
|
20,891,999
|
(9,194,687)
|
11,697,312
|
|
In progress
|
128,226
|
-
|
128,226
|
112,616
|
-
|
112,616
|
|
Net intangible assets
|
22,231,898
|
(9,503,178)
|
12,728,720
|
21,004,615
|
(9,194,687)
|
11,809,928
|
|
|
(1)
|
The rights of authorization to generate wind
energy granted to Parajuru and Volta do Rio, valued at R$122,144 (R$127,841 on December 31, 2020), and of the gas distribution
concession, granted to Gasmig, valued at R$403,874 (R$411,503 on December 31, 2020), are included in the interim financial information
of the subsidiary Cemig GT and of the Company, respectively, and in accordance with Technical Interpretation ICPC 09, the investments
and are classified in the consolidated balance sheet under Intangibles. These concession assets are amortized by the straight-line method,
during the period of the concession.
|
|
Parent company
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Historical cost
|
Accumulated amortization
|
Residual value
|
Historical cost
|
Accumulated amortization
|
Residual value
|
|
In service
|
|
|
|
|
|
|
|
Useful life defined
|
|
|
|
|
|
|
|
Software use rights
|
13,564
|
(11,655)
|
1,909
|
13,564
|
(10,968)
|
2,596
|
|
Brands and patents
|
8
|
(8)
|
-
|
8
|
(8)
|
-
|
|
Others
|
9
|
(9)
|
-
|
9
|
(9)
|
-
|
|
|
13,581
|
(11,672)
|
1,909
|
13,581
|
(10,985)
|
2,596
|
|
In progress
|
89
|
-
|
89
|
59
|
-
|
59
|
|
Net intangible assets
|
13,670
|
(11,672)
|
1,998
|
13,640
|
(10,985)
|
2,655
|
Changes in intangible assets are as follow:
|
Consolidated
|
Dec. 31, 2020
|
Additions
|
Disposals
|
Amortization
|
Transfers (1)
|
Jun. 30, 2021
|
|
In service
|
|
|
|
|
|
|
|
Useful life defined
|
|
|
|
|
|
|
|
Temporary easements
|
9,172
|
-
|
-
|
(378)
|
1,475
|
10,269
|
|
Onerous concession
|
5,881
|
-
|
(139)
|
(312)
|
-
|
5,430
|
|
Assets of concession
|
11,674,530
|
-
|
(13,220)
|
(368,943)
|
376,929
|
11,669,296
|
|
Assets of concession - GSF
|
-
|
909,601
|
-
|
-
|
-
|
909,601
|
|
Others
|
7,729
|
-
|
-
|
(1,862)
|
31
|
5,898
|
|
|
11,697,312
|
909,601
|
(13,359)
|
(371,495)
|
378,435
|
12,600,494
|
|
In progress
|
112,616
|
16,461
|
-
|
-
|
(851)
|
128,226
|
|
Net intangible assets
|
11,809,928
|
926,062
|
(13,359)
|
(371,495)
|
377,584
|
12,728,720
|
|
|
(1)
|
The transfers were made between concession contract
assets to Intangible assets: R$377,584.
|
|
Parent company
|
Dec. 31, 2020
|
Additions
|
Amortization
|
Jun. 30, 2021
|
|
In service
|
|
|
|
|
|
Useful life defined
|
|
|
|
|
|
Softwares use rights
|
2,596
|
-
|
(687)
|
1,909
|
|
|
2,596
|
-
|
(687)
|
1,909
|
|
In progress
|
59
|
30
|
-
|
89
|
|
Net intangible assets
|
2,655
|
30
|
(687)
|
1,998
|
Concession
assets
The energy and
gas distribution infrastructure assets already in service and that will be fully amortized during the concession term are recorded as
intangible assets. Assets linked to the infrastructure of the concession that are still under construction are posted initially as contract
assets, as detailed in Note 14.
The authorization rights of gas distribution
granted to Gasmig, in the amount of R$403,874 (R$411,503 on December 31, 2020), are classified as intangible assets in the Company’s
consolidated balance sheet and are recognized as investments in its individual balance sheet, as Note 15, in accordance with Technical
Interpretation ICPC 09.
On December, 31, 2020, upon conclusion
of the refurbishment of the 19 aero generators of the subsidiary Volta do Rio and full resumption of its generation capacity, the Company
tested its operation assets for impairment, and it was found an improvement that economic and financial equilibrium, and the liquidity,
of the subsidiary. As a result, the Company reversed part of the loss that had been recognized, resulting in a net reversal of R$13,825
on December, 31, 2020, which is posted in the statement of income as other expenses.
The Value in Use of the assets was
calculated based on the projection of future expected cash flows for the operation of the assets of the subsidiary, brought to present
value by the weighted average cost of capital (WACC) defined for the company’s wind generation activity, using the Firm Cash Flow
(FCFF) methodology.
Renegotiation of hydrological
risk – the Generation Scaling Factor (GSF)
On September 9, 2020, the Law 14,052
was issued, changing the Law 13,203/2015 and establishing new conditions for renegotiation of hydrological risk in relation to the portion
of costs incurred due to the GSF, borne by the holders of hydroelectric plants participating in the Energy Reallocation Mechanism (MRE)
between 2012 and 2017.
The aim of this new law is to compensate
the holders of hydroelectric plants participating in the MRE for non-hydrological risks caused by:
|
|
(i)
|
generation ventures classified as structural, related to bringing forward of physical guarantee of the
plants;
|
|
|
(ii)
|
the restrictions on start of operation of the transmission facilities necessary for outflow of the generation
output of structural projects; and
|
|
|
(iii)
|
generation outside the merit order system, and importation.
|
This compensation will take the form
of extension of the grant of concession or authorization to operate, limited to 7 years, calculated on the basis of the parameters applied
by Aneel.
On December 1, 2020, Aneel issued
its Normative Resolution 895, which established the methodology for calculation of the compensation, and the procedures for renegotiation
of hydrological risk. To be eligible for the compensations under Law 14,052, the holders of hydroelectric plants participating in the
MRE are required to:
|
|
(i)
|
cease any legal actions which claimed exemption from or mitigation of hydrological risks related to the
MRE;
|
|
|
(ii)
|
relinquishing any claims and/or further legal actions in relation to exemptions from or mitigation of
hydrological risks related to the MRE; and
|
|
|
(iii)
|
not to have renegotiated hydrological risk under Law 13,203/2015.
|
On August 03, 2021, Aneel ratified,
through the Ratifying Resolution nº. 2,919/2021, the terms of concession extension of hydroelectric plants participating in the MRE,
including all of the Company plants suitable for the renegotiation, except for Queimado and Irapé, which renegotiate the hydrological
risk through the Resolution nº. 684/2015 and were not covered by the Resolution nº. 2,919/2021. The values ratified are aligned
with the Company estimations, based on the Resolution Aneel nº. 895/2020.
On June 11, 2021, the Board of Directors
of Cemig GT authorized withdrawal of any legal proceedings based on the MRE, and the signing of the Term of Acceptance of Law 14,052/2020
provisions, for the plants within the concession contracts of Cemig GT and subsidiaries. With the approval by the Board of Directors,
the Company recognized an intangible asset relating to the right to the extension of concessions, with counterpart in “Operational
costs – Recovery of costs – Hydrological risk”, in the amount of R$909,601.
The fair values of the concessions
extension rights have been estimated individually, as shown in the table below, using the revenue approach, under which future values
are converted into a single present value, discounted by the rate of profitability approved by Management for the energy generation activity,
reflecting present market expectations in relation to the future amounts.
|
Power Plant
|
Intangible assets – Right to extension of concession
|
End of concession
|
Extension in years
|
New end of concession
|
|
Cemig Geração Camargos
|
9,459
|
01/05/2046
|
7
|
01/03/2053
|
|
Cemig Geração Itutinga
|
7,713
|
01/05/2046
|
7
|
01/03/2053
|
|
Cemig Geração Leste
|
154
|
|
|
|
|
Dona Rita
|
11
|
07/03/2046
|
4
|
07/19/2050
|
|
Ervalia
|
8
|
07/03/2046
|
0.8
|
04/19/2047
|
|
Neblina
|
11
|
07/03/2046
|
0.8
|
04/19/2047
|
|
Peti
|
113
|
01/05/2046
|
7
|
01/03/2053
|
|
Sinceridade
|
1
|
07/03/2046
|
0.7
|
03/12/2047
|
|
Tronqueiras
|
10
|
01/05/2046
|
1
|
12/26/2046
|
|
Cemig Geração Oeste
|
234
|
|
|
|
|
Cajuru (Cemig)
|
234
|
01/05/2046
|
7
|
01/03/2053
|
|
Cemig Geração Salto Grande
|
40,079
|
01/05/2046
|
7
|
01/03/2053
|
|
Cemig Geração Sul
|
2,106
|
|
|
|
|
Coronel Domiciano
|
36
|
07/03/2046
|
0.8
|
04/11/2047
|
|
Joasal
|
450
|
01/05/2046
|
7
|
01/03/2053
|
|
Marmelos
|
238
|
01/05/2046
|
7
|
01/03/2053
|
|
Paciencia
|
205
|
01/05/2046
|
7
|
01/03/2053
|
|
Piau
|
1,177
|
01/05/2046
|
7
|
01/03/2053
|
|
Cemig Geração Três Marias
|
115,831
|
01/05/2046
|
7
|
01/03/2053
|
|
Cemig Poço Fundo
|
1,482
|
05/29/2045
|
7
|
05/27/2052
|
|
Cemig PCH (Pai Joaquim)
|
418
|
04/04/2032
|
0.4
|
09/14/2032
|
|
Horizontes
|
130
|
|
|
|
|
Machado Mineiro
|
130
|
07/08/2025
|
1.9
|
05/21/2027
|
|
Rosal
|
8,900
|
05/08/2032
|
3.6
|
12/13/2035
|
|
Sá Carvalho
|
39,690
|
12/01/2024
|
1.7
|
08/27/2026
|
|
Total
|
226,196
|
|
|
|
|
Nova Ponte
|
254,956
|
07/23/2025
|
2.1
|
08/11/2027
|
|
Queimado
|
2,122
|
12/18/2032
|
0.1
|
02/05/2033
|
|
Sao Bernardo (Cemig)
|
655
|
08/19/2025
|
1.9
|
06/27/2027
|
|
Emborcação
|
425,672
|
07/23/2025
|
1.8
|
05/26/2027
|
|
Total Cemig GT
|
683,405
|
|
|
|
|
Total (R$)
|
909,601
|
|
|
|
The values to which the Company is
entitled, presented for the concession extension rights of Queimado and Irapé plants, which were not covered by the Resolution
nº. 2,919/2021, might not suffer any significant changes. The dispute related to these values is supplementary and does not create
risks in relation to the matter, and thus does not affect the value of the asset recognized by the Company.
The Resolution nº. 2,919/2021
ratified the amount of the right to compensation for the São Simão, Jaguara, Miranda and Volta Grande generation plants,
which had been owned by Cemig GT during the period stipulated in the Law 14,052/20 for the calculation of the amount to be compensated,
but does not specify how this compensation will happen in the event of absence of debts with the Federal Government related to the regime
of concessions determined in that Law. The amounts calculated are:
|
Cemig Geração - Plant re-offered for tender
|
Amount
|
|
São Simão
|
783,004
|
|
Miranda
|
145,528
|
|
Jaguara
|
237,218
|
|
Volta Grande
|
156,688
|
|
Total
|
1,322,438
|
Since there is no legal provision
relating to how the compensation of these non-hydrological risks will happen and the Company’s right depends on the occurrence of
uncertain future events, which are not totally under its control, as such these contingent assets have not been recognized.
The Company and
its subisiaries recognized a right of use and a lease liability for the following contracts which contain a lease in accordance with CPC
06 (R2) / IFRS 16:
|
|
§
|
Leasing of commercial real estate used for serving customers;
|
|
|
§
|
Leasing of buildings used as administrative headquarters;
|
|
|
§
|
Leasing of commercial vehicles used in operations.
|
The Company and
its subsidiaries has elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of
12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low
value (low-value assets). Thus, these leasing agreements are recognized as an expense in the income statement on the straight-line basis,
over the period of the leasing. Their effects on net income from January to June 2021 were immaterial.
The discount rates were obtained
by reference to the Company’s incremental borrowing rate, based on the debts contracted by the Company and through quotations with
potential financial institutions and reflect the Company’s credit risk and the market conditions at the lease agreement date, as
follows:
|
Marginal rates
|
Annual rate (%)
|
Monthly rate (%)
|
|
Initial application
|
|
|
|
Up to two years
|
7.96
|
0.64
|
|
Three to five years
|
10.64
|
0.85
|
|
Six to twenty years
|
13.17
|
1.04
|
|
|
|
|
|
Contracts entered – 2019 at 2021
|
|
|
|
Up to three years
|
6.87
|
0.56
|
|
Three to four years
|
7.33
|
0.59
|
|
Four to twenty years
|
8.08
|
0.65
|
The right of use
asset was valued at cost, comprising the amount of the initial measurement of the leasing liabilities, and amortized on the straight-line
basis up to the end of the period of leasing or of the useful life of the asset identified, as the case may be.
Changes in the
right of use asset are as follows:
|
Consolidated
|
Real estate property
|
Vehicles
|
Total
|
|
Balances on December 31, 2020
|
185,498
|
26,576
|
212,074
|
|
Settled
|
(2,112)
|
-
|
(2,112)
|
|
Amortization (1)
|
(4,489)
|
(18,368)
|
(22,857)
|
|
Addition
|
9,723
|
-
|
9,723
|
|
Remeasurement (2)
|
(10,110)
|
1,627
|
(8,483)
|
|
Balances on June 30, 2021
|
178,510
|
9,835
|
188,345
|
|
|
(1)
|
Amortization of the Right of Use recognized in the Income Statement is net of use of the credits of PIS/Pasep
and Cofins taxes on payments of rentals, a total R$276 on June 30, 2021 (R$1,929 on December 31, 2020).
|
|
|
(2)
|
The Company and its subsidiaries have identified events giving rise to revaluation and modifications of
their principal contracts. The leasing liabilities are restated with adjustment to the asset of Right of Use.
|
|
Parent company
|
Real estate property
|
|
Balances on December 31, 2020
|
2,058
|
|
Amortization (1)
|
(41)
|
|
Remeasurement (2)
|
(123)
|
|
Balances on June 30, 2021
|
1,894
|
|
|
(1)
|
Amortization of the Right of Use recognized in the Income Statement is net of use of the credits of PIS/Pasep
and Cofins taxes on payments of rentals, a total R$3 on June 30, 2021 (R$123 on December 31, 2020).
|
|
|
(2)
|
The Company and its subsidiaries have identified events giving rise to revaluation and modifications of
their principal contracts. The leasing liabilities are restated with adjustment to the asset of Right of Use.
|
The liability for
leasing agreements is measured at the present value of lease payments to be made over the lease term,
discounted at the Company’s incremental borrowing rate. The liability carrying amount is remeasured
to reflect leases modifications.
The changes in
the lease liabilities are as follows:
|
|
Consolidated
|
Parent company
|
|
Balances on December 31, 2020
|
226,503
|
2,114
|
|
Addition
|
9,723
|
-
|
|
Settled
|
(1,691)
|
78
|
|
Interest incurred (1)
|
13,319
|
135
|
|
Leasing paid
|
(33,377)
|
(135)
|
|
Interest in leasing contracts
|
(1,030)
|
(5)
|
|
Remeasurement (2)
|
(8,483)
|
(124)
|
|
Balances on June 30, 2021
|
204,964
|
2,063
|
|
|
|
|
|
Current liabilities
|
35,863
|
265
|
|
Non-current liabilities
|
169,101
|
1,798
|
|
|
(1)
|
Financial revenues recognized in the Income Statement are net of incorporation of the credits for PIS/Pasep
and Cofins taxes on payments of rentals, in the amounts of R$840 and R$10 on June 30, 2021 (R$1,833 and R$25 on December 31, 2020), for
the consolidated and individual interim financial information, respectively.
|
|
|
(2)
|
The Company and its subsidiaries identified events that give rise to restatement and modifications of
their principal contracts; the leasing liability was remeasured with an adjustment to the asset of Right of Use.
|
The potential right to recovery of
PIS/Pasep and Cofins taxes embedded in the leasing consideration, according to the periods specified for payment, is as follows:
|
Cash flow
|
Consolidated
|
Parent company
|
|
Nominal
|
Adjusted to present value
|
Nominal
|
Adjusted to present value
|
|
Consideration for the leasing
|
595,017
|
204,964
|
6,615
|
2,063
|
|
Potential PIS/Pasep and Cofins (9.25%)
|
52,356
|
17,065
|
634
|
191
|
The Company, in measuring and remeasuring
of its lease liability for leasing and for right of use, used the technique of discounted cash flow, without considering projected future
inflation in the flows to be discounted, as per the prohibition imposed by CPC 06 (R2).
The cash flows of the leasing contracts are, in their
majority, updated by the IPCA inflation index, annually. Below is an analysis of maturity of lease contracts:
|
|
Consolidated (nominal)
|
Parent company (nominal)
|
|
2021
|
23,931
|
135
|
|
2022
|
27,961
|
270
|
|
2023
|
25,870
|
270
|
|
2024
|
25,764
|
270
|
|
2025
|
25,676
|
270
|
|
2026 at 2045
|
465,816
|
5,400
|
|
Undiscounted values
|
595,018
|
6,615
|
|
Embedded interest
|
(390,054)
|
(4,552)
|
|
Lease liabilities
|
204,964
|
2,063
|
19.
SUPPLIERS
|
|
Consolidated
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Energy on spot market – CCEE
|
374,213
|
490,285
|
|
Charges for use of energy network
|
200,788
|
192,287
|
|
Energy purchased for resale
|
908,875
|
807,708
|
|
Itaipu Binacional
|
317,873
|
325,277
|
|
Gas purchased for resale
|
213,969
|
126,850
|
|
Materials and services
|
365,978
|
415,913
|
|
|
2,381,696
|
2,358,320
|
|
|
20.
|
TAXES PAYABLE AND AMOUNTS TO BE REFUNDED TO CUSTOMERS
|
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Current
|
|
|
|
|
|
ICMS
|
161,377
|
112,068
|
-
|
-
|
|
Cofins (2)
|
150,943
|
183,995
|
17,853
|
37,853
|
|
PIS/Pasep (2)
|
32,830
|
41,116
|
3,855
|
9,266
|
|
INSS
|
28,878
|
28,715
|
1,718
|
1,585
|
|
Others (1)
|
66,849
|
139,845
|
332
|
40,064
|
|
|
440,877
|
505,739
|
23,758
|
88,768
|
|
Non-current
|
|
|
|
|
|
Cofins (3)
|
250,632
|
215,878
|
-
|
-
|
|
PIS/Pasep (3)
|
54,409
|
46,867
|
-
|
-
|
|
|
305,041
|
262,745
|
-
|
-
|
|
|
745,918
|
768,484
|
23,758
|
88,768
|
|
Amounts to be refunded to customers
|
|
|
|
|
|
Current
|
|
|
|
|
|
PIS/Pasep and Cofins
|
1,590,108
|
448,019
|
-
|
-
|
|
Non-current
|
|
|
|
|
|
PIS/Pasep and Cofins
|
2,233,992
|
3,569,837
|
-
|
-
|
|
|
3,824,100
|
4,017,856
|
-
|
-
|
|
|
(1)
|
This includes the withholding income tax on Interest on equity declared
on June 29, 2021. This payment was made in July 2021, in accordance with the tax legislation.
|
|
|
(2)
|
Includes Cofins and PIS/Pasep recognized in
current liability includes the deferred taxes related to the interest revenue arising from the financing component in contract asset and
to the revenue of construction and upgrade associated with the transmission concession contract, whose consideration will be received
in at least twelve months after the reporting period. For more information, see Note 14.
|
|
|
(3)
|
The deferral of PIS/Pasep and Cofins taxes related to the interest revenue
arising from the financing component in contract asset and to the revenue of construction and upgrade associated with the transmission
concession contract, whose consideration will be received in at least twelve months after the reporting period. For more information,
see Note 2.3 and 14.
|
The amounts of PIS/Pasep and Cofins
taxes to be refunded to customers refer to the credits to be received by the Cemig D following the inclusion of the ICMS value added tax
within the taxable amount for calculation of those taxes, in amount of R$3,408,028, according Note 8 (a).
The Cemig D has a liability corresponding
to the credits to be refunded to its customers, which comprises the period of the 10 years, from June 2009 to May 2019, net of PIS/Pasep
and Cofins taxes over monetary updating.
The Company started the reimbursement
of the amounts to its customers, as follows:
|
|
§
|
On August 18, 2020, Aneel ratified the inclusion into the tariff adjustment for 2020 of a negative financial component of R$714,339,
in effect from August 19, 2020 to May 27, 2021 – this corresponds to the release of the escrow funds following final judgment in
Company’s favor against which there is no further appeal.
|
|
|
§
|
On May 25, 2021, Aneel ratified incorporation into the 2021 tariff adjustment, in effect from May 28,
2021 to May 27, 2022, of the negative financial component of R$1,573,000, corresponding to the total total amount confirmed by the Brazilian
tax authority (‘Receita Federal’). See Note 13.4 for more information on the Cemig D tariff adjustment.
|
Although the definitive criteria
for the refunding of PIS/Pasep and Cofins taxes to customers are pending, awaiting conclusion of discussions with Aneel and the mechanisms
and criteria for reimbursement, when actual offsetting of the tax credits takes place.
Additionally, as per Note 8 (a),
the subsidiary Gasmig recognized the amounts of the PIS/Pasep and Cofins taxes credits over ICMS for the periods covered by the legal
action that argues this matter, in the amount of R$219,753. In the absence of a court judgment against which there is no further appeal,
the subsidiary recorded a liability in the amount of R$195,274, corresponding to the amounts to be refunded to its customers, based on
10 years period, from the date of the end of the quarter. The 10 years period refers to the maximum amount possibly subject to restitution,
to be validated after complementary analyses of the court decisions that will be issued, and the legislation in effect when the case was
ruled against which there is no further appeal.
21.
LOANS, FINANCING AND DEBENTURES
|
Financing source
|
Principal maturity
|
Annual financial cost %
|
Currency
|
Consolidated
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Current
|
Non-current
|
Total
|
Total
|
|
FOREIGN CURRENCY
|
|
|
|
|
|
|
|
|
Banco do Brasil: Various Bonds (1) (4)
|
2024
|
Diverse
|
U$$
|
-
|
-
|
-
|
11,725
|
|
Eurobonds (2)
|
2024
|
9.25%
|
U$$
|
56,703
|
7,503,300
|
7,560,003
|
7,853,959
|
|
(-)Transaction costs
|
|
|
|
-
|
(14,042)
|
(14,042)
|
(15,664)
|
|
(±) Interest paid in advance (3)
|
|
|
|
-
|
(22,747)
|
(22,747)
|
(25,314)
|
|
Debt in foreign currency
|
|
|
|
56,703
|
7,466,511
|
7,523,214
|
7,824,706
|
|
BRAZILIAN CURRENCY
|
|
|
|
|
|
|
|
|
Caixa Econômica Federal (5)
|
2021
|
TJLP + 2.50%
|
R$
|
7,076
|
-
|
7,076
|
17,204
|
|
Caixa Econômica Federal (6)
|
2022
|
TJLP + 2.50%
|
R$
|
9,572
|
-
|
9,572
|
14,086
|
|
Eletrobrás (4)
|
2023
|
UFIR + 6.00% at 8.00%
|
R$
|
3,336
|
3,994
|
7,330
|
9,058
|
|
Sonda (7)
|
2021
|
110.00% of CDI
|
R$
|
50,706
|
-
|
50,706
|
50,008
|
|
(-)Transaction costs
|
|
|
|
-
|
-
|
-
|
(55)
|
|
Debt in Brazilian currency
|
|
|
|
70,690
|
3,994
|
74,684
|
90,301
|
|
Total of loans and financings
|
|
|
|
127,393
|
7,470,505
|
7,597,898
|
7,915,007
|
|
Debentures - 3th Issue – 3rd Series (2)
|
2022
|
IPCA + 6.20%
|
R$
|
392,089
|
-
|
392,089
|
761,520
|
|
Debentures - 7th Issue – Single series (2) (10)
|
2021
|
140.00% of CDI
|
R$
|
-
|
-
|
-
|
288,839
|
|
Debentures - 3th Issue – 2nd Series (4)
|
2021
|
IPCA + 4.70%
|
R$
|
-
|
-
|
-
|
587,956
|
|
Debentures - 3th Issue – 3rd Series (4)
|
2025
|
IPCA + 5.10%
|
R$
|
278,214
|
777,640
|
1,055,854
|
1,035,247
|
|
Debentures - 7th Issue – 1st Series (4)
|
2024
|
CDI + 0.45%
|
R$
|
543,106
|
1,080,000
|
1,623,106
|
1,891,927
|
|
Debentures - 7th Issue – 2nd Series (4)
|
2026
|
IPCA + 4.10%
|
R$
|
2,910
|
1,657,402
|
1,660,312
|
1,587,924
|
|
Debentures – 4th Issue – 1st Series (8)
|
2022
|
TJLP+1.82%
|
R$
|
10,150
|
4,866
|
15,016
|
19,629
|
|
Debentures – 4th Issue – 2nd Series (8)
|
2022
|
Selic + 1.82%
|
R$
|
4,338
|
2,197
|
6,535
|
9,089
|
|
Debentures – 4th Issue – 3th Series (8)
|
2022
|
TJLP + 1.82%
|
R$
|
11,724
|
4,651
|
16,375
|
21,807
|
|
Debentures – 4th Issue – 4th Series (8)
|
2022
|
Selic + 1.82%
|
R$
|
5,170
|
2,604
|
7,774
|
10,703
|
|
Debentures – 7th Issue – Single series (8)
|
2023
|
CDI + 1.50%
|
R$
|
20,026
|
40,000
|
60,026
|
60,024
|
|
Debentures – 8th Issue – Single series (8)
|
2031
|
IPCA + 5.27%
|
R$
|
17,293
|
913,698
|
930,991
|
890,440
|
|
(-) Discount on the issuance of debentures (9)
|
|
|
|
-
|
(16,664)
|
(16,664)
|
(18,300)
|
|
(-) Transaction costs
|
|
|
|
(3,035)
|
(27,289)
|
(30,324)
|
(41,254)
|
|
Total, debentures
|
|
|
|
1,281,985
|
4,439,105
|
5,721,090
|
7,105,551
|
|
Total
|
|
|
|
1,409,378
|
11,909,610
|
13,318,988
|
15,020,558
|
|
Financing source
|
Principal maturity
|
Annual financial cost %
|
Currency
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Current
|
Non-current
|
Total
|
Total
|
|
BRAZILIAN CURRENCY
|
|
|
|
|
|
|
|
|
Sonda (7)
|
2021
|
110.00% of CDI
|
R$
|
50,706
|
-
|
50,706
|
50,008
|
|
(-) Transaction costs
|
|
|
|
-
|
-
|
-
|
(55)
|
|
Total of loans and financings
|
|
|
|
50,706
|
-
|
50,706
|
49,953
|
|
|
(1)
|
On June 18, 2021, Cemig D made early settlement of the debt under the Debt
Confirmation and Consolidation Agreement, in the principal amount of US$44,626, considering the guarantees constituted in the amount of
US$42,843, by payment in cash, of roughly US$1,783. The total amount disbursed, comprising the basic cash amount, interest and fees, is
R$10,075 on the date of payment.
|
|
|
(2)
|
Cemig Geração e Transmissão;
|
|
|
(3)
|
Advance of funds to achieve the yield to maturity agreed in the Eurobonds
contract.
|
|
|
(5)
|
Central Eólica Praias de Parajuru. Early payment of the entire debt
was made on July 23, 2021, in the amount of R$5,320. Until the settlement of the contracts, guarantees were maintained and the contractual
obligations complied with;
|
|
|
(6)
|
Central Eólica Volta do Rio. Early payment of the entire debt was
made on July 23, 2021 in the amount of R$8,766. Until the settlement of the contracts, guarantees were maintained and the contractual
obligations complied with;
|
|
|
(7)
|
Parent Company. Arising from merger of Cemig Telecom.
|
|
|
(8)
|
Gasmig; The proceeds from the 8th debenture issue, concluded by Gasmig on
September 10, 2020, in the amount of R$850,000, were used to redeem the Promissory Notes issued on September 26, 2019, with maturity at
12 months, whose proceeds were used in their entirety for payment of the concession grant fee for the gas distribution concession contract.
|
|
|
(9)
|
Discount on the sale price of the 2nd series of the Seventh issue of Cemig
Distribuição.
|
|
|
(10)
|
On February 02, 2021, the Company made the mandatory early redemption of
this debentures, in the amount of R$264,796, with 20% discount of the funds obtained by the sale of the Company’s interest in Light.
For more information about the sale of the Company’s interest in Light, see Note 32.
|
The debentures issued by the subsidiaries
are non-convertible, there are no agreements for renegotiation, nor debentures held in treasury.
There are early maturity clauses
for cross-default in the event of non-payment by Cemig GT or by the Company, of any pecuniary obligation with individual or aggregate
value greater than R$50 million (“cross default”).
Partial repurchase of Eurobonds – Tender Offer
On July 19, 2021 Cemig GT launched
a Cash Tender Offer to acquire its debt securities issued in the external market, maturing in 2024, with 9.25% annual coupon, up to a
principal amount of US$500 million. The price to be paid in the Cash Tender was 116.25%, or US$1,162.50 per US$1,000 of the principal
amount.
On July 30, 2021, offers had been
received from holders of Notes representing a total of US$774 million. Since the aggregate principal of all the Notes validly offered,
until the Early Offer Date, exceeded the maximum amount, Cemig accepted the Notes offered on a pro rata basis until the ceiling amount
of U$500 million.
In addition to the total acquisition
amount, holders of validly offered notes that were accepted for purchase also received accumulated interest not yet paid since and including
the last interest payment date, until but not including the Initial Settlement Date (August 5, 2021).
The financial settlement and cancellation
of notes occurred on August 05, 2021 and the offers closing date is scheduled for August 13, 2021. The effects related to the repurchase
of bonds are described below:
|
|
%
|
US$
|
R$
|
|
Principal Amount
|
100.00
|
500,000
|
2,568,500
|
|
Premium to the market price + Tender
|
16.25
|
81,250
|
417,381
|
|
Accrued interests
|
1.54
|
7,708
|
39,598
|
|
|
|
588,958
|
3,025,479
|
|
|
|
|
|
|
IOF (‘financial operations tax’) levied on premium
|
0.38
|
309
|
1,586
|
|
Income tax on premium
|
17.65
|
14,338
|
73,655
|
|
Income tax on accrued interests
|
17.65
|
1,360
|
6,988
|
|
|
|
16,007
|
82,229
|
|
|
|
|
|
|
Total of payments
|
-
|
604,966
|
3,107,708
|
|
|
|
|
|
|
Partial disposal of hedge
|
-
|
-
|
(774,409)
|
|
NDF positive adjustment (*)
|
-
|
-
|
(23,699)
|
|
Total
|
-
|
-
|
2,309,600
|
(*) Difference between the dollar
PTAX on the purchase date (R$5.137) and the financial instrument – NDF, protecting against foreign exchange, with the dollar purchase
cap of R$5.0984.
Guarantees
The guarantees of the debt
balance on loans and financing, on June 30, 2021, were as follows:
|
|
Jun. 30, 2021
|
|
Promissory notes and Sureties
|
8,970,728
|
|
Guarantee and Receivables
|
3,259,770
|
|
Receivables
|
69,225
|
|
Shares
|
50,706
|
|
Unsecured
|
968,559
|
|
TOTAL
|
13,318,988
|
The composition of loans, financing
and debentures, by currency and index, with the respective amortization, is as follows:
|
Consolidated
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
Total
|
|
Currency
|
|
|
|
|
|
|
|
|
US dollar
|
56,703
|
-
|
-
|
7,503,300
|
-
|
-
|
7,560,003
|
|
Total, currency denominated
|
56,703
|
-
|
-
|
7,503,300
|
-
|
-
|
7,560,003
|
|
Index
|
|
|
|
|
|
|
|
|
IPCA (1)
|
47,721
|
642,785
|
259,213
|
355,957
|
1,190,034
|
1,543,536
|
4,039,246
|
|
UFIR/RGR (2)
|
1,686
|
3,265
|
2,379
|
-
|
-
|
-
|
7,330
|
|
CDI (3)
|
316,106
|
602,041
|
560,000
|
270,000
|
-
|
-
|
1,748,147
|
|
URTJ/TJLP (4)
|
36,129
|
11,910
|
-
|
-
|
-
|
-
|
48,039
|
|
Total by index
|
401,642
|
1,260,001
|
821,592
|
625,957
|
1,190,034
|
1,543,536
|
5,842,762
|
|
(-)Transaction costs
|
(2,583)
|
(781)
|
(760)
|
(16,660)
|
(4,916)
|
(18,666)
|
(44,366)
|
|
(±)Interest paid in advance
|
-
|
-
|
-
|
(22,747)
|
-
|
-
|
(22,747)
|
|
(-) Discount
|
-
|
-
|
-
|
-
|
(8,332)
|
(8,332)
|
(16,664)
|
|
Overall total
|
455,762
|
1,259,220
|
820,832
|
8,089,850
|
1,176,786
|
1,516,538
|
13,318,988
|
|
Parent company
|
2021
|
Total
|
|
Indexers
|
|
|
|
CDI (3)
|
50,706
|
50,706
|
|
Total, governed by indexers
|
50,706
|
50,706
|
(1) Expanded National Customer Price
(IPCA) Index.
(2) Fiscal Reference Unit (Ufir /
RGR).
(3) CDI: Interbank Rate for Certificates
of Deposit.
(4) Interest rate reference unit (URTJ)
/ Long-Term Interest Rate (TJLP)
The principal currencies and
index used for monetary updating of loans and financings had the following variations:
|
Currency
|
Accumulated change on Jan to Jun 30, 2021 (%)
|
Accumulated change on Jan to Jun 30, 2020 (%)
|
Indexer
|
Accumulated change on Jan to Jun 30, 2021 (%)
|
Accumulated change on Jan to Jun 30, 2020 (%)
|
|
US dollar
|
(3.74)
|
35.86
|
IPCA
|
3.77
|
0.10
|
|
|
|
|
CDI
|
1.26
|
1.76
|
|
|
|
|
TJLP
|
1.32
|
(11.31)
|
|
Currency
|
Accumulated change on Apr to Jun 30, 2021 (%)
|
Accumulated change on Apr to Jun 30, 2020 (%)
|
Indexer
|
Accumulated change on Apr to Jun 30, 2021 (%)
|
Accumulated change on Apr to Jun 30, 2020 (%)
|
|
US dollar
|
(12.20)
|
5.33
|
IPCA
|
1.68
|
(0.43)
|
|
|
|
|
CDI
|
0.77
|
0.74
|
|
|
|
|
TJLP
|
5.01
|
(2.95)
|
The changes in loans, financing and
debentures are as follows:
|
|
Consolidated
|
Parent company
|
|
Balances on December 31, 2020
|
15,020,558
|
49,953
|
|
Monetary variation
|
142,579
|
-
|
|
Exchange rate variation
|
(292,379)
|
-
|
|
Financial charges provisioned
|
602,204
|
698
|
|
Amortization of transaction cost
|
12,606
|
55
|
|
Financial charges paid
|
(638,160)
|
-
|
|
Amortization of financing
|
(1,533,724)
|
-
|
|
Reclassification to “Other obligations” (1)
|
5,304
|
-
|
|
Balances on June 30, 2021
|
13,318,988
|
50,706
|
|
|
(1)
|
Reclassification to Cemig D’s customers (CMM
and Serra da Fortaleza).
|
Borrowing
costs, capitalized
The subsidiaries Cemig D and
Gasmig considered the costs of loans and financing linked to construction in progress as construction costs of intangible and concession
contract assets, as follows:
|
|
Jun. 30, 2021
|
Jun. 30, 2020
|
|
Costs of loans and financing
|
602,204
|
605,621
|
|
Financing costs on intangible assets and contract assets (1) (Note 17 and 21)
|
(12,872)
|
(22,515)
|
|
Net effect in Profit or loss
|
589,332
|
583,106
|
|
|
(1)
|
The average capitalization rate p.a. on Jun.
30, 2021 was 7.78% (4.28% on Jun. 30, 2020).
|
The amounts of the capitalized borrowing
costs have been excluded from the statement of cash flows, in the additions to cash flow of investment activities, as they do not represent
an outflow of cash for acquisition of the related asset.
Restrictive
covenants
The Company and its subsidiaries
have contracts with financial covenants as follows:
|
Title - Security
|
Covenant
|
Ratio required – Issuer
|
Ratio required
Cemig (guarantor)
|
Compliance required
|
|
7th Debentures Issue
Cemig GT (1)
|
Net debt
/
(Ebitda + Dividends received)
|
The following or less:
2.5 in 2021
|
The following or less:
2.5 in 2021
|
Semi-annual and annual
|
|
Eurobonds
Cemig GT (2)
|
Net debt
/
Ebitda adjusted for the Covenant (6)
|
The following or less:
3.0 on June 30, 2021
2.5 on/after Dec. 31, 2021
|
The following or less:
3.0 on June 30, 2021
3.0 on/after Dec. 31, 2021
|
Semi-annual and annual
|
|
7th Debentures Issue
Cemig D
|
Net debt
/
Ebitda adjusted
|
Less than 3.5
|
Less than 3.0
|
Semi-annual and annual
|
|
Debentures
GASMIG (3)
|
Overall indebtedness (Total liabilities/Total assets)
|
Less than 0.6
|
-
|
Annual
|
|
Ebitda / Debt servicing
|
1.3 or more
|
-
|
Annual
|
|
Ebitda / Net finance income (expenses)
|
2.5 or more
|
-
|
Annual
|
|
Net debt / Ebitda
|
The following or less:
2.5 on/after Dec, 31.2020
|
-
|
Annual
|
|
8th Debentures Issue
Gasmig
Single series (4)
|
EBITDA/Debt servicing
Net debt/EBITDA
|
1.3 or more as of Dec, 31.2020
3.0 or less as of Dec, 31.2020
|
-
-
|
Annual
Annual
|
|
Financing Caixa Econômica Federal
Parajuru and Volta do Rio (5)
|
Debt servicing coverage index
Equity / Total liabilities
Share capital subscribed in investee
/ Total investments made in the project financed
|
1.20 or more
20.61% or more (Parajuru)
20.63% or more (Volta do Rio)
20.61% or more (Parajuru)
20.63% or more (Volta do Rio)
|
-
-
-
|
Annual (during amortization)
Always
Always
|
|
|
(1)
|
7th Issue of Debentures by Cemig GT, as of December
31, 2016, of R$2,240 million.
|
|
|
(2)
|
In the event of a possible breach of the financial
covenants, interest will automatically be increased by 2% p.a. during the period in which they remain exceeded. There is also an obligation
to comply with a ‘maintenance’ covenants – that the consolidated debt, shall have a guarantee for debt of 1.75x Ebitda
(2.0 as of December 31, 2017); and a ‘damage’ covenant, requiring real guarantee for debt at Cemig GT of 1.5x Ebitda.
|
|
|
(3)
|
If Gasmig does not achieve the required covenants,
it must, within 120 days from the date of notice in writing from BNDES or BNDESPar, constitute guarantees acceptable by the debenture
holders for the total amount of the debt, subject to the rules of the National Monetary Council (CMN), unless the required ratios are
restored within that period. Certain contractually specified situations can cause early maturity of other debts (cross-default).
|
|
|
(4)
|
Non-compliance with the financial covenants
results in automatic early maturity. If early maturity is declared by the debenture holders, Gasmig must make the payment after receipt
of notification.
|
|
|
(5)
|
The financing contracts with Caixa Econômica
Federal for the Praias de Parajuru and Volta do Rio wind power plants have financial covenants with compliance relating to early maturity
of the debt remaining balance. Compliance with the debt servicing coverage index is considered to be demandable only annually and during
the period of amortization, which begins in July 2020. Early payment of the entire debtor balance was made on July 23, 2021, in the amount
of R$5,320 (Central Eólica Praias de Parajuru) and R$8,766 (Volta do Rio). Until the settlement of the contracts, guarantees were
maintained and the contractual obligations complied with.
|
|
|
(6)
|
Ebitda is defined as: (i) Profit before interest,
income tax and Social Contribution tax on profit; depreciation; and amortization, calculated in accordance with CVM Instruction 527, of
October 4, 2012; – less: (ii) non-operational profit; any non-recurring non-monetary credits or gains that increase net profit;
any payments in cash made on consolidated basis during the period relating to non-monetary charges that were newly added in the calculation
of Ebitda in any prior period; and any non-recurring non-monetary expenses or charges.
|
On June 30, 2021, the Company and
its subsidiaries were compliant with the covenants.
The information on the derivative
financial instruments (swaps) contracted to hedge the debt servicing of the Eurobonds (principal, in foreign currency, plus interest),
and the Company’s exposure to interest rate risks, are disclosed in Note 30.
22.
REGULATORY CHARGES
|
|
Consolidated
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Liabilities
|
|
|
|
Global Reversion Reserve (RGR)
|
27,927
|
27,515
|
|
Energy Development Account (CDE)
|
109,126
|
64,179
|
|
Regulator inspection fee – ANEEL
|
3,339
|
3,200
|
|
Energy Efficiency Program
|
206,995
|
264,952
|
|
Research and development (R&D)
|
102,705
|
224,632
|
|
Energy System Expansion Research
|
3,678
|
3,776
|
|
National Scientific and Technological Development Fund
|
7,362
|
7,557
|
|
Proinfa – Alternative Energy Program
|
9,781
|
7,435
|
|
Royalties for use of water resources
|
6,846
|
12,976
|
|
Emergency capacity charge
|
26,325
|
26,325
|
|
Customer charges – Tariff flags
|
96,843
|
89,825
|
|
CDE on R&D
|
88,748
|
-
|
|
CDE on EEP
|
65,683
|
-
|
|
Others
|
4,626
|
4,624
|
|
|
759,984
|
736,996
|
|
|
|
|
|
Current liabilities
|
600,418
|
445,807
|
|
Non-current liabilities
|
159,566
|
291,189
|
23.
POST-EMPLOYMENT OBLIGATIONS
|
Consolidated
|
Pension plans and retirement supplement plans
|
Health plan
|
Dental plan
|
Life insurance
|
Total
|
|
Net liabilities at December 31, 2020
|
2,908,495
|
3,319,093
|
64,324
|
551,135
|
6,843,047
|
|
Expense recognized in Statement of income
|
100,266
|
126,049
|
2,530
|
21,274
|
250,119
|
|
Contributions paid
|
(113,087)
|
(79,480)
|
(1,471)
|
(4,934)
|
(198,972)
|
|
Net liabilities at June 30, 2021
|
2,895,674
|
3,365,662
|
65,383
|
567,475
|
6,894,194
|
|
|
|
|
|
|
|
|
|
|
|
|
Jun.
30, 2021
|
Dec.
31, 2020
|
|
Current liabilities
|
|
|
|
324,307
|
304,551
|
|
Non-current liabilities
|
|
|
|
6,569,887
|
6,538,496
|
|
Parent company
|
Pension plans and retirement supplement plans
|
Health plan
|
Dental plan
|
Life insurance
|
Total
|
|
Net liabilities at December 31, 2020
|
512,937
|
201,080
|
4,682
|
20,081
|
738,780
|
|
Expense recognized in Statement of income
|
17,702
|
7,371
|
176
|
747
|
25,996
|
|
Contributions paid
|
(5,564)
|
(4,687)
|
(93)
|
(149)
|
(10,493)
|
|
Net liabilities at June 30, 2021
|
525,075
|
203,764
|
4,765
|
20,679
|
754,283
|
|
|
|
|
|
|
|
|
|
|
|
|
Jun.
30, 2021
|
Dec.
31, 2020
|
|
Current liabilities
|
|
|
|
25,738
|
25,062
|
|
Non-current liabilities
|
|
|
|
728,545
|
713,718
|
Amounts recorded as current liabilities
refer to contributions to be made by Cemig and its subsidiaries in the next 12 months for the amortization of the actuarial liabilities.
The amounts reported as ‘Expense
recognized in the Statement of income’ refer to the costs of post-employment obligations, totaling R$215,971 (R$223,727 on June
30, 2020), plus the finance expenses and monetary updating on the debt with Forluz, in the amounts of R$34,148 (R$21,749 on June 30, 2020).
Debt with the pension fund (Forluz)
On June 30, 2021, the Company and
its subsidiaries have recognized an obligation for past actuarial deficits relating to the pension fund in the amount of R$429,752 on
June 30, 2021 (R$472,559 on December 31, 2020). This amount has been recognized as an obligation payable by Cemig and its subsidiaries,
and will be amortized until June of 2024, through monthly installments calculated by the system of constant installments (known as the
‘Price’ table), and adjusted by the IPCA (Expanded National Customer Price) inflation index (published by the Brazilian Geography
and Statistics Institute – IBGE) plus 6% per year. The Company is required to pay this debt even if Forluz has a surplus, thus,
the Company maintain recorded the debt in full, and record the effects of monetary updating and interest in finance income (expenses)
in the statement of income.
Agreement to cover the deficit on Forluz Pension Plan
‘A’
Forluz and the sponsors Cemig, Cemig
GT and Cemig D have signed a Debt Assumption Instrument to cover the deficit of Plan A for the years of 2015, 2016 e 2017. On June 30,
2021 the total amount payable by Cemig as a result of the Plan A deficit is R$540,074 (R$540,142 on December, 31, 2020, referring to the
Plan A deficits of 2015, 2016 and 2017). The monthly amortizations, calculated by the constant installments system (Price Table), will
be paid until 2031 for the 2015 and 2016 deficits, in the amount of R$360,826, and up to 2033 for the 2017 deficit, in the amount of R$179,248.
Remuneratory interest applicable to the outstanding balance is 6% p.a., plus the effect of the IPCA. If the plan reaches actuarial surplus
before the full period of amortization of the debt, also Company will not be required to pay the remaining installments and the contract
will be extinguished.
In December, 2020, in accordance
with the applicable legislation, Forluz proposed to Cemig a new Debt Assumption Instrument to be signed, if approved, by Forluz, Cemig,
Cemig GT and Cemig D, in accordance with the plan to cover the deficit of Plan A, which occurred in 2019. The total amount to be paid
by the Company to cover the deficit, without considering parity of contribution, is R$160,425, through 166 monthly installments. The remuneration
interest rate over the outstanding balance is 6% per year, plus the effect of the IPCA. If the plan reaches actuarial balance before the
full period of amortization of the debt, the Company will not be required to pay the remaining installments and the contract will be extinguished.
The Company acknowledged the legal
obligation in relation to the deficit of Plan A corresponding to 50% of the minimum amount, and, thus, obeying the contribution parity
rule, made payments of R$2,213 in consignment, corresponding to April, May and June 2021, to remain at the disposal of Forluz to be redeemed
at an account with an official bank. Due to the refusal by Forluz to receive this amount, on May 26, 2021 the Company proposed an Action
of Consignment in Payment, which is in its initial pleading phase.
Due to the Debt Assumption Instrument
not being signed for coverage of the minimum amount proposed in the plan for solution of the Plan A actuarial deficit for 2019, and the
refusal of the payments in consignment made by the Company, on April 27, 2021 Forluz filed legal action against sponsors Cemig, Cemig
GT and Cemig D, applying for approval and confirmation of the request to ensure compliance with the contracting of the debt for coverage
of the deficit of Plan A, in the amount of R$160,425, for the 2019 business year. The chances of loss have been assessed as ‘possible’,
due to the action still being at the instruction phase, and there being no decisions on the merit.
24.
PROVISIONS
Company and its subsidiaries
are involved in certain legal and administrative proceedings at various courts and government bodies, arising in the normal course of
business, regarding employment-law, civil, tax, environmental and regulatory matters, and other issues.
Actions in which the Company and
its subsidiaries are defendant
Company and its subsidiaries
recorded provisions for contingencies in relation to the legal actions in which, based on the assessment of the Company’s management
and its legal advisors, the chances of loss are assessed as ‘probable’ (i.e. an outflow of funds to settle the obligation
will be necessary), as follows:
|
|
Consolidated
|
|
Dec. 31, 2020
|
Additions
|
Reversals
|
Settled
|
Jun. 30, 2021
|
|
Labor
|
427,515
|
49,299
|
(9,165)
|
(35,490)
|
432,159
|
|
Civil
|
|
|
|
|
|
|
Customer relations
|
22,089
|
12,899
|
-
|
(10,568)
|
24,420
|
|
Other civil actions
|
32,495
|
9,822
|
(82)
|
(4,546)
|
37,689
|
|
|
54,584
|
22,721
|
(82)
|
(15,114)
|
62,109
|
|
Tax
|
1,294,287
|
59,387
|
(78,361)
|
(59)
|
1,275,254
|
|
Regulatory
|
51,660
|
2,882
|
(6,210)
|
(1,170)
|
47,162
|
|
Others
|
64,391
|
10,528
|
(2,146)
|
(4,755)
|
68,018
|
|
Total
|
1,892,437
|
144,817
|
(95,964)
|
(56,588)
|
1,884,702
|
|
|
Parent company
|
|
Dec. 31, 2020
|
Additions
|
Reversals
|
Settled
|
Jun. 30, 2021
|
|
Labor
|
28,152
|
8,418
|
-
|
(3,749)
|
32,821
|
|
Civil
|
|
|
|
-
|
|
|
Customer relations
|
550
|
193
|
-
|
(169)
|
574
|
|
Other civil actions
|
3,178
|
20
|
(82)
|
(20)
|
3,096
|
|
|
3,728
|
213
|
(82)
|
(189)
|
3,670
|
|
Tax
|
170,624
|
3,298
|
-
|
(24)
|
173,898
|
|
Regulatory
|
18,606
|
-
|
(3,772)
|
-
|
14,834
|
|
Others
|
1,275
|
1,135
|
(71)
|
(305)
|
2,034
|
|
Total
|
222,385
|
13,064
|
(3,925)
|
(4,267)
|
227,257
|
The Company and its subsidiaries’
management, in view of the extended period and the Brazilian judiciary, tax and regulatory systems, believes that it is not practical
to provide information that would be useful to the users of this interim financial information in relation to the the timing of any cash
outflows, or any possibility of reimbursements.
The Company and its subsidiaries
believe that any disbursements in excess of the amounts provisioned, when the respective claims are completed, will not significantly
affect the Company and its subsidiaries’ result of operations or financial position.
The details on the main provisions
and contingent liabilities are provided below, with the best estimation of expected future disbursements for these contingencies:
Provisions, made for legal actions
in which the chances of loss have been assessed as ‘probable’ and contingent liabilities, for actions in which the chances
of loss are assessed as ‘possible’
Labor claims
Company and its subsidiaries are
involved in various legal claims filed by its employees and by employees of service providing companies. Most of these claims relate to
overtime and additional pay, severance payments, various benefits, salary adjustments and the effects of such items on a supplementary
retirement plan. In addition to these actions, there are others relating, complementary additions to or re-calculation of retirement pension
payments by Forluz, and salary adjustments.
The aggregate amount of the contingency
is approximately R$1,543,921 (R$1,386,147 at December 31, 2020), of which R$432,159 (R$427,515 at December 31, 2020) has been recorded
– the amount estimated as probably necessary for settlement of these disputes.
Alteration of the monetary updating index of employment-law
cases
On December 2020 the Federal
Supreme Court gave partial judgment in favor of two actions for declaration of constitutionality, and ruled that monetary adjustment applied
to employment-law liabilities should be by the IPCA-E index until the stage of service of notice in a legal action, and thereafter by
application of the Selic rate, and the Reference Rate (TR) is not applicable to any employment-law obligations as well. The effects of
this decision were modulated as follows:
|
|
§
|
payments already
made in due time and in the appropriate manner, using application of the TR, the IPCA-E or any other indexer, will remain valid and may
not be the subject of any further contestation;
|
|
|
§
|
actions in
progress that are at the discovery phase, should be subject to backdated application of the Selic rate, on penalty of future allegation
of non-demandability of judicial title based on an interpretation contrary to the position of the Supreme Court; and;
|
|
|
§
|
the judgment
is automatically applicable to actions in which final judgment has been given against which there is no appeal, provided that there is
no express submission in relation to the monetary adjustment indices and interest rates; and this also applies to cases of express omission,
or simple consideration of following the legal criteria.
|
Customers claims
Company and its subsidiaries
are involved in various civil actions relating to indemnity for moral injury and for material damages, arising, principally, from allegations
of irregularity in measurement of consumption, and claims of undue charging, in the normal course of business, totaling R$157,729 (R$142,481
at December 31, 2020), of which R$24,420 (R$22,089 at December 31, 2020) has been recorded – this being the probable estimate for
funds needed to settle these disputes.
Other civil proceedings
Company and its subsidiaries
are involved in various civil actions claiming indemnity for moral and material damages, among others, arising from incidents occurred
in the normal course of business, in the amount of R$418,264 (R$359,122 at December 31, 2020), of which R$37,689 (R$32,495 at December
31, 2020) has been recorded – the amount estimated as probably necessary for settlement of these disputes.
Tax
Company and its subsidiaries
are involved in numerous administrative and judicial claims actions relating to taxes, including, among other matters, subjects relating
to the Urban Property Tax (Imposto sobre a Propriedade Territorial Urbana, or IPTU); the Rural Property Tax (ITR); the Tax on Donations
and Legacies (ITCD); the Social Integration Program (Programa de Integração Social, or PIS); the Contribution to
Finance Social Security (Contribuição para o Financiamento da Seguridade Social, or Cofins); Corporate Income tax
(Imposto de Renda Pessoa Jurídica, or IRPJ); the Social Contribution (Contribuição Social sobre o Lucro
Líquido, or CSLL); and motions to tax enforcement. The aggregate amount of this contingency is approximately R$185,566 (R$166,348
at December 31, 2020), of which R$17,222 (R$13,505 at December 31, 2020) has been recorded – the amount estimated as probably necessary
for settlement of these disputes.
In addition to the issues above the
Company and its subsidiaries are involved in various proceedings on the applicability of the IPTU Urban Land Tax to real estate properties
that are in use for providing public services. The aggregate amount of the contingency is approximately R$83,815 (R$84,525 at December
31, 2020). Of this total, R$3,303 has been recognized (R$3,844 at December 31, 2020) – this being the amount estimated as probably
necessary for settlement of these disputes. The company has been successful in its efforts to have its IPTU tax liability suspended, winning
judgments in favor in some cases – this being the principal factor in the reduction of the total value of the contingency.
Social Security contributions
on profit sharing payments
The Brazilian tax authority
(Receita Federal) has filed administrative and court proceedings against the Company, relating to social security contributions
on the payment of profit shares to its employees over the period 1999 to 2016, alleging that the Company did not comply with the requirements
of Law 10,101/2000 on the argument that it did not previously establish clear and objective rules for the distribution of these amounts.
In August 2019, the Regional Federal Court of the First Region published a decision against the Company on this issue. As a result the
Company, based on the opinion of its legal advisers, reassessed the chances of loss from ‘possible’ to ‘probable’
for some portions paid as profit-sharing amounts, maintaining the classification of the chance of loss as 'possible' for the other portions,
since it believes that it has arguments on the merit for defense and/or because it believes that the amounts questioned are already within
the period of limitation.
The amount of the contingencies is
approximately R$1,409,541 (R$1,520,054 on December 31, 2020), of which R$1,253,593 has been provisioned on June 30, 2021 (R$1,275,808
on December 31, 2020), this being the estimate of the probable amount of funds to settle these disputes. The significant change in the
amount of contingencies is due, among other factors, to a judgment given in favor of the Company in one of the administrative cases relating
to social security contributions, for the period January to October 2010, which resulted in cancellations of tax debits, according to
calculations made by the tax authority (Receita Federal).
Non-homologation of offsetting of tax credit
The federal tax authority did not
ratify the Company’s declared offsetting, in Corporate income tax returns, of carry-forwards and undue or excess payment of federal
taxes – IRPJ, CSLL, PIS/Pasep and Cofins – identified by official tax deposit receipts (‘DARFs’ and ‘DCTFs’).
The Company and its subsidiaries is contesting the non-homologation of the amounts offset. The amount of the contingency is R$204,414
(R$202,975 at December 31, 2020), of which R$1,136 (R$1,130 at December 31, 2020), has been provisioned, since the relevant requirements
of the National Tax Code (CTN) have been complied with.
Regulatory
The Company and its subsidiaries
are involved in numerous administrative and judicial proceedings, challenging, principally: (i) tariff charges in invoices for use of
the distribution system by a self-producer; (ii) alleged violation of targets for continuity indicators in retail supply of energy; and
(iii) the tariff increase made during the federal government’s economic stabilization plan referred to as the ‘Cruzado Plan’,
in 1986. The aggregate amount of the contingency is approximately R$346,051 (R$345,475 at December 31, 2020), of which R$47,163 (R$51,660
at December 31, 2020) has been recorded as provision – the amount estimated as probably necessary for settlement of these disputes.
Other legal actions in the normal course of
business
Breach of contract – Power line pathways and
accesses cleaning services contract
The Company and its subsidiaries
are involved in disputes alleging losses suffered as a result of supposed breaches of contract at the time of provision of services of
cleaning of power line pathways and firebreaks. The amount recorded is R$50,352 (R$46,312 at December 31, 2020), this being estimated
as the likely amount of funds necessary to settle this dispute.
‘Luz Para Todos’
Program
The Company is a party in disputes
alleging losses suffered by third parties as a result of supposed breach of contract at the time of implementation of part of the rural
electrification program known as the ‘Luz Para Todos’. The estimated amount of the contingency is approximately R$385,098
(R$356,236 on December 31, 2020). Of this total, R$743 (R$687 on December 31, 2020) has been provisioned the amount estimated as probably
necessary for settlement of these disputes.
Other legal proceedings
Company and its subsidiaries are
involved as plaintiff or defendant, in other less significant claims, related to the normal course
of their operations including: environmental matters; provision of cleaning service in power line pathways and firebreaks, removal
of residents from risk areas; and indemnities for rescission of contracts, on a lesser scale, related to the normal course of its operations,
with an estimated total amount of R$595,222 (R$621,398 at December, 31, 2020), of
which R$16,923 (R$17,392 at December, 31, 2020), the amount estimated as probably necessary
for settlement of these disputes.
Contingent liabilities –
loss assessed as ‘possible’
Taxes and contributions
The Company and its subsidiaries
are involved in numerous administrative and judicial proceedings in relation to taxes. Below are details of the main claims:
Indemnity of employees’
future benefit (the ‘Anuênio’)
In 2006 the Company and its
subsidiaries paid an indemnity to its employees, totaling R$177,686, in exchange for rights to future payments (referred to as the Anuênio)
for time of service, which would otherwise be incorporated, in the future, into salaries. The Company and its subsidiaries did not pay
income tax and Social Security contributions on this amount because it considered that those obligations are not applicable to amounts
paid as an indemnity. However, to avoid the risk of a future fine, the Company obtained an injection, which permitted to make an escrow
deposit of R$121,834, which updated now represents the amount of R$287,006 (R$285,836 at December 31, 2020). The updated amount of the contingency is R$296,738
(R$294,613 at December 31, 2020) and, based on the arguments above, management has classified the chance of loss as ‘possible’.
Social Security contributions
The Brazilian federal
tax authority (Secretaria da Receita Federal) has filed administrative proceedings related to various matters: employee profit
sharing; the Workers’ Food Program (Programa de Alimentação do Trabalhador, or PAT); education benefit; food
benefit; Special Additional Retirement payment; overtime payments; hazardous occupation payments;
matters related to Sest/Senat (transport workers’ support programs); and fines for non-compliance with accessory obligations. The
Company and its subsidiaries have presented defenses and await judgment. The amount of the contingency is approximately R$118,356 (R$110,436
at December 31, 2020). Management has classified the chance of loss as ‘possible’, also taking into account assessment of
the chance of loss in the judicial sphere, (the claims mentioned are in the administrative sphere), based on the evaluation of the claims
and the related case law.
Income tax withheld on capital
gain in a shareholding transaction
The federal tax authority
issued a tax assessment against Cemig as a jointly responsible party with its jointly-controlled entity Parati S.A. Participações
em Ativos de Energia Elétrica (Parati), relating to withholding income tax (Imposto de Renda Retido na Fonte, or IRRF) allegedly
applicable to returns paid by reason of a capital gain in a shareholding transaction relating to the purchase by Parati, and sale, by
Enlighted, at July 7, 2011, of 100.00% of the equity interests in Luce LLC (a company with head office in Delaware, USA), holder of 75.00%
of the shares in the Luce Brasil equity investment fund (FIP Luce), which was indirect holder, through Luce Empreendimentos e Participações
S.A., of approximately 13.03% of the total and voting shares of Light S.A. (Light). The amount of the contingency is approximately R$235,730
(R$234,113 at December 31, 2020), and the loss has been assessed as ‘possible’.
The social contribution
tax on net income (CSLL)
The federal tax authority
issued a tax assessment against the Company and its subsidiaries for the years of 2012 and 2013, alleging undue non-addition, or deduction,
of amounts relating to the following items in calculating the social contribution tax on net income: (i) taxes with liability suspended;
(ii) donations and sponsorship (Law 8,313/91); and (iii) fines for various alleged infringements. The amount of this contingency is R$436,450
(R$425,023 at December 31, 2020). The Company has classified the chances of loss as ‘possible’, in accordance with the analysis
of the case law on the subject.
ICMS (local state value added
tax)
From December 2019 to March 2020
the Tax Authority of Minas Gerais State issued infraction notices against the subsidiary Gasmig, in the total amount of R$55,204, relating
to reduction of the calculation base of ICMS tax in the sale of natural gas to its customers over the period from December 2014 to December
2015, alleging a divergence between the form of calculation used by Gasmig and the opinion
of that tax authority. The claims comprises: principal of R$17,047, penalty payments of R$27,465 and interest of R$10,692.
Considering that the State of Minas
Gerais, over a period of more than 25 years, has never made any allegations against the methodology of calculation by the Company, Management
and Company’s legal advisors, believe that there is a defense under Article 100, III of the National Tax Code, which removes claims
for penalties and interest; and that the contingency for loss related to these amounts is ‘remote’. In relation to the argument
on the difference between the amount of ICMS tax calculated by Gasmig and the new interpretation by the state tax authority, the probability
of loss was considered ‘possible’. On June 30, 2021 the amount of the contingency for the period relating to the rules on
expiry by limitation of time is R$121,736.
Interest on Equity
The Company filed an application
for mandamus, with interim relief, requesting the right to deduct, from the basis of calculation of corporate income tax and Social Contribution
tax, the expense relating to payment of Interest on Equity in 4Q20 calculated on the basis of prior periods (the first and second quarters
of 2020), and for cancellation of the demand for new supposed credits of corporate income tax and the Social Contribution relating to
the amount that was not paid as a result of the deduction of the said financial expense, with application of fines. The amount of the
contingencies in this case is approximately R$58,565 on June 30, 2021, and the chances of loss were assessed as ‘possible’,
based on analysis of current judgments by the Brazilian courts on the theme.
Regulatory matters
Public Lighting Contribution
(CIP)
Cemig and Cemig D are defendants
in several public civil claims (class actions) requesting nullity of the clause in the Electricity Supply Contracts for public illumination
signed between the Company and the various municipalities of its concession area, and restitution by the Company of the difference representing
the amounts charged in the last 20 years, in the event that the courts recognize that these amounts were unduly charged. The actions are
grounded on a supposed error by Cemig in the estimation of the period of time that was used in calculation of the consumption of energy
for public illumination, funded by the Public Lighting Contribution (Contribuição para Iluminação Pública,
or CIP).
The Company believes it has
arguments of merit for defense in these claims, since the charge at present made is grounded on Aneel Normative Resolution 456/2000. As
a result it has not constituted a provision for this action, the amount of which is estimated at R$1,165,190 (R$1,072,398 at December
31, 2020). The Company has assessed the chances of loss in this action as ‘possible’, due to the Customer Defense Code (Código
de Defesa do Consumidor, or CDC) not being applicable, because the matter is governed by the specific regulation of the energy sector,
and because Cemig complied with Aneel Resolutions 414 and 456, which deal with the subject.
Accounting of energy sale transactions
in the Power Trading Chamber (CCEE)
In a claim dating from August 2002,
AES Sul Distribuidora challenged in the court the criteria for accounting of energy sale transactions in the wholesale energy market (Mercado
Atacadista de Energia, or MAE) (predecessor of the present Power Trading Chamber – Câmara de Comercialização
de Energia Elétrica, or CCEE), during the period of rationing. It obtained a favorable interim judgment on February 2006, which
ordered the grantor (Aneel), working with the CCEE, to comply with the claim by AES Sul and recalculate the settlement of the transactions
during the rationing period, not considering the grantor (Aneel) Dispatch 288 of 2002.
This should take effect in the CCEE
as from November 2008, resulting in an additional disbursement for Cemig GT, related to the expense on purchase of energy in the spot
market on the CCEE, in the approximate amount of R$402,190 (R$376,228 at December 31, 2020). On November 9, 2008 Cemig GT obtained an
interim decision in the Regional Federal Appeal Court (Tribunal Regional Federal, or TRF) suspending the obligatory nature of the
requirement to pay into court the amount that would have been owed under the Special Financial Settlement made by the CCEE. Cemig GT has
classified the chance of loss as ‘possible’, since this action deals with the General Agreement for the Electricity Sector,
in which the Company has the full documentation to support its arguments.
Tariff increases
Exclusion of customers classified
as low-income
The Federal Public Attorneys’
Office filed a class action against the Company and the grantor (Aneel), to avoid exclusion of customers from classification in the Low-income
residential tariff sub-category, requesting an order for Cemig D to pay twice the amount paid in excess by customers. A decision was
given in favor of the plaintiffs, but the Company and the grantor (Aneel) have filed an interlocutory appeal and await judgment. The amount
of the contingency is approximately R$381,052 (R$356,907 at December 31, 2020). Cemig D has classified the chances of loss as ‘possible’
due to other favorable decisions on this matter.
Environmental claims
Impact arising from construction
of power plants
The Public Attorneys’ Office
of Minas Gerais State has filed class actions requiring the formation of a Permanent Preservation Area (APP) around the reservoir of the
Capim Branco hydroelectric plant, suspension of the effects of the environmental licenses, and recovery of alleged environmental
damage. Cemig GT, based on the opinion of its legal advisers in relation to the changes that have been made in the new Forest Code and
in the case law on this subject, Cemig GT has classified
the chance of loss in this dispute as ‘possible’. The estimated value of the contingency is R$113,485
(R$105,552 at December 31, 2020).
Other contingent liabilities
Early settlement of the
CRC (Earnings Compensation) Account
The Company is involved in an administrative
proceeding at the Audit Court of the State of Minas Gerais which challenges: (i) a difference of amounts relating to the discount offered
by Cemig for early repayment of the credit owed to Cemig by the State under the Receivables Assignment Contract in relation to the CRC
Account (Conta de Resultados a Compensar, or Earnings Compensation Account) – this payment was completed in the first quarter
of 2013; and also (ii) possible undue financial burden on the State after the signature of the Amendments that aimed to re-establish the
economic and financial balance of the Contract. The amount of the contingency is approximately R$469,754 (R$448,066 at December 31, 2020),
and, based on the Opinion of the Public Attorneys’ Office of the Audit Board of the State of Minas Gerais (Tribunal de Contas),
the Company believes that it has met the legal requirements. Thus, it has assessed the chances of loss as ‘possible’, since
it believes that the adjustment was made in faithful obedience to the legislation applicable to the case.
Contractual imbalance
Cemig D is party in other disputes
arising from alleged non-compliance with contracts in the normal course of business, for an estimated total of R$181,239 (R$167,168 at
December 31, 2020). Cemig D has classified the chance of loss as ‘possible’, after analysis of the case law on this subject.
Renova: Application to override
corporate identity
A receivables investment fund filed
an application for Override of Legal Identity (Incidente de Desconsideração da Personalidade Jurídica – IDPJ)
in relation to certain companies of the Renova group, aiming to include some shareholders of Renova, including the Company and its subsidiary
Cemig GT, as defendants jointly and severally liable. The amount involved in this dispute is estimated at R$83,246 at June 30, 2021. The
chances of loss have been assessed as ‘possible’.
25.
EQUITY AND REMUNERATION TO SHAREHOLDERS
On June 30, 2021 and December 31,
2020, the Company’s issued and share capital is R$8,466,810, represented by 566,036,634 common shares and 1,127,325,434 preferred
shares, both of them with nominal value of R$5.00 (five Reais).
Capital increase
The Annual General Meeting held on
April, 30, 2021 approved Management's proposal for allocation of the profits for 2020, published in the 2020 financial statements, and
a capital increase from R$7,593,763 to R$8,466,810 as per Article 199 of the Brazilian Corporate Law (Law 6,404/76), since the profit
reserves at December 31, 2020 (excluding tax-incentive amounts and Unrealized profit reserve) exceeded the share capital, by R$1,529,371.
The capital increase was made through
capitalization of the balance of R$873,047 in the Retained Earnings reserve, by issuance of a share bonus of 174,609,467 new shares (with
par value R$5.00, as per the by-laws), of which 58,366,345 are common shares and 116,243,122 are preferred shares.
Advance for future capital increase
(‘AFAC’)
On July 30, 2021, the Company made
an advance for future capital increase in Cemig GT, of R$1,350,000, in order to provide the resources for the Cash Tender offer implementation.
For further information about the Tender Offer, please see Note 21.
Due to the capital increase, on April
30, 2021, with issuance of 174,609,467 new shares, without a corresponding entry of funds into the Company, the basic and diluted profit
per share are presented, retrospectively, considering the new number of Company’s shares.
The number of shares included in
the calculation of basic and diluted earnings per share, is described in the table below:
|
|
Number of shares
|
|
Jun. 30, 2021
|
Jun. 30, 2020
|
|
Common shares already paid up
|
566,036,634
|
566,036,634
|
|
Shares in treasury
|
(79)
|
(79)
|
|
Total common shares
|
566,036,555
|
566,036,555
|
|
|
|
|
|
Preferred shares already paid up
|
1,127,325,434
|
1,127,325,434
|
|
Shares in treasury
|
(650,817)
|
(650,817)
|
|
Total preferred shares
|
1,126,674,617
|
1,126,674,617
|
|
Total
|
1,692,711,172
|
1,692,711,172
|
Basic and diluted earnings
per share
The calculation of basic and diluted earnings per share
is as follows:
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
(restated)
|
Apr to Jun, 2021
|
Apr to Jun, 2020
(restated)
|
|
Net income (loss) for the period (A)
|
2,368,269
|
1,013,060
|
1,946,237
|
1,081,462
|
|
Total earnings (B)
|
1,692,711,172
|
1,692,711,172
|
1,692,711,172
|
1,692,711,172
|
|
|
|
|
|
|
|
Basic and diluted earnings per share (A/B) (R$)
|
1.40
|
0.60
|
1.15
|
0.64
|
The purchase and sale options of
investments described in Note 30 could potentially dilute basic profit (loss) per share in the future; however, they have not caused dilution
of earnings per share in the periods presented here.
Revenues are measured at the fair
value of the consideration received or to be received and are recognized on a monthly basis as and when: (i) Rights and obligations of
the contract with the customer are identified; (ii) the performance obligation of the contract is identified; (iii) the price for each
transaction has been determined; (iv) the transaction price has been allocated to the performance obligations defined in the contract;
and (v) the performance obligations have been complied.
|
Consolidated
|
Jan to Jun, 2021
|
Jan to Jun, 2020
(restated)
|
|
Revenue from supply of energy (a)
|
13,789,570
|
12,687,452
|
|
Revenue from use of the electricity distribution systems (TUSD) (b)
|
1,657,608
|
1,399,108
|
|
CVA, and Other financial components (c)
|
792,651
|
81,652
|
|
Reimbursement of PIS/Pasep and Cofins over ICMS credits to customers– realization (1)
|
430,911
|
-
|
|
Transmission revenue
|
|
|
|
Transmission operation and maintenance revenue (d)
|
164,198
|
137,312
|
|
Transmission construction revenue (d)
|
62,133
|
104,056
|
|
Interest revenue arising from the financing component in the transmission contract asset (d) (Note 14)
|
297,122
|
115,252
|
|
Distribution construction revenue
|
738,437
|
609,632
|
|
Adjustment to expectation of cash flow from indemnifiable financial assets of distribution concession (e)
|
20,026
|
(955)
|
|
Revenue on financial updating of the Concession Grant Fee (f)
|
243,404
|
146,412
|
|
Transactions in energy on the CCEE (g)
|
108,088
|
31,598
|
|
Mechanism for the sale of surplus (h)
|
-
|
104,814
|
|
Supply of gas
|
1,543,629
|
962,887
|
|
Fine for violation of service continuity indicator
|
(44,904)
|
(29,117)
|
|
Advances for services provided (i)
|
153,970
|
-
|
|
Other operating revenues (j)
|
849,766
|
886,612
|
|
Deductions on revenue (k)
|
(6,341,886)
|
(5,694,614)
|
|
Net operating revenue
|
14,464,723
|
11,542,101
|
|
|
(1)
|
For more information, see Note 8a.
|
|
Consolidated
|
Apr to Jun, 2021
|
Apr to Jun, 2020
(restated)
|
|
Revenue from supply of energy (a)
|
6,837,733
|
5,920,014
|
|
Revenue from use of the electricity distribution systems (TUSD) (b)
|
820,873
|
674,737
|
|
CVA, and Other financial components (c)
|
453,744
|
136,254
|
|
Reimbursement of PIS/Pasep and Cofins over ICMS credits to customers– realization (1)
|
252,538
|
-
|
|
Transmission revenue
|
|
|
|
Transmission operation and maintenance revenue (d)
|
75,036
|
60,715
|
|
Transmission construction revenue (d)
|
39,682
|
42,815
|
|
Interest revenue arising from the financing component in the transmission contract asset (d) (Note 14)
|
139,867
|
43,672
|
|
Distribution construction revenue
|
409,128
|
346,559
|
|
Adjustment to expectation of cash flow from indemnifiable financial assets of distribution concession (e)
|
9,120
|
(1,679)
|
|
Revenue on financial updating of the Concession Grant Fee (f)
|
118,844
|
46,520
|
|
Transactions in energy on the CCEE (g)
|
1,043
|
7,074
|
|
Mechanism for the sale of surplus (h)
|
-
|
41,514
|
|
Supply of gas
|
838,444
|
403,227
|
|
Fine for violation of service continuity indicator
|
(14,335)
|
(11,918)
|
|
Advances for services provided (i)
|
153,970
|
-
|
|
Other operating revenues (j)
|
436,904
|
473,143
|
|
Deductions on revenue (k)
|
(3,218,609)
|
(2,682,530)
|
|
Net operating revenue
|
7,353,982
|
5,500,117
|
|
|
(1)
|
For more information, see Note 8a.
|
|
|
a)
|
Revenue from energy supply
|
These items are recognized upon delivery
of supply, based on the tariff specified in the contractual terms and approved by the grantor for each class of customer or in effect
in the market. Unbilled supply of energy, from the period between the last billing and the end of each month, is estimated based on the
supply contracted. For the distribution concession contract, the unbilled supply is estimated based on the volume of energy delivered
but not yet billed.
This table shows energy supply by
type of customer:
|
|
MWh (1)
|
R$
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Residential
|
5,641,592
|
5,442,910
|
5,280,570
|
4,866,632
|
|
Industrial
|
7,859,762
|
6,326,923
|
2,479,825
|
1,981,349
|
|
Commercial, services and others
|
4,098,721
|
4,472,574
|
2,584,188
|
2,577,247
|
|
Rural
|
1,919,300
|
1,671,380
|
1,164,034
|
984,629
|
|
Public authorities
|
358,362
|
386,015
|
265,367
|
279,249
|
|
Public lighting
|
670,035
|
664,656
|
361,053
|
295,455
|
|
Public services
|
699,867
|
675,124
|
391,974
|
356,523
|
|
Subtotal
|
21,247,639
|
19,639,582
|
12,527,011
|
11,341,084
|
|
Own consumption
|
16,832
|
17,376
|
-
|
-
|
|
Unbilled revenue
|
-
|
-
|
(49,934)
|
(257,626)
|
|
|
21,264,471
|
19,656,958
|
12,477,077
|
11,083,458
|
|
Wholesale supply to other concession holders (2)
|
5,328,247
|
6,626,096
|
1,404,260
|
1,588,364
|
|
Wholesale supply unbilled, net
|
-
|
-
|
(91,767)
|
15,630
|
|
Total
|
26,592,718
|
26,283,054
|
13,789,570
|
12,687,452
|
|
|
|
|
|
|
|
|
(1)
|
Data not reviewed by external auditors.
|
|
|
(2)
|
Includes a CCEAR (Regulated Market Sales Contract), ‘bilateral contracts’ with other agents,
and the revenues from management of generation assets (GAG) for the 18 hydroelectric plants of Lot D of Auction no 12/2015.
|
|
|
MWh (1)
|
R$
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Residential
|
2,766,585
|
2,657,910
|
2,620,985
|
2,307,578
|
|
Industrial
|
4,058,047
|
2,982,979
|
1,269,674
|
934,197
|
|
Commercial, services and others
|
1,992,781
|
2,028,857
|
1,263,457
|
1,136,848
|
|
Rural
|
1,074,926
|
896,375
|
629,219
|
511,810
|
|
Public authorities
|
171,645
|
169,009
|
128,263
|
121,381
|
|
Public lighting
|
314,679
|
325,162
|
149,098
|
142,679
|
|
Public services
|
352,752
|
339,650
|
197,094
|
177,860
|
|
Subtotal
|
10,731,415
|
9,399,942
|
6,257,790
|
5,332,353
|
|
Own consumption
|
8,272
|
7,970
|
-
|
-
|
|
Unbilled revenue
|
-
|
-
|
(55,728)
|
(104,793)
|
|
|
10,739,687
|
9,407,912
|
6,202,062
|
5,227,560
|
|
Wholesale supply to other concession holders (2)
|
2,612,137
|
3,401,541
|
653,719
|
726,004
|
|
Wholesale supply unbilled, net
|
-
|
-
|
(18,048)
|
(33,550)
|
|
Total
|
13,351,824
|
12,809,453
|
6,837,733
|
5,920,014
|
|
|
|
|
|
|
|
|
(1)
|
Data not reviewed by external auditors.
|
|
|
(2)
|
Includes a CCEAR (Regulated Market Sales Contract), ‘bilateral contracts’ with other agents,
and the revenues from management of generation assets (GAG) for the 18 hydroelectric plants of Lot D of Auction no 12/2015.
|
|
|
b)
|
Revenue from Use of the
Distribution System (the TUSD charge)
|
These are recognized upon the
distribution infrastructure become available to customers, and the fair value of the consideration is calculated according to the
TUSD tariff of those customers, set by the regulator.
The total amount of energy transported, in MWh, is as follows:
|
|
MWh (1)
|
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Industrial
|
10,101,082
|
8,750,291
|
|
Commercial
|
722,967
|
608,096
|
|
Rural
|
20,347
|
14,274
|
|
Public service
|
1,551
|
-
|
|
Concessionaires
|
124,337
|
144,465
|
|
Total
|
10,970,284
|
9,517,126
|
|
|
(1)
|
Data not reviewed by external auditors
|
|
|
MWh (1)
|
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Industrial
|
5,118,220
|
4,230,152
|
|
Commercial
|
356,817
|
254,096
|
|
Rural
|
10,560
|
7,045
|
|
Public service
|
900
|
-
|
|
Concessionaires
|
52,220
|
72,652
|
|
Total
|
5,538,717
|
4,563,945
|
|
|
(1)
|
Data not reviewed by external auditors
|
|
|
c)
|
The CVA account, and Other financial components
|
The results from variations in the
CVA account (Parcel A Costs Variation Compensation Account), and in Other financial components in calculation of tariffs,
refer to the positive and negative differences between the estimated non-manageable costs of the subsidiary Cemig D and the cost actually
incurred. The amounts recognized arise from balances recorded in the current period, homologated or to be homologated in tariff adjustment
processes. For more information please see Note 13.
|
|
d)
|
Transmission concession revenue
|
|
|
§
|
Construction
revenue corresponds to the performance obligation to build the transmission infrastructure, recognized based on the satisfaction of obligation
performance over time. They are measured based on the cost incurred, including PIS/Pasep and Cofins taxes over the total revenues and
the profit margin of the project. For more information, see Note 14.
|
|
|
§
|
Operation and
maintenance revenue corresponds to the performance obligation of operation and maintenance specified in the transmission concession contract,
after termination of the construction phase. They are recognized when the services are rendered and he invoices for the RAPs are issued.
|
|
|
§
|
Interest revenue
in the contract asset recognized, recorded as transmission concession gross revenue in statement income. Revenue corresponds to the significant
financing component in the contract asset, and is recognized by the linear effective interest rate method based on the rate determined
at the start of the investments, which is not subsequently changed. The average of the implicit rates is 6.86%. The rates are determined
for each authorization and are applied on the amount
to be received (future cash flow) over the contract duration. This includes financial updating by the inflation index specified for each
transmission contract.
|
The margin defined for each performance
obligation from the transmission concession contract is as follows:
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Construction and upgrades revenue
|
62,133
|
104,056
|
39,682
|
42,815
|
|
Construction and upgrades costs
|
(47,124)
|
(74,044)
|
(28,059)
|
(26,846)
|
|
Margin
|
15,009
|
30,012
|
11,623
|
15,969
|
|
Mark-up (%)
|
31.85%
|
40.53%
|
41.42%
|
59.48%
|
|
Operation and maintenance revenue
|
164,198
|
137,312
|
75,036
|
60,715
|
|
Operation and maintenance cost
|
(120,905)
|
(121,904)
|
(53,805)
|
(62,935)
|
|
Margin
|
43,293
|
15,408
|
21,231
|
(2,220)
|
|
Mark-up (%)
|
35.81%
|
12.64%
|
39.46%
|
(3.53)%
|
|
|
e)
|
Adjustment to expected cash flow from financial assets
on residual value of infrastructure asses of distribution concessions
|
Income from monetary updating of
the Regulatory Remuneration Asset Base.
|
|
f)
|
Revenue on financial updating of the Concession Grant
Fee
|
Represents the inflation adjustment
using the IPCA inflation index, plus interest, on the Concession Grant Fee for the concession awarded as Lot D of Auction 12/2015. See
Note 13.
|
|
g)
|
Energy transactions on the CCEE (Power Trading Chamber)
|
The revenue from transactions made
through the Power Trading Chamber (Câmara de Comercialização de Energia Elétrica, or CCEE) is the monthly
positive net balance of settlements of transactions for purchase and sale of energy in the Spot Market, through the CCEE, for which the
consideration corresponds to the product of energy sold at the Spot Price.
|
|
h)
|
Mechanism for the sale of
energy surplus
|
The revenue from the surplus sale
mechanism (‘Mecanismo de Venda de Excedentes – MVE’) refers to the sale of power surpluses by distributor agents.
This mechanism is an instrument regulated by Aneel enabling distributors to sell over contracted supply – the energy amount that
exceeds the quantity required to supply captive customers.
|
|
i)
|
Advances for services provided
|
Corresponds to the negotiation with a free customer
that resulted in a revenue recognition related to trading services provided in advance by the subsidiary ESCEE.
|
|
j)
|
Other operating revenues
|
|
Consolidated
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Charged service
|
7,932
|
5,221
|
|
Services rendered
|
26,922
|
70,117
|
|
Subsidies (1)
|
683,882
|
730,649
|
|
Rental and leasing
|
98,312
|
80,563
|
|
Other
|
32,718
|
62
|
|
|
849,766
|
886,612
|
|
Consolidated
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Charged service
|
3,950
|
1,466
|
|
Services rendered
|
13,613
|
35,669
|
|
Subsidies (1)
|
346,648
|
395,305
|
|
Rental and leasing
|
51,200
|
40,808
|
|
Other
|
21,493
|
(105)
|
|
|
436,904
|
473,143
|
(1)
Includes the revenue recognized for the tariff subsidies applied to users
of the distribution system, in accordance with the Decree n.7,891/2013, in the amount of R$494,424 on June 30, 2021 (R$545,778 on June
30, 2020). Includes the subsidies for sources that are subject to incentive, rural, irrigators, public services and the generation sources
that are subject to the incentive; and also includes the tariff flag revenue in the amount of R$46,057 on June 30, 2021, recognized because
of the creditor position assumed by the Company in CCRBT.
|
Consolidated
|
Jan to Jun, 2021
|
Jan to Jun, 2020
(restated)
|
|
Taxes on revenue
|
|
|
|
ICMS
|
3,304,168
|
3,010,684
|
|
Cofins
|
1,242,295
|
1,031,162
|
|
PIS/Pasep
|
269,081
|
224,096
|
|
Others
|
7,677
|
3,363
|
|
|
4,823,221
|
4,269,305
|
|
Charges to the customer
|
|
|
|
Global Reversion Reserve (RGR)
|
7,722
|
7,951
|
|
Energy Efficiency Program (PEE)
|
29,967
|
33,444
|
|
Energy Development Account (CDE)
|
1,324,598
|
1,217,865
|
|
Research and Development (R&D)
|
13,651
|
20,276
|
|
National Scientific and Technological Development Fund (FNDCT)
|
25,510
|
20,276
|
|
Energy System Expansion Research (EPE of MME)
|
12,755
|
10,138
|
|
Customer charges – Proinfa alternative sources program
|
30,671
|
17,739
|
|
Energy services inspection fee
|
19,529
|
15,413
|
|
Royalties for use of water resources
|
18,200
|
22,551
|
|
Customer charges – the ‘Flag Tariff’ system
|
7,017
|
59,656
|
|
CDE on R&D
|
11,859
|
-
|
|
CDE on EEP
|
17,186
|
-
|
|
|
1,518,665
|
1,425,309
|
|
|
6,341,886
|
5,694,614
|
|
Consolidated
|
Apr to Jun, 2021
|
Apr to Jun, 2020
(restated)
|
|
Taxes on revenue
|
|
|
|
ICMS
|
1,652,716
|
1,408,778
|
|
Cofins
|
629,445
|
486,599
|
|
PIS/Pasep
|
136,030
|
105,642
|
|
Others
|
6,841
|
1,605
|
|
|
2,425,032
|
2,002,624
|
|
Charges to the customer
|
|
|
|
Global Reversion Reserve (RGR)
|
4,032
|
4,002
|
|
Energy Efficiency Program (PEE)
|
4,545
|
16,539
|
|
Energy Development Account (CDE)
|
649,729
|
608,155
|
|
Research and Development (R&D)
|
(59)
|
8,998
|
|
National Scientific and Technological Development Fund (FNDCT)
|
11,800
|
8,998
|
|
Energy System Expansion Research (EPE of MME)
|
5,900
|
4,499
|
|
Customer charges – Proinfa alternative sources program
|
14,336
|
10,023
|
|
Energy services inspection fee
|
9,891
|
7,706
|
|
Royalties for use of water resources
|
9,321
|
10,913
|
|
Customer charges – the ‘Flag Tariff’ system
|
55,037
|
73
|
|
CDE on R&D
|
11,859
|
-
|
|
CDE on EEP
|
17,186
|
-
|
|
|
793,577
|
679,906
|
|
|
3,218,609
|
2,682,530
|
27.
OPERATING COSTS AND EXPENSES
The operating costs and expenses
of the Company and its subsidiaries are as follows:
|
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
(restated)
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Personnel (a)
|
650,323
|
650,789
|
7,718
|
11,112
|
|
Employees’ and managers’ profit sharing
|
49,189
|
33,280
|
39
|
6,032
|
|
Post-employment benefits – Note 23
|
215,971
|
223,727
|
24,316
|
23,985
|
|
Materials
|
46,202
|
34,766
|
35
|
100
|
|
Outsourced services (b)
|
687,075
|
601,690
|
5,894
|
15,793
|
|
Energy bought for resale (c)
|
6,417,348
|
5,569,733
|
-
|
-
|
|
Depreciation and amortization (1)
|
480,164
|
488,449
|
900
|
1,552
|
|
Operating provisions (reversals) and adjustments for operating losses (d)
|
93,379
|
356,729
|
9,139
|
48,986
|
|
Charges for use of the national grid
|
1,448,227
|
622,453
|
-
|
-
|
|
Gas bought for resale
|
868,042
|
543,303
|
-
|
-
|
|
Construction costs (e)
|
785,561
|
683,676
|
-
|
-
|
|
Other operating expenses, net (f)
|
154,580
|
126,678
|
12,073
|
5,542
|
|
|
11,896,061
|
9,935,273
|
60,114
|
113,102
|
|
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
(restated)
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Personnel (a)
|
342,869
|
339,183
|
1,417
|
4,916
|
|
Employees’ and managers’ profit sharing
|
19,675
|
7,440
|
(2,231)
|
2,792
|
|
Post-employment benefits – Note 23
|
109,288
|
118,322
|
12,222
|
12,310
|
|
Materials
|
25,352
|
16,141
|
27
|
73
|
|
Outsourced services (b)
|
344,641
|
302,609
|
3,185
|
8,488
|
|
Energy bought for resale (c)
|
3,309,234
|
2,755,238
|
-
|
-
|
|
Depreciation and amortization (1)
|
241,733
|
245,697
|
449
|
776
|
|
Operating provisions (reversals) and adjustments for operating losses (d)
|
69,175
|
197,613
|
(1,061)
|
47,144
|
|
Charges for use of the national grid
|
701,915
|
257,441
|
-
|
-
|
|
Gas bought for resale
|
480,517
|
231,378
|
-
|
-
|
|
Construction costs (e)
|
437,186
|
373,405
|
-
|
-
|
|
Other operating expenses, net (f)
|
77,580
|
72,673
|
4,986
|
1,642
|
|
|
6,159,165
|
4,917,140
|
18,994
|
78,141
|
|
|
(1)
|
Net of PIS/Pasep and
Cofins taxes applicable to amortization of the Right of Use, in the amount of R$276 in the statements and R$3 in the Parent company statements.
|
2021 Programmed
Voluntary Retirement Plan (‘PDVP’)
On May 2021, the Company
approved the Programmed Voluntary Retirement Plan for 2021 (‘the 2021 PDVP’). All the employees are eligible to join the program,
except as provided for in the Program, from May 10 to 31, 2021. The program will pay the standard legal payments for voluntary termination
of employment and a bonus, as an indemnity, which is calculated by the application of a percentage determined by the length of time the
employee has worked for Cemig, on the current remuneration, for each year of employment, according to the Program terms, and, for those
employees whose job tenure in Cemig is longer than 36 years, the value of 10.5 remunerations.
The total of R$35,238
has been recorded as expense related to this program, corresponding to acceptance by 324 employees. In April, 2020, has been appropriated
as expense, including severance payments, a total of R$58,850 (396 employees).
|
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Meter reading and bill delivery
|
63,192
|
65,168
|
-
|
-
|
|
Communication
|
77,936
|
43,292
|
127
|
239
|
|
Maintenance and conservation of electrical facilities and equipment
|
231,122
|
229,996
|
8
|
9
|
|
Building conservation and cleaning
|
34,082
|
41,980
|
85
|
77
|
|
Security services
|
7,909
|
8,753
|
-
|
-
|
|
Auditing and consulting services
|
18,739
|
18,088
|
2,801
|
11,800
|
|
Information technology
|
48,527
|
24,932
|
826
|
586
|
|
Disconnection and reconnection
|
36,094
|
15,278
|
-
|
-
|
|
Legal services
|
9,441
|
9,857
|
521
|
591
|
|
Tree pruning
|
23,067
|
24,336
|
-
|
-
|
|
Cleaning of power line pathways
|
49,612
|
33,933
|
-
|
-
|
|
Copying and legal publications
|
8,084
|
10,159
|
166
|
247
|
|
Inspection of customer units
|
13,816
|
12,618
|
-
|
-
|
|
Other expenses
|
65,454
|
63,300
|
1,360
|
2,244
|
|
|
687,075
|
601,690
|
5,894
|
15,793
|
|
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Meter reading and bill delivery
|
32,018
|
33,118
|
-
|
-
|
|
Communication
|
37,444
|
11,765
|
72
|
157
|
|
Maintenance and conservation of electrical facilities and equipment
|
107,080
|
113,872
|
4
|
5
|
|
Building conservation and cleaning
|
17,283
|
26,139
|
47
|
34
|
|
Security services
|
4,752
|
4,223
|
-
|
-
|
|
Auditing and consulting services
|
9,463
|
7,301
|
1,211
|
5,672
|
|
Information technology
|
23,266
|
11,056
|
501
|
292
|
|
Disconnection and reconnection
|
20,087
|
4,049
|
-
|
-
|
|
Legal services
|
5,248
|
6,081
|
215
|
443
|
|
Tree pruning
|
12,262
|
15,308
|
-
|
-
|
|
Cleaning of power line pathways
|
25,205
|
19,161
|
-
|
-
|
|
Copying and legal publications
|
5,252
|
5,556
|
155
|
240
|
|
Inspection of customer units
|
8,214
|
8,829
|
-
|
-
|
|
Other expenses
|
37,067
|
36,151
|
980
|
1,645
|
|
|
344,641
|
302,609
|
3,185
|
8,488
|
|
|
c)
|
Energy purchased for resale
|
|
Consolidated
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Supply from Itaipu Binacional
|
967,628
|
952,413
|
|
Physical guarantee quota contracts
|
401,516
|
379,450
|
|
Quotas for Angra I and II nuclear plants
|
122,289
|
151,484
|
|
Spot market
|
363,246
|
633,003
|
|
Proinfa Program
|
191,000
|
155,866
|
|
‘Bilateral’ contracts
|
195,094
|
163,392
|
|
Energy acquired in Regulated Market auctions
|
2,159,787
|
1,567,953
|
|
Energy acquired in the Free Market
|
2,059,165
|
1,743,809
|
|
Distributed generation (‘Geração distribuída’)
|
528,781
|
327,796
|
|
PIS/Pasep and Cofins credits
|
(571,158)
|
(505,433)
|
|
|
6,417,348
|
5,569,733
|
|
Consolidated
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Supply from Itaipu Binacional
|
480,103
|
524,601
|
|
Physical guarantee quota contracts
|
199,451
|
189,617
|
|
Quotas for Angra I and II nuclear plants
|
61,145
|
75,742
|
|
Spot market
|
323,914
|
251,066
|
|
Proinfa Program
|
95,500
|
77,933
|
|
‘Bilateral’ contracts
|
110,107
|
84,216
|
|
Energy acquired in Regulated Market auctions
|
1,036,952
|
748,514
|
|
Energy acquired in the Free Market
|
1,023,322
|
900,703
|
|
Distributed generation (‘Geração distribuída’)
|
273,757
|
154,315
|
|
PIS/Pasep and Cofins credits
|
(295,017)
|
(251,469)
|
|
|
3,309,234
|
2,755,238
|
|
|
d)
|
Operating provision (reversals)
|
|
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Estimated losses on doubtful accounts receivables (Note 7) (1)
|
42,168
|
215,100
|
-
|
-
|
|
Estimated losses on other accounts receivables (2)
|
(11,000)
|
-
|
-
|
-
|
|
Estimated losses on doubtful accounts receivable from related (3)
|
-
|
37,361
|
-
|
37,361
|
|
|
|
|
|
|
|
Contingency provisions (reversals) (Note 24) (2)
|
|
|
|
|
|
Labor claims
|
40,134
|
30,688
|
8,418
|
6,140
|
|
Civil
|
22,639
|
22,690
|
131
|
2,002
|
|
Tax
|
(18,974)
|
24,439
|
3,298
|
3,510
|
|
Other
|
5,054
|
3,651
|
(2,708)
|
(27)
|
|
|
48,853
|
81,468
|
9,139
|
11,625
|
|
|
80,021
|
333,929
|
9,139
|
48,986
|
|
Adjustment for losses
|
|
|
|
|
|
Put option – SAAG (Note 30)
|
13,358
|
22,800
|
-
|
-
|
|
|
13,358
|
22,800
|
-
|
-
|
|
|
93,379
|
356,729
|
9,139
|
48,986
|
|
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Estimated losses on doubtful accounts receivables (Note 7) (1)
|
(985)
|
115,360
|
-
|
-
|
|
Estimated losses on doubtful accounts receivable from related (3)
|
-
|
37,361
|
-
|
37,361
|
|
|
|
|
|
|
|
Contingency provisions (reversals) (Note 24) (2)
|
|
|
|
|
|
Labor claims
|
18,529
|
23,375
|
263
|
7,986
|
|
Civil
|
12,684
|
6,379
|
(122)
|
1,235
|
|
Tax
|
10,348
|
12,005
|
1,034
|
1,237
|
|
Other
|
2,074
|
1,145
|
(2,236)
|
(675)
|
|
|
43,635
|
42,904
|
(1,061)
|
9,783
|
|
|
42,650
|
195,625
|
(1,061)
|
47,144
|
|
Adjustment for losses
|
|
|
|
|
|
Put option – SAAG (Note 30)
|
26,525
|
1,988
|
-
|
-
|
|
|
26,525
|
1,988
|
-
|
-
|
|
|
69,175
|
197,613
|
(1,061)
|
47,144
|
|
|
(1)
|
The expected losses on receivables are presented as selling expenses in
the Statement of Income.
|
|
|
(2)
|
The provisions for contingencies of the holding
company are presented in the consolidated profit and loss account for the period as operating expenses.
|
|
|
(3)
|
Estimated losses on amounts receivable from
Renova, as a result of the assessment of credit risk.
|
|
|
e)
|
Construction infrastructure costs
|
|
Consolidated
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Personnel and managers
|
35,368
|
40,445
|
|
Materials
|
406,290
|
337,298
|
|
Outsourced services
|
297,591
|
239,960
|
|
Others
|
46,312
|
65,973
|
|
|
785,561
|
683,676
|
|
Consolidated
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Personnel and managers
|
20,354
|
23,522
|
|
Materials
|
225,254
|
180,348
|
|
Outsourced services
|
167,552
|
139,977
|
|
Others
|
24,026
|
29,558
|
|
|
437,186
|
373,405
|
|
|
f)
|
Other operating expenses, net
|
|
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
(restated)
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Leasing and rentals
|
2,077
|
5,234
|
(6)
|
427
|
|
Advertising
|
3,726
|
2,877
|
13
|
31
|
|
Own consumption of energy
|
11,387
|
10,750
|
-
|
-
|
|
Subsidies and donations
|
4,780
|
3,317
|
-
|
-
|
|
Onerous concession
|
1,678
|
1,387
|
-
|
-
|
|
Insurance
|
14,320
|
12,004
|
1,932
|
1,411
|
|
CCEE annual charge
|
2,984
|
2,974
|
-
|
1
|
|
Net loss (gain) on deactivation and disposal of assets
|
29,221
|
11,969
|
-
|
157
|
|
Forluz – Administrative running cost
|
15,565
|
14,856
|
770
|
731
|
|
Collection agents
|
42,892
|
42,393
|
-
|
-
|
|
Obligations deriving from investment contracts (1)
|
9,012
|
-
|
-
|
-
|
|
Taxes and charges
|
13,566
|
6,223
|
3,750
|
729
|
|
Other expenses
|
3,372
|
12,694
|
5,614
|
2,055
|
|
|
154,580
|
126,678
|
12,073
|
5,542
|
|
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
(restated)
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
Leasing and rentals
|
469
|
3,124
|
(9)
|
206
|
|
Advertising
|
3,458
|
1,662
|
25
|
31
|
|
Own consumption of energy
|
11,387
|
10,750
|
-
|
-
|
|
Subsidies and donations
|
3,773
|
1,645
|
-
|
-
|
|
Onerous concession
|
886
|
707
|
-
|
-
|
|
Insurance
|
6,990
|
5,943
|
973
|
726
|
|
CCEE annual charge
|
1,501
|
1,500
|
-
|
1
|
|
Net loss (gain) on deactivation and disposal of assets
|
17,417
|
5,536
|
-
|
157
|
|
Forluz – Administrative running cost
|
8,013
|
7,552
|
397
|
371
|
|
Collection agents
|
21,974
|
20,395
|
-
|
-
|
|
Obligations deriving from investment contracts (1)
|
3,633
|
-
|
-
|
-
|
|
Taxes and charges
|
9,630
|
1,442
|
3,397
|
112
|
|
Other expenses
|
(11,551)
|
12,417
|
203
|
38
|
|
|
77,580
|
72,673
|
4,986
|
1,642
|
|
|
(1)
|
This refers to the contractual obligations to
the investee Aliança Geração, corresponding to contingencies resulting from events before the closing of the transaction
which resulted in contribution of assets by Cemig and Vale S.A. to this investee in exchange for an equity interest. The total value of
the contingencies is R$141 million (R$119 million at December 31, 2020), of which Cemig GT’s portion is R$50 million (R$41 million
on December, 31, 2020).
|
|
|
28.
|
FINANCE INCOME AND EXPENSES
|
|
|
Consolidated
|
Parent company
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
FINANCE INCOME
|
|
|
|
|
|
Income from financial investments
|
92,821
|
39,590
|
28,224
|
2,122
|
|
Interest on sale of energy
|
237,822
|
176,823
|
-
|
-
|
|
Foreign exchange variations – Itaipu
|
7,291
|
-
|
-
|
-
|
|
Foreign exchange variations - loans and financing (Note 21)
|
292,379
|
-
|
-
|
-
|
|
Monetary variations
|
14,087
|
8,729
|
1,672
|
1
|
|
Monetary variations – CVA (Note 13)
|
6,927
|
25,688
|
-
|
-
|
|
Monetary updating of escrow deposits
|
6,944
|
54,042
|
583
|
10,172
|
|
PIS/Pasep and Cofins charged on finance income (1)
|
(49,303)
|
(15,812)
|
(32,294)
|
(2,036)
|
|
Gains on financial instruments –swap (Note 30)
|
-
|
1,800,960
|
-
|
-
|
|
Monetary updating on PIS/Pasep and Cofins taxes credits over ICMS (Note 8) (2)
|
18,127
|
27,092
|
2,059
|
3,489
|
|
Others
|
40,217
|
35,701
|
3,594
|
1,645
|
|
|
667,312
|
2,152,813
|
3,838
|
15,393
|
|
FINANCE EXPENSES
|
|
|
|
|
|
Charges on loans and financings (Note 21)
|
(589,332)
|
(583,106)
|
(698)
|
(942)
|
|
Cost of debt – amortization of transaction cost (Note 21)
|
(12,606)
|
(7,101)
|
(55)
|
(104)
|
|
Foreign exchange variations - loans and financing (Note 21)
|
-
|
(2,162,364)
|
-
|
-
|
|
Foreign exchange variations – Itaipu
|
-
|
(66,466)
|
-
|
-
|
|
Monetary updating – loans and financings (Note 21)
|
(142,579)
|
(35,978)
|
-
|
-
|
|
Monetary updating – onerous concessions
|
(7,054)
|
(1,782)
|
-
|
-
|
|
Charges and monetary updating on post-employment obligations (Note 23)
|
(34,148)
|
(21,749)
|
(1,680)
|
(1,070)
|
|
Loss on financial instruments –swap (Note 30)
|
(612,765)
|
-
|
-
|
-
|
|
Leasing – Monetary variation (Note 18)
|
(12,479)
|
(13,737)
|
(124)
|
(153)
|
|
Others (2)
|
(43,041)
|
(22,593)
|
(245)
|
(3)
|
|
|
(1,454,004)
|
(2,914,876)
|
(2,802)
|
(2,272)
|
|
NET FINANCE INCOME (EXPENSES)
|
(786,692)
|
(762,063)
|
1,036
|
13,121
|
|
|
Consolidated
|
Parent company
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
|
FINANCE INCOME
|
|
|
|
|
|
Income from financial investments
|
61,208
|
21,424
|
20,312
|
749
|
|
Interest on sale of energy
|
123,038
|
84,751
|
-
|
-
|
|
Foreign exchange variations – Itaipu
|
24,254
|
-
|
-
|
-
|
|
Foreign exchange variations - loans and financing (Note 21)
|
1,044,160
|
-
|
-
|
-
|
|
Monetary variations
|
7,394
|
5,079
|
630
|
1
|
|
Monetary variations – CVA (Note 13)
|
6,927
|
14,045
|
-
|
-
|
|
Monetary updating of escrow deposits
|
4,437
|
37,682
|
93
|
4,476
|
|
PIS/Pasep and Cofins charged on finance income (1)
|
(33,465)
|
(7,018)
|
(23,728)
|
(1,582)
|
|
Gains on financial instruments –swap (Note 30)
|
-
|
486,720
|
-
|
-
|
|
Monetary updating on PIS/Pasep and Cofins taxes credits over ICMS (2)
|
24,911
|
12,243
|
1,250
|
1,580
|
|
Others
|
25,561
|
15,152
|
2,031
|
869
|
|
|
1,288,425
|
670,078
|
588
|
6,093
|
|
FINANCE EXPENSES
|
|
|
|
|
|
Charges on loans and financings (Note 21)
|
(263,305)
|
(271,806)
|
(432)
|
(400)
|
|
Cost of debt – amortization of transaction cost (Note 21)
|
(8,469)
|
(3,556)
|
-
|
(53)
|
|
Foreign exchange variations - loans and financing (Note 21)
|
-
|
(405,828)
|
-
|
-
|
|
Foreign exchange variations – Itaipu
|
-
|
(32,457)
|
-
|
-
|
|
Monetary updating – loans and financings (Note 21)
|
(58,405)
|
32,467
|
-
|
-
|
|
Monetary updating – onerous concessions
|
(3,161)
|
(1,091)
|
-
|
-
|
|
Charges and monetary updating on post-employment obligations
|
(15,772)
|
(4,416)
|
(776)
|
(217)
|
|
Loss on financial instruments –swap
|
(425,417)
|
-
|
-
|
-
|
|
Leasing – Monetary variation
|
(6,147)
|
(6,738)
|
(61)
|
(74)
|
|
Others
|
(29,221)
|
(11,970)
|
282
|
-
|
|
|
(809,897)
|
(705,395)
|
(987)
|
(744)
|
|
NET FINANCE INCOME (EXPENSES)
|
478,528
|
(35,317)
|
(399)
|
5,349
|
|
|
(1)
|
The PIS/Pasep and Cofins
expenses apply to Interest on Equity.
|
|
|
(2)
|
The updating of the tax credits for the court judgment on PIS, Pasep, Cofins / ICMS tax, and the related
liability to be refunded to customers, is presented at net value.
|
|
|
29.
|
RELATED PARTY TRANSACTIONS
|
Cemig’s main balances and transactions
with related parties and its jointly-controlled entities are as follows:
|
COMPANY
|
ASSETS
|
LIABILITIES
|
REVENUE
|
EXPENSES
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Shareholder
|
|
|
|
|
|
|
|
|
|
Minas Gerais State Government
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Customers and traders (1)
|
300,785
|
334,824
|
-
|
-
|
45,711
|
70,851
|
-
|
-
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Accounts Receivable – AFAC (2)
|
13,366
|
11,614
|
-
|
-
|
1,752
|
5,056
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Affiliated (3)
|
|
|
|
|
|
|
|
|
|
Madeira Energia
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
8,231
|
2,173
|
126,780
|
92,054
|
49,776
|
13,014
|
(770,996)
|
(548,860)
|
|
|
|
|
|
|
|
|
|
|
|
Jointly-controlled entity (3)
|
|
|
|
|
|
|
|
|
|
Aliança Geração
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
16,232
|
14,297
|
23,173
|
19,872
|
(93,277)
|
(82,633)
|
|
Provision of services (5)
|
496
|
323
|
-
|
-
|
2,692
|
2,420
|
-
|
-
|
|
Interest on Equity, and dividends
|
19,930
|
114,430
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Contingency (6)
|
-
|
-
|
50,388
|
41,376
|
-
|
-
|
(9,012)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Baguari Energia
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
946
|
922
|
-
|
-
|
(4,351)
|
(4,172)
|
|
Provision of services (5)
|
211
|
211
|
-
|
-
|
82
|
559
|
-
|
-
|
|
Interest on Equity, and dividends
|
10,835
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Norte Energia
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
130
|
130
|
34,032
|
25,154
|
13,895
|
13,859
|
(162,589)
|
(108,885)
|
|
Advance for future power supply (7)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(19,931)
|
|
|
|
|
|
|
|
|
|
|
|
Lightger
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
2,823
|
1,646
|
-
|
-
|
(15,026)
|
(11,599)
|
|
|
|
|
|
|
|
|
|
|
|
Hidrelétrica Pipoca
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
3,036
|
2,728
|
-
|
-
|
(18,315)
|
(11,599)
|
|
Interest on Equity, and dividends
|
1,313
|
2,680
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Retiro Baixo
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
599
|
144
|
2,912
|
2,519
|
(3,062)
|
(2,103)
|
|
Interest on Equity, and dividends
|
3,929
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Hidrelétrica Cachoeirão
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
-
|
-
|
909
|
-
|
-
|
-
|
|
Interest on Equity, and dividends
|
4,020
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Renova
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Loans from related parties (8)
|
-
|
-
|
-
|
-
|
-
|
(803)
|
-
|
(37,361)
|
|
|
|
|
|
|
|
|
|
|
|
Taesa
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Transactions with energy (4)
|
-
|
-
|
7,988
|
8,128
|
123
|
-
|
(55,073)
|
(45,323)
|
|
Provision of services (5)
|
198
|
289
|
-
|
-
|
567
|
295
|
-
|
-
|
|
Interest on Equity, and dividends
|
5
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Hidrelétrica Itaocara
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Adjustment for losses (9)
|
-
|
-
|
29,297
|
29,615
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
COMPANY
|
ASSETS
|
LIABILITIES
|
REVENUE
|
EXPENSES
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
|
Axxiom
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Provision of services (10)
|
-
|
-
|
-
|
3,782
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Other related parties
|
|
|
|
|
|
|
|
|
|
FIC Pampulha
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
1,305,286
|
171,373
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Marketable securities
|
3,462,339
|
3,355,688
|
-
|
-
|
45,289
|
15,794
|
-
|
-
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
859,014
|
754,555
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Forluz
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Post-employment obligations (11)
|
-
|
-
|
169,321
|
158,671
|
-
|
-
|
(100,266)
|
(102,892)
|
|
Supplementary pension contributions – Defined contribution plan (12)
|
-
|
-
|
-
|
-
|
-
|
-
|
(38,215)
|
(36,285)
|
|
Administrative running costs (13)
|
-
|
-
|
-
|
-
|
-
|
-
|
(15,565)
|
(14,855)
|
|
Operating leasing (14)
|
157,585
|
166,926
|
21,750
|
21,754
|
-
|
-
|
(2,493)
|
(885)
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Post-employment obligations (11)
|
-
|
-
|
2,726,353
|
2,749,824
|
-
|
-
|
-
|
-
|
|
Operating leasing (14)
|
-
|
-
|
149,752
|
156,207
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cemig Saúde
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Health Plan and Dental Plan (15)
|
-
|
-
|
168,091
|
154,152
|
-
|
-
|
(128,579)
|
(120,392)
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Health Plan and Dental Plan (15)
|
-
|
-
|
3,262,954
|
3,229,265
|
-
|
-
|
-
|
-
|
The main conditions and characteristics
of interest with reference to the related party transactions are:
|
|
(1)
|
Refers to sale of energy supply to the Minas
Gerais State government. The price of the supply is set by the grantor (Aneel) through a Resolution relating to the annual tariff adjustment
of Cemig D. In 2017 the government of Minas Gerais State signed a debt recognition agreement with Cemig D for payment of debits relating
to the supply of power due and unpaid, in the amount of R$113,032, up to November 2019. These receivables have guarantee in the form of
Cemig’s right to retain dividends and Interest on Equity otherwise payable to the State (in proportion to the State’s equity
interest in the Company), for as long as any payments are overdue or in default. On June, 30, 2021, Cemig D obtained authorization from
the Minas Gerais State Finance Secretary to offset part of the ICMS tax payable to the state against the debt owed by the State government
to the company, under State Law 23,705/2020. The amount is to be offset in 21 equal monthly installments of approximately R$10.5 million.
Until June 30, 2021, three installments had been offset.
|
|
|
(2)
|
This refers to the recalculation of the inflation
adjustment of amounts relating to the Advance against Future Capital Increase (AFAC), which were returned to the State of Minas Gerais.
These receivables have guarantee in the form of Cemig’s right to retain dividends and Interest on Equity otherwise payable to the
State (in proportion to the State’s equity interest in the Company), for as long as any payments are overdue or in default. However,
the Minas Gerais State government is contesting the signature of the TARD, on the grounds that it was signed without obeying the legal
requirements for validity of administrative acts, and notified the Company to return the two installment payments that had been made,
and also the amounts of the dividends retained. For more information, see Note 10.
|
|
|
(3)
|
The relationship between Cemig and its investees
are described in Note 15 – Investments.
|
|
|
(4)
|
The transactions in sale and purchase of energy
between generators and distributors take place through auctions in the Regulated Market, and are organized by the federal government.
In the Free Market, transactions are made through auctions or through direct contracting, under the applicable legislation. Transactions
for transport of energy, on the other hand, are carried out by transmission companies and arise from the centralized operation of the
National Grid, executed by the National System Operator (ONS).
|
|
|
(5)
|
Refers to a contract to provide plant operation
and maintenance services.
|
|
|
(6)
|
This refers to the aggregate amounts of legal actions realized and legal actions provisioned arising from
the agreement made between Aliança Geração, Vale S.A. and Cemig. The action is provisioned in the amount of R$141
million (R$119 million on December 31, 2020), of which Cemig’s portion is R$50 million (R$41 million on December 31, 2020).
|
|
|
(7)
|
Refers to advance payments for energy supply made in 2019 to Norte Energia, established by auction and
by contract registered with the CCEE (Power Trading Chamber). Norte Energia delivered contracted supply until December 31, 2020.
|
|
|
(8)
|
On November 25, 2019, December 27, 2019 and January 27, 2020, DIP loan contracts under court-supervised
reorganization proceedings, referred to as ‘DIP’ and ‘DIP 2’, “DIP 3’ were entered into between the
Company and Renova Energia S.A., in the amounts of R$10 million, R$6.5 million and R$20 million, respectively. The contracts specify interest
equal to 100% of the accumulated variation in the DI rate, plus an annual spread, applied pro rata die (on 252-business-days basis), of
1.083% for the DIP contract, 2.5% for the DIP2 contract and 1.5% for the DIP3, until the date of respective full payment. The Company
recognized an impairment loss for the receivables from Renova, of its total carrying amount of R$37,361, in the second semester of 2020.
For further information, see Note 15 (c).
|
|
|
(9)
|
A liability was recognized corresponding to the Company’s interest in the share capital of Hidrelétrica
Itaocara, due to its negative equity (see Note 15).
|
|
|
(10)
|
This refers to a contract for development of
management software between Cemig D and Axxiom Soluções Tecnológicas S.A., instituted in Aneel Dispatch 2657/2017;
|
|
|
(11)
|
The contracts of Forluz are updated by the Expanded
Customer Price Index (Índice Nacional de Preços ao Consumidor Amplo, or IPCA) calculated by the Brazilian Geography
and Statistics Institute (IBGE) plus interest of 6% p.a. and will be amortized up to the business year of 2031 (see Note 23).
|
|
|
(12)
|
The Company’s contributions to the pension
fund for the employees participating in the Mixed Plan, and calculated on the monthly remuneration, in accordance with the regulations
of the Fund.
|
|
|
(13)
|
Funds for annual current administrative costs
of the Pension Fund in accordance with the specific legislation of the sector. The amounts are estimated as a percentage of the Company’s
payroll.
|
|
|
(14)
|
Rental of the Company’s administrative
head offices, in effect until August 2024 (able to be extended every five years, up to 2034), with annual inflation adjustment by the
IPCA index and price reviewed every 60 months. On April, 27, the Company signed with Forluz a contract amendment due to the transfer of
Cemig Sim e Gasmig facilities to Júlio Soares building, reducing the Company’s rent expenses.
|
|
|
(15)
|
Post-employment obligations relating to the
employees’ health and dental plan (see Note 23).
|
Dividends receivable
|
Dividends receivable
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2021
|
Jun. 30, 2021
|
Dec. 31, 2021
|
|
Cemig GT
|
-
|
-
|
479,093
|
891,998
|
|
Cemig D
|
-
|
-
|
221,463
|
309,434
|
|
Gasmig
|
-
|
-
|
115,756
|
-
|
|
Centroeste
|
-
|
-
|
11,038
|
-
|
|
Light
|
71,206
|
71,206
|
71,206
|
71,206
|
|
Taesa
|
5
|
-
|
5
|
-
|
|
Aliança Geração
|
19,930
|
114,430
|
-
|
-
|
|
Others (1)
|
20,154
|
2,691
|
1,024
|
240
|
|
|
111,295
|
188,327
|
899,585
|
1,272,878
|
|
|
(1)
|
The subsidiaries grouped in ‘Others’ are identified in the table
above under “Interest on Equity, and Dividends”.
|
Guarantees on loans, financing and debentures
Cemig has provided guarantees
on loans, financing and debentures of the following related parties – not consolidated in the interim financial information because
they relate to jointly-controlled entities or affiliated companies:
|
Related party
|
Relationship
|
Type
|
Objective
|
Jun. 30, 2021
|
Maturity
|
|
Norte Energia (NESA)
|
Affiliated
|
Surety
|
Financing
|
2,570,811
|
2042
|
|
Norte Energia (NESA)/Light (1)
|
Affiliated
|
Counter-guarantee
|
Financing
|
683,615
|
2042
|
|
Santo Antônio Energia S.A. (2)
|
Jointly-controlled entity
|
Surety
|
Debentures
|
466,041
|
2037
|
|
Santo Antônio Energia S.A.
|
Jointly-controlled entity
|
Guarantee
|
Financing
|
1,054,411
|
2034
|
|
Norte Energia (NESA)
|
Affiliated
|
Surety
|
Debentures
|
70,234
|
2030
|
|
|
|
|
|
4,845,112
|
|
|
|
(1)
|
Counter-guarantee to Light, related to execution of guarantees of the Norte
Energia financing.
|
|
|
(2)
|
Corporate guarantee given by Cemig to Saesa.
|
At June 30, 2021, Management believes
that there is no need to recognize any provisions in the Company’s interim financial information for the purpose of meeting any
obligations arising under these sureties and/or guarantees.
Cash
investments in FIC Pampulha – the investment fund of Cemig and its subsidiaries and affiliates
Cemig and its subsidiaries and jointly-controlled
entities invest part of their financial resources in an investment fund which has the characteristics of fixed income and obeys the Company’s
cash investment policy. The amounts invested by the fund are presented in Marketable securities line in current and non-current assets,
or presented deducted from the Debentures line in current and non-current liabilities, in proportion to the Company’s participation
in the fund, of 98.23%, on June, 30, 2021.
The funds applied are allocated only
in public and private fixed income securities, subject only to credit risk, with various maturity periods, obeying the unit holders’
cash flow needs.
Remuneration of key management
personnel
The total costs of key personnel,
comprising the Executive Board, the Fiscal Council, the Audit Committee and the Board of Directors, are within the limits approved at
a General Shareholders’ Meeting, and the effects on the income statements of the in period ended June 30, 2021 and 2020, are as
follows:
|
|
Jun. 30, 2021
|
Jun. 30, 2020
|
|
Remuneration
|
13,448
|
12,449
|
|
Profit sharing
|
942
|
2,672
|
|
Pension plans
|
1,062
|
512
|
|
Health and dental plans
|
101
|
66
|
|
Total
|
15,553
|
15,699
|
|
|
30.
|
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
|
|
|
a)
|
Financial instruments classification and fair value
|
The main financial instruments, classified
in accordance with the accounting principles adopted by the Company, are as follows:
|
|
Level
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Balance
|
Fair value
|
Balance
|
Fair value
|
|
Financial assets
|
|
|
|
|
|
|
Amortized cost (1)
|
|
|
|
|
|
|
Marketable securities – Cash investments
|
2
|
1,147,085
|
1,147,085
|
1,213,875
|
1,213,875
|
|
Customers and Traders; Concession holders (transmission service)
|
2
|
4,421,013
|
4,421,013
|
4,534,044
|
4,534,044
|
|
Restricted cash
|
2
|
75,016
|
75,016
|
63,674
|
63,674
|
|
Accounts receivable from the State of Minas Gerais (AFAC)
|
2
|
13,366
|
13,366
|
11,614
|
11,614
|
|
Concession financial assets – CVA (Parcel ‘A’ Costs Variation Compensation) Account and Other financial components
|
3
|
824,624
|
824,624
|
132,681
|
132,681
|
|
Reimbursement of tariff subsidies
|
2
|
85,846
|
85,846
|
88,349
|
88,349
|
|
Low-income subsidy
|
2
|
42,730
|
42,730
|
43,072
|
43,072
|
|
Escrow deposits
|
2
|
1,111,042
|
1,111,042
|
1,055,797
|
1,055,797
|
|
Concession grant fee – Generation concessions
|
3
|
2,658,162
|
2,658,162
|
2,549,198
|
2,549,198
|
|
|
|
10,378,884
|
10,378,884
|
9,692,304
|
9,692,304
|
|
Fair value through profit or loss
|
|
|
|
|
|
|
Cash equivalents – Cash investments
|
|
2,610,783
|
2,610,783
|
1,587,337
|
1,587,337
|
|
Marketable securities
|
|
|
|
|
|
|
Bank certificates of deposit
|
2
|
99,115
|
99,115
|
545,366
|
545,366
|
|
Treasury Financial Notes (LFTs)
|
1
|
1,379,682
|
1,379,682
|
730,806
|
730,806
|
|
Financial Notes – Banks
|
2
|
1,710,597
|
1,710,597
|
1,635,016
|
1,635,016
|
|
|
|
5,800,177
|
5,800,177
|
4,498,525
|
4,498,525
|
|
|
|
|
|
|
|
|
Derivative financial instruments (Swaps)
|
3
|
1,349,736
|
1,349,736
|
2,948,930
|
2,948,930
|
|
Derivative financial instruments (Ativas and Sonda Put options)
|
3
|
3,673
|
3,673
|
2,987
|
2,987
|
|
Concession financial assets – Distribution infrastructure
|
3
|
616,239
|
616,239
|
559,241
|
559,241
|
|
Reimbursements receivable – Generation
|
3
|
816,202
|
816,202
|
816,202
|
816,202
|
|
|
|
8,586,027
|
8,586,027
|
8,825,885
|
8,825,885
|
|
|
|
18,964,911
|
18,964,911
|
18,518,189
|
18,518,189
|
|
Financial liabilities
|
|
|
|
|
|
|
Amortized cost (1)
|
|
|
|
|
|
|
Loans, financing and debentures
|
2
|
(13,318,988)
|
(13,318,988)
|
(15,020,558)
|
(15,020,558)
|
|
Debt with pension fund (Forluz)
|
2
|
(429,752)
|
(429,752)
|
(472,559)
|
(472,559)
|
|
Deficit of pension fund (Forluz)
|
2
|
(540,074)
|
(540,074)
|
(540,142)
|
(540,142)
|
|
Concessions payable
|
3
|
(26,463)
|
(26,463)
|
(23,476)
|
(23,476)
|
|
Suppliers
|
2
|
(2,381,696)
|
(2,381,696)
|
(2,358,320)
|
(2,358,320)
|
|
Leasing transactions
|
2
|
(204,964)
|
(204,964)
|
(226,503)
|
(226,503)
|
|
Sector financial liabilities
|
2
|
(138,808)
|
(138,808)
|
(231,322)
|
(231,322)
|
|
|
|
(17,040,745)
|
(17,040,745)
|
(18,872,880)
|
(18,872,880)
|
|
Fair value through profit or loss
|
|
|
|
|
|
|
Derivative financial instruments (Swaps)
|
3
|
(59,032)
|
(59,032)
|
-
|
-
|
|
SAAG put options
|
3
|
(549,513)
|
(549,513)
|
(536,155)
|
(536,155)
|
|
|
|
(608,545)
|
(608,545)
|
(536,155)
|
(536,155)
|
|
|
|
(17,649,290)
|
(17,649,290)
|
(19,409,035)
|
(19,409,035)
|
|
|
(1)
|
On June 30, 2021 and December 31, 2020, the book values of financial instruments reflect their fair values.
|
At initial recognition the Company
measures its financial assets and liabilities at fair value and classifies them according to the accounting standards currently in effect.
Fair value is a measurement based on assumptions that market participants would use in pricing an asset or liability, assuming
that market participants act in their economic best interest. To increase consistency and comparability in fair value measurements and
related disclosures, the fair value hierarchy categorizes into three levels the inputs to valuation techniques used to measure fair value
as follows:
|
|
§
|
Level 1 – Active market – Quoted prices: A financial instrument is considered to be quoted in an active market if the
prices quoted are promptly and regularly made available by an exchange or organized over-the-counter market, by operators, by brokers
or by a market association, by entities whose purpose is to publish prices, or by regulatory agencies, and if those prices represent regular
arm’s length market transactions made without any preference.
|
|
|
§
|
Level 2 – No active market – Valuation technique: For an instrument that does not have an active market, fair value
should be found by using a method of valuation/pricing. Criteria such as data on the current fair value of another instrument that is
substantially similar, or discounted cash flow analysis or option pricing models, may be used. The objective of the valuation technique
is to establish what would be the transaction price on the measurement date in an arm’s-length transaction motivated by business
model.
|
|
|
§
|
Level 3 – No active market – No observable inputs: The fair value of investments in securities for which there are
no prices quoted on an active market, and/or of derivatives linked to them which are to be settled by delivery of unquoted securities.
Fair value is determined based on generally accepted valuation techniques, such as on discounted cash flow analysis or other valuation
techniques such as, for example, New Replacement Value (Valor novo de reposição, or VNR).
|
For assets and liabilities that are
recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy
by re-assessing categorization.
Fair value calculation
of financial positions
Distribution infrastructure concession
financial assets: These are measured at New Replacement Value (Valor novo de reposição, or VNR), according to
criteria established by the Concession-granting power (‘Grantor’), based on fair value of the concession assets in service
and which will be revertible at the end of the concession, and on the weighted average cost of capital (WACC) defined by the Grantor,
which reflects the concession holder’s return on the operations of the concession. The VNR and the WACC are public information disclosed
by the Grantor and by Cemig respectively. Changes in concession financial assets are disclosed in Note 13.
Indemnifiable receivable
– generation: measured at New Replacement Value (VNR), as per criteria set by regulations of the grantor power, based on the
fair value of the assets to be indemnify at the end of the concession.
Marketable securities:
Fair value of marketable securities is determined taking into consideration the market prices of the investment, or market information
that makes such calculation possible, considering future interest rates and exchange of investments to similar securities. The market
value of the security is deemed to be its maturity value discounted to present value by the discount rate obtained from the market yield
curve.
Put options: The Company adopted
the Black-Scholes-Merton method for measuring fair value of the Ativas and Sonda options. The fair value of these options was calculated
on the basis of the estimated exercise price on the day of exercise of the option, less the fair value of the underlying shares, also
estimated for the date of exercise, brought to present value at the reporting date of interim financial information.
Swaps: Fair value was calculated
based on the market value of the security at its maturity adjusted to present value by the discount rate from the market yield curve.
Other financial liabilities:
Fair value of its loans, financing and debentures were determined using 131.87% of the CDI rate – based on its most recent funding.
For the loans, financing, debentures and debt renegotiated with Forluz, with annual rates between IPCA + 4.10% to 6.20% and CDI + 0.36%
to 2.12%, Company believes that their carrying amount is approximated to their fair value.
|
|
b)
|
Derivative financial instruments
|
Put options
On June 30, 2021 and December 31,
2020, the options values were as follows:
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Put option – SAAG
|
549,513
|
536,155
|
|
Put options – Ativas and Sonda
|
(3,673)
|
(2,987)
|
|
|
545,840
|
533,168
|
Put option – SAAG
Option contracts were signed
between Cemig GT and the private pension entities that participate in the investment structure of SAAG (comprising FIP Melbourne, Parma
Participações S.A. and FIP Malbec, jointly, ‘the Investment Structure’), giving those entities the right to
sell units in the Funds that comprise the Investment Structure, at the option of the Funds, in the 84th (eighty-fourth) month
from June 2014. The exercise price of the Put Options corresponds to the amount invested by each private pension plan in the Investment
Structure, updated pro rata temporis by the Expanded National Customer Price (IPCA) index published by the IBGE, plus interest
at 7% per year, less such dividends and Interest on Equity as shall have been paid by SAAG to the pension plan entities. This option was
considered to be a derivative instrument until the early exercise of the option (for further details, see the next topic of this Note),
of accounted at fair value through profit and loss, measured using the Black-Scholes-Merton (“BSM”) model.
A liability of R$549,513 was recorded
in the Company’s interim financial information, for the difference between the exercise price and the estimated fair value of the
assets. Considering the early liquidation of Funds, and early maturity of put option, this amount was classified as current liabilities.
The changes in the value of the options are as
follows:
|
|
Consolidated
|
|
Balance at December 31, 2020
|
536,155
|
|
Adjustment to fair value
|
13,358
|
|
Balance at June 30, 2021
|
549,513
|
This option can potentially dilute
basic earnings per share in the future, however, they have not caused dilution of earnings per share in the years presented.
Early liquidation of Funds, and
early maturity of put option
On September 9, 2020, the administrator
of the FIP funds, Banco Modal S.A., notified its unit holders of the beginning of the early liquidation process of the funds Melbourne,
Parma Participações S.A. and FIP Malbec, due to expiration of the period of 180 days from its resignation, and the resignation
of the manager of the Fund, from their respective positions, without there having been any indication of new service providers, as specified
in the Fund’s Regulations.
As established by contract, funds
liquidation is one of the events that would result in expiration date of the option, which the private pension plan entities stated interest
in exercising in the period from September 9 to October 2, 2020.
However, the Company’s management
believes that the premises and conditions that were the grounds for the investment in Santo Antônio Energia and the legal structure
of the various contracts signed for this purpose underwent substantial changes which resulted in the options imbalance.
Thus, using the contractual prerogative
contained in the option instruments, the Company invoked the contractual mechanism of Amicable Resolution for the contractual terms negotiation
with the private pension plan entities. Since the amicable negotiation did not succeed, the Company invoked the arbitration clause for
resolution of conflict between the parties, which awaits the decision of the Brazil Canada Chamber of Commerce of the State of São
Paulo.
The Company recorded the accounting
effects of this contract in accordance with the contracts original terms.
Sonda and Ativas options
The Company , as successor
of CemigTelecom, and Sonda Procwork Outsourcing Informática signed a Purchase Option Agreement (issued by Cemig Telecom) and a
Sale Option Agreement (issued by Sonda), which resulted in the Company simultaneously having a right (put option) and an obligation (call
option) related to the shares held by the investee Ativas Datacenter S.A. (“Ativas”). The exercise price of the put option
and the call option is equivalent to fifteen times and seventeen times, respectively, the adjusted net income of Ativas in the period
prior to the exercise date. Both options, if exercised, result in the sale of the shares in Ativas, currently owned by the Company, and
the exercise of one of the options results in nullity of the other. The options may be exercised as from January 1, 2021.
The put and call options in Ativas
(‘the Ativas Options’) were measured at fair value and posted at their net value, i.e. the difference between the fair values
of the two options on the reporting date of the interim financial information of June 30, 2021.
The measurement has been made using
the Black-Scholes-Merton (BSM) model. In the calculation of the fair value of the Ativas Options based on the BSM model, the following
variables are taken into account: closing price of the underlying asset on June 30, 2021; the risk-free interest rate; the volatility
of the price of the underlying asset; the time to maturity of the option; and the exercise prices on the exercise date.
The valuation base date is
June 30, 2021, the same date as the closing of the Company’s interim financial information, and the methodology used to calculate
the fair value of the company is discounted cash flow (DCF) based on the value of the shares transaction of Ativas by Sonda, occurred
on October 19, 2016. Maturity was calculated assuming exercise date between January 1, 2022 and March 31, 2022.This is the first opportunity
for the exercise of the option, which will be available at the same period of the following years, since the option grants the Company
the right of selling to Sonda its interests held in Ativas, as of 2021.
Considering that the exercise
prices of the options are contingent upon the future financial results of Ativas, the estimated exercise prices on the maturity date was
based on statistical analyses and information of comparable listed companies.
Swap transactions
Considering that part of the loans
and financings of the Company’s subsidiaries is denominated in foreign currency, the companies use derivative financial instruments
(swaps and currency options) to protect the servicing associated with these debts (principal plus interest).
The derivative financial instruments
contracted have the purpose of protecting the operations against the risks arising from foreign exchange variation and are not used for
speculative purposes.
In 2021, Cemig GT began studies and
contracted services in order to take measures aimed to diligent managing its liabilities, and reducing liquidity risk and exposure to
foreign currency. In this context, on July 19, 2021, Cemig GT opened a Tender Offer to acquire, for cash, foreign market debt securities
it had issued, maturing in 2024, in the principal amount of US$500 million.
In alignment with Cash tender offer
process, on June 7 and 8, 2021 the derivative financial instruments contracted, corresponding to US$500 million, were partially dismantled.
As a result, the Company reported a gain of R$774,409.
To mitigate foreign exchange exposure
until the date of repurchase, on June 4, 2021 the Company contracted a short-term hedge against variation in the value of the US dollar
for a volume of US$600 million, locking in an exchange rate of R$5.0984/US$. The instrument contracted was a non-deliverable forward (NDF),
which does not include physical delivery of the currency, providing the Company with a pre-agreed rate at the maturity, which was August
3, 2021. For more details, see Note 21.
The half-yearly settlement of interest
in the swap took place on June 7, 2021, with a positive effect of R$271,053, resulting in a net cash inflow to Cemig GT of R$230,395.
The total amount of hedge settlement until June 30, 2021 was R$1,045,462, with net cash inflow of R$888,642.
|
Assets (1)
|
Liability (1)
|
Maturity period
|
Trade market
|
Notional amount (2)
|
Realized gain / loss
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
US$ exchange variation +
Rate (9.25% p.y.)
|
Local currency + R$ 150.49% of CDI
|
Interest:
Half-yearly
Principal:
Dec. 2024
|
Over the counter
|
US$1,000,000
|
954,841
|
328,817
|
|
US$ exchange variation +
Rate (9.25% p.y.)
|
Local currency + R$125.52% of CDI
|
Interest:
Half-yearly
Principal:
Dec. 2024
|
Over the counter
|
US$500,000
|
90,621
|
165,884
|
|
|
1,045,462
|
494,701
|
The notional amount of derivative
transactions are not presented in the statement of financial position, since they refer to transactions that do not require cash as only
the gains or losses actually incurred are recorded. The net result of those transactions on June 30, 2021 was a negative adjustment of
R$612,765 (positive adjustment of R$1,800,960 on June 30, 2020), which was posted in finance income (expenses).
The counterparties of the derivative
transactions are the banks Bradesco, Itaú, Goldman Sachs and BTG Pactual and Cemig is guarantor of the derivative financial instruments
contracted by Cemig GT. The counterparts of the NDF are the banks Deutsche Bank, Bradesco, XP Inc. and Goldman Sachs.
This table presents the derivative
instruments as of June 30, 2021 and December 31, 2020.
|
Assets
|
Liability
|
Maturity period
|
Trade market
|
Notional amount (2)
|
Unrealized gain / loss
|
Unrealized gain / loss
|
|
Carrying amount
Jun. 30, 2021
|
Fair value
Jun. 30, 2021
|
Carrying amount
Dec. 31, 2020
|
Fair value
Dec. 31, 2020
|
|
US$ exchange variation +
Rate (9.25% p.y.) (1)
|
Local currency + R$ 150.49% of CDI
|
Interest:
Half-yearly
Principal:
Dec. 2024
|
Over the counter
|
US$500,000
|
850,232
|
774,770
|
1,772,477
|
2,110,490
|
|
US$ exchange variation +
Rate (9.25% p.y.) (1)
|
Local currency + R$125.52% of CDI
|
Interest:
Half-yearly
Principal:
Dec. 2024
|
Over the counter
|
US$500,000
|
554,520
|
574,966
|
587,945
|
838,440
|
|
US$ exchange variation higher R$5.0984 (3)
|
US$ exchange variation lower R$5.0954
|
August 03, 2021
|
Over the counter
|
US$600,000
|
(57,720)
|
(59,032)
|
-
|
-
|
|
|
1,347,032
|
1,290,704
|
2,360,422
|
2,948,930
|
|
Current asset
|
|
160,784
|
|
522,579
|
|
Non-current asset
|
|
1,188,952
|
|
2,426,351
|
|
Current liabilities
|
|
(59,032)
|
|
-
|
|
|
1)
|
For the US$1 billion Eurobond issued on December
2017: (i) for the principal, a call spread was contracted, with floor at R$ 3.25/US$ and ceiling at R$ 5.00/US$; and (ii) a swap
was contracted for the total interest, for a coupon of 9.25% p.a. at an average rate equivalent to 150.49% of the CDI. In July 20 21,
Cemig GT dismantled a total of US$500 million of the original hedge issued. For the additional US$500 issuance of the same Eurobond issued
on July 2018: (1) a call spread was contracted for the principal, with floor at R$ 3.85/US$ and ceiling at R$ 5.00/US$; and
(2) a swap was contracted for the interest, resulting in a coupon of 9.25% p.a., with an average rate equivalent to 125.52% of the CDI
rate. The upper limit for the exchange rate in the hedge instrument contracted by the Company for the principal of the Eurobonds is R$ 5.00/US$.
The instrument matures in December 2024. If the USD/BRL exchange rate is still over R$5.00 in December 2024, the company will disburse,
on that date, the difference between the upper limit of the protection range and the spot dollar on that date. The Company is monitoring
the possible risks and impacts associated with the dollar being valued above R$5.00, and assessing various strategies for mitigating the
foreign exchange risk up to the maturity date of the transaction. The hedge instrument fully protects the payment of six-monthly interest,
independently of the USD/BRL exchange rate.
|
|
|
3)
|
Cemig GT contracted a NDF (non-deliverable forward)
for US$600 million, at an average dollar rate of R$5.0984.
|
In accordance with market practice,
Cemig GT uses a mark-to-market method to measure its derivatives financial instruments for its Eurobonds. The principal indicators for
measuring the fair value of the swap are the B3 future market curves for the DI rate and the dollar. The Black & Scholes model is
used to price the call spread, and one of parameters of which is the volatility of the dollar, measured on the basis of its historic record
over 2 years.
The fair value at June 30, 2021 was
R$1,290,704 (R$2,948,930 on December 31, 2020), which would be the reference if Cemig GT would liquidate the financial instrument on that
date, but the swap contracts protect the Company’s cash flow up to the maturity of the bonds in 2024 and they have carrying amount
of R$1,404,752 at June 30, 2021 (R$2,360,422 on December 31, 2020).
Cemig GT is exposed to market risk
due to having contracted this hedge, the principal potential impact being a change in future interest rates and/or the future exchange
rates. Based on the futures curves for interest rates and dollar, Cemig GT prepare a sensitivity analyses and estimates that in a probable
scenario its results at June 30, 2022, would be positively affected by the swap and call spread at the end of the period in the amount
of R$56,124. The fair value of the financial instrument will be R$1,405,860, in which R$1,061,366 refers to the option (call spread) and
R$344,494 refers to the swap.
Cemig GT has measured the effects
on its net income of reduction of the estimated fair value for the ‘probable’ scenario, analyzing sensitivity for the risks
of interest rates, exchange rates and volatility changes, by 25% and 50%, as follows:
|
Parent Company and Consolidated
|
Base scenario Jun. 30, 2021
|
‘Probable’
scenario:
|
‘Possible’ scenario
exchange rate depreciation and interest rate increase 25%
|
‘Remote’ scenario:
exchange rate depreciation and interest
rate increase 50%
|
|
|
|
|
Swap (asset)
|
4,307,796
|
4,154,733
|
3,700,008
|
3,269,043
|
|
|
Swap (liability)
|
(3,888,459)
|
(3,810,239)
|
(3,866,994)
|
(3,921,242)
|
|
|
Option / Call spread
|
930,399
|
1,061,366
|
631,569
|
200,789
|
|
|
NDF
|
(59,032)
|
-
|
-
|
-
|
|
|
Derivative hedge instrument
|
1,290,704
|
1,405,860
|
464,583
|
(451,410)
|
|
The same methods of measuring marked
to market of the derivative financial instruments described above were applied to the estimation of fair value.
|
|
c)
|
Financial risk management
|
Corporate risk management
is a management tool that is part of the Company’s corporate governance practices, and is aligned with the process of planning,
which sets the Company’s strategic business objectives.
The Company monitor the financial
risk of transactions that could negatively affect the Company’s liquidity or profitability, recommending hedge protection strategies
to minimize the Company’s exposure to foreign exchange rate risk, interest rate risk, and inflation risks, which are effective,
in alignment with the Company’s business strategy.
The main risks to which the Company
is exposed are as follows:
Exchange rate risk
The Company and its subsidiaries
are exposed to the risk of appreciation in exchange rates, with effect on loans and financing, suppliers (energy purchased from Itaipu)
and cash flow. For Cemig GT debt denominated in foreign currency, were contracted a derivative financial instrument that protects the
risks associated with the interest and principal, in the form of a swap and a call spread, respectively, in accordance with the hedge
policy of the Company. The Cemig GT exposures to market risk associated to this instrument is described in the topic “Swap transaction”
of this Note. The risk exposure of Cemig D is mitigated by the account for compensation of variation of parcel A items (CVA).
The net exposure to exchange rates
is as follows:
|
Exposure to exchange rates
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Foreign currency
|
R$
|
Foreign currency
|
R$
|
|
US dollar
|
|
|
|
|
|
Loans and financing (Note 21)
|
(1,511,336)
|
(7,560,003)
|
(1,513,592)
|
(7,865,684)
|
|
Suppliers (Itaipu Binacional) (Note 19)
|
(63,547)
|
(317,873)
|
(62,593)
|
(325,277)
|
|
|
(1,574,883)
|
(7,877,876)
|
(1,576,185)
|
(8,190,961)
|
|
Net liabilities exposed
|
|
(7,877,876)
|
|
(8,190,961)
|
Sensitivity analysis
Based on finance information from
its financial consultants, the Company estimates that in a probable scenario the variation of the exchange rates of foreign currencies
in relation to the Real on June 30, 2022 will be an appreciation of the dollar by 3.95%, to R$5.20. The Company has prepared a sensitivity
analysis of the effects on the Company’s net income arising from depreciation of the Real exchange rate considering the increase
of 25%, and 50%, in relation to this ‘probable’ scenario.
|
Risk: foreign exchange rate exposure
|
Base Scenario
|
‘Probable’ scenario
US$=R$5.20
|
‘Possible’ scenario
US$= R$6.50
|
‘Remote’ scenario
US$=R$7.80
|
|
US dollar
|
|
|
|
|
|
Loans and financings (Note 21)
|
(7,560,003)
|
(7,858,945)
|
(9,823,681)
|
(11,788,418)
|
|
Suppliers (Itaipu Binacional) (Note 19)
|
(317,873)
|
(330,443)
|
(413,053)
|
(495,664)
|
|
|
(7,877,876)
|
(8,189,388)
|
(10,236,734)
|
(12,284,082)
|
|
|
|
|
|
|
|
Net liabilities exposed
|
(7,877,876)
|
(8,189,388)
|
(10,236,734)
|
(12,284,082)
|
|
Net effect of exchange rate fluctuation
|
|
(311,512)
|
(2,358,858)
|
(4,406,206)
|
Company has entered into swap operations
to replace the exposure to the US dollar fluctuation with exposure to fluctuation in the CDI Rate, as described in more detail in the
item ‘Swap Transactions’ in this Note.
Interest rate risk
The Company and its subsidiaries
are exposed to the risk of decrease in Brazilian domestic interest rates on June 30, 2021. This risk arises from the effect of variations
in Brazilian interest rates on financial revenues from cash investments made by the Company, and also to the financial assets related
to the CVA and other financial components, net of the effects on financial expenses associated to loans, financings and debentures in
Brazilian currency, and also sectorial financial liabilities.
Part of the loans and financings
in Brazilian currency comprises financings obtained from various financial agents that specify interest rates taking into account basic
interest rates, the risk premium compatible with the companies financed, their guarantees, and the sector in which they operate.
The Company does not contract derivative
financial instruments for protection from this risk. Variations in interest rates are continually monitored with the aim of assessing
the need for contracting of financial instruments that mitigate this risk.
This exposure occurs as a result
of net assets (liabilities) indexed to variation in interest rates, as follows:
|
Risk: Exposure to domestic interest rate changes
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Assets
|
|
|
|
Cash equivalents – Cash investments (Note 5) – CDI
|
2,610,783
|
1,587,337
|
|
Marketable securities (Note 6) – CDI / SELIC
|
4,336,479
|
4,125,063
|
|
Restricted cash – CDI
|
75,016
|
63,674
|
|
CVA and in tariffs (Note 13) – SELIC
|
824,624
|
132,681
|
|
|
7,846,902
|
5,908,755
|
|
Liabilities
|
|
|
|
Loans, financing and debentures (Note 21) – CDI
|
(1,748,147)
|
(2,310,590)
|
|
Loans, financing and debentures (Note 21) – TJLP
|
(48,039)
|
(72,726)
|
|
Sector financial liabilities (note 13)
|
(138,808)
|
(231,322)
|
|
|
(1,934,994)
|
(2,614,638)
|
|
Net assets exposed
|
5,911,908
|
3,294,117
|
Sensitivity analysis
In relation to the most significant
interest rate risk, Company estimates that, in a probable scenario, at June 30, 2022 Selic and TJLP rates will be 7.00% and 4.72%, respectively.
The Company has made a sensitivity analysis of the effects on its net income arising from increases in rates of 25% and 50% in relation
to the ‘probable’ scenario. Fluctuation in the CDI rate accompanies the fluctuation of Selic rate.
|
Risk: Increase in Brazilian interest rates
|
Jun. 30, 2021
|
Jun. 30, 2022
|
|
Book value
|
‘Probable’ scenario
Selic 7.00%
TJLP 4.72%
|
‘Possible’ scenario
Selic 5.25%
TJLP 3.54%
|
‘Remote’ scenario
Selic 3.50%
TJLP 2.36%
|
|
Assets
|
|
|
|
|
|
Cash equivalents (Note 5)
|
2,610,783
|
2,793,538
|
2,747,849
|
2,702,160
|
|
Marketable securities (Note 6)
|
4,336,479
|
4,640,033
|
4,564,144
|
4,488,256
|
|
Restricted cash
|
75,016
|
80,267
|
78,954
|
77,642
|
|
CVA and Other financial components – SELIC (Note 13)
|
824,624
|
882,348
|
867,917
|
853,486
|
|
|
7,846,902
|
8,396,186
|
8,258,864
|
8,121,544
|
|
Liabilities
|
|
|
|
|
|
Loans and financing (Note 21) – CDI
|
(1,748,147)
|
(1,870,517)
|
(1,839,925)
|
(1,809,332)
|
|
Loans and financing (Note 21) – TJLP
|
(48,039)
|
(50,306)
|
(49,740)
|
(49,173)
|
|
Sector financial liabilities (Note 13)
|
(138,808)
|
(145,360)
|
(143,722)
|
(142,084)
|
|
|
(1,934,994)
|
(2,066,183)
|
(2,033,387)
|
(2,000,589)
|
|
|
|
|
|
|
|
Net assets exposed
|
5,911,908
|
6,330,003
|
6,225,477
|
6,120,955
|
|
Net effect of fluctuation in interest rates
|
|
418,095
|
313,569
|
209,047
|
Increase in inflation risk
The Company and its subsidiaries
are exposed to the risk of increase in inflation index on June 30, 2021. A portion of the loans, financings and debentures as well as
the pension fund liabilities are adjusted using the IPCA (Expanded National Customer Price). The revenues are also adjusted using the
IPCA and IGP-M index, mitigating part of the Company risk exposure. This table presents the Company’s net exposure to inflation
index:
|
Exposure to increase in inflation
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Assets
|
|
|
|
Concession financial assets related to Distribution infrastructure - IPCA (1)
|
616,239
|
559,241
|
|
Receivable from Minas Gerais state government (AFAC) – IGPM (Note 10 and 29)
|
13,366
|
11,614
|
|
Concession Grant Fee – IPCA (Note 13)
|
2,658,162
|
2,549,198
|
|
|
3,287,767
|
3,120,053
|
|
|
|
|
|
Liabilities
|
|
|
|
Loans, financing and debentures – IPCA and IGP-DI (Note 21)
|
(4,039,246)
|
(4,863,087)
|
|
Debt with pension fund (Forluz) – IPCA (Note 23)
|
(429,752)
|
(472,559)
|
|
Deficit of pension plan (Forluz) – IPCA (Note 23)
|
(540,074)
|
(540,142)
|
|
|
(5,009,072)
|
(5,875,788)
|
|
Net liabilities exposed
|
(1,721,305)
|
(2,755,735)
|
(1) Portion of the concession financial
assets relating to the Regulatory Remuneration Base of Assets ratified by the grantor (Aneel) after the 4rd tariff review cycle.
Sensitivity analysis
In relation to the most significant
risk of reduction in inflation index, reflecting the consideration that the Company has more assets than liabilities indexed to inflation
indices, the Company estimates that, in a probable scenario, at June 30, 2022 the IPCA inflation index will be 4.27% and the IGPM inflation
index will be 4.01%. The Company has prepared a sensitivity analysis of the effects on its net income arising from a reduction in inflation
of 25% and 50% in relation to the ‘probable’ scenario.
|
Risk: increase in inflation
|
Jun. 30, 2021
|
Jun. 30, 2022
|
|
Amount
Book value
|
‘Probable’ scenario
IPCA 4.27%
IGPM 4.01%
|
‘Possible’ scenario
(25%)
IPCA 5.34%
IGPM 5.01%
|
‘Remote’ scenario
(50%)
IPCA 6.41%
IGPM 6.02%
|
|
Assets
|
|
|
|
|
|
Concession financial assets related to Distribution infrastructure – IPCA (1)
|
616,239
|
642,465
|
649,036
|
655,609
|
|
Accounts receivable from Minas Gerais state government (AFAC) – IGPM index (Note 10 and 29)
|
13,366
|
13,902
|
14,036
|
14,171
|
|
Concession Grant Fee – IPCA (Note 13)
|
2,658,162
|
2,771,666
|
2,800,108
|
2,828,550
|
|
|
3,287,767
|
3,428,033
|
3,463,180
|
3,498,330
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Loans, financing and debentures – IPCA and IGP-DI (Note 21)
|
(4,039,246)
|
(4,211,722)
|
(4,254,942)
|
(4,298,162)
|
|
Debt agreed with pension fund (Forluz) – IPCA (Note 23)
|
(429,752)
|
(448,102)
|
(452,701)
|
(457,299)
|
|
Deficit of pension plan (Forluz) (Note 23)
|
(540,074)
|
(563,135)
|
(568,914)
|
(574,693)
|
|
|
(5,009,072)
|
(5,222,959)
|
(5,276,557)
|
(5,330,154)
|
|
Net liabilities exposed
|
(1,721,305)
|
(1,794,926)
|
(1,813,377)
|
(1,831,824)
|
|
Net effect of fluctuation in IPCA and IGP–M indices
|
|
(73,621)
|
(92,072)
|
(110,519)
|
(1)
Portion of the Concession financial assets relating to the Regulatory Remuneration Base of Assets ratified by the grantor (Aneel) after
the 4rd tariff review cycle.
Liquidity risk
Cemig has sufficient cash flow to
cover the cash needs related to its operating activities.
The Company manages liquidity risk
with a group of methods, procedures and instruments that are coherent with the complexity of the business, and applied in permanent control
of the financial processes, to guarantee appropriate risk management.
Cemig manages liquidity risk
by permanently monitoring its cash flow in a budget-oriented manner. Balances are projected monthly, for each one of the companies, over
a period of 12 months, and daily liquidity is projected over 180 days.
Short-term investments must
comply with investing principles established in the Company’s Cash Investment Policy. These include applying its resources in private
credit investment funds, without market risk, and investment of the remainder directly in bank CDs or repo contracts which earn interest
at the CDI rate.
In managing cash investments, the
Company seeks to obtain profitability through a rigid analysis of financial institutions’ credit risk, applying operational limits
for each bank, based on assessments that take into account their ratings, exposures and balance sheet. It also seeks greater returns on
investments by strategically investing in securities with longer investment maturities, while bearing in mind the Company’s minimum
liquidity control requirements.
Any reduction in the Company’s
ratings could result in a reduction of its ability to obtain new financing and could also make refinancing of debts not yet due more difficult
or more costly. In this situation, any financing or refinancing of the Company’s debt could have higher interest rates or might
require compliance with more onerous covenants, which could additionally cause restrictions to the operations of the business.
The flow of payments of the Company’s
obligation to suppliers, debts with the pension fund, loans, financing and debentures, at floating and fixed rates, including future interest
up to contractual maturity dates, is as follows:
|
Consolidated
|
Up to 1 month
|
1 to 3 months
|
3 months to 1 year
|
1 to 5 years
|
Over 5 years
|
Total
|
|
Financial instruments at (interest rates):
|
|
|
|
|
|
|
|
- loating rates
|
|
|
|
|
|
|
|
Loans, financing and debentures
|
61,923
|
167,427
|
2,185,208
|
12,605,641
|
1,345,520
|
16,365,719
|
|
Onerous concessions
|
299
|
590
|
2,694
|
12,640
|
15,892
|
32,115
|
|
Debt with pension plan (Forluz) (Note 23)
|
13,090
|
26,265
|
120,685
|
337,752
|
-
|
497,792
|
|
Deficit of the pension plan (FORLUZ) (Note 23)
|
5,784
|
11,650
|
53,446
|
309,050
|
498,807
|
878,737
|
|
|
81,096
|
205,932
|
2,362,033
|
13,265,083
|
1,860,219
|
17,774,363
|
|
- Fixed rate
|
|
|
|
|
|
|
|
Suppliers
|
1,966,650
|
413,471
|
1,575
|
-
|
-
|
2,381,696
|
|
|
2,047,746
|
619,403
|
2,363,608
|
13,265,083
|
1,860,219
|
20,156,059
|
Parent company
|
Up to 1 month
|
1 to 3 months
|
3 months to 1 year
|
1 to 5 years
|
Over 5 years
|
Total
|
|
Financial instruments at (interest rates):
|
|
|
|
|
|
|
|
- Floating rates
|
|
|
|
|
|
|
|
Loans, financing and debentures
|
-
|
-
|
53,088
|
-
|
-
|
53,088
|
|
Debt with pension plan (Forluz) (Note 23)
|
644
|
1,292
|
5,938
|
16,617
|
-
|
24,491
|
|
Deficit of the pension plan (FORLUZ) (Note 23)
|
285
|
573
|
2,630
|
15,205
|
24,541
|
43,234
|
|
|
929
|
1,865
|
61,656
|
31,822
|
24,541
|
120,813
|
|
- Fixed rate
|
|
|
|
|
|
|
|
Suppliers
|
1,684
|
-
|
-
|
-
|
-
|
1,684
|
|
|
2,613
|
1,865
|
61,656
|
31,822
|
24,541
|
122,497
|
Credit risk
The distribution concession contract
requires levels of service on a very wide basis within the concession area, and disconnection of supply of defaulting customers is permitted.
Additionally, the Company uses numerous tools of communication and collection to avoid increase in default. These include: telephone contact,
emails, text messages, collection letters, posting of customers with credit protection companies, and collection through the courts.
The risk arising from the possibility
of Cemig and its subsidiaries incurring losses as a result of difficulty in receiving amounts billed to its customers is considered to
be low. The credit risk is also reduced by the extremely wide customers’ base.
The allowance for doubtful accounts
receivable recorded on June 30, 2021, considered to be adequate in relation to the credits in arrears receivable by the Company and its
subsidiaries was R$779,994.
Company and its subsidiaries manage
the counterparty risk of financial institutions based on an internal policy, applied since 2004.
This Policy assesses and scales the
credit risks of the institutions, the liquidity risk systemic risk related to macroeconomic and regulatory conditions, the market risk
of the investment portfolio and the Treasury operational risk.
All investments are made in financial
securities that have fixed-income characteristics, always indexed to the CDI rate. The Company does not carry out any transactions that
would bring volatility risk into its interim financial information.
As a management instrument, the Company
and its subsidiaries divide the investment of its funds into direct purchases of securities (own portfolio) and investment funds. The
investment funds invest the funds exclusively in fixed income products, having companies of the Group as the only unit holders. They obey
the same policy adopted in the investments for the Company’s directly-held own portfolio.
The minimum requirements for concession
of credit to financial institutions are centered on three items:
|
|
1.
|
Rating by three risk rating
agencies.
|
|
|
2.
|
Equity greater than R$400 million.
|
|
|
3.
|
Basel ratio one percentage point above the minimum set
by the Brazilian Central Bank.
|
Banks that exceed these thresholds
are classified in three groups, in accordance with their equity value, plus a specific segment comprising those whose credit risk is associated
only with federal government, and within this classification, limits of concentration by group and by institution are set:
|
Group
|
Equity
|
Limit per bank
(% of equity)*
|
|
Federal Risk (FR)
|
-
|
10%
|
|
A1
|
Over R$ 3.5 billion
|
Between 6% and 9%
|
|
A2
|
Between R$ 1.0 billion and R$ 3.5 billion
|
Between 5% and 8%
|
|
A3
|
Between R$400 million and R$ 1.0 billion
|
Between 0% and 7%
|
* The percentage assigned to each
bank depends on individual assessment of indicators, e.g. liquidity, and quality of the credit portfolio.
Further to these points, Cemig also sets two concentration
limits:
|
|
1.
|
No bank may have more than 30% of the Group’s portfolio.
|
|
|
2.
|
“Federal Risk” and “A1” banks may
have more than 50% of the portfolio of any individual company.
|
COVID-19 Pandemic – Risks
and uncertainties related to Cemig’s business
The Company’s assessment concerning
the risks and potential impacts of Covid-19 are disclosed in Note 1b.
Risk of over-contracting and under-contracting
of energy supply
Sale or purchase of energy supply
in the spot market to cover a positive or negative exposure of supply contracted, to serve the captive market of Cemig D, is an inherent
risk to the energy distribution business. The regulatory agent limits for 100% pass-through to customers the exposure to the spot market,
valued at the difference between the distributor’s average purchase price and the spot price (PLD), is only the margin between 95%
and 105% of the distributor’s contracted supply. Any exposure that can be proved to have arisen from factors outside the distributor’s
control (‘involuntary exposure’) may also be passed through in full to customers. Company’s management is continually
monitories its contracts for purchase of energy supply to mitigate the risk of exposure to the spot market.
On April 07, 2020, Aneel expanded
the limit of total amount of energy that can be declared by energy distributors in the process of the mechanism for the sale of surplus
(‘Mecanismo de Venda de Excedentes’ - MVE), during 2020, from 15% to 30%, for the purpose of facilitating contractual reductions,
considering the scenario caused by Covid-19 pandemic.
On May 18, 2020, the Decree 10,350/2020
authorized the creation and management of the Covid Account by the CCEE (Power Trading Chamber), whose purposes includes the coverage
of the financial effects of over contracting caused by the pandemic. The amount estimated for this coverage was R$212,473. The Decree
also added a sub-item to Article 3 of the Decree 5,163/2004, reducing the charge arising from the effects of the Covid-19 pandemic, calculated
in accordance with an Aneel regulation, as one of the possible items to be treated as involuntary over contracting, and as a result passed
through to customers.
Risk of continuity of the concession
The risk to continuity of the distribution
concession arises from the new terms included in the extension of Cemig D’s concession for 30 years from January 1, 2016, as specified
by Law 12,783/13. The extension introduced changes to the present contract, conditional upon compliance by the distributor with new criteria
for quality, and for economic and financial sustainability.
Non-compliance with the quality criteria
for three consecutive years, or the minimum parameters for economic/financial sustainability for two consecutive years, results in opening
of proceedings for termination of the concession.
The efficiency criteria for continuity
of supply and for economic and for financial management, required to maintain the distribution concession, were met in the period ended
June 30, 2021.
Hydrological risk
The greater part of the energy sold
by the Company’s subsidiaries is generated by hydroelectric plants. A prolonged period of drought can result in lower water volumes
in the reservoirs of these plants, which can lead to an increase in the cost of acquisition of energy, due to replacement by thermoelectric
generation, or reduction of revenues due to reduction in consumption caused by implementation of wide-ranging programs for saving of energy.
Prolongation of the generation of energy using the thermal plants could pressure costs of acquisition of supply for the distributors,
causing a greater need for cash, and could result in future increases in tariffs.
Risk of debt early maturity
The Company’s subsidiaries
have loan contracts with restrictive covenants normally applicable to this type of transaction, related to compliance with a financial
index. Non-compliance with these covenants could result in earlier maturity of debts.
On June, 30, 2021, the Company and
its subsidiaries was compliant with all the covenants for financial index requiring half-yearly and annual compliance. More details in
Note 21.
Capital management
This table shows comparisons
of the Company’s net liabilities and its equity:
|
|
Consolidated
|
Parent company
|
|
Jun. 30, 2021
|
Dec. 31, 2020
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Total liabilities
|
33,993,246
|
36,605,732
|
1,832,649
|
2,589,817
|
|
(–) Cash and cash equivalents
|
(2,661,596)
|
(1,680,397)
|
(897,665)
|
(422,647)
|
|
(–) Restricted cash
|
(75,016)
|
(63,674)
|
(412)
|
(349)
|
|
Net liabilities
|
31,256,634
|
34,861,661
|
934,572
|
2,166,821
|
|
|
|
|
|
|
|
Total equity
|
19,846,008
|
17,477,348
|
19,841,104
|
17,472,666
|
|
Net liabilities / equity
|
1.57
|
2.00
|
0.05
|
0.12
|
The operating segments of the Company
and its subsidiaries reflect their management and their organizational structure, used to monitoring its results. They are aligned with
the regulatory framework of the Brazilian energy industry. The Company also operates in the gas market, through its subsidiary Gasmig,
and in other businesses with less impact on the results of its operations.
These segments are reflected in the
Company’s management, organizational structure, and monitoring of results.
As from 1° quarter of 2021, the
Executive Board has begun to make a separate performance evaluation of the energy trading activity, using information on its results to
support decisions on application of funds to this sector of the business. This change in the separation of details by operational segment
as disclosed by the Company arises from the growing importance of the activity of this segment in the energy market for complying with
and maintaining the Company’s contractual obligations, especially after the reduction of the Company’s own generation capacity
– hence this decision on criteria for segregation, to obtain separate information on the profit and loss of this segment. The energy
trading activity, as an operational segment, comprises purchase and sale of energy in the Free and Regulated markets, and the activities
related to its commercial and market procedures, including transactions on the Power Trading Exchange (CCEE).
In a further separation of segmented
management and analysis, we are now monitoring and evaluating the results of the affiliated and jointly-controlled companies overseen
by the department of the Chief Officer for Holdings (‘CemigPar’) as a single segment, evaluating Cemig’s non-controlling
shareholdings, in line with the Company’s business strategies. The main aim of separation of this segment is to monitor compliance
with the targets established by these companies, to ensure sustainability and maximization of their return for the company. The results
of the subsidiaries Gasmig and Cemig Sim are also included in this segment, since their management and analysis of performance, too, is
linked to the CemigPar management unit (the office of the Chief Officer for Holdings).
Thus, as from 1° quarter of 2021,
the segment information started be presented separately into the following 5 reportable segments:
Generation: Comprise production
of energy from hydroelectric and wind facilities.
Transmission: Comprise construction,
operation and maintenance of transmission lines and substations.
Trading: Comprise trading
in energy and provision of related services
Distribution: Comprise provision
of energy distribution services, including operation and maintenance of the related infrastructure and services.
Investees: Comprise management
of the equity interests in which the company does not have shareholding control, in line with the Company’s business strategies.
The results of the subsidiaries Gasmig and Cemig Sim are also included in this segment, since their management, too, is linked to the
CemigPar management unit (the office of the Chief Officer for Holdings).
Transfer of energy from the generation
activity to the trading activity comprises a transaction between segments, since it consists of obtaining of revenue from the sale of
energy generated, and costs for purchase of energy to be traded – these are measured at sale prices estimated in accordance with
criteria based on the Company’s model for management of these businesses, using market prices as a reference.
This table shows the segment information in the new segmentation
base, for the period end June 30, 2021 and 2020, on a consolidated basis:
|
|
INFORMATION BY SEGMENT AS OF AND FOR THE PERIOD ENDED JUNE 30, 2021
|
|
ACCOUNT/DESCRIPTION
|
ENERGY
|
INVESTEES
|
TOTAL
|
INTER SEGMENT TRANSACTIONS (1)
|
RECONCILIATION (2) (3)
|
TOTAL
|
|
GENERATION
|
TRANSMISSION
|
TRADING
|
DISTRIBUTION
|
|
NET REVENUE
|
1,461,450
|
441,332
|
2,833,770
|
9,463,013
|
1,264,718
|
15,464,283
|
(793,581)
|
(205,979)
|
14,464,723
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF ENERGY AND GAS
|
(285,249)
|
(131)
|
(2,540,912)
|
(6,009,267)
|
(868,042)
|
(9,703,601)
|
793,581
|
176,403
|
(8,733,617)
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Personnel
|
(77,498)
|
(55,698)
|
(10,275)
|
(454,674)
|
(52,178)
|
(650,323)
|
-
|
-
|
(650,323)
|
|
Employees’ and managers’ profit sharing
|
(5,862)
|
(5,093)
|
(976)
|
(36,043)
|
(1,215)
|
(49,189)
|
-
|
-
|
(49,189)
|
|
Post-employment obligations
|
(20,266)
|
(18,057)
|
(3,336)
|
(145,680)
|
(28,632)
|
(215,971)
|
-
|
-
|
(215,971)
|
|
Materials, outsourced services and others expenses (revenues)
|
(91,395)
|
(44,450)
|
(6,049)
|
(723,851)
|
(51,688)
|
(917,433)
|
-
|
29,576
|
(887,857)
|
|
Depreciation and amortization
|
(94,678)
|
(1,709)
|
(267)
|
(330,132)
|
(53,378)
|
(480,164)
|
-
|
-
|
(480,164)
|
|
Operating provisions
|
(8,646)
|
(6,182)
|
(6,224)
|
(38,091)
|
(34,236)
|
(93,379)
|
-
|
-
|
(93,379)
|
|
Construction costs
|
-
|
(47,124)
|
-
|
(719,519)
|
(18,918)
|
(785,561)
|
-
|
-
|
(785,561)
|
|
Total cost of operation
|
(298,345)
|
(178,313)
|
(27,127)
|
(2,447,990)
|
(240,245)
|
(3,192,020)
|
-
|
29,576
|
(3,162,444)
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES
|
(583,594)
|
(178,444)
|
(2,568,039)
|
(8,457,257)
|
(1,108,287)
|
(12,895,621)
|
793,581
|
205,979
|
(11,896,061)
|
|
|
|
|
|
|
|
|
|
|
|
|
Periodic tariff review, net
|
-
|
217,063
|
-
|
-
|
-
|
217,063
|
-
|
-
|
217,063
|
|
Gains arising from renegotiation of hydrological risk (Law 14,052/20), net
|
909,601
|
-
|
-
|
-
|
-
|
909,601
|
-
|
-
|
909,601
|
|
Gains arising from the sale of non-current asset held for sale
|
-
|
-
|
-
|
-
|
108,550
|
108,550
|
-
|
-
|
108,550
|
|
Equity in earnings of unconsolidated investees, net
|
20,410
|
-
|
-
|
-
|
131,069
|
151,479
|
-
|
-
|
151,479
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME BEFORE FINANCE INCOME (EXPENSES)
|
1,807,867
|
479,951
|
265,731
|
1,005,756
|
396,050
|
3,955,355
|
-
|
-
|
3,955,355
|
|
Finance net income (expenses)
|
(270,283)
|
(143,509)
|
6,547
|
10,458
|
(389,905)
|
(786,692)
|
-
|
-
|
(786,692)
|
|
INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION TAX
|
1,537,584
|
336,442
|
272,278
|
1,016,214
|
6,145
|
3,168,663
|
-
|
-
|
3,168,663
|
|
Income tax and social contribution tax
|
(437,272)
|
(100,231)
|
(45,378)
|
(276,422)
|
59,630
|
(799,673)
|
-
|
-
|
(799,673)
|
|
NET INCOME FOR THE PERIOD
|
1,100,312
|
236,211
|
226,900
|
739,792
|
65,775
|
2,368,990
|
-
|
-
|
2,368,990
|
|
Equity holders of the parent
|
1,100,312
|
236,211
|
226,900
|
739,792
|
65,054
|
2,368,269
|
-
|
-
|
2,368,269
|
|
Non-controlling interests
|
-
|
-
|
-
|
-
|
721
|
721
|
-
|
-
|
721
|
|
|
|
|
|
|
|
|
|
|
|
(1) The only inter-segment transactions are from the generation
to the trading segment, as explained above.
(2) The reconciliation between the published amounts for
the segments and the accounting information on revenue and costs indicates the transactions between the consolidated companies (eliminations).
(3) The information on operational costs and expenses separated
by type is segregated in accordance with the internal business model, which has immaterial differences in relation to the accounting information.
|
INFORMATION BY SEGMENT AS OF AND FOR THE PERIOD ENDED JUNE 30, 2020
|
|
ACCOUNT/DESCRIPTION
|
ENERGY
|
INVESTEES
|
TOTAL
|
INTER SEGMENT TRANSACTIONS (1)
|
RECONCILIATION (2) (3)
|
TOTAL
|
|
GENERATION
|
TRANSMISSION
(RESTATED)
|
TRADING (1)
|
DISTRIBUTION
|
|
|
NET REVENUE
|
3,042,212
|
295,952
|
-
|
7,555,731
|
802,901
|
11,696,796
|
-
|
(154,695)
|
11,542,101
|
|
COST OF ENERGY AND GAS
|
|
|
|
|
|
|
|
|
|
|
Energy bought for resale
|
(1,785,145)
|
-
|
-
|
(3,822,279)
|
-
|
(5,607,424)
|
-
|
37,691
|
(5,569,733)
|
|
Charges for use of the national grid
|
(98,288)
|
(95)
|
-
|
(638,051)
|
-
|
(736,434)
|
-
|
113,981
|
(622,453)
|
|
Gas bought for resale
|
-
|
-
|
-
|
-
|
(543,303)
|
(543,303)
|
-
|
-
|
(543,303)
|
|
Total
|
(1,883,433)
|
(95)
|
-
|
(4,460,330)
|
(543,303)
|
(6,887,161)
|
-
|
151,672
|
(6,735,489)
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Personnel
|
(96,746)
|
(58,803)
|
-
|
(451,411)
|
(43,829)
|
(650,789)
|
-
|
-
|
(650,789)
|
|
Employees’ and managers’ profit sharing
|
(5,048)
|
(2,989)
|
-
|
(19,211)
|
(6,032)
|
(33,280)
|
-
|
-
|
(33,280)
|
|
Post-employment obligations
|
(25,746)
|
(22,233)
|
-
|
(151,763)
|
(23,985)
|
(223,727)
|
-
|
-
|
(223,727)
|
|
Materials, outsourced services and others expenses (revenues)
|
(88,866)
|
(16,771)
|
-
|
(615,182)
|
(45,338)
|
(766,157)
|
-
|
3,023
|
(763,134)
|
|
Depreciation and amortization
|
(101,627)
|
(3,141)
|
-
|
(329,133)
|
(54,548)
|
(488,449)
|
-
|
-
|
(488,449)
|
|
Operating provisions
|
(37,305)
|
(17,967)
|
-
|
(250,678)
|
(50,779)
|
(356,729)
|
-
|
-
|
(356,729)
|
|
Construction costs
|
-
|
(74,044)
|
-
|
(581,744)
|
(27,888)
|
(683,676)
|
-
|
-
|
(683,676)
|
|
Total cost of operation
|
(355,338)
|
(195,948)
|
-
|
(2,399,122)
|
(252,399)
|
(3,202,807)
|
-
|
3,023
|
(3,199,784)
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES
|
(2,238,771)
|
(196,043)
|
-
|
(6,859,452)
|
(795,702)
|
(10,089,968)
|
-
|
154,695
|
(9,935,273)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of business combination
|
-
|
51,736
|
-
|
-
|
-
|
51,736
|
-
|
-
|
51,736
|
|
Impairment (reversals) of assets held for sale
|
-
|
-
|
-
|
475,137
|
(609,160)
|
(134,023)
|
-
|
-
|
(134,023)
|
|
Periodic tariff review, net
|
-
|
479,703
|
-
|
-
|
-
|
479,703
|
-
|
-
|
479,703
|
|
Equity in earnings of unconsolidated investees, net
|
21,316
|
-
|
-
|
-
|
143,160
|
164,476
|
-
|
-
|
164,476
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME BEFORE FINANCE INCOME (EXPENSES)
|
824,757
|
631,348
|
-
|
1,171,416
|
(458,801)
|
2,168,720
|
-
|
-
|
2,168,720
|
|
Finance expenses
|
(737,854)
|
(85,538)
|
-
|
24,655
|
36,674
|
(762,063)
|
-
|
-
|
(762,063)
|
|
INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION TAX
|
86,903
|
545,810
|
-
|
1,196,071
|
(422,127)
|
1,406,657
|
-
|
-
|
1,406,657
|
|
Income tax and social contribution tax
|
57,772
|
(157,602)
|
-
|
(241,544)
|
(51,766)
|
(393,140)
|
-
|
-
|
(393,140)
|
|
NET INCOME (LOSS) FOR THE PERIOD
|
144,675
|
388,208
|
-
|
954,527
|
(473,893)
|
1,013,517
|
-
|
-
|
1,013,517
|
|
Equity holders of the parent
|
144,675
|
388,208
|
-
|
954,527
|
(474,350)
|
1,013,060
|
-
|
-
|
1,013,060
|
|
Non-controlling interests
|
-
|
-
|
-
|
-
|
457
|
457
|
-
|
-
|
457
|
|
|
(1)
|
The results of the Trading business are presented
in the Generation segment, since in 2020 this activity was considered to be an element of the generation business, and segregating it
using the assumptions of the new segmentation base is impracticable. Thus, for 2Q20 we do not present the trading segment and there are
no inter-segment transactions.
|
|
|
(2)
|
The reconciliation between the published amounts
for the segments and the accounting information on revenue and costs indicates the transactions between the consolidated companies (eliminations).
|
|
|
(3)
|
The information on operational costs and expenses
separated by type is segregated in accordance with the internal business model, which has immaterial differences in relation to the accounting
information.
|
The information for assets by segment
is not presented, because this is not part of the information made available to the Company’s management.
As stated in Note 2.3, the
effects of the retrospective application adjustments in balances for June 30, 2020 only affected the transmission segment.
|
|
32.
|
ASSETS AND LIABILITIES AS HELD FOR SALE
|
On December 31, 2020 assets and liabilities
classified as held for sale, and the results of discontinued and continuing operations, were as follows:
|
Consolidated and Parent company – Statements of financial position
|
Jun. 30, 2021
|
Dec. 31, 2020
|
|
Assets held for sale – investment in an affiliate
|
-
|
1,258,111
|
Sale of retained investment
in Light on January 2021
On January 22, 2021, the public offering
of common shares in Light was completed. This offering comprises: (a) primary distribution of 68,621,264 new common shares in Light (“the
Primary Offering”); and (b) a secondary distribution, of the Company shares, with restricted placement efforts. The Company sold
its entire holding of shares in Light at R$20.00 per share for a total of R$1,372,425.
As a result, the Company recognized,
in January, 2021, the gain before taxes of R$108,550, considering the carrying amount of the non-current asset held for sale at the transaction
date. The fiscal cost of the investment was adjusted for the tax calculation, pursuant to tax law, considering the equity value of the
investment, plus the goodwill and the excess of net fair value of the investee’s identifiable assets and liabilities over the cost
paid in the step-acquisitions.
|
Consolidated and Parent company
|
|
|
Cemig’s shares
|
68,621,263
|
|
Sale price of the shares – January 21, 2021
|
20.00
|
|
Total value
|
1,372,425
|
|
Estimated cost to sell (0.42%) (1)
|
(5,764)
|
|
Fair value, less cost to sell on 01/22/2021
|
1,366,661
|
|
Non-current asset held for sale carrying amount in 12/31/2020
|
(1,258,111)
|
|
Gains arising from the sale of non-current asset held for sale
|
108,550
|
|
IRPJ and CSLL
|
(36,907)
|
|
Gain after taxes
|
71,643
|
|
|
(1)
|
The estimated cost to sell includes financing, accounting and legal advices
services.
|
33.
NON-CASH TRANSACTIONS
On June 30, 2021 and 2020, the Company
had the following transactions not involving cash, which are not reflected in the Cash flow statement:
|
|
§
|
Capitalized financial costs of R$12,872 on
the period enden on June 30, 2021 (R$22,515 on June 30, 2020);
|
|
|
§
|
Except for the cash arising from the business combination, in the amount of R$27,110, and the payment
of R$44,775, the acquisition of the Centroeste’s remaining equity interest did
not generate effects in the Company’s cash flow, in the 1st quarter of 2020;
|
|
|
§
|
Lease addition in the amount of R$9,723 on June 30, 2021.
|
34.
PARLIAMENTARY COMMITTEE OF INQUIRY (‘CPI’)
On June 17, 2021, the Legislative
Assembly of Minas Gerais has established a Parliamentary Committee of Inquiry (‘CPI’) to investigate management acts of Cemig
since 2019. At an ordinary meeting held on June 24, 2021, the Legislative Assembly of the State of Minas Gerais appointed the members
of a Committee of Inquiry to investigate acts of management in the Company. The Committee has powers, for 120 days from appointment of
its Chair and Deputy Chair, to conduct investigations on the reports that form the basis of the application for it to be constituted.
The ‘CPI’ requested,
through application, several documents and information related, mainly, to acquisition and disposal of equity interest, human resources
management and procurement processes that were considered to be exempt from mandatory bidding. The Company has complied with the requests,
including the deadlines.
The Company reaffirms its commitment
to provide all the information necessary for full understanding and clarification of its management decisions.
35.
SUBSEQUENT EVENTS
Process of disposal of Cemig’s interest held
at Taesa
On July 7, the Company received a
notification from the Minas Gerais State Court of Accounts (‘Tribunal de Contas do Estado de Minas Gerais’ - ‘TCE-MG’)
to present all the documentation relating to the process of disposal of Cemig’s equity interest at Taesa.
The TCE-MG did not grant the members’
application injunction to suspend the process of sale, but recommended Cemig abstention from any action relating to the sale of the shares
at Taesa until the Technical Unit of the TCE-MG was able to analyze all documentation requested. On July 26, 2021, this recommendation
was revoked and the said application for the injunction was refused, as well as, the Court has asked for additional documents to be made
available for ongoing technical analysis.
The Company emphasizes that the competitive
sale process that is under study obeys all the rules of law, regulations, and the São Paulo Stock exchange (B3) for execution of
the related specialized auction; and that the process of disposal is taking place with the advisory services of a specialized financial
institution, based on best governance practices for this type of transactions.
Share Purchase Agreement for the
acquisition of 100% of Sete Lagoas Transmissora de Energia S.A. (‘SLTE’)
On July 27, 2021, the Company signed
a Share Purchase Agreement with Cobra Brasil Serviços, Comunicações e Energia S.A. and Cobra Instalaciones y Servicios
S.A., for acquisition of the entire equity interest held by those companies in Sete Lagoas Transmissora de Energia S.A. (‘SLTE’).
Acquisition price amouts R$41,367, on the date of December
31, 2020, an it is subject to price adjustment mechanisms specified in the Share Purchase Agreement.
SLTE holds the concession, awarded
as Lot H in Aneel Transmission Auction 008/2010, for construction and operation of the Sete Lagoas 4 Substation, in the municipality of
Sete Lagoas, Minas Gerais. The concession contract expires in June 2041. The Sete Lagoas 4 substation began operation in June 2014, and
accesses the National Grid through switching from the Neves 1–Três Marias Transmission Line (345 kV), owned by Cemig Geração
e Transmissão S.A. (‘Cemig GT’), which already operates the related terminals in this substation.
The transaction closing is subject
to compliance with certain precedent conditions specified in the Share Purchase Agreement and commonly required in this type of transaction,
including approvals by: (i) the Brazilian energy grantor, Aneel; (ii) the Brazilian antitrust commission, Cade; and (iii) the Brazilian
Development Bank (BNDES).
This Transaction reinforces the Company’s strategy
of growth with value generation, and focus on its core business, within Minas Gerais.
CONSOLIDATED RESULTS
(Figures in R$ ’000 unless
otherwise indicated)
Net income for the period
From January to June 2021, Cemig
reports profit of R$2,368,990, compared to a loss of R$1,013,517 (restated) in the same period in 2020. The improvement in the result
is due, basically, to recognition of the gains arising from renegotiation of hydrological risk, disposal of assets held for sale (Light)
and the increase in gross margin in the 1H2021. The following items describe the main variations between the two periods in revenues,
costs, expenses and financial items.
Ebitda (Earnings before interest,
tax, depreciation and amortization)
Cemig’s consolidated adjusted
Ebitda, with the removal of non-recurrent items, higher in 29.44% on 1H21 compared to the same period of 2020, whereas the adjusted Ebitda
margin higher from 19.90% to 20.55%. Consolidated Ebitda higher 66.93% on 1H21 compared to the same period of 2020, whereas the Ebitda
margin was 23.02% on 1H20 to 30.66% on the same period of 2021.
|
EBITDA - R$’000
|
Jan to Jun 2021
|
Jan to Jun 2020 (Restated)
|
Charge %
|
|
Net income for the period
|
2,368,990
|
1,013,517
|
133.74
|
|
+ Income tax and Social Contribution tax
|
799,673
|
393,140
|
103.41
|
|
+ Net financial revenue (expenses)
|
786,692
|
762,063
|
3.23
|
|
+ Depreciation and amortization
|
480,164
|
488,449
|
(1.70)
|
|
= Ebitda according to “CVM Instruction 527” (1)
|
4,435,519
|
2,657,169
|
66.93
|
|
Non-recurrent items
|
|
|
|
|
+ Non-controlling interests
|
(721)
|
(457)
|
57.77
|
|
+ Impairment (reversals) of assets held for sale (Note 32)
|
-
|
134,023
|
-
|
|
+ Periodic Tariff Review adjustments
|
(217,063)
|
(479,703)
|
(54.75)
|
|
+ Gains arising from the sale of non-current asset held for sale (Note 32)
|
(108,550)
|
-
|
-
|
|
+ Reversal of tax provisions
|
(78,361)
|
-
|
-
|
|
+ Impairment loss – Receivables from Renova
|
-
|
37,361
|
-
|
|
+ Gains arising from hydrological risk costs (Law 14,052/20), net
|
(909,601)
|
-
|
-
|
|
+ Advances for services provided, net *
|
(148,350)
|
-
|
-
|
|
+ Result of business combination (note 15)
|
-
|
(51,736)
|
-
|
|
Ebitda Adjusted (2)
|
2,972,873
|
2,296,657
|
29.44
|
* The amount refers to early payment of amounts for provision
of services of the subsidiary ESCEE to a free customer, net of PIS/Pasep and Cofins taxes.
|
|
(1)
|
Ebitda is a non-accounting measure
prepared by the Company, reconciled with its consolidated interim financial information in accordance with the specifications in CVM Circular
SNC/SEP 01/2007 and CVM Instruction 527 of October 4, 2012. It comprises: net income adjusted for the effects of net financial revenue
(expenses), depreciation, amortization and income tax and the social contribution tax. Ebitda is not a measure recognized by Brazilian
GAAP nor by IFRS; it does not have a standard meaning; and it may be non-comparable with measures with similar titles provided by other
companies. Cemig publishes Ebitda because it uses it to measure its own performance. Ebitda should not be considered in isolation or as
a substitution for net income or operational profit, nor as an indicator of operational performance or cash flow, nor to measure liquidity
nor the capacity for payment of debt.
|
|
|
(2)
|
The Company adjusts the EBITDA
measured according to CVM Instruction 527 removing non-current items, which, because of their nature, do not contribute towards information
on the potential of future cash generation, since they are extraordinary items.
|
The higher Ebitda in 1H21 than 1H20
mainly reflects net revenue 25.32% higher year-on-year, partially offset by operational costs, excluding depreciation and amortization,
20.84% higher YoY. The higher Ebitda calculated in accordance with CVM Instruction 527/2012 results, mainly, from the gains arising from
renegotiation of hydrological risk, in the amount of R$909,601, as per the table above.
The main items in revenue in the period, are as follow:
Revenue from supply of energy
Revenue from supply of energy from
January to June 2021 was R$13,789,570, 8.69% higher than the same period in 2020 (R$12,687,452).
Final customers
Revenue from energy sold to final
customers, excluding Cemig’s own consumption, from January to June 2021 was R$12,477,077, or 12.57% higher than the figure in the
same period of 2020, R$11,083,458.
Cemig’s energy market
The total for sales in Cemig’s
consolidated energy market comprises sales to: (i) Captive customers in Cemig’s concession area in the State of Minas Gerais; (ii)
Free Customers in both the State of Minas Gerais and other States of Brazil, in the Free Market (Ambiente de Contratação
Livre, or ACL); (iii) other agents of the energy sector – traders, generators and independent power producers, also in the Free
Market; (iv) Distributors, in the Regulated Market (Ambiente de Contratação Regulada, or ACR); and (v) the
Power Trading Chamber (Câmara de Comercialização de Energia Elétrica – CCEE), eliminating
transactions between companies of the Cemig Group.
This table details Cemig’s market and the changes
in sales of energy by customer category, comparing the period from January to June 2021 to the same period in 2020:
Revenue from supply of energy
|
|
Jan to Jun 2021
|
Jan to Jun 2020
|
Charge %
|
|
MWh
(2)
|
R$
|
Average price billed (R$/MWh)
(1)
|
MWh
(2)
|
R$
|
Average price billed (R$/MWh)
(1)
|
MWh
|
R$
|
|
Residential
|
5,641,592
|
5,280,570
|
936.01
|
5,442,910
|
4,866,632
|
894.12
|
3.65
|
8.51
|
|
Industrial
|
7,859,762
|
2,479,825
|
315.51
|
6,326,923
|
1,981,349
|
313.16
|
24.23
|
25.16
|
|
Commercial, Services and Others
|
4,098,721
|
2,584,188
|
630.49
|
4,472,574
|
2,577,247
|
576.23
|
(8.36)
|
0.27
|
|
Rural
|
1,919,300
|
1,164,034
|
606.49
|
1,671,380
|
984,629
|
589.11
|
14.83
|
18.22
|
|
Public authorities
|
358,362
|
265,367
|
740.50
|
386,015
|
279,249
|
723.41
|
(7.16)
|
(4.97)
|
|
Public lighting
|
670,035
|
361,053
|
538.86
|
664,656
|
295,455
|
444.52
|
0.81
|
22.20
|
|
Public services
|
699,867
|
391,974
|
560.07
|
675,124
|
356,523
|
528.09
|
3.66
|
9.94
|
|
Subtotal
|
21,247,639
|
12,527,011
|
589.57
|
19,639,582
|
11,341,084
|
577.46
|
8.19
|
10.46
|
|
Own consumption
|
16,832
|
-
|
-
|
17,376
|
-
|
-
|
(3.13)
|
-
|
|
Unbilled retail supply, net
|
-
|
(49,934)
|
-
|
-
|
(257,626)
|
-
|
-
|
(80.62)
|
|
|
21,264,471
|
12,477,077
|
586.76
|
19,656,958
|
11,083,458
|
563.84
|
8.18
|
12.57
|
|
Wholesale supply to other concession holders (3)
|
5,328,247
|
1,404,260
|
263.55
|
6,626,096
|
1,588,364
|
239.71
|
(19.59)
|
(11.59)
|
|
Wholesale supply not yet invoiced, net
|
-
|
(91,767)
|
-
|
-
|
15,630
|
-
|
-
|
-
|
|
Total
|
26,592,718
|
13,789,570
|
518.55
|
26,283,054
|
12,687,452
|
482.72
|
1.18
|
8.69
|
|
|
(1)
|
The calculation of the average price does not include revenue from supply
not yet billed.
|
|
|
(2)
|
Data not audited by external auditors. .
|
|
|
(3)
|
Includes Regulated Market Energy Sale Contracts (CCEARs) and ‘bilateral
contracts’ with other agents.
|
The following factors that contributed
significantly to the higher of 1.18% on the volume of energy sold are:
|
|
§
|
the volume of energy sold to
the industrial customer category was 24.23% higher, mainly reflecting new contracts for sales to Free Clients, starting supply in January
2021.
|
|
|
§
|
Energy sold to residential customers 3.65%
higher YoY in 1H21, mainly reflecting the number of customers 2.7% higher YoY.
|
|
|
§
|
Volume of energy
sold to the rural customers category 14.83% higher, mainly reflecting the fact that consumption for irrigation was 44% higher, and comprised
38% of the total consumption by this category of customers, due to the lower volume of rains in the current period.
|
|
|
§
|
Decrease of 8.36% in the volume
of supply sold to the commercial customer category, mainly because of the significant migration of customers to Distributed Generation
and the Free Market. In addition, this customer category still suffers the impact of the pandemic on economic activity, and thus on consumption.
|
|
|
§
|
The average price of energy
was 7.42% higher in 1H21 than 1H20, mainly reflecting the increase for energy sale contracts in the Regulated Market, of 2.13%, and also
the higher incidence of ‘Tariff Flag’ extra charges in the tariffs of Cemig D. The higher average price of energy in the Free
Market in 1H21 reflects shorter-term sales to traders in 1H20, resulting from lower market prices in the period.
|
Revenue from Use of Distribution
Systems (the TUSD charge)
This is revenue from charging Free
Customers the Tariff for Use of the Distribution System (TUSD), on the volume of energy distributed. From January to June 2021, this was
R$1,657,608, compared to R$1,399,108 in the same period of 2020 - increase of 18.48%.
This variation mainly arises from
the Company’s annual tariff adjustment, in effect of 10.16% for free clients, applied from June 30, 2020, which respectively affected
Free Clients with increases 5.74%, on August 19, 2020.
Additionally, the volume of energy
transported from January to June 2021 was 15.27% higher than the same period of 2020, due to: (i) the increase in consumption for irrigation
by rural customers; (ii) the migration of commercial customers to Free Market; and (iii) growth in the industrial market in 2021, due
to the recovery of the economy, as follows:
|
|
MWh
|
|
Jan to Jun, 2021
|
Jan to Jun, 2020
|
Charge %
|
|
Industrial
|
10,101,082
|
8,750,291
|
15.44
|
|
Commercial
|
722,967
|
608,096
|
18.89
|
|
Rural
|
20,347
|
14,274
|
42.55
|
|
Public service
|
1,551
|
-
|
-
|
|
Concessionaires
|
124,337
|
144,465
|
(13.93)
|
|
Total
|
10,970,284
|
9,517,126
|
15.27
|
CVA and Other financial components
in tariff adjustments
These items are the recognition of
the difference between actual non-controllable costs (in which the contribution to the CDE – the Energy Development Account and
energy bought for resale, are significant components) and the costs that were used in calculating rates charged to customers. The amount
of this difference is passed through to customers in the next tariff adjustment of Cemig D (the distribution company).
From January to June 2021 this represented
a gain (posted in revenue) of R$792,651, whereas in the same period in 2020 it produced a revenue of R$81,652. The difference mainly reflects
a higher posting of new CVA and Other financial components in tariff adjustments in 1H21, due to the increase in the cost of energy acquired
in Regulated Market and the cost of transmission. Also, realization of amounts approved in the current tariff cycle was lower than in
the prior cycle.
For further details, see Note 13.
Transmission concession revenue
Transmission revenue from Cemig GT
and Centroeste comprises the sum of revenues recorded for construction, strengthening, enhancement, operation and maintenance, as specified
in the transmission contracts. Under the concession contracts, Annual Permitted Revenues (RAPs) of the existing electricity system, and
those involved in tenders. These are updated annually, based mainly on the inflation index specified in the contract (the IPCA and IGP-M
indices). Subsequently, all strengthening and enhancement works that are implemented upon specific authorization by Aneel result in the
constitution of a new component of RAP.
The main items in revenue in the period, are as follow:
|
|
§
|
The infrastructure
operation and maintenance revenue was R$164,198 from January to June 2021, or 19.58% more than the same period of 2020 (R$137,312 - Restated);
|
|
|
§
|
The revenues
posted for construction, strengthening and enhancement of infrastructure totaled R$62,133 from January to June 2021, 40.29% less than
the same period of 2020 (R$104,056 - Restated). This mainly reflects the lower investments in transmission, as a result of new decisions
on investments in small-scale improvements, due to the alterations in regulations, and the suspension of contracts with suppliers of strengthening
works;
|
|
|
§
|
At the same
time, revenues from financial remuneration of transmission contract assets were 157.80% higher from January to June 2021, at R$297,122,
compared to R$115,252 in the (re-presented) results for the same period of 2020 – mainly reflecting the increase in the remuneration
base of the assets linked to contracts, as from the Periodic Tariff Review (RTP) ratified by Aneel on June 30, 2020 and December 30, 2020.
|
More details in Note 14.
Revenue from transactions in the
Power Trading Chamber (CCEE)
Revenue from transaction with energy
on the CCEE (Power Trading Chamber) was R$108,088 from January to June 2021, compared to R$31,598 in the same period of 2020, an increase
of 242.07%. This higher amount is due to excess of energy in 1H21, compared to deficit positions in 1H20. In 1H20 short-term bilateral
sales were made that increased the Company’s exposure on the CCEE.
Additionally,
there was an increase of 52.65% in the average spot price (PLD) in the Southeast and Center-West regions, which was R$201.01/MWh in 1H21,
compared to R$131.68/MWh in 1H20, due to the water scarcity.
Revenue from supply of gas
Cemig reports revenue from supply
of gas totaling R$1,543,629 from January to June 2021, compared to R$962,887 in the same period of 2020 – 60.31% higher YoY. This
basically reflects the increase on volume of gas sold was in fact 56.41% higher (at 677,702m³ on January to June 2021, vs. 433,273m³
in the same period of 2020), – under the influence, mainly, of the thermoelectric power generation, which consumption was 279.34%
higher.
Construction revenue
Infrastructure construction revenue
of distribution from January to June 2021 was R$738,437, compared to R$609,632 in the same period of 2020. This variation is mainly due
to the execution of a larger proportion of the Investment Plan budget in assets related to distribution concession infrastructure, especially
those related to the sub-transmission networks, in expansion, strengthening and enhancement of high-voltage infrastructure.
This revenue is fully offset by Construction
costs, of the same amount, and corresponds to the Company’s investments in assets of the concession in the period.
The construction revenues of the
Transmission segment have been dealt with in topic Transmission Concession Revenues.
Revenue arising from advances for services provided
Revenue in the amount of R$153,970 arising from
the negotiation with a free customer that resulted in a revenue recognition related to trading services provided in advance by the subsidiary
ESCEE, on June 2021.
Other operating revenues
The other operating revenues line
for the Company and its subsidiaries from January to June 2021 totaled R$849,766, compared to R$886,612 in the same period of 2020 –
4.16% lower YoY. See Note 27 for a breakdown of other operating revenues.
Taxes and regulatory charges
reported as Deductions from revenue
The taxes and charges that are recorded
as deductions from operating revenue totaled R$6,341,886 from January to June 2021, or 11.37% more than the same period of 2020 (R$5,694,614
- restated).
The Energy Development Account
– CDE
The amounts of payments to the Energy
Development Account (CDE) are decided by an Aneel Resolution. The purpose of the CDE is to cover costs of concession indemnities (reimbursements
of costs of assets), tariff subsidies, and the subsidy for balanced tariff reduction, the low-income-customer subsidy, the coal consumption
subsidy, and the Fuels Consumption Account (CCC).
CDE charges in 1H21 totaled R$1,324,598,
8.76% more than in 1H20 (R$1,217,865). This mainly reflects (a) higher contracted demand, and (b) the start of charging of the ‘Covid
Account CDE’ in May 2021, ratified by Dispatch 939 of April 5, 2021, under Normative Resolution 885 of June 23, 2020.
This is a non-manageable cost: the difference between
the amounts used as a reference for setting of tariffs and the costs actually incurred is compensated for in the subsequent tariff adjustment.
Other taxes and charges on revenue
The deductions and charges with the
most significant impact on revenue are mainly taxes, calculated as a percentage of sales revenue. Thus their variations are, substantially,
in proportion to the variations in revenue.
Operating costs and expenses
(excluding financial income/expenses)
Operating costs and expenses totaled
R$11,896,061 from January to June 2021, or 19.74% more than the same period of 2020 (R$9,935,273 - restated). See more on the breakdown
of Operating costs and expenses in Note 27.
The following paragraphs comment
on the main variations:
Personnel
The expense on personnel from January
to June 2021 was R$650,323, or 0.07% less than the same period of 2020 (R$650,789). This variation results, mainly:
|
|
§
|
Reduction of
3.27% in the avarage number of employees from January to June 2021, compared to the same period of 2020, 5,288 and 5,467, respectly;
|
|
|
§
|
Recognition, in 1H21, of a cost of R$35,238 on voluntary retirement plans, compared to R$58,850 in 1H20;
and
|
|
|
§
|
Salary increase of 4.77% under the Collective Work Agreement, as from November 2020.
|
Outsourced services
The expense on outsourced services
from January to June 2021 was R$687,075, or 14.19% more than the expense of R$601,690 in the same period of 2020. The following paragraphs
comment on the main variations:
|
|
§
|
Expenses on information technology 94.64%
higher in 1H 21, at R$48,527, compared to R$24,932 in 1H20. This increase reflects new contracts and investments in IT security made in
2021.
|
|
|
§
|
Expenses on conservation and cleaning of power line pathways, access roads and firebreaks of Cemig D were
46.21% higher year-on-year, at R$49,612 from January to June 2021 vs. R$33,933 in the same period of 2020.
|
|
|
§
|
Expenses on disconnection and reconnection 136.25% higher in 1H21, at R$36,094, compared to R$15,278 in
1H20. This reflects resumption of the services, after the energy supply suspension due to default was once again allowed for certain classes
of customers.
|
Energy purchased for resale
The expense on energy purchased for
resale from January to June 2021 was R$6,417,348, or 15.22% more than in 2020 (R$5,569,733). The difference is mainly:
|
|
§
|
expenses on energy acquired at auction in the regulated market by Cemig D were 37.75% higher, at R$2,159,787,
compared to R$1,567,953 in the same period of 2020. This increase many arises from higher variable costs in energy trading contracts in
the Regulated Market, due to higher dispatching of thermal plants;
|
|
|
§
|
The expense
on purchase of supply at the spot price was lower 42.62% from January to June 2021, at R$363,246, compared to the same period of 2020
(R$633,003). This lower figure mainly reflects the nil net balance on transactions on the CCEE in 1H21 is mainly due to the lower impact
of availability contracts, due to dispatching of the thermoelectric plants outside ‘merit order’, for reasons of hydrological
security. Also, Cemig GT made less purchases of spot energy in 1H21 than 1H20, mainly due to having made bilateral spot sales in 2020,
increasing its exposure to the spot market;
|
|
|
§
|
Higher expenses on distributed generation (‘geração distribuída’) of
61.31%: R$528,781 from January to June 2021, compared to R$327,796 in the same period of 2020. This reflects the higher number of generation
units installed (86,377 on June 2021, compared to 49,339 on June 2020); and the higher volume of energy injected into the grid (864,599
MWh from January to June 2021, compared to 426,761 MWh in the same period of 2020).
|
This is a non-manageable cost: the
difference between the amounts used as a reference for calculation of tariffs and the costs actually incurred is compensated for in the
subsequent tariff adjustment. For more details please see Note 14.
Charges for use of the transmission network and
other system charges
Charges for use of the transmission
network from January to June 2021 totaled R$1,448,227, compared with R$622,453 in the same period of 2020, an higher of 132.66%.
These charges are payable by energy
distribution and generation agents for use of the facilities that are components of the national grid. The amounts to be paid are set
by a Resolution from the Grantor (Aneel).
The difference is mainly due to lower
transmission charges in 2Q20, resulting in lower cash outflow from distributors during the Covid-19 pandemic. The charges were increased
by approximately 40% as from July 2020. Also, there was higher dispatching of thermal plants outside the ‘merit order’, for
energy security of the system, in 1H21, and consequently their high cost increased the System Service Charge (CCEE-ESS), which is also
part of this account line, from R$5,630 in 1H20 to R$424,968 in 1H21.
This is a non-manageable cost in
the distribution activity: the difference between the amounts used as a reference for calculation of tariffs and the costs actually incurred
is compensated for in the subsequent tariff adjustment. More details see note 14.
Operating provisions
Operating provisions from January
to June 2021 totaled R$93,379, or 73.82% less than the same period of 2020 (R$356,729). This arises mainly from the following factors:
|
|
§
|
Expected losses
on doubtful receivables from clients 80.40% lower, at R$42,168 from January to June 2021, compared to R$215,100 in the same period of
2020, mainly reflecting the positive effect, as from March 2021, of improvement of the rules for provisioning in progress, which aim to
assimilate good practices adopted by the market in the energy sector, added to efficacy of the default mitigation plan, with more intense
use of collection tools, widening of the channels of negotiation, and diversification of means of payment.
|
|
|
§
|
Constitution
of estimated provisions for losses on loans to related parties, in 1H20, referring to credits owed by Renova totaling R$37,361.
|
|
|
§
|
Difference
in the provisions for tax contingencies, with a net reversal of R$18,974 in 1H21, compared to a positive amount (constitution of new provisions)
of R$24,439 in 1H20. The improvement resulted, among other factors, from a judgment given in favor of the Company in one of the administrative
cases relating to social security contributions, which resulted in cancellations of tax debits, according to calculations made by the
tax authority (Receita Federal).
|
For further details, please
see Note 24.
Construction cost
Infrastructure construction costs
from January to June 2021 totaled R$785,561, or 14.90% more than the same period of 2020 (R$683,676). The difference mainly arises the
higher volume of investments in distribution on January to March 2021, compared to the same period of 2020, especially in sub-transmission,
in expansion, strengthening and enhancement of high-voltage infrastructure.
This line records the Company’s
investment in assets of the concession in the period, and is fully offset by the line Construction revenue, in the same amount.
Gas bought for resale
From January to June 2021, the Company
recorded an expense of R$868,042 on acquisition of gas, 59.77% more than its comparable expense of R$543,303 in the same period of 2020.
This basically reflects the increase of volume of gas sold was in fact 56.41% higher (at 677,702m³ on January to June 2021, vs. 433,273m³
in the same period of 2020), – under the influence, mainly, of the thermoelectric power generation, which consumption was 279.34%
higher.
Share of profit (loss) of associates
and joint ventures, net
The result of equity method valuation
of interests in non-consolidated investees was a gain of R$151,479 from January to June 2021, compared to a gain of R$164,476 in the same
period of 2020 (7.90% lower on January to June 2021, compared to the same period of 2020). The lower figure mainly reflects a loss recognized
for the investee Madeira 271.86% higher YoY, partially offset by the gain from the investee Taesa 62.93% higher.
The breakdown of
the results from the investees recognized under this line is given in detail in Note 15.
Net financial revenue (expenses)
Cemig reports net financial expenses
from January to June 2021 of R$786,692, compared to net financial expenses of R$762,063 in the same period of 2020 (decrease of 3.23%).
The main factors are:
|
|
§
|
Depreciation
of the dollar against the real in 1H21 of 3.74%, compared to appreciation, of 35.86%, in 1H20 – generating a posting of revenues
of R$291,750 in 1H21, vs. expenses, of R$2,167,950, in 1H20;
|
|
|
§
|
Negative variation
in the fair value of the financial instrument contracted to hedge the risks of the Eurobond in 1H21, in contrast to the positive effect
at June 30, 2020. In 1H21 the variation in the fair value of the hedge instrument generated an expense of R$612,765, compared to a gain
of R$1,800,960 in 1H20. The reduction in the fair value of the hedge instrument in 1H21 arises from the higher future yield curve.
|
For a breakdown
of financial revenues and expenses please see Note 28.
Income tax and social contribution
tax
From January to June 2021, the expense
on income tax and the social contribution tax totaled R$799,673, on pre-tax profit of R$3,168,663, an effective rate of 25.24%. From January
to June 2020, the expense on income tax and the social contribution tax was R$393,140 (restated), on pre-tax loss of R$1,406,657 (restated)
an effective rate of 27.95%.
These effective rates are reconciled with the nominal
tax rates in Note 9c.
Results for the quarter
From 2Q21, Cemig reports profit of
R$1,946,639, compared to a profit of R$1,081,650 (restated) in the same period in 2020. The higher Ebitda calculated in accordance with
CVM Instruction 527/2012 results, mainly, from the posting of gains arising from the renegotiation of hydrological risk, in the amount
of R$909,601. The following items describe the main variations between the two periods in revenues, costs, expenses and financial items.
Ebitda (Earnings before interest,
tax, depreciation and amortization)
Cemig’s consolidated adjusted
Ebitda, with the removal of non-recurrent items, higher in 39.21% on 2Q21 compared to the same period of 2020, whereas the adjusted Ebitda
margin higher from 17.24% to 17.95%. Consolidated Ebitda higher 38.81% on 2Q21 compared to the same period of 2020, whereas the Ebitda
margin was 33.93% on 2Q20 to 35.22% on the same period of 2021.
|
EBITDA - R$’000
|
Apr to Jun 2021
|
Apr to Jun 2020 (Restated)
|
Charge %
|
|
Net income for the period
|
1,946,639
|
1,081,650
|
79.97
|
|
+ Income tax and Social Contribution tax
|
880,346
|
503,384
|
74.89
|
|
+ Net financial revenue (expenses)
|
(478,528)
|
35,317
|
-
|
|
+ Depreciation and amortization
|
241,733
|
245,697
|
(1.61)
|
|
= Ebitda according to “CVM Instruction 527” (1)
|
2,590,190
|
1,866,048
|
38.81
|
|
Non-recurrent items
|
|
|
|
|
+ Non-controlling interests
|
(402)
|
(188)
|
113.83
|
|
+ Impairment (reversals) of assets held for sale (Note 32)
|
-
|
(475,137)
|
-
|
|
+ Periodic Tariff Review adjustments
|
(211,247)
|
(479,703)
|
(55.96)
|
|
+ Gain arising from the renegotiation of hydrological risk costs (Law 14,052/20), net
|
(909,601)
|
-
|
-
|
|
+ Advances against services provided, net *
|
(148,350)
|
-
|
-
|
|
+ Reversal of tax provisions
|
(327)
|
-
|
-
|
|
+ Impairment loss – Receivables from Renova
|
-
|
37,361
|
-
|
|
Ebitda Adjusted (2)
|
1,320,263
|
948,381
|
39.21
|
* The amount refers to early payment of amounts for provision
of services of the subsidiary ESCEE to a free customer, net of PIS/Pasep and Cofins taxes.
|
|
(1)
|
Ebitda is a non-accounting measure
prepared by the Company, reconciled with its consolidated interim financial information in accordance with the specifications in CVM Circular
SNC/SEP 01/2007 and CVM Instruction 527 of October 4, 2012. It comprises: net income adjusted for the effects of net financial revenue
(expenses), depreciation, amortization and income tax and the social contribution tax. Ebitda is not a measure recognized by Brazilian
GAAP nor by IFRS; it does not have a standard meaning; and it may be non-comparable with measures with similar titles provided by other
companies. Cemig publishes Ebitda because it uses it to measure its own performance. Ebitda should not be considered in isolation or as
a substitution for net income or operational profit, nor as an indicator of operational performance or cash flow, nor to measure liquidity
nor the capacity for payment of debt.
|
|
|
(2)
|
The Company adjusts the EBITDA
measured according to CVM Instruction 527 removing non-current items, which, because of their nature, do not contribute towards information
on the potential of future cash generation, since they are extraordinary items.
|
The higher Ebitda in 2Q21 than 2Q20
mainly reflects net revenue 33.71% higher year-on-year, partially offset by operational costs, excluding depreciation and amortization,
26.67% higher YoY. The higher Ebitda – calculated in accordance with CVM Instruction 527/2012 – mainly reflects the positive
effects on revenues in 2Q21, and posting of the gains arising from renegotiation of hydrological risk, in the amount of R$909,601.
The main items in revenue in the period, are as follow:
Revenue from supply of energy
Revenue from supply of energy on
2Q21 was R$6,837,733, 15.50% higher than the same period in 2020 (R$5,920,014).
Final customers
Revenue from energy sold to final
customers, excluding Cemig’s own consumption, on 2Q21 was R$6,257,790, or 17.36% higher than the figure in the same period of 2020,
R$5,332,353.
Cemig’s energy market
The total for sales in Cemig’s
consolidated energy market comprises sales to: (i) Captive customers in Cemig’s concession area in the State of Minas Gerais; (ii)
Free Customers in both the State of Minas Gerais and other States of Brazil, in the Free Market (Ambiente de Contratação
Livre, or ACL); (iii) other agents of the energy sector – traders, generators and independent power producers, also in the Free Market;
(iv) Distributors, in the Regulated Market (Ambiente de Contratação Regulada, or ACR); and (v) the
Power Trading Chamber (Câmara de Comercialização de Energia Elétrica – CCEE), eliminating
transactions between companies of the Cemig Group.
This table details Cemig’s market and the changes
in sales of energy by customer category, comparing on 2Q21 to the same period in 2020:
Revenue from supply of energy
|
|
Apr to Jun 2021
|
Apr to Jun 2020
|
Charge %
|
|
MWh
(2)
|
R$
|
Average price billed (R$/MWh)
(1)
|
MWh
(2)
|
R$
|
Average price billed (R$/MWh)
(1)
|
MWh
|
R$
|
|
Residential
|
2,766,585
|
2,620,985
|
947.37
|
2,657,910
|
2,307,578
|
868.19
|
4.09
|
13.58
|
|
Industrial
|
4,058,047
|
1,269,674
|
312.88
|
2,982,979
|
934,197
|
313.18
|
36.04
|
35.91
|
|
Commercial, Services and Others
|
1,992,781
|
1,263,457
|
634.02
|
2,028,857
|
1,136,848
|
560.34
|
(1.78)
|
11.14
|
|
Rural
|
1,074,926
|
629,219
|
585.36
|
896,375
|
511,810
|
570.98
|
19.92
|
22.94
|
|
Public authorities
|
171,645
|
128,263
|
747.26
|
169,009
|
121,381
|
718.19
|
1.56
|
5.67
|
|
Public lighting
|
314,679
|
149,098
|
473.81
|
325,162
|
142,679
|
438.79
|
(3.22)
|
4.50
|
|
Public services
|
352,752
|
197,094
|
558.73
|
339,650
|
177,860
|
523.66
|
3.86
|
10.81
|
|
Subtotal
|
10,731,415
|
6,257,790
|
583.13
|
9,399,942
|
5,332,353
|
567.28
|
14.16
|
17.36
|
|
Own consumption
|
8,272
|
-
|
-
|
7,970
|
-
|
-
|
3.79
|
-
|
|
Unbilled retail supply, net
|
-
|
(55,728)
|
-
|
-
|
(104,793)
|
-
|
-
|
(46.82)
|
|
|
10,739,687
|
6,202,062
|
577.49
|
9,407,912
|
5,227,560
|
555.66
|
14.16
|
18.64
|
|
Wholesale supply to other concession holders (3)
|
2,612,137
|
653,719
|
250.26
|
3,401,541
|
726,004
|
213.43
|
(23.21)
|
(9.96)
|
|
Wholesale supply not yet invoiced, net
|
-
|
(18,048)
|
-
|
-
|
(33,550)
|
-
|
-
|
(46.21)
|
|
Total
|
13,351,824
|
6,837,733
|
517.65
|
12,809,453
|
5,920,014
|
472.96
|
4.23
|
15.50
|
|
|
(1)
|
The calculation of the average price does not include revenue from supply
not yet billed.
|
|
|
(2)
|
Data not audited by external auditors.
|
|
|
(3)
|
Includes Regulated Market Energy Sale Contracts (CCEARs) and ‘bilateral
contracts’ with other agents.
|
The following factors that contributed
significantly to the increased of 4.23% on the volume of energy sold are:
|
|
§
|
the volume of energy sold to
the industrial customer category was 36.04% higher, mainly reflecting new contracts for sales to Free Clients, starting supply in January
2021.
|
|
|
§
|
decrease of 1.78% in the volume
of supply sold to the commercial customer category, reflecting the impact of the pandemic on economic activity, and thus on consumption.
The lower volume in the captive market reflects the significant migration of customers to Distributed Generation and the Free Market.
|
|
|
§
|
Volume of energy
sold to the rural customer category 19.92% higher YoY, mainly due to increased consumption for irrigation, the largest factor in rural
users’ consumption, reflecting the lower rainfall in 2Q21 than in 2Q20.
|
|
|
§
|
Supply of energy to other concession holders
23.21% lower, mainly due to the high volume of spot sales to traders in the early months of 2020, and also the difference in volume contracted
with Trader clients.
|
|
|
§
|
The average
price of energy was 9.45% higher in 1H21 than 1H20, mainly reflecting the increase for energy sale contracts in the Regulated Market,
of 3.32%, and also the higher incidence of ‘Tariff Flag’ extra charges in the tariffs of Cemig D. The higher average price
of energy in the Free Market reflects shorter-term sales to traders than in 2Q20, resulting from lower market prices in the period.
|
Revenue from Use of Distribution
Systems (the TUSD charge)
This is revenue from charging Free
Customers the Tariff for Use of the Distribution System (TUSD), on the volume of energy distributed. On 2Q21, this was R$820,873, compared
to R$674,737 in the same period of 2020 - increase of 21.66%.
This variation mainly the volume
of energy transported on 2Q21 was 21.36% higher than the same period of 2020.
|
|
MWh
|
|
Apr to Jun, 2021
|
Apr to Jun, 2020
|
Charge %
|
|
Industrial
|
5,118,220
|
4,230,152
|
20.99
|
|
Commercial
|
356,817
|
254,096
|
40.43
|
|
Rural
|
10,560
|
7,045
|
49.89
|
|
Public service
|
900
|
-
|
-
|
|
Concessionaires
|
52,220
|
72,652
|
(28.12)
|
|
Total
|
5,538,717
|
4,563,945
|
21.36
|
CVA and Other financial components
in tariff adjustments
These items are the recognition of
the difference between actual non-controllable costs (in which the contribution to the CDE – the Energy Development Account and
energy bought for resale, are significant components) and the costs that were used in calculating rates charged to customers. The amount
of this difference is passed through to customers in the next tariff adjustment of Cemig D (the distribution company).
On 2Q21 this represented a gain (posted
in revenue) of R$453,744, whereas in the same period in 2020 it produced a gain of R$136,254. This difference mainly reflects a higher
posting of CVA and Other financial components in tariff adjustments in 2Q21, compared to 2Q20, due to the increase in the costs of energy
purchased in the regulated market, and transmission costs. Also, realization of amounts approved in the current tariff cycle was lower
than in the prior cycle.
For further details, see Note 13.
Transmission concession revenue
Transmission revenue from Cemig GT
and Centroeste comprises the sum of revenues recorded for construction, strengthening, enhancement, operation and maintenance, as specified
in the transmission contracts. Under the concession contracts, Annual Permitted Revenues (RAPs) of the existing electricity system, and
those involved in tenders. These are updated annually, based mainly on the inflation index specified in the contract (the IPCA and IGP-M
indices). Subsequently, all strengthening and enhancement works that are implemented upon specific authorization by Aneel result in the
constitution of a new component of RAP.
The main items in revenue in the period, are as follow:
|
|
§
|
The infrastructure
operation and maintenance revenue was R$75,036 on 2Q21, or 23.59% more than the same period of 2020 (R$60,715 - Restated);
|
|
|
§
|
The revenues
posted for construction, strengthening and enhancement of infrastructure totaled R$39,682 on 2Q21, 7.32% less than the same period of
2020 (R$42,815 - Restated). This mainly reflects the lower investments in transmission, as a result of new decisions on investments in
small-scale improvements, due to the alterations in regulations, and the suspension of contracts with suppliers of strengthening works;
and
|
|
|
§
|
At the same
time, revenues from financial remuneration of transmission contract assets were 220.27% higher on 2Q21, at R$139,867, compared to R$43,672
in the (re-presented) results for the same period of 2020 – mainly reflecting the increase in the remuneration base of the assets
linked to contracts, as from the Periodic Tariff Review (RTP) ratified by Aneel on June 30, 2020 and December 30, 2020.
|
More details in Note 14.
Revenue from supply of gas
Cemig reports revenue from supply
of gas totaling R$838,444 on 2Q21, compared to R$403,227 in the same period of 2020 – 107.93% higher YoY. This basically reflects
the increase on volume of gas sold was in fact 85.72% higher (at 340,126m³ on April to June 2021, vs. 183,137m³ in the same
period of 2020), – under the influence, mainly, of the thermoelectric power generation, which consumption was 279.34% higher.
Construction revenue
Infrastructure construction revenue
of distribution on 2Q21 was R$409,128, compared to R$346,559 in the same period of 2020. This variation is mainly due to the execution
of a larger proportion of the Investment Plan budget in assets related to distribution concession infrastructure, especially those related
to the sub-transmission networks, in expansion, strengthening and enhancement of high-voltage infrastructure.
This revenue is fully offset by Construction
costs, of the same amount, and corresponds to the Company’s investments in assets of the concession in the period.
The construction revenues of the
Transmission segment have been dealt with in topic Transmission Concession Revenues.
Revenue arising from advances for services provided
Revenue in the amount of R$153,970 arising from
the negotiation with a free customer that resulted in a revenue recognition related to trading services provided in advance by the subsidiary
ESCEE, on June 2021.
Other operating revenues
The other operating revenues line
for the Company and its subsidiaries on 2Q21 totaled R$436,904, compared to R$473,142 in the same period of 2020 – 7.66% lower YoY.
See Note 25 for a breakdown of other operating revenues.
Taxes and regulatory charges
reported as Deductions from revenue
The taxes and charges that are recorded
as deductions from operating revenue totaled R$3,218,609 on 2Q21, or 19.98% more than the same period of 2020 (R$2,682,530 - restated).
The Energy Development Account
– CDE
The amounts of payments to the Energy
Development Account (CDE) are decided by an Aneel Resolution. The purpose of the CDE is to cover costs of concession indemnities (reimbursements
of costs of assets), tariff subsidies, and the subsidy for balanced tariff reduction, the low-income-customer subsidy, the coal consumption
subsidy, and the Fuels Consumption Account (CCC).
CDE charges in 2Q21 totaled R$649,729,
6.48% more than in 2Q20 (R$608,155). This mainly reflects (a) higher contracted demand, and (b) the start of charging of the ‘Covid
Account CDE’ in May 2021, ratified by Dispatch 939 of April 5, 2021, under Normative Resolution 885 of June 23, 2020.
This is a non-manageable cost: the difference between
the amounts used as a reference for setting of tariffs and the costs actually incurred is compensated for in the subsequent tariff adjustment.
Other taxes and charges on revenue
The deductions and charges with the
most significant impact on revenue are mainly taxes, calculated as a percentage of sales revenue. Thus their variations are, substantially,
in proportion to the variations in revenue.
Operating costs and expenses
(excluding financial income/expenses)
Operating costs and expenses totaled
R$6,159,165 on 2Q21, or 25.26% more than the same period of 2020 (R$4,917,140 - restated). See more on the breakdown of Operating costs
and expenses in Note 26.
The following paragraphs comment
on the main variations:
Personnel
The expense on personnel on 20Q1
was R$342,869, or 1.09% more than the same period of 2020 (R$339,183). This variation results, mainly:
|
|
§
|
Salary increase of 4.77% under the Collective Work Agreement, as from November 2020;
|
|
|
§
|
Recognition, in 2Q21, of a cost of R$35,238 on voluntary retirement plans, compared to R$58,850 in 2Q20;
|
|
|
§
|
Reduction of
4.18% in the avarage number of employees from April to June 2021, compared to the same period of 2020.
|
Outsourced services
The expense on outsourced services
in 2Q2021 was R$344,641, or 13.89% more than the expense of R$302,609 in 2Q2020. The main impacts arise from the factors detailed below:
|
|
§
|
Expenses on information technology 110.44%
higher in 2Q21, at R$23,266, compared to R$11,056 in 2Q20. This increase reflects new contracts and investments in IT security made in
2021.
|
|
|
§
|
Expenses on conservation and cleaning of power line pathways, access roads and firebreaks of Cemig D were
31.54% higher year-on-year, at R$25,205 in 2Q2021 vs. R$19,161 in 2Q2020;
|
|
|
§
|
Expenses on disconnection and reconnection 396.10% higher in 2Q21, at R$20,087, compared to R$4,049 in
2Q20. This reflects resumption of the services, after the energy supply suspension due to default was once again allowed for certain classes
of customers.
|
Energy purchased for resale
The expense on energy purchased for
resale on 2Q21 was R$3,309,234, or 20.11% more than in 2020 (R$2,755,238). The difference is mainly:
|
|
§
|
expenses on energy acquired at auction in the regulated market by Cemig D were 38.53% higher, at R$1,036,952,
compared to R$748,514 in the same period of 2020. This increase many arises from higher variable costs in energy trading contracts in
the Regulated Market, due to higher dispatching of thermal plants;
|
|
|
§
|
The expense on purchase of supply at the spot price was higher 29.02% on 2Q21, at R$323,914, compared
to the same period of 2020 (R$251,066). The result expressed for spot-price supply is the net balance between revenues and expenses of
transactions on the Power Trading Chamber (CCEE). The lower figure is mainly due to the average spot price (PLD) being 204.00% higher,
at R$229,44/MWh in 2Q2021, compared to R$75.47/MWh in 2Q2020;
|
|
|
§
|
Higher expenses on distributed generation (‘geração distribuída’) of
77.40%: R$273,757 in 2Q2021, compared to R$154,314 in 2Q2020. This reflects the higher number of generation units installed and the higher
volume of energy injected into the grid (445,944 MWh in 2Q2021, compared to 232,076 MWh in 2Q2020).
|
This is a non-manageable cost: the
difference between the amounts used as a reference for calculation of tariffs and the costs actually incurred is compensated for in the
subsequent tariff adjustment. For more details please see Note 14.
Charges for use of the transmission network and
other system charges
Charges for use of the transmission
network on 2Q21 totaled R$701,915, compared with R$257,441 in the same period of 2020, an higher of 172.65%.
These charges are payable by energy
distribution and generation agents for use of the facilities that are components of the national grid. The amounts to be paid are set
by a Resolution from the Grantor (Aneel).
The difference is mainly due to lower
transmission charges in 2Q20, resulting in lower cash outflow from distributors during the Covid-19 pandemic. The charges were increased
by approximately 40% as from July 2020. Also, there was higher dispatching of thermal plants outside the ‘merit order’, for
energy security of the system, in 1Q21, and consequently their high cost increased the System Service Charge (CCEE-ESS), which is also
part of this account line, from R$5,630 in 2Q20 to R$142,771 in 2Q21.
This is a non-manageable cost in
the distribution activity: the difference between the amounts used as a reference for calculation of tariffs and the costs actually incurred
is compensated for in the subsequent tariff adjustment. More details see note 14.
Operating provisions
Operating provisions on 2Q20 totaled
R$69,175, or 64.99% less than the same period of 2020 (R$197,613). This arises mainly from the following factors:
|
|
§
|
Expected losses
on doubtful receivables from clients, at reversal of R$985 on 2Q21, compared to losses of R$115,360 in the same period of 2020. This mainly
reflects the positive effect of enhancement of the
rules for provisioning in progress, which aims to assimilate good practices adopted by the market in the energy sector.
|
|
|
§
|
Provisions
for the SAAG put option higher YoY: a R$26,525 in 2Q21, compared to posting of a provision of R$1,988 in 2Q20. For more information on
the criteria and variables for calculation of these options, please see Note 30b.
|
|
|
§
|
Increase in
net provisions for third-party liability legal actions, in the amount of R$12,684, on 2Q21, compared to R$6,379 in the same period of
2020. The difference mainly arises from provisions made for legal actions for third party liability, claiming payment of indemnity for
pain and suffering.
|
For further details, please
see Note 24.
Construction cost
Infrastructure construction costs
on 2Q21 totaled R$437,186, or 17.08% more than the same period of 2020 (R$373,405). The difference mainly arises the higher volume of
investments in distribution on 2Q21, compared to the same period of 2020, especially in sub-transmission, in expansion, strengthening
and enhancement of high-voltage infrastructure.
This line records the Company’s
investment in assets of the concession in the period, and is fully offset by the line Construction revenue, in the same amount.
Gas bought for resale
On 2Q21, the Company recorded an
expense of R$480,517 on acquisition of gas, 107.68% more than its comparable expense of R$231,378 in the same period of 2020. This basically
reflects the increase of volume of gas sold was in fact 85.72% higher (at 340,126m³ on 2Q2021, vs. 183,137m³ in the same period
of 2020), – under the influence, mainly, of the thermoelectric power generation, which consumption was 279.34% higher.
Share of profit (loss) of associates
and joint ventures, net
The result of equity method valuation
of interests in non-consolidated investees was a gain of R$32,792 on 2Q21, compared to a gain of R$82,534 in the same period of 2020 (60.27%
lower on 2Q20, compared to the same period of 2020). The lower figure mainly reflects a loss recognized for the investee Madeira 382.37%
higher YoY, partially offset by the gain from the investee Taesa 65.01% higher.
The breakdown of
the results from the investees recognized under this line is given in detail in Note 15.
Net financial revenue (expenses)
Cemig reports net financial revenues
on 2Q21 of R$478,528, compared to net financial expenses of R$35,317 in the same period of 2020. The main factors are:
|
|
§
|
The dollar
depreciated by 12.20% against the Real in 2Q21, compared to appreciation of 5.33% in 2Q20, resulting in a gain arising from FX variations
from debt in foreign currency of R$1,042,650 in 2Q21, compared to an expense of R$415,950 in 2Q20;
|
|
|
§
|
Negative variation
in the fair value of the financial instrument contracted to hedge the risks of the Eurobond in 2Q21, in contrast to the positive effect
at June 30, 2020. In 2Q21 the variation in the fair value of the hedge instrument generated an expense of R$425,417, compared to a gain
of R$486,720 in 2Q20. The reduction in the fair value of the hedge instrument in 2Q21 arises from the higher future yield curve.
|
For a breakdown
of financial revenues and expenses please see Note 28.
Income tax and social contribution
tax
On 2Q21, the expense on income tax
and the social contribution tax totaled R$880,346, on pre-tax profit of R$2,826,985, an effective rate of 31.14%. On 2Q20, the expense
on income tax and the social contribution tax was R$503,384 (restated), on pre-tax profit of R$1,585,034 (restated) an effective rate
of 31.76%.
These effective rates are reconciled with the nominal
tax rates in Note 9c.
OTHER INFORMATION
THAT THE COMPANY BELIEVES TO BE MATERIAL
Board of Directors
Meetings
The Board of Directors met 13 times
up to June 30, 2021, to discuss strategic planning, projects, acquisition of new assets, various investments, and other subjects.
Membership, election and period
of office
The present period of office began
with the EGM on July 31, 2020, with election by the multiple voting system.
The periods of office of the present
members of the Board of Directors expire at the Annual General Meeting of Shareholders to be held in 2022.
The composition of the Board of Directors
will be assessed annually by the Board of Directors itself, aiming to implement a gradual change with a view to increase diversity –
for which targets may possibly be established.
Principal responsibilities and duties:
Under the by-laws, the Board of Directors
has the following responsibilities and duties, as well as those conferred on it by law:
|
|
§
|
Decision on any sale of assets, loans or financings, charge on the company’s property, plant or
equipment, guarantees to third parties, or other legal acts or transactions, with value equal to 1% or more of the Company’s total
Shareholders’ equity.
|
|
|
§
|
Authorization for issuance of securities in the domestic or external market to raise funds;
|
|
|
§
|
Approval of the Long-term Strategy and the Multi-year Business Plan, and alterations and revisions to
them, and the Annual Budget.
|
Qualification and remuneration
The Board of Directors of the Company
comprises 9 (nine) sitting members and the same number of substitute members. One is the Chair, and another Deputy Chair. The members
of the Board of Directors are elected for concurrent periods of office of 2 (two) years, and may be dismissed at any time, by the General
Meeting of Shareholders. Re-election for a maximum of 3 (three) consecutive periods of office is permitted, subject to any requirements
and prohibitions in applicable legislation and regulations.
A list with the names of the members
of the Board of Directors and their résumés is on our website at: http://ri.cemig.com.br.
The Audit Committee
The Audit Committee is an independent,
consultative body, permanently established, with its own budget allocation. Its objective is to provide advice and assistance to the Board
of Directors, to which it reports. It also has the responsibility for such other activities as are attributed to it by legislation.
The Audit Committee has four members,
the majority of them independent, nominated and elected by the Board of Directors in the first meeting after the Annual General Meeting
for periods of office of three years, not to run concurrently. One re-election is permitted.
Under the by-laws, the Audit Committee
of Cemig has the following duties, among others:
|
|
§
|
to supervise the activities of the external auditors, evaluating their independence, the quality of the
services provided and the appropriateness of such services to the Company’s needs;
|
|
|
§
|
to supervise activities in the areas of internal control, internal audit and preparation of the financial
statements;
|
|
|
§
|
to evaluate and monitor, jointly with the management and the Internal Audit Unit, the appropriateness
of the transactions with related parties.
|
Executive Board
The Executive Board has 7 (seven)
members, whose individual functions are set by the Company’s bylaws. They are elected by the Board of Directors, for a period of
office of two years, subject to the applicable requirements of law and regulation, and may be re-elected up to three times.
Members are allowed simultaneously
also to hold non-remunerated positions in the management of wholly-owned subsidiaries, subsidiaries or affiliates of Cemig, upon decision
by the Board of Directors. They are also, obligatorily under the by-laws, members, with the same positions, of the Boards of Directors
of Cemig GT (Generation and Transmission) and Cemig D (Distribution). The period of office of the present Chief Officers expires at the
first meeting of the Board of Directors held after the Annual General Meeting of 2022.
The composition of the Executive
Board will be assessed annually by the Board of Directors itself, aiming to implement a gradual change with a view to increase diversity
– for which targets may possibly be established.
The members of the Executive Board
and their résumés are on our website: http://ri.cemig.com.br.
The members of the Executive Board
(the Company’s Chief Officers) have individual responsibilities set by the Board of Directors and the by-laws. These include:
|
|
§
|
Current management of the Company’s business, subject to compliance with the Long-term Strategy,
the Multi-year Business Plan, and the Annual Budget, prepared and approved in accordance with these by-laws.
|
|
|
§
|
Authorization of the Company’s capital expenditure projects, signing of agreements or other legal
transactions, contracting of loans and financings, and creation of any obligation in the name of the Company, based on an approved Annual
Budget, which individually or in aggregate have values less than 1% (one per cent) of the Company’s Shareholders’ equity,
including injection of capital into wholly-owned or other subsidiaries, affiliated companies, and the consortia in which the Company participates.
|
|
|
§
|
The Executive Board meets, ordinarily, at least two times per month; and, extraordinarily, whenever
called by the Chief Executive Officer or by two Executive Officers with at least two days’ prior notice in writing or by email
or other digital medium,
such notice not being required if all the Executive Officers are present. The decisions of the Executive Board are taken by vote of the
majority of its members, and in the event of a tie the Chief Executive Officer shall have a casting vote.
|
Audit
Board
|
|
§
|
The Audit Board held seven meetings through the first semester of 2021.
|
Membership,
election and period of office
|
|
§
|
We have a permanent Audit Board, made up of five sitting members and their respective substitute members.
They are elected by the Annual General Meeting of Shareholders, for periods of office of two years.
|
|
|
§
|
Nominations to the Audit Board must obey the following:
|
|
|
a)
|
The following two groups of shareholders each have the right to elect one member, in separate votes, in
accordance with the applicable legislation: (i) the minority holders of common shares; and (ii) the holders of preferred shares.
|
|
|
b)
|
The majority of the members must be elected by the Company’s controlling shareholder; at least one
must be a public employee, with a permanent employment link to the Public Administration.
|
|
|
§
|
The members of the Audit Board are listed on our website: http://ri.cemig.com.br.
|
Under the by-laws, the Audit Board
has the duties and competencies set by the applicable legislation and, to the extent that they do not conflict with Brazilian legislation,
those required by the laws of the countries in which the Company’s shares are listed and traded.
Qualification and remuneration
The global or individual compensation
of the members of the Audit Board is set by the General Meeting of Shareholders which elects it, in accordance with the applicable legislation.
Résumé information
on its members is on our website: http://ri.cemig.com.br.
Corporate risk management and
internal controls
As a part of Cemig’s corporate
governance practices, corporate risk management overall objective is to build and maintain a structure capable of providing material information
to senior management to support making of decisions, creating and protecting the company’s value. The process of risk management
enables the risk of the business’s objectives to be managed effectively, making it possible to influence
and align strategy and performance in all the areas of the company.
Since 2016 Cemig’s corporate
risk management activity is subordinated to the office of the CEO. In 2019, a separate senior management unit, Compliance, Corporate Risks
and Internal Controls, was created, bringing the processes of risk management and internal controls together under a single administration.
This change underlines the intention to increase the synergy between these processes, and the independence from other processes –
so as to supply senior management with independent information for decision-making, preserving the value of the company.
Thus, in 2019, the Executive Board
and the Board of Directors approved the ‘Top Risks’ corporate risk matrix, for the years 2019/2020, which comprehends business
such as Generation, Transmission, Distribution, Trading, Distributed Generation (‘Geração Distribuída’),
Holding as well as ordinary business risks.
These risks, related to execution
of strategy and scenarios, and also risks of conflicts of interest, fraud and corruption are under responsibility of the Chief Officers
and they are monitored and reported periodically to the Management.
Each Chief Officer’s Department
has responsibility for monitoring and managing the Company’s exposure to these risks as they relate to execution of strategy and
scenarios, and also risks of conflicts of interest, fraud and corruption. The Chief Officers report on this monitoring periodically to
senior management.
In 2019, the Company hired an expert
consulting firm to support the review of internal control and risk matrix as well as to monitor periodically the execution and sufficiency
of controls, analysis of failure/weakness and to support the remediation plans development and execution.
The matrix of internal controls is
also revised and approved annually. The Risk Management and Internal Controls Unit tests and monitors the controls design. The internal
audit, in its turn, monitors independently the internal control practices by testing control effectiveness. The conclusion of this assessment
is reported periodically to the Board of Directors, the Audit Board, and the Audit Committee.
The internal controls provide reasonable
assurance that errors and frauds that might cause an impact on the performance are detected and prevented, aimed at:
|
|
§
|
Operational
effectiveness and efficiency
|
|
|
§
|
Reliable financial
reporting
|
|
|
§
|
Compliance
with laws, regulations and policies.
|
The controls linked to mitigation
of risks associated with preparation and publication of the financial statements are a part of Cemig’s Risks and Internal Controls
Matrix. The financial statements are issued in accordance with Section 404 of the Sarbanes-Oxley Law and the rules of the US Public Company
Accounting Oversight Board (PCAOB), included as part of the annual 20-F Report filed with the US Securities
and Exchange Commission (SEC). Cemig obtained the first certification of its internal controls for the business year of 2006, filed with
the US Securities and Exchange Commission (SEC) on July 23, 2007.
Statement of Ethical Principles
and Code of Professional Conduct
On May 11, 2004 Cemig’s Board
of Directors approved the Statement of Ethical Principles and Code of Professional Conduct, which aims to orient and discipline everyone
acting in the name of, or interacting with, Cemig, to ensure ethical behavior at all times, and always in accordance with the law and
regulations. The code can be seen at http://ri.cemig.com.br. It was updated in 2018 and in 2019 to comply with the laws n. 12,486/2013
and n. 13,303/2016. Annually, the Company provide training on Statement of Ethical Principles and Code of Professional Conduct for all
its employees.
The Ethics Committee
This was created on August 12, 2004,
and is responsible for coordinating action in relation to management (interpretation, publicizing, application and updating) of the Statement
of Ethical Principles and Code of Professional Conduct, including assessment of and decision on any possible non-compliances with Cemig’s
Code of Ethics.
The Committee has eight sitting members.
It may be contacted through our Ethics Channel – the anonymous reporting channel on the corporate Intranet, or by email, internal
or external letter or by an exclusive phone line – these means of communication are widely publicized internally to all staff. These
channels enable both reports of adverse activity and also consultations. Reports may result in opening of proceedings to assess any non-compliances
with Cemig’s Statement of Ethical Principles and Code of Professional Conduct.
The Ethics Channel
Cemig installed this means of communication,
available on the internal corporate Intranet, in December 2006.
Through it the Ethics Committee can
receive anonymous reports or accusations that can enable Cemig to detect irregular practices that are contrary to its interest, such as:
financial fraud, including adulteration, falsification or suppression of financial, tax or accounting documents; misappropriation of goods
or funds; receipt of undue advantages by managers or employees; irregular contracting; and other practices considered to be illegal.
It is one more step in improving
Cemig’s transparency, compliance with legislation, and alignment with best corporate governance practices. It improves the management
of internal controls and dissemination of the ethical culture to Cemig’s employees in the cause of optimum compliance by our business.
Anti-fraud Policy
In its business
and activities, Cemig does not accept the practice and concealment of acts of fraud or corruption in all its forms. Suspicions and allegations
of such acts are rigorously assessed and where proven, apply disciplinary procedures set out in the internal rules of the Company, as
well as lawsuits and criminal charges, when applicable.
Thus, in
2012, Cemig consolidated its Anti-Fraud Policy is applicable to all members of the Board of Directors and Fiscal Officers, employees and
contractors. The policy underscores the Company's commitment to the Global Compact principles on the subject, particularly the principle
of number ten, which deals with combating corruption in all its forms, including extortion and bribery.
SHAREHOLDING POSITION OF HOLDERS
OF
MORE THAN 5% OF THE VOTING STOCK
ON JUNE 30, 2021
|
|
COMMON SHARES
|
%
|
PREFERRED SHARES
|
%
|
TOTAL SHARES
|
%
|
|
State of Minas Gerais
|
288,485,632
|
50.97
|
13,143
|
-
|
288,498,775
|
17.04
|
|
Other entities of Minas Gerais State
|
23,094
|
-
|
12,376,443
|
1.10
|
12,399,537
|
0.73
|
|
FIA Dinâmica Energia S.A.
|
146,668,528
|
25.91
|
63,076,757
|
5.60
|
209,745,285
|
12.39
|
|
BNDES Participações
|
63,082,911
|
11.14
|
30,438,020
|
2.70
|
93,520,931
|
5.52
|
|
BlackRock
|
-
|
-
|
123,325,741
|
10.94
|
123,325,741
|
7.28
|
|
Others
|
67,776,469
|
11.97
|
898,095,330
|
79.67
|
965,871,799
|
57.04
|
|
In Brazil
|
49,011,847
|
8.66
|
175,451,693
|
15.56
|
224,463,540
|
13.26
|
|
Foreign shareholders
|
18,764,622
|
3.32
|
722,643,637
|
64.10
|
741,408,259
|
43.78
|
|
Total
|
566,036,634
|
100.00
|
1,127,325,434
|
100.00
|
1,693,362,068
|
100.00
|
CONSOLIDATED SHAREHOLDING POSITION
OF
THE CONTROLLING SHAREHOLDERS AND
MANAGERS, AND FREE FLOAT,
ON JUNE 30, 2021
|
|
January to June 2021
|
|
ON
|
PN
|
|
Controlling shareholder
|
288,485,632
|
13,143
|
|
Board of Directors
|
-
|
81,252
|
|
Executive Board
|
11,498
|
9,291
|
|
Shares in Treasury
|
79
|
650,817
|
|
Free float
|
277,539,425
|
1,126,570,931
|
|
TOTAL
|
566,036,634
|
1,127,325,434
|
Investor Relations
In 2019 we expanded Cemig’s
exposure to the Brazilian and global capital markets, through strategic actions intended to enable investors and shareholders to make
a correct valuation of our businesses and our prospects for growth and addition of value.
We maintain a constant and proactive
flow of communication with Cemig’s investor market, continually reinforcing our credibility, seeking to increase investors’
interest in the Company’s shares, and to ensure their satisfaction with our shares as an investment.
Our results are published through
presentations transmitted via video webcast and telephone conference calls, with simultaneous translation in English, always with members
of the Executive Board present, developing a relationship that is increasingly transparent and in keeping with best corporate government
practices.
To serve our shareholders –
who are spread over more than 40 countries – and to facilitate optimum coverage of investors, Cemig has been present in and outside
Brazil at a very large number of events, including seminars, conferences, investor meetings, congresses, roadshows, and events such as
Money Shows; as well as holding phone and video conference calls with analysts, investors and others interested in the capital markets.
On April 2021, we held our 26rd Annual
Meeting with the Capital Markets, where market professionals had the opportunity to interact with the Company’s directors and principal
executives. In 2021 the event was held online, due to the Covid-19 pandemic.
Corporate governance
Our corporate governance model is
based on principles of transparency, equity and accountability, focusing on clear definition of the roles and responsibilities of the
Board of Directors and the Executive Board in the formulation, approval and execution of policies and guidelines for managing the Company’s
business.
We seek sustainable development of
the Company through balance between the economic, financial, environmental and social aspects of our enterprises, aiming always to improve
the relationship with shareholders, customers, and employees, the public at large and other stakeholders.
Cemig’s preferred and common
shares (tickers: CMIG4 and CMIG3 respectively) have been listed at Corporate Governance Level 1 on the São Paulo Stock Exchange
since 2001. This classification represents a guarantee to our shareholders of optimum reporting of information, and also that shareholdings
are relatively widely dispersed. Because Cemig has ADRs (American Depositary Receipts) listed on the New York Stock Exchange, representing
its preferred (PN) shares (ticker CIG) and common (ON) shares (ticker CIG.C), it is also subject to the regulations of the US Securities
and Exchange Commission (SEC) and the New York Stock Exchange Listed Company Manual. Our preferred shares have also been listed on the
Latibex of the Madrid stock exchange (with ticker XCMIG) since 2002.
In June 11, 2018 an Extraordinary
Meeting of Shareholders approved alterations to the Company’s bylaws, to maintain best corporate governance practices, and adapt
to Law 13,303/2016 (also known as the State Companies Law).
The improvements now formally incorporated
in the by-laws include:
|
|
§
|
Reduction of
the number of members of the Board of Directors from 15 to 9, in line with the IBGC Best Corporate Governance Practices Code, and the
Corporate Sustainability Evaluation Manual of the Dow Jones Sustainability Index.
|
|
|
§
|
Creation of
the Audit Committee (Comitê de Auditoria). The Audit Board (Conselho Fiscal) remains in existence.
|
|
|
§
|
The Policy
on Eligibility and Evaluation for nomination of a member of the Board of Directors and/or the Executive Board in subsidiary and affiliated
companies.
|
|
|
§
|
The Related
Party Transactions Policy.
|
|
|
§
|
Formal designation
for the Board of Directors to ensure implementation of and supervision of the Company’s systems of risks and internal controls.
|
|
|
§
|
Optional power
for the Executive Board to expand the technical committees (on which members are career employees), with autonomy to make decisions in
specific subjects.
|
|
|
§
|
The CEO now
to be responsible for directing compliance and corporate risk management activities.
|
|
|
§
|
Greater emphasis
on the Company’s control functions: internal audit, compliance, and corporate risk management.
|
|
|
§
|
Adoption of
an arbitration chamber for resolution of any disputes between the Company, its shareholders, managers, and/or members of the Audit Board.
|
* * * * * * * * * * * *
(The original is signed by
the following signatories)
|
Reynaldo Passanezi Filho
|
Dimas Costa
|
Leonardo George de Magalhães
|
|
Chief Executive Officer
|
Chief Trading Officer
|
Chief Finance and Investor Relations Officer
|
|
|
|
|
|
Marney Tadeu Antunes
|
|
Maurício Dall’Agneses
|
|
Chief Distribution Officer
|
|
Chief Officer Cemigpar
|
|
|
|
|
|
Thadeu Carneiro da Silva
|
|
Eduardo Soares
|
|
Chief Generation and Transmission Officer
|
|
Chief Regulation and Legal
|
|
|
|
|
|
Mário Lúcio Braga
|
|
Carolina Luiza F. A. C. de Senna
|
|
Controller
CRC-MG 47.822
|
|
Financial Accounting and Equity Interests
Manager
Accountant – CRC-MG 77.839
|
Table of Contents
|
Edifício Phelps Offices Towers
Rua Antônio de Albuquerque, 156
11º andar - Savassi
30112-010 - Belo Horizonte - MG - Brasil
Tel: +55 31 3232-2100
Fax: +55 31 3232-2106
ey.com.br
|
A free translation from Portuguese into English of Independent Auditor’s
Report on Financial Statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil and International
Financial Reporting Standards (IFRS), issued by International Accounting Standards Board – IASB
Independent Auditor’s Review Report
on Quarterly Information - ITR
To the Shareholders and Management of
Companhia Energética de Minas Gerais - CEMIG
Belo Horizonte - MG
Introduction
We have reviewed the accompanying individual and consolidated
interim financial information, contained in the Quarterly Information Form (ITR) of Companhia Energética de Minas Gerais –
Cemig (the “Company”), for the quarter ended June 30, 2021, comprising the statement of financial position as at June 30,
2021, and the related statements of profit or loss, of comprehensive income for three and six-month periods then ended, and of changes
in equity and cash flows for the six-month period then ended, including the explanatory notes.
Management is responsible for preparation of the individual
and consolidated interim financial information in accordance with Accounting Pronouncement NBC TG 21 – Interim Financial Reporting
and IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the fair
presentation of this information in conformity with the rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable
to the preparation of the Quarterly Information Form (ITR). Our responsibility is to express a conclusion on this interim financial information
based on our review.
Scope of review
We conducted our review in accordance with Brazilian
and international standards on review engagements (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information performed by the
Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the individual and consolidated interim
financial information
Based on our review, nothing has come to our attention
that causes us to believe that the accompanying individual and consolidated interim financial information included in the quarterly information
referred to above are not prepared, in all material respects, in accordance with NBC TG 21 and IAS 34, applicable to the preparation of
Quarterly Information Form (ITR), and presented consistently with the rules issued by the Brazilian Securities and Exchange Commission
(CVM).
Table of Contents
|
|
Edifício Phelps Offices Towers
Rua Antônio de Albuquerque, 156
11º andar - Savassi
30112-010 - Belo Horizonte - MG - Brasil
Tel: +55 31 3232-2100
Fax: +55 31 3232-2106
ey.com.br
|
Emphasis of matters
Restatement of corresponding figures
As described in Note 2.3, due to the impacts on the
statement of profit and loss of the adjustments in discounts rates of the financial inflows of the concession contract related to the
transmission segment and the respective impact on the construction margin allocation, the quarter and the six-month period ended June
30, 2020, presented for comparative purposes, are being restated in accordance with NBC TG 23 - Accounting Policies, Changes in Accounting
Estimates and Errors. Additionally, as described in Note 25, due to the increase in the number of shares as a result of capitalization
of reserves, the Company adjusted the earnings per share and the respective explanatory notes for the three and six-month period ended
June 30, 2020. Our conclusion is not modified in respect to this matter.
Risk regarding the ability of the jointly-controlled entity Renova Energia
S.A. to continue as a going concern
As described in Note 15 to the individual and consolidated
interim financial information, on December 18, 2020 were approved in the General Meeting of Creditors and ratified by the 2nd State of
São Paulo In-Court Reorganization and Bankruptcy Court, the court-supervised reorganization plans of the jointly-controlled entity
Renova Energia S.A. – in-court supervised reorganization and some of its subsidiaries, which accounting effects were recorded in
the financial statements of the jointly-controlled entity for the year ended December 31, 2020. Although the in-court reorganization plans
effects have been approved and recorded, there are events or conditions together with other matters described in referred note that may
indicate significant doubt about its ability to continue as a going concern. Our conclusion is not modified in respect to this matter.
Other matters
Statements of value added
The above mentioned quarterly information include the
individual and consolidated statements of value added (SVA) for the six-month period ended June 30, 2021, prepared under Company’s
Management responsibility and presented as supplementary information by IAS 34. These statements have been subjected to review procedures
performed together with the review of the quarterly information with the objective to conclude whether they are reconciled to the interim
financial information and the accounting records, as applicable, and if its format and content are in accordance with the criteria set
forth by NBC TG 09 – Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe
that they were not prepared, in all material respects, consistently with the overall individual and consolidated interim financial information.
Table of Contents
|
|
Edifício Phelps Offices Towers
Rua Antônio de Albuquerque, 156
11º andar - Savassi
30112-010 - Belo Horizonte - MG - Brasil
Tel: +55 31 3232-2100
Fax: +55 31 3232-2106
ey.com.br
|
Belo Horizonte (MG), August 16, 2021.
|
|
2.
|
Earnings Release for quarter ended on June 30, 2021.
|
CEMIG
2Q21 RESULTS
EBITDA R$ 2,590 MILLION
ADJUSTED EBITDA R$ 1,320 MILLION – UP 39.2% FROM
2Q20
Highlights of 2Q21:
|
|
§
|
Cemig D
distributed 12.4% more energy in 2Q21 than 2Q20
|
o
Captive market: up 5.4% YoY
o
Transport for clients: up 21.4% YoY
|
|
§
|
Gas –
volume sold in 2Q21: up 85.7% YoY
|
o
Opex within regulatory limit (R$ 128 million below)
in the first semester.
o
Realized Ebitda R$ 119 million above regulatory level
in the first semester.
|
|
§
|
Bonds: gain
in Net financial revenue (expenses): R$ 617 mn
|
|
|
§
|
Services revenue – advance payment
received: R$ 148 mn
|
|
|
§
|
Hydrological
risk (GSF) reimbursement: R$ 910 mn
|
|
|
§
|
Gain from
Periodic Tariff Review/RBSE reprofiling: R$ 211 mn
|
|
|
§
|
Equity income:
60% lower than in 2Q20
|
|
|
§
|
Solid cash position: R$ 6.99 billion
|
|
|
§
|
DECi: Continuous
improvement
|
o
Outage average: 9.46 hours/year (last 12 months)
|
Indicators (GWh)
|
2Q21
|
2Q20
|
Change, %
|
|
Electricity sold (excluding CCEE)
|
13,352
|
12,809
|
4.2%
|
|
Total energy carried
|
5,539
|
4,564
|
21.4%
|
|
Indicators – R$ million
|
2Q21
|
2Q20
|
Change, %
|
|
Sales on CCEE
|
1.0
|
7.1
|
-85.9%
|
|
Net revenue
|
7,354.0
|
5,500.1
|
33.7%
|
|
Ebitda (IFRS)
|
2,590.2
|
1,866.0
|
38.8%
|
|
Adjusted Ebitda*
|
1,320.3
|
948.4
|
39.2%
|
|
Net profit
|
1,946.6
|
1,081.7
|
80.0%
|
|
Adjusted Ebitda margin
|
17.95%
|
17.24%
|
0,71 p.p.
|
|
Ebitda of companies (R$ mn)
|
2Q21
|
2Q20
|
Change, %
|
|
Cemig D Ebitda (IFRS)
|
590.6
|
530.7
|
11.3%
|
|
Cemig D Adjusted Ebitda
|
590.6
|
530.7
|
11.3%
|
|
Cemig GT Ebitda (IFRS)
|
1,698.9
|
798.9
|
112.7%
|
|
Cemig GT Adjusted Ebitda
|
429.7
|
319.2
|
34.6%
|
|
Consolidated debt (R$ million)
|
2Q21
|
2020
|
Change, %
|
|
Net debt
|
6,320.9
|
9,215.1
|
-31.4%
|
|
Net debt (excluding hedge)
|
5,030.2
|
6,266.2
|
-19.7%
|
|
*
|
After calculating Ebitda in accordance with CVM Instruction 527/2012, Cemig adjusts it to exclude items
extraordinary items which by their nature do not contribute to information on the potential for gross cash flow generation.
|
Conference call
Second
quarter 2021 results
Webcast
and conference call
August
18 (Wednesday), at 3:00 PM a.m. (Brasília time)
The transmission
will have simultaneous translation in English and can be seen by Webcast, at http://ri.cemig.com.br,
or through the links:
https://vcasting.voitel.com.br/?transmissionId=9234
(Portuguese)
https://vcasting.voitel.com.br/?transmissionId=9274
(English)
or by voice conference
call on:
+
(55) 11 3127 4971
+
(1) 516 300 1066
|
Playback
of Webcast:
http://ri.cemig.com.br
Click on the banner and download. Available for 90 days.
|
|
Playback
of Conference call:
Telephone:
+(55) 11 3127 4999
Available
from August 18 to August 24, 2021
|
Cemig Investor Relations
Tel.:
+55 (31) 3506 5024
Cemig’s Executive Investor
Relations Team
|
|
§
|
Chief Finance and Investor Relations Officer
|
Leonardo
George de Magalhães
|
|
§
|
General Manager, Investor Relations
|
Antônio
Carlos Vélez Braga
Contents
|
Conference
call Conference call
|
2
|
|
Cemig
Investor Relations
|
2
|
|
Cemig’s
Executive Investor Relations Team
|
2
|
|
Contents
|
3
|
|
Disclaimer
|
4
|
|
INCOME
STATEMENT
|
5
|
|
Results
separated by business segment
|
6
|
|
Consolidated
results for 2Q21
|
7
|
|
After
2Q21 – Material subsequent events
|
8
|
|
Consolidated
operational revenue
|
9
|
|
Taxes
and charges on revenue
|
12
|
|
Operational
costs and expenses
|
13
|
|
Default
– Cemig D
|
17
|
|
Gain
(loss) in non-consolidated investees (equity method)
|
18
|
|
Consolidated
Ebitda
|
19
|
|
Ebitda
of Cemig GT
|
19
|
|
Ebitda
of Cemig D
|
20
|
|
Financial
revenue and expenses
|
20
|
|
The
Cemig group’s electricity market
|
20
|
|
The
electricity market of Cemig D
|
22
|
|
Sources
and uses of electricity – MWh
|
24
|
|
The
market of Cemig GT
|
24
|
|
SUPPLY
QUALITY INDICATORS – DECi and FECi
|
25
|
|
Investments
|
25
|
|
DEBT
|
26
|
|
Cemig’s
long-term ratings
|
28
|
|
Our
shares
|
29
|
|
Appendices
|
31
|
|
Sources
and uses of power – billed market
|
31
|
|
Energy
losses
|
32
|
|
Cemig
group generation plants
|
33
|
|
RAP
– 2020-2021 cycle (July 2020 to June 2021)
|
34
|
|
Profit
(loss) with internal monitoring adjustments
|
35
|
|
Cemig
D – Tables (R$ million)
|
36
|
|
Cemig
GT – Tables (R$ million)
|
37
|
|
Cemig
Consolidated – Tables (R$ million)
|
38
|
Disclaimer
Certain statements and estimates
in this material may represent expectations about future events or results which are subject to risks and uncertainties that may be known
or unknown. There is no guarantee that the events or results will take place as referred to in these expectations.
These expectations are based on the
present assumptions and analyses from the point of view of our management, in accordance with their experience and other factors such
as the macroeconomic environment, market conditions in the electricity sector, and expected future results, many of which are not under
Cemig’s control.
Important factors that could lead
to significant differences between actual results and the projections for future events or results include Cemig’s business strategy,
Brazilian and international economic conditions, technology, Cemig’s financial strategy, changes in the electricity sector, hydrological
conditions, conditions in the financial and energy markets, uncertainty on our results from future operations, plans and objectives, and
other factors. Due to these and other factors, Cemig’s results may differ significantly from those indicated in or implied by such
statements.
The information and opinions herein
should not be understood as a recommendation to potential investors, and no investment decision should be based on the veracity, currentness
or completeness of this information or these opinions. No employee of Cemig nor any of their related parties nor representatives shall
have any responsibility for any losses that may arise from use of the content of this presentation.
To evaluate the risks and uncertainties
as they relate to Cemig, and to obtain additional information about factors that could give rise to different results from those estimated
by Cemig, please consult the section on Risk Factors included in the Reference Form filed with the Brazilian Securities
Commission (CVM) – and in the 20-F Form filed with the U.S. Securities and Exchange Commission (SEC).
Adoption of IFRS
The results presented below,
expressed in thousands of Reais (R$ ’000) are prepared in accordance with Brazilian accounting rules, which now embody harmonization
to IFRS (International Financial Reporting Standards).
INCOME STATEMENT
|
|
2Q21
|
2Q20
Re-presented
|
|
NET REVENUE
|
7,353,982
|
5,500,117
|
|
OPERATING COSTS
|
|
|
|
Personnel
|
342,869
|
339,183
|
|
Employees’ and managers’ profit sharing
|
19,675
|
7,440
|
|
Post-Retirement Employee Benefits
|
109,288
|
118,322
|
|
Materials
|
25,352
|
16,141
|
|
Outsourced services
|
344,641
|
302,609
|
|
Energy purchased for resale
|
3,309,234
|
2,755,238
|
|
Depreciation and Amortization
|
241,733
|
245,697
|
|
Operating Provisions
|
69,175
|
197,613
|
|
Charges for use of the national grid
|
701,915
|
257,441
|
|
Gas bought for resale
|
480,517
|
231,378
|
|
Construction costs
|
437,186
|
373,405
|
|
Other Expenses
|
77,580
|
72,673
|
|
Total
|
6,159,165
|
4,917,140
|
|
|
|
|
|
GROSS PROFIT
|
1,194,817
|
582,977
|
|
|
|
|
|
Periodic Tariff Review, net
|
211,247
|
479,703
|
|
Offsetting of hydrological risk costs, net (Law 14052/20)
|
909,601
|
-
|
|
Impairment of assets held for sale
|
-
|
475,137
|
|
Share of profit (loss) in non-consolidated investees
|
32,792
|
82,534
|
|
Profit before financial revenue (expenses) and taxes
|
2,348,457
|
1,620,351
|
|
|
|
|
|
Financial revenue
|
1,288,425
|
670,078
|
|
Finance expenses
|
-809,897
|
-705,395
|
|
Profit before income and Social Contribution taxes
|
2,826,985
|
1,585,034
|
|
Current income tax and Social Contribution tax
|
-601,560
|
-198,803
|
|
Deferred income tax and Social Contribution tax
|
-278,786
|
-304,581
|
|
NET PROFIT FOR THE PERIOD
|
1,946,639
|
1,081,650
|
Results separated by business segment
|
|
(1)
|
The only inter-segment transactions are from the generation to the trading segment, as explained above.
|
|
|
(2)
|
The reconciliation between the published amounts for the segments and the accounting information on revenue
and costs indicates the transactions between the consolidated companies (eliminations).
|
|
|
(3)
|
The information on operational costs and expenses separated by type is segregated in accordance with the
internal business model, which has immaterial differences in relation to the accounting information.
|
Consolidated results for 2Q21
In thousands of Reais, unless
otherwise stated
For the second quarter of 2021
(2Q21) Cemig reports net profit of R$ 1,946,639, which compares to a net gain of R$ 1,081,650 in the (re-presented) result
for 2Q20.
Leading factors in the 2Q21
result:
|
§
|
2Q21 Ebitda of Cemig GT R$ 1,698,850, up 112.7% from 2Q20.
|
|
|
o
|
Recognition of reimbursement for hydrological risk (GSF):
R$ 910 mn
|
|
|
o
|
Advance of revenue for services: R$ 148 million. The amount refers to early payment of amounts for
provision of services of the subsidiary ESCEE to a free consumer, net of PIS, Pasep and Cofins taxes.
|
|
|
o
|
Recognition of the recalculation of RBSE financial component, including the remuneration of cost of capital
at the rate of cost of own capital, replacing the weighted average regulatory cost of capital, for the period from June 2017 to June 2020,
and the new amounts of the component for the cycles of 2020-21 and 2025-26, taking into account the reprofiling of the payments under
the terms of the Aneel Resolution, with positive effect of R$ 211 million.
|
|
§
|
Cemig GT posted a gain of R$ 617,233 in Net financial revenues (expenses), related to the debt in Eurobonds and the corresponding
hedge instrument. In 2Q20 the combined effect of the debt and the hedge was a gain of R$ 70,770.
|
|
§
|
Ebitda of Cemig D 11.3% higher than in 2Q20, led by volume of energy distributed 12.4% higher, and a provision for doubtful receivables
lower (due to strengthened efforts, and changing methods, of collection).
|
|
§
|
Gasmig - volume sold in 2Q21: up 85.7% YoY, due to the strong recovery in the industrial segment, and in dispatching of thermal
electricity generation plants.
|
|
§
|
Lower equity income (gain in non-consolidated investees)(totaling R$ 33 mn in 2Q21, vs. R$ 83 mn in 2Q20), mainly from
lower results in Santo Antônio and Guanhães, partially offset by higher equity income from Taesa.
|
After 2Q21 – Material
subsequent events
Tender
offer: On July 30, Cemig GT received offers totaling US$774 million for its Notes issued in the international market, of which a total
of R$ 500 million were accepted (pro-rata), at 116.25% of face value. Settlement of the transaction took place on August 5, 2021.
Acquisition
of Sete Lagoas Transmissora: On July 27, 2021, Cemig signed a contract to acquire 100% of the shares in Sete Lagoas Transmissora de
Energia S.A (SLTE) held by Cobra Brasil Serviços, Comunicações e Energia S.A and Cobra Instalaciones y Servicios
S.A. The price of the acquisition is R$ 41,367, on the base date of December 31, 2020, subject to price adjustment mechanisms specified
in the Share Purchase Agreement.
Renova
sells Brasil PCH: In July 2021 the Board of Directors of Renova approved acceptance of the binding offer presented by Mubadala Consultoria
Financeira e Gestora de Recursos Ltda. for acquisition of 100% of the common shares owned by the Renova Group (all book-entry shares without
par value) in Brasil PCH S.A., for R$ 1,100,100. On August 4, 2021, the Court Administrator declared SF 369 Participações
Societárias S.A., a subsidiary of Mubadala Consultoria Financeira e Gestora de Recursos Ltda., to be winner of the Competitive
Procedure for acquisition of the Brasil PCH UPI (Isolated Production Unit – as defined in the Judicial Recovery Law, Law
11101 of 2005) under the Judicial Recovery Plan of the Consolidated Companies of the Renova Group, The transaction is in line with the
Company’s strategy for healthy recovery and reduction of its liabilities. Renova will allocate the proceeds of the Transaction especially
to: pre-payment of the DIP bridge loan contracted with Quadra Capital, disbursed at the beginning of this year; payment of certain creditors
outside the Judicial Recovery agreement; compliance with its obligations under the Judicial Recovery Plan; and completion of Phase A of
the Alto Sertão III Wind Farm Complex.
Consolidated operational revenue
Revenue from supply of electricity:
Total revenue from supply of
electricity in 2Q21 was R$ 6,837,773 , a year-on-year increase of 15.5% compared to R$ 5,920,014 in 2Q20.
|
|
2Q21
|
2Q20
|
Change, %
|
|
|
MWh
(2)
|
R$
|
Average price billed – R$/MWh
(1)
|
MWh
(2)
|
R$
|
Average price billed – R$/MWh
(1)
|
MWh
|
R$
|
|
Residential
|
2,766,585
|
2,620,985
|
947,37
|
2,657,910
|
2,307,578
|
868,19
|
4.09
|
13.58
|
|
Industrial
|
4,058,047
|
1,269,674
|
312,88
|
2,982,979
|
934,197
|
313,18
|
36.04
|
35.91
|
|
Commercial, services and others
|
1,992,781
|
1,263,457
|
634,02
|
2,028,857
|
1,136,848
|
560,34
|
(1.78)
|
11.14
|
|
Rural
|
1,074,926
|
629,219
|
585,36
|
896,375
|
511,810
|
570,98
|
19.92
|
22.94
|
|
Public authorities
|
171,645
|
128,263
|
747,26
|
169,009
|
121,381
|
718,19
|
1.56
|
5.67
|
|
Public lighting
|
314,679
|
149,098
|
473,81
|
325,162
|
142,679
|
438,79
|
(3.22)
|
4.50
|
|
Public services
|
352,752
|
197,094
|
558,73
|
339,650
|
177,860
|
523,66
|
3.86
|
10.81
|
|
Subtotal
|
10,731,415
|
6,257,790
|
583,13
|
9,399,942
|
5,332,353
|
567,28
|
14.16
|
17.36
|
|
Own consumption
|
8,272
|
-
|
-
|
7,970
|
-
|
-
|
3.79
|
-
|
|
Retail supply not yet invoiced, net
|
-
|
(55,728)
|
-
|
-
|
(104,793)
|
-
|
-
|
(46.82)
|
|
|
10,739,687
|
6,202,062
|
577,49
|
9,407,912
|
5,227,560
|
555,66
|
14.16
|
18.64
|
|
Wholesale supply to other concession holders (3)
|
2,612,137
|
653,719
|
250,26
|
3,401,541
|
726,004
|
213,43
|
(23.21)
|
(9.96)
|
|
Wholesale supply not yet invoiced, net
|
-
|
(18,048)
|
-
|
-
|
(33,550)
|
-
|
-
|
(46.21)
|
|
Total
|
13,351,824
|
6,837,733
|
517,65
|
12,809,453
|
5,920,014
|
472,96
|
4.23
|
15.50
|
|
|
(1)
|
The calculation of the average price does not include
revenue from supply not yet billed.
|
|
|
(2)
|
Information in MWh has not been reviewed
by external auditors.
|
|
|
(3)
|
Includes Regulated Market Electricity
Sale Contracts (CCEARs) and ‘bilateral contracts’ with other agents.
|
Final consumers
Revenue from energy sold
to final consumers in 2Q21 was R$ 6,202,062. This is 18.6% higher than in 2Q20 (R$ 5,227,56), and reflects volume of energy sold
to final consumers 14.2% higher, especially to industrial clients (36.0% higher), rural consumers (19.9% higher), and residential
users (4.1% higher).
Revenue from Use of the Distribution System
(the TUSD charge)
This is revenue
from charging Free Consumers the Tariff for Use of the Distribution System (Tarifa de Uso do Sistema de Distribuição,
or TUSD) on the basis of the energy distributed. In 2Q21 this revenue was R$ 820,873, 21.7% more than in 2Q20 (R$ 674,737).
This is mainly due to revenue from transport of energy 21.4% higher YoY in 2Q21.
|
|
MWh
|
|
2Q21
|
2Q20
|
Change, %
|
|
Industrial
|
5,118,220
|
4,230,152
|
20.99
|
|
Commercial
|
356,817
|
254,096
|
40.43
|
|
Rural
|
10,560
|
7,045
|
49.89
|
|
Public services
|
900
|
-
|
-
|
|
Concession holders
|
52,220
|
72,652
|
(28.12)
|
|
Total energy transported
|
5,538,717
|
4,563,945
|
21.36
|
CVA and Other
financial components in tariff adjustments
In its financial statements
Cemig recognizes, in the CVA Account, the difference between actual non-controllable costs (in which the CDE, and electricity bought
for resale, are significant components) and the costs that were used as the basis for decision on the rates charged to consumers. A gain
in the CVA account of R$ 453,744 was posted for 2Q21, compared to a gain of R$ 136,254 in 2Q20. This variation mainly reflects
the increase in costs of electricity in the Regulated Market, and transmission costs. Also, realization of amounts approved in the current
tariff cycle was lower than in the prior cycle.
Transmission revenue
The transmission revenue of
Cemig GT and Centroeste comprises the sum of revenues recorded for construction, strengthening, enhancement, operation and maintenance,
as specified in the transmission contracts. The concession contracts establish the Permitted Annual Revenue (Receita Anual Permitida
– RAP) for the assets of the existing system and those won in competitive tenders, updated annually, based mainly on the IPCA inflation
index specified in the contract (the IPCA index is applied in the contracts of Cemig GT, and the IGP–M index in the contract of
Cemig Itajubá). From then on, whenever there is a strengthening or enhancement of an existing asset made under a specific authorization
from Aneel, an addition is made to the RAP.
Revenue from operation and maintenance
was R$ 75,036 in 2Q21, vs. R$ 60,715 in the 2Q20 result (re-presented) – an increase of 23.6%. Revenues from construction,
strengthening and enhancements of infrastructure in 2Q21 were R$ 39,682, compared to R$ 42,815 in the 2Q20 results (re-presented)
– a reduction of 7.3%, mainly reflecting lower investments in transmission in 2020, following decisions to review investments on
small-scale enhancements, due to alterations in regulations, and suspension of contracts with suppliers for enhancement works. At the
same time, revenues from financial remuneration of transmission contractual
assets were 220.3% higher, at R$ 139,867 in 2Q21, compared to R$ 43,672 in the (re-presented) results for 2Q20 – mainly
reflecting the increase in the remuneration base of assets linked to concession contracts, as from the Periodic Tariff Reviews (RTPs)
ratified by Aneel on June 30 and December 30, 2020.
Revenue
from supply of gas
The Company reports revenue
from supply of gas 107.9% higher YoY in 2Q21, at R$ 838,444, compared to R$ 403,227 in 2Q20. This difference basically reflects
volume of gas sold 85.7% higher, at 340,126m³ in 2Q21, compared to 183,137m³ in 2Q20, mainly reflecting higher consumption by
the thermoelectric electricity generation sector – 471.7% higher YoY – and the industrial consumer category,
47.8% higher YoY. Volume sold was 8% higher in 2Q21 than 2Q20, led by industrial consumers (4.1% higher) and vehicle natural
gas (14.5% higher).
|
Market
(’000 m³/day)
|
2016
|
2017
|
2018
|
2019
|
2020
|
6M20
|
6M21
|
|
|
|
|
Residential
|
3.38
|
11.44
|
17.73
|
21.28
|
25.52
|
23.91
|
27.80
|
|
|
Commercial
|
24.68
|
32.67
|
39.37
|
47.7
|
49.14
|
47.11
|
52.84
|
|
|
Industrial
|
2,173.76
|
2,453.22
|
2,400.41
|
2,085.32
|
2,007.45
|
1,902.09
|
2,418.55
|
|
|
Other
|
120.19
|
126.15
|
155.14
|
148.44
|
116.32
|
115.39
|
116.30
|
|
|
Total, excluding thermal generation
|
2,322.01
|
2,623.47
|
2,612.65
|
2,302.74
|
2,198.43
|
2,088.50
|
2,615.50
|
|
|
Thermal generation
|
591.52
|
990.89
|
414.04
|
793.94
|
385.52
|
292.13
|
1,108.14
|
|
|
Total
|
2,913.53
|
3,614.36
|
3,026.69
|
3,096.69
|
2,583.95
|
2,380.63
|
3,723.64
|
|
The total number of Gasmig’s
clients increased by 3,433 in 1H21. Supply to the residential market began in 2013, and at the end of 2Q21 Gasmig was serving 63,528 consumer
units – 5.7% more than at the end of December 2020.
|
Gasmig –
Number of clients
|
2016
|
2017
|
2018
|
2019
|
2020
|
June 2021
|
|
|
|
|
Residential
|
14,935
|
30,605
|
41,377
|
50,813
|
60,128
|
63,528
|
|
|
Commercial
|
394
|
591
|
756
|
981
|
1,121
|
1,151
|
|
|
Industrial
|
112
|
107
|
109
|
109
|
99
|
101
|
|
|
Other
|
49
|
50
|
57
|
61
|
64
|
65
|
|
|
Thermal generation
|
2
|
2
|
2
|
2
|
2
|
2
|
|
|
Total
|
15,492
|
31,355
|
42,301
|
51,966
|
61,414
|
64,847
|
|
Taxes and charges on revenue
The total of these taxes
and charges reported as deductions from revenue in 2Q21 was R$ 3,218,609, or 20.0% more than in 2Q20 (R$ 2,682,530).
The Energy Development
Account – CDE
The amounts of payments
to the Energy Development Account (CDE) are decided by an Aneel Resolution. The purpose of the CDE is to cover costs of concession indemnities
(reimbursements of costs of assets), tariff subsidies, the subsidy for balanced tariff reduction, the low-income-consumer subsidy, the
coal consumption subsidy, and the Fuels Consumption Account (CCC). The CDE charges in 2Q21 were R$ 649,729, 6.8% more than in 2Q20 (R$
608,155). This mainly reflects (a) higher contracted demand, and (b) the start of charging of ‘Covid-Account CDE’ in May 2021,
as confirmed by Dispatch 939 of April 5, 2021, under Normative Resolution 885 of June 23, 2020. This is a non-manageable cost: the difference
between the amounts used as a reference for setting of tariffs and the costs actually incurred is compensated for in the subsequent tariff
adjustment.
Consumer charges – the ‘Flag’
Tariff system
The ‘Flag’
Tariff bands are activated as a result of low levels of water in the system’s reservoirs – tariffs are temporarily increased
due to scarcity of rain. The ‘Red’ band has two levels – Level 1 and Level 2. ‘Red Level 2’ comes into effect
when the levels of reservoirs are more critical. Activation of the flag tariffs generates an impact on billing in the subsequent month.
Additional charges due
to the ‘Tariff Flag’ system totaled R$ 55,037 in 2Q21, compared to R$ 73 in 2Q20.
The ‘green’
flag was in effect in the months of March 2020 (with effect on billing in April 2020) through June 2020; in 2021, the ‘red’
flag was in effect in March and April.
|
The ‘Flag’ Tariff – history
|
|
March 2021
|
Yellow
|
March 2020
|
Green
|
|
April 2021
|
Yellow
|
April 2020
|
Green
|
|
May 2021
|
Red 1
|
May 2020
|
Green
|
|
June 2021
|
Red 2
|
June 2020
|
Green
|
Operational costs and expenses
Operating costs and expenses
in 2Q21 were R$ 6,159,165, 25.3% more than their total of R$ 4,917,140 in 2Q20 (re-presented).
The following paragraphs comment on the main variations
in expenses:
Employees
The expense on personnel in
2Q21 was R$ 342,869, or 1.1% more than in 2Q20 (R$ 339,183). The higher figure reflects the salary increase of 4.77%, from November
2020, under the Collective Work Agreement; and also deferral of part of the payments of employment-law taxes and charges in 2Q20, as authorized
by law. In counterpart to this, the volume of expenses recognized for the voluntary severance program in 2Q21, at R$ 35,238, was lower
than in 2Q20 (R$ 58,850). A total of 324 employees accepted the terms of the PDVP in 2021, and 396 in 2020. Also, the average number of
employees was 4.18% lower in 2Q21 than in 2Q20.
Number of employees –
by company
Electricity purchased for
resale
The expense on electricity bought
for resale in 2Q21 was R$ 3,309,234, or 20.1% more than in 2Q20 (R$ 2,755,238). This arises mainly from the following factors:
|
§
|
Expenses on supply acquired at auction
38.5% higher YoY in 2Q21, at R$ 1,036,952, compared to R$ 748,514 in 2Q20. This increase mainly arises from higher variable
costs in electricity sale contracts (CCEARs) in the Regulated Market, due to higher dispatching of thermal plants.
|
|
§
|
Expenses on purchase of supply at the spot price 29.0% higher: R$ 323,914 in 2Q21, compared to R$ 251,066 in 2Q20. The
difference mainly reflects an average spot price (PLD) 204.0% higher in the Southeast and Center-West regions: R$ 229.44/MWh in 2Q21,
compared to R$ 75.47/MWh in 2Q20.
|
|
§
|
Expenses on distributed generation 77.4%
higher, at R$ 273,757 in 2Q21, compared to R$ 154,314 in 2Q20 – this higher figure reflects the increase in the number of generating
facilities installed, and the higher quantity of energy injected (445,944 MWh in 2Q21, compare to 232,076 MWh in 2Q20).
|
For Cemig D, purchased energy
is a non-manageable cost: the difference between the amounts used as a reference for calculation of tariffs and the costs actually incurred
is compensated for in the subsequent tariff adjustment.
|
Consolidated
|
2Q21
|
2Q20
|
Change, %
|
|
Supply from Itaipu Binacional
|
480,103
|
524,601
|
–8.5%
|
|
Physical guarantee quota contracts
|
199,451
|
189,617
|
5.2%
|
|
Quotas for Angra I and II nuclear plants
|
61,145
|
75,742
|
–19.3%
|
|
Spot market
|
323,914
|
251,066
|
29.0%
|
|
Proinfa
|
95,500
|
77,933
|
22.5%
|
|
Individual (‘bilateral’) contracts
|
110,107
|
84,216
|
30.7%
|
|
Acquired in Regulated Market auctions
|
1,036,952
|
748,514
|
38.5%
|
|
Acquired in Free Market
|
1,023,322
|
900,703
|
13.6%
|
|
Distributed generation
|
273,757
|
154,315
|
77.4%
|
|
Credits of PIS, Pasep and Cofins taxes
|
-295,017
|
-251,469
|
17.3%
|
|
|
3,309,234
|
2,755,238
|
20.1%
|
|
Cemig D
|
2Q21
|
2Q20
|
Change, %
|
|
Supply from Itaipu Binacional
|
480,103
|
524,601
|
–8.5%
|
|
Physical guarantee quota contracts
|
209,823
|
199,970
|
4.9%
|
|
Quotas for Angra I and II nuclear plants
|
61,145
|
75,742
|
–19.3%
|
|
Spot market – CCEE
|
297,583
|
195,334
|
52.3%
|
|
Individual (‘bilateral’) contracts
|
110,107
|
84,216
|
30.7%
|
|
Acquired in Regulated Market auctions
|
1,046,928
|
757,419
|
38.2%
|
|
Proinfa
|
95,500
|
77,933
|
22.5%
|
|
Distributed generation
|
273,757
|
154,314
|
77.4%
|
|
Credits of PIS, Pasep and Cofins taxes
|
-199,744
|
-166,429
|
20.0%
|
|
|
2,375,202
|
1,903,100
|
24.8%
|
Gas purchased for resale
In 2Q21 the Company’s
expense on acquisition of gas was R$ 480,517, 107.7% higher than its comparable expense of R$ 231,378 in 2Q20. This difference
basically reflects volume of gas sold 85.7% higher, at 340,126m3 in 2Q21, compared to 183,137m3 in 2Q20, led by
demand from thermoelectric electricity generation plants, which consumed 471.7% more by volume year-on-year.
Charges for use of the transmission network
Charges for use of the national
grid in 2Q21 were R$ 701,915, or 172.6% higher than in 2Q20 (R$ 257,441). This expense is payable by electricity distribution
and generation agents for use of the facilities that are components of the national grid. The amounts to be paid are set by an Aneel Resolution.
The difference is mainly due to lower transmission charges in 2Q21, resulting in lower cash outflow from distributors during the Covid-19
pandemic. The charges were increased by approximately 40% as from July 2020. Also, there was higher dispatching of thermal plants outside
the ‘merit order’, for energy security, in 2Q21, and consequently their high cost increased the System Service Charges (CCEE-ESS),
which are also part of this account line, from R$ 5,630 in 2Q20 to R$ 142,771 in 2Q21.
Operational provisions
Operational provisions were
65.0% lower year-on-year in the quarter – at R$ 69,175 in 2Q21, compared to R$ 197,613 in 2Q20. This arises mainly from
the following factors:
|
|
§
|
The allowance
for doubtful debtors, which was an expense of R$ 115,360 in 2Q20, comprised a reversal, of R$ 985, in 2Q21, mainly reflecting
the positive effect of improvement of new rules for provisioning being put in place, which aim to assimilate good practices adopted by
the market in the electricity sector – added to efficacy of the default mitigation plan, with more intense use of collection tools,
widening of the channels of negotiation, and diversification of means of payment.
|
|
|
§
|
The provisions
for the SAAG put option were an expense of R$ 26,525 in 2Q21, compared to R$ 1,988 in 2Q20.
|
|
|
§
|
Recognition
of impairment of credits receivable from the investee Renova, totaling R$ 37,361, in 2Q20.
|
Default – Cemig D
The Covid-19 pandemic had major
effects on receipt of revenues, and collection. The tightest moment was in 2Q20, under the effects of actions restricting mobility, limiting
our employment of collection tools, especially including disconnection, and the strong retraction in the economy. Indices began to improve
only slowly, as from May and June, as a result of the postponement plan for mitigating default. The plan was based on daily monitoring
of the indicators of revenue collection and default, with intensification and improvement of collection tools, widening of channels of
communication, and addition of flexibility to the rules for payment by installments, applying sensitivity to the income situation of families
during the pandemic. To try to mitigate the impacts of the pandemic and help sustain clients’ payment capacity, Cemig launched special
payment conditions to help, principally, low-income clients, hospitals and micro-companies. New channels of payment, such as debit and
credit cards, PicPay and accreditation of online banks were also put in place, to expand consumers’ payment options.
In the first half of the year,
the company intensified its collection actions (collection letter, electronic communication, registration with credit protection services)
in a volume approximately 50% higher than the 1H20. Disconnection of defaulting clients was also an important measure in the combat of
default. Approximately 662,000 disconnections were made in the first six months of 2021, 201% more than in 1H20.
In 2Q21, the revenue collection
index reached one of the highest levels in recent years, close to 99%.
Receivables Collection
Index (‘ARFA’) (Collection/Billing) – %
12-month moving average
Gain (loss) in non-consolidated
investees (equity method)
For 2Q21, Cemig reports equity
income (equity gain in non-consolidated investees) of R$ 32,792, or 60.3% less than in 2Q20 (R$ 82,534). The lower figure mainly
reflects lower equity income results from Santo Antônio (R$ 70,137 lower), and Guanhães (R$ 40,244 lower),
partially offset by positive equity income in the investee Taesa, R$ 60,281 higher than in 2Q20.
|
Gain (loss) by equity method
R$ ’000
|
2Q21
|
2Q20
|
Change
|
|
Taesa
|
150,685
|
90,404
|
60,281
|
|
Aliança Geração
|
22,799
|
24,939
|
–2,140
|
|
Baguari Energia
|
5,092
|
5,539
|
–447
|
|
Retiro Baixo
|
3,040
|
2,609
|
431
|
|
Hidrelétrica Pipoca
|
2,063
|
2,430
|
–367
|
|
LightGer
|
1,665
|
1,339
|
326
|
|
Hidrelétrica Cachoeirão
|
1,293
|
2,204
|
–911
|
|
Lontra Photovoltaic Plant – distributed generation
|
670
|
0
|
670
|
|
Brasilândia Photovoltaic Plant – distributed generation
|
559
|
0
|
559
|
|
Janaúba photovoltaic plant – distributed generation
|
362
|
480
|
–118
|
|
Porteirinha I Photovoltaic Plant – distributed generation
|
261
|
0
|
261
|
|
Lagoa Grande Photovoltaic Plant – distributed generation
|
255
|
0
|
255
|
|
Corinto Photovoltaic Plant – distributed generation
|
247
|
0
|
247
|
|
Mato Verde Photovoltaic Plant – distributed generation
|
241
|
0
|
241
|
|
Manga Photovoltaic Plant – distributed generation
|
186
|
0
|
186
|
|
Mirabela Photovoltaic Plant – distributed generation
|
158
|
0
|
158
|
|
Porteirinha II Photovoltaic Plant – distributed generation
|
129
|
0
|
129
|
|
Bonfinópolis II Photovoltaic Plant – distributed generation
|
123
|
0
|
123
|
|
Ativas Data Center
|
–62
|
200
|
–262
|
|
Itaocara
|
–140
|
–151
|
11
|
|
Axxiom Soluções Tecnológicas
|
–1,050
|
–73
|
–977
|
|
Aliança Norte (Belo Monte plant)
|
–10,447
|
–11,271
|
824
|
|
Amazônia Energia (Belo Monte Plant)
|
–16,428
|
–17,592
|
1,164
|
|
Guanhães Energia
|
–40,244
|
5
|
–40,249
|
|
FIP Melbourne (Santo Antônio plant)
|
–39,768
|
–8,244
|
–31,524
|
|
Madeira Energia (Santo Antônio plant)
|
–48,897
|
–10,284
|
–38,613
|
|
Total
|
32,792
|
82,534
|
–49,742
|
Consolidated Ebitda
Cemig’s consolidated
Ebitda in 2Q21 was 38.8% higher than in 2Q20; adjusted Ebitda was 39.2% higher. Adjusted Ebitda margin was 17.2% in 2Q21, compared to
18.0% in 2Q20.
|
Ebitda
|
2Q21
|
2Q20
|
Change, %
|
|
R$ ’000
|
(re-presented)
|
|
Profit (loss) for the period
|
1,946,639
|
1,081,650
|
79.97
|
|
+ Income tax and Social Contribution tax
|
880,346
|
503,384
|
74.89
|
|
+ Net finance income (expenses)
|
-478,528
|
35,317
|
-
|
|
+ Depreciation and amortization
|
241,733
|
245,697
|
-1.61
|
|
= Ebitda as per CVM Instruction 527 (1)
|
2.590.190
|
1,866,048
|
38.81
|
|
Non-recurring and non-cash effects
|
|
|
|
|
+ Net profit attributed to non-controlling stockholders
|
-402
|
-188
|
113.83
|
|
+ Impairment of assets held for sale (Light)
|
-
|
-475,137
|
-
|
|
+ Result of Periodic tariff review / RBSE reprofilig
|
-211,247
|
-479,703
|
-55.96
|
|
+ Hydrological risk (GSF) reimbursement
|
-909,601
|
-
|
-
|
|
+ Services revenue - advance payment received
|
-148,350
|
-
|
-
|
|
+ Reversal of tax provisions
|
-327
|
-
|
-
|
|
+ Provision – receivable from Renova
|
-
|
37,361
|
-
|
|
Adjusted Ebitda (2)
|
1,320,263
|
948,381
|
39.21
|
|
|
(1)
|
Ebitda is a non-accounting measure prepared by the Company, reconciled with the
consolidated Interim accounting information in accordance with CVM Circular SNC/SEP 1/2007 and CVM Instruction 527 of October 4, 2012.
It comprises Net profit, adjusted by the effects of: Net financial revenue (expenses); Depreciation and amortization; and Income tax and
Social Contribution tax. Ebitda is not a measure recognized by Brazilian GAAP nor by IFRS; it does not have a standard meaning; and it
may be non-comparable with measures with similar variables provided by other companies. Cemig publishes Ebitda because it uses it to measure
its own performance. Ebitda should not be considered in isolation or as a substitution for net profit or operational profit, nor as an
indicator of operational performance or cash flow, nor to measure liquidity nor the capacity for payment of debt.
|
|
|
(2)
|
The Company adjusts the Ebitda calculated in accordance with CVM Instruction 527/2012,
to exclude items which by their nature, since they are extraordinary items, do not contribute to information on the potential for gross
cash flow generation.
|
Ebitda of Cemig GT
|
Ebitda
|
2Q21
|
2Q20
|
Change, %
|
|
R$ ’000
|
(re-presented)
|
|
Profit (loss) for the period
|
1,444,329
|
406,667
|
255.16
|
|
+ Income tax and Social Contribution tax
|
633,579
|
206,836
|
206.32
|
|
+ Net finance income (expenses)
|
-428,195
|
133,702
|
-
|
|
+ Depreciation and amortization
|
49,137
|
51,736
|
-5.02
|
|
= Ebitda as per CVM Instruction 527 (1)
|
1,698,850
|
798,941
|
112.64
|
|
Non-recurring and non-cash effects
|
|
|
|
|
+ Result of Periodic tariff review / RBSE reprofilig
|
-909,601
|
-
|
-
|
|
+ Hydrological risk (GSF) reimbursement
|
-148,350
|
-
|
-
|
|
+ Services revenue - advance payment received
|
-211,247
|
-479,703
|
-55.96
|
|
Adjusted Ebitda (2)
|
429,652
|
319,238
|
34.59
|
Ebitda of Cemig D
|
Ebitda
|
2Q21
|
2Q20
|
Change, %
|
|
R$ ’000
|
|
Net profit for the year
|
347,641
|
282,801
|
22.93
|
|
Income tax and Social Contribution tax
|
126,983
|
140,915
|
-9.89
|
|
Net financial revenue (expenses)
|
-49,913
|
-59,071
|
-15.5
|
|
Amortization
|
165,872
|
166,051
|
-0.11
|
|
= Ebitda (1)
|
590,583
|
530,696
|
11.28
|
Financial revenue and expenses
For 2Q21 Cemig reports Net financial
revenue of R$ 478,528, which compares to Net financial expenses of R$ 35,317 in 2Q20. This reflects the following main factors:
|
|
§
|
In 2Q21 the
US dollar depreciated by 12.2% against the Real, compared to an appreciation of 5.3% in 2Q20. This resulted in a gain of R$ 1,042,650
from the effect of exchange rate variation on the debt in Eurobonds in 2Q21, compared to an expense of R$ 415,950 in 2Q20.
|
|
|
§
|
Reduction,
in 2Q21, in the fair value of the financial instruments contracted to hedge risks related to the Eurobonds, creating an expense of R$ 425,417,
which compares with a financial gain of R$ 486,720 posted in 2Q20. The negative variation in the fair value in 2Q21 arises from a
fall in the dollar future curve and a rise in the interest rate yield curve.
|
|
R$ ’000
|
2Q21
|
2Q20
|
|
Period
|
|
(Reduction) of the principal of the Eurobond debt
|
1,042,650
|
-415,950
|
|
Effect on the hedge
|
-425,417
|
486,720
|
|
Net effect in Financial revenue (expenses)
|
617,233
|
70,770
|
The Cemig
group’s electricity market
The Cemig Group makes
its sales of electricity through:
– its distribution
company, Cemig Distribuição (‘Cemig D’),
– its generation
and transmission company Cemig Geração e Transmissão (‘Cemig GT’),
– and other
wholly-owned subsidiaries:
|
|
–
|
Horizontes Energia, Sá Carvalho, Cemig PCH, Rosal Energia, the Praias de Parajuru and Volta
do Rio wind farms, Cemig Geração Camargos, Cemig Geração Itutinga, Cemig Geração Salto Grande,
Cemig Geração Três Marias, Cemig Geração Leste, Cemig Geração Oeste, and Cemig Geração
Sul.
|
Its market comprises sales of
electricity to:
|
|
(i)
|
Captive consumers in Cemig’s concession area in the State of Minas
Gerais;
|
|
|
(ii)
|
Free Consumers in both the State of Minas Gerais and other States of Brazil, in the Free Market (Ambiente
de Contratação Livre, or ACL);
|
|
|
(iii)
|
other agents of the electricity sector – traders, generators and independent power producers, also
in the ACL; and
|
|
|
(iv)
|
Distributors, in the Regulated Market (Ambiente de Contratação Regulada, or ACR).
|
Excluding
transactions on the CCEE (Power Trading Exchange) the Cemig group traded a total of 13,351,824 MWh in 2Q21, 4.2% more than in 2Q20. Sales
of electricity to final consumers, plus Cemig’s own consumption, totaled 10,739,687 MWh, or 14.2% more than in 2Q20. Sales to distributors,
traders, other generating companies and independent power producers in 2Q21 totaled 2,612,137 MWh – or 23.2% less than in
2Q20.
In June 2021 the Cemig group
invoiced 8,764,603 clients – an increase in the consumer base of 2.0% in the year since June 2020. Of this total number of consumers,
8,764,207 are final consumers, and/or represent Cemig’s own consumption; and 396 are other agents in the Brazilian power sector.
This chart shows the percentages
of the Cemig Group’s sales to final consumers:
Total consumption of electricity
(GWh) 4.2%
The electricity market of Cemig
D
Electricity
billed by Cemig D to captive clients and electricity transported for Free Clients and distributors with access to its networks
in 2Q21 totaled 11,636,220 MWh, or 12.4% more than in 2Q20. This increase has two components: consumption of the captive market
5.4% lower YoY, and use of the network by Free Clients 21.4% higher YoY.
Captive clients + Transmission
service (MWh)
|
Captive clients + Transmission service (MWh)
|
2Q21
|
2Q20
|
Change, %
|
|
Residential
|
2,766,585
|
2,657,910
|
4.1%
|
|
Industrial
|
5,543,753
|
4,637,028
|
19.6%
|
|
Commercial, Services and Others
|
1,352,871
|
1,243,231
|
8.8%
|
|
Rural
|
1,072,543
|
899,106
|
19.3%
|
|
Public authorities
|
171,645
|
169,009
|
1.6%
|
|
Public lighting
|
314,679
|
325,162
|
–3.2%
|
|
Public services
|
353,652
|
339,650
|
4.1%
|
|
Concession holders
|
52,220
|
72,652
|
–28.1%
|
|
Own consumption
|
8,272
|
7,970
|
3.8%
|
|
Total
|
11,636,220
|
10,351,718
|
12.4%
|
Residential
Consumption by residential
users in 2Q21, at 2,766,585 MWh, totaled 23.8% of all electricity distributed by Cemig D, and was 4.1% higher than in 2Q20. This higher
figure can be attributed to growth of 2.70% in the number
of consumers, and average consumption approximately 1.4% higher.
Industrial
Consumption by the industrial
consumer category was 47.6% of the total volume of electricity distributed by Cemig D, and totaled 5,543,753 MWh in 2Q21, or 19.6% more
than in 2Q20. Energy consumed by captive clients totaled 425,533 MWh in 2Q21, 4.6% less than in 2Q20. The volume of energy transported
for industrial Free Clients, at 5,118,220 MWh in 2Q21, was 21.0% higher than in 2Q20. There was significant growth in energy consumption
by Free Clients in the industrial consumer category, especially in the automotive, textile, beverage manufacturing, ferro-alloys
and casting sectors, as economic activity recovered.
Commercial and Services
Volume of energy distributed
to the commercial category of clients was 8.8% higher than in 2Q20. Volume was up 0.7% YoY in the captive market, and up 40.4%
YoY in the Free Market. The total energy used by captive clients plus energy transported for Free Clients in the category totaled 11.6%
of the energy distributed by Cemig D in 2Q21.
Rural
Energy distributed to rural
clients was 19.3% higher in 2Q21 than 2Q20, due to increased consumption for irrigation, reflecting lower rainfall than in the previous
year. The rural client category consumed 9.2% of the total energy distributed.
Number of clients
In June 2021 Cemig D billed
8,763,302 consumers, or 2.0% more than in June 2020.
Of this total, 2,085 were Free
Consumers using the distribution network of Cemig D.
|
Cemig D
|
Number of clients
|
Change, %
|
|
2Q21
|
2Q20
|
|
Residential
|
7,189,027
|
7,002,932
|
2.7%
|
|
Industrial
|
29,467
|
29,745
|
-0.9%
|
|
Commercial, Services and Others
|
780,259
|
773,250
|
0.9%
|
|
Rural
|
675,016
|
695,510
|
-2.9%
|
|
Public authorities
|
66,403
|
65,737
|
1.0%
|
|
Public lighting
|
6,677
|
6,742
|
-1.0%
|
|
Public services
|
13,671
|
13,516
|
1.1%
|
|
Own consumption
|
697
|
705
|
-1.1%
|
|
|
8,761,217
|
8,588,137
|
2.0%
|
|
Energy transported
|
|
|
|
|
Industrial
|
914
|
766
|
19.3%
|
|
Commercial
|
1,142
|
801
|
42.6%
|
|
Rural
|
20
|
14
|
42.9%
|
|
Public services
|
6
|
0
|
-
|
|
Concession holders
|
3
|
3
|
0.0%
|
|
|
2,085
|
1,584
|
31.6%
|
|
Total
|
8,763,302
|
8,589,721
|
2.0%
|
Sources and uses of electricity
– MWh
|
Metered market
|
MWh
|
Change,
|
|
2Q21
|
2Q20
|
%
|
|
Transported for distributors (metered)
|
80,907
|
72,404
|
11.7%
|
|
Transported for Free clients (metered)
|
5,436,634
|
4,517,041
|
20.4%
|
|
Own load + Distributed generation (1)(2)
|
8,072,089
|
7,506,796
|
7.5%
|
|
Consumption by captive market – Billed supply
|
6,579,000
|
5,787,773
|
13.7%
|
|
Losses in distribution network
|
1,493,090
|
1,719,023
|
-13.1%
|
|
Total volume carried
|
13,589,630
|
12,096,241
|
12.3%
|
|
|
(1)
|
Includes Distributed microgeneration.
|
|
|
(2)
|
Includes own consumption.
|
The market of Cemig GT
Excluding transactions in the
Power Trading Exchange (CCEE), in 2Q21 Cemig GT billed a total of 7,286,932 MWh – 3.3% more than in 2Q20. The increase was
led by consumption of industrial Free Clients, due to new energy sale contracts coming into effect, and also increased consumption.
Also, in 2Q20 a higher volume of spot sales was allocated to traders, and lower funds to the CCEE, to redeem part of the company’s
credit balance on the CCE. This factor explains the lower figure for the Free Market line than in 2Q20.
|
Cemig GT
|
(MWh)
|
Change, %
|
|
2Q21
|
2Q20
|
|
Free Clients
|
|
|
|
|
Industrial
|
3,632,514
|
2,576,104
|
41.0%
|
|
Commercial
|
996,726
|
1,039,722
|
–4.1%
|
|
Rural
|
12,944
|
4,314
|
200.0%
|
|
Free Market – Free contracts
|
2,079,419
|
2,870,210
|
–27.6%
|
|
Regulated Market
|
532,719
|
531,332
|
0.3%
|
|
Regulated Market – Cemig D
|
32,610
|
32,363
|
0.8%
|
|
Total
|
7,286,931
|
7,054,045
|
3.3%
|
SUPPLY QUALITY INDICATORS –
DECi and FECi
Cemig is continuously taking
action to enhance operational management, and organization of the logistics of its services for emergencies, and has a permanent routine
of preventive inspection and maintenance of substations, distribution lines and networks. It also invests in training of its staff for
improved qualifications, state-of-the-art technologies, and standardization of work processes, aiming to maintain the quality of electricity
supply, and as a result maintain satisfaction of clients and consumers.
The charts below show Cemig’s
indicators for duration and frequency of outages – DECi (Average outage duration per consumer, in hours), and FECi (Average outage
frequency per consumer, in number of outages), since January 2017. Quality indicators linked to the new concession contract of Cemig D
(distribution), signed in 2015.
Investments
DEBT
The Company’s total consolidated
debt on June 30, 2021 was R$ 13,318,988, or R$ 1,701,570 less than at the end of 2020. Debt totaling R$ 1,533,724 was amortized
in the first half of 2021 – of this, R$ 161,153 was amortized in the second quarter. By division, amortizations in the half-year
totaled: R$ 851,980 in Cemig D, R$ 666,560 in GT, and R$ 15,184 in other companies. Net debt was R$ 6,320,913; it is important to add
that company also has a net asset of R$ 1,290,704 in the derivative transactions that hedge its Eurobond debt.
|
Consolidated
R$ ’000
|
June 30, 2021
|
Dec. 30, 2020
|
Change, %
|
|
Gross debt
|
13,318,988
|
15,020,558
|
–11.33%
|
|
Cash and equivalents + Securities
|
6,998,075
|
5,805,460
|
20.54%
|
|
Net debt
|
6,320,913
|
9,215,098
|
–31.41%
|
|
Debt in foreign currency
|
7,523,214
|
7,824,706
|
–3.85%
|
|
|
|
|
|
|
Cemig GT
R$ ’000
|
June 30, 2021
|
Dec. 30, 2020
|
Change, %
|
|
Gross debt
|
7,915,282
|
8,885,711
|
–10.92%
|
|
Cash and equivalents + Securities
|
2,306,554
|
1,771,159
|
30.23%
|
|
Net debt
|
5,608,728
|
7,114,552
|
–21.17%
|
|
Debt in foreign currency
|
7,523,214
|
7,812,981
|
–3.71%
|
|
|
|
|
|
|
Cemig D
R$ ’000
|
June 30, 2021
|
Dec. 30, 2020
|
Change, %
|
|
Gross debt
|
4,322,546
|
5,097,240
|
–15.20%
|
|
Cash and equivalents + Securities
|
2,048,186
|
3,235,535
|
–36.70%
|
|
Net debt
|
2,274,360
|
1,861,705
|
22.17%
|
|
Debt in foreign currency
|
0
|
11,725
|
–100.00%
|
Covenants – Eurobonds
Cemig’s long-term ratings
In recent years there have been
significant improvements in Cemig’s ratings. The trend was reflected in 2020 by the upgrades made by Moody’s, in September,
and Fitch, in October. In January 2021, S&P increased the Company’s ratings by two notches on the Brazilian scale, and by three
notches on the global scale and in June 2021, Moody’s increased Cemig’s rating again. More details in this table:
Our shares
|
Security
|
2Q21
|
2020
|
Change, %
|
|
|
|
|
|
|
Our share prices (2)
|
|
CMIG4 (PN) at year-end (R$/share)
|
12.13
|
12.24
|
–0.90%
|
|
CMIG3 (ON) at year-end (R$/share)
|
14.58
|
13.93
|
4.67%
|
|
CIG (ADR for PN shares), year-end (US$/share)
|
2.38
|
2.70
|
–11.85%
|
|
CIG.C (ADR for ON shares) year-end (US$/share)
|
3.10
|
3.07
|
0.98%
|
|
XCMIG (Cemig PN shares on Latibex), year-end (€/share)
|
2.00
|
2.26
|
–11.50%
|
|
Average daily volume
|
|
CMIG4 (PN) (R$ mn)
|
118.10
|
128.30
|
–7.95%
|
|
CMIG3 (ON) (R$ mn)
|
8.70
|
20.90
|
–58.37%
|
|
CIG (ADR for PN shares) (US$ mn)
|
22.65
|
10.03
|
125.82%
|
|
CIG.C (ADR for ON shares) (US$ mn)
|
0.09
|
0.21
|
–57.14%
|
|
Indices
|
|
IEE
|
80,452
|
82,846
|
–2.89%
|
|
IBOV
|
126,802
|
119,017
|
6.54%
|
|
DJIA
|
34,503
|
30,606
|
12.73%
|
|
Indicators
|
|
Market valuation at end of period, R$ mn
|
21,927,272
|
20,986,159
|
4.48%
|
|
Enterprise value (EV), R$ mn (1)
|
31,019,738
|
34,490,344
|
–10.06%
|
|
Dividend yield of CMIG4 (PN) (%) (3)
|
6.61
|
2.23
|
4.38 p.p.
|
|
Dividend yield of CMIG3 (ON) (%) (3)
|
5.50
|
1.98
|
3.52 p.p.
|
|
(1) EV = Market valuation (R$/share x number of shares) plus consolidated Net debt.
|
|
(2) Share prices are adjusted for corporate action payments, including dividends.
|
|
(3) (Dividends distributed in last four quarters) / (Share price at end of the period).
|
Trading volume in Cemig’s
preferred shares (CMIG4) totaled R$ 15.4 billion in the first half of 2021, of which R$ 7.32 billion in the second quarter,
corresponding to a daily average over the half-year of R$ 118.12 million – 15.6% lower than in 1H20.
Trading volume in Cemig’s
common shares in 2Q21 was R$ 1.31 bn, with average daily trading volume of R$ 10.75 mn in 1H21 and R$ 8.61 mn in the second
quarter.
Cemig’s shares,
by volume (aggregate of common (ON) and preferred (PN) shares), were the third most liquid in Brazil’s electricity sector in the
year, and among the most traded in the Brazilian equity market as a whole.
On the New York Stock
Exchange the volume traded in ADRs for Cemig’s preferred shares (CIG) in 1H21 was US$2.48 billion. We see this as reflecting recognition
by the investor market of Cemig as a global investment option.
The Bovespa index, benchmark
for the São Paulo stock exchange, rose 6.54% in 1H21, reflecting recovery from the effects of the Covid-19 pandemic. In São
Paulo, the price of Cemig’s preferred shares was relatively unchanged over the first half of the year (down 0.90%), while the price
of the common shares was down 4.67%. On the other hand, in 2Q21 the preferred shares rose 10.78%, and the common shares rose 8.40%.
In New York the ADRs
for Cemig’s preferred shares were down 11.85% at the end of June, and the ADRs for the common shares were up 0.98%.
Appendices
Sources and uses of power –
billed market
Energy losses
Note: As from 4Q20, the
calculation of losses began to be presented in terms of the size of the billed market, rather than the metered market. The change aims
to give a better reflection of the relationship between losses and the regulatory limit for losses.
Cemig group generation plants
Note: Excludes the effects of extensions of
concessions under the GSF agreements.
RAP
– 2020-2021 cycle (July 2020 to June 2021)
Reimbursement for assets – National grid
|
R$ per cycle
|
2020-2021
|
2021-2022
|
2022-2023
|
From 2023-2024
to 2027-2028
|
|
Economic
|
144,546,785
|
144,546,785
|
144,546,785
|
60,157,970
|
|
Financial
|
332,488,781
|
88,662,424
|
129,952,612
|
275,556,085
|
|
Total
|
477,035,566
|
233,209,209
|
274,499,397
|
335,714,055
|
The amounts of indemnities are included in
the RAP of Cemig, and were ratified by Aneel Resolution REH 2852/2021.
Profit (loss) with internal monitoring
adjustments
Note: Cemig Distribuição didn’t present
any adjustment items in the period.
Cemig D – Tables (R$ million)
Cemig GT – Tables (R$ million)
Cemig Consolidated – Tables
(R$ million)
|
|
3.
|
Material Announcement Dated August 16, 2021: Cemig GT Tender Offer Completed.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS - CEMIG
COMPANHIA ABERTA
CNPJ 17.155.730/0001-64
NIRE 31300040127
CEMIG GERAÇÃO E TRANSMISSÃO
S.A.
COMPANHIA ABERTA
CNPJ 06.981.176/0001-58
NIRE 31300020550
Material Announcement
A
COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG (“Cemig”), a
Category A Brazilian listed corporation with securities traded on the exchanges of São Paulo, New York and Madrid, and, CEMIG
GERAÇÃO E TRANSMISSÃO S.A. – CEMIG-GT, a Category B Brazilian corporation registered with the CVM and a
wholly-owned subsidiary of Cemig (“Cemig GT”), in accordance with CVM rule 358 of January 3, 2002 as amended, hereby
inform stockholders and the market in general that the tender offer by Cemig GT to purchase for cash up to US$500,000,000.00 (the “Maximum
Amount”) of its outstanding 9.250% Senior Notes due 2024 (the “Notes”), as announced in a Material Announcement
dated July 19, 2021 (the “Tender Offer”) has been concluded.
The Tender Offer expired at 11:59 p.m. (New York
City time) on August 13, 2021 (“Expiration Date”).
Until the Expiration Date, an aggregate principal
amount of US$500,000,000 was validly tendered and not validly withdrawn.
As disclosed in the Material Announced dated July
30, 2021, participation in the Tender Offer exceeded the Maximum Amount, and Cemig GT accepted such tendered Notes on a prorated basis.
All Notes not accepted as a result of proration were rejected from the Offer and promptly returned to the tendering holder.
Payment of notes validly tendered and accepted,
disclosed in the Material Announced dated July 30, 2021, occurred on August 5, 2021. The total amount paid by Cemig GT to the holders
of the Notes was US$581,250,000.
This Material Announcement is merely informative
and shall not, under any circumstance, be construed as an offer to purchase or solicitation of an offer for the sale of the Notes in any
jurisdiction in which an offer to purchase or solicitation of an offer for a sale is prohibited, in accordance
with the securities laws of any such state or jurisdiction, including Brazil. The Tender Offer will be offered exclusively to foreign
investors and shall not be registered with the CVM or offered in Brazil.
Cemig and Cemig GT reaffirm their commitment to
keep the market timely informed of the subject matter set forth in this Notice to the Market, pursuant to applicable law and regulation.
Any communication to their stockholders and the market relating to the Tender Offer will be made on the applicable websites of CVM (www.cvm.gov.br),
B3 – Brasil, Bolsa, Balcão S.A. (http://www.b3.com.br/pt_br/), and the Company (http://ri.cemig.com.br/).
Belo Horizonte, August 16, 2021.
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
|
|
4.
|
Material Announcement Dated August 23, 2021: Renova: Second Equity Conversion Completed.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–CEMIG
LISTED
COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127
MATERIAL ANNOUNCEMENT
Renova: Second equity conversion (R$ 54.76mn) completed
In compliance
with CVM Instruction 358 of January 3, 2002 as amended, Cemig (Companhia Energética de Minas Gerais, listed in São
Paulo, New York and Madrid), reports to the Brazilian Securities Commission (CVM), the Brazilian Stock Exchange (B3) and the market:
Today Cemig’s affiliated company Renova
Energia S.A. (‘Renova’) published the following Material Announcement:
“
Renova Energia S.A. – In Judicial Recovery (RNEW3; RNEW4; RNEW11) (‘the Company’ or ‘Renova’)
hereby informs its stockholders and the market as follows:
Today
the Board of Directors ratified the partial homologation of the capital increase by private subscription
of shares, within the limit of the Company’s authorized capital, approved by the Board of Directors on June 22, 2021, putting into
effect the “Second Capital Increase and Conversion Process” under Clause 14.1.1 of the Judicial Recovery Plan of Renova Energia
S.A. – in Judicial Recovery and other Consolidated Companies, of December 17, 2020, and Clause 12.1.1 of the Judicial Recovery Plan
of Alto Sertão Participações S.A. – in Judicial Recovery and other companies comprising Phase A of the Alto
Sertão III Project, of December 17, 2020.
The capital increase as ratified
is for:
|
a total of
|
R$ 54,763,295.78,
|
|
|
represented by
|
9,337,582
|
new nominal shares without par value,
|
|
comprising
|
4,666,882
|
common shares
|
|
and
|
4,670,700
|
preferred
shares.
|
|
This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
|
Page 1 of 1
|
As a result the share capital
of Renova is now
|
|
R$ 3,349,936,049.26,
|
|
|
in
|
109,480,048
|
nominal
shares without par value,
|
|
comprising
|
55,521,868
|
common shares
|
|
and
|
53,958,180
|
preferred
shares.
|
The credits of all creditors
that stated interest in conversion during the “Second Conversion Window” were converted into equity in this capital increase.
This capitalization reduces
the debt under the Company’s Judicial Recovery Proceedings by R$ 53,855,178.96 (9.8% of the balance of the Class III debt),
further enabling progress with the Company’s judicial recovery. ”
Cemig further informs the public that, as stated
in the Material Announcement of March 1, 2021, Cemig GT, a stockholder of Renova, is not part of the group of creditors that requested
conversion of their credits into shares, and did not take part in the said capital increase.
As a consequence of this ratification of the
“Second Capital Increase and Conversion Process”, the interest of Cemig GT in the voting capital of Renova has been reduced
from 29.72% to 27.22%; and its interest in the total capital from 15.09% to 13.80%.
Cemig emphasizes that the said conversion has
no effect on the rights of Cemig GT rights in the controlling stockholding block of Renova.
Belo Horizonte, August 23, 2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
|
This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
|
Page 1 of 1
|
|
|
5.
|
Market Notice Dated August 31, 2021: Cemig again wins Brazil Accounting/Reporting Transparency Trophy.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–
CEMIG
LISTED COMPANY
– CNPJ 17.155.730/0001-64 – NIRE 31300040127
MARKET NOTICE
Cemig again wins
Brazil Accounting / Reporting Transparency
Trophy
Cemig (Companhia Energética de
Minas Gerais – listed and traded in São Paulo, New York and Madrid), hereby informs the CVM (Brazilian Securities
Commission), the São Paulo stock exchange (B3) and the market in general:
For the 17th time,
Cemig has been awarded the Anefac Transparency Trophy.
Created in 1977, this award
encourages corporate transparency in the market.
It is jointly organized by Anefac
(Brazilian Association of Finance, Management and Accounting Professionals) and Fipecafi, the Accounting, Actuarial and Finance Research
Institute of the Economics and Management School (FEA) of São Paulo University (USP).
Cemig won this award for clarity
of financial statements, and quality of information published, in the category “Listed companies with net revenue over R$ 8 billion”.
Winning companies were selected
based on technical analysis by Fipecafi of the published financial statements of all the Brazilian companies operating in commerce, industry
and services – excluding financial services.
Belo Horizonte, August 31, 2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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Page 1 of 1
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6.
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Market Notice Dated September 1, 2021: Brazil Electricity Distributors' Award for Improvement of Performance.
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COMPANHIA ENERGÉTICA DE MINAS GERAIS
–
CEMIG
LISTED COMPANY
– CNPJ 17.155.730/0001-64 – NIRE 31300040127
MARKET NOTICE
Brazil Electricity Distributors’ Award
for improvement of performance
Cemig (Companhia Energética de
Minas Gerais – listed and traded in São Paulo, New York and Madrid), informs the CVM (Brazilian Securities Commission),
the São Paulo stock exchange (B3) and the market:
Cemig was second-placed in the nationwide
category “Performance Improvement” at the Brazilian Electricity Distributors’ Association (Abradee) Awards, given at
an online ceremony on August 26, 2021.
Abradee has been holding these awards
for more than 20 years. They aim to orient and enhance the management models of Brazilian electricity distribution concession holders,
with a view to continuous improvement of the sector.
‘Performance Improvement’
(Evolução do Desempenho) is a nationwide category recognizing concession holders that achieve the highest rate of
improvement in their performance indices – measured as the ratio of total score in the general category in the year to the weighted
average of total scores in the general category in the three last prior annual Abradee awards.
Cemig believes this year’s award
is the result of its efforts to achieve excellence in distribution service, improve quality of customer service, and as a result increase
customer satisfaction, while its financial results continue to grow.
Belo Horizonte, September 1, 2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
|
This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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Page 1 of 1
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7.
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Material Announcement Dated September 14, 2021: Renova: Brazil PCH Stockholders will exercise first refusal right.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–CEMIG
LISTED
COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127
MATERIAL ANNOUNCEMENT
Renova: Brasil PCH stockholders will exercise first
refusal right
Cemig
(Companhia Energética de Minas Gerais, listed in São Paulo, New York and Madrid), in compliance with CVM Instruction
358/2002 as amended, hereby reports to the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (B3) and
the market:
Today Cemig’s
affiliated company Renova Energia published the following Material Announcement:
|
|
“
|
Referring to the Material Announcement of August 5, 2021, and in compliance with
CVM Instruction 358/2002 as amended, Renova Energia S.A. (in Judicial Recovery – RNEW3; RNEW 4 and RNEW11 – ‘Renova’),
hereby informs its stockholders and the general public as follows:
|
In the matter of the disposal
of the Independent Productive Unit (UPI) Brasil PCH, specified in the Recovery Plan of the Consolidated Companies of the Renova
Group, and the offer made by SF 369 Participações Societárias S.A. (‘SF 369’, ‘the First
Proposer’), a subsidiary of Mubadala Consultoria Financeira e Gestora de Recursos Ltda., which had been declared winner of the Competitive
Procedure for acquisition of the said UPI, the remaining stockholders of Brasil PCH S.A. – BSB Energética S.A and
Eletroriver S.A. – have opted to exercise their rights of first refusal to acquire the totality of the common shares (book-entry
common shares, without par value) in Brasil PCH S.A. owned by the Renova Group, on the same conditions as offered by the First Proposer,
SF 369.
This right will be exercised
strictly in compliance with the rules, procedures, rights and duties of the Parties specified in the Stockholders’ Agreement of
Brasil PCH.
The sale price for transfer
of 100% of the shares in Brasil PCH S.A owned by the Renova Group (‘the Transaction’) is R$ 1,100,000,000.00 (one billion
one hundred million Reais), subject to the usual conditions precedent in transactions of this nature, and subject to the prior rights
reserved to the First Proposer in the contract previously signed with it.
Renova
will take all the measures necessary to finalize the Transaction, and reiterates its commitment to keep stockholders and the market duly
and timely informed, in accordance with the legislation. ”
Belo Horizonte, September 14, 2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer, Cemig
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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8.
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Material Announcement Dated September 20, 2021: Board of Directors of Renova approved acceptance of the binding offer for ESPRA unit.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–CEMIG
LISTED
COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127
MATERIAL ANNOUNCEMENT
Renova accepts binding offer for ESPRA unit
Cemig (Companhia Energética
de Minas Gerais, listed in São Paulo, New York and Madrid), in compliance with CVM Instruction 358/2002 as amended, hereby
reports to the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (B3) and the market as follows:
Today Cemig’s affiliated company Renova
Energia S.A. published this Material Announcement:
|
|
“
|
Complying with CVM Instruction
358/2002 as amended, Renova Energia S.A. (in Judicial Recovery) (RNEW3;
RNEW 4, RNEW11)(‘Renova’) hereby informs
its stockholders and the public:
|
On September 17, 2021 the Board
of Directors of Renova approved acceptance of the binding proposal presented by Vinci Energia Fundo de Investimento em Participações
em Infraestrutura (‘Vinci Energia’) through its investee V2I Energia S.A., of which the manager is Vinci
Infraestrutura Gestora de Recursos Ltda (‘Vinci’), for acquisition (‘the Transaction’)
of all the common and preferred shares (all are book entry shares without par value) in Enerbrás Centrais Elétricas S.A.
(‘Enerbrás’) and, indirectly, Energética Serra da Prata (‘Espra’), for purchase consideration
of
·
R$ 265,800,000.00 (two hundred sixty five million eight hundred thousand
Reais),
as an initial ‘Stalking
Horse’ offer, with the right to match any other offers made by other parties for the same acquisition, subject to the usual conditions
precedent, including compliance with the provisions of the Judicial Recovery Plan of the Consolidated Companies of the Renova Group and
the realization of a competitive proceeding for disposal of the Independent Productive Unit (UPI) Enerbrás, all within the
Judicial Recovery Proceedings in progress before the Second Bankruptcy and Judicial Recovery Court of the Legal District of São
Paulo, São Paulo State.
The
amount offered is greater than the amount specified in the Recovery Plan – demonstrating the quality of the assets managed by Renova,
and the diligence of Renova’s management in the processes of disposal.
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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Vinci
Energia is an FIP–I.E.: its units are listed and traded on the B3 (as VIGT11),
since November 11, 2019. It has net assets of more than R$ 800 million, and approximately 10,000 unit holders. Its investment strategy
combines the efficiency of an FIP-IE, the stability of the electricity sector, and the experience and focus on results of management by
Vinci.
The Vinci Group was
founded in 2009. It currently has more than R$ 57 billion under management, and 297 employees, of whom 34 are partners.
With offices in Rio de Janeiro,
São Paulo, Recife and New York, it has a history of ample success, investing across various sectors of the economy, including the
following companies:
|
|
–
|
Equatorial Energia S.A. (energy), Light (energy), LEST (Linha
de Energia do Sertão Transmissora S.A.) – energy, Água Vermelha Transmissora S.A. (energy), Arcoverde Transmissão
de Energia (energy), Transmissora Porto Alegrense de Energia (energy), Complexo Mangue Seco (energy), Grupo Los Grobo
(agribusiness), Austral (insurance, reinsurance), Unidas (vehicle rental), Burger King (retail), Le Biscuit
(retail), Cecrisa (ceramic tiles), Companhia Brasileira de Offshore (shipping), Uniasselvi (higher education), Domino’s
Pizza Brasil (retail), Vero Internet (telecoms), and Cura (health).
|
The present transaction is duly
aligned with the strategy set out by Renova in its judicial recovery, and will continue to enable the healthy re-establishment of Renova,
and substantial reduction of its liabilities, with payment of creditors inside and outside the Judicial Recovery Plan, while also maintaining
a portion of these funds for maintenance of its operational activities, as foreseen by the Plan.
When this Transaction is concluded,
Renova will dedicate itself entirely to development and implementation of energy generation projects based on wind and solar sources.
Renova
reiterates its commitment to keeping stockholders and the market in general duly informed in accordance with the applicable legislation.
”
Belo Horizonte, September 20, 2021
Maurício Dall’Agnese
Acting Chief Finance and Investor Relations Officer,
Cemig
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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9.
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Material Announcement Dated September 29, 2021: Renova: Regulator overrules challenges to wind farms.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–CEMIG
LISTED
COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127
MATERIAL ANNOUNCEMENT
Renova: Regulator overrules challenges to wind farms
Cemig (Companhia Energética de Minas
Gerais, listed in São Paulo, New York and Madrid), in compliance with CVM Instruction 358/2002 as amended, hereby reports
to the Brazilian Securities Commission (CVM), the São Paulo Stock Exchange (B3) and the market as follows:
Today Cemig’s
affiliated company Renova Energia S.A. (‘Renova’) published the following Material Announcement:
|
|
“
|
Renova Energia S.A. – In Judicial Recovery
(RNEW3; RNEW4; RNEW11) (‘Renova’) informs its stockholders and the market as follows:
|
In
its Financial Statements Renova disclosed an administrative proceeding in progress on the subject of cancellation of the Authorizing Resolutions
for Phase A of the ASIII wind farms, and of the Reserve Supply Contracts awarded under the ‘LER’ (Reserve Energy) auctions
of 2013 and 2014.
Renova
now reports that on today’s date the Governing Council of the Brazilian electricity regulator, Aneel (National Electricity Agency),
decided unanimously as follows:
|
|
(i)
|
To take cognizance of, and to grant, on its merits, the Administrative Appeal filed
by Renova Energia S.A. against Complaint Notices 25/2019 and 50/2019, issued by the Generation Services Oversight Authority (Superintendência
de Fiscalização dos Serviços de Geração – SFG), relating to Phase A of the Alto Sertão
III Wind Farm Complex, which comprises the following Wind Generation Plants –
|
Abil,
Acácia, Angico, Folha de Serra, Jabuticaba, Jacarandá do Cerrado, Taboquinha, Tábua, Vaqueta, Amescla, Angelim, Barbatimão,
Cedro, Facheio, Imburana Macho, Jataí, Juazeiro, Manineiro, Pau D’Água, Sabiu, São Salvador, Umbuzeiro, Vellozia,
Mulungu, Pau Santo and Quina,
–
and to cancel the said Notices of Complaint, making the following rulings:
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original text in Portuguese is the legally valid version.
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(ii)
|
Cancellation of application of Sub-item IV of Subclause 12.1 of the Reserve Energy Supply Contract (CER)
for the Mulungu, Pau Santo and Quina wind generation plants, which won the Reserve Energy Auction (LER) of 2014.
|
|
|
(iii)
|
Cancellation of temporary suspension of the right of Renova Energia S.A.
to contract or participate in public competitions organized by Aneel in relation to Phase A of the Alto Sertão III Wind Farm Complex.
|
|
|
(iv)
|
Aneel ordered the SFG to make a new analysis for assessment of application
of penalties specified in the Bidding Rules for the 2013 and 2014 LER Auctions for delay in conclusion of the projects, a responsibility
of Renova Energia S.A.
|
|
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(v)
|
Aneel ordered the Generation Concessions and Authorizations Authority (Superintendência de Concessões
e Autorizações da Geração – SCG) to assess applicability of the performance guarantees of the plants
as specified in the published Bidding Rules of the 5th LER Auction of 2013 and the 6th LER Auction of 2014, and
in Article 13 of Normative Resolution 876 of 2020.
|
With
the above decision, Renova takes one more important step in the consolidation of its restructuring plan, confirming the viability
of the Wind Farms of Phase A of the Alto Sertão III Wind Farm Complex, and enabling Renova to contribute to the Brazilian
energy system at this delicate moment that the country is currently undergoing. ”
Belo
Horizonte, September 29, 2021
Maurício
Dall’Agnese
Acting
Chief Finance and Investor Relations Officer, Cemig
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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Page 2 of 2
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10.
|
Market Notice Dated October 22, 2021: Reply to B3 Letter 1409/2021-SLS of October 21, 2021, Request for clarification of atypical
share price movements.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–
CEMIG
LISTED COMPANY
– CNPJ 17.155.730/0001-64 – NIRE 31300040127
MARKET NOTICE
Reply to B3 Letter 1409/2021-SLS
of October 21, 2021
Inquiry by B3
To
Cia. Energética de Minas Gerais – CEMIG
Att: Mr. Leonardo George de Magalhães
Chief Investor Relations Officer.
Subject: Request for clarification
of atypical share price movements
Dear Sir,
In view
of recent variations in prices of the securities of your company, the number of trades in these securities and the quantities of shares
traded, as shown below, we hereby request to be informed, by October 22, 2021, whether you are aware of any fact that might justify
them:
|
ON (common) shares
|
|
Price per share, R$
|
No. of
trades
|
Total no.
of shares
|
Volume
R$
|
|
Date
|
Opening
|
Minimum
|
Maximum
|
Average
|
Close
|
Variation
%
|
|
Oct. 07, 2021
|
17.00
|
16.54
|
17.16
|
16.96
|
17.05
|
0.29
|
1,532
|
424,500
|
7,199,812.00
|
|
Oct. 08, 2021
|
17.14
|
17.14
|
17.43
|
17.30
|
17.29
|
1.40
|
998
|
224,300
|
3,881,215.00
|
|
Oct. 11, 2021
|
17.23
|
17.11
|
18.07
|
17.84
|
17.95
|
3.81
|
1,429
|
372,900
|
6,653,180.00
|
|
Oct. 13, 2021
|
18.00
|
17.97
|
18.50
|
18.27
|
18.38
|
2.39
|
1,534
|
324,800
|
5,934,738.00
|
|
Oct. 14, 2021
|
18.39
|
18.34
|
18.67
|
18.53
|
18.61
|
1.25
|
1,176
|
203,100
|
3,763,267.00
|
|
Oct. 15, 2021
|
18.69
|
18.46
|
18.89
|
18.58
|
18.46
|
–0.80
|
1,974
|
346,400
|
6,436,451,00
|
|
Oct. 18, 2021
|
18.39
|
18.29
|
18.99
|
18.73
|
18.99
|
2.87
|
1,956
|
406,800
|
7,619,791.00
|
|
Oct. 19, 2021
|
18.88
|
18.06
|
18.88
|
18.30
|
18.06
|
–4.89
|
2,668
|
860,800
|
15,748,588.00
|
|
Oct. 20, 2021
|
18.08
|
18.08
|
18.64
|
18.47
|
18.47
|
2.27
|
2,266
|
439,900
|
8,125,220.00
|
|
Oct. 21, 2021*
|
18.20
|
17.34
|
18.43
|
17.74
|
17.47
|
–5.41
|
2,544
|
680,700
|
12,077,376.00
|
|
|
|
|
|
|
|
|
|
|
|
|
PN (preferred) shares
|
|
Price per share, R$
|
No. of
trades
|
Total no.
of shares
|
Volume
R$
|
|
Date
|
Opening
|
Minimum
|
Maximum
|
Average
|
Close
|
Variation
%
|
|
Oct. 07, 2021
|
13.82
|
13.46
|
13.99
|
13.77
|
13.74
|
–0.43
|
20,682
|
15,288,200
|
210,558,238.00
|
|
Oct. 08, 2021
|
13.85
|
13.85
|
14.25
|
14.11
|
14.13
|
2.83
|
15,275
|
7,329,000
|
103,379,809.00
|
|
Oct. 11, 2021
|
14.12
|
13.92
|
14.80
|
14.54
|
14.58
|
3.18
|
24,490
|
15,271,400
|
222,083,132.00
|
|
Oct. 13, 2021
|
14.65
|
14.65
|
15.15
|
14.97
|
15.00
|
2.88
|
27,500
|
14,277,900
|
213,783,379.00
|
|
Oct. 14, 2021
|
15.04
|
14.88
|
15.20
|
15.07
|
15.09
|
0.60
|
18,595
|
7,158,600
|
107,881,254.00
|
|
Oct. 15, 2021
|
15.06
|
14.92
|
15.30
|
15.05
|
15.00
|
–0.59
|
21,713
|
16,693,900
|
251,293,905.00
|
|
Oct. 18, 2021
|
14.96
|
14.75
|
15.20
|
15.02
|
15.11
|
0.73
|
17,672
|
12,090,100
|
181,637,221.00
|
|
Oct. 19, 2021
|
15.04
|
14.67
|
15.07
|
14.82
|
14.77
|
–2.25
|
26,567
|
19,852,600
|
294,247,029.00
|
|
Oct. 20, 2021
|
14.81
|
14.80
|
15.06
|
14.90
|
14.81
|
0.27
|
19,582
|
14,156,600
|
210,960,318.00
|
|
Oct. 21, 2021*
|
14.53
|
13.64
|
14.77
|
14.04
|
13.65
|
–7.83
|
21,598
|
16,282,900
|
228,605,341.00
|
|
This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
|
Page 1 of 1
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Reply by Cemig
Dear Ms. Ana Lucia da Costa Pereira,
In response to B3 Letter 1409/2021-SLS of October
21, 2021, in which B3 requests information on the existence of any fact of which Cemig might be aware in relation to the recent variations
in price of its shares, and the increase in the number of trades and volume traded, as per the tables above, Companhia Energética
de Minas Gerais – CEMIG (‘Cemig’), hereby reports to you that it is not aware of any fact arising from its activities
or business that could cause price variations, which has not been properly disclosed by Cemig in accordance with the terms of the specific
applicable regulations, in particular CVM Instruction 358/2002.
Cemig takes this opportunity to reiterate its
commitment to transparency and best market practices in disclosures to the market.
Belo Horizonte, October 22, 2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
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Page 1 of 1
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11.
|
Market Notice Dated October 25, 2021: Fitch updates Cemig's Ratings.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–
CEMIG
LISTED COMPANY
– CNPJ 17.155.730/0001-64 – NIRE 31300040127
MARKET NOTICE
Fitch upgrades Cemig’s
ratings
Cemig (Companhia Energética
de Minas Gerais – listed and traded on the exchanges of São Paulo, New York and Madrid), hereby informs the
Brazilian Securities Commission (CVM), the São Paulo stock exchange (B3) and the market in general:
Fitch Ratings has
upgraded its corporate ratings for Cemig and its wholly-owned subsidiaries Cemig Distribuição S.A. (‘Cemig
D’) and Cemig Geração e Transmissão S.A. (‘Cemig GT’), from BB– to BB on
the global scale, and by two points on the Brazilian scale from AA– to AA+ .
Fitch states:
“ The
increase reflects reduction in the Cemig group’s leverage, the strengthening of its liquidity, and its improved operational performance
in the distribution business.
The
reduction of concentration of debt maturities in 2024, and the lengthening of the periods of important concessions, were also taken into
consideration. ”
In the first
half of 2021 the other two principal risk rating agencies, Moody’s América Latina and Standard &
Poor’s, also increased their ratings for Cemig, reflecting stronger credit and liquidity metrics.
Cemig believes that the changes
of ratings by these agencies constitute recognition of its efforts to increase its credit quality; and reiterates its commitment to improving
its liquidity and capital structure through lengthening of its debt profile, strategic management of liabilities, and reduction of its
cost of capital.
Belo Horizonte, October 25,
2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
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This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
|
Page 1 of 1
|
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12.
|
Material Announcement Dated October 26, 2021: Minas Gerais legislature extends inquiry on Cemig.
|
COMPANHIA ENERGÉTICA DE MINAS GERAIS
–CEMIG
LISTED
COMPANY – CNPJ 17.155.730/0001-64 – NIRE 31300040127
MATERIAL ANNOUNCEMENT
Minas Gerais legislature extends inquiry on Cemig
Complementing the information published in its
Material Announcement of June 24, 2021, and in accordance with CVM Instruction 358 of January 3, 2002 as amended, Cemig (Companhia
Energética de Minas Gerais, listed and traded on the exchanges of São Paulo, New York and Madrid), hereby informs
the CVM (Brazilian Securities Commission), the São Paulo stock exchange (B3) and the market in general:
At an extraordinary meeting held
today, the Legislative Assembly of Minas Gerais State decided to extend its Committee of Inquiry investigating acts of management in Cemig
by a further 60 days.
Due to the parliamentary recess,
which begins in December, the effect of this extension is that proceedings of the Inquiry will continue to February 21, 2022.
Cemig reaffirms its commitment to the best practices
of corporate governance and compliance, and to providing all the information necessary for full understanding and clarification of its
management decisions.
Cemig will keep the market informed on this subject,
in accordance with the applicable regulations.
Belo Horizonte, October 26, 2021
Leonardo George de Magalhães
Chief Finance and Investor Relations Officer
|
This text is a translation, provided for information only. The
original text in Portuguese is the legally valid version.
|
Page 1 of 1
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