Companhia Energética de Minas Gerais (CIG) Q1 2013 Earnings Report, Transcript and Summary

A very good afternoon, everyone. It is with great pleasure that we open this -- the webcast for the presentation of our results for the first quarter of 2013. That is the first quarter in which we are applying the new accountancy standards which affected, more specifically, the consolidation of our results. Therefore, I think that it is going to demand a trifle more comments on our part in order to explain exactly what we have as results. Preliminarily, the results have been very good, aligned with all the strategies that we have adopted, and especially, adhering to the decisions that have been made in the last months vis-à-vis the novelties introduced by Provisional Measure 579. We are quite firm in our stance to try and follow not only the longings of our customers but also our shareholders. The result of the first quarter 2013 comparatively with the previous year. We had a very significant growth, not only in our net income -- net revenues, but also our EBITDA and our net income. That is a net revenue, as you saw, increased by 15% compared to last year, first quarter last year. The result properly because of the increase of the revenues from energy sold due to the high market prices, the spot market. The EBITDA increased by 28% which goes to show that we had substantial gains as a function of the reduction of the operational costs of the company, and therefore, we had this greater growth of the EBITDA. Then especially our net income, which increased by 37%, reaching BRL 865 million, which places us maybe as the best performance in the industry. Now these results come especially from the strategy that Cemig has adopted in the last years to give the due value to its assets. We have tried, not only to reduce operational costs and to introduce new technologies and new management, managerial practices, so as to guarantee that we're going to have resources enough in order to be able to invest. But mainly, the investment discipline which has brought us continuously good results in investments that we have made, we have several examples that we can list and we present to the investor market, the most representative of which is Taesa. Taesa presented very positive results this last week, together with Light in spite of difficulties that the distributing companies have been going through. Besides, we have some opportunities, doubtlessly very promising ones, so as to increase our growth, cash generation through opportunities that we have been preparing, getting ready for some time and now begin to materialize as natural gas. Natural gas is an industry that in Brazil is not very well developed. Because of the short supply of natural gas, we have the opportunity here in the state of Minas Gerais, especially in the Sao Francisco River basin which has very promising province of natural gas. We have obtained 4 blocks of -- the concession to drill 4 blocks with 2 wells already drilled and with very promising results. We're very enthusiastic about it. In the next months, we should provide some additional information. Due to result of the drilling, the investments that have been made thus far are not significant. They are around BRL 15 million or 25 million and our strategy is to develop these wells in partnership with investors. Cemig is going to be a minority partner in these investments but the availability of gas is going to allow for a significant increase in the supply and the demand and the supply, which today, is somewhere around 3 million cubic meters of gas. It can reach now higher values due in case some of these blocks that you see there, which belong to several companies have a positive result. I highlight the proximity of the city of Belo Horizonte to all of these blocks, which places us in a very favorable competitive situation because of the reduced costs we may have in connection with Belo Horizonte which is already a hub of gas pipes, which not only reach the Eastern part of the state but also the Southern part of the state. As you see, the Northwest part of Minas is a region which has agriculture or agri-business. Its -- may be its mainstay in economic terms, with a very well developed agriculture, very efficient agriculture, which needs an import in fertilizers from abroad. And the availability of such gas is going to allow for the development of that region with much more efficacy and much more efficiency. Gasmig is going to benefit solidly from this gas -- availability of gas. As you can see, Gasmig today has very aggressive posture in what has to do with the sales of gas to industrial consumers in a vast majority. We have reached 1,403,000,000 cubic meters of gas sold to these consumers in the last 12 months. Only in the first quarter of 2013, we sold somewhere around 374 million cubic meters of gas, which is a very positive performance, transforming Gasmig into a very significant company. As you know, our cash flow within its business structure, 40% of it comes from generation. And as you're going to see in a while, it remains along this level -- on this level and it coming from transmission and the remaining businesses account for the other 40%. It is very likely therefore that within a few years, Gasmig is going to be responsible for much more of the percentage that it has, somewhere around 5%. With such an availability of gas, Gasmig is going to be able to meet the demands of the residential consumers, commercial consumers as well in the most important urban areas in the state of Minas Gerais, whether from pipelines or gas or liquefied gas, kitchen-cooking gas, which we can also serve other cities of significant urban density, which justify these investments. We have a very aggressive plan at Gasmig, and in all certainty you're going to see this year that we're going to go beyond the revenues of last year. In the first quarter this year, we've been able to have a 23% gain over last year, which gives you the -- a measure, an idea, of the growth potential that Gasmig has. The next one. In your next slide, we have the results of the third tariff revision cycle. Tariff review, it was a long one. As you remember, 2 years ago, we began the discussion with Aneel the methodology to implement the third tariff review cycle. And I'm going to ask Dr. Maura, our superintendent responsible for economic regulation to make a few comments about this third tariff review.

Good afternoon, everyone. Our review process began with an average result of 2.99 correction of the tariffs. Remembering that it was limited because of the determination of the federal government to impose a limit up to 3% readjustments in terms of impact for the final consumer. The remainder of these resources are coming from partial A and especially of the great effect of the variation of the energy generated by the thermal plants has come as a function of the passing of CDE resources, which were around BRL 715 million, which a significant distributor received BRL 400 million to cover the difference of purchased energy and other charges and the remainder to cover the subsidies that were built into the tariff, such as is for the low income consumer, public elimination order and sewage and sanitation, which was the way the government found in order to solve the promise, or to fulfill the promise of 20% reduction in the tariffs. The other important thing was the adjustment of our new tariff structure in a constant search for an improvement of profitability because of the new rules that have been imposed given the definition of the methodology of this fourth cycle, which Dr. Rolla has just commentated on. It also shows our continuous dialogue with Aneel in search of another good recognition of our investments. The object of an administrative process, the way in which Aneel recognized our assets, and we are very optimistic with the results that must be -- should be taken to the next Aneel meeting for the adequate recognition of our investments. What we have here is another objective that we have been able to reach results for is the improvement of quality. When we compare here the FEC and the reduction of the DEC when we compare the results of 2012 and '13.

Okay, Maura. This performance of 2013, which has a reduction of 6% in the deck shows the results of investments that have been made in the recent last years in order to improve the operational performance of Cemig. And in these 3.86 hours of power shortage, a significant part comes from what we call the programmed cutoff.

This has always been a reason for arguing on the part of the distributors because those companies that make great volumes of investments with the purpose of improving the system quality, when we do not show to the society the difference, the percentage of the program to the accidental, the power shortages, this is -- goes unnoticed by the society and Cemig has taken, as a parameter, the regulation, especially of -- in Europe, we show that the program outage should be made explicit to the population, because those companies that have a great volume of investments, which is our case, which we have been investing in the distribution system, a considerable volume of resources exactly so we can improve the quality of the service. This is not too clear for society and for consumers. And the program outage, therefore, is the one whereby we have to switch off some lines in order to interfere into the system, in order to promote investment. And the accidental outage, when we see it in time, it's been reduced because of the amount of investments that we have been making in time in our distribution network.

With the employment of new technologies, which are going to give us greater efficiency. Continuing also and talking to about regulation, we received recently the response from the Minister of Mines and Energy about our pledge to renew concessions of the Jaguara hydroelectric plants. Can you tell us a few details about this?

The Ministry for science -- Ministry in Energy respected Aneel's indication about the -- our plea. And we are convinced that our contract guarantees the renewal of the concession of the Jaguara plant and also Miranda as well and Sao Simao. So we, as our Director, our Legal Director, says, we are very aware of the rights that we have and the entitlement that we have to these plants.

Dr. Maria Celeste our legal Director is already seeing to it that the next steps are taken so that we're going to contest the decision of the Minister of Mines and Energy about this concession contract of Jaguara. Our conviction, as Dr. Maura has said, is that we have a right because of the concession contract which we obtained. And this discussion about Jaguara is going to go over to Sao Simao and Miranda but Jaguara is already naturally going to be in anticipation of the discussion of the merit corresponding to the other 2 plants. Now moving forward, then we now talk about sustainability, because sustainability, for us, besides being a commitment, a cultural commitment of Cemig itself, Cemig traditionally is a renewable energy company, but today we have included the concept of sustainability in our decision-making processes. All -- every decision that is made about investments is made in terms of socially responsible investments we have as a principle to ensure to the next generations the resources that we use today so that all of our decisions, actually, fall under this principle, whether to preserve the economic financial results, respect the environment and also to meet the demands of the community which we serve. This is why we can present a slide with a very significant number and especially a very weighty indices of recognition on the part of the market of our sustainability policies. So we reiterate our commitment of socially responsible investments and respect to the environment and to meet not only the community but also our stockholders. That's -- the first part was more strategic and which we thought would be interesting to talk about. Now from now on, we're going to talk about the results of the first quarter 2013. This -- as announced today, they have been very positive, and I'm going to ask Antonio Carlos Vélez to talk about the 15% growth in our net revenues. A 15% revenue in our net revenues is not the normal one. What can you tell us about this, Vélez? Antônio Carlos Vélez Braga: Well, Dr. Rolla, as you have said, the growth of our net revenues have been very robust. But as we unfold, as we actually go about looking at them, we have several reasons for them. First of all, I would highlight the increase of spot energy sold at CCE, which led to the increase of revenues around BRL 540 million as compared to the first quarter last year. This revenue increase came because of the volume of energy liquidated at CCE during the first quarter was smaller than last year, because last year we had a great amount of secondary energy, which, as we know, did not take place this first quarter because hydrology did not allow it. But exactly for the same reason, the price for the liquidation of the energy and the spot price was much higher than last year. Therefore, so the average price of PLD the first quarter 2012 was around BRL 66 last year, this year was BRL 330. So the amount of energy was not as great as last year's, but the price was very high. Even then, the amount of energy was also a benefit because of seasonality, as the seasonality, as the energy was very expensive especially in the first quarter. We allocated energy privileging the allocation in the first quarter in order to maintain a longer position because of the high price. Important to highlight that this long position for Cemig GT remains throughout the year. It's not in the same proportions that we had in the first quarter, but Cemig has a favorable position in the rest of the year.

About that, the average PLD that is forecast for the rest of the year is much higher than the value that initially was considered. In the first quarter, we had reached 320 and naturally, with the changes that were introduced by the National Council of Energy Planning, we're going to have there maybe a greater impact on the price, which is going to benefit us because of the additional exposure that we have to the PLD. Antônio Carlos Vélez Braga: Exactly. This position is going to be even more benefited because the price is going to be very interesting. And talking a little bit more about the revenue, we had a reduction in the consumption by final consumers, but which somehow contributed to the increase of the supply and other revenues. I'm going to explain why. What happened is, because of our sales strategy, as we have been publicizing in our annual meeting for some time, for some years, our generators, Cemig GT, besides selling its own energy, also sells energy. It sells it in 2 ways, it sells it by purchasing energy and then reselling it, which in our demonstration, our results appears as a revenue from the sales of energy but it has its counterpart in the purchase. But also, we sell by having a contract directly with the generator -- with the customer and then we have a commission. As we have been commenting for some years, our policy is to try to sell this energy directly to the consumer because in such a way we can improve our margins. This has led to the fact that some of the contracts this year have already been passed over to our Cemig trading companies. So it doesn't appear here as a sales of energy, but it is -- it contributes to other revenues.

Thank you, Dr. Vélez. The next slide, we talk about the operational costs. As you know we have a program of operational efficiency which is very aggressive in the sense of obtaining efficiency gains in our operational area of the assets that we operate. This is true for all of the business portfolio of Cemig, not only for Cemig GT, but Cemig D and also Light, Taesa and other assets where -- which we are responsible for. Now these costs have been like reduced recently. Our concern in parallel with the investments that are made, which have given us also a very good return as you were able to see in the previous slides. But this cost reduction shows the engagement, the involvement of our staff so as to make our operation much more efficient. One of the responsible -- one of the things responsible for cost control is Dr. George Magalhaes, who has been practically the leader in the analysis of this cost. So I'm going to ask Leo to make an evaluation of the results, which we have obtained in the first quarter.

Good afternoon, Dr. Rolla, the participants of this video call. In spite of having presented an increase of cost of approximately BRL 150 million relative to the same period last year, when we make a detailed analysis of such costs, we perceive that those costs would have an increase in this first quarter 2013, with purchased energy in the case of distributor is passed over to the tariff and in case of the Cemig GT, this cost increase with purchased energy has to do with the revenue because it has to do with market growth. And in order to supply to the market, we'll have to buy additional energy, but with beneficial effect we've been able to sell this energy. Another cost that increased was fuel but it has to do with the generation of our [indiscernible] thermal plant, which is also positive effect in the net because it increases our revenue. And lastly, our program of redundancy, which had a significant reduction. These employees, which are going to be resigning until the month of June, we're going to have a reduction in the payroll. So the net effect of this redundancy program is going to be around BRL 60 million. We commented in the previous presentation, the fourth quarter of 2012, this is not going to be relevant, it was going to be lower than BRL 100 million. So we are now showing a figure that is quite lower than that. It's BRL 60 million of net effect this year after the reduction of -- in the payroll throughout that time. Also worth talking about is the outsourcing, which are costs that are controllable by the company, the highest ones, which even if without making the comparison updated by the inflation of that as of last year, we were able to present a reduction. Dr. Rolla has been talking about this cost reduction and the opportunities that we have to communicate with investors. We have talked about these programs of efficient management that the company has been developing internally, and we understand that the results that we have been presenting now in this semester converge with the communication presenting an improvement of efficiency in our operational results.

Leo, last year in our meeting with investors and analysts, we had made a commitment to reduce about BRL 200 million in 2013. Do you think that with the initiatives to reduce costs, especially this one, to reduce personnel costs, we're going to reach this goal?

Dr. Rolla, I think that the last results that we've been presenting relative to cost reduction and the company's commitments, especially distribution to become more efficient within its tariff review process in accordance with the regulation landmarks and the efficiency challenge that was published to us, we understand that we are on the correct track. All of our actions and our planning has been made within this line of becoming more efficient to be able to deliver the results that we promised to our investors and stockholders.

Thank you, Leo. Moving forward in our presentation, we have a profile of our consolidated debt. The debt of Cemig, the consolidated Cemig, reached BRL 9.8 billion. Now remember, Leo, that we have been applying here IFRS 11, which makes it slightly different from our usual practice. Until then, could you talk a little bit about this?

Yes. Actually, the first quarter as Cemig has interest in other companies in which control is done jointly, our balance sheet has a great reduction on the debt presented because we do not consolidated debt, especially at Light and Taesa and the TBE companies, so our consolidated debt which in the last year was approximately BRL 15 billion, it was reduced to BRL 9.8 billion the -- that presented in our balance sheet. Use of this opportunity, we understand this is a demand of the market, the presentation of such information of the previous criterion so as to allow for comparability for the market, so the adjustments are made in the market is slightly more used to the new -- having a new standards of accounting. We understand that up until next week, we're going to make more information available to the market about the consolidated data and performing too with the previous criterion so as to allow for better comparison. At any rate, we're going to say that the company when managing its debt, it had a reduction of its debt profile even if we had used the criterion that we used to use until the last quarter to consolidate totally all the debts.

May I suggest that we're going to present in our annual meeting, which is going to take place by the end of the month exactly this vision of the debt as compared to what we're presenting. And certainly we can do this in our annual meeting, which leads us naturally to reiterating invitation, Dr. Vélez, to the analysts and investors that may -- that can come to our event, registration is open already? Antônio Carlos Vélez Braga: We will have our annual meeting in Uberlandia. It's going to be from the 26th to the 28th this year -- this month. On the Sunday, 26th, we're going to have the opening ceremony with a dinner and the presentation of our Chairman of the Board, Dr. Dorothea Werneck. Next morning, we're going to have a round table with all the directors, talking about our strategies and their initiatives and what takes their time, what takes up their time and what are actually they are focusing upon. It's going to be very interesting. And during the afternoon, we're going to have some technical presentations, we're going to have a presentation of the management of interest and participation, another one about tariff reviews, one presentation about natural gas. And additionally, we're going to have the traditional presentations of the energy balance and our financial projectors and -- our projections and our guidance. On the next day, we're going to have a technical visit to the hydroelectric plant of Nova Ponte which is close to Uberlandia, It's going to be an interesting one. And finally, after 12, we're going to have lunch and those who have to go back home, they will be free to go. This is going to be a very interesting event.

Now let us go back to the deck slide. It is interesting panel. In order to analyze as you can will see. If you compare the debt profile that is in the first chart on the left top, which is quite different from the past, this difference has its raison d'etre which were the strategic management of the debt. Dr. Paulo Eduardo Guimaraes is the superintendent of the financial management, and he's the person today responsible for the implementation of the strategy to manage the debt. And so I'm going to ask him to make a few comments about the slide. Paulo Eduardo Pereira Guimarães: Thank you. Good afternoon to all. Dr. Rolla has mentioned the important point in our policies, which is to elongate the profile of our debt. This debt, today, is at the level of 4 years as a mean time and our purpose is to make it even longer. And this has been made with the operations that we have been making in the capital market. We've been offering investors the opportunity to invest in a great quality, credit quality asset with the long time -- in the long-term comparable with the expectation of returns versus institutional investors. I remind you again, we talked to you about this last meeting and it's worth talking about this. The IPO of Cemig distribution in the beginning of this year, it was debentures. We always offer a series in CDI in order to meet the demand of banks and assets and also an IPCA series to meet the demand of the other institutional investors, especially pension funds. We have done this for Cemig GT last year and Cemig D this year. We always place a third series with a longer-term read in the market here that so as to be able to elongate the debt. But in Cemig GT, last year, the longest series which were the third one was able to get a demand, a very significant demand, which was where we allocated most of the volume of the operation. This year, in a mission of Cemig D, we had more than twice the number of offer, and so we had a very great interest on the part of investors by IPCA series which were 8 years and 12 years. So Dr. Rolla, our objective to elongate the profile of the debt is very coherent with our last missions. Our effort to make the capital market more active with more liquidity is exactly aiming at obtaining smaller costs and longer terms which we have already gotten with the cost of 5.3%, the weighted average cost of capital. You see that the strategy that Cemig has adopted has pleased the investors, especially the debt investors, as you can see, that our management aims at guaranteeing, given the credit quality, which is quite superior, so that the investors have a total trust when they buy our papers. Today, our debt is around 36%, which places us in a very, very comfortable position and proceeding our growth and investments, seeking the opportunities so that the results such as the one for the first quarter 2013 is a sequence, a growing sequence and a normal sequence in our results. Okay. Let us move on in our next slide. We have now the results of Cemig GT. Cemig GT had a very positive result. We had an EBITDA around almost BRL 900 million in the first quarter, which also a very significant growth when it comes to comparing with 2012, already coming from factors which we have talked about. The income also showed exceptional growth, reaching almost BRL 500 million net revenue because of the recognition of the revenues of the seasonality in the first quarter. As talked about by Vélez, we had an extremely positive result. Therefore, our GT proceeds showing coherent results, with its philosophy of action aiming at cost reductions, improving its efficiency. And especially, with the management of sales of this capacity, that is one of the most competitive in the electric industry in Brazil. In the next slide, we have the GT debt profile, and this GT debt profile has a very interesting feature, because it is already the result of the policy that Paulo Eduardo has described. We still have due this year around BRL 840 million, which results in a very comfortable percentage. When we compare it to the cash generation, BRL 800 billion debt is not actually a significant debt, as you can see. But this debt decreases up until 2015, and it's not for no reason that it is like that. We have our strategies, our contingency plan, to meet all the requirements that are going to be demanded of us, when we renew the concessions. We are already with the debt profile which is very optimized. But it is a result that pleases us. Dr. Paulo? Paulo Eduardo Pereira Guimarães: Yes, exactly. This result shows us the great capacity that the company has to pay the debt. I'd like to highlight, if you allow me, the movement -- an important movement of our debt, which is the migration to a greater participation of the IPCA component in our debt profile. At each admission of debentures that we make as we have CDI and PCA series, we are gradually going to increase the percentage that IPCA component has in the debt profile, which is in alignment with the remuneration of ours which is connected to the inflation rate.

And naturally, linked to the fact that we are looking for in the secondary market for our debentures, which is a very, very relevant factor for us to obtain longer terms for our debt and longer times for our debt so that -- because our projects are in terms of long maturation projects. Paulo Eduardo Pereira Guimarães: Now the admission of GT last year was the first one in the fixed income market, which was the initiative to make the debentures a little more liquid, so the contraction of a market farmer to create a secondary market, the beginning of a secondary market. And we believe that with this active market, we need to have a greater base of investors and a greater demand for our papers so that we can have longer times and lower costs.

So this naturally gives us extremely favorable condition to use our Cemig GT as a growth vehicle that is to aim for new opportunities, not only to enlarge installed capacity through acquisitions, but also the construction of new capacities. In spite of the fact that this year, we are going to have the effect of the transfer of TBE to Taesa, we are already in the final stages of conclusion. Cemig GT will naturally, because of IFRS 11, we are not going to have any impact upon our results in the first and the second quarter. But from the point of view of management, this is going to bring about greater liquidity to Cemig GT and TBE, it's Taesa for H, and this is going to allow our H to have more resources without the need to act through Cemig GT. But at any rate, we have one of the pillars of our growth, which is exactly the financial capacity of our GT. Let us change gears a little bit and move onto Cemig D. Cemig D, which also had very positive results and which this year we had an impact, the regulation impact, which was quite significant. We had all this discussion about the price of energy in the short term. This discussion, which has been permeating everything since the end of last year, the concerns about the impact that this additional energy cost is going to have about the distributors. We had a decree, a law that allowed part of the cost to be absorbed by federal funds through CDE and these funds naturally resulted not in additional revenues for Cemig of BRL 750 million. Dr. Maura do you have any comments about that?

As I said, the BRL 750 million represents around BRL 400 million relative to the parcel of the thermals and the energy and charges and the remainder resources coming from subsidies and tariffs that were built in. And so that the government obtained the 20% as promised to reduce the cost for the final customer. They remove the subsidy and now it comes through the CDE.

In spite of that, we had this reduction of 20%. The tariff last February and the correction now of April is not still reflecting in the first quarter. But we have already had a revenue increase of approximately BRL 140 million in our revenues coming from the application of this law, this decree. The sales volume and the volume of electricity remains -- rose also ahead of the growth in the consumption. In the next slide, we had the debt -- the profile of our distributor. This debt profile also reflects the application of the strategy that we adopted for Cemig GT. We're trying to lengthen the profile of our distributor's debt. Remember, Dr. Paulo has talked about the debentures that we launched into the market last March. The deal has brought strong benefits to our distributor because of the cost obtained was much competitive, and, naturally, it is going to give this -- cause this lengthening of the debt. After 2020, we are going to have a significant volume of debts that are due, and this places our distributor in a very favorable condition and the payment -- the paying off this debt. Of course, we intend to keep the debt around 50% to 60%, which is a percentage of the regulation capital. We are trying to optimize that. Our -- the net debt over EBITDA of BRL 3,000 is going to be significantly reduced in the upcoming years, but it already inserts the distributor within a market, the debt market, which is quite positive, right, Dr. Paulo? Paulo Eduardo Pereira Guimarães: Yes. I think that proof of that is that -- the great demand that we had in the book building when we issued Cemig D debentures. The demand was twice the value of the book, also allowed for the efficiency of the book building to occur, reducing the interest rates to below the ceiling rate, but also allowing us to create an additional batch of debentures because we intended to capture BRL 1,600,000,000 and we actually captured 200 -- BRL 2,660,000,000. So this was the role, 2 promissory notes, which we had issued last year, with the purpose of being refinanced. With the debentures, they totaled BRL 1,200,000,000, and the remaining resources are going to be given over to the investments program of Cemig D. And these resources came at a very timely time when the cash flow of the company was being pressured by the increase of the purchase energy. This allowed us then to have some comfort for the cash flow of Cemig D throughout this year 2013.

And naturally, this leads us to the slide of the cash flow, which is the one that all of us would like to talk about. The cash, which is a slide which shows very robust cash in the standards of IFRS to be in reals. When we add the short and mid term, we reached BRL 2,740,000,000. This shows the ability that the company has to generate cash and the capacity and the ability to continue financing its own growth. With great efficiency and maintaining its indicators within those limits as required by our bylaws, we have a great investment program in the next years, and this investment program naturally is being revisited because of the regulatory changes. And when we have our meeting, we're going to show what the investment is, what is the investment program that. We're going to be applying in the next years, but it's never excessive and such a beautiful slide such as this one of the cash generation of Cemig. In closing our presentation, I'm going to give you just a few more figures. In terms of Cemig, we have total assets there around BRL 30.8 billion, stockholders' equity BRL 12 billion, with a consolidated revenue very significant and a market value naturally quite modest, BRL 20 billion. We understand that with the results that we have continuously presented to the market, we would have certainly a better performance, but we understand the market's reasons. The market is subjected to fluctuations and oscillations and the perceptions about, not only regulatory matters, but also economic issues. And, therefore, we are patient enough in order to be able to wait for the market recognition vis-à-vis our market value. I'm going to close this presentation right now, and at this time -- and open the floor for our question-and-answer time.

[Operator Instructions] We have a first question from Sergio Tamashiro from [indiscernible]. Sergio Tamashiro - Itaú Corretora de Valores S.A., Research Division: First, I would like to congratulate your initiative to publicize this financial data in a consolidated way, remembering that all the type of help to the investors and the community of the analysts that they work easier is always welcome. And now we have practically 3 different accounting procedures, the old one, we use the CVA. And then the -- we have this IFRS without CVA, which was not -- it was an aberration, and this new one, which does not consider consolidation. So if you publicize this financial data and also the EBITDA about the old procedure helps a lot. First question is about Jaguara. It was said that the Sao Simao and Jaguara, it was due August 2013, but they have different dates. But the question is, during this period of litigation in which you're going to file this administration process, what are you going to do in terms of revenues? Are you going to charge at the current prices? Or are you and ANEEL working in terms of the operation as like the 2 [indiscernible] plant of CSB has been going through? And how long should it take? Second question has to do with the concession renewal of the distributor. They've been saying that you're also filing a suit about the recognition of the remuneration basis. And now remembering that this is an asset that is going to be due in July 2015 and how valid is going into such a long time dispute when you have the renewal of consolidation. They come in with a total different rule and say, "We're going to open asset base now at the concession renewal." And all of this litigation is going to close.

Thank you, Sergio, for the question, especially for your initial words of praise to our commitment, which is always to bring information to the market in the most transparent way so that everyone is able to make their investment decisions about, not only our stock, but also our -- the papers that we put on the market. So this is a commitment that we have made and we have repeatedly reaffirmed to the financial market. It's for no other reason that our financial results have been for 10 years already among the most transparent ones in Brazil, and we're going to continue finding ways to inform more and more and more deeply in cases necessary to find the further clarification of any doubt as is the case of the consolidation, for example. Now about Jaguara, we naturally adopted a contingency plan for Jaguara. We took the Jaguara capacity of our portfolio, and in its place, we put many contracts of capacity that were acquired last year. By doing that, we meet every requirement of our contracts of supply without any problem. So we had even the benefit of the acquisition also because of other issues such as GSE, but we already have the solution for the Jaguara issue. Naturally, we're going to file a suit. We're going to try and defend our own right. And as long as we are responsible for the Jaguara operation, we are going to liquidate Jaguara in the building markets. So naturally, this is going to give us some compensation for the margin loss in the acquisition on the capacity that we mentioned. So by means of that, the result of our Cemig GT is not going to have any impact. Now -- to suffer any impact. Now as for the distributor, naturally, there are still pending the renewal of the distributor. We have already manifested to the federal government our intention to renew the contract under the conditions naturally that are going to be established by the federal government. Such conditions seem to us are going to be -- it seems to us are going to be very similar to the present ones with very little actual change. But once we have just gone through a process of tariff review, of course, that some things may change. We have heard rumors in the market that there could be a revision of the asset base. So we have no fear about that. The result of the third tariff review shows that we have maybe more to withstand, more to gain with this opening of the base than be questioned by ANEEL as a function of the investments that we have already made and as a function of the fact that we had things that, naturally, we consider that in the eyes of today, we would have a greater benefit in this evaluation. So this does not frighten us. On the contrary, it actually gives us more enthusiasm to discuss with ANEEL some issues that remain pending from previous reviews. Now when it comes to the work reduction, we don't need to have a new contract in order to reduce the weighted average cost of capital. It has already been done, so I believe that today, the view of our regulators is slightly more pragmatic because of the need to attract investment to the sector, to the industry. Several other industries are already negotiating returns a little higher than the ones previously mentioned by the federal government. So I believe that given the strategic position of our distribution as a whole, the government is going to be more lenient, it's going to allow similar returns to the ones we have obtained during the third tariff review are maintained. Do you have any additional comment? Would you -- I think that I have answered all your questions. Sergio Tamashiro - Itaú Corretora de Valores S.A., Research Division: Just a follow-up. When the contract to replance Jaguara, how long is it? And does that extend to Sao Simao and Miranda? And another question, just to understand, in the redundancy program of BRL 155 million that came in the first quarter, what is the potential of cost reduction in the mid-term?

We have 2 questions then. The last one about our resignation, voluntary resignation program. Our redundancy program, I'm going to ask Leo to talk about this.

This year, it was BRL 145 million, because the BRL 10 million, which was from the previous plan, which was in effect until the beginning of this bill plan. The net effect of the redundancy plan -- some people are leaving in April, others in May and June. The net effect is going to be approximately BRL 60 million because we had a provision of BRL 145 million, but there's going to be a reduction in the payroll because of the reduction of the -- because of the resignation of those employees around BRL 90 million. Therefore, it's going to have a net effect of approximately BRL 60 million. But next year, 2014, we're going to say that about 100,000 employees leaving will mean a reduction in the payroll of approximately BRL 140 million. Of course, the company is coming through. This is already going -- undergoing this process for a long time. Other employees are going to come in because of public selection processes that the company has offered. But the cost of the new employees is much smaller than the senior employees that are leaving the company. So the tendency is to have more and more efficiency and to reduce this cost vis-à-vis the reduction of the revenue of the company or our present result structure.

Worth remembering also that in previous years, we made many agreements with our employees, the elimination of some benefits, which the new employees, the incoming employees, are not entitled to. So this makes for further reduction of cost. It's not as though we are not stimulating the new employees that are coming in because they're going to be part of a visional remuneration, variable remuneration, which is quite modern and based upon performance. And we are now trying to fix benefits, for benefits, which will depend upon performance, which is going to lead us to an extremely -- to a performance which is much better than we had before. Now as for your first remark, the Jaguara issues sold on the basis of the strategy that I've mentioned to you. And -- but we can say the same thing for Miranda and Sao Simao. We are going to preliminarily make acquisitions of capacity, which is able to replace the capacity that is going to be under dispute, that we're going to have -- we have many plans that are being commissioned going into operation. We have not only wind farms that we made an agreement, remember, with Renova to acquire significant amounts of capacity, which is going to go into effect in the upcoming years. Likewise, the plants that we are building, Santo Antônio and Belo Monte are also going to add significant values for the cash generation in the future, in the short future. So this making up for it is being made. So in case this dispute is prolonged for a long time, we are able to replace the luster of our contracts with our -- the balance of our contracts at very competitive costs.

[Operator Instructions] We have a question from Vinicius Canheu of Crédit Suisse. Vinicius Canheu - Crédit Suisse AG, Research Division: Have to do with the CDE accounting and distribution. You received a compensation for last year's expenses, but you also received the reimbursement vis-à-vis the difference in the past tariff review. Now in the result of this quarter, can you identify some compensation for this past result or this is already being recognized in the first quarter how much it was?

Can you, Leo, say something?

Well, as has been talked about by Dr. Morais and Dr. Rolla, our tariff review, if we did not have the CDE cover fund, it would be approximately 6%, but it was 3% because 3% of the addressment which corresponded approximately to BRL 400 million. Instead of receiving this in the tariff, we received that all at once in a single lump by the conceding power through the CDE fund. Out of the BRL 650 million, we have BRL 300 more million, which are relative to the value that we are monthly receiving from the CDE. So this is approximately BRL 100 million per month in the CDE fund. We understand that this value should be maintained at this level. Even higher than this, we understand that the strategy is going to be received monthly, thus reducing the expense with the purchase of energy and also reducing the value of our CVA stock, which should be calculated next tariff review of the company. So it was received just a single time, and the other values of the CDE, which are BRL 100 million, which are going to be received from January on every month this value reducing our purchased energy. Vinicius Canheu - Crédit Suisse AG, Research Division: Just the figures that are shown here. If we try to look the result of the distributor in the first quarter with the CVA adjustment, as other companies showed, even Light showed it very clearly, do you have any idea how much of this readjustment would be and the result of Cemig distribution?

Vinicius, unfortunately, we have not been able to understand your question. Can you... Vinicius Canheu - Crédit Suisse AG, Research Division: The point is, distribution companies and your shareholders in your results of Light also did that. You show how much it would be, the CVA readjustment to the results. Just to have an idea, what were the recurrent results in the evolution of the quarter? As if we could recognize the regulatory liability, what was this effect upon the results of the distributor in the first quarter?

If I understood you, Vinicius, your comment was, what would be the effect of CVA over the first quarter if it had been registered in accounting? The information is like the debt. We can also -- during the event with the analysts and investors, we can't talk about this. I don't know if Dr. Rolla agrees...

Exactly, Leo. Just adding a little bit more. I think that your concern is to know whether these results that we had in the first quarter is repeatable in upcoming quarters. I think your concern boils down to this. And, of course, we have this benefit of the recognition -- the immediate recognition of a volume of revenues, which would be received in the next 12 months, which was the CVA balance from December. Now this December balance from January on, we also received that because of the CDE. But we have not had an impact -- a significant impact upon the results, which restricts, say, the non-recurrence to the values of CVA, finalize CVA at the end of last year. The fact is that we still have -- due to the seasonality of the results of our distributor, we have means to minimally maintain the results of the distributor within this level. Because of some other actions that Leo mentioned, the cost reduction there relative to personnel, that's a result of the first quarter. If on the one hand there was a CVA, on the other hand, there was a big -- the bid, which made up for it. So in the next -- in the upcoming quarters, we'll have the benefit of the reduction of personnel in order to capture, and we do not have the impact of CVA. But at any rate, the results should be quite similar as a function of the other initiatives that we have adopted in the operational improvement of our distributor.

We'll have a question from Felipe Leal, Merrill Lynch.

When do you expect to close the transfer of TBE to Taesa now that there was the approval of ANEEL? What was your -- and please remind us what is the impact that this should have upon the results when it does happen?

Probably, our schedule until the end of the month, we should be concluding all of the necessary approvals by our creditors. BNDES has already signaled positively. Yesterday, the other creditors are going to fill up at the end of the month. Until the end of the month, we should be finishing this transaction. So it has a cash impact, which is going to be very positive because of the value of the transaction. And the impact on the result, we're going to, again, offer you an estimate. Leo, can you do this by now?

Well, as Dr. Rolla has commented, the greater impact is upon our cash. Now the result is just not that great because we've been talking about the results of the company correspondent to our interest in Taesa. So it is somewhere around BRL 100 million, maybe slightly more than that, but nothing very significant, which is going to alter the results of the company for the beginning of the year.

We have better things in order to add such as more revenue coming from the sales strategies that we have adopted very successfully in the last years.

Ladies and gentlemen, now -- we will now close the question-and-answer session. I would like to give the floor to Dr. Luiz Fernando Rolla for his final remarks. Dr. Luiz Fernando Rolla, please proceed.

Very well. I would like to reiterate our invitation to you, ladies and gentlemen, to come to our meeting, annual meeting. It is -- we're looking forward to it because of the topics that we're going to cover with you, ladies and gentlemen. We have our guidance, which also is going to naturally, effectually remake all of our calculations, the calculations we have made thus far, because of the new scenario, of the new regulation situation, the new growth prospects. And this is going to be a very interesting discussion with you all. And we would like to count on your presence there so that this discussion is a very profitable one and can result in a very clear understanding of the strategy that Cemig is going to adopt for the upcoming years in order to give sustainability to its growth. We would like to close this -- the web conference by thanking my fellows here of a daily struggle and you, for having given your time to this conference call, which has been for 1.5 hours, in a time which we try to give you the most that we could so you could understand our results. Thank you very much. Have a good afternoon.

The video webcast of the results of Cemig is now closed. Thank you for your participation. Have a good afternoon.