Energy of Minas Gerais Co (CIG) 2008 Q1 法說會逐字稿

(interpreted) Good morning everyone. We begin the video webcast of the results of the first quarter 2008 with the presence of Djalma Bastos de Morais, CEO of this company, and Luiz Fernando Rolla, Chief Financial Officer. (OPERATOR INSTRUCTIONS)

I now give the floor to Dr. Djalma Bastos de Morais for his initial remarks.

(interpreted) Good morning ladies and gentlemen. It is a great pleasure to be together with you all here today. We're going to have an essentially technical presentation of our results. We are expecting better participation in two events we're going to have with you in Araxa after the auction where we think we're going to be successful.

And I would like to share our results with you, which are going to be shown by Dr. Rolla, expressive results for this company. And inform you of the absence of [Augustinio] here replaced by [Dr. Verus] because of [Augustinio] in his travellings he actually was affected by dengue.

So our company, as I have told you, is going to show expressive profit vis-a-vis the first quarter last year. And, as you are well aware, we have been trying to restructure internally, so as to improve our efficiency. And certainly we're going to have very good results beginning next year.

I ask your leave because it is an essentially technical presentation of results. I ask leave to leave, but I'll be at your entire disposal here at this company or anywhere else so that we can better clarify our actions. And we are at any time at your service.

So I would like to give the floor to Dr. Rolla and ask leave to go, but I am entirely at your service. Thank you very much.

(interpreted) Dr. Djalma, we are going to make a presentation that naturally is going to be restricted to an analysis of the results; the results that we have published yesterday. And this balance sheet was extremely positive in our view, because it reflects some factors that we have sought in a very intense manner in recent years.

We have tried to implement an investment discipline that is quite strong, and improvement of operational efficiency that aims at reducing our operational costs in a vigorous manner. A trade policy that gives value more and more of the assets that we have and therefore that give us our revenues. And besides that to maximize such results through other actions which will add value for our stockholders.

We had in the first quarter 2008 a profit of R$490 million which represents a growth by 20% relative to the first quarter 2007, which is a 20% growth. In what has to do with the EBITDA we had an expressive number of R$1,088 million, also compared to the same period a growth of 22% in our EBITDA. We already are in the fourth consecutive quarter with EBITDA figures over R$1 million and this performance results from the growth factors that I have just mentioned before.

We've had some more results, exceptional highlights in the first quarter and the retrospective is very positive in all. We had the signature of our partnership contract with the important national groups so as to study the feasibility of enterprises. Both wind and water, our enterprises that reach the capacity of 1,500 megawatts which are facing the need of new enterprises for Brazil in the next years, so in the short term is very strategically important.

On the other hand we have been trying to capture the growth trends in the prices of power. And we all know that there is a growing trend for energy prices in the next few years. And we have been trying to anticipate, as best as we can, the capture of such a trend aligned with the partnership policy, long-term policy, with selected customers.

So we have been seeking customers that add value to our assets. And such customers are signing long-term contracts, at very compensating prices for CEMIG. But on the other hand, we've been providing trustability to those customers that overcomes, or surpasses, what is being offered, in general, by the market. This has been recognized by our customers. And we have recently announced two contracts, very significant, with large national groups, thus showing the correctness of our trade policy.

We also had establishment of the tariff revision of our distributing company in last April 8. And the result that we have obtained was consistent with the projections that we made before the results were, in our view, very much aligned with the company's strategy. The results that you will see in the next quarters are going to show this very clearly. We have the conviction. We are convinced that, given the circumstances of tariff revision, we have obtained a result that is going to please our shareholders certainly.

We acquired, also within our investment policy, two more transmission companies, two small companies, that are located in the southern part of this country; companies that were acquired through TBE, which is our transmission company that we have purchased two years ago in partnership with some other investors, which is [inserted] within the context of the use of the cash existent in that company.

The return there was very attractive, that we obtained. And we made up very positive return on investment which is going to give, without any doubt, an even bigger growth in the future of our transmission company, our TBE company.

The same partnerships that we established in TBE have been kept in the presentation that you have available. In the appendix you have four extra slides with the detailed information about such acquisitions in such a way that you're going to see that that is really true about the attractive return and the optimization of resources from these investment vehicles that we have acquired.

We are looking for, as our CEO has remarked, operational efficiency that is even higher. We had a very positive growth, as I mentioned at the beginning, of our EBITDA, reflecting such operational efficiency.

But we are still not satisfied; there are still opportunities to reduce cost. And we're seeking, through a process optimization, some measures that are going to be put together into a plan to be implemented in the short term that is going to result in terms of even bigger benefits for the next quarters. We have been seeking also the optimization of non-operational costs such as the investment programs, also within the regulation logic, bringing additional benefits to the company.

This month of May, at the beginning of this month we commissioned our new billing system. It is a customary management system with a SAP platform that is going to also give some gains in the next months. It's a very great improvement of our billing processes and revenue collection and even accounting of our revenues, which is going to allow for a more nimble and quicker and flexible process. And this is going to redound not only is cost reduction, but also revenue gains.

Another important topic that was the object of discussion in the first quarter which is the generation concessions. In the slide there you have all of the most relevant facts in terms of our concessions. We had some concessions that were renewed end of last year that is. And we are speeding up the signature of the new term of the contracts, addition to the contracts, around 1,800 megawatts of capacity that were headed by the Emborcacao plant in Nova Ponte; three more hydro electric plants. This is an important thing, because we had a renewal for more 20 years, or 20 years more we'll have this concession, guaranteed until 2025.

A controversy came about about some other plants such as Sao Simao which is our largest generation plant of 1,700 megawatts, if by chance, the date due coinciding with 2015 would be the second renewal. Actually it is the first renewal. We are still entitled to another 20 year renewal; in accordance to the contract we had a guaranteed second renewal. Therefore we are very at ease vis-a-vis such aspects.

These renewals are going to take place in an automatic manner, in such a way that we have no risk that such concessions would be considered renewed. Such concessions that were renewed in 1995, therefore are due in 2015, entitled to a second renewal, go up to 6,000 megawatts, less than 10% of our installed capacity. But we strongly believe, in accordance with our contract, that we are entitled to a second renewal.

The investment program is also a highlight. Unfortunately in the first quarter we could not accomplish a significant parcel of this investment program. We realized less than R$100 million. It is an initial process in this investment program. But the investment program, we are still going to realize most of it in the next three quarters, so that we can fulfill the budget that we forecast for 2008, R$1.5 billion.

As couldn't be otherwise, we also have some investments that we've been making in the environmental and social area. These two programs, that you see on slide number nine, are initiatives that are extremely positive because they preserve, not only the river fauna, where we have our plants, therefore guaranteeing not only quality of water, but also the preservation of the water sources.

The Conviver project is a social project aiming at benefiting some low income consumers with donations of domestic equipment that besides bringing them the social benefit also brings the benefit of a more rational consumption of electric power.

In slide number ten, you have there our actually statement headed by the net income. As I mentioned in the beginning, this net income has reached R$490 million. We're going to analyze each one of these figures, the most important ones. And I expect that by means of this analysis, you have all of the information that you need in order to decide about the quality of the figures that we're presenting to you now.

Let us begin with the net income. Net income; you should skip to slide number 11 and you can see the construction of such a net profit. You notice that we had an increase of a net income of more than R$453 million, with a lesser growth of our operational expense. And this made this operational profit increase by more than 20%, thus reaching R$490 million, a growth that resulted exactly from the growth factors that I mentioned at the beginning.

Moving on to slide number 12, you can see that this profit was more or less within the average, above maybe the average of the market, which is R$462 million. The minimum projection was R$372 million. We reached R$490 million, therefore well above the minimum; we did not reach the maximum to R$569 million. We have to study with the analysts the reason why they have projected such a high value. At any rate, the profit that we presented was above average and above the medium, therefore we understand that it meets the expectations from the market.

The economic growth or the profit also grew substantially in the first quarter. In the last 12 months, we have reached R$510 million. The economic profit as compared to 2007, we had R$436 million. Therefore it is a substantial growth, as you can see. Our profitability has increased impressively with the reduction of our weighted cost of capital, leaving 13.6% 2005 reaching the first quarter, 2008 only 10.9%.

Then the return on invested capital reaches 14%, which is the highest value in the period. Therefore, we had an increase in profitability in this period, which is there represented by the economic profit with 3.1%. And this is a very expressive result.

The profit by company. As you can see, the distributing company reaches 50% of the total profit, our generator and transmitter reaching 38%, Light gave a contribution of 2% and TBE 1%, the remainder reaching 100%. Therefore it is important to clarify that the distributing company gave the biggest contribution, 50%. It is an extremely relevant fact because we went through the tariff revision and that is the one responsible for 50% of the profit. As you can well see, within the regulatory logic we had an exceptional result with the growth of this profit, over 50%, which is very expressive results as well.

And now, with the new revision, we're going to undergo a process of restructuring in such a way that we're going to start from a lower level. But at the end of the period, we will be reaching the profitability in the quarters with the regulatory logic.

[AGT], which is generation and transmission, CEMIG GT, had 17% growth, also very positive. This growth comes from the higher medium price of average price of the sales of this company. It gives a very strong support to growth because it is also responsible for 38% of the net profit. Therefore it is quite solid growth that is going to contribute to the maintenance of the good foundations that the company has for the next quarters.

RME, we had a reduction by 25%, more as a result of the exercise by the BNDES, the National Development Bank, of the convertible debentures. Therefore, we had a participation reduction, a stock reduction in RME, therefore, it justifies this 25% decrease. All the other companies had a very positive performance, well on line with what we had projected for them.

In what refers to distribution, [to justify] this 50% growth in our profit, we had an increase of revenues that was quite strong as well, going over the operational expenses increase, which resulted in this 50% increase in our profits.

[AGT] we had also an increase of its revenues as justification for the profit growth, R$206 million, followed very closely by operational expenses increase by R$26 million. But this is not enough to compensate or to make up for the growth of our earnings.

Going back to our slide number ten, we analyze therefore the net profit. We saw that the profit by company, the growth of each company. Now let's move on now to our participation in the profits, which was provision of R$22 million, more or less a growth that is proportionate to what we expect for the year [2005].

This is as it was established in our social statutes. It's good to make it clear that our social statute establishes some commitments vis-a-vis participation of employees. And this employee participation is going to take place in terms of the approval not only in the Board, but also by our general assembly. Therefore it's going to be done in a very transparent manner.

We are telling you about such aspects because of the concern that some investors had with the negotiation of some gratuities that we had last year with two of our employees. And from now on, to give more transparency to our decisions, we have adopted the inclusion in our statutes of those mechanisms in such a way that we're going to be transparent about such investments.

Going back to slide number ten, what we have here is the income tax. Let us look at the income tax details. Naturally we have an explanation about this. As you can see in slide number 18, the conciliation of our income tax that was effectively paid when the nominal is around R$272 million. We paid R$276 million, a little above the original figure because of some readjustments during the quarter. Therefore it's not going to divert much from the nominal income tax.

Going back to our slide number ten, minority participations are not very relevant in spite of the growth that they have experienced both in terms of profitability growth of the other companies in which we're not majority, but it is a small figure, around R$12 million. Therefore it does not have a dimension that is large enough for us to spend more time mentioning them.

[That is] with that the profits before tax has reached R$886 million, and let's see how this profit was made up. Let us begin with the financial results, also important in spite of having been negative representing a growth 18% actually. It comes much from the currency variation, especially exchange variation in the assets that we have, the regulatory assets, and some other assets such as CRC, which we have included in our sheet.

The financial earnings increased substantially something around 30% as a result of a more robust cash flow that we had in the first quarter. We had a reduction of the loans and financings of R$223 million in the first quarter 2007 to R$195 million, thus reflecting the improvement of the weighted mean cost of capital that I showed a while before. So this financial result is inserted within the context and it has no extraordinary aspects deserving of note. And I mention therefore, they don't demand a further explanation.

The cash that was generated in the quarter was very strong. We added almost R$400 million in our available cash at the end of the quarter. The generation of cash by all operations reached [R$647 million] (sic- see presentation), a little less than 2007 because of more adjustments that were made in the value. We are receiving RTD and part of RTE as well, which has deferred tariff readjustment adding substantial value to our cash.

Financing activities we're still in the initial process. We're going to roll 100% of our debt in accordance with what was previously announced. It's the management policy of our debt, trying to elongate this time due. Therefore the payments of loans and finances reaching R$115 million in the first quarter 2008 are going to be rolled throughout the period.

The investment activity is still low in spite of having required R$150 million from our cash. But at the end of the period, as I said this total R$2,459 million is available not only to pay the dividends, referring to 2007, representing 50% of the net profits of 2007, reaching R$1,743 million. Therefore, half of it is going to be paid with this monies that you have available there.

The remainder is still going to be invested in some other acquisitions. We have several plans to be implemented throughout the year; you are aware of some of them. The first one was the acquisition of [SDC] (inaudible) which was part of this cash that we have been showing you.

Indicators of debt also are extremely positive. As you can see, slide 21 that we are still 70% of our debt indexed and the CDI expect it to capture the lowering trend. We had a reversal of such lowering trend in 2008. It seems that interest rates are going to go up a little, but we believe that with the average that we have been making, we are going still to have the opportunity to reduce the mean cost of such debt, the average cost. As I said, the weighted cost of capital reached 10.8% but we expect, in spite of such a slight reversal of the interest rates here in Brazil, to still reduce it even more.

So in the financial indicators that we have subscribed with our financers are practically within the volume and the dimension that are required. We have no concern whatsoever in this quarter and nor throughout the year. And we're not going to have any pressure unless we have an acquisition of a higher value.

The debt profile is elongated. As you see, we only have R$1 billion to roll, which is a small parcel of our debt, less than one seventh of this debt. And the real mean cost is falling substantially every quarter, as you can see in this graph. About the slide, we have a mean cost of 7.4%. This is a very competitive value, especially for us. We'll have a restriction in terms of resource captured in the market and [appropriated] funds and we cannot do it the same facilities as the private companies have.

The Bank of Brazil and the debenturists have almost 50% of the total debt. So we have also [Itau Bank]; we have almost 70% of the debt in the hands of these three large debtors.

Going back to slide number ten. As we have mentioned, the financial results, the operational profit reached R$807 million. Also an extremely positive performance because it represented a growth vis-a-vis the same period last year up by 25%. Non-operational result is not sufficiently significant to spend any time on it, around R$6 million, even though it grew by 2% [and very little too]. But I prefer to focus on the bottom line, where we have the EBITDA and the net operational income and the operational expenses. This is where we built all our profit.

You see that in our EBITDA, we reached R$1,088 million, a growth of 22% where all of our explanations rest vis-a-vis the reaching of this level of profit. Net revenues R$2,755 million, 20% growth, and the operational expense almost R$1,900 million, a growth by 17%, falling short of our operational revenues, allowing EBITDA to grow by 22%.

Let us look at more details in the EBITDA figures. You can see there the construction of the EBITDA based on the net profit reaching R$1,087 million, with the provision of income tax, participation of the employees, non-operational result plus amortization and depreciation reaching R$1,087 million. As a non-recurring item, the recognition of some financial items in this new tariff revision which were recognized the first quarter, they refer to previous periods, R$62 million. If we make for this adjustment, the EBITDA then falls to almost R$1,030 million. Even then, with the growth of 17.7%, vis-a-vis 2007 and therefore very positive performance.

You can see that in the last four quarters that is, we have been keeping a level of cash generation that is quite strong, thus going over R$1 billion in a very consistent solid manner, leading to a cumulative EBITDA reaching R$4,272 million. This is an extremely positive performance, and naturally we have to consider that within the context that we had a revision of the distributor company, thus affecting this performance a little bit.

But comparatively speaking with what we had projected for 2008, R$3,600 million at the lower level and R$3,971 million in the upper limit. This performance shows that we are in a very positive level and we understand that represents exactly the implementation of the long-term strategies that we have adopted so as to maximize results of our assets by adding substantial value to our stockholders.

The EBITDA by company you see there on this page 25, you see that the distributor is responsible for 47%. It's a little less than the profit, the profit was 50%, the EBITDA 47%. The GT company increased its participation in the EBITDA but at any rate, the EBITDA growth of the distributor company was very strong, 47%, resulting from the growth factors.

GT also 19% a reduction of the EBITDA of RME because of the P&S of its convertible debentures, therefore reducing our participation in the Light company. So consolidation was slightly smaller therefore. But any rate, the results were quite solid, thus showing that the foundations of the company are on a very positive level.

Let us take a look at the operational revenues. Slide number 26, you can see the construction of such net revenues. We had an increase of sales to final consumers quite strong, R$469 million. Also a growth in the transactional CCEE of R$72 million, which represents practically this growth by 20% of the reductions proportional to the growth of the previous revenues. But this is the growth of sales to final consumers as to very healthy number responsible for the growth of our net earnings.

The operational earnings, as you can see you have a better detail there, slide number 27. With the composition by source, that is gross provision or the use of the network and other operational revenues, the composition of it. Most of the revenues come from the supply of energy, which is 85% of the total of the revenues. If you look at it slightly differently, residential consumption is responsible for 32% of the revenues and industrials 25%, rural reached 18.7%. All maintaining a percentage that is quite significant, with a slight reduction on the part of the residential customer.

The use of the network, TUSD, represents [62%] (sic- see presentation) and the use of the basic network representing 32%, giving a very precise diagnosis of where the revenues come from and what is the growth that we have been getting.

In terms of consolidated sales we had a slight decrease as compared to the first quarter 2007, because we had a small contribution of the Light company. The very nice summer in Rio de Janeiro reduced the consumption of power in the [Light Air] concession area, thus reducing the volume of sales there. We sold in the first quarter 13,800 gigawatts hour, as compared to 14,000 gigawatts hour in the first quarter last year. So it was quite a random situation that made about this reduction, but it's not had any reflection on our revenues, as you can see.

The more detailed diagnosis of our sales, you can see slide number 29, total energy sales to final customers was very positive. If you look only at the final customers, we had a growth of almost 6%, therefore, very positive. The supplies have a slightly negative variation as a result of the exercise of contract flexibility on the part of some free customers, and also the reduction of the availability of power to be sold on the spot market. Therefore, this reduced the growth, but for the final customers the growth was quite vigorous, thus reaching almost 6%, which is the most important value to focus on in terms of the revenue.

The net revenues per company, as you can see, the distributor is responsible for 57%, on slide number 30. There was a growth of 27% and the generator with 24% of the total revenue, had a growth of 16%. Therefore the two companies that are the locomotives, as it were, of our Group are having an extremely positive performance, 27% of growth.

And 16% in GT; RME had this impact of revenue reduction because of sales reduction. At any rate, we had substantial growth of net earnings in the most important companies. In what refers to GT, as you can see, you have the makeup of the net earnings, 16% up, with the sales to free customers going up to R$80 million and the supply and the transactions of CCEE in spite of the lesser volume, but the price was substantially higher.

You remember that the PLD had a very big growth and therefore the revenues increased by R$46 million, which allows us to reach this growth in the net income of the generator company by 16%, which makes the average of sales per megawatt hours reaching almost R$90 per megawatt hour, which is an extremely positive value.

The growth of GT sales. GT has no substantial variation in terms of volumes because we have a capacity that is practically fixed, unless we build or we acquire more additional capacity, and this figure will not grow. The variation that you see is the generation above the insured energy, which gives a few opportunities for business, which happened in the year 2007 and has not happened in 2008 because of the high prices on the spot market.

The detailing of the GT sales, as you can see, most of the parcels is industrial customers having a substantial increase 2008 because of the exercise that I mentioned before. The supply also grew through the [CCAR] contracts that are getting into effect now in 2008 and a reduction of contracts with trading companies at 11%, which are very short-term contracts. And as a result of the high price of the spot market, we had this reduction of the volume, but not reflected upon the revenues, because of the high prices.

With that, we had a generation of productivity and transmission productivity quite strong. As you can see the indicators there, we are at an extremely positive level, some of them in positive growth, showing that the actions that we've been implementing, vis-a-vis the increase of our operation efficiency, have resulted very positively in the net earnings per employee increased substantially. The EBITDA per employee also increased and the net profit per employee also increased. Installed capacity per employee had practically a stable volume.

The distributor also had a growth in earnings quite substantial, around 27%, and this makeup is there on page 35, additional R$417 million, because of the sales to final customers. The volume of sales increased by 6%, somewhere around a very positive to what us, aligned with the 5% tariff increase in April 2007. Thus giving us the growth of the revenues resulting in an increase of 27% of the net earnings.

Sales of the distributor company are showed on page 36. As you can see, sales growth to the captive market has a very steady growth as compared to 2007. But it has a seasonality; the first quarter is the weakest one of all in our area of concession in spite of the fact that Light is the opposite, it is the strongest quarter. But here in Minas Gerais this is the weakest of all.

But at any rate, compared with 2007, we had a substantial growth in the distributor sales. And the productivity of the distributor company has kept the same rhythm as the generator company, growing indicators that are quite expressive especially in what has [to] with the net earnings per employee, EBITDA per employee and profit for employee especially in these aspects, the profit per employee, we had a growth of [50]% (sic - see presentation).

The kilometer of line per employee; in the case of the distributor there was a small increase almost [instability] but it contributed to the increase of productivity. The distributor went through a tariff revision; we have to take this into account when we project the results for the next quarters.

In spite of the results that we understand as being very positive, the margin of the regulatory EBITDA reached 21%, which is well above the previous tariff revision with the total coverage of losses. Therefore, not giving us any additional onus, therefore any additional difficulties. Liabilities 17% a year for the next years, which implies a lesser risk than the previous revision.

And this because the market projection of the previous revision was over this 3.17%. X Factor, also was quite reasonable 0.84%. This is a figure that meets the expectations of the company, therefore, also is going to contribute to improve our performance in the next years. Therefore, with that we can include some financial items that are positively impacting EBITDA in the first quarter and are still going to have an impact on some others in the next quarters.

Another topic that is relevant to the distributor company, which is the exposure to spot market prices of PLD in the first quarter. Because of the high price of the PLD we had this exposure because there was a reduction in the Itaipu quota and the non-realization of the investments. And so in the supply structure of the distributor company we counted on the replacement of these two items, especially Itaipu quota, which did not happen because of several factors.

Fortunately it does not affect our profitability, because such involuntary purchases are accounted for at CVA and they move on to the tariff at the adequate time. So we have been able to achieve a tariff coverage for this exposure region that is of R$101 per megawatt hour for the next 12 months. So this is going to allow us to mitigate this transfer to the CVA, which does not have any economic impact, but there is a cash impact. But at any rate we should not have any impact in terms of our results.

Going back to page ten, let's analyze operational expense and we move on to page 40 that way on page 40 we'll have a perfect diagnosis of our operational expenses. As you can see, it had a growth of 17%, well short of our revenue growth, showing a productivity gain in the quarter. The detail of this growth, we had R$169 million of non-controllable expenses representing 61% of this growth. The controlled expenses grew by R$107 million, representing 39%.

So the breakdown of this non-controllable expenses shows that most of the growth of the non-controllable expenses came from purchased energy, higher prices of power, which our companies started to acquire, thus reflected on the non-controlled expenses.

The controllable expenses; we had a growth, which is natural, of the number of customers and the number of network kilometer lines that we have added to our distribution [part]. And personnel increased by 45% in the first quarter because of the little realization on the investment program we had a transfer to construction that is ongoing. Ongoing construction we had almost half of what (inaudible) last year. But as we take up again investment program this figure is going to go back to normal and expenses of personnel are going back to previously planned for 2008.

In the next slide, 41, you have the details of operational expenses, non-controllable and controlled, by quarter. In the first one on the left in the comparison with previous quarters it remains constant without any significant variation. Controllable expenses, as I said, the largest item is the personnel item reaching 32%. There is a percentage reduction in these expenses. It left the level of 35% in 2007 and now 32% in [2006] in spite of the slight increase as compared to 2007. But this showing that the actions that we have implemented vis-a-vis personnel are producing their effects, therefore, personnel has been reducing substantially.

Non-controllable expenses, we had a growing volume of energy purchases also as a function of the growing price of power, as I commented before. Therefore, this is the trend for the next quarters. Going back to page 10 we have completed the itemized analysis of the results.

I'd like only to close this presentation to comment with y'all about the next events that we're going to have. Those are extremely important to us. So we're now publicizing our results today, but we have program for the 19th you have the Jirau plant auction, which is an extremely important investment for us, which is going to result in the achievement of that highest strategy of going into the Amazon region.

Next day we're going to have a conference call we had promised the market in order to clarify all the aspects relative to the Santo Antonio plant. All of these two investments follow our investment policy, as highlighted by our CEO, offering a very attractive return besides the strategic aspects that we have already talked about. So on the 20th we are going to publicize very transparently what led us to make decisions to participate in the Santo Antonio plant.

In the Jirau plant auction we're going to have the same mechanism. We're going to participate in the auction in a minority way and we're going to have some time to decide whether we will stay in investment or not for the future.

At the end of the month we have our annual meeting; it is extremely important to us. We are going to present several items to you, including our projections for the next years to adjust the projections that we have publicized. Naturally, we expect to see all of you within the limitations of available places.

In the month of June we have some important conferences and some other events, the Merrill Lynch conference, Credit Suisse in Dubai and the transmission lines auction on the 27th, also an opportunity for very good investment. We are going to participate together with TBE, which is our investment vehicle, the most effective one in transmission lines. In spite that GT CEMIG is also going to participate in some of the batches that we think are most attractive together with TBE. We also should have another roadshow organized by Morgan Stanley in Europe and the USA at the end of the month of June.

Our Araxa meeting, which is traditional, it's the 13th meeting with analysts and investors. We're repeating naturally the location, Araxa. It is a resort of the best quality; the facilities are very nice and adequate for this type of event.

We're going to have a very dense program. We're going to make a presentation in round tables with all the main executives of the company showing strategically what is being proposed for the next years in terms of the improvements. I think it's going to be very interesting to the investors to become aware of the measures that we're taking. Those that cannot go because of the limitations of spaces and places we're going to have a webcast so that everyone may have access to such information in a very clear, transparent manner.

So we should have at least eight to ten hour webcast so that investors that cannot come [up] personally will have access to the very same information as the ones that will be present physically there. And as a highlight we should visit one of the CEMIG plants, always very attractive to get to know the generation assets, which shows how we go about making energy and the way we operate those plants and, in our view, in a very efficient way.

At the end of the day we're going to update our economic financial projections, our guidance for the next five years in such a way that everyone will be able to see the impact, especially of the tariff revisions. We anticipate that we are not announcing any radical change in our projection. Simply we update premises and very likely are going to be in line with the previous projections, except for such premises that are going to suffer any change.

So these were the slides that we had prepared to present to you. If by any chance we have not exhausted all the questions I place myself at your disposal to clarify any type of doubts that you might have about the topics that we have touched upon. Thank you very much.

(interpreted) We will now begin the question and answer session. (OPERATOR INSTRUCTIONS) Our first question comes from Eduardo Haiama from UBS Pactual.

(interpreted) Good morning, everyone. Basically I would like to have two questions about generation. First one having to do with the Jirau auction on the 19th; whether [was] having the auction and CEMIG deciding or not to participate. Let's say that the consortium wins, if you would be publicizing all the information, both in terms of investments, financial aspects, long term price premises, both for Santo Antonio and Jirau or whether such information will still be kept confidential? That's the first question.

The second question is still having to do with generation. Having in mind those relevant contracts that were signed [both LNG] and long term, is the strategy of the company, if we can imagine the company negotiating more contracts and what kinds of price levels can we think in terms of for these contracts?

(interpreted) Thank you, Eduardo, for the questions. Let us begin with the easiest one, which is the Jirau. Jirau, as I said, it's in our investment policy so we're going to participate in Jirau if it meets the requirements of our own investment program with an adequate return as prescribed by our Board. As we have also some time after the auction to say whether we move on with the project or not, we cannot say anything in the Santo Antonio conference call the Jirau figures.

We're going to publicize the Santo Antonio ones, as promised, in this conference call. The Santo Antonio figures will all be commented on with you but Jirau, however, because of the closeness of the auction and because of the mechanism of approval, we'll have to submit it to our Board for approval. We cannot publicize the data, but you can rest assured that as soon as our Board approves the figures will be adequately published.

In what concerns contracts, we have a sales policy approved by our Board which aims at maximizing results of our generating company. We are looking for the capture of all the trends of highest prices for generation and therefore add value for our stockholders. The contracts those [Usiminar] (inaudible) contracts meet such requirements, together with the fact that we also have as policy to serve selective customers; those are unquestionably good customers.

The volumes of sales that we're selling to those customers is very large, which gives us [billionaire] contracts. In the case of [Votora Cincos] over R$10 billion producing a positive effect in the company. We are ensuring a cash flow and revenues for the next years practically without any risk at all, given the credit quality of those companies. So it is a contract that meets some additional requirements such as, for example, in the case of [Votoratim] we are serving other localities outside of the state of Minas Gerais, therefore inside the south eastern/mid-western region. We're going to serve other states where we have not been present before. So they meet our strategy to become a nationwide company, and therefore I'd say that it does exactly what we had forecast and planned for this environment of competition given by the regulation that was implemented in 2003.

(interpreted) Okay, thank you very much.

(interpreted) Our next question comes from [Marcelo Gannem] from [META].

(interpreted) Good afternoon. I would like to clarify here about the revenue growth of CEMIG D, which was quite high. We saw two explaining factors for this growth; the 5% tariff and the growth of the market. I'd like to understand what are the other main factors that led to this 27% growth.

(interpreted) Some additional factors that contributed a better profile of the customers. They began to consume in a more effective manner, especially residential ones. The residential revenue growth was quite strong, practically moved up in terms of classes from the ones that have any discount to classes that have no discount. So they begin to contribute more.

But effectively the growth of revenues comes from a larger volume. And associated with these other factors, the 5% tariff increase and the reclassification of customers [there].

(interpreted) Our next question comes from Mr. [Bruno Pascone] from Citigroup.

(interpreted) This is Felipe Mattar, that is. Good morning or good afternoon, Luiz. Two questions, first having to do with the distribution and then another one in CEMIG generation. In CEMIG D you had non-billed revenues around R$100 million. And if you look at the last quarters in the last two years this average revenues could be around R$15 million, R$16 million. And some quarters there was quite negative revenues with a reverse of the non-billed. So I'd like to understand what happened with the non-billing, if there was any change of classification, what was the reason for this accountantship of the R$100 million and is that recurring for the next quarters or not?

Second, in the low income [divisions] there was something similar. What we see in the last two or three years is that the subsidies for low income begin in the first quarter around R$15 million, R$20 million and they gradually go up to R$40 million. This year the subsidies began in the first quarter around R$40 million. To the detriment of what happened what can we expect for that?

And in terms of generation I'd like to have a more strategic view whether the objectives of return of CEMIG are going to be changed in the next few months because of the fact that Brazil has received the investment degree or whether we can expect return investments similar to what has happened to Jirau where you [happen] is around 12%? Thank you very much.

(interpreted) Let us begin with generation, the easiest one, of course. The return that we have been getting is a function of the weighted cost of capital which is influenced by those macroeconomic factors. Therefore especially reduction of the Brazilian risk because of the new ranking for the investment degree that Brazil has received is going to have a positive effect. As you saw in my presentation that mean a weighed cost of capital, the nominal one has been reduced substantially in the last years and the tendency is to reduce it more.

Naturally, our main weighted cost of capital is going to be positively reduced on the one hand, but our objectives always are to add value. Therefore, our returns will only follow the weighted cost of capital, the WACC, therefore, adding value to our company. As you saw, the economic profit that we've been adding comes from this issue. So we are looking for the reflection of such strategy in our investment.

As for the distributor revenue, Felipe, the non-billed comes from a calculation methodology that is, it is an estimate of that volume of power that was delivered to the customer, which has not been billed. And there is a seasonal influence not only of volume increase, as was the case of this year we had an increase of 6% of energy volume, but also price. So the price did not receive an influence. There's going to be an influence in the second quarter, but it comes from this methodology. This is a very simple calculation, therefore the main factors are those.

And what has to do with subsidies, and last year ANEEL questioned or challenged the volume of subsidies that were passed over to the customers. And now in the first quarter we're taking up or going back to the normalcy of such a flow. It's very likely the next years we're going to have a figure that is quite similar to the one that was published for the first quarter. Therefore, you can consider that as the average of the year. Naturally these resources are best by ANEEL; according to ANEEL criteria it's all regulated. Therefore, we should not have any big surprises in the next quarters. Okay?

(interpreted) About the non-billed please. Again if you look at the quarters last year in the CEMIG distribution the non-billed was negative R$10 million the first quarter, negative R$24 million, positive R$16 million in the third quarter and positive R$21 million and closed the year with R$5 million. I'd like to have more sensitivity of what I can consider as recurrence of this? To me it was not quite clear. What is the best way to estimate this?

(interpreted) The calculation methodology is inducive to this variation. What non-billed volume means, it's a volume of power that we estimate that was delivered to the customer in a certain month. And given the process of the [reading] process it had not been billed yet so we estimate a certain volume of power. In the next month we have the same estimate, but we compare it with the previous month. Therefore, if by any chance the previous month is higher we have a negative impact on the non-billed. If by any chance the volume of the next month is superior we have a positive impact.

So this comparison, this collation is what shows the impact. We cannot ensure beforehand for the next quarter what is going to happen because, if by chance there is a smaller number of days in April as compared to May, for example, you're going to have a smaller volume of non-billed in April and a higher one in May, thus yielding an impact caused by this difference.

Therefore, unfortunately we cannot anticipate what is going to happen, Felipe. We more or less have to keep an eye on the number of billed days in a month, taking into account especially the number of holidays which are given. And in the first quarter it was quite big. We had actually Carnival; we had the Holy Week and some other large holidays thus reducing the number of billable days. So this is what we can tell you.

Now we can also, if you still have any other doubt, prepare a small text explaining the figures that we obtain and then we can publish that through our Q&A session. Okay?

(interpreted) Thank you very much.

(interpreted) Our next question comes from [Batisto Carr] from (technical difficulty).

(interpreted) Good afternoon. My question has to do with the difference between the operational cash flow and the net earnings. The operational cash flow fell by 13%, net earnings increased by 20%. The differences along the line called other adjustments increased by R$200 million. Can you help me conciliate this difference between the operational cash flow and the net earnings?

(interpreted) Welcome on your return to teleconferences. Such adjustments naturally are made through the variation of both of our current assets and liabilities. Therefore we calculate it by difference, therefore we maybe should -- I don't have the precise information available to me to give you the specific figures that we've presented. But on the explanatory notes in (inaudible) we have a little more openness justifying this variation. You can look and see what item that really provided for this readjustment higher in 2008 than '07.

But this short-term variation both in liabilities and assets probably either it is a provision of payable taxes or dividends that may have brought a negative readjustment in the first quarter 2008 which had no corresponding 2007 and/or the 2007 was smaller. But in our explanatory notes there's a cash flow table that you see on page 20, it's slightly more detailed, especially with the variation of the liabilities and the current assets in larger numbers, circulating that is. Very probably non-cash, non-cash.

(interpreted) The main ones, what were the non-cash main ones?

(interpreted) In this aspect we had several non-cash items. For example, monetary correction of RTE. We still have a parcel of receivable [CVE] and some other regulatory assets that have a monetary variation linked with the [CLIC]. As we had a [CLIC] increase we should have higher monetary correction as recognized in our liabilities; therefore both in the liability and our circulating assets.

(interpreted) Thank you.

(interpreted) Our next question comes from Mr. [Eduardo Consiar] from [Itau] Brokers.

(interpreted) Good afternoon [Luiz Fernando]. My question has to do with CEMIG distribution. You began your call talking about the internal restructuring and results should appear next year. I'd like to have an idea about the manageable expenses that you have. What can we expect from now on in terms of our manageable expenses?

(interpreted) Thank you for your question, Eduardo. We announced since our last conference call that we've been hiring a consultancy firm that was going to help us reevaluate our operational processes, and this consultancy has begun its work since last January. And we are in the process of identifying and comparing the performance of the several processes not only of our distributor, but also the other companies that we manage. And this consultancy company is going to present the first results in the next quarters.

I believe that by the end of the second quarter we should have an initial proposition of a few measures, immediate measures to reduce costs and later on a macro plan where all the measures that are going to be proposed so as to make the performance of our companies approximate the performances of successful global companies. So very probably we should have, let's say, outlined all the gains in the next quarters. And I believe that the implementation of this plan and the results reflected on [RDRs] should come about in the next quarter, in the second semester, or the beginning of the next year. But we've been doing the best that we can so that immediate gains can be reflected in the next quarters.

(interpreted) One more question then. The investment came around R$100 million, well below R$1.5 billion that was predicted. Is the plan still the same? Are you going to make up for it in the next quarters?

(interpreted) No doubt, we have no intention to revise the investment program. What happened was the initial process [of tie up] all the actions coming from the approval of the investment program. In the first quarter normally there is a small execution, but we intend to make up for it in the second and third quarters so that we're going to fulfill the established goal, the goal that was established by our Board.

(interpreted) Thank you very much.

(interpreted) Our next question comes from Mr. Marcio Prado from Santander.

(interpreted) Good morning, everyone. Two questions, first one in terms of generation; there are several, actually. The first is, I'd like for you to talk about the consortium that competed with you to generate the auction that you conducted three days before, whether you considered the strategy, decided not to move on or decided [for going] about it or whether it was an idea that you had not analyzed?

In terms of generation I'd like to have a clarification. You talked about concessions and the due dates of concessions. I'd like to ask generally if there is any impediment for you to sell power linked to concessions that are going to the second date due in 2015, if there is any kind of impediment to sign contracts with this type of power?

Also generation, quickly talk about your expansion policy in what seems in a very renewable, some eolic wind energy contracts and any hydroelectric plants. Let's talk about thermal plants, which is the focus on renewable power and what you've been thinking?

Only two comments about the results quickly. First, personnel you said increased relative to the first quarter last year, you explained, but how about costs relative to pension funds? I'd like to understand that, if that had to do with [IGT], for example, or if it's just a revision of the funds actuarial table?

(interpreted) Okay, Marcio, let us try to follow the [sequency] that you posited; a question of generation first, of Jirau. Each competitor in an auction process has their own strategy. The strategy that (inaudible) has taken up meets their needs. Very probably they want beforehand to ensure at least a parcel of the installed capacity to be sold to the free market, doing that beforehand at a price that they can estimate and which will contribute to determine in a more precise manner the return on it. It's a strategy we understand that could be beneficial to them.

However, our strategy is diverse. We had announced previously that the participation in Jirau was dependent upon the Santo Antonio participation as a result of the benefits that could be obtainable in the Santo Antonio participation. So we have a slightly different strategy then, the [Tractebel] strategy. But given the circumstances that they find themselves in, this was their best strategy. But in our case, it's a little depreciated because we have as a premise the participation in Santo Antonio. Therefore our view is different. At any rate, it is a very interesting strategy.

As for the concessions, every contract that we have signed are connected to the generation sources, so the concession concept have to have this, the ballast as it were. And all of the countries are connected to the existence of concessions, therefore we cannot sign any contract that does not have such a ballast.

Therefore all of the contracts, the long-term contracts, for example the [Votoratim] one are linked to plants for which we have concessions. Therefore we'll have no problem vis-a-vis this foundation.

As the contracts are due and purchase and sales contracts are due, we will make readjustments so as always to provide the real ballast for these contracts that are being signed. We have no doubt that all of the contracts that we are signing are covered by such guarantees.

And what has to do with hydroelectric and renewable energy, these are some opportunities that arise. I wouldn't say that they are an investment that on their own are attractive; they're always associated with some subsidies. And as a result of these subsidies, they are made feasible. Therefore we're trying to find within this context to enjoy the opportunities that we may come to have. So the hydroelectric and renewable energy are feasible only within this context.

The generation growth, the strategy is hydraulic hydro plants, especially the ones that are being bidded by the federal government. And in parallel, we cannot fail to pursue such opportunities in the short term. We have the hydroelectric plants and, second, renewable energies.

As for personnel, it's really the reason because of the growth was the non-capitalization of the expenses in the investment program because of small investments. This is going to be corrected in the next quarters as the investment program takes off.

Now as for (inaudible) the pension fund, this increase had to do with the change of actuarial parameters. When those actuarial parameters change, we have to readjust our commitments to the pension funds. Therefore we had this increase of expenses in the first quarter. Therefore this is an action that is not dependent upon the management of the company, it comes simply from some actuarial calculation. And about that, therefore this level of R$60 million per quarter should be considered that regard certainly yes.

(interpreted) One last about the results. What was the line of the net earnings that you had positive impact of the 2006 and [2005] the tariff revision. I saw there was a question about the non-billed provision. To me, where did you actually itemize that and what line was that included there in your statement that could be one of the explanations?

(interpreted) The non-billed is the gross supply. When you make the EBITDA adjustments you had a tariff revision, the financial component referring to previous years 2006 and [2005], which it impacted up on the net earnings. So some line of the R$62 million that must be included there somewhere, which that's why the EBITDA goes from R$1.87 billion to R$1.29 billion. Also appears in the gross supply because the tariff was included in spite of being a financial component, it's a tariff re-composition, therefore this comes through the tariff increase. And that is reported there in the gross supply of power to final customers.

Probably then you have the non-billed growth, so I imagine that this did contribute to a higher value on non-billed supply.

(interpreted) Thank you very much.

Our next question comes from Mr. (inaudible) with Nevsky. (inaudible) your line is open.

(interpreted) Let's move onto -- we have no more questions. We have a question that was submitted through the e-mail by Mr. (inaudible) from Banco Brazil Investment Bank.

The question is -- good afternoon everyone, congratulations on the results you're presenting. A brief report please on the present situation of CRC, the account of compensating results because of the restructure of receivables. About this value, how is this question moving on from the point of cash flow in terms of economic results and the level of debt of the company?

The CRC issue, all remember, we had an addition to the contract that the state of Minas Gerais with guarantees of dividends. So that now this contract has a guarantee for its total time, which is 30 years of dividend guarantees that we pay to the state of Minas Gerais. And on the basis of this contract, we prepared a FIDC, which is a fund to make up for compensation receivables and we recognize that is debt because we guarantee a return of this contract.

At any rate we have been receiving continuously the CRC through the state's dividends that we're paying off every year and this can be seen on the bonus that we gave last April. This bonus comes from the inclusion of the principal paid by the state of Minas Gerais in this CRC agreement, therefore showing that the contract has been paid without any problem.

The company's debt had already been affected by that because the [CVM], the commission of stock values has decided that this is part of the exploratory note of [RDRs]. Accompanied debt therefore already considered in the financial indicators. Therefore we have no specific variation because of this FIDC contract. Therefore this is a subject that we considered as solved, which during the years is going to be paid established in the contract and the contract, which is a ten year contract, is going to be amortized in this period. Therefore we have no additional remark to make about this.

Well --

Excuse me, we have a question from Mr. (inaudible) with Nevsky. (Inaudible) your line is open.

Hello?

Sir you can go ahead.

(interpreted) Hello. Your line is available.

Can you hear me?

(interpreted) Yes.

Could the translator also talk because I can't hear you? I can only hear the translator.

Okay my question is, of the employee bonus, I think last quarter you stated that the long run average was about 4% to 5% of EBITDA. In the first quarter it was only R$22 million. Is this a recurring number?

The second question is on the Jirau plant. I think you said that you would be able to disclose the Jirau details the day after the bid. I don't see what difference it makes whether it's been approved or not by the Board. I don't see the problem of investors and the Board looking at the same numbers ahead of the decision. So has there been a change of policy there?

And lastly in the generation segment, what was the impact of the high spot prices in the market? What percentage of your volumes or of your assured energy were you able to sell at those high spot prices? So do you expect your average selling price in generation to be slightly lower in the second quarter now that spot prices have eased back?

(interpreted) Well the question asked by Mr. [Harry Coby] first had to do with the personnel expenses. This increase that we had because of the lower transfer of expenses to our assets, whether such an additional expense would be recurrent.

As I said, this expense comes from a smaller realization of the investment program so lesser funds were invested. So as the investment is upgraded and reaches the level that we had programmed for, this personnel expense is going to be reduced because of the larger transfer of capitalization of such expenses by the investment program. Therefore it's not going to be recurrent.

Your second question had to do with generation. Correct me if I'm wrong, [Harry], but whether the price that we obtained in the first quarter came from an excess generation of an ensured power, well the additional revenues actually was due to the extra surplus of energy sold in the first quarter.

What I said was that in the first quarter 2007, we had a surplus generation to the ensured capacity in the first quarter 2008, such volume was much lower than the one we obtained in 2007. The generation capacity in the first quarter was reached, but not the surplus, hence lower volume of sales that we obtained.

But the price of power in the first quarter 20008 was well above the price of power obtained in 2007, hence again an increase in revenues in spite of the less volume of generation. This explains basically the evolution of generation earnings.

These seem to be the two questions that you asked us. You have an additional question?

Yes. Just to confirm, so the higher price of power was not to do with the high spot prices, it was to do with your underlying contract prices? Is that correct?

And the additional question was on Jirau --

(interpreted) Exactly so. The question is whether the higher price was [not] absorbed by a larger capacity of generation. Exactly because we had less generation of surplus power in the first quarter 2008.

Now as for Jirau, the most important thing, Mr. [Coby], is that we're going to have necessary time for our Board to approve the proposal that we made for Jirau. We can only disclose that after approval by the Board. As soon as the Board approves it, and if we are the winner party of course, we're going to disclose the figures of Jirau.

That's why we're not going to do it immediately after the bid because we would not have enough time to call a Board meeting to obtain the approval and then disclose the figures and publish those figures. But you can rest assured that we're going to disclose those figures in the same way as we promised we would do in terms of Santo Antonio, which we're going to do now on the 20th.

Okay. And my final question is on the distribution side. Looking at the regulatory EBITDA and looking at the reported EBITDA, there is a very large difference in the quarter between the regulatory EBITDA from the old tariff regime and the reported EBITDA. So what factors have been driving that difference? And will those factors still be in place when you move onto the new tariff structure in the second quarter?

(interpreted) The question is what is the difference between the --

The regulatory EBITDA and the reported EBITDA.

(interpreted) The regulatory EBITDA and the one that was reported in the first quarter. The regulatory EBITDA which was approved by ANEEL is good for the next 12 months beginning April. Therefore theoretically it is a figure that ANEEL has calculated as the EBITDA for the next 12 months beginning this month of April or last April. Therefore establishing a tariff that is going to be sufficient to reach that regulatory EBITDA.

Two remarks here. First, it doesn't take into account the efficiency gains that we may have in the next 12 months. Therefore they're not reflected in terms of efficiency gains.

Second is that if the market performs better or worse than predicted in the tariff process, we're going to have a variation there, up or down relative to the regulatory bid. We cannot (inaudible) say what the EBITDA is going to be, that we're going to report in the next quarters. We have to expect our economic projections that we're going to disclose in our event at the end of May. Then we're going to see all the figures, all the trends for the next years.

The comparison with the first quarter cannot be done because we had the first quarter with a tariff that was different from the one that is going to, let's say, preside over the next 12 months. Therefore in accordance to the regulatory logic, we will be at the upper limit of the remuneration for the last quarter of the period, which is the first quarter 2008.

So we can compare EBITDA of this quarter with the regulatory EBITDA, which is the one referring to the beginning of the next cycle. Therefore they're not comparable. But I ask you to be patient. At the end of the month in our event we're going to disclose the updating of our economic projections and then we're going to be able to perceive what is the real impact of the regulatory EBITDA upon the results of our distributor.

Now we can anticipate however that we do not foresee any significant variation vis-a-vis our guidance which was published last year. What is going to happen is an update of premises because in the previous guidance, we had already forecast the tariff revision. Therefore we have no surprises to include there. Okay.

Okay. My very last question is just coming back to the employees; I think it was misunderstood or mistranslated. I'm asking about the profit sharing that comes in below the tax line. Because previously I think this has averaged around 4% to 5% of EBITDA and in this quarter, it was R$22 million versus R$22 million in the first quarter '07. So is this now a stable quarterly number that we can expect on a recurring basis? Or can we expect it to go slightly higher towards the 4%, 5% of EBITDA level?

(interpreted) The question is what is the difference between what was reported in the last quarter vis-a-vis the distribution of profits or dividends among employees, given the results of R$22 million in the first quarter.

The answer is, we cannot compare with last year because last year we had the inclusion of some other negotiations with our employees, whereby we eliminated some of the rights that the companies had about some bonuses that were not connected to performance. Therefore they are not included in the projection for 2008.

Therefore we still have to approve in our Board and the stockholder assembly what the criteria are and what are the volumes to be distributed to the employees. It's going to be an entirely different process from what took place last year because our statutes today demand the approval not only by the Board, but also by the stockholders' assembly. Therefore it's going to take place in a very transparent, clear manner for all stakeholders in this company.

We cannot anticipate whether this provision is going to be definitive or not. It will depend upon the performance of the results that we obtain until the end of the year. This figure that you see as the participation in the profits is only an estimate that we placed there so that we can anticipate some volume in our budget. But as I said, such participation in the profits is dependent upon the Company's performance. And as a function of such a performance it may vary. Okay?

Okay. And finally, looking at the technical notes from the tariff revision, the note for factoring in a 5% year-on-year growth in distribution volumes to 40.2 terawatt hours in 2008 and this compares to a year-on-year growth rate in the first quarter of just 2.5%. So, so far are you seeing volumes on the distribution side growing at below the regulatory estimate for this year? I know that aggregate compound growth it was 3.5%, but for this year are you expecting the distribution volumes are going at a lower rate than in the technical notes of the tariff setting procedure?

(interpreted) In fact, the expectation is to fulfill exactly that which had been negotiated with ANEEL. I did not translate the question. The question has to do with the tariff revision. The tariff revision presents a market growth of 3.17% comparatively to what happened in the first quarter. According to Mr. [Coby's] calculations we had a performance below this value that was predicted by the tariff revision.

But in fact, what we're talking about this market growth excludes supply. Therefore we're talking about sales to final consumers, that is sales to final consumers as I said reached almost 6%, therefore slightly over 3.17%. But at any rate what was negotiated with ANEEL was the better perception of market growth for the next five years and which is this average of 3.17%. We estimate that this is going to be the performance of sales growth of the distributor segment in the next few years. Therefore the risk of having a performance below the 3.17% is quite low.

In the same way, to have a performance superior to this 3.17% is not as big as that either, unless the Brazilian GNP grows more speedily in the next years. But this is an estimate that we think is fitting and adequate, and we showed it to ANEEL and this is what we expect to reach in the next five years. Okay?

Okay. Thank you very much indeed. Thank you.

(interpreted) Thank you.

(interpreted) So we'll now close the webcast of the results of the first quarter 2008. We thank you all for your participation. We reaffirm our availability to clarify any doubts that you might still have. Thank you very much and good afternoon.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.