Energy of Minas Gerais Co (CIG) 2011 Q4 法說會逐字稿

Good afternoon, everyone. I am Antonio Carlos Velez Braga, Superintendent of Investor Relations of CEMIG. So we begin now the video webcast for 2011 with the presence of Djalma Bastos de Morais, CEO of CEMIG, and Luiz Fernando Rolla, CFO of our company. The webcast can be followed on the phone 55-11-4688-6341 and also on the Internet at our website, http://ri.CEMIG.com.br. Out site also has available a PDF presentation for those who have difficulty accessing the dynamic presentation.

We now give the floor to our CEO to begin the presentation.

Good afternoon, ladies and gentlemen. Once again, it is a pleasure to talk to you about our results and we continue delivering very good results. Our net revenues had a 14% increase, our net income, 7% and our EBITDA, 18%.

Our profit reflects success in implementation of the guidelines of the master plan, the increase of operational efficiency in CEMIG, and the strategy of growth and solidity leads to this record net revenue. And the 2011 EBITDA actually outperformed market expectations and is in line with our guidance.

Our sustainability continues being a permanent commitment in our management and our company and we are for the twelfth consecutive year in the Dow Jones World Sustainability Index, the only Latin American electricity company in this index since it began, included in the BM&F Bovespa Corporate Sustainability Index for the seventh consecutive year, CEMIG considered Prime in its sustainability by Oekom Research also included in the Carbon Efficient Index [seeable] by BM&F for the second consecutive year.

In terms of climatic change, we have a commitment to publicize the 10 climate initiatives and leaders of Brazil Award, Environmental Management Leaders category, given by LIDE, Business Leaders Organization and the Brasil Economico newspaper.

Also, included in the Dow Jones Sustainability Index (technical difficulty) our generation is based on renewable energy sources -- investments in wind and solar energy, small hydro plants, biomass and co-generation, the presence in the largest electric generation in Brazil, Belo Monte, present in the largest hydroelectric generation project at Belo Monte.

And also we started ahead of schedule in the Santo Antonio Hydro Plant, you can observe, 15 days ago. We have approximately two operating turbines for the time being without any problems. Generating units UG1 and UG4, 69,590 kilowatts, a total of 139,180 kilowatts. And then installed in 2011, 6,964.

CEMIG aims for leadership in the transmission sector. The financial solidity and partnerships positions CEMIG as a leader in the quest for growth opportunities. Growth in transmissions shows the CEMIG Group's strategy, the transmission network was more than 10,000 kilometers network, we reached 13% of market share, and permitted revenues, TAESA celebrates a contract for the acquisition in Abengoa and we continue participating in the auctions and new transmission assets.

You are aware that we recently participated in the north of this country. Unfortunately, we had no success, but our rate of commitment is with our stockholders, our shareholders. And our board have defined certain parameters of profitability and we're not going to avoid them or go astray from them.

We're not successful, but we insist and we are right -- we are certain that we are in the right way. Our acquisitions add up to more than 33% in our revenues -- in the total of our revenues. And we are certain that we are actually on the right path. Now we've been starting the restructuring of partnership in our transmission assets and our purpose is to increase operational efficiency and to capture synergies.

Our presence in our country is the third largest transmission group with 10,060 kilometers, aligns net revenue of BRL1.7 billion, present in 19 states in this country and also in Chile. So it is with great pleasure that we are showing our results, our statements. And now, I will give the floor now to Dr. Rolla and he will continue this presentation of our figures. And once again, we are to be congratulated and the Company and also our investors. A very good afternoon to all of you. Thank you.

Thank you, Dr. Djalma, for your introduction to our presentation. It is important to reassert our strategy and the correctness of our strategies, vis-a-vis the growth of the Company in the last years, which resulted actually in this profit increase, as mentioned by our CEO.

We have a long-term plan, a strategy plan, which forecasts growth in several business lines in the Company. This growth has been very solid and accompanied with cash generation that has brought certainly financial strength that makes it possible to finance CEMIG's growth in the next coming years.

As for the profit distribution, we reached also a position of leadership. We are now, with the extension of almost 500,000 kilometers network, we actually serve -- and that really covers not only the state of Minas Gerais but also part of the state of Rio de Janeiro, which takes us to share of total energy facility in this country of CEMIG in 2011 has reached a very representative, a very significant value of this total energy sold.

Our investments, which we have been making -- we have made in this period of 2008 to 2012, this last cycle, a tariff cycle, as you know, we had a tariff revision scheduled for 2013, it has reached almost BRL4 billion. And this is going to bring, not only more quality in the service just to be given to our customers, but also and especially it will bring a little a little more efficiency in terms of costs to our CEMIG distribution.

Very well. Another business line that has been very positive for CEMIG is the distribution of natural gas. As you know, we have a concession of natural gas distribution in Minas Gerais and last year we reached the mark of 1 billion cubic meters supplied in 2011. This has led Gasmig to be a company with a gross revenue around BRL1 billion, which places it among the largest gas distribution companies in Brazil. So we have at present 807 kilometers of natural gas distribution networks and reaching some of the most important regions in our state and also [serving] especially industrial customers.

We have plans to enlarge disconnection to residential customers as well. We are taking the first steps towards this goal. However, we have not -- we do not have enough gas to supply all of this demand. And once this gas is made available to Gasmig, we will be serving much higher demand on the one that is being served at the present.

And now we are looking for an additional supply of gas, especially in the Sao Francisco River basin, where we will have four blocks in partnership with some investors -- local investors. This block will begin now by obtaining in January the environmental licensing to perform a few geological studies so as to enhance our understanding about the seismic properties of the region to see what sites we're going to start drilling. We now are in the process of making this seismic study in two dimensions and we place that as scheduled for the second week of April, 2012.

We have other blocks also in the Reconcavo Basin and the Potiguar Basin. These total investments that we are going to make do not go beyond BRL15 million in 2012, so it is a very small investment, however, it is extremely strategically very important to CEMIG because it's going to give us economy, not only in the distribution of gas in the state of Minas Gerais, but especially in the utilization of gas for generation sources -- thermal generation sources, which places CEMIG on a very competitive level because our gas distribution is located in the southeast, where we have the largest demand for energy in this country. So thus, we repeat, it is becoming extremely important for us from a strategic point of view.

We, as usual, publicized that and we have been implemented on our master plan, our strategic plan, in accordance to the strategies that have been outlined and which lead to a consolidation of the Brazilian electric industry. We have been growing in a very well balanced way the three segments through acquisitions and new businesses. We have several examples, as our CEO has mentioned. We have already made some acquisitions in transmission this year, participated in a few auctions, unfortunately, not successfully.

But it is part of our strategy to grow in our business lines in all the three segments in a well balanced way and produce share participation in our cash flow, 40% generation, 20% transmission, and 40% in the other businesses. Of course, with the growth of the natural gas business, we are going to have a greater importance with that to this business line within this total balance, which will allow us in the short run to rebalance this growth.

However, this will have the main objective to reduce the risk -- the business risk for our shareholders and to produce a cash flow which is quite predictable and stable in the long run. Once our decisions in every project that we carry out are long maturation projects which demand the long-term decisions. So our plan actually requires credit quality and financial solidity in order to make feasible the access to resources and other opportunities as we did in 2011, as we're going to see later on.

We actually procured -- made important [debentures] for the Company within the structure, which is going to make possible to elongate those debts. We'll have a three-and-a-half year duration period, a very short period, which reflects Brazilian local market. And we are now trying, with the recent market situation, we're looking for longer terms. We have been very successful in Cemig GT in all of our growth vehicles are going to start using this structure so as to enhance -- or enlarge and lengthen the time of financing on our projects.

This strategic plan has given us a very respectable growth within the electric sector, giving us a position of leadership in the consolidation. However, in a very well disciplined way and a way that actually might add value for our shareholders, and this is one commitment that we have with our shareholders that is only really taken to term, those projects and acquisitions, which add real value, a very clear value-added and sustainable for our shareholders.

So, as a result of that, these partnerships, with the return they have given us, already reached 33% of consolidated net income in 2011. And naturally, these participations are going to become more and more autonomic, generating resources in the very same proportion that you can see in the 2011 results, which allows us to pay very attractive dividends for our shareholders today.

Last year, we had a payment -- a payout which was of dividends on the part because of these partnerships reaching BRL1.47 billion and the total contribution was a net income around BRL800 million. This shows that the correctness of our strategy, as mentioned by our CEO in the beginning of our presentation, has very positive results for our stockholders in a general manner.

The debt profile needs to be elongated or lengthened. We have a strong concentration in the short-term. All of the transactions that we're going to carry out from now on are going to aim for more elongated time, and this is going to be reflected in this schedule of our debt, which total has a 3.1 years, but we're going -- we're shooting for longer periods as we did for CEMIG GT.

Naturally, we had been trying to reduce the cost of this debt. We have indexed approximately 60% of our debt to CDI because the future prospects of CDI is that of reduction -- of a reduction, and we tend to capture that reduction. This is going to give us a very substantial improvement in our debt indicators especially with the opening of the debt which is going to be naturally reflected upon our net income.

Today, the total debt of CEMIG is somewhere around BRL15 billion, I would say. The total debt in the consolidated group is about BRL15.700 billion with value in foreign currency, which is very small. We think that the exchange of risk is too expensive to be reflected, therefore, we are focusing upon our local market, which has the necessary debt to finance enterprises, as demonstrated in 2011 with the capture of a significant amount by CEMIG and by its affiliated companies in the Company where we have a relevant partnership.

Our indicators are EBITDA over interest give us a very comfortable performance in what has to do with access to the market. All of our debts are classified by the rating agencies around AA or even AAA and by some companies are the net debt over EBITDA is below the limit of [2.5]. We had a growth of our debt -- a total debt growth, which had reached 52% of total capitalization of the Company, but this is a circumstantial situation naturally.

By the end of February, we have fallen -- we had already fallen below the 50% index, which gives us ample condition of a very little leveraged company, which allows us to have a good balance so we can finance our acquisitions and our growth and a long-term as our strategic plan provides.

All of these aspects translate into a value-added -- addition of value for shareholders and a degree of confidence that we have enjoyed in the local market, allowing us to capture resources at a record volume for CEMIG. And one highlights this amount, which was actually gained in [2012], the CEMIG GT debenture issue will begin with BRL1 billion and we ended up by having BRL1.3 billion given the conditions that we've been able to get in the market.

What we did was roll part of the debt due in 2012 to the long-term. As you see, we're going to start paying this debt beyond 2017 because the times go -- the due dates go up to 10 years. So this going to allow us to have a reduction not only in the short-term, but also better cash generation for the Company.

We are now proposing to the shareholder assembly a destination of the -- and allocation of the income. We're talking about BRL2.415 billion and 53% of net income was going to be distributed as dividends, and this is going to give us a BRL1.9 per share. Besides a stock bonus of 25%, which we're going to give as a proposal for the [year] which is going to e when is going to take place in April.

Part of the remaining resources, BRL109 million, are going to be the legal reserve. And BRL1.012 billion is going to be retained in shareholders' equity, and might be the object of an extraordinary dividend distribution in case there is cash availability that is enough to do this -- to pay this additional pay.

The dividend yield of the stocks with the closing price of March the 29th is very attractive. PN was 4.3% and ON, we reached 5.1%. This gives us value generation for our shareholders, considering the valuing of the shares in 2012, around 50% as a whole.

Naturally, this has been reflected upon the stock price. It has reached very uncommon prices we would like to highlight, but all of this growth was based exactly on the results that we are bringing back to our shareholders. These 2011 results were very good because there was a 7% growth vis-a-vis 2010, reaching BRL2.415 billion, as mentioned by our CEO.

We had some credits -- tax credits, which we utilized due to some gains and some old processes. This has resulted in a net improvement of this profit in terms of the 7% financial result, increased a function of the greater debt of the Company, but the operational profit compensated more than enough -- compensated all of this growth of the financial results.

Our EBITDA has reached BRL5.3 billion. It's important to say that it's in line with what had been planned and forecast by the Company. We have no surprise what we obtained with exactly that, which we had planned for, and we have already publicized that by May 2011 in our annual meeting with investors.

Our guidance already showed that CEMIG was already looking for an [EBITDA] of BRL5 billion and BRL5.5 billion. We were a little better than the market expectations, we actually outperformed market expectations as a function of some actions that we have made in 2011, which was the result of the operational gains for the Company.

And naturally, we had very favorable year in what has to do with the revenues with a 14% growth of operational expenses in spite of having grown around 12%, but it did increase less than the revenues. And the revenues, because of the volume of sales -- consolidated volume of sales, had a positive impact and we reached historic value of CEMIG. And we had never reached a position of 70,000 gigawatt hours sold in one year, and this is a record figure for a Company that is a unique Company in Brazil and places us as the largest integrated Company in the electric industry in Brazil.

You see that we had a 6% growth vis-a-vis 2010, which had already been a very good year. But in 2011, we had very good performance, especially based on the fact that our demand grows not only in concession area, but also outside of it. Therefore, we are actually enjoying all of this growth that has practically not only fueled the organic growth coming from the GDP growth, but also the ability to sell -- the selling ability that CEMIG has so as to reach a significant position in the market.

As you can see with good CEMIG GT performance, we had very strong growth of sales -- wholesale, almost 40,000 gigawatts, which gives us a position in the free market which actually goes beyond 25% with practically two-thirds of our contracts are sales to free consumers, which gives us a differential of -- a very strong revenue differential which allowed for very important, major growth in the last year.

CEMIG D sales also had a growth and CEMIG D has an importance -- a very fundamental importance because the growth of residential consumers and commercial consumers, which in 2011 went beyond 5% and 8%, are the strongest growth factors much as a result of the growth of the family income and the household incomes, which generates higher energy consumption by those consumers.

In spite of the fact that our industrial consumption of [Aneel] distributor has been reduced by about 1%, much as a result of the migration of consumers to the free market, and if we took -- we eliminated those effects, the industrial growth would be around 3%, which would already give us the growth of almost 5% total sales, from the total sales.

Of course, we had a reduction of our sales in the CCEE, but this is circumstantial because of the higher exposure that we had in 2010. This year, we had a smaller exposure and this reflected upon general sales, but they did not bring the benefit that the growth brings, of the direct sale to final consumers.

Today, we have residential or practically 15% -- 35% that is of our distribution market, thus reducing the dependence that we had in the past from industrial -- on industrial, which accounts for only 20%. The commercial has also gone to a position of 21%, which naturally as a result of the sales price to those consumers gives us a very good revenue growth. And this change of profile allows us to capture a little of more revenue than the distributor and this reflects upon the growth of the profit of CEMIG D.

Consolidated net income, net revenue increased by 14%, which is very complex to analyze this growth of the net revenue -- of the consolidated net revenue because we are talking about a group of companies. CEMIG today operates somewhere around 120 companies in all, and the revenues of which are -- you see consolidated in this chart, but already reflecting the important factor, which is the growth of final consumers.

The strongest focus on CEMIG, which is the service to the customers and consumers has been responded to in a very strong manner by the growth of the demand from these consumers. And this allows us to say that our business portfolio, well balanced for the business portfolio, has been reflected upon our net revenues -- has reflected the [excellence] of our portfolio in our net revenues.

Of course, trying to make our business lines increase, we sell energy, as you see, but the revenues of transmission and the revenues from gas also reached a record figure, record amounts, which allows us to obtain this 14% growth in the final net revenue, as you can see.

Expenses have also grown in 2012 in spite of the operational efficiency program that we have implemented, which was very successful, reducing costs. You can see here that the great growth of consolidated expenses were in purchased electricity, and this energy is totally passed over to the consumer will have no action on this item. We buy the purchase -- we purchase the energy through the distributor and we actually pass it on to the final consumers.

Therefore, we had, as you see, very good success in all of the other items with a very modest growth of this expense, which shows us that the results are appearing as a result of the measures that we have taken in order to improve the operation of the Company.

This is our EBITDA in detail, by business. This item's extremely important because each one of these segments brings us a different feature for our cash flow. Our greatest piece comes from generation our cash flow today.

As we closed 2011, it's 44% coming from the gas generation and 18% of our transmission. You know that we are looking for a balance of 40% generation, 20% transmission, and this 20% and 40% represents a strategy of predictability of this cash flow in the long-term. We're already reaching these figures, which allows us a cash generation to have a very stable generation and allows us to continue growing in the long-term.

The remaining businesses have reached 38%, including distribution of electricity. Gas, as I've said, is going to take on very significant value in the upcoming years, but we do not still have such a relevant participation of gas in the total picture.

You see in this graph here the growth by company, by business, and the contribution of each business throughout 2011. Beginning with the CEMIG GT, we had an increase of BRL190 million, CEMIG D, BRL436 million and TAESA with a very strong growth of BRL277 million. This had made us reach the BRL5.350 billion, showing the consequence of the strategy that we have repeatedly said is successful, which the figures confirm, as you can all see.

The net profit, the net income had the same behavior with very strong growth in our distributor, especially TAESA. We naturally had some reductions here and there of profits and income due to some random aspects because of the light, for example, which had a weak year because of the lack of the sales of energy as a reduction of the average temperate in Rio.

This is circumstantial, as the climate goes back to its normal parameters, we will have a return of light revenues, and this is going to make our -- its participation more positive because the investments are being made there in light. And they're very important and they're going to give conditions for it to take it up to a performance that is quite close to the benchmarks and distribution not only in Brazil, but also abroad.

All of this portfolio, as I said, results in cash generation. And this cash generation is very strong, which has given us conditions for us to continue investing in very significant amounts, as you can see both in 2011 and 2010. We have actually surpassed the mark of BRL4 billion. The investments -- total investments, which is very significant amount, just shows the willingness of CEMIG to continue growing and especially the confidence that our Company has to continue seeking investments that are going to add value, that are going to add new resources and new cash flows to CEMIG.

You see that the cash flow generated by operations has been very strong and as a result of the strategy -- investment strategy that we made, which has allowed for this growth not only in the net income, but also cash flow, cash generation. And with this cash generation, we have been able to pay growing dividends to our shareholders and even invest record amounts in the expansion of our system.

Maybe this is the best slide that a CFO likes to present because of the robustness of our cash flow. Also, this is another slide that was very pleasing to us because these investments that are being made are going to add significant value in the next years and which ensure also that in the next quarters we are going to see growing numbers there in terms of cash generation for the next upcoming quarters. All of this naturally based upon the strategies and the discipline of making the right and the appropriate choice for CEMIG investments.

We have reached a significant position in several states. You see there in some states not only generation, but also we have customers. I can actually click on each one of the states here that you're going to have good news for our shareholders within our business portfolio, whether in sales or generation or transmission, which today covers, as you saw in the beginning of our presentation, an important aspects within this country, very strategic in what has to do with the utilization of the synergies with the telecommunication systems. All of this is going to make us in the future continue adding value.

So, we're now obtaining the confidence of our shareholders and we are already in more than 40 countries around the world. Our investor relations areas work in [that] update to meet the demands from these investors. We may have had around 1,000 meetings with investors, had in all of the meetings since [R101] and also conferences and seminars. This is an extremely important performance which gives us a liquidity and an exposure to investments and other investors, which is quite strong, which has attracted first-class investors to our equity base.

And this is exactly what we want, investors who have interests coinciding with the strategy of the Company. We are looking for the long-term growth. We have grown in the short-term because of our -- as a result of our strategy, but our great focus is on the long run, to make CEMIG a leader not only within Brazil, but also in the electric industry in the world as a sustainable company, an efficient company, and also a lucrative, profitable company to attract and remunerate its investors in the long-term.

With that, we are ready to go beyond BRL37 billion in assets, which is quite large volume of resources invested, with a net assets BRL12 billion of total revenue going beyond BRL22 billion. And we've been talking about consolidated figures. When I mention all of the assets and all of the revenues, the companies that we operate, we will go much beyond those values that you see there. Our market value, the Company's market value, has reached BRL38 billion and this is the largest market value that we have had because of the result given by our participations.

With that, investors have given us good recognition. These two charts there are very important to us because the growth and the value of the shares, the share price, has absolutely gone beyond 90% -- over 90%, in the gives CEMIG preferential, 65% of CEMIG ordinary share. This growth I've already -- also had very strong growth, each surpassing the Dow Jones Index, which had a decline of 8%, showing a degree of confidence of investors in our strategy and also in the competence of the Company's management to deliver the results that were proposed and publicized to the market.

Naturally, this adds great value and we are now [BRL38 billion], maybe certainly the best performance in the electric industry result and once having reached this position, we are actually going for additional positions in the future.

We already finished our presentation in this first 50 minutes. We understand that the information that we have imparted to you actually will meet with your interest. And the ones that are actually watching this conference call, we're going to now to have a Q&A session so that those subjects that were not covered by our presentation naturally may be cleared up, may be clarified in as good a way as possible.

That is that CEMIG would probably take two or three hours in order to cover all of the topics that we would like to show and all the advances that we have made, all the strides forward that we have made in order to motivate our investors. And as I know that your time is also very valuable, I'm going to restrict myself to these slides, therefore, I'm now placing myself at your service for your questions. Thank you very much.

(Operator Instructions). Please, ladies and gentlemen, ask one question at a time. Thank you. We have a first question from Antonio Junqueira, BTG Pactual.

Good morning, everyone. About the simplification of transmission business, I'd like to understand in the scenario that is after the removal of concessions, if you're in the future think about including the legacy assets in TAESA? And in the closer future -- nearest future -- nearer future, are you going to include all the other assets, TBE and midwest of the TAESA? Thank you.

Thank you, Antonio. Of course, the assets that are under GT -- CEMIG GT management have a contract nature, slightly different from TBE and TAESA. As a result of that, we would not like to bring greater complexity to TAESA because we understand that it is an extremely simple vehicle and extremely easy vehicle to understand. And the analysts and investors, in general, may project its growth and its cash generation without much problem.

CEMIG GT, however, has a partnership complexity, which has been great because it 100% belongs to our holding Company, and it's one of the original companies in the integrated CEMIG. So we have some complexity -- there is some complexity involved in doing this.

As for the other assets, I would have a smaller interest. With the most diverse shareholder, the value is not that significant. And given the complexity of actually making these moves in the short-term, we chose to do only TBE to TAESA. Of course, we in the future might even make this move, there is no restriction about that. You understand that GT assets, not even after the concessions are removed, they're not going to be included in TAESA. That was all.

I think that the increase of the complexity because these assets of CEMIG GT imply a tariff revision, and it implied tariff revisions that naturally imply past inefficiency gains onto the regulator, therefore, in our sense, it is not worth our while to contaminate TAESA with these. I prefer to keep them separate, apart. And if by any chance Aneel requires the separation of those assets, they are going to be constituted into an isolated company, exactly will give greater transparency to investors in the calculation of our cash flow.

Okay, thank you.

I have a question from Mariana Coelho, Itau BBA.

Good afternoon, everyone. Congratulations on the result. I'd like to have a comment from you about negotiations, CRC with regard to [Minas] the state of Minas. Do you have any expectations to finish this negotiation on time?

And a second question, if I am allowed to do so, I'd like to know this potential transfer of TBE assets to TAESA, if this would take place before TAESA's IPO? Thank you.

Thank you, Mariana for your words. They are very good stimulus to us, an incentive for us to continue working hard in order to deliver the results now with greater responsibility in 2012. 2012 has come in already with the CRC question.

You'll remember that by the end of last year we communicated to the market that the state of Minas Gerais had [started] so as to make a prepayment of the CRC contract based upon the argument that the costs were too high for the state and that the state today has access to cheaper resources and therefore would -- this would benefit that service of the state if those contracts were prepaid.

So we began the negotiation with the state. The state obtained its approvals -- preliminary approvals. We had approval in the state legislature and also the state is already talking to [STN] and some other federal agencies so as to already obtain approvals for the proposition that has been put forward. It has already negotiated with the financers, which are the World Bank, the French agency of development, and besides that, CS, the Credit Suisse, which are going to be necessary resources for the states to prepay.

The schedule -- the transaction schedule, we understand that naturally will depend upon some other approvals. The state has to sign the contract with those entities and submit to STN and once again and especially and definitely to the federal Senate, to the Congress. So this will take a while. And still, the estimate that we have is by July this year, possibly would -- I'd say I would share the actions that are being implemented by the state and the interests of the finance (inaudible) and also the interests of the federal agencies, we might finish all of this by July this year.

And what has to do with the transfers of our interest in companies under TBE? The TBE name, we intend, as we have already communicated to the market to conclude the studies, well, before our IPO. And with that to actually make a commitment to the investors about this move or this transfer is very beneficial to TAESA once it's going to give us musculature. It's going to give it muscle so that TAESA can continue growing economically in the coming years.

It has a world of opportunities ahead of it, either through auctions, new projects may be constructed, maybe built in spite of the difficulties that we've had. As our CEO has announced, that we lost some concession contracts a few weeks ago, but as a function of the fact that our return will not be as attractive as if we had chosen to continue competing for these concession contracts.

However, the acquisitions are being made -- are being considered the most adequate way for TAESA. We have already announced by the end of last year the conclusion of the acquisition process of the Abengoa interest in some transmission lines. And today, we have already announced the conclusion of an agreement with Abengoa itself for the acquisition of the remainder of its interests in the transmission lines that have been negotiated at the end of last year.

So this shows the capacity or the ability that TAESA has to generate resources and naturally to utilize its balance sheet in order to finance its own expansion in the long-term. This is the role that we want for TAESA, for TAESA to be a Company with muscle, a very sold strength, and a very strong financial position so that it can pay for its expansion without the need of capital coming from its shareholders.

We're going to have the IPO. The IPO is going to substantially reduce debt of TAESA and this is going to allow it to fit within those limits that we have usually set for our affiliated companies. It's going to continue generation in conditions so that it can continue to grow at very strong strides in the mid and the long-term.

Okay. Could you please just remind us the magnitude of this negotiation of CRC?

Thank you for the question. I thought you were going to ask about the IPO. Okay. CRC is easier because the balance of CRC balance on 31st of December was around BRL4.6 billion. Naturally, when you have definitely the prepayment, the value is going to be a little different. The amount is going to be different because the contracts are readjusted by [IPGR] and there is no really discount of the dividends paid by the state. But I think it is a good estimate, would be the BRL5.6 billion.

Thank you.

Vinicius Canheu from Credit Suisse.

Good afternoon, everyone. About dividends in the last two years, the shareholders -- you paid --.

I'm having trouble with the audio.

Cash generation can be even better than last year because you have TAESA and you have coming money from CRC.

I'm sorry, the sound of the audio that is coming to me through the phone is not good, I cannot understand what the question is.

With all of this cash generation, do you have in mind the possibility to pay extraordinary dividends? Or, if you don't, if there's anything that may change this possibility?

Thank you, Vinicius, for your question and also important because our dividend policy is one of the policies that are as important to us that is actually placed in our -- it's part in our bylaws. This is the policy established that provides that we have to take 50% of the net profit and net income. And net income, only 50% of it is going to be paid as dividends. So if there is excessive cash generation, we may pay extraordinary dividends.

This was the case of the last two years, as you can see in our cash flow, which I showed you. Let me see if I can find it here. Let me see if I can find the slide here again. You see that given our cash flow, that we paid extraordinary dividends in the last two years, actually, over half of the net income, but we continued investing a very significant amount in 2010, reached BRL4.4 billion, and in 2011, BRL4 billion. Well we invested in the last two years BRL8 billion, which goes to show that our cash generation was strong enough to pay for this investment program and also to make it possible to pay extraordinary dividends.

So our policy is focused exactly upon these two basic points -- 50% of net income and if eventually we have excess cash and we do not have an investment that naturally will give a good -- a very attractive return to our shareholders, and then we can pay extraordinary dividends. And this year of 2012, with the CRC, naturally you'll see that CRC is going to generate cash that is going to naturally going to have an impact upon the net income. And if there's an impact upon the net income, we'll have to pay the corresponding dividends, corresponding to 50% of the net income.

This is the commitment that CEMIG has, and naturally, it has tried to honor this commitment with its shareholders all the time. I have no doubt that CEMIG has the financial ability -- capacity to continue sustaining not only its investment programs -- supporting its investment program, but also its dividend policy.

Actually, the investment program gives the sustainability so that the dividend policy is effective and efficacious and attractive to our investors. So one is the cause for the other, but it is the more value we add to our investment program the more dividends naturally our shareholders are going to receive.

Just to close then, about the CRC, you said would be BRL5.6 billion, but then you would receive what would be different from that?

Well, naturally when you talk about a long-term contract and you talk about prepayment, the very first issue is how are you going to discount the cash flow of these contracts to present value? And naturally, the present -- the face value discounted at a reasonable rate is going to be slightly less -- the present value is going to be slightly less. This is the value of money and time.

So we're going to negotiate with the state. We still have nothing defined with the state, and what you have are estimates that were made by the financers and we are still negotiating with the state, the discount rate, in order to allow us to reach a final amount to be definitely paid by the state.

Okay. Thank you very much.

We have now closed the session of questions and answers. I would like now to give the floor to Dr. Luiz Fernando Rolla for his final remarks. Please, Dr. Rolla, you may proceed.

Thank you very much. I would only like to express once again the confidence that CEMIG and its managers and all the management staff, all the employees of the Company have in its future, the confidence and the trust that we need to be able to deliver the goals established by our strategic plan. Those are very ambitious goals, but we have already demonstrated they are possible to reach, and with creativity and effort and much dedication on the part of everyone.

We have had the unequivocal support of our investors and our shareholders, especially our major shareholder and the second largest shareholder of CEMIG also and (inaudible) his concessions.

The strategic vision that is [coincident or what], growth with value addition in the long-term and the search for those business lines that are the focus of our expertise in which, therefore, are going to add value and the search for these investments that have greater synergy with our existing assets. All of this we have sought, we have tried to maintain and implement in a consistent and well disciplined way. This is the message that I would like to leave with you.

And I'd like to thank you once again for your presence and your attention always very courteous of coming to our conference call. I know your time is very valuable and we'll try to bring exactly what kind of information that we think is more relevant to you so that you can use it not only in our decision-making processes, but also in the analysis of recommendations that analysts make to investors about their respective institutions.

Thank you very much. Have a good afternoon.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring the Event.