Momentum investing is essentially an exception to the idea of "buying low and selling high." Investors following this style of investing are usually not interested in betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time. Everyone likes betting on fast-moving trending stocks, but it isn't easy to determine the right entry point. These stocks often lose momentum when their future growth potent ...

Core Viewpoint - The article emphasizes the importance of value investing and highlights Comp En De Mn Cemig (CIG) as a strong value stock based on its financial metrics and Zacks ranking system [2][4][8] Company Metrics - CIG has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4] - The stock's P/E ratio is 8.52, significantly lower than the industry average of 14.03, suggesting it may be undervalued [4] - CIG's P/B ratio stands at 1.06, compared to the industry's average P/B of 2.47, further indicating attractive valuation [5] - The P/S ratio for CIG is 0.7, while the industry average is 2.05, reinforcing the notion of undervaluation [6] - CIG's P/CF ratio is 3.96, compared to the industry's average of 12.05, highlighting its solid cash flow outlook [7] Investment Outlook - The combination of CIG's strong financial metrics and positive earnings outlook positions it as an impressive value stock currently [8]

Carolina Senna - IR Reynaldo Filho - CEO Leonardo Magalhaes - CFO Marney Antunes - CDO Marco Soligo - CPO Carolina Senna The transaction was concluded a large transaction. It's BRL 2.7 billion adjusted by the CDI. There is another less HPP's auction to happen now in July. So we are moving forward with our divestment in minority stakeholding and nonstrategic assets so that we can focus in our strategic assets, which are distribution, generation and transmission and managers. And here, once again, we have res ...

Table of Contents Annual Report and Form 20-F 2023 CEMIG Logo Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ SHELL COMPANY REPORT ...

Financial Data and Key Metrics Changes - The company reported a record net income of BRL 5.36 billion for 2023, reflecting a significant increase compared to previous years [34][76] - Adjusted EBITDA for Q4 2023 was greater than BRL 2 billion, with a recurring EBITDA growth of 16.6% over 2022 [32][34] - The company achieved a dividend yield of 12.4%, which is considered attractive in the current market environment [67][80] Business Line Data and Key Metrics Changes - CEMIG Distribution (CEMIG D) saw an EBITDA growth of almost 35% in Q4 2023, driven by a tariff review and increased demand due to higher temperatures [5][34] - CEMIG GT reported a recurring EBITDA growth of 37.7% in Q4 2023 compared to Q4 2022, with net income growing by 58.9% [13][34] - Gasmig, a natural gas distribution company, posted an EBITDA growth of 21.9% in 2023, attributed to tariff reviews and new investments [14] Market Data and Key Metrics Changes - The captive market for CEMIG D experienced a 2.4% growth, while distributed generation (DG) saw a 55% increase in energy injected compared to 2022 [8][34] - The migration of clients to distributed generation has impacted the concession area, with 18.4% of the total captive market now utilizing DG [7][8] Company Strategy and Development Direction - The company is focusing on divesting non-core assets and investing in regulated sectors, with a record investment plan of BRL 35.6 billion [70][76] - Future investments are planned to exceed BRL 6 billion in 2024, with a significant portion allocated to distribution [30][70] - The company aims to maintain its leadership in the trading sector while preparing for market openings [76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet regulatory thresholds and maintain operational efficiency [12][73] - The company is committed to creating value for shareholders through both dividends and reinvestments in regulated sectors [20][22] - Management highlighted the importance of focusing on core activities and improving operational performance to drive future growth [66][70] Other Important Information - The company completed a successful debenture issuance of BRL 2 billion, reflecting strong investor confidence [39][40] - CEMIG has joined various sustainability initiatives, including the UN Global Compact, demonstrating its commitment to ESG principles [27] Q&A Session Summary Question: Could you comment on the growth of DEC in 2023? - Management acknowledged an increase in DEC due to extreme weather events but assured that it is back within regulatory thresholds as of February [55][56] Question: What is the company's approach to divestments? - The company has divested from non-strategic assets, generating significant cash inflow and avoiding capital injections in complex assets [16][17] Question: How does the company plan to handle actuarial liabilities? - Management stated that they are seeking structural solutions for actuarial liabilities and are awaiting court decisions on related matters [87]

IFRS 1,969 2,453 1,406 1,886 Gain on disposal of investment – –288 – –202 Surpluses Sales Mechanism (MVE) –204 – –144 – Other adjustments –106 – –70 – FX exposure – Eurobond hedge – – 12 – RECURRING 1,658 2,163 1,204 1,684 11 EBITDA 1,969 2,453 +24.5% +30.5% 1,658 2,163 4Q22 recurring 1,406 1,886 +34.0% +39.8% 1204 1684 4Q22 4Q23 recurring recurring 4Q22 IFRS 4Q23 IFRS 4Q23 RESULTS 4Q23: Consolidated operational costs and expenses Manageable expenses rose less than inflation PMSO costs – 4Q22–4Q23 Increase ...

Thank you very much, Leonardo. So moving on into each one of the businesses. Let's start on the Cemig consolidated results in 2023. This is a clean result as a nonrecurring effect. We have the reversion of the provision in the first quarter for the sale of the SHPPs as we mentioned. So the recurring EBITDA when we analyze it, we grew 28% when compared to the same quarter in the past year and our profit was up 20%. I draw your attention to the recurring result. As our CEO mentioned, we should close the year ...

Ratings Breakdown by type 32% 37% 31% Dollar IPCA CDI 13 Classificação: Direcionado Earnings Presentation 3Q23 CEMIG D – 3Q23 RESULTS 3Q22 IFRS 3Q23 IFRS EBITDA NET PROFIT Classificação: Direcionado Earnings Presentation 3Q23 BENCHMARK IN ESG 23 consecutive years in the index. The only company in the Americas from the energy sector Leader in the Brazilian energy sector: AA S&P Global Brazil's first AGRIVOLTAIC project Cemig, Epamig and CPQD* form partnership • Expanding land use, building innovative clean e ...

[Form 6-K Filing Details](index=1&type=section&id=I.%20Form%206-K%20Filing%20Details) This section details the Form 6-K filing, including registrant information, forward-looking statements, and official signatures [Filing Information](index=1&type=section&id=1.1.%20Filing%20Information) This section provides the standard cover page for the Form 6-K filing, identifying the registrant as Companhia Energética de Minas Gerais (Cemig) and the filing month as September 2023 - The document is a Form 6-K filing for Companhia Energética de Minas Gerais (Cemig), filed for the month of September 2023[32](index=32&type=chunk) [Forward-Looking Statements](index=3&type=section&id=1.2.%20Forward-Looking%20Statements) This section includes a standard disclaimer regarding forward-looking statements, noting that actual results may differ materially due to various known and unknown risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from expectations[29](index=29&type=chunk)[34](index=34&type=chunk) [Signatures](index=4&type=section&id=1.3.%20Signatures) The report is duly signed on behalf of the registrant by Leonardo George de Magalhães, Chief Finance and Investor Relations Officer, dated September 12, 2023 - The report is signed by Leonardo George de Magalhães, Chief Finance and Investor Relations Officer, on September 12, 2023[30](index=30&type=chunk)[35](index=35&type=chunk) [Notices to the Market](index=6&type=section&id=II.%20Notices%20to%20the%20Market) This section details significant market announcements, including changes in shareholding, concession extensions, asset sales, and privatization updates [Pzena - Change in Significant Shareholding (July 11, 2023)](index=6&type=section&id=2.1.%20Pzena%20-%20Change%20in%20Significant%20Shareholding%20(July%2011,%202023)) Cemig announced that Pzena Investment Management, LLC's clients reduced their stake in Cemig's preferred shares from 5.07% to 4.99%, holding 73,103,089 preferred shares - Pzena Investment Management, LLC's clients reduced their stake in Cemig preferred shares from **5.07% to 4.99%**[41](index=41&type=chunk) Pzena Investment Management, LLC Shareholding Change (July 11, 2023) | Metric | Previous Stake (%) | Current Stake (%) | | :---------------------- | :------------- | :------------- | | Total Preferred Shares | 5.07 | 4.99 | | Number of Preferred Shares | - | 73,103,089 | [Pzena - Change in Significant Shareholding (July 14, 2023)](index=7&type=section&id=2.2.%20Pzena%20-%20Change%20in%20Significant%20Shareholding%20(July%2014,%202023)) Cemig reported that Pzena Investment Management, LLC's clients increased their stake in Cemig's preferred shares from 4.99% to 5.00%, now holding 73,283,989 preferred shares - Pzena Investment Management, LLC's clients increased their stake in Cemig preferred shares from **4.99% to 5.00%**[16](index=16&type=chunk) Pzena Investment Management, LLC Shareholding Change (July 14, 2023) | Metric | Previous Stake (%) | Current Stake (%) | | :---------------------- | :------------- | :------------- | | Total Preferred Shares | 4.99 | 5.00 | | Number of Preferred Shares | - | 73,283,989 | [Material Fact - Sá Carvalho HPP Concession Extension (July 20, 2023)](index=9&type=section&id=2.3.%20Material%20Fact%20-%20S%C3%A1%20Carvalho%20HPP%20Concession%20Extension%20(July%2020,%202023)) Cemig Geração e Transmissão S.A. (Cemig GT) filed an expression of interest with the Ministry of Mines and Energy and ANEEL for the extension of the Sá Carvalho HPP concession, and reiterated interest for Emborcação and Nova Ponte HPPs, under the Physical Guarantee Quotas regime - Cemig GT expressed non-binding interest in extending the concession of Sá Carvalho HPP (**78 MW**) and reiterated interest for Emborcação and Nova Ponte HPPs under the Physical Guarantee Quotas regime[19](index=19&type=chunk) - The Sá Carvalho HPP concession agreement 01/2004 matures on August 27, 2026[19](index=19&type=chunk) [Pzena - Change in Significant Shareholding (July 31, 2023)](index=11&type=section&id=2.4.%20Pzena%20-%20Change%20in%20Significant%20Shareholding%20(July%2031,%202023)) Cemig announced that Pzena Investment Management, LLC's clients reduced their stake in Cemig's preferred shares from 5.00% to 4.54%, holding 66,566,916 preferred shares - Pzena Investment Management, LLC's clients reduced their stake in Cemig preferred shares from **5.00% to 4.54%**[21](index=21&type=chunk) Pzena Investment Management, LLC Shareholding Change (July 31, 2023) | Metric | Previous Stake (%) | Current Stake (%) | | :---------------------- | :------------- | :------------- | | Total Preferred Shares | 5.00 | 4.54 | | Number of Preferred Shares | - | 66,566,916 | [CEMIG Conducts Bid to Sell 15 SHPPs / HGPs (August 10, 2023)](index=41&type=section&id=2.5.%20CEMIG%20Conducts%20Bid%20to%20Sell%2015%20SHPPs%20/%20HGPs%20(August%2010,%202023)) Cemig and Cemig GT held a bidding process to sell 15 small hydroelectric generation plants (SHPPs/HGPs) in a single lot. The winning bid was R$100.5 million, representing a 108.6% goodwill over the starting bid - Cemig and Cemig GT sold **15 SHPPs/HGPs** for **R$100.5 million**, achieving a **108.6% goodwill** over the **R$48.2 million** starting bid[103](index=103&type=chunk) - The sale aligns with Cemig's Strategic Planning to optimize its portfolio and capital allocation[103](index=103&type=chunk) [BlackRock - Change in Significant Shareholding (August 16, 2023)](index=43&type=section&id=2.6.%20BlackRock%20-%20Change%20in%20Significant%20Shareholding%20(August%2016,%202023)) BlackRock, Inc. informed Cemig that its aggregate stake in the Company's total capital decreased from 10.01% to 9.88% as of August 11, 2023, holding 217,550,174 preferred shares and 12,662,091 derivative financial instruments - BlackRock, Inc. reduced its total capital stake in Cemig from **10.01% to 9.88%** as of August 11, 2023[649](index=649&type=chunk) BlackRock, Inc. Shareholding Change (August 16, 2023) | Metric | Previous Stake (%) | Current Stake (%) | | :---------------------- | :------------- | :------------- | | Total Capital | 10.01 | 9.88 | | Preferred Shares | 15.04 | 14.84 | | Number of Preferred Shares | - | 217,550,174 | | Derivative Instruments | - | 12,662,091 | - BlackRock stated its equity interest is strictly for investment purposes and does not aim to change Cemig's control or administrative structure[649](index=649&type=chunk) [Minas Gerais Government Files PEC for Privatization (August 21, 2023)](index=46&type=section&id=2.7.%20Minas%20Gerais%20Government%20Files%20PEC%20for%20Privatization%20(August%2021,%202023)) The State Government of Minas Gerais filed a Proposed Amendment to the Constitution (PEC) to streamline the privatization process of state-controlled companies, simplifying approval requirements and removing the obligation for a public consultation - The State Government of Minas Gerais filed a PEC to simplify privatization processes for public companies[651](index=651&type=chunk) - The PEC aims to reduce the required quorum for approving corporate structure changes and remove the obligation for a public consultation (referendum) on privatizations[651](index=651&type=chunk) [News Article Published in the Media (August 30, 2023)](index=328&type=section&id=2.8.%20News%20Article%20Published%20in%20the%20Media%20(August%2030,%202023)) Cemig clarified a news article regarding a potential IPO of its piped natural gas distributor, Gasmig, stating that while studies for such an IPO are not new, no formal decision has been made by the Company - Cemig clarified that studies for a potential IPO of Gasmig are ongoing but no formal decision has been made[1102](index=1102&type=chunk)[1120](index=1120&type=chunk) - Any decision on a Gasmig IPO is subject to corporate approvals, favorable market conditions, and investor interest[1120](index=1120&type=chunk) [2Q23 Results Presentation](index=14&type=section&id=III.%202Q23%20Results%20Presentation) This section presents Cemig's second-quarter 2023 financial results, highlighting key performance indicators, ESG initiatives, and strategic outlook [Disclaimer](index=15&type=section&id=3.1.%20Disclaimer) This section provides a disclaimer stating that certain statements and estimates may represent expectations about future events or results, which are subject to known or unknown risks and uncertainties. Financial amounts are in R$ million unless otherwise stated - The presentation contains forward-looking statements based on present assumptions and analyses, subject to known and unknown risks and uncertainties[7](index=7&type=chunk) - Financial amounts are presented in **R$ million** unless otherwise stated, reflecting the adoption of IFRS[7](index=7&type=chunk) [Highlights of 2Q23](index=16&type=section&id=3.2.%20Highlights%20of%202Q23) Cemig delivered solid and consistent results in 2Q23, marked by robust adjusted EBITDA, increased adjusted net profit, successful execution of its investment program, and unqualified auditors' approval for SOX certification - Cemig achieved SOX certification with unqualified auditors' approval, strengthening internal controls[8](index=8&type=chunk) 2Q23 Key Financial Highlights | Metric | 2Q23 Value (R$ billion) | YoY Change (%) | | :--------------------- | :---------------------- | :--------- | | Adjusted EBITDA | 1.9 | +3.8 | | Adjusted Net Profit | 1.2 | +6.6 | | Investments (1H23) | 1.7 | +43 | - The company declared **R$851 million** in Interest on Equity in 2023, with **R$427 million** in June and **R$424 million** in March[568](index=568&type=chunk) [ESG Actions](index=20&type=section&id=3.3.%20ESG%20Actions) Cemig is committed to ESG actions, including issuing sustainable bonds, investing in network modernization with social impacts, disclosing climate change-related financial information (TCFD Report), reestablishing vegetation to remove CO2, and building a diverse and inclusive culture - Cemig issued the largest-ever sustainable bonds in the Brazilian power industry, investing **R$2 billion** in network modernization with social impacts[549](index=549&type=chunk) - The company removed **10,156 tons of CO2** by planting/replanting vegetation in Brazil's Cerrado and Atlantic Forest biomes[549](index=549&type=chunk) - Cemig launched a Diversity Program, including a Diversity Census and training, and issued Renewable Energy Certificates (RECs) for **2,047,000 MWh** and I-RECs for **1,456,000 MWh**[565](index=565&type=chunk) [Consolidated Financial Performance](index=23&type=section&id=3.4.%20Consolidated%20Financial%20Performance) Cemig's consolidated results for 2Q23 showed growth in adjusted EBITDA and net profit, alongside a decrease in operating costs and consistent cash generation. The company maintained a low debt and leverage profile, ensuring financial sustainability [EBITDA and Net Profit](index=23&type=section&id=3.4.1.%20EBITDA%20and%20Net%20Profit) Consolidated adjusted EBITDA increased by 3.8% year-over-year to R$1.878 billion, while adjusted net profit grew by 6.6% year-over-year to R$1.214 billion, reflecting solid performance Consolidated EBITDA and Net Profit (2Q23 vs 2Q22) | Metric | 2Q22 (R$ million) | 2Q23 (R$ million) | YoY Change (%) | | :-------------- | :---------------- | :---------------- | :--------- | | IFRS EBITDA | 354 | 1,878 | +430.5 | | Recurring EBITDA| 1,810 | 1,878 | +3.8 | | IFRS Net Profit | 50 | 1,245 | +2,390.0 | | Recurring Net Profit | 1,139 | 1,214 | +6.6 | - Adjustments to IFRS figures include gains on asset disposal, write-offs of financial assets, provisions for PIS, Pasep, Cofins taxes on ICMS, use of distribution infrastructure, reversal of Santo Antônio provision, and FX exposure hedge[583](index=583&type=chunk) [Operational Costs and Expenses](index=24&type=section&id=3.4.2.%20Operational%20Costs%20and%20Expenses) PMSO (Personnel, Materials, Services, and Other expenses) costs increased by 9.0% year-over-year, primarily due to higher outsourced services for preventive maintenance and an increase in the Regulatory Remuneration Base (RAB). However, overall operating costs and expenses decreased by 13.8% year-over-year Consolidated Operating Costs and Expenses (2Q23 vs 2Q22) | Category | 2Q22 (R$ million) | 2Q23 (R$ million) | YoY Change (%) | | :------------------------------------- | :---------------- | :---------------- | :--------- | | PMSO Costs | 1,051 | 1,146 | +9.0 | | Other Costs (Energy purchases, provisions) | 7,433 | 6,167 | -17.0 | | Total Operating Costs and Expenses | 8,484 | 7,313 | -13.8 | - Lower personnel costs were achieved due to the **2022 Voluntary Severance Program**, which saw **297 employees** participate[554](index=554&type=chunk) - Higher outsourced services costs were attributed to increased investment in preventive maintenance[585](index=585&type=chunk) [Cash Flow](index=25&type=section&id=3.4.3.%20Cash%20Flow) Cemig demonstrated consistent cash generation in 1H23, contributing to the execution of its investment program and maintaining strong liquidity. Operational cash flow, including CVA and PIS/Pasep/Cofins tax restitution, significantly supported this - Consistent cash generation contributed to the investment program and company liquidity[586](index=586&type=chunk) Consolidated Cash Flow (1H23 vs 1H22) | Metric | 1H22 (R$ million) | 1H23 (R$ million) | | :----------------------------------- | :---------------- | :---------------- | | Cash + Operational | 3,864 | 3,319 | | CVA Restitution of PIS, Pasep, Cofins tax credits to consumers | 1,257 | 1,388 | | Interest on Equity | 912 | 780 | | Loans obtained/paid | 2,038 | 1,43 | | Settlement of SAAG put option | - | 780 | | Investment activities | 1,388 | 780 | | Cash + Securities generation | 4,001 | 1,257 | [Debt Profile](index=26&type=section&id=3.4.4.%20Debt%20Profile) Cemig maintained a low debt and leverage profile, with net debt at R$7.9 billion and total net debt (net of hedge) at R$7.7 billion. The average debt tenor was 2.9 years, and the company holds strong credit ratings - Net debt (Debt - Cash and securities) was **R$7.9 billion**, and Total net debt (Net debt - Hedge) was **R$7.7 billion**[574](index=574&type=chunk) - The average debt tenor was **2.9 years**, with debt in USD protected by hedge instruments[587](index=587&type=chunk) Consolidated Debt Profile (1H23) | Metric | Value (R$ billion) | | :----------------------------------- | :----------------- | | Net Debt | 7.9 | | Total Net Debt (Net of Hedge) | 7.7 | | Average Tenor | 2.9 years | | Leverage (Net Debt / Recurring EBITDA) | 2.70 | - Cemig holds credit ratings of **AA from FitchRatings**, **A+ from S&P Global Ratings**, and **AA from Moody's**[587](index=587&type=chunk) [Segmental Performance](index=27&type=section&id=3.5.%20Segmental%20Performance) Cemig's segments demonstrated varied performance in 2Q23. Distribution (Cemig D) significantly improved net profit and operational efficiency. Generation and Transmission (Cemig GT) saw a decrease in EBITDA and net profit but is pursuing concession renewals. Gasmig achieved strong profit growth, and Distributed Generation continued its expansion with new solar projects [Cemig D (Distribution)](index=27&type=section&id=3.5.1.%20Cemig%20D%20(Distribution)) Cemig D reported a significant turnaround in net profit, moving from a loss in 2Q22 to a profit in 2Q23. The segment achieved operational efficiency, keeping energy losses below regulatory limits and improving its collection/billing ratio, supported by a tariff review Cemig D Financial Performance (2Q23 vs 2Q22) | Metric | 2Q22 (R$ million) | 2Q23 (R$ million) | YoY Change (%) | | :-------------- | :---------------- | :---------------- | :--------- | | IFRS Net Profit | -900 | 365 | +140.6 | | Recurring Net Profit | -145 | 329 | +326.9 | | Recurring EBITDA| 602 | 688 | +14.3 | - Cemig D's 5th 5-year Tariff Review resulted in an average increase of **13.3%**, effective May 28, 2023, and the Net Regulatory Remuneration Base (BRR) increased from **R$8.9 billion to R$10.2 billion**[609](index=609&type=chunk) - The billed market and energy transported for clients grew by **0.7% YoY** in 2Q23, with a notable **3.3% growth** in energy transported from large free consumers[594](index=594&type=chunk)[610](index=610&type=chunk) - The Collection/Billing ratio (ARFA) reached **100.31%** in 1H23, strengthened by collections from Medium Voltage, Hospitals, and Public Services, and increased digital payment adoption (**14.03% via PIX**)[598](index=598&type=chunk)[615](index=615&type=chunk) - Operational expenses (Opex) remained **6.6% below the regulatory level**, with **R$135 million** in efficiency gains[616](index=616&type=chunk) [Cemig GT (Generation & Transmission)](index=32&type=section&id=3.5.2.%20Cemig%20GT%20(Generation%20%26%20Transmission)) Cemig GT experienced a decline in EBITDA and net profit in 2Q23 compared to 2Q22. However, it secured a R$1.143 billion RAP for 2023-24, is progressing with works in renewable generation, and has applied for the renewal of concessions for three hydroelectric plants Cemig GT Financial Performance (2Q23 vs 2Q22) | Metric | 2Q22 (R$ million) | 2Q23 (R$ million) | YoY Change (%) | | :-------------- | :---------------- | :---------------- | :--------- | | IFRS EBITDA | 863 | 629 | -27.1 | | Recurring EBITDA| 804 | 629 | -21.8 | | IFRS Net Profit | 590 | 459 | -22.2 | | Recurring Net Profit | 450 | 428 | -4.9 | - Permitted Transmission Revenue (RAP) is **R$1.143 billion** for 2023-24, a **23.5% increase** incorporating inflation and network improvements[604](index=604&type=chunk)[637](index=637&type=chunk) - Cemig GT applied for renewal of concessions for Sá Carvalho, Emborcação, and Nova Ponte hydroelectric plants[637](index=637&type=chunk) - Works in progress for renewable generation sources have **R$360 million** already invested[637](index=637&type=chunk) [Gasmig (Gas Distribution)](index=34&type=section&id=3.5.3.%20Gasmig%20(Gas%20Distribution)) Gasmig demonstrated strong profit growth in 2Q23, with significant increases in both EBITDA and net profit. The company is actively executing its investment program, with R$73 million invested in 1H23 and substantial planned capex for network expansion Gasmig Financial Performance (2Q23 vs 2Q22) | Metric | 2Q22 (R$ million) | 2Q23 (R$ million) | YoY Change (%) | | :-------------- | :---------------- | :---------------- | :--------- | | EBITDA | 160 | 255 | +59.4 | | Net Profit | 83 | 163 | +96.4 | - Gasmig's 2Q23 profit reflects higher consumption and a tariff review[49](index=49&type=chunk) - **R$73 million** was invested by June 2023, with **R$367 million** planned by the end of 2023[639](index=639&type=chunk) - Planned capex for Gasmig is **R$780 million**, including building **300 km of network** in **8 municipalities**[50](index=50&type=chunk)[620](index=620&type=chunk) [Distributed Generation (DG)](index=36&type=section&id=3.5.4.%20Distributed%20Generation%20(DG)) Cemig's Distributed Generation (DG) portfolio is expanding, with 52 MWp currently in operation and significant capacity under construction and development. The company has completed competitive tenders for new solar plants, contributing to its renewable energy goals Distributed Generation Capacity (2Q23) | Status | Capacity (MWp) | | :-------------- | :------------- | | In operation | 52 | | In construction | 168 | | In development | 274 (floating) | - Competitive tenders were completed for the construction of **23 solar plants**, adding **89 MWp** with an estimated **R$412 million capex**, gradually coming into operation from 2024[51](index=51&type=chunk) [Strategic Investments & Future Outlook](index=17&type=section&id=3.6.%20Strategic%20Investments%20%26%20Future%20Outlook) Cemig is executing a robust investment program, with R$1.7 billion invested in 1H23, a 43% increase YoY. Key strategic areas include digital transformation, strengthening Cemig D's investment program, and expanding renewable generation sources. Future challenges involve concession renewals and continued investment in network modernization - **R$1,709 million** was invested in 1H23, a **43% increase** compared to 1H22, with a planned **R$5,451 million** for 2023[10](index=10&type=chunk) - Strategic pillars include client service quality, business productivity through automation and data, IT efficiency with agile methodologies, and increased resilience of information and networks[24](index=24&type=chunk) - The 'Minas Three-phase program 2022-2027' involves a total investment of **R$1.8 billion** to convert networks from single-phase to three-phase and improve operational flexibility[672](index=672&type=chunk)[673](index=673&type=chunk) - The 'Mais Energia' Program plans **R$3 billion** in investments for new substations and structural improvements by 2027[628](index=628&type=chunk)[645](index=645&type=chunk)[674](index=674&type=chunk) - Future challenges include renewals of concessions and continued investment in renewable floating generation sources[624](index=624&type=chunk)[642](index=642&type=chunk) [2Q23 Interim Financial Information](index=49&type=section&id=IV.%202Q23%20Interim%20Financial%20Information) This section presents Cemig's detailed interim financial statements for 2Q23, including balance sheets, income statements, cash flows, and comprehensive notes [Basis of Preparation](index=79&type=section&id=4.1.%20Basis%20of%20Preparation) This section outlines the foundational principles for preparing Cemig's interim financial information, including its corporate structure, compliance with accounting standards, the impact of new pronouncements, and adjustments made to the income statement for clarity [The Company](index=79&type=section&id=4.1.1.%20The%20Company) Companhia Energética de Minas Gerais (Cemig) is a Brazilian publicly held company, listed on B3, NYSE, and Latibex, primarily engaged in electric power commercialization and as a holding company for generation, transmission, distribution, gas distribution, and energy efficiency services - Cemig is a publicly held company listed on B3, NYSE, and Latibex, operating in electric power commercialization and as a holding company for various energy sector activities[248](index=248&type=chunk)[249](index=249&type=chunk) [Statement of Compliance](index=82&type=section&id=4.1.2.%20Statement%20of%20Compliance) The individual and consolidated interim financial information has been prepared in accordance with IAS 34 (Interim Financial Reporting) and CVM Resolution 44/2021, consistent with the principles adopted for the December 31, 2022 financial statements, except for new rules effective January 1, 2023 - Interim financial information is prepared in accordance with **IAS 34** and **CVM Resolution 44/2021**, consistent with 2022 financial statements, except for new rules effective January 1, 2023[76](index=76&type=chunk)[78](index=78&type=chunk) [New Pronouncements and Revisions](index=85&type=section&id=4.1.3.%20New%20Pronouncements%20and%20Revisions) Alterations to CPC 23/IAS 8, CPC 26/IAS 1, CPC 32/IAS 12, and the application of CPC 50, effective January 1, 2023, had no impact on Cemig's individual and consolidated interim financial information - New accounting pronouncements and revisions applied for the first time in 2023 had no impact on the Company's interim financial information[711](index=711&type=chunk) [Regrouping of Income Statement Items](index=85&type=section&id=4.1.4.%20Regrouping%20of%20Income%20Statement%20Items) Starting in 3Q22, Cemig adjusted the classification of expenses in its income statement to group certain items more accurately by function, without affecting margins or indicators. Corresponding information for 1H22 is presented using the same criteria for comparability - The Company regrouped income statement items for better accuracy, effective 3Q22, without affecting margins or indicators[140](index=140&type=chunk)[744](index=744&type=chunk) [Statements of Financial Position](index=55&type=section&id=4.2.%20Statements%20of%20Financial%20Position) As of June 30, 2023, Cemig's consolidated total assets increased to R$54.54 billion from R$53.67 billion at December 31, 2022, while total liabilities decreased to R$30.93 billion from R$31.89 billion, reflecting changes in current and non-current assets and liabilities Consolidated Statements of Financial Position (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :----------------- | :------------ | :------------ | | Total Current Assets | 13,540,429 | 13,465,203 | | Total Non-Current Assets | 41,002,635 | 40,205,634 | | **Total Assets** | **54,543,064**| **53,670,837**| | Total Current Liabilities | 10,127,642 | 11,205,178 | | Total Non-Current Liabilities | 20,800,787 | 20,682,393 | | **Total Liabilities**| **30,928,429**| **31,887,571**| | Total Equity | 23,614,635 | 21,783,266 | [Statements of Income](index=61&type=section&id=4.3.%20Statements%20of%20Income) Cemig's consolidated net income for the six-month period ended June 30, 2023, significantly increased to R$2.64 billion from R$1.51 billion in the same period of 2022, driven by higher gross income and improved net finance income (expenses) Consolidated Statements of Income (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | Net Revenue | 17,466,454 | 16,060,828 | | Gross Income | 4,104,202 | 2,251,974 | | Operating income before financial income (expenses) and taxes | 3,434,976 | 1,698,578 | | Net Finance Income (Expenses) | (66,104) | (556,786) | | Income before income tax and social contribution tax | 3,368,872 | 1,141,792 | | Current Income tax and social contribution tax | (563,031) | (370,689) | | Deferred income tax and social contribution tax | (162,253) | 734,344 | | **NET INCOME FOR THE PERIOD** | **2,643,588** | **1,505,447** | | Basic and diluted earnings per preferred share - R$ | 1.20 | 0.68 | [Statements of Comprehensive Income](index=67&type=section&id=4.4.%20Statements%20of%20Comprehensive%20Income) Cemig's consolidated comprehensive income for the six-month period ended June 30, 2023, was R$2.68 billion, an increase from R$1.51 billion in the same period of 2022, primarily due to higher net income and remeasurement gains on post-retirement liabilities Consolidated Statements of Comprehensive Income (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | NET INCOME FOR THE PERIOD | 2,643,588 | 1,505,447 | | Post retirement liabilities - remeasurement of obligations of the defined benefit plans | 61,208 | - | | Income tax and social contribution tax on remeasurement of defined benefit plans | (20,811) | - | | Equity gain (loss) on other comprehensive income in subsidiary and jointly controlled entity | - | 393 | | **COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAXES** | **2,683,985** | **1,505,840** | | Attributed to Equity holders of the parent | 2,682,618 | 1,505,102 | | Attributed to Non-controlling interests | 1,367 | 738 | [Statements of Changes in Shareholders' Equity](index=70&type=section&id=4.5.%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Cemig's total equity increased to R$23.61 billion as of June 30, 2023, from R$21.78 billion at December 31, 2022, primarily driven by net income for the period and other comprehensive income, partially offset by interest on equity Consolidated Statements of Changes in Shareholders' Equity (R$ thousands) | Metric | Dec. 31, 2022 (R$ thousands) | Jun. 30, 2023 (R$ thousands) | | :-------------------------- | :------------ | :------------ | | AS OF DECEMBER 31, 2022 | 21,777,356 | 21,777,356 | | Net income for the period | - | 2,642,221 | | Other comprehensive income | - | 40,397 | | Interest on equity | - | (850,924) | | Non-controlling interests | 5,910 | 5,585 | | **AS OF JUNE 30, 2023** | **21,783,266**| **23,614,635**| [Statements of Cash Flows](index=73&type=section&id=4.6.%20Statements%20of%20Cash%20Flows) Cemig's consolidated net cash from operating activities for the six-month period ended June 30, 2023, was R$2.74 billion, a decrease from R$3.00 billion in the same period of 2022. Investing activities resulted in a net cash outflow of R$2.47 billion, while financing activities generated R$476.77 million Consolidated Statements of Cash Flows (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | Net Cash from Operating Activities | 2,735,789 | 3,004,155 | | Net Cash from (used in) Investing Activities | (2,470,396) | (1,003,470) | | Net Cash Used in Financing Activities | 476,765 | (958,112) | | Net (decrease) increase in cash and cash equivalents | 742,158 | 1,042,573 | | Cash and cash equivalents at the end of the period | 2,182,819 | 1,867,781 | [Statements of Added Value](index=76&type=section&id=4.7.%20Statements%20of%20Added%20Value) Cemig's consolidated total added value to be distributed for the six-month period ended June 30, 2023, increased to R$10.55 billion from R$10.33 billion in the prior year, with significant portions distributed to taxes, employees, and capital remuneration Consolidated Statements of Added Value (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | Revenues | 23,585,565 | 23,254,955 | | Inputs Acquired from Third Parties | (13,849,260) | (14,134,384) | | Gross Value Added | 9,736,305 | 9,120,571 | | Net Added Value Produced by the Company | 9,130,376 | 8,548,642 | | Added Value Received by Transfer | 1,414,869 | 1,778,840 | | **ADDED VALUE TO BE DISTRIBUTED** | **10,545,245** | **10,327,482** | | Distribution to Employees | 965,526 | 1,018,811 | | Distribution to Taxes | 6,012,092 | 6,303,698 | | Remuneration of External Capital | 924,039 | 1,499,526 | | Remuneration of Own Capital | 2,643,588 | 1,505,447 | [Notes to the Financial Statements](index=79&type=section&id=4.8.%20Notes%20to%20the%20Financial%20Statements) This section provides detailed explanatory notes to Cemig's interim financial statements, covering specific accounts, accounting policies, and significant events. It offers granular insights into the company's financial position, performance, and cash flows, including information on assets, liabilities, equity, revenues, expenses, and risk management [Cash and Cash Equivalents (Note 4)](index=88&type=section&id=4.8.1.%20Cash%20and%20Cash%20Equivalents%20(Note%204)) Consolidated cash and cash equivalents increased to R$2.18 billion as of June 30, 2023, from R$1.44 billion at December 31, 2022, reflecting the company's liquidity position Consolidated Cash and Cash Equivalents (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Cash and cash equivalents | 2,182,819 | 1,440,661 | [Marketable Securities (Note 5)](index=91&type=section&id=4.8.2.%20Marketable%20Securities%20(Note%205)) Consolidated marketable securities decreased to R$1.68 billion as of June 30, 2023, from R$1.88 billion at December 31, 2022, comprising current and non-current investments in instruments like bank certificates of deposit, financial notes, and treasury financial notes Consolidated Marketable Securities (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Current Investments | 1,542,983 | 1,744,546 | | Non-Current Investments | 138,802 | 133,631 | | **Total Investments** | **1,681,785** | **1,878,177** | - The Company classifies interest from marketable securities as investing activities[145](index=145&type=chunk) [Receivables from Customers, Traders and Concession Holders (Note 6)](index=91&type=section&id=4.8.3.%20Receivables%20from%20Customers,%20Traders%20and%20Concession%20Holders%20(Note%206)) Consolidated receivables from customers, traders, and concession holders slightly decreased to R$4.74 billion as of June 30, 2023, from R$4.81 billion at December 31, 2022. The expected credit losses are considered sufficient to cover potential losses, with a balance of R$862.62 million Consolidated Receivables from Customers, Traders and Concession Holders (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Current Assets | 4,688,726 | 4,769,431 | | Non-Current Assets | 46,665 | 43,449 | | **Total Receivables** | **4,735,391** | **4,812,880** | | Expected Credit Losses | (862,620) | (820,324) | - Expected credit losses are considered sufficient to cover potential losses in accounts receivable[121](index=121&type=chunk) Expected Credit Losses Movement (R$ thousands) | Metric | Amount (R$ thousands) | | :-------------------------- | :-------------------- | | Balance at December 31, 2022| 820,324 | | Additions, net (Note 26) | 29,192 | | Amounts written off | 13,104 | | Balance at June 30, 2023 | 862,620 | [Recoverable Taxes (Note 7)](index=94&type=section&id=4.8.4.%20Recoverable%20Taxes%20(Note%207)) Consolidated recoverable taxes decreased to R$2.38 billion as of June 30, 2023, from R$3.27 billion at December 31, 2022, primarily due to offsets of PIS/Pasep and Cofins tax credits against federal taxes Consolidated Recoverable Taxes (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Current | 1,163,202 | 1,916,701 | | Non-Current | 1,213,329 | 1,357,846 | | **Total** | **2,376,531** | **3,274,547** | - In 1H23, **R$837.924 million** in PIS/Pasep and Cofins tax credits were offset against payable federal taxes[148](index=148&type=chunk) - The Company holds current and non-current tax credits of PIS/Pasep and Cofins over ICMS, totaling **R$697.101 million** and **R$578.345 million** respectively, updated by the Selic rate[172](index=172&type=chunk) [Income and Social Contribution Taxes (Note 8)](index=97&type=section&id=4.8.5.%20Income%20and%20Social%20Contribution%20Taxes%20(Note%208)) Consolidated income tax and social contribution tax liabilities decreased to R$111.67 million as of June 30, 2023, from R$239.67 million at December 31, 2022. Deferred tax assets, net of liabilities, decreased to R$2.01 billion from R$2.19 billion, with a consolidated effective tax rate of 21.53% for 1H23 Consolidated Income Tax and Social Contribution Tax Payable (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Income tax | 80,448 | 197,619 | | Social contribution tax | 31,219 | 42,055 | | **Total Current** | **111,667** | **239,674** | Consolidated Deferred Income Tax and Social Contribution Tax (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Deferred tax assets | 4,410,327 | 4,709,687 | | Deferred tax liabilities| (2,403,262) | (2,522,400) | | **Total, net** | **2,007,065** | **2,187,287** | Consolidated Effective Tax Rate (Jan to Jun) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :---------------------- | :--------------- | :--------------- | | Income before tax | 3,368,872 | 1,141,792 | | Effective rate | 21.53% | (31.85)% | [Accounts Receivable from the State of Minas Gerais (Note 9)](index=103&type=section&id=4.8.6.%20Accounts%20Receivable%20from%20the%20State%20of%20Minas%20Gerais%20(Note%209)) Cemig holds a non-current receivable of R$13.37 million from the State of Minas Gerais, related to the return of an administrative deposit for a dispute on inflation correction of an advance against future capital increase (AFAC) - Cemig has a non-current receivable of **R$13,366 thousand** from the State of Minas Gerais related to an AFAC inflation correction dispute[756](index=756&type=chunk) [Escrow Deposits (Note 10)](index=103&type=section&id=4.8.7.%20Escrow%20Deposits%20(Note%2010)) Consolidated escrow deposits totaled R$1.21 billion as of June 30, 2023, slightly up from R$1.21 billion at December 31, 2022, primarily related to tax contingencies Consolidated Escrow Deposits (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Tax contingencies | 875,534 | 843,870 | | Other | 112,318 | 103,431 | | **Total** | **1,214,964** | **1,206,595** | [Reimbursement of Tariff Subsidies (Note 11)](index=103&type=section&id=4.8.8.%20Reimbursement%20of%20Tariff%20Subsidies%20(Note%2011)) Cemig recognized R$554.62 million in subsidies revenue in 1H23, reimbursed through the Energy Development Account (CDE). The company has a current receivable of R$124.34 million for these subsidies - In 1H23, **R$554,619 thousand** was recognized as subsidies revenue, reimbursed via the Energy Development Account (CDE)[759](index=759&type=chunk) - Cemig D has a current receivable of **R$117,184 thousand** and Cemig GT **R$7,159 thousand** for these subsidies, totaling **R$124,343 thousand**[157](index=157&type=chunk) [Concession Financial and Sector Assets and Liabilities (Note 12)](index=106&type=section&id=4.8.9.%20Concession%20Financial%20and%20Sector%20Assets%20and%20Liabilities%20(Note%2012)) Consolidated concession financial assets increased to R$5.33 billion as of June 30, 2023, from R$5.05 billion at December 31, 2022. This includes energy and gas distribution concessions, generation indemnity receivables, and concession grant fees. Sector financial assets, primarily related to CVA and other financial components, decreased to R$890.81 million Consolidated Concession Financial and Sector Assets (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Concession Financial Assets | 5,330,648 | 5,048,475 | | Sector Financial Assets | 890,809 | 944,090 | | **Total** | **6,221,457** | **5,992,565** | - The concession grant fee for **18 hydroelectric plants** (Auction 12/2015) was **R$2,216,353 thousand**, recognized as a financial asset measured at amortized cost[741](index=741&type=chunk) - The balance of generation indemnity receivable is **R$737,406 thousand**, representing management's best estimate for cash from the regulator[186](index=186&type=chunk) CVA and Other Financial Components (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Total Assets | 890,809 | 944,090 | | Total Financial Components | 890,809 | 944,090 | [Concession Contract Assets (Note 13)](index=115&type=section&id=4.8.10.%20Concession%20Contract%20Assets%20(Note%2013)) Consolidated concession contract assets increased to R$7.73 billion as of June 30, 2023, from R$6.70 billion at December 31, 2022, driven by additions in distribution and transmission infrastructure. The 5th Periodic Tariff Review for Cemig D resulted in an average tariff increase of 13.27% Consolidated Concession Contract Assets (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Distribution - Infrastructure assets under construction | 2,785,768 | 1,849,853 | | Transmission - National Grid ('BNES') | 1,862,666 | 1,927,040 | | Transmission - Assets remunerated by tariff | 2,928,732 | 2,810,949 | | **Total** | **7,734,476** | **6,704,824** | - Cemig D's 5th Periodic Tariff Review established an average tariff increase of **13.27%** for consumers, effective from May 28, 2023[166](index=166&type=chunk)[218](index=218&type=chunk) - The Periodic Tariff Review for transmission concessions was postponed, with the time limit for ratification of RAP set for July 1, 2024[199](index=199&type=chunk) [Investments in Subsidiaries, Associates and Joint Ventures (Note 14)](index=121&type=section&id=4.8.11.%20Investments%20in%20Subsidiaries,%20Associates%20and%20Joint%20Ventures%20(Note%2014)) Consolidated investments in subsidiaries, associates, and joint ventures decreased to R$4.82 billion as of June 30, 2023, from R$5.11 billion at December 31, 2022. This includes the sale of Cemig GT's stake in Mesa and acquisitions of photovoltaic plants by Cemig Sim, aligning with portfolio optimization and distributed generation growth Consolidated Investments in Subsidiaries, Associates and Joint Ventures (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Total of investments | 4,821,254 | 5,105,724 | - Cemig GT completed the sale of its direct and indirect ownership interest in Mesa to Furnas Centrais Elétricas S.A. for **R$55,390 thousand**, recognizing a capital gain[262](index=262&type=chunk)[263](index=263&type=chunk) - Cemig Sim acquired **100% of the shares** in the Montes Claros photovoltaic plant and the remaining **51% interests** in four SPCs (G2 Olaria 1, G2 Campo Lindo 1, G2 Campo Lindo 2, SPE G2 Olaria 2), adding **13 MWp capacity**[269](index=269&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk) - The Company injected **R$39,216 thousand** into UFV Três Marias S.A. for the construction of a **78 MW floating photovoltaic complex** and a **1.5 MW photovoltaic plant**[243](index=243&type=chunk) [Property, Plant and Equipment (Note 15)](index=136&type=section&id=4.8.12.%20Property,%20Plant%20and%20Equipment%20(Note%2015)) Consolidated property, plant, and equipment (PP&E) increased to R$2.61 billion as of June 30, 2023, from R$2.41 billion at December 31, 2022, with significant additions in assets in progress, including investments in solar plants Consolidated Property, Plant and Equipment (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | In service | 1,948,689 | 2,030,665 | | In progress | 659,375 | 378,686 | | **Net PP&E** | **2,608,064** | **2,409,351** | - Additions in 1H23 totaled **R$338,980 thousand**, including investments in Boa Esperança (**R$112,367 thousand**) and Jusante (**R$118,693 thousand**) photovoltaic solar plants[277](index=277&type=chunk)[299](index=299&type=chunk) [Intangible Assets (Note 16)](index=139&type=section&id=4.8.13.%20Intangible%20Assets%20(Note%2016)) Consolidated net intangible assets remained stable at R$14.62 billion as of June 30, 2023, primarily comprising concession assets and assets of concession - GSF, with additions in assets in progress Consolidated Intangible Assets (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | In service | 14,468,373 | 14,415,514 | | In progress | 152,263 | 206,339 | | **Net Intangible Assets** | **14,620,636**| **14,621,853**| [Leasing (Note 17)](index=142&type=section&id=4.8.14.%20Leasing%20(Note%2017)) Consolidated right-of-use assets increased to R$386.16 million as of June 30, 2023, from R$329.08 million at December 31, 2022. Leasing liabilities also increased to R$416.07 million from R$354.63 million, with cash flows primarily updated by the IPCA inflation index Consolidated Right-of-Use Assets (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Real estate property | 215,216 | 213,645 | | Vehicles | 170,940 | 115,432 | | **Total** | **386,156** | **329,077** | Consolidated Leasing Liabilities (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Current liabilities | 75,495 | 57,438 | | Non-current liabilities | 340,578 | 297,195 | | **Total** | **416,073** | **354,633** | - Leasing cash flows are mostly updated annually by the IPCA inflation index[286](index=286&type=chunk) [Suppliers (Note 18)](index=145&type=section&id=4.8.15.%20Suppliers%20(Note%2018)) Consolidated suppliers decreased to R$2.49 billion as of June 30, 2023, from R$2.83 billion at December 31, 2022, primarily due to lower energy and gas purchases for resale Consolidated Suppliers (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Energy purchased for resale | 1,055,249 | 1,162,009 | | Gas purchased for resale| 203,463 | 277,750 | | Materials and services | 637,497 | 801,838 | | **Total** | **2,492,971** | **2,832,049** | [Taxes Payable and Amounts to be Refunded to Customers (Note 19)](index=145&type=section&id=4.8.16.%20Taxes%20Payable%20and%20Amounts%20to%20be%20Refunded%20to%20Customers%20(Note%2019)) Consolidated taxes payable remained stable at R$913.26 million as of June 30, 2023. Amounts to be refunded to customers for PIS/Pasep and Cofins taxes decreased to R$2.11 billion from R$3.30 billion, with R$5.20 billion already reimbursed to clients Consolidated Taxes Payable (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Current | 543,570 | 544,146 | | Non-Current | 369,686 | 370,168 | | **Total** | **913,256** | **914,314** | Consolidated Amounts to be Refunded to Customers (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Current PIS/Pasep and Cofins | 1,164,003 | 1,154,798 | | Non-Current PIS/Pasep and Cofins | 607,684 | 1,808,074 | | Current ICMS | 340,800 | 340,800 | | **Total** | **2,112,487** | **3,303,672** | - **R$5,200,878 thousand** has been reimbursed to clients for PIS/Pasep and Cofins taxes until June 30, 2023[314](index=314&type=chunk) [Loans and Debentures (Note 20)](index=148&type=section&id=4.8.17.%20Loans%20and%20Debentures%20(Note%2020)) Consolidated loans and debentures increased to R$11.83 billion as of June 30, 2023, from R$10.58 billion at December 31, 2022, primarily due to a new R$2 billion debenture issue by Cemig D. The company manages its debt profile with various currencies and indexes, and monitors restrictive covenants Consolidated Loans and Debentures (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Total Loans and Financings | 3,663,528 | 3,962,185 | | Total Debentures | 8,167,518 | 6,617,313 | | **Overall Total** | **11,831,046**| **10,579,498**| - Cemig D concluded its 9th issue of unsecured non-convertible debentures, raising **R$2 billion** (net **R$1,988,311 thousand**) with CDI + 2.05% remuneration, maturing in 2026[294](index=294&type=chunk)[319](index=319&type=chunk)[339](index=339&type=chunk) - The company has various guarantees on its debt, including Eurobonds, debentures, and shares, and monitors financial covenants to avoid early maturity[320](index=320&type=chunk)[327](index=327&type=chunk)[341](index=341&type=chunk)[347](index=347&type=chunk) [Regulatory Charges (Note 21)](index=157&type=section&id=4.8.18.%20Regulatory%20Charges%20(Note%2021)) Consolidated regulatory charges increased slightly to R$586.75 million as of June 30, 2023, from R$575.61 million at December 31, 2022, comprising various liabilities such as Global Reversion Reserve (RGR), Energy Development Account (CDE), and Energy Efficiency Program (EEP) Consolidated Regulatory Charges (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Global Reversion Reserve (RGR) | 27,888 | 28,245 | | Energy Development Account (CDE) | 136,408 | 127,870 | | Energy Efficiency Program | 199,322 | 220,802 | | Research and development (R&D) | 148,378 | 125,864 | | **Total** | **586,752** | **575,607** | [Post-Employment Obligations (Note 22)](index=160&type=section&id=4.8.19.%20Post-Employment%20Obligations%20(Note%2022)) Consolidated net liabilities for post-employment obligations decreased slightly to R$3.29 billion as of June 30, 2023, from R$3.31 billion at December 31, 2022. This includes pension plans, health, and dental plans, with a curtailment event in 1H23 leading to an actuarial gain Consolidated Post-Employment Obligations (R$ thousands) | Metric | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Pension plans and supplement plans | 3,289,171 | 3,313,138 | | Health plan | 5,249,788 | 5,691,985 | | Dental plan | 60,487 | 136,059 | | **Net Liabilities** | **3,289,171** | **3,313,138** | - A curtailment event related to a new Premium Health Plan offered to employees resulted in an actuarial gain of **R$60,274 thousand** for the health plan and **R$934 thousand** for the dental plan[352](index=352&type=chunk)[389](index=389&type=chunk) - The total amount payable by Cemig and its subsidiaries for Plan A deficits (2015, 2016, 2017) was **R$542,106 thousand** as of June 30, 2023[365](index=365&type=chunk) [Provisions (Note 23)](index=166&type=section&id=4.8.20.%20Provisions%20(Note%2023)) Consolidated provisions for contingencies increased to R$2.11 billion as of June 30, 2023, from R$2.03 billion at December 31, 2022, covering labor, civil, tax, and regulatory matters. The company also has significant possible contingencies not provisioned Consolidated Provisions for Contingencies (R$ thousands) | Category | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Labor | 416,869 | 414,809 | | Civil | 87,764 | 77,504 | | Tax | 1,546,974 | 1,474,690 | | Regulatory | 49,508 | 47,493 | | Others | 10,125 | 14,525 | | **Total** | **2,111,240** | **2,029,021** | Consolidated Possible Contingencies (Not Provisioned) (R$ thousands) | Category | Jun. 30, 2023 (R$ thousands) | Dec. 31, 2022 (R$ thousands) | | :---------------------- | :------------ | :------------ | | Labor | 1,352,040 | 1,198,657 | | Customer relations | 259,519 | 280,919 | | Other civil actions | 570,328 | 537,197 | | Tax | 2,562,900 | 2,149,475 | | Regulatory | 3,461,158 | 2,976,485 | | Others | 1,646,267 | 1,361,004 | | **Total** | **9,852,212** | **8,453,737** | - The probability of loss for social security contributions on income sharing payments was reassessed from 'possible' to 'probable' for some portions[402](index=402&type=chunk) - The estimated contingency for the 'Luz Para Todos' program is **R$500,169 thousand**, with a 'possible' chance of loss[428](index=428&type=chunk) [Equity and Remuneration to Shareholders (Note 24)](index=190&type=section&id=4.8.21.%20Equity%20and%20Remuneration%20to%20Shareholders%20(Note%2024)) Cemig's share capital remained at R$11.01 billion, represented by 735.85 million common shares and 1.47 billion preferred shares. Basic and diluted earnings per preferred share increased to R$1.20 for 1H23. The Executive Board declared R$850.92 million in Interest on Equity during 1H23 - Share capital is **R$11,006,853 thousand**, represented by **735,847,624 common shares** and **1,465,523,064 preferred shares**, each with a nominal value of **R$5.00**[461](index=461&type=chunk) Basic and Diluted Earnings Per Share (R$) | Metric | Jan to Jun, 2023 (R$) | Jan to Jun, 2022 (R$) | | :----------------------------------- | :--------------- | :--------------- | | Total earnings (A) | 2,642,221 | 1,504,709 | | Total shares (B) | 200,524,524 | 200,524,524 | | Basic and diluted earnings per common share (A/B) | 1.20 | 0.68 | - The Executive Board declared **R$424,226 thousand** in Interest on Equity on March 22, 2023, and **R$426,698 thousand** on June 20, 2023, totaling **R$850,924 thousand**[464](index=464&type=chunk)[100](index=100&type=chunk) [Revenue (Note 25)](index=193&type=section&id=4.8.22.%20Revenue%20(Note%2025)) Consolidated net revenue for 1H23 increased to R$17.47 billion from R$16.06 billion in 1H22, driven by higher distribution construction revenue and TUSD, despite a decrease in energy supply revenue due to ICMS rate reductions Consolidated Net Revenue (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | Revenue from supply of energy | 14,623,983 | 16,148,608 | | Revenue from use of the electricity distribution systems (TUSD) | 2,098,765 | 1,772,420 | | Distribution construction revenue | 1,592,270 | 1,136,536 | | Supply of gas | 2,197,133 | 2,069,435 | | Deductions on revenue | (6,149,276) | (7,575,238) | | **Net operating revenue** | **17,466,454** | **16,060,828** | - Revenue from energy supply decreased by **4.03%** in 2Q23 due to ICMS rate reductions[934](index=934&type=chunk)[935](index=935&type=chunk) - Distribution construction revenue increased by **31.59%** in 2Q23 due to higher investment plan execution and increased material/service costs[919](index=919&type=chunk) - Deductions on revenue decreased by **20.02%** in 2Q23, mainly reflecting the reduction of the ICMS tax rate[943](index=943&type=chunk) [Operating Costs and Expenses (Note 26)](index=205&type=section&id=4.8.23.%20Operating%20Costs%20and%20Expenses%20(Note%2026)) Consolidated total operating costs and expenses for 1H23 decreased to R$13.36 billion from R$13.81 billion in 1H22. This reduction was primarily driven by lower operating provisions and expected credit losses, despite increases in infrastructure and construction costs Consolidated Operating Costs and Expenses (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | Cost of energy and gas | 9,504,736 | 9,233,889 | | Infrastructure and construction cost | 1,667,521 | 1,262,422 | | Operating costs | 2,189,995 | 3,312,543 | | **Total Operating Costs** | **13,362,252** | **13,808,854** | | Expected credit losses | (29,192) | (133,458) | | General and administrative expenses | (327,843) | (358,389) | | Other operating expenses | (534,513) | (582,445) | - Operating provisions were **R$132,503 thousand** in 2Q23, significantly lower than **R$1,420,370 thousand** in 2Q22, due to a large provision in 2Q22 related to Law No. 14,385/22[954](index=954&type=chunk) - Expected credit loss decreased by **76.47%** in 2Q23 due to revised loss measurement rules and increased settlement of regular debts[955](index=955&type=chunk) [Finance Income and Expenses (Note 27)](index=211&type=section&id=4.8.24.%20Finance%20Income%20and%20Expenses%20(Note%2027)) Cemig's consolidated net finance income (expenses) significantly improved to R$(66.10) million for 1H23 from R$(556.79) million in 1H22, driven by lower finance expenses, particularly from foreign exchange variations and losses with financial instruments Consolidated Finance Income and Expenses (Jan to Jun, R$ thousands) | Metric | Jan to Jun, 2023 (R$ thousands) | Jan to Jun, 2022 (R$ thousands) | | :----------------------------------- | :--------------- | :--------------- | | Finance Income | 825,136 | 917,511 | | Finance Expenses | (891,240) | (1,474,297) | | **NET FINANCE INCOME (EXPENSES)** | **(66,104)** | **(556,786)** | - Net financial expense with the restatement of tax credits related to PIS/Pasep and Cofins decreased to **R$16,779 thousand** in 2Q23 from **R$356,213 thousand** in 2Q22[978](index=978&type=chunk) - Foreign exchange variations on loans and debentures generated **R$301,310 thousand** in income in 1H23, compared to **R$342,500 thousand** in 1H22[507](index=507&type=chunk) [Related Party Transactions (Note 28)](index=217&type=section&id=4.8.25.%20Related%20Party%20Transactions%20(Note%2028)) Cemig engages in various transactions with related parties, including energy transactions, service provision, and financial arrangements. The company also provides guarantees on loans and debentures for jointly controlled entities and affiliates, and manages cash investments in a related investment fund Key Related Party Transactions (Jan to Jun, R$ thousands) | Related Party | Assets (Jun. 30, 2023, R$ thousands) | Liabilities (Jun. 30, 2023, R$ thousands) | Revenues (Jan to Jun, 2023, R$ thousands) | Expenses (Jan to Jun, 2023, R$ thousands) | | :---------------------- | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Aliança Geração | 4,245 | 17,181 | 24,519 | (106,184) | | Norte Energia | 2,389 | 29,750 | 13,952 | (134,538) | | Governo do Estado de Minas Gerais | 42,697 | - | 87,050 | - | | FIP Melbourne | 240,860 | - | - | - | | FORLUZ (Post-employment obligations) | - | 212,657 | - | (136,059) | | Cemig Saúde (Health Plan) | - | 223,529 | - | - | Guarantees on Loans and Debentures for Related Parties (Jun. 30, 2023, R$ thousands) | Related Party | Relationship | Type of Guarantee | Amount (R$ thousands) | | :---------------------- | :----------- | :---------------- | :---------- | | Norte Energia (NESA) | Affiliated | Surety | 2,597,565 | | Norte Energia (NESA)/Light | Affiliated | Counter-guarantee | 683,615 | | Norte Energia (NESA) | Affiliated | Surety | 81,620 | | **Total** | | | **3,362,800** | - The total remuneration of key management personnel for 1H23 was **R$14,795 thousand**[521](index=521&type=chunk) [Financial Instruments and Risk Management (Note 29)](index=223&type=section&id=4.8.26.%20Financial%20Instruments%20and%20Risk%20Management%20(Note%2029)) Cemig manages various financial risks, including exchange rate, interest rate, and liquidity risks. The company uses derivative financial instruments (swaps, currency options, NDFs) to hedge foreign currency exposure, particularly for Eurobonds. Sensitivity analyses are performed for interest rate and inflation risks, and capital management focuses on maintaining low net liabilities relative to equity Consolidated Financial Assets and Liabilities at Fair Value (R$ thousands) | Metric | Jun. 30, 2023 (Book Value, R$ thousands) | Jun. 30, 2023 (Fair Value, R$ thousands) | | :---------------------- | :------------------------- | :------------------------- | | Total Financial Assets | 16,592,525 | 16,592,525 | | Total Financial Liabilities | (15,591,240) | (15,591,240) | - Cemig GT settled the SAAG put option for **R$780 million** on May 12, 2023, with an additional **R$25 million** effect posted in 2Q23[547](index=547&type=chunk) - The company uses derivative financial instruments (swaps, currency options, NDFs) to protect against foreign exchange variation risks, not for speculative purposes[830](index=830&type=

Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA of BRL2 billion for the quarter, with an annualized figure close to BRL8 billion, reflecting a growth of almost 7% compared to the previous quarter [4] - Net profit for the quarter was BRL1.2 billion, indicating consistent results and a growth of 6.6% year-over-year [42][23] - The company generated BRL4 billion in operating cash flow over six months, ending with BRL3.8 billion in cash [44] Business Line Data and Key Metrics Changes - The trading segment of Cemig achieved an EBITDA of over BRL600 million in the first half of the year, demonstrating effective market engagement [18] - Investments in distribution for the first half of the year were BRL1.7 billion, nearly double the total investment made in 2018 [15] - The company is constructing 180 megawatts of photovoltaic plants and has plans for 540 megawatts in distributed generation [6] Market Data and Key Metrics Changes - The electricity market for Cemig D saw a 0.7% growth in consumer and transported energy, with a significant 56% increase in distributed generation [45] - The state of Minas Gerais is presenting growth opportunities, with transported energy growing by 3.3% despite a 1.7% drop in overall consumption [45] Company Strategy and Development Direction - The company is focused on a BRL42 billion investment program over the next five years, targeting distribution, transmission, and generation of energy in Minas Gerais [11] - Cemig aims to maintain its leadership in the state of Minas Gerais while expanding its market share in the retail sector as the market opens [19][34] - The company is investing in digital transformation and automation, with a commitment to modernizing its operations [20][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's results for the end of the year, citing a robust investment program and positive tariff reviews [23][25] - The Brazilian electric sector faces challenges in centralized generation due to high supply levels, but demand is expected to pick up [7] - The company is committed to maintaining operational efficiency and meeting regulatory limits, with a focus on cash generation [29][54] Other Important Information - Cemig issued BRL2 billion in sustainable bonds, reflecting market confidence and supporting investments in social programs [22] - The company has a strong commitment to ESG initiatives, including a diversity program and significant reductions in CO2 emissions [21][37] - The company is undergoing a divestment process for non-strategic assets, with several assets already sold [48] Q&A Session Summary Question: Can you comment on GASMIG's results and the significant gap compared to regulatory limits? - Management explained that GASMIG's results are influenced by a recent tariff review that integrated off-balance regulatory payments, leading to improved EBITDA and profit [70] Question: How is the negotiation with the government regarding thermal dispatch and exports progressing? - Management indicated that discussions are ongoing, but no definitive timeline is available for the resolution of these negotiations [74] Question: Will the BRL1 billion investment in automation and technology be included in the remuneration base? - Management confirmed that most of the investment is operational expenditure, which will be covered by the tariff review [77] Question: What is the strategy for Eurobond rollover? - The company plans to manage liability in stages, reducing FX exposure and potentially switching to local debt due to current market conditions [84] Question: Update on GASMIG's IPO and divestment in Taesa? - Internal preparations for a potential IPO of GASMIG have been completed, but no decision has been made yet [86]