Financial Reporting and Accounting Standards - The consolidated financial statements have been prepared in accordance with IFRS and presented in millions of Reais[322]. - The company reported significant estimates and judgments affecting the financial statements, including adjustments for loss on doubtful accounts and deferred income tax[327]. - The company intends to adopt new and amended accounting standards when they become effective, as disclosed in the financial statements[331]. - The Company assesses impairment of financial assets using historical trends and management's judgment, adjusting for current economic conditions[346]. - Deferred tax assets and liabilities are recognized for temporary differences, with a review at the reporting date to ensure realization is probable[353]. - The liability for retirement benefit pension plan obligations is recorded as the greater of the amortization amount or the present value of actuarial obligations, adjusted for unrecognized gains and losses[347]. Revenue Recognition - The Annual Permitted Revenue (RAP) is recognized when the performance obligation is satisfied, with revenues from energy transmission concession contracts recorded accordingly[338]. - Revenue from energy sales is recognized based on actual consumption during each 30-day billing period at specified rates, with adjustments for peak demand[359]. - Revenues from gas sales are recorded upon delivery, with unbilled amounts estimated based on contracted supply and historical accuracy[359]. - Revenue from the Tariff for Use of the Distribution System (TUSD) increased by 11.02% year-on-year, reaching R$3,022 million in 2020[398]. - CEMIG recognized a revenue of R$455 million from tariff adjustments in 2020, significantly higher than R$58 million in 2019, primarily due to increased energy costs[399]. Financial Performance - Total revenues for the year ended December 31, 2020, were R$23,018 million, a decrease of 4.31% compared to R$24,052 million in 2019[369]. - Net revenues decreased by 1.02% from R$25,486 million in 2019 to R$25,228 million in 2020[386]. - Revenue from energy sales to final customers was R$23,018 million in 2020, a decrease of 4.30% compared to R$24,052 million in 2019[389]. - The total volume of energy sold by CEMIG decreased by 1.52% in 2020 compared to 2019, with residential consumption increasing by 4.20%[392]. - CEMIG D's total energy sales to other concessionaires increased by 16.68% compared to 2019[396]. Operating Costs and Expenses - Operating costs and expenses decreased by 4.64% to R$21,432 million in 2020, down from R$22,475 million in 2019[413]. - Charges for the use of the national grid rose by 22.58% to R$1,748 million in 2020, compared to R$1,426 million in 2019, due to annual adjustments[418]. - Operating provisions decreased by 82.38% to R$423 million in 2020, down from R$2,401 million in 2019, mainly due to reassessment of legal provisions[419]. Cash Flow and Financing - Cash and cash equivalents increased to R$1,680 million as of December 31, 2020, up from R$536 million in 2019, primarily due to net cash generated from operating activities of R$8,607 million in 2020 compared to R$2,036 million in 2019[460]. - The company used net cash of R$5,076 million in investing activities in 2020, significantly higher than R$1,188 million in 2019, reflecting increased investments in marketable securities[461]. - Total indebtedness as of December 31, 2020, was R$15,020 million, comprising R$2,059 million in current debt and R$12,961 million in non-current debt, an increase from R$14,777 million in 2019[463]. - The company’s total loans and financings as of December 31, 2020, included R$7,825 million in foreign currency debt, reflecting a strategic approach to managing currency exposure[463]. Governance and Management - The Board of Directors of CEMIG comprises nine members, with a structure that ensures representation from minority shareholders and employees[484]. - The Executive Board consists of seven Executive Officers, elected for a two-year term, with the possibility of re-election for a maximum of three consecutive terms[492]. - The Fiscal Council is composed of five members, with a majority elected by the controlling shareholder, ensuring independent oversight of financial statements[499]. - The company has established a healthcare plan applicable to Executive Officers, aligning benefits with those of other employees[498]. Employee and Labor Relations - As of December 31, 2020, CEMIG had a total of 5,254 employees, a decrease from 5,596 in 2019 and 6,083 in 2018[506]. - In 2020, CEMIG distributed 4.3% of its profits to employees, compared to 4% in 2019 and a potential maximum of 7.5% based on exceeding budget targets[511]. - Total employee benefits paid in 2020 amounted to R$183 million, including R$100 million for pension contributions and R$83 million for assistance benefits[513]. Impact of Covid-19 - The company suspended energy supply interruptions for low-income residential customers during the Covid-19 pandemic[378]. - CEMIG D received a total of R$1,404 million from the "Covid-Account" to support its cash flow during the pandemic[381]. - The industrial sector's energy consumption decreased by 14.40% in 2020 due to the impact of the Covid-19 pandemic[394]. Future Outlook and Investments - CEMIG plans to allocate approximately R$2,347 million for capital investments in 2021, primarily for the expansion of its distribution system[477]. - The total purchase of energy from various sources is projected to be R$187,418 million from 2021 to 2026, with the highest annual purchase in 2025 at R$9,571 million[480].
CEMIG(CIG_C) - 2020 Q4 - Annual Report