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Companhia Energetica de Minas Gerais (CIG) Q2 2021 Earnings Call Transcript

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CIG earnings call for the period ending June 30, 2021.

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Companhia Energetica de Minas Gerais (CIG 0.49%)
Q2 2021 Earnings Call
Aug 18, 2021, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for waiting. Welcome to Cemig's second-quarter 2021 conference call. We informed that all participants will be in a listen-only mode during the company's presentation. After that, there will be a Q&A session where further instructions will be given.

[Operator instructions] Now, I would like to turn the floor over to Mr. Antonio Carlos Velez Braga. Please, Mr. Braga, the floor is yours.

Antonio Carlos Velez Braga -- Investor Relations

Good afternoon, everyone. I am Antonio Velez, Cemig's investor relations superintendent. We now start the Cemig's second-quarter 2021 earnings call and webcast with the following executives: Reynaldo Passanezi Filho, CEO; Dimas Costa, chief commercial officer; Eduardo Soares, chief legal and regulatory officer; Leonardo George de Magalhaes, CFO, and IR officer; Marney Tadeu Antunes, chief distribution officer; Mauricio Dall'Agnese, chief CemigPar Participation Strategy, Environment and Innovation; and Thadeu Carneiro da Silva, generation and transmission officer. This broadcast can be followed via the phone numbers in Brazil, 55-11-3127-4970; or in U.S., 1-516-300-1066, as well as on the link available in our RI website, ri.cemig.com.br.

For the initial remarks, I would like to turn the floor to our CEO, Reynaldo Passanezi.

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Reynaldo Passanezi Filho -- Chief Executive Officer

Good afternoon. Good afternoon, everyone. It is a pleasure to be here in the conference call, bringing to you the results of the second quarter of Cemig. I'm going to go straight to the presentation.

You can turn to Page 3 on to make highlights. Here, we have main highlights. I would say that the message is about a consistent recovery, very robust recovery on the company's results. These are robust figures that prove our success in this -- turnaround in the company's recovery.

And in terms of financial results, you can see -- our final results in the quarter, we reached an EBITDA of 2.590 billion, 38% higher than the same quarter last year and a net income of almost BRL 2 billion. So in a single quarter, the company reached BRL 2.6 billion in EBITDA and BRL 2 billion of net income. Here also, we have the results for the first six months, which are very significant, 4.4 billion in EBITDA and 2.4 billion of net income. Just to give you an idea, and we are here every day and sometimes we forget to make, you know, long-term comparisons.

And I thought it would be nice to have this long-term comparison now and I would like to compare that to 2018. So, if we compare the results in a single semester, Cemig is delivering more than the whole year in '18, whether in EBITDA or net profit in a single semester, in six months, our EBITDA was BRL 4.4 billion in six months in 2018, it was BRL 3.7 billion. So, we are 17% higher in six months of the results that we reached in 2018. And the same thing applies to net profit, we are seeing that in six months, we had almost BRL 2.4 billion of net profit to a net profit in 2018 of BRL 1.7 billion.

So, I would say that just here you can see that consistency in the results, a very sound results that the company is delivering according to its strategic planning here. And where the results come form? Well, first, from a huge effort in terms of operating efficiency, which takes us to the second topic, opex and EBITDA for distribution. We were already delivering in the last quarters, the opex that was within the regulatory limit. And now this is the first time in history that we were able also to deliver our EBITDA that is higher than the regulatory limit.

So, today, we have an opex that is 10% in average lower than the maximum regulatory limit. We -- maintaining quality, we are able to have lower expenses than the regulatory opex establishes. And at the same time, our EBITDA was over the regulatory limit, and we are increasing collection, reducing losses, increasing disconnections, and that's how we were able to get such a good EBITDA over the regulatory limit. And here, we should take a look at the whole picture and make a comparison, once again, turning back to 2018, there we were enough within the regulatory opex and EBITDA.

We were 5% lower -- rather 5% higher than our regulatory opex, and we were 23% lower than the regulatory EBITDA. So if we consider that difference, we have an adjustment of almost BRL 250 million. Now, over the regulatory EBITDA. If we consider the number that we had in 2018 that was lower than the regulatory EBITDA.

So, these are very significant results that show our efforts of operating efficiency and improvement in the company's performance because EBITDA is not only operating expenses but also a good collection practice, low provision, and low delinquencies. So we are very pleased to announce the EBITDA of BRL 119 million above the regulatory EBITDA. In 2018, it was 23% lower than the regulatory limit. So, this is an adjustment of almost 30% in only three years.

The same thing we can say about our quality indicators. This is our all-time low for DEC, 9.46 hours. Starting last -- the end of last year, we were able to be under 10 hours in that indicator. And obviously, this is a very positive scenario when we have a long-term vision.

And we have been able to do that, thanks to our legal successes with no significant tariff impact for consumers our tariff adjustment was only of 128%, zero for consumers, and this is the lowest in this industry in the second consecutive quarter because thanks to our tax credits, PIS and Cofins that we are reimbursing our consumers. So we have been able to do that with no impact for -- and tariffs for end consumers. And that is the second adjustment that we don't need to adjust anything. And finally, here we have a challenge and we want to accelerate the BRL 822 million in investments.

They are very close to what we carried out in 2018. So here, in six months, we have the same amount of 2018 and that's 20% higher than last year. But of course, for our objective, which is the largest investment program in history, we still have to accelerate, and we have the challenge of accelerating it in the second half of the year. And Leonardo Magalhaes will comment more on that.

And here, we are highlighting operating topics EBITDA and opex at our record. When we know that historical comparison, we can really see that they more than doubled the results when we compare that to a few years ago, these are fantastic results in terms of efficiency, whether by meeting the regulatory opex or the regulatory EBITDA in the first time in the company's history, excellent quality indicators. Understanding the country's situation because of the pandemic and the lower tariff adjustments in the industry for two consecutive years. and generating value, buying investments with the largest investment program in the company's future, which are at BRL 22.5 billion for the next five years.

This is on the operations point of view. I think we can move on to the next page now. And here, we are bringing some nonrecurring topics versus the buyback of Eurobonds, and Leonardo and Velez will go into that, but this was a successful conclusion, we bought back $500 million of our bonds and eliminating, therefore, a risk regarding the FX rates. That's something that the company had and regarding those securities also the recognition of GSF 910 million with the extension of the plant rights.

And this is interesting because this is what's immediate cash, effectively, we gained more or less two years, two years, and something in terms -- in plants that we're doing 2024, 2025. And now we have the reprofiling of RBSE and also updating our assets using our Ke, and that adding 211 million to our net profit. And here, we have our strategy also, which is the acquisition of Sete Lagoas Transmissora de Energia, BRL 40 million. That shows our objective of going back to the market also in terms of analyzing acquisition opportunities, if they represent synergy with the company, and this is a substation that connects two of our own lines.

So exactly because of that, it has a lot of synergy, and this acquisition will generate a lot of value. And obviously, we should highlight a sound cash position. This is very important in a scenario in which our spot prices are high, we have GSF. And so there is a need of cash disbursements of CDE because this is only going to come next year in distribution adjustments.

So, this is a sound cash position of almost BRL 7 billion and an EBITDA/net debt ratio in the 0.91 and a minimum ratio here. So, these are the main highlights that I wanted to bring to you, and we will be available to take your questions in the Q&A session. And now, I turn the floor to Leonardo and Velez. But when you see the whole picture, and I think that's what's interesting.

It is really to see, in fact, how the company is improving. And I think this is our objective to keep delivering more and more within our strategic planning this recovery for Cemig.

Leonardo George de Magalhaes -- Chief Financial Officer

Thank you, Reynaldo. Good morning. Actually, good afternoon, everyone, and thank you for being with us here in this conference call for the second-quarter earnings of Cemig. So now, we are going to go into the details about the renegotiation of hydrological risk.

Basically, here, we have the plant where we have the concessions Reynaldo already mentioned, we highlight here Emborcacao and Nova Ponte. They have cash generation that is high and we were able to have additional cash generation for two more years up to 2027. It's important to have this cash generation preparing the company for renewal process in this concession and a possible payment of concession grant fee then. Right now, this is a noncash effect.

It's only on the results. But further on, I mean, in the future, this extension will represent a very significant cash generation for the company in 2026 and '27. We understand that this was very important. And in the prior quarter, we mentioned that we would possibly post this in the quarter, I mean post these effects here are the effects posted and to our financial statements.

In the next slide, we have our Eurobond buyback. We believe this is a very important highlight. In our meeting with investors in May, we mentioned that if we had an opportunity to restart the process of buying back the bonds still in 2021. If there was a window of reduction in the FX rate, we would start a process.

And today, the FX rate is over BRL 5.30, but there was a moment in which it was close to BRL 5, and we took the opportunity. We've done a locked the spread at BRL 5.09 and we had the opportunity to start and conclude the bonds operation. It was successful, there was a demand of BRL 774 million with a premium of 16.25%. The premium considering the face value of the activity shows how the company is improving its rating.

And I think the premium represents that improvement in the credit quality of the company. Therefore, the effects and this withdraw would involve of BRL 3.107 billion in payments, we drew 500 million related to these bonds. And the net cash effect was BRL 2.309 billion. This operation was included in August.

So now in this third quarter, we are going to have a nonrecurring effect, which is a premium payment with a net effect for social contribution and income tax of BRL 325 million in our financial statements in the third quarter, that it's not posted yet. But at the end of the day, we believe this was a very important movement to reduce our FX exposure. And more than that, considering that we have a partial hedge also a better debt profile. And when Velez talks about that, it's going to be very clear how the company now has a much better debt profile because we removed the $1.5 million for 2024, we were BRL 8 billion to a much less amount.

We believe this effect is better for the company in its cash management and debt profile. On the next slide, we have the effects of the bond. In the second quarter, the total effect worth BRL 617 million credit. But looking only at the head, we have a negative effect of BRL 426 million because of the interest rates, considering that we switched our hedge, we changed FX variation by CDI, considering CDI was up in this last quarter that has a negative effect on the pricing of our hedge.

But on the other hand, considering the FX rate was down. We ended the quarter close to BRL 5 that had a positive effect of BRL 1.043 billion. So in the quarter, we have a positive effect and the balance sheet of the company of BRL 617 million because of these operations that involve the updating of the principal amount of our debt of the bond and also how much our hedge adjusted to market value used in that pricing. Moving on, this is an important highlight.

And we mentioned in prior quarters, the tariff adjustment of the company was approved on May 25 by Aneel now that the tariff review considering all consumption classes was of BRL 1.28, but for residential consumers for the second year in a row, this was zero adjustment. That is during the pandemic our consumers, residential consumers had no tariff adjustments, and we believe this is an important piece of data that helps the company to maintain the delinquency level very low, and we'll talk more about that in a few minutes. And that was thanks to the beginning of reimbursement of PIS, Pasep, and Cofins tax credits. And we started reimbursing those amounts.

These -- total of BRL 4 billion, and these amounts were considered in the last two tariffs adjustments, and we started already reimbursing 1.5 billion in the credits. We believe this was an important event for the company. We were successful and the company also is benefiting consumers, thanks to its proactive action in 2008 when they started this lawsuit. Moving on to our investment program.

We had 822 million invested up to June. The total amount so far is 2.9 billion. This is a great challenge for us to be able to carry out all this plan by the end of the year. The first six months was the one with the greater challenges in terms of acquiring equipment, considering FX variation and also the price increase for steel in the international market.

All of that cost is this investment process in the first half of the year to be more challenging. And we hope that in the last semester, this investment program, it's accelerated. And just to give you an example, we have around 30 substations to be concluded in the second half of the year. And because of that, we understand that the second half of the year, we'll be able to have a better performance in terms of our investment decision.

But even if part of this investment on distribution, which is the highest one, 2.3 billion, if we cannot conclude all of that by the end of the year, we understand that we will have to accelerate. And at the most, it should be concluded by 2022. We are alert to that situation, and the company is really working to include the investment programs in 2021 and 2022, so that we can include them in our regulatory tariff review. Moving on, we talk about quality indicators and matters that involve delinquency.

And now, I'll turn the floor to Marney, our distribution officer, and he worked on Cemig distribution on this process, and he will comment more.

Marney Tadeu Antunes -- Chief Distribution Officer

Thank you, Leonardo. Good afternoon, everyone. Just stressing what Dr. Reynaldo mentioned in the beginning that we reached the lowest level DEC in history.

Now, we are at 9.46 and this is a moving indicator in 12 months, 12 months. So July of 2020 to June 2021. So this figure is much lower than the regulatory limit. I would like to highlight two topics here.

The first one is a programmed DEC and the other one is the accidental DECR program, the one would be even higher than last year because our investments were higher. But because we are using new technologies, we have a great management there so that we do not increase the program, the DEC, which is to turn off the grid for maintenance, and the accidental DEC is worked by our investment plans. It has to do the substations that are under construction, these 30 substations, 30 kilometers of transmission lines, all of that -- thanks to the -- because of the pandemic. We'll be able -- we will leverage now in the second half of the year.

We have some bidding problems but all the events have been taken care of, and we'll be able to move on. And all these comments also can be applied to FEC, 4.89 much lower than the regulatory limit, which is 6.56. Also, a historic result. Next slide, please.

Now turning to our delinquency and how we are fighting delinquency. I would like to mention that because of the pandemic and its consequences when we could not make disconnections in some customers categories, the isolation, and the economic crisis that we had. We then had to develop a special plan to fight delinquency, and we developed a program for merchants. We were very successful in the results of this program, helping the merchants to go back and start working again.

We increased the number of disconnections, where allowed. We added intelligence to the process to have a better return. And all of that allowed us -- so we have a better collection index. You can see here in the first line, we had a collection index of 98.8% at the highest levels in the past few years.

This is collection over one billing in 49.4% in our collection activities that is 50% higher than the same period of last year. Also, we automated protests automatic activities, electronic protests. We implemented that, we started charging bills on the credit card, in installments for the past due bills also we negotiated installment via WhatsApp, with disconnections. We had 201 more disconnections than same period of last year in the categories where we could have disconnections again.

And also, we have new payment channels. And you can see here on the screen. But I also would like to highlight that thanks to that, if we look to the chart, the top chart, you have 98.87%, which is our collection index. Collection over billing.

And our ADA has a very satisfactory result, thanks to the improvement in the rules, reversals that we are working on, and also all these collection actions. And I would like to add the losses. We are in very well in delinquency and in terms of the losses. Our losses today and we just ended July at 11.92%.

Our target for the year is 11.09%. We are very close to it and the regulatory, we expect that October next year, that rate planning to reach the regulatory level or losses. So we are doing well in losses and delinquency, which so our plan is on the right part. Thank you very much.

And I'll turn the call back to Velez.

Antonio Carlos Velez Braga -- Investor Relations

Thank you very much, Marney. So now, let's turn to Slide 13, and we'll start the company's results. Here, we have the main effect for the second quarter of 2021. For Cemig Holdings, we had an operating efficiency initiative, which was our voluntary redundancy program.

We had the enrollment of 324 employees and the cost was of 35 million. For Cemig distribution exclusively, we should highlight, we already mentioned the strong growth in the volume of distributed energy of 12.4%. Our market captive market that is the sale for end consumers grew 5.3% and transport for clients for free clients here also had a strong growth of over 21%. And we are going to go into the details of this growth.

And if it were not by distributed generation and as you know, this is very strong in Minas Gerais growth for total consumption would have been of over 14%, but we are going to go into the details shortly. As already mentioned, we had a reversal in our ADA in BRL 8 million that was in order to better reflect that provision. But I should highlight that even without that reversal, we would have a 50% reduction in provision following the same criteria of last year. Just to make clear here that there is an improvement regardless of the reversal.

And as already mentioned, by our CEO, the opex for the distributing company is within the regulatory target for Cemig GT, we did have the effect of the posting for GSF or hydrological risk renegotiation with a positive impact in our EBITDA of BRL 910 million. Also, we have a reprofiling of RBSE, positive BRL 211 million, marking to market of Eurobond as our CFO mentioned, had a positive effect in 2021 of BRL 717 million with a lower positive effect in the same period of 2020 of BRL 71 million. So that also caused the Cemig GT's result increase, and we will show you that in details when we go company by company. And equity income for Cemig GT had a negative impact of BRL 119 million in the second quarter of '21 with sub-fee, a negative effect in the 2Q '20 of BRL 8 million; but negative equity income was mainly because of Santo Antonio and Guanhaes.

And Turning to Slide 14. We have here the results in the first half of the year, the consolidated for Cemig for 2021, first half of the year. So, strong growth for EBITDA and profit, weather, and accounting IFRS figures or are recurring numbers when we consider the period adjustments. So, EBITDA, for instance, the IFRS EBITDA increased 66.9% reaching BRL 4.435 billion in the first half of the year.

While the recurring figure for EBITDA reached BRL 2.973 billion with a growth of 29.5%. Our net profit and IFRS grew 133.5% from BRL 1.014 billion in the first half of BRL 2.368 billion in the first half of 2021. Now -- and the recurring results last year's net profit in the first half was BRL 1.058 billion and it increased 45.8%, reaching BRL 1.543 billion in the first six months of 2021. We do have adjustments on the bottom of the page.

And as I mentioned, the highlight here is the GSF, which was the highest BRL 910 million. In the second quarter of 2021, the consolidated results also had growth any way you look at it. In accounting -- accounting wise and recurring figures as well and this was because of the highest energy consumption in our concession area. And also, we have growth in gas consumption from Gasmig that was very relevant, up 85% in the period.

And just Gasmig alone had a growth in EBITDA of BRL 94 million in the second quarter of '21 vis-a-vis second quarter of '20. Consolidated EBITDA in IFRS grew 38.8%, reaching BRL 2.590 billion. And in the second quarter of 2021, the adjusted figure was of BRL 1.321 billion, up 39.4%. About the net profit, it was up 79.9% for BRL 1.082 billion to BRL 1.946 billion in IFRS, while the adjusted net profit with no effect of the FX exposure, we had an increase of 58.7% to BRL 441 million to BRL 700 million.

So in recurring terms, I think we can say that net profit increased almost 80% in IFRS, and the adjusted almost 60%. So these are great results for our second quarter of 2021. Going into the details of the Cemig GT. We also grew, as you can see and we should highlight that because of the adjustment in our contracts and also settlement on CPE, we had an average price of BRL 248.34 in the second quarter of 2020 that is energy selling price for the BRL 219.53 million in the same period of 2020.

So Cemig GT's EBITDA grew in IFRS of 112.6%, reaching BRL 1.699 billion, while the adjusted result in the EBITDA was BRL 430 million, up 34.8%. The IFRS net profit reached BRL 1.444 billion, up 254.8% and the adjusted net profit was BRL 198 million, increasing over 360%. Starting on Slide 17 to talk a little bit about the energy market for Cemig Distribution. Now as we mentioned energy billed to end consumers and transported energy, both increased to 12.4%.

Out of that transported energy for free clients increased 21.4% and consumers energy increased 5.3%. We should now return to the industrial area -- in our concession area, which we had a strong recovery of 19.6%. That was the increasing consumption, really, really strong because of the recovery. But also residential customers you see here.

That you remember last year in this period of the stores were basically closed. So there was an increase of 8.8% in the commercial area. But the residential consumers, draw attention during the pandemic they were consuming regularly, and we did have increase in consumption in the residential segment. And even then in 2021, we still see growth in that area, 4%.

So it really is a very important growth. As I mentioned, in terms of the distributed generation, the total energy there increased over 90% in the second quarter of 2021 compared to 2Q '20. And so in 2Q '20, we had 232-gigawatt hour injected in our system because of distributed generation. And in 2Q '21, we have 442-gigawatt hours, so when we add these figures to total distributed energy, we concluded that total consumption in concession area for Cemig Distribution actually increased 14.1%.

We also had migration of captive clients to free clients. So this is what you see for our end consumers. They also had this dynamic. Therefore, we saw a migration in the second quarter of 153-gigawatt hour.

And so comparing total distributed energy, for Cemig Distribution in the second quarter of '21 to the second quarter of '19, which would be a better comparison base because it was before the pandemic. There was a growth of 3.8%. So once again, growth -- we see growth on all areas from all angles we look at it. Now on Slide 18, we have the semi distribution results.

We did not have any nonrecurring effects here, and that's why you only see EBITDA and net profit in IFRS, there was an increase in energy volume. And here, we once again highlight the industry, only the industrial sector it had an increase of 907-gigawatt hours. We had a reversal, as I mentioned, in the provision of ADA in the second quarter of BRL 8 million vis-a-vis a provision of BRL 103 million in the second Q '20. If we had done the provision -- the provision in 2021 using the same criteria of last year, the provision would have been BRL 41 million, even then it would be much lower, stressing what we already said regarding all our initiatives to increase collection and reduce delinquency.

On Slide 19, operating costs and expenses. There was an increase of 25.3%. And when we remove items such as purchase of energy or energy that we purchase and then sell for commercialization. And so PMSO itself went from BRL 856 million to BRL 919 million and there was an increase specifically here in outsourced services.

It was because of two main reasons. Last year because of the pandemic, some IT expenses have been reduced because services were reduced considering the pandemic. And also, there was a migration of the data center. And while we're migrating information from one data center to another, we had an overlapping of two service providers, this has been concluded already.

And we have to remember that in the second quarter of 2020, basically, we didn't have any disconnections of our overdue customers. And in August, they started again. But in the second quarter of 2021, we had 332,000 disconnections, but we didn't have any in 2Q '20 and this is a service that is done basically by our subcontractors. Now turning to Slide 20.

We have here the comparison both of opex and EBITDA. Both regulatory, of Cemig Distribution to the real numbers. This is -- all right, this has been already mentioned by our CEO. We're just going to go into the details here.

The regulatory opex in the first half was BRL 1.571 billion, and the realized opex was BRL 1.443 billion, better than the regulatory, and BRL 128 million just in the first half of the year. I should highlight here the PMSO itself is lower than the regulatory BRL 385 million. But because of the other expenses that we have such as profit-sharing program, post-retirement, and voluntary redundancy program, and other provisions that are higher. And that we bring in so that we can factor those into the comparison, and we still suffer a little bit in a way that we have the realized opex of BRL 1.443 billion.

But as our CEO mentioned, it's important to see it as the whole picture, in 2018 the realized opex grow 5% or higher than the regulatory opex in 2019 it was over 29%. And just in 2020, as you know, you're following the company, by the end of the year, the third and fourth quarters alone, we were able to have a better performance, and the opex in 2020, it was 5% lower. And now just in the first half of the year, we are 8% lower than the regulatory opex. About the EBITDA regulatory EBITDA in the first half was BRL 1.217 billion and the realized was BRL 1.336 billion.

As we see, it was better than the regulatory opex was better as well. And just losses were a little bit lower in the 51% in the half of the year, a much lower figure than what we had last year. And as Marney mentioned, by October of next year, we should be within the regulatory level as well in losses. Now turning to Slide 21.

We have here our debt profile -- consolidated debt profile. So here, you see in the first chart, the maturities timetable, with average tenor for 3.4 years. Our net debt is of BRL 6.3 billion, that's considered total debt minus cash and securities, and we still reduce our hedge because this is an asset that we have, and we showed that this is something that we can use at any time when we're ready to settle the bond whether at maturity date or in a prepayment is considered cash also because of covenant calculation effect. So by the end of the quarter, our cash was almost BRL 7 billion with these maturities timetable that we see here plus BRL 456 million due in 2021, in 2022, BRL 1.259 billion; 2023, BRL 821 million.

So up to 2023, we have our maturities table that is fine for the company's cash generation. But in 2024, we have the maturity of this bond. And we should highlight that by June, we had it as BRL 8.090 billion. But since we carried out the standard operation in July and August, and we settled it in August, $500 million, we are already reflecting the real maturity in 2024, which will be BRL 5.585 billion and much better.

And we did not have a debt transfer here. We used the cash that we had by the end of the quarter to be able to make this payment. So we are not rolling out debt from this year to another one. In terms of the indexors, the U.S.

dollar is the most relevant, 57% of our debt is indexed by dollar, IPCA represents 30% and CDI, 13%, and we have other indexors that are not very representative even then we have our hedge protecting our dollar-denominated debt, and the principal is protected in between 3.45 for a dollar -- from BRL BRL 3.45 up to BRL 5. And we have a full swap for interest rates of around 165% and a very competitive cost of debt. In terms of cost of debt, nominal terms in the quarter, we reached 8%. But if we can delay the real term, which is important -- and it's important to do that.

As you know, our revenues are protected against the inflation, so our debt cost in the real term is still coming down, reaching 1.06% a year. And leverage is still going down, both in terms of net debt over EBITDA and the total net debt over equity plus net debt. In 2018, net debt over EBITDA was 3.24 times in December of 2018 year and now in June is 0.91 times. Now in terms of capital structure, it was 42.8% in 2018 and now it is at 20.2% in June, a significant reduction.

And this is reflected in our credit quality in the performance of our debentures and our bonds in the secondary market. Now, turning to the figures in our results on 22 -- Slide number 22, we have the consolidated cash flow. This is what would be the reconciliation. So by the end of last year, cash and securities was 5.805 billion.

The cash generation was of 2.944 billion, we did have cash inflow settlement of derivative instruments of 889 million. We reimbursed our consumers of 910 million, regarding the tax credits of PIS and Cofins, that allowed us to have a very low readjustment last year and this year. And we paid long-term financings with no further funding. We also paid dividends, that's why we have that 734 million in financing activities.

We sold Light in January, and we raised BRL 1.366 billion, and we invested BRL 829 million, in a way that our cash by the end of the quarter reached BRL 6.998 billion. Now, I will turn the floor to Leonardo on Slide 23, to talk about the management's priorities.

Leonardo George de Magalhaes -- Chief Financial Officer

I will be very brief so that we have time for questions. In addition to operating efficiency measures, which are part of this management's routine in our strategic plan disclosed by May, we were very transparent, and we mentioned our is our main initiatives in terms of value generation for the company. And this slide is kind of an accountability to show you how the actions are moving forward. This is our guide.

A lot of the measures and a lot of the topics have been already carried out. And we are working in the remaining ones, and we expect that in the next quarters, we will bring to you more and more of these measures already achieved. And these involve restructuring our retirement benefit plans and also value-generation. And we understand that considering the results we're bringing to you and by the deliveries that we involve operating efficiency of the company and a better structure of capital.

We understand we are on the right track to have and to carry out all these measures that we consider to be the more relevant ones. That's it, Velez. 

Antonio Carlos Velez Braga -- Investor Relations

Very well, we now conclude the presentation we prepared for you for this call. And now we turn to our Q&A session.

Questions & Answers:


Operator

We will now start the Q&A session. [Operator instructions] If there are no further questions, we turn the floor back to Mr. Reynaldo Passanezi Filho for his final remarks.

Reynaldo Passanezi Filho -- Chief Executive Officer

Very well. Good afternoon, everyone, and thank you very much for being with us on this call. We hope to see it in 90 days with the results of the third quarter. We expect that they are as robust and consistent as the ones we just brought to you.

Thank you all very much. See you next time.

Operator

[Operator signoff]

Duration: 53 minutes

Call participants:

Antonio Carlos Velez Braga -- Investor Relations

Reynaldo Passanezi Filho -- Chief Executive Officer

Leonardo George de Magalhaes -- Chief Financial Officer

Marney Tadeu Antunes -- Chief Distribution Officer

More CIG analysis

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