Eletropaulo Metropolitana Eletricidade de São Paulo SA

Transcription

Eletropaulo Metropolitana
Eletricidade de São Paulo S.A.
Financial Statements
December 31, 2015
with Independent Auditor's Report on individual
financial statements
ELETROPAULO METROPOLITANA ELETRICIDADE DE SÃO PAULO S.A.
FINANCIAL STATEMENTS
December 31, 2015 and 2014
Content
Independent auditor's report on the financial statements ..................................................... 1
Audited financial statements:
Balance sheets ...................................................................................................................... 3
Statements of income ........................................................................................................... 5
Statements of comprehensive income .................................................................................. 6
Statements of changes in shareholders’ equity .................................................................... 7
Statements of cash flows ...................................................................................................... 8
Statements of value added ................................................................................................... 9
Notes to the financial statements ......................................................................................... 10
A free translation from Portuguese into English of Independent Auditor’s Report on Financial
Statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil
and International Financial Reporting Standards (IFRS), issued by International Accounting Standards
Board – IASB
Independent auditor’s report on financial statements
The Board of Directors and Shareholders
Eletropaulo Metropolitana Eletricidade de São Paulo S/A.
Barueri - SP
We have audited the accompanying financial statements of Eletropaulo Metropolitana
Eletricidade de São Paulo S/A. (“Company”), which comprise the balance sheet as at
December 31, 2015 and the related income statement, statements of comprehensive
income, of changes in equity and cash flow statement for the year then ended, and a
summary of significant accounting practices and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting practices adopted in Brazil and International
Financial Reporting Standards (IFRS), issued by the International Accounting Standards
Board (IASB), and for such internal control as management determines is necessary to
enable the preparation of these financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Brazilian and International Standards on
Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether these financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the preparation and fair presentation of the
Company’s financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company's internal control. An audit also includes evaluating the appropriateness of
accounting practices used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
1
Opinion
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Eletropaulo Metropolitana Eletricidade de São Paulo S/A.
as at December 31, 2015, and its financial performance and its cash flows for the year then
ended, in accordance with accounting practices adopted in Brazil and International
Financial Reporting Standards (IFRS), issued by the International Accounting Standards
Board (IASB).
Other matters
Statement of value added
We have also audited the statement of value added (SVA) for the year ended December 31,
2015, prepared under the responsibility of Company management, the presentation of
which is required by the Brazilian Corporation Law for publicly-held companies, and as
supplementary information under IFRS, whereby SVA presentation is not required. This
statement has been subjected to the same auditing procedures previously described and, in
our opinion, is presented fairly, in all material respects, in relation to the overall financial
statements.
Prior years’ financial statements audited by other independent auditors
The financial statements for the year ended December 31, 2014, as originally prepared
before the reclassifications described in Note 2.2, were audited by other independent
auditors, who expressed an unmodified opinion on those statements on February 9, 2015.
As part of our audit of the financial statements for the year ended December 31, 2015, we
have also audited the reclassifications described in Note 2.2, which have been made to
restate the 2014 financial statements originally presented. In our opinion, these
reclassifications are appropriate and have been made correctly. We were not engaged to
audit, review or apply any other procedures on the financial statements for the year ended
December 31, 2014, therefore, we do not express an audit opinion or any form of assurance
on these overall financial statements.
São Paulo, February 15, 2016.
ERNST & YOUNG
Auditores Independentes S.S.
CRC-2SP015199/O-6
Marcos Antonio Quintanilha
Accountant CRC-1SP132776/O-3
2
A free translation from Portuguese into English of the financial statements in accordance with
accounting practices adopted in Brazil and in accordance with International Financial Reporting
Standards (IFRS).
___________________________________________________________________________________
BALANCE SHEETS
(Amounts expressed in thousands of reais – R$)
Notes
TOTAL ASSETS
Cash and cash equivalents
Short-term investments
Consumers, concessionaires and permitees
Recoverable income tax and social contribution
Other recoverable taxes
Sundry receivables
Accounts receivable - agreements
Other credits
Inventories
Prepaid expenses
Financial sector assets, Net
TOTAL CURRENT ASSETS
4
4
5
6
6
8
9
34
NON CURRENT
Deferred income tax and social contribution
Guarantees and judicial deposits
Other credits
Financial asset related to the concession agreement
Investments
Property, plant and equipment
Intangible
TOTAL NON-CURRENT ASSETS
5
6
7
18
8
9
11
34
11/12
TOTAL ASSETS
See accompanying notes to the financial statements
3
2015
2014
146,621
384,557
2,530,174
25,973
93,450
10,011
89,752
321,532
63,957
36,609
891,472
4,594,108
181,260
727,891
1,723,776
19,378
110,520
1,997
99,911
229,834
63,137
28,584
140,940
3,327,228
26,451
33,916
438,191
443,126
9,215
63,398
2,004,798
449,428
13,130
40,688
5,158,378
8,680,719
40,780
499,851
445,283
19,900
81,575
1,980,753
129,566
8,769
11,100
5,045,454
8,263,031
13,274,827
11,590,259
BALANCE SHEETS
Notes
CURRENT LIABILITIES
Trade accounts payable
Loans and financing
Debentures
Finance Lease
Government grants
Income tax and social contribution payable
Other taxes payable
Dividends and Interest on shareholders’ equity payable
Accrued liabilities
Labor and social liabilities
Consumer charges payable
Provision for legal proceedings and others
Research and development and Energy efficiency
Other liabilities
TOTAL CURRENT LIABILITIES
13
15
15
15
14
14
17
19
18
20
21
NO CURRENT
Loans and financing
Debentures
Finance Lease
Government grants
Pension plan liabilities
Provision for Legal Proceedings and Others
Research and development and Energy efficiency
Accrued liabilities
Reversal reserve
Other liabilities
TOTAL NON-CURRENT LIABILITIES
15
15
15
16
18
20
17
21
SHAREHOLDERS' EQUITY
Capital
Capital reserve
Other comprehensive income/Equity valuation adjustment
Income reserves:
Legal reserve
Statutory reserve
TOTAL SHAREHOLDERS' EQUITY
22.1
22.3
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
4
2015
2014
1,926,785
38,286
678,273
11,351
2,427
2,531
528,319
42,730
95,857
7,766
690,504
166,929
57,640
271,469
4,520,867
1,561,434
68,387
520,010
2,958
2,478
19,118
551,549
3,858
88,601
1,589
60,252
168,108
40,279
230,880
3,319,501
474,952
2,367,850
31,830
8,108
2,604,967
319,440
32,295
969
66,085
8,319
5,914,815
457,364
2,014,161
9,012
10,535
2,818,793
299,507
15,731
720
66,085
11,042
5,702,950
1,257,629
20,428
309,780
1,257,629
19,203
174,615
244,265
1,007,043
2,839,145
235,573
880,788
2,567,808
13,274,827
11,590,259
STATEMENTS OF INCOME
(Amounts expressed in thousands of reais, except earnings per shares, presented in reais)
Reclassified
Notes
NET OPERATING REVENUE
2015
2014
25
13,667,413
10,596,616
26
26
26
(8,524,148)
(236,801)
(1,123,511)
(7,212,156)
(271,673)
(396,083)
27
16
(693,188)
(315,254)
(524,290)
(42,038)
(610,731)
(197,019)
(92,222)
(490,676)
(344,657)
(13,194,535)
(678,759)
(286,038)
(445,870)
(42,886)
(582,995)
(80,580)
(28,967)
(470,528)
(57,559)
(10,554,094)
OPERATING COSTS
Cost of electric energy
Electricity purchased for resale
Electricity purchased for resale - Proinfa
Charge for use of transmission and distribution system
Operating Costs
Personnel and management
Private pension entity
Third-party services
Material
Construction cost
Provision/Reversal allowance for doubtful accounts, net
Provision/Reversal for Legal Proceedings and Others, net
Depreciation and amortization
Other costs
GROSS OPERATING COSTS
10
28
INCOME FROM SERVICES (GROSS PROFIT)
FINANCIAL INCOME (EXPENSES)
Financial income
Financial expenses
Net foreign exchange variations
TOTAL FINANCIAL INCOME (EXPENSES)
472,878
42,522
469,543
(663,047)
(120,401)
(313,905)
273,411
(486,637)
(25,671)
(238,897)
158,973
(196,375)
30
30
7/30
7/30
(28,268)
(74,994)
12,024
33,401
(57,837)
101,136
(23,791)
(61,917)
39,795
110,541
64,628
(131,747)
24
24
0.57004
0.62705
(0.74258)
(0.81684)
29
29
29
PRE-TAX INCOME
Social contribution
Income tax
Deferred social contribution
Deferred income tax
TOTAL TAXES
NET (LOSS) INCOME FOR THE YEAR
Basic and diluted (losses) earnings per share:
Earnings per common share
Earnings per preferred share
5
STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 31, 2015 and 2014
Notes
2015
2014
101,136
(131,747)
314,955
(107,085)
(207,755)
70,637
309,006
(268,865)
Other comprehensive income
16
7
Actuarial valuation adjustment
Income tax and social contribution on actuarial valuation adjustment
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAXES
See accompanying notes to the financial statements.
6
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts expressed in thousands of reais)
Capital
reserve
Stock and
stock options
granted
Capital
Notes
Balance as of December 31, 2013
Total comprehensive income:
Net income for the year
Income tax and social contribution on actuarial valuation adjustments
Transactions with shareholders:
Share-based payments
Prescribed dividends and interest on shareholders' equity unclaimed by shareholders
Internal changes in equity accounts:
Realization of equity valuation adjustment
Income tax and social contribution on equity valuation adjustments
Absorption of the net loss for the year with part of the statutory reserve
1,257,629
16
7
35
23
Total comprehensive income:
Net income for the year
Income tax and social contribution on actuarial valuation adjustments
Transactions with shareholders:
Share-based payments
Minimum mandatory dividends
Prescribed dividends and interest on shareholders' equity unclaimed by shareholders
Internal changes in equity accounts:
Realization of equity valuation adjustment
Income tax and social contribution on equity valuation adjustments
Legal reserve destination
Statutory reserve destination
18,210
-
-
-
993
-
-
-
1,257,629
19,203
-
-
-
1,225
-
1,257,629
20,428
16
7
35
23
23
25
Income reserve
7
Other
comprehensive
income/equity
valuation adjustment
407,819
(207,755)
70,637
(145,584)
49,498
174,615
314,955
(107,085)
(110,159)
37,454
309,780
Legal reserve
235,573
Statutory
reserve
910,231
-
-
-
-
235,573
Total
shareholders'
equity
Retained
earnings
-
2,829,462
(131,747)
-
(131,747)
(207,755)
70,637
6,218
(29,443)
145,584
(49,498)
29,443
880,788
-
993
6,218
2,567,808
-
-
101,136
-
101,136
314,955
(107,085)
-
-
(42,085)
3,191
1,225
(42,085)
3,191
8,692
244,265
126,255
1,007,043
110,159
(37,454)
(8,692)
(126,255)
-
2,839,145
STATEMENTS OF CASH FLOWS
2015
Operating activities:
Net income (loss) for the year
Expenses (Income) not affecting cash and cash equivalents:
Monetary and foreign exchange variation
Monetary adjustment on financial concession assets
Allowance for doubtful accounts, net
Provision for legal proceedings and others, net
Cost of loans and financing (charges on debt)
Pension fund/ health plan - CVM Rule 695
Interest income on short-term investments
Disposal of financial assets, intangibles relating to concession and property, plant and equipament
Capital gain on disposal of assets
Deferred taxes and social contributions
Shares and stock options granted
Changes in assets and liabilities:
Sundry receivables
Inventories
Prepaid expenses
Other credits
Other taxes payable
Payment of legal proceedings and others
Labor and social liabilities
Accrued liabilities
Research and development and energy efficiency
Other liabilities
Cash interest on short-term investments received
Payment of obligations with pension plan entity
Interest paid (charges on debt)
Income tax and social contribution paid
Net cash provided by (used in) operating activities
Investing activities:
Additions of financial and intangible assets related to concession
Consumers financial participation
Purchase of short-term investments
Sales of short-term investments
Purchase/sale of guarantees and judicial deposits
Cash received on sale of property, pland and equipament and intangibles
Sale of investments
Net cash flow used in investing activities
Financing activities:
New loans and debentures
Dividends and interest on shareholders' equity paid
Payments of loans and debentures (principal)
Cost of loans and financing (transaction costs and premium)
Payment for capital leasing
Net cash flow provided financing activities
Variation in Company's net cash
Opening balance of cash and cash equivalents
Closing balance of cash and cash equivalents
101,136
(131,747)
490,676
19,795
(194,343)
231,409
136,639
507,271
312,891
(63,592)
71,748
(2,613)
(45,425)
1,225
470,528
(24,908)
(55,237)
104,734
94,646
382,156
282,517
(67,835)
59,730
(157,974)
(150,336)
993
(1,019,102)
7,492
23,934
(8,014)
(820)
(24,562)
(8,025)
(61,694)
(1,070,394)
365,351
79,798
(23,230)
(164,042)
6,177
7,505
630,252
27,380
37,866
89,677
(211,762)
250,604
(656,292)
12,837
36,183
(1,553)
(8,315)
33,195
(272)
(50,905)
(270,506)
405,860
41,271
316,626
(133,911)
133
(11,736)
49,011
(5,572)
(2,807)
71,429
(224,649)
407,294
(450,887)
(115,897)
(316,180)
(334,406)
(70,950)
1,938
(618,373)
101,507
(9,510,605)
9,833,454
24,925
12,543
(156,549)
(571,321)
148,014
(5,586,528)
5,695,966
61,081
57,772
3,600
(191,416)
1,181,144
(22)
(725,568)
(9,585)
(7,879)
438,090
569,397
(68,655)
(277,998)
(2,182)
(4,034)
216,528
(34,639)
181,260
146,621
8
2014
27,050
154,210
181,260
STATEMENTS OF VALUE ADDED
Reclassified
2015
1. REVENUE
Gross revenue from sale of electric energy and others revenue
Supply of electric energy
Others revenue
Construction revenue of own assets
Allowance for doubtful accounts, net
2. INPUTS ACQUIRED FROM THIRD PARTIES
Materials
Other operating costs
Cost of purchased energy and transmission
Third party services
3. GROSS VALUE ADDED
4. RETENTION
5. NET VALUE ADDED PRODUCED BY THE ENTITY
6. VALUE ADDED RECEIVED UPON TRANSFER
Financial income
7. TOTAL VALUE ADDED TO BE DISTRIBUTED
8. DISTRIBUTION OF ADDED VALUE
Employees
Salaries and charges
Employees' profit sharing
Private pension plan
FGTS
Taxes (Government)
Federal
Income taxes and social contribution
COFINS
PIS
INSS
Social charges - others
State
ICMS
Other
Municipal
ISS
IPTU
Regulatory concession charges
CDE - energy development acccount
R&D, Energy Efficiency, FNDCT and EPE
Consumer charges - PROINFA
Consumer charges - CCRBT
Inspection charge - ANEEL
Others
Third party capital remuneration
Interest
Rental
Allocation of Income
Dividends
Retained (Losses) earnings
9
2014
24,368,277
24,565,296
12,110,457
11,844,108
610,731
(197,019)
(12,368,318)
(330,594)
(413,329)
(10,877,745)
(746,650)
11,999,959
(490,676)
(490,676)
11,509,283
469,543
469,543
11,978,826
14,483,629
14,564,209
7,728,457
6,252,757
582,995
(80,580)
(9,630,431)
(342,337)
(57,773)
(8,531,836)
(698,485)
4,853,198
(470,528)
(470,528)
4,382,670
273,411
273,411
4,656,081
11,978,826
987,742
572,993
70,495
315,254
29,000
10,082,508
1,110,670
57,837
793,254
171,285
62,090
26,204
3,886,512
3,875,704
10,808
31,574
270
31,304
5,053,752
3,169,660
128,623
46,257
1,694,062
15,149
1
807,440
783,448
23,992
101,136
42,085
59,051
4,656,081
880,639
488,000
70,431
286,038
36,170
3,366,492
549,561
(64,628)
426,238
92,539
66,652
28,760
2,422,222
2,419,926
2,296
30,382
255
30,127
364,327
222,666
93,016
32,743
15,900
2
540,697
512,308
28,389
(131,747)
(131,747)
NOTES TO FINANCIAL STATEMENTS
1.
General information
Eletropaulo Metropolitana Eletricidade de São Paulo S.A. (“Company”) is a
publicly held company, under private Law, directly controlled by AES Elpa S.A.
and indirectly controlled by Brasiliana Participações S.A. (“Brasiliana
Participações”). Brasiliana Participações is an indirect subsidiary of The AES
Corporation (headquartered in the United States of America). The Company is
authorized to operate as an electric power utility concessionaire, primarily in the
distribution and sale of electric power in 24 cities in the metropolitan region of
Greater São Paulo. Its activities are regulated and inspected by the Brazilian Power
Regulatory Agency (ANEEL), which is associated with the Ministry of Mines and
Energy (MME).
The Company’s headquarter is located at Brazil, Barueri Municipality, State of Sao
Paulo at Avenue Dr. Marcos Penteado de Ulhôa Rodrigues, No. 939, stores 1 and 2
(ground floor) and the 1st to the 7th floor, Subdivision Sitio Tamboré, Tower II
Condominium Castelo Branco Office Park, ZIP Code 06460-040.
The Company, as mentioned in explanatory note 25, billed for electric energy
distribution services 36,179 GWh and 37,827 GWh for the period ended December
31, 2015 and 2014, serving approximately 6.9 million and 6.7 million consumers
for the period ended December 31, 2015 and 2014, respectively.
The Concession Contract for Electric Power Distribution No. 162/1998, executed
on June 15, 1998 (ANEEL resolution No. 72, of March 25, 1998), shall be effective
for 30 years.
According to the Concession Agreement, the Company is supposed to go through
Tariff Reset processes every four years, first of which took place on July 4, 2003,
and through Tariff Adjustment on an annual basis. The last Tariff Reset took place
on July, 4 2015 (please refer to explanatory note 33.4(b.4)).
Corporate reorganization
On June 3, 2015, the Companhia Brasiliana and AES Tietê SA ("AES Tietê")
published material fact informing the market the corporate reorganization
("Reorganization") involving the Companhia Brasiliana and AES Tietê and the
companies directly or indirectly controlled by them. The proposal of reorganization
was formalized by the Restructuring Agreement signed between AES Holdings
Brasil Ltda. (“AES Holdings Brasil”) and BNDES Participações S.A. (“BNDESPAR”), and subsequently approved by ANEEL, as Authorizing
Resolution N 5.433 as of August 25, 2015, and the Company's Board of Directors
and AES Tiete, through corporate documents, besides to obtaining the consents
from creditors. On October 26, 2015, the Shareholders' Meetings from all
companies involved approved all the reorganization stages, subject to certain
condition precedents that were met on December 28, 2015. Thus, for tax and
corporate effects, on December 31, 2015, the corporate reorganization process
involving the Company and companies directly and indirectly controlled by the
Company was completed.
10
The Reorganization took place by means of the partial spin-off of Companhia
Brasiliana and merger of the spun-off portion into Companhia Brasiliana
Participações S.A. (“Brasiliana Participações”). Companhia Brasiliana shall hold
directly and exclusively the shareholding control of AES Tietê and Brasiliana
Participações shall hold directly or indirectly the shareholding control of all other
companies (Eletropaulo Metropolitana Eletricidade de São Paulo, AES Elpa S.A.,
AES Uruguaiana Empreendimentos S.A. and AES Serviços TC Ltda.). In a
subsequent stage, AES Tietê was acquired by the Company, the latter being the
remnant legal entity, which was renamed as AES Tietê Energia S.A. (“AES Tietê
Energia”).
AES Holdings Brasil and BNDESPAR was entered into a new Brasiliana
Shareholders' Agreement, new controlling shareholder of AES Elpa and, indirectly,
of the Company, which substantially reflects the terms and conditions of the
previous shareholders' agreement of Brasiliana’s company before reorganization.
Thus, the restructuring and the new shareholders' agreement has not implied on a
change in the controlling shareholder of Brasiliana Participações and AES Tietê
Energia, which continued being AES Holdings Brasil. After the restructuring, the
equity interest held by AES Holdings Brasil and BNDESPAR in the total share
capital of both companies, Brasiliana Participações and AEs Tietê Energia,
remaining the same.
Therefore, the corporate reorganization involved, exclusively for the Company, the
replacement of its indirect controlling company, due to the transfer of shares of
Companhia Brasiliana to Brasiliana Participações, not generating any impact on the
presentation of these financial statements.
2.
Basis of preparation and presentation of Financial Statements
The Company’s Executive Board authorized the conclusion of the preparation of
financial Statements on February 15, 2016 submitting such documents, at this date,
to the approval of the Board of Directors and to the analysis by the Fiscal Council.
Based on the proposal of the Board of Directors and opinion by the Fiscal Council,
such financial statements will be submitted to the approval of the Company’s
shareholders.
11
2.1
Declaration of conformity
Financial Statements of the Company was prepared in accordance with the
International Accounting Standards - IFRS issued by the International Accounting
Standards Board – IASB and with the accounting practices adopted in Brazil.
The accounting practices adopted in Brazil comprise the Pronouncements,
Interpretations and Guidelines issued by the Accounting Pronouncements
Committee - CPC, which were approved by the Brazilian Securities and Exchange
Commission - CVM and the Federal Council of Accountancy - CFC, and, also
include complementary rules issued by CVM.
The Financial statements were prepared using historical cost, as basis of value,
except for revaluations recorded in prior years to the transition date, and for the
valuation of certain financial instruments which were measured at fair value.
2.2
Basis of preparation and presentation
All amounts presented in the Financial statements are expressed in thousands of
reais, unless otherwise indicated. Due to rounding, the figures throughout this
Financial statements may not accurately add up to the totals stated.
Our independent auditors did not examine quantitative data, such as volumes and
numbers of consumer units.
Reconciliation of the comparative balances:
The company, after carrying out certain topics and aiming to better presentation of
its financial position and its operational and financial performance, carried out the
following adjustments and reclassifications in its statements of income and value
added of December 31, 2014, originally authorized on February 9, 2015 as shown
below, based on guidelines issued by the "CPC 23 - Accounting Policies, Changes
in Accounting Estimates and Errors". The changes made do not alter the total assets
and equity.
12
2014
Originally
presented
NET OPERATING REVENUE
10,557,279
Ref.
Reclassifications
Reclassified
(a.2 e b)
39,337
10,596,616
(a.2)
15,900
(7,212,156)
(271,673)
(396,083)
-
(18,245)
(2,345)
(678,759)
(286,038)
(445,870)
(42,886)
(582,995)
(80,580)
(28,967)
(470,528)
(57,559)
(10,554,094)
OPERATING COSTS
Cost of electric energy
Electricity purchased for resale
Electricity purchased for resale - PROINFA
Charge for use of transmission and distribution system
Inspection charge
(7,212,156)
(271,673)
(396,083)
(15,900)
Operating Costs
Personnel and management
Private pension entity
Third-party services
Material
Construction cost
Provision allowance for doubtful accounts, net
Provision for Legal Proceedings and Others, net
Other costs
GROSS OPERATING COSTS
(678,759)
(286,038)
(445,870)
(42,886)
(582,995)
(80,580)
(28,967)
(470,528)
(39,314)
(10,551,749)
INCOME FROM SERVICES (GROSS PROFIT)
(a.1)
5,530
36,992
42,522
(55,237)
18,245
(36,992)
273,411
(486,637)
(25,671)
(238,897)
(196,375)
-
(196,375)
64,628
(131,747)
-
64,628
(131,747)
FINANCIAL INCOME (EXPENSES)
Financial income
Financial expenses
Net foreign exchange variations
TOTAL FINANCIAL INCOME (EXPENSES)
328,648
(504,882)
(25,671)
(201,905)
PRE-TAX INCOME
TOTAL TAXES
(b)
(a.1)
2014
Originally
presented
1. REVENUE
Gross revenue from sale of electric energy and others revenue
Supply of electric energy
Others revenue
Construction revenue of own assets
Allowance (Reversal) for doubtful accounts, net
2. INPUTS ACQUIRED FROM THIRD PARTIES
Materials
Other operating costs
Cost of purchased energy and transmission
3. GROSS VALUE ADDED
4. RETENTION
5. NET VALUE ADDED PRODUCED BY THE ENTITY
6. VALUE ADDED RECEIVED UPON TRANSFER
Financial income
7. TOTAL VALUE ADDED TO BE DISTRIBUTED
14,428,392
14,508,972
7,728,457
6,197,520
582,995
(80,580)
(9,612,186)
(342,337)
(39,528)
(8,531,836)
(698,485)
4,816,206
(470,528)
4,345,678
328,648
328,648
4,674,326
8. DISTRIBUTION OF ADDED VALUE
Employees
Taxes (Government)
Income taxes and social contribution
Interest
Rental
Allocation of Income
4,674,326
880,639
3,366,492
558,942
530,553
28,389
(131,747)
13
Ref.
(b)
(a.1)
(b)
(a.1)
Reclassifications
Reclassified
55,237
55,237
55,237
(18,245)
(18,245)
36,992
36,992
(55,237)
(55,237)
(18,245)
14,483,629
14,564,209
7,728,457
6,252,757
582,995
(80,580)
(9,630,431)
(342,337)
(57,773)
(8,531,836)
(698,485)
4,853,198
(470,528)
4,382,670
273,411
273,411
4,656,081
(18,245)
(18,245)
(18,245)
-
4,656,081
880,639
3,366,492
540,697
512,308
28,389
(131,747)
The nature of the principal reclassifications is described below:
(a)
As the new Accounting Manual for the Electrical Sector - "MCSE", issued by
the Brazilian Electrical Energy Agency - ANEEL, became effective on
January 1, 2015, the Company's Management chose to make the presentation
of the income statement in line with this guidance, since it understands that it
more properly portrays its operations. The reclassifications made in order
align the presentation criterion with the best practices of electrical sector
companies were:
(a.1) Financial indicators (DIC/FIC/DMIC/DICRI) classified as “Other Costs”,
previously presented as "Financial expenses", in a total of R$18,245;
(a.2) Electric Energy Services Inspection Charge – TFSEE - classified as
“Deduction to gross revenue”, previously presented as "Operational costs", in
a total of R$15,900.
(b)
The Company reviewed its accounting practices and concluded that the
adjustment of the financial assets subject to indemnification from the
concession, originally presented as "Financial Revenue", in the financial
result, could be better classified in the operating revenue group, together with
further revenues related to its business purpose, since it more properly
reflects its business model of electrical energy distribution and provide a
better presentation as for its equity status and its performance. This
conclusion is supported by the fact that:
(i)
The return of the distribution business, over investment in
infrastructure, is determined by the fair value of the infrastructure plus
the "WACC” rate;
(ii)
Investing in infrastructure is the main activity of its business ands its
management model is supported on controlling construction,
maintenance and operation of such infrastructure;
(iii) The tariff revenues represent both the intangible assets return and a part
of the financial assets return, due to the fact that both accounting assets
are part of the regulatory basis of compensation. And the tariff
revenues are fully recorded as part of the "Net Operating Income";
(iv) Analyses are prepared by third party specialists seeking to calculate
certain performance indicators, such as: Return on Net Equity, Return
on Financial Assets, Return on Operating Assets, Debt Cost and Return
on Total Assets, may have relevant distortions when computed based
on the previously adopted accounting practice;
14
(v)
The new classification adopted is supported by paragraph 23 of OCPC
05 - Concession Agreement.
The impact of this issue for the year ended December 31, 2014 is a
reclassification of R$55,237 of interest income to operating income.
2.3
Functional currency, translation of balances and transactions in foreign
currency
(a)
Functional and presentation currency
The Financial statements were prepared and presented in Reais (R$), which is the
Company’s functional currency and the same used in the presentation. The
functional currency was determined in accordance with the main economic
environment of the Company’s operation.
(b)
Transactions and balances
Foreign currency transactions, i.e. all those that are not carried out in the functional
currency, are translated at the effective exchange rate on the date of each
transaction. Monetary assets and liabilities in foreign currency are translated into
the functional currency of the effective exchange rate at the Financial Statements’
date.
3.
Accounting policies and estimates
The main accounting policies applied in the preparation of the financial statements
are stated below. Those policies were applied consistently in all years presented.
3.1
Financial assets – initial recognition and subsequent measurement
Financial assets are any assets identified as: cash and cash equivalents, an equity
instrument of another entity, including short-term investments, a contractual right
to receive cash or another financial asset from another entity; a contractual right to
exchange financial assets or financial liabilities with another entity under
conditions that are potentially favorable to the entity, or a contract that may be
settled by the entity’s equity instruments under certain conditions. The Company's
principal financial assets are described below.
15
(a)
Cash and cash equivalents and short-term investments
Include cash, bank accounts and short-term investments that are highly liquid and
bear insignificant risk of change in their market value. Cash and cash equivalents
are stated at cost plus accrued interest, since there was no material difference in
relation to their market value.
Investments which maturity term is set at three months or less on the date of
acquisition are classified as cash equivalents. Those investments with maturities
greater than three months on the date of acquisition are classified as short-term
investments.
Short-term investments are classified as available for sale and measured at fair
value. Interest, monetary and variations are recognized in the income statement
when incurred. The variations stemming from changes in the fair value of these
investments are recognized in a specific equity account, as incurred. Any
provisions for impairment are recorded in the income statement. Gains and losses
recorded in equity are transferred to income statement for the year at the time these
investments turn into cash or when there is evidence of loss on their realization. As
of December 31, 2015 and 2014, there was no change in fair value.
(b)
Consumers, concessionaires and permittees and other accounts receivable
The Company classifies consumers, concessionaires, permittees and other accounts
receivable as “Loans and receivable” financial instruments. The receivables are
initially recognized at fair value and are subsequently adjusted through
amortization of the principal, interest calculated based on the effective interest rate
method (“amortized cost”). Receivables can be reduced by the allowance for
doubtful accounts. Accounts receivable from consumers, resellers, concessionaires
and permittees include amounts billed and unbilled for electric energy distribution
services, also including the use of the distribution system for free consumers as
energy sold on the spot market Electric Energy Spot Market (CCEE).
(c)
Allowance for doubtful accounts - ADA
The allowance for doubtful accounts (explanatory note 10) is constituted based on
an estimate of probable losses that may be incurred in the collection of receivables
and are stated netting the corresponding asset accounts to which they are related to
(explanatory notes 5, 8 e 9). The criteria currently used by the Company to set up
the allowance for doubtful accounts are as follows:
(i)
Consumers
 Residential category: consumers with accounts overdue by more than 90 days;
 Commercial category: consumers with accounts overdue by more than 180 days;
 Industrial and rural category, public sector, public lighting public services and
other, overdue for more than 360 days.
16
(ii)
Services rendered/agreements
The services rendered are accrued based on credit overdue more than 360 days.
The agreements concerning installment payment with consumers in default “Debt
Confession Term - DCT” are fully accrued regardless of installments not matured,
since at least one invoice is already classified as ADA and is reversed upon the
occurrence of the following events: (i) proportionally to the amount received from
each installment negotiated (ii) when the amount amortized exceeds 30% of the
total negotiated debt and the consumer is compliant, including with other debts,
and the total reversal of value still outstanding.
The allowance for doubtful accounts also includes an individual analysis of
accounts that management considers deemed hardly realizable.
Account write-offs due to losses are made after all administrative collection actions
and comply with the terms and amounts established by Law 9430/1996, with
changes introduced by Article 8 of Law N 13,097/2015.
Receipts of receivables related to accounts receivable already written-off as they
met the loss criteria, are recorded under the “provision/reversal for allowance for
doubtful accounts” – ADA heading.
(d)
Provision for impairment of financial assets
Financial assets are analyzed on an quartelly basis to identify any changes that may
indicate impairment. Assets are considered irrecoverable when there is evidence
that one or more events occurred after their initial recognition, having impacted
their estimated future cash flow on a significant or prolonged way.
(e)
Write-off on financial assets
The Company writes their financial assets off upon expiration of the contractual
rights on such assets’ cash flow, or when substantially all the risks and rewards
underlying this financial asset are transferred to another entity. If the Company
retains substantially all the risks and rewards of a transferred financial asset, such
financial and a liability is recognized for any amounts received in the transaction.
(f)
Concession contract (financial and intangible assets)
Assets infrastructurerelating to the concession contract are separated between
financial and intangible assets.
Financial assets relating to concession (financial asset and intangible) are
remunerated through the regulatory WACC (weighted average cost of capital), that
consists of interest on investment made, which are included in the tariff charged to
the Company’s consumers and received monthly.
17
Assets classified as concession’s compensable financial assets represent the
estimated portion of investment realized and will not be amortized until the end of
the concession.The Company has an unconditional right to receive cash or other
financial asset from the Granting Authority in compensation for the reversal of
public sector infrastructure. Financial assets related to the concession agreement
are classified as available for sale and for the years presented were adjusted to fair
value in accordance with the regulatory base asset – RAB calculated at the new
replacement value, criterion used by ANEEL to determine the tariff to be charged.
Also pursuant to technical pronouncement CPC 38, the changes derived from
changes in market conditions (interest rates variations) are recorded in the
shareholders’ equity under other comprehensive income. Since there isn’t an active
market for the trading of such financial asset, the Company determines its fair
value by using the same components of the regulatory remuneration rate set forth
by ANEEL (Regulatory WACC). In case of the Company observing a change in
the regulatory WACC over the tariff-reset periods, that new interest rate is used by
the Company to discount the estimated cash flows to present value. The Company
understands that this methodology is which better reflects the fair value in the view
of the market players, since the return rate set by ANEEL considers not only the
free-risk rates, but also the other risks inherent to the electric energy industry.
Hence, the adjustments derived from the changes to market WACC and the
regulatory WACC are recognized under Shareholders’ Equity. On December 31,
2015 and 2014, there is no balance recorded under other comprehensive results as
the Company concluded that on that date there was no difference between those
rates.
(g)
Financial sector assets and liabilities
On December 10, 2014 was signed the Third Amendment to the Concession
Agreement, for which he was assured that any balance of an asset or financial
liability sector at the end of the concession contract, will be compensated for or
reimbursed by the Company.
Recognition of financial sector assets and liabilities are Intended to neutralize the
economic impacts of the Company, due to the difference between non-manageable
items, called "Parcel A" or other financial components, and those effectively
included in the tariff, every tariff adjustment / revision.
These differences between the actual cost and the cost considered in the tariff
adjustments generate a right as the cost performed is greater than that included in
the tariff, or an obligation, when costs are lower than those included in the tariff.
The differences are considered by ANEEL in the next tariff adjustment, and
became part of the Company's tariff adjustment index.
18
The balance comprises: (i) the previous cycle (in amortization), representing the
balance approved by ANEEL already included in the tariff and (ii) the cycle in
constitution, which are the differences that will be approved by ANEEL in the next
tariff adjustment. The balance of cycles can be seen in Note No. 34.
On December 9, 2014 by CVM Resolution no. 732, the Accounting
Pronouncements Committee - CPC approved the Technical Guidance OCPC 08,
becoming mandatory prospective recognition of certain financial sector assets or
liabilities by electricity distributors. With addendum of the concession agreements,
the CPC considers there is no significant uncertainty that is an impediment to the
recognition of sectoral financial assets and liabilities as amounts actually receivable
or payable. Thus, the Company recognized from December 10, 2014 the financial
sector assets and liabilities in its statutory financial statements.
3.2
Inventories
Inventories are valued at average cost of acquisition or production. The provisions
for obsolete items are set up when considered necessary by management.
Inventories are intended for own consumption and distribution system
maintenance.
The materials intended for construction of the Company’s infrastructurerelated to
concession are classified as construction in progress.
3.3
Intangible
Assets classified as intangible assets represent the Company’s right to charge
consumers for the use of the public service infrastructure during the contract
concession period.
Intangible assets are recognized at fair value on the acquisition or construction date
and include capitalized financing costs. After initial recognition, intangible assets
are amortized by the straight line method over the period corresponding to the right
to charge consumers for use of concession assets that these generated (useful
regulatory lives of assets) or by the concession contract period, whichever is
shorter.
The Company aggregates, on a monthly basis, interest incurred on loans, financing
and debentures to the infrastructure construction costs recorded in intangible assets
in progress, considering the following capitalization criteria: (a) interest is
capitalized during progress of construction infrastructure; (b) interest is capitalized
considering the average weighted cost of loans effective on the capitalization date;
(c) total interest capitalized on a monthly basis does not exceed the total value of
monthly interest expenses; and (d) capitalized interest is amortized considering the
same criteria and useful lives determined for intangible assets in which they were
incorporated. Capitalized interests for the years ended December 31, 2015 and
2014 are presented in Note 29.
19
3.4
Property, plant and equipment – financial leasing
Leased items whose control, risks and benefits are substantially exercised by the
Company (financial leasing) are recorded as a Company’s PP&E against current or
non-current liability, as the case maybe. Assets recorded under PP&E are
depreciated or amortized according to the shorter of their estimated economic
useful lives or over the expected lease agreement effective term, whichever is
shorter.
Income from the disposal of an asset is determined by the difference between the
sales value and the book value, net of the respective accumulated depreciation, and
is recognized in the income statement for the year.
3.5
Provision for impairment of non-current or long term assets (non-financial
assets)
Management reviews at least on a quarterly basis the net book value of long term
assets with a view to determining whether there are any events or changes in
economic, operating or technological circumstances that may indicate impairment
loss. If there is any indicator of loss, the Company proceeds with the calculation of
impairment. The Company does not have intangible assets with indefinite useful
lives for which impairment tests are required on an annual basis.
The recoverable assets are defined as the greater value between the value in use and
the net sales value.
In order to measure the recoverable amount of the asset through its value in use, the
Company uses the smallest identifiable group of assets that generates cash inflows
(cash-generating unit). The Company’s management considered integrated
distribution network as a single cash generating unit.
An impairment loss shall be recognized in the income statement in the amount that
the carrying amount exceeds the amount to be recovered through use or sale of the
asset
3.6
Provisions for legal proceedings and others
The Company is party to various judicial and administrative proceedings.
Provisions are set up for lawsuits for which it is probable that an outflow of
resources will be required to settle the obligation and a reliable estimate of the cash
disbursement can be made. Assessment of the chances of an unfavorable outcome
by the Company’s legal advisors includes evaluation of available evidence, the
hierarchy of the laws, case law available, the most recent court decisions and their
significance in the legal system, as well as the assessment made by external legal
advisors. The provisions are reviewed and adjusted to take into account changes in
the circumstances, such as the applicable statutes of limitation, additional
exposures identified based on new issues and court decisions.
20
Financial liabilities – initial recognition and subsequent measurement
3.7
As described in Note 33.2, the Company classifies suppliers, loans and financing,
government subsidies, tariff and consumer charges payable, and dividends and
interest on capital payable as financial liabilities. All financial liabilities are
recognized and measured at amortized cost.
Settlement of financial liabilities
The Company settles financial liabilities only when the obligations are
extinguished, i.e. when settled, cancelled by the lender or time-barred by statute in
accordance with contractual provisions or legislation in force.
Financial instruments – presentation at net amount
Financial assets and liabilities are presented net in the balance sheet if and only if
there is a current legal and enforceable right to offset the recognized amounts and
there is the intention to offset, or concomitantly realize the asset and settle the
liability.
3.8
Embedded derivatives
Embedded derivatives in other financial instruments or agreements, when
applicable, are treated as separate derivatives when their risk and characteristics are
not close related to the main agreements and when these agreements are not
measured at fair value through statement of income. For the years ended December
31, 2015 and 2014, the Company did not identify any embedded derivatives in its
contracts.
3.9
Taxes on sales
Sales revenue is subject to the following taxes and contributions at the following
statutory rates:

Contribution for Social Integration Program (PIS) – 1.65% on sale of electric
energy and revenue of services rendered;

Contribution for Social Security Financing (COFINS) 7.60% on sale of
electric energy and revenue of services rendered;

State VAT (ICMS) – is applied in accordance with the consumers’ class. The
main classes are taxed at the following rates: 18% for commercial and
industrial classes; and tax exempt for the residential class with consumption up
to 90kv, 12% for consumption between 91kv and 200kv and 25% for
consumption above 201kv.

Service Tax – From 2% to 5% levied on the revenue of services rendered
where the tax is due on the property provider. Where tax is payable at the place
21
of execution, shall be applied to the corresponding rate in the respective
municipality.
The taxes reduce sales revenues, which are stated in the statements of income at
their net value. The credits generated from PIS and COFINS non cumulative taxes
over the operating expenses and costs are presented as reduction of these groups in
the financial statements.
3.10 Current and deferred income tax and social contribution
(a)
Current income tax and social contribution
Income tax comprises income tax and social contribution. The current income and
social contribution expense is calculated in accordance with tax law in force.
Income tax is calculated on taxable income at the rate of 15%, plus a surtax of 10%
on taxable income exceeding R$240 a year for the computation of tax, while social
contribution is calculated at 9% of taxable income, both recognized on an accrual
basis. Tax prepayments or recoverable taxes are stated in current and noncurrent
assets, based on forecast of their realization.
Tax prepayments or recoverable taxes are stated in current and noncurrent assets,
based on forecast of their realization, until the end of the year, when the income tax
due is dully calculated and offset with the tax prepayments.
Management periodically reviews the tax position of cases for which ruling tax
legislation requires interpretation and sets up provisions as appropriate.
(b)
Deferred taxes are generated by temporary differences between the tax bases of
assets and liabilities and their book values on the balance sheet date.
Deferred tax liabilities are recognized for all temporary tax differences. Deferred
tax assets are recognized for all deductible temporary differences, credits and tax
losses not used, to the extent it is probable that taxable profit will be available for
the temporary differences to be realized, and unused tax credits and losses to be
utilized.
The book value of deferred tax assets is reviewed on each balance sheet date, or in
shorter periods where material facts requiring review take place. Reduced at the
extent that it is no longer probable that taxable profit will be generated to allow all
or part of the deferred tax assets to be utilized. Should estimated future taxable
profits indicate that deferred taxes recoverable will not be recovered by due date
and pursuant to the latest term of the concession. This analysis is grounded on
expected future taxable profit determined through a technical analysis approved by
the Company’s Management.
To the extent that it becomes probable that there will be sufficient future taxable
income, the Company recognizes an addition to the deferred tax in proportion to
such profits.
22
Deferred tax assets and liabilities are measured at the tax rate determined by tax
legislation in effect at the balance sheet date and that is expected to be applicable at
the date of realization of the assets or settlement of the liabilities which generated
the deferred taxes.
Deferred taxes relating to items recognized directly in equity are also recognized in
equity. Deferred tax items are recognized in accordance with the transaction that
generated the deferred tax, either in the income statement or in equity.
Deferred tax assets and liabilities are presented net only if the deferred taxes are
related to the same taxpayer and subject to the same tax authority, and when there
is a legal or constructive right ensuring the offset of current tax assets against
current tax liabilities.
3.11 Employees benefits
The Company sponsors a retirement and pension plan for its active and former
employees, and their beneficiaries, for the purpose of complementary the
retirement and pension benefits provided by the government.
The pension plan is a defined benefit type plan. The cost of the benefit plan is
determined by the Projected Unit Credit Method, net of assets guaranteeing the
plan assets. The actuarial valuation is based on assumptions (of interest rates,
inflation, benefit increases, life expectancy, etc), the actuarial valuation and
respective assumptions are reviewed on an annual basis at the end of each year, or
in shorter periods where material facts that require new actuarial assessment take
place.
Asset or liability related to defined benefit plans recognized in the financial
statements represents the present value of the defined benefit obligation (using a
discount rate based on Federal Government long-term securities), less the fair value
of plan assets.
The plan assets are held by a closed supplementary pension entity (FUNCESP).
Plan assets are not available to creditors of the Company and may not be paid
directly to the Company. The fair value is based on information on market price
and in the case of listed securities, on the published purchase price. The value of
any defined benefit asset recognized is limited to the sum of any past service cost
not yet recognized and the present value of any economic benefits available in the
form of reductions in future contributions to the plan by the sponsoring employer.
3.12 Other current and non-current assets and liabilities
Other assets are stated at their acquisition or realization value, when the second is
lower, and other liabilities are stated at known or determinable amounts including,
when applicable, accrued charges and monetary variation incurred.
23
3.13 Classification of current and non-current assets and liabilities
An asset or liability should be recorded as current if it is expected to be settled
within the 12 month period following the financial statements base date, otherwise
these are recorded as non-current.
3.14 Present value adjustment of assets and liabilities
Non-current and current monetary assets and liabilities are adjusted to present
value when the effect is considered material in relation to the overall financial
statements.
The implied interest rates applied were based on assumptions and are considered
accounting estimates. At the dates of the financial statements, the Company had no
significant balances resulting from present value adjustments of assets or liabilities.
3.15 Distribution of dividends
Approved dividends payable or grounded on statutory obligations are recorded in
current liabilities.
The Company’s articles of incorporation establish the distribution of mandatory
minimum dividends corresponding to 25% of adjusted net income. Also, in
accordance with the articles of incorporation, the Board of Directors shall resolve
on the payment of interest on shareholder’s equity and interim dividends.
In determining the adjusted net income for distribution of dividends, the realization
of equity valuation adjustment relating to the revaluation reserve recognized in
prior years to the transition date is considered. Accordingly, the increase in
amortization and write off expenses, in connection with the recording of
revaluation recognized in prior years, has a null effect on the calculation of
Company’s dividends.
As such, at year end and after appropriate legal allocations, the Company records
under current liabilities, the equivalent amount to the minimum mandatory
dividend not yet distributed during the year, whilst recording proposed dividends in
excess to the minimum mandatory amount as “additional proposed dividend” in
equity.
The Company can pay interest on shareholder’s equity pursuant to article 9,
paragraph 7 of Law No.9249, dated December 26, 1995, which is deductible for tax
purposes.
The dividends and interest on shareholders’ equity not claimed for three years are
reversed to the Company’s equity under the account “retained earnings and losses”
for new distribution, in accordance with the Brazilian Corporate Law.
24
3.16 Share-based payments
The AES Corporation maintains a compensation plan to its own employees and for
its direct and indirect subsidiaries, concerning the grant of equity instruments,
which occurs when certain pre-established conditions are met. The stock or stock
options granted by AES Corporation are recorded in the Company at fair value of
the equity instrument, on its granting date.
The cost of equity instrument grant transactions is recognized in the income
statement for the year, matched against a capital reserve in equity under a specific
account that indicates the future commitment of the Company's parent to contribute
the funds needed to support the granting of shares and stock options of AES Corp.
acquired by the employees of the Company. Also in accordance with CPC 10 (R1),
the established capital reserve may be utilized to increase the Company’s capital in
favor of The AES Corporation.
3.17 Revenue recognition
Sales revenue includes only the gross inflows of economic benefits received and
receivable by the Company. Amounts charged on account of third parties - such as
sales taxes - are not economic benefits of the Company, and are therefore not
presented in the statements of income. Revenue is not recognized if there is
significant uncertainty as to its realization.
(a)
Revenues from electricity supply
Electric energy distribution services are measured through the delivery of electric
energy over a set period. This measurement occurs in accordance with a meter
reading schedule established by the Company. The billing for electric energy
distribution services is, therefore, based on this meter reading schedule. Service
revenues are recorded as energy bills are issued. In order to adapt meter readings to
the accrual period the services rendered between the date of the meter reading and
month end are recorded through estimates.
b)
Interest income
Interest income is recognized based on the period of time and effective interest rate
on the outstanding principal amount. The effective interest rate is that from which
is discounted the estimated future cash flow receipts during the useful life of a
financial asset in relation to the initial net book value of that asset.
25
(c)
Construction contracts
Entities included within the scope of ICPC 01 (IFRIC 12) Service Concession
Arrangements should record the construction of or improvements to the infrastructure of a concession in accordance with CPC 17 (IAS11) Construction
Contracts. The costs of infrastructure construction performed by the Company can
be reliably measured. However, revenue and expenses corresponding to these
construction services are recognized based on the proportion of work completed up
to the balance sheet date. Expected losses in construction contracts are immediately
recognized as expenses. Considering the regulatory model in force which does not
establish specific remuneration for the construction of or improvement to
concession infrastructure are substantially performed through specialist outsourced
services, and that all construction revenue is related to the construction of
infrastructure for services of electricity distribution, company’s management
decided to record revenue from construction contracts with a zero profit margin.
3.18 Lease agreements
As described in note 3.4, assets related to lease agreements where risks and benefits
are substantially carried by the Company (financial lease agreements) are recorded
under the Company’s property, plant and equipment matched against a current or
non-current liabilities accounts, on a case by case basis. Interests on capital leasing
are allocated to statements of income in accordance with the duration of the
agreement by the effective interest rate method.
In lease agreements classified as "operating lease" payments are recognized as
expenses in the statement of income on a straight line method over the term of the
lease.
3.19 Earnings per share
The Company calculates earnings per share using the weighted average number of
outstanding common and preferred shares during the period corresponding to the
result, in accordance with accounting pronouncement CPC 41 (IAS 33) - Earnings
per Share.
Basic earnings per share are calculated by dividing net income for the year by the
weighted average number of outstanding shares.
The Company’s articles of incorporation assign different rights on the dividend to
preferred shares and common shares. As a consequence, base earnings and diluted
earnings per share are calculated by the “two classes” method. The “two classes”
method of an earnings allocation formula that determines earnings per preferred
share and per common share in accordance with the declared dividends and rights
to share-in undistributed profits.
26
3.20 Segment information
Operating segments are defined as business activities which can generate revenues
and incur expenses, the operating results of which are regularly reviewed by the
Company’s chief operations officer for decision-making about funds to be allocated
to the segment and for assessing its performance.
All decisions made by the Company are based on consolidated reports, the services
are provided using an integrated energy distribution network, and operations are
managed on a consolidated basis. Accordingly, the Company concluded that it has
only one reportable segment, that of the distribution of electric energy.
3.21 Significant accounting judgments, estimates and assumptions
For the preparation of the financial statements, the Company uses judgment and
estimates, based on available information, as well as adopts assumptions, which
affect the amounts of revenues, expenses, assets and liabilities, and the disclosures
of contingent liabilities. Whenever necessary, the judgment and estimates are
supported by opinions prepared by specialists. The Company adopts assumptions
derived from its experience and other factors considered reasonable and significant
under the circumstances. The assumptions adopted by the Company are
periodically reviewed in the ordinary course of business. However, it is important
to note that there are some uncertainty relating to the estimations and assumptions
used by the Company, which can lead to a significant adjustment to the book value
of the asset or liability in future periods as soon as new information becomes
available. An event that requires a change in estimate is treated prospectively.
The main assumptions and estimative used in the preparation of financial
statements are discussed below:
(a)
Retirement and other post employment benefits
The Company has defined benefit plan and also defined contribution plan.
Under a defined contribution plan, the Company has no legal or constructive
obligation to make further payments if the fund does not have sufficient assets to
pay all the benefits. The contributions are recognized as expenses benefits to
emplouees when incurred.
In relation to the defined benefit plan, the Company assesses its liabilities with
supplementary retirement benefits by assessing actuarial rates on an annual basis
and, when necessary, in interim periods, with the help of consultants specializing in
actuarial services. The actuarial valuation involves the use of assumptions on rates
of discount, expected rates of return on assets, future salary increases, rates of
mortality and future increases of retirement and pension benefits. The defined
benefit obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed and updated on an annual basis, at the end of the year.
27
The main assumptions used by the Company are described as follows:
Discount rate
According to Technical Pronouncement CPC 33(R1) – Employees Benefits, the
rate used to discount employee benefits obligation must be determined with
reference to market yields on high quality corporate bonds. However, when there is
no deep market in corporate bonds, it is required to use market yields on
government bonds instead.
In determining the appropriate discount rate, management considers the rates of
government treasury securities with a maturity matching the length of the defined
benefit obligation.
Mortality rate
The mortality rate is based on mortality tables available in Brazil. FUNCESP tests,
on an annual basis, the adequacy of mortality rate according to the most recent
mortality of plan members.
Salary Increase, benefits and Inflation
Future increases in salaries and in retirement and pension benefits are based on
future inflation rates expected for Brazil. As to the inflation rate used, the Company
carried out a survey on the projection of long-term inflation with the economic
departments of several financial institutions.
Expected return rate on plan assets
With the adoption of Technical Pronouncement CPC 33(R1) – Employees Benefits,
the expected return rate on plan assets will be the discount rate used for discounting
the obligation.
(b)
Amortization of intangible assets related to the concession
Intangible assets are amortized by the straight line method over the period
corresponding to the right to charge consumers for use of concession assets that
these generated (useful regulatory lives of assets) or by the concession contract
period whichever is shorter.
For the years ended December 31, 2015 and 2014, the Company used the useful
lives as set forth in ANEEL Resolution 474 of February 07, 2012.
(c)
Useful lives of property, plant and equipment
As described in Note 3.4, items recorded as PP&E are depreciated for the shorter of
their estimated useful economic lives or the lease agreement term.
28
(d)
Provisions for legal proceedings and others
According to Note 3.6, the Company recognizes a provision for legal proceedings
and others based on the likelihood of loss assessment.
Estimates and assumptions used to record provisions for the Company’s
proceedings and others are reviewed on a quarterly basis.
(e)
Provision for impairment of non-current or long term assets
The Company reviews, on a quarterly basis the existence of events or changes that
may indicate impairment of its current or non-current assets at least on an annual
basis (Note 3.5). The recoverable amount is the higher between fair value less costs
of sales and value in use.
The calculation of fair value less sales costs is based on sales transaction
information available for similar assets or market prices less additional costs to
dispose of the asset.
The calculation of value in use is based on the discounted cash flow using the
regulatory WACC. Cash flows derive from the short-term budget and the long-term
projections, corresponding to concession period and do not include restructuring
activities where the Company is still not fully committed or significant future
investments that will improve the asset base of the cash generating unit being
tested. The recoverable value is sensitive to the discount rate used in the discounted
cash flow method, as well as to the expected future cash receipts and the
extrapolated growth rate utilized.
As of December 31, 2015, Management estimates that the carrying amount will be
recovered throughout its future operations.
(f)
Taxes
There are uncertainties regarding the interpretation of complex tax regulations. The
Company sets up provisions based on reasonable estimates, for possible
consequences of audits conducted by tax authorities of the jurisdictions where it
operates, when, likelihood of loss is assessed as probable. The amount of these
provisions is based on several factors such as experience in previous tax audits and
differing interpretations of tax regulations by the taxable entity and the tax
authority in charge. Such differences of interpretation may arise in a wide variety
of matters, depending on the conditions prevailing in the respective domicile of the
Company.
Significant judgment by management is required to determine the amount of
recognizable deferred tax assets based on the probable term of realization and level
of future taxable profits, along with future tax planning strategies.
29
(g)
Allowance for doubtful accounts
The criteria relating to credit risk analysis to determine the allowance for doubtful
accounts are described in Note 3.1 (c).
(h)
Financial assets relating to the concession
As described in explanatory note 3.1 (f), financial assets relating to the concession
represent the estimated portion of investment made in infrastructure and that will
not be amortized until the end of the concession, thus not being recovered through
tariff during the concession period. The value of this financial asset is calculated
based on the asset base approved by ANEEL. It is important to point out that this is
not a financial asset like the other comparable assets available in the market, but a
derivative asset closely connected to the Company’s existing infrastructure, whose
cash flow susceptible to the variations derived from changes in the regulatory
environment and in the price of commodities related to that infrastructure.
The Company’s tariff review occurs every four years, and only on that date the
Regulatory Remuneration Basis is ratified by ANEEL by way of the depreciated
VNR. Thus, in the period between the dates of tariff review, the Management
adjusts the financial assets by using the criterion set forth by ANEEL for the
adjustment of the Remuneration Basis between the review periods. The Company
applied the IGP-M (Brazilian Market Price Index) up to November 2015 as the
adjustment factor for the Compensation Basis fair value. In December 2015, based
on item 8 and Sub-module 2.3 of PROET - Tariff Regulation Procedures, in effect
as from November 23, 2015, the Company started applying the IPCA (Broad
Consumer Price Index) as its adjustment factor. It should be pointed out that the
criterion defined by ANEEL assigns value to the concessionaire’s infrastructure,
fixed assets, and the value of the financial asset represents a portion of these fixed
assets that is not likely to be depreciated/ amortized by the end of the concession
period. Therefore, that financial asset is closely related to the infrastructure, which
on the other hand has its evaluation criteria set forth by ANEEL. These criteria may
be altered by ANEEL timely.
(i)
Fair value of financial instruments
The fair value of financial instruments actively traded in over-the-counter markets
is determined based on purchase prices quoted in the market at close of business on
the balance sheet date, without deduction of transaction costs.
The fair value of financial instruments for which there is no active market is
determined by using valuation techniques. These valuation techniques may include
the use of recent market transactions (at arm’s length); reference to current fair
value of other similar instrument; analysis of discounted cash flows or other
valuation models. An analysis of the fair value of financial instruments, and further
details about their calculation are reported in note 33.
30
(j)
Unbilled revenue
Unbilled revenue is recorded as described in Note 3.17 (a).
(k)
Transactions with share-based payments
The Company measures the cost of transactions settled with shares involving
employees based on the fair value of equity instruments at their granting date. The
estimated fair value of share-based payments requires determining the most
appropriate valuation model for granting equity instruments, which is contingent on
the terms and conditions of the grant. This also requires determining the most
appropriate data for the valuation model, including the option’s expected life,
volatility and dividend income and related assumptions.
3.22 New pronouncements, interpretations and guidelines
(i)
Review of Technical Pronouncements No. 08/2015 - Approved on August 7,
2015 and published on November 5, 2015: Represents changes to the
following technical pronouncements: CPC 01 (R1), CPC 04 (R1), CPC 06
(R1) CPC 18 (R2), CPC 19 (R2), CPC 20 (R1), CPC 21 (R1), CPC 22, CPC
26 (R1), CPC 27, CPC 28, CPC 29, CPC 31, CPC 33 (R1 ), CPC 36 (R3),
CPC 37 (R1), CPC 40 (R1) and CPC 45. All changes are effective as of
January 1, 2016 and in general, introduce improvements in the texts aimed at
better application of the pronouncements in line with international accounting
practices.
(ii)
The following pronouncements and interpretations are effective for periods
after the date of these financial statements. The potential impacts of these
adoptions will be assessed when issuing technical pronouncements of the
Accounting Pronouncements Committee:




IFRS 9 – Financial Instruments;
IFRS 15 – Contract Revenue with Clients;
IFRS 16 - Leases;
Amendment to IFRS 11 - Accounting for Investments Acquisition of Joint
Operations
Amendment to IAS 1 – Disclosure Initiative;
Amendment to IAS 16 e IAS 38 – Clarification of the methods of
depreciation and amortization acceptable;
Amendment to IAS 27 – Equity method and separate financial statements;
Amendment to IFRS 10 e IAS 28 – Sale or contribution of assets between an
investor and its associate or joint venture;
Amendment to IFRS 10, IFRS 12 e IAS 28 – Investment entities: Applying
the exception of consolidation;
Annual Improvements to IFRS cycle 2012 - 2014.






31
4.
Cash and cash equivalents and short-term investments
Cash and cash equivalents:
2015
Cash on bank
Cash in transit
CDB-DI (i)
Repurchase agreement (i)
Subtotal
2014
9,879
136,742
146,621
Short-term investment:
6,859
113,975
15,106
45,320
181,260
2015
CDB-DI (i)
Repurchase agreement (i)
Government securities
Investment fund (i)
Subtotal
Total
2014
57,018
327,234
305
384,557
531,178
198,512
466,747
62,209
423
727,891
909,151
(i) Bank Deposit Certificates (CDB), investment fund and Repurchase Agreements
were remunerated, at an average of 99.62% of CDI for the exercise ended
December 31, 2015 (100.76% for the year ended December 31, 2014) subject to
be redeemed at any time without any revenue impairment with the issuer itself.
5.
Consumers, concessionaires and permissionaires
The breakdown of consumers, concessionaires and permissionaires is as follows:
2015
Balances falling
due
CURRENT
Consumers - Supply:
Residential
Industrial
Commercial
Rural
Government:
Federal
State
Municipal
Public lightening
Public service
Total – billed
Unbilled
Total
Concessionaires and permittees
Spot market - CCEE
Use of energy grid charges
Reimbursement - energy auctions
Total
Total - CURRENT
NON-CURRENT
Consumers - Supply:
Public lightening (**)
Total - NON-CURRENT
Balances past-due
up to 90 days
over 90 days
Total
ADA (*)
Net balance
395,170
81,821
280,555
107
424,376
51,581
87,224
53
81,547
25,649
24,768
5
901,093
159,051
392,547
165
(86,886)
(9,560)
(7,589)
-
814,207
149,491
384,958
165
5,023
19,864
23,413
26,814
43,275
876,042
854,837
1,730,879
4,546
9,783
8,544
3,968
3,616
593,691
593,691
3,054
203
1,627
330
5,936
143,119
143,119
12,623
29,850
33,584
31,112
52,827
1,612,852
854,837
2,467,689
(88)
(43)
(1,094)
(105,260)
(105,260)
12,535
29,850
33,541
31,112
51,733
1,507,592
854,837
2,362,429
161,898
43
5,566
167,507
238
238
1,898,386
593,929
-
-
32
-
161,898
281
5,566
167,745
143,119
2,635,434
26,451
26,451
26,451
26,451
(105,260)
-
161,898
281
5,566
167,745
2,530,174
26,451
26,451
2014
Balances falling
due
CURRENT
Consumers - Supply:
Residential
Industrial
Commercial
Rural
Government:
Federal
State
Municipal
Public lightening
Public service
Total – billed
Unbilled
Total
Concessionaires and permittees
Spot market - CCEE
Use of energy grid charges
Reimbursement - energy auctions
Total
Total - CURRENT
(*)
Balances past-due
up to 90 days
over 90 days
Total
ADA (*)
Net balance
209,975
48,602
179,243
89
217,640
30,516
51,411
28
34,987
13,183
2,084
21
462,602
92,301
232,738
138
(49,626)
(6,109)
(11,099)
-
412,976
86,192
221,639
138
2,698
10,407
13,618
15,363
18,476
498,471
587,482
1,085,953
2,239
1,732
3,325
785
257
307,933
307,933
179
107
1,863
253
5,944
58,621
58,621
5,116
12,246
18,806
16,401
24,677
865,025
587,482
1,452,507
(291)
(4)
(82)
(963)
(68,174)
(68,174)
4,825
12,242
18,724
16,401
23,714
796,851
587,482
1,384,333
330,769
60
8,614
339,443
1,425,396
307,933
58,621
330,769
60
8,614
339,443
1,791,950
(68,174)
330,769
60
8,614
339,443
1,723,776
Allowance for doubtful accounts – refer to explanatory note 10.
(**)
On August 6, 2015, the decision by the Supreme Federal Court (STF) was
published referring to the Direct Action of Unconstitutionality (ADINs) No.
4357 and No. 4425, which sought to challenge the Amendment No. 62 of 2009
whose purpose was to set forth the method of payment for the legal registered
warrants issued until March 25, 2015. Among others, such decision established
the following points:
i) Ratification of all procedures and all operations previously performed to
discharge the registered warrants, with no risk remaining to the creditors as
for the eventual discussion on the validity of receipts occurred between 2009
and March 2015;
ii) Definition of a term ascertained and determined to discharge the
outstanding registered warrants until March 25, 2015 (until January 2020);
iii) In the event of delay of the National Treasury in the transfer of the
amounts required for the payment of the Registered Warrants, the Chairman
of the respective Court of Appeals is compelled to perform the detention of
the necessary money, under penalty of criminal liability.
The Company's Management reassessed the credits arising from the legal
registered warrants with the cities and concluded that the aforementioned decision
ensures the performance of such credits and constituted an account receivable in
the total amount of R$ 26,451, where R$ 6,654 refer to principal (explanatory note
No. 10) and R$ 19,797 refer to interests and inflation adjustment (explanatory note
No. 29) until December 31, 2015. In virtue of the uncertainty with the performance
of registered warrants until the date of decision by STF, such credits had been
written-off for loss.
Consumers choose the due dates of their monthly bills. Overdue amounts incur
0.033% per day and penalty of 2% on overdue customer bills.
33
6.
Recoverable taxes
2015
CURRENT
Social Contribution
Income tax
Wittholding income tax
Total
6,497
16,877
2,599
25,973
2015
CURRENT
National Social Security Institute - INSS
VAT (ICMS)
VAT (ICMS) - rate differential - Condominiums - explanatory note 21
VAT - Transfer of credits (*)
COFINS
PIS
Others
Total
NON-CURRENT
VAT (ICMS)
Subtotal
Grand total
(*)
7.
2014
3,254
8,790
7,334
19,378
2014
81
73,512
1,810
16,857
978
212
93,450
81
71,040
25,026
8,850
4,404
955
164
110,520
33,916
33,916
127,366
40,780
40,780
151,300
Balance of credits value added tax – ICMS acquired from third parties according to
Article 84 of Decree 45,490/2000, and authorization granted by the State Treasury
Office – SEFAZ, for offsetting VAT (ICMS) that the Company will pay to
SEFAZ-SP.
Balance sheet
Deferred income tax and social contribution refer to:
2015
Accrual for employees benefits
Allowance for doubtful accounts
Financial sector assets (regulatory)
Equity valuation adjustment/Revaluation of assets
Actuarial valuation adjustment (Other comprehensive income)
Tax losses/Tax losses carry forward
Monetary adjustment on financial concession assets
Difference in depreciation/amortization rates
Sale of property
Accruals for trade accounts payable - material and services
Others
Revenue related to deferred income tax and social contribution
Deferred tax assets, net
Deferred tax assets
Deferred tax liabilities
34
Income Statement
2014
319,282
188,596
95,560
(578,823)
419,239
53,907
(118,346)
87,812
(20,554)
21,724
(30,206)
296,335
146,909
67,598
(616,277)
526,324
92,906
(53,162)
94,837
(24,129)
12,876
(44,366)
438,191
499,851
2015
2014
1,214,227
(776,036)
438,191
1,251,923
(752,072)
499,851
2015
22,947
41,687
27,962
37,454
(38,999)
(65,184)
(7,025)
3,575
8,848
14,160
45,425
2014
14,130
(18,171)
(11,244)
219,439
49,498
(34,033)
(18,781)
(18,412)
(24,129)
2,024
(9,985)
150,336
Changes in deferred taxes
278,878
Effect on income
Impact on equity
150,336
70,637
499,851
Effect on income
Impact on equity
45,425
(107,085)
438,191
Based on this technical study regarding generation of future taxable profit, to the
year ended December 31, 2015, the Company estimates the realization of deferred
tax assets in future years:
2015
Income tax
Term of recovery of deferred tax assets:
2016
2017
2018
2019
2020-2022
2023-2025
2026-2028
59,730
148,024
105,566
122,093
344,077
98,424
14,900
892,814
Social
contribution
21,503
53,289
38,004
43,953
123,868
35,433
5,363
321,413
Total
81,233
201,313
143,570
166,046
467,945
133,857
20,263
1,214,227
On January 28, 2016, the Company submitted for approval of the Board of
Directors and analysis of Fiscal Council the revised technical study of feasibility to
the realization of the fiscal credits.
Estimated recovery of tax credits was based on projections of taxable profits taking
into consideration several financial and business assumptions at year end. As a
result, these estimates may not materialize due to uncertainties inherent in such
process and therefore, they are not to be relied upon in making any investment
decision. The management understands that this estimate was consistent with its
business plan at the time such technical study was conducted, and no losses on the
realization of such credits are expected. No material adjustments arising thereof
have been recorded when compared to previous years.
35
8.
Accounts receivable – agreements and other accounts receivable
The breakdown of accounts receivable - agreements is as follows:
2015
2014
CURRENT
Acknowledgement of debt:
Sundry municipalities
Consumers
Others
Subtotal
ADA - note 10
Balance net of ADA
11,215
238,068
755
250,038
(160,286)
89,752
24,892
187,362
751
213,005
(113,094)
99,911
NON-CURRENT
Acknowledgment of debt:
Consumers
Subtotal
ADA - note 10
Balance net of ADA
24,107
24,107
(14,892)
9,215
8,615
27,963
36,578
(16,678)
19,900
Total current+non-current
98,967
119,811
As a result of tariff increases, there was an increase in the number of agreements
made in 2015. As a strategy for settlement of debts in arrears by consumers, the
Company intensified the realization of "fairs" specific to this type of trading.
Accounts receivable – by maturity date is:
Balances falling
due
Consumers
Others
Subtotal
ADA
Balance net of ADA - Current+Non-Current
11,215
123,156
134,371
(49,398)
84,973
36
Balances past-due
up to 90 days
over 90 days
29,515
29,515
(15,521)
13,994
109,504
755
110,259
(110,259)
-
Total
11,215
262,175
755
274,145
(175,178)
98,967
9.
Other credits
2015
CURRENT
Contribution for public lighting fee - COSIP
Guarantees and others deposits
Property sale
Disposal of assets and rights
CDE Resources – discounts in the tariff – note 25
Others credits - related parties - note 31
Others
Subtotal
ADA - Third party services - note 10
Total
NON-CURRENT
Eletropaulo Metropolitana X Companhia Brasiliana de Energia - Eletropaulo Telecomunicação Ltda. - note 31
Reluz program- PMSBC
Property sale
Disposal of assets and rights
CESP financing
Contractual collaterals – sale of real estate
Others
Total
10.
2014
45,700
985
79,140
10,919
1,237
177,011
3,200
3,961
322,153
(621)
321,532
45,185
1,238
49,726
9,290
873
114,669
2,884
6,840
230,705
(871)
229,834
38,321
8,455
11,035
5,587
63,398
218
3,728
40,659
27,552
5,752
3,666
81,575
Allowance for doubtful accounts - ADA
Changes in the allowance for doubtful accounts are as follows:
Beginning
balances
12.31.2014
Source accounts:
CURRENT
Consumers - note 5
Other credits - third party services - note 9
Accounts receivable - agreements - note 8
Total
NON-CURRENT
Total
Reversal
Closing
balances
12.31.2015
Write-off
for losses
(68,174)
(871)
(113,094)
(182,139)
(253,505)
(2,806)
(86,387)
(342,698)
76,316
986
32,201
109,503
140,103
2,070
6,994
149,167
(105,260)
(621)
(160,286)
(266,167)
(16,678)
(16,678)
(1,669)
(1,669)
3,455
3,455
-
(14,892)
(14,892)
(198,817)
(344,367)
112,958
149,167
(281,059)
Beginning
balances
12.31.2013
Source accounts:
Provisions
Provisions
Reversal
Write-off
for losses
Closing
balances
12.31.2014
CURRENT
Consumers - note 5
Other credits - third party services - note 9
INSS - illness support - note 6
Total
(61,451)
(1,628)
(143,701)
(1,429)
(208,209)
(165,568)
(4,044)
(38,199)
(207,811)
69,144
657
24,846
1,429
96,076
89,701
4,144
43,960
137,805
(68,174)
(871)
(113,094)
(182,139)
NON-CURRENT
Total
(23,679)
(23,679)
(231,888)
(207,811)
7,001
7,001
103,077
137,805
(16,678)
(16,678)
(198,817)
37
Following, the Company presents the composition of ADA in the income
statement:
2015
Provision
Reversal
Revenue associated with recovery of accounts receivable already written off (*)
Expense related to ADA in the income statement
2014
(344,367)
112,958
34,390
(197,019)
(207,811)
103,077
24,154
(80,580)
(*)
Refer to cash receiving of accounts receivable already written off as loss,
including the amount of R$ 6,654 related to credit of judicial orders. (Precatory)
(Note explanatory 5).
11.
Service concession arrangements – private
2015
2014
Financial assets
Financial asset related to concession agreement
Intangible
2,004,798
1,980,753
Concession intangible assets - note 12
Total service concession agreement - private
5,158,378
7,163,176
5,045,454
7,026,207
Financial
concession asset
Additions from intangible assets in progress - note 12
Write-offs
Monetary adjustment - note 25
Additions from intangible assets in progress - note 12
Further splitting of special obligations - note 12
Write-offs
Monetary adjustment (*)
Monetary adjustment - note 25
(*)
1,285,810
555,458
(16,873)
1,824,395
26,238
(184,697)
(11,839)
1,654,097
Monetary
adjustment on
Total financial
financial
concession asset
concession asset
101,121
55,237
156,358
1,216
193,127
350,701
1,386,931
555,458
(16,873)
55,237
1,980,753
26,238
(184,697)
(11,839)
1,216
193,127
2,004,798
The Company, based on the valuation report for the 4th Tariff Reset Process,
recorded in June 2015 an increase in concession’s financial asset by R$
1,216, it being R$ 73,271 of the net financial assets of R$ 72,055 of special
obligations. This increase, along with the indexation for inflation of R$
193,127, was recorded against the title “Net operating revenue,” detailed in
explanatory note 25.
38
Characteristics of Company’s concession agreement
On June 15, 1998, the Company and ANEEL signed the concession agreement for
the distribution of electric power No. 162/1998, which regulates conditions to the
operation of electric power distribution public utilities, with the proper technology
and methods that guarantee the rendering of services in the concession area as
established by ANEEL Decree No. 72, dated March 25, 1998. The concession term
is thirty years from signature of the agreement. The concession term may be
extended for an equal term. The Company should make any request within 36
months before the end of the concession and ANEEL must manifest its position in
the 18th month before the termination of that concession. Any extension will be in
the public interest and review of the conditions stipulated in the Concession
Contract under ANEEL’s criteria. The Company’s concession is not onerous
therefore; there are no fixed commitments or payments to be made to the Granting
Authority.
Upon termination of the service concession arrangement, assets and installations
related to electric power distribution will become an integral part of the Federal
Government’s assets, through an indemnification for investments made and not yet
amortized, provided that authorized by ANEEL and computed through regulator’s
own audit.
On June 06, 2005 the First Amendment to the Concession Agreement N 162/1998
– ANEEL was signed between the Company and federal government, whose
purpose was to address the efficiency conditions appearing in paragraph 2 of art. 36
and 43 of Decree No. 5.163, of July 30, 2004, that is related to pass through in
tariff to end consumers.
On May 03, 2010 the Second Amendment to the Concession Agreement N
162/1998 – ANEEL was signed between the Company and federal government,
whose purpose was to change annual tariff adjustment calculation procedures,
aiming at the neutrality of Regulatory Charges of "Parcel A" of the
Concessionaire's Annual Revenue, as the amendments made in the wording of
Clause Seven of the Electrical Energy Distribution Concession Agreement No.
162/1998-ANEEL, entered into on June 15, 1998, set forth in Clause Two in this
Amendment.
On December 10, 2014 was signed the Third Amendment to the Concession
Agreement N 162/1998 – ANEEL between the Company and federal government,
for which he was assured that any balance of an asset or financial liability sector at
the end of the concession contract, will be compensated for or reimbursed by the
Company.
Considering that the conditions set forth in ICPC 01 – Service Concession
Arrangements have been fully met, the Company’s management concluded that its
concession arrangement is within the scope of ICPC 01 and, therefore, concessionrelated assets are divided into financial assets and intangible assets.
39
The Company’s tariff adjustment occurs on July 4 each year, and the year Tariff
Reset occurs every four years.
Assets related to the concession
Pursuant to articles 63 and 64 of Decree No. 41,019, dated February 26, 1957,
assets and installations used for generation, transmission, distribution and sale are
restricted to such services, and may not be retired, disposed of, assigned or
provided as mortgage guarantee without prior express authorization of the
Regulator.
12.
Intangible assets
The breakdown of intangible balance is as follows:
Concession intangible assets
2015
2014
Intangible assets - cost
Accumulated amortization
7,334,070
(2,175,692)
6,895,634
(1,850,180)
Total intangible assets related to concession
5,158,378
5,045,454
Intangible assets mainly refer to assets related to the concession, that are
recognized to the extent that the Company has the right (authorization) to charge
for services rendered to public utility consumers.
Changes in intangible assets are as follows:
In progress
Intangible
Balances as of December 31, 2013
Addition
Write-offs
Amortization of special obligation
Transfer
Addition
Write-offs
Amortization of special obligation (***)
Transfer
Further splitting of special obligations (**)
Disposal of assets and rights (****)
(*)
(-) Special
obligation
1,228,130
564,809
(1,300,828)
492,111
611,307
(500,142)
-
(289,356)
(148,014)
68,980
(368,390)
(101,507)
397,829
(72,068)
603,276
In service
Intangible
7,081,499
6,512
(276,346)
713,184
7,524,849
7,066
(216,592)
293,045
(15,517)
7,592,851
(-) Special
obligation
(757,948)
41,806
(36,794)
(752,936)
(4,780)
(216,970)
184,697
(789,989)
Intangible
assets
7,262,325
423,307
(234,540)
(555,458)
6,895,634
516,866
(221,372)
(26,238)
184,697
(15,517)
7,334,070
Accumulated
amortization
(1,539,397)
(510,515)
157,210
42,522
(1,850,180)
(499,714)
161,073
13,129
(2,175,692)
Total
intangible
assets
5,722,928
(87,208)
(77,330)
42,522
(555,458)
5,045,454
17,152
(60,299)
13,129
(26,238)
184,697
(15,517)
5,158,378
In February 2015, the amount of R$ 362,043 related to special obligations in
progress received for excess of demand and reactive energy during the 4th
Tariff Cycle (from February 2011 to January 2015) was transferred to both
intangible and financial asset related to the concession. Out of this amount,
R$ 199,640 was transferred into special obligations in service (intangible)
and R$ 162,403 was transferred to "financial assets of the concession". The
remaining transfers in the amount of R$ 17,330 for the special service
obligations are relevant to the current exercise.
40
(**)
(***)
(****)
13.
In June 2015, R$ 184,697 of special service obligations were transferred to
title “concession’s financial asset”, relating to review of allocation between
financial and intangible assets (further splitting of assets) caused by the
change in depreciation rates from July 2011 to June 2015, within the scope of
the 2015 Tariff Reset.
In June 2015 the Company made reversal in the amount of R$ 32,038 related
to the amortization of special obligations from previous years related to the
latest tariff cycle, also caused by changes in depreciation rates, within the
scope of the 2015 Tariff Reset.
In February, October and December 2015 the Company transfers to assets
intended for sale, in a total of R$11,156, and assets for future use, in a total of
R$4,361.
CURRENT
Itaipu
Bilateral contracts - AES Tietê Energy - note 31
Bilateral contracts - AES Tietê - note 31
Electric power spot market - CCEE (*)
Auction - CCEAR
ANGRA I and II
Physical Guarantee Quotas
Free energy - Others
Use of basic grid
System Service Charges- ESS/EER
Connection to the basic grid
Transmission
Use of distribution system
National System Operator - ONS
Subtotal
Materials and services
Suppliers - related parties - note 31
Total
(*)
2015
2014
483,674
271,814
191,591
344,241
23,454
30,562
84,332
64,822
162,492
4,494
4,971
1,069
2,785
1,670,301
253,093
3,391
1,926,785
234,128
296,028
189,652
336,343
23,001
28,393
74,549
73,530
35,418
3,676
3,814
1,043
3,513
1,303,088
254,487
3,859
1,561,434
The balance payable to CCEE refers to hydrological risk for both Itaipu and
Quotas. The accruals from October and November 2015 had its financial
settlements postponed by CCEE, which occurred on a concurrent manner on
February 11, 2016.
41
14.
Taxes payable
2015
CURRENT
Income tax
Social contribution
Total
1,861
670
2,531
Other taxes payable:
2015
2014
13,272
5,846
19,118
2014
CURRENT
Federal tax
PIS
COFINS
INSS
IRRF
Others
Subtotal - Federal
18,250
84,061
8,681
577
7,759
119,328
10,129
46,656
10,562
565
1,174
69,086
State tax
VAT
VAT - Parcelling (*)
Subtotal - State
407,853
407,853
255,434
226,128
481,562
1,138
1,138
901
901
528,319
551,549
Municipal tax
ISS
Subtotal - Municipal
Total - Other taxes payable
(*)
The Company settled, in October 2015, the last installment referring to the
three requests for VAT tax installment payment requested in 2014, relating to
the competences of August, September and October in that year.
The Company is taxed on actual profits with payments on monthly estimates. For
the amount of income tax and social contribution for the year ended on December
31, 2015, the Company offset against withholding income tax from investments
and services rendered in a total of R$17,055, and made payments on an estimate
(prepayments ) in a total of R$82,550. Still, in the current year, made payments of
withholding income tax in a total of R$19,512 and the remaining balance of prior
year of income tax and social contribution in a total of R$13,835.
In the current year, the Company made payments higher than the amount due. The
difference between the total amount actually paid and the one due amounted to
R$12,195, and are recorded in "Income tax and social contribution offset" –
Explanatory note 6.
42
15.
Loans and financing, debentures and financial leasing
15.1 Loans financing, non-convertible debentures and financial leasing are as
follows:
2015
Current
Non-current
Transaction
costs to be
amortized
Transaction
costs to be
amortized
Total
Current+NonCurrent
Maturity
Effective interest
rate (**) (%)
Loans and financing
Foreign currency:
BNDES Finame - b.8
FINEP (*) - b.9
Bank Credit Bills- Bradesco (CCB's) - b.10
FINEM - Subcredit A - a.1
FINEM - Subcredit B - a.1
FINEM - Subcredit C - a.1
FINEM - Subcredit E - a.1
Others
Total
2016
2024
2019
2021
2021
2021
2021
8.70
5.00
CDI + 2.64
TJLP + 4.22
SELIC + 4.22
9.50
SELIC + 3.20
2
108
2,463
240
108
107
32
275
3,335
637
3,671
11,033
11,913
5,130
4,396
36,780
(1,829)
(1,829)
639
3,779
634
11,273
12,021
5,237
4,428
275
38,286
40,706
300,000
46,890
50,630
21,804
18,681
478,711
(3,759)
(3,759)
40,706
296,241
46,890
50,630
21,804
18,681
474,952
639
44,485
296,875
58,163
62,651
27,041
23,109
275
513,238
Debentures
Debentures - 9th issue - b.1
Debentures – 11th issue - b.2
Debentures - 17th issue - a.3 (2nd tranche)
Debentures - 18th issue - a.4 (1st tranche)
Debentures - 18th issue - a.4 (2nd tranche)
Debentures - 19th issue - a.5
Total
2018
2018
2020
2021
2018
2016
2017
2022
2022
2021
CDI + 2.98
CDI + 2.24
CDI + 2.38
CDI + 1.90
CDI + 1.98
CDI + 3.86
CDI + 2.24
CDI + 3.06
CDI + 3.07
CDI + 3.12
9,297
4,928
2,299
7,757
24,486
18,989
6,519
6,991
6,991
2,881
91,138
75,000
100,000
250,000
174,930
599,930
(2,471)
(837)
(1,626)
(1,696)
(4,785)
(265)
(289)
(237)
(250)
(339)
(12,795)
81,826
104,091
673
6,061
269,701
193,654
6,230
6,754
6,741
2,542
678,273
100,000
100,000
280,000
600,000
500,000
90,000
200,000
200,000
320,000
2,390,000
(2,459)
(869)
(3,207)
(7,649)
(4,730)
(15)
(1,043)
(1,118)
(1,060)
(22,150)
97,541
99,131
276,793
592,351
495,270
89,985
198,957
198,882
318,940
2,367,850
179,367
203,222
277,466
598,412
764,971
193,654
96,215
205,711
205,623
321,482
3,046,123
11,351
11,351
31,830
31,830
31,830
31,830
43,181
43,181
727,910
2,900,541
2,874,632
3,602,542
Lease
Finance lease - c
Total
Charges
8.49 to 15.64
Total debt
Principal
94,473
11,351
11,351
-
648,061
(14,624)
Total
Principal
(25,909)
Total
2014
Current
Non-current
Transaction
costs to be
amortized
Transaction
costs to be
amortized
Total
Current+NonCurrent
Maturity
Effective interest
rate (**) (%)
Loans and financing
Foreign currency:
RELUZ - Eletrobrás - SBC - b.7
BNDES Finame - b.8
FINEP (*) - b.9
Bank Credit Bills- Bradesco (CCB's) - b.10
Promissory Notes - 1st issue - b.11
Others
2015
2016
2024
2019
5.00
8.70
4.00
CDI + 2.41
8
106
5,904
275
6,293
440
1,528
3,620
60,000
65,588
(3,494)
(3,494)
440
1,536
3,726
62,410
275
68,387
637
44,270
420,000
464,907
(7,543)
(7,543)
637
44,270
412,457
457,364
440
2,173
47,996
474,867
275
525,751
Debentures
Debentures – 11th issue - b.2
Total
2018
2018
2020
2021
2018
2016
CDI + 2.98
CDI + 2.24
CDI + 2.28
CDI + 1.90
CDI + 1.98
CDI + 2.52
11,039
4,090
5,645
6,512
20,692
19,907
67,885
75,000
40,000
350,000
465,000
(3,552)
(798)
(2,074)
(1,540)
(4,636)
(275)
(12,875)
82,487
3,292
43,571
4,972
16,056
369,632
520,010
175,000
200,000
320,000
600,000
750,000
2,045,000
(4,930)
(1,706)
(5,343)
(9,345)
(9,515)
(30,839)
170,070
198,294
314,657
590,655
740,485
2,014,161
252,557
201,586
358,228
595,627
756,541
369,632
2,534,171
2,958
2,958
9,012
9,012
9,012
9,012
11,970
11,970
591,355
2,518,919
2,480,537
3,071,892
Lease
Finance lease - c
Total
Total debt
(*)
Charges
8.40 to 13.90
Principal
74,178
2,958
2,958
533,546
(16,369)
Total
Principal
(38,382)
Total
FINEP is net of the government grants.
(**)
Effective interest rate is different from the contractual interest rate, as
transaction costs incurred in the emission are considered part of the rate.
All funds obtained through contracted financing were intended for contractually
provisioned purposes, i.e., all respected the established contractual limits over use.
The FINEM financing and debentures – 18th issue are guaranteed by the
Company’s revenue, which is subject to remaining in a restricted bank account.
This guarantee corresponds to 25% of the outstanding balance of FINEM and the
entire outstanding balance of 18th debenture. FINAME and FINEP are guaranteed
through guarantee letters as described below:
43
Quantity
FINAME
FINEP
Amount
1
4
4,584
60,435
Rate p.a.
1.10%
1.30% to 3.50%
As for the other loans and financings there are no guarantees required.
Transaction costs incurred in raising funds with third parties are allocated to the
income statement for the year under the terms of the loan agreements that gave rise
to them through the amortized cost method. The utilization of the amortized cost
method results in the calculation and allocation of financial charges based on the
effective interest rate instead of the contractual interest rate of the agreement.
15.2 The main characteristics of loans financing, debentures and financial leasing
contracts are described below:
a)
Loans, financing and debentures obtained during 2015:
a.1)
FINEM – on February 2015 the Company received funds from Banco Itaú, trough
transfer contracted with the BNDES, as financing to implement the investment
program for the year 2014, aimed at expanding and improving the electric power
distribution system, with a 6-month grace period to pay the principal. ANEEL
through the Dispatch 596/2015 approved a total of R$ 172,000. The total amount
approved is released as confirmation is presented of execution of work under the
contract. By December 31, 2015, the total of R$ 171,144 had been release.
FINEM - Subcredit A
FINEM - Subcredit B
FINEM - Subcredit C
FINEM - Subcredit E
Contractual rate
TJLP + 4.22%
SELIC + 4.22%
9.5%
SELIC + 3.20%
Interest payment
Principal amortization
Maturity
Quarterly until grace
period. From this date,
monthly
Monthly (from October 2015)
March 2021
a.2) Promissory Notes – 2 nd Issuance – on September 8, 2015 was issued 10 promissory
notes with unit value of R$ 10,000, totaling R$ 100,000.
Promissory Notes
Contractual rate
CDI + 2.95%
Interest payment
In Maturity
R$ 100,000
Maturity
January 2016
The net proceeds raised by the Company through this issuance were used for
recompose cash used to payments of principal installments of credit notes and the
13th issuance of debentures.
The Company prepaid this financing in December 2015, partly using the proceeds
of the 19th issuance of debentures.
a.3) Debentures – 17 th Issuance – R$ 190,000 in debentures, occured on January 16,
2015, in the domestic market with final maturity date in July 2015 (1 st tranche) and
January 2017 (2 nd tranche).
44
17th issue (1st tranche)
17th issue (2nd tranche)
Contractual rate
CDI + 1.35%
CDI + 1.90%
Interest payment
In Maturity
Semi-annually
R$ 100,000
R$ 90,000
Maturity
July 2015
January 2017
Debentures are non-convertible into shares, of the unsecured species. Debentures
do not have a reprising clause.
The net funds obtained by the Company by means of this issue were allocated for
the reinforcement of its working capital and debt refinancing.
In July 2015 it was paid the amount of R$ 106,691, related to the 1st tranche of this
issue.
a.4) Debêntures – 18 th Issuance – R$ 400,000 in debentures, in two tranches of R$
200,000 each, occured on July 14, 2015, in the domestic market with final maturity
date in July 2022.
18th issue (1st tranche)
Contractual rate
CDI + 2.85%
Interest payment
Quarter
18th issue (2nd tranche)
CDI + 2.85%
Quarter
Quarter
R$ 9,520
Single
R$ 19,120
Maturity
October 2017 to April 2022
July 2022
Quarter
Single
October 2017 to April 2022
July 2022
R$ 9,520
R$ 19,120
Debentures are non-convertible into sharesin, two tranches, secured, according to
current legislation. Debentures do not have a reprising clause.
On September 11, 2015 it was signed the first amendment of 18th Issuance of
Debentures, through which the sort of debentures change from unsecured to
collateral. It is guaranteed by the Company’s revenue, which is subject to
remaining in a restricted bank account. This guarantee corresponds to 100% of the
outstanding balance in this loan.
The funds obtained by the Company by means of this issue were allocated for the
reinforcement of its working capital and debt refinancing and investments in the
years 2015, 2016 and 2017.
a.5) Debêntures – 19 th Issuance – R$ 320,000 in debentures, occured on December 10,
2015, in the domestic market with final maturity date in July 2021.
19th issue
Contractual rate
CDI + 2.95%
Interest payment
Semi-annually
45
Semi-annually R$ 35,552
Single
R$ 35,584
Maturity
June2017 to December 2020
July 2021
Funds obtained through this issuance were allocated to the pre-payment of the
Promissory Notes – 2nd issue, cash replenished due to installment payments with a
maturity date 2015 and 2016 of Bank credit note (CCB Bradesco) and pre-payment
of 2016 installment of 13th debentures issuance.
b)
Loans, financing and debentures obtained in previously years:
b.1) Debentures – 9th Issuance - R$ 250,000 in debentures, occurred on December 20,
2005, in the domestic market, with maturity date in August 2018.
Contractual rate
9th issue
Interest payment
Semi-annually
CDI + 1.12%
Annual R$ 75,000
R$ 75,000
R$ 25,000
R$ 75,000
Maturity
August 2015
August 2016
August 2017
August 2018
Debentures are non-convertible into shares, of unsecured species. Debentures do
not have a repricing clause.
Funds obtained through of the 9th issue of debentures and the Syndicated Bank
Credit Notes were wholly allocated to the pre-payment of debts renegotiated
between the Company and creditors banks in 2004.
b.2) Debentures 11th Issuance – R$ 200,000 in debentures, occurred on October 23,
2007 with issuance date as of November 01st, 2007, in the domestic market with
final maturity date in November 2018.
Contractual rate
11th issue
CDI + 1.75%
Interest payment
Semi-annually
Annual R$ 100,000
R$ 100,000
Maturity
November 2016
November 2018
Funds obtained through this issuance, were utilized to make investments in the
Company distribution network in the course of its regular activities.
b.3) Debentures 13th Issuance – R$ 400,000 in debentures, occurred on May 14, 2010,
in the domestic market with final maturity date in May 2020.
46
Contractual rate
13th issue
(*)
Interest payment
Semi-annually
CDI + 1.50%
Annual
R$ 20,000
R$ 20,000
R$ 40,000
R$ 40,000
R$ 80,000
R$ 80,000
R$ 80,000
R$ 40,000
Maturity
May 2013
May 2014
May 2015
May 2016 (*)
May 2017
May 2018
May 2019
May 2020
On December 08, 2015, the fourth amendment of the 13th debenture issue was
signed, by which the following were amended: (i) the date of scheduled amortization
of the upcoming installment on May 14, 2016 to December 10, 2015; and (ii) the
addition of a new date for Debenture compensation, exceptionally on December 10,
2015, when the Company made the compensation payment. The early redemption of
this installment was made by partially using the capital raised through the 19th Issue
of Debentures.
Funds obtained through this issuance were used to pay bonds denominated in reais,
issued by the Company in June 2005 maturing in June 2010, and for financing part
of investments 2010.
b.4) Debentures 14th Issuance – R$ 600,000 in debentures, occurred on November 28,
2011, in the domestic market with final maturity date in November 2021.
Contractual rate
14th issue
Interest payment
Semi-annually
CDI + 1.50%
Annual R$ 60,000
R$ 180,000
R$ 180,000
R$ 180,000
Maturity
November 2018
November 2019
November 2020
November 2021
The resources obtained through this issuance were used for cash restoration due to
the 2011 and 2012 debt amortizations.
b.5) Debentures 15th Issuance – R$ 750,000 in debentures, occured on October 9, 2012,
in the domestic market with final maturity date in October 2018.
47
Contractual rate
15th issue
Interest payment
Semi-annually
CDI + 1.24%
Annual
R$ 250,000
R$ 250,000
R$ 250,000
Maturity
October 2016
October 2017
October 2018
The resources obtained through this issuance were used for the early payment of
10th Issue of Debentures, 12th Issue of Debentures and Bank Credit Notes (CCB’s),
lead by Banco Citibank S.A.
b.6) Debentures 16th Issuance – R$ 350,000 in debentures, occured on July 21, 2014, in
the domestic market with final maturity date in January 2016.
On April 29, 2015, the third amendment of the 16th debenture issue was executed,
by which the following were amended: (i) maturity term to 558 calendar days as
from the date of issue; (ii) debenture remuneration, that start to be entitled to a
remuneration equivalent to the 100% of the accrued variation of daily average CDI
rates added with 1.60% spread per year as from the date of issue to January 17,
2015 ("first rate") and 1.35% as from January 17, 2015 ("second rate") up to April,
30 2015, and 2.40% a.p. (“first rate”) as from April, 30 2015 up to the date of
maturity; (iii) the periodicity of the remuneration payment, with the remuneration
being assessed on the basis of the second fee was paid on April 30, 2015 in the
amount of R$ 8,324 and the remuneration assessed on the basis of the third rate
shall be paid on the maturity date.
Additionally, there was a payment of R$2,337 to obtain the 3rd amendment. In
accordance with CPC 38, the Company assessed that the amount paid is directly
linked to the structure of the amendment, thus the cost referring to the obtainment
of the amendment was deferred and shall be amortized during the debenture term.
As a result, the effective interest rate increased from 2.52% to 3.86% above the
CDI.
16th issue
Contractual rate
CDI + 2.40%
Interest payment
In Maturity
R$ 174,930
Maturity
January 2016
On January 27, 2016, the fourth amendment of the 16th debenture issue was
executed, by which the following were amended: (i) maturity term to 738 calendar
days as from the date of issue, with maturity date on July 28, 2016; (ii) debenture
remuneration, that start to be entitled to a remuneration equivalent to the 100% of
the accrued variation of daily average CDI rates added with 3.00% spread per year
(fourth rate) as from February 02 to July 28, 2016; (iii) the periodicity of the
remuneration payment, with the remuneration being assessed on the basis of the
third fee was paid on February 01, 2016 in the amount of R$21,525 and the
remuneration assessed on the basis of the third rate shall be paid on the maturity
date.
48
The resources obtained through this issuance were used for working capital.
Pursuant to the indenture, the Company will use 100% of the funds from FINEM
(item a.13) in the early (partial or full) redemption of the 16th debenture issue. The
Company held partial mandatory early redemption, in accordance with installments
receipt of FINEM, April, June, July, August, October and December 2015.
b.7) RELUZ - Eletrobrás - financing characterized by the National Program for Efficient
Street Light - RELUZ, created by the Federal Government and coordinated by the
Ministry of Mines and Energy and Ministry of Justice through Eletrobrás. The
purpose of RELUZ is to promote the development of efficient Street Lights
systems, and the valuation of urban public spaces, improving the safety of the
population.
The program is feasible through the financing contracts executed between the
Company and Eletrobrás and the Company and Municipalities. Eletrobrás finances
the concessionaire up to the limit of 75% of the Projects value.
On March 11, 2008, Eletrobrás granted credit to the Company for financing a
Project to improve the street lights system of the Municipality of São Bernardo do
Campo – SBC.
RELUZ - SBC
Contractual rate
Interest payment
5%
Monthly
Monthly
Maturity
June 2015
The Company paid the last parcel of this financing in June 2015.
b.8) FINAME – Banco Itaú – in May 2011, the Company took out an amount of R$
4,583 as financing from Banco Itaú in order to buy gauges, with a 24-month grace
year for principal payment.
FINAME
Contractual rate
Interest payment
Maturity
8.7%
Quarterly until May
2013. From this
date monthly
Monthly (from June
2013)
May 2016
b.9) Financiadora de Estudos e Projetos – FINEP – on February 8, 2012, the Company
received funds from FINEP in the amount of R$ 37,096 for financing projects
relating to innovation. The approved full amount has been fully released.
49
FINEP
Contractual rate
Interest payment
Maturity
4.0%
Monthly
Monthly (from
February 2014)
February 2020
On April 7, 2014 the Company was granted resources by FINEP for project
development funding in the amount of R$ 96,748. The total amount was approved
and will be released according to the schedule of projects provided for under the
funding agreement. The total released by December 31, 2015 was R$ 29,397.
Contractual rate
FINEP
(*)
TJLP + 5%
(*)
Interest payment
Maturity
Monthly
Monthly (from April
2017)
April 2024
The contractual rate is TJLP + 5% p.a. reduced by the equivalent equalization
benefit at 6% p.a. The equalization benefit relates to timely payments and
compliance with the project development schedule, which reduced the
effective rate to 4% p.a considering TJLP on the date of signing the contract,
which was 5% p.a. In October 2015, TJLP increased to 7.0% p.a which
increased the effective tax rate to 5% pa. The surplus of 1.0% p.a the TJLP and
equalization benefit as inflation adjustment difference focuses on the principal
balance.
The main characteristics of the financing agreement obtained with the institution
FINEP are the lower contractual interest rates when compared to market rates and
are closely related to the financing of innovation projects and development. Thus,
the subsidies granted at the same interest rates of that financing is qualified as a
government subsidy.
b.10) Bank Credit Notes (CCB) – loans formalized by bank credit notes with several
financial institutions under the leadership of Banco Bradesco S.A., which occurred
on November 25, 2009, in the principal amount of R$ 600,000.
Bradesco (CCB's)
(*)
Contractual rate
Interest payment
CDI + 1.50%
Semi-annually
R$ 30,000
R$ 30,000
R$ 60,000
R$ 60,000
Annual
R$ 120,000
R$ 120,000
R$ 120,000
R$ 60,000
Maturity
November 2012
November 2013
November 2014
November 2015
November 2016 (*)
November 2017
November 2018
November 2019
The Company, in December 2015, made the early redemption of the installment
with maturity date in November 2016, using partial of the proceeds of the 19th
Issue of Debentures.
50
Funds from the Bank Credit Bills issued by Banco Bradesco S.A., were used by the
Company to settle amounts owed to Brazil’s IRS that were renegotiated with
inclusion in the Special Tax Repayment Program (REFIS) of that tax authority in
November 2009.
c.)
Finance lease
The finance lease contracts refers to lease of computer equipment, vehicles and
buildings and neither contain any provisions on contingent payments, renewal or
purchase option nor impose restrictions on payments of dividends and interest on
shareholders’ equity or limits on financial indicators.
The balance of financial leasing as of December 31, 2015 recorded by the
Company amounted to R$ 43,181 (R$ 11,970 as of December 31, 2014) under
liabilities, and R$ 40,688 (R$ 11,100 as of December 31, 2014) under assets.
The guarantee for the lease agreements is the residual value of the assets amounting
to R$ 40,688 as of December 31, 2015 (R$ 11,100 as of December 31, 2014).
15.3 Breakdown of principal and transaction costs to be amortized concerning
currency and indexes:
2015
2014
R$
%
R$
%
Local currency
CDI
SELIC
TJLP
Fixed rate
Total
3,249,397
85,620
57,923
115,129
3,508,069
92.63
2.44
1.65
3.28
100.00
2,935,249
62,465
2,997,714
97.92
2.08
100.00
15.4 On December 31, 2015, installments related to the principal amounts of loans,
financing and debentures and transaction costs to be amortized under noncurrent liabilities fall due as follows:
Local currency
Loans and
financing
2017
2018
2019
2020
after 2020
Debentures
159,429
160,876
101,338
36,649
20,419
478,711
535,144
712,264
407,264
367,264
368,064
2,390,000
51
Leasing
8,352
6,467
5,098
4,070
7,843
31,830
Transaction
costs to be
amortized
(11,490)
(8,008)
(3,562)
(1,901)
(948)
(25,909)
Total
691,435
871,599
510,138
406,082
395,378
2,874,632
15.5 The index used to monetarily update loans, financing and debentures had the
following change:
2015
2014
%
%
CDI (*)
SELIC (*)
TJLP (*)
14.14
14.15
7.00
11.57
11.65
5.00
(*)
Rate of the last day of the year.
15.6 Changes in loans, financing, debentures and charges on debts are as follows:
Local currency
Financial institutions/creditors
FINAME
FINEP
RELUZ - Eletrobrás - SBC
Bank Credit Bills - Citibank (CCB's)
FINEM - Subcredit A
FINEM - Subcredit B
FINEM - Subcredit C
FINEM - Subcredit E
Promissory Notes
Finance lease
Others
Subtotal
Beginning
balances
12.31.2014
Inflows
Financial
charges
Monetary
Variation
Payment of
principal
Payments of
financial
charges
Deferral of
transaction
costs
Transaction
costs to be
amortized
Government
grants (*)
2,173
47,996
440
474,867
11,970
275
537,721
60,192
60,192
28,200
22,560
100,000
33,676
304,820
119
2,557
6
67,159
3,670
1,610
1,326
385
4,248
5,414
3,304
89,798
106
193
4,990
1,584
6,873
(1,528)
(6,098)
(440)
(180,000)
(2,461)
(2,638)
(1,266)
(1,067)
(100,000)
(7,879)
(303,377)
(125)
(2,554)
(6)
(70,599)
(3,431)
(1,503)
(1,219)
(353)
(4,248)
(3,304)
(87,342)
(2,179)
(2,179)
5,448
2,179
7,627
2,478
-
Debentures – 9th issue
Debentures – 17th issue (1st tranche)
Debentures – 17th issue (2nd tranche)
Debentures – 18th issue (1st tranche)
Debentures – 18th issue (2nd tranche)
Subtotal
252,557
201,586
358,228
595,627
756,541
369,632
2,534,171
100,000
90,000
200,000
200,000
320,000
910,000
30,971
29,280
47,624
86,319
105,797
36,253
6,691
12,792
15,000
13,191
2,881
386,799
-
(75,000)
(80,000)
(175,070)
(100,000)
(430,070)
(32,712)
(28,442)
(50,969)
(85,074)
(102,004)
(37,172)
(6,691)
(6,273)
(8,008)
(6,200)
(363,545)
3,071,892
1,214,820
476,597
6,873
(733,447)
(450,887)
3,551
798
2,583
1,540
4,637
2,348
273
240
95
91
18
16,174
12,937
23,801
-
Grand Total
(2,337)
(273)
(544)
(1,376)
(1,459)
(1,417)
(7,406)
(49,550)
(9,585)
Payment of
principal
Payments of
financial
charges
Local currency
Financial institutions/creditors
FINAME
FINEP
RELUZ - Eletrobrás - SBC
Bank Credit Bills - Citibank (CCB's)
Finance lease
Promissory Notes - 1st issue
Others
Subtotal
Beginning
balances
12.31.2013
Inflows
Financial
charges
-
3,705
32,085
1,321
530,760
15,307
275
583,453
29,397
190,000
219,397
248
1,820
60
64,849
1,617
11,679
3,304
83,577
(1,527)
(5,590)
(881)
(60,000)
(4,034)
(190,000)
(262,032)
(253)
(1,780)
(60)
(64,507)
(11,679)
(3,304)
(81,583)
Subtotal
246,978
200,145
375,283
593,117
748,839
2,164,362
350,000
350,000
29,356
24,809
44,567
72,880
89,001
19,907
280,520
(20,000)
(20,000)
(27,483)
(24,107)
(43,785)
(71,801)
(85,647)
(252,823)
Total
2,747,815
569,397
364,097
(282,032)
(334,406)
Write-offs
(920)
(920)
(920)
Deferral of
transaction
costs
Transaction
costs to be
amortized
2,478
(1,579)
2,478
Government
grants (*)
Closing balances
12.31.2015
639
44,485
296,875
58,163
62,651
27,041
23,109
43,181
275
556,419
179,367
203,222
277,466
598,412
764,971
193,654
96,215
205,711
205,623
321,482
3,046,123
3,602,542
Closing balances
12.31.2014
(470)
(470)
3,765
470
4,235
(7,936)
(7,936)
2,173
47,996
440
474,867
11,970
275
537,721
(1,712)
(1,712)
(49,550)
(2,182)
3,706
739
2,163
1,431
4,348
1,437
13,824
12,937
18,059
-
252,557
201,586
358,228
595,627
756,541
369,632
2,534,171
(1,579)
(7,936)
3,071,892
15.7 Financial Commitments – Covenants
As a way to monitor the Company’s financial situation, creditors involved in
financial agreements use covenants in some debt agreements.
The Company’s Management maintains the follow-up of some financial indexes:
52
(i) Indebtedness ability: measures the level of net indebtedness compared to the
adjusted(*) EBITDA corresponds to the results of the Company’s service of the
last twelve months. As defined in the contracts, that index must be below 3.5
times:
(ii) Ability to pay interest: measures the adjusted(*) EBITDA on financial expenses
of the last 12 months. As defined in the contracts, that index must be above
1.75 times.
On December 31, 2015, these indexes were as follows:
(i)
Net debt/adjusted EBITDA = 3.47 times
(ii)
Adjusted EBITDA /financial expenses = 2.77 times
As described in the debt contracts, non-compliance with the indexes above, for two
consecutive quarters, implies the likelihood of early maturity of the debt. Thus, on
December 31, 2015, the Company was compliant with the terms of the covenants.
The Company also follows up other qualitative covenants, which on December 31,
2015 were met.
(*)
16.
Adjusted EBITDA - means the sum of the last twelve months of (i) operating
income as presented in the restated accounting statement of the Issuer in the
"Operating Income" line (excluding financial income and expenses), (ii) all
amounts of depreciation and amortization, (iii) all amounts relating to
expenditure on private pension entity classified under "operating costs" and
(iv) the adjustment of regulatory assets and liabilities (positive and negative
in the income) according to the regulatory rules determined by ANEEL
(National Electric Energy Agency), provided that not included in the above
operating income.
Pension plan obligation
The Company sponsors a retirement and pension plan for its active and former
employees, and their beneficiaries. FUNCESP is the entity that administers the
benefit plans sponsored by the Company.
After negotiations with professional category unions, the Company renegotiated
the plan in 1997 to adopt a mixed system, i.e., 70% relate to defined benefit and
30% to defined contribution. This change was intended to solve the actuarial deficit
and also reduce the risk of future deficits.
53
Funding for defined benefit plan and defined contribution plan is divided equally
among the Company and its employees. Funding rates are revalued, yearically, by
independent actuaries. The cost of the defined contribution portion is based on a
percentage freely chosen by the participant, (from 1% to 100% on 30% base of
their compensation) divided with the Company up to the limit of 5% on a 30% base
of their compensation.
The Settled Proportional Supplementary Benefit - BSPS is guaranteed to the plan
participants who enrolled before the implementation of the new plan of the
privatization of Company. This benefit ensures a proportional supplementary
amount relating to the year of employment prior to the date of the change to the
plan. The benefit is due starting from the date on which the minimum grace years
established by the new plan rules are completed
At the end of 2015, the company carried out the annual actuarial assessment,
performed by independent actuaries, where all assumptions for that date were
reviewed. The plans’ actuarial valuation used the projected unit credit method. The
benefit plan net assets are measured at fair value.
Actuarial assets and liabilities:
2015
Present value of actuarial obligations
Fair value of plan assets
Total recorded
9,770,083
(7,165,116)
2,604,967
2014
10,078,792
(7,259,999)
2,818,793
Changes in present value of actuarial obligations with post-retirement benefits are
as follows:
2015
Present value of actuarial obligations at the beginning of the year
Cost of current services
Interest
Benefits paid
Employee’s contribution
Actuarial (loss) gain
Present value of actuarial obrigations at the end of the year
10,078,792
16,028
1,054,916
(914,124)
6,753
(472,282)
9,770,083
2014
9,789,505
15,066
1,049,523
(896,615)
6,270
115,043
10,078,792
Changes in the fair value of the plan assets are set out as follows:
2015
Fair value of plan assets at the beginning of the year
Employer’s contribution
Employee’s contribution
actuarial loss related to the return on plan assets
Expected return on plan assets
Benefits paid
Fair value of plan assets at the end of the year
7,259,999
211,762
6,753
(157,327)
758,053
(914,124)
7,165,116
54
2014
7,236,335
224,649
6,270
(92,712)
782,072
(896,615)
7,259,999
Expenses recorded are as follows:
2015
Interest
Total expense defined benefit
2014
16,028
1,054,916
(758,053)
312,891
Capitalization for intangible in progress
Other contributions - defined benefit
Total expense for the year
15,066
1,049,523
(782,072)
282,517
(1,524)
3,887
315,254
3,521
286,038
Changes in liabilities recorded are as follows:
2015
Balance at the beginning of the year
Expense according to actuarial report
Payment of contributions
Balance at the end of the year
2014
2,818,793
312,891
(211,762)
(314,955)
2,604,967
2,553,170
282,517
(224,649)
207,755
2,818,793
The movement of actuarial remeasurements recorded in other comprehensive
results are as follows:
2015
Balance at the beginning of the year
Actuarial gain (loss) related to the discount rate
Actuarial loss related to demographic experience
Actuarial (loss) gain related to Demographical assumptions
Actuarial loss related to the return on plan assets
Balance at the end of the year
2014
(1,548,012)
992,042
(485,626)
(34,134)
(157,327)
(1,233,057)
(1,340,257)
(209,856)
(37,898)
132,711
(92,712)
(1,548,012)
The breakdown of investments of the plan, per segment, are as follows:
Allocation limits
established by
National Monetary
Investment
distribution
Fixed rate
Variable rate
Loans to participants
Real States
Structured investments
Total
55
2015
2014
Council
82.82%
10.49%
2.11%
4.22%
0.36%
100.00%
79.69%
14.97%
1.72%
3.62%
0.00%
100.00%
up to 100%
up to 70%
up to 15%
up to 8%
up to 20%
Actuarial assumptions used by the Company are as follows:
a) Economics assumptions:
a1) Determination of actuarial liability:
Discount rate for actuarial liability
Estimated index for salary increase
Estimated index for inflation in long-term
Nominal Rate of compensation increase
a2) Determination of actuarial expenses:
Discount rate
Estimated index for salary increase
Estimated index for inflation in long-term
Nominal Rate of compensation increase
b) Demographical assumptions:
Mortality biometric table (actuarial liability)
Mortality biometric table (expense)
Disability biometric table
Expected turnover
c) Life Expectancy at retirement age of 65 years
2016
2015
2014
N/A
N/A
N/A
N/A
12.13% p.a
6.59% p.a
4.50% p.a.
4.50% p.a.
10.93% p.a.
6.59% p.a
4.50% p.a.
4.50% p.a.
12.13% p.a
6.59% p.a
4.50% p.a.
4.50% p.a.
10.93% p.a.
6.59% p.a.
4.50% p.a.
4.50% p.a.
11.19% p.a.
6.59% p.a.
4.50% p.a.
4.50% p.a.
N/A
AT-2000
N/A
N/A
AT-2000
AT-2000
Light low
EXPR 2012
AT-2000
AT-83
Mercer table
0,30 / (years of service + 1)
19.55
19.55
N/A
Projected expenses for fiscal year 2016 are as follows:
2016
Interest
Total projected expense for the year
12,793
1,128,057
(821,401)
319,449
Company’s expected contributions for 2016 amount to R$ 292,148.
The average of benefit plan obligation set at the end of the year is 8.49 years (9.33
years on December 31, 2015):
The plan’s expected payments for future years concerning the benefit liability are
as follows:
1 year
From 2 to 5 years
More than 5 years
Total payments expected
940,704
4,087,873
5,783,100
10,811,677
56
With an aim at checking the impact of actuarial liabilities, which on December 31,
2015 is R$ R$9,770,083, the Company made an analysis of the sensitivity of
actuarial assumptions considering 0.25% variation. The result of the quantitative
analysis on December 31, 2015 is shown below.
Hypotheses
Sensitivity
Level
Estimated index for
salary increase
Nominal Rate of
compensation increase
(+0.25%)
(+0.25%)
Impact on the defined
benefit obligation
Total defined
benefit obligation
7,463
214,572
9,777,546
9,984,655
Estimated index for
inflation in long-term
(+0.25%)
(-0.25%)
-
9,770,083
-
9,770,083
Discount rate
(+0.25%)
(191,112)
9,578,971
(-0.25%)
198,377
9,968,460
16.1 Contracts with FUNCESP
In an effort to solve the actuarial deficit and reduce the risk of future deficits, the
Company entered into agreements with FUNCESP, beginning 1997, as
acknowledgment of debt agreements and a mathematical reserve adjustment
agreement. These agreements are part of the actuarial liabilities determined by the
independent actuaries, the provisions of which are as follows:
NON-CURRENT
2015
Loans and financing:
Acknowledgement of debt IIa (i)
Acknowledgement of debt IIb (i)
Agreement for mathematical reserve adjustment (ii)
Total agreements
Unrecorded portion (*)
Total recorded
(*)
431,975
224,223
3,643,695
4,299,893
(1,694,926)
2,604,967
2014
398,762
206,982
2,825,149
3,430,893
(612,100)
2,818,793
The portion of the deficit amounting to R$ 1,694,926 arises from the difference
in assumptions and methodologies used by the Company to comply with the
requirements of CVM Deliberation No. 695/2012, and those used by the
FUNCESP (the benefit plan administrator) for the purpose of complying with
the Resolutions of the General Supplementary Pension Board, tends to
eliminate that difference over time with the maturity of the plan.
(i) Refers to a debt confession agreement executed on September 30, 1997 and
subsequently amended for the fourth time on June 5, 2014, for refinancing
future installments maturing between April 2014 and March 2016, remaining
unchanged all other provisions including payment term, rate and monthly
interest. The IIb portion refers to the Market value of Eletropaulo’s properties
returned to the Company by FUNCESP.
57
(ii) Refers to mathematical reserve contract executed on September 30, 1997, and
amended for the fourth time on June 5, 2014, for refinancing future
installments maturing between April 2014 and March 2016, remaining
unchanged all other provisions, including payment term, rate and monthly
interest. The balance of this contract is adjusted annually by the effects of the
actuarial gains and losses determined at the level of FUNCESP.
17.
Accrued liabilities
2015
CURRENT
Vacation
Retirement incentive program
Profit sharing
Social charges over vacation and other compensation
Bonus
Total
NON-CURRENT
Bonus
Total
18.
2014
37,176
618
39,399
14,459
4,205
95,857
33,788
37,931
12,853
4,029
88,601
969
969
720
720
18.1 Proceedings with probability classified as probable
Provisions for legal proceedings and others and respective guarantees and judicial
deposits are composed as follows:
Liabilities
Assets
2015
2014
Labor (a)
Cruzado economic plan – tariff adjustment (b)
Civil proceedings (c)
Regulatory proceedings (d)
Administrative proceedings - city government (e)
Tax proceedings (f)
Environmental (g)
PIS/COFINS on financial revenue (h)
Others
Total
247,899
13,492
26,021
71,445
531
65,198
11,425
20,231
30,127
486,369
251,747
15,864
31,936
58,479
523
71,385
12,708
24,973
467,615
Current
Non-current
Total
166,929
319,440
486,369
168,108
299,507
467,615
58
2015
215,777
3,639
777
27,464
23,119
270,776
2014
228,822
3,180
1,382
28,873
262,257
Total amount of guarantee and judicial deposits of R$ 443,126 (R$ 445,283 as of
December 31, 2014) is related to legal proceedings with likelihood of loss
classified as probable, possible and remote, are as follows:
2015
Probable
Possible (*)
Remote
Total
(*)
2014
270,776
120,726
51,624
443,126
262,257
131,854
51,172
445,283
The total of R$120,726, refers to deposits linked lawsuits with likelihood of
loss, is composed mostly by judicial deposits for tax lawsuits, which are
made by the Company in order to enable its defense.
Change in provision in legal proceedings and others is as follows:
Liabilities
Beginning balances
12.31.2014
Labor
Cruzado economic plan – tariff adjustment
Civil proceedings
Regulatory proceedings
Administrative proceedings -city government
Tax proceedings
Environmental
PIS/COFINS on financial revenue
Others
Total
251,747
15,864
31,936
58,479
523
71,385
12,708
24,973
467,615
Current
Non-current
Total
168,108
299,507
467,615
Inflows
Updated
94,109
807
25,457
47,039
5
15,448
5,246
26,208
5,503
219,822
17,874
2,372
5,198
7,452
63
12,319
49
418
412
46,157
Payments
Reversal
(69,915)
(906)
(26,114)
(35,353)
(29)
(23,063)
(8,614)
(48)
(164,042)
(45,916)
(4,645)
(8,420)
(6,172)
(31)
(10,891)
(6,395)
(713)
(83,183)
Reclassifications
Closing balances
12.31.2015
(2,036)
2,036
-
247,899
13,492
26,021
71,445
531
65,198
11,425
20,231
30,127
486,369
166,929
319,440
486,369
Liabilities
Beginning balances
12.31.2013
Labor
Cruzado economic plan – tariff adjustment
Civil proceedings
Administrative proceedings -city government
Tax proceedings
Environmental
Others
Total
270,865
16,191
55,749
54,294
472
60,489
25,024
23,796
506,880
Current
Non-current
Total
191,472
315,408
506,880
Inflows
73,352
41
15,204
7,373
11,304
9,477
1,177
117,928
Updated
15,245
2,073
6,227
6,091
51
4,447
34,134
Payments
(61,592)
(881)
(44,888)
(5,478)
(53)
(21,019)
(133,911)
Reversal
(46,123)
(1,560)
(356)
(3,801)
(4,802)
(774)
(57,416)
Closing balances
12.31.2014
251,747
15,864
31,936
58,479
523
71,385
12,708
24,973
467,615
168,108
299,507
467,615
Estimates of closure of legal disputes, disclosed in the items below cannot be
accurately performed due to the progress of future proceedings.
59
a)
Labor: there are 4,369 labor claims (4,939 as of December 31, 2014) filed by
former employees and outsourced staff of the Company claiming payment of
overtime, risk and health exposure premium, equal payment for equal work
performed, supplementing retirement benefits among others. The Company's
management, based on the opinion of its legal advisors, estimates that the current
processes will be completed between 2016 and 2020.
b)
Cruzado economic plan – Tariff adjustment: relates to lawsuits initiated by certain
industrial consumers against the Company, challenging the legality of tariff
increases granted by DNAEE (currently ANEEL) in 1986, during the year in which
a Federal Government economic stabilization plan established that all prices should
be ‘frozen’, from March to November 1986. Suits currently in progress refer solely
to the controversies resulting from difference in calculation of the amount
presented by the parties, with provision of R$ 13,492 (R$ 15,864 as of December
31, 2014). The Company's management, based on the opinion of its legal advisors,
estimates that the current processes will be completed by 2017.
c)
Civil: these are civil claims of general and special nature. Based on the opinion of
its legal advisors, Company’s Management recognizes provisions for contingencies
whose likelihood of unfavorable outcome has been assessed as probable. In
December 31, 2015, these demands relate to a provision of R$ 26,021 (R$ 31,936
as of December 31, 2014). The Company's management, based on the opinion of
its legal advisors, estimates that the current processes will be completed by 2017.
The Company is defendant in general civil legal proceedings involving legal
actions brought by consumers linked to the supply of electric power and
compensatory actions stemming for alleged accidents in the electric network and
general damages. Currently these demands amount to a provision of R$ 12,131 (R$
21,255 as of December 31, 2014).
The civil proceedings of special nature refer to matters stemming from the
Company’s business relationship with other private companies and/ or public
utility concessionaires as well as matters that involve the Regulator, nongovernmental organizations and/ or the Public Prosecutor. Currently these
proceedings amount to a provision of approximately R$ 13,890 (R$ 10,681 as of
December 31, 2014).
d)
d.1) The Company received an infraction notice No. 0337/TN 2060/2010 on July 14,
2011, by the Sao Paulo State Sanitation and Energy Regulation Agency (ARSESP).
The penalty shown in the infraction notice amounting to R$ 26,761 arises from the
audit at the Company between June 21, 2010 and July 2, 2010. It consisted of a
year technical audit to look into the technical quality of power supply, planning,
engineering, operation and maintenance of networks and substations in 2008, 2009
and part of 2010. On November 7, 2013, in a reconsideration judgment, ARSESP
decided to partially reduce the amount of the penalty imposed to R$16,939. The
Company awaits a decision on the appeal still pending judgment at ANEEL. The
Company’s management, based on its legal advisers’ analyses, decided to set up a
provision R$ 16,939. On November 9, 2015, ANEEL partially accepted the
60
arguments presented by the Company that, consequently, decreased the penalty
from R$ 16,939 to R$ 15,377. On November 19, 2015, the penalty was settled in
the amount of R$ 21,908, contemplating R$ 15,377 for principal and R$ 6,531 for
inflation adjustment in the period. On December 31, 2015, the Company awaits for
dismissal.
d.2) On April 2, 2012 AES Eletropaulo received an infraction notice (AI No. 008/2012SFF) from the Brazilian Electric Power Regulatory Agency (“ANEEL”) in the
amount of R$ 136,773 relating to the financial audit of its fixed assets which
occurred from December 7, 2010 to February 04, 2011. The notice alleges nonconformities in the regulatory accounting applied by AES Eletropaulo in the fixed
assets, which impacts the Regulatory Asset Base component used by ANEEL to
calculate the tariff charged to customers. Based on an initial assessment of the
notice, the Company’s management decided to set up a provision that monetarily
updated to December 31, 2015 amounted to R$ 20,699 (R$ 18,259 as of December
31, 2014). The Company’s management has submitted a formal response to
ANEEL contesting the non-conformities and fine imposed as of April 18, 2012 and
waits for a decision.
d.3) On December 19, 2012, the Company received an infraction notice (AI No
122/2012-SFF) from the Brazilian Electric Power Regulatory Agency (“ANEEL”)
relating to the financial audit of its remuneration base – Assets in service in the
amount of R$ 126,379. On January 2, 2013, the Company filed an appeal. On
August 24, 2015, the appeal filed to reduce the penalties imposed by the Notice of
Violation, for violations related to the inspection of the Remuneration Base, was
granted at R$ 98,854. The granted amount corresponded to R$ 11,301 (R$ 10,419
on December 31, 2014) and, on September 10, 2015, the payment of the undisputed
amount was made in the amount of R$ 8,939, with the provision granted up to this
date being fully reversed. The remaining amount is being legally discussed (see
explanatory note No. 18.2.28).
d.4) The Company, as part of its compliance and corporate governance procedure, as
well as internal audit program, observed inconsistencies in the assessment of its
SAIDI and SAIFI continuity indexers in the period from 2011 to May 2015,
particularly in relation to the classification of differences characterized as "critical
day", upon the need for reprocessing the continuity indexers and amending the
global SAIDI and SAIFI indexers previously informed to the regulatory agency.
61
The Company has already communicated it to the National Electric Energy Agency
(“ANEEL”) and is currently working in the reprocessing of its continuous
operational indicators during the referred period, determination of the exact amount
of the economic and financial impacts in consequence of the reprocessing as well
as compensation actions to the affected clients.
Based on data and projections available so far, the Company estimate that the
impact of this inconsistence for the period mentioned above can reach R$ 152,530.
Therefore, on December 31, 2015, the Company recorded a provision in the same
amount, allocating the impacts on the balance sheet and income statement based on
the best estimate, as follows:

Xq factor: tariff return: in a total of R$58,100, recorded as “Financial sector
assets, net” against, in the results, “Net operating income”;

DIC/FIC/DMIC/DICRI: in a total of R$59,430, recorded as “Other liabilities”,
against, in the results as “Other costs” in a total of R$48,400 and the “Financial
expenses” in a total of R$11,300, related to monetary variation of the covered
period;

Conduct Adjustment Agreement: R$ 35,000, was recorded as "Lawsuits and
other" as a corresponding entry, in the result, "Provision for lawsuits and other,
net".
The negotiations with ANEEL about the best form of return are expected for 2016.
The Conduct Adjustment Agreement is an instrument binding the Company to
perform actions to correct the assessed non-conformities and invest on works on
service quality improvement, to be perceived by its consumers.
d.5) The Company is involved in other regulatory processes, for which is provisioned
the amount that updated until December 31, 2015 is R$ 15,746 (R$ 6,634 on
December 31, 2014). These proceedings relate to: (i) Notification Terms of CCEE Electric Energy Trading Chamber and (ii) Notices of Violation of ARSESP Regulatory Agency for Sanitation and Energy of the State of São Paulo.
The Company's management, based on the opinion of its legal advisors, estimates
that the current processes will be completed until 1 year.
e)
Administrative proceedings – city governments: there are administrative
proceedings relating to City Governments. The Company’s management, based on
the opinion of its legal advisors, recognizes provision for claims whose likelihood
of an unfavorable outcome is assessed as probable. The Company maintains
provision of R$ 531 (R$ 523 as of December 31, 2014). The Company's
management, based on the opinion of its legal advisors, estimates that the current
processes will be completed by 2016.
f)
Tax: there are tax claims of several natures, among which stands out at the
municipal level, the existence of cases of property tax, fees and posture fines while
at federal level cases related to ILL, tax deficiencies related to INSS, and the
62
impact of income tax and social contribution on default interest. With regard to
ILL, as a result of the adhesion to the REFIS Installment Program, the survey of
45% of the interests levied upon the respective judicial deposit was requested, and,
in September 2015, the permit to survey was issued in favor of the Company in the
amount of R$ 5,995, where the remaining amounts deposited were converted to
Federal Government's income. In November 2015, the case was finally closed and
sent to the file. The Company’s management, based on the opinion of its legal
advisors, recognizes provision for claims whose likelihood of an unfavorable
outcome is assessed as probable, which on December 31, 2015 amounted to R$
65,198 (R$ 71,385 as of December 31, 2014). The Company's management, based
on the opinion of its legal advisors, estimates that the current processes will be
completed by 2021.
Adhesion to the Tax Recovery Program - REFIS
On November 28, 2014, the Company adhered to the REFIS Installment Program
(instituted by Law No. 11.941/2009 and reopened by Law No. 13.043/2014) in
order to make use of the debit reduction benefits created by such law. Upon this
opportunity, the abandonment of the lawsuit was requested in order to enable the
institution of the ILL (Tax on Net Income) debit in REFIS constituted in March
2000, which would correspond to the provision of R$ 25,444 in September 2015.
Below is a summary of movements occurred with the accession:
Assets
Judicial deposits
Provision ILL - Principal
Provision ILL - Interest
Refis (45% of interest)
ILL payment (Survey escrow deposit - Union)
ILL payment (Survey escrow deposit - Company)
Total impact
g)
25,444
(19,449)
(5,995)
-
Liabilities
6,317
19,127
(5,995)
(19,449)
Financial
Income
5,995
-
-
Environmental Proceedings: The environmental bodies of the state of São Paulo
followed up the environmental management activities of some Company’s
properties by means of proprietary administrative proceedings and based on
technical studies lead the Company to record the amounts of demands that are
possible to quantify. On December 31, 2015, these demands respond for the accrual
of R$11,425 (R$12,708 on December 31, 2014). The Company's management,
based on the opinion of its legal advisors, estimates that the current processes will
be completed by 2017. Among the cases accrued, we should point out the demands
concerning soil and underground water contamination, as follow:
63
g.1) Cambuci Complex: Environmental studies were started in 2005 to assess soil and
underground water quality. Subsequent to confirming contamination, studies were
resumed and so was the remediation action. In 2012, after signed the commitment
of sale of the property, with an obligation contract to deliver the area restored. In
2013, new studies were conducted considering the future use of the area, pointing
out the necessary intervention actions for closing the remediation that was be
concluded by 2015. In 2014, different remedy stages were performed, in addition to
new monitoring campaigns in the area which allowed signing the deed of sale of
property, definitely transferring the ownership and possession. Currently, the
Company performs monitoring the groundwater quality requested by CETESB.
g.2) Miguel Yunes: Environmental studies were started in 2009 for assessing the soil
and underground water. After confirming contamination, studies were resumed for
the purpose of identification, and buried domestic waste and rubble were found
(clandestinely arranged prior to the grant date), requiring a breakdown of the
studies with a view at quantification, which was conducted in December 2013, and
confirmed the need for removing the buried waste. In February 2014 the Company
proceeded with the removal and disposal of the soil impacted by the waste
discarded in the area, being completed in the second quarter of 2015. The water and
soil investigation was completed, leaving the underground water quality
monitoring requested by CETESB. The area backfill will be required for leveling
purposes, which shall be carried out in 2016.
g.3) Distribution Transforming Stations - ETD´s: In 2007, the Company started
processes for environmental compliance of works for upgrading and extending
substations. These processes require an environmental survey of the soil and
underwater conditions to be followed up by the State Secretariat of Environment –
SMA pursuant to procedures set out by CETESB. During the survey activities, in
some properties, polluting substances were found in the soil and underground water
requiring the adoption of environmental remedy actions. In 2013 new proceedings
were opened due to the need for extending substations, creating the need for
remedying and/or monitoring. New monitoring steps will occur in 2016.
g.4) Guarapiranga Reservoir
On September 1996, the Public Prosecutor for the State of São Paulo (MP) brought
a pubic civil action against the Company and the Associação Desportiva Cultural
Eletropaulo seeking rehabilitation of supposed environmental damage that had
been caused by the construction of a sports and recreational club on the banks of
the Guarapiranga Reservoir. The action was upheld finding against the Defendant,
severally, who is liable to undertake environmental rehabilitation, as well as the
demolition of all construction in the area classified under the prime category, such
as reforestation indicated in the technical study performed. On August 10, 2012 the
merit decision was judged unfavorable to the Company. In January 2013, the
proceedings returned to the lower court, where the General Attorneys’ Office
requested that the decision be complied with.
Subsequent to the court decision the Company clarified that it intended to serve the
alternative sentence by means of donation to the State of São Paulo of a green area
in a wellhead area. Likewise, it requested that EMAE, in its capacity as owner of
64
the real estate, be summoned to join the proceedings so that the portion of the court
decision that ordered demolitions, regularizations and planting in the area occupied
by the Eletropaulo’s Sports and Cultural Association would be complied with.
The Secretariat of Environment (SMA) notified the court and the Company stating
that it would not accept donation of green area in the surrounding fountainheads as
offered by the Company, since it would result in the State to incur additional
infrastructure installation and maintenance costs (“donation with charges for
State”). Considering this, the Company initiated negotiations with the SMA in
order to comply with the judgment by implementing an environmental project in
the area. On December 31, 2015, the Company has an accrual for compliance with
the estimable parts of this demand in a total of R$2,885.
h)
PIS/COFINS on financial revenue: The Company judicially discusses the effects of
the Decree No. 8.426/2015, providing for the PIS/COFINS taxation on financial
revenue as from July 1, 2015 and until the decision of merit on the action is
rendered. While there is no decision authorizing the non-enforcement of new rules
from the Decree, the Company is making judicial deposits in the amounts
corresponding to the taxes levying upon the financial revenue. The Company
recorded a provision that, adjusted until December 31, 2015, corresponds to R$
20,231 and performed judicial deposits in the amount of R$ 23,119. With regard to
the merits of the case, the Management, together with its legal advisors, rates it as
possible. However, with regard to the cash disbursement, the Company estimates
it’s likely that payments referring to this action may be made before the discussion
of the merits. Thus, the Company made a provision for the said amount. The
Company's Management, based on the opinion of its legal advisors, estimates that
such procedure shall be completed by 2023.
18.2 Proceedings with probability classified as possible
Following is a summary of major contingent liabilities which likelihood of loss was
classified by management as possible. The Company is involved in other suits for
which the chances of loss assessed are possible, however they were not disclosed
since the Company has set forth the amount of R$ 10,000 for the purpose of
disclosing the provisions for the likeliness of possible loss.
Assessment of this probability is based upon on reports prepared by the Company’s
legal counsel.
65
Estimated value of contingency
Notes
Description of contingencies
2015
2014
(18.2.1)
(18.2.2)
(18.2.3)
(18.2.4)
(18.2.5)
(18.2.6)
(18.2.7)
(18.2.8)
(18.2.9)
(18.2.10)
(18.2.11)
(18.2.12)
(18.2.13)
(18.2.14)
(18.2.15)
(18.2.16)
(18.2.17)
(18.2.18)
(18.2.19)
(18.2.20)
(18.2.21)
(18.2.22)
(18.2.23)
(18.2.24)
(18.2.25)
(18.2.26)
(18.2.27)
(18.2.28)
(18.2.29)
(18.2.30)
Eletrobrás - Loan Agreement ECF-1.046/1986
Consumer classification - Public civil action
Tariff review - Exclusion of bilateral contract amounts
Tariff review - Tax benefits
ADA Regulator assessment - Allowance for Doubtful Accounts
Popular action - Maruzan Conrado
Ecovias - Use of land
Public civil action - City Boaçava
Public civil action - ETD Panorama
Public civil action - suspension of supply
Public civil action - overdue 90 days
Payment of FGTS
PASEP - Suspension of collection
NFLDs - Tax collection proceedings
Social contribution - tax loss carryforward
Tax collection proceedings - municipal government - sundry
PIS - Decree No 2445/1988 and 2449/1988
PIS - Statute of limitation
Public Civil Action - restablishment of electric energy
Finsocial
COFINS - amnesty
Actions for annulment – traffic tickets
Cofins Penalty
PIS – Compensations Decrees (Remaining Credits)
Tariff return - Shielded Base
Infraction note nº 1014/2015
Infraction note - Fine of offsetting not yet approved
Infraction note - Law-enforcement inspections of Regulated Asset Base
1,787,659
Undetermined
Undetermined
Undetermined
63,444
34,341
Undetermined
Undetermined
Undetermined
16,392
Undetermined
85,205
40,373
32,408
130,463
108,122
49,394
221,294
3,798
185,021
149,061
68,616
58,988
126,582
635,516
155,626
15,025
124,835
31,522
45,729
1,554,811
Undetermined
Undetermined
Undetermined
55,408
28,648
Undetermined
Undetermined
Undetermined
11,462
Undetermined
112,902
39,722
31,384
123,045
88,300
49,394
214,146
3,009
171,744
144,802
51,894
221,631
116,031
489,277
-
(18.2.1) Eletrobrás - Loan Agreement ECF-1046/1986
In November 1986, Eletropaulo Eletricidade de São Paulo S.A. (Governmentowned Eletropaulo) entered into a Loan Agreement ECF No. 1046/1986 with
Centrais Elétricas Brasileiras S.A. (Eletrobrás).
Considering the questioning regarding the yearicity of monetary adjustment on the
borrowed amount and the failure to reach an agreement with Eletrobrás, in
December 1988, Government-owned Eletropaulo filed a proceeding for payment in
court against Eletrobrás.
In filing the aforementioned claim, government-owned Eletropaulo made an
escrow deposit at the amount corresponding to the debt balance, i.e., principal plus
annual monetary adjustment.
After filing a defense against the proceeding for payment in court, in April 1989
Eletrobrás filed a suit for collection with the 5th Civil Court in the City of Rio de
Janeiro (5th Civil Court), grounding its request for collection by alleging that the
amounts deposited in connection with the proceeding for payment in court were not
consistent with the terms of Loan Agreement ECF 1046/86, which provided for,
based on Eletrobrás understanding, monetary adjustment on the principal on a
monthly basis rather than annually as asserted by government-owned Eletropaulo.
66
In the course of both suits, a Spin-Off Protocol was executed on December 22,
1997, whereby government-owned Eletropaulo was spun-off in four companies:
current Eletropaulo Metropolitana – Eletricidade de São Paulo S.A. (Company),
Bandeirante Energia S.A. (Bandeirante), Empresa Metropolitana de Águas e
Energia S.A. (EMAE) and Empresa Paulista de Transmissão de Energia S.A.
(EPTE), the latter company being thereafter merged into Companhia de
Transmissão de Energia Elétrica Paulista (CTEEP).
In April 1999, the 5th Civil Court (lower court) handed down a decision in favor of
Eletrobrás on both the suit for collection and the proceeding for payment in court.
The Court acknowledged, in connection with the former suit, that the principal of
the Loan Agreement ECF 1046/86 should be monetarily adjusted on a monthly
basis and, in connection with the second suit, that the amount deposited by
government-owned Eletropaulo was not consistent with the terms of the
aforementioned Loan Agreement.
In September 2001, Eletrobrás initiated execution proceedings also with the 5th
Civil Court, and, based on its interpretation on the terms of the Protocol for the
Spin-off of government-owned Eletropaulo, demanded from Eletropaulo
Metropolitana and from CTEEP the payment of proportional amounts recognized
by these companies as liabilities, (90.11%) and (9.89%) respectively.
Accordingly, CTEEP was required to pay an amount corresponding to the payment
in court (principal of the Loan Agreement plus annual monetary variation) and the
Company was required to pay an amount of R$ 1,787,659 updated to December, 31
2015 (R$ 1,554,811 as of December 31, 2014), representing the difference between
annual monetary variation and monthly monetary variation under the Loan
Agreement.
In November 2002, the 5th Civil Court (lower court) dismissed the Company’s
allegations and maintained it as a party to the suit. This decision was challenged
before the Rio de Janeiro State Court of Justice (TJRJ).
In September 2003, the TJRJ accepted all the allegations made by the Company
and ultimately acknowledged based on the Protocol for the Spin-off of
government-owned Eletropaulo that the company was not be held liable for settling
Loan Agreement 1046/86 since the related liability would have been transferred to
EPTE, a company merged into CTEEP.
In view of this unfavorable decision, Eletrobrás, in December 2003, and CTEEP in
March 2004, filed appeals with the Brazilian High Court of Justice (STJ) and with
the STF seeking a reversal of the TJRJ decision.
Without considering the merits of the case or the provisions of the Loan
Agreement, in June 2006, STJ reversed the decision that exempted the Company
from any liabilities for the amounts under dispute and, more importantly, that
dismissed it as a party to the litigation. The STJ understands that the litigation
among the parties requires the matters to be analyzed through a proceeding other
than the formal objection filed, and that the case should, therefore, be returned to
67
the lower court (5th Civil Court) for a detailed analysis of the matters involving the
three entities (Company, CTEEP and Eletrobrás), the Loan Agreement and the
Protocol for the Spin-off of government-owned Eletropaulo.
Against this decision: in December 2006 – “motion for clarification of the
decision”; in April 2007 – “motion for resolution of conflicting decisions”, and
“extraordinary appeal”. None of the appeals were favorable to the Company.
As all necessary legal measures had been presented to the STJ and STF and with no
further measure necessary the proceedings were returned to the lower court (5th
Civil Court).
Additionally, in February 2008, CTEEP filed an ordinary suit against the Company
and Eletrobrás before the 5th Civil Court seeking a decision that acknowledges
CTEEP as not liable for the payment of any amounts claimed by Eletrobrás in
connection with the suits involving the Loan Agreement ECF 1046/86. In
September 2008, the Company filed its defense, and such claim is currently
suspended for purposes of analyzing issues referring to the correct venue of
judgment of the case.
On April 17, 2009, based on the Brazilian Code of Civil Procedure (CPCB),
Eletrobrás requested that the legal proceedings regarding the “Settlement of the
Decision by Arbitration” before the 5th Civil Court be initiated. Such proceeding
aims at receiving the challenged debt amount through work to be performed by a
legal expert.
On May 26, 2009, the Company agreed with the computation of amounts through
calculations for execution of decision, but it pointed out that, in this proceeding, the
most appropriate way to determine amounts would be the execution based on parts
of the judgment rather than based on arbitration, as suggested by Eletrobrás, to the
extent that several items of the Government-owned Eletropaulo’s Spin-off Protocol
should be analyzed in full, since they were not complied with by the 1999 decision,
in particular any and all matters relating to which of the spun-off companies
(Company and/ or CTEEP) should be held responsible the for payment.
On February 25, 2010, the 5th Civil Court accepted the request for settlement of
decision through arbitration given that under the terms of the aforementioned
decision the Company presented a motions for clarification of the decision to the
5th Civil Court alleging that the Settlement of the Decision should be made through
Articles, while Eletrobrás filed an objection to the appointment of the expert, both
dismissed by the 5th Civil Court on March 4th, 2010.
68
Following the dismissal of the appeal, on March 31, 2010, the Company filed an
interlocutory appeal with the TJRJ, which was accepted on April 15, 2010, to
determine the full taking of evidence on the facts that support the liability for
payment of the debt, it being decided that the settlement decision should be
processed in terms of Articles, as requested by the Company.
On April 28, 2010, Eletrobrás filed an appeal with the TJRJ seeking
acknowledgment of refutation of the expert, which appeal was dismissed by the
TJRJ on May 14, 2010, due to the decision that accepted the appeal filed by the
Company. This is due to the fact that the Settlement of Decision procedure should
be reinitiated at the 5th Civil Court.
On March 2011, the Company was acknowledged that, on December 6, 2010,
Eletrobrás would requested to start a settlement process and that, for this reason,
the process was submitted to the 5th Civil Court.
In July 2011, the 5th Civil Court determined that the Company and CTEEP were to
produce their answers to the request for the judicial award based on secondary
elements added to case records, which was produced by the Company on August
10, 2011 and by CTEEP on July 26, 2011.
In December 2012, a decision was announced at the municipal level, with the early
judgment of the liquidation holding the Company responsible for the payment of
the balance of the monetary correction concerning the financing agreement ECF
1046/1986, executed with Eletrobrás. That decision did not consider the order for
carrying out the liquidation procedure of the sentence with broad evidence taking
by the Higher Court of Justice (STJ) and the Justice Court of the State of Rio de
Janeiro (TJRJ), in addition to not considering the request for evidence taking by the
parties.
Against the aforementioned decision, on January 7, 2013, the Company filed an
appeal with the Justice Court of the State of Rio de Janeiro, requesting the
immediate motion to stay execution, and the subsequent annulment of the decision,
to determine that broad evidence be produced, including expert evidence.
On January 21, 2013 the injunction granted by the Appeals Court Judge, of the
Justice Court of the State of Rio de Janeiro became public (“Injunction”), accepting
the preliminary request of the appeal filed by the Company against the decision
issued on December 12, 2012, by the 5th District Court of Rio de Janeiro in
proceeding No 0010021-19.1989.8.19.0001. With the grant of the Injunction, the
municipal decision is suspended, and awaits a decision concerning the appeal filed
by the Company.
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On February 07, 2013, the District Court of Rio de Janeiro (TJRJ) granted a
favorable decision to the Company, which fully annulled the first instance decision
which held the Company responsible for the payment of the debt. Eletrobrás and
CTEEP have not filed any appeal against that decision.
Therefore, the case shall be resumed in the first instance State Court, continuing
with the analysis of technical and legal issues involved in the dispute, as well as for
an accounting expert appraisal. On February 20, 2014, a court expert was
appointed, and the parties summoned were requested to produce their requirements
and appoint a technical assistant, and the Company did so in March 2014. On
March 28, 2014, CTEEP appointed its technical assistant and presented its
questions to be responded by a court expert. On September 6, 2014, the court
expert filed a petition accepting the appointment and the fees proposed (which
should be deposited by Eletrobrás). On October 23, 2014, considering that all
parties agreed to the proposal of court expert fees, the judge ordered that the
amount be deposited, to be done by Eletrobras in a court account in order to start
the court expert evidence. On November 24, 2014, Eletrobrás filed a complaint
confirming the deposit of the amount of expert fees. On November 27, 2014, the
accounting expert took the case to start the work. The expert’s work started
February 2015.
On September 17, 2015, the accounting expert report, while recognizing the
technical premises defended by the Company, issued an opinion in the sense that
the liability for the payment of the loan balance adjustment deficiency would stay
with the Company. With regard to the report, the Company presented, on
September 30, 2015, its technical opinion, as well as submitting new questions to
the legal expert. The judge shall decide whether the expert shall answer the
supplementary requirements of the Company. In case the judge determines that the
expert should answer the supplementary questions, the expert has the prerogative of
amending the conclusion of the previous report. After such step, the judge, at
his/her discretion, may designate any hearing to question the witnesses, the expert
and the respective technical assistants of the parties. After the production of all the
evidence, the judge shall render the decision of merits declaring the party liable for
paying the debt.
Upon conclusion of the legal proceeding on the Settlement of Decision Eletrobrás
may reinitiate the execution proceeding against the Company. Should this fact
occurs, in order for the Company to defend itself, a collateral should be given under
the terms of the Brazilian Civil Code.
Also in accordance with the Brazilian Civil Code, Eletrobrás should be entitled to
request to the court the release of the collateral provided by the Company even
before the final decision. In the event Eletrobrás request is granted, the Company
may have to make a cash disbursement and record a negative impact on its income
since the aforementioned disbursement may be considered as a contingent asset
due to the likelihood of its recovery on final decision in the case.
Management’s assessment of loss remains unchanged, and classified as possible.
70
In the event a decision unfavorable to the Company is handed down it will be
required to pay R$ 1,787,659 updated till December 31, 2015 (R$ 1,554,811 as of
December 31, 2014).
(18.2.2) Consumer classification – public civil action
A Public Civil Action was filed by the Federal Public Prosecutors’ Office and ProTeste on June 1st, 2005 against the Company and ANEEL claiming the
classification under the low-income category of the consumer units included in
social housing projects. The request for injunctive relief to determine the
immediate classification of the aforementioned consumers in the low-income
category was rejected and the decision was subject to an appeal filed by Pro-Teste
with the Federal Regional Court of the Third Region which upheld the decision. In
October 2008 the injunction was deemed as without grounds. Following the
unfavorable decision the plaintiffs filed appeals with the Federal Regional Court of
the Third Region. The amount involved in the action cannot be estimated as it
refers to a public civil action and, in the event of overturn of the decision favorable
to the Company, consumers may individually request enforcement of the decision
and the benefits arising there from. In the event an unfavorable decision is handed
down, the Company will be required to pay amounts, which, in light of the current
progress of the action, are not likely to be quantified.
(18.2.3) Tariff Reset – exclusion of bilateral contract amounts
The Federal Public Prosecutors’ Office filed a public civil action on December 5th,
2003 against the Company and ANEEL seeking the ruling out of the amounts
under the agreement entered into between the Company and AES Tietê in the
composition of tariffs, as well as the refund of consumers for tariffs allegedly
overcharged in 2003. The amount of the action was R$ 553 on September 30, 2007.
The action was rejected and an interlocutory appeal was filed with the Federal
Regional Court of the Third Region, which was dismissed. After presentation of
the refutations and subsequent rebuttals, the action was deemed as without grounds.
In March 2012, the appeal filed by the Federal Prosecutors’ Office was accepted,
indicating that the proceeding should go through examination by experts to
determine whether there had been excessive onus on Company’s consumers, and
the Company presented a request for clarification against that decision, which was
rejected in June 2012. On July 3rd, 2012 the company filed for an appeal with STJ
and STF against the decision that reversed the sentence of groundlessness of the
suit. In the event an unfavorable decision is handed down, the Company will be
required to pay amounts, which, in light of the current progress in the action, are
not likely to be quantified. In this case, any potential payment due to any ruling
against the Company should be requested by the allegedly aggrieved parties.
(18.2.4) Tariff Reset – tax benefit
On November 16, 2004, a legal proceeding was filed due to analysis of the 2003
Tariff Reset, and the Federal Court of Auditors handed down an opinion
unfavorable to ANEEL and the Company, where it has asserted that the Company
would have inadequately taken advantage from the benefits generated by payment
of interest on shareholder’s equity in the composition of tariff amounts. In light of
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these allegations, the Public Prosecutors’ Office filed a civil class action against the
Company and ANEEL, seeking the acknowledgment and subsequent cancellation
of the unduly generated benefit as well as the refund of amounts allegedly
overcharged to consumers. After the submission of defense by the parties and the
closing of the evidence taking phase, the proceeding was decided in favor of the
Company at the lower courts. It was ruled that there was no undue benefit on the
Company’s behalf. The Company is awaiting a court decision as to the appeal filed
by the Federal General Attorney’s Office. In the event an unfavorable decision is
handed down, the Company will be required to pay amount, which, in light of the
current progress in the case, are not likely to be quantified.
(18.2.5) ADA regulator assessment – allowance for doubtful accounts
Two tax assessment notices were filed against Eletropaulo by ANEEL (on May 4th,
2000 – AI No 015/TN170 and April 5th, 2001- AI 027/TN0336/1) as a result of
inclusion of credits against the Government in the ADA – Allowance for Doubtful
Accounts. The Company filed two writs of mandamus against these tax
assessments. Both injunctions were dismissed, given that all reasonable measures
were presented in the lower courts and based on the last calculation adopted by
ANEEL the amount of these assessments totals R$ 63,444 updated to December
31, 2015 (R$ 55,408 as of December 31, 2014).
AI 015/TN170:
On July 4th, 2012 an unfavorable decision was handed down to the appeal filed by
the Company in the writ of mandamus, with a new review appeal being filed on
July 6th, 2012 an appeal that was dismissed. On August 23, 2013, the Company
brought a Special Appeal to the Higher Court of Justice (STJ) and an Extraordinary
Appeal to the Federal Supreme Court (STF). On September 10, 2013, the Company
filed two Precautionary Measures with request for injunction, with the Federal
Regional Court of the First Region (TRF1), with a view at dismissing the liability
of the fine imposed by ANEEL until the final adjucation of the appeals, both by the
STJ and the STF. On September 17, 2013, the TRF1 granted the dismissal
requested by the Company. According to the adjustments made on the basis of the
adjustment criteria adopted by ANEEL, that fine amounts to R$ 15,327, adjusted
until December 31, 2015 (R$ 13,386 on December 31, 2014).
AI 027/TN0336/1:
On August 27, 2013, the appeal filed by the Company against the unfavorable
decision by the lower court in February 2002 was granted, by the Federal Regional
Court of the 1st Region (TRF1), canceling the fine imposed by ANEEL. Against the
favorable decision to the Company, ANEEL filed an appeal at TRF1 addressed to
STJ. The judgment of admissibility of the appeal at TRF1 is pending. Based on the
adjustments made according to the adjustment criteria adopted by ANEEL that fine
amounts to R$ 48,117 updated to December 31, 2015 (R$ 42,022 as of December
31, 2014).
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(18.2.6) Popular action - Maruzan Conrado
On January 26, 2006, Mr. Maruzan Conrado Oliveira, filed a popular action against
the Company, SABESP, the Taboão da Serra Municipal Government and Mr.
Fernando Fernandes Filho, seeking the annulment of an Acknowledgement of Debt
agreement signed by the co-defendants as well as indemnification for damages
allegedly caused to national treasury. On April 8, 2014, the Company was awarded
a favorable decision, which deemed the action unfounded and recognized that there
had been no breach of the debt confession agreement, or irregular installment
payment as provided under that agreement between the Company and the Local
Administration of Taboão da Serra in 2004. The judgment for the defendant was
submitted to required review and, on December 02, 2015, the trial was held, in
which the judgment was upheld in favor of the Company. In the event that an
unfavorable decision is handed down, the Company will be required to pay R$
34,341 updated to December 31, 2015 (R$ 28,648 as of December 31, 2014).
(18.2.7) Ecovias – use of land
On August 28, 2003, Concessionária Ecovias dos Imigrantes S/A. filed a lawsuit
against Eletropaulo, seeking to validate the collection of a public price for use of
the land where the light poles are installed along the rights of way in the highways
managed by Ecovias, and also to issue authorization for light pole installation.
Ecovias had a partial favorable decision in the STJ as of March 16, 2012 for which
the Company filed an appeal, on March 22, 2012. ABRADEE (Brazilian
Association of Electric Energy Utilities) requested its inclusion in the proceeding
as interest’s party. In the event an unfavorable decision is handed down, the
Company will be required to pay amount, which, in light of the current progress in
the case, are not likely to be quantified.
(18.2.8) Public civil action - City Boaçava
The City Boaçava District Residents Association (Associação de Moradores do
Bairro de City Boaçava) filed a Public Civil Action aiming at preventing the
reinforcement of LTA Pirituba-Bandeirante 3-4 transmission line, based on the
allegation that the radiation generated by electromagnetic fields has harmful effects
on individuals living close to the transmission line. The decision was partially
favorable. An appeal was filed against that decision which was unfavorable to the
Company. In light of the constitutional matters contained in the decision an
extraordinary appeal was filed with the STF and is pending judgment. On March 3,
2011, due to a request presented by Company, STF suspended the effects of the
decision of São Paulo State Law Courts until final decision about the merit of the
injunction. In June 2011 ANEEL requested its inclusion in the proceeding as an
“amicus curiae”. In September 2011 the Federal Higher Court has recognized that
the matter discussed on the appeal lodged by the company is “Repercussão Geral”
(Public Interest), by the Minister speaking for the Federal Supreme Court on the
case called a public hearing to listen to the testimony of people with expertise and
experience on the matter regarding the electro-magnetic field of electric power
transmission lines. A Public Hearing was held on March 6, 7 and 8, 2013, with 21
participants provided clarification to the Federal Higher Court on several subjects
73
related to the case. On July 29, 2014, the Federal Prosecution presented in the
Federal Supreme Court (STF) its opinion as to accepting the Company’s appeal,
given that the electromagnetic fields generated by the transmission lines comply
with the Brazilian legislation and the international limits recommended by the
World Health Organization (which adopts the guidelines of ICNIRP).
The appeal is pending decision by the Federal Higher Court. In the event an
unfavorable decision is handed down, the Company will be required to pay
amounts which, in light of the current progress of the case, are not likely to be
quantified.
(18.2.9) Public civil action - ETD panorama
The Cidade Jardim Residents Association (Associação de Moradores Sociedade
Amigos da Cidade Jardim) filed a Public Civil Action aiming at preventing the
construction of ETD Panorama. After deferring the injunction ordering the
stoppage of work, the Company, through appeal, obtained an order determining the
continuity of the works, which, in December 2015, was upheld in an unappealable
ruling declining to hear the Special Appeal which would be judged by STJ
(Superior Court of Justice), making the court order granting the possibility of
building the said ETD definite. On merit, the lawsuit was dismissed and motions
for clarification were filed by the opposing party, which were rejected. Currently,
the trial for the appeal filed by Sociedade is pending. Considering the confirmation
of refusal of the injunction filed by the Sociedade Amigos da Cidade Jardim, the
lawsuit prognosis was changed to remote.
(18.2.10) Public civil action – suspension of supply
The Legal Aid Department and the Consumer Rights Association of the
Municipality of Santo André, on January 06, 2006, filed a Public Civil Action
against the Company seeking to (1) prevent the interruption of supply of electric
power to consumers in that municipality due to allegations of fraud in metering
facilities, (2) a declaration to annul the terms of Debt Acknowledgement
Agreements entered into with the Santo André residents, with the subsequent
refund of 2 times the amount unduly received, as well as (3) in case of verification
of fraud, the Company is required to indicate the source and materiality of any
fraud and stipulate the objective criteria for its determination. On September 22,
2010 a partially favorable decision was handed down by the lower courts After the
parties had filed appeals, in November 2012, the Court of Appeals of the State São
Paulo issued a decision granting the appeal by the Company, and denying the
appeal by the Plaintiff. The Company filed for a Special Appeal and Extraordinary
Appeal against the aforementioned decision on April 4th, 2013. In case of
unfavorable decision to the Company is handed down, the estimated amount of R$
16,392 monetarily updated till December 31, 2015 (R$ 11,462 as of December 31,
2014).
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(18.2.11) Public civil action – overdue - 90 days
On April 15, 2005, the Public Prosecutors’ Office filed a Public Civil Action
against the Company seeking to (1) define the prescriptive year for the collection of
amounts relating to consumer accounts overdue by ninety days, in accordance with
the Consumer Defense Code (CDC), (2) also in accordance with the CDC, the
refund by two times the amount incorrectly charged from consumers that signed
acknowledgement of debt agreements fully or partially composed of third party
debts (former owners, tenants, or occupiers), and finally, (3) that ANEEL
supervises the compliance with the Company’s decisions. A partially well founded
ruling was awarded by the trial court, and the Company filed an appeal before the
3rd Region of the Federal Court against the decision on merits at the trial court,
which ordered the refund of the amounts wrongly collected from consumers who
signed TCDs regarding third parties’ debts. The Company awaits judgment.
As regards compliance with the part of the sentence that determines the
identification of consumers eventually affected by the decisions and the
quantification of the amount involved in the court claim, on September 9, 2014, a
decision was awarded terminating the temporary execution requested by the
Federal Prosecution in order to identify the consumers who signed Debt Confession
Terms (TCDs). On June 15, 2015, the Motion for Clarification filed by the Federal
Prosecution Service was partially granted by the trial court and determined that the
judgment had been partially executed (identification, by the Company, of the
TCD’s declared void) and R$ 10 daily fine is invalid, because the MPF itself had
agreed to postpone the deadline for provisional execution. Pursuant to the survey
concluded in the provisional performance, 3,211 TCDs were identified, relating to
consumers failing to assume the liability for third party debits, in the total amount
of R$ 6,430. On September 11, 2015, the Sixth Class of TRF - 3rd Region rejected
the appeal filed by the Company and ANEEL and granted the appeal filed by MPF
in order to increase the adverse judgment for double reimbursement of the amount
that had been wrongly collected from consumers executing the admission of debt
partially or fully comprised of third party debits. On September 29, 2015, the
Company presented the Motion for Clarification to TRF 3rd Region and, after its
judgment, it shall file an appeal to the Superior Court of Justice. The office in
charge shall maintain the probability of loss as possible for such case.
Should an unfavorable decision supervenes, the Company will have an impact on
its operations, and will have to disburse amounts, which, given the current claim
status, are not subject to quantification.
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(18.2.12) Payment of FGTS - government severance indemnity fund for employees
It refers to three notices related to the year from January 1993 to September 1998,
issued on November 1998 amount by Caixa Econômica Federal, in connection with
an alleged failure to pay FGTS amount of R$ 85,205 updated to December 31,
2015 (R$ 112,902 as of December 31, 2014). After the allegations made by the
Company, in March 2007 there was an unfavorable decision at the administrative
level and the consequent inclusion of that debt in the Overdue Federal Liabilities.
In view of that, since the Company understands that the intended collection is
unfounded, it filed for a Writ of Prevention to, upon the presentation of a Guarantee
Letter, suspend the debit until the merit of the dispute is judged. In September
2014, the decision of the trial court was awarded, judging the request partially well
founded (debt charged off by R$ 15,458). Appeal filed, which is pending judgment.
(18.2.13) PASEP – Suspension of collection
In November 2006, the Company filed a writ of prevention with a view to
suspending collection of presumed PASEP debts related for the period from
January 1985 to June 1988, in the amount of R$ 40,373 updated to December 31,
2015 (R$ 39,722 as of December 31, 2014),which was granted by presenting bank
guarantee. The collection is based on the fact that by instituting the Law Decree
No. 2052/1983, the Company would have to fall within and be subordinated to the
standards applicable to PASEP, but not to PIS. In view of the unfavorable decision
at the municipal level, the Company filed an appeal, which still awaits judgment.
(18.2.14) NFLDs – tax collection proceedings
These refer to tax collection proceedings filed by the Brazilian Institute of Social
Security (INSS) seeking collection of alleged tax credits not paid for purposes of
social security payments totaling R$ 32,408 updated to December 31, 2015 (R$
31,384 as of December 31, 2014). In summary, the discussions concern the
possible levy of Social Security taxes on different non- compensatory monies. Two
Tax Foreclosures had unfavorable decisions at the lower court, and at this time we
await a decision by the court of appeals. As to the third foreclosure we await a
decision by the lower court.
(18.2.15) Social Contribution Tax Loss Carry forward
In November 2007, Company filed a Declaratory Action with a view at ruling out
the application of MP 2158/2001, which determined that companies derived from
spin-offs can only use CSLL credits on the exact proportion of the spun-off
company net equity. The Company does not agree with that rule, since it wants the
proportion defined in the spin-off protocol, which is prior to the aforementioned
MP to prevail. The difference between the credit balance percentages amounts to
R$ 130,463 updated to December 31, 2015 (R$ 123,045 as of December 31, 2014).
In March 2007, the trial decision was rendered in favor of the Company's interests.
In September 2015, the appellate decision was rendered, denying the appeal filed
by the Federal Government. In October 2015, the Federal Government filed for
Motions for Clarifications, which are currently pending trial. Currently, the
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eventual filing of special appeal by the Government is pending. Despite of that
decision that suspends the demand of the debit, in September 2010, the Federal
Revenue Office drew up a Notice of Infraction and issued a final order in face of
the Company’s demand that CSLL amounts be compensated in the 3 rd and 4th
quarters of 2005 and in 2006 and 2007. In July 2012, an unfavorable decision by
the lower court was issued against the Company. A Voluntary Appeal was filed
with a partially favorable decision for the Company. In December 2014, a partially
favorable decision cancelling the separate fine collection (R$ 22,328 in historical
amounts) was maintained, maintaining the updating as for the principal, ex-officio
fine and SELIC (R$ 65,122 - in historical amounts). Since there is no more
possibility for administrative appeal, the unfavorable part of the notice of violation
remains under discussion in the common share, which prognosis remains unaltered.
(18.2.16) Municipal tax foreclosures - sundry
The Company has several Tax Foreclosures filed by Municipalities in its
concession area, demanding basically IPTU debts (property taxes), fines and ISS.
The total debts classified as potential loss amount to R$ 108,122 updated to
December 31, 2015 (R$ 88,300 as of December 31, 2014). The greatest part of that
amount (R$ 86,786) refer to seven Tax Foreclosures of the municipalities of
Itapevi and Jandira, where fines are required due to failure to produce technical
opinions for each assets deployed in the municipality. These discussions are based
on legislations that regulate the use of urban soil, and not on the relevant municipal
aspects, and since they are not of the same nature as the other fines, they were
being analyzed individually, and are not included in the amounts of this item.
(18.2.17) PIS – Decree Law 2445/1988 and 2449/1988
In July 2000, the Company filed a Judicial Lawsuit with an aim at the recognition
of PIS credits derived from the overpayment made when the aforementioned
Decrees were in force, and that had been ruled as unconstitutional by the Higher
Court of Justice - STF. In May 2012, the Company was granted a final favorable
decision recognizing the right to the aforementioned credit. However, five (5)
Tax Foreclosures with a view at collecting the debits compensated by the
Company in 2002 are still in progress. Since these debits were offset with credits
already recognized by the aforementioned final decisions, a potential exposure of
the Company is restricted to an arrears fine of 20% applicable to the debts
compensated, which amount to R$ 49,394. The amount is not subject to adjustment
given that it concerns only a default fine of 20%, applied on the offset PIS debits.
(18.2.18) PIS – Statute of limitations
Addresses the Tax Foreclosure with a view at collecting alleged PIS debits in the
amount of R$ 221,294 updated to December 31, 2015 (R$ 214,146 as of December
31, 2014) arising from the enforcement of the Standards imposed by MP
1407/1996. In opposition to that collection, the Company filed defense, asserting
loss of right by the Tax Administration to demand these amounts based on the time
elapsed between the taxable event and the due constitution of the tax debit, which
was delayed by 5 years. Unfavorable decisions rendered by trial and appellate
courts. In May 2015, motions for clarification were filed, Which were not
77
provided. In September 2015, the Company filed special and extraordinary
appeals, which is pending ruling.
(18.2.19) Public Civil Action – Reestablishment of Electric Power
On June 22, 2011, São Paulo State and the Bureau of Consumer Protection
(PROCON) filed a Public Civil Action against the Company, before São Paulo
State Justice, based on the suspended power supply from June 7 to June 9, 2011,
when the city of São Paulo was hit by an extratropical cyclone, aggravated by
heavy rain. After receiving formal notification of the suit and the preliminary
decision awarded, the Company filed an appeal before the Higher Court of Justice,
which determined that TJSP decision was to be suspended. Against such decision,
PROCON filed an appeal which is still pending judgment. The Company will
produce its defense in October 2011, and the suit was forwarded to the Federal
Court after ANEEL entry into the proceeding was admitted, where judgment is
awaited. On March 20, 2014, the action was partially granted in the lower court,
condemning the Company to the payment of collective moral damages in the
amount of R$ 2,000, to be reverted to the Diffuse Rights Protection Fund. The
Company and ANEEL shall file for an appeal in order to dismiss such court
decision. Should an unfavorable decision supervenes, the Company will have
disburse amount R$ 3,798, updated to December 31, 2015 (R$ 3,009 as of
December 31, 2014).
(18.2.20) FINSOCIAL
In July 2012 the Company was notified of two (2) Final Orders that ratified
partially the offsets made with credits from FINSOCIAL. It should be pointed out
that such credits derive from a final court decision that recognized same, with the
discussion remaining solely around its amount. The amount of the portion still not
ratified is R$ 185,021 updated to December 31, 2015 (R$ 171,744 as of December
31, 2014). On April, 2013 there was unfavorable decisions at the lower court to the
Company, which was filed a Voluntary Appeal. The Company awaits a decision
on the appeals filed.
(18.2.21) COFINS - Amnesty
Judicial Action proposed by the Company against the Federal Treasury with a
view at the recognition of amounts paid as COFINS, considering the reductions of
fines and interest guaranteed by the amnesty provided for by Law 9779/99. In May
2012, there was a decision at the State Court recognizing the right to the reductions
brought about by the amnesty. However, in the context of that same decision, the
understanding that the legal charges of 20% on the amount of the debt had not
been excluded by the amnesty was issued, remaining therefore the requirement
concerning that amount which is of the order of R$ 149,061 updated to December
31, 2015 (R$ 144,802 as of December 31, 2014).
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(18.2.22) Actions for annulment – traffic tickets
The Company is the plaintiff in 16 Actions for Annulment of Traffic Tickets filed
against the Administration of the City of São Paulo, with a view at temporarily
suspending and annulling at the end of the action traffic tickets such as: (i) Rotating
Circulation of Vehicles; (ii) Truck Transit Restriction Zone; and (iii) Nonindication of Drivers. According to legal advisors, the chance of loss in all
proceedings is possible. By December 31, 2015, the total adjusted amount under
dispute of actions for annulment is R$68,616 (R$ 51,894 as of December 31,
2014).
(18.2.23) Cofins – Exofficio Fine
Notice of Violation issued to demand tax credits concerning COFINS
(determination period from April 1992 to March 1993) , plus exofficio fine
calculated on a 100% basis, and interest based on Selic. From the exclusive
standpoint of the Brazilian Tax Authorities the exofficio fine is justified by the fact
that the COFINS credits were paid by means of the Tax Amnesty granted by MP
2158/99 rather than the original payment of that tax (explanatory note 18.2.21). On
October 31, 2011 an unfavorable decision was rendered by the appeal court. The
Company obtained an unfavorable decision at the trial court and partially favorable
decision in administrative appellate court. In January 2015, the Company was
served with the notice of the decision denying the furtherance to special appeal to
CARF (Administrative Council of Tax Appeals). Thus, the decision decreasing the
ex-officio fine from 100% to 75% became definite, as well as the incidence of
SELIC rate on such values was excluded. Since there is no possibility for appeal
any longer, the debit was decreased from R$ 221,631 to R$ 58,988. On April 2015,
the preparatory action for a provisional remedy for tax collection shall be filed in
order to enable the debit guarantee and consequent enforceability suspension. The
proceeding merit shall be discussed in the records of the future tax collection to be
proposed by the Federal Revenue Service. The amount authorized up to December
31, 2015 is R$ 58,988 (R$ 221,631 on December 31, 2014).
(18.2.24) PIS Compensation Decrees (Remaining Credits)
On August 8, 2014, the Company was summoned by the Internal Revenue Service
on the non-ratification of administrative offsets carried out between remaining
Credits of excise tax (PIS) paid in excess, based on Decree-Laws nº 2.445/88 and
2.449/88, and PIS and COFINS debits relating to the period between April and
May 2013. On September 8, 2014 an administrative defense was presented, which
is now pending judgment. The value adjusted by December 31, 2015 is R$
126,582 (R$ 116,031 as of December 31, 2014).
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(18.2.25) Tariff return - Shielded Base
On November 21, 2012, a proceeding was filed in order to examine certain assets
of the Company’s Regulatory Remuneration Base, a potential overvaluation of
assets and the possible refund of amounts overcharged to consumers. On February
18, 2013 the Reporting Director was appointed for the aforementioned proceeding.
In November 2013, ANEEL notified the Company requesting the latter to expose
their view in regards to the aforementioned proceeding, for the specific purpose of
knowing whether the recalculation of the tariffs practiced by the Company is due
prior to the date of its third periodic tariff reset, for potential discount and refund of
amortization and depreciation installments associated with any possibly
nonexistent assets (246,474.87 meters of AL Nu CAA 1272 MCM Cable). The
company presented its view, and on December 17, 2013, ANEEL Management by
means of ANEEL Dispatch nº 4.259/2013, decided for the recalculation of the
tariffs used by the Company in the period between July 2007 and July 2011,
corresponding to the amount of R$ 626,052, which shall be adjusted by the IGP-M
as of December 1, 2013 until the date of the beginning of the refund, which shall be
made by means of a negative financial component, deferred in up to 4 tariff events
as of July 2014 (“Decision”).
After the Decision was published, which took place on December 27, 2013, the
Company filed for an administrative appeal requesting ANEEL to reconsider the
Decision, also requesting that its effects be suspended until the reconsideration
request made is analyzed by the Agency.
On January 28, 2014, by means of a dispatch, ANEEL General Director denied the
company’s request regarding the suspension of the effects of the Decision. In
opposition to that act, also on January 28, 2014, the Company filed for a writ of
mandamus with the Federal Court of Brasilia, with a motion for an injunction
requesting the Court to order the suspension of the effects of the Decision until the
request for reconsideration is judged by ANEEL. On January 29, 2014 the court
upheld the injunction in favor of Company, suspending the effects of the Decision
until ANEEL has judged the request for reconsideration. On February 3, 2014,
Director Reive Barros dos Santos was appointed reporter for the Reconsideration
Request filed by the Company with ANEEL.
On July 1, 2014, the Brazilian Electric Energy Agency (“ANEEL”), in a public
meeting of its Management, discussed the Company’s request for reconsidering the
analysis of the validity of the recalculation of the tariffs charged by the Company
prior to the date of its 3RTP (Proceeding nº 48500.006159/2012-75 – “Specific
Proceeding”), for a possible discount and refund of the remuneration and
depreciation tranches associated with a possibly nonexistent asset, and decided to
maintain the decision made in December 2013.
Based on ANEEL Dispatch nº 2.176/2014, on July 3, 2014, ANEEL decided for
the refund of 50% of the remuneration and depreciation tranches associated with
possibly nonexistent assets in the amount of R$ 325,543 generating a negative
impact of -3.30% on the total 2014 readjustment.
80
On the same date, the Company filed a new request for reconsideration, requiring
that the decision be reviewed as to the part that did not accept the secondary claim
for tariff recalculation, taking into account the undervaluation of other existing
service assets.
Also on July 3, 2014, the Company requested the Writ of Mandamus Court to
extend the preliminary injunction, which had suspended the effect of the Decision
rendered in December 2013, until the final judgment of the request for
reconsideration made by the Company by way of administrative proceeding nº
48500.006159/2012-75.
On July 9, 2014, the Writ of Mandamus Court determined the extension of the
injunction previously granted, until the final judgment of the request for
reconsideration made by the Company in administrative Proceeding nº
48500.006159/2012-75, and thus the effects of the decision awarded by ANEEL on
July 1, 2014 were suspended.
On July 16, 2014, ANEEL’s General Director, despotically did not acknowledge
the new request for consideration filed by the Company on July 3, 2014, on the
basis that the discussion had been exhausted at the administrative level.
On July 18, 2014, the Company filed for an appeal at ANEEL (appeal), on the
grounds that it is the competence of the Management of ANEEL to judge the
request for reconsideration. Also, given the fact that the administrative proceeding
is not concluded, the injunction granted by the Writ of Mandamus remains in force.
On August 12, 2014, ANEEL Management dismissed the review appeal filed by
the Company, confirming the termination of the discussion on the matter at the
administrative level.
On August 19, 2014, the Company filed with the Federal Court of Brasília an
Ordinary Action against ANEEL, with a request for advance relief to stay the
effects of ANEEL Dispatch nº 4.259/2013, confirmed by ANEEL Dispatch nº
2.176/2014. The advance relief was rejected.
The Company filed a bill of review appeal (“Appeal”) with the Federal Regional
Court of the 1st Region (“TRF1”), and, on September 9, 2014, the Company was
awarded a preliminary decision on the Appeal for ANEEL to carry out the
recalculation of the tariff without the negative financial component set out in
ANEEL Dispatches nº 4.259/2013 and 2.176/2014 until judgment of the merits of
the appeal.
On September 25, 2014, ANEEL submitted a petition pointing out difficulties for
complying with the preliminary decision due to the need for complying with a
complex internal procedure and called for the adjournment of the compliance with
the decision until the judgment of the Appeal.
81
On October 6, 2014, the Reporting Associate Judge did not revoke the injunction
favorable to the Company, however suspending compliance with the preliminary
decision until judgment of the Appeal in the TRF1. Therefore, the preliminary
decision remained in force and only compliance with it was suspended.
On October 13, 2014, the judgment of the Appeal started, and initially a favorable
vote was casted by the reporting Associate Judge of the Appeal. Subsequently, the
trial was adjourned given that the reviewing Associate Judge requested access to
the case files. The trial shall continue with the vote of the reviewing Associate
Judge plus one vote of another Associate Judge (the trial is held by three Associate
Judges) on a date yet to be defined.
On December 18, 2014, the effects of the injunction were reestablished by Judge
Rapporteur of the grievance in TRF1.
On January 7, 2015, ANEEL filed before to the Superior Court of Justice (STJ) um
pedido de Suspensão Liminar de Segurança (SLS) order to suspend the injunction
in force granted by TRF1.
On January 8, 2015, ANEEL published the new tariff adjustment index, which
excludes the financial component of -3.30 pp
On January 16, 2015, President of the exercise Superior Court of Justice dismissed
the appeal of ANEEL.
On February 10, 2015, ANEEL (National Electric Energy Agency) filed an appeal
against President of the STJ (Supreme Justice Court) decision.
On February 13, 2015, the Company filed its appellee's briefs.
On May 20, 2015, the STJ denied appeal filed by ANEEL aimed at revoking the
injunction granted in favor of the Company.
Based on current injunction and a legal assessment made by their external legal
counselors, the Company classifies the loss risk as possible as regards that dispute.
However the Company understands that it has good arguments to support its
position at the judicial level, and it shall certainly seek to have its rights assured.
Based on a legal analysis of the matter at hand as described above and current
injunction, a liability was likewise not recorded. On December 31, 2015, already
considering the refunds made to consumers in the amount of R$ 721,833.
According to ANEEL Ratifying Resolution 1,844, of January 5, 2015, maintained
the court decision that ordered the exclusion from the tariff of the negative
financial component of 3.30%, The amount of R$ 162,772, previously refunded to
consumers, was reverted to the Company through the 2015 Tariff Reset (see
explanatory note 33.4 (b.4)). Considering restatement to the IGP-M rate for the
period, R$ 172,634 were reversed, to be received through billing in the current
tariff cycle.
82
Thus, considering the amount already refunded and not yet received by the
Company, the amount in dispute as of December 31, 2015 is R$ 635,516 (R$
489,277 as of December 31, 2014).
(18.2.26) Infraction Notice No. 1014/2015
On January 8, 2015 the Company received Notification Term (TN) No 73/2014 of
the Economic and Financial Supervisory Superintendency ("SFF"), through which
ANEEL claims that the Company would have breached item 6.3.22 - Provisions for
contingencies contained in the Accounting Manual of the Electricity Sector MCSPEE established by ANEEL Resolution No. 444, of October 26, 2001, as
amended.
The infraction notice determined further that the Company proceed to accounting
in its regulatory statements of December 2014, the amount of negative financial
component of R$ 626,052 and updates corresponding to the amount that ANEEL,
at the administrative level, understood that should be returned to consumers in the
distributor's concession area (explanatory note nº 18.2.25)
To issue the above determinations, supervision used as basis the above identified
accounting standards and the understanding exposed by the Federal Attorney
Office of ANEEL in Opinions No. 622 and No. 623, both of 2013.
On January 23, 2015 the Company, timely, filed Manifestation to the Notification
Term No. 73/2014, clarifying the following points:
a.
The Company's management, based on the opinion of its legal counsel,
assessed the likelihood of loss of discussion as "possible";
b.
According to the instruction of the Accounting Manual of the Electricity
Sector, Company's Management shall exercise its judgment based on the
opinion of its legal counsel and not based on the opinion of Federal Attorneys
of ANEEL;
c.
Also according to the instructions of the Manual, the cases evaluated as
possible losses should be disclosed in the notes, and its registration as a
liability does not apply.
In view of the above clarifications, as well as their understanding as to the correct
application of the Accounting Manual of the Electricity Sector, the Company
requested the filing of TN No 73/2014, pursuant to Article 20, Paragraph 1 of REN
No. 63/2004.
The Company received an infraction notice No. 1014/2015-SFF on May 5, 2015 by
the ANEEL in the amount R$ 155,626, in virtue of its understanding that the
Company failed to meet the Notice.
83
The Company’s management believes that the Company has complied with the
rules set forth in the Electric Sector Accounting Guide (MCSPEE) and, therefore,
will undertake the necessary measures at the administrative and legal proceedings,
if necessary, to cancel such Tax Assessment.
In view of its attorneys’ assessment whether the chances of being defeated in the
discussions of the Notice of Violation are possible, no provision was constituted.
(18.2.27) Infraction Notice - Tax assessment issued by the Federal Tax Authority
On March 23,2015, the company was notified about tax assessment issued by the
Federal Tax Authority, seeking the payment of R$ 15,025, updated to December
31, 2015, related to a fine corresponding to 50% of the offset debts on the grounds
in the article 74, § 17, law nº 9.430/1996. Such offsets were held with tax credits
arising from to a final decision rendered in a lawsuit (explanatory note nº 18.2.20).
On April 2015, the Company filed an administrative appeal, which is awaiting for
judgment.
(18.2.28) Notice of Violation - Action for inspection in the Regulatory
Remuneration Base
The Company filed a lawsuit against ANEEL - Brazilian Electrical Energy Agency
in order to set aside the Non-Conformities N.13, N.20 and N.28, appearing in the
Notice of Violation No. 122/2012-SFF, on December 19, 2012. The total amount
of the penalties related to the said non-conformities is R$91,931. The imposed
penalties arise from the action for inspection in the Regulatory Remuneration Base
- Ongoing Fixed Assets. The amount updated as of December 31, 2015 is R$
124,835.
(18.2.29)Infraction Notice nº 0014/2015
The Company received the Notice of Violation No. 0014/2015 - ARSESP - SFE TN 0012/2015, on September 22, 2015, in virtue of individual and collective
continuity indicators for 2014 (assessment of the data collection proceeding and
assessment of individual and collective continuity indicators, as well as the
payment for financial settlements related to index transgressions), in the amount of
R$ 35,887. The Company made a statement on a timely basis on AI on October 5,
2015. On February 5, 2016, ARSESP's Executive Office discussed in court of
reconsideration for the penalty amount review, decreased to R$ 31,522. The
Company awaits for trial of the appeal filed by ANEEL.
84
(18.2.30)Infraction Notice nº 0005/2015
The Company received the Notice No. 0005/2015 - SFE - ARSESP, on February
12, 2015, in virtue of individual and collective continuity indicators for 2013
(assessment of the data collection proceeding and assessment of individual and
collective continuity indicators, as well as the payment for financial settlements
related to index transgressions). The Company made a statement on a timely basis
on TN on Friday, April 10, 2015. The Company received, on January 8, 2016, the
Notice of Violation No. 001/2016, in the amount of R$ 45,729, making a statement
on a timely basis thereon on January 27, 2016. The Company awaits for the
analysis of the appeal filed.
Letters of guarantee, guarantee insurances and collateral
On December 31, 2015, the Company has letters of guarantee, guarantee insurances
for legal proceedings. The Company’s main letters of guarantees are stated below:
Nature
Quantity
Tax
Civil
Labor
19.
Amount
40
34
53
Rate p.a.
1,621,867
271,249
104,303
0.35% up to 2.75%
0.35% up to 6.33%
0.35% up to 2.75%
2015
CURRENT
Energy Development Account - CDE
Consumer charges - Centralized Account Tariff Flags (ii)
Other charges
Total
482,102
208,341
61
690,504
2014
60,150
102
60,252
(i)
In accordance with ANEEL Confirmatory Resolution no. 1.857, of February
27, 2015, new quotas were defined for the Energy Development Account CDE due by the energy distribution utilities for 2015.
(ii)
Out of the total amount of R$ 208,341, the amount of R$ 1,978 refers to
November 2015 and was liquidated on January 8, 2016. The remaining
balance of R$ 206,363 refers to the billed and unbilled amount of December
2015, for which the Company still awaits for disclosure, by means of ANEEL
technical note, of the amounts to be transferred. For further details on tariff
flags, see explanatory note no. 25.
85
20.
Research and development and energy efficiency
2015
2014
CURRENT
Research and development
National technology development fund
Ministry of mines and energy
Energy efficiency
Total
22,318
3,706
1,853
29,763
57,640
26,142
1,531
765
11,841
40,279
NON CURRENT
Research and development
Energy efficiency
Total
32,295
32,295
89,935
15,690
41
15,731
56,010
Changes in research and development and energy efficiency are as follows:
Research and
development
Provisions
Payments
Applications
Monetary Variation
Provisions
Payments
Applications
Monetary Variation
21.
National
technology
development fund
42,213
18,611
(23,280)
4,288
41,832
25,725
(18,409)
5,465
54,613
Ministry of mines
and energy
1,413
18,611
(18,493)
1,531
25,725
(23,550)
3,706
Energy efficiency
706
9,305
(9,246)
765
12,862
(11,774)
1,853
12,305
46,489
(47,569)
657
11,882
64,311
(47,510)
1,080
29,763
Total
56,637
93,016
(27,739)
(70,849)
4,945
56,010
128,623
(35,324)
(65,919)
6,545
89,935
Other liabilities
2015
CURRENT
Refunds to consumers- Special obligation
Return to customers – VAT (ICMS) rate differential - Condominiums (*)
Contribution for public lighting service - Cosip
Eletrobrás compulsory loan
Amounts received in duplicate
Low income program
Eletrobrás Subsidies – Onlending Differences
Inspection charge - ANEEL
PIS/COFINS - Rate differential
Sundry creditors
Adjustment to billed invoices - Consumers
Itaipu bonuses
DIC/FIC/DMIC/DICRI - Index DEC and FEC - note nº 18.1 (d.4)
Others
Total
NON CURRENT
Advances relating to asset sale
Others
Total
86
2014
44,433
2,477
73,245
1,330
17,796
3,833
1,198
17,089
16,419
22,064
3,628
59,430
8,527
271,469
41,280
28,881
65,200
966
17,724
3,834
3,170
1,327
11,824
11,747
20,298
3,634
20,995
230,880
2,940
5,379
8,319
2,940
8,102
11,042
(*)
22.
VAT (ICMS) overcollected to be returned to customers as credit on energy
bills, by reframing the consumer units in the commercial class of collective
areas of residential condominiums, with consequent amendment of the
collection rate of VAT (ICMS) 25% to 18%. The amount of R$ 2,477
includes besides the difference of VAT (ICMS) rate, return of electricity rates
and PIS / COFINS. It should be pointed out that the VAT (ICMS) amount
collected in excess was onlent to the state of São Paulo, which generated for
the Company a balance of VAT (ICMS) recoverable on the excess collection
made (refer to explanatory note 6).
Shareholders’ equity
22.1 Capital
For the year ended December 31, 2015 and 2014 there was no share issued or
redeemed.
22.2 Ownership structure
Shareholders:
2015
2014
Common
Common
Quantity
AES Elpa S.A.
BNDESPar
Federal Government
Others
Total of shares
51,825,798
1
13,342,384
1,436,634
66,604,817
%
77.81
20.03
2.16
100.00
Preferred
Quantity
51,825,798
1
13,342,384
1,436,634
66,604,817
%
77.81
20.03
2.16
100.00
Preferred
Shareholders:
Quantity
%
Quantity
%
BNDESPar
Companhia Brasiliana de Energia
Brasiliana Participações S.A.
Others
Total of shares
568,976
7,434,410
92,735,684
100,739,070
0.56
7.38
92.06
100.00
568,976
7,434,410
92,735,684
100,739,070
0.56
7.38
92.06
100.00
On October 26, 2015, the shareholders of Companhia Brasiliana de Energia
approved the partial spin off that, after verified all suspensive conditions to
implement the division on December 31, 2015, results on transfer of the
Company’s shares to Brasiliana Participações, a private equity stock company
which shares are held by AES Holdings Brasil and BNDESPAR in the same
proportions in which they participate in Companhia Brasiliana de Energia.
22.3 Equity valuation adjustment/other comprehensive income
As of December 31, 2015, the equity valuation adjustment balance and other
comprehensive income were comprised of the revaluation of assets recorded in
1998 and 2007 and the actuarial loss and gain on pension plan liability,
respectively.
87
The equity valuation adjustment (net of income tax and social contribution) relating
to asset revaluation amounts to R$ 1,123,597 (R$ 1,196,302 as of December 31,
2014).
Other comprehensive income, relating to the actuarial loss on pension plan liability,
amounts to a negative impact of R$ 813,817 (R$ 1,021,687 as of December 31,
2014) net of income tax and social contribution.
23.
Shareholders’ equity
The Company’s articles of incorporation establishes a mandatory minimum
dividend of 25%, calculated on net annual income adjusted in accordance with that
provided in Article 202 of Law No. 6404/1976.
(Loss) Net income
Realization of equity valuation adjustment, net
Prescribed dividends and interest on shareholders' equity
Legal reserve
Statutory reserve
Absorption of the net loss for the year with part of the statutory reserve
Subtotal
Balance of retained earnings
88
2015
2014
101,136
72,705
3,191
(8,692)
(126,255)
42,085
(42,085)
-
(131,747)
96,086
6,218
29,443
-
Share
2015
2014
Type
ON
PN
R$ / Share
0.2372
0.2609
R$ / Share
-
24.
Earnings per share
Preferred shares are entitled to dividends on profits 10% higher than that
attributable to common shares. The amounts of earnings per share in the tables
below include this condition.
The table below shows the basic and diluted income (loss) per share for the year
ended December 31, 2015 and 2014:
Numerator:
2015
(Loss) Net income
2014
101,136
Denominator (in thousand of shares):
Weighted average number of common shares (*)
Weighted average number of preferred shares (*)
66,605
100,739
(131,747)
66,605
100,739
Remuneration of preferred shares - 10%
Weighted average of the number of preferred shares adjusted
1.10
110,813
1.10
110,813
Adjusted Denominator
Denominator for basic and diluted net income per shares
Denominator for basic and diluted net income per adjusted shares
167,344
177,418
167,344
177,418
Basic and diluted earnings per share (Reais - R$)
Basic and diluted earnings per common share
Basic and diluted earnings per preferred share
0.57004
0.62705
(0.74258)
(0.81684)
(*)
There were no changes in common and preferred shares during the years
submitted to comparison.
There were no transactions involving common or potential common shares
between balance sheet date and the date the Financial statements were concluded.
Income (Loss) attributable to shareholders
Year:
Common
2015
2014
37,968
(49,459)
Preferred
63,168
(82,288)
Total
101,136
(131,747)
In the event of the issue of shares in favor of its indirect controlling shareholder,
The AES Corporation, arising from the share-based payment plan, such event does
not generate any significant dilutive effect on the Company, once the amount is
immaterial for calculation purposes. Thus, the basic and diluted profit per share is
equal in all years presented.
89
25.
Net operating revenue
Reclassified
2015
Revenue from electric energy distribution services
Consumer class
Residential
Industrial
Commercial
Rural
Public sector:
Federal
State
Municipal
Public lighting
Public service
Emergency capacity charge
Financial assets remuneration (Income charges)
Transfer for distribution activities
Subtotal – Supply
Others
PIS/Cofins Difference of rate
Transfer to special obligations - excess energy demand
Transfer to special obligations - reactive energy
Unbilled
Distribution and transmission usage charge - TUSD
Transfer for distribution activities
Transfer to special obligations - excess energy demand - TUSD
Transfer to special obligations - reactive energy - TUSD
Financial assets remuneration - TUSD - (Income charges)
Spot market (**)
Construction revenue
Subsidy with resources from the CDE (*)
Financial sector assets, Net - note 34
Factor Xq - note nº 18.1 (d.4)
Monetary adjustment on financial sector asset
Other revenue
Gross operating revenue
Number of
consumers
billed
MWh
R$
MWh
R$
6,390,034
26,877
414,677
453
15,567,348
4,766,148
13,024,820
28,987
8,868,250
2,408,829
6,715,712
4,371
6,328,583
26,472
366,688
396
16,486,199
5,280,773
13,133,599
30,304
5,466,454
1,554,674
4,112,016
3,128
1,346
4,445
10,352
2,555
1,406
6,852,145
182,903
685,722
446,924
850,999
625,267
36,179,118
86,218
323,239
210,672
284,924
275,810
1
212,417
(7,279,986)
12,110,457
1,409
4,352
10,273
1,890
1,397
6,741,460
185,418
687,886
456,161
881,043
685,233
37,826,616
56,749
161,595
151,748
167,263
170,374
2
157,334
(4,272,880)
7,728,457
545
6,852,690
8,057,733
3,120,484
47,357,335
(66,006)
(2,381)
(4,240)
305,940
847,670
7,279,986
(265)
(846)
16,822
812,325
610,731
221,824
2,166,811
(58,100)
194,343
130,225
24,565,296
554
6,742,014
8,588,685
1,167,477
47,582,778
71,812
(21,331)
(43,552)
79,366
408,534
4,272,880
(2,632)
(13,099)
13,629
831,792
582,995
199,576
270,506
55,237
130,039
14,564,209
Emergency capacity charge
Energy Efficiency, R&D, FNDCT e EPE
Energy development account - CDE
Consumers charge - PROINFA
Consumers charge - CCRBT
Electric Energy Services Inspection Fee - TFSEE
ICMS
COFINS - current
PIS - current
Service tax - ISS
Deduction to gross revenue
Net operating revenue
2014
Number of
consumers
billed
-
-
-
-
6,852,690
47,357,335
(1)
(128,623)
(3,169,660)
(46,257)
(1,694,062)
(15,149)
(3,873,654)
(1,619,533)
(350,674)
(270)
(10,897,883)
13,667,413
-
-
-
-
6,742,014
47,582,778
(2)
(93,016)
(222,666)
(32,743)
(15,900)
(2,422,318)
(970,083)
(210,610)
(255)
(3,967,593)
10,596,616
(*)
Revenue recognized as a result of the subsides levying upon the tariffs
applicable to the electrical energy distribution utility users, including low
income subsides, which are reimbursed by Eletrobras. The receivable balance
is recorded under CDE Resources – discounts in the tariff – please refer to
explanatory note 9.
(**)
The Company recorded the revenue from energy sale in the short-term market
for the year of 2015. The receivable balances arising from that sale are
recorded in explanatory note nº 5 and are settled financially by CCEE –
Electric Energy Commercialization Chamber.
90
Tariff Flags:
As determined by Decree no. 8.401, issued on February 4, 2015, the Centralized
Tariff Flags Account - CCRBT was created, assigned to manage the resources
arising out of application of tariff flags instituted by ANEEL. The Electrical
Energy Commercialization Chamber - CCEE was designated by the creation and
maintenance of the CCRBT, and the amounts to be transferred and/or offset shall
be confirmed on a monthly basis by ANEEL, by means of issuance of technical
note.
The funds arising out of the application of tariff flags by the distribution companies
may be totally or partially reverted to the CCRBT. The funds available in this
account are transferred to the distribution companies by taking into consideration
(i) the amounts effectively realized of the variations relating to the generation costs
and exposure to liquidation prices in the short-term market; and (ii) rate coverage
in effect for each distribution company.
In January and February 2015, the amounts added to the electricity bill by the
yellow and red flags were R$15.00/MWh and R$30.00/MWh, respectively. As
from March 2, 2015, the amounts added were R$ 25.00/MWh and R$ 55.00/MWh,
respectively. From September 1, 2015, the additional values for red flags changed
to R$ 45.00/MWh.
The red tariff flag was effective throughout all year of 2015, when the Company
recorded the following amounts:
Tariff Flags
Competence
January/2015
February/2015
March/2015
April/2015
May/2015
June/2015
July/2015
August/2015
September/2015
October/2015
November/2015
December/2015 (*)
Total
(*)
Billed
Unbilled
43,820
91,744
122,508
170,548
165,688
153,506
159,906
162,308
145,333
137,301
135,038
137,050
1,624,750
69,312
69,312
CCRBT
Resources
(21,753)
(37,674)
(29,885)
(33,786)
(118,027)
(37,597)
(27,717)
(27,049)
(20,464)
(1,977)
(355,929)
Receipt of
CCRBT
33,304
33,304
Company´s Cost Covered
22,067
54,070
92,623
136,762
47,661
115,909
132,189
135,259
124,869
170,605
133,061
1,165,075
For December, the Company, not making an estimate for costs to be covered by
CCRBT, since it has no history.
From January to March, the short cost of the tariff flag was R$ 13,870, already
including the amount of R$ 127,349 approved for the 2015 Tariff. In August, the
uncovered costs accrued in 2015 financial year were cleared by the tariff flags.
91
Competence
January up to March/2015
April/2015
May/2015
June/2015
July/2015
August/2015
September/2015
October/2015
November/2015
Total
Total cost
Cost covered by
tariff review
(309,979)
(140,177)
(65,842)
(182,053)
(96,082)
(69,756)
(124,869)
(103,249)
(118,732)
(1,210,739)
Balance to be
covered by tariff
review
(13,870)
(3,415)
(18,181)
(66,144)
36,107
65,503
67,356
14,329
81,685
Balance covered by
tariff review
168,760
136,762
47,661
115,909
132,189
135,259
124,869
170,605
133,061
1,165,075
127,349
127,349
For the accruals for October and November 2015, the Company withheld CCRBT
surplus in the amount of R$ 81,685. This amount shall be returned in the
subsequent tariff process or shall be considered to assess the loss in loss months.
Such surplus withheld by the Company particularly refers to the coverage of ESS
and is accounted for as deduction of "regulatory financial assets, net" - explanatory
note No. 34.
In case of ocurence costs not covered by the tariff flags in the current cycle will be
zeroed after they are recorded in the following In the subsequent tariff adjustment
process
26.
Cost of electric power service
MWh
Energy purchased for resale:
2015
Itaipu
ANGRA 1 and 2
Bilateral contract - AES Tietê - note 31
Bilateral contract - others
Purchase - CCEE
Purchase - CCEAR
Physical Guarantee Quotas Agreements
Hydrological risks
(-) CDE Resources - energy costs
(-) ACCOUNT-ACR Resources - Energy costs
(-) Reimbursement - energy auctions
ICMS over commercial losses
(-) PIS/Cofins tax credits
Subtotal
Electric energy purchased for resale - PROINFA
Total
9,250,312
1,674,856
11,107,680
13,030,549
8,739,931
43,803,328
942,911
44,746,239
Transmission and distribution system usage charges:
Basic network use
System service charge - ESS/EER
(-) Adjustments concerning the retroactive relief
(-) Financial Resources of the Reserve Energy Account – CONER (i)
Energy transportation - Furnas/Itaipu
National System Operator - ONS
Contract for distribution system use - CUSD
Connection to basic network - CTEEP
(-) PIS/Cofins tax credits
Total
92
R$
2014
9,586,846
1,668,105
11,107,680
1,848,933
11,526,803
8,369,220
44,107,587
969,043
45,076,630
2015
(2,595,389)
(273,260)
(2,355,172)
(3,183,081)
(239,757)
(842,075)
83,327
881,259
(8,524,148)
(236,801)
(8,760,949)
2014
2014
(1,278,850)
(252,867)
(2,233,613)
(66)
(1,301,525)
(3,426,326)
(213,831)
(601,795)
111,146
1,185,748
184,273
4,752
610,798
(7,212,156)
(271,673)
(7,483,829)
2015
2014
(627,898)
(609,979)
116,575
(46,617)
(24,441)
(6,448)
(36,729)
112,026
(1,123,511)
(556,806)
(242,263)
91,551
373,034
(34,584)
(23,787)
(7,587)
(32,015)
36,374
(396,083)
(i) Financial Resources of the Reserve Energy Account – CONER
Normative Resolution nº 613, of May 20, 2014 established that the CONER
financial resources must be used to refund the excess financial amounts of the
CONER to the users of reserve energy, where they exist. The refund will be made
in the form of a credit to the users at the financial settlements by CCEE.
CNPE Resolution No. 3, dated March 6, 2013
National Council of Energy Policy (CNPE) Resolution No. 3, dated March 6, 2013
established guidelines for the mechanisms internalization of risk aversion in
computational programs to energy studies and pricing forming as well as
established a new criteria to costs proration of additional dispatch from thermal
plants, over the transition phase and prior to the implementation of the new PLD
calculation (from April to August 2013). By new criteria, ESS cost due to energy
security, which was fully apportioned by consume category, free consumers and
distribution companies shall be apportioned by all SIN agents, including generator
companies and trader companies.
In May 2013, several associations - Abraceel, Apine, Abragel, Abraget, Única and
Abeeólica – managed to be granted injunctions excluding their associates from
splitting these costs and exempting them from the payment. As a consequence of
the judicial dispute, the Electric Energy Commercialization Camber – CCEE has
been carrying out financial settlements, allocating the corresponding cost to the
consumer category, including distributors.
On December 31, 2015, the injunction remains in force until a final decision is
made, which discusses the application of ESS collection by CNPE Resolution 03.
Thus the Company recognizes the cost of energy ESS according to the financial
settlements by the CCEE.
27.
Personnel and Management
2015
2014
Employees:
Salaries
Medical and dental assistance
Food and meal assistance
Other benefits
Education and training
Employees' profit sharing
Social charges
Others
(336,996)
(73,330)
(64,164)
(14,972)
(4,403)
(71,829)
(121,968)
(77)
(284,868)
(67,123)
(69,656)
(13,417)
(3,616)
(81,300)
(153,315)
(267)
Administrators
Total
(5,449)
(693,188)
(5,197)
(678,759)
93
28.
Other costs
Reclassified
2015
Gains and losses on assets sale
Lease and rent expense
Insurance
Taxes
Donations, contributions and grants
Bank fees
Advertisement
Social responsability
Loss on assets disposal
Compensation for damages to consumers - PID
Disposal of financial asset related to the concession agreement
Administration fee - Funcesp
Credits of PIS and COFINS
DIC/FIC/DMIC/DICRI (*)
DIC/FIC/DMIC/DICRI - Index DEC and FEC - explanatory note nº 18.1 (d.4)
Recovery of expenses
Penalties - return to consumers
Others
Total
(*)
2,674
(23,171)
(3,788)
(33,834)
(3,558)
(46,966)
(2,675)
(3,249)
(41,797)
(14,928)
(11,839)
(9,799)
1,157
(77,439)
(48,400)
7,944
(4,471)
(30,518)
(344,657)
2014
171,969
(26,448)
(3,490)
(33,409)
(2,491)
(43,644)
(6,922)
(3,707)
(33,483)
(20,952)
(16,873)
(9,235)
1,310
(18,245)
9,127
(21,066)
(57,559)
DIC, FIC, DMIC and DICRI are indicators that reflect the quality of the electric
energy supply service rendered to customers. They indicate the duration and
frequency of the interruption of energy supply, and the maximum duration
(tolerance) of the interruption in the supply of energy to the consumer. When
these indicators go beyond the goals set forth by ANEEL, the consumers receive
a financial compensation in the energy bill. The Company makes the
reimbursement to the customer by way of a credit in the bill in up to two months
after the event has occurred.
94
29. Financial results
2015
Financial income
Interest on investments
Late payment charges - consumers
Monetary variation and interest on overdue electricity bills
Penalties
Government grants
Monetary adjustment of tax credits
Monetary variation on judicial deposits
Financial income from sale of property
Monetary adjustment on financial sector asset
REFIS - Income taxes - explanatory note nº 18.1 (f)
Judicial precatory - monetary correction and interest - explanatory note nº 5
Others
Subtotal
Reclassified
2014
68,487
106,237
88,516
6,243
2,478
624
35,019
186
126,758
5,994
19,797
9,204
469,543
75,594
65,936
50,608
5,197
1,853
981
31,352
15,018
26,872
273,411
Financial expenses
Debt charges - local currency loans
Government grants
Exchange variation on research and development and efficiency energy - note 20
Capitalized interest transferred to construction in progress (*)
Late payment fines, penalties and sanctions
Payment postponed - Bilateral contract AES Tietê - explanatory note nº 31
Letters of guarantees
Monetary variation on judicial process and others
Monetary variation - free energy
Monetary variation - tax
Monetary variation - Index DEC and FEC - explanatory note nº 18.1 (d.4)
Others
Subtotal
(509,180)
(2,478)
(6,545)
11,907
(619)
(12,256)
(38,107)
(41,813)
(9,783)
(18,592)
(11,030)
(24,551)
(663,047)
(380,176)
(1,853)
(4,945)
3,621
(3,681)
(22,705)
(38,600)
(7,252)
(1,727)
(29,319)
(486,637)
Exchange variation, net
Itaipu
Others
Subtotal
(121,723)
1,322
(120,401)
(26,018)
347
(25,671)
Total , net
(313,905)
(238,897)
(*)
Interest was capitalized at a rate of 16% p.a. in for the year ended December
31, 2015, (13% p.a. in the year ended December 31, 2014) over qualifying
intangible assets.
95
30.
Income tax and social contribution
Income and social contribution taxes on net profit are calculated based on rates
effective at the balance sheet dates, 25% for IRPJ and 9% for CSLL. Deferred taxes
relating to temporarily non-deductible provisions and revaluation reserve are
recorded in the balance sheets (explanatory note 7). The breakdown of tax base and
balances of these taxes is as follows:
2015
IRPJ
2014
CSLL
IRPJ
CSLL
a) Breakdown of income taxes in the income statement:
Income taxes:
Current
Deferred
Total
b) Income tax calculation - expense:
Income before taxes
Additions (exclusions)
Donations
Management bonuses - non-deductible portion
Tax benefit R&D - research and development
Indeductible losses on accounts receivable
Non-deductible penalties
Tax benefits – Law nº 11.941 - REFIS - explanatory note nº 18.1 (f)
Others
Total additions (exclusions)
Basis for calculation
Tax rate
Income (Expenses) with taxes at nominal rates
Tax breaks
Tax base offset
Adjustment IRPJ/CSLL - previous years
Adjustment IRPJ/CSLL - Exclusion P&D
Total tax income (expenses)
Effective tax rate
(74,994)
33,401
(41,593)
(28,268)
12,024
(16,244)
(61,917)
110,541
48,624
(23,791)
39,795
16,004
158,973
158,973
(196,375)
(196,375)
3,408
3,705
(7,731)
27,381
1,246
(5,995)
1,997
24,012
182,985
25%
(45,746)
4,472
24
(1,278)
935
(41,593)
3,408
3,705
(7,731)
27,381
1,246
(5,995)
1,997
24,012
182,985
9%
(16,469)
(118)
343
(16,244)
3,741
3,034
(9,807)
17,990
1,203
1,803
17,964
(178,411)
25%
44,603
4,340
24
(499)
156
48,624
3,741
3,034
(9,807)
17,990
1,203
1,803
17,964
(178,411)
9%
16,057
(110)
57
16,004
26.2%
10.2%
24.8%
8.1%
As from January 1, 2015, the Company has been calculation the Income Tax for
Legal Entities - IRPJ, Social Contribution on Net Income - CSLL, PIS/PASEP
(Social Integration Program) and the Contribution and Social Security Financing
Contribution - COFINS by applying the precepts of Law no. 12.783/2014 RFB
Normative Instructions no. 1.515 of November 24, 2014 and no. 1.556 of March
31, 2015.
96
31.
Related parties
The Company is directly controlled by AES Elpa S.A., and indirectly controlled by
Brasiliana Participações S.A. which is a subsidiary of the AES Corporation.
Brasiliana Participações S.A. is a privately-held company incorporated for the
purpose of controlling the operations of the following companies: AES Tietê S.A.
(Tietê), and AES Uruguaiana Empreendimentos S.A. (Uruguaiana S.A) and AES
Serviços TC Ltda by holding direct interest in their capital.
31.1 Related parties:
Assets
2015
Other credits:
AES Tietê Energia S.A. (iii)
AES Sul - other credits
AES Serviços TC Ltda. - Recovery of expenses – store rental
AES Sul -sublease (v)
AES Serviços TC Ltda. - sublease (v)
AES Tietê Energia S.A. - sublease (v)
AES Brasil -sublease (v)
Local suppliers:
AES Serviços TC Ltda. - Customer Service Facilities (vii)
Total assets from related parties
Liabilities
2,759
390
11
16
24
3,200
218
2,759
14
16
95
3,102
3,200
362
362
3,464
2015
Payable dividends and interest on shareholders’ equity:
AES Elpa S.A.
1,940
12,293
14,233
Trade accounts payable:
AES Tietê Energia S.A. - note 13 (i)
AES Tietê S.A. - note 13 (i)
AES Serviços TC Ltda. - disconnection/reconnection (iv)
AES Serviços TC Ltda. - Replacement of poles (vi)
AES Big Sky (ii)
Pension plan obligation:
FUNCESP - post employment benefits - note nº 16
Total liabilities from related parties
2014
2014
-
271,814
960
1,872
283
276
275,205
296,028
1,658
1,595
261
345
299,887
2,604,967
2,604,967
2,818,793
2,818,793
2,894,405
3,118,680
The Company is an integral part of the Decision-Making Body of FUNCESP,
having a significant influence in its management. Thereby, the balances with
FUNCESP are shown as transaction with related parties. The retirement plan
details with FUNCESP are shown in explanatory note No. 16.
97
Income
2015
Operating revenue (Other revenue):
AES Tietê S.A. - sublease (v)
AES Tietê Energia S.A. -sublease (v)
AES Serviços TC Ltda. - sublease (v)
AES Sul - sublease (v)
AES Rio PCH -sublease (v)
AES Holdings Brasil - sublease (v)
AES Elpa - sublease (v)
AES Brasil Ltda. - sublease (v)
Southern Electric Brasil Participações Ltda. - sublease (v)
1,184
5
191
129
5
4
5
24
11
1,558
Energy purchased for resale:
AES Tietê S.A. - note nº 26 (i)
Pension plan entity:
FUNCESP - post employment benefits - note nº 16
Third-party services:
AES Serviços TC Ltda. - disconnection/reconnection (iv)
AES Serviços TC Ltda. - Replacement of poles (vi)
AES Serviços TC Ltda. -Recovery of expenses - Customer Service Facilities
AES Serviços TC Ltda. - Others
AES Big Sky (ii)
Financial income:
AES Tietê Energia S.A. (iii)
(2,233,613)
(2,233,613)
(312,891)
(312,891)
(282,517)
(282,517)
(11,288)
(1,778)
(20,555)
945
(52)
(3,281)
(36,009)
(9,928)
(798)
(14,327)
(4,089)
(29,142)
(12,256)
(12,256)
Total income from related parties
1,094
4
187
118
4
4
4
1,415
(2,355,172)
(2,355,172)
27
27
Financial expenses:
AES Tietê S.A. - note nº 29 (i)
(i)
2014
(2,714,743)
25
25
(2,543,832)
In December 2000, the Company entered into a power purchase and sale
agreement with its affiliate Tietê for a 15-year term. Under this agreement, since
2003 Tiete began selling to the Company electric power corresponding to the 25%
decrease p.a. in the quantities established in the “initial contracts”. The termination
date of this contract is up to December 31, 2015. The average price for the year
ended December 31, 2015 is R$212.03 / MWh (R$201.09 / MWh for the year
ended December 31, 2014).
The outstanding balance of R$271,814 on December 31, 2015 will be paid by the
Company to AES Tiete Energia, since it incorporated the assets and liabilities of
AES Tiete on the same date.
The Company postponed and subsequently settled five invoices from bilateral
contract with AES Tiete, being of the May,June, September, October and
November 2015 competence. Thus, it was recorded R$ 12,256 of interest expense,
in accordance with its terms.
From January 2016, the Company started to contract energy through auction CCEAR in line with the rules and regulated by ANEEL, from AES Tiete Energia.
The contract have a duration term of 3 years, with an average price of R$ 142.00.
AES Tietê Energia sold 90 MW on average, of which 49.7 MWm were directed to
Eletropaulo. As it is a regulated contract, it was not subject to approval by ANEEL.
98
(ii)
This refers to the integrated IT system management operation and processing
service value with affiliate AES Big Sky.
(iii) As set Sale contract of Eletropaulo Telecomunicações LTDA to Tim Celular S.A.,
the AES Tietê Energia (formely “Companhia Brasiliana”) de Energia should keep
into specific account resources such as warranty obligations adjustment of the
selling price. In May, 2013, the AES Tietê Energia redeemed partly the deposit
kept in secured account which was transferred to the Company in the accordance
with the terms of the credit assignment. On December 2015, AES Tiete Energia
redeem the remaining balance of the deposit in a total of R$244, which was also
transferred to the Company.
(iv) It refers to the service agreement entered into by and between the Company and
AES Serviços TC whose subject matter is the provision for services of connection,
modification, cut-off, reconnection, verification, assessment and/or technical and
commercial services, and, under special circumstances, the compliance with
emergency situations for corrective maintenance of the air distribution grid. The
agreement term is 48 months, as from April 29, 2015 and its total estimated price is
R$ 9,500. ANEEL approved the operation by means of Order No. 1.267/2015.
(v)
Corresponds to Sublease contract of part of the commercial building executed
between the Company and other companies for a ten-year term duration. ANEEL
approved the transaction through the Dispatch 2804/2012 and Dispatch 3893/2012.
(vi) ANEEL, by means of Dispatch 3.663/2013, approved the Works Execution and
Service Supply Agreement between the Company AES Serviços TC, purpose of
which was the supply of ongoing construction services (assembly and
disassembly), maintenance and refurbishing of networks and overhead distribution
line in the amount of R$ 14,754. The duration of that agreement is January 2014
through December 2017.
(vii) Corresponds to the contract entered into by the Company (contracting party) and
AES Serviços (hired party) regarding customer services provided at customer
service facilities. The purpose of the contract is the supply of customer services
operations in 32 stores to Company’s clients, distributed in all municipalities of its
grant, to receive requests for commercial and technical services, supply information
and manage complaints. The contract is valid September 1, 2015 until September 1,
2019, and the total amount is estimated at R$ 81,322. ANEEL has approved the
operation by means of Dispatch 2.830/2015
99
31.2 Senior Management compensation
Pursuant to CVM Instruction No. 560 of December 11, 2008, the Company is
required to disclose its Senior Management compensation. For the year ended
December 31, 2015 and 2014, management compensation was as follows:
Description:
2015
Short-term benefits (a)
Post-employment benefits (b)
Other long-term benefits (c)
Share-based payment (d)
Total
2014
10,431
262
310
1,225
12,228
11,359
372
241
993
12,965
a)
Year Represented by wages, salaries and social security contributions and nonmonetary benefits (such as health care, housing, cars and goods or services for
free or subsidized);
b)
Represented by pensions, other retirement benefits, post-employment life
insurance and post-employment health care;
c)
Represented by paid leave, bonus for years of service, profit sharing, bonuses
and other deferred compensation;
d)
Represented by The AES Corporation’s stocks and stock options granted to
Senior Management.
The Management compensation was approved at the General Meeting, except for
the remuneration plan based on actions that is administered and funded by The
AES Corporation.
32.
Insurance
As of December 31, 2015, insurance coverage established by Company’s
Management to cover any contingent events and civil liability is as follows:
Effective
Operating risks
Group life
Civil liability
Civil liability directors and officers (D&O) insurance
Environmental risks
Vehicle fleet - RCF
from
to
Jan 1, 2016
Jan 1, 2016
Apr 1, 2015
Apr 1, 2015
Apr 1, 2015
Apr 1, 2015
Jan 1, 2017
Jan 1, 2017
Apr 1, 2016
Apr 1, 2016
Apr 1, 2016
Apr 1, 2016
Amount assured
R$ 3,750,000
25 X salary, up to R$ 1,833
R$ 30,000
R$ 100,000
R$ 10,000
RCFV combined single limit R$ 1,000
The insurance of vehicle fleet is contracted individually by the Company. For other
insurance, the insured amount is shared with other companies of the Group AES
Brasil (co-insured). The premium is paid individually by each company involved
and are the sale is the basis for apportionment criterion.
100
33.
Financial instruments and risk management
33.1 General considerations
The main financial instruments, according to the accounting practices adopted by the
Company, are stated as follows:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
Cash and cash equivalents (explanatory note 4);
Short-term investments (explanatory note 4);
Consumers, concessionaires and permissionaires (explanatory note 5);
Accounts receivable – Agreements (explanatory note 8);
Guarantees and judicial deposits (explanatory note 18);
Financial assets related to concession (explanatory note 11);
Financial sector assets, Net (explanatory note 34);
Trade accounts payable (explanatory note 13);
Loans, financing, debentures and financial leasing (explanatory note 15);
Government grants;
Consumer charges payable (explanatory note 19); and
Payable dividends and interest on shareholders’ equity.
33.2 Fair value and financial instruments classification
2015
2014
Book
value
Fair
value
Book
value
Fair
value
ASSETS (Current and non-current)
Consumer, concessionaire and permittees
Accounts receivable – agreements
Financial concession assets
Total
146,621
384,557
2,556,625
98,967
443,126
2,004,798
1,340,900
6,975,594
146,621
384,557
2,556,625
98,967
443,126
2,004,798
1,340,900
6,975,594
181,260
727,891
1,723,776
119,811
445,283
1,980,753
270,506
5,449,280
181,260
727,891
1,723,776
119,811
445,283
1,980,753
270,506
5,449,280
Financial asset measured at fair value through profit and loss
Financial asset available for sale
Loans and receivables
Financial asset available for sale
LIABILITIES (Current and non-current)
Loans, financing, debentures and financial leasing
Government grants
Payable dividends and interest on shareholders’ equity
Total
1,926,785
3,602,542
10,535
690,504
42,730
6,273,096
1,926,785
3,531,065
10,535
690,504
42,730
6,201,619
1,561,434
3,071,892
13,013
60,252
3,858
4,710,449
1,561,434
3,072,351
13,013
60,252
3,858
4,710,908
Financial Liabilities - Amortized cost
Category
Cash and cash equivalents and short term investments are composed of bank
deposit certificates (CDB), repurchase agreements and marketable securities. CDBs
and repurchase agreements are marked to market on a monthly basis according to
the curve during the term of the investment.
For Loans, financing and debentures, the measurement technique used for fair
value calculation is the discounted cash flow, considering the expectation of
liquidation of such liabilities and current market rates and respecting the
peculiarities of each instrument at the balance sheet date.
For the financial concession asset, the Company determines its fair value by using
the same components of the regulatory remuneration rate set forth by ANEEL
(Regulatory WACC). In the event of the Company observes a change in the
regulatory WACC during the tariff-reset years, that new interest rate is used by the
Company to discount the estimated cash flows to present value. As of December
31, 2015, the Company concluded that there was no difference between those rates.
101
For the remaining accounts, book values approximate to the fair value. Therefore,
the Company is disclosing both as equivalents to the amounts recorded.
There was no reclassification between categories of financial instruments during
for the year ended December 31, 2015.
33.3 Fair value hierarchy
The table below shows the financial instruments recorded at fair value according to
the measurement technique.
2015
Fair
Value
ASSETS (Current and non-current)
Financial concession assets
Total
146,621
384,557
2,004,798
2,535,976
2014
Measurement
Level 1
146,621
146,621
Level 2
384,557
2,004,798
2,389,355
Level 3
-
Fair
Value
181,260
727,891
1,980,753
2,889,904
Measurement
Level 1
120,834
120,834
Level 2
60,426
727,891
1,980,753
2,769,070
Level 3
-
The measurement of financial instruments is grouped into levels 1 to 3, based on
the degree at which their fair value is quoted:
Level 1 – prices quoted in active markets for identical assets and liabilities;
Level 2 – other techniques for which all data significantly affecting the recorded
fair value are observable, whether directly or indirectly; and
Level 3 – techniques that use data significantly affecting the recorded fair value not
based on observable market data.
During for the year ended December 31, 2015 and 2014, there was no transfer
relating to measurement of fair value from levels 1 and 2, neither for or from level
3.
33.4 Risk management
(a)
Internal structure of risk management
In its structure, the Company has an Internal Controls Management which main rile
is to advise the business areas in the review of processes and implementation of
controls to ensure accuracy of financial reporting and compliance with laws,
standards, regulations and internal procedures.
The efficiency of the key controls implemented by the Company in order to ensure
the accuracy of the financial statements is tested on an annual basis. In the event of
identification of eventual points of improvement on such controls, the Company
prepares the action plans, defining terms and liabilities, in order to ensure the
mitigation of all associated risks.
102
The Company also relies on an Internal Audit Department that acts in four areas:
operational, financial, information technology and investigative. The first evaluates
all processes and procedures connected with the Company’s operations, the second
evaluates Financial Statements, and the controls associated, the third evaluates
information safety controls and fourth acts in investigation of possible fraud and
irregularities, all in accordance with the Sarbanes-Oxley Act, requirements of the
Brazilian legislation, regulatory provisions of the electricity sector and internal
rules and procedures.
The annual audit plan is prepared in conformity with the result of the assessment of
risks and its main purpose is to provide independent assessment of risks, control
environment and significant weaknesses which may affect the Financial Statements
and processes of the Company. Possible weaknesses or non-compliances are
corrected through an action established by the persons responsible for the processes
and its implementation is duly monitored by the Internal Audit area and Internal
controls.
The audit plan is approved by both The AES Corporation’s Audit Committee and
the Company’s top Management and Board of Directors. In addition, audit findings
and corresponding action plan to implement potential improvements are submitted
to the Board of Directors and Fiscal Committee regularly.
(b)
Risks associated with financial instruments
The Company is exposed to the following risks resulting from financial
instruments:
(b.1) Credit risk
Credit Risk is the risk of the Company to incur in loss due to a client or a contraparty in a financial instrument fails to fulfill its contractual obligations. This risk is
basically generated in: (i) accounts receivable from customers; and (ii) cash
equivalents and short term investments.
Accounts receivable
Under electric power industry regulations and the concession contract, the
Company is obligated to supply electric power to all consumers located in its
concession area. In accordance with the industry regulations, the Company has the
right to interrupt the supply of electricity to consumers who fail to pay their bills.
Cash and cash equivalents and short term investments
Risks related to financial investments deposited in financial institutions that are
subject to market actions and the risk associated with them, and especially to the
lack of guarantees for the amounts invested, which may lead to loss of related
amounts.
103
The Company operates so as to diversify credit risk with financial institutions,
concentrating their transactions only in prime institutions and following their
internal policies on valuation of investments to equity of such financial institutions,
and the ratings of the main agencies.
The Company uses the ratings of Fitch Ratings (Fitch), Moody’s or Standard &
Poor’s (S&P) to identify the banks eligible for investment portfolio composition.
Any financial institutions who show, in one of the risk rating agencies, rating
below that set out, (AA), at the domestic level, in local currency, may not be part of
the investment portfolio.
As to the amounts of maximum exposure by financial institutions, the most
restrictive of the following criteria defined by the Company prevail: (i) Cash
Criterion: Investments of up to 20% (Shareholders’ Equity (PL) less than R$
6,000,000) up to 25% (PL exceeds R$ 6,000,000) of the total portfolio per financial
institution. (ii) Company’s Net Equity (PL) Criteria: Investments of up to 20% of
its net equity per financial institution; and (iii) Criterion of Net Equity of the
Financial Institution receiving the resources: Each Financial Institution may receive
resources equivalent up to 3% (PL less than R$ 6,000,000) up to 5% (PL exceeds
R$ 6,000,000) of its net equity. The most restrictive among criteria i, ii and iii
prevails.
The book values of financial instruments represent the maximum exposure to the
credit risk. The maximum exposure to the credit risk as of December 31, 2015 is:
2015
Consumer, concessionaire and permittees
Accounts receivable – agreements
Total net exposure
146,621
384,557
2,556,625
98,967
3,186,770
(b.2) Liquidity risk
The Company adopts as risk management policy: (i) to maintain a minimum cash
level as to insure the availability of financial resources and to mitigate liquidity
risks; (ii) to establish guidelines to contract hedge operations to mitigate the
Company’s financial risks, as well as the operation and control of these positions.
The table below shows information on future maturities of financial liabilities of
the Company. For “loans and financings” and “debentures” the projected cash
flows are being used. As it is a projection of future payments, the amounts shown
as maturities differ from the amounts shown in explanatory note 15. Information on
the table below includes both principal and interest.
104
Year ended December 31, 2015
Less than 3
months
From 3 to 12
months
From 1 to 2
years
From 2 to 5
years
More than 5
years
1,926,785
16,323
233,244
3,195
690,504
645
2,870,696
91,215
823,729
8,156
42,085
965,185
237,992
893,929
8,352
1,140,273
357,231
2,037,201
15,635
2,410,067
23,199
426,555
7,843
457,597
Loans and financing
Debentures
Financial leasing
Payable dividends and interest on shareholders’ equity
Total
According to CPC 40 Financial Instruments: Disclosures, when the amount payable
is not fixed, the amount shown is determined with reference to the existing
conditions on the closing date. As such, the CDI index used in the projections
corresponds to the index at December 31, 2015.
(b.3) Operations with derivative financial instruments
For the year ended December 31, 2015 and 2014, the Company had no operations
with derivative financial instruments.
(b.4) Market risk
Capital management
The Company controls its capital structure according to the economic conditions,
in order to allow for the payment of dividends, return on shareholders’ capital, and
the funding of new loans issues of securities in the financial and capital market, in
addition to other instruments that it may deem necessary.
In order to maintain or adjust the capital structure, the Company may revise its
practice of paying dividends, increasing capital by issuing new shares or selling
assets to reduce debt levels, if applicable.
The Company also constantly monitors its liquidity and levels of financial
leverage, and seek the lengthening of the profile of its debt in order to mitigate the
risk of refinancing.
The Company includes in its net debt structure: loans and financing, debentures
and financial leases, less cash and cash equivalents and short-term investments.
The table below shows the Company's net debt:
Loans and financing
Debentures
Financial leasing
Cash equivalents
Net debt
Equity
Net debt / Equity
105
2015
2014
513,238
3,046,123
43,181
(146,621)
(384,557)
3,071,364
2,839,145
108.18%
525,751
2,534,171
11,970
(181,260)
(727,891)
2,162,741
2,567,808
84.23%
Of the total financial debt on December 31, 2015, 20.2% was short-term (19.3% in
December 31, 2014) and the average maturity was 4.5 years (5.4 years as on
December 31 2014).
Interest rate risk
The Company has significant levels of financing that are remunerated at the CDI,
SELIC e TJLP. Accordingly, the Company’s income statement is affected by the
variation of such indexes.
On December 31, 2015 the investments of Company were allocated in CDBs and
repurchase agreement indexed by CDI.
The net amount that the Company is exposed relating to the interest risk as of
December 31, 2015 is:
2015
Loans and financing
Debentures
Total net exposure
384,557
(446,386)
(3,081,068)
(3,142,897)
The amounts of loans, financing and debentures in the table above are related only
to debts indexed to the CDI, SELIC e TJLP and do not include the cost of
unamortized balances.
Sensitivity analysis to interest rate risk
With a view to determining the sensitivity on short-term investment and debts
indexes to which the Company was exposed as of December 31, 2015, 5 different
scenarios were developed. Based on the report prepared by FOCUS on December
31, 2015, the SELIC/CDI e TJLP indices were estimated for one year, and this
scenario was defined as probable; 25% and 50% variations were calculated thereon.
Gross financial income and expense were calculated for each scenario, which
represents the estimated effect in the profit and loss and shareholders’ equity for
each projected scenario, not considering taxes on short-term investment yields or
flow of payments for each debt contract. The portfolio base date was December 31,
2015 with a one-year forecast and CDI sensitivity tested for each scenario.
106
Financial income projection - 01 year
Interest rate
Position as of
12.31.2015
CDI
Scenario I
Scenario II
Base
(-50%)
(-25%)
Case
7.69%
Subtotal
CDI
Scenario III Scenario IV
(+25%)
(+50%)
11.54%
15.38%
19.23%
23.07%
59,145
59,145
73,950
73,950
88,717
88,717
384,557
384,557
29,572
29,572
44,378
44,378
Position as of
12.31.2015
Scenario I
Scenario II
Base
(-50%)
(-25%)
Case
Projeção despesas financeiras - 01 ano
Debts
Interest rate
CDI / SELIC
Debentures - 9th issue
Debentures - 17th issue (2nd tranche)
Debentures - 18th issue (1st tranche)
Debentures - 18th issue (2nd tranche)
Bank credit bills - Bradesco (CCB's)
FINEM - Subcredit B
FINEM - Subcredit E
CDI + 1.12% p.a.
CDI + 1.75% p.a.
CDI + 1.50% p.a.
CDI + 1.50% p.a.
CDI + 1.24% p.a.
CDI + 2.40% p.a.
CDI + 1.90% p.a.
CDI + 2.85% p.a.
CDI + 2.85% p.a.
CDI + 2.95% p.a.
CDI + 1.50% p.a.
SELIC + 4.22% p.a.
SELIC + 3.20% p.a.
TJLP + 4.22% p.a.
Total net exposure
(+25%)
(+50%)
7.69%
11.54%
15.38%
19.23%
23.07%
(184,297)
(204,928)
(282,299)
(607,757)
(774,486)
(193,919)
(96,519)
(206,991)
(206,991)
(322,881)
(302,463)
(62,651)
(23,109)
(16,395)
(19,621)
(26,269)
(56,554)
(69,900)
(19,924)
(9,397)
(22,271)
(22,271)
(35,087)
(28,145)
(7,665)
(2,573)
(23,570)
(27,649)
(37,300)
(80,304)
(100,088)
(27,569)
(13,184)
(30,467)
(30,467)
(47,885)
(39,965)
(10,179)
(3,492)
(30,726)
(35,656)
(48,303)
(103,991)
(130,197)
(35,195)
(16,961)
(38,642)
(38,642)
(60,649)
(51,754)
(12,686)
(4,407)
(37,901)
(43,684)
(59,335)
(127,741)
(160,384)
(42,840)
(20,747)
(46,838)
(46,838)
(73,447)
(63,573)
(15,200)
(5,326)
(45,058)
(51,690)
(70,338)
(151,429)
(190,493)
(50,465)
(24,524)
(55,013)
(55,013)
(86,211)
(75,362)
(17,707)
(6,241)
3.50%
5.25%
7.00%
8.75%
10.50%
(58,163)
(3,527,454)
(4,576)
(340,648)
(5,637)
(477,756)
(6,698)
(614,507)
(7,759)
(751,613)
(8,819)
(888,363)
(3,142,897)
(311,076)
(433,378)
(555,362)
(677,663)
(799,646)
TJLP
FINEM - Subcredit A
Subtotal
Scenario III Scenario IV
Currency Risk
The Company is exposed to the exchange variance risk linked to the US Dollar
through payments for energy purchased from Itaipu. However exchange variance
fluctuations are passed through to consumers in the tariff, through the mechanism
of CVA (Financial sector assets, Net).
Price risk
Extraordinary Tariff Review of 2015
ANEEL, in a public meeting of its Board of Directors held on February 27, 2015,
approved the Extraordinary Tariff Review (ETR) to be applied from March 2, 2015
to the electricity distributors, due to the gap between the actual costs of energy
purchases and contributions to the energy Development Account (CDE) and the
related tariff covers. Thus, ANEEL approved a ETR for the Company with an
average effect for consumers of 32%
Tariff Reset 2015
ANEEL, at a public meeting of its Board of Governors held on June 30, 2015,
approved the end index for the Company’s regular Tariff Reset of 15.23% (average
effect to be experienced by consumers, less tariff flags and taxes) to be applied on
the tariff as from July 4, 2015.
107
According to ANEEL, the index composition is as follows:
2015 Tariff adjustment
Parcel A
Sector charges
Energy purchased
Transmission charges
Parcel A
Parcel B
Adjustment base
CVA total
Reversão RTE março/2015
Other Financial costs of parcel A
Financial costs of parcel B
Removal of the previous financial
Total adjustment
7.06%
-0.28%
-0.54%
6.24%
1.27%
7.51%
17.04%
-4.56%
-3.71%
1.61%
-2.66%
15.23%
As such, Company’s parcel A and parcel B, after 2015 tariff reset, had the
following impacts:
(i)
Parcel A
The adjustment rate of Parcel A was 7.68%, which represents a participation of
6.24% in the economical adjustment as a result of the combination of the following
items:
Sector charges – increase of 29.0%, representing 7.06% of the economic
adjustment, highlighting the increase of the System Services Charges (“EES”) and
Reserve Energy (“EER”) and the Energy Development Account (“CDE”);
Power purchased – a 0.5% decrease, This is variation is mainly due to the reduction
of the average price of the energy purchased by the Company after the end the
contracted energy by the Company from AES Tietê S.A. on December 31, 2015;
and
Transmission costs – a 10.3% decrease, reflect the Tariff for the Use of the
Distribution System published through Resolution 1.917 of June 23, 2015.
(ii)
Parcel B
The adjustment rate of Parcel B was 6.8%, which represents a participation of
1.27% in the economical adjustment, amount R$ 2,812,095 as a result of the
combination of the following items:
 Management, Operation and Maintenance Cost (“Operational Costs”) of R$
1,570,860 where R$ 198,259 is referent to irrecoverable revenue and R$
1,372,601 referent to the remaining operational costs, these calculated on top of
the tariff coverage considered in the previous tariff reset process, the 3RTP;
 Annual Cost of the Assets of R$ 1,362,293, highlighting the remuneration of the
investments made with Special Obligations resources totaling R$ 38,659; and;
108
 Productivity index (Pd) from Parcel B a negative effect of R$ 33,004.
(iii)
Special Obligations
Investments made with resources for Special Obligations will be compensated in
this Periodic Tariff Reset process. That being, over half of the Company`s gross
Special Obligations amount, which totals R$ 2,314,099, was applied a 3.34% rate.
(iv)
Factor X
The T Component defined for the next four years is -2.37%. The Pd Component of
X Factor to be applied in the this tariff reset and tariff readjustments for the next 4
years is of 1.13%.
(v)
Technical and non-technical losses
The trajectory of the non-technical losses, referenced to the Low Tension market,
defined for this cycle was of 8.53% (date of the RTP) to 8.43% (finishing point),
resulting in an approximate 0.03 percentage point reduction annually.
(vi)
Financial Components
The financial components applied to this Tariff Reset totaled R$ 1,109,814, among
which we highlight: (i) R$ 1,820,222 of CVA; (ii) R$ 20,083 of Sector Charge
neutrality; (iii) negative effect of R$ 489,616 due to involuntary exposure in the
spot market; (iv) negative effect of financial reversal of March/2015 Extraordinary
Tariff Reset in the amount of R$ 486,685; (v) R$ 23,063 referent to the positive
result of the Administrative Appeal filed by the Company against the 2014 Tariff
Readjustment; and (vi) R$ 172,634 million referring to the reimbursement of
remuneration and depreciation parcels associated with the possibly nonexistent
asset (explanatory note 18.2.25), as per Order 4.259/2013.
The table below shows the effect to be perceived by the consumer of the different
classes not taking into account the effects of the tariff flags and before taxes:
Consumer class
High Voltage
Low Voltage
Total average
(c)
Index
11.73%
17.04%
15.23%
Other risks
(c.1) Regulatory risk
The Company's activities, as well as those of its competitors are regulated and
supervised by ANEEL. Any change in the regulatory environment may have an
impact on the Company’s activities.
109
Recovery plan for the indicators
In 2014 and early 2015, severe weather caused multiple and simultaneous incidents
that interrupted the improvements trend of quality indicators of distribution, mainly
SAIDI.
At the same time the regulator requested for 18 electricity distribution companies,
including the Company, a Recovery Plan of Operational Indicators, directing them
to equalize the quality of services in their concession areas. The Company's
income plan was presented to ANEEL, on September 18, 2015, and approved by
the agency on December 16, 2015. At the end of the plan, if the Company does not
meet the agreed indicators, ANEEL may impose penalties appearing in
REN63/2004, which are warning, penalty and, in extreme cases, intervention of the
concession.
The improvements in quality indicators regulated results in additional investments
and costs.
(c.2) Debt acceleration risk
The Company has loans, financing and debentures contracts containing covenants
usually applicable to these types of transactions, related to compliance with
economic and financial indexes, cash generation and others. As of December 31,
2015, the Company was compliant with the terms of the covenants (explanatory
note 15.7).
(c.3) Electric power contracting risk
The 2015 portfolio of Company power agreements consists of the following
components: Bilateral Contracts with AES Tietê Itaipu Contract and Program for
Alternative Electric Power Generation Sources (PROINFA); Physical Guarantee
Quotas Agreements – CCCGF; quotas Angra 1 and 2 and Electric Power Purchase
Agreements in a Regulated Market (CCEAR).
According to MME Decree No. 5163/2004, distributors must enter into regulated
power purchase agreements, only through federal public auctions, whose duration
is established by the MME.
Costs associated with purchase of electric power consist of unmanageable items.
Current legislation establishes that distribution companies must ensure service to
100% of their energy markets, and stipulates that ANEEL must consider, when
transferring electric power acquisition costs, up to 105% of the total amount of
power purchased in relation to the distributor’s annual supply load.
110
The primary factors of uncertainty in the purchase of electricity are related to the
anticipation of the need for acquiring energy in advance of 5 and 3 years as regards
the start of the supply of the electricity acquired and the expectation of future
prices. Non-supply of 100% of the market may lead to fines due to lack of
contracting, in addition to not onlending the full costs of energy purchase in the
Short-Term Market onlent to the tariffs. Additionally, ANEEL will not pass on the
costs of acquisition of electric energy to the final consumers’ tariffs, in the event
that the level of contracting is in excess of one hundred and five percent of the total
amount of electric energy contracted compared to the annual load of supply of the
distribution agent. There are instruments provided for in the legislation such as
adjustment auctions to mitigate the risks of over and under contracting, MCSD
(Surplus and Deficit Control Mechanisms), option to reduce the Auction contracts
(CCEARs) due to (i) migration of consumers to the free market, (ii) increases in
power purchase under agreements entered into before Law No. 10848/2004 was
issued, and (iii) other market variations.
The power supply strategy is to ensure that the contracting level remains in the
range between 100% and 105%, in order to minimize costs with purchase of power
required to serve all captive consumers. Therefore, a risk management approach
was adopted on power purchase focused on identifying, measuring volume, prices
and supply periods, in addition to using leveraging tools to support the contracting
decision.
As provided for in the rules established by ANEEL Regulatory Decision 453, of
October 18, 2011, the contracting exposure to which the distribution companies
may be subject for reasons beyond their will, may be passed on to the distribution
to the respective tariffs. That onlending should be granted, provided that the
distribution agents use all mechanisms provided for in the regulation to meet the
obligation to contract the whole electric energy market. The penalties derived from
not meeting the full electric energy market of the distribution agents shall not be
applicable in the event of involuntary contractual exposure acknowledged by
ANEEL.
The company’s contracting level is defined on the basis of the purchase contracts
executed and the energy required for the use of captive clients. The Company
closed the year of 2015 with a contracting level of 107.2%. Transfer of
overcontracting is limited to 5% of the regulatory annual power required from the
concessionaire. Therefore, the difference not transferred on to consumer tariff is
absorbed by the concessionaire and may result in risk or opportunity, depending on
the energy price setting throughout the year.
The Company took part in auctions in the regulated environment (CCEAR), in
order to replenish the energy linked to the bilateral contract with AES Tiete, whose
termination occurred on December 31, 2015. This compulsory participation is
generating overcontracting forecast for the year 2016. However, the Company is
negotiating with ANEEL a way to mitigate the risks linked to that overcontracting.
111
Macro-economic and meteorological uncertainties significantly impact on the
projection of power to be contracted. The models provide guidance on the
contracting of power and the acceptable levels of risk and over time there is a need
to adjust these projections.
The increase of the dispatch by the thermoelectric plants and the short-term market
prices arising from the unfavorable rainfall scenario may result in higher costs for
the Company on the purchase of energy, associated with the contracts by
availability (CCEAR), hydrological risks associated with the physical guarantee.
Although the increased cost of energy and sector charges are passed through tariff,
if they occur at different times, the Company need to be financed by working
capital. In order to mitigate the negative impact on the cash flow of distributors in
February 2015 ANEEL opened two public hearings to: i) discuss Extraordinary
Tariff Reset required by electricity distributors, including the Company's specific
request filed on January 9; and ii) discuss adjustments to the tariff flag mechanism
already in force. The result was the confirmation of the special rate adjustment as
from as of March 2015, anticipating the transfer to customers of the cost increases
with the acquisition of electricity, thereby reducing the impact on cash flow and
need for working capital of the Company. By publishing the Confirmatory
Resolution no. 649 of February 27, 2015, the whole or part of the exposure in the
short-term market of the distribution company arising out of involuntary exposure,
the cost of the System Service Charge - ESS, the generation cost of the thermal
agreements and Hydrological Risk of Cotas and Itaipu started to be reorganized by
the effective Rate Flag.
In July 2015 the Company has passed by periodic tariff reset process which
allowed a new tariff adjustment to cover the Power purchase costs.
In addition, the economic crisis and the increase in power tariff led to a market
decline. If these conditions continue or worsen, the Company may be negatively
impacted, especially in relation to its cash flow.
112
34.
Financial sector assets, net
The Company prospectively applied OCPC 08 - Recognition of certain assets
and/or liabilities of electric power distributors - from the year ended on December
31, 2014, The following is the composition of the net financial sector assets
balance, and the compostion by tariff cicle:
2015
Assets
CURRENT
Items of Parcel A:
Fuel Consumption Bill- CCC
Itaipu Energy - cost/exchange variation
System Service Charges - ESS
Energy transportation - Itaipu
Energy transportation through basic grid
Energy purchases
PROINFA
Total items of Parcel A
Liabilities
Net assets
presented in
balance sheet
2014
Amortized
Items
07.04.2014 to
07.03.2015
Accrued items
07.04.2015 to
07.03.2016
Assets
Liabilities
Net assets
presented in
balance sheet
689,908
630,070
17,424
5,747
24,909
732,834
209
2,101,101
(595)
(259,467)
(108,646)
(5,980)
(374,688)
689,908
629,475
(242,043)
5,747
24,909
624,188
(5,771)
1,726,413
304,635
116,585
(259,467)
4,311
16,599
732,834
(5,678)
909,819
385,273
512,890
17,424
1,436
8,310
(108,646)
(93)
816,594
24,121
99
24,358
905
27,573
855,054
5,761
937,871
(40)
(52,079)
(287,261)
(27)
(339,407)
24,081
99
(27,721)
(287,261)
878
27,573
855,054
5,761
598,464
61,237
32,719
93,956
2,195,057
(255,112)
(615,636)
(58,100)
(49)
(928,897)
(1,303,585)
61,237
(255,112)
(615,636)
(58,100)
32,670
(834,941)
891,472
10,042
(210,994)
(278,818)
16,451
(463,319)
446,500
51,195
(44,118)
(336,818)
(58,100)
16,219
(371,622)
444,972
78,707
2,439
5,107
21,079
107,332
1,045,203
(5,024)
(292,216)
(55,366)
(201,328)
(2,220)
(8,702)
(564,856)
(904,263)
78,707
(2,585)
(287,109)
(55,366)
(201,328)
(2,220)
12,377
(457,524)
140,940
NON-CURRENT
Items of Parcel A:
Energy transportation through basic grid
System Service Charges - ESS
Itaipu Energy - cost/exchange variation
Energy purchases
PROINFA
Energy transportation - Itaipu
Total items of Parcel A
385,273
8,310
17,424
512,890
1,436
925,333
(103,080)
(93)
(103,173)
385,273
8,310
17,424
512,890
(103,080)
(93)
1,436
822,160
-
385,273
8,310
17,424
512,890
(103,080)
(93)
1,436
822,160
14,439
9,941
17,218
612,281
86
902
654,867
(219,172)
(37,432)
(256,604)
14,439
9,941
(219,172)
(20,214)
612,281
86
902
398,263
Other financial components of the tariff
Neutrality effect
Extraordinary Tariff Increase - RN ANEEL 1.858/2015
Over contracted energy - RN ANEEL 305/2008
Exceeded demand and exceeded reactive energy consumption - 4CRTP
Other financial components
Total other financial components of the tariff
Total do non-current
51,195
16,220
67,415
992,748
(336,818)
(15,700)
(87,629)
(440,147)
(543,320)
51,195
(336,818)
(15,700)
(87,629)
16,220
(372,732)
449,428
28,418
28,418
28,418
51,195
(336,818)
(44,118)
(87,629)
16,220
(401,150)
421,010
2,439
21,079
23,518
678,385
(292,215)
(292,215)
(548,819)
2,439
(292,215)
21,079
(268,697)
129,566
3,187,805
(1,846,905)
474,918
865,982
1,723,588
(1,453,082)
Other financial components of the tariff
Tariff review 3th cycle - Adjustment to the asset remuneration base
Neutrality effect
Over contracted energy - RN ANEEL 305/2008
Extraordinary Tariff Increase - RN ANEEL 1.858/2015
Tariff review - Factor Xe
Postponed tariff review 2011
Tariff review - Universalization
Factor Xq - tariff return - note nº 18.1 (d.4)
Other financial components
Total other financial components of the tariff
Total current
TOTAL
(*)
(*)
1,340,900
270,506
The Normative Resolution No. 660, of April 28, 2015, approved the new
version for Sub-module 2.1 - General Procedures for Proret, including item 3.4 Exceeded demand and exceeded reactive energy consumption. Item 3.4 defines
that "As from the second review after 3CRTP, the values for the exceeded
demand and exceeded reactive energy consumption must be subtracted from
Parcel B, in proportion to the tariff cycle". Thus and pursuant to ANEEL
Closing Order No. 245, of January 28, 2016, the amounts referring to the
revenues for exceeded demand and exceeded reactive energy consumption
assessed as from the 4th Periodical Tariff Reset Cycle (4CRTP), previously
recorded as special obligations, were accounted for as regulatory financial
liabilities, in the amount of R$ 87,629. Also, pursuant to the Closing Order, the
amounts must be adjusted by SELIC interest rate.
113
Changes in net financial asset sector for the year ended December 31, 2015 was as
follows:
Deferrals
Factor Xq - tariff return - note nº 18.1 (d.4)
Monetary variation
Amortization
Tariff Flags - amounts received
35.
270,506
2,568,668
(58,100)
126,758
(401,857)
(1,165,075)
1,340,900
Share-based payment plan
The Company does not have its own stock remuneration plan, so it is established,
managed and borne by its indirect controller, the AES Corporation, without
encumbrance for the Company.
This plan is eligible for statutory and non statutory directors and aims to retain
professionals and at create value for the business in a sustainable way over the
long-term. Its effective disbursement occurs only if the global results (financial and
performance) are reached, also reflecting in the positive variation in the price of the
AES Corporation shares.
The AES Corporation has two types of share based payment compensation:
(a)
Stock option: the statutory director receives the right to purchase shares of The
AES Corporation at a specific price after a period of three years; 1/3 of The AES
Corporation options granted become exercisable each year in which the officer
remains in the Company. The stock options have a contractual term of ten year and,
in all circumstances, stock options granted do not entitle the holder the right to
settle the stock option in cash or other assets of The AES Corporation.
Fair value weighted average for each option grant was estimated, on grant date,
through the “Black-Scholes” option pricing model, which used the weighted
average of the following assumptions:
2015
Expected volatility (%)
Annual expected dividend yield (%)
Expected life of options (years)
Risk free rate of return (%)
2014
25
3
7
1.86
24
1
6
1.88
Considering the abovementioned assumptions, the market value of options issued
was US$ 2.07 and US$ 3.31 as of December 31, 2015 and 2014, respectively.
114
The following table summarizes the number and weighted average exercise price
and weighted average remaining contractual term and the changes in stock options
during the years ended December 31, 2015 and 2014:
Weighted
Number of stock
average exercise
options
price (US$)
Outstanding at December 31, 2013
Exercised stock options as of December 31, 2013
Canceled and expired in the year
Granted in the year
Outstanding at December 31, 2014
Exercised stock options as of December 31, 2014
Granted in the year
Outstanding at December 2015 (*)
(*)
(b)
102,096
(2,142)
(794)
8,098
107,258
(4,227)
12,699
115,730
16.67
8.97
8.97
14.63
16.72
16.81
11.89
16.19
Weighted
average
remaining
contractual term
4.2
4.0
Outstanding shares refer to shares exercisable of that year
Restricted Stock Units: the director receives shares of The AES Corporation but
only effectively acquires the shares attributed to him, in the ratio of 1/3 at the end
of each one year period that he remains in the Company. In all circumstances,
restricted stock units granted do not entitle the holder the right to settle the
restricted stock unit in cash or other assets of The AES Corporation.
For the years ended December 31, 2015 and 2014, restricted stocks issued had a
grant date fair value equal to the closing price of The AES Corporation’s stock on the
grant date.
The following table summarizes the number and weighted average exercise price
and weighted average remaining contractual term and the changes in the restricted
stock units during the years ended December 31, 2015 and 2014:
Number of
restricted stock
units
Restricted stock option non-vested as of December 31, 2013
Options that became vested during the year
Granted in the year
Options that became vested during the year
Granted in the year
Transfers
115
71,162
(27,549)
(9,880)
33,261
66,994
(28,172)
(13,702)
36,447
(1,491)
60,076
Weighted
average exercise
price (US$)
12.76
12.63
14.62
14.66
13.49
12.10
13.29
11.68
13.72
12.49
Weighted
average
remaining
contractual term
1.2
1.5
36.
Environmental investments
Expenses with environment
2015
2014
Direct costs
Environmental management system (SGA) and others
Environmental licensing and remediation
Soil and underground water quality recovery
Pollution prevention (construction of oil catch basins - ETD's
Operations training (Fire Brigade - Chemical Emergency)
Communication (the Environment Week, dissemination, printed material, etc.)
Subtotal
6,755
2,093
3,771
8,614
6,917
42
28,192
3,488
1,703
4,473
21,019
17,868
29
17
48,597
Energy efficiency projects
Total
47,511
75,703
47,570
96,167
Of the total spending on the environment in 2015, R$ 67,501 (R$ 78,299 as of
December 31, 2014) were recorded in the year’s result and R$ 8,202 (R$ 17,868 as
of December 31, 2014) were used for investments in fixed assets. The expense
capitalization policy is based on the general instructions of the MCPSEE Manual –
Manual of Accounting for the use of public service of electric energy.
The Company will continue working towards its strategic goal, which is to be
recognized for its environmental excellence, by expanding its scope of
environmental certification ISO 14001:04 to all activities performed and in
compliance with the environmental legislation, its environmental standards, and
maintenance of its Environmental Management System. Therefore, several projects
are expected in relation to preventing pollution, among which, the construction of
containment boxes and separators of water from oil in substations, with
investments expected through 2019. The Company also expects improvement in
urban tree landscaping, inspection of engaged services, waste management,
environmental licensing and offsetting, management of environmental liabilities,
maintenance of green areas, training sessions and communication.
37.
Regulatory financial statements
In compliance with ANEEL Regulatory Resolution 605 published on March 11,
2014, the Company is required to disclose regulatory financial statements
(“DCR”), for the year ending December 31, 2015 through April 30, 2016 on the
website http://ri.aeseletropaulo.com.br/.
116
38
Commitments
The Company’s main input is electrical power which is basically contracted at
public auction supervised by ANEEL.
The New Electric Power Sector Model Law established that energy be purchased
through auctions in an effort to restructure the electric power sector. This is in
order to give incentive to both public and private agents to construct and maintain
energy generation and supply in Brazil at moderate tariffs through competitive
public power auctions.
As of January 31, 2015, the Company now have four basic types of supply
agreements: (i) purchased power units from Itaipu that extend until 2027, (ii)
energy supply units from PROINFA projects; (iii) Physical Guarantee Quotas
Agreements – CCGF ; (iv) bilateral contracts with the affiliate Tietê; and (v)
purchases through auctions (explanatory note 26).
In addition, the Company incurs cost in accessing the distribution and transmission
system where tariffs are approved by ANEEL (explanatory note 26).
The Company also has commitments related to sector charges such as Energy
Development Account - CDE and Inspection Charge of Public Service of Electric
Power - TFSEE, whose tariffs are approved by ANEEL (explanatory note 25).
117
Commentary on Behavior of Corporate Projections
a) projection purpose
1 – Investments
The Company informs the investment amounts expected, divided into own resources and investments
financed by customers.
b) projected period and effective period of projection
1 – Investments
The Company discloses its projections for annual investments for the next five years including the
present financial period, which it can review quarterly, effective through completion or replacement
for a new projection.
c) assumptions of the projection, with indication of which could be affected by the Company’s
management and which are out of control
1 – Investments
The Company’s investment projections are mainly based on the following assumptions:






Growth indicators (PIB, inflation, demographic density);
Network diagnosis;
Consumers’ demand;
Schedule of maintenances;
Regulatory obligations; and
Strategic initiatives.
All assumptions may be affected by management, except for the growth indicators, demand of the
consumers and regulatory obligations out of control.
These projections reflect the current views of the Company's management concerning the future of
their business, considering mainly the following factors: (i) performance of the national economy and
international; (ii) market conditions and the electricity sector in general, including the Country
hydrological condition; (iii) the regulation of the electricity sector and environmental legislation in
force; and (iv) factors operational.
All assumptions indicated above are subject to change, risks and uncertainties that are beyond the
management's control. Any changes in such assumptions or factors above described could cause actual
results to differ from projections made. In case of material change in these factors, the projections
should be reviewed.
d) value of the indicators subject to the estimates
1 – Investments
Estimated Investments
(R$ million)
Own resources
Customer’s resources
Total
2 – Consumers’ demand
Estimated
2015
Estimated
2016
Estimated
2017
Estimated
2018
Estimated
2019
2015-2019
cycle
546.2
710.1
73.5
783.6
673.2
78.7
751.9
587.0
84.4
671.4
625.0
83.8
708.8
3,141.5
71.7
617.9
392.1
3,533
The Company presents a comparative between the projected and actual data for the year of 2015 as
shown below:
e) Monitoring and updating the values of the indicators subject to the estimates
1 – Investments
The Company revised the projected values for 2015-2019 cycle, exhibited at d item, targeting the
improvement of the quality indicators. The revisions are shown in the table below:
2015 investments
Estimate
Actual
Variation
(R$ million)
Own resources
Customer’s resources
Total
546.2
71.7
617.9
522.1
81.9
604.1
-4.4%
14.2%
-2.2%
The 2.2% variation between the estimated amount and the actual investment for 2015 is mainly due
to the R$ 24 million decrease of investments done with own resources. This reduction occurred due
to the reclassification from CAPEX to OPEX of cancelled or postponed construction projects.
2 – Consumers’ demand
The table below exhibits the Companies estimated value for consumers’ demand for energy, based on
2014 and 2015’s consumption.
Estimated consumers’
demand variation
(Based on 2014 vs
2015 consumption)
Total
2015
estimate
(on 3Q15)
Actual in
2015
Variation
-4.5%
4.7%
-0.2 p.p.
The variation between the estimated 4.5% decrease in comparison 2015 vs. 2014 and the actual
decrease of 4.7% is due to the deterioration of the macroeconomic scenario and the increase in
energy tariffs
2015 Management Report
Eletropaulo Metropolitana Eletricidade de São Paulo S.A.
Dear Shareholders,
The Management of Eletropaulo Metropolitana Eletricidade de São Paulo S.A. (“AES Eletropaulo” or
“Company”), in compliance with the legal and statutory provisions, submits for your appraisal the
Company’s Management Report and accounting statements, accompanied by the independent
accountants’ report on these statements, pertaining to the fiscal year ended December 31, 2015.
PROFILE
AES Eletropaulo is a publicly-held company with shares listed on BM&FBovespa, which is
for supplying electricity to 24 municipalities located in the metropolitan area of
including the capital of the state, one of the main economic and financial centers in
Company holds a concession area of 4,526 km², with high population density
concentrates Brazil’s greatest GNP.
responsible
São Paulo,
Brazil. The
and which
In order to meet the demand of 6.9 million consumer units, AES Eletropaulo, which employs 7,165
workers, has a structure which encompasses 152 substations (140 distribution transformer stations,
8 distribution system stations and 4 underground distribution transformer stations) and a
distribution and subtransmission network, overhead and underground cables, with over 42 thousand
kilometers, of which 1,847 km pertain to subtransmission lines, 2,190 km are underground
distribution networks and 38,497 km pertain to overhead distribution networks. The Company has
also over 208 thousand overhead and underground distribution transformers.
Sustainable Strategic Planning
The strategy of AES Brasil, the group to which AES Eletropaulo belongs, is guided by the 2015-2019
Sustainable Strategic Planning (“PES”), which defines as the Company’s strategic guidelines the
Customer satisfaction, Business development, Efficient use of resources and discipline in the
execution and Engagement of relationship audiences.
INDUSTRY CONTEXT
The Brazilian power industry is regulated by the National Electric Power Agency [Agência
Reguladora de Energia Elétrica] (“ANEEL”), has its guidelines established by the Ministry of Mines
and Energy [Ministério de Minas e Energia] (“MME”), and the following institutions are an integral
part thereof: the National Power System Operator [Operador Nacional do Sistema Elétrico] (“ONS”),
the purpose of which is to coordinate and control the operation of the National Interconnected
System [Sistema Interligado Nacional] (“SIN”); the Electric Power Trade Chamber [Câmara de
Comercialização de Energia Elétrica] (“CCEE”), which is responsible for accounting for and
liquidating short-term market transactions and, under delegation of ANEEL, performs electric
energy auctions; and the Energy Research Company [Empresa de Pesquisa Energética] (“EPE”),
which conducts studies and researches for the industry’s planning.
Prepared with the purpose of ensuring the supply of electric power and reasonable tariffs, the
milestone of this industry model was the enactment of Law No. 10.848/2004, which sets forth the
coverage of agents of the generation, distribution, transmission and sale segments.
Tariffs
The electric power supply tariffs are adjusted every year according to a parametric formula set
forth in the concession agreement. This formula takes into consideration the transfer of the socalled “unmanageable costs” by ANEEL (Portion A – industry charges, costs of electricity purchased
for resale purposes and transmission costs) and adjusts the “manageable costs” of the
concessionaire (Portion B – operating expenses, return on assets and depreciation) by the IGP-M of
1
the 12 months prior to the reference date of the adjustment, deducted from a productivity gain
index, called “X Factor”.
As for AES Eletropaulo, tariffs are reviewed every four years, with the purpose of restoring the
economic and financial balance set forth in the concession agreement. Among the main items which
ANEEL takes into account in the tariff review methodology are the assessment of the asset base,
operating expenses, regulatory losses, depreciation passed to tariffs and the weighted average cost
of capital (“WACC”) that, applied to the asset base, determines the compensation of the Company.
The forth periodic tariff review occurred on July 4, 2015 and the next tariff review will occur in July
2019.
Fourth Cycle of Tariff Review
Aneel, in a Public Meeting of the Executive Office held on June 30, 2015, approved a final periodic
tariff review index for the company of 15.23% (average effect on consumers), to be applied to the
tariff as from July 4, 2015. The index is composed of an economic adjustment of +7.51% and a
financial component of +7.72%, and the financial component considered in the previous tariff
determination process has already been deducted.
The tariff review index approved included:
(i) The reduction of the average price of purchased power due to the termination of the
agreement with AES Tietê on December 31, 2015;
(ii) The Compensation for Change in Value of Items in Portion A (“CVA”) of R$ 1.8 billion mainly
due to the CVA for Power Purchase, corresponding to +17.04% of the index; and,
(iii) The reversal of refund of the compensation and depreciation portions related to possibly
non-existing assets, in the amount of R$172.6 million as a financial component.
We highlight below the items which composed the tariff review in 2015:
2015 Periodic Tariff Reset
Parcel A
Sector Charges
7.06%
Energy purchased
-0.28%
Transmission costs
-0.54%
Parcel A
6.24%
Parcel B
1.27%
Base Adjustment
7.51%
Total CVA
17.04%
Reversal of Mar/15 Extraordinary Tariff Reset -4.56%
Other financial costs of Parcel A
-3.71%
Parcel B financial costs
1.61%
Removal of previous financial adjustments
-2.66%
Effect of the Financial Components
7.72%
Total Readjustment
15.23%
CUSTOMER SATISFACTION
According to the new Sustainable Strategic Planning of AES Brasil, one of the commitments is to
ensure the excellence of the services provided with ethics and respect for the customer.
In 2015, AES Eletropaulo achieved 76.1% in the Satisfaction Index with Perceived Quality (ISQP)
measured by ABRADEE, a level 3.5 percentage points lower than in 2014. This change occurred
mainly due to severe climate events in the beginning of the year, when the data of the first
research was collected. In addition, the significant increase in tariff throughout the year caused an
increase in the number of clarification requests to the company.
Quality Indicators
As previously informed to the market and Aneel, AES Eletropaulo verified inconsistencies during the
ascertainment of the DEC and FEC indicators in the period between January 2014 and May 2015,
mainly due to purges qualified as “critical day”. The Company is ascertaining the exact amount of
impacts resulting from the reprocessing, as well as on the refund actions to all clients.
Based on the data and projections available to date, AES Eletropaulo made in 2015 provisions in the
amount of R$152.2 million (“provision for regulatory proceedings”). This amount represents our best
estimate regarding four components: i) compensation to consumers for DIC/FIC/DMIC-related fines;
ii) Xq component of the X Factor which composes the tariff; iii) possible fines to be determined by
the regulatory body in replacement of any other fines issued against the company for the same
period in relation to quality indicators, and iv) financial update up to 2015.
The DEC indicator reached 23.41 hours in the past 12 months ended on December 31, 2015, which
represents a 76.8% increase in relation to 2014 (13.25 hours). This performance reflects a higher
incidence of events with strong wind gusts of up to 100 km/h during the period which was
associated with rain and lightning, caused a countless number of branches and objects to hit the
power grid, causing multiple damages to the wires, poles and equipment. The fall of more than 400
trees was registered in the City of São Paulo in only three days, contributing to the increase in the
DEC during the period. The FEC indicator for the past 12 months was 6.41 times, a 21.3% increase
compared to 2014 (5.28 times), also due to the abovementioned reasons.
In 2015, the fines paid by the Company to its customers due to violation of the DIC, FIC and DMIC
indicators totaled R$82.5 million, an amount 351.5% greater than the one accounted for in the
previous year.
Customer Relationship
The program Jeito AES de Atender (JAAT) was implemented in 2013, with the main purpose of
ensuring a relationship standard in all interactions within the Customer’s Journey. This program
promotes the culture and engagement regarding the quality and assertiveness necessary to the
customer’s interaction with AES.
After two phases dedicated to the awareness on the service standardization and service culture in
the past years, in 2015, JAAT’s actions focused on the management of the customer’s journey.
Different stages related to the power supply and which may result in a direct interaction with the
customer compose the journey, such as a complaint regarding the interruption of the power supply
or an indemnification claim.
Throughout the year, over 8.4 thousand employees and contracted personnel were trained so that
they can understand their role and impact on customer satisfaction and on the importance of
collaboration among the different departments for the results. Direct interviews with customers
have also been conducted to understand the level of satisfaction with the service provided.
EFFICIENT USE OF RESOURCES AND DISCIPLINE IN THE EXECUTION
Operating Perfomance
Energy Balance1
SUPPLY (GWh)
Itaipu
Bilateral Tietê
Bilateral Outros
Proinfa
Auction (hydro)
Auction (thermal)
CCEE
BILLING (GWh)
9,250
15,567
Residential
11,108
13,025
Comercial
4,766
Industrial
2,821
P. Sector and Others
15,630
37
Own Consumption
7,816
915
Transmission Loss
(3,120)
4,487
Distribution Loss
943
Required
Energy
41,618
AES Eletropaulo closed 2015 with an energy contracting level equal to 107.2% of its captive load.
The subcontracting occurred mainly as a result of a drop in the energy consumption in the period.
The surplus of 3.120 GWh of energy accumulated by the Company was sold in the CCEE.
Losses (%) – (last 12 months)
1. Amounts estimated by the Company in order to make them similar to the reference for nontechnical losses of the low voltage market determined by Aneel
2. Reference by Aneel of losses for the regulatory year normalized for the civil year
1 1
The energy balance reflects the numbers for 2015 informed by the Electric Power Trade Chamber (CCEE), however, the
numbers for November 2015 and December 2015 are still preliminary. The numbers set out in the explanatory notes of the
Company’s Accounting Statements reflect the amounts estimated thereby at the time of the accounting closing and are
adjusted in the subsequent months, when the final numbers are made available by CCEE.
The total losses presented a 0.29 percentage point decrease compared to 2014 due to the decrease
in technical losses and actions implemented by the Company to reduce the threshold of the nontechnical portion, which were impacted by the tariff increase, mainly in the low voltage segment.
Among the main actions promoted to decrease losses, including efforts with the low-income
population, we highlight: (i) fraud inspections; (ii) recovery programs of cut installations; and (iii)
regularization of illegal connections.
In 2015, the initiatives aiming at preventing losses added to the invoiced market 594 GWh,
compared to 633 GWh in 2014.
Commercial Performance
The Company’s concession area has the most diversified economic activities, such as industries,
commerce and provision of services. In addition, its concession area has the greatest population
concentration in the country.
Commercial Activity
In 2015, the volume distributed by AES Eletropaulo reached 44,236.8 GWh, a 4.7% decrease in
relation to 2014, resulting from the negative performance of the classes, mainly the residential and
industrial classes which reduced the consumption in 5.1% and 9.6%, respectively. In this period
there was an extra 1.3 days of turnover (+131 GWh) and deactivation of customers’ installations
and, if those effects were to be excluded, the total market would decrease by 4.9%. The
performance reflects a worse economic scenario and the increase in the electricity rates. Until
November 15, the actual income in the Metropolitan Area of São Paulo decreased 4.0% and the
Industrial Production in the State of São Paulo dropped by 10.9% in relation to the accumulated
total in November 2014, according to data provided by IBGE, reflecting the consumption in the
State of São Paulo, which accumulates a decrease of 4.1% until November 15.
The invoiced market of free clients decreased 6.2% due to the economic activity’s performance. In
that period, 4 consumer units migrated to ACL and no unit returned to ACR and the net effect of
such migration was an increase of 15 GWh to the ACL and, as a result, a decrease of the same order
in the ACR. However, 6 units were turned-off (-16 GWh) in the period, which compensated the
volume that migrated to the free market.
Economic and Financial Performance
Operating Revenue
The Company’s gross operating revenue totaled R$24,565.3 million in 2015, a 68.7% increase
compared to 2014. Such increase is mainly explained by: (i) a greater supply revenue in the amount
of R$4,382.0 million in view of the tariff reviews made throughout the year and the revenue of
R$1,623.1 million from Tariff Flags2; and (ii) a greater acknowledgement of the industry financial
assets in R$1,838.2 million; offset, mainly, (iii) by the increase of R$2,947.0 million, or 1,323.5%, in
the charges of the Energy Development Account [Conta de Desenvolvimento Energético] (“CDE”);
and (iv) the accounting for charges of the Tariff Flags Centralizing Account as from January 2015,
increasing the Gross Revenue deductions in R$1,694.1 million.
2
It does not include its own consumption of R$1.7 million.
Operational Revenue - R$ milhões
2014
2015
V ar (%)
Supply Revenue
7,728.5
12,110.5
Other Revenues
6,565.2
10,346.1
57.6%
270.5
2,108.7
679.5%
Total Gross Revenue
14,564.2
24,565.3
68.7%
Gross Revenue Deductions
(3,967.6)
(10,897.9)
174.7%
Net Revenue
10,596.6
13,667.4
29.0%
Net Sectorial Asset (Liability)
56.7%
Operating Costs and Expenses
In 2015, the operating expenses increased by 27.3%, totaling R$12,093.1 million. The main
variations are detailed below:
Operating Expenses - R$ millions *
2014
2015
Parc el A
7,879.9
9,884.5
Energy Purchased for Resale
7,483.8
8,760.9
17.1%
396.1
1,123.5
183.7%
-
-
0.0%
1,620.7
2,208.7
36.3%
964.8
1,008.4
4.5%
Personnel
678.8
693.2
2.1%
Pension Fund
286.0
315.3
10.2%
42.9
42.0
-2.0%
445.9
524.3
17.6%
167.1
633.9
279.3%
9,500.6
12,093.1
27.3%
Transmission
Aneel Tax
PMSO
Personnel + Pension Fund
Materials
Third-Party Services
Others
Total
Var (%)
25.4%
* Excluding depreciat ion and const ruct ion cost
Portion A
Expenses with the purchase of power increased by 17.1% compared to 2014, mainly due the greater
power costs in Itaipú of 102,9%, as a result of the average tariff increase of 14.3% (R$216.6/MWh in
2015 versus R$189.5/MWh in 2014). Such increase was partially offset by the decrease of 0.7% of the
volume of power purchased in the period (44,746 GWh in 2015 versus 45,077 GWh in 2014).
Expenses with charges arising out of the use of the power grid and transmission increased by 183.7%
in 2015, mainly as a result of a 151.8% increase in the System Service Charges [Encargos do Serviço
do Sistema] (“ESS”) in view of a greater thermal dispatch and the positive effect in 2014 on the
liquidation by CCEE in the amount of R$91.5 million due to the financial adjustment regarding the
retroactive relief of the ESS and the receipt of funds from the Reserve Energy Account [Conta de
Energia de Reserva] (“CONER”) determined by ANEEL in 2014 totaling R$373.0 million (in
comparison to R$116.6 million in 2015).
Operating Expenses
The operating expenses, except for the Company’s pension fund, totaled R$1,893.4 million, a 41.9%
increase in relation to that accounted for in 2014 (R$1,334.6 million). Excluding also the Company’s
unmanageable items, such as PCLD, cancellations, contingencies, and the sale of Cambuci (R$114
million impact in 2014) and other non-recurring events, the manageable operating expenses would
total R$1,329.6 million, an amount 11.3% granter than that accounted for in 2014, mainly as a result
of greater costs with personnel, as detailed below.
Personnel
In 2015, expenses with personnel and charges increased by 2.1% compared to 2014, totaling R$693.2
million. Such variation is mainly due to the increase in the expenses with salary adjustment and
benefits in 2015 as a result of the collective bargaining agreement in the amount of R$21.1 million
and greater expenses with health insurance in the amount of R$19.9 million, partially offset by the
effect of the enhancement to the criteria of apportionment of own labor between Opex and Capex
in 2014, in the amount of R$51.8 million.
In 2015, expenses with the private pension fund totaled R$315.3 million, a 10.2% increase compared
to the R$286.9 million accounted for in 2014, mainly as a result of the decrease in the discount
rate.
Personnel - R$ millions
Personnel and Payroll
2014
678.8
Pension Fund
286.0
Total
964.8
2015
Var (%)
693.2
2.1%
315.3
10.2%
1,008.4
4.5%
Materials and Outsourced Services
In 2015, expenses with materials and outsourced services totaled R$566.3 million, a 15.9% increase
in comparison to 2014. Such variation is mainly due to (i) expenses of R$28.2 million related to the
quality indicators recovery plan; (ii) dismissal and collecting actions plan aiming to reduce default
by R$16.1 million; and (iii) expenses resulting from storms occurred the concession area in January
2015.
Other Operating Expenses
In 2015, the other operating expenses increased by 279.3% in comparison to 2014, totaling R$633.9
million, mainly as a result of the increase of DIC/FIC/DMIC-related fines (R$59.2 million) due to the
increase in the average turnover per consumer unit (“average ticket”) after the tariff adjustment of
2014 and tariff review of 2015 and as a result of climate events in January 2015, the increase in
PCLD also due to the increase in the “average ticket” and the provision of R$83.43 million related to
inconsistences ascertained in the calculation of the DEC and FEC quality indicators. In addition, in
2014 we accounted for R$146.1 million from the sale of real properties, which impacted the
variation in the same amount.
Other Operating Expenses - R$ millions
2014
2015
Var (%)
ADA
80.6
197.0
144.5%
Provisions (Reversal) for Contingencies
29.0
92.2
218.4%
Other*
57.6
344.7
498.8%
Total
167.1
633.9
279.3%
* Leasing and rents, indemnification, losses, publicity, banking fees, IPTU, etc
Ebitda
In 2015, the Reported Ebitda totaled R$963.6 million, in comparison to R$513.1 million in 2014. This
R$450.5 million variation results from (i) the decrease in the amortization effect of the regulatory
liability created due to the postponement of the 3RTP of R$362.4 million; (ii) the recovery of the
return of any possibly non-existent asset throughout the second trimester of 2015 accounting for
approximately R$249.1 million of the variation; offset by (iii) the R$116.4 million increase in PCLD;
3
Composed by (i) compensation to consumers due to DIC/FIC/DMIC/DICRI indicators in the value of R$ 48.5
million and (ii) possible penalties to be established by the regulator which substitutes any other penalties issued
to the Company for the same period regarding the quality indicators, totaling R$ 35.0 million
(iv) the increase in costs pertaining to Personnel, Materials and Outsourced Services of R$121.2
million; and (v) an effect of R$141.5 million related to inconsistencies ascertained in the
calculations of the DEC and FEC quality indicators.
Pursuant to IN CVM 527/2012, the disclosure of the EBITDA calculation shall be accompanied by the
reconciliation of the amounts set out in the accounting statements and shall be obtained as follows:
net profit in 2015 of R$101.1 million and net loss in 2014 of R$131.7 million, plus taxes on profits
(R$57.8 million in 2015 and minus R$64.6 million in 2014), from the net financial results of minus
R$313.9 million in 2015 and R$238.9 million in 2014, and the depreciations and amortizations
(R$490.7 million in 2015 and R$470.5 million in 2014) totaling, as described above, R$963.6 million
in 2015 and R$513.1 million in 2014.
Financial Results
In 2015, the net financial result was a financial expense of R$313.9 million, in comparison to a
financial expense of R$238.9 million in 2014. Such variation is explained mainly as follows: (i) the
net effect of the CDI due to the increase in the interest rate and a greater debt balance in the
period; and (ii) the increase in the exchange rate variation of R$94.7 million, mainly due to the
exchange rate variation associated to the power purchased from Itaipú.
Net Results
In 2015, the Company registered a reported net profit of R$101.1 million, compared to a net loss of
R$131.7 million in 2014, a variation of R$232.9 million mainly due to the accounting for the net
industry financial assets in 2015 under the period versus the balance accounted for in 2014 which
reflects other periods.
Shareholders’ Compensation
AES Eletropaulo’s Management proposes the distribution of 25% of the base for payment of dividends
of 2015, totaling R$42.1 million. The Management also proposes that the remaining amount of
R$126.3 million be allocated to the Statutory Reserve to increase the Company’s working capital.
The abovementioned allocations will be submitted for the approval of the Ordinary General Meeting
(“AGO”), which is scheduled to be held by April 29, 2016. Thus, the proposal for distribution of
Company’s funds corresponds to R$ 0.2372 per ON share and R$ 0.2609 per PN share to be paid on a
date to be resolved upon at an AGO.
Shareholders' Remuneration (R$ million)
Net Income - 12/31/2015
101,1
Realization of equity valuation adjustments
72,7
Prescribed Dividends and Interest on Equity
3,2
Legal reserve (5%)
Distribution basis
Mandatory minimum dividend
Statutory reserve
(8,7)
168,3
42,1
126,2
Debt
For purposes of analysis of this report, and according to the criteria applied for calculation of the
debt contracts of the Company, the outstanding balance with the pension fund is considered on the
amount of R$ 1,371.9 million (excluding accounting corridor effect).
ON December 31st, 2015, the gross debt of the Company was of 4,974.5 million, a 14.55% increase
from the R$ 4,342.7 recorded on December 31st, 2014.
The supplies amounted to R$ 531.2 million at the close of the fiscal year, an amount R$ 378.0
million lower than the same period in 2014. As a result, the net debt of the Company amounted to
R$ 4,443.3 million in 2015, a 29.41% increase when compared to 2014, mainly due to:
(i)
the 17th issue of debentures, amounting to R$ 190 million;
(ii)
the 18th issue of debentures, amounting to R$ 400 million;
(iii) the 19th issue of debentures, amounting to R$ 320 million;
(iv) FINEM releases, amounting to R$ 171.1 million;
(v)
decrease of R$ 378.0 million in cash balance; partially compensated by:
(vi) payment of 3rd and 4th amortization installments of the 13th issue of debentures, amounting
to R$ 80 million, on May and December 2015;
(vii) payment of CCB amortization installments with Bradesco, amounting to R$ 180 million, on
November and December 2015;
(viii) payment of 1st amortization installment of the 9th issue of debentures, amounting to R$ 75
million, on August 2015;
(ix) payment of 1st amortization installment of the 17th issue of debentures, amounting to R$
100 million, on July 2015;
(x) payment of amortization installments of the 16th issue of debentures, amounting to R$
175.1 million, on 2015;
On December 31st, 2014, the debt associated to the CDI (Interbank Certificates of Deposit), of R$
3,009.0 million, had an average CDI cost + 1.43% per year, and increased to R$ 3,343.0 million, at
an average CDI cost + 1.80% per year on December 31st, 2015, mainly due to issues occurred
throughout the year of 2015. On the other hand, the remaining debt balance of R$ 1,321.7 million,
basically associated with price indexes, had an average IGPDI (General Price Index – Internal Supply)
cost of + 5.5% per year on December 31st, 2014 and the same average cost for the balance of R$
1,588.3 million on December 31st, 2015. The average debt deadline on December 31st, 2014 was of
5.4 years, an increased level compared to 4.5 years on December 31st, 2015. The net debt/ adjusted
Ebitda ratio was at 3.47x in 2015 and at 2.46x in 2014. The adjusted Ebitda / financial expense ratio
in 2015 was at 2.77x while in 2014 the number was at 4.19x.
Investments
Investments in R$ million
3,533
392
831
35
809
165
796
2012
644
2013
583
73
604
82
510
522
2014
2015
3,141
2015-2019
Third-party Resources
Own Resources
In 2015, the volume of investments of the Company reached R$ 604.0 million, in which R$
500.6522.1 million was made with owned resources and, R$ 21.5 million allocated to the quality
indicator recovery plan and R$ 81.9 million funded by clients.
2015 Investments - R$ milhões
2014
2015
Var. %
Client Services and System Expansion
282.3
257.3
-8.9%
Operational Reliability
143.6
135.5
-5.6%
8.9
8.7
-2.4%
IT
33.5
53.1
58.5%
Others
42.0
46.0
9.5%
510.4
500.6
-1.9%
Losses Recovery
Total - Own Resources
Recovery Plan - Quality Indicators
Third-Party Resources
Total
2015 Investments - R$ millions
-
21.5
N.A.
72.6
81.9
12.7%
583.0
604.0
3.6%
2014
2015
Var. %
Client Services and System Expansion
282.3
262.3
-7.1%
143.6
136.3
-5.1%
8.9
8.7
-2.2%
IT
33.5
66.7
99.1%
Others
42.0
48.0
14.3%
Total - Own Resources
510.4
522.1
2.3%
72.6
81.9
12.8%
583.0
604.0
3.6%
Losses Recovery
Total
Main Investments of 2015
Customer Service and System Expansion
• R$ 182.2 million was invested to address the addition of 291.3 thousand new customers, of which
67 thousand are related to regulation of illegal connections.
• R$ 80.1 million was invested in expansion works which benefited approximately 320 thousand
users on the period.
• R$ 136.3 million was invested, mainly on the maintenance of 7,824 km of grid and modernization
of sub-transmission and underground grids.
Recovery of Losses
• R$ 8.7 million was invested in the regularization of 30.3 thousand illegal connections through
inspection of frauds and anomalies.
Information Technology
• In 2015, a total of R$ 66.7 million was invested in information technology, with R$ 28.1 million in
SAP system architecture and R$ 13.6 million in equipment and systems for recovery of quality
indicators.
Others
• R$ 48.0 million were invested in other fronts, such as machinery and equipment (R$ 10.6
million), R$ 6.8 million in fleet modernization, R$ 4.7 million in electronic security and R$ 4.3
million in walls, walkways and slopes.
Client Funded
• Investments funded by clients amounted to R$ 81.9 million, mainly regarding conversion and
removal of grids and suspension of high voltage lines.
Investment Plan 2016-2020: The investment plan forecast by the Company for the 2016 to 2020
cycle is stated on the table below:
Investment Plan 2016-2020 - R$ million
2016
Own Resources
2018
2019
2020
Total
2,890.8
548.9
575.3
582.7
599.9
584.1
77.0
78.5
75.6
89.1
72.8
393.0
168.1
111.2
-
-
-
279.3
794.0
764.9
658.3
689.0
656.9
Recovery Plan - Quality Indicators
Total
2017
3,563.1
Investments Payable
Payable investment, also called payment base, is made of the Fixed Asset in Service and Operations
Stock, minus the balance of bonds linked with Public Power Supply (Special Bonds). Payment was
calculated over the net amount of the payment base, and depreciation quota over the gross
amount, which are part of the "B" part of the Required Revenue - RR of the Concessionaire,
approved by the ANEEL Approval Action of 7/2/2012 and by Order 4,258 of December 2013.
The table below features Payment Base amounts approved by Aneel for the 4th cycle in July 2015,
already considering amounts adjusted in Oct/2015, after expression of the concessionaire, via
Letter n588/2015-SFF/ANEEL:
Remunerable Investment Components
a) Gross Service Fixed Asset
b1) (-) Accumulated depreciation
b2) (-) Accumulated depreciation %
c1) (-) Gross SPEE Obligation
c2) (-) Net SPEE Obligation
d) Assets 100% depreciated
e) Lands and easements
f) = Gross Fixed Assets in Service and Depreciable
g) (+) Warehouse
h) = Remunerable Investments (Remuneration Basis)
i) (+) Expected Investment on Xe
j) IGPM Variation (-) X Factor in Tariff adjustment
k) Depreciation rate – Average Annual Rate %
Tariff Reset
Tariff Reset
Tariff Reset
Tariff Reset
Tariff Reset
jul/11
16,189,530,212.21
10,347,767,122.93
63.9%
1,370,413,429.38
1,196,630,700.25
3,364,292,878.86
313,831,954.63
jul/12
17,021,672,065.12
10,879,642,353.05
63.9%
1,440,852,679.65
1,258,137,518.25
3,537,217,532.84
329,962,917.10
jul/13
18,096,420,439.31
11,566,582,971.22
63.9%
1,531,828,117.84
1,337,576,321.15
3,760,557,447.86
350,796,775.69
jul/14
19,225,818,038.92
12,288,453,414.45
63.9%
1,627,429,510.67
1,421,054,459.35
3,995,253,838.18
372,690,002.46
jul/15
21,183,138,713.48
13,391,278,940.46
63.2%
2,315,613,770.02
1,767,608,510.56
6,147,896,399.65
456,376,870.35
11,140,991,949.34
11,713,638,935.53
12,453,238,097.92
13,230,444,687.61
12,263,251,673.46
31,500,064.06
33,119,167.35
35,210,311.58
37,407,787.12
56,691,526.82
4,676,632,453.09
4,917,011,361.17
5,227,471,458.52
5,553,717,952.24
6,080,942,789.28
1.0000
3.82%
1.0514
3.82%
1.0631
3.82%
1.0624
3.82%
1.0000
3.75%
a) Amount deducted from Administrative Assets amount, Vehicles, furniture and appliances
Research and Development (R&D)
In 2015, AES Eletropaulo invested R$ 18.4 million in innovation, research and development, within
its innovation strategy, focusing on improvement of technical and operational procedures,
collaborator and contractor safety, as well as promotion of sustainable initiatives to communities.
IN 2014, AES Eletropaulo invested R$ 23.3 million.
The main projects in 2015 are becoming permanent programs, such as the Smartgrid, with
investments of R$ 11.4 million in development and implementation of monitoring, measurement,
supervision, communication and intelligence solutions to the electric grid, integrating and taking
the Company systems to a new technology level. There were also projects for transmission lines,
environment, technical distribution grid solutions, optimization of activities and processes, new
concepts, methods and equipment.
Power Efficiency Program
The AES Eletropaulo Power Efficiency Program seeks to reduce power wastes through regularization
of informal connections in low-income communities, machinery and equipment efficiency and
improvements in power management from public and corporate clients, as well as educational
projects focusing on awareness in power consumption. IN 2015, R$ 68.6 million were invested, an
average R$ 21 million increase compared to 2014, of which R$ 37.1 million were owned resources
and R$ 31.5 million were resources from the ANEEL program Transformação de Consumidores em
Clientes (Transforming Consumers into Clients), which aims to regulate informal connections
through safe and reliable power supply.
On other power efficiency programs, public and private entities were contemplated, as well as
projects originated from Public Calls. Also, projects with a social scope, such as the Recicle Mais
Pague Menos ("Recycle More, Pay less") program and AES in Schools.
Safety
Company Safety Programs are based in global guidelines of the AES Corporation (AES Corp) and on
the Occupational Health and Safety Management System (OHSMS).
The OHSMS requisites are according to specifications of Role OHSAS 18001 (Occupational Health and
Safety Assessment Series), an international rule regarding workplace safety and health, focused at
preservation of physical integrity and health of collaborators and partners, through risk mitigation
practices in activities and facilities. As a result of the adherence to our Health and Safety
Management System we were granted, in 2012, the OHSAS Certification 18001. In 2015, the recertification audit by certifying company ABS Quality Evaluations was carried out.
Despite continuous efforts from AES Eletropaulo to keep a safe work environment, in 2015 a traffic
accident was recorded, involving a contractor team, which ended with two casualties. There was an
increase in attendance rates of owned collaborators and contractors compared to 2014, as a result
of minor events regarding injuries. No event was related to interaction with electric energy.
Events recorded in 2015 requested more attention over the reduction of accident frequency and
reinforcement of the safety principles and culture on all operational levels. Thus, an additional
strategic action plan was established to the Safety Program, regarding process aspects, data
collection, incident report and analysis, contractor management and training. In 2016 a new
strategic cycle will be started for the safety theme inside AES, based on challenges observed over
the last years and lessons learned.
The Company keeps four formal safety committees: AES Brasil Job Safety Committee, AES
Eletropaulo Job Safety Committee, AES Eletropaulo Regional Committee and Internal Committee for
Accident Prevention ("CIPA"), all representing the best interests of all collaborators.
Population Safety
IN 2015, there were 16 fatal accidents involving the population, compared to 10 in 2014. Actions for
raising awareness over risks were reinforced throughout 2015. This increase may be due to the
advance of informal civil construction activities near the power grid, especially in low-income
communities. In order to address these practices and provide more safety to the population, safety
lectures in communities and companies were increased in 2015, and Blitzes and training with the
population were carried out, focusing on civil construction workers.
Awareness campaigns in public media were also reinforced in 2015, with announcements on
broadcast TV, radio stations, subways and trains in order to inform the public about the safety risks
regarding the power grid.
The company invested R$ 1 million in 2015 to bring information to the population, mainly of lowincome, which experienced the most accidents.
Environmental Management
AES Eletropaulo features the Environmental Management System "SGA", certified since 2008
according to requisites of Rule ISO 14001. In 2015, the re-certification audit was carried out (in
joint effort with the Occupational Health and Safety Management System) by certifier company ABS
Quality, which resulted in "Zero Non-Conformities". The SGA focuses, mainly, on prevention,
mitigation and control of negative environmental impacts caused by company operations. In order
to attain better results, goals are established and investments are made in standardization and
improvement of operational processes of activities with higher environmental risks.
The system also approaches themes which involve management of service and material suppliers,
taking into account issues related to conformity to environmental law and Company policies, as well
as impact and accident prevention. All these actions are guided by the AES Brasil sustainability
policy, which promotes action in conformity with the current environmental law and in respect of
natural resources.
In 2015, AES Eletropaulo assigned R$ 75.7 million to environmental actions, such as training,
improvement of environmental process management, new technologies, licensing and
environmental compensations, investigation of potential liabilities, environmental remediation
measures and environmental audits with suppliers.
ENGAGEMENT WITH RELATIONSHIP AUDIENCES
Collaborators
Seeking to attract, develop and retain talent, AES Brasil companies put effort in providing
collaborators with an ethical and inclusive work environment, which values diversity and promotes
personal and professional development. Collaborators are engaged to a culture of sustainability and
creation of shared value, which is based in ethics and AES Values. In 2015, the development process
of 7,165 collaborators of AES Eletropaulo was continued, in order to retain talent with necessary
knowledge and experience to reach the goals of the AES vision - always based on our Values. Career
development policies include continued qualification processes, trainee programs, practice,
acknowledgment, knowledge management, inclusive qualification, and leadership development.
Communities
The relationship and commitments to communities are guided by the Corporate Social Responsibility
Management System (SGRSC) and are in accordance to external rules and standards applicable to
AES businesses in Brazil, such as ISO 26,000 and AA 1,000. This way, the Company promotes
continued improvement of social action and ensures alignment with the business strategy and
Sustainability Policy.
Initiatives for communities are grouped under four pillars of the Private Social Investment Policy,
aligned to the value creation model of the company based on the Sustainable Strategic Planning:
Education, Culture, Sports and Health; Inclusive Professional Qualification; Access to Electricity and
Power Efficiency; Social Influence. The evaluation system is made of indicators of activity
management, which measure the impact over the affected audience and take investment per
project into consideration. Opinion polls are also carried out with the beneficiaries to measure the
satisfaction levels and fulfillment of expectations for each audience.
In 2015, R$ 95.2 million was assigned, of which R$ 50.1 million were incentive resources and R$ 45.1
million with owned resources in social actions. More information about the subject may be found on
the AES Eletropaulo Sustainability Report.
ACKNOWLEDGMENTS
•
Company Sustainability Index (ISE) - BM&FBovespa: AES Eletropaulo features in the index that
lists companies with more sustainable practices in the stock market in 2016, for one more year.
AES Eletropaulo is part of this index since 2005, when said index was created;
•
Transparency Award: The Company was acknowledged by the National Finance, Administration
and Accounting Executives Association (Anefac) over the quality and transparency of its
financial statements, for the third consecutive time;
•
Carta Capital Award: 1st in the power sector rank on category "Most Admired Companies in
Brazil";
•
Eloy Chaves Award 2015: the company received the bronze medal award which acknowledges
the best electric power companies in Brazil in the areas Occupational Health and Safety.
•
ISO 55001 Certification: within the scope of Asset Management needed for sub-transmission
and aerial and underground distribution systems, as well as associated automation systems,
needed for power supply in the concession area.
•
National Quality Award 2015: Highlight in the "Processes" category
Aside from individual recognition, AES Eletropaulo has significantly contributed to other important
acknowledgments to the AES Brasil group regarding innovation and sustainability:
•
Exame Sustainability Guide: Model company on 2015 edition
•
Press-Friendly Company Award – Communication Business;
•
Smart Award 2015: the Company received three awards in the event which distinguishes and
acknowledges best practices in Customer Relationship in Utilities and Telecommunications.
•
Best Innovator Award: 5th most innovative company in Brazil
•
Aberje Regional Award: for the Recycle More, Pay Less program and its communication strategy
for the project
•
Pro-Ethics Registry: For the fifth consecutive year among the most ethical companies in the
country, acknowledged by the Pro-Ethics Registry, conducted by the Federal Inspector General
Office (CGU) and by Ethos Institute
CORPORATE GOVERNANCE
AES Eletropaulo integrates the Level 2 of Corporate Governance of BM&FBovespa since 2004 and was
the seventh company to commit to its regulation. According to Level 2 rules, the Company discloses
its accounting statements in English and concedes 100% tag along rights to shareholders with
ordinary stocks (ON) and preferential stocks (PN). Furthermore, preferential stocks are elligible to
vote on some subjects, adhesion to the Market Arbitration Chamber for resolution of societal
conflicts and the requirement to own at least 20% independent members in its Management Council.
Since 2005 the Company is part of the Company Sustainability Index (ISE), which lists companies
with the best performances regarding sustainability aspects. As a subsidiary of AES Corporation, a
joint stock company with stocks in the New York Stock Market, AES Eletropaulo has suited its
internal controls to the Sarbanes-Oxley Law (SOX), which aims to ensure reliability of accounting
statements of companies that negotiate shares in the North American market.
Corporate Structure
On December 2015, the share capital of AES Eletropaulo was R$ 1,257.6 million, represented by
66,604,817 of ordinary shares (39.8% of total) and 100,739,070 preferential shares (60.2% of total),
with a total free float of 94,172,060 shares (56.3% of total). At the end of the fiscal year, the
Company had approximately 63 thousand shareholders.
Shareholder
Common
%
União Federal
13,342,384
20.0%
AES Elpa S.A.
51,825,798
77.8%
Free float
Total
1,436,635
66,604,817
Preferred
%
Total
%
258
0.0%
13,342,642
8.0%
-
31.0%
0.0%
51,825,798
0.0%
7,434,410
7.4%
7,434,410
4.4%
2.2%
93,304,402
92.6%
94,741,037
56.6%
100.0%
100,739,070
100.0%
167,343,887
100.0%
Base Date: 12/31/2015
Capital Market
AES Eletropaulo shares are listed on the Level 2 of Corporate Governance of BM&FBovespa under
codes ELPL3 (ordinary) and ELPL4 (preferential). The Company also features ADRs negotiated on
Level 1 of the North American over-the-counter market (OTC) under code EPUMY.
In 2015, ELPL4 action was negotiated on all trading sessions of BM&FBovespa. Liquidity data shows
the closing of approximately 900 thousand businesses, involving about 226 million preferential
shares and an average daily volume of R$ 10.7 million cash in the market. Over the year,
preferential shares of AES Eletropaulo have suffered a 3.0% drop. In the same period, the Bovespa
and IEE indexes dropped 13.3% and 8.7%, respectively.
AES Eletropaulo x Ibovespa x IEE
Base 100
Independent Audit Services
Throughout the fiscal year of 2015, AES Eletropaulo employed independent audit services from Ernst
& Young Auditores Independentes S.S (EY) to carry out other audit and consultancy jobs, in addition
to accounting statement audits, consolidation audits by the indirect controller company AES
Corporation, headquartered in the United States of America and special review of Quarterly
Information (ITR) related to March 31st, June 30th and September 30th of the same fiscal year
(jointly denominated external audit services). The details of the contracts of these services are as
follows:
(i) Nature of Service: Audit of previously agreed procedures of Regulatory Account Statements
("DCR") according to NBC-TSC-4400 - Works on Previously Agreed Procedures about
Accounting Information and procedures established by Aneel. Date of Agreement: April 1st,
2015
(ii) Nature of Service: Audit of previously agreed procedures of the Equity Control Report
("RCP") in accordance with item II, article 4 of the ANEEL Normative Resolution 367. Date of
Agreement: April 1st, 2015
The value of the services described above amounts to R$ 186,435.00 (one hundred, eighty six
thousand, four hundred and thirty five reais) and equals 9% of the total fees related to external
audit services. All services described above have a contract time below one year.
The Company Management, as well as its independent auditors, understands that the services
mentioned above are characterized as audit related services and, consequently, do not affect the
autonomy and objectivity of EY, necessary for carrying out audit services according to the current
rules in Brazil.
When hiring other services from its external auditors, the action policy of the Company is based on
principles that preserve the autonomy of the auditor and consist in: (a) the auditor must not audit
his/her own work, (b) the auditor must not perform management functions in the Company and (c)
the auditor must not promote the Company's interests.
Barueri, February 23rd, 2015.
Balanço Social
Balanço Social Anual / 2015
Em presa: Eletropaulo Metropolitana Eletricidade de São Paulo S.A.
1 - Base de Cálculo
2015 Valor (Mil reais)
Receita líquida (RL)
13.667.413
10.596.616
Resultado operacional (RO)
472.878
42.522
Folha de pagamento bruta (FPB)
693.188
678.759
2 - Indicadores Sociais Internos
Valor ( m il) % sobre FPB % sobre RL Valor ( m il) % sobre FPB % sobre RL
Alimentação
64.164
9,26%
0,47%
69.656
10,26%
0,66%
Encargos sociais compulsórios
121.968
17,60%
0,89%
153.315
22,59%
1,45%
Previdência privada
315.254
45,48%
2,31%
286.038
42,14%
2,70%
Saúde
73.330
10,58%
0,54%
67.123
9,89%
0,63%
Segurança e saúde no trabalho
16.400
2,37%
0,12%
14.798
2,18%
0,14%
Educação
0
0,00%
0,00%
0
0,00%
0,00%
Cultura
0
0,00%
0,00%
0
0,00%
0,00%
Capacitação e desenvolvimento profissional
4.403
0,64%
0,03%
3.616
0,53%
0,03%
Creches ou auxílio-creche
1.460
0,21%
0,01%
1.488
0,22%
0,01%
Participação nos lucros ou resultados
71.829
10,36%
0,53%
81.300
11,98%
0,77%
Outros
0
0,00%
0,00%
0
0,00%
0,00%
Total - Indicadores sociais internos
668.808
96,48%
4,89%
677.334
99,79%
6,39%
3 - Indicadores Sociais Externos
Valor ( m il)
% sobre RO % sobre RL Valor ( m il) % sobre RO % sobre RL
Educação
13.416
2,84%
0,10%
14.197
33,39%
0,13%
Cultura
3.293
0,70%
0,02%
3.390
7,97%
0,03%
Saúde e saneamento
632
0,13%
0,00%
704
1,66%
0,01%
Esporte
1.400
0,30%
0,01%
1.441
3,39%
0,01%
Combate à fome e segurança alimentar
0
0,00%
0,00%
0
0,00%
0,00%
Outros
76.465
16,17%
0,56%
70.542
165,90%
0,67%
Total das contribuições para a sociedade
95.205
20,13%
0,70%
90.276
212,30%
0,85%
Tributos (excluídos encargos sociais)
3.975.923
840,79%
29,09%
2.387.976
5615,86%
22,54%
Total - Indicadores sociais externos
4.149.624
877,53%
30,36%
2.550.940
5999,11%
24,07%
4 - Indicadores Am bientais
Valor ( m il)
% sobre RO % sobre RL Valor ( m il) % sobre RO % sobre RL
Investimentos relacionados com a produção/ operação da
empresa
24.421
5,16%
0,18%
44.124
103,77%
0,42%
Investimentos em programas e/ou projetos externos
51.282
10,84%
0,38%
52.042
122,39%
0,49%
Total dos investim entos em m eio am biente
75.702
16,01%
0,55%
96.167
226,16%
0,91%
Quanto ao estabelecimento de “metas anuais” para
( ) não po ssui metas ( ) cumpre de 51a 75%
( ) não po ssui metas ( ) cumpre de 51a 75%
minimizar resíduos, o consumo em geral na produção/
( ) cumpre de 0 a 50% (x) cumpre de 76 a 100%
operação e aumentar a eficácia na utilização de recursos ( ) cumpre de 0 a 50% (X) cumpre de 76 a 100%
naturais, a empresa
5 - Indicadores do Corpo Funcional
2015
2014
Nº de empregados(as) ao f inal do período
7.165
6.152
Nº de admissões durante o período
1.403
562
Nº de empregados(as) terceirizados(as)
10.403
8.798
Nº de estagiários(as)
27
26
Nº de empregados(as) acima de 45 anos
1.081
987
Nº de mulheres que trabalham na empresa
1.106
1.060
% de cargos de chefia ocupados por mulheres
16,44%
16,48%
Nº de negros(as) que trabalham na empresa
1.475
1.454
% de cargos de chefia ocupados por negros(as)
8,22%
6,98%
Nº de pessoas com deficiência ou necessidades especiais
86
76
6 - Inform ações relevantes quanto ao exercício da
cidadania em presarial
Relação entre a maior e a menor remuneração na empresa
87,01
87,97
Número total de acidentes de trabalho
68
57
( ) direção
( X ) direção e
( ) to do s(as)
( ) direção
( X ) direção e
( ) to do s(as)
Os projetos sociais e ambientais desenvolvidos pela
gerências
empregado s(as)
gerências
empregado s(as)
empresa f oram def inidos por:
( X ) direção e
( ) to do s(as)
( ) to do s(as) +
( X ) direção e
( ) to do s(as)
( ) to do s(as) +
Os pradrões de segurança e salubridade no ambiente de
gerências
empregado s(as)
Cipa
gerências
empregado s(as)
Cipa
trabalho foram def inidos por:
( ) não se
( ) segue as
( X ) incentiva e
( ) não se
( ) seguirá as
( X ) incentiva e
Quanto à liberdade sindical, ao direito de negociação
envo lve
no rmas da OIT
segue a OIT
envo lverá
no rmas da OIT
segue a OIT
coletiva e à representação interna dos(as)
( ) direção
( ) direção e
gerências
( ) direção e
gerências
( ) são
sugerido s
( X ) to do s(as)
empregado s(as)
( X ) to do s(as)
empregado s(as)
( X ) são exigido s
( ) não se
envo lve
( ) apó ia
( X ) o rganiza e
incentiva
na empresa(*)
43.431
no P ro co n
7.794
na empresa
100%
no P ro co n
100%
A previdência privada contempla:
( ) direção
A participação dos lucros ou resultados contempla:
Na seleção dos fornecedores, os mesmos padrões éticos
e de responsabilidade social e ambiental adotados pela
Quanto à participação de empregados(as) em programas
de trabalho voluntário, a empresa:
Número total de reclamações e críticas de
consumidores(as):
% de reclamações e críticas atendidas ou solucionadas:
Valor adicionado total a distribuir (em mil R$):
( ) não são
co nsiderado s
( ) direção
( ) direção e
gerências
( ) direção e
gerências
( ) serão
sugerido s
( X ) to do s(as)
empregado s(as)
( X ) to do s(as)
empregado s(as)
( X ) são
exigido s
( ) não se
envo lverá
( ) apo iará
( X ) o rganiza e
incentiva
na Justiça
5.434
na empresa
32.059
no P ro co n
4.432
na Justiça
4.077
na Justiça
-
na empresa
100%
no P ro co n
100%
na Justiça
-
( ) direção
( ) não serão
co nsiderado s
11.978.826
4.656.081
84,17% go verno 8,25% co labo rado res(as)
0,84% acio nistas 6,74% terceiro s
Co labo rado res: 18,91%
Go verno : 72,30%
Terceiro s: 11,61%
A cio nistas: -2,83%
Distribuição do Valor Adicionado (DVA):
7 - Outras Inform ações
(*) As reclamações "na empresa" contabilizam apenas o controle da Ouvidoria.

Eletropaulo Metropolitana Eletricidade de São Paulo SA

Transcription

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