SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For November 30, 2015
(Commission File No. 1-31317)
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
(Exact name of registrant as specified in its charter)
Basic Sanitation Company of the State of Sao Paulo - SABESP
(Translation of Registrant's name into English)
Rua Costa Carvalho, 300
São Paulo, S.P., 05429-900
Federative Republic of Brazil
(Address of Registrant's principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1)__.
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7)__.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes ______ No ___X___
If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE) |
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Table of Contents
Company Information |
|
Capital Breakdown |
1 |
Cash Proceeds |
2 |
Parent Company’s Financial Statements |
|
Statement of Financial Position – Assets |
3 |
Statement of Financial Position – Liabilities |
4 |
Statement of Income |
6 |
Statement of Comprehensive Income |
8 |
Statement of Cash Flows |
9 |
Statement of Changes in Equity |
|
1/1/2015 to 9/30/2015 |
11 |
1/1/2014 to 9/30/2014 |
12 |
Statement of Value Added |
13 |
Comments on the Company’s Performance |
14 |
Notes to the Financial Statements |
22 |
Comments on the Company’s Projections |
82 |
Other Information Deemed as Relevant by the Company |
83 |
Reports and Statements |
|
Unqualified Report on Special Review |
85 |
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE) |
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Company Information / Capital Breakdown
Number of Shares
(Units) |
Current Quarter
9/30/2015 |
|
Paid-in Capital |
|
|
Common |
683,509,869 |
|
Preferred |
0 |
|
Total |
683,509,869 |
|
Treasury Shares |
|
|
Common |
0 |
|
Preferred |
0 |
|
Total |
0 |
|
Page 1 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Company Information / Cash Proceeds
Event |
Approval |
Proceeds |
Date of Payment |
Type of Share |
Class of Share |
Earnings per Share
(Reais / Share) |
Board of Directors’ Meeting |
3/26/2015 |
Interest on Shareholders’ Equity |
6/29/2015 |
Common |
|
0.36913 |
Page 2 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Financial Position - Assets
(R$ thousand) |
Code |
Description |
Current Quarter
09/30/2015 |
Previous Year
12/31/2014 |
1 |
Total Assets |
32,456,526 |
30,355,440 |
1.01 |
Current Assets |
2,612,733 |
3,215,445 |
1.01.01 |
Cash and Cash Equivalents |
889,933 |
1,722,991 |
1.01.03 |
Accounts Receivable |
1,374,497 |
1,156,785 |
1.01.03.01 |
Trade Accounts Receivable |
1,236,982 |
1,034,820 |
1.01.03.02 |
Other Accounts Receivable |
137,515 |
121,965 |
1.01.03.02.01 |
Balances with Related Parties |
137,515 |
121,965 |
1.01.04 |
Inventories |
56,739 |
66,487 |
1.01.06 |
Recoverable Taxes |
66,097 |
148,768 |
1.01.06.01 |
Current Recoverable Taxes |
66,097 |
148,768 |
1.01.08 |
Other Current Assets |
225,467 |
120,414 |
1.01.08.03 |
Other |
225,467 |
120,414 |
1.01.08.03.01 |
Restricted Cash |
29,331 |
19,750 |
1.01.08.03.02 |
Financial Asset Held for Trading |
90,617 |
0 |
1.01.08.03.20 |
Other Accounts Receivable |
105,519 |
100,664 |
1.02 |
Noncurrent Assets |
29,843,793 |
27,139,995 |
1.02.01 |
Long-Term Assets |
1,441,729 |
780,362 |
1.02.01.03 |
Accounts Receivable |
164,311 |
189,458 |
1.02.01.03.01 |
Trade Accounts Receivable |
164,311 |
189,458 |
1.02.01.06 |
Deferred Taxes |
348,913 |
209,478 |
1.02.01.06.01 |
Deferred Income Tax and Social Contribution |
348,913 |
209,478 |
1.02.01.08 |
Receivables from Related Parties |
678,337 |
102,018 |
1.02.01.08.03 |
Receivables from Controlling Shareholders |
678,337 |
102,018 |
1.02.01.09 |
Other Noncurrent Assets |
250,168 |
279,408 |
1.02.01.09.04 |
Escrow Deposits |
78,041 |
69,488 |
1.02.01.09.05 |
ANA – National Water Agency |
88,267 |
122,634 |
1.02.01.09.20 |
Other Accounts Receivable |
83,860 |
87,286 |
1.02.02 |
Investments |
81,999 |
75,262 |
1.02.02.01 |
Shareholdings |
22,759 |
21,223 |
1.02.02.01.04 |
Other Shareholdings |
22,759 |
21,223 |
1.02.02.02 |
Investment Properties |
59,240 |
54,039 |
1.02.03 |
Property, Plant and Equipment |
299,526 |
304,845 |
1.02.04 |
Intangible Assets |
28,020,539 |
25,979,526 |
1.02.04.01 |
Intangible Assets |
28,020,539 |
25,979,526 |
1.02.04.01.01 |
Concession Contracts |
8,352,777 |
8,650,531 |
1.02.04.01.02 |
Program Contracts |
7,280,311 |
6,082,062 |
1.02.04.01.03 |
Service Contracts |
12,080,775 |
10,986,386 |
1.02.04.01.04 |
Software License |
306,676 |
260,547 |
Page 3 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Financial Position – Liabilities
(R$ thousands) |
Code |
Description |
Current Quarter
09/30/2015 |
Previous Year
12/31/2014 |
2 |
Total Liabilities |
32,456,526 |
30.355.440 |
2.01 |
Current Liabilities |
2,990,989 |
3.480.576 |
2.01.01 |
Labor and Pension Plan Liabilities |
397,105 |
387.971 |
2.01.01.01 |
Pension Plan Liabilities |
24,430 |
38.427 |
2.01.01.02 |
Labor Liabilities |
372,675 |
349.544 |
2.01.02 |
Trade Accounts Payable |
225,804 |
323.513 |
2.01.02.01 |
Domestic Suppliers |
225,804 |
323.513 |
2.01.03 |
Tax Liabilities |
75,724 |
74.138 |
2.01.03.01 |
Federal Tax Liabilities |
67,943 |
64.209 |
2.01.03.01.02 |
PIS-PASEP and COFINS (taxes on revenue) Payable |
23,430 |
0 |
2.01.03.01.03 |
INSS (social security contribution) Payable |
33,425 |
33.324 |
2.01.03.01.20 |
Other Federal Taxes |
11,088 |
30.885 |
2.01.03.02 |
State Taxes Liabilities |
0 |
48 |
2.01.03.03 |
Municipal Taxes Liabilities |
7,781 |
9.881 |
2.01.04 |
Loans and Financing |
973,726 |
1.207.126 |
2.01.04.01 |
Loans and Financing |
606,154 |
484.064 |
2.01.04.01.01 |
In Domestic Currency |
224,093 |
245.384 |
2.01.04.01.02 |
In Foreign Currency |
382,061 |
238.680 |
2.01.04.02 |
Debentures |
357,615 |
714.065 |
2.01.04.03 |
Financing through finance lease |
9,957 |
8.997 |
2.01.05 |
Other Liabilities |
701,445 |
862.736 |
2.01.05.01 |
Payables to Related Parties |
1,544 |
1.569 |
2.01.05.01.03 |
Payables to Controlling Shareholders |
1,544 |
1.569 |
2.01.05.02 |
Other |
699,901 |
861.167 |
2.01.05.02.01 |
Dividends and Interest on Equity Payable |
81 |
214.523 |
2.01.05.02.04 |
Services Payable |
328,281 |
318.973 |
2.01.05.02.05 |
Refundable Amounts |
8,443 |
16.929 |
2.01.05.02.06 |
Program Contract Commitments |
256,944 |
189.551 |
2.01.05.02.07 |
Private Public Partnership – PPP |
39,456 |
38.047 |
2.01.05.02.09 |
Indemnities |
8,831 |
10.516 |
2.01.05.02.20 |
Other Payables |
57,865 |
72.628 |
2.01.06 |
Provisions |
617,185 |
625.092 |
2.01.06.01 |
Tax, Social Security, Labor and Civil Provisions |
128,592 |
120.003 |
2.01.06.01.01 |
Tax Provisions |
10,714 |
8.681 |
2.01.06.01.02 |
Social Security and Labor Provisions |
49,891 |
48.340 |
2.01.06.01.04 |
Civil Provisions |
67,987 |
62.982 |
2.01.06.02 |
Other Provisions |
488,593 |
505.089 |
2.01.06.02.03 |
Provisions for Environmental Liabilities and Decommissioning |
12,929 |
62.250 |
2.01.06.02.04 |
Provisions for Customers |
408,965 |
382.937 |
2.01.06.02.05 |
Provisions for Suppliers |
66,699 |
59.902 |
2.02 |
Non-Current Liabilities |
16,107,787 |
13.570.461 |
2.02.01 |
Loans and Financing |
11,659,836 |
9.578.641 |
2.02.01.01 |
Loans and Financing |
7,926,240 |
5.718.135 |
Page 4 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Financial Position – Liabilities
(R$ thousands) |
Code |
Description |
Current Quarter
09/30/2014 |
Previous Year
12/31/2013 |
2.02.01.01.01 |
In Domestic Currency |
1,591,500 |
1,610,523 |
2.02.01.01.02 |
In Foreign Currency |
6,334,740 |
4,107,612 |
2.02.01.02 |
Debentures |
3,221,234 |
3,386,913 |
2.02.01.03 |
Financing through finance lease |
512,362 |
473,593 |
2.02.02 |
Other Payables |
4,058,440 |
3,396,565 |
2.02.02.02 |
Other |
4,058,440 |
3,396,565 |
2.02.02.02.04 |
Pension Plan Liabilities |
2,849,389 |
2,729,598 |
2.02.02.02.05 |
Program Contract Commitments |
98,506 |
18,208 |
2.02.02.02.06 |
Private Public Partnership – PPP |
832,203 |
330,236 |
2.02.02.02.07 |
Indemnities |
11,664 |
8,925 |
2.02.02.02.08 |
Labor Liabilities |
15,980 |
23,498 |
2.02.02.02.09 |
Deferred COFINS and PASEP |
132,779 |
129,351 |
2.02.02.02.20 |
Other Payables |
117,919 |
156,749 |
2.02.04 |
Provisions |
389,511 |
595,255 |
2.02.04.01 |
Tax, Pension Plan, Labor and Civil Provisions |
263,531 |
285,197 |
2.02.04.01.01 |
Tax Provisions |
49,361 |
46,873 |
2.02.04.01.02 |
Pension Plan and Labor Provisions |
169,030 |
184,893 |
2.02.04.01.04 |
Civil Provisions |
45,140 |
53,431 |
2.02.04.02 |
Other Provisions |
125,980 |
310,058 |
2.02.04.02.03 |
Provisions for Environmental Liabilities and Decommissioning |
70,284 |
163,347 |
2.02.04.02.04 |
Provisions for Customers |
54,329 |
141,237 |
2.02.04.02.05 |
Provisions for Suppliers |
1,367 |
5,474 |
2.03 |
Equity |
13,357,750 |
13,304,403 |
2.03.01 |
Paid-Up Capital |
10,000,000 |
10,000,000 |
2.03.04 |
Profit Reserve |
3,672,149 |
3,694,151 |
2.03.04.01 |
Legal Reserve |
758,141 |
758,141 |
2.03.04.08 |
Additional Dividend Proposed |
0 |
22,002 |
2.03.04.10 |
Reserve for Investments |
2,914,008 |
2,914,008 |
2.03.05 |
Retained Earnings/Accumulated Losses |
75,349 |
0 |
2.03.06 |
Equity Valuation Adjustment |
-389,748 |
-389,748 |
Page 5 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Income
(R$ thousands) |
Code |
Description |
Current Quarter
7/1/2015 to 9/30/2015 |
YTD Current Year
1/1/2015 to 9/30/2015 |
Same Quarter
Previous Year
7/1/2014 to 9/30/2014 |
YTD Previous Year
1/1/2014 to 9/30/2014 |
3.01 |
Revenue from Sales and/or Services |
3,196,992 |
8,488,485 |
2,823,532 |
8,369,615 |
3.02 |
Cost of Sales and/or Services |
-2,261,459 |
-6,125,545 |
-1,985,938 |
-5,494,788 |
3.02.01 |
Cost of Sales and/or Services |
-1,268,475 |
-3,670,962 |
-1,203,695 |
-3,527,856 |
3.02.02 |
Construction Cost |
-992,984 |
-2,454,583 |
-782,243 |
-1,966,932 |
3.03 |
Gross Profit |
935,533 |
2,362,940 |
837,594 |
2,874,827 |
3.04 |
Operating Income/Expenses |
-249,406 |
-56,349 |
-344,615 |
-1,225,001 |
3.04.01 |
Selling Expenses |
-109,709 |
-441,161 |
-126,564 |
-498,393 |
3.04.02 |
General and Administrative Expenses |
-192,637 |
287,039 |
-210,716 |
-681,094 |
3.04.04 |
Other Operating Income |
63,732 |
128,201 |
21,014 |
59,159 |
3.04.04.01 |
Other Operating Income |
69,923 |
143,449 |
24,291 |
67,196 |
3.04.04.02 |
COFINS and PASEP |
-6,191 |
-15,248 |
-3,277 |
-8,037 |
3.04.05 |
Other Operating Expenses |
-9,417 |
-30,052 |
-27,182 |
-103,187 |
3.04.05.01 |
Loss on Write-off of Property, Plant and Equipment Items |
-7,313 |
-6,551 |
-24,917 |
-77,009 |
3.04.05.02 |
Provision for Tax Incentive Losses |
500 |
500 |
0 |
0 |
3.04.05.03 |
Tax Incentives |
0 |
-7,770 |
-2,096 |
-10,663 |
3.04.05.04 |
Surplus Cost of Traded Electricity |
-2,847 |
-14,465 |
0 |
0 |
3.04.05.06 |
Provision for losses - Diadema and Saned |
0 |
0 |
0 |
-14,967 |
3.04.05.20 |
Other |
243 |
-1,766 |
-169 |
-548 |
3.04.06 |
Equity in the Earnings (Losses) of Subsidiaries |
-1,375 |
-376 |
-1,167 |
-1,486 |
3.05 |
Income Before Financial Result and Taxes |
686,127 |
2,306,591 |
492,979 |
1,649,826 |
3.06 |
Financial Result |
-1,539,410 |
-2,369,778 |
-337,772 |
-331,830 |
3.06.01 |
Finance Income |
124,544 |
354,322 |
109,724 |
290,839 |
3.06.01.01 |
Finance Income |
130,438 |
359,609 |
109,902 |
291,629 |
3.06.01.02 |
Foreign Exchange Gains |
10 |
617 |
-178 |
-790 |
3.06.01.03 |
COFINS and PASEP |
-5,904 |
-5,904 |
0 |
0 |
3.06.02 |
Finance Expenses |
-1,663,954 |
-2,724,100 |
-447,496 |
-622,669 |
3.06.02.01 |
Finance Expenses |
-215,016 |
-599,550 |
-134,535 |
-510,942 |
3.06.02.02 |
Foreign Exchange Losses |
-1,448,938 |
-2,124,550 |
-312,961 |
-111,727 |
3.07 |
Earnings Before Income Tax |
-853,283 |
-63,187 |
155,207 |
1,317,996 |
3.08 |
Income Tax and Social Contribution |
273,139 |
138,536 |
-63,706 |
-446,487 |
3.08.01 |
Current |
-674 |
-899 |
-41,608 |
-453,799 |
Page 6 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Income
(R$ thousands) |
Code |
Description |
Current Quarter
7/1/2014 to 9/30/2014 |
YTD Current Year
1/1/2014 to 9/30/2014 |
Same Quarter Previous Year
7/1/2013 to 9/30/2013 |
YTD Previous Year
1/1/2013 to 9/30/2013 |
3.08.02 |
Deferred |
273,813 |
139,435 |
-22,098 |
7,312 |
3.09 |
Net Result from Continued Operations |
-580,144 |
75,349 |
91,501 |
871,509 |
3.11 |
Profit/Loss for the Period |
-580,144 |
75,349 |
91,501 |
871,509 |
3.99 |
Earnings per Share - (Reais / Share) |
|
|
|
|
3.99.01 |
Basic Earnings per Share |
|
|
|
|
3.99.01.01 |
Common Share |
-0.84877 |
0.11024 |
0.13387 |
1.27505 |
3.99.02 |
Diluted Earnings per Share |
|
|
|
|
3.99.02.01 |
Common Share |
-0.84877 |
0.11024 |
0.13387 |
1.27505 |
Page 7 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements / Statement of Comprehensive Income
(R$ thousands) |
Code |
Description |
Current Quarter
7/1/2015 to 9/30/2015 |
YTD Current Year
1/1/2015 to 9/30/2015 |
Same Quarter Previous Year
7/1/2014 to 9/30/2014 |
YTD Previous Year
1/1/2014 to 9/30/2014 |
4.01 |
Net Income for the Period |
-580,144 |
75,349 |
91,501 |
871,509 |
4.03 |
Comprehensive Income for the Period |
-580,144 |
75,349 |
91,501 |
871,509 |
Page 8 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Cash Flows – Indirect Method
(R$ thousands) |
Code |
Description |
YTD Current Year
1/1/2015 to 9/30/2015 |
YTD Previous Year
1/1/2014 to 9/30/2014 |
6.01 |
Net Cash from Operating Activities |
1,853,010 |
2,006,936 |
6.01.01 |
Cash from Operations |
2,521,581 |
2,865,933 |
6.01.01.01 |
Profit (loss) Before Income Tax and Social Contribution |
-63,187 |
1,317,996 |
6.01.01.02 |
Provision and Inflation Adjustments on Provisions |
-116,292 |
151,776 |
6.01.01.03 |
GESP Agreement |
-696,283 |
0 |
6.01.01.04 |
Financial Charges from Customers |
-199,994 |
-142,996 |
6.01.01.05 |
Residual Value of Written-off Property, Plant and Equipment and Intangible Assets |
18,214 |
28,887 |
6.01.01.06 |
Depreciation and Amortization |
808,706 |
726,051 |
6.01.01.07 |
Interest on Loans and Financing Payable |
357,306 |
293,000 |
6.01.01.08 |
Monetary and Foreign Exchange Change on Loans and Financing |
2,247,653 |
183,808 |
6.01.01.09 |
Interest and Monetary Change on Liabilities |
17,469 |
13,942 |
6.01.01.10 |
Interest and Monetary Change in Assets |
-36,514 |
-24,564 |
6.01.01.11 |
Allowance for Doubtful Accounts |
9,389 |
54,688 |
6.01.01.12 |
Provision for Consent Decree (TAC) |
-17,916 |
40,977 |
6.01.01.13 |
Equity in the Earnings of Subsidiaries |
376 |
1,486 |
6.01.01.14 |
Provision for Sabesprev Mais |
5,908 |
7,105 |
6.01.01.15 |
Other Provisions/Reversals |
-13,731 |
57,086 |
6.01.01.16 |
Transfer of Funds to São Paulo Municipal Government |
8,012 |
-17,504 |
6.01.01.17 |
Gross Margin over Intangible Assets Resulting from Concession Contracts |
-53,881 |
-42,775 |
6.01.01.18 |
Pension Plan Liabilities |
246,346 |
216,970 |
6.01.02 |
Changes in Assets and Liabilities |
-129,262 |
-20,975 |
6.01.02.01 |
Trade Accounts Receivable |
17,731 |
277,581 |
6.01.02.02 |
Balances and Related Party Transactions |
15,364 |
40,940 |
6.01.02.03 |
Inventories |
9,366 |
5,096 |
6.01.02.04 |
Recoverable Taxes |
82,671 |
0 |
6.01.02.05 |
Other Accounts Receivable |
-26 |
-30,621 |
6.01.02.06 |
Escrow Deposits |
25,696 |
598 |
6.01.02.08 |
Contractors and Suppliers |
-31,968 |
1,694 |
6.01.02.09 |
Payroll, Provisions and Social Contribution |
27,050 |
49,815 |
6.01.02.10 |
Pension Plan Liabilities |
-126,555 |
-119,580 |
6.01.02.11 |
Taxes and Contributions Payable |
15,776 |
-100,753 |
6.01.02.12 |
Services Received |
1,296 |
22,070 |
6.01.02.13 |
Other Liabilities |
-71,732 |
-18,437 |
6.01.02.14 |
Provisions |
-97,359 |
-150,331 |
6.01.02.15 |
Deferred COFINS/PASEP |
3,428 |
953 |
6.01.03 |
Other |
-539,309 |
-838,022 |
Page 9 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Cash Flows – Indirect Method
(R$ thousands) |
Code |
Description |
YTD Current Year
1/1/2015 to 9/30/2015 |
YTD Previous Year
1/1/2014 to 9/30/2014 |
6.01.03.01 |
Interest Paid |
-521,566 |
-415,829 |
6.01.03.02 |
Income Tax and Social Contribution Paid |
-17,743 |
-422,193 |
6.02 |
Net Cash from Investing Activities |
-1,886,867 |
-1,929,606 |
6.02.01 |
Acquisition of Intangible Assets |
-1,856,910 |
-1,834,304 |
6.02.02 |
Acquisition of Property, Plant and Equipment |
-21,902 |
-85,031 |
6.02.03 |
Increase in Investments |
0 |
-24 |
6.02.04 |
Restricted Cash |
-9,581 |
-10,247 |
6.02.05 |
Dividends Received |
1,526 |
0 |
6.03 |
Net Cash from Financing Activities |
-799,201 |
359 |
6.03.01 |
Funding – Loans |
684,586 |
940,215 |
6.03.02 |
Amortization of Loans |
-1,219,588 |
-418,963 |
6.03.03 |
Payment of Interest on Shareholders’ Equity |
-202,108 |
-467,470 |
6.03.04 |
Public-Private Partnership (PPP) |
-17,169 |
-15,030 |
6.03.05 |
Program Contract Commitments |
-44,922 |
-38,393 |
6.05 |
Increase (Decrease) in Cash and Cash Equivalents |
-833,058 |
77,689 |
6.05.01 |
Opening Cash and Cash Equivalents |
1,722,991 |
1,782,001 |
6.05.02 |
Closing Cash and Cash Equivalents |
889,933 |
1,859,690 |
Page 10 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Changes in Equity – 1/1/2015 to 9/30/2015
(R$ thousands) |
Code |
Description |
Paid-up Capital |
Capital Reserves, Options Granted and Treasury Shares |
Profit Reserves |
Retained Earnings/ Accumulated Losses |
Other Comprehensive Income |
Total Equity |
5.01 |
Opening Balances |
10,000,000 |
0 |
3,694,151 |
0 |
-389,748 |
13,304,403 |
5.03 |
Restated Opening Balances |
10,000,000 |
0 |
3,694,151 |
0 |
-389,748 |
13,304,403 |
5.04 |
Capital Transactions with Partners |
0 |
0 |
-22,002 |
0 |
0 |
-22,002 |
5.04.08 |
Additional Dividends Approved |
0 |
0 |
-22,002 |
0 |
0 |
-22,002 |
5.05 |
Total Comprehensive Income |
0 |
0 |
0 |
75,349 |
0 |
75,349 |
5.05.01 |
Net Income for the Period |
0 |
0 |
0 |
75,349 |
0 |
75,349 |
5.07 |
Closing Balances |
10,000,000 |
0 |
3,672,149 |
75,349 |
-389,748 |
13,357,750 |
Page 11 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Changes in Equity– 1/1/2014 to 9/30/2014
(R$ thousands)
Code |
Description |
Paid-up Capital |
Capital Reserves, Options Granted and Treasury Shares |
Profit Reserves |
Retained Earnings/ Accumulated Losses |
Other Comprehensive Income |
Total Equity |
5.01 |
Opening Balances |
6,203,688 |
124,255 |
6,736,389 |
0 |
-133,531 |
12,930,801 |
5.03 |
Restated Opening Balances |
6,203,688 |
124,255 |
6,736,389 |
0 |
-133,531 |
12,930,801 |
5.04 |
Capital Transactions with Partners |
0 |
0 |
-42,862 |
0 |
0 |
-42,862 |
5.04.08 |
Additional Dividends Approved |
0 |
0 |
-42,862 |
0 |
0 |
-42,862 |
5.05 |
Total Comprehensive Income |
0 |
0 |
0 |
871,509 |
0 |
871,509 |
5.05.01 |
Net Income for the Period |
0 |
0 |
0 |
871,509 |
0 |
871,509 |
5.06 |
Internal Changes in the Shareholders’ Equity |
3,796,312 |
-124,255 |
-3,672,057 |
0 |
0 |
0 |
5.06.04 |
Capitalization of Reserves |
3,796,312 |
-124,255 |
-3,672,057 |
0 |
0 |
0 |
5.07 |
Closing Balances |
10,000,000 |
0 |
3,021,470 |
871,509 |
-133,531 |
13,759,448 |
Page 12 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
Parent Company’s Financial Statements/Statement of Value Added
(R$ thousands) |
Code |
Description |
YTD Current Year
1/1/2015 to 9/30/2015 |
YTD Previous Year
1/1/2014 to 9/30/2014 |
7.01 |
Revenue |
9,021,425 |
8,856,341 |
7.01.01 |
Operating Revenue |
6,378,901 |
6,834,126 |
7.01.02 |
Other Revenue |
143,449 |
67,196 |
7.01.03 |
Revenue from the Construction |
2,508,464 |
2,009,707 |
7.01.04 |
Allowance for/Reversal of Doubtful Accounts |
-9,389 |
-54,688 |
7.02 |
Inputs Acquired from Third Parties |
-4,025,989 |
-3,963,237 |
7.02.01 |
Costs of Sales and Services |
-3,720,310 |
-3,269,421 |
7.02.02 |
Materials, Energy, Outsourced Services and Other |
-275,627 |
-590,629 |
7.02.04 |
Other |
-30,052 |
-103,187 |
7.03 |
Gross Value Added |
4,995,436 |
4,893,104 |
7.04 |
Retentions |
-808,706 |
-726,051 |
7.04.01 |
Depreciation, Amortization and Depletion |
-808,706 |
-726,051 |
7.05 |
Net Value Added Produced |
4,186,730 |
4,167,053 |
7.06 |
Value Added Received through Transfer |
1,056,133 |
289,353 |
7.06.01 |
Equity in the Earnings (Losses) of Subsidiaries |
-376 |
-1,486 |
7.06.02 |
Finance Income |
360,226 |
290,839 |
7.06.03 |
Other |
696,283 |
0 |
7.06.03.01 |
GESP Reimbursement – Benefits Paid |
696,283 |
0 |
7.07 |
Total Value Added to Distribute |
5,242,863 |
4,456,406 |
7.08 |
Value Added Distribution |
5,242,863 |
4,456,406 |
7.08.01 |
Personnel |
1,495,699 |
1,451,547 |
7.08.01.01 |
Direct Compensation |
984,944 |
958,390 |
7.08.01.02 |
Benefits |
415,006 |
383,074 |
7.08.01.03 |
Government Severance Indemnity Fund for Employees (FGTS) |
95,749 |
110,083 |
7.08.02 |
Taxes and Contributions |
639,712 |
1,275,831 |
7.08.02.01 |
Federal |
563,731 |
1,204,239 |
7.08.02.02 |
State |
53,114 |
50,402 |
7.08.02.03 |
Municipal |
22,867 |
21,190 |
7.08.03 |
Value Distributed to Providers of Capital |
3,032,103 |
857,519 |
7.08.03.01 |
Interest |
2,971,176 |
799,392 |
7.08.03.02 |
Rental |
60,927 |
58,127 |
7.08.04 |
Value Distributed to Shareholders |
75,349 |
871,509 |
7.08.04.03 |
Retained Earnings/Accumulated Loss for the Period |
75,349 |
871,509 |
Page 13 of 86
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ITR - Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Version: 1 |
1. Financial highlights
|
|
|
|
|
|
|
|
R$ million |
|
|
3Q15 |
3Q14 |
Chg. (R$) |
% |
9M15 |
9M14 |
Chg. (R$) |
% |
|
Gross operating revenue |
2,327.2 |
2,165.6 |
161.6 |
7.5 |
6,378.9 |
6,834.1 |
(455.2) |
(6.7) |
|
Construction revenue |
1,015.2 |
799.7 |
215.5 |
26.9 |
2,508.5 |
2,009.7 |
498.8 |
24.8 |
|
COFINS and PASEP taxes |
(145.4) |
(141.8) |
(3.6) |
2.5 |
(398.9) |
(474.2) |
75.3 |
(15.9) |
(=) |
Net operating revenue |
3,197.0 |
2,823.5 |
373.5 |
13.2 |
8,488.5 |
8,369.6 |
118.9 |
1.4 |
|
Costs and expenses |
(1,570.8) |
(1,541.0) |
(29.8) |
1.9 |
(3,825.1) |
(4,707.3) |
882.2 |
(18.7) |
|
Construction costs |
(993.0) |
(782.1) |
(210.9) |
27.0 |
(2,454.6) |
(1,966.9) |
(487.7) |
24.8 |
|
Equity result |
(1.3) |
(1.2) |
(0.1) |
- |
(0.4) |
(1.5) |
1.1 |
(73.3) |
|
Other operating revenue (expenses), net |
54.3 |
(6.2) |
60.5 |
(975.8) |
98.1 |
(44.1) |
142.2 |
(322.4) |
(=) |
Earnings before financial result, income tax and social contribution |
686.2 |
493.0 |
193.2 |
39.2 |
2,306.5 |
1,649.8 |
656.7 |
39.8 |
|
Financial result |
(1,539.4) |
(337.8) |
(1,201.6) |
355.7 |
(2,369.7) |
(331.8) |
(2,037.9) |
614.2 |
(=) |
Earnings before income tax and social contribution |
(853.2) |
155.2 |
(1,008.4) |
(649.7) |
(63.2) |
1,318.0 |
(1,381.2) |
(104.8) |
|
Income tax and social contribution |
273.1 |
(63.7) |
336.8 |
(528.7) |
138.5 |
(446.5) |
585.0 |
(131.0) |
(=) |
Net income (loss) |
(580.1) |
91.5 |
(671.6) |
(734.0) |
75.3 |
871.5 |
(796.2) |
(91.4) |
|
Earnings (loss) per share* (R$) |
(0.85) |
0.13 |
|
|
0.11 |
1.28 |
|
|
|
* Total shares = 683,509,869 |
|
|
|
|
|
|
|
|
Adjusted EBITDA Reconciliation (Non-accounting measures)
|
|
|
|
|
|
|
|
R$ million |
|
|
3Q15 |
3Q14 |
Chg. (R$) |
% |
9M15 |
9M14 |
Chg. (R$) |
% |
|
Net income (loss) |
(580.1) |
91.5 |
(671.6) |
(734.0) |
75.3 |
871.5 |
(796.2) |
(91.4) |
|
Income tax and social contribution |
(273.1) |
63.7 |
(336.8) |
(528.7) |
(138.5) |
446.5 |
(585.0) |
(131.0) |
|
Financial result |
1,539.4 |
337.8 |
1,201.6 |
355.7 |
2,369.7 |
331.8 |
2,037.9 |
614.2 |
|
Other operating revenues (expenses), net |
(54.3) |
6.2 |
(60.5) |
(975.8) |
(98.1) |
44.1 |
(142.2) |
(322.4) |
(=) |
Adjusted EBIT* |
631.9 |
499.2 |
132.7 |
26.6 |
2,208.4 |
1,693.9 |
514.5 |
30.4 |
|
Depreciation and amortization |
271.3 |
243.2 |
28.1 |
11.6 |
808.7 |
726.0 |
82.7 |
11.4 |
(=) |
Adjusted EBITDA ** |
903.2 |
742.4 |
160.8 |
21.7 |
3,017.1 |
2,419.9 |
597.2 |
24.7 |
|
(%) Adjusted EBITDA margin |
28.3 |
26.3 |
|
|
35.5 |
28.9 |
|
|
(*) Adjusted EBIT is net income before: (i) other operating revenues/expenses; (ii) financial result; and (iii) income tax and social contribution.
(**) Adjusted EBITDA is net income before: (i) depreciation and amortization expenses; (ii) income tax and social contribution; (iii) financial result; and (iv) other operating revenues/expenses, net.
In 3Q15, net operating revenue, including construction revenue, reached R$ 3.2 billion; a 13.2% increase compared to 3Q14.
Costs and expenses, including construction costs, totaled R$ 2.6 billion, up by 10.4% compared to R$ 2.3 billion recorded in 3Q14.
Adjusted EBIT, in the amount of R$ 631.9 million, grew 26.6% from R$ 499.2 million recorded in the same quarter of the previous year.
Adjusted EBITDA, in the amount of R$ 903.2 million, increased 21.7% from R$ 742.4 million recorded in 3Q14 (R$ 3,017.1 million in the last 9 months and R$ 3,515.9 million in the last 12 months).
The adjusted EBITDA margin was 28.3% in 3Q15, versus 26.3% in 3Q14 (35.5% in the last 9 months and 31.0% in the last 12 months). Excluding construction revenues and construction costs, the adjusted EBITDA margin was 40.4% in 3Q15 (35.8% in 3Q14, 49.6% in the last 9 months and 43.5% in the last 12 months).
In 3Q15 the Company recorded a net loss of R$ 580.1 million, in comparison to a net income of R$ 91.5 million recorded in 3Q14.
Page 14 of 86
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Version: 1 |
2. Gross operating revenue
Gross operating revenue from water and sewage, not including construction revenue, totaled R$ 2.3 billion, an increase of R$ 161.6 million or 7.5%, when compared to the R$ 2.2 billion recorded in 3Q14.
The main factors that led to this variation were:
· 6.5% repositioning tariff index since December 2014;
· 15.2% tariff increase (7.8% ordinary tariff adjustment and 6.9% extraordinary tariff revision) since June 2015; and
· Application of contingency tariff, with a R$ 144.8 million impact in 3Q15.
The increase in gross operating revenue was mitigated by:
· The bonus granted under the Water Consumption Reduction Incentive Program, with a R$ 248.8 million impact in 3Q15, versus the R$ 129.4 million granted in 3Q14, resulting in a decrease of 5.5% in gross operating revenue; and
· Decrease of 5.8% in the Company’s total billed volume (6.8% in water and 4.4% in sewage).
3. Construction revenue
Construction revenue increased R$ 215.5 million or 26.9%, when compared to 3Q14. The variation was mainly due to higher investments in the concessions.
Page 15 of 86
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Version: 1 |
4. Billed volume
The following tables show the water and sewage billed volume, quarter-on-quarter and year-to-date, per customer category and region.
WATER AND SEWAGE BILLED VOLUME (1) PER CUSTOMER CATEGORY - million m3 |
|
|
Water |
|
|
Sewage |
|
Water + Sewage |
|
Category |
3Q15 |
3Q14 |
% |
3Q15 |
3Q14 |
% |
3Q15 |
3Q14 |
% |
Residential |
363.1 |
379.6 |
(4.3) |
306.1 |
318.2 |
(3.8) |
669.2 |
697.8 |
(4.1) |
Commercial |
39.6 |
42.4 |
(6.6) |
37.8 |
40.1 |
(5.7) |
77.4 |
82.5 |
(6.2) |
Industrial |
8.0 |
9.6 |
(16.7) |
9.6 |
10.7 |
(10.3) |
17.6 |
20.3 |
(13.3) |
Public |
9.6 |
12.9 |
(25.6) |
8.4 |
9.9 |
(15.2) |
18.0 |
22.8 |
(21.1) |
Total retail |
420.3 |
444.5 |
(5.4) |
361.9 |
378.9 |
(4.5) |
782.2 |
823.4 |
(5.0) |
Wholesale (3) |
52.8 |
63.1 |
(16.3) |
5.8 |
5.8 |
- |
58.6 |
68.9 |
(14.9) |
Total |
473.1 |
507.6 |
(6.8) |
367.7 |
384.7 |
(4.4) |
840.8 |
892.3 |
(5.8) |
|
9M15 |
9M14 |
% |
9M15 |
9M14 |
% |
9M15 |
9M14 |
% |
Residential |
1,090.1 |
1,172.3 |
(7.0) |
916.0 |
977.8 |
(6.3) |
2,006.1 |
2,150.1 |
(6.7) |
Commercial |
119.5 |
130.1 |
(8.1) |
113.4 |
122.4 |
(7.4) |
232.9 |
252.5 |
(7.8) |
Industrial |
24.5 |
29.7 |
(17.5) |
29.2 |
32.7 |
(10.7) |
53.7 |
62.4 |
(13.9) |
Public |
30.8 |
39.8 |
(22.6) |
24.8 |
30.8 |
(19.5) |
55.6 |
70.6 |
(21.2) |
Total retail |
1,264.9 |
1,371.9 |
(7.8) |
1,083.4 |
1,163.7 |
(6.9) |
2,348.3 |
2,535.6 |
(7.4) |
Wholesale (3) |
164.9 |
208.0 |
(20.7) |
18.3 |
18.9 |
(3.2) |
183.2 |
226.9 |
(19.3) |
Total |
1,429.8 |
1,579.9 |
(9.5) |
1,101.7 |
1,182.6 |
(6.8) |
2,531.5 |
2,762.5 |
(8.4) |
|
|
|
|
|
|
|
|
|
|
WATER AND SEWAGE BILLED VOLUME (1) PER REGION - million m3 |
|
Water |
|
Sewage |
|
Water + Sewage |
|
Region |
3Q15 |
3Q14 |
% |
3Q15 |
3Q14 |
% |
3Q15 |
3Q14 |
% |
Metropolitan |
271.6 |
289.4 |
(6.2) |
235.7 |
249.1 |
(5.4) |
507.3 |
538.5 |
(5.8) |
Regional (2) |
148.7 |
155.1 |
(4.1) |
126.2 |
129.8 |
(2.8) |
274.9 |
284.9 |
(3.5) |
Total retail |
420.3 |
444.5 |
(5.4) |
361.9 |
378.9 |
(4.5) |
782.2 |
823.4 |
(5.0) |
Wholesale (3) |
52.8 |
63.1 |
(16.3) |
5.8 |
5.8 |
- |
58.6 |
68.9 |
(14.9) |
Total |
473.1 |
507.6 |
(6.8) |
367.7 |
384.7 |
(4.4) |
840.8 |
892.3 |
(5.8) |
|
9M15 |
9M14 |
% |
9M15 |
9M14 |
% |
9M15 |
9M14 |
% |
Metropolitan |
806.6 |
891.2 |
(9.5) |
698.2 |
763.3 |
(8.5) |
1,504.8 |
1,654.5 |
(9.0) |
Regional (2) |
458.3 |
480.7 |
(4.7) |
385.2 |
400.4 |
(3.8) |
843.5 |
881.1 |
(4.3) |
Total retail |
1,264.9 |
1,371.9 |
(7.8) |
1,083.4 |
1,163.7 |
(6.9) |
2,348.3 |
2,535.6 |
(7.4) |
Wholesale (3) |
164.9 |
208.0 |
(20.7) |
18.3 |
18.9 |
(3.2) |
183.2 |
226.9 |
(19.3) |
Total |
1,429.8 |
1,579.9 |
(9.5) |
1,101.7 |
1,182.6 |
(6.8) |
2,531.5 |
2,762.5 |
(8.4) |
(1) Unaudited
(2) Including coastal and interior region
(3) Reused water and non-domestic sewage are included in wholesale
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5. Costs, administrative, selling and
construction expenses
In 3Q15, costs,
administrative, selling and construction expenses, grew 10.4% (R$ 240.7
million). Excluding construction costs, total costs and expenses grew by 1.9%.
As a percentage of net revenue, cost and expenses were 82.3% in 3Q14 and 80.2%
in 3Q15.
|
|
|
|
|
|
|
R$
million |
|
3Q15 |
3Q14 |
Chg. (R$) |
% |
9M15 |
9M14 |
Chg. (R$) |
% |
Payroll and
benefits |
552.0
|
535.9
|
16.1
|
3.0
|
1,615.3
|
1,584.0
|
31.3
|
2.0
|
Supplies |
42.0
|
54.7
|
(12.7) |
(23.2) |
133.7
|
148.8
|
(15.1) |
(10.1) |
Treatment
supplies |
62.9
|
65.6
|
(2.7) |
(4.1) |
198.8
|
199.9
|
(1.1) |
(0.6) |
Services |
296.6
|
301.1
|
(4.5) |
(1.5) |
862.5
|
967.4
|
(104.9) |
(10.8) |
Electric power |
220.0
|
156.3
|
63.7
|
40.8
|
587.4
|
440.8
|
146.6
|
33.3
|
General
expenses |
144.5
|
187.6
|
(43.1) |
(23.0) |
247.7
|
530.3
|
(282.6) |
(53.3) |
Tax expenses |
19.6
|
18.2
|
1.4
|
7.7
|
57.9
|
55.4
|
2.5
|
4.5
|
São Paulo state government
reimbursement |
-
|
-
|
-
|
-
|
(696.3) |
-
|
(696.3) |
-
|
Sub-total |
1,337.6
|
1,319.4
|
18.2
|
1.4
|
3,007.0
|
3,926.6
|
(919.6) |
(23.4) |
Depreciation and
amortization |
271.3
|
243.2
|
28.1
|
11.6
|
808.7
|
726.0
|
82.7
|
11.4
|
Credit
write-offs |
(38.1) |
(21.6) |
(16.5) |
76.4
|
9.4
|
54.7
|
(45.3) |
(82.8) |
Sub-total |
233.2
|
221.6
|
11.6
|
5.2
|
818.1
|
780.7
|
37.4
|
4.8
|
Costs, administrative and
selling expenses |
1,570.8 |
1,541.0
|
29.8
|
1.9
|
3,825.1
|
4,707.3
|
(882.2) |
(18.7) |
Construction
costs |
993.0
|
782.1
|
210.9
|
27.0
|
2,454.6
|
1,966.9
|
487.7
|
24.8
|
Costs, adm., selling and
construction expenses |
2,563.8 |
2,323.1
|
240.7
|
10.4
|
6,279.7
|
6,674.2
|
(394.5) |
(5.9) |
% of net
revenue |
80.2
|
82.3
|
|
|
74.0
|
79.7
|
|
|
5.1. Payroll and
benefits
In 3Q15 payroll and
benefits increased R$ 16.1 million or 3.0%, due to the following:
·
R$ 20.5
million, mainly due to the average wage increase of 9.7% in May 2015 and by the
application of 1% related to the career and wage plan, since July
2015;
·
R$ 10.3
million in the provision for the pension plan, arising from changes in actuarial
assumptions; and
·
R$ 8.3
million severance payments, due to dismissal in 3Q15.
Despite the above factors, there
was a decrease of R$ 24.9 million, due to the smaller number of employees
entitled to retirement (TAC).
5.2.
Supplies
In 3Q15, expenses with supplies
decreased R$ 12.7 million or 23.2%, from R$ 54.7 million to R$ 42.0 million,
mostly due to lower use of materials in preventive and corrective maintenance in
water and sewage systems, expansion of computerized systems and conservation of
properties and installations, in the amount of R$ 8.7 million.
5.3.
Services
Services expenses, in
the amount of R$ 296.6 million, dropped R$ 4.5 million or 1.5%, in comparison to
R$ 301.1 million in 3Q14. The main factors that led to this decrease were lower
expenses with the Program for the Rational Use of Water (PURA), in the amount of
R$ 2.4 million and with surveillance services, in the amount of R$ 2.3 million.
5.4. Electric
power
Electric power expenses totaled R$
220.0 million, an increase of R$ 63.7 million or 40.8% in comparison to the R$
156.3 million in 3Q14, chiefly due to the following:
·
Average
increase of 76.4% in the regulated market tariffs, with a 8.3% decrease in
consumption; and
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·
Average
increase of 196.4% in the grid market tariffs (TUSD), with a 4.0% decrease in
consumption.
The increases were
partially offset by the 11.1% drop in tariffs and the 2.6% drop in the free
market consumption.
In 3Q15 the regulated
market accounted for 67.1% of the total electric power consumed by the Company,
the free market accounted for 17.4% and the grid market (TUSD) accounted for
15.5% of total consumption.
5.5. General
expenses
General
expenses dropped R$ 43.1 million or 23.0%, totaling R$ 144.5 million, versus the
R$ 187.6 million recorded in 3Q14 mainly due to:
·
Reversal
of the provision, totaling R$ 17.9 million, related to the recovery of amounts
with the Government of the State of São Paulo – GESP due to the disposal of
employees; and
·
R$ 17.7
million decrease in the provision for lawsuits.
5.6. Depreciation and
amortization
R$ 28.1 million increase or 11.6%,
reaching R$ 271.3 million in comparison to the R$ 243.2 million recorded in
3Q14, largely due to the beginning of operations of intangible assets, in the
amount of R$ 2.5 billion.
5.7. Credit
write-offs
Credit write-offs decreased R$
16.5 million, especially due to the reversal of the provision for losses with
the municipality of Santos, in the amount of R$ 70.5 million, as a result of the
settlement of an agreement.
The decrease was offset by the
additional provisions for losses in the amount of R$ 54.0 million, mostly with
public entities and private clients.
6. Other operating
revenues and expenses, net
Other net operational
revenues and expenses reported an upturn of R$ 60.5 million, mainly due to the
following:
·
An
increase of R$ 42.7 million in other operating revenues, largely due to the
proceeds of R$ 22.1 million related to the Depollution Program of Hydrographic
Basins and the sale of real estate in 3Q15, totaling R$ 16.6 million;
and
·
A decrease
of R$ 17.8 million on other operating expenses, as a result of the decrease in
the write-off of obsolete goods during 3Q15, in the amount of R$ 14.6 million.
7. Financial
result
|
|
|
R$
million |
|
3Q15 |
3Q14 |
Chg. |
% |
Financial expenses, net of
revenues |
(105.6) |
(36.7) |
(68.9) |
187.7 |
Net monetary and exchange
variation |
(1,433.8) |
(301.1) |
(1,132.7) |
376.2 |
Financial
result |
(1,539.4) |
(337.8) |
(1,201.6) |
355.7
|
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7.1. Financial revenues
and expenses
|
|
|
R$
million |
|
3Q15 |
3Q14 |
Chg. |
% |
Financial
expenses |
|
|
|
|
Interest and charges on
international loans and financing |
(39.2) |
(27.1) |
(12.1) |
44.6 |
Interest and charges on
domestic loans and financing |
(80.9) |
(46.6) |
(34.3) |
73.6 |
Other financial
expenses |
(50.4) |
(43.9) |
(6.5) |
14.8 |
Total financial
expenses |
(170.5) |
(117.6) |
(52.9) |
45.0 |
Financial
revenues |
64.9 |
80.9 |
(16.0) |
(19.8) |
Financial expenses net of
revenues |
(105.6) |
(36.7) |
(68.9) |
187.7
|
7.1.1. Financial
expenses
Financial expenses grew R$ 52.9
million. The main reasons were:
·
R$ 34.3
million in interest and charges on domestic loans and financing, especially due
to the higher appreciation of the CDI in 3Q15, in comparison to 3Q14 (14.13% and
10.81%, respectively); and
·
R$ 12.1 million in interest and charges on international
loans and financing, due to the higher appreciation of US dollar and the Yen
versus the Brazilian Real in 3Q15 (28.1% and 30.5%, respectively), when compared
to 3Q14 (11.3% and 2.8%, respectively).
7.1.2. Financial
revenues
Financial revenues decreased R$
16.0 million, largely due to lower financial investments held in the period.
7.2. Monetary and
exchange rate variation on assets and liabilities
|
|
|
|
R$
million |
|
3Q15 |
3Q14 |
Chg. |
% |
Monetary variation on loans
and financing |
(25.9) |
(10.2) |
(15.7) |
153.9 |
Currency exchange variation
on loans and financing |
(1,448.9) |
(312.9) |
(1,136.0) |
363.1 |
Other monetary
variations |
(18.6) |
(6.8) |
(11.8) |
173.5 |
Monetary/exchange rate
variation on liabilities |
(1,493.4) |
(329.9) |
(1,163.5) |
352.7 |
Monetary/exchange rate
variation on assets |
59.6 |
28.8 |
30.8 |
106.9 |
Monetary/exchange rate
variation, net |
(1,433.8) |
(301.1) |
(1,132.7) |
376.2
|
7.2.1.
Monetary/currency exchange variation on liabilities
The effect on the
monetary/currency exchange variation on liabilities in 3Q15 was R$ 1,163.5
million, higher than in 3Q14, especially due to:
·
Negative
variation of R$ 1,136.0 million in expenses with exchange rate variation on
loans and financing, due to a higher appreciation of the US dollar and the Yen
versus the Brazilian Real in 3Q15 (28.1% and 30.5%, respectively), when compared
to 3Q14 (11.3% and 2.8%, respectively); and
·
An upturn of R$ 15.7 million in expenses with monetary
variation on loans and financing, due to the increase in the IPCA (Amplified
Consumer Price Index) in 3Q15 compared to 3Q14 (1.4% and 0.8%,
respectively).
7.2.2.
Monetary/Exchange rate variation on assets
An increase of R$ 30.8 million, especially due to the
monetary update on the agreement with the municipality of Santos, in
3Q15.
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8. Income tax and
social contribution
Recorded a R$ 336.8 million upturn, due to the decrease in
taxable income in 3Q15, versus 3Q14.
9.
Indicators
9.1. Operating
As a result of the water crisis,
there was a substantial reduction in the water production volume, down by 11.1%
in the quarter and 15.9% in the nine month period.
There was also a substantial
decline in the index that measures water losses per connection per day (IPDT)
which came to 261 liters/connection x day versus 340 liters/connection x day on
the same period last year. This reduction was the result not only of loss
control initiatives, but also of the water crisis and the consequent need to
reduce the network pressure as a demand management mechanism.
Operating
indicators * |
3Q15 |
3Q14 |
% |
Water connections
(1) |
8,366 |
8,156 |
2.6 |
Sewage
connections
(1) |
6,806 |
6,607 |
3.0 |
Population directly served -
water (2) |
25.5 |
25.2 |
1.2 |
Population directly served -
sewage (2) |
22.7 |
22.2 |
2.3 |
Number of
employees |
14,056 |
14,766 |
(4.8) |
Water volume produced -
quarter (3) |
615 |
692 |
(11.1) |
Water volume produced - nine
months (3) |
1,834 |
2,180 |
(15.9) |
IPM - Measured water loss
(%) |
28.3 |
30.2 |
(6.3) |
IPDt (liters/connection x
day) |
261 |
340 |
(23.2) |
(1) Total connections,
active and inactive, in thousand units at the end of the period
(2) In million inhabitants,
at the end of the period. Not including wholesale
(3) In millions of cubic
meters
(*) Unaudited
9.2.
Financial
Economic Indexes
* (quarter end) |
3Q15 |
3Q14 |
Amplified Consumer Price
Index (IPCA) - % |
0.54 |
0.57 |
Referential Rate (TR) -
% |
0.19 |
0.09 |
Interbank Deposit
Certificate (CDI) - % |
14.13 |
10.81 |
US DOLAR (R$) |
3.9729 |
2.4510 |
YEN (R$) |
0.03316 |
0.02235 |
(*) Unaudited
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10. Loans and financing
On September 30, 2015, the Company
and the IDB entered into a Letter Agreement related to the AB Loan 1983AB Loan
Agreement, in which the IDB irrevocably agreed not to exercise its right to
accelerate the debt, in the period between September 30, 2015 and October 1,
2016, in the case of non-compliance, in a single quarter, with the “Adjusted net
debt / EBITDA” ratio, which should be lower than 3.65. The IDB may exercise its
right to accelerate repayment in the case of non-compliance with said ratio for
more than one quarter. The Company’s ratio this quarter was 3.54, in line with
the contractual requirement.
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|
|
|
|
|
|
R$
million |
INSTITUTION |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 and onwards |
Total |
Local
market |
|
|
|
|
|
|
|
|
Caixa Econômica
Federal |
11.1 |
48.0 |
52.5 |
55.9 |
57.6 |
59.7 |
749.5 |
1,034.3 |
Debentures |
38.4 |
360.8 |
889.4 |
604.9 |
698.7 |
388.9 |
597.8 |
3,578.9 |
BNDES |
13.5 |
70.1 |
75.5 |
75.5 |
75.5 |
57.8 |
299.2 |
667.1 |
Commercial
Leasing |
2.8 |
20.1 |
21.2 |
22.4 |
23.6 |
25.0 |
407.2 |
522.3 |
Others |
0.2 |
0.6 |
0.7 |
0.5 |
- |
- |
- |
2.0 |
Interest and
charges |
45.3 |
66.9 |
- |
- |
- |
- |
- |
112.2 |
Local market
total |
111.3 |
566.5 |
1,039.3 |
759.2 |
855.4 |
531.4 |
2,053.7 |
5,916.8
|
International
market |
|
|
|
|
|
|
|
|
BID |
5.5 |
151.6 |
223.3 |
123.6 |
123.5 |
123.6 |
1,435.7 |
2,186.8 |
BIRD |
- |
- |
- |
- |
7.7 |
15.3 |
206.6 |
229.6 |
Eurobonds |
- |
556.1 |
- |
- |
- |
1,386.2 |
- |
1,942.3 |
JICA |
- |
72.6 |
74.0 |
75.3 |
114.0 |
114.0 |
1,329.6 |
1,779.5 |
BID 1983AB |
- |
95.1 |
95.1 |
94.9 |
70.3 |
69.6 |
90.8 |
515.8 |
Interest and
charges |
55.9 |
6.9 |
- |
- |
- |
- |
- |
62.8 |
International market
total |
61.4 |
882.3 |
392.4 |
293.8 |
315.5 |
1,708.7 |
3,062.7 |
6,716.8
|
Total |
172.7 |
1,448.8 |
1,431.7 |
1,053.0 |
1,170.9 |
2,240.1 |
5,116.4 |
12,633.6 |
11.
Capex
In the third quarter of 2015 R$
1.0 billion were invested, totaling R$ 2.6 billion investments in the first nine
months of 2015.
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1
Operations
Companhia de Saneamento Básico
do Estado de São Paulo ("SABESP" or the "Company") is a mixed-capital company
headquartered in São Paulo, at Rua Costa Carvalho, 300, CEP 05429-900,
controlled by the São Paulo State Government. The Company is engaged in the
provision of basic and environmental sanitation services in the State of São
Paulo, as well as it supplies treated water and sewage services on a wholesale
basis.
In addition to providing basic
sanitation services in the State of São Paulo, SABESP may perform these
activities in other states and countries, and can operate in drainage, urban
cleaning, solid waste handling and energy markets. The objective set in the new
vision of SABESP is to be recognized as the company that ensured universal
access to water and sewage services in its marketplace, in a sustainable and
competitive manner, with excellence in customer service.
On September 30, 2015, the Company operated water and sewage
services in 364 municipalities of the State of São Paulo. Most of these
municipalities operations are based on 30-year concession, program and services
contracts. On August 5, 2015, the Company signed an agreement with the
municipality of Santa Isabel and will start operations in 2016; thus, Santa
Isabel is not included in the aforementioned 364 municipalities. The Company has
two partial contracts with the municipality of Mogi das Cruzes, however, since
most of municipality is serviced by wholesale, it was not included in the 364
municipalities. On September 30, 2015, the Company had 367
contracts.
SABESP is not operating in some
municipalities due to judicial orders. The lawsuits in progress refer to Álvares
Florence, Cajobi, Embaúba, Iperó and Macatuba, and the carrying amount of these
municipalities’ intangible assets was R$11,322 on September 30, 2015 (R$11,328
on December 31, 2014).
As of September 30, 2015, 52
concession agreements had expired and are being negotiated. From September 30,
2015 to 2030, 37 concession agreements will expire. Management believes that
concession agreements expired and not yet renewed will result in new contracts,
disregarding the risk of discontinuity in the provision of municipal water
supply and sewage services. By September 30, 2015, 278 program and services
contracts were signed (274 contracts on December 31, 2014).
As of September 30, 2015, the
carrying amount of the underlying assets used in the 52 concessions of the
municipalities under negotiation totaled R$5,897,430, accounting for 21.05% of
the total, and the related gross revenue for the nine-month period then ended
totaled R$1,165,943, accounting for 13.12% of the total.
The Company’s operations are
concentrated in the municipality of São Paulo, which represents 51.52% of the
gross revenues on September 30, 2015 (50.00% on September 30, 2014) and 43.11%
of intangible assets (42.29% on December 31, 2014).
On June 23, 2010, the State of
São Paulo, the Municipality of São Paulo, the Company and the regulatory agency
“Sanitation and Energy Regulatory Agency – ARSESP” signed an agreement to share
the responsibility for water supply and sewage services to the Municipality of
São Paulo based on a 30-year concession agreement. This agreement is extendable
for another 30 years, pursuant to the law. This agreement sets forth SABESP as
the exclusive service provider and designates ARSESP as regulator, establishing
prices, controlling and monitoring services.
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Also, on June 23, 2010, the
State of São Paulo, the city of São Paulo and SABESP signed the “Public service
provision agreement of water supply and sewage services”, a 30-year
concession agreement which is extendable for another 30 years. This agreement
involves the following activities:
i. protection of the sources of
water in collaboration with other agencies of the State and the
City;
ii.
capture, transport
and treat of water;
iii.
collect, transport,
treatment and final dispose of sanitary sewage; and
iv.
adoption of other
actions of basic and environmental sanitation.
The Company operates under an
authorization by public deed in some municipalities in the Santos coast region
and in the Vale do Ribeira, where the Company started to operate after the
merger of the companies that formed it.
In September 2015, the Company
entered into a water supply and sewage public utility services agreement with
the municipality of Santos where it used to operate under a public deed of
authorization (See note 8 (d)). As of September 30, 2015, the carrying amount of
the municipality of Santos’ intangible assets was R$561,736 (R$205,261 on
December 31, 2014) and gross revenue in the nine-month period ended
September 30, 2015 was R$197,723 (R$170,712 on September 30,
2014).
Article 58 of Law 11,445/07
determines that precarious and overdue concessions, as well as those effective
for an undetermined period of time, including those that do not have an
instrument formalizing them, will be valid until December 31, 2010. However,
Article 2 of Law 12,693 of July 24, 2012 allows program agreements to be
executed until December 31, 2016.
The Company’s Management
understands that the concession agreements not yet renewed are valid and will be
governed by Laws 8,987/95 and 11,445/07, including those municipalities served
without an agreement.
Public deeds are valid and
governed by the Brazilian Civil Code.
The Company's shares have been
listed in the Novo Mercado (New Market) segment of BM&FBovespa under the
ticker symbol SBSP3 since April 2002 and on the New York Stock Exchange (NYSE)
as American Depositary Receipts (“ADRs”) Level III, under the SBS code, since
May 2002. In 2007, SABESP adhered to the Corporate Sustainability Index, or ISE
of BM&FBovespa, which reflects the high level of commitment with sustainable
development and social practices.
Since 2008, the Company has
been setting up partnerships with other companies, which resulted in the
following companies: Sesamm, Águas de Andradina, Saneaqua Mairinque, Aquapolo
Ambiental, Águas de Castilho, Attend Ambiental and Paulista Geradora de Energia.
Although SABESP has no majority interest in the capital stock of these
companies, the shareholders’ agreements provide for the power of veto and
casting vote in certain issues jointly with associates, indicating the shared
control in the management of investees.
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Water shortage – the Company’s
operations have been influenced by the lowest rainfall and inflow never seen in
85 years, especially at the reservoirs composing the Cantareira System which,
under usual conditions, is liable for the direct supply of approximately 8.8
million people. During the rainy season from October 2013 to March 2014,
rainfall was well below average. The Company expected the water stored in the
Cantareira System to recover in the rainy season from October 2014 to March
2015. As this did not happen, reservoir levels are below the historical
series. To face this situation and ensure that the water supply is not
interrupted, the Company has been adopting several measures since February 2014,
such as:
·
Using pumps to remove water below the
catchment level of the Cantareira System, the so-called “technical
reserve”;
·
Offering financial incentives to reduce
consumption through bonus granted to consumers, whose volume consumed is below
the average stipulated;
·
Using water from other producing systems to
serve consumers previously supplied by the Cantareira System;
·
Intensifying the advertising campaigns
towards the rational use of water;
·
Reducing pressure in the distribution
network, in order to prevent water losses;
·
Adjusting the water volume sold to
municipalities which operate their own distribution networks, due to lower
availability;
·
Anticipating investments to expand water
safety in the Metropolitan Region of São Paulo - RMSP
·
Performing short-term emergency works to
increase water availability in the reservoirs, improving and optimizing supply
systems in the RMSP, thereby lessening the impacts arising from the drought;
·
Installing ultrafiltration membranes which
enabled rapid increase in the Guarapiranga System’s water production;
and
·
Implementing the contingency tariff for
consumers whose volume consumed is above the average
stipulated.
At the end of September 2015, the year’s main work was concluded
and delivered to contribute to the water supply in the Metropolitan Region of
São Paulo. This interconnection will enable the transfer of up to 4m³/s of the
Rio Grande Reservoir (Billings) to the Alto Tietê System, bringing more water
safety so that this system expand to regions previously served only by the
Cantareira System.
The water reservation volume at the reservoirs relies on several
factors, such as levels of rain, temperature and atmospheric humidity, as well
as the type and humidity of soil in water sources regions.
This scenario of water shortage also had adverse effects for the
Company. As a result, since 2014 up to date, the Company has taken decisions to
minimize these effects, including:
·
Rearrangement of investments,
·
Expense budget reduction,
·
Negotiation of overdue receivables (until
September 30, 2015, the Company included in the State CADIN a total of 33
municipalities with unpaid water bills, including those municipalities served by
wholesale);
·
Contracting guarantee insurance for escrow
deposits; and
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·
Application of the extraordinary tariff
revision since June 2015.
The Company’s Management expects that these measures and their
impacts on operating cash generation and the lines of credit available for
investments, will be sufficient to meet its short-term liabilities and not
compromise the actions required to overcome the water shortage, thus preserving
its consumers’ supply.
The interim financial
information was approved by the Board of Directors on November 12,
2015.
2
Basis of preparation and
presentation of the financial statements
(i)
Presentation of the quarterly financial
information
The quarterly financial
information as of September 30, 2015, was prepared based on the provisions of
CPC 21 (R1) – Interim Financial Information and the international standard IAS
34 – Interim Financial Reporting, issued by the International Accounting
Standards Board (IASB), applicable to the preparation of Quarterly Information
Form– ITR and they are fairly presented consistent with the rules issued by the
Brazilian Securities and Exchange Commission (CVM). Therefore, this Interim
Financial Information takes into consideration the official letter CVM/SNC/SEP
003 of April 28, 2011, which allows the entities to present selected notes to
the financial statements, in cases of redundant information already disclosed in
the Annual Financial Statements. The interim
financial information for September 30, 2015, therefore, does not include all
the notes and reporting required by the annual financial statements, and
accordingly, shall be read jointly with the financial statements as of December
31, 2014, prepared pursuant to the International Financial Reporting Standards –
IFRS, issued by the International Accounting Standards Board – IASB and pursuant
to the accounting practices adopted in Brazil which observe the pronouncements
issued by the Brazilian Accounting Pronouncements Committee-
CPC.
3
Accounting
policies
The accounting policies used in
the preparation of the quarterly financial information for the quarter ended
September 30, 2015 are consistent with those used to prepare the Annual
Financial Statements for the year ended December 31, 2014. These policies are
disclosed in Note 3 to the Annual Financial Statements.
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4
Risk
Management
4.1 Financial Risk
Management
Financial risk
factors
The Company's activities are
affected by Brazilian economic scenario, making it exposed to market risk
(exchange rate and interest rate), credit risk and liquidity risk. The Company’s
financial risk management is focused on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the Company’s
financial performance.
The Company has not utilized
derivative instruments in any of the reported periods.
(a) Market risk
Foreign exchange risk
SABESP’s foreign exchange
exposure implies market risks associated with currency fluctuations, since the
Company has foreign currency-denominated liabilities, mainly US dollar and
yen-denominated short and long-term loans.
The management of SABESP’s
foreign currency exposure considers several current and projected economic
factors, besides market conditions.
This risk arises from the
possibility that the Company may incur in losses due to exchange rate
fluctuations that would impact liability balances of foreign
currency-denominated loans and financing raised in the market and related
financial expenses. The Company does not maintain hedge or swap contracts or any
derivative financial instrument to hedge against this risk.
A significant amount of the
Company’s financial debt is indexed to the U.S. dollar and Yen, in the total
amount of R$6,735,687 on September 30, 2015 (R$4,363,898 on December 31, 2014).
Below, the Company’s exposure to foreign exchange risk:
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Notes to the Interim
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|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing–
US$ |
1,231,031 |
4,890,763 |
1,231,188 |
3,270,282 |
Loans and financing –
Yen |
53,743,581 |
1,782,137 |
48,066,910 |
1,068,527 |
Interest and charges from
loans and financing – US$ |
|
59,293 |
|
17,703 |
Interest and charges from
loans and financing– Yen |
|
|
|
|
Total
exposure |
|
6,735,687 |
|
4,363,898 |
Financing cost |
|
|
|
|
Total loans in foreign currency (Note
15) |
|
6,716,801 |
|
4,346,292 |
The 55% increase in foreign
currency-denominated debt from December 31, 2014 to September 30, 2015 was
mainly due to the following:
1)
Exchange rate
changes, due to the 49.6% increase in the US dollar, from R$2.6562 on December
31, 2014 to R$3.9729 on September 30, 2015. The US dollar-denominated debt
accounts for 73.5% of foreign currency-denominated debts; and
2)
A 12% increase in
Yen-denominated debt and 49.2% increase in the Yen, from R$0.02223 on December
31, 2014 to R$0.03316 on September 30, 2015 .
On September 30, 2015, if the
Brazilian real had depreciated or appreciated by 10% against the US dollar and
Yen with all other variables held constant, effects on results before taxes on
the nine-month period ended September 30, 2015 would have been R$673,568
(R$436,390 on December 31, 2014), lower or higher, mainly as a result of foreign
exchange losses or gains on the translation of foreign currency-denominated
loans.
Scenario I below presents the
effect in income statements for the next 12 months, considering the projected
rates of the U.S. dollar and the Yen. Considering the other variables as
remaining constant, the impacts for the next 12 months are shown in scenarios II
and III with possible depreciations of 25% and 50%, respectively, in the
Brazilian real.
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|
|
|
|
|
(*) |
|
|
Net currency exposure on September 30, 2015 (Liabilities) in
US$ |
1,231,031 |
1,231,031 |
1,231,031 |
|
|
|
|
US$ rate on September 30, 2015 |
3.9729 |
3.9729 |
3.9729 |
Exchange rate estimated according to the
scenario |
|
|
|
Difference between the rates |
(0.0271) |
(1.0271) |
(2.0271) |
|
|
|
|
Effect on net financial result in R$ - (loss)
|
(33,361) |
(1,264,392) |
(2,495,423) |
|
|
|
|
Net currency exposure on September 30, 2015 (Liabilities) in
Yen |
53,743,581 |
53,743,581 |
53,743,581 |
|
|
|
|
Yen rate on September 30, 2015 |
0.03316 |
0.03316 |
0.03316 |
Exchange rate estimated according to the
scenario |
|
|
|
Difference between the rates |
(0.00177) |
(0.01051) |
(0.01924) |
|
|
|
|
Effect on net financial result in R$ - (loss)
|
|
|
|
|
|
|
|
Total effect on net financial result in R$- (loss)
|
(128,487) |
(1,829,237) |
(3,529,449) |
|
|
|
|
(*)The probable scenario in foreign currency (US dollar and
Yen) considered the average exchange rate for the 12-month period after
September 30, 2015, according to BACEN’s Focus Report and
BM&FBovespa. |
Interest rate risk
This risk arises from the
possibility that the Company could incur losses due to fluctuations in interest
rates, increasing the financial expenses related to loans and
financing.
The Company has not entered
into any derivative contract to hedge against this risk; however continually
monitors market interest rates, in order to evaluate the possible need to
replace its debt.
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The table below provides the
Company's loans and financing subject to variable interest
rate:
|
|
|
|
|
|
TR(i) |
1,479,549 |
1,578,250 |
CDI(ii) |
1,117,191 |
1,712,010 |
TJLP(iii) |
1,099,110 |
1,059,074 |
IPCA(iv) |
1,593,817 |
1,492,320 |
LIBOR(v) |
2,927,488 |
1,953,989 |
Interest and
charges |
|
|
Total
|
|
|
(i) TR – Interest Benchmark
Rate
(ii) CDI – (Certificado de
Depósito Interbancário), an interbank deposit certificate
(iii) TJLP – (Taxa de Juros a
Longo Prazo), a long-term interest rate index
(iv) IPCA – (Índice Nacional de
Preços ao Consumidor Amplo), a consumer price index
(v) LIBOR – London Interbank
Offered Rate
As of September 30, 2015, if
interest rates on loans and financing denominated in Brazilian reais had been 1%
higher or lower with all other variables held constant, the effects on profit
for the nine-month period ended September 30, 2015, before taxes would have been
R$83,380 (R$79,294 on December 31, 2014) lower or
higher.
Another risk to which the
Company is exposed, is the mismatch of the monetary restatement indices of its
debts with those of its service revenues. Water supply and sewage services
tariff adjustments do not necessarily follow the increases in the inflation
indexes to adjust loans, financing and interest rates affecting the Company's
indebtedness.
(b)
Credit
risk
Credit risk arises from cash
and cash equivalents, deposits in banks and financial institutions, as well as
credit exposures to wholesale basis and retail customers, including outstanding
accounts receivable, restricted cash and accounts receivable from related
parties. Credit risk exposure to customers is mitigated by sales to a dispersed
base.
The maximum exposures to credit
risk on September 30, 2015 are the carrying amounts of instruments classified as
cash equivalents, deposits in banks and financial institutions, restricted cash,
trade accounts receivable and accounts receivable from related parties. See
additional information in Notes 6, 7, 8 and 9.
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Regarding the financial assets
held with financial institutions, the credit quality that is not past due or
subject to provision for impairment can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty
default rates. The credit quality of counterparties which are banks, such as
deposits and financial investments, the Company considers the lower national
rating of the counterparty published by three main international rating agencies
(Fitch, Moody's and S&P), according to internal policy of market risk
management:
|
|
|
Cash at bank and
short-term bank deposits |
|
|
AAA(bra) |
889,320 |
1,722,347 |
Other
(*) |
|
|
|
889,933 |
1,722,991 |
(*)This category includes
current accounts and investment funds in banks, which have no credit rating
information available.
The available credit rating
information of the banks in which the Company made deposit transactions and
financial investments in domestic currency (R$ - domestic rating) during the
period is as follows:
|
|
|
|
|
|
|
|
Banco do Brasil S.A. |
AAA (bra) |
Aaa.br |
- |
Banco Santander Brasil S.A. |
AAA (bra) |
Aaa.br |
brAA+ |
Brazilian Federal Savings Bank |
AAA (bra) |
Aaa.br |
brAAA |
Banco Bradesco S.A. |
AAA (bra) |
Aaa.br |
brAA+ |
Itaú Unibanco Holding S.A. |
AAA (bra) |
Aa1.br |
brAA+ |
(c)
Liquidity risk
The Company's liquidity is
primarily reliant upon cash provided by operating activities, loans from
Brazilian Federal and State governmental financial institutions, and financing
in the domestic and international capital markets. The liquidity risk management
considers the assessment of its liquidity requirements to ensure it has
sufficient cash to meet its Capex and operating expenses needs, as well as the
payment of debts.
The funds held by the Company
are invested in interest-bearing current accounts, time deposits and securities,
selecting instruments with appropriate maturity or liquidity sufficient to
provide margin as determined by projections mentioned above.
The table below shows the
financial liabilities of the Company and São Lourenço PPP’s commitments, by
relevant maturities, including the installment of principal and future interest
to be paid according to the agreement.
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|
|
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As of September 30,
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Loans and
financing |
363,841 |
1,953,103 |
1,934,088 |
1,476,714 |
1,542,438 |
9,137,674 |
16,407,858 |
Accounts payable to
suppliers and contractors |
225,804 |
- |
- |
- |
- |
- |
225,804 |
Services
payable |
328,281 |
- |
- |
- |
- |
- |
328,281 |
Public-private partnership
– PPP (*) |
11,509 |
46,038 |
46,038 |
155,407 |
308,523 |
5,248,499 |
5,816,014 |
Program contract
commitments |
174,407 |
106,318 |
37,344 |
26,884 |
27,094 |
17,378 |
389,425 |
(*)The Company also considered
future commitments (construction not yet performed) not yet recognized in the
financial statements related to São Lourenço PPP, due to the relevance of future
cash flows, the impacts on its operations and the fact the Company already has
formalized this commitment through an agreement signed by the
parties.
Future
interest
Future interest was calculated based on the contractual clauses for
all agreements. For agreements with floating interest rate, the interest rates
used correspond to the base dates above.
Cross default
The Company has loan and
financing agreements including cross default clauses, i.e., the early maturity
of any debt may imply the early maturity of these agreements. The indicators are
continuously monitored in order to avoid the execution of this
clause.
(d)
Other price risks
The Company is exposed to the
price risk of investment in equity instruments of Companhia de Transmissão de
Energia Elétrica Paulista – CTEEP, solely held for trading purposes in the short
term.
Sensitivity analysis of equity
instruments price
The sensitivity analysis was
determined based on the exposure to the equity instruments price at the end of
the reporting period.
If the equity instrument price
were 10% lower, the profit for the quarter ended September 30, 2015 would
decrease by R$5,981, net of taxes.
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(e)
Sensitivity analysis on interest rate risk
The table below shows the
sensitivity analysis of the financial instruments, prepared in accordance with
CVM Rule 475/2008 in order to evidence the balances of main financial assets and
liabilities, calculated at a rate projected until the final settlement of each
contract, considering a probable scenario (scenario I), appreciation of 25%
(scenario II) and 50% (scenario III).
The purpose of the sensitivity
analysis is to measure the impact of changes in the market over the financial
instruments of the Company, considering constant all other variables. In the
time of settlement, the amounts can be different from those presented above, due
to the estimates used in the measurement.
September 30,
2015 |
|
|
Scenario I
(Probable)
(i) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
CDI |
830,117 |
13.5900% (*) |
16.9875% (***) |
20.3850% |
Financial income |
|
112,813 |
141,016 |
169,219 |
|
|
|
|
|
Liabilities |
|
|
|
|
CDI |
(1,117,191) |
13.5900% (*) |
16.9875% (***) |
20.3850% |
Interest to be incurred |
|
(151,826) |
(189,783) |
(227,739) |
|
|
|
|
|
CDI net exposure |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
TR |
(1,479,549) |
0.0203% (*) |
0.0254% |
0.0305% |
Expenses to be incurred |
|
(300) |
(376) |
(451) |
|
|
|
|
|
IPCA |
(1,593,817) |
5.8700% (*) |
7.3375% |
8.8050% |
Expenses to be incurred |
|
(93,557) |
(116,946) |
(140,336) |
|
|
|
|
|
TJLP |
(1,099,110) |
6.5000% (*) |
8.1250% |
9.7500% |
Interest to be incurred |
|
(71,442) |
(89,303) |
(107,163) |
|
|
|
|
|
LIBOR |
(2,927,488) |
0.4934% (**) |
0.6168% |
0.7402% |
Interest to be incurred |
|
(14,444) |
(18,057) |
(21,669) |
|
|
|
|
|
Total net expenses to be incurred |
|
|
|
|
|
|
|
|
|
(*) Source: Focus Report – BACEN, September 25,
2015 |
(**) Source: Bloomberg |
(***) Scenario with a 25% and 50% increase, as the Company’s
net exposure in CDI is
negative |
(i) Refers to the scenario of
interest to be incurred for the 12 months as of September 30, 2015 or until the
maturity of the agreements, whichever is shorter.
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4.2
Capital management
The Company’s objectives when
managing capital are ensure its ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders, and to
maintain an optimal capital structure to reduce the cost of
capital.
The Company monitors capital
based on the leverage ratio. This ratio corresponds to net debt divided by total
capital. Net debt corresponds to total loans and financing less cash and cash
equivalents. Total capital is calculated as total equity as shown in the
statement of financial position plus net debt.
|
|
|
|
|
|
Total loans and financing
(Note 15) |
12,633,562 |
10,785,767 |
(-) Cash and cash
equivalents (Note 6) |
|
|
|
|
|
Net debt |
11,743,629 |
9,062,776 |
Total equity |
|
|
|
|
|
Total
capital |
|
|
|
|
|
Leverage
ratio |
|
|
The leverage ratio increased
from 41% as of December 31, 2014 to 47% on September 30, 2015, due to the
increased balance of foreign-currency denominated loans and financing as a
result of 49.6% and 49.2% appreciations of the U.S. dollar and the Yen,
respectively, in 2015.
4.3
Fair value
estimates
It is assumed that balances
from trade accounts receivable (current) and accounts payable to suppliers by
carrying amount, less impairment, approximate their fair values, considering the
short maturity. Long-term trade accounts receivable also approximate their fair
values, as they will be adjusted by inflation and/or will bear contractual
interest rates over time.
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4.4
Financial
instruments
On December 31, 2014 the
Company neither had financial assets classified as held to maturity, available
for sale and fair value through profit or loss nor financial liabilities
classified as fair value through profit or loss. In the second quarter of 2015,
the Company received CTEEP’s shares, which were classified as financial asset
held for trading and are recognized at fair value through profit or loss. This
is the only new classification of financial instruments when compared to the
year ended December 31, 2014. The Company’s financial instruments included in
the loans and receivables category comprise cash and cash equivalents, trade
accounts receivable, balances with related parties, other accounts receivable,
balances receivable from the Water National Agency – ANA, and the financial
instruments under other liabilities category are comprised of balance payable to
contractors and suppliers, loans and financing, balances payable deriving from
the Public Private Partnership-PPP and program contract commitments, which are
non-derivative financial assets and liabilities with fixed or determinable
payments, not quoted in an active market.
The estimated fair values of
financial instruments are as follows:
Financial
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
889,933 |
889,933 |
1,722,991 |
1,722,991 |
Restricted
cash |
29,331 |
29,331 |
19,750 |
19,750 |
Trade accounts
receivable |
1,401,293 |
1,401,293 |
1,224,278 |
1,224,278 |
Water National Agency –
ANA |
88,267 |
88,267 |
122,634 |
122,634 |
Financial asset held for
trading |
90,617 |
90,617 |
- |
- |
Other accounts receivable
|
189,379 |
189,379 |
187,950 |
187,950 |
Additionally, SABESP has
financial instrument assets receivable from related parties, in the amount of
R$815,852 as of September 30, 2015 (R$223,983 as of December 31, 2014), which
were calculated in accordance with the conditions negotiated between related
parties. The conditions and additional information referring to these financial
instruments are disclosed in Note 9 to this interim financial information and in
Note 10 to the annual financial statements as of December 31, 2014. Part of this
balance, totaling R$735,908 (R$155,493 on December 31, 2014), refers to
reimbursement from additional retirement and pension plan - G0 and is indexed by
IPCA plus simple interest of 0.5% p.m. This interest rate approximates that one
practiced by federal government bonds (NTN-b) with terms similar to those of
related-party transactions.
For financial assets held for
trading, which balance of which is measured at fair value at the end of each
reporting period and recorded in the financial statements, SABESP measured such
fair value at level 1 inputs, as required by the international financial
reporting standards and the accounting practices adopted in Brazil, considering
share price through quotation at the São Paulo Stock Exchange (Bovespa) on
September 30, 2015.
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Notes to the Interim
Financial Information
|
Version:
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Financial
liabilities
|
|
|
|
|
|
|
|
Loans and
financing |
12,633,562 |
12,032,668 |
10,785,767 |
10,641,611 |
Accounts payable to
suppliers and contractors |
225,804 |
225,804 |
323,513 |
323,513 |
Services
payable |
328,281 |
328,281 |
318,973 |
318,973 |
Program contract
commitments |
355,450 |
355,450 |
207,759 |
207,759 |
Public-Private-Partnership
- PPP |
871,659 |
871,659 |
368,283 |
368,283 |
The criteria adopted to obtain
the fair values of loans and financing, in preparing the interim financial
information as of September 30, 2015, are consistent with those adopted in the
Annual Financial Statements for the fiscal year ended December 31, 2014. In the
Annual Financial Statements, these criteria are disclosed in Note
5.4.
Considering the nature of other
financial instruments, assets and liabilities of the Company, the balances
recognized in the statement of financial position approximate the fair values,
taking into account the maturities close to the end of the reporting period,
comparison of contractual interest rates with market rates in similar operations
at the end of the reporting period, their nature and maturity
terms.
5
Critical accounting estimates
and judgments
Estimates and judgments are
continually evaluated and are based on historical experience and on other
factors, including expectations of future events that are believed to be
reasonable under the circumstances.
The main accounting estimates and judgments are disclosed in Note 6
to the Annual Financial Statements as of December 31, 2014
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Notes to the Interim
Financial Information
|
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6
Cash and cash
equivalents
|
|
|
|
|
|
Cash and
banks |
59,816 |
118,226 |
Cash
equivalents |
|
|
|
|
|
Cash and cash equivalents
include cash, bank deposits and high-liquidity short-term financial investments,
mainly represented by repurchase agreements (accruing CDI interest rates),
deposited at Banco do Brasil, whose original maturities are lower than three
months, which are convertible into a cash amount and subject to an insignificant
risk of change in value.
On September 30, 2015, the
average yield of financial investments corresponds to 99.25% of CDI (99.68% on
December 31, 2014).
7
Restricted cash
|
|
|
|
|
|
Agreement with the
municipal government of São Paulo (i) |
9,430 |
9,176 |
Funds raised with BNDES
(ii) |
6,927 |
6,433 |
Funds raised with JICA
(iii) |
4,454 |
371 |
Brazilian Federal Savings
Bank – escrow deposit (iv) |
5,155 |
2,236 |
Others |
|
|
|
|
|
(i) Agreement with the municipal
government of São Paulo where the Company transfers 7.5% of the Municipal
revenue to the Municipal Fund;
(ii) Refers to funds
raised with the Brazilian Development Bank– BNDES, awaiting the authorization
for use.
(iii) Refers to funds raised with the
Japan International Cooperation Agency – JICA, awaiting
release.
(iv) Refers to savings
account for receiving escrow deposits regarding lawsuits with final and
unappealable decisions in favor of the Company, which are blocked as per
contractual clause.
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Notes to the Interim Financial Information
|
Version: 1 |
8 Trade accounts receivable
(a) Financial position balances
|
|
|
Private sector: |
|
|
General and special customers (i) (ii) |
990,203 |
852,815 |
Agreements (iii) |
|
|
|
|
|
|
|
|
Government entities: |
|
|
Municipal |
514,715 |
533,984 |
Federal |
6,498 |
4,671 |
Agreements (iii) |
|
|
|
|
|
|
|
|
Wholesale customers – Municipal governments: (iv) |
|
|
Guarulhos |
852,767 |
776,674 |
Mauá |
403,853 |
366,515 |
Mogi das Cruzes |
2,384 |
2,092 |
Santo André |
840,801 |
787,305 |
São Caetano do Sul |
2,240 |
1,779 |
Diadema (*) |
|
|
|
|
|
Wholesale customers – Municipal governments |
|
|
|
|
|
Unbilled supply |
|
|
|
|
|
Subtotal |
4,752,795 |
4,388,566 |
Allowance for doubtful accounts |
|
|
|
|
|
Total |
|
|
|
|
|
Current |
1,236,982 |
1,034,820 |
Noncurrent |
|
|
|
|
|
|
|
|
(*) On March 18, 2014, the State of São Paulo, the municipality of Diadema and SABESP entered into a “Water Supply and Sewage Public Utility Services Agreement” in the municipality of Diadema. Through this contract, the State of São Paulo and the municipality of Diadema have ensured to SABESP (or subsidiary) exclusive rights to render services for a 30-year term.
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On this same date, judicial
settlements were signed in lawsuits filed by SABESP against the municipality of
Diadema and Saned – a municipal company. Through these settlements, SABESP, the
municipality of Diadema and Saned agree to suspend the execution of suits to
collect receivables related to water supply at wholesale and collection of
indemnity debt. The debts will progressively decrease throughout a 30-year
period, under the condition that there is a full compliance with the agreements
and provision of services contract.
This balance is fully accrued
as losses.
From January to September 2015,
there were no relevant changes in relation to the operations presented in the
financial statements as of December 31, 2014.
(i) General customers - residential
and small and mid-sized companies
(ii) Special customers - large
consumers, commercial, industries, condominiums and special billing consumers
(industrial waste, wells, etc.).
(iii) Agreements -
installment payments of past-due receivables, plus monetary restatement and
interest.
(iv) Wholesale basis customers
- municipal governments - This balance refers to the sale of treated water to
municipalities, which are responsible for distributing to, billing and charging
final customers. Some of these municipalities are questioning in court the
tariffs charged by SABESP, which have full allowance for doubtful accounts.
Additionally, the overdue amounts are included in the allowance for doubtful
accounts.
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Notes to the Interim Financial Information
|
Version: 1 |
Below, the breakdown of trade accounts receivable at wholesale:
|
Nine-month period ended September 30, 2015 |
Twelve-month period ended December 31 , 2014 |
|
|
|
Balance at the beginning of the period |
2,158,798 |
1,917,859 |
Services provided |
253,281 |
375,294 |
Receipts |
|
|
|
|
|
Balance at the end of the period |
|
|
(b) The aging of trade accounts receivable is as follows
|
|
|
|
|
|
Current |
1,111,580 |
992,800 |
Past-due: |
|
|
Up to 30 days |
200,703 |
136,666 |
From 31 to 60 days |
90,176 |
93,534 |
From 61 to 90 days |
67,415 |
62,276 |
From 91 to 120 days |
64,121 |
54,725 |
From 121 to 180 days |
99,561 |
96,079 |
From 181 to 360 days |
186,348 |
202,024 |
Over 360 days |
|
|
|
|
|
Total past-due |
|
|
|
|
|
Total |
|
|
The increase in the balance overdue is mainly due to accounts receivable at wholesale, where municipalities are challenging in court the tariffs charged by SABESP. These amounts are fully covered by the allowance for doubtful accounts.
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Notes to the Interim Financial Information
|
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(c) Allowance for doubtful accounts
|
|
|
|
|
|
Balance at the beginning of the period |
3,164,288 |
2,856,684 |
Private sector/government entities |
54,741 |
53,004 |
Recoveries |
(57,138) |
(111,011) |
Wholesale customers |
|
|
|
|
|
Additions for the period |
|
|
|
|
|
Balance at the end of the period |
|
|
Reconciliation of provision for losses
of income |
|
January to September 2015 |
|
January to September 2014 |
|
|
|
|
|
Losses (write-off) |
(8,130) |
22,017 |
22,521 |
42,604 |
Provision for state entities (related parties) |
(956) |
1,443 |
- |
795 |
Provision for private sector/government entities |
1,098 |
54,741 |
18,075 |
53,004 |
Provision for wholesale supply |
8,934 |
(11,674) |
26,700 |
69,296 |
Recoveries |
|
|
|
|
|
|
|
|
|
Amount recorded as selling expenses |
(38,131) |
9,389 |
(21,640) |
54,688 |
Wholesale sales losses were recorded as revenue reduction, R$63,635 in the third quarter and R$201,285 from January to September of 2015 (R$49,523 in the third quarter of 2014 and R$175,048 from January to September of 2014).
The Company does not have customers accounting for 10% or more of its revenues.
(d) Agreement with the municipality of Santos
On September 29, 2015, the State of São Paulo, the municipality of Santos and SABESP entered into a “Water Supply and Sewage Public Utility Services Agreement” in the municipality of Santos. Under this contract, the State of São Paulo and the municipality of Santos, granted SABESP exclusive rights to render services for a 30-year term.
On this same date, judicial settlements were signed in lawsuits filed by SABESP against the municipality of Santos, as well as an out-of-court settlement, both aimed to pay up debts owed by the municipality which were overdue up to August 31, 2015. As a result, an allowance for losses amounting to R$70,462 was reversed, an inflation adjustment totaling R$21,838 was recognized, and R$2,905 was recorded under accounts receivable without recording an allowance for losses. With the execution of the agreement, the Company settled accounts receivable and the contra-entry was intangible assets in the amount of R$95,205.
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The Company will transfer
amounts to the Municipality to be invested in related services and environmental
sanitation in the municipality. The Company will transfer R$130,000, in five
installments, the first totaling R$25 million, 30 days after the execution of
the agreement, and the remaining four installments, of R$26,250 each, adjusted
by the IPCA, will be paid annually as of July 5, 2016. Additionally, every
quarter, the Company will transfer 0.53% of the revenue obtained from the
services rendered in the Municipality, less PIS-PASEP and COFINS taxes.
Semi-annually, the Municipality must provide a report describing the initiatives
carried out and the actual amounts of the transfers made.
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Notes to the Interim
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9
Related
Party Balances and Transactions
The Company is a party to
transactions with its controlling shareholder, the State Government, and
companies related to it.
(a)
Accounts receivable,
interest on shareholders' equity payable, revenue and expenses with the São
Paulo State Government
|
|
|
Accounts
receivable |
|
|
Current: |
|
|
Water and sewage services
|
107,847 |
96,162 |
Allowance for losses
|
(47,209) |
(45,333) |
Reimbursement for pension
benefits (G0): |
|
|
- Monthly flow
|
13,849 |
9,753 |
- GESP Agreement – 2008
|
43,722 |
43,722 |
“Se Liga na Rede” (Connect
to the Network Program) (m) |
|
|
|
|
|
Total
current |
|
|
|
|
|
Noncurrent: |
|
|
Reimbursement for pension
benefits (G0): |
|
|
- GESP Agreement – 2008
|
69,227 |
102,018 |
- GESP Agreement – 2015
(b) |
|
|
|
|
|
Total
noncurrent |
|
|
|
|
|
Total receivables from
shareholder |
|
|
|
|
|
Assets: |
|
|
Water and sewage
services |
60,638 |
50,829 |
Reimbursement for pension
benefits (G0): |
735,908 |
155,493 |
“Se Liga na Rede” (Connect
to the Network Program) (m) |
|
|
|
|
|
Total |
815,852 |
223,983 |
|
|
|
Liabilities: |
|
|
Interest on shareholders’
equity payable to related parties |
- |
107,784 |
Other (h) |
1,544 |
1,569 |
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|
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|
|
January to September 2015 |
|
January to September 2014 |
Revenue from water and
sewage services |
|
|
|
|
Water supply
|
51,574 |
141,034 |
51,754 |
168,455 |
Sewage
services |
42,377 |
117,428 |
46,210 |
149,479 |
Payments received from
related parties |
(85,468) |
(245,970) |
(101,132) |
(323,312) |
|
|
|
|
|
Receipt of GESP
reimbursement referring to Law 4,819/58 |
(31,257) |
(87,973) |
(29,694) |
(89,031) |
(b)
Agreement with the
State Government of São Paulo “GESP”
The first 24 installments of
the agreement signed on March 18, 2015 were settled by transferring 2,221,000
preferred shares issued by Companhia de Transmissão de Energia Elétrica Paulista
- CTEEP, totaling R$87,174, based on the share closing price on March 17, 2015.
On May 12, 2015, the transfer
of shares issued by CTEEP to SABESP was concluded in order to settle the first
24 installments of the agreement signed with the State government on March 18,
2015. On September 30, CTEEP’s shares were recorded under “Financial asset held
for trading”, for R$90,617, due to a reduction in its fair value, from
thirty-nine reais and twenty-five centavos(R$39.25) on March 18, 2015 to forty
reais and eighty centavos(R$40.80) on September 30, 2015. The effect of this
appreciation was recorded under financial revenues and totaled
R$3,443.
On June 8, 2015, SABESP
received dividends referring to the 2,221,000 shares, corresponding to
R$0.686875 per share, totaling R$1,526.
See additional information in
Note 9 (b) to the interim financial information for the first quarter of
2015.
(c)
Contingent assets -
GESP (not recorded)
SABESP had contingent assets
with GESP, not recorded in assets referring to the additional retirement and
pension paid (Law 4,819/58), as follows:
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|
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|
September 30
2015 |
|
December 31
2014 |
Disputed amounts receivable |
832,889 |
|
783,422 |
Undisputed amount referring to the transfer of two reservoirs
at Alto Tietê System to SABESP (Note 9 (b)) |
- |
|
696,283 |
Total |
832,889 |
|
1,479,705 |
(d)
Use of reservoirs –
EMAE
Empresa Metropolitana de Águas
e Energia S.A. - EMAE plans to receive for the credit and to obtain financial
compensation for the use of water from the Guarapiranga and Billings reservoirs,
which SABESP uses in its operations, as well as the reimbursement of damages
related to the failure to pay appropriately.
The Company understands that no
amounts are due for the use of these reservoirs given the grants already made.
Should these reservoirs not be available for use to the Company, there could be
the need to collect water in more distant places. There is a risk of not
properly rendering services in the region, besides increasing water supply cost.
Several lawsuits were filed by
EMAE. Currently, an arbitration proceeding is in progress related to the
Guarapiranga reservoir and a lawsuit related to Billings reservoir, both
pleading for financial compensation due to SABESP’s water collect for public
supply, alleging that this conduct has been causing permanent and growing loss
in the capacity of generating electricity of Henry Borden hydroelectric power
plant with financial losses.
SABESP understands that the
expectation for all cases is of possible losses, and for the time being, it is
not feasible to estimate the amounts involved, since they were not
determined.
On April 10, 2014, we issued a
Notice to the Market including the information about any future agreement.
However, no adjustment was confirmed and no agreement was executed by either
party up to date.
(e)
Agreements with
reduced tariffs with State and Municipal Government Entities that joined the
Water Rational Use Program (PURA)
The Company has signed
agreements with government entities related to the State Government and
municipalities where it operates that benefit from a reduction of 25% in the
tariff of water supply and sewage services when they are not in default. These
agreements provide for the implementation of the rational water use program,
which takes into consideration the reduction in the water
consumption.
(f)
Guarantees
The State Government provides
guarantees for some loans and financing of the Company and does not charge any
fee with respect to such guarantees.
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(g)
Personnel assignment agreement among entities related to the State
Government
The Company has personnel
assignment agreements with entities related to the State Government, whose
expenses are fully passed on and monetarily reimbursed. From July to September
2015 and 2014, the expenses related to personnel assigned by SABESP to other
state government entities amounted to R$2,439 and R$2,321, respectively. From
January to September 2015 and 2014, said expenses totaled R$7,870 and R$7,387,
respectively.
From July to September 2015 and
2014, expenses related to personnel assigned by other entities to SABESP totaled
R$91 and R$87, respectively, while from January to September 2015 and 2014
totaled R$322 and R$296, respectively.
(h)
Services obtained
from state government entities
On September 30, 2015 and
December 31, 2014, SABESP had an outstanding amounts payable of R$1,544 and
R$1,569, respectively, for services rendered by São Paulo State Government
entities.
(i)
Non-operating
assets
As of September 30, 2015 and
December 31, 2014, the Company had an amount of R$969 related to a free land
lent to DAEE (Water and Electricity Department).
(j)
Sabesprev
The Company sponsors a private
defined benefit pension plan, which is operated and administered by Sabesprev.
The net actuarial liability recognized until September 30, 2015 amounted to
R$718,712 (R$676,071 on December 31, 2014), according to Note 19
(b).
(k)
Compensation of
Management Key Personnel
Expenses related to the
compensation to the members of its Board of Directors, Fiscal Council and
Officers amounted to R$1,011 from July to September 2015 (R$911 from July to
September 2014). From January to September 2015, these expenses totaled R$2,944
(R$2,664 from January to September 2014). An additional amount of R$124, related
to the Officers’ bonus program, was recorded from July to September 2015 (R$120
from July to September 2014). From January to September 2015, this bonus totaled
R$397 (R$373 from January to September 2014).
(l)
Loan agreement
through credit facility
The Company holds interest in
certain Special Purpose Entities (SPEs), not holding the majority interest but
with cast vote and power of veto in some issues, with no ability to use such
power of veto in a way to affect returns over investments. Therefore, these SPEs
are considered for accounting purposes as jointly-owned
subsidiaries.
The Company entered into a loan
agreement through credit facility with the SPEs Aquapolo Ambiental S/A and
Attend Ambiental S/A to finance
the operations of these companies, until the loans and financing requested with
financial institutions is cleared.
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|
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The agreements executed with
Aquapolo Ambiental S/A, on March 30, 2012 and Attend Ambiental S/A, on May 9,
2014, have the following characteristics:
|
Principal
disbursed amount |
|
|
|
|
Attend Ambiental |
5,400 |
1,508 |
6,908 |
SELIC + 3.5 % p.a. |
(*) |
Aquapolo Ambiental |
5,629 |
4,331 |
9,960 |
CDI + 1.2% p.a. |
4/30/2016 |
Aquapolo Ambiental |
|
|
|
CDI + 1.2% p.a. |
10/30/2015 |
Total |
30,029 |
13,413 |
43,442 |
|
|
(*)
The loan agreement with SPE
Attend Ambiental S/A matures within 180 days, from the date when the respective
amount is available in the borrower’s account, renewable for the same period. A
portion of the loan has been overdue since May 11, 2015 and is subject to
contractual charges (inflation adjustment considering the IGP-M variation, 2%
fine and default interest of 1% p.m.). The agreement is being renegotiated
between the parties.
The amount disbursed is
recognized in Current Assets under “Other Receivables” and amounts to R$30,029
for principal andR$13,413 for interest. As of September 30, 2015, the balance of
principal and interest rates of these agreements is R$43,442 (R$40,366 on
December 31, 2014). In the period between January and September 2015, financial
income recognized was R$8,076 (R$3,711 from January to September
2014).
(m)
Se Liga na Rede
(Connect to the Network Program)
The State Government enacted
the State Law 14,687/12, creating the pro-connection program, destined to
financially subsidize the execution of household branches necessary to connect
to the sewage collecting networks, in low-income households, which agreed to
adhere to the program. The program expenditures, except for indirect costs,
construction margin and borrowing costs are financed with 80% of funds deriving
from the State Government and the remaining 20% invested by SABESP, which is
also liable for the execution of works. On September 30, 2015, the program total
amount was R$78,597 (R$67,576 on December 31, 2014), R$19,306 (R$17,661 on
December 31, 2014) recorded in balances receivable from related parties, the
amount of R$34,238 (R$24,862 on December 31, 2014) recorded in the group of
intangible assets and R$25,053 (R$25,053 on December 31, 2014) reimbursed by
GESP.
10
Water National Agency –
ANA
Refers to agreements executed
within the scope of the Hydrographic Basin Depollution Program (PRODES), also
known as "Treated Sewage Purchase Program".
This program does not finance
works or equipment, remunerates by results achieved, i.e., by effectively
treated sewage. In this program, the Water National Agency (ANA) makes available
funds, which are restricted to a specific current account and applied in
investment funds at the Caixa Econômica Federal - Federal Savings Banks (CEF),
until the fulfillment of treated sewage volume is evidenced, as well as, the
reduction of polluting cargoes of each agreement.
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When resources are made
available, liabilities are recorded until funds are released by ANA. After the
evidence of targets stipulated in each contract, the revenue deriving from these
funds is recognized, but if these targets are not met, funds will return to the
National Treasury with the appropriate funds earnings. On September 30, 2015,
the balances of assets and liabilities were R$88,267 (R$122,634 on December 31,
2014), and the liabilities are recorded under "Other liabilities" of noncurrent
liabilities
11
Investment properties
The Company holds interest in
certain Special Purpose Entities (SPE). Although SABESP has no majority shares
of its investees, the shareholders’ agreement provides for the power of veto in
certain management issues, with no ability to use such power of veto in a way to
affect returns over investments, indicating participating shared control (joint
venture – CPC 19 (R2)).
The Company measures
investments by the equity method.
See information on
the operations of each investee in Note 12 to the Annual Financial Statements as
of December 31, 2014.
(a)
Summary of the
investees’ financial statements and SABESP’s interest:
Company |
|
|
Profit (loss) for the
period |
|
|
|
|
|
|
|
|
|
|
|
|
Sesamm |
31,052 |
26,788 |
(92) |
4,356 |
2,638 |
Águas de Andradina |
6,342 |
4,582 |
(228) |
1,988 |
13 |
Águas de Castilho |
3,170 |
2,866 |
(190) |
494 |
440 |
Saneaqua Mairinque |
3,040 |
2,697 |
(282) |
625 |
(139) |
Attend Ambiental |
2,379 |
(111) |
- |
2,490 |
(2,745) |
Aquapolo Ambiental |
8,215 |
16,220 |
- |
(8,005) |
(2,640) |
Paulista Geradora de Energia |
|
|
|
|
|
Total |
62,722 |
53,042 |
(792) |
1,849 |
(2,433) |
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Notes to the Interim
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|
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Company |
|
|
Equity in the earnings of
subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sesamm |
11,179 |
9,644 |
(33) |
1,568 |
949 |
36% |
36% |
Águas de Andradina |
1,902 |
1,375 |
(69) |
596 |
4 |
30% |
30% |
Águas de Castilho |
951 |
860 |
(57) |
148 |
132 |
30% |
30% |
Saneaqua Mairinque |
912 |
809 |
(85) |
188 |
(42) |
30% |
30% |
Attend Ambiental |
1,071 |
- |
- |
1,071 |
(1,235) |
45% |
45% |
Aquapolo Ambiental |
4,026 |
7,948 |
- |
(3,922) |
(1,294) |
49% |
49% |
Paulista Geradora de Energia |
|
|
|
|
|
25% |
- |
Total |
22,172 |
20,636 |
(244) |
(376) |
(1,486) |
|
|
Other investments |
|
|
|
|
|
|
|
Overall total |
|
|
|
|
|
|
|
12
Investment
properties
On September 30, 2015, the
balance of “Investment properties” is R$59,240 (R$54,039 on December 31, 2014).
On September 30, 2015 and December 31, 2014, the market value of these
properties is approximately R$404,000 and R$350,000,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
Investment
properties |
|
|
|
|
|
Total |
|
|
|
|
|
Page 48 of 86
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Notes to the Interim
Financial Information
|
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13
Intangible
assets
(a) Balance sheet
balances
|
|
|
|
|
|
|
|
|
|
Intangible right arising
from: |
|
|
|
|
|
|
Agreements – equity
value |
8,523,330 |
(1,508,410) |
7,014,920 |
8,983,492 |
(1,614,221) |
7,369,271 |
Concession agreements –
economic value |
1,786,676 |
(448,819) |
1,337,857 |
1,679,042 |
(397,782) |
1,281,260 |
Program contracts
|
8,670,827 |
(2,342,177) |
6,328,650 |
7,338,985 |
(1,959,832) |
5,379,153 |
Program contracts–
commitments |
1,079,010 |
(127,349) |
951,661 |
808,662 |
(105,753) |
702,909 |
Services contracts– São
Paulo |
14,371,644 |
(2,290,869) |
12,080,775 |
12,916,939 |
(1,930,553) |
10,986,386 |
Software
licenses |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
(b)
Changes
|
|
|
|
|
|
|
|
|
Intangible right arising
from: |
|
|
|
|
|
|
|
|
Concession Agreements –
equity value |
7,369,271 |
224,099 |
(463,362) |
2,197 |
(325) |
(785) |
(116,175) |
7,014,920 |
Concession agreements –
economic value |
1,281,260 |
108,144 |
- |
- |
(17) |
(133) |
(51,397) |
1,337,857 |
Program contracts
|
5,379,153 |
666,251 |
463,362 |
- |
(752) |
(5,108) |
(174,256) |
6,328,650 |
Program contracts–
commitments |
702,909 |
270,349 |
- |
- |
- |
- |
(21,597) |
951,661 |
Services contracts– São
Paulo |
10,986,386 |
1,486,149 |
- |
8,145 |
(4,920) |
(8,355) |
(386,630) |
12,080,775 |
Software licenses
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
In the first half of 2015, the
Company formalized program agreements with the municipalities of Barueri and
Mairiporã. In the third quarter of 2015, the Company formalized an agreement
with the municipality of Santos (see Note 8 (d)) and signed a program agreement
with the municipality of Santa Isabel. The duration of all agreements is 30
years.
Page 49 of 86
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(c)
Construction services
|
|
January to September 2015 |
|
|
|
|
|
|
|
Construction
revenue |
732,144 |
283,094 |
1,015,238 |
1,588,137 |
920,327 |
2,508,464 |
Construction costs
incurred |
|
|
|
|
|
|
Margin |
15,951 |
6,303 |
22,254 |
33,571 |
20,310 |
53,881 |
|
|
January to September 2014 |
|
|
|
|
|
|
|
Construction
revenue |
374,240 |
425,491 |
799,731 |
873,204 |
1,136,503 |
2,009,707 |
Construction costs
incurred |
|
|
|
|
|
|
Margin |
8,023 |
9,465 |
17,488 |
17,801 |
24,974 |
42,775 |
(d)
General information
During the period ended
September 30, 2015 there were no relevant changes in the criteria to account for
intangible assets and types of contracts. See further information in Note 14 (d)
to the Annual Financial Statements as of December 31, 2014.
The Company has obligations
recorded in “Program Contract– Commitments” in current liabilities in the amount
of R$256,944 and R$189,551 on September 30, 2015 and December 31, 2014,
respectively, and noncurrent liabilities in the amount of R$98,506 and R$18,208
on September 30, 2015 and December 31, 2014, respectively. The increase in
balance results from the signature of new program contracts.
(e)
Capitalization of interest and other financial
charges
From January to September 2015,
the Company capitalized interest and inflation adjustment, including related
foreign currency exchange effects, in concession intangible assets totaling
R$247,075 (R$176,724 from January to September 2014), during the period in which
assets were recorded as works in progress.
(f)
Construction margin
The Company acts as a primary
responsible to construct and install the infrastructure related to the
concession, using own efforts or hiring outsourcing services, receiving the
risks and benefits.
As a consequence, the Company
recognizes revenue from construction service corresponding to the cost of
construction increased by margin. Generally, the constructions related to the
concessions are performed by third parties, in such case, the margin of the
Company is lower, normally, to cover eventual administration costs, and the responsibility
of the primary risk. On September 30, 2015 and 2014 the margin was
2.3%.
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The construction margin for the
third quarter of 2015 and 2014 was R$22,254 and R$17,488, respectively, and from
January to September
of 2015 and 2014 was R$53,881 and R$42,775, respectively.
(g)
Expropriations
As a result of the construction
of priority projects related to water and sewage systems, the Company was
required to expropriate third-parties' properties, and the owners of these
properties will be compensated either amicably or through
courts.
The assets received as a result
of expropriations are recorded as concession intangible assets. From July to
September 2015, the total amount related to expropriations was R$4,809 (R$2,685
from July to September 2014), and from January to September 2015 totaled
R$43,650 (R$10,211 from January to September 2014).
(h)
Public-Private Partnership – PPP
SABESP carries out operations
related to the PPPs mentioned below. These operations and their respective
obligations and guarantees are supported by agreements executed according to Law
11,079/04.
Alto Tietê Production System
As of September 30, 2015 and
December 31, 2014, the amounts recognized as intangible asset related to PPP
were R$396,068 and R$404,447, respectively.
The obligations assumed by the
Company on September 30, 2015 and December 31, 2014 are shown in the table
below.
São Lourenço Production
System
As of September 30, 2015 and
December 31, 2014, the amounts recognized as intangible asset related to PPP
were R$555,273 and R$22,756, respectively.
The obligations assumed by the
Company on September 30, 2015 and December 31, 2014 are shown in the table
below, and the increase in liabilities and intangible assets was due to the
progress of the works in 2015.
Payment is scheduled to start
in August 2018, four (4) months after the beginning of assisted
operations.
The following table shows the
liabilities balances related to these intangible assets:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alto
Tietê |
39,456 |
289,414 |
328,870 |
38,047 |
307,991 |
346,038 |
São
Lourenço |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
39,456 |
832,203 |
871,659 |
38,047 |
330,236 |
368,283 |
See additional information in
Note 14 (h) to the Financial Statements for the fiscal year ended December 31,
2014.
(i)
Works in progress
The
amount of R$6,590 million is recorded as intangible assets from works in
progress on September 30, 2015 (R$5,180 million on December 31, 2014), and on
September 30, 2015, most of works are located in the municipalities of São
Paulo, Praia Grande and Franca, totaling R$3,409 million
(including R$555 million from São Lourenço
PPP), R$248 million and R$184 million, respectively.
(j)
Amortization of intangible assets
The
amortization average rate totaled 3.9% on September 30, 2015 and
2014.
(k)
Software license of use
The
software license of use is capitalized based on the costs incurred to acquire
software and make them ready for use. In the first quarter of 2013, the Company
started to implement an integrated business management solution (ERP system),
which includes the administrative/financial module and the commercial module.
The project is in progress.
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|
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14
Property, Plant and Equipment
(a) Balance
sheet balances
|
|
|
|
|
|
|
|
|
|
Land |
101,565 |
- |
101,565 |
100,533 |
- |
100,533 |
Buildings |
79,256 |
(33,028) |
46,228 |
74,235 |
(31,720) |
42,515 |
Equipment |
300,524 |
(163,931) |
136,593 |
299,921 |
(152,999) |
146,922 |
Transportation equipment |
12,875 |
(6,509) |
6,366 |
14,051 |
(6,438) |
7,613 |
Furniture and fixtures |
18,646 |
(10,023) |
8,623 |
16,556 |
(9,432) |
7,124 |
Others |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
(b)
Changes
|
|
|
|
|
|
|
Land |
100,533 |
1,032 |
- |
- |
- |
101,565 |
Buildings |
42,515 |
1,382 |
3,364 |
- |
(1,033) |
46,228 |
Equipment |
146,922 |
18,806 |
(7,600) |
(217) |
(21,318) |
136,593 |
Transportation equipment |
7,613 |
136 |
(627) |
- |
(756) |
6,366 |
Furniture and fixtures |
7,124 |
546 |
1,675 |
(14) |
(708) |
8,623 |
Others |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
(c)
Depreciation
The Company annually revises
the depreciation rates of: buildings - 2%; equipment- 10%; transportation
equipment - 10% and furniture, fixture and equipment - 6.7%. Lands are not
depreciated.
The depreciation average rate
was 10.3% and 11.5%, on September 30, 2015 and 2014,
respectively
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|
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15
Loans and Financing
Loans and financing outstanding balance |
|
|
Financial institution |
|
|
|
|
|
|
Domestic currency |
|
|
|
|
|
|
10th issuance debentures |
39,133 |
174,886 |
214,019 |
38,027 |
187,352 |
225,379 |
12th issuance debentures |
45,450 |
397,039 |
442,489 |
45,450 |
431,174 |
476,624 |
14th issuance debentures |
38,069 |
214,341 |
252,410 |
37,038 |
239,192 |
276,230 |
15th issuance debentures |
94,819 |
711,131 |
805,950 |
94,819 |
761,497 |
856,316 |
16th issuance debentures |
- |
- |
- |
498,731 |
- |
498,731 |
17th issuance debentures |
140,144 |
977,671 |
1,117,815 |
- |
1,067,760 |
1,067,760 |
18th issuance debentures |
- |
247,783 |
247,783 |
- |
202,145 |
202,145 |
19th issuance debentures |
- |
498,383 |
498,383 |
- |
497,793 |
497,793 |
Brazilian Federal Savings Bank |
46,593 |
987,710 |
1,034,303 |
67,085 |
1,031,438 |
1,098,523 |
Brazilian Development Bank - BNDES BAIXADA
SANTISTA |
16,329 |
53,069 |
69,398 |
16,309 |
65,237 |
81,546 |
Brazilian Development Bank - BNDES PAC |
10,301 |
69,367 |
79,668 |
10,287 |
76,975 |
87,262 |
Brazilian Development Bank - BNDES PAC II 9751 |
4,254 |
32,188 |
36,442 |
4,068 |
35,318 |
39,386 |
Brazilian Development Bank - BNDES PAC II 9752 |
2,303 |
24,179 |
26,482 |
1,725 |
25,875 |
27,600 |
Brazilian Development Bank - BNDES ONDA LIMPA |
20,808 |
176,572 |
197,380 |
20,183 |
186,374 |
206,557 |
Brazilian Development Bank - BNDES TIETE III |
10,748 |
246,983 |
257,731 |
- |
187,420 |
187,420 |
Leasing |
9,957 |
512,362 |
522,319 |
8,997 |
473,593 |
482,590 |
Others |
627 |
1,432 |
2,059 |
716 |
1,886 |
2,602 |
Interest and charges |
|
|
|
|
|
|
Total in domestic currency |
|
|
|
|
|
|
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Loans and financing outstanding balance |
|
|
Financial institution |
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
Inter-American Development Bank - IDB 713 – US$50,195
thousand(US$75,293 thousand in December 2014) |
99,709 |
99,710 |
199,419 |
66,664 |
133,329 |
199,993 |
Inter-American Development Bank - IDB 896 – US$4,167
thousand(US$5,555 thousand in December 2014) |
11,036 |
5,518 |
16,554 |
7,377 |
7,378 |
14,755 |
Inter-American Development Bank - IDB 1212 – US$102,781
thousand(US$113,059 thousand in December 2014) |
40,834 |
367,505 |
408,339 |
27,301 |
273,007 |
300,308 |
Inter-American Development Bank - IDB 2202 – US$395,714
thousand(US$347,190 thousand in December 2014) |
- |
1,562,468 |
1,562,468 |
- |
914,189 |
914,189 |
International Bank for Reconstruction and Development -IBRD –
US$57,886 thousand (US$45,860 thousand in December 2014) |
- |
229,621 |
229,621 |
- |
121,447 |
121,447 |
Eurobonds – US$140,000 thousand (US$140,000 thousand in
December 2014) |
- |
556,076 |
556,076 |
- |
371,655 |
371,655 |
Eurobonds – US$350,000 thousand (US$350,000 thousand in
December 2014) |
- |
1,386,200 |
1,386,200 |
- |
924,741 |
924,741 |
JICA 15 – ¥ 16,134,020 thousand (¥ 17,286,450 thousand in
December 2014) |
38,215 |
496,790 |
535,005 |
25,619 |
358,659 |
384,278 |
JICA 18 – ¥ 14,506,240 thousand (¥ 15,542,400 thousand in
December 2014) |
34,359 |
446,376 |
480,735 |
23,034 |
322,166 |
345,200 |
JICA 17 – ¥ 1,563,210 thousand (¥ 1,029,992 thousand in
December 2014) |
- |
51,330 |
51,330 |
- |
22,437 |
22,437 |
JICA 19 – ¥ 21,540,111 thousand (¥ 14,208,068 thousand in
December 2014) |
- |
712,460 |
712,460 |
- |
314,526 |
314,526 |
BID 1983AB – US$130,288 thousand (US$154,231 thousand in
December 2014) |
95,120 |
420,686 |
515,806 |
63,596 |
344,078 |
407,674 |
Interest and charges |
|
|
|
|
|
|
Total in foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and financing |
|
|
|
|
|
|
Current exchange
rates on
September 30, 2015 were US$3.9729; ¥ 0.03316 (US$2.6562; ¥ 0.02223 on
December 31, 2014).
On September 30, 2015, the
Company did not have balances of loans and financing raised in 2014 to
mature within 12 months. |
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|
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|
|
|
|
|
|
|
|
|
|
10th issuance debentures |
Own funds |
2020 |
TJLP +1.92% (series 1 and 3) and 9.53%
(series 2) |
IPCA (series 2) |
12th issuance debentures |
Own funds |
2025 |
TR + 9.5% |
|
14th issuance debentures |
Own funds |
2022 |
TJLP +1.92% (series 1 and 3) and 9.19%
(series 2) |
IPCA (series 2) |
15th issuance debentures |
Own funds |
2019 |
CDI + 0.99% (series 1) and 6.2%
(series 2) |
IPCA (series 2) |
17th issuance debentures |
Own funds |
2023 |
CDI +0.75 (series 1) and 4.5% (series
2) and+4.75% (series 3) |
IPCA (series 2) |
18th issuance debentures |
Own funds |
2024 |
TJLP + 1.92% (series 1 and 3) and
8.25% (series 2) |
IPCA (series 2) |
19th issuance debentures |
Own funds |
2017 |
CDI + 0.80% to 1.08% |
|
Brazilian Federal Savings Bank |
Own funds |
2015/2037 |
5% to 9.5% |
TR |
Brazilian Development Bank - BNDES
BAIXADA SANTISTA |
Own funds |
2019 |
2.5% + TJLP |
|
Brazilian Development Bank - BNDES PAC |
Own funds |
2023 |
2.15% + TJLP |
|
Brazilian Development Bank - BNDES PAC II 9751 |
Own funds |
2027 |
1.72% + TJLP |
|
Brazilian Development Bank - BNDES PAC II 9752 |
Own funds |
2027 |
1.72% + TJLP |
|
Brazilian Development Bank - BNDES ONDA LIMPA |
Own funds |
2025 |
1.92% + TJLP |
|
Brazilian Development Bank - BNDES TIETE III |
Own funds |
2028 |
1.66% + TJLP |
|
Leasing |
|
2035 |
7.73% to 10.12% |
IPC |
Others |
Own funds |
2015/2018 |
TJLP + 2% (Fehidro) and
12% (Presidente Prudente) |
TR |
Page 56 of 86
(CONVENIENCE TRANSLATION
INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN
PORTUGUESE)
ITR –– Quarterly
Information Form – 09/30/ 2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim
Financial Information
|
Version:
1 |
|
|
|
|
Foreign exchange variation |
|
|
|
|
|
Inter-American Development Bank - IDB 713 – US$50,195
thousand |
Federal
Government |
2017 |
3.35% (*) |
US$ |
Inter-American Development Bank - IDB 896- US$4,167
thousand |
Federal
Government |
2016 |
3.00% |
US$ |
Inter-American Development Bank - IDB 1212 – US$102,781
thousand |
Federal
Government |
2025 |
2.28% (*) |
US$ |
Inter-American Development Bank - IDB 2202 – US$395,714
thousand |
Federal
Government |
2035 |
1.19% (*) |
US$ |
International Bank for Reconstruction and Development -
IBRD
US$57,886
thousand |
Federal
Government |
2034 |
0.69% (*) |
US$ |
Eurobonds – US$140,000 thousand |
- |
2016 |
7.50% |
US$ |
Eurobonds – US$350,000 thousand |
- |
2020 |
6.25% |
US$ |
JICA 15 – ¥ 16,134,020 thousand |
Federal
Government |
2029 |
1.8% and
2.5% |
Yen |
JICA 18– ¥ 14,506,240 thousand |
Federal
Government |
2029 |
1.8% and
2.5% |
Yen |
JICA 17– ¥ 1,563,210 thousand |
Federal
Government |
2035 |
1.2% and 0.01%
|
Yen |
JICA 19– ¥ 21,540,111 thousand |
Federal
Government |
2037 |
1.7% and 0.01%
|
Yen |
BID 1983AB – US$130,288 thousand |
- |
2023 |
2.49% to 2.99%
(*) |
US$ |
(*) Rates comprising LIBOR + contractually defined
spread.
Page 57 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/ 2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information
|
Version: 1 |
(i) Payment schedule – accounting balances on September 30, 2015
|
|
|
|
|
|
|
|
|
Domestic currency |
|
|
|
|
|
|
|
|
Debentures |
38,434 |
360,774 |
889,418 |
604,872 |
698,689 |
388,880 |
597,782 |
3,578,849 |
Brazilian Federal Savings Bank |
11,079 |
48,007 |
52,463 |
55,901 |
57,627 |
59,705 |
749,521 |
1,034,303 |
BNDES |
13,499 |
70,115 |
75,489 |
75,489 |
75,489 |
57,853 |
299,167 |
667,101 |
Leasing |
2,829 |
20,090 |
21,175 |
22,356 |
23,638 |
25,033 |
407,198 |
522,319 |
Others |
150 |
646 |
728 |
535 |
- |
- |
- |
2,059 |
Interest and other charges |
|
|
|
|
|
|
|
|
Total in domestic currency |
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
IDB |
5,518 |
151,580 |
223,288 |
123,578 |
123,578 |
123,578 |
1,435,660 |
2,186,780 |
IBRD |
- |
- |
- |
- |
7,666 |
15,332 |
206,623 |
229,621 |
Eurobonds |
- |
556,076 |
- |
- |
- |
1,386,200 |
- |
1,942,276 |
JICA |
|
72,574 |
73,975 |
75,376 |
113,985 |
113,985 |
1,329,635 |
1,779,530 |
IDB 1983AB |
- |
95,120 |
95,120 |
94,877 |
70,290 |
69,602 |
90,797 |
515,806 |
Interest and other charges |
|
|
|
|
|
|
|
|
Total in foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall Total |
|
|
|
|
|
|
|
|
Page 58 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(i) Main events in the nine-month period ended September 30, 2015
(a) 16th issuance debentures
On June 24, 2015, the total early payment of the 16th issue occurred totaling R$507,674. Contractual maturity was scheduled for November 12, 2015.
(b) Federal Savings Bank (CEF)
Funding totaled R$163,749, mainly related to the agreements in progress of the Growth Acceleration Program (PAC).
Advance amortization totaling R$191,081, related to Pro Saneamento and Pro Sanear Programs.
(c) BNDES
Funding totaled R$76,000, referring to agreements 12.2.138.1 (BNDES Tiete III) and 09.2.1535.1 (BNDES Onda Limpa).
(d) BID
Funding totaled R$145,681, referring to agreement 2202 (BID 2202).
(e) JICA
Funding totaled R$223,941, referring to agreements BZ-P17 (JICA 17) and BZ-P19 (JICA 19).
(f) Foreign exchange variation
The US dollar exchange rate increased 49.6%, from R$2.6562 on December 31, 2014 to R$3.9729 on September 30, 2015, increasing debt by R$1,628,668. The Yen exchange rate increased 49.2%, from R$0.02223 on December 31, 2014 to R$0.03316 on September 30, 2015, increasing debt by R$546,583.
(g) Leasing
On January 15, 2015, the São José dos Campos Sanitary Sewage System started and the corresponding amount on September 30, 2015 is R$96,913.
Page 59 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(ii) Covenants
On September 30, 2015, the Company had met the requirements set forth by its loan and financing agreements.
Regarding the agreements with the BNDES, there is a collateral mechanism by which SABESP has assigned a portion of its tariff payment receivables to BNDES. Under this mechanism, each month, the Company must ensure that a portion of the tariff payments received by it are deposited on a daily basis into a blocked collateral account in Banco do Brasil, before being released to a regular movements account later in the day provided that BNDES has not notified the bank that SABESP is in default. Among the financial ratios set forth in the agreements with the BNDES, there is the adjusted net debt/adjusted EBITDA ratio. If this ratio is at or lower 3.00 the amount that must pass through this blocked collateral account will be R$230 million per month; and if the ratio is in the band between 3.00 and 3.80, for two or more quarters in the last twelve months, the amount that must pass through the blocked collateral account will automatically increase by 20%, equivalent to R$276 million per month.
The rations recorded by the Company were 3.28, 3.06, 3.09 and 3.17, on September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively. As a result, since the second quarter of 2015, the monthly guarantee assigned has increased by 20%.
Currently, R$226 million are pass through monthly in the blocked collateral account through the abovementioned mechanism. Considering that new loan agreements were signed with the BNDES, where the Company assigned additional guarantees of R$50 million (plus the 20%), total guarantees to pass through to the blocked account will be R$276 million. The Company jointly with the BNDES are formalizing the operation of these guarantees.
For the Company to be in default and accordingly, subject to early maturity, the adjusted net debt/ adjusted EBITDA ratio of the agreements with the BNDES must exceed 3.80.
On September 30, 2015, the Company and the IDB entered into a Letter Agreement related to the 1983AB Loan Agreement, in which the IDB irrevocably agreed not to exercise its right to accelerate the debt, in the period between September 30, 2015 and October 1, 2016, in the case of non-compliance, in a single quarter, with the “Adjusted net debt / EBITDA” ratio, which should be lower than 3.65. The IDB may exercise its right to accelerate repayment in the case of non-compliance with the ratio for more than one quarter. The Company’s ratio this quarter was 3.54, in line with the contractual requirement.
(iii) Loans and financing contracted and not yet used
Agent |
|
September 30, 2015 |
|
|
(in millions of reais (*)) |
Brazilian Federal Savings Bank |
|
2,558 |
Brazilian Development Bank – BNDES |
|
2,120 |
Inter-American Development Bank – IDB |
|
812 |
Japan International Cooperation Agency – JICA |
|
553 |
International Bank for Reconstruction and Development - IBRD |
|
167 |
Others |
|
57 |
Total |
|
6,267 |
(*) Closing quote of 9/30/2015 (US$1.00 = R$3.9729; ¥ 1.00 = R$0.03316.
Page 60 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
For more information on loans and financing, see Note 16 to the Annual Financial Statements as of December 31, 2014.
16 Taxes Payable
(a) Current assets
|
|
|
Recoverable taxes |
|
|
COFINS and PASEP |
- |
10,121 |
Income tax and social contribution |
55,553 |
132,447 |
Withholding income tax (IRRF) on financial investments |
6,645 |
3,718 |
Other federal taxes |
3,454 |
2,313 |
Other municipal taxes |
|
|
Total |
|
|
The reduction in recoverable taxes is mainly due to decrease in “Income tax and social contribution” item, which was offset by Pasep and Cofins payable in the period.
Page 61 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(b) Current liabilities
|
|
|
Taxes and contributions payable |
|
|
Cofins and Pasep |
23,430 |
- |
INSS(Social Security contribution) |
33,425 |
33,324 |
IRRF(withholding income tax) |
189 |
17,377 |
Others |
|
|
Total |
|
|
17 Deferred Taxes and Contributions
(a) Balance sheet balances
|
|
|
Deferred income tax assets |
|
|
Provisions |
461,779 |
524,728 |
Pension obligations – G0 |
- |
85,271 |
Pension obligations – G1 |
243,764 |
229,266 |
Donations of underlying assets on concession agreements |
49,205 |
45,742 |
Allowance for loan losses |
226,964 |
222,587 |
Tax losses |
275,620 |
- |
Others |
|
|
Total deferred tax assets |
|
|
|
|
|
Deferred income tax liabilities |
|
|
Temporary difference on concession intangible assets |
(532,861) |
(559,411) |
Capitalization of borrowing costs |
(299,995) |
(253,581) |
Profit on supply to governmental entities |
(81,030) |
(87,092) |
Actuarial gain/loss – G1 Plan |
(2,514) |
(2,514) |
Construction margin |
(97,744) |
(98,772) |
Financing costs |
|
|
Total deferred tax liabilities |
|
|
|
|
|
Deferred tax asset, net |
|
|
Page 62 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(b) Changes
Deferred income tax assets |
|
|
|
Provisions |
524,728 |
(62,949) |
461,779 |
Pension obligations – G0 |
85,271 |
(85,271) |
- |
Pension obligations – G1 |
229,266 |
14,498 |
243,764 |
Donations of underlying assets on concession agreements |
45,742 |
3,463 |
49,205 |
Credit losses |
222,587 |
4,377 |
226,964 |
Tax losses |
- |
275,620 |
275,620 |
Others |
|
|
|
Total |
|
|
|
|
|
|
|
Deferred income tax liabilities |
|
|
|
Temporary difference on concession intangible assets |
(559,411) |
26,550 |
(532,861) |
Capitalization of borrowing costs |
(253,581) |
(46,414) |
(299,995) |
Profit on supply to governmental entities |
(87,092) |
6,062 |
(81,030) |
Actuarial gain/loss –G1 |
(2,514) |
- |
(2,514) |
Construction margin |
(98,772) |
1,028 |
(97,744) |
Financing cost |
|
|
|
Total |
|
|
|
|
|
|
|
Deferred tax asset, net |
|
|
|
Page 63 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
Deferred income tax assets |
|
|
|
Provisions |
506,568 |
5,294 |
511,862 |
Pension obligations – G0 |
85,271 |
- |
85,271 |
Pension obligations – G1 |
215,187 |
10,841 |
226,028 |
Donations of underlying assets on concession agreements |
43,901 |
1,074 |
44,975 |
Credit losses |
172,482 |
(12,714) |
159,768 |
Others |
|
|
|
Total |
|
|
|
|
|
|
|
Deferred income tax liabilities |
|
|
|
Temporary difference on concession intangible assets |
(595,285) |
27,292 |
(567,993) |
Capitalization of borrowing costs |
(200,343) |
(33,503) |
(233,846) |
Profit on supply to governmental entities |
(81,711) |
(4,034) |
(85,745) |
Actuarial gain/loss –G1 |
(32,405) |
- |
(32,405) |
Others |
|
|
|
Total |
|
|
|
|
|
|
|
Deferred tax asset, net |
|
|
|
Page 64 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(c) Reconciliation of the effective tax rate
The amounts recorded as income and social contribution tax expenses in the financial statements are reconciled to the statutory rates, as shown below:
|
|
|
|
|
|
Profit before income taxes |
(63,187) |
1,317,996 |
Statutory rate |
|
|
|
|
|
Estimated expenses at statutory rate |
21,484 |
(448,119) |
Tax benefit of interest on equity |
12,868 |
27,411 |
Permanent differences |
|
|
Provision - Law 4,819/58 (i) |
(43,049) |
(37,723) |
Donations |
(2,853) |
(5,593) |
GESP Agreement (Note 9(b)) |
151,465 |
- |
Other differences |
|
|
|
|
|
Income tax and social contribution |
|
|
|
|
|
Current income tax and social contribution |
(899) |
(453,799) |
Deferred income tax and social contribution |
139,435 |
7,312 |
Effective rate |
219% |
34% |
(i) Permanent difference related to the provision for actuarial liability (Note 19 (b) (iii)).
Page 65 of 86
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ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
18 Provisions
(a) Lawsuits with probable likelihood of loss
(I) Financial position balances
The Company is party to a number of claims and legal proceedings arising in the normal course of business, including civil, tax, labor and environmental matters. Management, recognized provisions at an amount considered sufficient to cover probable losses. These provisions, net of escrow deposits are as follows:
|
|
|
|
|
|
|
|
Customer claims (i) |
586,436 |
(123,142) |
463,294 |
|
638,637 |
(114,463) |
524,174 |
Supplier claims (ii) |
280,574 |
(212,508) |
68,066 |
|
260,854 |
(195,478) |
65,376 |
Other civil claims (iii) |
125,091 |
(11,964) |
113,127 |
|
126,403 |
(9,990) |
116,413 |
Tax claims (iv) |
60,735 |
(660) |
60,075 |
|
55,554 |
- |
55,554 |
Labor claims (v) |
221,856 |
(2,935) |
218,921 |
|
235,466 |
(2,233) |
233,233 |
Environmental claims (vi) |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
617,185 |
- |
617,185 |
|
625,092 |
- |
625,092 |
Noncurrent |
741,595 |
(352,084) |
389,511 |
|
918,226 |
(322,971) |
595,255 |
(II) Changes
|
|
|
Interest and inflation adjustment |
|
Amounts not used
(reversal) |
|
Customer claims (i) |
638,637 |
29,962 |
77,416 |
(48,863) |
(110,716) |
586,436 |
Supplier claims (ii) |
260,854 |
3,059 |
24,797 |
(5,452) |
(2,684) |
280,574 |
Other civil claims (iii) |
126,403 |
10,888 |
14,771 |
(8,901) |
(18,070) |
125,091 |
Tax claims (iv) |
55,554 |
1,316 |
6,596 |
(215) |
(2,516) |
60,735 |
Labor claims (v) |
235,466 |
51,272 |
18,076 |
(18,778) |
(64,180) |
221,856 |
Environmental claims (vi) |
|
|
|
|
|
|
Subtotal |
1,543,318 |
108,715 |
153,976 |
(87,082) |
(360,147) |
1,358,780 |
Escrow deposits |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Page 66 of 86
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ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(b) Explanation on the nature of main classes of lawsuits
(i) Customer claims
Approximately 1,190 lawsuits were filed by commercial customers, which claim that their tariffs should correspond to other consumer categories, and 740 lawsuits which claim a reduction in the sewage tariff due to losses in the system, consequently requesting the refund of amounts charged by the Company and 60 lawsuits where customers plead the reduction in tariff under the category as “Social Welfare Entity”. The Company was granted both favorable and unfavorable final decisions at several court levels and recognized provisions when the chances of losses are probable. The decrease of R$60,880 in the lawsuits classified as probable loss (net of escrow deposits) is mainly related to revisions of expectations caused by favorable decisions to the Company.
(ii) Supplier claims
Suppliers’ claims include lawsuits filed by some suppliers alleging underpayment of monetary restatements, withholding of amounts related to the understated inflation rates deriving from Real economic plan, and the economic and financial imbalance of the agreements. These lawsuits are in progress at different courts and a provision is recognized when the chances of losses are probable.
(iii) Other civil claims
These mainly refer to indemnities for property damage, pain and suffering, and loss of profits allegedly caused to third parties, filed at different court levels, dully accrued when classified as probable losses.
(iv) Tax claims
Tax claims refers mainly to issues related to tax collections challenged due to differences in the interpretation of legislation by the Company's management, accrued when classified as probable loss.
(v) Labor claims
The Company is a party to labor lawsuits, involving issues such as overtime, shift schedule, health hazard premium and hazardous duty premium, prior notice, change of function, salary equalization, and other. Part of the amount involved is in provisional or final execution at various court levels, and thus is classified as of probable loss and accordingly, accrued.
Page 67 of 86
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ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(vi) Environmental claims
Environmental claims refer to several administrative proceedings and lawsuits filed by government entities, including Companhia de Tecnologia de Saneamento Ambiental – Cetesb, Public Prosecution Office of the State of São Paulo and others, that aim affirmative and negative covenants and penalty is estimated due to failure to comply in addition to the imposition of indemnity due to environmental damages allegedly caused by the Company. The amounts accrued represent the best estimate of the Company at this moment, however, may differ from the amount to be disbursed as indemnity to alleged damages, in view of the current stage of referred proceedings. The decrease of R$142,384 in lawsuits with expectation of probable losses (net of escrow deposits) is mainly related to two proceedings, one due to change in its amount, totaling R$36,500, due to the expectation of settlement with the parties involved and the other one due to provision reversal totaling R$106,339, due to court decision favorable to the Company.
(c) Lawsuits with possible likelihood of loss
The Company is party to lawsuits and administrative proceedings relating to environmental, tax, civil and labor claims, which are assessed by Management whose chances of loss are possible and are not recorded. Liability contingencies classified as possible loss represent the amount of R$5,295,900 on September 30, 2015 (December/2014 – R$3,779,100). In the first nine months of 2015, three new lawsuits were filed totaling R$559,887 related to environmental, labor and tax claims. The amounts considered for reporting purposes are the amounts questioned by adverse parties, which is not possible estimate the amounts involved for the Company, due to the initial phase of lawsuit. In addition, there was a decision favorable to the Company related to an environmental lawsuit that changed its likelihood of loss from probable to possible, in the amount of R$115,227, and an increase in the estimated loss amount for a lawsuit regarding other civil matters totaling R$112,548.
(d) Lawsuits with settlements made in 2015
During the first nine months of 2015, the Company made several judicial and administrative settlements, totaling R$194,348. Of this amount, R$189,475 refer to works and R$4,873 refer to environmental compensation, the latter, recorded as “other liabilities”. The accumulated balance on September 30, 2015, referring to these environmental liabilities is R$20,583.
Other information is stated in Note 19 to the Annual Financial Statements as of December 31, 2014.
(e) Guarantee insurance for escrow deposit
During the second quarter of 2015, the Company contracted guarantee insurance for escrow deposit totaling R$500 million. Such insurance will be used in legal claims where instead of making immediate cash disbursement by the Company, such insurance is used until the conclusion of these proceedings or up to three-year effectiveness term of the agreement.
In 2015, the Company used R$168,063 of the total contracted amount.
Page 68 of 86
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ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
19 Employee Benefits
(a) Health benefit plan
The health benefit plan is managed by Fundação Sabesp de Seguridade Social - SABESPREV and consists of optional, free choice, health plans sponsored by contributions of SABESP and the active participants, as follows:
. Company: 7.9% on average, of gross payroll;
. Participating employees: 3.21% of base salary and premiums, equivalent to 2.3% of payroll, on average.
(b) Pension plan benefits
Amounts recorded in the statement of financial position |
|
|
Funded plan – G1 |
|
|
Pension plan liabilities on December 31, 2014 |
|
676,071 |
Expenses recognized in 2015 |
|
60,452 |
Payments made in 2015 |
|
|
Pension plan liabilities on September 30, 2015 (i) |
|
718,712 |
|
|
|
Unfunded plan – G0 |
|
|
Pension plan liabilities on December 31, 2014 |
|
2,053,527 |
Expenses recognized in 2015 |
|
185,894 |
Payments made in 2015 |
|
|
Pension plan liabilities on September 30, 2015 (iii) |
|
|
|
|
|
Total |
|
|
(i) Plan G1
The Company sponsors a defined benefit pension plan for its employees ("Plan G1"), which is managed by Sabesprev, receives similar contributions established in a plan of subsidy of actuarial study of SABESPREV, as follows:
· 1.19% of the portion of the salary of participation up to 20 salaries; and
· 10.13% of the surplus, if any, of the portion of the salary of participation over 20 salaries.
As of September 30, 2015, SABESP had a net actuarial liability of R$718,712 (R$676,071 on December 31, 2014) representing the difference between the present value of the Company's defined benefit obligations to the participating employees, retired employees, and pensioners; the fair value of the plan’s assets.
Page 69 of 86
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ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Notes to the Interim Financial Information |
Version: 1 |
(ii) Private pension plan benefits – Defined contribution
On September 30, 2015, Sabesprev Mais plan, based on defined contribution, had 5,257 active and assisted participants (5,188 in December 2014).
With respect to the Sabesprev Mais plan, the contributions from the sponsor represent 100% over the total basic contribution from the participants.
The commitment to all participants who migrated from Plan G1 to the Sabesprev Mais Plan amounted to R$8,198 on September 30, 2015 (R$9,214 on December 31, 2014) referred to active participants.
(iii) Plan G0
Pursuant to Law 4,819/58, employees who started services prior to May 1974 and were retired as an employee of the Company acquired a legal right to receive supplemental pension payments, which rights are referred as "Plan G0". The Company pays these supplemental benefits on behalf of the State Government and makes claims for reimbursements from the State Government, which are recorded as accounts receivable from shareholder, limited to the amounts considered virtually certain that will be reimbursed by the State Government. As of September 30, 2015, the Company recorded a defined benefit obligation for Plan G0 of R$2,130,677 (R$2,053,527 on December 31, 2014).
(c) Profit sharing
The Company recorded as reference to the 2015 Profit Sharing Program, the amount corresponding to one-month salary for each employee, depending on the establishment goals. In the third quarter of 2015, R$19,207 were accrued (R$18,233 in the third quarter of 2014). From January to September 2015 and 2014, R$57,127 and R$54,749, respectively were accrued.
20 Services payable
The services account records the balances payable, mainly from services received from third parties, such as supply of electric power, reading of hydrometers and delivery of water and sewage bills, cleaning, surveillance and security services, collection, legal counsel services, audit, marketing and advertising and consulting services, among others. This account also records the amounts payable from the percentage in the revenues of São Paulo local government. The balances on September 30, 2015 and December 31, 2014 were R$328,281 and R$318,973, respectively.
21 Equity
(a) Authorized capital
The Company is authorized to increase capital by up to R$15,000,000 (R$15,000,000 in December 2014), based on a Board of Directors' resolution, after submission to the Fiscal Council.
In the event of capital increase, issue of convertible debentures and/or warrants by means of private subscription, shareholders will have preemptive right in the proportion of number of shares held, pursuant to Article 171 of Law 6,404/76.
Page 70 of 86
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Notes to the Interim Financial Information |
Version: 1 |
(b) Subscribed and paid-in capital
Subscribed and paid-in capital is represented by 683,509,869 registered, book-entry common shares without par value as of September 30, 2015 (683,509,869 on December 31, 2014), held as follows:
|
|
|
|
|
|
|
|
State Department of Finance |
343,524,285 |
50.26% |
343,524,285 |
50.26% |
Brazil Clearing and Depository Corporation - CBLC |
184,871,804 |
27.05% |
169,000,272 |
24.73% |
The Bank Of New York ADR Department (equivalent in shares) (*) |
152,957,613 |
22.38% |
170,351,902 |
24.92% |
Others |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Each ADR corresponds to 1 share.
The Annual Shareholders’ Meeting held on April 30, 2015 approved the distribution of dividends as interest on shareholders’ equity amounting to R$252,304 and the transfer to Investments Reserves of retained earnings balances totaling R$605,530.
The payment of interest on equity declared in 2014, in the amount of R$252,304, began in June 2015. In June 2014, the Company paid R$106,980 to minority shareholders and R$126,805 to the controlling shareholder on September 24, 2015, totaling R$233,785. Of the amount paid to the controlling shareholder, R$95,123 were through bank transfer, while R$31,682 were offset with receivables from reimbursement of costs of SABESP employees available for the São Paulo State Government. Additionally, the Company paid R$5 as interest on equity reported in prior years.
Further information about equity, such as shareholder’ compensation, dividends and purpose of reserves, can be found in Note 22 to the Annual Financial Statements as of December 31, 2014.
22 Earnings per share
Basic and diluted
Basic earnings per share is calculated by dividing the income attributable to the Company’s shareholders by the weighted average number of outstanding common shares during the period. The Company does not have potentially dilutive common shares outstanding or debts convertible into common shares. Accordingly, basic and diluted earnings per share are equal.
Page 71 of 86
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Notes to the Interim Financial Information |
Version: 1 |
|
January to September 2015 |
January to September 2014 |
|
|
|
Income attributable to the Company’s shareholders |
75,349 |
871,509 |
Weighted average number of common shares issued |
|
|
|
|
|
Basic and diluted earnings per share (reais per share) |
|
|
23 Business segment information
Management, comprised by the Board of Directors and the Board of Executive Officers, has determined the operating segments used to make strategic decisions, as water supply and sewage services.
|
|
|
|
|
Reconciliation to
the statement
of income |
Balance as per
financial
statements |
Gross operating income |
|
|
|
|
Gross sales deductions |
|
|
|
|
Net operating income |
|
|
|
|
Costs, selling, general and administrative expenses |
|
|
|
|
Income from operations before other operating expenses, net and equity accounting |
|
|
|
|
Other operating income (expenses), net |
|
|
|
54,315 |
Equity accounting |
|
|
|
(1,375) |
Financial result, net |
|
|
|
|
Income from operations before taxes |
|
|
|
|
Depreciation and amortization |
158,137 |
113,174 |
- |
271,311 |
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Notes to the Interim Financial Information |
Version: 1 |
|
January to September 2015 |
|
|
|
Reconciliation
to the statement
of income |
Balance as per
financial
statements |
Gross operating income |
|
|
|
|
Gross sales deductions |
|
|
|
|
Net operating income |
|
|
|
|
Costs, selling, general and administrative expenses |
|
|
|
|
Income from operations before other operating expenses, net and equity accounting |
|
|
|
|
Other operating income (expenses), net |
|
|
|
98,149 |
Equity accounting |
|
|
|
(376) |
Financial result, net |
|
|
|
|
Income from operations before taxes |
|
|
|
|
Depreciation and amortization |
445,414 |
363,292 |
- |
808,706 |
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Notes to the Interim Financial Information |
Version: 1 |
|
|
|
|
|
Reconciliation
to the statement
of income |
Balance as per
financial
statements |
Gross operating income |
|
|
|
|
Gross sales deductions |
|
|
|
|
Net operating income |
|
|
|
|
Costs, selling, general and administrative expenses |
|
|
|
|
Income from operations before other operating expenses, net and equity accounting |
|
|
|
|
Other operating income (expenses), net |
|
|
|
(6,168) |
Equity accounting |
|
|
|
(1,167) |
Financial result, net |
|
|
|
|
Income from operations before taxes |
|
|
|
|
Depreciation and amortization |
121,541 |
121,658 |
- |
243,199 |
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Notes to the Interim Financial Information |
Version: 1 |
|
January to September 2014 |
|
|
|
Reconciliation to the
statement of income |
Balance as per
financial statements |
Gross operating income |
|
|
|
|
Gross sales deductions |
|
|
|
|
Net operating income |
|
|
|
|
Costs, selling, general and administrative expenses |
|
|
|
|
Income from operations before other operating expenses, net and equity accounting |
|
|
|
|
Other operating income (expenses), net |
|
|
|
(44,028) |
Equity accounting |
|
|
|
(1,486) |
Financial result, net |
|
|
|
|
Income from operations before taxes |
|
|
|
|
Depreciation and amortization |
384,133 |
341,918 |
- |
726,051 |
Explanation on the reconciliation items for the financial statements: the impacts on gross operating income and in costs are as follows:
|
|
January to September 2015 |
|
January to September 2014 |
|
|
|
|
|
Gross revenue from construction recognized under ICPC 1 (R1) (a) |
1,015,238 |
2,508,464 |
799,731 |
2,009,707 |
Construction costs recognized under ICPC 1 (R1) (a) |
|
|
|
|
|
|
|
|
|
Construction margin |
|
|
|
|
(a) Revenue from concession construction contracts is recognized in accordance with CPC 17 (R1), Construction Contracts (IAS 11), using the percentage-of-completion method. See Note 13 (c) and (f).
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Notes to the Interim Financial Information |
Version: 1 |
24 Operating Revenue
(a) Revenue from water and sewage services:
|
|
January to September 2015 |
|
January to September 2014 |
|
|
|
|
|
Metropolitan region of São Paulo |
1,576,110 |
4,261,892 |
1,513,008 |
4,821,592 |
Regional Systems (i) |
|
|
|
|
Total (ii) |
|
|
|
|
(i) Including the municipalities operated in countryside and at the coast of the State of São Paulo.
The gross operating revenue from sale of products and services increased by 7.5% year-on-year in the quarter ended September 30, 2015, due to the effect of the 6.5% tariff increase as of December 2014, the 15.2% tariff adjustment as of June 2015, and the application of contingency tariff totaling R$144.8 million in the third quarter of 2015.
The increase was offset by larger bonuses, R$248.8 million in the third quarter of 2015 and R$129.4 million in the third quarter of 2014, in addition to the 5.8% decline in water and sewage billed volume.
(b) Reconciliation between gross operating income and net operating income:
|
|
January to September 2015 |
|
January to September 2014 |
|
|
|
|
|
Revenue from water and sewage services |
2,327,167 |
6,378,901 |
2,165,677 |
6,834,126 |
Construction revenue (Note 13 (c)) |
1,015,238 |
2,508,464 |
799,731 |
2,009,707 |
Sales tax |
|
|
|
|
Net revenue |
|
|
|
|
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Notes to the Interim Financial Information |
Version: 1 |
25 Operating costs and expenses
|
|
January to September 2015 |
|
January to September 2014 |
Operating costs |
|
|
|
|
Salaries and payroll charges |
385,270 |
1,115,186 |
377,045 |
1,109,573 |
Pension obligations |
14,960 |
44,381 |
12,135 |
35,886 |
Construction costs (Note 13 (c)) |
992,984 |
2,454,583 |
782,243 |
1,966,932 |
General supplies |
40,689 |
129,469 |
51,827 |
140,372 |
Treatment supplies |
62,878 |
198,788 |
65,628 |
199,880 |
Outsourced services |
189,962 |
580,024 |
217,728 |
627,943 |
Electricity |
219,281 |
585,610 |
155,801 |
439,624 |
General expenses |
105,543 |
268,477 |
99,632 |
308,021 |
Depreciation and amortization |
|
|
|
|
|
2,261,459 |
6,125,545 |
1,985,938 |
5,494,788 |
|
|
|
|
|
Selling expenses |
|
|
|
|
Salaries and payroll charges |
59,767 |
174,832 |
60,248 |
175,748 |
Pension obligations |
1,924 |
5,740 |
1,582 |
4,675 |
General supplies |
805 |
2,640 |
1,094 |
3,264 |
Outsourced services |
63,541 |
180,055 |
60,363 |
188,348 |
Electricity |
206 |
561 |
139 |
443 |
General expenses |
19,087 |
60,509 |
22,304 |
63,385 |
Depreciation and amortization |
2,510 |
7,435 |
2,474 |
7,842 |
Allowance for doubtful accounts, net of recoveries (Note 8 (c)) |
|
|
|
|
|
109,709 |
441,161 |
126,564 |
498,393 |
|
|
|
|
|
Administrative expenses |
|
|
|
|
Salaries and payroll charges |
43,888 |
135,039 |
45,876 |
134,629 |
Pension obligations |
46,164 |
140,149 |
38,982 |
123,497 |
GESP reimbursement– benefits paid (Note 9 (b)) |
- |
(696,283) |
- |
- |
General supplies |
508 |
1,621 |
1,799 |
5,138 |
Outsourced services |
43,096 |
102,452 |
23,052 |
151,095 |
Electricity |
520 |
1,230 |
340 |
758 |
General expenses |
19,921 |
(81,338) |
65,660 |
158,864 |
Depreciation and amortization |
18,909 |
52,244 |
16,826 |
51,652 |
Tax expenses |
|
|
|
|
|
192,637 |
(287,039) |
210,716 |
681,094 |
|
|
|
|
|
Operating Costs and Expenses |
|
|
|
|
Salaries and payroll charges |
488,925 |
1,425,057 |
483,169 |
1,419,950 |
Pension obligations |
63,048 |
190,270 |
52,699 |
164,058 |
GESP reimbursement– benefits paid (Note 9 (b)) |
- |
(696,283) |
- |
- |
Construction costs (Note 13 (c)) |
992,984 |
2,454,583 |
782,243 |
1,966,932 |
General supplies |
42,002 |
133,730 |
54,720 |
148,774 |
Treatment supplies |
62,878 |
198,788 |
65,628 |
199,880 |
Outsourced services |
296,599 |
862,531 |
301,143 |
967,386 |
Electricity |
220,007 |
587,401 |
156,280 |
440,825 |
General expenses |
144,551 |
247,648 |
187,596 |
530,270 |
Depreciation and amortization |
271,311 |
808,706 |
243,199 |
726,051 |
Tax expenses |
19,631 |
57,847 |
18,181 |
55,461 |
Allowance for doubtful accounts, net of recoveries (Note 8 (c)) |
|
|
|
|
|
|
|
|
|
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Notes to the Interim Financial Information |
Version: 1 |
26 Financial Expenses and Income
|
|
January to September 2015 |
|
January to September 2014 |
Financial expenses |
|
|
|
|
Interest and charges on loans and financing – local currency (i) |
(80,914) |
(248,635) |
(46,533) |
(208,704) |
Interest and charges on loans and financing – foreign currency |
(39,146) |
(94,688) |
(27,140) |
(74,581) |
Other financial expenses |
(25,783) |
(82,420) |
(23,351) |
(65,376) |
Income tax over international remittance |
(5,045) |
(13,983) |
(2,976) |
(9,715) |
Inflation adjustment on loans and financing (ii) |
(25,882) |
(123,632) |
(10,155) |
(72,141) |
Inflation adjustment on Sabesprev Mais
incentive deficit |
(379) |
(1,307) |
(215) |
(899) |
Other inflation adjustments |
(6,334) |
(15,361) |
(1,817) |
(7,686) |
Interest and inflation adjustments on provisions |
|
|
|
|
Total financial expenses |
|
|
|
|
|
|
|
|
|
Financial revenues |
|
|
|
|
Inflation adjustment gains |
59,640 |
124,752 |
29,024 |
65,262 |
Income on short-term investments |
36,300 |
131,211 |
52,205 |
148,309 |
Interest receivable |
30,585 |
97,082 |
27,909 |
76,480 |
Cofins and Pasep |
(5,904) |
(5,904) |
- |
- |
Other |
|
|
|
|
Total financial income |
|
|
|
|
|
|
|
|
|
Financial, net before foreign exchange variations |
|
|
|
|
|
|
|
|
|
Net foreign exchange gains (losses) |
|
|
|
|
Foreign exchange variation on loans and financing (iii) |
(1,448,717) |
(2,124,021) |
(312,931) |
(111,667) |
Other foreign exchange variations |
(221) |
(529) |
(30) |
(60) |
Foreign exchange gains |
|
|
|
|
Foreign exchange variations, net |
|
|
|
|
|
|
|
|
|
Financial, net |
|
|
|
|
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Notes to the Interim Financial Information |
Version: 1 |
(i) The R$34.3 million increase in interests and charges on internal loans and financing results from the higher CDI variation in the third quarter of 2015 when compared with the same period of 2014 (14.13% and 10.81%, respectively).
(ii) The R$15.7 million increase is mainly due to IPCA and TR variations increase of 1.4% and 0.6%, respectively, in the third quarter of 2015, compared to variations of 0.8% and 0.3%, respectively, in the third quarter of 2014.
(iii) The R$1,135.9 million increase in expenses is due to the third-quarter appreciation of the U.S. Dollar and the Yen of 28.1% and 30.5%, respectively, compared with the appreciations of 11.3% and 2.8%, respectively, in the same period of 2014.
27 Other operating income (expenses), net
|
|
January to September 2015 |
|
January to September 2014 |
|
|
|
|
|
Other net operating income |
63,732 |
128,201 |
21,014 |
59,159 |
Other operating expenses |
|
|
|
|
|
|
|
|
|
Other operating income (expenses), net |
|
|
|
|
Other operating income is comprised by sale of property, plant and equipment, sale of contracts awarded in public bids, electricity selling right, indemnities and reimbursement of expenses, fines and collaterals, property leases, reuse water, PURA projects and services.
Other operating expenses consist mainly of write-off of concessions due to obsolescence, discontinued construction works, unproductive wells, projects considered economically unfeasible, losses on property, plant and equipment and surplus cost of electricity sold.
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Notes to the Interim Financial Information |
Version: 1 |
28 Commitments
The Company has agreements to manage and maintain its activities, as well as agreements to build new projects aiming at achieving the objectives proposed in its target plan. Below, main committed amounts as of September 30, 2015:
|
|
|
|
|
|
Contractual obligations- Expenses |
335,844 |
1,319,793 |
318,804 |
1,358,237 |
3,332,678 |
Contractual obligations- Investments |
|
|
|
|
|
Total |
|
|
|
|
|
The main commitment refers to São Lourenço PPP. See Note 13 (h).
29 Additional information on cash flows
(a) Investment activities not affecting cash:
|
January to September 2015 |
January to September 2014 |
|
|
|
Total additions of intangible assets (Note 13) |
2,835,571 |
2,283,864 |
|
|
|
Items not affecting cash (see breakdown below) |
|
|
|
|
|
Total additions to intangible assets as per statement of cash flows |
1,856,910 |
1,834,304 |
|
|
|
Investments and financing operations affecting intangible assets but not cash: |
|
|
Interest capitalized in the period (Note 13 (e)) |
247,075 |
176,724 |
Contractors payable |
(65,741) |
37,535 |
Program contract commitments |
175,144 |
70,250 |
Public-Private-Partnership (Note 13 (h)) |
520,545 |
43,459 |
Leasing |
47,757 |
78,817 |
Construction margin (Notes 13 (f) and 23) |
|
|
Total |
978,661 |
449,560 |
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Notes to the Interim Financial Information |
Version: 1 |
30 Events after the reporting period
- Extraordinary Shareholders’ Meeting
On November 10, 2015, the Extraordinary Shareholders’ Meeting (ESM) was held to:
I. Elect an alternate member to the Fiscal Council, with term of office until 2016. Sandra Maria Giannella was elected to replace Marcio Rea;
II. Resolve on the terms and conditions of the Protocol and Justification of Merger of Empresa de Água e Esgoto de Diadema S.A. (“EAED”), a wholly-owned investee of the Company;
III. Ratify the appointment and engagement of Priori Serviços e Soluções Contabilidade EIRELI-ME, to prepare the Valuation Report of the assets of EAED (“Valuation Report”);
IV. Approve the Valuation Report prepared by experts, which concluded that the book value of shareholders’ equity for the purpose of merger of EAED into the Company is R$1,269; and
V. Resolve on the merger of EAED into the Company.
All items were approved by a majority vote.
- Empresa de Água e Esgoto de Diadema S.A. (“EAED”)
The merger of EAED into the Company, approved by the ESM held on November 10, 2015, will not materially affect the Company’s financial statements.
- Interconnection works between the Jaguari and Atibainha reservoirs
At the beginning of October, the agreement for the interconnection between the Jaguari (Paraíba do Sul basin) and Atibainha (Cantareira System basin) reservoirs was signed. This project will allow the transfer of an average annual inflow of 5.13 m³/s and maximum inflow of 8.5 m³/s into Cantareira System. The works are expected to be concluded in 2017. The company which was awarded the contract submitted a bid of R$555 million.
- Lawsuit with Álvares Florence Municipality Local Government
On October 15, 2015, the final and unappelable decision regarding the lawsuit to resume sewage services in the municipality of Álvares Florence was issued. The decision was unfavorable to the Company, and the book value of intangible assets in this municipality amounted to R$847 on September 30, 2015.
Page 81 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/ 2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Comments on the Company’s Projections
|
Version: 1 |
Comments on the Company’s projections
The projections presented in the reference form are annual and not on a quarterly basis. Therefore, the quarterly comparison between the information disclosed in the reference form with quarterly results shall not apply.
The projections monitoring occurs on an annual basis and are disclosed in the reference form.
Page 82 of 86
(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Other Information Deemed as Relevant by the Company |
Version: 1 |
1. CHANGES IN INTEREST HELD BY CONTROLLING SHAREHOLDER, BOARD MEMBERS AND EXECUTIVE OFFICERS
CONSOLIDATED SHAREHOLDING OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES Position as of 9/30/2015 |
Shareholder |
Number of Common Shares (units) |
% |
Total Number of Shares (units) |
% |
Controlling shareholder |
|
|
|
|
Treasure Department |
343,524,285 |
50.3% |
343,524,285 |
50.3% |
Management |
|
|
|
|
Board of Directors |
- |
- |
- |
- |
Executive Officers |
- |
- |
- |
- |
|
|
|
|
|
Fiscal Council |
15 |
- |
15 |
- |
|
|
|
|
|
Treasury shares |
- |
- |
- |
- |
|
|
|
|
|
Other shareholders |
|
|
|
|
|
|
|
|
|
Overall Total |
343,524,300 |
50.3% |
343,524,300 |
50.3% |
|
|
|
|
|
|
|
|
|
|
Outstanding shares |
339,985,569 |
49.7% |
339,985,569 |
49.7% |
Page 83 of 86
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ITR –– Quarterly Information Form – 09/30/2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Other Information Deemed as Relevant by the Company |
Version: 1 |
CONSOLIDATED SHAREHOLDING OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES Position as of 9/30/2014 |
Shareholder |
Number of Common Shares (units) |
% |
Total Number of Shares (units) |
% |
Controlling shareholder |
|
|
|
|
Treasury Department |
343,524,285 |
50.3% |
343,524,285 |
50.3% |
Management |
|
|
|
|
Board of Directors |
- |
- |
- |
- |
Executive Officers |
- |
- |
- |
- |
|
|
|
|
|
Fiscal Council |
- |
- |
- |
- |
|
|
|
|
|
Treasury shares |
- |
- |
- |
- |
|
|
|
|
|
Other shareholders |
|
|
|
|
|
|
|
|
|
Overall Total |
343,524,285 |
50.3% |
343,524,285 |
50.3% |
|
|
|
|
|
|
|
|
|
|
Outstanding shares |
339,985,584 |
49.7% |
339,985,584 |
49.7% |
2. SHAREHOLDING POSITION
SHAREHOLDING POSITION OF HOLDERS OF MORE THAN 5% OF EACH TYPE AND CLASS OF COMPANY SHARES, UP TO THE INDIVIDUAL LEVEL |
Company: CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO |
Position as of 9/30/2015 (shares) |
|
Common shares |
Overall Total |
Shareholder |
Number of shares |
% |
Number of shares |
% |
Treasury Department |
343,524,285 |
50.3 |
343,524,285 |
50.3 |
Page 84 of 86
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ITR –– Quarterly Information Form – September 30, 2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Reports and Statements / Unqualified Report on Special Review |
Version: 1 |
(Convenience Translation into English from the Original Previously Issued in Portuguese)
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
To the Shareholders, Board of Directors and Management of
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
São Paulo - SP
Introduction
We have reviewed the accompanying interim financial information of Companhia de Saneamento Básico do Estado de São Paulo - SABESP (the “Company”) included in the Quarterly Information Form (ITR), for the quarter ended September 30, 2015, which comprises the financial position as of September 30, 2015 and the related statements of income and comprehensive income for the three and nine-month period then ended and changes in equity and cash flows for the nine-month period then ended, including the explanatory notes.
The Company’s Management is responsible for the preparation of the interim financial information in accordance with technical pronouncement CPC 21 (R1) - Interim Financial Information and in accordance with international standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of Interim Financial Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with standards on auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information included in the ITR referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, applicable to the preparation of Interim Financial Information - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.
Page 85 of 86
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ITR –– Quarterly Information Form – September 30, 2015 – CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO
Reports and Statements / Unqualified Report on Special Review |
Version: 1 |
Other matters
Statements of value added
We have also reviewed the statements of value added (DVA) for the nine-month period ended September 30, 2015, prepared under the responsibility of the Company’s Management, the presentation of which is required by the standards issued by the CVM - Brazilian Securities and Exchange Commission applicable to the preparation of Interim Financial Information - ITR and considered as supplemental information by IFRSs, which does not require the presentation of DVA. These statements were subject to the same review procedures described above, and, based on our review, nothing has come to our attention that causes us to believe that they were not prepared, in all material respects, consistently with the interim financial information taken as a whole.
The accompanying interim financial information has been translated into English for the convenience of readers outside Brazil.
São Paulo, November 12, 2015
DELOITTE TOUCHE TOHMATSU |
Délio Rocha Leite |
Auditores Independentes |
Engagement Partner |
Page 86 of 86
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city São Paulo, Brazil.
Date: November 30, 2015
Companhia de Saneamento Básico do Estado de São Paulo - SABESP |
|
|
|
By: |
/s/ Rui de Britto Álvares Affonso
|
|
|
Name: Rui de Britto Álvares Affonso
Title: Chief Financial Officer and Investor Relations Officer |
|
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
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