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___
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
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 |
Income Statement | 6 |
Statement of Comprehensive Income | 7 |
Statement of Cash Flows | 8 |
Statement of Changes in Equity | |
1/01/2018 to 3/31/2018 |
10 |
1/01/2017 to 3/31/2017 |
11 |
Statement of Value Added | 12 |
Comments on the Company’s Performance | 13 |
Notes to the Interim Financial Information | 19 |
Comments on the Company’s Projections | 77 |
Other Information Deemed as Relevant by the Company | 78 |
Reports and Statements | |
Unqualified Reports on Special Review | 80 |
Executive Officers' Statement on the Financial Statements | 81 |
Executive Officers' Statement on the Report of Independent Registered Public Accounting Firm | 82 |
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Number of Shares |
Current Quarter |
(Units) |
3/31/2018 |
Paid-in Capital |
|
Common |
683,509,869 |
Preferred |
0 |
Total |
683,509,869 |
Treasury Shares |
|
Common |
0 |
Preferred |
0 |
Total |
0 |
PAGE: 1 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO Version: 1
Event | Approval | Proceeds | Date of Payment | Type of Share | Class of Share | Earnings per share |
(Reais / share) | ||||||
Board of Directors’ | 3/27/2018 | Interest on Capital | Common |
1.02980 | ||
Meeting |
PAGE: 2 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Code | Description | Current Quarter | Previous Year |
3/31/2018 | 12/31/2017 | ||
1 | Total Assets | 40,685,614 | 39,546,444 |
1.01 | Current Assets | 5,340,677 | 4,574,085 |
1.01.01 | Cash and Cash Equivalents | 2,963,862 | 2,283,047 |
1.01.03 | Accounts Receivable | 1,928,846 | 1,853,368 |
1.01.03.01 | Trade Receivables | 1,762,793 | 1,672,595 |
1.01.03.02 | Other Receivables | 166,053 | 180,773 |
1.01.03.02.01 | Related-Party Balances | 166,053 | 180,773 |
1.01.04 | Inventories | 75,492 | 85,671 |
1.01.06 | Recoverable Taxes | 190,516 | 276,585 |
1.01.06.01 | Current Recoverable Taxes | 190,516 | 276,585 |
1.01.08 | Other Current Assets | 181,961 | 75,414 |
1.01.08.03 | Other | 181,961 | 75,414 |
1.01.08.03.01 | Restricted Cash | 14,064 | 18,822 |
1.01.08.03.20 | Other Receivables | 167,897 | 56,592 |
1.02 | Noncurrent Assets | 35,344,937 | 34,972,359 |
1.02.01 | Long-Term Assets | 1,168,708 | 1,156,593 |
1.02.01.03 | Accounts Receivable | 217,271 | 215,910 |
1.02.01.03.01 | Trade Receivables | 217,271 | 215,910 |
1.02.01.08 | Receivables from Related Parties | 619,465 | 634,387 |
1.02.01.08.03 | Receivables from Controlling Shareholders | 619,465 | 634,387 |
1.02.01.09 | Other Noncurrent Assets | 331,972 | 306,296 |
1.02.01.09.04 | Escrow Deposits | 147,646 | 122,686 |
1.02.01.09.05 | ANA Water National Agency | 71,552 | 70,487 |
1.02.01.09.20 | Other Receivables | 112,774 | 113,123 |
1.02.02 | Investments | 98,044 | 94,584 |
1.02.02.01 | Equity Investments | 40,404 | 36,932 |
1.02.02.01.04 | Other Equity Investments | 40,404 | 36,932 |
1.02.02.02 | Investment Properties | 57,640 | 57,652 |
1.02.03 | Property, Plant and Equipment | 247,472 | 255,050 |
1.02.04 | Intangible Assets | 33,830,713 | 33,466,132 |
1.02.04.01 | Intangible Assets | 33,830,713 | 33,466,132 |
1.02.04.01.01 | Concession Contracts | 8,461,497 | 8,575,551 |
1.02.04.01.02 | Program Contracts | 8,632,086 | 8,505,442 |
1.02.04.01.03 | Services Contracts | 16,275,618 | 15,917,014 |
1.02.04.01.04 | Software License | 461,512 | 468,125 |
PAGE: 3 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Financial Position – Liabilities
(R$ thousand)
Code | Description | Current Quarter | Previous Year |
3/31/2018 | 12/31/2017 | ||
2 | Total Liabilities | 40,685,614 | 39,546,444 |
2.01 | Current Liabilities | 4,968,725 | 4,771,880 |
2.01.01 | Labor and Pension Plan Liabilities | 633,146 | 588,073 |
2.01.01.01 | Social Security Liabilities | 23,657 | 40,631 |
2.01.01.02 | Labor Liabilities | 609,489 | 547,442 |
2.01.02 | Trade Payable | 310,685 | 344,947 |
2.01.02.01 | Domestic Suppliers | 310,675 | 344,947 |
2.01.02.02 | Foreign Suppliers | 10 | 0 |
2.01.03 | Tax Liabilities | 126,977 | 183,965 |
2.01.03.01 | Federal Tax Liabilities | 122,432 | 176,202 |
2.01.03.01.02 | PIS-Pasep and Cofins Payable | 80,044 | 74,034 |
2.01.03.01.03 | INSS (social security contribution) Payable | 35,251 | 35,365 |
2.01.03.01.20 | Other Federal Taxes | 7,137 | 66,803 |
2.01.03.03 | Municipal Tax Liabilities | 4,545 | 7,763 |
2.01.04 | Borrowings and Financing | 1,876,775 | 1,746,755 |
2.01.04.01 | Borrowings and Financing | 826,555 | 827,702 |
2.01.04.01.01 | In Domestic Currency | 239,298 | 280,331 |
2.01.04.01.02 | In Foreign Currency | 587,257 | 547,371 |
2.01.04.02 | Debentures | 1,032,682 | 901,480 |
2.01.04.03 | Financing through Finance Lease | 17,538 | 17,573 |
2.01.05 | Other Liabilities | 1,436,194 | 1,300,181 |
2.01.05.01 | Payables to Related Parties | 1,402 | 1,367 |
2.01.05.01.03 | Payables to Controlling Shareholders | 1,402 | 1,367 |
2.01.05.02 | Other | 1,434,792 | 1,298,814 |
2.01.05.02.01 | Dividends and Interest on Equity Payable | 598,612 | 598,612 |
2.01.05.02.04 | Services Payable | 515,852 | 408,275 |
2.01.05.02.05 | Refundable Amounts | 12,160 | 11,598 |
2.01.05.02.06 | Program Contract Commitments | 138,591 | 128,802 |
2.01.05.02.07 | Public-Private Partnership - PPP | 76,151 | 60,007 |
2.01.05.02.09 | Indemnities | 11,220 | 10,368 |
2.01.05.02.20 | Other Liabilities | 82,206 | 81,152 |
2.01.06 | Provisions | 584,948 | 607,959 |
2.01.06.01 | Tax, Social Security, Labor and Civil Provisions | 169,403 | 170,012 |
2.01.06.01.01 | Tax Provisions | 33,104 | 32,712 |
2.01.06.01.02 | Social Security and Labor Provisions | 46,990 | 45,881 |
2.01.06.01.04 | Civil Provisions | 89,309 | 91,419 |
2.01.06.02 | Other Provisions | 415,545 | 437,947 |
2.01.06.02.03 | Provisions for Environmental Liabilities and Decommissioning | 17,524 | 16,472 |
2.01.06.02.04 | Provisions for Customers | 352,723 | 373,747 |
2.01.06.02.05 | Provisions for Suppliers | 45,298 | 47,728 |
2.02 | Noncurrent Liabilities | 17,623,449 | 17,261,555 |
2.02.01 | Borrowings and Financing | 10,605,701 | 10,354,211 |
2.02.01.01 | Borrowings and Financing | 7,372,802 | 7,224,061 |
2.02.01.01.01 | In Domestic Currency | 2,186,421 | 2,098,611 |
2.02.01.01.02 | In Foreign Currency | 5,186,381 | 5,125,450 |
2.02.01.02 | Debentures | 2,684,283 | 2,586,106 |
PAGE: 4 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Financial Position – Liabilities
(R$ thousand)
Code | Description | Current Quarter | Previous Year |
3/31/2018 | 12/31/2017 | ||
2.02.01.03 | Financing through Finance Lease | 548,616 | 544,044 |
2.02.02 | Other Liabilities | 6,549,451 | 6,400,345 |
2.02.02.02 | Other | 6,549,451 | 6,400,345 |
2.02.02.02.04 | Pension Plan Liabilities | 2,939,958 | 2,932,338 |
2.02.02.02.05 | Program Contract Commitments | 105,201 | 110,698 |
2.02.02.02.06 | Public-Private Partnership - PPP | 3,155,812 | 3,011,409 |
2.02.02.02.07 | Indemnities | 31,146 | 30,179 |
2.02.02.02.08 | Labor Liabilities | 6,715 | 6,494 |
2.02.02.02.09 | Deferred Cofins/Pasep | 128,769 | 130,182 |
2.02.02.02.20 | Other Liabilities | 181,850 | 179,045 |
2.02.03 | Deferred Taxes | 19,125 | 36,754 |
2.02.03.01 | Deferred Income Tax and Social Contribution | 19,125 | 36,754 |
2.02.03.01.01 | Deferred Income Tax and Social Contribution | 19,125 | 36,754 |
2.02.04 | Provisions | 449,172 | 470,245 |
2.02.04.01 | Tax, Social Security, Labor and Civil Provisions | 289,543 | 292,999 |
2.02.04.01.01 | Tax Provisions | 34,292 | 38,881 |
2.02.04.01.02 | Social Security and Labor Provisions | 250,300 | 247,220 |
2.02.04.01.04 | Civil Provisions | 4,951 | 6,898 |
2.02.04.02 | Other Provisions | 159,629 | 177,246 |
2.02.04.02.03 | Provisions for Environmental Liabilities and Decommissioning | 152,501 | 143,974 |
2.02.04.02.04 | Provisions for Customers | 5,587 | 8,571 |
2.02.04.02.05 | Provisions for Suppliers | 1,541 | 24,701 |
2.03 | Equity | 18,093,440 | 17,513,009 |
2.03.01 | Paid-Up Capital | 10,000,000 | 10,000,000 |
2.03.04 | Profit Reserve | 8,051,110 | 8,051,110 |
2.03.04.01 | Legal Reserve | 1,058,275 | 1,058,275 |
2.03.04.08 | Additional Dividend Proposed | 53,539 | 53,539 |
2.03.04.10 | Reserve for Investments | 6,939,296 | 6,939,296 |
2.03.05 | Retained Earnings/Accumulated Losses | 580,431 | 0 |
2.03.06 | Equity Valuation Adjustments | -538,101 | -538,101 |
PAGE: 5 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Income Statement
(R$ thousands)
Code | Description | YTD Current Year | YTD Previous Year |
1/01/2018 to 3/31/2018 | 1/01/2017 to 3/31/2017 | ||
3.01 | Revenue from Sales and/or Services | 3,699,668 | 3,558,825 |
3.02 | Cost of Sales and/or Services | -2,139,237 | -2,061,416 |
3.02.01 | Cost of Sales and/or Services | -1,506,585 | -1,354,187 |
3.02.02 | Construction Cost | -632,652 | -707,229 |
3.03 | Gross Profit | 1,560,431 | 1,497,409 |
3.04 | Operating Income/Expenses | -477,826 | -465,380 |
3.04.01 | Selling Expenses | -224,155 | -238,680 |
3.04.02 | General and Administrative Expenses | -267,980 | -239,134 |
3.04.04 | Other Operating Income | 17,425 | 8,697 |
3.04.04.01 | Other Operating Income | 19,460 | 11,568 |
3.04.04.02 | Cofins and Pasep | -2,035 | -2,871 |
3.04.05 | Other Operating Expenses | -5,933 | 1,867 |
3.04.05.01 | Loss on Write-off of Property, Plant and Equipment Items | -5,384 | 2,066 |
3.04.05.04 | Surplus Cost of Electricity Sold | -365 | 0 |
3.04.05.05 | Provision for Inventory Losses | -106 | 0 |
3.04.05.20 | Other | -78 | -199 |
3.04.06 | Equity Results | 2,817 | 1,870 |
3.05 | Income before Financial Result and Taxes | 1,082,605 | 1,032,029 |
3.06 | Financial Result | -193,933 | 3,798 |
3.06.01 | Financial Income | 77,099 | 80,898 |
3.06.01.01 | Financial Income | 80,999 | 84,551 |
3.06.01.02 | Exchange Gains | -134 | 279 |
3.06.01.03 | Cofins and Pasep | -3,766 | -3,932 |
3.06.02 | Financial Expenses | -271,032 | -77,100 |
3.06.02.01 | Financial Expenses | -159,017 | -166,488 |
3.06.02.02 | Exchange Losses | -112,015 | 89,388 |
3.07 | Earnings before Income Tax | 888,672 | 1,035,827 |
3.08 | Income Tax and Social Contribution | -308,241 | -361,465 |
3.08.01 | Current | -325,870 | -350,440 |
3.08.02 | Deferred | 17,629 | -11,025 |
3.09 | Net Result from Continued Operations | 580,431 | 674,362 |
3.11 | Profit/Loss for the Period | 580,431 | 674,362 |
3.99 | Earnings per Share - (Reais/Share) | ||
3.99.01 | Basic Earnings per Share | ||
3.99.01.01 | Common Share | 0.84919 | 0.98662 |
3.99.02 | Diluted Earnings per Share | ||
3.99.02.01 | Common Share | 0.84919 | 0.98662 |
PAGE: 6 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Comprehensive Income
(R$ thousand)
Code | Description | YTD Current | YTD Previous |
Year | Year | ||
1/01/2018 to 3/31/2018 | 1/01/2017 to 3/31/2017 | ||
4.01 | Net Income for the Period | 580,431 | 674,362 |
4.03 | Comprehensive Income for the Period | 580,431 | 674,362 |
PAGE: 7 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Code | Description | YTD Current Year | YTD Previous Year |
1/01/2018 to 3/31/2018 | 1/01/2017 to 3/31/2017 | ||
6.01 | Net Cash from Operating Activities | 662,016 | 763,612 |
6.01.01 | Cash from Operations | 1,557,019 | 1,636,617 |
6.01.01.01 | Profit before Income Tax and Social Contribution | 888,672 | 1,035,827 |
6.01.01.02 | Provision and Inflation Adjustments on Provisions | 36,513 | 62,657 |
6.01.01.04 | Finance Charges from Customers | -60,324 | -60,716 |
6.01.01.05 | Residual Value of Property, Plant and Equipment, | 4,282 | 11,314 |
Intangible Assets and Investment Properties Written-off | |||
6.01.01.06 | Depreciation and Amortization | 327,899 | 331,948 |
6.01.01.07 | Interest on Borrowings and Financing Payable | 119,242 | 90,640 |
6.01.01.08 | Monetary and Exchange Change on Borrowings and | 131,664 | -67,648 |
Financing | |||
6.01.01.09 | Interest and Monetary Changes on Liabilities | 8,099 | 2,950 |
6.01.01.10 | Interest and Monetary Changes on Assets | -3,929 | -10,569 |
6.01.01.11 | Allowance for Doubtful Accounts | 48,631 | 86,136 |
6.01.01.12 | Provision for Consent Decree (TAC) | 7,387 | 2,314 |
6.01.01.13 | Equity Results | -2,817 | -1,870 |
6.01.01.15 | Other Adjustments | 6,303 | -12,295 |
6.01.01.16 | Transfer of Funds to São Paulo Municipal Government | 0 | 104,360 |
6.01.01.17 | Construction Margin over Intangible Assets Resulting from | -14,551 | -15,699 |
Concession Contracts | |||
6.01.01.18 | Pension Plan Liabilities | 59,948 | 77,268 |
6.01.02 | Changes in Assets and Liabilities | -477,063 | -387,509 |
6.01.02.01 | Trade Receivables | -77,646 | -49,660 |
6.01.02.02 | Related-Party Balances and Transactions | 28,282 | 16,050 |
6.01.02.03 | Inventories | 10,179 | -6,047 |
6.01.02.04 | Recoverable Taxes | 86,069 | 28,438 |
6.01.02.05 | Other Receivables | -112,021 | -71,154 |
6.01.02.06 | Escrow Deposits | -21,891 | 16,047 |
6.01.02.08 | Contractors and Suppliers | -244,286 | -29,084 |
6.01.02.09 | Payroll, Provisions and Social Contribution | 37,686 | -5,959 |
6.01.02.10 | Pension Plan Liabilities | -52,328 | -54,489 |
6.01.02.11 | Taxes and Contributions Payable | -160,978 | -78,771 |
6.01.02.12 | Services Payable | 107,577 | -127,199 |
6.01.02.13 | Other Liabilities | 4,304 | 24,542 |
6.01.02.14 | Provisions | -80,597 | -49,923 |
6.01.02.15 | Deferred Cofins/Pasep | -1,413 | -300 |
6.01.03 | Other | -417,940 | -485,496 |
6.01.03.01 | Interest Paid | -196,060 | -213,824 |
6.01.03.02 | Income Tax and Social Contribution Paid | -221,880 | -271,672 |
6.02 | Net Cash from Investing Activities | -228,659 | -529,408 |
6.02.01 | Acquisition of Intangible Assets | -229,976 | -520,886 |
6.02.02 | Acquisition of Property, Plant and Equipment | -2,786 | -10,601 |
6.02.03 | Increase in Investments | -655 | 0 |
6.02.04 | Restricted Cash | 4,758 | 2,079 |
6.03 | Net Cash from Financing Activities | 247,458 | -136,603 |
PAGE: 8 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Cash Flows – Indirect Method
(R$ thousand)
Code | Description | YTD Current Year | YTD Previous Year |
1/01/2018 to 3/31/2018 | 1/01/2017 to 3/31/2017 | ||
6.03.01 | Funding | 943,048 | 275,208 |
6.03.02 | Amortization | -681,698 | -403,698 |
6.03.04 | Public-Private Partnership - PPP | -13,892 | -7,741 |
6.03.05 | Program Contract Commitments | 0 | -372 |
6.05 | Increase (Decrease) in Cash and Cash Equivalents | 680,815 | 97,601 |
6.05.01 | Opening Cash and Cash Equivalents | 2,283,047 | 1,886,221 |
6.05.02 | Closing Cash and Cash Equivalents | 2,963,862 | 1,983,822 |
PAGE: 9 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Changes in Equity / 1/01/2018 to 3/31/2018
(R$ thousand)
Code | Description | Paid-up | Capital Reserves, | Profit Reserves | Retained | Other Comprehensive | Equity |
Capital | Options Granted and | Earnings/Accumulated | Income | ||||
Treasury Shares | Losses | ||||||
5.01 | Opening Balances | 10,000,000 | 0 | 8,051,110 | 0 | -538,101 | 17,513,009 |
5.03 | Restated Opening Balances | 10,000,000 | 0 | 8,051,110 | 0 | -538,101 | 17,513,009 |
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 580,431 | 0 | 580,431 |
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 580,431 | 0 | 580,431 |
5.07 | Closing Balances | 10,000,000 | 0 | 8,051,110 | 580,431 | -538,101 | 18,093,440 |
PAGE: 10 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Changes in Equity / 1/01/2017 to 3/31/2017
(R$ thousand)
Code | Description | Paid-up | Capital Reserves, | Profit Reserves | Retained | Other Comprehensive | Equity |
Capital | Options Granted and | Earnings/Accumulated | Income | ||||
Treasury Shares | Losses | ||||||
5.01 | Opening Balances | 10,000,000 | 0 | 6,244,859 | 0 | -825,648 | 15,419,211 |
5.03 | Restated Opening Balances | 10,000,000 | 0 | 6,244,859 | 0 | -825,648 | 15,419,211 |
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 674,362 | 0 | 674,362 |
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 674,362 | 0 | 674,362 |
5.07 | Closing Balances | 10,000,000 | 0 | 6,244,859 | 674,362 | -825,648 | 16,093,573 |
PAGE: 11 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Parent Company’s Financial Statements / Statement of Value Added
(R$ thousand)
Cod | Description | YTD Current Year | YTD Previous Year |
1/01/2018 to 3/31/2018 | 1/01/2017 to 3/31/2017 | ||
7.01 | Revenue | 3,898,878 | 3,677,651 |
7.01.01 | Goods, Products and Services Sold | 3,280,846 | 3,029,291 |
7.01.02 | Other Revenue | 19,460 | 11,568 |
7.01.03 | Revenue from Construction of own Assets | 647,203 | 722,928 |
7.01.04 | Allowance for/Reversal of Doubtful Accounts | -48,631 | -86,136 |
7.02 | Inputs Acquired from Third Parties | -1,390,017 | -1,257,582 |
7.02.01 | Costs of Sales and Services | -1,124,975 | -1,055,933 |
7.02.02 | Materials, Electricity, Outside Services and Others | -259,109 | -203,516 |
7.02.04 | Other | -5,933 | 1,867 |
7.03 | Gross Value Added | 2,508,861 | 2,420,069 |
7.04 | Retentions | -327,899 | -331,948 |
7.04.01 | Depreciation, Amortization and Depletion | -327,899 | -331,948 |
7.05 | Net Value Added Produced | 2,180,962 | 2,088,121 |
7.06 | Wealth Received in Transfer | 83,682 | 86,700 |
7.06.01 | Equity Results | 2,817 | 1,870 |
7.06.02 | Financial Income | 80,865 | 84,830 |
7.07 | Total Value Added to Distribute | 2,264,644 | 2,174,821 |
7.08 | Value Added Distribution | 2,264,644 | 2,174,821 |
7.08.01 | Personnel | 570,360 | 541,307 |
7.08.01.01 | Salaries and Wages | 389,100 | 363,315 |
7.08.01.02 | Benefits | 139,950 | 146,150 |
7.08.01.03 | Government Severance Indemnity Fund for Employees | 41,310 | 31,842 |
(FGTS) | |||
7.08.02 | Taxes and Contributions | 679,408 | 698,920 |
7.08.02.01 | Federal | 636,987 | 666,858 |
7.08.02.02 | State | 30,019 | 21,586 |
7.08.02.03 | Municipal | 12,402 | 10,476 |
7.08.03 | Value Distributed to Providers of Capital | 434,445 | 260,232 |
7.08.03.01 | Interest | 414,156 | 243,323 |
7.08.03.02 | Rental | 20,289 | 16,909 |
7.08.04 | Value Distributed to Shareholders | 580,431 | 674,362 |
7.08.04.03 | Retained Earnings/Accumulated Loss for the Period | 580,431 | 674,362 |
PAGE: 12 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Comments on the Company’s Performance
1. Financial highlights
R$ million
|
Chg. | |||
|
1Q18 |
1Q17 |
R$ |
% |
Gross operating revenue (1) |
3,280.8 |
3,029.3 |
251.5 |
8.3 |
Construction revenue |
647.2 |
722.9 |
(75.7) |
(10.5) |
Cofins, Pasep and TRCF taxes (2) |
(228.4) |
(193.4) |
(35.0) |
18.1 |
(=) Net operating revenue |
3,699.6 |
3,558.8 |
140.8 |
4.0 |
Costs and expenses |
(1,998.7) |
(1,832.0) |
(166.7) |
9.1 |
Construction costs |
(632.7) |
(707.2) |
74.5 |
(10.5) |
Equity result |
2.8 |
1.8 |
1.0 |
55.6 |
Other operating revenue (expenses), net |
11.5 |
10.6 |
0.9 |
8.5 |
(=) Earnings before financial result, income tax and social contribution |
1,082.5 |
1,032.0 |
50.5 |
4.9 |
Financial result |
(193.9) |
3.8 |
(197.7) |
(5,202.6) |
(=) Earnings before income tax and social contribution |
888.6 |
1,035.8 |
(147.2) |
(14.2) |
Income tax and social contribution |
(308.2) |
(361.4) |
53.2 |
(14.7) |
(=) Net income |
580.4 |
674.4 |
(94.0) |
(13.9) |
Earnings per share (R$)* |
0.85 |
0.99 |
|
|
(1) Includes revenue from Regulatory, Control and Inspection Fee (TRCF - Taxa de Regulação, Controle e Fiscalização), in the amount of R$ 15.5 million.
(2) Includes TRCF transfers in the amount of R$ 13.5 million. (*) Total shares = 683,509,869
R$ million
|
Chg. | |||
|
1Q18 |
1Q17 |
R$ |
% |
Net income |
580.4 |
674.4 |
(94.0) |
(13.9) |
Income tax and social contribution |
308.2 |
361.4 |
(53.2) |
(14.7) |
Financial result |
193.9 |
(3.8) |
197.7 |
(5,202.6) |
Other operating revenue (expenses), net |
(11.5) |
(10.6) |
(0.9) |
8.5 |
(=) Adjusted EBIT* |
1,071.0 |
1,021.4 |
49.6 |
4.9 |
Depreciation and amortization |
328.0 |
332.0 |
(4.0) |
(1.2) |
(=) Adjusted EBITDA ** |
1,399.0 |
1,353.4 |
45.6 |
3.4 |
(%) Adjusted EBITDA margin |
37.8 |
38.0 |
|
|
(*) Adjusted EBIT is net income before: (i) other operating revenues/expenses, net; (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 1Q18, net operating revenue, which considers construction revenue, totaled R$ 3,699.6 million, a growth of 4% over the same period of last year.
Costs and expenses, which include construction costs, totaled R$ 2,631.4 million, 3.6% up on 1Q17.
Adjusted EBIT, in the amount of R$ 1,071.0 million, increased 4.9% when compared to the R$ 1,021.4 million reported in 1Q17.
Adjusted EBITDA, in the amount of R$ 1,399.0 million, increased 3.4% when compared to the R$ 1,353.4 million reported in 1Q17 (R$ 5,314.8 million in the last 12 months).
Adjusted EBITDA margin in 1Q18 was 37.8%, against 38.0% in 1Q17 (36.0% in the last 12 months).
Excluding the effects of revenue and construction costs, adjusted EBITDA margin resulted in 45.4% in 1Q18 (47.2% in 1Q17 and 44.9% in the last 12 months).
In 1Q18 the company recorded a net income of R$ 580.4 million, compared to a net income of R$ 674.4 million in 1Q17.
PAGE: 13 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Comments on the Company’s Performance
2. Gross operating revenue
The gross operating revenue related to the sanitation services, in the amount of R$ 3,280.8 million, which does not consider construction revenue, increased by R$ 251.5 million or 8.3%, when compared to R$ 3,029.3 million in 1Q17.
The main factors that led to this variation were:
· Tariff repositioning index of 7.9% since November 2017; and
· 2.1% increase in total billed volume, 2.1% in water and 2.0% in sewage
The increase caused by the above-mentioned facts was offset by the recognition of higher estimated losses on wholesale revenue in 1Q18, in the amount of R$ 36.1 million, due to lower payment received in the period, mainly from the municipality of Guarulhos.
3. Construction revenue
Construction revenue decreased by R$ 75.7 million or 10.5%, when compared to the previous year. The variation is mainly due to the lower investments in the municipalities served by the Company.
4. Billed volume
The tables below show the water and sewage billed volume in quarterly terms, per customer category and region.
QUARTER | |||||||||
WATER AND SEWAGE BILLED VOLUME(1) PER CUSTOMER CATEGORY - million m3 | |||||||||
|
Water |
Sewage |
Water + Sewage | ||||||
Category |
1Q18 |
1Q17 |
Chg. % |
1Q18 |
1Q17 |
Chg. % |
1Q18 |
1Q17 |
Chg. % |
Residential |
406.8 |
398.9 |
2.0 |
346.5 |
338.1 |
2.5 |
753.3 |
737.0 |
2.2 |
Commercial |
42.0 |
41.5 |
1.2 |
40.0 |
39.5 |
1.3 |
82.0 |
81.0 |
1.2 |
Industrial |
7.8 |
7.8 |
- |
9.7 |
9.3 |
4.3 |
17.5 |
17.1 |
2.3 |
Public |
9.7 |
9.9 |
(2.0) |
8.7 |
8.7 |
- |
18.4 |
18.6 |
(1.1) |
Total retail |
466.3 |
458.1 |
1.8 |
404.9 |
395.6 |
2.4 |
871.2 |
853.7 |
2.0 |
Wholesale (3) |
64.7 |
61.9 |
4.5 |
7.7 |
9.0 |
(14.4) |
72.4 |
70.9 |
2.1 |
Overall Total |
531.0 |
520.0 |
2.1 |
412.6 |
404.6 |
2.0 |
943.6 |
924.6 |
2.1 |
WATER AND SEWAGE BILLED VOLUME(1) PER REGION - million m3 | |||||||||
|
Water |
Sewage |
Water + Sewage | ||||||
Region |
1Q18 |
1Q17 |
Chg. % |
1Q18 |
1Q17 |
Chg. % |
1Q18 |
1Q17 |
Chg. % |
Metropolitan |
299.7 |
292.9 |
2.3 |
260.7 |
254.0 |
2.6 |
560.4 |
546.9 |
2.5 |
Regional (2) |
166.6 |
165.2 |
0.8 |
144.2 |
141.6 |
1.8 |
310.8 |
306.8 |
1.3 |
Total retail |
466.3 |
458.1 |
1.8 |
404.9 |
395.6 |
2.4 |
871.2 |
853.7 |
2.0 |
Wholesale (3) |
64.7 |
61.9 |
4.5 |
7.7 |
9.0 |
(14.4) |
72.4 |
70.9 |
2.1 |
Overall Total |
531.0 |
520.0 |
2.1 |
412.6 |
404.6 |
2.0 |
943.6 |
924.6 |
2.1 |
(1) Unaudited
(2) Including coastal and interior region
(3) Reused water volume and non-domestic sewage are included in
PAGE: 14 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Comments on the Company’s Performance
Costs, administrative and selling expenses and construction costs increased by R$ 92.2 million in 1Q18 (3.6%). Excluding construction costs, there was an increase of R$ 166.7 million (9.1%).
As a percentage of net revenue, costs, administrative and selling expenses and construction costs represented 71.1% in 1Q18, against 71.3% in 1Q17.
R$ million
|
Chg. | |||
|
1Q18 |
1Q17 |
R$ |
% |
Salaries and payroll charges and Pension plan obligations |
630.0 |
588.4 |
41.6 |
7.1 |
General supplies |
55.0 |
36.0 |
19.0 |
52.8 |
Treatment supplies |
75.9 |
71.3 |
4.6 |
6.5 |
Services |
377.1 |
282.8 |
94.3 |
33.3 |
Electricity |
221.9 |
199.7 |
22.2 |
11.1 |
General expenses |
246.2 |
209.9 |
36.3 |
17.3 |
Tax expenses |
16.0 |
25.8 |
(9.8) |
(38.0) |
Sub-total |
1,622.1 |
1,413.9 |
208.2 |
14.7 |
Depreciation and amortization |
328.0 |
332.0 |
(4.0) |
(1.2) |
Allowance for doubtful accounts |
48.6 |
86.1 |
(37.5) |
(43.6) |
Sub-total |
376.6 |
418.1 |
(41.5) |
(9.9) |
Costs, administrative and selling expenses |
1,998.7 |
1,832.0 |
166.7 |
9.1 |
Construction costs |
632.7 |
707.2 |
(74.5) |
(10.5) |
Costs, adm. & selling expenses and construction costs |
2,631.4 |
2,539.2 |
92.2 |
3.6 |
% of net revenue |
71.1 |
71.3 |
|
|
5.1. Salaries and payroll charges and Pension plan obligations
In 1Q18, there was an increase of R$ 41.6 million or 7.1%, chiefly due to the following factors:
· Increase of R$ 22.2 million, mainly due to the salary increase of 3.71%, in May 2017 and the application of 1.7% referring to the Carrier and Salary Plan, in February 2018;
· Increase of R$ 7.4 million in provision referring to TAC (Conduct Adjustment Term) of retirees;
· Increase of R$ 5.7 million in overtime expenses; and
· Increase of R$ 4.7 million in health care.
5.2. General supplies
Increase of R$ 19.0 million or 52.8%, due to the following factors:
· Increase of R$ 8.1 million, resulting from the greater application of materials for maintenance in networks and connections of water and sewage; and
· Greater application of materials for conservation of properties, furniture and equipment, in the amount of R$ 6.7 million.
5.3. Services
Growth of R$ 94.3 million or 33.3%, due to the following factors:
· Higher estimate of expenses, in the amount of R$ 47.5 million, due to an increase in several services contracted in 1Q18, mainly in water and sewage connections and network maintenance;
· Increase of R$ 15.8 million in advertising campaigns; and
· Increase in expenses with credit recovery, in the amount of R$ 7.3 million.
PAGE: 15 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Comments on the Company’s Performance
5.4. Electricity
Electricity expenses totaled R$ 221.9 million in 1Q18, an increase of R$ 22.2 million or 11.1% compared to R$ 199.7 million in 1Q17. The main factors that contributed to this decrease were:
· Average increase of 0.8% in the free market tariffs (ACL - Ambiente de Contratação Livre), with an increase of 13.4% in consumption;
· Average reduction of 9.9% in the grid market tariff (TUSD), with a 12.3% rise in consumption; and
· Average increase of 1.7% in the regulated market tariffs (ACR - Ambiente de Contratação Regulada), with a decrease of 6.9% in consumption.
In 1Q18, the ACL accounted for 36.2% of the total electricity consumed by the Company, TUSD accounted for 35.9% and ACR represented 27.9% of that amount.
5.5. General expenses
Increase of R$ 36.3 million or 17.3%, totaling R$ 246.2 million in 1Q18, against R$ 209.9 million in 1Q17, due to the following factors:
· Higher provision for transfer to the Municipal Fund of Environmental Sanitation and Infrastructure, in the amount of R$ 17.2 million, due to the increase in revenue obtained with the municipality of São Paulo;
· Increase in expenses related to water use, in the amount of R$ 4.9 million; and
· Greater provisioning for lawsuits in 1Q18, in the amount of R$ 4.1 million.
5.6. Allowance for doubtful accounts
Decrease of R$ 37.5 million, mainly due to higher recovery of unpaid amounts in 1Q18.
6. Financial result |
|
|
|
R$ million |
|
|
|
Chg. | |
|
1Q18 |
1Q17 |
R$ |
% |
Financial expenses, net of income |
(67.2) |
(68.9) |
1.7 |
(2.5) |
Net monetary and exchange variation |
(126.7) |
72.7 |
(199.4) |
(274.3) |
Financial Result |
(193.9) |
3.8 |
(197.7) |
(5,202.6) |
6.1. Financial expenses, net of income |
|
|
|
|
|
|
|
|
R$ million |
|
|
|
Chg. | |
|
1Q18 |
1Q17 |
R$ |
% |
Financial expenses Interest and charges on domestic loans and financing |
(78.2) |
(64.8) |
(13.4) |
20.7 |
Interest and charges on international loans and financing |
(36.6) |
(22.2) |
(14.4) |
64.9 |
Other financial expenses |
(14.9) |
(42.1) |
27.2 |
(64.6) |
Total financial expenses |
(129.7) |
(129.1) |
(0.6) |
0.5 |
Financial income |
62.5 |
60.2 |
2.3 |
3.8 |
Financial expenses, net of income |
(67.2) |
(68.9) |
1.7 |
(2.5) |
PAGE: 16 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Comments on the Company’s Performance
Decrease of R$ 1.7 million, mainly due to the following factors:
· Increase of R$ 13.4 million in interest and charges on domestic loans and financing, mainly due to the lower capitalization of interest in works in progress in 1Q18, when compared to the capitalization recorded in 1Q17;
· Increase of R$ 14.4 million in interest and charges on international loans and financing, mainly due to the appreciation of the US dollar against the real in 1Q18, compared to the devaluation in 1Q17 (0.5% and -2.8% respectively), and higher appreciation of the yen against the real in 1Q18, when compared to the appreciation in 1Q17 (6.3% and 1.9%, respectively); and
· Decrease of R$ 27.2 million in other financial expenses, largely due to the lower provisioning of interest on lawsuits in 1Q18.
6.2. Net monetary and exchange variation |
|
|
|
R$ million |
|
|
|
Chg |
. |
|
1Q18 |
1Q17 |
R$ |
% |
Monetary variation on loans and financing |
(19.6) |
(21.8) |
2.2 |
(10.1) |
Currency exchange variation on loans and financing |
(112.0) |
89.3 |
(201.3) |
(225.4) |
Other monetary variations |
(9.7) |
(15.5) |
5.8 |
(37.4) |
Monetary/exchange rate variation on liabilities |
(141.3) |
52.0 |
(193.3) |
(371.7) |
Monetary/exchange rate variation on assets |
14.6 |
20.7 |
(6.1) |
(29.5) |
Monetary/exchange rate variation, net |
(126.7) |
72.7 |
(199.4) |
(274.3) |
The effect on the net monetary/exchange rate variation 1Q18 was R$ 199.4 million higher than in 1Q17, with highlight to the R$ 201.3 million increase in the exchange rate variation on loans and financing, due to the appreciation of the dollar against the real in 1Q18, compared to the devaluation in 1Q17 (0.5% and -2.8%, respectively), and higher appreciation of the yen against the real in 1Q18, when compared to the appreciation registered in 1Q17 (6.3% and 1.9%, respectively).
7. Income tax and social contribution
The Company recorded a decrease of R$ 53.2 million, due to the lower taxable result presented in 1Q18, mainly resulting from the appreciation of the US dollar against the real, compared to the devaluation in 1Q17 and the higher appreciation of the yen against the real, when compared to the appreciation registered in 1Q17.
8. Indicators
8.1. Indicators
Operating indicators(*) |
1Q18 |
1Q17 |
% |
Water connections(1) |
8,908 |
8,703 |
2.4 |
Sewage connections (1) |
7,345 |
7,140 |
2.9 |
Population directly served - water (2) |
24.9 |
24.8 |
0.4 |
Population directly served - sewage (2) |
21.6 |
21.3 |
1.4 |
Number of employees |
13,610 |
14,086 |
(3.4) |
Water volume produced - quarter (3) |
702 |
700 |
0.3 |
IPM - Measured water loss (%) |
30.4 |
31.5 |
(3.5) |
IPDt (liters/connection x day) |
298 |
308 |
(3.2) |
(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
PAGE: 17 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Comments on the Company’s Performance
Economic Variables at the close of the quarter(*) |
1Q18 |
1Q17 |
Amplified Consumer Price Index (%)(1) |
0.70 |
0.96 |
National Consumer Price Index (%)(1) |
0.48 |
0.98 |
IPC (1) |
0.04 |
0.38 |
Reference Rate (%)(1) |
0.0000 |
0.3525 |
Interbank Deposit Certificate (%)(2) |
6.39 |
12.13 |
US DOLLAR (3) |
3.3238 |
3.1684 |
YEN (3) |
0.03126 |
0.02844 |
(1) Quarterly rate
(2) Last day average
(3) R$/sell rate previous day price
(*) Unaudited
(R$ million)
DEBT PROFILE | ||||||||
INSTITUTION |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
TOTAL |
Local Currency |
|
|
|
|
|
|
|
|
Brazilian Federal Savings Bank |
52,063 |
71,159 |
73,743 |
77,573 |
81,709 |
73,856 |
832,949 |
1,263,052 |
Debentures |
366,754 |
1,029,909 |
579,963 |
476,635 |
556,106 |
359,749 |
347,850 |
3,716,966 |
BNDES |
78,478 |
117,441 |
99,282 |
98,833 |
98,833 |
93,145 |
505,791 |
1,091,803 |
Leases |
13,013 |
32,900 |
34,553 |
36,350 |
38,304 |
41,035 |
369,999 |
566,154 |
Other |
1,266 |
1,373 |
1,373 |
1,373 |
1,373 |
1,373 |
2,628 |
10,759 |
Interest and other charges |
48,227 |
11,878 |
- |
- |
- |
- |
- |
60,105 |
Total Local Currency |
559,801 |
1,264,660 |
788,914 |
690,764 |
776,325 |
569,158 |
2,059,217 |
6,708,839 |
Foreign Currency |
|
|
|
|
|
|
|
|
IADB |
59,111 |
118,223 |
118,223 |
118,223 |
118,223 |
118,224 |
1,061,600 |
1,711,827 |
BIRD |
- |
10,104 |
20,208 |
20,208 |
20,208 |
20,209 |
212,175 |
303,112 |
Deutsche Bank 350 |
249,285 |
244,432 |
- |
- |
- |
- |
- |
493,717 |
Eurobond |
- |
- |
1,161,066 |
- |
- |
- |
- |
1,161,066 |
JICA |
36,970 |
122,884 |
122,884 |
122,884 |
122,884 |
122,884 |
1,138,558 |
1,789,948 |
BID 1983AB |
79,504 |
58,806 |
57,632 |
25,568 |
25,568 |
23,750 |
- |
270,828 |
Interest and other charges |
43,139 |
- |
- |
- |
- |
- |
- |
43,139 |
Total in foreign currency |
468,009 |
554,449 |
1,480,013 |
286,883 |
286,883 |
285,067 |
2,412,333 |
5,773,637 |
Overall Total |
1,027,810 |
1,819,109 |
2,268,927 |
977,647 |
1,063,208 |
854,225 |
4,471,550 |
12,482,476 |
1Q18 investments totaled R$ 689.2 million, including R$ 172.9 million related to the São Lourenço PPP.
PAGE: 18 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
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. SABESP aims to be a world reference in the provision of sanitation services, in a sustainable, competitive and innovative manner, with a focus on customers.
As of March 31, 2018, the Company operated water and sewage services in 368 municipalities of the State of São Paulo. Most of these municipalities operations are based on 30-year concession, program and services contracts. 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 368 municipalities. As of March 31, 2018, the Company had 370 contracts.
SABESP is not temporarily operating in the municipalities of Macatuba and Cajobi due to judicial orders. The lawsuits are in progress and the carrying amount of these municipalities’ intangible assets was R$ 4,345 as of March 31, 2018 (R$ 4,345 as of December 31, 2017).
As of March 31, 2018, 50 concession agreements (51 as of December 31, 2017) had expired and are being negotiated. From March 31, 2018 to 2030, 31 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 March 31, 2018, 289 program and services contracts were signed (287 contracts as of December 31, 2017).
As of March 31, 2018, the carrying amount of the underlying assets used in the 50 concessions of the municipalities under negotiation totaled R$6,416,264, accounting for 18.97% of the total, and the related gross revenue for the year ended March 31, 2018 totaled R$397,788, accounting for 10.13% of the total.
The Company’s operations are concentrated in the municipality of São Paulo, which represents 55.00% of the gross revenues on March 31, 2018 (52.86% on March 31, 2017) and 48.24% of intangible assets (46.92% on December 31, 2017).
As of 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. On the same date, the State of São Paulo, the Municipality 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 treatment of water;
iii. collect, transport, treatment and final dispose of sanitary sewage; and
iv. adoption of other actions of basic and environmental sanitation.
PAGE: 19 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
The Company operates under an authorization by public deed in some municipalities in the Santos coast region and in the Ribeira Valley, 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; the gross revenue calculated in the three-month period ended March 31, 2018 totaled
R$ 98,042 (R$ 76,086 in the three-month period ended March 31, 2017) and the intangible asset was R$ 313,006 on March 31, 2018 (R$ 310,577 on December 31, 2017).
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, which amended Article 7-A of Law 11,578, of November 26, 2007, allowed the provision of public basic sanitation services to be executed until December 31, 2016. The Company’s Management understands that in the municipalities where the concession agreements were not yet renewed, the operation is 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 segment of B3 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.
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.
On March 3, 2018, the Jaguari-Atibainha interconnection was inaugurated; this interconnection will allow the transfer of an average annual outflow of 5.13 cubic meters per second (m³/s) and a maximum outflow of 8.5 m³/s from the Paraíba do Sul Basin to the Cantareira System. On April 3, 2018, the São Lourenço Production System was inaugurated and will expand water production and capacity by 6.4 m³/s. After construction is completed, the Company will have nine large production systems available to supply the São Paulo Metropolitan Region. These two important works aim at expanding water security in the São Paulo Metropolitan Region.
Management expects that with improved water security, due to the works carried out, the generation of operating cash and the credit lines available for investment, the Company will have sufficient funds to meet its commitments and not compromise its necessary investments.
Corporate reorganization
On May 12, 2017, the Board of the State Privatization Program approved:
(i) the conducting of studies for SABESP’s Capitalization (as defined below);
(ii) the hiring, by SABESP, of the International Finance Corporation, which is associated with the World Bank;
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Notes to the Interim Financial Information
(iii) the execution of an agreement between SABESP and the State Government through the Water Resources and Sanitation Department and the Treasury Department, in order to define the scope of the contract and control the relationship between the parties, including a proportional expense reimbursement.
The proposed Capitalization provides for the creation of a corporation to directly control SABESP through the transfer of the shares held by the São Paulo State to the capital stock of the new corporation. The São Paulo State will continue holding a sufficient number of shares to ensure SABESP’s control, as provided for in law. The objective of the Capitalization is to overcome a situation that restricts investments designed to preserve the expansion of activities to ensure the universalization of basic sanitation services offered by the Company.
The Capitalization may provide for the admission of institutional investors to contribute financial resources to the capital stock of the new company, strengthening SABESP’s corporate governance and business efficiency in order to promote and accelerate the universalization of sanitation services in the State of São Paulo.
On September 15, 2017, Law 16,525 was sanctioned, enacted and published; it provides for the corporate reorganization of Companhia de Saneamento Básico de São Paulo - SABESP and sets forth other provisions.
The interim financial information was approved by the Board of Directors on May 10, 2018.
Presentation of the interim financial information
The interim financial information as of March 31, 2018, 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 March 31, 2018, therefore, does not include all the notes and reporting required by the annual financial statements, and accordingly, shall be read jointly with the Annual Financial Statements as of December 31, 2017, 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. Therefore, the interim financial information as of March 31, 2018 was not fully completed due to redundancies with the information presented in the annual financial statements of December 31, 2017 and, as provided for in Official Letter/CVM/SNC/SEP 003/2011. In this interim financial information, the notes below were either not presented or are not as detailed as those in the annual financial statements:
i. Summary of significant accounting policies (Note 3);
ii. Changes in accounting practices and disclosures (Note 4);
iii. Risk Management – Financial Instruments (Note 5.4);
iv. Key Accounting Estimates and Judgments (Note 6);
v. Related-Party Balances and Transactions (Note 10);
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Notes to the Interim Financial Information
vi. Investments (Note 12);
vii. Intangible Assets (Note 14);
viii. Borrowings and Financing (Note 16);
ix. Deferred Taxes and Contributions (Note 18);
x. Provisions (Note 19);
xi. Employees Benefits (Note 20);
xii. Equity (Note 22);
xiii. Insurance (Note 25);
xiv. Financial Income (Expenses) (Note 28).
All material information related to the financial statements, and this information alone, is being disclosed and corresponds to the information used by the Company’s Management in its administration.
Except for the amendments introduced by CPC 47/IFRS 15 (Revenue from Contracts with Customers) and CPC 48/IFRS 9 (Financial Instruments) pursuant to the accounting policies described below, the other policies used in the preparation of the interim financial information for the quarter ended March 31, 2018 are consistent with those used to prepare the Annual Financial Statements for the year ended December 31, 2017:
(a) Revenue from sanitation services
Revenue from water supply and sanitation services are recognized as the water is consumed and services are provided. Revenues, including the revenues unbilled, are recognized at the fair value of the consideration received or receivable for the sale of those services. Revenue is shown net of value-added tax, rebates and discounts. Unbilled revenues represent incurred revenues in which the services were provided, but not yet billed until the end of the each period and are recorded as trade receivables based on monthly estimates of the completed services. Concerning revenues of wholesale municipal governments, which do not pay the full invoice, the Company records allowance for doubtful accounts upon invoicing in revenue reduction account.
The Company recognizes revenue when: i) it identifies the contracts with customers; ii) it identifies the different obligations in the contract; iii) it determines the transaction price; iv) it allocates the transaction price to the performance obligations in the contracts; and (v) it satisfies all performance obligations. Amounts in dispute are recognized as revenue when collected.
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Notes to the Interim Financial Information
(b) Construction revenue
Revenue from concession construction contracts is recognized in accordance with ICPC 01 (R1)/IFRIC 12 (Service Concession Arrangements) and CPC 47 (R1)/IFRS 15 (Revenue from Contracts with Customers), as all performance obligations are satisfied over time. During the construction of the contract, an asset is classified as intangible, as the Company estimates that the fair value of its consideration is equivalent to expected construction costs plus margin. The fee represents the additional margin related to the work performed by the Company in relation to such construction contracts and it is added construction costs, resulting in the construction revenue.
The Company classifies its financial assets according to the following categories: measured at amortized cost, measured at fair value through other comprehensive income and measured at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of the financial assets at inception. As of March 31, 2018, the Company did not have financial assets classified as fair value through other comprehensive income and fair value through profit or loss.
· Amortized cost
This comprises financial assets that meet the following conditions: (i) it is held within the business model whose objective is to hold financial assets to collect contractual cash flows; and (ii) the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Are presented as current assets, except for those with maturity of more than 12 months after the reporting date (these are classified as noncurrent assets). The Company's financial assets measured at amortized cost include cash and cash equivalents, restrict cash, balances of trade receivables, accounts receivable from related parties, other receivables, receivables from the Water National Agency – ANA. Financial assets measured at amortized cost are recorded at fair value and subsequently at amortized cost, under the effective interest rate method.
The Company classifies its financial liabilities measured at amortized cost. Classification depends on the purpose to which the financial liabilities were assumed. This category comprises balances payable to contractors and suppliers, borrowings and financing, services payable, balances payable from public-private partnership (PPP), and program contract commitments.
The effective interest rate method is adopted to calculate the amortized cost of a financial liability and allocate its interest expense under the respective period. The effective interest rate exactly deducts the estimated future cash flows (including fees, transaction costs and other issue costs) throughout the financial liability’s estimated life or, when appropriate, during a shorter period, for initial recognition of the net carrying amount.
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Notes to the Interim Financial Information
Trade receivables are amounts due from customers for services performed in the ordinary course of business. These are classified as current assets, except when maturity exceeds 12 months after the end of the reporting period. In these cases, they are presented as noncurrent assets.
The Company records allowance for doubtful accounts for receivable balances at an amount that Management considers to be sufficient to cover eventual losses. The analysis is carried out based on objective “accounts receivable” data, past receipts, existing guarantees and expected future losses.
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.
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 borrowings.
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 borrowings 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.
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Notes to the Interim Financial Information
A significant amount of the Company’s financial debt is indexed to the U.S. dollar and Yen, in the total amount of
R$ 5,802,695 as of March 31, 2018 (R$ 5,702,375 as of December 31, 2017). Below, the Company’s exposure to exchange risk:
|
March 31, 2018 |
December 31, 2017 | ||
|
Foreign currency |
R$ |
Foreign currency |
R$ |
|
|
|
|
|
Borrowings and financing – US$ |
1,193,360 |
3,966,490 |
1,200,786 |
3,972,200 |
Borrowings and financing – Yen |
57,359,762 |
1,793,066 |
57,575,271 |
1,692,713 |
Interest and charges from borrowings and financing – US$ |
|
39,670 |
|
26,628 |
Interest and charges from borrowings and financing – Yen |
|
3,469 |
|
10,834 |
Total exposure |
|
5,802,695 |
|
5,702,375 |
Borrowing cost – US$ |
|
(25,940) |
|
(26,454) |
Borrowing cost – Yen |
|
(3,118) |
|
(3,100) |
Total foreign currency-denominated borrowings (Note 15) |
|
5,773,637 |
|
5,672,821 |
Total foreign currency-denominated borrowings (Note 15)
1) The 1.8% increase in foreign-currency denominated debt from December 31, 2017 to March 31, 2018, was mainly due to exchange rate changes, as a result of the 6.3% increase in the Yen-denominated debt, from R$ 0.02940 on December 31, 2017, to R$ 0.03126 on March 31, 2018. The U.S. dollar increased from R$ 3.3080 on December 31, 2017, to R$ 3.3238 on March 31, 2018, not causing a significant impact.
As of March 31, 2018, if the Brazilian real had depreciated or appreciated by 10 percentage points, in addition to the impacts mentioned above, against the U.S. dollar and Yen with all other variables held constant, the effects on results before taxes on the three-month period ended March 31, 2018 would have been R$ 580,270 (R$ 570,238 for the year ended December 31, 2017), lower or higher, mainly as a result of 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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Notes to the Interim Financial Information
|
Scenario I (Probable) |
|
Scenario II (+25%) |
|
Scenario III (+50%) |
(*) |
|
|
|
| |
Net currency exposure as of March 31, 2018 (Liabilities) in US$ |
1,193,360 |
|
1,193,360 |
|
1,193,360 |
US$ rate as of March 31, 2018 |
3.3238 |
|
3.3238 |
|
3.3238 |
Exchange rate estimated according to the scenario |
3.4000 |
|
4.2500 |
|
5.1000 |
Differences between the rates |
(0.0762) |
|
(0.9262) |
|
(1.7762) |
Effect on net financial result R$ - (loss) |
(90,934) |
|
(1,105,290) |
|
(2,119,646) |
Net currency exposure as of March 31, 2018 (Liabilities) in Yen |
57,359,762 |
|
57,359,762 |
|
57,359,762 |
Yen rate as of March 31, 2018 |
0.03126 |
|
0.03126 |
|
0.03126 |
Exchange rate estimated according to the scenario |
0.03172 |
|
0.03965 |
|
0.04758 |
Differences between the rates |
(0.00046) |
|
(0.00839) |
|
(0.01632) |
Effect on net financial result R$ - (loss) |
(26,385) |
|
(481,248) |
|
(936,111) |
Total effect on net financial result in R$ - (loss) |
(117,319) |
|
(1,586,538) |
|
(3,055,757) |
(*) For the probable scenario in U.S. dollar, the exchange rate estimated for March 31, 2019 was used, pursuant to the Focus Report-BACEN of March 31, 2018, while for the Yen, the average exchange rate was considered for the 12-month period after March 31, 2018, according to B3’s Reference Rates report of March 31, 2018.
This risk arises from the possibility that the Company could incur losses due to fluctuations in interest rates, increasing the financial expenses related to borrowings and financing.
The Company has not entered into any derivative contract to hedge against this risk; however it continually monitors market interest rates, in order to evaluate the possible need to replace its debt.
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Notes to the Interim Financial Information
The table below provides the Company's borrowings and financing subject to variable interest rate:
|
March 31, 2018 |
|
December 31, 2017 |
CDI(i) |
1,500,000 |
|
1,144,391 |
TR(ii) |
1,592,966 |
|
1,574,564 |
IPCA(iii) |
1,603,132 |
|
1,699,747 |
TJLP(iv) |
1,396,947 |
|
1,354,987 |
LIBOR(v) |
2,803,160 |
|
2,814,399 |
Interest and charges |
75,064 |
|
125,172 |
Total |
8,971,269 |
|
8,713,260 |
(i) CDI - (Certificado de Depósito Interbancário), an interbank deposit certificate
(ii) TR – Interest Benchmark Rate
(iii) IPCA – (Índice Nacional de Preços ao Consumidor Amplo), a consumer price index
(iv) TJLP – (Taxa de Juros a Longo Prazo), a long-term interest rate index
(v) LIBOR – London Interbank Offered Rate
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. Tariff adjustments of services provided by the Company do not necessarily follow the increases in the inflation indexes to adjust loans, financing and interest rates affecting indebtedness.
As of March 31, 2018, if interest rates on borrowings and financing had been 1 percentage point higher or lower with all other variables held constant, the effects on profit before taxes for the three-month period ended March 31, 2018 would have been R$ 89,713 (R$ 87,133 as of December 31, 2017), lower or higher, mainly as a result of lower or higher interest expense on floating rate borrowings and financing.
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 as of March 31, 2018 are the carrying amounts of instruments classified as cash equivalents, deposits in banks and financial institutions, restricted cash, trade receivables and accounts receivable from related parties at the end of reporting period. See additional information in Notes 6, 7, 8 and 9.
Regarding the financial assets held with financial institutions, the credit quality that is not past due or subject to impairment can be assessed by reference to external credit ratings (if available) or to historical information about the bank’s default rates. The credit quality of the banks, such as deposits and financial investments, the Company considers the lower rating published by three main international rating agencies (Fitch, Moody's and S&P), according to internal policy of market risk management:
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Notes to the Interim Financial Information
|
March 31, 2018 |
|
December 31, 2017 |
Cash at bank and short-term bank deposits |
|
|
|
AA+(bra) |
2,907,162 |
|
2,222,001 |
AAA(bra) |
46,258 |
|
43,978 |
Other (*) |
10,442 |
|
17,068 |
|
2,963,862 |
|
2,283,047 |
(*) This category includes current accounts and investment funds in banks whose balances were not significant.
The available credit rating information of the banks, as of March 31, 2018, in which the Company made deposit transactions and financial investments in domestic currency (R$ - domestic rating) during the period is as follows:
Banks | Fitch | Moody's | Standard Poor's |
Banco do Brasil S/A | AA+(bra) | Aa1.br | - |
Banco Santander Brasil S/A | - | Aaa.br | brAA- |
Brazilian Federal Savings Bank | AA+(bra) | Aa1.br | brAA- |
Banco Bradesco S/A | AAA(bra) | Aa1.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 operating and capital expenditures 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, into relevant maturities, including the installment of principal and future interest to be paid according to the agreement.
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Notes to the Interim Financial Information
|
April to December |
|
|
|
|
2023 |
|
2018 |
2019 |
2020 |
2021 |
2022 |
onwards |
Total | |
As of March 31, 2018 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Borrowings and financing |
1,434,038 |
2,434,477 |
2,749,426 |
1,314,718 |
1,357,778 |
6,387,191 |
15,677,628 |
Accounts payables to suppliers and contractors |
310,685 |
- |
- |
- |
- |
- |
310,685 |
Services payable |
515,852 |
- |
- |
- |
- |
- |
515,852 |
Public-Private Partnership – PPP (*) |
171,985 |
368,305 |
368,305 |
368,305 |
368,305 |
5,151,367 |
6,796,572 |
Program contract commitments |
129,134 |
92,787 |
15,645 |
15,787 |
1,037 |
16,101 |
270,491 |
(*) The Company also considered future commitments (construction not yet performed) still not 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 borrowings 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 these clauses.
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 for the twelve-month period after March 31, 2018, or until the final settlement of each contract, whichever is shorter, 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, due to the estimates used in the measurement.
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Notes to the Interim Financial Information
March 31, 2018 | ||||
Indicators |
Exposure |
Scenario I (Probable) (i) |
Scenario II 25% |
Scenario III 50% |
|
|
|
|
|
Assets |
|
|
|
|
CDI |
2,842,263 |
7.2700% (*) |
5.4525% |
3.6350% |
Financial income |
|
206,633 |
154,974 |
103,316 |
|
|
|
|
|
Liabilities |
|
|
|
|
CDI |
(1,500,000) |
7.2700% (*) |
5.4525% |
3.6350% |
Interest to be incurred |
|
(109,050) |
(81,788) |
(54,525) |
|
|
|
|
|
CDI net exposure |
1,342,263 |
97,583 |
73,186 |
48,791 |
|
|
|
|
|
Liabilities |
|
|
|
|
TR |
(1,592,966) |
0.0001% (***) |
0.0001% |
0.0002% |
Expenses to be incurred |
|
(2) |
(2) |
(3) |
|
|
|
|
|
IPCA |
(1,603,132) |
4.0800% (*) |
5.1000% |
6.1200% |
Expenses to be incurred |
|
(65,408) |
(81,760) |
(98,112) |
|
|
|
|
|
TJLP |
(1,396,947) |
6.7500% (*) |
8.4375% |
10.1250% |
Interest to be incurred |
|
(94,294) |
(117,867) |
(141,441) |
|
|
|
|
|
LIBOR |
(2,803,160) |
2.4065% (**) |
3.0082% |
3.6098% |
Interest to be incurred |
|
(67,458) |
(84,325) |
(101,188) |
|
|
|
|
|
Total net expenses to be incurred |
|
(129,579) |
(210,768) |
(291,953) |
|
|
|
|
|
(*) Source: CDI and IPCA rates (Focus Report – BACEN, March 31, 2018) and long-term interest rate at March 31, 2018 (BACEN). | ||||
(**) Source: Bloomberg | ||||
(***)Source: B3 (previously BM&FBovespa) |
(i) Refers to the scenario of interest to be incurred for the 12 months as of March 31, 2018 or until the maturity of the agreements, whichever is shorter.
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 borrowings and financing less cash and cash equivalents. Total capital is calculated as total equity as shown in the balance sheet plus net debt.
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Notes to the Interim Financial Information
March 31, 2018 | December 31, 2017 | |
Total borrowings and financing (Note 15) | 12,482,476 | 12,100,966 |
(-) Cash and cash equivalents (Note 6) | (2,963,862) | (2,283,047) |
Net debt | 9,518,614 | 9,817,919 |
Total equity | 18,093,440 | 17,513,009 |
Total capital | 27,612,054 | 27,330,928 |
Leverage ratio | 34% | 36% |
As of March 31, 2018, the leverage ratio decreased to 34% from the 36% as of December 31, 2017, mainly due to the increase in cash, generated in operating activities, and the increase in equity from the profit recorded in the three-month period ended March 31, 2018.
It is assumed that balances from trade receivables (current) and accounts payable to suppliers by carrying amount, less impairment approximate their fair values, considering the short maturity. Long-term trade receivables also approximate their fair values, as they will be adjusted by inflation and/or will bear contractual interest rates over time.
With the changes introduced by CPC 48/IFRS 9 (Financial Instruments), as of March 31, 2018, the Company did not have financial assets classified as fair value through other comprehensive income and fair value through profit or loss. The Company’s financial instruments included in the amortized cost category comprise cash and cash equivalents, restricted cash, trade receivables, balances with related parties, other receivables, and balances receivable from the Water National Agency – ANA, accounts payable to contractors and suppliers, borrowings and financing, services payable, 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:
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Notes to the Interim Financial Information
Financial Assets
|
March 31, 2018 |
December 31, 2017 | ||
|
Carrying amount |
Fair value |
Carrying amount |
Fair value |
Cash and cash equivalents |
2,963,862 |
2,963,862 |
2,283,047 |
2,283,047 |
Restricted cash |
14,064 |
14,064 |
18,822 |
18,822 |
Trade receivables |
1,980,064 |
1,980,064 |
1,888,505 |
1,888,505 |
Water National Agency – ANA |
71,552 |
71,552 |
70,487 |
70,487 |
Other receivables |
280,671 |
280,671 |
169,715 |
169,715 |
Additionally, SABESP has financial instrument assets receivable from related parties, in the amount of R$ 785,518 as of March 31, 2018 (R$ 815,160 as of December 31, 2017), which were calculated in accordance with the conditions negotiated between related parties. Part of this balance, totaling R$ 680,321 (R$ 709,208 as of December 31, 2017), refers to reimbursement of 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.
Financial liabilities
|
March 31, 2018 |
December 31, 2017 | ||
|
Carrying amount |
Fair value |
Carrying amount |
Fair value |
Borrowings and financing |
12,482,476 |
12,426,320 |
12,100,966 |
11,967,909 |
Accounts payables to suppliers and contractors |
310,685 |
310,685 |
344,947 |
344,947 |
Services payable |
515,852 |
515,852 |
408,275 |
408,275 |
Program contract commitments |
243,792 |
243,792 |
239,500 |
239,500 |
Public-Private Partnership - PPP |
3,231,963 |
3,231,963 |
3,071,416 |
3,071,416 |
The criteria adopted to obtain the fair values of borrowings and financing, in preparing the interim financial information as of March 31, 2018, are consistent with those adopted in the Annual Financial Statements for the fiscal year ended December 31, 2017.
Considering the nature of other financial instruments, assets and liabilities of the Company, the balances recognized in the balance sheet 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.
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Notes to the Interim Financial Information
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 key accounting estimates and judgments are: (i) allowance for doubtful accounts, (ii) intangible assets resulting from concession agreements and program contracts, (iii) pension benefits, (iv) deferred income tax and social contribution, and (v) provisions.
|
March 31, 2018 |
December 31, 2017 |
|
|
|
Cash and banks |
121,598 |
171,951 |
Cash equivalents |
2,842,264 |
2,111,096 |
|
2,963,862 |
2,283,047 |
Cash and cash equivalents include cash, bank deposits and high-liquidity short-term financial investments, mainly represented by repurchase agreements (remunerated based on the variation of the Interbank Deposit Certificates (CDI) rates), entered into with 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.
As of March 31, 2018, the average yield of financial investments corresponds to 98.53% of CDI (98.88% as of December 31, 2017).
|
March 31, 2018 |
December 31, 2017 |
Current |
|
|
Agreement with the São Paulo municipal government (i) |
6,021 |
12,055 |
Brazilian Federal Savings Bank – escrow deposits (ii) |
2,202 |
1,209 |
Other |
5,841 |
5,558 |
|
14,064 |
18,822 |
|
|
|
(i) Refers to the amount deducted from the 7.5% of Municipal revenue transferred to the Municipal Fund, corresponding to eventual amounts unpaid by direct management bodies, foundations and government agencies, as established in the agreement entered into with the municipal government of São Paulo; and
(ii) 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
(a) Statement of financial position details
|
March 31, 2018 |
December 31, 2017 |
Private sector: |
|
|
General and special customers (i) (ii) |
1,295,502 |
1,248,979 |
Agreements (iii) |
319,371 |
320,032 |
|
|
|
|
1,614,873 |
1,569,011 |
Government entities: |
|
|
Municipal |
535,060 |
532,320 |
Federal |
4,368 |
3,547 |
Agreements (iii) |
295,492 |
285,614 |
|
|
|
|
834,920 |
821,481 |
Wholesale customers – Municipal governments: (iv) |
|
|
Guarulhos |
814,372 |
760,598 |
Mauá |
554,161 |
530,830 |
Mogi das Cruzes |
5,839 |
2,670 |
Santo André |
1,089,852 |
1,048,832 |
São Caetano do Sul |
8,045 |
2,604 |
Diadema |
222,671 |
222,671 |
|
|
|
Total wholesale customers – Municipal governments |
2,694,940 |
2,568,205 |
|
|
|
Unbilled supply |
578,411 |
580,006 |
|
|
|
Subtotal |
5,723,144 |
5,538,703 |
Allowance for doubtful accounts |
(3,743,080) |
(3,650,198) |
|
|
|
Total |
1,980,064 |
1,888,505 |
|
|
|
Current |
1,762,793 |
1,672,595 |
Noncurrent |
217,271 |
215,910 |
|
|
|
|
1,980,064 |
1,888,505 |
(i) General customers - residential and small and mid-sized companies
(ii) Special customers – large consumers, commercial industries, condominiums and special billing consumers (fixed demand agreements, industrial waste, wells, etc.);
(iii) Agreements - installment payments of past-due receivables, plus monetary restatement and interest, as provided for in the agreements; and
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Notes to the Interim Financial Information
(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.
|
March 31, 2018 |
December 31, 2017 |
Current |
1,498,217 |
1,471,668 |
Past-due: |
|
|
Up to 30 days |
302,413 |
287,173 |
From 31 to 60 days |
193,040 |
118,179 |
From 61 to 90 days |
90,746 |
73,989 |
From 91 to 120 days |
48,167 |
52,477 |
From 121 to 180 days |
116,857 |
105,952 |
From 181 to 360 days |
138,570 |
147,699 |
Over 360 days |
3,335,134 |
3,281,566 |
Total past-due |
4,224,927 |
4,067,035 |
Total |
5,723,144 |
5,538,703 |
The increase in the overdue balance was mainly due to wholesale receivables, where the municipalities challenge the tariffs charged by SABESP in court, and the increase in default of amounts overdue, related to private customers.
|
January to March 2018 |
January to March 2017 |
Balance at beginning of the period |
3,650,198 |
3,514,240 |
Private sector /government entities |
6,639 |
30,546 |
Recoveries |
(19,079) |
(3,485) |
Wholesale customers |
105,322 |
38,278 |
Net additions for the period |
92,882 |
65,339 |
Write-offs in the period referring to accounts receivable |
- |
(9,523) |
Balance at the end of the period |
3,743,080 |
3,570,056 |
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Notes to the Interim Financial Information
Reconciliation of estimated losses in profit or loss |
January to March 2018 |
January to March 2017 |
Write-offs |
(27,567) |
(58,136) |
Losses/(reversal) with state entities - related parties |
(1,360) |
288 |
(Losses) with private sector / government entities |
(6,639) |
(30,546) |
(Losses) with wholesale customers |
(32,144) |
(1,227) |
Recoveries |
19,079 |
3,485 |
Amount recorded as selling expenses |
(48,631) |
(86,136) |
Wholesale sales losses, amounting to R$ 73,178 from January to March 2018 and R$ 37,051 from January to March 2017, were also recorded as revenue reduction.
The Company does not have customers representing 10% or more of its total revenues.
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Notes to the Interim Financial Information
The Company is a party to transactions with its controlling shareholder, the State Government, and companies related to it.
|
March 31, 2018 |
December 31, 2017 |
Accounts receivable |
|
|
Current: |
|
|
Sanitation services |
120,379 |
118,441 |
Allowance for losses |
(36,474) |
(35,114) |
Reimbursement for retirement and pension benefits paid (G0) |
|
|
- monthly flow (payments) |
22,745 |
22,968 |
- GESP Agreement – 2008 |
5,024 |
20,099 |
- GESP Agreement – 2015 |
54,379 |
54,379 |
|
|
|
Total current |
166,053 |
180,773 |
|
|
|
Noncurrent: |
|
|
Agreement for the installment payment of sanitation services |
21,292 |
22,625 |
Reimbursement for retirement and pension benefits paid (G0) |
|
|
- GESP Agreement – 2015 |
598,173 |
611,762 |
|
|
|
Total noncurrent |
619,465 |
634,387 |
|
|
|
Total receivables from shareholders |
785,518 |
815,160 |
|
|
|
Assets: |
|
|
Sanitation services |
105,197 |
105,952 |
Reimbursement of additional retirement and pension benefits (G0) |
680,321 |
709,208 |
|
|
|
Total |
785,518 |
815,160 |
|
|
|
Liabilities: |
|
|
Interest on capital payable to related parties |
300,717 |
300,717 |
Other (f) |
1,402 |
1,367 |
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Notes to the Interim Financial Information
|
January to March 2018 |
January to March 2017 |
|
|
|
Revenue from sanitation services |
117,353 |
109,926 |
Payments received from related parties |
(118,721) |
(119,586) |
|
|
|
Receipt of GESP reimbursement referring to Law 4,819/58 |
(50,709) |
(36,552) |
(b) Use of reservoirs – EMAE
Empresa Metropolitana de Águas e Energia S.A. - EMAE planned to receive for the credit and obtain financial compensation for alleged past and future losses in electricity generation, due to water collection, and compensation for costs already incurred and to be incurred with the operation, maintenance and inspection of the Guarapiranga and Billings reservoirs used by SABESP in its operations.
Several lawsuits were filed by EMAE, an arbitration proceeding was in progress related to the Guarapiranga reservoir and a lawsuit related to the 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.
As of October 28, 2016, the Company entered into an agreement based on a Private Transaction Agreement and Other Adjustments aimed to fully and completely settle the disputes involving the two companies, and involves the payment by SABESP to EMAE of the following amounts:
- R$ 6,610 annually, adjusted for inflation, as of the execution date of this instrument, by the IPCA or any other index that may replace it, by the last business day of October of each fiscal year, with (i) the first of such annual payments due up to the last business day of October 2017 and (ii) the last payment due up to the last business day of October 2042; and
- R$ 46,270, in five annual and successive installments, adjusted for inflation by the IPCA or any other index that may replace it, with the first installment of R$ 9,254 due on April 30, 2017 and the subsequent ones in 04 (four) installments of same amount, due on every April 30 of the subsequent years, or on the first subsequent business day.
On October 19, 2017, the contractual conditions precedent were complied with and the agreement came into effect.
As of March 31, 2018, the balance of the agreement totaled R$ 16,039 and R$ 96,330 (R$ 15,668 and R$ 92,894 on December 31, 2017), recorded under other liabilities, in current and noncurrent liabilities, respectively.
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 water consumption.
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Notes to the Interim Financial Information
The State Government provides guarantees for some borrowings and financing of the Company and does not charge any fee with respect to such guarantees.
The Company has personnel assignment agreements with entities related to the State Government, whose expenses are fully passed on and monetarily reimbursed. From January to March 2018 and in the same period in 2017, the expenses related to personnel assigned by SABESP to other state government entities amounted to R$ 2,131 and
R$ 2,523, respectively.
From January to March 2018 and 2017, there were no expenses related to personnel assigned by other entities to the Company.
As of March 31, 2018 and December 31, 2017, SABESP had an outstanding amount payable of R$ 1,402 and R$ 1,367, respectively, for services rendered by São Paulo State Government entities.
As of March 31, 2018 and December 31, 2017, the Company had an amount of R$ 969 related to a free land lent to DAEE (Department of Water and Electricity).
The Company sponsors a private defined benefit pension plan, which is operated and administered by Sabesprev. The net actuarial liability recognized as of March 31, 2018 amounted to R$ 379,373 (R$ 388,461 as of December 31, 2017), according to Note 19 (b).
Expenses related to the compensation to the members of its Board of Directors, Fiscal Council and Board of Executive Officers amounted to R$ 923 and R$ 926 from January to March 2018 and the same period in 2017, respectively. An additional amount of R$ 185 and R$ 124, related to the Officers’ bonus program, was recorded from January to March 2018 and 2017, respectively.
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. on March 30, 2012, and with Attend Ambiental S.A. on May 9, 2014, to finance the operations of these companies, until the borrowings and financing requested with financial institutions is cleared. These agreements remain with the same characteristics, according to the table below:
SPE |
Principal disbursed amount |
Interest balance |
Total |
Interest rate |
Maturity |
Aquapolo Ambiental |
5,629 |
4,507 |
10,136 |
CDI + 1.2% p.a. |
(i) |
Aquapolo Ambiental |
19,000 |
12,081 |
31,081 |
CDI + 1.2% p.a. |
(ii) |
Total |
24,629 |
16,588 |
41,217 |
|
|
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Notes to the Interim Financial Information
(i) The R$ 5,629 loan agreement originally expired on April 30, 2016; however, on February 10, 2016, an amendment to the agreement changed the payment schedule for four annual installments, the first of which maturing on December 30, 2018 and the last on December 30, 2021; and
(ii) The loan agreement totaling R$ 19,000 originally expired on April 30, 2015, but was extended to October 30, 2015. On November 25, 2015 a new amendment changed the payment schedule for three annual installments, the first of which maturing on December 30, 2021 and the last on December 30, 2023.
As of March 31, 2018, the Company created allowance for doubtful accounts in the amount of R$ 9,596 related to the loan agreement with SPE Attend Ambiental S/A, as a renegotiation agreement was not reached. The original value of the agreement was R$ 5,400, and it was overdue since June 2015.
The amount disbursed referring to the agreements entered into with Aquapolo Ambiental S/A is recognized under “Other Receivables”, of which R$ 2,321 was classified in Current Assets and R$ 38,896 in Noncurrent Assets. As of March 31, 2018, the balance of principal and interest rates of these agreements was R$ 41,217 (R$ 50,617 as of December 31, 2017). From January to March 2018, the financial income recognized was R$ 740 (R$ 4,560 from January to March 2017).
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. Until March 31, 2018, the program total amount was R$ 91,320 (R$ 82,697 as of December 31, 2017); as of March 31, 2018 and December 31, 2017, there was no balance receivable from related parties. As of March 31, 2018, R$ 43,691 (R$ 35,068 as of December 31, 2017) was recorded under intangible assets. R$ 47,629 was reimbursed by GESP (R$ 47,629 as of December 31, 2017) from the beginning of the program until March 31, 2018.
PAGE: 40 of 82
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Notes to the Interim Financial Information
The Company has 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 Brazilian Federal Savings Banks (CEF), until the fulfillment of treated sewage volume is evidenced, as well as the reduction of polluting cargoes of each agreement.
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. As of March 31, 2018, the balances of assets and liabilities were R$ 71,552 (R$ 70,487 as of December 31, 2017), and the liabilities are recorded under "other liabilities" of noncurrent liabilities.
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, however, 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 holds interest valued by the equity accounting.
Below is a summary of the investees’ financial statements and SABESP’s equity interest:
|
Equity |
Capital increase |
Profit (loss) for the period | ||
March 31, 2018 |
December 31, 2017 |
March 31, 2018 |
January to March 2018 |
January to March 2017 | |
|
|||||
Sesamm |
40,754 |
39,262 |
- |
1,492 |
1,689 |
Águas de Andradina |
20,051 |
19,392 |
- |
659 |
902 |
Águas de Castilho |
5,172 |
4,880 |
- |
292 |
259 |
Saneaqua Mairinque |
6,417 |
4,327 |
2,183 |
(93) |
108 |
Attend Ambiental |
5,948 |
5,169 |
- |
779 |
1,029 |
Aquapolo Ambiental |
22,174 |
18,757 |
- |
3,417 |
854 |
Paulista Geradora de Energia |
8,439 |
8,447 |
- |
(8) |
(1) |
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Notes to the Interim Financial Information
|
Investments |
Capital increase |
Equity in the earnings (losses) of subsidiaries |
Interest percentage | |||
March 31, 2018 |
December 31, 2017 |
March 31, 2018 |
January to March 2018 |
January to March 2017 |
March 31, 2018 |
December 31, 2017 | |
|
|||||||
Sesamm |
14,672 |
14,135 |
- |
537 |
608 |
36% |
36% |
Águas de Andradina |
6,016 |
5,818 |
- |
198 |
271 |
30% |
30% |
Águas de Castilho |
1,553 |
1,465 |
- |
88 |
78 |
30% |
30% |
Saneaqua Mairinque |
1,925 |
1,298 |
655 |
(28) |
32 |
30% |
30% |
Attend Ambiental |
2,676 |
2,326 |
- |
350 |
463 |
45% |
45% |
Aquapolo Ambiental |
10,865 |
9,191 |
- |
1,674 |
418 |
49% |
49% |
Paulista Geradora de Energia |
2,109 |
2,111 |
- |
(2) |
- |
25% |
25% |
Total |
39,816 |
36,344 |
655 |
2,817 |
1,870 |
|
|
Other investments |
588 |
588 |
|
|
|
|
|
Overall total |
40,404 |
36,932 |
|
|
|
|
|
As of March 31, 2018, the balance of “Investment properties” was R$ 57,640 (R$ 57,652 as of December 31, 2017). As of March 31, 2018 and December 31, 2017, the market value of these properties was approximately R$ 402,000.
|
December 31, 2017 |
Depreciation |
March 31, 2018 |
|
|
|
|
|
|
Investment properties |
57,652 |
(12) |
57,640 |
|
Total |
57,652 |
(12) |
57,640 |
|
|
||||
|
December 31, 2016 |
Write-offs and disposals |
Depreciation |
March 31, 2017 |
|
|
|
|
|
Investment properties |
57,968 |
(7) |
(23) |
57,938 |
Total |
57,968 |
(7) |
(23) |
57,938 |
PAGE: 42 of 82
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Notes to the Interim Financial Information
(a) Statement of financial position details
|
March 31, 2018 |
December 31, 2017 | ||||
|
Cost |
Accumulated amortization |
Net |
Cost |
Accumulated amortization |
Net |
Intangible right arising from: |
|
|
|
|
|
|
Agreements – equity value |
8,806,993 |
(1,775,896) |
7,031,097 |
8,893,296 |
(1,751,682) |
7,141,614 |
Agreements – economic value |
2,088,095 |
(657,695) |
1,430,400 |
2,068,402 |
(634,465) |
1,433,937 |
Program contracts |
10,881,491 |
(3,150,500) |
7,730,991 |
10,653,292 |
(3,058,226) |
7,595,066 |
Program contracts – commitments |
1,113,160 |
(212,065) |
901,095 |
1,113,160 |
(202,785) |
910,375 |
Services contracts – São Paulo |
19,890,710 |
(3,615,092) |
16,275,618 |
19,388,751 |
(3,471,736) |
15,917,015 |
Software license |
699,922 |
(238,410) |
461,512 |
688,712 |
(220,587) |
468,125 |
Total |
43,480,371 |
(9,649,658) |
33,830,713 |
42,805,613 |
(9,339,481) |
33,466,132 |
(b) Changes
|
December 31, 2017 |
Additions |
Contract renewal |
Transfers |
Write-offs and disposals |
Amortization |
March 31, 2018 |
Intangible right arising from: |
|
|
|
|
|
|
|
Agreements – equity value |
7,141,614 |
41,124 |
(104,721) |
(942) |
(853) |
(45,125) |
7,031,097 |
Agreements – economic value |
1,433,937 |
45,883 |
- |
(26,028) |
(5) |
(23,387) |
1,430,400 |
Program contracts |
7,595,066 |
95,709 |
104,721 |
11,742 |
(759) |
(75,488) |
7,730,991 |
Program contracts – commitments |
910,375 |
- |
- |
- |
- |
(9,280) |
901,095 |
Services contracts – São Paulo |
15,917,015 |
492,459 |
- |
16,006 |
(2,644) |
(147,218) |
16,275,618 |
Software license |
468,125 |
11,211 |
- |
- |
- |
(17,824) |
461,512 |
Total |
33,466,132 |
686,386 |
- |
778 |
(4,261) |
(318,322) |
33,830,713 |
|
December 31, 2016 |
Additions |
Allowance for estimated losses |
Transfers |
Write-offs and disposals |
Amortization |
March 31, 2017 |
Intangible right arising from: |
|
|
|
|
|
|
|
Agreements – equity value |
7,482,955 |
81,886 |
2,078 |
312 |
(1,805) |
(46,721) |
7,518,705 |
Agreements – economic value |
1,381,652 |
67,641 |
8 |
(23) |
(1,007) |
(26,585) |
1,421,686 |
Program contracts |
6,576,021 |
121,742 |
4,833 |
513 |
(3,688) |
(74,955) |
6,624,466 |
Program contracts – commitments |
823,216 |
- |
- |
- |
- |
(9,069) |
814,147 |
Services contracts – São Paulo |
14,552,707 |
441,546 |
6,460 |
2,148 |
(4,738) |
(143,650) |
14,854,473 |
Software license |
430,237 |
22,013 |
- |
6,489 |
- |
(11,649) |
447,090 |
Total |
31,246,788 |
734,828 |
13,379 |
9,439 |
(11,238) |
(312,629) |
31,680,567 |
PAGE: 43 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(i) As of December 31, 2017, the Company reclassified R$ 24,071 corresponding to the intangible assets of Álvares Florence, Embaúba, Araçoiaba da Serra, Itapira and Tuiuti to indemnities receivable, in noncurrent assets, less estimated losses.
In the first quarter of 2018, the Company renewed a program contract with the municipalities of Itirapuã and Monte Mor for 30 years.
During the period ended March 31, 2018 there were no relevant changes in the criteria to account for intangible assets and types of contracts.
The Company has obligations recorded in “Program Contract– Commitments” in current liabilities in the amount of R$ 138,591 and R$ 128,802 as of March 31, 2018 and December 31, 2017, respectively, and noncurrent liabilities in the amount of R$ 105,201 and R$ 110,698 as of March 31, 2018 and December 31, 2017, respectively.
From January to March 2018, the Company capitalized interest and inflation adjustment, including related foreign currency exchange in concession intangible assets, totaling R$ 143,041, including the São Lourenço Production System and Leases (R$ 166,223 from January to March 2017), during the construction period.
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.
PAGE: 44 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
As a consequence, the Company recognizes revenue from construction service corresponding to the cost of construction increased by a gross 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. As of March 31, 2018 and 2017, the margin was 2.3%.
Construction margin from January to March 2018 and 2017 was R$ 14,551 and R$ 15,699, respectively.
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 costs of these expropriations are recorded as concession intangible assets after the transaction is concluded. From January to March 2018, the total amount related to expropriations was R$ 9,695 (R$ 2,901 from January to March 2017).
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 March 31, 2018 and December 31, 2017, the amounts recognized as intangible asset related to this PPP were
R$ 368,138 and R$ 371,862, respectively.
From January to March 2018, a discount rate of 8.20% p.a. was used to calculate the adjustment to present value of the agreement. The obligations assumed by the Company as of March 31, 2018 and December 31, 2017 are shown in the next table.
On a monthly basis, SABESP assigns funds from tariffs to the SPE CAB Sistema Produtor Alto Tietê S/A, in the amount of R$ 10,012, corresponding to the monthly remuneration. This amount is annually adjusted by the IPC – FIPE and is recorded in a restricted account, pursuant to the contractual operating proceeding. Should SABESP comply with its monthly obligations with the SPE, the funds from the restricted account will be released.
The guarantee is effective since the beginning of the operation and will be valid until the conclusion, termination, intervention, annulment or caducity of the Administrative Concession, or other extinction events provided for in the Concession Agreement or in the law applicable to administrative concessions, including in the event of bankruptcy or extinction of the SPE.
PAGE: 45 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
São Lourenço Production System
As of March 31, 2018 and December 31, 2017, the carrying amount recorded in the Company’s intangible assets, related to this PPP, totaled R$ 2,991,752 and R$ 2,818,805, respectively. Intangible assets are accounted for based on the physical evolution of the works which, as of March 31, 2018, was approximately 93%, with a counter-entry in the Private Public Partnership (PPP) liabilities account. As of March 31, 2018, a discount rate of 7.80% p.a. was used to calculate the adjustment to present value of the agreement.
The obligations assumed by the Company as of March 31, 2018 and December 31, 2017 are shown in the table below, and the increase in intangible assets and liabilities was due to the progress of works in 2018.
|
March 31, 2018 |
December 31, 2017 | ||||
|
Current liabilities |
Noncurrent liabilities |
Total liabilities |
Current liabilities |
Noncurrent liabilities |
Total liabilities |
|
|
|
|
|
|
|
Alto Tietê |
35,780 |
273,291 |
309,071 |
35,083 |
282,501 |
317,584 |
São Lourenço |
40,371 |
2,882,521 |
2,922,892 |
24,924 |
2,728,908 |
2,753,832 |
Total |
76,151 |
3,155,812 |
3,231,963 |
60,007 |
3,011,409 |
3,071,416 |
The amount of R$ 10,701 million is recorded under intangible assets as works in progress as of March 31, 2018
(R$ 10,387 million as of December 31, 2017), and, in the period ended March 31, 2018, the major projects are located in the municipalities of São Paulo, Franca and Itanhaém, totaling R$ 6,953 million (including R$ 2,991 million from PPP São Lourenço), R$ 217 million and R$ 187 million, respectively.
The amortization average rate totaled 4.1% and 3.9% as of March 31, 2018 and 2017, respectively.
The software license of use is capitalized based on the costs incurred to acquire software and make them ready for use. On April 10, 2017, the Company implemented the Integrated Business Management System (Enterprise Resource Planning – SAP ERP), which includes the administrative/financial module. The implementation of the commercial module is in progress.
PAGE: 46 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(a) Statement of financial position details
|
March 31, 2018 |
December 31, 2017 | ||||
|
Cost |
Accumulated depreciation |
Net |
Cost |
Accumulated depreciation |
Net |
Land |
92,507 |
- |
92,507 |
92,507 |
- |
92,507 |
Buildings |
79,014 |
(37,233) |
41,781 |
79,013 |
(36,653) |
42,360 |
Equipment |
332,772 |
(235,449) |
97,323 |
330,753 |
(226,950) |
103,803 |
Transportation equipment |
10,862 |
(7,381) |
3,481 |
10,862 |
(7,182) |
3,680 |
Furniture and fixtures |
24,397 |
(12,888) |
11,509 |
24,430 |
(12,614) |
11,816 |
Other |
1,122 |
(251) |
871 |
1,122 |
(238) |
884 |
Total |
540,674 |
(293,202) |
247,472 |
538,687 |
(283,637) |
255,050 |
(b) Changes
|
December 31, 2017 |
Additions |
Transfers |
Write-offs and disposals |
Depreciation |
March 31, 2018 |
Land |
92,507 |
- |
- |
- |
- |
92,507 |
Buildings |
42,360 |
- |
- |
- |
(579) |
41,781 |
Equipment |
103,803 |
2,767 |
(733) |
(14) |
(8,500) |
97,323 |
Transportation equipment |
3,680 |
- |
- |
- |
(199) |
3,481 |
Furniture and fixtures |
11,816 |
19 |
(45) |
(7) |
(274) |
11,509 |
Other |
884 |
- |
- |
- |
(13) |
871 |
Total |
255,050 |
2,786 |
(778) |
(21) |
(9,565) |
247,472 |
|
December 31, 2016 |
Additions |
Transfers |
Write-offs and disposals |
Depreciation |
March 31, 2017 |
Land |
92,494 |
- |
- |
- |
- |
92,494 |
Buildings |
43,262 |
- |
11 |
- |
(426) |
42,847 |
Equipment |
149,140 |
10,426 |
(9,340) |
(30) |
(18,350) |
131,846 |
Transportation equipment |
4,531 |
- |
(25) |
(10) |
(200) |
4,296 |
Furniture and fixtures |
11,986 |
175 |
(85) |
(29) |
(307) |
11,740 |
Other |
970 |
- |
- |
- |
(13) |
957 |
Total |
302,383 |
10,601 |
(9,439) |
(69) |
(19,296) |
284,180 |
PAGE: 47 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
The Company annually revises the depreciation rates of: buildings - 3.0%; equipment- 16.8%; transportation equipment - 10% and furniture, fixture and equipment - 6.9%. Lands are not depreciated.
The depreciation average rate was 12.7% and 12.0%, as of March 31, 2018 and 2017, respectively.
PAGE: 48 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
Borrowings and financing outstanding balance |
March 31, 2018 |
December 31, 2017 | |||||||||
Financial institution |
Current |
|
Noncurrent |
|
Total |
|
Current |
|
Noncurrent |
|
Total |
Local currency |
|
|
|
|
|
|
|
|
|
|
|
10th issue debentures |
41,927 |
|
75,224 |
|
117,151 |
|
41,702 |
|
80,953 |
|
122,655 |
12th issue debentures |
45,450 |
|
283,332 |
|
328,782 |
|
45,450 |
|
294,702 |
|
340,152 |
14th issue debentures |
40,689 |
|
120,105 |
|
160,794 |
|
40,503 |
|
141,351 |
|
181,854 |
15th issue debentures |
349,599 |
|
- |
|
349,599 |
|
346,414 |
|
345,788 |
|
692,202 |
17th issue debentures |
271,818 |
|
518,598 |
|
790,416 |
|
144,391 |
|
781,922 |
|
926,313 |
18th issue debentures |
33,200 |
|
191,068 |
|
224,268 |
|
33,020 |
|
194,872 |
|
227,892 |
20th issue debentures |
250,000 |
|
247,246 |
|
497,246 |
|
250,000 |
|
246,890 |
|
496,890 |
21st issue debentures |
- |
|
499,608 |
|
499,608 |
|
- |
|
499,628 |
|
499,628 |
22nd issue debentures |
- |
|
749,102 |
|
749,102 |
|
- |
|
- |
|
- |
Brazilian Federal Savings Bank |
69,746 |
|
1,193,306 |
|
1,263,052 |
|
78,487 |
|
1,154,599 |
|
1,233,086 |
Brazilian Development Bank - BNDES BAIXADA SANTISTA |
16,812 |
|
12,609 |
|
29,421 |
|
16,782 |
|
16,782 |
|
33,564 |
Brazilian Development Bank - BNDES PAC |
11,163 |
|
47,332 |
|
58,495 |
|
11,143 |
|
50,028 |
|
61,171 |
Brazilian Development Bank - BNDES PAC II 9751 |
4,342 |
|
21,953 |
|
26,295 |
|
4,334 |
|
22,991 |
|
27,325 |
Brazilian Development Bank - BNDES PAC II 9752 |
2,371 |
|
18,968 |
|
21,339 |
|
2,367 |
|
19,526 |
|
21,893 |
Brazilian Development Bank - BNDES ONDA LIMPA |
23,511 |
|
140,852 |
|
164,363 |
|
23,469 |
|
146,461 |
|
169,930 |
Brazilian Development Bank - BNDES TIETÊ III |
30,433 |
|
273,721 |
|
304,154 |
|
30,378 |
|
280,825 |
|
311,203 |
Brazilian Development Bank - BNDES 2015 |
19,206 |
|
468,530 |
|
487,736 |
|
10,050 |
|
397,922 |
|
407,972 |
Leases |
17,538 |
|
548,616 |
|
566,154 |
|
17,573 |
|
544,044 |
|
561,617 |
Other |
1,609 |
|
9,150 |
|
10,759 |
|
1,466 |
|
9,477 |
|
10,943 |
Interest and charges |
60,105 |
|
- |
|
60,105 |
|
101,855 |
|
- |
|
101,855 |
Total in local currency |
1,289,519 |
|
5,419,320 |
|
6,708,839 |
|
1,199,384 |
|
5,228,761 |
|
6,428,145 |
PAGE: 49 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
Borrowings and financing outstanding balance |
March 31, 2018 |
December 31, 2017 | |||||||||
Financial institution |
Current |
|
Noncurrent |
|
Total |
|
Current |
|
Noncurrent |
|
Total |
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
Inter-American Development Bank - BID 1212 – US$ 77,086 thousand (US$ 82,225 thousand in December 2017) |
34,162 |
|
222,055 |
|
256,217 |
|
34,000 |
|
238,000 |
|
272,000 |
Inter-American Development Bank - BID 2202 – US$ 442,584 thousand (US$ 444,871 thousand in December 2017) |
84,061 |
|
1,371,549 |
|
1,455,610 |
|
81,757 |
|
1,375,358 |
|
1,457,115 |
International Bank of Reconstruction and Development - BIRD – US$ 91,286 thousand |
- |
|
303,112 |
|
303,112 |
|
- |
|
301,665 |
|
301,665 |
Deutsche Bank – US$ 150,000 thousand (US$ 150,000 thousand in December 2017) |
249,285 |
|
244,432 |
|
493,717 |
|
248,100 |
|
242,343 |
|
490,443 |
Eurobonds– US$ 350,000 thousand (US$ 350,000 thousand in December 2017) |
- |
|
1,161,066 |
|
1,161,066 |
|
- |
|
1,155,331 |
|
1,155,331 |
JICA 15 – ¥ 13,252,945 thousand (¥ 13,829,160 thousand in December 2017) |
36,025 |
|
378,262 |
|
414,287 |
|
33,881 |
|
372,696 |
|
406,577 |
JICA 18 – ¥ 11,915,840 thousand (¥ 12,433,920 thousand in December 2017) |
32,390 |
|
339,859 |
|
372,249 |
|
30,463 |
|
334,849 |
|
365,312 |
JICA 17 – ¥ 1,590,429 thousand (¥ 1,534,959 thousand in December 2017) |
2,762 |
|
46,180 |
|
48,942 |
|
2,507 |
|
41,835 |
|
44,342 |
JICA 19 – ¥ 30,600,548 thousand (¥ 29,777,232 thousand in December 2017) |
25,853 |
|
928,617 |
|
954,470 |
|
- |
|
873,383 |
|
873,383 |
BID 1983AB – US$ 82,404 (US$ 82,404 thousand in December 2017) |
79,579 |
|
191,249 |
|
270,828 |
|
79,201 |
|
189,990 |
|
269,191 |
Interest and charges |
43,139 |
|
- |
|
43,139 |
|
37,462 |
|
- |
|
37,462 |
Total in foreign currency |
587,256 |
|
5,186,381 |
|
5,773,637 |
|
547,371 |
|
5,125,450 |
|
5,672,821 |
Total borrowings and financing |
1,876,775 |
|
10,605,701 |
|
12,482,476 |
|
1,746,755 |
|
10,354,211 |
|
12,100,966 |
Exchange rate as of March 31, 2018: US$ 3.3238; ¥ 0.03126 (as of December 31, 2017: US$ 3.3080; ¥ 0.02940).
As of March 31, 2018, the Company did not record balances of borrowings and financing raised during the year to mature within 12 months.
PAGE: 50 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
Domestic currency |
Guarantees |
Maturity |
Annual interest rates |
Inflation adjustment |
|
|
|
|
|
10th issue debentures |
Own funds |
2020 |
TJLP +1.92% (Series 1 and 3) and 9.53% (Series 2) |
IPCA (series 2) |
12th issue debentures |
Own funds |
2025 |
TR + 9.5% |
|
14th issue debentures |
Own funds |
2022 |
TJLP +1.92% (Series 1 and 3) and 9.19% (Series 2) |
IPCA (series 2) |
15th issue debentures |
Own funds |
2019 |
CDI + 0.99% (Series 1) and 6.2% (Series 2) |
IPCA (series 2) |
17th issue debentures |
Own funds |
2023 |
CDI +0.75 (Series 1) and 4.5% (Series 2) and 4.75% (Series 3) |
IPCA (series 2 and 3) |
18th issue debentures |
Own funds |
2024 |
TJLP + 1.92 % (series 1 and 3) and 8.25% (series 2) |
IPCA (series 2) |
20th issue debentures |
Own funds |
2019 |
CDI + 3.80% |
|
21st issue debentures |
Own funds |
2022 |
CDI + 0.60% and CDI + 0.90% |
|
22nd issue debentures |
Own funds |
2025 |
CDI + 0.58%, CDI + 0.90% |
IPCA + 6% |
Brazilian Federal Savings Bank |
Own funds |
2018/2038 |
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 TIETÊ III |
Own funds |
2028 |
1.66%+TJLP |
|
Brazilian Development Bank - BNDES 2015 |
Own funds |
2035 |
2.5%+TJLP |
|
Leases |
|
2035 |
7.73% to 10.12% |
IPC |
Other |
Own funds |
2018/2025 |
12% (Presidente Prudente) and TJLP + 1.66% (FINEP) |
TR |
PAGE: 51 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
Foreign currency |
Guarantees |
Maturity |
Annual interest rates |
Exchange rate changes |
|
|
|
|
|
Inter-American Development Bank - BID 1212 – US$ 77,086 thousand |
Government |
2025 |
2.74% (*) |
US$ |
Inter-American Development Bank - BID 2202 – US$ 442,584 thousand |
Government |
2035 |
2.33% (*) |
US$ |
International Bank for Reconstruction and Development - BIRD – US$ 91,286 thousand |
Government |
2034 |
1.71% (*) |
US$ |
Deutsche Bank – US$ 150,000 thousand |
- |
2019 |
Libor+4.50%(*) |
US$ |
Eurobonds – US$ 350,000 thousand |
- |
2020 |
6.25% |
US$ |
JICA 15 – ¥ 13,252,945 thousand |
Government |
2029 |
1.8% and 2.5% |
Yen |
JICA 18 – ¥ 11,915,840 thousand |
Government |
2029 |
1.8% and 2.5% |
Yen |
JICA 17 – ¥ 1,590,429 thousand |
Government |
2035 |
1.2% and 0.01% |
Yen |
JICA 19 – ¥ 30,600,548 thousand |
Government |
2037 |
1.7% and 0.01% |
Yen |
BID 1983AB – US$ 82,404 thousand |
- |
2023 |
Libor + 1.88% to 2.38% (*) |
US$ |
(*) Rates comprising LIBOR + contractually defined spread.
PAGE: 52 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(i) Payment schedule – accounting balances as of March 31, 2018
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 to 2038 |
|
TOTAL |
LOCAL CURRENCY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
366,754 |
|
1,029,909 |
|
579,963 |
|
476,635 |
|
556,106 |
|
359,749 |
|
347,850 |
|
3,716,966 |
Brazilian Federal Savings Bank |
52,063 |
|
71,159 |
|
73,743 |
|
77,573 |
|
81,709 |
|
73,856 |
|
832,949 |
|
1,263,052 |
BNDES |
78,478 |
|
117,441 |
|
99,282 |
|
98,833 |
|
98,833 |
|
93,145 |
|
505,791 |
|
1,091,803 |
Leases |
13,013 |
|
32,900 |
|
34,553 |
|
36,350 |
|
38,304 |
|
41,035 |
|
369,999 |
|
566,154 |
Other |
1,266 |
|
1,373 |
|
1,373 |
|
1,373 |
|
1,373 |
|
1,373 |
|
2,628 |
|
10,759 |
Interest and charges |
48,227 |
|
11,878 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
60,105 |
TOTAL IN LOCAL CURRENCY |
559,801 |
|
1,264,660 |
|
788,914 |
|
690,764 |
|
776,325 |
|
569,158 |
|
2,059,217 |
|
6,708,839 |
FOREIGN CURRENCY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BID |
59,111 |
|
118,223 |
|
118,223 |
|
118,223 |
|
118,223 |
|
118,224 |
|
1,061,600 |
|
1,711,827 |
BIRD |
- |
|
10,104 |
|
20,208 |
|
20,208 |
|
20,208 |
|
20,209 |
|
212,175 |
|
303,112 |
Deutsche Bank |
249,285 |
|
244,432 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
493,717 |
Eurobonds |
- |
|
- |
|
1,161,066 |
|
- |
|
- |
|
- |
|
- |
|
1,161,066 |
JICA |
36,970 |
|
122,884 |
|
122,884 |
|
122,884 |
|
122,884 |
|
122,884 |
|
1,138,558 |
|
1,789,948 |
BID 1983AB |
79,504 |
|
58,806 |
|
57,632 |
|
25,568 |
|
25,568 |
|
23,750 |
|
- |
|
270,828 |
Interest and charges |
43,139 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
43,139 |
TOTAL IN FOREIGN CURRENCY |
468,009 |
|
554,449 |
|
1,480,013 |
|
286,883 |
|
286,883 |
|
285,067 |
|
2,412,333 |
|
5,773,637 |
Overall Total |
1,027,810 |
|
1,819,109 |
|
2,268,927 |
|
977,647 |
|
1,063,208 |
|
854,225 |
|
4,471,550 |
|
12,482,476 |
PAGE: 53 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(ii) Changes
December 31, 2017 |
Funding |
Borrowings costs |
Lease |
Monetary variation and exchange rate changes |
Inflation adjustment / update and incorporated interest - Capitalized |
Interest paid |
Amortization |
Accrued interest |
Provision for interest and fees - Capitalized |
Borrowings costs expenses |
March 31, 2018 | |
|
|
|
|
|
|
|
|
|
|
|
| |
LOCAL CURRENCY |
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
3,576,842 |
750,000 |
(2,294) |
- |
18,204 |
- |
(104,183) |
(537,322) |
51,440 |
11,043 |
792 |
3,764,522 |
Brazilian Federal Savings Bank |
1,236,674 |
57,531 |
- |
- |
- |
- |
(24,588) |
(27,565) |
19,709 |
4,924 |
- |
1,266,685 |
BNDES |
1,042,036 |
79,000 |
- |
- |
1,426 |
761 |
(19,936) |
(22,138) |
6,823 |
12,662 |
52 |
1,100,686 |
Leases |
561,616 |
- |
- |
8,695 |
- |
- |
- |
(4,157) |
- |
- |
- |
566,154 |
Other |
10,977 |
- |
- |
- |
18 |
- |
(204) |
(202) |
200 |
3 |
- |
10,792 |
TOTAL IN DOMESTIC CURRENCY |
6,428,145 |
886,531 |
(2,294) |
8,695 |
19,648 |
761 |
(148,911) |
(591,384) |
78,172 |
28,632 |
844 |
6,708,839 |
|
|
|
|
|
|
|
|
|
|
|
| |
LOCAL CURRENCY |
|
|
|
|
|
|
|
|
|
|
|
|
BID |
1,743,257 |
32,772 |
(1,139) |
- |
(3,490) |
11,336 |
(20,457) |
(56,971) |
5,723 |
5,006 |
204 |
1,716,241 |
BIRD |
303,278 |
- |
- |
- |
598 |
845 |
(2,634) |
- |
1,010 |
240 |
5 |
303,342 |
Deutsche Bank |
496,726 |
- |
- |
- |
2,370 |
- |
(8,449) |
- |
7,156 |
1,531 |
902 |
500,236 |
Eurobonds |
1,158,642 |
- |
- |
- |
5,530 |
- |
- |
- |
17,025 |
4,375 |
205 |
1,185,777 |
JICA |
1,700,448 |
27,241 |
(63) |
- |
105,706 |
750 |
(15,609) |
(33,343) |
8,102 |
142 |
43 |
1,793,417 |
BID 1983AB |
270,470 |
- |
- |
- |
1,302 |
- |
- |
- |
2,054 |
463 |
335 |
274,624 |
TOTAL IN FOREIGN CURRENCY |
5,672,821 |
60,013 |
(1,202) |
- |
112,016 |
12,931 |
(47,149) |
(90,314) |
41,070 |
11,757 |
1,694 |
5,773,637 |
Overall Total |
12,100,966 |
946,544 |
(3,496) |
8,695 |
131,664 |
13,692 |
(196,060) |
(681,698) |
119,242 |
40,389 |
2,538 |
12,482,476 |
PAGE: 54 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
December 31, 2016 |
Funding |
Borrowings costs |
Lease |
Monetary variation and exchange rate changes |
Inflation adjustment / update and incorporated interest - Capitalized |
Interest paid |
Amortization |
Accrued interest |
Provision for interest and fees - Capitalized |
Borrowings costs expenses |
March 31, 2017 | |
|
|
|
|
|
|
|
|
|
|
|
| |
LOCAL CURRENCY |
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
3,641,912 |
- |
(191) |
- |
18,574 |
- |
(130,670) |
(281,725) |
34,838 |
42,554 |
1,059 |
3,326,351 |
Brazilian Federal Savings Bank |
1,150,691 |
30,435 |
- |
- |
3,217 |
848 |
(23,381) |
(14,417) |
18,448 |
4,968 |
- |
1,170,809 |
BNDES |
946,984 |
171,153 |
- |
- |
- |
- |
(17,937) |
(21,875) |
11,356 |
12,620 |
52 |
1,102,353 |
Leases |
552,516 |
- |
- |
5,302 |
- |
- |
- |
(3,637) |
- |
- |
- |
554,181 |
Other |
11,677 |
- |
- |
- |
4 |
- |
(224) |
(179) |
209 |
20 |
- |
11,507 |
TOTAL IN LOCAL CURRENCY |
6,303,780 |
201,588 |
(191) |
5,302 |
21,795 |
848 |
(172,212) |
(321,833) |
64,851 |
60,162 |
1,111 |
6,165,201 |
|
|
|
|
|
|
|
|
|
|
|
| |
FOREIGN CURRENCY |
|
|
|
|
|
|
|
|
|
|
|
|
BID |
1,811,664 |
22,463 |
(1,295) |
- |
(55.530) |
5,038 |
(18,200) |
(52,374) |
5,667 |
3,603 |
170 |
1,721,206 |
BIRD |
261,337 |
5,005 |
- |
- |
(7.648) |
466 |
(1,874) |
- |
724 |
217 |
5 |
258,232 |
Deutsche Bank |
485,090 |
- |
(463) |
- |
(13.605) |
- |
(7,698) |
- |
2,955 |
4,609 |
879 |
471,767 |
Eurobonds |
1,141,469 |
- |
- |
- |
(31.745) |
- |
- |
- |
8,827 |
10,863 |
205 |
1,129,619 |
JICA |
1,617,215 |
48,101 |
- |
- |
28.731 |
1,058 |
(13,840) |
(29,491) |
6,607 |
486 |
37 |
1,658,904 |
BID 1983AB |
343,588 |
- |
- |
- |
(9,646) |
- |
- |
- |
1,009 |
1,263 |
326 |
336,540 |
TOTAL IN FOREIGN CURRENCY |
5,660,363 |
75,569 |
(1,758) |
- |
(89,443) |
6,562 |
(41,612) |
(81,865) |
25,789 |
21,041 |
1,622 |
5,576,268 |
Overall Total |
11,964,143 |
277,157 |
(1,949) |
5,302 |
(67,648) |
7,410 |
(213,824) |
(403,698) |
90,640 |
81,203 |
2,733 |
11,741,469 |
PAGE: 55 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(a) Debentures
As of January 15, 2018, the Company amortized series 1 of the 17th issue, totaling R$ 144,391.
As of February 15, 2018, the Company amortized the first installment of series 2 of the 15th issue, totaling
R$ 348,434.
As of February 19, 2018, the Company held the 22nd issue of unsecured debentures, not convertible into shares, in up to three series, for public distribution, with restricted placement efforts, pursuant to CVM Instruction 476/2009, totaling R$ 750 million. The first series, totaling R$ 100,000, is due in three years and is remunerated at the CDI + 0.58% p.a., the second series, totaling R$ 400,000, is due in five years and is remunerated at the CDI + 0.90% p.a., and the third series, totaling R$ 250,000, is due in seven years and is remunerated at the IPCA + 6.00% p.a. The proceeds from the debenture issue will be allocated to refinance financial commitments and recompose the Company’s cash.
The covenants agreed for the 22nd issue debentures are:
Calculated every quarter upon the disclosure of interim financial information or annual financial statements:
- Net debt/adjusted EBITDA: lower than or equal to 3.50;
- Adjusted EBITDA/paid financial expenses equal to or higher than 1.5;
- Disposal of operating assets, extinguishment of license, loss of concession or loss of Issuer’s capacity to execute and operate the basic sanitation public utilities in areas of the State of São Paulo territory, which considered individually or jointly during the contract’s effectiveness, result in a reduction of net sales revenue and/or services revenue of the Issuer exceeding twenty-five percent (25%). The limit established above will be calculated quarterly, taking into account the Issuer’s operating income for the twelve (12) months preceding the end of each quarter and applying the financial information disclosed by the Issuer.
Non-compliance with the covenant clauses, during, at least, two consecutive quarters, or also two nonconsecutive quarters within a twelve-month period shall result in the early maturity of the agreement.
The contract has a cross acceleration clause, i.e., the early maturity of any of the Company’s debts, in and individual or aggregate amount equal to or higher than R$ 145 million, adjusted by the IPCA inflation index as of the issue date, constitutes a default event and may result in the early maturity of the obligations arising from the Debentures.
As of March 15, 2018, the Company raised R$ 79,000, corresponding to agreement 15.2.0313.1 - BNDES 2015.
In 2018, funding totaled R$ 20,243, referring to agreement BZ-P19 (JICA 19).
PAGE: 56 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
In 2018, funding totaled R$ 32,771, referring to agreement BID 2202.
The Yen increased 6.3%, from R$ 0.02940 on December 31, 2017 to R$ 0.03126 on March 31, 2018, increasing the Yen-pegged debt by R$ 106,689.
As of March 31, 2018, the Company had met the requirements set forth by its borrowings and financing agreements.
Agent |
|
March 31, 2018 |
|
|
(in millions of reais (*)) |
Brazilian Federal Savings Bank |
|
1,429 |
Brazilian Development Bank - BNDES |
|
1,502 |
Inter-American Development Bank – BID |
|
405 |
Japan International Cooperation Agency – JICA |
|
232 |
Other |
|
38 |
TOTAL |
|
3,606 |
(*) Brazilian Central Bank’s exchange rate as of March 31, 2018 (US$1.00 = R$3.3238; ¥1.00 = R$0.03126).
SABESP in order to comply with its Capex plan relies on a fund-raising plan.
Financing resources contracted have specific purposes, which have been released for the execution of their respective investments, according to the progress of the works.
PAGE: 57 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(a) Current assets
|
March 31, 2018 |
December 31, 2017 |
Recoverable taxes |
|
|
Income tax and social contribution |
171,809 |
270,614 |
Withheld income tax (IRRF) on financial investments |
8,039 |
2,606 |
Other federal taxes |
10,668 |
3,365 |
Total |
190,516 |
276,585 |
The decrease in recoverable taxes was mainly due to a decrease in “income tax and social contribution”, due to offsets with taxes payable in the first quarter of 2018.
|
March 31, 2018 |
December 31, 2017 |
Taxes and contributions payable |
|
|
Cofins and Pasep |
80,044 |
74,034 |
INSS (Social Security contribution) |
35,251 |
35,365 |
IRRF (withholding income tax) |
4,435 |
58,204 |
Other |
7,247 |
16,362 |
Total |
126,977 |
183,965 |
The decrease in taxes and contribution payable was mainly due to the payment of withholding income tax based on the amount of interest on equity declared in 2017.
PAGE: 58 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
17 Deferred taxes and contributions
(a) Statement of financial position details
|
March 31, 2018 |
December 31, 2017 |
Deferred income tax assets |
|
|
Provisions |
475,848 |
482,863 |
Pension obligations - G1 |
162,413 |
165,503 |
Donations of underlying asset on concession agreements |
54,444 |
55,112 |
Allowance for doubtful accounts |
206,993 |
199,063 |
Other |
175,217 |
151,562 |
Total deferred tax assets |
1,074,915 |
1,054,103 |
|
|
|
Deferred income tax liabilities |
|
|
Temporary difference on concession of intangible asset |
(452,678) |
(460,177) |
Capitalization of borrowing costs |
(417,621) |
(415,379) |
Profit on supply to governmental entities |
(85,921) |
(76,705) |
Actuarial gain/loss – G1 Plan |
(36,538) |
(36,538) |
Construction margin |
(88,255) |
(88,947) |
Borrowing costs |
(13,027) |
(13,111) |
Total deferred tax liabilities |
(1,094,040) |
(1,090,857) |
|
|
|
Deferred tax liability, net |
(19,125) |
(36,754) |
PAGE: 59 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
(b) Changes
Deferred income tax assets |
December 31, 2017 |
Net change |
March 31, 2018 |
Provisions |
482,863 |
(7,015) |
475,848 |
Pension obligations - G1 |
165,503 |
(3,090) |
162,413 |
Donations of underlying assets on concession agreements |
55,112 |
(668) |
54,444 |
Allowance for doubtful accounts |
199,063 |
7,930 |
206,993 |
Other |
151,562 |
23,655 |
175,217 |
Total |
1,054,103 |
20,812 |
1,074,915 |
|
|
|
|
Deferred income tax liabilities |
|
|
|
Temporary difference on concession of intangible asset |
(460,177) |
7,499 |
(452,678) |
Capitalization of borrowing costs |
(415,379) |
(2,242) |
(417,621) |
Profit on supply to governmental entities |
(76,705) |
(9,216) |
(85,921) |
Actuarial gain/loss – G1 |
(36,538) |
- |
(36,538) |
Construction margin |
(88,947) |
692 |
(88,255) |
Borrowing costs |
(13,111) |
84 |
(13,027) |
Total |
(1,090,857) |
(3,183) |
(1,094,040) |
|
|
|
|
Deferred tax liability, net |
(36,754) |
17,629 |
(19,125) |
PAGE: 60 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
Deferred income tax assets |
December 31, 2016 |
Net change |
March 31, 2017 |
Provisions |
524,129 |
3,890 |
528,019 |
Actuarial loss – G1 |
85,044 |
- |
85,044 |
Pension obligations - G1 |
167,922 |
(979) |
166,943 |
Donations of underlying asset on concession agreements |
57,317 |
(187) |
57,130 |
Allowance for doubtful accounts |
266,757 |
(8,858) |
257,899 |
Other |
151,247 |
937 |
152,184 |
Total |
1,252,416 |
(5,197) |
1,247,219 |
|
|
|
|
Deferred income tax liabilities |
|
|
|
Temporary difference on concession of intangible asset |
(492,341) |
8,832 |
(483,509) |
Capitalization of borrowing costs |
(374,512) |
(18,071) |
(392,583) |
Profit on supply to governmental entities |
(92,365) |
2,406 |
(89,959) |
Construction margin |
(91,790) |
738 |
(91,052) |
Borrowing costs |
(15,063) |
267 |
(14,796) |
Total |
(1,066,071) |
(5,828) |
(1,071,899) |
|
|
|
|
Deferred tax asset, net |
186,345 |
(11,025) |
175,320 |
|
March 31, 2018 |
March 31, 2017 |
|
|
|
Opening balance |
(36,754) |
186,345 |
Net change in the year: |
|
|
- corresponding entry to the income statement |
17,629 |
(11,025) |
|
|
|
Total change, net |
17,629 |
(11,025) |
Closing balance |
(19,125) |
175,320 |
PAGE: 61 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
The amounts recorded as income tax and social contribution expenses in the financial statements are reconciled to the statutory rates, as shown below:
|
March 31, 2018 |
|
March 31, 2017 |
Profit before income taxes |
888,672 |
|
1,035,827 |
Statutory rate |
34% |
|
34% |
Estimated expense at statutory rate |
(302,148) |
|
(352,181) |
Permanent differences |
|
|
|
Provision - Law 4,819/58 – G0 (i) |
(12,323) |
|
(14,945) |
Donations |
(657) |
|
(222) |
Other differences |
6,887 |
|
5,883 |
Income tax and social contribution |
(308,241) |
|
(361,465) |
Current income tax and social contribution |
(325,870) |
|
(350,440) |
Deferred income tax and social contribution |
17,629 |
|
(11,025) |
Effective rate |
35% |
|
35% |
(i) Permanent difference related to the provision for actuarial liability (Note 19 (b) (iii)).
(a) Lawsuits and proceedings that resulted in provisions
(I) Statement of financial position details
The Company is party to a number of claims and legal and administrative proceedings arising in the normal course of business, including civil, tax, labor and environmental matters. Management recognizes provisions consistently with the recognition and measurement criteria established in Note 3.15 to the Annual Financial Statements as of December 31, 2017. The ultimate timing and amounts of the payments depend on the outcome of the court cases. The provisions, net of escrow deposits are as follows:
PAGE: 62 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
|
Provisions |
Escrow deposits |
March 31, 2018 |
|
Provisions |
Escrow deposits |
December 31, 2017 |
Customer claims (i) |
414,972 |
(56,662) |
358,310 |
|
438,619 |
(56,301) |
382,318 |
Supplier claims (ii) |
326,638 |
(279,799) |
46,839 |
|
332,037 |
(259,608) |
72,429 |
Other civil claims (iii) |
108,386 |
(14,126) |
94,260 |
|
114,544 |
(16,227) |
98,317 |
Tax claims (iv) |
75,235 |
(7,839) |
67,396 |
|
77,100 |
(5,507) |
71,593 |
Labor claims (v) |
306,587 |
(9,297) |
297,290 |
|
299,842 |
(6,741) |
293,101 |
Environmental claims (vi) |
170,139 |
(114) |
170,025 |
160,446 |
- |
160,446 | |
Total |
1,401,957 |
(367,837) |
1,034,120 |
1,422,588 |
(344,384) |
1,078,204 | |
|
|
|
|
|
|
|
|
Current |
584,948 |
- |
584,948 |
|
607,959 |
- |
607,959 |
Noncurrent |
817,009 |
(367,837) |
449,172 |
|
814,629 |
(344,384) |
470,245 |
(II) Changes
|
December 31, 2017 |
Additional provisions |
Interest and inflation adjustment |
Use of the accrual |
Amounts not used (reversal) |
March 31, 2018 |
Customer claims (i) |
438,619 |
1,281 |
8,159 |
(19,285) |
(13,802) |
414,972 |
Supplier claims (ii) |
332,037 |
20,049 |
2,345 |
(26,287) |
(1,506) |
326,638 |
Other civil claims (iii) |
114,544 |
2,584 |
2,826 |
(3,725) |
(7,843) |
108,386 |
Tax claims (iv) |
77,100 |
4,583 |
1,223 |
(2,431) |
(5,240) |
75,235 |
Labor claims (v) |
299,842 |
17,583 |
7,740 |
(5,131) |
(13,447) |
306,587 |
Environmental claims (vi) |
160,446 |
10,205 |
5,027 |
- |
(5,539) |
170,139 |
Subtotal |
1,422,588 |
56,285 |
27,320 |
(56,859) |
(47,377) |
1,401,957 |
Escrow deposits |
(344,384) |
(27,680) |
(2,823) |
3,942 |
3,108 |
(367,837) |
Total |
1,078,204 |
28,605 |
24,497 |
(52,917) |
(44,269) |
1,034,120 |
PAGE: 63 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Notes to the Interim Financial Information
|
December 31, 2016 |
Additional provisions |
Interest and inflation adjustment |
Use of the accrual |
Amounts not used (reversal) |
March 31, 2017 |
Customer claims (i) |
572,210 |
7,188 |
10,842 |
(28,459) |
(3,902) |
557,879 |
Supplier claims (ii) |
332,667 |
5,891 |
13,035 |
(9,878) |
(143) |
341,572 |
Other civil claims (iii) |
131,286 |
3,167 |
3,721 |
(3,428) |
(7,839) |
126,907 |
Tax claims (iv) |
69,898 |
2,392 |
3,473 |
(192) |
(28) |
75,543 |
Labor claims (v) |
285,413 |
11,950 |
10,176 |
(8,628) |
(8,742) |
290,169 |
Environmental claims (vi) |
150,084 |
7,518 |
4,592 |
(970) |
(297) |
160,927 |
Subtotal |
1,541,558 |
38,106 |
45,839 |
(51,555) |
(20,951) |
1,552,997 |
Escrow deposits |
(368,483) |
(6,627) |
(3,050) |
8,274 |
2,698 |
(367,188) |
Total |
1,173,075 |
31,479 |
42,789 |
(43,281) |
(18,253) |
1,185,809 |
The Company is party to lawsuits and administrative proceedings relating to environmental, tax, civil and labor claims, which are assessed as contingent liabilities in the financial statements, since it either does not expect outflows to be required or the amount of the obligation cannot be reliably measured. Contingent liabilities are represented as follows:
|
March 31, 2018 |
December 31, 2017 |
Customer claims (i) |
236,800 |
219,900 |
Supplier claims (ii) |
1,515,000 |
1,430,600 |
Other civil claims (iii) |
685,500 |
733,100 |
Tax claims (iv) |
1,284,000 |
1,291,000 |
Labor claims (v) |
687,600 |
677,400 |
Environmental claims (vi) |
4,004,200 |
3,879,000 |
Total |
8,413,100 |
8,231,000 |
(i) Customer claims
Approximately 1,020 lawsuits (1,070 as of December 31, 2017) were filed by commercial customers, which claim that their tariffs should correspond to other consumer categories, and 660 lawsuits (680 as of December 31, 2017) in which customers claim a reduction in the sewage tariff due to losses in the system, consequently requesting the refund of amounts charged by the Company and 50 lawsuits (50 as of December 31, 2017) in which customers plead the reduction in tariff under the category “Social Welfare Entity”. The Company was granted both favorable and unfavorable final decisions at several court levels.
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Notes to the Interim Financial Information
These 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, and are in progress at different courts.
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.
Tax claims refer mainly to issues related to tax collections and fines in general challenged due to disagreements regarding notification or differences in the interpretation of legislation by the Company's management.
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, service outsourcing and other. Part of the amount involved is in provisional or final execution at various court levels.
These refer to several administrative proceedings and lawsuits filed by government entities, including Companhia de Tecnologia de Saneamento Ambiental – Cetesb and the Public Prosecution Office of the State of São Paulo, 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 Company contracts guarantee insurance for the issue of policy, which was renewed on May 25, 2017, in the amount of 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 limited to up to five years.
From January to March 2018, the Company did not use the guarantee insurance (R$ 524 from January to March 2017).
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Notes to the Interim Financial Information
(a) Health benefit plan
The health benefit plan is managed by Sabesprev and consists of optional, free choice, health plans sponsored by contributions of SABESP and the active participants, as follows:
. Company: 8.0% on average, of gross payroll;
. Participating employees: 3.21% of base salary and premiums, equivalent to 2.7% of payroll, on average.
(b) Pension plan benefits
Funded plan – G1 |
|
|
Pension plan liabilities as of December 31, 2017 |
|
388,461 |
Expenses recognized in 2018 |
|
1,886 |
Payments made in 2018 |
|
(10,974) |
Pension plan liabilities as of March 31, 2018 (i) |
|
379,373 |
|
|
|
Unfunded plan – G0 |
|
|
Pension plan liabilities as of December 31, 2017 |
|
2,543,877 |
Expenses recognized in 2018 |
|
58,062 |
Payments made in 2018 |
|
(41,354) |
Pension plan liabilities as of March 31, 2018 (iii) |
|
2,560,585 |
|
|
|
Total |
|
2,939,958 |
(i) G1 Plan
The Company sponsors a defined benefit pension plan for its employees (“G1 Plan”), which is managed by Sabesprev, receives similar contributions established in a plan of subsidy of actuarial study of SABESPREV, as follows:
· 0.99% of the portion of the salary of participation up to 20 salaries; and
· 8.39% of the surplus, if any, of the portion of the salary of participation over 20 salaries.
As of March 31, 2018, SABESP had a net actuarial liability of R$ 379,373 (R$ 388,461 as of December 31, 2017) 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.
As of March 31, 2018, Sabesprev Mais plan, based on defined contribution, had 9,300 active and assisted participants (9,328 as of December 31, 2017).
PAGE: 66 of 82
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Notes to the Interim Financial Information
With respect to the Sabesprev Mais plan, the contributions from the sponsor represent 100% over the total basic contribution from the participants. In 2018, expenses related to the obligation of defined contribution, totaling
R$ 3,195, R$ 459 and R$ 884, were allocated to operating costs, selling expenses and administrative expenses. The amount of R$ 451 was capitalized in assets.
From January to March 2018, the Company has made contributions in the amount of R$ 4,989 (R$ 4,310 from January to March 2017).
Pursuant to Law 4,819/58, employees who started providing services prior to May 1974 and 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 related parties, limited to the amounts considered virtually certain that will be reimbursed by the State Government. As of March 31, 2018, the Company recorded a defined benefit obligation for Plan G0 of R$ 2,560,585 (R$ 2,543,877 as of December 31, 2017).
The Company has a profit sharing program in accordance with an agreement with labor union and SABESP. The period covered represents the Company fiscal year, commence in January to December 2018. The limit of the profit sharing is one month salary for each employee, depending on performance goals reached.
From January to March 2018 and 2017, R$ 24,619 and R$ 21,077, respectively, were accrued.
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 includes the amounts payable related to transfer of 7.5% of revenue from the São Paulo local government to the Municipal Fund (Note 14 (c) (v) of the Annual Financial Statements of December 31, 2017). The balances as of March 31, 2018 and December 31, 2017 were R$ 515,852 and R$ 408,275, respectively.
(a) Authorized capital
The Company is authorized to increase capital by up to R$ 15,000,000, 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 the number of shares held, pursuant to Article 171 of Law 6,404/76.
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Notes to the Interim Financial Information
As of March 31, 2018 and December 31, 2017, subscribed and paid-in capital is represented by 683,509,869 registered, book-entry common shares with no par value, held as follows:
|
March 31, 2018 |
December 31, 2017 | ||
|
Number of shares |
% |
Number of shares |
% |
State Department of Finance |
343,524,285 |
50.26% |
343,524,285 |
50.26% |
Companhia Brasileira de Liquidação e Custódia |
205,319,606 |
30.04% |
201,026,895 |
29.41% |
The Bank Of New York ADR Department (equivalent in shares) (*) (**) |
132,497,792 |
19.38% |
136,790,413 |
20.01% |
Other |
2,168,186 |
0.32% |
2,168,276 |
0.32% |
|
|
|
|
|
|
683,509,869 |
100.00% |
683,509,869 |
100.00% |
(*) each ADR corresponds to 1 share.
(**) custodians.
22 Earnings per share
Basic and diluted
Basic earnings per share is calculated by dividing the equity attributable to Company’s owners by the weighted average number of outstanding common shares during the year. 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.
|
January to |
January to |
March 2018 |
March 2017 | |
Equity attributable to Company’s owners |
580,431 |
674,362 |
Weighted average number of common shares issued |
683,509,869 |
683,509,869 |
Basic and diluted earnings per share (reais per share) |
0.84919 |
0.98662 |
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Notes to the Interim Financial Information
Management, comprised by the Board of Directors and Board of Executive Officers, has determined the operating segment used to make strategic decisions, as sanitation services.
Result
|
January to March 2018 | ||
|
Sanitation (i) |
Reconciliation to the statement of income (ii) |
Balance as per financial statements |
Gross operating revenue |
3,280,846 |
647,203 |
3,928,049 |
Gross sales deductions |
(228,381) |
- |
(228,381) |
Net operating revenue |
3,052,465 |
647,203 |
3,699,668 |
Costs, selling and administrative expenses |
(1,998,720) |
(632,652) |
(2,631,372) |
Income from operations before other operating expenses, net and equity accounting |
1,053,745 |
14,551 |
1,068,296 |
Other operating income / (expenses), net |
|
|
11,492 |
Equity accounting |
|
|
2,817 |
Financial result, net |
|
|
(193,933) |
Income from operations before taxes |
|
|
888,672 |
Depreciation and amortization |
(327,899) |
- |
(327,899) |
(i) See note 29 for further information about non-monetary items, other than depreciation and amortization that impact segment results, and additionals to long-lived asset information.
(ii) Construction revenue and related costs not reported to the CODM (“Chief Operating Decision Maker”).
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Notes to the Interim Financial Information
|
January to March 2017 | ||
|
Sanitation (i) |
Reconciliation to the statement of income (ii) |
Balance as per financial statements |
Gross operating revenue |
3,029,291 |
722,928 |
3,752,219 |
Gross sales deductions |
(193,394) |
- |
(193,394) |
Net operating revenue |
2,835,897 |
722,928 |
3,558,825 |
Costs, selling and administrative expenses |
(1,832,001) |
(707,229) |
(2,539,230) |
Income from operations before other operating expenses, net and equity accounting |
1,003,896 |
15,699 |
1,019,595 |
Other operating income / (expenses), net |
|
|
10,564 |
Equity accounting |
|
|
1,870 |
Financial result, net |
|
|
3,798 |
Income from operations before taxes |
|
|
1,035,827 |
Depreciation and amortization |
(331,948) |
- |
(331,948) |
(i) See note 29 for further information about non-monetary items, other than depreciation and amortization that impact segment results, and additionals to long-lived asset information.
(ii) Construction revenue and related costs not reported to the CODM (“Chief Operating Decision Maker”).
Explanation on the reconciliation items for the income statement.
The impacts on gross operating income and costs are as follows:
|
January to March |
January to March |
|
2018 |
2017 |
Gross revenue from construction recognized under ICPC 1 (R1) (a) |
647,203 |
722,928 |
Construction costs recognized under ICPC 1 (R1) (a) |
(632,652) |
(707,229) |
Construction margin (Note 13 (e)) |
14,551 |
15,699 |
(a) Revenue from construction is recognized as shown in Note 3.1 (b).
PAGE: 70 of 82
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Notes to the Interim Financial Information
24 Operating revenue
(a) Revenue from sanitation services:
|
January to March 2018 |
January to March 2017 |
|
|
|
São Paulo Metropolitan Region |
2,280,557 |
2,108,248 |
Regional Systems |
1,000,289 |
921,043 |
Total |
3,280,846 |
3,029,291 |
|
January to March |
January to March |
2018 |
2017 | |
Revenue from sanitation services (i) |
3,280,846 |
3,029,291 |
Construction revenue |
647,203 |
722,928 |
Sales tax |
(214,910) |
(193,394) |
Regulation, Control and Oversight Fee (TRCF) (ii) |
(13,471) |
- |
Net revenue |
3,699,668 |
3,558,825 |
(i) Includes the amount of R$ 15,509 corresponding to the TRCF charged from customers from the municipalities regulated by ARSESP.
(ii) Refers to the performance of the regulation, control and oversight activity paid to ARSESP, pursuant to State Complementary Law 1,025/07.
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Notes to the Interim Financial Information
25 Operating costs and expenses
|
January to March 2018 |
January to March 2017 |
Operating costs |
|
|
Salaries, payroll charges and benefits |
(457,587) |
(417,423) |
Pension obligations |
(5,408) |
(10,970) |
Construction costs (Note 23) |
(632,652) |
(707,229) |
General supplies |
(52,148) |
(34,520) |
Treatment supplies |
(75,931) |
(71,268) |
Outside services |
(245,995) |
(194,236) |
Electricity |
(221,237) |
(199,326) |
General expenses |
(150,113) |
(125,345) |
Depreciation and amortization |
(298,166) |
(301,099) |
|
(2,139,237) |
(2,061,416) |
|
|
|
Selling expenses |
|
|
Salaries, payroll charges and benefits |
(70,754) |
(65,266) |
Pension obligations |
(795) |
(1,603) |
General supplies |
(1,431) |
(972) |
Outside services |
(73,893) |
(60,249) |
Electricity |
(314) |
(177) |
General expenses |
(23,992) |
(21,786) |
Depreciation and amortization |
(4,345) |
(2,491) |
Allowance for doubtful accounts (Note 8 (c)) |
(48,631) |
(86,136) |
|
(224,155) |
(238,680) |
|
|
|
Administrative expenses |
|
|
Salaries, payroll charges and benefits |
(58,095) |
(47,506) |
Pension obligations |
(37,313) |
(45,659) |
General supplies |
(1,377) |
(499) |
Outside services |
(57,302) |
(28,269) |
Electricity |
(321) |
(205) |
General expenses |
(72,144) |
(62,801) |
Depreciation and amortization |
(25,388) |
(28,358) |
Tax expenses |
(16,040) |
(25,837) |
|
(267,980) |
(239,134) |
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Notes to the Interim Financial Information
|
|
|
Operating costs and expenses |
|
|
Salaries, payroll charges and benefits |
(586,436) |
(530,195) |
Pension obligations |
(43,516) |
(58,232) |
Construction costs (Note 23) |
(632,652) |
(707,229) |
General supplies |
(54,956) |
(35,991) |
Treatment supplies |
(75,931) |
(71,268) |
Outside services |
(377,190) |
(282,754) |
Electricity |
(221,872) |
(199,708) |
General expenses |
(246,249) |
(209,932) |
Depreciation and amortization |
(327,899) |
(331,948) |
Tax expenses |
(16,040) |
(25,837) |
Allowance for doubtful accounts (Note 8 (c)) |
(48,631) |
(86,136) |
|
(2,631,372) |
(2,539,230) |
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Notes to the Interim Financial Information
26 Financial income (expenses)
|
January to March 2018 |
January to March 2017 |
Financial expenses |
|
|
Interest and charges on borrowings and financing – local currency |
(78,169) |
(64,850) |
Interest and charges on borrowings and financing – foreign currency |
(36,559) |
(22,182) |
Other financial expenses |
(22,903) |
(23,251) |
Income tax over international remittance |
(4,514) |
(3,608) |
Inflation adjustment on loans and financing |
(19,649) |
(21,794) |
Other inflation adjustments |
(9,764) |
(6,933) |
Interest and inflation adjustments on provisions |
12,541 |
(23,870) |
Total financial expenses |
(159,017) |
(166,488) |
|
|
|
Financial income |
|
|
Inflation adjustment gains |
14,753 |
20,449 |
Income on short-term investments |
37,578 |
55,414 |
Interest income |
28,667 |
8,246 |
Cofins and Pasep |
(3,766) |
(3,932) |
Other |
1 |
442 |
Total financial income |
77,233 |
80,619 |
|
|
|
Financial income (expenses), net before exchange rate changes |
(81,784) |
(85,869) |
|
|
|
Net exchange gains (losses) |
|
|
Exchange rate changes on borrowings and financing (i) |
(112,015) |
89,442 |
Exchange gains on assets |
(134) |
279 |
Other exchange rate changes |
- |
(54) |
Exchange rate changes, net |
(112,149) |
89,667 |
|
|
|
Financial income (expenses), net |
(193,933) |
3,798 |
(i) The change in expenses mainly reflects the 0.48% and 6.33% appreciation of the U.S. dollar and Yen, respectively, in the first quarter of 2018, compared to a 2.78% depreciation in the U.S. dollar and a 1.86% appreciation in the Yen, in the same period in 2017.
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Notes to the Interim Financial Information
|
January to March 2018 |
January to March 2017 |
|
|
|
Other net operating income, net |
17,425 |
8,697 |
Other operating expenses |
(5,933) |
1,867 |
|
|
|
Other operating revenue (expenses), net |
11,492 |
10,564 |
Other operating income is comprised by sale of property, plant and equipment, sale of contracts awarded in public bids, right to sell electricity, indemnities and reimbursement of expenses, fines and collaterals, property leases, reuse water, PURA projects and services, net of Cofins and Pasep.
Other operating expenses consist mainly of derecognition of concessions due to obsolescence, discontinued construction works, unproductive wells, projects considered economically unfeasible, losses on property, plant and equipment and exceeding cost of electricity sold.
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, the main committed amounts as of March 31, 2018:
|
April to December |
|
|
|
|
|
2023 |
| |
2018 |
|
2019 to 2020 |
|
2021 to 2022 |
|
onwards |
|
Total | |
Contractual obligations – |
|
|
|
|
|
|
|
|
|
Expenses |
1,405,261 |
|
1,163,536 |
|
382,178 |
|
1,217,375 |
|
4,168,350 |
Contractual obligations – Investments |
1,718,447 |
|
2,128,542 |
|
1,031,857 |
|
6,005,402 |
|
10,884,248 |
Total |
3,123,708 |
|
3,292,078 |
|
1,414,035 |
|
7,222,777 |
|
15,052,598 |
The main commitment refers to São Lourenço PPP. See Note 13 (g).
PAGE: 75 of 82
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Notes to the Interim Financial Information
29 Supplemental cash flow information
|
January to March 2018 |
January to March 2017 |
|
|
|
Total additions to intangible assets (Note 13 (b)) |
686,386 |
734,828 |
|
|
|
Items not affecting cash (see breakdown below) |
(456,410) |
(213,942) |
|
|
|
Total additions to intangible assets as per statement of cash flows |
229,976 |
520,886 |
|
|
|
Investments and financing operations affecting intangible assets but not cash: |
|
|
Interest capitalized in the period (Note 13 (d)) |
143,041 |
166,223 |
Contractors payable |
210,024 |
(81,182) |
Public Private Partnership - São Lourenço PPP (Note 13 (g)) |
85,576 |
113,202 |
Leases |
3,218 |
- |
Construction margin (Note 23) |
14,551 |
15,699 |
Total |
456,410 |
213,942 |
30 Events after the reporting period
On April 3, 2018, SABESP inaugurated the São Lourenço Production System, which increases treated water production availability by up to 6.4 m³/s.
The Annual Shareholders’ Meeting of April 27, 2018 approved the Company’s financial statements for the fiscal year ended December 31, 2017 and the allocation of net income for 2017.
On May 9, 2018, the Sanitation and Energy Regulatory Agency of the State of São Paulo (ARSESP) published Resolution 794, which authorizes the Company to apply the tariff adjustment index of 3.507% to the effective tariffs. The new table of tariffs will be published in the São Paulo State Official Gazette and will be effective 30 days as of their publication.
PAGE: 76 of 82
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The projections presented in the Reference Form are annual and not on a quarterly basis. Therefore, the quarterly comparison between information disclosed in the Reference Form with quarterly results shall not apply.
The projections monitoring occurs on annual basis and are disclosed in the Reference Form.
PAGE: 77 of 82
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Other Information Deemed as Relevant by the Company
CONSOLIDATED SHAREHOLDING OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES Position as of 3/31/2018 | ||||
Shareholder |
Number of Common Shares (units) |
% |
Total Number of Shares (units) |
% |
Controlling Group |
|
|
|
|
Treasury Department |
343,524,285 |
50.3% |
343,524,285 |
50.3% |
Cesp - Companhia Energética De São Paulo |
4,272 |
0.00% |
4,272 |
0.00% |
Companhia Paulista de Parcerias - CPP |
6 |
0.00% |
6 |
0.00% |
Management |
|
|
|
|
Board of Directors |
- |
- |
- |
- |
Board of Executive Officers |
- |
- |
- |
- |
|
|
|
|
|
Fiscal Council |
4 |
0.00% |
4 |
0.00% |
|
|
|
|
|
Treasury Shares |
- |
- |
- |
- |
|
|
|
|
|
Other Shareholders |
|
|
|
|
|
|
|
|
|
Total |
343,528,567 |
50.3% |
343,528,567 |
50.3% |
|
|
|
|
|
|
|
|
|
|
Outstanding Shares |
339,981,302 |
49.7% |
339,981,302 |
49.7% |
PAGE: 78 of 82
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Other Information Deemed as Relevant by the Company
CONSOLIDATED SHAREHOLDING OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES Position as of 3/31/2017 | ||||
Shareholder |
Number of Common Shares (units) |
% |
Total Number of Shares (units) |
% |
Controlling Group |
|
|
|
|
Treasury Department |
343,524,285 |
50.3% |
343,524,285 |
50.3% |
Cesp - Companhia Energética De São Paulo |
4,272 |
0.00% |
4,272 |
0.00% |
Companhia Paulista de Parcerias - CPP |
6 |
0.00% |
6 |
0.00% |
Management |
|
|
|
|
Board of Directors |
- |
- |
- |
- |
Board of Executive Officers |
- |
- |
- |
- |
|
|
|
|
|
Fiscal Council |
0 |
0.0% |
0 |
0.0% |
|
|
|
|
|
Treasury Shares |
- |
- |
- |
- |
|
|
|
|
|
Other Shareholders |
|
|
|
|
|
|
|
|
|
Total |
343,528,563 |
50.3% |
343,528,563 |
50.3% |
|
|
|
|
|
|
|
|
|
|
Outstanding Shares |
339,981,306 |
49.7% |
339,981,306 |
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 3/31/2018 Number of shares | |||
|
Common shares |
Total | ||
Shareholder |
Number of shares |
% |
Number of shares |
% |
Treasury Department |
343,524,285 |
50.3 |
343,524,285 |
50.3 |
PAGE: 79 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Reports and Statements / Unqualified Report on Special Review
Review report on the interim financial statements – ITR
To the Board of Directors and Shareholders
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
São Paulo - SP
Introduction
We have reviewed the interim financial information of Companhia de Saneamento Básico do Estado de São Paulo – SABESP (“The Company”), included in the Quarterly Financial Information – ITR referring to the quarter ended March 31, 2018, comprising the Financial position as of March 31, 2018 and the statement of income, comprehensive income, changes in equity and cash flows for the three-months period then ended, including the explanatory notes.
Management is responsible for the preparation of the interim financial information in accordance with accounting standard CPC 21(R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board - IASB, as well as for the presentation of this information in accordance with the standards issued by the Brazilian Securities and Exchange Commission - CVM, applicable to the preparation of Quarterly 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 the Brazilian and International standards on review engagements NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity 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 the 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 the auditing standards 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 Quarterly Information Form - ITR referred to above is not prepared, in all material respects, in accordance with CPC 21(R1) and IAS 34, issued by the IASB applicable to the preparation of Quarterly Financial Information - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission - CVM.
Other matters - Statement of value added
We have also reviewed the statements of value added (DVA) for the three-month period ended March 31, 2018, prepared under the responsibility of the Company’s management, whose presentation on the interim financial information is required in accordance with the standards issued by the Brazilian Securities and Exchange Commission – CVM applicable to the preparation of Quarterly Financial Information - ITR, and considered as supplementary information by IFRS, which does not require this disclosure. 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 it is not prepared, in all material respects, in accordance with the interim financial information taken as a whole.
São Paulo, May 10, 2018.
KPMG Auditores Independentes
CRC 2SP014428/O-6
(Original report in Portuguese signed by)
Marcio Serpejante Peppe
Contador CRC 1SP233011/O-8
PAGE: 80 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Executive Officers’ Statement on the Interim Financial Information STATEMENT
The Executive Officers of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, with Corporate Taxpayer’s ID (CNPJ/MF) no. 43.776.517/0001-80, headquartered at Rua Costa Carvalho, nº 300, Pinheiros, São Paulo, declare that, pursuant to paragraph 1, article 29, item II, of CVM Instruction 480, of December 7, 2009, amended by CVM Instruction 586, of June 8, 2017, that:
They revised, discussed and agreed with the interim financial information for the period ended March 31, 2018.
São Paulo, May 10, 2018.
Companhia de Saneamento Básico do Estado de São Paulo – SABESP
Jerson Kelman
Chief Executive Officer
Rui de Britto Álvares Affonso
Chief Financial and Investor Relations Officer
Manuelito Pereira Magalhães Junior
Corporate Management Officer
Edison Airoldi
Technology, Project and Environment Officer
Paulo Massato Yoshimoto
Metropolitan Officer
Luiz Paulo de Almeida Neto
Regional Systems Officer
PAGE: 81 of 82
ITR - Quarterly Information Form - 3/31/2018 - CIA SANEAMENTO BASICO EST SAO PAULO PAULO |
Version : 1 |
Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm STATEMENT
The Executive Officers of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, with Corporate Taxpayer’s ID (CNPJ/MF) no. 43.776.517/0001-80, headquartered at Rua Costa Carvalho, nº 300, Pinheiros, São Paulo, declare that, pursuant to paragraph 1, article 29, item II, of CVM Instruction 480, of December 7, 2009, amended by CVM Instruction 586, of June 8, 2017, that:
They revised, discussed and agreed with the Report of Independent Registered Public Accounting Firm on the interim financial information for the period ended March 31, 2018.
São Paulo, May 10, 2018.
Companhia de Saneamento Básico do Estado de São Paulo – SABESP
Jerson Kelman
Chief Executive Officer
Rui de Britto Álvares Affonso
Chief Financial and Investor Relations Officer
Manuelito Pereira Magalhães Junior
Corporate Management Officer
Edison Airoldi
Technology, Project and Environment Officer
Paulo Massato Yoshimoto
Metropolitan Officer
Luiz Paulo de Almeida Neto
Regional Systems Officer
PAGE: 82 of 82
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 |
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.