UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of June, 2018
Commission File Number 32297


 
CPFL Energy Incorporated
(Translation of Registrant's name into English)

 
Rodovia Engenheiro Miguel Noel Nascentes Burnier, km 2,5, parte
CEP 13088-140 - Parque São Quirino, Campinas - SP

Federative Republic of Brazil
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.  Form 20-F ___X___ Form 40-F _______

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_________________

.


 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Table of Contents   
Company Data   
Capital Composition  1 
Individual interim financial statements   
Statement of Financial Position - Assets  2 
Statement of Financial Position - Liabilities and Equity  3 
Statement of Income  4 
Statement of Comprehensive Income  5 
Statement of Cash Flows – Indirect Method  6 
Statement of Changes in Equity   
01/01/2018 to 06/30/2018  7 
01/01/2017 to 06/30/2017  8 
Statements of Value Added  9 
Consolidated Interim Financial Statements   
Statement of Financial Position - Assets  10 
Statement of Financial Position - Liabilities and Equity  11 
Statement of Income  13 
Statement of Comprehensive Income  14 
Statement of Cash Flows - Indirect Method  15 
Statement of Changes in Equity   
01/01/2018 to 06/30/2018  17 
01/01/2017 to 06/30/2017  18 
Statements of Value Added  19 
Comments on Performance  20 
Notes to Interim financial statements  29 
Other relevant information  87 
Reports   
Independent Auditor’s Report - Unqualified  88 
Management declaration on financial statements  90 
Management declaration on independent auditor’s report  91 

 


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

Capital Composition

Number of Shares

(In units)

Closing Date

06/30/2018

Paid-in capital

 

Common

1,017,914,746

Preferred

0

Total

1,017,914,746

Treasury Stock

0

Common

0

Preferred

0

Total

0

 

 

 

 

1


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Financial Position – Assets

 

(In thousands of Brazilian reais - R$)

 

 

 

 

 

 

Code

Description

  Current Year  06/30/2018

 Previous Year  12/31/2017

1

Total assets

          9,827,511

          9,463,648

1.01

Current assets

             430,729

             275,382

1.01.01

Cash and cash equivalents

               13,585

                  6,581

1.01.06

Taxes recoverable

               64,006

               63,751

1.01.06.01

Current taxes recoverable 

               64,006

               63,751

1.01.06.01.01

Income tax and social contribution to be offset

               16,989

               17,052

1.01.06.01.02

Other taxes recoverable

               47,017

               46,699

1.01.07

Prepaid expenses

                       41

                       46

1.01.08

Other current assets

             353,097

             205,004

1.01.08.03

Other

             353,097

             205,004

1.01.08.03.01

Dividends and interest on capital

             352,118

             204,807

1.01.08.03.05

Other receivables

                     979

                     197

1.02

Noncurrent assets

          9,396,782

          9,188,266

1.02.01

Long-term assets

             153,948

             629,352

1.02.01.07

Deferred taxes

             147,855

             145,778

1.02.01.07.01

Deferred income tax and social contribution

             147,855

             145,778

1.02.01.08

Prepaid expenses

                          4

                         -  

1.02.01.09

Receivables from related parties

                         -  

             127,147

1.02.01.09.02

Receivables from subsidiaries

                         -  

             127,147

1.02.01.10

Other noncurrent assets

                  6,089

             356,427

1.02.01.10.03

Escrow deposits

                     777

                     665

1.02.01.10.04

Advance for future capital increase

                         -  

             350,000

1.02.01.10.12

Other receivables

                  5,312

                  5,762

1.02.02

Investments

          9,241,583

          8,557,673

1.02.02.01

Equity interests

          9,241,583

          8,557,673

1.02.02.01.02

Equity interests in subsidiaries

          8,335,468

          7,556,123

1.02.02.01.03

Equity interests in joint ventures

             906,115

          1,001,550

1.02.03

Property, plant and equipment

                  1,159

                  1,170

1.02.03.01

Property, plant and equipment - in servce

                     974

                     985

1.02.03.03

Property, plant and equipment - in progress

                     185

                     185

1.02.04

Intangible assets

                       92

                       71

1.02.04.01

Intangible assets

                       92

                       71

1.02.04.01.03

Other intangible assets

                       92

                       71

 

 

 

2


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Financial Position – Liabilities and Equity

(In thousands of Brazilian reais – R$)

Code

Description

  Current Year  06/30/2018

 Previous Year  12/31/2017

2

Total liabilities

9,827,511

9,463,648

2.01

Current liabilities

   20,948

303,812

2.01.02

Trade payables

   136

   1,644

2.01.02.01

Domestic suppliers

   136

   1,644

2.01.03

Taxes payable

   458

   717

2.01.03.01

Federal taxes

   458

   717

2.01.03.01.02

Other taxes

   458

   717

2.01.04

Borrowings

-  

   1,938

2.01.04.02

Debentures

-  

   1,938

2.01.05

Other liabilities

   20,354

299,513

2.01.05.02

Others

   20,354

299,513

2.01.05.02.01

Dividends and interest on capital payable

   2,825

281,919

2.01.05.02.09

Other liabilities

   17,529

   17,594

2.02

Noncurrent liabilities

   10,804

198,308

2.02.01

Borrowings

-  

184,388

2.02.01.02

Debentures

-  

184,388

2.02.02

Other liabilities

   10,316

   13,320

2.02.02.02

Others

   10,316

   13,320

2.02.02.02.10

Other liabilities

   10,316

   13,320

2.02.04

Provisons

   488

   600

2.02.04.01

Tax, social security, labor and civil provisions

   488

   600

2.02.04.01.02

Social security and labor provisions

  62

  57

2.02.04.01.04

Civil provisions

   426

   543

2.03

Equity

9,795,759

8,961,528

2.03.01

Issued capital

5,741,284

5,741,284

2.03.02

Capital reserves

468,018

468,014

2.03.04

Earnings reserves

2,090,136

2,916,736

2.03.04.01

Legal reserve

798,090

798,090

2.03.04.02

Statutory reserve

1,292,046

2,118,646

2.03.05

Retained earnings

1,656,377

-  

2.03.08

Other comprehensive income

  (160,056)

  (164,506)

 

3


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of income

 

(In thousands of Brazilian reais - R$)

 

 

   
           

Code

Description

 Current Year - Second Quarter

 YTD Current Year

 Previous Year - Second Quarter

 YTD Previous Year

 04/01/2018 to 06/30/2018

 01/01/2018 to 06/30/2018

 04/01/2017 to 06/30/2017

 01/01/2017 to 06/30/2017

3.04

Operating income (expenses)

                     453,637

                     895,377

                     153,288

                     407,969

3.04.02

General and administrative expenses

                        (8,405)

                      (17,651)

                        (6,905)

                      (24,071)

3.04.06

Share of profit (loss) of investees

                     462,042

                     913,028

                     160,193

                     432,040

3.05

Profit before finance income (costs) and taxes

                     453,637

                     895,377

                     153,288

                     407,969

3.06

Finance income (costs)

                             273

                          2,048

                      (15,828)

                      (33,169)

3.06.01

Finance income

                             362

                          7,446

                          3,219

                          8,983

3.06.02

Finance costs

                              (89)

                        (5,398)

                      (19,047)

                      (42,152)

3.07

Profit (loss) before taxes on income

                     453,910

                     897,425

                     137,460

                     374,800

3.08

Income tax and social contribution

                          1,803

                          2,071

                          6,014

                       14,561

3.08.01

Current

                                 -  

                                (5)

                                 -   

                                 -  

3.08.02

Deferred

                          1,803

                          2,076

                          6,014

                       14,561

3.09

Profit (loss) from continuing operations

                     455,713

                     899,496

                     143,474

                     389,361

3.11

Profit (loss) for the period

                     455,713

                     899,496

                     143,474

                     389,361

 

 

 

4


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Comprehensive Income

 

(In thousands of Brazilian reais – R$)

   
           

Code

Description

Current Year - Second Quarter

YTD Current Year

Previous Year - Second Quarter

YTD Previous Year

04/01/2018 to 06/30/2018

01/01/2018 to 06/30/2018

04/01/2017 to 06/30/2017

01/01/2017 to 06/30/2017

 4.01

 Profit for the period

                455,714

                899,497

                143,475

                389,360

 4.02

 Other comprehensive income

                     1,242

                 (16,809)

                            -  

                            -  

 4.02.01

 Comprehensive income for the period of subsidiaries

                     1,242

                 (16,809)

                            -  

                            -  

 4.03

 Total comprehensive income for the period

                456,956

                882,688

                143,475

                389,360

 

 

 

 

5


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Cash Flows – Indirect Method

 

(In thousands of Brazilian reais – R$)

     
       

Code

Description

 Current year
01/01/2018 to 06/30/2018

 Previous Year
01/01/2017 to 06/30/2017

 6.01

 Net cash from operating activities

                     407,642

                     215,969

 6.01.01

 Cash generated from operations

                      (12,548)

                      (16,420)

 6.01.01.01

 Profit before taxes

                     897,426

                     374,800

 6.01.01.02

 Depreciation and amortization

                               93

                             108

 6.01.01.03

 Provision for tax, civil and labor risks

                              (12)

                           (155)

 6.01.01.05

 Interest on debts, inflation adjustment and exchange rate changes

                          2,973

                       40,867

 6.01.01.07

 Share of profit (loss) of investees

                   (913,028)

                   (432,040)

 6.01.02

 Changes in assets and liabilities

                     424,425

                     277,045

 6.01.02.02

 Dividend and interest on capital received

                     428,935

                     288,061

 6.01.02.03

 Taxes recoverable

                           (116)

                        (2,883)

 6.01.02.05

 Escrow deposits

                           (106)

                               35

 6.01.02.10

 Other operating assets

                             341

                       18,451

 6.01.02.11

 Trade payables

                        (1,508)

                        (3,185)

 6.01.02.12

 Other taxes and social contributions

                           (264)

                             114

 6.01.02.16

 Tax, civil and labor risks paid

                           (119)

                           (211)

 6.01.02.19

 Other operating liabilities

                        (2,738)

                      (23,337)

 6.01.03

 Others

                        (4,235)

                      (44,656)

 6.01.03.01

 Interest paid on debts and debentures

                        (4,235)

                      (44,656)

 6.02

 Net cash from investing activities

                       64,455

                          6,284

 6.02.01

 Purchases of property, plant and equipment

                           (252)

                              (42)

 6.02.02

 Securities, pledges and restricted deposits

                           (500)

                                 -  

 6.02.04

 Purchases of intangible assets

                              (23)

                                (4)

 6.02.06

 Advance for future capital increases

                      (62,395)

                      (38,950)

 6.02.07

 Intragroup loans

                     127,625

                       45,280

 6.03

 Net cash from financing activities

                   (465,093)

                   (220,906)

 6.03.05

 Repayment of principal of borrowings and debentures

                   (186,000)

                                 -  

 6.03.08

 Dividend and interest on capital paid

                   (279,093)

                   (220,906)

 6.05

 Increase (decrease) in cash and cash equivalents

                          7,004

                          1,347

 6.05.01

 Cash and cash equivalents at the beginning of the period

                          6,581

                       64,973

 6.05.02

 Cash and cash equivalents at the end of the period

                       13,585

                       66,320

 

 

6


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Changes in Equity – from January 1, 2018 to June 30, 2018

 

(In thousands of Brazilian reais – R$)

 

 

         
               

Code

Description

 Issued capital 

 Capital reserves,
stock options and treasury stock

 Earnings reserves

 Retained earnings/accumulated losses

 Other comprehensive income

 Equity

 5.01

 Opening balances

           5,741,284

              468,014

           2,916,736

                          -  

            (164,506)

           8,961,528

 5.03

 Adjusted opening balances

           5,741,284

              468,014

           2,916,736

                          -  

            (164,506)

           8,961,528

 5.05

 Total comprehensive income 

                          -  

                          -  

                          -  

              816,890

                17,337

              834,227

 5.05.01

 Profit for the period

                          -  

                          -  

                          -  

              899,497

                          -  

              899,497

 5.05.02

 Other comprehensive income

                          -  

                          -  

                          -  

               (82,607)

                17,337

               (65,270)

 5.05.02.03

 Equity on comprehensive income of subsidiaries

                          -  

                          -  

                          -  

               (82,607)

                17,337

               (65,270)

 5.06

 Internal changes in equity

                          -  

                           4

            (826,600)

              839,487

               (12,887)

                           4

 5.06.06

 Equity on comprehensive income of subsidiaries

                          -  

                          -  

                          -  

                12,887

               (12,887)

                          -  

 5.06.07

 Changes in statutory reserve in the period

                          -  

                          -  

            (826,600)

              826,600

                          -  

                          -  

 5.06.08

 Other changes

                          -  

                           4

                          -  

                          -  

                          -  

                           4

 5.07

 Closing balances

           5,741,284

              468,018

           2,090,136

           1,656,377

            (160,056)

           9,795,759

 

 

 

7


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Changes in Equity – from January 1, 2017 to June 30, 2017

 

(In thousands of Brazilian reais – R$)

           
               

 Código da Conta

 Descrição da Conta

 Issued capital 

Capital reserves, stock options and treasury stock

Earnings reserves

Retained earnings/accumulated losses

Other comprehensive income

Equity

 5.01

 Opening balances

           5,741,284

              468,014

           1,995,355

                          -  

            (234,632)

           7,970,021

 5.03

 Adjusted opening balances

           5,741,284

              468,014

           1,995,355

                          -  

            (234,632)

           7,970,021

 5.04

 Capital transactions with owners 

                          -  

                          -  

                 (7,820)

                          -  

                          -  

                 (7,820)

 5.04.06

 Dividends

                          -  

                          -  

                 (7,820)

                          -  

                          -  

                 (7,820)

 5.05

 Total comprehensive income

                          -  

                          -  

                          -  

              389,360

                          -  

              389,360

 5.05.01

 Profit for the period

                          -  

                          -  

                          -  

              389,360

                          -  

              389,360

 5.06

 Internal changes in equity

                          -  

                          -  

                57,938

               (45,105)

               (12,833)

                          -  

 5.06.06

 Equity on comprehensive income of subsidiaries

                          -  

                          -  

                          -  

                12,833

               (12,833)

                          -  

 5.06.07

 Changes in statutory reserve in the period

                          -  

                          -  

                57,938

               (57,938)

                          -  

                          -  

 5.07

 Closing balances

           5,741,284

              468,014

           2,045,473

              344,255

            (247,465)

           8,351,561

 

 

 

8


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Individual Financial Statements

Statement of Value Added

 

(In thousands of Brazilian reais – R$)

 
       

 Code

 Description

 Current Year
01/01/2018 to 06/30/2018

 Previous Year
01/01/2017 to 06/30/2017

 7.01

 Revenues

                             275

                               46

 7.01.03

 Revenues related to construction of own assets

                             275

                               46

 7.02

 Inputs purchased from third parties

                        (5,477)

                        (4,289)

 7.02.02

 Materials, energy, third-party services and others

                        (5,477)

                        (4,289)

 7.03

 Gross value added

                        (5,202)

                        (4,243)

 7.04

 Retentions

                              (93)

                           (108)

 7.04.01

 Depreciation and amortization

                              (93)

                           (108)

 7.05

 Wealth created by the company

                        (5,295)

                        (4,351)

 7.06

 Wealth received in transfer

                     920,839

                     441,515

 7.06.01

 Share of profit (loss) of investees

                     913,028

                     432,040

 7.06.02

 Finance income

                          7,811

                          9,475

 7.07

 Total wealth for distribution

                     915,544

                     437,164

 7.08

 Wealth distributed

                     915,544

                     437,164

 7.08.01

 Personnel and charges

                       10,446

                       16,768

 7.08.01.01

 Salaries and wages

                          5,186

                       11,894

 7.08.01.02

 Benefits

                          4,522

                          3,936

 7.08.01.03

 FGTS (Severance Pay Fund)

                             738

                             938

 7.08.02

 Taxes, fees and contributions

                             205

                      (11,187)

 7.08.02.01

 Federal

                             181

                      (11,203)

 7.08.02.02

 State

                               24

                               16

 7.08.03

 Lenders and lessors

                          5,396

                       42,223

 7.08.03.01

 Interest

                          5,394

                       42,012

 7.08.03.02

 Rentals

                                  2

                             211

 7.08.04

 Shareholders

                     899,497

                     389,360

 7.08.04.03

 Retained earnings / Loss for the period

                     899,497

                     389,360

 

 

 

9


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Financial Statements

Statement of Financial Position – Assets

(In thousands of Brazilian reais – R$)

Code

Description

  Current Year 06/30/2018

 Previous Year 12/31/2017

 1

 Total assets

   41,708,250

   41,282,912

 1.01

 Current assets

   9,671,893

   9,581,211

 1.01.01

 Cash and cash equivalents

   2,490,235

   3,249,642

 1.01.03

 Trade receivables

   4,545,631

   4,301,284

 1.01.03.01

 Consumers

   4,545,631

   4,301,284

 1.01.06

 Taxes recoverable 

   480,967

   395,046

 1.01.06.01

 Current taxes recoverable

   480,967

   395,046

 1.01.06.01.01

 Income tax and social contribution to be offset

   135,278

  88,802

 1.01.06.01.02

 Other taxes recoverable

   345,689

   306,244

 1.01.07

 Prepaid expenses

   287,379

   343,134

 1.01.08

 Other current assets

   1,867,681

   1,292,105

 1.01.08.03

 Others

   1,867,681

   1,292,105

 1.01.08.03.01

 Dividends and interest on capital

   153,187

  56,145

 1.01.08.03.02

 Derivatives

   449,475

   444,029

 1.01.08.03.03

 Concession financial asset 

  23,241

  23,736

 1.01.08.03.04

 Sector financial asset

   679,406

   210,834

 1.01.08.03.05

 Other receivables

   562,372

   557,361

 1.02

 Noncurrent assets

   32,036,357

   31,701,701

 1.02.01

 Long-term assets

   11,016,654

   10,323,201

 1.02.01.04

 Trade receivables

   235,146

   236,539

 1.02.01.04.01

 Consumers

   235,146

   236,539

 1.02.01.07

 Deferred taxes

   825,862

   943,199

 1.02.01.07.01

 Deferred income tax and social contribution

   825,862

   943,199

 1.02.01.08

 Prepaid expenses

  20,490

  20,042

 1.02.01.10

 Other noncurrent assets

   9,935,156

   9,123,421

 1.02.01.10.03

 Escrow deposits

   866,057

   839,990

 1.02.01.10.05

 Derivatives

   370,585

   203,901

 1.02.01.10.06

 Concession financial asset 

   7,053,027

   6,545,668

 1.02.01.10.08

 Sector financial asset

   414,528

   355,003

 1.02.01.10.09

 Income tax and social contribution to be offset

  66,352

  61,464

 1.02.01.10.10

 Other taxes recoverable

   167,122

   171,980

 1.02.01.10.11

 Investments at cost

   116,654

   116,654

 1.02.01.10.12

 Other receivables

   880,831

   828,761

 1.02.02

 Investments

   906,115

   1,001,550

 1.02.02.01

 Equity interests

   906,115

   1,001,550

 1.02.02.01.04

 Equity interests in joint ventures

   906,115

   1,001,550

 1.02.03

 Property, plant and equipment

   9,612,095

   9,787,125

 1.02.03.01

 Property, plant and equipment - in servce

   9,262,944

   9,535,933

 1.02.03.03

 Property, plant and equipment - in progress

   349,151

   251,192

 1.02.04

 Intangible assets

   10,501,493

   10,589,825

 1.02.04.01

 Intangible assets

   10,501,493

   10,589,825

 1.02.04.01.01

 Rights of concession

   10,428,124

   10,522,933

 1.02.04.01.02

 Goodwill

  6,115

  6,115

 1.02.04.01.03

 Other intangible assets

  67,254

  60,777

 

10


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

Consolidated Financial Statements

 

 

11


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Statement of Financial Position – Liabilities and Equity

(In thousands of Brazilian reais – R$)

   
       

Code

Description

  Current Year 06/30/2018

 Previous Year 12/31/2017

 2

 Total liabilities

   41,708,250

   41,282,912

 2.01

 Current liabilities

   9,713,720

   11,378,687

 2.01.01

 Payroll and related taxes

   150,597

   116,080

 2.01.01.01

 Social taxes

  34,975

  37,741

 2.01.01.02

 Payroll taxes

   115,622

  78,339

 2.01.02

 Trade payables

   3,229,917

   3,296,870

 2.01.02.01

 Domestic suppliers

   3,229,917

   3,296,870

 2.01.03

 Taxes payable

   470,760

   710,303

 2.01.03.01

 Federal taxes

   271,678

   300,768

 2.01.03.01.01

 Income tax and social contribution

  67,225

  81,457

 2.01.03.01.02

 Other Taxes 

   204,453

   219,311

 2.01.03.02

 State taxes

   193,492

   403,492

 2.01.03.03

 Municipal taxes

  5,590

  6,043

 2.01.04

 Borrowings

   4,396,744

   5,292,680

 2.01.04.01

 Borrowings

   3,011,598

   3,589,607

 2.01.04.01.01

 In local currency

   1,176,187

   1,258,330

 2.01.04.01.02

 In foreign currency

   1,835,411

   2,331,277

 2.01.04.02

 Debentures

   1,385,146

   1,703,073

 2.01.05

 Other liabilities

   1,465,702

   1,962,754

 2.01.05.02

 Others

   1,465,702

   1,962,754

 2.01.05.02.01

 Dividends and interest on capital payable

  37,105

   297,744

 2.01.05.02.04

 Regulatory charges

   286,858

   581,600

 2.01.05.02.05

 Derivatives

  11,314

  10,230

 2.01.05.02.06

 Use of public asset

  11,179

  10,965

 2.01.05.02.07

 Sector financial liability

  394

  40,111

 2.01.05.02.08

 Post-employment benefit obligation 

  69,132

  60,801

 2.01.05.02.09

 Other payables

   1,049,720

   961,303

 2.02

 Noncurrent liabilities

   20,053,785

   18,717,881

 2.02.01

 Borrowings

   16,249,194

   14,875,904

 2.02.01.01

 Borrowings

   7,657,213

   7,402,450

 2.02.01.01.01

 In local currency

   4,103,143

   4,884,253

 2.02.01.01.02

 In foreign currency

   3,554,070

   2,518,197

 2.02.01.02

 Debentures

   8,591,981

   7,473,454

 2.02.02

 Other liabilities

   1,578,350

   1,631,253

 2.02.02.02

 Others

   1,578,350

   1,631,253

 2.02.02.02.03

 Trade payables

   135,370

   128,438

 2.02.02.02.04

 Others tax and social contribution

  14,768

  18,839

 2.02.02.02.06

 Derivatives

  1,443

  84,576

 2.02.02.02.07

 Use of public asset

  86,561

  83,766

 2.02.02.02.08

 Sector financial liability

   -  

  8,385

 2.02.02.02.09

 Post-employment benefit obligation 

   870,298

   880,360

 2.02.02.02.10

 Other payables

   469,910

   426,889

 2.02.03

 Deferred taxes

   1,276,832

   1,249,591

 2.02.03.01

 Deferred income tax and social contribution

   1,276,832

   1,249,591

 2.02.03.01.01

 Deferred income tax and social contribution

   1,266,471

   1,239,048

 2.02.03.01.02

 Others deferred taxes

  10,361

  10,543

 2.02.04

 Provisions

   949,409

   961,133

 2.02.04.01

 Tax, social security, labor and civil provisions

   949,409

   961,133

 2.02.04.01.01

 Tax provisions

   373,498

   347,291

 2.02.04.01.02

 Social security and labor provisions

   208,991

   224,258

 2.02.04.01.04

 Civil provisions

   266,681

   291,388

 2.02.04.01.05

 Others provisions

   100,239

  98,196

 2.03

 Consolidated equity

   11,940,745

   11,186,344

 2.03.01

 Issued capital

   5,741,284

   5,741,284

 2.03.02

 Capital reserves

   468,018

   468,014

 2.03.04

 Earnings reserves

   2,090,136

   2,916,736

 2.03.04.01

 Legal reserve

   798,090

   798,090

 2.03.04.02

 Statutory reserve

   1,292,046

   2,118,646

 2.03.05

 Retained earnings

   1,656,377

   -  

 2.03.08

 Other comprehensive income

(160,056)

(164,506)

 2.03.09

 Noncontrolling interests

   2,144,986

   2,224,816

 

12


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

 

 

 

 

13


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Financial Statements

Statement of income

 

(In thousands of Brazilian reais – R$)

   
           

Code

Description

 Current Year - Second Quarter

 YTD Current Year

 Previous Year - Second Quarter

 YTD Previous Year

 04/01/2018 to 06/30/2018

 01/01/2018 to 06/30/2018

 04/01/2017 to 06/30/2017

 01/01/2017 to 06/30/2017

 3.01

 Net operating revenue

             6,945,366

           13,320,021

             5,962,549

           11,501,328

 3.02

 Cost of electric energy services

           (5,581,208)

         (10,636,223)

           (4,894,310)

           (9,197,014)

 3.03

 Gross profit

             1,364,158

             2,683,798

             1,068,239

             2,304,314

 3.04

 Operating expenses/income

               (408,571)

               (752,264)

               (422,348)

               (839,241)

 3.04.01

 Selling expenses

               (148,412)

               (277,051)

               (142,565)

               (291,782)

 3.04.02

 General and administrative expenses

               (236,112)

               (439,987)

               (255,225)

               (516,791)

 3.04.03

 Impairment reversal

                            -  

                     5,837

                            -  

                            -  

 3.04.05

 Other operating expenses

                 (92,793)

               (195,165)

               (107,526)

               (193,346)

 3.04.06

 Share of profit (loss) of investees

                   68,746

                154,102

                   82,968

                162,678

 3.05

 Profit before finance income (costs) and taxes

                955,587

             1,931,534

                645,891

             1,465,073

 3.06

 Finance income (costs)

               (245,674)

               (553,193)

               (418,167)

               (854,306)

 3.06.01

 Finance income

                169,078

                366,230

                222,632

                503,343

 3.06.02

 Finance costs

               (414,752)

               (919,423)

               (640,799)

           (1,357,649)

 3.07

 Profit before taxes

                709,913

             1,378,341

                227,724

                610,767

 3.08

 Income tax and social contribution

               (259,736)

               (508,760)

               (104,552)

               (255,474)

 3.08.01

 Current

                 (69,373)

               (334,831)

                 (33,066)

               (235,587)

 3.08.02

 Deferred

               (190,363)

               (173,929)

                 (71,486)

                 (19,887)

 3.09

 Profit from continuing operations

                450,177

                869,581

                123,172

                355,293

 3.11

 Consolidated profit for the period

                450,177

                869,581

                123,172

                355,293

 3.11.01

 Attributable to owners of the Company

                455,714

                899,497

                143,474

                389,360

 3.11.02

 Attributable to noncontrolling interests

                   (5,537)

                 (29,916)

                 (20,302)

                 (34,067)

 3.99

 Earnings per share - (R$ / share)

 

 

 

 

 3.99.01

 Basic earnings per share - R$

 

 

 

 

 3.99.01.01

 ON

                       0.45

                       0.88

                       0.14

                       0.38

 3.99.02

 Diluted earnings per share - R$

 

 

 

 

 3.99.02.01

 ON

                       0.45

                       0.88

                       0.14

                       0.38

 

 

14


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Financial Statements

Statement of Comprehensive Income

 

(In thousands of Brazilian reais – R$)

   
           

Code

Description

 Current Year - Second Quarter

 YTD Current Year

 Previous Year - Second Quarter

 YTD Previous Year

 04/01/2018 to 06/30/2018

 01/01/2018 to 06/30/2018

 04/01/2017 to 06/30/2017

 01/01/2017 to 06/30/2017

 4.01

 Consolidated profit for the period

                450,177

                869,581

                123,173

                355,293

 4.02

 Other comprehensive income

                     1,242

                 (16,808)

                            -  

                            -  

 4.02.01

 Actuarial gains (losses), net of tax effects

                   (1,865)

                   (3,669)

                            -  

                            -  

 4.02.02

  Credit risk in mark to market of financial liabilities

                     3,107

                 (13,139)

                            -  

                            -  

 4.03

 Consolidated comprehensive income for the period

                451,419

                852,773

                123,173

                355,293

 4.03.01

 Attributable to owners of the Company

                456,956

                882,688

                143,475

                389,360

 4.03.02

 Attributable to noncontrolling interests

                   (5,537)

                 (29,915)

                 (20,302)

                 (34,067)

 

 

 

 

15


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Financial Statements

Statement of Cash Flows – Indirect Method

 

(In thousands of Brazilian reais – R$)

   
       

Code

Description

 YTD Current Year
01/01/2018 to 06/30/2018

 YTD previous year
01/01/2017 to 06/30/2017

 6.01

 Net cash from operating activities

                     370,515

                  1,280,545

 6.01.01

 Cash generated from operations

                  2,782,974

                  2,622,163

 6.01.01.01

 Profit before taxes

                  1,378,341

                     610,767

 6.01.01.02

 Depreciation and amortization

                     803,965

                     758,227

 6.01.01.03

 Provision for tax, civil and labor risks

                       55,305

                       93,064

 6.01.01.04

 Allowance for doubtful debts

                       68,242

                       86,068

 6.01.01.05

 Interest on debts, inflation adjustment and exchange rate changes

                     576,458

                  1,108,799

 6.01.01.06

 Pension plan expense (income)

                       44,955

                       56,944

 6.01.01.07

 Share of profit (loss) of investees

                   (154,102)

                   (162,678)

 6.01.01.08

 Loss (gain) on disposal of noncurrent assets

                       46,573

                       49,275

 6.01.01.09

 Deferred taxes (PIS and COFINS)

                           (182)

                          1,037

 6.01.01.10

 Others

                      (36,581)

                       20,660

 6.01.02

 Changes in assets and liabilities

                (1,364,829)

                   (147,823)

 6.01.02.01

 Consumers, concessionaries and licensees

                   (370,264)

                   (279,388)

 6.01.02.02

 Dividend and interest on capital received

                     152,494

                     184,117

 6.01.02.03

 Taxes recoverable

                      (57,253)

                      (48,491)

 6.01.02.05

 Escrow deposits

                        (8,219)

                   (243,817)

 6.01.02.06

 Sectorial financial asset

                   (487,028)

                      (25,525)

 6.01.02.07

 Receivables - CDE

                       47,325

                      (21,720)

 6.01.02.08

 Concession financial assets (transmission companies)

                        (3,979)

                      (49,349)

 6.01.02.10

 Other operating assets

                      (60,229)

                      (71,804)

 6.01.02.11

 Trade payables

                      (60,020)

                       62,185

 6.01.02.12

 Other taxes and social contributions

                   (234,899)

                      (88,703)

 6.01.02.13

 Other liabilities with private pension plan

                      (50,354)

                      (34,406)

 6.01.02.14

 Regulatory charges 

                   (294,742)

                       74,136

 6.01.02.16

 Tax, civil and labor risks paid

                      (92,987)

                   (111,294)

 6.01.02.17

 Sector financial liability

                      (69,878)

                     315,136

 6.01.02.18

 Payables - amounts provided by the CDE 

                          9,715

                           (744)

 6.01.02.19

 Other operating liabilities 

                     215,489

                     191,844

 6.01.03

 Others

                (1,047,630)

                (1,193,795)

 6.01.03.01

 Interest paid on debts and debentures

                   (681,214)

                   (934,922)

 6.01.03.02

 Income tax and social contribution paid

                   (366,416)

                   (258,873)

 6.02

 Net cash from investing activities

                   (914,145)

                (1,381,785)

 6.02.01

 Purchases of property, plant and equipment

                   (129,534)

                   (548,625)

 6.02.02

 Securities, pledges and restricted deposits

                      (66,487)

                      (81,107)

 6.02.04

 Purchases of intangible assets

                   (718,124)

                   (790,940)

 6.02.05

 Sale of noncurrent assets

                                 -  

                               94

 6.02.07

 Intragroup loans

                                 -  

                       38,793

 6.03

 Net cash from financing activities

                   (215,777)

                (1,747,667)

 6.03.01

 Capital increase of noncontrolling shareholder

                               15

                                  7

 6.03.04

 Borrowings and debentures raised

                  6,386,698

                     986,988

 6.03.05

 Repayment of principal of borrowings and debentures, net of derivatives

                (6,657,657)

                (2,342,145)

 6.03.06

 Settlement of derivatives

                     365,434

                   (148,177)

 6.03.08

 Dividend and interest on capital paid

                   (310,267)

                   (241,826)

 6.03.10

 Payment of business combination

                                 -  

                        (2,514)

 6.05

 Increase (decrease) in cash and cash equivalents

                   (759,407)

                (1,848,907)

 6.05.01

 Cash and cash equivalents at the beginning of the period

                  3,249,642

                  6,164,997

 6.05.02

 Cash and cash equivalents at the end of the period

                  2,490,235

                  4,316,090

 

16


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

6.02

 Net cash from investing activities

                     914,145

                  1,381,785

 6.02.01

 Purchases of property, plant and equipment

                     129,534

                     548,625

 6.02.02

 Securities, pledges and restricted deposits

                       66,487

                       81,107

 6.02.04

 Purchases of intangible assets

                     718,124

                     790,940

 6.02.05

 Sale of noncurrent assets

                                 -  

                              (94)

 6.02.07

 Intragroup loans

                                 -  

                      (38,793)

 6.03

 Net cash from financing activities

                     215,777

                  1,747,667

 6.03.01

 Capital increase of noncontrolling shareholder

                              (15)

                                (7)

 6.03.04

 Borrowings and debentures raised

                (6,386,698)

                   (986,988)

 6.03.05

 Repayment of principal of borrowings and debentures, net of derivatives

                  6,657,657

                  2,342,145

 6.03.06

 Settlement of derivatives

                   (365,434)

                     148,177

 6.03.08

 Dividend and interest on capital paid

                     310,267

                     241,826

 6.03.10

 Payment of business combination

                                 -  

                          2,514

 6.05

 Increase (decrease) in cash and cash equivalents

                     759,407

                  1,848,907

 6.05.01

 Cash and cash equivalents at the beginning of the period

                  2,490,235

                  4,316,090

 6.05.02

 Cash and cash equivalents at the end of the period

                  3,249,642

                  6,164,997

 

 

 

 

17


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Financial Statements

Statement of Changes in Equity – from January 1, 2018 to June 30, 2018

 

(In thousands of Brazilian reais – R$)

 

 Code

 Description

 Issued capital 

 Capital reserves, stock options and treasury stock

 Earnings reserves

 Retained earnings/accumulated losses

 Other comprehensive income

 Equity

 Noncontrolling interests

 Consolidated equity

 5.01

 Opening balances

  5,741,284

  468,014

  2,916,736

  -  

   (164,506)

  8,961,528

  2,224,816

  11,186,344

 5.03

 Adjusted opening balances

  5,741,284

  468,014

  2,916,736

  -  

   (164,506)

  8,961,528

  2,224,816

  11,186,344

 5.04

 Capital transactions with owners 

  -  

  -  

  -  

  -  

  -  

  -  

   (49,867)

   (49,867)

 5.04.01

 Capital increase

  -  

  -  

  -  

  -  

  -  

  -  

   15

   15

 5.04.06

 Dividend 

  -  

  -  

 -  

  -  

  -  

  -  

   (49,882)

   (49,882)

 5.05

 Total comprehensive income 

  -  

  -  

  -  

  816,890

17,337

  834,227

   (29,916)

  804,311

 5.05.01

 Profit for the period

  -  

  -  

  -  

  899,497

  -  

  899,497

   (29,916)

  869,581

 5.05.02

 Other comprehensive income

  -  

  -  

  -  

   (82,607)

17,337

   (65,270)

  -  

   (65,270)

 5.05.02.01

 Financial instruments adjustment

  -  

  -  

  -  

   (82,607)

21,006

   (61,601)

  -  

   (61,601)

 5.05.02.06

 Other comprehensive income - actuarial gains (losses)

  -  

  -  

  -  

  -  

  (3,669)

  (3,669)

  -  

  (3,669)

 5.06

 Internal changes in equity

  -  

   4

   (826,600)

  839,487

   (12,887)

   4

  (47)

  (43)

 5.06.04

 Realization of deemed cost of property, plant and equipment

  -  

  -  

  -  

19,526

   (19,526)

  -  

  -  

  -  

 5.06.05

 Tax effect on realization of deemed cost

  -  

  -  

  -  

  (6,639)

6,639

  -  

  -  

  -  

 5.06.07

 Changes in statutory reserve in the period

  -  

  -  

   (826,600)

  826,600

  -  

  -  

  -  

  -  

 5.06.08

 Other changes

  -   

   4

  -  

  -  

  -  

   4

  (47)

  (43)

 5.07

 Closing balances

  5,741,284

  468,018

  2,090,136

  1,656,377

   (160,056)

  9,795,759

  2,144,986

  11,940,745

18


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Financial Statements

Statement of Changes in Equity – from January 1, 2017 to June 30, 2017

 

(In thousands of Brazilian reais – R$)

                 
                   

 Code

 Description

 Issued capital 

 Capital reserves, stock options and treasury stock

 Earnings reserves

 Retained earnings/accumulated losses

 Other comprehensive income

 Equity

 Noncontrolling interests

 Consolidated equity

 5.01

 Opening balances

  5,741,284

  468,014

  1,995,355

  -  

   (234,632)

  7,970,021

  2,402,647

  10,372,668

 5.03

 Adjusted opening balances

  5,741,284

  468,014

  1,995,355

  -  

   (234,632)

  7,970,021

  2,402,647

  10,372,668

 5.04

 Capital transactions with owners 

  -  

  -  

  (7,820)

  -  

  -  

  (7,820)

  (9,602)

   (17,422)

 5.04.01

 Capital increase

  -  

  -  

  -  

  -  

  -  

  -  

   8

   8

 5.04.06

 Dvidend

  -  

  -  

  (7,820)

  -  

  -  

  (7,820)

  (9,610)

   (17,430)

 5.05

 Total comprehensive income 

  -  

  -  

  -  

  389,360

  -  

  389,360

   (34,067)

  355,293

 5.05.01

 Profit for the period

  -  

  -  

  -  

  389,360

  -  

  389,360

   (34,067)

  355,293

 5.06

 Internal changes in equity

  -  

  -  

57,939

   (45,105)

   (12,834)

  -  

  (33)

  (33)

 5.06.04

 Realization of deemed cost of property, plant and equipment

  -  

  -  

  -  

19,445

   (19,445)

  -  

  -  

  -  

 5.06.05

 Tax effect on realization of deemed cost

  -  

  -  

  -  

  (6,611)

6,611

  -  

  -  

 -  

 5.06.07

 Changes in statutory reserve in the period

  -  

  -  

57,939

   (57,939)

  -  

  -  

  -  

  -  

 5.06.09

 Other changes in noncontrolling interests

  -  

  -  

  -  

  -  

  -  

  -  

  (33)

  (33)

 5.07

 Closing balances

  5,741,284

  468,014

  2,045,474

  344,255

   (247,466)

  8,351,561

  2,358,945

  10,710,506

 

 

 

 

19


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Consolidated Interim Financial Statements

Statement of Value Added

 

(In thousands of Brazilian reais – R$)

 
       

 Code

 Description

 Current Year
01/01/2018 to 06/30/2018

 Previous Year
01/01/2017 to 06/30/2017

 7.01

 Revenues

               20,220,616

               18,408,445

 7.01.01

 Sales of goods and services

               19,397,799

               17,008,535

 7.01.02

 Other revenues

                     740,615

                     878,362

 7.01.02.01

 Revenue from construction of concession infrastructure

                     740,615

                     878,362

 7.01.03

 Revenues related to construction of own assets

                     150,444

                     607,616

 7.01.04

 Allowance for doubtful debts

                      (68,242)

                      (86,068)

 7.02

 Inputs purchased from third parties

              (11,016,283)

                (9,937,126)

 7.02.02

 Materials, energy, third-party services and others

              (11,022,120)

                (9,937,126)

 7.02.03

 Impairment reversal

                          5,837

                                 -  

 7.03

 Gross value added

                  9,204,333

                  8,471,319

 7.04

 Retentions

                   (805,756)

                   (760,052)

 7.04.01

 Depreciation and amortization

                   (805,756)

                   (760,052)

 7.05

 Wealth created by  the company

                  8,398,577

                  7,711,267

 7.06

 Wealth received in transfer

                     543,566

                     703,305

 7.06.01

  Interest in subsidiaries, associates and joint ventures

                     154,102

                     162,678

 7.06.02

 Others

                     389,464

                     540,627

 7.07

 Total wealth for disbribution

                  8,942,143

                  8,414,572

 7.08

 Wealth distributed

                  8,942,143

                  8,414,572

 7.08.01

 Personnel and charges

                     676,975

                     697,891

 7.08.01.01

 Salaries and wages

                     396,402

                     430,396

 7.08.01.02

 Benefits

                     246,914

                     232,488

 7.08.01.03

 FGTS (Severance Pay Fund)

                       33,659

                       35,007

 7.08.02

 Taxes, fees and contributions

                  6,437,815

                  5,921,459

 7.08.02.01

 Federal

                  3,496,765

                  3,153,099

 7.08.02.02

 State

                  2,928,814

                  2,757,380

 7.08.02.03

 Municipal

                       12,236

                       10,980

 7.08.03

 Lenders and lessors

                     957,772

                  1,439,929

 7.08.03.01

 Interest

                     921,289

                  1,399,462

 7.08.03.02

 Rentals

                       36,483

                       40,467

 7.08.04

 Shareholders

                     869,581

                     355,293

 7.08.04.03

 Retained earnings / Loss for the period

                     869,581

                     355,293

 

 

 

20


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

COMMENTS ON PERFORMANCE

 

COMMENTS ON THE INDIVIDUAL PERFORMANCE

The comments on performance are expressed in thousands of Reais - R$, unless otherwise stated.

 

Profit or loss analysis

 

CPFL Energia (Parent)

This quarter, the increase in profit was R$ 312,239  when compared with the same period of the prior year (R$ 455,714 in 2018 and R$ 143,475 in 2017) mainly due to the increase in profit of investees.

 

 

   

Consolidated

   

2nd Quarter

 

1st Semester

   

2018

 

2017

 

Variation

 

2018

 

2017

 

Variation

Gross operating revenue

 

    10,500,917

 

    9,156,512

 

14.7%

 

    20,138,414

 

   17,886,897

 

12.6%

Electricity sales to final consumers (*)

 

      6,909,773

 

    5,875,500

 

17.6%

 

    13,657,216

 

   12,697,351

 

7.6%

Electricity sales to wholesalers (*)

 

      1,317,495

 

    1,454,121

 

-9.4%

 

      2,315,954

 

     2,404,924

 

-3.7%

Revenue from concession infrastructure construction

 

         370,053

 

       462,323

 

-20.0%

 

         740,615

 

        878,362

 

-15.7%

Other operating revenues (*)

 

      1,422,896

 

       995,250

 

43.0%

 

      2,570,382

 

     2,101,946

 

22.3%

Sector financial assets and liabilities

 

         480,699

 

       369,317

 

30.2%

 

         854,246

 

       (195,686)

 

-536.5%

Deductions from operating revenue

 

    (3,555,551)

 

   (3,193,963)

 

11.3%

 

    (6,818,393)

 

    (6,385,569)

 

6.8%

Net operating revenue

 

      6,945,366

 

    5,962,549

 

16.5%

 

    13,320,021

 

   11,501,327

 

15.8%

Cost of electric energy

 

    (4,538,036)

 

   (3,738,517)

 

21.4%

 

    (8,551,758)

 

    (6,959,171)

 

22.9%

Electricity purchased for resale

 

    (3,862,633)

 

   (3,520,542)

 

9.7%

 

    (7,163,909)

 

    (6,538,926)

 

9.6%

Network usage charge

 

       (675,403)

 

      (217,974)

 

209.9%

 

    (1,387,849)

 

       (420,244)

 

230.2%

Operating costs and expenses

 

    (1,520,489)

 

   (1,661,141)

 

-8.5%

 

    (2,990,831)

 

    (3,239,795)

 

-7.7%

Personnel

 

       (352,387)

 

      (336,678)

 

4.7%

 

       (690,132)

 

       (669,161)

 

3.1%

Private pension entity

 

         (22,477)

 

        (28,112)

 

-20.0%

 

         (44,955)

 

         (56,944)

 

-21.1%

Materials

 

         (63,357)

 

        (57,461)

 

10.3%

 

       (125,979)

 

       (112,557)

 

11.9%

Third-party services

 

       (155,721)

 

      (189,136)

 

-17.7%

 

       (336,653)

 

       (374,389)

 

-10.1%

Depreciation and amortization

 

       (342,494)

 

      (309,124)

 

10.8%

 

       (661,170)

 

       (613,447)

 

7.8%

Amortization of concession intangible asset

 

         (71,287)

 

        (72,116)

 

-1.1%

 

       (142,795)

 

       (144,232)

 

-1.0%

Cost of concession infrastructure construction

 

       (370,047)

 

      (465,666)

 

-20.5%

 

       (740,606)

 

       (880,293)

 

-15.9%

Others

 

       (142,718)

 

      (202,849)

 

-29.6%

 

       (248,540)

 

       (388,773)

 

-36.1%

Income from electric energy services

 

         886,842

 

       562,923

 

57.5%

 

      1,777,433

 

     1,302,395

 

36.5%

Finance income (costs)

 

       (245,674)

 

      (418,168)

 

-41.2%

 

       (553,193)

 

       (854,306)

 

-35.2%

Finance income

 

         169,078

 

       222,632

 

-24.1%

 

         366,230

 

        503,343

 

-27.2%

Finance costs

 

       (414,752)

 

      (640,799)

 

-35.3%

 

       (919,423)

 

    (1,357,649)

 

-32.3%

Share of profit (loss) of investees

 

           68,746

 

         82,968

 

-17.1%

 

         154,102

 

        162,678

 

-5.3%

Profit before taxes

 

         709,913

 

       227,724

 

211.7%

 

      1,378,341

 

        610,767

 

125.7%

Social contribution

 

         (69,844)

 

        (28,289)

 

146.9%

 

       (136,712)

 

         (68,863)

 

98.5%

Income tax

 

       (189,892)

 

        (76,263)

 

149.0%

 

       (372,047)

 

       (186,610)

 

99.4%

Profit for the period

 

         450,177

 

       123,172

 

265.5%

 

         869,581

 

        355,293

 

144.8%

                         

Profit for the period attributable to owners of the Company

 

         455,714

 

       143,475

 

217.6%

 

         899,497

 

        389,360

 

131.0%

Profit for the perioid attributable to noncontrolling interests

 

           (5,537)

 

        (20,302)

 

-72.7%

 

         (29,914)

 

         (34,067)

 

-12.2%

                         

EBITDA

 

      1,369,511

 

    1,027,277

 

33.3%

 

      2,735,789

 

     2,223,042

 

23.1%

                         
                         
                         
                         

Reconciliation of Profit for the Period and EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the Period

 

         450,177

 

       123,172

     

         869,581

 

        355,293

 

 

Depreciation and amortization

 

         413,781

 

       381,240

     

         803,966

 

        757,679

 

 

Amortization of fair value adjustment of assets

 

145

 

145

     

290

 

290

 

 

Finance income (costs)

 

         245,674

 

       418,168

     

         553,193

 

        854,306

 

 

Social contribution

 

           69,844

 

         28,289

     

         136,712

 

          68,863

 

 

Income tax

 

         189,892

 

         76,263

     

         372,047

 

        186,610

 

 

EBITDA

 

1,369,511

 

1,027,277

     

2,735,789

 

2,223,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(*) For purposes of presentation of the comments on performance, the reclassification of revenue from network usage charge - TUSD to captive consumer was not made.

 

21


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Gross operating revenue

 

Gross operating revenue for the 2nd quarter of 2018 was R$ 10,500,917, an increase of 14.7% (R$ 1,344,405) compared with the same period of the prior year.        

The main factors of this variation were:

 

·       Increase of 17.6% (R$ 1,034,273) in the electricity sales to final consumer, justified by the increase in average tariffs of 18.1% (R$ 1,060,183), mainly due to the positive effects of the Annual and Periodics Tariff Adjustments (RTA / RTP);

·       Decrease of 9,4 % (R$ 136,626) in the electricity sales to wholesalers, mainly due to:

 

o   Decrease of 48.5% (R$ 294,775) in sale of spot market energy in CCEE (Electric Energy Trading Chamber), basically due to the decrease in energy sold of 65.6% (R$ 398,781), partially offset by an increase in average tariffs of 49.7% (R$ 104,006).

o   Increase of 18.7% (R$ 158,149) in other concessionaires, licensees and authorized, due to the increase in energy sold of 12% (R$ 101,372) and 6% in the average price (R$ 56,777);

·       Increase of 30.2% (R$ 111,382) in sector financial assets income, due to a higher setting up of an asset (R$ 381,547) partially offset by a lower realization of liabilities (R$270,164).

·       Increase of 43% (R$ 27,646) in other operating revenues, due to: increase in (i) TUSD free consumers (R$ 137,626) and (ii) other revenues and income (R$ 127,265), (iii)  adjustment in concession financial asset (R$ 106,161) and (iv) contribution CDE (R$ 63,798).

 

Ø  Volume of energy sold by distributors

 

In the 2nd quarter of 2018, the amount of energy billed to captive consumers in the period, including other licensees presented an increase of 2.3% when compared with the same quarter of the prior year.

The consumption of the residential class represents 43.1% of the total market supplied by the distributor. With the positive performance of income mass, which, in the accumulated of 12 months (until May 2018) recorded an increase of 3.5%, consumption recorded an increase of 5.7% in the 2nd quarter of 2018, in relation to the same period of the prior year.

The commercial class, which represents 19.3% of the total market supplied by the distributor, presented a growth of 0.2% in the 2nd quarter of 2018 in relation to the same period of the prior year. The result reflects partially the client’s migration to the free market and higher temperatures in the 2nd quarter of 2018 compared with the same period last year.

The industrial class, which represents 13% of the total market supplied by distributors, reported a fall of 8.8% in the 2nd quarter of 2018 in relation to the same period of the prior year. Such performance reflects the client’s migration to the free market.

The other consumption classes (rural, public administration, public utilities and licensees) participate with 24.6% of the total market supplied by distributors. Such classes presented a growth of 5.4% in the 2nd quarter of 2018 in relation to the same period of the prior year. This performance reflects the growth in consumption of rural and public utilities classes.

Regarding the amount of energy sold and transported in the concession area, which impacts both the billed supply (captive market) and the TUSD collection (free market), there was an increase of 4.0% when compared with the same period of the prior year. The variation by class presents an increase of 5.7% in the residential class, an increase of 3.7% in the commercial class and an increase of 2.4% in the industrial class. Regarding other classes, there was a growth of 5.3%.

 

22


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

                                                                                                                        

Ø  Tariffs

 

In the 2nd quarter of 2018, energy supply tariffs increased on average 18.1%. This occurred mainly due to the effects of the annual tariff adjustments and periodic tariff review, as follows:

 

       

2018

 

2017

Distributor

 

Month

 

RTA

 

Effect perceived by consumers (a)

 

RTA / RTP

 

Effect perceived by consumers (a)

CPFL Paulista

 

April (b)

 

12.68%

 

16.90%

 

-0.80%

 

-10.50%

CPFL Piratininga

 

October

 

(b)

 

(b)

 

7.69%

 

17.28%

RGE

 

June

 

21.27%

 

20.58%

 

3.57%

 

5.00%

RGE Sul

 

April (b)

 

18.45%

 

22.47%

 

-0.20%

 

-6.43%

Companhia Força e Luz Santa Cruz

 

March

 

(c)

 

(c)

 

-1.28%

 

-10.37%

CPFL Leste Paulista

 

March

 

(c)

 

(c)

 

0.76%

 

-3.28%

CPFL Jaguari de Energia (CPFL Santa Cruz)

 

March

 

5.71%

 

(c)

 

2.05%

 

-8.42%

CPFL Sul Paulista

 

March

 

(c)

 

(c)

 

1.64%

 

-4.15%

CPFL Mococa

 

March

 

(c)

 

(c)

 

1.65%

 

-2.56%

 

(a)     Represents the average effect perceived by the consumer, as a result of the elimination from the tariff base of financial components that had been added in the prior tariff adjustment.

(b)     The respective adjustments for 2018 have not yet occurred.

(c)     As mentioned in note 12.5.2 to the interim financial information, at December 31, 2017, the EGM approved the grouping of subsidiaries Companhia Luz e Força Santa Cruz, Companhia Leste Paulista de Energia, Companhia Jaguari de Energia, Companhia Sul Paulista de Energia e Companhia Luz and Força de Mococa. In accordance with Normative Resolution 716, of May 3, 2016, until the first tariff review of the grouped concessionaire, which will take place in March 2021, ANEEL may apply the procedure that divides over time the variation in the tariffs of the former concessions and the unified tariff. The decision regarding the tariff transition occurred in the tariff adjustment of March 2018.

On March 13, 2018, the Brazilian Electricity Regulatory Agency – ANEEL published Resolution No. 2,376, which set the average annual tariff adjustment of Companhia Jaguari de Energia (“CPFL Santa Cruz”), effective as of March 22, 2018, at 5.71%, 4.41% regarding the economic tariff adjustment and 1.30% regarding relevant financial components. The average effect to be perceived by consumers of the original concessions are:

 

Consumer perception

     

Jaguari

 

Mococa

 

Leste Paulista

 

Sul Paulista

 

Santa Cruz

       

21.15%

 

3.40%

 

7.03%

 

7.50%

 

5.32%

 

Deductions from operating revenue

Deductions from operating revenue in the 2nd quarter of 2018 were R$ 3,555,551, an increase of 11.3% (R$ 361,588) in relation to the same quarter of 2017, which mainly occurred due to:

 

·       Increase of 17.2% (R$ 133,778) in PIS and COFINS, mainly due to the increase in the basis of calculation of these taxes (operating revenue);

·       Increase of 16.6% (R$ 213,158) in ICMS, mainly due to the increase in billed supply;Increase of 16.2% (R$ 141,233) in sector charges, mainly due to an increase in Energy Development Account – CDE (R$ 137,629), partially offset by a decrease in tariff flags and others (R$ 128,225).

 

Cost of electric energy

 

23


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

The cost of electric energy this quarter amounted to R$ 4,538,036, an increase of 21.4% (R$ 799,519) in relation to the same period of the prior year, mainly justified by:

·       Increase of 9.7% (R$ 342,091) in electric energy purchased for resale, due to:

o   Increase of 18.4% (R$ 599,569) in average price due to : increase in the PLD and dólar rate (Itaipu);

o   Decrease of 7.3% (R$ 257,478) in the amount of energy purchased.

·       Increase of 209.9% (R$ 457,429) in the transmission and distribution system usage charges, mainly due to: (i) basic network charges (R$ 327,130) and (ii) system service charge– ESS and reserve energy charge – EER (R$ 128,056).   

Operating costs and expenses

Disregarding the cost of construction of the concession infrastructure, operating costs and expenses this quarter amounted to R$ 1,150,442, a decrease of 3.8% (R$ 45,033) compared with the same period of the prior year. This variation is mainly due to:

·       Personnel: increase of 4.7% (R$ 15,710), mainly due to the effects of the collective labor agreement; 

·       Private pension entity: decrease of 20% (R$ 5,635) due to the recognition of the impact of the actuarial report of 2018;

·       Materials: increase of 10.3% (R$ 5,896), mainly due to maintenance of lines and networks (R$ 11,240), partially offset by a decrease in uniforms and personal protection equipment (PPE) (R$ 3,178) and fleet maintenance (R$ 2,141);

·       Third-party services: decrease of 17.7% (R$ 33,415) mainly due to the decreases: (i) equipment maintenance (R$ 5,554), (ii) PIS/COFINS credits (R$ 7,888)  and (iii) insoursing of services (R$ 7,090).

·       Depreciation and amortization: increase of 10.8% (R$ 33,370) due to the impact of periodic tariff adjustment in distribution subsidiaries;

·       Other expenses: decrease of 29.6 % (R$ 60,131), mainly due to decreases in: (i) legal and compensations (R$ 27,037), (ii) loss in disposals and terminations of non current assets (R$ 13,996), (iii) offset for non-compliance with technical indexes (R$ 9,206), which, as of January 1, 2018 is now classified in Other Revenues.

 

Finance income (costs)

Net finance result this quarter presented costs of R$ 245,674, compared with R$ 418,168 in the same period of 2017, a decrease in net finance costs of 41.2% (R$ 172,494). Such variation is basically due to:

·       Decrease in finance income of 24.1% (R$ 53,553), basically from a decrease in financial investment earnings (R$ 74,852), partially offset by adjustments of the sector financial asset (R$ 13,606);

·       Decrease in finance costs of 35.3% (R$ 226,047), mainly due to the charges on debts, adjustments for inflation and exchange rate changes, net of capitalized interest (R$ 211,619), and adjustments of the sector financial liability (R$ 25,357).

 

 

24


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

Share of profit (loss) of investees

The variation in share of profit (loss) of investees refers to the effect of the share of profit (loss) of joint ventures, as follows:

 

 

 

2nd Quarter 2018

 

2nd Quarter 2017

Epasa

 

               19,442

 

               17,805

Baesa

 

                  (324)

 

                 2,355

Enercan

 

               20,908

 

               28,346

Chapecoense

 

               28,865

 

               34,607

Amortization of fair value adjustment of asset

 

                  (145)

 

                  (145)

Total

 

               68,746

 

               82,968

 

·       ENERCAN: Decrease of R$ 7,438 mainly due to increase in financial expenses (R$ 7,735);

·       Chapecoense: Decrease of R$ 5,742 mainly due to increase in financial expenses (R$ 4,962);

 

Social Contribution and Income Tax

 

Expenses on taxes on profit in the 2nd quarter of 2018 were R$ 259,736, an increase of 148.4% (R$ 155,184) in relation to the one recorded in the same quarter of 2017, which reflects mainly the effects of variation in Profit Before Taxes.

 

Profit for the Period and EBITDA

 

Due to the factors described above, the profit for this quarter was R$ 450,177, 265.5% (R$ 327,005) higher than the one of the same period of 2017.

EBITDA (Earnings before the effects of depreciation, amortization, finance income and costs, and income tax and social contribution) for the 2nd quarter of 2018 was R$ 1,369,511, 33.3% (R$ 342,234) higher than the one determined in the same period of 2017.

 

 

25


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

COMMENT ON THE PERFORMANCE OF SUBSIDIARIES/ASSOCIATES

 

Subsidiary/Associate: Companhia Paulista de Força e Luz - CPFL

The subsidiary Companhia Paulista de Força e Luz - CPFL is a publicly-held corporation, and the comment on its performance is included in its Quarterly Information - ITR as of June 30, 2018 filed with the Brazilian Securities and Exchange Commission (CVM).

 

Subsidiary/Associate: CPFL Geração de Energia S.A.

The subsidiary CPFL Geração de Energia S/A is a publicly-held corporation, and the comments on its individual and consolidated performance is included in its Quarterly Information – ITR as of June 30, 2018 filed with the Brazilian Securities and Exchange Commission (CVM).

 

Subsidiary/Associate: Companhia Piratininga de Força e Luz

The subsidiary Companhia Piratininga de Força e Luz is a publicly-held corporation, and the comments on its performance is included in its Quarterly Information – ITR as of June 30, 2018 filed with the Brazilian Securities and Exchange Commission (CVM).

 

Subsidiary/Associate: Rio Grande Energia S.A.

The subsidiary Rio Grande Energia S.A. is a publicly-held corporation, and the comment on its performance is included in its Quarterly Information – ITR as of June 30, 2018 filed with the Brazilian Securities and Exchange Commission (CVM).

 

Subsidiary/Associate: RGE Sul Distribuidora de Energia S.A.

The subsidiary RGE Sul Distribuidora de Energia S.A is a publicly-held corporation, and the comment on its performance is included in its Quarterly Information – ITR as of June, 30, 2018 filed with the Brazilian Securities and Exchange Commission (CVM).

 

 

26


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Subsidiary: CPFL Comercialização Brasil S.A.

 

 

Consolidated

 

2nd Quarter

 

1st Semester

 

2018

 

2017

 

Variation

 

2018

 

2017

 

Variation

Gross operating revenue

         948,985

 

    863,075

 

10.0%

 

     1,754,339

 

     1,566,747

 

12.0%

Electricity sales to final consumers

         474,487

 

    464,027

 

2.3%

 

        934,745

 

        900,560

 

3.8%

Electricity sales to wholesalers

         474,496

 

    399,046

 

18.9%

 

        819,590

 

        666,183

 

23.0%

Other operating revenues

                    2

 

               2

 

0.0%

 

                   4

 

                   4

 

0.0%

Deductions from operating revenue

        (107,110)

 

   (100,768)

 

6.3%

 

       (203,561)

 

       (184,897)

 

10.1%

Net operating revenue

         841,875

 

    762,308

 

10.4%

 

     1,550,778

 

     1,381,850

 

12.2%

Cost of electric energy

        (800,396)

 

   (717,866)

 

11.5%

 

    (1,491,474)

 

    (1,287,067)

 

15.9%

Electricity purchased for resale

        (800,258)

 

   (717,853)

 

11.5%

 

    (1,491,307)

 

    (1,287,029)

 

15.9%

Network usage charge

               (138)

 

            (13)

 

965.2%

 

              (167)

 

                (38)

 

340.4%

Operating expenses

          (12,141)

 

     (11,408)

 

6.4%

 

         (23,752)

 

         (23,041)

 

3.1%

Personnel

            (9,007)

 

       (7,545)

 

19.4%

 

         (16,847)

 

         (15,287)

 

10.2%

Materials

                 (45)

 

            (52)

 

-14.8%

 

                (69)

 

                (87)

 

-20.0%

Third-party services

            (2,158)

 

       (1,478)

 

46.0%

 

           (4,314)

 

           (3,554)

 

21.4%

Depreciation/amortization

               (609)

 

          (789)

 

-22.7%

 

           (1,221)

 

           (1,696)

 

-28.0%

Others

               (321)

 

       (1,544)

 

-79.2%

 

           (1,301)

 

           (2,417)

 

-46.2%

Income from electric energy services

           29,338

 

      33,034

 

-11.2%

 

          35,552

 

          71,743

 

-50.4%

Finance income (costs)

            (4,836)

 

       (9,530)

 

-49.3%

 

         (12,200)

 

         (20,729)

 

-41.1%

Finance income

             7,152

 

        5,319

 

34.5%

 

          17,924

 

          12,370

 

44.9%

Finance costs

          (11,988)

 

     (14,849)

 

-19.3%

 

         (30,124)

 

         (33,099)

 

-9.0%

Equity

             5,059

 

       (6,783)

 

-174.6%

 

          17,858

 

           (6,783)

 

-363.3%

Profit before taxes

           29,561

 

      16,721

 

76.8%

 

          41,210

 

          44,231

 

-6.8%

Social contribution

            (2,411)

 

       (2,134)

 

13.0%

 

           (2,385)

 

           (4,657)

 

-48.8%

Income tax

            (6,733)

 

       (5,913)

 

13.9%

 

           (6,916)

 

         (12,931)

 

-46.5%

Profit for the period

           20,417

 

        8,673

 

135.4%

 

          31,909

 

          26,644

 

19.8%

                       

EBITDA

           35,236

 

      27,040

 

30.3%

 

          55,152

 

          66,656

 

-17.3%

                       
                       
                       

Reconciliation of Profit for the Period and EBITDA (*)

 

 

 

 

 

 

 

 

 

 

 

Profit for the Period

           20,417

 

        8,673

     

          31,909

 

          26,644

 

 

Depreciation and amortization

                609

 

           789

     

            1,221

 

            1,696

 

 

Finance income (costs)

             4,836

 

        9,530

     

          12,200

 

          20,729

 

 

Social contribution

             2,411

 

        2,134

     

            2,385

 

            4,657

 

 

Income tax

             6,733

 

        5,913

     

            6,916

 

          12,931

 

 

EBITDA

           35,236

 

      27,040

     

          55,152

 

          66,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(*) information not reviewed by the independent auditors.

                   

 

 

Gross Operating Revenue

The gross operating revenue for the 2nd quarter of 2018 was R$ 948,985, an increase of R$ 85,910 (10,0%) in relation to the same quarter of 2017, mainly explained by: (i) supply of electric energy, basically in the amount sold to industrial and commercial clients and public services, (29,6 GWh - R$ 9,499); (ii) supply of energy mainly in the amount of energy sold (267,8 GWh - R$ 79,744).

 

 

Cost of Electric Energy

Cost of electric energy in the 2nd quarter of 2018 was R$ 800,396, an increase of R$ 82,530 (11,5%) in relation to the same quarter of 2017, basically explained by bilateral contracts: increase in purchased volume (215,4 GWh - R$ 84,608).

 

Finance Income (Expenses)

 

27


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

The finance result in the 2nd quarter of 2018 was a finance expense of R$ 4,836, a decrease of R$ 44,694 in relation to the same quarter of 2017, mainly due to the decrease in debt expenses of R$4,118.

 

The share of profit (loss) of investees in the 2nd quarter of 2018 was R$ 5,059, as a result of the share of RGE Sul .

 

Profit for the Period and EBITDA

The result determined in the 2nd quarter of 2018 was a profit of R$ 20,417, an increase of R$ 11,744 (135.4%) when compared with the same quarter of 2017.

EBITDA (Earnings before finance result, income tax and social contribution and depreciation and amortization) for the 2nd quarter of 2018 was R$ 35,236, an increase of 30.3% when compared with the same quarter of 2017, which was R$ 27,040 .

 

 

28


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

NOTES TO FINANCIAL STATEMENTS   
 
 
SUMMARY   
 
ASSET    2 
LIABILITY AND EQUITY  3 
STATEMENT OF INCOME  4 
STATEMENT OF COMPREHENSIVE INCOME  5 
STATEMENT OF CHANGES IN SHAREHOLDER’ EQUITY  6 
STATEMENT OF CASH FLOW  7 
STATEMENT OF VALUE ADDED  8 
( 1 )  OPERATIONS  9 
( 2 )  PRESENTATION OF THE INTERIM FINANCIAL STATEMENTS  11 
( 3 )  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  13 
( 4 )  FAIR VALUE MEASUREMENT  14 
( 5 )  CASH AND CASH EQUIVALENTS  15 
( 6 )  CONSUMERS, CONCESSIONAIRES AND LICENSEES  15 
( 7 )  TAXES RECOVERABLE  17 
( 8 )  SECTOR FINANCIAL ASSET AND LIABILITY  18 
( 9 )  DEFERRED TAX ASSETS AND LIABILITIES  18 
( 10 )  CONCESSION FINANCIAL ASSET  21 
( 11 )  OTHER RECEIVABLES  21 
( 12 )  INVESTMENTS  22 
( 13 )  PROPERTY, PLANT AND EQUIPMENT  27 
( 14 )  INTANGIBLE ASSETS  28 
( 15 )  TRADE PAYABLES  29 
( 16 )  BORROWINGS  30 
( 17 )  DEBENTURES  35 
( 18 )  PRIVATE PENSION PLAN  39 
( 19 )  REGULATORY CHARGES  40 
( 20 )  TAXES, FEES AND CONTRIBUTIONS  40 
( 21 )  PROVISION FOR TAX, CIVIL AND LABOR RISKS AND ESCROW DEPOSITS  41 
( 22 )  OTHER PAYABLES  42 
( 23 )  EQUITY  42 
( 24 )  EARNINGS PER SHARE  43 
( 25 )  NET OPERATING REVENUE  43 
( 26 )  COST OF ELECTRIC ENERGY  46 
( 27 )  OPERATING COSTS AND EXPENSES  46 
( 28 )  FINANCE INCOME (COSTS)  48 
( 29 )  SEGMENT INFORMATION  48 
( 30 )  RELATED PARTY TRANSACTIONS  49 
( 31 )  RISK MANAGEMENT  50 
( 32 )  FINANCIAL INSTRUMENTS  51 
( 33 )  NON-CASH TRANSACTIONS  56 

 

 

 

29


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 


 

CPFL Energia S.A.

Statements of financial position at June 30, 2018 and December 31, 2017

(In thousands of Brazilian reais - R$)


 

Note

Parent company

 

Consolidated

ASSETS

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

                 

Current assets

               

Cash and cash equivalents

5

             13,585

 

            6,581

 

            2,490,235

 

        3,249,642

Consumers, concessionaires and licensees

6

                   -  

 

                 -  

 

            4,545,631

 

        4,301,283

Dividends and interest on capital

12

           352,118

 

         204,807

 

               153,187

 

            56,145

Income tax and social contribution to be offset

7

             16,989

 

           17,051

 

               135,278

 

            88,802

Other taxes recoverable

7

             47,017

 

           46,699

 

               345,689

 

          306,244

Derivatives

32

                   -  

 

                 -  

 

               449,475

 

          444,029

Sector financial asset

8

                   -  

 

                 -  

 

               679,406

 

          210,834

Concession financial asset

10

                   -  

 

                 -  

 

                 23,241

 

            23,736

Other receivables

11

              1,020

 

               243

 

               849,752

 

          900,498

Total current assets

 

           430,729

 

         275,383

 

            9,671,894

 

        9,581,211

                 

Noncurrent assets

               

Consumers, concessionaires and licensees

6

                   -  

 

                 -  

 

               235,146

 

          236,539

Intragroup loans

30

                   -  

 

         127,147

 

                       -  

 

              8,612

Escrow deposits

21

                 777

 

               665

 

               866,057

 

          839,990

Income tax and social contribution to be offset

7

                   -  

 

                 -  

 

                 66,352

 

            61,464

Other taxes recoverable

7

                   -  

 

                 -  

 

               167,122

 

          171,980

Sector financial assets

8

                   -  

 

                 -  

 

               414,528

 

          355,003

Derivatives

32

                   -  

 

                 -  

 

               370,585

 

          203,901

Deferred tax assets

9

           147,855

 

         145,779

 

               825,862

 

          943,199

Advances for future capital increases

 

                   -  

 

         350,000

 

                       -  

 

                   -  

Concession financial asset

10

                   -  

 

                 -  

 

            7,053,027

 

        6,545,668

Investments at cost

 

                   -  

 

                 -  

 

               116,654

 

          116,654

Other receivables

11

              5,315

 

            5,761

 

               901,320

 

          840,192

Investments

12

        9,241,583

 

      8,557,673

 

               906,115

 

        1,001,550

Property, plant and equipment

13

              1,159

 

            1,170

 

            9,612,096

 

        9,787,125

Intangible assets

14

                   92

 

                 71

 

          10,501,494

 

      10,589,824

Total noncurrent assets

 

        9,396,782

 

      9,188,265

 

          32,036,357

 

      31,701,702

                 

Total assets

 

        9,827,511

 

      9,463,648

 

          41,708,250

 

      41,282,912

 

 

The accompanying notes are an integral part of these interim financial statements.

 

 

 

 

30


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

 

CPFL Energia S.A.

Statements of financial position at June 30, 2018 and December 31, 2017

(In thousands of Brazilian reais - R$)

                   
 

Note

 

Parent company

 

Consolidated

LIABILITIES AND EQUITY

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

                   

Current liabilities

                 

Trade payables

15

 

               136

 

            1,644

 

        3,229,917

 

        3,296,870

Borrowings

16

 

                 -  

 

                 -  

 

        3,011,598

 

        3,589,607

Debentures

17

 

                 -  

 

            1,938

 

        1,385,146

 

        1,703,073

Private pension plan

18

 

                 -  

 

                 -  

 

             69,132

 

             60,801

Regulatory charges

19

 

                 -  

 

                 -  

 

           286,858

 

           581,600

Income tax and social contribution payable

20

 

                 -  

 

                 -  

 

             67,225

 

             81,457

Other taxes, fees and contributions

20

 

               458

 

               717

 

           403,535

 

           628,846

Dividends

   

            2,825

 

         281,919

 

             37,105

 

           297,744

Estimated payroll

   

                 -  

 

                 -  

 

           150,597

 

           116,080

Derivatives

32

 

                 -  

 

                 -  

 

             11,314

 

             10,230

Sector financial liability

8

 

                 -  

 

                 -  

 

                 394

 

             40,111

Use of public asset

   

                 -  

 

                 -  

 

             11,179

 

             10,965

Other payables

22

 

           17,529

 

           17,594

 

        1,049,723

 

           961,306

Total current liabilities

   

           20,948

 

         303,812

 

        9,713,721

 

       11,378,688

                   

Noncurrent liabilities

                 

Trade payables

15

 

                 -  

 

                 -  

 

           135,370

 

           128,438

Borrowings

16

 

                 -  

 

                 -  

 

        7,657,213

 

        7,402,450

Debentures

17

 

                 -  

 

         184,388

 

        8,591,981

 

        7,473,454

Private pension plan

18

 

                 -  

 

                 -  

 

           870,298

 

           880,360

Other taxes, fees and contributions

20

 

                 -  

 

                 -  

 

             14,768

 

             18,839

Deferred tax liabilities

9

 

                 -  

 

                 -  

 

        1,276,832

 

        1,249,591

Provision for tax, civil and labor risks

21

 

               488

 

               600

 

           949,408

 

           961,134

Derivatives

32

 

                 -  

 

                 -  

 

               1,443

 

             84,576

Sector financial liability

8

 

                 -  

 

                 -  

 

                    -  

 

               8,385

Use of public asset

   

                 -  

 

                 -  

 

             86,561

 

             83,766

Other payables

22

 

           10,315

 

           13,320

 

           469,910

 

           426,889

Total noncurrent liabilities

   

           10,803

 

         198,308

 

       20,053,785

 

       18,717,880

                   

Equity

23

               

Issued capital

   

      5,741,284

 

      5,741,284

 

        5,741,284

 

        5,741,284

Capital reserves

   

         468,018

 

         468,014

 

           468,018

 

           468,014

Legal reserve

   

         798,090

 

         798,090

 

           798,090

 

           798,090

Statutory reserve - concession financial asset

   

                 -  

 

         826,600

 

                    -  

 

           826,600

Statutory reserve - working capital improvement

   

      1,292,046

 

      1,292,046

 

        1,292,046

 

        1,292,046

Accumulated comprehensive income

   

        (160,056)

 

        (164,506)

 

          (160,056)

 

          (164,506)

Retained earnings

   

      1,656,377

 

                 -  

 

        1,656,377

 

                    -  

     

      9,795,759

 

      8,961,528

 

        9,795,759

 

        8,961,528

Equity attributable to noncontrolling interests

   

                 -  

 

                 -  

 

        2,144,986

 

        2,224,816

Total equity

   

      9,795,759

 

      8,961,528

 

       11,940,745

 

       11,186,344

                   

Total liabilities and equity

   

      9,827,511

 

      9,463,648

 

       41,708,250

 

       41,282,912

 

 

The accompanying notes are an integral part of these interim financial statements.

 

 

 

31


 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

 

CPFL Energia S.A.

Statements of income for the periods ended June 30, 2018 and 2017

(In thousands of Brazilian reais, except earnings per share)

                                 
                                 
 

Note

Parent company

 

Consolidated

 

2018

 

2017

 

2018

 

2017

 

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Net operating revenue

25

  -

 

  -

 

 -

 

  -

 

6,945,366

 

13,320,021

 

5,962,549

 

11,501,327

Cost of electric energy services

                               

Cost of electric energy

26

  -

 

  -

 

  -

 

  -

 

  (4,538,036)

 

  (8,551,758)

 

  (3,738,517)

 

  (6,959,171)

Cost of operation

27

  -

 

  -

 

  -

 

  -

 

(672,530)

 

  (1,342,462)

 

(689,687)

 

  (1,356,470)

Cost of services rendered to third parties

27

  -

 

  -

 

  -

 

  -

 

(370,642)

 

(742,003)

 

(466,106)

 

(881,373)

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

  -

 

  -

 

 -

 

  -

 

1,364,158

 

2,683,798

 

1,068,239

 

2,304,314

Operating expenses

27

                             

Selling expenses

 

  -

 

  -

 

  -

 

  -

 

(148,412)

 

(277,051)

 

(142,565)

 

(291,782)

General and administrative expenses

 

  (8,405)

 

  (17,651)

 

  (6,905)

 

  (24,071)

 

(236,112)

 

(439,987)

 

(255,226)

 

(516,790)

Other operating expenses

 

  -

 

  -

 

  -

 

  -

 

  (92,794)

 

(189,326)

 

(107,526)

 

(193,346)

                                 
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from electric energy services

 

  (8,405)

 

  (17,651)

 

  (6,905)

 

  (24,071)

 

  886,840

 

1,777,432

 

  562,923

 

1,302,395

                                 

Equity interests in subsidiaries, associates and joint ventures

12

  462,042

 

  913,028

 

  160,193

 

  432,040

 

68,746

 

  154,102

 

82,968

 

  162,678

Finance income (costs)

28

                             

Finance income

 

  362

 

7,446

 

3,219

 

8,983

 

  169,078

 

  366,230

 

  222,632

 

  503,343

Finance costs

 

(89)

 

  (5,398)

 

  (19,047)

 

  (42,152)

 

(414,752)

 

(919,423)

 

(640,799)

 

  (1,357,649)

   

  273

 

2,048

 

  (15,828)

 

  (33,169)

 

(245,674)

 

(553,193)

 

(418,168)

 

(854,306)

Profit before taxes

 

  453,910

 

  897,426

 

  137,460

 

  374,800

 

  709,913

 

1,378,341

 

  227,724

 

  610,767

Social contribution

9

  788

 

1,340

 

1,962

 

5,082

 

  (69,844)

 

(136,712)

 

  (28,289)

 

  (68,863)

Income tax

9

1,015

 

  731

 

4,052

 

9,479

 

(189,892)

 

(372,047)

 

  (76,263)

 

(186,610)

   

1,803

 

2,071

 

6,014

 

14,561

 

(259,736)

 

(508,760)

 

(104,552)

 

(255,474)

                                 

Profit for the period

 

  455,714

 

  899,497

 

  143,475

 

  389,360

 

  450,177

 

  869,581

 

  123,172

 

  355,293

                                 

Profit for the period attributable to owners of the Company

                 

  455,714

 

  899,497

 

  143,475

 

  389,360

Profit (loss) for the period attributable to noncontrolling interests

                 

  (5,537)

 

  (29,915)

 

  (20,302)

 

  (34,067)

Basic earnings per share attributable to owners of the Company - R$

24

               

0.45

 

0.88

 

0.14

 

0.38

Diluted earnings per share attributable to owners of the Company - R$

24

               

0.45

 

0.88

 

0.14

 

0.38

 

 

 

The accompanying notes are an integral part of these interim financial statements

 

32


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

 

CPFL Energia S.A.

 Statements of comprehensive income for the periods ended June 30, 2018 and 2017

 (In thousands of Brazilian reais - R$)

   

Parent company

   

2018

 

2017

   

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Profit for the period

 

            455,714

 

            899,497

 

            143,475

 

            389,360

Other comprehensive income

               

Items that will not be reclassified subsequently to profit or loss

               

     Comprehensive income for the period of subsidiaries

 

              (1,865)

 

              (3,669)

 

                    -  

 

                    -  

                 

Items that will be reclassified subsequently to profit or loss

               

     Comprehensive income for the period of subsidiaries

 

               3,107

 

            (13,140)

 

                    -  

 

                    -  

                 

Total comprehensive income for the period - individual

 

            456,956

 

            882,688

 

            143,475

 

            389,360

                 
                 
                 
                 
   

Consolidated

   

2018

 

2017

   

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Profit for the period

 

            450,177

 

            869,581

 

            123,172

 

            355,293

                 

Other comprehensive income

               

Items that will not be reclassified subsequently to profit or loss

               

     - Actuarial gains (losses), net of tax effects

 

              (1,865)

 

              (3,669)

 

                    -  

 

                    -  

                 

Items that will be reclassified subsequently to profit or loss

               

     Comprehensive income for the period of subsidiaries

 

               3,107

 

            (13,140)

 

                    -  

 

                    -  

                 

Total comprehensive income for the period

 

            451,419

 

            852,773

 

            123,172

 

            355,293

Attributable to owners of the Company

 

            456,956

 

            882,688

 

            143,475

 

            389,360

Attributable to noncontrolling interests

 

              (5,537)

 

            (29,915)

 

            (20,302)

 

            (34,067)

 

The accompanying notes are an integral part of these interim financial statements

 

 

33


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 CPFL Energia S.A.

 Statements of changes in shareholders' equity for the periods ended June 30, 2018 and 2017

 (In thousands of Brazilian reais - R$)

         

 Earning reserves

 

 Accumulated comprehensive income

         

 Noncontrolling interests

 
         

 

 

 Statutory reserves

 

 

 

 

 

 

         

 Accumulated comprehensive income

 

 

   
 

 Issued capital

 

 Capital reserve

 

 Legal reserve

 

 Concession financial asset

 

 Working capital improvement

 

 Dividend

 

 Deemed cost

 

 Private pension plan / Credit risk in mark to market

 

 Retained earnings

 

 Total

   

 Other equity components

 Total equity

Balance at December 31, 2017

5,741,284

 

  468,014

 

  798,090

 

  826,600

 

  1,292,046

 

  -

 

  405,840

 

(570,346)

 

  -

 

8,961,528

 

11,833

 

2,212,983

 

11,186,344

                                                   

Total comprehensive income

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

17,337

 

  816,890

 

  834,227

 

  -

 

  (29,915)

 

  804,312

 Profit for the period

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  899,497

 

  899,497

 

  -

 

  (29,915)

 

  869,582

 Other comprehensive income - credit risk in mark to market

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

21,006

 

  (34,146)

 

  (13,140)

 

  -

 

  -

 

  (13,140)

 Effects of first adoption of IFRS 9 / CPC 48

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  (48,461)

 

  (48,461)

 

  -

 

  -

 

  (48,461)

 Other comprehensive income - actuarial gains (losses)

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  (3,669)

 

  -

 

  (3,669)

 

  -

 

  -

 

  (3,669)

                                                   

 Internal changes in equity

  -

 

4

 

  -

 

(826,600)

 

-

 

  -

 

  (12,887)

 

  -

 

  839,487

 

4

 

(889)

 

  842

 

(43)

Realization of deemed cost of property, plant and equipment

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  (19,526)

 

  -

 

19,526

 

  -

 

  (1,347)

 

1,347

 

  -

Tax effect on realization of deemed cost

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

6,639

 

  -

 

  (6,639)

 

  -

 

  458

 

(458)

 

 -

Recognition of legal reserve

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

Changes in statutory reserve in the period

  -

 

  -

 

  -

 

(826,600)

 

-

 

  -

 

  -

 

  -

 

  826,600

 

  -

 

  -

 

  -

 

  -

Other changes in noncontrolling interests

  -

 

4

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  -

 

4

 

  -

 

(47)

 

(43)

                                                   

Capital transactions with owners

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  -

 

  -

 

 -

 

  (49,868)

 

  (49,868)

                                                   

Balance at June 30, 2018

5,741,284

 

  468,018

 

  798,090

 

  -

 

  1,292,046

 

  -

 

  392,952

 

(553,008)

 

1,656,377

 

9,795,759

 

10,943

 

2,134,042

 

11,940,745

                                                   
                                                   
         

 Earning reserves

 

 Accumulated comprehensive income

         

 Noncontrolling interests

 
         

 

 

 Statutory reserves

 

 

 

 

 

 

         

 Accumulated comprehensive income

 

 

   
 

 Issued capital

 

 Capital reserve

 

 Legal reserve

 

 Concession financial asset

 

 Working capital improvement

 

 Dividend

 

 Deemed cost

 

 Private pension plan

 

 Retained earnings

 

 Total

   

 Other equity components

 Total equity

Balance at December 31, 2016

5,741,284

 

  468,014

 

  739,102

 

  702,928

 

545,505

 

7,820

 

  431,713

 

(666,346)

 

  -

 

7,970,021

 

13,572

 

2,389,076

 

10,372,668

                                                   

Total comprehensive income

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  389,360

 

  389,360

 

  -

 

  (34,067)

 

  355,293

 Profit for the period

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  389,360

 

  389,360

 

  -

 

  (34,067)

 

  355,293

 Other comprehensive income - credit risk in mark to market

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

 -

 

  -

                                                   

 Internal changes in equity

  -

 

  -

 

  -

 

57,939

 

-

 

  -

 

  (12,833)

 

  -

 

  (45,106)

 

  -

 

(875)

 

  842

 

(33)

Realization of deemed cost of property, plant and equipment

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  (19,444)

 

  -

 

19,444

 

  -

 

  (1,325)

 

1,325

 

  -

Tax effect on realization of deemed cost

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

6,611

 

  -

 

  (6,611)

 

  -

 

  450

 

(450)

 

  -

Changes in statutory reserve in the period

  -

 

  -

 

  -

 

57,939

 

-

 

  -

 

  -

 

  -

 

  (57,939)

 

  -

 

  -

 

  -

 

  -

Other changes in noncontrolling interests

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

(33)

 

(33)

                                                   

Capital transactions with owners

  -

 

  -

 

  -

 

  -

 

-

 

  (7,820)

 

  -

 

  -

 

  -

 

  (7,820)

 

  -

 

  (9,603)

 

  (17,423)

Capital increase

  -

 

  -

 

  -

 

  -

 

-

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

7

 

7

Dividend proposal  approved

  -

 

  -

 

  -

 

  -

 

-

 

  (7,820)

 

  -

 

  -

 

  -

 

  (7,820)

 

  -

 

  (9,610)

 

  (17,430)

                                                   

Balance at June 30, 2017

5,741,284

 

  468,014

 

  739,102

 

  760,866

 

545,505

 

  -

 

  418,880

 

(666,346)

 

  344,254

 

8,351,561

 

12,697

 

2,346,248

 

10,710,506

 

The accompanying notes are an integral part of these interim financial statements.

 

 

34


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

CPFL Energia SA

Statements of cash flow for the periods ended June 30, 2018 and 2017

 (in thousand of Brazilian reais - R$)

                 
   

Parent Company

 

Consolidated

   

June 30, 2018

 

June 30, 2017

 

June 30, 2018

 

June 30, 2017

                 

Profit before taxes

 

897,426

 

374,800

 

1,378,341

 

610,767

Adjustment to reconcile profit to cash from operating activities

               

   Depreciation and amortization

 

   93

 

108

 

803,965

 

758,227

   Provision for tax, civil and labor risks

 

  (12)

 

   (155)

 

   55,305

 

   93,064

   Allowance for doubtful accounts

 

-  

 

-  

 

   68,242

 

   86,068

   Interest on debts, inflation adjustment and exchange rate changes

 

  2,973

 

   40,867

 

576,458

 

1,108,799

   Pension plan expense (income)

 

-  

 

-  

 

   44,955

 

   56,944

   Equity interests in associates and joint ventures

 

   (913,028)

 

   (432,040)

 

   (154,102)

 

   (162,678)

   Reversal of impairment

 

-  

 

-  

 

(5,837)

 

-  

   Loss (gain) on disposal of noncurrent assets

 

-  

 

-  

 

   52,410

 

   49,275

   Deferred taxes (PIS and COFINS)

 

-  

 

-  

 

   (182)

 

  1,037

   Others

 

-  

 

-  

 

  (36,581)

 

   20,660

   

  (12,549)

 

  (16,420)

 

2,782,973

 

2,622,163

Decrease (increase) in operating assets

               

   Consumers, concessionaires and licensees

 

-  

 

-  

 

   (370,264)

 

   (279,388)

   Dividend and interest on capital received

 

428,935

 

288,061

 

152,494

 

184,117

   Taxes recoverable

 

   (116)

 

(2,883)

 

  (57,253)

 

  (48,491)

   Escrow deposits

 

   (106)

 

   35

 

(8,219)

 

   (243,817)

   Sector financial asset

 

-  

 

-  

 

   (487,028)

 

  (25,525)

   Receivables - CDE

 

-  

 

-  

 

   47,325

 

  (21,720)

   Concession financial assets (transmission companies)

 

-  

 

-  

 

(3,979)

 

  (49,349)

   Other operating assets

 

341

 

   18,451

 

  (60,229)

 

  (71,804)

                 

Increase (decrease) in operating liabilities

               

   Trade payables

 

(1,508)

 

(3,185)

 

  (60,020)

 

   62,185

   Other taxes and social contributions

 

   (264)

 

114

 

   (234,899)

 

  (88,703)

   Other liabilities with private pension plan

 

-  

 

-  

 

  (50,354)

 

  (34,406)

   Regulatory charges

 

-  

 

-  

 

   (294,742)

 

   74,136

   Tax, civil and labor risks paid

 

   (119)

 

   (211)

 

  (92,987)

 

   (111,294)

   Sector financial liability

 

-  

 

-  

 

  (69,878)

 

315,136

   Payables - amounts provided by the CDE

 

-  

 

-  

 

  9,715

 

   (744)

   Other operating liabilities

 

(2,738)

 

  (23,337)

 

215,489

 

191,844

Cash flows provided (used) by operations

 

411,876

 

260,625

 

1,418,144

 

2,474,339

   Interest paid on debts and debentures

 

(4,235)

 

  (44,656)

 

   (681,214)

 

   (934,922)

   Income tax and social contribution paid 

 

-  

 

-  

 

   (366,416)

 

   (258,873)

Net cash from operating activities

 

407,641

 

215,969

 

370,514

 

1,280,544

                 

Investing activities

               

   Purchases of property, plant and equipment

 

   (252)

 

  (42)

 

   (129,534)

 

   (548,625)

   Securities, pledges and restricted deposits

 

   (500)

 

-  

 

  (66,487)

 

  (81,107)

   Purchases of intangible assets

 

  (23)

 

(4)

 

   (718,124)

 

   (790,940)

   Sale of noncurrent assets

 

-  

 

-  

 

-  

 

   94

   Advances for future capital increases

 

  (62,395)

 

  (38,950)

 

-  

 

-  

   Intragroup loans

 

127,625

 

   45,280

 

-  

 

   38,793

   

 

 

 

 

 

 

 

Net cash generated by (used) In investing activities

 

   64,455

 

  6,284

 

   (914,145)

 

   (1,381,785)

                 

Financing activities

               

   Capital increase of noncontrolling shareholder

 

-  

 

-  

 

   15

 

  7

   Borrowings and debentures raised

 

-  

 

-  

 

6,386,698

 

986,988

   Repayment of principal of borrowings and debentures

 

   (186,000)

 

-  

 

   (6,657,657)

 

   (2,342,145)

   Repayment of derivatives

 

-  

 

-  

 

365,434

 

   (148,177)

   Dividend and interest on capital paid

 

   (279,093)

 

   (220,906)

 

   (310,267)

 

   (241,826)

   Business combination payment

 

-  

 

-  

 

-  

 

(2,514)

Net cash generated by (used in) financing activities

 

   (465,093)

 

   (220,906)

 

   (215,777)

 

   (1,747,667)

Net increase (decrease) in cash and cash equivalents

 

  7,003

 

  1,347

 

   (759,407)

 

   (1,848,907)

Cash and cash equivalents at the beginning of the period

 

  6,581

 

   64,973

 

3,249,642

 

6,164,997

Cash and cash equivalents at the end of the period

 

   13,585

 

   66,321

 

2,490,235

 

4,316,090

 

 

The accompanying notes are an integral part of these interim financial statements.


 

35


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

CPFL Energia SA

Statements of value added for the periods ended June 30, 2018 and 2017

(in thousand of Brazilian reais - R$)

 

Parent Company

 

Consolidated

 

1st semester 2018

 

1st semester 2017

 

1st semester 2018

 

1st semester 2017

1 - Revenues

                    275

 

                     46

 

         20,220,616

 

              18,408,445

1.1 Operating revenues

                      -  

 

                      -  

 

         19,397,799

 

              17,008,535

1.2 Revenue related to the construction of own assets

                    275

 

                     46

 

             150,444

 

                  607,616

1.3 Revenue from construction of concession infrastructure

                      -  

 

                      -  

 

             740,615

 

                  878,362

1.4 Allowance for doubtful accounts

                      -  

 

                      -  

 

              (68,242)

 

                   (86,068)

               
               

2 - (-) Inputs

                (5,477)

 

                (4,289)

 

        (11,016,283)

 

               (9,937,126)

2.1 Electricity purchased for resale

                      -  

 

                      -  

 

          (9,478,293)

 

               (7,749,937)

2.2 Material

                   (322)

 

                    (66)

 

            (591,856)

 

               (1,078,775)

2.3 Outsourced services

                (3,902)

 

                (3,507)

 

            (693,424)

 

                 (764,079)

2.4 Others

                (1,253)

 

                   (716)

 

            (252,710)

 

                 (344,335)

               

3 - Gross value added (1+2)

                (5,202)

 

                (4,243)

 

           9,204,333

 

                8,471,319

               

4 - Retentions

                    (93)

 

                   (108)

 

            (805,756)

 

                 (760,052)

4.1 Depreciation and amortization

                    (93)

 

                   (108)

 

            (662,961)

 

                 (615,819)

4.2 Amortization of intangible assets of concession

                      -  

 

                      -  

 

            (142,795)

 

                 (144,232)

               

5 - Net value added generated (3+4)

                (5,295)

 

                (4,351)

 

           8,398,577

 

                7,711,267

               

6 - Value Added received in transfer

             920,839

 

             441,515

 

             543,566

 

                  703,305

6.1 Financial income

                 7,810

 

                 9,475

 

             389,464

 

                  540,627

6.2 Interest in subsidiaries, associates and joint ventures

             913,028

 

             432,040

 

             154,102

 

                  162,678

               
               

7 - Value Added to be distributed (5+6)

             915,544

 

             437,164

 

           8,942,143

 

                8,414,572

               

8 - Distribution of value added

             

8.1 Personnel and charges

               10,447

 

               16,769

 

             676,975

 

                  697,891

8.1.1 Direct remuneration

                 5,187

 

               11,894

 

             396,402

 

                  430,397

8.1.2 Benefits

                 4,522

 

                 3,936

 

             246,914

 

                  232,488

8.1.3 Government severance indemnity fund for employees - F.G.T.S

                    738

 

                    938

 

               33,659

 

                    35,007

8.2 Taxes, fees and contributions

                    205

 

              (11,187)

 

           6,437,815

 

                5,921,459

8.2.1 Federal

                    181

 

              (11,203)

 

           3,496,765

 

                3,153,099

8.2.2 Estate

                     24

 

                     16

 

           2,928,814

 

                2,757,380

8.2.3 Municipal

                      -  

 

                      -  

 

               12,236

 

                    10,980

8.3 Lenders and lessors

                 5,396

 

               42,223

 

             957,772

 

                1,439,930

8.3.1 Interest

                 5,394

 

               42,012

 

             921,288

 

                1,399,463

8.3.2 Rental

                       2

 

                    211

 

               36,483

 

                    40,467

8.4 Interest on capital

             899,497

 

             389,360

 

             869,581

 

                  355,293

8.4.1 Retained earnings

             899,497

 

             389,360

 

             869,581

 

                  355,293

               
 

             915,544

 

             437,164

 

           8,942,143

 

                8,414,572

 

 

The accompanying notes are an integral part of these interim financial statements.

 

36


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

CPFL ENERGIA S.A.

NOTES TO THE INTERIM FINANCIAL STATEMENTS

AT JUNE 30, 2018

 (Amounts in thousands of Brazilian reais – R$, unless otherwise stated)

 

( 1 )OPERATIONS

 

CPFL Energia S.A. (“CPFL Energia” or “Company”) is a publicly-held corporation incorporated for the principal purpose of operating as a holding company, with equity interests in other companies primarily engaged in electric energy distribution, generation and commercialization activities in Brazil. 

The Company’s registered office is located at Rodovia Engenheiro Miguel Noel Nascentes Burnier, km 2,5, Parque São Quirino - Campinas - SP - Brazil.

The Company has direct and indirect interests in the following subsidiaries and joint:

 

Energy distribution

 

Company type

 

Equity interest

 

Location (state)

 

Number of municipalities

 

Approximate number of consumers (in thousands)

 

Concession period

 

End of the concession

                             

 Companhia Paulista de Força e Luz ("CPFL Paulista")

 

Publicly-held corporation

 

Direct
100%

 

Interior of São Paulo

 

234

 

4,441

 

30 years

 

 November 2027

 Companhia Piratininga de Força e Luz ("CPFL Piratininga")

 

Publicly-held corporation

 

Direct
100%

 

Interior and coast of São Paulo

 

27

 

1,736

 

30 years

 

 October 2028

 Rio Grande Energia S.A. ("RGE")

 

Publicly-held corporation

 

Direct
100%

 

Interior of Rio Grande do Sul

 

255

 

1,499

 

30 years

 

 November 2027

 RGE Sul Distribuidora de Energia S.A.  ("RGE Sul")

 

Publicly-held corporation

 

Indirect
100%

 

Interior of Rio Grande do Sul

 

118

 

1,351

 

30 years

 

 November 2027

  Companhia Jaguari de Energia  ("CPFL Santa Cruz") (e)

 

Privately-held corporation

 

Direct
100%

 

Interior of São Paulo, Paraná and Minas Gerais

 

45

 

452

 

30 years

 

 July 2045

 

                   

Installed power (MW)

Energy generation
(conventional and renewable sources)

 

Company type

 

Equity interest

 

Location (state)

 

Number of plants / type of energy

 

Total

 

CPFL share

                         

CPFL Geração de Energia S.A.
("CPFL Geração")

 

Publicly-held corporation

 

Direct
100%

 

São Paulo and Goiás

 

3 Hydropower (a)

 

1295

 

678

CERAN - Companhia Energética Rio das Antas
("CERAN")

 

Privately-held corporation

 

Indirect
65%

 

Rio Grande do Sul

 

3 Hydropower

 

360

 

234

Foz do Chapecó Energia S.A.
("Foz do Chapecó")

 

Privately-held corporation

 

Indirect
51% (d)

 

Santa Catarina and
Rio Grande do Sul

 

1 Hydropower

 

855

 

436

Campos Novos Energia S.A.
("ENERCAN")

 

Privately-held corporation

 

Indirect
48.72%

 

Santa Catarina

 

1 Hydropower

 

880

 

429

BAESA - Energética Barra Grande S.A.
("BAESA")

 

Privately-held corporation

 

Indirect
25.01%

 

Santa Catarina and
Rio Grande do Sul

 

1 Hydropower

 

690

 

173

Centrais Elétricas da Paraíba S.A.
("EPASA")

 

Privately-held corporation

 

Indirect
53.34%

 

Paraíba

 

2 Thermal

 

342

 

182

Paulista Lajeado Energia S.A.
("Paulista Lajeado")

 

Privately-held corporation

 

Indirect
59.93% (b)

 

Tocantins

 

1 Hydropower

 

903

 

63

CPFL Energias Renováveis S.A.
("CPFL Renováveis")

 

Publicly-held corporation

 

Indirect
51.60%

 

(c)

 

(c)

 

(c)

 

(c)

CPFL Centrais Geradoras Ltda                                                    ("CPFL Centrais Geradoras")

 

Limited liability company

 

Direct
100%

 

São Paulo and Minas Gerais

 

6 SHPs

 

4

 

4

 

Energy commercialization

 

Company type

 

Core activity

 

Equity interest

CPFL Comercialização Brasil S.A. ("CPFL Brasil")

 

Privately-held corporation

 

Energy commercialization

 

Direct
100%

Clion Assessoria e Comercialização de Energia Elétrica Ltda.
("CPFL Meridional")

 

Limited liability company

 

Commercialization and provision of energy services

 

Indirect
100%

CPFL Comercialização Cone Sul S.A. ("CPFL Cone Sul")

 

Privately-held corporation

 

Energy commercialization

 

Indirect
100%

CPFL Planalto Ltda.  ("CPFL Planalto")

 

Limited liability company

 

Energy commercialization

 

Direct
100%

CPFL Brasil Varejista S.A.  ("CPFL Brasil Varejista")

 

Privately-held corporation

 

Energy commercialization

 

Indirect
100%

 

 

 

37


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Provision of services

 

Company type

 

Core activity

 

Equity interest

CPFL Serviços, Equipamentos, Industria e Comércio S.A.
("CPFL Serviços")

 

Privately-held corporation

 

Manufacturing, commercialization, rental and maintenance of electro-mechanical equipment and service provision

 

Direct
100%

NECT Serviços Administrativos Ltda ("Nect")

 

Limited liability company

 

Provision of administrative services

 

Direct
100%

CPFL Atende Centro de Contatos e Atendimento Ltda.  ("CPFL Atende")

 

Limited liability company

 

Provision of call center services

 

Direct
100%

CPFL Total Serviços Administrativos Ltda. ("CPFL Total")

 

Limited liability company

 

Collection services

 

Direct 
100%

CPFL Eficiência Energética S.A ("CPFL Eficiência")

 

Privately-held corporation

 

Energy efficiency management

 

Direct
100%

TI Nect Serviços de Informática Ltda. ("Authi")

 

Limited liability company

 

Provision of IT services

 

Direct
100%

CPFL GD S.A ("CPFL GD")

 

Privately-held corporation

 

Provision of maintenance services for energy generation companies

 

Indirect
100%

             

Others

 

Company type

 

Core activity

 

Equity interest

CPFL Jaguari de Geração de Energia Ltda ("Jaguari Geração")

 

Limited liability company

 

Holding company

 

Direct
100%

Chapecoense Geração S.A. ("Chapecoense")

 

Privately-held corporation

 

Holding company

 

Indirect
51%

Sul Geradora Participações S.A. ("Sul Geradora")

 

Privately-held corporation

 

Holding company

 

Indirect
99.95%

CPFL Telecom S.A ("CPFL Telecom")

 

Privately-held corporation

 

Telecommunication services

 

Direct
100%

CPFL Transmissão Piracicaba S.A  ("CPFL Piracicaba")

 

Privately-held corporation

 

Energy transmission services

 

Indirect
100%

CPFL Transmissora Morro Agudo S.A ("CPFL Morro Agudo") 

 

Privately-held corporation

 

Energy transmission services

 

Indirect
100%

 

 

a)     CPFL Geração has 51.54% of the assured energy and power of the Serra da Mesa hydropower plant, which concession is owned by Furnas. The plants Carioba and Cariobinha are inactive while they await the position on the early termination of their concession and are not included in the table.

 

b)    Paulista Lajeado holds a 7% interest in the installed power of Investco S.A. (5.94% interest in total capital).

 

c)     CPFL Renováveis has operations in the states of São Paulo, Minas Gerais, Mato Grosso, Santa Catarina, Ceará, Rio Grande do Norte, Paraná and Rio Grande do Sul and its main activities are: (i) holding investments in companies of the renewable energy segment; (ii) identification, development, and exploration of generation potentials; and (iii) sale of electric energy. At June 30, 2018, CPFL Renováveis had a portfolio of 110 projects of 2,479.9 MW of installed capacity (2,102.6 MW in operation). 

 

·         Hydropower generation: 44 SHP’s (514.7 MW) with 39 SHPs in operation (423 MW) and 5SHPs under development (91.7 MW);

·         Wind power generation: 57 projects (1,594.1 MW) with 45 projects in operation (1,308.5 MW) and 12 projects under construction/development (285.6 MW);

·         Biomass power generation: 8 plants in operation (370 MW);

·         Solar power generation: 1 solar plant in operation (1.1 MW).

 

d)    The joint venture Chapecoense has as its direct subsidiary Foz do Chapecó and fully consolidates its financial statements.

 

e)     As described in note 12.5.2, on December 31, 2017, approval was given for the merger of the subsidiaries Companhia Luz e Força Santa Cruz, Companhia Leste Paulista de Energia, Companhia Jaguari de Energia, Companhia Sul Paulista de Energia and Companhia Luz e Força de Mococa into Companhia Jaguari de Energia, which adopted the trade name “CPFL Santa Cruz”.

 

 

38


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

As at June 30, 2018, the Company recorded in the interim financial statements a negative net working capital of R$ 41,827. The Company has been monitoring timely the net working capital and your cash generation, as well as the profit projections, which supports and makes feasible the reduction of the net working capital.

 

( 2 ) PRESENTATION OF THE INTERIM FINANCIAL STATEMENTS

2.1 Basis of preparation

This interim individual (Parent Company) and consolidated financial statement has been prepared and is being presented in accordance with the International Accounting Standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standard Board – IASB, and also based on standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Quarterly Financial Information (ITR), in accordance with Technical Pronouncement CPC 21 (R1) - Interim Financial Reporting.

The Company and the subsidiaries (“Group”) also follows the guidelines of the Accounting Manual of the Brazilian Electricity Sector and the standards laid down by the Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Elétrica – ANEEL), when these do not conflict with the accounting practices adopted in Brazil and/or International Financial Reporting Standards.

The accounting practices and criteria adopted in preparing this individual and consolidated interim financial statements are consistent with those adopted in preparing the financial statements at December 31, 2017, except for the matters described in note 3, and therefore should be read together.

Management states that all material information of the interim financial statements is disclosed and corresponds to what is used in the Group's management.

The interim financial statements were authorized for issue by Management and on August 6, 2018.

 

2.2 Basis of measurement

The interim financial statements has been prepared on the historical cost basis except for the following items recorded in the statements of financial position: i) derivative financial instruments measured at fair value and ii) financial instruments measured at fair value through profit or loss. The classification of the fair value measurement in the level 1, 2 or 3 categories (depending on the degree of observance of the variables used) is presented in note 32 – Financial Instruments.

 

2.3 Use of estimates and judgments

The preparation of the interim financial statements requires the Group’s management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

 

By definition, the accounting estimates are rarely the same as the actual results. Accordingly, the Group’s management review the estimates and assumptions on an ongoing basis, based on previous experience and other relevant factors. Adjustments resulting from revisions to accounting estimates are recognized in the period in which the estimates are revised and applied on a prospective basis.

 

The main accounts that require the adoption of estimates and assumptions, which are subject to a greater degree of uncertainty and may result in a material adjustment if these estimates and assumptions suffer significant changes in subsequent periods, are:

 

 

39


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

·

 

Note 6 – Consumers, concessionaires and licensees (Allowance for doubtful accounts: key assumptions regarding to the expected credit loss);

·

 

Note 8 – Sector financial asset and liability (certain financial components that can start without prior methodology);

·

 

Note 9 – Deferred tax assets and liabilities (recognition of assets: availability of future taxable profit against which the tax losses can be utilized);

·

 

Note 10 – Concession financial asset (assumptions for fair value measurement, based on significant unobservable inputs);

·

 

Note 11 – Other receivables (allowance for doubtful accounts: key assumptions regarding to the expected credit loss);

·

 

Note 13 – Property, plant and equipment (application of defined useful lives and key assumptions regarding recoverable amounts);

·

 

Note 14 – Intangible assets (key assumptions regarding recoverable amounts);

·

 

Note 18 – Private pension plan (key actuarial assumptions used in the measurement of defined benefit obligations);

·

 

Note 21 – Provision for tax, civil and labor risks and escrow deposits (recognition and measurement: key assumptions on the probability and magnitude of outflow of resources);

·

 

Note 25 – Net operating revenue (assumptions for measurement of unbilled supply and Distribution System Usage Tariff - TUSD ); and

·

 

Note 32 – Financial instruments (assumptions for fair value measurement, based on significant unobservable inputs).

2.4 Functional currency and presentation currency

The Group’s functional currency is the Brazilian Real, and the individual and consolidated interim financial statements is being presented in thousands of reais. Figures are rounded only after sum-up of the amounts. Consequently, when summed up, the amounts stated in thousands of reais may not tally with the rounded totals.

 

2.5 Segment information

An operating segment is a component of the Company (i) that engages in operating activities from which it earns revenues and incurs expenses, (ii) whose operating results are regularly reviewed by Management to make decisions about resources to be allocated and assess the segment's performance, and (iii) for which individual financial information is available.

The Group’s officers use reports to make strategic decisions, segmenting the business into: (i) electric energy distribution activities (“Distribution”); (ii) electric energy generation from conventional sources activities (“Generation”); (iii) electric energy generation activities from renewable sources (“Renewables”); (iv) energy commercialization activities (“Commercialization”); (v) service activities (“Services”); and (vi) other activities not listed in the previous items.

The presentation of the operating segments includes items directly attributable to them, as well as any allocations required, including intangible assets, see note 29 for further details.

 

40


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

2.6 Information on equity interests

The Company's equity interests in direct and indirect subsidiaries and joint ventures are described in note 1. Except for (i) the companies ENERCAN, BAESA, Chapecoense and EPASA, which use the equity method of accounting, and (ii) the investment measured at cost by the subsidiary Paulista Lajeado in Investco S.A., all other entities are fully consolidated.

 

At June 30, 2018 and December 31, 2017 and for the quarters and semesters ended June 30, 2018 and 2017 the noncontrolling interests in the consolidated balances refer to interests held by third parties in subsidiaries CERAN, Paulista Lajeado and CPFL Renováveis.

2.7 Statement of value added

The Company has prepared the individual and consolidated statements of value added (“DVA”) in conformity with technical pronouncement CPC 09 - Statement of Value Added, which are presented as an integral part of the interim financial statements in accordance with accounting practices adopted in Brazil and as supplementary information to the interim financial statements in accordance with IFRS, as this statement is neither provided for nor required by IFRS.

 

( 3 ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Except for the matters described below, the main interim financial information of the Group was prepared based on the same accounting policies described in explanatory notes 3.1 to 3.18, disclosed in the financial statements for the year ended December 31, 2017.

The impact from the changes in accounting policies is also expected in the Group’s consolidated financial statements for the year ending December 31, 2018.

Nature and effect of changes arising from the application of new and revised standards

The Group adopted for the first time the CPC 48 / IFRS 9 Financial Instruments and CPC 47 / IFRS 15 Revenue from Contracts with Customers beginning on January 1, 2018, accordingly, the information presented for 2017 was not restated and, therefore, was presented as previously reported in accordance with CPC 38 / IAS 18, CPC 17 / IAS 11, CPC 38, 39, 40 / IAS 32, 39 and IFRS 7 and related interpretations. Several other standards are effective January 1, 2018, however, without material effect on the Group’s interim financial information.

 The effect from the initial application of these standards is mainly related to:

·         The categories for the classification of financial assets and liabilities, eliminating the categories existing under CPC 38 / IAS 39 of held to maturity, loans and receivables and available for sale;

·         Mark to market of financial liabilities, the recognition of the credit risk in other comprehensive income, previously recorded in profit or loss for the period;

·         An increase in impairment in the balance of consumers, concessionaires and licensees recognized in financial assets

 

CPC 48 / IFRS 9 Financial Instruments

CPC 48 / IFRS 9 establishes requirements to recognize and measure financial assets, financial liabilities and some agreements for purchase or sale of nonfinancial items. This standard replaces CPC 38 / IAS 39 Financial Instruments: Recognition and Measurement.

 

a)   Classification and measurement of Financial Assets and Liabilities

CPC 48 / IFRS 9 Financial Instruments maintains most of the requirements existing under CPC 38  / IAS 39 for the classification and measurement of financial liabilities. However, it eliminates the former categories of CPC 38 / IAS 39 for financial assets: held to maturity, loans and receivables and available for sale.

The following accounting policies apply to the subsequent measurement of financial assets:

 

41


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

Financial assets at fair value through profit or loss

These assets are subsequently measured at fair value. Net gains or losses, including interest or dividend income, are recognized in profit or loss.

Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on the derecognition is recognized in profit or loss.

Debt instruments at fair value through other comprehensive income

These assets are subsequently measured at fair value. Net gains and losses are recognized in other comprehensive income, except the interest income calculated using the effective interest method, foreign exchange gains and losses and impairment, that are recognized in profit or loss. Other In the moment of the derecognition, the accumulated effect profit or loss in other comprehensive income (loss) is reclassified to profit or loss for the period.

Equity instruments at fair value through other comprehensive income

These assets are subsequently measured at fair value. Every  are recognized in other comprehensive income (loss) and never will be reclassified in profit or loss, except for dividends, that are recognized as gains in profit or loss (unless the dividend clearly represents a recovery of part of the investment cost).

 

As described in note 3.17 to the financial statements for the year ended December 31, 2017, the Company’s distribution subsidiaries had material assets classified as “available for sale”, according to the current requirements of IAS 39 / CPC 38. These assets represent the right to indemnity at the end of the concession period of the distribution subsidiaries. These assets started to be classified as measured at fair value through profit or loss according to the new standard and the effects of the subsequent measurement of these assets are recognized in profit or loss for the year, with no material impacts on the Company’s consolidated financial statements.  The classification of financial assets and liabilities is presented according to the note 31 to this interim financial information.

The Group assessed the impacts from the adoption of CPC 48 / IFRS 49 regarding the classification and measurement of concession financial assets, applicable to the electricity transmission subsidiaries, as follows: (i) the financial assets of infrastructure implementation services, until then classified as loans and receivables, are now classified as at amortized cost. This change in classification does not change the measurement of these assets and does not generate impact on the quarterly information; (ii) indemnity financial assets, until then classified as loans and receivables are now measured at fair value through profit or loss, without material impacts identified on the interim financial information.

The adoption of CPC 48 / IFRS 9 had no significant impact on the Group’s accounting policies related to financial liabilities and derivative financial instruments (for derivatives used as hedge instruments). According to note 3.18 to the financial statements for the year ended December 31, 2017, IFRS 9 / CPC 48 determines that the financial liabilities designated as at fair value through profit or loss that have the credit risk as a component of their calculation, to have the effect of changes in this credit risk recorded in other comprehensive income, instead of directly in profit or loss for the year.

The differences in the carrying amounts of financial liabilities arising from the adoption of CPC 48 / IFRS 9 were recognized retrospectively in line item retained earnings on January 1, 2018. The accumulated amount recorded in other comprehensive income due to this change was a loss of R$ 51,736 (R$ 34,146 net of tax effects).

 

b)   Impairment of financial assets

CPC 48 / IFRS 9 requires the expected credit loss model, instead of the “incurred” credit loss model mentioned in IAS 39 / CPC 38. The expected credit loss model requires that the company account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. That is, the credit losses are recognized earlier than under CPC 38 / IAS 39, under which it is no longer necessary for a loss event to have occurred before credit losses are recognized.

 

42


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

In assessing whether the credit risk of a financial asset has increased significantly since the initial recognition and in estimating the expected credit losses, the Group considers reasonable and supportable information that is significant and available without excessive cost or effort. This includes quantitative and qualitative information and analyses, based on the Group’s historical experience in credit analysis. The provision for losses on financial assets measured at amortized cost is deduced from the gross carrying amount of the assets.

Impairment losses related to consumers, concessionaires and licensees recognized in financial assets and other receivables, including contractual assets, are recorded in profit or loss for the period. As a retrospective result of the adoption of this pronouncement, the Group on January 1, 2018, recorded an additional expense of R$ 73,426, directly in Retained Earnings (R$ 48,461 net of tax effects).

CPC 47 / IFRS 15 Revenue recognition

CPC 47 / IFRS 15 establish that revenue most be recognized net of eventual discounts, rebates, refunds, penalties or similar item. The distribution concessionaries are evaluated by service quality rendered to consumers. The quality of the rendered service compromises the evaluation of electricity supply interruptions. When determined index are not complied, the distribution companies are subject of penalties, currently recognized as operational expense.

With CPC 47 / IFRS 15 adoption, it become a revenue deduction, which is a simple reclassification in the profit or loss, with no effect in the Company’ net profit. From January 1st, 2018, the compensation by not complying of technical index is being recognized as operation revenue, in others revenues, until December 31, 2017 was recognized in other operational expenses. The amount recorded in the 1st semester of 2018 is R$ 29,821 (note 25).

 

( 4 )FAIR VALUE MEASUREMENT

 

A number of the Group’s accounting policies and disclosures require the fair value measurement, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, additional information on the assumptions made in the fair value measurement is disclosed in the notes specific to that asset or liability.

Accordingly, the Group measures fair value in accordance with IFRS 13 / CPC 46, which defines the fair value as the price estimate for which an unforced transaction for the sale of the asset or transfer of the liability would occur between market participants under current market conditions at the measurement date.

 

- Property, plant and equipment and intangible assets

The fair value of property, plant and equipment and intangible assets recognized as a result of a business combination is based on market values. The fair value of these assets is the estimated value for which an asset could be exchanged on the valuation date between knowledgeable interested parties in an unforced transaction between market participants at the measurement date. The fair value of items of property, plant and equipment is based on the market approach and cost approaches using quoted market prices for similar items when available and replacement cost when appropriate.

 

- Financial instruments

Financial instruments measured at fair value are valued based on quoted prices in an active market, or, if such prices are not available, they are assessed using pricing models, applied individually to each transaction, taking into consideration future payment flows, based on the contractual conditions, discounted to present value at rates obtained from market interest curves, having as a basis, whenever available, information obtained from the websites of B3 S.A. and “Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais – ANBIMA” (note 32) and also includes the debtor's credit risk rate.

 

43


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

The right to compensation, to be paid by the Federal Government when the distribution concessionaires’ assets are handed over at the end of the concession period are classified as measured at fair value. The methodology adopted for fair value measurement of these assets is based on the tariff review process for distributors. This process, conducted every four or five years according to each concessionaire, involves assessing the replacement price of the distribution infrastructure, in accordance with criteria established by the granting authority (“ANEEL”). This valuation basis is used for pricing the tariff, which is adjusted annually up to the next tariff review, based on the parameter of the main inflation indices.

Accordingly, at the time of the tariff review, each distribution concessionaire adjusts the position of the financial asset base for compensation at the amounts ratified by the granting authority and uses the Extended Consumer Price Index (“IPCA”) as the best estimate to adjust the original base to the adjusted value at subsequent dates, in accordance with the tariff review process.

 

( 5 )CASH AND CASH EQUIVALENTS

 

 

Parent company

Consolidated

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

Bank balances

             1,192

 

               508

 

         157,370

 

         365,031

Short-term financial investments

           12,393

 

             6,073

 

      2,332,865

 

      2,884,611

Overnight investment (a)

           12,365

 

                 42

 

           15,374

 

         178,444

Bank certificates of deposit (b)

                  -  

 

                  -  

 

      1,311,476

 

         785,074

Repurchase agreements secured on debentures (b)

                  -  

 

                  -  

 

           70,735

 

             3,268

Investment funds (c)

                 28

 

             6,032

 

         935,280

 

      1,917,825

Total

           13,585

 

             6,581

 

      2,490,235

 

      3,249,642

 

a)   Bank account balances, which earn daily interest by investment in repurchase agreements secured on Bank Certificate Deposit (CDB) and interest of 15% of the variation in the Interbank Certificate of Deposit (CDI).

b)   Short-term investments in Bank Certificates of Deposit (CDB) and secured debentures with major financial institutions that operate in the Brazilian financial market, with daily liquidity, short term maturity, low credit risk and interest equivalent, on average, to 100,5% of the CDI.

c)   Exclusive Fund investments, with daily liquidity and interest equivalent, on average, to 98% of the CDI, subject to floating rates tied to the CDI linked to federal government bonds, CDBs, financial bills and secured debentures of major financial institutions, with low credit risk and short term maturity.

 

 

44


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

( 6 ) CONSUMERS, CONCESSIONAIRES AND LICENSEES

 

The consolidated balance includes mainly activities from the supply of electric energy, broken down as follows at June 30, 2018 and December 31, 2017:

 

   

Consolidated

   

 Amounts

 

 Past due

 

 Total

   

 coming due

 

 until 90 days

 

 > 90 days

 

June 30, 2018

 

December 31, 2017

 Current

                   

 Consumer classes

                   

 Residential

 

         727,501

 

         525,699

 

           65,012

 

      1,318,212

 

      1,113,604

 Industrial

 

         271,316

 

           82,605

 

           77,863

 

         431,784

 

         483,630

 Commercial

 

         265,909

 

           88,422

 

           40,229

 

         394,560

 

         382,470

 Rural

 

           79,963

 

           25,350

 

             9,190

 

         114,503

 

           98,663

 Public administration

 

           71,124

 

           14,599

 

             3,187

 

           88,909

 

           88,910

 Public lighting

 

           60,189

 

             4,340

 

             9,188

 

           73,716

 

           67,533

 Public utilities

 

           92,219

 

             7,994

 

             6,470

 

         106,683

 

         100,843

 Billed

 

      1,568,221

 

         749,009

 

         211,139

 

      2,528,367

 

      2,335,653

 Unbilled

 

      1,025,653

 

                  -  

 

                  -  

 

      1,025,653

 

      1,008,486

 Financing of consumers' debts

 

         152,048

 

           24,489

 

           37,918

 

         214,454

 

         206,937

 CCEE transactions

 

         624,992

 

           14,866

 

             1,037

 

         640,895

 

         413,067

 Concessionaires and licensees

 

         401,080

 

                (46)

 

             8,289

 

         409,323

 

         539,322

 Others

 

           30,420

 

                  -  

 

                  -  

 

           30,416

 

           36,011

   

      3,802,414

 

         788,318

 

         258,383

 

      4,849,108

 

      4,539,476

 Allowance for doubtful accounts

             

        (303,477)

 

        (238,193)

Total

             

      4,545,631

 

      4,301,283

                     

 Noncurrent

                   

 Financing of consumers' debts

 

         208,154

 

                  -  

 

                  -  

 

         208,154

 

         217,944

 Free energy

 

             6,166

 

                  -  

 

                  -  

 

             6,166

 

             5,976

 CCEE transactions

 

           41,301

 

                  -  

 

                  -  

 

           41,301

 

           41,301

   

         255,621

 

                  -  

 

                  -  

 

         255,621

 

         265,221

 Allowance for doubtful accounts

             

          (20,476)

 

          (28,683)

Total

             

         235,146

 

         236,539

 

Allowance for doubtful accounts

The allowance for doubtful debts is set up based on the expected loss, based on the history and future probability of default.

Movements in the allowance for doubtful accounts are shown below:

  

 

Consumers, concessionaires and licensees

 

Other
receivables
(note 11)

 

Total

As of December 31, 2017

               (266,876)

 

          (29,379)

 

        (296,255)

Allowance - reversal (recognition)

               (111,435)

 

               700

 

        (110,735)

Recovery of revenue

                  42,493

 

                  -  

 

           42,493

Effects of first adoption of IFRS 9 / CPC 48

                 (72,687)

 

              (738)

 

          (73,426)

Write-off of accrued receivables

                  84,552

 

                (45)

 

           84,507

As of June 30, 2018

               (323,953)

 

          (29,462)

 

        (353,415)

           

Current

               (303,477)

 

          (29,462)

 

        (332,939)

Noncurrent

                 (20,476)

 

                  -  

 

          (20,476)

 

 

45


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 7 ) TAXES RECOVERABLE

 

 

Parent company

 

Consolidated

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

Current

             

Prepayments of social contribution - CSLL

                  -  

 

               227

 

           10,226

 

             7,257

Prepayments of income tax - IRPJ

                  -  

 

             1,725

 

           28,561

 

           21,887

Income tax and social contribution to be offset

           16,989

 

           15,099

 

           96,490

 

           59,658

Income tax and social contribution to be offset

           16,989

 

           17,051

 

         135,278

 

           88,802

               

Withholding income tax - IRRF on interest on capital

           43,467

 

           43,467

 

           43,468

 

           43,841

Withholding income tax - IRRF

             3,168

 

             2,893

 

         114,857

 

         103,277

State VAT - ICMS to be offset

                  -  

 

                  -  

 

         111,959

 

         104,843

Social Integration Program - PIS

                 63

 

                 56

 

           11,728

 

             8,447

Contribution for Social Security Funding - COFINS

               319

 

               283

 

           54,730

 

           37,699

Others

                  -  

 

                  -  

 

             8,947

 

             8,137

Others taxes to be offset

           47,017

 

           46,699

 

         345,689

 

         306,244

 

 

 

 

 

 

 

 

Total current

           64,006

 

           63,751

 

         480,967

 

         395,045

               

Noncurrent

             

Social contribution to be offset - CSLL

                  -  

 

                  -  

 

           60,888

 

           58,856

Income tax to be offset - IRPJ

                  -  

 

                  -  

 

             5,463

 

             2,608

Income tax and social contribution to be offset

                  -  

 

                  -  

 

           66,352

 

           61,464

               

State VAT - ICMS to be offset

                  -  

 

                  -  

 

         155,872

 

         159,624

Social Integration Program - PIS

                  -  

 

                  -  

 

             1,047

 

             1,024

Contribution for Social Security Funding - COFINS

                  -  

 

                  -  

 

             4,826

 

             4,719

Others

                  -  

 

                  -  

 

             5,377

 

             6,613

Others taxes to be offset

                  -  

 

                  -  

 

         167,122

 

         171,980

               

Total noncurrent

                  -  

 

                  -  

 

         233,474

 

         233,444

 

 

46


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 8 ) SECTOR FINANCIAL ASSET AND LIABILITY

 

The breakdown of the balances of sector financial asset and liability and the movement for the period are as follows:

 

 

As of December 31, 2017

 

Operating revenue

 

Finance income or expense

 

Receipt

 

As of June 30, 2018

 

Deferred

 

Approved

 

Total

 

Constitution

 

Through billing

 

Monetary adjustment

 

 Tariff flag
(note 25.4)

 

Deferred

 

Approved

 

Total

Parcel "A"

     924,943

 

         (235,916)

 

       689,026

 

         731,178

 

        321,684

 

          23,199

 

           (297,340)

 

  1,021,108

 

           446,639

 

     1,467,748

CVA (*)

                                     

CDE (**)

    (235,901)

 

         (263,520)

 

      (499,422)

 

           72,901

 

        247,999

 

           (9,306)

 

                     -  

 

      (37,052)

 

          (150,775)

 

       (187,827)

Electric energy cost

  1,625,759

 

          (18,280)

 

     1,607,479

 

          (45,774)

 

        (58,272)

 

          39,975

 

           (297,340)

 

     362,539

 

           883,528

 

     1,246,068

ESS and EER (***)

    (974,091)

 

         (167,048)

 

    (1,141,139)

 

        (217,663)

 

        385,742

 

         (32,239)

 

                     -  

 

    (265,727)

 

          (739,572)

 

    (1,005,299)

Proinfa

          (610)

 

          (17,961)

 

        (18,572)

 

             7,505

 

         12,579

 

               (95)

 

                     -  

 

        1,776

 

                (357)

 

           1,418

Basic network charges

      (20,163)

 

           23,387

 

           3,224

 

         110,890

 

        (12,485)

 

              606

 

                     -  

 

     104,877

 

             (2,642)

 

        102,235

Pass-through from Itaipu

     959,518

 

          125,860

 

     1,085,378

 

         512,640

 

       (220,140)

 

          36,736

 

                     -  

 

     645,325

 

           769,289

 

     1,414,614

Transmission from Itaipu

        7,802

 

             7,806

 

         15,608

 

           18,386

 

          (5,872)

 

              594

 

                     -  

 

       23,100

 

              5,615

 

         28,715

Neutrality of sector charges

       32,566

 

          112,084

 

       144,651

 

          (63,759)

 

        (75,608)

 

           (2,181)

 

                     -  

 

      (40,490)

 

            43,592

 

           3,102

Overcontracting

    (469,937)

 

          (38,244)

 

      (508,181)

 

         336,052

 

         47,741

 

         (10,891)

 

                     -  

 

     226,760

 

          (362,039)

 

       (135,278)

Other financial components

    (193,496)

 

           21,812

 

      (171,685)

 

        (223,039)

 

         24,423

 

           (3,905)

 

                     -  

 

      (72,609)

 

           389,612

 

       (374,207)

                                       

Total

     731,447

 

         (214,104)

 

       517,341

 

         508,139

 

        346,107

 

          19,294

 

           (297,340)

 

     764,019

 

           329,522

 

     1,093,541

                                       

Current assets

       

       210,834

                         

        679,406

Noncurrent assets

       

       355,003

                         

        414,528

Current liabilities

       

        (40,111)

                         

             (394)

Noncurrent liabilities

       

          (8,385)

                         

                -  

 

(*)         Deferred tariff costs and gains variations from Parcel “A” items
(**)       Energy Development Account – CDE
(***)      System Service Charge (ESS) and Reserve Energy Charge (EER)

 

The details of the nature of each sector financial asset and liability are provided in Note 8 to the financial statements at December 31, 2017.

( 9 )     DEFERRED TAX ASSETS AND LIABILITIES

9.1    Breakdown of tax assets and liabilities

 

 

Parent company

 

Consolidated

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

 Social contribution credit/(debit)

             

 Tax losses carryforwards

           39,812

 

           38,216

 

           99,567

 

         103,903

 Tax benefit of merged intangible

                  -  

 

                  -  

 

         101,177

 

         105,065

 Temporarily nondeductible/taxable differences 

              (663)

 

              (408)

 

        (331,935)

 

        (305,677)

 Subtotal

           39,150

 

           37,808

 

        (131,191)

 

          (96,708)

               

 Income tax credit / (debit)

             

 Tax losses carryforwards

         110,547

 

         109,103

 

         282,095

 

         303,543

 Tax benefit of merged intangible

                  -  

 

                  -  

 

         328,726

 

         342,262

 Temporarily nondeductible/taxable differences 

            (1,841)

 

            (1,132)

 

        (920,240)

 

        (844,948)

 Subtotal

         108,706

 

         107,971

 

        (309,418)

 

        (199,141)

               

PIS and COFINS credit/(debit)

             

 Temporarily nondeductible/taxable differences 

                  -  

 

                  -  

 

          (10,361)

 

          (10,543)

               

 Total

         147,855

 

         145,779

 

        (450,970)

 

        (306,392)

               

 Total tax credit

         147,855

 

         145,779

 

         825,862

 

         943,199

 Total tax debit

                  -  

 

                  -  

 

     (1,276,832)

 

     (1,249,591)

 

The expected recovery of the deferred tax assets recorded in noncurrent assets, arising from nondeductible temporary differences, tax benefit of merged intangible and income tax and social contribution losses, the breakdown of which is described in the financial statements at December 31, 2017, is based on the projections of future profits, approved by the Board of Directors and reviewed by the Fiscal Council. To reflect adequately the effective rate of the taxes on profit, deferred tax assets are recognized monthly on any losses for companies that have positive projections, in accordance with such studies.

 

47


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

9.2    Tax benefit of merged intangible asset

Refers to the tax credit calculated on the intangible assets derived from the acquisition of subsidiaries, as shown in the following table, which were merged and are recognized in accordance with the concepts of CVM Instructions No. 319/1999 and No. 349/2001 and ICPC 09 (R2) - Individual Financial Statements, Separate Financial Statements, Consolidated Interim financial statements and Application of the Equity Method. The benefit is being realized  in proportion to the tax amortization of the merged intangible assets that originated them as per CPC 27 and CPC 04 (R1) - Clarification of acceptable methods of depreciation and amortization, over the remaining concession period, as shown in note 14.

 

 

Consolidated

 

June 30, 2018

 

December 31, 2017

Social contribution

 

Income tax

 

Social contribution

 

Income tax

CPFL Paulista

           43,559

 

         120,996

 

           45,872

 

         127,421

CPFL Piratininga

           10,698

 

           36,714

 

           11,215

 

           38,491

RGE

           20,455

 

           84,473

 

           21,513

 

           88,843

RGE Sul

           26,466

 

           73,515

 

           26,466

 

           73,515

CPFL Geração

                  -  

 

           13,027

 

                  -  

 

           13,992

Total

         101,177

 

         328,726

 

         105,065

 

         342,262

 

9.3    Accumulated balances on nondeductible temporary / taxable differences

 

Consolidated

 

June 30, 2018

 

December 31, 2017

 

Social contribution

 

Income tax

 

PIS/COFINS

 

Social contribution

 

Income tax

 

PIS/COFINS

Temporarily nondeductible/taxable differences

                     

Provision for tax, civil and labor risks

           54,588

 

         151,633

 

                  -  

 

           53,687

 

         149,130

 

                  -  

Private pension fund

             2,614

 

             7,261

 

                  -  

 

             2,331

 

             6,476

 

                  -  

Allowance for doubtful accounts

           32,760

 

           91,001

 

                  -  

 

           27,354

 

           75,985

 

                  -  

Free energy supply

             8,929

 

           24,803

 

                  -  

 

             8,382

 

           23,284

 

                  -  

Research and development and energy efficiency programs

           25,301

 

           70,279

 

                  -  

 

           21,851

 

           60,697

 

                  -  

Personnel-related provisions

             3,929

 

           10,913

 

                  -  

 

             4,111

 

           11,420

 

                  -  

Depreciation rate difference

          (16,159)

 

          (44,884)

 

                  -  

 

          (13,970)

 

          (38,806)

 

                  -  

Derivatives

          (74,858)

 

        (207,938)

 

                  -  

 

          (48,848)

 

        (135,690)

 

                  -  

Recognition of concession - adjustment of intangible asset (IFRS/CPC)

            (6,847)

 

          (19,020)

 

                  -  

 

            (7,291)

 

          (20,253)

 

                  -  

Recognition of concession - adjustment of financial asset (IFRS/CPC)

        (135,810)

 

        (375,195)

 

            (7,801)

 

        (117,527)

 

        (324,387)

 

            (7,881)

Actuarial losses  (IFRS/CPC)

           25,864

 

           71,845

 

                  -  

 

           25,716

 

           71,432

 

                  -  

Financial instruments (IFRS/CPC)

            (2,125)

 

            (5,900)

 

                  -  

 

            (5,291)

 

          (14,694)

 

                  -  

Accelerated depreciation

              (121)

 

              (336)

 

                  -  

 

              (104)

 

              (288)

 

                  -  

Others

             1,750

 

             4,604

 

            (2,560)

 

             2,956

 

           10,292

 

            (2,662)

Temporarily nondeductible differences - accumulated
 comprehensive income:

                     

Property, plant and equipment  - adjustment of deemed cost (IFRS/CPC)

          (50,339)

 

        (139,831)

 

                  -  

 

          (51,961)

 

        (144,336)

 

                  -  

Actuarial losses  (IFRS/CPC)

           36,607

 

         101,687

 

                  -  

 

           36,607

 

         101,687

 

                  -  

Temporarily nondeductible differences - business combination

                     

Deferred taxes - asset:

                     

Provision for tax, civil and labor risks

           12,876

 

           35,767

     

           13,188

 

           36,635

 

                  -  

Fair value of property, plant and equipment (negative value added of assets)

           20,555

 

           57,099

 

                  -  

 

           21,294

 

           59,150

 

                  -  

Deferred taxes - liability:

                     

Fair value of property, plant and equipment (value added of  assets)

          (25,351)

 

          (70,420)

     

          (26,201)

 

          (72,779)

 

                  -  

Intangible asset - exploration right/authorization in indirect
subsidiaries acquired

        (240,093)

 

        (666,925)

 

                  -  

 

        (246,669)

 

        (685,190)

 

                  -  

Other temporary differences

            (6,005)

 

          (16,683)

 

                  -  

 

            (5,292)

 

          (14,713)

 

                  -  

Total

        (331,935)

 

        (920,240)

 

          (10,361)

 

        (305,677)

 

        (844,948)

 

          (10,543)

                       

 

 

48


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

9.4    Reconciliation of the income tax and social contribution amounts recognized in the statements of profit or loss for the quarters and semesters ended by June 30, 2018 and 2017: 

 

 

Parent Company

 

Consolidated

 

Social Contribution

 

Social Contribution

 

2018

 

2017

 

2018

 

2017

 

 2nd quarter

 

 1st semester

 

 2nd quarter

 

 1st semester

 

 2nd quarter

 

 1st semester

 

 2nd quarter

 

 1st semester

Profit before taxes

         453,910

 

         897,426

 

         137,460

 

         374,800

 

          709,913

 

         1,378,341

 

          227,724

 

           610,767

Reconciliation to reflect effective rate:

                             

Equity in subsidiaries

        (462,042)

 

        (913,028)

 

        (160,193)

 

        (432,040)

 

          (68,746)

 

          (154,102)

 

          (82,968)

 

          (162,678)

Amortization of intangible asset acquired

            (3,382)

 

            (6,764)

 

            (3,382)

 

            (6,764)

 

           12,162

 

             24,324

 

           12,162

 

             24,324

Effect of presumed profit system

                  -  

 

                  -  

 

                  -  

 

                  -  

 

          (63,361)

 

          (105,986)

 

          (48,031)

 

            (96,751)

Adjustment of revenue from excess demand and excess reactive power

                  -  

 

                  -  

 

                  -  

 

                  -  

 

           38,643

 

             77,163

 

           27,917

 

             58,167

Other permanent additions (exclusions), net

             2,758

 

             7,480

 

             4,318

 

             7,540

 

           15,234

 

             41,418

 

           30,444

 

             34,439

Tax base

            (8,756)

 

          (14,886)

 

          (21,797)

 

          (56,465)

 

          643,845

 

         1,261,158

 

          167,247

 

           468,268

Statutory rate

9%

 

9%

 

9%

 

9%

 

9%

 

9%

 

9%

 

9%

Tax credit/(debit)

               788

 

             1,340

 

             1,962

 

             5,082

 

          (57,946)

 

          (113,504)

 

          (15,052)

 

            (42,144)

Tax credit recorded (not recorded), net

                  -  

 

                  -  

 

                  -  

 

                  -  

 

          (11,898)

 

            (23,209)

 

          (13,237)

 

            (26,718)

Total

               788

 

             1,340

 

             1,962

 

             5,082

 

          (69,844)

 

          (136,712)

 

          (28,289)

 

            (68,863)

                               

Current

                  -  

 

                  (1)

 

                  -  

 

                  -  

 

          (20,872)

 

            (93,963)

 

            (9,802)

 

            (65,299)

Deferred

               788

 

             1,341

 

             1,962

 

             5,082

 

          (48,972)

 

            (42,750)

 

          (18,487)

 

              (3,565)

                               
                               
                               
 

Parent Company

 

Consolidated

 

Income Tax

 

Income Tax

 

2018

 

2017

 

2018

 

2017

 

 2nd quarter

 

 1st semester

 

 2nd quarter

 

 1st semester

 

 2nd quarter

 

 1st semester

 

 2nd quarter

 

 1st semester

Profit before taxes

         453,910

 

         897,426

 

         137,460

 

         374,800

 

          709,913

 

         1,378,341

 

          227,724

 

           610,767

Reconciliation to reflect effective rate:

                             

Equity in subsidiaries

        (462,042)

 

        (913,028)

 

        (160,193)

 

        (432,040)

 

          (68,746)

 

          (154,102)

 

          (82,968)

 

          (162,678)

Amortization of intangible asset acquired

                  -  

 

                  -  

 

                  -  

 

                  -  

 

           15,689

 

             31,378

 

           15,689

 

             31,378

Effect of presumed profit system

                  -  

 

                  -  

 

                  -  

 

                  -  

 

          (79,796)

 

          (137,435)

 

          (65,650)

 

          (129,273)

Adjustment of revenue from excess demand and excess reactive power

                  -  

 

                  -  

 

                  -  

 

                  -  

 

           38,643

 

             77,163

 

           27,917

 

             58,167

Tax incentive - operating profit

                  -  

 

                  -  

 

                  -  

 

                  -  

 

            (2,924)

 

              (2,924)

 

               (360)

 

              (6,861)

Other permanent additions (exclusions), net

             4,070

 

           12,679

 

             6,523

 

           19,325

 

           14,640

 

             39,766

 

           35,640

 

             49,034

Tax base

            (4,062)

 

            (2,923)

 

          (16,210)

 

          (37,915)

 

          627,419

 

         1,232,187

 

          157,991

 

           450,534

Statutory rate

25%

 

25%

 

25%

 

25%

 

25%

 

25%

 

25%

 

25%

Tax credit/(debit)

             1,015

 

               731

 

             4,052

 

             9,479

 

         (156,855)

 

          (308,047)

 

          (39,498)

 

          (112,634)

Recorded (unrecognizad) Tax credit,net

                  -  

 

                  -  

 

                  -  

 

                  -  

 

          (33,038)

 

            (64,000)

 

          (36,765)

 

            (73,977)

Total

             1,015

 

               731

 

             4,052

 

             9,479

 

         (189,892)

 

          (372,047)

 

          (76,263)

 

          (186,610)

                               

Current

                  -  

 

                  (4)

 

                  -  

 

                  -  

 

          (48,502)

 

          (240,868)

 

          (23,265)

 

          (170,288)

Deferred

             1,015

 

               735

 

             4,052

 

             9,479

 

         (141,391)

 

          (131,179)

 

          (52,998)

 

            (16,322)

 

 

 

( 10 )     CONCESSION FINANCIAL ASSET

  

 

 Distribution

 

 Transmission

 

 Consolidated

As of December 31, 2017

      6,330,681

 

         238,723

 

      6,569,404

 Current

                  -  

 

           23,736

 

           23,736

 Noncurrent

      6,330,681

 

         214,987

 

      6,545,668

           

Additions

         313,559

 

               428

 

         313,986

Fair value adjustment

         206,875

 

                  -  

 

         206,875

Adjustment - financial asset measured at amortized cost

                  -  

 

           15,260

 

           15,260

Cash inputs - RAP

                  -  

 

          (11,700)

 

          (11,700)

Disposals

          (17,557)

 

                  -  

 

          (17,557)

           

As of June 30, 2018

      6,833,557

 

         242,711

 

      7,076,268

 Current

                  -  

 

           23,241

 

           23,241

 Noncurrent

      6,833,557

 

         219,470

 

      7,053,027

 

The balance refers to the financial asset corresponding to the right established in the concession agreements of the energy distribution  and transmission measured at amortized cost companies to receive cash (i) through compensation at the time assets are handed over to the granting authority at the end of the concession, measured at fair value, and (ii) the transmission companies’ right to receive cash over the concession period through allowed annual revenue ("RAP"), measured at amortized cost.

 

49


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

For energy distribution companies, according to the current tariff model, the remuneration for this asset is recognized in profit or loss upon billing to consumers and the realization occurs upon receipt of the electric energy bills. Moreover, the difference to adjust the balance to the fair value (new replacement value - “VNR” - note 4) is recognized as a balancing item to the operating income account (note 25) in the statement of profit or loss for the period (R$206,875 at 1st semester of 2018 and R$ 84,057 at 1st semester of 2017).

For energy transmission companies, the remuneration for this asset is recognized according to the internal rate of return, which takes into account the investment made, the allowed annual revenue (“RAP”) to be received over the concession period, and the compensation to be received at the time assets are handed over to the granting authority. The adjustment of R$ 15,260 is recognized against other operating revenues and income (R$ 12,637 at 1st semester of 2017).

 

( 11 )   OTHER RECEIVABLES

 

 

Consolidated

 

Current

 

Noncurrent

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

Advances - Fundação CESP

             5,832

 

             7,851

 

             6,797

 

             6,797

Advances to suppliers

           16,253

 

           31,981

 

                  -  

 

                  -  

Pledges, funds and restricted deposits

         166,589

 

         159,291

 

         699,538

 

         621,489

Orders in progress

         136,939

 

         158,707

 

             6,003

 

             5,062

Services rendered to third parties

           12,826

 

             8,530

 

                  -  

 

                  -  

Energy pre-purchase agreements

                  -  

 

                  -  

 

           27,735

 

           26,260

Prepaid expenses

           79,568

 

           80,600

 

           20,490

 

           20,043

GSF renegotiation

           12,230

 

           19,629

 

           11,571

 

           17,359

Receivables - CDE

         195,581

 

         242,906

 

                  -  

 

                  -  

Advances to employees

           38,171

 

           19,658

 

                  -  

 

                  -  

Others

         215,223

 

         200,724

 

         129,186

 

         143,183

(-) Allowance for doubtful debts (note 6)

          (29,462)

 

          (29,379)

 

                  -  

 

                  -  

Total

         849,752

 

         900,498

 

         901,320

 

         840,192

 

 

Orders in progress: encompass costs and revenues related to ongoing decommissioning or disposal of intangible assets and the service costs related to expenditure on projects in progress under the Energy Efficiency and Research and Development programs. Upon the closing of the respective projects, the balances are amortized against the respective liability recognized in Other Payables (note 22).

Receivables – CDE: refer to: (i) low-income subsidies amounting to  R$ 12,709 (R$ 15,930 at December 31, 2017), (ii) other tariff discounts granted to consumers amounting to R$ 182,829 (R$ 224,936 at December 31, 2017), and (iii) tariff discounts – court injunctions amounting to R$ 43 (R$ 2,039 at December 31, 2017) – note 25.3.1

At the 1st semester of 2018, the subsidiaries offset the receivables relating to the CDE account with the payables relating to the Energy Development Account (CDE) (note 19) amounting to R$ 2,545 authorized by Order No. 1,576/2016.

 

 

 

50


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 12 )   INVESTMENTS

 

 

Parent company

 

Consolidated

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

Permanent equity interests - equity method

             

By equity method of the subsidiary

      8,492,359

 

      7,804,431

 

         895,765

 

         990,910

Fair value of assets, net

         680,795

 

         713,848

 

           10,350

 

           10,640

Advances for future capital increases

           62,375

 

           33,340

 

                  -  

 

                  -  

Goodwill

             6,054

 

             6,054

 

                  -  

 

                  -  

Total

      9,241,583

 

      8,557,673

 

         906,115

 

      1,001,550

 

 

12.1 Permanent equity interests – equity method

The main information on investments in direct permanent equity interests is as follows:

 

       

June 30, 2018

 

June 30, 2018

 

December 31, 2017

 

1st semester 2018

 

1st semester 2017

Investment

 

Number of shares (thousand)

 

Total assets

 

Issued capital

 

Equity

 

Profit or loss for the year

 

Share of equity of investees

 

Share of profit (loss) of investees

CPFL Paulista

 

         880,653

 

      9,081,065

 

      1,273,423

 

      1,880,128

 

         303,142

 

      1,880,128

 

    1,370,403

 

         303,142

 

           75,593

CPFL Piratininga

 

     53,096,770

 

      3,630,549

 

         240,144

 

         522,872

 

         104,288

 

         522,872

 

       461,059

 

         104,288

 

           61,855

CPFL Santa Cruz

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

               -  

 

                  -  

 

           15,062

CPFL Leste Paulista

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

               -  

 

                  -  

 

             4,639

CPFL Sul Paulista

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

               -  

 

                  -  

 

             4,940

CPFL Jaguari de Energia (CPFL Santa Cruz)

 

         359,058

 

      1,099,841

 

         170,413

 

         369,469

 

           37,851

 

         369,469

 

       340,463

 

           37,851

 

               750

CPFL Mococa

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

               -  

 

                  -  

 

             3,824

RGE

 

      1,019,790

 

      4,390,393

 

      1,223,350

 

      1,789,575

 

         122,936

 

      1,789,575

 

    1,680,334

 

         122,936

 

           65,701

RGE Sul

 

         527,266

 

      4,714,252

 

      1,495,084

 

      1,789,367

 

           76,015

 

      1,286,770

 

    1,228,317

 

           59,854

 

                  -  

CPFL Geração

 

   205,492,020

 

      5,961,341

 

      1,043,922

 

      2,302,844

 

         251,805

 

      2,302,844

 

    2,354,115

 

         251,805

 

         183,688

CPFL Jaguari Geração (*)

 

           40,108

 

           53,940

 

           40,108

 

           53,814

 

             5,352

 

           53,814

 

        50,970

 

             5,352

 

             4,404

CPFL Brasil

 

             3,000

 

      1,355,521

 

             3,000

 

           52,634

 

           31,909

 

           52,634

 

        96,093

 

           31,909

 

           26,644

CPFL Planalto (*)

 

               630

 

             2,591

 

               630

 

             2,384

 

             1,754

 

             2,384

 

          3,293

 

             1,754

 

             1,706

CPFL Serviços

 

      1,564,844

 

         223,872

 

         105,105

 

         136,362

 

            (8,643)

 

         136,362

 

       105,105

 

            (8,643)

 

            (8,072)

CPFL Atende (*)

 

           13,991

 

           24,235

 

           13,991

 

           17,673

 

             3,681

 

           17,673

 

        19,338

 

             3,681

 

             3,499

Nect (*)

 

             2,059

 

           22,574

 

             2,059

 

           12,249

 

             9,779

 

           12,249

 

        15,515

 

             9,779

 

             8,213

CPFL Total (*)

 

             9,005

 

           24,020

 

             9,005

 

           21,103

 

           11,420

 

           21,103

 

        20,624

 

           11,420

 

             9,923

CPFL Jaguariuna (*)

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

                  -  

 

               -  

 

                  -  

 

             3,526

CPFL Telecom

 

         119,780

 

             2,240

 

         119,780

 

             1,944

 

              (169)

 

             1,944

 

          2,018

 

              (169)

 

          (14,710)

CPFL Centrais Geradoras (*)

 

           16,128

 

           17,257

 

           16,128

 

           16,876

 

               748

 

           16,876

 

        16,177

 

               748

 

               730

CPFL Eficiência

 

           48,164

 

         113,380

 

           48,164

 

           74,066

 

            (3,586)

 

           74,066

 

        55,252

 

            (3,586)

 

              (449)

Authi (*)

 

                 10

 

           30,002

 

                 10

 

           13,971

 

           13,961

 

           13,971

 

        18,694

 

           13,961

 

           11,931

Subtotal - by subsidiary's equity

                     

      8,554,734

 

    7,837,770

 

         946,082

 

         463,396

Amortization of fair value adjustment of assets

                     

                  -  

 

               -  

 

          (33,053)

 

          (31,356)

Total

                     

      8,554,734

 

    7,837,770

 

         913,028

 

         432,040

                                     

Investment

                     

      8,492,359

 

    7,804,431

       

Advances for future capital increases

                     

           62,375

 

        33,340

       

 

(*) number of quotas

 

Fair value adjustments (value added) of net assets acquired in business combinations are classified in the parent’s statement of profit or loss in the group of Investments. In the parent company’s statement of profit or loss, the  amortization of the fair value adjustments (value added) of net assets of R$ 33,053 (R$ 31,356 in the 1st semester of 2017) is classified in line item “share of profit (loss) of investees”, in conformity with ICPC 09 (R2).

The movements, in the parent company, of the balances of investments in subsidiaries for the period are as follows:

 

51


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Investment

 

As of December 31, 2017

 

Capital Increase

 

Share of profit (loss) of investees

 

Share of profit (loss) of investees (OCI)

 

Effects of the first adoption of IFRS 9 / CPC 48

 

Dividens / Interest on Capital

 

Advances for future capital increases / Others

 

As of June 30, 2018

CPFL Paulista

 

1,370,403

 

350,000

 

303,142

 

(6,643)

 

(18,453)

 

(118,321)

 

-  

 

1,880,128

CPFL Piratininga

 

461,059

 

   -  

 

104,288

 

   (2,034)

 

  (11,996)

 

  (28,445)

 

   -  

 

522,872

Companhia Jaguari de Energia (CPFL Santa Cruz)

 

340,463

 

   -  

 

   37,851

 

   (396)

 

   (1,556)

 

   (6,892)

 

   -  

 

369,469

RGE

 

1,680,334

 

   -  

 

122,936

 

   (6,546)

 

   (7,148)

 

   -  

 

   -  

 

1,789,575

RGE Sul

 

1,228,317

 

   -  

 

   59,854

 

5,720

 

   (7,121)

 

   -  

 

   -  

 

1,286,770

CPFL Geração

 

2,354,115

 

   -  

 

251,805

 

   (4,569)

 

   -  

 

   (298,512)

 

5

 

2,302,844

CPFL Jaguari Geração

 

   50,970

 

   -  

 

5,352

 

   -  

 

   -  

 

   (2,508)

 

   -  

 

   53,814

CPFL Brasil

 

   96,093

 

   -  

 

   31,909

 

   (2,341)

 

   (2,187)

 

  (70,841)

 

   -  

 

   52,634

CPFL Planalto

 

3,293

 

   -  

 

1,754

 

   -  

 

   -  

 

   (2,663)

 

   -  

 

2,384

CPFL Serviços

 

105,105

 

   -  

 

   (8,643)

 

   -  

 

   -  

 

   -  

 

  39,900

 

136,362

CPFL Atende

 

   19,338

 

   -  

 

3,681

 

   -  

 

   -  

 

   (5,346)

 

   -  

 

   17,673

Nect

 

   15,515

 

   -  

 

9,779

 

   -  

 

   -  

 

  (13,044)

 

   -  

 

   12,249

CPFL Total

 

   20,624

 

   -  

 

   11,420

 

   -  

 

   -  

 

  (10,941)

 

   -  

 

   21,103

CPFL Telecom

 

2,018

 

   33,360

 

   (169)

 

   -  

 

   -  

 

   -  

 

(33,265)

 

1,944

CPFL Centrais Geradoras

 

   16,177

 

   -  

 

748

 

   -  

 

   -  

 

  (50)

 

   -  

 

   16,876

CPFL Eficiência

 

   55,252

 

   -  

 

   (3,586)

 

   -  

 

   -  

 

   -  

 

  22,400

 

   74,066

Authi

 

   18,694

 

   -  

 

   13,961

 

   -  

 

   -  

 

  (18,684)

 

   -  

 

   13,971

   

7,837,770

 

383,360

 

946,082

 

  (16,809)

 

  (48,461)

 

   (576,247)

 

  29,040

 

8,554,734

 

 In the consolidated, the investment balances refer to interests in joint ventures accounted for using the equity method:

 

Investments in joint ventures

 

June 30, 2018

 

December 31, 2017

 

1st semester 2018

 

1st semester 2017

 

 Share of equity

 

Share of profit (loss)

                 

Baesa

 

   190,379

 

   187,654

 

2,725

 

3,637

Enercan

 

   147,116

 

   176,998

 

  48,307

 

  62,497

Chapecoense

 

   344,695

 

   385,870

 

  59,654

 

  59,996

EPASA

 

   213,574

 

   240,388

 

  43,706

 

  36,838

Fair value adjustments of assets, net

 

  10,350

 

  10,640

 

   (290)

 

   (290)

   

   906,115

 

   1,001,550

 

   154,102

 

   162,678

 

12.2 Fair value adjustments and goodwill

Fair value adjustments (value added) refer basically to the right to the concession acquired through business combinations. The goodwill refers basically to acquisitions of investments and is based on projections of future profits.

In the consolidated interim financial statement, these amounts are classified as Intangible Assets (note 14).

12.3 Dividends and interest on capital receivable

At June 30, 2018 and December 31, 2017, the Company has the following amounts receivable from the subsidiaries below, relating to dividends and interest on capital:

 

 

Parent company

 

Dividends

 

Interest on capital

 

Total

Subsidiary

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

CPFL Paulista

   68,000

 

   49,798

 

   95,120

 

-  

 

  163,120

 

   49,798

CPFL Piratininga

-  

 

-  

 

   28,445

 

-  

 

   28,445

 

-  

CPFL Santa Cruz

-  

 

   24,918

 

  6,893

 

   13,960

 

  6,893

 

   38,878

RGE

   26,795

 

   50,319

 

-  

 

-  

 

   26,795

 

   50,319

CPFL Centrais Geradoras

66

 

17

 

-  

 

-  

 

66

 

17

CPFL Brasil

   91,091

 

   20,748

 

  498

 

  2,361

 

   91,589

 

   23,109

CPFL Planalto

-  

 

  888

 

-  

 

-  

 

-  

 

  888

CPFL Atende

-  

 

  1,003

 

-  

 

  620

 

-  

 

  1,623

Nect Serviços

-  

 

  4,348

 

-  

 

-  

 

-  

 

  4,348

CPFL Eficiência

   12,195

 

   12,195

 

   15,104

 

   17,404

 

   27,299

 

   29,599

AUTHI

  7,912

 

  6,228

 

-  

 

-  

 

  7,912

 

  6,228

 

  206,059

 

  170,461

 

  146,060

 

   34,344

 

  352,118

 

  204,807

 

The consolidated balance includes dividends and interest on capital receivable amounting to R$ 153,187 at June 30, 2018 and R$ 56,145 at December 31, 2017 related basically to joint ventures.

 

 

52


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

12.4 Noncontrolling interests and joint ventures

The disclosure of interests in subsidiaries, in accordance with IFRS 12 and CPC 45, is as follows:

 

12.4.1    Movements in noncontrolling interests 

   

CERAN

 

CPFL Renováveis

 

Paulista Lajeado

 

Total

As of December 31, 2017

 

           86,031

 

      2,058,079

 

           80,707

 

      2,224,816

Equity Interests and voting capital

 

35.00%

 

48.40%

 

40.07%

   
                 

Profit (loss) attributable to noncontrolling shareholders

 

           16,284

 

          (50,408)

 

             4,209

 

          (29,915)

Dividends

 

          (35,632)

 

            (6,011)

 

            (8,241)

 

          (49,884)

Other movements

 

                  -  

 

                (32)

 

                  -  

 

                (32)

As of June 30, 2018

 

           66,683

 

      2,001,628

 

           76,675

 

      2,144,986

Equity Interests and voting capital

 

35.00%

 

48.39%

 

40.07%

   

 

12.4.2    Summarized financial information on subsidiaries that have noncontrolling interests

The summarized financial information on subsidiaries that have noncontrolling interests at June 30, 2018 and December 31, 2017 and semesters ended at June 30, 2018 and 2017, is as follows:

  

   

June 30, 2018

 

December 31, 2017

   

CERAN

 

CPFL Renováveis

 

Paulista Lajeado

 

CERAN

 

CPFL Renováveis

 

Paulista Lajeado

Current assets

 

         103,451

 

          1,497,796

 

           30,528

 

         110,566

 

      1,623,645

 

           48,037

Cash and cash equivalents

 

           63,173

 

             856,583

 

             6,021

 

           37,043

 

         950,215

 

           24,086

Noncurrent assets

 

         822,820

 

         11,111,479

 

         119,520

 

         848,445

 

     11,232,357

 

         120,677

                         

Current liabilities

 

         217,429

 

          1,837,090

 

           32,999

 

         198,624

 

      1,957,000

 

           42,525

Borrowings and debentures

 

         106,947

 

          1,027,584

 

                  -  

 

         105,844

 

      1,259,105

 

           36,453

Other financial liabilities

 

           22,159

 

               86,137

 

             1,044

 

           12,360

 

             7,258

 

               264

Noncurrent liabilities

 

         518,317

 

          6,748,307

 

               265

 

         514,583

 

      6,760,025

 

               258

Borrowings and debentures

 

         422,347

 

          4,962,887

 

                  -  

 

         422,166

 

      5,251,704

 

                  -  

Other financial liabilities

 

           86,561

 

                      -  

 

                  -  

 

           83,766

 

                  -  

 

                  -  

Equity

 

         190,525

 

          4,023,878

 

         116,783

 

         245,804

 

      4,138,977

 

         125,931

  Equity attributable to owners of the Company

 

         190,525

 

          3,918,787

 

         116,783

 

         245,804

 

      4,032,448

 

         125,931

  Equity attributable to noncontrolling interests

 

                  -  

 

             105,091

 

                  -  

 

                  -  

 

         106,529

 

                  -  

                         
   

1st semester 2018

 

1st semester 2017

   

CERAN

 

CPFL Renováveis

 

Paulista Lajeado

 

CERAN

 

CPFL Renováveis

 

Paulista Lajeado

Net operating revenue

 

         158,770

 

             798,584

 

           25,702

 

         155,257

 

         783,006

 

           21,981

Operational costs and expenses

 

          (41,329)

 

            (315,040)

 

          (14,162)

 

          (33,591)

 

        (323,538)

 

          (11,542)

Depreciation and amortization

 

          (22,723)

 

            (312,173)

 

                  (2)

 

          (22,451)

 

        (303,694)

 

                  (2)

Interest income

 

             2,906

 

               46,855

 

               395

 

           16,811

 

           67,057

 

             1,289

Interest expense

 

          (18,121)

 

            (231,865)

 

              (348)

 

          (19,085)

 

        (293,456)

 

              (645)

Income tax expense

 

          (23,951)

 

              (32,099)

 

            (1,165)

 

          (32,201)

 

          (26,033)

 

            (1,207)

Profit (loss) for the period

 

           46,525

 

            (109,061)

 

           10,504

 

           62,543

 

        (126,445)

 

             8,338

 Attributable to owners of the Company

 

           46,525

 

            (113,661)

 

           10,504

 

           62,543

 

        (130,120)

 

             8,338

  Attributable to noncontrolling interests

 

                  -  

 

                 4,600

 

                  -  

 

                  -  

 

             3,675

 

                  -  

 

 

12.4.3    Joint ventures

The summarized financial information on joint ventures at June 30, 2018 and December 31, 2017 and semesters ended at June 30, 2018 and 2017, is as follows:

 

53


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

   

June 30, 2018

 

December 31, 2017

   

Enercan

 

Baesa

 

Chapecoense

 

Epasa

 

Enercan

 

Baesa

 

Chapecoense

 

Epasa

Current assets

 

   184,615

 

   118,918

 

552,106

 

   231,624

 

   182,843

 

   124,361

 

   329,721

 

   319,222

Cash and cash equivalents

 

  62,511

 

  79,736

 

  67,140

 

  63,968

 

  48,695

 

  17,873

 

   116,425

 

  74,741

Noncurrent assets

 

   1,071,042

 

   1,000,016

 

2,675,106

 

   520,468

 

   1,101,291

 

   1,030,904

 

   2,745,989

 

   531,527

                                 

Current liabilities

 

   320,640

 

  67,304

 

713,571

 

   128,339

 

   291,010

 

   121,369

 

   426,695

 

   157,343

Borrowings and debentures

 

   140,013

 

  19,854

 

138,698

 

  34,437

 

   140,090

 

  63,154

 

   138,788

 

  34,299

Other financial liabilities

 

  25,322

 

  41,786

 

  80,974

 

  39,738

 

4,085

 

  17,113

 

  67,897

 

   993

Noncurrent liabilities

 

   633,074

 

   290,292

 

1,837,768

 

   223,378

 

   629,850

 

   283,456

 

   1,892,407

 

   242,765

Borrowings and debentures

 

   511,116

 

   -  

 

1,108,755

 

   169,176

 

   510,874

 

   -  

 

   1,172,181

 

   186,373

Other financial liabilities

 

  25,584

 

   270,951

 

725,938

 

7,768

 

  25,115

 

   265,250

 

   716,986

 

   -  

Equity

 

   301,943

 

   761,338

 

675,873

 

   400,375

 

   363,273

 

   750,440

 

   756,608

 

   450,641

                                 
   

1st semester 2018

 

1st semester 2017

   

Enercan

 

Baesa

 

Chapecoense

 

Epasa

 

Enercan

 

Baesa

 

Chapecoense

 

Epasa

Net operating revenue

 

   274,645

 

   122,121

 

420,699

 

   274,596

 

   289,599

 

   118,719

 

   406,442

 

   286,848

Operational costs and expenses

 

(76,889)

 

(58,445)

 

(96,627)

 

  (155,139)

 

(78,545)

 

(56,876)

 

(82,332)

 

  (176,561)

Depreciation and amortization

 

(25,246)

 

(25,358)

 

(62,138)

 

(17,520)

 

(26,424)

 

(25,358)

 

(63,424)

 

(16,296)

Interest income

 

2,824

 

2,205

 

7,565

 

2,631

 

  23,096

 

2,888

 

  16,211

 

4,064

Interest expense

 

(23,834)

 

(24,745)

 

(94,442)

 

   (8,756)

 

(13,449)

 

   (8,502)

 

(58,385)

 

   (9,941)

Income tax and social contribution expenses

 

(50,522)

 

   (5,546)

 

(60,518)

 

(13,822)

 

(66,065)

 

   (7,612)

 

(66,182)

 

(14,919)

Profit (loss) for the year

 

  99,146

 

  10,898

 

116,968

 

  81,933

 

   128,270

 

  14,546

 

   117,638

 

  69,057

Equity Interests and voting capital

 

48.72%

 

25.01%

 

51.00%

 

53.34%

 

48.72%

 

25.01%

 

51.00%

 

53.34%

 

Even holding more than 50% of the equity interest in Epasa and Chapecoense, the subsidiary CPFL Geração controls these investments jointly with other shareholders. The analysis of the classification of the type of investment is based on the Shareholders' Agreement of each joint venture.

The borrowings from the BNDES obtained by the joint ventures ENERCAN, BAESA and Chapecoense establish restrictions on the payment of dividend to subsidiary CPFL Geração above the minimum mandatory dividend of 25% without the prior consent of the BNDES.

 

12.4.4    Joint operation

Through its wholly-owned subsidiary CPFL Geração, the Company holds part of the assets of the Serra da Mesa hydropower plant, located on the Tocantins River, in Goias State. The concession and the right to operate the hydropower plant are held by Furnas Centrais Elétricas S.A. In order to maintain these assets operating jointly with Furnas (jointly operation), CPFL Geração was assured 51.54% of the installed power of 1,275 MW (657 MW) and the assured energy of mean 671 MW (mean 345.4 MW) until 2028.

 

12.5 Corporate restructurings in 2017

12.5.1    Merger of CPFL Jaguariúna

At the EGM held on December 15, 2017, approval was given for the merger of CPFL Jaguariúna  into RGE Sul. Accordingly, the merged company was wound up and RGE Sul became the successor to its assets, rights and obligations.

At the time of the merger, the concepts of CVM Instructions No. 319/99 and 349/01 were applied, which resulted in the recognition of a goodwill rectifying account, generating a tax credit of R$ 99,981 (note 9). To reassess its investments, the Company and CPFL Brasil recognized, proportionally to its investments in RGE Sul, (i) a reassessed concession intangible asset of R$ 148,487 and R$ 45,594 respectively, totaling R$ 194,081, corresponding to the fair value adjustment (value added) of the intangible assets relating to the distribution infrastructure and the right to operate the concession; and (ii) a net adjustment corresponding to the surplus value and decrease in  value in the amounts of R$ 66,607 and R$ 20,452, respectively, corresponding  to the fair value of the provision for tax, civil and labor risks, decrease in value of consumers, and surplus value of indemnification asset. Both amounts are non-deductible for tax purposes for the Company and for CPFL Brasil.

12.5.2    Grouping of subsidiaries Companhia Luz e Força Santa Cruz, Companhia Leste Paulista de Energia, Companhia Jaguari de Energia, Companhia Sul Paulista de Energia and Companhia Luz e Força de Mococa

On November 21, 2017, ANEEL through Resolution No. 6,723/2017 authorized the grouping of the power distribution companies Companhia Luz e Força Santa Cruz, Companhia Leste Paulista de Energia, Companhia Jaguari de Energia, Companhia Sul Paulista de Energia and Companhia Luz e Força de Mococa, pursuant to Normative Resolution No, 716/2016 of May 3, 2016. Effective as of January 1, 2018, the operations of these subsidiaries are controlled only by Companhia Jaguari de Energia, which adopted the trade name “CPFL Santa Cruz”. This operation was approved by the Extraordinary General Meetings (“EGM”) held on December 31, 2017 at the grouped companies.

 

54


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 13 )      PROPERTY, PLANT AND EQUIPMENT

 

 

 Consolidated

 

Land

 

Reservoirs, dams and water mains

 

Buildings, construction and improvements

 

Machinery and equipment

 

Vehicles

 

Forniture and fittings

 

In progress

 

Total

As of December 31, 2017

      168,494

 

            1,319,257

 

       1,094,777

 

         6,870,389

 

      75,771

 

          7,245

 

      251,192

 

     9,787,125

Historical cost

      207,365

 

            2,066,850

 

       1,652,178

 

         9,693,512

 

    122,540

 

        22,026

 

      251,192

 

   14,015,662

Accumulated depreciation

      (38,870)

 

              (747,593)

 

         (557,400)

 

        (2,823,123)

 

     (46,769)

 

       (14,782)

 

              -  

 

    (4,228,537)

                               

Additions

              -  

 

                       -  

 

                  -  

 

                    -  

 

            -  

 

               -  

 

      144,649

 

        144,649

Disposals

              -  

 

                       -  

 

            (7,600)

 

              (8,596)

 

      (1,604)

 

               -  

 

              -  

 

         (17,799)

Transfers

              -  

 

                  3,535

 

            13,224

 

             15,716

 

       8,868

 

            623

 

       (41,964)

 

                -  

Transfers from/to other assets - cost

        (2,755)

 

                       -  

 

           (39,029)

 

             41,223

 

            -  

 

                6

 

        (4,725)

 

          (5,280)

Depreciation

        (3,917)

 

               (39,647)

 

           (29,876)

 

          (218,563)

 

      (9,448)

 

           (448)

 

              -  

 

       (301,897)

Write-off of depreciation

              -  

 

                       -  

 

                  -  

 

               3,836

 

          802

 

               -  

 

              -  

 

           4,638

Impairment reversal

              -  

 

                       -  

 

                  15

 

                  645

 

            -  

 

               -  

 

              -  

 

              660

                               

As of June 30, 2018

      161,822

 

            1,283,145

 

       1,031,510

 

         6,704,652

 

      74,390

 

          7,426

 

      349,151

 

     9,612,096

Historical cost

      204,610

 

            2,070,385

 

       1,618,787

 

         9,742,501

 

    129,805

 

        22,655

 

      349,151

 

   14,137,892

Accumulated depreciation

      (42,788)

 

              (787,240)

 

         (587,276)

 

        (3,037,850)

 

     (55,415)

 

       (15,229)

 

              -  

 

    (4,525,797)

                               

Average depreciation rate

3.86%

 

3.92%

 

3.77%

 

4.57%

 

13.40%

 

6.47%

       

 

The balance of construction in progress, in the consolidated balances, refers mainly to works in progress of operating and/or under development subsidiaries, especially for the projects of CPFL Renováveis, which has construction in progress of R$ 295,477 at June 30, 2018 (R$ 197,305 at December 31, 2017).

In conformity with CPC 20 (R1) and IAS 23, the interest on borrowings taken by subsidiaries to finance the works is capitalized during the construction phase. In the consolidated balances, in the 1st semester of 2018 R$ 5,082 were capitalized at the rate of 8.38% p.a. (R$ 25,098 , at the rate of 10.05% p.a., in the 1st semester of 2017) note 28.

In the consolidated balances, the depreciation amounts are recognized in the statement of profit or loss in line item “Depreciation and amortization” (note 27).

 

 

55


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

 

 

 

 

56


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 14 )   INTANGIBLE ASSETS

 

 

Consolidated

 

Goodwill

 

Concession right

 

Other intangible assets

 

Total

   

Acquired in business combinations

 

   Distribution infrastructure - operational

 

   Distribution infrastructure - in progress

 

Public utilities

   

As of December 31, 2017

           6,115

 

             4,117,105

 

             5,554,447

 

               825,476

 

                 25,904

 

                 60,777

 

   10,589,824

Historical cost

           6,152

 

             7,558,645

 

           11,442,528

 

               825,476

 

                 35,840

 

               174,407

 

   20,043,048

Accumulated amortization

               (37)

 

            (3,441,540)

 

            (5,888,080)

 

                        -  

 

                  (9,936)

 

              (113,630)

 

   (9,453,223)

                           

Additions

                -  

 

                        -  

 

                        -  

 

               720,979

 

                        -  

 

                   5,589

 

       726,568

Amortization

                -  

 

              (142,795)

 

              (355,954)

 

                        -  

 

                     (710)

 

                  (4,400)

 

      (503,859)

Transfer - intangible assets

                -  

 

                        -  

 

               318,064

 

              (318,064)

 

                        -  

 

                        -  

 

                -  

Transfer - financial asset

                -  

 

                        -  

 

                 28,064

 

              (341,623)

 

                        -  

 

                        -  

 

      (313,559)

Disposal and transfer - other assets

                -  

 

                        -  

 

                  (1,597)

 

                  (6,303)

 

                        -  

 

                   5,243

 

          (2,657)

Impairment reversal

                -  

 

                   5,130

 

                        -  

 

                        -  

 

                        -  

 

                       47

 

           5,177

                           

As of June 30, 2018

           6,115

 

             3,979,438

 

             5,543,025

 

               880,466

 

                 25,195

 

                 67,254

 

   10,501,494

Historical cost

           6,152

 

             7,558,645

 

           11,678,069

 

               880,466

 

                 35,840

 

               185,409

 

   20,344,581

Accumulated amortization

               (37)

 

            (3,579,207)

 

            (6,135,044)

 

                        -  

 

                (10,646)

 

              (118,155)

 

   (9,843,089)

 

 

In conformity with CPC 20 (R1) and IAS 23, the interest on borrowings taken by subsidiaries is capitalized for qualifying intangible assets. In the consolidated, for the 1st semester of 2018, R$ 7,726 were capitalized at a rate of 7.84% p.a. (R$ 9,061 at a rate of 8.48% p.a. in the 1st semester of 2017).

In the consolidated interim financial statements the amortization of intangible assets is recognized in the statement of profit or loss in the following line items: (i) “depreciation and amortization” for amortization of distribution infrastructure intangible assets, use of public asset and other intangible assets; and (ii) “amortization of concession intangible asset” for amortization of the intangible asset acquired in business combination (note 27).

14.1 Intangible asset acquired in business combinations

The breakdown of the intangible asset related to the right to operate the concessions acquired in business combinations is as follows:

 

 

June 30, 2018

 

December 31, 2017

 

Annual amortization rate

 

Historic cost

 

Accumulated amortization

 

Net value

 

Net value

 

2018

 

2017

Intangible asset - acquired in business combinations

 

 

 

 

 

 

 

 

 

 

 

Intangible asset acquired, not merged

 

 

 

 

 

 

 

 

 

 

 

CPFL Paulista

         304,861

 

        (211,996)

 

         92,866

 

           97,858

 

3.28%

 

3.28%

CPFL Piratininga

           39,065

 

          (25,687)

 

         13,377

 

           14,025

 

3.32%

 

3.31%

RGE

             3,768

 

            (2,104)

 

           1,664

 

             1,752

 

4.70%

 

4.70%

CPFL Geração

           54,555

 

          (36,411)

 

         18,144

 

           19,067

 

3.39%

 

3.38%

CPFL Jaguari Geração

             7,896

 

            (3,986)

 

           3,910

 

             4,044

 

3.41%

 

3.41%

CPFL Renováveis

      3,717,093

 

        (971,826)

 

     2,745,268

 

      2,818,331

 

3.93%

 

4.16%

Subtotal

      4,127,239

 

     (1,252,010)

 

     2,875,228

 

      2,955,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible asset acquired and merged - Deductible

 

 

 

 

 

 

 

 

 

 

 

RGE

      1,120,266

 

        (897,782)

 

       222,484

 

         234,297

 

2.11%

 

2.11%

RGE Sul

         312,741

 

          (47,402)

 

       265,339

 

         279,553

 

9.09%

 

9.09%

CPFL Geração

         426,450

 

        (328,447)

 

         98,003

 

         102,987

 

2.34%

 

2.34%

Subtotal

      1,859,457

 

     (1,273,631)

 

       585,826

 

         616,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible asset acquired and merged – Reassessed

 

 

 

 

 

 

 

 

 

 

 

CPFL Paulista

      1,074,026

 

        (770,768)

 

       303,259

 

         319,360

 

3.00%

 

3.00%

CPFL Piratininga

         115,762

 

          (76,121)

 

         39,641

 

           41,560

 

3.32%

 

3.31%

RGE

         310,128

 

        (190,685)

 

       119,442

 

         125,785

 

4.09%

 

4.09%

CPFL Jaguari Geração

           15,275

 

            (8,607)

 

           6,668

 

             6,898

 

3.01%

 

3.01%

RGE Sul

           56,759

 

            (7,387)

 

         49,372

 

           51,588

 

7.81%

 

9.09%

Subtotal

      1,571,949

 

     (1,053,567)

 

       518,382

 

         545,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

      7,558,645

 

     (3,579,207)

 

     3,979,438

 

      4,117,105

 

 

 

 

 

 

 

57


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 15 )   TRADE PAYABLES

 

 

 

Consolidated

   

June 30, 2018

 

December 31, 2017

Current

       

System service charges

 

             2,978

 

               413

Energy purchased

 

      2,411,899

 

      2,248,748

Electricity network usage charges

 

         246,254

 

         252,170

Materials and services

 

         419,175

 

         650,538

Free energy

 

         149,610

 

         145,002

Total

 

      3,229,917

 

      3,296,870

         

Noncurrent

       

Energy purchased

 

         135,370

 

         128,438

 

 

( 16 )   BORROWINGS

 

 The movements in borrowings are as follows:

 

   

Consolidated

       

Raised

 

Repayment

 

Interest, inflation adjustment and MTM

 

Exchange rates

 

Interest paid

   
   

December 31, 2017

           

June 30, 2018

               

Measured at cost

                           

Local currency

                           

Fixed Rate

 

         900,257

 

         160,932

 

          (86,229)

 

                 18,938

 

                 -  

 

          (17,130)

 

         976,767

Post Fixed Rate

                           

TJLP

 

      3,449,468

 

           90,384

 

        (219,774)

 

               144,895

 

                 -  

 

        (134,443)

 

      3,330,533

Selic

 

         140,099

 

                 -  

 

          (16,658)

 

                   5,930

 

                 -  

 

           (1,733)

 

         127,638

CDI

 

      1,541,278

 

           23,360

 

        (786,626)

 

                 53,495

 

                 -  

 

          (58,452)

 

         773,054

IGP-M

 

           57,291

 

                 -  

 

           (5,117)

 

                   4,788

 

                 -  

 

           (2,348)

 

           54,614

UNBNDES

 

            2,293

 

                 -  

 

              (233)

 

                      432

 

                 -  

 

                 -  

 

            2,491

Others

 

           74,741

 

                 -  

 

          (35,481)

 

                   9,638

 

                 -  

 

           (9,006)

 

           39,894

Total at cost

 

      6,165,427

 

         274,676

 

     (1,150,118)

 

               238,116

 

                 -  

 

        (223,111)

 

      5,304,991

                             

Borrowing costs *

 

          (31,816)

 

           (5,048)

 

                 -  

 

                 10,246

 

                 -  

 

                 -  

 

          (26,618)

                             

Measured at fair value

                           

Foreign currency

                           

Dollar

 

      4,698,183

 

      1,655,514

 

     (2,064,066)

 

                 75,426

 

         691,313

 

          (71,305)

 

      4,985,065

Euro

 

         218,814

 

         456,000

 

        (215,824)

 

                      424

 

           12,155

 

           (1,834)

 

         469,735

Mark to market

 

          (58,552)

 

                 -  

 

                 -  

 

                  (5,808)

 

                 -  

 

                 -  

 

          (64,360)

Total at fair value

 

      4,858,445

 

      2,111,514

 

     (2,279,890)

 

                 70,042

 

         703,468

 

          (73,139)

 

      5,390,440

                             

Total

 

    10,992,057

 

      2,381,142

 

     (3,430,008)

 

               318,404

 

         703,468

 

        (296,250)

 

    10,668,811

Current

 

      3,589,607

                     

      3,011,598

Non Current

 

      7,402,450

                     

      7,657,213

 

(*) In accordance with CPC 48/IFRS 9, this refers to borrowing costs directly attributable to the issuance of the respective debts.

 

The detail on borrowings are as follows:

 

58


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

       

Consolidated

       

Category

 

Annual interest

 

June 30, 2018

 

December 31, 2017

 

Maturity range

 

Collateral

Measured at cost - Local Currency

                   

Prefixed

                   

FINEM

 

Fixed rate de 2,5% to 8%

(a)

          482,413

 

          546,504

 

2011 to 2024

 

(i) CPFL Energia guarantee (ii) Liens on equipment and receivables (iii)  Pledge of shares of SPE, authorized by ANEEL and receivables of operation contracts (iv) guarantee of Bioenergia S.A., CPFL Renováveis, CPFL Energia and State Grid.

FINAME

 

Fixed rate de 2,5% to 10%

(a)

            60,224

 

            71,780

 

2012 to 2025

 

(i) Liens on equipment (ii) Guarantee of CPFL Renováveis(iii)  CPFL Energia guarantee (iv) Liens on assets

FINEP

 

Fixed rate de 3,5% to 8%

 

             8,527

 

            10,482

 

2013 to 2021

 

Bank guarantee

Bank loans

 

Fixed rate of 9,5% to 10,14% and discount for timely payment of 15% and 25%

 

          425,602

 

          271,492

 

2009 to 2029

 

(i) Liens on equipment and receivables (ii)  Pledge of shares of SPE, authorized by ANEEL and receivables of operation contracts (iii) SIIF Énergies do Brasil and BVP S.A guarantee

       

          976,767

 

          900,257

       

Post-Fixed

                   

TJLP

                   

FINEM

 

TJLP and TJLP + of 1,72% to 3,4%

(b)

       3,289,296

 

       3,406,017

 

2009 to 2033

 

(i) Bank guarantee (ii) CPFL Energia guarantee (iii) Pledge of receivables, equipment and and assignment of credit and concession rights authorized by ANEEL and shares os SPE (iv) Liens on equipment and receivables (v) guarantee of Bioenergia S.A., CPFL Renováveis, CPFL Energia and State Grid (vi) real estate mortgage

FINAME

 

TJLP + 2,2% to 4,2%

(b)

            22,283

 

            23,181

 

2017 to 2027

 

(i) CPFL Energia guarantee (ii) Liens on equipment and receivables

FINEP

 

TJLP to TJLP -1%

 

            13,053

 

            13,997

 

2016 to 2024

 

Bank guarantee

Bank loans

 

TJLP + 2,99% to 3,1% (1)

 

             5,902

 

             6,273

 

2005 to 2023

 

(i) Pledge of receivables, equipment and and assignment of credit and concession rights (ii) CPFL Energia guarantee

       

       3,330,533

 

       3,449,468

       

SELIC

                   

FINEM

 

SELIC + 2,19% to 2,66%

(c)

          122,007

 

          134,260

 

2015 to 2022

 

(i)SGBP and CPFL Energia guarantee and receivables (ii) CPFL Energia guarantee

FINAME

 

SELIC + 2,70% to 3,90%

 

             5,631

 

             5,840

 

2016 to 2022

 

CPFL Energia guarantee and liens on equipment and receivables

       

          127,638

 

          140,099

       

CDI

                   

Bank loans

 

(i) From 100,00% to 109,50% to CDI
(ii) CDI + 0,10% to  1,90%

(c)

          347,447

 

          885,715

 

2012 to 2021

 

(i) CPFL Energia and CPFL Renováveis guarantee (ii) CPFL Renováveis promissory note (iii) CPFL Energia guarantee

Promissory note

 

(i) 104% of CDI
(ii) CDI + 1,39%

 

                  -  

 

          110,523

 

2018

 

CPFL Energia and CPFL Renováveis guarantee

Bank loans

 

(i) 105% do CDI
(ii) CDI + 0,5% to 3,40%

 

          326,659

 

          443,035

 

2013 to 2024

 

No guarantee

Promissory note

 

CDI + 3,80%

 

            98,948

 

          102,006

 

2017 to 2019

 

No guarantee

       

          773,054

 

       1,541,278

       

IGPM

                   

Bank loans

 

IGPM + 8,63%

 

            54,614

 

            57,291

 

2011 to 2024

 

(i) Liens on equipment and receivables (ii)  Pledge of shares of SPE and rights authorized by ANEEL and receivables of operation contracts

                     

UNBNDES

                   

Bank loans

 

UNBNDES + from 1,99% to 5%

 

             2,491

 

             2,293

 

2006 to 2023

 

CPFL Energia guarantee

Other

                   

Other

     

            39,894

 

            74,740

 

2007 to 2023

 

Bank guarantee; assignment of credit rights and promissory notes

Total - Local currency

     

       5,304,991

 

       6,165,427

       
                     

Borrowing costs (*)

     

           (26,618)

 

           (31,816)

       
                     

Measured at fair value - Foreing Currency

               

Dollar

                   

Bank Loans (Law 4.131)

 

US$ + Libor 3 months + from 0,95% to 3%

 

       2,213,891

 

       2,879,241

 

2017 to 2022

 

CPFL Energia guarantee and promissory notes

Bank Loans (Law 4.131)

 

US$ + Libor 3 months + de 0,8% to 2,7%

(c)

          482,421

 

          704,572

 

2017 to 2020

 

CPFL Energia guarantee and promissory notes

Bank Loans (Law 4.131)

 

US$ + de 1,93% to 3,59%

 

       2,288,754

 

       1,114,370

 

2017 to 2021

 

CPFL Energia guarantee and promissory notes

       

       4,985,065

 

       4,698,183

       

Euro

                   

Bank Loans (Law 4.131)

 

Euro + de 0,42% to 0,85%

 

          469,735

 

          218,814

 

2019 to 2021

 

CPFL Energia guarantee and promissory notes

                     

Mark to market

     

           (64,360)

 

           (58,552)

       
                     

Total in foreign currency

     

       5,390,440

 

       4,858,445

       
                     

Total

     

     10,668,811

 

     10,992,057

       
                     
                     

(*) In accordance with CPC 48/IFRS 9, this refers to borrowing costs directly attributable to the issuance of the respective debts.

   

The subsidiaries hold  swaps converting the operating cost of currency variation to interest tax variation in reais. For further information about the considered rates, see note 32.

Effective rate:

                   

 (a)  30% to 70% of CDI

 (b)  60% to 110% of CDI

 (c)  100% to 130% of CDI

       

 

 

 

 

59


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

As segregated in the tables above, in conformity with CPC 48 and IFRS 9, the Group classified their debts as (i) other financial liabilities (or measured at amortized cost), and (ii) financial liabilities measured at fair value through profit or loss.

The objective of the classification as financial liabilities of borrowings measured at fair value is to compare the effects of the recognition of income and expenses derived from marking to market of derivatives, debt-related derivatives, in order to obtain more relevant and consistent accounting information. At June 30, 2018, the balance of the borrowings measured at fair value was R$ 5,390,440 (R$ 4,858,446 at December 31, 2017).

Changes in the fair values of these borrowings are recognized in the finance income/cost of the Group, except for the component of credit risk calculation, which is recorded in other comprehensive income. At June 30, 2018, the accumulated gains of R$ 64,360 (accumulated gains of R$ 58,552 at December 31, 2017) on marking the borrowings to market, offset by the losses of R$ 48,714 (losses of R$ 51,145 at December 31, 2017) of marking to market the derivative financial instruments contracted as a hedge against foreign exchange variations (note 32), resulted in a total net gain of R$ 15,646 (R$ 7,407 at December 31, 2017).

 

The maturities of the principal of borrowings recorded in noncurrent liabilities are scheduled as follows:

  

Maturity

 

Consolidated

From July 1, 2019

 

         1,108,894

2020

 

         1,443,125

2021

 

         2,528,326

2022

 

            553,242

2023

 

            377,892

2024 to 2028

 

         1,209,354

2029 to 2033

 

            414,413

2034 to 2038

 

              87,524

2039 to 2043

 

               4,071

Subtotal

 

         7,726,841

Mark to market

 

             (69,629)

Total

 

         7,657,213

 

 

Main additions in the period:

   

R$ thousand

  

   
   

Total approved

 

 Released in 2018

 

 Released net of fundraising costs

 

Interest

 

Utilization

Local Currency

                   
                     

Prefixed

                   

Bank Loan

 

           170,152

 

           160,932

 

                      158,719

 

Montlhy

 

 Subsidiary's investment plan

Post Fixed

                   

CDI

                   

Bank Loan (a)

 

             16,000

 

             16,000

 

                        16,000

 

 Bullet

 

 Working Capital

Bank Loan (a)

 

               7,360

 

               7,360

 

                          7,360

 

Semiannually

 

 Working Capital

TJLP

                   

FINEM

 

           144,500

 

             90,000

 

                        88,670

 

Montlhy

 

 Subsidiary's investment plan

FINAME (a)

 

                  384

 

                  384

 

                             384

 

 Quarterly

 

 Acquisition of machinery and equipment

Foreing Currency

                   

Dollar

                   

Bank Loan (Law 4.131)

 

         1,655,514

 

         1,655,514

 

                    1,655,514

 

 Quarterly

 

 Working Capital

Euro

                   

Bank Loan (Law 4.131)

 

           456,000

 

           456,000

 

                      456,000

 

 Quarterly

 

 Working Capital

   

         2,449,909

 

         2,386,190

 

                    2,382,646

       
                     

 

 


(a) There is no restrictive financial covenant.

 

 

60


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Prepayment:

In the first semester of 2018, R$ 1,484,832 were settled in advance relating to borrowings with original maturities from May 2018 to May 2021.

Covenants

Borrowings raised by Group companies require the compliance with certain restrictive financial clauses, under penalty of restriction in the distribution of dividends and/or advance maturity of the related debts. Furthermore, failure to comply with the obligations or restrictions mentioned may result in default in relation to other contractual obligations (cross default), depending on each borrowing agreement. Additionally, borrowings contain non-financial covenants, which are met as per the last calculation period.

For borrowings raised or with funds released in 2018, certain have restrictive clauses related to financial ratios, as follows:

Ratios required for the individual or consolidated financial statements of CPFL Renováveis or its subsidiaries

·         Debt Service Coverage Ratio (ICSD) minimum of 1.3.

·         Company capitalization ratio minimum of 30%.

Ratios required for the individual or consolidated financial statements of CPFL Energia

·                     Debt indebtedness divided by EBITDA maximum of 3.75 and

·                      EBITDA divided by the financial result minimum of 2.25.

 

For other borrowings, the details of the covenants are presented in the financial statements as of December 31, 2017.

The Group’s management monitors these ratios on a systematic and constant basis, so that all conditions are met. The Group’s management believes that all covenants and financial and non-financial clauses whose indicators are measured semiannually and annually are properly complied with, according to the last calculation period, in other words, June 30, 2018 and December 31, 2017, respectively.

 

( 17 )   DEBENTURES

 

The movements in debentures are as follows:

 

   

Consolidated

   

As of December 31, 2017

 

Raised

 

Repayment

 

Interest, inflation adjustment

 

Exchange rates

 

As of June 30, 2018

             
                         

Debentures

 

           9,253,396

 

      4,010,000

 

     (3,223,452)

 

                390,800

 

       (385,004)

 

    10,045,741

Borrowings costs

 

              (76,870)

 

           (4,457)

 

                 -  

 

                 12,712

 

                 -  

 

         (68,615)

Total

 

           9,176,526

 

      4,005,543

 

     (3,223,452)

 

                403,512

 

       (385,004)

 

      9,977,126

Current

 

           1,703,073

                 

      1,385,146

Non Current

 

           7,473,454

                 

      8,591,981

 

 

The detail on debentures are as follows :

 

61


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

   

Consolidated

   

June 30, 2018

 

December 31, 2017

   

Current interest

 

Current

 

Noncurrent

 

Total

 

Current interest

 

Current

 

Noncurrent

 

Total

CPFL Paulista

                               

7th Issue

Single series

  10,715

 

126,250

 

252,500

 

389,465

 

17,134

 

126,250

 

378,750

 

522,134

8th Issue

1st series

  2,776

 

-

 

220,145

 

222,921

 

  1,669

 

-

 

215,310

 

216,980

8th Issue

2nd series

  4,865

 

-

 

366,269

 

371,133

 

  2,925

 

-

 

358,224

 

361,149

8th Issue

3rd series

  1,931

 

-

 

134,348

 

136,279

 

  1,161

 

-

 

131,397

 

132,558

9th Issue

Single series

  44,755

 

-

 

  1,380,000

 

  1,424,755

 

-

 

-

 

-

 

-

   

  65,042

 

126,250

 

  2,353,262

 

  2,544,554

 

22,890

 

126,250

 

  1,083,681

 

  1,232,821

                                 

CPFL Piratininga

                               

6th Issue

Single series

  1,549

 

-

 

  44,000

 

  45,549

 

  1,950

 

-

 

  44,000

 

  45,950

7th Issue

Single series

  4,986

 

  58,750

 

117,500

 

181,236

 

  7,973

 

  58,750

 

176,250

 

242,973

8th issue

2nd series

  6,300

 

-

 

246,000

 

252,300

 

  7,669

 

-

 

246,000

 

253,669

8th issue

1st series

  1,200

 

-

 

  62,488

 

  63,688

 

  1,174

 

-

 

  61,125

 

  62,299

9th Issue

Single series

  6,721

 

-

 

215,000

 

221,721

 

-

 

-

 

-

 

-

   

  20,756

 

  58,750

 

684,988

 

764,494

 

18,766

 

  58,750

 

527,375

 

604,891

                                 

RGE

                               

6th Issue

Single series

  7,039

 

-

 

200,000

 

207,039

 

  8,864

 

-

 

200,000

 

208,864

7th Issue

Single series

  3,607

 

  42,500

 

  85,000

 

131,107

 

  5,768

 

  42,500

 

127,500

 

175,768

8th issue

2nd series

  6,417

 

-

 

250,000

 

256,417

 

  7,812

 

-

 

250,000

 

257,812

8th issue

1st series

  2,631

 

-

 

135,530

 

138,160

 

  2,573

 

-

 

132,573

 

135,146

9th Issue

Single series

  7,071

 

-

 

220,000

 

227,071

 

-

 

-

 

-

 

-

   

  26,764

 

  42,500

 

890,530

 

959,794

 

25,017

 

  42,500

 

710,073

 

777,590

                                 

CPFL Santa Cruz

                               

1st Issue

Single series

-

 

-

 

-

 

-

 

135

 

  32,500

 

-

 

  32,635

2nd Issue

Single series

  5,829

 

-

 

190,000

 

195,829

 

-

 

-

 

-

 

-

 

 

  5,829

 

-

 

190,000

 

195,829

 

135

 

  32,500

 

-

 

  32,635

                                 

RGE SUL

                               

4th Issue

Single series

321

 

-

 

189,730

 

190,051

 

16,662

 

-

 

  1,100,000

 

  1,116,662

6th Issue

Single series

827

 

-

 

520,000

 

520,827

 

312

 

-

 

220,000

 

220,312

   

  1,147

 

-

 

709,730

 

710,877

 

16,974

 

-

 

  1,320,000

 

  1,336,974

                                 

CPFL Brasil

                               

3rd Issue

Single series

  1,082

 

-

 

116,000

 

117,082

 

  6,059

 

-

 

400,000

 

406,059

4th issue

Single series

  3,646

 

115,000

 

-

 

118,646

 

-

 

-

 

-

 

-

 

 

  4,728

 

115,000

 

116,000

 

235,728

 

  6,059

 

-

 

400,000

 

406,059

                                 

CPFL Geração

                               

5th Issue

Single series

-

 

-

 

-

 

-

 

  3,366

 

546,000

 

-

 

549,366

6th Issue

Single series

  11,509

 

153,318

 

306,682

 

471,509

 

13,671

 

153,318

 

306,682

 

473,671

7th Issue

Single series

-

 

-

 

-

 

-

 

  8,978

 

-

 

635,000

 

643,978

8th Issue

Single series

854

 

  89,502

 

-

 

  90,356

 

  3,401

 

-

 

  87,905

 

  91,306

9th Issue

Single series

  1,981

 

-

 

  52,832

 

  54,813

 

550

 

-

 

  51,672

 

  52,221

10th issue

Single series

97

 

190,000

 

-

 

190,097

 

-

 

-

 

-

 

-

11th issue

1st series

  1,457

 

-

 

700,000

 

701,457

 

-

 

-

 

-

 

-

11th issue

2nd series

  1,481

 

-

 

700,000

 

701,481

 

-

 

-

 

-

 

-

   

  17,379

 

432,820

 

  1,759,514

 

  2,209,713

 

29,966

 

699,318

 

  1,081,259

 

  1,810,543

Parent company

                               

5th Issue

Single series

-

 

-

 

-

 

-

 

  2,817

 

-

 

186,000

 

188,817

                                 

CPFL Renováveis

                               

1st Issue - SIIF (*)

1st to 12th series

749

 

  46,453

 

441,300

 

488,502

 

762

 

  44,968

 

449,678

 

495,408

1st Issue - PCH Holding 2

Single series

267

 

  24,678

 

  98,712

 

123,657

 

260

 

  8,701

 

123,391

 

132,352

2nd Issue - DESA

Single series

810

 

  43,336

 

-

 

  44,146

 

39,857

 

  43,329

 

  21,671

 

104,857

1st Issue - Pedra Cheirosa I

Single series

-

 

-

 

-

 

-

 

  1,617

 

  64,653

 

-

 

  66,270

1st Issue - Pedra Cheirosa II

Single series

-

 

-

 

-

 

-

 

  1,481

 

  59,203

 

-

 

  60,684

1st Issue - Renováveis

Single series

  2,269

 

  64,500

 

193,500

 

260,269

 

  2,970

 

  64,500

 

258,000

 

325,470

2nd Issue - Renováveis

Single series

  3,800

 

  60,000

 

150,000

 

213,800

 

  5,531

 

  60,000

 

210,000

 

275,531

3rd Issue - Renováveis

Single series

  1,370

 

  98,657

 

  98,686

 

198,713

 

  2,169

 

  98,657

 

197,343

 

298,169

4th Issue - Renováveis

1st series

  4,004

 

-

 

200,000

 

204,004

 

  4,534

 

-

 

200,000

 

204,534

5th Issue - Renováveis

Single series

300

 

  13,000

 

  81,000

 

  94,300

 

  9,716

 

  12,000

 

  88,000

 

109,716

7th Issue - Renováveis

Single series

  6,556

 

-

 

259,400

 

265,956

 

  6,244

 

-

 

253,529

 

259,773

   

  20,125

 

350,624

 

  1,522,598

 

  1,893,347

 

75,141

 

456,011

 

  1,801,612

 

  2,332,764

                                 

CERAN

                               

1st Issue

1st series

843

 

106,000

 

212,000

 

318,843

 

181

 

106,000

 

212,000

 

318,181

1st Issue

2nd series

562

 

-

 

212,000

 

212,562

 

121

 

-

 

212,000

 

212,121

   

  1,406

 

106,000

 

424,000

 

531,406

 

302

 

106,000

 

424,000

 

530,302

                                 

Borrowing costs (**)

 

-

 

(9,974)

 

(58,641)

 

(68,615)

 

(7,580)

 

(8,745)

 

(60,546)

 

(76,870)

                                 
   

163,176

 

  1,221,970

 

  8,591,981

 

  9,977,127

 

190,489

 

  1,512,584

 

  7,473,454

 

  9,176,526

 

 


 

62

 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

   

Quantity issued

 

Annual remuneration

 

Annual effective rate

 

Amortization conditions

 

Collateral

CPFL Paulista

                   

7th Issue

Single series

50,500

 

CDI + 0.83% (2)

 

CDI  + 0.89%

 

4 annual installments from February 2018

 

CPFL Energia guarantee

8th Issue

1st series

213,804

 

IPCA + 4,42%

 

IPCA + 4,42%

 

1 installment in September 2022

 

CPFL Energia guarantee

8th Issue

2nd series

355,718

 

IPCA + 4,66%

 

IPCA + 4,66%

 

2 annual instalments from September 2023

 

CPFL Energia guarantee

8th Issue

3rd series

130,478

 

IPCA + 5,05%

 

IPCA + 5,05%

 

3 annual instalments from September 2025

 

CPFL Energia guarantee

9th Issue

Single series

1,380,000

 

CDI + 0.48% (2)

 

106.0% of CDI

 

Parcela única em Janeiro de 2021

 

CPFL Energia guarantee

 

 

 

 

     

 

 

 

 

                     

CPFL Piratininga

                   

6th Issue

Single series

110

 

 CDI + 0.8% (2)

 

CDI + 0.91%

 

3 annual installments from July 2017

 

CPFL Energia guarantee

7th Issue

Single series

23,500

 

 CDI + 0.83% (2) (3)

 

CDI + 0.89%

 

4 annual installments from February 2018

 

CPFL Energia guarantee

8th issue

2nd series

246,000

 

 109.5% CDI (2)

 

109.5% CDI

 

2 annual installments from February 2021

 

CPFL Energia guarantee

8th issue

1st series

60,000

 

 IPCA + 5.2901%

 

IPCA + 5.2901%

 

2 annual installments from February 2021

 

CPFL Energia guarantee

9th Issue

Single series

215,000

 

 CDI + 0.48% (2)

 

106.2% of CDI

 

Parcela única em Janeiro de 2021

 

CPFL Energia guarantee

                     
                     

RGE

                   

6th Issue

Single series

500

 

CDI + 0.8% (2)

 

CDI + 0.88%

 

3 annual installments from July 2017

 

CPFL Energia guarantee

7th Issue

Single series

17,000

 

CDI + 0.83% (2)(4)

 

CDI + 0.88%

 

4 annual installments from February 2018

 

CPFL Energia guarantee

8th issue

2nd series

250,000

 

111.25% CDI (2)

 

111.25% CDI

 

2 annual installments from February 2021

 

CPFL Energia guarantee

8th issue

1st series

130,000

 

IPCA+ 5.3473%

 

IPCA+ 5.3473%

 

2 annual installments from February 2023

 

CPFL Energia guarantee

9th Issue

Single series

220,000

 

CDI + 0,48% (2)

 

106.2% of CDI

 

1 installment in January 2021

 

CPFL Energia guarantee

                     
                     

CPFL Santa Cruz

                   

1st Issue

Single series

650

 

CDI + 1.4%

 

CDI + 1.52%

 

2 annual instalments from June 2017

 

 CPFL Energia guarantee

2nd Issue

Single series

190,000

 

CDI + 0,48%

 

106.3% of CDI

 

1 installment in January 2021

 

CPFL Energia guarantee

                     
                     

RGE SUL

                   

4th Issue

Single series

110,000

 

114.50% of CDI (2) (5)

 

114.5% of CDI

 

2 annual installments from October 2019

 

CPFL Energia guarantee

6th Issue

Single series

520,000

 

 CDI + 0.48% (2)

 

 CDI + 0,48%

 

1 installment in December 2020

 

CPFL Energia guarantee

   

 

 

 

 

 

 

 

 

 
                     

CPFL Brasil

                   

3rd Issue

Single series

40,000

 

114.5% of CDI

 

114.5% of CDI

 

2 annual installments from October 2019

 

CPFL Energia guarantee

4th Issue

Single series

115,000

 

CDI + 0.27% (2)

 

106.1% of CDI

 

1 installment in January 2019

 

CPFL Energia guarantee

                     
                     

CPFL Geração

                   

5th Issue

Single series

10,920

 

 CDI + 1.4%

 

CDI + 1.48%

 

2 annual instalments from June 2017

 

CPFL Energia guarantee

6th Issue

Single series

46,000

 

 CDI + 0.75% (2)

 

CDI + 0.75%

 

3 annual instalments from August 2018

 

CPFL Energia guarantee

7th Issue

Single series

63,500

 

 CDI + 1.06% (2)

 

CDI + 1.11%

 

1 installment in April 2019

 

CPFL Energia guarantee

8th Issue

Single series

1

 

 IPCA + 5.86% (1)

 

103.33% of CDI

 

1 installment in April 2019

 

CPFL Energia guarantee

9th Issue

Single series

50,000

 

 IPCA+ 5.4764%

 

 IPCA+ 5.4764%

 

1 installment in October 2021

 

CPFL Energia guarantee

10th Issue

Single series

190,000

 

CDI + 0,27% (2)

 

105,4% of CDI

 

1 installment in December 2018

 

CPFL Energia guarantee

11th Issue

1st series

700,000

 

105,75% of CDI

 

106,75% of CDI

 

1 installment in May 2021

 

CPFL Energia guarantee

11th Issue

2nd series

700,000

 

107,50% of CDI

 

107,82% of CDI

 

2 annual instalments from May 2022

 

CPFL Energia guarantee

                     
                     

Parent company

                   

5th Issue

Single series

62,500

 

114.5% of CDI

 

114.5% of CDI

 

2 annual installments from October 2019

 

No guarantee

                     

CPFL Renováveis

                   

1st Issue - SIIF

1st to 12th series

432,299,666

 

TJLP + 1%

 

TJLP + 3.48%

 

39 semi-annual installments from 2009

 

Liens

1st Issue - PCH Holding 2

Single series

1,581

 

CDI + 1.6%

 

CDI + 2.6%

 

9 annual installments from June 2015 to 2023

 

CPFL Renováveis guarantee

2nd Issue - DESA

Single series

65

 

CDI + 1.34%

 

CDI + 3.03%

 

3 semi-annual installments from April de 2018

 

Unsecured

1st Issue - Pedra Cheirosa I

Single series

5,220

 

CDI + 1.90%

 

CDI + 4.74%

 

1 installment in March 2018

 

CPFL Renováveis guarantee

1st Issue - Pedra Cheirosa II

Single series

4,780

 

CDI + 1.90%

 

CDI + 4.76%

 

1 installment in March 2018

 

CPFL Renováveis guarantee

1st Issue - Renováveis

Single series

43,000

 

CDI + 1.7%

 

CDI + 2.60%

 

9 annual installments from May 2015

 

Assignment of dividends of BVP and PCH Holding

2nd Issue - Renováveis

Single series

300,000

 

114% do CDI

 

129.39% CDI

 

5 annual instalments from 2017

 

Unsecured

3rd Issue - Renováveis

Single series

29,600

 

117.25% CDI

 

135.94% CDI

 

3 semi-annual installments from April de 2018

 

Unsecured

4th Issue - Renováveis

1st series

20,000

 

126% CDI

 

140.16% CDI

 

3 annual installments from September 2019

 

CPFL Energia guarantee

5th Issue - Renováveis

Single series

100,000,000

 

129.5% CDI

 

144.46% CDI

 

Semi-annual installments from June 2018

 

Liens of 60% of the quotas from Ludesa
 and contract credits
Dobrevê guarantee

7th Issue - Renováveis

Single series

250,000

 

IPCA + 5.62%

 

IPCA + 6.14%

 

1 installment in the end of the contract

 

CPFL Energia guarantee

                     
                     

CERAN

                   

1st Issue

1st series

318,000

 

 107,75% CDI

 

 109,82% of CDI

 

3 annual installments from December 2018

 

No guarantee

1st Issue

2nd series

212,000

 

 107,75% CDI

 

 109,82% of CDI

 

3 annual installments from December 2021

 

No guarantee

                     

(1) The subsidiaries entered into swap transactions for swap of the fixed interest component of the transaction to the fluctuation of the interest rate in reais, corresponding to 100.15% of the CDI

(2) The subsidiaries entered into swap transactions for swap of the fluctuation in interest rate of the transaction to fixed rates between from 6.61% to 7.72%

   

(3) The swap of the transaction represents 40.73% of the debt principal

           

(4) The swap of the transaction represents 73.63% of the debt principal

           

(5) The swap of the transaction represents 70.13% of the debt principal

           

 

 

 

63


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

(*) These debentures can be converted into shares and, therefore, are considered in the calculation of the dilutive effect for the earnings per share (note 24)

(**) In accordance with CPC 48/IFRS 9 this refers to borrowing costs directly attributable to the issuance of the respective debts.

 

The maturities of the principal of debentures recognized in noncurrent liabilities are as follows:  

 

Maturity

 

Consolidated

From July 1, 2019

 

            709,190

2020

 

         1,517,654

2021

 

         3,677,925

2022

 

         1,333,025

2023

 

            715,047

2024 to 2028

 

            639,140

Total

 

         8,591,981

 

 

Main additions in the period:

 

 

 

 

 

 

 

R$ thousand

  

Company

 

Issue

 

Quantity issued

 

 Released in 2018

 

 Released net of fundraising costs

 

Interest

 

Utilization

CPFL Paulista

 

9th issue

 

1,380,000

 

1,380,000

 

1,379,022

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

CPFL Piratininga

 

9th issue

 

215,000

 

215,000

 

214,739

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

CPFL Brasil

 

4th issue

 

115,000

 

115,000

 

114,848

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

CPFL Santa Cruz

 

2nd issue

 

190,000

 

190,000

 

189,737

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

RGE

 

9th issue

 

220,000

 

220,000

 

       219,733

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

RGE Sul

 

6th issue

 

520,000

 

300,000

 

       299,677

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

CPFL Geração

 

10th issue

 

190,000

 

190,000

 

       189,838

 

Semiannually

 

Subsidiary's investment plan, debt refinancing and working capital improvement

CPFL Geração

 

11th issue

 

1,400,000

 

1,400,000

 

    1,397,949

 

Semiannually

 

Prepayment of financial debt and working capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,010,000

 

4,005,543

 

 

 

 

 

Pre-payment

In the 1st semester of 2018, R$2,015,270 of debenture were paid in advance, whose due dates were from April 2019 to October 2020.

 

RESTRICTIVE COVENANTS

The debenture agreements are subject to certain restrictive covenants, including covenants that require the Company and its subsidiaries to maintain certain financial ratios within pre-established parameters. Moreover, these agreements contain restrictive non-financial covenants, which are complied with as per the last  measurement period.

 

64


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Debentures issued in 2018 are subject to the following covenants:

·                     Debt indebtedness divided by EBITDA maximum of 3.75 and

·                      EBITDA divided by the financial result minimum of 2.25.

 

The details of the restrictive conditions for other debts are presented in the Financial Statements of December 31, 2017.

The Group’s management monitors these ratios on a systematic and constant basis, so that all conditions are met. The Group’s management believes that all covenants and clauses whose indicators are measured semiannually and annually are properly complied with, according to the last calculation period, in other words, June 30, 2018 and December 31, 2017, respectively.

 

( 18 )   PRIVATE PENSION PLAN

 

The subsidiaries have supplementary retirement and pension plans for their employees, the characteristics of which are described in note 18 to the financial statements for the year ended December 31, 2017.

18.1    Movements in the defined benefit plans              

The movements in net liability occurred in the period are as follows:

 

 

CPFL Paulista

 

CPFL Piratininga

 

CPFL Geração

 

RGE

 

RGE Sul

 

Total liability

Net actuarial liability at December 31, 2017

      690,000

 

      141,724

 

     16,424

 

           -  

 

     77,623

 

           925,771

Expenses (income) recognized in the statement of profit or loss

        31,165

 

          8,186

 

          777

 

          (94)

 

      4,922

 

             44,955

Sponsors' contributions transferred during the year / period

       (28,646)

 

       (11,510)

 

         (420)

 

      3,575

 

     (3,132)

 

            (40,134)

Effect of asset ceiling

              -  

 

               -  

 

            -  

 

     (3,480)

 

           -  

 

              (3,480)

Net actuarial liability at June, 2018

      692,519

 

      138,400

 

     16,781

 

           -  

 

     79,413

 

           927,112

Other contributions

        11,664

 

            547

 

           73

 

           33

 

           -  

 

             12,318

Total liability

      704,183

 

      138,947

 

     16,854

 

           33

 

     79,413

 

           939,430

                       

Current

 

 

 

 

 

 

 

 

 

 

             69,132

Noncurrent

 

 

 

 

 

 

 

 

 

 

           870,298

 

 

The income and expenses recognized as cost of the operation are shown below:

 

 

1st semester 2018 accomplished

 

CPFL Paulista

 

CPFL Piratininga

 

CPFL Geração

 

RGE

 

RGE Sul

 

Total

Service cost

            418

 

          2,182

 

           40

 

           88

 

      1,396

 

               4,124

Interest on actuarial obligations

      210,542

 

        57,314

 

       5,054

 

     16,776

 

     24,110

 

           313,796

Expected return on plan assets

     (179,794)

 

       (51,310)

 

      (4,318)

 

    (17,976)

 

    (20,584)

 

          (273,982)

Effect of asset ceiling

              -  

 

               -  

 

            -  

 

      1,018

 

           -  

 

               1,018

Total expense (income)

        31,165

 

          8,186

 

          777

 

          (94)

 

      4,922

 

             44,955

                       
                       
 

1st semester 2017 accomplished

 

CPFL Paulista

 

CPFL Piratininga

 

CPFL Geração

 

RGE

 

RGE Sul

 

Total

Service cost

            354

 

          1,576

 

           36

 

         136

 

      1,077

 

               3,179

Interest on actuarial obligations

      238,306

 

        63,780

 

       5,716

 

     18,698

 

     25,464

 

           351,964

Expected return on plan assets

     (196,410)

 

       (56,734)

 

      (4,718)

 

    (18,708)

 

    (21,630)

 

          (298,200)

Total expense (income)

        42,251

 

          8,622

 

       1,034

 

         127

 

      4,911

 

             56,944

 

The main assumptions considered in the actuarial calculation, based on the actuarial reports prepared as of  December 31, 2017 and 2016, were as follows:

 

65


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

   

CPFL Paulista, CPFL Geração and CPFL Piratininga

 

RGE

 

RGE Sul

   

December 31, 2017

 

December 31, 2016

 

December 31, 2017

 

December 31, 2016

 

December 31, 2017

 

December 31, 2016

                         

Nominal discount rate for actuarial liabilities:

 

9.51% p.a.

 

10.99% p.a.

 

9.51% p.a.

 

10.99% p.a.

 

9.51% p.a.

 

10.99% p.a.

Nominal return rate on plan assets:

 

9.51% p.a.

 

10.99% p.a.

 

9.51% p.a.

 

10.99% p.a.

 

9.51% p.a.

 

10.99% p.a.

Estimated rate of nominal salary increase:

 

6.08% p.a.**

 

7.00% p.a.

 

6.13% p.a.

 

8.15% p.a.

 

6.10% a.a.

 

7.29% p.a.

Estimated rate of nominal benefits increase:

 

4.00% p.a.

 

5.00% p.a.

 

4.00% p.a.

 

5.00% p.a.

 

4.00% p.a.

 

5.00% p.a.

Estimated long-term inflation rate (basis for determining the nominal rates above)

 

4.00% p.a.

 

5.00% p.a.

 

4.00% p.a.

 

5.00% p.a.

 

4.00% p.a.

 

5.00% p.a.

General biometric mortality table:

 

AT-2000 (-10)

 

AT-2000 (-10)

 

BREMS sb v.2015

 

BREMS sb v.2015

 

BREMS sb v.2015

 

AT-2000

Biometric table for the onset of disability:

 

Low Light

 

Low Light

 

Medium Light

 

Medium Light

 

Medium Light

 

Medium Light

Expected turnover rate:

 

ExpR_2012

 

ExpR_2012*

 

Null

 

Null

 

Null

 

Null

Likelihood of reaching retirement age:

 

100% when a beneficiary of the plan first becomes eligible

 

100% when a beneficiary of the plan first becomes eligible

 

100% one year after when a beneficiary of the plan first becomes eligible

 

100% one year after when a beneficiary of the plan first becomes eligible

 

100% one year after when a beneficiary of the plan first becomes eligible

 

100% one year after when a beneficiary of the plan first becomes eligible

(*) FUNCESP experience, with aggravation of 40%

                       

(**) Estimated rate of nominal salary increase of 6.39% p.a. for CPFL Piratininga

                   

 

 

 

( 19 )   REGULATORY CHARGES

 

 

Consolidated

 

June 30, 2018

 

December 31, 2017

Financial compensation for the use of water resources

             1,180

 

             1,256

Global reversal reserve - RGR

           17,312

 

           17,545

ANEEL inspection fee -TFSEE

             3,789

 

             2,061

Energy development account - CDE

         148,293

 

         262,213

Tariff flags and others

         116,285

 

         298,525

Total

         286,858

 

         581,600

 

Energy development account – CDE: Refers to (i) quota for the return of CDE contribution for the period from January, 2013 to January, 2014 in the amount of R$48,481 (R$47,429 at December 31, 2017) and (ii) quota for the return of Regulated Contracting Environment Account (“ACR account”) contribution for the period from February to December, 2014, in the amount of R$99,813 (R$76,649 at December 31, 2017.) At December 31, 2017, there was also a balance relating to the CDE annual quota for 2017, in the amount of R$138,135. The subsidiaries matched the amounts payable and the amounts receivable – CDE (note 11) of the first semester of 2018, in the amount of R$2,545 (R$182,648 in the first semester of 2017.)

Tariff flags and others – Refer basically to the amount to be passed through to the Centralizing Account of Tariff Flag Resources (“CCRBT”), whose amount receivable was recognized through the issue of electricity bills (note 25.4)

 

 

 

66


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 20 )   TAXES, FEES AND CONTRIBUTIONS

 

   

Consolidated

   

June 30, 2018

 

December 31, 2017

Current

       

IRPJ (corporate income tax)

 

           48,146

 

           59,026

CSLL (social contribution on net income)

 

           19,078

 

           22,430

Income tax and social contribution

 

           67,225

 

           81,457

         

ICMS (State VAT)

 

         193,492

 

         403,492

PIS (tax on revenue)

 

           30,304

 

           32,486

COFINS (tax on revenue)

 

         140,044

 

         141,757

Others

 

           39,695

 

           51,111

Other taxes, fees and contributions

 

         403,535

 

         628,846

         

Total current

 

         470,759

 

         710,303

         

Noncurrent

       

ICMS (State VAT)

 

               756

 

                  -  

PIS (tax on revenue)

 

             2,524

 

           18,839

COFINS (tax on revenue)

 

           11,488

 

                  -  

Other taxes, fees and contributions

 

           14,768

 

           18,839

         

Total noncurrent

 

           14,768

 

           18,839

 

 

 

( 21 )   PROVISION FOR TAX, CIVIL AND LABOR RISKS AND ESCROW DEPOSITS

 

 

Consolidated

 

June 30, 2018

 

December 31, 2017

 

Provision for tax, civil and labor risks

 

Escrow Deposits

 

Provision for tax, civil and labor risks

 

Escrow Deposits

               

Labor

             208,991

 

    119,732

 

             224,258

 

      122,194

               

Civil

             266,681

 

    110,644

 

             291,388

 

        97,100

               

Tax

             

FINSOCIAL

              34,307

 

      97,535

 

              33,473

 

        95,903

Income Tax

             152,399

 

    391,969

 

             150,020

 

      382,884

Others

             186,793

 

    146,167

 

             163,798

 

      140,289

 

             373,498

 

    635,671

 

             347,291

 

      619,077

               

Others

             100,239

 

              9

 

              98,196

 

          1,620

               

Total

             949,408

 

    866,057

 

             961,134

 

      839,990

 

 

The movements in the provision for tax, civil, labor and other risks are shown below:

 

67


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

Consolidated

 

As of December 31, 2017

 

Additions

 

Reversals

 

Payments

 

Monetary adjustment

 

As of June 30, 2018

Labor

             224,258

 

           21,829

 

          (15,481)

 

          (33,928)

 

           12,313

 

         208,991

Civil

             291,388

 

           37,610

 

          (21,568)

 

          (50,499)

 

             9,750

 

         266,681

Tax

             347,291

 

           19,825

 

              (994)

 

              (491)

 

             7,867

 

         373,498

Others

               98,196

 

           13,465

 

            (6,147)

 

            (8,068)

 

             2,793

 

         100,239

Total

             961,134

 

           92,729

 

          (44,190)

 

          (92,985)

 

           32,723

 

         949,408

 

The provision for tax, civil, labor and other risks was based on the assessment of the risks of losing the lawsuits to which the Group is part, where the likelihood of loss is probable in the opinion of the outside legal counselors and the Management of the Group.

The details of the nature of the provision for tax, civil, labor and other risks and escrow deposits are presented in the Note 21 of the financial statements at December 31, 2017.

Possible losses

 

The Group is part to other lawsuits in which Management, supported by its external legal counselors, believes that the chances of a successful outcome are possible, that is, it is more likely than not that there will be no disbursement for these cases due to a solid defensive position in these cases. It is not yet possible to predict the outcome of the courts’ decisions or any other decisions in similar proceedings considered probable or remote.

The claims relating to possible losses at June 30, 2018 and December 31, 2017 were as follows:

 

Consolidated

   
 

June 30, 2018

 

December 31, 2017

   
           

Labor

            830,240

 

          686,538

 

Work accidents, risk premium for dangerousness at workplace and overtime

Civil

         1,381,046

 

       1,178,671

 

Personal injury, environmental impacts and overfed tariffs

Tax

         5,601,385

 

       5,100,151

 

ICMS, FINSOCIAL, PIS and COFINS, and Income tax

Regulatory

            222,359

 

          140,695

 

Technical, commercial and economic-financial supervisions

Total

         8,035,030

 

       7,106,055

   

 

Tax – there is a discussion about the deductibility for income tax of the expense recognized in 1997 relating to the commitment assumed in regard to the pension plan of employees of the subsidiary CPFL Paulista with Fundação CESP in the estimated amount of R$ 1,275,051.

With respect to labor contingencies, the Group informs that, as described in note 22 to the financial statements as of December 31, 2017, there is a discussion regarding the possibility of changing the adjustment index adopted by the Labor Court, and the discussion status has not changed since then the rate currently used remains valid.

Based on the opinion of their outside legal counselors, the Group’s management believes that the amounts provided for reflect the current best estimate.

 

 

68


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 22 ) OTHER PAYABLES

 

 

Consolidated

 

Current

 

Noncurrent

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

Consumers and concessionaires

           71,371

 

           93,068

 

           46,873

 

           44,473

Energy efficiency program - PEE

         159,885

 

         186,621

 

         114,366

 

         110,931

Research & Development - P&D

         102,808

 

         103,308

 

           83,981

 

           68,780

EPE / FNDCT / PROCEL

           28,633

 

           15,612

 

                  -  

 

                  -  

Reversion fund

             1,712

 

                  -  

 

           15,183

 

           17,750

Advances

         446,850

 

         300,214

 

           42,810

 

           22,255

Tariff discounts - CDE

           34,755

 

           25,040

 

                  -  

 

                  -  

Provision for socio environmental costs

           17,139

 

           16,360

 

         112,028

 

         107,814

Payroll

           13,022

 

           20,747

 

                  -  

 

                  -  

Profit sharing

           59,776

 

           80,518

 

           10,104

 

           16,273

Collection agreements

           74,923

 

           72,483

 

                  -  

 

                  -  

Guarantees

                  -  

 

                  -  

 

             5,495

 

             5,959

Business combination

             7,230

 

             6,927

 

                  -  

 

                  -  

Others

           31,619

 

           40,408

 

           39,069

 

           32,654

Total

      1,049,723

 

         961,306

 

         469,910

 

         426,889

 

Advances: refer mainly to advances from customers in relation to advance billing by the subsidiary CPFL Renováveis, before the energy or service has actually been provided or delivered.

 

( 23 ) EQUITY

 

The shareholders’ interest in the Company’s Equity at June 30, 2018 and December 31, 2017 is shown below:

   

Number of shares

   

June 30, 2018

 

December 31, 2017

Shareholders

 

Common shares

 

Interest %

 

Common shares

 

Interest %

State Grid Brazil Power Participações S.A.

 

       730,435,698

 

71.76%

 

       730,435,698

 

71.76%

Camargo Correa S.A.

 

               27,435

 

0.00%

 

               27,435

 

0.00%

ESC Energia S.A.

 

       234,086,204

 

23.00%

 

       234,086,204

 

23.00%

Members of the Executive Board

 

                    189

 

0.00%

 

                    189

 

0.00%

Other shareholders

 

         53,365,220

 

5.24%

 

         53,365,220

 

5.24%

Total

 

    1,017,914,746

 

100.00%

 

    1,017,914,746

 

100.00%

 

The details of the items included in equity are described in the financial statements for the year ended December 31, 2017.

23.1 – Termination of the statutory reserve of the concession financial asset.

The EGM of April 27, 2018 approved the termination of the statutory reserve of the concession financial asset and the transfer of the respective balance of R$ 826,600 to the Retained Earnings account.

 

( 24 ) EARNINGS PER SHARE

 

Earnings per share – basic and diluted

The calculation of the basic and diluted earnings per share for the quarters and semesters ended at June 30, 2018 and 2017 was based on the profit of the period attributable to controlling shareholders and the weighted average number of common shares outstanding period:

 

69


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

   

2nd quarter 2018

 

1st semester 2018

 

2nd quarter 2017

 

1st semester 2017

Numerator

               

Profit attributable to controlling shareholders

               

Denominator

 

            455,714

 

            899,497

 

            143,475

 

            389,360

Weighted average number of shares held by shareholders

               
   

   1,017,914,746

 

   1,017,914,746

 

   1,017,914,746

 

   1,017,914,746

Earnings per share - basic and diluted

               
   

0.45

 

0.88

 

0.14

 

0.38

 

For the periods ended June 30, 2018 and 2017, the calculation of earnings per share was not affected by the effects of debentures convertible into shares due to the fact that they presented antidilutive effects.

 

( 25 ) NET OPERATING REVENUE

 

 

Consolidated

 

2018

 

2017

Revenue from Eletric Energy Operations

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Consumer class

             

Residential

   3,282,393

 

  6,399,851

 

   2,694,765

 

  5,872,153

Industrial

   1,266,623

 

  2,425,972

 

   1,259,244

 

  2,502,632

Commercial

   1,479,401

 

  2,913,868

 

   1,293,443

 

  2,819,964

Rural

   305,874

 

  658,275

 

   256,233

 

  586,001

Public administration

   222,179

 

  415,098

 

   199,150

 

  399,210

Public lighting

   184,844

 

  338,894

 

   158,707

 

  313,497

Public services

   279,087

 

  517,413

 

   230,687

 

  470,532

(-) Adjustment of revenues from excess demand and excess reactive power

   -  

 

-  

 

(20,874)

 

   (45,153)

Billed

   7,020,401

 

   13,669,370

 

   6,071,355

 

   12,918,836

Unbilled (net)

  (110,628)

 

  (12,154)

 

  (195,855)

 

(221,484)

(-) Reclassificacion to Network Usage Charge - TUSD - Captive Consumers

  (2,616,568)

 

(5,558,620)

 

  (2,235,793)

 

(4,827,275)

Electricity sales to final consumers

   4,293,205

 

  8,098,596

 

   3,639,707

 

  7,870,076

               

Furnas Centrais Elétricas S.A.

   135,778

 

  269,864

 

   142,641

 

  277,241

Other concessionaires and licensees

   868,434

 

  1,566,680

 

   703,422

 

  1,274,975

(-) Reclassificacion to Network Usage Charge - TUSD - Captive Consumers

(24,214)

 

  (42,068)

 

(12,371)

 

   (24,847)

Spot market energy

   313,283

 

  479,410

 

   608,058

 

  852,708

Electricity sales to wholesalers

   1,293,281

 

  2,273,886

 

   1,441,750

 

  2,380,077

               

Revenue due to Network Usage Charge - TUSD - Captive Consumers

   2,640,782

 

  5,600,688

 

   2,248,164

 

  4,852,122

Revenue due to Network Usage Charge - TUSD - Free Consumers

   674,921

 

  1,254,161

 

   537,295

 

  1,063,604

(-) Compensation for non-compliance with technical indicators

(13,441)

 

  (29,821)

 

   -  

 

-  

(-) Adjustment of revenues from excess demand and excess reactive power

   -  

 

-  

 

   (6,237)

 

   (13,034)

Revenue from construction of concession infrastructure

   370,053

 

  740,615

 

   462,323

 

  878,362

Sector financial asset and liability (Note 8)

   480,699

 

  854,246

 

   369,317

 

(195,686)

Concession financial asset - fair value adjustment (Note 10)

   138,552

 

  203,409

 

  32,391

 

81,314

Energy development account - CDE - Low-income, Tariff discounts - judicial injunctions ,and other tariff discounts

   377,748

 

  754,489

 

   313,950

 

  737,924

Other revenues and income

   245,116

 

  388,144

 

   117,851

 

  232,137

Other operating revenues

   4,914,430

 

  9,765,931

 

   4,075,055

 

  7,636,744

Total gross operating revenue

  10,500,917

 

   20,138,414

 

   9,156,512

 

   17,886,897

Deductions from operating revenues

 

 

 

 

 

 

 

ICMS

  (1,501,034)

 

(2,925,304)

 

  (1,287,876)

 

(2,755,202)

PIS

  (162,849)

 

(312,534)

 

  (138,986)

 

(274,789)

COFINS

  (750,126)

 

(1,439,641)

 

  (640,211)

 

(1,265,701)

ISS

   (4,019)

 

(7,547)

 

   (3,672)

 

(6,594)

Global reversal reserve - RGR

   -  

 

(247)

 

  (741)

 

(1,457)

Energy development account - CDE

  (921,787)

 

(1,819,458)

 

  (784,158)

 

(1,614,314)

Research and development and energy efficiency
programs

(52,320)

 

(100,913)

 

(43,333)

 

   (84,434)

PROINFA

(38,220)

 

  (73,495)

 

(42,862)

 

   (86,767)

Tariff flags and others

  (116,235)

 

(123,331)

 

  (244,460)

 

(281,063)

IPI

             

 

  (3,555,551)

 

(6,818,393)

 

  (3,193,963)

 

(6,385,569)

Net operating revenue

   6,945,366

 

   13,320,021

 

   5,962,549

 

   11,501,327

               

 

 

70


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 

2018

 

2017

Revenue from operations with electricity - in GWh

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Consumer class

             

Residential

                    4,787

 

                    10,078

 

                    4,590

 

                     9,718

Industrial

                    3,392

 

                     6,767

 

                    3,683

 

                     7,142

Commercial

                    2,520

 

                     5,273

 

                    2,455

 

                     5,284

Rural

                       778

 

                     2,015

 

                       836

 

                     1,935

Public administration

                       372

 

                        746

 

                       400

 

                        767

Public lighting

                       490

 

                        994

 

                       490

 

                        970

Public services

                       572

 

                     1,143

 

                       515

 

                     1,012

Billed

                  12,911

 

                    27,016

 

                  12,969

 

                    26,829

Own consumption

                          8

 

                          17

 

                          8

 

                          17

Electricity sales to final consumers

                  12,920

 

                    27,033

 

                  12,977

 

                    26,846

               

Furnas Centrais Elétricas S.A.

                       717

 

                     1,426

 

                       754

 

                     1,501

Other concessionaires and licensees

                    4,286

 

                     7,856

 

                    3,803

 

                     7,020

Spot market energy

                    1,016

 

                     1,589

 

                    2,952

 

                     4,374

Electricity sales to wholesalers

                    6,019

 

                    10,871

 

                    7,510

 

                    12,895

 

   

Consolidated

Nº of consumers

 

June 30, 2018

 

June 30, 2017

Consumer class

       

  Residential

 

      8,436,616

 

      8,240,134

  Industrial

 

           59,107

 

           60,447

  Commercial

 

         538,250

 

         543,888

  Rural

 

         360,650

 

         356,962

  Public Administration

 

           60,822

 

           60,764

  Public Lighting

 

           11,449

 

           11,111

  Public Services

 

           10,050

 

             9,698

Total

 

      9,476,944

 

      9,283,004

 

25.1 Adjustment of revenues from excess demand and excess reactive power

The tariff regulation procedure (Proret), sub item 2.7 Other revenues, approved by ANEEL Normative Resolution No. 463 of November 22, 2011, determined that revenues of the distribution subsidiaries received as a result of excess demand and excess reactive power, from the contractual tariff review date for the 3rd periodic tariff review, must be accounted for as special obligations, in specific sub-accounts, and will be amortized from the next tariff review. Beginning May 2015 for subsidiary CPFL Piratininga, September 2015 for subsidiary Companhia Jaguari de Energia (CPFL Santa Cruz) and November 2017 for subsidiaries CPFL Paulista and RGE Sul and January 2018 for the subsidiary RGE, due to the 4th cycle of periodic tariff review, this special obligation started being amortized and the new values from the excess demand and excess reagents started being recognized in sector financial assets and liabilities and will only be amortized when the 5th cycle of periodic tariff review is approved.

25.2 Periodic tariff review (“RTP”) and Annual tariff adjustment (“RTA”)

       

2018

 

2017

Subsidiary

 

Month

 

RTA

 

Effect perceived by consumers (a)

 

RTA / RTP

 

Effect perceived by consumers (a)

CPFL Paulista

 

April (b)

 

12.68%

 

16.90%

 

-0.80%

 

-10.50%

CPFL Piratininga

 

October

 

(b)

 

(b)

 

7.69%

 

17.28%

RGE

 

June

 

21.27%

 

20.58%

 

3.57%

 

5.00%

RGE Sul

 

April (b)

 

18.45%

 

22.47%

 

-0.20%

 

-6.43%

Companhia Força e Luz Santa Cruz

 

March

 

(c)

 

(c)

 

-1.28%

 

-10.37%

CPFL Leste Paulista

 

March

 

(c)

 

(c)

 

0.76%

 

-3.28%

CPFL Jaguari de Energia (CPFL Santa Cruz)

 

March

 

5.71%

 

(c)

 

2.05%

 

-8.42%

CPFL Sul Paulista

 

March

 

(c)

 

(c)

 

1.64%

 

-4.15%

CPFL Mococa

 

March

 

(c)

 

(c)

 

1.65%

 

-2.56%

 

 

(a)   Represents the average effect perceived by the consumer, as a result of the elimination from the tariff base of financial components that had been added in the prior tariff adjustment.

(b)   The respective adjustments for 2018 have not yet occurred.

 

71


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

(c)   As mentioned in note 12.5.2, at March 31, 2018, the EGM approved the grouping of subsidiaries Companhia Luz e Força Santa Cruz, Companhia Leste Paulista de Energia, Companhia Jaguari de Energia, Companhia Sul Paulista de Energia e Companhia Luz and Força de Mococa In accordance with Normative Resolution 716, of May 3, 2016, until the first tariff review of the grouped concessionaire, which will take place in March 2021, ANEEL may apply the procedure that divides over time the variation in the tariffs of the former concessions and the unified tariff. This occurred in the tariff adjustment of March 2018.

On March 13, 2018, the ANEEL published REH No. 2,376, which set the average annual tariff adjustment of Companhia Jaguari de Energia (“CPFL Santa Cruz”), effective as of March 22, 2018, at 5.71%, 4.41% regarding the economic tariff adjustment and 1.30% regarding relevant financial components. The average effect to be perceived by consumers of the original concessions are:

 

 

Jaguari

 

Mococa

 

Leste Paulista

 

Sul Paulista

 

Santa Cruz

Effect perceived by consumers

21.15%

 

3.40%

 

7.03%

 

7.50%

 

5.32%

 

25.3 Energy Development Account (CDE) – Low income, other tariff subsidies and tariff discounts - injunctions

All details on the CDE contribution are disclosed in notes 25.3 to the financial statements as of December 31, 2017.

In the first semester of 2018, a revenue of R$754,489 was recognized (R$737,924 in the first semester of 2017), considering (i) R$39,882 for low-income subsidy (R$51,793 in the first semester of 2017), (ii) R$693,719 for other tariff discounts (R$609,826 in the first semester of 2017), and (iii) R$20,887 for tariff discounts – CCRBT injunctions and subsidy (R$76,305 in the first semester of 2017); These items were recorded as a balancing item to other receivables in line item Receivables – CDE (note 11) and other payables in line item Tariff discounts – CDE (note 22.)

 

25.4 Tariff flags

The system of Tariff Flags application is described in note 25.4 to the financial statements as of December 31, 2017.

In the first semester of 2018, ANEEL approved the Tariff Flags billed from November 2017to April 2018. The amount approved in this period was R$366,321. Out of this amount, R$297,340, referring to November and December 2017, were used to offset part of the sector financial asset and liability (note 8) and R$68,981, referring to the January  to April 2018 approval, due to Closing Order No. 4,356 of December 22, 2017, were classified as sector financial asset and liability. The amount of R$116,274, with respect to the tariff flag billed for May and June 2018, was not approved and is recorded in regulatory fees (note 17.)

 

25.5 Energy development account (“CDE”)

ANEEL, by means of Ratifying Resolution (“REH”) No. 2,358 of December 19, 2017, amended by REH No. 2,368 of February 9, 2018, established the definitive annual quotas of CDE for the year 2018. These quotas comprise: (i) annual quota of the CDE – USAGE account; and (ii) quota of the CDE – Energy account, related to part of the CDE contributions received by the electric energy distribution concessionaires in the period from January 2013 to January 2014, which should be charged from consumers and passed on to the CDE Account in up to five years from the RTE of 2015. Furthermore, by means of REH No. 2.004 of December 15, 2015, ANEEL established another quota intended for the amortization of the ACR Account, whose amount were updated by REH No. 2.231, of April 25, 2017, with payment and transfer to the CDE Account for the period of April 2017 to March 2018. The same resolution defined the amounts for the period of April 2018 to March 2020.

 

 

72


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 26 ) COST OF ELECTRIC ENERGY

 

   

Consolidated

   

2018

 

2017

Electricity Purchased for Resale

 

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Itaipu Binacional

 

         716,374

 

           1,274,806

 

         610,101

 

         1,168,098

PROINFA

 

           82,243

 

              168,118

 

           72,052

 

            142,936

Energy purchased through auction in  the regulated market and bilateral contracts and spot market

 

      3,442,156

 

           6,417,321

 

      3,191,280

 

         5,884,091

PIS and COFINS credit

 

        (378,138)

 

             (696,336)

 

        (352,889)

 

           (656,198)

Subtotal

 

      3,862,633

 

           7,163,909

 

      3,520,542

 

         6,538,926

                 

Electricity Network Usage Charge

               

Basic network charges

 

         575,569

 

           1,143,009

 

         248,439

 

            496,314

Transmission from Itaipu

 

           65,463

 

              127,654

 

           15,645

 

              30,538

Connection charges

 

           38,206

 

                70,403

 

           29,777

 

              59,814

Charges for use of the distribution system

 

           11,855

 

                21,421

 

           10,780

 

              22,066

System service charges - ESS

 

           (7,124)

 

                39,751

 

          (65,865)

 

           (148,528)

Reserve energy charges - EER

 

           69,298

 

              135,212

 

                (17)

 

                   (17)

PIS and COFINS credit

 

          (77,865)

 

             (149,601)

 

          (20,785)

 

             (39,942)

Subtotal

 

         675,403

 

           1,387,849

 

         217,974

 

            420,244

                 

Total

 

      4,538,036

 

           8,551,758

 

      3,738,517

 

         6,959,171

 

 

   

Consolidated

   

2018

 

2017

Electricity Purchased for Resale - in GWh

 

2nd quarter

 

1st semester

 

2nd quarter

 

1st semester

Itaipu Binacional

 

             2,765

 

                5,504

 

             2,926

 

             5,834

PROINFA

 

               268

 

                   524

 

               267

 

               537

Energy purchased through auction in  the regulated market and bilateral contracts and spot market

 

           15,117

 

              30,586

 

           16,389

 

           32,578

Total

 

           18,150

 

              36,614

 

           19,582

 

           38,949

 

 

 

 

 

 

73


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 27 )      OPERATING COSTS AND EXPENSES

 

 

2nd quarter

 

 

 

 

   

 

 

 

Operating Expenses

   

 

 

 

Operating costs

 

Services Rendered to Third Parties

 

Sales

 

General

 

Other

 

Total

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

Personnel

   226,085

 

   217,889

 

  -  

 

1

 

  42,565

 

  43,059

 

  83,737

 

  75,729

 

  -  

 

  -  

 

   352,387

 

   336,678

Private Pension Plans

  22,477

 

  28,112

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  22,477

 

  28,112

Materials

  53,205

 

  50,984

 

   162

 

   159

 

   1,986

 

   2,143

 

   8,004

 

   4,175

 

  -  

 

  -  

 

  63,357

 

  57,461

Third party services

  39,193

 

  71,500

 

   434

 

   280

 

  41,756

 

  39,759

 

  74,338

 

  77,597

 

  -  

 

  -  

 

   155,721

 

   189,136

Depreciation and amortization

   319,069

 

   283,656

 

  -  

 

  -  

 

   1,026

 

   1,515

 

  22,399

 

  23,953

 

  -  

 

  -  

 

   342,494

 

   309,124

Costs of infrastructure construction

  -  

 

  -  

 

   370,047

 

   465,666

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   370,047

 

   465,666

Others

  12,500

 

  37,547

 

   (2)

 

1

 

  61,078

 

  56,087

 

  47,634

 

  73,772

 

  92,794

 

   107,526

 

   214,004

 

   274,933

Collection fees

  -  

 

   3,523

 

  -  

 

  -  

 

  20,560

 

  17,527

 

  -  

 

  -  

 

  -  

 

  -  

 

  20,560

 

  21,050

Allowance for doubtful accounts

  -  

 

  -  

 

  -  

 

  -  

 

  41,822

 

  39,372

 

  -  

 

  -  

 

  -  

 

  -  

 

  41,822

 

  39,372

Leases and rentals

   6,917

 

  13,521

 

  -  

 

  -  

 

  -  

 

  (189)

 

   7,757

 

   4,722

 

  -  

 

  -  

 

  14,674

 

  18,054

Publicity and advertising

1

 

   126

 

  -  

 

  -  

 

  -  

 

  -  

 

   3,936

 

   4,629

 

  -  

 

  -  

 

   3,937

 

   4,755

Legal, judicial and indemnities

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  31,467

 

  58,504

 

  -  

 

  -  

 

  31,467

 

  58,504

Donations, contributions and subsidies

  21

 

  29

 

  -  

 

  -  

 

  -  

 

  -  

 

   1,040

 

   1,430

 

  -  

 

  -  

 

   1,061

 

   1,459

Gain (loss) on disposal, retirement and other noncurrent assets

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  21,512

 

  35,508

 

  21,512

 

  35,508

Amortization of concession intangible asset

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  71,287

 

  72,116

 

  71,287

 

  72,116

Amotization of the risk premium paid -GSF

   3,147

 

   2,398

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   3,147

 

   2,398

Fee for the use of water

   2,085

 

   2,698

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   2,085

 

   2,698

Others

   328

 

  15,252

 

   (2)

 

1

 

  (1,304)

 

  (623)

 

   3,433

 

   4,486

 

   (5)

 

(98)

 

   2,450

 

  19,018

Total

   672,530

 

   689,687

 

   370,642

 

   466,106

 

   148,412

 

   142,565

 

   236,112

 

   255,226

 

  92,794

 

   107,526

 

   1,520,490

 

   1,661,110

                                               
                                               
 

1st semester

 

 

 

 

   

 

 

 

Operating Expenses

   

 

 

 

Operating costs

 

Services Rendered to Third Parties

 

Sales

 

General

 

Other

 

Total

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

Personnel

   442,487

 

   421,484

 

  -  

 

1

 

  83,267

 

  85,583

 

   164,378

 

   162,093

 

  -  

 

  -  

 

   690,132

 

   669,161

Private Pension Plans

  44,955

 

  56,944

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  44,955

 

  56,944

Materials

   110,131

 

  99,595

 

   353

 

   298

 

   3,924

 

   4,737

 

  11,571

 

   7,927

 

  -  

 

  -  

 

   125,979

 

   112,557

Third party services

   103,506

 

   138,835

 

   1,047

 

   784

 

  79,740

 

  83,397

 

   152,360

 

   151,373

 

  -  

 

  -  

 

   336,653

 

   374,389

Depreciation and amortization

   615,737

 

   561,636

 

  -  

 

  -  

 

   2,096

 

   2,841

 

  43,337

 

  48,970

 

  -  

 

  -  

 

   661,170

 

   613,447

Costs of infrastructure construction

  -  

 

  -  

 

   740,606

 

   880,293

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   740,606

 

   880,293

Others

  25,646

 

  77,976

 

   (3)

 

   (3)

 

   108,025

 

   115,224

 

  68,341

 

   146,428

 

   189,326

 

   193,346

 

   391,335

 

   532,971

Collection fees

  -  

 

   5,826

 

  -  

 

  -  

 

  40,666

 

  34,045

 

  -  

 

  -  

 

  -  

 

  -  

 

  40,666

 

  39,871

Allowance for doubtful accounts

  -  

 

  -  

 

  -  

 

  -  

 

  68,242

 

  86,068

 

  -  

 

  -  

 

  -  

 

  -  

 

  68,242

 

  86,068

Leases and rentals

  21,365

 

  25,875

 

  -  

 

  -  

 

  -  

 

  (161)

 

  11,104

 

   9,357

 

  -  

 

  -  

 

  32,469

 

  35,071

Publicity and advertising

1

 

   127

 

  -  

 

  -  

 

  -  

 

  -  

 

   6,202

 

   7,513

 

  -  

 

  -  

 

   6,203

 

   7,640

Legal, judicial and indemnities

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  43,751

 

   113,623

 

  -  

 

  -  

 

  43,751

 

   113,623

Donations, contributions and subsidies

  34

 

  53

 

  -  

 

  -  

 

  -  

 

2

 

   2,168

 

   2,558

 

  -  

 

  -  

 

   2,202

 

   2,613

Gain (loss) on disposal, retirement and other noncurrent assets

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  52,410

 

  49,275

 

  52,410

 

  49,275

Amortization of concession intangible asset

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   142,795

 

   144,232

 

   142,795

 

   144,232

Amotization of the risk premium paid -GSF

   5,546

 

   4,797

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   5,546

 

   4,797

Fee for the use of water

   4,278

 

   4,963

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

   4,278

 

   4,963

Impairment reversal

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  -  

 

  (5,837)

 

  -  

 

  (5,837)

 

  -  

Others

  (5,578)

 

  36,336

 

   (3)

 

   (3)

 

  (883)

 

  (4,731)

 

   5,117

 

  13,376

 

(42)

 

  (161)

 

  (1,389)

 

  44,817

Total

   1,342,462

 

   1,356,470

 

   742,003

 

   881,373

 

   277,051

 

   291,782

 

   439,987

 

   516,790

 

   189,326

 

   193,346

 

   2,990,829

 

   3,239,762

 

 

 

74


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

( 28 ) FINANCE INCOME (COSTS)

 

   

Consolidated

   

2nd quarter 2018

 

1st semester 2018

 

2nd quarter 2017

 

1st semester 2017

Financial income

               

Income from financial investments

 

              54,420

 

             120,806

 

             129,272

 

             289,476

Late payment interest and fines

 

              63,410

 

             132,933

 

              69,401

 

             142,835

Adjustment for inflation of tax credits

 

                2,221

 

                4,762

 

                2,429

 

                4,955

Adjustment for inflation of escrow deposits

 

                9,002

 

              17,806

 

              12,826

 

              26,063

Adjustment for inflation and exchange rate changes

 

                6,366

 

              29,108

 

               (1,129)

 

              29,278

Discount on purchase of ICMS credit

 

              12,263

 

              18,995

 

                2,859

 

                5,781

Adjustments to the sector financial asset (note 8)

 

              14,711

 

              21,815

 

                1,105

 

                1,105

PIS and COFINS on other finance income

 

             (11,190)

 

             (22,857)

 

             (12,549)

 

             (27,208)

Others

 

              17,876

 

              42,862

 

              18,418

 

              31,059

Total

 

             169,078

 

             366,230

 

             222,632

 

             503,343

                 

Finance costs

               

Interest on debts

 

            (338,288)

 

            (681,520)

 

            (442,466)

 

            (927,761)

Adjustment for inflation and exchange rate changes

 

             (43,593)

 

            (162,725)

 

            (154,436)

 

            (338,043)

(-) Capitalized interest

 

                6,600

 

              12,809

 

              10,002

 

              34,159

Adjustments to the sector financial liability ( note 8)

 

                2,142

 

               (2,521)

 

             (23,215)

 

             (50,390)

Use of public asset

 

               (4,693)

 

               (8,495)

 

                  (243)

 

               (3,630)

Others

 

             (36,919)

 

             (76,971)

 

             (30,440)

 

             (71,985)

Total

 

            (414,752)

 

            (919,423)

 

            (640,799)

 

         (1,357,649)

                 

Finance expense, net

 

            (245,674)

 

            (553,193)

 

            (418,168)

 

            (854,306)

 

Interests were capitalized at an average rate of 8.05% p.a. in the 1st semester of 2018 (9.63% p.a. in the 1st semester of 2017) on qualifying assets, in accordance with CPC 20 (R1) and IAS 23.

In line item of adjustment for inflation and exchange rate changes, the expense includes the effects of gains of R$ 622,591 in the 1st semester of 2018 (loss of R$ 98,826 in the 1st semester of 2017) on derivative instruments (note 32).

 

( 29 ) SEGMENT INFORMATION

 

The segregation of the Group’s operating segments is based on the internal financial information and management structure and is made by type of business: electric energy distribution, electric energy generation (conventional and renewable sources), electric energy commercialization and services rendered activities.

Profit or loss, assets and liabilities per segment include items directly attributable to the segment, as well as those that can be allocated on a reasonable basis, if applicable. Prices charged between segments are determined based on similar market transactions. Note 1 presents the subsidiaries according to their areas of operation and provides further information on each subsidiary and its business line and segment.

As of 2018, due to the way the Group’s new management monitors the segment results, intangible assets acquired in business combination that were previously allocated to the respective segments started to be presented in the parent company in which it is recorded, in the segment “Others.” In order to keep the comparability, 2017’ information are been disclosed in the same criteria.

The information segregated by segment is presented below, according to the criteria established by the Group’s officers:

 

75


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

1st semester 2018

Distribution

 

Generation
(conventional source)

 

Generation
(renewable source)

 

Commercialization

 

Services

 

Total

 

Other (*)

 

Elimination

 

Total

Net operating revenue

   10,838,134

 

   325,196

 

  576,707

 

  1,551,720

 

28,263

 

   13,320,020

 

-  

 

-  

 

   13,320,021

(-) Intersegment revenues

  3,806

 

   226,771

 

  221,877

 

  1,161

 

  211,026

 

  664,641

 

-  

 

(664,641)

 

-  

Cost of electric energy

(7,324,255)

 

(35,434)

 

(152,444)

 

(1,491,474)

 

-  

 

(9,003,608)

 

-  

 

  451,850

 

(8,551,758)

Operating costs and expenses

(1,957,792)

 

(47,032)

 

(162,596)

 

   (22,718)

 

(191,774)

 

(2,381,912)

 

   (17,745)

 

  212,791

 

(2,186,864)

Depreciation and amortization

(387,734)

 

(60,270)

 

(312,173)

 

(1,222)

 

   (11,111)

 

(772,510)

 

   (31,455)

 

-  

 

(803,965)

Income from electric energy service

  1,172,159

 

   409,232

 

  171,371

 

37,467

 

36,403

 

  1,826,632

 

   (49,199)

 

-  

 

  1,777,432

Equity

-  

 

   154,102

 

-  

 

-  

 

-  

 

  154,102

 

-  

 

-  

 

  154,102

Finance income

  258,664

 

  36,609

 

60,012

 

18,037

 

  3,221

 

  376,544

 

  7,471

 

   (17,785)

 

  366,230

Finance expenses

(409,983)

 

  (179,439)

 

(308,345)

 

   (30,130)

 

(3,912)

 

(931,809)

 

(5,399)

 

17,785

 

(919,423)

Profit (loss) before taxes

  1,020,839

 

   420,505

 

   (76,962)

 

25,375

 

35,712

 

  1,425,469

 

   (47,128)

 

-  

 

  1,378,341

Income tax and social contribution

(376,607)

 

(83,454)

 

   (32,099)

 

(9,570)

 

(9,100)

 

(510,830)

 

  2,071

 

-  

 

(508,760)

Profit (loss) for the year

  644,232

 

   337,051

 

(109,061)

 

15,805

 

26,612

 

  914,638

 

   (45,057)

 

-  

 

  869,581

Total assets

   22,906,327

 

6,921,247

 

   12,609,275

 

  1,358,830

 

  433,969

 

   44,229,647

 

  9,467,801

 

  (11,989,197)

 

   41,708,250

Purchases of PP&E and intangible assets

  712,446

 

3,599

 

  104,313

 

  1,328

 

25,697

 

  847,383

 

  275

 

-  

 

  847,658

                                   
                                   

1st semester 2017(**)

Distribution

 

Generation
(conventional source)

 

Generation
(renewable source)

 

Commercialization

 

Services

 

Total

 

Other (*)

 

Elimination

 

Total

Net operating revenue

  9,191,030

 

   372,470

 

  530,684

 

  1,379,025

 

26,837

 

   11,500,047

 

  1,280

 

-  

 

   11,501,327

(-) Intersegment revenues

  4,542

 

   216,643

 

  252,322

 

  4,832

 

  191,613

 

  669,952

 

-  

 

(669,952)

 

-  

Cost of electric energy

(5,960,877)

 

(50,053)

 

(140,620)

 

(1,287,067)

 

-  

 

(7,438,617)

 

-  

 

  479,447

 

(6,959,171)

Operating costs and expenses

(2,156,432)

 

(98,679)

 

(182,918)

 

   (21,484)

 

(178,345)

 

(2,637,858)

 

   (34,729)

 

  190,506

 

(2,482,082)

Depreciation and amortization

(349,601)

 

(60,197)

 

(303,694)

 

(1,697)

 

(9,250)

 

(724,438)

 

   (33,243)

 

-  

 

(757,679)

Income from electric energy service

  728,661

 

   380,185

 

  155,775

 

73,610

 

30,856

 

  1,369,087

 

   (66,692)

 

-  

 

  1,302,395

Equity

-  

 

   162,678

 

-  

 

-  

 

-  

 

  162,678

 

-  

 

-  

 

  162,678

Finance income

  340,430

 

  64,966

 

71,740

 

12,493

 

  4,587

 

  494,216

 

15,882

 

(6,755)

 

  503,343

Finance expenses

(687,598)

 

  (267,948)

 

(327,926)

 

   (33,122)

 

(2,736)

 

(1,319,330)

 

   (45,074)

 

  6,755

 

(1,357,649)

Profit (loss) before taxes

  381,493

 

   339,883

 

(100,412)

 

52,982

 

32,706

 

  706,652

 

   (95,884)

 

-  

 

  610,767

Income tax and social contribution

(157,974)

 

(58,682)

 

   (26,033)

 

   (17,850)

 

(7,660)

 

(268,200)

 

12,727

 

-  

 

(255,474)

Profit (loss) for the year

  223,519

 

   281,201

 

(126,445)

 

35,132

 

25,046

 

  438,452

 

   (83,157)

 

-  

 

  355,293

Total assets

   22,040,918

 

7,113,427

 

   12,856,002

 

  1,378,814

 

  454,961

 

   43,844,122

 

  9,103,854

 

  (11,665,064)

 

   41,282,912

Purchases of PP&E and intangible assets

  787,630

 

1,736

 

  521,117

 

  1,501

 

26,115

 

  1,338,099

 

  653

 

-  

 

  1,338,752

  

(*) Others – refer basically to assets and transactions which are not related to any of the identified segments. Of total assets, the amount of R$9,241,583 reffers to the investment of CPFL Energia in the subsidiaries ( R$ 8,557,673 in December 31, 2017).

(**)For total assets, the balances refer to December 31, 2017.

 

( 30 ) RELATED PARTY TRANSACTIONS

 

The Company’s controlling shareholders are as follows:

·   State Grid Brazil Power Participações S.A.

Indirect subsidiary of State Grid Corporation of China, a Chinese state-owned company primarily engaged in developing and operating businesses in the electric energy sector.

·   ESC Energia S.A.

Subsidiary of State Grid Brazil Power Participações S.A.

The direct and indirect interests in operating subsidiaries are described in note 1.

Controlling shareholders, subsidiaries, associates, joint ventures and entities under common control and that in some way exercise significant influence over the Company and its subsidiaries and associates were considered as related parties.

The main transactions are disclosed in note 30 to the financial statements for the year ended December 31, 2017:

To ensure that the trading transactions with related parties are conducted under usual market conditions, the Group set up a “Related Parties Committee”, comprising representatives of the controlling shareholders, of the Company and an independent member, which analyzes the main transactions with related parties.

The total compensation of key management personnel in the 1st semester of 2018, in accordance with CVM Decision 560/2008, was R$ 40,978 (R$ 38,222 in the 1st semester of 2017). This amount comprises R$ 40,052 (R$ 37,517 in the 1st semester of 2017) in respect of short-term benefits and R$ 982 (R$ 579 in the 1st semester of 2017) of post-employment benefits, and a recovery of R$ 56 of expenses related to other long-term benefits ( R$ 26 in the 1st semester) .

Transactions with entities under common control basically refers to transmission system charge paid by the Company’s subsidiaries to the direct or indirect  subsidiaries of State Grid Corporation of China.

 

 

76


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Transactions involving controlling shareholders, entities under common control or  significant influence and joint ventures:

 

 

 Consolidated

 

Asset

 

Liability

 

Income

 

Expense

 

June 30, 2018

 

December 31, 2017

 

June 30, 2018

 

December 31, 2017

 

1st semester 2018

 

1st semester 2017

 

1st semester 2018

 

1st semester 2017

Advances

                             

BAESA – Energética Barra Grande S.A.

                   -  

 

                   -  

 

                 674

 

                 691

 

                   -  

 

                   -  

 

                   -  

 

                   -  

Foz do Chapecó Energia S.A.

                   -  

 

                   -  

 

                 955

 

                 979

 

                   -  

 

                   -  

 

                   -  

 

                   -  

ENERCAN - Campos Novos Energia S.A.

                   -  

 

                   -  

 

              1,183

 

              1,212

 

                   -  

 

                   -  

 

                   -  

 

                   -  

EPASA - Centrais Elétricas da Paraiba

                   -  

 

                   -  

 

                 429

 

                 440

 

                   -  

 

                   -  

 

                   -  

 

                   -  

                               

Energy purchases and sales, and charges

                             

Entities under common control (State Grid Corporation of China' subsidiaries)

                   -  

 

                   -  

 

                   -  

 

             13,330

 

                   -  

 

                   -  

 

             73,441

 

             41,646

BAESA – Energética Barra Grande S.A.

                   -  

 

                   -  

 

              6,959

 

             13,169

 

                   -  

 

                   -  

 

             10,520

 

             26,323

Foz do Chapecó Energia S.A.

                   -  

     

             38,155

 

             37,415

 

                   -  

 

                   -  

 

           217,961

 

           187,693

ENERCAN - Campos Novos Energia S.A.

                 816

 

                 823

 

             51,844

 

             51,381

 

              5,245

 

              4,360

 

           152,517

 

           140,010

EPASA - Centrais Elétricas da Paraiba

                   -  

 

                   -  

 

              7,985

 

             19,458

 

                   -  

 

                   -  

 

             52,062

 

             53,447

                               

Intangible assets, property, plant and equipment, materials and services rendered

                             

BAESA – Energética Barra Grande S.A.

                     3

 

                 153

 

                   -  

 

                   -  

 

                 810

 

                 777

 

                   -  

 

                   -  

Foz do Chapecó Energia S.A.

                     2

 

                     2

 

                   -  

 

                   -  

 

                 887

 

                 781

 

                   -  

 

                   -  

ENERCAN - Campos Novos Energia S.A.

                 139

 

                 152

 

                   -  

 

                   -  

 

                     8

 

                 820

 

                   -  

 

                   -  

EPASA - Centrais Elétricas da Paraíba S.A.

                 556

 

                 416

 

                   -  

 

                   -  

 

                 150

 

                (619)

 

                   -  

 

                   -  

                               

Intragroup loans

                             

EPASA - Centrais Elétricas da Paraíba S.A.

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                     1

 

                 327

 

                   -  

 

                   -  

                               

Dividends and interest on capital

                   

                   -  

 

                   -  

 

                   -  

BAESA – Energética Barra Grande S.A.

                 108

 

                 108

 

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                   -  

Chapecoense Geração S.A.

           100,829

 

             32,734

 

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                   -  

ENERCAN - Campos Novos Energia S.A.

             50,649

 

             21,184

 

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                   -  

 

                   -  

                               

Others

                             

Instituto CPFL

                   -  

 

                   -  

 

                   92

 

                   -  

 

                   -  

 

                   -  

 

              2,638

 

              2,137

 

 

( 31 ) RISK MANAGEMENT

 

The risk management structure and the main risk factors that affect the Group’s business are disclosed in note 32 to the financial statements for the year ended December 31, 2017.

 

( 32 ) FINANCIAL INSTRUMENTS

 

The main financial instruments, at fair value and/or the carrying amount is significantly different of the respective fair value, classified in accordance with the Group’s accounting practices, are:

               

Consolidated

               

 June 30, 2018

 

Note

 

Category

 

Measurement

Level (*)

 

Carrying amount

 

Fair value

Assets

                   

Cash and cash equivalent

5

 

(a)

 

(2)

Level 1

 

          1,072,878

 

          1,072,878

Cash and cash equivalent

5

 

(a)

 

(2)

Level 2

 

          1,417,357

 

          1,417,357

Derivatives

32

 

(a)

 

(2)

Level 2

 

             795,396

 

             795,396

Derivatives - Zero-cost collar

32

 

(a)

 

(2)

Level 3

 

               24,664

 

               24,664

Concession financial asset - distribution

10

 

(a)

 

(2)

Level 3

 

          6,833,557

 

          6,833,557

               

         10,143,852

 

         10,143,852

                     

Liabilities

                   

Borrowings - principal and interest

16

 

(b)

 

(1)

Level 2 (***)

 

          5,279,330

 

          5,160,739

Borrowings - principal and interest (**)

16

 

(a)

 

(2)

Level 2

 

          5,389,481

 

          5,389,481

Debentures - Principal and interest

17

 

(b)

 

(1)

Level 2 (***)

 

          9,977,127

 

          9,929,824

Derivatives

32

 

(a)

 

(2)

Level 2

 

               12,757

 

               12,757

               

         20,658,695

 

         20,492,801

(*) Refers to the hierarchy for fair value measurement

                   

(**) As a result of the initial designation of this financial liability, the consolidated  balances  reported  a  gain  of  R$ 5,808 in the 1st semester of 2018 (a loss of R$ 65,817 in the 1st semester of 2017).

(***) Only for disclosure purposes, in accordance with CPC 40 (R1) / IFRS 7

                 
                     

Key

       

Category:

Measurement:

             

(a) - Measured at fair value through profit or loss

(1) - Measured at amortized cost

         

(b) - Other financial liabilities

(2) - Measured at fair value

           

 

 

The financial instruments for which the carrying amounts approximate the fair values, due to their nature, at the end of the reporting period are:

 

77


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

·      

Financial assets: (i) consumers, concessionaires and licensees, (ii) leases, (iii) intercompany loans between associates, subsidiaries and parent company, (iv) receivables – CDE, (v) concession financial asset – transmission companies, (vi) pledges, funds and restricted deposits, (vii) services rendered to third parties, (viii) collection agreements and (ix) sector financial asset;

·      

Financial liabilities: (i) trade payables, (ii) regulatory charges, (iii) use of public asset, (iv) consumers and concessionaires, (v) FNDCT/EPE/PROCEL, (vi) collection agreement, (vii) reversal fund, (viii) payables for business combination, (ix) tariff discounts – CDE and (x) sector financial liability.

In addition, in the 1st semester of 2018 there were no transfers between the fair value hierarchy levels.

 

a)     Measurement of financial instruments

As mentioned in note 4, the fair value of a security corresponds to its maturity value (redemption value) adjusted to present value by the discount factor (relating to the maturity date of the security) obtained from the market interest curve, in Brazilian reais.

CPC 40 (R1) and IFRS 7 require the classification into a three-level hierarchy for fair value measurement of financial instruments, based on observable and unobservable inputs related to the measurement of a financial instrument at the measurement date.

CPC 40 (R1) and IFRS 7 also define observable inputs as market data obtained from independent sources and unobservable inputs as those that reflect market assumptions.

The three levels of the fair value hierarchy are:

Level 1: Quoted prices in an active market for identical instruments;

Level 2: Observable inputs other than quoted prices in an active market that are observable for the asset or liability, directly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3: Instruments whose relevant factors are not observable market inputs.

 

As the distribution concessionaries classified the respective concession financial assets as fair value through profit or loss, the relevant factors for fair value measurement are not publicly observable. Therefore, the fair value hierarchy classification is level 3. The movements and respective gains (losses) in profit for or loss at the 1st semester are R$ 206,875 (R$ 84,057 in the 1st semester of 2017) and the main assumptions are described in note 10.

Additionally, the main assumptions used in the fair value measurement of the zero-cost collar derivative, the fair value hierarchy of which is Level 3, are disclosed in note 32 b.1.

The Company recognizes in “Investments at cost” in the interim financial statements the 5.94% interest held by the indirect subsidiary Paulista Lajeado Energia S.A. in the total capital of Investco S.A. (“Investco”), in the form of 28,154,140 common shares and 18,593,070 preferred shares. As Investco’s shares are not traded on the stock exchange and the main objective of its operations is to generate electric energy for commercialization by the shareholders holding the concession, the Company opted to recognize the investment at cost.

 

b)    Derivatives

The Group has the policy of using derivatives to hedge against the risks of fluctuations in exchange and interest rates, without any speculative purposes. The Group has currency hedges in a volume compatible with the net exchange exposure, including all assets and liabilities tied to exchange rate changes.

The hedging instruments entered into by the Group are currency or interest rate swaps with no leverage component, margin call requirements or daily or periodic adjustments. Furthermore, in 2015 the subsidiary CPFL Geração contracted a zero-cost collar derivative (see item b.1 below).

As a large part of the derivatives entered into by the subsidiaries have their terms fully aligned with the hedged debts, and in order to obtain more relevant and consistent accounting information through the recognition of income and expenses, these debts were designated for the accounting recognition at fair value (note 16). Other debts that have terms different from the derivatives contracted as a hedge continue to be recognized at amortized cost. Furthermore, the Group did not adopt hedge accounting for transactions with derivative instruments.

 

78


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

At June 30, 2018, the Group had the following swap transactions, all traded on the over-the-counter market:

   

Fair values (carrying amounts)

                       

Strategy

 

Assets

 

Liabilities

 

Fair value, net

 

Values at cost, net (1)

 

Gain (loss) on mark to market

 

Currency / debt index

 

Currency /swap index

 

Maturity range

 

Notional

                                     

Derivatives to hedge debts designated at fair value

                                   

Exchange rate hedge

                                   

Bank Loans - Law 4.131

 

  768,169

 

   -  

 

   768,169

 

  808,998

 

   (40,829)

 

 US$ + of 2.00% to 4.82%

 

104% to 116% of CDI

 

Aug-18 to Mar-22

 

  4,140,121

Bank Loans - Law 4.131

 

  4,869

 

   (1,443)

 

3,426

 

11,311

 

(7,885)

 

 EUR + 0.48% to 0.94%

 

102% to 106% of CDI

 

Apr-19 to Jun-21

 

456,000

   

  773,038

 

   (1,443)

 

   771,595

 

  820,309

 

   (48,714)

               
                                     

Derivatives to hedge debts  not designated at fair value

                                   

Price index hedge

                                   

Debentures

 

   21,988

 

   -  

 

  21,988

 

19,154

 

  2,833

 

IPCA + 5.86%

 

100% of CDI

 

Apr-19

 

   70,469

                                     

Interest rate hedge

                                   

Debentures

 

  370

 

   (3,314)

 

   (2,944)

 

(5,115)

 

  2,171

 

CDI

 

interest of 6.61% to 7.65%

 

2019

 

  4,964,409

Bank Loans - Law 4.131

 

-  

 

   (8,000)

 

   (8,000)

 

(6,450)

 

(1,550)

 

CDI

 

interest of 6.91% to 8.02%

 

2019

 

  3,697,103

   

  370

 

(11,314)

 

(10,944)

 

   (11,565)

 

  621

               

Other (2):

                                   

Zero cost collar

 

   24,664

 

   -  

 

  24,664

 

  4,568

 

20,096

 

US$

 

(note 32 b.1)

 

Jul-18 to Sep-20

 

   58,402

                                     

Total

 

  820,060

 

(12,757)

 

   807,302

 

  832,466

 

   (25,164)

               
                                     

Current

 

   449,475

 

   (11,314)

                           

Noncurrent

 

   370,585

 

(1,443)

                           

 

For further details on terms and information on debts and debentures, see notes 16 and 17

(1)The value at cost are the derivative amount without the respective mark to market, while the notional refers to the balance of the debt and reduces according to the amortization of the debt;

(2) Due to the characteristics of this derivative (zero-cost collar), the notional amount is presented in U.S. dollar.

   

Consolidated

   

As of December 31, 2017

 

Interest, inflation adjustment, exchange rate and MTM

 

Repayment

 

As of June 30, 2018

Derivatives

               

To hedge debts designated at fair value

 

         526,148

 

                           648,012

 

        (353,851)

 

         820,309

To hedge debts not designated at fair value

           17,881

 

                             (5,392)

 

           (4,899)

 

            7,590

Other (zero cost collar)

 

                 -  

 

                            11,253

 

           (6,685)

 

            4,568

Mark to market (*)

 

            9,095

 

                           (34,259)

 

                 -  

 

          (25,164)

   

         553,124

 

                           619,614

 

        (365,435)

 

         807,303

                 

 

(*)The effects on the income and comprehensive income of 2018 related to the fair value adjustments (MTM) of the derivatives are: (i) gain of R$ 2,431 for the debts designated at fair value, (ii) a loss of R$ 4,728 for non- designated at fair value and (iii) loss of R$ 31,962 for other derivatives (zero cost collar).

As mentioned above, certain subsidiaries elected to mark to market debts for which they have fully debt-related derivatives instruments (note 16).

The Group has recognized gains and losses on their derivatives. However, as these derivatives are used as a hedging instrument, these gains and losses minimized the impacts of fluctuations in exchange and interest rates on the hedged debts. For the quarters and semesters ended at June 30, 2018 and 2017, the derivatives generated the following impacts on the consolidated profit or loss, recognized in the line item of Finance costs on adjustment for inflation and exchange rate changes and in the consolidated comprehensive income in the credit risk in the market to market.

 

79


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

                         
   

Gain (Loss) on income

 

Gain (Loss) in comprehensive income

Hedged risk / transaction

 

2nd Quarter 2018

1st Semester 2018

2nd Quarter 2017

1st Semester 2017

2nd Quarter 2018

1st Semester 2018

                         

Interest rate variation

 

               (8,370)

 

            (5,392)

 

             (20)

 

               (492)

 

                   -  

 

                     -  

Mark to Market

 

              38,089

 

            (4,428)

 

          2,243

 

             5,347

 

               (344)

 

                  (380)

Exchange variation

 

             655,532

 

         659,264

 

      213,265

 

        (119,056)

 

                   -  

 

                     -  

Mark to Market

 

             (79,188)

 

          (26,853)

 

       (23,432)

 

           15,504

 

             (2,399)

 

               (2,371)

                         
   

             606,063

 

         622,591

 

      192,056

 

          (98,697)

 

             (2,743)

 

               (2,751)

                         

 

 

b.1) Zero-cost collar derivative transactions entered into by CPFL Geração

In 2015, the subsidiary CPFL Geração entered into a transaction involving put options and call options in US$, both having the same institution as counterpart, and that combined are featured as a transaction usually known as zero-cost collar. Entering into this transaction does not have any speculative purpose, inasmuch as it is aimed at minimizing any negative impacts on future revenue of the joint venture ENERCAN, which has electric energy sale agreements with annual adjustment of part of the tariff based on the dollar variation. In addition, according to Management’s view, the scenario in 2015 was favorable to enter into this type of financial instrument, considering the high volatility implicit in dollar options and the fact that there is no initial cost for this type of transaction.

The total amount contracted was US$ 111,817, with due dates between October 1, 2015 and September 30, 2020. At June 30, 2018, the total amount contracted was US$ 58,402, considering the options already settled until this date. The strike prices of the dollar options vary from R$ 4.20 to R$ 4.40 for put options and from R$ 5.40 to R$7.50 for call options.

These options were measured at fair value in a recurring manner, as required by IFRS 9 /CPC 48. The fair value of the options that are part of this transaction was calculated based on the following assumptions:

 

Valuation technique(s) and key information

We used the Black Scholes Option Pricing Model, which aims to obtain the fair price of the options involving the following variables: value of the asset, strike price of the option, interest rate, term and volatility.

Significant unobservable inputs

Volatility determined based on the average market pricing calculations, future dollar and other variables applicable to this specific transaction, with average variation of 20.81%.

Relationship between unobservable inputs and fair value (sensitivity)

A slight rise in long-term volatility, analyzed separately, would result in an insignificant increase in fair value. If the volatility were 10% higher and all the other variables remained constant, the net carrying amount (asset) would increase by R$ 644, resulting in a net asset of R$ 25,307.

 

The following table reconciles the opening and closing balances of the call and put options for the 1st semester of 2018, as required by IFRS 13/CPC 46:
 

   

Consolidated

   

Asset

 

Liability

 

Net

As of December 31, 2017

 

          52,058

 

                 -  

 

          52,058

Measurement at fair value

 

         (20,709)

 

                 -  

 

         (20,709)

Net cash of settlement flows

 

           (6,685)

 

                 -  

 

           (6,685)

As of June 30, 2018

 

          24,664

 

                 -  

 

          24,664

 

 

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(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

 The fair value measurement of these financial instruments was recognized as finance income (expense) of the period, and no effects were recognized in other comprehensive income.

c)     Sensitivity analysis

In compliance with CVM Instruction No. 475/2008, the Group performed sensitivity analyses of the main risks to which their financial instruments (including derivatives) are exposed, mainly comprising changes in exchange and interest rates.

When the risk exposure is considered asset, the risk to be taken into account is a reduction in the pegged indexes, due to a consequent negative impact on the Group’s profit or loss. Similarly, if the risk exposure is considered liability, the risk is of an increase in the pegged indexes and the consequent negative effect on the profit or loss. The Group therefore quantify the risks in terms of the net exposure of the variables (dollar, euro, CDI, IGP-M, IPCA, TJLP and SELIC), as shown below:

c.1)  Changes in exchange rates

Considering that the net exchange rate exposure at June 30, 2018 is maintained, the simulation of the effects by type of financial instrument for three different scenarios would be:

   

 Consolidated

           

Decrease (increase) in P&L

Instruments

 

Exposure (a)

 

Risk

 

Exchange appreciation / depreciation (b)

 

Currency appreciation /  depreciation  of 25% (c)

 

Currency appreciation / depreciation of 50% (c)

Financial liability instruments

 

          (4,923,196)

     

              (185,779)

 

                1,091,465

 

                2,368,709

Derivatives - Plain Vanilla Swap

 

           4,992,635

     

               188,399

 

               (1,106,860)

 

               (2,402,118)

   

               69,439

 

drop in the dollar

 

                   2,620

 

                   (15,395)

 

                   (33,409)

                     

Financial liability instruments

 

            (469,735)

     

                (32,545)

 

                 (158,115)

 

                 (283,685)

Derivatives - Plain Vanilla Swap

 

             467,198

     

                 32,369

 

                  157,261

 

                  282,153

   

                (2,537)

 

raise in the euro

 

                    (176)

 

                        (854)

 

                     (1,532)

                     

Total

 

               66,902

     

                   2,444

 

                   (16,249)

 

                   (34,941)

                     

Effects in comprehensive income of the period

     

                   1,385

 

                     (3,759)

 

                     (8,903)

Effects in the income of the period

         

                   1,059

 

                   (12,490)

 

                   (26,038)

                     
                     
           

Decrease (increase) in P&L - R$ thousand

Instruments

 

Exposure
(US$ thousand)

 

Risk

 

Exchange depreciation (b)

 

Currency depreciation  of 25% (c)

 

Currency depreciation of 50% (c)

Derivatives zero-cost collar

 

58,402

 (d)

raise in the dollar

 

                  (2,223)

 

                   (20,096)

 

                   (37,970)

 

(a) The exchange rate considered at 06/30/2018 was R$ 3.86 per US$ 1.00 and R$ 4.50 per €$ 1.00.
(b) As per the exchange rate curves obtained from information made available by B3 S.A., with the exchange rate being considered at R$ 4.00 and 4.82, and the currency depreciation at 3.77% and 6.93% for US$ and €$, respectively at 06/30/2018.
(c) As required by CVM Instruction No. 475/2008, the percentage increases in the ratios applied refer to the information made available by the B3 S.A..
(d) Owing to the characteristics of this derivative (zero-cost collar), the notional amount is presented in US$.

 

Except for the zero-cost collar, as the net exchange exposure of the dollar for the other derivative instruments is an asset, the risk is a drop in the dollar, therefore, the exchange rate is appreciated by 25% and 50% in relation to the probable exchange rate.

 

 

81


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

c.2) Changes in interest rates

Assuming thatthe scenario of net exposure of the financial instruments indexed to floating interest rates at June 30, 2018 is maintained, the net finance cost for the next 12 months for each ofthe three scenarios defined, would be:

 

Consolidated

                   

Income (expense)  in P&L

Instruments

 

Exposure

 

Risk

 

Period rate

 

Probable scenario rate (a)

 

Probable scenario

 

Raising/Drop index by 25% (b)

 

Raising/Drop index by 50% (b)

                             

Financial asset instruments

 

   3,305,700

             

  247,928

 

309,909

 

371,891

Financial liability instruments

 

  (8,986,987)

             

(674,024)

 

   (842,530)

 

   (1,011,036)

Derivatives - Plain Vanilla Swap

 

   4,153,324

             

  311,499

 

389,374

 

467,249

   

  (1,527,963)

 

CDI apprec.

 

7.37%

 

7.50%

 

(114,597)

 

   (143,247)

 

   (171,896)

                             

Financial liability instruments

 

(54,614)

             

(2,223)

 

(2,778)

 

   (3,334)

   

(54,614)

 

IGP-M apprec.

 

6.92%

 

4.07%

 

(2,223)

 

(2,778)

 

   (3,334)

                             

Financial liability instruments

 

  (3,819,035)

             

(252,056)

 

   (315,070)

 

   (378,084)

   

  (3,819,035)

 

TJLP apprec.

 

6.60%

 

6.60%

 

(252,056)

 

   (315,070)

 

   (378,084)

                             

Financial liability instruments

 

  (1,343,307)

             

  (65,956)

 

  (49,467)

 

(32,978)

Derivatives - Plain Vanilla Swap

 

  93,156

     

  4,574

 

  3,430

 

2,287

Concession financial asset

 

   7,076,268

             

  347,445

 

260,584

 

173,722

   

   5,826,117

 

drop in the IPCA

 

4.37%

 

4.91%

 

  286,063

 

214,547

 

143,031

                             

Sectorial financial assets and liabilities

 

   1,093,541

             

   83,109

 

   62,332

 

  41,555

Financial liability instruments

 

  (127,638)

             

(9,700)

 

(7,275)

 

   (4,850)

   

   965,903

 

drop in the SELIC

 

7.18%

 

7.60%

 

   73,409

 

   55,057

 

  36,705

                           

Total

 

   1,390,408

             

(9,404)

 

   (191,491)

 

   (373,578)

                             

Effects in accumulated comprehensive income

                 

13

 

   14

 

   15

Effects in the income of the period

                 

(9,417)

 

   (191,505)

 

   (373,593)

 

(a)   The indexes were obtained from information available in the market.

(b)   As required by CVM Instruction 475/2008, the percentages of increase were applied to the indexes in the probable scenario.

 

Additionally, the debts exposed to pre-fixed indexes would generate an expense of R$ 673,940.

 

( 33 )   NON-CASH TRANSACTIONS

 

 

Consolidated

 

June 30, 2018

 

June 30, 2017

Other transactions

 

 

 

Interest capitalized in property, plant and equipment

          5,082

 

        25,098

Interest capitalized in concession intangible asset - distribution infrastructures

          7,726

 

          9,061

Reversal of provision for socio environmental costs capitalized in property, plant and equipment

          1,679

 

               -  

Transfers between property, plant and equipment and other assets

          5,280

 

            921

 

 

 

82


 
 

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Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

OTHER RELEVANT INFORMATION

 

Shareholders of CPFL Energia S/A holding more than 5% of the shares of the same type and class, as of June 30, 2018:

Shareholders

 

Common shares

 

Interest - %

State Grid Brazil Power Participações Ltda.

 

                     20

 

          0.00

ESC Energia S.A.

 

       234,086,204

 

        81.43

Other shareholders

 

         53,392,844

 

        18.57

Total

 

       287,479,068

 

      100.00

 

Quantity and characteristic of secutiries held by directly or indirectly Controlling Shareholders, Executive Officers, Board of Directors, Fiscal Council and Free Float, as of June 30, 2018 and December 31,2017:

 

   

June 30, 2018

 

December 31, 2017

Shareholders

 

Common shares

 

Interest - %

 

Common shares

 

Interest - %

Controlling shareholders

 

       964,521,902

 

        94.75

 

       964,521,902

 

        94.75

Administrator

 

                      -  

 

             -  

 

                      -  

 

             -  

Members of the Executive Officers

 

                    189

 

          0.00

 

                    189

 

          0.00

Members of the Board of Directors

 

                      -  

 

             -  

 

                      -  

 

             -  

Fiscal Council  Members

 

                      -  

 

             -  

 

                      -  

 

             -  

Other shareholders

 

         53,392,655

 

          5.25

 

         53,392,655

 

          5.25

Total

 

    1,017,914,746

 

      100.00

 

    1,017,914,746

 

      100.00

Outstanding shares - free float

 

         53,392,655

 

          5.25

 

         53,392,655

 

          5.25

 

SHAREHOLDING STRUCTURE

 2nd quarter of 2018

 

CPFL ENERGIA S/A

Per units shares

Date of last change

 #

 1 - SHAREHOLDERS OF THE COMPANY

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

           964,521,902

94.75%

100.00%

                        -  

0.00%

0.00%

          964,521,902

94.75%

 

 1.1

 Esc Energia S.A.

15.146.011/0001-51

           234,086,204

23.00%

100.00%

                        -  

0.00%

0.00%

          234,086,204

23.00%

January 23, 2017

 1.2

 State Grid Brazil Power Participações Ltda.

26.002.119/0001-97

           730,435,698

71.76%

100.00%

                        -  

0.00%

0.00%

          730,435,698

71.76%

November 30, 2017

 

 Noncontrolling shareholders

 

             53,392,844

5.25%

100.00%

                        -  

0.00%

0.00%

            53,392,844

5.25%

 

 1.3

 Board of Directors members

07.341.926/001-90

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

November 30, 2017

 1.4

 Executive Office members

 

                         189

0.00%

100.00%

                        -  

0.00%

0.00%

                        189

0.00%

November 30, 2017

 1.5

 Other shareholders

 

             53,392,655

5.25%

100.00%

                        -  

0.00%

0.00%

            53,392,655

5.25%

 

 

 Total

 

        1,017,914,746

100.00%

100.00%

                        -  

0.00%

0.00%

       1,017,914,746

100.00%

 

 

 2 - Entity: 1.1 Esc Energia S.A.

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

        1,042,392,615

100.00%

100.00%

                        -  

0.00%

0.00%

       1,042,392,615

100.00%

 

 1.1.1

 State Grid Brazil Power Participações Ltda.

26.002.119/0001-97

        1,042,392,615

100.00%

100.00%

                        -  

0.00%

0.00%

       1,042,392,615

100.00%

January 23, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 1.1.2

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

        1,042,392,615

100.00%

100.00%

                        -  

0.00%

0.00%

       1,042,392,615

100.00%

 

 

 3 - Entity: 1.2 State Grid Brazil Power Participações S.A.

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

      14,299,999,999

100.00%

100.00%

                        -  

0.00%

0.00%

     14,299,999,999

100.00%

 

 1.2.1

 International Grid Holdings Limited

 

      14,299,999,999

100.00%

100.00%

                        -  

0.00%

0.00%

     14,299,999,999

100.00%

July 31, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 1.2.2

 Top View Grid Investment Limited

 

                             1

0.00%

100.00%

                        -  

0.00%

0.00%

                            1

0.00%

July 31, 2017

 1.2.3

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

      14,299,999,999

100.00%

100.00%

                        -  

0.00%

0.00%

     14,299,999,999

100.00%

 

 

 4 - Entity: 1.2.1 International Grid Holdings Limited

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

                             1

100.00%

100.00%

                        -  

0.00%

0.00%

                            1

100.00%

 

 1.2.1.1

 State Grid International Development Limited

 

                             1

100.00%

100.00%

                        -  

0.00%

0.00%

                            1

100.00%

July 31, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 1.2.1.2

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

                             1

100.00%

100.00%

                        -  

0.00%

0.00%

                            1

100.00%

 

 

 5 - Entity: 1.2.2 Top View Grid Investment Limited

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

                             1

100.00%

100.00%

                        -  

0.00%

0.00%

                            1

100.00%

 

 1.2.2.1

 State Grid International Development Limited

 

                             1

100.00%

100.00%

                        -  

0.00%

0.00%

                            1

100.00%

July 31, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 1.2.2.2

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

                             1

100.00%

100.00%

                        -  

0.00%

0.00%

                            1

100.00%

 

 

 6 - Entity: 1.2.1.1 State Grid International Development Limited

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

      21,429,327,845

100.00%

100.00%

                        -  

0.00%

0.00%

     21,429,327,845

21.32%

 

 1.2.1.1.1

 State Grid International Development Co., Ltd

 

      21,429,327,845

100.00%

100.00%

                        -  

0.00%

0.00%

     21,429,327,845

21.32%

July 31, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

  79,091,019,116

100.00%

100.00%

     79,091,019,116

78.68%

 

 1.2.1.1.2

 State Grid Overseas Investment Ltd

 

                            -  

0.00%

0.00%

  79,091,019,116

100.00%

100.00%

     79,091,019,116

78.68%

July 31, 2017

 1.2.1.1.3

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

      21,429,327,845

100.00%

21.32%

  79,091,019,116

100.00%

78.68%

   100,520,346,961

100.00%

 

 

 7 - Entity: 1.2.1.1.1 State Grid International Development Co., Ltd

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

        7,131,288,000

100.00%

100.00%

                        -  

0.00%

0.00%

       7,131,288,000

100.00%

 

 1.2.1.1.1.1

 State Grid Corporation of China

 

        7,131,288,000

100.00%

100.00%

                        -  

0.00%

0.00%

       7,131,288,000

100.00%

July 31, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 1.2.1.1.1.2

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

        7,131,288,000

100.00%

100.00%

                        -  

0.00%

0.00%

       7,131,288,000

100.00%

 

 

 8 - Entity: 1.2.1.1.2 State Grid Overseas Investment Ltd

CNPJ or CPF

 Quotes/common shares

%

% Total

 Preferred shares

%

% Total

 TOTAL

% Total

 

 

 Controlling shareholders

 

                         100

100.00%

100.00%

                        -  

0.00%

0.00%

                        100

100.00%

 

 1.2.1.1.2.1

 State Grid Corporation of China

 

                         100

100.00%

100.00%

                        -  

0.00%

0.00%

                        100

100.00%

July 31, 2017

 

 Noncontrolling shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 1.2.1.1.2.2

 Other shareholders

 

                            -  

0.00%

0.00%

                        -  

0.00%

0.00%

                          -  

0.00%

 

 

 Total

 

                         100

100.00%

100.00%

                        -  

0.00%

0.00%

                        100

100.00%

 

 

 

83


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

The Company is committed to arbitration in the Market Arbitration Chamber, in accordance with the Arbitration Clause in Article 44 of the Company’s By-Laws.

INDEPENDENT AUDITORS' REPORT

KPMG Auditores Independentes

Av. Coronel Silva Telles, 977 - 10º andar, Cambuí

13024-001 - Campinas/SP – Brasil

Edifício Dahruj Tower

Caixa Postal 737 - CEP 13012-970 - Campinas/SP - Brasil

Telephone +55 (19) 3198-6000, Fax +55 (19) 3198-6205

www.kpmg.com.br

 

 

INDEPENDENT AUDITORS’ REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

(A free translation of the original report in Portuguese, as filed with the Brazilian Securities and Exchange Commission (CVM), prepared in accordance with the accounting practices adopted in Brazil, rules of the CVM and of the International Financial Reporting Standards - IFRS)

 

To the Shareholders and Board Directors of

CPFL Energia S.A.

Campinas - SP

 

Introduction

We have reviewed the individual and consolidated, interim financial information, of CPFL Energia S.A. (“the Company”), included in the Quarterly Information Form (ITR), for the quarter ended June 30, 2018, which comprises the statement of financial position as of June 30, 2018 and the respective statements of profit or loss and other comprehensive income for the three and six month periods then ended, and the changes in equity and cash flows for the six month period then ended, comprising the explanatory notes.

 

Management is responsible for the preparation of the interim financial information in accordance with CPC 21(R1) Technical Pronouncement - Interim Financial Information and International Standard IAS 34 - Interim Financial Reporting, issued by International Accounting Standards Board - IASB, and for presentation of this interim financial information in accordance with the rules issued by Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of the quarterly 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 standard on interim review (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The scope of a review is substantially less than an audit conducted in accordance with auditing standards and, consequently, it 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

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information referred above is not prepared, in all material respects, in accordance with CPC 21(R1) and the IAS 34, issued by IASB, applicable to the preparation of the Quarterly Information and presented in accordance with the rules issued by Brazilian Securities and Exchange Commission (CVM).

 

 

 

 

84


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Other matters - Statements of Value Added

The individual and consolidated interim financial information, related to statements of value added (DVA) for the six month period ended June 30, 2018, prepared under the responsibility of the Company's management, and presented as supplementary information for the purposes of IAS 34, were submitted to the same review procedures followed together with the review of the Company's interim financial information. In order to form our conclusion, we evaluated whether these statements are reconciled to the interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added are not prepared, in all material respects, in accordance with the individual and consolidated interim financial information taken as a whole.

 

Campinas, August 06, 2018

 

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Marcio José dos Santos

Accountant CRC 1SP252906/O-0

 

 

 

 

85


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Management declaration on financial statements

 

In compliance with the provisions in items V and VI of article 25 of the Brazilian Securities & Exchange Commission (CVM) Instruction No. 480, of December 7, 2009, as amended by CVM Instruction No. 586, of June 8, 2017, the chief executive officers and the officers of CPFL Energia S.A, a publicly traded company, with its registered office at Rodovia Engo Miguel Noel Nascentes Burnier, km 2,5, Parque São Quirino - Campinas - SP -  Brasil, enrolled with the National Register of Legal Entities (CNPJ ) under No. 02.429.144/0001-93, hereby stated that:

 

a)     they have reviewed and discussed, and agree with, the opinions expressed in the opinion of KPMG Auditores Independentes on the interim financial statements of CPFL Energia of June 30, 2018;

 

b)    they have reviewed and discussed, and agree with, the interim financial statements of CPFL Energia of June 30, 2018;

 

 

Campinas, August 6, 2018.

 

 

 

__________________________________

André Dorf

Chief Executive Officer, holding also the function of

Chief Business Development Officer

 

 

 

__________________________________

Yumeng Zhao

Deputy Chief Executive Officer

 

 

 

Gustavo Pinto Gachineiro

Chief Institutional Relations Officer

 

       

Gustavo Estrella

Chief Financial and

Investor Relations Officer

 

 

 

__________________________________

Pan Yuehui

Deputy Chief Financial Officer

 

 

 

__________________________________

Wagner Luiz Schneider de Freitas

Chief Business Planning and

Management Officer

 

 

 

__________________________________

Karin Regina Luchesi

Chief Market Operations Officer

 

 

 

__________________________________

Luis Henrique Ferreira Pinto

Chief Regulated Operations Officer

 

 

 

 

86


 
 

(Free Translation of the original in Portuguese)

Interim Standard Financial Statements – ITR –  Date: June 30, 2018 - CPFL Energia S.A.

 

Management declaration on independent auditors’ report

 

 

In compliance with the provisions in items V and VI of article 25 of the Brazilian Securities & Exchange Commission (CVM) Instruction No. 480, of December 7, 2009, as amended by CVM Instruction No. 586, of June 8, 2017, the chief executive officers and the officers of CPFL Energia S.A, a publicly traded company, with its registered office at Rodovia Engo Miguel Noel Nascentes Burnier, km 2,5, Parque São Quirino - Campinas - SP -  Brasil, enrolled with the National Register of Legal Entities (CNPJ ) under No. 02.429.144/0001-93, hereby stated that:

 

a)     they have reviewed and discussed, and agree with, the opinions expressed in the opinion of KPMG Auditores Independentes on the interim financial statements of CPFL Energia of June 30, 2018;

 

b)    they have reviewed and discussed, and agree with, the interim financial statements of CPFL Energia of June 30, 2018;

 

 

Campinas, August 6, 2018.

 

 

 

__________________________________

André Dorf

Chief Executive Officer, holding also the function of

Chief Business Development Officer

 

 

 

__________________________________

Yumeng Zhao

Deputy Chief Executive Officer

 

 

 

Gustavo Pinto Gachineiro

Chief Institutional Relations Officer

 

 

Gustavo Estrella

Chief Financial and

Investor Relations Officer

 

 

 

__________________________________

Pan Yuehui

Deputy Chief Financial Officer

 

 

 

__________________________________

Wagner Luiz Schneider de Freitas

Chief Business Planning and

Management Officer

 

 

 

__________________________________

Karin Regina Luchesi

Chief Market Operations Officer

 

 

 

__________________________________

Luis Henrique Ferreira Pinto

Chief Regulated Operations Officer

 

 

 

 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 6, 2018
 
CPFL ENERGIA S.A.
 
By:  
 /S/  GUSTAVO ESTRELLA
  Name:
Title:  
 Gustavo Estrella 
Chief Financial Officer and Head of Investor Relations
 
 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

87