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____.
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
Registration data
1.
General information
2
2.
Address
3
3.
Securities
4
4.
Auditor information
5
5.
Share register
6
6.
Investor relations officer
7
7.
Shareholders’ department
8
1
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
1. General information
Company name: CPFL ENERGIA S.A.
Date of adoption of company name: 08/06/2002
Type: publicly-held Corporation
Previous company name: Draft II Participações S.A
Date of incorporation: 03/20/1998
CNPJ (Corporate Taxpayer ID): 02.429.144/0001-93
CVM code: 1866-0
CVM registration date: 05/18/2000
CVM registration status: Active
Status starting date: 05/18/2000
Country: Brazil
Country in which the securities
Are held in custody: Brazil
Other countries in which the securities can be traded
Country Date of admission
United States 09/29/2004
Sector of activity: Holding company (Electric Energy)
Description of activity: Holding company
Issuer’s category: Category A
Date of registration in the current category: 01/01/2010
Issuer’s status: Operating
Status starting date: 05/18/2000
Type of ownership control: Private Holding
Date of last change in ownership control: 11/30/2009
Date of last change of fiscal year:
Month/day of the end of fiscal year: 12/31
Issuer´s web address: www.cpfl.com.br
Newspaper or media where issuer discloses its information:
Newspaper or media |
FU |
Diário Oficial do Estado de São Paulo |
SP |
Valor Econômico |
SP |
www.cpfl.com.br/ri |
SP |
www.portalneo1.net |
SP |
www.valor.com.br/valor-ri |
SP |
2
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
2. Address
Mail Address: Rodovia Engenheiro Miguel Noel Nascentes Burnier, 1755, Km 2,5, Parque São Quirino, Campinas, SP, Brazil, zip code 13088-140
Telephone (019) 3756-6083, Fax (019) 3756-6089, E-mail: [email protected]
Registered Office Address: Rua Gomes de Carvalho, 1510, 14º– Cj 2 Vila Olímpia, São Paulo, SP, Brazil, zip code: 04547-005
Telephone: (019) 3756-6083, Fax: (019) 3756-6089, E-mail: [email protected]
3
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
3. Securities
Share trading
Trading mkt Stock exchange
Managing entity BM&FBOVESPA
Start date 09/29/2004
End date
Trading segment New Market
Start date 9/29/2004
End date
Debenture trading
Trading mkt Organized market
Managing entity CETIP
Start date 05/18/2000
End date
Trading segment Traditional
Start date 05/19/2000
End date
4
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
4. Auditor information
Does the issuer have an auditor? Yes
CVM code: 385-9
Type of auditor: Brazilian firm
Independent auditor: Deloitte Touche Tomatsu Auditores Independentes
CNPJ (Corporate Taxpayer ID): 49.928.567/0001-11
Period of service: 03/12/2012
Partner in charge Marcelo Magalhães Fernandes
Period of service 03/12/2012
CPF (Individual Taxpayer ID) 110.931.498-17
5
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
5. Share register
Does the company have a service provider: Yes
Corporate name: Banco do Brasil
CNPJ: 00.000.000/0001-91
Period of service: 01/01/2011
Address:
Rua Lélio Gama, 105 – 38º floor, Gecin, Centro, Rio de Janeiro, RJ, Brazil, zip code: 20031-080, Telephone (021) 38083551, Fax: (021) 38086088, e-mail: [email protected]
6
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
6. Investor relations officer
Name: Gustavo Estrella
Investor Relations Officer
CPF/CNPJ: 037.234.097-09
Address:
Rodovia Engenheiro Miguel Noel Nascentes Burnier, 1755, Km 2,5, Parque São Quirino, Campinas, SP, Brazil, zip code 13088-140
Telephone (019) 3756-6083, Fax (019) 3756-6089, email: [email protected].
Date when the officer assumed the position: 02/27/2013
Date when the officer left the position:
7
Registration Form – 2017 – CPFL Energia S.A. | Version: 1 |
7. Shareholders’ department
Contact Leandro José Cappa de Oliveira
Date when the officer assumed the position: 10/06/2014
Date when the officer left the position:
Address:
Rodovia Engenheiro Miguel Noel Nascentes Burnier, 1755, Km 2,5, Parque São Quirino, Campinas, SP, Brazil, zip code 13088-140
Telephone (019) 3756-6083, email: [email protected]
8
Company Data |
|
Capital Composition |
1 |
Cash dividend |
2 |
Individual financial statements |
|
Statement of Financial Position - Assets |
3 |
Statement of Financial Position - Liabilities and Equity |
4 |
Statement of Income |
5 |
Statement of Comprehensive Income |
6 |
Statement of Cash Flows – Indirect Method |
7 |
Statement of Changes in Equity |
|
01/01/2016 to 12/31/2016 |
8 |
01/01/2015 to 12/31/2015 |
9 |
01/01/2014 to 12/31/2014 |
10 |
Statements of Value Added |
11 |
Consolidated Interim Financial Statements |
|
Statement of Financial Position - Assets |
12 |
Statement of Financial Position - Liabilities and Equity |
13 |
Statement of Income |
14 |
Statement of Comprehensive Income |
15 |
Statement of Cash Flows - Indirect Method |
16 |
Statement of Changes in Equity |
|
01/01/2016 to 12/31/2016 |
17 |
01/01/2015 to 12/31/2015 |
18 |
01/01/2014 to 12/31/2014 |
19 |
Statements of Value Added |
20 |
Management Report |
21 |
Notes to Interim financial statements |
37 |
Reports |
|
Independent Auditor’s Report - Unqualified |
131 |
Report of the Fiscal Council or Equivalent Body |
135 |
Officers’ Statement on the Financial Statements |
136 |
Officers’ Statement on the Independent Auditor’s Report |
137 |
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Number of Shares (In units) |
Closing Date 12/31/2016 |
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)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Company Data
Event |
Approval |
Description |
Beginning of payment |
Type of share |
Class of share |
Amount per share (Reais/share) |
RCA |
01/05/2017 |
Dividend |
01/20/2017 |
ON (common shares) |
|
0.21788 |
2
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Financial Position – Assets
(In thousands of Brazilian reais – R$) |
|
|
| |
Code |
Description |
Current Year 12/31/2016 |
Prior Year 12/31/2015 |
Prior Year 12/31/2014 |
1 |
Total assets |
8,908,964 |
8,948,469 |
8,318,287 |
1.01 |
Current assets |
791,016 |
1,795,763 |
1,792,189 |
1.01.01 |
Cash and cash equivalents |
64,973 |
424,192 |
799,775 |
1.01.06 |
Taxes recoverable |
82,836 |
72,885 |
49,070 |
1.01.06.01 |
Current taxes recoverable |
82,836 |
72,885 |
49,070 |
1.01.08 |
Other current assets |
643,207 |
1,298,686 |
943,344 |
1.01.08.03 |
Others |
643,207 |
1,298,686 |
943,344 |
1.01.08.03.01 |
Other receivables |
229 |
943 |
977 |
1.01.08.03.02 |
Derivatives |
- |
70,153 |
- |
1.01.08.03.04 |
Dividends and interest on capital |
642,978 |
1,227,590 |
942,367 |
1.02 |
Noncurrent assets |
8,117,948 |
7,152,706 |
6,526,098 |
1.02.01 |
Long-term assets |
250,625 |
211,432 |
234,239 |
1.02.01.06 |
Deferred taxes |
171,073 |
140,389 |
150,628 |
1.02.01.06.02 |
Deferred tax assets |
171,073 |
140,389 |
150,628 |
1.02.01.08 |
Receivables from related parties |
52,582 |
2,814 |
12,089 |
1.02.01.08.02 |
Receivables from subsidiaries |
52,582 |
2,814 |
12,089 |
1.02.01.09 |
Other noncurrent assets |
26,970 |
68,229 |
71,522 |
1.02.01.09.04 |
Escrow deposits |
710 |
630 |
546 |
1.02.01.09.07 |
Advance for future capital increase |
- |
52,680 |
55,157 |
1.02.01.09.10 |
Other receivables |
26,260 |
14,919 |
15,819 |
1.02.02 |
Investments |
7,866,100 |
6,940,036 |
6,290,998 |
1.02.02.01 |
Equity interests |
7,866,100 |
6,940,036 |
6,290,998 |
1.02.02.01.02 |
Investments in subsidiaries |
7,866,100 |
6,940,036 |
6,290,998 |
1.02.03 |
Property, plant and equipment |
1,199 |
1,215 |
843 |
1.02.03.01 |
Intangible assets |
1,199 |
1,215 |
843 |
1.02.04 |
Intangible assets |
24 |
23 |
18 |
1.02.04.01 |
Other intangible assets |
24 |
23 |
18 |
3
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Financial Position – Liabilities and Equity
(In thousands of Brazilian reais – R$) |
||||
Code |
Description |
Current Year 12/31/2016 |
Prior Year 12/31/2015 |
Prior Year 12/31/2014 |
2 |
Total liabilities |
8,908,964 |
8,948,469 |
8,318,287 |
2.01 |
Current liabilities |
255,755 |
1,206,708 |
1,338,488 |
2.01.02 |
Trade payables |
3,760 |
1,157 |
790 |
2.01.02.01 |
Domestic suppliers |
3,760 |
1,157 |
790 |
2.01.03 |
Taxes payable |
454 |
747 |
1,859 |
2.01.03.01 |
Federal taxes |
453 |
747 |
1,859 |
2.01.03.01.01 |
Income tax and social contribution |
- |
- |
1,628 |
2.01.03.01.02 |
PIS (tax on revenue) |
15 |
63 |
1 |
2.01.03.01.03 |
COFINS (tax on revenue) |
90 |
391 |
3 |
2.01.03.01.04 |
Other federal taxes |
348 |
293 |
227 |
2.01.03.03 |
Municipal taxes |
1 |
- |
- |
2.01.03.03.01 |
Other municipal taxes |
1 |
- |
- |
2.01.04 |
Borrowings |
15,334 |
973,252 |
1,304,406 |
2.01.04.01 |
Borrowings |
- |
973,252 |
- |
2.01.04.01.01 |
Local currency |
- |
330,164 |
- |
2.01.04.01.02 |
Foreign currency |
- |
643,088 |
- |
2.01.04.02 |
Debentures |
15,334 |
- |
1,304,406 |
2.01.04.02.01 |
Debentures |
- |
- |
1,289,386 |
2.01.04.02.02 |
Interests on debentures |
15,334 |
- |
15,020 |
2.01.05 |
Other liabilities |
236,207 |
231,552 |
31,433 |
2.01.05.02 |
Others |
236,207 |
231,552 |
31,433 |
2.01.05.02.01 |
Dividends and interest on capital payable |
218,630 |
212,531 |
13,555 |
2.01.05.02.04 |
Derivatives |
- |
981 |
- |
2.01.05.02.07 |
Other liabilities |
17,577 |
18,040 |
17,878 |
2.02 |
Noncurrent liabilities |
683,188 |
67,565 |
36,264 |
2.02.01 |
Borrowings |
612,251 |
- |
- |
2.02.01.02 |
Debentures |
612,251 |
- |
- |
2.02.01.02.01 |
Debentures |
612,251 |
- |
- |
2.02.02 |
Other liabilities |
69,929 |
65,930 |
35,539 |
2.02.02.02 |
Others |
69,929 |
65,930 |
35,539 |
2.02.02.02.05 |
Provision for equity interest losses |
19,301 |
33,969 |
- |
2.02.02.02.08 |
Other payables |
50,628 |
31,961 |
35,539 |
2.02.04 |
Provisons |
1,008 |
1,635 |
725 |
2.02.04.01 |
Tax, social security, labor and civil provisions |
1,008 |
1,635 |
725 |
2.02.04.01.02 |
Social security and labor provisions |
467 |
1,209 |
378 |
2.02.04.01.04 |
Civil provisions |
541 |
426 |
347 |
2.03 |
Equity |
7,970,021 |
7,674,196 |
6,943,535 |
2.03.01 |
Issued capital |
5,741,284 |
5,348,312 |
4,793,424 |
2.03.02 |
Capital reserves |
468,014 |
468,082 |
468,082 |
2.03.04 |
Earnings reserves |
1,995,356 |
1,672,481 |
1,536,136 |
2.03.04.01 |
Legal reserve |
739,103 |
694,058 |
650,811 |
2.03.04.02 |
Statutory reserve |
1,248,433 |
978,423 |
885,325 |
2.03.04.08 |
Additional dividend proposed |
7,820 |
- |
- |
2.03.08 |
Accumulated comprehensive income |
(234,633) |
185,321 |
145,893 |
2.03.08.01 |
Accumulated comprehensive income |
(234,633) |
185,321 |
145,893 |
4
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of income
(In thousands of Brazilian reais – R$) |
|
| ||
|
|
|
|
|
Code |
Description |
Current Year |
Prior Year |
Prior Year |
01/01/2016 to 12/31/2016 |
01/01/2015 to 12/31/2015 |
01/01/2014 to 12/31/2014 | ||
3.01 |
Revenue from sale of energy and/or services |
1,713 |
1,157 |
61 |
3.03 |
Gross profit |
1,713 |
1,157 |
61 |
3.04 |
Operating income (expenses) |
871,501 |
897,040 |
985,010 |
3.04.02 |
General and administrative expenses |
(50,860) |
(29,911) |
(26,175) |
3.04.06 |
Share of profit (loss) of investees |
922,361 |
926,951 |
1,011,185 |
3.05 |
Profit before finance income (costs) and taxes |
873,214 |
898,197 |
985,071 |
3.06 |
Finance income (costs) |
17,184 |
(22,948) |
(25,464) |
3.06.01 |
Finance income |
70,878 |
74,854 |
117,855 |
3.06.02 |
Finance costs |
(53,694) |
(97,802) |
(143,319) |
3.07 |
Profit (loss) before taxes on income |
890,398 |
875,249 |
959,607 |
3.08 |
Income tax and social contribution |
10,487 |
(10,309) |
(10,430) |
3.08.01 |
Current |
(20,197) |
(70) |
(23,266) |
3.08.02 |
Deferred |
30,684 |
(10,239) |
12,836 |
3.09 |
Profit (loss) from continuing operations |
900,885 |
864,940 |
949,177 |
3.11 |
Profit (loss) for the year |
900,885 |
864,940 |
949,177 |
3.99.01.01 |
ON - common shares |
0.89 |
0.85 |
0.96 |
3.99.02.01 |
ON - common shares |
0.87 |
0.83 |
0.94 |
5
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Comprehensive Income
(In thousands of Brazilian reais – R$) |
| |||
Code |
Description |
Current Year |
Prior Year |
Prior Year |
01/01/2016 to 12/31/2016 |
01/01/2015 to 12/31/2015 |
01/01/2014 to 12/31/2014 | ||
4.01 |
Profit for the year |
900,885 |
864,940 |
949,177 |
4.02 |
Other comprehensive income |
(394,176) |
65,548 |
(225,720) |
4.02.01 |
Comprehensive income for the year of subsidiaries |
(394,176) |
65,548 |
(225,720) |
4.03 |
Comprehensive income for the year |
506,709 |
930,488 |
723,457 |
6
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Cash Flows – Indirect Method
(In thousands of Brazilian reais – R$) |
|
|
| |
Code |
Description |
Current year |
Prior Year |
Prior Year |
6.01 |
Cash flows from operating activities |
1,556,255 |
617,661 |
1,185,901 |
6.01.01 |
Cash generated from operations |
11,049 |
44,553 |
91,513 |
6.01.01.01 |
Profit for the year, including income tax and social contribution |
890,398 |
875,250 |
959,607 |
6.01.01.02 |
Depreciation and amortization |
193 |
169 |
173 |
6.01.01.03 |
Provision for tax, civil and labor risks |
425 |
1,497 |
640 |
6.01.01.04 |
Interest on debts, inflation adjusment and exchange rate changes |
42,395 |
94,588 |
142,278 |
6.01.01.10 |
Share of profit (loss) of investees |
(922,362) |
(926,951) |
(1,011,185) |
6.01.02 |
Changes in assets and liabilities |
1,545,206 |
573,108 |
1,094,388 |
6.01.02.02 |
Taxes recoverable |
3,261 |
(12,350) |
1,564 |
6.01.02.03 |
Escrow deposits |
(37) |
(48) |
(444) |
6.01.02.06 |
Dividends and interest on capital received |
1,606,073 |
627,014 |
1,248,982 |
6.01.02.09 |
Other operating assets |
(10,033) |
933 |
(411) |
6.01.02.10 |
Trade payables |
2,603 |
366 |
(336) |
6.01.02.12 |
Tax, civil and labor risks paid |
(1,115) |
(674) |
(209) |
6.01.02.14 |
Income tax and social contribution paid |
(27,117) |
(2,172) |
(21,463) |
6.01.02.16 |
Interest paid on debts |
(45,470) |
(36,858) |
(138,599) |
6.01.02.17 |
Other taxes and social contributions |
(1,162) |
804 |
(389) |
6.01.02.19 |
Other operating liabilities |
18,203 |
(3,907) |
5,693 |
6.02 |
Net cash generated by (used in) investing activities |
(1,426,698) |
(532,392) |
(389,988) |
6.02.01 |
Purchases of property, plant and equipment |
(573) |
(535) |
- |
6.02.02 |
Securities, pledges and restricted deposits |
(200) |
- |
- |
6.02.04 |
Purchases of intangible assets |
- |
(12) |
(13) |
6.02.08 |
Intragroup loans |
(41,405) |
10,845 |
(2,822) |
6.02.09 |
Advance for future capital increase |
(1,384,520) |
(52,680) |
(27,153) |
6.02.10 |
Capital increase in existing investment |
- |
(490,010) |
(360,000) |
6.03 |
Net cash generated by (used in) financing activities |
(488,776) |
(460,853) |
(986,810) |
6.03.01 |
Borrowings and debentures raised |
609,060 |
829,997 |
- |
6.03.02 |
Repayment of principal of borrowings and debentures |
(888,408) |
(1,290,000) |
- |
6.03.03 |
Dividends and interest on capital paid |
(204,717) |
(850) |
(986,810) |
6.03.06 |
Repayment of derivative instruments |
(4,711) |
- |
- |
6.05 |
Increase (decrease) in cash and cash equivalents |
(359,219) |
(375,584) |
(190,897) |
6.05.01 |
Cash and cash equivalents at the beginning of the year |
424,192 |
799,775 |
990,672 |
6.05.02 |
Cash and cash equivalents at the end of the year |
64,973 |
424,191 |
799,775 |
7
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Changes in Equity – from January 1, 2016 to December 31, 2016
(In thousands of Brazilian reais – R$) |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Code |
Description |
Paid-in capital |
Capital reserves, |
Earnings reserves |
Retained earnings/accumulated losses |
Other comprehensive income |
Equity |
5.01 |
Opening balances |
5,348,312 |
468,082 |
1,672,481 |
- |
185,320 |
7,674,195 |
5.03 |
Adjusted opening balances |
5,348,312 |
468,082 |
1,672,481 |
- |
185,320 |
7,674,195 |
5.04 |
Capital transactions with shareholders |
392,972 |
(68) |
(385,152) |
(218,636) |
- |
(210,884) |
5.04.01 |
Capital increase |
392,972 |
- |
(392,972) |
- |
- |
- |
5.04.08 |
Prescribed dividend |
- |
- |
- |
3,144 |
- |
3,144 |
5.04.09 |
Dividend proposal approved |
- |
- |
- |
(213,960) |
- |
(213,960) |
5.04.10 |
Dividend proposed |
- |
- |
7,820 |
(7,820) |
- |
- |
5.04.13 |
Capital increase in subsidiaries with no change in control |
- |
(68) |
- |
- |
- |
(68) |
5.05 |
Total comprehensive income |
- |
- |
- |
900,886 |
(394,175) |
506,710 |
5.05.01 |
Profit for the year |
- |
- |
- |
900,886 |
- |
900,885 |
5.05.02 |
Other comprehensive income |
- |
- |
- |
- |
(394,175) |
(394,175) |
5.06 |
Internal changes in equity |
- |
- |
708,027 |
(682,250) |
(25,778) |
- |
5.06.01 |
Recognition of reserves |
- |
- |
45,044 |
(45,044) |
- |
- |
5.06.04 |
Equity on comprehensive income of subsidiaries |
- |
- |
- |
25,778 |
(25,778) |
- |
5.06.08 |
Changes in statutory reserve in the year |
- |
- |
662,983 |
(662,984) |
- |
- |
5.07 |
Closing balances |
5,741,284 |
468,014 |
1,995,356 |
- |
(234,633) |
7,970,021 |
8
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Changes in Equity – from January 1, 2015 to December 31, 2015
(In thousands of Brazilian reais – R$) |
|
|
| ||||
|
|
|
|
|
|
|
|
Code |
Description |
Paid-in capital |
Capital reserves, stock options and treasury stock |
Earnings reserves |
Retained earnings/accumulated losses |
Other comprehensive income |
Equity |
5.01 |
Opening balances |
4,793,424 |
468,082 |
1,536,136 |
- |
145,892 |
6,943,534 |
5.03 |
Adjusted opening balances |
4,793,424 |
468,082 |
1,536,136 |
- |
145,892 |
6,943,534 |
5.04 |
Capital transactions with shareholders |
554,888 |
- |
(554,888) |
(199,826) |
- |
(199,826) |
5.04.01 |
Capital increase |
554,888 |
- |
(554,888) |
- |
- |
- |
5.04.08 |
Prescribed dividend |
- |
- |
- |
5,597 |
- |
5,597 |
5.04.09 |
Dividend proposal approved |
- |
- |
- |
(205,423) |
- |
(205,423) |
5.05 |
Total comprehensive income |
- |
- |
- |
864,940 |
65,548 |
930,488 |
5.05.01 |
Profit for the year |
- |
- |
- |
864,940 |
- |
864,940 |
5.05.02 |
Other comprehensive income |
- |
- |
- |
- |
65,548 |
65,548 |
5.06 |
Internal changes in equity |
- |
- |
691,233 |
(665,114) |
(26,119) |
- |
5.06.01 |
Recognition of reserves |
- |
- |
43,247 |
(43,247) |
- |
- |
5.06.05 |
Changes in statutory reserve in the year |
- |
- |
647,986 |
(647,986) |
- |
- |
5.06.09 |
Equity on comprehensive income of subsidiaries |
- |
- |
- |
26,119 |
(26,119) |
- |
5.07 |
Closing balances |
5,348,312 |
468,082 |
1,672,481 |
- |
185,321 |
7,674,196 |
9
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Changes in Equity – from January 1, 2014 to December 31, 2014
(In thousands of Brazilian reais – R$) |
|
|
| ||||
Code |
Description |
Paid-in capital |
Capital reserves, stock options and treasury stock |
Earnings reserves |
Retained earnings/accumulated losses |
Other comprehensive income |
Equity |
5.01 |
Opening balances |
4,793,424 |
287,630 |
1,545,177 |
- |
397,668 |
7,023,899 |
5.03 |
Adjusted opening balances |
4,793,424 |
287,630 |
1,545,177 |
- |
397,668 |
7,023,899 |
5.04 |
Capital transactions with shareholders |
- |
180,452 |
(567,802) |
(416,472) |
- |
(803,822) |
5.04.08 |
Dividend proposal approved |
- |
- |
(567,802) |
- |
- |
(567,802) |
5.04.09 |
Prescribed dividend |
- |
- |
- |
5,723 |
- |
5,723 |
5.04.10 |
Interim dividend |
- |
- |
- |
(422,195) |
- |
(422,195) |
5.04.11 |
Capital increase in subsidiaries with no change in control |
- |
362 |
- |
- |
- |
362 |
5.04.12 |
Gain (loss) in participation with no change in control |
- |
(207) |
- |
- |
- |
(207) |
5.04.13 |
Business combination CPFL Renováveis / DESA |
- |
180,297 |
- |
- |
- |
180,297 |
5.05 |
Total comprehensive income |
- |
- |
- |
949,177 |
(225,720) |
723,457 |
5.05.01 |
Profit for the year |
- |
- |
- |
949,177 |
- |
949,177 |
5.05.02 |
Other comprehensive income |
- |
- |
- |
- |
(225,720) |
(225,720) |
5.05.02.03 |
Share of comprehensive income of subsidiaries and associates |
- |
- |
- |
- |
(225,720) |
(225,720) |
5.06 |
Internal changes in equity |
- |
- |
558,760 |
(532,705) |
(26,055) |
- |
5.06.01 |
Recognition of reserves |
- |
- |
47,459 |
(47,459) |
- |
- |
5.06.04 |
Changes in statutory reserve in the year |
- |
- |
620,288 |
(620,288) |
- |
- |
5.06.05 |
Equity on comprehensive income of subsidiaries |
- |
- |
- |
26,055 |
(26,055) |
- |
5.06.08 |
Realization/reversal of earnings retained investment |
- |
- |
(108,987) |
108,987 |
- |
- |
5.07 |
Closing balances |
4,793,424 |
468,082 |
1,536,135 |
- |
145,893 |
6,943,534 |
10
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Individual Financial Statements
Statement of Value Added
(In thousands of Brazilian reais – R$) |
|
| ||
|
|
|
|
|
Code |
Description |
Current Year |
Prior Year |
Prior Year |
7.01 |
Revenues |
2,461 |
1,821 |
81 |
7.01.01 |
Sales of goods and services |
1,888 |
1,274 |
78 |
7.01.03 |
Revenues related to construction of own assets |
573 |
547 |
3 |
7.02 |
Inputs purchased from thrid parties |
(13,305) |
(10,322) |
(7,701) |
7.02.02 |
Materials, energy, third-party services and others |
(11,045) |
(7,825) |
(5,081) |
7.02.04 |
Others |
(2,260) |
(2,497) |
(2,620) |
7.03 |
Gross value added |
(10,844) |
(8,501) |
(7,620) |
7.04 |
Retentions |
(194) |
(169) |
(173) |
7.04.01 |
Depreciation, amortization and depletion |
(194) |
(169) |
(173) |
7.05 |
Wealth created by the Company |
(11,038) |
(8,670) |
(7,793) |
7.06 |
Wealth received in transfer |
998,853 |
1,011,012 |
1,141,740 |
7.06.01 |
Share of profit (loss) of investees |
922,362 |
926,950 |
1,011,185 |
7.06.02 |
Finance income |
76,491 |
84,062 |
130,555 |
7.07 |
Total wealth for distribution |
987,815 |
1,002,342 |
1,133,947 |
7.08 |
Wealth distributed |
987,815 |
1,002,342 |
1,133,947 |
7.08.01 |
Personnel and charges |
33,168 |
16,938 |
15,507 |
7.08.01.01 |
Salaries and wages |
17,914 |
9,963 |
8,455 |
7.08.01.02 |
Benefits |
13,978 |
5,987 |
6,257 |
7.08.01.03 |
FGTS (Severance Pay Fund) |
1,276 |
988 |
795 |
7.08.02 |
Taxes, fees and contributions |
483 |
28,424 |
25,807 |
7.08.02.01 |
Federal |
443 |
28,394 |
25,782 |
7.08.02.02 |
State |
40 |
30 |
25 |
7.08.03 |
Lenders and lessors |
53,279 |
92,040 |
143,456 |
7.08.03.01 |
Interest |
53,229 |
91,918 |
143,318 |
7.08.03.02 |
Rentals |
50 |
122 |
138 |
7.08.04 |
Shareholders |
900,885 |
864,940 |
949,177 |
7.08.04.02 |
Dividends |
192,857 |
173,708 |
281,430 |
7.08.04.03 |
Retained earnings / Loss for the year |
708,028 |
691,232 |
667,747 |
11
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Financial Position – Assets
(In thousands of Brazilian reais – R$) |
|
|
| |
|
|
|
|
|
Code |
Description |
Current Year 12/31/2016 |
Prior Year 12/31/2015 |
Prior Year 12/31/2014 |
1 |
Total assets |
42,170,992 |
40,532,471 |
35,144,436 |
1.01 |
Current assets |
11,379,187 |
12,508,652 |
9,214,704 |
1.01.01 |
Cash and cash equivalents |
6,164,997 |
5,682,802 |
4,357,455 |
1.01.02 |
Financial investments |
449 |
23,633 |
5,323 |
1.01.02.02 |
Financial investments at amortized cost |
449 |
23,633 |
5,323 |
1.01.02.02.01 |
Held-to-maturity securities |
449 |
23,633 |
5,323 |
1.01.03 |
Trade receivables |
3,765,893 |
3,174,918 |
2,251,124 |
1.01.03.01 |
Consumers |
3,765,893 |
3,174,918 |
2,251,124 |
1.01.06 |
Taxes recoverable |
403,848 |
475,211 |
329,638 |
1.01.06.01 |
Current taxes recoverable |
403,848 |
475,211 |
329,638 |
1.01.08 |
Other current assets |
1,044,000 |
3,152,088 |
2,271,164 |
1.01.08.03 |
Others |
1,044,000 |
3,152,088 |
2,271,164 |
1.01.08.03.01 |
Other receivables |
777,450 |
946,671 |
1,030,001 |
1.01.08.03.02 |
Derivatives |
163,241 |
627,493 |
23,260 |
1.01.08.03.03 |
Leases |
19,281 |
12,883 |
12,395 |
1.01.08.03.04 |
Dividends and interest on capital |
73,328 |
91,392 |
54,483 |
1.01.08.03.05 |
Concession financial asset |
10,700 |
9,630 |
540,094 |
1.01.08.03.06 |
Sector financial asset |
- |
1,464,019 |
610,931 |
1.02 |
Noncurrent assets |
30,791,805 |
28,023,819 |
25,929,732 |
1.02.01 |
Long-term assets |
8,809,442 |
8,392,634 |
6,751,305 |
1.02.01.03 |
Trade receivables |
203,185 |
128,946 |
123,405 |
1.02.01.03.01 |
Consumers |
203,185 |
128,946 |
123,405 |
1.02.01.06 |
Deferred taxes |
922,858 |
334,886 |
938,496 |
1.02.01.06.02 |
Deferred tax assets |
922,858 |
334,886 |
938,496 |
1.02.01.08 |
Receivables from related parties |
47,632 |
84,265 |
100,666 |
1.02.01.08.03 |
Receivables from owners of the Company |
47,632 |
84,265 |
100,666 |
1.02.01.09 |
Other noncurrent assets |
7,635,767 |
7,844,537 |
5,588,738 |
1.02.01.09.03 |
Derivatives |
641,357 |
1,651,260 |
584,917 |
1.02.01.09.04 |
Escrow deposits |
550,072 |
1,227,527 |
1,162,477 |
1.02.01.09.05 |
Taxes recoverable |
198,286 |
167,159 |
144,383 |
1.02.01.09.06 |
Leases |
50,541 |
34,504 |
35,169 |
1.02.01.09.07 |
Concession financial asset |
5,363,144 |
3,597,474 |
2,834,522 |
1.02.01.09.09 |
Investments at cost |
116,654 |
116,654 |
116,654 |
1.02.01.09.10 |
Other receivables |
715,713 |
560,014 |
388,828 |
1.02.01.09.11 |
Sector financial asset |
- |
489,945 |
321,788 |
1.02.02 |
Investments |
1,493,752 |
1,247,631 |
1,098,769 |
1.02.02.01 |
Equity interests |
1,493,752 |
1,247,631 |
1,098,769 |
1.02.02.01.04 |
Other equity interests |
1,493,752 |
1,247,631 |
1,098,769 |
1.02.03 |
Property, plant and equipment |
9,712,998 |
9,173,217 |
9,149,486 |
1.02.03.01 |
PP&E - in service |
9,462,696 |
8,499,051 |
8,761,398 |
1.02.03.03 |
PP&E - in progress |
250,302 |
674,166 |
388,088 |
1.02.04 |
Intangible assets |
10,775,613 |
9,210,337 |
8,930,172 |
1.02.04.01 |
Intangible assets |
10,775,613 |
9,210,337 |
8,930,172 |
12
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Financial Position – Liabilities and Equity
(In thousands of Brazilian reais – R$) |
||||
Code |
Description |
Current Year 12/31/2016 |
Prior Year 12/31/2015 |
Prior Year 12/31/2014 |
2 |
Total liabilities |
42,170,992 |
40,532,471 |
35,144,436 |
2.01 |
Current liabilities |
9,018,493 |
9,524,873 |
7,417,104 |
2.01.01 |
Payroll and related taxes |
131,707 |
79,924 |
70,251 |
2.01.01.02 |
Payroll taxes |
131,707 |
79,924 |
70,251 |
2.01.01.02.01 |
Estimated payroll |
131,707 |
79,924 |
70,251 |
2.01.02 |
Trade payables |
2,728,131 |
3,161,210 |
2,374,147 |
2.01.02.01 |
Domestic suppliers |
2,728,131 |
3,161,210 |
2,374,147 |
2.01.03 |
Taxes payable |
681,544 |
653,342 |
436,267 |
2.01.03.01 |
Federal taxes |
260,607 |
265,126 |
166,527 |
2.01.03.01.01 |
Income tax and social contribution |
57,227 |
43,249 |
57,547 |
2.01.03.01.02 |
PIS (tax on revenue) |
28,759 |
33,199 |
15,096 |
2.01.03.01.03 |
COFINS (tax on revenue) |
126,939 |
159,317 |
69,701 |
2.01.03.01.04 |
Other federal taxes |
47,682 |
29,361 |
24,183 |
2.01.03.02 |
State taxes |
416,102 |
384,151 |
266,493 |
2.01.03.02.01 |
ICMS (state VAT) |
416,096 |
384,151 |
266,493 |
2.01.03.02.02 |
State taxes - other |
6 |
- |
- |
2.01.03.03 |
Municipal taxes |
4,835 |
4,065 |
3,247 |
2.01.03.03.01 |
Other municipal taxes |
4,835 |
4,065 |
3,247 |
2.01.04 |
Borrowings |
3,422,923 |
3,640,314 |
3,526,208 |
2.01.04.01 |
Borrowings |
1,875,648 |
2,949,922 |
1,191,025 |
2.01.04.01.01 |
In local currency |
1,260,527 |
1,287,278 |
1,047,191 |
2.01.04.01.02 |
In foreign currency |
615,121 |
1,662,644 |
143,834 |
2.01.04.02 |
Debentures |
1,547,275 |
690,392 |
2,335,183 |
2.01.04.02.01 |
Debentures |
1,242,095 |
458,165 |
2,042,075 |
2.01.04.02.02 |
Interest on debentures |
305,180 |
232,227 |
293,108 |
2.01.05 |
Other liabilities |
2,054,188 |
1,990,083 |
1,010,231 |
2.01.05.02 |
Others |
2,054,188 |
1,990,083 |
1,010,231 |
2.01.05.02.01 |
Dividends and interest on capital payable |
232,851 |
221,855 |
19,086 |
2.01.05.02.04 |
Derivatives |
6,055 |
981 |
38 |
2.01.05.02.05 |
Private pension plan |
597,515 |
- |
21,998 |
2.01.05.02.06 |
Regulatory charges |
10,857 |
9,457 |
4,000 |
2.01.05.02.07 |
Use of public asset |
807,623 |
904,971 |
835,940 |
2.01.05.02.08 |
Other payables |
366,078 |
852,017 |
43,795 |
2.01.05.02.09 |
Sector financial liability |
33,209 |
802 |
85,374 |
2.02 |
Noncurrent liabilities |
22,779,831 |
20,877,460 |
18,330,004 |
2.02.01 |
Borrowings |
18,621,065 |
18,092,904 |
15,623,751 |
2.02.01.01 |
Borrowings |
11,168,393 |
11,712,865 |
9,487,351 |
2.02.01.01.01 |
In local currency |
6,293,533 |
6,438,701 |
6,192,973 |
2.02.01.01.02 |
In foreign currency |
4,874,860 |
5,274,164 |
3,294,378 |
2.02.01.02 |
Debentures |
7,452,672 |
6,380,039 |
6,136,400 |
2.02.01.02.01 |
Debentures |
7,423,519 |
6,363,553 |
6,136,400 |
2.02.01.02.02 |
Interest on debentures |
29,153 |
16,486 |
- |
2.02.02 |
Other liabilities |
2,001,356 |
782,427 |
797,093 |
2.02.02.02 |
Others |
2,001,356 |
782,427 |
797,093 |
2.02.02.02.03 |
Derivatives |
129,781 |
633 |
633 |
2.02.02.02.04 |
Private pension plan |
1,019,233 |
474,318 |
518,386 |
2.02.02.02.05 |
Taxes, fees and contributions |
112,207 |
33,205 |
13,317 |
2.02.02.02.06 |
Sector financial liability |
317,406 |
- |
- |
2.02.02.02.07 |
Use of public asset |
86,624 |
83,124 |
80,992 |
2.02.02.02.08 |
Other payables |
309,292 |
191,147 |
183,765 |
2.02.02.02.09 |
Federal taxes |
26,813 |
- |
- |
2.02.03 |
Deferred taxes |
1,324,134 |
1,432,594 |
1,401,009 |
2.02.03.01 |
Deferred income tax and social contribution |
1,324,134 |
1,432,594 |
1,401,009 |
2.02.04 |
Provisions |
833,276 |
569,535 |
508,151 |
2.02.04.01 |
Tax, social security, labor and civil provisions |
833,276 |
569,535 |
508,151 |
2.02.04.01.01 |
Tax provisions |
288,389 |
184,362 |
171,119 |
2.02.04.01.02 |
Social security and labor provisions |
222,001 |
171,990 |
125,641 |
2.02.04.01.04 |
Civil provisions |
236,915 |
194,530 |
185,741 |
2.02.04.01.05 |
Others |
85,971 |
18,653 |
25,650 |
2.03 |
Consolidated equity |
10,372,668 |
10,130,138 |
9,397,328 |
2.03.01 |
Issued capital |
5,741,284 |
5,348,312 |
4,793,424 |
2.03.02 |
Capital reserves |
468,015 |
468,082 |
468,082 |
2.03.04 |
Earnings reserves |
1,995,355 |
1,672,481 |
1,536,136 |
2.03.04.01 |
Legal reserve |
739,102 |
694,058 |
650,811 |
2.03.04.02 |
Statutory reserve |
1,248,433 |
978,423 |
885,325 |
2.03.04.08 |
Additional dividend proposed |
7,820 |
- |
- |
2.03.08 |
Other comprehensive income |
(234,634) |
185,321 |
145,892 |
2.03.09 |
Noncontrolling interests |
2,402,648 |
2,455,942 |
2,453,794 |
13
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of income
(In thousands of Brazilian reais – R$) |
||||
Code |
Description |
Current Year |
Prior Year |
Prior Year |
3.01 |
Revenue from sale of energy and/or services |
19,112,089 |
20,599,212 |
17,399,196 |
3.02 |
Cost of sales and/or services |
(14,806,069) |
(16,268,045) |
(13,261,541) |
3.02.01 |
Cost of electric energy |
(11,200,242) |
(13,311,747) |
(10,643,130) |
3.02.02 |
Cost of operation |
(2,248,795) |
(1,907,198) |
(1,672,359) |
3.02.03 |
Cost of services rendered to third parties |
(1,357,032) |
(1,049,100) |
(946,052) |
3.03 |
Gross profit |
4,306,020 |
4,331,167 |
4,137,655 |
3.04 |
Operating income (expenses) |
(1,471,999) |
(1,468,851) |
(1,444,643) |
3.04.01 |
Selling expenses |
(547,251) |
(464,583) |
(402,698) |
3.04.02 |
General and administrative expenses |
(849,416) |
(863,499) |
(773,630) |
3.04.05 |
Other operating expenses |
(386,745) |
(357,654) |
(327,999) |
3.04.06 |
Share of profit (loss) of investees |
311,413 |
216,885 |
59,684 |
3.05 |
Profit before finance income (costs) and taxes |
2,834,021 |
2,862,316 |
2,693,012 |
3.06 |
Finance income (costs) |
(1,453,474) |
(1,407,863) |
(1,182,708) |
3.06.01 |
Finance income |
1,200,503 |
1,143,247 |
785,795 |
3.06.02 |
Finance costs |
(2,653,977) |
(2,551,110) |
(1,968,503) |
3.07 |
Profit (loss) before taxes on income |
1,380,547 |
1,454,453 |
1,510,304 |
3.08 |
Income tax and social contribution |
(501,490) |
(579,176) |
(623,861) |
3.08.01 |
Current |
(867,198) |
(12,860) |
(466,021) |
3.08.02 |
Deferred |
365,708 |
(566,316) |
(157,840) |
3.09 |
Profit (loss) from continuing operations |
879,057 |
875,277 |
886,443 |
3.11 |
Consolidated profit (loss) for the year |
879,057 |
875,277 |
886,443 |
3.11.01 |
Attributable to owners of the Company |
900,885 |
864,940 |
949,177 |
3.11.02 |
Attributable to noncontrolling interests |
(21,828) |
10,337 |
(62,734) |
14
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Comprehensive Income
(In thousands of Brazilian reais – R$) |
| |||
Code |
Description |
Current Year |
Prior Year |
Prior Year |
4.01 |
Consolidated profit for the year |
879,057 |
875,277 |
886,443 |
4.02 |
Other comprehensive income |
(394,175) |
65,548 |
(225,719) |
4.02.03 |
Actuarial gains (losses), net of tax effects |
(394,175) |
65,548 |
(225,719) |
4.03 |
Consolidated comprehensive income for the year |
484,882 |
940,825 |
660,724 |
4.03.01 |
Attributtable to owners of the Company |
506,709 |
930,488 |
723,457 |
4.03.02 |
Attributable to noncontrolling interests |
(21,827) |
10,337 |
(62,733) |
15
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Cash Flows – Indirect Method
(In thousands of Brazilian reais – R$) |
||||
Code |
Description |
YTD Current Year |
YTD Prior Year |
YTD Prior Year |
6.01 |
Cash flows from operating activities |
4,634,026 |
2,557,974 |
1,592,573 |
6.01.01 |
Cash generated from operations |
5,015,992 |
4,551,471 |
4,462,978 |
6.01.01.01 |
Profit for the year, including income tax and social contribution |
1,380,547 |
1,454,454 |
1,510,304 |
6.01.01.02 |
Depreciation and amortization |
1,291,165 |
1,279,902 |
1,159,964 |
6.01.01.03 |
Provision for tax, civil and labor risks |
228,292 |
258,539 |
191,228 |
6.01.01.04 |
Interest on debts, inflation adjustment and exchange rate changes |
2,052,959 |
1,519,819 |
1,486,061 |
6.01.01.05 |
Private pension plan |
76,638 |
60,184 |
48,165 |
6.01.01.06 |
Loss on disposal of noncurrent assets |
83,576 |
16,309 |
20,726 |
6.01.01.07 |
Deferred taxes - PIS and COFINS |
(8,579) |
19,138 |
24,946 |
6.01.01.08 |
Others |
(1,832) |
(5,824) |
(2,431) |
6.01.01.09 |
Allowance for doubtful debts |
176,349 |
126,879 |
83,699 |
6.01.01.10 |
Share of profit (loss) of investees |
(311,414) |
(216,885) |
(59,684) |
6.01.01.11 |
Impairment |
48,291 |
38,956 |
- |
6.01.02 |
Changes in assets and liabilities |
(381,966) |
(1,993,497) |
(2,870,405) |
6.01.02.01 |
Consumers, concessionaires and licensees |
(205,828) |
(1,055,143) |
(265,103) |
6.01.02.02 |
Taxes recoverable |
128,453 |
(62,041) |
(134) |
6.01.02.04 |
Escrow deposits |
756,171 |
22,827 |
65,732 |
6.01.02.05 |
Sector financial asset |
2,494,223 |
(858,860) |
(932,719) |
6.01.02.16 |
Dividends and interest on capital received |
83,356 |
24,050 |
40,374 |
6.01.02.06 |
Receivables - Eletrobrás |
186,052 |
181,141 |
(352,379) |
6.01.02.08 |
Concession financial assets (transmission companies) |
(55,134) |
(44,244) |
(62,299) |
6.01.02.07 |
Other operating assets |
265,404 |
(82,279) |
20,634 |
6.01.02.08 |
Trade payables |
(782,963) |
787,063 |
470,982 |
6.01.02.13 |
Regulatory charges |
(514,935) |
808,223 |
11,415 |
6.01.02.15 |
Tax, civil and labor risks paid |
(216,998) |
(247,512) |
(188,000) |
6.01.02.18 |
Payables - CDE |
(70,907) |
19,696 |
25,807 |
6.01.02.09 |
Income tax and social contribution paid |
(875,883) |
(276,061) |
(552,070) |
6.01.02.17 |
Sector financial liability |
288,144 |
(23,170) |
21,998 |
6.01.02.12 |
Interest paid on debts and debentures |
(1,570,985) |
(1,595,649) |
(1,333,570) |
6.01.02.10 |
Other taxes and social contributions |
(63,986) |
412,703 |
193,357 |
6.01.02.11 |
Other liabilities with private pension plan |
(77,183) |
(112,172) |
(118,897) |
6.01.02.14 |
Other operating liabilities |
(148,967) |
107,931 |
84,467 |
6.02 |
Net cash generated by (used in) investing activities |
(3,815,219) |
(1,524,894) |
(933,007) |
6.02.02 |
Purchases of property, plant and equipment |
(1,026,867) |
(550,003) |
(345,049) |
6.02.03 |
Securities, pledges and restricted deposits |
(125,517) |
(147,914) |
(7,839) |
6.02.11 |
Payment of amount for business combination |
- |
10,454 |
- |
6.02.05 |
Purchases of intangible assets |
(1,211,082) |
(877,793) |
(716,818) |
6.02.07 |
Sale of noncurrent assets |
- |
10,586 |
43,024 |
6.02.12 |
Intragroup loans |
44,922 |
29,776 |
949 |
6.02.13 |
Capital increase in existing investments |
|
|
(45,445) |
6.02.14 |
Business combination, net of cash acquired |
(1,496,675) |
- |
70,829 |
6.02.15 |
Repayment of advances to suppliers |
- |
- |
67,342 |
6.03 |
Net cash generated by (used in) financing activities |
(336,612) |
292,267 |
(508,533) |
6.03.01 |
Borrowings and debentures raised |
3,774,355 |
4,532,167 |
3,186,384 |
6.03.02 |
Repayment of principal of borrowings and debentures |
(4,016,693) |
(4,037,685) |
(2,559,771) |
6.03.03 |
Dividends and interest on capital paid |
(231,749) |
(5,204) |
(1,016,641) |
6.03.08 |
Capital increase by noncontrolling interests |
467 |
7 |
1,123 |
6.03.04 |
Business combination payment |
(21,234) |
(61,709) |
- |
6.03.06 |
Repayment of derivative instruments |
158,242 |
(135,309) |
(119,628) |
6.05 |
Increase (decrease) in cash and cash equivalents |
482,195 |
1,325,347 |
151,033 |
6.05.01 |
Cash and cash equivalents at the beginning of the year |
5,682,802 |
4,357,455 |
4,206,422 |
6.05.02 |
Cash and cash equivalents at the end of the year |
6,164,997 |
5,682,802 |
4,357,455 |
16
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Changes in Equity – from January 1, 2016 to December 31, 2016
(In thousands of Brazilian reais – R$) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Code |
Description |
Paid-in 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 |
5,348,312 |
468,082 |
1,672,481 |
- |
185,320 |
7,674,195 |
2,455,943 |
10,130,138 |
5.03 |
Adjusted opening balances |
5,348,312 |
468,082 |
1,672,481 |
- |
185,320 |
7,674,195 |
2,455,943 |
10,130,138 |
5.04 |
Capital transactions with shareholders |
392,972 |
(68) |
(385,152) |
(218,636) |
- |
(210,884) |
(30,293) |
(241,177) |
5.04.01 |
Capital increase |
392,972 |
- |
(392,972) |
- |
- |
- |
- |
- |
5.04.08 |
Prescribed dividends |
- |
- |
- |
3,144 |
- |
3,144 |
- |
3,144 |
5.04.09 |
Dividend proposed |
- |
- |
7,820 |
(7,820) |
- |
- |
- |
- |
5.04.10 |
Dividend proposal approved |
- |
- |
- |
(213,960) |
- |
(213,960) |
(30,827) |
(244,787) |
5.04.13 |
Capital increase in subsidiaries with no change in control |
- |
(68) |
- |
- |
- |
(68) |
534 |
466 |
5.05 |
Total comprehensive income |
- |
- |
- |
900,885 |
(394,175) |
506,710 |
(21,828) |
484,882 |
5.05.01 |
Profit for the year |
- |
- |
- |
900,885 |
- |
900,885 |
(21,828) |
879,057 |
5.05.02 |
Other comprehensive income |
- |
- |
- |
- |
(394,175) |
(394,175) |
- |
(394,175) |
5.06 |
Internal changes in equity |
- |
- |
708,027 |
(682,249) |
(25,778) |
- |
(1,176) |
(1,176) |
5.06.01 |
Recognition of reserves |
- |
- |
45,044 |
(45,044) |
- |
- |
- |
- |
5.06.05 |
Changes in statutory reserve in the year |
- |
- |
662,983 |
(662,983) |
- |
- |
- |
- |
5.06.06 |
Realization of deemed cost of property, plant and equipment |
- |
- |
- |
39,058 |
(39,058) |
- |
- |
- |
5.06.07 |
Tax on realization of deemed cost |
- |
- |
- |
(13,280) |
13,280 |
- |
- |
- |
5.06.09 |
Other changes in noncontrolling interests |
- |
- |
- |
- |
- |
- |
(1,176) |
(1,176) |
5.07 |
Closing balances |
5,741,284 |
468,014 |
1,995,356 |
- |
(234,633) |
7,970,021 |
2,402,646 |
10,372,667 |
17
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Changes in Equity – from January 1, 2015 to December 31, 2015
(In thousands of Brazilian reais – R$) | |||||||||
Code |
Description |
Paid-in capital |
Capital |
Earnings reserves |
Retained |
Other |
Equity |
Noncontrolling interests |
Consolidated equity |
5.01 |
Opening balances |
4,793,424 |
468,082 |
1,536,136 |
- |
145,892 |
6,943,534 |
2,453,795 |
9,397,329 |
5.03 |
Adjusted opening balances |
4,793,424 |
468,082 |
1,536,136 |
- |
145,892 |
6,943,534 |
2,453,795 |
9,397,329 |
5.04 |
Capital transactions with shareholders |
554,888 |
- |
(554,888) |
(199,826) |
- |
(199,826) |
(8,140) |
(207,966) |
5.04.01 |
Capital increase |
554,888 |
- |
(554,888) |
- |
- |
- |
- |
- |
5.04.08 |
Prescribed dividends |
- |
- |
- |
5,597 |
- |
5,597 |
- |
5,597 |
5.04.09 |
Dividend proposal approved |
- |
- |
- |
(205,423) |
- |
(205,423) |
(8,147) |
(213,570) |
5.04.10 |
Capital increase in subsidiaries with no change in control |
- |
- |
- |
- |
- |
- |
7 |
7 |
5.05 |
Total comprehensive income |
- |
- |
- |
864,940 |
65,548 |
930,488 |
10,337 |
940,825 |
5.05.01 |
Profit for the year |
- |
- |
- |
864,940 |
- |
864,940 |
10,337 |
875,277 |
5.05.02 |
Other comprehensive income |
- |
- |
- |
- |
65,548 |
65,548 |
- |
65,548 |
5.06 |
Internal changes in equity |
- |
- |
691,233 |
(665,114) |
(26,119) |
- |
(50) |
(50) |
5.06.01 |
Recognition of reserves |
- |
- |
43,247 |
(43,247) |
- |
- |
- |
- |
5.06.05 |
Changes in statutory reserve in the year |
- |
- |
647,986 |
(647,986) |
- |
- |
- |
- |
5.06.06 |
Realization of deemed cost of property, plant and equipment |
- |
- |
- |
39,574 |
(39,574) |
- |
- |
- |
5.06.07 |
Tax on realization of deemed cost |
- |
- |
- |
(13,455) |
13,455 |
- |
- |
- |
5.06.09 |
Other changes in noncontrolling interests |
- |
- |
- |
- |
- |
- |
(50) |
(50) |
5.07 |
Closing balances |
5,348,312 |
468,082 |
1,672,481 |
- |
185,321 |
7,674,196 |
2,455,942 |
10,130,138 |
18
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Changes in Equity – from January 1, 2014 to December 31, 2014
(In thousands of Brazilian reais – R$) | |||||||||
Code |
Description |
Paid in capital |
Capital |
Earnings reserves |
Retained earnings/ |
Other |
Equity |
Noncontrolling |
Consolidated |
5.01 |
Opening balances |
4,793,424 |
287,630 |
1,545,177 |
- |
397,668 |
7,023,899 |
1,774,818 |
8,798,717 |
5.03 |
Adjusted opening balances |
4,793,424 |
287,630 |
1,545,177 |
- |
397,668 |
7,023,899 |
1,774,818 |
8,798,717 |
5.04 |
Capital transactions with shareholders |
- |
180,452 |
(567,802) |
(416,472) |
- |
(803,822) |
741,743 |
(62,078) |
5.04.08 |
Prescribed dividends |
- |
- |
- |
5,723 |
- |
5,723 |
- |
5,723 |
5.04.09 |
Interim dividends |
- |
- |
- |
(422,195) |
- |
(422,195) |
(2,382) |
(424,577) |
5.04.10 |
Dividend proposal approved |
- |
- |
(567,802) |
- |
- |
(567,802) |
(27,156) |
(594,958) |
5.04.11 |
Redemption of capital reserve of non-controlling shareholders |
- |
- |
- |
- |
- |
- |
(2,189) |
(2,189) |
5.04.13 |
Capital increase in subsidiaries with no change in control |
- |
362 |
- |
- |
- |
362 |
760 |
1,123 |
5.04.14 |
Gain (loss) in participation with no change in control |
- |
(207) |
- |
- |
- |
(207) |
207 |
- |
5.04.15 |
Business combination CPFL Renováveis / DESA |
- |
180,297 |
- |
- |
- |
180,297 |
653,366 |
833,663 |
5.04.16 |
Business combination CPFL Renováveis / DESA effect of non-controlling of subsidiary |
- |
- |
- |
- |
- |
- |
119,137 |
119,137 |
5.05 |
Total comprehensive income |
- |
- |
- |
949,177 |
(225,720) |
723,457 |
(62,733) |
660,723 |
5.05.01 |
Profit for the year |
- |
- |
- |
949,177 |
- |
949,177 |
(62,733) |
886,443 |
5.05.02 |
Other comprehensive income |
- |
- |
- |
- |
(225,720) |
(225,720) |
- |
(225,720) |
5.05.02.06 |
Other comprehensive income: actuarial gains |
- |
- |
- |
- |
(225,720) |
(225,720) |
- |
(225,720) |
5.06 |
Internal changes in equity |
- |
- |
558,760 |
(532,705) |
(26,055) |
- |
(33) |
(33) |
5.06.01 |
Recognition of reserves |
- |
- |
47,459 |
(47,459) |
- |
- |
- |
- |
5.06.05 |
Changes in statutory reserve in the year |
- |
- |
620,288 |
(620,288) |
- |
- |
- |
- |
5.06.06 |
Realization of deemed cost of property, plant and equipment |
- |
- |
- |
39,478 |
(39,478) |
- |
- |
- |
5.06.07 |
Tax on realization of deemed cost |
- |
- |
- |
(13,423) |
13,423 |
- |
- |
- |
5.06.08 |
Realization/reversal of earnings retained investment |
- |
- |
(108,987) |
108,987 |
- |
- |
- |
- |
5.07 |
Closing balances |
4,793,424 |
468,082 |
1,536,135 |
- |
145,893 |
6,943,534 |
2,453,795 |
9,397,329 |
19
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated Financial Statements
Statement of Value Added
(In thousands of Brazilian reais – R$) |
|
| ||
|
|
|
|
|
Code |
Description |
Current Year |
Prior Year |
Prior Year |
7.01 |
Revenues |
31,664,675 |
34,770,704 |
23,150,426 |
7.01.01 |
Sales of goods and services |
29,430,560 |
33,255,632 |
21,944,635 |
7.01.02 |
Other revenues |
1,354,022 |
1,046,669 |
944,997 |
7.01.02.01 |
Revenue from construction of distribution infrastructure |
1,354,022 |
1,046,669 |
944,997 |
7.01.03 |
Revenues related to construction of own assets |
1,056,442 |
595,282 |
344,492 |
7.01.04 |
Recognition (reversal) of allowance for doubtful debts |
(176,349) |
(126,879) |
(83,698) |
7.02 |
Inputs purchased from third parties |
(16,150,083) |
(17,590,769) |
(14,092,481) |
7.02.01 |
Cost of sales and services |
(12,452,018) |
(14,749,957) |
(11,780,445) |
7.02.02 |
Materials, energy, third-party services and others |
(3,063,363) |
(2,238,817) |
(1,866,059) |
7.02.04 |
Others |
(634,702) |
(601,995) |
(445,977) |
7.03 |
Gross value added |
15,514,592 |
17,179,935 |
9,057,945 |
7.04 |
Retentions |
(1,293,924) |
(1,281,726) |
(1,160,714) |
7.04.01 |
Depreciation, amortization and depletion |
(1,038,814) |
(979,062) |
(875,696) |
7.04.02 |
Others |
(255,110) |
(302,664) |
(285,018) |
7.04.02.01 |
Amortization of concession intangible asset |
(255,110) |
(302,664) |
(285,018) |
7.05 |
Wealth created by the Company |
14,220,668 |
15,898,209 |
7,897,231 |
7.06 |
Wealth received in transfer |
1,609,777 |
1,446,644 |
858,286 |
7.06.01 |
Share of profit (loss) of investees |
311,414 |
216,885 |
59,684 |
7.06.02 |
Finance income |
1,298,363 |
1,229,759 |
798,602 |
7.07 |
Total wealth for distribution |
15,830,445 |
17,344,853 |
8,755,517 |
7.08 |
Wealth distributed |
15,830,445 |
17,344,853 |
8,755,517 |
7.08.01 |
Personnel and charges |
1,073,119 |
905,103 |
814,979 |
7.08.01.01 |
Salaries and wages |
660,138 |
562,082 |
500,471 |
7.08.01.02 |
Benefits |
359,604 |
298,738 |
275,322 |
7.08.01.03 |
FGTS (Severance Pay Fund) |
53,377 |
44,283 |
39,186 |
7.08.02 |
Taxes, fees and contributions |
11,066,274 |
12,910,440 |
5,044,466 |
7.08.02.01 |
Federal |
6,109,701 |
8,207,474 |
1,916,922 |
7.08.02.02 |
State |
4,938,832 |
4,688,978 |
3,109,743 |
7.08.02.03 |
Municipal |
17,741 |
13,988 |
17,801 |
7.08.03 |
Lenders and lessors |
2,811,995 |
2,654,033 |
2,009,629 |
7.08.03.01 |
Interest |
2,743,600 |
2,600,948 |
1,942,906 |
7.08.03.02 |
Rentals |
68,395 |
53,085 |
46,929 |
7.08.03.03 |
Others |
- |
- |
19,794 |
7.08.04 |
Shareholders |
879,057 |
875,277 |
886,443 |
7.08.04.02 |
Dividends |
143,379 |
164,227 |
208,673 |
7.08.04.03 |
Retained earnings / Loss for the year |
735,678 |
711,050 |
677,770 |
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Management Report
Dear Shareholders,
In compliance with the law and the Bylaws of CPFL Energia S.A. (“CPFL Energia” or “Company”), the Management of the Company hereby submits to you the Management Report and financial statements of the Company, along with the reports of the independent auditor and fiscal council for the fiscal year ended December 31, 2016. All comparisons herein are made with consolidated figures for fiscal year 2015, except when specified otherwise.
1. Opening remarks
The year 2016 was marked by great changes to CPFL Energia. After a three-month transition period, Andre Dorf took over as the Group´s CEO on July 1st, replacing Wilson Ferreira Junior, with the challenge of leading the new growth phase and make sure that processes and systems are increasingly simpler and more efficient, in order to make the Company more agile, so that we continue to face the challenges and seize the opportunities for growth and value creation.
On June 16, CPFL Energia announced that it has executed a Share Purchase and Sale Agreement with AES Guaíba II Empreendimentos Ltda. (“AES Guaíba”) that provides for the acquisition by CPFL Energia of the totality of the shares issued by AES Sul Distribuidora Gaúcha de Energia S.A. (“AES Sul”),resuming the process of consolidation of the sector. On October 31, with the conclusion of the acquisition, AES Sul was renamed RGE Sul Distribuidora de Energia S.A. (“RGE Sul”), a distribution company that serves approximately 1.3 million clients in 118 cities in the state of Rio Grande do Sul. With this step, CPFL Energia increased its scale and footprint in the state of Rio Grande do Sul, serving 382 cities and reaching a market share of 65%. In Brazil, CPFL Energia now enjoy a market share of over 14% of the distribution segment, serving around 9 million clients through 9 concessionaires in the Southern and Southeastern regions. CPFL took charge of the RGE Sul’s management on November 1st, and its plans include investments of around R$ 1.0 billion in the period 2017-2019, aiming to implement CPFL standards in services and to comply with the improvement plan set by ANEEL.
Still in 2016, in early July, CPFL Energia was informed by one of its controlling shareholders, Camargo Corrêa S.A., that the latter had received and accepted a proposal from the State Grid Corporation of China (“State Grid”) to acquire its interest in the Company´s controlling block for R$25.00 per share. On September 2, the final share purchase agreement (SPA) was entered into between State Grid and Camargo Corrêa. In sequence, the proposal was extended to other controlling shareholders, which decided, over the course of September, to join Camargo Corrêa and sell their interest.
The transaction had all applicable approvals and was concluded in January 23, 2017, when State Grid Brazil became the controlling shareholder of CPFL Energia, with a 54.64% stake. As a result of the closing of the transaction that resulted in the direct change of control of CPFL Energia in the indirect change of the control of CPFL Energias Renováveis S.A. (“CPFL Renováveis”) and in accordance with applicable regulation, State Grid Brazil will perform tender offer for the remaining outstanding common shares of CPFL Energia and CPFL Renováveis. According to the Material Facts released by both companies on February 23, 2017, State Grid has filed the Unified Offer documentation with CVM, on February 22, 2017; the registration is now under analysis by CVM.
In the midst of these changes, CPFL Energia followed its growth path. In 2016, new renewable energy projects went into operation: in May, it was the turn of SHPP Mata Velha, with 24 MW of installed capacity, while the Campo dos Ventos and São Benedito Wind Complexes had a gradual start-up during the year, being concluded in December, totaling 231 MW of installed capacity.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Still in generation segment, with regard to the hydrological risk (GSF), renegotiation of the Baesa power plant (Energética Barra Grande Energia) was concluded, protecting the plant from 100% of the effects of GSF until the end of its regulated agreements. The remaining power plants had already renegotiated in 2015. The strategy of renegotiating this risk is aimed at returning the predictability and stability of cash flows to hydroelectric generators.
In the distribution segment, the Company continued to suffer from the economic recession, which affected the power consumption in the concession area. Despite the acqusition of RGE Sul as of November, sales in Group CPFL´s concession area contracted 1.0%. Disregarding the effect of the acquisition of RGE Sul, it would be a 3.5% drop, with 0.7%, 3.7% and 7.6% decreases respectively for residential, commercial and industrial segments. Unfavorable macroeconomic scenario also influenced delinquency levels, leading the Company to intensify its collections actions, increasing by more than 50% the number of disconnections, collections efforts and reporting to credit bureaus, among other actions.
In the financial sphere, it is important to notice that the reduction in leverage, which reached the level of 3.21x net debt/EBITDA by the end of 2016, reflecting not only the improved results, but also the consistent monetization of sectoral financial assets throughout the year. On the other hand, the acquisition of RGE Sul pressed this indicator.
It should also be noted that six of the nine distribution companies - CPFL Piratininga, CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Mococa and CPFL Jaguari – are already in the 4th cycle of Tariff Revision, benefiting from the investments made in the previous cycle and the better conditions offered by the new cycle.
The overcontracted position of Brazilian distribution companies, a regulatory theme of great importance, was widely discussed among agents in 2016 and many advances have already been obtained. Several measures have been taken in order to mitigate the surpluses and define their involuntary character, such as the treatment of involuntary surplus from quotas, the feasibility of bilateral agreements between generation and distribution companies, the New Energy MCSD (Surplus and Deficit Compensation Mechanism) and changes in the rules for auctions.
Law 13,360/2016 also implemented important changes to the power sector, creating impacts and opportunities for its various business segments. The safety of a solid regulatory framework is essential for the power sector to resume investments and deliver sustainable growth in the long term.
In this moment of transition for the Company and the power sector, the arrival of State Grid strengthens the growth strategy of CPFL Energia, as well as its protagonism in the Brazilian power sector. State Grid brings the confidence that CPFL will reinforce its leadership in the segments in which it operates. State Grid´s solid financial situation strengthens the Group´s credit profile and enhances funding possibilities for new projects and acquisitions. Therefore, we have a business platform prepared to seize new market opportunities.
SHAREHOLDERS’ STRUCTURE (simplified)
CPFL Energia is a holding company that owns stake in other companies. The reference date of the shareholders’ structure below is December 31, 2016, therefore before the conclusion of the acquisition of Camargo Corrêa, Previ and Bonaire holdings in CPFL Energia by State Grid, which occurred on January 23, 2017:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Reference date: 12/31/2016
Notes:
(1) Controlling shareholders;
(2) % of bound shares by the controlling shareholders;
(3) 51.54% stake of the availability of power and energy of Serra da Mesa HPP, regarding the Power Purchase Agreement between CPFL Geração and Furnas;
(4) CPFL Energia holds a stake in RGE Sul through the CPFL Jaguariúna.
2. Comments on the macroeconomic and regulatory scenario
MACROECONOMIC SCENARIO
Despite the frustration caused by the level of economic activity in 2015, the global results in 2016 were more promising, especially in the second half of the year. Though below potential, the Purchasing Managers’ Index (PMI) pointed to acceleration in major advanced economies, supported mainly by drawdowns in inventories and a recovery in manufacturing. The slight improvement in advanced economies and the results in line with expectations in China transformed lackluster economic indicators into more promising expectations for 2017 and 2018.
The change in administration in the United States and the associated developments are the main source of uncertainty in the external scenario. In the near term, the fiscal stimulus promised by the new administration could increase private-sector confidence and create expectations of a less gradual monetary adjustment, potentially leading to higher interest rates and a stronger U.S. dollar. On the other hand, the risks posed by protectionism and political isolationism persist, which, if followed through on, could adversely affect international trade and the world economy, while disrupting global financial conditions and weighing on the performance of emerging nations.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The IMF is forecasting world economic growth in 2017 and 2018 of 3.4% and 3.6%, respectively, which are above the forecast of 3.1% for 2016, driven by potential recoveries in emerging and developing economies.
In 2016, the Brazilian economy continued to be castigated by political instability, the ongoing fiscal adjustment and weak economic activity indicators. Such negative results have led the country’s GDP to contract by 7.3% over the past two years. Industrial production fell 6.6%1 in 2016, generating unemployment and losses in important industrial chains, such as the automotive and metal-mechanical sectors. In 2017, industrial production is expected to improve only slightly, driven primarily by the extractive industry (oil and iron ore).
The negative effects from the crisis were also widely felt in the labor market, with approximately 3 million formal jobs2 eliminated and sharp drops in household income and mounting unemployment. The lag between job and income indicators in relation to the economic cycle is responsible for a third straight year of declines in income levels, which penalizes the contribution from consumer spending to economic growth.
Despite this ongoing climate of uncertainty, especially in the political scenario, the inflation forecast is calling for meeting the center of the target for 20173 defined by the government, the central bank’s Monetary Policy Committee (Copom) is expected to carry out a substantial cumulative cut in the basic interest rate in the year, which would stimulate economic activity and provide relief for the high levels of private-sector debt.
Based on this scenario of weak economic activity and challenges for a recovery in growth, the consensus forecasts are calling for GDP growth of 0.5% in 20173 and 2.4% in 20183.
REGULATORY ENVIRONMENT
Overcontracted position
The year 2016 was marked by major advances in sector regulation in order to increase flexibility and management of the distribution companies´ overcontracted position. There were several and continuous negotiations between distribution companies, ABRADEE, ANEEL, CCEE, EPE and MME to mitigate part of these surpluses and for the correct understanding of their involuntary character, among which:
· Normative Resolution n. 706/16, which defined more precisely the volume and treatment of involuntary surpluses arising from the process of allocation of physical guarantee quotas;
· Normative Resolution n. 711/16, which allowed the celebration of bilateral agreements, more quickly, among distribution and generation companies in order to reduce or revoke their CCEARs;
· Normative Resolution n. 726/16, which allowed distribution companies to reduce, for future existing energy auctions, the surpluses arising from the migration of special consumers to the free market;
· Normative Resolution n. 727/16, which provided advances in New Energy MCSD, with the insertion of new products for the current year, for the following year and for the years prior to the delivery of energy from A-3 and A-5 auctions, in addition to allowing the reduction of CCEARs among distribution and generation companies in case of high overcontracted positions;
· Decree n. 8,828/16, which exempt distribution companies with surpluses in year A-1 from contract the minimum limit (96% of replacement amount) in these auctions;
1 Brazilian Institute of Geography and Statistics (IBGE).
2 General Registry of Employed and Unemployed Populations (CAGED).
3 Market Readout (Focus) – March 3, 2017.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
· Law n. 13,360/16, which provides a legal prediction for an auction to sell contractual surpluses of distribution companies to the free market, only pending ANEEL and MME regulation.
ABRACE Injunction
The significant increase in the CDE quota in 2015 was disputed in court by several associations. By means of preliminary injunction, ABRACE obtained the suspension of payment, by its members, of the controversial portion of the CDE tariff charge, as well as a change in the method of apportionment of the balance amounts in the budget. The injunction led to a tariff increase for other consumers during 2016, since there was no reduction in the quota to be paid by the distribution companies.
However, as of June 2016, in face of the growing number of lawsuits challenging the CDE charge, ANEEL, through Dispatch 1,576/16, altered the system of compensation for revenue deficits caused by the CDE injunctions, allowing distribution companies to have the right of offset amounts not billed at their respective quotas of CDE Charge. On the other hand, Eletrobras should reduce transfers from the fund to the beneficiaries in the proportion of the reduction of revenues referring to the items challenged by the injuctions. This decision represented a tariff decrease in tariff adjustment processes carried out in the second half of 2016.
ELECTRICITY TARIFFS AND PRICES
Distribution Segment
Annual Tariff Adjustment (ATA):
The following distribution companies had tariffs adjusted as below:
|
CPFL Paulista |
RGE Sul |
RGE |
CPFL Piratininga |
Ratifying Resolution |
2,056 |
2,059 |
2,082 |
2,157 |
Adjustment |
9.89% |
3.94% |
-1.48% |
-12.54% |
Parcel A |
-2.06% |
-3.75% |
-2.98% |
-7.02% |
Parcel B |
1.78% |
1.86% |
2.31% |
1.67% |
Financial Components |
10.18% |
5.83% |
-0.81% |
-7.19% |
Effect on consumer billings |
7.55% |
-0.34% |
-7.51% |
-24.21% |
Date of entry into force |
4/8/2016 |
4/19/2016 |
6/19/2016 |
10/23/2016 |
Periodical Tariff Revision (PTR)
The following distribution companies went through the tariff revision process in 2016, when the new methodologies of the 4th cycle of tariff revision were applied:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
|
CPFL Santa Cruz |
CPFL Leste Paulista |
CPFL Jaguari |
CPFL Sul Paulista |
CPFL Mococa |
Ratifying Resolution |
2,026 |
2,029 |
2,028 |
2,025 |
2,027 |
Adjustment |
10.69% |
8.02% |
14.05% |
9.77% |
6.08% |
Parcel A |
-1.84% |
-1.95% |
-1.20% |
-2.70% |
-2.35% |
Parcel B |
1.61% |
5.94% |
2.80% |
5.01% |
3.76% |
Financial Components |
10.92% |
4.03% |
12.45% |
7.46% |
4.67% |
Effect on consumer billings |
7.15% |
13.32% |
13.25% |
12.82% |
9.02% |
Date of entry into force |
3/22/2016 |
3/22/2016 |
3/22/2016 |
3/22/2016 |
3/22/2016 |
Generation Segment
Electricity sale contracts of generators contain specific adjustment clauses, whose main index is the average annual variation measured by the IGP-M. Contracts signed in the Regulated Contracting Environment (ACR) are indexed to the IPCA, and bilateral contracts signed by the indirect subsidiary Campos Novos Energia (Enercan) use a combination of dollar and IGP-M indexes.
3. Operating Performance
ENERGY SALES
In 2016, electricity sales to final consumers (quantity of electricity billed to final consumers) totaled 46,578 GWh, an increase of 3.3% compared to 2015, a reflect of the acquisition of AES Sul (current RGE Sul), in October 2016. Disregarding the effect of this acquisition (in November and December 2016), the increase would be of 0.8%.
It is noteworthy the performance of the residential and industrial segments, which together accounted 63.5% of the electricity sales to final consumers:
· Residential Class: increase of 1.9%, if we consider the acquisition of RGE Sul. Disregarding the effect of this acquisition, we would have a reduction of 0.7%, reflecting the changes in the labor market, with the hike of unemployment and the decrease of the volume in real income mass, and the lower sales volume of retail trade.
· Commercial Class: increase of 5.0%, if we consider the acquisition of RGE Sul. Disregarding the effect of this acquisition, the increase would be of 2.9%. Despite the adverse macroeconomic scenario, which has resulted in lower sales volume of the retail trade, commercialization companies had higher sales to free customers.
· Industrial Class: increase of 2.1%, if we consider the acquisition of RGE Sul. Disregarding the effect of this acquisition, the increase would be of 0.9%. Despite the weak result of the country's industrial activity, the commercialization companies and the assets of renewable generation (controlled by CPFL Renováveis) had higher sales to free customers.
Electricity sales to wholesaler’s, through other concessionaires, licensees and authorized reached 12,252 GWh, which represented an increase of 15.0%, mainy due to the increases in sales by the commercialization companies (through bilateral contracts) and licensees, which serve residential consumers.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
PERFORMANCE IN THE ELECTRICITY DISTRIBUTION SEGMENT
The Group maintained its strategy of encouraging the dissemination and sharing of best management and operational practices at its distributors in an effort to increase operational efficiency and improve the quality of services provided to clients.
Find below the results posted by distributors in the main indicators that measure quality and reliability of power supply. The Equivalent Duration of Interruptions (SAIDI) measures the average duration, in hours, of interruptions suffered by consumers in the year, while the SAIFI (Equivalent Frequency of Interruptions) measures the average number of interruptions suffered per consumer per year.
PERFORMANCE IN THE ELECTRICITY GENERATION SEGMENT
In 2016, CPFL Energia continued its expansion in the Generation segment, with a 4.2% increase in its installed capacity, from 3,129 MW to 3,259 MW, considering its 51.61% interest in CPFL Renováveis. This increase was driven by the expansion of CPFL Renováveis.
On December 31, 2016, the portfolio of CPFL Renováveis totaled 2,054 MW of installed capacity in operation, comprising 39 SHPPs (423 MW), 43 wind farms (1,260 MW), 8 biomass-powered thermal power plants (370 MW) and 1 solar plant (1 MW). Still under construction are 2 wind farms (48.3 MW) and 1 SHPP (26.5 MW), whose startup schedule is: 48.3 MW in 2018 and 26.5 MW in 2020.
In May 2016, the Mata Velha SHPP, located in the city of Unaí (Minas Gerais), started operating with installed capacity of 24 MW. The wind farms of Campo dos Ventos (São Domingos, Ventos de São Martinho e Campo dos Ventos I, III and V) and São Benedito (Ventos de São Benedito, Ventos de Santo Dimas, Santa Mônica e Santa Úrsula) Complexes, located at Rio Grande do Norte State, had their works closed in December 2016, with the comercial start-up of the last wind turbines, of a total of 110 (the first wind turbines started commercial operations in May 2016); the combined installed capacity is of 231 MW.
4. Economic and Financial Performance
The Management’s comments on economic and financial performance and the operating results should be read together with the financial statements and notes to the financial statements.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Operating Revenue
Gross operating revenue was of R$ 30,785 million, representing a reduction of 10.3% (R$ 3,518 million), mainly due to: (i) the variation of R$ 4,601 million in the sectoral financial assets and liabilities, from an asset of R$ 2,507 million in 2015 to a liability of R$ 2,095 million in 2016; (ii) the reduction of 52.7% (R$ 207 million) in the update of concession’s financial asset; and (ii) the reduction of 1.0% (R$ 37 million) in the energy supplied. These effects were partially offset by the increases of 1.8% (R$ 421 million) in the supply of electric energy, of 29.4% (R$ 307 million) in the revenue with construction of concession infraestructure and of 19.1% (R$ 600 million) in other operating income.
Deductions from operating revenue were of R$ 11,672 million, presenting a reduction of 14.8% (R$ 2,031 million). Net operating revenue was of R$ 19,112 million, representing a reduction of 7.2% (R$ 1,487 million).
Operating Cash Flow - EBITDA
EBITDA is a non-accounting measurement calculated by Management as the sum of income, taxes, financial income/loss, depreciation and amortization. This measurement serves as an indicator of management performance and is usually monitored by the market. Management complied with the concepts of CVM Instruction 527 of October 4, 2012, while calculating this non-accounting measurement.
Reconciliation of Net Income and EBITDA | ||
2016 |
2015 | |
Net Income |
879,057 |
875,277 |
Depreciation and Amortization |
1,291,165 |
1,279,902 |
Assets Surplus Value Amortization |
579 |
1,136 |
Financial Income/Loss |
1,453,474 |
1,407,864 |
Social Contribution |
150,859 |
160,162 |
Income Tax |
350,631 |
419,015 |
EBITDA |
4,125,766 |
4,143,356 |
Operating cash flow, as measured by EBITDA, reached R$ 4,126 million, a reduction of 0.4% (R$ 18 million), mainly due to the reduction of 7.2% (R$ 1,487 million) in net operating revenue and the increase of 21.9% (R$ 736 million) in operating costs and expenses, including expenses with private pension fund and costs with construction of concession infrastructure. These effects were partially offset by the reduction of 15.9% (R$ 2,111 million) in costs with energy purchase and sector charges and the increase of 43.1% (R$ 94 million) in interest in subsidiaries, associates and joint ventures.
Net Income
In 2016, net income reached R$ 879 million, an increase of 0.4% (R$ 4 million), mainly due to the reduction of R$ 78 million in Income Tax and Social Contribution and of R$ 0.6 million in the assets surplus value amortization. These effects were partially offset by the reduction of 0.4% (R$ 18 million) in EBITDA and the increases of 3.2% (R$ 46 million) in net financial expenses and of 0.8% (R$ 11 million) in depreciation and amortization.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Allocation of Net Income from the Fiscal Year
The Company’s Bylaws require the distribution of at least 25% of net income adjusted according to law, as dividends to its shareholders. The proposal for allocation of net income from the fiscal year is shown below:
The Company declared, in the fiscal year of 2016, the amount of R$ 214 million of minimum mandatory dividend, as governed by Law 6,404/76, and, R$ 8 million of additional proposed dividend.
For this fiscal year, considering the current adverse economic scenario and the uncertainties regarding market projections for distributors, the Company’s Management proposes the allocation of R$ 546 million to the statutory reserve - strengthening of working capital.
Debt
At the close of 2016, gross financial debt (including derivatives) of the Company reached R$ 21,368 million, presenting an increase of 9.6%. Cash and cash equivalents totaled R$ 6,166 million, an increase of 8.5%. As such, net financial debt increased 10.1% to R$ 15,502 million.
The increase in financial debt was to support the strategic expansion of the Group’s business, such as financing for greenfield projects conducted by CPFL Renováveis. Furthermore, however, CPFL Energia adopts a pre-funding strategy whereby it anticipates funding of debt that matures in 18 to 24 months.
5. Investments
In 2016, investments of R$ 2,238 million were made in business maintenance and expansion, of which R$ 1,201 million was destined to distribution, R$ 986 million to generation (R$ 979 million to CPFL Renováveis and R$ 8 million to conventional generation) and R$ 51 million to commercialization, services and others. In addition, we invested R$ 51 million in the construction of CPFL Transmissão’s transmission lines and, according to the requirements of IFRIC 12, it was recorded as “Financial Asset of Concession” in non current assets. CPFL Energia’s investments in 2016 include:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
6. Corporate Governance
The corporate governance model adopted by CPFL Energia and its subsidiaries is based on the principles of transparency, equity, accountability and corporate responsibility.
In 2016, CPFL marked 12 years since being listed on the BM&FBovespa and the New York Stock Exchange (“NYSE”). With more than 100 years of history in Brazil, the Company’s shares are listed on the Novo Mercado Special Listing Segment of the BM&FBovespa with Level III ADRs, a special segment for companies that comply with corporate governance best practices. All CPFL shares are common shares, entitling all shareholders the right to vote with 100% Tag Along rights guaranteed in case of sale of shareholding control.
CPFL’s Management is composed of the Board of Directors (“Board”), its decision-making authority, and the Board of Executive Officers, its executive body. The Board is responsible for defining the strategic business direction of the holding company and subsidiaries, and is composed of 7 members, whose term of office is 1 year and who are eligible for reelection. At the Extraordinary General Meeting held on February 16, 2017, 6 new members were elected (5 members representing State Grid, new controlling shareholder, and 1 new independent member), replacing the members representing the former controlling shareholders. As a result, the Board has two Independent Directors.
The Bylaws of the Board establishes the procedures for evaluating the directors, under the leadership of the Chairman, their main duties and rights.
The Board set up three advisory committees (Management Processes, Risks and Sustainability, People Management and Related Parties), all coordinated by a director, which support the Board in its decisions and monitor relevant and strategic themes, such as people and risk management, sustainability, the surveillance of internal audits and analysis of transactions with Parties Related to controlling shareholders and handling of incidents recorded through complaint hotlines and ethical conduct channels. At a meeting of the Board of Directors, held on February 17, 2017, the new members of the advisory committees were elected.
To ensure that best practices permeate all activities of the Board and its relations with the Company while the Board members are focused on their decision-making functions, in 2006 the Company created the Corporate Governance Advisory Council, which reports directly and solely to the Chairman of the Board.
This Advisory Council acts as the guardian of best practices to ensure compliance with Governance Guidelines; speed of communication between the Company and its Board members; quality and timeliness of information; integration and evaluation of members of the Board of Directors and the Audit Board; constant improvement of governance processes and institutional relations with government authorities and entities.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The Board of Executive Officers is made up of 1 Chief Executive Officer and 6 Vice Presidents, with terms of two years, eligible for reelection, responsible for executing the strategy of CPFL Energia and its subsidiaries as defined by the Board of Directors in line with corporate governance guidelines. To ensure alignment of governance practices, Executive Officers sit on the Boards of Directors of companies that make up the CPFL group and nominate their respective executive officers.
CPFL has a permanent Fiscal Council that also exercises the duties of the Audit Committee, in line with Sarbanes-Oxley law (SOX) rulings applicable to foreign companies listed on U.S. stock exchanges. At the Extraordinary General Meeting held on February 16, 2017, 3 new members were elected, replacing the 5 members who had submitted a resignation letter when the closing of the transaction of State Grid (new controlling shareholder) occurred.
The guidelines and documents on corporate governance are available at the Investor Relations website http://www.cpfl.com.br/ir.
7. Capital Markets
The shares of CPFL Energia, which have a free float of 31.9% (up to December 31, 2016), are listed both on the São Paulo Stock Exchange (BM&FBovespa) and the New York Stock Exchange (NYSE). In 2016, CPFL Energia shares appreciated 72.0% on the BM&FBovespa and 109.7% on the NYSE, closing the year at R$ 25.21 per share and US$ 15.40 per ADR, respectively. The average daily trading volume in 2016 was R$ 55.4 million, of which R$ 38.9 million on the BM&FBovespa and R$ 16.4 million on the NYSE, representing a increase of 45.2% over 2015. Number of trades on the BM&FBovespa increased 17.8%, from a daily average of 5,984 trades in 2016 to 7,049 in 2016.
8. Sustainability and Corporate Responsibility
CPFL Energia develops initiatives to create value for all its stakeholders and to mitigate the impacts from its operations by managing the economic, environmental and social risks associated with its business activities. The highlights from the fiscal year follow:
Sustainability platform: consists of the sustainability management tool, which is integrated into the strategic planning of the CPFL Group. The tool encompasses: a) Topics of relevance to the business operations, which are determined jointly with stakeholders; b) Value levers related to the topics; c) Corporate strategic indicators, with performance targets for the near and medium term.
Sustainability Committee: main internal body for sustainability governance, which also is responsible for monitoring the Platform.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Climate change: CPFL Energia is aware of the impacts of climate change on its business and of its influence and significance in the power industry. Therefore, it works to promote a low-carbon economy by incorporating the topic into its business strategy and project development, which are aligned with its corporate initiatives and commitments at the national and international levels.
Ethics Management and Development System (SGDE): In 2015, the review of the Code of Ethics and Business Conduct was concluded. The updated version of the Code of Ethical Conduct (new name) was approved by the Board of Executive Officers in November 2015, and subsequently approved by the Board of Directors in a Meeting held on January 27, 2016, with the code applicable to all direct subsidiaries of the Group. The SGDE was revised to include the restructuring of the Ethics and Business Conduct Committee, which now has five members, two of whom are external independent members. The review included the Committee’s Charter, the implementation of an Executive Department to support the Committee, and the contracting of an External Ethics Channel to receive consultations, suggestions and whistleblowing of an ethical nature, which are now investigated by the Whistleblowing Processing Commission (CPD). CPFL also implemented a plan for publishing and disseminating its ethical guidelines and a training program on the SGDE based, which adopts an e-learning format and is available to all professionals, and organized on-site workshops for employees in management and leadership positions. The Committee held 13 meetings in 2016 to address topics involving ethics management and to analyze the suggestions, reports of whistleblowing and consultations received in the period.
Human Resources Management: the company ended 2016 with 12,8794 employees (9,584 in 2015), which represents a turnover rate of 17.92%5 (19.90% in 2015). The Group’s companies maintained their management and training programs, which focused on developing competencies of strategic importance to the business, leadership succession, boosting productivity and occupational health and safety. Average training hours per employee stood at 79.8 hours6 (59.6 in 2015), surpassing by 37 hours the average of the Sextant Survey 2016. Also in 2016, for the 14th straight year, CPFL Energia figured in the “Best Places to Work in Brazil” ranking compiled by Você S/A / Exame Guide, which was accompanied by improvement in Knowledge Management, Electrician School and Talent Management, with yet another class of professionals gaining the potential to hold leadership positions.
Value Network: in 2016, 75 supplier companies participated and four meetings were held, which addressed the following topics: Occupational Safety and documentation for Third-Party Management, Environmental Risk Management, Energy Efficiency and Ethics, and combatting corruption with lecturer and philosopher Clovis de Barros.
Community relations: (i) Culture – Partnerships with the Municipal Government of Campinas and with the National Electric Power Agency (ANEEL) supported the debates on changes in society, energy consumption, services and economy, which had a direct impact on the lives of our consumers. The debates were edited and broadcast in weekly editions of the CPFL Café Filosófico show on the channel TV Cultura and its affiliates nationwide. In addition to the TV broadcast, the debates were posted on www.institutocpfl.org.br and on social media, such as Facebook, Instagram and Twitter. In addition to the debates with free entrance and live streaming, the CPFL Cultura Institute organized free weekly movie showings in the year, with various topics, such as Olympic sports, future scenarios for Brazil, classics and series to honor specific directors, such as Alfred Hitchcock, Ridley Scott and Martin Scorsese. It brought to the interior region of São Paulo the CPFL Arts and Culture Circuit, which featured showings of Brazilian movies and documentaries, as well as sustainability workshops conducted in partnership with the Cinesolar project, a mobile cinema powered by solar energy. In addition to showings in public spaces, the institute organized private showings at vocational schools in five cities in the interior region of São Paulo state, in partnership with Centro Paula Souza. Also in Campinas, the institute organized the III Brazilian Contemporary Music Festival in partnership with the State University of Campinas (Unicamp). In the area of education, the institute organized, jointly with the Portuguese Language Museum, a free exhibition on the origins and uses of our language. Targeting a younger public, the exhibition was visited by more than 11,000 people, including students from 35 public schools in the region;
4 Includes RGE Sul
5 Do not include RGE Sul
6 Do not include RGE Sul
12
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
(ii) Program to Revitalize Philanthropic Hospitals - aims to improve the administrative performance of philanthropic hospitals and improve the quality of services provided to the community. In 2016, the Program served 20 hospitals in the regions of Barretos and Marília. The investment amounted to R$870,000; (iii) Support for Municipal Councils on Children’s Rights (CMDCA) (1% of Income Tax) - In 2016, the Group’s companies allocated R$1,483,660.00 to the Municipal Fund for Children for 12 municipalities in the concession area. The funds will be used to support the situational diagnoses and actions plans conducted in 2015/16. (iv) Support for Municipal Councils on Elderly Rights (CMDI) (1% of Income Tax) - In 2016, the Group’s companies allocated R$1,030,600.00 to the Municipal Fund for the Elderly for three municipalities to support the pilot project entitled “City for All Ages;” (v) Volunteer Work - In 2016, there were 45 actions that engaged approximately 1,700 volunteers. The actions organized in seven cities in the concession area benefitted approximately 5,400 people directly and around 20,000 indirectly. The program reached some important milestones in the year, such as the pilot module of the volunteer program Pro Bono being implemented in Campinas; (vi) Energy Efficiency (0.5% of net operating income) - a total of over R$97.7 million was invested, of which R$54.0 million was allocated to projects targeting low-income consumers, which led to (a) the normalization of 3,057 clients; (b) the replacement of 5,746 refrigerators; (c) the replacement of 188,135 light bulbs with more efficient models (LED); (d) the installation of 5,275 solar water heaters, 3,500 heat exchangers and 6,438 E-Power controllers to reduce shower consumption, the execution of educational projects; (e) the program CPFL nas Escolas and the Manufacturers’ Energy Efficiency Education Program (PEEE), which involved 32 municipal and state public schools, with training administered to 14,032 students and 2,392 professors in 32 municipalities for investment of over R$4.9 million. Furthermore, actions were implemented to capture efficiency gains at (f) 39 Public Buildings, 19 Schools, 34 Hospitals and 17 Philanthropic Institutes for an additional investment of R$5.7 million; (g) residential bonus project that led to the replacement of 7,053 refrigerators and 43,617 LED light bulbs for investment of over R$12.8 million; (h) 4 municipal energy management projects for investments of over R$78,900; (i) 3 commercial projects for investment of over R$3.6 million; (j) 3 industrial projects for investment of over R$4.2 million; and (k) public lighting projects that involved replacing 1,618 lamps for investment of over R$2.0 million. Of this total, R$87.3 million (0.4%) was invested in clients and R$10.4 million (0.1%) was provisioned, in accordance with Federal Law 13,280/2016, to be transferred at an opportune time to PROCEL; (vii) Geekie Project - works to reduce learning gaps among students and to train teachers and regional managers by implementing an online adaptive learning platform. In 2016, 5,900 students from 15 public schools in Botucatu, São Paulo were benefitted. The investment amounted to R$586,000, which was financed by the Social Subcredit facility of the Brazilian Development Bank (BNDES); (viii) Tamboro Project - works to implement new educational methodologies by using an adaptive learning platform based on games. In 2016, 7,600 students from nine public schools in Sumaré, São Paulo were benefitted. The investment amounted to R$811,000, which was financed by the Social Subcredit facility of the BNDES; (ix) ToLife Project - Implementation of a system for classifying clinical risk and organizing patient flows at emergency rooms in public hospitals and/or hospitals that serve the National Health System (SUS). In 2016, six healthcare units in Campinas were served, for investment of R$980,000, which was financed by Social Subcredit facility of the BNDES; (x) Community Library Project - works to democratize access to literature and contribute to the effectiveness of Federal Law 12,244/10, which determines that by 2020 all education institutions in Brazil must have a library. In 2016, the implementation of three libraries in Marília, Bebedouro and Campinas in São Paulo state was begun. The investment amounted to R$140,000, which was financed by the Social Subcredit facility of the BNDES; and (xi) Electrician School - works to train a group of skilled electricians and to mitigate the risks of a labor blackout. It also constitutes a social investment, since it offers free training to people in the job market, while also training future employees before hiring them. As of 2016, we had trained 215 new electricians, of whom 143 were hired.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
14
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Energy distribution – (i) continuation of the Urban Road Forestry Program, with the donation of seedlings to municipal governments in São Paulo state; (ii) its Advanced Stations are regularly assessed for environmental risks and legal requirements, and a ranking system and an action plan for improvements were developed; (iii) for environmental emergencies, distributors hold agreements with a specialized company as well as environmental insurance. For minor incidents, the Advanced Stations and vehicles equipped with hydraulic devices carry environmental emergency kits for immediate use; (iii) CPFL Paulista, RGE and CPFL Santa Cruz, in partnership with the municipal governments of seven cities in their concession areas, launched the Forestry + Safety Project, an initiative that works to revitalize urban forestry by replacing trees that pose risks to residents and to the power grid with species that require less pruning and coexist better with the grid.
9. Independent Auditors
Deloitte Touche Tohmatsu Auditores Independentes (Deloitte) was hired by CPFL Energia to provide external audit services for the Company’s financial statements. In accordance with CVM Instruction 381/03, we inform that Deloitte provided, in 2016, services not related to audit, whose fees were more than 5% of all fees received for this service.
In the fiscal year ended December 31, 2016, apart from the audit of financial statements and review of interim information, Deloitte provided the following audit services:
The hiring of independent auditors, in accordance with the Bylaws, is recommended by the Fiscal Council, and the Board of Directors deliberates on the selection or removal of independent auditors.
The Management of CPFL Energia declares that all the services were provided strictly in accordance with the standards that deal with the independence of independent auditors in audit work and did not represent situations that could affect the independence and objectivity required by Deloitte to carry out external audit services.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
10. Acknowledgements
The Management of CPFL Energia thanks its shareholders, customers, suppliers and communities in the areas of operations of its subsidiaries for their trust in the Company in 2016. It also thanks, in a special way, its employees for their competence and dedication in meeting the objectives and targets set.
The Management
For more information on the performance of this and other companies of the CPFL Energia Group, visit www.cpfl.com.br/ir.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL ENERGIA S.A. | |||||||||
Statements of financial position at December 31, 2016 and 2015 | |||||||||
(in thousands of Brazilian reais - R$) | |||||||||
Parent company |
Consolidated | ||||||||
ASSETS |
Note |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||
CURRENT ASSETS |
|||||||||
Cash and cash equivalents |
5 |
64,973 |
424,192 |
6,164,997 |
5,682,802 | ||||
Consumers, concessionaires and licensees |
6 |
- |
- |
3,765,893 |
3,174,918 | ||||
Dividends and interest on capital |
13 |
642,978 |
1,227,590 |
73,328 |
91,392 | ||||
Securities |
- |
- |
449 |
23,633 | |||||
Taxes recoverable |
7 |
82,836 |
72,885 |
403,848 |
475,211 | ||||
Derivatives |
35 |
- |
70,153 |
163,241 |
627,493 | ||||
Sector financial asset |
8 |
- |
- |
- |
1,464,019 | ||||
Leases |
- |
- |
19,281 |
12,883 | |||||
Concession financial asset |
11 |
- |
- |
10,700 |
9,630 | ||||
Other receivables |
12 |
229 |
942 |
777,451 |
946,670 | ||||
TOTAL CURRENT ASSETS |
791,016 |
1,795,763 |
11,379,187 |
12,508,652 | |||||
NONCURRENT ASSETS |
|||||||||
Consumers, concessionaires and licensees |
6 |
- |
- |
203,185 |
128,946 | ||||
Associates, subsidiaries and parent company |
32 |
52,582 |
2,814 |
47,631 |
84,265 | ||||
Escrow Deposits |
22 |
710 |
630 |
550,072 |
1,227,527 | ||||
Securities |
- |
- |
62 |
- | |||||
Taxes recoverable |
7 |
- |
- |
198,286 |
167,159 | ||||
Sector financial assets |
8 |
- |
- |
- |
489,945 | ||||
Derivatives |
35 |
- |
- |
641,357 |
1,651,260 | ||||
Deferred tax assets |
9 |
171,073 |
140,389 |
922,858 |
334,886 | ||||
Advance for future capital increase |
13 |
- |
52,680 |
- |
- | ||||
Leases |
10 |
- |
- |
50,541 |
34,504 | ||||
Concession financial asset |
11 |
- |
- |
5,363,144 |
3,597,474 | ||||
Investments at cost |
- |
- |
116,654 |
116,654 | |||||
Other receivables |
12 |
26,261 |
14,919 |
715,650 |
560,014 | ||||
Investments |
13 |
7,866,100 |
6,940,036 |
1,493,753 |
1,247,631 | ||||
Property, plant and equipment |
14 |
1,199 |
1,215 |
9,712,998 |
9,173,217 | ||||
Intangible assets |
15 |
24 |
24 |
10,775,613 |
9,210,338 | ||||
TOTAL NONCURRENT ASSETS |
8,117,948 |
7,152,706 |
30,791,805 |
28,023,819 | |||||
TOTAL ASSETS |
8,908,964 |
8,948,469 |
42,170,992 |
40,532,471 |
The accompanying notes are an integral part of these financial statements.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Energia S.A. | |||||||||
Statements of financial position at December 31, 2016 and 2015 | |||||||||
(in thousand of Brazilian reais - R$) | |||||||||
Note |
Parent Company |
|
Consolidated | ||||||
LIABILITIES AND EQUITY |
December 31, 2016 |
|
December 31, 2015 |
December 31, 2016 |
December 31, 2015 | ||||
CURRENT LIABILITIES |
|||||||||
Trade payables |
16 |
3,760 |
1,157 |
2,728,130 |
3,161,210 | ||||
Interest on debts |
17 |
- |
38,057 |
129,364 |
118,267 | ||||
Interest on debentures |
18 |
15,334 |
- |
305,180 |
232,227 | ||||
Borrowings |
17 |
- |
935,196 |
1,746,284 |
2,831,654 | ||||
Debentures |
18 |
- |
- |
1,242,095 |
458,165 | ||||
Private pension plan |
19 |
- |
- |
33,209 |
802 | ||||
Regulatory charges |
20 |
- |
- |
366,078 |
852,017 | ||||
Taxes, fees and contributions |
21 |
454 |
747 |
681,544 |
653,342 | ||||
Dividend |
25 |
218,630 |
212,531 |
232,851 |
221,855 | ||||
Estimated payroll |
- |
- |
131,707 |
79,924 | |||||
Derivatives |
35 |
- |
981 |
6,055 |
981 | ||||
Sector financial liability |
8 |
- |
- |
597,515 |
- | ||||
Use of public asset |
23 |
- |
- |
10,857 |
9,457 | ||||
Other payables |
24 |
17,577 |
18,041 |
807,623 |
904,971 | ||||
TOTAL CURRENT LIABILITIES |
255,755 |
1,206,708 |
9,018,492 |
9,524,873 | |||||
NONCURRENT LIABILITIES |
|||||||||
Trade payables |
16 |
- |
- |
129,781 |
633 | ||||
Interest on debts |
17 |
- |
- |
144,709 |
120,659 | ||||
Interest on debentures |
18 |
- |
- |
29,153 |
16,487 | ||||
Borrowings |
17 |
- |
- |
11,023,685 |
11,592,206 | ||||
Debentures |
18 |
612,251 |
- |
7,423,519 |
6,363,552 | ||||
Private pension plan |
19 |
- |
- |
1,019,233 |
474,318 | ||||
Taxes, fees and contributions |
21 |
- |
- |
26,814 |
- | ||||
Deferred tax liabilities |
9 |
- |
- |
1,324,134 |
1,432,594 | ||||
Provision for tax, civil and labor risks |
22 |
1,008 |
1,635 |
833,276 |
569,534 | ||||
Derivatives |
35 |
- |
- |
112,207 |
33,205 | ||||
Sector financial liability |
8 |
- |
- |
317,406 |
- | ||||
Use of public asset |
23 |
- |
- |
86,624 |
83,124 | ||||
Allowance for equity investment losses |
13 |
19,302 |
33,969 |
- |
- | ||||
Other payables |
24 |
50,628 |
31,961 |
309,292 |
191,148 | ||||
TOTAL NONCURRENT LIABILITIES |
683,188 |
67,565 |
22,779,832 |
20,877,460 | |||||
EQUITY |
25 |
||||||||
Issued capital |
5,741,284 |
5,348,312 |
5,741,284 |
5,348,312 | |||||
Capital reserves |
468,014 |
468,082 |
468,014 |
468,082 | |||||
Legal reserve |
739,102 |
694,058 |
739,102 |
694,058 | |||||
Statutory reserve - concession financial asset |
702,928 |
585,451 |
702,928 |
585,451 | |||||
Statutory reserve - working capital improvement |
545,505 |
392,972 |
545,505 |
392,972 | |||||
Additional dividend proposed |
7,820 |
- |
7,820 |
- | |||||
Accumulated comprehensive income |
(234,633) |
185,321 |
(234,633) |
185,321 | |||||
7,970,021 |
7,674,196 |
7,970,021 |
7,674,196 | ||||||
Equity attributable to noncontrolling interests |
- |
- |
2,402,648 |
2,455,942 | |||||
TOTAL EQUITY |
7,970,021 |
7,674,196 |
10,372,668 |
10,130,138 | |||||
TOTAL LIABILITIES AND EQUITY |
8,908,964 |
8,948,469 |
42,170,992 |
40,532,471 |
The accompanying notes are an integral part of these financial statements.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Energia S.A. | ||||||||
Statements of profit or loss for the years ended December 31, 2016 and 2015 | ||||||||
(in thousand of Brazilian reais - R$, except for earnings per share) | ||||||||
Note |
Parent Company |
Consolidated | ||||||
2016 |
2015 |
2016 |
|
2015 | ||||
NET OPERATING REVENUE |
27 |
1,713 |
1,157 |
19,112,089 |
20,599,212 | |||
COST OF ELECTRIC ENERGY SERVICES |
||||||||
Cost of electric energy |
28 |
- |
- |
(11,200,242) |
(13,311,747) | |||
Cost of operation |
29 |
- |
- |
(2,248,795) |
(1,907,197) | |||
Cost of services rendered to third parties |
29 |
- |
- |
(1,357,032) |
(1,049,101) | |||
|
|
|
| |||||
GROSS PROFIT |
1,713 |
1,157 |
4,306,020 |
4,331,167 | ||||
Operating expenses |
29 |
|||||||
Sales expenses |
- |
- |
(547,251) |
(464,583) | ||||
General and administrative expenses |
(50,860) |
(29,911) |
(849,416) |
(863,499) | ||||
Other operating expense |
- |
- |
(386,746) |
(357,653) | ||||
|
|
|
| |||||
INCOME FROM ELECTRIC ENERGY SERVICES |
(49,147) |
(28,754) |
2,522,608 |
2,645,433 | ||||
Equity interests in associates and joint ventures |
13 |
922,362 |
926,951 |
311,414 |
216,885 | |||
FINANCE INCOME (COSTS) |
30 |
|||||||
Finance income |
70,878 |
74,854 |
1,200,503 |
1,143,247 | ||||
Finance costs |
(53,694) |
(97,802) |
(2,653,977) |
(2,551,110) | ||||
17,183 |
(22,948) |
(1,453,474) |
(1,407,863) | |||||
PROFIT BEFORE TAXES |
890,398 |
875,250 |
1,380,547 |
1,454,454 | ||||
Social contribution |
9 |
(1,075) |
(797) |
(150,859) |
(160,162) | |||
Income tax |
9 |
11,562 |
(9,513) |
(350,631) |
(419,015) | |||
10,487 |
(10,309) |
(501,490) |
(579,177) | |||||
PROFIT FOR THE YEAR |
900,885 |
864,940 |
879,057 |
875,277 | ||||
Profit attributable to the owners of the Company |
900,885 |
864,940 | ||||||
Profit (loss) attributable to noncontrolling interests |
(21,828) |
10,337 | ||||||
Basic earnings per share attributable to owners of the Company (R$): |
26 |
0.89 |
0.85 |
|||||
Diluted earnings per share attributable to owners of the Company (R$): |
26 |
0.87 |
0.83 |
(*) Include the effects of note 2.8
The accompanying notes are an integral part of these financial statements.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Energia S.A. | ||||
Statements of comprehensive income for the years ended December 31, 2016 and 2015 | ||||
(in thousand of Brazilian reais - R$) | ||||
Parent Company | ||||
2016 |
2015 | |||
Profit for the year |
900,885 |
864,940 | ||
Other comprehensive income |
||||
Items that will not be reclassified subsequently to profit and loss |
||||
- Equity interests in subsidiaries, associates and joint ventures |
(394,175) |
65,547 | ||
Total Comprehensive income for the year |
506,709 |
930,488 | ||
Consolidated | ||||
2016 |
2015 | |||
Profit for the year |
879,057 |
875,277 | ||
Other comprehensive income |
||||
Items that will not be reclassified subsequently to profit and loss |
||||
- Actuarial gains (losses), net of tax effects |
(394,175) |
65,547 | ||
Total Comprehensive income for the year |
484,882 |
940,825 | ||
Attributable to owners of the Company |
506,709 |
930,488 | ||
Attributable to noncontrolling interests |
(21,828) |
10,337 |
The accompanying notes are an integral part of these financial statements.
20
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Energia S.A. | |||||||||||||||||||||||||
Statements of changes in shareholders' equity for the years ended December 31, 2016 and 2015 | |||||||||||||||||||||||||
(in thousand of Brazilian reais - R$) | |||||||||||||||||||||||||
Earning reserves |
Accumulated comprehensive income |
Noncontrolling interests |
|
||||||||||||||||||||||
|
|
Statutary reserves |
|
|
|
|
|
|
|
||||||||||||||||
Issued capital |
Capital reserves |
Legal reserve |
Concession financial asset |
Working capital improvement |
Dividend |
Deemed cost |
Private pension plan |
Retained earnings |
Total |
Accumulated comprehensive income |
Other equity components |
|
Total equity | ||||||||||||
Balance at December 31, 2014 |
4,793,424 |
468,082 |
650,811 |
330,437 |
554,888 |
- |
483,610 |
(337,718) |
- |
6,943,535 |
17,003 |
2,436,791 |
9,397,329 | ||||||||||||
Total comprehensive income |
- |
- |
- |
- |
- |
- |
- |
65,547 |
864,940 |
930,488 |
- |
10,337 |
940,825 | ||||||||||||
Profit for the year |
- |
- |
- |
- |
- |
- |
- |
- |
864,940 |
864,940 |
- |
10,337 |
875,277 | ||||||||||||
Other comprehensive income - actuarial gains |
- |
- |
- |
- |
- |
- |
- |
65,547 |
- |
65,547 |
- |
- |
65,547 | ||||||||||||
Internal changes of shareholders'equity |
- |
- |
43,247 |
255,013 |
392,972 |
- |
(26,119) |
- |
(665,113) |
- |
(1,683) |
1,635 |
(48) | ||||||||||||
Realization of deemed cost of property, plant and equipment |
- |
- |
- |
- |
- |
- |
(39,574) |
- |
39,574 |
- |
(2,550) |
2,550 |
- | ||||||||||||
Tax on realization of deemed cost |
- |
- |
- |
- |
- |
- |
13,455 |
- |
(13,455) |
- |
867 |
(867) |
- | ||||||||||||
Recognition of legal reserve |
- |
- |
43,247 |
- |
- |
- |
- |
- |
(43,247) |
- |
- |
- |
- | ||||||||||||
Changes in statutory reserve in the year |
- |
- |
- |
255,013 |
392,972 |
- |
- |
- |
(647,985) |
- |
- |
- |
- | ||||||||||||
Other changes in noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(48) |
(48) | ||||||||||||
Capital transactions with owners |
554,888 |
- |
- |
- |
(554,888) |
- |
- |
- |
(199,826) |
(199,826) |
- |
(8,140) |
(207,966) | ||||||||||||
Capital increase |
554,888 |
- |
- |
- |
(554,888) |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||||
Prescribed dividend |
- |
- |
- |
- |
- |
- |
- |
- |
5,597 |
5,597 |
- |
- |
5,597 | ||||||||||||
Additional dividend approved |
- |
- |
- |
- |
- |
- |
- |
- |
(205,423) |
(205,423) |
- |
(8,147) |
(213,570) | ||||||||||||
Capital increase in subsidiaries with no change in control |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
7 |
7 | ||||||||||||
Balance at December 31, 2015 |
5,348,312 |
468,082 |
694,058 |
585,450 |
392,972 |
- |
457,491 |
(272,170) |
- |
7,674,196 |
15,320 |
2,440,623 |
10,130,140 | ||||||||||||
Total comprehensive income |
- |
- |
- |
- |
- |
- |
- |
(394,175) |
900,885 |
506,710 |
- |
(21,828) |
484,882 | ||||||||||||
Profit for the year |
- |
- |
- |
- |
- |
- |
- |
- |
900,885 |
900,885 |
- |
(21,828) |
879,057 | ||||||||||||
Other comprehensive income - actuarial losses |
- |
- |
- |
- |
- |
- |
- |
(394,175) |
- |
(394,175) |
- |
- |
(394,175) | ||||||||||||
Internal changes of shareholders'equity |
- |
- |
45,044 |
117,478 |
545,505 |
- |
(25,778) |
- |
(682,249) |
- |
(1,748) |
573 |
(1,176) | ||||||||||||
Realization of deemed cost of property, plant and equipment |
- |
- |
- |
- |
- |
- |
(39,058) |
- |
39,058 |
- |
(2,649) |
2,649 |
- | ||||||||||||
Tax on realization of deemed cost |
- |
- |
- |
- |
- |
- |
13,280 |
- |
(13,280) |
- |
901 |
(901) |
- | ||||||||||||
Recognition of legal reserve |
- |
- |
45,044 |
- |
- |
- |
- |
- |
(45,044) |
- |
- |
- |
- | ||||||||||||
Changes in statutory reserve in the year |
- |
- |
- |
117,478 |
545,505 |
- |
- |
- |
(662,983) |
- |
- |
- |
- | ||||||||||||
Other changes in noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(1,176) |
(1,176) | ||||||||||||
Capital transactions with owners |
392,972 |
(68) |
- |
- |
(392,972) |
7,820 |
- |
- |
(218,636) |
(210,884) |
- |
(30,292) |
(241,176) | ||||||||||||
Capital increase |
392,972 |
- |
- |
- |
(392,972) |
- |
- |
- |
- |
- |
- |
- |
- | ||||||||||||
Prescribed dividend |
- |
- |
- |
- |
- |
- |
- |
- |
3,144 |
3,144 |
- |
3,144 | |||||||||||||
Additional dividend proposed |
- |
- |
- |
- |
- |
7,820 |
- |
- |
(7,820) |
- |
- |
- | |||||||||||||
Dividend distributed to noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(30,827) |
(30,827) | ||||||||||||
Dividend proposal approved |
- |
- |
- |
- |
- |
- |
- |
- |
(213,960) |
(213,960) |
- |
- |
(213,960) | ||||||||||||
Capital increase in subsidiaries with no change in control |
- |
(68) |
- |
- |
- |
- |
- |
- |
- |
(68) |
- |
535 |
467 | ||||||||||||
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 |
The accompanying notes are an integral part of these financial statements.
21
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Energia S/A | ||||||||
Statements of cash flow for the years ended December 31, 2016 and 2015 | ||||||||
(in thousand of Brazilian reais - R$) | ||||||||
Parent Company |
|
Consolidated | ||||||
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
December 31, 2015 | |||||
Profit before taxes |
890,398 |
875,250 |
1,380,547 |
1,454,454 | ||||
Adjustment to reconcile profit to cash from operating activities |
||||||||
Depreciation and amortization |
193 |
170 |
1,291,165 |
1,279,902 | ||||
Provision for tax, civil and labor risks |
425 |
1,497 |
228,292 |
258,539 | ||||
Allowance for doubtful debts |
- |
- |
176,349 |
126,879 | ||||
Interest on debts, inflation adjustment and exchange rate changes |
42,395 |
94,588 |
2,052,959 |
1,519,819 | ||||
Pension plan expense |
- |
- |
76,638 |
60,184 | ||||
Equity interests in associates and joint ventures |
(922,362) |
(926,952) |
(311,414) |
(216,885) | ||||
Impairment |
- |
- |
48,291 |
38,956 | ||||
Loss on disposal of noncurrent assets |
- |
- |
83,576 |
16,309 | ||||
Deferred taxes (PIS and COFINS) |
- |
- |
(8,579) |
19,138 | ||||
Others |
- |
- |
(1,832) |
(5,825) | ||||
11,049 |
44,553 |
5,015,992 |
4,551,470 | |||||
DECREASE (INCREASE) IN OPERATING ASSETS |
||||||||
Consumers, concessionaires and licensees |
- |
- |
(205,828) |
(1,055,143) | ||||
Dividend and interest on capital received |
1,606,073 |
627,014 |
83,356 |
24,050 | ||||
Taxes recoverable |
3,261 |
(12,350) |
128,453 |
(62,041) | ||||
Escrow deposits |
(37) |
(48) |
756,171 |
22,827 | ||||
Sector financial asset |
- |
- |
2,494,223 |
(858,860) | ||||
Receivables - Eletrobras |
- |
- |
186,052 |
181,141 | ||||
Concession financial assets (transmission companies) |
- |
- |
(55,134) |
(44,243) | ||||
Other operating assets |
(10,033) |
933 |
265,404 |
(82,278) | ||||
INCREASE (DECREASE) IN OPERATING LIABILITIES |
||||||||
Trade payables |
2,603 |
366 |
(782,963) |
787,063 | ||||
Other taxes and social contributions |
(1,162) |
804 |
(63,986) |
412,703 | ||||
Other liabilities with private pension plan |
- |
- |
(77,183) |
(112,172) | ||||
Regulatory charges |
- |
- |
(514,935) |
808,223 | ||||
Tax, civil and labor risks paid |
(1,115) |
(674) |
(216,998) |
(247,512) | ||||
Sector financial liability |
- |
- |
288,144 |
(23,170) | ||||
Payables - amounts provided by the CDE |
- |
- |
(70,907) |
19,696 | ||||
Other operating liabilities |
18,203 |
(3,907) |
(148,967) |
107,930 | ||||
CASH FLOWS PROVIDED BY OPERATIONS |
1,628,842 |
656,691 |
7,080,894 |
4,429,684 | ||||
Interest paid on debts and debentures |
(45,470) |
(36,858) |
(1,570,985) |
(1,595,649) | ||||
Income tax and social contribution paid |
(27,117) |
(2,172) |
(875,883) |
(276,061) | ||||
NET CASH FROM OPERATING ACTIVITIES |
1,556,255 |
617,661 |
4,634,026 |
2,557,974 | ||||
INVESTING ACTIVITIES |
||||||||
Price paid in business combination net of cash acquired |
- |
- |
(1,496,675) |
- | ||||
Capital increase in investees |
- |
(490,010) |
- |
- | ||||
Gain on sales of interest in joint ventures |
- |
- |
- |
10,454 | ||||
Purchases of property, plant and equipment |
(573) |
(535) |
(1,026,867) |
(550,003) | ||||
Securities, pledges and restricted deposits |
(200) |
- |
(125,517) |
(147,914) | ||||
Purchases of intangible assets |
- |
(12) |
(1,211,082) |
(877,793) | ||||
Sale of noncurrent assets |
- |
- |
- |
10,586 | ||||
Advances for future capital increases |
(1,384,520) |
(52,680) |
- |
- | ||||
Intragroup loans |
(41,405) |
10,845 |
44,922 |
29,776 | ||||
|
|
|
| |||||
NET CASH USED IN INVESTING ACTIVITIES |
(1,426,698) |
(532,392) |
(3,815,219) |
(1,524,894) | ||||
FINANCING ACTIVITIES |
||||||||
Capital increase by noncontrolling interests |
- |
- |
467 |
7 | ||||
Borrowings and debentures raised |
609,060 |
829,997 |
3,774,355 |
4,532,167 | ||||
Repayment of principal of borrowings and debentures |
(888,408) |
(1,290,000) |
(4,016,693) |
(4,037,685) | ||||
Repayment of derivatives |
(4,711) |
- |
158,242 |
(135,309) | ||||
Repayment for business combinations |
- |
- |
(21,234) |
(61,709) | ||||
Dividend and interest on capital paid |
(204,717) |
(850) |
(231,749) |
(5,204) | ||||
NET CASH GENERATED BY (USED IN) FINANCING ACTIVITIES |
(488,776) |
(460,853) |
(336,612) |
292,267 | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
(359,219) |
(375,584) |
482,195 |
1,325,347 | ||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR |
424,192 |
799,775 |
5,682,802 |
4,357,455 | ||||
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR |
64,973 |
424,192 |
6,164,997 |
5,682,802 |
The accompanying notes are an integral part of these financial statements.
22
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Energia S.A. | |||||||
Statements of value added for the years ended December 31, 2016 and 2015 | |||||||
(in thousand of Brazilian reais - R$) | |||||||
Parent Company |
|
Consolidated | |||||
2016 |
2015 |
2016 |
2015 | ||||
1 - Revenues |
2,461 |
1,821 |
31,664,675 |
34,770,704 | |||
1.1 Operating revenues |
1,888 |
1,274 |
29,430,560 |
33,255,632 | |||
1.2 Revenue related to the construction of own assets |
573 |
547 |
1,056,442 |
595,282 | |||
1.3 Revenue from construction of concession infrastructure |
- |
- |
1,354,023 |
1,046,669 | |||
1.4 Allowance for doubtful debts |
- |
- |
(176,349) |
(126,879) | |||
2 - (-) Inputs |
(13,305) |
(10,322) |
(16,150,083) |
(17,590,769) | |||
2.1 Electricity purchased for resale |
- |
- |
(12,452,018) |
(14,749,957) | |||
2.2 Material |
(625) |
(586) |
(1,711,064) |
(1,116,288) | |||
2.3 Outsourced services |
(10,420) |
(7,239) |
(1,352,299) |
(1,122,529) | |||
2.4 Others |
(2,260) |
(2,496) |
(634,701) |
(601,995) | |||
3 - Gross value added (1+2) |
(10,844) |
(8,501) |
15,514,592 |
17,179,935 | |||
4 - Retentions |
(193) |
(170) |
(1,293,924) |
(1,281,727) | |||
4.1 Depreciation and amortization |
(193) |
(170) |
(1,038,814) |
(979,062) | |||
4.2 Amortization of intangible assets of concession |
- |
- |
(255,110) |
(302,665) | |||
5 - Net value added generated (3+4) |
(11,037) |
(8,670) |
14,220,668 |
15,898,208 | |||
6 - Value Added received in transfer |
998,853 |
1,011,013 |
1,609,777 |
1,446,645 | |||
6.1 Financial income |
76,491 |
84,061 |
1,298,363 |
1,229,760 | |||
6.2 Interest in subsidiaries, associates and joint ventures |
922,362 |
926,951 |
311,414 |
216,885 | |||
7 - Value Added to be distributed (5+6) |
987,815 |
1,002,342 |
15,830,445 |
17,344,853 | |||
8 - Distribution of value added |
|||||||
8.1 Personnel and charges |
33,168 |
16,939 |
1,073,118 |
905,102 | |||
8.1.1 Direct remuneration |
17,914 |
9,963 |
660,138 |
562,082 | |||
8.1.2 Benefits |
13,978 |
5,987 |
359,604 |
298,738 | |||
8.1.3 Government severance indemnity fund for employees - F.G.T.S |
1,276 |
988 |
53,376 |
44,283 | |||
8.2 Taxes, fees and contributions |
483 |
28,424 |
11,066,274 |
12,910,440 | |||
8.2.1 Federal |
443 |
28,394 |
6,109,701 |
8,207,474 | |||
8.2.2 Estate |
40 |
30 |
4,938,832 |
4,688,978 | |||
8.2.3 Municipal |
- |
- |
17,742 |
13,988 | |||
8.3 Lenders and lessors |
53,279 |
92,040 |
2,811,995 |
2,654,033 | |||
8.3.1 Interest |
53,229 |
91,918 |
2,743,600 |
2,600,948 | |||
8.3.2 Rental |
50 |
121 |
68,394 |
53,085 | |||
8.4 Interest on capital |
900,885 |
864,940 |
879,057 |
875,278 | |||
8.4.1 Dividend (including additional proposed) |
192,857 |
173,708 |
143,379 |
164,228 | |||
8.4.2 Retained earnings |
708,027 |
691,232 |
735,678 |
711,050 | |||
987,815 |
1,002,342 |
15,830,444 |
17,344,853 |
(*) Include the effects of note 2.8
The accompanying notes are an integral part of these financial statements.
23
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL ENERGIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 and 2015
(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 Rua Gomes de Carvalho, 1510 – 14th floor - Office 142 - Vila Olímpia - São Paulo - SP - Brazil.
The Company has direct and indirect interests in the following subsidiaries and joint ventures (information on the concession area, number of consumers, energy production capacity and related data are not audited by the independent auditors):
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 |
Interior of São Paulo |
234 |
4,311 |
30 years |
November 2027 | |||||||
Companhia Piratininga de Força e Luz ("CPFL Piratininga") |
Publicly-held corporation |
Direct |
Interior and coast of São Paulo |
27 |
1,695 |
30 years |
October 2028 | |||||||
Rio Grande Energia S.A. ("RGE") |
Publicly-held corporation |
Direct |
Interior of Rio Grande do Sul |
255 |
1,461 |
30 years |
November 2027 | |||||||
RGE Sul Distribuidora de Energia S.A. ("RGE Sul") (a) |
Publicly-held corporation |
Indirect |
Interior of Rio Grande do Sul |
118 |
1,320 |
30 years |
November 2027 | |||||||
Companhia Luz e Força Santa Cruz ("CPFL Santa Cruz") |
Privately-held corporation |
Direct |
Interior of São Paulo and Paraná |
27 |
209 |
30 years |
July 2045 | |||||||
Companhia Leste Paulista de Energia ("CPFL Leste Paulista") |
Privately-held corporation |
Direct |
Interior of São Paulo |
7 |
58 |
30 years |
July 2045 | |||||||
Companhia Jaguari de Energia ("CPFL Jaguari") |
Privately-held corporation |
Direct |
Interior of São Paulo |
2 |
41 |
30 years |
July 2045 | |||||||
Companhia Sul Paulista de Energia ("CPFL Sul Paulista") |
Privately-held corporation |
Direct |
Interior of São Paulo |
5 |
85 |
30 years |
July 2045 | |||||||
Companhia Luz e Força de Mococa ("CPFL Mococa") |
Privately-held corporation |
Direct |
Interior of São Paulo and Minas Gerais |
4 |
47 |
30 years |
July 2045 |
Installed power (MW) | ||||||||||||
Energy generation |
Company type |
Equity interest |
Location (state) |
Number of plants / type of energy |
Total |
CPFL share | ||||||
CPFL Geração de Energia S.A. |
Publicly-held corporation |
Direct |
São Paulo and Goiás |
3 Hydropower plants (b) |
1,295 |
688 | ||||||
CERAN - Companhia Energética Rio das Antas |
Privately-held corporation |
Indirect |
Rio Grande do Sul |
3 Hydropower plants |
360 |
234 | ||||||
Foz do Chapecó Energia S.A. |
Privately-held corporation |
Indirect |
Santa Catarina and |
1 Hydropower plant |
855 |
436 | ||||||
Campos Novos Energia S.A. |
Privately-held corporation |
Indirect |
Santa Catarina |
1 Hydropower plant |
880 |
429 | ||||||
BAESA - Energética Barra Grande S.A. |
Publicly-held corporation |
Indirect |
Santa Catarina and |
1 Hydropower plant |
690 |
173 | ||||||
Centrais Elétricas da Paraíba S.A. |
Privately-held corporation |
Indirect |
Paraíba |
2 Thermal plants |
342 |
182 | ||||||
Paulista Lajeado Energia S.A. |
Privately-held corporation |
Indirect |
Tocantins |
1 Hydropower plant |
903 |
63 | ||||||
CPFL Energias Renováveis S.A. |
Publicly-held corporation |
Indirect |
(d) |
(d) |
(d) |
(d) | ||||||
CPFL Centrais Geradoras Ltda ("CPFL Centrais Geradoras") |
Limited liability company |
Direct |
São Paulo and Minas Gerais |
6 small hydropower plants |
4 |
4 |
Energy commercialization |
Company type |
Core activity |
Equity interest | |||
CPFL Comercialização Brasil S.A. ("CPFL Brasil") |
Privately-held corporation |
Energy commercialization |
Direct | |||
Clion Assessoria e Comercialização de Energia Elétrica Ltda. |
Limited liability company |
Commercialization and provision of energy services |
Indirect | |||
CPFL Comercialização Cone Sul S.A. ("CPFL Cone Sul") |
Privately-held corporation |
Energy commercialization |
Indirect | |||
CPFL Planalto Ltda. ("CPFL Planalto") |
Limited liability company |
Energy commercialization |
Direct | |||
CPFL Brasil Varejista S.A. ("CPFL Brasil Varejista") |
Privately-held corporation |
Energy commercialization |
Indirect |
24
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Provision of services |
Company type |
Core activity |
Equity interest | |||
CPFL Serviços, Equipamentos, Industria e Comércio S.A. |
Privately-held corporation |
Manufacturing, commercialization, rental and maintenance of electro-mechanical equipment and service provision |
Direct | |||
NECT Serviços Administrativos Ltda ("Nect") |
Limited liability company |
Provision of administrative services |
Direct | |||
CPFL Atende Centro de Contatos e Atendimento Ltda. ("CPFL Atende") |
Limited liability company |
Provision of call center services |
Direct | |||
CPFL Total Serviços Administrativos Ltda. ("CPFL Total") |
Limited liability company |
Collection services |
Direct | |||
CPFL Eficiência Energética S.A ("CPFL ESCO") |
Privately-held corporation |
Energy efficiency management |
Direct | |||
TI Nect Serviços de Informática Ltda. ("Authi") (f) |
Limited liability company |
Provision of IT services |
Direct | |||
CPFL GD S.A ("CPFL GD") (h) |
Privately-held corporation |
Provision of maintenance services for energy generation companies |
Indirect |
Others |
Company type |
Core activity |
Equity interest | |||
CPFL Jaguariúna Participações Ltda ("CPFL Jaguariuna") |
Limited liability company |
Holding company |
Direct | |||
CPFL Jaguari de Geração de Energia Ltda ("Jaguari Geração") |
Limited liability company |
Holding company |
Direct | |||
Chapecoense Geração S.A. ("Chapecoense") (e) |
Privately-held corporation |
Holding company |
Indirect | |||
Sul Geradora Participações S.A. ("Sul Geradora") |
Privately-held corporation |
Holding company |
Indirect | |||
CPFL Telecom S.A ("CPFL Telecom") |
Privately-held corporation |
Telecommunication services |
Direct | |||
CPFL Transmissão Piracicaba S.A ("CPFL Transmissão") |
Privately-held corporation |
Energy transmission services |
Indirect | |||
CPFL Transmissora Morro Agudo S.A ("CPFL Transmissão Morro Agudo") (d) |
Privately-held corporation |
Energy transmission services |
Indirect |
a) RGE Sul Distribuidora de Energia S.A. (“RGE Sul”) is a publicly-held corporation engaged in providing electricity distribution services in all forms, and these activities are regulated by the Brazilian Electricity Regulatory Agency (“ANEEL”), linked to the Ministry of Mines and Energy. Additionally, RGE Sul is authorized to participate in programs that aim at other forms of energy, technology and services, including exploration of activities directly or indirectly derived from the use of assets, rights and technologies held by it. The CPFL Group took over the control of RGE Sul, formerly named AES Sul Distribuidora Gaúcha S.A., on October 31, 2016. For further details see note 13.4.1 – acquisition of AES Sul Distribuidora Gaúcha de Energia S.A. (“AES Sul”).
b) CPFL Geração has 51.54% of assured energy and power of the Serra da Mesa hydropower plant, whose concession is owned by Furnas. The thermoelectric plant Carioba and the hydropower plant Cariobinha are inactive while they await the position of the Ministry of Mines and Energy on the early termination of their concession and are not included in the table.
c) Paulista Lajeado has a 7% share in the installed power of Investco S.A. (5.94% interest in total capital).
d) 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 December 31, 2016, CPFL Renováveis had a portfolio of 126 projects with installed capacity of 2,904.1 MW (2,054.3 MW in operation), as follows:
· Hydropower generation: 47 SHP’s (555.3 MW) with 39 SHPs in operation (423 MW) and 8 SHPs under development (132.3 MW);
· Wind power generation: 70 projects (1,977.7 MW) with 43 projects in operation (1,260.2 MW) and 27 projects under construction/development (717.5 MW);
· Biomass power generation: 8 plants in operation (370 MW);
· Solar power generation: 1 solar plant in operation (1.1 MW).
e) The joint venture Chapecoense has as its direct subsidiary Foz do Chapecó and fully consolidates its financial statements.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 2 ) PRESENTATION OF THE FINANCIAL STATEMENTS
2.1 Basis of presentation
The individual (Parent Company) and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards – IFRS, issued by the International Accounting Standard Board – IASB, and accounting practices adopted in Brazil.
Accounting practices adopted in Brazil encompass those included in Brazilian corporate law and the technical pronouncements, guidelines and interpretations issued by the Accounting Pronouncements Committee (Comitê de Pronunciamentos Contábeis - CPC) and approved by the Brazilian Securities Commission (Comissão de Valores Mobiliários – CVM).
The Company 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.
Management states that all material information of the financial statements is disclosed and corresponds to what is used in the Company's management.
The financial statements were approved by Management and authorized for issue on March 13, 2017.
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items recorded in the statements of income: i) derivative financial instruments measured at fair value, ii) financial instruments measured at fair value through profit or loss, and iii) available-for-sale financial assets measured at fair value. 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 35 – Financial Instruments.
2.3 Use of estimates and judgments
The preparation of financial statements requires the Company’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 Company’s management reviews 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:
· Note 6 – Consumers, concessionaires and licensees;
· Note 9 – Deferred tax assets and liabilities;
· Note 11 – Concession financial asset;
· Note 14 – Property, plant and equipment and impairment;
· Note 15 – Intangible assets and impairment;
· Note 19 – Private pension plan;
· Note 22 – Provision for tax, civil and labor risks and escrow deposits;
· Note 27 – Net operating revenue; and
· Note 35 – Financial instruments.
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2.4 Functional currency and presentation currency
The Company’s functional currency is the Brazilian Real, and the individual and consolidated financial statements are 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 Directors of Company 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 31 for further details.
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 stated at cost by the subsidiary Paulista Lajeado in Investco S.A., all other entities are fully consolidated.
At December 31, 2016 and 2015, the noncontrolling interests recognized in the financial statements refer to the 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 financial statements in accordance with accounting practices adopted in Brazil and as supplementary information to the financial statements in accordance with IFRS, as the statement is neither provided for nor mandatory in accordance with IFRS.
2.8 Restatements of the 2015 financial statements
After the review of their accounting practices, the Company and its electricity distribution subsidiaries, for a better presentation of their operating and financial performance, concluded that the adjustment of the expected cash flow of the indemnifiable concession financial asset of each distribution company, originally presented in the line item of finance income, within finance income (costs), should be more properly classified in the group of operating income, together with the other income related to their core activity. This allocation reflects more accurately the electricity distribution business model and allows a better presentation regarding its performance. This conclusion is based on the fact that:
i. |
Investing in infrastructure is an essential activity of the electricity distribution business whose management model is to construct, maintain and operate this infrastructure; |
ii. |
Most players in distribution activity, as well as Transmission companies, have already adopted such classification, which improves comparability of financial statements among industry companies; |
iii. |
Increase of inflation rates observed over the past few years has contributed to the rise of Concession Financial Asset’s carrying amount, which has contributed for the increasing relevance of such income in company’s consolidated income statement. |
According to the guidance in CPC 23 / IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, the Company and its subsidiaries changed their accounting policy previously adopted to an accounting policy that better reflects the business performance of the Company and its subsidiaries (for the reasons mentioned above) and, therefore, made the retrospective reclassifications in their statements of profit or loss and value added, originally issued on March 7, 2016.
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The reclassifications made do not change the total assets, equity and profit for the year, or the statement of cash flows for the year.
The statements of profit or loss and value added for the year, for comparability purposes, are presented as follows:
· Statements of profit or loss
Consolidated | ||||||
2015 |
Reclassifications |
2015 | ||||
Net operating revenue |
20,205,869 |
393,343 |
20,599,212 | |||
Cost of electric energy services |
||||||
Cost of electric energy |
(13,311,747) |
(13,311,747) | ||||
Cost of operation |
(1,907,197) |
(1,907,197) | ||||
Cost of services rendered to third parties |
(1,049,101) |
(1,049,101) | ||||
Gross profit |
3,937,825 |
393,343 |
4,331,168 | |||
Operating expenses |
||||||
Selling expenses |
(464,583) |
(464,583) | ||||
General and administrative expenses |
(863,499) |
(863,499) | ||||
Other operating expenses |
(357,653) |
(357,653) | ||||
Income from electric energy services |
2,252,090 |
393,343 |
2,645,433 | |||
Equity interests in associates and joint ventures |
216,885 |
- |
216,885 | |||
Finance income (costs) |
||||||
Finance income |
1,558,047 |
(414,800) |
1,143,247 | |||
Finance costs |
(2,572,567) |
21,457 |
(2,551,110) | |||
(1,014,520) |
(393,343) |
(1,407,863) | ||||
Profit before taxes |
1,454,454 |
- |
1,454,454 | |||
Social contribution |
(160,162) |
(160,162) | ||||
Income tax |
(419,015) |
|
(419,015) | |||
(579,177) |
- |
(579,177) | ||||
Profit for the year |
875,277 |
- |
875,277 |
· Statements of value added
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Consolidated | ||||||
2015 |
Reclassifications |
2015 | ||||
1 - Revenues |
34,377,361 |
393,343 |
34,770,704 | |||
1.1 Operating revenues |
32,862,289 |
393,343 |
33,255,632 | |||
1.2 Revenue related to the construction of own assets |
595,282 |
595,282 | ||||
1.3 Revenue from construction of concession infrastructure |
1,046,669 |
1,046,669 | ||||
1.4 Allowance for doubtful debts |
(126,879) |
(126,879) | ||||
2 - (-) Inputs |
(17,590,769) |
- |
(17,590,769) | |||
2.1 Electricity purchased for resale |
(14,749,957) |
(14,749,957) | ||||
2.2 Material |
(1,116,288) |
(1,116,288) | ||||
2.3 Outsourced services |
(1,122,529) |
(1,122,529) | ||||
2.4 Others |
(601,995) |
(601,995) | ||||
3 - Gross value added (1+2) |
16,786,592 |
393,343 |
17,179,935 | |||
4 - Retentions |
(1,281,727) |
- |
(1,281,727) | |||
4.1 Depreciation and amortization |
(979,062) |
(979,062) | ||||
4.2 Amortization of intangible assets of concession |
(302,665) |
(302,665) | ||||
5 - Net value added generated (3+4) |
15,504,865 |
393,343 |
15,898,208 | |||
6 - Value added received in transfer |
1,861,445 |
(414,800) |
1,446,645 | |||
6.1 Financial income |
1,644,560 |
(414,800) |
1,229,760 | |||
6.2 Interest in subsidiaries, associates and joint ventures |
216,885 |
216,885 | ||||
7 - Value added to be distributed (5+6) |
17,366,310 |
(21,457) |
17,344,853 | |||
8 - Distribution of value added |
||||||
8.1 Personnel and charges |
905,102 |
- |
905,102 | |||
8.2 Taxes, fees and contributions |
12,910,440 |
- |
12,910,440 | |||
8.3 Lenders and lessors |
2,675,490 |
(21,457) |
2,654,033 | |||
8.3.1 Interest |
2,622,405 |
(21,457) |
2,600,948 | |||
8.3.2 Rental |
53,085 |
- |
53,085 | |||
8.4 Interest on capital |
875,278 |
- |
875,278 | |||
17,366,310 |
(21,457) |
17,344,853 |
( 3 ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in preparing the Company’s individual and consolidated financial statements are set out below. These policies have been consistently applied to all periods presented.
3.1 Concession agreements
ICPC 01 (R1) and IFRIC 12 – Service Concession Arrangements establish general guidelines for the recognition and measurement of obligations and rights related to concession agreements and apply to situations in which the granting authority controls or regulates which services the concessionaire should provide with the infrastructure, to whom the services should be provided and at what price, and controls any significant residual interest in the infrastructure at the end of the concession period.
When these definitions are met, the infrastructure of distribution concessionaires is segregated at the time of construction in accordance with the CPC and IFRS requirements, so that the following are recognized in the financial statements (i) an intangible asset corresponding to the right to operate the concession and collect from the users of public utilities, and (ii) a financial asset corresponding to the unconditional contractual right to receive cash (indemnity) by transferring control of the assets at the end of the concession.
The concession financial asset is measured based on its fair value, determined in accordance with the remuneration base for the concession assets, pursuant to the legislation in force established by the regulatory authority (ANEEL), and takes into consideration changes in the estimated cash flow, mainly based on factors such as new replacement price, and adjustment for IPCA (Extended Consumer Price Index) to the subsidiaries of the distribution segment. The financial asset is classified as available-for-sale, with the corresponding cash flow changes entry in an operating income/expense account in the statement of profit or loss for the year (notes 2.8 and 4).
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The remaining amount is recognized as intangible asset and relates to the right to charge consumers for electric energy distribution services, and is amortized in accordance with the consumption pattern that reflects the estimated economic benefit to the end of the concession.
Services related to the construction of infrastructure are recognized in accordance with CPC 17 (R1) and IAS 11 – Construction Contracts, against a financial asset corresponding to the amount subject to right to receive cash (indemnity). Residual amounts classified as intangible assets are amortized over the concession period in proportion to a curve that reflects the consumption pattern in relation to the economic benefits.
Considering that (i) the tariff model that does not provide for a profit margin for the infrastructure construction services, (ii) the way in which the subsidiaries manage the constructions by using a high level of outsourcing, and (iii) the fact that there is no provision for profit margin on construction in the Company‘s business plans, Management is of the opinion that the margins on this operation are irrelevant, and therefore no mark-up to the cost is considered in revenue. The construction revenues and costs are therefore presented in the statement of profit or loss for the year in the same amounts.
3.2 Financial instruments
Financial assets are recognized initially on the date that they are originated or on the trade date at which the Company or its subsidiaries become parties to the contractual provisions of the instrument. Derecognition of a financial asset occurs when the contractual rights to the cash flows from the asset expire or when the risks and rewards of ownership of the financial asset are transferred. The Company and its subsidiaries hold the following main financial assets:
(i) Fair value through profit or loss: these are assets held for trading or designated as such upon initial recognition. The Company and its subsidiaries manage such assets and make purchase and sale decisions based on their fair value in accordance with their documented risk management and investment strategy. These financial assets are measured at fair value, and changes therein are recognized in profit or loss for the year.
(ii) Held-to-maturity: these are assets that the Company and its subsidiaries have the positive intent and ability to hold to maturity. Held-to-maturity financial assets are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any impairment losses.
(iii) Loans and receivables: these are assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any impairment losses.
(iv) Available-for-sale: these are non-derivative financial assets that are designated as available-for-sale or that are not classified into any of the previous categories. Subsequent to initial recognition, interest calculated using the effective interest method is recognized in the statement of profit or loss as part of the operating revenue for changes in the expectation of cash flow for the concession financial assets from the distribution subsidiaries, while changes in fair value are recognized in other comprehensive income. The accumulated result in other comprehensive income is transferred to profit or loss when the asset is realized.
Financial liabilities are initially recognized on the date that they are originated or on the trade date at which the Company or its subsidiaries become a party to the contractual provisions of the instrument. The Company and its subsidiaries have the following main financial liabilities:
(i) Measured at fair value through profit or loss: these are financial liabilities that are: (i) held for short-term trading, (ii) designated at fair value in order to match the effects of recognition of income and expenses to obtain more relevant and consistent accounting information, or (iii) derivatives. These liabilities are measured at fair value and any changes in fair value are subsequently recognized in profit or loss.
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(ii) Other financial liabilities (not measured at fair value through profit or loss): these are other financial liabilities not classified into the previous category. They are measured initially at fair value net of any cost attributable to the transaction and subsequently measured at amortized cost using the effective interest rate method.
The Company recognizes financial guarantees when these are granted to non-controlled entities or when the financial guarantee is granted at a percentage higher than the Company's interest to cover commitments of joint ventures. Such guarantees are initially measured at fair value, by recognizing (i) a liability corresponding to the risk of non-payment of the debt, which is amortized against finance income simultaneously and in proportion to amortization of the debt, and (ii) an asset equivalent to the right to compensation by the guaranteed party or a prepaid expense under the guarantees, which is amortized by receipt of cash from other shareholders or at the effective interest rate over the term of the guarantee. After initial recognition, guarantees are measured periodically at the higher of the amount determined in accordance with CPC 25 and IAS 37 and the amount initially recognized less accumulated amortization.
Financial assets and liabilities are offset and presented at their net amount when there is a legal right to offset the amounts and the intent to realize the asset and settle the liability simultaneously.
The classifications of financial instruments (assets and liabilities) are described in Note 35.
- Issued Capital
Common shares are classified as equity. Additional costs directly attributable to share issues and share options are recognized as a deduction from equity, net of any tax effects.
3.3 Leases
At the inception of an agreement, one shall determine whether such agreement is or contains a lease. A specific asset is the subject of a lease if fulfillment of the agreement is dependent on the use of that specified asset. An agreement conveys the right to use the asset if the agreement conveys to the lessee the right to control the use of the underlying asset.
Leases in which substantially all the risks and rewards are retained by the lessor are classified as operating leases. Payments/receipts made under operating leases are recognized as expense/revenues in profit or loss on a straight-line basis, over the term of the lease.
Leases that involve not only the right to use assets, but also substantially transfer the risks and rewards to the lessee, are classified as finance leases.
In finance leases in which the Company or its subsidiaries act as lessee, the assets are capitalized to property, plant and equipment at the commencement of the lease against a liability measured at the lower of the leased asset’s fair value and the present value of the minimum future lease payments. Property, plant and equipment are depreciated over the shorter of the estimated useful life of the asset or the lease term.
For finance leases in which the Company or its subsidiaries act as lessors, receivables from lessees are initially recognized based on the fair value of the leased asset, against the income from electric energy services.
In both cases, the finance income/cost related to the financing component in the contract is recognized in the statement of profit or loss over the term of the lease agreement so as to produce an effective interest rate on the remaining balance of the investment/liability.
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3.4 Property, plant and equipment
Items of property, plant and equipment are measured at acquisition, construction or formation cost less accumulated depreciation and, if applicable, accumulated impairment losses. Cost also includes any other costs attributable to bringing the assets to the place and in a condition to operate as intended by Management, the cost of dismantling the items and restoring the site on which they are located and capitalized borrowing costs on qualifying assets.
The replacement cost of items of property, plant and equipment is recognized if it is probable that it will involve economic benefits for the subsidiaries and if the cost can be reliably measured, and the value of the replaced item is written off. Maintenance costs are recognized in profit or loss as they are incurred.
Depreciation is calculated on a straight-line basis, at annual rates of 2% to 20%, taking into consideration the estimated useful life of the assets, as instructed and defined by the Granting Authority.
Gains and losses on disposal/write-off of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of the asset, and are recognized net within other operating income/expenses.
Assets and facilities used in the regulated activities are tied to these services and may not be removed, disposed of, assigned or pledged in mortgage without the prior and express authorization of the ANEEL. The ANEEL, through Resolution No. 20 of February 3, 1999, amended by Normative Resolution No. 691 of December 8, 2015, releases Public Electric Energy Utility concessionaires from prior authorization for release of assets of no use to the concession, but determines that the proceeds from the disposal be deposited in a restricted bank account for use in the concession.
3.5 Intangible assets
Includes rights related to non-physical assets such as goodwill and concession exploitation rights, software and rights-of-way.
Goodwill that arises on the acquisition of subsidiaries is measured based on the difference between the fair value of the consideration transferred for acquisition of a business and the net fair value of the assets and liabilities of the subsidiary acquired.
Goodwill is subsequently measured at cost less accumulated impairment losses. Goodwill and other intangible assets with indefinite useful lives, if any, are not subject to amortization and are tested annually for impairment.
Negative goodwill is recognized as a gain in the statement of profit or loss in the year of the business acquisition.
In the individual financial statements, fair value adjustments (value added) of net assets acquired in business combinations are included in the carrying amount of the investment and the amortization is classified in the individual statement of income as “equity interest in associates and joint ventures” in accordance with ICPC 09 (R2). In the consolidated financial statements, the amount is stated as intangible asset and its amortization is classified in the consolidated statement of profit and loss as “amortization of concession intangible asset” in other operating expense.
Intangible assets corresponding to the right to operate concessions may have three origins, as follows:
(i) Acquisitions through business combinations: the portion arising from business combinations that corresponds to the right to operate the concession is stated as an intangible asset. Until December 31, 2015, such amounts were amortized over the remaining period of the concessions, on a straight-line basis or based on the profit curves projected for the concessionaires, as applicable. Effective January 1, 2016, in compliance with the amendments to IAS 16/CPC 27 and to IAS 38/CPC 04 (R1), the Company adopted prospectively, for all cases, the straight-line amortization method over the remaining concession period. Accordingly, for 2016, the expense relating to the amortization of the concession intangible asset decreased by R$ 24,627.
(ii) Investments in infrastructure (application of ICPC01 (R1) and IFRIC 12 – Service Concession Arrangements): under the electric energy distribution concession agreements with the subsidiaries, the recognized intangible asset corresponds to the concessionaires' right to charge the consumers for use of the concession infrastructure. Since the exploration term is defined in the agreement, intangible assets with defined useful lives are amortized over the concession period in proportion to a curve that reflects the consumption pattern in relation to the expected economic benefits. For further information, see note 3.1.
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Items comprised in the infrastructure are directly tied to the Company’s electric energy distribution operation and cannot be removed, disposed of, assigned or pledged in mortgage without the prior and express authorization of the ANEEL. The ANEEL, through Resolution No. 20 of February 3, 1999, amended by Normative Resolution No. 691 of December 8, 2015, releases Public Electric Energy Utility concessionaires from prior authorization for release of assets of no use to the concession, but determines that the proceeds from the disposal be deposited in a restricted bank account for use in the concession.
(iii) Use of public asset: certain generation concessions were granted with the condition of payments to the federal government for use of public asset. On the signing date of the respective agreements, the Company’s subsidiaries recognized intangible assets and the corresponding liabilities, at present value. The intangible assets, capitalized by interest incurred on the obligation until the start-up date, are amortized on a straight-line basis over the remaining period of each concession.
3.6 Impairment
A financial asset not measured at fair value through profit or loss is reassessed at each reporting date to determine whether there is objective evidence that it is impaired. Impairment can occur after the initial recognition of the asset and have a negative effect on the estimated future cash flows.
The Company and its subsidiaries consider evidence of impairment of receivables and held-to-maturity securities for both specific asset and at a collective level for all significant securities. Receivables and held-to-maturity securities that are not individually significant are collectively assessed for impairment by grouping together the securities with similar risk characteristics.
In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for Management's judgment as to whether the assumptions and current economic and credit conditions are such that the actual losses are likely to be higher or lower than suggested by historical trends.
An impairment loss of a financial asset is recognized as follows:
(i) Amortized cost: as the difference between the carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and shown in an allowance account against receivables. When a subsequent event indicates that the amount of impairment loss has decreased, this reduction is reversed as a credit through profit or loss.
(ii) Available-for-sale: as the difference between the acquisition cost, net of any reimbursement and principal repayment and the current fair value, less any impairment loss previously recognized in profit or loss. Losses are recognized in profit or loss.
In the case of financial assets carried at amortized cost and/or debt instruments classified as available-for-sale, if an increase (gain) is identified in subsequent periods, the impairment loss is reversed through profit or loss. However, any subsequent recovery in the fair value of an impaired equity instrument classified as available-for-sale is recognized in other comprehensive income.
Non-financial assets that have indefinite useful lives, such as goodwill, are tested annually for impairment to assess whether the asset's carrying amount does not exceed its recoverable amount. Other assets subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may be impaired.
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An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount, which is the greater of (i) its fair value less costs to sell or (ii) its value in use.
For impairment tests purposes, Management adopts the asset's value in use. In such cases, the assets (e.g. goodwill, concession intangible asset) are segregated and grouped together at the lowest level that generates identifiable cash inflows (the "cash generating unit", or CGU). If there is an indication of impairment, the loss is recognized in profit or loss. Except in the case of goodwill impairment, which cannot be reversed in the subsequent period, impairment losses are reassessed annually for any possibility of reversals.
3.7 Provisions
A provision is recognized if, as a result of a past event, there is a legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. When applicable, provisions are determined by discounting the expected future cash outflows at a rate that reflects current market assessment and the risks specific to the liability.
3.8 Employee benefits
Certain subsidiaries have post-employment benefits and pension plans, recognized under the accrual method in accordance with CPC 33 (R1) / IAS 19 (as revised 2011) “Employee benefits”, and are regarded as Sponsors of these plans. Although the plans have particularities, they have the following characteristics:
(i) Defined contribution plan: a post-employment benefit plan under which the Sponsor pays fixed contributions into a separate entity and will have no liability for the actuarial deficits of the plan. The obligations are recognized as an expense in the statement of profit or loss in the periods during which the services are rendered.
(ii) Defined benefit plan: The net obligation is calculated as the difference between the present value of the actuarial obligation based on assumptions, biometric studies and interest rates in line with market rates, and the fair value of the plan assets as of the reporting date. The actuarial liability is calculated annually by independent actuaries, under the responsibility of Management, using the projected unit credit method. Actuarial gains and losses are recognized in other comprehensive income when they occur. Net interest (income or expense) is calculated by applying the discount rate at the beginning of the period to the net amount of the defined benefit asset or liability. When applicable, the cost of past services is recognized immediately in profit or loss.
If the plan records a surplus and it becomes necessary to recognize an asset, the recognition is limited to the present value of future economic benefits available in the form of reimbursements or future reductions in contributions to the plan.
3.9 Dividend and Interest on capital
Under Brazilian law, the Company is required to distribute a mandatory minimum annual dividend of 25% of profit adjusted in accordance with the Company´s bylaws. In conformity with Brazilian and international accounting standards, CPC 24, IAS 10 and ICPC 08 (R1) a provision may only be made for the minimum mandatory dividend, and dividends declared but not yet approved are only recognized as a liability in the financial statements after approval by the competent body. According to Law 6.404/76, the amounts paid out to shareholders in excess of the mandatory minimum dividend, will therefore be held in equity, in the “additional dividend proposed” account, as they do not meet the present obligation criteria at the reporting date.
As established in the Company's bylaws and in accordance with current Corporate law, the Board of Directors is responsible for declaring an interim dividend and interest on capital determined in a half-yearly statement of income. An interim dividend and interest on capital declared at the base date of June 30, if any, is only recognized as a liability in the Company's financial statement after the date of the Board of Directors’ decision.
Interest on capital is treated in the same way as dividend and is also stated in changes in equity. Withholding income tax on interest on capital is debited against equity when proposed by Management, as it fulfills the obligation criteria at that time.
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3.10 Revenue recognition
The operating revenue in the normal course of the subsidiaries’ activities is measured at the fair value of the consideration received or receivable. The operating revenue is recognized when there is convincing evidence that all significant risks and rewards were transferred to the buyer, it is probable that future economic benefits will flow to the entity, the associated costs can be reliably measured, and the amount of the operating revenue can be reliably measured.
The revenue from electric energy distribution is recognized when the energy is supplied. The energy distribution subsidiaries perform the reading of their customers based on a reading routine (calendar and reading route) and invoice monthly the consumption of MWh based on the reading performed for each consumer. As a result, part of the energy distributed during the month is not billed at the end of the month and, consequently, an estimate is developed by Management and recorded as “Unbilled”. This unbilled revenue estimate is calculated using as a base the total volume of energy of each distributor made available in the month and the annualized rate of technical and commercial losses. The revenue from energy generation sales is recognized based on the assured energy and at tariffs specified in the terms of the supply contracts or the current market price, as appropriate. The revenue from energy commercialization is recognized based on bilateral contracts with market agents and properly registered with the Electric Energy Commercialization Chamber – CCEE. No single consumer accounts for 10% or more of the Company’s total revenue.
The revenue from services provided is recognized when the service is provided, under a service agreement between the parties.
The revenue from construction contracts is recognized based on the percentage of completion method, and losses, if any, are recognized the statement of profit or loss as incurred.
3.11 Income tax and social contribution
Income tax and social contribution expenses are calculated and recognized in accordance with the legislation in force and comprise current and deferred taxes. Income tax and social contribution are recognized in the statement of profit or loss except to the extent that they relate to items recognized directly in equity or other comprehensive income, when the net amounts of these tax effects are already recognized, and those arising from the initial recognition in business combinations.
Current taxes are the expected taxes payable or receivable/recoverable on the taxable profit or loss. Deferred taxes are recognized for temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the equivalent amounts used for tax purposes and for tax loss carryforwards.
The Company and certain subsidiaries recognize in their financial statements the effects of tax loss carryforwards and temporarily nondeductible differences, based on projections of future taxable profits, approved annually by the Boards of Directors and examined by the Fiscal Council. The subsidiaries also recognized tax credits relating to the benefit of merged goodwill, which are amortized on a straight-line basis over the remaining period of each concession agreement.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity.
Deferred income tax and social contribution assets are reviewed at each annual reporting date and are reduced to the extent that it is no longer probable that the related taxes benefit will be realized.
3.12 Earnings per share
Basic earnings per share are calculated by dividing the profit or loss for the year attributable to the controlling shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share are calculated by dividing the profit or loss for the year attributable to the controlling shareholders, adjusted by the effects of instruments that potentially would have impacted the profit or loss for the year by the weighted average of the number of shares outstanding, adjusted by the effects of all dilutive potential convertible notes for the reporting periods, in accordance with CPC 41 / IAS 33.
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3.13 Government grants – CDE
Government grants are only recognized when it is reasonably certain that these amounts will be received by the Company and its subsidiaries. They are recognized in profit or loss for the periods in which the Company recognizes as income the discounts granted in relation to the low-income subsidy and other tariff discounts.
The subsidies received through funds from the Energy Development Account - CDE (notes 27 and 28) have the main purpose of offsetting discounts granted and expenses already incurred in order to provide immediate financial support to the distribution companies, in accordance with CPC 07 / IAS 20.
3.14 Sector financial asset and liability
According to the tariff pricing mechanism applicable to the distribution companies, the energy tariffs should be set at a price level (price cap) that ensures the economic and financial equilibrium of the concession. Therefore, the concessionaires and licensees are authorized to charge from their consumers (after review and ratification by ANEEL) for: (i) the annual tariff increase; and (ii) every four or five years, according to each concession agreement, the periodic review for purposes of reconciliation of part of Parcel B (controllable costs) and adjustment of Parcel A (non-controllable costs).
The distributors' revenue is mainly comprised of the sale of electric energy and for the delivery (transmission) of the electric energy via the distribution infrastructure (network). The distribution concessionaires' revenue is affected by the volume of energy delivered and the tariff. The electric energy tariff is comprised of two parcels which reflect a breakdown of the revenue:
· Parcel A (non-controllable costs): this parcel should be neutral in relation to the entity's performance, i.e., the costs incurred by the distributors, classifiable as Parcel A, is fully passed through the consumer or borne by the Granting Authority; and
· Parcel B (controllable costs): comprised of capital expenditure on investments in infrastructure, operational costs and maintenance and remuneration to the providers of capital. It is this parcel that actually affects the entity's performance, since it has no guarantee of tariff neutrality and thus involves an intrinsic business risk.
This tariff pricing mechanism can cause temporal differences arising from the difference between the budgeted costs (Parcel A and other financial components) included in the tariff at the beginning of the tariff period and those actually incurred while it is in effect. This difference constitutes a right of the concessionaire to receive cash when the budgeted costs included in the tariff are lower than those actually incurred, or an obligation to pay if the budgeted costs are higher than those actually incurred.
3.15 Business combination
Business combinations are accounted for by applying the acquisition method. The consideration transferred in a business combination is measured at fair value, calculated as the sum of the fair values of the assets transferred by the acquirer, the liabilities incurred at the acquisition date to the former owner of the acquiree and the equity interests issued by the Company and subsidiaries in exchange for control of the acquiree. Costs related to the acquisition are generally recognized in profit or loss, when incurred.
At the acquisition date, other liabilities are recognized at fair value, except for: (i) deferred taxes, (ii) employee benefits, and (iii) equity instruments.
The noncontrolling interests are initially measured either at fair value or at the noncontrolling interests’ proportionate share of the acquiree’s identifiable net assets. The measurement method is chosen on a transaction-by-transaction basis.
The excess of the consideration transferred over the fair value of the identifiable assets (including the concession intangible asset) and net liabilities assumed at the acquisition date are recognized as goodwill. In the event that the fair value of the identifiable assets and net liabilities assumed exceeds the consideration transferred, a bargain purchase is identified and the gain is recognized in the statement of profit or loss at the acquisition date.
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3.16 Basis of consolidation
(i) Business combinations
The Company measures goodwill as the fair value of the consideration transferred including the recognized amount of any noncontrolling interest in the acquiree, less the recognized fair value of the identifiable assets acquired and liabilities assumed, all measured at the acquisition date.
(ii) Subsidiaries and joint ventures
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Joint ventures are accounted for using the equity method of accounting from the moment joint control is established.
The accounting policies of subsidiaries and joint ventures taken into consideration for purposes of consolidation and/or equity method of accounting, as applicable, are aligned with the Company's accounting policies.
In the individual (parent company) financial statements, the financial information on subsidiaries and joint ventures, as well as on associates, is accounted for under the equity method. In the consolidated financial statements, the information on joint ventures and associates, companies in which the Company has significant influence, is accounted for under the equity method.
The consolidated financial statements include the balances and transactions of the Company and its subsidiaries. The balances and transactions of assets, liabilities, income and expenses have been fully consolidated for the subsidiaries. Prior to consolidation into the Company's financial statements, the financial statements of subsidiaries CPFL Geração, CPFL Brasil, CPFL Jaguari Geração, CPFL ESCO and CPFL Renováveis are fully consolidated into those of their subsidiaries.
Intragroup balances and transactions, and any income and expenses derived from these transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the CPFL Energia interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
In the case of subsidiaries, the portion related to noncontrolling interests is stated in equity and in the statements of profit or loss and comprehensive income in each period presented.
The balances of joint ventures, as well as the Company’s interest in each of them are described in note 13.5.
(iii) Acquisition of noncontrolling interests
Accounted for as transaction among shareholders. Consequently, no gain or goodwill is recognized as a result of such transaction.
3.17 New standards and interpretations issued and adopted
A number of IASB and CPC standards were issued or revised and are mandatory for accounting periods beginning on January 1, 2016:
a) IFRS 14 - Regulatory deferral accounts
IFRS 14 establishes that rate-regulated entities may continue to recognize regulatory deferral accounts only in connection with their first-time adoption of IFRS, allowing first-time adopters to continue to apply their previous GAAP accounting policies to regulatory assets and liabilities.
Considering that the Company and its subsidiaries are not first-time adopters of IFRS, IFRS 14 was not applicable to the Group.
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b) Amendments to IFRS 11 / CPC 19 (R2) - Accounting for acquisition of an interest in a joint operation
The amendments to IFRS 11 / CPC 19 (R2) / provide instructions for accounting for an interest in a joint operation that constitute a "business" under the definition established in IFRS 3 / CPC 15 (R1) – Business combinations.
The amendments established the relevant principles for accounting for a business combination in respect of testing for impairment of an asset to which the goodwill arising from acquisition of the business combination has been allocated. The same requirements should be applied in setting up a joint arrangement if, and only if, a business that existed previously benefits from the joint arrangement in the case of one of the participating parties. A business combination is also required to disclose the relevant information required by IFRS 3 / CPC 15 (R1) and the other business combination standards.
The application of the amendments to IFRS 11 / CPC 19 (R2) did not have material impacts on the Company’s consolidated financial statements for the year ended December 31, 2016 since there were no acquisitions of joint operations during the year. Should such transactions occur, there may be impacts on the consolidated financial statements in future periods.
c) Amendments to IAS 16 / CPC 27 and IAS 38 / CPC 04 (R1) - Clarification of acceptable methods of depreciation and amortization
The amendments to IAS 16 / CPC 27 prohibit the use of the revenue based depreciation method for property, plant and equipment items. The amendments to IAS 38 / CPC 04 (R1) introduced the rebuttable presumption that revenue is an inappropriate basis for amortizing an intangible asset. Such presumption can be rebuttable only in the two conditions set out:
(i) when the intangible asset is expressed as a measure of revenue; or
(ii) when it can be demonstrated that revenue and the economic benefits of the intangible asset are highly correlated.
With the beginning of the effective period of the amendments, the Company started adopting prospectively the straight-line amortization method for the concession intangible asset, over the remaining concession period. This amendment resulted in an understatement of the amortization expense by R$ 24,627 in 2016.
d) Amendments to IAS 1 / CPC 26 – Disclosure initiative
The amendments to IAS 1/CPC 26 provide guidance on the application of the materiality in practice. These amendments were applied and there was no impact on the disclosures or amounts recognized in the consolidated financial statements for the year ended December 31, 2016.
e) Amendments to IAS 27 – Equity Method in Separate Financial Statements.
The amendments deal with the permitted methods to account for investments in subsidiaries, joint ventures and associates in separate financial statements. Considering that the Company does not prepare consolidated financial statements, the application of the amendments to IAS 27 did not have impacts on its financial statements for the year ended December 31, 2016.
f) Amendments to IFRS 10 / and IAS 28 – Sale or Contribution of Assets between an Investor and its associate or joint venture.
The amendments deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, gains and losses resulting from loss of control of a subsidiary that does not represent a business in a transaction with an associate or joint venture that is accounted for using the equity method are recognized in the parent company's profit or loss only proportionally to the “unrelated investor’s” interest in this associate or joint venture. Similarly, gains and losses resulting from revaluation of investments retained in some former subsidiary (that has become an associate or joint venture accounted for using the equity method) at fair value are recognized in the profit or loss of the former parent company proportionally to the "unrelated investor’s"' interest in the new associate or joint venture.
These amendments were applied and there was no impact on the disclosures or amounts recognized in the consolidated financial statements for the year ended December 31, 2016, since there were no sales or contributions of assets between the Company and its subsidiaries, associates and joint ventures during the year. Should such transactions occur, there may be impacts on the consolidated financial statements in future periods.
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g) Amendments to IFRS 10 / IFRS 12 / and IAS 28 – Investment Entities: Applying the Consolidation Exception.
The amendments to IFRS 10, IFRS 12 and IAS 28 bring clarifications about exemption from preparing consolidated financial statements for entities whose subsidiary is an investment entity. Considering that the Company is not an investment entity and it does not have a subsidiary, associate or joint venture that qualifies as an investment entity, the application of the amendments to IFRS 10, IFRS 12 and IAS 28 did not have material impact on its consolidated financial statements for the year ended December 31, 2016.
h) Annual Improvements to IFRSs 2012 – 2014 Cycle
The application of the amendments did not have material impact on the disclosures and amounts recognized in the Company’s consolidated financial statements for the year ended December 31, 2016.
3.18 New standards and interpretations issued and not yet adopted:
A number of new IFRS standards and amendments to the standards and interpretations were issued by the IASB and had not yet come into effect for the year ended December 31, 2016. Consequently, the Company has not adopted them:
a) CPC 48 / IFRS 9 – Financial Instruments
CPC 48 / IFRS 9 is effective for the financial statements of an entity prepared in accordance with IFRS for annual periods beginning on or after January 1, 2018 and earlier application is permitted.
This standard establishes new requirements for classification and measurement of financial assets and liabilities. Financial assets are classified into three categories: (i) measured at fair value through profit or loss; (ii) measured at amortized cost, based on the business model within which they are held and the characteristics of their contractual cash flows; and; (iii) measured at fair value through other comprehensive income.
With regard to financial liabilities, the main alteration in relation to the requirements already set by IAS 39 / CPC 38 requires any change in fair value of a financial liability designated at fair value through profit or loss attributable to changes in the liability's credit risk to be stated in other comprehensive income and not in the statement of profit or loss, unless such recognition results in a mismatching in the statement of profit or loss.
In relation to the impairment of financial assets, IFRS 9 / CPC 48 requires an expected credit loss model, as opposed to an incurred credit loss under IAS 39 / CPC 38. The expected credit loss model requires an entity to 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. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognized.
Regarding the modifications related to hedge accounting, IFRS 9 / CPC 48 retains three types of hedge accounting mechanisms currently available in IAS 39 / CPC 38. Under IFRS 9 / CPC 48, greater flexibility has been introduced to the types of transactions that are eligible for hedge accounting, more specifically regarding the types of instruments that qualify as hedging instruments and the types of risk components of non-financial items eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an “economic relationship”. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management have also been introduced.
The Company’s distribution subsidiaries have material assets classified as “available-for-sale”, in accordance with 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. The designation of these instruments as available-for-sale occurs due to the non-classification in the other three categories described in IAS 39 / CPC 38 (loans and receivables, fair value through profit or loss and held-to-maturity). Management’s preliminary opinion is that, should these assets be classified as measured at fair value through profit or loss according to the new standard, the effects of the subsequent remeasurement of this asset would be recognized in profit or loss for the year. Thus, there will not be material impacts on the Company’s consolidated financial statements.
Moreover, as the Company and its subsidiaries do not apply hedge accounting, Management concluded that there will not be material impact on the information disclosed or amounts recorded in its consolidated financial statements as a result of the amendments to standard. As regards the changes in the calculation of impairment of financial instruments, the Company is assessing any impacts of the adoption of this standard.
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b) CPC 47 / IFRS 15 and Clarifications to IFRS 15 - Revenue from contracts with customers
CPC 47 / IFRS 15 provides a single, straightforward model for accounting for contracts with customers, and when it comes into effect, it will supersede the current guide for revenue recognition provided in IAS 18 / CPC 30 (R1) – Revenue and IAS 11 / CPC 17 (R1) - Construction contracts and related interpretations.
The standard establishes that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduces a five-step model for revenue recognition: (i) Identify the contract with the customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract and (v) Recognize revenue when (or as) the entity satisfies a performance obligation.
Under IFRS 15 / CPC 47, an entity recognizes revenue when (or as) the entity satisfies a performance obligation, i.e., when the "control" over the goods and services in a certain operation is transferred to the customer, and will establish a greater level of detail in the disclosures.
The standard will be applicable for annual reporting periods beginning on or after January 1, 2018, and its early adoption is permitted. The Company is assessing the potential impacts of the adoption of this new standard and preliminarily assess that they will not be material in its consolidated financial statements.
c) IFRS 16 – Leases
Issued on January 13, 2016, establishes, in the lessee’s view, a new form for accounting for leases currently classified as operating leases, which are now recognized similarly to leases classified as finance leases. As regards the lessors, it virtually retains the requirements of IAS 17, including only some additional disclosure aspects.
IFRS 16 is effective for annual periods beginning or on after January 1, 2019, and its early adoption is permitted as long as the entities also early adopt IFRS 15 - Revenues from contracts with customers. The Company is assessing the potential impacts of the adoption of this new standard.
d) Amendments to IAS 12 / CPC 32 – Recognition of Deferred Tax Assets for Unrealized Losses
Issued on January 19, 2016, the amendments to IAS 12 / CPC 32 clarify the requirements of recognition of deferred tax assets for unrealized losses on debt instruments and the method for assessing the existence of probable future taxable profits for the realization of temporarily nondeductible differences, to address the diversity in practice.
The amendments to IAS 12 / CPC 32 will be applicable for annual periods beginning on or after January 1, 2017, and its early adoption is permitted. The Company’s management estimates that the application of the amendments to IAS 12 / CPC 32 tends not to cause material impacts on its consolidated financial statements.
e) Amendments to IAS 7 / CPC 03 – Disclosure initiative
Issued on January 29, 2016, the objective of the amendments to IAS 7 / CPC 03 from the Disclosure Initiative is for the entities to provide disclosures that permit the users of the financial statements to assess the amendments as regards the responsibilities arising from financing activities.
For this, IASB requires that the following changes in liabilities arising from financing activities be disclosed: (i) changes in cash flows from financing activities; (ii) changes arising from the obtainment or loss of control of subsidiaries or other businesses; (iii) effect of exchange rate changes; (iv) changes in fair values; and (v) other changes.
The IASB defines liabilities arising from financing activities as liabilities "for which their cash flows were or will be classified in the Statements of Cash Flows as cash flows from financing activities". It also highlights that the new disclosure requirements refer similarly to changes in financial assets, if they meet the same definition. Finally, the amendments indicate that the changes in liabilities arising from financing activities should be disclosed separately from the changes in other assets and liabilities.
The amendments to IAS 7 / CPC 03 are effective for annual periods beginning on or after January 1, 2017, and its early adoption is permitted. Since the amendments were disclosed in a period of time shorter than one year before the mandatory adoption period, entities are exempt from publishing comparative information on the early adoption of the amendments. The Company’s management estimates that the application of the amendments to IAS 7 / CPC 03 will not result in changes in the classification of the amounts of the Company’s statements of cash flows for future periods with no other material impacts on its consolidated financial statements.
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f) Amendments to IFRS 2 – Clarifications of classification and measurement of share based payment transactions
Issued on June 20, 2016, the amendments provide requirements to account for:
a) Effects of the vesting and non-vesting conditions on the measurement of cash-settled share-based payments.
b) Share-based payment transactions with a net settlement criterion, for tax withholding obligations; and
c) A modification in the terms and conditions of a share-based payment that changes the classification of the cash-settled transaction to share-settled transaction.
The amendments to IFRS 2 are effective for annual periods beginning on or after January 1, 2018, and its early adoption is permitted. The Company is assessing the potential impacts of the adoption of these amendments.
g) Amendments to IFRS 4 – Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Issued on September 12, 2016, the amendments deal with the concerns arising from the implementation of IFRS 9 – Financial Instruments before the implementation of the new standard that will supersede IFRS 4, for potential temporary volatilities on the reported results.
Since the Company does not apply the insurance pronouncement, the Company’s management estimates that the amendments to IFRS 4 will not have material impacts on its consolidated financial statements.
h) IFRIC 22 - Foreign Currency Transactions and Advance Consideration
Issued on December 8, 2016, IFRIC 22 deals with the exchange rate to be used in transactions that involve the consideration paid or received in advance in foreign exchange transactions. The IFRIC is effective for annual periods beginning on or after January 1, 2018, and its early adoption is permitted.
The transactions in foreign currency of the Company and its subsidiaries are currently restricted to debt instruments with international financial institutions, measured at fair value, and to the acquisition of energy from Itaipu. Since assets and liabilities measured at fair value are not within the scope of the IFRIC and that there are no advance payments on transactions with Itaipu, the Company’s management estimates that IFRIC 22 will not have material impacts on its consolidated financial statements.
i) Amendments to CPC 28 / IAS 40 – Investment Property
Issued on December 8, 2016, the amendments to IAS 40 / CPC 28 clarify the requirements relating to transfers from or to investment properties. The amendments are effective for annual periods beginning on or after January 1, 2018, and its early adoption is permitted.
The Company is assessing the potential impacts of the adoption of the amendments.
j) Annual Improvements to IFRSs 2014 – 2016 Cycle
Every year, IASB discusses and decides on the proposed improvements to IFRS as they arise during the period. Issued on December 8, 2016, the improvements deal with the following subjects:
j.1) Amendments to IFRS 1 - excludes from the standard some exceptions existing for application in the transition period of the entities that are new IFRS adopters.
j.2) Amendments to IFRS 12 - clarifies the scope of the pronouncement, in respect of interest of entities in other entities that are classified as available for sale or discontinued operations in accordance with IFRS 5.
j.3) Amendments to IAS 28 - clarifies if an entity has an option of "investment for investment" to measure the investees at fair value in accordance with IAS 28 for a risk capital organization.
Based on a preliminary assessment of the amendments, the Company's management believes that the application of these amendments should not have material impact on the disclosures or amounts recognized in its consolidated financial statements in future periods.
( 4 ) DETERMINATION OF FAIR VALUES
A number of the Company’s accounting policies and disclosures require the determination of fair value, 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, further information on the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
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Accordingly, the Company measures fair value in accordance with IFRS 13 / CPC 46, which defines the fair value as the price estimate for an unforced transaction for the sale of the asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions.
- 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 on 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 values are valued based on quoted prices in an active market, or, if such prices were not available, assessed using pricing models, applied individually for each transaction, taking into consideration the future payment flows, based on the conditions contracted, discounted to present value at market interest rate curves, based on information obtained, when available, from the BM&FBOVESPA S.A – Bolsa de Valores, Mercadorias e Futuros (“BM&FBOVESPA”) and “Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais – ANBIMA” (note 35) and also includes the debtor's credit rating.
Financial assets classified as available-for-sale refer to the right to compensation, to be paid by the Federal Government regarding the assets of the distribution concessionaires at the end of the concession agreement. The methodology adopted for marking these assets to fair value is based on the tariff review process for distributors. This review, conducted every four or five years according to each concessionaire, involves assessing the replacement price for 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”) or the General Market Price Index (“IGP-M”) as the best estimates for adjusting the original base to the fair value at subsequent dates, in accordance with the tariff review process.
( 5 ) CASH AND CASH EQUIVALENTS
Parent company |
Consolidated | ||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||
Bank balances |
426 |
311 |
170,884 |
148,224 | |||
Short-term financial investments |
64,548 |
423,881 |
5,994,112 |
5,534,578 | |||
Overnight investment (a) |
64,541 |
- |
95,034 |
26,914 | |||
Bank certificates of deposit (b) |
- |
- |
2,357,187 |
1,255,666 | |||
Repurchase agreements secured on debentures (b) |
- |
- |
58,616 |
433,693 | |||
Investment funds (c) |
6 |
423,881 |
3,483,274 |
3,818,305 | |||
Total |
64,973 |
424,192 |
6,164,997 |
5,682,802 |
a) Current account balances, which earn daily interest by investment in repurchase agreements secured on debentures 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 repurchase agreements secured on debentures with major financial institutions that operate in the Brazilian financial market, with daily liquidity, low credit risk and interest equivalent, on average, to 101.7% of the CDI.
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c) Exclusive Fund investments, with daily liquidity and interest equivalent, on average, of 100.4% 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.
( 6 ) CONSUMERS, CONCESSIONAIRES AND LICENSEES
In the consolidated financial statements, the balance derives mainly from the supply of electric energy. The following table shows the breakdown at December 31, 2016 and 2015:
Consolidated | ||||||||||
Amounts |
Past due |
Total | ||||||||
coming due |
until 90 days |
> 90 days |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||||
Current |
||||||||||
Consumer classes |
||||||||||
Residential |
423,499 |
429,169 |
79,711 |
932,380 |
793,826 | |||||
Industrial |
222,168 |
83,207 |
81,451 |
386,826 |
365,420 | |||||
Commercial |
178,567 |
88,230 |
50,314 |
317,111 |
263,259 | |||||
Rural |
67,575 |
21,850 |
8,019 |
97,444 |
64,257 | |||||
Public administration |
64,009 |
24,064 |
6,275 |
94,348 |
79,953 | |||||
Public lighting |
57,049 |
10,287 |
5,805 |
73,142 |
78,204 | |||||
Public utilities |
74,792 |
15,752 |
6,959 |
97,503 |
80,706 | |||||
Billed |
1,087,660 |
672,559 |
238,534 |
1,998,754 |
1,725,626 | |||||
Unbilled |
1,095,188 |
- |
- |
1,095,188 |
881,307 | |||||
Financing of consumers' debts |
118,357 |
20,792 |
31,834 |
170,982 |
197,035 | |||||
CCEE transactions |
194,177 |
4,619 |
90,964 |
289,761 |
169,561 | |||||
Concessionaires and licensees |
381,982 |
678 |
7,673 |
390,333 |
331,105 | |||||
Other |
39,974 |
- |
- |
39,974 |
10,770 | |||||
2,917,338 |
698,648 |
369,005 |
3,984,991 |
3,315,403 | ||||||
Allowance for doubtful debts |
(219,098) |
(140,485) | ||||||||
Total |
3,765,893 |
3,174,918 | ||||||||
Noncurrent |
||||||||||
Financing of consumers' debts |
198,875 |
- |
- |
198,875 |
101,585 | |||||
Free energy |
5,436 |
- |
- |
5,436 |
4,768 | |||||
CCEE transactions |
41,301 |
- |
- |
41,301 |
41,301 | |||||
245,612 |
- |
- |
245,612 |
147,654 | ||||||
Allowance for doubtful debts |
(42,427) |
(18,708) | ||||||||
Total |
203,185 |
128,946 |
Financing of Consumers' Debts - Refers to the negotiation of overdue receivables from consumers, principally public administration. Payment of some of these receivables is guaranteed by the debtors, in the case of public entities, by pledging the bank accounts through which their ICMS (VAT) revenue is received. Allowances for doubtful debts are recognized based on the best estimates of the subsidiaries’ Management for unsecured amounts or amounts that are not expected to be collected.
Electric Energy Commercialization Chamber (CCEE) transactions - The amounts refer to the sale of electric energy on the spot market. The noncurrent amounts mainly comprise: (i) adjustments of entries made by the CCEE in response to certain legal decisions (preliminary orders) in the accounting processes for the period from September 2000 to December 2002; and (ii) provisional accounting entries established by the CCEE. The subsidiaries consider that there is no significant risk on the realization of these assets and consequently no allowance was recognized for these transactions.
Concessionaires and licensees - Refer basically to receivables for the supply of electric energy to other concessionaires and licensees, mainly by the subsidiaries CPFL Geração, CPFL Brasil and CPFL Renováveis.
Allowance for doubtful debts
Movements in the allowance for doubtful debts are shown below:
43
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | |||||
Consumers, concessionaires and licensees |
Other |
Total | |||
As of December 31, 2014 |
(123,171) |
(15,285) |
(138,456) | ||
Allowance - reversal (recognition) |
(170,131) |
(1,152) |
(171,283) | ||
Recovery of revenue |
44,338 |
67 |
44,405 | ||
Write-off of accrued receivables |
89,770 |
1,930 |
91,700 | ||
As of December 31, 2015 |
(159,194) |
(14,441) |
(173,635) | ||
Business combination |
(70,636) |
(16,187) |
(86,823) | ||
Allowance - reversal (recognition) |
(258,377) |
(969) |
(259,347) | ||
Recovery of revenue |
82,393 |
605 |
82,998 | ||
Write-off of accrued receivables |
144,289 |
3,000 |
147,289 | ||
As of December 31, 2016 |
(261,525) |
(27,992) |
(289,517) | ||
Current |
(219,098) |
(27,992) |
(247,090) | ||
Noncurrent |
(42,427) |
- |
(42,427) |
( 7 ) TAXES RECOVERABLE
Parent company |
Consolidated | ||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||
Current |
|||||||
Prepayments of social contribution - CSLL |
5,508 |
- |
14,141 |
35,019 | |||
Prepayments of income tax - IRPJ |
2,282 |
2,171 |
35,534 |
76,920 | |||
Withholding income tax - IRRF on interest on capital |
3,126 |
10,776 |
3,642 |
11,150 | |||
Income tax and social contribution to be offset |
45,457 |
42,456 |
94,268 |
100,658 | |||
Withholding income tax - IRRF |
26,150 |
16,996 |
115,189 |
125,392 | |||
State VAT - ICMS to be offset |
- |
- |
82,090 |
63,450 | |||
Social Integration Program - PIS |
52 |
74 |
9,062 |
8,543 | |||
Contribution for Social Security Funding - COFINS |
262 |
411 |
39,984 |
40,126 | |||
National Social Security Institute - INSS |
- |
- |
6,374 |
12,660 | |||
Others |
- |
- |
3,564 |
1,292 | |||
Total |
82,836 |
72,885 |
403,848 |
475,211 | |||
Noncurrent |
|||||||
Social contribution to be offset - CSLL |
- |
- |
55,498 |
57,439 | |||
Income tax to be offset - IRPJ |
- |
- |
10,037 |
23,765 | |||
State VAT - ICMS to be offset |
- |
- |
122,415 |
81,584 | |||
Social Integration Program - PIS |
- |
- |
800 |
350 | |||
Contribution for Social Security Funding - COFINS |
- |
- |
3,687 |
1,613 | |||
Others |
- |
- |
5,849 |
2,409 | |||
Total |
- |
- |
198,286 |
167,159 |
Withholding income tax - IRRF – Relates mainly to IRRF on financial investments.
Social contribution to be offset – CSLL – In noncurrent, it refers basically to the final unappealable favorable decision in a lawsuit filed by the subsidiary CPFL Paulista. The subsidiary CPFL Paulista is awaiting the authorization for utilization of credit from the Federal Revenue in order to carry out its subsequent offset.
State VAT - ICMS to be offset – In noncurrent, it refers mainly to the credit recorded on purchase of assets that results in the recognition of property, plant and equipment, intangible assets and financial assets.
44
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 8 ) SECTOR FINANCIAL ASSET AND LIABILITY
The breakdown and changes for the year in the balances of sector financial asset and liability is as follows:
Consolidated | ||||||||||||||||||||||
As of December 31, 2015 |
Operating revenue |
Finance income or expense |
Receipt |
As of December 31, 2016 | ||||||||||||||||||
Deferred |
Approved |
Total |
Constitution |
Realization |
Monetary adjustment |
Tariff flag |
Business combination |
Deferred |
Approved |
Total | ||||||||||||
Parcel "A" |
1,490,744 |
519,838 |
2,010,582 |
(644,484) |
(1,260,579) |
28,166 |
(687,673) |
(18,213) |
(762,573) |
190,369 |
(572,203) | |||||||||||
CVA (*) |
||||||||||||||||||||||
CDE (**) |
407,295 |
109,937 |
517,232 |
(612,336) |
(329,898) |
(4,020) |
- |
16,561 |
(342,161) |
(70,301) |
(412,462) | |||||||||||
Electric energy cost |
(466,337) |
472,428 |
6,091 |
81,164 |
(179,617) |
(101,982) |
(417,883) |
(134,041) |
(506,490) |
(239,777) |
(746,267) | |||||||||||
ESS and EER (***) |
(25,128) |
(249,081) |
(274,209) |
(225,794) |
385,941 |
(56,038) |
(269,352) |
(91,527) |
(406,568) |
(124,411) |
(530,979) | |||||||||||
Proinfa |
(814) |
(5,334) |
(6,148) |
51,060 |
(19,335) |
7,219 |
- |
2,111 |
3,492 |
31,414 |
34,906 | |||||||||||
Basic network charges |
28,185 |
68,289 |
96,474 |
19,517 |
(84,894) |
(1,449) |
- |
7,539 |
27,527 |
9,660 |
37,187 | |||||||||||
Pass-through from Itaipu |
1,281,279 |
39,416 |
1,320,695 |
(116,276) |
(921,201) |
197,581 |
- |
109,124 |
147,012 |
442,911 |
589,923 | |||||||||||
Transmission from Itaipu |
11,372 |
4,097 |
15,469 |
8,102 |
(13,754) |
2,163 |
- |
2,948 |
7,646 |
7,281 |
14,927 | |||||||||||
Neutrality of industry charges |
187,765 |
2,508 |
190,273 |
198,274 |
(171,420) |
15,730 |
- |
73,609 |
142,091 |
164,375 |
306,466 | |||||||||||
Overcontracting |
67,127 |
77,578 |
144,705 |
(48,195) |
73,600 |
(31,037) |
(439) |
(4,537) |
164,878 |
(30,782) |
134,096 | |||||||||||
Other financial components |
(92,098) |
35,480 |
(56,618) |
(195,758) |
6,126 |
(20,498) |
- |
(75,968) |
(182,958) |
(159,759) |
(342,717) | |||||||||||
Refunds related to judicial injuctions (note 27.4) |
- |
- |
- |
(223,356) |
31,419 |
(17,088) |
- |
- |
(76,615) |
(132,410) |
(209,025) | |||||||||||
Others |
(92,098) |
35,480 |
(56,618) |
27,598 |
(25,294) |
(3,410) |
- |
(75,968) |
(106,343) |
(27,349) |
(133,692) | |||||||||||
Total |
1,398,646 |
555,318 |
1,953,964 |
(840,241) |
(1,254,453) |
7,668 |
(687,673) |
(94,181) |
(945,530) |
30,612 |
(914,918) | |||||||||||
Current assets |
1,464,019 |
- | ||||||||||||||||||||
Noncurrent assets |
489,945 |
- | ||||||||||||||||||||
Current liabilities |
- |
(597,515) | ||||||||||||||||||||
Noncurrent liabilities |
- |
(317,406) |
(*) Deferred tariff costs and gains variations from Parcel “A” items
(**) Energy Development Account – CDE
(***) System Service Charge (ESS) and Reserve Energy Charge (EER)
a) CVA
Refers to the variations of the Parcel A account, in accordance with note 3.14. These amounts are adjusted for inflation based on the SELIC rate and are compensated in the subsequent tariff processes.
b) Neutrality of industry charges
This refers to the neutrality of the industry charges contained in the electric energy tariffs, calculating the monthly differences between the amounts billed relating to such charges and the respective amounts considered at the time the distributors’ tariff was set.
c) Overcontracting
Electric energy distribution concessionaires are required to guarantee 100% of their energy market through contracts approved, registered and ratified by ANEEL. It is also assured to the distribution concessionaires that costs or revenues derived from energy surplus will be passed through the tariffs, limited to 5% of the energy load requirement. These amounts are adjusted for inflation based on SELIC rate and are compensated in the subsequent tariff processes.
d) Other financial components
Refers mainly to: (i) excess demand and excess reactive power that, since the 4th periodic tariff review cycle, became a financial component that will only be amortized upon the approval of the 5th periodic tariff review cycle, for the subsidiaries CPFL Piratininga, CPFL Santa Cruz, CPFL Leste Paulista, CPFL Jaguari, CPFL Sul Paulista, and CPFL Mococa (ii) financial guarantees related to the compensation of the cost of the previous offering of guarantees required from distributors for carrying out commercial transactions among the sector agents, (iii) financial components related to the recalculations of the tariff processes, to neutralize the effects to consumers, and (iv) ABRACE judicial injunction in accordance with Order No. 1.576/2016 (see note 27.4.2).
45
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 9 ) DEFERRED TAX ASSETS AND LIABILITIES
9.1 Breakdown of tax credits and debits
Parent company |
Consolidated | ||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||
Social contribution credit (debit) |
|||||||
Tax losses carryforwards |
42,841 |
46,602 |
123,389 |
152,200 | |||
Tax benefit of merged goodwill |
- |
- |
86,377 |
93,467 | |||
Temporarily nondeductible differences |
1,125 |
(5,918) |
(332,750) |
(547,066) | |||
Subtotal |
43,966 |
40,684 |
(122,984) |
(301,399) | |||
Income tax credit (debit) |
|||||||
Tax losses carryforwards |
123,980 |
116,438 |
358,683 |
417,600 | |||
Tax benefit of merged goodwill |
- |
- |
295,987 |
323,422 | |||
Temporarily nondeductible differences |
3,126 |
(16,733) |
(923,383) |
(1,519,171) | |||
Subtotal |
127,106 |
99,705 |
(268,713) |
(778,150) | |||
PIS and COFINS credit (debit) |
|||||||
Temporarily nondeductible differences |
- |
- |
(9,580) |
(18,159) | |||
Total |
171,073 |
140,389 |
(401,276) |
(1,097,708) | |||
Total tax credit |
171,073 |
140,389 |
922,858 |
334,886 | |||
Total tax debit |
- |
- |
(1,324,134) |
(1,432,594) |
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 had been incorporated and is recognized in accordance with CVM Instructions No. 319/1999 and No. 349/2001 and ICPC 09 (R2) - Individual Interim financial statements, Separate Interim financial statements, Consolidated Interim financial statements and Application of the Equity Method. The benefit is realized proportionally to the tax amortization of the merged intangible assets that gave rise to it, during the remaining concessions period, as shown in note 15.
Consolidated | |||||||
December 31, 2016 |
December 31, 2015 | ||||||
Social contribution |
Income tax |
Social contribution |
Income tax | ||||
CPFL Paulista |
50,497 |
140,270 |
55,123 |
153,119 | |||
CPFL Piratininga |
12,251 |
42,044 |
13,286 |
45,597 | |||
RGE |
23,629 |
97,584 |
25,058 |
106,324 | |||
CPFL Geração |
- |
16,090 |
- |
18,380 | |||
Total |
86,377 |
295,987 |
93,467 |
323,422 |
46
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
9.3 Accumulated balances on temporarily nondeductible differences
Consolidated | |||||||||||
Dec. 31, 2016 |
Dec. 31, 2015 | ||||||||||
Social contribution |
Income tax |
PIS/COFINS |
Social contribution |
Income tax |
PIS/COFINS | ||||||
Temporarily nondeductible differences |
|||||||||||
Provision for tax, civil and labor risks |
45,065 |
125,182 |
- |
33,806 |
93,906 |
- | |||||
Private pension fund |
1,711 |
4,753 |
- |
1,867 |
5,185 |
- | |||||
Allowance for doubtful debts |
26,543 |
73,729 |
- |
15,680 |
43,556 |
- | |||||
Free energy supply |
7,718 |
21,440 |
- |
6,897 |
19,158 |
- | |||||
Research and development and energy efficiency programs |
17,474 |
48,538 |
- |
16,060 |
44,612 |
- | |||||
Personnel-related provisions |
3,422 |
9,506 |
- |
2,578 |
7,161 |
- | |||||
Depreciation rate difference |
6,200 |
17,223 |
- |
6,797 |
18,880 |
- | |||||
Derivatives |
(54,368) |
(151,023) |
- |
(219,524) |
(609,788) |
- | |||||
Recognition of concession - adjustment of intangible asset (IFRS/CPC) |
(8,355) |
(23,208) |
- |
(9,031) |
(25,085) |
- | |||||
Recognition of concession - adjustment of financial asset (IFRS/CPC) |
(104,080) |
(287,990) |
(6,157) |
(73,241) |
(202,271) |
(18,450) | |||||
Actuarial losses (IFRS/CPC) |
25,390 |
70,527 |
- |
26,351 |
73,199 |
- | |||||
Financial instruments (IFRS/CPC) |
(10,022) |
(27,838) |
- |
(8,950) |
(24,860) |
- | |||||
Accelerated depreciation |
(73) |
(204) |
- |
(34) |
(95) |
- | |||||
Others |
4,491 |
12,281 |
(3,423) |
4,236 |
11,054 |
291 | |||||
Temporarily nondeductible differences - accumulated comprehensive income: |
|||||||||||
Property, plant and equipment - adjustment of deemed cost (IFRS/CPC) |
(55,223) |
(153,398) |
- |
(58,484) |
(162,456) |
- | |||||
Actuarial losses (IFRS/CPC) |
49,698 |
138,051 |
- |
10,464 |
29,064 |
- | |||||
Temporarily nondeductible differences - Business combination - CPFL Renováveis |
|||||||||||
Deferred taxes - asset: |
|||||||||||
Fair value of property, plant and equipment (negative value added of assets) |
22,771 |
63,252 |
- |
24,248 |
67,355 |
- | |||||
Other temporary differences |
|||||||||||
Deferred taxes - liability: |
|||||||||||
Fair value of property, plant and equipment (value added of assets) |
(27,472) |
(76,310) |
- |
(29,132) |
(80,922) |
- | |||||
Value added derived from determination of deemed cost |
(78,443) |
(217,897) |
- |
(86,495) |
(240,264) |
- | |||||
Intangible asset - exploration right/authorization in indirect subsidiaries acquired |
(183,443) |
(509,563) |
- |
(193,927) |
(538,685) |
- | |||||
Other temporary differences |
(21,754) |
(60,435) |
- |
(17,233) |
(47,874) |
- | |||||
Total |
(332,750) |
(923,383) |
(9,580) |
(547,066) |
(1,519,171) |
(18,159) |
9.4 Expected recovery
The expected recovery of the deferred tax assets recorded in noncurrent assets derived from temporarily nondeductible differences and tax benefit of merged intangible assets is based on the average period of realization of each item included in deferred assets, and tax loss carryforwards are based on the projections of future profits, approved by the Board of Directors and reviewed by the Fiscal Council. They are comprised as follows:
Parent company |
Consolidated | |||
2017 |
2,010 |
214,154 | ||
2018 |
10,964 |
206,224 | ||
2019 |
22,501 |
157,568 | ||
2020 |
19,672 |
116,761 | ||
2021 |
53,523 |
209,705 | ||
2022 to 2024 |
49,313 |
275,413 | ||
2025 to 2027 |
15,108 |
408,551 | ||
2028 to 2030 |
- |
60,799 | ||
2031 to 2033 |
- |
13,747 | ||
Total |
173,092 |
1,662,921 |
47
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
9.5 Reconciliation of the income tax and social contribution amounts recognized in the statements of profit or loss for 2016 and 2015:
Parent company | |||||||
2016 |
2015 | ||||||
Social contribution |
Income tax |
Social contribution |
Income tax | ||||
Profit before taxes |
890,398 |
890,398 |
875,250 |
875,250 | |||
Reconciliation to reflect effective rate: |
|||||||
Equity interest in associates and joint ventures |
(922,362) |
(922,362) |
(926,951) |
(926,951) | |||
Amortization of intangible asset acquired |
(13,528) |
- |
(23,177) |
- | |||
Interest on capital |
20,837 |
20,837 |
72,339 |
72,339 | |||
Other permanent additions (exclusions), net |
13,672 |
21,434 |
11,390 |
17,413 | |||
Tax base |
(10,983) |
10,307 |
8,851 |
38,049 | |||
Statutory rate |
9% |
25% |
9% |
25% | |||
Tax credit (debit) |
988 |
(2,577) |
(797) |
(9,513) | |||
Recognized (unrecognized) tax credit, net |
(2,063) |
14,138 |
- |
- | |||
Total |
(1,075) |
11,562 |
(797) |
(9,513) | |||
Current |
(4,357) |
(15,840) |
- |
(70) | |||
Deferred |
3,282 |
27,402 |
(797) |
(9,443) | |||
Consolidated | |||||||
2016 |
2015 | ||||||
Social contribution |
Income tax |
Social contribution |
Income tax | ||||
Profit before taxes |
1,380,547 |
1,380,547 |
1,454,454 |
1,454,454 | |||
Reconciliation to reflect effective rate: |
|||||||
Equity interest in associates and joint ventures |
(311,414) |
(311,414) |
(216,885) |
(216,885) | |||
Amortization of intangible asset acquired |
48,649 |
62,756 |
84,484 |
108,797 | |||
Tax incentives - PIIT (*) |
(7,820) |
(7,820) |
- |
- | |||
Effect of presumed profit regime |
(175,110) |
(234,827) |
(186,546) |
(244,541) | |||
Adjustment of revenue from excess demand and excess reactive power |
119,272 |
119,272 |
117,374 |
117,374 | |||
Tax incentive - operating profit |
- |
(112,232) |
- |
(85,760) | |||
Other permanent additions (exclusions), net |
14,240 |
(16,243) |
42,310 |
59,450 | |||
Tax base |
1,068,364 |
880,040 |
1,295,193 |
1,192,890 | |||
Statutory rate |
9% |
25% |
9% |
25% | |||
Tax credit (debit) |
(96,153) |
(220,010) |
(116,567) |
(298,223) | |||
Recognized (unrecognized) tax credit, net |
(54,706) |
(130,621) |
(43,595) |
(120,792) | |||
Total |
(150,859) |
(350,631) |
(160,162) |
(419,015) | |||
Current |
(244,015) |
(623,183) |
(10,916) |
(1,944) | |||
Deferred |
93,156 |
272,552 |
(149,246) |
(417,071) |
(*) Technologic innovation program - PIIT
Amortization of intangible asset acquired – Refers to the nondeductible portion of amortization of intangible assets derived from the acquisition of investees. In the parent company, these amounts are classified in the line item of equity in subsidiaries, in conformity with ICPC 09 (R2) (Note 15).
Recognized (unrecognized) tax credit, net - the recognized tax credit refers to the amount of tax credit on tax loss carryforwards recorded as a result of review of projections of future profits. The unrecognized tax credit refers to losses generated for which currently there is no reasonable assurance that sufficient future taxable profits will be generated to absorb them.
9.6 Deferred income tax and social contribution recognized directly in Equity
The deferred income tax and social contribution recognized directly in equity (other comprehensive income) in 2016 and 2015 were as follows:
48
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | ||||||||
2016 |
2015 | |||||||
Social Contribution |
Income tax |
Social Contribution |
Income tax | |||||
Actuarial losses (gains) |
527,436 |
527,436 |
(84,635) |
(84,635) | ||||
Limits on the asset ceiling |
(8,738) |
(8,738) |
7,984 |
7,984 | ||||
Basis of calculation |
518,698 |
518,698 |
(76,651) |
(76,651) | ||||
Statutory rate |
9% |
25% |
9% |
25% | ||||
Calculated taxes |
(46,683) |
(129,675) |
6,899 |
19,163 | ||||
Limitation on recognition (reversal) of tax credits |
13,720 |
38,113 |
(3,959) |
(10,998) | ||||
Taxes recognized in other comprehensive income |
(32,963) |
(91,562) |
2,940 |
8,165 |
9.7 Unrecognized tax credits
As of December 31, 2016, the parent company has tax credits on tax loss carryforwards that were not recognized amounting to R$ 85,717 since at present there is no reasonable assurance of the generation of future taxable profits. This amount can be recognized in the future, according to the annual reviews of taxable profit projections.
Some subsidiaries have also income tax and social contribution credits on tax loss carryforwards that were not recognized because currently there is no reasonable assurance that sufficient future taxable profits will be generated to absorb them. At December 31, 2016, the main subsidiaries that have such income tax and social contribution credits are CPFL Renováveis (R$ 785,660), RGE Sul (R$ 272,820), Sul Geradora (R$ 72,596), CPFL Telecom (R$ 34,783), CPFL Jaguariúna (R$ 2,777) and CPFL Jaguari Geração (R$ 1,648). These tax losses can be carried forward indefinitely.
( 10 ) LEASES
The activities of provision services and lease of equipment for self-production of energy are carried out mainly by the subsidiary CPFL ESCO, which is the lessor, and the main risks and rewards of ownership of the assets are transferred to the lessees.
The essence of the transaction is to lease self-production equipment in order to serve customers that require higher consumption of electricity in peak hours (when tariffs are higher) and provide maintenance and operation services for such equipment.
The subsidiary constructs the power generation plant at the customer’s facilities. When the equipment enters into service, the customer makes monthly fixed payments and the revenue is recognized during the lease agreement period based on the agreement effective interest rate.
The investments made in these finance lease projects are recognized at the present value of the minimum lease payments and these payments are treated as amortization of the accounts receivable and the operating revenues are recognized in profit or loss for the year at the effective interest rate implicit in the lease over the lease term.
In 2016 these investments resulted in an operational revenue of R$ 17,156 (R$ 11,164 in 2015).
Consolidated |
|||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
||||||
Gross investment |
132,930 |
83,854 |
|||||
Unrealized finance income |
(63,108) |
(36,466) |
|||||
Present value of minimum lease payments |
69,822 |
47,388 |
|||||
Current |
19,281 |
12,883 |
|||||
Noncurrent |
50,541 |
34,504 |
|||||
Up to 1 year |
1 to 5 years |
Over 5 years |
Total | ||||
Gross investment |
27,455 |
59,640 |
45,835 |
132,930 | |||
Present value of minimum lease payments |
19,281 |
33,094 |
17,447 |
69,822 |
49
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
At December 31, 2016, there are no (i) unsecured residual values that benefit the lessor; (ii) provision for uncollectible minimum lease payments; (iii) contingent payments recognized as revenue during the period; or (iv) provision for impairment required.
( 11 ) CONCESSION FINANCIAL ASSET
Distribution |
Transmission |
Consolidated | |||
As of December 31, 2014 |
3,296,837 |
77,779 |
3,374,616 | ||
Current |
540,094 |
- |
540,094 | ||
Noncurrent |
2,756,744 |
77,779 |
2,834,522 | ||
Additions |
330,062 |
37,469 |
367,531 | ||
Transfers for intangible assets - extended concessions |
(537,198) |
- |
(537,198) | ||
Adjustment of expected cash flow |
414,800 |
- |
414,800 | ||
Adjustment - financial asset measured at amortized cost |
- |
11,400 |
11,400 | ||
Cash inputs - RAP |
- |
(3,257) |
(3,257) | ||
Disposals |
(20,788) |
- |
(20,788) | ||
As of December 31, 2015 |
3,483,713 |
123,391 |
3,607,104 | ||
Current |
- |
9,630 |
9,630 | ||
Noncurrent |
3,483,713 |
113,761 |
3,597,474 | ||
Business combination |
876,281 |
- |
876,281 | ||
Additions |
655,456 |
50,580 |
706,036 | ||
Adjustment of expected cash flow |
203,452 |
- |
203,452 | ||
Adjustment - financial asset measured at amortized cost |
- |
16,088 |
16,088 | ||
Cash inputs - RAP |
- |
(9,727) |
(9,727) | ||
Disposals |
(25,392) |
- |
(25,392) | ||
|
|||||
As of December 31, 2016 |
5,193,511 |
180,333 |
5,373,844 | ||
Current |
- |
10,700 |
10,700 | ||
Noncurrent |
5,193,511 |
169,633 |
5,363,144 |
The amount refers to the financial asset corresponding to the right established in the concession agreements of the energy distributors (measured at fair value) and transmitters (measured at amortized cost) to receive cash (i) in the distributor by compensation upon the return of the assets to the granting authority at the end of the concession, and (ii) the transmitter's right to receive cash throughout the concession through allowed annual revenue ("RAP").
For energy distributors, 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 expected cash flow receipts at fair value (new replacement value - “VNR” - note 4) is recognized as a balancing item to the operating income account (note 27) in the statement of profit or loss for the year (R$ 186,148 in 2016 and R$ 393,343 restated in 2015).
In 2015, the “Transfer to intangible assets” line records the impacts of the extension of the distribution concessions of subsidiaries CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Jaguari and CPFL Mococa, which transferred the amount of R$ 537,198 from the concession financial assets to intangible assets (note 15), corresponding to the right to explore the concession from July 2015 through June 2045. As the concession periods were renewed, the Company exchanged the unconditional right to receive cash at the end of the concession periods for additional concession periods of thirty years, that is, representing the exchange of the financial asset for an intangible asset to operate the concession.
For the energy transmitters, 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 during the remaining concession period, and the indemnity upon the reversal of assets to the granting
50
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
power. The adjustment of R$ 16,088 is recognized against other operating revenues and income (R$ 11,400 in 2015).
( 12 ) OTHER RECEIVABLES
Consolidated | ||||||||
Current |
Noncurrent | |||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | |||||
Advances - Fundação CESP |
7,533 |
10,567 |
- |
- | ||||
Advances to suppliers |
15,787 |
10,666 |
- |
- | ||||
Pledges, funds and restricted deposits |
106,925 |
649 |
533,719 |
433,014 | ||||
Orders in progress |
203,344 |
274,605 |
- |
- | ||||
Services rendered to third parties |
9,385 |
6,987 |
- |
- | ||||
Energy pre-purchase agreements |
- |
- |
27,302 |
31,375 | ||||
Collection agreements |
1,273 |
90,451 |
- |
- | ||||
Prepaid expenses |
65,668 |
61,602 |
20,942 |
19,579 | ||||
GSF Renegotiation |
12,722 |
8,724 |
28,935 |
29,392 | ||||
Receivables - Eletrobras |
213,552 |
341,781 |
- |
- | ||||
Receivables - Business combination |
- |
- |
- |
13,950 | ||||
Advances to employees |
15,940 |
12,509 |
- |
- | ||||
Indemnities for claims |
- |
49,937 |
- |
- | ||||
Others |
153,315 |
90,653 |
104,752 |
34,685 | ||||
(-) Allowance for doubtful debts (note 6) |
(27,992) |
(12,460) |
- |
(1,981) | ||||
Total |
777,451 |
946,670 |
715,650 |
560,014 |
Pledges, funds and restricted deposits: refer to guarantees offered for transactions conducted in the CCEE and short-term investments required by the subsidiaries’ loans agreements.
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 24).
Energy pre-purchase agreements: refer to prepayments made by subsidiaries, which will be settled with energy to be supplied in the future.
GSF Renegotiation: refers to the 2015 GSF premium paid in advance by the subsidiaries Ceran, CPFL Jaguari Geração (Paulista Lajeado) and CPFL Renováveis, related to the transfer of the hydrological risks to the Centralizing Account for Tariff Flag Resources (“CCRBT”), amortized as other operating expenses on a straight-line basis.
Receivables – Eletrobras: refer to: (i) low income subsidies totaling R$ 17,239 (R$ 18,190 at December 31, 2015), (ii) other tariff discounts granted to consumers amounting to R$ 164,396 (R$ 323,591 as of December 31, 2015), and (iii) tariff discounts – judicial injunctions totaling R$ 31,917 (note 27.4).
In 2016 the subsidiaries matched the receivables relating to Eletrobrás to the payables relating to the Energy Development Account (CDE) (note 24) amounting to R$ 869,717, of which (i) R$ 659,258 based on a judicial injunction obtained in May 2015, and (ii) R$ 201,249 authorized by Order No. 1,576/2016.
Indemnities for claims: refer to the amounts receivable from insurance companies as indemnities for claims occurred in subsidiaries of CPFL Renováveis, which were received in 2016.
51
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 13 ) INVESTMENTS
Parent company |
Consolidated | ||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||
Permanent equity interests - equity method |
|||||||
By equity method of the subsidiary |
5,811,894 |
6,178,637 |
1,482,533 |
1,235,832 | |||
Fair value of assets, net |
692,632 |
755,345 |
11,219 |
11,799 | |||
Advances for future capital increases |
1,355,520 |
- |
- |
- | |||
Goodwill |
6,054 |
6,054 |
- |
- | |||
Total |
7,866,100 |
6,940,036 |
1,493,753 |
1,247,631 |
13.1Permanent equity interests – equity method
The main information on investments in direct permanent equity interests is as follows:
Number of shares (thousand) |
December 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
2016 |
2015 | |||||||||||||
Investment |
Total assets |
Issued capital |
|
Shareholders' equity |
Profit or loss for the year |
Equity interest |
Share of profit (loss) of investees | |||||||||||
CPFL Paulista |
880,653 |
9,237,502 |
905,948 |
1,063,400 |
255,329 |
1,063,400 |
1,352,393 |
255,329 |
298,203 | |||||||||
CPFL Piratininga |
53,096,770 |
3,656,198 |
235,556 |
355,755 |
68,114 |
355,755 |
537,670 |
68,114 |
211,637 | |||||||||
CPFL Santa Cruz |
371,772 |
422,005 |
74,862 |
140,520 |
23,797 |
140,520 |
131,149 |
23,797 |
12,424 | |||||||||
CPFL Leste Paulista |
892,772 |
168,031 |
29,212 |
52,853 |
10,731 |
52,853 |
46,301 |
10,731 |
13,556 | |||||||||
CPFL Sul Paulista |
454,958 |
194,012 |
28,492 |
58,895 |
8,455 |
58,895 |
55,233 |
8,455 |
16,201 | |||||||||
CPFL Jaguari |
209,294 |
135,194 |
20,632 |
30,255 |
7,988 |
30,255 |
28,521 |
7,988 |
4,852 | |||||||||
CPFL Mococa |
117,199 |
113,270 |
16,004 |
33,824 |
9,198 |
33,824 |
29,205 |
9,198 |
6,679 | |||||||||
RGE |
1,019,790 |
4,219,445 |
1,213,180 |
1,614,320 |
102,647 |
1,614,320 |
1,580,807 |
102,647 |
145,804 | |||||||||
CPFL Geração |
205,492,020 |
7,037,210 |
1,043,922 |
2,158,384 |
401,148 |
2,158,384 |
2,169,922 |
401,148 |
240,520 | |||||||||
CPFL Jaguari Geração (*) |
40,108 |
46,947 |
40,108 |
45,099 |
6,655 |
45,099 |
42,729 |
6,655 |
6,670 | |||||||||
CPFL Brasil |
2,999 |
925,624 |
2,999 |
109,054 |
104,235 |
109,054 |
51,779 |
104,235 |
81,929 | |||||||||
CPFL Planalto (*) |
630 |
2,274 |
630 |
2,101 |
2,476 |
2,101 |
2,003 |
2,476 |
1,830 | |||||||||
CPFL Serviços |
1,509,882 |
175,161 |
50,143 |
97,968 |
(8,175) |
97,968 |
7,117 |
(8,175) |
(17,952) | |||||||||
CPFL Atende (*) |
13,991 |
25,869 |
13,991 |
17,150 |
5,833 |
17,150 |
17,373 |
5,833 |
7,776 | |||||||||
Nect (*) |
2,059 |
24,976 |
2,059 |
10,295 |
13,424 |
10,295 |
16,087 |
13,424 |
18,155 | |||||||||
CPFL Total (*) |
19,005 |
30,865 |
19,005 |
27,570 |
12,817 |
27,570 |
19,930 |
12,817 |
5,836 | |||||||||
CPFL Jaguariuna (*) |
3,156 |
1,657,416 |
3,156 |
1,656,161 |
(35,498) |
1,256,161 |
2,496 |
(35,498) |
(167) | |||||||||
CPFL Telecom |
55,420 |
51,211 |
55,420 |
(19,302) |
(33,333) |
(19,302) |
(33,969) |
(33,333) |
(60,718) | |||||||||
CPFL Centrais Geradoras (*) |
16,128 |
16,381 |
16,128 |
15,459 |
(958) |
15,459 |
19,972 |
(958) |
4,740 | |||||||||
CPFL ESCO |
48,164 |
99,742 |
48,164 |
61,543 |
5,926 |
61,543 |
66,038 |
5,926 |
35,194 | |||||||||
AUTHI (*) |
2,610 |
34,185 |
2,610 |
16,810 |
24,264 |
16,810 |
1,913 |
24,264 |
2,537 | |||||||||
Subtotal - by subsidiary's equity |
7,148,112 |
6,144,667 |
985,074 |
1,035,703 | ||||||||||||||
Amortization of fair value adjustments of assets |
- |
- |
(62,713) |
(108,754) | ||||||||||||||
Total |
7,148,112 |
6,144,667 |
922,362 |
926,951 | ||||||||||||||
Investment |
5,811,894 |
6,178,636 |
||||||||||||||||
Advances for future capital increases |
1,355,520 |
- |
||||||||||||||||
Allowance for equity investment losses |
(19,302) |
(33,969) |
(*) number of quotas
Fair value adjustments (value added) of net assets acquired in business combinations are classified under Investments in the parent company’s statement of income. The amortization of the fair value adjustments (value added) of net assets of R$ 62,713 (R$ 108,784 in 2015) is classified in the parent company’s statement of profit or loss in line item “equity in subsidiaries”, in conformity with ICPC 09 (R2).
As at December 31, 2016, the balances of advance for future capital increase comprised advances to the following subsidiaries: (i) R$ 1,299,520 to CPFL Jaguariúna, (ii) R$ 56,000 to CPFL Serviços; and (iii) R$ 29,000 to CPFL Telecom (allowance for equity investment losses).
The movements in investments in subsidiaries, in the parent company, in 2016 and 2015 are as follows:
52
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Equity in subsidiary |
||||||||||||||||
Investment |
Investment as of December 31, 2015 |
Capital increase |
Profit or loss |
Other comprehensive income |
Dividend and Interest on capital |
Advances for future capital increases |
Others |
Investment as of December 31, 2016 | ||||||||
CPFL Paulista |
1,352,393 |
- |
255,329 |
(260,666) |
(283,656) |
- |
- |
1,063,400 | ||||||||
CPFL Piratininga |
537,670 |
|
- |
68,114 |
(109,626) |
(140,404) |
- |
- |
355,755 | |||||||
CPFL Santa Cruz |
131,149 |
- |
23,797 |
- |
(14,427) |
- |
- |
140,520 | ||||||||
CPFL Leste Paulista |
46,301 |
- |
10,731 |
- |
(4,180) |
- |
- |
52,853 | ||||||||
CPFL Sul Paulista |
55,233 |
- |
8,455 |
- |
(4,793) |
- |
- |
58,895 | ||||||||
CPFL Jaguari |
28,521 |
- |
7,988 |
- |
(6,253) |
- |
- |
30,255 | ||||||||
CPFL Mococa |
29,205 |
- |
9,198 |
- |
(4,580) |
- |
- |
33,824 | ||||||||
RGE |
1,580,807 |
- |
102,647 |
(3,915) |
(65,218) |
- |
- |
1,614,320 | ||||||||
CPFL Geração |
2,169,922 |
- |
401,148 |
(9,531) |
(403,086) |
- |
(68) |
2,158,384 | ||||||||
CPFL Jaguari Geração |
42,729 |
- |
6,655 |
- |
(4,284) |
- |
- |
45,099 | ||||||||
CPFL Brasil |
51,779 |
- |
104,235 |
- |
(46,960) |
- |
- |
109,054 | ||||||||
CPFL Planalto |
2,003 |
- |
2,476 |
- |
(2,378) |
- |
- |
2,101 | ||||||||
CPFL Serviços |
7,117 |
43,026 |
(8,175) |
- |
- |
56,000 |
- |
97,968 | ||||||||
CPFL Atende |
17,373 |
- |
5,833 |
- |
(6,056) |
- |
- |
17,150 | ||||||||
Nect |
16,087 |
- |
13,424 |
- |
(19,216) |
- |
- |
10,295 | ||||||||
CPFL Total |
19,930 |
- |
12,817 |
- |
(5,178) |
- |
- |
27,570 | ||||||||
CPFL Jaguariuna |
2,496 |
80 |
(35,498) |
(10,438) |
- |
1,299,520 |
- |
1,256,161 | ||||||||
CPFL Telecom |
(33,969) |
19,000 |
(33,333) |
- |
- |
29,000 |
- |
(19,302) | ||||||||
CPFL Centrais Geradoras |
19,972 |
- |
(958) |
- |
(3,555) |
- |
- |
15,459 | ||||||||
CPFL ESCO |
66,038 |
- |
5,926 |
- |
(10,421) |
- |
- |
61,543 | ||||||||
AUTHI |
1,913 |
2,600 |
24,264 |
- |
(11,967) |
- |
- |
16,810 | ||||||||
6,144,668 |
64,706 |
985,074 |
(394,175) |
(1,036,612) |
1,384,520 |
(68) |
7,148,112 |
Capital increase (payment of capital) |
Equity in subsidiary |
||||||||||||
Investment |
Investment as of December 31, 2014 |
Profit or loss |
Other comprehensive income |
Dividend and Interest on capital |
Corporate restructuring |
Investment as of December 31, 2015 | |||||||
CPFL Paulista |
728,213 |
612,493 |
298,203 |
40,879 |
(327,395) |
- |
1,352,393 | ||||||
CPFL Piratininga |
479,686 |
|
15,511 |
211,637 |
32,263 |
(201,427) |
- |
537,670 | |||||
CPFL Santa Cruz |
132,353 |
- |
12,424 |
- |
(13,628) |
- |
131,149 | ||||||
CPFL Leste Paulista |
38,066 |
- |
13,556 |
- |
(5,321) |
- |
46,301 | ||||||
CPFL Sul Paulista |
44,375 |
- |
16,201 |
- |
(5,343) |
- |
55,233 | ||||||
CPFL Jaguari |
25,627 |
- |
4,852 |
- |
(1,958) |
- |
28,521 | ||||||
CPFL Mococa |
26,260 |
- |
6,679 |
- |
(3,734) |
- |
29,205 | ||||||
RGE |
1,300,685 |
250,000 |
145,804 |
(940) |
(114,742) |
- |
1,580,807 | ||||||
CPFL Geração |
2,035,286 |
- |
240,520 |
(6,654) |
(103,532) |
4,302 |
2,169,922 | ||||||
CPFL Jaguari Geração |
34,685 |
- |
6,670 |
- |
1,374 |
- |
42,729 | ||||||
CPFL Brasil |
65,508 |
- |
81,929 |
- |
(95,658) |
- |
51,779 | ||||||
CPFL Planalto |
1,633 |
- |
1,830 |
- |
(1,460) |
- |
2,003 | ||||||
CPFL Serviços |
23,013 |
- |
(17,952) |
- |
2,056 |
- |
7,117 | ||||||
CPFL Atende |
17,496 |
- |
7,776 |
- |
(7,899) |
- |
17,373 | ||||||
Nect |
9,458 |
- |
18,155 |
- |
(11,526) |
- |
16,087 | ||||||
CPFL Total |
24,417 |
- |
5,836 |
- |
(10,323) |
- |
19,930 | ||||||
CPFL Jaguariuna |
2,553 |
110 |
(167) |
- |
- |
- |
2,496 | ||||||
CPFL Telecom |
(293) |
27,043 |
(60,718) |
- |
- |
- |
(33,969) | ||||||
CPFL Centrais Geradoras |
22,439 |
- |
4,740 |
- |
(2,905) |
(4,302) |
19,972 | ||||||
CPFL ESCO |
409,385 |
(360,000) |
35,194 |
- |
(18,541) |
- |
66,038 | ||||||
AUTHI |
- |
10 |
2,537 |
(634) |
1,913 | ||||||||
5,420,845 |
545,167 |
1,035,705 |
65,547 |
(922,597) |
- |
6,144,669 |
In the consolidated financial statements, the investment balances correspond to the interest in the joint ventures accounted for by the equity method:
Share of equity |
Share of profit (loss) | |||||||
Joint ventures |
Dec. 31, 2016 |
Dec. 31, 2015 |
2016 |
2015 | ||||
Baesa |
175,914 |
166,150 |
9,853 |
2,508 | ||||
Enercan |
562,701 |
473,148 |
117,112 |
74,677 | ||||
Chapecoense |
537,170 |
449,049 |
117,451 |
77,487 | ||||
EPASA |
206,749 |
147,485 |
67,577 |
63,348 | ||||
Fair value adjustments of assets, net |
11,219 |
11,799 |
(579) |
(1,136) | ||||
1,493,753 |
1,247,631 |
311,414 |
216,885 |
13.2Fair value adjustments and goodwill
Fair value adjustments (value added) refer basically to the right to the concession, acquired through business combinations. The goodwill refers mainly to acquisitions of investments and is based on projections of future profits.
In the consolidated financial statements, these amounts are classified as Intangible Assets (note 15).
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
13.3Dividend and interest on capital receivable
At December 31, 2016 and 2015, the Company has the following amounts receivable from the subsidiaries below, relating to dividend and interest on capital:
Parent company | |||||||||||
Dividend |
Interest on capital |
Total | |||||||||
Subsidiary |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | |||||
CPFL Paulista |
- |
612,585 |
- |
52,383 |
- |
664,968 | |||||
CPFL Piratininga |
72,080 |
172,239 |
- |
27,084 |
72,080 |
199,323 | |||||
CPFL Santa Cruz |
- |
19,527 |
- |
7,517 |
- |
27,044 | |||||
CPFL Leste Paulista |
- |
3,220 |
- |
2,102 |
- |
5,321 | |||||
CPFL Sul Paulista |
8,641 |
3,848 |
1,986 |
1,986 |
10,627 |
5,834 | |||||
CPFL Jaguari |
6,115 |
1,152 |
- |
- |
6,115 |
1,152 | |||||
CPFL Mococa |
- |
2,499 |
- |
1,234 |
- |
3,734 | |||||
RGE |
24,672 |
67,815 |
- |
64,073 |
24,672 |
131,887 | |||||
CPFL Geração |
396,086 |
103,532 |
- |
- |
396,086 |
103,532 | |||||
CPFL Centrais Geradoras |
- |
1,185 |
- |
- |
- |
1,185 | |||||
CPFL Jaguari Geração |
1,664 |
1,667 |
- |
- |
1,664 |
1,667 | |||||
CPFL Brasil |
86,020 |
41,176 |
1,650 |
1,601 |
87,671 |
42,777 | |||||
CPFL Planalto |
- |
458 |
- |
- |
- |
458 | |||||
CPFL Serviços |
- |
12,026 |
- |
- |
- |
12,026 | |||||
CPFL Atende |
1,953 |
- |
554 |
- |
2,507 |
- | |||||
Nect |
5,600 |
4,539 |
- |
- |
5,600 |
4,539 | |||||
CPFL Total |
- |
5,589 |
- |
- |
- |
5,589 | |||||
CPFL Telecom |
- |
- |
- |
- |
- |
- | |||||
CPFL ESCO |
9,565 |
9,565 |
16,325 |
6,354 |
25,891 |
15,920 | |||||
AUTHI |
10,064 |
634 |
- |
- |
10,064 |
634 | |||||
622,463 |
1,063,256 |
20,516 |
164,334 |
642,978 |
1,227,590 |
In the consolidated financial statements, the balance of dividend and interest on capital receivable at December 31, 2016 is R$ 73,328 (R$ 91,392 at December 31, 2015) related to joint ventures.
After decisions by the Annual and Extraordinary General Meetings (AGMs/EGMs) of its subsidiaries, in the first half of 2016 the Company recognized R$ 278,520 as dividend and interest on capital receivable for 2015. The subsidiaries also declared in 2016: (i) interim dividends and interest on capital of R$ 590,196, related to interim income of 2016 and (ii) R$ 164,771 as minimum mandatory dividend receivable related to 2016.
Of the amounts recognized as receivables, R$ 1,606,073 was paid to the Company by the subsidiaries in 2016.
13.4Business combinations
13.4.1 Acquisition of AES Sul Distribuidora Gaúcha de Energia S.A. (“AES Sul”)
On June 16, 2016, the Company disclosed in a Significant Event Notice that it had entered into an agreement for acquisition 100% of the shares of AES Sul Distribuidora Gaúcha de Energia S.A. (“AES Sul”), currently RGE Sul, through its wholly-owned subsidiary CPFL Jaguariúna Ltda., shares until then held by AES Guaíba II Empreendimentos Ltda. (“seller”), indirect wholly-owned subsidiary of The AES Corporation.
On August 5, 2016, the transaction was approved by the CADE (Brazilian antitrust agency) and, on September 9, 2016, authorized by ANEEL.
The acquisition was completed on October 31, 2016 (“acquisition date”), after all the conditions precedent of the transaction were met, date in which the control of RGE Sul was taken over by CPFL Jaguariúna and the payment was made. This acquisition resulted in a business combination in accordance with CPC 15 (R1) / IFRS 3 (R) – “Business Combination” since CPFL Jaguariúna started holding the control of RGE Sul after the payment was made.
The consideration initially transferred was R$ 1,698,455, paid in cash equivalents, in a lump sum, on the date in which the share acquisition agreement was entered into. This consideration was subsequently adjusted for changes in working capital and net debt of RGE Sul, occurred in the period between December 31, 2015 and the acquisition date, as per the amendment to the agreement. The final value of the consideration, considering the price adjustment, was R$ 1,591,839.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
RGE Sul is a publicly traded company engaged in providing public services of electricity distribution in any forms, and these activities are regulated by the ANEEL, linked to the Ministry of Mines and Energy. Additionally, RGE Sul is authorized to participate in programs that aim at other forms of energy, technology and services, including exploration of activities derived directly or indirectly from the use of assets, rights and technologies owned by it.
Its administrative headquarters are located at Rua Dona Laura, 320 – 6th and 10th floors - Rio Branco, Porto Alegre, State of Rio Grande do Sul, Brazil.
RGE Sul holds the concession for operation of its activities for a period of thirty years, up to November 5, 2027, its concession area comprises 118 municipalities of the State of Rio Grande do Sul, located between the metropolitan region of Porto Alegre and the borders with Uruguay and Argentina, serving approximately 1.3 million consumers (information not audited by the independent auditors).
The acquisition of RGE Sul is in line with the Company’s growth strategy, especially in the Distribution segment, with potential gains of scale for its operations. The Company also expects to obtain important synergies relating to the concession area of RGE Sul since another important distributor of the Group (RGE) holds concession in the state of Rio Grande do Sul.
Additional information to the acquisition (acquisition of RGE Sul)
a) Consideration
| ||
RGE Sul | ||
Consideration paid, net |
||
Consideration directly transferred to prior shareholders |
1,698,455 | |
Reimbursements due to adjustments related to agreement clauses |
(106,616) | |
1,591,839 |
b) Assets acquired and liabilities recognized on the acquisition date
The total amount paid on the transaction was allocated on the acquisition date to the assets acquired and liabilities assumed at fair values, including the intangible assets related to the concession exploration right, which started to be amortized over the remaining concession period that will end in November 2027. Consequently, as the entire amount paid was provisionally allocated to assets identified and liabilities assumed, no residual value was allocated as goodwill on this transaction.
The allocation of the amount paid for the assets and liabilities acquired was made with amounts provisionally calculated for the financial statements as of October 31, 2016, based on analyses conducted by Management itself. Considering the complexity involved in the fair value measurement process, these values will be confirmed after the conclusion of the appraisal report to be prepared by an independent appraiser. The costs related to the acquisition, recognized as expenses in the profit or loss for the year, totaled R$ 6,692.
The initial recording of the acquisition of RGE Sul was provisionally calculated at the end of the consolidated financial statements reporting period based on analyses conducted by Management until the economic and financial appraisal report is completed by the independent appraiser. The allocation of the price paid for the fair value of the assets and liabilities acquired is as follows:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
October 31, 2016 | ||
Consolidated | ||
(preliminary) | ||
Current assets |
||
Cash and cash equivalents |
95,164 | |
Consumers, concessionaries and licensees |
580,945 | |
Other current assets |
89,548 | |
Noncurrent assets |
||
Consumers, concessionaries and licensees |
54,111 | |
Deferred tax assets |
204,176 | |
Concession financial asset |
876,281 | |
Intangible assets - Distribution infrastructure |
1,456,472 | |
Intangible acquired in this business combination |
413,796 | |
Other noncurrent assets |
147,784 | |
Current liabilities |
||
Trade payables |
(479,031) | |
Debentures and borrowings |
(24,672) | |
Taxes, fees and contributions |
(65,198) | |
Sector financial liability |
(29,246) | |
Regulatory charges |
(60,787) | |
Other current liabilities |
(114,552) | |
Noncurrent liabilities |
||
Debentures and borrowings |
(1,131,949) | |
Sector financial liability |
(64,935) | |
Provision for tax, civil and labor risks |
(223,383) | |
Other noncurrent liabilities |
(132,686) | |
Net assets acquired |
1,591,839 | |
Goodwill arising on acquisition |
||
Consideration paid, net |
1,591,839 | |
(-) Fair value of identifiable net assets acquired |
1,591,839 | |
Goodwill |
- |
The fair values presented above are provisional, and the confirmation of the amounts is pending until the economic and financial appraisal report, which is being prepared by an independent appraisal, is received:
· Consumers, Concessionaires and Licensees R$ 635,056
· Concession financial asset: R$ 876,281
· Intangible asset of the distribution infrastructure: R$ 1,456,472
· Indemnification asset: R$ 30,000
· Intangible acquired in a business combination: R$ 413,976
· Contingent liabilities: R$ 223,283
The fair values of the concession financial asset and distribution infrastructure intangible assets was calculated based on the best estimate of the fair value of the asset base (Regulatory Remuneration Base – “BRR”) of RGE Sul, considering the same assumptions adopted when preparing the report for Periodic Tariff Review purposes.
Management expects to have the aforementioned report completed by October 2017.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Moreover, no fair value adjustment of assets and liabilities was recognized in the period between the acquisition date and the consolidated financial statements reporting date.
c) Contingent consideration
The share purchase agreement does not contain any clauses related to the contingent consideration to be paid to the seller.
d) Indemnification assets
The agreement for purchase of 100% of the shares of RGE Sul establishes that CPFL Jaguariúna can be indemnified, up to the limit of 15% of the total amount paid, if in the future it suffers any loss, conditioned to the compliance with specific clauses derived from matters originated in the seller or in any of its subsidiaries established in the share purchase agreement. There are also specific clauses for two lawsuits (regulatory and environmental) in which the seller undertakes to indemnify fully CPFL Jaguariúna in case of cash outflows related to the lawsuits, and CPFL Jaguariúna undertakes to pass on to the seller any cash flows related to these lawsuits that come to be received in the future in order to neutralize any effect on these two specific matters.
On the acquisition date, an indemnification asset of R$ 30,000 was recognized, relating to the environmental lawsuit (see item “e” below). This indemnification asset was recognized at the same amount of the fair value attributed to this contingent liability, which was also recognized on the acquisition date.
No indemnification asset was recognized for the regulatory lawsuit for which there is a specific indemnification clause since no contingent liability related to this lawsuit was recognized on the acquisition date.
e) Contingent liabilities recognized
We present below the contingent liabilities provisionally recognized in the amount of R$ 145,443 on the acquisition date:
RGE Sul | ||
October 31,2016 | ||
Labor lawsuits (i) |
53,958 | |
Civil lawsuits (i) |
53,174 | |
Regulatory lawsuits (i) |
5,850 | |
Environmental lawsuits (ii) |
30,000 | |
Tax lawsuits (i) |
2,461 | |
Preliminary contingent liabilities |
145,443 | |
Provisions recognized in the subsidiary |
77,940 | |
Provisions for tax, civil and labor risks |
223,383 |
i. These amounts represent the fair values of the labor, civil, regulatory and tax lawsuits for which the likelihood of loss attributed on the acquisition date is “possible” or “remote”. Considering that the settlement of these lawsuits depends on third parties, either at the judicial or administrative level, it is not possible to estimate a schedule for the occurrence of any cash outflows associated with these contingent liabilities. No indemnification asset was recognized for these contingent liabilities.
ii. Refers to the fair value attributed to a class action lawsuit for which the likelihood of loss attributed by Management, together with its legal counsel, is “possible” on the acquisition date. This class action lawsuit seeks compensation for environmental damages occurred in a woodworking and pole manufacture unit that was operated, between 1997 and 2005, by RGE Sul together with its associate at that time AES Florestal. Until 1997, this unit was operated by the former concessionaire, Companhia Estadual de Energia Elétrica (CEEE). An indemnification asset in the same amount was recognized on the acquisition date.
f) Receivables acquired
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The fair value of the receivables acquired is R$ 635,056. The gross contractual amount of the receivables is R$ 703,672 and, based on Management’s best estimates R$ 68,616 are not expected to be received and represent, therefore, the portion that is expected to represent impairment loss.
g) Net cash outflow on the acquisition
Consideration paid, net |
1,591,839 | |
(-) Cash and cash equivalents balances acquired |
(95,164) | |
Cash and cash equivalents transferred, net |
1,496,675 |
h) Financial information on the acquiree
i. On the net operating revenue and profit of the subsidiary acquired included in the consolidated financial statements in 2016:
2016 | ||||
Operational revenues, net |
Profit or loss, net | |||
RGE Sul (November 1 to December 31, 2016) |
522,677 |
(27,687) |
The Company’s consolidated financial statements for the year ended December 31, 2016 include two months of operations of RGE Sul.
ii. Consolidated financial information on the net operating revenue and profit for 2016 had the acquisition occurred on January 1, 2016.
2016 | ||||
Operational revenues, net |
Profit or loss, net | |||
CPFL Energia Consolidated |
19,112,089 |
879,057 | ||
Pro-forma adjustments (*) |
2,365,090 |
(403,839) | ||
Total |
21,477,179 |
475,218 |
(*) The pro forma adjustments in the operating net revenue consider the addition of the subsidiary’s net operating revenue for the period in which it was not a subsidiary and, consequently, was not consolidated by the Company. The pro form adjustments to profit for the year consider: (i) addition of the subsidiary’s result for the period in which it was not consolidated by the Company; (ii) inclusion of the amortization of the intangible asset acquired on the business combination and the amortization of the fair value of the distribution infrastructure intangible asset, had the acquisition occurred on January 1, 2016.
13.5Noncontrolling interests and joint ventures
The disclosure of interests in subsidiaries, in accordance with IFRS 12 and CPC 45, is as follows:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
13.5.1 Movements in noncontrolling interests
CERAN |
CPFL Renováveis |
Paulista Lajeado |
Total | |||||
At December 31, 2014 |
214,454 |
2,171,911 |
67,427 |
2,453,794 | ||||
Equity interests and voting capital |
35.00% |
48.39% |
40.07% |
|||||
Equity attributable to noncontrolling interests |
25,990 |
(20,611) |
4,958 |
10,337 | ||||
Dividends |
(6,173) |
(2,818) |
843 |
(8,147) | ||||
Other movements |
- |
7 |
(48) |
(41) | ||||
At December 31, 2015 |
234,271 |
2,148,490 |
73,182 |
2,455,942 | ||||
Equity interests and voting capital |
35.00% |
48.39% |
40.07% |
|||||
Equity attributable to noncontrolling interests |
38,621 |
(65,311) |
4,862 |
(21,828) | ||||
Dividends |
(9,172) |
(22,751) |
1,096 |
(30,827) | ||||
Other movements |
- |
535 |
(1,176) |
(641) | ||||
At December 31, 2016 |
263,719 |
2,060,963 |
77,966 |
2,402,648 | ||||
Equity Interests and voting capital |
35.00% |
48.40% |
40.07% |
13.5.2 Summarized financial information of subsidiaries that have interests of noncontrolling shareholders
Summarized financial information on subsidiaries that have interests of noncontrolling shareholders at December 31, 2016 and 2015 is as follows:
December 31, 2016 |
December 31, 2015 | |||||||||||
|
CERAN |
CPFL Renováveis |
Paulista Lajeado |
CERAN |
CPFL Renováveis |
Paulista Lajeado | ||||||
Current assets |
288,538 |
1,398,797 |
39,429 |
203,205 |
1,296,420 |
39,916 | ||||||
Cash and cash equivalents |
238,241 |
908,982 |
24,688 |
154,845 |
871,503 |
30,907 | ||||||
Noncurrent assets |
927,948 |
11,066,086 |
122,991 |
997,049 |
10,607,682 |
126,147 | ||||||
Current liabilities |
121,646 |
1,313,466 |
9,586 |
128,920 |
1,174,865 |
16,515 | ||||||
Borrowings and debentures |
60,162 |
889,981 |
324 |
62,279 |
854,042 |
392 | ||||||
Other financial liabilities |
20,800 |
85,523 |
1,056 |
39,068 |
75,716 |
6,497 | ||||||
Noncurrent liabilities |
341,356 |
6,713,610 |
36,404 |
401,988 |
6,425,440 |
40,908 | ||||||
Borrowings and debentures |
254,732 |
5,517,890 |
36,167 |
318,864 |
5,167,017 |
40,908 | ||||||
Other financial liabilities |
86,624 |
633 |
- |
83,124 |
633 |
- | ||||||
Equity |
753,484 |
4,437,807 |
116,431 |
669,346 |
4,303,797 |
108,639 | ||||||
Equity attributable to owners of the Company |
753,484 |
4,324,589 |
116,431 |
669,346 |
4,176,063 |
108,639 | ||||||
Equity attributable to noncontrolling interests |
- |
113,218 |
- |
- |
127,734 |
- | ||||||
2016 |
2015 | |||||||||||
CERAN |
CPFL Renováveis |
Paulista Lajeado |
CERAN |
CPFL Renováveis |
Paulista Lajeado | |||||||
Net operating revenue |
301,179 |
1,646,589 |
30,820 |
281,374 |
1,499,356 |
31,225 | ||||||
Operational costs and expenses |
(67,242) |
(653,459) |
(27,404) |
(71,033) |
(498,005) |
(22,400) | ||||||
Depreciation and amortization |
(48,082) |
(553,169) |
(3) |
(45,986) |
(540,578) |
(7) | ||||||
Interest income |
28,232 |
112,389 |
2,728 |
17,532 |
115,639 |
2,243 | ||||||
Interest expense |
(36,485) |
(591,626) |
(1,383) |
(40,801) |
(551,407) |
(1,206) | ||||||
Income tax expense |
(55,596) |
(46,311) |
(1,137) |
(38,381) |
(49,221) |
(2,843) | ||||||
Profit (loss) for the year |
110,345 |
(143,706) |
12,134 |
74,256 |
(48,717) |
12,374 | ||||||
Attributable to owners of the Company |
110,345 |
(151,900) |
12,134 |
74,256 |
(54,447) |
12,374 | ||||||
Attributable to noncontrolling interests |
- |
8,195 |
- |
- |
5,730 |
- |
13.5.3 Joint ventures
Summarized financial information on joint ventures at December 31, 2016 and 2015 is as follows:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
December 31, 2016 |
December 31, 2015 | |||||||||||||||
Enercan |
Baesa |
Chapecoense |
Epasa |
Enercan |
Baesa |
Chapecoense |
Epasa | |||||||||
Current assets |
405,874 |
54,703 |
577,296 |
257,082 |
292,133 |
105,198 |
356,493 |
305,371 | ||||||||
Cash and cash equivalents |
288,956 |
18,946 |
280,083 |
85,709 |
112,387 |
75,097 |
239,192 |
120,307 | ||||||||
Noncurrent assets |
1,174,869 |
1,117,120 |
2,892,371 |
562,462 |
1,253,002 |
1,174,604 |
3,079,957 |
600,413 | ||||||||
Current liabilities |
196,760 |
116,192 |
391,402 |
172,401 |
264,721 |
188,077 |
447,142 |
336,794 | ||||||||
Borrowings and debentures |
87,560 |
87,032 |
137,753 |
35,555 |
86,724 |
111,422 |
136,323 |
57,269 | ||||||||
Other financial liabilities |
7,848 |
24,119 |
78,372 |
62,762 |
81,121 |
70,793 |
115,360 |
122,921 | ||||||||
Noncurrent liabilities |
229,085 |
352,142 |
2,024,989 |
259,559 |
309,317 |
427,284 |
2,108,820 |
292,490 | ||||||||
Borrowings and debentures |
153,020 |
63,196 |
1,292,239 |
218,891 |
240,336 |
155,826 |
1,404,553 |
251,914 | ||||||||
Other financial liabilities |
26,254 |
276,600 |
730,494 |
28,686 |
24,759 |
260,042 |
703,556 |
40,381 | ||||||||
Equity |
1,154,897 |
703,489 |
1,053,275 |
387,584 |
971,097 |
664,442 |
880,488 |
276,500 | ||||||||
2016 |
2015 | |||||||||||||||
Enercan |
Baesa |
Chapecoense |
Epasa |
Enercan |
Baesa |
Chapecoense |
Epasa | |||||||||
Net operating revenue |
564,966 |
239,730 |
789,732 |
548,145 |
523,055 |
427,561 |
729,511 |
949,246 | ||||||||
Operational costs and expenses |
(137,159) |
(76,985) |
(140,212) |
(328,093) |
(196,480) |
(260,004) |
(149,219) |
(729,994) | ||||||||
Depreciation and amortization |
(53,888) |
(51,429) |
(126,770) |
(35,075) |
(53,733) |
(55,342) |
(130,652) |
(32,413) | ||||||||
Interest income |
31,602 |
9,115 |
35,113 |
10,329 |
15,742 |
8,426 |
28,235 |
11,275 | ||||||||
Interest expense |
(36,275) |
(23,961) |
(125,192) |
(23,128) |
(56,049) |
(22,555) |
(132,625) |
(29,778) | ||||||||
Income tax expense |
(121,223) |
(20,401) |
(106,683) |
(28,011) |
(76,795) |
(5,165) |
(76,880) |
(32,869) | ||||||||
Profit (loss) for the year |
240,363 |
39,405 |
212,294 |
126,665 |
153,269 |
10,028 |
151,935 |
118,734 | ||||||||
Equity interests and voting capital |
48.72% |
25.01% |
51.00% |
53.34% |
48.72% |
25.01% |
51.00% |
53.34% |
Although holding more than 50% 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 mandatory minimum dividend of 25% without the prior consent of the BNDES.
13.5.4 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 operation of the hydropower plant belong to Furnas Centrais Elétricas S.A. In order to maintain these assets operating jointly with Furnas, 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 (information on energy capacity measures not audited by the independent auditors).
13.6Capital increase and decrease
13.6.1 CPFL Serviços and CPFL Telecom
At the Extraordinary General Meeting (EGM) held on April 26, 2016, the capital increases by the Company in subsidiaries CPFL Serviços and CPFL Telecom, in the amounts of R$ 43,026 and R$ 19,000 respectively, were approved.
13.6.2 CPFL Jaguariúna and Authi
At the Executive Officers Meeting held on April 27, 2016, the capital increases by the Company in subsidiaries CPFL Jaguariúna and Authi, in the amounts of R$ 80 and R$ 2,600, respectively, were approved.
60
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 14 ) PROPERTY, PLANT AND EQUIPMENT
Consolidated | |||||||||||||||
Land |
Reservoirs, dams and water mains |
Buildings, construction and improvements |
Machinery and equipment |
Vehicles |
Furniture and fittings |
In progress |
Total | ||||||||
As of December 31, 2014 |
182,316 |
1,185,614 |
1,517,475 |
5,832,005 |
32,328 |
11,660 |
388,088 |
9,149,486 | |||||||
Historical cost |
197,393 |
1,637,812 |
1,976,212 |
7,521,804 |
43,081 |
22,462 |
388,088 |
11,786,852 | |||||||
Accumulated depreciation |
(15,077) |
(452,199) |
(458,737) |
(1,689,799) |
(10,753) |
(10,802) |
- |
(2,637,366) | |||||||
Additions |
- |
- |
168 |
512 |
- |
- |
583,538 |
584,216 | |||||||
Disposals |
(1,354) |
(414) |
(4,093) |
(21,773) |
(558) |
(284) |
- |
(28,477) | |||||||
Transfers |
2,338 |
140 |
61,615 |
217,462 |
10,436 |
578 |
(292,569) |
- | |||||||
Reclassification - cost |
(212) |
328,101 |
(499,943) |
172,169 |
22 |
(137) |
- |
- | |||||||
Transfers from/to other assets - cost |
(24) |
2 |
(6,548) |
6,598 |
(1) |
(186) |
630 |
471 | |||||||
Depreciation |
(6,257) |
(68,562) |
(50,716) |
(370,076) |
(6,343) |
(1,926) |
- |
(503,881) | |||||||
Write-off of depreciation |
- |
139 |
204 |
3,572 |
379 |
186 |
- |
4,480 | |||||||
Reclassification - depreciation |
- |
(68,775) |
68,711 |
151 |
- |
(88) |
- |
- | |||||||
Transfers from/to other assets - depreciation |
- |
- |
- |
35 |
- |
- |
- |
35 | |||||||
Impairment |
- |
- |
(10,891) |
(16,565) |
(32) |
(106) |
(5,519) |
(33,112) | |||||||
As of December 31, 2015 |
176,807 |
1,376,246 |
1,075,982 |
5,824,089 |
36,230 |
9,696 |
674,166 |
9,173,217 | |||||||
Historical cost |
198,141 |
1,965,641 |
1,516,228 |
7,878,838 |
52,947 |
22,323 |
674,166 |
12,308,285 | |||||||
Accumulated depreciation |
(21,334) |
(589,395) |
(440,246) |
(2,054,749) |
(16,717) |
(12,627) |
- |
(3,135,068) | |||||||
Additions |
- |
171 |
- |
236 |
- |
- |
1,084,612 |
1,085,019 | |||||||
Disposals |
- |
- |
(421) |
(6,705) |
(1,249) |
(779) |
(26,696) |
(35,850) | |||||||
Transfers |
8,325 |
95,799 |
177,902 |
1,160,915 |
22,467 |
456 |
(1,465,864) |
- | |||||||
Reclassification - cost |
(137) |
(1,434) |
(40,852) |
52,205 |
12 |
(39) |
(1,219) |
8,536 | |||||||
Transfers from/to other assets - cost |
- |
3 |
- |
(5,025) |
(167) |
(452) |
(10,523) |
(16,164) | |||||||
Depreciation |
(7,632) |
(75,659) |
(54,035) |
(377,529) |
(8,888) |
(1,676) |
- |
(525,420) | |||||||
Write-off of depreciation |
(7) |
1 |
62 |
4,694 |
480 |
254 |
- |
5,484 | |||||||
Reclassification - depreciation |
(1,211) |
(967) |
(5,374) |
(1,002) |
7 |
11 |
- |
(8,536) | |||||||
Transfers from/to other assets - depreciation |
- |
3 |
(46) |
1,374 |
150 |
91 |
- |
1,572 | |||||||
Impairment |
- |
- |
- |
- |
- |
- |
(5,221) |
(5,221) | |||||||
Business combination |
- |
- |
- |
2,140 |
27,175 |
- |
1,049 |
30,364 | |||||||
As of December 31, 2016 |
176,145 |
1,394,162 |
1,153,220 |
6,655,391 |
76,217 |
7,562 |
250,302 |
9,712,998 | |||||||
Historical cost |
206,330 |
2,060,191 |
1,652,934 |
9,066,408 |
106,920 |
21,507 |
250,302 |
13,364,592 | |||||||
Accumulated depreciation |
(30,185) |
(666,028) |
(499,714) |
(2,411,017) |
(30,704) |
(13,945) |
- |
(3,651,594) | |||||||
Average depreciation rate 2016 |
3.86% |
3.69% |
3.30% |
4.19% |
14.31% |
10.01% |
|||||||||
Average depreciation rate 2015 |
3.86% |
3.66% |
3.46% |
4.62% |
14.24% |
10.49% |
61
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
In the financial statements, the balance of construction in progress refers mainly to works in progress of the operating subsidiaries and/or those under development, especially for CPFL Renováveis’ projects, which has construction in progress of R$ 182,181 in December 31, 2016 (R$ 612,083 in December 31, 2015).
The amounts recognized in line item “Reclassification – cost”, related mainly to the subsidiary CPFL Renováveis, refer to transfers for adjustments between groups of property, plant and equipment and do not change the amount of the depreciation expense recognized in the period since their respective useful lives were not changed.In accordance with IAS 23 / CPC 20 (R1), the interest on borrowings taken by subsidiaries to finance the works is capitalized during the construction phase. During 2016, R$ 54,733 was capitalized in the consolidated financial statements (R$ 34,212 in 2015) at a rate of 11.70% (11.16% in 2015).
In the consolidated financial statements, depreciation expenses are recognized in the statement of profit or loss in line item “depreciation and amortization” (note 29).
At December 31, 2016, the total amount of property, plant and equipment pledged as collateral for borrowings, as mentioned in note 17, is approximately R$ 4,198,472, mainly relating to the subsidiary CPFL Renováveis (R$ 4,157,894).
14.1 Impairment testing
For all the reporting years the Company assesses whether there are indicators of impairment of its assets that would require an impairment test. The assessment was based on external and internal information sources, taking into account fluctuations in interest rates, changes in market conditions and other factors.
As the Brazilian economic conditions have deteriorated even further during 2016, a complement of R$ 5,221 was recorded in subsidiary CPFL Telecom, relating to the provision for impairment of cash-generating units (in 2015, R$ 31,284 in the subsidiary CPFL Telecom and R$ 1,828 in subsidiary CPFL Total). This loss was recognized in the statement of profit or loss in line item “Other operating expenses” (note 29).
Such provisions for impairment were based on the assessment of the cash-generating units comprising fixed assets of those subsidiaries which, separately, are not featured as an operating segment (note 31). Additionally, during 2016 and 2015 the Company did not change the form of aggregation of the assets for identification of these cash-generating units.
Fair value was measured by using the cost approach, a valuation technique that reflects the amount that would be required at present to replace the service capacity of an asset (normally referred to as the cost of substitution or replacement). A provision for impairment of assets was recognized owing to the unfavorable scenario for the business of these subsidiaries and it was calculated based on their fair values, net of selling expenses.
62
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 15 ) 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, 2014 |
6,115 |
4,658,210 |
3,734,606 |
414,574 |
30,162 |
86,503 |
8,930,171 | ||||||
Historical cost |
6,152 |
7,441,935 |
9,526,355 |
414,574 |
35,840 |
195,577 |
17,620,433 | ||||||
Accumulated amortization |
(37) |
(2,783,725) |
(5,791,748) |
- |
(5,678) |
(109,074) |
(8,690,262) | ||||||
Additions |
- |
- |
- |
879,851 |
- |
9,298 |
889,149 | ||||||
Amortization |
- |
(302,665) |
(460,774) |
- |
(1,419) |
(12,604) |
(777,462) | ||||||
Transfer - intangible assets |
- |
- |
512,912 |
(512,912) |
- |
- |
- | ||||||
Transfer - financial asset |
- |
- |
387 |
(330,449) |
- |
- |
(330,062) | ||||||
Transfers from concession financial asset - extended concessions |
- |
- |
488,635 |
48,563 |
- |
- |
537,198 | ||||||
Disposal and transfer - other assets |
- |
- |
(26,584) |
- |
- |
(6,228) |
(32,813) | ||||||
Impairment losses |
- |
- |
- |
- |
- |
(5,844) |
(5,844) | ||||||
As of December 31, 2015 |
6,115 |
4,355,546 |
4,249,182 |
499,627 |
28,743 |
71,125 |
9,210,338 | ||||||
Historical cost |
6,152 |
7,441,902 |
10,348,857 |
499,627 |
35,840 |
192,626 |
18,525,004 | ||||||
Accumulated Amortization |
(37) |
(3,086,356) |
(6,099,675) |
- |
(7,097) |
(121,500) |
(9,314,665) | ||||||
Additions |
- |
- |
- |
1,213,924 |
- |
10,507 |
1,224,431 | ||||||
Amortization |
- |
(255,110) |
(498,891) |
- |
(1,419) |
(12,438) |
(767,858) | ||||||
Transfer - intangible assets |
- |
- |
610,032 |
(610,032) |
- |
- |
- | ||||||
Transfer - financial asset |
- |
- |
9,452 |
(664,908) |
- |
- |
(655,456) | ||||||
Disposal and transfer - other assets |
- |
(7,283) |
(48,346) |
- |
- |
(7,410) |
(63,040) | ||||||
Business combinations |
- |
413,796 |
1,229,074 |
227,398 |
- |
- |
1,870,268 | ||||||
Impairment losses |
- |
(40,433) |
- |
- |
- |
(2,637) |
(43,070) | ||||||
As of December 31, 2016 |
6,115 |
4,466,516 |
5,550,502 |
666,008 |
27,324 |
59,147 |
10,775,613 | ||||||
Historical cost |
6,152 |
7,602,941 |
11,987,109 |
666,008 |
35,840 |
183,138 |
20,481,188 | ||||||
Accumulated Amortization |
(37) |
(3,136,425) |
(6,436,607) |
- |
(8,516) |
(123,990) |
(9,705,575) |
In the consolidated 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 29).
As mentioned in note 11, in 2015 the subsidiaries CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Jaguari and CPFL Mococa made a transfer from concession financial assets to intangible assets in the amount of R$ 537,198, recognized in line item “Extension of concessions – transfer of financial asset”, whose amortization for the period from July to December 2015 was R$ 27,939.
In accordance with IAS 23 / CPC 20 (R1), the interest on borrowings taken by subsidiaries is capitalized for qualifying intangible assets. In the consolidated financial statements, in 2016, R$ 13,349 was capitalized (R$ 11,358 in 2015) at a rate of 7.74% p.a. (7.53% p.a. in 2015).
15.1Intangible 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:
63
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | |||||||||||
December 31, 2016 |
2015 |
2016 |
2015 | ||||||||
Historical cost |
Accumulated amortization |
Net value |
Net value |
Annual amortization rate | |||||||
Intangible asset - acquired in business combinations |
|||||||||||
Intangible asset acquired, not merged |
|||||||||||
Parent company |
|||||||||||
CPFL Paulista |
304,861 |
(197,018) |
107,843 |
117,829 |
3.28% |
4.78% | |||||
CPFL Piratininga |
39,065 |
(23,746) |
15,319 |
16,614 |
3.31% |
4.50% | |||||
RGE |
3,150 |
(1,693) |
1,457 |
1,590 |
4.24% |
5.51% | |||||
CPFL Geração |
54,555 |
(33,643) |
20,912 |
22,757 |
3.38% |
5.04% | |||||
CPFL Jaguari Geração |
7,896 |
(3,582) |
4,314 |
4,584 |
3.41% |
6.36% | |||||
409,527 |
(259,682) |
149,845 |
163,373 |
||||||||
Subsidiaries |
|||||||||||
CPFL Renováveis |
3,717,093 |
(722,065) |
2,995,028 |
3,195,215 |
5.39% |
4.35% | |||||
RGE Sul |
101,055 |
(1,531) |
99,524 |
- |
9.09% |
- | |||||
RGE |
618 |
(145) |
473 |
516 |
7.06% |
7.06% | |||||
3,818,766 |
(723,742) |
3,095,025 |
3,195,731 |
||||||||
Subtotal |
4,228,294 |
(983,424) |
3,244,869 |
3,359,104 |
|||||||
Intangible asset acquired and merged – Deductible |
|||||||||||
Subsidiaries |
|||||||||||
RGE |
1,120,266 |
(862,342) |
257,924 |
281,551 |
2.11% |
1.79% | |||||
RGE Sul |
312,741 |
(4,759) |
307,982 |
- |
9.09% |
||||||
CPFL Geração |
426,450 |
(313,497) |
112,953 |
122,919 |
2.34% |
3.80% | |||||
Subtotal |
1,859,457 |
(1,180,598) |
678,859 |
404,470 |
|||||||
Intangible asset acquired and merged – Reassessed |
|||||||||||
Parent company |
|||||||||||
CPFL Paulista |
1,074,026 |
(722,461) |
351,565 |
383,770 |
3.00% |
4.34% | |||||
CPFL Piratininga |
115,762 |
(70,366) |
45,395 |
49,232 |
3.31% |
4.50% | |||||
RGE |
310,128 |
(171,659) |
138,469 |
151,153 |
4.09% |
5.32% | |||||
CPFL Jaguari Geração |
15,275 |
(7,917) |
7,358 |
7,818 |
3.01% |
5.61% | |||||
Subtotal |
1,515,190 |
(972,403) |
542,787 |
591,972 |
|||||||
Total |
7,602,941 |
(3,136,425) |
4,466,516 |
4,355,546 |
The intangible asset acquired in business combinations is associated to the right to operate the concessions and comprises:
- Intangible asset acquired, not merged
Refers basically to the intangible asset from acquisition of the shares held by noncontrolling interests prior to adoption of CPC 15 and IFRS 3.
- Intangible asset acquired and merged - Deductible
Refers to the intangible asset from the acquisition of subsidiaries that were merged into the respective equity, without application of CVM Instructions No. 319/1999 and No. 349/2001, that is, without segregation of the amount of the tax benefit.
- Intangible asset acquired and merged – Reassessed
In order to comply with ANEEL requirements and avoid the amortization of the intangible asset resulting from the merger of parent company causing a negative impact on dividend paid to noncontrolling interests, the subsidiaries applied the concepts of CVM Instructions No. 319/1999 and No. 349/2001 to the intangible asset. A reserve was therefore recognized to adjust the intangible, against a special goodwill reserve on the merger of equity in each subsidiary, so that the effect of the transaction on the equity reflects the tax benefit of the merged intangible asset. These changes affected the Company's investment in subsidiaries, and in order to adjust this, a nondeductible intangible asset was recognized for tax purposes.
Effective January 1, 2016, in compliance with the amendments to IAS 16/CPC 27 and IAS 38/CPC 04 (R1), the Company and its subsidiaries started to adopt prospectively, for all cases, the straight-line method of amortization over the remaining concession period.
64
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
15.2Impairment test
For all the reporting years, the Company assesses whether there are indicators of impairment of its assets that would require an impairment test. The assessment was based on external and internal information sources, taking into account fluctuations in interest rates, changes in market conditions and other factors.
As the Brazilian economic conditions have deteriorated even further during 2016, a complement of R$ 2,637 was recorded in subsidiary CPFL Telecom, relating to the provision for impairment of cash-generating units (in 2015, R$ 1,835 in the subsidiary CPFL Telecom and R$ 4,009 in the subsidiary CPFL Total). This loss was recognized in the statement of profit or loss in line item “Other operating expenses” (note 29). Furthermore, the subsidiary CPFL Renováveis recognized a loss of R$ 40,433 on the intangible assets acquired in the business combination of Aiuruoca.
Such provisions for impairment were based on the assessment of these cash-generating units formed by the intangible assets of those subsidiaries, which, separately, do not feature an operating segment (note 31). Additionally, during 2016 and 2015 the Company did not change the form of aggregation of the assets for identification of these cash-generating units.
For fair value measurement the cost approach was used, this is a valuation technique that reflects the amount that would be currently required to replace the service capacity of an asset (normally referred to as cost of substitution or replacement). The recognition of the provision for impairment of assets was due to the unfavorable scenario for the businesses of these subsidiaries and was calculated based on their fair values net of selling expenses.
( 16 ) TRADE PAYABLES
Consolidated | ||||
Dec. 31, 2016 |
Dec. 31, 2015 | |||
Current |
||||
System service charges |
59,935 |
203,961 | ||
Energy purchased |
1,868,950 |
2,402,823 | ||
Electricity network usage charges |
121,884 |
106,940 | ||
Materials and services |
545,468 |
331,809 | ||
Free energy |
131,893 |
115,676 | ||
Total |
2,728,130 |
3,161,210 | ||
Noncurrent |
||||
Energy purchased |
129,148 |
- | ||
Materials and services |
633 |
633 | ||
Total |
129,781 |
633 |
The amounts of electricity supply recorded in noncurrent refer to the sale made by the indirect subsidiary RGE Sul in the period from September 1, 2000 to December 31, 2002, relating to the electricity purchase and sale transactions made on the Electric Energy Commercialization Chamber (CCEE) and adjusted, in 2002 and 2003, based on information and calculations prepared and disclosed by CCEE, the payment of which is suspended due to the judicial injunction obtained by the indirect subsidiary until the judgment of the lawsuit (notes 6 and 24).
65
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 17 ) INTEREST ON DEBTS AND BORROWINGS
Consolidated | ||||||||||||||||
December 31, 2016 |
December 31, 2015 | |||||||||||||||
Interest - Current and noncurrent |
Principal |
|
Total |
Interest - Current and noncurrent |
Principal |
|
Total | |||||||||
Current |
Noncurrent |
Current |
Noncurrent |
|||||||||||||
Measured at cost |
||||||||||||||||
Local currency |
||||||||||||||||
Investment |
17,827 |
842,015 |
4,606,227 |
5,466,069 |
17,775 |
693,058 |
4,970,715 |
5,681,549 | ||||||||
Rental assets |
38 |
1,034 |
3,955 |
5,028 |
17 |
687 |
3,434 |
4,138 | ||||||||
Financial Institutions |
234,096 |
255,355 |
1,517,251 |
2,006,702 |
179,656 |
382,411 |
1,350,746 |
1,912,812 | ||||||||
Others |
50 |
59,756 |
42,370 |
102,176 |
764 |
134,960 |
10,002 |
145,726 | ||||||||
Total at cost |
252,011 |
1,158,159 |
6,169,803 |
7,579,974 |
198,212 |
1,211,115 |
6,334,897 |
7,744,225 | ||||||||
Measured at fair value |
||||||||||||||||
Foreign currency |
||||||||||||||||
Financial Institutions |
22,062 |
595,101 |
4,922,463 |
5,539,626 |
40,714 |
1,651,199 |
5,560,517 |
7,252,430 | ||||||||
Mark to market |
- |
(1,764) |
(35,651) |
(37,415) |
- |
(29,269) |
(282,980) |
(312,249) | ||||||||
Total at fair value |
22,062 |
593,337 |
4,886,812 |
5,502,211 |
40,714 |
1,621,930 |
5,277,536 |
6,940,180 | ||||||||
Borrowing costs |
- |
(5,213) |
(32,930) |
(38,143) |
- |
(1,391) |
(20,227) |
(21,618) | ||||||||
Total |
274,073 |
1,746,284 |
11,023,685 |
13,044,041 |
238,926 |
2,831,654 |
11,592,206 |
14,662,787 |
Consolidated |
||||||||||
Measured at amortized cost |
Dec. 31, 2016 |
Dec. 31, 2015 |
Annual interest |
Amortization |
Collateral | |||||
Local currency |
||||||||||
Investment |
||||||||||
CPFL Paulista |
||||||||||
FINEM V |
37,078 |
70,293 |
TJLP + 2.12% to 3.3% (c) |
72 monthly installments from February 2012 |
CPFL Energia guarantee and receivables | |||||
FINEM V |
3,638 |
5,384 |
Fixed rate 8% (c) |
90 monthly installments from August 2011 |
CPFL Energia guarantee and receivables | |||||
FINEM V |
30,835 |
38,386 |
Fixed rate 5.5% (b) |
96 monthly installments from February 2013 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
149,984 |
197,145 |
TJLP + 2.06% to 3.08% (e) (f) |
72 monthly installments from January 2014 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
8,907 |
10,412 |
Fixed rate 2.5% (a) |
114 monthly installments from June 2013 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
163,404 |
191,022 |
Fixed rate 2.5% (a) |
96 monthly installments from December 2014 |
CPFL Energia guarantee and receivables | |||||
FINEM VII |
57,798 |
63,777 |
Fixed rate 6% (b) |
96 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINEM VII |
73,435 |
65,304 |
SELIC + 2.62% to 2.66% (h) |
72 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINEM VII |
132,622 |
130,774 |
TJLP + 2.12% to 2.66% (c) (d) |
72 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINAME |
25,356 |
33,808 |
Fixed rate 4.5% |
96 monthly installments from January 2012 |
CPFL Energia guarantee | |||||
CPFL Piratininga |
||||||||||
FINEM IV |
19,970 |
37,859 |
TJLP + 2.12% to 3.3% (c) |
72 monthly installments from February 2012 |
CPFL Energia guarantee and receivables | |||||
FINEM IV |
1,173 |
1,736 |
Fixed rate 8% (c) |
90 monthly installments from August 2011 |
CPFL Energia guarantee and receivables | |||||
FINEM IV |
16,035 |
19,962 |
Fixed rate 5.5% (b) |
96 monthly installments from February 2013 |
CPFL Energia guarantee and receivables | |||||
FINEM V |
43,836 |
57,621 |
TJLP + 2.06% to 3.08% (e) (f) |
72 monthly installments from January 2014 |
CPFL Energia guarantee and receivables | |||||
FINEM V |
2,339 |
2,735 |
Fixed rate 2.5% (a) |
114 monthly installments from June 2013 |
CPFL Energia guarantee and receivables | |||||
FINEM V |
40,664 |
47,536 |
Fixed rate 2.5% (a) |
96 monthly installments from December 2014 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
41,620 |
39,605 |
SELIC + 2.62% to 2.66% (h) |
72 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
65,778 |
69,054 |
TJLP + 2.12% to 2.66% (c) (d) |
72 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
28,198 |
30,463 |
Fixed rate 6% (b) |
96 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINAME |
12,023 |
16,031 |
Fixed rate 4.5% |
96 monthly installments from January 2012 |
CPFL Energia guarantee | |||||
RGE |
||||||||||
FINEM V |
22,444 |
42,549 |
TJLP + 2.12% to 3.3% (c) |
72 monthly installments from February 2012 |
CPFL Energia guarantee and receivables | |||||
FINEM V |
11,828 |
14,725 |
Fixed rate 5.5% (b) |
96 monthly installments from February 2013 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
80,126 |
105,322 |
TJLP + 2.06% to 3.08% (e) (f) |
72 monthly installments from January 2014 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
942 |
1,102 |
Fixed rate 2.5% (a) |
114 monthly installments from June 2013 |
CPFL Energia guarantee and receivables | |||||
FINEM VI |
60,085 |
70,240 |
Fixed rate 2.5% (a) |
96 monthly installments from December 2014 |
CPFL Energia guarantee and receivables | |||||
FINEM VII |
39,442 |
43,522 |
Fixed rate 6% (b) |
96 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINEM VII |
65,261 |
59,348 |
SELIC + 2.62% to 2.66% (h) |
72 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINEM VII |
81,394 |
76,728 |
TJLP + 2.12% to 2.66% (d) |
72 monthly installments from April 2016 |
CPFL Energia guarantee and receivables | |||||
FINAME |
6,033 |
8,045 |
Fixed rate 4.5% |
96 monthly installments from January 2012 |
CPFL Energia guarantee | |||||
FINAME |
168 |
227 |
Fixed rate 10.0% |
90 monthly installments from May 2012 |
Liens on assets | |||||
FINAME |
579 |
715 |
Fixed rate 10.0% |
66 monthly installments from October 2015 |
Liens on assets | |||||
CPFLSanta Cruz |
||||||||||
FINEM |
9,094 |
10,306 |
Fixed rate 6% |
111 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
3,381 |
3,663 |
SELIC + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
6,062 |
7,382 |
TJLP + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
CPFL Leste Paulista |
||||||||||
FINEM |
3,397 |
3,850 |
Fixed rate 6% |
111 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
1,239 |
1,343 |
SELIC + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
2,224 |
2,709 |
TJLP + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
CPFL Sul Paulista |
||||||||||
FINEM |
2,412 |
2,734 |
Fixed rate 6% |
111 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
1,731 |
1,876 |
SELIC + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
3,122 |
3,803 |
TJLP + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
CPFL Jaguari |
||||||||||
Santander - Bank credit note |
1,464 |
1,710 |
TJLP + 3.1% |
96 monthly installments from June 2014 |
CPFL Energia guarantee | |||||
Santander - Bank credit note |
572 |
808 |
UMBNDES + 2.1% |
96 monthly installments from June 2014 |
CPFL Energia guarantee | |||||
FINEM |
2,422 |
2,745 |
Fixed rate 6% |
111 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
1,287 |
1,394 |
SELIC + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
FINEM |
2,321 |
2,826 |
TJLP + 2.19% |
72 monthly installments from April 2015 |
CPFL Energia guarantee | |||||
CPFL Mococa |
||||||||||
Santander - Bank credit note |
1,883 |
2,200 |
TJLP + 3.1% |
96 monthly installments from June 2014 |
CPFL Energia guarantee | |||||
Santander - Bank credit note |
736 |
1,039 |
UMBNDES + 2.1% |
96 monthly installments from June 2014 |
CPFL Energia guarantee | |||||
Santander - Bank credit note |
1,413 |
1,932 |
UMBNDES +1.99% |
96 monthly installments from October 2015 |
CPFL Energia guarantee | |||||
Santander - Bank credit note |
4,081 |
4,619 |
TJLP + 2.99% (f) |
96 monthly installments from October 2015 |
CPFL Energia guarantee | |||||
RGE SUL |
||||||||||
FINEP I |
7,757 |
- |
Fixed rate 5% |
81 monthly installments from September 2013 |
Bank guarantee | |||||
FINEP II |
7,562 |
- |
TJLP |
73 monthly installments from May 2016 |
Bank guarantee | |||||
CPFL Serviços |
||||||||||
FINAME |
1,297 |
1,509 |
Fixed rate 2.5% to 5.5% |
96 monthly installments from August 2014 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
313 |
357 |
Fixed rate 6% |
72 monthly installments from April 2016 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
668 |
864 |
Fixed rate 7.7% to 10% |
90 monthly installments from November 2012 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
11,292 |
13,049 |
Fixed rate 2.5% to 5.5% |
114 monthly installments from February 2013 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
47 |
60 |
TJLP + 4.2% |
90 monthly installments from November 2012 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
2,249 |
2,659 |
Fixed rate 6% |
90 monthly installments from October 2014 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
101 |
108 |
Fixed rate 6% |
96 monthly installments from July 2016 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
5,768 |
6,496 |
Fixed rate 6% |
114 monthly installments from June 2015 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
762 |
1,002 |
TJLP + 2.2% to 3.2% (c) |
56 monthly installments from July 2015 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
3,870 |
4,006 |
Fixed rate 9.5% to 10% (c) |
66 monthly installments from October 2015 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
1,589 |
- |
Fixed rate 6% to 10% (e) |
66 monthly installments from April 2016 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
5,832 |
- |
TJLP + 3.50% (e) |
48 monthly installments from July 2017 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
2,511 |
- |
SELIC + 3.86% to 3.90% (k) |
48 monthly installments from July 2017 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
1,147 |
- |
SELIC + 3.74% (d) |
36 monthly installments from November 2018 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
495 |
- |
TJLP + 3.40% (h) |
36 monthly installments from November 2018 |
CPFL Energia guarantee and liens on equipment |
66
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CERAN |
||||||||||
BNDES |
266,484 |
312,150 |
TJLP + 3.69% to 5% |
168 monthly installments from December 2005 |
Pledge of shares, credit and concession rights, revenues and CPFL Energia guarantee | |||||
BNDES |
48,409 |
68,993 |
UMBNDES + 5% (1) |
168 monthly installments from February 2006 |
Pledge of shares, credit and concession rights, revenues and CPFL Energia guarantee | |||||
CPFL Transmissão Piracicaba |
||||||||||
FINAME |
16,871 |
19,466 |
Fixed rate 3.0% |
96 monthly installments from July 2015 |
CPFL Energia guarantee | |||||
CPFL Telecom |
||||||||||
FINAME |
7,448 |
7,610 |
Fixed rate 6.0% (b) |
60 monthly installments from December 2016 |
CPFL Energia guarantee | |||||
FINEM |
7,849 |
7,018 |
SELIC + 3.12% (h) |
60 monthly installments from December 2016 |
CPFL Energia guarantee | |||||
FINEM |
21,342 |
21,544 |
TJLP + 2.12% to 3.12% (c) |
60 monthly installments from December 2016 |
CPFL Energia guarantee | |||||
FINEM |
470 |
- |
TJLP (l) |
60 monthly installments from December 2016 |
CPFL Energia guarantee | |||||
CPFL Renováveis |
||||||||||
FINEM I |
262,224 |
290,445 |
TJLP + 1.95% |
168 monthly installments from October 2009 |
PCH Holding a joint and several debtor, letters of guarantee | |||||
FINEM II |
22,210 |
25,308 |
TJLP + 1.90%. |
144 monthly installments from June 2011 |
CPFL Energia guarantee, liens on assets and assignment of credit rights | |||||
FINEM III |
495,912 |
528,528 |
TJLP + 1.72% |
192 monthly installments from May 2013 |
CPFL Energia guarantee, pledge of shares, liens on assets, assignment of credit rights | |||||
FINEM V |
80,362 |
90,678 |
TJLP + 2.8% to 3.4% |
143 monthly installments from December 2011 |
PCH Holding 2 and CPFL Renováveis as joint and several debtors. | |||||
FINEM VI |
74,737 |
79,457 |
TJLP + 2.05% |
192 monthly installments from October 2013 |
Pledge of CPFL Renováveis shares, assignment of receivables | |||||
FINEM VII |
138,474 |
156,737 |
TJLP + 1.92 % |
156 monthly installments from October 2010 |
Pledge of shares, assignment of rights, liens on machinery and equipment | |||||
FINEM IX |
25,195 |
32,289 |
TJLP + 2.15% |
120 monthly installments from May 2010 |
Pledge of shares, liens on machinery and equipment, real estate mortgages and guarantee letter | |||||
FINEM X |
230 |
528 |
TJLP |
84 monthly installments from October 2010 |
Pledge of shares, assignment of rights, liens on machinery and equipment | |||||
FINEM XI |
105,670 |
115,676 |
TJLP + 1.87% to 1.9% |
168 monthly installments from January 2012 |
CPFL Energia guarantee, pledge of shares, liens on assets, assignment of credit rights | |||||
FINEM XII |
317,289 |
335,894 |
TJLP + 2.18% |
192 monthly installments from July 2014 |
CPFL Energia guarantee, liens on assets, joint assignment of credit rights, pledge of shares | |||||
FINEM XIII |
318,257 |
296,891 |
TJLP + 2.02% to 2.18% |
192 monthly installments from November 2014 |
Pledge of shares and machinery and equipment of SPE , assignment of rights | |||||
FINEM XIV |
- |
11,599 |
TJLP + 3.50% |
120 monthly installments from June 2007 |
Pledge of shares and of credit rights, liens on machines and equipment to be acquired with the resources of the operation | |||||
FINEM XV |
27,305 |
31,227 |
TJLP + 3.44% |
139 monthly installments from September 2011 |
Pledge of shares, assignment of credit rights, pledge of grantor rights and reserve account | |||||
FINEM XVI |
6,418 |
8,500 |
Fixed rate 5.50% |
101 monthly installments from September 2011 |
Pledge of shares, assignment of credit rights, pledge of grantor rights and reserve account | |||||
FINEM XVII |
460,426 |
490,786 |
TJLP + 2.18% |
192 monthly installments from January 2013 |
Pledge of shares, assignment of credit rights, liens on machinery and equipment, assignment of receivables, reserve account | |||||
FINEM XVIII |
13,763 |
18,481 |
Fixed rate 4.5% |
102 monthly installments from June 2011 |
CPFL Energia guarantee, liens on assets , assignment of credit rights | |||||
FINEM XIX |
29,559 |
31,381 |
TJLP + 2.02% |
192 monthly installments from January 2014 |
Pledge of shares and assignment of receivables | |||||
FINEM XX |
44,650 |
52,091 |
Fixed rate 2.5% |
108 monthly installments from January 2014 |
Pledge of shares and assignment of receivables | |||||
FINEM XXI |
40,281 |
42,765 |
TJLP + 2.02% |
192 monthly installments from January 2014 |
Pledge of shares and assignment of receivables | |||||
FINEM XXII |
39,281 |
45,828 |
Fixed rate 2.5% |
108 monthly installments from January 2014 |
Pledge of shares and assignment of receivables | |||||
FINEM XXIII |
1,729 |
2,305 |
Fixed rate 4.5% |
102 monthly installments from June 2011 |
Pledge of shares and assignment of receivables | |||||
FINEM XXIV |
109,580 |
136,528 |
Fixed rate 5.5% |
108 monthly installments from January 2012 |
CPFL Energia guarantee, liens on assets, joint assignment of credit rights | |||||
FINEM XXV |
87,492 |
79,010 |
TJLP + 2.18% |
192 monthly installments from July 2016 |
Pledge of shares and grantor rights, liens on assets and assignment of credit rights | |||||
FINEM XXVI |
525,011 |
270,768 |
TJLP + 2.75% |
192 monthly installments from July 2017 |
Penhor de ações e de máquinas e equipamentos, cessão fiduciária dos direitos creditórios, conta reserva. | |||||
FINEM XXVII |
70,532 |
- |
TJLP + 2,02% |
162 monthly installments from November 2016 |
Pledge of shares of the intervening parties, assignment of credit rights, pledge of incidental rights authorized by ANEEL and SPE Reserve Account | |||||
FINAME IV |
2,857 |
3,327 |
Fixed rate 2.5% |
96 monthly installments from February 2015 |
Liens and CPFL Renováveis guarantee | |||||
FINEP I |
1,397 |
1,890 |
Fixed rate 3.5% |
61 monthly installments from October 2014 |
Bank guarantee | |||||
FINEP II |
10,445 |
10,383 |
TJLP - 1.0% |
85 monthly installments from June 2017 |
Bank guarantee | |||||
FINEP III |
5,232 |
6,374 |
TJLP + 2.0% |
73 monthly installments from July 2015 |
Bank guarantee | |||||
BNB I |
100,323 |
108,835 |
Fixed rate 9.5% to 10% |
168 monthly installments from January 2009 |
Liens, pledge of shares and SIIF Energy guarantee | |||||
BNB II |
158,364 |
165,324 |
Fixed rate 10% (J) |
222 monthly installments from May 2010 |
CPFL Energia guarantee | |||||
BNB III |
29,020 |
30,837 |
Fixed rate 9.5% |
228 monthly installments from July 2009 |
Guarantee, liens on assets, assignment of credit rights | |||||
NIB |
67,872 |
72,739 |
IGPM + 8.63% |
50 quarterly installments from June 2011 |
No guarantee | |||||
Banco do Brasil |
- |
31,014 |
Fixed rate 10.0% |
132 monthly installments from June 2010 |
Pledge of shares, pledge of the intervening parties and credit rights, assignment of revenues, bank guarantee, insurance and reserve account | |||||
CPFL Brasil |
||||||||||
FINEP |
- |
1,864 |
Fixed rate 5% |
81 monthly installments from August 2011 |
Receivables | |||||
Purchase of assets |
||||||||||
CPFL ESCO |
||||||||||
FINAME |
2,923 |
3,544 |
Fixed rate 4.5% to 8.7% |
96 monthly installments from March 2012 |
CPFL Energia guarantee | |||||
FINAME |
99 |
117 |
Fixed rate 6% |
72 monthly installments from October 2016 |
CPFL Energia guarantee | |||||
FINAME |
234 |
261 |
TJLP + 2.70% |
48 monthly installments from August 2016 |
CPFL Energia guarantee | |||||
FINAME |
219 |
216 |
SELIC + 2.70% |
48 monthly installments from August 2016 |
CPFL Energia guarantee | |||||
FINAME |
121 |
- |
Fixed rate 9.5% |
48 monthly installments from October 2016 |
CPFL Energia guarantee | |||||
FINAME |
678 |
- |
Fixed rate 9.5% (e) |
48 monthly installments from February 2017 |
CPFL Energia guarantee and liens on equipment | |||||
FINAME |
753 |
- |
TJLP + 3.50% (e) |
48 monthly installments from August 2017 |
CPFL Energia guarantee and liens on equipment | |||||
Financial institutions |
||||||||||
CPFL Energia |
||||||||||
Santander - Working capital |
- |
331,343 |
86.40% of CDI |
1 installment in January 2016 |
No guarantee | |||||
CPFL Paulista |
||||||||||
Banco do Brasil - Working capital |
380,403 |
331,549 |
104.90% of CDI (f) |
2 annual installments from July 2017 |
CPFL Energia guarantee | |||||
CPFL Piratininga |
||||||||||
Banco do Brasil - Working capital |
66,951 |
58,353 |
104.90% of CDI (f) |
2 annual installments from July 2017 |
CPFL Energia guarantee | |||||
CPFL Santa Cruz |
||||||||||
Banco do Brasil - Working capital |
50,213 |
43,764 |
104.90% of CDI (f) |
2 annual installments from July 2017 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
6,925 |
7,637 |
CDI + 0.27% (f) |
12 semiannual installments from June 2015 |
CPFL Energia guarantee | |||||
CPFL Leste Paulista |
||||||||||
Banco IBM - Working capital |
5,405 |
6,587 |
100.0% of CDI |
14 semiannual installments from December 2012 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
20,955 |
23,790 |
CDI + 0.1% |
12 semiannual installments from October 2014 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
15,658 |
17,268 |
CDI + 0.27% |
12 semiannual installments from March 2015 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
6,993 |
8,052 |
CDI + 1.33% (f) |
12 semiannual installments from January 2016 |
CPFL Energia guarantee | |||||
CPFL Sul Paulista |
||||||||||
Banco do Brasil - Working capital |
31,954 |
27,850 |
104.90% of CDI (f) |
2 annual installments from July 2017 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
7,888 |
8,914 |
CDI + 0.27% to 1.33 (f) |
12 semiannual installments from June 2015 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
6,784 |
- |
CDI + 1.27% (g) |
Semiannual installments from February 2017 |
CPFL Energia guarantee | |||||
CPFL Jaguari |
||||||||||
Banco do Brasil - Working capital |
4,413 |
3,846 |
104.90% of CDI (f) |
2 annual installments from July 2017 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
10,726 |
13,266 |
100.0% of CDI |
14 semiannual installments from December 2012 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
11,297 |
12,825 |
CDI + 0.1% |
12 semiannual installments from October 2014 |
CPFL Energia guarantee | |||||
CPFL Mococa |
||||||||||
Banco do Brasil - Working capital |
28,911 |
25,198 |
104.90% of CDI (f) |
2 annual installments from July 2017 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
3,481 |
4,305 |
100.0% of CDI |
14 semiannual installments from December 2012 |
CPFL Energia guarantee | |||||
Banco IBM - Working capital |
13,296 |
14,663 |
CDI + 0.27% |
12 semiannual installments from March 2015 |
CPFL Energia guarantee |
67
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Serviços |
||||||||||
Banco IBM - Working capital |
3,473 |
5,111 |
CDI + 0.10% |
11 semiannual installments from June 2013 |
CPFL Energia guarantee | |||||
CPFL Geração |
||||||||||
Banco do Brasil - Working capital |
641,316 |
642,124 |
109.5% of CDI |
1 installment in March 2019 |
CPFL Energia guarantee | |||||
CPFL Renováveis |
||||||||||
HSBC |
250,363 |
290,679 |
CDI + 0.5% (i) |
8 annual installment from June 2013 |
Pledge of shares | |||||
Safra |
208,547 |
- |
105% of CDI |
14 installments from August 2016 |
Redeemable preferred shares structure | |||||
Banco BBM - Bank credit note |
44,171 |
- |
CDI + 3.40% |
1 installment in March 2018 |
No guarantee | |||||
Banco ABC - Bank credit note |
44,217 |
- |
CDI + 3.80% |
1 installment in December 2017 |
No guarantee | |||||
Banco ABC - Promissory notes |
105,883 |
- |
CDI + 3.80% |
Semiannual installments from February 2017 |
No guarantee | |||||
CPFL Telecom |
||||||||||
Banco IBM - Working capital |
31,449 |
35,689 |
CDI + 0.18% |
12 semiannual installments from August 2014 |
CPFL Energia guarantee | |||||
CPFL Transmissão Morro Agudo |
||||||||||
Santander |
5,031 |
- |
CDI + 1.60% (k) |
1 installment in March 2017 |
CPFL Energia guarantee | |||||
Others |
||||||||||
Eletrobrás |
||||||||||
CPFL Paulista |
2,960 |
3,931 |
RGR + 6% to 6.5% |
monthly installments from August 2006 |
Receivables and promissory notes | |||||
CPFL Piratininga |
- |
88 |
RGR + 6% |
monthly installments from August 2006 |
Receivables and promissory notes | |||||
RGE |
5,851 |
7,658 |
RGR + 6% |
monthly installments from August 2006 |
Receivables and promissory notes | |||||
CPFL Santa Cruz |
508 |
1,029 |
RGR + 6% |
monthly installments from January 2007 |
Receivables and promissory notes | |||||
CPFL Leste Paulista |
338 |
532 |
RGR + 6% |
monthly installments from February 2008 |
Receivables and promissory notes | |||||
CPFL Sul Paulista |
303 |
544 |
RGR + 6% |
monthly installments from August 2007 |
Receivables and promissory notes | |||||
CPFL Jaguari |
9 |
24 |
RGR + 6% |
monthly installments from June 2007 |
Receivables and promissory notes | |||||
CPFL Mococa |
122 |
170 |
RGR + 6% |
monthly installments from January 2008 |
Receivables and promissory notes | |||||
RGE SUL |
25,946 |
- |
Fixed rate 5% |
120 monthly installments from June 2012 |
Bank guarantee | |||||
Others |
66,141 |
131,751 |
||||||||
Subtotal local currency |
7,579,974 |
7,744,225 |
||||||||
Foreign currency |
||||||||||
Measured at fair value |
||||||||||
Financial institutions |
||||||||||
CPFL Energia |
||||||||||
Santander |
- |
293,660 |
US$ + 1.547% (3) |
1 installment in February 2016 |
No guarantee | |||||
Bradesco |
- |
154,665 |
US$ + 1.72% (2) (f) |
1 installment in June 2016 |
No guarantee | |||||
Santander |
- |
197,044 |
US$ + 1.918% (3) |
1 installment in September 2016 |
No guarantee | |||||
CPFL Paulista |
||||||||||
Bank of America Merrill Lynch (***) |
327,503 |
397,324 |
US$+Libor 3 months+1.35% (3) (f) |
1 installment in october 2018 |
CPFL Energia guarantee and promissory notes | |||||
Bank of America Merrill Lynch |
146,703 |
175,750 |
US$+Libor 3 months+1.70% (4) |
1 installment in September 2018 |
CPFL Energia guarantee and promissory notes | |||||
Bank of Tokyo-Mitsubishi |
163,279 |
195,524 |
US$ + Libor 3 months + 0.88% (3) (g) |
1 installment in February 2020 |
CPFL Energia guarantee and promissory notes | |||||
Bank of Tokyo-Mitsubishi |
163,106 |
195,380 |
US$+Libor 3 months+0.80% (3) (f) |
4 semiannual installments from September 2017 |
CPFL Energia guarantee and promissory notes | |||||
BNP Paribas |
68,663 |
85,991 |
Euro + 1.6350% (3) |
1 installment in January 2018 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
- |
195,502 |
US$+Libor 3 months + 1.35% (4) |
1 installment in March 2019 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
- |
227,397 |
US$ + Libor 3 months + 1.44% (3) |
1 installment in January 2020 |
CPFL Energia guarantee and promissory notes | |||||
HSBC |
282,808 |
338,504 |
US$ + Libor 3 months + 1.30% (3) |
1 installment in January 2018 |
CPFL Energia guarantee and promissory notes | |||||
J.P. Morgan |
130,522 |
156,381 |
US$ + 2.28% to 2.32% (3) |
1 installment in December 2017 |
CPFL Energia guarantee and promissory notes | |||||
J.P. Morgan |
115,382 |
138,255 |
US$ + 2.36% to 2.39% (3) |
1 installment in January 2018 |
CPFL Energia guarantee and promissory notes | |||||
J.P. Morgan |
82,544 |
98,891 |
US$ + 2.74% (3) |
1 installment in January 2019 |
CPFL Energia guarantee and promissory notes | |||||
J.P. Morgan |
49,311 |
59,080 |
US$ + 2.2% (3) |
1 installment in February 2018 |
CPFL Energia guarantee and promissory notes | |||||
Bank of America Merrill Lynch |
490,334 |
587,094 |
US$ + Libor 3 months + 1.40% (3) |
1 installment in February 2018 |
CPFL Energia guarantee and promissory notes | |||||
Mizuho Bank |
244,484 |
292,895 |
US$+Libor 3 months+1.55% (3) (f) |
3 semiannual installments from March 2018 |
CPFL Energia guarantee and promissory notes | |||||
Morgan Stanley |
- |
196,502 |
US$ + Libor 6 months + 1.75% (3) |
1 installment in September 2016 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
- |
95,502 |
US$ + 3.3125% (3) |
1 installment in July 2016 |
CPFL Energia guarantee and promissory notes | |||||
Syndicated transaction (**) - Bank of America Merrill Lynch, Citibank, HSBC and EDC-Export Development Canada |
218,104 |
- |
US$ + Libor 3 months + 2.7% (4) |
5 semiannual installments from May 2019 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Piratininga |
||||||||||
Bank of America Merrill Lynch |
- |
48,964 |
US$ + Libor 3 months + 1.15% (3) |
1 installment in July 2016 |
CPFL Energia guarantee and promissory notes | |||||
Bank of America Merrill Lynch |
- |
97,849 |
US$ + Libor 3 months + 1.15% (3) |
1 installment in August 2016 |
CPFL Energia guarantee and promissory notes | |||||
BNP Paribas |
188,822 |
236,474 |
Euro + 1.6350% (3) |
1 installment in January 2018 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
204,486 |
244,778 |
US$ + Libor 3 months + 1.41% (3) |
2 annual installments from January 2019 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
163,225 |
195,502 |
US$ + Libor 3 months + 1.35% (4) |
1 installment in March 2019 |
CPFL Energia guarantee and promissory notes | |||||
Santander |
- |
177,268 |
US$ + 2.58% (3) |
1 installment in July 2016 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
- |
124,737 |
US$ + 3.3125% (3) |
1 installment in July 2016 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
54,235 |
64,980 |
US$ + 2.08% (3) |
1 installment in August 2017 |
CPFL Energia guarantee and promissory notes | |||||
Sumitomo |
163,712 |
195,938 |
US$ + Libor 3 months + 1.35% (3) (f) |
1 installment in April 2018 |
CPFL Energia guarantee and promissory notes | |||||
Syndicated transaction (**) - Bank of America Merrill Lynch, Citibank, HSBC and EDC-Export Development Canada |
218,104 |
- |
US$ + Libor 3 months + 2.7% (4) |
5 semiannual installments from May 2019 |
CPFL Energia guarantee and promissory notes | |||||
RGE |
||||||||||
Bank of Tokyo-Mitsubishi |
58,852 |
70,439 |
US$ + Libor 3 months + 0.82%(3) |
1 installment in April 2018 |
CPFL Energia guarantee and promissory notes | |||||
Bank of Tokyo-Mitsubishi |
267,740 |
320,602 |
US$ + Libor 3 months + 0.83%(3) |
1 installment in May 2018 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
- |
58,683 |
US$ + Libor 3 months + 1.25%(4) |
2 annual installments from May 2018 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
- |
274,426 |
US$ + Libor 6 months + 1.45% (3) |
1 installment in April 2017 |
CPFL Energia guarantee and promissory notes | |||||
HSBC |
44,496 |
53,260 |
US$ + Libor 3 months + 1.30% (3) |
1 installment in October 2017 |
CPFL Energia guarantee and promissory notes | |||||
J.P. Morgan |
199,826 |
239,453 |
US$ + 2.78% (3) |
1 installment in February 2018 |
CPFL Energia guarantee and promissory notes | |||||
J.P. Morgan |
- |
139,466 |
US$ + 1.35% (3) |
1 installment in February 2016 |
CPFL Energia guarantee and promissory notes | |||||
Syndicated transaction (**) - Bank of America Merrill Lynch, Citibank, HSBC and EDC-Export Development Canada |
218,104 |
- |
US$ + Libor 3 months + 2.7% (4) |
5 semiannual installments from May 2019 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Santa Cruz |
||||||||||
Santander |
- |
34,679 |
US$ + 2.544% (3) |
1 installment in June 2016 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
16,556 |
- |
US$ + 3.37% (4) (g) |
1 installment in July 2019 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Sul Paulista |
||||||||||
Santander |
- |
38,147 |
US$ + 2.544% (3) |
1 installment in June 2016 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
16,556 |
- |
US$ + 3.37% (4) (g) |
1 installment in July 2019 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Leste Paulista |
||||||||||
Scotiabank |
16,556 |
- |
US$ + 3.37% (4) (g) |
1 installment in July 2019 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Jaguari |
||||||||||
Santander |
- |
53,752 |
US$ + 2.544% (3) |
1 installment in June 2016 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
16,556 |
- |
US$ + 3.37% (4) (g) |
1 installment in July 2019 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Geração |
||||||||||
HSBC |
326,159 |
390,757 |
US$+Libor 3 months + 1.30% (3) |
1 installment in March 2017 |
CPFL Energia guarantee and promissory notes | |||||
China Construction Bank - Bank credit note |
97,946 |
- |
US$+Libor 3 months + 1.60% + 1.4% fee (4) |
1 installment in June 2019 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
117,550 |
- |
US$ + 3.37% (4) (g) |
1 installment in July 2019 |
CPFL Energia guarantee and promissory notes | |||||
Citibank |
391,380 |
- |
US$+Libor 3 months + 1.41% (3) (f) |
3 annual installments from September 2018 |
CPFL Energia guarantee and promissory notes | |||||
China Construction Bank - Bank credit note |
32,624 |
- |
US$ + 3.37% (4) (g) |
1 installment in September 2019 |
CPFL Energia guarantee and promissory notes | |||||
Scotiabank |
163,125 |
- |
US$ + 3.13% (f) |
1 installment in December 2019 |
CPFL Energia guarantee | |||||
CPFL Serviços |
||||||||||
J.P. Morgan |
- |
14,760 |
US$ + 1.75% (3) |
1 installment in October 2016 |
CPFL Energia guarantee and promissory notes | |||||
Paulista Lajeado |
||||||||||
Banco Itaú |
35,771 |
42,862 |
US$ + 3.196% (4) |
1 installment in March 2018 |
CPFL Energia guarantee and promissory notes | |||||
CPFL Brasil |
||||||||||
Scotiabank |
44,501 |
53,317 |
US$ + 2.779% (3) |
1 installment in August 2018 |
CPFL Energia guarantee and promissory notes | |||||
Mark to market |
(37,415) |
(312,249) |
||||||||
Subtotal foreign currency |
5,502,211 |
6,940,180 |
||||||||
Borrowing costs (*) |
(38,143) |
(21,618) |
||||||||
Total - Consolidated |
13,044,041 |
14,662,787 |
68
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The subsidiaries hold swaps converting the operating cost of currency variation to interest rate variation in reais, corresponding to:
(1) 143.85% of CDI (3) 99% to 109% of CDI
(2) 95.20% of CDI (4) 109.1% to 119% of CDI
Effective rate:
(a) 30% to 40% of CDI (e) 80.1% to 90% of CDI (i) CDI + 0.73%
(b) 40.1% to 50% of CDI (f) 100.1% to 110% of CDI (J) Fixed rate 10.57%
(c) 60.1% to 70% of CDI (g) 110.1% to 120% of CDI (k) 130.01% a 140% of CDI
(d) 70.1% to 80% of CDI (h) 120.1% to 130% of CDI (l) 50.1% a 60% of CDI
(*) In accordance with IAS 39 / CPC 38, this refers to the fundraising costs attributable to issuance of the respective debts.
(**) Syndicated transaction – borrowings in foreign currency, having as counterpart a group of financial institutions.
In conformity with CPC 38 and 39 and IAS 32 and 39, the Company and its subsidiaries classified their debts as (i) other financial liabilities (or measured at amortized cost), and (ii) financial liabilities measured at fair value through profit and loss.
The objective of classification as financial liabilities of borrowings measured at fair value is to compare the effects of recognition of income and expense derived from marking derivatives to market, tied to the borrowings, in order to obtain more relevant and consistent accounting information. At December 31, 2016, the total balance of the borrowings measured at fair value was R$ 5,502,211 (R$ 6,940,180 at December 31, 2015).
Changes in the fair values of these borrowings are recognized in the finance income/cost of the Company and its subsidiaries. Accumulated gains of R$ 37,415 (R$ 312,249 at December 31, 2015) on marking the borrowings to market, aligned with gains of R$ 24,504 (losses of R$ 184,518 at December 31, 2015) of marking to market the derivative financial instruments contracted as a hedge against foreign exchange variations (note 35), resulted in a total net gain of R$ 61,919 (R$ 127,731 at December 31, 2015).
The maturities of the principal of borrowings are scheduled as follows:
Maturity |
Consolidated | |
2018 |
4,034,972 | |
2019 |
2,784,486 | |
2020 |
1,356,467 | |
2021 |
688,645 | |
2022 |
489,441 | |
2023 to 2027 |
1,230,202 | |
2028 to 2032 |
458,899 | |
2033 to 2037 |
16,225 | |
Subtotal |
11,059,336 | |
Mark to market |
(35,651) | |
Total |
11,023,685 |
The main indexes used for adjusting borrowings for inflation and the indebtedness profile in local and foreign currency, already considering the effects of the derivative instruments, are as follows:
Consolidated | |||||||
Accumulated variation |
% of debt | ||||||
Index |
2016 |
2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | |||
IGP-M |
7.17 |
10.54 |
0.53 |
0.50 | |||
UMBND |
(16.30) |
47.00 |
0.38 |
0.49 | |||
TJLP |
7.50 |
6.21 |
31.48 |
27.67 | |||
CDI |
13.63 |
13.18 |
56.31 |
61.60 | |||
Others |
11.31 |
9.74 | |||||
100.00 |
100.00 |
69
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Main borrowings in the year:
R$ thousand |
|
|||||||||||
Company |
Bank / credit issue |
Total approved |
Released in 2016 |
Released net of fundraising costs |
Interest |
Utilization | ||||||
Local currency |
||||||||||||
Investment |
||||||||||||
CPFL Paulista |
FINEM VII |
427,716 |
27,075 |
26,421 |
Quarterly |
Subsidiary's investment plan | ||||||
CPFL Piratininga |
FINEM VI |
194,862 |
7,866 |
7,586 |
Quarterly |
Subsidiary's investment plan | ||||||
RGE |
FINEM VII |
266,790 |
21,125 |
20,740 |
Quarterly |
Subsidiary's investment plan | ||||||
CPFL Serviços |
FINAME (a) |
12,277 |
11,886 |
11,886 |
Quarterly |
Subsidiary's investment plan | ||||||
CPFL Esco |
FINAME (a) |
1,543 |
1,525 |
1,525 |
Quarterly |
Subsidiary's investment plan | ||||||
CPFL Renováveis |
FINEM XIII |
379,948 |
38,873 |
38,873 |
Monthly |
Subsidiary's investment plan | ||||||
CPFL Renováveis |
FINEM XXVII |
69,103 |
67,628 |
67,628 |
Monthly |
Subsidiary's investment plan | ||||||
CPFL Renováveis |
FINEM XXVI |
764,109 |
219,028 |
218,370 |
Monthly |
Subsidiary's investment plan | ||||||
CPFL Renováveis |
FINEM XXV |
84,338 |
6,676 |
6,676 |
Monthly |
Subsidiary's investment plan | ||||||
Financial institutions |
||||||||||||
CPFL Sul Paulista |
Banco IBM - Bank credit notes (a) |
6,459 |
6,459 |
6,459 |
Semiannually |
Working capital improvement | ||||||
CPFL Transmissão Morro Agudo |
Santander / Bank credit notes (a) |
5,000 |
5,000 |
5,000 |
With the principal |
Working capital improvement | ||||||
CPFL Renováveis: Alto Irani |
Banco Safra / Redeemable preferred shares of the subsidiary Alto Irani (a) |
75,000 |
75,000 |
73,416 |
Semiannually |
Subsidiary's investment plan | ||||||
CPFL Renováveis: Plano Alto |
Banco Safra / Redeemable preferred shares of the subsidiary Plano Alto (a) |
55,000 |
55,000 |
53,838 |
Semiannually |
Subsidiary's investment plan | ||||||
CPFL Renováveis: Figueirópolis |
Banco Safra / Redeemable preferred shares of the subsidiary Figueirópolis (a) |
70,000 |
70,000 |
68,521 |
Semiannually |
Subsidiary's investment plan | ||||||
CPFL Renováveis - Parent company |
Banco BBM - Bank credit notes (a) |
44,000 |
44,000 |
44,000 |
With the principal |
Working capital improvement | ||||||
CPFL Renováveis - Parent company |
Banco ABC - Bank credit notes (a) |
44,000 |
44,000 |
44,000 |
With the principal |
Subsidiary's investment plan | ||||||
CPFL Renováveis - Parent company |
Banco ABC - Promissory notes (a) |
100,000 |
100,000 |
99,294 |
Semiannually |
Working capital improvement | ||||||
2,600,145 |
801,141 |
794,233 |
||||||||||
Foreign currency |
||||||||||||
Financial institutions |
||||||||||||
CPFL Paulista |
Syndicalized transaction: Bank of America Merrill Lynch, Citibank, HSBC and EDC / Law 4.131 |
236,127 |
236,127 |
232,458 |
Quarterly |
Working capital improvement | ||||||
CPFL Piratininga |
Syndicalized transaction: Bank of America Merrill Lynch, Citibank, HSBC and EDC / Law 4.131 |
236,127 |
236,127 |
232,461 |
Quarterly |
Working capital improvement | ||||||
RGE |
Syndicalized transaction: Bank of America Merrill Lynch, Citibank, HSBC and EDC / Law 4.131 |
236,127 |
236,127 |
232,461 |
Quarterly |
Working capital improvement | ||||||
CPFL Santa Cruz |
Scotiabank / Law 4.131 |
16,484 |
16,484 |
16,484 |
Semiannually |
Working capital improvement | ||||||
CPFL Leste Paulista |
Scotiabank / Law 4.131 |
16,484 |
16,484 |
16,484 |
Semiannually |
Working capital improvement | ||||||
CPFL Sul Paulista |
Scotiabank / Law 4.131 |
16,484 |
16,484 |
16,484 |
Semiannually |
Working capital improvement | ||||||
CPFL Jaguari |
Scotiabank / Law 4.131 |
16,484 |
16,484 |
16,484 |
Semiannually |
Working capital improvement | ||||||
CPFL Geração |
Scotiabank / Law 4.131 |
117,036 |
117,036 |
117,036 |
Semiannually |
Working capital improvement | ||||||
CPFL Geração |
Scotiabank / Law 4.131 |
174,525 |
174,525 |
174,525 |
Semiannually |
Working capital improvement | ||||||
CPFL Geração |
Citibank / Law 4.131 |
397,320 |
397,320 |
397,320 |
Quarterly |
Working capital improvement | ||||||
CPFL Geração |
CCB China / Law 4.131 (a) |
137,071 |
137,071 |
137,071 |
Quarterly |
Working capital improvement | ||||||
1,600,269 |
1,600,269 |
1,589,269 |
||||||||||
4,200,414 |
2,401,411 |
2,383,502 |
(a) the agreement has no restrictive covenants
Restrictive covenants
BNDES:
Borrowings from the BNDES restrict the subsidiaries CPFL Paulista, CPFL Piratininga, RGE, CERAN and CPFL Telecom to: (i) not paying dividends and interest on capital totaling more than the minimum mandatory dividend laid down by law without after fulfillment of all contractual obligations; (ii) full compliance with the restrictive conditions established in the agreement; and (iii) maintaining certain financial ratios within pre-established parameters, calculated annually:
CPFL Paulista, CPFL Piratininga and RGE
Maintaining, by these subsidiaries, the following ratios:
· Net indebtedness divided by EBITDA – maximum of 3.5;
· Net indebtedness divided by the sum of net indebtedness and Equity – maximum of 0.90.
CPFL Geração
The borrowings from the BNDES raised by the indirect subsidiary CERAN establish the following parameters to be maintained in the indirect subsidiary:
· Maintaining the debt service coverage ratio at 1.3 during the amortization period;
· Restrictions on the payment of dividend to the subsidiary CPFL Geração above the minimum mandatory dividend of 25% without the prior approval of the BNDES.
70
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Telecom
Maintaining, by the Company, the following ratios:
· Equity / (Equity + Net Bank Debt) of more than 0.28;
· Net Bank Debt / Adjusted EBITDA of less than 3.75.
CPFL Renováveis (calculated in indirect subsidiary CPFL Renováveis and its subsidiaries, except when mentioned in each specific item):
FINEM I and FINEM VI
· Maintaining the debt service coverage ratio “ICSD” (cash balance for the prior year + cash generation for the current year) / (debt service charge for the current year) at 1.2;
· Own capitalization ratio of 25% or more.
As of December 31, 2016 the indirect subsidiaries SPE Ninho da Águia Energia S.A., SPE Paiol Energia S.A. and SPE Várzea Alegre Energia S.A (subsidiaries of CPFL Renováveis) had not complied with the debt coverage ratio (ICSD), which requires cash generation of 1.2 times the debt service amount for the period. The total amount of the debts, R$ 87,376, was classified in current liabilities. Early maturity of the debt due to non-compliance with the debt coverage ratio agreed was not declared at December 31, 2016 and on March 7, 2017, the subsidiaries obtained a waiver from BNDES to determine the debt coverage ratio for the second semester of 2016. Failure to comply with the covenant also did not result in early maturity of other debts with specific cross-default conditions.
FINEM II and FINEM XVIII
· Restrictions on the payments of dividend if a debt service coverage ratio of 1.0 or more and a general indebtedness ratio of 0.8 or less are not achieved.
FINEM III
· Maintaining Equity/(Equity + Net Bank Debt) ratio of more than 0.28, determined in the Company's annual consolidated financial statements;
· Maintaining a Net Bank Debt/EBITDA ratio of 3.75 or less, determined in the Company's annual consolidated financial statements.
FINEM V
· Maintaining the debt service coverage ratio at 1.2;
· Maintaining the own capitalization ratio at 30% or more.
FINEM VII, FINEM X and FINEM XXIII
· Maintaining the annual debt service coverage ratio at 1.2;
· Distribution of dividend limited to the Total Liabilities/ ex-Dividend Equity ratio of less than 2.33.
FINEM IX, FINEM XIII and FINEM XXV
· Maintaining the Debt Service Coverage Ratio at 1.3 or more.
FINEM XXVI
· Maintaining the Debt Service Coverage Ratio of the subsidiaries related to the contract at 1.3 or more;
· Maintaining the consolidated Debt Service Coverage Ratio at 1.3, or more, determined in the consolidated financial statements of the subsidiary Turbina 16 (“T-16”).
FINEM XI and FINEM XXIV
· Maintaining a Net Bank Debt/EBITDA ratio of 3.75 or less, determined in the Company's annual consolidated financial statements.
FINEM XII
· Maintaining the Debt Service Coverage Ratio of the indirect subsidiaries Campo dos Ventos II Energias Renováveis S.A., SPE Macacos Energia S.A., SPE Costa Branca Energia S.A., SPE Juremas Energia S.A. and SPE Pedra Preta Energia S.A. at 1.3 or more after amortization starts;
· Maintaining the Consolidated Debt Service Coverage Ratio at 1.3 or more, determined in the consolidated financial statements of Eólica Holding S.A., after amortization starts.
71
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
FINEM XV and FINEM XVI
· Maintaining the quarterly equity ratio (ICP) at 25% or more, defined by the ratio of Equity to Total Assets;
· Maintaining the quarterly debt service coverage ratio at 1.2 or more during the amortization period.
FINEM XVII
· Maintaining the debt service coverage ratio at 1.2 or more during the amortization period;
· Maintaining the annual consolidated debt service coverage ratio at 1.3 or more, determined in the consolidated financial statements of Desa Eólicas S.A.
FINEM XIX, FINEM XX, FINEM XXI and FINEM XXII
· Maintenance of Debt Service Coverage Ratio of 1.2 or more during the effective period of the agreement;
· Maintenance of Net Debt/EBITDA ratio of 6.0 or less in 2014, 5.6 in 2015, 4.6 in 2016 and 3.75 in 2017 and thereafter, determined in the consolidated financial statements of CPFL Renováveis during the effective period of the agreement;
· Maintenance of an Equity/(Equity + Net Debt) ratio of 0.41 or more from 2014 to 2016 and 0.45 in 2017 and thereafter, determined in the consolidated financial statements of CPFL Renováveis, during the effective period of the agreement.
In December 2016 the Company obtained from BNDES approval for non-compliance with the Net Debt/EBITDA ratio without the acceleration of the debt maturity for the year ended December 31, 2016.
FINEM XXVII
· Maintaining the debt service coverage ratio at 1.2 or more;
· Maintaining the equity ratio (ICP) at 39.5% or more, defined by the ratio of Equity to Total Assets.
HSBC
· From 2014, there is the obligation to maintain the Net Debt/ EBITDA ratio of less than 4.50 in June 2014, 4.25 in December 2014, 4.0 in June 2015 and 3.50 in the other half yearly periods until settlement.
NIB
· Maintaining the half-yearly debt service coverage ratio at 1.2;
· Maintaining an indebtedness ratio of 70% or less;
· Maintaining the Financing Term Coverage ratio at 1.7 or more.
Banco do Brasil
· Maintaining the annual debt service coverage ratio at 1.2 or more during the amortization period.
Foreign currency borrowings - Bank of America Merrill Lynch, J.P Morgan, Citibank, Scotiabank, Bank of Tokyo-Mitsubishi, Santander, Sumitomo, Mizuho, HSBC, BNP Paribas and syndicated transaction (Law 4.131)
The foreign currency borrowings taken under Law 4.131 are subject to certain restrictive covenants, and include clauses that require the Company to maintain certain financial ratios within pre-established parameters, calculated semiannually.
The ratios required are as follows: (i) Net indebtedness divided by EBITDA – maximum of 3.75 and (ii) EBITDA divided by Finance Income (Costs) – minimum of 2.25.
For purposes of determining covenants, the definition of EBITDA for the Company takes into consideration mainly the consolidation of subsidiaries, associates and joint ventures based on the direct or indirect Company’s interest in those companies (for both EBITDA and assets and liabilities).
Various borrowings of the direct and indirect subsidiaries were subject to acceleration of their maturities in the event of any changes in the Company’s shareholding structure, except if at least one of the following shareholders, Camargo Corrêa and Previ, remained directly or indirectly in the Company’s control block.
72
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
In view of the change of the Company’s shareholding control in January 2017, the Company negotiated previously with the creditors of the Company and its direct and indirect subsidiaries the non-acceleration of the maturities of such borrowings, which started including State Grid International Development Limited or any entity directly or indirectly controlled by State Grid Corporation of China as exception for non-acceleration of their maturities.
Furthermore, failure to comply with the obligations or restrictions mentioned can result in default in relation to other contractual obligations (cross default), depending on each borrowing agreement.
The Management of the Company and its subsidiaries monitor these ratios systematically and constantly to ensure that the contractual conditions are complied with. In Management’s opinion, all restrictive covenants and financial and non-financial clauses are adequately complied with, except as mentioned previously in relation to the indirectly-controlled entity CPFL Renováveis, at December 31, 2016.
( 18 ) DEBENTURES AND INTERESTS ON DEBENTURES
Consolidated | |||||||||||||||||
December 31, 2016 |
December 31, 2015 | ||||||||||||||||
Issue |
Current and noncurrent interest |
Current |
Noncurrent |
Total |
Current and noncurrent interest |
Current |
Noncurrent |
Total | |||||||||
Parent company |
|||||||||||||||||
5th Issue |
Single series |
18,069 |
- |
620,000 |
638,069 |
- |
- |
- |
- | ||||||||
CPFL Paulista |
|||||||||||||||||
6th Issue |
Single series |
47,079 |
198,000 |
462,000 |
707,079 |
47,292 |
- |
660,000 |
707,292 | ||||||||
7th Issue |
Single series |
28,913 |
- |
505,000 |
533,913 |
29,546 |
- |
505,000 |
534,546 | ||||||||
75,992 |
198,000 |
967,000 |
1,240,992 |
76,838 |
- |
1,165,000 |
1,241,838 | ||||||||||
CPFL Piratininga |
|||||||||||||||||
6th Issue |
Single series |
7,846 |
33,000 |
77,000 |
117,846 |
7,882 |
- |
110,000 |
117,882 | ||||||||
7th Issue |
Single series |
13,455 |
- |
235,000 |
248,455 |
13,749 |
- |
235,000 |
248,749 | ||||||||
21,301 |
33,000 |
312,000 |
366,301 |
21,631 |
- |
345,000 |
366,631 | ||||||||||
RGE |
|||||||||||||||||
6th Issue |
Single series |
35,666 |
150,000 |
350,000 |
535,666 |
35,828 |
- |
500,000 |
535,828 | ||||||||
7th Issue |
Single series |
9,733 |
- |
170,000 |
179,733 |
9,946 |
- |
170,000 |
179,946 | ||||||||
45,399 |
150,000 |
520,000 |
715,399 |
45,774 |
- |
670,000 |
715,774 | ||||||||||
RGE SUL |
|||||||||||||||||
4th Issue |
Single series |
32,058 |
- |
1,100,000 |
1,132,058 |
- |
- |
- |
- | ||||||||
CPFL Santa Cruz |
|||||||||||||||||
1st Issue |
Single series |
550 |
32,500 |
32,500 |
65,550 |
568 |
- |
65,000 |
65,568 | ||||||||
CPFL Brasil |
|||||||||||||||||
2nd Issue |
Single series |
- |
- |
- |
- |
2,794 |
- |
228,000 |
230,794 | ||||||||
3rd Issue |
Single series |
11,657 |
- |
400,000 |
411,657 |
- |
- |
- |
- | ||||||||
11,657 |
- |
400,000 |
411,657 |
2,794 |
|
- |
|
228,000 |
|
230,794 | |||||||
CPFL Geração |
|||||||||||||||||
5th Issue |
Single series |
12,969 |
546,000 |
546,000 |
1,104,969 |
13,382 |
- |
1,092,000 |
1,105,382 | ||||||||
6th Issue |
Single series |
23,228 |
- |
460,000 |
483,228 |
23,531 |
- |
460,000 |
483,531 | ||||||||
7th Issue |
Single series |
16,379 |
- |
635,000 |
651,379 |
16,770 |
- |
635,000 |
651,770 | ||||||||
8th Issue |
Single series |
3,369 |
- |
85,520 |
88,889 |
3,153 |
- |
80,024 |
83,177 | ||||||||
9th Issue |
Single series |
524 |
- |
50,278 |
50,802 |
||||||||||||
56,470 |
546,000 |
1,776,798 |
2,379,268 |
56,835 |
- |
2,267,024 |
2,323,859 | ||||||||||
CPFL Renováveis |
|||||||||||||||||
1st Issue - SIIF (*) |
1st to 12th series |
762 |
41,938 |
461,314 |
504,014 |
788 |
38,965 |
467,577 |
507,329 | ||||||||
1st Issue - PCH Holding 2 |
Single series |
644 |
8,700 |
132,091 |
141,435 |
616 |
8,701 |
140,792 |
150,109 | ||||||||
1st Issue - Renováveis |
Single series |
6,160 |
43,000 |
322,500 |
371,660 |
6,579 |
43,000 |
365,500 |
415,079 | ||||||||
2nd Issue - Renováveis |
Single series |
11,486 |
30,000 |
270,000 |
311,486 |
11,894 |
- |
300,000 |
311,894 | ||||||||
3rd Issue - Renováveis |
Single series |
4,444 |
- |
296,000 |
300,444 |
4,589 |
- |
296,000 |
300,589 | ||||||||
4th Issue - Renováveis |
1st series |
7,925 |
- |
200,000 |
207,925 |
- |
- |
- |
- | ||||||||
1st Issue - DESA |
Single series |
425 |
17,500 |
- |
17,925 |
862 |
17,500 |
17,500 |
35,862 | ||||||||
2nd Issue - DESA |
Single series |
29,153 |
- |
65,000 |
94,153 |
16,487 |
- |
65,000 |
81,487 | ||||||||
1st Issue - Turbina 16 |
Single series |
- |
- |
- |
- |
1,810 |
277,200 |
- |
279,010 | ||||||||
1st Issue - Campos dos Ventos V |
Single series |
- |
- |
- |
- |
374 |
42,000 |
- |
42,374 | ||||||||
1st Issue - Santa Úrsula |
Single series |
- |
- |
- |
- |
275 |
30,800 |
- |
31,075 | ||||||||
1st Issue - Pedra Cheirosa I |
Single series |
6,675 |
52,200 |
- |
58,875 |
- |
- |
- |
- | ||||||||
1st Issue - Pedra Cheirosa II |
Single series |
6,114 |
47,800 |
- |
53,914 |
- |
- |
- |
- | ||||||||
1st Issue - Boa Vista II |
Single series |
6,395 |
50,000 |
- |
56,395 |
- |
- |
- |
- | ||||||||
80,183 |
291,138 |
1,746,905 |
2,118,226 |
44,274 |
458,165 |
1,652,369 |
2,154,808 | ||||||||||
Borrowing costs (**) |
(7,346) |
(8,545) |
(51,684) |
(67,575) |
- |
- |
(28,842) |
(28,842) | |||||||||
334,333 |
1,242,095 |
7,423,519 |
8,999,946 |
248,714 |
458,165 |
6,363,552 |
7,070,430 |
(*) These debentures can be converted into shares and, therefore, are considered in the calculation of the dilutive effect for earnings per share (note 26)
(**) In accordance with CPC 08/IAS 39, this refers to borrowings costs attributable to issuance of the respective debt instruments.
73
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Issue |
Quantity issued |
Annual remuneration |
Annual effective rate |
Amortization conditions |
Collateral | ||||||
Parent company |
|||||||||||
5th Issue |
Single series |
62,000 |
114.5% of CDI |
120.65% of CDI |
2 annual installments from October 2019 |
No guarantee | |||||
CPFL Paulista |
|||||||||||
6th Issue |
Single series |
660 |
CDI + 0.8% (2) |
CDI + 0.87% |
3 annual installments from July 2017 |
CPFL Energia guarantee | |||||
7th Issue |
Single series |
50,500 |
CDI + 0.83% (3) |
CDI + 0.89% |
4 annual installments from February 2018 |
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) |
CDI + 0.89% |
4 annual installments from February 2018 |
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% (3) |
CDI + 0.88% |
4 annual installments from February 2018 |
CPFL Energia guarantee | |||||
RGE SUL |
|||||||||||
4th Issue |
Single series |
110,000 |
114.50% of CDI |
120.65% of CDI |
2 annual installments from October 2019 |
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 | |||||
CPFL Brasil |
|||||||||||
2nd Issue |
Single series |
2,280 |
CDI + 1.4% |
CDI + 1.48% |
2 annual instalments from June 2017 |
CPFL Energia guarantee | |||||
3rd Issue |
Single series |
40,000 |
114.5% of CDI |
124.04%% of CDI |
2 annual installments from October 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% (1) |
CDI + 0.75% |
3 annual instalments from August 2018 |
CPFL Energia guarantee | |||||
7th Issue |
Single series |
63,500 |
CDI + 1.06% |
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+ 5.48% |
101.74% of CDI |
1 installment in October 2021 |
CPFL Energia guarantee | |||||
CPFL Renováveis |
|||||||||||
1st Issue - SIIF |
1st to 12th series |
432,299,666 |
TJLP + 1% |
TJLP + 1% + 0.6% |
39 semi-annual installments from 2009 |
Liens | |||||
1st Issue - PCH Holding 2 |
Single series |
1,581 |
CDI + 1.6% |
CDI + 1.8% |
9 annual installments from June 2015 |
CPFL Renováveis guarantee | |||||
1st Issue - Renováveis |
Single series |
43,000 |
CDI + 1.7% |
CDI + 1.82% |
Annual installments from May 2015 |
Assignment of dividends of BVP and PCH Holding | |||||
2nd Issue - Renováveis |
Single series |
300,000 |
114.0% of CDI |
115.43% of CDI |
5 annual instalments from June 2017 |
Unsecured | |||||
3rd Issue - Renováveis |
Single series |
29,600 |
117.25% of CDI |
120.64% of CDI |
1 installment in May 2020 |
Unsecured | |||||
4th Issue - Renováveis |
1st series |
20,000 |
126% CDI |
134.22% CDI |
3 annual installments from September 2019 |
CPFL Renováveis guarantee | |||||
1st Issue - DESA |
Single series |
20 |
CDI + 1.75% |
CDI + 1.75% |
3 semi-annual installments from May de 2016 |
Unsecured | |||||
2nd Issue - DESA |
Single series |
65 |
CDI + 1.34% |
CDI + 1.34% |
3 semi-annual installments from April de 2018 |
Unsecured | |||||
1st Issue - Turbina 16 |
Single series |
27,720 |
112.75% of CDI |
116.94% of CDI |
1 installment in December 2016 |
CPFL Renováveis guarantee | |||||
1st Issue - Campos dos Ventos V |
Single series |
4,200 |
112.75% of CDI |
116.94% of CDI |
1 installment in December 2016 |
CPFL Renováveis guarantee | |||||
1st Issue - Santa Úrsula |
Single series |
3,080 |
112.75% of CDI |
116.94% of CDI |
1 installment in December 2016 |
CPFL Renováveis guarantee | |||||
1st Issue - Pedra Cheirosa I |
Single series |
5,220 |
CDI + 2.85% |
CDI + 2.85% |
1 installment in September 2017 |
CPFL Renováveis guarantee | |||||
1st Issue - Pedra Cheirosa II |
Single series |
4,780 |
CDI + 2.85% |
CDI + 2.85% |
1 installment in September 2017 |
CPFL Renováveis guarantee | |||||
1st Issue - Boa Vista II |
Single series |
5,000 |
CDI + 2.85% |
CDI + 2.85% |
1 installment in September 2017 |
CPFL Renováveis guarantee |
The subsidiaries entered into swap transactions in which they swap the fixed interest component of the transaction for the fluctuation of the interest rate in reais, corresponding to:
(1) 100.15% to 106.9% of CDI
(2) 107% to 107.9% of CDI
(3) 108% to 108.1% of CDI
The maturities of the debentures’ principal recognized in noncurrent liabilities are scheduled as follows:
Maturity |
Consolidated | |
2018 |
1,655,227 | |
2019 |
3,000,726 | |
2020 |
1,771,096 | |
2021 |
595,340 | |
2022 |
129,920 | |
2023 to 2027 |
230,095 | |
2028 to 2032 |
41,113 | |
Total |
7,423,519 |
Main debentures issued during the year
|
|
R$ thousand |
|
|
| |||||||
Company |
Issue |
Released in 2016 |
Released net of borrowing costs |
Interest |
Utilization | |||||||
Quantity issued | ||||||||||||
CPFL Energia - Parent company |
5th Issue |
62,000 |
620,000 |
609,060 |
Semiannual |
Indirect acquisition of RGE Sul shares | ||||||
CPFL Brasil |
3rd Issue |
40,000 |
400,000 |
389,077 |
Semiannual |
Indirect acquisition of RGE Sul shares | ||||||
CPFL Geração |
9th Issue |
50,000 |
50,000 |
48,843 |
Annual |
Subsidiary's investment plan | ||||||
CPFL Renováveis: Pedra Cheirosa I (a) |
1st issue |
5,200 |
52,200 |
51,602 |
With the principal |
Subsidiary's investment plan | ||||||
CPFL Renováveis: Pedra Cheirosa II (a) |
1st issue |
4,780 |
47,800 |
47,251 |
With the principal |
Subsidiary's investment plan | ||||||
CPFL Renováveis: Boa Vista II (a) |
1st issue |
5,000 |
50,000 |
49,426 |
With the principal |
Subsidiary's investment plan | ||||||
CPFL Renováveis - parent company |
4th Issue |
20,000 |
200,000 |
195,589 |
Semiannual |
Debt profile and working capital improvement | ||||||
1,420,000 |
1,390,847 |
74
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
(a) the agreement has no restrictive covenants.
RESTRICTIVE COVENANTS
The debentures are subject to certain restrictive covenants, which include clauses that require the Company and its subsidiaries to maintain certain financial ratios within pre-established parameters. The main ratios are as follows:
CPFL Energia, CPFL Paulista, CPFL Piratininga, RGE, RGE Sul, CPFL Geração, CPFL Brasil and CPFL Santa Cruz
Maintaining, by the Company, of the following ratios:
· Net indebtedness divided by EBITDA – maximum of 3.75;
· EBITDA divided by Finance Income (Costs) - minimum of 2.25;
For purposes of determination of covenants, the definition of EBITDA, in the Company, takes into consideration the consolidation of subsidiaries, associates and joint ventures based on the Company’s interest in those companies (both for EBITDA and assets and liabilities).
CPFL Renováveis
The issues of debentures for the year ended December 31, 2016 contain clauses that require the subsidiary CPFL Renováveis to maintain the following financial ratios:
1st Issue of CPFL Renováveis
· Operating debt service coverage ratio - minimum of 1.00;
· Debt service coverage ratio - minimum of 1.05;
· Net indebtedness divided by EBITDA- maximum of 5.6 in 2015, 5.4 in 2016, 4.6 in 2017, 4.0 in 2018 and 2019 and 3.75 from 2020;
· EBITDA divided by Net finance costs - minimum of 1.75.
The subsidiary obtained approval from the debentureholders for non-compliance with the following:
(i) Debt Service Coverage ratio related to the calculation of December 2015, through the General Meeting of Debentureholders held on December 21, 2015.
(ii) Debt Service Coverage ratio related to the calculation of June 2016, through the General Meeting of Debentureholders held on June 30, 2016.
2nd and 3rd Issues – CPFL Renováveis
· Maintaining a Net Debt/EBITDA ratio maximum of 5.6 in 2015, 5.4 in 2016, 4.6 in 2017, 4.0 in 2018 and 2019 and 3.75 from 2020.
4th Issue of CPFL Renováveis
· Net indebtedness divided by EBITDA- maximum of 5.4 in 2016, 4.6 in 2017 and 4.0 from 2018.
1st issue of the indirect subsidiary PCH Holding 2 S.A:
· Maintaining the Debt Service Coverage ratio of the subsidiary Santa Luzia at 1.2 or more from September 2014.
· Net Debt indebtedness divided by EBITDA maximum of 5.6 in 2015, 5.4 in 2016, 4.6 in 2017, 4.0 in 2018 and 2019 and 3.75 from 2020.
2nd issue – Dobrevê Energia S/A (DESA):
· Maintaining a net debt/dividend ratio of 5.5 or less in 2014, 5.5 in 2015, 4.0 in 2016, 3.5 in 2017 and 3.5 in 2018
Various debentures of the subsidiaries and joint ventures were subject to acceleration of their maturities in the event of any changes in the Company’s shareholding structure, except if at least one of the following shareholders, Camargo Corrêa and Previ, remained directly or indirectly in the Company’s control block.
75
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
In view of the change of the Company’s shareholding control in January 2017, the Company negotiated previously with the creditors of the Company and its direct and indirect subsidiaries and joint ventures the non-acceleration of the maturities of such debentures, which started including State Grid International Development Limited or any entity directly or indirectly controlled by State Grid Corporation of China as exception for non-acceleration of their maturities.Failure to comply with the restrictions mentioned can result in default in relation to other contractual obligations (cross default), depending on each agreement.
The Management of the Company and its subsidiaries monitor those ratios systematically and constantly for the conditions to be fulfilled. In Management’s opinion, all restrictive covenants and financial and non-financial clauses are adequately complied with at December 31, 2016.
( 19 ) PRIVATE PENSION PLAN
The subsidiaries sponsor supplementary retirement and pension plans for their employees. The main characteristics of these plans are as follows:
19.1Characteristics
CPFL Paulista
The plan currently in force for the employees of the subsidiary CPFL Paulista through Fundação CESP is a Mixed Benefit Plan, with the following characteristics:
(i) Defined Benefit Plan (“BD”) – in force until October 31, 1997 – a defined benefit plan, which grants a Proportional Supplementary Defined Benefit (“BSPS”), in the form of a lifetime income convertible into a pension, to participants enrolled prior to October 31, 1997, the amount being defined in proportion to the accumulated past service time up to that date, based on compliance with the regulatory requirements for granting. The total responsibility for coverage of actuarial deficits of this plan falls to the subsidiary.
(ii) Mixed model, as from November 1, 1997, which covers:
· scheduled retirement, under a variable contribution plan, consisting of a benefit plan, which is a defined contribution plan up to the granting of the income, and does not generate any actuarial liability for the subsidiary. The benefit plan only becomes a defined benefit plan, consequently generating actuarial responsibility for the subsidiary, after the granting of a lifetime income, convertible or not into a pension.
Additionally, the subsidiary’s Managers may opt for a Free Benefit Generator Plan – PGBL (defined contribution), operated by either Banco do Brasil or Bradesco.
CPFL Piratininga
As a result of the spin-off of Bandeirante Energia S.A. (subsidiary’s predecessor), the subsidiary CPFL Piratininga assumed the responsibility for the actuarial liabilities of that company’s employees retired and terminated until the date of spin-off, as well as for the obligations relating to the active employees transferred to the subsidiary.
On April 2, 1998, the Secretariat of Pension Plans – “SPC” approved the restructuring of the retirement plan previously maintained by Bandeirante, creating a "Proportional Supplementary Defined Benefit Plan – BSPS”, and a "Mixed Benefit Plan", with the following characteristics:
(i) Defined Benefit Plan (“BD”) - in force until March 31, 1998 – a defined benefit plan, which grants a Proportional Supplementary Defined Benefit (BSPS), in the form of a lifetime income convertible into a pension to participants enrolled until March 31, 1998, in an amount calculated in proportion to the accumulated past service time up to that date, based on compliance with the regulatory requirements for granting. In the event of death while working or the onset of a disability, the benefits incorporate the entire past service time. The subsidiary has full responsibility for covering the actuarial deficits of this Plan.
76
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
(ii) Defined Benefit Plan - in force after March 31, 1998 – defined-benefit type plan, which grants a lifetime income convertible into a pension based on the past service time accumulated after March 31, 1998, based on 70% of the average actual monthly salary for the last 36 months of active service. In the event of death while working or the onset of a disability, the benefits incorporate the entire past service time. The responsibility for covering the actuarial deficits of this Plan is equally divided between the subsidiary and the participants.
(iii) Variable Contribution Plan – implemented together with the Defined Benefit plan effective after March 31, 1998. This is a defined-benefit type pension plan up to the granting of the income, and generates no actuarial liability for the subsidiary. The pension plan only becomes a Defined Benefit type plan after the granting of the lifetime income, convertible (or not) into a pension, and accordingly starts to generate actuarial liabilities for the subsidiary.
Additionally, the subsidiary’s Managers may opt for a Free Benefit Generator Plan – PGBL (defined contribution), operated by either Banco do Brasil or Bradesco.
RGE
A defined benefit type plan, with a benefit level equal to 100% of the adjusted average of the most recent salaries, less the presumed Social Security benefit, with a Segregated Net Asset managed by Fundação CEEE. Only those whose employment contracts were transferred from CEEE to RGE are entitled to this benefit. A defined benefit private pension plan was set up in January 2006 with Bradesco Vida e Previdência for employees hired from 1997.
RGE Sul
Supplementary pension plans for its employees, former employees and related beneficiaries, managed by CEEE. The Single Plan is of the “defined benefit” type and is closed to new participants since February 2011. The Company’s contribution equates the contribution of the benefitted employees, in the proportion of one for one, including regarding the Fundação’s administrative costing plan. Currently the Itauprev plan is in effect, structured in the modality of defined contribution.
CPFL Santa Cruz
The benefits plan of the subsidiary CPFL Santa Cruz, managed by BB Previdência - Fundo de Pensão do Banco do Brasil, is a defined contribution plan.
CPFL Leste Paulista, CPFL Sul Paulista, CPFL Mococa and CPFL Jaguari
In December 2005, the companies joined the CMSPREV private pension plan, managed by IHPREV Pension Fund. The plan is structured as a defined contribution plan.
CPFL Geração
The employees of the subsidiary CPFL Geração participate in the same pension plan as CPFL Paulista.
In addition, managers may opt for a Free Benefit Generator Plan – PGBL (defined contribution), operated by either Banco do Brasil or Bradesco.
77
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
19.2Movements in the defined benefit plans
December 31, 2016 | |||||||||||
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Present value of actuarial obligations |
4,524,008 |
1,202,596 |
108,486 |
352,879 |
480,081 |
6,668,050 | |||||
Fair value of plan's assets |
(3,723,563) |
(1,062,638) |
(89,533) |
(347,906) |
(405,251) |
(5,628,892) | |||||
Net actuarial liability recognized in the statement of financial position |
800,445 |
139,958 |
18,953 |
4,972 |
74,830 |
1,039,158 |
December 31, 2015 | |||||||||||
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Present value of actuarial obligations |
3,793,259 |
961,329 |
90,609 |
278,985 |
- |
5,124,182 | |||||
Fair value of plan's assets |
(3,355,589) |
(951,021) |
(80,332) |
(287,202) |
- |
(4,674,144) | |||||
Present value of obligations (fair value of assets), net |
437,670 |
10,308 |
10,277 |
(8,217) |
- |
450,038 | |||||
Effect of asset ceiling |
- |
- |
- |
8,217 |
- |
8,217 | |||||
Net actuarial liability recognized in the statement of financial position |
437,670 |
10,308 |
10,277 |
- |
- |
458,255 |
The movements in the present value of the actuarial obligations and the fair value of the plan’s assets are as follows:
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Present value of actuarial obligations at December 31, 2014 |
3,820,563 |
986,972 |
88,621 |
279,283 |
- |
5,175,439 | |||||
Gross current service cost |
1,183 |
3,733 |
160 |
(131) |
- |
4,945 | |||||
Interest on actuarial obligations |
425,465 |
110,425 |
9,944 |
31,490 |
- |
577,324 | |||||
Participants' contributions transferred during the year |
12 |
1,842 |
- |
611 |
- |
2,465 | |||||
Actuarial loss (gain): effect of changes in demographic assumptions |
(226) |
(614) |
(12) |
(6) |
- |
(858) | |||||
Actuarial loss (gain): effect of changes in financial assumptions |
(98,399) |
(70,590) |
(400) |
(11,884) |
- |
(181,273) | |||||
Benefits paid during the year |
(355,339) |
(70,439) |
(7,704) |
(20,378) |
- |
(453,860) | |||||
Present value of actuarial obligations at December 31, 2015 |
3,793,259 |
961,329 |
90,609 |
278,985 |
- |
5,124,182 | |||||
Business combination |
- |
- |
- |
- |
474,710 |
474,710 | |||||
Gross current service cost |
828 |
3,242 |
76 |
59 |
365 |
4,570 | |||||
Interest on actuarial obligations |
467,872 |
121,158 |
11,184 |
35,211 |
8,469 |
643,894 | |||||
Participants' contributions transferred during the year |
59 |
2,020 |
- |
319 |
165 |
2,563 | |||||
Actuarial loss (gain): effect of changes in demographic assumptions |
- |
- |
- |
3,602 |
- |
3,602 | |||||
Actuarial loss (gain): effect of changes in financial assumptions |
619,803 |
193,652 |
14,909 |
57,793 |
3,613 |
889,770 | |||||
Benefits paid during the year |
(357,813) |
(78,805) |
(8,292) |
(23,090) |
(7,241) |
(475,241) | |||||
Present value of actuarial obligations at December 31, 2016 |
4,524,008 |
1,202,596 |
108,486 |
352,879 |
480,081 |
6,668,050 |
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Fair value of actuarial assets at December 31, 2014 |
(3,315,422) |
(913,589) |
(85,360) |
(273,019) |
- |
(4,587,390) | |||||
Expected return during the year |
(375,527) |
(105,413) |
(9,691) |
(31,686) |
- |
(522,317) | |||||
Participants' contributions transferred during the year |
(12) |
(1,842) |
- |
(611) |
- |
(2,465) | |||||
Sponsors' contributions |
(81,111) |
(22,936) |
(1,687) |
(7,593) |
- |
(113,327) | |||||
Actuarial loss (gain) |
61,144 |
22,320 |
8,702 |
5,329 |
- |
97,495 | |||||
Benefits paid during the year |
355,339 |
70,439 |
7,704 |
20,378 |
- |
453,860 | |||||
Fair value of actuarial assets at December 31, 2015 |
(3,355,589) |
(951,021) |
(80,332) |
(287,202) |
- |
(4,674,144) | |||||
Business combination |
- |
- |
- |
- |
(415,621) |
(415,621) | |||||
Expected return during the year |
(404,183) |
(115,607) |
(9,582) |
(35,632) |
(7,470) |
(572,474) | |||||
Participants' contributions transferred during the year |
(59) |
(2,020) |
- |
(319) |
(165) |
(2,563) | |||||
Sponsors' contributions |
(48,263) |
(13,405) |
(843) |
(9,441) |
(1,437) |
(73,389) | |||||
Actuarial loss (gain) |
(273,282) |
(59,390) |
(7,068) |
(38,403) |
12,201 |
(365,942) | |||||
Benefits paid during the year |
357,813 |
78,805 |
8,292 |
23,090 |
7,241 |
475,241 | |||||
Fair value of actuarial assets at December 31, 2016 |
(3,723,563) |
(1,062,638) |
(89,533) |
(347,906) |
(405,251) |
(5,628,892) |
19.3Movements in recognized assets and liabilities recognized
The movements in net liability are as follows:
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Net actuarial liability at December 31, 2014 |
505,140 |
73,383 |
3,261 |
6,264 |
- |
588,048 | |||||
Expenses (income) recognized in the statement of profit or loss |
51,121 |
8,745 |
413 |
(95) |
- |
60,184 | |||||
Sponsors' contributions transferred during the year |
(81,111) |
(22,936) |
(1,687) |
(7,593) |
- |
(113,327) | |||||
Actuarial loss (gain): effect of changes in demographic assumptions |
(226) |
(614) |
(12) |
(6) |
- |
(858) | |||||
Actuarial loss (gain): effect of changes in financial assumptions |
(37,254) |
(48,270) |
8,302 |
(6,555) |
- |
(83,777) | |||||
Effect of asset ceiling |
- |
- |
- |
7,984 |
- |
7,984 | |||||
Net actuarial liability at December 31, 2015 |
437,670 |
10,308 |
10,277 |
- |
- |
458,255 | |||||
Other contributions |
16,149 |
526 |
63 |
127 |
- |
16,865 | |||||
Total liability |
453,819 |
10,834 |
10,340 |
127 |
- |
475,120 | |||||
Current |
|
|
|
|
802 | ||||||
Noncurrent |
|
|
|
|
474,318 |
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Net actuarial liability at December 31, 2015 |
437,670 |
10,308 |
10,277 |
- |
458,255 | ||||||
Business combination |
59,089 |
59,089 | |||||||||
Expenses (income) recognized in the statement of profit or loss |
64,514 |
8,791 |
1,677 |
158 |
1,364 |
76,505 | |||||
Sponsors' contributions transferred during the year |
(48,263) |
(13,405) |
(843) |
(9,442) |
(1,436) |
(73,388) | |||||
Actuarial loss (gain): effect of changes in demographic assumptions |
- |
- |
- |
3,602 |
- |
3,602 | |||||
Actuarial loss (gain): effect of changes in financial assumptions |
346,523 |
134,263 |
7,843 |
19,392 |
15,813 |
523,834 | |||||
Effect of asset ceiling |
- |
- |
- |
(8,738) |
- |
(8,738) | |||||
Net actuarial liability at December 31, 2016 |
800,445 |
139,958 |
18,954 |
4,972 |
74,830 |
1,039,158 | |||||
Other contributions |
12,914 |
133 |
8 |
228 |
- |
13,284 | |||||
Total liability |
813,359 |
140,091 |
18,962 |
5,200 |
74,830 |
1,052,442 | |||||
Current |
|
|
|
|
|
33,209 | |||||
Noncurrent |
|
|
|
|
|
1,019,233 |
19.4Expected contributions and benefits
The expected contributions to the plans for 2017 are shown below:
2017 | |
CPFL Paulista |
75,920 |
CPFL Piratininga |
21,375 |
CPFL Geração |
1,606 |
RGE |
9,914 |
RGE Sul |
9,053 |
Total |
117,868 |
The subsidiaries CPFL Paulista, CPFL Piratininga and CPFL Geração negotiated with Fundação CESP a grace period for payment of the principal of the monthly contributions for the respective plans during the period from September 2015 to August 2017, with resumption of these payments as from September 2017.
The expected benefits to be paid by the Fundação CESP and Fundação CESP in the next 10 years are shown below:
2017 |
2018 |
2019 |
2020 |
2021 to 2026 |
Total | |
CPFL Paulista |
374,441 |
390,441 |
407,979 |
424,542 |
2,869,228 |
4,466,631 |
CPFL Piratininga |
83,797 |
88,712 |
94,257 |
99,111 |
713,424 |
1,079,301 |
CPFL Geração |
8,941 |
9,408 |
9,745 |
10,173 |
68,181 |
106,448 |
RGE |
25,229 |
27,041 |
28,632 |
30,051 |
212,032 |
322,985 |
RGE Sul |
33,377 |
35,368 |
37,554 |
39,607 |
285,256 |
431,162 |
Total |
525,785 |
550,970 |
578,167 |
603,484 |
4,148,121 |
6,406,527 |
At December 31, 2016, the average duration of the defined benefit obligation was 9.1 years for CPFL Paulista, 10.7 years for CPFL Piratininga, 9.3 years for CPFL Geração, 10.2 years for RGE and 10.6 years for RGE Sul.
19.5Recognition of private pension plan income and expense
The actuary’s estimate of the expenses and/or income to be recognized in 2017 and the income/expense recognized in 2016 and 2015 are as follows:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
2017 Estimated | |||||||||||
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Service cost |
707 |
3,153 |
73 |
270 |
2,153 |
6,356 | |||||
Interest on actuarial obligations |
476,613 |
127,561 |
11,431 |
37,395 |
50,927 |
703,927 | |||||
Expected return on plan assets |
(392,819) |
(113,470) |
(9,437) |
(37,412) |
(43,258) |
(596,396) | |||||
Total expense (income) |
84,501 |
17,244 |
2,067 |
253 |
9,822 |
113,887 |
2016 Actual | |||||||||||
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul* |
Total | ||||||
Service cost |
828 |
3,242 |
76 |
59 |
365 |
4,570 | |||||
Interest on actuarial obligations |
467,872 |
121,158 |
11,184 |
35,211 |
8,469 |
643,894 | |||||
Expected return on plan assets |
(404,184) |
(115,608) |
(9,582) |
(35,632) |
(7,470) |
(572,476) | |||||
Effect of asset ceiling |
- |
- |
- |
520 |
- |
520 | |||||
Total expense (income) |
64,514 |
8,791 |
1,677 |
158 |
1,364 |
76,505 |
(*) The expenses and income presented for RGE Sul are related to November and December 2016.
2015 Actual | |||||||||||
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | ||||||
Service cost |
1,183 |
3,733 |
160 |
(131) |
- |
4,945 | |||||
Interest on actuarial obligations |
425,465 |
110,425 |
9,944 |
31,490 |
- |
577,324 | |||||
Expected return on plan assets |
(375,527) |
(105,413) |
(9,691) |
(31,686) |
- |
(522,317) | |||||
Effect of asset ceiling |
- |
- |
- |
232 |
- |
232 | |||||
Total expense (income) |
51,121 |
8,745 |
413 |
(95) |
- |
60,184 |
The main assumptions taken into consideration in the actuarial calculation at the end of the reporting period were as follows:
CPFL Paulista, CPFL Geração and CPFL Piratininga |
RGE |
RGE Sul | ||||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 | ||||||
Nominal discount rate for actuarial liabilities: |
10.99% p.a. |
12.67% p.a. |
10.99% p.a. |
12.67% p.a. |
10.99% p.a. | |||||
Nominal Return Rate on Assets: |
10.99% p.a. |
12.67% p.a. |
10.99% p.a. |
12.67% p.a. |
10.99% p.a. | |||||
Estimated Rate of nominal salary increase: |
7.00% p.a. |
6.79% p.a. |
8.15% p.a. |
6.79% p.a. |
7.29% p.a. | |||||
Estimated Rate of nominal benefits increase: |
5.00% a .a. |
5.00% a .a. |
5.00% a .a. |
5.00% a .a. |
5.00% a .a. | |||||
Estimated long-term inflation rate (basis for determining the nominal rates above) |
5.00% p.a. |
5.00% p.a. |
5.00% p.a. |
5.00% p.a. |
5.00% p.a. | |||||
General biometric mortality table: |
AT-2000 (-10) |
AT-2000 (-10) |
BR-EMS sb v.2015 |
AT-2000 (-10) |
AT-2000 | |||||
Biometric table for the onset of disability: |
Low Light |
Low Light |
Medium Light |
Low Light |
Medium Light | |||||
Expected turnover rate: |
ExpR_2012* |
ExpR_2012* |
Null |
ExpR_2012* |
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% 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%
19.6Plan assets
The following tables show the allocation (by asset segment) of the assets of the CPFL Energia pension plans, at December 31, 2016 and 2015 managed by Fundação CESP and Fundação CEEE. The tables also show the distribution of the guarantee resources established as target for 2017, obtained in light of the macroeconomic scenario in December 2016.
Assets managed by the plans are as follows:
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Assets managed by Fundação CESP |
Assets managed by Fundação CEEE | |||||||||||||
CPFL Paulista and CPFL Geração |
CPFL Piratininga |
RGE |
RGE Sul | |||||||||||
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
2016 | ||||||||
Fixed rate |
79% |
80% |
83% |
84% |
76% |
73% |
74% | |||||||
Federal governament bonds |
60% |
57% |
56% |
54% |
61% |
56% |
60% | |||||||
Corporate bonds (financial institutions) |
6% |
5% |
10% |
10% |
8% |
4% |
8% | |||||||
Corporate bonds (non financial institutions) |
1% |
1% |
1% |
1% |
4% |
5% |
4% | |||||||
Multimarket funds |
1% |
16% |
1% |
19% |
3% |
8% |
3% | |||||||
Other fixed income investments |
12% |
1% |
15% |
- |
- |
- |
- | |||||||
Variable income |
14% |
13% |
12% |
12% |
15% |
14% |
16% | |||||||
CPFL Energia's shares |
8% |
5% |
6% |
4% |
- |
- |
- | |||||||
Investiment funds - shares |
6% |
8% |
7% |
8% |
15% |
14% |
16% | |||||||
Structured investments |
1% |
- |
1% |
- |
8% |
11% |
8% | |||||||
Equity funds |
- |
- |
- |
- |
7% |
10% |
7% | |||||||
Real estate funds |
- |
- |
- |
- |
1% |
1% |
1% | |||||||
Multimarket fund |
1% |
- |
1% |
- |
- |
- |
- | |||||||
Total quoted in an active market |
94% |
93% |
97% |
96% |
99% |
98% |
98% | |||||||
Real estate |
3% |
4% |
2% |
2% |
1% |
1% |
1% | |||||||
Transactions with participants |
1% |
2% |
2% |
2% |
1% |
1% |
2% | |||||||
Other investments |
1% |
1% |
- |
- |
- |
- |
- | |||||||
Escrow deposits and othes |
1% |
1% |
- |
- |
- |
- |
- | |||||||
Total not quoted in an active market |
6% |
7% |
3% |
4% |
1% |
2% |
2% |
The plan assets do not include any properties occupied or assets used by the Company. The fair value of the shares stated in line item "Shares of CPFL Energia" in the assets managed by Fundação CESP is R$ 417,058 at December 31, 2016 (R$ 245,380 at December 31, 2015).
Target for 2017 | |||||||
Fundação CESP |
Fundação CEEE | ||||||
CPFL Paulista and CPFL Geração |
CPFL Piratininga |
RGE |
RGE Sul | ||||
Fixed income investments |
77.1% |
80.4% |
80.0% |
78.0% | |||
Variable income investments |
14.4% |
12.2% |
15.0% |
16.0% | |||
Real estate |
3.4% |
1.6% |
1.0% |
1.0% | |||
Transactions with participants |
1.5% |
1.8% |
1.0% |
2.0% | |||
Structured investments |
2.3% |
2.3% |
3.0% |
3.0% | |||
Investments abroad |
1.3% |
1.7% |
0.0% |
0.0% | |||
100.0% |
100.0% |
100.0% |
100.0% | ||||
The allocation target for 2017 was based on the recommendations for allocation of assets made at the end of 2016 by Fundação CESP and Fundação CEEE, in their Investment Policy. This target may change at any time during 2017, in light of changes in the macroeconomic situation or in the return on assets, among other factors.
The asset management aims to maximize the return on investments, while seeking to minimize the risks of an actuarial deficit. Investments are therefore always made bearing in mind the liabilities that have to be honored. Fundação CESP and Fundação CEEE conduct studies of Asset Liability Management at least once a year, for a horizon longer than ten years. The ALM study also represents an important tool for the liquidity risk management of the pension plans since it considers the payment flow of benefits versus the assets considered liquid.
The basis for determining the assumptions of estimated general return on the assets is supported by ALM. The main assumptions are macroeconomic projections for calculating the anticipated long-term profitability, taking into account the current benefit plan portfolios. ALM processes the ideal average long-term allocation of the plans’ assets and the estimated long-term profitability is based on this allocation and on the assumptions of the assets’ profitability.
19.7Sensitivity analysis
The significant actuarial assumptions for determining the defined benefit obligation are discount rate and mortality. The following sensitivity analyses were based on reasonably possible changes in the assumptions at the end of the reporting period, with the other assumptions remaining constant.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
In the presentation of the sensitivity analysis, the present value of the defined benefit obligation was calculated using the projected unit credit method at the end of the reporting period, the same method used to calculate the defined benefit obligation recognized in the statement of income, according to CPC 33 / IFRS 19.
See below the effects on the defined benefit obligation if the discount rate were 0.25 percentage points lower (higher) and if general biometric mortality table were to be softened (aggravated) in one year:
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Total | |||||||
Defined benefit plan obligation |
4,524,008 |
1,202,596 |
108,486 |
352,879 |
480,081 |
6,668,050 |
Increase / Decrease |
CPFL Paulista |
CPFL Piratininga |
CPFL Geração |
RGE |
RGE Sul |
Increase (decrease) in total defined benefit plan obligation | ||||||||
Nominal discount (p.a.)* |
-0,25 p.p. |
104,645 |
32,642 |
2,565 |
9,082 |
12,933 |
161,867 | |||||||
+0,25 p.p. |
(100,503) |
(31,174) |
(2,460) |
(8,694) |
(12,346) |
(155,177) | ||||||||
General biometric mortality table** |
+1 year |
(92,886) |
(19,346) |
(2,132) |
(5,666) |
(8,549) |
(128,578) | |||||||
-1 year |
90,954 |
18,750 |
2,091 |
5,484 |
8,299 |
125,577 | ||||||||
* The assumption considered in the actuarial report for the nominal discount rate was 10.99% p.a. for all companies. The projected rates are increased or decreased | ||||||||||||||
by 0.25 p.p. to 10.74% p.a. and 11.24% p.a.. | ||||||||||||||
** The assumption considered in the actuarial report for the mortality table was AT-2000 (-10) for CPFL Paulista, CPFL Piratininga and CPFL Geração; BREMS sb v.2015 | ||||||||||||||
for RGE and AT-2000 for RGE Sul. The projections were performed with 1 year of aggravation or softening on the respective mortality tables. |
19.8Investment risk
The major part of the resources of the Company’s benefit plans is invested in the fixed income segment and, within this segment, the greater part of the funds is invested in federal government bonds, indexed to the IGP-M, IPCA and SELIC, which are the indexes for adjustment of the actuarial liabilities of the Company’s plans (defined benefit plans), representing the matching between assets and liabilities.
Management of the Company’s benefit plans is monitored by the Investment and Pension Plan Management Committee, which includes representatives of active and retired employees, as well as members appointed by the Company. Among the duties of the Committee are the analysis and approval of investment recommendations made by Fundação CESP investment managers, which occurs at least quarterly.
In addition to controlling market risks by the unplanned divergence methodology, as required by law, Fundação CESP and Fundação CEEE uses the following tools to control market risks in the fixed income and variable income segments: VaR, Tracking Risk, Tracking Error and Stress Test.
Fundação CESP's and Fundação CEEE’s Investment Policy imposes additional restrictions that, along those established by law, define the percentage of diversification for investments in assets issued or underwritten by the same legal entity.
( 20 ) REGULATORY CHARGES
Consolidated | ||||
Dec. 31, 2016 |
Dec. 31, 2015 | |||
Fee for the use of water resources |
1,385 |
2,482 | ||
Global reversal reserve - RGR |
17,469 |
17,446 | ||
ANEEL inspection fee - TFSEE |
2,044 |
1,764 | ||
Energy development account - CDE |
309,117 |
526,196 | ||
Tariff flags and others |
36,064 |
304,129 | ||
Total |
366,078 |
852,017 |
82
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Energy development account – CDE: refer to the (i) annual CDE quota for the year 2016 in the amount of R$ 164,681 (R$ 401,347 as at December 31, 2015); (ii) quota intended for the reimbursement of the CDE injection for the period from January 2013 to January 2014 in the amount of R$ 44,622 (R$ 45,618 in December 31, 2015); and (iii) quota intended for the reimbursement of the injection into the Regulated Contracting Environment (ACR) account for the period from February to December 2014, in the amount of R$ 99,814 (R$ 79,231 in December 31, 2015). The subsidiaries conducted matching of accounts between the amount of CDE payable and the Accounts Receivable – Eletrobras (note 12) in 2016, in the amount of R$ 869,717.
Tariff flags and others: refer basically to the amount to be passed on to the Centralizing Account for Tariff Flag Resources (“CCRBT”).
( 21 ) TAXES, FEES AND CONTRIBUTIONS
Consolidated | |||
Dec. 31, 2016 |
Dec. 31, 2015 | ||
Current |
|||
ICMS (State VAT) |
416,096 |
384,151 | |
PIS (tax on revenue) |
28,759 |
33,199 | |
COFINS (tax on revenue) |
126,939 |
159,317 | |
IRPJ (corporate income tax) |
42,793 |
30,751 | |
CSLL (social contribution on net income) |
14,434 |
12,498 | |
Others |
52,522 |
33,427 | |
Total |
681,544 |
653,342 | |
Noncurrent |
|||
PIS/COFINS (tax on revenue) - installment |
26,814 |
- |
( 22 ) PROVISION FOR TAX, CIVIL AND LABOR RISKS AND ESCROW DEPOSITS
Consolidated | |||||||
December 31, 2016 |
December 31, 2015 | ||||||
Provision for tax, civil and labor risks |
Escrow Deposits |
Provision for tax, civil and labor risks |
Escrow Deposits | ||||
Labor |
222,001 |
110,147 |
171,989 |
78,345 | |||
Civil |
236,915 |
114,214 |
194,530 |
112,909 | |||
Tax |
|||||||
FINSOCIAL |
32,372 |
90,951 |
29,917 |
84,092 | |||
Income Tax |
142,790 |
150,439 |
138,524 |
886,271 | |||
Others |
113,227 |
84,091 |
15,920 |
63,600 | |||
288,389 |
325,481 |
184,362 |
1,033,964 | ||||
Others |
85,971 |
229 |
18,654 |
2,310 | |||
Total |
833,276 |
550,072 |
569,534 |
1,227,527 |
The movements in the provision for tax, civil, labor and other risks are shown below:
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | ||||||||||||||
December 31, 2015 |
Additions |
Reversals |
Payments |
Monetary Restatements |
Business combination |
December 31, 2016 | ||||||||
Labor |
171,989 |
114,403 |
(56,710) |
(104,254) |
20,416 |
76,156 |
222,001 | |||||||
Civil |
194,530 |
105,424 |
(51,246) |
(105,870) |
30,080 |
63,998 |
236,915 | |||||||
Tax |
184,362 |
81,776 |
(13,006) |
(1,122) |
20,457 |
15,922 |
288,389 | |||||||
Others |
18,654 |
12,362 |
(8,880) |
(5,757) |
2,286 |
67,307 |
85,971 | |||||||
Total |
569,534 |
313,965 |
(129,843) |
(217,003) |
73,239 |
223,383 |
833,276 |
The additions in provisions for tax risks, made in 2016, refer basically to discussions by certain subsidiaries about the levy of PIS and COFINS on finance income.
The provision for tax, civil and labor risks was based on the assessment of the risks of losing the lawsuits to which the Company and its subsidiaries are parties, where the likelihood of loss is probable in the opinion of the outside legal counselors and the Management of the Company and its subsidiaries.
The principal pending issues relating to litigation, lawsuits and tax assessments are summarized below:
a. Labor: The main labor lawsuits relate to claims filed by former employees or labor unions for payment of salary adjustments (overtime, salary parity, severance payments and other claims).
b. Civil
Bodily injury - refer mainly to claims for indemnities relating to accidents in the Company's electrical grids, damage to consumers, vehicle accidents, etc.
Tariff increase - refer to various claims by industrial consumers as a result of tariff increases imposed by DNAEE Administrative Rules 38 and 45, of February 27 and March 4, 1986, when the “Plano Cruzado” economic plan price freeze was in effect.
c. Tax
FINSOCIAL – refers to legal challenges of the subsidiary CPFL Paulista of the rate increase and collection of FINSOCIAL during the period from June 1989 to October 1991.
Income Tax – the provision of R$ 139,957 (R$ 129,907 at December 31, 2015) recognized by the subsidiary CPFL Piratininga refers to the lawsuit for tax deductibility of CSLL in the determination of corporate income tax - IRPJ.
Other - tax – refer to other lawsuits in progress at the judicial and administrative levels resulting from the subsidiaries' operations, related to tax matters involving INSS, FGTS and SAT.
The line item of “others” refers mainly to lawsuits involving regulatory matters.
Possible losses
The Company and its subsidiaries are parties to other lawsuits in which Management, supported by its external legal counselors, believes that the chances of a successful outcome are possible, 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 December 31, 2016 and 2015, were as follows:
Consolidated |
||||||||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Main reasons for claims | ||||||||||
Labor |
668,005 |
659,636 |
Work accidents, risk premium for dangerousness at workplace and overtime | |||||||||
Civil |
1,004,279 |
697,242 |
Personal injury, environmental impacts and overfed tariffs | |||||||||
Tax |
4,611,077 |
3,600,368 |
ICMS, FINSOCIAL, PIS and COFINS, and Income tax | |||||||||
Regulatory |
93,827 |
71,514 |
Technical, commercial and economic-financial supervisions | |||||||||
Total |
6,377,188 |
5,028,760 |
Tax – there is a discussion relating to the deductibility for income tax expense recognized in 1997 relating to the commitment assumed in regard to the pension plan of employees of subsidiary CPFL Paulista with Fundação CESP in the estimated amount of R$ 1,130,820, since it was subject to renegotiation and novation of debt in that year. The subsidiary, based on an inquiry to the Brazilian Federal Revenue Service (RFB), obtained a favorable response included in Note MF/SRF/COSIT/GAB No. 157 of April 9, 1998 and took the tax deductibility of the expense, consequently generating tax loss in that year. Despite the favorable response of the RFB, the subsidiary received tax infringement notices from the tax authorities and, in two tax lawsuits arising from these infringements, made escrow deposits. In January 2016, the Company obtained court decisions that authorized the replacement of the escrow deposits (R$ 745,903 as at December 31, 2015) with financial guarantees (letter of guarantee and performance bond), for which the withdrawals on behalf of the subsidiary occurred in 2016. There is an appeal by the Office of Attorney-General of the National Treasury in one of the cases, with suspensive effect, which awaits judgment by the Federal Regional Court. Based on the updated position of the lawsuits that conduct this case, Management’s opinion is that the risk of loss is possible.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Additionally, in August 2016, the subsidiary CPFL Renováveis received a tax infringement notice in the amount of R$ 285,537 relating to the collection of Withholding Income Tax - IRRF on remuneration of capital gain incurred by parties resident and/or domiciled abroad, arising from the transaction of sale of Jantus SL, in December 2011, which the Company’s management, supported by the opinion of its outside legal counselors, classified the likelihood of a favorable outcome as possible.
The subsidiary CPFL Geração, in December 2016, received two (2) tax infringement notices that, summed up, total R$ 316,372 relating to the collection of Corporate Income Tax - IRPJ and Social Contribution on Profit – CSLL relating to calendar year 2011, calculated on the alleged capital gain identified on the acquisition of ERSA Energias Renováveis S.A. and recording of differences from the fair value remeasurement of SMITA Empreendimentos e Participações S.A., company acquired in a downstream merger, which the Company’s management, supported by its outside legal counselors, classified the likelihood of a favorable outcome as possible.
As regards labor contingencies, the Company informs that there is discussion about the possibility of changing the inflation adjustment index adopted by the Labor Court. Currently there is a decision of the Federal Supreme Court (STF) that suspends the change taken into effect by the Superior Labor Court (TST), which intended to change the index currently adopted by the Labor Court (“TR”), the IPCA-E. The Supreme Court considered that the TST’s decision entailed an unlawful interpretation and was not compliant with the determination of the effects of prior court decisions, violating its competence to decide on a constitutional matter. In view of such decision, and until there is a new decision by the STF, the index currently adopted by the Labor Court (“TR”) remains valid, which has been acknowledged by the TST (Superior Labor Court) in recent decisions. Accordingly, the management of the Company and its subsidiaries considers the risk of loss as possible and, as this matter still requires definition by the Courts, it is not possible to reliably estimate the amounts involved.
Based on the opinion of their external legal advisers, Management of the Company and its subsidiaries consider that the registered amounts represent best estimate.
( 23 ) USE OF PUBLIC ASSET
Consolidated | ||||||||
Company |
Dec. 31, 2016 |
Dec. 31, 2015 |
Number of remaining installments |
Interest rates | ||||
CERAN |
97,481 |
92,581 |
231 |
IGP-M + 9,6% p.a. | ||||
Current |
10,857 |
9,457 |
||||||
Noncurrent |
86,624 |
83,124 |
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 24 ) OTHER PAYABLES
Consolidated | |||||||
Current |
Noncurrent | ||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 | ||||
Consumers and concessionaires |
73,864 |
53,959 |
44,711 |
- | |||
Energy efficiency program - PEE |
257,622 |
295,745 |
58,798 |
35,597 | |||
Research & Development - P&D |
75,655 |
84,943 |
55,272 |
36,426 | |||
EPE/FNDCT/PROCEL (*) |
12,928 |
6,181 |
- |
- | |||
Reversion fund |
- |
- |
17,750 |
17,750 | |||
Advances |
163,054 |
141,228 |
8,029 |
10,041 | |||
Tariff discounts - CDE |
8,891 |
54,749 |
- |
- | |||
Provision for socio environmental costs and asset retirement |
13,703 |
- |
61,828 |
53,378 | |||
Payroll |
16,951 |
13,136 |
- |
- | |||
Profit sharing |
56,215 |
49,227 |
11,400 |
5,099 | |||
Collection agreements |
69,793 |
130,282 |
- |
- | |||
Guarantees |
- |
- |
44,140 |
28,531 | |||
Business combination |
9,492 |
29,935 |
- |
- | |||
Others |
49,454 |
45,587 |
7,364 |
4,326 | |||
Total |
807,623 |
904,971 |
309,292 |
191,148 |
(*) EPE - Energy research company; FNDCT - National scientific and technological development fund; and PROCEL - National Program for Electric Energy Savings
Consumers and concessionaires: refer to liabilities with consumers in connection with bills paid twice and adjustments of billing to be offset or returned to consumers as well the participation of consumers in the “Programa de Universalização” program. The noncurrent asset refers to the sale made by the indirect subsidiary RGE Sul in the period from September 1, 2000 to December 31, 2002 (note 16).
Research & Development and Energy Efficiency Programs: the subsidiaries recognized liabilities relating to amounts already billed in tariffs (1% of net operating revenue), but not yet invested in the research & development and energy efficiency programs. These amounts are subject to adjustment for inflation at the SELIC rate, through the date of their realization.
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.
Provision for socio environmental costs and asset retirement: refers mainly to provisions recognized by the indirect subsidiary CPFL Renováveis in relation to socio environmental licenses as a result of events that have already occurred and obligations to remove assets arising from contractual and legal requirements related to leasing of land on which the wind farms are located. Such costs are accrued against property, plant and equipment and will be depreciated over the remaining useful life of the asset.
Tariff discounts – CDE: refer to the difference between the tariff discount granted to consumers and the amounts received via the CDE.
Profit sharing: mainly comprised by:
(i) in accordance with a collective labor agreement, the Company and its subsidiaries introduced an employee profit-sharing program, based on the achievement of operating and financial targets previously established;
(ii) Long-Term Incentive Program: refer to the Long-Term Incentive Plan for Executives, which involves rewarding the latter with financial resources, based on the behavior of the Company’s shares on the market and expectations for appreciation, as well as the Company’s results, using parametric calculation formulas and granting of Virtual Value Units (UVV). The Plan does not contemplate distributing Company shares to such executives and only uses them for purposes of monitoring the expectations established in the Company’s Long-Term Strategic Plan, likewise approved by the Board of Directors.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The currently effective plan is in effect from 2014 to 2020 and calls for grants relating to 2014, 2015 and 2016. The effective period is thus 6 years, with a grace period of two years for the first conversion of each annual grant. The conversion term for each grant is gradual, in a period of up to 5 years and in 3 conversions (33/33/34%).
The incentive program calls for partial realization, according to the relationship between expected appreciation and that effectively accrued, as per Strategic Plan expectation, there being a minimum expected results trigger, as well as attainment higher than initially projected, limited to 150%.
( 25 ) EQUITY
The shareholders’ interest in the Company’s equity at December 31, 2016 and 2015 is shown below (see note 38.1 – Acquisition of ownership interest in the Company by State Grid International Development Limited):
Number of shares | ||||||||
December 31, 2016 |
December 31, 2015 | |||||||
Shareholders |
Common shares |
Interest % |
Common shares |
Interest % | ||||
BB Carteira Livre I FIA |
- |
- |
262,698,037 |
26.45% | ||||
Caixa de Previdência dos Funcionários do Banco do Brasil - Previ |
299,787,559 |
29.45% |
29,756,032 |
3.00% | ||||
Camargo Correa S.A. |
5,897,311 |
0.58% |
26,764 |
0.00% | ||||
ESC Energia S.A. |
234,086,204 |
23.00% |
234,086,204 |
23.57% | ||||
Bonaire Participações S.A. |
1,249,386 |
0.12% |
1,238,334 |
0.12% | ||||
Energia São Paulo FIA |
35,145,643 |
3.45% |
146,463,379 |
14.75% | ||||
Fundação Petrobras de Seguridade Social - Petros |
28,056,260 |
2.76% |
1,816,119 |
0.18% | ||||
Fundação Sistel de Seguridade Social |
37,070,292 |
3.64% |
- |
- | ||||
Fundação Sabesp de Seguridade Social - SABESPREV |
696,561 |
0.07% |
- |
- | ||||
Fundação CESP |
51,048,952 |
5.02% |
- |
- | ||||
BNDES Participações S.A. |
68,592,097 |
6.74% |
66,914,177 |
6.74% | ||||
Antares Holdings Ltda. |
16,967,165 |
1.67% |
16,552,110 |
1.67% | ||||
Brumado Holdings Ltda. |
36,497,075 |
3.59% |
35,604,273 |
3.59% | ||||
Members of the Executive Board |
34,250 |
0.00% |
105,672 |
0.01% | ||||
Other shareholders |
202,785,991 |
19.92% |
197,753,114 |
19.91% | ||||
Total |
1,017,914,746 |
100.00% |
993,014,215 |
100.00% |
The Company’s capital is R$ 5,741,284, comprising 1,017,914,746 common shares, fully subscribed and paid in. The shares do not have nominal value and there are no treasury shares. Capital can be increased by issuing up to 500,000,000 new common shares.
25.1Approval of capital increase and bonus in shares to be paid to shareholders – AGM/EGM
On April 8, 2016, the Company disclosed to its shareholders and the market in general, through a Significant Event Notice, that its controlling shareholders had signed a term separating the shareholders agreement relating to the shares that would be delivered to them due to the share bonus process.
At the Extraordinary General Meeting of April 29, 2016, a capital increase at CPFL Energia was approved, in order to strengthen the Company’s capital structure, through the integralization of the Statutory Reserve for Working Capital Improvement in the amount of R$ 392,972, through the issuance of 24,900,531 common shares, which issuance were costless distributed to shareholders as bonus, pursuant to Article 169 of Law 6404/76.
25.2Capital reserves
Refer basically to: (i) R$ 228,322 related to the CPFL Renováveis business combination in 2011, (ii) effect of the public offer of shares, in 2013, of the subsidiary CPFL Renováveis amounting to R$ 59,308, as a result of the reduction of the indirect interest in CPFL Renováveis, (iii) effect of the association between CPFL Renováveis and DESA, amounting to R$ 180,297 in 2014, and (iv) other movements with no change of control amounting to R$87. In accordance with ICPC 09 (R2) and IFRS 10 / CPC 36, these effects were recognized as transactions between shareholders, directly in Equity.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
25.3Earnings reserves
Comprised of:
i. Legal reserve, amounting to R$ 739,102;
ii. Statutory reserve – concession financial asset: the distribution subsidiaries recognize in profit or loss the adjustment to the expected cash flow from the concession financial asset, however its financial realization will occur only upon the write-off of the concession financial asset arising from disposal or corporate restructuring upon the indemnity (at the end of the concession). As result, the Company recognizes a statutory reserve – concession financial asset for these amounts, supported by article 194 of Law 6404/76, until their financial realization. This statutory reserve amounts to R$ 702,928 at December 31, 2016 (R$ 585,450 at December 31, 2015).
25.4Accumulated comprehensive income
The accumulated comprehensive income is comprised of:
(i) Deemed cost: refers to the recognition of the fair value adjustments of the deemed cost of the generating plants' property, plant and equipment, of R$ 431,713;
(ii) Private pension plan: The debt balance of R$ 666,346 refers to the effects recognized directly in comprehensive income, in accordance with IAS 19 / CPC 33 (R2).
25.5Dividend
The Annual and Extraordinary General Meeting held on April 29, 2015 approved the allocation of the profit for 2015, with the proposal of a minimum mandatory dividend of R$ 205,423.
Furthermore, in 2016 the Company proposed R$ 213,960 of minimum mandatory dividend, as set forth by Law 6,404/76, and R$ 7,820 of additional dividend, and for each share the amount of R$ 0.217876793 was attributed.
In 2016, the Company paid R$ 204,717 relating basically to the minimum mandatory dividend for 2015.
25.6Allocation of profit for the year
The Company’s bylaws assure shareholders a minimum dividend of 25% of profit for the year, adjusted in accordance with the law.
The proposed allocation of profit for the year is shown below:
2016 | |
Profit for the year - individual |
900,885 |
Realization of comprehensive income |
25,778 |
Prescribed dividends |
3,144 |
Profit base for allocation |
929,807 |
Legal reserve |
(45,044) |
Statutory reserve - concession financial asset |
(117,478) |
Statutory reserve - working capital improvement |
(545,505) |
Additional dividend proposed |
(7,820) |
Mandatory dividend |
(213,960) |
88
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
For this year, considering the current adverse economic scenario and the uncertainties regarding market projections for distribution companies, Company Management is proposing allocating R$ 545,505 to the Statutory Reserve for Working capital improvement.
( 26 ) EARNINGS PER SHARE
Earnings per share – basic and diluted
The calculation of the basic and diluted earnings per share at December 31, 2016 and 2015 was based on the profit attributable to controlling shareholders and the weighted average number of common shares outstanding during the reporting years. For diluted earnings per share, the calculation considered the dilutive effects of instruments convertible into shares, as shown below:
2016 |
2015 |
||||
Numerator |
|||||
Profit attributable to controlling shareholders |
900,885 |
864,940 |
|||
Denominator |
|||||
Weighted average number of shares held by shareholders |
1,017,914,746 |
(**) |
1,017,914,746 |
(**) | |
Earnings per share - basic |
0.89 |
0.85 |
|||
Numerator |
|||||
Profit attributable to controlling shareholders |
900,885 |
864,940 |
|||
Dilutive effect of convertible debentures of subsidiary CPFL Renováveis (*) |
(16,153) |
(19,811) |
|||
Profit attributable to controlling shareholders |
884,731 |
845,129 |
|||
Denominator |
|||||
Weighted average number of shares held by shareholders |
1,017,914,746 |
(**) |
1,017,914,746 |
(**) | |
Earnings per share - diluted |
0.87 |
0.83 |
(*) Proportional to the percentage of the Company’s equity interest in the subsidiary in the respective years.
(**) Considers the event that occurred on April 29, 2016, related to the capital increase through issue of 24,900,531 shares (note 25). In accordance with CPC 41/IAS 33, when there is an increase in the number of shares without an increase in resources, the number of shares is adjusted as if the event had occurred at the beginning of the oldest period presented
The dilutive effect of the numerator in the calculation of diluted earnings per share takes into account the dilutive effects of the debentures convertible into shares issued by subsidiaries of the indirect subsidiary CPFL Renováveis. The calculation of the effects was based on the assumption that these debentures would have been converted into common shares of the subsidiaries at the beginning of each year.
The effects calculated in the denominator of indirect subsidiary CPFL Renováveis for calculation of diluted earnings per share resulting from the subsidiary’s share-based payment plan were considered anti-dilutive in 2016 and 2015. For this reason, these effects were not included in the calculation for each of these two years.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 27 ) NET OPERATING REVENUE
Consolidated | ||||||||||||
Number of Consumers (*) |
In GWh (*) |
R$ thousand | ||||||||||
Revenue from Eletric Energy Operations |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 | ||||||
Consumer class |
||||||||||||
Residential |
8,174,700 |
6,906,580 |
16,473 |
16,164 |
10,367,415 |
9,833,419 | ||||||
Industrial |
61,112 |
55,586 |
13,022 |
12,748 |
5,281,978 |
5,526,967 | ||||||
Commercial |
551,171 |
473,333 |
9,720 |
9,259 |
5,431,926 |
5,266,432 | ||||||
Rural |
355,586 |
245,238 |
2,474 |
2,152 |
816,684 |
750,209 | ||||||
Public administration |
61,208 |
51,359 |
1,271 |
1,278 |
690,389 |
674,530 | ||||||
Public lighting |
11,073 |
10,362 |
1,746 |
1,649 |
580,229 |
573,219 | ||||||
Public services |
9,649 |
8,402 |
1,840 |
1,797 |
901,662 |
879,288 | ||||||
(-) Adjustment of revenues from excess demand and excess reactive power |
- |
- |
- |
- |
(72,129) |
(79,362) | ||||||
Billed |
9,224,499 |
7,750,860 |
46,546 |
45,049 |
23,998,155 |
23,424,701 | ||||||
Own comsuption |
- |
- |
32 |
33 |
- |
- | ||||||
Unbilled (net) |
- |
- |
- |
- |
50,444 |
202,726 | ||||||
Other consumer charges / Emergency charges (ECE/EAEE) |
- |
- |
- |
- |
(3) |
3 | ||||||
(-) Reclassification to Network Usage Charge - TUSD - Captive Consumers |
- |
- |
- |
- |
(9,055,188) |
(8,118,085) | ||||||
Electricity sales to final consumers |
9,224,499 |
7,750,860 |
46,578 |
45,082 |
14,993,408 |
15,509,345 | ||||||
Furnas Centrais Elétricas S.A. |
3,034 |
3,026 |
533,855 |
485,846 | ||||||||
Other concessionaires and licensees |
12,252 |
10,656 |
2,371,091 |
2,223,339 | ||||||||
(-) Reclassification to Network Usage Charge - TUSD - Captive Consumers |
- |
- |
(50,598) |
(46,982) | ||||||||
Spot market energy |
6,173 |
4,289 |
641,744 |
875,002 | ||||||||
Electricity sales to wholesalers |
21,459 |
17,971 |
3,496,092 |
3,537,205 | ||||||||
Revenue due to Network Usage Charge - TUSD - Captive Consumers |
9,105,786 |
8,165,066 | ||||||||||
Revenue due to Network Usage Charge - TUSD - Free Consumers |
2,057,327 |
1,898,138 | ||||||||||
(-) Adjustment of revenues from excess demand and excess reactive power |
(17,908) |
(16,884) | ||||||||||
Revenue from construction of concession infrastructure |
1,354,023 |
1,046,669 | ||||||||||
Sector financial asset and liability (Note 8) |
(2,094,695) |
2,506,524 | ||||||||||
Concession financial asset - Adjustment of expected cash flow (note 11) |
186,148 |
393,343 | ||||||||||
Energy Development Account (CDE) – Low income, tariff discounts - judicial injunctions, and other tariff discounts |
1,266,027 |
895,538 | ||||||||||
Other revenues and income |
438,377 |
367,356 | ||||||||||
Other operating revenues |
12,295,084 |
15,255,750 | ||||||||||
Total gross operating revenue |
30,784,584 |
34,302,301 | ||||||||||
Deductions from operating revenue |
||||||||||||
ICMS |
(4,935,068) |
(4,686,039) | ||||||||||
PIS |
(471,836) |
(529,322) | ||||||||||
COFINS |
(2,172,777) |
(2,438,208) | ||||||||||
ISS |
(10,568) |
(8,204) | ||||||||||
Global reversal reserve - RGR |
(4,230) |
(2,529) | ||||||||||
Energy development account - CDE |
(3,360,613) |
(3,970,013) | ||||||||||
Research and development and energy efficiency |
(138,583) |
(158,516) | ||||||||||
PROINFA |
(121,800) |
(90,910) | ||||||||||
Tariff flags and others |
(430,077) |
(1,796,226) | ||||||||||
IPI |
(195) |
(100) | ||||||||||
FUST and FUNTEL |
(38) |
(24) | ||||||||||
Others |
(26,709) |
(22,997) | ||||||||||
|
(11,672,495) |
(13,703,089) | ||||||||||
|
||||||||||||
Net operating revenue |
19,112,089 |
20,599,212 | ||||||||||
(*) Information not audited by the independent auditors |
||||||||||||
(**) Includes the effects of note 2.8 |
27.1Adjustment of revenues from excess demand and excess reactive power
The tariff regulation procedure (Proret), subitem 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, should be accounted for as special obligations, in specific sub-accounts, and would be amortized from the next tariff review. Beginining May 2015 for subsidiary CPFL Piratininga and September 2015 for subsidiaries CPFL Santa Cruz, CPFL Jaguari, CPFL Mococa, CPFL Leste Paulista and CPFL Sul Paulista 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.
On February 7, 2012, the Brazilian Association of Electric Energy Distributors (Associação Brasileira de Distribuidores de Energia Elétrica - ABRADEE) succeeded in suspending the effects of Resolution No. 463, whereby the request for preliminary judicial injunction relief was granted and the order to account for revenues from excess demand and excess reactive power as special obligations was suspended. The suspensive effect required by ANEEL in its interlocutory appeal was granted in June 2012 and the preliminary judicial injunction relief originally granted in favor of ABRADEE was suspended. The distribution subsidiaries are awaiting the court’s decision on the final treatment of these revenues. At December 31, 2016, these amounts are accrued under Special Obligations, in compliance with CPC 25, presented net in concession intangible asset.
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Standard Financial Statements - DFP - Date: December 31, 2016 - CPFL Energia S. A
27.2Extraordinary Tariff Review ("RTE") - 2015
On February 27, 2015, the ANEEL approved the result of the Extraordinary Tariff Revision (RTE) in order to re-establish the tariff coverage for electric energy distributors given the significant increase in the CDE quota for 2015 and the cost of purchasing electric energy (Itaipu tariff and exchange variation, and auctions of existing electric power and adjustment). The tariffs resulting from this RTE were in effect from March 2, 2015 up to the date of the next readjustment or tariff revision for each distributor. With respect to subsidiaries CPFL Leste Paulista, CPFL Sul Paulista, CPFL Jaguari, CPFL Mococa and CPFL Santa Cruz, on April 7, 2015, by means of Ratification Resolution No. 1.870, the ANEEL adjusted the result of the RTE of February 27, 2015, in order to change the amount of the monthly CDE quotas - energy relating to the ACR account, intended for amortization of credit operations by the CCEE in management of the ACR account. The tariffs resulting from such adjustment or rectification were in effect as from April 8, 2015 up to the date of the following tariff revision for each distributor.
The average effects for the distributors' consumers were:
Effect perceived by consumers (*) | ||||||
Subsidiary |
Total |
Group A |
Group B | |||
CPFL Paulista |
32.28% |
40.05% |
27.27% | |||
CPFL Piratininga |
29.78% |
40.49% |
21.47% | |||
RGE |
37.16% |
43.36% |
33.04% | |||
RGE Sul |
39.45% |
43.76% |
36.23% | |||
CPFL Santa Cruz |
10.04% |
10.53% |
9.78% | |||
CPFL Leste Paulista |
19.54% |
24.74% |
17.55% | |||
CPFL Jaguari |
23.01% |
25.01% |
18.79% | |||
CPFL Sul Paulista |
21.95% |
37.67% |
13.86% | |||
CPFL Mococa |
16.59% |
23.84% |
13.97% | |||
(*) Information not audited by the independent auditors |
27.3Periodic tariff review ("RTP") and Annual tariff adjustment ("RTA")
2016 |
2015 | |||||||||
Subsidiary |
Month |
RTA / RTP |
Effect perceived by consumers (a) |
RTA / RTP |
Effect perceived by consumers (a) | |||||
CPFL Paulista |
April |
9.89% |
7.55% |
41.45% |
4.67% (b) | |||||
CPFL Piratininga |
October |
-12.54% |
-24.21% |
56.29% |
21.11% (b) | |||||
RGE |
June |
-1.48% |
-7.51% |
33.48% |
-3.76% (b) | |||||
RGE Sul |
April |
3.94% |
-0.34% |
52.45% |
5.46% (b) | |||||
CPFL Santa Cruz |
March (c) |
22.51% |
7.15% |
34.68% |
27.96% | |||||
CPFL Leste Paulista |
March (c) |
21.04% |
13.32% |
20.80% |
24.89% | |||||
CPFL Jaguari |
March (c) |
29.46% |
13.25% |
38.46% |
45.70% | |||||
CPFL Sul Paulista |
March (c) |
24.35% |
12.82% |
24.88% |
28.38% | |||||
CPFL Mococa |
March (c) |
16.57% |
9.02% |
23.34% |
29.28% |
(a) Represents the average effect perceived by consumers, as a result of the elimination from the tariff base of financial components that had been added in the prior tariff adjustment (information not audited by the independent auditors).
(b) Consumer perception in comparison to the Extraordinary Tariff Revision (RTE) described in note 27.2.
(c) On February 2016, ANEEL changed the RTA date of the subsidiaries CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Mococa and CPFL Jaguari from February to March
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
27.4Energy Development Account (CDE) – Low income, tariff discounts - judicial injunctions, and other tariff discounts
27.4.1 Energy Development Account (CDE) – Low income and other tariff discounts
Law 12,783 of January 11, 2013 determined that the amounts related to the low-income subsidy, as well as other tariff discounts shall be fully subsidized by amount from the CDE.
Income of R$ 1,038,621 was recognized in 2016 (R$ 895,538 in 2015), of which R$ 93,879 for the low-income subsidy (R$ 66,313 in 2015) and R$ 944,742 for other tariff discounts (R$ 829,225 in 2015), against other receivables in line item “Account Receivable –Eletrobras” (note 12) and other payables in line item “Tariff discounts – CDE” (note 24).
27.4.2 Tariff discounts – judicial injunctions
The Brazilian Association of Large Industrial Consumers of Electricity (“ABRACE”) obtained an judicial injunction in July 2015, which exempted its associates from paying specific items of the CDE (Energy Development Account) charge. The obligation of paying the CDE quota was not changed and the distributors borne this revenue deficit. In the tariff process subsequent to the decision on the judicial injunction, ANEEL granted a financial component in the tariff for recovery of this revenue.
However, the decision of the ANEEL board was superseded by Order No. 1.576/2016, which revoked Decree No. 2.792/2015, and distributors were required to deduct the total effects of the judicial injunctions from the payment of the monthly CDE quotas. Thus, it was established that this revenue deficit will be the liability of Eletrobrás.
In view of the new procedure defined in Order No. 1.576/2016 it was necessary:
(i) to record a revenue in line item CDE – low income subsidy and other tariff discounts – judicial injunctions against the line item Receivables - Eletrobrás (note 12) in the amount of R$ 227,406
(ii) to record sector financial liability (note 8) against revenue from sector financial asset and liability in the amount of R$ 209,250, which will be refunded to consumers in the next tariff process.
27.5Tariff flags
The system for application of Tariff Flags was created by means of Normative Resolution No. 547/2013, in effect as from January 1, 2015. Such mechanism can reflect the actual cost of the conditions for generation of electric energy in Brazil, mainly related to thermoelectric generation, energy security ESS, hydrologic risk and involuntary exposure of electric energy distributors. A green flag indicates favorable conditions and the tariff does not rise. A yellow flag indicates less favorable conditions, and the red flag, segregated at two levels, is set off in costlier conditions. In the latter cases, the tariff increases R$ 1.50, R$ 3.00 and R$ 4.50 (before tax effects), respectively, for each 100 KWh consumed, readjusted by means of Ratification Resolution No. REH 2.016/2016 as from February 1, 2016, until January 31, 2017.
In 2016, the distribution subsidiaries billed their consumers the amount of R$ 430,065 in terms of Tariff Flags (R$ 1,796,226 in 2015), recorded in line item "Tariff flags and others”.
In 2016, ANEEL approved the Tariff Flags billed from November 2015 to November 2016. The amount billed in this period was R$ 706,178, of this amount R$ 687,673 were used to offset part of the sector financial asset and liability (note 8) and R$ 18,911 were passed on to the Centralizing Account for Tariff Flag Resources.
27.6Energy development account (“CDE”)
By means of Ratification Resolutions No. 2.018 of February 2, 2016, revoked by No. 2.077 of June 7, 2016, and No. 1.857 of February 27, 2015, the ANEEL established the definitive annual quotas of the CDE. Those quotas comprise: (i) annual quota of the CDE – Usage account; and (ii) CDE quota – Energy, 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 paid by consumers and passed on to the CDE in five years as from the 2015 RTE. In addition, by means of Ratification Resolution No. 2.004 of December 15, 2015, the ANEEL established another quota intended for amortization of the ACR account, with payment and transfer to the CDE for the tariff period of each distribution company.
92
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 28 ) COST OF ELECTRIC ENERGY
Consolidated | ||||||||
GWh (*) |
R$ thousand | |||||||
Electricity Purchased for Resale |
2016 |
2015 |
2016 |
2015 | ||||
Itaipu Binacional |
10,497 |
10,261 |
2,025,780 |
2,869,481 | ||||
Spot market / PROINFA |
2,253 |
4,004 |
269,792 |
981,009 | ||||
Energy purchased through auction in the regulated market and bilateral contracts |
51,225 |
44,342 |
8,541,677 |
9,192,868 | ||||
PIS and COFINS credit |
- |
- |
(987,997) |
(1,196,579) | ||||
Subtotal |
63,975 |
58,607 |
9,849,252 |
11,846,779 | ||||
Electricity network usage charge |
||||||||
Basic network charges |
834,341 |
847,342 | ||||||
Transmission from Itaipu |
53,248 |
51,236 | ||||||
Connection charges |
84,927 |
56,312 | ||||||
Charges for use of the distribution system |
38,699 |
40,332 | ||||||
System service charges - ESS |
362,735 |
555,851 | ||||||
Reserve energy charges - EER |
106,925 |
54,762 | ||||||
PIS and COFINS credit |
(129,883) |
(140,868) | ||||||
Subtotal |
1,350,990 |
1,464,967 | ||||||
Total |
11,200,242 |
13,311,747 | ||||||
(*) Information not audited by the independent auditors |
93
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 29 ) OPERATING COSTS AND EXPENSES
Parent company | |||
General and administrative | |||
2016 |
2015 | ||
Personnel |
37,845 |
19,816 | |
Materials |
79 |
74 | |
Third party services |
10,404 |
7,209 | |
Depreciation and amortization |
193 |
170 | |
Others |
2,340 |
2,642 | |
Leases and rentals |
50 |
121 | |
Publicity and advertising |
520 |
142 | |
Legal, judicial and indemnities |
626 |
1,686 | |
Donations, contributions and subsidies |
- |
105 | |
Others |
1,144 |
589 | |
Total |
50,860 |
29,911 |
Consolidated | |||||||||||||||||||||||
|
|
|
Cost of services rendered to third parties |
Operating Expenses |
|
| |||||||||||||||||
Cost of operation |
Selling |
General and administrative |
Others |
Total | |||||||||||||||||||
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 | ||||||||||||
Personnel |
686,434 |
596,021 |
1 |
28 |
134,864 |
123,812 |
272,618 |
219,348 |
- |
- |
1,093,918 |
939,209 | |||||||||||
Private pension plans |
76,505 |
60,184 |
- |
- |
- |
- |
- |
- |
- |
- |
76,505 |
60,184 | |||||||||||
Materials |
164,168 |
123,853 |
1,412 |
1,008 |
8,191 |
5,249 |
16,175 |
9,825 |
- |
- |
189,946 |
139,935 | |||||||||||
Third party services |
271,623 |
187,080 |
3,416 |
2,777 |
146,957 |
128,022 |
229,199 |
241,115 |
- |
- |
651,195 |
558,994 | |||||||||||
Depreciation and amortization |
937,506 |
870,427 |
- |
- |
3,602 |
21,826 |
94,949 |
84,985 |
- |
- |
1,036,056 |
977,238 | |||||||||||
Cost of infrastructure construction |
- |
- |
1,352,214 |
1,045,301 |
- |
- |
- |
- |
- |
- |
1,352,214 |
1,045,301 | |||||||||||
Others |
112,560 |
69,633 |
(11) |
(12) |
253,638 |
185,673 |
236,476 |
308,226 |
386,745 |
357,653 |
989,408 |
921,173 | |||||||||||
Collection fees |
- |
- |
- |
- |
65,562 |
56,990 |
- |
- |
- |
- |
65,562 |
56,990 | |||||||||||
Allowance for doubtful debts |
- |
- |
- |
- |
176,349 |
126,879 |
- |
- |
- |
- |
176,349 |
126,879 | |||||||||||
Leases and rentals |
42,163 |
31,687 |
- |
- |
113 |
(4) |
17,109 |
16,874 |
- |
- |
59,385 |
48,558 | |||||||||||
Publicity and advertising |
150 |
339 |
- |
- |
29 |
34 |
11,659 |
9,565 |
- |
- |
11,838 |
9,938 | |||||||||||
Legal, judicial and indemnities |
- |
10 |
- |
- |
- |
- |
181,888 |
263,453 |
- |
- |
181,888 |
263,463 | |||||||||||
Donations, contributions and subsidies |
54 |
- |
- |
- |
9 |
16 |
2,425 |
3,418 |
- |
- |
2,488 |
3,434 | |||||||||||
Gain (loss) on disposal, retirement and other noncurrent assets |
- |
- |
- |
- |
- |
- |
- |
- |
83,575 |
16,309 |
83,575 |
16,309 | |||||||||||
Amortization of concession intangible asset |
- |
- |
- |
- |
- |
- |
- |
- |
255,110 |
302,665 |
255,110 |
302,665 | |||||||||||
Amortization of the risk premium paid - GSF |
9,594 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
9,594 |
- | |||||||||||
Financial compensation for use of water resources |
12,233 |
13,768 |
- |
- |
- |
- |
- |
- |
- |
- |
12,233 |
13,768 | |||||||||||
Impairment |
- |
- |
- |
- |
- |
- |
- |
- |
48,291 |
38,956 |
48,291 |
38,956 | |||||||||||
Others |
48,367 |
23,829 |
(11) |
(12) |
11,575 |
1,759 |
23,395 |
14,916 |
(231) |
(277) |
83,095 |
40,214 | |||||||||||
Total |
2,248,795 |
1,907,197 |
1,357,032 |
1,049,101 |
547,251 |
464,583 |
849,416 |
863,499 |
386,746 |
357,653 |
5,389,240 |
4,642,033 |
94
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 30 ) FINANCE INCOME (COSTS)
Parent company |
Consolidated | ||||||
2016 |
2015 |
2016 |
2015 | ||||
Financial income |
|||||||
Income from financial investments |
55,084 |
72,158 |
667,429 |
472,745 | |||
Late payment interest and fines |
464 |
3 |
246,045 |
215,923 | |||
Adjustment for inflation of tax credits |
6,698 |
6,413 |
32,371 |
57,580 | |||
Adjustment for inflation of escrow deposits |
44 |
35 |
35,228 |
84,683 | |||
Adjustment for inflation and exchange rate changes |
1 |
- |
147,849 |
121,609 | |||
Discount on purchase of ICMS credit |
- |
- |
16,198 |
13,027 | |||
Adjustments to the sector financial asset (note 8) |
- |
- |
32,747 |
162,786 | |||
PIS and COFINS on other finance income |
(3,608) |
(2,496) |
(63,223) |
(52,849) | |||
PIS and COFINS on interest on capital |
(2,006) |
(6,711) |
(2,324) |
(6,941) | |||
Others |
14,200 |
5,451 |
88,182 |
74,685 | |||
Total |
70,878 |
74,854 |
1,200,503 |
1,143,247 | |||
Finance costs |
|||||||
Interest on debts |
(27,217) |
(61,398) |
(1,811,263) |
(1,725,252) | |||
Adjustment for inflation and exchange rate changes |
(25,980) |
(30,332) |
(703,128) |
(686,575) | |||
(-) Capitalized interest |
- |
- |
68,082 |
45,568 | |||
Adjustments to the sector financial liability (note 8) |
- |
- |
(25,079) |
(1,573) | |||
Use of public asset |
- |
- |
(14,950) |
(16,028) | |||
Others |
(498) |
(6,072) |
(167,638) |
(167,250) | |||
Total |
(53,694) |
(97,802) |
(2,653,977) |
(2,551,110) | |||
Finance income (expense), net |
17,183 |
(22,948) |
(1,453,474) |
(1,407,863) |
Interests were capitalized at an average rate of 10.9% p.a. in 2016 (10.25% p.a. in 2015) 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 losses of R$ 1,399,988 in 2016 (gains of R$ 1,514,439 in 2015) on derivative instruments (note 35).
( 31 ) INFORMATION BY SEGMENT
The segregation of the Company’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 based on similar market transactions. Note 1 presents the subsidiaries in accordance with their areas of operation and provides further information on each subsidiary and its business area and segment.
The information segregated by segment is presented below, in accordance with the criteria established by the Executive Officers of the Company:
95
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Distribution |
Generation |
Generation |
Commercialization |
Services |
Others (*) |
Elimination |
Total | ||||||||
2016 |
|||||||||||||||
Net operating revenue |
15,017,166 |
593,775 |
1,334,571 |
2,024,350 |
81,595 |
60,633 |
19,112,089 | ||||||||
(-) Intersegment revenues |
22,526 |
409,338 |
338,357 |
62,757 |
318,770 |
8,661 |
(1,160,410) |
- | |||||||
Cost of electric energy |
(9,382,165) |
(91,588) |
(211,777) |
(1,514,712) |
- |
- |
(11,200,242) | ||||||||
Operating costs and expenses |
(3,153,327) |
(100,606) |
(374,391) |
(38,440) |
(308,232) |
(123,077) |
(4,098,073) | ||||||||
(-) Intersegment costs and expenses |
(659,308) |
(12,691) |
(93,630) |
(371,347) |
(13,900) |
(9,534) |
1,160,410 |
- | |||||||
Depreciation and amortization |
(591,334) |
(126,596) |
(553,169) |
(3,779) |
(12,870) |
(3,417) |
(1,291,166) | ||||||||
Income from electric energy service |
1,253,557 |
671,631 |
439,961 |
158,829 |
65,363 |
(66,734) |
2,522,608 | ||||||||
Equity |
- |
311,414 |
- |
- |
- |
- |
311,414 | ||||||||
Finance income |
781,365 |
182,574 |
132,653 |
31,513 |
10,742 |
61,655 |
1,200,503 | ||||||||
Finance costs |
(1,331,973) |
(562,196) |
(667,344) |
(24,761) |
(5,272) |
(62,432) |
(2,653,978) | ||||||||
Profit (loss) before taxes |
702,950 |
603,424 |
(94,730) |
165,581 |
70,832 |
(67,510) |
1,380,547 | ||||||||
Income tax and social contribution |
(295,748) |
(98,530) |
(46,311) |
(53,225) |
(17,019) |
9,343 |
(501,490) | ||||||||
Profit (loss) for the year |
407,202 |
504,894 |
(141,041) |
112,357 |
53,813 |
(58,167) |
879,057 | ||||||||
Total assets (**) |
22,887,781 |
5,310,924 |
12,459,791 |
466,021 |
345,372 |
701,103 |
42,170,992 | ||||||||
Purchases of PP&E and intangible assets |
1,200,621 |
7,564 |
978,896 |
3,713 |
42,954 |
4,199 |
2,237,949 |
Distribution |
Generation |
Generation |
Commercialization |
Services |
Others (*) |
Elimination |
Total | ||||||||
2015 Restated |
|||||||||||||||
Net operating revenue |
16,945,222 |
572,553 |
1,262,297 |
1,716,348 |
55,547 |
47,246 |
20,599,212 | ||||||||
(-) Intersegment revenues |
22,318 |
411,038 |
335,979 |
82,544 |
239,088 |
3,136 |
(1,094,101) |
- | |||||||
Cost of electric energy |
(11,604,347) |
(147,120) |
(249,809) |
(1,310,470) |
- |
- |
(13,311,747) | ||||||||
Operating costs and expenses |
(2,668,411) |
(80,811) |
(226,522) |
(34,460) |
(241,247) |
(110,674) |
(3,362,130) | ||||||||
(-) Intersegment costs and expenses |
(550,953) |
(80,954) |
(120,593) |
(324,495) |
(10,137) |
(6,975) |
1,094,101 |
- | |||||||
Depreciation and amortization |
(587,059) |
(131,969) |
(540,578) |
(4,534) |
(12,633) |
(3,128) |
(1,279,903) | ||||||||
Income from electric energy service |
1,556,770 |
542,738 |
460,772 |
124,933 |
30,617 |
(70,396) |
2,645,434 | ||||||||
Equity |
- |
216,885 |
- |
- |
- |
- |
216,885 | ||||||||
Finance income |
740,628 |
110,018 |
131,354 |
42,840 |
44,098 |
74,310 |
1,143,247 | ||||||||
Finance costs |
(1,256,801) |
(549,286) |
(599,303) |
(38,386) |
(4,858) |
(102,477) |
(2,551,110) | ||||||||
Profit (loss) before taxes |
1,040,597 |
320,354 |
(7,176) |
129,386 |
69,857 |
(98,563) |
1,454,454 | ||||||||
Income tax and social contribution |
(414,633) |
(37,570) |
(49,222) |
(41,282) |
(18,232) |
(18,239) |
(579,177) | ||||||||
Profit (loss) for the year |
625,965 |
282,783 |
(56,398) |
88,104 |
51,625 |
(116,802) |
875,277 | ||||||||
Total assets (**) |
22,138,086 |
4,575,230 |
11,868,943 |
714,781 |
317,845 |
917,586 |
40,532,471 | ||||||||
Purchases of PP&E and intangible assets |
868,495 |
6,910 |
493,584 |
2,432 |
39,176 |
17,199 |
1,427,796 |
(*) Others – refer basically to assets and transactions which are not related to any of the identified segments.
(**) Intangible assets, net of amortization, were allocated to their respective segments.
As the Brazilian economic conditions have deteriorated even further during 2016, the following was recorded (i) CPFL Telecom – “segment others” -, a complement of R$ 7,858 and (ii) R$ 40,433 of CPFL Renováveis (segment generation – renewable source) relating to the provision for impairment of cash-generating units (in 2015, R$ 33,119 in subsidiary CPFL Telecom and R$ 5,837 in subsidiary CPFL Total “segment services”). This loss was recognized in the statement of profit or loss in line item “Other operating expenses” (note 29).
The investment balance in joint ventures, accounted for under the equity method and classified in the generation (conventional source) segment, is R$ 1,493,753 (R$ 1,247,631 in 2015)
( 32 ) RELATED PARTY TRANSACTIONS
In December 31, 2016, the Company’s controlling shareholders were as follows:
· ESC Energia S.A.
Company controlled by the Camargo Corrêa group, with operations in diversified segments, such as construction, cement, footwear, textiles, aluminum and highway concessions, among others.
· Caixa de Previdência dos Funcionários do Banco do Brasil - PREVI
Pension entity the participants of which are the employees of Banco do Brasil and employees of the company itself.
· Fundação CESP
Pension entity that manages pension plans for employees of the electricity sector companies of the State of São Paulo.
· Fundação SISTEL de Seguridade Social
Pension entity that manages pension plans for employees of the telecommunications sector companies.
· Fundação Petrobras de Seguridade Social - PETROS
Pension entity that manages pension plans for employees of companies mostly from the oil and chemical industries.
· Fundação SABESP de Seguridade Social - SABESPREV
96
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Pension entity that manages pension plans for employees of SABESP.
The direct and indirect interest in operating subsidiaries are described in note 1.
Controlling shareholders, associates companies, joint ventures and entities under common control that in some way exercise significant influence over the Company are considered to be related parties.
The main transactions are listed below:
a) Bank balances and short-term investments – refer mainly to bank balances and short-term investments with financial institutions, as mentioned in note 5. The Company and its subsidiaries also have an Exclusive Investment Fund.
b) Borrowings and Debentures and Derivatives - refer to borrowings from financial institutions under the conditions described in notes 17 and 18. The Company is also the guarantor of certain borrowings raised by its subsidiaries and joint ventures, as described in notes 17 and 18.
c) Other Financial Transactions – the expense amounts are bank costs, collection and bookkeeping expenses.
d) Purchase and sale of energy and charges - refer basically to energy purchased or sold by distribution, commercialization and generation subsidiaries through short or long-term agreements and tariffs for the use of the distribution system (TUSD). Such transactions, when conducted in the free market, are carried out under conditions considered by the Company as similar to market conditions at the time of the trading, according to internal policies previously established by the Company’s management. When conducted in the regulated market, the prices charged are set through mechanisms established by the regulatory authority.
e) Intangible assets, Property, plant and equipment, Materials and Service – refer to the purchase of equipment, cables and other materials for use in distribution and generation activities and contracting of services such as construction and information technology consultancy.
f) Advances – refer to advances for investments in research and development.
g) Intragroup loans – refer to (i) contracts with the joint venture EPASA, under contractual conditions of 113.5% of the CDI, maturing in January 2017; (ii) contracts with the non-controlling shareholder of the subsidiary CPFL Renováveis, with maturity defined for the date of distribution of earnings of the indirect subsidiary to its shareholders and remuneration of 8% p.a. + IGP-M (General Market Price Index).
Certain subsidiaries have supplementary retirement plan maintained with Fundação CESP and offered to the employees of the subsidiaries. These plans hold investments in Company’s shares (note 19).
To ensure that commercial transactions with related parties are conducted under usual market conditions, the Company set up a “Related Parties Committee”, comprising representatives of the controlling shareholders, responsible for analyzing the main transactions with related parties.
The subsidiaries CPFL Paulista, CPFL Piratininga and CPFL Geração renegotiated with the joint ventures Baesa and Enercan and the subsidiary Ceran the extension of the original maturities of the energy purchase bills, previously from August to November 2016, to January to July 2017.
The total compensation of key management personnel in 2016, in accordance with CVM Decision 560/2008, was R$ 58,132 (R$ 43,208 in 2015). This amount comprises R$ 49,989 (R$ 44,061 in 2015) in respect of short-term benefits, R$ 1,212 (R$ 1,087 in 2015) of post-employment benefits and R$ 6,930 (a reversal of provision of R$ 1,940 in 2015) for other long-term benefits, and refers to the amount recognized on an accrual basis.
Transactions between related parties involving controlling shareholders, entities under common control or with significant influence and joint ventures, until the end of the year, are as follows:
97
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | |||||||||||||||
ASSETS |
|
LIABILITIES |
|
INCOME |
EXPENSES | ||||||||||
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
2016 |
2015 |
2016 |
2015 | ||||||||
Bank balances and short-term investments |
|||||||||||||||
Banco Bradesco S.A.(**) |
- |
4,097,770 |
- |
1 |
- |
351,086 |
- |
312 | |||||||
Banco do Brasil S.A. |
48,985 |
126,036 |
- |
- |
4,113 |
28,466 |
5 |
4 | |||||||
Borrowings (*), Debentures (*) and Derivatives (*) |
|||||||||||||||
Banco Bradesco S.A.(**) |
- |
- |
- |
667,335 |
- |
- |
- |
85,505 | |||||||
Banco do Brasil S.A. |
- |
- |
4,257,562 |
3,727,087 |
800 |
- |
463,949 |
459,889 | |||||||
Banco BNP Paribas Brasil S.A |
5,126 |
58,478 |
- |
322,465 |
- |
- |
67,196 |
8,978 | |||||||
Other financial transactions |
|||||||||||||||
Banco Bradesco S.A.(**) |
- |
- |
- |
1,259 |
- |
166 |
- |
4,174 | |||||||
Banco do Brasil S.A. |
- |
- |
962 |
879 |
234 |
80 |
6,408 |
5,941 | |||||||
Advances |
|||||||||||||||
BAESA – Energética Barra Grande S.A. |
- |
- |
726 |
790 |
- |
- |
- |
- | |||||||
Foz do Chapecó Energia S.A. |
- |
- |
1,025 |
1,120 |
- |
- |
- |
- | |||||||
ENERCAN - Campos Novos Energia S.A. |
- |
- |
1,269 |
1,377 |
- |
- |
- |
- | |||||||
EPASA - Centrais Elétricas da Paraiba |
- |
- |
462 |
503 |
- |
- |
- |
- | |||||||
Energy purchases and sales, and charges |
|||||||||||||||
AES Tiete S.A. (***) |
- |
- |
- |
- |
2 |
- |
14,498 |
- | |||||||
Afluente Transmissão de Energia Elétrica S.A. |
- |
- |
53 |
27 |
- |
- |
1,212 |
1,426 | |||||||
Aliança Geração de Energia S.A |
- |
- |
1,183 |
1,364 |
4 |
1 |
49,944 |
34,063 | |||||||
Alpargatas S.A. (***) |
- |
- |
2,954 |
- |
- |
- | |||||||||
Arizona 1 Energia Renovável S.A |
- |
- |
- |
- |
- |
- |
967 |
883 | |||||||
Baguari I Geração de Energia Elétrica S.A. |
- |
- |
6 |
6 |
- |
- |
294 |
268 | |||||||
BRF Brasil Foods |
- |
- |
- |
- |
20,190 |
- |
- |
- | |||||||
Caetite 2 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
889 |
810 | |||||||
Caetité 3 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
896 |
817 | |||||||
Calango 1 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
1,073 |
977 | |||||||
Calango 2 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
916 |
834 | |||||||
Calango 3 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
1,072 |
977 | |||||||
Calango 4 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
995 |
907 | |||||||
Calango 5 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
1,054 |
963 | |||||||
Companhia Brasileira de Soluções e Serviços CBSS - Alelo (**) |
- |
- |
374 |
- |
- |
- |
- | ||||||||
Companhia de Eletricidade do Estado da Bahia – COELBA |
743 |
655 |
121 |
- |
19,296 |
14,491 |
121 |
46 | |||||||
Companhia Energética de Pernambuco - CELPE |
692 |
587 |
20 |
- |
9,829 |
7,062 |
250 |
206 | |||||||
Companhia Energética do Rio Grande do Norte - COSERN |
267 |
227 |
- |
- |
3,128 |
2,580 |
- |
- | |||||||
Companhia Hidrelétrica Teles Pires S.A. |
- |
- |
1,416 |
1,548 |
57 |
17 |
53,710 |
29,915 | |||||||
ELEB Equipamentos Ltda |
- |
- |
- |
- |
- |
4,036 |
- |
- | |||||||
Embraer |
- |
- |
- |
- |
6,938 |
26,615 |
- |
- | |||||||
Energética Águas da Pedra S.A. |
- |
- |
112 |
130 |
6 |
2 |
4,716 |
4,260 | |||||||
Estaleiro Atlântico Sul S.A. |
- |
- |
- |
- |
7,978 |
19,026 |
- |
- | |||||||
Goiás Sul Geração de Enegia S.A. |
- |
- |
- |
- |
- |
- |
181 |
166 | |||||||
InterCement Brasil S.A |
- |
- |
- |
- |
2 |
1 |
- |
- | |||||||
Itapebi Geração de Energia S.A |
- |
- |
- |
- |
3 |
1 |
- |
- | |||||||
Mel 2 Energia Renovável S.A. |
- |
- |
- |
- |
- |
- |
718 |
632 | |||||||
NC ENERGIA S.A. |
451 |
- |
2 |
- |
28,298 |
5,336 |
6 |
- | |||||||
Norte Energia S.A. |
1 |
1 |
4,585 |
- |
17 |
1 |
61,240 |
- | |||||||
Rio PCH I S.A. |
- |
- |
209 |
242 |
- |
- |
8,865 |
8,004 | |||||||
Samarco Mineração S.A. |
- |
- |
- |
- |
2 |
1 |
- |
- | |||||||
Santista Jeanswear S/A |
- |
- |
- |
- |
13,600 |
4,491 |
- |
- | |||||||
Santista Work Solution S/A |
- |
- |
- |
- |
2,224 |
- |
- |
- | |||||||
SE Narandiba S.A. |
- |
- |
2 |
- |
- |
- |
152 |
166 | |||||||
Serra do Facão Energia S.A. - SEFAC |
- |
- |
557 |
576 |
- |
- |
23,153 |
20,916 | |||||||
Termopernambuco S.A. |
- |
- |
- |
- |
5 |
3 |
- |
- | |||||||
ThyssenKrupp Companhia Siderúrgica do Atlântico |
- |
- |
- |
- |
25,268 |
37,238 |
7,683 |
6,965 | |||||||
Tupy |
- |
- |
- |
- |
- |
- |
27,127 |
- | |||||||
Vale Energia S.A. |
8,680 |
7,843 |
- |
- |
102,069 |
92,353 |
216 |
695 | |||||||
BAESA – Energética Barra Grande S.A. |
- |
- |
5,642 |
88,441 |
- |
6,080 |
60,765 |
111,541 | |||||||
Foz do Chapecó Energia S.A. |
- |
- |
35,018 |
142,596 |
215 |
4,996 |
358,272 |
330,675 | |||||||
ENERCAN - Campos Novos Energia S.A. |
387 |
667 |
50,526 |
140,496 |
3,684 |
23,283 |
269,480 |
244,102 | |||||||
EPASA - Centrais Elétricas da Paraiba |
- |
- |
12,418 |
19,807 |
- |
15,243 |
91,010 |
168,187 | |||||||
Intangible assets, property, plant and equipment, materials and services rendered |
|||||||||||||||
Alpargatas S.A. (***) |
168 |
- |
- |
- |
2,310 |
- |
- |
- | |||||||
Afluente Transmissão de Energia Elétrica S.A. |
- |
- |
- |
- |
- |
- |
5 |
- | |||||||
Banco Bradesco S.A.(**) |
- |
- |
- |
2 |
- |
- |
- |
19 | |||||||
Banco do Brasil S A |
- |
- |
- |
- |
- |
- |
6 |
170 | |||||||
Brasil veículos Companhia de Seguros |
- |
- |
- |
- |
2 |
- |
- |
- | |||||||
BRF Brasil Foods |
- |
- |
- |
- |
1,250 |
- |
- |
- | |||||||
Companhia de Saneamento Básico do Estado de São Paulo - SABESP |
4 |
65 |
42 |
42 |
170 |
1,034 |
94 |
31 | |||||||
Companhia Brasileira de Soluções e Serviços CBSS - Alelo (**) |
- |
- |
- |
- |
- |
- |
- |
576 | |||||||
Companhia de Eletricidade do Estado da Bahia – COELBA |
- |
- |
- |
- |
- |
- |
- |
50 | |||||||
Concessionária Auto Raposo Tavares S.A. - CART |
- |
- |
- |
- |
15 |
- | |||||||||
Concessionária de Rodovias do Oeste de São Paulo – ViaOeste S.A. |
- |
- |
- |
- |
- |
- |
6 |
- | |||||||
Concessionária do Sistema Anhanguera - Bandeirante S.A. |
86 |
- |
- |
- |
- |
- |
10 |
9 | |||||||
Estaleiro Atlântico Sul S.A. |
- |
- |
- |
- |
9 |
- |
- |
- | |||||||
Ferrovia Centro-Atlântica S.A. |
- |
- |
- |
- |
- |
- |
24 |
22 | |||||||
HM 14 Empreendimento Imobiliário SPE Ltda |
- |
14 |
- |
- |
- |
- |
- |
- | |||||||
HM 02 Empreendimento Imobiliário SPE Ltda. |
- |
- |
- |
- |
45 |
- |
- |
- | |||||||
HM Engenharia e Construções S.A. |
- |
- |
- |
- |
- |
272 |
- |
- | |||||||
Indústrias Romi S.A. |
4 |
- |
- |
- |
51 |
68 |
- |
- | |||||||
InterCement Brasil S.A |
- |
- |
- |
- |
43 |
26 |
- |
- | |||||||
Oi Móvel S.A (***) |
- |
- |
- |
- |
- |
- |
302 |
- | |||||||
Logum Logística S.A. |
26 |
- |
- |
- |
730 |
55 |
- |
- | |||||||
LUPATECH |
- |
- |
- |
- |
- |
- |
- |
2 | |||||||
Mapfre Seguros Gerais S.A. (**) |
- |
- |
- |
- |
- |
4 |
- |
1 | |||||||
NC Energia S.A. |
- |
- |
- |
- |
17 |
- |
- |
- | |||||||
Renovias Concessionária S.A. |
- |
- |
- |
- |
- |
- |
17 |
- | |||||||
Rodovias Integradas do Oeste S.A. |
- |
- |
- |
12 |
- |
- |
3 |
- | |||||||
SAMM - Sociedade de Atividades em Multimídia Ltda. |
- |
- |
- |
- |
1,410 |
1,463 |
- |
- | |||||||
Santista Jeanswear S/A |
- |
- |
- |
- |
1 |
21 |
- |
- | |||||||
Tim Celular S.A. (***) |
6 |
- |
89 |
- |
2,008 |
- |
12 |
- | |||||||
TOTVS S.A. |
- |
2 |
3 |
2 |
- |
32 |
44 | ||||||||
Ultrafértil S.A |
- |
- |
- |
14 |
868 |
- |
- | ||||||||
Vale Energia S.A. |
- |
- |
- |
331 |
- |
- |
- | ||||||||
Vale S.A. |
- |
- |
- |
- |
- |
- |
11 |
- | |||||||
Vale Fertilizantes S.A |
- |
39 |
- |
- |
45 |
- |
- | ||||||||
BAESA – Energética Barra Grande S.A. |
56 |
- |
- |
521 |
1,354 |
- |
- | ||||||||
Foz do Chapecó Energia S.A. |
104 |
- |
- |
1,424 |
1,483 |
- |
- | ||||||||
ENERCAN - Campos Novos Energia S.A. |
74 |
- |
- |
- |
1,826 |
1,354 |
- |
- | |||||||
EPASA - Centrais Elétricas da Paraíba S.A. |
1,599 |
1,104 |
- |
488 |
720 |
- |
- | ||||||||
Intragroup loans |
|||||||||||||||
EPASA - Centrais Elétricas da Paraíba S.A. |
38,078 |
76,586 |
- |
- |
4,379 |
14,123 |
- |
- | |||||||
Noncontrolling shareholders - CPFL Renováveis |
9,067 |
7,680 |
- |
- |
1,039 |
1,475 |
- |
- | |||||||
Dividend and interest on capital |
|||||||||||||||
BAESA – Energética Barra Grande S.A. |
89 |
20 |
- |
- |
- |
- |
- |
- | |||||||
Chapecoense Geração S.A. |
29,329 |
28,417 |
- |
- |
- |
- |
- |
- | |||||||
ENERCAN - Campos Novos Energia S.A. |
40,983 |
30,905 |
- |
- |
- |
- |
- |
- | |||||||
EPASA - Centrais Elétricas da Paraiba |
- |
29,933 |
- |
- |
- |
- |
- |
- | |||||||
(*) The balances include the mark to market adjustments | |||||||||||||||
(**) Related party until December 2015 | |||||||||||||||
(***) Related party from January 2016 |
98
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 33 ) INSURANCE
The subsidiaries maintain insurance policies with coverage based on specialized advice and takes into account the nature and degree of risk. The amounts are considered sufficient to cover any significant losses on assets and/or responsibilities. The main insurance policies in the financial statements are:
Description |
Type of cover |
Dec. 31, 2016 | ||
Concession financial asset / Intangible |
Fire, lightning, explosion, machinery breakdown, electrical damage and engineering risk |
9,679,825 | ||
Transport |
National transport |
416,358 | ||
Stored materials |
Fire, lightning, explosion and robbery |
232,849 | ||
Automobiles |
Comprehensive cover |
13,235 | ||
Civil liability |
Electric energy distributors and others |
200,000 | ||
Personnel |
Group life and personal accidents |
234,357 | ||
Others |
Operational risks and others |
281,914 | ||
Total |
11,058,537 | |||
Information not audited by independent auditors |
For the civil liability insurance of the officers, the insured amount is shared among the companies of the CPFL Energia Group. The premium is paid individually by each company involved, and the revenue is the base for the apportionment criterion.
( 34 ) RISK MANAGEMENT
The business of the Company and its subsidiaries comprise mainly the generation, commercialization and distribution of electric energy. As public utilities concessionaires, the activities and/or tariffs of its principal subsidiaries are regulated by ANEEL.
Risk management structure
The Board of Directors is responsible for directing the way the business is run, which includes monitoring of business risks, exercised by means of the corporate risk management model used by the Company. The responsibilities of the Executive Officers are to develop the mechanisms for measuring the impact of the exposure and probability of its occurrence, overseeing the implementation of risk mitigation actions and informing the Board of Directors. It is assisted in this process by: i) the Executive Risk Management Committee, whose mission is to assist in identifying the main business risks, analyzing measurement of the impact and probability and assessing the mitigation actions taken; ii) the Risk Management and Compliance Division, responsible for coordination of the process for risk management, developing and maintaining updated methodologies for Corporate Management of Risks that involve the identification, measurement, monitoring and reporting of risks to which the CPFL Group is exposed.
The risk management policy was established to identify, analyze and address the risks faced by the Company and its subsidiaries, and includes reviewing the model adopted whenever necessary to reflect changes in market conditions and in the Groups’ activities, with a view to developing an environment of disciplined and constructive control.
In its supervisory role, the Company’s Board of Directors also counts on the support of the Management Process, Risks and Sustainability Committee to provide guidance for the Internal Audit, Risk Management and Compliance work. The Internal Audit conducts both periodic and “ad hoc” reviews in order to ensure alignment of the processes to guidelines and strategies set by the shareholders and Management.
The Fiscal Council is responsible for, among other attributions, certifying that Management has means to identify the risks on the preparation and disclosure of the financial statements to which the Company is exposed and for monitoring the effectiveness of the control environment.
The main market risk factors affecting the businesses are as follows:
Exchange rate risk: this risk derives from the possibility of the Company and its subsidiaries incurring losses and cash constraints due to fluctuations in exchange rates, increasing the balances of liabilities denominated in foreign currency and portion of the revenue of the joint venture ENERCAN from electric energy sale agreements with annual restatement of part of the tariff based on variation in the US$. The exposure in relation to raising funds in foreign currency is largely covered by contracting swap transactions, which allowed the Company and its subsidiaries to exchange the original risks of the transaction for the cost of the variation in the CDI. The exposure relating to the revenues of ENERCAN was hedged by contracting a zero-cost collar type of financial instrument, as described in note 35.b.1. The quantification of this risk is presented in note 35. The subsidiaries’ operations are also exposed to exchange variations on the purchase of electric energy from Itaipu. The compensation mechanism - CVA protects the companies against possible losses.
99
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Interest rate risk: this risk derives from the possibility of the Company and its subsidiaries incurring losses due to fluctuations in interest rates that increase finance costs related to borrowings and debentures. The subsidiaries have tried to increase the number of fixed rate borrowings or borrowings tied to indexes with lower rates and little fluctuation in the short and long term. The quantification of this risk is presented in note 35.
Credit risk: this risk arises from the possibility of the subsidiaries incurring losses resulting from difficulties in collecting amounts billed to customers. This risk is managed by the sales and services segments through norms and guidelines applied in terms of the approval, guarantees required and monitoring of the operations. In the distribution segment, even though it is highly pulverized, the risk is managed through monitoring of defaults, collection measures and cutting off supply. In the generation segment there are contracts under the regulated environment (ACR) and bilateral agreements that call for the posting of guarantees.
Risk of under/overcontracting from distributors: risk inherent to the energy distribution business in the Brazilian market to which the distributors of the CPFL Group and all distributors in the market are exposed. Distributors are prevented from fully passing through the costs of their electric energy purchases in two situations: (i) volume of energy contracted above 105% of the energy demanded by consumers and (ii) level of contracts lower than 100% of such demanded energy. In the first case, the energy contracted above 105% is sold in the CCEE and is not passed through to consumers, that is, in PLD scenarios lower than the purchase price of these contracts, there is a loss for the concession. In the second case, the distributors are required to purchase energy at the PLD amount at the CCEE and do not have guarantees of full pass-through to the consumer tariffs, there is a penalty for insufficiency of contractual guarantee. These situations may be mitigated if the distributors are entitled to exposures or involuntary surpluses.
Market risk of commercialization companies: this risk arises from the possibility of commercialization companies incurring losses due to variations in the spot prices that will value the positions of energy surplus or deficit of its portfolio in the free market.
Risk of energy shortages: the energy sold by subsidiaries is primarily generated by hydropower plants. A prolonged period of low rainfall could result in a reduction in the volume of water in the power plants’ reservoirs, compromising the recovery of their volume, and resulting in losses due to the increase in the cost of purchasing energy or a reduction in revenue due to the introduction of comprehensive electric energy saving programs or other rationing programs, as in 2001.
The storage conditions of the National Interconnected System (“SIN”) improved during 2016, despite the low storage levels in the Northeast sub-system. The improvement in SIN storage conditions, associated with the reduced demand verified during the year and the availability of thermoelectric power generation, significantly reduce the likelihood of additional load cuts.
Risk of acceleration of debts: the Company has borrowing agreements and debentures with restrictive covenants normally applicable to these types of transactions, involving compliance with economic and financial ratios. These covenants are monitored and do not restrict the capacity to operate normally, if met at the contractual intervals or if prior agreement is obtained from the creditors for failure to meet.
Regulatory risk: The electric energy supplied tariffs charged to captive consumers by the distribution subsidiaries are set by ANEEL, at intervals established in the concession agreements entered into with the Federal Government and in accordance with the periodic tariff review methodology established for the tariff cycle. Once the methodology has been ratified, ANEEL establishes tariffs to be charged by the distributor to the final consumers. In accordance with Law 8,987/1995, the tariffs set shall ensure the economic and financial equilibrium of the concession agreement at the time of the tariff review, but could result in lower adjustments than expected by the electric energy distributors.
100
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Financial instruments risk management
The Company and its subsidiaries maintain operating and financial policies and strategies to protect the liquidity, safety and profitability of their assets. Accordingly, control and follow-up procedures are in place as regards the transactions and balances of financial instruments, for the purpose of monitoring the risks and current rates in relation to market conditions.
Risk management controls: In order to manage the risks inherent to the financial instruments and to monitor the procedures established by Management, the Company and its subsidiaries use Luna and Bloomberg software systems to calculate the mark to market, stress testing and duration of the instruments, and assess the risks to which the Company and its subsidiaries are exposed. Historically, the financial instruments contracted by the Company and its subsidiaries supported by these tools have produced adequate risk mitigation results. It must be stressed that the Company and its subsidiaries routinely contract derivatives, always with the appropriate levels of approval, only in the event of exposure that Management regards as a risk. The Company and its subsidiaries do not enter into transactions involving speculative derivatives.
( 35 ) FINANCIAL INSTRUMENTS
The main financial instruments, classified in accordance with the group’s accounting practices, are:
Consolidated | |||||||||||||||
December 31, 2016 |
December 31, 2015 | ||||||||||||||
Note |
Category |
Measurement |
Level (*) |
Carrying amount |
|
Fair value |
Carrying amount |
|
Fair value | ||||||
Assets |
|||||||||||||||
Cash and cash equivalents |
5 |
(a) |
(2) |
Level 1 |
5,267,966 |
5,267,966 |
4,353,488 |
4,353,488 | |||||||
Cash and cash equivalents |
5 |
(a) |
(2) |
Level 2 |
897,031 |
897,031 |
1,329,314 |
1,329,314 | |||||||
Securities |
(a) |
(2) |
Level 1 |
511 |
511 |
23,633 |
23,633 | ||||||||
Derivatives |
35 |
(a) |
(2) |
Level 2 |
746,883 |
746,883 |
2,269,932 |
2,269,933 | |||||||
Derivatives - Zero-cost collar |
35 |
(a) |
(2) |
Level 3 |
57,715 |
57,715 |
8,820 |
8,820 | |||||||
Concession financial asset - Distribution |
11 |
(b) |
(2) |
Level 3 |
5,193,511 |
5,193,511 |
3,483,713 |
3,483,713 | |||||||
12,163,617 |
12,163,617 |
11,468,900 |
11,468,900 | ||||||||||||
Liabilities |
|||||||||||||||
Borrowings - Principal and interest |
17 |
(c) |
(1) |
Level 2 (***) |
7,554,059 |
6,615,837 |
7,725,978 |
6,499,746 | |||||||
Borrowings - Principal and interest |
17 (**) |
(a) |
(2) |
Level 2 |
5,489,982 |
5,489,982 |
6,936,808 |
6,936,808 | |||||||
Debentures - Principal and interest |
18 |
(c) |
(1) |
Level 2 (***) |
8,999,947 |
8,855,211 |
7,070,430 |
6,105,830 | |||||||
Derivatives |
35 |
(a) |
(2) |
Level 2 |
118,262 |
118,262 |
31,745 |
31,745 | |||||||
Derivatives - Zero-cost collar |
35 |
(a) |
(2) |
Level 3 |
- |
- |
2,440 |
2,440 | |||||||
22,162,250 |
21,079,292 |
21,767,402 |
|
19,576,570 | |||||||||||
(*) Refers to the hierarchy for determination of fair value | |||||||||||||||
(**) As a result of the initial designation of this financial liability, the consolidated financial statements reported a loss of R$ 274,834 in 2016 (a gain of R$ 256,251 in 2015) |
|||||||||||||||
(***) 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) - Available for sale |
(2) - Mensured at fair value |
||||||||||||||
(c) - Other financial liabilities |
The financial instruments for which the carrying amounts approximate the fair values at the end of the reporting period, due to their nature, are:
· Financial assets: (i) consumers, concessionaires and licensees, (ii) leases, (iii) associates, subsidiaries and parent company, (iv) receivables – Eletrobras, (v) concession financial asset - transmission, (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 discount CDE, and (x) sector financial liability.
In addition, in 2016 there were no transfers between hierarchical levels of fair value.
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.
101
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
CPC 40 (R1) / IFRS 7 requires the classification in a three-level hierarchy for fair value measurement of financial instruments, based on observable and unobservable inputs related to the valuation of a financial instrument at the measurement date.
CPC 40 (R1) / IFRS 7 also defines observable inputs as market data obtained from independent sources and unobservable inputs 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: inputs for the instruments that are not based on observable market data.
As the distribution subsidiaries have classified their concession financial asset as available-for-sale, the relevant factors for fair value measurement are not publicly observable. The fair value hierarchy classification is therefore level 3. The changes between years and the respective gains (losses) in profit for the year of R$ 186,148 (R$ 393,343 in 2015), and the main methodologies are described in notes 11 and 27.
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 35 b.1.
The Company recognizes in “Investments at cost” in the 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.
The Company and its subsidiaries have the policy of using derivatives to reduce their risks of fluctuations in exchange and interest rates, without any speculative purposes. The Company and its subsidiaries have exchange rate derivatives compatible with the exchange rate risks net exposure, including all the assets and liabilities tied to exchange rate changes.
The derivative instruments entered into by the Company and its subsidiaries are currency or interest rate swaps with no leverage component, margin call requirements or daily or periodical adjustments. Furthermore, in 2015 subsidiary CPFL Geração contracted a zero-cost collar (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 at fair value, for accounting purposes (note 17). Other debts with terms different from the derivatives contracted as a hedge continue to be recognized at amortized cost. Furthermore, the Company and its subsidiaries do not adopt hedge accounting for derivative instruments.
At December 31, 2016, the Company and its subsidiaries had the following derivative transactions, all traded on the over-the-counter market:
102
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Fair values (carrying amounts) |
||||||||||||||||
Company / strategy / counterparts |
Assets |
Liabilities |
Fair value, net |
Values at cost, net |
Gain (loss) on marking to market |
Currecy / index |
Maturity range |
Notional | ||||||||
Derivatives to hedge debts designated at fair value |
||||||||||||||||
Exchange rate hedge |
||||||||||||||||
CPFL Paulista |
||||||||||||||||
Bank of Tokyo-Mitsubishi |
44,536 |
- |
44,536 |
44,845 |
(309) |
dollar |
March 2019 |
117,400 | ||||||||
Bank of America Merrill Lynch |
41,815 |
- |
41,815 |
40,514 |
1,300 |
dollar |
September 2018 |
106,020 | ||||||||
Bank of America Merrill Lynch |
47,538 |
- |
47,538 |
46,268 |
1,270 |
dollar |
March 2019 |
116,600 | ||||||||
J.P.Morgan |
23,768 |
- |
23,768 |
23,134 |
634 |
dollar |
March 2019 |
58,300 | ||||||||
J.P.Morgan |
13,231 |
- |
13,231 |
13,311 |
(80) |
dollar |
December 2017 |
51,470 | ||||||||
J.P.Morgan |
11,785 |
- |
11,785 |
11,885 |
(100) |
dollar |
December 2017 |
53,100 | ||||||||
J.P.Morgan |
4,053 |
- |
4,053 |
4,065 |
(12) |
dollar |
January 2018 |
27,121 | ||||||||
Bradesco |
10,045 |
- |
10,045 |
9,698 |
347 |
dollar |
January 2018 |
54,214 | ||||||||
Bradesco |
41,072 |
- |
41,072 |
39,589 |
1,483 |
dollar |
January 2018 |
173,459 | ||||||||
J.P.Morgan |
10,354 |
- |
10,354 |
10,191 |
164 |
dollar |
January 2018 |
67,938 | ||||||||
J.P.Morgan |
10,532 |
- |
10,532 |
10,515 |
16 |
dollar |
January 2019 |
67,613 | ||||||||
BNP Paribas |
1,367 |
- |
1,367 |
672 |
695 |
euro |
January 2018 |
63,896 | ||||||||
Bank of Tokyo-Mitsubishi |
14,735 |
- |
14,735 |
18,298 |
(3,563) |
dollar |
February 2020 |
142,735 | ||||||||
J.P.Morgan |
5,961 |
- |
5,961 |
6,080 |
(119) |
dollar |
February 2018 |
41,100 | ||||||||
Bank of America Merrill Lynch |
81,111 |
- |
81,111 |
77,971 |
3,140 |
dollar |
February 2018 |
405,300 | ||||||||
Bank of America Merrill Lynch |
- |
(11,672) |
(11,672) |
(11,726) |
54 |
dollar |
October 2018 |
329,500 | ||||||||
Bradesco |
- |
(4,379) |
(4,379) |
(5,418) |
1,039 |
dollar |
May 2021 |
59,032 | ||||||||
Bank of America Merrill Lynch |
- |
(3,771) |
(3,771) |
(5,390) |
1,619 |
dollar |
May 2021 |
59,032 | ||||||||
Citibank |
- |
(7,846) |
(7,846) |
(10,793) |
2,947 |
dollar |
May 2021 |
118,063 | ||||||||
361,903 |
(27,668) |
334,235 |
323,711 |
10,524 |
||||||||||||
CPFL Piratininga |
||||||||||||||||
Citibank |
44,955 |
- |
44,955 |
44,779 |
176 |
dollar |
March 2019 |
117,250 | ||||||||
Bradesco |
25,700 |
- |
25,700 |
25,194 |
506 |
dollar |
April 2018 |
55,138 | ||||||||
J.P.Morgan |
25,717 |
- |
25,717 |
25,197 |
521 |
dollar |
April 2018 |
55,138 | ||||||||
Citibank |
30,808 |
- |
30,808 |
30,780 |
28 |
dollar |
January 2020 |
169,838 | ||||||||
BNP Paribas |
3,759 |
- |
3,759 |
1,849 |
1,911 |
euro |
January 2018 |
175,714 | ||||||||
Scotiabank |
- |
(4,257) |
(4,257) |
(4,211) |
(46) |
dollar |
August 2017 |
55,440 | ||||||||
Bradesco |
- |
(4,379) |
(4,379) |
(5,418) |
1,039 |
dollar |
May 2021 |
59,032 | ||||||||
Bank of America Merrill Lynch |
- |
(5,438) |
(5,438) |
(8,074) |
2,636 |
dollar |
May 2021 |
88,548 | ||||||||
Citibank |
- |
(5,950) |
(5,950) |
(8,098) |
2,148 |
dollar |
May 2021 |
88,548 | ||||||||
130,940 |
(20,024) |
110,916 |
101,997 |
8,919 |
||||||||||||
CPFL Geração |
||||||||||||||||
Bradesco |
92,771 |
- |
92,771 |
92,569 |
201 |
dollar |
March 2017 |
232,520 | ||||||||
Votorantim |
- |
(4,525) |
(4,525) |
(7,212) |
2,687 |
dollar |
June 2019 |
104,454 | ||||||||
Scotiabank |
- |
(8,208) |
(8,208) |
(7,643) |
(566) |
dollar |
July 2019 |
117,036 | ||||||||
Bradesco |
79 |
- |
79 |
(158) |
237 |
dollar |
September 2019 |
32,636 | ||||||||
Citibank |
- |
(8,824) |
(8,824) |
(7,646) |
(1,177) |
dollar |
September 2020 |
397,320 | ||||||||
Scotiabank |
- |
(14,117) |
(14,117) |
(12,248) |
(1,870) |
dollar |
December 2019 |
174,525 | ||||||||
92,849 |
(35,674) |
57,175 |
57,663 |
(488) |
||||||||||||
RGE |
||||||||||||||||
Bank of Tokyo-Mitsubishi |
21,496 |
- |
21,496 |
21,657 |
(162) |
dollar |
April 2018 |
36,270 | ||||||||
Bank of Tokyo-Mitsubishi |
96,357 |
- |
96,357 |
96,985 |
(628) |
dollar |
May 2018 |
168,346 | ||||||||
Bradesco |
11,207 |
- |
11,207 |
10,968 |
239 |
dollar |
October 2017 |
32,715 | ||||||||
J.P.Morgan |
19,839 |
- |
19,839 |
19,441 |
398 |
dollar |
February 2018 |
171,949 | ||||||||
Bradesco |
- |
(4,379) |
(4,379) |
(5,418) |
1,039 |
dollar |
May 2021 |
59,032 | ||||||||
Bank of America Merrill Lynch |
- |
(7,106) |
(7,106) |
(10,759) |
3,653 |
dollar |
May 2021 |
118,063 | ||||||||
Citibank |
- |
(4,053) |
(4,053) |
(5,403) |
1,350 |
dollar |
May 2021 |
59,032 | ||||||||
148,898 |
(15,539) |
133,360 |
127,471 |
5,888 |
||||||||||||
CPFL Jaguari |
||||||||||||||||
Scotiabank |
- |
(1,156) |
(1,156) |
(1,076) |
(80) |
dollar |
July 2019 |
16,484 | ||||||||
CPFL Sul Paulista |
||||||||||||||||
Scotiabank |
- |
(1,156) |
(1,156) |
(1,076) |
(80) |
dollar |
July 2019 |
16,484 | ||||||||
CPFL Leste Paulista |
||||||||||||||||
Scotiabank |
- |
(1,156) |
(1,156) |
(1,076) |
(80) |
dollar |
July 2019 |
16,484 | ||||||||
CPFL Santa Cruz |
||||||||||||||||
Scotiabank |
- |
(1,156) |
(1,156) |
(1,076) |
(80) |
dollar |
July 2019 |
16,484 | ||||||||
CPFL Paulista Lajeado |
||||||||||||||||
Itaú |
- |
(678) |
(678) |
(653) |
(25) |
dollar |
March 2018 |
35,000 | ||||||||
CPFL Brasil |
||||||||||||||||
Itaú |
- |
(3,403) |
(3,403) |
(3,407) |
5 |
dollar |
August 2018 |
45,360 | ||||||||
Subtotal (a) |
734,590 |
(107,610) |
626,980 |
602,476 |
24,504 |
|||||||||||
Derivatives to hedge debts not designated at fair value |
||||||||||||||||
Exchange rate hedge |
||||||||||||||||
CPFL Geração |
||||||||||||||||
J.P.Morgan |
- |
(6,807) |
(6,807) |
(2,045) |
(4,762) |
dollar |
December 2016 |
47,645 | ||||||||
Price index hedge |
||||||||||||||||
CPFL Geração |
||||||||||||||||
Santander |
6,077 |
- |
6,077 |
5,922 |
155 |
IPCA |
April 2019 |
35,235 | ||||||||
J.P.Morgan |
6,077 |
- |
6,077 |
5,922 |
155 |
IPCA |
April 2019 |
35,235 | ||||||||
12,155 |
- |
12,155 |
11,845 |
310 |
||||||||||||
Interest rate hedge (1) |
||||||||||||||||
CPFL Paulista |
||||||||||||||||
Bank of America Merrill Lynch |
- |
(1,242) |
(1,242) |
(810) |
(432) |
CDI |
July 2019 |
660,000 | ||||||||
J.P.Morgan |
- |
(530) |
(530) |
(286) |
(244) |
CDI |
February 2021 |
300,000 | ||||||||
Votorantim |
- |
(158) |
(158) |
(92) |
(66) |
CDI |
February 2021 |
100,000 | ||||||||
Santander |
- |
(163) |
(163) |
(96) |
(67) |
CDI |
February 2021 |
105,000 | ||||||||
- |
(2,093) |
(2,093) |
(1,284) |
(809) |
||||||||||||
CPFL Piratininga |
||||||||||||||||
J.P.Morgan |
- |
(207) |
(207) |
(135) |
(72) |
CDI |
July 2019 |
110,000 | ||||||||
Votorantim |
- |
(168) |
(168) |
(116) |
(52) |
CDI |
February 2021 |
135,000 | ||||||||
Santander |
- |
(115) |
(115) |
(84) |
(31) |
CDI |
February 2021 |
100,000 | ||||||||
- |
(490) |
(490) |
(335) |
(155) |
||||||||||||
RGE |
||||||||||||||||
Bradesco |
- |
(941) |
(941) |
(614) |
(328) |
CDI |
July 2019 |
500,000 | ||||||||
Votorantim |
- |
(321) |
(321) |
(166) |
(155) |
CDI |
February 2021 |
170,000 | ||||||||
- |
(1,262) |
(1,262) |
(779) |
(483) |
||||||||||||
CPFL Geração |
||||||||||||||||
Votorantim |
138 |
- |
138 |
(221) |
359 |
CDI |
August 2020 |
460,000 | ||||||||
|
|
|
|
|
||||||||||||
Subtotal (b) |
12,293 |
(10,652) |
1,641 |
7,181 |
(5,540) |
|||||||||||
Other derivatives (2) |
||||||||||||||||
CPFL Geração |
||||||||||||||||
Itaú |
20,028 |
- |
20,028 |
- |
20,028 |
dollar |
September 2020 |
26,627 | ||||||||
Votorantim |
16,688 |
- |
16,688 |
- |
16,688 |
dollar |
September 2020 |
26,627 | ||||||||
Santander |
20,999 |
- |
20,999 |
- |
20,999 |
dollar |
September 2020 |
33,060 | ||||||||
Subtotal (c) |
57,715 |
- |
57,715 |
- |
57,715 |
|||||||||||
Total (a+b+c) |
804,598 |
(118,262) |
686,336 |
609,657 |
76,679 |
|||||||||||
Current |
163,241 |
(6,055) |
||||||||||||||
Noncurrent |
641,357 |
(112,207) |
||||||||||||||
For further details on terms and information on debts and debentures, see notes 17 and 18 | ||||||||||||||||
(1) The interest rate hedge swaps have half-yearly validity, so the notional value 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 |
103
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
As mentioned above, certain subsidiaries opted to mark to market debts for which they have fully tied derivative instruments (note 17).
The Company and its subsidiaries have recognized gains and losses on their derivatives. However, as these derivatives are used as a hedge, these gains and losses minimized the impact of variations in exchange and interest rates on the hedged debts. For the years 2016 and 2015, the derivatives resulted in the following impacts on the result, recognized in the line item of finance costs on adjustment for inflation and exchange rate changes:
Gain (Loss) | ||||||
Company |
Hedged risk / transaction |
2016 |
2015 | |||
CPFL Energia |
Exchange variation |
(76,202) |
71,492 | |||
CPFL Energia |
Mark to Market |
2,319 |
(2,319) | |||
CPFL Paulista |
Interest rate variation |
(1,423) |
(2,250) | |||
CPFL Paulista |
Exchange variation |
(802,479) |
843,224 | |||
CPFL Paulista |
Mark to Market |
118,663 |
(98,738) | |||
CPFL Piratininga |
Interest rate variation |
(661) |
(609) | |||
CPFL Piratininga |
Exchange variation |
(358,412) |
300,652 | |||
CPFL Piratininga |
Mark to Market |
48,193 |
(32,431) | |||
RGE |
Interest rate variation |
(835) |
(1,321) | |||
RGE |
Exchange variation |
(252,321) |
291,612 | |||
RGE |
Mark to Market |
48,915 |
(29,946) | |||
CPFL Geração |
Interest rate variation |
3,161 |
2,600 | |||
CPFL Geração |
Exchange variation |
(145,933) |
122,294 | |||
CPFL Geração |
Mark to Market |
66,425 |
(7,896) | |||
CPFL Santa Cruz |
Exchange variation |
(6,986) |
9,899 | |||
CPFL Santa Cruz |
Mark to Market |
148 |
(80) | |||
CPFL Leste Paulista |
Exchange variation |
(1,076) |
4,596 | |||
CPFL Leste Paulista |
Mark to Market |
(80) |
(76) | |||
CPFL Sul Paulista |
Exchange variation |
(7,577) |
12,404 | |||
CPFL Sul Paulista |
Mark to Market |
170 |
(83) | |||
CPFL Jaguari |
Exchange variation |
(10,236) |
16,616 | |||
CPFL Jaguari |
Mark to Market |
273 |
(63) | |||
CPFL Mococa |
Exchange variation |
- |
2,022 | |||
CPFL Mococa |
Mark to Market |
- |
(33) | |||
Paulista Lajeado Energia |
Exchange variation |
(11,046) |
4,626 | |||
Paulista Lajeado Energia |
Mark to Market |
1,649 |
(1,675) | |||
CPFL Telecom |
Exchange variation |
- |
3,204 | |||
CPFL Telecom |
Mark to Market |
- |
6 | |||
CPFL Brasil |
Exchange variation |
(13,857) |
5,367 | |||
CPFL Brasil |
Mark to Market |
2,383 |
(2,378) | |||
CPFL Serviços |
Exchange variation |
(3,420) |
3,810 | |||
CPFL Serviços |
Mark to Market |
254 |
(87) | |||
(1,399,988) |
1,514,439 |
b.1) Zero-cost collar derivative contracted by CPFL Geração
In 2015, subsidiary CPFL Geração contracted US$ denominated put and call options, involving the same financial institution as counterpart, and which on a combined basis are characterized as an operation usually known as zero-cost collar. The contracting of this operation does not involve any kind of speculation, inasmuch as it is aimed at minimizing any negative impacts on future revenues of the joint venture ENERCAN, which has electric energy sale agreements with annual restatement of part of the tariff based on the variation in the US$. In addition, according to Management’s view, the current scenario is favorable for contracting this type of financial instrument, considering the high volatility implicit in dollar options and the fact that there is no initial cost for same.
104
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The total amount contracted was US$ 111,817, with due dates between October 1, 2015 and September 30, 2020. As at December 31, 2016, the total amount contracted was US$ 86,313, considering the options already settled until this date. The exercise prices of the dollar options vary from R$ 4.20 to R$ 4.40 for the put options and from R$ 5.40 to R$7.50 for the call options.
These options have been measured at fair value in a recurring manner, as required by IAS 39/CPC 38. The fair value of the options that are part of this operation has been calculated based on the following premises:
Valuation technique(s) and key information |
We used the Black Scholes Option Pricing Model, which aims to obtain the fair price of the options involving the following variables: value of the asset, exercise price of the option, interest rate, term and volatility. |
Significant unobservable inputs |
Volatility determined based on the average market pricing calculations, future dollar and other variables applicable to this specific transaction, with average variation of 20.9%. |
Relationship between unobservable inputs and fair value (sensitivity) |
A slight rise in long-term volatility, analyzed on an isolated basis, would result in an insignificant increase in fair value. If the volatility were 10% higher and all the other variables remained constant, the net carrying amount (asset) would increase by R$ 864, resulting in a net asset of R$ 58,579. |
The following table reconciles the opening and closing balances of the call and put options for the year ended December 31, 2016, as required by IFRS 13/CPC 46:
Consolidated | |||||
Assets |
Liabilities |
Net | |||
At December 31, 2014 |
- |
- |
- | ||
Measurement at fair value |
10,342 |
(2,440) |
7,902 | ||
Net cash received from settlement of flows |
(1,522) |
- |
(1,522) | ||
At December 31, 2015 |
8,820 |
(2,440) |
6,380 | ||
Measurement at fair value |
65,546 |
2,440 |
67,986 | ||
Net cash received from settlement of flows |
(16,651) |
- |
(16,651) | ||
At December 31, 2016 |
57,715 |
- |
57,715 |
The fair value measurement of these financial instruments was recognized as finance income in the statement of profit or loss for the year, and no effects were recognized in other comprehensive income.
c) Sensitivity analysis
In compliance with CVM Instruction No. 475/2008, the Company and its subsidiaries performed sensitivity analyses of the main risks to which their financial instruments (including derivatives) are exposed, mainly comprising variations in exchange and interest rates.
If the risk exposure is considered asset, the risk to be taken into account is a reduction in the pegged indexes, resulting in a negative impact on the results of the Company and its subsidiaries. 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 results. The Company and its subsidiaries 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) Exchange rate variation
Considering the level of net exchange rate exposure at December 31, 2016 is maintained, the simulation of the effects by type of financial instrument for three different scenarios would be:
105
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | |||||||||||
Decrease (increase) | |||||||||||
Instruments |
Exposure |
Risk |
Currency depreciation (b) |
Currency appreciation / depreciation of 25% |
Currency appreciation / depreciation of 50% | ||||||
Financial liability instruments |
(5,295,856) |
(462,134) |
977,364 |
2,416,861 | |||||||
Derivatives - Plain Vanilla Swap |
5,430,208 |
473,858 |
(1,002,158) |
(2,478,175) | |||||||
134,352 |
drop in the dollar |
11,724 |
(24,794) |
(61,314) | |||||||
Financial liability instruments |
(257,485) |
(30,664) |
41,374 |
113,411 | |||||||
Derivatives - Plain Vanilla Swap |
261,385 |
31,128 |
(42,000) |
(115,129) | |||||||
3,900 |
drop in the euro |
464 |
(626) |
(1,718) | |||||||
Total |
138,252 |
12,188 |
(25,420) |
(63,032) | |||||||
Decrease (increase) | |||||||||||
Instruments |
Exposure |
Risk |
Currency depreciation (b) |
Currency appreciation / depreciation of 25% |
Currency appreciation / depreciation of 50% | ||||||
Derivativos zero-cost collar |
86,314 |
(d) |
dollar apprec. |
(68,386) |
(99,565) |
(130,743) |
(a) The exchange rates considered as of December 31, 2016 were R$ 3.26 per US$ 1.00 and R$ 3.41 per € 1.00.
(b) As per the exchange curves obtained from information made available by the BM&FBOVESPA, with the exchange rate being considered at R$ 3.54 and R$ 3.81, and exchange depreciation at 8.73% and 11.91%, for the US$ and €, respectively.
(c) As required by CVM Instruction No. 475/2008, the percentage increases in the ratios applied refer to the information made available by the BM&FBOVESPA.
(d) Owing to the characteristics of this derivative (zero-cost collar), the notional amount is presented in US$.
Based on the net exchange exposure in US$ and in € being an asset, the risk is a drop in the dollar and in the euro, therefore, the exchange rate is appreciated by 25% and 50% in relation to the probable exchange rate.
c.2) Interest rate variation
Assuming that (i) the scenario of net exposure of the financial instruments indexed to variable interest rates at December 31, 2016 is maintained, and (ii) the respective accumulated annual indexes for the following 12 months remain stable (CDI 13.63% p.a.; IGP-M 7.17% p.a.; TJLP 7.50% p.a.; IPCA 6.29% p.a. and SELIC 14.08% p.a.), the effects on the Company’s 2017 financial statements would be a net finance cost of R$ 1,377,463 (finance costs of CDI R$ 1,200,603, IGP-M R$ 4,886, TJLP R$ 341,942 and SELIC R$ 156,936 and finance income of IPCA R$ 326,804). In the event of fluctuations in the indexes in accordance with the three scenarios described below, the effect on net finance cost would as follows:
Consolidated | ||||||||||
Exposure |
Decrease (increase) | |||||||||
Instruments |
Risk |
Scenario I (a) |
Raising index by 25% (b) |
Raising index by 50% (b) | ||||||
Financial asset instruments |
6,773,850 |
(151,057) |
41,998 |
235,053 | ||||||
Financial liability instruments |
(10,430,518) |
232,601 |
(64,669) |
(361,939) | ||||||
Derivatives - Plain Vanilla Swap |
(5,151,860) |
114,886 |
(31,942) |
(178,770) | ||||||
(8,808,528) |
CDI apprec. |
196,430 |
(54,613) |
(305,656) | ||||||
Financial liability instruments |
(67,872) |
1,663 |
862 |
61 | ||||||
(67,872) |
IGP-M apprec. |
1,663 |
862 |
61 | ||||||
Financial liability instruments |
(4,559,227) |
- |
(85,486) |
(170,971) | ||||||
(4,559,227) |
TJLP apprec. |
- |
(85,486) |
(170,971) | ||||||
Financial liability instruments |
(139,692) |
2,053 |
3,737 |
5,420 | ||||||
Derivatives - Plain Vanilla Swap |
88,889 |
(1,307) |
(2,378) |
(3,449) | ||||||
Concession financial asset |
5,247,689 |
(77,141) |
(140,376) |
(203,610) | ||||||
5,196,886 |
drop in the IPCA |
(76,395) |
(139,017) |
(201,639) | ||||||
Financial liability instruments |
(199,681) |
5,052 |
(714) |
(6,480) | ||||||
Sector financial asset and liability |
(914,921) |
23,148 |
(3,271) |
(29,689) | ||||||
(1,114,602) |
SELIC apprec. |
28,200 |
(3,985) |
(36,169) | ||||||
Total |
(9,353,343) |
149,898 |
(282,239) |
(714,374) |
(a) The CDI, IGP-M, TJLP, IPCA and SELIC indexes considered of 11.40%, 4.72%, 7.50%, 4.82% and 11.55%, respectively, were obtained from information available in the market.
(b) In compliance with CVM Instruction 475/08, the percentages of increase in indexes were applied to Scenario I indexes.
d) Liquidity analysis
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of its financial liabilities. The table below sets out details of the contractual maturities of the financial liabilities as at December 31, 2016, taking into account principal and interest, and is based on the undiscounted cash flow, considering the earliest date on which the Company and its subsidiaries have to settle their respective obligations.
106
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Consolidated | ||||||||||||||||||
December 31, 2016 |
Note |
Weighted average interest rates |
Less than 1 month |
1-3 months |
3 months to 1 year |
1-3 years |
4-5 years |
More than 5 years |
Total | |||||||||
Trade payables |
16 |
2,641,544 |
81,808 |
4,778 |
129,781 |
- |
- |
2,857,911 | ||||||||||
Borrowings - principal and interest |
17 |
12.04% p.a. |
125,661 |
682,898 |
2,039,166 |
8,537,020 |
2,590,956 |
2,887,932 |
16,863,633 | |||||||||
Derivatives |
35 |
286 |
815 |
16,826 |
55,179 |
97,752 |
- |
170,858 | ||||||||||
Debentures - principal and interest |
18 |
14.22% p.a. |
93,758 |
269,536 |
2,044,542 |
6,761,502 |
2,127,274 |
438,843 |
11,735,455 | |||||||||
Regulatory charges |
20 |
366,078 |
- |
- |
- |
- |
- |
366,078 | ||||||||||
Use of public asset |
23 |
13.77% p.a. |
1,987 |
4,149 |
19,522 |
44,487 |
62,102 |
234,601 |
366,848 | |||||||||
Others |
24 |
46,625 |
91,395 |
18,565 |
44,711 |
- |
17,750 |
219,045 | ||||||||||
Consumers and concessionaires |
11,432 |
52,940 |
9,492 |
44,711 |
- |
- |
118,575 | |||||||||||
EPE / FNDCT / PROCEL (*) |
1,457 |
2,397 |
9,073 |
- |
- |
- |
12,927 | |||||||||||
Collections agreement |
33,736 |
36,057 |
- |
- |
- |
- |
69,793 | |||||||||||
Reversal fund |
- |
- |
- |
- |
- |
17,750 |
17,750 | |||||||||||
Total |
3,275,940 |
1,130,600 |
4,143,399 |
15,572,679 |
4,878,084 |
3,579,127 |
32,579,828 |
(*) EPE - Energy research company; FNDCT - National scientific and technological development fund; and PROCEL - National Program for Electric Energy Savings
( 36 ) COMMITMENTS
The Company’s commitments as regards long-term energy purchase agreements and plant construction projects at December 31, 2016, as follows:
Consolidated | ||||||||||||
Commitments at December 31, 2016 |
Duration |
Less than 1 year |
1-3 years |
4-5 years |
More than 5 years |
Total | ||||||
Energy purchase agreements (except Itaipu) |
Up to 29 years |
9,433,125 |
17,967,834 |
16,493,436 |
59,486,713 |
103,381,108 | ||||||
Energy purchase from Itaipu |
Up to 29 years |
2,589,135 |
5,419,669 |
5,985,978 |
24,175,651 |
38,170,433 | ||||||
Energy system service charges |
Up to 34 years |
2,031,659 |
6,916,109 |
8,573,355 |
29,439,307 |
46,960,430 | ||||||
GSF renegotiation |
Up to 26 years |
17,882 |
- |
35,899 |
266,279 |
320,059 | ||||||
Power plant constrution projects |
Up to 3 years |
1,560,470 |
8,676 |
- |
- |
1,569,146 | ||||||
Trade payables |
Up to 17 years |
1,819,714 |
1,253,650 |
314,992 |
496,760 |
3,885,116 | ||||||
Total |
17,451,985 |
31,565,937 |
31,403,661 |
113,864,710 |
194,286,292 |
The power plant construction projects include commitments made basically to construction related to the subsidiaries of the renewable energy segment.
( 37 ) NON-CASH TRANSACTIONS
|
Parent Company |
|
Consolidated | ||||
|
Dec. 31, 2016 |
|
Dec. 31, 2015 |
|
Dec. 31, 2016 |
|
Dec. 31, 2015 |
Transactions resulting from business combinations |
|
|
|
|
|
|
|
Borrowings and debentures |
- |
|
- |
|
(1,156,621) |
|
- |
Concession financial asset |
- |
|
- |
|
876,281 |
|
- |
Intangible assets - distribution infrastructure acquired |
- |
|
- |
|
1,456,472 |
|
- |
Intangible assets acquired |
|
|
|
|
413,796 |
|
- |
Other net assets acquired |
- |
|
- |
|
1,911 |
|
- |
|
- |
|
- |
|
1,591,839 |
|
- |
Cash and cash equivalents acquired |
- |
|
- |
|
(95,164) |
|
- |
Consideration paid in the acquisition, net |
- |
|
- |
|
1,496,675 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other transactions |
|
|
|
|
|
|
|
Capital increase through earnings reserve |
392,272 |
|
554,888 |
|
392,272 |
|
554,888 |
Capital increase in investees through advances for future capital increase |
52,680 |
|
905,167 |
|
- |
|
- |
Capital increase in investees through dividends |
12,026 |
|
- |
|
- |
|
- |
Interest capitalized in property, plant and equipment |
- |
|
- |
|
54,733 |
|
34,212 |
Interest capitalized in concession intangible asset - distribution infraestruture |
- |
|
- |
|
13,349 |
|
11,358 |
Escrow deposits to property, plant and equipment |
- |
|
- |
|
3,418 |
|
- |
Reversal of contingencies against intangible assets |
- |
|
- |
|
7,591 |
|
- |
Reversal of contingencies and other assets |
- |
|
- |
|
13,950 |
|
- |
Transfers between property, plant and equipment and other assets |
- |
|
- |
|
14,592 |
|
2,928 |
107
(Free Translation of the original in Portuguese)
Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
( 38 ) RELEVANT FACTS AND EVENTS AFTER THE REPORTING PERIOD
38.1. Acquisition of ownership interest in the Company by State Grid International Development Limited
In a Significant Event Notice disclosed to the market on July 1, 2016, the Company disclosed that it received from its controlling shareholder Camargo Corrêa S.A. (“CCSA”) a communication on the proposal received from State Grid International Development Limited for the acquisition of the entire ownership interest relating to the Company’s control block. On September 2, 2016, the Company received from CCSA a correspondence confirming the signing of the acquisition contract.
On November 23, 2016, the Company disclosed a Significant Event Notice informing that ANEEL approved, on that date, the request for approval of the transfer of shares of CPFL Energia held by the shareholders that are part of its control block (“Controlling Shareholders”) to State Grid Brazil Power Participações Ltda. (“State Grid”), Brazilian subsidiary of State Grid International Development Limited. This authorization was the last condition precedent for the closing of the transaction and the consummation of the transfer of shares of CPFL Energia held by the Controlling Shareholders to State Grid.
On January 23, 2017, the Company disclosed a Significant Event Notice informing that it received, on that date, a correspondence from State Grid Brazil Power Participações Ltda. (“State Grid Brazil”) informing that on that date the Share Purchase Agreement dated September 2, 2016 between State Grid Brazil, Camargo Correa S.A., Caixa de Previdência dos Funcionários do Banco do Brasil – PREVI, Fundação CESP, Fundação Sistel de Seguridade Social, Fundação Petrobras de Seguridade Social – PETROS, Fundação SABESP de Seguridade Social — SABESPREV, and certain other parties, had been signed. This Significant Event Notice also disclosed the conditions for the transaction regarding (i) closing and shares acquired, (ii) price per share of CPFL Energia; (iii) price per share of CPFL Renováveis; (iv) OPAs for sale of control; (v) OPA price for sale of control; (vi) Possibility of Cancelation of Registration of CPFL Energia and/or CPFL Renováveis; (vii) termination of control of shareholders, and other material information.
After finalizing the transaction, State Grid Brazil became the parent company of CPFL Energia with 54.64% (556,164.817 shares, direct or indirect) of the Company’s voting and total capital. The total price paid for the direct and indirect acquisition of shares was R$ 25.51 per share, totaling approximately R$ 14.19 billion. With the transaction, State Grid Brazil Power Participações Ltda. became the only controlling shareholder of the Company, and the Shareholders’ Agreement dated March 22, 2002 signed among the former shareholders was terminated.
The members of the Board of Directors and Fiscal Council (except the one elected as independent member) resigned on the same date. The election of the members for the vacant positions of the Board of Directors and the Fiscal Council occurred at the Extraordinary General Meeting held on February 16, 2017, according to the call notice and Management’s Proposal already disclosed.
As the closing occurred on January 23, 2017, after all conditions precedent were met, this transaction did not generate impacts on the Company’s ownership structure as at December 31, 2016.
38.2. Approval for fundraising
38.2.1. Approval for issue of debentures of CPFL Piratininga and RGE
The Board of Directors of the subsidiaries authorized, on January 25, 2017, the 8th issue of simple non-convertible debentures. The debentures were issued on February 15, 2017.
Subsidiary |
Issue |
Quantity issued |
Amount |
Maturity |
Interest |
Utilization | ||||||
CPFL Piratininga |
8th issue - 1st series |
60,000 |
60,000 |
Feb. 2024 |
Semiannual |
Implementation and development of investment projects in substations and transmission lines | ||||||
CPFL Piratininga |
8th issue - 2nd series |
246,000 |
246,000 |
Feb. 2022 |
Semiannual |
Working capital improvement and extension of the debt profile | ||||||
RGE |
8th issue - 1st series |
130,000 |
130,000 |
Feb. 2024 |
Semiannual |
Implementation and development of investment projects in substations and transmission lines | ||||||
RGE |
8th issue - 2nd series |
250,000 |
250,000 |
Feb. 2022 |
Semiannual |
Working capital improvement and extension of the debt profile | ||||||
686,000 |
38.2.2. Approval for fundraising in foreign currency (Law 4,131) – CPFL Geração, CPFL Paulista, RGE and RGE Sul
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
On February 1, 2017, the Board of Directors approved the raising of borrowings for the following subsidiaries:
- CPFL Paulista: up to R$ 2,225,000;
- CPFL Geração: up to R$ 679,000;
- RGE Sul: up to R$ 390,000; and
- RGE: up to R$ 308,000.
These approvals will occur through borrowings based on Law 4,131/62 and/or roll over of the current debts in foreign currency with swap for CDI, as well as the assignment of swap in guarantee, Rural Credit, Bank Credit Note, Promissory Notes with take out of long-term debts, Issue of Debentures, Assumption of Debts, other working capital transactions.
38.3. Interim dividend for the 1st half of 2016
According to the Notice to the Shareholders of January 5, 2017, at a meeting held on the same date the Company’s Board of Directors approved the proposal for “Interim Dividend”, relating to the first half of 2016, which will be attributed to the mandatory minimum dividend for 2016, in the amount of R$ 221,780, equivalent to R$ 0.217876793 per share.
The dividend proposed was paid on January 20, 2017, to the shareholders holding Company shares on January 12, 2017, and the shares are now traded “ex-dividend” on the BM&FBOVESPA and on the New York Stock Exchange (NYSE) from January 13, 2017.
38.4. Share Acquisition Public Offer
As per the significant event notice on February 16, 2017, State Grid Brazil Power Participações will conduct a public offer for acquisition of all the common shares held by the remaining shareholders of CPFL (“Offer for Sale of Control”), pursuant to the prevailing legislation and CPFL’s Bylaws.
State Grid Brazil has also the intention of, together with the Offer for Sale of Control, conduct a unified public offer for acquisition of Company common shares aimed to: (i) cancel its listing as publicly-traded company with the CVM under the category “A” and its conversion to category “B” (“Offer for Conversion of Listing”); and (ii) withdraw the Company from the Special Listing Segment of BM&FBOVESPA named Novo Mercado (“Offer for Withdrawal from Novo Mercado”), in conformity with the relevant legislation. State Grid Brazil also intends to cause: (i) the deposit agreement relating to the American depositary of the Company’s shares to be terminated, (ii) the Company to withdraw from the NYSE, and (iii) the Company’s listing as publicly-traded company in the United States to be canceled.
CPFL Energia also informs that, due to the intention expressed by State Grid Brazil, the Company’s shareholders will be called for an extraordinary general meeting to decide on the (i) selection of the specialized institution or company responsible for determining the Company’s economic value based on a triple list to be submitted by the Board of Directors, as provided for in the Novo Mercado Regulation and the Company’s Bylaws; (ii) cancelation of the Company’s listing with CVM as issuer of securities registered under the category “A”, and their conversion into category “B”; and (iii) Company’s withdrawal from the Novo Mercado listing segment of BM&FBOVESPA S.A.– Bolsa de Valores, Mercadorias e Futuros. This significant event notice includes further details of the transaction.
As per Significant Event Notice disclosed by both companies to the market on February 23, 2017, State Grid Brazil filled with CVM in February 22, 2017 requiring authorization for a Public Tender Offer for acquisition of CPFL Energia’s shares. Such request is currently under analysis by CVM.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
BOARD OF DIRECTORS
HU YUHAI
Chairman
CHEN DAOBIAO
Vice Chairman
QU YANG
ZHAO YUMENG
ANDRE DORF
ANTONIO KANDIR
ANA MARIA ELORRIETA
Directors
EXECUTIVE OFFICERS
ANDRE DORF
Chief Executive Officer
GUSTAVO ESTRELLA
Chief Financial
and Investor Relations Officer
WAGNER LUIZ SCHNEIDER DE FREITAS
Chief Planning and Business Management Officer
LUIS HENRIQUE FERREIRA PINTO
Chief Regulated Operations Officer
CARLOS DA COSTA PARCIAS JÚNIOR
Chief Business Development Officer
KARIN REGINA LUCHESI
Chief Market Operations Officer
LUIZ EDUARDO FRÓES DO AMARAL OSORIO
Chief Institutional Relations Officer
ACCOUNTING DIVISION
SERGIO LUIS FELICE
Accounting Director
CT CRC 1SP192767/O-6
110
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
(Convenience Translation into English from the Original Previously Issued in Portuguese)
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors and Shareholders of
CPFL Energia S.A.
São Paulo - SP
Opinion
We have audited the individual and consolidated financial statements of CPFL Energia S.A. (“CPFL Energia” or “Company”), identified as Company and Consolidated, respectively, which comprise the statement of financial position as of December 31, 2016 and the related statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying individual and consolidated financial statements referred to above present fairly, in all material respects, the financial position of CPFL Energia as of December 31, 2016, its individual and consolidated financial performance and its individual and consolidated cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards - IFRSs, issued by the International Accounting Standards Board - IASB.
Basis for opinion
We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the individual and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical requirements in the Code of Ethics for Professional Accountants and the professional standards issued by the Federal Accounting Council ("CFC"), and we have fulfilled our other ethical responsibilities in accordance with these standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of matter
Restatement of corresponding amounts
As stated in note 2.8, as a result of changes in the accounting policy adopted by the Company concerning the classification of adjustments of expected cash flows related to the concession financial asset, the corresponding amounts reported in the financial statements and related to the consolidated statements of income and value added statement (supplemental information) for the year ended December 31, 2015, presented for comparative purposes, have been reclassified and are restated as set out in technical pronouncement CPC 23 and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors. We issued an unqualified opinion thereon.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current year. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and, therefore, we do not provide a separate opinion on these matters.
Recognition of unbilled revenue from electricity distributed
As mentioned in note 3.110 to the financial statements, accounting for unbilled revenue from electricity distributed to consumers causes an impact on the net revenue amount recognized in the year, as well as the balance reported in receivables from consumers, concessionaires and licensees account. The estimate assessment and determination process, which comprises defining assumptions that affect the calculation of distributed and unbilled electricity volume and amount, is complex and involve Management’s significant judgment. Accordingly, we have considered the estimated amounts of unbilled revenue and receivables from consumers, concessionaires and licensees arising from electricity distributed as a key audit matter.
Our audit procedures designed to address such accounting estimate included, but were not limited to: (i) assessing the design, implementation and effectiveness of relevant internal controls adopted by the Company’s Management so as to determine the unbilled revenue amount from electricity distributed (ii) involving our Information Technology specialists to assess the systems and IT environment used in determining the recorded balances, and (iii) challenging the major assumptions used by Management to make such estimate. Moreover, we have tested the completeness and accuracy of data used for calculating Management’s estimates and performed valuation tests on the unbilled revenue from distributed electricity, by comparing amounts recognized by the Company with independent expectations derived from our substantive tests.
Capitalization of expenses as concession intangible assets
In view of the involved amount and investments allocated within the entire concession area of distributors controlled by the Company and the fact that the regulatory agency (Brazilian Electricity Regulatory Agency - "Aneel") uses the distribution infrastructure as a basis to determine tariffs for each tariff cycle, i.e., the distribution infrastructure corresponds to the regulatory remuneration base – RRB, we consider the segregation and capitalization of expenses to the concession intangible assets as a key matter in our audit, since there might be errors while determining and capitalizing non-qualifying expenses primarily related to outsourced services and labor force.
Our audit procedures included, but were not limited to: (i) assessing the design, implementation and effectiveness of relevant internal controls adopted by Management so as to segregate and capitalize expenses to the distribution infrastructure, (ii) involving our Information Technology specialists to assess the systems used by the Company to control intangible assets and respective capitalized expenses, (iii) performing tests, on a sample basis, in order to assess the valuation and allocation of expenses segregated and capitalized to the concession intangible assets and financial assets, (iv) challenging the assumptions used by Management to determine and segregate capitalized expenses, and (v) comparing the nature and volume of capitalized expenses with those approved by the regulatory agency over the last tariff review period of each distributor controlled by the Company.
Acquisition of AES Sul
As disclosed in note 13.4, the Company acquired AES Sul Distribuidora Gaúcha in 2016, for the amount of R$1,591 million. Accounting for such acquisition required the use of estimates from the Company’s Management, with respect to the accounting treatment, the determination of the fair value of acquired assets and assumed liabilities, the disclosure of information on those transactions, as well as the appropriateness of the acquired company’s significant accounting policies. Consequently, we consider the measurement, accounting treatment and disclosure of the effects of such acquisition as a key audit matter.
Our audit procedures designed to address such matter included, but were not limited to: (i) assessing the design, implementation and effectiveness of relevant internal controls adopted by the Company’s Management to identify acquired assets and assumed liabilities and to allocate the purchase price and accounting record relating to price allocation and disclosure, (ii) assessing the completeness and accuracy of calculation models prepared by the Company’s Management in the identification and valuation of assets and liabilities; (iii) involving our internal specialists in valuation techniques, and (iv) assessing the appropriateness of acquisition-related disclosures, as shown in note 13 to the financial statements.
112
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Other matters
Value added statements
The individual and consolidated value added statements (“DVA”) for the year ended December 31, 2016, prepared under the responsibility of the Company’s Management and disclosed as supplemental information for purposes of the IFRSs, were subject to audit procedures performed together with the audit of the Company’s financial statements. In forming our opinion, we assess whether these statements are reconciled with the financial statements and accounting records, as applicable, and whether their form and content are in accordance with the criteria set out in Technical Pronouncement CPC 09 - Value Added Statement. In our opinion, these statements of value added were fairly prepared, in all material respects, in accordance with the criteria set out in such Technical Pronouncement and are consistent in relation to the individual and consolidated financial statements taken as a whole.
Other information accompanying the individual and consolidated financial statements and the independent auditor’s report
Management is responsible for such other information. The other information comprises the Management Report.
Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of audit conclusion thereon.
In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether such report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Management Report, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and those charged with governance for the individual and consolidated financial statements
Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards - IFRSs, issued by the International Accounting Standards Board - IASB, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the individual and consolidated financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s and its subsidiaries’ financial reporting process.
Auditor’s responsibilities for the audit of the individual and consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and its subsidiaries’ internal control.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
· Conclude on the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and its subsidiaries’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the current year and are, therefore, the Key Audit Matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other matters
The accompanying individual and consolidated financial statements have been translated into English for the convenience of readers outside Brazil.
Campinas, March 13, 2017
DELOITTE TOUCHE TOHMATSU Marcelo Magalhães Fernandes
Auditores Independentes Engagement Partner
2017-CPS-0059
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
The members of the Fiscal Council of CPFL Energia S.A., in performing their legal and statutory attributions, have examined the Management Report, the Financial Statements for the Fiscal Year 2016 and, with the clarifications provided by the Company’s Directors and considering the examinations made and the unqualified report of the independent auditors, dated March 13, 2017, are of the opinion that these documents are authorized to be analyzed and voted by the Annual General Meeting of Shareholders, to be held in April 28, 2017.
Campinas, March 22, 2017.
PAN YUEHUI
Chairman
ZHANG RAN
Director
REGINALDO FERREIRA ALEXANDRE
Director
115
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
In accordance to the sections V and VI of article 25 of CVM Instruction 480, of December 07, 2009, the chief executive officer and directors of CPFL Energia S.A., a publicly quoted companion, whose headquarters are located at Gomes de Carvalho street, 1510 - 14º floor- Room 142 - Vila Olímpia - São Paulo - SP – Brasil, CNPJ (Federal Tax ID) 02.429.144/0001-93, have declared:
a) that reviewed, discussed and agree with the auditors’ opinion issued by Deloitte Touche Tohmatsu Auditores Independentes, related to CPFL Energia Financial Statements as of December 31, 2016;
b) that reviewed, discussed and agree with the CPFL Energia Financial Statements as of December 31, 2016.
Campinas, March 13, 2017.
ANDRE DORF
Chief Executive Officer
GUSTAVO ESTRELLA
Chief Financial
and Investor Relations Officer
WAGNER LUIZ SCHNEIDER DE FREITAS
Chief Planning and Business Management Officer
LUIS HENRIQUE FERREIRA PINTO
Chief Regulated Operations Officer
CARLOS DA COSTA PARCIAS JÚNIOR
Chief Business Development Officer
KARIN REGINA LUCHESI
Chief Market Operations Officer
LUIZ EDUARDO FRÓES DO AMARAL OSORIO
Chief Institutional Relations Officer
116
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Standard Financial Statements – DFP – Date: December 31, 2016 - CPFL Energia S. A
Management declaration on independent auditors’ report
In accordance to the sections V and VI of article 25 of CVM Instruction 480, of December 07, 2009, the chief executive officer and directors of CPFL Energia S.A., a publicly quoted companion, whose headquarters are located at Gomes de Carvalho street, 1510 - 14º floor- Room 142 - Vila Olímpia - São Paulo - SP – Brasil, CNPJ (Federal Tax ID) 02.429.144/0001-93, have declared:
c) that reviewed, discussed and agree with the auditors’ opinion issued by Deloitte Touche Tohmatsu Auditores Independentes, related to CPFL Energia Financial Statements as of December 31, 2016;
d) that reviewed, discussed and agree with the CPFL Energia Financial Statements as of December 31, 2016.
Campinas, March 13, 2017.
ANDRE DORF
Chief Executive Officer
GUSTAVO ESTRELLA
Chief Financial
and Investor Relations Officer
WAGNER LUIZ SCHNEIDER DE FREITAS
Chief Planning and Business Management Officer
LUIS HENRIQUE FERREIRA PINTO
Chief Regulated Operations Officer
CARLOS DA COSTA PARCIAS JÚNIOR
Chief Business Development Officer
KARIN REGINA LUCHESI
Chief Market Operations Officer
LUIZ EDUARDO FRÓES DO AMARAL OSORIO
Chief Institutional Relations Officer
117
CPFL ENERGIA S.A. | ||
|
By: |
/S/ GUSTAVO ESTRELLA
|
Name: Title: |
Gustavo Estrella Chief Financial Officer and Head of Investor Relations |
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.