Professional Documents
Culture Documents
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Independent Auditors Report on Financial Statements Balance sheets Statements of income Statements of changes in shareholders' equity Statements of cash flows Statements of added value Notes to the financial statements
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
A free translations from Portuguese into English of Independent Auditors Report on Individual financial statements in accordance with accounting practices adopted in Brazil and consolidated financial statements prepared in accordance with IFRS and also with accounting practices adopted in Brazil.
Introduction
We have reviewed the interim, individual and consolidated accounting information of Renova Energia S.A., contained in the Quarterly Information - ITR Form for the quarter ended March 31, 2012, which comprise the balance sheet as of September 31, 2012 and the related statements of income, of changes in shareholders' equity and of cash flows for the 3-month period then ended, including the explanatory notes. Management is responsible for the preparation of the individual interim accounting information in accordance with Technical Pronouncement CPC 21(R1) - Interim Statement and of the consolidated interim accounting information in accordance with CPC 21 (R1) and with international standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of this information in a manner consistent with the standards issued by the Securities Commission, applicable to the preparation of the Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim information based on our review. Scope of the review Our review was carried out in accordance with the Brazilian and international review standards for interim information (NBC TR 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists in asking questions, chiefly to the persons in charge of financial and accounting affairs, and in applying analytical procedures and other review procedures. The scope of a review is significantly lower than that of an audit held in accordance with auditing rules, and as a result we were unable to ascertain whether we became aware of all the significant matters likely to be detected in an audit. Therefore, we do not express an opinion on the information disclosed.
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Conclusion on the individual interim accounting information Based on our review, we are not aware of any facts that would lead us to believe that the individual interim accounting information included in the quarterly information referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) applicable to the preparation of Quarterly Information - ITR, and presented in a manner consistent with the standards issued by the Securities Commission. Conclusion on the consolidated interim accounting information Based on our review, we are not aware of any facts that would lead us to believe that the consolidated interim accounting information included in the quarterly information referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34 applicable to the preparation of Quarterly Information ITR, and presented in a manner consistent with the standards issued by the Securities Commission. Other issues Interim information of the added value We also reviewed the individual and consolidated Statements of Added-value for the quarter ended March 31, 2012, prepared by the Company's management, whose presentation in the interim information is required according to the standards issued by the CVM - Securities and Exchange Commission, applicable to the preparation of Quarterly Information - ITR and considered supplementary information by the IFRS, which do not require the presentation of the statement of added-value. These statements were subjected to the review procedures previously described and, based on our review, we are not aware of any other event that make us believe that those were not prepared, in all material respects, in accordance with the individual and consolidated interim accounting information taken as a whole.
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
6 7 8 9 11
Non-current assets Related party transactions Loans - subsidiaries Loans - Parent companies Special savings bonds Pledges and restricted deposits Goodwill (-) Provision for goodwill at the time of the take-over Investments Other investments Fixed assets in service Constructions in progress
10 26.510 10 450 119.272 (119.272) 469.265 60 10.985 56.900 25.229 244 449 119.272 (119.272) 464.709 60 7.980 44.636 10 25 12.151 119.272 (119.272) 70 198.043 1.120.999 244 25 11.875 119.272 (119.272) 70 196.337 959.120
11 12
13 14 14
564.180
543.307
1.331.298
1.167.671
Total assets
669.067
816.237
1.587.076
1.579.501
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Parent company Liabilities Current liabilities Suppliers Loans and financing Charges on loans Current tax liabilities Salaries and vacations payable Other accounts payable Note 3/31/2012 12/31/2011
15 16 16 17
4.428
155.019
71.294
178.757
Non-current liabilities Loans and financing Charges on loans Related party transactions Loans - subsidiaries Total non-current liabilities Total liabilities
16 16 10
Shareholders' equity Capital (-) Expenses with issue of shares Accumulated loss Total shareholders' equity
18 702.803 (34.241) (16.125) 652.437 702.788 (34.241) (19.416) 649.131 702.803 (34.241) (18.002) 650.560 702.788 (34.241) (21.673) 646.874
669.067
816.237
1.587.076
1.579.501
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Net income
19
9.750
8.645
Cost of services Depreciation and amortization Operating cost Distribution system use charges Gross income (loss) Operating expenses Other income Administrative and general expenses Tax expenses Depreciation and amortization Other expenses Equity income (loss)
20
20
Income (loss) before net financial income (expenses) and taxes Financial expenses Financial income Net financial income (expenses)
21
3.364
(2.090)
4.828
(1.236)
22
(73)
(1.157)
(475)
3.291
(2.090)
3.671
(1.711)
Basic earnings per share attributable to Company's per preferred share per common share
0,02 0,02
(0,01) (0,01)
0,02 0,02
(0,01) (0,01)
Diluted earnings per share attributable to Company's per preferred share per common share
0,02 0,02
(0,01) (0,01)
0,02 0,02
(0,01) (0,01)
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Statements of changes in shareholders' equity Quarter ended March 31, 2012 and 2011
Parent company Capital
Paid-in
Accumulated losses
Total
Balances at January 1, 2011 Income (loss) for the period Capital increase - issue of shares Balances at March 31, 2011
(13.686) (13.686)
Capital
Paid-in
Balances at January 1, 2012 Income for the period Capital increase - issue of shares Balances at March 31, 2012
702.788 15 702.803
(34.241) (34.241)
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Consolidated
Capital
Paid-in
Balances at January 1, 2011 Income (loss) for the period Capital increase - issue of shares Balances at March 31, 2011
Capital
Paid-in
Balances at January 1, 2012 Income for the period Capital increase - issue of shares Balances at March 31, 2012
702.788 15 702.803
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Statements of cash flows Quarter ended March 31, 2012 and 2011
Parent company 3/31/2012 Cash flows from operating activities Income (loss) for the period Adjustments due to: from operational activities: Depreciation and amortization Charges on loan Write-off of intangible assets Write-off of fixed assets Interest on loan Escrow interest Equity income (loss) Changes in assets (Increase) decrease in trade accounts receivable (Increase) decrease in recoverable taxes (Increase) decrease in prepaid expenses (Increase) decrease in receivables from suppliers (Increase) decrease in other accounts receivable Changes in liabilities (Decrease) increase in suppliers (Decrease) increase in taxes and contributions payable (Decrease) increase in other accounts 3.291 (2.090) 3.671 (1.711) 3/31/2011 Consolidated 3/31/2012 3/31/2011
391 (211) 633 23 383 (1) (4.626) (117) (1.859) (37) (468) (212) 239 (247) (216) (2.917) 73 (4.857) (7.701) (7.584)
61 85 571 (1) (1.778) (3.152) 263 (43) (1.587) (15.050) (147) (63) 350 (19.429) (19.429) (16.277)
1.810 (2) 633 23 2.572 (276) 8.431 916 (1.896) 299 7.404 (211) 42.126 619 (240) 57.448 394 (7.047) 50.795 42.364
1.479 (1) 4.029 (279) 3.517 169 258 (908) (1.187) (277) (405) (119) 350 1.398 (54) (4.282) (2.938) (6.455)
Payment of income and social contribution taxes Payment of interest on loans Net cash used in operational activities Cash flows from operating activities Cash flows from investment activities (Increase) decrease in AFAC [Advance for future capital increase] Acquisition of property, plant and equipment in service Acquisition of property, plant and equipment in progress
70 (3.419) (8.863)
(147) (3.682)
(3.539) (145.023)
(240) (19.264)
Net cash generated (consumed) in financing activities Cash flows from financing activities (Increase) decrease in restricted deposits Increase in loans/financings Payments of loans Increase (decrease) in loans Loan with related parties - Receipt Loan with related parties - Payment Loan with related parties - Granted Net cash generated/(consumed) in financing activities
(12.212)
(3.829)
(148.562)
(19.504)
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at January 1 Cash and cash equivalents on March 31
10
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Statements of added value Quarter ended March 31, 2012 and 2011
Parent company 3/31/2012 Revenues Sales of goods, products and services Non-operating income Inputs acquired by third parties (include ICMS and IPI) Cost of goods sold and services rendered Materials, energy, outsourced services and other operating expenses Gross added value Depreciation, amortization and depletion Net added value generated by the Company Added value received as transfer Equity income (loss) Financial income Total added value payable Distribution of added value Employees Salaries and payroll charges Management fees Taxes Federal State Municipal Third-party capital remuneration Interest Rents Others Income (loss) for the period Distribution of added value 3/31/2011 Consolidated 3/31/2012 3/31/2011
10.119 -
8.972 -
8.527 10.346
1.090 4.937
1.739 218
1.013 245
1.739 218 `
1.013 245
180 -
68 -
1.748 -
973 -
11
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
(*) (**)
Company - Ge ne rating wind e ne rgy Nova Renova Energia S.A. (Holding) (former Serto) Bahia Elica Participaes S.A. (Holding) Centrais Elicas Pinda S.A. Centrais Elicas Igapor S.A. Centrais Elicas Licnio de Almeida S.A. Centrais Elicas Candiba S.A. Centrais Elicas Ilhus S.A. Salvador Elica Participaes S.A. Centrais Elicas Alvorada S.A. Centrais Elicas Paje do Vento S.A. Centrais Elicas Planaltina S.A. Centrais Elicas Rio Verde S.A. Centrais Elicas Guirap S.A. Centrais Elicas Nossa Senhora Conceio S.A. Centrais Elicas Guanambi S.A. Centrais Elicas Porto Seguro S.A. Centrais Elicas Serra do Salto S.A. Renova Elica Participaes S.A. Centrais Eltricas Borgo LT DA Centrais Eltricas Dourados LT DA Centrais Eltricas Maron LT DA Centrais Eltricas Serra do Espinhao LT DA Centrais Elicas Ametista LT DA Centrais Elicas Caetit LT DA Centrais Elicas Espigo LT DA Centrais Elicas Pelourinho LT DA (former Palmares) Centrais Elicas Piles LT DA (former Recncavo) Centrais Elicas So Salvador LT DA Centrais Eltricas Morro LT DA (former Morrinhos) Centrais Eltricas Serama LT DA Centrais Eltricas T anque LT DA Centrais Elicas dos Araas LT DA Centrais Elicas da Prata LT DA Centrais Elicas Ventos do Nordeste LT DA Centrais Eltricas Botuquara LT DA Centrais Eltricas Itaparica LT DA (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**) (**)
Consolidation Full at Full at Nova Renova Full at Bahia Elica Full at Bahia Elica Full at Bahia Elica Full at Bahia Elica Full at Bahia Elica Full at Nova Renova Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Salvador Elica Full at Nova Renova Full at Full at Full at Full at Full at Full at Full at Full at Full at Full at Full at Renova Elica Full at Renova Elica Full at Renova Elica Full at Renova Elica Full at Renova Elica Full at Renova Elica Full at Full at
(*) Authorization from ANEEL for a 30-year period (**) Companies in pre-operating phase;
12
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Enerbras Centrais Eltricas S.A. ("Enerbras"), established on February 9, 2001 as a limited liability company and converted on May 10, 2006 into a private corporation has the exclusive purpose of investing in the capital of Energtica Serra da Prata S.A. ("Espra"), a corporation headquartered in the city of Salvador, Bahia State. The indirect subsidiary Espra was initially established as a consortium on October 30, 2003 and converted into a private corporation on September 17, 2004. The sole business purpose of Espra is to generate and sell the electric power of Serra da Prata Hydroelectric Complex by means of its small hydroelectric power plants (PCHs): (i) Cachoeira da Lixa, with an installed capacity of 14.8MW; (ii) Colino 2, with an installed capacity of 16.0MW; and (iii) Colino 1 with an installed capacity of 11.0MW, whose operating activities started in May, July and September 2008, respectively. On June 30, 2004, the electric power generated by Serra da Prata Hydroelectric Complex was subject to a purchase and sales agreements entered into with ELETROBRS - Centrais Eltricas Brasileiras S.A., under the Incentive Program for Alternative Electric Power Sources (PROINFA). Through these electric power purchase and sales agreements, Espra will sell its entire electric power production which can be negotiated in the long term of twenty (20) years. The authorization period of Espra is 30 years and can be extended for another 30 years. On December 14, 2009, the Company participated in Auction 03/2009-ANEEL, for the procurement of Reserve Energy generated exclusively by wind power, pursuant to Ordinances 147/2009 and 211/2009 of the Ministry of Mines and Energy (MME), and committed to sell average 127MW arising from 14 wind farms located in Bahia State. Such farms are already under implementation and shall commence their business operations by July 2012. On October 26, 2010, wind power plants Guanambi, Porto Seguro, Rio Verde, Alvorada, Guirap, Ilhus, Candiba, Serra do Salto, Igapor and December 6, 2010 the SPES, Paje do Vento, Pinda, Planaltina, Licnio de Almeida and Nossa Senhora Conceio, respectively, entered into an energy purchase and sale agreement with the Power Commercialization Chamber (CCEE) for a 20-year supply term. On August 26, 2010, the Company participated in Auction 05/2010-ANEEL, for the procurement of Reserve Energy generated exclusively by wind power, pursuant to Ordinances of the Ministry of Mines and Energy (MME) 555/2010, 645/2010, and 483/2010 and those that may be changed, and is committed to sell average 78MW of installed capacity arising from six wind farms located in Bahia State. Such farms shall commence their business operations by September 2013. On May 26, 2011, wind power plants Da Prata, Dos Aras, Morro, Ventos do Nordeste and July 20, 2011, the wind power plants Serama and Tanque, respectively, entered into an energy purchase and sale agreement with the Power Commercialization Chamber (CCEE) for a 20-year supply term. On August 17, 2011, the Company participated in Auction 02/2011-ANEEL, for the procurement of Energia Nova (A-3), pursuant to Ordinances of the Ministry of Mines and Energy (MME) 021/2008, 175/2009, 113/2011 and those that may be changed, and is committed to sell average 103.6MW of installed capacity arising from nine wind farms located in Bahia State. Such farms shall commence their business operations by March 2014.
13
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Shared control
On July 8, 2011, RR Participaes S.A. (RR), in the capacity of controlling shareholder of Renova Energia S.A. Renova, and Light S.A., in the capacity of new investor, and Renova, in the capacity of investee, entered into an Investment Agreement with Renova, whereby Light Energia S.A. "Light Energia" entered in Renova's capital stock by subscribing new common shares to be issued by the latter, corresponding to a capital increase at Renova in the amount of R$360,000 (three hundred and sixty thousand Brazilian Reais), as per the following terms: The Investment was previously authorized by the National Agency of Electrical Energy ANEEL, and authorized by the lenders of Renova and its subsidiaries. Once all the suspensive conditions established in the Investment Agreement are met, as described below, the capital increase of Renova was carried out on August 19, 2011. By means of such Investment on August 19, 2011, Light Energia became the holder of 34.9% of common shares of Renova and 25.9% of its total capital. (As detailed in note 18 - Shareholders' equity). Corporate Reorganization On March 16, 2012, the Company authorized the capital increase of its subsidiary Nova Renova Energia S.A., a publicly-held company with head office in the City of So Paulo, State of So Paulo, at Avenida Roque Petroni Junior, n 999, Vila Gertrudes, CEP 04707-910, enrolled with CNPJ/MF under No. 12.041.313/0001-77 ("Nova Renova"), from the current R$344,596 to R$356,887 at book values of investments through the transfer of the total registered common shares, without par value, of its subsidiaries CE da Prata, CE Araas, CE Morro, CE Serama, CE Tanque and CE Ventos do Nordeste, under the terms of the Appraisal Reports, through the issuance of 12,291,409 new registered common shares, with no par value of Nova Renova. This change was necessary due to the financing model and strategy adopted by the Company for its wind farms in connection with the Reserve Energy Auction - 2010 (LER). Accordingly, Nova Renova now holds the direct control of the aforementioned companies and will hold indirect control over these companies. On March 16, 2012, the subsidiary Nova Renova Energia S.A. as identified above authorized the capital increase of its subsidiary Renova Elica Participaes S.A. from the current R$ 100.00 to R$ 12,291, total through the transfer of its shares held by its parent company Nova Renova S.A in the companies CE da Prata, CE Araas, CE Morro, CE Serama, CE Tanque and CE Ventos do Nordeste, through the issuance of 12,291,409 new common shares without par value of the Company.
14
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) Organizational chart
Renova Energia S.A.
99% 100% Enerbrs Centrais Eltricas S.A. 99,99% Energtica Serra da Prata S.A. 100% Bahia Elica Participaes S.A. 100% Salvador Elica Participaes S.A. 100% Renova Elica Participaes S.A. 100% Centrais Elicas Pelourinho Ltda 100% Centrais Elicas Ametista Ltda Nova Renova Energia S.A.
99,99% Centrais Elicas Pinda S.A. 99,99% Centrais Elicas Igapor S.A. Centrais Elicas Paje do Vento S.A. Centrais Elicas Alvorada S.A.
99,99%
99,99%
Centrais Eltricas Serra do Espinhao Ltda 100% Centrais Elicas Caetit Ltda 100% Centrais Eltricas Dourados Ltda
99,99% Centrais Elicas Licnio de Almeida S.A. Centrais Elicas Planaltina S.A. 99,99% 99,99% Centrais Eltricas Seraima LTDA(*) 99,99% Centrais Elicas Candiba S.A. Centrais Elicas Rio Verde S.A. 99,99% 99,99% Centrais Eltricas Tanque LTDA(*) 99,99% Centrais Elicas Ilhus S.A. Centrais Elicas Guirap S.A. 99,99% 99,99% Centrais Elicas Aras dos LTDA(*)
100% Centrais Elicas Piles Ltda Centrais Elicas Nossa Senhora da Conceio S.A. 99,99% 99,99% Centrais Elicas da Prata LTDA(*) 100% Centrais Eltricas Maron Ltda 99,99% 99% LER 2009 99,99% LER 2010 LEN 2011 99,99% Subholding PCH 99,99% LIVRE Centrais Elicas So Salvador Ltda Centrais Elicas Serra do Salto S.A. 99% Centrais Eltricas Itaparica Ltda Centrais Elicas Porto Seguro S.A. 99% Centrais Eltricas Botuquara Ltda Renova PCH Ltda.
15
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
The interim financial information of the Parent Company was prepared in accordance with CPCs, and, in the case of the Company, these practices differ from the IFRS applicable to separate interim financial information due to the fact that investments, as, for IFRS purposes, they would be valued at cost or fair value. Pursuant to CPC 43 (R1), the shareholders' equity and net income presented in the individual interim financial information, on March 31, 2012 and 2011, differ from the IFRS only in view of the following: (i) adoption of the equity method of accounting in the evaluation of investments in subsidiaries and (ii) existence of balance of deferred assets not yet amortized of the subsidiary, also in these statements. The reconciliation of shareholders' equity and net income for the years ended March 31, 2012 and December 31, 2011 is presented in the note 4. The statements of comprehensive income are not being submitted, as there are no amounts to be presented on this concept; in other words, net income for the year is equal to the total comprehensive income. The issue of individual and consolidated interim financial information (which are expressed in thousands of Reais, rounded to the nearest value, except otherwise indicated) was authorized by the Board of Directors on May 10, 2012.
b. Measuring basis
The individual and consolidated interim financial information were prepared using historical cost as the value base, except for the valuation of certain non-current assets such as financial instruments, which are measured at fair value.
16
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
b. Foreign currency Transactions in foreign currency are translated into the respective functional currency of the Company and its subsidiaries at the exchange rates on the dates of the transactions. Monetary assets and liabilities denominated and calculated in foreign currencies on the date of presentation are reconverted into the functional currency at the exchange rate determined on that date. Exchange gain or loss in monetary items is the difference between the
17
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) amortized cost of the functional currency at the beginning of the year, adjusted by interest and effective payments during the year, and the amortized cost in foreign currency at the exchange rate at the end of the presentation year. c. Financial instruments i. Non-derivative financial assets The Company initially recognizes the loans, receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are initially recognized on the date of the negotiation under which the Company becomes a party to the contractual provisions of the instrument. The Company fails to recognize a financial asset when the contractual rights to the cash flows of the asset expire, or when they transfer the rights to reception of the contractual cash flows on a financial asset in a transaction in which essentially all the risks and benefits of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained is recognized as a separate asset or liability. Financial assets and liabilities are offset and the net amount reported in the balance sheet only when there is a legally enforceable right to set off and there is intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. The Company classifies non-derivative financial assets in the following categories: financial assets recorded at fair value through profit or loss, investments held to maturity, loans and receivables and financial assets available for sale. Financial assets held to maturity If the Company has the intention and capacity to hold its debt instruments to maturity, these are classified as held to maturity. Investments held to maturity are measured by the amortized cost using the effective interest rate method, deducting any reductions in their recoverable value. Currently, the Company records judicial deposits and restricted deposits under assets held to maturity. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments, but not quoted on any active market. Such assets are initially recognized at fair value plus any transaction costs directly assignable. After their initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method, reduced by any impairment losses. Loans and receivables comprise trade accounts receivable, receivables from suppliers and related party transactions. Assets at fair value through income (loss) A financial asset is classified at fair value through profit or loss if it is held for trading, or stated as such when initially recognized. Financial assets are stated at fair value through profit or loss if the Company manages these investments and makes decisions on investment and redemption based on fair value according to the risk management and strategy of investment documented by the Company. The transaction costs are recognized in income (loss) as incurred. Financial assets recorded at fair value through profit or loss are measured at fair value and changes in the fair value of such assets, taking into account any gain with dividends, are recognized in the income for the year.
18
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Cash and cash equivalents Cash and cash equivalents comprise balances of cash and financial investments with original maturities of three months or less as of the contracting date, which are subject to an insignificant risk of change in value and are used to manage short-term obligations. ii. Non-derivative financial liabilities The Company recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognized initially on the negotiation date on which the Company becomes a party to the contractual provisions of the instrument. The Company writes off a financial liability when its contractual obligations are discharged or cancelled or expired. The Company classifies non-derivative financial liabilities in the category of other financial liabilities. Such financial liabilities are initially recognized at fair value plus any transaction costs directly assignable. After their initial recognition, these financial liabilities are measured at amortized cost using the effective interest rate method. The Company has the following non-derivative financial liabilities: loans, financing and suppliers. iii. Capital Common shares Common shares are classified as shareholders' equity. Additional costs directly attributable to the issue of shares are recognized as a deduction from shareholders' equity, net of any tax effects. Preferred shares Preferred stock has restrict voting rights and takes priority in the settlement of their share of capital. Compulsory minimum dividends are established by the by-laws and when reserved in the end of the year, they are recognized as liabilities.
d. Property, plant and equipment i. Recognition and measurement Property, plant and equipment items are stated at historical acquisition or construction cost, net of accumulated depreciation and impairment losses, when required. The cost of the assets built by the entity includes the cost of materials and direct labor, any other costs to bring assets to the site and the necessary conditions for them to operate as intended by management, disassembly costs and restoration of the location where the assets are located, when applicable, and the costs and interest of loans and financing from third parties capitalized during the construction stage, less financial revenue from third party funds that have not been invested, when applicable.
19
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
ii. Depreciation Fixed assets items are depreciated using the straight-line method in the profit or loss of the year based on the estimated economic useful life of each component. Land is not depreciated. Property, plant and equipment items are depreciated as from the date in which they are installed and become available for use; assets that are internally built are depreciated as from the day in which construction is completed and the asset becomes available for use. The useful lives estimated for the current and comparative year are shown in the Note 14. Our depreciation rates conform to ANEEL resolutions 02/1997, 44/1999 and 474/2012. The depreciation methods and residual values are reviewed at every year closing and any adjustments are recognized as changes in accounting estimates, and useful lives are those established by ANEEL. e. Leases The Company has only operating leases and they are not recognized in the balance sheet. Payments for operating leasing are charged to income on the straight-line basis over the lease period. f. Environmental Licenses
Preliminary environmental licenses and installation permits, obtained in the enterprise planning and installation stage, consecutively, are unitized and recognized as cost of the small hydroelectric power plants and wind farms. g. Employee benefits Short-term employee benefits Obligations for short-term employee benefits are measured on a non-discounted basis and incurred as expenses as the related service is rendered. h. Provisions A provision is set up when the Company has a legal or constructive obligation as a result of a past event, which can be reliably estimated, and it is probable that an outflow of funds will be required to settle the obligation. The financial costs incurred are recorded in the statements of income. i. Results Income and expenses are recognized on the accruals basis. The revenue from electric power sales is recognized in the income statements upon measurement and supply: Income is not recognized if there are significant uncertainties as to its realization. Financial revenues comprise income from interest on cash investments and loans with related parties. Interest income is recognized in income under the effective interest method. Financial expenses include basically loan interest expenses and financing. Borrowing costs which are not directly attributable to the acquisition, construction, or production of a qualifying asset are recognized for in profit or loss using the effective interest rate method.
20
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
j.
For the Company, the income and social contribution taxes of the current year were calculated based on the rates of 15% plus a surcharge of 10% on taxable income in excess of R$ 240 for income tax and 9% on taxable income for social contribution on net income, and take into account tax loss carry forward and negative basis of social contribution, limited to 30% of taxable income. The Company owns companies that opted for the deemed income system, according to calculations shown in note 22. The income tax and social contribution expense comprises current income tax. Current tax is recognized in income (loss). Current taxes are the taxes payable or receivable on the taxable income or loss for the year, at tax rates enacted or substantively enacted on the date of presentation of the interim financial information, and any adjustments to taxes payable in relation to prior years.
k. Income per share The basic earnings per share are calculated based on the result for the financial year attributable to the Company's controlling shareholders and the weighted average of outstanding common and preferred shares in the respective period. The diluted earnings per share are calculated based on the mentioned average of outstanding shares, adjusted by instruments that can potentially be converted into shares, diluted, in the periods presented.
l. Segment information The results that are reported to management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The unallocated items include mostly the corporate assets, office expenses and income and social contribution tax assets and liabilities.
m. Statements of added value The Company prepared individual and consolidated statements of added value in accordance with the rules of technical pronouncement CPC 09 - Statement of Added Value, which are presented as an integral part of the interim financial information under this CPC applicable to publicly-held companies, whereas under IFRS they represent additional financial information.
n. New standards and interpretations not yet adopted Several IFRS standards and standard amendments, and interpretations issued by IASB have not yet come into effect for the quarter ended December 31, 2012, as follows: News Standards, amendments to Standards and interpretations have effective dates as from annual periods started as of January 01, 2013, and have not been applied to the preparation of these interim financial statements. None of these new Standards are expected to have a material effect on the Company's interim financial statements except for IFRS 9 Financial Instruments that may change classification and measurement of financial assets maintained by the Company.
21
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) The Company does not expect to adopt this Standard in advance and the impact of its adoptions has not been measured yet. The CPC (Accounting Pronouncements Committee) has not yet issued pronouncements equivalent to the aforementioned IFRSs, although that is expected to be done before the date when they are required to come into effect. The advanced adoption of IFRS pronouncements is conditioned to the prior approval by a regulatory act by the Brazilian Securities Commission ("CVM").
4. Reconciliation of the consolidated financial statements (IFRS) and the parent company's financial statements (CPC)
The reconciliations of the shareholders' equity on March 31, 2012 and December 31, 2011 as compared to the results for the years ended March 31, 2012 and March 31, 2011, is as follows:
Shareholders' equity 3/31/2012 31/12/2011 Parent company - CPC Write-off of deferred assets and reversals of the respective amortization of income Consolidated (IFRS) 652.437 649.131 Net income for the year 3/31/2012 3/31/2011 3.291 (2.090)
(1.877) 650.560
(2.257) 646.874
380 3.671
379 (1.711)
Description of the differences between accounting practices and respective adjustments: The principal difference between the consolidated financial statement (IFRS) and the parent company's financial statement (CPC) is described below:
Deferred assets: For purposes of the consolidated interim financial information (IFRS), the Company's management recorded against retained earnings on the transition date of January 1, 2009 the balance formerly recorded as deferred assets based, whereas it was kept in the individual position (CPC) of the subsidiary Espra, since for purposes of this interim financial information, management opted to keep this balance up to its total realization through amortization.
5. Operating segments
Three reportable segments are the Company's strategic business units. Such units offer different renewable electric power sources and are managed separately, as they require different technologies, developments and operation stages. The Company's reportable segment operations can be detailed as follows: The difference between segments and the consolidated company refers to administrative activities developed by the Holding: a) PCH (Renewable Energy Development and Generation using hydric sources). This segment includes the development of Inventory and Basic Projects and Energy generation projects for associates Espra and
22
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) Enerbras. This segment is already in the operating stage and comparison between the quarters of 2012 and 2011. b) Wind plants (Renewable Energy Implementation and Generation using wind sources). This segment includes the implementation and operation of bid winning energy projects by the Company. This segment is implementing plants related to Auctions LER 2009, LER 2010 and LEN 2011; operation and energy generation by first plants is expected to begin as of July 2012.
c) New Technologies and Prospection (Development of new projects). This segment includes the prospection and development of new wind farm projects and the development of new technologies for energy generation using renewable sources. This segment started in 2011.
3/31/2012 PCH Net revenue Non-manageable expenses Gross Margin Manageable expenses Depreciation EBITDA Financial income (loss) Deferred income and social contribution taxes Net income T otal assets T otal liabilities 9.750 (192) 9.558 (1.293) (1.419) 8.265 (1.455) Wind farms (749) (749) 1.448 New technologies (226) Adm (6.500) (165) (6.500) 5.629 Consolidated 9.750 (192) 9.558 (8.542) (1.810) 1.016 5.622 PCH 8.645 (277) 8.368 (1.491) (1.418) 6.877 (3.112) Wind farms (43) (43) 3/31/2011 New technologies (13) (3.446) (48) (3.446) (33) Adm Consolidated 8.645 (277) 8.368 (4.980) (1.479) 3.388 (3.145)
(226) 5.306 -
(13) 3.321 -
Highly liquid short-term interest earning bank deposits are promptly convertible into a known sum of cash and subject to an insignificant risk of change of value. These financial investments refer substantially to fixed income funds of the Interbank Deposit Certificate (CDI), remunerated the rates ranging from 98.5% to 102.75% from the CDI.
23
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Corresponds to amounts receivable from the sale of energy generated by the indirect subsidiary Espra, relating to the PCHs Cachoeira da Lixa, Colino 1 and Colino 2. The balance as of March 31, 2012 comprises current amounts exclusively related to our agreement with ELETROBRAS, for which no losses are expected upon realization.
As of March 31, 2012 and December 31, 2011, the balances of R$6,075 and R$ 13,479, respectively, presented in consolidated financial statements are comprised of advances for the purchase of wind towers and credit lines from suppliers of aerogenerators.
24
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
3/31/2012 RR Enerbras Espra Renova PCH Nova Renova Energia Bahia Elica Salvador Elica Renova Elica CE Serra do Espinhao CE Ametista CE Borgo CE Botuquara CE Caetit CE Dourados CE Espigo CE Itaparica CE Maron CE Pelourinho CE Piles CE So Salvador 10 27 10 11 8.225 15.949 12 240 240 215 10 276 245 276 10 239 213 301 11
12/31/2011 244 10 7 8 8.046 15.695 8 163 151 144 6 175 159 175 6 153 144 172 -
Maturity Beginning End 5/27/2009 12/28/2013 1/2/2008 12/28/2013 1/0/1900 1/0/1900 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 5/27/2011 5/27/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012 7/1/2011 3/31/2012
3/31/2012 12.202 -
12/31/2011 12.087 -
The main balances of assets and liabilities on March 31, 2012, as well as the transactions that influenced income for the quarter, relating to operations with related parties, result from transactions of the Company with its parent company, subsidiaries and other related parties. Although their due dates are in short-term, the Company expects that these amounts will be realized only in longterm.
a. Accounts receivable/payable
Accounts receivable - Correspond to a loan from parent RR Participaes S.A. and other associates and subsidiaries, as described in the chart. These loans were raised to supply these companies' cash requirements.
Accounts payable - loan from associate Espra was raised to cover cash requirements. For both balances (receivable and payable), the amount due is subject to adjustment by the Long-term Interest Rate (TJLP) plus interest of 0.5% per year, which will not be capitalized. The request for authorization to prepare loan contracts was registered with ANEEL in 2008.
Management remuneration
The remuneration of Management's key personnel in the periods ended March 31, 2012 and 2011, as required by CVM Resolution No. 560, of December 11, 2008, amounted to R$ 489 and R$ 433, respectively, figures which only comprise short-term benefits.
25
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) Remuneration of the Board of Directors and Statutory Board paid by the Company in the accumulated period.
Parent company 1Q 2012 Board of Directors 2 52 36 n/a 16 n/a n/a n/a 52 Statutory Board 5 437 437 n/a n/a n/a n/a n/a 437 Total 7 489 473 n/a 16 n/a n/a n/a 489
Number of members Annual fixed remuneration Salary or direct compensation Direct and indirect benefits Remuneration for participation in committees Variable compensation Bonus Post-employment benefits T otal amount of compensation per body
11.
Current Non-current
40 450 490
40 449 489
The balances of R$12,151 and R$11,875 on March 31, 2012 and December 31, 2011, respectively, presented in "Non-current assets" refer to the money market investment in a fixed income fund denominated "reserve account liquidity fund" at Banco do Nordeste do Brasil S.A., the objective of which is to guarantee the financing obtained for the construction of the PCHs of the subsidiary Espra. This investment cannot be used until the final term of the financing in 2026. It reaches 97% of the variation of the Certificate of Interbank Deposit (CDI), the balances of which at the end of the year are already stated at market value. The remaining balance refers to deposits related to guarantees of inventory studies, whereas these deposits are made in favor of ANEEL - Agncia Nacional de Energia Eltrica (National Agency of Electrical Energy).
26
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
12.
On January 15, 2010, one of the Company's stockholders, Hourtin Holdings S.A. ("Hourtin"), was merged into the Company. As a result of this merger, the Company recognized goodwill of R$ 119,272. This goodwill initially recognized in Hourtin was due to the acquisition of an ownership interest in the Company's capital. This goodwill is based on expected future earnings of Energtica Serra da Prata ("Espra") and other special purpose entities that hold projects through Renova. Despite of and as indicated in the Appraisal Report prepared to evidence goodwill economic basis, experts indicated that, as Renova is a pure holding and these earnings derive from direct and indirect investments, goodwill should be attributed to these investments' earnings. The assets that were transferred to the Company at the time of the transaction supported the goodwill amount, which was recorded as a contra entry to a capital reserve. Later considering the reverse merger occurred in early 2010, goodwill was fully recognized in the merging company and, for tax purposes, the Company records goodwill from this merger in Part B of Lalur.
13. Investments
The Company did record equity in the income of its subsidiary companies in the amount of R$ 4,626 at March 31, 2012 and R$10,968 at December 31, 2011, respectively.
Shareholders' equity 106.819 357.890 464.709 Income (loss) 12.548 (1.580) 10.968 Equity in net income 12.548 (1.580) 10.968
Interest % December 31, 2011 Enerbras Centrais Eltricas S.A. Wind farms - SPEs 100% 100%
March 31, 2012 Enerbras Centrais Eltricas S.A. Wind farms - SPEs
100% 100%
(70) (70)
27
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) The shareholders' equity of Enerbras as of March 31, 2012 is R$111,192. The net income for the period is R$4,373 and capital is R$101,956, represented by 5,170,101 shares, 4,337,536 thousand of which are common shares, 832,562 preferred class B shares and 3 preferred class A shares. In addition to Enerbras, the Company has holdings in another 18 Companies, with 14 in direct interest and 3 subholding with indirect interest (see note 1). These Companies are in the pre-operational phase and their business purpose consists of developing studies, designing, implementing, operating and exploring electric power plants using a wind energy source and to hold interests in other companies, as the case. The statement of investments for companies with direct interest is as follows:
Company Enerbtras Centrais Eltricas S.A. Centrais Elicas Ametista LTDA Centrais Elicas dos Araas LTDA Centrais Elicas Caetit LTDA Centrais Elicas Espigo LTDA Centrais Elicas Piles LTDA (former Recncavo) Centrais Elicas So Salvador LTDA Centrais Elicas Ventos do Nordeste LTDA Centrais Elicas da Prata LTDA Centrais Eltricas Tanque LTDA Centrais Eltricas Serra do Espinhao LTDA Centrais Eltricas Serama LTDA Centrais Elicas Pelourinho LTDA (former Palmares) Centrais Eltricas Morro LTDA Centrais Eltricas Maron LTDA Centrais Eltricas Itaparica Ltda Centrais Eltricas Dourados LTDA Centrais Eltricas Botuquara LTDA Centrais Eltricas Borgo LTDA Renova PCH LTDA (former Bela Vista) Nova Renova Energia S.A. Total Investment on 12/31/2011 106.819 210 2.371 211 210 210 212 2.033 1.773 1.878 (7) 2.118 (7) 2.118 (7) (5) (7) (6) (7) (5) 344.597 464.709 Addition to the investment (2.371) (2.033) (1.773) (1.878) (2.118) (2.118) 12.291 Advances for future capital increase (70) (70) Net Income (loss) for the period 4.373 (6) (8) (6) (7) (4) (7) (7) (7) (4) (7) (3) (6) (4) 329 4.626 Investment on 03/31/2012 111.192 204 203 204 203 208 (14) (14) (14) (9) (14) (9) (13) (9) 357.147 469.265
28
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
The composition of investments made in sub holding Nova Renova Energia S.A. that controls Renova Elica, Salvador Elica and Bahia Elica is as follows:
Company Investment on 12/31/2011 (32) (5) (46) 42.435 32.592 32.606 18.343 16.039 41 8.328 20.784 28.787 30.806 21.775 28.906 25.568 27.170 10.500 344.597 Addition to the investment 2.371 2.033 1.773 1.878 2.118 2.118 12.291 Advances for future capital increase 257 209 222 228 266 248 (1.500) (70) Net Income (loss) for the period 21 (6) (4) (3) (5) (2) (4) (5) 46 79 79 90 34 27 117 (6) (45) (31) 67 10 18 (69) (68) (11) 329 Investment on 03/31/2012 (11) (11) 2.624 2.239 1.990 2.104 2.380 2.361 41.014 32.671 32.696 18.377 16.066 158 8.322 20.739 28.756 30.873 21.785 28.924 25.499 27.102 10.489 357.147
Nova Renova Energia S.A. Renova Elica Participaes S.A. Centrais Elicas dos Araas LTDA Centrais Elicas Ventos do Nordeste LTDA Centrais Elicas da Prata LTDA Centrais Eltricas Tanque LTDA Centrais Eltricas Serama LTDA Centrais Eltricas Morro LTDA Bahia Elica Participaes S.A. Centrais Elicas Igapor S.A. Centrais Elicas Lcinio de Almeida S.A. Centrais Elicas Pinda S.A. Centrais Elicas Ilhus S.A. Centrais Elicas Candiba S.A. Salvador Elica Participaes S.A. Centrais Elicas Alvorada S.A. Centrais Elicas Guanambi S.A. Centrais Elicas Guirap S.A. Centrais Elicas Rio Verde S.A. Centrais Elicas Serra do Salto S.A. Centrais Elicas N. S. Conceio S.A. Centrais Elicas Paje do Vento S.A. Centrais Elicas Planaltina S.A. Centrais Elicas Porto Seguro S.A. TOTAL
29
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
3/31/2012 Annual depreciation rates % Fixed assets in service Generation Measurement towers Administration Machinery and equipment Improvements Furniture and fixtures Software Data processing equipment Vehicles Total fixed assets in service Constructions in progress Generation To pay out Studies and projects Land Total constructions in progress Total fixed assets Historical cost Accumulated depreciation Net amount Historical cost
20%
(1.889)
(1.511)
30
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
14.2 Movements record movements of property, plant and equipment (Parent company)
12/31/2011 Fixed assets in service Generation Measurement towers Administration Machinery and equipment Improvements Furniture and fixtures Software Data processing equipment Vehicles Total fixed assets in service Constructions in progress Generation To pay out Studies and projects Land Total constructions in progress Total of Property, plant and equipment
Additions
Writeoffs
Depreciation
3/31/2012
2.527
3.005
(227)
5.305
(391)
31
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
14.3
Consolidated
3/31/2012 12/31/2011 Annual de pre ciation rate s % Accumulate d de pre ciation Accumulate d de pre ciation
Historical cost
Ne t amount
Historical cost
Ne t amount
Fixed assets in service Generation Land Reservoirs, dams and ducts Buildings, civil works and improvements Machinery and equipment Furniture and fixtures Data processing equipment Measurement towers Others Administration Machinery and equipment Improvements Furniture and fixtures Software Data processing equipment Vehicles T otal fixed assets in service
595 95.807 46.231 65.009 89 232 6.520 10 214.493 267 2.157 2.118 1.076 787 6 6.411 220.904
(8.382) (5.737) (6.672) (28) (122) (1.215) (5) (22.161) (9) (80) (246) (160) (205) (700) (22.861)
595 87.425 40.494 58.337 61 110 5.305 5 192.332 258 2.077 1.872 916 582 6 5.711 198.043
595 95.807 46.110 65.009 89 232 3.516 10 211.368 55 2.156 2.139 1.006 672 6 6.034 217.402
(7.818) (5.308) (6.262) (26) (111) (988) (5) (20.518) (6) (60) (205) (108) (168) (547) (21.065)
595 87.989 40.802 58.747 63 121 2.528 5 190.850 49 2.096 1.934 898 504 6 5.487 196.337
Constructions in progress Generation T o pay out Studies and projects Land Buildings, civil works and improvements Furniture and fixtures Measurement towers Aerogenerators Substation equipment Advances to suppliers Social projects - BNDES T otal constructions in progress T otal fixed assets
158.851 26.289 6.455 129.912 19 3.383 708.567 65.674 21.817 32 1.120.999 1.341.903
(22.861)
158.851 26.289 6.455 129.912 19 3.383 708.567 65.674 21.817 32 1.120.999 1.319.042
120.979 26.404 5.725 77.017 3 3.228 663.066 5.204 57.494 959.120 1.176.522
(21.065)
120.979 26.404 5.725 77.017 3 3.228 663.066 5.204 57.494 959.120 1.155.457
32
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
595 90.237 41.905 60.373 62 163 7 193.342 376 1.167 610 564 245 6 2.968 196.310
(2.258) (1.713) (1.640) (8) (46) (826) (2) (6.493) (4) (55) (111) (108) (86) (364) (6.857)
595 87.989 40.802 58.747 63 121 2.528 5 190.850 49 2.096 1.934 898 504 6 5.487 196.337
125.809 4.245 4.044 64.645 3 1.940 652.007 4.934 54.909 912.536 917.511
(836)
(6.857)
120.979 26.404 5.725 77.017 3 3.228 663.066 5.204 57.494 959.120 1.155.457
33
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
12/31/2011 Fixed assets in service Generation Land Reservoirs, dams and ducts Buildings, civil works and improvements Machinery and equipment Furniture and fixtures Data processing equipment Measurement towers Others Administration Machinery and equipment Improvements Furniture and fixtures Software Data processing equipment Vehicles T otal fixed assets in service Constructions in progress Generation T o pay out Studies and projects Land Buildings, civil works and improvements Furniture and fixtures Measurement towers Aerogenerators Substation equipment Advances to suppliers Social projects - BNDES T otal constructions in progress T otal of Property, plant and equipment
Additions
Writeoffs
Depreciation
3/31/2012
595 87.989 40.802 58.747 63 121 2.528 5 190.850 49 2.095 1.934 898 505 6 5.487 196.337
(564) (429) (410) (2) (11) (227) (1.643) (3) (20) (54) (52) (38) (167) (1.810)
595 87.425 40.494 58.337 61 110 5.305 5 192.332 258 2.077 1.872 916 582 6 5.711 198.043
120.979 26.404 5.725 77.017 3 3.228 663.066 5.204 57.494 959.120 1.155.457
37.872 543 705 51.812 16 155 45.499 13.755 12.123 32 162.512 166.051
(1.810)
158.851 26.289 6.455 129.912 19 3.383 708.567 65.674 21.817 32 1.120.999 1.319.042
34
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Property, plant and equipment in use PP&E in use are divided into two groups: i. Generation - Basically comprised of assets of the Serra da Prata Hydroelectric Complex and the PCHs Cachoeira da Lixa, Colino 1 and Colino 2 Management - Comprised of assets used in Espra's and the parent company's head office, and by equipment such as wind towers used in wind measurement tests for the development of wind projects.
ii.
In November 2008, pursuant to ANEEL Normative Resolution no. 190/2005, the unitizing procedure was concluded with regard to the fixed assets commissioned at the Serra da Prata hydroelectric compound. The unitized value is composed of the amount of R$11,886 referring to interest capitalized in the construction period in 2005 and 2006. According to articles 63 and 64 of Decree 41019/1957, the assets and facilities utilized in the generation, transmission, distribution and trade of electric power are tied to these services, and cannot be removed, divested, assigned or mortgaged without the prior and express authorization of the regulatory body. ANEEL, through official letter 459/2001- SFF/ANEEL, authorized the offering of emergent rights, assets and facilities of the concession in guarantee of the performance of the obligations assumed by the Company in the sphere of the direct financing, transfer and issue of debentures (note 16.1 c). Depreciation of assets at the Serra da Prata hydroelectric compound was calculated according to the Electricity Accounting and Public Service Manual, according to the Ordinance 815/1994, issued by DNAEE (National Department of Waters and Electric Energy), and Resolutions 02/1997, 44/1999 and 474/2012 of ANEEL. Fixed assets in progress Property, plant and equipment in progress record expenses incurred with hydric projects divided into inventories and basic projects that have already been authorized by ANEEL, and wind projects that won the 2009 and 2010 Reserve Auction and that are being built by the Company's subsidiaries. Investments made include the purchase of aerogenerators, civil construction work and several expenses incurred for the construction of our wind farms that, after completed, are unitized before operation starts. The amount of R$40,727 was recorded under amounts to be apportioned and refers to interest on loans capitalized up to March 31, 2012. For the comparative balance as of 2011, no interest was capitalized. Caption amounts to be apportioned includes, in addition to interest on loans, costs such as salaries of implementation teams and owner investments in engineering, environment and construction work insurance. As of December 31, 2012, consolidated balance of Advances to suppliers is R$21,817 and refers to advances on contracts for the supply of Substation Equipment entered into with ABB Ltda, which totals R$5,932, to advances for the civil construction contract entered into with consortium Queiroz Galvo and Mercurius, which totals R$8,222, to the advances to the purchase of aerogenerators in the amount of R$ 4,442 with GE and import advances from Anchor bolds, in the amount of R$3,221. Civil construction and plants substations are expected to be completed in July 2012.
35
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) On March 31, 2012, after reviewing its portfolio of development projects for Small Hydroelectric Power Plants, the Company decided to discontinue the Sobrado and Cachoeira inventory projects and the Nova 1 basic project, in the total amount of R$633.
15. Suppliers
Parent company 3/31/2012 Suppliers 2.298 12/31/2011 2.059 Consolidated 3/31/2012 61.692 12/31/2011 19.566
The Parents suppliers are mainly service providers and suppliers of materials for the projects under development. In the consolidated, are included mainly amounts payable to suppliers of equipment and construction material for wind farms.
16.1 Additional information on debt service a. Commercial promissory notes Banco Votorantim On March 18, 2011, the Company issued commercial promissory notes in the amount of R$ 150,000. These securities fall due in 360 days on March 12, 2012. The remuneration is at DI Rate, plus 3% p.a. and other commissions and charges. The Company is entitled to early redemption of the debt. In order to ensure the full payment and the compliance with all its contractual obligations, the Company pledged as collateral to the holders of Commercial Notes all its current and future shares, representative of the capital of its subsidiary Enerbras, and their respective rights. The holders of the respective commercial notes may only exercise this right in case the Company fails to comply with the contractual clauses. The proceeds from this operation were used to settle the IFC loan and the remainder was used for investments in the wind farm in connection with LER 2009. On March 12, 2012, the Company settled these loans.
36
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) b. BNB and BNDES financing for the construction of the wind farms of LER 2009. On December 28, 2010, the Company obtained the approval of financing for its 9 wind farms and on September 28, 2011, for its 5 out of 14 wind farms contracted at the 2009 Reserve Auction of December 2009 (LER 2009) from the National Bank for Economic and Social Development (BNDES). The Paje do Vento, Planaltina, Porto Seguro, Nossa Senhora da Conceio, Guirap, Serra do Salto, Guanambi, Alvorada and Rio Verde, wind farms obtained approval from the Senior Management of BNDES in a total financed volume of R$586,677. The volume represents approximately 74% of the total investments in these projects. The financing has an interest rate of 1.92% p.a. + TJLP (Long-term Interest Rate), up to two years of interest and principal grace period and 16 years of amortization term. The nine farms total 195.2 MW of installed capacity and an 84 MW on average of firm energy contracted. On March 26, 2012, the fourth release of funds had already been made. BNDES - agreement n 10.2.2108.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Serra do Salto from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$6,997. Up to this date, R$46,787 of this total amount R$57,913 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2107.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Rio Verde from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$2,356. Up to this date, R$83,156 of this total amount R$89,550 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2106.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Porto Seguro from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$1,721. Up to this date, R$15,801 of this total amount R$19,252 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2105.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Planaltina from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$12,254. Up to this date, R$73,205 of this total amount R$82,125 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period.
37
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) BNDES - agreement n 10.2.2104.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Paje do Vento from June 2011 to July 2012. The fourth payment was made on March26, 2012, in the amount of R$15,406. Up to this date, R$68,502 of this total amount R$77,294 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2103.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Nossa Senhora da Conceio from June 2011 to July 2012. The third payment was made on November 25, 2011, in the amount of R$21,391. Up to this date, R$82,171 of this total amount R$86,956 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2102.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Guirap from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$15,422. Up to this date, R$69,565 of this total amount R$86,956 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2101.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Guanambi from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$6,237. Up to this date, R$50,739 of this total amount R$62,801 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 10.2.2100.1 Signed on May 5, 2011, aimed at the deployment of Central Geradora Elica Alvorada from June 2011 to July 2012. The fourth payment was made on March 26, 2012, in the amount of R$347. Up to this date, R$22,074 of this total amount R$23,829 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on May 15, 2013 and the last one on April 15, 2029, bearing interest of 1.92% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. The other five plants of Renova Energia contracted according to LER 2009, Candiba, Igapor, Ilhus, Licnio de Almeida and Pinda received the approval of BNDES Executive Board for the total financed amount of R$297,380, corresponding to 70% of total expected investments for these farms. The financing has an interest rate of 2.18% p.a. + TJLP (Long-term Interest Rate), up to two years of interest and principal grace period and 16
38
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) years of amortization term. The five farms total 98.8 MW of installed capacity and an 42.5 MW on average of firm electric power contracted. On February 17, 2012, the second release of funds was made. BNDES - agreement n 11.2.0914.1 Signed on December 6, 2011, aimed at the deployment of Central Geradora Elica Candiba from June 2011 to July 2012. The first payment was made on December 28, 2011 in the amount of R$ 21,235, with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on April 15, 2013 and the last one on March 15, 2029, bearing interest of 2.18% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES -agreement n 11.2.0913.1 Signed on December 6, 2011, aimed at the deployment of Central Geradora Elica Ilhus from June 2011 to July 2012. The second payment was made on February 17, 2012 in the amount of R$ 5,124. Up to this date, R$29,874 of this total amount R$33,000 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on April 15, 2013 and the last one on March 15, 2029, bearing interest of 2.18% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 11.2.0912.1 Signed on December 6, 2011, aimed at the deployment of Central Geradora Elica Igapor from June 2011 to July 2012. The second payment was made on February 17, 2012 in the amount of R$ 16,845. Up to this date, R$84,907 of this total amount R$90,750 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on April 15, 2013 and the last one on March 15, 2029, bearing interest of 2.18% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES -agreement n 11.2.0911.1 Signed on December 6, 2011, aimed at the deployment of Central Geradora Elica Pinda from June 2011 to July 2012. The second payment was made on February 17, 2012 in the amount of R$ 10,213. Up to this date, R$46,564 of this amount R$73,150 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on April 15, 2013 and the last one on March 15, 2029, bearing interest of 2.18% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. BNDES - agreement n 11.2.0910.1 Signed on December 6, 2011, aimed at the deployment of Central Geradora Elica Licnio de Almeida from June 2011 to July 2012. The second payment was made on February 17, 2012 in the amount of R$ 11,364. Up to this date, R$47,364 of this total amount R$72,500 has been disbursed with BNDES ordinary funds, amortizable in 192 monthly installments, the first one maturing on April 15, 2013 and the last one on March 15, 2029, bearing interest of 2.18% p.a. indexed to the TJLP. The operation is guaranteed by pledge on shares, fiduciary assignment of credit and emerging rights, fiduciary assignment of assets, and bank guarantee during construction and the first year of business operation. This operation establishes that the DFB/EBITDA index should be higher or equal to 1.3, and financing currently enjoys the grace period. c. Banco do Nordeste do Brasil S.A. - Financing Contract through public deed for credit line, intermediated by Enerbras and their parent companies, entered into on June 30, 2006, for the total amount of R$120,096
39
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) with interest of 9.5% p.a. (which may be reduced to 8.08% due to the 15% performance bonus), charged on a quarterly basis on the 30th of each month from June 30, 2006 to June 30, 2008 and, from then on, on a monthly basis, on the 30th of each month. The agreement matures on June 30, 2026. The following were given as security to this loan: bank letter equal to 50% of the sum loaned. In March 2010, Banco do Nordeste do Brasil S.A. released a guarantee in view of the registration of the construction; first-degree mortgage of the property with all the existing facilities at: (i) rural property PCH - Cachoeira da Lixa, located in the municipality of Jucuruu (BA); (ii) rural property PCH Colino 1 - D, E, F, located in the municipality of Vereda (BA); and (iii) Fazenda Entorno PCH - Colino 2, located in the municipality of Vereda (BA); pledge on shares, entered into pursuant to articles 1,419 and the following of the Brazilian Civil Code (Law 10406/2002) and article 39 of Law 6404/76. As an intervening party, the parent company of Enerbras pledged common shares issued by the subsidiary Espra; Pledge of Rights Arising from the Authorizing Resolutions entered into pursuant to articles 1431 and following of the Brazilian Civil Code (Law 10406/2002) and as permitted in paragraph 1, article 19, Decree 2003 dated September 10, 1996, the subsidiary Espra pledges in favor of BNB: a. The right to receive all and any sums which are or will become actually or potentially payable and outstanding to Espra by the Concession Authority, in accordance with the legal and regulatory norms and applicable to the following Authorizing Resolutions: (i) PCH Cachoeira da Lixa: Authorizing Resolution no. 697 dated December 24, 2003; (ii) PCH Colino 1: Authorizing Resolution 703 dated December 24, 2003, and (iii) PCH Colino 2: Authorizing Resolution no. 695 dated December 24, 2003, subsequently amended by Resolutions no. 427, 425, and 426, all dated December 24, 2004, and by means of SCG/ANEEL Provisions no. 591 and 588 dated March 20, 2006, and no. 529 dated March 15, 2006, respectively, including but not limited to all the indemnities owing to the license's repeal or extinction; and b. All other rights, tangible or not, potential or otherwise, likely to be pledged pursuant to the applicable legal and regulatory norms and the following Authorizing Resolutions: (i) PCH Cachoeira da Lixa: Authorizing Resolution no. 697 dated December 24, 2003; (ii) PCH Colino 1: Authorization Resolution No. 703, dated December 24, 2003; (iii) PCH Colino 2: Authorizing Resolution 695 dated December 24, 2003, with its amendments mentioned in item 'a' of the Electricity Purchase and Sale Agreements: CT-PROINFA/PCH-MRE
40
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
no. 032/2004 (PCH Cachoeira da Lixa); CT-PROINFA/PCH-MRE no. 033/2004 (PCH Colino 1) and CT-PROINFA/PCH-MRE no. 034/2004 (PCH Colino 2),entered into between Espra and ELETROBRAS. Assignment and Binding of Revenues from the agreements entered into with ELETROBRAS; reserve account liquidity fund (Note 11); credit insurance to conclude the project, which owing to the conclusion of the works, is already cancelled.
16.2 Maturities of the long-term portion (principal and charges) The portions classified in non-current assets (Consolidated) have the following payment schedule:
Year of maturity: 2013 2014 2015 2016 2017 After 2017 TOTAL
41
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
(*) remaining RR Participaes shares that are not in the control block - RR/Light Energia
On January 26, 2012, the Company authorized capital increase in the amount of 7,782.60, whereby it issued 68,670 shares in the proportion of one (01) common share and two (2) preferred shares. The Company's capital increased from R$702,788 to R$702,795. On March 1, 2012, the Company authorized capital increase in the amount of 7,480.00, whereby it issued 66,000 shares in the proportion of one (01) common share and two (2) preferred shares. The Company's capital increased from R$702,795 to R$702,803. The Company's shareholders' chart on March 31, 2012 is as follows:
RENOVA ENERGIA Controlling Block PR Interests Light Other shareholders RR Participaes* Members of the Board of Directors InfraBrasil Santander FIP Caixa Ambiental FIP Santa Barbara Others Total ON Shares Quantity 101.123.594 50.561.797 50.561.797 43.963.593 18.892.107 400.468 11.651.467 1.896.000 4.666.666 4.228.732 2.228.153 145.087.187 % 69,70% 34,85% 34,85% 30,30% 13,02% 0,28% 8,03% 1,31% 3,22% 2,91% 1,54% 100,00% Preferred shares Quantity 0 0 50.643.731 573.416 799.730 23.302.933 3.792.000 9.333.332 8.457.460 4.384.860 50.643.731 % 0,00% 0,00% 100,00% 1,13% 1,58% 46,01% 7,49% 18,43% 16,70% 8,66% 100,00% Total shares Quantity 50.561.797 50.561.797 94.607.324 19.465.523 1.200.198 34.954.400 5.688.000 13.999.998 12.686.192 6.613.013 195.730.918 % of total capital % 25,83% 25,83% 48,34% 9,95% 0,61% 17,86% 2,91% 7,15% 6,48% 3,38% 100,00%
(*) remaining RR Participaes shares that are not in the control block - RR/Light Energia
42
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
The Company records all costs of share issuance transactions in a specific line. Those amounts refer to expenditures on consulting and financial advisory services, for the IPO of July 13, 2010 and the capital increase operation through the new investor Light Energia, of September 16, 2011.
c. Dividends
As of December 31, 2011, subsidiary Enerbras S.A. approved in the Annual General Meeting the proposal for the distribution of dividends to the Company in the amount of R$11,921, deriving from income earned in 2011, after the recognition of the legal reserve. This amount is recorded under caption Dividends receivable in the Current Assets group of the Parent company.
Manageable Personnel, Management Outsourced services Rental and leases Traveling Depreciation Discontinued projects Insurance Telephony and IT Store and supplies Others Total
43
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Consolidated 3/31/2012 Operating expenses General and Total administrative 1.957 2.003 287 577 165 633 38 435 123 478 6.696 6.696 170 22 192 1.957 2.711 1.061 602 1.810 633 157 460 214 747 10.352 10.544 3/31/2011 Total 257 20 277 1.258 2.554 353 192 1.479 142 106 70 305 6.459 6.736
Operation Non-manageable Tusd - Distribution system use charge Inspection fee 170 22 192 708 774 25 1.645 119 25 91 269 3.656 3.848
Personnel, Management Outsourced services Rental and leases Traveling Depreciation Discontinued projects Insurance Telephony and IT Store and supplies Others Total
44
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Calculation basis - deemed IRPJ and CSLL Rate - deemed profit IRPJ and CSLL Adjustments to reflect effective rate Other income IRPJ and CSLL calculation basis Effective rate IRPJ and CSLL Calculation Discount in excess of R$240 per annum IRPJ and CSLL expenses
The Company adopts the taxable income calculation regime, having determined the total accumulated in the amount of R$1,103 on March 31, 2012. Tax presented in the consolidated position refers to subsidiary Espra (deemed income system) and on financial revenues of some of the associates that, although using deemed income system, should calculate revenues from financial operations using the taxable income rule. The income and social contribution taxes are calculated based on the rates of 15% plus a surcharge of 10% on taxable income in excess of R$ 240 for income tax and 9% on taxable income for social contribution on net income, and take into account tax loss carry forward and negative basis of social contribution, limited to 30% of taxable income. Income and social contribution taxes under the deemed profit system are paid quarterly on the gross revenue, considering the percentage presumption, based on the rates defined in current legislation. (Basis of estimate of 8% and 12% on sales, income tax and social contribution, respectively, plus the calculation amount of other financial revenue).
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) flows. Those practices establish a requirement of updating of the information in operating systems, plus exchanging information and performing the transaction with the counterparties. a. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between parties with knowledge of the deal and interest in performing it, in a transaction where none of the parties is favored. The concept of fair value deals with innumerous variations of metrics used for the purpose of reliably measuring an amount. To calculate the fair value we project the cash flows from the financial instruments up to the end of the operations by following the contractual rules and use as a discount rate the future interbank deposit rate disclosed by BM&F Bovespa. Some of the headings show a book balance equivalent to fair value, and this situation occurs because the financial instruments' features are similar to those of instruments traded in the market. The use of different market methodologies may have a material effect on the estimated realizable value. Transactions with financial instruments are stated in the balance sheet at book value, which is equivalent to their fair value under the headings of cash and cash equivalents, trade accounts receivable, related parties, judicial deposits, and trade accounts payable. For loans, financing and debt charges, book balances differ from fair value.
Parent company Book value 3/31/2012 12/31/2011 83.825 5.169 40 450 26.520 254.459 4.701 40 449 25.473
Fair value Financial assets Current assets Cash and cash equivalents Receivables from suppliers Pledges and restricted deposits Non-current assets Pledges and restricted deposits Related party transactions Financial liabilities Current liabilities Suppliers Loans and financing Non-current liabilities Related party transactions 2.298 12.202
3/31/2012 12/31/2011 83.825 5.169 40 450 26.520 254.459 4.701 40 449 25.473
2.298 12.202
46
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Financial assets Current assets Cash and cash equivalents T rade accounts receivable Receivables from suppliers Pledges and restricted deposits Non-current assets Pledges and restricted deposits Related party transactions Financial liabilities Current liabilities Suppliers Loans and financing Non-current liabilities Loans and financing
Consolidated Fair value Book value 3/31/2012 12/31/2011 3/31/2012 12/31/2011 240.291 4.236 6.075 40 12.151 10 389.846 5.152 13.479 40 11.875 244 240.291 4.236 6.075 40 12.151 10 389.846 5.152 13.479 40 11.875 244
Loans and financing in domestic currency by BNB are stated as financial liabilities and are recorded at their amortized cost, and refer to loans with the specific purpose of funding investments in electricity generation, indexed to pre-fixed rates.
Parent company 3/31/2012 Fair value through profit or loss 83.825 Fair value through profit or loss 254.459 12/31/2011
Financial assets Current assets Cash and cash equivalents Pledges and restricted deposits Non-current assets Pledges and restricted deposits Related party transactions Financial liabilities Current liabilities Suppliers Loans and financing Non-current liabilities Related party transactions
Held to maturity
Total
Held to maturity
Total
40
83.825 40
40
254.459 40
26.520
450 -
450 26.520
25.473
449 -
449 25.473
2.298 -
2.298 -
2.059 150.440
2.059 150.440
12.202
12.202
12.087
12.087
47
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Consolidated 3/31/2012 Fair value through profit or loss 4.236 240.291 Fair value through profit or loss 5.152 389.846 12/31/2011
Financial assets Current assets Cash and cash equivalents T rade accounts receivable Pledges and restricted deposits Non-current assets Pledges and restricted deposits Related party transactions Financial liabilities Current liabilities Suppliers Loans and financing Non-current liabilities Loans and financing
Held to maturity
Total
Held to maturity
Total
40
240.291 4.236 40
40
389.846 5.152 40
10
12.151 -
12.151 10
244
11.875 -
11.875 244
61.692 4.983
61.692 4.983
19.566 155.345
19.566 155.345
865.222
865.222
753.870
753.870
b. Market risk The market risk refers to the possibility of monetary loss arising from fluctuations of variables that have impact on prices and rates negotiated in the market. Said fluctuations impact on virtually all sectors and, therefore, are financial risk factors. The loans and financing taken by the Company and its subsidiaries shown in Note 16 are from BNB and BNDES. Contract rules for financial liabilities create risks related to these exposures. On March 31, 2012, the Company and its subsidiaries have a market risk associated to interbank deposit rate, long-term interest rate and the general market price index. To determine market risks associated to interest rates we considered the general market price index, the interbank deposit rate, and the long-term interest rate and extended consumer price index but took into account that the Brazilian economy has a favorable outlook for solid growth and investments in infrastructure, as exemplified by governmental programs such as the Growth Acceleration Program. A controlled inflation and a credit supply are important factors to obtain low-risk funding. Considering that the market rate (or the opportunity cost of capital) is defined by this agent, bearing in mind a risk premium compatible with the area's activities and that, as it is not possible to seek out other alternatives or different market opportunities and/or methodologies for it estimates, the market value of this portion of domestic loans is close to its book value, as are the other financial assets and liabilities assessed. c. Sensitivity analysis (Consolidated) The direct and indirect subsidiaries have investments and loans and financings in domestic currency. The following table considers rate scenarios with the respective effect on the Company's income figures, with the applicable exposures of interest rate fluctuations and other indexes, to these transactions' maturity dates. The likely scenario was established based on the Company's business plan as approved by Management, with balances outstanding on March 31, 2012. Scenarios II and III represent, respectively, 25% and 50% of increase in the risk, and IV and V scenarios represent, respectively, 25% and 50% of deterioration or reduction, as follows:
48
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Financial assets Interest earning bank deposits Reference for financial assets CDI - Year Financial liabilities BNDES Contracts Reference for financial liabilities TJLP (Long-term interest rate) - Year
Probable (I) Scenario II Scenario III Scenario IV Scenario V 177.675 179.685 181.698 175.633 173.652 25% 50% -25% -50%
Probable (I) Scenario II Scenario III Scenario IV Scenario V 769.650 777.094 784.123 763.034 756.004 25% 50% -25% -50%
This sensitivity analysis was prepared according to CVM Instruction no. 475/2008, with the purpose of measuring the impact of changes in market variables on each of the Company's financial instruments. However, settling the transactions involving such estimates may result in sums different from those estimated, owing to the subjectivity contained in the procedure used to prepare these analyses.
d. Liquidity risk
The liquidity risk shows the subsidiary's and parent company's ability to settle assumed obligations. To settle assumed obligations and determine the subsidiary's financial capacity to adequately meet its commitments, loan maturities, and other obligations included in the disclosures. More detailed information on loans taken by the Company is shown in Note 16. The Company's management only makes use of credit facilities that allow its operating leverage. This assumption is confirmed by observing the characteristics of the loans taken. The flow of realization for the liabilities assumed under their contractual conditions is presented in the table below.
Consolidated 3/31/2012 Maturity Maturity from 2013 to from 2016 to 2015 2017
Maturity in 2012
4.983
159.216
109.908
606.637
Consolidated 12/31/2011 Maturity Maturity from 2013 to from 2016 to 2015 2017
Maturity in 2012
155.936
126.284
94.462
538.714
49
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) e. Credit risk Credit risk includes the possibility that the Company may fail to realize its rights. This description is directly related to headings such as cash and cash equivalents, trade accounts receivable, pledges and restricted deposits, and others. In the electric power sector information on operations are submitted to the regulatory agency, which maintains active data on electric power produced and consumed, and this structure results in plans for the independent and uninterrupted operation of the electric system. Electric power sales arise from auctions and agreements with other companies. This mechanism brings reliability and controls default among participants of the industry. Another credit risk source is that associated to financial investments. The management of these financial assets is done through operating strategies and internal controls, aimed at assuring liquidity, security and profitability. The Company does not make investments for speculative purpose. The results obtained from such operations are consistent with the policies and strategies defined by Company's Management. The Company manages its risks continuously, assessing whether the practices adopted in the execution of its activities are in line with the policies advocated by management. The Company does not make use of equity hedging financial instruments, as it believes that the risks to which its assets and liabilities are ordinarily exposed compensate each other in the natural course of its activities. The management of these financial instruments is done through operating strategies, aimed at liquidity, profitability and security. The control policy consists of permanent follow-up of the conditions engaged versus those in force in the market. The Company does not make any speculative investments in derivatives or any other risk assets. Regarding financial assets from financial investments, the Company only conducts transactions with financial institutions classified as low risk by rating agencies in order to ensure a higher profitability while aggregating security to the results. Management's understanding is that its contracted financial investment transactions do not expose the Company to significant risks that might, in the future, generate material losses. f. Transactions with derivative financial instruments
There were no transactions with derivative financial instruments during the fiscal years in question.
50
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
g. Capital management
3/31/2012 12/31/2011
Financing and loan debt (-) Cash and cash equivalents Net debt Shareholders' equity Capital Financial leverage index - %
The Company's objectives in managing its capital are to safeguard its business continuity capacity to offer return to shareholders and benefits to the other stakeholders besides maintaining an optimal capital structure to reduce this cost. In order to keep or adjust the capital structure, the Company may review the dividend payment policy, refund capital to the shareholders or, also, issue new shares or sell assets to reduce, for instance, the indebtedness level .
Subject of the Guarantee Surety bond guaranteeing the faithful performance of the obligations of implementation of the 14 Wind Generation Centers of LER 2009. Surety bond guaranteeing the faithful performance of the obligations of implementation of the 06
Amount insured
Insured
R$53,910
03/29/2010
10/01/2012
R$29,470
12/06/2012
12/01/2013
51
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Wind Energy Generation Centers of LER 2010. ICG surety bond Guarantee LER 2009
ICG Surety - LEN 2011
07/22/2011
10/05/2011
07/01/2012
08/10/2012
Registration Guarantee Basic Project Registration Guarantee PB PCH A Surety bond guaranteeing the faithful performance of implementation of the 09 wind farms - LEN 2011 Operational risks
Civil Liability Civil Liability LER 2009 Engineering Risks LER 2009 Operational risks LER 2009 Surety Contractual obligations
07/15/2011 11/01/2011
08/15/2013 11/01/2013
R$ 41,193
12/05/2011
06/01/2014
Subject of the Guarantee General civil liability insurance for directors and officers - D&O Civil Liability Insurance for Public Offering of Shares POSI Offices Insurance - Branches Insurance - Head Office
Insured
Renova Energia
25.
Capital commitments
Relevant contracts
a) Purchase and Sale Contracts for Energy Generation Equipment and Related Services for Wind Farms under Implementation.
52
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) On May 7, 2010, Purchase and Sale Contracts for Energy Generation Equipment and Rendering of Related Services ("Contracts for the Acquisition of Aerogenerators") were entered into with General Electric do Brasil Equipamentos e Servios de Energia Ltda. ("General Electric"). Such contracts regulate the principles and general rules for the supply of 180 wind turbines of 1.5MW each and the related transportation services and commissions for wind farms under Implementation. Pursuant to the terms of said contracts, General Electric should complete the installation of our Wind Farms under Implementation by June 30, 2012. Added value of Contracts for the Acquisition of Aerogenerators is R$854,655, to be paid in installments whose maturities are bound to the performance of some obligations by General Electric, as well as to the occurrence of some specific events, as established in said contracts. On August 26, 2010, we entered into a Memorandum of Understanding with General Electric International, Inc. and General Electric do Brasil - Equipamentos e Servios de Energia Ltda. ("General Electric") to include 4 aerogenerators in the contract executed on November 4, 2009. It was also agreed that equipment would be changed to model 1.6 XLE.
b) Contracts for the Rendering of Engineering and Civil Construction Services under the Partial Price contract basis at global price
On December 27, 2010, SPEs Centrais Elicas Alvorada S.A. ("Alvorada"), Centrais Elicas Candiba S.A. ("Candiba"), Centrais Elicas Guanambi S.A. ("Guanambi"), Centrais Elicas Guirap S.A. ("Guirap"), Centrais Elicas Igapor S.A. ("Igapor"), Centrais Elicas Ilhus S.A. ("Ilhus"), Centrais Elicas Licnio de Almeida S.A. ("Licnio de Almeida"), Centrais Elicas Nossa Senhora Conceio S.A. ("Nossa Senhora Conceio"), Centrais Elicas Paje do Vento S.A. ("Paje do Vento"), Centrais Elicas Pinda S.A. ("Pinda"), Centrais Elicas Planaltina S.A. ("Planaltina"), Centrais Elicas Porto Seguro S.A. ("Porto Seguro"), Centrais Elicas Rio Verde S.A. ("Rio Verde") and Centrais Elicas Serra do Salto S.A. ("Serra do Salto") entered into Contracts for the Rendering of Engineering and Civil Construction Services under the Partial Contract basis at global price with Construtora Queiroz Galvo S.A. ("Queiroz Galvo") and Mercurius Engenharia S.A. ("MESA"). These contracts discipline general principles and rules for all services, supply and other activities necessary to conduct civil construction work, including bases and accesses to implement wind farms that won bid LER 2009. The added value of contracts is R$167,623, to be paid in installments whose maturities are bound to the performance of some obligations by Queiroz Galvo and MESA, as well as to the occurrence of some specific events, as established in said contracts. In addition to making payments according to contracts, SPEs main obligations include obtaining environmental licenses that are necessary to perform services, on a timely basis.
c) Contracts for the Supply of Equipment and Rendering of Services for the Integrated Installation of Electric Power Distribution and Transmission Systems, Engineering and Civil Construction under the Partial Contract basis at global price.
On December 27, 2010, SPEs Alvorada, Candiba, Guanambi, Guirap, Igapor, Ilhus, Licnio de Almeida, Nossa Senhora Conceio, Paje do Vento, Pinda, Planaltina, Porto Seguro, Rio Verde and Serra do Salto entered into Contracts for the Supply of Equipment and Rendering of Services for the Integrated Installation of Electric Power Distribution and Transmission Systems, Engineering and Civil Construction under the Partial Contract basis at global price with ABB LTDA ("ABB"). These contracts discipline general principles and rules for all services, including the supply of internal distribution networks, unit substations, boosting substations, transmission and
53
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated) distribution lines, connection with ICG and other installations of wind farms that won bid LER 2009. Pursuant to the terms of said contracts, ABB should complete service delivery in May 2012, so that SPEs commercial operation starts on July 1, 2012, and electrical-mechanical installations are free from failures by August 2014. The added value of the contracts is R$85,089, to be paid in installments whose maturities are bound to the performance of some obligations by ABB, as well as to the occurrence of some specific events, as established in said contracts. d) Contract for the Operation and Maintenance of Aerogenerators
On April 6, 2011, SPEs Alvorada, Candiba, Guanambi, Guirap, Igapor, Ilhus, Licnio de Almeida, Nossa Senhora Conceio, Paje do Vento, Pinda, Planaltina, Porto Seguro, Rio Verde and Serra do Salto entered into Contracts for the Operation and Maintenance of Aerogenerators with General Eletric Energy do Brasil Equipamentos e Servios de Energia Ltda. and General Eletric International, INC. ("General Electric"). Such contracts regulate the principles and general rules for the supply of operation and maintenance of 184 wind turbines, model 1.6 XLE, of 1.6MW each. Pursuant to the terms of said contracts, General Eletric will provide operation and maintenance services over 10 years from the final delivery of the last aerogenerator or 12 years from the date that the contract was signed. The added value of the contracts is R$103,040, to be paid in installments whose maturities are bound to the performance of some obligations by General Eletric.
e) Contract for the Rendering of Operation and Maintenance Services on the Transmission System of Restricted Use
On April 6, 2011, SPEs Alvorada, Candiba, Guanambi, Guirap, Igapor, Ilhus, Licnio de Almeida, Nossa Senhora Conceio, Paje do Vento, Pinda, Planaltina, Porto Seguro, Rio Verde and Serra do Salto entered into Contracts for the Rendering of Operation and Maintenance Services on the Transmission System of Restricted Use with Enex O&M de Sistemas Eltricos LTDA. ("ENEX"). These contracts discipline general principles and rules for the rendering of operation and maintenance services on transmission systems of restricted use. Pursuant to the terms of said contracts, ENEX should provide operation and maintenance services over 120 months, counted as of the start of the commercial operation of the first aerogenerator.
The added value of the contracts is R$22,046, to be paid beginning as of the 96th month after the start of SPEs commercial operation period, in installments whose maturities are bound to the performance of some obligations by ENEX.
54
Renova Energia S.A. Notes to the financial statements Quarters ended March 31, 2012 and 2011
(In thousands of Reais, unless otherwise indicated)
Carlos Mathias Aloysius Becker Neto Chief Executive Officer Pedro V.B. Pileggi Financial, Controllership, Planning and Administrative Officer* Luiz Eduardo Bittencourt Freitas Chief Legal and Regulatory Officer
Pedro V.B. Pileggi Investor Relations Officer with Investors and New Business,
Marcelo Amaral da Silva Engineering and Construction Director Marcelo Amaral da Silva Operations Director*
55