From left to right: Rio Pinheiros, Usina Elevatória de Pedreira, Reservatório Billings, and UFV Araucária 5MW. Photo EMAE.
2023 Results
MANAGEMENT REPORT, ANNUAL GOVERNANCE LETTER, AND FINANCIAL STATEMENTS
Dear Shareholders,
The Management of EMAE - Empresa Metropolitana de Águas e Energia S/A ("Company" or "EMAE"), in accordance with the legal and statutory provisions, is pleased to submit for its appreciation the Management Report, Annual Governance Letter, and the Company's Financial Statements, accompanied by the Independent Auditors' Opinion, for the year ended December 31, 2023.
The Company's operating and financial information, except where otherwise indicated, is expressed in thousands of Brazilian Reais and was prepared according with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the accounting policies adopted in Brazil. In addition, it accompanies the Independent Auditors' Opinion.
Table of Contents
LETTER____________________________________________________________________ 6
Activities______________________________________________________________ 6 | |
Control Structure____________________________________________________ 10 | |
c. | Economical and Financial Data _______________________________________ 11 |
d. | Operating Performance ______________________________________________ 15 |
e. | Management's Composition and Compensation______________________ 20 |
f. | Environmental Liability _______________________________________________ 21 |
III. | FINANCIAL STATEMENTS ____________________________________________ 23 |
Assets _________________________________________________________________________ 23
Statements of Income - DRE ___________________________________________________ 25
Statements of Comprehensive Income _________________________________________ 26
Statements of Changes in Equity _______________________________________________ 27
Statements of Cash Flows (indirect method)____________________________________ 28
Statements of Value Added ____________________________________________________ 29
Notes __________________________________________________________________________ 30
1. OPERATING CONTEXT _________________________________________________________ 30
2. PRESENTATION OF THE FINANCIAL STATEMENTS ____________________________ 34
3. SIGNIFICANT ACCOUNTING PRACTICES _______________________________________ 36
4. CASH AND CASH EQUIVALENTS _______________________________________________ 43
5. RESELLERS ____________________________________________________________________ 44
6. TAXES AND SOCIAL SECURITY CONTRIBUTIONS TO BE OFFSET _______________ 44
7. TPP PIRATININGA LEASE ______________________________________________________ 44
8. OTHER CREDITS _______________________________________________________________ 46
9. DEFERRED AND CURRENT INCOME TAX AND SOCIAL SECURITY
CONTRIBUTION________________________________________________________________________ 48
9.1 LossReconciliation of Income Tax and Social Security Contribution in the Profit or 48
9.2 Breakdown of deferred taxes __________________________________________________ 49
10. ESCROWS AND RELATED DEPOSITS ___________________________________________ 50
11. NON-CURRENT ASSETS HELD FOR SALE ______________________________________ 51
12. INDEMNIFIABLE FINANCIAL ASSET ____________________________________________ 51
13. CONCESSION'S REVERSIBLE ASSETS __________________________________________ 52
14. INVESTMENTS _________________________________________________________________ 52
15. PROPERTY, PLANT, AND EQUIPMENT _________________________________________ 54
16. PAYROLL AND ESTIMATES_____________________________________________________ 55
17. POST-EMPLOYMENT BENEFITS, COMPLEMENTARY RETIREMENT PLAN ______ 56
18. PROVISION FOR LABOR, CIVIL, AND TAX RISKS _______________________________ 61
1.1. Contingencies - Possibility of Probable Loss ___________________________________ 61
18.2 Contingencies - Probability of Possible Loss ___________________________________ 63
18.3 Contingent Assets _____________________________________________________________ 64
19. SPECIAL OBLIGATIONS - GLOBAL REVERSION RESERVE (RGR) ________________ 64
20. OTHER OBLIGATIONS - INVESTMENTS IN THE CONCESSION __________________ 65
21. OTHER OBLIGATION - COMGÁS _______________________________________________ 65
22. OTHER LIABILITIES ____________________________________________________________ 66
23. TRANSACTIONS WITH RELATED PARTIES _____________________________________ 66
23.1. Financial asset - Sabesp Agreement ___________________________________________ 66
23.2. Operation and Maintenance Agreement between EMAE and Pirapora _________ 67
23.3. Agreement entered into with Secretariat for the Environment, Infrastructure,
and Logistics___________________________________________________________________________ 67
23.4. Employee Assignment _________________________________________________________ 67
23.5. Compensation of the key management personnel _____________________________ 68
24. EQUITY ________________________________________________________________________ 68
24.1. Capital _________________________________________________________________________ 68
24.2. Earnings per share - basic and diluted _________________________________________ 69
24.3. Allocations of net income for the fiscal year ___________________________________ 69
24.4. Dividend per share_____________________________________________________________ 70
24.5. Changes in profit reserves _____________________________________________________ 71
24.6. Changes from other comprehensive income ___________________________________ 71
24.7. Dividend and interest on equity reconciliations ________________________________ 71
25. NET REVENUE _________________________________________________________________ 72
25.1. Reconciliation of net operating revenue _______________________________________ 72
25.2. Electric power sold ____________________________________________________________ 72
25.3. Income from services provided ________________________________________________ 73
26. OPERATING COSTS AND OPERATING EXPENSES PER TYPE ___________________ 74
26.1. Parent Company_______________________________________________________________ 74
26.2. Consolidated __________________________________________________________________ 75
28. INSURANCE ___________________________________________________________________ 76
29. FINANCIAL INSTRUMENTS ____________________________________________________ 77
30. RISK MANAGEMENT ___________________________________________________________ 78
31. LONG-TERM COMMITMENTS__________________________________________________ 84
32. NON-CASH CHANGES _________________________________________________________ 85
IV. INDEPENDENT AUDITOR'S REPORT __________________________________ 88
I.
Message from Management
With great joy, we share the exceptional results of 2023, a special year for our company, which celebrates its 25th anniversary. We want to express our sincere gratitude for the ongoing trust that you, our essential partners, have placed in us, playing a crucial role in the successes we celebrate today.
In 2023, we renewed our commitment to sustainability and environmental responsibility. We are excited to report that we have intensified our efforts in clean energy generation, significantly contributing to a more sustainable future in the São Paulo Metropolitan Region. This year's record investment was carefully directed towards innovative projects, aiming not only to boost our growth but also to ensure excellence in our public service and minimize our impact on the environment.
It is important to highlight that these positive results would not have been possible without the invaluable support of our dedicated employees. We are excited about the opportunities the future holds for us and are committed to continuing to move towards a more sustainable and prosperous world. We appreciate your active participation in this journey with us.
MARCIO REA
CHIEF EXECUTIVE OFFICER
PABLO UHART
CHIEF FINANCIAL OFFICER AND RELATIONS WITH INVESTORS OFFICER
II. MANAGEMENT REPORT AND ANNUAL CORPORATE GOVERNANCE LETTER
a. Activities
Profile
As a public utility concessionaire specialized in electricity generation, EMAE manages four hydroelectric projects. This includes three plants operating under the regime of guaranteed physical power and energy quotas, as well as a small hydroelectric plant owned by its wholly-owned subsidiary, Pirapora Energia S.A., which is authorized to operate as an independent power producer. These projects are distributed from the municipality of Salto to Baixada Santista, in the State of São Paulo. The company also owns a thermal power plant in the capital city of São Paulo, currently leased to Baixada Santista Energia - BSE, a wholly-owned subsidiary of Petrobras.
Additionally, EMAE is responsible for managing a complex hydraulic system that includes dykes, dams, and reservoirs, with notable ones being Billings and Guarapiranga, located in the southern zone of São Paulo city, as well as the São Paulo and Pedreira pumping stations and the Pinheiros River canal.
EMAE's main activities include: (i) electricity supply; (ii) the construction of energy generation assets; and (iii) the provision of operation and maintenance services for power plants and related structures, serving both private companies and public sector entities.
Power Plant
HPP Henry Borden Concession - Quotas
Cubatão, State of São Paulo Installed capacity: 889.0 MW
Physical guarantee: 115.4 MW average Concession period
Starting: 01/01/2013
HPP Porto Góes Concession - Quotas
Salto, State of São Paulo
Installed capacity: 24.8 MW Physical guarantee: 11.6 MW average
Concession period: Starting: 01/01/2013
HPP Rasgão Concession - Quotas
Pirapora do Bom Jesus, State of São Paulo
Installed capacity: 22.0 MW
Physical guarantee: 11.8 MW averag Concession period:
Starting: 01/01/2013
Ending: 07/01/2043
Ending: 24/01/2043
Ending: 30/11/2042
SHP Pirapora
TPP Piratininga
Independent Producer - PIE
Concession
Pirapora do Bom Jesus, State of São Paulo
São Paulo, State of São Paulo
Installed capacity: 25 MW
Physical guarantee: 17.2 MW average
Concession period
Starting: 24/06/2008
Ending: 02/05/2045
Hydroenergetic System
Installed capacity: 472 MW
Thermoelectric plant leased to Baixada Santista Energia - BSE, a wholly-owned subsidiary of Petrobras, since 2007. Note "Leasing."
Key: | ||
USINA DE PORTO GÓES | - | PORTO GÓES PLANT |
Unidades de | - | Units of |
Unidade de | - | Unit of |
Comportas | - | Floodgates |
Vãos com Stop Logs | - | Gaps with Stop Logs |
Vertedouros Livres | - | Free Spillways |
BARRAGEM E TÚNEL DE PIRAPORA | - | PIRAPORA DAM AND TUNNEL |
Comportas Superfície | - | Surface Floodgates |
Comportas Fundo | - | Bottom Floodgates |
PCH PIRAPORA | - | SHP PIRAPORA |
RIO TIETÊ | - | TIETÊ RIVER |
RESERVATÓRIO DE PORTO GOÉS | - | PORTO GOÉS RESERVOIR |
USINA DE RASGÃO | - | RASGÃO PLANT |
BARRAGEM MÓVEL (DAEE) | - | MOBILE DAM (DAEE) |
BARRAGEM EDGARD DE SOUZA | - | EDGARD DE SOUZA DAM |
NA Max Útil | - | At Max Utility |
CANAL PINHEIROS INFERIOR | - | LOWER PINHEIROS CHANNEL |
ESTRUTURA DE RETIRO | - | PASSAGE STRUCTURE |
Comportas | - | Floodgates |
USINA ELEVATÓRIA SÃO PAULO | - | SÃO PAULO PUMPING STATION |
Unidades | - | Units |
Sangradouro | - | Spillway |
BARRAGEM DO GUARAPIRANGA | - | GUARAPIRANGA DAM |
Vertedouro Livre | - | Free Spillways |
RESEVATÓRIO DO GUARAPIRANGA | - | GUARAPIRANGA RESERVOIR |
CANAL PINHEIROS SUPERIOR | - | SUPERIOR PINHEIROS CHANNEL |
BARRAGEM REGULADORA BILLINGS-PEDRAS | - | BILLINGS-PEDRAS REGULATORY DAM |
RESERVATÓRIO BILLINGS | - | BILLINGS RESERVOIR |
RESERVATÓRIO DO RIO DAS PEDRAS | - | RIO DAS PEDRAS RESERVOIR |
BARRAGEM DO RIO DAS PEDRAS | - | RIO DAS PEDRAS DAM |
CASA DE VÁLVULAS | - | VALVE CHAMBER |
RIO CUBATÃO | - | CUBATÃO RIVER |
NÍVEL DO MAR | - | SEA LEVEL |
USINA HENRY BORDEN SUBTERRÂNEA | - | HENRY BORDEN UNDERGROUND PLANT |
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Main projects and achievements
In line with its strategic planning, EMAE has made significant advancements in projects aimed at increasing its generation capacity, modernizing its facilities, and monetizing non-operational assets, with the following achievements standing out:
▪ Expansion of Power Plant: EMAE has expanded its generating capacity focusing on sustainable sources. Notably, the implementation of floating photovoltaic plants in the Billings Reservoir stands out, inaugurating the first phase of the project in December with 5 MW of distributed generation capacity.
▪ HPP Henry Borden: Significant improvements have been made, including the replacement of old transformers and the modernization of the digital supervision and control system, with a total investment of BRL 65.1 million. Additionally, the replacement of 6 Pelton turbine rotors (BRL 23.5 million), the manufacture and installation of a ball valve in unit 15, and the modernization of units 13 and 14 have been carried out with an investment of BRL 29.2 million, part of a total of BRL 40.2 million in progress. The modernization of Unit 13 has also been completed, with an investment of BRL 9.2 million, within a larger project of BRL 105 million for the underground section.
▪ HPP Rasgão: The modernization of Units 1 and 2 is underway, with an expected investment of BRL 89.9 million, of which BRL 18.1 million has already been invested in 2023.
▪ HPP Porto Góes: An investment of BRL 11.3 million has been made in the supply and installation of a speed and voltage regulation system, automation, and protection of generator unit 3, marking another significant advancement in the modernization of this plant.
▪ Launch of the Voluntary Retirement Program (VRP) aimed at optimizing costs and operational expenses.
▪ Continuation of activities related to Emergency Action Plans for dams, following an important path, and in dialogue with the agents involved in this planning.
The Company remains committed to promoting sustainable development through the generation of clean electric power and environmental preservation and is committed to creating value for its shareholders.
Research & Development
EMAE allocates 1% of its net operating revenue to the Electric Power Sector's Research and Development Program, in compliance with current legislation. From this allocation, 40% is directed to the National Fund for Scientific and Technological Development, 20% to the Planning Coordination of the Ministry of Mines and Energy, 7% to the Energy Development Account, and the remaining 33% funds research projects developed by EMAE itself.
One notable initiative is the project initiated in March to develop the Emergency Action Plan (EAP) in regions near dams. The focus is on establishing alert systems for populations in Self-Rescue Zones (ZAS), enhancing safety at 19 EMAE structures. This project will last for 42 months and involves a partnership with the Federal University of Uberlândia.
b. Control Structure
EMAE is a publicly traded company whose shares are traded on B3 - Brasil, Bolsa Balcão, under the codes EMAE3 (common shares - ON) and EMAE4 (preferred shares - PN). The Government of the State of São Paulo holds the shareholding control of the company, with 97.6% of the common shares.
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EMAE - Empresa Metropolitana de Águas e Energia SA published this content on 25 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 March 2024 14:46:03 UTC.