ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Contents
Company Information
Shareholding Structure 1
Individual Financial Statements
Statement of Financial Position - Assets 2
Statement of Financial Position - Liabilities
Statement of Profit and Loss 5
Statement of Comprehensive Income 6
Statement of Cash Flows 7
Statements of Changes in Equity
01/01/2021 to 03/31/2021 9
01/01/2020 to 03/31/2020 10
Statement of Value Added 11
Consolidated Financial Statements
Statement of Financial Position - Assets 12
Statement of Financial Position - Liabilities 13
Statement of Profit and Loss 15
Statement of Comprehensive Income 16
Statement of Cash Flows 17
Statements of Changes in Equity
01/01/2021 to 03/31/2021 19
01/01/2020 to 03/31/2020 20
Statement of Value Added 21
Performance Comments 22
Notes to the Interim Financial Information 27
95
Opinions and Representations
103
Opinion of the Supervisory Board or Equivalent Body 105
Opinion or Summary Report, if any, of the Audit Committee (statutory or not) 106
Management’s Representation on the Interim Financial Information 107
Management’s Representation on the Independent Auditor’s Review Report 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Company Information / Shareholding Structure
Number of Shares Current Quarter (Units) 03/31/2021
In paid-in capital Common shares 257,937,732 Preferred shares 400,945,572 Total 658,883,304
Shares held in Treasury Common shares 0 Preferred shares 0 Total 0
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Financial Position - Assets
(R$ thousand)
Account Account Description Current Quarter Prior year Code 03/31/2021 12/31/2020 1 Total assets 24,352,392 23,595,377 1.01 Current assets 3,554,273 4,783,000 1.01.01 Cash and cash equivalents 711,387 2,020,119 1.01.02 Short-term investments 69,569 51,787 1.01.02.01 Short-term investments at fair value through profit or loss 69,569 51,787
1.01.02.01.03 Short-term investments 69,569 51,787 1.01.03 Trade receivables 2,550,680 2,533,173 1.01.03.01 Trade receivables 2,550,680 2,533,173 1.01.03.01.01 Concession asset 2,550,680 2,533,173 1.01.04 Inventories 40,454 41,993 1.01.06 Recoverable taxes 57,576 26,411 1.01.06.01 Current recoverable taxes 57,576 26,411 1.01.06.01.01 Recoverable taxes 57,576 26,411 1.01.07 Prepaid expenses 35,892 6,060 1.01.08 Other current assets 88,715 103,457 1.01.08.03 Other 88,715 103,457 1.01.08.03.02 Restricted cash 3,873 1,808 1.01.08.03.03 Receivables from related parties 22,430 30,426 1.01.08.03.04 Other 62,412 71,223 1.02 Noncurrent assets 20,798,119 18,812,377 1.02.01 Long-term assets 12,624,225 12,653,551 1.02.01.04 Trade receivables 10,628,389 10,702,388 1.02.01.04.01 Concession asset 10,628,389 10,702,388 1.02.01.05 Inventories 1,365 1,103 1.02.01.10 Other noncurrent assets 1,994,471 1,950,060 1.02.01.10.03 Receivables - Finance Department 1,821,503 1,778,999 1.02.01.10.04 Sureties and escrow deposits 44,151 44,070 1.02.01.10.07 Restricted cash 14,690 16,681 1.02.01.10.08 Other 114,127 110,310 1.02.02 Investments 8,072,630 6,055,385 1.02.02.01 Equity interests 8,072,630 6,055,385 1.02.02.01.02 Equity interests in subsidiaries 5,071,452 3,197,383 1.02.02.01.03 Equity interests in jointly controlled entities 3,001,178 2,858,002 1.02.03 Property and equipment 88,381 91,184 1.02.03.01 Property and equipment in use 88,381 91,184 1.02.04 Intangible assets 12,883 12,257 1.02.04.01 Intangible assets 12,883 12,257 1.02.04.01.02 Intangible assets 12,883 12,257
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Financial Position - Liabilities
(R$ thousand)
Account Account Description Current Quarter Prior Year Code 03/31/2021 12/31/2020 2 Total liabilities 24,352,392 23,595,377 2.01 Current liabilities 1,748,550 1,233,267 2.01.02 Trade payables 47,268 75,332 2.01.02.01 Domestic suppliers 47,268 75,332 2.01.03 Taxes payable 220,031 248,449 2.01.03.01 Taxes payable - Federal 220,031 248,449 2.01.03.01.02 Taxes and payroll charges payable 220,031 248,449 2.01.04 Borrowings and financing 306,420 280,881 2.01.04.01 Borrowings and financing 53,307 54,330 2.01.04.01.01 In local currency 53,307 54,330 2.01.04.02 Debentures 245,489 217,948 2.01.04.03 Financing - Leases 7,624 8,603 2.01.04.03.01 Leases 7,624 8,603 2.01.05 Other payables 1,138,619 583,511 2.01.05.02 Other 1,138,619 583,511 2.01.05.02.01 Dividends and interest on capital payable 1,068,548 500,513 2.01.05.02.04 Payables - Vivest 855 871 2.01.05.02.05 Regulatory charges payable 41,870 47,390 2.01.05.02.07 Other 27,346 34,737 2.01.06 Provisions 36,212 45,094 2.01.06.01 Provisions for social security, labor and civil risks 36,212 45,094 2.01.06.01.03 Accrued employee benefits 36,212 45,094 2.02 Noncurrent liabilities 9,296,061 8,607,827 2.02.01 Borrowings and financing 4,702,507 4,012,977 2.02.01.01 Borrowings and financing 996,777 1,008,447 2.02.01.01.01 In local currency 996,777 1,008,447 2.02.01.02 Debentures 3,664,357 2,961,318 2.02.01.03 Financing - Leases 41,373 43,212 2.02.01.03.01 Leases 41,373 43,212 2.02.02 Other payables 489,387 516,956 2.02.02.02 Other 489,387 516,956 2.02.02.02.04 Global Reversal Reserve (RGR) 13,512 14,132 2.02.02.02.06 Regulatory charges payable 45,176 43,222 2.02.02.02.08 Employee benefits - actuarial deficit 394,078 381,977 2.02.02.02.09 Other 36,621 77,625 2.02.03 Deferred taxes 4,005,261 4,020,500 2.02.03.01 Deferred income tax and social contribution 4,005,261 4,020,500 2.02.03.01.01 Deferred PIS and COFINS (taxes on revenue) 1,176,101 1,181,747 2.02.03.01.02 Deferred income tax and social contribution 2,829,160 2,838,753 2.02.04 Provisions 98,906 57,394 2.02.04.01 Provisions for social security, labor and civil risks 98,906 57,394 2.02.04.01.06 Provisions 98,906 57,394 2.03 Equity 13,307,781 13,754,283 2.03.01 Realized capital 3,590,020 3,590,020 2.03.02 Capital reserves 666 666 2.03.02.02 Special goodwill reserve - merger 588 588
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Financial Position - Liabilities
(R$ thousand)
Account Account Description Current Quarter Prior Year Code 03/31/2021 12/31/2020 2.03.02.07 Investment grants - CRC 78 78 2.03.04 Earnings reserves 9,332,529 10,388,142 2.03.04.01 Legal reserve 718,004 718,004 2.03.04.02 Statutory reserve 1,862,804 1,862,804 2.03.04.05 Earnings retention reserve 266,149 797,312 2.03.04.08 Proposed additional dividends 0 524,450 2.03.04.10 Unrealized special earnings reserve 6,485,572 6,485,572 2.03.05 Retained earnings/Accumulated losses 582,624 0 2.03.08 Other comprehensive income -198,058 -224,545 2.03.08.01 Financial instrument adjustment 42,618 16,131 2.03.08.02 Actuarial surplus (deficit) -240,676 -240,676
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Profit and Loss
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 3.01 Revenue from sales and/or services 774,423 582,577 3.01.01 Revenue from infra, operation and maintenance, 318,575 228,966 efficiency gain on infra implementation and other, net 3.01.02 Compensation from concession assets, net 455,848 353,611 3.02 Cost of sales and/or services -151,994 -96,521 3.02.01 Costs on infrastructure implementation and operation and -151,994 -96,521 maintenance services 3.03 Gross revenue 622,429 486,056 3.04 Operating income/ (expenses) 232,208 214,731 3.04.02 General and administrative expenses -43,925 -34,078 3.04.02.01 Management fees -4,381 -3,215 3.04.02.02 Other general and administrative expenses -39,544 -30,863 3.04.04 Other operating income 343 4,895 3.04.05 Other operating expenses -3,370 -722 3.04.06 Share of profit of investees 279,160 244,636 3.05 Profit from operations before finance income (costs) and taxes 854,637 700,787 3.06 Finance income (costs) -113,308 -60,166 3.06.01 Finance income 17,188 177,503 3.06.02 Finance costs -130,496 -237,669 3.07 Profit before taxes on income 741,329 640,621 3.08 Income tax and social contribution -158,705 -134,038 3.08.01 Current -168,298 -75,865 3.08.02 Deferred 9,593 -58,173 3.09 Profit from continuing operations 582,624 506,583 3.11 Profit/loss for the period 582,624 506,583 3.99 Earnings per share (R$/share) 3.99.01 Basic earnings per share 3.99.01.01 Common share 0.88426 0.76885 3.99.01.02 Preferred share 0.88426 0.76885 3.99.02 Diluted earnings per share 3.99.02.01 Common share 0.88420 0.76879 3.99.02.02 Preferred share 0.88420 0.76879
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Comprehensive Income
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 4.01 Profit for the period 582.624 506.583 4.02 Other comprehensive income 26.487 32.439 4.02.03 Adjustment - subsidiaries’ financial instruments 26.977 33.473 under the equity method 4.02.04 Deferred income tax and social contribution -490 -1.034 4.03 Comprehensive income for the period 609.111 539.022
PAGE: 6 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Cash Flows - Indirect Method
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 6.01 Net cash from operating activities 284,377 375,690 6.01.01 Cash provided by operations 403,147 390,433 6.01.01.01 Profit for the year 582,624 506,583 6.01.01.02 Depreciation and amortization 4,992 4,319 6.01.01.03 Deferred PIS and COFINS (taxes on revenue) -5,646 3,982 6.01.01.04 Deferred income tax and social contribution -9,593 58,173 6.01.01.05 Provision for risks -3,181 -1,069 6.01.01.06 Residual cost of property and equipment and intangible assets 3 0 disposed of 6.01.01.07 Tax benefits - merged goodwill 9 10 6.01.01.08 Amortization of concession asset in the acquisition of 623 623 subsidiary 6.01.01.09 Realization of loss on subsidiary -1,187 -470 6.01.01.10 Share of profit of investees -278,595 -244,636 6.01.01.11 Interest, inflation adjustment and exchange rate changes 88,794 60,751 on borrowings, financing and debentures 6.01.01.13 Employee benefits - actuarial deficit 12,100 0 6.01.01.14 Income from short-term investments -399 -1,197 6.01.01.15 Interest, inflation adjustment and exchange rate changes on 12,603 3,364 assets and liabilities 6.01.02 Changes in assets and liabilities -118,770 -14,743 6.01.02.01 Restricted cash -74 -142 6.01.02.02 Concession asset 56,492 72,741 6.01.02.03 Inventories 1,277 -23,518 6.01.02.04 Receivables - Finance Department -42,504 -44,639 6.01.02.05 Recoverable taxes -31,165 -11,230 6.01.02.06 Sureties and escrow deposits 123 1,066 6.01.02.07 Prepaid expenses -29,832 -28,197 6.01.02.08 Other assets 12,981 -6,655 6.01.02.09 Trade payables -28,064 33,302 6.01.02.10 Taxes and social security charges payable -28,412 34,962 6.01.02.11 Payroll and related taxes -8,882 -6,829 6.01.02.13 Regulatory charges payable -3,782 -7,191 6.01.02.14 Provisions -1,380 -1,668 6.01.02.15 Payables - Funcesp -16 3 6.01.02.16 Global Reversal Reserve (RGR) -620 -620 6.01.02.17 Other liabilities -14,912 -26,128 6.02 Net cash from investing activities -1,731,806 -156,767 6.02.01 Short-term investments -187,054 -305,700 6.02.02 Purchases of property and equipment -1,384 -1,287 6.02.03 Intangible assets -1,440 -323 6.02.04 Investments -1,711,599 -194,374 6.02.06 Redemption of short-term investments 169,671 344,917 6.03 Net cash provided by financing activities 138,697 -134,874 6.03.01 Additions to borrowings and debentures 672,500 4,138 6.03.02 Repayment of borrowings (principal) -12,297 -12,182 6.03.03 Repayment of borrowings (interest) -30,941 -30,481 6.03.04 Derivative financial instruments 0 -1,254
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Cash Flows - Indirect Method
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 6.03.05 Dividends and interest on capital paid -487,578 -91,971 6.03.06 Payments of leases (principal and interest) -2,987 -3,124 6.05 Increase (decrease) in cash and cash equivalents -1,308,732 84,049 6.05.01 Opening balance of cash and cash equivalents 2,020,119 593,663 6.05.02 Closing balance of cash and cash equivalents 711,387 677,712
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Statement of Changes in Equity / 01/01/2021 to 03/31/2021
(R$ thousand)
Account Account Description Paid-in Capital Reserves, Earnings Reserve Retained earnings Other Comprehensive Equity Code Capital Stock Options (Accumulated Losses) Income Granted, and Treasury Shares 5.01 Opening balances 3,590,020 666 10,388,142 0 -224,545 13,754,283
5.03 Adjusted opening balances 3,590,020 666 10,388,142 0 -224,545 13,754,283
5.04 Capital transactions with shareholders 0 0 -1,055,613 0 0 -1,055,613
5.04.06 Dividends 0 0 -531,163 0 0 -531,163
5.04.08 Proposed additional dividends 0 0 -524,450 0 0 -524,450
5.05 Total comprehensive income 0 0 0 582,624 26,487 609,111
5.05.01 Profit for the period 0 0 0 582,624 0 582,624
5.05.02 Other comprehensive income 0 0 0 0 26,487 26,487
5.05.02.01 Adjustments to financial instruments 0 0 0 0 26,977 26,977
5.05.02.02 Taxes on adjustments to financial instruments 0 0 0 0 -490 -490 5.07 Closing balances 3,590,020 666 9,332,529 582,624 -198,058 13,307,781
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Statement of Changes in Equity / 01/01/2020 to 03/31/2020
(R$ thousand)
Account Account Description Paid-in Capital Reserves, Earnings Reserve Retained earnings Other Comprehensive Equity Code Capital Stock Options (Accumulated Losses) Income Granted, and Treasury Shares 5.01 Opening balances 3,590,020 666 8,172,442 0 31,191 11,794,319
5.03 Adjusted opening balances 3,590,020 666 8,172,442 0 31,191 11,794,319
5.04 Capital transactions with shareholders 0 0 0 377 0 377
5.04.06 Dividends 0 0 0 377 0 377
5.05 Total comprehensive income 0 0 0 392,454 32,439 424,893
5.05.01 Profit for the period 0 0 0 392,454 0 392,454
5.05.02 Other comprehensive income 0 0 0 0 32,439 32,439
5.05.02.01 Adjustments to financial instruments 0 0 0 0 33,473 33,473
5.05.02.02 Taxes on adjustments to financial instruments 0 0 0 0 -1,034 -1,034 5.07 Closing balances 3,590,020 666 8,172,442 392,831 63,630 12,219,589
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Individual Interim Financial Information / Statement of Value Added
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 7.01 Revenue 914,697 704,077 7.01.01 Sales of goods, products, and services 914,354 699,182 7.01.02 Other revenue 343 4,895 7.02 Inputs acquired from third parties -100,310 -41,914 7.02.01 Cost of products, goods and services rendered -90,431 -39,771 7.02.02 Materials, electric power, outside services and other -9,879 -2,143 7.03 Gross value added 814,387 662,163 7.04 Retentions -4,992 -4,319 7.04.01 Depreciation, amortization and depletion -4,992 -4,319 7.05 Net wealth created 809,395 657,844 7.06 Wealth received in transfer 296,348 422,139 7.06.01 Share of profit of investees 279,160 244,636 7.06.02 Finance income 17,188 177,503 7.07 Total wealth for distribution 1,105,743 1,079,983 7.08 Wealth distributed 1,105,743 1,079,983 7.08.01 Personnel 70,053 60,797 7.08.01.01 Salaries and wages 42,156 42,257 7.08.01.02 Benefits 24,436 14,173 7.08.01.03 Severance Pay Fund (FGTS) 3,461 4,367 7.08.02 Taxes and contributions 321,785 274,601 7.08.02.01 Federal 310,238 263,072 7.08.02.02 State 382 365 7.08.02.03 Municipal 11,165 11,164 7.08.03 Lenders and lessors 131,281 238,002 7.08.03.01 Interest 130,246 237,416 7.08.03.02 Rentals 1,035 586 7.08.04 Shareholders 582,624 506,583 7.08.04.03 Retained earnings/accumulated losses for the period 582,624 506,583
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Financial Position - Assets
(R$ thousand)
Account Account Description Current Quarter Prior Year Code 03/31/2021 12/31/2020 1 Total assets 26,505,399 24,592,358 1.01 Current assets 4,631,986 5,507,858 1.01.01 Cash and cash equivalents 853,688 2,067,337 1.01.02 Short-term investments 469,733 453,557 1.01.02.01 Short-term investments at fair value through profit or loss 469,733 453,557
1.01.02.01.03 Short-term investments 469,733 453,557 1.01.03 Trade receivables 3,057,083 2,804,373 1.01.03.01 Trade receivables 3,057,083 2,804,373 1.01.03.01.01 Concession asset 3,057,083 2,804,373 1.01.04 Inventories 49,717 45,297 1.01.06 Recoverable taxes 72,195 28,807 1.01.06.01 Current recoverable taxes 72,195 28,807 1.01.06.01.01 Recoverable taxes 72,195 28,807 1.01.07 Prepaid expenses 36,595 6,400 1.01.08 Other current assets 92,975 102,087 1.01.08.03 Other 92,975 102,087 1.01.08.03.01 Derivative financial instruments 7,507 9,790 1.01.08.03.02 Restricted cash 3,873 1,808 1.01.08.03.03 Receivables from related parties 14,771 14,994 1.01.08.03.04 Other 66,824 75,495 1.02 Noncurrent assets 21,873,413 19,084,500 1.02.01 Long-term assets 18,275,723 16,109,008 1.02.01.04 Trade receivables 16,221,607 14,118,454 1.02.01.04.01 Concession asset 16,221,607 14,118,454 1.02.01.05 Inventories 12,634 9,997 1.02.01.10 Other noncurrent assets 2,041,482 1,980,557 1.02.01.10.03 Receivables - Finance Department 1,821,503 1,778,999 1.02.01.10.04 Sureties and escrow deposits 47,184 44,119 1.02.01.10.05 Financial instruments 18,417 226 1.02.01.10.06 Other 114,129 110,310 1.02.01.10.07 Restricted cash 40,249 46,903 1.02.02 Investments 3,001,178 2,858,002 1.02.02.01 Equity interests 3,001,178 2,858,002 1.02.02.01.04 Equity interests in jointly controlled entities 3,001,178 2,858,002 1.02.03 Property and equipment 90,195 92,991 1.02.03.01 Property and equipment in use 90,195 92,991 1.02.04 Intangible assets 506,317 24,499 1.02.04.01 Intangible assets 506,317 24,499 1.02.04.01.02 Intangible assets 506,317 24,499
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Financial Position - Liabilities
(R$ thousand)
Account Account Description Current Quarter Prior Year Code 03/31/2021 12/31/2020 2 Total liabilities 26,505,399 24,592,358 2.01 Current liabilities 2,294,062 1,372,497 2.01.02 Trade payables 100,371 153,346 2.01.02.01 Domestic suppliers 100,371 153,346 2.01.03 Taxes payable 268,737 255,614 2.01.03.01 Taxes payable - Federal 268,737 255,614 2.01.03.01.02 Taxes and payroll charges payable 268,737 255,614 2.01.04 Borrowings and financing 715,093 321,371 2.01.04.01 Borrowings and financing 461,788 94,628 2.01.04.01.01 In local currency 461,788 94,628 2.01.04.02 Debentures 245,489 217,948 2.01.04.03 Financing - Leases 7,816 8,795 2.01.04.03.01 Leases 7,816 8,795 2.01.05 Other payables 1,173,649 597,072 2.01.05.02 Other 1,173,649 597,072 2.01.05.02.01 Dividends and interest on capital payable 1,068,548 500,513 2.01.05.02.04 Payables - Vivest 855 871 2.01.05.02.05 Regulatory charges payable 44,836 49,457 2.01.05.02.07 Other 59,410 46,231 2.01.06 Provisions 36,212 45,094 2.01.06.01 Provisions for social security, labor and civil risks 36,212 45,094 2.01.06.01.03 Accrued employee benefits 36,212 45,094 2.02 Noncurrent liabilities 10,547,630 9,094,419 2.02.01 Borrowings and financing 4,890,099 4,214,361 2.02.01.01 Borrowings and financing 1,182,886 1,208,301 2.02.01.01.01 In local currency 1,182,886 1,208,301 2.02.01.02 Debentures 3,664,357 2,961,318 2.02.01.03 Financing - Leases 42,856 44,742 2.02.01.03.01 Leases 42,856 44,742 2.02.02 Other payables 494,542 521,799 2.02.02.02 Other 494,542 521,799 2.02.02.02.03 Global Reversal Reserve (RGR) 13,512 14,132 2.02.02.02.05 Regulatory charges payable 50,331 48,065 2.02.02.02.08 Other 36,621 77,625 2.02.02.02.09 Employee benefits - actuarial deficit 394,078 381,977 2.02.03 Deferred taxes 5,034,259 4,269,577 2.02.03.01 Deferred income tax and social contribution 5,034,259 4,269,577 2.02.03.01.01 Deferred income tax and social contribution 3,506,348 2,952,855 2.02.03.01.02 Deferred PIS and COFINS (taxes on revenue) 1,527,911 1,316,722 2.02.04 Provisions 128,730 88,682 2.02.04.01 Provisions for social security, labor and civil risks 128,730 88,682 2.02.04.01.06 Provisions 128,730 88,682 2.03 Consolidated equity 13,663,707 14,125,442 2.03.01 Realized capital 3,590,020 3,590,020 2.03.02 Capital reserves 666 666 2.03.02.02 Special goodwill reserve - merger 588 588
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Financial Position - Liabilities
(R$ thousand)
Account Account Description Current Quarter Pior Year Code 03/31/2021 12/31/2020 2.03.02.07 Investment grants - CRC 78 78 2.03.04 Earnings reserves 9,332,529 10,388,142 2.03.04.01 Legal reserve 718,004 718,004 2.03.04.02 Statutory reserve 1,862,804 1,862,804 2.03.04.05 Earnings retention reserve 266,149 797,312 2.03.04.10 Unrealized special earnings reserve 6,485,572 6,485,572 2.03.04.11 Additional dividends proposed 0 524,450 2.03.05 Retained earnings/Accumulated losses 582,624 0 2.03.08 Other comprehensive income -198,058 -224,545 2.03.08.01 Financial instrument adjustment 42,618 16,131 2.03.08.02 Actuarial surplus (deficit) -240,676 -240,676 2.03.09 Noncontrolling interests 355,926 371,159
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Profit and Loss
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 3.01 Revenue from sales and/or services 1,088,017 852,127 3.01.01 Revenue from infra, operation and maintenance, 461,876 410,804 efficiency gain on infra implementation and other, net 3.01.02 Compensation from concession assets, net 626,141 441,323 3.02 Cost of sales and/or services -282,678 -233,201 3.02.01 Cost on infrastructure implementation and operation and -282,678 -233,201 maintenance services 3.03 Gross revenue 805,339 618,926 3.04 Operating income/ (expenses) 70,993 102,520 3.04.02 General and administrative expenses -42,497 -35,134 3.04.02.01 Management fees -4,381 -3,215 3.04.02.02 Other general and administrative expenses -38,116 -31,919 3.04.04 Other operating income 343 5,384 3.04.05 Other operating expenses -11,029 -722 3.04.06 Share of profit of investees 124,176 132,992 3.05 Profit from operations before finance income (costs) and taxes 876,332 721,446 3.06 Finance income (costs) -115,769 -49,311 3.06.01 Finance income 19,999 193,787 3.06.02 Finance costs -135,768 -243,098 3.07 Profit before taxes on income 760,563 672,135 3.08 Income tax and social contribution -176,084 -150,055 3.08.01 Current -210,719 -77,594 3.08.02 Deferred 34,635 -72,461 3.09 Profit from continuing operations 584,479 522,080 3.11 Consolidated profit/loss for the period 584,479 522,080 3.11.01 Attributable to the Company’s owners 582,624 506,583 3.11.02 Attributable to noncontrolling interests 1,855 15,497 3.99 Earnings per share (R$/share) 3.99.01 Basic earnings per share 3.99.01.01 Common share 0.88426 0.76885 3.99.01.02 Preferred share 0.88426 0.76885 3.99.02 Diluted earnings per share 3.99.02.01 Common share 0.88420 0.76879 3.99.02.02 Preferred share 0.88420 0.76879
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Comprehensive Income
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 4.01 Consolidated profit for the period 584,479 522,080 4.02 Other comprehensive income 26,487 32,439 4.02.03 Adjustment - subsidiaries’ financial instruments 26,977 33,473 under the equity method 4.02.04 Deferred income tax and social contribution -490 -1,034 4.03 Consolidated comprehensive income for the period 610,966 554,519 4.03.01 Attributable to the Company’s owners 609,111 539,022 4.03.02 Attributable to noncontrolling interests 1,855 15,497
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Cash Flows - Indirect Method
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 6.01 Net cash from operating activities 219,204 336,101 6.01.01 Cash provided by operations 566,494 527,488 6.01.01.01 Profit for the period 584,479 522,080 6.01.01.02 Depreciation and amortization 5,119 4,468 6.01.01.03 Deferred PIS and COFINS (taxes on revenue) 19,234 -3,410 6.01.01.04 Deferred income tax and social contribution -34,635 72,461 6.01.01.05 Provision for risks -1,847 -2,905 6.01.01.06 Residual cost of permanent assets disposed of 3 0 6.01.01.07 Tax benefits - merged goodwill 9 10 6.01.01.08 Amortization of concession asset in the acquisition 623 623 of subsidiary 6.01.01.09 Realization of loss on subsidiary -1,187 -470 6.01.01.10 Share of profit of investees -124,176 -132,992 6.01.01.11 Interest, inflation adjustment and exchange rate changes 94,249 65,893 on borrowings, financing and debentures 6.01.01.12 Employee benefits - actuarial deficit 12,100 0 6.01.01.13 Income from short-term investments -655 -1,273 6.01.01.14 Interest, inflation adjustment and exchange rate changes on 13,178 3,003 assets and liabilities 6.01.02 Changes in assets and liabilities -347,290 -191,387 6.01.02.01 Restricted cash 4,589 -145 6.01.02.02 Concession asset -184,193 -139,038 6.01.02.03 Inventories -7,057 29,987 6.01.02.04 Receivables - Finance Department -42,504 -44,639 6.01.02.05 Recoverable taxes -31,187 -11,148 6.01.02.06 Sureties and escrow deposits -2,861 1,670 6.01.02.07 Prepaid expenses -30,195 -28,535 6.01.02.08 Other assets 8,373 -4,182 6.01.02.09 Trade payables -55,505 84 6.01.02.10 Taxes and payroll charges payable 8,272 35,555 6.01.02.11 Payroll and related taxes -8,882 -6,829 6.01.02.13 Regulatory charges payable -2,583 -6,965 6.01.02.14 Provisions -4,742 -1,668 6.01.02.15 Payables - Funcesp -16 3 6.01.02.16 Global Reversal Reserve (RGR) -620 -620 6.01.02.17 Other liabilities 1,821 -14,917 6.02 Net cash from investing activities -1,556,161 -8,056 6.02.01 Short-term investments -265,886 -344,515 6.02.02 Redemption of short-term investments 235,132 437,569 6.02.03 Purchases of property and equipment -1,446 -1,287 6.02.04 Intangible assets -1,451 -323 6.02.05 Investments -1,590,065 -99,500 6.02.07 Cash acquired in business combinations 67,555 0 6.03 Net cash provided by financing activities 123,308 -166,738 6.03.01 Additions - Borrowings 672,500 4,138 6.03.02 Repayment of borrowings (principal) -31,807 -22,728 6.03.03 Repayment of borrowings (interest) -35,977 -36,202
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Cash Flows - Indirect Method
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 6.03.04 Derivative financial instruments 11,067 -1,254 6.03.05 Transactions with noncontrolling shareholders -1,855 -15,497 6.03.06 Dividends and interest on capital paid -487,578 -91,971 6.03.07 Payments of leases (principal and interest) -3,042 -3,224 6.05 Increase (decrease) in cash and cash equivalents -1,213,649 161,307 6.05.01 Opening balance of cash and cash equivalents 2,067,337 595,971 6.05.02 Closing balance of cash and cash equivalents 853,688 757,278
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Changes in Equity / 01/01/2021 to 03/31/2021
(R$ thousand)
Account Account Description Capital Reserves, Earnings Reserve Retained Earnings Other Comprehensive Equity Noncontrolling Consolidated Code Paid-in Stock Options (Accumulated Losses) Income interests Equity Capital Granted, and Treasury Shares 5.01 Opening balances 3,590,020 666 10,388,142 0 -224,545 13,754,283 371,159 14,125,442
5.03 Adjusted opening balances 3,590,020 666 10,388,142 0 -224,545 13,754,283 371,159 14,125,442
5.04 Capital transactions with shareholders 0 0 -1,055,613 0 0 -1,055,613 -17,088 -1,072,701
5.04.06 Dividends 0 0 -531,163 0 0 -531,163 0 -531,163
5.04.08 Proposed additional dividends 0 0 -524,450 0 0 -524,450 0 -524,450
5.04.09 Acquisition of additional interest from 0 0 0 0 0 0 -17,088 -17,088 noncontrolling shareholders 5.05 Total comprehensive income 0 0 0 582,624 26,487 609,111 1,855 610,966
5.05.01 Profit for the period 0 0 0 582,624 0 582,624 1,855 584,479
5.05.02 Other comprehensive income 0 0 0 0 26,487 26,487 0 26,487
5.05.02.01 Adjustments to financial instruments 0 0 0 0 26,977 26,977 0 26,977
5.05.02.02 Taxes on adjustments to 0 0 0 0 -490 -490 0 -490 financial instruments 5.07 Closing balances 3,590,020 666 9,332,529 582,624 -198,058 13,307,781 355,926 13,663,707
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
Consolidated Interim Financial Information / Statement of Changes in Equity / 01/01/2020 to 03/31/2020
(R$ thousand)
Account Account Description Capital Reserves, Earnings Reserve Retained Earnings Other Comprehensive Equity Noncontrolling Consolidated Code Paid-in Stock Options (Accumulated Losses) Income interests Equity Capital Granted, and Treasury Shares 5.01 Opening balances 3,590,020 666 8,172,442 0 31,191 11,794,319 1,967,288 13,761,607
5.03 Adjusted opening balances 3,590,020 666 8,172,442 0 31,191 11,794,319 1,967,288 13,761,607
5.04 Capital transactions with shareholders 0 0 0 377 0 377 -1,480,343 -1,479,966
5.04.06 Dividends 0 0 0 377 0 377 0 377
5.04.08 Acquisition of additional interest from 0 0 0 0 0 0 -1,480,343 -1,480,343 noncontrolling shareholders 5.05 Total comprehensive income 0 0 0 392,454 32,439 424,893 15,497 440,390
5.05.01 Profit for the period 0 0 0 392,454 0 392,454 15,497 407,951
5.05.02 Other comprehensive income 0 0 0 0 32,439 32,439 0 32,439
5.05.02.01 Adjustments to financial instruments 0 0 0 0 33,473 33,473 0 33,473
5.05.02.02 Taxes on adjustments to 0 0 0 0 -1,034 -1,034 0 -1,034 financial instruments 5.07 Closing balances 3,590,020 666 8,172,442 392,831 63,630 12,219,589 502,442 12,722,031
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ITR - Informações Trimestrais - 31/03/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA PAULISTA Versão : 1
Consolidated Interim Financial Information / Statement of Value Added
(R$ thousand)
Account Account Description Year to Date - Current Year Year to Date - Prior Year Code 01/01/2021 to 01/01/2020 to 03/31/2021 03/31/2020 7.01 Revenue 1,260,734 971,236 7.01.01 Sales of goods, products, and services 1,260,391 965,852 7.01.02 Other revenue 343 5,384 7.02 Inputs acquired from third parties -235,749 -178,499 7.02.01 Cost of products, goods and services rendered -220,763 -176,249 7.02.02 Materials, electric power, outside services and other -14,986 -2,250 7.03 Gross value added 1,024,985 792,737 7.04 Retentions -5,119 -4,468 7.04.01 Depreciation, amortization and depletion -5,119 -4,468 7.05 Net wealth created 1,019,866 788,269 7.06 Wealth received in transfer 144,175 326,779 7.06.01 Share of profit of investees 124,176 132,992 7.06.02 Finance income 19,999 193,787 7.07 Total wealth for distribution 1,164,041 1,115,048 7.08 Wealth distributed 1,164,041 1,115,048 7.08.01 Personnel 70,992 61,533 7.08.01.01 Salaries and wages 42,164 42,257 7.08.01.02 Benefits 25,362 14,909 7.08.01.03 Severance Pay Fund (FGTS) 3,466 4,367 7.08.02 Taxes and contributions 371,702 287,851 7.08.02.01 Federal 360,138 276,296 7.08.02.02 State 393 386 7.08.02.03 Municipal 11,171 11,169 7.08.03 Lenders and lessors 136,869 243,584 7.08.03.01 Interest 135,478 242,821 7.08.03.02 Rentals 1,391 763 7.08.04 Shareholders 584,478 522,080 7.08.04.03 Retained earnings/accumulated losses for the period 582,623 506,583 7.08.04.04 Noncontrolling interest in retained earnings 1,855 15,497
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Performance Comments
Analysis of the consolidated profit for the quarter ended March 31, 2021
The Company and its subsidiaries and jointly controlled entities currently hold 30 electricity transmission concession contracts totaling, as of March 31, 2021, an Annual Permitted Revenue (RAP) of R$3,922,025 thousand (CTEEP and subsidiaries) and R$1,147,858 (jointly controlled entities), 2020/2021 cycle baseline (note 1.2).
In the period ended March 31, 2021, the Company and its subsidiaries reported operating cash generation of R$431.3 million and an increase in profit for the period of 12%, reaching a total of R$584,479,000 in 1Q21 compared to R$522,080 thousand in 1Q20.
It is worth noting that 1Q20 results are being restated for the sole, exclusive purpose of reflecting in the disclosure of quarterly balances the impacts of CVM Official Letter 04/2020 that were adjusted as of December 31, 2020, so that such restatement does not change the Company’s profit for the year disclosed on February 22, 2021 (note 2.4).
Quarter-on-quarter net operating revenue was up 27.7% and consists of the following changes:
Change 03/31/2020 (%) 03/31/2021 % (Restated) % 2021/2020
Infrastructure revenues 235,645 21.7 193,571 22.7 21.7 Efficiency gain on infrastructure implementation 20,922 1.9 - - 100,0 Operation and maintenance 318,120 29.2 297,169 34.9 7.1 Compensation from concession assets 679,010 62.4 480,688 56.4 41.3 Revenue from rentals and services 6,694 0.6 7,700 0.9 (13.1)
Taxes on revenue (114,201) (9.1) (83,976) (8.6) 36.0
Regulatory charges (58,173) (4.6) (43,025) (4.4) 35.2
Net operating revenue 1,088,017 852,127 27.7
Infrastructure revenues totaled R$235,645 thousand in 1Q21, compared to R$193,571 thousand in 1Q20. This revenue is recognized considering the project investments made in the period plus the estimated margin of each project and the gross-up of taxes on revenue, so that the revenue varies according to the volume of investments. In 1Q21, there was (i) an increase in revenue from reinforcement and improvement projects in CTEEP of R$84,043 thousand, which presents an average margin higher than the average margins of the subsidiaries, offset by (ii) a R$41,969 thousand decrease, due to the change in the volume of investments due to the percentage of completion of the subsidiaries’ works, as well as the completion of the Itaquerê, Tibagi, and Aguapeí works that went into operation throughout 2020 and the first quarter of 2021, which was partially offset by investments in the works that are still at an advanced stage of completion of Biguaçu, IEMG (Triangulo Mineiro), and Evrecy (Minuano).
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Performance Comments
1Q2021 1Q2020
0,2% CTEEP
5.2% 28.3% Non-operational Subsidiaries 32.1% IETG IETP IETQ IEJ1 Operational Subsidiaries
7,964 1,084 13,085 22,077 326 160 3,430 1,847 199,334 39.6% 94.8%
The efficiency gain of R$20,922 thousand in 1Q21, refers to the additional gains to the estimated margin, which were earned only when the projects went into operation, especially at subsidiary Aguapeí, which went into operation six months ahead of the ANEEL deadline and had a positive revision of the RAP.
Operation and maintenance revenues totaled R$318,120 thousand in 1Q21, compared to R$297,169 thousand in 1Q20, with the main factors being: (i) positive change of the adjustment and prepayment portion of R$14,431 thousand; (ii) increase in the transfer of regulatory charges added to revenue totaling R$22,743; (iii) higher discount of the variable portion amounting to R$4,601 thousand; (iv) negative change of R$11,622 thousand due to the adjustment using the IPCA/IGPM inflation indices offset by applying the 2020/2021 cycle RAP with impacts from the Periodical Tariff Revision (RTP).
1Q2021 1Q2020
57,565 34,822 O&M Revenue
20,155 2,977 Variable Portion (VP) (5,038) 37,563 Adjustment Portion (PA) (9,639) Advance 232,631 244,253 Regulatory Charges
The compensation of concession assets totaled R$679,010 thousand in 1Q21 compared to R$480,688 thousand in 1Q20 due to:
• Law 12783 - SE assets: recorded a change of R$81,484 thousand: (i) increase of R$72,050 thousand related to the adjustment using the monthly IPCA, which was higher than in 1Q20; (ii) increase in the adjustment of the financial flow amounting to R$9,434 thousand.
• Infrastructure implementation posted a change of R$116,839 thousand: (i) increase of R$56,110 thousand related to adjustment of the concession assets by the discount rate implicit in each concession contract and (ii) increase of R$60,729 thousand using the monthly IPCA adjustment.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Performance Comments
65,544 679,010 132,779
480,688
1Q20 Monthly IPCA Concession 1Q21 Adjustment
Revenue from rentals and services basically record fiber optic cables and lightning cables infrastructure sharing for telecommunication operations and totaled R$6,694 thousand in 1Q21, compared to R$7,700 thousand in 1Q20.
The deductions from operating revenue totaled R$172,374 thousand in 1Q21 and R$127,001 thousand in 1Q20 impacted mainly by the increase in (i) PIS/COFINS taxes of R$30,017 thousand, which follow the change in gross revenue; and (ii) regulatory charges of R$15,148 thousand.
The costs of services of infrastructure implementation and operation and maintenance increased by 21.2%, totaling R$282,678 thousand in 1Q21 compared to R$233,201 thousand in 1Q20.
Total em 1T2021: R$ 96.962 (Mil) Total em 1T2021: R$ 185.716 (Mil) Total em 1T2020: R$ 92.136 (Mil) Total em 1T2020: R$ 141.065 (Mil) Infrastructure implementation cost Custo de operação e manutenção 4,475 Personnel
2,423 Outside services 100,186 32,840 56,130 54,030 Materials
104,002 Leases and rentals 67,023 22,761 21,696 499 1,040 4,347 13,762 1,800 12,684 16,067 Other
1Q2021 1Q2020 1Q2021 1Q2020
The infrastructure implementation service costs represent the investments made in the construction in progress in the period, and the expenses on materials and services vary according to the percentage of completion of the works. The increase of R$44,651 thousand is due to the higher investment in reinforcements and improvements made by the Parent Company, offset by the reduction in the subsidiaries due to the entry into operation of Itaquerê, Tibagi and Aguapeí.
The operation and maintenance costs totaled R$96,962 thousand in 1Q21 and R$92,136 thousand in 1Q20 and did not present material changes.
The general administrative expenses increased by 21.0% to R$42,497 thousand in 1Q21 compared to R$35,134 thousand in 1Q20, mainly due to the increase in personnel expenses due to the recognition of a provision for the estimated actuarial liability of the pension plan in the amount of R$11,892 thousand.
The finance costs totaled R$115,769 thousand in 1Q21 compared to R$49,311 thousand in 1Q20; this change is mainly due to a decrease in income from short-term investments and the increase in charges on debentures, the latter due to the higher indebtedness in 1Q21.
PAGE: 24 of 108 ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Performance Comments
(62,877) 5,803 1,117 (115,769)
(49,311) (12,222) 6,215 (4,494)
1Q2020 Income from Other Finance Interest on Inflation Operation 4131 - Other Finance 1Q2021 Short-term Income Borrowings Adjustments - Swap Costs Investments Debentures
Consolidated gross debt totaled R$5,605,192 in 1Q21 and R$4,535,732 in 2020, due to the raising, in 1Q21, of infrastructure debentures totaling R$672,500 thousand and the acquisition of subsidiary PBTE with total debt of R$374,800 with CCB. The average debt cost in 1Q21 is 9.04% compared to 7.01% in 1Q20.
Gross debt breakdown:
2021 Total da dívida: R$ 5,605,192 (R$ Mil) 2020 Total da dívida: R$ 4,535,732 (R$ Mil) 195,775 201,731
471,894 - 501,417 BNDES - TJLP BNDES - TJLP - 1,027,677 Credit Agreement Credit Agreement 653,317 CCB and Commercial Paper CCB and Commercial Paper Debentures - CDI / IPCA Debentures - CDI / IPCA Other Other
3,909,846 3,179,266
Share of profit of investees totals R$124,176 thousand in 1Q21 compared to R$132,992 thousand in 1Q20, and has as main reason the changes in the jointly controlled subsidiaries:
(i) IEParaguaçu, IEAimorés and IEIvaí, in preoperating phase, negative change of R$27,135 thousand basically for the adjustment to concession assets using the implicit rate and profit margin.
(ii) IEGaranhuns, in operation, the change refers mainly to the adjustment to concession assets using the implicit rate of the concession contract, with a recognized gain of R$4,203.
(iii) IEMadeira, in operation, the change of R$14,116 refers mainly to (i) the adjustment to concession assets using the implicit rate of the concession contract; and (ii) the recognition of the sale of ICMS credits amounting to R$8,600 thousand.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Performance Comments
Share of profit of investees
1Q2021 1Q2020 73,080
58,965
39,023
23,343 22,945 16,539 12,336
4,760 6,852
(674)
Income tax and social contribution totaled R$176,084 thousand in 1Q21 compared to R$150,055 thousand in 1Q20, which follows the change in profit less the share of profit of investees. The effective rate in 1Q21 is 23% and in 1Q20 is 22%.
Value added
In the 1Q21, the Company calculated R$1,164,041 thousand in added value compared to R$1,115,048 thousand in the 1Q20, distributed as follows:
1Q20212019 1Q2020
Personnel
6,1%6.1% 5.5% Taxes
25.8% Third parties 31,9%31.9% 45.4% 50,1%50.1% Noncontrolling interests
Shareholders 21.8% 11,8%11.8% 0,2%0,0% Retained
0.2% 1.4%
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information
Highlights
Management highlights below important accounting, regulatory and economic-financial matters for this earnings release:
• Accounting
PBTE Acquisition
On March 2, 2021, the acquisition of all the shares of Piratininga - Bandeirantes Transmissora de Energia (PBTE) was completed after meeting the conditions precedent set forth in the share purchase agreement. This company operates a 30km underground transmission line in the city of São Paulo, which went into operation in April 2020 and connects two CTEEP substations (Piratininga II and Bandeirantes); the effects of the acquisition of control of PBTE are shown in Note 11 (ii).
• Regulatory
Start-up
On March 4, 2021 and February 2, 2021, subsidiary IEAguapeí energized the Baguaçu substation and 16 km of transmission lines and the Alta Paulista substation and 105 km of transmission lines, respectively. As a result, the project of contract 046/2017 was completed six months ahead of ANEEL's deadline.
Installation Licenses
On January 26, 2021, subsidiary IETibagi obtained the Installation License (LI) for the activities under agreement 006/2020 (Três Lagoas project) from the Brazilian Institute of Environment and Natural Resources (IBAMA).
On March 19, 2021, subsidiary IEBiguaçu obtained the Installation License (LI) issued by the Santa Catarina State Environmental Institute (IMA) for the transmission lines.
CVM/SNC/SEP Circular Letter no. 02/2020 - Effects of Coronavirus on Financial Statements
In accordance with CVM Circular Letter No. 02/2020 of March 10, 2020, ISA CTEEP has been monitoring the impacts of COVID-19 on the macroeconomic scenario and its business and is constantly assessing the possible risks of default due to a disruption of cash flow in the system.
Considering the actions that the Government has structured to support the Electric Power Sector that have proven to be efficient for Transmission, the Company’s default levels have not changed significantly. Additionally, the Company is diligently monitoring the construction in progress deadlines and is continually in touch with the regulator about possible delays that may occur until the business activities are normalized in the market as a whole. To date, there has been no material impact on the business that would require any additional measurement or disclosure in interim financial information as of March 31, 2021.
Given the lengthening and worsening of the pandemic, Management maintains a prudent position in cash management to ensure the normal course of business and the usual financial liquidity and soundness. The precautionary measures were strengthened to reduce the exposure of its employees to risk and guarantee the continuity and quality of its operations, maintaining contingency systems, travel restrictions, expansion of telework, daily monitoring of the employees’ health and wellbeing, and by relying on the assistance of an infectious disease specialist to validate preventive health protocols. The Company continues to monitor the evolution of the pandemic and constantly reassesses the measures adopted to ensure the adherence of the actions to the moment of this new reality.
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information
• Economic and Financial
i) The Company’s Management has been constantly monitoring the valuation of actuarial assets of the pension plan due to the interest rate instability, which is determined based on market data for NTN-B government bonds’ yields (Note 22).
ii) Subsidiaries Biguaçu and Riacho Grande have Non-deliverable Forward (NDF) hedging contracts for the purpose of hedging foreign currency-denominated commitments (CAPEX). As a result, the fluctuations in the current scenario had no impact on the financial statements.
iii) On February 3, 2021, the Company’s Board of Directors approved the 10th issue of debentures, under which 672,500 debentures were issued, totaling R$672,000 with maturity on July 15, 2044 (Note 15).
iv) On April 15, 2021, the Company’s Board of Directors approved the 8th issue of promissory notes, in a single series, whereby 800 commercial notes will be issued, totaling R$1,200,000 (Note 34).
1. General information
1.1 Corporate purpose
CTEEP - Companhia de Transmissão de Energia Elétrica Paulista (“ISA CTEEP”, “CTEEP” or “Company”) is a Brazilian publicly held corporation authorized to operate as an electric power public service concessionaire, and is principally engaged in energy transmission, which requires planning, infrastructure implementation, and operation and maintenance of subordinated power transmission systems. The Company’s headquarters are located at Avenida das Nações Unidas, 14.171, Torre C (Crystal Tower), andares 5, 6 e 7, Vila Gertrudes, in the city of São Paulo, State of São Paulo. In performing its operating activities, the Company is required to make investments and manage research & development programs related to power transmission and other activities related to the technology available. These activities are regulated and inspeced by the National Electric Energy Agency (ANEEL).
The Company derived from a partial spin-off of Companhia Energética de São Paulo (“CESP”) and started to operate on April 1, 1999. On November 10, 2001, the Company merged EPTE - Empresa Paulista de Transmissão de Energia Elétrica S.A. (“EPTE”), which was originated from the partial spin-off of Eletropaulo - Eletricidade de São Paulo S.A. In a privatization auction held on June 28, 2006, the State Government of São Paulo sold the common shares held by it, corresponding to 50.10% of the common shares issued by CTEEP. The entity winning the auction was Interconexión Eléctrica S.A. E.S.P. (“ISA”).
Currently, the Company is consolidated in the electric power transmission sector, operating as a group, directly controls 15 companies and shares control of other five companies, which, together, hold 30 concession contracts (note 1.2) and 18.8 thousand kilometers of lines built, 68.9 thousand MVA transformation capacity, in addition to more than 1.6 thousand kilometers and 9 thousand MVA power in the pre-operating stage.
The Company’s shares are traded in the Level 1 segment of B3 S.A. - Brasil, Bolsa, Balcão, under the ticker symbols TRPL3 and TRPL4.
The Company adopts B3’s Differentiated Corporate Governance Practices - Level 1 since September 2002. The commitments undertaken as a result of this adhesion ensure greater transparency from the Company towards the market, investors and shareholders, thus facilitating the monitoring of Management’s actions.
The Company is a member of Brasil Amplo Index, Brazil 100 Index, Dividends Index, Electric Power Index, Corporate Governance Index, MidLarge Cap Index, Public Utility Index, and Efficient Carbon Index.
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information 1.2 Concessions
The Company, its subsidiaries and jointly controlled subsidiaries are authorized to operate the following concession contracts relating to electric energy transmission services:
Periodic Tariff Annual Permitted Revision Revenue ( RAP) (RTP)
Stake (%) Term Maturity Term Adjust. Concessionaire Contract (years) (years) Next index R$ thousand Base month
CTEEP (i) 059/2001 30 12.31.42 5 2023 IPCA 3,131,031 06/20
Subsidiaries IESerra do Japi 143/2001 100 30 12.20.31 n/a n/a IGPM 13,161 06/20 IEMG 004/2007 100 30 04.23.37 5 2022 IPCA 19,863 06/20 IENNE 001/2008 100 30 06.16.38 5 2023 IPCA 52,538 06/20 IEPinheiros 012/2008 100 30 10.15.38 5 2024 IPCA 11,746 06/20 IESul 013/2008 100 30 10.15.38 5 2024 IPCA 6,418 06/20 IEPinheiros 015/2008 100 30 10.15.38 5 2024 IPCA 39,448 06/20 IESul 016/2008 100 30 10.15.38 5 2024 IPCA 14,321 06/20 IEPinheiros 018/2008 100 30 10.15.38 5 2024 IPCA 5,769 06/20 Evrecy 020/2008 100 30 07.17.25 4 2025 IGPM 12,775 06/20 IESerra do Japi 026/2009 100 30 11.18.39 5 2021 IPCA 43,138 06/20 IEPinheiros 021/2011 100 30 12.09.41 5 2022 IPCA 6,093 06/20 IEItaúnas 018/2017 100 30 02.10.47 5 2022 IPCA 53,438 06/20 IETibagi (ii) 026/2017 100 30 08.11.47 5 2023 IPCA 20,585 06/20 IEItaquerê 027/2017 100 30 08.11.47 5 2023 IPCA 51,747 06/20 IEItapura 042/2017 100 30 08.11.47 5 2023 IPCA 12,015 06/20 IEAguapeí 046/2017 100 30 08.11.47 5 2023 IPCA 60,145 06/20 IEBiguaçu 012/2018 100 30 09.20.48 5 2024 IPCA 41,185 06/20 IEItapura 021/2018 100 30 09.20.48 5 2024 IPCA 10,889 06/20 Evrecy 001/2020 100 30 03.20.50 5 2025 IPCA 37,748 Auctioned RAP IETibagi 006/2020 100 30 03.20.50 5 2025 IPCA 5,316 Auctioned RAP IEMG 007/2020 100 30 03.20.50 5 2025 IPCA 32,887 Auctioned RAP
IERiacho Grande 005/2021 100 30 03.31.51 5 2026 IPCA 68,050 Auctioned RAP Piratininga- PBTE 012/2016 100 30 11.21.46 5 2022 IPCA 171,719 06/20
Total CTEEP and Subsidiaries 3,922,025
Jointly controlled subsidiaries IEMadeira 013/2009 51 30 02.25.39 5 2024 IPCA 296,458 06/20
IEMadeira 015/2009 51 30 02.25.39 5 2024 IPCA 255,180 06/20 IEGaranhuns 022/2011 51 30 12.09.41 5 2022 IPCA 95,130 06/20 IEParaguaçu 003/2017 50 30 02.10.47 5 2022 IPCA 120,704 06/20 IEAimorés 004/2017 50 30 02.10.47 5 2022 IPCA 80,864 06/20 IEIvaí 022/2017 50 30 08.11.47 5 2023 IPCA 299,522 06/20
Total jointly controlled subsidiaries 1,147,858
(i) In CTEEP, the Annual Permitted Revenue (“RAP”) relating to the Existing Service (“SE”) assets increased from R$1,531,817 as of June 2019 to R$1,842,311 as of June 2020, as established in the Periodic Tariff Revision (RTP) for transmission concessionaires under Authorization Resolution No. 2.714, of June 30, 2020, with effects retrospective to July 2018. This RTP also covers the revision of the investments that were placed into operation between January 2013 and January 2018.
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information
(ii) ANEEL’s Executive Board’s meeting held on October 26, 2020 approved the proposal to make an addendum to Agreement No. 26/2017 relating to subsidiary IETibagi. Such addendum was necessary because, by the time the start of the tests was authorized, ANEEL understood that the optimizations exceeded the maximum permitted by the Bid Notice and proposed that an addendum to the agreement was made
As a result, the RAP will decrease from R$18.3 million to R$15.9 million (auction base date), which represents a reduction of approximately 13.5%, in addition to the adjustment portion with a discount of R$6.7 million in the 2020/2021 tariff cycle. The Company remeasured the concession assets based on the new RAP estimate, and no evidence was identified that would require the recognition of any allowance for impairment losses on such asset or a provision for onerous agreement.
All concession contracts above, acquired up to the 2019 auction, provide for the right of compensation from concession-related assets at the end of their effective term. For contracts subject to periodic tariff revision, according to ANEEL regulations, yielding income on investments in expansion, enhancements and improvements is provided for.
Law No. 12.783/2013
The Extraordinary Shareholders Meeting of December 03, 2012 unanimously approved the extension of Concession Contract No. 059/2001, under Law No. 12.783/2013, to December 2042, ensuring the Company the right to receive the amounts relating to NI (*) and SE assets (**).
The amounts relating to NI assets, equivalent to R$2,891,291, according to Inter-ministry Ruling No. 580, were received between 2013 and 2015 (note 7).
For the SE amounts, ANEEL Order No. 1484/17, of May 30, 2017, recognized as the total value of the assets the amount of R$4,094,440 as of December 31, 2012. The initial impact of RBSE amounts was accounted for in September 2016, and the additional value recognized by ANEEL was recognized during the second quarter of 2017 and is presented as “Concession assets” (note 7 (a) (ii)).
Under ANEEL Technical Note No.108/2020 – SGT/ANEEL, of June 25, 2020, the RAP amounts were recalculated as from the 2020/2021 cycle, including the portion of the remuneration of cost of capital (Ke) (note 7), and the effects of the preliminary injunctions, which prevented Ke from being paid, were reversed. Such amounts were included in the calculation of the RTP (note 25.3(b)) and approved by ANEEL’s Executive Board under Confirmation Resolution No. 2.714/2020. Currently, there are two injunctions in force. On April 22, 2021, ANEEL judged the appeal filed by the Company against Confirmation Resolution No. 2.714/2020 and applied the reprofiling of the RBSE financial component (note 34).
(*) NI - facilities energized as of June 1, 2000. (**) SE - facilities of nondepreciated assets existing on May 31, 2000.
2 Presentation of the interim financial information
2.1 Basis of preparation and presentation
The individual interim financial information, identified as “Parent”, and the consolidated interim financial information, identified as “Consolidated”, has been prepared and is presented in accordance with the accounting practices adopted in Brazil, which comprise the provisions set out by the Brazilian Corporate Law and the pronouncements, interpretations and guidelines issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (“CVM”), which are in conformity with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and disclose all relevant information for the interim financial information, and only this information, which is consistent with that used by Management in managing the Company.
Since there is no difference between the consolidated equity and consolidated profit or loss attributable to the Company’s owners, included in the consolidated interim financial information prepared in accordance with IFRS and the accounting practices adopted in Brazil, and the Parent’s equity and profit or loss, included in the individual interim financial information, the Company elected to present this individual and consolidated interim financial information as a single set, in a side-by-side format.
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information The individual and consolidated interim financial information was prepared at the historical cost, unless otherwise stated, as described in the accounting practices summarized below. The historical cost is generally based on the value of the consideration paid in exchange for an asset. Nonfinancial data included in this interim financial information, such as electric power volume and capacity, non- supplied power, contract information, projections, insurance and environment data, was not revised.
The interim financial information was approved and authorized for disclosure by the Board of Directors on April 29, 2021.
2.2 Representation on relevant information
In preparing this interim financial information, Management applied Technical Guidance OCPC 7 and CVM Decision No. 727/14 to primarily disclose relevant information that can help the users of the interim financial information to make decisions while ensuring that minimum requirements are met. In addition, Management represents that all relevant information is disclosed and corresponds to that used in managing the business.
2.3 Functional and presentation currency
The financial statements of the Parent and each of its subsidiaries, included in the consolidated interim financial information, are presented in reais, the currency of the main economic environment where the companies operate (“functional currency”).
2.4 Restatement of the interim financial information for the period ended March 31, 2020
On December 1, 2020, CVM issued Official Circular Letter CVM/SNC/SEP/No. 04/2020, providing guidelines on the application of significant aspects contained in CPC 47 (IFRS 15) and CPC 48 (IFRS 9) for electric power transmission companies, addressing manly the following matters: (i) determination and assignment of an infrastructure implementation margin over the term of the works; (ii) application of the implicit rate of discount for the concession assets under the contract;(iii) guidance on the classification of assets under Law No. 12.783 – SE as a contract asset; (iv) segregation in a specific line item in the statement of profit and loss of the revenue from remuneration of concession assets; and (v) recognition of the impacts of the Periodic Tariff Revision (RTP) due to the change in the regulatory base (BRR) or in the rate used to remunerate capital (regulatory WACC) in a line item below the operating margin.
To comply with CVM Official Circular Letter, the Company adjusted its accounting policies as of December 31, 2020, and, according to paragraph 14 of CPC 23/IAS 8 - Accounting policies, changes in estimates and errors, the following balances reported in the interim financial information as of March 31, 2020 were restated, as shown below: Parent Reported as of Impacts of Restated 03.31.2020 CVM Circ 04/20 03.31.2020 Statement of profit and loss Net operating revenue 577,770 4,807 582,577 Share of profit of investees 133,679 110,957 244,636 Other (186,592) - (186,592) Income tax and social contribution (132,403) (1,635) (134,038) Profit for the period 392,454 114,129 506,583
Statement of cash flows
Profit for the period 392,454 114,129 506,583 Deferred PIS and Cofins (taxes on revenue) 3,492 490 3,982 Deferred income tax and social contribution 56,538 1,635 58,173 Share of profit (loss) of investees (133,679) (110,957) (244,636) Concession asset 78,038 (5,297) 72,741 Other items not impacted (19,956) - (19,956) Net cash provided by operating activities 376,887 - 376,887 Cash used in investing activities (157,964) - (157,964) Cash used in financing activities (134,874) - (134,874) Changes in cash and cash equivalents 84,049 - 84,049
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information
Parent Reported as of Impacts of Restated 03.31.2020 CVM Circ 04/20 03.31.2020
Statement of value added
Gross value added (revenues) 656,866 5,297 662,163 Retentions (4,319) - (4,319) Net wealth created 652,547 5,297 657,844 Wealth received in transfer (share of profit of investees) 311,182 110,957 422,139
Total wealth for distribution 963,729 116,254 1,079,983
Wealth distributed 963,729 116,254 1,079,983
Federal taxes, fees and contributions 272,476 2,125 274,601 Retained earnings for the period 392,454 114,129 506,583 Other items not impacted 298,799 - 298,799
Consolidated Reported as of Impacts of Restated 03.31.2020 CVM Circ 04/20 03.31.2020
Statement of profit and loss
Net operating revenue 805,503 46,624 852,127 Share of profit (loss) of investees 62,516 70,476 132,992 Other (312,984) - (312,984) Income tax and social contribution (147,084) (2,971) (150,055)
Profit for the period 407,951 114,129 522,080
Statement of cash flows
Profit for the period 407,951 114,129 522,080 Deferred PIS and Cofins (taxes on revenue) (5,484) 2,074 (3,410) Deferred income tax and social contribution 69,490 2,971 72,461 Share of profit (loss) of investees (62,516) (70,476) (132,992) Concession asset (90,340) (48,698) (139,038) Other items not impacted 18,273 - 18,273 Net cash provided by operating activities 337,374 - 337,374 Cash used in investing activities (9,329) - (9,329) Cash used in financing activities (166,738) - (166,738)
Changes in cash and cash equivalents 161,307 - 161,307
Statement of value added
Gross value added (revenues) 744,039 48,698 792,737 Retentions (4,468) - (4,468) Net wealth created 739,571 48,698 788,269 Wealth received in transfer (share of profit of investees) 256,303 70,476 326,779
Total wealth for distribution 995,874 119,174 1,115,048
Wealth distributed 995,874 119,174 1,115,048
Federal taxes, fees and contributions 282,806 5,045 287,851 Retained earnings for the period 392,454 114,129 506,583 Other items not impacted 320,614 - 320,614
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information
2.5 Critical accounting judgments and key estimates and assumptions
According to CVM/SNC/SEP Official Circular Letter No. 03/2011 and CPC 21 (R1) Interim Financial Reporting, the Company declares that the significant judgments, accounting estimates and assumptions, as well as the significant accounting policies, are in line with those adopted in preparing the 2020 annual financial statements.
2.6 Consolidation procedures
The consolidated interim financial information includes the interim financial information of the Company and its subsidiaries.
Control is obtained when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power in the investee.
Subsidiaries are fully consolidated from the date control is obtained until the date on which control ceases to exist.
As of March 31, 2021 and December 31, 2020, equity interests in subsidiaries were as follows:
Reporting Equity interest - %
date 03.31.2021 12.31.2020 Subsidiariess Interligação Elétrica Serra do Japi S.A. (Serra do Japi) 03.31.2021 100 100 Interligação Elétrica de Minas Gerais S.A. (IEMG) 03.31.2021 100 100 Interligação Elétrica Norte e Nordeste S.A. (IENNE) 03.31.2021 100 100 Interligação Elétrica Pinheiros S.A. (Pinheiros) 03.31.2021 100 100 Interligação Elétrica do Sul S.A. (IESul) 03.31.2021 100 100 Evrecy Participações Ltda. (Evrecy) 03.31.2021 100 100 Interligação Elétrica Itaúnas S.A. (Itaúnas) 03.31.2021 100 100 Interligação Elétrica Tibagi S.A. (Tibagi) 03.31.2021 100 100 Interligação Elétrica Itaquerê S.A. (Itaquerê) 03.31.2021 100 100 Interligação Elétrica Aguapeí S.A. (Aguapeí) 03.31.2021 100 100 Interligação Elétrica Biguaçu S.A. (Biguaçu) 03.31.2021 100 100 Interligação Elétrica Itapura S.A. (Itapura) 03.31.2021 100 100 Interligação Elétrica Riacho Grande S.A. (Riacho Grande) 03.31.2021 100 100 Piratininga-Bandeirantes Transmissora de Energia S.A (PBTE) (iii) 03.31.2021 100 - SF Energia Participações S.A. 03.31.2021 100 - Fundo de Investimento Referenciado DI Bandeirantes (i) 03.31.2021 17 (*) 13 Fundo de Investimento Xavantes Referenciado DI (ii) 03.31.2021 20 (*) 36 Fundo de Investimento Assis Referenciado DI 03.31.2021 100 (*) 100 Fundo de Investimento Barra Bonita 03.31.2021 100 (*) 100
(*) Includes direct equity interest through the Company and indirect equity interest through the subsidiaries.
(i) As of March 31, 2021, jointly controlled subsidiary Interligação Elétrica do Madeira (IEMadeira) has a 83% equity interest in Fundo de Investimento Referenciado DI Bandeirantes.
(ii) As of March 31, 2021, jointly controlled subsidiaries Interligação Elétrica do Madeira (IEMadeira), Interligação Elétrica Paraguaçu S.A (IEParaguaçu) and Interligação Aimorés S.A (Aimorés) have equity interests of 68%, 6% and 6%, respectively, in Fundo de Investimento Xavantes Referenciado DI.
Consequently, as of March 31, 2021, these equity interests have effect on noncontrolling interests in investment funds in the amount of R$355,926. Any changes to the regulation or structure of the funds must be aligned with and approved by CTEEP.
(iii) The Parent has a direct equity interest of 11.12% and an indirect equity interest of 88.88% by means of subsidiary SF Energia Participações S.A. The following procedures were adopted in preparing the consolidated interim financial information:
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ITR – Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Versão : 1 PAULISTA Notes to interim financial information • elimination of subsidiaries’ equity; • elimination of share of profit (loss) of investees; and • elimination of assets and liabilities, and income and expenses between consolidated entities.
The accounting policies were consistently applied to all consolidated companies, and the fiscal year of these companies coincides with that of the Parent.
Noncontrolling interests are reported as part of equity and profit and presented separately in the consolidated interim financial information.
Jointly controlled entities are accounted for under the equity method, as required by CPCs 18 (R2), 19 (R2) and 36 (R3), and a shareholders’ agreement governing the shared control has been executed.
As of March 31, 2021 and December 31, 2020, equity interests in jointly controlled entities are as follows:
Equity interest % Reporting date 03.31.2021 and 12.31.2020
Jointly controlled subsidiaries
Interligação Elétrica do Madeira S.A. (IEMadeira) 03.31.2021 51 Interligação Elétrica Garanhuns S.A. (IEGaranhuns) 03.31.2021 51 Interligação Elétrica Paraguaçu S.A. (IEParaguaçu) 03.31.2021 50 Interligação Elétrica Aimorés S.A. (IEAimorés) 03.31.2021 50 Interligação Elétrica Ivaí S.A. (IEIvaí) 03.31.2021 50
3 Significant accounting policies The Company represents that the significant accounting policies presented in note 3 to the 2020 annual financial statements remain effective for this interim financial information, which must be read in conjunction with those financial statements.
4 New and revised standards and interpretations:
(a) Revised and Effective:
• CPC 15 (R1) (IFRS 3) - Definition of a business
• CPC 00 (R2) - Conceptual financial reporting framework
CVM Decision No. 854, approving revisions of technical pronouncements:
• CPC 38 (IAS 39) Financial Instruments: Recognition and measurement • CPC 40 (R1) / IFRS 7 - Financial Instruments: Disclosures • CPC 48 (IFRS 9) - Financial Instruments • CPC 26 (R1) (IAS 1) and (CPC 23) (IAS 8) - Definition of material
The Management of the Company and its subsidiaries evaluated the abovementioned standards and did not identify material impacts on this interim financial information.
(b) Revised and not yet effective
• CPC 11 (IFRS 17) - Insurance Contracts • CPC 26 (IAS 1) - Presentation of financial statements (classification of liabilities as current or non-current)
Except for IFRS 17 – Insurance Contracts, not yet issued in Brazil, the overall objective of which is to provide a model to account for insurance contracts that is more helpful and consistent for insurance companies, which does not apply to the Company and its subsidiaries. The Management of the Company and its subsidiaries is analyzing the impacts of the other standards mentioned above.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
5 Cash and cash equivalents
Parent Consolidated
% of CDI 03.31.2021 12.31.2020 03.31.2021 12.31.2020
Cash and banks 3,455 3,035 83,724 18,195 Cash equivalents CDB (a) 101.9% 707,932 2,017,084 768,166 2,047,352 Repurchase transactions (b) 96.5% - - 1,798 1,790
711,387 2,020,119 853,688 2,067,337
Cash equivalents are measured at fair value through profit or loss and have daily liquidity.
The Company’s Management’s analysis of these assets’ exposure to interest rate risks, among others, is disclosed in note 31 (c).
(a) Securities issued by banks at rates pegged to the variation of the Interbank Certificate of Deposit (CDI).
(b) Repurchase transactions refer to securities issued by banks for repurchase by the bank and resale by the Company, at rates pegged to the variation of the Interbank Certificate of Deposit (CDI) at preset maturity dates, backed by government bonds registered with B3.
6 Short-term investments
Parent Consolidated Parent Consolidated
Average yield in the portfolio in 2021 % of CDI 03.31.2021 12.31.2020 03.31.2021 12.31.2020
Fundo de Investimento Referenciado DI Bandeirantes 25,482 1,931 219,574 140,561 Fundo de Investimento Xavantes 116.0% 110.2% Referenciado DI 22,647 15,385 208,343 260,401 Fundo de Investimento Assis Referenciado DI 14,191 30,823 14,191 30,823 Fundo de Investimento Barra Bonita Referenciado DI 7,249 3,648 27,625 21,772
69,569 51,787 469,733 453,557
(*) Investments funds are consolidated as described in note 2.6.
The Company, its subsidiaries and jointly controlled subsidiaries concentrated their short-term investments in the following investment funds:
• Fundo de Investimento Referenciado DI Bandeirantes: an investment fund organized exclusively for the Company, its subsidiaries and jointly controlled entities, managed by Banco Bradesco, having its portfolio comprised of units in Fundo de Investimento Referenciado DI Coral.
• Fundo de Investimento Xavantes Renda Fixa Referenciado DI: an investment fund organized exclusively for the Company, its subsidiaries and jointly controlled entities, managed by Banco Itaú-Unibanco, having its portfolio comprised of units in Fundo de Investimento Special Referenciado DI (Corp Referenciado DI merged by Special DI).
• Fundo de Investimento Assis Referenciado DI: an investment fund organized exclusively for the Company, its subsidiaries and jointly controlled entities, managed by Banco Santander, having its portfolio comprised of units in Fundo de Investimento Santander Renda Fixa Referenciado DI.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
• Fundo de Investimento Barra Bonita Renda Fixa Referenciado DI LP: an investment fund organized exclusively for the Company, its subsidiaries and jointly controlled entities, managed by Banco do Brasil, having its portfolio comprised of units in Fundo de Investimento Top DI FI Referenciado DI LP.
Said investment funds are highly liquid, readily convertible into a cash amount, regardless of the assets, and any risk of change in the amount will be directly linked to the composition of the funds, which holds government bonds and private securities. Portfolios are comprised of fixed income securities, such as federal government bonds and private securities, in order to follow the variation of the Interbank Certificates of Deposits (CDI) and/or of the SELIC rate.
The Company’s Management’s analysis of these assets’ exposure to interest rate risks, among others, is disclosed in note 31 (c).
7 Concession asset
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Financial assets O&M services (a) 154,526 146,905 209,350 179,839
Contract asset Asset under Law No. 12.783 - SE (b) 9,068,017 9,264,491 9,068,017 9,264,491 Infrastructure implementation (c) 3,956,526 3,824,165 10,001,323 7,478,497 13,024,543 13,088,656 19,069,340 16,742,988
13,179,069 13,235,561 19,278,690 16,922,827
Current 2,550,680 2,533,173 3,057,083 2,804,373
Noncurrent 10,628,389 10,702,388 16,221,607 14,118,454
(a) O&M - Operation and Maintenance refers to the portion of revenues monthly and separately informed by the ONS for compensation of O&M services, with an average collection period below 30 days.
(b) Receivables under Law No. 12.783 - amounts receivable relating to investments under Concession Agreement No. 059/2001, which was extended under Law No. 12.783 and had the right to the receivable subdivided into SE and NI:
NI facilities
The compensation relating to NI facilities was received partly in cash partly in installments by means of transfer made to the company by Eletrobras. However, the adjustment approach to be applied on the remaining installments is being discussed in court (note 21).
SE facilities
The amounts receivable relating to SE facilities have specific characteristics in view of the renewal conditions established in Administrative Ruling No. 120/16 and amounts regulated by ANEEL Technical Note No. 336/2016, and are treated as a contract asset segregated from the other assets of the Company. The future cash flow from RBSE is comprised of: (i) the portion relating to cost of equity capital (Ke) (financial component); and (ii) the portion relating to the remuneration base (economic component), which have different realization terms and whose amounts were remeasured in June 2020, according to the Periodic Tariff Revision defined in Confirmation Resolution No. 2.714, of June 30, 2020.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information Since most of the injunctions that prohibited ANEEL from considering the portion relating to the cost of equity capital (Ke) in the Annual Permitted Revenue (RAP) were overruled, Confirmation Resolution No. 2.714, of June 30, 2020, includes the Ke portions relating to tariff cycles 2017/2018, 2018/2019 and 2019/2020, which will be received through the adjustment portion (PA) mechanism in the three subsequent cycles, beginning July 2020.
The retrospective amounts relating to tariff cycles 2017/2018, 2018/2019 and 2019/2020 were subject to adjustment based on the IPCA (Extended Consumer Price Index). The Company understands that it is entitled to compensation based on actual Ke and, in conjunction with entities in the same sector, filed an administrative appeal with the Regulatory Body (25.3 (a)).
(c) Infrastructure implementation - flow of receipt of expected cash relating to the remuneration from the implementation investments, enhancements and improvements in the electric power transmission infrastructure, discounted to present value and, when applicable, includes the portion of the investments made and not amortized through the end of the concession term (reversible assets).
The aging list of trade receivables is as follows:
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Current 13,168,042 13,224,622 19,266,568 16,910,782
Up to 30 days past 234 68 260 114 due 31 to 60 days 92 37 103 42 61 to 360 days 353 420 400 460 Over 361 days (i) 10,348 10,414 11,359 11,429
11,027 10,939 12,122 12,045
13,179,069 13,235,561 19,278,690 16,922,827
(i) Some agents in the system challenge the billed amounts relating to the Basic Grid in court. By virtue of such disputes, judicial deposits are made by such agents, classified as noncurrent receivables. The Company billed the amounts according to authorizations granted by regulatory agencies and, therefore, no provision for risks relating to this discussion is recognized.
The Company does not have any history or expectation of losses on collection of trade receivables, which are collateralized by letters of guarantee and/or guarantee agreements managed by the National System Operator (ONS) and, therefore, no allowance for expected credit losses was recognized.
Changes in trade receivables are as follows: Parent Consolidated
Balances at 12.31.2020 13,235,561 16,922,827
Infrastructure revenue (note 25.1) 95,949 235,645 Remuneratin of concession assets (note 25.1) 502,312 757,234 O&M revenues (note 25.1) 298,732 318,120 Efficiency gain (note 25.1) 5,654 20,922 Business combination (*) - 2,092,261 Receipts (959,139) (1,068,319)
Balances at 03.31.2021 13,179,069 19,278,690
(*) amount derived from the acquisition of PBTE (note 11).
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
8 Receivables - Finance Department
Parent and Consolidated
03.31.2021 12.31.2020
Payroll processing - Law No. 4819/58 (a) 2,041,491 1,999,993 Labor claims - Law No. 4819/58 (b) 296,267 295,261 Allowance for expected credit losses (c) (516,255) (516,255)
1,821,503 1,778,999
(a) Refers to amounts receivable from the State of São Paulo for settlement of the payroll relating to the retirement and pension supplementation plan governed by State Law No. 4.819/58, in the period from January 2005 to March 2021. The increase in relation to prior year is due to compliance with the court decision issued by the 49th Labor Court, currently in progress at the Common Court, whereby CTEEP, as the defendant, monthly transfers funds to VIVEST (former “FUNCESP”) to process payments to retired employees and pensioners (note 32 (d)).
(b) Refer to certain labor claims settled by CTEEP, upon a court order, relating to employees retired under the terms of State Law No. 4.819/58, which should be borne by the State Government of São Paulo.
(c) The expected loss recognized was based on decisive factors such as the extension of the expected term for realization of part of accounts receivable from the State of São Paulo and on the status of pending litigation. The Company monitors the progress of this issue and regularly revises the provision, evaluating the need for supplementing or reversing the provision based on legal events that may change the opinion of its advisors. Through March 31, 2021, no events occurred that would indicate the need to change the expected loss (impairment).
9 Recoverable taxes
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Prepaid income tax 17,789 640 26,708 876 Prepaid social contribution 8,622 - 11,969 125 Withholding income tax 3,343 1,449 5,338 3,260 Withholding social security contribution 261 30 339 30 COFINS(tax on revenue) 15,865 14,547 15,968 14,604 PIS (tax on revenue) 3,443 3,157 3,469 3,173 Taxes in installments 4,137 4,124 4,137 4,124 Other 4,116 2,464 4,267 2,615
57,576 26,411 72,195 28,807
PAGE: 38 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
10 Sureties and escrow deposits
Sureties and escrow deposits are recorded in noncurrent assets, given the uncertainties around the outcome of the related litigation.
Deposits are recognized at nominal value and adjusted for inflation based on the Benchmark Rate (TR) for labor and social security deposits and on SELIC for tax and regulatory deposits. Balance is broken down as follows:
Parent Consolidate d
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Judicial deposits - labor claims (note 20 (a) (i)) 29,060 29,038 29,109 29,087 PIS/COFINS (a) 12,603 12,559 12,603 12,559 Assessments - ANEEL (b) 2,081 2,072 2,081 2,072 Other 407 401 3,391 401
44,151 44,070 47,184 44,119
(a) In March 2015, through Decree No. 8426/15, the PIS/COFINS rate applicable on finance income was reinstated at 4.65% effective July 1, 2015. For the period from July 2015 to February 2018, the Company filed a lawsuit seeking the non-levy of such tax based on the fact that the levy could only be required by Law, as set forth in article 150, item I, of the Federal Constitution, and that Decree No. 8.426/15 also violates the principle of non- cumulative taxation established in paragraph 12 of article 194.
(b) Refers to deposits for the purpose of voiding ANEEL assessment notices which the Company has challenged.
11 Investments
(a) Breakdown of share of profit of investees:
Parent Consolidated
03.31.2020 03.31.2020 03.31.2021 (Restated) 03.31.2021 (Restated)
Share of profit of investees 278,595 244,636 124,176 132,992 Realization of control acquisition (11 b) 565 - - -
279,160 244,636 124,176 132,992
PAGE: 39 of 108
Notes to the Interim Financial Information
(b) Changes in investments
Parent
Realization Financial Balances at Capital Share of profit of control Control instrument Balances at 12.31.2020 payment (loss) of acquisition acquisition adjustment 03.31.2021 investees
IESerra do Japi 471,415 - 24,157 - - - 495,572 IEMG (*) 75,791 1,721 1,165 426 - - 79,103 IENNE 315,010 - 10,550 - - - 325,560 IEPinheiros 537,238 - 25,590 - - - 562,828 Evrecy (*) 66,530 8,148 (45) (622) - - 74,011 IEItaúnas 267,928 12,318 9,252 - - - 289,498 IETibagi 136,524 16,752 10,893 - - - 164,169 IEItaquerê 490,055 3 23,256 - - - 513,314 IEItapura 141,331 10,021 362 - - - 151,714 IEAguapeí 471,068 16,305 40,139 - - - 527,512 IESul (*) 120,454 - 9,581 761 - - 130,796 IEBiguaçu 103,481 56,265 (4,806) - - 5,928 160,868 IERiacho Grande 558 - - - - 20,559 21,117 PBTE (*) - - 482 - 174,753 - 175,235 SF Energia (*) - - 3,843 - 1,396,312 - 1,400,155 IEMadeira 1,650,121 - 73,080 - - - 1,723,201 IEGaranhuns 377,759 - 16,540 - - - 394,299 IEParaguaçu 384,022 10,400 6,852 - - - 401,274 IEAimorés 254,376 8,600 4,760 - - - 267,736 IEIvaí 191,724 22,944 - - - 214,668
Total 6,055,385 140,533 278,595 565 1,571,065 26,487 8,072,630
(*) The adjusted equity includes the fair value adjustments according to appraisal report as of the acquisition date.
PAGE: 40 of 108
Notes to the Interim Financial Information
Consolidated
Balances at Capital Share of profit Balances at 12.31.2020 payment of investees 03.31.2021
IEMadeira 1,650,121 - 73,080 1,723,201 IEGaranhuns 377,759 - 16,540 394,299 IEParaguaçu 384,022 10,400 6,852 401,274 IEAimorés 254,376 8,600 4,760 267,736 IEIvaí 191,724 - 22,944 214,668
Total 2,858,002 19,000 124,176 3,001,178
PAGE: 41 of 108
Notes to the Interim Financial Information
(c) Information on investments in subsidiaries
Share of paid-in Number of common capital Paid-in Adjusted Gross Profit Reporting date shares % capital Assets Liabilities Equity equity (*) revenue (loss)
IESerra do Japi 03.31.2021 130,857,000 100.0 130,857 569,767 74,195 495,572 - 28,030 24,157 12.31.2020 130,857,000 100.0 130,857 546,846 75,431 471,415 - 20,022 17,457
IEMG 03.31.2021 103,415,000 100.0 103,415 129,016 25,225 103,791 79,103 12,322 1,165 12.31.2020 101,695,000 100.0 101,695 139,357 38,450 100,907 75,791 4,926 4,043
IENNE 03.31.2021 338,984,000 100.0 338,984 506,885 181,325 325,560 - 21,754 10,550 12.31.2020 338,984,000 100.0 338,984 500,951 185,941 315,010 - 50,027 10,729
IEPinheiros 03.31.2021 300,910,000 100.0 300,910 637,082 74,254 562,828 - 31,578 25,590 12.31.2020 300,910,000 100.0 300,910 614,631 77,393 537,238 - 22,002 18,317
Evrecy 03.31.2021 29,660,000 100.0 29,660 71,058 7,839 63,219 74,011 10,598 (45) 12.31.2020 21,512,367 100.0 21,512 63,131 8,015 55,116 66,530 3,068 1,839
IEItaúnas 03.31.2021 188,149,000 100.0 188,149 314,564 25,066 289,498 - 22,374 9,252 12.31.2020 175,831,000 100.0 175,831 290,304 22,376 267,928 - 23,093 4,369
IETibagi 03.31.2021 113,174,000 100.0 113,174 183,299 19,130 164,169 - 16,276 10,893 12.31.2020 96,422,000 100.0 96,422 170,453 33,929 136,524 - 49,111 606
IEItaquerê 03.31.2021 206,093,000 100.0 206,093 576,694 63,380 513,314 - 25,892 23,256 12.31.2020 206,093,000 100.0 206,093 558,274 68,219 490,055 - 7,302 5,746
IEItapura 03.31.2021 133,067,000 100.0 133,067 165,469 13,755 151,714 - 13,863 362 12.31.2020 123,046,000 100.0 123,046 155,299 13,968 141,331 - 27,961 3,693
(*) The adjusted equity includes the fair value adjustments according to appraisal report as of the acquisition date.
PAGE: 42 of 108
Notes to the Interim Financial Information
(Continued) Share Number of paid-in of capital Paid-in Adjusted Profit comm on Reporting shares % capital Assets Liabilities Equity equity (*) Gross revenue (loss) date IEAguapeí 03.31.2021 320.733.000 100.0 320,733 607,016 79,504 527,512 - 81,557 40,139 12.31.2020 304.429.000 100.0 304,429 526,533 55,465 471,068 - 93,213 (431)
IESul 03.31.2021 220.660.000 100.0 220,660 224,893 40,563 184,330 130,796 9,162 9,581 12.31.2020 220.660.000 100.0 220,660 219,469 44,719 174,750 120,454 (2,830) 2,120
IEBiguaçu 03.31.2021 159.399.000 100.0 159,399 173,381 12,513 160,868 - 43,799 (4,806) 12.31.2020 103.133.000 100.0 103,133 120,810 17,329 103,481 - 2,150 183
IE Riacho Grande 03.31.2021 - 100.0 173,381 12,513 160,868 - - 12.31.2020 - 100.0 - 577 19 558 - - -
PBTE 03.31.2021 410.000 100.0 2,202,611 1,119,887 1,082,724 - 32,782 4,330
SF Energia 03.31.2021 349.000 100.0 962,325 67,433 894,892 - - 3,843
(*) The adjusted equity includes the fair value adjustments according to appraisal report as of the acquisition date.
PAGE: 43 of 108
Notes to the Interim Financial Information
(d) Information on investments in jointly controlled subsidiaries
03.31.2021 12.31.2020
IEMadeira IEGaranhuns IEParaguaçu IEAimorés IEIvaí IEMadeira IEGaranhuns IEParaguaçu IEAimorés IEIvaí
Current assets Cash and cash equivalents 47,977 22,671 9,663 9,721 807,305 14,673 14,595 4,433 10,821 1,039,553 Short-term investments 329,642 - 13,324 12,960 - 350,636 - 9,704 5,186 - Concession asset 441,270 95,482 - - 435,367 93,321 - - - Other assets 59,538 5,891 2,076 1,860 8,929 51,264 5,285 1,910 1,606 4,910 Noncurrent assets Concession asset 5,653,488 1,014,657 1,056,069 690,117 1,921,282 5,562,015 994,365 1,028,124 669,582 1,549,158 Other noncurrent assets 219,479 40,259 998 734 68,088 253,157 41,086 760 617 46,499
Current liabilities Borrowings and financing 181,579 33,390 50 50 50 182,025 33,394 50 50 50 Debentures 56,418 - - 75,874 - - - - Other liabilities 138,499 20,616 13,730 9,948 183,969 126,681 21,260 20,808 15,993 211,242 Noncurrent liabilities - borrowings and financing 1,155,095 145,255 384 404 384 1,194,090 153,431 397 418 397 Debentures 317,628 - - - 1,794,792 361,226 - - - 1,727,550 Other liabilities 1,523,349 206,563 265,418 169,519 397,074 1,480,018 183,424 255,632 162,599 317,433 Equity 3,378,826 773,136 802,548 535,471 429,335 3,247,198 757,143 768,044 508,752 383,448 03.31.2021 03.31.2020 IEMadeira IEGaranhuns IEParaguaçu IEAimorés IEIvaí IEMadeira IEGaranhuns IEParaguaçu IEAimorés IEIvaí
Net operating revenue 227,235 44,232 25,360 18,636 337,703 176,136 34,044 131,151 84,547 72,640 Infrastructure and O&M costs 10,432 (715) (4,150) (3,857) (204,692) (6,493) (920) (124,007) (80,220) (68,724) General and administrative (5,335) (3,067) (559) (471) (698) 1,392 (2,816) (532) (417) (686) expenses Finance income (costs) (43,690) (2,602) 103 107 (62,794) (35,415) (3,055) 241 118 (26,857) Other operating income (expenses) (75) (1) Income tax and social contribution (45,273) (5,416) (7,051) (4,895) (23,631) (19,748) (2,936) (2,423) (1,465) (1,325) Profit (loss) 143,294 32,431 13,703 9,520 45,888 115,872 24,317 4,430 2,563 (24,952) CTEEP’s equity interest (%) 51% 51% 50% 50% 50% 51% 51% 50% 50% 50%
PAGE: 44 of 108
Notes to the Interim Financial Information
(i) Subsidiaries and jointly controlled subsidiaries
Operating agreements Start of commerc Installed Extension of Company Incorporation Agreement Segment ial power Transmission Lines lines Region Operating operations Substations
IESerra do Japi 07.01.2009 026/2009 Transmission 2012 Jandira and Salto 2.000 MVA Botucatu – Chavantes C4 137.0 São Paulo IEMG 12.13.2006 004/2007 Transmission 2009 - - Neves 1 – Mesquita 172.0 Minas Gerais Maranhão, Piauí, and IENNE 12.03.2007 001/2008 Transmission 2010 - - Colinas – São João do Piauí 710.0 Tocantins Piratininga ll, Mirassol ll, Getulina, Araras, Atibaia IEPinheiros 07.22.2008 015/2008 Transmission 2010 II, and Itapeti 4.200 MVA Interlagos – Piratininga II 0.72 São Paulo Aimorés, Conselheiro Pena Espírito Santo and Evrecy 11.14.2006 020/2008 Transmission 2008 and Mascarenhas 450 MVA Governador Valadares – Mascarenhas 163.0 Minas Gerais Curitiba, Forquilhinha, Jorge Lacerda, Joinville, Nova Santa Rita – Scharlau, Joinville Norte – Paraná, Santa Nova Santa Rita, Scharlau Curitiba, Jorge Lacerda B – Siderópolis and Catarina and Rio IESul 07.23.2008 016/2008 Transmission 2010 2, Siderópolis 900 MVA Siderópolis – Lajeado Grande 167.0 Grande do Sul -125 a IEItapura 04.11.2017 042/2017 Transmission 2019 Bauru +250Mvar - - São Paulo IEItaquerê 04.11.2017 027/2017 Transmission 2020 Araraquara 2 1.800 MVA - - São Paulo Rondônia, Mato Porto Velho Grosso, Goiás, rectifying station Minas Gerais and IE Madeira 12.18.2008 013/2009 Transmission 2013 and 7.464,0 MVA Porto Velho – Araraquara II 2,385.0 São Paulo Araraquara reversing station Luiz Gonzaga – Garanhuns, Garanhuns – Pau Paraíba, Ferro, Garanhuns – Campina Grande III, Pernambuco e IE Garanhuns 10.07.2011 022/2011 Transmission 2015 Garanhuns ll and Pau 2.100 MVA Garanhuns – Angelim, Angelim I 633.0 Alagoas Ferro IE Tibagi 04.11.2017 026/2017 Transmission 2020 Rosana 500 MVA Nova Porto Primavera – Rosana CD 121.0 São Paulo and Paraná Marechal Rondon – Taquaruçu e Ilha Solteira IEAguapeí (*) 04.11.2017 046/2017 Transmission 2021 Baguaçu and Alta Paulista 1.400 MVA – Bauru C1/C2 111.0 São Paulo Bandeirante – Piratininga II, C1/ C2, PBTE (**) 07.25.2016 012/2016 Transmission 2020 - - subterrâneas 30.0 São Paulo (*) Started commercial operations on January 22, 2021 (Alta Paulista) and March 04, 2021 (Baguaçu), six months earlier than ANEEL´s estimated date. (**) A 15km double circuit
PAGE: 45 of 108
Notes to the Interim Financial Information
Pre-operating agreements Expected Installed start of power Extension Estimated Contract executtion Company Incorporation Agreement Segment operations (*) Substations Transmission lines of lines Region investment (**) date 1.200 Espírito
IEItaúnas 01.12.2017 018/2017 Transmissio 60 months João Neiva 2 MVA Viana 2 - João Neiva 2 79.0 Santo R$297,819 02.10.2017 n IEItapura 1.200 (***) 04.11.2017 021/2018 Transmissio 48 months Lorena MVA - 6.0 São Paulo R$237,947 09.21.2018 n 48 months 300 Santa IEBiguaçu 07.06.2018 012/2018 Transmissio 60 months Ratones MVA - 57.0 Catarina R$641,382 09.21.2018 n 2.700 Caxias Norte - Caxias 6 MVA C1 Caxias Norte - Vinhedos C1 Rio Caxias Norte - Monte Grande Evrecy 12.19.2019 001/2020 Transmissio 60 months Caxias Norte Claro 169.0 do Sul R$681,550 03.20.2020 n - Mato Grosso do Ilha Solteira - Três Sul and São IETibagi 12.19.2019 006/2020 Transmissio 42 months - Irmãos C2 37.0 Paulo R$98,797 03.20.2020 n Nova Ponte 1.600 Araxá 3 MVA Uberlândia 10 and Nova Ponte - Araxá 3 IEMG Monte Alegre Nova Ponte - Minas 12.19.2019 007/2020 Transmissio 60 months de Minas 2 Uberlândia 10 173.0 Gerais R$553,567 03.20.2020 n 800 MVA Miguel Reale - São Caetano do Sul, C1/C2; Sul - São Caetano do Sul, C1/C2; Trechos LT entre SE Sul - LT IERiacho São Caetano Ibiuna - Tijuco Preto Grande 12.17.2020 005/2021 Transmissio 60 months do Sul C2 63.0 São Paulo R$1,140,629 03.31.2021 n
PAGE: 46 of 108
Notes to the Interim Financial Information
Pre-operating agreements
Expected start of Installed Transmission Extension Estimated Contract execution Company Incorporation Agreement Segment operations (*) Substations power lines of lines Region investment (**) date
- Bahia and Poções III – Padre Minas IEParaguaçu 11.18.2016 003/2017 Transmission 60 months - Paraíso 2 C2 338.0 Gerais R$509,595 02.10.2017 - Padre Paraíso 2 – Governador Minas IEAimorés 11.18.2016 004/2017 Transmission 60 months - Valadares 6 C2 208.0 Gerais R$341,118 02.10.2017 2.988 MVA Guaíra – Sarandi, Guaíra, Foz do Iguaçu – Sarandi Guaíra, Londrina – and Sarandi, Sarandi – Paranavaí IEIvaí (***) 05.17.2017 022/2017 Transmission 60 months Norte Paranavaí Norte 599.0 Paraná R$1,936,474 08.11.2017
(*) Term for placement into operation as from the contract execution date, according to ANEEL’s estimate. (**) Investment according to ANEEL’s estimate. (***) Double circuit.
PAGE: 47 of 108
ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
(ii) Business combination
On December 2, 2020, the Company entered into the purchase and sale agreement with Wire Fundo de Investimento em Participações Multiestratégia e Fundo de Investimento em Participações em Infraestrutura Kavom for the acquisition, directly and indirectly, of all shares of Piratininga - Bandeirantes Transmissora de Energia S.A. (PBTE). The shares in PBTE were indirectly acquired through the acquisition of all shares in the capital of its Parent, SF Energia Participações S.A., for the final purchase price of R$1,571,065. The transaction was approved by the Brazilian Antitrust Authority (CADE) on January 19, 2021 and ratified by ANEEL on February 1, 2021. Control was transferred on March 2, 2021.
PBTE operates a 30km underground transmission line in the city of São Paulo, which was placed into operation in April 2020, interconnecting CTEEP´s substations Piratininga II and Bandeirantes.
The fair value of the assets acquired and liabilities assumed and the concession intangible assets were preliminarily defined for PBTE and SF Energia by an independent consulting firm based on the statement of financial position as of February 28, 2021 and shown below:
Pirantininga – Bandeirantes Transmissora de Energia S.A. (PBTE)
Carrying amount Adjustments to fair Assets and value liabilities at 02.28.2021 - preliminary at fair value
Cash and cash equivalents 67,555 - 67,555 Trade receivables (concession asset) 2,092,261 - 2,092,261 Recoverable taxes 12,201 - 12,201 Other assets 3,307 - 3,307 Concession intangible assets (note 13) - 493,129 493,129
2,175,324 493,129 2,668,453
Borrowings and financing 373,537 - 373,537 Trade payables 2,456 - 2,456 Taxes payable 4,859 - 4,859 Deferred PIS and Cofins (taxes on revenue) 191,955 191,955 Other current liabilities 3,743 - 3,743 Deferred income tax and social contribution 520,380 - 520,380
1,096,930 - 1,096,930
Equity (*) 1,078,394 493,129 1,571,523
Interest acquired 11.12%
174,753
Amount paid (174,753)
(*) Equity at book value as of February 28, 2021 after adjustment to the accounting policies adopted by the Company and its subsidiaries for consolidation purposes. The differences in accounting policies resulted in the amount of R$216,644.
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Carrying amount Adjustments to fair Assets and SF Energia Participações S.A value liabilities
Investment 958,477 438,293 1,396,770 Concession intangible assets in the holding (note - 66,970 66,970 13)
958,477 505,263 1,463,740
Trade payables 74 - 74 Deferred income tax and social contribution 67,260 - 67,260 Other liabilities 94 - 94
67,428 - 67,428
Equity (*) 891,049 505,263 1,396,312
Interest acquired 100%
1,396,312
Amount paid (1,396,312)
(*) Equity at book value as of February 28, 2021 after adjustment of the accounting policies adopted by the Company and its subsidiaries for consolidation purposes. The differences in accounting policies resulted in the amount of R$216,644.
As a result of this transaction, the balance of the Company’s investment in PBTE and SF Energia reflects the fair value of the assets and liabilities, which differs from the book value of PBTE’s and SF Energia’s equity.
(iii) Jointly controlled subsidiary
Interligação Elétrica do Madeira S.A.
• Arbitration proceeding:
IE Madeira is a party to an arbitration proceeding at the Reconciliation and Arbitration Chamber of Fundação Getúlio Vargas, in Rio de Janeiro, against Transformadores e Serviços de Energia das Américas Ltda., formerly “Toshiba América do Sul Ltda.” (“Toshiba”), engaged in July 2010 to build approximately 900 km of IE Madeira transmission line, stretches 1A, 1B and 2B. On June 25, 2020, the Arbitration Court issued its final decision, after the clarification stage, and decided that IE Madeira shall pay Toshiba an indemnity of R$285,061, already adjusted for inflation based on IPCA plus late payment interest of 1% per month and a fine of 2%. IEMadeira recognized a provision to cover potential losses from this proceeding and, in August 2020, a settlement was made to pay the debt, 40% in cash and the remaining balance in 48 monthly installments plus inflation adjustment and interest. As of March 31, 2021, the outstanding balance totals R$163,795.
PAGE: 49 of 108
ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
12 Property and equipment
Refers mainly to chattels used by the Company and not related to the concession contract.
Parent
Aver age annual depreciation 03.31.2021 12.31.2020 rates
Accumulated Cost depreciation Net Net %
Land 2,060 - 2,060 2,060 - Buildings 1,246 (950) 296 299 4.00% Leases of buildings (i) 53,930 (8,873) 45,057 46,453 10.37% Machinery and equipment 8,068 (2,975) 5,093 5,089 5.51% Furniture and fixtures 13,178 (6,576) 6,602 6,696 3.89% IT equipment 21,842 (15,948) 5,894 6,319 11.46% Vehicles 10,196 (7,891) 2,305 2,669 14.29% Leases of vehicles (i) 17,694 (14,660) 3,034 4,463 17.63% Leasehold improvements 10,071 (839) 9,232 9,546 12.50% Property and equipment in progress 8,808 - 8,808 7,590
147,093 (58,712) 88,381 91,184
(i) Depreciation rate over the lease agreement term.
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Consolidated
Aver age annu al deprec iation 03.31.2021 12.31.2020 rates
Accumulated Cost depreciation Net Net %
Land 2,060 - 2,060 2,060 - Buildings 1,246 (950) 296 299 4.00% Leases of buildings (i) 55,837 (9,136) 46,701 48,147 10.37% Machinery and equipment 8,148 (2,983) 5,165 5,140 5.51% Furniture and fixtures 13,190 (6,577) 6,613 6,705 3.89% IT equipment 21,946 (16,000) 5,946 6,336 11.46% Vehicles 10,196 (7,891) 2,305 2,668 14.29% Leases of vehicles (i) 17,956 (14,921) 3,035 4,466 18.30% Leasehold improvements Property and equipment 10,071 (839) 9,232 9,546 12.50% in progress Land 8,842 - 8,842 7,624
149,492 (59,297) 90,195 92,991
(i) Depreciation rate over the lease agreement term.
Changes in property and equipment are as follows:
Parent
Balances at Write-offs / Balances at 12.31.2020 Depreciation Transfers 03.31.2021 Additions Land 2,060 - - - 2,060 Buildings 299 - (3) - 296 Leases of - buildings 46,453 (1,396) - 45,057 Machinery and - equipment (*) 5,089 (117) 121 5,093 Furniture and 6,696 - (127) 33 6,602 fixtures - IT 6,319 (585) 160 5,894 equipment Vehicles 2,669 - (364) - 2,305 Leases of - vehicles 4,463 (1,429) - 3,034 Leasehold - improvements 9,546 (314) - 9,232 Property and equipment in 7,590 1,384 - (166) 8,808 progress
91,184 1,384 (4,335) 148 88,381 (*) Transfer of R$151 from intangible assets. PAGE: 51 of 108
ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Consolidated
Balances at Write-offs/ Balances at 12.31.2020 Depreciation Transfers 03.31.2021 Addition s Land 2,060 - - - 2,060 Buildings 299 - (3) - 296 Leases of buildings 48,147 - (1,446) - 46,701 Machinery and equipment (*) 5,140 22 (118) 121 5,165 Furniture and fixtures 6,705 2 (127) 33 6,613 IT equipment 6,336 38 (588) 160 5,946 Vehicles 2,668 - (363) - 2,305 Leases of vehicles 4,466 - (1,431) - 3,035 Leasehold improvements 9,546 - (314) - 9.232 Property and equipment in progress 7,624 1,384 - (166) 8.842
92.991 1,446 (4,390) 148 90,195 (*) Transfer of R$151 from intangible assets.
13 Intangible assets
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
ERP-SAP and software (a) 12,883 12,257 13,648 13,084 Concession right of use generated in the acquisition of subsidiaries (b) - - 492,669 11,415
12,883 12,257 506,317 24,499
(a) Primarily refers to expenses incurred to upgrade ERP-SAP and software licenses, amortized on a straight-line basis over five years.
(b) Refers to concession intangible assets, calculated according to reports prepared by independent consultants, generated upon the acquisitions of subsidiaries Evrecy, IEMG, IESul, Piratininga (PBTE), and SF Energia which have as business basis prospect earnings during the concession exploitation term. The concession's intangibles are amortized according to the remaining periods of the concession contracts of the subsidiaries, as prescribed by ICPC 09 (R2) - Individual Financial Statements, Separate Financial Statements, Consolidated Financial Statements and Application of the Equity Method of Accounting. <} These are, Evrecy contract 020/2008 maturing on July 17, 2025, IEMG contract 004/2007 maturing on April 23, 2037, IESul contracts 013/2008 and 016/2008 maturing on April 15, 2038, and PBTE contract 012/2016 maturing on November 21, 2046.
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Changes in intangible assets are as follows:
Parent Consolidated
Balance at 12.31.2019 10,168 25,196
Additions 323 323 Amortization (594) (1.292)
Balance at 03.31.2020 9,897 24,227
Balance at 12.31.2020 12,257 24,499
Additions 1.440 561.550 Transfers (*) (151) (79.560) Amortization (663) (172)
Balance at 03.31.2021 12,883 506,317
(*) Transfer of R$151 to property and equipment and R$79,409 from concession asset.
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Notes to the Interim Financial Information
14 Borrowings and financing
Borrowings and financing are broken down as follows: a) Local Currency
Parent Consolidated Borrowin IRR Payment Collater Financial Agreement Company g amount Start date Charges p.a. Final date Purpose conditions al ratio (***) 03.31.2021 12.31.2020 03.31.2021 12.31.2020 BNDES TJLP + Quarterly 284,136 8.35% 03.15.29 1.80% p.a. interest 154,229 159,057 154,229 159,057 through Net Agreement 105,231 3.50% p.a. 3.60% 01.15.24 Pluriannual March 2015 Bank debt/EBITDA 28,912 31,455 28,912 31,455 13.2.1344.1 CTEEP Investment and payment guarante < 3.0 and Net 12.23.2013 (*) Plan 2012 - of principal e debt/Net debt 1,940 TJLP 6.17% 03.15.29 2015 and interest + Equity < 0.6 beginning April 2015 22 23 22 23 Principal and TJLP + Net 272,521 7.04% 03.15.32 monthly 214,001 218,877 214,001 218,877 Agreement Pluriannual Fiduciar debt/EBITDA 08.08.2017 2.62% p.a. interest 17.2.0291.2 CTEEP Investment y < 3.0 and Net beginning (*) Plan 2016 - assignm debt/Net debt April 15, 1,378 TJLP 4.98% 03.15.32 2019 ent + Equity < 0.6 28 29 28 29 2018 TJLP + Principal 7.55% 02.15.28 2.06% p.a. Finance and interest - - - 3,795 3,932 DSCR of at Projects of 168 monthly Agreement least 1.3 Pinheiros 23,498 Lot K - installments - 13.2.0650.1 08.13.2013 determined 3.50% p.a. 3.55% 04.15.23 Auction beginning annually 004/2008 March 15, 2014 - - 3,773 4,226 TJLP + Principal and 8.28% 05.15.26 Finance 2.62% p.a. interest - 168 - - 18,610 19,543 Projects of DSCR of at monthly Agreement Lots E, H least 1.3 Pinheiros 119,886 installments - 10.2.2034.1 12.30.2010 and K - determined 5.50% p.a. 5.78% 01.15.21 beginning Auction annually September 004/2008 15, 2011 - - - 838
PAGE: 54 of 108
Notes to the Interim Financial Information
Parent Consolidated Borrowi ng IRR Payment Collater Financial Agreement Company amount Start date Charges p.a. Final date Purpose conditions al ratio (***) 03.31.2021 12.31.2020 03.31.2021 12.31.2020 TJLP + Principal 8.20% 05.15.2026 1.95% p.a. Finance and interest - - - 19,916 20,881 DSCR of at Projects of 168 monthly Agreement IE Serra do least 1.2 93,373 Lot I - installments - 11.2.0842.1 Japi 10.28.2011 TJLP + determined 7.90% 05.15.2026 Auction beginning 1.55% p.a. annually 001/2009 June 15, 2012 - - 17,210 18,044 Principal and Finance interest - 168 DSCR of at Projects of monthly Agreement TJLP + least 1.3 IEMG 70,578 01.14.2009 7.93% 04.15.2023 Lot D - installments - 08.2.0770.1 2.39% p.a. determined Auction beginning annually 005/2006 May 15, 2009 - - - 12,324
5.5% p.a. 5.50% 01.15.2021 Principal and - - - 93 Finance interest - 168 DSCR of at Projects of monthly Agreement least 1.3 IESUL 18,166 12.21.2010 TJLP + Lot F - installments - 10.2.1883.1 7.72% 05.15.2025 determined 2.58% p.a. Auction beginning annually 004/2008 June 15, 2011 - - 3,181 3,372
3.0% p.a. 3.00% 04.15.2023 Principal and - - 2,483 2,781 Finance interest - 168 DSCR of at Projects of monthly Agreement least 1.3 IESUL 28,200 06.28.2013 TJLP + Lot I - installments - 13.2.0422.1 7.93% 02.2028 determined 2.58% p.a. Auction beginning annually 004/2008 May 26, 2014 - - 5,734 5,492 Eletrobrás CTEEP - - 8.0% p.a. 8.00% 11.15.2021 - - - - 15 19 15 19 Principal by CDI + final maturity CCB CTEEP 650,000 04.30.2020 3.90% 04.20.2022 - - - 652,877 653,317 652,877 653,317 2.45% p.a. and quarterly interest Principal and CDI+ CCB PBTE 365,000 07.02.2020 3.93% 07.07.2021 - interest by - - - - 374,800 - 1.60% final maturity Quarterly Finance interest Reserve Projects of through May 10.00 account BNB IENNE 220,000 05.19.2010 10.0% p.a. 05.19.2030 Lot A - 2012 and - - - 145,088 148,176 % held in Auction monthly BNB 004/2008 beginning June 2012
Total in local currency 1,050,084 1,062,777 1,644,674 1,302,929
Current 53,307 54,330 461,788 94,628
Noncurrent 996,777 1,008,447 1,182,886 1,208,301 (*) For purposes of BNDES calculation and to show that such ratios were reached, the Company consolidates all subsidiaries and jointly controlled subsidiaries (proportionately to its equity interest), provided that the equity interest held is equal or higher than 10%.
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
The noncurrent portion of borrowings and financing is as follows:
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
2022 686,426 698,096 707,886 731,628 2023 48,757 48,757 75,910 77,583 2024 39,429 39,429 66,293 66,293 2025 38,581 38,581 65,484 65,484 2026 38,581 38,581 59,704 59,704 2027 to 2031 140,154 140,154 202,759 202,759 2032 to 2032 4,849 4,849 4,850 4,850
996,777 1,008,447 1,182,886 1,208,301
Changes in borrowings and financing are as follows:
Parent Consolidated
Balances at 12.31.2019 1,062,512 1,347,376
Additions (i) 4,138 4,138 Repayments of principal (12,182) (22,728) Payments of interest (13,683) (19,404) Interest, inflation adjustments and exchange rate 191,834 196,984 changes Balances at 03.31.2020 1,232,619 1,506,366
Balances at 12.31.2020 1,062,777 1,302,929
Business combination (*) - 373,537 Repayments of principal (12,297) (31,807) Payments of interest (13,661) (18,697) Interest, inflation adjustments and exchange rate 13,265 18,712 changes Balances at 03.31.2021 1,050,084 1,644,674 (i) Refers to the borrowing made on August 8, 2017 under BNDES Agreement No. 17.2.0291.2 (*) Amount resulting from the business combination (acquisition of PBTE) (note 11).
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
The Company participates as intervening guarantor, to the limit of its interests in subsidiaries, jointly controlled subsidiaries, in their financing agreements, as shown below:
Equity Outstanding Balance End of collateral interest in balance at Type of guaranteed Subsidiary subsidiary Bank Debt type 03.31.2021 collaterals by CTEEP FINEM and 7,568 7,568 IE Pinheiros 100% BNDES PSI Pledge of shares 02.15.2028 FINEM and Pledge of shares 18,610 18,610 IE Pinheiros 100% BNDES PSI 05.15.2026 IE Serra do Pledge of shares 37,126 37,126 Japi 100% BNDES FINEM 05.15.2026 FINEM and Pledge of shares 3,181 3,181 IESul 100% BNDES PSI 05.15.2025 FINEM and Pledge of shares 8,217 8,217 IESul 100% BNDES PSI 02.15.2028 Banco do Pledge of 145,088 145,088 IENNE 100% Nordeste FNE shares/corporate 05.19.2030 Banco da IE Madeira 51% 292,849 Pledge of shares 149,353 01.10.2033 Amazônia Bank credit note FINEM and IE Madeira 51% BNDES 1,043,825 Pledge of shares 532,351 02.15.2030 PSI
Infrastructure Pledge of IE Madeira 51% Itaú/BES 374,046 190,763 03.18.2025 debentures shares/corporate FINEM and 178,505 91,037 12.15.2028 IE Garanhuns 51% BNDES PSI Pledge of shares Pledge of shares 12.15.2043 IE Ivaí 50% Itaú Infrastructure 1,794,792 Corporate 897,396 01.15.2024 debentures guarantee
In addition to the collaterals mentioned above, the financing agreements between the subsidiaries and jointly controlled subsidiaries with the development banks (BNDES/BASA/BNB) require the creation and maintenance of a reserve account for the debt service in an amount equivalent to three to six times the last installment paid under the financing, including the portion of principal and interest, classified under restricted cash in the balance sheet in the amount of R$10,391, Parent, and R$36,363, consolidated (R$10,349, Parent, and R$41,160, consolidated, at December 31, 2020).
The BNDES financing agreements and debentures of subsidiaries and jointly controlled subsidiaries contain covenants that require the maintenance of financial indicators for the Debt Service Coverage Ratio (DSCR) as well as cross default clauses that provided for the acceleration of payment in case of failure to comply with the obligations under the agreements.
As of March 31, 2021, no acceleration of payment occurred relating to covenants under the agreements with the Parent, subsidiaries and jointly controlled subsidiaries.
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
15 Debentures Parent and Consolidate d
Numb Maturity er Charges IRR p.a. 03.31.2021 12.31.2020
Single series (i) 07.15.2021 148,270 IPCA + 6.04% 7.9% 183,568 176,460 Single series (ii) 02.15.2024 300,000 IPCA + 5.04% 6.8% 348,372 352,490 Single series (iii) 04.15.2025 621,000 IPCA+ 4.70% 6.4% 707,554 681,986 Single series (iv) 12.15.2029 409,325 IPCA+3.50% 5.5% 421,684 407,032 1st series (v) 11.15.2028 800,000 CDI + 2.83% 8.3% 805,401 795,750 2nd series (v) 05.15.2044 800,000 IPCA + 5.30% 9.6% 795,967 765,548 Single series (vi) 07.15.2044 672,500 IPCA + 5.07% 9.0% 647,300 - 3,909,846 3,179,266
Current 245,489 217,948
Noncurrent 3,664,357 2,961,318
(i) In August 2016, the Company issued 148,270 infrastructure debentures, in accordance with article 2 paragraph 1 of Law No. 12431/2001 in a single series, to a total amount of R$148,270 with the purpose of reimbursing contributions and investments in jointly controlled subsidiaries IEMadeira and IEGaranhuns. These debentures will mature on July 15, 2021 and yield will be paid annually in July of each year, with the first installment due on July 15, 2017.
Financial ratios established in the indenture are as follows: Net Debt/EBITDA(*) >3.5 and EBITDA(*)/Finance Income (Costs) > 1.5 through the measurement made as of June 30, 2017 and, as from the measurement made at September 30, 2017, > 2.0.
(ii) In March 2017, the Company issued 300,000 infrastructure debentures under article 2, paragraph 1, of Law No. 12431/2001, in a single series, in the total amount of R$300,000, to cover future payments and/or reimbursement of expenditures, expenses or debts relating to investments in enhancements and improvements in transmission facilities, encompassing the installation, replacement or renovation with a view to maintain proper quality services, the reliability of the National Interconnected System (SIN), the useful life of equipment and/or connect new users. Debentures will mature on February 15, 2024 and yield will be paid every February, the first installment was paid on February 15, 2018. Issuance costs, net of transaction costs, amounted to R$292,603. Costs are recognized in profit or loss over the transaction term.
The financial ratios established in the indenture are Net Debt/EBITDA(*) < 3.5 and EBITDA(*)/Finance Income (Costs) > 1.5, up to the reporting date of June 30, 2017, and > 2.00 beginning the reporting date of September 30, 2017.
(iii) In May 2018, the Company issued 621,000 infrastructure debentures, under article 2 of Law No. 12.431/2011, in a single series, in the total amount of R$621,000, with a view to reimburse the costs incurred in up to 24 months as of the disclosure of the Offering Closing Notice, or future payment in the scope of the investment in IEParaguaçu, IEAimorés, IEItaúnas, IEIvaí, IETibagi, IEItaquerê, IEItapura, and IEAguapeí projects. Debentures were classified as “green bonds”, since their proceeds will contribute to the sustainable development by supporting the generation of renewable energy, according to an independent opinion of experienced specialists having technical capacity in the sustainability area, disclosed in May 2018 on the Company’s website. Debentures will mature on April 15, 2025 and yield will be paid on a semi-annual basis in October and April of each year; the first installment was paid on October 15, 2018. Issuance costs, net of transaction costs, amounts to R$603,877. The costs will be recognized in profit or loss over the transaction term.
(iv) In December 2019, the Company issued 409,325 infrastructure debentures, under article 2 of Law No. 12.431/2011, in a single series, in the total amount of R$409,325, with a view to reimburse the costs incurred in up to 24 months as of the disclosure of the Offering Closing Notice, or future payment in the scope of the investment in IEParaguaçu, IEAimorés, IEItaúnas, IETibagi, IEItaquerê, IEItapura, IEAguapeí, and IEBiguaçu projects.
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Debentures were classified as “green bonds”, since their proceeds will contribute to the sustainable development by supporting the generation of renewable energy, according to an independent opinion of experienced specialists having technical capacity in the sustainability area, disclosed in December 2019 on the Company’s website. Debentures will mature on December 15, 2027, December 15, 2028 and December 15, 2029, and yield will be paid on a semi-annual basis in June and December of each year; the first installment was paid on June 15, 2020. Issuance costs, net of transaction costs, amount to R$387,852. The costs are recognized in profit or loss over the transaction term.
(v) In December 2020, the Company issued 1,600,000 debentures, in two series, in the total amount of R$1,600,000, payable in May 2044. The first series, in the total amount of R$800,000 is exclusively intended for working capital purposes and to reschedule the financial obligation. The 1st series debentures will mature on November 15, 2028, with yield payable semiannually in May and November of each year.
The 2nd series infrastructure debentures, in the total amount of R$800,000, under article 2 of Law No. 12.431/2011, intended to reimburse the costs incurred in up to 24 months as of the disclosure of the Offering Closing Notice, or future payment in the scope of the investment in IEParaguaçu, IEAimorés, IEItaúnas, IEItaquerê, IEItapura, IEAguapeí, and IEBiguaçu projects and in enhancement projects in ISA CTEEP’s electric power transmission facilities. The debentures were classified as “green bonds” because the use of the funds contributes to the sustainable development by supporting the flow of renewable energy, according to the Green Finance Framework, released in November 2020 on the Company’s website, and independent assessment and opinion from experienced specialists having technical capacity in the sustainability area. The 2nd series debentures will mature on May 15, 2044, and yield will be paid semi-annually in May and November of each year. The total issue amount, net of transaction costs, is R$1,555,745. Costs are recognized in profit or loss over the transaction term.
(vi) In February 2021, the Company issued 672,500 infrastructure debentures, under Article 2 of Law 12431/2011, in a single series, totaling R$672,500intended to reimburse the costs incurred in up to 24 months as of the disclosure of the Offering Closing Notice, or future payment in the scope of the investment in Minuano, Triângulo Mineiro and Três Lagoas projects. The debentures were classified as “green bonds” because the use of the funds contributes to the sustainable development by supporting the flow of renewable energy, according to the Green Finance Framework, released in November 2020 on the Company’s website, and independent assessment and opinion from experienced specialists having technical capacity in the sustainability area. The debentures will mature on July 15, 2045 and yield will be paid semi-annually in January and July of each year. The total issue amount, net of transaction costs, is R$638,285. Costs are recognized in profit or loss over the transaction term.
All requirements and covenants set out in the indentures of the issuances have been properly met and satisfied by the Company and its subsidiaries through the reporting date.
The issuance costs recognized on the financial transactions through March 31, 2021 totaled R$130,876. The balance of the remaining costs to be recognized beginning March 31, 2021 is R$109,432. The noncurrent portion of installments matures as follows:
03.31.2021 12.31.2020
2022 26,067 25,395 2023 26,695 26,007 2024 387,822 365,486 2025 750,502 706,316 2026 319,543 292,121 2027 to 2031 1,238,988 1,084,287 2032 to 2036 327,814 165,988 2037 to 2041 371,094 190,848 2042 to 2044 215,832 104,870
3,664,357 2,961,318
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ITR - Interim Financial Information – 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Changes in debentures are as follows:
Balances at 12.31.2019 1,896,479
Payments of interest (16,798) Interest and inflation adjustment 46,398
Balances at 03.31.2020 1,926,079
Balances at 12.31.2020 3,179,266
Addition 672,500 Transaction cost (34,215) Payments of interest (17,280) Interest and inflation adjustment 109,575
Balances at 03.31.2021 3,909,846
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Notes to the Interim Financial Information
16 Leases
Breakdown of lease balances is as follows:
Parent Consolidated
Agreement Start amount date Rate End date Payment method 03.31.2021 12.31.2020 03.31.2021 12.31.2020
06.01.2017 10.31.2020 Vehicles 13,278 to to Principal and monthly interest 06.01.2020 0.58% p.m. 03.14.2024 2,704 4,168 2,704 4,168 09.01.2018 08.31.2022 Properties 10,885 to to Principal and monthly interest 07.01.2019 0.58% p.m. 06.30.2029 46,293 47,647 47,968 49,369
Total leases 48,997 51,815 50,672 53,537
Current 7,624 8,603 7,816 8,795
Noncurrent 41,373 43,212 42,856 44,742
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
The noncurrent portion of leases matures as follows:
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
2022 4,323 6,162 4,470 6,357 2023 5,689 5,689 5,887 5,887 2024 5,578 5,578 5,778 5,778 2025 to 2029 25,783 25,783 26,721 26,720
41,373 43,212 42,856 44,742
Changes in leases are as follows:
Parent Consolidated
Balances at 12.31.2019 49,285 49,896
Additions 8,047 9,384 Payments (3,124) (3,224) Interest 994 1,016
Balances at 03.31.2020 55,202 57,072
Balances at 12.31.2020 51,815 53,537
Payments (2,987) (3,042) Interest 169 177
Balances at 03.31.2020 48,997 50,672
According to Circular Letters No. 02/2019 and No. 01/2020, issued on December 18, 2019 and February 05, 2020, respectively, the inflation effects on the balances reported in the financial statements relating to CPC 06 (R2) are as follows: (i) right of use of R$9,408, Parent, and R$10,220, consolidated; (ii) lease liability of R$6,906, Parent, and R$7,485, consolidated; (iii) depreciation of R$302, Parent, and R$326, consolidated; and (iv) finance cost of R$24, Parent, and R$26, consolidated.
17 Taxes and payroll charges payable
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Income tax 123,475 147,518 154,020 149,012 Social contribution 44,823 47,544 56,261 48,409 COFINS(tax on revenue) 32,793 33,654 36,216 34,459 PIS (tax on revenue) 6,659 6,852 7,400 7,027 INSS (social security contribution) 5,097 5,426 6,611 7,551 ISS (service tax) 847 1,614 1,248 2,712 FGTS (severance pay fund) 280 - 280 - Withholding income tax 3,129 4,128 3,047 4,255 Other 2,928 1,713 3,654 2,189
220,031 248,449 268,737 255,614
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
18 Deferred PIS and COFINS (taxes on revenue) Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
PIS 209,817 210,824 272,580 234,846 COFINS 966,284 970,923 1,255,331 1,081,876
1,176,101 1,181,747 1,527,911 1,316,722
Deferred PIS and Cofins relate to infrastructure implementation revenues and compensation from concession assets determined on the contract asset recorded on an accrual basis. Payment is made as monthly revenues are billed, as provided for in Law No. 12973/14.
19 Regulatory charges payable Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Research & Development - R&D (i) 74,316 75,083 82,050 81,608 Global Reversal Reserve (RGR) Energy 548 548 548 548 Development Account ( CDE) (ii) 9,962 12,721 9,962 12,721 Alternative Power Sources Incentive Program - PROINFA 2,220 2,260 2,220 2,260 ANEEL inspection fee - - 387 385
87,046 90,612 95,167 97,522
Current 41,870 47,390 44,836 49,457
Noncurrent 45,176 43,222 50,331 48,065
(i) The Company and its subsidiaries recognize obligations relating to tariff amounts already billed (1% of net operating revenue), applied to the Research and Development (R&D) Program, monthly adjusted, as from the second month subsequently to its recognition up to its actual realization, based on SELIC (Central Bank interest rate) as established in ANEEL Resolutions 300/2008 and 316/2008. According to Official Letter No. 0003/2015, of May 18, 2015, expenditures applied to R&D are accounted for in assets and, by completion of the project, they are recognized as obligation settled and, subsequently, submitted to audit and final evaluation by ANEEL. The amount invested in projects not completed by March 31, 2021 totals R$27,462 (R$26,002 at December 31, 2020) and is recorded in other assets.
(ii) The CDE is a fee transmission companies are required to transfer based on amounts collected from free consumers.
20 Payroll and related taxes
Parent and Consolidated
03.31.2021 12.31.2020
Vacation, 13th salary and related taxes 29,585 32,147 Profit sharing 6,627 12,947
36,212 45,094
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
21 Provisions
(a) Lawsuits
Lawsuits are assessed periodically and classified based on their likelihood of loss for the Company and its subsidiaries. Provisions are recognized for all lawsuits for which it is probable that an outflow of funds will be required to settle the obligation and a reliable estimate can be made.
Lawsuits assessed as probable loss are as follows:
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Labor (i) 49,716 50,535 49,752 50,569 Civil (ii) 44,221 1,748 44,221 1,748 Tax - IPTU (iii) 2,268 2,192 5,251 2,192 Land (iv) 2,450 2,669 29,255 33,923 Other 251 250 251 250
98,906 57,394 128,730 88,682
(i) Labor
The Company is a defendant in certain lawsuits that are under discussion at different courts relating to claims of salary equalization, overtime, hazardous duty premium, among others. The Company made judicial deposits for labor claims in the amount of R$29,060, Parent, and R$29,109, consolidated (R$29,038, Parent, and R$29,087, consolidated, as of December 31, 2020), as shown in note 10.
(ii) Civil
• The Company is a party to civil lawsuits relating to issues including real estate, indemnities, collections, annulment and class actions arising in the normal course of business, that is, operation and maintenance of transmission lines, substations and equipment under the electric power transmission concession agreements. The major amount refers to the lawsuit that discusses the remaining indemnity amount of NI facilities.
The indemnity arising from the extension of Concession Contract No. 059/2001 under Law No. 12.783/201, relating to NI facilities, corresponded to the original amount of R$2,891,291, adjusted for inflation to R$2,949,121, as determined by Inter-ministry Ruling No. 580. The equivalent to 50% of this amount was received on January 18, 2013, and the remaining 50% were divided into 31 monthly installments, which had been transferred to the Company by Eletrobras. However, the terms under which these remaining installments should be adjusted are still under discussion. Following a Federal Court of Auditors’ request, ANEEL revised the amounts transferred as compensation for NI facilities to all concessionaires and understood that incorrect adjustment calculations were made, which resulted in overpayments to concessionaires. Although recognizing that calculations were incorrect, Eletrobras challenged ANEEL`S understanding of the matter. Based on an independent appraisal report and on the opinion of its legal counsel, the Company’s interpretation of the adjustment approach differs from that applied by ANEEL. Based on this, the Company maintained its best estimate for the involved amount of R$34,900 (not including the fine and late payment interest that would be due in favor of the Company, considering the delays in the transfers) recorded. Eletrobras filed a collection action against ISA CTEEP and, on December 17, 2020, a decision was published requiring the return of the amount overpaid to the Company, less the amounts related to late payment effects, due to the delayed payment of the indemnity portions.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
The Company may file an appeal and the determination of the amounts will depend on the lawsuit being settled.
(iii) Tax - IPTU (property tax)
The Company is a party to tax lawsuits relating to the collection of Property Tax (IPTU) and recognizes a provision to cover debts to the government of various municipalities in the State of São Paulo.
(iv) Land
Civil-land lawsuits to which subsidiaries are parties relating to properties, involving right of ways, expropriation, indemnities, collections, and other claims arising in the normal course of business, that is, operation and maintenance of transmission lines, substations and equipment under the electric power transmission concession cnotracts.
(b) Changes in provisions are as follows:
Parent
Tax- Labor Civil Land Other Total Propert y tax - IPTU Balances at 12.31.2020 50,535 1,748 2,192 2,669 250 57,394
Recognition 754 - - 37 - 791
Reversal (3,641) - - (331) - (3,972) Payment (1,374) - - (6) - (1,380) Transfer (*) - 33,584 - - - 33,584 Adjustment 3,442 8,889 76 81 1 12,489
Balances at 03.31.2020 49,716 44,221 2,268 2,450 251 98,906
(*) transfer from other noncurrent liabilities
Consolidated
Tax- Labor Civil Land Other Total Propert y tax - IPTU
Balances at 12.31.2020 50,569 1,748 2,192 33,923 250 88,682
Recognition 754 - 2,984 315 - 4,053
Reversal (3,641) - - (2,259) - (5,900) Payment (1,374) - - (3,368) - (4,742) Transfer (*) - 33,584 - - - 33,584 Adjustment 3,444 10,473 75 644 1 13,053
Balances at 03.31.2021 49,752 44,221 5,251 29,255 251 128,730
(*) transfer from other noncurrent liabilities
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
(c) Lawsuits whose likelihood of loss is assessed as possible - Parent and consolidated
The Company and its subsidiaries are parties to labor, civil, social security and tax lawsuits involving risks of loss which, based on the assessment of the legal counsel, Management classified as possible loss, in the estimated amounts of R$804,578 and R$830,217 as of March 31, 2021 (R$771,066 and R$780,482 as of December 31, 2020), Parent and consolidated, respectively, for which no provision was recognized.
Parent Consolidated
Classification Number Total Number Total
Labor 131 17,388 132 17,411 Civil 92 61,260 106 78,462 Civil - Land 6 11,077 62 18,812 Social security 32 2,426 32 2,426 Civil – Annulment of merger of EPTE by CTEEP (i) 2 421,001 2 421,001 Tax - Goodwill amortization (ii) 2 167,898 2 167,898
Tax - CSLL tax loss carryforwards (iii) 1 30,456 1 30,456 Tax - IPTU (property tax) 160 84,257 161 84,267 Tax - Other 37 8,815 42 9,484
463 804,578 540 830,217
(i) Annulment of merger of EPTE by CTEEP
• Declaratory Action
Lawsuit whereby noncontrolling shareholders claim the annulment of Empresa Paulista de Transmissão de Energia Elétrica’s (EPTE) merger into the Company or, in a jointly liable manner, the declaration of its right to withdrawal and determination of the payment of the share reimbursement value. Currently, it is in the execution phase, pending final assessment of the pre-execution exception. The Company filed a rescission claim and obtained an injunction contingent on the possible withdrawal of amounts by the plaintiffs in order to submit an appropriate surety. The injunction was deemed groundless and the Company filed an appeal, which is pending judgment. In the primary action, the noncontrolling shareholders have been complying with the decision on a temporary basis; the company’s objection was held partially valid and the Company filed an appeal, which is pending judgment.
• Action for damages
In October 2020, the Company’s noncontrolling shareholders filed a new action against the Company claiming that the indemnity for the value of the shares be calculated based on the RBSE report. The noncontrolling shareholders submitted an economic technical opinion indicating the amount of around R$133 million for the lawsuit. The lawsuit is in discovery phase.
(ii) Tax - Goodwill amortization
Lawsuits arising from tax assessment notices issued by the Federal Revenue Service from 2013 to 2017 (period from 2008 to 2013), relating to the goodwill paid by ISA Capital on the acquisition of CTEEP shareholding control.
• The 2008 case was judged at the higher court of the Administrative Board of Tax Appeals (CARF), which granted an unfavorable decision. The Company filed a lawsuit which was partially granted (for the income tax but not for the social contribution). An appeal was filed with the appellate court and is pending judgment.
• The 2009, 2010, 2011 and 2012 cases were awarded a final favorable decision by the superior court of the Administrative Board of Tax Appeals (CARF).
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For 2013, the decision was partially favorable to the Company at the lower court. An appeal was filed, which is pending judgment.
The existence of CARF’s unfavorable decisions does not bind the other ongoing lawsuits awaiting judgment since CARF does not have an unanimous opinion on the matter, as unfavorable judgments were preceded by a deadlock, subsequently decided by the deciding vote of the President of the Panel/Chamber.
(iii) Tax - CSLL tax loss carryforwards
Lawsuit arising from a tax assessment notice issued in 2007, in connection with the failure to confirm the CSLL tax loss carryforwards basis, arising from the partial spin-off of CESP. The Company’s Administrative Proceeding with CARF had an unfavorable outcome by a casting vote. The Company discusses the issue at the judicial level and obtained an injunction to suspend the requirement to pay the debt without pledging a collateral. In September 2020, the Company was awarded an unfavorable decision and filed an appeal which is pending judgment. However, a favorable decision was granted to the company, suspending the enforceability of the debt with no collateral being required.
(d) Lawsuits whose likelihood of loss is assessed as remote - Parent and consolidated
(ii) PIS/COFINS(taxes on revenue)
The Company is a defendant to tax assessment notices relating to PIS and COFINS (taxes on revenue) for the period from 2003 to 2011, under the allegation that the Company would be required to pay PIS/COFINS on a cumulative basis. The Company paid PIS/COFINS on a cumulative basis until 2003. With the changes introduced in legislation in October 2003, the general rule became paying PIS/COFINS on a noncumulative basis, except for revenues meeting the four following requirements: i) agreements executed before October 2003, ii) with an effective term longer than one year, iii) at predetermined prices, iv) for purchases of goods or services. Since SE revenue (Agreement 059/2001 prior to Law No. 12.783/2013) meets these requirements, and, also, following ANEEL’s instructions, the Company requested the offset of the amounts overpaid in the period the Company paid PIS and COFINS on a noncumulative basis and started paying such taxes cumulatively on the portion of SE revenue.
Through September 2013, administrative proceedings in most advanced stages were granted a favorable decision by CARF, in line with the Court’s understanding on the issue. In December 2015, CARF changed its understanding on the matter; however, the Court maintained their original position. Currently, these cases were already closed at CARF (for the period from 2013 to 2010), totaling the adjusted amount of R$2,063 million and are the subject of a lawsuit that discusses the analysis of an expert report by CARF, and an unfavorable decision was granted to the Company at the lower court. The Company awaits ruling of the appeal.
The proceeding relating to 2011 involves the amount of R$660 million, adjusted for inflation, and was granted an unfavorable decision at CARF’s lower level. CARF´s Lower Panel determined that the National Treasury Attorney General should analyze the report prepared by the specialized consulting firm, which was analyzed and validated. The Company awaits a new ruling by CARF’s Lower Panel.
22 Post-employment Benefit/Amounts payable – Vivest (formerly “Funcesp”) – Parent and consolidated
The Company sponsors retirement and survivors’ pension complementation and supplementation plans managed by Vivest (formerly “Funcesp”), which, together with the administrative costs of the fund, amounts to R$855 as of March 31, 2020 (R$871 as of December 31, 2020), relating to monthly installments payable as contribution to the fund.
(a) Retirement and pension plan - PSAP/CTEEP
PSAP/CTEEP includes the following subplans:
• Proportional Supplemental Settled Benefit (BSPS) - (Plan “B”); • Defined benefit (BD) - (Plan “B1”); • Variable contribution (VC) - (Plan “B1”).
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PSAP/CTEEP, governed by Supplementary Law No. 109/2001 and managed by Vivest (former “Funcesp”), is sponsored by the Company itself and offers retirement and survivors’ pension supplementation benefits, whose reserves are determined on a funded basis.
PSAP/CTEEP originated from the spin-off of PSAP/CESP B1 on September 1, 1999 and covers all participants transferred to the Company. On January 1, 2004, PSAP/EPTE was merged into PSAP/Transmissão, whose name was changed from that date to PSAP/Transmissão Paulista and from December 1, 2014 changed to PSAP/CTEEP.
Subplan “BSPS” refers to the Proportional Supplemental Settled Benefit arising from the Supplementary Retirement and Pension Plan PSAP/CESP B, transferred to this plan on September 1, 1999 and from PSAP/Eletropaulo Alternativo, transferred to this plan after the merger of PSAP/EPTE on January 1, 2004, calculated on December 31, 1997 (CTEEP) and March 31, 1998 (EPTE), based on effective regulations, and the actuarial asset-liability balance was obtained at the time.
The Defined Benefit (“DB”) subplan defines contributions and related matching responsibilities between the Company and Participants on 70% of employees’ Actual Contribution Salary in order to obtain the plan’s actuarial asset-liability balance. This subplan ensures lifetime income retirement and death benefits to employees, former employees and beneficiaries in order to supplement the benefits provided by the official social security system.
The CV sub-plan defines voluntary contributions from Participants with limited compensation of the Company, levied on 30% of the Actual Contribution Salary of these employees in order to provide additional supplementation in the cases of retirement and death pension. On the date of receipt of the benefit, the Variable Contribution (CV) sub-plan may become a Defined Benefit (“BD”) if the lifetime income is chosen by the Participant as a form of receipt of this supplementation.
(i) Actuarial valuation
The actuarial valuation prepared by an independent actuary relating to the PSAP/CTEEP pension plans adopted the projected unit credit method.
As of March 31, 2021, PSAP/CTEEP recorded actuarial deficit in other comprehensive income of R$381,977 (R$381,977 as of December 31, 2020).
The change from actuarial surplus to actuarial deficit between December 31, 2019 and December 31, 2020 was due to an adjustment to lifetime income higher than 23% (cumulative IGP-DI in the period). This significant actuarial loss was the main responsible for the change from an asset of R$43,024 recognized in the financial statements in 2019 to a liability of R$394,078 as of March 31, 2021.
23 Global Reversal Reserve (RGR) – Parent and Consolidated
As of March 31, 2021, the amount of R$13,512 (R$14,132 at December 31, 2020) recorded in noncurrent liabilities refers to the funds deriving from the reversal reserve, amortization and portion retained in the Company of the monthly shares of the Global Reversal Reserve (RGR) relating to investments of funds to expand power services and repay borrowings raised for the same purpose, occurred through December 31, 1971. Annually, according to the ANEEL Order, interest of 5% is charged on the value of the reserve, with monthly settlement. Under article 27 of Decree No. 9022, of March 31, 2017, electric power concessionaires shall fully amortize the RGR debits from January 2018 to December 2026.
24 Equity
(a) Capital
As of March 31, 2021, the Company’s issued capital is R$5,000,000, of which R$1,957,386 in common shares and R$3,042,614 in preferred shares, all registered, book-entry, and without par value.
The subscribed and paid-in capital as of March 31, 2021 and December 31, 2020 totals R$3,590,020, represented by common and preferred shares as follows:
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03.31.2021 R$ 12.31.2020 R$ thousand thousand
Common 257,937,732 1,405,410 257,937,732 1,405,410 Preferred 400,945,572 2,184,610 400,945,572 2,184,610
658,883,304 3,590,020 658,883,304 3,590,020
Common shares entitle their holders the right to one vote at the resolutions of general meetings.
Preferred shares are not entitled to vote; however, they have priority in the refund of capital and payment of dividends corresponding to this class of shares.
(b) Dividends and interest on capital
On February 22, 2021, the Board of Directors approved dividend distribution from the earnings retention reserve as follows:
Dividends
BoD Total Per share Payment meeting date
02.25.2021 531,163 0.806156 05.21.2021
531,163 0.806156
The General Shareholders’ Meeting of March 25, 2021 approved the proposal for distribution of additional dividends relating to 2020, as follows:
Additional dividends proposed
GSM date Total Per share Payment
03.25.2021 524,450 0.795967 05.21.2021
524,450 0.795967
The Company’s bylaws establish that the allocation of profit for the year in the following order: (i) recognition of the legal reserve; (ii) of the balance, payment of dividends attributed to preferred and common shares, at the higher value between R$218,461and R$140,541, respectively, and 25% of profit for the year; (iii) of the balance, up to 20% of profit for recognition of the statutory reserve.
(c) Capital reserves
03.31.2021 12.31.2020
Investment grants - CRC 78 78 Special goodwill reserve - merger 588 588
666 666
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(d) Earnings reserves
03.31.2021 12.31.2020
Legal reserve (i) 718,004 718,004 Statutory reserve (ii) 1,862,804 1,862,804 Earnings retention reserve (iii) 266,149 797,312 Unrealized special earnings reserve (iv) 6,485,572 6,485,572
9,332,529 9,863,692
(i) Legal reserve
Recognized as 5% of profit for the year, before any allocation, up to 20% of capital. In the year ended December 31, 2019, the Company reached the maximum percentage for recognition of the legal reserve.
(ii) Statutory reserve
The Company’s Bylaws establish that up to 20% of profit for the year, after deducting the legal reserve, must be allocated to the statutory reserve, the amount of which may not exceed the capital amount. The statutory reserve may be used for the following purposes: (a) support investments to expand the Company’s activities; (b) help maintain a proper working capital; (c) maintain funds necessary to meet obligations with third parties, including lenders; and (d) protect the Company against potential contingencies or losses arising from regulatory risks.
(iii) Earnings retention reserve
Management proposes to maintain in equity prior years’ retained earnings, in an earnings retention reserve, which is intended to meet the capital budget approved at the General Shareholders’ Meeting in the respective periods.
(iv) Unrealized special earnings reserve
The unrealized special earnings reserve includes the impacts of (i) amounts receivables from SE (note 7); (ii) adjustments due to application of ICPC 01 (R1) Concession Contracts; (iii) first-time application of CPC 47; and (iv) share of profit of investees, since they do not comprise the realized portion of profit for the year. Allocation in this reserve is made to reflect the fact that the financial realization of earnings from these operations will occur in future years. Once realized, in case the special reserve is not absorbed by subsequent losses, the Company will allocate its balance for capital increase, distribution of dividends or recognition of other earnings reserves, considering Management’s proposals to be made on a timely basis.
Changes are as follows:
Balance in 2019 5,466,623
Realization (*) (1,848,074) Recognition (**) 2,867,023
Balance in 2020 and at March 31, 2021 6,485,572
(*) The realization mainly includes the amounts received relating to RBSE and dividends received from subsidiaries and jointly controlled subsidiaries.
(**) The amount recognized is comprised of the adjusted RBSE balance receivable and noncash items from the application of the accounting practices adopted in Brazil and IFRS standards, mainly the application of IFRS 9 and IFRS 15, and their specific characteristics for the transmission sector.
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(e) Other Comprehensive Income (OCI)
The Company recognizes in Other Comprehensive Income the remeasurement arising from the actuarial deficit liability and respective tax effects as supported by a report prepared by an independent actuary. As of March 31, 2021, this amount to R$240,676, net of taxes (R$240,676 as of December 31, 2020) (note 22).
Derivative financial instruments are also classified in Other Comprehensive Income , namely non-deliverable forwards (NDF) to manage the currency risk of the cash flow of subsidiaries IEBiguaçu and IERiacho Grande in the amount of R$42,617, net of taxes, whereby the effective portion of changes in the fair value of the hedge accounting is recorded in equity, not in profit or loss (note 11 (a)).
(f) Earnings (loss) per share
Basic earnings or loss per share are calculated through the Company’s profit or loss, based on the weighted average number of common and preferred shares outstanding in the respective period. Diluted earnings or loss per share is calculated by obtaining such average number of outstanding shares, adjusted by instruments potentially convertible into shares. In this case, the Company considered shares that may be issued through capitalization of the special goodwill reserve on merger in favor of the controlling shareholder.
As prescribed in CVM Instruction No. 319, to the extent that the tax benefit of the special goodwill reserve on merger is realized, included in the Company’s equity, this benefit can be capitalized on behalf of the Parent, and other shareholders shall have an interest in such capital increase, so as to maintain its ownership interest in the Company.
Those shares issued based on this realization were considered as dilutive for purposes of calculating the Company’s earnings or loss per share, based on the assumption that all issuance conditions have been met.
The table below shows the profit or loss and share data used to calculate basic and diluted earnings per share:
Parent 03.31.2020 03.31.2021 (restated) Basic and diluted earnings per share
Profit - R$ thousand 582,624 506,583
Weighted average number of common shares (i) 257,937,732 257,937,732 Preferred shares 400,945,572 400,945,572
658,883,304 658,883,304
Weighted average number of common shares 257,957,417 257,961,042 Preferred shares 400,968,915 400,973,586
658,926,332 658,934,628
Basic earnings per share 0.88426 0.76885
Diluted earnings per share 0.88420 0.76879
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25 Net operating revenue
25.1 Breakdown of net operating revenue
Parent Consolidated
03.31.2021 03.31.2020 03.31.2021 03.31.2020 (Restated) (Restated) Gross revenue Infrastructure revenue (a) (note 7) 95,949 11,906 235,645 193,571 O&M (b) (note 7) 298,732 287,194 318,120 297,169 Compensation from concession assets (d) (note 7) 502,312 389,654 679,010 480,688 Efficiency gain (c) 5,654 - 20,922 - Rentals 4,283 5,316 4,408 5,483 Services rendered 7,424 5,112 2,286 2,217
Total gross revenue 914,354 699,182 1,260,391 979,128
Taxes on revenue COFINS (69,095) (62,292) (93,541) (68,870) PIS (15,001) (13,523) (20,303) (14,957) Other (358) (149) (357) (149)
(84,454) (75,964) (114,201) (83,976) Regulatory charges Energy Development Account (CDE) CDE (35,258) (27,731) (35,258) (27,731) Global Reversal Reserve (RGR) - - (1,404) (1,624) Research and Development (R&D) (7,413) (6,719) (8,397) (7,280) Alternative Power Sources Incentive Program (PROINFA) (9,713) (3,597) (9,713) (3,597) Electric Power Service Inspection Fee (TFSEE) (3,093) (2,594) (3,401) (2,793)
(55,477) (40,641) (58,173) (43,025)
774,423 582,577 1,088,017 852,127
(a) Infrastructure implementation services
The revenue from the performance obligation relating to infrastructure implementation for providing electric power transmission services, including new facilities, enhancement projects and improvements under the concession contract is recognized as performance obligations are satisfied, which is determined based on expenses incurred plus the estimated margin for each project and gross-up of taxes.
(b) Operation and maintenance
The revenues from the performance obligation relating to O&M services are recognized when services are provided by the Company. When the Company provides more than one service under a service concession contract, the consideration received is allocated by reference to the fair values of the services delivered.
(c) Efficiency gain on infrastructure implementation
Efficiency gain on the infrastructure implementation reflects the positive variances determined when enhancement projects and improvements are placed into operation and new concession contracts arising from savings in investments in relation to the estimate made at the beginning of the works, revision of the Annual Permitted Revenue (RAP) and placement into operation earlier than the due date. As of March 31, 2021, the efficiency gain refers to enhancement projects and improvements and Agreement 046/2017 of subsidiary Aguapei, which started operations.
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(d) Compensation from concession assets
Revenue from compensation of assets is recognized at the implicit rate of each project on the future flow of cash receipts, considering the specific characteristics of each enhancement project, improvements and auctions and that compensates the transmission infrastructure investment. The purpose of the implicit rate is to price the financial component of the contract asset established at the commencement of the contracts/projects and are not subsequently adjusted.
(e) Performance obligation margins
03.31.2021 Parent Consolidated
Infrastructure implementation Infrastructure revenues 95,949 235,645 Infrastructure implementation cost (57,505) (185,716) Margin 38,444 49,929
% perceived margin 40.1% 21.2%
O&M O&M revenue 298,732 318,120 O&M cost (89,300) (91,773) Margin 209,432 226,347
% perceived margin 70.1% 71.2%
Compensation from concession assets 502,312 679,010
Discount rate of the contract asset 6.64% 6.13% to 9.92%
25.2 Variable Portion (PV) and RAP Additional
Regulatory Resolution 729, of July 28, 2016, regulates the Variable Portion (PV) and RAP Additional. The Variable Portion is the pecuniary penalty applied by the Concession Grantor for any unavailability or operating restrictions of the facilities comprising the Basic Grid. The RAP Additional corresponds to the pecuniary premium granted to transmission companies as an incentive for improving the availability of transmission facilities. For both situations, a revenue and/or O&M revenue reduction is recognized in the period they occur.
25.3 Periodic revision of the Annual Permitted Revenue (RAP)
Under concession contracts, at every four and/or five years, after the contract execution date, ANEEL will periodically revise the electric power transmission RAP to promote tariff efficiency and moderation.
Each contract has its specific characteristics; however, in general terms, concessionaires have their RAP revised three times (every five years), when the cost of debt capital is revised. Enhancement and improvements related to the bid agreements are revised every five years. A revenue reduction may also be applied for Operation and Maintenance (O&M) costs to capture Business Efficiency Gains.
The considerations above do not apply to the revenue associated with subsidiary IE Serra do Japi’s Concession Agreement No. 143/2001, which is not subject to a Periodic Tariff Revision of the portion related to the auctioned revenue. However, Proret 9.2, release 3.0, established that, beginning 2019, the enhancements and improvements of contracts that do not contain a revision clause would be revised every five years. Considering that Concession Contract No. 143/2001 does not include enhancements or improvements, its RAP was not affected.
The periodic tariff revision for concession contracts, such as Concession Contract No. 059/2011, of concessionaires considered as existing, is made every five years and includes the revenue repositioning upon determination of the following:
a) the regulatory compensation basis for RBNI and RBSE; b) efficient operating costs; c) optimal capital structure and definition of the transmission companies’ compensation;
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d) Identification of the amount to be considered as tariff reduction - Other Revenues; e) application of the “x” factor (ratio set by ANEEL in the periodic revision process to promote efficiency and capture productivity gains for the consumer).
The information on the latest periodic tariff revisions is described below:
Confirmation REH Concessionaire Contract Resolution (REH) date Effective date
CTEEP 059/2001 2.714 30.06.2020 01.07.2020
Subsidiaries
IESerra do Japi 026/2009 2.840 03.30.2021 07.01.2020 IEMG 004/2007 2.257 06.20.2017 07.01.2017 IENNE 001/2008 2.405 06.19.2018 07.01.2018 IEPinheiros 012/2008 2.556 06.11.2019 07.01.2019 IEPinheiros 015/2008 2.556 06.11.2019 0701..2019 IEPinheiros 018/2008 2.556 06.11.2019 07.01.2019 IEPinheiros 021/2011 2.257 06.20.2017 07.01.2017 Evrecy 020/2008 2.404 06.19.2018 07.01.2018 IESul 013 and 016/2008 2.556 06.11.2019 07.01.2019
Jointly controlled subsidiaries
IEMadeira 013 and 015/2009 2.556 06.11.2019 07.01.2019 IEGaranhuns 022/2011 2.257 06.20.2017 07.01.2017
The next periodic tariff revisions for the RAP of the Company and its subsidiaries and jointly controlled subsidiaries are described in note 1.2.
(a) Periodic Tariff Revision – CTEEP Contract 059/2001
The Company’s Periodic Tariff Revision (RTP), relating to Concession Contract No. 059/2001, was defined by means of Approval Resolution No. 2.714, of June 30, 2020, Proceeding No. 48500.000748/2019-16, with effects retrospective to July 2018, and the differences between the RAP are determined in this RTP. The differences between the amounts actually received and those in the RTP will be adjusted, positively or negatively, by using the Adjustment Portion (PA) mechanism.
Said RTP included the revenue repositioning upon the determination of several costs that comprise the Annual Permitted Revenue (RAP) portions, as shown below:
(i) CAA (Annual Cost of the Assets) compensation for RBNI (*) and RBSE
The consideration for new facilities (RAP “RBNI”) of the Company increased from R$233,762 to R$237,058, representing an increase of 1.41%, due to the following: (i) change in the compensation base due to the benchmark price bank; (ii) change in the profile of part of the RAP´s from plain to descending (as determined by Proret 9.1, version 2.0); (iii) retrospective change of the WACC from 6.64% to 7.71%; and (iii) inclusion of regulatory premium for the risk of operating and maintaining assets arising from special obligations.
The RAP “RBSE” increased from R$1,531,817 to R$1,842,311, with an increase of 20.27 % due to the following:
• The amounts relating to the financial component, under Administrative Ruling No. 120/2016, encompass (i) write-off of assets made in the period from January 2013 to June 2017; (ii) incorporation of amounts relating to the cost of equity capital (Ke). The Ke amounts relating to cycles 2017/2018, 2018/2019 and 2019/2020 will be received by using the adjustment portion mechanism in the three subsequent cycles. These retrospective amounts included IPCA only. The RAP of the financial component totaled R$1,035,452 for cycle 2018/2019.
• The economic component decreased from R$714,729 to R$692,415, as of July 2018, basically due to the change in WACC and the revision of the write-offs and assets fully depreciated.
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(ii) O&M compensation
To define the O&M compensation, ANEEL used the efficient operating cost methodology based on a benchmarking model. This process was completed upon the publication of Regulatory Resolution No. 880/20. The Company was appointed as a benchmark company and, as such, 134.07% of its regulatory operating and maintenance costs will be transferred, having 2016 as the base year, thus representing a reduction of around 17% in relation to the O&M RAP for cycle 2017/2018. This reduction will be applied gradually at a rate of 1/5 of the amount per year, beginning in July 2018, in such a way that the tariff cycle 2020/2021 will start with a reduction of 3/5. The retrospective amounts for cycles 2018/2019 and 2019/2020 will be returned by using the Adjustment Portion (PA) mechanism.
(iii) c) Optimal capital structure and definition of the transmission companies’ compensation
In defining the provisional RAP, ANEEL applies the WACC rates effective in the year enhancements were authorized. This compensation is revised in the subsequent tariff revision process. Consequently, all base of assets subject to such tariff revision was compensated at a WACC of 7.71%.
(iv) iv) Identification of the amount to be considered as tariff reduction – Other Revenues
The methodology used to capture the amounts of Other Revenues for the tariff moderation was approved by means of Regulatory Resolution No. 754/2016, and the amount of R$3,543, as of June 2018, was captured.
(v) Adjustment Portion (PA)
The Adjustment Portion (PA) is the portion of revenue arising from the adoption of a mechanism established in the agreement, which is used in the periodic annual adjustments by adding to or subtracting from the RAP in order to offset a surplus or deficit of collection in the period prior to the adjustment.
In the Periodic Tariff Revision (RTP) adjustment portions were defined that will be received by the Company in a period of three years in the total amount of R$892,079, considering the following: (i) the RAP RBNI retroactivity, (ii) the write-off of the assets in the financial component, (iii) the start of the cost of equity capital (Ke) payment, (iv) the revision of the amounts relating to minor improvements, and (v) postponement of the RTP from cycle 2018/2019 to cycle 2020/2021).
(vi) Administrative Proceeding
Regarding the RTP, on July 13, 2020, the Company filed Administrative Appeal claiming the following:
• RBNI: (i) adjustment of the total value of the Special Obligations assets amount; (ii) inclusion of the decommissioning costs for assets whose New Replacement Value (VNR) was defined under the inspected and adjusted original carrying amount (VOC) methodology, to equalize the costs considered in the breakdown of the new replacement value of the assets appraised under ANEEL’s Benchmark Price Bank methodology; (iii) inclusion of assets that, despite in operation, have no revenue defined;
• RBSE: (i) need to compensate the cost of capital relating to the amounts that should have been paid to transmission concessionaires extended by Law No. 12.783/2013 according to the rationale established in art. 1, paragraph 3, of Administrative Ruling MME 120/2016, requiring the compensation at the actual cost of equity capital (ke), under article 1, paragraph 3, of MME Administrative Ruling No. 120/2016 through the actual payment date (art. 15, Paragraph 3, of Law 12.783/2013).
Through March 31, 2021, there were no change in the status of such Appeal.
(b) Periodic Tariff Revision - Subsidiaries
The RTP process of the entities involves: (i) a revision of the debt capital cost for the assets obtained by means of auctions; (ii) application of the business productivity gain (which is currently equal to zero); (iii) a revision of the base of assets comprised of enhancement projects and improvements. For 2018 and 2019, the debt capital costs were revised. Whereas, the valuation of said regulatory compensation base is preferably made by ANEEL’s Benchmark Price Bank; the related discussions were held by means of Public Hearing No. 031/18, and the results were approved by means of Approval Resolution No. 2.514/2019. Considering that on the effective dates of the RTPs the price bank was still under discussion, the base of assets comprised of enhancement projects and PAGE: 75 of 108
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Accordingly, the variance in the subsidiaries’ RAPs for 2018 and 2019, considering the revision of the base of enhancements and improvements, is as follows:
Entity Year of revision Concession contraction RTP revision results (%) IENNE 2018 001/2008 0.61 IEPinheiros 2019 012/2018 (1.95) IEPinheiros 2019 015/2018 2.22 IEPinheiros 2019 018/2018 4.13 IESul 2019 013/2008 (2.37) IESul 2019 016/2008 1.89
On July 8, 2020, an administrative appeal was filed with ANEEL for the contracts of IEPinheiros (012/2008, 015/2008, 018/2008) and IESul (016/2008), relating to appraisal reports relating to BRR assets. The amounts used by ANEEL in determining the RAP were based on BRR reports filed in July 2019, which did not include the changes in relation to the Price Bank according to Order No. 2.869/2019, published on October 29, 2019, which changed data relating to the quantitative references of the assets that comprise said bank, resulting in changes to the VNR reference values in appraising the assets. Confirmation Resolutions 2843 and 2844, issued on April 16, 2021, confirmed the result of the analysis of the Administrative Appeal and revised the RAP for enhancements and improvements. The adjustments will be retrospectively applied, beginning July 2021.
Thus, the change in the subsidiaries’ RAPs for the years 2018 and 2019, considering the confirmation of the outcome on the administrative appeal regarding the revision of the enhancements and improvements base is:
Entity Year of revision Concession agreement RTP revision results (%) IENNE 2018 001/2008 0.62 IEPinheiros 2019 012/2018 (1.92) IEPinheiros 2019 015/2018 2.50 IEPinheiros 2019 018/2018 (4.13) IESul 2019 013/2008 (2.37) IESul 2019 016/2008 2.76
During the first half of 2020, Public Consultation No. 027/120 was initiated to address the RTP for IESerra do Japi Contract No. 026/2009. However, the result of such Public Consultation was only completed when Approval Resolution REH 2826/20 was published, on December 18, 2020. Therefore, the positive result of around 2.86% of the Periodic Tariff Revision (RTP) will only be applied beginning July 2021, with retrospective effects. These effects are reflected on the cash receipt flow considered in measuring the contract asset. With the result of Resolution REH 2826/20 for IESerra do Japi Contract 026/2009 on December 23, 2020, an Administrative Appeal was filed with ANEEL, relating to valuation reports relating to BRR assets, since the final version of the valuation report filed on June 5, 2020 was not considered in the RTP for said Contract, as the regulatory agency used one of the preliminary versions of such valuation report. Confirmation Resolution No. 2.840, of March 30, 2021, ratified the outcome of Administrative Appeal and set the positive tariff repositioning at 2.71%, effective beginning July 2021, with retrospective effects.
PAGE: 76 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
25.4 Annual revenue adjustment
On July 14, 2020, Approval Resolution No. 2.725 was published to establish the annual permitted revenues for the Company and its subsidiaries for the availability of the transmission facilities comprising the Basic Grid and other transmission facilities, for a 12-month cycle, from June 30, 2020 to June 30, 2021, considering the cycle shown below:
RAP RAP 19/20 20/21 cycle cycle 50% RAP REH REH Concessionaire Rate Inflation Enhancements/improvements Ke RTP reduction PA 20/21 2.565 (*) 2.725 RAP cycle
ISA CTEEP IPCA 2,633,794 49,031 10,157 278,840 (72,940) 2,898,882 232,149 3,131,031 - Operating IPCA subsidiaries /IGP- 399,085 8,900 697 1,978 (5,118) 405,542 3,461 409,003 - (**) M
Total 3,032,879 57,931 10,854 278,840 (70,962) (5,118) 3,304,424 235,610 3,540,034
(*) The amounts do not include the negative adjustment portion (PA) of the cycle 2019/2020 of R$63,985. (**) Considering the RAP from PBTE, acquired in March 2021.
The Company’s and its subsidiaries’ Regulatory Revenue, net of PIS and COFINS, is as follows:
Concession Total Total Contract Basic Grid Other Transmission Facilities – DIT 2020 (*) 2019 (*)
Adjust Adjust ment Auctio ment RPC RCDM Auctio portio RBSE RBNI ned portion (***) (***) ned n
3,131,03 059/2001 1,910,977 189,189 - 193,658 650,006 148,709 - 38,492 1 2,579,079 143/2001 - - 13,352 (191) - - - - 13,161 16,476 004/2007 - - 20,076 (213) - - - - 19,863 19,030 012/2008 - 7 9,081 236 - 1,019 1,369 34 11,746 10,677 015/2008 - 16,280 17,368 396 - 4,833 425 146 39,448 35,337 018/2008 - 100 4,473 86 - 1,471 54 (415) 5,769 5,865 021/2011 - - 4,478 (28) - - 1,643 - 6,093 5,495 026/2009 - 5,541 30,802 (211) - - 7,006 - 43,138 41,840 001/2008 - 5 48,858 3,675 - - - - 52,538 46,371 020/2008 - 11,030 - (668) - 2,414 - (1) 12,775 10,401 013/2008 - - 6,340 78 - - - - 6,418 5,777
016/2008 - 2,389 11,128 542 - - 257 5 14,321 12,166 042/2017 (**) - - 12,022 (7) - - - - 12,015 -
3,368,31 1,910,977 224,541 177,978 197,353 650,006 158,446 10,754 38,261 6 2,788,514
(*) Including the amounts relating to the adjustment portion (PA). (**) Placement into operation in August 2019. (***) RPC represents the equivalent to “RBSE” whereas RCDM represents the equivalent to “RBNI” for the DITs.
PAGE: 77 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information 26 Costs of infrastructure implementation, operation and maintenance services, and general and administrative expenses a) Parent
Parent
03.31.2021 03.31.2020
Cost of Implementation services and O&M costs rendered Expenses Total Total
Management fees - - (4,381) (4,381) (3,215) Personnel (60,875) (5,189) (24,515) (90,579) (73,400) Services (33,448) - (9,519) (42,967) (29,941) Depreciation - - (4,992) (4,992) (4,319) Materials (38,197) - (452) (38,649) (1,057) Leases and rentals (688) - (344) (1,032) (586) Other (13,597) - 278 (13,319) (18,081)
(146,805) (5,189) (43,925) (195,919) (130,599)
Consolidated
03.31.2021 03.31.2020
Implementation Cost of and O&M services costs rendered Exepenses Total Total
Management fees - - (4,381) (4,381) (3,215) Personnel (60,875) (5,189) (25,452) (91,516) (74,136) Services (117,810) - (9,976) (127,786) (63,413) Depreciation - (5,119) (5,119) (4,468) Materials (71,370) - (453) (71,823) (103,860) Leases and rentals (1,040) - (351) (1,391) (763) Other (26,394) - 3,235 (23,159) (18,480)
(277,489) (5,189) (42,497) (325,175) (268,335)
Out of the costs shown above, the Parent’s infrastructure implementation costs totaled R$57,505 in 1Q21 and R$7,160 in 1Q20. Consolidated infrastructure implementation costs totaled R$185,716 in 1Q21 and R$141,065 in 1Q20. The respective infrastructure implementation revenue, shown in note 25.1, is calculated by adding the PIS and COFINS rates and other charges to the cost of the investment.
PAGE: 78 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
27 Finance income (costs)
Parent Consolidated
03.31.2021 03.31.2020 03.31.2021 03.31.2020 Revenue Income from short-term investments 6,979 5,726 9,761 21,983 Interest income 1,105 222 1,113 224 Inflation adjustments 2,893 572 2,905 574 Hedge transactions (i) MtM (mark to market) adjustment - 807 - 807 Adjustment of hedging instruments - Swap - 169,305 - 169,305 Other 6,211 871 6,220 894
17,188 177,503 19,999 193,787 Expenses Interest on borrowings (13,558) (8,953) (19,054) (14,123) Interest expense (203) (635) (205) (642) Charges on debentures (44,043) (23,138) (44,043) (23,138) Inflation adjustments (71,492) (26,595) (71,036) (26,733) Hedging instrument (i) Charges on swap - (5,960) (40) (5,843) MtM (mark to market) adjustment - (807) - (807) Exchange rate changes - borrowings - (169,305) - (169,305) Other (1,200) (2,276) (1,390) (2,507)
(130,496) (237,669) (135,768) (243,098)
(113,308) (60,166) (115,769) (49,311)
(i) Refers to gain (loss) on financial transactions under Law No. 4131, of September 03, 1962, which addresses the use of foreign capital and remittance of profits abroad.
28 Income tax and social contribution
The provision for income tax and social contribution is recognized monthly on an accrual basis and computed as provided for in Law No. 12.973/14.
The Company adopts the taxable income regime on an estimated basis and makes monthly payments by applying the deemed income rates on gross revenue while subsidiaries adopt the deemed income regime.
PAGE: 79 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
(a) Reconciliation of the effective tax rate
The reconciliation of income tax (IRPJ) and social contribution (CSLL) expenses for the periods is as follows:
Parent Consolidated
03.31.2021 03.31.2020 03.31.2021 03.31.2020 (Restated) (Restated)
Profit before income tax and social contribution 741,329 640,621 760,563 672,135
Statutory rates 34% 34% 34% 34%
Income tax and social contribution at statutory rate (252,052) (217,812) (258,591) (228,527)
Income tax and social contribution on permanent differences Share of profit of investees 94,914 83,176 42,220 45,218 Effect of adopting the deemed income regime for subsidiaries (*) - - 41,854 32,656 Other (1,567) 598 (1,567) 598
Effective income tax and social contribution (158,705) (134,038) (176,084) (150,055)
Income tax and social contribution Current (168,298) (75,865) (210,719) (77,594) Deferred 9,593 (58,173) 34,635 (72,461)
(158,705) (134,038) (176,084) (150,055)
Effective rate 21% 21% 23% 22%
(*) the deemed income regime was adopted to calculate income tax and social contribution for subsidiaries.
(b) Breakdown of deferred income tax and social contribution
Parent Consolidated
Assets / (Liabilities) 03.31.2021 12.31.2020 03.31.2021 12.31.2020
Receivables - Law No. 12783 - SE (i) (1,984,083) (2,098,270) (1,984,083) (2,098,270) IFRS adjustments (ICPC 01 (R1) and CPC 47) (1,189,231) (1,084,027) (1,867,216) (1,198,437) (ii) Provision for risks 33,628 19,514 33,628 19,514 Other temporary differences 310,526 324,030 311,323 324,338
Total, net (2,829,160) (2,838,753) (3,506,348) (2,952,855)
(i) Deferred income tax and social contribution on the compensation from concession asset relating to SE facilities, which will be incorporated into the tax base as amounts are actually received.
(ii) Refers to income tax and social contribution on profit from infrastructure implementation operation to provide the electric power transmission services and compensation from concession assets (ICPC 01 (R1)) and CPC 47 (IFRS 15)) recognized on an accrual basis, which are taxed when amounts are actually received, as provided in article 168 of Regulatory Instruction No. 1700/17 and article 36 of Law No. 12973/14.
PAGE: 80 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
The Company’s Management believes that deferred income tax and social contribution assets arising from temporary differences will be realized proportionately to the lawsuits, trade receivables and the materialization of the events that gave rise to the provisions for risks.
29 Related-party transactions
The main balances and transactions with related parties in the period and year are as follows:
03.31.2021 12.31.2020 03.31.2021 03.31.2020
Nature of Revenue/ Revenue/ transaction Related parties Assets Liabilities Assets Liabilities (Expense) (Expense)
Short-term benefits (a) Management - - - - (4,381) (3,215)
Dividends ISA Capital (578,686) - (174,246) - - IEGaranhuns 8,384 - 8,384 - - - IEMadeira 5,950 - 5,950 - - - 14,334 (578,686) 14,334 (174,246) - -
ISA Capital 50 - 116 - 50 72
IEMG 69 - 71 - 69 53 Sublease, IEPinheiros 234 - 243 - 234 175 Reimbursements and 117 117 Sharing of personnel IESerra do Japi - 121 - 88 expenses (b) Evrecy 78 - 81 - 78 38 IENNE 281 - 291 - 281 211 IEItaúnas 21 - 22 - 21 24 IETibagi 27 - 22 - 27 24 IEItaquerê 21 - 22 - 21 24 IEItapura 19 - 19 - 19 22 IEAguapeí 21 - 22 - 21 24 IESul 119 - 120 - 119 93 IEBiguaçu 21 - 22 - 21 3 IEAimorés 33 - 22 - 33 31 IEParaguaçu 33 - 22 - 33 31 IEIvaí 33 - 22 - 33 31 Internexa Brasil - - - - - (87) 1,177 - 1,238 - 1,177 857
03.31.2021 12.31.2020 03.31.2021 03.31.2020
Nature of Revenue/ Revenue/ transaction Related parties Assets Liabilities Assets Liabilities (Expense) (Expense)
Service provision (c) ISA Capital 96 - 30 - 96 84 IEMG 179 - 151 - 179 555 IEPinheiros 1,721 - 1,446 - 1,721 343 IESerra do Japi 110 - 101 - 110 283 Evrecy 2,320 - 2,334 - 2,285 577 IENNE 134 - 349 - 134 983 IEItaúnas 323 - 915 - 323 - IETibagi 159 - 2,554 - 159 - IEItaquere 222 - 1,378 - 222 - IEtapura 430 - 2,276 - 430 154 IEAguapei 683 - 2,199 - 683 - IEGaranhuns 38 - 37 - 38 108 IEBiguaçu 303 - 673 - 303 - Internexa Brasil 201 - 411 (31) 211 270
6,919 - 14,854 (31) 6,894 3,357 Related-party balances 22,430 (578,686) 30,426 (174,277) 3,690 999
- 1,265 Short-term Bandeirantes 219,574 140,561 - 167 investments - Xavantes 208,343 - 260,401 - 231 17,727 PAGE: 81 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
investment funds Assis 14,191 - 30,823 - 141 194 (note 6) - Barra Bonita 27,625 21,772 - 117 212 469,733 - 453,557 - 656 19,398
Other liabilities Eletrobras - (34,900) - (33,585) - - - (34,900) - (33,585) - -
Total 492,163 (613,586) 483,983 (207,862) 4,346 20,397
(a) Refers to management fees, which, as disclosed in the Company’s statement of profit and loss, amount to R$4,381, Parent and consolidated (R$3,215 as of March 31, 2020).
The Company’s compensation policy does not include postemployment benefits, other long-term benefits, severance benefits or share-based compensation.
(b) The sublease agreement comprises the sub-leased area of the Company’s headquarters building, as well as apportionment of common area and maintenance expenses, reimbursement of shared services, among others.
The personnel expenses sharing agreement requires the proportional allocation of expenses relating to employees shared the Company and its subsidiaries.
(c) The Company maintains the following service agreements: (i) ISA Capital - tax and accounting bookkeeping services, tax calculation and payroll processing; (ii) IEMG, IEPinheiros, Serra do Japi, Evrecy, IENNE, IEItapura, and Garanhuns - operation and maintenance of its facilities; (iii) Internexa Brasil, a subsidiary of ISA Group - two service agreements including assignment of right of use, on an onerousbasis, of the support infrastructure necessary for the installation of fiber optic cables, auxiliary services and related improvements and sharing of IT infrastructure. Additionally, the Company contracted the provision of 10 Mbps internet link services with Internexa Brasil; (iii) IEAguapei, IETibagi, IEItapura, IEItaquere, Evrecy, IEItaúnas, IEMG, IENNE, IESUL, Serra do Japi e IEPinheiros – services including engineering, analysis of basic and executive projects, technical support to the acquisition of materials and equipment, and substation and transmission line construction management.
(d) These transactions are conducted under specific conditions agreed upon between the parties and no transactions considered unusual and out of the normal course of business were performed.
The Company has free lease agreements with subsidiaries IEItapura and IEPinheiros and the jointly controlled subsidiary IEMadeira to formalize the borrowing of pieces of equipment and materials that the companies did not have readily available in inventory.
The Company entered into a non-onerous Procurement Management Cooperation Agreement with Interconexión Elétrica S.A. E.S.P. to generate increased synergy and efficiency in managing the quotation and negotiation process for ISA Group’s purchases.
Additionally, the Company contributes as a founding member of Brazil’s Association for Social and Cultural and Business Interchange - Colombia, whose objective is to be the largest platform of relationship between Brazil and Colombia, fostering bilateral social, culture and trade investments.
30 Financial instruments
(a) Identification of the main financial instruments
Parent Consolidated
Level 03.31.2021 12.31.2020 31.03.2021 12.31.2020
Financial assets
Fair value through profit or loss Cash equivalents 1 707,932 2,017,084 769,964 2,049,142 PAGE: 82 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information Short-term investments 2 69,569 51,787 469,733 453,557 Derivative financial instruments 2 - - 25,924 10,016 Restricted cash 2 18,563 18,489 44,122 48,711
Amortized cost Concession asset - O&M services - 154,526 146,905 209,350 179,839 Accounts receivable - São Paulo State Finance Department - 1,821,503 1,778,999 1,821,503 1,778,999 Receivables from related parties - 22,430 30,426 14,771 14,994 Sureties and escrow deposits - 44,151 44,070 47,184 44,119 Other - Receivables 101,662 101,662 101,662 101,662
Financial liabilities
Amortized cost Borrowings and financing Current - 53,307 54,330 461,788 94,628 Noncurrent - 996,777 1,008,447 1,182,886 1,208,301 Debentures Current - 245,489 217,948 245,489 217,948 Noncurrent - 3,664,357 2,961,318 3,664,357 2,961,318 Leases Current - 7,624 8,603 7,816 8,795 Noncurrent - 41,373 43,212 42,856 44,742
Trade payables - 47,268 75,332 100,371 153,346 Interest on capital and dividends payable - 1,068,548 500,513 1,068,548 500,513
The carrying amounts of financial assets and financial liabilities, when compared to the amounts that could be obtained if they are traded in an active market or, in the absence of such market, the net present value adjusted based on the prevailing market interest rate, approximate their fair values. The Company classifies financial instruments as required by CPC 46 (IFRS) - Fair Value Measurement:
Level 1 - quoted prices (unadjusted) in active markets, net and observable for identical assets or liabilities, available on the measurement date;
Level 2 - quoted prices (which can be adjusted or unadjusted) for similar assets or liabilities in active markets, other inputs not directly or indirectly observable in level 1, pursuant to asset or liability terms; and
Level 3 - assets and liabilities whose prices are unavailable or prices or valuation techniques supported by a small or inexistent, unobservable or illiquid market. In this level, the fair value estimate becomes highly subjective.
The Company contracted swap transactions to hedge against fluctuations in currency and interest rate on foreign currency-denominated borrowings under Law No. 4.131/1962. For swap transactions, the rate applied is 102.3%. These transactions were settled between July and August 2020.
The Company classifies the derivative instrument contracted as fair value hedge and, based on the requirements of CPC 48 and IFRS 9, the Company adopted the hedge accounting for such transactions.
In 2018, subsidiary Biguaçu entered into NDF currency hedge contracts with Citibank, whereby that company bought future dollar with a notional value of USD29,301. The purpose of these transactions was to hedge commitments in foreign currency assumed by Biguaçu. In May 2020, the first financial settlement was made, and the settlements will be made up to the end of September 2021.
In the third quarter of 2020, subsidiary Biguaçu entered into new NDF currency hedge contracts with Citibank, whereby that company bought future dollar with a notional value of USD7,097. The purpose of these transactions was to hedge commitments in foreign currency assumed by Biguaçu.
In December 2020, subsidiary IERiacho Grande entered into NDF currency hedge contracts with BTG Pactual, whereby the company bought future dollar with a notional value of USD32,723. The purpose of these transactions PAGE: 83 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information was to hedge foreign currency commitments assumed (CAPEX) by the subsidiary.
The Company classifies the derivative instrument contracted as fair value hedge and cash flow hedfe and, based on the requirements of CPC 48 and IFRS 9, the Company adopted the hedge accounting for such transactions.
Financial instrument management is in line with the Risk Management Policy and Financial Risk Guidelines of the Company and its subsidiaries. The results from these transactions and adoption of controls to manage this risk are part of the monitoring of the financial risks adopted by the Company and its subsidiaries as follows:
NDF transaction Consolidated
03.31.2021 Notional Contract Hedging Counterp Final value - Fair value date Instrument purpose Nature arty maturity US$ adjustment
Non Deliverable Biguaçu USD Purchase Citibank Oct 18 Sep 21 3,060 4,135 Forward - NDF Non IERiacho Deliverable BTG USD Purchase Dec 20 Jul 25 32,723 21,789 Grande Forward - Pactual NDF
(b) Financing
Debt-to-equity ratio
The debt ratio at the end of the prior year and beginning of the current period is as follows:
Parent Consolidated
03.31.2021 12.31.2020 03.31.2021 12.31.2020
Borrowings and financing Current 53,307 54,330 461,788 94,628 Noncurrent 996,777 1,008,447 1,182,886 1,208,301
Leases Current 7,624 8,603 7,816 8,795 Noncurrent 41,373 43,212 42,856 44,742
Debentures Current 245,489 217,948 245,489 217,948 Noncurrent 3,664,357 2,961,318 3,664,357 2,961,318
Total debt 5,008,927 4,293,858 5,605,192 4,535,732 PAGE: 84 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
Cash and cash equivalents and short-term investments 780,956 2,071,906 1,323,421 2,520,894
Net debt 4,227,971 2,221,952 4,281,771 2,014,838
Equity 13,307,781 13,754,283 13,663,707 14,125,442
Debt ratio, net 31.8% 16.2% 31.3% 14.3%
CTEEP and its subsidiaries are parties to borrowings and financing agreements that contain covenants determined based on debt ratios (notes 14 and 16). As of March 31, 2021, the Company and its subsidiaries are compliant with the requirements relating to covenants.
The carrying amount of borrowings and financing, considering the financial instruments applicable, and debentures is pegged to the TJLP, CDI and IPCA fluctuation and approximates the fair value.
(c) Risk management
The main risk factors inherent in the Company’s and its subsidiaries’ transactions are as follows:
(i) Credit risk - The Company and its subsidiaries enter into agreements with the National Electric System Operator (ONS), concessionaires and other agents, governing the provision of services relating to the basic grid, including a bank guarantee clause. The Company and its subsidiaries also maintain agreements governing the provision of services directly to free consumers, also containing a bank guarantee clause, to mitigate the risk of default.
(ii) Price risk - The Company’s and its subsidiaries’ revenues are, as set forth in the concession contract, annually adjusted by ANEEL, based on the IPCA and IGP-M fluctuation, and a portion of the revenues is subject to periodic tariff revision (note 25.2).
(iii) Interest rate risk - The adjustment of financing agreements is pegged to the TJLP, IPCA and CDI fluctuation (notes 14 and 16). Additionally, the Company’s Management monitors the valuation of the pension plan’s actuarial assets, pegged to the interest rate, which is determined based on market inputs for returns on NTN- B notes.
PAGE: 85 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
(iv) Currency risk - The Company and its subsidiaries do not have foreign currency-denominated trade receivables and other assets; however, there are transactions involving the acquisition of underground and subsea cables and respective accessories as well as the provision of the services necessary to their implementation, in subsidiaries Biguaçu and Riacho Grande, with future cash disbursements in dollars, for which a NDF derivative instrument has been contracted to manage the cash flow’s currency risk.
(v) Borrowing risk - The Company and its subsidiaries may face difficulties in the future to raise funds at costs and payment terms aligned with their cash generation profile and/or debt obligations.
(vi) Guarantee risk – The main guarantee risks are the following:
• Management of risks related to the retirement and health care benefits via Vivest (formerly “Funcesp”), a closed-end supplementary private pension entity, through its representation in management bodies.
• Participation as intervening guarantor, within the limit of its interests, for subsidiaries and jointly controlled subsidiaries, in their financing agreements (note 14).
(vii) Liquidity risk - The Company’s and its subsidiaries’ main sources of cash are the following:
Its operations, mainly the collection for the use of the electric power transmission system by other concessionaries and market participants. The cash amount, represented by the RAP linked to the basic grid’s facilities and other transmission facilities (DIT) is defined, as set forth in prevailing laws, by ANEEL.
The Company is compensated for the transmission system availability, and any electric power rationing will have no impact on revenue and respective cash receipts.
The Company manages the liquidity risk by maintaining adequate credit facilities and lines of credit to raise borrowings it considers appropriate, based on the continuous monitoring of budgeted and actual cash flows, and the combination of the maturity profiles of financial assets and financial liabilities.
Receipt of the facilities indemnity installment related to the SE represents an important source of cash generation for the Company in order to be able to comply with its financial planning for the coming years. The Company manages any changes to the schedule and legal proceedings that may impact cash receipts.
(d) Sensitivity analysis
The Company analyzes the sensitivity to interest rate and currency risks. The Company’s Management does not consider as material its exposure to other risks described above.
For purposes of defining a base scenario for analyzing the sensitivity of interest rate, price risk and currency fluctuations, we used the same assumptions defined for the Company’s long-term financial and economic plan. These assumptions are based on the macroeconomic environment in Brazil and the opinions of market specialists.
Therefore, to assess the effects of changes in the Company’s cash flow, the sensitivity analysis below, for items pegged to floating rates, considers:
Base scenario: Interest rate quotation (pre-DI curve) and exchange rate (future dollar) on June 30, 2021, determined on March 31, 2021, according to B3, which are shown in the interest risk and currency risk tables; and positive and negative 25% (scenario I) and 50% (scenario II) variations were applied.
PAGE: 86 of 108
Notes to the Interim Financial Information
Interest rate risk - Effects on finance income (costs) - Parent and consolidated
Risk of increase in indices Risk of decrease in indices
Balances at Transaction Risk 03.31.2021 Base scenario Scenario I Scenario II Scenario I Scenario II
Financial assets
Short-term investments and cash and cash equivalents 102.59% of CDI 777,501 11,363 12,934 14,495 9,783 8,194
Financial liabilities
Debentures - single series (i) IPCA+6.04% 183,568 5,489 6,165 6,833 4,806 4,116
Debentures - single series (ii) IPCA + 5.04% 348,372 9,566 10,845 12,111 8,273 6,966
Debentures - single series (iii) IPCA + 4.70% 707,554 18,611 21,755 24,294 16,594 13,972 Debentures - single series (iv) IPCA + 3.50%. 421,684 9,985 11,528 13,055 6,250 5,386 1st series debentures (v) CDI + 2,83% 805,401 6,547 8,199 9,810 4,949 3,310 2nd series debentures (v) IPCA + 5.30% 795,968 22,137 25,031 27,896 19,210 16,252 Debentures - single series (vi) IPCA + 5.07% 647,300 17,826 20,204 22,556 15,423 12,994 CCB CDI + 2.45% p.a. 652,877 5,304 6,645 7,950 4,011 2,682 FINEM BNDES (i), (ii) TJLP+1.80% to 2.62% 368,279 6,203 6,785 7,819 4,775 3,738
Net effect of changes 90,305 104,223 117,829 74,508 61,222
Benchmark for financial assets and financial liabilities
100% CDI (June 2021) (*) 3.30% 4.13% 4.95% 2.48% 1.65%
IPCA (March 2021) 6.10% 7.63% 9.15% 4.58% 3.05%
TJLP (June 2021) 4.61% 5.76% 6.92% 3.46% 2.31%
PAGE: 87 of 108
Notes to the Interim Financial Information
Risk of decrease in Risk of increase in indices indices
Balances at 03.31.202 Base Scenario I Transaction Risk 1 scenario Scenario I Scenario II Scenario I I
Financial assets
Short-term investments and cash and cash equivalents 102.59% of CDI 777,501 11,363 12,934 14,495 9,783 8,194
Financial liabilities
Debentures - single series (i) IPCA+6.04% 183,568 5,489 6,165 6,833 4,806 4,116
Debentures - single series (ii) IPCA + 5.04% 348,372 9,566 10,845 12,111 8,273 6,966
Debentures - single series (iii) IPCA + 4.70%. 707,554 18,611 21,755 24,294 16,594 13,972 Debentures - single series (iv) IPCA + 3.50%. 421,684 9,985 11,528 13,055 6,250 5,386 1st series debentures (v) CDI + 2.83% 805,401 6,547 8,199 9,810 4,949 3,310 2nd series debentures (v) IPCA + 5.30% 795,968 22,137 25,031 27,896 19,210 16,252 Debentures - single series (vi) IPCA + 5,07% 647,300 17,826 20,204 22,556 15,423 12,994 CCB CDI + 2.45% p.a. 652,877 5,304 6,645 7,950 4,011 2,682 TJLP+1.80% to FINEM BNDES (i), (ii) 2.62% 368,279 6,203 6,785 7,819 4,775 3,738
Net effect of changes 90,305 104,223 117,829 74,508 61,222
Benchmark for financial assets and financial liabilities
100% CDI (June 2021) (*) 3.30% 4.13% 4.95% 2.48% 1.65%
IPCA (March 2021) 6.10% 7.63% 9.15% 4.58% 3.05%
TJLP (June 2021) 4.61% 5.76% 6.92% 3.46% 2.31%
PAGE: 88 of 108
ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information
31 Insurance
The Company’s insurance coverage and effective terms by insurance line is as follows:
Parent
Insured Insurance line Effective date amount- R$ Premium - R$ thousand thousand
Property (a) 12/01/19 to 06/01/21 2,433,326 6,015 General civil liability (b) 12/19/20 to 12/19/21 60,000 100 National transportation (c) 12/19/20 to 12/19/21 360,000 33 Group personal accident (d) 04/30/20 to 04/30/21 85,000 15 Vehicles (e) 04/10/20 to 12/19/21 Market value 222 Court guarantee (f) 04/28/16 to 04/27/26 611,076 3,760
10,145
Consolidated
Insured Insurance line Effective date amount - R$ Premium - R$ thousand thousand
Property (a) 12/01/19 to 12/19/21 3,354,687 6,626 General civil liability (b) 12/19/20 to 12/19/21 60,000 100 National transportation (c) 12/19/20 to 12/19/21 360,000 33 Group personal accident (d) 04/30/20 to 04/30/21 85,000 15 Vehicles (e) 04/10/20 to 12/19/21 Market value 222 Court guarantee (f) 04/28/16 to 04/27/26 611,076 3,760
10,756
(a) Property - coverage against fire and electrical damages for the main equipment installed in transmission substations, buildings and related components, storeroom supplies and facilities, as set forth in concession contracts, where the transmission companies should keep insurance policies to ensure the proper coverage of the most important equipment of the transmission system facilities, and the transmission company should define the assets and facilities to be insured.
(b) General civil liability - Coverage against repairs for involuntary, personal and/or property damages caused to third parties, as a result of the Company’s activities.
(c) National transportation - Coverage against damages caused to the Company’s assets and equipment transported in Brazilian territory.
(d) Group personal accident - Coverage against personal accidents of executives and apprentices.
(e) Vehicles - coverage against crash, fire, theft and third parties.
(f) Court guarantee - replacement of sureties and/or escrow deposits made by the Judicial Branch.
There is no coverage for potential damages to the transmission lines against fire, lightning, explosion, short circuit and power interruption.
The assumptions adopted to contract insurance, given their nature, are not included in the scope of an audit work. Consequently, they were not reviewed by the independent auditors.
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32 Retirement supplementation plan governed by Law No. 4819/58
The supplementary pension plan under State Law No. 4819/58, which established the creation of the State Social Security Fund, is applicable to government body’s employees, corporations in which the State of São Paulo holds the majority of shares, with right to control and to industrial services owned and managed by the State, hired through May 13, 1974, and also provided for supplementary pension plans, bonus leave and family allowance. The funds necessary to cover the charges under such plan are borne by the relevant bodies of the State Government of São Paulo, whose implementation was made as set forth in the agreement entered into among the Finance Department of the State of São Paulo (SEFAZ-SP) and CTEEP, on December 10, 1999.
Such procedure was properly carried out up to December 2003 by Vivest (Fundação CESP), with the funds provided by SEFAZ-SP, transferred by CESP and subsequently by CTEEP. Since January 2004, SEFAZ-SP has processed payments of benefits directly, without the intermediation of CTEEP and Vivest (Fundação CESP) at amounts lower than those historically paid up to December 2003.
(a) Civil class action under discussion at the 2nd Court of the Treasury Department
The change in SEFAZ’s method used to pay retirements and pensions made retirees to file lawsuits, especially a civil class action. The 2nd Court of the Treasury Department issued a decision thereon in June 2005 overruling the pension supplementation claim and allowing the processing of payroll and payments of retirements and pensions by SEFAZ-SP under Law No. 4819/58. The Association of Funcesp Retirees (AAFC), which represents retirees and pensioners, filed an appeal against the decision and the fact that the lawsuit was upheld to the common courts. On November 24, 2015, a final and unappealable decision was issued by the Superior Court of Justice, which maintained the discussion at the common courts.
Accordingly, on June 27, 2016, AAFC’s appeal was stayed, and the labor court injunction (item “b” below) should be maintained until the appeal was judged.
Since June 2016, a public-interest civil action is in progress in conjunction with a class action whose status is reported in item (b.(i)) below. Although these actions are in progress together, they are independent from each other.
(b) Civil class action under discussion at the 2nd Court of the Treasury Department (former Labor Claim which was discussed at the 49th São Paulo Labor Court)
Class action filed by AAFC, simultaneously to the civil class action referred to above. This time, however, before the Labor Court, in an individual lawsuit for which advanced relief had been granted. On July 11, 2005, the advanced relief was ratified so that Vivest (Fundação CESP) resumed the processing of payments of those benefits under Law No. 4819/58, under the respective regulation, the same way as that effective until December 2003, in which the Company was acting as an intermediary between SEFAZ-SP and Vivest (Fundação CESP). Currently, the public-interest civil action and civil class action are being discussed at the common courts, as established in the decision obtained by the Company in a conflict of jurisdiction before the STF.
Following the decision on the Conflict of Jurisdictions mentioned above, the class action was received at the 2nd Court of the Treasury Department on May 20, 2016 and, on May 30, 2016, a decision was issued revoking the preliminary injunction that ordered the Company to make monthly payments, extinguishing the claims relating to payroll processing, and considering groundless the request for refunding any differences that may be owed to retirees and pensioners under Law No. 4819/58.
SEFAZ-SP resumed payroll processing in June 2016. However, after filing an appeal against the decision, AAFC requested São Paulo Court of Justice to stay the effect of the appeal, which was granted on June 27, 2016.
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On July 22, 2016, a new decision was issued clarifying that the labor injunction should be maintained until AAFC’s appeal was judged.
Since June 2016, the class action was in progress in conjunction with the public-interest civil action whose status is reported in item (b.i) below. Although these actions are in progress together, they are independent from each other.
(i) Status of the Public-interest Civil Action and Class Action (items a and b)
On August 2, 2017, São Paulo Court of Justice unanimously considered the decision groundless, condemned AAFC’s position due to malicious abuse of legal process, and revoked the injunction.
Following the unanimous decision above, on August 8, SEFAZ sent an Official Letter to the Company informing that they were assuming the payroll of the retirees and pensioners under Law No. 4819/58 beginning August 2017. AAFC filed appeals against São Paulo Court of Justice’s unanimous decision: one special appeal with the Superior Court of Justice (STJ) and one extraordinary appeal with the Federal Supreme Court (STF), both of them claiming São Paulo Court of Justice’s unanimous decision to be stayed.
São Paulo Court of Justice, on October 18, 2017, and STJ, on October 31, 2017, denied the claim filed by AAFC. However, STF granted an injunction staying the effects of the decision issued by São Paulo Court of Justice and ordering defendants to continue to adopt the same procedures as those were adopted before the matter was judged by São Paulo Court of Justice until STF analyzes the grounds of the request.
As a result of this court injunction, SEFAZ determined that the payroll should be processed by Vivest (Fundação CESP) beginning December 2017.
In December 2017, the Company filed an appeal against the court injunction issued by STF; the appeal awaits judgment.
In April 2020, the STJ did not recognize the Special Appeals filed by AAFC, which filed a new appeal. According to STJ’s judge-rapporteur, the court decision should be analyzed by the STF before being analyzed by the STJ to avoid conflicting decisions. Therefore, the lawsuit was immediately distributed to the STF so that AAFC’s Extraordinary Appeals may be judged.
On December 26, 2020, a first-instance decision by the STJ’s judge-rapporteur for the public-interest civil action was issued ratifying the injunction published on January 08, 2021. The Company then filed an appeal against such decision, which is pending judgment. The class action is still at the STJ awaiting distribution to the STF.
(c) Claims filed by individuals and by multiple plaintiffs with the Labor Court and State Court
The Company is also a party to 834 claims filed by individuals and by multiple plaintiffs amounting to approximately R$426,134, If the outcome of such claims is not favorable, according to the assessment of the Company and and of its external legal counsel, any amounts to be paid will be subsequently charged from the State of São Paulo Finance Department and, additionally, recorded in “trade accounts receivable”.
(d) Collection claim
SEFAZ-SP has transferred to the Company, since September 2005, amounts lower than those established by the decision issued by the 49th Labor Court, referred to in letter (b) above.
By virtue of this decision, the Company transferred to Vivest (Fundação CESP), from January 2005 to March 2021, the amount of R$5,476,504 for the payment of benefits under State Law No. 4819/58, and received from SEFAZ-SP the amount of R$3,435,013 for such purpose. The difference between the amounts transferred to Vivest (Fundação CESP) and reimbursed by SEFAZ-SP, in the amount of R$2,041,491 (Note 8 (a)), has been requested by the Company for reimbursement by SEFAZ-SP. In addition, there are amounts relating to labor claims settled by the Company and under the responsibility of SEFAZ-SP, in the amount of R$296,267 (Note 8 (b)), totaling R$2,337,758.
In December 2010, CTEEP filed a collection claim against SEFAZ-SP to recover the amounts that were not received. After a decision that dismissed the case without analyzing its grounds in May 2013, the decision was upheld by São Paulo Court of Justice in December 2014. PAGE: 91 of 108
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The Company filed an appeal and, on August 31, 2015, São Paulo Court of Justice accepted the Company’s appeal and sentenced SEFAZ-SP to make the transfers relating to supplementary retirement and pension as agreed with the Company and in accordance with the governing legislation, except for the disallowed amounts.
Seeking the inclusion of the disallowed amounts in the decision, the Company filed a new appeal for clarifications, which was accepted on February 1, 2016 by the São Paulo Court of Justice, which upheld the decision of August 31, 2015 and determined the measurement of the amounts pending transfers by SEFAZ-SP at the settlement phase.
SEFAZ-SP, on March 7, 2016, filed an appeal that was rejected by a judgment held on July 4, 2016, thus upholding the sentence of SEFAZ-SP, which filed a new appeal also denied by TJ/SP on June 5, 2017.
After the Special Appeal was rejected by TJ/SP, SEFAZ filed a new appeal which is pending judgment by STJ.
In August 2018, the Company was granted a decision by São Paulo Court Justice under which SEFAZ is required not to make any disallowance in the transfer to pay the benefits provided for by Law No. 4819/58 until the administrative proceedings started to determine irregularity in payments are closed. In March 2019, the Superior Court of Justice in a first-instance decision suspended the effects of the decision that prohibited SEFAZ from making discounts in the transfers to the Company, which started to receive again the transfer with the disallowances and complement the payment amount since April 2019. The Company continues to make efforts for the favorable decision granted by São Paulo Court Justice to be maintained.
CTEEP’s opinion
The Company continues to seek a final and unappealable decision that maintains the procedure of making direct payments of the benefit payroll under State Law No. 4819/58 by SEFAZ-SP. The Company also reinforces the opinion of its legal department and legal advisors that the expenses in connection with State Law No. 4819/58 and respective regulation should be fully borne by SEFAZ-SP and continues to adopt additional measures to protect the Company’s interests.
Due to the new developments occurred through 2013, especially those related to the claim in progress for collection of the amounts due by SEFAZ-SP, as described above, and also considering the progress of the other proceedings and lawsuits mentioned above, the Company’s Management recognized in 2013 an allowance for losses on the collection of receivables relating to a portion of the amounts receivable from SEFAZ-SP, mainly considering the then expected realization period and the fact that such receivables have not yet been determined as SEFAZ-SP’s sole responsibility. Despite the developments occurred after such allowance was recognized, the Company still considers the current allowance amount appropriate and, to date, no significant event has occurred that might cause the allowance amount to be revised.
The Company’s Management has monitored the progress and new facts related to the legal aspects of the issue and has, also, continuously assessed the potential impacts that the matter may have on its financial statements.
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Notes to the Interim Financial Information 33 Transactions not affecting cash or cash equivalents – Financing activities
As required by CPC 03 (R2) - Statement of Cash Flows, item 44 (a), the table below shows the reconciliation of the cash flow from financing activities: Parent
Non-cash changes Addition or Allocation or 12.31.2020 Cash flow transfer Interest forfeiture 03.31.2021
Borrowings and financing 1,062,777 (25,958) - 13,265 - 1,050,084
Debentures 3,179,266 730,580 - - - 48,996
Leases 51,815 (2,987) - 168 - 48,996
Interest on capital/dividends 500,513 (487,578) 1,055,613 1,068,548
Total 4,794,371 214,057 - 13,433 1,055,613 6,077,474
Consolidado
Noncash changes Addition or Allocation or 12.31.2020 Cash flow transfer Interest forfeiture 03.31.2021
Borrowings and financing 1,302,929 323,033 - 18,712 - 1,644,674 Debentures 3,179,266 730,580 - - - 3,909,846
Leases 53,537 (3,042) - 177 - 50,672 Derivative financial instruments 10,016 (11,067) 26,935 40 - 25,924 Interest on capital/dividends 500,513 (487,578) - - 1,055,613 1,068,548 Total 5,046,261 552,414 26,447 18,929 1,055,613 6,699,664
34 Events After the Reporting Period
(a) Issue of promissory notes
On April 15, 2021, the Company’s Board of Directors approved the 8th issue of promissory notes, in a single series, under which 800 commercial notes will be issued, with a unit par value of R$1,500, totaling R$1,200,000, and maturing within one thousand and ninety-six calendar days from the date of issue of the commercial notes.
(b) Reprofiling of the RBSE Financial Component
On April 22, 2021, the ANEEL judged the administrative appeal filed by the Company against the Confirmation Resolution 2714/2020 that defined the Periodical Tariff Revision of contract 059/2001. It should be noted that the ANEEL applied the RBSE reprofiling according to Technical Note No. 068/2021 by maintaining the criteria previously established in ANEEL Regulatory Resolution 762/2017.
In the context of the economic crisis caused by COVID-19, the ANEEL, in an attempt to find alternatives to cushion the increase in energy tariffs in 2021/2022 and 2022/2023 cycles, established the RBSE reprofiling. The definition presented by ANEEL will contribute to tariff moderation, minimizing the impacts for consumers who are being directly affected by the pandemic.
Even though the Measure reflects the mismatch of the financial flow set forth in Confirmation Resolution No. 2714/2020, it preserves the economic value for the Company, since the assumptions effective beginning the 2021/2022 cycle were: (i) the completion of the RBSE payment in 2028; (ii) the reduction of the RBSE debt amortization with no impact on the increase of the balance payable; and (iii) the compensation under the regulatory WACC defined in the 2018 RTP.
Beginning in the 2023/2024 cycle, the payment flows forecasted by the ANEEL should return to levels similar to those approved in Confirmation Resolution no. 2714/2020.
The Company is still studying the technical note and assessing the related accounting impacts on the financial statements. * * * PAGE: 93 of 108
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Other Information that the Company Deems Relevant
1. Reconciliation of the Statutory and Regulatory Statement of Financial Position and Statement of Profit and Loss
Consolidated
Assets Statutory Regulatory(*) Adjust ments
Current assets Cash and cash equivalents 853,688 - 853,688 Short-term investments 469,733 - 469,733 Concession assets 3,057,083 (2,364,948) 692,135 Inventories 49,717 (29,010) 20,707 Services in progress - 19,330 19,330 Recoverable taxes 72,195 - 72,195 Derivative financial instruments 7,507 - 7,507 Restricted cash 3,873 - 3,873 Receivables from related parties 14,771 - 14,771 Prepaid expenses 36,595 - 36,595 Other 66,824 (10,757) 56,067
4,631,986 (2,385,385) 2,246,601
Noncurrent assets Long-term assets Restricted cash 40,249 - 40,249 Concession assets 16,221,607 417,349 Receivables - Finance Department 1,821,503 - 1,821,503 Sureties and escrow deposits 47,184 - 47,184 Inventories 12,634 (12,634) - Income tax and social contribution - 41,074 41,074 Employee benefit - Actuarial surplus - - - Derivative financial instruments 18,417 - 18,417 Services in progress - 11,984 11,984 Other 114,129 (11,983) 102,146
18,275,723 (15,775,817) 2,499,906
Investments 3,001,178 (1,463,634) 1,537,544 Property and equipment 90,195 8,240,123 8,330,318 Intangible assets 506,317 1,411,684 1,918,001
3,597,690 8,188,173 11,785,863
21,873,413 (7,587,644) 14,285,769
Total assets 26,505,399 (9,973,029) 16,532,370 (*) unaudited
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Consolidated
Liabilities Statutory Regulatory (*) Adjust ments
Current liabilities Borrowings and financing 461,788 - 461,788 Debentures 245,489 - 245,489 Leases 7,816 (7,735) 81 Trade payables 100,371 - 100,371 Taxes and payroll charges payable 268,737 - 268,737 Regulatory charges payable 44,836 - 44,836 Interest on capital and dividends 1,068,548 - 1,068,548 Payroll and related taxes 36,212 - 36,212 Payables - Vivest 855 - 855 Global Reversal Reserve (RGR) 2,480 - 2,480 Adjustment portion - 3,947 3,947 Other 56,930 (14) 56,916
2,294,062 (3,802) 2,290,260 Noncurrent Long-term liabilities Borrowings and financing 1,182,886 - 1,182,886 Debentures 3,664,357 - 3,664,357 Leases 42,856 (42,856) - Employee benefits - actuarial deficit 394,078 - 394,078 Deferred PIS and Cofins (taxes on revenue) 1,527,911 (1,462,121) 65,790 Income tax and social contribution 3,506,348 (2,570,178) 936,170 Regulatory charges payable 50,331 - 50,331 Provisions 128,730 (2,632) 126,098 Global Reversal Reserve (RGR) 13,512 - 13,512 Concession-related obligations - 397,485 397,485 Other 36,621 (24,648) 11,973 10,547,630 (3,704,950) 6,842,680 Equity Capital 3,590,020 - 3,590,020 Capital reserves 666 (19,046) (18,380) Earnings reserves 9,332,529 (4,195,014) 5,137,515 Actuarial surplus (240,676) - (240,676) Other comprehensive income 42,618 - 42,618 Revaluation reserve - 2,083,782 2,083,782 Retained earnings/Accumulated losses 582,624 (4,133,999) (3,551,375) 13,307,781 (6,264,277) 7,043,504 Noncontrolling interests in investment funds 355,926 - 355,926 13,663,707 (6,264,277) 7,399,430
Total liabilities and equity 26,505,399 (9,973,029) 16,532,370 (*) unaudited
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Consolidated (Period ended 03.31.2021)
Statutory Adjustme Regulatory(*) nts
O&M revenue 318,120 - 318,120 Revenue from CAAE (Annual Cost of Electric Assets) - 179,224 179,224 RBSE Revenue 367,003 126,678 493,681 Adjustment Portion (PA) RTP and RBSE - - - Infrastructure implementation cost 235,645 (235,645) - Compensation from concession assets 312,007 (312,007) - Efficiency gain on infrastructure implementation 20,922 (20,922) - Other revenue 6,694 - 6,694 Deductions from operating revenue (172,374) 25,032 (147,342) Net operating revenue 1,088,017 (237,640) 850,377
Infrastructure implementation cost (*) (185,716) 185,716 - O&M costs (91,773) (1,237) (93,010) Cost of services (5,189) - (5,189) Costs on construction services, O&M and (98,199) services rendered (282,678) 184,479
General and administrative expenses (37,378) (4,803) (42,181) Depreciation and amortization (5,119) (131,772) (136,891) Finance income (costs) (115,769) (428) (116,197) Share of profit (loss) of investees 124,176 (122,967) 1,209 Goodwill amortization (632) 25 (607) Other operating income (expenses) (10,054) (3,056) (13,110)
Profit before income tax and social 444,401 contribution 760,563 (316,162)
Income tax and social contribution (176,084) 41,674 (134,410)
Profit (loss) for the period 584,479 (274,488) 309,991
(*) The infrastructure implementation cost is equivalent to CAPEX for concession assets in the regulatory financial statements.
(**) unaudited
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2. EBITDA reconciliation – IFRS and Regulatory
Consolidated 2021
EBITDA IFRS (ICVM 527) 882,083 (-) Infrastructure implementation revenue (235,645) (-) Compensation from concession assets (679,010) (-) Efficiency gain on infrastructure implementation (20,922) (-) O&M revenue (318,120) (+) Revenue from use of electric power grid 991,025 (+) Deferred PIS and Cofins (taxes on revenue) 25,032 (+) Infrastructure implementation cost 185,716 (-) O&M costs (1,237) (-) General and administrative expenses (4,803) (-) Share of profit (loss) of investees (122,967) (-) Revenues - Periodic Tariff Revision (RTP) - (-) Other operating income (expenses) (3,056)
REGULATORY EBITDA (ICVM 527) 698,096
Share of profit (loss) of investees (1,209) Retrospective receipt of PA (RTP and RBSE) 72,589 Non-recurring costs and expenses¹ 951
ADJUSTED EBITDA 770,427
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3. Company’s Shareholding Structure
In compliance with the provisions of the Corporate Governance practices, we are pleased to submit below the Company’s shareholding structure and the shareholders who hold more than 5% of each Company share type and class, either directly or indirectly, up to the level of individuals.
The Company’s main shareholders are as follows:
03.31.2021
Common shares Preferred shares Total
Shareholders Number % Number % Number %
Controlling shareholder ISA Capital do Brasil S. A 230,856,832 89.50 5,144,528 1.28 236,001,360 35.82
Management
Officers ------Board of Directors - - 4,000 - 4,000 - Supervisory Board - - 1,310 - 1,310 - - - 5,310 - 5,310 -
Total Controlling group 230,856,832 89.50 5,149,838 1.28 236,006,670 35.82
Outstanding Shares Federal Government Centrais Elétricas Brasileiras S. A - ELETROBRAS (i) 25,157,077 9.75 210,692,269 52.55 235,849,346 35.80
Other (ii) 1,923,823 0.75 185,103,465 46.17 187,027,288 28.39
Total Outstanding Shares 27,080,900 10.50 395,795,734 98.72 422,876,634 64.19
Total Capital 257,937,732 100.00 400,945,572 100.00 658,883,304 100.00
(i) Centrais Elétricas Brasileiras S.A. - Eletrobras is a publicly-held company registered with CVM under code 2437. (ii) Includes only those shareholders who individually hold a number of shares lower than 5% of the voting capital.
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03.31.2020
Common shares Preferred shares Total
Shareholders Number % Number % Number %
Controlling shareholder ISA Capital do Brasil S. A 230,856,832 89.50 5,144,528 1.28 236,001,360 35.82
Management Officers ------Board of Directors - - 4,000 - 4,000 - Supervisory Board ------4,000 - 4,000 -
Total Controlling group 230,856,832 89.50 5,148,528 1.28 236,005,360 35.82
Outstanding Shares Federal Government
Centrais Elétricas Brasileiras S. A – ELETROBRAS (i) 25,158,644 9.75 212,276,657 52.94 237,435,301 36.04
Other (ii) 1,922,256 0.75 183,520,387 45.77 185,442,643 28.14
Total Outstanding Shares 27,080,900 10.50 395,797,044 98.72 422,877,944 64.18
Total Capital 257,937,732 100.00 400,945,572 100.00 658,883,304 100.00
(i) Centrais Elétricas Brasileiras S.A. - Eletrobras is a publicly held company registered with CVM under code 2437. (ii) Includes only those shareholders who individually hold a number of shares lower than 5% of the voting capital.
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Shareholding position per type and class of share of holders of more than 5% of each type and class of Company shares, up to the level of individuals
03.31.2021
Common shares Preferred shares Total
Shareholders Number % Number % Number %
ISA Capital do Brasil S.A.
ISA Interconéxion Elétrica S.A. E.S.P. (a) 840,625,000 100.00 - - 840,625,000 100.00 Other shareholders ------
840,625,000 100.00 - - 840,625,000 100.00
(a) ISA Interconéxion Elétrica S.A. E.S.P. Ministério de Hacienda Y Crédito Público (b) 569,472,561 51.41 - - 569,472,561 51.41 Empresas Públicas de Medellín E.S.P. (c) 97,724,413 8.82 - - 97,724,413 8.82 Other shareholders 440,480,920 39.77 - - 440,480,920 39.77
1,107,677,894 100.00 - - 1,107,677,894 100.00
(b) Ministério de
Hacienda Y Crédito
Público State-owned (National Government of Colombia) 3,008,720 100.00 - - 3,008,720 100.00
3,008,720 100.00 - - 3,008,720 100.00
(c) Empresas Públicas de Medellín E.S.P. City of Medellin 4,223,308 100.00 - - 4,223,308 100.00
4,223,308 100.00 - - 4,223,308 100.00
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA Other Information that the Company Deems Relevant 03.31.2020
Common shares Preferred shares Total
Shareholders Number % Number % Number %
ISA Capital do Brasil S. A.
ISA Interconéxion Elétrica
S.A. E.S.P. (a) 840,625,000 99.99 - - 840,625,000 99.99 ISA Investimento e Participações do Brasil S.A. 10 0.01 - - 10 0.01
840,625,010 100.00 - - 840,625,010 100.00
(a) ISA Interconéxion Elétrica S.A. E.S.P. Ministério de Hacienda Y Crédito Público (b) 569,472,561 51.41 - - 569,472,561 51.41 Empresa Pública de Medellín E.S.P. (c) 97,724,413 8.82 - - 97,724,413 8.82 Other shareholders 440,480,920 39.77 - - 440,480,920 39.77
1,107,677,894 100.00 - - 1,107,677,894 100.00
(b) Ministério de
Hacienda Y Crédito
Público State-owned (National Government of Colombia) 3,008,720 100.00 - - 3,008,720 100.00
3,008,720 100.00 - - 3,008,720 100.00
(c) Empresa Pública de Medellín E.S.P. City of Medellin 4,223,308 100.00 - - 4,223,308 100.00
4,223,308 100.00 - - 4,223,308 100.00
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ITR - Interim Financial Information - 03/31/2021 - CTEEP - CIA TRANSMISSÃO ENERGIA ELÉTRICA Version: 1 PAULISTA
INDEPENDENT AUDITOR’S REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
To the Shareholders, Directors and Management of CTEEP - Companhia de Transmissão de Energia Elétrica Paulista
Introduction
We have reviewed the accompanying individual and consolidated interim financial information of CTEEP - Companhia de Transmissão de Energia Elétrica Paulista (“CTEEP” or “Company”), included in the Interim Financial Information Form (ITR) for the quarter ended March 31, 2021, which comprises the statement of financial position as of March 31, 2021, and the related statements of profit and loss, of comprehensive income, of changes in equity and of cash flows for the three-month period then ended, including the explanatory notes.
Management is responsible for the preparation of this individual and consolidated interim financial information in accordance with technical pronouncement CPC 21 (R1) and international standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International Standards on Review of Interim Financial Information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the individual and consolidated interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with technical pronouncement CPC 21 (R1) and international standard IAS 34, applicable to the preparation of ITR, and presented in accordance with the standards issued by the CVM.
Emphasis of matter
Law No. 4,819/58
As described in notes 8 and 32 to the interim financial information, on March 31, 2021, the Company records accounts receivable from the State of São Paulo Finance Department in the amount of R$1,821,503 Thousand net, relating to the impacts of Law No. 4,819/58, which granted to the public servants of the companies under the control of the State of São Paulo benefits of supplementation of retirement and pension amounts already granted to other public servants. The Company’s Management has been monitoring the new facts related to the matter, as well as evaluating the possible impacts on its interim financial information. Our conclusion is not qualified in respect of this matter.
Other matters
Audit of the corresponding figures for the previous year and review of the corresponding figures for the first quarter of the previous year
The audit of the statement of financial position as of December 31, 2020 was conducted under the responsibility of another independent auditor, who issued an unqualified audit report thereon, containing an emphasis of matter similar to the same matter mentioned above related to Law No. 4,819, and emphasis of matter related to the change of accounting policy according to relevant aspects of CVM Circular Letter 04/2020, whereby the corresponding figures related to the financial statements as of December 31, 2019, presented for comparison purposes, were adjusted and restated as provided for in technical pronouncements CPC 23 - Accounting Policies, Changes in Accounting Estimates and Errors and CPC 26 (R1) - Presentation of the Financial Statements, dated February 22, 2021.
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The corresponding figures for the period ended March 31, 2020, presented for comparison purposes, in the review of the individual and consolidated interim financial information for the current period, were restated in relation to the review of the complete information originally disclosed for that period, which was reviewed by another independent auditor. The corresponding figures restated herein as a result of the matters described in note 2.4, according to relevant aspects of CVM Circular Letter 04/2020, were reviewed by another independent auditor who issued an unqualified report dated April 28, 2021, containing emphasis of matter similar to the matter mentioned above related to Law No. 4,819.
Statements of value added
The interim financial information referred to above includes the individual and consolidated statements of value added for the three-month period ended March 31, 2021, prepared under the responsibility of the Company’s Management and disclosed as supplemental information for international standard IAS 34 purposes. These statements were subject to the review procedures performed together with the review of the ITR to reach a conclusion on whether they are reconciled with the interim financial information and the accounting records, as applicable, and if their form and content are in accordance with the criteria set forth in technical pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that such statements of value added were not prepared, in all material respects, in accordance with the criteria set forth in that technical pronouncement and consistently with the individual and consolidated interim financial information taken as a whole.
The accompanying individual and consolidated interim financial information has been translated into English for the convenience of readers outside Brazil.
São Paulo, April 29, 2021 DELOITTE TOUCHE TOHMATSU Renato Vieira Lima Auditores Independentes Engagement Partner
2021SP007456_REV_CTEEP Auditor report - free translation.docx
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Opinions and Statements / Opinion of the Supervisory Board or Equivalent Body
The Supervisory Board of CTEEP – Companhia de Transmissão de Energia Elétrica Paulista (“Company”), in the discharge of its legal and statutory duties, and in compliance with the provisions of item vi, Article 163 of Law No. 6404/76, represents that it has analyzed the Company’s interim financial information for the quarter ended March 31, 2021 and Report on the Review of Interim Financia Information issued by our independent auditors, Deloitte Touche Tohmatsu Auditores Independentes S.S., and is favorable to its disclosure
São Paulo, April 29, 2021
Ricardo Lopes Cardoso
Manuel Domingues de Jesus e Pinho Luiz Carlos Passetti Andrea Costa Amancio Negrão Pablo Saint Just Lopes
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Opinions and Statements / Opinion or Summary Report, if any, of the Audit Committee (statutory or not) The objective of the Audit Committee is to strengthen the internal control system, risk management and the Company’s corporate governance practices. The establishment of an Audit Committee is not a statutory requirement. It is only a Company´s internal management body which does not have the duties that are specific to a Statutory Audit Committee, such as, for example, the responsibility of issuing an opinion on the standard financial statements.
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Opinions and Statements / Management’s Representation on the Financial Statements
Management’s Representation on the Interim Financial Information
The Company’s Management hereby represent that they have reviewed, discussed and agreed with the information contained in the Interim Financial Information (ITR) for the quarter ended March 31, 2021, as well as with the opinion expressed in the respective report issued by the independent auditors, Deloitte Touche Tohmatsu, and, also, represent that all significant information relating to the Interim Financial Information, and only such information, is being disclosed and corresponds to that used in managing the Company.
Therefore, Management hereby approves the issuance of the Interim Financial Information for the quarter ended March 31, 2021.
São Paulo, April 29, 2021
Rui Chammas Chief Executive Officer
Dayron Esteban Urrego Moreno Chief Project Officer
Alessandro Gregori Filho CFO and Investor Relations Officer
Silvia Diniz Wada Chief Strategy and Business Development Officer
Gabriela Desire Olimpio Pereira Chief Operating Officer
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Opinions and Statements / Management’s Representation on the Independent Auditor’s Report
Management’s Representation on the Independent Auditor’s Report
The Company’s Management hereby represent that they have reviewed, discussed, and agreed with the opinions expressed in the independent review report.
São Paulo, April 29, 2021
Rui Chammas Chief Executive Officer
Dayron Esteban Urrego Moreno Chief Project Officer
Alessandro Gregori Filho CFO and Investor Relations Officer
Silvia Diniz Wada Chief Strategy and Business Development Officer
Gabriela Desire Olimpio Pereira Chief Operating Officer
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