2q20 results - ri taesa
TRANSCRIPT
1
2020 Second Quarter Earnings Release
2Q20
RESULTS
2
2020 Second Quarter Earnings Release
Rio de Janeiro, August 12, 2020
Transmissora Aliança de Energia Elétrica S.A. (“Taesa” or the “Company”; B3: TAEE11), one of Brazil’s largest
concessionaire groups in electricity transmission, announces today its results for the second quarter of the year 2020.
The consolidated financial statements of the Company are prepared and issued in accordance with the accounting
practices set forth in the Accounting Manual for the Electricity Sector, by the National Electrical Energy Agency (ANEEL)
and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board
(IASB), defined in this document as Regulatory Results and IFRS Results, respectively. The presentation of this
information is in line with the standards issued by the Brazilian Securities Exchange Commission (CVM) applicable to
the preparation of Quarterly Information (ITR).
The Company adopted, as of January 1, 2018, CPC 47 (IFRS 15) - Revenues from Contracts with Customers, based
on the modified retrospective method, explained in section 4.4 of this document.
As of the second quarter of 2020 the Company revised and changed the nomenclatures of revenues and costs related
to the construction of transmission infrastructures, where: Construction Revenues became Implementation of
Infrastructure Revenues, Construction Margin became Implementation of Infrastructure Margin, and Construction Costs
became Implementation of Infrastructure Costs.
In the Regulatory Results presented below, prepared based on the structure prevailing in the Accounting Manual for the
Electricity Sector as issued by ANEEL, all investments in the construction of transmission lines and substations are
recorded as fixed assets and the effects of the application of CPC 47 (IFRS 15) are eliminated, including the fiscal impact
(deferred IR and social contribution and deferred PIS and COFINS) are recognized on the differences arising from the
temporary application of this interpretation. In addition, as of the first quarter of 2018, in order to align the Regulatory
Results with the financial statements submitted to ANEEL, the Company started to present the values referring to the
RAP (Annual Permitted Revenues) that are not are recorded in the Contractual Asset in the "RAP Concessionaires" line.
These amounts were previously presented in the Other Income line, following the IFRS Results. It is important to mention
that the Regulatory Results are not audited.
To facilitate the understanding of the information presented herein, the terms associated with the words Regulatory and
IFRS follow the same principles and structure defined above for the Regulatory Results and IFRS Results, respectively.
In line with accounting standards, Taesa does not proportionally consolidate jointly controlled and associated companies.
Thus, the results of Transirapé, Transudeste, Transleste (together, “Transmineiras”), ETAU, Aimorés, Paraguaçu, Ivaí
and the TBE group are accounted for in the equity method line both in the IFRS and in the Regulatory Results. After the
acquisition of the interest in Centrais Elétricas Brasileiras S.A. (“Eletrobras”) in Brasnorte (see Material Fact of May 31,
2019), this company ceases to be an affiliate of Taesa and becomes its subsidiary, with a total share interest of 88,376
%. As a result, the Company started consolidating Brasnorte's results as of that date in its income statements, with the
segregation of non-controlling interest in its net income (11.624%). Also on August 30, 2019, Taesa acquired the
11.624% interest in Brasnorte held by Bipar Energia, Telecomunicacao e Industria Metalúrgica S.A., and now hold 100%
of Brasnorte's total shares (see Material Fact of the same date).
Taesa’s dividends distribution is based on the IFRS Results as reviewed by the auditor.
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2020 Second Quarter Earnings Release
Marco Antonio Resende Faria CEO and Legal and Regulatory Officer
(acting) and Chief Technical Officer
Fábio Antunes Fernandes CFO e IRO
Cristiano Prado Grangeiro IR Manager
IR Contact [email protected]
Telephone +55 21 2212 6060
Conference call in English (simultaneous translations)
August 13, 2020
Thursday
Brasília 11 am
New York 10 am
Phone: + 55 11 3181 8565 or
+55 11 4210-1803
Dial in: +1 412 717 9627
Code: Taesa
Senha: Taesa
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2020 Second Quarter Earnings Release
INDEX
1. MESSAGE FROM THE ADMINISTRATION ............................................................................................................. 5
2. SUMMARY OF RESULTS ......................................................................................................................................... 7
3. OVERVIEW ................................................................................................................................................................ 9
3.1. Corporate Structure ................................................................................................................................................ 9
3.2. TBE Corporate Structure ...................................................................................................................................... 10
3.3. AIE Corporate Structure ........................................................................................................................................ 11
4. ECONOMIC AND FINANCIAL PERFORMANCE .................................................................................................... 12
4.1. Operational Performance ...................................................................................................................................... 12
4.2. RAP Cycle 2020-2021 .......................................................................................................................................... 13
4.3. Drop of 50% in RAP .............................................................................................................................................. 14
4.4. Impact of Accounting Change (CPC 47) ............................................................................................................... 16
4.5. Net Revenues under IFRS ................................................................................................................................... 18
4.6. Costs, Expenses, Depreciation and Amortization under the IFRS ....................................................................... 19
4.7. EBITDA and EBITDA Margin under the IFRS ...................................................................................................... 20
4.8. Regulatory Net Revenues ..................................................................................................................................... 21
4.9. Regulatory Costs, Expenses, Depreciation and Amortization .............................................................................. 21
4.10. Regulatory EBITDA and EBITDA Margin ........................................................................................................... 23
4.11. Composition of Regulatory EBITDA ................................................................................................................... 23
4.12. Equity Method under IFRS ................................................................................................................................. 24
4.13. Regulatory Equity Method................................................................................................................................... 24
4.14. Net Financial Results .......................................................................................................................................... 25
4.15. Taxes .................................................................................................................................................................. 26
4.16. Net Income .......................................................................................................................................................... 29
4.17. Dividends and Interest on Equity ........................................................................................................................ 32
4.18. Indebtedness ...................................................................................................................................................... 33
4.19. Investments ......................................................................................................................................................... 35
4.20. Projects under Construction................................................................................................................................ 35
4.21. Environmental, Social and Governance (ESG) Initiatives .................................................................................. 38
4.22. Initiatives to Mitigate COVID-19 Impacts ............................................................................................................ 39
5. FINANCIAL STATEMENTS ..................................................................................................................................... 40
5.1. Revenues under IFRS by Concession .................................................................................................................. 40
5.2. Movement of Contractual Assets (IFRS) .............................................................................................................. 41
5.3. 2Q20 Income Statement ....................................................................................................................................... 42
5.4. 6M20 Income Statement ....................................................................................................................................... 43
5.5. 2Q20 IFRS Income Statement (Subsidiaries)....................................................................................................... 44
5.6. 6M20 IFRS Income Statement (Subsidiaries) ...................................................................................................... 45
5.7. 2Q20 Regulatory Income Statement (Subsidiaries) ............................................................................................. 46
5.8. 6M20 Regulatory Income Statement (Subsidiaries) ............................................................................................. 47
5.9. EBITDA Reconciliation .......................................................................................................................................... 48
5.10. Balance Sheet ..................................................................................................................................................... 49
5.11. IFRS Cash Flow .................................................................................................................................................. 50
5.12. Regulatory Cash Flow ......................................................................................................................................... 51
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2020 Second Quarter Earnings Release
1. MESSAGE FROM THE ADMINISTRATION
DISCIPLINE, RESILIENCE AND OPERATIONAL CONTINUITY IN THE MIDDLE OF A WORLD CRISIS The COVID-19 pandemic brought great challenges in the first half of 2020, substantially impacting the entire
global economy. During this period, mainly in the second quarter of 2020, Taesa was fully committed to the
health and safety of its employees and its assets that are part of the Brazilian Interconnected System,
maintaining the protection measures recommended by the World Health Organization (WHO) and the
competent national bodies.
Due to the growing expansion of the pandemic, the Company intensified the care previously implemented,
maintaining the isolation measures, the home-office for the administrative areas and the operation and
maintenance contingency plan, and began in May the scheme for confinement of operators who work in
Taesa’s Operation and Control Center as they are essential for the operation of the national electrical system.
Even before the adverse scenario, Taesa, through the efficient management of the annual plan for the
operation and maintenance of its assets, presented an availability rate of 99.96% and a Variable Portion of
1.12% of RAP in the first half of 2020.
It is also worth noting that, despite the current complexity and adversity, the Company was successful in
integrating the new assets acquired in the primary and secondary market. Nevertheless, on May 25, 2020,
the Company completed the energizing of Mariana project. Thus, considering the delivered projects (Mariana,
Miracema, EDTE and the reinforcements of Novatrans) and recently completed acquisitions (São João, São
Pedro and Lagoa Nova), we added a RAP of R$ 259.1 million (cycle 2020-2021).
We continue to work to deliver the 6 projects under construction, whose investments amount to R$ 3.2 billion
with a RAP of R$ 567.5 million (considering only Taesa’s portion). It is important to note that, in the first half
of 2020, Taesa made investments totaling R$ 695.3 million, an increase of R$ 497.4 million compared to the
same period in 2019. It is worth mentioning that, due to the extension of the crisis and the decrees of some
municipalities imposing stoppage and social isolation, there is a slowdown in the progress of the works, but
we are working towards complying with the projects delivery schedule.
Additionally, Taesa ended 2Q20 with a solid cash position of R$ 2.2 billion, as a result of its operating cash
generation and the raising of funds in the total amount of R$ 900 million in April 2020. This cash addition
represents an important measure in line with Taesa’s strategic pillar of financial discipline, which aims at the
ordinary fulfillment of its contractual obligations, especially those related to debt contracts. It is also important
to note that bad debt levels remained normal even in this adverse economic scenario and that we will continue
to closely monitor the possible impacts of the crisis on our business.
As per IFRS results, Taesa presented a solid performance in 2Q20, registering a net income of R$ 437.8
million, 42.4% higher y.o.y, driven by greater investments, recent acquisitions, the operating start-up of new
assets and the reduction of net financial expenses. Regarding the regulatory results, the Company recorded
an annual growth of 7.1% in regulatory net revenues and 2.4% in regulatory EBITDA, reversing the downward
trend of recent years, also explained by the recent acquisitions and the start-up of new projects, which
overcame the RAP drop of category 2 concessions.
Based on the interim financial statements as of June 30, 2020, the Board of Directors approved today the
distribution of R$ 279.3 million (R$ 0.81 / Unit) between interim dividends and interest on equity, and the
payment will occur on August 26, 2020, from the base date of August 17, 2020.
Finally, Taesa has been advancing in communicating its practices related to Environmental, Social and
Governance (ESG) matters, aiming to create initiatives and identify opportunities for clear communication of
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2020 Second Quarter Earnings Release
Taesa’s current social, environmental and governance actions, in addition to seeking progress of ESG best
practices. Thus, we reinforce our focus on the strategic pillars of sustainable growth, financial discipline,
operational efficiency and value creation for our shareholders, ratifying our commitment, in the middle of this
global crisis, to transmit energy with reliability, transparency and security to the whole society, respecting the
environment and our stakeholders.
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2020 Second Quarter Earnings Release
2. SUMMARY OF RESULTS
IFRS RESULTS
▪ Net income amounted to R$ 437.8 million in 2Q20, an y.o.y increase of 42.4% (+R$ 130.4 million), explained
by:
(i) Growth in the implementation of infrastructure margin due to higher investments in the projects under
construction, positively affecting both the implementation revenues (+R$ 133.8 million) and the equity
method (+R$ 43.0 million);
(ii) Reduction of R$ 43.1 million in net financial expenses, mainly due to the accumulated deflation of IPCA
recorded in the quarter;
(iii) Consolidation of results from the recent acquisitions of São João, São Pedro, Lagoa Nova, the 3 lots
from the Eletrobras auction (Brasnorte, Transmineiras and ETAU), the conclusion of the reinforcements
to Novatrans, and the entry into operation of the concessions of Miracema and Mariana, adding
approximately R$ 25 million on the net income for the quarter;
(iv) The above effects were partially offset by the following:
a. R$ 39.8 million reduction in the monetary restatement due to the lower macroeconomic indexes
recorded between the compared periods; and
b. Higher operating costs and expenses, ex-implementation, mainly due to the operating start-up
of the new concessions, inflation adjustment, and some non-recurring events, such as civil
contingencies review, termination agreement of directors, and hiring of strategic consulting
firms.
▪ Adjusted net income for 6M20 was R$ 575.3 million, ex-effects of the adoption of CPC 47 in the amount of R$
226.7 million. After the allocation of the legal and tax incentive reserves and the earnings of R$ 241.7 million
already distributed over the 1Q20 results, the earnings to be distributed over this result totaled R$ 279.3 million
(R$ 0.81 / Unit), which were approved today by the Board of Directors and will be paid on August 26 as of the
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
Net Revenues IFRS 755.7 427.5 76.8% 1,446.1 769.7 87.9%
Net Income IFRS 437.8 307.4 42.4% 802.0 467.0 71.7%
Net Revenues Reg. 385.7 360.2 7.1% 758.5 722.9 4.9%
EBITDA Reg. 316.8 309.4 2.4% 629.5 620.3 1.5%
EBITDA Margin Reg. 82.1% 85.9% -3.8 bps 83.0% 85.8% -2.8 bps
Net Debt 4,433.5 2,495.5 77.7% 4,433.5 2,495.5 77.7%
Dividends and IoE Paid 303.5 153.9 97.2% 303.5 153.9 97.2%
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
Net Revenues Reg. 498.6 470.7 5.9% 980.6 1,061.8 -7.6%
EBITDA Reg. 416.3 405.6 2.6% 825.4 939.7 -12.2%
EBITDA Margin Reg. 83.5% 86.2% -2.7 bps 84.2% 88.5% -4.3 bps
Net Debt 5,024.1 2,831.9 77.4% 5,024.1 2,831.9 77.4%
Net Debt/EBITDA 3.3 1.8 83.3% 3.3 1.8 83.3%
Consolidated
Consolidated and Associated Concessions
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2020 Second Quarter Earnings Release
base date of August 17. As a result, the year-to-date payout stood at 90.6% of adjusted net income and of
65.0% of net income.
REGULATORY RESULTS
▪ In 2Q20, net revenues totaled R$ 385.7 million, registering a 7.1% y.o.y growth, explained by the inflation
adjustment, the entry into operation of Miracema, Mariana and reinforcements of Novatrans, acquisition of São
João, São Pedro and Lagoa Nova concessions, and the consolidation of Brasnorte, which offset the RAP drop
from some concessions.
▪ PMSO costs totaled R$ 68.9 million in 2Q20, an y.o.y increase of 35.6% due mainly to the start of operations
on new concessions (Mariana, Miracema, São João, São Pedro and Lagoa Nova) by Taesa, the consolidation
of Brasnorte, the inflation adjustment, and non-recurring events in the amount of R$ 5.3 million, such as civil
contingencies review, termination agreement of directors, and hiring of strategic consulting firms.
▪ EBITDA totaled R$ 316.8 million in this quarter, 2.4% higher y.o.y. EBITDA margin was 82.1% in 2Q20 (-3.8pp
y.o.y). Highlight for the positive impact of approximately R$ 48 million on consolidated EBITDA due to the recent
acquisitions (São João, São Pedro, Lagoa Nova and Brasnorte) and the entry into operation of Miracema,
Mariana and reinforcements of Novatrans.
▪ Net financial expenses totaled R$ 27.7 million, 60.9% lower y.o.y mainly due to the accumulated IPCA deflation
of 0.43% recorded in the quarter.
▪ Net income totaled R$ 257.6 million in the quarter, an y.o.y increase of 15.1% (+ R$ 33.8 million) mainly due to
RAP growth and reduction in net financial expenses.
▪ In 2Q20, the gross debt closed at R$ 6,648.5 million, a 16.4% q.o.q growth. The cash position was R$ 2,215.0
million (+ 32.1% q.o.q), resulting in a net debt of R$ 4,433.5 million (+ 9.9% q.o.q). The ratio of proportional net
debt / EBITDA was 3.3x (versus 3.0x in 1Q20).
▪ The availability rate of 99.96% transmission lines and R$ 9.5 million of PV (1.12% of consolidated RAP) in 6M20.
Annual increase of R$ 7.2 million in PV is mainly explained by the shutdowns/provisions that occurred mainly in
São João, Novatrans, and TSN.
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2020 Second Quarter Earnings Release
3. OVERVIEW
3.1. Corporate Structure
The 39 concessions/interests of transmission owned by TAESA are segregated into: (i) 10 concessions that make up the
holding company (TSN, Novatrans, ETEO, GTESA, PATESA, Munirah, NTE, STE, ATE, and ATE II); (ii) 10 full investees
(ATE III, Brasnorte, São Gotardo, Mariana, Miracema, Janaúba, Sant'Ana, São João, São Pedro, and Lagoa Nova (new
name for Rialma I)); and (iii) shareholding interest in 19 companies (ETAU, Transmineiras, AIE, and TBE).
Within the scope of 01/2018 Eletrobras Auction held on September 27, 2018, Taesa completed the acquisition of lot N
(ETAU) on April 29, 2019 and lots L (Brasnorte) and M (Transmineiras) on May 31, 2019, adding R$ 49.2 million (2020-
2021 Cycle) of RAP to its base. See below for more details of the transaction:
On August 30, 2019, Taesa completed the acquisition of 11.624% of Brasnorte held by Bipar Energia, Telecomunicação e
Industria Metalúrgica S.A. After completing this transaction, the Company, which before held an interest of 88.376% in
Brasnorte, went on to hold 100% of the total shares of this company.
On February 14, 2020, the Company completed the acquisition of 100% of the shares of São João Transmissora de Energia
S.A. (“São João”) and São Pedro Transmissora de Energia S.A. (“São Pedro"), after complying with the suspensive
conditions applicable to the acquisition of these assets, adding a RAP of R$ 96.4 million (2020-2021 cycle).
And on March 13, 2020, Taesa completed the acquisition of 100% of the shares representing the total and voting capital of
Rialma Transmissora de Energia I S.A. (“Rialma I”), after the fulfillment of the precedent conditions. The Extraordinary
General Meeting held on the same day approved the change of the corporate name of Rialma I, which was renamed Lagoa
Nova Transmissão de Energia Elétrica S.A.
Regarding the projects under construction, 3 of the 9 projects acquired in auctions started operations between the end of
2019 and the first half of 2020. The energizations of the Miracema concession, referring to the 230kV TL Lajeado-Palmas
stretch, the new Palmas substation and the adequacy the 500kV TL Miracema-Lajeado stretch (circuit 1) with the Lajeado
substation were completed on November 29, 2019. Before that, the Company had already energized the Miracema-Lajeado
TL stretch (circuit 2), at 500kV voltage and 30 km length, on September 30, 2019. On January 20, 2020, the last energization
of EDTE for the 230kV TL Poções III-Poções II stretch (representing only 6% of the project) was completed. Previously, the
energizations of the 500kV LT Ibicoara-Poções III and 500/230kV SS Poções III sections were completed on December
22, 2019. Finally, the energization of the Mariana concession regarding the 500kV CS Itabirito 2-Vespasiano 2 transmission
line with 82 km in length and two substations (500kV SS Itabirito 2 and 500kV SS Vespasiano 2) was completed on May
25, 2020.
Lot/ Eletrobras
AuctionSPE
Amount Paid
(in R$ mn)RAP¹ (in R$ mn)
Acquired
Stake
TAESA Final
Stake
Accounting Method for
TAESA
LBrasnorte Transmissora de
Energia S.A. (Brasnorte) 75.622 13.921 49.7115% 88.376% Consolidation
MCompanhia Transirapé de
Transmissão (Transirapé)34.969 10.057 24.50% 53.9982%2 Equity Method
MCompanhia Transleste de
Transmissão (Transleste)24.199 8.559 24.00% 53.9982%2 Equity Method
MCompanhia Transudeste de
Transmissão (Transudeste)18.340 7.558 25.00% 53.9982%2 Equity Method
NEmpresa de Transmissão do
Alto Uruguai S.A. (ETAU)32.880 9.100 23.0355% 75.6193% Equity Method
186.010 49.195Total(1) RAP related to the acquired stake (cycle 2020-2021)
(2) Considers direct interest of 49% and indirect interest of 4.9982% via subsidiary ENTE.
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2020 Second Quarter Earnings Release
With this, the Company completes the delivery of the Miracema, EDTE, and Mariana projects, adding a RAP of R$ 109.1
million (2020-2021 cycle).
It is also important to highlight that the Company completed the reinforcements of the Novatrans concession regarding the
authorization resolutions REA 6306/17 and REA 6369/17, adding R$ 40.8 million in RAP (2020-2021 cycle). The Serra da
Mesa and Gurupi Sul capacitor banks, referring to REA 6306/17, were energized on October 21, 2019, and the Gurupi
Norte and Miracema capacitor banks, referring to REA 6369/17, were energized, respectively, in October 28 and November
18, 2019.
After the completion of the operations and deliveries of the projects and reinforcements in construction mentioned above,
Taesa’s corporate structure is as follows.
3.2. TBE Corporate Structure
TBE
21.7%
100% 100% 100% 100% 75.6% 49.0%
ISA Brasil1
Under constrution
100%
14.9%
MercadoCEMIG
63.4%
100%100%
1 ISA Investimentos e Participações do Brasil S.A.2 Lagoa Nova Transmissora de Energia Eletrica is the new corporate name of Rialma I concession acquired by Taesa on March 13, 20203 In 2018, the Company announced th e purchas e of 4 operating assets fro m Ambar En ergia Ltd a. The acquisition of São João Transmissora d e En ergia SA and São Pedro Transmissora d e En ergia SA was co mpleted on Febru ary 14, 2020. The closing of th etransaction for the acquisition of Triângulo Mineiro Transmissora de Energia SA and São Bartolomeu Transmissora de Energia SA still subject to the fulfillment of precedent conditions..4 Transmineiras is a group in which Taesa holds stakes in 3 concessions : Transirapé (54.0%), Transleste (54.0%) and Transudeste (54.0%)5 TBE - Transmissora Brasileira de Energia is a group resulting from the partnership of majority shareholders Taesa and Alupar.6 AIE – Aliança Interligação Elétrica is an economic group of the partnership of the companies TAESA and ISA CTEEP, currently responsible for implementing 3 new projects.
Equity MethodFull Consolidation
ATE III São Gotardo Miracema Mariana Janaúba Sant’Ana ETAUBrasnorte AIE6Transmineiras4 TBE5São João3 São Pedro3
100%100%
Lagoa Nova2
100%
TBE
ETEP
ESDE (h)
ENTE
STC (a)
ERTE (g)
EDTE (f)
ECTE
ETSE (k)
ERTE (g) EBTE(i) EDTE (f)EATE
STC (a)
Lumitrans (b)
Transleste (c)
Transudeste (d)
Transirapé (e)
ERTE (g)
EBTE (i)
ESTE (j)
49.98% 49.98% 49.99% 19.09% 21.95%
100.0%
61.55%
80.00%
10.0%
10.0%
10.0%
100%
51.00%
18.45% 100%
49.00%
38,02%
18.08%
a) EATE: 61.55%; ENTE 18.45%; Total Taesa: 39.99%b) EATE 80.0%; Total Taesa: 39.99%.c) EATE 10.00%; Taesa 49.00% Total Taesa: 54.00%d) EATE 10.00%; Taesa 49.00% Total Taesa: 54.00%e) EATE 10.00%; Taesa 49.00% Total Taesa: 54.00%f) ENTE 50.10%;Taesa 24.95% Total Taesa: 49.99%g) EATE 18.08%; ENTE 38.02%; Taesa 21.95%; Total Taesa 49.99%h) ETEP 100%;Total Taesa: 49.98%i) EATE 51.00%; Taesa 49.00%; Total Taesa: 74.49%j) EATE 100%; Total Taesa: 49.98%k) ECTE 100%; Total Taesa: 19.09%
50,10%
24.95%
Under construction
TBE - Transmissora Brasileira de Energia is an economic group resulting from the partnership of majority shareholders, Taesa and Alupar.
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2020 Second Quarter Earnings Release
3.3. AIE Corporate Structure
1AIE is an economic group resulting from the partnership of majority shareholders, Taesa and Cteep.
50.0% 50.0%50.0%
Paraguaçu Aimorés Ivaí
AIE1
Under constrution
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2020 Second Quarter Earnings Release
4. ECONOMIC AND FINANCIAL PERFORMANCE
4.1. Operational Performance
With a high operating performance over the years, in the first half of 2020 Taesa recorded a consolidated average line
availability rate of 99.96%, as shown in the diagram below, which shows its consolidated performance, therefore,
disregarding ETAU, Transmineiras, AIE and TBE.
Line Availability Rate is a measure of time and is strictly an operational indicator. The calculation consists of: number of
hours that the line is available, divided by the number of hours contained in 1 year (8,760 hours), measured by 100km
spreads.
∑(Length of the line x hours availabl𝑒)/100
(Length of the Line x 8.670 hours)/100 𝑥 100
The indicator showing the impact of transmission line unavailability on the Company’s income statements is the variable
portion (PV). Due to the unstable behavior of PV in the short term, the best way to understand Taesa’s performance is to
analyze the value of PV divided by RAP, as shown in the diagram below.
Accumulated PV in 6M20 was R$ 9.5 MM, an increase of 7.2 MM compared to the same period of 2019, mainly due to the
disconnections/provisions in São João, Novatrans, and TSN, with the main following events in 6M20 being: (i) São João:
two automatic shutdowns on the 500 kV TL Gilbués II São João Piauí C1, one due to a fire at the 500 kV RE7-08 reactor
at the Gilbués II SS terminal in July 2019 and the other due an emergency shutdown for cable traction to align the insulator
chain in January 2020; (ii) Novatrans: occurrence with an explosion of the MCCL7-2 Capacitor Bank at the Gurupi SS in
February 2020, shutdown of TCSC 500kV IZCL-05 Series Capacitors due to a failure in the control module in March 2020
and corrective maintenance in the Bypass SCC on Banks 9489 (GUR) and MCSL7-07 (MIR), requiring the TL to be
disconnected to make provisional adjustments in May 2020; and (iii) TSN: de-energization of the Serra da Mesa II/Rio das
Éguas 500 kV TL due to a gas relay activation in the RT SDRE7-02 reactor in April 2020. The above listed events of São
João concession were indemnified by the sellers as agreed in the purchase and sale agreement, since the triggering factor
for these events occurred before the closing date of the acquisition, although the materialization of the effective PV took
place after the closing.
2014 20182013 20172012 2015 2016 2019 6M20
99.97% 99.98% 99.97% 99.98% 99.96%99.96% 99.97% 99.94% 99.90%
20162014 2019
0.54%
2012 20172013
1.12%
2015 2018 6M20
1.20%1.05%
1.40%1.33%
0.48%
1.18%
0.98%
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2020 Second Quarter Earnings Release
4.2. RAP Cycle 2020-2021
In July 15, 2020, ANEEL published the Ratifying Resolution 2.275/2020, which established the Annual Permitted Revenues
(RAP) from transmission concessions for the 2020-2021 cycle, effective from July 1, 2020 to June 30, 2021, affecting
therefore the Company’s results only from 3Q20 onwards. The concessions adjusted by IGP-M (Category II) were
monetarily restated by 6.51%, and concessions adjusted by IPCA (Category III) were monetarily restated by 1.88%.
Including the controlled concessions, jointly-controlled investees and
affiliates1, Taesa’s total RAP (operational and under construction) for
2020-2021 cycle is R$ 2,734 million, of which 50.0% is at the holding
company level. Considering the completion of the Mariana project in
May 2020, Taesa’s operating RAP for 2020-2021 cycle was R$ 2,167
million, against R$ 2,176 million for 2019-2020 cycle, considering the
conclusion of Mariana project only for 2020-2021 cycle.
The RAP readjustment for 2020-2021 cycle was different from inflation
in some concessions for the following reasons: (i) Munirah, PATESA,
ETAU, STE, ATE I, ENTE, ERTE, and Transleste were impacted by
the 50% drop in RAP due to entry in the 16th year of operation (for
further details, see section 4.3); (ii) TSN and Mariana reinforcements
entered into operation; and (iii) NTE, ETEP, Lumitrans, Transirapé,
EBTE, Brasnorte, STC, Mariana, São João, and São Pedro were
affected by tariff reviews.
The following is also worth mentioning: (i) the acquisition of Eletrobras'
interests in ETAU, Brasnorte and Transmineiras were completed in
2Q19; (ii) a 11.624% interest in Brasnorte was acquired in Aug/19; (iii)
energizing of Miracema (Nov/19), EDTE (Jan/20) and Mariana (May/20)
projects; (iv) completion of Novatrans reinforcements regarding the
authorization resolutions REA 6306/17 and REA 6369/17 in Nov/19; (v)
completion of the São João and São Pedro acquisitions in Feb/20; and
(vi) completion of the acquisition of Lagoa Nova in Mar/20. More details
in section 3.1.
The applicable PIS/COFINS must be added to the published RAP
values of ATE III, São Gotardo, Mariana, Miracema, Janaúba, Aimorés,
Paraguaçu, Brasnorte, STC, EBTE, ESDE, ETSE, ESTE, Ivaí, EDTE,
Sant'Ana, São João, São Pedro, and Lagoa Nova concessions.
RAP Cycle 2020-2021RAP Cycle 2019-2020
68.2%
31.8%
cat2
cat3
67.6%
32.4%
cat2
cat3
RAP (R$ mn)2018-2019
Cycle
2019-2020
Cycle
2020-2021
CycleIGP-M Adjustment 4.26% 7.64% 6.51%
Novatrans 28 413.5 330.9 351.8
TSN 2 279.6 301.0 325.1
Munirah 38.0 40.9 29.0
GTESA 5.8 5.5 5.9
PATESA 2 26.1 18.1 17.4
ETAU 12 25.2 38.5 29.9
ETEO 91.9 98.9 105.4
NTE 2 125.2 86.3 92.1
STE 2 85.3 48.6 50.6
ATE I 2 155.4 167.3 115.1
ATE II 2 240.3 258.7 275.5
EATE 128 113.6 122.2 129.0
ETEP 1 25.6 27.6 29.4
ENTE 1 117.4 102.0 67.3
ECTE 1 9.4 10.2 10.8
ERTE 12 26.3 19.5 15.3
Lumitrans 12 11.1 12.0 12.7
Transleste 1 12.8 24.7 19.3
Transirapé 1 10.2 20.1 22.2
Transudeste 1 7.6 15.3 16.3Subtotal 1,820.4 1,748.3 1,720.1
IPCA Adjustment 2.86% 4.66% 1.88%
ATE III 235 119.8 125.4 127.7
São Gotardo 3 5.2 5.4 5.5
Mariana 3 14.7 15.4 16.4
Miracema 38 62.1 65.0 59.7
Janaúba 34 185.4 194.1 197.7
Aimorés 134 37.9 39.7 40.4
Paraguaçu 134 56.6 59.2 60.4
Brasnorte 123 10.2 27.6 28.0
STC 123 18.1 18.9 19.2
EBTE 123 35.8 34.4 36.4
ESDE 13 6.7 7.0 7.2
ETSE 123 3.8 4.0 4.1
ESTE 134 53.6 56.1 57.2
Ivaí 134 140.5 147.0 149.8
EDTE 138 33.0 34.6 33.0
Sant'Ana 4 59.0 60.9 62.1
São João6 47.6 49.8
São Pedro6 44.9 46.5
Lagoa Nova7 12.6 12.9Subtotal 842.4 999.8 1,013.9
Total 2,662.8 2,748.1 2,734.1 ¹ RAP amount proportional to TAESA's stake
² Including reinforcements
³ Gross up PIS/COFINS4 Under Construction5 Category II Concession with IPCA Adjustment6 Acquisition completed on February 14, 20207 Acquisition completed on March 13, 20208 RAP of 2020-2021 cycle with rectification request within ANEEL
14
2020 Second Quarter Earnings Release
4.3. Drop of 50% in RAP
The transmission concession contracts included in the bidding process between 1999 and 2006 (Category II) provide for a
50% reduction in RAP (Basic Network) as of the 16th year of commercial operation of the facilities. Considering that the
concession contracts include facilities whose associated RAP portion will be reduced by 50% on different dates throughout
its cycle, an equivalent RAP was calculated to be received by the concessionaires over said cycle and future cycles,
considering the pro-rata amounts of RAP installments without reduction from the beginning of the cycle (July 1st) to the end
of the 15th year of commercial operation of facilities, and the pro rata amounts of the RAP installments with a reduction of
50%, as of the start date of the 16th year of commercial operation of the installations until the end of the same cycle (June
30th).
For the 2016-2017 cycle, two concessions reached the 16th year of operation¹:
• ETEO: 100% of RAP from ETEO started the 16th year of operation on 10/19/2016.
• ECTE3: 67.6% of RAP from ECTE started the 16th year of operation on 3/9/2017, and 28.4% started on 3/26/2017.
For the cycles 2017-2018, 2018-2019 and 2019-2020, and 2020-2021, the following concessions reached or will reach
the 16th year of operation¹:
• ETEP3: 99.7% of RAP from ETEP reached the 16th year of operation on 8/25/2017.
• EATE3: 19.0% of RAP from EATE reached the 16th year of operation on 2/1/2018, 45,6% of RAP on 2/20/2018,
and 33.5% of RAP on 3/10/2018.
• TSN3: 89.9% of RAP from TSN reached the 16th year of operation on 3/4/2018, 4.0% of RAP on 4/5/2018, 0.7% of
RAP on 5/22/2018, and 1.3% of RAP on 6/3/2018.
• Novatrans: 16.3% of RAP from Novatrans reached the 16th year of operation on 6/3/2018, 19.4% of RAP on
12/8/2018, 19.1% da RAP on 12/23/2018, and 45.2% of RAP on 4/8/2019.
• GTESA: 100% of RAP from GTESA reached the 16th year of operation on 8/26/2018.
• NTE: 100% of NTE’s RAP reached the 16th year of operation on 1/25/2019.
• STE3: 19.0% of STE’s RAP reached the 16th year of operation on 6/27/2019, 36.6% of RAP on 7/13/2019, and
42.1% of RAP on 7/18/2019.
• PATESA3: 98.2% of RAP from PATESA reached the 16th year of operation on 9/1/2019.
• ERTE3: 71.5% of ERTE’s RAP reached the 16th year of operation on 09/15/2019.
• ENTE: 100% of ENTE’s RAP reached the 16th year of operation on 2/12/2020.
• ETAU3: 34.2% of the ETAU’s RAP reached the 16th year of operation on 4/17/2020, and 36.0% of RAP will reach
on 9/29/2020.
• Munirah: 100% of Munirah’s RAP will reach the 16th year of operation on 10/30/2020.
• ATE I: 54.0% of ATE I’s RAP will reach the 16th year of operation on 10/8/2020, and 46.0% of the RAP on
10/27/2020.
• Transleste: 100% of Transleste’s RAP will reach the 16th year of operation on 12/18/2020.
For future cycles, the following concessions will reach the 16th year of operation1:
• ATE II: 100% of ATE II’s RAP will reach the 16th year of operation on 12/11/2021.
• Transudeste: 100% of Transudeste’s RAP will reach the 16th year of operation on 2/23/2022.
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2020 Second Quarter Earnings Release
• Transirapé3: 45.1% of the RAP of Transirapé will reach the 16th year of operation on 05/23/2022, and 15.9% of the
RAP on 5/30/2022.
• Lumitrans3: 99.9% of Lumitrans’s RAP will reach the 16th year of operation on 10/3/2022.
• STC3: 71.9% of STC’s RAP will reach the 16th year of operation on 11/8/2022.
• ATE III3: 54.4% of the ATE III’s RAP will reach the 16th year of operation on 4/27/2023, and 40.1% of the RAP on
5/23/2023.
Notes:
1. The 50% reduction schedule of RAP mentioned above was taken from the Technical Note n. 144-2018-SGT of
ANEEL.
2. The RAP percentages were calculated based on the value of the RAP prior to the date of the first 50% reduction.
3. For those concessions whose percentages of RAP indicated above do not add up to 100%, the difference is due to reinforcements/improvements that do not fit into the category 2 assets subject to the 50% drop in RAP at the beginning of the 16th year of operation.
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2020 Second Quarter Earnings Release
4.4. Impact of Accounting Change (CPC 47)
In the accounting under IFRS up to the 3rd quarter of 2018, the investments were recognized as Financial Assets at
amortized cost, pursuant to Resolution n. 1,261 of 12/10/2009 (Federal Accounting Council). Consequently, Revenues
under IFRS reflected the movement of Financial Assets. As of January 1, 2018, the adoption of IFRS 9 (CPC 48) or IFRS
15 (CPC 47) became mandatory, in effect as of the disclosure of the Annual Financial Statements for 2018. The Company
opted to adopt IFRS 15, whose principles are based on the business model that identifies the contract with the client (goods
or services) and its respective contractual performance obligations, defining the price of the transaction and recognition of
income as of the realization of these obligations (recognition of the Contractual Assets).
The rate considered in calculating the Financial Assets was the Financial Assets Remuneration Rate (TRAF) which matched
the present value of investments with the present value of the flow of receipts from financial assets, that is, it was the internal
rate of return of the flow. For the calculation of the Contractual Asset, the rate adopted becomes the market rate at the time
of the auction, fixed over the term of the concession (“Project Rate”). The Company chose to adopt the real auction WACC
(ANEEL) as the Project Rate as it is a known and benchmark rate for the market. It is important to mention that this change
in the rate explained above applies only to companies that were built by Taesa or are in the process of construction. In the
case of acquisitions, brownfield, there was no rate change, as it is not possible to retrace the project's construction date.
Thus, the Company believes that the rate used until then is the most appropriate.
Based on the above, the accounting for the transmission asset became effective as a Contractual Asset and no longer as
Financial Assets. Therefore, the Contractual Asset is calculated monthly from the future flow of receipts brought to present
value according to the Project Rate.
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2020 Second Quarter Earnings Release
Under the accounting method (CPC 47 - Contractual Asset), the efficiencies/inefficiencies generated in the project under
construction are recorded as implementation of infrastructure margin. That is, the implementation of infrastructure revenues
will comprise the implementation margin, calculated by the difference between the Present Value of the RAP and the Future
Value of Implementation Cost in the start-up of operations (see picture above). Accordingly, if in the Financial Asset the
impact of the construction in the result was basically null during the pre-operational stage (implementation revenues were
equal to the implementation cost plus PIS/COFINS), in the Contractual Asset the implementation margin will impact the
Income Statements of the project. In other words, the implementation revenues will be calculated, over the pre-operational
period, as the implementation cost plus the implementation margin, which also includes the interest on the remuneration of
the asset in the period, calculated by the Project Rate over the balance of the contractual asset.
Another important change refers to the remuneration of the asset. Under the Financial Asset method, the revenues from
remuneration were calculated based on the TRAF levied on the balance of the financial asset since the beginning of the
concession. Under the Contractual Asset method, such revenues from the remuneration are calculated based on the Project
Rate levied on the balance of the contractual asset and is recorded solely after the start-up of operations of the project.
During the construction period, the interest on the remuneration is included in the Implementation of Infrastructure
Revenues and the calculation is performed as described above.
The other lines of the revenues under IFRS (O&M and Monetary Restatement) maintain exactly the same recording criterion
of the method that was formerly adopted.
Another change in the adoption of CPC 47 occurs in the treatment of advances with suppliers. Previously the advance
related to Financial Asset was recorded directly in the balance sheet as a financial asset, and therefore not recognized in
the statement of income. As from the accounting using the Contractual Asset method, this advance must necessarily pass
through the result as implementation of infrastructure cost.
Impacts of the accounting changes due to CPC-47 recorded so far:
The adjustments generated by the adoption of CPC 47 as of January 1, 2018 were:
(i) For the initial (starting) balance of the Contractual Asset on January 1, 2018, the adjustment was entered into the
special reserve account for the 2018 financial year (Shareholders' Equity), in the amount of R$ 113,399,544.45,
referring to previous years;
(ii) For Fiscal year 2018, the adjustment was entered into the Income Statements in the amount of R$ 116,924,085.17
and allocated to the special reserve account at the end of the year, net of the 5% that were retained as legal reserve;
(iii) For Fiscal year 2019, the adjustment was entered into the Income Statements in the amount of R$ 291,323,518.24
and allocated to the special reserve account at the end of the year, net of the 5% that were retained as legal reserve.
The aforementioned adjustments totalled R$ 521,647,147.86, of which R$ 501,234,767.69 recorded as Special Reserve
and R$ 20,412,380.17 as Legal Reserve (5%).
On June 30, 2020, the adjustments generated by the adoption of CPC 47 in the net income amounted to R$ 226,736,802.32.
It is important to note that the effects related to the adoption of CPC 47 are excluded from the distributable net income and,
during the year, are recorded in the Accumulated Incomes account, being allocated to the Special Reserve and Legal
Reserve accounts at the end of the fiscal year.
In order not to compromise the Company’s cash position and leverage, the Special Reserve account will be used for future
dividend distribution, taking into consideration that the adoption of CPC 47 has no cash effects (the efficiency/inefficiency
of the project is recorded as construction margin during the construction phase of the projects, with a pure accounting effect
in the results under IFRS).
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2020 Second Quarter Earnings Release
4.5. Net Revenues under IFRS
Net Revenues under IFRS in 2Q20 was R$ 755.7 million, 76.8% higher y.o.y, mainly due to the increase in
investments in construction projects, with an increase of R$ 335.3 million in Implementation Revenues, and the
growth of O&M Revenues and the remuneration of the contractual asset, due to the recent acquisitions and entry
into operation of some concessions.
6M20 net revenues under IFRS was R$ 1,446.1 million, 87.9% higher y.o.y.
Since the adoption of CPC 47 (IFRS 15), as explained in section 4.4, the change in the recognition of the transmission
asset has an effect on the Implementation of Infrastructure Revenues that now accounts for an implementation of
infrastructure margin, thus generating impact on the net income.
Considering the monetary restatement of the revenues assured in the concession agreement, the Company monthly
records the monetary restatement of the concession's contractual asset in the result. Thus, the inflationary effect is diluted
month by month considering the inflation as per the IGP-M or the IPCA verified in the previous month. The indices used for
the monetary restatement of the second quarter of 2020 were: IGP-M of 1.24%, 0.80% and 0.28% (accumulated + 2.34%),
and IPCA of 0.07%, -0.31% and -0.38% (accumulated -0.62%), referring to the months of March, April and May 2020,
respectively. In the first quarter of 2019, the IGP-M was 1.26%, 0.92% and 0.45% (accumulated +2.65%), and the IPCA
was 0.75%, 0.57% and 0.13% (accumulated +1.46%), referring to the respective months of 2019.
The variation and composition of Taesa’s net revenues under IFRS mainly reflect the following aspects:
• Operation and maintenance: The 13.0% y.o.y increase in O&M revenues is mainly due to (i) the monetary
restatement of the 2019-2020 cycle, 7.64% from IGP-M and 4.66% from IPCA, considering the variation between
the periods from July 2019 to June 2020, according to the Ratifying Resolution 2,565/19, (ii) the entry into operation
of Miracema concession at the end of 2019, (iii) the completion of the acquisition of São João and São Pedro on
February 14, 2020, and of Lagoa Nova on March 13, 2020, and (iv) the consolidation of Brasnorte's results as of
June 2019.
• Remuneration of the contractual asset of concession: Calculated by multiplying the project rate over the
balance of the contractual asset (recorded only in the operating period of the concession). 2Q20 results showed a
31.6% y.o.y increase due to (i) the completion of the acquisition of São João and São Pedro in February 2020, and
Net Revenues - IFRS (Consolidated)
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
Operation and Maintenance 165.1 146.1 13.0% 326.3 292.0 11.7%
Remuneration of contractual assets 164.1 124.7 31.6% 313.0 249.5 25.5%
Monetary restatement of contractual assets 74.4 114.1 -34.8% 200.0 111.8 78.9%
Implementation of infrastructure 424.0 88.7 377.8% 739.4 200.5 268.8%
Total IFRS Revenues 827.5 473.7 74.7% 1,578.7 853.8 84.9%
Variable Portion (3.1) (3.2) -1.9% (9.5) (2.3) 309.6%
Other Revennues 6.0 2.4 154.4% 20.1 5.0 300.4%
Total Gross Revenues 830.4 472.9 75.6% 1,589.2 856.5 85.6%
PIS/Cofins (56.5) (24.9) 127.1% (107.0) (45.6) 134.5%
Service Tax (0.09) (0.04) 119.2% (0.2) (0.1) 111.6%
ICMS (0.04) (0.0) 42.1% (0.04) (0.03) 42.1%
Consumer's Fees (18.2) (20.5) -11.3% (35.9) (41.0) -12.3%
Deductions (74.8) (45.4) 64.7% (143.2) (86.7) 65.1%
Total Net Revenues 755.7 427.5 76.8% 1,446.1 769.7 87.9%
19
2020 Second Quarter Earnings Release
of Lagoa Nova on March 13, 2020, (ii) the entry into operation of concessions Miracema at the end of last year and
Mariana on May 25, 2020, (iii) the completion of Novatrans reinforcements at the end of 2019, and (iv) the
consolidation of Brasnorte's results as of June 2019. These events offset the natural effect of the amortization of
the balance of the contractual asset by the receivables.
• Monetary restatement of the concession contractual asset: Based on the monthly inflation adjustment.
Monetary restatement revenues showed an y.o.y reduction of R$ 39.8 million, mainly due to the fall in
macroeconomic indices recorded in the periods under comparison, with a greater effect of IPCA that showed a
deflation of 0.61% in the accumulated quarter against inflation of 1.46% in the same quarter of 2019, as described
above. In addition, this line was negatively impacted in R$ 11.7 million due to the completion of the acquisition of
São João, São Pedro and Lagoa Nova concessions, the consolidation of Brasnorte in 2Q19, and the entry into
operation of Miracema and Mariana, since their contractual assets were adjusted according to a negative IPCA in
the accumulated quarter.
• Implementation of infrastructure: As explained in section 4.4, since the adoption of CPC 47, the efficiencies
generated until then in projects under construction are now accounted for as an implementation margin in this
revenues line. Also bearing in mind that the interest on the remuneration of the asset is also added to
implementation revenues during the pre-operating period. The R$ 335.3 million y.o.y growth in implementation
revenues is basically due to higher investments in Janaúba and Sant'Ana and the reinforcement of São Pedro,
which was partially offset by the completion of Miracema project and Novatrans reinforcements, both at the end of
last year, and for the non-accounting of the implementation revenues of Mariana project since 3Q19 (the investment
limit defined in the base case on the auction for the calculation of Mariana's implementation margin was exceeded
in 3Q19) until its entry into operation on May 25, 2020.
• Variable portion (PV): PV was practically in line in the annual comparison. There was an increase in shutdowns
between the periods compared, which were offset by greater reversals in 2Q20. For more details see section 4.1.
• Other operating revenues: The y.o.y increase of R$ 3.7 million is basically due to the accounting of revenues
from Rede de Fronteira and DIT (Other Installations) in São Pedro and Brasnorte, and Mariana’s revenues of June,
as the contractual asset is only accounted after the full receipt of the RAP.
• Deductions of gross revenues: There was an y.o.y increase of 64.7%. The mentioned variations are due to the
PIS/COFINS that follows the variation of the gross revenues in IFRS (the tax varies according to each concession
- see section 4.15).
4.6. Costs, Expenses, Depreciation and Amortization under the IFRS
Costs, Expenses, and Depreciation and Amortization totaled R$ 319.7 million in 2Q20, 179.5% higher y.o.y.
Costs, Expenses, and Depreciation and Amortization totaled R$ 575.7 million in the semester, 149.3% higher y.o.y.
The variations in IFRS costs were caused mainly by the following events:
Cost, Expenses and D&A - IFRS (Consolidated)
R$ mn 2Q20 2Q19 Chg. % 6M20 6M19 Chg. %
Personnel (41.1) (29.8) 37.8% (79.7) (62.6) 27.4%
Material (249.8) (63.1) 296.1% (444.6) (126.5) 251.4%
Third Party Services (20.0) (15.5) 29.4% (34.3) (27.2) 26.2%
Other (4.7) (2.8) 68.6% (9.5) (8.0) 18.2%
Total (315.7) (111.2) 183.9% (568.2) (224.4) 153.3%
Depreciation and amortization (4.0) (3.2) 26.5% (7.5) (6.6) 13.8%
Total (319.7) (114.4) 179.5% (575.7) (230.9) 149.3%
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2020 Second Quarter Earnings Release
• Personnel: The y.o.y increase of 37.8% is explained by the employee’s salary adjustments of 7.23% under the
collective bargaining agreement, the meritocracy and promotions program, increase in staff, the completion of São
João, São Pedro and Lagoa Nova acquisitions, the entry into operation of Miracema and Mariana, and the
consolidation of Brasnorte, in addition to the termination agreement of directors, and the change in the way of
capitalization of personnel costs in projects under construction after the implementation of SAP 4/Hana in 2Q19. It
should be noted that the salary adjustment under the collective bargaining agreement follows the same mix of IGP-
M and IPCA inflation indices that restate Taesa's concessions RAP in the respective RAP cycle. The 7.23%
readjustment, for example, is the result of the mix of inflation indexes for the 2019-2020 RAP cycle (7.64% for IGP-
M and 4.66% for IPCA).
• Material: The y.o.y increase of R$ 186.7 million is mainly due to higher investments in projects under construction
of Janaúba (+R$ 195.7 million) and Sant'Ana (+R$ 19.5 million) and of São João reinforcement (+R$ 10.8 million),
partially offset by the drop in investments in the completed projects of Miracema, Mariana, and reinforcements of
Novatrans and TSN.
• Third-party services: The 29.4% y.o.y growth was mainly influenced by the retaining of strategic consulting firms,
increased expenses with cleaning of the right of way, as well as by the acquisition of São João, São Pedro and
Lagoa Nova, and the consolidation of Brasnorte into Taesa.
• Other: These expenses increased by 68.6% due to the change in the prognosis of civil contingencies, the
acquisition of São João and São Pedro, and the increase in expenses with sponsorships and donations, partially
offset by a contractual reimbursement related to the acquisitions of São Pedro and São João, among them the one
referred to the Variable Portion of events that occurred in São João before the acquisition closing.
• Depreciation and amortization: The increase of 26.5% is basically due to the remeasurement of financial lease
agreements within the scope of CPC 06 (R2), which generated an increase in depreciation in 2Q20 compared to
2Q19.
4.7. EBITDA and EBITDA Margin under the IFRS
In 2Q20 IFRS EBITDA totaled R$ 440.0 million with an EBITDA margin of 58.2%. The y.o.y increase of 39.1% in the IFRS
EBITDA was due to the higher investments in projects under construction, which positively impacted the implementation
margin by R$ 133.8 million (R$ 142.8 million in 2Q20 versus R$ 9.0 million in 2Q19).
EBITDA IFRS (Consolidated)
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
Net Revenues 755.7 427.5 76.8% 1,446.1 769.7 87.9%
Costs and Expenses (315.7) (111.2) 183.9% (568.2) (224.4) 153.3%
EBITDA 440.0 316.3 39.1% 877.9 555.2 58.1%
EBITDA margin 58.2% 74.0% -15.8 bps 60.7% 72.1% -11.4 bps
EBITDA IFRS is not a measure that reflects the Company’s operating cash generation, since the IFRS standards
generate a mismatch between the Income Statements and the Cash Flow.
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2020 Second Quarter Earnings Release
4.8. Regulatory Net Revenues
Regulatory Net Revenues in 2Q20 reached R$ 385.7 million, 7.1% higher y.o.y, explained by the monetary
restatement, entry into operation of Miracema, Mariana and the reinforcements of Novatrans, acquisition of São
João and São Pedro concessions and Brasnorte consolidation, effects that offset the RAP drop on some
concessions.
Regulatory Net Revenues in 6M20 totaled R$ 758.5 million, showing an y.o.y increase of 4.9%.
The Regulatory Net Revenues are not impacted by recognition of the inflationary effects described in section 4.5 of the Net
Revenues under IFRS, since this recognition is an IFRS accounting definition on the monetary restatement of the
contractual asset that therefore influences only the Net Revenues under IFRS. On the other hand, the RAP is annually
adjusted by inflation at each new cycle that starts on the 1st of July of each year and ends on the 30th of June of the following
year (see section 4.2).
The 7.1% y.o.y growth in the line of RAP is explained basically by the inflation adjustment of the 2019-2020 RAP cycle
(7.64% from IGP-M and 4.66% from IPCA), by the entry into operation of Miracema and Mariana concessions, and
Novatrans reinforcements, by the conclusion of the acquisition of São João, São Pedro and Lagoa Nova, and by the
consolidation of Brasnorte into Taesa. These impacts were partially offset by the RAP drop from Novatrans, GTESA,
PATESA, NTE and STE (more details on the effects and cutoff dates in sections 4.2 and 4.3).
The Variable Portion (PV) was practically in line in the annual comparison, since there was an increase in shutdowns
between the periods compared, which were offset by greater reversals in 2Q20. For more details see section 4.1.
The reduction in sector charges is due to the 50% RAP drop, as mentioned above, since the new concessions that affected
the results are exempt from the collection of the Global Reversion Reserve - RGR tariff, according to Law 12,783/2013,
which waives this payment for concessions auctioned after September 12, 2012.
4.9. Regulatory Costs, Expenses, Depreciation and Amortization
Costs, Expenses, and Depreciation and Amortization totaled R$ 129.4 million in 2Q20, 30.5% higher y.o.y. PMSO
costs totaled R$ 68.9 million, registering an y.o.y increase of 35.6%.
Costs, Expenses, and Depreciation and Amortization in the first half of the year reached R$ 246.7 million, 24.2%
higher y.o.y. PMSO costs totaled R$ 129.0 million in 6M20, an y.o.y increase of 25.8%.
Net Revenues - Regulatory (Consolidated)
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
RAP Concessions 431.3 404.0 6.8% 850.0 805.9 5.5%
Variable Portion (3.1) (3.2) -1.9% (9.5) (2.3) 309.6%
Service Revenues 428.2 400.8 6.8% 840.5 803.6 4.6%
Other Revenues 0.3 0.3 -16.9% 0.5 0.7 -27.1%
Total Gross Revenues 428.5 401.1 6.8% 841.0 804.3 4.6%
PIS/Cofins (24.4) (20.4) 19.9% (46.4) (40.4) 14.7%
Service Tax (0.09) (0.0) 119.2% (0.2) (0.1) 111.6%
ICMS (0.0) (0.0) 42.1% (0.0) (0.0) 42.1%
Consumer's Fee (18.2) (20.5) -11.3% (35.9) (41.0) -12.3%
Deductions (42.7) (40.9) 4.4% (82.5) (81.5) 1.2%
Total Net Revenues 385.7 360.2 7.1% 758.5 722.9 4.9%
22
2020 Second Quarter Earnings Release
The differences between Regulatory Results and IFRS, in the line of costs, expenses and depreciation and amortizationare
verified in expenses with materials and in depreciation and amortization. The IFRS Results recognize the investment in the
construction of new assets, reinforcements and improvements, as expenses with materials, while at the same time
capitalizes the implementation revenues in the contractual asset. The Regulatory Results depreciate the investments in
fixed assets. In addition, as from the adoption of CPC 06 (IFRS 16) - Leasing Operations, in 2019, differences are also
observed in the lines of Other operating costs and expenses, between the Regulatory and IFRS Results.
The costs and expenses for PMSO totaled R$ 68.9 million in 2Q20 (+35.6% y.o.y). This increase is explained by the
following events:
• Personnel: The y.o.y increase of 37.8% is explained by the employee’s salary adjustment of 7.23% under the
collective bargaining agreement, the meritocracy and promotions program, increase in staff, the completion of São
João, São Pedro and Lagoa Nova acquisitions, the entry into operation of Miracema and Mariana, and the
consolidation of Brasnorte, in addition to the termination agreement of directors, and the change in the way of
capitalization of personnel costs in projects under construction after the implementation of SAP 4/Hana in 2Q19. It
should be noted that the salary adjustment under the collective bargaining agreement follows the same mix of IGP-
M and IPCA inflation indices that restate Taesa's concessions RAP in the respective RAP cycle. The 7.23%
readjustment, for example, is the result of the mix of inflation indexes for the 2019-2020 RAP cycle (7.64% for IGP-
M and 4.66% for IPCA).
• Material: The y.o.y increase of R$ 13.9% is due to higher maintenance expenses in addition to the consolidation
of Brasnorte, and the completion of the São João, São Pedro and Lagoa Nova acquisitions.
• Third-party services: The 29.4% y.o.y growth was mainly influenced by the retaining of strategic consulting firms,
increase in expenses with cleaning of the right of way, as well as by the acquisition of São João, São Pedro and
Lagoa Nova, and the consolidation of Brasnorte into Taesa.
• Others: These expenses showed an increase of 44.7% due to the change in the prognosis of civil contingencies,
the acquisition of São João and São Pedro, and the increase in expenses with sponsorships and donations, partially
offset by the contractual reimbursement related to the acquisitions of São Pedro and São João, among them the
one referred to the Variable Portion of events that occurred in São João before the acquisition closing.
• Depreciation and Amortization: The increase in depreciation refers to unitizations of reinforcements to Novatrans,
the entry into operation of Miracema, the consolidation of Brasnorte into Taesa, and the acquisition of São João,
São Pedro and Lagoa Nova.
Costs, Expenses and D&A - Regulatory (Consolidated)
R$ mn 2Q20 2Q19 Chg. % 6M20 6M19 Chg. %
Personnel (41.1) (29.8) 37.8% (79.7) (62.6) 27.4%
Material (0.8) (0.7) 13.9% (1.1) (0.7) 49.0%
Third Party Services (20.0) (15.5) 29.4% (34.3) (27.2) 26.2%
Other (7.0) (4.8) 44.7% (13.9) (12.0) 15.3%
Total (68.9) (50.8) 35.6% (129.0) (102.6) 25.8%
Depreciation and amortization (60.5) (48.3) 25.2% (117.7) (96.0) 22.5%
Total (129.4) (99.2) 30.5% (246.7) (198.6) 24.2%
23
2020 Second Quarter Earnings Release
4.10. Regulatory EBITDA and EBITDA Margin
The Regulatory EBITDA for 2Q20 reached R$ 316.8 million, 2.4% higher y.o.y, and an EBITDA margin of 82.1%. As
previously mentioned, the 50% RAP drop of some concessions, associated with higher operating costs and expenses, were
offset by the inflation adjustment over the RAP, the entry into operation of Miracema, Mariana and Novatrans
reinforcements, the acquisition of São João, São Pedro and Lagoa Nova concessions, and the consolidation of Brasnorte.
4.11. Composition of Regulatory EBITDA
The diagram below shows how the Regulatory EBITDA would be in the first half of 2020, considering all concessions of
Taesa group proportionally. It is important to note that the consolidated results according to the Brazilian accounting
standards do not include the jointly-controlled investeees and affiliates (ETAU, Brasnorte, Transmineiras, AIE, and TBE).
EBITDA Regulatoty (Consolidated)
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
Net Revenues 385.7 360.2 7.1% 758.5 722.9 4.9%
Costs and Expenses (68.9) (50.8) 35.6% (129.0) (102.6) 25.8%
EBITDA 316.8 309.4 2.4% 629.5 620.3 1.5%
EBITDA margin 82.1% 85.9% -3.8 bps 83.0% 85.8% -2.8 bps
TAESAEBITDA: R$ 629.5 mn
Margin: 83.0 %Opex
R$ 129.0 mn
Net RevenuesR$ 758.5 mn
ETAU (75.62%)EBITDA: R$ 15.2 mn
Margin: 85.6% OpexR$ 2.6 mn
Net RevenuesR$ 17.7 mn
TBE (49.99%)EBITDA: R$ 160.7 mn
Margin: 89.4% OpexR$ 19.0 mn
Net RevenuesR$ 179.7 mn
AIE (50.00%)EBITDA: R$ (1.3) mn
Margin: -Opex
R$ 1.3 mn
Net RevenuesR$ -
TRANSMINEIRAS (49.00%)
EBITDA: R$ 21.4 mnMargin: 86.8%
OpexR$ 3.2 mn
Net RevenuesR$ 24.6 mnEBITDA
R$ 825.4 mnMargin: 84.2%
In the power transmission sector, the Regulatory EBITDA is an important operating and financial performance indicator,
since it is adherent to the Company’s effective operating cash generation.
24
2020 Second Quarter Earnings Release
4.12. Equity Method under IFRS
The Equity Method under IFRS in 2Q20 totaled R$ 125.9 million, 30.9% higher y.o.y. In the first half of 2020, Equity
Method under IFRS closed at R$ 271.0 million, 117.5% higher y.o.y.
The y.o.y increase of 30.9% in the IFRS results of the jointly-controlled investees and affiliates, is mainly due to higher
investments in the concessions under construction Aimorés, Paraguaçu and Ivaí, and the conclusion of the acquisition of
Eletrobras’ interests in ETAU and Transmineiras in 2Q19.
4.13. Regulatory Equity Method
The Regulatory Equity Method in 2Q20 totaled R$ 57.5 million, 1.2% lower y.o.y. In the first half of 2020, Regulatory
Equity Mehod closed at 98.1 million, practically in line with that recorded in 6M19.
The Regulatory Equity Method in 2Q20 showed a small y.o.y reduction of 1.2%, mainly due to the drop in the TBE results,
increase in Ivaí’s financial expenses, and the consolidation of Brasnorte into Taesa, partially offset by the completion of the
acquisition of Eletrobras' interests in ETAU and Transmineiras in 2Q19.
The difference between the Equity Method in Taesa and the sum of the results of ETAU, Brasnorte, Aimorés, Paraguaçu,
Ivaí, Transmineiras, and TBE is due to the amortization of the goodwill arising from the allocation of the price paid for the
acquisition of TBE.
Equity Method - IFRS
R$ mn 2Q20 2Q19 Chg. % 6M20 6M19 Chg. %
ETAU 3.1 2.4 28.0% 6.7 3.7 80.7%
Brasnorte - 2.4 0.0% - 3.3 -100.0%
TBE 72.1 74.5 -3.2% 167.2 98.0 70.5%
Aimorés 9.1 0.8 1033.3% 26.0 0.2 11617.8%
Paraguaçu 13.8 3.5 298.0% 38.7 5.5 602.5%
Ivaí 19.2 4.4 332.9% 15.9 5.4 194.9%
Transmineiras 8.6 8.2 5.7% 16.5 8.5 95.2%
Total Equity method 125.9 96.2 30.9% 271.0 124.6 117.5%
Equity method - Regulatory
R$ mn 2Q20 2Q19 Chg. % 6M20 6M19 Chg. %
ETAU 4.3 3.5 22.1% 8.6 6.4 35.0%
Brasnorte - 1.2 -100.0% - 2.3 -100.0%
TBE 59.8 61.6 -2.9% 115.7 109.7 5.5%
Aimorés (0.1) (0.2) -73.8% (0.2) (0.3) -37.9%
Paraguaçu (0.2) (0.3) -45.5% (0.3) (0.4) -33.9%
Ivaí (1.2) 0.0 - (14.9) (0.1) 15754.7%
Transmineiras 8.5 6.0 40.0% 16.5 8.3 99.5%
Subsidiaries Net Income 71.2 71.9 -0.9% 125.4 125.8 -0.3%
Amortization of goodwill - TBE (13.6) (13.6) 0.0% (27.3) (27.3) 0.0%
Total Equity Method 57.5 58.2 -1.2% 98.1 98.5 -0.4%
25
2020 Second Quarter Earnings Release
4.14. Net Financial Results
The net financial expenses under IFRS totaled R$ 28.5 million in 2Q20, 60.3% lower y.o.y. The Regulatory net
financial expense totaled R$ 27.7 million, 60.9% lower y.o.y.
In the first half of 2020, net financial expenses under IFRS closed at R$ 163.3 million, showing an y.o.y increase of
20.3%. The Regulatory net financial expense expenses reached R$ 161.9 million, 20.6% higher y.o.y.
With the adoption of CPC 06 (IFRS 16) - Leasing Operations, as of January 1, 2019, rental expenses are no longer
accounted for as other operating expenses, but are now accounted for as financial expenses (in the line “Leasing”), and
depreciation, against Lease Liabilities (short and long term) in the balance sheet, and Right of Usage (long term) of the
Asset. Therefore, as of 2019, the financial results under IFRS will differ from the regulatory financial results only in the
“Leasing” line.
The 62.4% y.o.y reduction in Financial Revenues was due to the drop in CDI and the lower profitability achieved in
investments this quarter, despite the higher average cash volume invested due to fund raisings in 2019 and 2020 (2nd
issuance of Janaúba debentures, 7th, 8th and 9th issuances of Taesa’s debentures, and the two bank credit notes issued in
April this year). The drop in profitability mentioned above was caused by the COVID-19 crisis, which negatively impacted
the investment market in March 2020, causing negative markdowns on investments.
The 29.9% y.o.y increase in the interest incurred line is mainly due to the higher volume of debt between the compared
periods as a result of the 7th issuance of Taesa’s debentures in the amount of R$ 509 million in September 2019, 8th
issuance of Taesa’s debentures in the amount of R$ 300 million in January 2020, 9th issuance of Taesa’s debentures in the
amount of R$ 450 million in April 2020, the R$ 350 million and R$ 100 million bank credit notes in favor of Banco Citibank
and Bradesco, respectively, both in April 2020, 2nd issuance of Janaúba’s debentures in the amount of R$ 575 million in
December 2019, and the pre-existing R$ 62.7 million financing from BNB with Lagoa Nova, a recently acquired asset. In
addition, the lower CDI recorded in 2Q20 minimized the increase in interest for the period.
The y.o.y reduction of R$ 62.9 million in the monetary and exchange variations line is explained by the accumulated
deflation of 0.43% of IPCA recorded in 2Q20 associated with the higher volume of debt linked to IPCA due to the 7th and
8th Taesa’s debenture issuances, the 2nd issuance of Janaúba debentures, and the pre-existing financing of BNB with Lagoa
Nova.
In 2Q20, the fair value adjustment line was impacted by the reclassification of the R$ 12.4 million balance to the
shareholders’ equity. This amount was recorded in the fair value adjustment line in 1Q20 due to the methodology update
of the swap of the 1st series of the 6th issuance, from CDI to IPCA, in 2019, since this debt was recorded in the 2019 balance
at amortized cost and not at market value.
The line of other financial expenses/revenues decreased by 4.8% in the annual comparison, explained basically by the
reduction of expenses related to the issuances of the debentures of Taesa and Janaúba, partially offset by the increase in
Net Financial Expenses IFRS
R$ mn 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
Financial Revenues 9.3 24.8 -62.4% 22.3 40.7 -45.3%
Revenues from financial investments 9.3 24.8 -62.4% 22.3 40.7 -45.3%
Financial Expenses (37.8) (96.4) -60.8% (185.6) (176.5) 5.2%
Interest incurred (73.4) (56.5) 29.9% (149.2) (102.5) 45.5%
Monetary and exchange variations 28.5 (34.4) n/a (26.1) (65.6) -60.2%
Fair Value Adjustment 12.4 0.0 - 0.0 (0.0) n/a
Leasing (0.7) (0.7) -2.7% (1.4) (1.5) -3.6%
Other financial expenses/revenues (4.6) (4.8) -4.8% (8.8) (6.9) 28.5%
Total IFRS (28.5) (71.6) -60.3% (163.3) (135.8) 20.3%
26
2020 Second Quarter Earnings Release
PIS/COFINS expenses on financial investments, the conclusion of São João, São Pedro and Lagoa Nova acquisitions, and
consolidation of Brasnorte.
4.15. Taxes
The y.o.y increase of 138.4% in the Income Tax and Social Contribution under IFRS recognized in the result is explained
by the increase in income before taxes and the reduction of 21.3% in the interest on equity paid.
The Other line is impacted by the result of companies under the presumed income regime. The total pre-tax profit of the
presumed income companies fell in the annual comparison due to the loss in Mariana and the decrease in Miracema results,
reducing thus the tax advantage that the presumed income regime of these companies adds to Taesa consolidated tax
rate, and consequently contributing to the higher effective tax rate of the Company.
R$ mn
Reconciliation of Income Tax 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
PreTax Profit 533.4 347.5 53.5% 978.1 537.4 82.0%
IRPJ and CSLL rate of 34% (181.3) (118.1) 53.5% (332.5) (182.7) 82.0%
Equity Method 42.8 32.7 30.9% 92.1 42.4 117.5%
SUDAM/SUDENE 20.4 13.9 46.6% 33.5 29.2 14.5%
Interest on Equity Paid/Received 20.8 26.5 -21.3% 20.8 26.5 -21.3%
Others 1.8 5.0 -64.4% 10.1 14.2 -29.3%
IRPJ and CSLL recognized in profit (95.5) (40.1) 138.4% (176.0) (70.4) 149.9%
Effective Rate 17.9% 11.5% 6.4 bps 18.0% 13.1% 4.9 bps
IFRS
R$ mn
Reconciliation of Income Tax 2Q20 2Q19 Chg.% 6M20 6M19 Chg.%
PreTax Profit 286.1 248.4 15.2% 448.0 488.5 -8.3%
IRPJ and CSLL rate of 34% (97.3) (84.5) 15.2% (152.3) (166.1) -8.3%
Equity Method 19.6 19.8 -1.2% 33.3 33.5 -0.4%
SUDAM/SUDENE 20.4 13.9 46.6% 33.5 29.2 14.5%
Interest on Equity Paid/Received 20.8 26.5 -21.3% 20.8 26.5 -21.3%
Others 8.0 (0.3) n/a 13.5 (2.7) n/a
IRPJ and CSLL recognized in profit (28.5) (24.6) 15.9% (51.2) (79.6) -35.7%
Effective Rate 10.0% 9.9% -5.9% 11.4% 16.3% -4.9 bps
Regulatory
7.9%
6M19
5.4%
4.9%2.6%
3.4%1.0%
13.1%
9.4%
34.0%
2.1%
18.0%
6M20
Equity Method
Fiscal Benefit
Interest on Equity Pa id/Received
Others
Effective Rate - IFRS
34.0%
Effective Rate - IFRS
6M19
34.0%
3.0%
34.0%
11.4%
7.4%
7.5%
6.9%
4.6%
6.0%
5.4%
16.3%
-0.5%
6M20
Equity Method
Fiscal Benefit
Interest on Equity Pa id/Received
Effective Rate - IFRS
Others
Effective Rate - Regulatory
27
2020 Second Quarter Earnings Release
The table below shows the tax regime for each concession, as well as those that enjoy a tax benefit, the date in which the benefit expires, and the PIS and COFINS rate applicable to each concession.
Concession Fiscal Regimen Fiscal Benefit % Area Maturity PIS COFINS
TSN “Real” “Sudene” 84% 2023 0.65% 3.00%
NVT “Real” “Sudam” 73% 2023 0.65% 3.00%
GTESA “Real” “Sudene” 100% 2023 0.65% 3.00%
PATESA “Real” “Sudene” 100% 2025 0.65% 3.00%
Munirah “Real” “Sudene” 84% 2023 0.65% 3.00%
ETEO “Real” - - - 0.65% 3.00%
NTE “Real” - - - 0.65% 3.00%
STE “Real” - - - 0.65% 3.00%
ATE I “Real” - - - 0.65% 3.00%
ATE II “Real” “Sudene” 85% 2026 1.65% 7.60%
ATE III “Real” “Sudam” 100% 2027 1.65% 7.60%
São Gotardo “Presumed” - - - 0.65% 3.00%
Mariana “Presumed” - - - 0.65% 3.00%
Miracema “Presumed” “Sudam” 100% 2029 0.65% 3.00%
Janaúba “Real” “Sudene” 100% 2032 1.65% 7.60%
Aimorés “Real” “Sudene” 80% 2032 1.65% 7.60%
Paraguaçu “Real” “Sudene” 100% 2032 1.65% 7.60%
ETAU “Real” - - - 0.65% 3.00%
BRASNORTE “Real” “Sudam” 100% 2027 1.65% 7.60%
EATE “Real” “Sudam” 100% 2023 0.65% 3.00%
ENTE “Real” “Sudam” 100% 2025 0.65% 3.00%
ECTE “Real” - - - 0.65% 3.00%
ETEP “Real” “Sudam” 100% 2025 0.65% 3.00%
ERTE “Presumed” - - - 0.65% 3.00%
LUMITRANS “Presumed” - - - 0.65% 3.00%
EBTE “Real” “Sudam” 100% 2020 1.65% 7.60%
ESDE “Presumed” - - - 0.65% 3.00%
STC “Presumed” - - - 0.65% 3.00%
ETSE “Presumed” - - - 0.65% 3.00%
ESTE “Real” “Sudene” 22% 2032 1.65% 7.60%
IVAÍ “Real” 1.65% 7.60%
TRANSUDESTE “Presumed” - - - 0.65% 3.00%
TRANSLESTE “Presumed” - - - 0.65% 3.00%
TRANSIRAPÉ “Presumed” - - - 0.65% 3.00%
EDTE “Real” “Sudene” 100% 2030 1.65% 7.60%
Sant”Ana “Presumed” - - - 0.65% 3.00%
São João “Presumed” - - - 0.65% 3.00%
São Pedro “Presumed” - - - 0.65% 3.00%
Lagoa Nova “Presumed” - - - 0.65% 3.00%
28
2020 Second Quarter Earnings Release
The SUDAM/SUDENE tax benefit is calculated based on the net income under IFRS of each concession. These benefits
are tax incentives granted by the Superintendency of Development for the Amazon (SUDAM) and by Superintendency of
Development of the Northeast (SUDENE) in activities directly related to production in the region and they reduce 75% of
income tax due to exploration of transmission concessions.
Income and social contribution taxation rule by fiscal regimen
Lucro Real (real profit): The company must anticipate taxes monthly, based on monthly revenues, over which predetermined
percentages are applied, according to the activities, in order to obtain an estimated profit margin on which the income tax
(IRPJ) and social contribution (CSLL) are levied. At the end of each year, the legal entity states its annual balance sheet
and adjusts the profit for the year, calculating the final IRPJ and CSLL and discounting the anticipated taxes paid monthly.
Eventually, the anticipated tax payments may be higher than the real taxes due, generating a credit in favor of the taxpayer.
Lucro Presumido (presumed profit): IRPJ and CSLL for “Lucro Presumido” are calculated quarterly. The rate of each tax
(IRPJ and CSLL) is levied on revenues based on a percentage of variable presumption, depending on the activity. In
Taesa’s case, the presumption rates of IRPJ and CSLL are 8% and 12%, respectively.
With the Law 12,973/2014, from 2015 until November 2017 the Company accounted the income and social contribution
taxes using the presumption rate of 32%. However, based on recent law cases, the Company reversed the provision for
IRPJ and CSLL in ETAU* and São Gotardo in 4Q17, and began to account them using the previous rates (8% and 12%).
The same occurred for concessions of the TBE group that adopt “Lucro Presumido” regime.
* In 2015, ETAU used the “Lucro Presumido” regime. However, from January 2016, it opted for the “Lucro Real” regime, aiming to reduce the tax rate of IRPJ and CSLL, due to the enactment
of Law 12,973/14.
29
2020 Second Quarter Earnings Release
4.16. Net Income
Net Income under IFRS totaled R$ 437.8 million in 2Q20, 42.4% higher y.o.y. In the first half of 2020, Net Income
under IFRS totaled R$ 802.0 million, 71.7% higher y.o.y.
39.8
2Q19 Net Income
43.1
Δ Net Financial
Results
Δ TaxesΔ Monetary
Restatement
55.5
2Q20 Net Income
437.8133.8
Δ Implementation
Margin
19.0
Δ Other Effects
on Operational
Result
29.7
307.4
Δ Equity Method
+42.4%
(+130.4)
Δ Other Effects
on Operational
Result
27.5
6M19 Net Income
40.5
Δ Equity MethodΔ Monetary
Restatement
Δ Implementation
Margin
802.0
467.0
Δ Taxes 6M20 Net Income
146.4
Δ Net Financial
Results
105.6
88.2
193.1
+71.7%
(+335.0)
2Q20 Net Income under IFRS:
6M20 Net Income under IFRS:
30
2020 Second Quarter Earnings Release
Regulatory Net Income totaled R$ 257.6 million in 2Q20, presenting an y.o.y increase of 15.1%. In 6M20, Net Income
under IFRS closed at R$ 396.9 million, 2.9% lower y.o.y.
Δ Equity Method
27.3
2Q19 Net Income
43.1
Δ Net Financial Result
257.6
Annual Permitted Revenues
(RAP)
3.9
Δ Taxes
19.9
Δ Other Effects on EBITDA
2Q20 Net Income
12.2
223.8
Δ Depreciation and Amortization
0.7
+15.1%(+33.8)
0.4
Δ Other Effects on EBITDA
6M19 Net Income Annual Permitted Revenues
(RAP)
Δ Depreciation and Amortization
396.9
Δ Net Financial Result
Δ Taxes
27.6
Δ Equity Method
44.1
6M20 Net Income
408.9
34.921.6
28.4
-2.9%(-12.1)
2Q20 Regulatory Net Income:
6M20 Regulatory Net Income:
31
2020 Second Quarter Earnings Release
Adjusted Net Income
With the adoption of CPC 47 for 2018 onwards, the Company began to anticipate a result that is strictly accounting (with
no cash effect) in connection with the efficiency of the construction (see section 4.4 for further details). However, for
purposes of distribution of dividends and in order to maintain the flow of dividends that Taesa has historically paid, without
impacting its cash and leverage position, the Company will record, on a quarterly basis, the adjusted net income excluding
the effects of construction margins. That is, the adjusted net income approximates the previously adopted accounting
method (financial asset at amortized cost). Consequently, the Company will record the special earnings reserve relating to
such adjustments, which may be distributed as dividends in the future.
Income Statement under IFRS - Consolidated - 6M20
R$ '000
Financials
(CPC 47)Adjustments
Adjusted
Financials
GROSS OPERATING REVENUES
Operation and Maintenance 326,311 326,311
Remuneration of the Contractual Asset 312,977 (13,149) 299,828
Monetary Restatement of the Contractual Asset 199,970 199,970
Implementation of Infrastructure Revenues 739,407 (256,525) 482,882
Other Revenues 20,051 20,051
Variable Portion (9,484) (9,484)
TOTAL GROSS REVENUES 1,589,232 (269,675) 1,319,558
PIS/Cofins (107,021) 23,932 (83,088)
Service Tax (185) (185)
ICMS (39) (39)
RGR, P&D, TFSEE, CDE and PROINFA (35,917) (35,917)
Others Deductions - -
Gross Revenue deductions (143,161) 23,932 (119,229)
NET REVENUES 1,446,071 (245,743) 1,200,328
COSTS AND OPERATING EXPENSES - -
Personnel (79,725) (79,725)
Material (444,648) 29,411 (415,236)
Third party services (34,346) (34,346)
Depreciation and amortization (7,491) (7,491)
Other operating expenses (9,480) (9,480)
Costs and Expenses (575,690) 29,411 (546,279)
Gains (losses) on company acquisitions - -
GROSS PROFIT 870,381 (216,332) 654,050
Equity method 271,014 (93,008) 178,006
Revenues from financial investments 22,296 22,296
Financial Expenses (185,612) (185,612)
Financial Revenues (Expenses) (163,316) - (163,316) (2,054) - (2,054)
NET INCOME BEFORE INCOME TAXES 978,079 (309,339) 668,740
Income taxes and social contribution (176,044) 82,603 (93,441)
NET INCOME 802,035 (226,736) 575,299
Controlling Shareholder Interest (Distributable) 802,035 (226,736) 575,299
Participation of non-controlling shareholders - -
Legal Reserve (5%) (40,102) 11,337 (28,765)
Fiscal Incentive Reserve (25,510) (25,510)
Special Reserve - Initial Adoption CPC 47 (215,399) 215,399 -
Distributable Profit 521,025 521,025
Payout 65.0% 90.6%
32
2020 Second Quarter Earnings Release
4.17. Dividends and Interest on Equity
On May 15, 2020, the Company paid R$ 61.8 million (R$ 0.177928194772 / Unit) as additional dividends referring to the
allocation of net income from 2019. In addition, on May 28, 2020, Taesa paid an additional R$ 241.7 million divided as
follows: (i) R$ 180.4 million (R$ 0.52378039554 / Unit) as interim dividends, and (ii) R$ 61.3 million (R$ 0.17787141663 /
Unit) as interest on equity (JCP), both based on the interim income statements as of on March 31, 2020.
Additionally, based on the interim statements of income of June 30, 2020, the Board of Directors approved today the
distribution of (i) R$ 220.5 million (R$ 0.64018294146 / Unit) as interim dividends, and (ii) R$ 58.8 million (R$
0.17057885955 / Unit) as interest on equity (JCP), totaling R$ 279.3 million (R$ 0.81076180101 / Unit). The payment will
take place on August 26, 2020, with August 17, 2020 as the base date.
As a result, the year-to-date payout was 90.6% of adjusted net income and 65.0% of net income
88.0%95.0% 95.0% 95.0%
87.0%95.0% 95.0%
100.0%90.7%91.0% 94.1% 90.9% 91.5%
65.0%
80.1%
65.5%
127
255
188
288
429
333
495
589
893 905 909862
648
121
242
178
273
407
333
429
519
814852
825784
593
2006 201020092007 2010 Extra
(*)
20132008 20122011 2014 20162015 2017
Payout
89.9%92.3%
90.6%
802
954
711
575
858
656
521
2018 2019 6M20
1.002
1.071
Adjusted Payout Net Income IFRS (R$ mn) Adjusted Net Income IFRS (R$ mn) Dividends and IoE (R$ mn)
* IFRS Reserve** Adjusted Net Income
33
2020 Second Quarter Earnings Release
4.18. Indebtedness
In 2Q20, Taesa’s Gross Debt totaled R$ 6,648.5 million, a q.o.q increase of 16.4%. The Company’s cash position
totaled R$ 2,215.0 million, an increase of 32.1% in the quarter, representing a net debt of R$ 4,433.5 million, a q.o.q
increase of 9.9%.
* The cash value is the sum of the Cash and Cash Equivalent and Securities lines.
At the end of the first half of 2020, the gross debt totaled R$ 6,648.5 million and the cash position R$ 2,215.0 million,
resulting in a net debt of R$ 4,433.5 million. The increase of 16.4% in the gross debt for the period resulted basically from
the fund raisings of R$ 900 million relating to the 9th issuance of Taesa’s debentures, in the amount of R$ 450 million, and
two bank credit notes of R$ 350 million and R$ 100 million, on behalf of Banco Citibank and Bradesco, respectively, all
issued in April 2020.
The 32.1% increase in Cash and Cash Equivalents is a result of: (i) operating cash generation in the quarter of R$ 267
million; (ii) fund raising of R$ 900 million in April 2020; and (iii) receipt of R$ 82 million in dividends from TBE and
Transmineiras. Such increase was partially offset by the payment of dividends/IoE in the amount of R$ 303 million, Capex
disbursements for the projects under construction in the amount of R$ 251 million, payment of debt amortization and interest
in the amount of R$ 31 million, and equity contribution to jointly-controlled and affiliated companies, which are under
construction, in the amount of R$ 70 million.
By proportionally consolidating the jointly-controlled and affiliated companies, the total gross debt is R$ 8,235.6 million and
the cash position is R$ 3,211.5 million, considering the following amounts: (i) TBE’s debt in the amount of R$ 705.8 million
and cash/investments of R$ 228.2 million; (ii) ETAU’s debt in the amount of R$ 11.4 million and cash/investments of R$
14.9 million; (iii) Transmineiras’ debt in the amount of R$ 62.2 million and cash/investments of R$ 5.7 million; and (iv) AIE’s
debt (Aimorés, Paraguaçu and Ivaía) of R$ 807.7 million and cash/investments of R$ 747.6 million. Noting that the amounts
of ETAU and Transmineiras include the interest acquired in the Eletrobras Auction 01/2018.
Considering the proportional net debt of jointly-controlled and affiliated companies, the net debt to EBITDA ratio was 3.3x
in 2Q20, higher than 1Q20 (3.0x). Excluding the results of subsidiaries, this ratio would be 3.8x in 2Q20 against 3.5x in
1Q20.
R$ mn
Net Debt 2Q20 % Outst. Debt 1Q20 % Outst. Debt Chg.%
Short Term 916.6 13.8% 787.0 13.8% 16.5%
Fixed Coupon 9.0 0.1% 9.0 0.2% 0.0%
CDI 400.5 6.0% 302.7 5.3% 32.3%
IPCA 507.1 7.6% 475.3 8.3% 6.7%
Long Term 5,732.0 86.2% 4,924.2 86.2% 16.4%
Fixed Coupon 15.4 0.2% 17.6 0.3% -12.7%
CDI 1,589.4 23.9% 790.6 13.8% 101.0%
IPCA 4,127.2 62.1% 4,116.0 72.1% 0.3%
Total Debt 6,648.5 100.0% 5,711.2 100.0% 16.4%
(-) Cash and cash equivalents* (2,215.0) (1,677.2) 32.1%
(=) Net Debt 4,433.5 4,034.0 9.9%
45%
55%
Net Debt Equity (book value)
Capital Structure Taesa (Book Value)
CompanyGross Debt
R$ mn
Cash Balance
R$ mn
Net Debt
R$ mn
TAESA 6,648.5 2,215.0 4,433.5
ETAU (75.6%) 11.4 14.9 -3.5
TBE (49,99%) 705.8 228.2 477.6
Transmineiras (49%) 62.2 5.7 56.4
AIE (50%) 807.7 747.6 60.1
TOTAL 8,235.6 3,211.5 5,024.1
34
2020 Second Quarter Earnings Release
The debt of Taesa, jointly-controlled and associated companies is detailed in the table below, proportionally.
Company Creditor IndexPrincipal
(R$ / 000)
Interest
(R$ / 000)Cost Issuance Rating Maturity Amort
Coupons
per Year
IPCA 397,681 13,389 IPCA + 4.85% Br.AAA Oct - 2020 Annual 1
IPCA 1,056,669 37,370 IPCA + 5.10% Br.AAA Oct - 2024 Annual 1
4th Debentures CDI 285,739 2,732 105% CDI AAA.br Sep - 2020 Bullet 1
4th Debentures IPCA 276,572 9,556 IPCA + 4.41% AAA.br Sep - 2024 Annual 1
5th Debentures IPCA 542,381 31,546 IPCA + 5.9526% - Jul - 2025 Annual 1
6th Debentures CDI 439,741 3,021 108% CDI AAA.br May-2026 Bullet 1
6th Debentures IPCA 204,167 1,417 IPCA + 5,50% AAA.br May-2044 Monthly 12
7th Debentures IPCA 485,891 15,365 IPCA + 4,50% AAA.br Sep-2044 Semiannual 2
8th Debentures IPCA 279,830 6,224 IPCA + 4,77% AAA.br Dec-2044 Semiannual 2
9th Debentures CDI 447,704 5,270 CDI + 2.85% - Apr/2022 Bullet 1
CCB Bradesco CDI 99,625 1,171 CDI + 2.55% - Apr/2021 Bullet 1
CCB citibank CDI 348,248 4,099 CDI + 2.85% - Apr/2022 Bullet 1
SWAP - CITIBANK* CDI 351,390 0 106.0% CDI - May-2023 Bullet 1
SWAP 1st Serie of 6th issuance (BR Partners) CDI 106,368 0 3.995%.per year - May-2026 Bullet 1
SWAP 1st Serie of 6th issuance (Santander) IPCA 106,367 0 3.99%.per year - May-2026 Bullet 1
SWAP 1st Serie of 6th issuance (Itaú) IPCA 53,302 0 3.94%.per year - May-2026 Bullet 1
SWAP 1rst Serie of 6th issuance (Br Partners) IPCA 53,176 0 3.91%.per year - May-2026 Bullet 1
SWAP 1rst Serie of 6th issuance (Santander) IPCA 52,336 0 3.66%.per year - May-2026 Bullet 1
SWAP 1ª 1rst Serie of 6th issuance (ABC) IPCA 54,662 0 3.59%.per year - May-2026 Bullet 1
FINAME Fixed 189 0 5.50% - Jul - 2022 Monthly 12
FINAME Fixed 6,346 7 2.50% - Dec - 2022 Monthly 12
FINAME Fixed 11,422 14 3.00% - Aug - 2024 Monthly 12
FINAME Fixed 224 1 6.00% - Jun - 2023 Monthly 12
SGT FINAME Fixed 6,116 6 2.5% - Dec - 2022 Monthly 12
1st Debentures IPCA 220,026 14,190 IPCA + 4.5% per year - Jul/2033 Quarterly 4
2nd Debentures IPCA 543,929 14,177 4.8295%.per year - Dec - 2044 Annual 1
Lagoa Nova BNB Financing IPCA 58,381 486 IPCA + 2.109% per.year - May - 2038 Monthly 12
BNDES Selic 1,583 3 SELIC + 3.76% - Aug - 2021 Monthly 12
BNDES TJLP 1,623 7 TJLP + 5.20% - Aug - 2021 Monthly 12
FINAME Fixed 34 0 9.50% - Jan - 2021 Monthly 12
FINAME Fixed 395 1 9.50% - Jan - 2021 Monthly 12
BNDES - GIRO TJLP 7,768 16 TLP + 2,78% + 1,5% + 1,5% - Oct - 2023 Monthly 12
4th Debentures CDI 4,674 20 109.75% CDI - Aug - 2020 Quarterly 4
5th Debentures - 2nd CDI 26,970 46 116% CDI - Sep - 2021 Monthly 12
6th Debentures CDI 17,117 3 107.75% CDI - Sep - 2022 Monthly 12
7th Debentures CDI 27,703 5 113.53 % CDI Jun - 2023 Monthly 12
8th Debentures CDI 134,640 2,280 108.60% CDI Jul - 2024 Bullet 1
EBTE 1st Debentures CDI 48,970 9 113.83% CDI - Jun - 2023 Monthly 12
EDTE 2nd Debentures IPCA 152,792 7,276 IPCA + 5,29% - Dec - 2028 Semiannual 2
4th Debentures CDI 13,297 2 107.75% CDI - Sep - 2022 Monthly 12
5th Debentures CDI 9,506 161 108.60% CDI - Jul - 2024 Semiannual 2
2nd Debentures CDI 7,291 32 109.75% CDI Aa1.br Mar - 2016 Monthly 12
4th Debentures CDI 24,889 422 108.60% CDI - Jul - 2024 Bullet 1
2nd Debentures CDI 2,028 9 109.75% CDI - Aug - 2020 Quarterly 4
3rd Debentures CDI 16,461 3 112% CDI - Jun - 2023 Monthly 12
BNDES TJLP 5,209 17 TJLP + 2.02% - Nov - 2028 Monthly 12
BNDES Fixed 2,895 4 3.50% - Nov - 2023 Monthly 12
ESTE 1st Debentures IPCA 194,928 6,140 IPCA + 4.5% per year - Dec - 2044 Semiannual 2
BDMG Fixed 6,202 31 10% per year - Mar - 2025 Monthly 12
BNB Fixed 1,941 40 9.50% - Mar - 2025 Monthly 12
1st Debentures CDI 1,746 8 109.75% CDI - Aug - 2020 Quarterly 4
2nd Debentures CDI 16,152 3 107.75% CDI - Sep - 2022 Monthly 12
BDMG Fixed 6 0 4.5% - Jul - 2020 Monthly 12
BDMG Fixed 4,610 7 3.5% - Jan - 2024 Monthly 12
BDMG Fixed 895 24 4.5% + TJLP - Apr - 2021 Monthly 12
BDMG Fixed 2,122 91 3.5% + TJLP - Oct - 2029 Monthly 12
2nd Debentures CDI 11,786 2 107.75% CDI - Sep - 2022 Mensal 12
BNDES Fixed 1,635 51 6.0% + TJLP - Apr - 2026 Monthly 12
2nd Debentures CDI 14,833 3 107.75% CDI - Sep- 2022 Monthly 12
IVAÍ 1st Debentures IPCA 787,329 20,336 4,8892% a.a. - Dec- 2043 Semiannual 2
8,038,509 197,093
ETSE
ETEP
ENTE
TRANSLESTE
EATE
Total
TRANSUDESTE
TRANSIRAPÉ
ECTE
Taesa
3rd Debentures
ETAU
Janaúba
* The debt was collected in USD, and indexed to Libor. However, as the debt includes a swap for CDI, the final value of the debt was considered with the swap balance included in said value.
35
2020 Second Quarter Earnings Release
4.19. Investments
In 6M20, Taesa, its subsidiaries, jointly-controlled and affiliated companies invested a total of R$ 695.3 million against R$
197.9 million invested in 6M19, regarding the projects under construction. The y.o.y increase of R$ 497.4 million is due to
the higher investments in almost all projects (except Miracema, EDTE and Mariana), especially for Janaúba, which
presented an y.o.y increase of R$ 347.7 million.
4.20. Projects under Construction
Currently Taesa has 6 projects under construction with a total investment of R$ 4,844 million and a RAP of R$ 875 million
(2020-2021 cycle). Considering only the Company’s interest in these concessions, the amount to be invested is R$ 3,206.9
million with a proportional RAP of R$ 567.5 million. It is worth mentioning that 3 projects, Miracema, EDTE and Mariana,
and reinforcements for Novatrans were recently concluded, adding a total RAP of R$ 142.0 million to Taesa – 2020-2021
cycle (see section 3.1 for further details).
Projects under Construction
2014 2015 2016 2017 2018 2019 6M20 TOTAL
Mariana 2,619 4,751 21,181 38,106 22,797 55,083 17,446 161,983
Miracema 1,197 41,695 115,009 110,664 - 268,565
Janaúba 10,190 30,741 116,074 357,388 514,393
Aimorés 3,923 3,638 65,877 58,290 131,728
Paraguaçu 5,750 4,611 110,848 91,128 212,337
Ivaí 8,662 12,740 46,190 83,551 151,144
ESTE 868 4,546 6,243 52,231 63,887
EDTE 14,635 175,155 1,837 191,626
Sant'Ana 32,172 33,425 65,597
Total 2,619 4,751 22,378 109,195 208,716 718,306 695,295 1,761,260
Implementation Cost (Capex)
R$ '000
Note: The amounts presented in the table above consider the implementation of infrastructure costs in each of the projects on an accrual basis, in line with the IFRS Results
disclosed by the Company. The adjustment in the implementation costs line generated by the adoption of CPC 47, related to the treatment of advances with suppliers until
December 31, 2017, was recorded in the special reserve account for the 2018 fiscal year (PL). For the purposes of monitoring in the table above, this impact was added to
the investment value of each project in 2017.
Auction 013/2013
(Dec-13)
Mariana
(Lot A)
82 km /
Minas Gerais100% Taesa 16.4 107 May/14 May/17
Concluded in
05/25/2020
Miracema
(Lot P)
90 km /
Tocantins100% Taesa 59.7 276 Jun/16 Dec/19
Concluded in
11/29/2019
EDTE
(Lot M)
167 km /
Bahia
25% Taesa
25% Apollo 12
50% ENTE
66.0 368 Dec/16 Dec/19Concluded in
01/20/2020
ESTE
(Lot 22)
236 km /
Minas Gerais and
Espirito Santo
50% Taesa
50% Alupar
(100% EATE-TBE)
114.4 486 Feb/17 Feb/22 In progress
Janaúba
(Lot 17)
542 km /
Bahia and Minas
Gerais
100% Taesa 197.7 960 Feb/17 Feb/22 In progress
Aimorés
(Lot 4)
208 km /
Minas Gerais
50% Taesa
50% CTEEP80.9 341 Feb/17 Feb/22 In progress
Paraguaçu
(Lot 3)
338 km /
Bahia and Minas
Gerais
50% Taesa
50% CTEEP120.7 510 Feb/17 Feb/22 In progress
Auction 005/2016
(Apr-16)
Ivaí
(Lot 1)
600 km /
Paraná
50% Taesa
50% CTEEP299.5 1937 Aug/17 Aug/22 In progress
Auction 004/2018
Dec/18
Sant'Ana
(Lot 12)
591 km / Rio Grande
do Sul100% Taesa 62.1 610 Mar/19 Mar/23 In progress
TOTAL 2.854 km R$ 1.017 mn R$ 5.595 mn
Contract SigningANEEL's
Deadline
Auction 013/2015
(Apr-16)
Auction 013/2015 2º
Part
(Oct-16)
Partnership
RAP
(2020-21 cycle)
R$ mn
StatusCapex ANEEL
R$ mnAuction Project
Extension /
Location
36
2020 Second Quarter Earnings Release
Project Status
Mariana
• Preliminary License (LP) issued in May 2016.
• Installation and Operation Licences (LI e LO) issued in December 2018.
• Issuance of TLD (Termo de Liberação Definitivo) on 20/12/2019 for Mariana reinforcement.
• Energization scheduled for May 25, 2020.
• Issuance of TLD (Termo de Liberação Definitivo) on June 8, 2020, with date to entry into retroactive
commercial operation on June 4, 2020.
• Concession in operation.
Miracema
• All environmental licenses have been obtained: LI’s and LP’s of LT 500kV, LT 230kV, SE Palmas, SE Lajeado
and SE Miracema.
• Recognition of the right to SUDAM’s tax benefit in September 2018. The benefit will last for 10 years, from the
start of its operations.
• The section LT Miracema – Lajeado (circuit 2), with 500kV of voltage and 30 km of extension, was energized
in in September 2019. Energization of the remaining section concluded in November 29, 2019.
• Issuance of TLD (Termo de Liberação Definitivo) on October 1, 2019 for the reinforcement, in December 27,
2019 for the 5000kV installations, and on February 18, 2020 for the 230 kV and 138 kV installations, where for
the latter, a TLR (Termo de Liberação de Receita) was issued for the period between December 27, 2019 and
February 7, 2020.
• Concession in operation.
EDTE
• Preliminary License (LP) issued in June 2018.
• 2nd issuance of Debentures of EDTE in December 2018.
• Installation License (LI) issued in January 2019.
• Energization of the LT 500kV Ibicoara – Poções III and 500/230kV Poções III Substation in December 22,
2019.
• Last energization of EDTE refers to the LT 230kV poções III – Poções II on January 20, 2020.
• Issuance of TLP (Termo de Liberação Provisória) on January 20, 2020.
• Issuance of TLD (Termo de Liberação Definitiva) on February 7, 2020.
• Concession in operation.
ESTE
• Basic project filed in ANEEL and already approved in ONS.
• Preliminary License (LP) issued in January 2019.
• Installation Licence (LI) issued in October 2019.
• 1st issuance of debentures of ESTE in December 2019.
• Issued the OSC (Ordem de Serviço de Campo) for the start of field work.
• Construction progress: 19% accomplished.
Janaúba
• Basic project approved by ANEEL/ONS for the substations and transmission lines.
• The design implementation / topography activities were completed.
• Preliminary License (LP) issued in September 2018.
• Financing agreement signed with BNB in September 2018.
• Recognition of the right to SUDENE tax benefit in September 2018. The benefit will last for 10 years, from the
start of its operations.
37
2020 Second Quarter Earnings Release
• 1st issuance of debentures of Janaúba in January 2019.
• Installation Licence (LI) issued in July 2019.
• 2nd issuance of debentures of Janaúba in December 2019.
• Construction progress: 57% accomplished.
Aimorés
• Basic project approved by ANEEL.
• Preliminary License (LP) issued in October 2018.
• Recognition of the right to SUDENE tax benefit in December 2018. The benefit will last for 10 years, from the
start of its operations.
• Installation Licence (LI) issued in April 2019.
• Construction progress: 77% accomplished.
Paraguaçu
• Basic project approved by ANEEL.
• Preliminary License (LP) issued in October 2018.
• Recognition of the right to SUDENE tax benefit in December 2018. The benefit will last for 10 years, from the
start of its operations.
• Installation Licence (LI) issued in May 2019.
• Construction progress: 80% accomplished.
Ivaí
• Basic project filed in ANEEL.
• EIA/RIMA registered with IAP.
• Preliminary License (LP) for the 230 kV installations issued in September 2018.
• Change in corporate name of Elétricas Reunidas do Brasil S.A. (ERB1) for Interligação Elétrica Ivaí S.A.
• Installation Licence (LI) issued for SE Sarandi of 525/230 kV in April 2019, SE Paranavaí Norte - 230/138 kV
in May 2019, LT 230 kV Sarandi - Paranavaí Norte in June 2019, and for the Substations Londrina of 525 kV,
Foz do Iguaçu of 525 kV and Guaíra of 525 kV/230 kV and the LT 525 kV Sarandi - Londrina in August 2019.
• 1st issuance of debentures of Ivaí in January 2020.
• Construction progress: 39% accomplished.
Sant’Ana
• Establishment of the company Sant’Ana Transmissora de Energia S.A. in January 2019.
• Execution of the concession agreement on March 22, 2019.
• Previous and Installation Licences (LPI) issued for the SEs Livramento 3 and Maçambará 3, both with 230kV,
in October 2019.
• Previous Licenses (LP) issued for all transmission lines and for the 3 existing substations (SE Alegrete 2, SE
Cerro Chato and SE Santa Maria 3) in December 2019.
• Installation Licence issued for the transmission lines LT Livramento 3 – Alegrete 2 (C1), LT Livramento 3 –
Maçambará 3 (C1), LT Livramento 3 – Cerro Chato (C1), and LT Maçambará – Santo Ângelo (C1/C2), all with
230kV voltage, as well as for the expansion of existing substations of SE 230kV Alegrete 2 and SE 230kV
Cerro Chato on April 9, 2020.
• Installation License pending referring to the LT 230kV CS Livramento 3 - Santa Maria 3, which represents
approximately one third of the total extension of the transmission lines of this concession, with a pending
release process.
• Construction progress: 19% accomplished.
38
2020 Second Quarter Earnings Release
4.21. Environmental, Social and Governance (ESG) Initiatives
In the implementation, operation and maintenance activities of the electric energy transmission assets, as well as in the
administrative procedures and business management, Taesa considers the sustainability matter an important value to
be developed and maintained in its culture, in order to ensure the security and reliability of its processes, as well as to
improve the life quality of the population, based on environmental respect and sustainable development.
Accordingly, the Company has advanced in the disclosure of its Environmental, Social and Governance (ESG) practices.
The purpose of such improvement is to create initiatives and identify opportunities for a clear communication of the
environmental, social and governance practices implemented in Taesa, in addition to the continuous progress of ESG
best practices.
Taesa deeply understood the issue and prepared a plan in order to implement the ASG best practices, in order to ensure
the sustainable development and business maintenance, aiming at becoming a reference company in sustainability in
the electric energy transmission sector in Brazil. Accordingly, Taesa developed the Sustainability Project, mainly directed
to document and innovate the ESG practices, improve the transparency of the social and environmental reports and
create initiatives for the continuous improvement and innovation with respect to this matter.
Amongst the improvements implemented, the 12th Annual Social and Environmental Responsibility Report was disclosed
and presented an important progress compared to the previous versions, and whose structure was elaborated based
on the ESG practices, under the GRI methodology. In addition, the adhesion to the UN Global Compact was an initiative
to promote the dialogue between the companies, corporations and UN bodies with respect to the social and
environmental responsibility policies. Accordingly, the Company assumed the responsibility to contribute for the
achievement of the global sustainability agenda through 2030, which is supported by the 17 Sustainable Development
Goals, the SDO.
The complete Annual Social and Environmental Responsibility Report describes the initiatives implemented by Taesa
in the context of the ESG practices, such as:
• Issuance of four debentures, with Green Bonds certification;
• Social Responsibility Projects, under the incentive laws;
• Environmental Management System: Environmental Programs, Environmental Management Guide and Health,
Environment and Security Policy;
• Social Communication and Environmental Education Campaigns;
• Voluntary Projects;
• Great Place to Work Certification.
The link to access Taesa’s 12th Annual Social and Environmental Responsibility Report (2019) is the following:
https://ri.taesa.com.br/wp-content/uploads/2018/11/Taesa_Relat%C3%B3rio-2019_digital_alta_site.pdf
39
2020 Second Quarter Earnings Release
4.22. Initiatives to Mitigate COVID-19 Impacts
The beginning of this year was marked by the COVID-19 pandemic, which affected the entire world and also Taesa.
Since then, the Company has adopted measures for protection, security and health of its employees, families and local
communities, in order to protect Taesa’s most important asset – the persons – and reduce the speed of the dissemination
of the new coronavirus in Brazil. Therefore, the main measures implemented so far are presented below:
Protection of the employees’ health
• Adoption of measures to protect Taesa’s most important asset, the persons, and ensure the continuity of the
operations;
• Continuous and updated documentation submitted to the employees with respect to the new coronavirus;
• Maintenance of the home office for all employees in the last five months, with initial discussions for a gradual return to the offices;
• Hiring of specialized medical advice to support the protocols implemented and to return the activities;
• Suspension of travels (except for O&M and Implementation) and meetings in person;
• Monitoring of the employees, with support in the treatment of suspected or positive cases identified by COVID-
19;
• Several channels to take care of the physical and emotional health of Taesa’s employees and families;
• Vaccination against the flue for the persons included in the risk group.
Continuity of the operations and projects under construction
• Creation of the Crisis Committee and Suppliers’ Management Committee;
• Contingency Plan for the Operational and Control Center (COC-Taesa and COC-Backup);
• Adoption of Decrees 10.282 and 10.292 – suspend the restricted flow of employees for essential public services;
• Action in conjunction with ONS for the programming of the necessary maintenances;
• Interventions solely with local resources;
• More restrictive measures in the O&M staff by virtue of less constrained social isolation in some cities;
• Beginning of the confinement regime for operators who work at the Operation and Control Center as they are
essential for the operation of the SIN;
• Maintenance of high availability rates (99.96% in 6M20);
• By virtue of the continuous crisis and decrees of some municipalities imposing interruption of services and social
isolation, there is a slowdown in the progress of the works, but the Company is working towards complying with
the projects delivery schedule;
• Maintenance of the investments in the projects under construction – increase in Capex of 251.4% between
6M20 and 6M19).
Protection of the Company’s financial health
• Solid position of current liquidity (R$2.2 billion in cash) and proper leverage level (3.3x net debt/EBITDA);
• Raising of R$900 million in April to reinforce the cash position:
✓ 9th issuance of debentures, in the amount of R$450 million, 2 years bullet at CDI + 2.85%;
✓ Bank Credit Note, in the amount of R$350 million, 2 years bullet at CDI + 2.85%;
✓ Bank Credit Note, in the amount of R$100 million, 1 year bullet at CDI + 2.5505%;
• 100% of the funds to finance the projects of construction;
• Consistent operating cash generation, maintaining the Company’s low historical default levels;
• Continuous monitoring of the default level and impacts from the crisis in the electric energy sector, including the
evaluation of the alternatives to promote short-term liquidity.
40
2020 Second Quarter Earnings Release
5. FINANCIAL STATEMENTS
5.1. Revenues under IFRS by Concession
Remuneration of Contractual Assets is obtained by multiplying the balance of Assets by the Market Rate. The Monetary
Restatement of Contractual Assets is the monthly recognition of inflation effects. O&M Revenues is a value adjusted to
inflation (IGP-M or IPCA) on annual basis, in the same way as RAP. The Variable Portion (PV) is a penalty derived from
unavailability of the lines (see detail on section 4.1). All the captions of income mentioned above are related to the operating
period of the concessions.
In the Income Statement, the Remuneration of Contractual Assets, the Monetary Restatement of Contractual Assets,
the Implementation of Infrastructure Revenues and O&M Revenues are accounted for in Revenues, as shown in the
following table.
IFRS Revenues
R$ mn 2Q20
ConcessionRemuneration of
Caontractual Asset
Monetary
Restatement of
Contractual Asset
Implementation
of Infrastructure
Revenues
O&MPV (Variable
Portion)
NOVATRANS 44.6 26.1 0.5 31.4 (0.4)
TSN 15.2 10.7 0.5 58.6 (2.2)
MUNIRAH 1.4 0.9 0.2 3.9 -
GTESA 0.6 0.5 - 0.6 -
PATESA 1.9 2.1 0.0 1.3 -
ETEO 8.9 7.8 - 11.9 (0.1)
NTE 10.6 6.5 0.0 9.7 0.1
STE 6.4 5.5 0.0 4.2 -
ATE 12.4 11.3 0.0 7.4 (0.0)
ATE II 16.9 17.2 0.0 16.7 (0.1)
ATE III 8.5 (2.8) 0.0 11.2 0.0
ETAU 1.9 1.9 - 2.3 (0.0)
BRASNORTE 5.7 (1.3) - 0.6 (0.1)
SÃO GOTARDO 0.8 (0.4) - 0.2 0.0
SÃO JOÃO 8.2 (2.6) - 1.8 -
SÃO PEDRO 7.1 (2.6) 11.3 1.5 (0.1)
LAGOA NOVA 2.6 (0.8) - 0.4 (0.0)
MARIANA 0.2 (0.1) - - -
MIRACEMA 12.2 (3.1) - 3.6 (0.2)
JANAÚBA - - 389.4 - -
SANT'ANA - - 22.0 - -
AIMORÉS - - 35.2 - -
PARAGUAÇÚ - - 55.3 - -
IVAÍ - - 79.7 - -
EATE 13.8 19.3 - 5.3 (0.1)
EBTE 4.1 (2.1) - 2.2 (0.0)
ECTE 1.1 1.6 - 0.4 -
EDTE 7.3 (6.2) - 1.0 -
ENTE 7.4 11.2 - 2.7 (0.1)
ERTE 1.8 3.0 - 1.0 (0.0)
ESDE 1.0 (0.4) - 0.3 0.001
ESTE - - 73.3 - -
ETEP 2.9 4.0 - 1.7 -
ETSE 0.6 (0.3) - 0.1 (0.002)
LUMITRANS 0.8 1.4 - 0.4 -
STC 1.0 (0.4) - 0.7 0.0
TRANSIRAPE 1.6 1.7 - 0.5 (0.1)
TRANSLESTE 2.1 1.8 - 0.4 (0.6)
TRANSUDESTE 1.3 1.4 - 0.4 -
Total 212.7 112.6 667.4 184.5 (4.0)
41
2020 Second Quarter Earnings Release
5.2. Movement of Contractual Assets (IFRS)
Contra. Asset
1Q20
Rem. of Cont. Asset
Cont.. AssetMon.
O&M Reve.
Imple.
Reve.RAP
Contra. Asset
2Q20
(R$ mn)
Concession Project RateContractual Asset
1Q20
Remuneration
of Contratual
Asset
Contractual
Asset -
Monetary
Implementation
of Infrastructure
Revenues
O&M RAPContractual
Asset 2Q20
NOVATRANS 10.3% 1,207.2 44.6 26.1 0.5 31.4 (82.7) 1,227.0
TSN 10.8% 603.6 15.2 10.7 0.5 58.6 (76.3) 612.3
MUNIRAH 12.4% 48.2 1.4 0.9 0.2 3.9 (10.2) 44.4
GTESA 11.1% 23.6 0.6 0.5 - 0.6 (1.4) 23.9
PATESA 7.7% 104.1 1.9 2.1 0.0 1.3 (4.5) 104.9
ETEO 10.4% 353.0 8.9 7.8 - 11.9 (24.7) 356.7
NTE 15.0% 301.7 10.6 6.5 0.0 9.7 (21.6) 306.9
STE 10.4% 255.8 6.4 5.5 0.0 4.2 (12.2) 259.7
ATE 9.6% 542.0 12.4 11.3 0.0 7.4 (41.8) 531.3
ATE II 8.5% 829.2 16.9 17.2 0.0 16.7 (64.7) 815.3
ATE III1 6.7% 524.2 8.5 (2.8) 0.0 11.2 (34.7) 506.4
ETAU 3.5% 66.7 1.9 1.9 - 2.3 (12.0) 60.8
BRASNORTE 11.0% 212.2 5.7 (1.3) - 0.6 (7.0) 210.2
SÃO GOTARDO1 5.0% 66.7 0.8 (0.4) - 0.2 (1.4) 65.9
SÃO JOÃO1 6.0% 555.1 8.2 (2.6) - 1.8 (12.3) 550.1
SÃO PEDRO1 6.3% 465.4 7.1 (2.6) 11.3 1.5 (10.0) 472.6
LAGOA NOVA1 9.2% 120.6 2.6 (0.8) - 0.4 (3.1) 119.7
MARIANA12 4.7% 185.3 0.2 (0.1) - - (0.2) 185.2
MIRACEMA12 9.9% 514.4 12.2 (3.1) - 3.6 (16.8) 510.4
JANAÚBA12 10.0% 596.6 - - 389.4 - - 986.0
SANT'ANA12 8.0% 50.2 - - 22.0 - - 72.2
AIMORÉS12 10.0% 204.8 - - 35.2 - - 240.0
PARAGUAÇÚ12 10.0% 322.5 - - 55.3 - - 377.8
IVAÍ12 10.0% 166.1 - - 79.7 - - 245.8
EATE 6.6% 858.3 13.8 19.3 - 5.3 (30.6) 866.1
EBTE1 4.4% 377.2 4.1 (2.1) - 2.2 (8.8) 372.5
ECTE 6.3% 72.8 1.1 1.6 - 0.4 (2.5) 73.4
EDTE12 10.2% 305.1 7.3 (6.2) - 1.0 (9.5) 297.6
ENTE 6.0% 516.6 7.4 11.2 - 2.7 (25.5) 512.4
ERTE 5.3% 135.5 1.8 3.0 - 1.0 (4.9) 136.3
ESDE1 6.6% 64.0 1.0 (0.4) - 0.3 (1.7) 63.3
ESTE12 10.0% 33.6 - - 73.3 - - 106.9
ETEP 6.4% 184.2 2.9 4.0 - 1.7 (6.9) 185.9
ETSE1 5.6% 46.2 0.6 (0.3) - 0.1 (1.0) 45.7
LUMITRANS 5.1% 66.9 0.8 1.4 - 0.4 (3.0) 66.5
STC1 4.9% 81.3 1.0 (0.4) - 0.7 (3.6) 79.0
TRANSIRAPE 7.7% 83.7 1.6 1.7 - 0.5 (3.5) 84.0
TRANSLESTE 10.5% 85.4 2.1 1.8 - 0.4 (5.6) 84.1
TRANSUDESTE 8.0% 65.9 1.3 1.4 - 0.4 (3.5) 65.5
Total - 11,295.6 212.7 112.6 667.4 184.5 (548.1) 11,924.8
¹ The RAPs must be grossed up of PIS/COFINS
² under construction
42
2020 Second Quarter Earnings Release
5.3. 2Q20 Income Statement
Income Statement
R$ mn 2Q20 2Q19 Chg. % 2Q20 2Q19 Chg. %
GROSS OPERATING REVENUES
Service revenues - - - 431,319 403,978 6.8%
Operation and Maintenance 165,059 146,113 13.0% - - 0.0%
Remuneration of contractual assets 164,096 124,736 31.6% - - 0.0%
Monetary restatement of contractual assets 74,367 114,140 -34.8% - - 0.0%
Implementation of Infrastructure Revenues 424,016 88,746 377.8% - - 0.0%
Other Revenues 6,033 2,372 154.4% 268 323 -16.9%
Variable Portion (3,125) (3,184) -1.9% (3,125) (3,184) -1.9%
TOTAL GROSS REVENUES 830,446 472,922 75.6% 428,462 401,117 6.8%
PIS/Cofins (56,492) (24,872) 127.1% (24,436) (20,374) 19.9%
Service Tax (94) (43) 118.2% (94) (43) 118.2%
ICMS (39) (27) 42.8% (39) (27) 42.8%
RGR, P&D, TFSEE, CDE and PROINFA (18,167) (20,483) -11.3% (18,167) (20,483) -11.3%
Other Deductions - - 0.0% - - 0.0%
Gross Revenue deductions (74,792) (45,425) 64.6% (42,736) (40,927) 4.4%
NET REVENUES 755,654 427,497 76.8% 385,726 360,190 7.1%
Personnel (41,120) (29,831) 37.8% (41,120) (29,831) 37.8%
Material (249,797) (63,068) 296.1% (774) (679) 13.9%
Third party services (20,041) (15,491) 29.4% (20,041) (15,491) 29.4%
Other operating expenses (4,717) (2,796) 68.7% (6,952) (4,804) 44.7%
Costs and Expenses (315,675) (111,185) 183.9% (68,888) (50,804) 35.6%
Depreciation and amortization (4,045) (3,198) 26.5% (60,549) (48,348) 25.2%
Costs, Expenses and D&A (319,720) (114,383) 179.5% (129,437) (99,152) 30.5%
Gains (losses) on company acquisitions - 9,812 -100.0% - - 0.0%
GROSS PROFIT 435,934 322,925 35.0% 256,289 261,037 -1.8%
Equity method 125,893 96,165 30.9% 57,537 58,211 -1.2%
Revenues from financial investments 9,340 24,849 -62.4% 9,340 24,849 -62.4%
Financial Expenses (37,797) (96,445) -60.8% (37,078) (95,706) -61.3%
Borrowings and financing (31,239) 1,633 - (31,241) 1,633 -
- Interests Incurred (8,450) (4,252) 98.7% (8,453) (4,252) 98.8%
- Monetary Variation - - 0.0% - - 0.0%
- Exchange variation (27,823) 10,254 - (27,823) 10,254 -
- Fair value adjustment 5,034 (4,369) - 5,034 (4,369) -
Financial instrument 37,890 (8,207) - 37,890 (8,207) -
- Interests Incurred 2,655 (2,323) - 2,655 (2,323) -
- Exchange Variation 27,823 (10,254) - 27,823 (10,254) -
- Fair value adjustment 7,412 4,369 69.7% 7,413 4,369 69.7%
Debentures (39,155) (84,328) -53.6% (39,153) (84,328) -53.6%
- Interests incurred (67,650) (49,944) 35.5% (67,648) (49,944) 35.4%
- Monetary Variation 28,495 (34,384) - 28,495 (34,384) -
Leasing (719) (739) -2.7% - - 0.0%
Other financial expenses (4,575) (4,803) -4.8% (4,575) (4,803) -4.8%
Financial Revenues (Expenses) (28,457) (71,596) -60.3% (27,738) (70,857) -60.9%
NET INCOME BEFORE INCOME TAXES 533,370 347,495 53.5% 286,088 248,392 15.2%
Income taxes and social contribution (95,522) (40,071) 138.4% (28,477) (24,576) 15.9%
NET INCOME 437,848 307,424 42.4% 257,611 223,815 15.1%
EBITDA 439,979 316,312 39.1% 316,838 309,385 2.4%
EBITDA Margin 58.2% 74.0% -15.8 bps 82.1% 85.9% -3.8 bps
RegulatoryIFRS
43
2020 Second Quarter Earnings Release
5.4. 6M20 Income Statement
Income Statement
R$ mn 6M20 6M19 Chg. % 6M20 6M19 Chg. %
GROSS OPERATING REVENUES
Service revenues (0) 0 - 850,012 805,949 5.5%
Operation and Maintenance 326,311 292,031 11.7% - - 0.0%
Remuneration of contractual assets 312,977 249,476 25.5% - - 0.0%
Monetary restatement of contractual assets 199,970 111,760 78.9% - - 0.0%
Implementation of Infrastructure Revenues 739,407 200,513 268.8% - - 0.0%
Other Revenues 20,051 5,008 300.4% 518 712 -27.1%
Variable Portion (9,484) (2,315) 309.6% (9,484) (2,315) 309.6%
TOTAL GROSS REVENUES 1,589,232 856,473 85.6% 841,047 804,346 4.6%
PIS/Cofins (107,021) (45,644) 134.5% (46,372) (40,413) 14.7%
Service Tax (185) (88) 111.1% (185) (88) 111.6%
ICMS (39) (27) 42.1% (39) (27) 42.1%
RGR, P&D, TFSEE, CDE and PROINFA (35,917) (40,967) -12.3% (35,917) (40,967) -12.3%
Other Deductions - - 0.0% - - 0.0%
Gross Revenue deductions (143,161) (86,727) 65.1% (82,514) (81,496) 1.2%
NET REVENUES 1,446,071 769,746 87.9% 758,532 722,850 4.9%
Personnel (79,725) (62,572) 27.4% (79,725) (62,572) 27.4%
Material (444,648) (126,538) 251.4% (1,094) (734) 49.0%
Third party services (34,346) (27,221) 26.2% (34,347) (27,221) 26.2%
Other operating expenses (9,480) (8,020) 18.2% (13,878) (12,035) 15.3%
Costs and Expenses (568,199) (224,351) 153.3% (129,044) (102,562) 25.8%
Depreciation and amortization (7,491) (6,584) 13.8% (117,657) (96,026) 22.5%
Costs, Expenses and D&A (575,690) (230,934) 149.3% (246,701) (198,588) 24.2%
Gains (losses) on company acquisitions - 9,812 -100.0% - - 0.0%
GROSS PROFIT 870,381 548,623 58.6% 511,831 524,262 -2.4%
Equity method 271,014 124,601 117.5% 98,085 98,496 -0.4%
Revenues from financial investments 22,296 40,741 -45.3% 22,296 40,741 -45.3%
Financial Expenses (185,612) (176,515) 5.2% (184,163) (175,013) 5.2%
Borrowings and financing (145,360) (5,132) 2732.2% (145,360) (5,132) 2732.2%
- Interests Incurred (11,798) (8,098) 45.7% (11,800) (8,098) 45.7%
- Monetary Variation - - 0.0% - - 0.0%
- Exchange variation (139,103) 1,045 - (139,103) 1,045 -
- Fair value adjustment 5,542 1,921 188.5% 5,542 1,921 188.5%
Financial instrument 130,350 (7,624) - 130,350 (7,624) -
- Interests Incurred (3,211) (4,658) -31.1% (3,211) (4,658) -31.1%
- Exchange Variation 139,103 (1,045) - 139,103 (1,045) -
- Fair value adjustment (5,542) (1,921) 188.5% (5,542) (1,921) 188.5%
Debentures (160,343) (155,400) 3.2% (160,340) (155,400) 3.2%
- Interests incurred (134,206) (89,787) 49.5% (134,206) (89,787) 49.5%
- Monetary Variation (26,135) (65,612) -60.2% (26,135) (65,612) -60.2%
Leasing (1,448) (1,502) -3.6% - - 0.0%
Other financial expenses (8,814) (6,857) 28.5% (8,814) (6,857) 28.5%
Financial Revenues (Expenses) (163,316) (135,774) 20.3% (161,868) (134,272) 20.6%
NET INCOME BEFORE INCOME TAXES 978,079 537,450 82.0% 448,049 488,486 -8.3%
Income taxes and social contribution (176,044) (70,445) 149.9% (51,196) (79,582) -35.7%
NET INCOME 802,035 467,005 71.7% 396,852 408,905 -2.9%
EBITDA 877,872 545,396 61.0% 629,489 620,288 1.5%
EBITDA Margin 60.7% 70.9% -10.1 bps 83.0% 85.8% -2.8 bps
IFRS Regulatory
44
2020 Second Quarter Earnings Release
5.5. 2Q20 IFRS Income Statement (Subsidiaries)
The difference between the Equity Method in the business and the sum of results of ETAU, TBE, Aimorés, Paraguaçu, Ivaí
and Transmineiras is due to the amortization of goodwill arising from the allocation of the price paid for the acquisition of
TBE.
IFRS Income Statement
R$ mn ETAU TBE Aimorés Paraguaçu Ivaí Transmineiras
GROSS OPERATING REVENUES
Service revenues 790 - - - - -
Operation and Maintenance 2,348 15,803 - - - 1,249
Remuneration of the Contractual Asset 1,185 43,171 - - - 4,961
Monetary adjustment of the Contractual Asset 1,897 30,957 - - - 5,011
Implementation of Infrastructure Revenues - 71,903 35,211 55,251 79,667 -
Other Revenues 1,070 2,996 - - - 1,824
Variable Portion (0) (148) - - - (691)
TOTAL GROSS REVENUES 7,290 164,682 35,211 55,251 79,667 12,353
PIS/Cofins (272) (10,537) (3,257) (5,111) (7,369) (442)
Service Tax - - - - - -
ICMS - - - - - -
RGR, P&D, TFSEE, CDE and PROINFA (413) (3,654) - - - (510)
Other Deduction - - - - - -
Gross Revenue deductions (685) (14,191) (3,257) (5,111) (7,369) (952)
NET REVENUES 6,605 150,491 31,954 50,140 72,298 11,402
COSTS AND OPERATING EXPENSES - - - - - -
Personnel (170) (4,726) (41) (111) (181) (1,204)
Material (393) (45,242) (18,180) (29,125) (49,189) 240
Third party services (1,214) (3,742) (45) (45) (60) (741)
Depreciation and amortization (71) (25) (11) (14) (12) (4)
Other operating expenses 19 (1,144) (4) (4) (4) 31
Costs and Expenses (1,829) (54,880) (18,280) (29,299) (49,447) (1,678)
GROSS PROFIT 4,775 95,611 13,673 20,841 22,851 9,724
Equity method - 1,468 - - - -
Revenues from financial investments 67 484 41 26 4,818 91
Financial Expenses (183) (4,853) (2) (2) (5,724) (710)
Interests Incurred (156) (4,223) - - - (681)
Monetary Variation (13) (556) - - - (11)
Fair value adjustment - - - - - -
Financial instrument - - - - - -
Other financial expenses (14) (74) (2) (2) (5,724) (17)
Financial Revenues (Expenses) (116) (4,368) 39 24 (907) (619)
NET INCOME BEFORE INCOME TAXES 4,659 92,711 13,712 20,865 21,945 9,105
Income taxes and social contribution (1,585) (20,603) (4,614) (7,047) (2,782) (460)
NET INCOME 3,075 72,108 9,098 13,817 19,163 8,646
EBITDA 4,846 95,636 13,685 20,856 22,864 9,728
EBITDA Margin 73.4% 63.5% 42.8% 41.6% 31.6% 85.3%
45
2020 Second Quarter Earnings Release
5.6. 6M20 IFRS Income Statement (Subsidiaries)
IFRS Income Statement
R$ mn ETAU TBE Aimorés Paraguaçu Ivaí Transmineiras
GROSS OPERATING REVENUES
Service revenues 3,142 - - - - -
Operation and Maintenance 4,281 31,281 - - - 2,498
Remuneration of the Contractual Asset 2,172 83,382 - - - 9,968
Monetary adjustment of the Contractual Asset 3,615 92,625 - - - 10,179
Implementation of Infrastructure Revenues - 104,265 107,903 165,312 135,065 -
Other Revenues 1,946 5,276 - - - 2,190
Variable Portion (1) (309) - - - (691)
TOTAL GROSS REVENUES 15,156 316,519 107,903 165,312 135,065 24,143
PIS/Cofins (553) (19,487) (9,981) (15,291) (12,493) (863)
Service Tax - - - - - -
ICMS - - - - - -
RGR, P&D, TFSEE, CDE and PROINFA (826) (7,237) - - - (1,018)
Other Deduction - - - - - -
Gross Revenue deductions (1,378) (26,724) (9,981) (15,291) (12,493) (1,881)
NET REVENUES 13,778 289,795 97,922 150,020 122,571 22,262
COSTS AND OPERATING EXPENSES
Personnel (231) (10,133) (152) (279) (368) (1,669)
Material (91) (55,399) (58,290) (91,128) (83,551) (41)
Third party services (2,338) (6,691) (124) (122) (193) (1,496)
Other operating expenses 13 (2,170) (11) (12) (13) (73)
Costs and Expenses (2,646) (74,393) (58,577) (91,541) (84,126) (3,280)
Depreciation and amortization (283) (73) (22) (28) (24) (27)
Costs, Expenses and D&A (2,929) (74,466) (58,599) (91,569) (84,150) (3,307) GROSS PROFIT 10,848 215,328 39,324 58,451 38,422 18,955
Equity method - 2,188 - - - -
Revenues from financial investments 124 1,380 112 164 11,451 100
Financial Expenses (549) (11,483) (15) (20) (25,788) (1,600)
Interests Incurred (492) (10,285) - - - (1,542)
Monetary Variation (25) (125) - - - (28)
Exchange variation - - - - - -
Fair value adjustment - - - - - -
Other financial expenses (31) (1,073) (15) (20) (25,788) (30)
Financial Revenues (Expenses) (425) (10,102) 97 144 (14,338) (1,500)
NET INCOME BEFORE INCOME TAXES 10,423 207,414 39,421 58,596 24,084 17,455
Income taxes and social contribution (3,528) (40,249) (13,403) (19,922) (8,188) (924)
NET INCOME 6,895 167,165 26,018 38,673 15,895 16,531
EBITDA 11,131 215,402 39,346 58,479 38,445 18,982
EBITDA Margin 80.8% 74.3% 40.2% 39.0% 31.4% 85.3%
46
2020 Second Quarter Earnings Release
5.7. 2Q20 Regulatory Income Statement (Subsidiaries)
The difference between the equity income in Taesa and the sum of the income from ETAU, TBE, Aimorés, Paraguaçu, Ivaí
and Transmineiras is due to the amortization of the goodwill arising from the allocation of the price paid for the acquisition
of TBE.
47
2020 Second Quarter Earnings Release
5.8. 6M20 Regulatory Income Statement (Subsidiaries)
Regulatory Income Statement
R$ mn ETAU TBE Aimorés Paraguaçu Ivaí Transmineiras
GROSS OPERATING REVENUES
Service revenues 19,307 196,542 - - - 27,284
Operation and Maintenance - - - - - -
Remuneration of the Contractual Asset - - - - - -
Monetary adjustment of the Contractual Asset - - - - - -
Implementation of Infrastructure Revenues - - - - - -
Other Revenues - - - - - -
Variable Portion (1) (309) - - - (691)
TOTAL GROSS REVENUES 19,306 196,233 - - - 26,592
PIS/Cofins (745) (9,298) - - - (964)
Service Tax - - - - - -
ICMS - - - - - -
RGR, P&D, TFSEE, CDE and PROINFA (826) (7,237) - - - (1,018)
Other Deduction - - - - - -
Gross Revenue deductions (1,570) (16,535) - - - (1,982)
NET REVENUES 17,736 179,698 - - - 24,610
COSTS AND OPERATING EXPENSES - - - - - -
Personnel (231) (10,133) (152) (279) (368) (1,669)
Material (6) - - - - -
Third party services (2,338) (6,691) (137) (135) (206) (1,496)
Other operating expenses 13 (2,170) (11) (12) (13) (73)
Costs and Expenses (2,562) (18,994) (300) (426) (588) (3,239)
Depreciation and amortization (1,739) (22,475) (11) (17) (12) (2,527)
Costs, Expenses and D&A (4,301) (41,469) (311) (443) (600) (5,766) GROSS PROFIT 13,435 138,229 (311) (443) (600) 18,844
Equity method - 2,008 - - - -
Revenues from financial investments 124 1,380 112 164 11,451 100
Financial Expenses (549) (11,483) (12) (17) (25,785) (1,600)
Interests Incurred (492) (10,285) - - - (1,542)
Monetary Variation (25) (125) - - - (28)
Exchange variation - - - - - -
Fair value adjustment - - - - - -
Other financial expenses (31) (1,073) - - - (30)
Financial Revenues (Expenses) (425) (10,102) 100 147 (14,335) (1,500)
NET INCOME BEFORE INCOME TAXES 13,010 130,134 (210) (296) (14,935) 17,344
Income taxes and social contribution (4,408) (14,414) - - - (848)
NET INCOME 8,602 115,721 (210) (296) (14,935) 16,496
EBITDA 15,174 160,704 (300) (426) (588) 21,371
EBITDA Margin 85.6% 89.4% - - - 86.8%
48
2020 Second Quarter Earnings Release
5.9. EBITDA Reconciliation
The reconciliation of EBITDA excludes the impact caused by the equity method in the Company's results.
EBITDA Reconciliation IFRS
R$ mn 2Q20 2Q19 Chg. % 6M20 6M19 Chg. %
Net Income 437.8 307.4 42.4% 802.0 467.0 71.7%
Income taxes and social contribution 95.5 40.1 138.4% 176.0 70.4 149.9%
Net Financial Expenses 28.5 71.6 -60.3% 163.3 135.8 20.3%
Depreciation and amortization 4.0 3.2 26.5% 7.5 6.6 13.8%
Gains (losses) on company acquisitions - (9.8) - - (9.8) -
Equity method (125.9) (96.2) 30.9% (271.0) (124.6) 117.5%
EBITDA 440.0 316.3 39.1% 877.9 545.4 61.0%
EBITDA Margin 58.2% 74.0% -15.8 bps 60.7% 70.9% -10.1 bps
EBITDA Reconciliation Regulatory
R$ mn 2Q20 6M19 Chg. % 6M20 6M19 Chg. %
Net Income 257.6 223.8 15.1% 396.9 408.9 -2.9%
Income taxes and social contribution 28.5 24.6 15.9% 51.2 79.6 -35.7%
Net Financial Expenses 27.7 70.9 -60.9% 161.9 134.3 20.6%
Depreciation and amortization 60.5 48.3 25.2% 117.7 96.0 22.5%
Equity method (57.5) (58.2) -1.2% (98.1) (98.5) -0.4%
EBITDA 316.8 309.4 2.4% 629.5 620.3 1.5%
EBITDA Margin 82.1% 85.9% -3.8 bps 83.0% 85.8% -2.8 bps
49
2020 Second Quarter Earnings Release
5.10. Balance Sheet
Balance Sheet
R$ '000 IFRS Adjustment Regulatory
Assets
Cash and cash equivalent 1,524,256 - 1,524,256
Financial Investments 681,323 - 681,323
Receivables 144,561 (15,102) 159,663
Contractual Asset 997,625 997,625 -
Recoverable taxes 110,680 - 110,680
Bonds and related deposits 11 - 11
Derivative financial instruments - - -
Dividends and interest on equity to receive 226,793 - 226,793
Stocks 11,168 - 11,168
Other Current Assets 144,882 - 144,882
Total Current Assets 3,841,299 982,523 2,858,776
Financial Investments 9,418 - 9,418
Financial Asset 6,963,226 6,963,226 -
Deferred income tax - - -
Deferred income tax and social contribution - (10,915) 10,915
Income tax and social contribution - - -
Investment 2,314,905 675,167 1,639,738
Receivables 19,572 - 19,572
Escrow deposits 35,613 - 35,613
Financial instruments derivatives 177,590 - 177,590
Other receivables 35,585 - 35,585
Fixed Assets 22,952 (5,790,030) 5,812,982
Intangible Assets 82,880 (187,005) 269,885
Right of use 32,419 32,419 -
Total Non Current Assets 9,694,160 1,682,862 8,011,298
Total Assets 13,535,459 2,665,385 10,870,074
Liabilities
Trade accounts payable 59,420 - 59,420
Taxes 45,519 - 45,519
Borrowings and financing 115,411 - 115,411
Debentures 801,140 - 801,140
Leasing liability 8,558 8,558 -
Financial instruments derivatives - - -
Dividends to pay 13 - 13
Regulatory fees 65,237 - 65,237
Other payables 92,480 40,627 51,853
Total Current Liabilities 1,187,778 49,185 1,138,593
Borrowings and financing 949,904 - 949,904
Debentures 4,933,448 - 4,933,448
Leasing liability 26,074 26,074 -
Financial instruments derivatives 26,210 - 26,210
Deferred taxes and social contributions 494,669 411,240 83,429
Deferred Taxes 435,792 435,792 -
Provisions for contingencies 36,409 2,594 33,815
Provision for asset demobilization 461 461 -
Special obligations - (11,714) 11,714
Suppliers 7,855 - 7,855
Other payables 24,447 - 24,447
Total Non Current Liabilities 6,935,269 864,447 6,070,822
Paid-in capital - - -
Capital Reserve 3,042,035 - 3,042,035
Earnings reserve 598,736 4,229 594,507
Profit reserve 1,224,261 - 1,224,261
Proposed additional dividends - - -
Equity valuation adjustment (12,937) - (12,937)
AFAC Reserve - - -
Interim dividends and interest on equity (241,718) - (241,718)
Accumulated Losses - 1,342,341 (1,342,341)
Retained earnings 802,035 405,183 396,852
Attributing interest of controlling shareholders 5,412,412 1,751,753 3,660,659
Participation of non-controlling shareholders - - -
Total Shareholder's Equity 5,412,412 1,751,753 3,660,659
Total Liabilities and Shareholder's Equity 13,535,459 2,665,385 10,870,074
2Q20
50
2020 Second Quarter Earnings Release
5.11. IFRS Cash Flow
Cash Flow
R$ mn IFRS
R$ thousand 2Q20
Cash Flow from operating activities
Income for the period 802,035
Adjusts to: -
Equity Method (subsidiaries net income) (271,014)
Depreciation and amortization 3,883
Amortization of right of use 3,608
Tax, social security, labor and civil provisions 5,367
Environmental compensation provisions -
Revenues from financial investments (22,296)
Implementation cost - provision suppliers 430,227
Interest, monetary variation and exchange gains / losses and fair value adjustment on borrowings and financing145,359
Interest and inflation adjustment on debentures 160,339
Leasing liability interest 1,448
Derivative financial instruments (130,350)
Income tax and social contribution 18,093
Income tax and social contribution deferred 157,951
Deferred taxes 60,648
Remuneration of Contractual Asset (312,977)
Monetary Restatement of Contractual Asset (199,970)
Implementation of Infrastructure Revenues (739,407)
Gains (losses) on company acquisitions -
Variable Portion Provision (1,793)
111,151
Changes in assets and liabilities: -
(Increase) Reduction in customer balance (7,937)
(Increase) Decrease in the Balance of Concession Contractual assets 504,169
(Increase) Decrease in the balance of income tax and social contribution assets (6,482)
(Increase) Decrease in the balance of Income taxes and defered social contribution -
(Increase) Reduction in the balance of deferred taxes -
(Increase) Decrease in the balance of other assets (92,296)
(Increase) Decrease in balance of trade accounts payable (457,427)
(Increase) Decrease in the balance of regulatory fees (4,796)
(Increase) Decrease in the balance of other payables (9,215)
Dividends earned from jointly controlled -
Dividends and interest on equity earned from jointly controlled 65,825
(8,159)
Cash from operating activities 102,992
Income tax and social contribution paid (16,971)
Cash flow of investing activities 86,021
-
Additions in property, intangible assets -
(Increase) Decrease in the balance of DTVM and other investments 1,719,033
(Additions) Write-offs in fixed and intangible assets (8,189)
Acquisition of subsidiaries, net of cash acquired (765,131)
Acquisition of jointly controlled subsidiaries -
Capital increase in the joint subsidiary -
Capital increase in jointly-owned subsidiaries (169,000)
Advance for future capital increase in subsidiaries -
Cash Flow provided by financing activities 776,713
Payment of borrowings and financing (principal) -
Borrowing and financing 447,133
Payment of borrowing and financing - principal (246,422)
Payment of borrowing and financing - interest (7,404)
Debentures 724,546
Payment of debentures (principal) -
Payment of debentures (interest) (30,911)
Payment of derivative financial instruments (interest) (7,537)
Receipt (payment) on settlement of financial instruments 7,436
Payment of lease liabilities (4,403)
Subsidiary Acquisition -
Payment of dividends and interest on equity (303,478)
Advance for future capital increase -
Capital increase -
Others -
Net Cash provided by financing activities 578,960
Increase (Decrease) in cash and cash equivalents 1,441,694
Opening balance of cash and cash equivalents 82,562
Closing balance of cash and cash equivalents 1,524,256
Increase (decrease) in cash and cash equivalents 1,441,694
51
2020 Second Quarter Earnings Release
5.12. Regulatory Cash Flow
Cash Flow
R$ mn Regulatory
R$ thousand 2Q20
Cash Flow from operating activities
Income for the period 396,852
Adjusts to: -
Equity Method (subsidiaries net income) (98,085)
Depreciation and amortization 117,657
Amortization of right of use -
Tax, social security, labor and civil provisions 5,367
Environmental compensation provisions -
Revenues from financial investments (22,296)
Implementation cost - provision suppliers -
Interest, monetary variation and exchange gains / losses and fair value adjustment on borrowings and financing145,359
Interest and inflation adjustment on debentures 160,339
Leasing liability interest -
Derivative financial instruments (130,350)
Income tax and social contribution 18,093
Income tax and social contribution deferred 33,102
Deferred taxes -
Remuneration of Contractual Asset -
Monetary Restatement of Contractual Asset -
Implementation of Infrastructure Revenues -
Gains (losses) on company acquisitions -
Variable Portion Provision (1,793)
624,245
Changes in assets and liabilities: Variações nos ativos e passivos:
(Increase) Reduction in customer balance (7,937)
(Increase) Decrease in the Balance of Concession Contractual assets -
(Increase) Decrease in the balance of income tax and social contribution assets (6,482)
(Increase) Decrease in the balance of Income taxes and defered social contribution -
(Increase) Reduction in the balance of deferred taxes -
(Increase) Decrease in the balance of other assets (92,296)
(Increase) Decrease in balance of trade accounts payable (27,200)
(Increase) Decrease in the balance of regulatory fees (4,796)
(Increase) Decrease in the balance of other payables (9,215)
Dividends earned from jointly controlled -
Dividends and interest on equity earned from jointly controlled 65,825
(82,101)
Cash from operating activities 542,144
Income tax and social contribution paid (16,971)
Cash flow of investing activities 525,173
.
Additions in property, intangible assets Fluxo de caixa das atividades de investimentos
(Increase) Decrease in the balance of DTVM and other investments 1,719,033
(Additions) Write-offs in fixed and intangible assets (451,744)
Acquisition of subsidiaries, net of cash acquired (765,131)
Acquisition of jointly controlled subsidiaries -
Capital increase in the joint subsidiary -
Capital increase in jointly-owned subsidiaries (169,000)
Advance for future capital increase in subsidiaries -
Cash Flow provided by financing activities 333,158
Payment of borrowings and financing (principal) Fluxo de caixa das atividades de financiamento
Borrowing and financing 447,133
Payment of borrowing and financing - principal (246,422)
Payment of borrowing and financing - interest (7,404)
Debentures 724,546
Payment of debentures (principal) -
Payment of debentures (interest) (30,911)
Payment of derivative financial instruments (interest) (7,537)
Receipt (payment) on settlement of financial instruments 7,436
Payment of lease liabilities -
Subsidiary Acquisition -
Payment of dividends and interest on equity (303,478)
Advance for future capital increase -
Capital increase -
Others -
Net Cash provided by financing activities 583,363
Increase (Decrease) in cash and cash equivalents 1,441,694
Opening balance of cash and cash equivalents 82,562
Closing balance of cash and cash equivalents 1,524,256
Increase (decrease) in cash and cash equivalents 1,441,694
52
2020 Second Quarter Earnings Release
Disclaimer
The consolidated financial statements were prepared in accordance with accounting practices adopted in Brazil, comprising
the Brazilian corporate law, Statements, Guidelines and Interpretations issued by the Accounting Pronouncements
Committee and the standards of the Brazilian Securities and Exchange Commission (CVM), combined with specific
legislation issued by the National Electricity Regulatory Agency (ANEEL). ANEEL, as a regulatory agency, has the power
to regulate concessions.
The statements in this document related to business prospects, projections about operating and financial results, and those
related to Taesa's growth prospects are merely projections and, as such, based solely on the executive boards expectations
about the business future. These expectations depend, substantially, on changes in market conditions, the Brazilian
economy performance, the industry and international markets and, therefore, are subject to change without prior notice.
EBITDA:
EBITDA is net income before taxes, net financial expenses, and depreciation, amortization and income expenses. EBITDA
is not recognized by accounting practices adopted in Brazil or by IFRS, does not represent cash flow for the covered
periods, and should not be considered as alternative net income. EBITDA presented is used by Taesa to measure its own
performance. Taesa understands that some investors and financial analysts use EBITDA as an indicator of its operating
performance.
Net debt:
“Net debt” is not recognized by accounting practices adopted in Brazil or by IFRS, does not represent cash flow for the
covered periods. Net debt presented is used by Taesa to measure its own performance. Taesa understands that some
investors and financial analysts use debt net as an indicator of its operating performance.