Energy that drives us

Transcription

1 Energy that drives us 2014 FINANCIAL STATEMENTS

2 A free translation of the original in Portuguese

3 4 Balance sheet 6 Statement of income 7 Statement of cash flows indirect method 8 Statement of value added 8 Statement of comprehensive income 9 Statement of changes in equity 10 Notes to the financial statements 25 Independent auditor s report 26 Report of the Statutory Audit Board 26 Management

4 2014 Financial statements Balance sheet at December 31 (in R$ million) Assets Note Current assets Cash and cash equivalents Restricted bank accounts Accounts receivable: Petrobras system 7(a) Prepaid taxes Other current assets 9 9 Total current assets Non-current assets Judicial deposits 3 2 Property and equipment Property and equipment in use 6 2,261 2,382 Spare parts ,306 2,425 Intangible assets- software 11 4 Total non-current assets 2,320 2,431 Total assets 2,616 2,791 4

5 Financial statements Liabilities and equity Note Current liabilities Suppliers Provision for income tax and social contribution Accounts payable, including advances - Petrobras system companies 7(a) Subordinated loans from other stockholders 7(b) 4 3 Funding from multilateral credit agencies Dividend payable 10(c) Other accounts payable Total current liabilities Non-current liabilities Accounts payable, including advances - Petrobras system companies 7(a) 1,078 1,011 Subordinated loans from other stockholders 7(b) Funding from multilateral credit agencies Actuarial obligations Deferred income tax and social contribution 9(a) Total non-current liabilities 1,567 1,448 Equity 10 Capital Revenue reserves Carrying value adjustments 6 6 Additional dividend proposed Total equity Total liabilities and equity 2,616 2,791 The accompanying notes are an integral part of these financial statements. 5

6 2014 Financial statements Statement of income Years ended December 31 (in R$ million) Net operating revenue (Note 11) 1, Cost of services rendered Depreciation of the gas pipeline and operating assets (Note 6) (158) (153) Cost of operations and maintenance (Note 12) (135) (123) Total cost of services rendered (293) (276) Gross profit Board of Directors and Executive Directors fees (5) (5) General and administrative expenses (Note 13) (90) (79) Operating profit Finance costs (Note 14) (119) (94) Finance income (Note 5) Hedge losses - (15) Foreign exchange losses on liabilities (Note 15) (150) (155) Net finance costs (247) (249) Profit before taxation Income tax and social contribution (Note 9) (137) (118) Profit before employee profit sharing Employee profit sharing (4) (4) Profit for the year The accompanying notes are an integral part of these financial statements. 6

7 Financial statements Statement of cash flows - indirect method Years ended December 31 (in R$ million) Cash flows from operating activities Profit for the year Adjustments to reconcile the profit for the year with cash from operating activities: Depreciation of the gas pipeline and operating assets (Note 6) Depreciation of other items 4 5 Unrealized finance costs and foreign exchange losses on loans Deferred income tax and social contribution 31 (35) Property and equipment disposals 1 - Changes in assets and liabilities: Decrease (increase) in accounts receivable 48 (31) Advances received from Petrobras (23) (41) Decrease in restricted bank accounts - 13 (Increase) in other assets (9) (3) Increase (decrease) in suppliers and other current liabilities (24) Cash from operations Payment of interest to companies of the Petrobras system (35) (32) Payment of interest to other stockholders (33) (31) Payment of interest on funding from multilateral credit agencies (9) (10) Net cash provided by operating activities Cash flows from financing activities: Dividends paid, plus interest (568) (393) Payment of funding from multilateral credit agencies (46) (75) Net cash used in financing activities (614) (468) Cash from investing activities Additions to property and equipment (49) (60) Net cash used in investing activities (49) (60) Increase (decrease) in cash and cash equivalents (24) 13 Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year The accompanying notes are an integral part of these financial statements. 7

8 2014 Financial statements Statement of value added Years ended December 31 (in R$ million) Revenue Transport services 1,280 1,150 Other revenue 4 3 1,284 1,153 Inputs acquired from third parties Cost of services rendered (73) (75) Materials, electricity, services and others (31) (29) (104) (104) Gross value added 1,180 1,049 Retentions Depreciation of the gas pipeline and operating assets (158) (151) Depreciation of other items (4) (5) (162) (156) Net value added generated by the Company 1, Value added received through transfer Finance income Total value added to distribute 1, Distribution of value added Personnel and payroll charges Taxes and contributions Financial costs and foreign exchange losses Profit for the year , The accompanying notes are an integral part of these financial statements. Statement of comprehensive income Years ended December 31 (in R$ million) Profit for the year Other comprehensive income: Items that will not be reclassified to profit and loss Actuarial gains/(losses) - Pension Plan - 6 Comprehensive income for the year The accompanying notes are an integral part of these financial statements. 8

9 Financial statements Statement of changes in equity (in R$ million) Revenue reserves Share capital Legal Unearned profit Special Other comprehensive income Additional dividend proposed Retained earnings Total At December 31, Authorization by the March 8, 2013 AGM for payment (95) - (95) Profit for the year Realization of reserves - - (116) (66) Actuarial revaluation Dividends proposed and distributed (410) (296) At December 31, Authorization by the March 26, 2014 AGM for payment (114) - (114) Authorization by the October 10, 2014 EGM for payment of additional dividend (130) (130) Profit for the year Realization of reserves - - (18) (148) Minimum compulsory dividend (Note 10 (c )) (132) (132) Additional dividend proposed (132) - At December 31, The accompanying notes are an integral part of these financial statements. 9

10 2014 Financial statements Notes to the financial statements at December 31, 2014 (In R$ million, except when otherwise indicated) 1 Operations Transportadora Brasileira Gasoduto Bolívia-Brasil TBG or Company is a corporation established on April 18, 1997 by Petrobras Gás S.A. GASPETRO, its parent company, which is a subsidiary of Petróleo Brasileiro S.A. PETROBRAS, which holds 99.9% of its capital. The Company is headquartered in the state of Rio de Janeiro, has a Maintenance Center located in the city of Campinas (SP) and two Maintenance Units located in Campo Grande (MS) and Florianópolis (SC). The main economic activity of TBG is the operation of the Bolivia-Brazil Gas Pipeline GASBOL on the Brazilian side, which it owns. Activities associated to the transportation of natural gas in its geo-economic region of influence, including communication via optic fiber, are also included in the Company s corporate object. The Bolivia-Brazil Gas Pipeline runs 3,150 km from Rio Grande, in Bolivia, to Canoas in the state of Rio Grande do Sul, Brazil, with 557 km on the Bolivian side, and 2,593km on the Brazilian side. The transportation capacity of the pipeline is of 30 million m 3 /day. The operation of the North Sector, extending from the border between Brazil and Bolivia up to the state of São Paulo, was started in June 1999 and the South Sector, connecting the state of São Paulo to the state of Rio Grande do Sul, in April 2000, both fully concluded. The funds required to construct the pipeline originate from subordinated loans from the stockholders (Note 7) and from financing by credit agencies (Note 8). The recovery of the investments in the Bolivia-Brazil Gas Pipeline is guaranteed by the transportation service contracts with duration from 20 to 40 years, summarized below, on a ship or pay basis, whereby the customer is obliged to pay for the contracted capacity regardless of the volume transported: (i) Contract of Basic Transportation Quantities (TCQ) for 18 million m 3 /day for 20 years up to December (ii) Contract of Additional Transportation Quantities (TCO) for 6 million m 3 /day with prepayment, and for 40 years up to September (iii) Contract of Excess Transportation Quantities (TCX) for 6 million m 3 /day for 20 years up to December (iv) Contract of Transportation resulting from the Public Bid for Capacity Allocation CPAC 2007 for an additional 5.2 million m 3 /day, in the South Sector of the pipeline between Paulínia and Araucária, for 20 years and up to September The Company s operations are basically carried out with companies in the Petrobras system. 2 Summary of the significant accounting practices 2.1 Basis of preparation The financial statements were prepared in accordance with accounting practices adopted in Brazil (BR GAAP) which include the standards issued by the Brazilian Accounting Pronouncements Committee - CPC (Comitê de Pronunciamentos Contábeis) and were prepared under the historical cost convention as modified by the financial instruments measured at fair value through profit or loss. The preparation of the financial statements requires the use of certain critical accounting estimates and also requires management to use its judgment in the process of the applying the accounting policies. Areas that require a higher degree of judgment or complexity, as well as areas in which the assumptions and estimates are significant to the financial statements, are shown in Note 3. The authorization for the issue of the financial statements was given by the Board of Directors on April 20, Functional currency and presentation currency Items included in the financial statements are measured using the main currency of the economic environment in which the Company operates ( functional currency ). These accounting statements are presented in Brazilian reais, which is the Company s functional currency. All financial information presented in reais has been rounded to the closest million, except when stated otherwise. Transactions in foreign currency are translated to the Company s functional currency at exchange rates ruling on the dates of the transactions. Monetary assets and liabilities in foreign currencies on the date of presentation are translated to the functional currency at the exchange rate ruling on that day. Gains or losses on monetary items due to differences in foreign exchange rates is the difference between the amount of the functional currency at the beginning of the year, adjusted by interest and payments 10

11 Financial statements made during the year and the amount in foreign currency at the exchange rate at the end of the year. The differences in foreign currency resulting from translation are recognized in the statement of income. 2.3 Results of operations The results of operations are recorded on the accrual method of accounting. Revenue is recognized based on the volume of natural gas contracted on the ship or pay basis and expenses and costs are recognized when incurred. 2.4 Finance income Finance income includes income, charges and foreign exchange variations at official indexes and rates on current and noncurrent assets and liabilities. 2.5 Cash and cash equivalents Cash and cash equivalents include cash, bank deposits and other short-term investments with high liquidity and maturity in up to three months and an insignificant risk of change in value. The balance is presented net of overdraft accounts in the statement of cash flows. 2.6 Financial instruments The Company has non-derivative financial instruments including: Loans and receivables that include accounts receivable and other credits Financial liabilities measured at amortized cost 2.7 Impairment The management of the Company monitors and evaluates events and/or indicators that may lead to the non-recovery of the book value of property and equipment. In the event a loss indicator is identified, a test of reduction to recoverable value will be applied. (I) Financial assets A financial asset that is not measured at fair value through profit and loss is evaluated every reporting date to determine whether there is objective evidence that a loss in its recoverable value may have occurred. An asset loses recoverable value if objective evidence exists that an event of value loss occurred after the initial recognition of the asset and that the value loss event had a negative effect on forecasted future cash flows that may be estimated accurately. (II) Non-financial assets The book values of non-financial assets, inventories and property and equipment are reviewed at every reporting date to determine whether there is indication of a loss in recoverable value. If there are such indications, the recoverable value of the asset is estimated. A loss by reduction of the recoverable value is recognized if the book value of the asset exceeds its recoverable value. Losses in recoverable value are recognized in the statement of income. Losses in recoverable value are only reversed if the book value of the asset does not exceed the book value that would have been calculated, net of depreciation or amortization, if the loss had not been recognized. The recoverable value of an asset or cash generating unit is the higher of the value in use and the fair value less selling expenses. In evaluating the value in use, the estimated future cash flows are discounted to their present value through a discount rate before taxes that reflects current market conditions as to the period of capital recovery and the specific risks to assets or cash generating units (CGU). 11

12 2014 Financial statements 2.8 Property and equipment These are stated at the cost of acquisition or formation, less accumulated depreciation, combined with the following aspects: During the construction of the Bolivia-Brazil Gas Pipeline, the TBG preoperating period, interest and other financial charges on the financing obtained to finance the construction, net of finance income, were added to the cost of the asset. Depreciation is calculated on the straight-line method over the periods shown in Note 6 which take into consideration the useful economic lives of the assets. Subsequent costs are included in the book value of the asset or recognized as a separate asset, as deemed appropriate, only when there is the probability that future economic benefits associated to these costs will flow to the Company and can be reliably estimated. The book value of replaced assets is written off. All other repairs and maintenance are charged to the results of operations when incurred. The depreciation of assets is calculated on the straight-line method considering their cost and residual values during the estimated useful lives, as follows: Years Pipelines 30 Equipment 10 Furniture, utensils and equipment 10 The residual values and useful lives of the assets are reviewed and adjusted, if appropriate, at the end of each year. The book value of an asset is immediately reduced to its recoverable value when it exceeds its estimated recoverable value. Gains and losses on disposal are determined by comparison between the sales proceeds and the book values and are recognized in the statement of income. Based on projections using the Company s economic model there were no identifications of the need for provisions for impairment. 2.9 Provisions A provision is recognized when the Company has a legal obligation as a result of past events and it is likely that economic resources are required to settle the obligation. Provisions are recorded based on the best estimates of the risks involved. Provisions are measured at the present value of the funds required to liquidate the obligation using a rate before taxes which reflects the current market evaluation on the value of money over time and the risks specific to the obligation. The increase in the obligation due to the passage of time is recognized as a finance cost Pension plan and post-employment benefits to employees Actuarial obligations for pension or complementary retirement benefit plans and healthcare are provided based on actuarial calculations made annually by an independent actuary. The actuarial premises include demographic and economic estimates, medical expense estimates as well as historic data on the expenses and contributions of the employees Loans and financing These are updated, in accordance with the contractual clauses, by foreign exchange rate variations and interest incurred up to the reporting date, and are measured at amortized cost. 12

13 Financial statements 2.12 Income tax and social contribution The expenses of income tax and social contribution for the year comprise current and deferred taxes. Taxes on income are recognized in the statement of income except to the extent that they relate to items directly recognized in equity or in comprehensive income. In this case, the tax is also recognized in equity or in comprehensive income. The charge for current and deferred income tax and social contribution is calculated based on current tax legislation at the date of the financial statements. Management periodically evaluates the position assumed by the Company in the calculation of income tax in relation to situations in which the applicable tax legislation gives margin to interpretation and establishes provisions, when appropriate, based on estimated amounts payable to the tax authorities. Current income tax and social contribution are presented net in liabilities when there are amounts to be paid, or in assets when prepayments exceed the total amount due at the date of the reporting date. Deferred income tax and social contribution are recognized using the liability method on temporary differences between the asset and liability tax bases and their book values in the financial statements. However, deferred income tax and social contribution are not recorded if they result from the initial recognition of an asset or liability in a transaction that is not a business combination which, at the time of the transaction, did not affect the accounting result or taxable profit (tax loss). Deferred income tax and social contribution are only recognized to the extent that future taxable profit will be available against which the temporary differences can be offset. Deferred income tax assets and liabilities are presented net in the balance sheet when there is legal right and the intention to offset at the time of the ascertainment of current taxes. The current and deferred income tax and social contribution are calculated based on the rate of 15%, plus an additional 10% on taxable profit exceeding R$ 240 thousand for income tax, and of 9% on taxable profit for social contribution on net income Statement of value added The Company has prepared the Statement of Value Added in accordance with Technical Pronouncement CPC09 and has presented it as an integral part of the financial statements, as adopted in Brazil. 3 Estimates and critical accounting judgments The preparation of financial statements according to CPC standards demands judgment by management as well as estimates and the adoption of premises that affect the application of accounting policies and the reported values of assets, liabilities, income and expenses. The actual results may differ from these estimates. The estimates and premises are reviewed continuously. The reviews of the accounting estimates are recognized at the time in which the estimates are reviewed and in any future periods affected. The estimates and premises that present significant risk likely to cause material adjustments to the recorded values of assets and liabilities in the next financial year are addressed below: (a) Useful lives of the assets The Company annually reviews the useful economic lives of its assets based on reports from external appraisers. Depreciation is recognized in the statement of income based on the balance of the remaining useful lives (Note 6). (b) Provisions for tax, civil and labor risks The Company recognizes provisions for civil, tax and labor litigation. The evaluation of the loss probability includes the evaluation of available evidence, hierarchy of legislation, available jurisprudence, most recent court decisions and their relevance in law order, as well as the evaluation of external legal counsel. Provisions are reviewed and adjusted to consider changes in circumstances such as applicable prescription deadlines, tax inspection conclusions or additional exposures identified based on new matters or court decisions (Note 16). 13

14 2014 Financial statements (c) Complementary pension plan The management of the Company s complementary pension plan is the responsibility of Fundação Petrobras de Seguridade Social (Petros), established by Petrobras as a non-profit private legal entity with administrative and financial autonomy. As from August 1, 2009, the Company has implemented a Complementary Pension Plan, the Petros TBG Plan, established as a defined contribution plan for pension benefits and with variable contributions for risk benefits. In February 2012, all the employees of TBG were transferred from the Petros TBG Plan to the Petros 2 Plan. The portion of this plan with a characteristic of defined benefit refers to the coverage for the risk of disability and death, a guarantee of minimum lifetime benefits payments; the actuarial liability is recorded in accordance with the unit credit method. The portion of the plan with a characteristic of defined contribution is intended to accumulate a reserve for planned retirement, whose contributions are recognized in the statement of income as paid. The portion of the contribution characterized as a defined benefit has been suspended between July 1, 2012 and June 30, 2015 according to the decision of the Deliberative Council of the Petros Foundation, based on the recommendation of the actuaries of the Foundation. Accordingly, all the contributions of this period are being destined to the individual account of the participant. The liability recognized in the balance sheet in relation to the defined benefit pension plan is the present value of the benefit obligation defined at the reporting date, less the fair value of the plan assets. The present value of the defined benefit obligation is determined by discounting the estimated future cash expenses at interest rates consistent with market rates determined for the currency in which the benefits are being paid and have due dates close to the respective liabilities of the pension plan. Actuarial gains and losses due to adjustments by experience and from changes in actuarial premises are recorded directly in equity as other comprehensive income (loss) when they occur. Past service costs are immediately recognized in the statement of income. The Company contributes in contractual form to the defined contribution plan. The Company has no additional obligation for payments after the contributions are made. Contributions are recognized as employee benefit expenses when due. 4 Cash and cash equivalents FIDC (a) (a) Represented by credit rights investment funds (FIDC) of the Petrobras system with daily availability, for use in payment of operating expenses. In 2014, the profitability was 10.8%, equivalent to 100% of the Interbank Certificate of Deposit (CDI) interest rate. 5 Restricted bank accounts Linked to the debt service These restricted bank accounts are held with Banco do Brasil S.A. to guarantee the payment of current debt service in foreign currency. In 2014, the profitability was of 10.47%. Finance income was as follows: Income from FIDC investments Income from fixed income investments

15 Financial statements 6 Property and equipment in use Estimated useful Accumulated life (years) Cost depreciation Net Net Bolivia-Brazil Gas Pipeline (i) 30 4,336 (2,112) 2,224 2,329 Properties and improvements 10 to (6) 6 6 Furniture, equipment and office installations 10 5 (4) 1 1 Machinery and equipment (17) 4 5 Equipment and installations for data processing 5 12 (8) 4 3 Equipment and installations for communication 5 5 (4) 1 2 In progress (ii) ,412 (2,151) 2,261 2,382 (i) The useful economic life of the Bolivia-Brazil Gas Pipeline was determined based on a Technical engineering evaluation. (ii) Property and equipment in progress includes the construction of new delivery stations and operating improvements of the pipeline. Bolivia- Brazil Gas Pipeline Assets in progress Equipment and other operating properties Buildings, installations and other properties Balance at December 31, , ,479 Additions Transfers 70 (75) - 3 (2) Depreciation (151) - (2) (2) (155) Balance at December 31, , ,382 Additions Transfers 50 (63) - 4 (9) Depreciation (156) - (2) (3) (161) Balance at December 31, , ,261 7 Related parties (a) Petrobras system Petrobras Gaspetro Total Petrobras Gaspetro Total Current assets Accounts receivable Exchange effects on the tariff (i) Current liabilities Exchange effects on the tariff (i) Advances from customers (ii) Subordinated loans Note 7(b) Interest on unpaid dividends Non-current liabilities Advances from customers (ii) Subordinated loans Note 7(b) , ,011 Statement of income Gross revenue from services rendered - Note 11 1,284-1,284 1,153-1,153 Finance costs - Note 14 - (55) (55) - (42) (42) Foreign exchange losses - Note 15 (62) (31) (93) (63) (30) (93) Total 15

16 2014 Financial statements (i) Foreign exchange effects on the tariff According to the contractual terms, the transportation tariff for the year is determined in January and undergoes monthly calculations of the difference between the value calculated in reais and its parity in US dollars on the day of receipt, and the rate fixed in reais (R$) at the beginning of the year. The differences calculated monthly are recorded in the statement of income with contra entry to be received or paid to Petrobras as offset against the transportation rate of the following year, considering the values established in the contract. In 2014, R$ 10 was determined to be reimbursed in 2015, as a reduction (in 2013 R$ 63 was calculated as recoverable in 2014 as a tariff increase). (ii) Advances from customers Petrobras Refers to the amounts received as advance payments on the TCO contract, from Petrobras, equivalent to US$ 302 million, for financing the Bolivia-Brazil Gas Pipeline. These payments were made in accordance with the Shareholders Agreement of TBG for the Financial Contribution and other Covenants and are being settled through the provision of services over 40 years as from Includes a prepayment for financing the expansion of the South Stretch, which is being settled through provision of services over 20 years as from October 2010, and new delivery stations, through the provision of services after the completion of each construction. It also includes the prepayment of rent of part of the right-of-way of the pipeline for 20 years, as from July 25, Initially, this contract was signed with Gaspetro and on July 1, 2012, it was assigned to Petrobras. (b) Transactions with stockholders Subordinated loans As contemplated in the Shareholders Agreement of TBG for the Financial Contribution and other Covenants, the raising of funds required to finance the construction of the Bolivia-Brazil Gas Pipeline included contributions from stockholders of US$ 310 million to cover the basic budget of the project. Of this total, 59% was registered as subordinated loans and 41% as corporate capital, both paid-in in proportion to the stake of each stockholder. Up to April 2000, the stockholders were also responsible for financing the administrative expenses of TBG, totaling US$ 19 million. Of this total, 50% was registered as subordinated loans and 50% as corporate capital, also in proportion to the stake of each stockholder. The loans from multilateral credit agencies and export credit agencies have priority in settlement and, therefore, are classified as senior debt. Loans from stockholders will be settled subsequently and, therefore, are classified as subordinated loans. Both are long term. Subordinated loans total US$ million with annual interest of 15%, for payment of the principal after the loans of the multilateral credit agencies. The balance of the subordinated loans at December 31, 2014 and 2013, including the principal as long-term and interest as current, are: Current liability Petrobras Gas S.A. Gaspetro (Note 7(a)) 4 4 BBPP Holding Ltda. 2 2 YPFB Transporte do Brasil Holding S.A. 1 1 GTB TBG Holding S.A. R.L. 1 - Total other stockholders 4 3 Non-current liability Petrobras Gas S.A. Gaspetro (Note 7(a)) BBPP Holding Ltda YPFB Transporte do Brasil Holding S.A GTB TBG Holding S.A. R.L Total other stockholders

17 Financial statements The interest credited to stockholders on the subordinated loans and restatement of dividends by the Special System for Settlement and Custody (SELIC) rate were: Petrobras Gas S.A. Gaspetro (Note 7(a)) BBPP Holding Ltda YPFB Transporte do Brasil Holding S.A GTB TBG Holding S.A. R.L. 9 7 Total other stockholders (c) Personnel remuneration (in reais) The remuneration of employees, including management positions and TBG executives, for the months of December 2014 and 2013 are the following: Remuneration of employees Highest remuneration 38, , Average remuneration 14, , Lowest remuneration 5, , Remuneration of management (highest) 69, , Loans from multilateral credit agencies This note supplies information on the contractual terms of loans with interest, measured at amortized cost. For information on the risk of interest and foreign currency, see Note 17(b) - Financial Instruments and Risk Management. In November and December 1998, loan contracts were signed with the multilateral credit agencies listed below for US$ 510 million, for terms of 15 to 20 years and withdrawals from 1999 onwards. The balances at December 31 are: Inter-American Development Bank (BID) European Investment Bank (-) Current liability (52) (45) Non-current liability The long-term maturities of these loans are as follows:

18 2014 Financial statements Maturities of the principal and interest on the loans are: 6 months or less to 12 months years years The payment of the principal and interest of the loans from the multilateral credit agencies are guaranteed by the Brazilian Federal Government. For each guarantee contract issued by the Federal Government in favor of the agencies, counter-guarantee contracts were signed having the Federal Government, TBG, Petrobras and Banco do Brasil S.A. as signatories, in which TBG commits to pledge its revenue to the order of the National Treasury until the settlement of all the obligations guaranteed by the Federal Government. The contract for escrow of accounts and revenue signed by TBG, Petrobras, as guarantor of the bank accounts of TBG and the funds deposited, and Banco do Brasil S.A., as consenting intervening party, disciplines the pledge of the revenue. Inter-American Development Bank (BID) Contract of US$ 240 million at LIBOR interest rate (variable determined by the BID IADB rate) which, at December 31, 2013, was 2.08% plus an annual spread of 0.84%. All the contracted value was withdrawn up to December 2001 and the due date of the last installment is December 15, European Investment Bank (BEI) Contract of US$ 60 million at interest rates determined by the Bank (EIB internal rate) fixed at an annual rate of 7.09%. The total contracted value was withdrawn in one transaction in 1999 and the due date of the last installment is June 15, The contracts have the following covenants: (i) The Borrower shall not, without previous authorization of the Bank, assume new financial obligations which differ from those contemplated in the financing scheme for the execution of the project, and whose due dates exceed one year, and, if as consequence of this new indebtedness, the relation between internal generation of funds and the service of the debts, including payment of the principal, interest, commissions and other charges, is less than 1.5 times; (ii) The Borrower commits to adopt the necessary measures to ensure that the relation between the long-term senior debt (excluding the portion of the debt due in the year) and the sum of the equity and total liabilities does not exceed 67%. The Company has fulfilled these obligations for the years of 2014 and Taxes and social contributions (a) The deferred income tax and social contribution have the following origins: Liabilities: Pipeline depreciation 93 - Unrealized profit on transactions with a private/public capital company Effects of taxation of unrealized foreign exchange gains on a cash basis (44) 6 Other temporary exclusions (9) (6)

19 Financial statements (b) Reconciliation of the income tax and social contribution expenses Profit for the year before taxation and after employee profit sharing Income tax and social contribution on net income at the standard rates (34%) (137) (118) Income tax and social contribution on net income for the year (137) (118) Current (106) (153) Deferred ( 31) 35 (c) Provision for income tax and social contribution Income tax and social contribution charge for the year Increase (decrease) of the amount payable: Pipeline depreciation (93) - Taxation of exchange gains on liabilities when paid (cash basis) Temporary provisions 9 - Use of deferred tax credits - (14) Deferred profit with a private/public company 9 (5) Provision for income tax and social contribution recorded as a current liability Equity (a) Share capital On December 31, 2014 and 2013 the subscribed and paid-up share capital was represented by 203,288,000 common shares, without par value. The Company s stockholders and their respective holdings are as follows: 51% - Petrobras Gás S.A. Gaspetro; 29% BBPP Holding Ltda. BBPP; 12% - YBFP Transporte do Brasil Holding Ltda.; 8% - GTB TBG Holding S.A. R.L. (b) Revenue reserves Legal reserve Recorded at 5% of profit for each year in accordance with Article 193 of the Brazilian Corporate Law, up to the limit of 20% of share capital. No legal reserve was recorded in 2014 and 2013 since the reserve had reached the maximum amount permitted by law. Unearned profit reserve Recorded as a result of gains, principally the deferred asset arising from unrealized foreign exchange gains on long-term loans that do not generate cash to support the payment of dividends in the year they were recorded. The payment of dividends from this reserve occurs in subsequent years as the events that originated their record are realized, in the terms of Article 197 of the Brazilian Corporate Law. Special reserve Established based on paragraphs 4 and 5 of Article 202 of the Brazilian Corporate Law to record profits that were not distributed and that, if not offset by losses in subsequent years, should be paid as dividends as soon as the financial situation of the Company allows. 19

20 2014 Financial statements Article 199 of the Brazilian Corporate Law stipulates that the balance of the revenue reserves, except for contingencies, tax incentives and unearned profit, cannot exceed the share capital. Once this limit is reached, the stockholders in General Meeting will decide on the application of the excess amount in the payment or increase of the share capital or in the distribution of dividends. In 2014, R$ 166 of the revenue reserve was transferred to proposed dividends. At the end of 2014, there is no excess of reserves in relation to the share capital (there was an excess of R$ 170 in 2013). (c) Proposed dividends As established in the Company s bylaws, the minimum mandatory dividend is 50% of profit, equivalent to R$ 132 in The proposal for an additional dividend submitted to the Annual General Meeting of stockholders was R$ 298, comprising the destination of the balance of the profit for the year of R$ 132, the realization of the unearned profit reserve, R$ 18 and the special reserve of R$ 148, totaling R$ 298 recorded in equity for the year ended December 31, The remuneration of the stockholders is shown below: Profit for the year Realization of the unearned profit reserve Transfer from the special reserve Total dividends Being: Dividend payable - current liability Additional proposed dividend - equity Dividend payable - current liability R$ per share Additional proposed dividend - equity R$ per share Net operating revenue Gross revenue from services rendered (Note 7(a)) 1,284 1,153 Taxes on revenue (244) (194) Net operating revenue 1, Operating and maintenance costs Personnel Maintenance and repairs Rent of vehicles, land and helicopters Consumption materials 7 9 Communication systems 2 2 Operation support services and others Travel expenses 2 3 Electricity consumption

21 Financial statements 13 General and administrative expenses Personnel Property expenses 6 6 Equipment, furniture and installation expenses 4 2 Contracted services expenses Travel expenses 1 1 General and communication expenses Finance costs Suppliers 2 1 Loans and financing 8 10 Companies of the Petrobras system (Note 7(b)) Subordinated loan other stockholders Interest on dividends other stockholders Foreign exchange losses on liabilities Loans and financing Companies of the Petrobras system (Note 7(a)) Subordinated loan other stockholders Contingencies The Company is a party to lawsuits and administrative cases in various courts and government entities in the normal course of its operations. Certain lawsuits have been classified as a risk of possible loss. The most significant ones are mentioned below although management, based on information from its legal counsel and on analyses of the pending litigation, does not expect financial losses in ongoing cases and, therefore, no provisions for loss have been recorded in the financial statements. Contingent liabilities A contractor hired for the work on the Reliability Project claims payment from TBG for compensation for loss and damages due to an alleged economic imbalance in the contract. The maximum amount TBG is exposed to is R$ 120. On the other hand, TBG filed a case claiming payment by the contractor for compensation for loss and damages due to successive contractual defaults. The amount claimed is R$ 94. Claim for compensation for losses arising from increases in product and material prices and foreign exchange losses during the execution of service contracts. The maximum updated amount TBG is exposed to is R$ 58. Claim for damages of R$ 14 for alleged losses and additional costs on the service contract for the construction of ECOMP in Capão Bonito (SP). Claim for collective compensation by 167 litigants, due to an accident in November 2008 in the Gaspar Region (SC). The updated amount claimed is R$ 100. TBG has a subsidiary responsibility in various labor lawsuits. The majority of the claims are considered as possible, generating a maximum exposure of R$ 7. 21

22 2014 Financial statements Contingent assets PIS and COFINS recoverable TBG filed a common lawsuit against the Federal Government in the Federal Justice Law Court in Rio de Janeiro for recovery, by offset of the amounts paid as PIS on finance income, from February 1999 to November 2002, and paid as COFINS, from February 1999 to January 2004, claiming unconstitutionality of 1 of Article 3 of Law 9,718/98. The historical amount of R$ 12 of this lawsuit is not reflected in the financial statements. ICMS on the calculation basis of PIS and COFINS TBG filed in an Injunction in August 2008 to exclude from the calculation basis of PIS and COFINS the amounts paid as ICMS. On September 18, 2008, a decision by a judge was issued suspending the matter for 180 days because of the decision of the Supreme Federal Court on the judgment of ADC 18/2007, which determined the suspension of all lawsuits on the matter. 17 Financial instruments and financial risk management The Company contracts operations using financial instruments. These instruments are managed through operating strategies and internal controls aimed at ensuring liquidity and profitability. The control policy consists of a permanent monitoring of the contracted conditions against existing market conditions. The controls for the identification of embedded derivatives in the Company s operations are applied on a corporate basis by its parent company, Petrobras. These controls are mainly related to the identification of possible embedded derivatives and guidance related to the accounting treatment to be given by the companies of the Petrobras system. During the years ended December 31, 2014 and 2013, no embedded derivatives were identified in the Company s operations. All transactions with financial instruments are recognized in the Company s financial statements, as shown below: Financial instruments Note Assets Cash and cash equivalents Restricted bank accounts Accounts receivable 7(a) Liabilities Suppliers Accounts payable, including advances - companies of the Petrobras system 7(a) 1,153 1,065 Loans and financing The Company s operations are subject to the risks mentioned below: (a) Credit risk This risk results from the possibility of the Company suffering losses from default by financial institutions where resources or financial investments are deposited. The Company concentrates its financial operations with Banco do Brasil and Petrobras FDIC (Note 4), which reduces this risk. There is no credit risk with respect to the single customer, Petrobras, which in fifteen years of operations has always paid the invoices within the contracted due dates. (b) Foreign exchange rate risk This risk results from the possibility of fluctuations in the rate of the U.S. dollar. The financial feasibility of the Company s project was based on contracting loans and stockholder contributions, substantially pegged to the U.S. dollar, as described in Notes 7 and 8. The exchange rate exposure of the Company on December 31, 2014 is concentrated on loans and financing, with financing agencies and stockholders, in U.S. dollars, totaling R$ 724 (R$ 683 in 2013). 22

23 Financial statements The advances received from Petrobras and Gaspetro (Note 7), totaling R$ 871 at December 31, 2014 (R$ 832 in 2013), include amounts linked to the U.S. dollar but are not considered at risk since their settlement will occur through the provision of transport services, which are also linked to that currency. Sensitivity analysis The following sensitivity analysis was performed for the financial instruments with foreign exchange rate risk, considering that the likely scenario represents the balance of loans and financing at December 31, 2014 and that the possible and remote scenarios represent the effect of the variation of the exchange rate by 25% and 50%, respectively. Scenarios Probable (balance) Possible Remote Loans and financing As mentioned in Note 8, the transportation service revenues are linked to changes in the U.S. dollar, providing a long-term natural hedge. (c) Liquidity risk The Company uses its resources mainly with capital expenditures, loan payments, operating expenses, taxes and dividends. Historically, the conditions are met with funds generated internally, by short and long term receivables and the rendering of transport services. These sources of funds, added to the Company s financial position, are likely to continue enabling meeting the capital requirements necessary for its operations. The table below analyzes non-derivative financial liabilities of the Company, by maturity ranges, relating to the remaining period between the balance sheet date and the contractual maturity dates. The amounts disclosed are the undiscounted contracted cash flows. Less than a year Between one and two years Between two and five years At December 31, 2014 Suppliers and other liabilities Accounts payable to companies of the Petrobras system Subordinated loans of other stockholders Financing from multilateral credit agencies At December 31, 2013 Suppliers and other liabilities Accounts payable to companies of the Petrobras system Subordinated loans of other stockholders Financing from multilateral credit agencies (d) Interest rate risk This risk results from the possibility of the Company suffering gains or losses from interest rate fluctuations on financial liabilities. To mitigate this type of risk, the Company s loans and financing were contracted with fixed and variable interest rates. A substantial portion of the debt has fixed interest rates, and those subject to variable rates were contracted with multilateral credit institutions whose historical volatility is smaller than that of the market rates. The balances of loans and financing at December 31, 2014 are distributed in relation to the interest rate as follows: Total with fixed rates 574 Total with variable rates

24 2014 Financial statements (e) Measurement of the financial instruments The balances of cash, cash equivalents, loans and receivables, suppliers and accounts payable to companies of the Petrobras system are measured at amortized cost. The fair values of the Company s financial instruments are equivalent to their book values. 18 Insurance cover (unaudited) The Bolivia-Brazil Gas Pipeline is insured against risks of material damages, business interruption and civil liability. The cover was contracted by Petrobras on behalf of TBG. The risk assumptions adopted, given their nature, are outwith the scope of a financial statement audit and, accordingly, were not examined by our independent auditors. The amounts at risk and the maximum indemnity limits are the following: Value Maximum Insured risks at risk indemnity Material damages 11, Gross revenue loss Civil liability The maximum indemnity amount gives the Company the necessary cover considering the characteristics of the insured asset and the likelihood of claims and their replacement values. 19 Actuarial obligations Complementary pension plan 7 4 Health plan - AMS Complementary pension plan All Company employees are members of the Petros Plan 2, established as a defined contribution plan for pension benefits and a variable contribution plan for risk benefits. AMS Health Plan - Post retirement benefits As from 2014, the Company employees migrated to the AMS Health Plan - Multidisciplinary Health Assistance, maintained by Petrobras. The employees contribute with a fixed monthly payment for high risk coverage and with part of the expenses incurred in other coverages. The health plan is not covered by guarantor assets. The benefits are paid by the Company based on the costs paid by the participants. 24

25 Financial statements Independent auditor s report To the Board of Directors and Stockholders Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. - TBG Rio de Janeiro - RJ We have audited the accompanying financial statements of Transportadora Brasileira Gasoduto Bolívia-Brasil S.A., which comprise the balance sheet as at December 31, 2014 and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting practices adopted in Brazil and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. as at December 31, 2014, and its financial performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil. Emphasis of matter We draw attention to Notes 1 and 7 to the financial statements which state that the Company s transactions are basically carried out with companies of the Petrobras system and, therefore, the financial statements should be read in this context. Our opinion is not qualified in respect of this matter. Other matters Supplementary information - statement of value added We have also audited the statement of value added for the year ended December 31, This statement is the responsibility of the Company s management and is presented as supplementary information. This statement was subject to the same audit procedures described above and, in our opinion, is fairly presented, in all material respects, in relation to the financial statements taken as a whole. Rio de Janeiro, April 20, 2015 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 F RJ Christiano Augusto Beleze dos Santos Contador CRC 1SP219266/O-7 S RJ 25