Companhia de Gás de São Paulo - COMGÁS

Transcription

1 Companhia de Gás de São Paulo - COMGÁS Interim financial statements as of (A free translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices adopted in Brazil) KPDS

2 Interim financial statements as of Contents Review report on the interim financial statements - ITR 3 Statement of financial position 5 Statement of profit or loss 7 Statement of value added 8 Statement of changes in shareholder s equity 9 Statement of cash flows 10 Statement of value added

3 KPMG Auditores Independentes Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A São Paulo/SP - Brasil Caixa Postal CEP São Paulo/SP - Brasil Telefone +55 (11) , Fax +55 (11) Report on review report on the interim financial information To the Management, Board of Directors and Shareholders of Companhia de Gás de São Paulo - COMGÁS São Paulo - SP Introduction We have reviewed the accompanying interim financial information of Companhia de Gás de São Paulo - COMGÁS ("Company"), contained in the Quarterly Information Form (ITR) for the quarter ended, which comprises the statement of financial position as of and the respective statements of profit and loss and comprehensive income for the three and six-month periods then ended and changes in shareholders' equity and cash flows for the six-month period then ended, including the explanatory notes. The Company's management is responsible for the preparation of this interim financial information in accordance with Technical Pronouncement CPC 21 (R1) - Demonstração Intermediária and IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board - IASB, as well as for presenting this information in a manner consistent with the standards issued by the Comissão de Valores Mobiliários, applicable to the preparation of the Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards for review of interim information (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enabled us to obtain assurance that we would become aware of all significant KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 3

4 matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the interim information Based on our review, nothing has come to our attention that causes us to believe that the interim financial information included in the quarterly information referred to above is not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, issued by the IASB, applicable to the preparation of the Quarterly Information - ITR and presented in accordance with the standards issued by the Comissão de Valores Mobiliários. Other matters - Statements of added value The interim financial information related to the statements of value added (DVA) for the six-month period ended, prepared under the responsibility of the Company's management, presented herein as supplementary information for IAS 34 purposes, have been subject to review procedures jointly performed with the review of the Company s interim financial information - ITR. In order to form our conclusion, we assessed whether those statements are reconciled with the interim financial information and accounting records, as applicable, and whether their format and contents are in accordance with criteria determined in the Technical Pronouncement CPC 09 - Demonstração do Valor Adicionado. Based on our review, nothing has come to our attention that causes us to believe that the statements of added value above referred were not prepared, in all material respects, consistently with the overall interim financial information. São Paulo, August 7, 2018 KPMG Auditores Independentes CRC SP014428/O-6 (Original report in Portuguese signed by) Rogério Hernandez Garcia Accountant CRC 1SP213431/O-5 KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 4

5 Statement of financial position and December 31, 2017 Assets Note December 31, 2017 Cash and cash equivalents 5 1,376,192 1,727,521 Marketable securities 6 1,090, ,544 Trade receivables 7 727, ,976 Inventories 69,142 76,548 Income tax and social contribution 196,732 61,393 Other recoverable taxes 8 78,981 77,109 Derivative financial instruments , ,088 Receivables from related parties 9 1,382 1,039 Other 23,481 25,264 Current 3,715,929 3,301,482 Long-term assets Trade receivables 7 25,267 28,706 Transportation not used , ,290 Other recoverable taxes 8 10,576 11,098 Derivative financial instruments , ,388 Deferred tax assets 15-91,152 Judicial deposits 16 53,259 53,580 Other 1, Intangible assets 11 4,700,433 4,640,875 Non-current 5,330,036 5,365,083 Total Assets 9,045,965 8,666,565 The accompanying notes are an integral part of these financial statements. 5

6 Statement of financial position and December 31, 2017 Liabilities and equity Note December 31, 2017 Loans, financing and debentures ,190 1,264,352 Trade payables 14 1,606,452 1,444,835 Other financial liabilities 12,133 51,403 Payables to related parties 9 7,591 8,370 Employee benefits payable 42,275 59,059 Other taxes payable 134, ,169 Dividends and interest on capital payable ,235 Other current liabilities 6,183 5,252 Current 2,806,715 3,126,675 Loans, financing and debentures 12 3,266,783 2,948,152 Advances from customers and other 24,039 26,191 Provision for legal proceedings , ,637 Deferred tax liabilities 15 86,815 - Post-employment benefits , ,827 Non-current liabilities 3,934,769 3,522,807 Total liabilities 6,741,484 6,649,482 Share capital 1,650,032 1,481,204 Capital reserve 58, ,161 Revaluation reserve 5,767 5,838 Profit reserve 425, ,177 Carrying value adjustments (129,297) (129,297) Retained earning 293,100 - Shareholder s equity 17 2,304,481 2,017,083 Total liabilities and shareholder s equity 9,045,965 8,666,565 The accompanying notes are an integral part of these financial statements. 6

7 Statement of profit or loss and June 30, 2017 Note April 1, 2018 to January 1, 2018 to April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Net sales 1,592,803 3,023,679 1,359,666 2,505,932 Cost of gas and services (1,140,367) (2,082,799) (866,812) (1,586,931) Gross profit 452, , , ,001 Selling expenses (35,270) (71,562) (34,109) (68,329) General and administrative expenses (168,165) (332,631) (180,737) (360,937) Other operating expenses (4,064) (4,317) (9,308) (9,889) Operational expenses (207,499) (408,510) (224,154) (439,155) Profit before Financial Results 244, , , ,846 Finance expense (122,702) (209,546) (91,737) (231,490) Finance income 43,764 99,211 63, ,177 Foreign exchange gain (93,241) (87,826) (42,378) (13,664) Derivatives 106, ,606 29,905 2,361 Financial result, net 19 (65,926) (87,555) (41,192) (82,616) Profit before income tax and social contribution 179, , , ,230 Current (29,724) 29,529 (49,422) (9,986) Deferred (35,280) (181,244) (31,755) (137,269) Income tax and social contribution 15 (65,004) (151,715) (81,177) (147,255) Net profit for the period 114, , , ,975 Earnings per share attributable to the owners of the Company - R$ per share attributed to the owners of the Company 18 Basic per share: Common shares Preferred shares Diluted per share: Common shares Preferred shares The accompanying notes are an integral part of these financial statements. 7

8 Statement of value added and June 30, 2017 April 1, 2018 to January 1, 2018 to April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Profit for the period 114, , , ,975 Total comprehensive income for the period 114, , , ,975 The accompanying notes are an integral part of these financial statements. 8

9 Statement of changes in shareholder s equity and June 30, 2017 Capital reserves Revenue reserves Share capital Tax Incentives For future Special goodwill Granted options Revaluation Retained Carrying value Legal reserve Profit retention capitalization reserve recognized reserves earnings adjustments Total equity At December 31, ,481,204 1, ,828 56, , , ,134 - (129,297) 2,017,083 IFRS (6,360) - - (6,360) At January 01, ,481,204 1, ,828 56, , , ,774 - (129,297) 2,010,723 Profit for the period , ,100 Comprehensive income Realization of revaluation reserve (71) Total comprehensive income for the period (71) , ,100 Granted options recognized Capital increase 168,828 - (168,828) Total contributions by and distributions to owners 168,828 - (168,828) At 1,650,032 1,201-56,276 1,514 5, , , ,100 (129,297) 2,304,481 The accompanying notes are an integral part of these financial statements. Capital reserves Revenue reserves Share capital Tax Incentives For future Special goodwill Revaluation Retained Carrying value Legal reserve Profit retention capitalization reserve reserves earnings adjustments Total equity At January 01, ,312,376 1, , ,104 6, , ,874 - (113,712) 2,590,749 Profit for the year , ,975 Comprehensive income Realization of revaluation reserve (132) Total comprehensive income for the year (132) , ,975 Dividends (329,861) - - (329,861) Capital increase 168,828 - (168,828) Total contributions by and distributions to owners 168,828 - (168,828) (329,861) - - (329,861) At June 30, ,481,204 1, ,104 5, , , ,975 (113,712) 2,510,863 The accompanying notes are an integral part of these financial statements. 9

10 Statement of cash flows and June 30, 2017 Note June 30, 2017 Cash flows from operating activities Profit before taxes 444, ,230 Adjustments for: Amortization , ,137 Loss on the disposal of intangible assets 5,759 20,432 Provision for profit sharing 17,254 11,814 Interest and monetary variations 152, ,297 Provision for judicial demands 1,027 (5,461) Impairment of trade receivables 7,201 9,017 Granted options recognized Other (8,207) 1, , ,277 Variations in: Trade receivables (115,101) (122,723) Inventories 7,581 11,504 Trade payables 167,534 57,709 Other taxes, net (65,899) 11,000 Provisions and profit sharing (34,037) (33,609) Other (13,389) (4,526) (53,311) (80,645) Net cash provided by operating activities 740, ,632 Cash flows from investing activities Additions to intangible assets (251,627) (171,447) Marketable securities (591,756) (16,363) Cash received in the sale of other permanent assets 1,123 1,097 Cash provided used in investing activities (842,260) (186,713) Cash flows from financing activities Proceeds from new loans, borrowings and debentures ,227 9,009 Payments of principal on loans, borrowings and debentures 12 (616,162) (254,929) Payments of interest on loans, borrowings and debentures 12 (44,642) (60,062) Derivative financial instruments 98,118 17,495 Dividends and interest on capital paid (169,176) (421,568) Net cash used in financing activities (249,635) (710,055) Decrease in cash and cash equivalents (351,329) (162,136) Cash and cash equivalents at the beginning of the period 1,727,521 2,108,336 Cash and cash equivalents at the end of the period 1,376,192 1,946,200 Additional information: Income tax and social contribution paid 55,158 - The accompanying notes are an integral part of these financial statements. 10

11 Statement of value added and June 30, 2017 Note June 30, 2017 Revenue Sale of gas 3,706,284 3,020,233 Other operating income 32,829 33,982 Provision for impairment of trade receivables (7,201) (9,017) Construction revenue 185, ,114 Other income ( expenses ) (4,317) (9,889) 3,913,265 3,178,423 Cost and expenses Cost of gas and transportation (2,488,618) (1,824,511) Cost of sales and services (13,882) (7,721) Construction costs (185,670) (143,114) Materials, services and other expenses (102,158) (96,837) (2,790,328) (2,072,183) Gross value added 1,122,937 1,106, Retention Amortization 11 (173,090) (200,137) (173,090) (200,137) Net value added generated by the Company 949, ,103 Value added received through transfer Financial income 90, ,001 90, ,001 Total value added to distribute 1,040,090 1,055,104 Distribution of value added Personnel and social charges 76,140 75,343 Remuneration 53,756 50,895 Benefits 15,696 17,347 FGTS 6,688 6,064 Other - 1,037 Taxes and contributions 486, ,513 Federal 277, ,578 State 198, ,356 Municipalities 10,637 11,579 Finance costs and rentals 184, ,273 Interest 142, ,643 Rents 6,811 7,662 Other 35,172 21,968 Remuneration of shareholder s equity 293, ,975 Profit retention 293, ,975 1,040,090 1,055,104 The accompanying notes are an integral part of these financial statements 11

12 1 General information The main activity of Companhia de Gás de São Paulo - COMGÁS (the "Company") is the distribution of piped natural gas in part of the State of São Paulo (in approximately 180 municipalities, including the region referred to as Greater São Paulo) to industrial, residential, commercial, automotive, thermal-power generation and co-generation consumers. COMGÁS is a public company headquartered in São Paulo, State of São Paulo, Brazil, and is listed on the São Paulo Stock Exchange (B3). The Company is a direct subsidiary of Cosan S.A. Indústria e Comércio, which holds 80.12% of the Company's share capital. The Concession Contract for the Exploration of Public Piped Gas Distribution Services was signed on May 31, 1999 with the conceding authority - represented by the Sanitation and Energy Regulatory Agency for the State of São Paulo (ARSESP, formerly Energy Public Utilities Commission (CSPE)). The Contract grants and regulates the concession for the exploration of public piped gas distribution services for a period of 30 years, which may be extended for a further period of 20 years at the concessionaire's request and subsequent approval of the granting authority. ARSESP is responsible for the enforcement of the agreement and for regulating, controlling and overseeing the operations of energy operators in the State of São Paulo. The aforementioned concession agreement describes the Company's obligations, the rules for the five-year tariff review procedures and the quality and safety indicators that the Company must comply with. ARSESP Ordinance 160/01, which regulates the general conditions for the supply of piped gas, was recently perfected through a Public Hearing process, AP 03/2016, resulting in Deliberation ARSESP 732/2017, seeking to modernize the relationship of the concessionaire with its market in several aspects of the provision of services. In addition, the concession agreement establishes that the tariffs practiced by the Company must be readjusted once a year in the month of May, with the objective of realigning its price to the cost of gas and adjusting the distribution margin for inflation. Exceptionally, the regulation allows to adjust the cost of gas in a period of less than one year, provided that certain criteria are met, depending on the difference between the cost of gas contained in the tariff and that paid by the concessionaire to its supplier (Resolution ARSESP 308/2012 ). In addition, five-yearly, through the Tariff Review process, the tariff margins are realigned to the ticket application, authorized by the regulator, in function of projections of costs and volumes for the next five-year period. 12

13 2 Basis of preparation 2.1 Conformity declaration These interim financial statements are presented in thousands of Brazilian reais, unless otherwise stated and have been prepared and are presented in accordance with technical pronouncement CPC 21 - Interim Financial Statements and with the international standards IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), and also based on the provisions contained in the Brazilian Corporate Law, and presented in a manner consistent with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of quarterly information. These interim financial statements were prepared based on the preparation basis and accounting policies consistent with those adopted in the preparation of the financial statements as of December 31, 2017 and should be read together. The information in the notes to the financial statements that did not significantly change as of December 31, 2017 were not fully presented in this quarterly information. The relevant information specific to the interim financial statements, and only them, are being evidenced and that correspond to those used by management in its management. The issuance of these interim financial statements was approved by the Board of Directors on July 30, Main accounting policies The accounting policies described below have been applied consistently by the Company for all periods presented in these interim financial statements. 3.1 Change in significant accounting policy a. IFRS 9 - Financial instruments IFRS 9 Financial Instruments replaces IAS 39 - Financial Instruments: Recognition and Measurement for annual periods beginning on or after January 1, 2018, bringing together all three aspects of accounting for financial instruments: (i) classification and measurement; (ii) impairment; and (iii) hedge accounting. Except for the classification and measurement of financial assets, the Company applied IFRS 9 prospectively with the initial application date of January 1, The effect of adopting IFRS 9 is as follows: 13

14 Impact on the balance sheets (increase / (decrease)) on January 1, 2018: Assets Trade accounts receivable (9,637) Deferred income and social contribution taxes 3,277 Shareholder s equity Profit retention 6,360 a) Classification and measurement Except for certain commercial receivables, in accordance with IFRS 9, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not measured at the fair value through profit or loss, of transaction costs. Debt financial instruments in IFRS 9 are subsequently measured at fair value through profit or loss, amortized cost or fair value through other comprehensive income. The classification is based on two forms: (i) the Company's business model to manage the assets; and (ii) whether the contractual cash flows of the instruments represent "principal and interest payments only" on the amount of outstanding capital. The Company recognizes its financial assets at amortized cost for financial assets that are kept within a business model with the objective of obtaining contractual cash flows that meet the "Principal and Interest" form. This category includes trade accounts receivable, cash and cash equivalents, receivables from related parties, other financial assets and dividends and interest on capital to be received. No remeasurement of financial assets was done. The Company's business models were evaluated as of the initial application date on January 1, 2018 and applied to financial assets that were not recognized before to January 1, The evaluation of whether cash flows of contractual debt instruments are composed of principal and interest were made based on the facts and circumstances as in the initial recognition of the assets. The accounting of the Company's financial liabilities remains basically the same as in IAS 39. Similar to IAS 39 requirements, IFRS 9 requires contingent consideration to be treated as financial instruments measured at fair value, with changes in fair value recognized in profit or loss. b) Impairment The adoption of IFRS 9 fundamentally changed the Company's accounting for impairment losses on financial assets, replacing the approach of loss incurred by IAS 39 with an expected credit loss approach. The Company recognizes a provision for expected credit loss for its accounts receivable. The simplified standard approach is applied and the expected credit losses for the entire life of the asset are calculated. The Company has established a provisioning matrix that is based on the historical experience of credit loss, adjusted for specific prospective factors for the debtors and for the economic environment. The adoption of the expected credit loss requirements of IFRS 9 resulted in an increase in 14

15 provisions for losses of the Company in the amount of R $ 9,637. The increase in the provision resulted in an adjustment to retained earnings in the amount of R $ 6,360. The reduction in recoverable value falls within the exemptions from the general principle of application of this standard for comparative periods. The Company used the transition model without restatement of the comparative balance, recognizing the impacts of adopting the standard on retained earnings. c) Hedge accounting The Company applied hedge accounting prospectively. At the date of initial application, all of the Company's existing hedging relationships were eligible to be treated as continuing hedging relationships. Consistent with previous periods, the Company continued to designate the change in the fair value of the entire forward contract in the Company's cash flow hedge relationships and, as such, the adoption of the hedge accounting requirements of IFRS 9 had no impact the Company's interim financial statements. In accordance with IAS 39, all gains and losses arising from the Company's cash flow hedge relationships were eligible to be subsequently reclassified to income. However, according to IFRS 9, the gains and losses resulting from cash flow hedge of the expected purchases of nonfinancial assets need to be incorporated into the initial book values of non-financial assets. Therefore, after the adoption of IFRS 9, the net cash flow hedge gain or loss was presented under "Other comprehensive income not being reclassified to income". This amendment applies only prospectively from the date of initial application of IFRS 9 and has no impact on the presentation of comparative amounts. b. IFRS 15 - Customer Contract Revenue IFRS 15 has as a fundamental principle the recognition of revenue when the goods or services are transferred to the customer at the price of the transaction. Revenue is recognized according to this principle by applying a 5-step model: Step 1: Identify the contract (s) with the client; Step 2: Identify the performance obligations defined in the contract; Step 3: Determine the price of the transaction; Step 4: Allocate the price of the transaction to the performance obligations provided for in the agreement; and Step 5: Recognize revenue when (or as) the entity meets each performance obligation. When evaluating contracts with customers, the Company uses judgment to identify whether contracts can be combined, whether there are contract modifications, determine different goods and services, and whether performance obligations are met over time or at a given time, if there are discounts implicit in the contract and determine significant financing components. In the evaluation of the Company, no effects of the adoption of IFRS 15 that affect these interim financial statements were identified. The Company records all sales of services only when a firm sales contract is in effect, the delivery occurred or the services were rendered and the collection of the fixed or determinable sale price is reasonably assured. 15

16 The Company recognizes revenue from contracts for the sale of gas distribution services and construction revenue (under ICPC 01). The Company estimates the total contract revenue net of price concessions, as well as the total costs of the contract. For construction revenues under concession contracts, the Company recognizes revenue and costs at the time of completion of the work. The Company records any loss it expects to incur in these agreements when such loss is probable. Significant components of revenue and cost estimates include prices and guarantees related to performance, as well as material, labor and overhead costs. The Company recognizes any loss it expects to incur in these agreements when such loss is probable. The Company does not expect to have any agreement in which the period between the transfer of the goods or services promised to the customer and the payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the amount of money in time. 3.2 Cash flow - transactions that did not involve cash i. Transactions that do not involve cash During the period ended, the Company carried out the following transactions that did not involve cash: i. Capital increase of R $ 168,828 through the use of the capital reserve. ii. Interest rate i. Interest paid is classified as cash flow from financing activities, as it is considered to refer to the costs of obtaining financial resources. 4 Segment reporting Management analyzes the financial performance considering the gross economic result separately by business segment. The regulatory agency "ARSESP" determines the tariffs for the various business segments. The Company does not perform asset analysis by segment for business management. Finally, the definition of a cash-generating unit, representing the smallest asset in use that generates cash inflows, in the Company's context can not be segregated by segment, since the same pipeline distributes gas to consumers in different segments. Information by operating segments is presented in a manner consistent with the internal report provided to the chief operating decision maker. The chief operating decision maker, responsible for the allocation of resources and for the performance evaluation of the operating segments, is the executive director responsible for making the strategic decisions of the Company. Due to the sporadic nature and the low representativeness of the amounts withdrawn by free users, in volumes above those contracted, these volumes are disclosed in the financial statements as "Other revenues". The composition of the margin per segment is as follows: 16

17 Margin per segment April 1, 2018 to Segments Residential Commercial Industrial Cogeneration Automotive Constructio n revenues Other revenues Total Volume (thousands of m³) 69,339 38, ,879 78,826 54, ,111,012 Gross revenue 315, ,671 1,341,030 87,766 83,112 96,177 16,829 2,059,872 Deductions (76,457) (28,936) (323,492) (15,916) (20,155) - (2,113) (467,069) Net revenue 238,830 90,735 1,017,538 71,850 62,957 96,177 14,716 1,592,803 Regulatory assets (liabilities) 10,971 6, ,101 9, (6,033) 159,968 Cost (65,955) (36,054) (823,588) (63,394) (52,061) (96,177) (3,138) (1,140,367) Economic gross profit 183,846 61, ,050 17,472 11,380-5, ,404 Reversal of regulatory assets (159,968) - Gross profit 452,436 Selling expenses (35,270) General and administrative expenses (168,165) Other operating expenses, net (4,064) Operating expenses (207,499) Finance expense (122,702) Finance income 43,764 Foreign exchange gain (93,241) Derivatives 106,253 Financial result, net (65,926) Profit before taxes 179,011 Provision for income tax and social contribution (65,004) Profit for the period 114,007 Reconciliation of EBITDA Profit for the period 114,007 Provision for income tax and social contribution 65,004 Financial result 65,926 Amortization 86,014 Other amortization (138) EBITDA 330,813 17

18 Margin per segment January 1, 2018 to Segments Residential Commercial Industrial Cogeneration Automotive Construction Other revenues revenues Total Volume (thousands of m³) 125,456 73,934 1,730, , , ,182,748 Gross revenue 566, ,225 2,581, , , ,670 32,829 3,910,209 Deductions (137,001) (54,940) (622,265) (30,275) (37,824) - (4,225) (886,530) Net revenue 429, ,285 1,959, , , ,670 28,604 3,023,679 Regulatory assets (liabilities) 15,394 9, ,037 12,425 (6,470) - (11,612) 222,973 Cost (111,059) (64,859) (1,513,808) (110,625) (90,689) (185,670) (6,089) (2,082,799) Economic gross profit 333, , ,647 32,325 20,992-10,903 1,163,853 Reversal of regulatory assets (222,973) Gross profit 940,880 Selling expenses (71,562) General and administrative expenses (332,631) Other operating expenses, net (4,317) Operating expenses (408,510) Finance expense (209,546) Finance income 99,211 Foreign exchange gain (87,826) Derivatives 110,606 Financial result, net (87,555) Profit before taxes 444,815 Provision for income tax and social contribution (151,715) Profit for the period 293,100 Reconciliation of EBITDA Profit for the period 293,100 Provision for income tax and social contribution 151,715 Financial result 87,555 Amortization 173,090 Other amortization (277) EBITDA 705,183 18

19 Margin per segment April 1, 2017 to June 30, 2017 Segments Residential Commerc ial Industrial Cogeneration Automotive Constructio n revenues Other revenues Total Volume (thousands of m³) 70,913 36, ,276 68,436 50,018-1,302 1,081,314 Gross revenue 301, ,440 1,105,803 61,450 72,208 86,787 21,315 1,753,246 Deductions (72,825) (25,135) (264,865) (10,696) (17,475) - (2,584) (393,580) Net revenue 228,418 79, ,938 50,754 54,733 86,787 18,731 1,359,666 Regulatory assets (liabilities) 7,436 3,857 89,879 4,543 (8,309) - (3,874) 93,532 Cost (51,775) (26,515) (622,888) (41,275) (36,445) (86,787) (1,127) (866,812) Economic gross profit 184,079 56, ,929 14,022 9,979-13, ,386 Reversal of regulatory assets (93,532) - Gross profit 492,854 Selling expenses (34,109) General and administrative expenses (180,737) Other operating expenses, net (9,308) Operating expenses (224,154) Finance expense (91,737) Finance income 63,018 Foreign exchange gain (42,378) Derivatives 29,905 Financial result, net (41,192) Profit before taxes 227,508 Provision for income tax and social contribution (81,177) Profit for the period 146,331 Reconciliation of EBITDA Profit for the period 146,331 Provision for income tax and social contribution 81,177 Financial result 41,192 Amortization 97,729 Other amortization (138) EBITDA 366,291 19

20 Margin per segment January 1, 2017 to June 30, 2017 Segments Residential Commercial Industrial Cogeneration Automotive Constructio n revenues Other revenues Total Volume (thousands of m³) 118,353 68,899 1,666, ,322 98,154-1,302 2,089,560 Gross revenue 493, ,194 2,069, , , ,114 34,849 3,185,825 Deductions (113,668) (43,210) (468,329) (18,794) (31,307) - (4,585) (679,893) Net revenue 379, ,984 1,601,201 98, , ,114 30,264 2,505,932 Regulatory assets (liabilities) 11,741 6, ,542 8,125 (18,249) - (6,568) 164,389 Cost (83,129) (48,025) (1,159,863) (79,137) (68,316) (143,114) (5,347) (1,586,931) Economic gross profit 308, , ,880 27,465 19,424-18,349 1,083,390 Reversal of regulatory assets (164,389) - Gross profit 919,001 Selling expenses (68,329) General and administrative expenses (360,937) Other operating expenses, net (9,889) Operating expenses (439,155) Finance expense (231,490) Finance income 160,177 Foreign exchange gain (13,664) Derivatives 2,361 Financial result, net (82,616) Profit before taxes 397,230 Provision for income tax and social contribution (147,255) Profit for the period 249,975 Reconciliation of EBITDA Profit for the period 249,975 Provision for income tax and social contribution 147,255 Financial result 82,616 Amortization 200,137 Other amortization (277) EBITDA 679,706 20

21 5 Cash and cash equivalents December 31, 2017 Cash and bank deposits 44,495 30,618 Financial Investments 1,331,697 1,696,903 1,376,192 1,727,521 Financial investments are as follows: December 31, 2017 Investment Funds Compromised operations 970,263 1,071,636 Certificate of bank deposits - 274, ,263 1,346,097 Applications in banks Certificate of bank deposits 361, , , ,806 Financial investments 1,331,697 1,696,903 6 Marketable securities December 31, 2017 Government securities 1,090, ,544 1,090, ,544 Investments in government securities are made out through investment funds. These securities are remunerated at Selic and mature between one and seven years, when asked to redeem the quotas for conversion into cash by the Company, the owner can trade them in the secondary market, active and with high liquidity. 21

22 7 Trade receivables The composition of trade accounts receivable is as follows: December 31, 2017 Receivables from gas 348, ,844 Receivable from sale of equipment 8,166 9,466 Financing marketing program 29,344 29, , ,748 Adjustments to present value (1,947) (2,184) Unbilled revenue (i) 467, ,026 Other 12,695 14,735 Allowance for doubtful accounts (111,941) (112,643) 752, ,682 Current 727, ,976 Non-current 25,267 28,706 (i) Unbilled revenue accounts for a portion of the gas supply, to which no measurement and billing to customers have yet been performed. Accounts Receivable are registered by amortized cost, which is the same as fair value. 8 Other taxes recoverable December 31, 2017 Value-added Tax on Sales and Services (ICMS) 80,605 67,797 Social Integration Program (PIS) 2,726 3,511 Contribution Financing of Social Security (COFINS) 5,500 16,174 Other ,557 88,207 Current 78,981 77,109 Non-current 10,576 11,098 22

23 9 Related parties a) Summary of balance sheet balances with related parties: December 31, 2017 Current assets Commercial operations Raízen Combustíveis S.A. (i) 1,382 1,039 1,382 1,039 Current liabilities Commercial operations Raízen Energia S.A. (ii) 7,591 8,370 7,591 8,370 b) Summary of transactions with related parties: April 1, 2018 to January 1, 2018 to April 1, 2018 to January 1, 2017 to June 30, 2017 Operation income Raízen Combustíveis S.A. (i) 3,735 7,025 3,193 5,966 Elevações Portuárias (iii) ,807 7,152 3,193 5,966 Income (expense) Raízen Energia S.A. (ii) (13,392) (19,122) (7,639) (19,068) (13,392) (19,122) (7,639) (19,068) (i) Raízen Combustíveis S.A. Accounts receivable related to gas supply to gas stations. (ii) Raízen Energia S.A. (RESA) The balances recorded as current liabilities represent services performed by the RESA. (iii) Elevações Portuárias Accounts receivable related to gas supply. c) Management and director s remuneration The remuneration of management which includes members of the Board of Directors and statutory directors, responsible for the planning, management and control of the Company s activities, is a follows: April 1, 2018 to January 1, 2018 to April 1, 2017 to January 1, 2017 to June 30, 2017 June 30, 2017 Short-term benefits 5,798 9,743 3,697 7,486 Post-employment benefits Other long-term benefits Share-based compensation ,043 10,233 3,901 7,885 23

24 10 Transportation not used December 31, 2017 Transportation not used 282, ,290 The recovery of the balances related to the "Transportation not used", will occur as the transport is used above the percentage stipulated in the contracts. 11 Intangible assets Concession agreement Customer loyalty efforts Intangible assets in service Computer software Intangible assets in progress Cost December 31, ,149,529 1,130, , ,528 7,773,527 Additions , ,040 Disposals (33,751) (2,685) - - (36,436) Transfers 185,487 19,323 16,351 (221,161) - 6,301,265 1,146, , ,407 7,979,131 Amortization December 31, 2017 (1,926,778) (976,490) (229,384) - (3,132,652) Additions (118,114) (43,900) (11,076) - (173,090) Disposals 24,775 2, ,044 Transfers (360) (2,020,477) (1,017,761) (240,460) - (3,278,698) December 31, ,222, ,787 62, ,528 4,640,875 4,280, ,154 68, ,407 4,700,433 Total The amounts recognized as "Intangible assets" represent the cost value of assets constructed or purchased for the purpose of rendering concession services, net of amortization. Interest on construction in progress During the exercise ended, the Company capitalized the amount of R $ 4,400 (June 30, R $ 5,155) related to interest on the loans raised for the construction of these assets. The weighted average interest rate on debt used to capitalize interest on the balance of construction in progress was 7.51% py for the period ended on (10.42% py for the period ended on June 30, 2017). Impairment Defined useful life intangible assets that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, which did not occur for the period. 24

25 12 Loans, financing and debentures Interest Description Index Annual interest December 31, 2017 Aging Loans and financing BNDES Project VI TJ % 9.45% 401, ,807 October, 20 Project VI SELIC % 8.32% 188, ,222 October, 20 Project VI TJLP 6.64% 630 1,243 October, 18 Project VII TJLP % 8.65% 119, ,330 June, 23 Project VII SELIC % 8.49% 68,779 66,794 June, 23 EIB USD % 3.88% 118, ,190 June, 20 USD % 2.94% 68,803 70,611 September, 20 USD + LIBOR6M 3.03% 137, ,778 May, % USD + LIBOR6M 2.91% 150, ,386 September, % Resolution nº USD % 2.36% - 249,916 March, 18 USD % 2.46% - 165,847 February, 18 USD % 3.67% 282,606 - May, 23 Total of loans and financing 1,536,294 1,796,124 Debentures 3ª emission - 1ª issue CDI % 7.35% 87,083 87,467 September, 19 3ª emission - 2ª issue IPCA % 9.40% 380, ,894 September, 18 3ª emission - 3ª issue IPCA % 9.89% 203, ,923 September, 20 4ª emission - 1ª issue IPCA % 11.52% 310, ,312 December, 20 4ª emission - 2ª issue IPCA % 11.88% 279, ,701 December, 22 4ª emission - 3ª issue IPCA % 11.75% 92,219 86,927 December, 25 5ª emission - single IPCA % 10.20% 737, ,826 December, 23 6ª emission - single IPCA % 8.60% 414, ,330 October, 24 7ª emission - single IGPM % 14.38% 219,523 - May, 28 Total of debentures 2,726,679 2,416,380 Total 4,262,973 4,212,504 Current 996,190 1,264,352 Non-current 3,266,783 2,948,152 As of the Company had available unused credit facilities in the amount of R$ 200 million (December 31, R$ 194 million). The use of these lines of credit is subject to certain contractual conditions. On May 8, 2018, the Board of Directors approved a public offering of the seventh (7th) issue of simple, non-convertible unsecured debentures, in a single series, for public distribution with restricted placement efforts, of 215,000 debentures, all nominative and book-entry, with a par value of R $ 1, on the date of issue, totaling R $ 215,000,000.00, to be carried out in accordance with the procedures of CVM Instruction 476. On May 23, 2018, the closing of the public offer of the seventh (7th) issue of debentures was announced. The Debentures of the 7th issue are entitled to a remuneration corresponding to 6.10% + IGPM and matures in

26 On May 8, 2018, the Board of Directors' Meeting approved the signing of the financing agreement under Law No. 4,131 / 1962 between the Company and The Bank of Nova Scotia. The operation, in the amount of US $ 75 million, has a total term of 5 years and a fixed interest rate of 3.67% per year. The carrying amounts of loans, financing and debentures are denominated in the following currencies: December 31, 2017 Reais (R$) 3,505,095 3,310,776 Dólar (U.S.$) 757, ,728 4,262,973 4,212,504 (i) As of, all dated debts denominated in US dollars have currency risk protection through derivatives. Note (20). The Company's debt composition is 88.97% post-fixed and 11.03% prefixed ( % post-fixed and 14.57% prefixed). a. Covenants During the period, there were no breaches or violations of contractual agreements with creditors. As of, the Company complies with all financial covenants. December 31, 2017 Net debt 1,387,635 1,516,963 EBITDA (*) 1,543,401 1,517,924 (=) Net debt/ebitda (*) last twelve months December 31, 2017 Current loans 844,460 1,053,264 Loans total 3,854,728 3,754,028 (=) Current loans/ Loans total b. Changes in loans, financing and debentures: December 31, ,212,504 Capitation 482,227 Payments of principal (616,162) Payments of interest (44,642) Monetary and exchange rate adjustment 229,046 4,262,973 26

27 13 Commitments a. Assets (liabilities) regulatory December 31, 2017 Cost of gas to be recovered/(transferred) 55,620 (174,090) Credits of taxes to be recovered/(transferred) (57,610) (48,549) Adjustment to present value of taxes 1,895 1,742 Amount (95) (220,897) Effect on the result for the exercise Result not recognized before taxes 220, ,114 Regulatory assets (liabilities) 232, ,722 Regulatory assets (liabilities) - taxes (9,061) (12,222) 222, ,500 Adjustment (2,323) (26,270) Adjustment to present value of tax credits Extemporaneous credits - (12,267) 220, ,114 The balance of this account is considered as an asset or liability in accordance with the plan of accounts of the regulator. However, this account is excluded from the financial statements prepared in accordance with accounting practices adopted in Brazil and international standards IFRS, since the respective balance is not recorded as an asset or a liability, as their realization or settlement depends on future consumption by different consumers of the Company. 14 Trade Payables December 31, 2017 Natural gas suppliers 1,773,028 1,563,930 Material and services 128, ,881 Judicial deposits (*) (294,976) (294,976) 1,606,452 1,444,835 (i) The Company has a lawsuit against a gas supplier regarding the difference in prices, for which it maintains the amount secured in court deposit of R $ 294,976 and on bail of R $ 870,769 (R $ 859,627 on December 31 of 2017). 27

28 15 Income tax and social contribution a) Reconciliation of income tax and social contribution expenses The reconciliation between the expenditure for the income tax and social contributions by the nominal rate and by the actual rate is shown below: April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Profit before income tax and social contribution Income tax and social contribution - nominal rate (34%) 179, , , ,230 (60,864) (151,237) (77,353) (135,058) Adjustments to determine the effective rate Permanent differences (2,299) (3,241) (4,495) (8,754) Other (1,841) 2, (3,443) Expenses with income and social contribution taxes (current and deferred) (65,004) (151,715) (81,177) (147,255) Effective rate - % 36.31% 34.11% 35.68% 37.07% 28

29 b) Deferred income tax and social contribution December 31, 2017 Active differences Provision for legal proceedings 34,456 33,863 Goodwill on incorporation - 56,276 Post-employment benefit obligation (i) 152, ,881 Regulatory current account 62,457 65,318 Share-based payment transactions Temporary differences about provisions and other 11,431 21,620 obligations Impairment of trade receivables 8,755 7,388 Not realized result with derivatives (ii) - 1,513 Contractual disputes 87,897 86,482 Other 1,108 1,252 Deferred taxes 358, ,884 Passive differences Useful life Review of intangible assets (298,443) (312,113) Exchange variation - loans and financing - (6,138) Intangible assets - concession agreement (7,713) (8,681) Not realized result with derivatives (ii) (131,771) - Other (7,743) (5,800) Deferred tax liabilities (445,670) (332,732) Total deferred taxes (86,815) 91,152 (i) (ii) The credit related to the accrual of post-employment benefits has an estimated period of financial realization of 25 to 30 years. The Company opted for the competence regime for exchange rate variations on loans and financing for the year 2018, thus deferred income tax and social contribution on unrealized gains and losses on derivatives amounts for a deferred tax liability in this period. They were previously compensated by the exchange variation of loans and financing. c) Changes in deferred taxes (net) December 31, ,152 Deferred taxes recognized in income for the exercise (181,244) Deferred income taxes on comprehensive income 3,277 (86,815) 29

30 16 Provision for judicial demands Judicial demands Judicial deposits December 31, December 31, Tax 8,188 16,840 20,663 23,640 Civil, environmental and regulatory 40,227 30,381 19,860 16,620 Labor 60,965 60,416 12,736 13, , ,637 53,259 53,580 Movement of judicial demands: Tax Civil, environmental and regulatory Labor Total December 31, ,840 30,381 60, ,637 Additions ,772 1,914 Reversal or payments - (208) (2,914) (3,122) Interest (1,536) 2,796 1,691 2,951 Transfers (7,118) 7, ,188 40,227 60, ,380 Contingencies - Lawsuits considered as possible loss, therefore not provisioned December 31, 2017 Tax 1,078,435 1,009,547 Civil, environmental and regulatory 126, ,241 Labor 39,479 34,239 1,244,421 1,188,027 Tax The main tax lawsuits, whose likelihood of loss is possible and, consequently, no provision was recognized in the financial statements, are as follows: Tax December 31, 2017 ICMS 45,887 45,332 IRPJ / CSSL 712, ,164 Federal tax 272, ,825 Other 47,371 44,226 1,078,435 1,009,547 30

31 17 Shareholder s equity Share Capital The Company is authorized to increase the share capital up to the limit of R$ 1,650,033 regardless of statutory reform, through the issuance of common shares and / or preferred by resolution of the Board of Directors, which will determine, in each case, the conditions of issue. The Extraordinary General and Extraordinary Shareholders' Meeting held on April 25, 2018 approved an increase in subscribed and paid-in capital in the amount of R$ 168,828, from of R$ , on March 31, 2018, to R$ 1,650,032, through the capitalization of the special goodwill reserve. The capital stock is represented by common shares with no par value and fully paidup and 28,550,269 class A preferred shares, and their composition is as follows: Common shares Percentage Preferred shares Number of share - thousand in Percentage Total Percentage Stockholders Cosan S A Indústria e Comércio 100, , , Alaska Poland FIA BDR Nivel , , Utilico Emerging Markets Limited - - 1, , Norges Bank 1-1, , Alaska Black Master FIA BDR Nível , , Other 2, , , , , , Number of share - thousand in December 31, 2017 Common shares Percentage Preferred shares Percentage Total Percentage Stockholders Cosan S A Indústria e Comércio 99, , , Alaska Poland FIA BDR Nivel , , Utilico Emerging Markets Limited - - 1, , Norges Bank 1-1, , Alaska Black Master FIA BDR Nível , Other 2, , , , , , The movement of the number of shares in the period is presented below: Quantity of shares Common Preferred Total December 31, ,917 28, ,038 Capital increase 1, , ,473 28, ,023 31

32 18 Earnings per share The following table sets the calculation of earnings per share for the periods ended and 2017 (in thousands, except per share amounts): Earnings per share - R$ April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Numerator Results of the period attributed to controlling shareholders 114, , , ,975 Common shares 87, , , ,770 Preferred shares 26,546 68,246 34,072 58,205 Denominator (in thousands of shares) Weighted average number of common shares 103, , , ,473 Weighted average number of preferred shares 28,550 28,550 28,550 28,550 Earnings per share - R$ Common shares Preferred shares Diluted earnings per share Numerator Results of the period attributed to controlling shareholders 114, , , ,975 Common shares 87, , , ,738 Preferred shares 26,642 68,494 34,110 58,237 Denominator (in thousands of shares) Weighted average number of common shares 103, , , ,473 Weighted average number of preferred shares 28,685 28,685 28,591 28,571 Diluted EPS Common shares Preferred shares