Companhia de Gás de São Paulo - COMGÁS

Transcription

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

2 Contents Report on review report on the interim financial information... 3 Statement of financial position... 5 Statement of profit or loss... 6 Statement of comprehensive income... 7 Statement of changes in shareholder s equity... 8 Statement of cash flows... 9 Statement of value added Notes to the interim financial statements

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 Companhia de Gás de São Paulo - COMGÁS São Paulo - SP Introduction We have reviewed the interim financial information of Companhia de Gás de São Paulo - COMGÁS ("Company"), contained in the Quarterly Information Form (ITR) for the quarter ended March 31, 2018, which comprise the balance sheet and the respective statements of income, comprehensive income, changes in shareholders' equity and cash flows for the three-month period then ended, including the explanatory notes. The Company's management is responsible for the preparation of these 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 the presentation of these 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 these 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 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 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. 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 Other matters - Statements of added value The interim financial statements related to the statements of value added (DVA) for the three-month period ended March 31, 2018, 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 referred to above were not prepared, in all material respects, consistently with the overall interim financial information. São Paulo, May 9, 2018 KPMG Auditores Independentes CRC 2SP014428/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 March 31, 2018 and December 31, 2017 (In thousands of Brazilian Reais - R$) Note Note Assets Liabilities and equity Cash and cash equivalents 5 1,484,686 1,727,521 Loans, financing and debentures ,629 1,264,352 Marketable securities 6 377, ,544 Trade payables 14 1,467,788 1,444,835 Trade receivables 7 607, ,976 Other financial liabilities 29,195 51,403 Inventories 71,451 76,548 Payable to related parties 9 5,622 8,37 Income tax and social contribution 198,813 61,393 Employee benefits payable 31,394 59,059 Other recoverable taxes 8 83,493 77,109 Other taxes payable 126, ,169 Derivative financial instruments , ,088 Dividends and interest on capital payable ,235 Receivables from related parties 9 1,247 1,039 Other current liabilities 5,342 5,252 Other 19,815 25,264 Current 2,972,075 3,301,482 Current 2,586,340 3,126,675 Loans, financing and debentures 12 2,864,293 2,948,152 Long-term assets Advances from customers and other 24,196 26,191 Trade receivables 7 26,696 28,706 Provision for legal proceedings , ,637 Transportation not used , ,29 Deferred tax liabilities 15 51,535 - Other recoverable taxes 8 10,697 11,098 Post-employment benefits , ,827 Derivative financial instruments , ,388 Deferred tax assets 15-91,152 Non-current liabilities 3,494,956 3,522,807 Judicial deposits 16 53,512 53,58 Other 1, Total liabilities 6,081,296 6,649,482 Intangible assets 11 4,660,331 4,640,875 Share capital 1,481,204 1,481,204 Non-current 5,299,350 5,365,083 Capital reserve 227, ,161 Revaluation reserve 5,803 5,838 Profit reserve 425, ,177 Carrying value adjustments (129,297) (129,297) Retained earning 179,093 - Shareholder s equity 17 2,190,129 2,017,083 Total assets 8,271,425 8,666,565 Total liabilities and shareholder s equity 8,271,425 8,666,565 The accompanying notes are an integral part of these interim financial statements. 5

6 Statement of profit or loss March 31, 2018 and 2017 (In thousands of Brazilian Reais - R$) Note March 31, 2018 March 31, 2017 Net sales 1,430,876 1,146,266 Cost of gas and services (942,432) (720,119) Gross profit 488, ,147 Selling expenses (36,292) (34,22) General and administrative expenses (164,466) (180,2) Other operating expenses (253) (581) Operational expenses (201,011) (215,001) Gross expenses 287, ,146 Finance expense (78,801) (139,025) Finance income 55,27 97,779 Foreign exchange gain 5,415 28,714 Derivatives (3,513) (28,892) Financial result, net 19 (21,629) (41,424) Profit before income tax and social contribution 265, ,722 Current 59,253 39,436 Deferred (145,964) (105,514) Income tax and social contribution 15 (86,711) (66,078) Profit for the period 179, ,644 Earnings per share attributable to the owners of the Company - R$ per share attributed to the owners of the Company 18 Basic per share: Common shares 1, ,76843 Preferred shares 1, ,84527 Diluted per share: Common shares 1, ,76843 Preferred shares 1, ,84527 The accompanying notes are an integral part of these interim financial statements. 6

7 Statement of comprehensive income March 31, 2018 and 2017 (In thousands of Brazilian Reais - R$) March 31, 2018 March 31, 2017 Profit for the period 179, ,644 Total comprehensive income for the period 179, ,644 The accompanying notes are an integral part of these interim financial statements. 7

8 Statement of changes in shareholder s equity March 31, 2018 and 2017 (In thousands of Brazilian Reais - R$) Capital reserves Revenue reserves Share capital Tax Incentives For future capitalization Special goodwill reserve Granted options recognized Revaluation reserves Legal reserve Profit retention Retained earnings Carrying value adjustments Total equity At December 31, ,481,204 1, ,828 56, , , ,134 - (129,297) 2,017,083 IFRS (6,36) - - (6,36) At January 01, 2018 (resubmitted) 1,481,204 1, ,828 56, , , ,774 - (129,297) 2,010,723 Profit for the period , ,093 Comprehensive income Realization of revaluation reserve (35) Total comprehensive income for the period (35) , ,093 Granted options recognized Total contributions by and distributions to owners At March 31, ,481,204 1, ,828 56,276 1,169 5, , , ,093 (129,297) 2,190,129 Capital reserves Revenue reserves Share capital Tax Incentives For future capitalization Special goodwill reserve Revaluation reserves Legal reserve Profit retention Retained earnings Carrying value adjustments Total equity At January 01, ,312,376 1, , ,104 6, , ,874 - (113,712) 2,590,749 Profit for the period , ,644 Comprehensive income Realization of revaluation reserve (65) Total comprehensive income for the period (65) , ,644 Dividends (329,86) - - (329,86) Total contributions by and distributions to owners (329,86) - - (329,86) At March 31, ,312,376 1, , ,104 5, , , ,644 (113,712) 2,364,533 The accompanying notes are an integral part of these interim financial statements. 8

9 Statement of cash flows March 31, 2018 and 2017 (In thousands of Brazilian Reais - R$) Note March 31, 2018 March 31, 2017 Cash flows from operating activities Profit before taxes 265, ,722 Adjustments for: Amortization 11 87, ,408 Loss on the disposal of intangible assets 1,252 1,621 Provision for profit sharing 6,564 3,357 Interest and monetary variations 67,554 98,355 Provision for judicial demands 1 1,629 Impairment of trade receivables 4,34 5,041 Granted options recognized Other (3,78) (227) 430, ,906 Variations in: Trade and other receivables 2,629 18,754 Inventories 5,38 2,004 Trade payables 15,458 (33) Recoverable taxes (56,796) (6,637) Provisions and profit sharing (34,229) (35,927) Other (3,545) (262) (71,103) (54,674) Net cash provided by operating activities 359,02 327,232 Cash flows from investing activities Additions to intangible assets (97,201) (68,72) Marketable securities 113,477 21,767 Cash received in the sale of other permanent assets 1,123 - Cash provided by (used) in investing activities 17,399 (46,953) Cash flows from financing activities Proceeds from new loans, borrowings and debentures 12-9,009 Payments of principal on loans, borrowings and debentures 12 (499,397) (118,002) Payments of interest on loans, borrowings and debentures 12 (25,401) (35,896) Derivative financial instruments 74,708 4,331 Dividends and interest on capital paid (169,164) (421,568) Net cash used in financing activities (619,254) (562,126) Decrease in cash and cash equivalents (242,835) (281,847) 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 1,484,686 1,826,489 Additional information: Income tax and social contribution paid 42,243 70,774 The accompanying notes are an integral part of these interim financial statements. 9

10 Statement of value added March 31, 2018 and 2017 (In thousands of Brazilian Reais - R$) Note March 31, 2018 March 31, 2017 Revenue Sale of gas 1,751,772 1,367,542 Other operating income 16 13,533 Provision for impairment of trade receivables (4,34) (5,041) Construction revenue 89,493 56,327 Other expenses (253) (581) 1,852,672 1,431,780 Cost and expenses Cost of gas and transportation (1,118,691) (837,663) Cost of sales and services (6) (4,133) Construction costs (89) (56,327) Materials, services and other expenses (51) (45,901) (1,265,481) (944,024) Gross value added 587, ,756 Retention Amortization 11 (87,076) (102,408) (87,076) (102,408) Net value added generated by the Company 500, ,348 Value added received through transfer Financial income 50,685 91,262 50,685 91,262 Total value added to distribute 550,8 476,61 Distribution of value added Personnel and social charges 35,414 36,199 Remuneration 24,196 23,7 Benefits 8,011 8,197 FGTS 3,207 3,076 Other - 1,226 Taxes and contributions 260, ,464 Federal 151, ,481 State 102,939 72,131 Municipalities 5,66 6,852 Finance costs and rentals 75, ,303 Interest 54, ,169 Rents 3,476 3,617 Other 17,802 24,517 Remuneration of shareholder s equity 179, ,644 Profit retention 179, , ,8 476,61 The accompanying notes are an integral part of these interim financial statements 10

11 Notes to the interim financial statements (In thousands of Brazilian Reais - R$) 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 listed on the São Paulo Stock Exchange (B3). The Company is a direct subsidiary of Cosan S.A. Indústria e Comércio, which holds 79.87% 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. 11

12 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 the administration in the company s management. The issuance of these interim financial statements was approved by the Board of Directors on May 2, 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: Impact on the balance sheets (increase / (decrease)) on January 1, 2018: Assets Trade accounts receivable (9,637) Liabilities Deferred income and social contribution taxes 3,277 Shareholder s equity Profit retention 6,360 12

13 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 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 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. 13

14 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 profit and loss. However, according to IFRS 9, the gains and losses resulting from cash flow hedge of the expected purchases of non-financial 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. 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 14

15 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 consequence, the Company does not adjust any of the transaction prices for amount of money in time. 3.2 Cash flow - transactions that did not involve cash (i) (i) (ii) (i) Transactions that do not involve cash During the period ended March 31, 2018, the Company carried out the following transactions that did not involve cash and not reflected in the statement of cash flows: Acquisitions of assets for the construction of the distribution network with deferred payment of amount R$ 14,734. Interest rate 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: 15

16 Margin per segment January 1, 2018 to March 31, 2018 Segments Residential Commercial Industrial Cogeneration Automotive Construction revenues Other revenues Total Volume (thousands of m³) 56,117 35, ,792 70,991 47, ,071,736 Gross revenue 250, ,553 1,240,653 73,034 72,864 89,493 16,000 1,850,336 Deductions (60,544) (26,003) (298,773) (14,358) (17,669) - (2,113) (419,460) Net revenue 190,195 81, ,880 58,676 55,195 89,493 13,887 1,430,876 Regulatory assets (liabilities) 4,423 2,771 64,936 3,409 (6,955) - (5,579) 63,005 Cost (45,104) (28,805) (690,220) (47,231) (38,628) (89,493) (2,951) (942,432) Economic gross profit 149,514 55, ,596 14,854 9,612-5, ,449 Reversal of regulatory assets (63,005) Gross profit 488,444 Selling expenses (36,292) General and administrative expenses (164,466) Other operating (income) (253) Operating expenses, net (201,011) Finance expense (78,801) Finance income 55,270 Foreign exchange gain 5,415 Derivatives (3,513) Financial result, net (21,629) Profit before taxes 265,804 Provision for income tax and social contribution (86,711) Profit for the period 179,093 Reconciliation of EBITDA Profit for the period 179,093 Provision for income tax and social contribution 86,711 Financial result 21,629 Amortization 87,076 Other amortization (139) EBITDA 374,370 16

17 Margin per segment January 1, 2017 to March 31, 2017 Segments Residential Commercial Industrial Cogeneration Automotive Construction revenues Other revenues Total Volume (thousands of m³) 47,440 32, ,254 67,886 48, ,008,246 Gross revenue 192,328 85, ,727 55,821 65,088 56,327 13,534 1,432,579 Deductions (40,843) (18,075) (203,464) (8,098) (13,832) - (2,001) (286,313) Net revenue 151,485 67, ,263 47,723 51,256 56,327 11,533 1,146,266 Regulatory assets (liabilities) 4,305 2,941 72,663 3,582 (9,940) - (2,694) 70,857 Cost (31,354) (21,510) (536,975) (37,862) (31,871) (56,327) (4,220) (720,119) Economic gross profit 124,436 49, ,951 13,443 9,445-4, ,004 Reversal of regulatory assets (70,857) - Gross profit 426,147 Selling expenses (34,220) General and administrative expenses (180,200) Other operating (income) (581) Operating expenses, net (215,001) Finance expense (139,025) Finance income 97,779 Foreign exchange gain 28,714 Derivatives (28,892) Financial result, net (41,424) Profit before taxes 169,722 Provision for income tax and social contribution (66,078) Profit for the period 103,644 Reconciliation of EBITDA Profit for the period 103,644 Provision for income tax and social contribution 66,078 Financial result 41,424 Amortization 102,408 Other amortization (139) EBITDA 313,415 17

18 5 Cash and cash equivalents Cash and bank deposits 17,275 30,618 Financial Investments 1,467,411 1,696,903 1,484,686 1,727,521 Financial investments are as follows: Investment Funds Compromised operations 1,027,072 1,071,636 Certificate of bank deposits 84, ,461 1,111,831 1,346,097 Applications in banks Certificate of bank deposits 355, , , ,806 Financial investments 1,467,411 1,696,903 6 Marketable securities Government securities 377, , , ,544 Investments in government securities are made 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. 7 Trade receivables The composition of trade accounts receivable is as follows: Receivables from gas 313, ,844 Receivable from sale of equipment 8,961 9,466 Financing marketing program 30,336 29, , ,748 Adjustments to present value (2,048) (2,184) Unbilled revenue (i) 388, ,026 Other 13,225 14,735 Allowance for doubtful accounts (118,520) (112,643) 634, ,682 Current 607, ,976 Non-current 26,696 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. 18

19 8 Other taxes recoverable Value-added Tax on Sales and Services (ICMS) 73,372 67,797 Social Integration Program ( PIS ) 3,559 3,511 Contribution Financing of Social Security (COFINS) 16,391 16,174 Other ,190 88,207 Current 83,493 77,109 Non-Current 10,697 11,098 9 Related parties a. Receivable and payment with related parties: Current assets Commercial operations Raízen Combustíveis S.A. (i) 1,247 1,039 1,247 1,039 Current liabilities Commercial operations Raízen Energia S.A. (ii) 5,622 8,370 b. Summary of transactions with related parties: 5,622 8,370 Operation income Raízen Combustíveis S.A. (i) 3,290 2,773 3,290 2,773 Income (expense) Raízen Energia S.A. (ii) (5,730) (11,429) (5,730) (11,429) (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. 19

20 c. Management and director s remuneration The remuneration of management, responsible for the planning, management and control of the Company s activities, includes members of the Board of Directors and statutory directors, is a follows: Short-term benefits 3,945 3,789 Post-employment benefits 4 65 Other long-term benefits Share-based compensation Transportation not used 4,190 3,984 Transportation not used 286, ,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 Computer software and other Intangible assets in progress Total Cost December 31, ,149,529 1,130, , ,528 7,773,527 Additions , ,935 Disposals (18,002) (1,796) - - (19,798) Transfers 107,186 13,041 6,837 (127,064) - March 31, ,238,713 1,141, , ,399 7,865,664 Amortization December 31, 2017 (1,926,778) (976,490) (229,384) - (3,132,652) Additions (58,591) (23,124) (5,361) - (87,076) Disposals 12,892 1, ,395 March 31, 2018 (1,972,477) (998,111) (234,745) - (3,205,333) December 31, ,222, ,787 62, ,528 4,640,875 March 31, ,266, ,411 64, ,399 4,660,331 The amounts recognized as "Intangible assets" represent the cost value of assets constructed or purchased of rendering concession services, net of amortization. 20

21 Interest on construction in progress During the exercise ended March 31, 2018, the Company capitalized the amount of R $ 2,123 (March 31, R $ 2,136) 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 8.11% py for the period ended on March 31, 2018 (10.41% py for the period ended on March 31, 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. 12 Loans, financing and debentures Interest Description Index Annual interest Aging Loans and financing BNDES Project VI TJ % 9.62% 443, ,807 October, 20 Project VI SELIC % 8.32% 205, ,222 October, 20 Project VI TJLP 6.80% 1,011 1,243 October, 18 Project VII TJLP % 8.81% 119, ,330 June, 23 Project VII SELIC % 8.49% 67,710 66,794 June, 23 EIB USD % 3.88% 125, ,190 June, 20 USD % 2.94% 58,593 70,611 September, 20 USD + LIBOR6M % 2.14% 138, ,778 May, 21 USD + LIBOR6M % 2,91% 127, ,386 September, 21 Resolution nº USD % 3.05% - 249,916 March, 18 USD % 4.79% - 165,847 February, 18 Total of loans and financing 1,287,384 1,796,124 Debentures 3ª emission - 1ª issue CDI % 7.35% 85,505 87,467 September, 19 3ª emission - 2ª issue IPCA % 8.84% 370, ,894 September, 18 3ª emission - 3ª issue IPCA % 9.33% 203, ,923 September, 20 4ª emission - 1ª issue IPCA % 10.95% 301, ,312 December, 20 4ª emission - 2ª issue IPCA % 11.31% 271, ,701 December, 22 4ª emission - 3ª issue IPCA % 11.18% 89,399 86,927 December, 25 5ª emission - single IPCA % 9.64% 769, ,826 December, 23 6ª emission - single IPCA % 8.04% 405, ,330 October, 24 Total of debentures 2,496,538 2,416,380 Total 3,783,922 4,212,504 Current 919,629 1,264,352 Non-current 2,864,293 2,948,152 As of March 31, 2018 and December 31, 2017, the Company had available unused credit facilities in the amount of R$ 194 million. The use of these lines of credit is subject to certain contractual conditions. 21

22 The carrying amounts of loans, financing and debentures are denominated in the following currencies: Reais (R$) 3,333,405 3,310,776 Dólar (U.S.$) 450, ,728 3,783,922 4,212,504 (i) As of March 31, 2018, all dated debts denominated in US dollars have currency risk protection through derivatives. Note (20). The Company's debt composition is 95.12% post-fixed and 4.88% 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 March 31, 2018, the Company complies with all financial covenants. Net debt 1,533,588 1,516,963 EBITDA (*) 1,578,880 1,517,924 (=) Net debt/ebitda (*) last twelve months Current loans 791,483 1,053,264 Loans total 3,395,381 3,754,028 (=) Current loans/ Loans total b. Changes in loans, financing and debentures: December 31, ,212,504 Payment (524,798) Interest. monetary and exchange rate adjustment 96,216 March 31, ,783, Commitments a. Assets (liabilities) regulatory Cost of gas to be recovered/(transferred) (108,431) (174,090) Credits of taxes to be recovered/(transferred) (53,252) (48,549) Adjustment to present value of taxes 1,798 1,742 Effect on equity (159,885) (220,897) Opening balance as of December 31, 2017 (220,897) (414,011) Closing balance (159,885) (220,897) 22

23 Effect on the result for the period Revenue/(expenses) not recognized in income before taxes 61, ,114 Regulatory assets (liabilities) 67, ,722 Regulatory assets (liabilities) - taxes (4,702) (12,222) 63, ,500 Adjustment (2,048) (26,270) Credits taxes Other taxes - (12,267) 61, ,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 its realization or settlement depends on future consumption by different consumers of the Company. Therefore, the balances presented above are not recognized in the financial statements presented. 14 Trade Payables (i) Natural gas suppliers 1,637,466 1,563,930 Material and services 125, ,881 Judicial deposits (i) (294,976) (294,976) 1,467,788 1,444,835 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 $ 864,745 (R$ 859,627 on December 31 of 2017). 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: March 31, 2018 March 31, 2017 Profit before income tax and social contribution 265, ,722 Income tax and social contribution - nominal rate (34%) (90,373) (57,705) Adjustments to determine the effective rate Permanent differences (942) (4,259) Other 4,604 (4,114) Expenses with income and social contribution taxes (current and deferred) (86,711) (66,078) Effective rate - % 32.62% 38.93% 23

24 b. Deferred income tax and social contribution Active differences Provision for legal proceedings 34,796 33,863 Goodwill on incorporation 14,069 56,276 Post-employment benefit obligation (i) 151, ,881 Regulatory current account 63,888 65,318 Share-based payment transactions Temporary differences about provisions and other obligations 108, ,490 Not realized result with derivatives (ii) - 1,513 Other 1,163 1,252 Deferred taxes 373, ,884 Passive differences Useful life review (305,278) (312,113) Exchange variation - loans and financing - (6,138) Temporary differences (8,197) (8,681) Result with derivatives (ii) (105,009) - Other (7,009) (5,800) Deferred tax liabilities (425,493) (332,732) Total deferred taxes (51,535) 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 regime of foreign exchange taxation of loans and financing by competence for fiscal year The IR / CS differed on the unrealized gains and losses on performance with the derivatives began to present the deferred tax liability balance. They were 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 (145,964) Deferred income taxes on comprehensive income 3,277 March 31, 2018 (51,535) 16 Provision for judicial demands Judicial demands Judicial deposits March 31, 2018 December 31,2017 Tax 8,105 16,840 20,594 23,640 Civil, environmental and regulatory 39,868 30,381 20,254 16,620 Labor 62,408 60,416 12,664 13, , ,637 53,512 53,580 24

25 Movement of judicial demands: Tax Civil, environmental and regulatory Labor Total December 31, ,840 30,381 60, ,637 Additions Reversal - (27) (413) (440) Interest (i) ,579 2,260 Transfers (8,906) 8, March 31, ,105 39,868 62, ,381 (i) Includes write-down of interest on reversal. Contingencies - Lawsuits considered as possible loss, therefore not provisioned Tax 1,059,017 1,009,547 Civil, environmental and regulatory 154, ,241 Labor 37,219 34,239 1,250,492 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 ICMS 45,611 45,332 IRPJ / CSSL 704, ,164 Federal tax 261, ,825 Other 46,885 44, Shareholder s equity 1,059,017 1,009,547 a. Share Capital The Company is authorized to increase the share capital up to the limit of R$ 1,481,205 million 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. 25

26 The capital stock is represented by 101,917,264 (one hundred and one million, nine hundred and seventeen thousand, two hundred and sixty-four) common shares with no par value and fully paid-up and 28,121,015 (twenty-eight million, one hundred and twenty-one thousand And fifteen) class A preferred shares, and their composition is as follows: Common shares Percentage Number of share - thousand in March 31, 2018 Preferred shares Percentage Total Percentage Stockholders Cosan S A Indústria e Comércio 99, , , Alaska Poland FIA BDR Nivel , , Norges Bank 1-1, , Utilico Emerging Markets Limited - - 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, , , , , , b. Interest on capital On December 20, 2017, the Board of Directors approved the credit of interest on capital for the year 2017, in the amount of R $ 169,197. The amount of R$ 169,164 was paid on January 05 and 08, Earnings per share The following table sets the calculation of earnings per share for the periods ended March 31, 2018 and 2017 (in thousands, except per share amounts): March 31, 2018 March 31, 2017 Numerator Results of the period attributed to controlling shareholders 179, ,644 Common shares 137,393 79,511 Preferred shares 41,700 24,133 Denominator (in thousands of shares) Weighted average number of common shares 103, ,473 Weighted average number of preferred shares 28,550 28,550 Earnings per share - R$ Common shares Preferred shares

27 Diluted earnings per share March 31, 2018 March 31, 2017 Numerator Results of the period attributed to controlling shareholders 179, ,644 Common shares 137,241 79,511 Preferred shares 41,852 24,133 Dilutive effect - Compensation based on preferred shares Denominator (in thousands of shares) Weighted average number of common shares 103, ,473 Weighted average number of preferred shares 28,685 28,550 Earnings per share - R$ Common shares Preferred shares Financial results March 31, 2018 March 31, 2017 Cost of gross debt Interest on debt (69,960) (94,520) Adjustment to fair value of debt and derivative (4,374) (3,850) Exchange rate variation on debt 5,415 28,714 Exchange Derivatives (3,513) (28,892) Debt guarantees (7,076) (7,454) (79,508) (106,002) Financial investment income 32,635 66,736 32,635 66,736 Cost of debt, net (46,873) (39,266) Other charges and monetary variations Tax about financial income (2,584) (4,381) Interest on other operations 16,221 23,839 Interest on customers 5,786 5,637 Interest on judicial deposits Interest on transactions payable 17,315 (10,893) Other monetary variations (5,121) (11,834) Interest on contingencies (2,364) (2,230) Bank expenses (4,454) (3,243) 25,244 (2,158) Financial result, net (21,629) (41,424) Finance expense (78,801) (139,025) Finance income 55,270 97,779 Exchange rate variation 5,415 28,714 Derivatives (3,513) (28,892) Financial result, net (21,629) (41,424) 27

28 20 Financial instruments The Company is exposed to the following risks from its use of financial instruments: Credit risk; Liquidity risk, and Market risk The carrying amounts of financial assets and liabilities are as follows: Assets Fair value through profit or loss Financial investments 1,111,831 1,346,097 Derivate financial instruments 388, ,476 Marketable securities 377, ,544 1,877,479 2,314,117 Amortized cost Cash and cash equivalents 372, ,424 Trade receivables 634, ,682 Receivable related parties 1,247 1,039 1,008,115 1,023,145 Total assets 2,885,594 3,337,262 Liabilities Amortized cost Loans, financing and debentures (1,975,640) (2,007,058) Trade payables (1,467,788) (1,444,835) Other financial liabilities (29,195) (51,403) Dividends and interest on own capital payable (923) (147,235) Payment of tax debts (7,255) (7,294) Payable related parties (5,622) (8,370) (3,486,423) (3,666,195) Fair value through profit or loss Loans, financing and debentures (1,808,282) (2,205,446) (1,808,282) (2,205,446) Total liabilities (5,294,705) (5,871,641) During the period, there was no reclassification between categories, the fair value through the result and amortized cost 28

29 Structure of financial risk management At March 31, 2018 and December 31, 2017, fair values related to transactions involving derivative financial instruments to protect the Company's exposure to risk were using observable data, such as quoted prices in active markets or discounted flows based on curves of and are presented below: Notional (i) Fair value Interest rate and exchange rate risk Exchange lock Swap agreements (interest rate) 1,146,948 1,146, , ,257 Swap agreements (interest rate and exchange) 231, , , ,219 1,378,375 1,730, , ,476 Total financial instruments 388, ,476 (i) Amounts equivalent the notional value in US dollars converted to R$ by contracting day dollar rate. Credit risk On March 31, 2018 the Company had the following main credit risk exposure: Cash and cash equivalents (i) 1,484,686 1,727,521 Marketable securities (i) 377, ,544 Trade receivables (ii) 634, ,682 Derivative financial instruments (i) 388, ,476 Receivable related parties 1,247 1,039 2,885,594 3,337,262 (i) The Cash and cash equivalents, marketable securities and derivative financial instruments are held with banks and financial institutions with credit ratings between AA and AAA. AAA 77,607 86,609 AA 2,172,727 2,608,932 2,250,334 2,695,541 (ii) On March 31, 2018 the Company has a portfolio of approximately 1,824 million customers, residential, commercial, industrial, automotive, cogeneration and thermal cogeneration, there is no concentration of credit in large consumers by volume exceeding 10% of sales thus diluting the risk of default. The Company has no exposure to risk related to transfers of financial assets at the end of the years presented. Liquidity risk Liquidity risk is the risk that the Company may encounter difficulties in complying with the obligations associated with its financial liabilities that are settled with cash payments or with another financial asset. The Company's approach to liquidity management is to ensure, to the maximum extent possible, that there is always sufficient liquidity to meet obligations due under normal and stress conditions without causing unacceptable losses or risks of undermining the Company's reputation. Company. 29

30 As part of liquidity management, Management prepares business plans and monitors their execution, discussing positive and negative cash flow risks and evaluating the availability of financial resources to support its operations, capital expenditures, financial liabilities and distribution of dividends. The table below analyzes the non-derivative financial liabilities of the Company and the derivative financial liabilities by maturity, corresponding to the period remaining in the financial statements up to the contractual date of maturity. The amounts disclosed in the table are the nominal cash flows of payment considering the appropriation of interest until the maturity date. Up to 1 year 1-2 years 3-5 years More than 5 years Total Total Loans, financing and debentures (1,037,346) (763,080) (1,532,758) (1,689,115) (5,022,299) (5,318,184) Derivate financial instruments 132,942 89,487 41, , , ,466 Suppliers (1,467,788) (1,467,788) (1,444,835) Other financial liabilities (29,195) (29,195) (51,403) Dividends and interest on own capital payable (923) (923) (147,235) Payment of tax debts (613) (6,642) - - (7,255) (7,294) Related parties (5,622) (5,622) (8,370) (2,408,545) (680,235) (1,490,897) (1,476,205) (6,055,882) (6,714,855) Market risk Market risk is the risk that changes in market prices - such as exchange rates and interest rates - will affect the Company's earnings or the value of its holdings of financial instruments. The objective of market risk management is to manage and control exposures to market risks within acceptable parameters, while improving the return. Risk of exchange rate On March 31, 2018 and December 31, 2017 the Company had the following net foreign exchange exposure in search results on assets and liabilities denominated in US dollars: Loans and financing (450,515) (901,728) Derivative financial instruments (*) 450, ,728 Foreign exchange exposure, net - - (*) The amounts are equivalent to the notional value in US dollars converted to R$ for dollar rate on March 31,