Aegea’s consolidated net revenue in 2015 totaled BRL795.1 million, with variation of 32.6% compared to BRL599.5 million in 2014. This result reflects the 9.5% increase in the customer base: 13.2% in billed volume for the year.
If the effect of amortization is not considered, the Company’s costs and expenses were 28.9% higher, which is BRL87.9 million more than in 2014.
This total can be explained by the higher rates charged by power companies and by the fiscal crisis which impacted the ability of public agencies to make payment. Despite these impacts, growth in total costs and expenses was less than revenue growth, showing gains in productivity.
| 2014 | 2015 | |
|---|---|---|
Personnel |
114,411 | 132,148 |
Outside services |
50,760 | 54,373 |
Conservation and maintenance |
7,041 | 8,976 |
Materials, equipment and vehicles |
18,260 | 19,891 |
Cost of concession |
5,626 | 16,584 |
Electricity |
46,629 | 86,909 |
Chemical products |
4,296 | 5,884 |
Travel and lodging |
5,224 | 4,792 |
Provision for doubtful debts |
6,405 | 29,481 |
Provisions for contingency |
157 | (5,133) |
Research and development of new business (R&D) |
17,924 | 9,013 |
Other costs |
27,842 | 29,603 |
| Subtotal | 304,576 | 392,522 |
Amortization |
56,157 | 88,315 |
| Total | 360,733 | 480,837 |
Energy costs grew significantly during the year, by around 86.4%. Of this amount, 14.6% is attributed to new companies and 71.8% to existing concessionaires, such as Águas Guariroba and Prolagos, due to an extraordinary price readjustment made by Brazil’s National Electric Energy Agency (Aneel), and to Águas de Matão, which achieved universal coverage of the concession area.
In relation to personnel costs, the staff at existing concessionaires was 4.6% smaller, with 105 fewer workers than the previous year. The result shows process improvements and more operational efficiency, especially with the expansion of Aegea Academy (learn more), aimed at enhancing skills at the strategic, tactical and operational levels and assure application of the Company’s Values in every phase of concession maturity.
The 180-day default rate was 1.1% higher year-over-year in 2015. This increase can be credited to the government consumption category, which had higher share percentages in default, going from 14.9% in 2014 to 30.5% in 2015. Moreover, Aegea has monitored the national economic scenario, particularly numbers on jobs, earnings and consumer buying power and its impacts on its users’ capacity to make payment, especially its government customers. In order to bring these numbers down, the Company has intensified campaigns to encourage renegotiations of accounts past due, up by 16% year-over-year, and enrollment in automatic bill pay.
Consolidated operating income for the year was BRL314 million, which represents year-over-year growth of 31.6%. Ebitda totaled BRL402 million, 36.5% higher than in 2014. This result was due to gains in efficiency, which contributed to lower personnel costs (see Costs and expenses).
| Ebitda (BRL thousands) | 2014 | 2015 |
|---|---|---|
| Operating income | 238.778 | 314.289 |
| (+) Depreciation and amortization | 56.157 | 88.315 |
| Ebitda | 294,935 | 402,604 |
| Ebitda margin (%) | 49.2 | 50.6 |
Aegea’s net earnings in 2015 were BRL115.156 million, a 2.6% increase compared to the previous year. This performance shows the ratio between the increased customer base and lower operating expenses. It was not more elastic due to an increase in the cost of electricity that was above the Company’s projections.
| Cash flow from operating activities | 2013 | 2014 | 2015 |
|---|---|---|---|
| Earnings before taxes | 69,015 | 50,813 | (34,471) |
| Adjustments for: | |||
| Amortization and depreciation | 47 | 2,132 | 2,162 |
| Interest on loans, financing and debentures | 27,900 | 32,384 | 25,122 |
| Fair value adjustments to loans and financing | 0 | 0 | 5,662 |
| Exchange rate loss | 0 | 0 | 41,898 |
| Derivatives | 0 | 0 | (34,869) |
| Interest on financial investments | (15,009) | (23,537) | (23,560) |
| Result of equity accounting | (132,339) | (130,626) | (147,968) |
| Changes in assets and liabilities (Increase)/Decrease of assets | |||
| Customer accounts receivable | (26,216) | (58,659) | (58,203) |
| Inventories | (2,622) | 934 | (1,558) |
| Current and noncurrent fiscal assets | 12,166 | (17,130) | (12,222) |
| Advances to suppliers | 0 | (4,729) | (7,640) |
| Other credits | (10,284) | (843) | (20,383) |
| Increase/(Decrease) of liabilities | |||
| Suppliers and contractors | (5,806) | 31,287 | 16,590 |
| Labor and social obligations | 2,571 | 8,912 | 6,082 |
| Tax obligations | (2,857) | 8,080 | (3,223) |
| Tax payments | (3,148) | (1,661) | 452 |
| Payment of contingencies | (129) | (500) | (4,080) |
| Other accounts payable | (70,547) | 1,963 | (18,292) |
| Interest paid | (76,822) | (98,487) | (131,274) |
| Income tax and social contribution paid | (48,179) | (43,842) | (72,197) |
| Cash flows from investment activities | |||
| Financial investments and debentures | (273,352) | 48,716 | 191,932 |
| Dividends and interest received on shareholders’ equity | 0 | 1,000 | 1,570 |
| Investment losses | 0 | 173 | 0 |
| Acquisition of fixed assets | (14,030) | (8,566) | (3,177) |
| Acquisition of intangible assets | (175,848) | (386,822) | (338,668) |
| Advance for acquisition of business | 0 | (12,500) | 0 |
| Acquisition of the Agência Ambiental controlled company, net cash obtained in the acquisition | 0 | (29,788) | 0 |
| Cash flows from financing activities | |||
| Loans, financing and debentures raised | 185,067 | 7,000 | 150,000 |
| Loans, financing and debentures paid | (185,585) | (350) | 157,936 |
| Current accounts receivable from related parties | (26,087) | (41,536) | (70,352) |
| Dividends paid | (86,000) | (86,000) | (123,820) |
| Capital investments by minority shareholders in controlled companies | 287,775 | 0 | 0 |
| Net increase (decrease) in cash and cash equivalents | (14,908) | (3,894) | 5,012 |
| Initial Balance of Cash and Cash Equivalents | 18,933 | 4,025 | 131 |
| Final Balance of Cash and Cash Equivalents | 4,025 | 131 | 5,143 |
The balance of cash and cash equivalents and short and long-term financial investments ended the year at a total of BRL395.8 million. Gross debt (including hedging) for the same period was BRL1.6 billion.
| 2014 | 2015 | (%) | |
|---|---|---|---|
| Ebitda | 294,935 | 402,604 | 36.5 |
| Net debt | 815,756 | 1,170,578 | 43.5 |
| (+) Gross debt (including hedging) | 1,343,463 | 1,566,361 | 16.6 |
| (-) Cash | (527,707) | (395,783) | -25.0 |
| Net debt/Ebitda | 2.77 | 2.91 |
Reduced cash flow is the result of an accelerated curve of capital expenses (CAPEX), the outcome of which is a lower financial yield than in 2014.
