Capitals – Financial

Costs and expenses

When discounting the effects of amortization and depreciations, costs and expenses for the year were 32.7% higher than in 2015.

Costs and expenses (thousands of R$)

Personnel costs and expenses grew by 43.6% compared to 2015 as a result of an 11.3% increase in total active staff9, especially at Águas de Meriti and at concessions gained in 2016.

Electricity, the Company’s second highest cash consumer, was 3.5% higher year-over-year. However, the variation is lower compared to the growth in this expense from 2014 to 2015 (86.4%). This is the result of investments in efficiency (see “Intellectual capital”) and rate readjustments allowed in 2015. Also during the year, readjustments were authorized at Prolagos (9.2%) and at Águas Guariroba (8.5%), as established in the concession contracts.

Aegea also developed a pilot program at Águas Guariroba to acquire energy on the free market. With this, the concessionaire estimates savings of up to R$9 million over the next five years. Energy acquired will power the pumping system that sends water from the Córrego Guariroba dam to the WTS, an operation that accounts for 46% of the unit’s power consumption. The Company intends to adopt the same practice at Prolagos next year.

Default

The 180-day default rate fell by 1.2% year-over-year; this can be credited to the good performance of commercial actions promoted during the year (see “Population services”).

Operating income and Ebitda

Consolidated operating income in 2016 was R$354.4 million, up by 12.8% in comparison to 2015. Earnings before interest, taxes, depreciation and amortization (Ebitda) totaled R$462.5 million, growing by 14.9% compared to the year before.

Ebitda (R$ thousands)

Net earnings

Aegea’s net earnings in 2016 were R$103.1 million, 10.4% less than in 2015, mostly due to an increase in net financial expenses during the year.

Cash flow

Consolidated cash flow statement (R$ thousands)

Indebtedness

Aegea ended the year with a balance of cash and cash equivalents of R$310.0 million. Gross debt, including hedging, was R$1.8 billion.

Indebtedness is explained by investments made in concessions, especially new concessions. This is a strategy that is based on the Indebtedness Policy and is aimed at accelerating the Company’s growth.

Indebtedness (R$ thousands)

CAPEX (R$ millions)

Debt distribution profile (%)

Debt amortization schedule

Gross debt by index (%)

Value Added Statement (VAS)

R$763.6 million in value was added for the year, 17.2% more than in 2015. Of this amount, 13.5% was distributed to shareholders, with 3.3% as dividends and 10.2% as retained earnings; 21.5% went to employees; and 29.3% went to federal, state and municipal governments through taxes and contributions.

VAS (R$ thousands)