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Divulgação de Resultados 2010
25 de março de 2011 Pág. 1 de 1
E-
Complete Annual Financial Statements
Management Report and Statements - Article 25 (ICVM 480)
Independent Auditor’s Report
Financial Statements for the years ended
December 31, 2014 and December 31, 2013
Fiscal Council’s Report
Capital Budget Proposal
Arteris S.A.
Message from the CEO
Record investments of R$1.9 billion in 2014 shows just how important the year was for Arteris, an achievement that was only possible thanks to the quality of our teams, the efficient management of available resources and our transparent and productive relations with the regulatory authorities.
The year was marked by important deliveries, including the remodeling of the Ribeirão Preto interchange, which was concluded 16 months ahead of schedule, as well as advances on other important work fronts, such as the execution of the new contractual addenda. The ANTT (National Ground Transport Agency) authorized expenditure of an additional R$395 million on works to improve service and ensure compliance with environmental strictures at Serra do Cafezal. The Company also received authorization to invest R$91 million in duplicating the SP-318. These achievements reflect the maintenance of a relationship policy in regard to the granting authority that contributes to the development of Brazil’s infrastructure.
The record investments were applied in a sustainable manner, without jeopardizing the balance of the Company’s accounts. Net income totaled R$457 million and gross revenue came to R$2.4 billion, while EBITDA stood at R$1.4 billion, 10% up on 2013. Even in a year of low GDP growth, the volume of tolled vehicles increased by 1.3%, underlining the diversification of our 3,250 km highway network, the resilience of the businesses and the Company’s ability to cope with economically adverse and challenging times.
Throughout 2014, Arteris became increasingly committed to administrative excellence, resulting in efficiency and productivity gains. The market’s recognition of our strategy and management pillars was reflected in our successful debenture issue, which raised R$1.3 billion to be allocated to investments.
We also remained focused on operational excellence, exemplified by a series of initiatives to improve the safety of our employees and users. We held the 1st Arteris Safety Month, a pioneer initiative in Brazil’s concession industry, which allowed us to raise the awareness of 840,000 people in September.
The year was also important for our achievements on the corporate social responsibility front. The School Project, a traffic education initiative, was successfully implemented in the federal concessionaires and we sponsored a Salvador Dalí exhibition, which attracted more than 1.5 million visitors in Rio de Janeiro and São Paulo.
Arteris will maintain its long-term vision for Brazil in 2015. Our efforts will be concentrated on investing R$2.1 billion in further works, resulting in the duplication and modernization of new stretches and increased user safety and comfort. With this in mind, we can count on the commitment of our 6,500 employees, who have already demonstrated their focus on results and their pride in working for Arteris. These are the foundations on which we wish to conduct our business, generating value for
society and our shareholders and making a substantial contribution to the development of the infrastructure needed for Brazil’s sustainable growth.
David Díaz
CEO
MANAGEMENT REPORT
In compliance with the prevailing legislation and its Bylaws, the Management of Arteris S.A.
(“Arteris” or “Company”) hereby submits its report for the fiscal year ended December 31, 2014
for the appreciation of its investors and the market in general.
Profile
Arteris plays an important role in Brazil’s highway infrastructure sector, being responsible for
improving, extending, maintaining and managing toll roads under the concession programs of
the federal and São Paulo state governments.
Through its concessionaires, Arteris operates and manages 3,250 km of highways within the
country’s main economic center, comprising the states of São Paulo, Minas Gerais, Paraná, Rio
de Janeiro and Santa Catarina, which are also characterized by their high population density.
The group has nine concessionaires (four state and five federal), all of which are publicly-held
companies and wholly-owned subsidiaries of Arteris – Autovias S.A. (Autovias), Centrovias
Sistemas Rodoviários S.A. (Centrovias), Concessionária de Rodovias do Interior Paulista S.A.
(Intervias), Vianorte S.A. (Vianorte), Autopista Fernão Dias S.A. (Fernão Dias), Autopista
Fluminense S.A. (Fluminense), Autopista Litoral Sul S.A. (Litoral Sul), Autopista Planalto Sul
S.A. (Planalto Sul) and Autopista Régis Bittencourt S.A. (Régis Bittencourt).
The Company also owns 100% of Latina Manutenção de Rodovias Ltda. (Latina Manutenção)
and Latina Sinalização de Rodovias Ltda. (Latina Sinalização), which are responsible for
highway inspections, works management and maintenance, and retains a 4.68% interest in STP
– Serviços e Tecnologia de Pagamentos S.A., which pursues activities related to the electronic
toll collection system.
Economic Scenario
Arteris and the results of its business are directly affected by the overall state of Brazil’s
economy, especially in regard to inflation, interest and exchange rates, government policies, tax
policies and GDP growth.
In 2014, Brazil’s economic performance was below market expectations. Although GDP growth
is expected to be positive, it will almost certainly be far below the beginning-of-year projection.
The Brazilian Central Bank estimates growth of 0.1% in 2014, below the initial forecast of 2.0%.
As a result of the domestic and international economic scenario, the Central Bank’s Monetary
Policy Committee (Copom) increased the Selic base rate from 10.50% to 11.75% along the year
as part of the government’s efforts to control inflation, as detailed below.
Inflation measured by the IGP-M general market price index fell from 5.5% in 2013 to 3.7% in
2014, while the extended consumer price index (IPCA) moved up from 5.9% to 6.4% in the
same period. These indices influence the inflationary-economic environment and the IPCA is
used to calculate the adjustment of group concessionaires’ toll tariffs, thus directly affecting the
Company’s toll revenue.
Material Events
Minimum Percentage of Outstanding Shares
In May 2014, Arteris informed the market of the conclusion of a corporate restructuring involving the shareholder Brookfield Aylesbury S.A.R.L., through which the latter’s interest in the Company qualifies as an integral part of its free float, thereby complying with the Minimum Percentage of Outstanding Shares, as defined in the Novo Mercado Listing Rules. The corporate restructuring included the segregation of Brookfield Aylesbury S.A.R.L.’s interest through (i) the creation of a new holding company, Aylesbury Motorways Brazil Holdings SRL, 41% of whose capital stock is held by BIP Bermuda Holdings I Limited, a Brookfield Infrastructure Group company, and 59% by two subsidiaries of British Columbia Investment Management Corporation, an independent Canadian institutional investor; and (ii) the transfer of all the shares issued by Brookfield Aylesbury S.A.R.L. to Aylesbury Motorways Brazil Holdings SRL. As a result, the Company’s free float is approximately 30.739685% of its capital stock, equivalent to 105,881,135 common shares.
Inclusion of new Investments
Autovias: In September 2014, Concessionária Autovias S.A., a Company subsidiary, agreed
with the São Paulo State Public Transportation Services Regulatory Agency (ARTESP) to
include a new project in the concession agreement – the duplication of 14 kilometers of the SP-
318 involving estimated investments of R$91 million. Thanks to the inclusion of this project, the
concessionaire obtained a six-month extension to the concession, which will now terminate in
May 2019.
Autopista Régis Bittencourt: In December 2014, the ANTT authorized the inclusion of an
additional R$395 million in the concession agreement to be allocated to the duplication of the
Serra do Cafezal. The undertaking, located on the BR-116/SP between the municipalities of
Juquitiba and Miracatu, involves the duplication of 30.5 kilometers between km 336.7 and km
367.2, including the construction of 34 overpasses and four tunnels. The concessionaire will be
compensated by the addition of R$0.20929 to the Basic Toll Tariff (TBP), at June 2007 values,
to be introduced gradually over three years, the first addition, corresponding to 30% of this
amount, occurring on December 29, 2014, the second, equivalent to 35% of the total, on
December 29, 2015 and the remainder on December 29, 2016.
Autopista Fluminense: In January 2015, the ANTT authorized an 11.65% increase in the toll
tariff. This percentage, which was above period inflation, was the result of including various
highway improvement works which will be implemented in the coming years, totaling
investments of around R$100 million at today’s values. They include the installation of
pedestrian overpasses, bus stops, new interchanges and devices, and fixed weighing
machines, as well as improvements to critical points.
Term of Adjustment of Conduct (“TAC”):
In October 2014, the subsidiary concessionaires Autopista Régis Bittencourt S.A., Autopista
Litoral Sul S.A., Autopista Fernão Dias S.A. and Autopista Fluminense S.A. entered into Terms
of Adjustment of Conduct (“TACs”) with the National Ground Transportation Agency (ANTT), as
a result of administrative proceedings sanctioning possible non-compliances instituted by the
ANTT between the beginning of the concessions and September 22, 2014.
As a result of these terms, the concessionaires will invest the equivalent of R$141.3 million in new works not provided for in the original concession agreements, involving improvements and ensuring greater safety and comfort for users, this amount to be distributed in accordance with the table below:
Economic and Financial Performance
Gross Service Revenue
Arteris recorded gross revenue of R$4.2 billion in 2014, 17.6% up on 2013, fueled by the 5.7%
improvement in toll revenue to R$2.4 billion, the 39.6% upturn in construction revenue to R$1.8
billion, thanks to the acceleration of the federal highway investment plan, and the 9.8% increase
in other revenue to R$47.1 million.
Breakdown of Gross Service Revenue
2014 2013
Toll Plaza Revenue
The combination of higher average consolidated tariffs (+4.4%) and total tolled traffic growth
(+1.3%) in relation to 2013, were responsible for the 5.7% improvement in toll revenue to R$2.4
billion in 2014.
The state concessions accounted for 58% of the total, moving up by 6.0% over 2013 to R$1.4
billion, while the federal highways recorded a 5.3% improvement to R$1 billion.
Breakdown of Toll Revenue
2014 2013
Tolled Traffic: The Company’s tolled traffic volume came to 726,295 thousand vehicle
equivalents in 2014, 1.3% up on 2013.
The annual upturn in tolled traffic volume in a year of economic stagnation for the country as a
whole demonstrated the sector’s resilience in times of low growth, basically due to the profile of
Brazil’s transport industry, marked by logistics bottlenecks, a concentration on highway
transport and toll road concessions with better conditions than the public system. On the other
hand, the Company and the sector have experienced greater expansion in the past and there
was a slowdown in terms of volume throughout last year in line with Brazil’s macroeconomic
situation.
This trend becomes apparent if we analyze tolled traffic growth in terms of light and heavy
vehicles. While light vehicles recorded growth during virtually the entire year, still fueled by
household income levels and low unemployment, heavy vehicles were impacted by the
shrinkage in industrial activity, especially in the auto sector, as well as the effects of the World
Cup, and suffered successive declines throughout 2014.
Also in relation to heavy vehicles, the non-recurring growth of the state highways in the first half
was due to the charging of air lift axles* as of July 2013. In the second half, when vehicle
equivalent volume could once again be compared under equal conditions with the same period
the year before, the decline in the total number of trucks became clear. In the case of the
federal segment, those highways with the worst performance were precisely those whose
transported cargo profile was directly related to industrial GDP, notably Autopista Régis
Bitencourt and Rodovia Fernão Dias.
In the specific cases of Planalto Sul (+5.2% in the annual comparison) and Litoral Sul (+3.4%),
the former benefited in the third quarter from vehicles from parallel highways with stretches that
were blocked due to heavy rainfall in the region, while the latter posted non-recurring growth in
the second half due to the reopening, on June 20, of a toll plaza that had been transferred to
another location at the request of the ANTT.
* Since July 2013, in order to mitigate the 2013 tariff freeze on the São Paulo highways, the state government authorized the collection of a charge on heavy vehicle air lift axles, which has contributed to an increase in total vehicle volume in the state concessions.
Vehicle-Equivalents (Thousand) 2014 2013 Var%
State Concessions 213.097 206.864 3,0%
Autovias 48.939 47.422 3,2%
Centrovias 58.336 56.233 3,7%
Intervias 66.937 65.479 2,2%
Vianorte 38.885 37.729 3,1%
Federal Concessions 513.198 510.233 0,6%
Planalto Sul 30.185 28.704 5,2%
Fluminense 48.653 48.422 0,5%
Fernão Dias 164.275 165.213 -0,6%
Régis Bittencourt 148.263 150.105 -1,2%
Litoral Sul 121.823 117.787 3,4%
Total 726.295 717.096 1,3%
In terms of composition, 63.1% of 2014 tolled traffic in the state concessions (measured in
vehicle equivalents) consisted of heavy vehicles and 36.9% of light vehicles, with respective
ratios of 73.3% and 26.7% in the federal concessions.
Average Tariff: The following table shows average tariff trends in each of the concessionaires
on a consolidated and same-comparison basis:
In 2014, the average consolidated tariff of Arteris’ concessionaires was R$3.35, 4.4% up on
2013.
After a period in which the tariffs of the state concessions remained unchanged (there was no
annual increase in 2013 in compliance with an order from the São Paulo State Government), a
tariff adjustment for all state concessions was authorized on July 1, 2014. The granting
authority, via ARTESP, unilaterally imposed tariff adjustments for each concessionaire based
on the results of the air lift axle charges, in accordance with studies developed by ARTESP.
This was the reason for the different tariff percentage between the state concessionaires in the
comparison between 2013 and 2014.
The Company disagreed with the calculations and methodology adopted by ARTESP for
defining the 2014 tariffs and took all the necessary measures to ensure its rights and
compliance with the concession agreements. As a result, on September 18, 2014, Centrovias
was granted an injunction by the São Paulo State Court of Appeals authorizing the full
adjustment of its toll tariff (6.37%, versus the authorized 5.04%) and the other state
concessionaires are seeking a similar decision from the court. Consequently, the state
concessions’ average consolidated tariff came to R$6.66 in 2014, 2.9% higher than in 2013.
In both 2013 and 2014, the federal concessionaires were granted the tariff adjustments provided
for in their corresponding concession agreements, i.e. taking into account the accrued variation
in the IPCA inflation index, any economic-financial rebalancing of the contracts and rounding
criteria. Adjustments are made in February of each year for Autopista Fluminense and Litoral
Sul, and in December for Autopista Fernão Dias, Régis Bittencourt and Planalto Sul. The
federal concessions’ average consolidated tariff stood at R$1.97, 4.6% up on 2013.
Average Toll Tariff (R$ / Vehicle-Equiv.) 2014 2013 Var%
State Concessions 6,66 6,48 2,9%
Autovias 7,01 6,79 3,3%
Centrovias 6,36 6,17 3,1%
Intervias 5,76 5,62 2,5%
Vianorte 8,25 8,03 2,8%
Federal Concessions 1,97 1,88 4,6%
Planalto Sul 3,81 3,61 5,6%
Fluminense 3,39 3,28 3,3%
Fernão Dias 1,50 1,40 6,9%
Régis Bittencourt 1,80 1,80 0,0%
Litoral Sul 1,79 1,67 7,4%
Total 3,35 3,21 4,4%
At the close of 2014 and beginning of 2015, the ANTT authorized the Company to include in the
calculation of the tariffs that are in effect in the closing days of 2014 and will remain in effect
throughout 2015 additional increases to the full pass-through of inflation in order to remunerate
new investments (contractual amendments) for improvements/adjustments to federal highway
infrastructure to be implemented in the coming years. The new tariffs are shown in the following
table:
Electronic Collection: Revenue from toll plaza electronic payments (AVI System) in the state
concessionaires accounted for 66.4% of total revenue in 2014, versus 64.0% in 2013, while the
average ratio in the federal concessionaires was 52.5% in 2014, compared to 49.2% in 2013.
Construction Revenue
Construction revenue — an accounting representation of the Company’s investments in
intangible assets and therefore with no cash effect — grew by 39.6% over 2013 to R$1.8 billion,
in line with the expanding cycle of ongoing works on the federal highways.
Other Revenue
The “other revenue” line is composed exclusively of ancillary revenue from the exploration/sale
of highway right-of-way services. In 2014, this item came to R$47.1 million, 9.8% up on 2013,
with non-recurring revenue of R$16.9 million from Autopista Fernão Dias from the retroactive
charging (since 2008) for the use of this concessionaire’s right of way by telecommunications
companies (fiber-optic cable).
Net Service Revenue and Deductions from Revenue
Influenced primarily by the upturn in gross toll revenue (+5.7%) and construction revenue
(+39.6%), in addition to the increase in other revenue (+9.8%), the Company recorded total net
revenue of R$4 billion, 19% up on 2013.
Revenue deductions, composed of PIS, COFINS and ISS, totaled R$218.2 million in 2014.
Operating Costs and Expenses
Total costs and expenses came to R$3 billion in 2014, 23.7% more than in 2013. However,
most of the variation came from non-cash items, such as construction costs, which moved up by
R$498.6 million as a result of the Company’s increased investments.
Cash costs totaled R$758 million, 9.9% up on 2013, chiefly due to period inflation, which
impacted personnel costs through the respective collective bargaining agreements for all Group
employees, and the adjustments to outsourced service agreements. The Company also
expanded the scope of its highway operations, through a higher number of user mechanical and
Concessionaries Old Tariff Nrew Tariff Var% Valid from
Autopista Fernão Dias 1,50 1,60 6,7% 19/12/2014
Autopista Planalto Sul 3,80 4,10 7,9% 19/12/2014
Autopista Régis Bittencourt 1,80 2,00 11,1% 29/12/2014
Autopista Fluminense 3,40 3,80 11,8% 02/02/2015
Autopista Litoral Sul 1,80 1,90 5,6% 22/02/2015
medical assistance incidents and the start-up of radar operations, among others, in accordance
with the level of service required by the agreement or as a result of requests from the granting
authority. It is also worth noting the Company’s investments in advertising, marketing and brand
strengthening, in line with its new strategic guidelines in regard to reinforcing its corporate
image, as well as its efforts and initiatives on the social responsibility front. However, these
increases were partially offset by a reduction in the amounts due to the granting authority —
given that the state highways transfer 1.5% of their gross toll revenue to the São Paulo State
Government, versus 3% until July 2013 — and the reduction in management compensation
costs, reflecting changes in the holding company’s administrative structure.
The following table gives a breakdown of operating costs and expenses:
EBITDA and Adjusted EBITDA
Arteris recorded an annual operating result, as measured by EBITDA, of R$1.4 billion, 10.1% up
on 2013, primarily due to the period increase in toll revenue and the reduction in provisions for
highway maintenance. The annual EBITDA margin* came to 60%, 1.8 p.p. up year-on-year.
EBITDA adjusted for provisions for highway maintenance, which have no cash effect, grew by
5.2% to R$1.5 billion, with a margin* of 66.5% (-1.0. p.p.).
* The EBITDA Margin is based on Net Operational Revenue excluding Construction Revenue.
Costs and Services Expenses (R$ Thousand) 2014 2013 Var%
Third Party Services (213.728) (197.894) 8,0%
Personnel (219.012) (211.656) 3,5%
Conservation (104.936) (100.807) 4,1%
Inspection fee (38.773) (36.689) 5,7%
Costs w ith granting authority (22.660) (32.554) -30,4%
Insurance and guarantees (25.028) (21.306) 17,5%
Directors' compensation (19.259) (21.331) -9,7%
Civil, labor and tax risks (9.576) (3.960) 141,8%
Tax expenses (3.755) (3.146) 19,4%
Other operating expenses, net (101.276) (60.462) 67,5%
Subtotal (Cash Costs) (758.003) (689.805) 9,9%
% Cash Costs / Net Revenue (excl. construction) 33,5% 32,6% -1,8 p.p.
Cost of construction services (1.757.447) (1.258.870) 39,6%
Provision for maintenance in highw ays (145.463) (196.030) -25,8%
Depreciation and amortization (344.689) (285.745) 20,6%
Total (3.005.602) (2.430.450) 23,7%
2014 2013 Var%
NET REVENUE 4.018.133 3.377.473 19,0%
Cost and expenses (excl. depreciation and amortization) (2.660.913) (2.144.705) 24,1%
EBITDA ¹ 1.357.220 1.232.768 10,1%
EBITDA Margin* 60,0% 58,2% 1,8 p.p.
(+) Provision for maintenance in highw ays 145.463 196.030 -25,8%
Adjusted EBITDA ² 1.502.683 1.428.798 5,2%
Adjusted EBITDA Margin 66,5% 67,4% -1,0 p.p.
EBITDA
(In thousands of Brazilian reais)
¹ EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization, an operating performance indicator also known by its Portuguese acronym
LAJIDA. EBITDA is not a measure adopted in accounting standards and does not represent cash flow for the periods presented and therefore should not be
considered an alternative to cash flow as an indicator of liquidity. EBITDA does not have a standardized meaning and therefore cannot be compared to the
EBITDA of other companies.
² Includes adjustments related to reversals of the provision for highway maintenance (accounting pronouncement ICPC 01).
The following table shows the calculation of EBITDA and Adjusted EBITDA for the Group’s
companies in 2014:
*Excludes depreciation and amortization.
Financial Result
The 2014 financial result was a net financial expense of R$322.4 million, 16.1% higher than the
net expense of R$277.8 million posted in 2013.
This result was basically due to the following factors:
Group Companies
(R$ Thousand)
Services
Revenue
(A)
Construct
Revenue
(B)
Total (A + B)
Cost of
Services
(A)
Cost of
Construction
Service (B)
Total (A + B) EBITDA
Provision for
highways's
maintenance
Ajusted
EBITDA
Adjusted
EBITDA
M argin*
Autovias 315.166 57.995 373.161 (102.103) (57.995) (160.098) 213.063 38.173 251.236 79,7%
Centrovias 341.251 6.451 347.702 (100.752) (6.451) (107.203) 240.499 38.735 279.234 81,8%
Intervias 356.725 44.798 401.523 (109.299) (44.798) (154.097) 247.426 32.597 280.023 78,5%
Vianorte 295.007 24.466 319.473 (63.573) (24.466) (88.039) 231.434 4.571 236.005 80,0%
State Concessions 1.308.149 133.710 1.441.859 (375.727) (133.710) (509.437) 932.422 114.076 1.046.498 80,0%
Planalto Sul 105.597 197.213 302.810 (66.264) (197.213) (263.477) 39.333 3.464 42.797 40,5%
Fluminense 151.099 332.654 483.753 (83.932) (332.654) (416.586) 67.167 1.190 68.357 45,2%
Fernão Dias 244.255 242.721 486.976 (150.086) (242.721) (392.807) 94.169 14.545 108.714 44,5%
Régis Bittencourt 245.550 435.615 681.165 (123.894) (435.615) (559.509) 121.656 6.117 127.773 52,0%
Litoral Sul 206.036 415.534 621.570 (117.168) (415.534) (532.702) 88.868 6.071 94.939 46,1%
Federal Concessions 952.537 1.623.737 2.576.274 (541.344) (1.623.737) (2.165.081) 411.193 31.387 442.580 46,5%
Total Concessionaires 2.260.686 1.757.447 4.018.133 (917.071) (1.757.447) (2.674.518) 1.343.615 145.463 1.489.078 65,9%
Arteris Holding 0 0 0 2.197 0 2.197 2.197 0 2.197
Constructors 0 488.362 488.362 0 (476.955) (476.955) 11.408 0 11.408
Other companies and eliminations for consolidation 0 (488.362) (488.362) 11.408 476.955 488.363 0 0 0
Total 2.260.686 1.757.447 4.018.133 (903.467) (1.757.447) (2.660.913) 1.357.220 145.463 1.502.683 66,5%
Net Revenue Costs and Expenses*
Financial Result (R$ Thousand) 2014 2013 Var%
Financial Income 127.375 61.061 108,6%
Interest Receivable 4.256 983 333,0%
Financial Investments 122.514 58.468 109,5%
Financial Charges - Reversal of Present Value Adjustments - 71 -100,0%
Other Revenues 605 1.539 -60,7%
Financial Expenses (450.073) (338.824) 32,8%
Financial Charges (383.045) (263.120) 45,6%
Monetary Adjustment of Concession Charges (22.093) (28.505) -22,5%
Financial Charges - Reversal of Present Value Adjustments (26.958) (22.713) 18,7%
Other Expenses (17.977) (24.486) -26,6%
Net Exchange Variation 324 (4) -8200,0%
Financial Result (322.374) (277.767) 16,1%
The 108.6% (R$66.3 million) increase in financial income, due to higher funding in the
year (debenture issues), which led to an increase in the average amount of cash
invested, whose returns are pegged to the CDI rate, which recorded successive upturns
in the period.
The 32.8% (R$111.2 million) increase in financial expenses, chiefly due to higher
financial charges (+44.8% or R$117.9 million) resulting from the increase in the
Company’s leverage in 2014 and the upturn in the gross debt indexing rates (TJLP, CDI
and IPCA).
Net Income
Arteris posted net income of R$456.9 million in 2014, 2% down on 2013 despite period net
revenue and EBITDA growth of 19% and 10.1%, respectively, primarily due to non-cash items
such as the 20.6% increase in amortizations, as well as the R$44.6 million reduction in the net
financial result over 2013, as mentioned above.
The Company’s consolidated income differs from the income booked by Arteris (as the Group’s
parent company), the latter being the basis for calculating the dividends to be distributed to
shareholders. As described in Note 3 to the financial statements, this difference arises from the
fact that the individual statements were prepared in accordance with accounting practices
adopted in Brazil, which, in the case of Arteris S.A., differ from IFRS, which applies to the
individual financial statements only in regard to the assessment of investments in subsidiaries
under the equity method which, for IFRS purposes, are assessed at cost or fair value, and by
the option to maintain the balance of deferred assets on December 31, 2008, which is being
amortized.
Indebtedness
On December 31, 2014, net debt totaled R$4.4 billion, 42.1%, or R$1.3 billion, more than in
2013.
At year-end, net debt represented 3.1 times Adjusted EBITDA less payment of the fixed
concession in the last 12 months.
This R$1.3 billion upturn was mainly due to disbursements of BNDES credit facilities and new
debentures issues, in addition to prepayments of older operations, as detailed below:
BNDES financing: Arteris receives long-term loans from the Brazilian Development Bank
(BNDES) to finance its federal concession investment programs. All five federal concessionaires
Debt
(In thousands of Brazilian reais)12/31/2014 12/31/2013 Var%
Gross Debt 6.052.505 4.124.728 46,7%
Short Term 1.078.249 288.482 273,8%
Long Term 4.974.256 3.836.246 29,7%
Cash Position 1.669.688 1.040.898 60,4%
Cash and equivalents 1.410.451 929.911 51,7%
Restricted investments ¹ 259.237 110.987 133,6%
Net Debt 4.382.817 3.083.830 42,1%
¹ Short and Long Term
have already received approval for long-term financing lines, guaranteeing the funds needed to
implement the main contractual projects before the end of the concession.
Up to December 31, 2014, approximately R$3.2 billion in BNDES funding had been disbursed,
out of the contracted total of R$3.7 billion, leaving R$532 million still available.
Issue of Debentures: The following table summarizes the debentures issued by the Company
and its subsidiaries in 2014:
Gross Debt:
Gross Debt Profile (%)
On December 31, 2014, the Company’s consolidated gross debt (loans and financing plus
debentures) totaled R$6.1 billion, 48% of which corresponding to contracts indexed to the TJLP
(long-term interest rate), 41% indexed to the CDI interbank rate and 12% indexed to the IPCA
inflation rate.
Company Debentures Date of issue Issue ( R # M ill ion) Cost Due Rating Moody's
Centrovias 2nd Issue of Simple Debentures Not Convertible to Shares March - 14 400.000 CDI + 0,99% p.a. June-18 Aa1br*
Intervias 4th Issue of Simple Debentures Not Convertible to Shares/ Serie 1 October - 14 150.000 CDI + 1,10% p.a. October - 19 Aa1.br*
Intervias 4th Issue of Simple Debentures Not Convertible to Shares/ Serie 2 October - 14 225.000 IPCA + 5,96% p.a. October - 19 Aa1.br*
Vianorte 2nd Issue of Simple Debentures Not Convertible to Shares March - 14 150.000 CDI + 0,86% a.a. March - 17 Aa1br*
Fernão Dias 2nd Issue of Simple Debentures Not Convertible to Shares December- 14 100.000 CDI + 1,15% p.a. June-16
Arteris 2nd Issue of Simple Debentures Not Convertible to Shares October - 14 300.000 CDI + 1,28% a.a. October - 19 AA+*
N/A
The Company’s debt amortization schedule is shown below:
Amortization Schedule – (R$ million)
Fixed Concession Fee paid to the Concession Authority
In accordance with our concession contracts, the state concessionaires must pay the
concession authority a fixed fee in exchange for the granting of the concession. In 2014, the
total amount paid was R$71.6 million.
Highway Maintenance
In 2014, the state concessionaires disbursed R$96.6 million as payment for maintenance
carried out on their highways.
It is important to note that the federal highways have not yet effected any maintenance-related
cash disbursements, which are only expected to begin as of 2017.
Investments
The Company executed more works in 2014 than in any other year, with record annual
investments of R$1.7 billion, 39% up on 2013, 85.5% of which allocated to the federal
concessionaires.
The most important construction projects receiving investments in the period are described
below:
Autopista Fluminense: In 2014, the concessionaire maintained the accelerated pace of the
duplication works of the BR 101/RJ highway between the cities of Rio Bonito and Campos dos
Goytacazes, a project that began in 3Q11 after it obtained the construction permit from IBAMA,
Brazil’s environmental protection agency. The project involves 176.6 km of highway, 35.9 km of
which concluded in 2014. Of the remaining 140.7 km, 83.1 km are currently undergoing works.
Two raised interchanges have also been installed and another six are being built.
In October 2012, the Company began works on Avenida do Contorno in the city of Niterói,
which will substantially improve this stretch of the highway by expanding its capacity.
288
810
569 597
395
206 221 237 255 274204
5613
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
288
810
569 597
395
206 221 237 255 274204
5613
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
1.078953
1.175
563 546
288 313 337 362295
10539
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
The company also built two pedestrian overpasses and concluded the structural strengthening
and widening of a bridge.
Autopista Fernão Dias: After having completed the implantation of the 8.1 km Betim Beltway
(MG) in 2013, creating an alternative for long-distance highway traffic, which used to pass
through the city, the concessionaire concluded its main contractual works.
However, other improvements have been implemented on the highway. In 2014, Autopista
Fernão Dias completed the construction of three interchanges, 11 pedestrian overpasses, 24.7
kilometers of side roads and 19 kilometers of auxiliary lanes.
Autopista Régis Bittencourt: The Serra do Cafezal (BR-116/SP) project, the concessionaire’s
main construction work, continues to move ahead. The Company has already concluded and
delivered 17.9 km of the duplication of a total of 30.5 km, including two interchanges. In
December 2014, the ANTT approved the necessary contractual rebalancing for the continuation
of the works, which include the construction of four tunnels (three of which in progress) and 33
bridges and overpasses (11 concluded and 11 in progress).
In 2014, the concessionaire also built four raised interchanges, structurally reinforced and
widened six bridges, built one pedestrian overpass and installed 6.4 km of side roads.
Autopista Planalto Sul: The concessionaire’s main project is the duplication of 25.0 km of the
BR-116/PR between Curitiba (PR) and Mandirituba (PR), whose construction permit has
already been obtained from IBAMA. Of this total, 7.3 km between Curitiba and Fazenda Rio
Grande (PR) have already been concluded and freed for traffic, and the remainder, up to
Mandirituba, is under construction.
In 2014, the concessionaire widened two bridges, constructed two pedestrian overpasses,
made corrections to the course of the existing lane (1 km) to improve user safety, and installed
one interchange and a 1.8 km side road.
Autopista Litoral Sul: The Florianópolis Beltway project, one of the most important works in
the region, began in May 2014, immediately after IBAMA had granted the installation license for
a 14 km stretch.
In 2014, the concessionaire also concluded the construction of 44.3 km of side roads, six
pedestrian overpasses and 28.7 km of new auxiliary lanes, and completed the structural
reinforcement and widening of 11 special structures (bridges and overpasses).
Autovias and Vianorte: In December 2014, through its subsidiaries Autovias and Vianorte, the
Company concluded the remodeling of the main access way to Ribeirão Preto (Waldo Adalberto
da Silveira interchange) at km 307+500 of the SP 330 – Rodovia Anhanguera – at the junction
of the SP 333, SP 255 and Avenida Castelo Branco (SPA 307/330). The project increased the
safety of Rodovia Anhanguera users, organized highway and urban vehicle traffic in the
Ribeirão Preto region and ensured access for pedestrians through overpasses. The project
arose from a concession contract amendment and included the construction of eight
overpasses, 20 access and return loops and a 440-meter pedestrian overpass, benefiting more
than 1.5 million people in the region.
In addition, in September 2014 Autovias began duplicating 13.6 km of the SP 318 between km
235 and 249, in the São Carlos region. This is a new project which was added to the
concession agreement, resulting in a six-month extension of the concession term until May
2019, in accordance with the marginal cash flow method for the economic and financial
rebalancing of the agreement.
Intervias: Implementation of the second 5 km stage of the Mogi Mirim Beltway is moving ahead
rapidly. The concessionaire is also duplicating the SP 147 between Mogi Mirim and Engenheiro
Coelho, a project that began in September 2014.
Added Value
In 2014, Arteris generated consolidated added value of R$1.7 billion, 0.6% up on 2013,
resulting from service revenue (R$4.2 billion) less costs related to the concessions and
construction, materials and consumer goods, third-party services, and depreciation and
amortization (R$2.5 billion), plus dividends, capitalized interest and other financial income
(R$219.7 million).
Distribution of Added Value (R$1.7 billion)
Personnel12,3%
Taxes and Contribuitions
29,1%
Financial Expenses,
Rentals and Others31,1%
Retained Earnings
21,1%
Dividends6,4%
Capital Market
Arteris closed 2014 with a market capitalization of R$4.3 billion, based on the closing price of
R$12.40 per share on December 30, 2014, representing depreciation of 33.2% since the
beginning of the year. In the same period, the Bovespa Index fell by 0.7%. Under the ticker
ARTR3, the Company’s stock was traded in 100% of BM&FBOVESPA trading sessions, with
financial trading volume of approximately R$1.7 billion in the year.
Shareholding Structure
Arteris’ shares are included in the following stock indices: Brazil Index (IBrX), Special Corporate
Governance Stock Index (IGC), Special Tag-Along Stock Index (ITAG), Mid-Large Cap Index
(MLCX), Brazil Broad-Based Index (IBrA) and Corporate Governance Trade Index (IGCT).
The Company’s subscribed and paid-in capital was approximately R$873.8 million on
December 31, 2014, represented by a single class of 344,444,440 common shares.
Dividends Shareholders are entitled to receive minimum mandatory dividends of 25% of annual net
income, adjusted in accordance with Article 202 of Brazilian Corporation Law.
On May 8, 2014, the Company paid its shareholders dividends of R$123.6 million on 2013
income, representing a pay-out of 50% when added to the interim dividends of R$79.2 million,
distributed on December 12, 2013, also related to 2013 income.
For the year ended December 31, 2014, the Board of Directors’ Meeting of October 30, 2014,
resolved on the payment of interim dividends totaling R$79.2 million to the Company’s
shareholders on November 28, 2014, representing R$0.23 per share. The amount will be fully
attributed to the minimum mandatory dividends for fiscal year 2014, yet to be distributed.
Personnel
Arteris closed 2014 with 6,499 employees, 43.1% of whom in the federal concessionaires,
20.9% in the state concessionaires, 33.7% in the group’s construction companies and the
remaining 2.3% in the group’s holding company, as shown below:
Social and Environmental Responsibility - Sustainability
Arteris focuses on developing its business in a sustainable manner, ensuring that its activities
permit the development of its employees, its neighboring municipalities, and society as a whole.
The Company maintains several programs focusing on reducing accidents on its highways and
on promoting traffic education, environmental preservation and the social and cultural
development of its adjacent communities.
These programs are listed below:
Safety
The Company’s goal is to reduce the total number of accidents on the Group’s highways by
50% between 2011 and 2020, in line with the UN’s own target determined in its Decade of
Action for Road Safety. The Company also maintains the Strategic Group for the Reduction of
Road Accidents (GERAR), which is responsible for creating studies and action plans designed
to reduce the number of accidents. In September 2014, the Company held the 1st Arteris Safety
Month, an initiative to raise the awareness of drivers, employees and society in general of the
importance of remaining conscientious in traffic. The initiative was concluded with the 1st Arteris
Safety Forum, attended by representatives of São Paulo state and federal regulatory agencies,
the Federal and State Highway Police, research institutions, the World Health Organization
(WHO), and non-governmental organizations.
Personnel 2014 2013 Var. %
Arteris (Holding) 149 126 18,3%
State Concessions 1.356 1.315 3,1%
Autovias 302 206 46,6%
Centrovias 283 314 -9,9%
Intervias 519 534 -2,8%
Vianorte 252 261 -3,4%
Federal Concessions 2.804 2.708 3,5%
Litoral Sul 595 562 5,9%
Planalto Sul 264 262 0,8%
Fluminense 438 403 8,7%
Fernão Dias 874 851 2,7%
Régis Bittencourt 633 630 0,5%
Latina Manutenção 2.017 2.481 -18,7%
Latina Sinalização 173 174 -0,6%
Total 6.499 6.804 -4,5%
Turnover 5,38% 4,11%
Education
Traffic humanization is the Company’s priority in the education area, exemplified by the School
Project (Projeto Escola), which prepares public school teachers for the adoption of traffic safety
activities with elementary and high school students. The same strategy is used to prepare these
teachers in relation to environmental issues through the Long Live the Environment program
(Viva Meio Ambiente).
The School Project is recognized by UNICEF (United Nations Children’s Fund). The Company
also develops specific initiatives through the Passarela Viva (for pedestrians), Viva Ciclista and
Viva Motociclista programs in order to raise the awareness of these users on the importance of
adopting a responsible attitude in traffic.
Health
The Viva Saúde program has already benefited almost 100,000 truck drivers through the
provision of advice on health and safety, as well as free medical exams and vaccination
programs, given that truckers are not always best equipped to take care of their health.
Consequently, the program favors a preventive approach that encourages quality of life and
good practices.
The Environment
Business sustainability is a Company priority and is accomplished through the control of
emissions and the rational use of natural resources, as well as the development of programs
involving the highways’ adjoining communities. The Environmental Management System is the
mechanism through which Arteris and its concessionaires monitor the execution of initiatives in
this area. Focusing on the preservation of areas near the roads, Arteris develops projects
related to reforestation and the recovery of degraded areas, the planting of native tree seedlings
and the prevention of accidents involving animals on the highways. It also controls and recycles
garbage, maintains agreements with several state and federal universities to control wildlife,
and adopts a responsible attitude to water preservation by using tanks to collect rainwater in all
of its operational bases.
Culture and Sports
The Company prioritizes the sponsorship of important sporting and cultural projects in the
regions where its concessionaires operate, and promotes partnerships with leading cultural
institutions to sponsor exhibitions by internationally renowned artists in Brazil. In 2014, it
sponsored a Salvador Dalí exhibition, the world’s most visited exhibition of his work and the
most complete ever to come to Brazil. Shown in Rio de Janeiro and São Paulo, it attracted more
than 1.5 million visitors. The Company also formed partnerships with institutions that care for
children with special needs as well as other organizations, so that children and adults who
normally would not have access to this type of cultural event, could attend the exhibition.
Volunteer Program
The Company’s employees are encouraged to maintain close relations with their surrounding
communities by developing a transformational approach in order to help build a more just
society. At the same time as it helps develop employees’ personal skills, the initiative also adds
value to the business and strengthens the Company’s image.
Arbitration Clause
The Company is subject to arbitration under the Market Arbitration Chamber, pursuant to the
arbitration clause in its Bylaws.
Final Considerations Relations with the Independent Auditors
In accordance with CVM Instruction 381/03, the Company hereby declares that, during the fiscal
year ended December 31, 2014, it did not hire BDO RCS Auditores Independentes S.S. for any
services beyond those related to the external audit. In its relations with the independent
auditors, the Company seeks to evaluate conflicts of interest in regard to non-audit-related
services based on the following precepts: the auditors must not (a) audit their own work, (b)
exercise managerial functions in the Company or (c) promote the Company’s interests.
Declaration by the Board of Executive Officers
Pursuant to Article 25 of CVM Instruction 480/09 of December 7, 2009, the Company’s
executive officers hereby declare that they have discussed, reviewed and are in full agreement
with (i) the opinions expressed in the report drawn up by BDO RCS Auditores Independentes
S.S.; and (ii) the financial statements for the fiscal year ended December 31, 2014.
São Paulo, February 26, 2015.
Board of Executive Officers David Antonio Díaz Almazán Chief Executive Officer Felipe Ezquerra Plasencia Vice Chief Executive Officer and Administrative and Finance Officer Alessandro Scotoni Levy Investor Relations Officer Maria de Castro Michielin Legal Officer Angelo Luiz Lodi Executive Officer Paulo Pacheco Fernandes Executive Officer
Board of Directors José Carlos Ferreira de Oliveira Filho Chairman Benjamin Michael Vaughan Member David Antonio Díaz Almazan Member Francisco José Aljaro Navarro Member Francisco Miguel Reynés Massanet Member Lluíz Deulofeu Fuguet Member Luiz Ildefonso Simões Lopes Member Marta Casas Caba Member Marcos Pinto Almeida Member Pedro Wongtschowski Independent Member Sérgio Silva de Freitas Independent Member
4
INDEPENDENT AUDITORS ' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS to Board of Directors and Shareholders Arteris S.A. São Paulo - SP Introduction We have audited the individual and consolidated financial statements of Arteris S.A. ( "Company " ) , identified as Company and Consolidated , respectively , which comprise the balance sheet as at December 31, 2013 and the related statements of income, comprehensive income, changes in equity and net cash flows for the year then ended , and a summary of significant accounting policies and other explanatory notes . Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting practices adopted in Brazil and the consolidated financial statements in accordance with International Financial Reporting Standards ( IFRS) issued by the International Accounting Standards Board ( IASB ) , and in accordance with accounting practices adopted in Brazil , and for such internal control as management determines is necessary to enable the preparation of financial statements free from material misstatement, whether caused by fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit conducted in accordance with national and international auditing standards. Those standards require that we comply with ethical requirements by auditors and the audit is planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error . In this risk assessment, the auditor considers internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal controls of the Company. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements taken as a whole. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion. Opinion on financial statements In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Arteris SA on December 31, 2013 , the results of its operations and its cash flows for the year ended that date, in accordance with accounting practices adopted in Brazil . Opinion on the consolidated financial statements In our opinion, the aforementioned consolidated financial statements present fairly , in all material respects, the consolidated financial position of Arteris SA on December 31, 2013 ,
5
the consolidated results of its operations and its cash flows for the year then ended in accordance with accounting practices adopted in Brazil . Emphasis As described in Note 3, the financial statements have been prepared in accordance with accounting practices adopted in Brazil , which , in the case of Arteris SA , differ from IFRS applicable to the separate financial statements only as regards the valuation of investments in subsidiaries under the equity method , which , under IFRS , would be valued at cost or fair value and the option of maintaining the balance of deferred charges , as at December 2008 , which is being amortized 31 . Our opinion is not qualified in respect of this matter. Other Subjects Statements of value added Also audited the statements , individual and consolidated , Value Added ( DVA) for the year ended December 31, 2013 , prepared under the responsibility of the directors of the Company , whose presentation is required by Brazilian corporate law for public companies , and how supplementary information under IFRS that does not require disclosure. These statements are subject to the same audit procedures described above and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
São Paulo, February 25, 2015.
BDO RCS Independent Auditors
CRC 2 SP 013846/O-1
Paulo Sérgio Tufani
Accountant CRC 1 SP 124504/O-9
Francisco de Paula dos Reis Júnior
Accountant CRC 1 SP 139268/O-6
ARTERIS S.A.
(In thousands of Brazilian reais - R$)
ASSETS Note 12.31.2014 12.31.2013 12.31.2014 12.31.2013 LIABILITIES AND SHAREHOLDERS' EQUITY Note 12.31.2014 12.31.2013 12.31.2014 12.31.2013
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents 5 109.516 185.442 1.410.451 929.911 Borrowings and financing 12 - - 198.865 142.989
Trade receivables 6 - - 154.062 126.709 Borrowings and financing - related parties 14 107.042 60.675 - -
Amounts due from related parties 14 227.103 60.227 - - Debentures 13 230.372 - 879.384 145.493
Inventories - - 9.950 7.662 Trade payables 2.809 1.003 142.868 122.115
Prepaid expenses 3.085 59 15.358 10.411 Payroll and related taxes 12.164 11.530 76.815 79.899
Taxes recoverable 14.082 - 47.482 19.965 Taxes payable 3.886 2.709 72.748 82.679
Dividends receivable 14 6.929 14.632 - - Amounts due to related parties 14 152 201 152 154
Restricted investments 8 - - 174.377 47.383 Contractual guarantees - - 61.764 44.847
Other receivables 1.267 2.826 6.806 5.691 Inspection fee - - 2.289 3.101
Total current assets 361.982 263.186 1.818.486 1.147.732 Dividends proposed 27.028 22.183 27.028 22.183
Concession fees 15 - - 74.452 70.299
NON-CURRENT ASSETS Provision for maintenance in highways 16 - - 95.258 71.043
Restricted investments 8 - - 84.860 63.604 Provision for investments in highways 16 - - 98.280 68.489
Amounts due from related parties 14 1.143.779 787.826 - - Claims received - - 18.347 40.152
Taxes recoverable - 13.726 - 13.726 Other payables 2.756 4.347 9.566 7.048
Prepaid expenses - - 3 22 Total current liabilities 386.209 102.648 1.757.816 900.491
Contractual guarantees 47 302 68 331
Deferred income tax and social contribution 7 - - 183.906 172.108 NON-CURRENT LIABILITIES
Escrow deposits 16 5.113 4.806 54.103 20.372 Borrowings and financing 12 - - 2.716.797 2.148.990
Other receivables - - 235 217 Borrowings and financing - related parties 14 1.124.251 828.577 - -
Investments in subsidiaries and associates 9 2.458.045 1.988.918 1.052 1.053 Debentures 13 309.154 205.022 2.257.459 1.687.256
Property and equipment 10 9.173 5.095 61.486 46.377 Trade payables - 68 15 290
Intangible assets 11 9.391 659 7.395.629 5.903.469 Concession fees 15 - - 163.048 216.540
Total non-current assets 3.625.548 2.801.332 7.781.342 6.221.279 Civil, labor and tax risks 16 - - 15.198 11.787
Deferred revenue - - 461 427
Deferred income tax and social contribution 7 - - 90.294 76.326
Provision for maintenance in highways 16 - - 443.244 401.395
Provision for investments in highways 16 - - 26.120 43.151
Other payables - - 599 2.785
Total non-current liabilities 1.433.405 1.033.667 5.713.235 4.588.947
EQUITY
Share capital 873.822 772.417 873.822 772.417
Profit reserves 1.316.365 1.178.057 1.277.226 1.129.427
Valuation adjustment to equity - foreign exchange differences on capital17 (22.271) (22.271) (22.271) (22.271)
Total equity 2.167.916 1.928.203 2.128.777 1.879.573
TOTAL ASSETS 3.987.530 3.064.518 9.599.828 7.369.011 TOTAL LIABILITIES AND EQUITY 3.987.530 3.064.518 9.599.828 7.369.011
The accompanying notes are an integral part of these financial statements.
BALANCE SHEET AS AT DECEMBER 31, 2014
Parent Company Consolidated Parent Company Consolidated
6
ARTERIS S.A.
INCOME STATEMENT FOR THE PERIOD ENDED DECEMBER 30, 2014
(In thousands of Brazilian reais - R$, except basic and diluted earnings per share)
Note 12.31.2014 12.31.2013 12.31.2014 12.31.2013
NET OPERATING REVENUE 18 - - 4.018.133 3.377.473
COST OF SERVICES 19 - - (2.812.470) (2.237.115)
OTHER REVENUES
Equity in the arnings (losseS) of subsidiaries 9 467.218 466.156 - -
GROSS PROFIT 467.218 466.156 1.205.663 1.140.358
OPERATING (EXPENSES) INCOME
General and administrative 19 (3.824) (20.708) (182.086) (181.818)
Management compensation 14 (6.111) (12.306) (19.259) (21.331)
Tax expenses (2.759) (2.303) (3.755) (3.146)
Other operating income, net 13.089 10.853 11.968 12.960
OPERATING PROFIT BEFORE
FINANCE INCOME 467.613 441.692 1.012.531 947.023
FINANCE INCOME (COSTS)
Finance income 20 143.462 72.725 127.375 61.061
Finance costs 20 (162.525) (87.447) (450.073) (338.824)
Foreign exchange gain (loss), net (39) - 324 (4)
(19.102) (14.722) (322.374) (277.767)
OPERATING PROFIT BEFORE INCOME TAX
ANDO SOCIAL CONTRIBUTION 448.511 426.970 690.157 669.256
INCOME TAX AND SOCIAL CONTRIBUTION
Current 22 (1.141) - (231.128) (230.600)
Deferred 22 - - (2.169) 27.684
NET PROFIT FOR THE PERIOD 447.370 426.970 456.860 466.340
PROFIT ATTRIBUTABLE TO
Owners of the Company 447.370 426.970 456.860 466.340
BASIC AND DILUTED EARNINGS PER SHARE - R$ 23 1,2988 1,2396 1,3264 1,3539
The accompanying notes are an integral part of these financial statements.
Parent Company Consolidated
7
ARTERIS S.A.
Individual statement of comprehensive income for the
period ended DECEMBER 30, 2014
(In thousands of Brazilian reais - R$)
12.31.2014 12.31.2013
Net income for the year from continuing operations 447.370 426.970
Other comprehensive income
- -
Total comprehensive income for the period 447.370 426.970
LUCRO ATRIBUÍDO A
Participação de controladores 447.370 426.970
The accompanying notes are an integral part of these financial statements.
8
ARTERIS S.A.
Individual statement of comprehensive income for the
period ended DECEMBER 30, 2014
(In thousands of Brazilian reais - R$)
12.31.2014 12.31.2013
Net income for the year from continuing operations 456.860 466.340
Other comprehensive income
- -
Total comprehensive income for the period 456.860 466.340
LUCRO ATRIBUÍDO A
Participação de controladores 456.860 466.340
The accompanying notes are an integral part of these financial statements.
9
ARTERIS S.A.
(In thousands of Brazilian reais)
Valuation
adjustments
to capital -
Share Earnings foreign exchange Retained Consolidated
capital Legal retention differences on capital earnings equity
BALANCES AT DECEMBER 31, 2012 679.970 80.076 864.863 92.446 (22.271) - 1.695.084
Capital increase 92.447 (92.447) -
Distribution of additional dividends proposed (92.446) (92.446)
Lucro líquido do exercício - - - - 426.970 426.970
Net income for the year
Legal Reserve - 21.349 - - (21.349) -
Dividends Paid - - - - (79.222) (79.222)
Proposed dividends - - - - (22.183) (22.183)
Additional Proposed dividends - - 101.405 - (101.405) -
Retenção de lucros - - 202.811 - (202.811) -
BALANCES AT DECEMBER 31, 2013 772.417 101.425 975.225 101.405 (22.271) - 1.928.201
Capital increase 101.405 (101.405) -
Distribution of additional dividends proposed (101.405) (101.405)
-
Lucro líquido do exercício - - - - 447.370 447.370
Net income for the year -
Legal Reserve - 22.369 - - (22.369) -
Dividends Paid - - - - (79.222) (79.222)
Proposed dividends - - - - (27.028) (27.028)
Retenção de lucros - - 318.751 - (318.751) -
-
BALANCES AT DECEMBER 31, 2014 873.822 123.794 1.192.571 - (22.271) - 2.167.916
The accompanying notes are an integral part of these financial statements.
INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2014
Profit reserves
Additional dividend
proposed
10
ARTERIS S.A.
(In thousands of Brazilian reais)
Valuation
adjustments
to capital -
Share Earnings foreign exchange Retained Consolidated
capital Legal retention differences on capital earnings equity
BALANCES AT DECEMBER 31, 2012 679.970 80.076 776.863 92.446 (22.271) - 1.607.084
Capital increase 92.447 - (92.447) - - - -
Distribution of additional dividends proposed - - -
Aumento de capital - - -
Distribuição de dividendos adicionais propostos - - - (92.446) - - (92.446)
Lucro líquido do exercício - - - - - 466.340 466.340
Net income for the year
Legal Reserve - 21.349 - - (21.349) -
Dividends Paid - - - - (79.222) (79.222)
Proposed dividends - - - - (22.183) (22.183)
Additional Proposed dividends - - - 101.405 - (101.405) -
Retenção de lucros - - 242.181 - (242.181) -
BALANCES AT DECEMBER 31, 2013 772.417 101.425 926.596 101.405 (22.271) - 1.879.572
Capital increase 101.405 - (101.405) - - - -
Distribution of additional dividends proposed - - (101.405) - - (101.405)
- - - - - 456.860 456.860
Lucro líquido do exercício
Net income for the year - 22.843 - - (22.843) -
Legal Reserve - - - - (79.222) (79.222)
Dividends Paid - - - - (27.028) (27.028)
Additional Proposed dividends - - 327.767 - (327.767) -
Retenção de lucros
873.822 124.268 1.152.958 - (22.271) - 2.128.777
BALANCES AT DECEMBER 31, 2014
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2014
Profit reserves
Additional dividend
proposed
11
ARTERIS S.A.
STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED DECEMBER 31, 2014
(In thousands of Brazilian reais - R$)
12.31.2014 12.31.2013 12.31.2014 12.31.2013
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 447.370 426.970 456.860 466.340
Adjustments to reconcile profit for the year to net cash (used in) generated by operating activities:
Depreciation and amortization 1.802 1.269 344.689 285.745
Write-off of permanent assets 96 129 27.774 2.368
Deferred income tax and social contribution - - 2.169 (27.684)
Inflation adjustment and interest on concession fees - - 22.105 28.500
Income from restricted investments - - (18.236) (8.486)
Interest and inflation adjustment on borrowings (6.603) (16.348) 107.214 124.963
Interest and inflation adjustment on debentures 38.321 5.022 277.108 139.080
Finance costs / (income) from discount to present value - - 26.754 22.815
Recognition (reversal) of provision for civil, labor and tax risks - - 10.343 4.655
Recognition (reversal) of provision for maintenance in highways - - 103.071 120.370
Equity in the earnings (losses) of subsidiaries (467.218) (466.156) - -
Decrease (increase) in operating assets:
Trade receivables - - (27.353) (15.695)
Amounts due from related parties (4.360) (10.043) - 90
Inventories - - (2.288) 1.216
Prepaid expenses (3.026) 39 (6.862) (1.348)
Taxes recoverable (1.151) (5.544) (11.472) (8.421)
Other receivables 1.559 (2.603) (1.115) (3.349)
Contractual guarantees 255 (64) 263 (41)
Escrow deposits (307) (229) (33.731) (5.663)
Other receivables 228 114 (18) (1)
Increase (decrease) in operating liabilities:
Trade payables 7.202 283 (85.979) 5.112
Amounts due to related parties - - (2) (13.723)
Contractual guarantees of suppliers (13) (34) 10.107 1.948
Payroll and related taxes 634 4.308 (3.084) 20.195
Taxes payable 1.177 1.188 142.609 191.612
Income tax and social contribution paid - - (152.365) (183.187)
Deferred revenue - - 34 29
Amounts due to related parties (49) 13.344 - -
Claims received - - (21.250) (8.173)
Other payables (1.591) 4.048 53 2.861
Concession fees - - 126 (1.432)
Civil, labor and tax risks - - (6.932) (3.044)
Payment of interest - federal - - (176.788) (153.382)
Net cash (used in) generated by operating activities 14.326 (44.307) 983.804 984.270
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (5.747) (706) (19.515) (11.632)
Increase in intangible assets (8.962) (352) (1.721.640) (1.239.908)
Restricted investments - - (219.135) (303.857)
Amount redeemed from restricted investments - - 86.802 332.733
Additions to investments (444.000) (135.000) - -
Interest on capital received 10.287 19.744 - -
Dividends received 424.797 309.427 - -
Net cash generated by (used in) investing activities (23.625) 193.113 (1.873.488) (1.222.664)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings and financing:
Funding - 290.000 773.255 862.679
Payments - - (147.148) (453.411)
Payment of interest - - (912) (9.168)
Debentures:
Issue of debentures 300.000 200.000 1.321.138 1.136.976
Payment of - principal - - (130.262) (699.791)
Payment of debentures - interest (3.817) - (171.467) (91.782)
Payment of concession fees - - (71.570) (66.852)
Payment of dividends (202.810) (191.783) (202.810) (191.783)
Loans - related parties (160.000) (273.000) - -
Net cash (used in) generated by financing activities (66.627) 25.217 1.370.224 486.868
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (75.926) 174.023 480.540 248.474
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 185.442 11.419 929.911 681.437
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 109.516 185.442 1.410.451 929.911
The accompanying notes are an integral part of these financial statements.
Parent Company Consolidated
12
ARTERIS S.A.
STATEMENTS OF VALUE ADDED FOR THE PERIOD ENDED
DECEMBER 31, 2014
(In thousands of Brazilian reais - R$)
12.31.2014 12.31.2013 12.31.2014 12.31.2013
REVENUES
Services provided - - 2.431.851 2.300.436
Revenue from construction services - - 1.757.447 1.258.870
Other revenues - - 47.060 42.877
- - 4.236.358 3.602.183
INPUTS PURCHASED FROM THIRD PARTIES
Cost of services provided - - 259.792 125.881
Cost of construction services - - 1.757.447 1.258.870
Materials, energy, outside services and other - - 164.172 123.869
Cost of concession - - 110.514 121.815
Cost of provision for maintenance in highways - - 145.463 196.030
Other - - 14.490 14.007
- - 2.451.878 1.840.472
GROSS VALUE ADDED - - 1.784.480 1.761.711
DEPRECIATION AND AMORTIZATION 1.802 1.269 344.689 285.745
NET VALUE ADDED GENERATED (RETAINED) (1.802) (1.269) 1.439.791 1.475.966
VALUE ADDED RECEIVED THROUGH TRANSFER
Equity in the earnings (losses) of subsidiaries 467.218 466.156 - -
Finance income 143.462 72.725 127.375 61.061
Dividends received 6.830 7.150 78.426 7.150
Capitalized interest - 6.830 35.388
Other 6.323 3.781 7.093 70.649
623.833 549.812 219.724 174.248
TOTAL VALUE ADDED TO BE DISTRIBUTED 622.031 548.543 1.659.515 1.650.214
DISTRIBUTION OF VALUE ADDED
Personnel and payroll charges:
Salaries 2.274 6.083 149.929 217.065
Benefits 248 802 42.157 73.620
Severance Pay Fund (FGTS) 200 690 12.291 18.165
Taxes and contributions:
Federal (including tax on financial transactions - IOF) 8.188 7.831 359.081 375.097
State 25 703 356 1.048
Municipal - 73 123.541 134.866
Lenders:
Interest 32.037 - 386.964 266.357
Capitalized interest - 78.426 35.388
Rentals (2) 1.193 11.506 11.637
Other 5.760 23.060 38.404 50.631
Shareholders:
Interest 125.931 81.138 - -
Capitalized interest - - -
Dividends - - -
Profit for the year 106.251 - 106.251 110.756
341.119 426.970 350.609 355.584
- - -
622.031 548.543 1.659.515 1.650.214
The accompanying notes are an integral part of these financial statements.
Parent Company Consolidated
13
ARTERIS S.A. AND SUBSIDIARIES
Independent auditor’s report Individual and consolidated financial statements at December 31, 2014
ARTERIS S.A. AND SUBSIDIARIES Individual and consolidated financial statements at December 31, 2014 Contents Independent auditor’s report Balance sheets Income statements Statements of comprehensive income Statements of changes in equity Statements of cash flows – indirect method Statements of value added Notes to the financial statements
12
ARTERIS S.A. AND SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 AND INDEPENDENT AUDITOR’S REPORT
TABLE OF CONTENT
1. OPERATIONS .............................................................................................................................. 13
2. CONCESSIONS ............................................................................................................................ 13
3. BASIS OF PREPARATION ........................................................................................................... 27
4. SIGNIFICANT ACCOUNTING POLICIES .................................................................................... 30
5. CASH AND CASH EQUIVALENTS .............................................................................................. 41
6. TRADE RECEIVABLES ................................................................................................................ 41
7. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION ........................................................ 42
8. RESTRICTED INVESTMENTS ..................................................................................................... 44
9. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES ................................................................ 45
10. PROPERTY AND EQUIPMENT ................................................................................................... 47
11. INTANGIBLE ASSETS ................................................................................................................. 49
12. BORROWINGS AND FINANCING ............................................................................................... 51
13. DEBENTURES ............................................................................................................................. 55
14. RELATED-PARTY TRANSACTIONS ........................................................................................... 60
15. CONCESSION FEES .................................................................................................................... 64
16. PROVISIONS ............................................................................................................................... 67
17. EQUITY ....................................................................................................................................... 69
18. REVENUES .................................................................................................................................. 71
19. COSTS AND EXPENSES BY NATURE......................................................................................... 71
20. FINANCE INCOME (COSTS)....................................................................................................... 72
21. STATEMENT OF CASH FLOWS ................................................................................................. 73
22. RECONCILIATION OF INCOME TAX AND SOCIAL CONTRIBUTION ....................................... 73
23. EARNINGS PER SHARE .............................................................................................................. 75
24. FINANCIAL INSTRUMENTS ........................................................................................................ 75
25. SEGMENT REPORTING .............................................................................................................. 79
26. GUARANTEES AND INSURANCES ............................................................................................. 82
27. EVENTS AFTER THE REPORTING PERIOD .............................................................................. 83
13
ARTERIS S.A. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 (Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
1. OPERATIONS
Arteris S.A. (“Company”) has its registered office and principal place of business at
Av. Presidente Juscelino Kubitschek, 1455 - 9º andar, in the city of São Paulo, state
of São Paulo, Brazil. The Company’s individual and consolidated financial
statements for the year ended December 31, 2014 include the Company and its
subsidiaries (collectively referred to as “Arteris Group” and individually as “Group
entity”). The Company was established on November 9, 1998 and is primarily
engaged in:
Execution by means of management, contracting or subcontracting of
construction works, including ancillary or complementary services, except the
supply by the Company of merchandise outside the location where the services
are provided.
Conducting of studies, calculations, projects, tests and supervision related to
engineering and civil construction activities.
Performance of infrastructure works in general, including, without restriction,
construction services, earthworks in general, signaling, reinforcement,
improvement, recovery, maintenance and conservation of highways, and
engineering consultancy in general.
Direct operation and/or operation in consortiums of businesses relating to public
construction works and/or services in the infrastructure sector in general, by
means of any agreement mode, including, but not limited to, public-private
partnerships, authorizations, permissions and concessions.
Operation and maintenance of transportation infrastructure in general.
Holding of equity interests in other companies that develop the activities
previously mentioned.
The individual and consolidated financial statements were approved by the Board of
Directors and authorized for issue on February 25, 2015.
2. CONCESSIONS
In conformity with its corporate purposes, as at December 31, 2014, the Company
holds interests in the following São Paulo State highway concessionaires and Federal
highway concessionaires:
14
State concessionaires
Autovias S.A. (“Autovias”)
Autovias is a corporation with its registered office in the city of Ribeirão Preto,
State of São Paulo, Brazil, at Anhanguera Highway, km 312.2, and started its
operations on September 1, 1998 to operate, under a concession through August
31, 2018, the highway network connecting the cities of Franca, Batatais,
Ribeirão Preto, Araraquara, São Carlos and Santa Rita do Passa Quatro and
respective access routes, under the terms of the concession agreement entered
into with the São Paulo State Highway Department (DER/SP) No. 18/CIC/97/Lot
10.
Autovias agreed with the São Paulo State Public Transportation Services
Regulatory Agency (“ARTESP”) to include a new project in the concession
agreement – the duplication of 14 kilometers of the SP 318, between km 253
and 249. The inclusion of the works in the agreement and the latter’s economic
and financial rebalancing will be executed through the Marginal Cash Flow
methodology, by extending the concession term of the Company’s by six
months.
Autovias assumed commitments to implement the works resulting from the
concession, with the main projects of such works already completed, as follows:
Works
SP 255 - Antônio Machado Sant’anna Highway:
Implementation of the second lane in the stretch between kilometers 2.8
and 48.35;
Implementation of additional lanes along the entire stretch between
kilometers 48.35 and 77.
SP 318 - Engenheiro Thales de Lorena Peixoto Júnior Highway:
Implementation of additional lanes from kilometer 257.8 to kilometer 280.
SP 330 – Anhanguera Highway:
Implementation of side lanes in Ribeirão Preto (17.2 kilometers).
SP 334 - Cândido Portinari Highway:
Complementation of the duplication of the stretch between kilometers 322
and 337;
15
Implementation of the second lane in the stretch between kilometers 337
and 348;
Implementation of the second lane in the stretch between kilometers 358
and 395.5.
SP 345 - Engenheiro Ronan Rocha Highway:
Implementation of the second lane and repaving of the stretch between
kilometers 10 and 36;
Implementation of side lanes between kilometers 30 and 35, on the right
side, and between kilometers 33 and 35, on the left side.
Centrovias Sistemas Rodoviários S.A. (“Centrovias”)
Centrovias is a corporation with its registered office in the city of Itirapina,
State of São Paulo, Brazil, located at Washington Luis Highway, km 216.8, South
Lane. It began operations on June 9, 1998 under a Highway Concession
Agreement signed with the Highway Department (DER), regulated by State
Decree No. 42,411 of October 30, 1997, and its exclusive objective is to
operate, under a concession, the highway system that connects the cities of São
Carlos to Cordeirópolis, and Itirapina to Jaú, and Jaú to Bauru.
Under Modifying Amendment 11, of December 21, 2006, the São Paulo State
Public Transportation Services Regulatory Agency (ARTESP) authorized a revision
of Centrovias concession agreement to ensure its financial and economic
balance. As a result of such revision, the concession period was extended for
additional 12 months without changing current fixed concession fees. Therefore,
the operation period of the concession was extended to June 19, 2019.
Centrovias assumed commitments to implement the works resulting from the
concession, with the main projects of such works already completed, as follows:
Works
SP 225 - Engenheiro Paulo Nilo Romano and Comandante João Ribeiro de Barros
Highways:
Implementation of the second lane in the stretch between kilometers 91 +
429 and 177 + 400;
Implementation of the second lane in the stretch between kilometers 183 +
850 and 235 + 040.
16
Concessionária de Rodovias do Interior Paulista S.A. (“Intervias”)
Intervias is a corporation with its registered office in the city of Araras, State of
São Paulo, Brazil, located at Anhanguera Highway, km 168, South Lane. It was
founded on May 28, 1999 and began operating on February 18, 2000 under a
Highway Concession Agreement signed with the State Highway Department
(DER/SP 19/CIC/98), regulated by State Decree No. 42,411 of October 30, 1997.
The purpose of the agreement is to operate, under a concession, the highway
system that links the cities of Itapira, Mogi-Mirim, Limeira, Piracicaba, Conchal,
Araras, Rio Claro, Casa Branca, Porto Ferreira and São Carlos - Lot 6. The work
under the concession encompasses performance, management and inspection of
the delegated services, including operating services, conservation and expansion
of the system, complementary and non-delegated services, besides the acts
required for compliance with the object, in the manner provided by the
concession agreement signed.
Under Modifying Amendment 14/06, of December 21, 2006, ARTESP authorized
the revision of the concession agreement of Intervias to ensure its financial and
economic balance. As a result of such revision, the concession period was
extended for additional 95 months without changing current fixed concession
fees. Therefore, the operation period of the concession was extended to
January 16, 2028 (335 months).
Intervias originally assumed commitments to implement the works resulting
from the concession, with the main projects of such works already completed,
as follows:
Works
SP 147 - Engenheiro João Tosello Highway
Duplication of the highway in the stretch between kilometers 41.36 (in
Itapira) and 54 (in Mogi-Mirim) and between kilometers 62.45 (in Mogi-Mirim)
and 106.32 (in Limeira).
SP 191 – Wilson Finardi Highway
Duplication of the highway in the stretch between kilometers 43.8 and 44.9
(Mogi-Mirim/Araras), kilometers 45.6 and 46.9 (Araras/Anhanguera) and
kilometers 49.7 and 74.72 (Araras/Rio Claro).
SP 352 - Comendador Virgolino de Oliveira Highway
Duplication of the highway in the stretch between kilometers 162.45 and
185.17 (Itapira – border with the State of Minas Gerais).
17
SP 165/330 - Anhanguera Highway – Araras Beltway
In accordance with Modifying Amendment 06/02 and third readequacy of
the work schedule of 10/08/2002, a stretch comprising 4.67 kilometers of
highway, known as Araras Beltway, was built at SP 165/330, from Km 165,225
of SP 330 - Anhanguera Highway - to Km 42,300 of SP 191 - Wilson Finardi
Highway.
Vianorte S.A. (“Vianorte”)
Vianorte is a corporation with its registered office in the city of Sertãozinho,
State of São Paulo, Brazil, located at Attílio Balbo Highway, km 327.5. It started
operations on March 6, 1998 under a Highway Concession Agreement signed with
the São Paulo State Highway Department (DER/SP 009/CIC/97/Lot 05), with
the purpose of operating, under a concession until March 2018, the highway
system made up of the following state highways: SP-330 Anhanguera Highway,
SP-322 Attílio Balbo Highway/Armando Salles de Oliveira Highway, SP-328
Alexandre Balbo Highway/northern periphery of Ribeirão Preto and SP-325/322
Avenida dos Bandeirantes.
Vianorte assumed commitments to implement the works resulting from the
concession, with the main projects of such works already completed, as follows:
Works
322 Attílio Balbo Highway / Armando Salles de Oliveira Highway
Duplication of the stretch between kilometers 343 + 500 and kilometers 390
+ 500 - Sertãozinho/ Bebedouro;
Duplication of the stretch between kilometers 307 + 500 and kilometers 325
+ 910 – Contorno Viário Sul (Southern Beltway);
Construction of access/return connections;
Construction of pedestrian overpasses between kilometers 334 + 860 and
kilometers 337 + 790 – Sertãozinho;
Construction of service roads between kilometers 333 + 160 and kilometers
343 + 480;
Expansion of the connection with state highway SP 325/322 kilometer 325 +
910 (junction);
Construction of the transposition works over the local stream Córrego Santa
Elisa at kilometer 345 + 100.
18
SP 328 Alexandre Balbo Highway
Duplication of the stretch between kilometers 323+130 and kilometers
337+010;
Construction of connections in kilometers 326+220 / 330+720 / 334+710 /
335+160 – superior overpass (PSU).
SP 330 – Anhanguera Highway
Construction of pedestrian overpass at kilometer 380 - São Joaquim da
Barra;
Construction of a user support base in Orlândia at kilometers km 366 + 150;
Construction of a connection with Avenida Lara Nilza Raffaini Cação at
kilometers 319 + 650.
SP 325/322 - Avenida dos Bandeirantes – Ribeirão Preto
Construction of pedestrian overpass at kilometers 8+550;
Construction of steel gallery at kilometers 6+400;
Construction of connection at kilometers 8+300.
As a result of these concession agreements, the state concessionaires have
recognized the rights to use and operate, accounted for in intangible assets as
concession rights, against “concession fees”, in liabilities, as mentioned in notes
11 and 15, respectively.
As set out in the concession agreements of these concessionaires, tolls are
adjusted in July, based on the variation of the General Market Price Index (IGP-
M) through May 31.
As a result of a resolution from the Managing Board of the São Paulo State Public
Transportation Services Regulatory Agency (“ARTESP” or “Concession
Authority”), of July 27, 2011, the Concession Authority prepared and the
Company agreed, in December 2011, with the Modifying Amendment - TAM,
which establishes the change of the toll adjustment index from the General
Market Price Index - IGP-M to the Extended National Consumer Price Index -
IPCA, in order to standardize the toll adjustment system, maintaining the
annual periodicity and the adjustment reference month. The change of the
adjustment index will entail an annual contractual revision with the Concession
Authority for verification of the existence of economic imbalance arising from
the use of the new index, which may determine the imbalance in favor of the
19
Company or of the Concession Authority, through the change of the concession
period or another form mutually defined between the parties. The TAM clauses
became effective on January 1, 2012 and were subject to the authorization of
the State Secretary of Logistics and Transportation. This amendment was
approved on June 28, 2012 and became effective as of July 1, 2013.
On June 27, 2013, the extraordinary resolution of ARTESP’s Managing Board
regarding the toll tariff adjustment was published in the Diário Oficial do
Estado. To sum up, the resolution authorizes adjusting the concessionaires’ toll
tariffs as of July 1, 2013 by the General market Price Index (IGP-M), but with no
pass-through of inflation to users. The Managing Board authorized the charging
of tariffs for air lift axles of heavy vehicles and the reduction of variable
concession fee percentages since July 2013, except for the payments made in
November 2013 and suggests measures for rebalancing the concession contracts.
Such measures shall be evaluated on an individual basis, and resolved on by the
Secretary of Transport, and approved by the granting authority.
Exceptionally, between July and September, November and December 2013, the
variable concession fee was calculated based on 1.5% of gross revenue to offset
the non-pass-through of inflation to tariffs as of July 1, 2013, as published on
July 27, 2013 in the Diário Oficial do Estado, proceedings No. 015.147/2013 and
registration No. 234.316/13.
On December 14, 2013, ARTESP’s Managing Board extended, for indefinite term,
the previously granted authorization to withhold and discount 50% of the
amount due as variable concession fee (which corresponds to 1.5% of the
concessionaire’s revenue). This extension does not include the payments made
in November 2013 related to the variable concession fee of October 2013.
On June 28, 2014, the extraordinary resolution of ARTESP’s Managing Board
regarding the toll tariff adjustment was published in the Diário Oficial do
Estado. To sum up, the resolution authorized adjusting the concessionaires’ toll
tariffs as of July 1, 2014 by the IPCA Index, with an adjustment of 5.17% for
Autovias, 5.04% for Centrovias, 4.67% for Intervias and 5.58% for Vianorte,
which did not correspond to the IPCA rate variation in the period. The Company
does not agree with the São Paulo state government’s unilateral decision,
announced by ARTESP, and it is taking the measures to guarantee its rights.
On September 19, 2014, the subsidiary Centrovias was granted an injunction
from the Court of Appeals of São Paulo to fully adjust its toll tariffs. The
adjustment index to be applied is 6.37% and is in compliance with the IPCA rate
variation between June 2013 and May 2014. Tariffs were adjusted as of that
date, at 12:00 a.m.
20
At the end of the concession periods, all reversible assets, rights and privileges
related to the operation of the highway systems transferred to the
concessionaires or implemented by them will be handed over to the Concession
Authority. The handover will be free of charge and automatic, with the assets in
perfect conditions of operation, use and maintenance, and free from any
encumbrances or charges. The concessionaires will be entitled to compensation
for the unamortized or undepreciated balance of works or assets whose
construction or purchase, duly authorized by the Concession Authority, have
occurred in the last five years of the concession periods, as long as carried out
to ensure the continuity and upgrading of the services included in the
concession.
The state concessionaires estimate the amounts shown below, as at December
31, 2014 and 2013, to meet the requirements to make investments and carry
out recovery and maintenance works through the end of the concession
agreements. These amounts referring to December 31, 2014, are subject to
changes due to contract adaptations and periodic revisions of cost estimates
over the concession period.
12.31.2014 Autovias Centrovias Intervias Vianorte
Total Nature of costs
Forecast from
2015 to 2018
Forecast from 2015 to 2019
Forecast from 2015 to 2028
Forecast from 2015 to 2018
Infrastructure
improvements 121,544 42,152 454,661 5,694 624,051
Special upkeep work 178,278 97,309 187,983 86,061 549,631
299,822 139,462 642,644 91,755 1,173,682
12.31.2013
Autovias Centrovias Intervias Vianorte
Total Nature of costs
Forecast from
2014 to 2018
Forecast from 2014 to 2019
Forecast from 2014 to 2028
Forecast from 2014 to 2018
Infrastructure
improvements 73,352 17,442 436,753 25,000 552,547
Special upkeep work 242,170 168,498 279,406 149,200 839,274
315,522 185,940 716,159 174,200 1,391,821
Investment estimates were broken down as mentioned in Note 3 “Recognition of
intangible assets.”
Regardless of the maintenance and conservation necessary to maintain the
appropriate service level throughout the concession period, the state
concessionaires are required to hand over the highway systems in good
conditions, properly adjusted at the time of the handover, and guaranteed
21
additional useful life of six years of the structures in general, especially the
pavement. During this period, subsequent to the handover, no structure
recovery and/or repair services should be required due to the maintenance
carried out designed to preserve the structure of the highways.
Federal concessionaires
Autopista Planalto Sul S.A. (“Planalto Sul”)
Planalto Sul is a corporation with its registered office in the city of Rio Negro,
State of Paraná, located at Avenida Afonso Petschow, 4040 - Industrial District.
It was founded on December 19, 2007 and its sole purpose is to engage in public
concession services for the highway lot BR-116/PR/SC, along the stretch
between Curitiba and the border between the States of Santa Catarina and Rio
Grande do Sul, object of the bidding process corresponding to lot 02, in
conformity with Bid Notice No. 006/2007, published by the National Ground
Transportation Agency (ANTT), including public works such as recovery,
maintenance, monitoring, conservation, operation, expansion and
improvements.
Planalto Sul is fully operational since February 22, 2009, date of the beginning
of operation of its last toll plaza on BR-116/km 134 - PR. The concessionaire
assumed the following commitments to implement the works resulting from the
concession:
25.4 kilometers of highway duplication;
48.3 kilometers of third lane;
10.2 kilometers of side routes;
Construction of nine pedestrian overpasses;
Construction of five toll plazas;
Construction of nine operational service bases (BSOs);
Implantation and overhaul of truck weighting stations;
Recovery and maintenance of the entire extension of the highway.
Autopista Fluminense S.A. (“Fluminense”)
Fluminense is a corporation with its registered office in the city of São Gonçalo,
State of Rio de Janeiro, Brazil, located at Avenida São Gonçalo, 100 - Unit 101.
It was founded on December 19, 2007 and its sole purpose is to engage in public
concession services for highway lot BR-101/RJ, encompassing the stretch
22
between the border of the states of Rio de Janeiro and Espírito Santo -
Presidente Costa e Silva Bridge, object of the bidding process corresponding to
lot 04, in conformity with Bid Notice No. 004/2007, published by the ANTT,
including public works such as recovery, maintenance, monitoring,
conservation, operation, expansion and improvements.
Fluminense is fully operational since August 31, 2009, date of beginning of
operation of its last toll booth area on BR-101/km 252, RJ. The concessionaire
assumed the following commitments to implement the works resulting from the
concession:
176.6 kilometers of highway duplication;
3.8 kilometers of side routes;
28.3 kilometers of branch and peripheral roads;
Construction of 17 pedestrian overpasses;
Construction of five toll plazas;
Construction of seven operational service bases (BSOs);
Implantation and overhaul of truck weighting stations;
Recovery of the entire extension of the highway.
Autopista Fernão Dias S.A. (“Fernão Dias”)
Fernão Dias is a corporation with its registered office in the city of Pouso
Alegre, State of Minas Gerais, Brazil, located on BR-381 Highway, km 850.5 –
North Lane. It was founded on December 19, 2007 and its sole purpose is to
engage in public concession services for highway lot BR 381-MG/SP,
encompassing the stretch between Belo Horizonte and São Paulo, object of the
bidding process corresponding to lot 05, in conformity with Bid Notice No.
002/2007, published by the ANTT for a term of 25 years counted from February
15, 2008, including public works such as recovery, maintenance, monitoring,
conservation, operation, expansion and improvements.
Fernão Dias is fully operational since September 9, 2010, date of beginning of
operation of its last toll booth area on BR-381/km 65, SP. The concessionaire
assumed the following commitments to implement the works resulting from the
concession:
88.8 kilometers of third lane;
23
94.26 kilometers of side routes;
8.3 kilometers of branch and peripheral roads;
Construction of 50 pedestrian overpasses;
Construction of eight toll plazas;
Construction of 12 operational service bases (BSOs);
Implementation and overhaul of truck weighting stations;
Recovery of the entire extension of the highway.
Autopista Régis Bittencourt S.A. (“Régis Bittencourt”)
Régis Bittencourt is a corporation with its registered office in the city of
Registro, State of São Paulo, Brazil, located at SP 139 Highway, 216. It was
founded on December 19, 2007 and its sole purpose is to operate highway lot
BR-116 – SP/PR, encompassing the stretch between São Paulo and Curitiba,
object of the bidding process corresponding to lot 06, in conformity with Bid
Notice No. 001/007, published by the ANTT, in the form of a 25-year public
service concession that began on February 14, 2008, with no extension of the
concession period being permitted, including public works such as recovery,
maintenance, monitoring, conservation, operation, expansion and
improvements.
Régis Bittencourt is fully operational since May 18, 2009, date of the
beginning of operation of its last toll plaza on BR-116/km 542 - SP. The
concessionaire assumed the following commitments to implement the works
resulting from the concession:
30.5 kilometers of highway duplication;
30 kilometers of third lane;
55 kilometers of side routes;
26.4 kilometers of branch and peripheral roads;
Construction of 51 pedestrian overpasses;
Construction of six toll plazas;
Construction of nine operational service bases (BSOs);
Implementation and overhaul of truck weighting stations;
24
Recovery of the entire extension of the highway.
Autopista Litoral Sul S.A. (“Litoral Sul”)
Litoral Sul is a corporation with its registered office in the city of Joinville,
State of Santa Catarina, Brazil, located at Rua Ministro Calógenas, 343. It was
founded on December 19, 2007, and its sole purpose is to engage in public
concession services for highway lot BR-116/BR-376/PR and BR-101/SC,
encompassing the stretch between Curitiba and Florianópolis, object of the
bidding process corresponding to lot 07, in conformity with Bid Notice No.
003/2007, published by the ANTT, for a 25-year period, including public works
such as recovery, maintenance, monitoring, conservation, operation, expansion
and improvements.
Litoral Sul is fully operational since June 17, 2009, date of the beginning of
operation of its last toll plaza on BR-101/km 221 - SC. The concessionaire
assumed the following commitments to implement the works resulting from the
concession:
30 kilometers of third lane;
79.7 kilometers of side routes;
94.7 kilometers of branch and peripheral roads;
Construction of 39 pedestrian overpasses;
Construction of five toll plazas;
Construction of nine operational service bases (BSOs);
Implementation and overhaul of truck weighting stations;
Recovery of the entire extension of the highway.
On April 24, 2013, the Company signed an addendum envisaging the extension of
the concession area by 23.64 km and the transfer of the P5 toll plaza from km
220 to km 243, both located in the municipality of Palhoça/SC.
On June 17, 2013, the National Ground Transportation Agency (ANTT) published
Resolution 4,122 of June 12, 2013, which addresses matters related to the
transfer of this toll plaza.
Considering that the delay in obtaining environmental license hindered the
works necessary for the transfer of the toll plaza, the resolution approved the
25
suspension of toll collection during one (1) year, from June 22, 2013 to June 22,
2014, or until the effective transfer to the new location is carried out. On June
20, 2014, such transfer became effective and toll began to be charged.
The suspension of collection at the P5 toll plaza had no significant impact on
the Company’s consolidated revenue (Arteris S.A.), and the other toll plazas of
concessionaire Litoral Sul remained operating normally, without any operational
or tariff changes.
As set out in the concession agreements of these concessionaires, tolls are
adjusted in February for Fluminense and Litoral Sul and in December for
Planalto Sul, Fernão Dias and Régis Bittencourt, based on the variation in IPCA
[Extended National Consumer Price Index].
At the end of the concession periods, all reversible assets, rights and privileges
related to the operation of the highway systems transferred to the
concessionaires or implemented by them will be handed over to the Concession
Authority. The handover will be free of charge and automatic, with the assets in
perfect conditions of operation, use and maintenance, and free from any
encumbrances or charges. The concessionaires will be entitled to compensation
for the unamortized or undepreciated balance of assets whose purchase, duly
authorized by the Concession Authority, has occurred in the last five years of
the concession period, as long as carried out to ensure the continuity and
upgrading of the services included in the concessions.
As the federal models for concession agreements are non-onerous and consider
the lowest toll, the federal concessionaires will not pay to the Concession
Authority any fixed and variable concession fee for the right to operate such
lots.
The main commitments made by the federal concessionaires as a result of the
concession agreements are as follows:
Payment to the ANTT of the inspection fees intended to cover expenses on
inspecting the concession over the entire period. The nominal amounts of
the inspection fees are as follows:
Concessionaire Annual amount
Remaining amount in the
concession period
Planalto Sul 1,846 33,536
Fluminense 2,665 48,414
Fernão Dias 7,916 143,807
Régis Bittencourt 8,436 153,254
Litoral Sul 6,424 116,703
26
27,287 495,714
The annual inspection fees are adjusted based on the same index and at the
same date as the basic toll.
The federal concessionaires must fully assume the risk arising from errors in
the determination of quantitative amounts for performance of projects and
services set out in the Highway Concession Program – PER.
The federal concessionaires fully assume the risk arising from damages to
the highway derived from causes that should be covered by insurance,
pursuant to Chapter III, Title V, of the auction notice.
The federal concessionaires fully assume the risk arising from variations in
the costs of their raw materials, labor and financing.
The federal concessionaires fully assume the risk arising from the
settlement of any environmental liabilities within the highway’s domain
area, the triggering event of which occurs after the date the concession
agreement is signed.
The bylaws of the federal concessionaires provided for the requirement to
go public within two years after the concession agreement beginning date,
set for February 15, 2010. The petition to register the publicly-traded
corporation with the Brazilian Securities and Exchange Commission (CVM)
was granted on March 29, 2010.
The federal concessionaires must annually submit their financial statements
to the ANTT and publish them.
The federal concessionaires estimate the amounts shown below, as at
December 31, 2014 and 2013, to meet the requirements to make
investments and carry out recovery and maintenance work through the end
of the concession agreements. The December 31, 2014 amounts are subject
to changes due to contract adaptations and periodic revisions of cost
estimates over the concession period.
12.31.2014
Forecast from 2015 to 2033
Nature of costs
Planalto Sul Fluminense
Fernão Dias
Régis Bittencourt Litoral Sul Total
Infrastructure
improvements 438,435 1,165,844 469,491 1,399,384 769,578 4,242,732
Recovery/maintenance work 249,832 372,845 762,749 602,465 541,865 2,529,755
Total 688,267 1,538,689 1,232,240 2,001,849 1,311,442 6,772,487
27
12.31.2013
Forecast from 2014 to 2033
Nature of costs
Planalto Sul Fluminense
Fernão Dias
Régis Bittencourt Litoral Sul Total
Infrastructure improvements 197,339 522,353 408,175 1,040,178 598,565 2,766,610
Recovery/maintenance work 326,037 399,893 715,231 592,386 619,199 2,652,746
Total 523,376 922,246 1,123,406 1,632,564 1,217,764 5,419,356
Investment estimates were broken down as mentioned in Note 3 “Recognition of
intangible assets.”
The subsidiary concessionaires Regis Bittencourt, Litoral Sul, Fernão Dias and
Fluminense, jointly “Concessionaires”, entered into “Terms of Adjustment of
Conduct (TACs)” with the National Ground Transportation Agency (ANTT), as a result
of administrative proceedings sanctioning possible non-compliances institutes by the
ANTT between the beginning of concessions and September 22, 2014.
As a result of these terms, the concessionaires will invest the equivalent of R$141.3
million in new works not provided for in the concession agreement, involving
improvements, ensuring greater safety and comfort for users, this amount to be
distributed as follows:
Fernão Dias: R$28.2 million, Fluminense: R$31.2 million, Régis Bitencourt: R$29
million and Litoral Sul: R$52.9 million.
The Company is defining with the ANTT the works that will be part of this
agreement and, after this definition, these investments will be assessed based on
independent experts’ report to determine when to recognize the intangible asset
between two groups: (a) investments that generate potential additional revenue;
and (b) investments that do not generate potential additional revenue.
With regard to the subsidiary Planalto Sul, the Company announces that it is still
negotiating to enter into a TAC with ANTT under similar conditions in the coming
months, but it is still presenting justifications and administrative defenses in non-
compliance procedures.
3. BASIS OF PREPARATION
Statement of compliance (in regard to IFRS and CPC standards)
The individual financial statements have been prepared in accordance with the
accounting practices adopted in Brazil, and are identified as Parent Company.
28
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and accounting practices adopted in Brazil.
The accounting practices adopted in Brazil comprise those included in the Brazilian
Corporation Law and the technical pronouncements, guidance and interpretations
issued by the Accounting Pronouncements Committee (CPC) and approved by the
Brazilian Securities and Exchange Commission (CVM).
The individual financial statements present the maintenance of the effects of the
amortization of deferred charges existing at the date of transition to IFRSs, in
accordance with accounting practices adopted in Brazil. Therefore, this individual
information is not considered as being in conformity with IFRS, which require the
recognition of deferred charges in profit or loss, as incurred.
Measurement basis
The individual and consolidated financial statements have been prepared on the
historical cost basis, unless otherwise indicated.
Functional and presentation currency
The individual and consolidated financial statements are presented in reais (R$),
which is the Company’s functional currency. All financial statements presented have
been rounded to thousands of reais, unless otherwise indicated.
Use of estimates and judgments
The preparation of financial statements requires Management to make judgments,
estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, revenues and expenses. Actual results may
differ from these estimates.
The information on uncertainties as to assumptions and estimates that have a
significant risk of resulting in a material adjustment within the next year is related
to the following aspects: determination of rates for discount to present value used in
measuring certain short- and long-term assets and liabilities, determination of
amortization rates for intangible assets obtained from traffic projection economic
studies, determination of provisions for maintenance, determination of provisions
for investments arising from concession agreements whose economic benefits are
diluted in toll rates, provisions for tax, civil and labor risks, losses on accounts
receivable, and preparation of projections for test of realization of deferred income
tax and social contribution that, although reflecting the best estimate of the
management of the Company and its subsidiaries, related to the likelihood of future
events, may present variations in relation to actual data and amounts.
29
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the year in which the estimate is
revised and in any future years affected.
The information on critical judgments and estimates related to accounting policies
adopted that have effects on the amounts recognized in the individual and
consolidated financial statements is described below:
Accounting for concession agreements
In accounting for concession agreements, as required by the Accounting
Pronouncements Committee’s Technical Interpretation ICPC 01, the Company
performs analyses that involve Management’s judgment, mainly in regard to the
application of the interpretation of concession agreements, determination and
classification of improvement and construction expenditures as intangible assets,
and assessment of future economic benefits for purpose of determining the timing of
recognition of intangible assets generated in concession agreements.
Timing of recognition of intangible assets
The Company’s management assesses the timing of recognition of intangible assets
based on the economic features of the concession agreements, mainly segregating
investments into two groups: (a) investments that generate potential for additional
revenue; and (b) investments that do not generate potential for additional revenue:
(a) Investments that generate potential for additional revenue: are recognized only
when the costs of provision of construction services related to the infrastructure
expansion/improvement are incurred.
(b) Investments that do not generate potential for additional revenue: are estimated
considering the total amounts of concession agreements and carried at present value
at the transition date, as mentioned in Note 16.
Determination of annual amortization of intangible assets arising from concession
agreements
The Company recognizes the effect of the amortization of intangible assets arising
from concession agreements limited to the related concession period. The
calculation is made based on the pattern in which economic benefits are consumed,
which normally occurs according to the traffic demand curve. Therefore, the
amortization rate is determined by means of periodic technical and economic
studies that seek to reflect the projected highway traffic growth and the generation
of future economic benefits arising from the concession agreement.
Determination of construction revenues
30
When the Company contracts construction services, it must recognize construction
revenue realized at fair value and the related costs changed into expenses related to
the construction service contracted. The Company’s management assesses issues
related to the primary responsibility for contracting these services, even in the cases
when services are outsourced and costs are incurred in managing and monitoring the
construction works of Arteris’ subsidiaries. All assumptions described are used for
purposes of determining the fair value of the construction activities.
Provision for maintenance related to concession agreements
The provision for maintenance, repair and replacements in highways is calculated
based on the best estimate of the expenditure required to settle the obligation at
present value at the end of the reporting year, against the expense for maintenance
or restoration of the infrastructure to a specified level of operation. The present
value liability should be progressively recognized and accrued to cover payments to
be made during the execution of the works.
4. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies described below have been consistently applied in these
individual and consolidated financial statements for the year ended December 31,
2014.
The main accounting policies adopted by the Company and its subsidiaries in the
preparation of the financial statements are set out below.
Basis of consolidation
Business combinations
Acquisitions as of January 1, 2009
For the year ended December 31, 2014 there were no transactions qualifying as
business combination.
Acquisitions prior to January 1, 2009
As part of the transition to IFRSs and CPCs, the Company elected not to restate
business combinations prior to January 1, 2009. In regard to acquisitions prior to
January 1, 2009, merged concession represents the amount recognized under
previous accounting policies. This merged concession was allocated as part of the
concession intangible assets and is amortized under the criteria described in Note
4.4.
Consolidation principles
The consolidated financial statements include the balances of the Company and its
subsidiaries in which the Company directly or indirectly controls 100% of the voting
31
shares, described below. Investments in subsidiaries, intercompany balances and
transactions have been eliminated on consolidation.
The list below presents the interests in the subsidiaries included in the
consolidation:
Total/voting capital
Subsidiary 12.31.2014 12.31.2013
Autovias 100% 100%
Centrovias 100% 100%
Intervias 100% 100%
Vianorte 100% 100%
Planalto Sul 100% 100%
Fluminense 100% 100%
Fernão Dias 100% 100%
Régis Bittencourt 100% 100%
Litoral Sul 100% 100%
Paulista Gerenciamento (c) - 100%
Latina Manutenção (a) 100% 100%
Latina Sinalização (b) 100% 100%
(a) Latina Manutenção, established in 2005, has its registered office in the
city of Ribeirão Preto, State of São Paulo, Brazil, located at Anhanguera
Highway, km 312.2, and is engaged in the conservation and operation of
construction, management and maintenance activities in the
highways managed by the Company’s subsidiaries.
(b) Latina Sinalização, established in 2008, has its registered office in the
city of Ribeirão Preto, State of São Paulo, Brazil, located at Anhanguera
Highway, km 312.2, and is engaged in the provision of traffic
signaling installation and maintenance, and related services. Latina
Sinalização started its operations in the first quarter of 2009.
(c) On April 14, 2014, the Company approved the merger of Paulista
Gerenciamento de Rodovias Ltda. (“Paulista”) into Latina Manutenção.
The Company also holds 4.68% of the capital of STP - Serviços e Tecnologia de
Pagamentos S.A., engaged in the development of business related to the
electronic toll collection system at national level, which is carried at cost, as
mentioned in Note 9.
The operations of each of the highway concessionaires, main commitments
and other information are disclosed in Note 2.
4.1. Financial assets
32
Financial assets are classified into the following specified categories: assets at
fair value through profit or loss, held-to-maturity investments, available-for-
sale financial assets, and loans and receivables. The classification depends on
the nature and purpose of the financial assets and is determined at the time of
initial recognition.
The Company recognizes financial assets classified in the category “loans and
receivables”, as described below:
Loans and receivables
This classification includes non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
recognized in current assets, except for maturities greater than 12 months
after the end of the reporting period, which are classified as non-current
assets.
The financial assets of the Company and its subsidiaries comprise cash and
cash equivalents (Note 5), trade receivables (Note 6), escrow deposits and
other receivables, and the main criteria adopted are as follows:
a) Cash and cash equivalents
Comprise basically cash on hand and in banks and other highly liquid short-
term investments, readily convertible to a known amount of cash and
subject to an insignificant risk of changes in value, and expected to be
used in a period shorter than 90 days.
b) Short-term investments
Basically represented by Bank Certificate of Deposit, debentures and
quotas from investment funds, with maturity greater than 90 days, and
are classified as restricted to financing with future maturity or
Management's intention of making investments. Financial assets are
classified into a specific category as financial assets at amortized cost.
The classification depends on the nature and purpose of the financial
assets and is determined at the time of initial recognition. All regular way
purchases or sales of financial assets are recognized and derecognized on
a trade date basis.
c) Trade receivables
Stated at their realizable amounts at the end of the reporting period,
recognized based on their original invoice amounts and not discounted to
present value due to their short-term maturities and immaterial effect on
33
the financial statements. The allowance for doubtful debts is recognized,
when necessary, based on estimated losses.
4.2. Property and equipment
Stated at cost of acquisition and/or construction, plus interest capitalized
during the construction period, when applicable, for qualifying assets.
Depreciation is calculated using the straight-line method, at the rates stated
in note 10, limited, when applicable, to the concession period.
4.3. Deferred charges
Technical Pronouncement CPC 43 (R1) – First-time adoption of technical
pronouncements CPC 15 to CPC 41, determines that the maintenance of the
balance of deferred charges applies only to individual financial statements
prepared in accordance with accounting practices adopted in Brazil.
Therefore, these balances were eliminated in the consolidated financial
statements to align them to the international standards (IFRS).
4.4 Intangible assets
Intangible asset arising from concession agreements
The Company recognized an intangible asset related to the right to charge for
the use of the state concession infrastructure, measured at fair value on initial
recognition. Subsequent to initial recognition, the intangible asset is measured
at cost, which includes borrowing costs capitalized, less accumulated
amortization and impairment losses.
The amortization of these intangible assets is recognized in profit or loss based
on the traffic demand curve projection, estimated for the concession period,
from the date when these assets are available for use, which is the method
that better reflects the pattern in which future economic benefits from the
asset are consumed.
Goodwill that has been allocated to concession rights, as well as those that
have not been directly allocated to the concession, or other assets and
liabilities that have the economic benefit limited in time (defined term), in
view of concession right with finite useful life, is included in intangible assets
in the consolidated financial statements and is amortized under the same
criteria described in the previous paragraph.
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are
carried at cost less accumulated amortization and accumulated impairment
34
losses. Amortization is recognized in profit or loss mainly based on the traffic
demand curve projection, estimated for the concession period, from the date
when these assets are available for use, which is the method that better
reflects the consumption pattern of future economic benefits incorporated
into the asset.
4.5. Impairment of tangible and intangible assets with finite useful lives
At the end of each reporting period, the Company and its subsidiaries review
the carrying amount of their tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss, if any. As
these assets refer basically to concessions, the Company does not estimate the
recoverable amount of an asset individually, but the recoverable amount of its
assets as a whole based on their value in use.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flow estimates have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset is reduced
to its recoverable amount. An impairment loss is recognized immediately in
profit or loss.
4.6 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use, are added to
the cost of those assets, until such time as the assets are substantially ready
for their intended use.
Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalization.
All other borrowing costs are recognized as a reduction and amortized for the
term of the agreements.
4.7 Financial liabilities
a) Classified as debt or equity
35
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual
arrangements.
b) Borrowings and financing
At the contracting date, they are carried at fair value, less transaction
costs incurred, and are subsequent measured at amortized cost using the
effective interest method.
c) Concession fees
Correspond to fixed installments to be paid to the Concession Authority,
discounted to present value at the rate of 5% per year, as described in
Note 15.
Subsidiaries Autovias, Centrovias, Intervias and Vianorte discount to
present value the balance in line item “Concession fees”, recognized in
current and non-current liabilities, based on the average rates of finance
charges contracted at the time the transactions were originated.
The balancing item of discount to present value is “Intangible assets”,
where the concession right is recognized. The discount to present value is
reversed as a balancing item of line item “Finance costs” over the
concession period.
d) Obligation from the exploration rights
It corresponds to obligations arising from the right of use and exploration
of the granite and gneiss mine in accordance with the exploration
agreement. These obligations primarily refer to fixed installments in
accordance with the original contractual value, adjusted to present value,
as from the beginning of the exploration agreement at the rate of 5% per
year plus adjustment to inflation and interests until the date of the
balance sheets. The rate used for calculation of the discount to present
value was defined by the Management based on the average interest rates
from third-party funding on that date. The counterparty of discount to
present value was recorded under “Exploration rights” (intangible). The
reversal of discount to present value has as counterparty the “Financial
expenses” line, when the term is elapsed.
4.8 Income tax and social contribution – current and deferred
Income tax and social contribution are calculated in accordance with the
criteria established by prevailing tax legislation.
36
Current taxes
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the income statement because of
items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The liability for current tax is
calculated individually for each company based on rates in effect at the end of
the reporting period.
Deferred taxes
Deferred income tax and social contribution assets are recognized for tax loss
carryforwards and temporary differences between the carrying amounts of
assets and liabilities and the corresponding tax bases, when applicable,
considering a 25% rate for income tax and a 9% rate for social contribution.
Deferred income tax and social contribution liabilities are recognized based on
discounts to present value arising from concession fees, and from adjustments
related to changes in accounting policies, as mentioned in Note 7.
4.9 Leases
Leases carried out by the Company as lessee, in which a significant part of the
ownership risks and rewards is retained by the lessor are classified as
operating leases. Operating lease payments (net of any incentive from the
lessor) are recognized in the income statement on a straight-line basis over
the lease term.
Leases in which the Company and its subsidiaries retain substantially all risks
and rewards of ownership are classified as finance leases. Finance leases are
capitalized in the balance sheet at the inception of the lease at the lower of
the fair value of the leased asset and the present value of the minimum lease
payments.
Each lease payment is allocated between the liability and finance charges so
as to achieve a constant rate of interest on the remaining balance of the
liability. The related obligations, less finance charges, are classified in current
and non-current liabilities over the agreement terms. Property and equipment
items acquired under finance leases are depreciated over their economic
useful lives or over the lease agreement terms, when these are shorter.
4.10 Provisions
Provisions are recognized when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company will
37
be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
The provisions for lawsuits are recognized when the Company has a present or
constructive obligation as a result of a past event, it is probable that an
outflow of resources will be required to settle the obligation, and a reliable
estimate of the obligation can be made. They are adjusted through the end of
the reporting period for estimated probable losses, considering their nature
and supported by the opinion of the legal counsel of the Company and its
subsidiaries. The bases and nature of the provisions for civil, labor and tax
risks are described in Note 16.
4.11 Liabilities discounted to present value
For certain liabilities, Management assesses and recognizes the effects of
discount to present value taking the time value of money and the
uncertainties associated thereto into consideration. The liabilities subject to
discount to present value, as well as the main assumptions used by
Management for their measurement and recognition are as follows:
Provision for investments in highways: arising from estimated expenditures
to fulfill contractual obligations of the concessions whose economic
benefits are already being flown to the Company and, therefore,
recognized against the concession intangible asset. The measurement of
the related present values was made under the discounted cash flow
method, considering the dates of the estimated outflow of resources to
settle the obligations (estimated for the whole concession period) and
discounted using the rate of 6.35% p.a. at December 31, 2014 and
2013. Management reviews the discount rate periodically. The
determination of the discount rate used by Management is based on the
free-risk interest rate since the projected flows of obligations were
based on their nominal amounts at December 31, 2014 and 2013 and do
not consider additional cash flow risks.
Provision for maintenance in highways: arising from estimated
expenditures to fulfill contractual obligations of the concession related to
the use and maintenance of highways at pre-established levels of
utilization. The measurement of the related present values was made
under the discounted cash flow method, considering the dates of the
estimated outflow of resources to settle the obligations and discounted
using the rate of 6.35% p.a. at December 31, 2014 and 2013.
Management reviews the discount rate periodically. The determination of
the discount rate used by Management is based on the free-risk interest
rate since the projected flows of obligations were based on their nominal
38
amounts at December 31, 2014 and 2013 and do not consider additional
cash flow risks.
Concession fees: arising from obligations incurred by the Company related
to concession rights. The measurement of the related present values was
made under the discounted cash flow method, considering the dates of
the estimated outflow of resources to settle the obligations and
discounted using the rate of 5% p.a. The determination of the discount
rate used by Management is based on the free-risk interest rate, and
should be consistently adopted from the initial recognition through the
realization of the obligations.
The nominal balances and the present value of current and non-current liabilities, at the
end of the reporting period, are as follows:
Current 12.31.2014 12.31.2013
Provision for investments in highways - nominal 100,002 70,738
Provision for investments in highways at present value 98,280 68,489
Effect of discount to present value 1,722 2,249
Provision for maintenance in highways - nominal 99,089 72,784
Provision for maintenance in highways at present value 95,258 71,043
Effect of discount to present value 3,831 1,741
Concession fees - nominal (*) 76,389 72,229
Concession fees at present value (*) 74,452 70,299
Effect of discount to present value 1,937 1,930
Non-current
Provision for investments in highways - nominal 30,220 51,062
Provision for investments in highways at present value 26,120 43,151
Effect of discount to present value 4,100 7,911
Provision for maintenance in highways - nominal 526,111 480,635
Provision for maintenance in highways at present value 443,244 401,395
Effect of discount to present value 82,867 79,240
Concession fees - nominal (*) 182,525 248,025
Concession fees at present value (*) 163,048 216,540
Effect of discount to present value 19,477 31,485
(*) Includes the variable portion, as mentioned in Note 15.
39
The recompilation of balances to their nominal amounts at the reporting date
due to passage of time is recognized as finance costs in the income statement.
4.12 Revenue recognition
Construction contracts qualified and classified as construction services
Revenue related to construction or improvement services established in the
concession contracts is recognized in accordance with the stage of conclusion
of the works performed. Revenue from operations or services is recognized in
the fiscal year in which the services are rendered.
Revenues from collection of tolls or tariffs resulting from concession rights
These revenues are measured by fair value of the consideration received or to
be received, discounted of any estimated deductions. The revenue is
recognized in the fiscal year when the public assets, which are object of the
concession, are utilized by users.
4.13 Financial revenues and expenses
They are substantially represented by interest and inflation adjustment
resulting from financial investments, escrow deposits, borrowings and
financing, debentures and liabilities with creditors due to the concession and
effect of discount to present value.
4.14 Dividends and interest on equity
The proposal for payment of dividends made by the Company’s Management,
which is included in the installment equivalent to the minimum mandatory
dividends, is recorded as liabilities under the “Proposed dividends” line
because it is considered a legal obligation envisaged in the Company’s Bylaws,
as disclosed in Note 17.
4.15 Statements of Value Added
Its aim is to show all wealth created and distributed by the Company in a given
fiscal year, being presented in compliance with the Brazilian Corporation Law,
as part of its financial statements, not being mandatory in accordance with
IFRS.
The Statement of Value Added was prepared based on the accounting
information that serves as basis to the preparation of the financial statements,
observing the provisions set forth in Technical Pronouncement CPC 09 –
Statement of Value Added. In its first part, the statement shows the wealth
40
created by the Company, represented by revenues (gross revenue from sales,
including taxes, other revenues and the effects of provision for doubtful
accounts), raw materials acquired from third parties (costs from sales and
acquisitions of materials, energy and services from third parties, including
taxes levied at the moment of acquisition, the effects of loss and recovery of
assets, and depreciation and amortization) and by the value added received
from third parties (equity accounting, financial revenues, and other revenues).
The second part of the statement shows the distribution of this wealth among
personnel, taxes and contributions, third-party capital remuneration and own
capital remuneration.
4.16 New and revised standards and interpretations of standards issued but not yet
adopted
The following accounting pronouncements and interpretations issued by the
International Accounting Standards Board (IASB) and International Financial
Reporting Standards Interpretations Committee (IFRIC) have been published or
revised, but their adoption is not yet mandatory and they have not been
subject to regulation by the Accounting Pronouncements Committee (CPC)
and, accordingly, they have not been early adopted by the Company and its
investees in their financial statements for the year ended December 31, 2014.
They will be adopted as their adoption becomes mandatory. The Company has
not yet estimated the extension of possible impacts from these new
pronouncements and interpretations on its financial statements.
Pronouncement Description Effectiveness
Amendments to IFRS 11 – Accounting for
acquisitions of interest in a joint venture
It provides guidelines on how to account for the
acquisition of interest in a joint venture whose
activities represent a business under IFRS 3 – Business
Combinations.
(1)
Amendments to IAS 16 and IAS 38 –
Clarification on the acceptable depreciation
and amortization methods
The amendments to IAS 16 forbid entities to adopt a
depreciation method based on revenue for property
and equipment items. The amendments to IAS 38
introduce a refutable assumption that revenues do
not establish an appropriate basis for the purposes of
amortization of an intangible asset.
(1)
IFRS 15 – Revenue from contracts with
customers
It establishes a single comprehensive model to be
adopted by entities when accounting for revenues
from contracts with customers.
(2)
IFRS 9 – Financial instruments
Revision in 2014 contains requirements to: a) classify
and measure financial assets and liabilities; b)
impairment methodology; c) general hedge
accounting.
(3)
(1) Annual periods beginning on or after January 1, 2016;
(2) Annual periods beginning on or after January 1, 2017;
(3) Annual periods beginning on or after January 1, 2018;
The amendments to the IFRS mentioned above have not been issued by the
CPC yet. However, due to CPC’s and the Federal Accounting Council (CFC)’s
41
commitment to update the set of standards issued based on the updates and
amendments by the IASB, these amendments and changes are expected to be
issued by the CPC and approved by CFC until the date of their mandatory
adoption. The Company’s Management does not expect these amendments to
affect the financial statements. There are no other standards or
interpretations issued and not yet adopted that may, in the Management’s
opinion, have a significant impact on the profit or equity reported by the
Company.
5. CASH AND CASH EQUIVALENTS
Broken down as follows:
Parent Company Consolidated
12.31.2014 12.31.2013 12.31.2014 12.31.2013
Cash and banks 83 1,138 17,928 18,417
Short-term investments(*) 109,433 184,304 1,392,523 911,494
Total 109,516 185,442 1,410,451 929,911
(*) Represented by highly liquid short-term investments, with insignificant risk of change in value and maturity of less than 90 days from the acquisition date, as follows:
Parent Company Consolidated
12.31.2014 12.31.2013 12.31.2014 12.31.2013
Bank Certificates of Deposit (CDB) - - 12,890 8,191
Debentures under repurchase agreements - - 129,714 35,524
Investment funds 109,433 184,304 1,249,919 867,779
Total 109,433 184,304 1,392,523 911,494
Short-term investments yielded on average 100.42% of the interbank deposit certificate (CDI) in the year.
6. TRADE RECEIVABLES
Broken down as follows:
Consolidated
12.31.2014 12.31.2013
Electronic toll(*) 137,923 119,714
Toll tickets 4,302 4,893
Toll cards 937 880
Supplementary revenues 10,900 1,222
154,062 126,709
(*) According to Note 24c.
42
The Management of the Company and its subsidiaries did not identify the need to recognize a provision for loss on receivables as at December 31, 2014. The average maturity is 30 days.
7. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
Broken down as follows:
Consolidated Non-current assets 12.31.2014 12.31.2013 Bases of deferred asset:
Tax loss (a) 91,692 36,787 Accrued profit sharing 13,632 11,248 Civil, labor and tax risks (b) 11,233 9,588 Merged concession (c) (19,152) (20,916) Goodwill from SPR (d) 5,078 11,849 Provision for maintenance (adoption of Law 12,973) 58,495 - Adjustment in financial charges (adoption of Law 12,973) 144 - Adjustments related to changes in accounting policies (e) Provision for maintenance 355,554 329,469 Differences in intangible assets, deferred charges and property and equipment, net. 5,572 116,215 Adjustment in financial charges 18,066 11,425 Reversal of interest capitalization 653 536 Taxable base 540,901 506,201 Combined statutory rate 34% 34% Total deferred income tax and social contribution 183,906 172,108
Consolidated Non-current liabilities 12.31.2014 12.31.2013 Bases of deferred liability:
Tax loss (a) (83,773) (9,678) Accrued profit sharing (4,839) (4,402) Civil, labor and tax risks (b) (3,965) (1,985) Adjustments related to changes in accounting policies (e) Provision for maintenance (124,453) (99,276) Differences of intangible assets, deferred charges and property and equipment, net. 487,601 354,111 Adjustment in financial charges (4,282) (13,897) Reversal of interest capitalization (719) (384) Taxable base 265,570 224,489 Combined statutory rate 34% 34% Total deferred income tax and social contribution 90,294 76,326
(a) Refers to income tax and social contribution losses, supported by future
taxable income projections.
(b) Refer to provisions for civil, labor and tax risks related to unresolved claims.
(c) Credit arising from the amortization of the merged concession, recorded up
to the base date of the spin-off of OHL do Brasil Participações em
Infraestrutura Ltda. in June 2006 and, until then, controlled in “part B” of
43
that company's taxable income book (LALUR). With the merger of the interest
of OHL do Brasil Participações em Infraestrutura Ltda., the Company
recognized this credit that, pursuant to tax legislation, is amortized at the
rate of 20% per annum, for tax purposes, and for the term of the concession, for
accounting purposes.
(d) Credit arising from the merger of SPR - Sociedade para Participações em
Rodovias S.A., former parent company of Vianorte, recognized on the portion of
the goodwill amortized by SPR from December 2006 to September 2010. The
Company recognized this credit that, according to the tax law, was amortized
at the rate of 20% per annum, for tax purposes, and for the term of the
concession, for accounting purposes.
(e) Adjustments arising from the first-time adoption of the changes in accounting
practices adopted in Brazil and the international financial reporting
standards.
The Company has tax credits that are not being recognized given that it is a holding
company that does not record taxable result.
The future business forecasts of the Company and its subsidiaries and their income
projections are prepared by their Management. Therefore, they are dependent upon
market variables and are subject to changes.
The expectation of recovery of all credits and the actual payment of deferred tax
debits, indicated by taxable income projections, are as follows:
Year ended on:
Non-current assets
2015 8,595
2016 50,103
2017 47,662
2018 30,335
2019 20,099
After 2020 27,112
183,906
Non-current liabilities
2015 307
2016 3,757
2017 3,914
2018 4,079
2019 13,843
After 2020 64,394
90,294
44
8. RESTRICTED INVESTMENTS
The Company’s subsidiaries hold restricted investments in order to fulfill contractual
obligations related to borrowings and financing. A brief description of these
obligations is provided below:
Debentures - Sinking Fund
As guarantee of the strict and full compliance with the obligations assumed, the
Company’s subsidiaries have been withholding/depositing on a daily basis part of
their receivables to repay the principal and pay the annual interest of series 2
debentures, so that at the end of each interest and principal amortization period
the payment amount is already available. These funds are kept in an investment
fund specifically established for this purpose. As at December 31, 2014, these
investments yielded on average 96.20% of the CDI variation.
BNDES
The federal concessionaires must deposit, in a payment account with a financial
institution, part of the operating revenues, between 43% and 58% of the collection
of tool plazas. These funds are used for payment of the debt service and
maintenance of the mandatory minimum amount of the reserve account. After the
legal fulfillment of the contractual obligations, the excess funds are transferred to a
free current account.
The Company’s federal subsidiaries must maintain deposited in a reserve account
with a financial institution, until the final settlement of all obligations assumed in
the financing agreement with the BNDES, a minimum amount equivalent to three
times the amount of the last overdue debt service installment, including the
payments of principal, interest and other debt charges arising from the financing
agreement. This amount will always be recalculated on the day subsequent to each
payment of the monthly installments. As at December 31, 2014, these investments
yielded on average 98.90% of the CDI variation.
The amounts of these investments are as follow:
Consolidated 12.31.2014 12.31.2013 Current Non-current Current Non-current
Debentures 174,377 55 47,383 -
BNDES - 84,805 - 63,604
174,377 84,860 47,383 63,604
45
9. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
Investments in subsidiaries are as follows:
12.31.2014
Common shares
Equity interest (%)
Equity Total assets Total
liabilities Net revenue Profit / (loss)
Autovias 125,040,451 100% 190,949 842,537 651,588 373,161 99,861
Centrovias 101,483,834 100% 147,612 855,392 707,780 347,702 120,223
Intervias 4,352,285 100% 198,975 1,353,720 1,154,745 401,525 142,876
Vianorte 1,132,038 100% 170,760 684,850 514,090 319,473 96,075
Planalto Sul 242,629,494 100% 228,386 812,520 584,134 302,810 (8,150)
Fluminense 160,011,942 100% 285,494 1,250,036 964,542 483,753 11,221
Fernão Dias 340,732,128 100% 315,293 1,617,465 1,302,172 486,973 (15,472)
Régis Bittencourt 209,396,514 100% 519,179 1,774,947 1,255,768 681,165 17,953
Litoral Sul 252,630,712 100% 341,759 1,452,849 1,111,090 605,919 (216)
Paulista (*) 500,000 100% - - - - (42)
Latina Manutenção (*) 2,113,205 100% 43,501 115,603 72,102 453,444 (801)
Latina Sinalização (*) 250,000 100% 15,084 18,529 3,445 34,918 3,690
(*) Shares.
46
12.31.2013
Common shares
Equity interest (%)
Equity Total assets
Total liabilities
Net revenue
Profit / (loss)
Autovias 125,040,451 100% 188,769 797,907 609,138 334,581 92,099
Centrovias 101,483,834 100% 147,038 533,159 386,121 323,841 112,163
Intervias 4,352,285 100% 200,863 948,406 747,543 356,157 138,783
Vianorte 1,132,038 100% 155,386 590,051 434,665 293,167 67,381
Planalto Sul 159,417,665 100% 156,536 631,060 474,524 218,081 (6,446)
Fluminense 105,745,395 100% 182,723 823,129 640,406 414,839 17,749
Fernão Dias 298,681,400 100% 290,765 1,289,290 998,525 480,470 (6,174)
Régis Bittencourt 138,326,717 100% 343,814 1,333,606 989,792 499,596 32,317
Litoral Sul 190,854,749 100% 259,232 1,067,530 808,298 458,105 11,547
Paulista (*) 500,000 100% 1,905 8,940 7,035 - (132)
Latina Manutenção (*) 250,000 100% 42,439 119,157 76,718 474,571 2,374
Latina Sinalização (*) 250,000 100% 18,394 21,974 3,580 43,704 4,495
(*) Shares.
Changes in investments for the year ended December 31, 2014 are as follows:
Balance at
12.31.2013
Merger of
Paulista by
Latina
Manutenção Capital
contribution
Interest on capital/
dividends
Equity in the earnings
(losses) of subsidiaries for
the year
Balance at
12.31.2014
Autovias 188,769 - - (97,681) 99,861 190,949
Centrovias 147,038 - 4,980 (124,629) 120,223 147,612
Intervias 200,863 - - (144,764) 142,876 198,975
Vianorte 155,386 - - (80,701) 96,075 170,760
Planalto Sul 156,536 - 80,000 - (8,150) 228,386
Fluminense 182,723 - 94,215 (2,665) 11,221 285,494
Fernão Dias 290,765 - 40,000 - (15,472) 315,293
Régis Bittencourt 343,814 - 161,676 (4,264) 17,953 519,179
Litoral Sul 259,232 - 82,743 - (216) 341,759
Paulista 1,905 (1,863) - - (42) -
Latina Manutenção 42,440 1,863 - - (801) 43,501
Latina Sinalização 18,394 - - (7,000) 3,690 15,084
Serviço e Tecnologia de Pagamentos S.A. 1,034 - - - - 1,034
Other investments 19 - - - - 19
Total 1,988,918 - 463,614 (461,704) 467,218 2,458,045
On April 14, 2014, the merger of Paulista Gerenciamento de Rodovias Ltda.
("Paulista") into Latina Manutenção de Rodovias Ltda. ("Latina Manutenção"), both of
them controlled by Arteris, was approved. The merger of Paulista into Latina
Manutenção is part of the Group’s corporate restructuring, which aims to improve
the organization of activities, increae economic efficiency and synergy gain, reduce
operating and financial costs and simplify the corporate structure.
47
Changes in investments for the year ended December 31, 2013 are as follows:
Balance at 12.31.2012
Capital contribution
Interest on capital/
dividends
Equity in the earnings of
subsidiaries for the year
Balance at 12.31.2013
Autovias 173,743 - (77,073) 92,099 188,769
Centrovias 120,476 2,121 (87,722) 112,163 147,038
Intervias 190,702 - (128,622) 138,783 200,863
Vianorte 123,902 - (35,897) 67,381 155,386
Planalto Sul 162,982 - - (6,446) 156,536
Fluminense 119,083 50,106 (4,215) 17,749 182,723
Fernão Dias 256,939 40,000 - (6,174) 290,765
Régis Bittencourt 257,830 61,342 (7,675) 32,317 343,814
Litoral Sul 247,035 3,391 (2,741) 11,547 259,232
Paulista 2,037 - - (132) 1,905
Latina Manutenção 40,066 - - 2,374 42,440
Latina Sinalização 13,899 - - 4,495 18,394
Serviço e Tecnologia de Pagamentos S.A. 1,034 - - - 1,034
Other investments 19 - - - 19
Total 1,709,747 156,960 (343,945) 466,156 1,988,918
10. PROPERTY AND EQUIPMENT
Changes in property and equipment are as follows:
Parent Company
Cost of property and equipment,
gross
Furniture,
fixtures and
facilities
Facilities,
buildings and
premises
Leasehold
improvements
Other
property and
equipment Land Total
Balance at 12.31.2012 2,589 2,782 2,203 2,282 586 10,442
Additions 61 - 512 133 - 706
Disposals/write-offs - - (4) (106) - (110)
Balance at 12.31.2013 2,650 2,782 2,711 2,309 586 11,038
Additions 725 - 4,086 935 - 5,746
Disposals/write-offs - (2,223) (196) - (2,419)
Balance at 12.31.2014 3,375 2,782 4,574 3,048 586 14,365
Accumulated depreciation
Balance at 12.31.2012 (1,707) (952) (1,842) (452) - (4,953)
Depreciation/amortization (425) (112) (336) (177) - (1,050)
Disposals/write-offs - - - 60 - 60
Balance at 12.31.2013 (2,132) (1,064) (2,178) (569) - (5,943)
Depreciation/amortization (289) (111) (752) (420) (1,572)
Transfers/reclassifications 793 (793)
Disposals/write-offs - - 2,139 184 2,323
Balance at 12.31.2014 (1,628) (1,175) (791) (1,598) (5,192)
Property and equipment, net
Balance at 12.31.2013 518 1,718 533 1,740 586 5,095
Balance at 12.31.2014 1,747 1,607 3,783 1,450 586 9,173
Depreciation rates - % 10 4 55.5 10 0
48
Consolidated
Cost of property and equipment, gross
Furniture, fixtures and
facilities
Computers and
peripherals Vehicles
Facilities, buildings and
premises Land Machinery and
equipment
Other property and
equipment
Property and equipment in
progress Total
Balance at 12.31.2012 15,256 6,588 17,617 12,593 586 26,279 2,402 234 81,555
Additions 1,900 665 210 6,852 - 1,011 151 361 11,150
Transfer/reclassification 9 (166) - 1 - 9 - (265) (412)
Disposals/write-offs (380) (68) (1,492) (73) - (934) (138) (31) (3,116)
Balance at 12.31.2013 16,785 7,019 16,335 19,373 586 26,365 2,415 299 89,177
Additions 2,662 1,722 4,772 4,965 - 5,231 973 15,855 36,180
Transfer/reclassification 443 (118) 1,403 (8,135) - 3,255 (4,921) (8,073)
Disposals/write-offs (310) (449) (74) (2,235) - (3,320) (223) (8) (6,619)
Balance at 12.31.2014 19,580 8,174 22,436 13,968 586 31,531 3,165 11,225 110,665
Accumulated depreciation
Balance at 12.31.2012 (8,120) (4,392) (8,409) (4,109) - (8,830) (487) - (34,347)
Depreciations/amortizations (1,799) (860) (3,091) (1,420) - (3,098) (190) - (10,458)
Transfer/reclassification (5) 21 - 1 - (17) - - -
Disposals/write-offs 266 129 1,244 20 - 274 72 - 2,005
Balance at 12.31.2013 (9,658) (5,102) (10,256) (5,508) - (11,671) (605) - (42,800)
Depreciations/amortizations (1,750) (1,364) (2,720) (1,462) (3,069) (432) - (10,797)
Transfer/reclassification 555 562 (13) 727 - 328 (793) - 1,366
Disposals/write-offs 106 71 27 2,139 - 523 186 - 3,052
Balance at 12.31.2014 (10,747) (5,833) (12,962) (4,104) - (13,889) (1,644) - (49,179)
Property and equipment, net
Balance at 12.31.2013 7,127 1,917 6,079 13,865 586 14,694 1,810 299 46,377
Balance at 12.31.2014 8,833 2,341 9,474 9,864 586 17,642 1,521 11,225 61,486
Depreciation rates - % 9 20 20 13 - 12 16.67 - -
49
11. INTANGIBLE ASSETS
Changes in intangible assets are as follows:
Parent Company
Cost of intangible asset: Software
Balance at 12.31.2012 1,217 Additions 352 Disposals/write-offs (104) Balance at 12.31.2013 1,465 Additions (*) 8,962 Balance at 12.31.2011 10,427
Accumulated amortization:
Balance at 12.31.2012 (612) Amortization (219) Disposals/write-offs 25 Balance at 12.31.2013 (806) Amortization (230) Balance at 12.31.2014 (1,036) Intangible assets, net:
Balance at 12.31.2013 659
Balance at 12.31.2014 9,391 Amortization rates - % 20%
(*) Projects development
50
Consolidated
Cost of intangible assets
Intangible assets in
highways – works and
services (a) Concession
(b) Merged
concession (c ) Software Operation right
(d)
Intangible assets in progress
Advances to suppliers Total
Balance at 12.31.2012 5,256,056 351,939 144,380 17,120 9,997 861,806 4,633 6,645,931
Additions 389,205 - - 3,340 - 892,436 (2) 1,284,979
Transfer/reclassification 580,677 - - 181 - (580,259) (946) (347)
Disposals/write-offs (1,507) - - (366) - - (233) (2,106)
Balance at 12.31.2013 6,224,431 351,939 144,380 20,275 9,997 1,173,983 3,452 7,928,457
Additions 506,527 - - 12,252 - 1,312,593 12,180 1,843,552
Transfer/reclassification 664,225 - - 40 - (642,539) (13,653) 8,073
Disposals/write-offs (974) - - (248) - (23,157) (312) (24,691)
Balance at 12.31.2014 7,394,209 351,939 144,380 32,319 9,997 1,820,880 1,667 9,755,391
Accumulated amortization
Balance at 12.31.2012 (1,480,027) (192,785) (67,233) (9,583) (1,645) - - (1,751,273)
Amortization (235,637) (26,864) (9,155) (2,217) (1,414) - - (275,287)
Transfer/reclassification 725 - - (1) - - - 724
Disposals/write-offs 717 - - 131 - - - 848
Balance at 12.31.2013 (1,714,222) (219,649) (76,388) (11,670) (3,059) - - (2,024,988)
Amortization (292,225) (28,034) (9,918) (2,141) (1,574) (333,892)
Transfer/reclassification (1,378) - - 12 - - - (1,366)
Disposals/write-offs 491 - - (7) - - - 484
Balance at 12.31.2014 (2,007,334) (247,683) (86,306) (13,806) (4,633) - - (2,359,762)
Intangible assets, net
Balance at 12.31.2013 4,510,209 132,290 67,992 8,605 6,938 1,173,983 3,452 5,903,469
Balance at 12.31.2014 5,386,875 104,256 58,074 18,513 5,364 1,820,880 1,667 7,395,629
51
(a) Refer to projects and services carried out on the highway, such as paving,
duplication, side roads, shoulders, work yards, special works of art, ground
leveling, implementing a system for collecting tolls and monitoring traffic,
signaling and other such services, amortized based on the traffic curves
projected until the final terms of the concessions.
(b) Refers to the amount assumed for the operation of the highway system
discounted to present value. See Note 15.
(c) Refers to the merged concession resulting from the merger of the spun-off
portion, in June 2006, of OHL Participações, former parent company of Autovias
and Centrovias. This amount is being amortized based on the traffic curve
projected until the final term of the concession.
(d) Refers to the amount assumed for using granite and gneiss rocks in
infrastructure work in projects for the companies belonging to the Arteris Group
and installation and safeguarding of equipment to perform the work.
12. BORROWINGS AND FINANCING
Broken down as follows:
Consolidated Annual charges 12.31.2014 12.31.2013 Current liabilities:
Investment financing (BNDES) (a) TJLP + 2.3% to 2.58% p.a. 187,180 134,103
Investment financing (BNDES) - automatic (a) TJLP + 3.3% to 5.3% p.a. - 2,463
Equipment financing - State (FINAME) (b) TJLP + 3.3% to 7.93% p.a. - 29
Equipment financing - Federal (FINAME) (b) TJLP + 2.6% p.a. 287 344
Equipment financing – Construction companies (FINAME) (b) TJLP + 4.5% p.a. 3,119 3,569
Leasing (c) CDI + 1.23% p.a. to 3.7%
p.a. 1,383 2,439
Working capital (Construction companies) 112.5% CDI 6,007 -
Vehicle financing (d) 16.63% p.a. fixed rate 889 42
198,865 142,989
Consolidated Annual charges 12.31.2014 12.31.2013
Non-current liabilities :
Investment financing (BNDES) (a) TJLP + 2.3% to 2.58% p.a. 2,703,497 2,143,257
Investment financing (BNDES) - automatic (a) TJLP + 3.3% to 5.3% p.a. - 1,013
Equipment financing - State (FINAME) (b) TJLP + 3.3% to 7.93% p.a. - 92
Equipment financing - Federal (FINAME) (b) TJLP + 2.6% p.a. 818 50
Equipment financing – Construction companies (FINAME) (b) TJLP + 4.5% p.a. 139 3,232
Leasing (c) CDI + 1.23% p.a. to 3.7%
p.a. 170 1,346
Working capital (Construction companies) 9,855 -
Vehicle financing (d) 16.63% p.a. fixed rate 2,318 -
2,716,797 2,148,990
52
2,915,662 2,291,979
TJLP – Long-Term Interest Rate.
(a) Credit facility opening agreement entered into with the Brazilian Economic and
Social Development Bank (BNDES) to finance the recovery, improvement,
maintenance, conservation, expansion, and operation works and services in the
highways.
(b) Financing of equipment, guaranteed by the financed assets, collateral signature
of shareholders or promissory notes.
(c) Finance lease agreements signed with financial institutions for acquisition of
vehicles, information technology equipment and other equipment. The
guarantees are the financed assets.
(d) Bank credit notes contracted from Banco Volkswagen for purchase of vehicles for
administrative use, with repayment term of 36 months as from the transaction
formalization date, guaranteed by the financed assets.
As at December 31, 2014, the maturities of the borrowings and financing are as
follows:
Maturity year
2016 214,740
2017 240,919
2018 252,393
2019 638,818
After 2020 1,369,927
2,716,797
The long-term financing agreements with the BNDES have covenants that, if not
complied with, can accelerate their maturity. The main covenants are:
a) Comply with environmental regulations during the effective period of the
financing agreements.
b) Not suffer any penalty for nonperformance of the concession agreements, with
final administrative decision, corresponding to infringements related to
insurance or provision of guarantees determined by the National Ground
Transportation Agency (ANTT).
c) Present semiannually, to the BNDES, until the final settlement of the
agreements, balance sheets audited by an independent audit firm registered
with the Brazilian Securities Commission.
d) Except upon the express consent of the BNDES, not distribute dividends above
the mandatory minimum dividend nor pay interest on capital that is not
53
attributable to the mandatory minimum dividend until the completion of the
financed projects.
e) Not distribute dividends above the minimum mandatory amount, payment of
interest on equity not imputed to the minimum mandatory dividend, payment of
interest on loans or amortization of the principal of these loans when the
shareholders’ equity/total liabilities ratio is lower than 20%.
f) Not grant loans to any shareholder, without the previous and express
authorization from the BNDES.
g) Not present, without previous and express authorization from the BNDES, a debt
balance representing more than 15% of the gross revenue, adopting the
following definitions and conditions solely for the purpose of verifying the non-
compliance with this condition:
1) Gross revenue: gross revenue calculated in accordance with applicable
accounting legislation, earned in the prior year, verified by the stipulated
documentation, amount that will be used as a basis until the disclosure of
the balance sheet for the next year.
2) Debt balance: balance of debts contracted and actually taken from third
parties, including principal, interest and all other charges.
3) The computation excludes the amounts related to:
3.1 The contracting of financing solely for purchase of equipment for the
concessionaires’ operation.
3.2 The loans granted to concessionaires by any shareholders, as long as
the interest rate does not exceed two percent (2%) of the interbank
deposit certificate (CDI) rate or eight percent (8%) of the Extended
National Consumer Price Index (IPCA), according to the interest rate
index for the loan agreements.
3.3 The debt balances related to the credit under the Agreements.
h) Not distribute dividends above the minimum mandatory amount, pay interest on
capital, pay interest on loans or repay the principal of these loans when the
Debt Service Coverage Ratio (ICSD) is lower than 1.3, calculated under the
following formula:
ICSD = Cash Generation from the Activity Debt Service
Where:
Cash Generation from the Activity Debt Service EBITDA
54
(+) EBITDA (+) Repayment of principal (+) Profit for the year
(-) Income tax (+) Payment of interest (+) Finance cost/income, net
(-) Social contribution (+) Depreciation and amortization
(+) Provision for income tax and social contribution
(+) Other non-operating expenses/income, net
i) Not assign, dispose of, transfer, sell, pledge, encumber or, in any other form,
negotiate or burden the rights assigned or its related financial investment
without previous and express consent from the BNDES.
j) Maintain deposited in a reserve account, until the final settlement of all
obligations assumed by the Company in the financing agreement, a minimum
amount equivalent to three (3) times the amount of the last overdue debt
service installment, including the payments of principal, interest and other debt
charges arising from the financing agreement.
k) In addition to the events indicated above, the BNDES may accelerate the
maturity of the agreement and require the immediate repayment of the debt, in
the following events:
(a) Non-fulfillment of any obligation assumed with the BNDES and its
subsidiaries, by a company or entity of the Group to which the Company
belongs.
(b) A downsizing in the Company, in disagreement with the training program
approved by the BNDES.
(c) The existence of a sentence to condemn, final and unappealable, due to the
practice of acts involving child labor, slave labor or crime against the
environment.
(d) The amendment to or extinction of the concession agreements without the
previous knowledge of the BNDES.
(e) The non-fulfillment of the obligation established in the calculation of the
ICSD index previously mentioned.
The shareholders agrees
a) Submit for the approval of the BNDES any proposals of matters regarding
encumbrance of any type, of shares owned by it, issued by the concessionaires,
sale, acquisition, merger, spin-off of assets or any other act that entails or may
entail changes in the concessionaires’ current structure or transfer of the
concessionaires’ control, or change in its capacity as concessionaires’
controlling shareholder.
55
b) Not include in the concessionaires’ corporate agreements, bylaws or articles of
organization provisions that result in restrictions to the concessionaires’ growth
capacity or to their technological development or that result in restrictions to
their ability to pay the financial obligations of the transactions with the BNDES.
c) Cover, on a joint liability basis, through increases in the concessionaires’
capital, in cash, the insufficiencies of funds required for executing the project.
d) Maintain, during the effective period of the agreement, its current interests in
the concessionaires’ capital, as well as not dispose of, pledge, encumber or
burden its shares representing the concessionaires’ capital, without previous
and express consent of the BNDES.
e) Maintain pledged to the BNDES, during the effective period of the agreements,
all shares issued by the concessionaires.
f) In the event of the extinction of the Concession Agreements due to
nonperformance resulting from the concessionaires’ acts or omissions or also
due to their bankruptcy or judicial recovery, pay, on a joint liability basis, the
equivalent to 25% of the debt balance with the BNDES, in up to ninety (90)
days counted from the end of the concession agreements, regardless of the
receipt of any indemnity by the Concession Authority. After the payment of such
indemnity to the BNDES, the intervening parties shall pay to the BNDES, on a
joint liability basis, within a maximum period of sixty (60) days from this
payment, any difference existing between the remaining debt balances and the
indemnity amount.
g) If the indemnity does not occur within 12 months counted from the end of the
Concession Agreement, the intervening parties shall pay the remaining debt
balance within 60 days after such term expires.
In order to not fail to comply with any clause of the BNDES agreement, Fernão Dias
was granted referred agency’s approval for the 2nd debenture issue on October 16,
2014. Therefore, the Company and its subsidiaries are compliant with all restrictive
covenants of the agreements with the BNDES at the end of the reporting period. The
fair value of borrowings recognized in current and non-current liabilities
approximates their carrying amount, since the impact of the discount is not
significant, considering that the discount rates are substantially similar to the
contracted rates.
13. DEBENTURES
Balances are broken down as follows:
Parent Company
12.31.2014 12.31.2013
Series Number Contractual Maturities Current Non-current Current Non-
56
issued yield current rates (%)
1st Issuance (d) 20,000 CDI +
1.4% p.a. Jul/2015 230,372 - - 205,022
2nd Issuance (i) 30,000 CDI +
1.28% p.a. Oct/17 - 309,154 - - 50,000 230,372 309,154 - 205,022
Consolidated
12.31.2014 12.31.2013
Series
Number issued
Contractual yield Maturities Current Non-current Current
Non-current
rates (%) Arteris:
1st Issuance (d) 20,000
CDI + 1.4% p.a. Jul/2015 230,372 - - 205,022
2nd Issuance (i) 30,000 CDI +
1.28% p.a. Oct/2017 - 309,154 - -
50,000 230,372 309,154 - 205,022
Autovias: 1st Issuance -
Series 2 (a) 120,000 IPCA + 8% p.a. Mar/2017
3rd Issuance (c) 30,000
CDI + 0.83% p.a. Aug/2017 63,524 104,984 9,461 148,675
150,000 -
108,912 204,000 726 300,000
172,436 308,984 10,187 448,675
Transaction cost
(619) (477) (760) (1,096)
171,817 308,507 9,427 447,579
Centrovias: 1st Issuance -
Series 1 (a) 286,131 CDI + 1.7%
p.a. Mar/2015 - - 67,690 16,847
1st Issuance - Series 2 (a) 120,000
IPCA + 8% p.a. Mar/2017 62,890 105,618 9,460 148,676
2nd Issuance (f) 40,000 CDI + 0.99%
p.a. Jun/2018 115,379 285,760 - -
446,131
178,269 391,378 77,150 165,523
Transaction cost
(896) (899) (412) (294)
177,373 390,479 76,738 165,229
Intervias:
3rd Issuance (c) 60,000 CDI + 1.09%
p.a. Sept/2018 19,128 600,000 16,234 600,000
4th Issuance - Series 1 (a) 150,000
CDI + 1.10% p.a. Oct/2019 3,811 150,000 - -
4th Issuance -Series 2 (g) 225,000
IPCA + 5.96% p.a. Oct/2019 5,546 225,000 - -
435,947
28,485 975,000 16,234 600,000
Transaction cost
(1,424) (3,698) (756) (2,129)
27,061 971,302 15,478 597,871
Vianorte: 1st Issuance -
Series 1 (a) 153,776 CDI + 1.7%
p.a. Mar/2014 - - 36,379 9,054
1st Issuance - Series 2 (a) 100,000
IPCA + 8% p.a. Mar/2017 52,408 88,015 7,880 123,834
2nd Issuance - 150,000 CDI + 0.86%
p.a. Mar/2017 64,892 90,000 - -
253,776
117,300 178,015 44,259 132,888
57
Transaction cost
(426) (252) (300) (250)
116,874 177,763 43,959 132,638
Planalto Sul:
1st Issuance (e) 1,390 CDI + 1.4%
p.a. Jul/2015 16,011 - - 14,250
1,390
16,011 - - 14,250
Transaction cost
(12) (167) - (13)
15,999 (167) - 14,237
Fluminense:
1st Issuance (e) 2,250 CDI + 1.4%
p.a. Jul/2015 25,917 - 23,065
2,250 25,917 - - 23,065
Transaction cost (17) - (31) (15)
25,900 - (31) 23,050
Fernão Dias
1st Issuance (e) 3,370 CDI + 1.4%
p.a. Jul/2015 38,818 - - 34,546
2nd Issuance (h) 10,000 CDI + 1.15%
p.a. Jul/2016 - 100,530 - -
13,370 38,818 100,530 - 34,546
Transaction cost (251) (109) - (32)
38,567 100,421 - 34,514
Régis Bittencourt
1st Issuance (e) 3,940 CDI + 1.4%
p.a. Jul/2015 45,383 - - 40,389
3,940 45,383 - - 40,389
Transaction cost - -
45,383 - - 40,389
Litoral Sul:
1st Issuance (e) 2,610 CDI + 1.4%
p.a. Jul/2015 30,064 - 26,756
2,610 30,064 - 26,756
Transaction cost (25) - (58) (29)
30,039 - (58) 26,727
Total
879,384 2,257,459 145,493 1,687,256
(a) 1st issuance of debentures, Series 1 and 2, on March 15, 2010 with nominal unit
amount of R$1,000 each.
(b) 2nd issuance of debentures, in a single series, of Vianorte on March 20, 2014 with
nominal unit amount of R$10,000 each.
(c) 3rd issuance of debentures, in a single series, of Intervias, on September 25,
2013 with nominal unit amount of R$10,000 each, and 3rd issue of debentures, in
58
a single series, of Autovias, on December 18, 2013 with nominal unit amount of
R$10,000 each.
(d) 1st issuance of debentures, in a single series, of the Parent Company on October
4, 2013 with nominal unit value of R$10,000 each.
(e) 1st issuance of debentures of federal concessionaires, in a single series, on
October 4, 2013 with nominal unit value of R$10,000 each.
(f) 2nd issue of Centrovias’ debentures, in a single series, issued on March 20, 2014,
with unit face value of R$10,000 each.
(g) 4th issue of Intervias’ debentures, in two series, the agreement was issued on
October 15, 2014, with unit face value of R$10,000.
(h) 2nd issue of Fernão Dias’ debentures, in a single series, issued on December 15,
2014, with unit face value of R$10,000 each.
(i) 2nd issue of the Parent Company’s debentures on October 1, 2014, with unit face
value of R$10,000 each.
Debentures were subscribed at their nominal unit amount plus, for series two
debentures, the corresponding adjustment for inflation and, for all debentures, the
interest charged from the issue date through their actual payment date, as
described below:
Issue date
Nominal
amount Payment date
Subscribed
amount 1st Issuance – State
concessionaires
Series 2 03.15.2010 340,000 04.27.2010 345,382 2nd Issuance – Centrovias and
Vianorte 03.20.2014 550,000 03.25.2014 550,722 3rd Issuance – Autovias and
Intervias
09.25.2013 and
12.18.2013 900,000
10.07.2013 and
12.26.2013 902,168
4th Issuance – State concessionaires 10.15.2014 375,000 11.05.2014 377,640
1st Issuance – Federal concessionaires 10.04.2013 135,600 10.08.2013 141,338
2nd Issuance – Federal
concessionaires 10.04.2013 100,000 10.07.2013 100,530 1st Issuance - Arteris 10.04.2013 200,000 10.08.2013 200,156
2nd Issuance – Arteris 10.01.2014 300,000 10.01.2014 302,486 2,900,600 2,920,422
The 1st series debentures of the 1st and 2nd issues of Autovias, Centrovias, Intervias
and Vianorte concessionaires were prepaid to restructure and improve the
amortization profile and debt maturities.
59
The remuneration of 2nd series debentures of 1st issue of Autovias, Centrovias and
Vianorte concessionaires is paid yearly, every March 15, as of March 2011, and will
be amortized in three annual installments.
The yield on 3rd issuance debentures of Intervias is paid on a semi-annual basis,
every 25 of March and September, as of 2014, and amortized in three annual
installments, as of September 25, 2016.
The yield on series 3rd issuance of Autovias will be paid on a semi-annual basis, the
first payment on February 18, 2014, and amortization of principal in three annual
installments, the first of them in February 2015 and the last one in February 2017.
The yield on 1st and 2nd issuance debentures of the federal concessionaires will be
paid on a single installment jointly with the principal on the maturity date.
The remuneration of 2nd issue of Centrovias’ debentures will be paid half-yearly, the
first payment on December 20, 2014, and the others in June and December of each
year and will be amortized in seven half-yearly installments as of June 20, 2015.
The remuneration of 1st series debentures of 4th issue of Intervias concessionaire is
paid half-yearly, every April and October 15, as of 2015, and will be amortized in
three annual installments, as of October 15, 2017.
The remuneration of 2nd series debentures of 4th issue of Intervias concessionaire is
paid yearly, every October 15, as of 2015, and will be amortized in a lump sum on
October 15, 2019.
The remuneration of 2nd issue of the parent company’s debentures will be paid half-
yearly in April and October, the first payment in April 2015.
As at December 31, 2014, long-term installments of both issues are broken down as
follows:
Maturity year 2016 631,041
2017 1,041,456
2018 310,370
2019 274,592
2,257,459
1st, 2nd, 3rd and 4th issuance debentures of state concessionaires contain restrictive
covenants that could accelerate their maturity and require the fulfillment of certain
financial ratios, as disclosed in the section “Information on the Offering –
Accelerated Maturity” of the Final Public Placement Prospectus filed with the CVM.
60
As at December 31, 2014, the Company and its subsidiaries were compliant with the
contractual terms and conditions agreed for the debentures.
The debentures of the 1st Issuance - Series 2 are guaranteed by:
1. Pledge of 51% of the shares of the issuers Autovias and Centrovias, and 53.06%
for Vianorte. The pledge percentage will be periodically decreased as the
debentures are amortized up to the limit of 51%.
2. Collateralization of 80% of toll plaza receivables. The collateralized percentage
will be periodically decreased as the debentures are amortized.
3. Collateralization of 100% of the concession compensation receivables.
4. All units of the Sinking Fund, as described in Note 8.
The 1st and 2nd issuance debentures of the parent company and the federal
concessionaires have restrictive clauses that entail early redemption and require
compliance with certain financial indices, as disclosed in the section “Indentures
and advances from debentures”, filed at CVM.
As at December 31, 2014, the Company and its subsidiaries were compliant with
the contractual terms and conditions agreed for the debentures.
The 1st and 2nd issuance debentures of the federal concessionaires are guaranteed
by “aval” guarantee by Arteris S.A., in favor of the debenture holders.
14. RELATED-PARTY TRANSACTIONS
Parent Company (*)
Current Assets 12.31.2014 12.31.2013
Amounts due from related parties:
Subsidiaries:
Autovias (a) 1,024 269
Centrovias (a) 1,101 270
Intervias (a) 1,114 267
Vianorte (a) 964 267
Planalto Sul (a) 332 453
Fluminense (a) 517 621
Fernão Dias (a) 727 599
Régis Bittencourt (a) 881 892
Litoral Sul (a) 634 693
Latina Manutenção (a) 1,505 166
61
Parent Company (*)
Current Assets 12.31.2014 12.31.2013
Latina Sinalização (a) 141 120
Autovias (d) 4,913 1,716
Centrovias (d) 3,386 1,218
Intervias (d) 4,783 1,763
Vianorte (d) 2,572 -
Planalto Sul (b) 16,823 8,592
Fluminense (b) 56,804 5,415
Fernão Dias (b) 32,730 17,412
Régis Bittencourt (b) 14,393 9,908
Litoral Sul (b) 81,758 9,626
Related parties:
SPI Sociedade para participações em Infraestrutura S.A. 1 -
Total 227,103 60,227
(*) There are no balances in the consolidated.
Parent Company (*)
12.31.2014 12.31.2013
Dividends receivable from subsidiaries:
Fluminense 2,665 4,215
Régis Bittencourt 4,264 7,675
Litoral Sul - 2,742
Total 6,929 14,632
Non-current assets Parent Company (*)
12.31.2014 12.31.2013
Amounts due from related parties - subsidiaries:
Planalto Sul (b) 160,075 151,483
Fluminense (b) 165,833 100,418
Fernão Dias (b) 337,639 235,227
Régis Bittencourt (b) 147,379 127,471
Litoral Sul (b) 332,853 173,227
Total 1,143,779 787,826
(*) There are no balances in consolidated.
Current liabilities Parent Company (*)
12.31.2014 12.31.2013
Borrowings and financing - subsidiaries:
Autovias (c) 33,225 18,275
Centrovias (c) 24,702 9,840
Intervias (c) 31,493 22,485
Vianorte (c) 17,622 10,075
Total 107,042 60,675
(*) There are no balances in consolidated.
Parent Company Consolidated
62
12.31.2014 12.31.2013 12.31.2014 12.31.2013
Trade payables:
Related parties:
Participe en Brasil S.L. 152 154 152 154
Subsidiaries:
Centrovias (a) - 12 - -
Intervias (a) - 33 - -
Latina Sinalização - 2 - -
Total 152 201 152 154
Non-current liabilities Parent Company (*)
12.31.2014 12.31.2013
Borrowings and financing - subsidiaries:
Autovias (c) 354,230 235,955
Centrovias (c) 294,201 149,361
Intervias (c) 311,745 289,261
Vianorte (c) 164,075 154,000
Total 1,124,251 828,577
(*) There are no balances in consolidated.
(a) Refer to the apportionment of administrative costs and expenses among Arteris
Group companies. In order to increase the efficiency of the current criterion for
cost apportionment, expedite the administrative process and ensure that all the
benefited parties pay for a share of the expenses related to the Group’s
administrative and support areas, in 2014, the Company adopted a new criterion
for apportioning costs applicable to all Group companies. This criterion adjusts
the apportioned percentages of costs based on the companies’ revenue. This
change does not affect the consolidated operating result.
(b) Intercompany loan agreements with an interest rate equivalent to 100% of the
CDI fluctuation plus 1.037% to 1.4% per year. Interest falls due beginning
December 2017.
(c) Intercompany loan agreements with an interest rate equivalent to 100% of the
CDI fluctuation plus 1.037% to 1.4% per year. Interest falls due beginning
December 2015, and the principal, beginning December 2017.
(d) Refers to interest on capital receivable.
Parent Company
12.31.2014 12.31.2013
Finance income (costs), net:
Subsidiaries:
Autovias (39,088) (21,500)
Centrovias (29,061) (11,577)
Intervias (37,051) (26,452)
63
Vianorte (20,731) (11,853)
Planalto Sul 19,792 10,108
Fluminense 19,846 6,370
Fernão Dias 38,507 20,483
Régis Bittencourt 16,933 11,657
Litoral Sul 37,458 11,324
Total 6,605 (11,440)
During the year ended December 31, 2014, the Company recognized R$6,111
(R$12,306 as at December 31, 2013), Parent Company, and R$19,259 (R$21,331 as at
December 31, 2013), Consolidated, as management compensation. The officers did
not receive loans from or grant loans to the Company and/or its subsidiaries, and
are not entitled to significant fringe benefits.
The Company grants its employees profit sharing on an annual basis, which is
calculated based on the attainment of corporate targets and specific goals
established, approved and disclosed at the beginning of each fiscal year, and the
payment is made in the following year, in accordance with the attainment of targets
and goals. During the current fiscal year, the accounting provisions are calculated
each month on bases that are estimated and appropriated to the result, having
social obligations as counterparty. The balances of the provision for profit sharing
(PLR) recorded on December 31, 2014 and 2013, respectively, under the “Social
obligations” line, are R$7,647 and R$6,874 on the parent company, and R$28,595
and R$23,631 on the consolidated.
All active employees and employees dismissed for the period, who worked during the
fiscal year, are entitled to profit sharing. In the case of employees dismissed, only
those dismissed without cause are entitled to profit sharing.
The calculation of the profit sharing is based on corporate targets and specific goals
to which weights are attributed in accordance with specific tables. The targets,
goals and weights can be mainly summarized as the achievement of the budget for
expenses and revenues, consolidated EBITDA and EBITDA by company, in addition to
individual evaluations based on technical competence and commitment to quality.
The Company and its subsidiaries offer their employees’ health care, reimbursement
of dental care expenses and life insurance during the employment period. Such
benefits are partially funded by the employees, based on their professional category
and the usage of the respective plans. These benefits are recognized as costs or
expenses when incurred.
In regard to transactions carried out with related parties, the transactions have
strictly adhered to market standards, legal requirements and the interests of the
Company and its subsidiaries. Whenever necessary, these transactions are submitted
to the Board of Directors for approval, in the manner stipulated in the Bylaws. The
64
transactions and business entered into by the Company and its subsidiaries with
related parties are subject to the finance charges previously described, which are
compatible with the rates normally charged in Brazil.
15. CONCESSION FEES
Refer to the fees payable for the concessions granted to subsidiaries Autovias,
Centrovias, Intervias and Vianorte to the São Paulo State Highway Department
(DER/SP), discounted to present value.
The concession fees will be paid in 240 monthly consecutive installments, the first
of which was paid in September 1998 by Autovias, in June 1998 by Centrovias, in
February 2000 by Intervias, and in March 1998 by Vianorte. The amounts are
adjusted using the same formula and at the same dates as the tool adjustment, and
are due on the last business day of each month.
Therefore, the amount of the fees payable was determined as follows:
Consolidated
Present value Notional amount (*)
Current
12.31.2014 12.31.2013 12.31.2014 12.31.2013
Autovias Concession fee 7,634 7,219 7,838 7,414
Variable portion (a) 441 418 441 418
Centrovias Concession fee 11,422 10,802 11,727 11,093
Variable portion (a) 490 462 490 462
Intervias Concession fee 7,108 6,640 7,298 6,903
Variable portion (a/b) 605 537 605 537
Vianorte Concession fee 46,336 43,825 47,574 45,006
Variable portion (a) 416 396 416 396
Total
74,452 70,299 76,389 72,229
Consolidated
Present value Notional amount (*)
Non-current 12.31.2014 12.31.2013 12.31.2014 12.31.2013
Autovias Concession fee 18,669 24,176 20,948 27,780
Centrovias Concession fee 25,464 33,910 28,402 38,735
Intervias Concession fee 25,738 30,189 29,867 35,864
Vianorte Concession fee 93,177 128,265 103,308 145,646
Total
163,048 216,540 182,525 248,025
(*) Notional amounts adjusted for inflation through the end of the reporting period, included solely as
additional information.
65
(a) The variable portion, equivalent to 3% of the gross monthly revenue, is due by
the last business day of the subsequent month. Exceptionally, between July and
September 2013, the variable concession fee was calculated based on 1.5% of
gross revenue to offset the non-pass-through of inflation to tariffs as of July 1,
2013, as published on July 27, 2013 in the Diário Oficial do Estado, proceedings
015.147/2013 and registration 234.316/13.
(b) The variable portion, corresponding to 3% of the monthly toll revenue and 25%
of the monthly supplementary revenues actually earned, is due by the last
business day of the subsequent month.
On December 14, 2014, ARTESP’s Managing Board extended, for indefinite term, the
previously granted authorization to withhold and discount 50% of the amount due as
variable concession fee (which corresponds to 1.5% of the Concessionaire’s revenue).
This extension does not include the payments made in November 2013 related to the
variable concession fee of October 2013.
The number of installments payable as at December 31, 2014 is as follows:
Installments
Current Non-current Total
Autovias 12 32 44
Centrovias 12 29 41
Intervias 12 49 61
Vianorte 12 26 38
The amounts paid by the Company to the Concession Authority during the year
ended December 31, 2014 are as follows:
Concession fee
Fixed Variable Amount paid
Autovias 7,536 5,160 12,696
Centrovias 11,275 5,578 16,853
Intervias 7,016 6,338 13,354
Vianorte 45,743 4,827 50,570
Total 71,570 21,903 93,473
As at December 31, 2014, the portions related to the notional amount classified in
non-current liabilities are broken down as follows:
Maturity year
2016 74,603
2017 74,603
2018 25,394
66
After 2019 7,925
182,525
Federal highway concessions do not entail the payment of concession fees as they were
granted on a lowest toll offered basis.
67
16. PROVISIONS
Civil, labor and tax risks
The Company and its subsidiaries are parties to ongoing lawsuits basically involving
civil liability to highway users and labor claims.
Management recognized, based on the opinion of its legal counsel, a provision to
cover probable losses on said lawsuits and estimates that the final outcome will not
affect significantly the cash flows, financial position, and results of operations of
the Company and its subsidiaries.
Changes in the consolidated balance of civil, labor and tax risks during the years
ended December 31, 2014 and 2013 are as follows:
12.31.2013 Additions Reversals Uses 12.31.2014
Civil 5,858 13,740 (5,606) (6,509) 7,483
Labor 5,929 9,093 (6,884) (423) 7,715
Total 11,787 22,833 (12,490) (6,932) 15,198
12.31.2012 Additions Reversals Uses 12.31.2013
Civil 4,624 4,845 (1,669) (1,942) 5,858
Labor 5,552 3,693 (2,214) (1,102) 5,929
Total 10,176 8,538 (3,883) (3,044) 11,787
Additionally, the Company and its subsidiaries are parties to ongoing civil and labor
lawsuits arising from the normal course of business, which were assessed as possible
loss by their legal counsel and for which no provision has been recognized. These
lawsuits total R$7,298 and R$5,419, respectively, in each nature of risk, as at
December 31, 2014 (R$8,433 and R$3,757, respectively, as at December 31, 2013).
Escrow deposits classified in non-current assets refer to lawsuits for which no
provision has been recognized because the respective risk of loss was assessed as
possible or remote.
In May 2014, the Company filed lawsuits with the Federal Court, in the amount of
R$23,308, against ANTT, to annul the deficiency notices imposed by the Agency. In
the opinion of the legal advisors, the deficiency notices were based on weak grounds
and the amounts therein were disproportionate.
Provision for maintenance and investments in highways
The provision for maintenance and investments in highways is calculated,
respectively, based on the best estimate of the expenditures to be incurred on
repairs and replacements and construction and improvement services. The provision
68
for investments considers the amounts through the end of the concession period,
while the provision for maintenance considers the amounts of the next intervention.
69
Changes in provisions for maintenance and investments in highways during the year
ended December 31, 2014 are as follows:
Current Non-current
Provisions Maintenance in highways
Investments in highways
Maintenance in highways
Investments in highways
Balances at 12.31.2013 71,043 68,489 401,395 43,151
Additions
9,892 103,071 -
Uses (59,849) (889) - -
Discount to present value - 1,003 22,842 2,754
Transfers 84,064 19,785 (84,064) (19,785)
Balances at 12.31.2014 95,258 98,280 443,244 26,120
Current Non-current
Provisions Maintenance in highways
Investments in highways
Maintenance in highways
Investments in highways
Balances at 12.31.2012 80,614 56,336 252,115 54,905
Additions 10,374 - 135,331 887
Uses (25,145) (3,962) - (1)
Discount to present value 399 (459) 18,750 3,934
Transfers 4,801 16,574 (4,801) (16,574)
Balances at 12.31.2013 71,043 68,489 401,395 43,151
Payments made in the years ended December 31, 2014 and 2013, related to
maintenances performed, totaled R$96,641 and R$76,534, respectively.
17. EQUITY
a) As at December 31, 2014, share capital is R$873,822 (R$772,417 as at December 31,
2013), represented by 344,444,440 common shares without par value, held as
follows:
12.31.2014
Number of shares
subscribed Equity interest - % Participe en Brasil S.L. 238,563,304 69.26 Board of Directors 5 0.00 Other 105,881,131 30.74 Total 344,444,440 100.00
70
12.31.2013
Number of shares
subscribed Equity interest - %
Participe en Brasil S.L. 238,563,304 69.26
Board of Directors 5 0.00
Other 105,881,131 30.74
Total 344,444,440 100.00
At the Annual and Extraordinary Shareholders’ Meeting held on April 23, 2014, the
Company approved a capital increase through capitalization of profits of R$101,405,
raising the capital to R$873,822 divided into 344,444,440 common shares, without
issuance of new shares.
Each share entitles its holder to one vote in Shareholders’ Meetings.
b) Profit reserves and distribution of dividends (Parent Company):
Legal and profit retention reserve
The Company’s bylaws prescribe that the profit for the year, after recognition
of the legal reserve, as provided for by law, can be allocated to the provision
for civil, labor and tax risks, the earnings retention reserve set out in the
capital budget to be approved at the Shareholders’ Meeting, or the unrealized
earnings reserve, pursuant to Article 198 of Law 6404/76.
Distribution of dividends
The Company’s bylaws provide for the distribution of a minimum mandatory
dividend of 25% of the profit for the year, adjusted pursuant to Article 202 of
Law 6404/76.
The calculation of statutory dividends as at December 31, 2014 and 2013 is as
follows:
12.31.2014 12.31.2013
Profit for the year 447,370 426,972
Legal reserve 5% (22,369) (21,349)
Taxable base 425,001 405,623
Statutory dividends 25% 25%
Total 106,250 101,405
Dividends advanced (79,222) (79,222)
Dividends proposed 27,028 22,183
Dividends per share 0.3085 0.29440
71
18. REVENUES
Broken down as follows:
Consolidated 12.31.2014 12.31.2013
Revenue from services provided 2,431,851 2,300,436
Revenue from construction services 1,757,447 1,258,870
Other revenues 47,060 42,877
4,236,358 3,602,183
The reconciliation between gross revenue and net revenue presented in the income
statement for the year is as follows:
Consolidated 12.31.2014 12.31.2013
Gross revenue 4,236,358 3,602,183
Service tax (ISSQN) (123,318) (134,753)
Tax on revenue (PIS) (17,271) (16,382)
Tax on revenue (COFINS) (76,084) (73,209)
Other deductions (1,552) (366)
Net revenue 4,018,133 3,377,473
19. COSTS AND EXPENSES BY NATURE
Broken down as follows: Parent Company
12.31.2014 12.31.2013
Expenses:
Personnel (1,193) (4,814)
Outsourced services 817 (7,488)
Depreciation and amortization (1,802) (1,269)
Insurance and guarantees (1) (44)
Consumption (91) (491)
Transportation (140) (490)
Other (1,414) (6,112)
Total (3,824) (20,708)
72
Consolidated
12.31.2014 12.31.2013
Costs:
Construction cost (1,757,447) (1,258,870)
Personnel (141,455) (133,572)
Outsourced services (174,293) (155,471)
Depreciation and amortization (336,786) (270,630)
Costs with Concession Authority (22,660) (32,554)
Insurance and guarantees (23,174) (19,748)
Conservation (104,936) (100,807)
Provision for maintenance in highways (145,463) (196,030)
Inspection fee (38,773) (36,689)
Other (67,483) (32,744)
Total (2,812,470) (2,237,115)
Consolidated
12.31.2014 12.31.2013
Expenses:
Personnel (77,557) (78,084)
Outsourced services (39,433) (42,423)
Depreciation and amortization (7,903) (15,115)
Civil, labor and tax risks (9,576) (3,960)
Insurance and guarantees (1,854) (1,558)
Other (45,763) (40,678)
Total (182,086) (181,818)
20. FINANCE INCOME (COSTS)
Represented by:
Parent Company
12.31.2014 12.31.2013
Finance income:
Interest income 134,161 60,878
Short-term investments 9,228 11,828
Other income 73 19
Total 143,462 72,725
Finance costs:
Finance charges (157,968) (71,383)
Other costs (4,557) (16,064)
Total (162,525) (87,447)
73
Consolidated
12.31.2014 12.31.2013
Finance income:
Interest income 4,256 983
Short-term investments 122,514 58,468
Finance charges – reversal of discount to present value - 71
Other income 605 1,539
Total 127,375 61,061
Finance costs: Finance charges (383,045) (263,120)
Inflation adjustment of concession fees (22,093) (28,505)
Finance charges – discount to present value (26,958) (22,713)
Other costs (17,977) (24,486)
Total (450,073) (338,824)
21. STATEMENT OF CASH FLOWS
a) Cash and cash equivalents
The breakdown of cash and cash equivalents included in the statement of cash flows is stated in Note 5.
b) Supplemental information
12.31.2014 12.31.2013 Non-cash investing and financing transactions: Purchases of intangible assets recognized under trade payables, related parties, contractual guarantees and taxes payable 60,151 18,514
Capital contribution – Profit reserves 19,612 21,960
Capitalized interest 78,426 35,344
Dividends proposed 4,697
22. RECONCILIATION OF INCOME TAX AND SOCIAL CONTRIBUTION
The reconciliation of effective and statutory income tax and social contribution rates in the income statements for the years ended December 31, 2014 and 2013 is as follows:
Parent Company 12.31.2014 12.31.2013
Profit before income tax and social contribution 448,511 426,970
Combined statutory rate 34% 34%
Income tax and social contribution according to the combined statutory rate (152,493) (145,169)
74
Adjustments to effective rate:
Equity in the earnings (losses) of subsidiaries 158,853 158,491
Interest on capital received (8,499) (7,879)
Credit on tax loss and tax loss carryforwards on which the effects of deferred income tax and social contribution were not recognized - -
Other adjustments 998 (5,443)
Expense recognized (1,141) -
Income tax and social contribution expense:
Current (1,141) -
Consolidated 12.31.2014 12.31.2013
Profit before income tax and social contribution 690,157 669,256
Combined statutory rate 34% 34%
Income tax and social contribution according to the combined statutory rate (234,653) (227,547)
Credit on tax loss and tax loss carryforwards on which the effects of deferred income tax and social contribution were not recognized -
Adjustments to effective rate:
Other adjustments 1,882 24,631
Expense recognized (233,297) (202,916)
Income tax and social contribution expense:
Current (231,128) (230,600)
Deferred (2,169) 27,684
The effects of certain items of such reconciliation, on which no deferred income tax
and social contribution were recognized, arise from specific tax situations of
companies that did not meet the conditions established in the accounting standard
for recognition of deferred tax assets.
On November 11, 2013, the Provisional Measure 627, converted into Law No. 12,973,
as of May 13, 2014, was published, introducing changes in tax rules and revoking the
Transitional Tax Regime (RTT), adopted by the Company and its subsidiaries for
calculation of income tax and social contribution on net income.
On December 31, 2014, the Company’s Management resolved on its early adoption
as provided for by laws for the fiscal year of 2014, referring to subsidiaries Autovias
and Centrovias. Other subsidiaries will apply referred law when it takes effect as of
2015. The adjustments were not relevant for the Company and consolidated results.
75
23. EARNINGS PER SHARE
The tables below present the reconciliation of profit for the year to the weighted
average of the value per share used for calculation of basic earnings and diluted
earnings per share.
Parent Company 12.31.2014 12.31.2013
Profit for the year 447,370 426,970
Number of shares during the year 344,444 344,444
Earnings per share – basic 1.2988 1.2396
Consolidated 12.31.2014 12.31.2013
Basic
Profit for the year 456,860 466,340
Number of shares during the year 344,444 344,444
Earnings per share – basic 1.3264 1.3539
There is no difference between basic and diluted earnings per share, since during
the fiscal year ended December 31, 2014 there were no equity instruments with
dilutive effect.
The weighted average number of common shares used in the calculation of diluted
earnings per share reconciles to the weighted average number of common shares
used in the calculation of basic earnings per share. There are no longer quantities as
employee options and/or other options to be reconciled.
24. FINANCIAL INSTRUMENTS
According to their nature, financial instruments may involve known or unknown risks
and a potential risk assessment is important. The main market risk factors that may
affect the business of the Company and its subsidiaries are as follows:
Capital risk management
The Company’s management manages its cash in order to be able to continue as a
going concern and maximize the funds for use in new investments, as well as to
provide return to shareholders.
The Company’s capital structure consists of financial liabilities, cash and cash
equivalents, marketable securities and equity, comprising share capital and profit
reserves.
76
Management periodically reviews the capital structure and its ability to settle its
liabilities, and timely monitors the average term of suppliers in relation to the
average turnover of current assets, taking the necessary actions when the ratio
between these balances presents assets higher than liabilities.
The Company’s objectives when managing capital are to safeguard its ability to
continue as a going concern in order to provide return to shareholders and benefits
to other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital and maximize the funds for use in new investments and investments
in existing businesses.
Fair value of financial instruments carried at amortized cost
The financial instruments held by the Company are carried at amortized cost and
approximate their fair value because:
Borrowings, financing and debentures: are substantially contracted at floating
interest rates.
Trade receivables and payables: have average term of 30 days.
Cash and cash equivalents and restricted investments: are substantially indexed to
the CDI.
As the nature, characteristics and contracted conditions are reflected in the
carrying amounts, the eligible balances are discounted to present value, when
applicable. The Company and its subsidiaries did not hold derivatives or other
instruments with similar risks. Differences might occur if these amounts were
settled in advance.
Parent Company Consolidated
12.31.2014 12.31.2013 12.31.2014 12.31.2013
Assets Loans receivable
Loans receivable
Loans receivable
Loans receivable
Cash and cash equivalents 109,516 185,442 1,410,451 929,911
Related parties 1,370,882 848,053 - -
Trade receivables - - 154,062 126,709
Restricted Investments - - 259,237 110,987
Other receivables 1,267 2,826 6,806 5,691
Parent Company Consolidated
12.31.2014 12.31.201
3 12.31.2014 12.31.2013
Liabilities Financial
liabilities at amortized cost
Financial liabilities
at amortized
Financial liabilities at
amortized cost
Financial liabilities at amortized
cost
77
cost
Trade payables and contractual guarantees 2,809 1,071 204,632 166,962
Borrowings and financing - - 2,915,662 2,291,979
Debentures 539,526 205,022 3,136,843 1,832,749
Related parties 1,231,293 889,252 - -
Concession fees - - 237,500 286,839
Other payables 2,756 4,347 10,165 9,833
Market risks
a) Exposure to exchange rate risks
As at December 31, 2014 and 2013, the Company and its subsidiaries did not
have any material assets or liabilities denominated in foreign currency.
b) Exposure to interest rate risks
The Company, through its subsidiaries, is exposed to normal market risks related
to TJLP, IPCA and CDI fluctuation in connection with real-denominated
borrowings and debentures. Interest on short-term investments is pegged to CDI
fluctuation.
As at December 31, 2014, Management carried out a sensitivity analysis, taking
into account 25% and 50% increases and a 25% decrease in expected interest
rates on the balances of borrowings and financing and debentures, net of short-
term investments.
Indicators Scenario I (probable)
Scenario II (+ 25%)
Scenario III (- 25%)
Scenario IV (+ 50%)
CDI 12.50% 15.63% 18.75% 9.38%
Interest to be incurred(*) (246,002) (300,827) (354,553) (192,595)
Income from short-term investments 169,345 211,623 253,902 127,067
TJLP 5.00% 6.25% 3.75% 7.50%
Interest to be incurred(*) (176,214) (203,924) (231,189) (148,711)
Extended Consumer Price Index (IPCA) 6.40% 8.00% 9.60% 4.80%
Interest to be incurred(*) (33,483) (38,755) (44,812) (27,720)
Interest to be incurred, net(*) (286,354) (331,883) (376,652) (241,959) Source of indexes: Focus Report- Brazilian Central Bank (Bacen).
(*) Refers to the scenario of interest to be incurred in the shorter of the next
12 months or up to the agreement termination date.
78
These presentations are additional to the disclosures required by IFRS,
being in conformity with the disclosures required by the CVM.
c) Credit risk
As at December 31, 2014, the subsidiaries have receivables totaling R$137,923
(R$119,714 at December 31, 2013) from CGMP - Centro de Gestão de Meios de
Pagamento S.A., Dbtrans, Conectar and Autoexpresso, arising from tolls
collected by the electronic toll payment system (“Sem Parar”), recognized in
line item “Trade receivables”.
The subsidiaries have a letter of guarantee issued by a bank to secure the
collection of such receivables from CGMP.
d) Liquidity risk
Liquidity risk is managed by the parent company Arteris S.A., which has an
appropriate liquidity risk management model for the needs to obtain funding
and manage liquidity on a short-, medium- and long-term basis.
The parent company manages liquidity risks by maintaining adequate reserves,
bank credit lines and other credit lines for obtaining funding in the form of
loans, as deemed appropriate, through ongoing monitoring of forecast and
actual cash flows, as well as through the combination of maturity profiles for
financial assets and liabilities.
The table below shows details of the remaining contractual maturity of the
Company’s non-derivative financial liabilities and the contractual amortization
terms. This table was prepared under the undiscounted cash flow method for
financial liabilities based on the most recent date on which the Company should
settle the respective obligations. The table includes interest and principal cash
flows. To the extent that the interest flows are post-fixed, the undiscounted
amount was obtained based on the interest curves at the end of the reporting
period. The contractual maturity is based on the most recent date on which the
Company should settle the respective obligations:
Type
Effective (weighted average) interest
rate % p.a.
2014 2015 2016 2017 After 2018
Total
Debentures - CDI 13.08 558,449 670,400 669,321 545,280 526,996 2,970,496
BNDES Automático 7.95 235,369 274,812 288,150 291,086 1,883,132 2,972,549
Finame 5.99 244,429 374,015 216,424 - - 834,868
Concession fees 3.89 144,264 343,926 340,244 250,664 - 1079,098
Lease 3.75 1,462 139 - - - 1,601
79
Working capital 12.60 6,740 11,943 - - - 18,683
Debentures - IPCA 13.30 265,239 253,995 223,020 260,135 - 1,002,389
Total
1,456,002 1,929,230 1,737,159 1,347,165 2,410,128 8,879,684
25. SEGMENT REPORTING
On January 1, 2009, the Company adopted CPC 22 and IFRS 8 – Segment Reporting,
which require that operating segments be identified based on internal reports
regarding the Company’s components that are regularly reviewed by the Company’s
officers, chief operating decision-makers, to allocate funds to the segment and
assess its performance.
As a means of managing its business in both financial and operational terms, the
Company has classified its businesses as construction and concession of highways.
These two divisions are considered the primary segments for purposes of disclosing
information. The main characteristics are mentioned in notes 2 and 4.1.
a) Income statement by segment
12.31.2014
Concession Construction Total
Eliminations and holding
Consolidated balance
Net revenue of the segment 4,018,133 488,362 4,506,495 (488,362) 4,018,133
Costs (2,839,340) (448,223) (3,287,563) 475,093 (2,812,470)
Gross profit 1,178,793 40,139 1,218,932 (13,269) 1,205,663
General and administrative expenses (193,289) (35,908) (229,197) 24,097 (205,100)
Other operating (expenses) income 807 120 927 11,041 11,968
Finance income 239,933 2,814 242,747 (115,372) 127,375
Finance costs (543,545) (2,474) (546,019) 95,946 (450,073)
Foreign exchange gain (loss), net 324 324
Operating profit before taxes 682,699 4,691 687,390 2,767 690,157
Income tax and social contribution:
Current (224.034) (5.953) (229.987) (1.141) (231.128)
Deferred (1.453) 4.151 2.698 (4.867) (2.169)
Profit for the year 457.212 2.889 460.101 (3.241) 456.860
12.31.2013
Concession Construction Total
Eliminations and holding
Consolidated balance
Net revenue of the segment 3,378,837 518,275 3,897,112 (519,639) 3,377,473
Costs (2,278,381) (485,540) (2,763,921) 526,806 (2,237,115)
Gross profit 1,100,456 32,735 1,133,191 7,167 1,140,358
General and administrative expenses (147,901) (23,087) (170,988) (35,307) (206,295)
80
Other operating (expenses) income 2,910 (803) 2,107 10,853 12,960
Finance income 117,613 2,056 119,669 (58,608) 61,061
Finance costs (381,168) (1,538) (382,706) 43,882 (338,824)
Foreign exchange gain (loss), net - - - (4) (4)
Operating profit before taxes 691,910 9,363 701,273 (32,017) 669,256
Income tax and social contribution:
Current (225,556) (5,044) (230,600) - (230,600)
Deferred 215 2,417 2,632 25,052 27,684
Profit for the year 466,569 6,736 473,305 (6,965) 466,340
b) Balance sheets by segment
12.31.2014
Assets Concession Construction Total Eliminations and holding
Consolidated balance
CURRENT ASSETS Cash and cash equivalents 1,279,341 21,594 1,300,935 109,516 1,410,451
Trade receivables 152,835 1,227 154,062 - 154,062
Restricted investments 174,377 - 174,377 - 174,377
Amounts due from related parties 107,049 - 107,049 (107,049) -
Other current assets 54,099 60,279 114,378 (34,782) 79,596
Total current assets 1,760,757 83,100 1,843,857 (32,315) 1,818,486
NON-CURRENT ASSETS Restricted investments 84,860 - 84,860 - 84,860
Amounts due from related parties 1,124,251 - 1,124251 (1,124,251) -
Deferred income tax and social contribution 155,009 8,709 163,718 20,188 183,906
Other non-current assets 48,706 542 49,248 6,213 55,461
Property and equipment 16,436 35,877 52,313 9,173 61,486
Intangible assets 7,380,334 5,904 7,386,238 9,391 7,395,629
Deferred charges 59,373 59,373 (59,373)
Total non-current assets 8,868,969 51,032 8,920,001 (1,138,659) 7,781,342
Total assets 10,636,670 134,132 10,770,802 (1,170,974) 9,599,828
81
12.31.2014
Liabilities Concession Construction Total Eliminations and holding
Consolidated balance
CURRENT LIABILITIES Borrowings and financing 188,356 10,509 198,865 - 198,865
Debentures 649,012 - 649,012 230,372 879,384
Trade payables 125,281 14,778 140,059 2,809 142,868
Payroll and related taxes 106,139 27,374 133,513 16,050 149,563
Concession fees 74,452 - 74,452 - 74,452
Dividends proposed 6,929 - 6,929 20,099 27,028
Claims received 39,266 - 39,266 (20,919) 18,347
Provision for maintenance/investments 193,538 - 193,538 - 193,538
Other current liabilities 321,909 8,361 330,270 (256,499) 73,771
Total current liabilities 1,704,882 61,022 1,765,904 (8,088) 1,757,816
NON-CURRENT LIABILITIES
Borrowings and financing 2,804,569 10,164 2,814,733 (97,936) 2,716,797
Debentures 1,948,521 - 1,948,521 308,938 2,257,459
Concession fees 163,048 - 163,048 - 163,048
Provision for maintenance/investment 469,364 - 469,364 - 469,364
Other non-current liabilities 1,147,882 4,360 1,152,242 (1,045,675) 106,567
Total non-current liabilities 6,533,384 14,524 6,547,908 (834,673) 5,713,235
Equity 2,398,404 58,586 2,456,990 (328,213) 2,128,777
Total liabilities 10,636,670 134,132 10,770,802 (1,170,974) 9,599,828
82
12.31.2013
Assets Concession Construction Total Eliminations and holding
Consolidated balance
CURRENT ASSETS Cash and cash equivalents 708,395 36,074 744,469 185,442 929,911
Trade receivables 125,981 728 126,709 - 126,709 Restricted investments 47,383 - 47,383 - 47,383 Amounts due from related parties 60,682 - 60,682 (60,682) - Other current assets 33,044 79,073 112,117 (54,662) 57,455 Total current assets 975,485 115,875 1,091,360 70,098 1,161,458
NON-CURRENT ASSETS Restricted investments 63,604 - 63,604 - 63,604
Amounts due from related parties 828,577 - 828,577 (828,577) - Deferred income tax and social contribution 142,495 4,558 147,053 25,055 172,108 Other non-current assets 15,565 268 15,833 6,162 21,995 Property and equipment 19,298 21,984 41,282 5,095 46,377 Intangible assets 5,895,424 7,386 5,902,810 659 5,903,469 Deferred charges 84,424 - 84,424 (84,424) - Total non-current assets 7,049,387 34,196 7,083,583 (876,030) 6,207,553 Total assets 8,024,872 150,071 8,174,943 (805,932) 7,369,011
12.31.2013
Liabilities
Concession Construction Total Eliminations and holding
Consolidated balance
CURRENT LIABILITIES Borrowings and financing 136,872 6,008 142,880 109 142,989
Debentures 145,511 - 145,511 (18) 145,493
Trade payables 99,345 21,764 121,109 1,006 122,115
Payroll and related taxes 113,322 35,017 148,339 14,239 162,578
Concession fees 70,299 - 70,299 - 70,299
Dividends proposed 14,632 - 14,632 7,551 22,183 Provision for maintenance/investments in highways - - - 40,152 40,152
Claims received 139,532 - 139,532 - 139,532
Other current liabilities 208,327 15,738 224,065 (168,915) 55,150
Total current liabilities 927,840 78,527 1,006,367 (105,876) 900,491
NON-CURRENT LIABILITIES Borrowings and financing 2,283,329 4,578 2,287,907 (138,917) 2,148,990
Debentures 1,482,450 - 1,482,450 204,806 1,687,256
Concession fees 216,540 - 216,540 - 216,540
Provision for maintenance/investment 444,546 - 444,546 - 444,546
Other non-current liabilities 734,311 4,228 738,539 (646,924) 91,615
Total non-current liabilities 5,161,176 8,806 5,169,982 (581,035) 4,588,947
Equity 1,935,856 62,738 1,998,594 (119,021) 1,879,573
Total liabilities 8,024,872 150,071 8,174,943 (805,932) 7,369,011
26. GUARANTEES AND INSURANCES
By force of contract, the concessionaires maintain regularized and updated the
guarantees covering expansion and special conservation functions, as well as
operating functions, ordinary upkeep of the highway network and payment of the
fixed concession fees, when applicable. In addition, as required by contract and the
internal risk management policy, the concessions have insurance policies in place
83
for operating risks, engineering risks and civil liability, to ensure coverage of
damages arising from risks inherent to its activities, such as loss of revenue, total or
partial destruction of works and assets that are part of the concession, as well as
property damage and bodily injury to users. All of them are in accordance with
international standards for projects of this nature.
As at December 31, 2014, the subsidiaries’ insurance coverage is summarized as
follows:
Indemnity limits – state concessions
Type Covered risks Autovias Centrovias Intervias Vianorte
All risks Property damage/loss of revenue(*) 180,000 180,000 180,000 180,000
Civil liability 17,000 24,000 21,000 24,000
Guarantee Concession agreement performance
guarantee 92,626 131,448 160,272 122,292
Indemnity limits – federal concessions
Type Covered risks Planalto
Sul Fluminense
Fernão Dias
Régis Bittencourt
Litoral Sul
All risks Property damage/loss
of revenue(*) 180,000 180,000 180,000 180,000 180,000
Civil liability 20,000 20,000 20,000 20,000 20,000
Guarantee Concession agreement performance guarantee 50,640 74,369 131,061 139,839 106,548
(*) By claim
The Company has also civil liability insurance policies for board members, directors
and officers, with an indemnity limit of R$62,000.
27. EVENTS AFTER THE REPORTING PERIOD
Planalto Sul
As per the Extraordinary Shareholders’ Meeting of January 26, 2015, the Company
entered into a loan agreement with the parent company Arteris totaling R$13
million. This agreement matures on March 27, 2015, with annual interest rate of
1.4% plus 100% of CDI rate variation as of the date of reimbursement. Referred
proceeds will be allocated to finance the investments estimated in the Company’s
work schedule.
On January 28, 2015, the Company obtained the 10th release for the sub-credit “C”
totaling R$2.5 million of the long-term loan entered into with the Brazilian
Development Bank (BNDES). With such release, the Company raised R$331.3 million
estimated for the abovementioned agreement.
84
As per the Extraordinary Shareholders’ Meeting of February 13, 2015, the Company
entered into a loan agreement with the parent company Arteris totaling R$13
million. Referred agreement matures on April 13, 2015, with annual interest rate of
1.4% plus 100% CDI rate variation as of the date of reimbursement. Referred
proceeds will be allocated to finance investments estimated in the Company’s work
schedule.
Litoral Sul
On January 26, 2015, a total of 14,781,966 non-par common shares were fully paid
and subscribed (R$20,000) through the Minutes of the Extraordinary Shareholders’
Meeting.
Fernão Dias
On January 26, 2015, a total of 10,752,688 new non-par, registered common shares
were fully paid at the issue price of R$0.93, totaling R$10,000, and subscribed on
January 26, 2015 through the Minutes of the Extraordinary Shareholders’ Meeting.
The payment was made in domestic currency, by means of capitalization of credits
Arteris S.A. holds in the concessionaire in view of loan agreements signed.
Total subscribed and paid-up capital stock is R$348,001,003.00, divided into
351,484,816 shares.
ARTERIS S.A.
Corporate Taxpayers’ ID (CNPJ): 02.919.555/0001-67
Company Registry (NIRE): 35.300.322.746
Publicly-Held Company
FISCAL COUNCIL’S REPORT
On a meeting held on this date, at 10:00 a.m., the members of the Fiscal Council of ARTERIS S.A.
(“Company”), in compliance with Article 163 of Law 6404/76, after examining Management’s
documents and proposals submitted to analysis on this date, and in view of the unqualified report issued
by BDO Auditores Independentes, is unanimously favorable to the approval at the Company’s Annual
Shareholders’ Meeting, to be held on April 8, 2015, and based on the Management Report and the
Financial Statements for the fiscal year ended December 31, 2014 (such documents were notarized by the
Board and filed at the Company as Docs. 1, 2 and 3, respectively), of the allocation of net income for the
year, totaling four hundred forty-seven million, three hundred seventy thousand, four hundred twenty-six
reais and eighty-nine centavos (R$447,370,426.89), of which (i) twenty-two million, three hundred sixty-
eight thousand, five hundred twenty-one reais and thirty-four centavos (R$22,368,521.34) corresponding
to 5% of the net income for the year, allocated to the legal reserve, in accordance with the law and the
Company’s Bylaws; (ii) one hundred six million, two hundred fifty thousand, four hundred seventy-six
reais and thirty-nine centavos (R$106,250,476.39), corresponding to 25% of the net income for the year,
for the distribution of mandatory dividends related to 2014, as per Article 22 of the Company’s Bylaws,
of which seventy-nine million, two hundred twenty-two thousand, two hundred twenty-one reais and
twenty centavos (R$79,222,221.20) already distributed on November 28, 2014, remaining twenty-seven
million, twenty-eight thousand, two hundred fifty-five reais and nineteen centavos (R$27,028,255.19) to
be distributed to the Company’s shareholders; (iii) three hundred eighteen million, seven hundred fifty-
one thousand, four hundred twenty-nine reais and sixteen centavos (R$318,751,429.16) allocated to the
profit reserve to cover the capital budget duly prepared by the Board of Executive Officers, which was
submitted to analysis and approved by the Company’s Fiscal Council and which shall be submitted to the
analysis and approved by the Company’s Board of Directors, pursuant to Article 196 of Law 6404/76.
However, if the allocations proposed herein are approved without restrictions, the amount of the profit
reserves will exceed the amount of capital stock and will not comply with the limit established in Article
199 of Law 6404/76. Accordingly, the Board members also recommend the capitalization of a portion of
the balance of the reserves that exceed the Company’s capital stock, of one hundred fifty-nine million,
three hundred seventy-five thousand, seven hundred fourteen reais and fifty-eight centavos
(R$159,375,714.58).
São Paulo, February 24, 2015.
“This is a free English translation of the original minutes drawn up in the Company’s records”
Maria de Castro Michielin
Secretary
2015 Capital Budget Proposal
In accordance with Article 196 of Law 6404/76, the Company’s Board of Directors submits to your analysis
and vote at the Annual Shareholders’ Meeting to be held on April 08, 2015, the 2015 capital budget proposal,
as outlined in the table below:
Additionally, in light of the investment commitments made to the Concession Authority with respect to its five
federal concessionaires, the Company expects to invest approximately R$5.4 billion during the entire
concession term. These investments in fixed and intangible assets include spending on the construction,
improvement and maintenance of the highway stretches managed by the Company, consistent with its long-
term investment plan and the legal requirements of its concession contracts.
Cash Flow Estimate for 2014 In thousands of Brazilian reais
Opening cash 1.410
Cash flow generated by operations after income tax 1.388
New financing and finance income minus financing amortization and
payment of f inance costs 319
Payment of dividends - Annual Shareholders' Meeting (27)
Payment of interim dividends (Nov/14) (69)
Cash available for investments 3.022
Investments expected - concessions (2.067)
Other investments in projects and equipment (11)
Closing cash 943