Yesterday we had the release of the results for the fourth quarter of the company Taesa and today I participated in the Webcast with the other shareholders to try to understand why some investors were happy and others were sad.
Today I participated in the Webcast for the release of the fourth quarter results and came across a results presentation, in which the directors of the electricity transmission company showed the results based on the regulatory net profit. Observing these results, I noticed very positive numbers and very expressive growth. If we look at the annual net income, we will see that the growth was practically doubled from year to year, with some developments being delivered and concluded. We also note that the operating performance remains at a high availability rate and that the net debt has been decreasing throughout this year. It was also announced that there would be distribution of JCP dividends , if approved by the board of directors , in the amount of R$1.3 billion, referring to the year 2022.
However, even with the numbers presented in its Webcast, we have that the company's share price (TAE3) fell only 4% today.
Why did the market react negatively to the 4th quarter 2022 earnings release?
What happens is that Taesa has two accounting standards in which it registers its results. The first of them is the oldest, which came before 2010, and is the accounting system allowed by the National Electric Energy Agency (ANEEL). In this accounting standard, which was used in the presentation, the growth numbers were very expressive.
However, in 2010, Brazilian companies listed on B3 were required by law to account for their data in accordance with the international standard IFRS . Since then, we have had a change in the way of accounting for property, plant and equipment, because according to IFRS , all infrastructure built by the operator is not recorded as fixed assets of the operator itself because the concession contract does not transfer ownership from the Union to the company. That is, everything that Taesa builds in power lines , according to IFRS, cannot be considered fixed assets , and must be accounted for as a financial asset . Therefore, when we observe the accounting numbers from the perspective of the IFRS , which amortizes and adjusts the financial asset according to inflationary data such as IPCA and IGP-M , we have different results from those of the regulatory standard.
When we observe the 2022 Income Statement (DRE) , we understand a little more how these two types of accounting work. For example, in the IFRS , in the account of receipts by transmission systems, there is no type of revenue, while in the regulatory one practically all revenue enters this account. Even so, under IFRS, we have other accounts, such as operation and maintenance, remuneration of contractual assets, monetary restatement, implementation revenue and others, which do not exist in accounting using the regulatory method. So, basically, there are two systems that exist and the law allows Taesa to record its results. And as we see in the DRE , they result in different numbers. And that's why one investor was happy and the other investor was sad.
Which of the two accounting systems should you trust?
I believe in both! You should take a look at both the IFRS result and the regulatory result. But above all, never stop trying to understand how Taesa's RAP works, as reading the RAP provides us with a good estimate of the company's future.
Youtube link: https://youtu.be/4hjG7S_rKhA