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Being of Minas, but being of the world. Being proud of its roots, of its tracks and having faith that the best chapters are still ahead. COPASA and the Ponto de Partida Group, share Minas’ values and the ability to build with them a history that foments traditions, that mixes the local to the universal keeping the focus on the future, on the new.

Sanitation is a fundamental factor for the development of a region as it socially and economically affects the served communities and guarantees quality of life and health for the population by implementing the necessary sanitary conditions for collective welfare, making available treated water and collection and sewer treatment.

The set of measures which ensures that these conditions are echoed in a significant way in the economic field, contributing for the rationalization of the expenses with health, the reduction of absenteeism in schools and in companies. From a productive point of view, the services of water supply and sanitary sewage involve development opportunities, enabling enterprising initiatives that generate, directly and indirectly, jobs and income for the local population.

In this scenario, as a concessionaire of water supply and sanitary sewage services in the State of Minas Gerais, COPASA maintains a relation with its interested parties, dedicated to a policy addressed to the exercise of its activities based on legal and ethical principles. It increments its active actions with the several publics of its area of influence, with actual customer or with the population identified as potential user of the services, acting with a focus on the economic-financial balance, the improvement of the corporate governance and on the socio-environmental responsibility principles.

The Company invests in the expansion of the sanitation public service users’ attendance, implementing actions addressed to the universalization of these services with a focus on the sustainable development of the Company and of the communities. This is a permanent commitment of the high administration, allied to the endeavor of COPASA functional team looking forward to vanquish the constant challenges and to ensure better life health and quality conditions for the served populations.

 

THE HISTORY OF COPASA

It was created on July 5th by State Law 2842, Companhia Mineira de Água e Esgotos (Comag) (the Water and Sewage Company of Minas Gerais), which purpose was to define and execute the ample policy of sanitation for the State of Minas Gerais. Up to then, the State had no sanitation policy and the conditions of water supply and sanitation services were insufficient to ensure life quality and health of the population.

In 1971, with purposes to be achieved in the country by the sanitation sector, the Federal Government issued the National Sanitation Plan (Planasa). During that same period, the Municipal Water and Sewage Department of Belo Horizonte (DEMAE), responsible for the rendering of these services in the city of Belo Horizonte, was incorporated to Comag. This adhesion and the changes introduced by Planasa, especially the technical-financial support increment to the work developed by the state sanitation companies, provided a significant impulse to the Company’s growth..

(GRI 2.1) As of that moment, Comag started to suffer a series of modifications in order to adjust itself to the needs of the Basic Sanitation Policy of the State of Minas Gerais, among them, the alteration of its name to Companhia de Saneamento de Minas Gerais [Sanitation Company of Minas Gerais] (COPASA MG), by Law 6475/74. COPASA’s main activity is the water supply and sewage rendering of public services which include the planning and preparation of projects up to their execution, expansion, remodeling and exploitation of sanitation services. (GRI 2.2)

In 2006, the Company realized its Initial Public Offering – IPO – entering into BM&FBOVESPA New Market, a distinct segment that demands a clearer transparency and stricter rules of corporate governance. COPASA’s main expectation at the time of the initial public offer was the raising of resources for the Company’s expansion. In April 2008, a secondary offer of shares was made in which the shareholder Município de Belo Horizonte (Belo Horizonte Municipality) disposed of the totality of its shares and the shareholder Estado de Minas Gerais (the State of Minas Gerais) sold part of its shares without losing the Company’s corporate control.

The activities of COPASA’s board of directors and its employees demonstrate the endeavor of the Government of Minas Gerais for the improvement of the infrastructure and health conditions in the State, assuming a decisive role in the resuming of the economic and social development of Minas Gerais. The Company incorporated in its managing practices the strategic planning, the technological innovation and the relation improvement with its customers. (GRI 4.11)

 

KEY INDICATORS (DATA FROM THE CONTROLLER’S OFFICE)
(GRI EC1)










(GRI EN8)







¹ The 2009 EBITDA was adjusted for the exclusion of the profit in the disposal of assets for COPANOR, item not recurrent in 2009 for a value of R$6.1 million and for 2010 the value was adjusted for exclusion of the actuarial liability reversal in the value of R$313.1 million.
² The 2010 EBITDA was impacted by the reversal of the net actuarial liability provision of R$313.1 million. As this refers to an item not recurrent, the adjusted EBITDA for the period is R$923 million.
³ 2010 and 2011 adjusted data of the COPANOR subsidiary.
(GRI 3.10)

 

COPASA IN 2011
(GRI 2.7; 2.8; 2.9; 2.10)

COPASA ended the year with a supply of treated water to 13.6 million people or 69.2% of the State of Minas Gerais total population. 134 thousand new water connections were effected and installation of 362 km of new distribution networks, summing a total of 43,906 km.

COPASA expanded its attendance with sanitary sewage services, now serving 176 Minas Gerais municipalities, favoring a population of 8.3 million people. The volume of treated sewer reached 182.2 million m3, almost 16% above the volume recorded in 2010. This increment was due to the starting operation of eight new Estações de Tratamento de Esgoto (ETEs) [Sewer Treating Stations].

*Situation on December 31st, 2011”

COPASA ended the year with a water and sewage net operational income of R$2.51 billion and EBITDA of R$1.07 billion, with a margin of 40.9%. Total investments were R$682.9 million, a value applied mainly in water supply systems (R$270.5 million) and in sanitary sewer systems (R$390.6 million) which resulted in a significant expansion of attending capacity to public service users of sanitation served by the Company.

COPASA’s market value on December 31st, 2011, is R$3.84 billion.

 

5th Brand of Greatest Prestige in Minas Gerais
(GRI 2.10)

COPASA was rated among the first ten brands of greatest prestige and reputation in the State of Minas Gerais, by an investigation made by the Troiano Group in partnership with Ideia Comunicação and published in a special issue of the newspaper Jornal Estado de Minas. In the second year of the study, 60 organizations were selected based on an investigation made by Exame and Valor magazines and submitted for assessment to 4,520 interviewed persons in different regions of the State of Minas Gerais. One of COPASA highlights revealed by the investigation is the strong image of socio-environmental responsibility that the Company presents before the Minas people for its important work of sanitary and environmental education it provides especially with the student public. (See Environmental Education) link

 

Moody’s Agency assigns a rating to COPASA

In its first risk classification rating by a specialized agency, COPASA was assigned by Moody’s an “Aa2” corporate rating at the Brazilian National Scale, which is equivalent to a High Credit Quality, corresponding to a “Ba1” at the global scale level, incorporating, in this case, the Brazil Risk. In the document published by Moody’s, the Agency enhances COPASA financial and credit indicators and its stable cash flow, the result of existing long-term concession contracts with 620 municipalities of the State of Minas Gerais, its high operational efficiency, low rates of default, assured access to water supply and diversified customer base. It emphasizes as well the Company’s expansion capacity, the observance to the expectations in terms of quality on rendered services and operational performance, besides the support of the State Government in view of COPASA role as essential service provider and the importance of the tariff review for the Company’s expansion.

 

A Brazilian Corporate Highlight in Sustainable Environment and Development
(GRI 2.10)

An additional award for actions and initiatives in favor of the environment was won by COPASA. The Company was among the 50 Brazilian organizations that won the Brazilian Corporate Highlight in Sustainable Environment and Development – edition 2011. The award granted by Instituto Ambiental Biosfera (Biosphere Environmental Institution), of the Federação das Indústrias do Rio de Janeiro

 

Companies that Best Communicate with Journalists
(GRI 2.10)

COPASA press office was granted the award of Companies that Best Communicate with Journalists. The awarding, granted by Negócios de Comunicação (Communication Business) Magazine, aims to acknowledge the quality of the relation that companies have with journalists and with the media.

COPASA’s Office choice was made from an investigation with 25 thousand communication professionals realized by H2R and audited by Consultoria BDO. Three companies were selected from each of the 30 sectors of the Brazilian economy that were distinguished during 2011.

 

Trade Corporate Governance Index (TCGI)

The shares of COPASA (BM&FBOVESPA: CSMG3) comprise the new BM&FBOVESPA indicator – the Index of Trade Corporate Governance (IGCT) since its institution, in January 2011. With the objective of examining the performance of the papers issued by organizations that voluntarily adopt distinct corporate governance standards, IGCT differs from the already existent index, the Corporate Governance Index (CGI), as it also takes into consideration the papers’ liquidity.

 

Corporate Sustainable Index (BM&FBOVESPA CSI)

COPASA comprises the ISE Corporate Sustainability Index of BM&FBOVESPA portfolio. The inclusion in the ISE for the second consecutive year translates the recognition of the Company’s commitment to socio-environmental responsibility and to corporate sustainability.

 

Health Medal of Honor
(GRI 2.10)

The Health Medal of Honor’s objective is to honor entities, persons and corporations that have been distinguished, in Minas Gerais, by rendered services to public health. COPASA was one of the companies who received the Health Medal of Honor, granted by the Health Agency of the State of Minas Gerais, as a Partner Public Institution of the Unified Health System (UHS). The medal was granted for relevant activities regarding the endeavors against the Dengue disease which is being developed by the Company.

 

Minas Award – Corporate Performance – Common Market – 2010/2011
(GRI 2.10)

COPASA was contemplated with the Minas Award – Corporate Performance – Common Market – 2010/2011, in the category of the “Best and Greatest Organizations of Minas Gerais”. In its 13th edition, the award is developed by investigations based on reports and balance sheets of the participants. The operational, financial and economic performances are taken into consideration. The selection and classification of the winning organizations are made by the management of the Mercado Comum Magazine.

 

2011 National Quality Award in Sanitation
(GRI 2.10)

Another inedited award was won by COPASA by becoming the first Brazilian sanitation company to win the National Quality Award in Sanitation (NQAS 2011) in the Platinum category, Level III, for the management of the whole Company. COPASA operations management also won trophies from NQAS. The East-Central Operation Board, created in 2011, and the South-West Operation Board won the Platinum Trophy while the North Operation Board, which was awarded the Platinum Trophy in 2010, received the best of all the awards of the sector, the Diamond Trophy, at Level IV.

Acknowledged by the International Water Association (IWA) as the most important managing tool of environmental sanitation services, NQAS encourages the adoption of managing models compatible with the best world examples. The award has the mission of stimulating the practice of the managing models by the promotion and the acknowledgement of successful cases that provide help and assistance for the improvement of the environmental sanitation sector and in increasing the population’s quality of life.

 

ADVB Socio-Environmental Top Award
(GRI 2.10)

The Program Chuá de Educação Sanitária e Ambiental (Chuá of Sanitary and Environmental Education Program) developed by COPASA was one of the winners of the State’s Socio-environmental Top Award, promoted by the Associação dos Dirigentes de Vendas e Marketing do Brasil (ADVB) (Association of Sales and Marketing Directors of Brazil), Minas Gerais section. The awarding seeks to acknowledge the best activities addressed to the preservation and socio-environmental and cultural incentive with proven efficiency with society and the environment.(See Programa Chuá).

 

Recertification of the Corporate Responsibility Seal
(GRI 2.10)

In 2011, due to the contribution of the improvement of the economic indicators and the quality of life of the Northern and Northeastern regions of the State of Minas Gerais, COPASA and COPANOR received the recertification of the Corporate Responsibility Seal from Centro Mineiro de Alianças Intersetoriais [Minas Gerais Center of Intersectoral Alliances] (CeMAIS) offered by a partnership between CeMAIS and the Government of the State of Minas Gerais. The objective of the seal is to identify and acknowledge companies committed to the development of the Vales do Jequitinhonha, Mucuri, São Mateus and Northern Minas Gerais regions.

 

Revival of the São Francisco River

COPASA signed a deal with Companhia de Desenvolvimento dos Vales do São Francisco do Parnaíba (CODEVASF) to guarantee the sanitation of the Minas Gerais municipalities located at the basin of the São Francisco River and to join forces for the revival of “Velho Chico”.

 

Vila Esperança

COPASA launched an important social undertaking in Teófilo Otoni, Vila Esperança, a housing complex built to serve families that lived in the area where today the dam of Todos os Santos River is being built. This complex consists of 23 houses and involved an investment of R$3 million from the State Government of Minas Gerais.

 

SUBSIDIARIES

(GRI 2.2; 2.3)Aiming to reinforce its presence and market position in the State of Minas Gerais and to take advantage of new businesses, in 2007 COPASA established three integral subsidiaries: COPASA Águas Minerais de Minas [COPASA Mineral Water of Minas], COPASA Serviços de Irrigação [COPASA Irrigation Services] and COPASA Serviços de Saneamento Integrado do Norte e Nordeste de Minas Gerais [COPASA Sanitation Services of North and Northeast of Minas Gerais (COPANOR).


COPASA Águas Minerais de Minas S.A. (AGMM)

The subsidiary COPASA Águas Minerais de Minas was established by the Government of the State of Minas Gerais under the form of a private equity company with the objective of promoting the development of one of the principal touristic resources of the State: the hydro-mineral resorts. The subsidiary is responsible for production, distribution and commercialization of mineral water from sources of the cities of Caxambu, Cambuquira and Lambari, in the Water Circuit of Minas Gerais, besides Araxá, historically known for their thermal sources. Their waters originate from centenary natural sources, conferring purity, softness and sophistication to the traded products.

Caxambu was the first mineral water to go back on the market through the COPASA subsidiary and is available since 2008 for all of the Southern Region of country. This is gourmet water by excellence having the natural capacity of expanding the taste perception. On the other hand, Cambuquira mineral water, considered one of the best waters in the world, went back on the market in July 2011, after the restructuring of the plant. Lambari and Araxá waters are forecasted to enter onto the market in 2012 after having been refurbished and adequacies to the requirements of the National Agency of Sanitary Vigilance (ANVISA) and of the National Department of Mineral Production (DNPM).

 
COPASAServiços de Irrigação S.A.(CSI)

COPASA Serviços de Irrigação S.A. (CSI) is a joint-stock Corporation, COPASA integral subsidiary, that was established in August 2007 with the objective of being an operating company of the irrigation system of common use of the Jaiba Project. The intention of the State Government of Minas Gerais by structuring the Stage II Jaíba Project was to promote the socio-economic development in the Northern Region of the State by generating jobs, income and production in a region favorable for good results in irrigation.

In this context, CSI was established to operate the irrigation system in a total area of 34.8 thousand hectares of which 11.3 thousand belong to an environmental reserved area and 19.3 thousand hectares are of an irrigable area. This latter are is divided into corporate lots which predominant cultures are sugar-cane, banana and grains. The principal activities of the subsidiary are:

  1. Operation of raw water distribution system for irrigation of the agriculture lots;
  2. Maintenance of the Stage II of the Jaíba Project infrastructure;
  3. Monitoring of the water quality.

In March 2008, CSI initiated the operation of the Jaíba II Project irrigation system from the formalization of a Technical and Financial Cooperation Deal with the State of Minas Gerais through the Planning and Management State Agency, the Agriculture, Livestock and Supply State Agency and the Minas Gerais Rural Foundation (Ruralminas). According to this deal and with the funding of the State Government, R$7.5 million will be invested for the adequacy of the operational infrastructure as well as the acquisition of machinery and equipment.

In 2011, CSI consolidated the use of the automated system implemented in 2010 in a partnership with Companhia de Desenvolvimento dos Vales do São Francisco e do Parnaíba (Codevasf) – (Development of the São Francisco and of the Parnaiba Valleys). The system is adjusted to the operational needs of the subsidiary and has a centralized control and monitoring in real time which provides a greater security and reliability in the rendered services.

When CSI assumed Stage II of the Jaíba Project it presented a low rate of occupation. But by the end of 2011, approximately 57% of the total area was already occupied, generating annual sales of about R$5.3 million.

This eminent growth was due to the security of the services COPASA Serviços de Irrigação S/A provided the investors of the irrigated agriculture and demonstrates that Stage II of the Jaíba Project is on its way to reach maturity. The expectation is that by the end of 2012 about 13 thousand hectares (67% of the area) will be occupied by agricultural production.

For 2012 the subsidiary forecasts a growth of 20% of the irrigated area to attend the expansion of the Jaíba Project Stage II irrigation plan.

 

COPASA Serviços de Saneamento Integrado do Norte e Nordeste de Minas Gerais (COPANOR)

Show the whole of Minas Gerais, building an identity that congregates this plural state and reveals it to the world. This contagious proposal is the art and history of Ponto de Partida which appear in its manner of being and of showing itself with valuable elements like happiness, proximity and diversity. While diverse in their essence, they complete themselves and enrich our culture and our people. And in this Minas (Mines) where there are so many, the challenge is to take good care of each and every one of the Mines of Minas Gerais, preparing to serve all in the best possible way.

With its headquarters in the city of Teófilo Otoni, the integral subsidiary COPANOR was established under the form of a private equity company for service rendering in all of the locations with populations between 200 and 500 inhabitants in the Northern and Northeastern regions of the State of Minas Gerais. As these are of a low Human Development Index (HDI), the objective of the Government of the State of Minas Gerais, with the creation of COPANOR, was to increase the servicing index of water and sewer, and to reduce the childhood death rate of the communities in the Northern Region and the region of the Jequitinhonha, Mucuri, São Mateus, Buranhém, Itanhém and Jucuruçu. COPANOR promotes the social inclusion, the pollution remedy of rivers and streams, providing a better quality of life to the population in its area of influence, the reduction of regional inequalities and of the so-called waterborne disease index.

The company is responsible for the implementation, operation and realization of the water supply and sanitary sewage systems maintenance according to COPASA quality standard. Furthermore, the subsidiary adopts a tariff model compatible to the socio-economic reality of the region without compromising the quality of the services. As the investment for the implementation of the water supply and sanitary sewage systems of COPANOR are subsidized by the State Government of Minas Gerais, the user pays only for the cost of the rendered service. The technological and organizational model adopted by the Company permits the increase of efficiency and the reduction of operational costs in the rendered sanitary services.

The subsidiary’s experience was one of the chosen by the World Bank as implementation and management model of sanitation services in Brazilian isolated communities by the “Studies and Models of Rural Sanitation” realized by the World Bank.

Of the 92 municipalities that will be part of COPANOR until December 2011, 81 Program Contracts and 87 Authorized Laws were signed, municipal documents that allow the transfer of the services to the subsidiary. There are now 163 locations being served, a benefit for more than 242 thousand people. Many of these people, who did not have a minimum infrastructure, started having sanitary modules with bathroom, washing-tank and shower in their homes. By the end of 2011, 830 modules were installed.

In 2011, R$63.47 million were invested for the acquisition of materials and equipment, wells drilling, construction of 120 new water supply and sanitary sewage systems; there are assured resources of R$100 million in 2012. All investments are provided by the State Government of Minas Gerais and transferred through a signed deal with the Health State Agency.

 

CONCESSIONS

The concession is the delegation, under contract, of the administration and water supply and sanitary sewage public service rendering for a defined period of time and under controlled conditions, including quality of the service and tariffs. In January 2007, Federal Law 11445 was issued, regulating the sanitation sector in the country and established the juridical-institutional bases. Since then, the new COPASA concessions or those that are renewed in municipalities/locations of the State of Minas Gerais for the water supply and sanitary sewage services have their legal framework composed of the Cooperation Deal and Program Contracts. The first is celebrated between the municipality, the State of Minas Gerais and the Regulating Agency of Water Supply and Sanitary Sewage Services of Minas Gerais (Arsae/MG); the second is between the municipality, the State of Minas Gerais and COPASA. These legal instruments contemplate all rights and obligations of the participants and confer the necessary transparency to the concession process.

In 2011, COPASA (controller) signed program contracts with municipalities of the State of Minas Gerais: five new concessions of water and 12 new concessions of sanitary sewage. 21 concessions of water were also renewed, according to the following table:

Also in 2011, the COPANOR subsidiary assumed new concessions in the municipalities of Bertópolis, Botumirim, Catuji, Itaipé, Mendes Pimentel, Pescador, Ponto dos Volantes and São Félix de Minas.

COPASA reached the end of 2011 as concessionaire for water services rendering in 620 Minas Gerais municipalities, as responsible as well for the sanitary sewage services in 225 of these municipalities.

In this universe, the Company is responsible for servicing a population of more than 13.6 million inhabitants in all of the State of Minas Gerais. The expectation for 2012 is the renewal of all expiring concessions and the expansion of its customer base according to the priorities established in the strategic planning.


PARTNERSHIPS AND TECHNICAL COOPERATION

Aligned with the strategic objectives of expanding the performing market, strengthening the Company’s image and raising the customers’ satisfaction by following its New Businesses Policy, COPASA continued to sign partnerships for which it seeks to implement the most adequate model to the business.

COPASA develops several activities of technical cooperation with the municipalities, sanitation companies and with the private sector, in Brazil and abroad. These initiatives, as technical assistance or as consulting, include, among others: water analyses; filling of cylinders with chloride, hydrometers maintenance, drilling, assembling and maintenance of artesian wells, projects and works of water supply and sanitary sewage, communitarian assistance, sanitary and environmental education, water supply by water-truck transportation, installation of automatic meteorological stations and technical publications.

During 2011, companies in several countries such as Mozambique, Peru and Paraguay visited COPASA for benchmarking or identification of future partnerships.

Among the deployment works of 2011, the following are emphasized:

 

Empresa Pública de Águas (EPAL) – Luanda/Angola

In March 2011, COPASA received a technical mission from the IT responsible people of EPAL who were looking for the improvement of the implementation of a corporate management integrated system (Enterprise Resource Planning ERP) in that company. Soon after, in June, the Company received from International Organization for Standardization (ISO) their water treatment team for training in certification, according to a Work Plan prepared by the parties with a focus on Water Treatment Stations. The results obtained in both missions provided a new impulse toward a partnership which started in 2008 and is now consolidating the interchange between the two companies and their respective teams.

 

Companhia de Saneamento da Capital (SANECAP) – Cuiabá/Mato Grosso (Brazil)

Effective since October 2007, the Technical Cooperation Deal with the Municipality of Cuiabá was concluded in October 2011, accounting for considerable results before the proposed objectives. The cooperation had the purpose to help in the Corporate Restructuring Program of the Sanitation Company of the Capital (SANECAP) seeking to rationalize, modernize and improving the operational, commercial and administrative processes.

 

Water Operator Partnership for Latin America and Caribbean (WOP–LAC)

The need of a cooperation mechanism between the sanitation companies of Latin America and the Caribbean region, as an example of what occurs in other continents, making it necessary for agencies like International Water Association (IWA), UN Habitat and the Inter-American Bank of Development to establish, in 2007, the WOP – LAC, a branch of the Water Operators Partnership for the region of Latin America and Caribbean.

WOP-LAC objective is to increment the technical cooperation between member countries in order to contribute for the dissemination of the best practices and to stimulate the pursuit for the universalization of the sanitation services in the region. COPASA, member of the Committee Board of this organization since its foundation, participated actively of their activities in 2011, realizing a workshop in which representatives of ten different countries from Latin America and Caribbean were present.

The workshop’s objective was to disseminate experiences in the control and reduction of water losses in public systems of supply, stimulating the problem’s discussion, common to sanitation companies. During this occasion, COPASA presented its Integrated Program of Control and Reduction of Electrical Power Losses and Costs. (See Energy Consumption and Energy Efficiency)