Cosan S.A. ADS

Good afternoon everyone.

Thank you for waiting and welcome to COZON's 4th quarter 2024 earnings release conference call with unordered numbers, as well as for the year end. Simultaneous translation will be available during the session by clicking on the interpretation button at the bottom of the screen and choosing your preferred language, Portuguese or English.

If you

are listening to the conference call in English, you have the option to mute the original audio in Portuguese by clicking on Mute Original Audio. This video conference is being recorded and will be available on the COZON company's IR website at .com.br. The presentation is also available for download in English through the chat. During the company's presentation, participants will be in listen only mode. The question and answer session will begin after the presentation. Please note that the information contained in this presentation and in statements that may be made during the conference call regarding COZON's business prospects, projections and operating and financial goals constitute the beliefs and assumptions of the company's management, as well as information currently available. Forward-looking considerations are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore depend on circumstances that may or may not occur. Investors should bear in mind that overall economic conditions, market conditions and other operating factors may affect COZON's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn it over to Mr. Rodrigo Araujo.

Hello everyone. Good afternoon. We're here to announce our results for the fourth quarter and year end 2024. And first of all, I'd like to highlight alongside with our usual disclaimers that last night we filed our press release for Q424 and for the year end. We've un-audited the numbers. If we look at the whole portfolio, we had RUMU already disclosing its audited financial statements, Compass already disclosing its audited financial statements, Hai-Zing with the reviewed financial statements by its auditors. And we also have a substantial portion of the audit work concluded. We don't expect any changes in the current numbers that we're going to present today. However, given the need of our independent auditors to conclude their working papers, we have postponed the filing of the audited numbers to March 10th. However, as I mentioned, we don't expect the numbers to change, so we decided to proceed with our earnings call and be here with you today at the date that we had agreed before. So next slide, starting with our portfolio and liability management. I think that when we look at the overall micro environment for 2024, we began the year with positive prospects and an expectation of interest rate reduction in the United States and Brazil. Projections of inflation under control, an expectation of the appreciation of the hell against the US dollar. However, throughout the year, what we saw was not only a deterioration in inflation expectations, but also the Brazil's debt trajectory also worsening over the course of the year. So we started the year with a new inflation, therefore the start of a new interest rate height cycle, which basically changed dramatically the way we look at capital allocation and the need to reinforce capital discipline and to be more assertive in terms of the capital movements that we do. So I think that when we look at what we've done in Cosa, over the course of the year, we did a lot of transactions to extend the maturity of our debt portfolio. So basically improving the duration of our debt. But we already started 2025 by acting very diligently in terms of improving our capital structure. And that's why we announced the divestment of our value stake and performed the divestment in the beginning of January this year. And for the rest of the year 2025, you can expect that we're going to be quite active in terms of improving our capital structure. And that's clearly the focus of the management team for this year. Looking at the macro environment, I think it's relevant also to comment that what we saw was portfolio recycling, not only at Cosa as a very important movement, but also at the operating companies in the portfolio. We see that all of them are performing divestments and also strategic acquisitions to be able to better navigate this more challenging macro environment. But at the same time, continue with the growth of the portfolio and the strategic advancements of the relevant parts of the portfolio. So you can see that we have transactions in virtually all of the companies and all of them with a very high degree of capital discipline and focus on being able to keep the quality or increase the quality of the portfolio, even though we're facing this more challenging macro environment. Next slide, please. When we look at our EB downer management, excluding non-recurring items, we had a year of about 30 billion reais. And you can see that we continue the trajectory of quality and resilience of the portfolio. So we have a very strong and resilient portfolio. We continue to see that in terms of EB downer management for 2024. In terms of our earnings for 2024, excluding non-recurring events, we had negative 900 million reais result. And the main highlights are related to our financial results. Basically, we had the depreciation of the Brazilian real impacting our perpetual bonds negatively. And we also had the impact of our market to market of the total return swap that we have of Cousins shares, basically reflecting the devaluation of Cousins shares over the course of the year of 2024. In terms of dividends and interest on capital received, you can see that we have a relevant increase compared to 2023. So 4.3 billion reais. That was mostly explained by Compass. If you remember, in 2023, we have a tax litigation issue that postponed the dividend payments from Compass. So basically, Compass paid more dividends in 2024. Organically, you can expect to return to levels similar to what we saw in 2023. In terms of our corporate net debt, we finished the year with a net debt of 23.4 billion reais. And also looking at our safety metrics on Q4, we saw an important evolution compared to Q3. And the overall number for the year was continuing to show the relevance of our safety culture and improvement in our safety culture over time. Unfortunately, we still had fatalities on the year of 2024, but we continue to work diligently to have zero accidents and zero fatalities. Also looking at our debt service coverage ratio, as I mentioned over the last couple of quarters, we're organically closer to one time. We finished 2024 at 1.1 and that also reinforces the need to improve our capital structures to get to a healthier level that's either close or above one and a half times. Next slide, please. So looking at the performance of the portfolio, we see HOMO with higher transported volumes and also growth in tariffs. We saw record level transports in several months of 2024 at HOMO and also record results. So a very important year for HOMO, proving the quality of the asset and our ability to execute on the plan. Compass also had growth in distributed natural gas volumes. And also we saw the ramp up of edge operations, the marketing and services companies that operates the Regas terminal in Santos. So we expect a lot of positive prospects coming from that new business that just started up over the course of 24. In MOVE, even though we had lower volumes sold, we were able to increase our revenues and perform well in terms of supply management to have better results, even though lower volumes. And we also managed OPEX diligently to be able to deliver the expected results. In RADA, you see a lower EBITDA compared to 2023, and that's basically the impact of the appreciation of our portfolio of land. Even though the portfolio continued to appreciate in 2024, comparing to 2023, the change in the value of the portfolio in 2024 was smaller than 2023. And that's why you see a lower EBITDA. But the overall value of the portfolio continued to grow in 2024. At Hi-Easing, we saw a very challenging year in terms of sugar cane crushing. So given the dry weather and the fires, we had a relevant impact in terms of sugar cane crushing. We also saw lower EBITDA not only in the renewable segment, but also in the trading business. So Hi-Easing had a year where there was a lot of challenging in meeting the expected results for the business. Finally, in Vale, overall, the 4% stake that we had resulted in a roughly 5 billion reais of equity pickup. However, we had the negative contribution of the disposal, so we recorded the impairment of our Vale shares in the fourth quarter of 2024 to market the value of the investment to the transaction that we did in January 2025. Next slide, please. Looking at our debt profile, you see a higher gross debt at the end of 2024. But that's basically because we did a domestic transaction in the end of 2024 to take out the 27 bonds. They became callable at par in the beginning of 2025. And that was already done. And you can see on the lower part of the chart that we are using the proceeds of the Vale disposal to take out not only the 27 bonds, but also a tender of the 29, 30 and 31. So basically the sale of our Vale shares, the focus of the use of proceeds is to reduce our debt at the HODCO level. And it's also relevant to mention that we have been able to, at the same time, we increased the maturity, the average maturity of our debt. But we have also been able to navigate the positive corporate spread scenario in Brazil and reduce the average cost at the same time. Next slide, please. So finally, looking at the cash flow for the fourth quarter, I think the most relevant part here is that you can see that the dividends that we received basically match the interest paid and the dividend to the preferred shareholders. So basically the interest coverage close to one, as I mentioned. And we also have the 600 million reais of the acquisition installments of Hadar, Teletraxas and Chamos. So basically, as I mentioned, I'd like to reinforce that 2025 is going to be a very important year in terms of execution. And we reinforce our need to be more disciplined in terms of capital structure and to be more assertive in terms of capital allocation. So you can expect more transactions over the course of 2025 to improve our capital structure. Thank you very much for joining our earnings call. And let's move on to our Q&A session. Thank you.

We will now begin

the Q&A session with Mr. Marcelo Martins, Mr. Rodrigo Araujo and Mr. Fernando Tinell. To ask questions, please click on the raise hand icon at the bottom of the screen to join the queue. Upon being announced, a request to activate your microphone will appear on the screen. Please unmute your mic and ask your question. We kindly request that each participant ask a maximum of two questions at a time. If you are listening to the conference call in English, please ask your questions in writing by clicking on the Q&A button.

The first question

is from Isabella Simonato, Bank of America.

Please

go ahead, Ms.

Simonato. Hi, good afternoon,

Marcelo, Rodrigo.

I have a question

about your debt profile. And

if

you expect to reduce the flow and financial expected after the repurchases and the liability management that you implemented in Q1 after disposing of the Vale shares, could you provide some more color on the preferred shares and remind us of the terms and how we need to think about them now after the Vale share disposal? How are you thinking of treating them in your deleveraging process? Thank you.

Thank you, Isa, for the question.

I'll

start with the debt profile.

We showed you some

of what we're thinking in terms of liability management. Obviously, it's a combination between what's available, what's callable right now at a low cost, like the 27 bond takeout at par. We did that recently as well as what's sizable and what we can do.

Hence,

our focus on the 29, 30 and 31 for the tender because we have bigger checks there. We have relevant amortization for 28. And in the first half of the year,

it will allow

us

to

take away part of that. So amortization in 28 won't be as high as you're seeing there. But the key message here is

that the

funds are being used. They have, you know, that these operations often have a number of working days

before it's substantially

contracted. So we'll carry on with what's in our pipeline. But it's a combination, as I said, between having

more spaced out bars without it

leading to any relevant additional costs. That's our mindset. If you look at the cost of the swapped bonds is clearly higher than what's in our portfolio. That's one of the reasons why

they might

undergo a takeout and potential sales over time.

As for

the preferred shares, a couple of points. First, they're not directly associated to the value acquisition so much so that we're using the funds to take away bond liabilities and

the

ventures. So

it's

a combination of the fact that we have the value proceeds, which is making us bringing forward payments for the preferred shares. Their dynamics is a service plus compass and raise and dividend payouts.

But

these structures over time do have a cost step up. So when we disclose the costs, those are an average cost of the curve of the accrual of the preferred shares.

That average

cost starts off low and goes up over time. So we're constantly monitoring opportunities to optimize our structures. We didn't announce anything to that end so far.

It's not time to do

that yet, but we are monitoring them. And if anything compelling comes up, then there may be adjustments. But for the time being, we are focusing

on

the debts that we have announced the calls for. Thank you for your question. Thank you.

The next question

is from Gabriel Barra, City. Please go ahead, Mr. Barra. Hi Marcelo. Hi Rodrigo. Thank you for taking my questions. I have a couple.

The main one being

about capital allocation. The Vale sale using proceeds from the sale to extend the debt seems to be

looking more

comfortable in the short term. I'd like to hear from you about potential divestment. There's been a lot of news about potential secondary or primary in some of the groups' companies. So what's your mindset after this Vale process? Are you still considering divestments, considering a more challenging market scenario? So if you could provide me with some more color on that, that would be great. The second question is about mood.

There was

that fire, unfortunately,

and

you mentioned it in the company release about the impacts, and you're still looking into potential impacts on the company's operation.

Could you talk

a bit more about that and also provide us with some more detail on the return timeline from that operation, what kind of an impact it will have on the company and moves operation in Brazil? Insurance, any color would be helpful. Those are my two questions. Thank you.

Thank you, Barra, for your questions. Yes, there are a couple

of key points here. So I'll start with your second question.

Do

we see the need to do anything else? Yes, definitely. The Vale process was important and it was timely, in our opinion,

so that we could be

in a more comfortable position if we have to do anything else in terms of capital allocation in 2025.

But it

has not decreased our sense of urgency. So looking at our debt service coverage ratio, which is close to one now, that's not something we consider to be comfortable. We really do need to work on other fronts, and it's important to make it clear that

nothing is

off the table. We see some assets in our portfolio because of the control we have over them or because of the potential to turn them into future platforms and having

growth for

the group coming from those. We're looking less at those assets, but nothing is off the table. We're considering options with a sense of urgency. In terms of the challenging market scenario you mentioned, I think

there is

a positive externality coming from the Vale process. We were very pragmatic when it came to the Vale disposal, and that's led to a lot of interest by other investors in our portfolio. As you know, the assets in our portfolio are resilient. They're long-term, so even though there's a challenging macro scenario, considering investors who look at the long-term, those assets are quite compelling. But obviously, on our side, there are two key assumptions. One, we don't want to lose quality in our portfolio. That's vital. The other one is that even though there are options on the table, we're very clear on the value of these assets. When they do happen, it will be for the right price. Generally speaking, I don't know if you want to jump in, Marcelo. You talked about the main points.

Preserving

the portfolio quality is key because we see an interesting future for Cozan after we de-leverage. Our main priority right now is to reduce Cozan's leveraging as much as possible. Obviously,

not losing

sight of maintaining a high-quality portfolio. We won't sell assets that are strategic for the company's future, and we'll bring an unbalance to the portfolio's quality. We've been reiterating that, and that's the key point. We do have interesting options that can be executed in a timely fashion. We're running against time because the cost of that carryover is not compatible with the quality of the company's financial health. We have stressed those points a few times. I just want to reiterate that that is our utmost priority right now. The discipline to adjust the company's capital allocation, both at Cozan and Raizian, those are the two companies that need to look at that urgently.

We

are sharing with you what we are going to do, and right now we are putting that in place. I don't think we need to be repetitive. The market should now look

at the fact that

we are seeking to reduce debt and maintain quality in our portfolio. Let's not forget that there is a clear limitation, which is the dividends we will take from the operations.

We're not going to reduce

our debt at Cozan by

selling assets

that will decrease the quality of the portfolio because that will limit the growth of the controlled companies. We want to have something continuous that will bring the right returns in the future. There's a lot of speculations around that topic, and I want to make it clear. We need to adapt to the limitation of the dividends that are possible within our system so that we

can continue to

grow the controlled companies. It's not the companies that need to adapt to our need to keep the debt profile. As to your second question about move, Barra, let me start by the main one. There have been no fatalities and no one got hurt. I just want to make that very clear.

The

operation and the speed with which the company has reacted was

extremely

successful in a very challenging scenario. Our interactions with stakeholders have been constructive.

There

have been no environmental impacts. The company is very close to commercial stakeholders, government stakeholders, the communities. We've been very constructive and we've had a very solid interaction with all of them. The company has been able to be highly effective in contingency plans. You will have noticed that obviously part of the plant was affected. The storage infrastructure, however, was not affected at all. The company was able to

keep

the fire under control and part of the plant. Another point is the company has done a couple of things over time. One of them was to increase its capacity. We had announced recently

that

we were going to acquire a grease plant at the beginning of the year. That gives the company operating flexibility, which is key right now. Another important thing the company has done over the year

has

to do with what you mentioned, which is risk management through insurance. We have policies

for

environmental damage, civil liabilities and operating risks. So we had done our homework. The company had done our homework through the right kinds of insurance, which is going to be important now.

Even if

we haven't disclosed financial information and it's too soon for that, we will update you as soon as we have more precise information available. But it's important to say that in addition to the partnership with ExxonMobil and other commercial partners, the company already has a plan in place

to capture volumes

alternatively

for

a reasonable part of the plant's volume. Obviously, we're not ready to disclose the guidance on impact, but we do have the insurance. We were able to implement everything in a timely fashion, and that will be crucial to preserve the company's

financial

health.

It's

also important to point out the relevance of our international operations. We have been expanding internationally and nothing has changed when it comes to our assets in the US or Europe. The company already had an agenda to create value, especially with Petrol Choice, our most recent acquisition. But the company's international acquisitions will carry on and top management's focus will continue to be on delivering the same level results across geographies. So that's what we can share with you, Barbara, given that it's all very recent, but we will update you as time goes by. Thank you for your questions. Very clear, Rodrigo. Thank you, Marcelo.

Thank you. The next question

is from Thiago Duarte from BTG Petrol. Please go ahead, Mr.

Duarte. Hi, good afternoon,

Marcelo, Rodrigo, everyone. Pleasure to talk to you. I have one question, and it's possibly the hardest one to answer.

Since the changes

that were announced at the end of last year at the hold call level and some of the subsidiaries, especially Raizan, it's very clear and you have said it a few times that there's been a change in your mindset. Now the priority is to deleverage. And in a way, it sounds like you have a good problem. You have too many options. You've addressed the value issue. You've addressed the duration stroke cost of the debt.

But looking

at the size of the portfolio, looking at the size of the companies and as a listed company, which you are, we're wondering

which

direction is the company going to go to deal with the deleveraging, which is your key point right now. So now that a few months have gone by, you have been talking to the market. Could you perhaps

tell

us, you know, considering the assumptions you've mentioned, you want to maintain the quality of your portfolio. You don't want to shoot yourselves in the foot, as Marcelo said. Could you tell us what kind of direction the company is going to be going towards increasing capital at the hold call, increasing capital at subsidiaries, selling a stake, part of the stake at subsidiaries, selling subsidiaries? I don't know. It's very hard to know in which direction you're going to go right now because there are lots of options on the table. It's a good problem to have. Anyway, if you have anything to share, that would be great. Thank you. Thanks, Thiago, for your question. Well, as you know,

we're very cautious

about anything the company might do due to confidentiality, and it's also strategic for the company. So let me share something more conceptual and not exactly what we're going to do. In some cases, which you're familiar with, for instance, at São Luis Port, we're selling 100% of that.

That's

a full sale of the assets.

And

you all know that. It's an ongoing process as we speak. So that's the first point. The second point is...

It's not being discussed

right now. That's not the main choice. But as I said, it's not off the table, but it's not the main avenue we're considering. As I said earlier,

in Anshin Bara's question, we have

excess control of some assets, so to speak. So partial monetization could take place there with the right partner, for the right price, at the right time.

And what I

would add to your question, and to give you some more color on what's to come, I would say that

there

will be a

change in our model. And Marcelo talked a lot about that when he talked about leveraging. But I think it's important to reiterate it.

The

leveraging model at the hold call level for new verticals is not a model we will be pursuing looking forward.

In

the future, we'll be promoting the growth agenda in the invested companies for many reasons. Because of the debt and that the hold call is more inefficient financially. Often we can't get

as

compelling funding as the subsidiaries. They can get financial funding or for the structure. The fact that

many

of these invested companies, and I showed you some of that in my presentation, can enter into partnerships with strategic partners, commercial partners, and bring in more creative funding that don't involve a stake at the level of the hold call, but further down.

And the fact that we don't control

100 percent of the business dividends when you have a relevant capex agenda. So

that's

another point, as Marcelo said,

getting in the

way of business growth to provide dividends to the hold call is not the best model looking forward. So

we're not giving you

an objective answer in terms of which assets, but those would be the points I'd share with you. Thiago, let me just jump in. There's an order of events. First and most importantly, we needed to change strategy. And to be clear on what the next strategic steps are, both at Cozan and Raizen. I can speak for both because there's a similar situation in terms of the direction of the strategy. So that's the first point. And I think that's clear. Cozan will have absolute discipline in its portfolio. A change in focus in terms of growing the portfolio, not through the portfolio, but through the invested company. So a gradual but constant reduction and desirable until we get to zero at some point in terms of Cozan debt. It's an operating company. We need to decrease leverage in at Raizen, but it will keep a healthy leverage level. Cozan has an asset pool that could be sold, but the priority is what we consider to be more or less strategic. And we will respect that. But that's a clear step before considering any kind of capitalization, whether it be at Raizen or Cozan. We need to have a concrete effort to sell assets that are less relevant and that do not get in the way of the strategic rebalancing of the company. Now, that said and I reiterated, Cozan will not be putting money into Raizen. The clear priority is to reduce its own leveraging. I am committed to our creditors and to the market that Cozan's focus will be on deleveraging. Raizen can sell very relevant assets that could have a high positive impact on its leveraging. After assessing that reduction, there may be a need to capitalize. That will be considered at the right time. I think both shareholders are well aware of that. It's been the object of

ongoing discussions. Regardless of what we

need to go over, what needs to be done before we get to that point. So we're not ignoring the fact that capitalization is needed, but that's the second step because at the current price, no one

wants to be

diluted.

The price

situation is completely incompatible with the quality of the assets. If despite the challenging scenario that requires some kind of discount, we have been penalized, considering the quality of our portfolio, the level of return of our business, considering the competition. However, the price is being paid considering the macro scenario, which affects us. And our objective is to change the situation so the market can assess our companies

adequately.

Those that are listed and those that are not listed, but have an implied price in our shares. Excellent. If I could go back to Rodrigo's point, and obviously I knew you couldn't be too granular in our answer, but the best way of thinking about it, Rodrigo, right now, taking your net debt and your managerial debt that you have reported. We're talking about 14 billion considering Vale's 9 billion and another 1.5 billion from the preferred ones. Let's treat that as that. What kind of level? One way of thinking that would be the DSCR, the debt service coverage ratio. Obviously, you want that to increase, but in terms of reducing the debt immediately, because I don't think you're going to get to the whole cause. That level to zero, that's a longer term thing. But right now, is there a number that you could share with us

out

of those 14 billion plus the preferred shares? Thiago, I would like to reduce that as much as possible. I know we can't reduce the debt and it wouldn't be realistic to assume we're going to bring it down to zero in the short or the midterm. We're going to need time to do that, but I think it is possible to commit to reduce it, I'd say, by at least 30% in the coming months. That is our objective. We have an asset pool that will allow us to get to that.

We have

a set of priorities. We'll start focusing on those. We know where we're going to go to get to where we want to get to.

In

terms of execution, we're starting off with assets that make more sense, considering the valuation for the time of those assets and liquidity. If

we

can't do it that way, then we'll go another way. But I couldn't tell you

what

we're going to prioritize because we're trying a strategy that may or may not work. We're very optimistic with what we're seeing right now, but we don't have anything concrete that we can share with you for the time being. Excellent. Thank you, Marcelo.

Thank you. The next question

is from Victor Modanezi from UBS. Please go ahead. Good morning. Good afternoon. I have one question about how you're seeing the share in the land business. In your opinion, does the current portfolio continue to make sense, considering the macro scenario? Are there better options to monetize on those assets in the short term?

For instance,

selling land, considering your current leveraging. Thank you.

Thanks, Victor, for your question. Well, it's along

the same lines of what we said previously. We're looking at different alternatives. Obviously, there are also different ways of divesting

that

is already happening in our land business, especially last year and this year won't be any different, I don't think.

We

have been increasing

our

divestment at the invested company level to capture this considerable appreciation of this height cycle that we're facing. That may not be as visible externally because as we sell it and the portfolio appraisal appreciates, then you see a higher number than you saw in the previous year. But last year and this year tend to be the highest divestment years at Radar.

So it's important

to say that that is already happening at the invested company level. Obviously,

anything more

structural is on the table. As I said, we're looking at different alternatives. Thank you.

Thank you.

That was very clear.

The next question is

from Regis Cardoso from XP. Please go ahead.

Good afternoon,

Marcelo, Rodrigo. Thank you for taking my questions.

I have a couple.

The first one is about

capital

structure. I have a couple of questions. One, what is the relevant metric? I know that the debt service coverage is one of them. I don't know if you're looking. I usually look at how the relative size of the debt within the total assets.

So how

much the debt accounts for the assets EV in the market. I don't know if you use that ratio, if it makes sense for you. And if not, could you share

what

might be a reasonable target for the debt service coverage ratio or the EV share

of the

debt within the EV? I know that in the long term you want to get that to close to zero, but what would be healthy?

And

to do away with the sense of urgency at the whole co-level. So that's the first one. The second one

is about the equity.

What do you think you might need to inject? From your previous answer, I think you're thinking about exhausting the list of potential divestments. Please correct me if I'm wrong. And then after that, the second step would be to look into the size and the actual need to inject any capital.

So if you

consider injecting capital,

then what kind of

control are you talking about, especially at Raizen?

Do you think

it might be possible to separate part of the assets considering E2G or renewables? That may be of higher value for specific players and

maybe

selling part of it or capitalizing it. Anyway, in general terms, what might you do considering capitalization?

Thank

you. Thanks, Regis, for your questions. I'll start with the first one about the capital structure. A couple of important points are, first, you talked about the IV and the pie chart. Obviously, we're not happy with the current

split,

and that's why we are deleveraging. We believe, and as Marcelo said, we are optimistic about the potential value transfer to

the equity,

given the underline of the portfolio. Now,

a specific metric for that,

we don't have one right now. We're looking at being 1.5 times in terms of that service coverage ratio. But given the size of our leveraging, anything we do

will trigger a clear value

transfer from debt to equity that will reprice the company. And that's why we don't have a metric, because

there's a

discount level that's implicit in the holding company, given the size of the leveraging. That's one way of looking at it. As for the second question, and I think you're talking more specifically about Ryzen. Just to recap what happened and looking forward,

there was

a change in management in November that was quite relevant. And a clear turnaround agenda, simplifying things, optimizing capex, divesting, improving the company's operation. And we're very happy with what we're seeing happen in this short time. As Marcelo mentioned, this is a key step.

As you said,

nothing can happen without that happening. As for

the

relationship with partners, well, along the same lines you said, yes, we are looking into entry alternatives. Obviously, that has to be approved by our other partner. We have potential partners coming into company business like electricity or renewals. We are looking into potential partners. There's nothing going on, but it is one of the things we do consider. And as for

injecting

capital at the company level, as Marcelo said,

it's important to reiterate that given the current

leveraging level and everything Cozan is doing, it's very clear that we are willing to be diluted. The company doesn't have any capital to allocate. So I think that's implicit. I don't know if you want to jump in, Marcelo?

Marcelo,

I think you've mentioned everything. I'd just say that specifically about splitting raising assets, that will depend on an agreement among the main partners, NOZ and Shell. But both are aware that if there is a possibility

to invest in

a business that has more feasibility than another, we'll consider that. So if we have to split the businesses, it will be considered. And another important point is that there is a clear need to review our planned portfolio. We are doing that right now. And there is also the possibility to, at some point, reduce that portfolio. We haven't talked a lot about that, but it's important to make it clear. We are reviewing our portfolio and specifically the plans in our portfolio. I couldn't tell you how much we're going to reduce it by, but we will be reassessing our asset base there as well. Great. That was very clear, Marcelo and Rodrigo.

Thank you. The

next question is from Deborah Borges from Safra. Please go ahead with your question. Hi, everyone. Good afternoon, Marcelo, Rodrigo. I have a couple of questions. The first one. Deborah, sorry, we can't really hear you, Deborah. Could you speak a bit louder or closer to the mic because we can hardly hear you. Is that any better? Yes. Okay. I have a couple of questions. The first one

is

about the preferred shares.

Up until... There was

a percentage... Apologies, but it's impossible to hear her. Sorry, Deborah, we can't hear you.

I just heard the beginning

of the question. I don't know if you could type in your question through the chat box, maybe. Is that better? Yes. Hi. About the preferred shares. Until 2025,

you had a percentage

of a dividend payout, both at Compass and Ryzen. We know what to expect for the next years at Ryzen, but looking forward until 2032, should we expect the same dividends you paid out from 2023 to 2025? And I want to make it clear, in 2032, what will happen? Will Cozan... Does it have to rebuy those preferred shares and what would be the options? That's my first question. Second one is, you went to 2024 with a call spread at value of 1.43.

So, did you

undo that call spread when you disposed of Vale or did you keep it?

Thank you,

Deborah, for your questions. I'll start with the first one. About the preferred shares. No, Cozan does not have to rebuy them,

but that possibility

does exist.

Meanwhile,

there was a question about that earlier. They do have a cost step up over time. The dividends are not required, so the model is a percentage of the dividends paid out by the business. As for the dividend flow expectation, we don't provide a guidance on future flows, but they will always be a percentage of the dividends that are paid out, whatever they are. They vary over the contract and the correction

index

also changes, so those are the variables that we monitor. As for the call spread,

we still have it,

but the intention is to divest. It's more a matter of timing than anything else.

It's much more

about the financial timing. Thank you for your questions. That's great. Thank you. The Q&A session is now concluded.

I

will now turn it over to Mr Marcelo Martins for his closing remarks. Thank you so much for joining us. I think we've covered all the relevant topics for the company right now. I just want to reiterate once again that Cozan is completely focused and committed to improving the quality of our portfolio looking forward. So considering high quality assets and less priority assets is our utmost priority right now. And what we're going to do to get there is to have a leveraging level that will allow us to sustain this portfolio without having to drain the companies or making them pay out more dividends than they can and therefore compromising their growth over time. That is another key condition. So once again, Cozan will adapt and will reduce its leveraging level so that the dividends pay out, which might increase given the quality of the assets and additional cash generation, but it will have to happen in time. So our capital structure will respect that timing. And there's a huge effort here by everyone at Cozan to reduce

our

leveraging level intelligently as quickly as possible. We know that

the micro scenario

is not looking very optimistic at the moment, so we have to do what it takes. Thank you for joining us and see you soon.

The unaudited

information, Cozan's 4th quarter 2024 video conference is now concluded. The IR department is available to answer any further questions. Thank you so much for joining us and have a great day.