Centrais Electricas Brasileiras S A American Depositary Shares (Each representing one Common Share)

Ladies and gentlemen, thank you for waiting. Welcome to Eletrobras Q2 earnings call. Let me introduce the Eletrobras team. Mr. Wilson Ferreira Jr., Eletrobras CEO. Ms. Elvira Presta, VP of Finance and Investors Relations. Mr. Hélio Wolff, VP of Strategy and Business Development, Mr. Rodrigo Limp, VP of Regulation and Institutional Relations, Mr. Renato Costa Santos Carrera, VP of Procurement and Services, and Mr. Marcelo de Siqueira Freitas from the Executive Legal Vice Presidency are here with us today. This earnings call is being recorded and it will be made available at the company's IR website, where you can also find the presentation in both languages. If you need simultaneous translation services, this has been made available. Just click on the globe icon at the bottom of the screen. When you click on the icon, choose your preferred language. If you're listening to the conference in English, you can mute the audio in Portuguese by clicking on Mute Original Audio. For the Q&A session, please press the Q&A icon also at the bottom of your screen. Your names will be stated and then you can ask your questions. A request to unmute your mic will be shown on the screen. If you don't want to speak into the mic, just write down no mic, please, and the operator will be reading your questions. Before proceeding, we'd like to clarify that any statements that may be made during the teleconference regarding the company's business outlook, projections, operation and financial goals are based on beliefs and assumptions of the Electrobras management, as well as information currently available to the company. These future considerations are not a guarantee of performance, because they involve risks and uncertainties, and they depend on circumstances that may or may not occur. Investors should understand that general economic conditions and other operational factors can influence the results expressed in these remarks. I'd like to turn the floor over to Mr. Wilson Ferreira, Eletrobras CEO. You may proceed now, sir. Thank you. I would like to welcome all of you. Can you please show the slides? I would like to welcome analysts, investors, thank you for attending our earnings call for the second quarter. Let me start. Please move on to the next slide, please. We'll have a summary of six segments. That's how we broke down the company's highlights. An overview of the number one managerial indicator, which is PMSO, operational performance, generation transmission, financial performance. Elvira will take over at this point in time, and then I'll come back for the investments and next steps segments. Let me start with the highlights for the quarter. Next slide, please. Next one, please. Another one. Yes. These are the highlights for Q2. First collections and operations in the financial front have been concluded, given the exposure we had to the US dollars. the hedging for the bonuses and yet another operation that accounts for almost 96% have been covered and we'll be completing that in the next quarter. There won't be any FX exposure from now on. Onto liability management operations. Let me start with the ones that have already been approved and implemented at Eletronart. 1.9 billion reals. The goal is the same, to lower costs and extend the profile. Costs are 2.2% above CDI. and we have been able to extend that debt profile. We'll be detailing that shortly. Elvira will be doing that. We paid R$ 1.2 billion in dividends and the average cost is CDI plus 2.5%. Amongst those operations, I would like to highlight that one on the right, R$ 680 million, the first credit note for exports. One of the important covenants is the TED contract with the commitment to sustainability. Our number one goal here is the clean energy percentage. We are at 97. Our commitment is to bring that down. We are at 97 and the original commitment was 96. So that's a very important highlight because we are now introducing our second voluntary separation program. We had 1,473 that have applied. 513 million reals will be saved. We'll be breaking that down for both the first VSP, early last year, and this second VSP. We have already concluded the application phase now in the second quarter. we believe it's important to share a couple of events for the second half of the year because they are really important to the company first liability management operations that are currently underway and we were able to announce them through a market note we had the fourth debentures issuing of 7 billion and 3.5 billion in Furnace, and the fourth issuing of debentures, 250 million at CGT Electrosu. All these operations aim at addressing the liability management strategy, always aiming at lowering costs and extending the debt profile. The second important action was the annual readjustment of RAP for 2023-2024. There is an annual resolution that increased our RAP by 30% with R$17.5 billion for the 2022-2023 cycle. We've also received authorization to be the trade agent of electric energy at CCEE This will be allowing us to use some of the tax credits we have for the trading activities. And we've also received the announcement of our restructuring for the unprecedented net zero for any energy company by 2030. That's going to be a pioneering effort. That's why we have a sales structuring of our process of all our assets related to thermal, both using gas and non-gas. We use coal, we have gas, thermal plants, and a combination of both. So these are the main highlights for the quarter, the second quarter of 2023. Onto the next slide, please. We have an overview of our PMSO, People, Materials, Services and Third Parties and Other. Next slide, please. The first PDV won the first voluntary termination or separation program. 1.2 billion is the expected savings on an annual basis with an 11-month payback. The first thing we can see on the top chart is that we expect expenses reaching 2,494 people. People are leaving the company at a slower pace than expected for a couple of reasons. Number one, we were very careful earlier this year. Let me remind you. We had those uncomfortable events as to the crumbling of a couple of towers and we decided to be extra careful so that we could better manage that situation at that point in time. But we expect to have new people coming in. They are, again, at a slower pace than expected and for that reason Our curve is the green is the best estimate we can get, not the blue one. That will entail less savings for the year. Our estimate was 790 million reais. Originally, it would be 890 million of savings. as of next year as a result of this activity alone will be bringing costs down by 1.2 billion a year the payback would be about 11 months there was that delay but we are focused on taking good care of the company especially its operations we believe that this 100 million can, of course, be offset by far by the credibility of our operations, because now we can be sure that we'll be reaping that result next year, as about 1.2 billion, as I said. The same assessment of the ESP number two that we introduced last year, Given the collective bargaining we had, our estimate was of about 1,475. The expectation was 1,574. We had 1,475, a little less than expected. Most of it have been terminated by July. On August 31st, over 500 employees have left the company. So this program is somewhat quick because some employees could not join our DSP number one. So that's why the process is now faster. Again, according to our board, we have been very conservative to maintain the company's operations and, of course, its credibility. to maintain that credibility intact despite these adjustments. This VSP has a cost of $513 million, savings of $688 million on an annualized pay, a better payback than that of first, about nine months. That, of course, is consistent with what we said before during the Electrobras day. we're reducing our personnel costs. That was 4.6 billion in 2022, and we expect to reach 2.6 billion, a reduction of almost 42% by 2026. And just to give you more color, these two voluntary separation programs with firing another 800 people, Our staff started out with 10,500. In Q2, we are at 8,432. We'll be reaching 7,727 by year's end. We knew professionals coming in the company throughout the country, and we expect to reach, in the second half of 24, 7,250. So as to this main activity to bring costs down, these two voluntary separation programs have already been implemented, and we are bringing costs down gradually. Onto the next slide. Other activities related to MSO. Our expectation, we had about 4.1 billion reals worth of costs. in MSO in 2022. We expected 200 million savings for the year. We're actually moving ahead. We're even moving that faster. We had additional savings of 100 million reals given the realization of the plan by June. We expected 1.9. So we exceeded our projections in 100 million reals. This is a whole set of activities. Number one is OBZ. But let me point out that the number one activity And the number one driver that brings costs down is to centralize our hiring process for all the companies. And then we can better estimate costs to have better services and materials synergies We can better manage inventories through that centralized purchasing, which would give us more bargaining power and centralization of contracts for both insurance and facilities. We brought costs down by over 40%. That's the first time we did that. So we're expecting additional results for 2024. And let me remind you that now, the second half, we're now starting the centralization of the four centralized or shared services in Recife. So, throughout the second half, we'll be concluding that centralization effort. We'll be able to then expand cost reductions throughout the year 2024 as a result of this centralization effort I mentioned. Our estimates are on the left. We are, of course, working to bring that number by 42%, starting at 41 billion, 4.1 rather, bringing that number down to 2.5 in 2026. So these are the two main actions, two managerial actions that will mobilize the entire management team. And we have been able to show very positive results up to now. Moving on. So these are the financial highlights of Q2. So these are very promising results. Net profit was up by 4%, reaching 9,246,000. For the second quarter, our EBITDA was reaching 6 billion 595 million results shows net profit 1 billion 619 million 16 increase when compared to last year at the bottom you have the adjusted numbers but let me point out the following in the reported number we have a very relevant effect which is the consolidation of saint antonio energia this operation occurred after the privatization in the third quarter, so we have effects bringing in 949 million, the additional 449 million of revenue through that consolidation. On top of that, we had a reduction of contractual results in IFFRs for transmission systems Let me remind you that this revenue is booked based on economic indicators. IPCA is the most important one. In the second half of last year with higher inflation rates, we had 3.18. It's almost half now for the second quarter. So that brings a reduction of 101 million. We had another 674 million for transmission revenue due to regulatory changes in the period. We had a reduction in recurring PMSO, excluding PMSO of Saeza. Despite that negative impact, we had more salary increases of 2.13% and with CT73 we did that last year, another 4.18%, another 15 million reals. We still have as a relevant for the quarter, a PMSO reduction of six or rather, an increase of 76 million for PMSO and SIS, and 332 million for costs and operational expenses. These two figures have been included to those numbers, and Elvira will be explaining that in further detail. The quarter was very positive as compulsory loans we reduced our remainder of over 2 billion Reals and about 1 billion 477 million because of settlements. So it was a very important quarter. On the other hand, privatization took place in June last year. Since then, we incurred privatization costs. They amount to 1.5 billion per quarter. and they are referring to amortization of CDEs and other funds, 397 million of amortization, and an additional 1.2 billion for those obligations I just mentioned. Of course, you have more revenue, so it's almost the cost of that transaction. It goes up as we move away from that stake when we compared quarter on quarter. Non-recurring highlights. We provisioned the second voluntary separation program, the second one introduced in July, so it includes 513 million reals. for coverage of costs of 1,475 applications that will take place throughout time. Over a third has already been completed in August alone. On the other hand, we had an increase of consulting services in the transformation office so that all these transformations receive the necessary support, not only on the technology front, but also in the quality of consulting services so that they could be implemented smoothly. These are a one-off, but 54 million for the quarter.

Now we can talk about our operating performance. This entails generation and transmission. We ended this quarter with these numbers. So we went beyond 43,000 megawatts, representing 22% of generation in Brazil. This is 20% of our installed capacity in Brazil, but actually 25% of the generation in this quarter. So 38,827 gigawatts hour is what we generated, which is important if we think about our economy. What is also very relevant is that we were able to generate that with 97% of clean energy sources. To your right, we see our PLD in each one of the submarkets. We see increases compared to last year, and this happens because of our costs with the voluntary dismissal plan. It also includes Itaipu. Below, we see the GSF curve. We see numbers for 2021, 2022 and 2023. Our GSF is important because we need to hedge for it in our operations. Next, we see information regarding costs and volumes for the trading of energy. This analysis is important. We basically have four products for sale in the free market. First, we have our quotas. We had a reduction in the volume or in the stakes of our company. And this happens because we are reducing our stake. This is something we are doing as we work on fundraising. But this 29% production represents only 7% of reduction in revenue from these products. Of course, this is also connected to inflation. This is something that we see for this quarter. So we go from 67.3 megawatt hour to 78. The second important product is the regulated market. So we see not only effects of its growth, but also the consolidation of Saisa. So our energy volume in the regulated market grew 78% because of this consolidation. And we saw 46% of growth in the average tariffs for this market. Usually for Saeza, we had lower tariffs compared to other plants in our Electrobras group. And we are still talking about a very relevant volume. around 3,800 gigawatts hour, 23.78 real. Now for the third project or product, which is very promising for the future of our company is the volume that we're trading in the free market. So this includes not only the reduction of stake, which we mentioned before, but the volume that we have for Saisa. We had a 14% reduction in volume and a 14% reduction in revenue from this market. So in this quarter, we had 198 real for this. As I was saying, it's around 14% of increase compared to the previous year. The volumes that are not traded here are settled at the CCEE. the lowest volume, as you can see in the chart. So the total energy that we saw this year, and this represents an increase of 8% year over year. When we see the total revenue for this company, we see a growth that is actually 23%, not 8%. We go from 5.2 billion real to 6.4 billion real. So if we look at the product, electricity sold by Eletrobras, that leads us to R$ 211 per megawatt hour. This is relevant. This is good performance in this quarter. It takes into account the capitalization process, which allows for increase in volume, but also better pricing for the products that Eletrobras is offering, both in the free and regulated markets. Now we have something that we'd like to clarify for analysts. It's an important disclaimer. This is how our company works. We have our resources for the second quarter. And as you may recall, we have a few clients under the So it would be possible for some of these clients to be decommissioned. In the third row, we see the volumes of decommissioning. We have a minimum term for the decommissioning period. So we go from 160 to 270. This is added to our resources and now this is going to be made available to the market and they will be sold according to the prices that the company can achieve. You can see the numbers here. We start with 9,571 and we get to 4,424 in 2027. So compared to the first quarter, we see growing numbers. This means that we're selling more quarter by quarter. We sold 8,875 gigawatts hour for 2023. And in this quarter, we sold another 9,571. So the variation or the fluctuation in sales is shown in green. Now, in blue at the bottom, we see information based not only on volume, which we see at the top, but also on hedging. This is why it is important for us to report on our GSF and our forecasts. We can't just be caught off guard with a higher GSF. This is why we have a very structured process. But in the first quarter for 2023, we had 18% or actually 11% of decommissioning. And for this quarter, we have only 6%. So from 11% to 6%. For every quarter, we have these products for sale up until 2027. And the volumes that are not sold in the second quarter are not as high as the ones that we had in the first quarter, which shows that we are getting to effective sales for every year for which products are available. We also have average contract prices of 206 real. We even get to 207 by 2027. So this is something we're monitoring weekly with my team so that we see the evolution of sales. We want to get to positive results, of course. We're also taking into account delinquency fees or delinquency rates. There's something else that we could have added here. The company ends up having a good perspective on the clients that we have. We already have 162 customers. These are different industries, different companies, so we're working hard on acquiring new clients. We're working on sales contracts for our subsidiaries, we're making products available, we have sub-markets for each of the subsidiaries, and we're working with the sales team so that we can better that. In the past, people would come to us, clients would come to us, but now we're going to customers and we're making an energy offering. based on our product portfolio. We even want to diversify our product portfolio. So I'm really happy with everything we're doing regarding energy trading. Now we can talk about transmission. One of the highlights is the 30% growth in transmission. Of course, we can think about inflation. We can think about IPCA at 479 million. We added more assets, 173. We had reinforcements and improvements, 123 million. We had minus 76 for other adjustments. And we had 3,320 with the new profile for RBSC. So, for the 2023-2024 cycle, we're going to see growth revenue of around 30% compared to 2022-2023. Please remember that Eletrobras has 73,000 kilometers that leads to a 38% stake in the Brazilian market. In the Electrobras Day, we talked about a CAPEX that has been approved of 174 big-scale endeavors, 5.9 billion until 2027. So as of 2027, this leads to 846, but 132 will be realized in 2023. Now, next, we have the financial performance. Ovira will be talking about this. She'll go into details regarding revenue and how we manage expenditures, EBITDA, and our net income. Thank you, Wilson. Good afternoon. So now we're going to talk about our balance. We always talk about this every quarter. So to your left, you see the IFRS information. As he was saying, we had a 59% increase in our EBITDA, 16% increase in our net income. And to your right still, in the same table, we see our recurring basis. So we see that the EBITDA was basically the same, but the net results were below our results year over year. Now, let me tell you why this is happening. In previous quarters, we would always, always show the recurring results, but we would exclude our provisions, especially for compulsory loans. Because in prior periods, before we started this work, this would increase provisions, therefore reducing results. If we use the same criteria, the reversals of these provisions, which are positive, are non-recurring. This is why our EBITDA is kept at the same level, but we have a reduction in our net income. We have a few highlights to your right. Wilson mentioned some of them. We had around 4% growth in revenue. This has to do with Santo Antonio Energia and its consolidation. This is the last quarter where we still have to explain the effects of Santo Antonio. As of the next quarter, Santo Antonio will have been at the same base as the previous year. So we will no longer need to explain these effects because in the second quarter of last year, Santo Antonio had not been consolidated yet. This is why we've been explaining these effects. It represented 1.1 billion. In the next slide, we're going to talk about IFRS compared to our regulatory perspective. For the PMSO, we had a very positive quarter with a reduction of 144 million. We're also excluding Santo Antonio, which adds 62 million. This is the fruit of our initiatives, not only with the voluntary dismissal program, but also other items in PMSO. This also has to do with collective bargaining agreements. For costs and operating expenses, Santo Antônio Energia adds revenue, but it also adds costs. So we see this impact of 332 million. For construction, we are building transmission lines. So we have expenditures for that. For depreciation and repayments, once again, we see the consolidation of Santo Antonio with 204 million. and we have the impact of concessions or grants which were renewed when we went private, so 193 million. For financial results, which we'll go into details later, if we have a comparison quarter over quarter, we have a 1.8 million reduction. This is mainly due to two things. First, Santo Antonio, as we consolidated, we have a financial expense related to interests, so 741 million. The biggest impact here is related to our obligations regarding the privatization of Eletrobras. We have to pay fees over our CDE. We also have our projects related to basins and to renewable sources for the decarbonization of the Amazon, the legal Amazon. And as we mentioned before, we were working with foreign exchange. We swapped to CDI because we don't have revenue in dollar. and we invested our cash in CDI. So this brought us a non-cash effect at 458 million real. Now, when it comes to changes in foreign exchange, we had positive results. In the previous period from last year, we didn't have protections. the dollar went up and we had negative results last year. So since this didn't happen now, when we compare it year over year, we get to these positive results related to foreign exchange rates. Now we can talk about our gross revenue. We had a 4% growth as previously said. I've already mentioned Santo Antonio, which is the green column related to generation. But with transmission to your right, it is important to say that with the IFRS, revenue gets updated. The balance of our assets gets updated according to the IPCA rate, meaning inflation. Since it changed, and it used to be over 3 last year, but it's over 1 this year, we had a reduction here, 1,134,000. This was mitigated by our changes in OEM, ONM, adding 408 million real, and also our construction assets, adding 338 million real. This is why we have minus 388 here, not 1.1 million, or 1.1 billion, actually. Also, this year, we're no longer responsible for our pro-sell, so we don't have the revenue that we had in the previous quarter, around 40 million real. But we had both costs and revenues related to this, and we're no longer responsible for our pro-sell.

We'll now see the breakdown of PMSO. On the left, top left, that's IFRS, and at the bottom, the recurring view with the adjustments. Two major adjustments, basically. Number one, the second PSP provision, 500 million that we have already mentioned. and the San Antonio consolidation effect in the IFRS view is 1% increase, but when we consider we did not have San Antonio Energia last year and the VSP2 provision is a one-off event in comparable basis, we had a 7% reduction as you can see on the bottom chart at 144 million reduction. And on the right, these are the highlights. And staff 134 million and 11% reduction, which is significant, especially when we consider that we do not have ASB increases of 12% last year and 4% for the year and new people that have been hired. As to services in blue, non-recurring has to do with the Transformation Office effort. And in others, we had legal cases as a result of the work conducted by the legal department. And there's another important activity, Wilson has mentioned that in the NSO strategy, which is centralizing the insurance hiring. so we have managed to reduce costs by 23 million. These are the highlights for AMSO. Now on to provisions. On the right, you see a summarized table, some provisions for the same period last year when compared to this year. In 22, we had 2.2 billion in provisions, a reversal of 1.7 billion. Last year, let me remind you that as far as compulsory loans was 242 million, this year almost 1.5 billion. For cases that are not compulsory, last year We were at 475 million, an increase, and this year a reversal of 184 million. This is one of the initiatives we mentioned during Eletrobras Day. Just like we have been negotiating compulsory contracts, our VP, Marcelo, is already heading that process for other cases to review risks, and we have been able to review that risk mitigation. That's why we had that positive impact on two investments. The second quarter of last year, we had to account the losses for San Antonio Energia. Already we have reversed that with the consolidation. And the PCRD Amazonas Energia last year. So these were the highlights. So, in the quarter we had 1.7 billion as positive effect, improving results by reversing our provisions. Let me break that down as far as the compulsory loans are concerned. Ever since we started that plan in Q3 of last year, on the right you can see the table of provision inventory for compulsory was almost 26 billion, 25.8 to be exact, and we're now at 22.1, that reduction amount for 3.7 billion for these quarters. In the current quarter, we had an inclusion of 1.4 billion, just like I explained in the previous slide. When we take into account other agreements or other settlements that have been negotiated, we're just waiting for the final ratification of those settlements. They haven't been booked in the quarter. We had an additional 1.7 billion. So we expect a reduction of... From 22 to about 20 billion. So for the year, it will amount to a 5.4 billion reduction, almost 20% reduction. In red, let me point that out. the monetary adjustment given our interest rates. As our inventory of provisions comes down, we also reduce the monetary impact for the quarter. And the last two highlights on your right, since our negotiation strategy involves all compulsory processes or cases they have against us, we reduce off-balance contingencies, that is 1.9 billion off-balance, and a release of 1.3 billion of connected cases, those that were used as guarantees So these are judicial deposits that amount to 1.3 billion reals. On to the EBITDA variation. In IFRS, we had a 59% increase, but we deal these reverses as non-recurring in adjusted basis. Our EBITDA was along the lines of the number we had last year. On to the next slide. This is a net profit assessment. Since we removed compulsory events as non-recurring, that's why our net profit is reduced, therefore. But let me point out a couple of things. The financial results, the column in red, 1.8 billion, this is impacted. It's on the right. So we have some important events. Number one, the privatization obligations. Regional funds, CDE amounting to 1.1 billion. And then we had the hedge issue. I tried to break that down. Let me remind you of what we did. We had two bonds. One is 500 million dollars maturing 2025 and another 759 million US for 2030. When we signed that operation in late May, FX was 5.54 and swapped that to CDI. So, the series is for 2025. It's now 97.4% of CDI and for the 2030 was CDI plus 1.7. So, these are the relevant information we would like to convey to you. So these are cheap debts when we compare to prices today. We wouldn't be able to leverage that loan at this cost. We're moving away from that foreign exchange risk because we're protected by CDI. And that effect of 467 million, which is a non-cash effect, is the result of the differences of these flows. Because once we concluded the operation, FX came down and our CDI was high. And for depreciation and amortization, another column in red, 400 million. and the number one reason behind it is due to the new concession contracts we have been depreciating ever since the privatization and again the consolidation of San Antonio Energia. Moving on to the end of my presentation, on to the next slide, this is the net debt adjusted EBITDA ratio according to our financial discipline. We have been able to maintain our two times indebtedness level, as you can see on the left. And on the right, you can see detailed information of our debt profile. 57 billion. Consolidated cash was 18.6 billion. Net debt is about 38 billion. Let me point out what I wrote at the bottom, on your right. According to our explanation notes, in late June, we converted 4.1 billion through AFAC and intercompany debentures. As of July, we'll be able to see the results of the fiscal savings of that operation. We expect 180 million savings for the year. Since this year we only have half of the year, we'll be achieving half of that amount. I have my final slide of investments and then I'll turn over the presentation to Wilson. So as we show every quarter, we show you the investment curve in blue. Investments by June amounting to 2.5 billion reals. And in green, the same period of last year, not including San Antonio allocations for the CAPEX was 1 billion reals. So we have this major increase. And on the right, two highlights. We have that impact of construction in Conchilla Negra, investments amounted to 279 million. And also here the SPS, we resumed Transnorte Energy, a very important project to connect Roraima, the state of Roraima. We had another or an extra 29 million of allocations there. So these are the highlights for the quarter. I'll turn it over back to Wilson. Thank you, Rivera. Let's move on to the next slide, please. Let me point out a couple of investments we made. And we announced that right after Eletro Barra's day. 17 billion reals in contracted investments for the period 23-27. 6.7 billion in transmission assets. We were talking about that these are assets for improvements that have been approved by ANIL, which have a guaranteed revenue. We also have for improvements a set of mills or plants operating in the quota system with an additional 4.6 billion reals there, 2.9 billion for infrastructure and environment. The first billion is related to environmental investments, a little over 500 million for the social environment programs that have already been commissioned or Santo Antonio, and 1.9 billion for infrastructure. These are optimization efforts of our costs that can be ranked as operational investments, but they're actually necessary investments through automation, robotization of a couple of processes, with intelligent networks, AI, 2.4 billion for generation assets with new sources of revenue that have been commissioned, Elvira mentioned, that's the wind process in Cochila Negra, and 0.7 billion in contracted M&As, Telespiris, Baguari, Retiro Baixo, Saeza, and Baguari Energia. These are assets we'll incur in cash outflow of 0.9 million reals. That's not all. We have The outlook for growth. We have additional firepower. These are alternative sources of growth. Number one is the transmission auctions. Several auctions that are scheduled for this year and next year, 35 billion in total. The company was very competitive, the only company that was present for every lot. This is an important growth avenue that is interesting for the company. We do have M&A operations. Not only for that, the reversal of cross ownership, we had that goal. And that has to go through that reversal, just like Nail Energia, but also M&A operations. We are considering renewable sources, transmission assets with the analysis of Elio's team and another 10 billion reals. addition of investments to improve transmission systems. We had 6 billion that have been approved in the previous slide and we have that potential given the age of assets, an additional 10 billion that would bring in an additional 1.2 billion reals of revenue. And ITO will be leading the effort, analyzing the quality of the asset in partnership with Varejao. We are, of course, focusing our efforts to submit that for a NILS approval. Every single investment will have to be subjected to that risk return assessment submitted by our committees and our board and everyone, of course, using the services of a rating company so that we can generate value from that asset because the rate of return has to be above that cost of capital on to the next steps this is our final message to you we're going through a transformation phase this is the third quarter i'm reporting My team has been working for almost a quarter together, but we're making a difference already. First one is the reverse of cross ownership strategy. Our goal is to reach 31 SPs. We had 74 earlier this year. We are at 68 now. And we're working towards that goal as early as the beginning of next year. A second effort, we are advancing compulsory loans negotiations. We have 400 million under negotiation. 1.7 billion have been commissioned. We had 22 billion of provisions. Early last year, we were at 26. By this effort alone, we'll be able to bring those numbers down by 20 billion. We'll be reducing or completing or eliminating the FX exposure, we are speeding up our tax strategy. We do have credits above 13 billion reals. So, there are several activities that have been shared since Eletrobras Day, almost about a billion in four years. It can be even more. We had a trading strategy. Once we have that trading company, we better structuring our sales teams. We also have a trading desk. We do have all the elements in place so that we can become a very good company in trading effort too. We are boosting the number of customers and people are coming to look for our products. And we're also developing new products so that we can become even more competitive in this new market. Of course, our focus is on PMSO savings. That's the number one asset that can be managed, that can deliver results on a short-term basis. A 990 million savings for this year alone. 39% has been realized already. Second half is even more heated, if I can put it that way. And Renato Carrera is leading this next activity. We have a whole set of real estate assets. They cost money, operational and maintenance, tax-related costs. So we have a team. looking at this issue so that we can bring an additional 450 million by next year. So these are some of the activities that are already beginning to show some results. Compulsory loans, among others, and I remain optimistic about these initiatives and we'll be able to deliver very good results in the next quarters. I just would like to conclude by Thank. For all the awards we have, and I speak on behalf of the board, the best CEO, the best CFO team, the best IR professionals. Paula, thank you very much for your effort. So this is yet another incentive to help us keep working harder and harder under Elvira's and myself leadership. Let's get started with the Q&A session.