Companhia de Saneamento Básico do Estado de São Paulo - SABESP

Recording in Progress Results Conference for 2022. Today we have with us Mr. André Salcedo, Mrs. Katia Pereira,

Finance Director and Investor Related Director and Mr. Marcelo Miyake, Accounting Manager. And before I turn over to Andrés Salcedo, I would like to share some information and instructions. This video conference is being recorded and has simultaneous translation into English. The presentation and recording will be available at the and the IR website of SABESP. I would also remind you that questions will only be taken in writing in the chat of this platform. Our conference shall last about 1 hour and 30 minutes, and we're going to save 45 minutes for Q&A of analysts and then journalists. Conclude, I would like to clarify that any statements made during this conference regarding the company's businesses and projections for the future are only projections based on the assumptions of the company, as well as the information currently available to the company and do not constitute any results and They involve risks, uncertainties and premises because they refer to future events and therefore the circumstances may happen or not. Investors should take into account general operational factors and the industry, take into account that they may change the results which will be materially different Good morning. Thank you very much. I thank everyone who has been with us in these early months of our new management. I thank investors, journalists and analysts for their presence, as well as the general public. For those who do not know me personally, I am Andrea Salcedo. I have been assigned as a Presidenta Director last year and I officially took over on January 13.

Since then, we have

We have been learning about the company's performance, getting to know the team of managers of the company, so that we can have a more extensive view of what is, in fact, the aspirations for SABESP. A free charge to take care of the company, to turn the company into a more modern one, into an innovating and inclusive company. And this is the mission that we're going to implement throughout this management. And to give you an idea of the work we're going to perform, we have already We defined the new composition of the board so that we can align SABESP's management with this strategic view, a view of modernity, a better relationship with regulators, with our clients, and also in terms of the end users. With a more integrated view, a company that thinks together, that uses its resources, human resources, finance resources rationally, a management which is closer to people, and a management which will pursue a full opening including all stakeholders, regulators, shareholders, investors, to understand what can be improved and how we can improve. And whenever possible, we will be as transparent As possible, I'm very happy to be here in the company right now. We are at a moment where we're turning a page. We will pursue new businesses. We want to grow and we also want to provide better service to the population according to what we consider to be adequate in terms of investment. And in this process, we're going to start planning the next four years focusing on an organizational transformation and working in clusters, very autonomous units which could be more integrated in terms of processes. We're going to review our methods both for the board of directors and the company so that it reflects what we understand to be more adequate for the company and also to guarantee more efficiency in the decision-making process. And as I commented, we're going to focus on generating value to all stakeholders. We understand the importance of the environment and the ESG agenda. This is going to have a priority in our management. Also, we will separate clients into two tiers. First, the owner of the sanitation service that authorizes us to work, and a second tier, which is actually the end user. For this transformation and this new vision, we will look carefully at our employees by training and developing Their knowledge based on the demands we have in terms of investments. We want to have a more competitive company that can grow, compete for new markets, We see opportunities in optimizing our employees and in special for the development of activities that we do not develop today. Later on, we will allocate activities to different activities that can generate more value. Also, a cost reduction is one of our targets and also demanding our managers to meet our targets. To do that, we are proposing new packages for the involvement of our employees so that we can reach our goals and the company. And before moving on to the next slide, I wanted to highlight that last year was very challenging. Despite the challenges, we were able to have a net profit that was record in the history of the company. We're going to continue pursuing more growth and it's important to highlight that in the growth last year it has not yet been acknowledged the tariff gap that we had in December and so we hope that in the next cycles this is incorporated in the annual review we're going to have and therefore turning our revenue a more adequate one in terms of operations. And now talking more specifically about the new challenge of the company and then I move on to the next slide. What is SABESP going to be like in the next cycle? It is going to have a clear vision of what it has to pursue. And as you have noticed, our proposal for this year includes a change in our bylaws to make the company a more modern one. We have specific attributions, but we want to be flexible in allocating roles as the company changes. With a new view for each member of the Board of Directors, we are going to have communication. We're going to focus on the legal department, the strategic building. Sabrina has a lot of experience in She has been in the company since February and has been doing wonderful work and therefore we are hoping to deliver a lot in this regard. As the CFO, we have Katia, she's been in the company for two months and she's already working with investors and in addition to the typical activities of the financial and investor relations department she's also working with shared service centers in the company that she used to work she had this experience and we are counting on her expertise to work with corporate shared centers and therefore Being able to work with water production, distribution and treatment of sewage and leaving all of this integrated view to the corporate management to guarantee that the company will have adequate resources in due time. With this, Regulation and New Businesses is no longer in the financial and investor relations, but this will be the responsibility of Bruno da Badia, who will lead the relationship with the regulating agencies, with the different municipalities, and the combination of opportunities for new businesses Whether they are a concession or not to the company, and there is a regulatory demand, and it's important to have this integration to generate value. The other board of directors, typically engineering, which are separated in a regional area, will be divided into two. We'll have one that will take care of CAPEX and the long and mid-term investment, as well as environmental management, and this will be led by Paulo Violante. The idea is that the whole FAPEX of the company goes through Paola and will be prioritized according to the demands we're having, which are initially environmental investments that we have to meet, the guarantee of safety for our employees, and also to meet our contract requirements. Also, to complement this change, we will also adapt our metropolitan and regional departments. and a new one which is already led by Roberval who has a lot of experience with the company. He's been here for many years and he's already integrating the two departments so that we have a single view of the management of the company so that the best practices are all Thank you very much. Thank you very much. is the creation of a new department, a new board of directors called clients, so that we can have a relationship close with the clients, guaranteeing that the cycle will receive all required attention, so that we can adjust everything to SABESP's needs. And in addition, in strategic terms, We have communication and they will report directly to me. I think this is very important for the exchange of information with the market, providing access to mayors, regulating agencies directly on our website. We want to be totally transparent, also digital transformation. All of the data collected from our operations and data on our client base. When combined, they can generate a lot of value for the company. We're going to create a digital transformation unit to guarantee that data management and decision-making based on data is a decision of the company. The strategic view remains a responsibility of the CEO, analyzing opportunities for improvement in the company, also providing adequate information and the ESG agenda now will be extremely important for the company so that we can define our goals and that everybody follows this corporate vision. We hope that within a few months we will be able to fulfill ESG targets and share it with the market. We're very happy and the whole board of directors are happy. We consider ourselves to be very lucky to have the right people to face the challenges we're going to have in the company. It's going to be a very good cycle with a transformation of the company, improving in all of the operational goals, client perception, and above all, I'm going to conclude now. I count on your support. SABESP has opened doors for comments, criticism. Our objective is to turn the best company possible, and to do this, we count on you, and I thank you for your attention. Tiberio, I turn back to you. Well, thank you, Andrea. Now, actually, I think it is Katia's turn to present the results. Good morning, everyone. Thank you, André, for the introduction and a very inspiring introduction. First of all, I am Catia Pereira. I started working in the company in early March. I am very new in the company, but it's a pleasure to be part of this team and help in this construction in the finance area, playing a role of Turning the company into an efficient company with integrated processes so that the finance department permeates all of the other areas of the company and, as André mentioned, providing focus on the delivery of the operation. Turning processes more integrated, faster and more efficient. This is the objective and is aligned with the introduction. Shared services and this is going to be our journey for 2023. So now, moving on to the next slide, I will start talking a little bit about volume. In 22, we saw an increase of 0.2 in terms of water volume. Basically, we see a decrease in residential area, but on the other hand, Thank you very much. Thank you very much. We see the same trend in sewage. We had an increase of 1.7. Also an increase in the commercial and industrial area. And this was a little bit higher in sewage because all of the focus we've given on sewage and with that we can see the results. When we look at the whole, we're talking about a growth in the order of 0.9 in terms of volume. and the good thing about this is that when I have this migration and this change in the mix from residential to other categories, I can have a differentiated mean tariff which is better for the company and this is a very important factor when we look at volume and the consequences of volume on our revenue. Next slide, please. Now, looking at the financial highlights, we can see a growth in the order of 13.7%, as Andrea mentioned. Part of it results from the tariff readjustment we had in 22, in the order of 12.9%, and we also have a result of this volume mix. We also see the tariff mix in the changes of this consumption profile. This leads to a revenue of 17.2. I would like to remind you that this is related to sanitation and it's separate from construction. When we look at the ETIDA, we see an increase of 11.2. So we went from 6.6 billion to almost 7 billion, and the net income increased 35.4%. We went from 2.3 billion to 3.1 billion and 22. And later I will talk a little bit more about our performance. And now in the next page, when we look at our financial performance, we started with a net profit of 2.3 billion. We had an increment revenue of 2 billion, and we combined this to make the effect of the revenue with construction with a differential of 2.3%, following all of the metrics. And we really had an impact of costs and expenses in the order of 1.6 billion. Other revenues, We have about 33 millions, nothing really expressive in terms of net revenue. We can see the result of a monetary adjustment. resulting from the just agreement and this was entered in the third quarter and is seen here within this 555 million as well as other positive effect of the exchange rate variations in a percentage of our debt which is linked to foreign currency and therefore we had A valuation of the BRL when compared to the Yen and that generated a positive variation which contributed with our net financial results. And later on I will get into the details of each one of these items. Also income tax and social contribution increased because of the results obtained throughout 22. And then next slide, please. Finally, here in terms of costs and expenses, this is something that should be highlighted. We can see a growth in these accounts. We see a growth of 12.8 with personnel, and this results from Inflation in the order of 12.9. We also see an increase of 1% with salaries and different positions. Also, the mean number of employees in the order of 12.8, so we ended at 22. Peralta de Saneamento Básico do Estado de São Paulo and also the area of fuels and lubricants now that we're resuming our activities after the pandemic so we can see a change when compared to 2021 which has some effect related to behaviors and all the limitations of the pandemic materials this is our main impact basically We had a volume increase, but what had a major impact was price in the external market. A lot of the materials we work with are raw materials that are related to commodities and are pricified in the external market, as well as the war in Ukraine had a direct impact In terms of services, we had an increase of 13.3%. This increase in services that we would like to highlight expenses with IT, focusing on the improvements of our invoicing system. And I would like to remind you that it was implemented in October 21, so throughout 22, We had to bring in improvements to the system to help us with stabilization, focusing on our SLD. Also, we had services that were associated to the maintenance of treatment services or EPEs. and so we also had these services allocated here and they are associated to materials that were used these are the main aspects in services we can also see investments made by the company in communication channels with clients to try to recover and go back to the levels we had before the The pandemic to our Allowance for Doubtful Accounts. Anyway, we're now focusing on guaranteeing our revenue. In terms of electricity, we had an increase of 2.4%. Basically, we have a relationship between the regulated market and the free market. So we had 8.7% in the regulated market and 6.3% in the free contracting. And when we compare to 21, basically our level of reserves and supply or reservoirs We can see a reduction in the consumption of energy, lower cost to pump water. So we can see this positive effect. And at the same time, we can see an effect in the flat cost That caused the cost of tariffs to rise enormously. We also benefited by the price of energy because of a higher level of reservoirs in the generator. So in December we had the end of the red flag. All of this contributed positively for us to have an increase in the order of 2.4. In general expenses, we had an increase of 22%. We're talking about 270 billion in overall expenses. We have two major events, which was a provision for a lawsuit which is part of our monitoring of all of the contingencies by the legal department and we acknowledge an amount of 190 million in the end of December. In addition to that, we had an increase of what we pay to the different municipalities and that is associated to higher revenue. With that, I have more expenses because there is a direct relationship So basically, the general expenses had these main motivators, main drivers. In terms of the increase of our assets, we have been mobilized and this is going to generate Depreciation, we are going to deliver the plan and activate the plan. And so we do have to take into account the effects of depreciation and amortization. Now, when we compare to how much it represents of our net revenue, we went from 4.3 to 4.5. and allowance for doubtful accounts. And we can see that everything we're doing is for us to go back to lower levels. This is really associated to what our CEO said when he mentioned the focus on the client. Being closer to the client so that we can understand the client and guarantee that we will resume the same levels of default we had in the past. And this is something that started in the past management with the implementation of the invoicing system, looking at the value chain, invoices, charging, and how we look at this and how we have effective actions for defaults and then recoveries and also guarantee that we will have a higher level of payments made in due time. This was my first mission here when I took over the financial department because of the criticality of the topic, because of how important it is for our company in terms of revenue. Regarding taxes, we are aligned to what we had in 21. There were no major changes. Now, in the next slide, please. Looking at the financial results, as I had commented, We had an improvement from 21 to 22. In 22, we had an effect of the exchange rate variations and also the GESPY agreement, and we acknowledged the correction of this. And it is a recurring fact. We also had some gains with the valuation of the BRL when compared to the dollar and the yen. And I'd like to remind you that a third of our debt, we have two thirds in yen and the rest in dollars. When we look at our net, Expenses. We had new captures throughout 2022. We issued debentures and also had an impact of DI when we went from 5 to 12.5. and this is seen in the cost of our debt. Part of it was mitigated, was offset by the revenue, but taking into account the size of our debt, it can be seen here, and we had an increase in financial expenses. Somehow, this was offset by the exchange rate and monetary adjustment of this non-recurrent event. When we look at our debt composition, we go from a position in 21, in the order of 19%, and we ended 22% with 15%. So, basically, we're talking about low loan, we were able to capture resources from PD Invest and BRLs, and with that we also decreased our exposure to exchange rates from 19% to 15%. On the lower left side, we can see the increase of our debt. We went from 17.7 going to almost 19 billion. They are associated to investment plans. So this is here to fund universalization processes, and then on the side we can see the distribution of this debt, where we have 16% in IPCA, 8% in PGLP, 9% in TR, and 10% in foreign prefixed. The major part of our debt is somehow related to the DI, 50% of our debt. And that's why we have an effect when we look at financial expenses. This is a direct impact. And even in the cases that we transform a debt in dollars to BRLs, the reference is always going to be associated to DI. Next one, please. I have concluded the finance presentation and I turn over to Berri so that we can have our Q&A session. Thank you, Katia. We're now going to start the Q&A session. Before that, I would like to inform that the first Part of the session is going to be for investors and then later we will open to answer the questions of journalists. Right now we already have five questions ready that have been placed in the Q&A box of our platform and I'm going to ask the first question by Carolina Carneiro. Good morning. Our question is about causes. Another quarter where the company had a relevant increase in manageable classes, which was below, above expectations, especially in PDD. So number one, With the new management, do you have a mapped plan to reduce these inefficiencies? Number two, when do you plan to announce this detailed plan? Question number three, how long do you think it will take to reach more adequate cost levels? Andrea or Katia, who is going to answer? Well, I can answer this question. This question by Carolina was asked before Katia's presentation. I don't know whether it is possible to go back to Katia's presentation and the barcode when she talked about individual costs. With that, we can help answer what she mentioned. So, Carolina and those who are watching this presentation, we have done a lot in two and a half months. We have a new strategy for the company, a new board of directors with new proposals, with strategies that are already ongoing. We hope to have our assembly to implement everything. But based on what you can see here on the screen, the change in the management, review of processes, review of the strategic plan will have an impact in the allocation of people and the activities we have today. We have submitted a plan which is being analyzed and this is something that we will share with you. We expect to have relevant reductions throughout the process. We will share with you once everything is concluded. So the general supplies, treatment supplies and services in general are being treated within the context of process review. We have created two centers. One is the CST, which will take care of contracts, hiring, and things that are used on a continuous basis. Also, the bidding model for large processes, so the demanding area. will submit the investment demand, maintenance, operation of a specific system, and that's going to go through CAPEX modeling and then it will go to the bidding process and hiring process. With that, we guarantee a standardization of hiring processes, Also, unified contract pursuance so that we can negotiate with a scale and reduce costs with hiring, so we expect to have a reduction in these four items. For electricity, we already have a very daring process ongoing for distributed generation. We also hope to see it in electricity, and the self-production modeling will be ready in the next quarter, and then we will hire in the market this year. Also, allowance for adult full accounts is something that we are concerned about, and we will have dedicated attention to this. We do not know what an adequate level is today, but since we have somebody taking care specifically of this area, and once we have an approval by the Board of Directors, we will move on with the plan. At the same time we have hired external support to analyze all of the opportunities in terms of efficiencies and the use of revenue in the company. We have different consultancies. And in two or three months, we'll be able to share with you our vision for value capture in all of these areas. Today, we don't have it yet. Okay. Thank you, André. Now, we move on to the next question. Marcelo Gonçalves, he asks, What is the review process of the tariff? Will the resulting increase of this review be given along with the annual adjustments? Does SABESP have an estimate of the total increase of the tariff for 2023? Tiberio, can you answer this one? Yes, I can. In the practice, the regulator for public consultation has already answered about and we haven't defined the percentage of value yet but it will be published by April 8 along with the extraordinary adjustment because of the inflation and these new tariffs will probably be enforced after May 10. Of course we expect to have something at around a 10 or 12 percent more or less. Next question, going back to another question by Carolina Canedo. Could you also comment about the regulatory model? What is the expectation for the extraordinary review? Do you have any discussions to change the base model and cost some to a fixed tariff using a possible privatization negotiation? I think we have already answered part of this question. But André can comment about it. Yeah, Carolina, because this is public and the Governor and Secretary have already commented about it, what happened was that the IMC This study is evaluating the modeling of the privatization. As far as I know, the review of the regulatory model and what things are going to be like is being evaluated in this study and let's see what the results are. Today, we do not have any information regarding the desire or what will be followed. I know that it's a technical regulatory fact there, it's feasible, but I don't know whether this is the model that the State is going to pursue. Okay. We now have a question by Enrique Peretti. He says the following. Hello, thank you for the call. I have two questions. Could you give us some guidance on the default projections? Do you believe that PDD has reached its peak? Could you explain why there was a significant increase of expenses with the legal deposits and would it be possible to estimate the normalized provision level? Well, I can answer this question. When we talk about the legal implications, I think that we had something that ended up having a different impact when we compare it to the other years. We don't see it as a recurring effect. Of course, we have the contingencies which are monitored proactively, looking at all of the possibilities to Making it a concrete fact, we expect that this is not a recurring fact and it happened because of a lawsuit. When we look at PCLD, it's difficult for us to know if we've reached the peak. But we can imagine that theoretically that we have reached the peak when we look at these two variables. First of all, we have the pandemic, which in fact reduces the power of consumption and also a change in the invoicing system. We can see some signs in 2022 of improvement in unemployment rate in the state, and we see with good eyes the possibility of recovery throughout 2023, but it's too early to say where we're going to get. This is also associated to having somebody focusing on client relationship. So this is the comment I have about your question. Okay, thank you Katia. Now we have a question by Gustavo Fabricio. He asked the following. The results show us that there is a cost pressure when compared to other companies in the sector, as well as a PDD which is higher than the average. Furthermore, in the fourth quarter of 22, we saw that the mean tariff was below what was expected in the volume mix. Thinking about this new management, what can we expect in terms of operational costs, better management of the tariff mix, and a better profitability of the capital used? Do you intend to present a strategic plan to investors? Well, I think this question was asked before an explanation we gave After the question was asked, we do have a new strategic view. This will have an impact on costs. It will be quantified once the consultancies and the internal work of the company can change this impact, both in terms of personnel, also expenses with activities, services, materials, and so on and so forth. So, our expectation is to have a relevant cost, but we still do not have any numbers to share with you. André, perhaps we could comment about the mix and the tariff. In fact, all of the other questions you had already answered. Well, the management of the tariff mix has a non-relevant component. We've worked with the regulation of some activities that have an impact on losses, People who are consuming water in an unusual manner, but we do have a program with large clients and I think that the creation of this new department aiming at clients Thank you, André. I think that part of what you mentioned is also being questioned by Gabriel Caruso. He asked the following, André and team, I wish you success in the new management. I would like to know if SABESP is considering reviewing the company's pricing. As an investor, it's good to know that the company Are you considering investing in new returns as an end client of SABESP? Do you think of reducing or do you consider reducing consumption cost price aiming at expanding SABESP's performance and the mean consumption. Well, André, thank you very much. We're really excited about the challenges and the opportunities we've identified this far. Our objective is to turn SABESP into as efficient of a company as possible. We try everything that is possible to make cost and human resources management more efficient. We have also started reprioritizing the company's CAPEX, aiming at also compliance, environmental compliance. Since we operate based on the rules and all of the demands, also complying with the program contracts and concessions that we have, and also generating value. So this is our goal, combined with this management shock that we intend to put into place. So that we can have more efficient hiring processes and reduce inefficiencies. The issue of tariff cost reflects the company's structure. If we maintain the current structure, we have an annual review, an adjustment every four years, the next one will be in 25. Of course, What we do will be analyzed by the regulator. We will implement the new tariff base, which will be valid for the next four years. So, this is related to a capture by the regulator and can also be turned into investments. I understand your question. I don't know whether I missed anything, but this is our vision. Well, I think that you have answered all of his questions. Yes. We have a question by Antonio Rizzo here. It says the following. An important aspect in the case of privatization and the agreement of the model with the municipalities. Could you approach this aspect a little bit? Thank you very much. Antonio, thank you for your question. I think we can only answer this once the IFC ends its analysis. The regulatory framework does include something on contract changes. We already have pre-established deadlines and notification to the municipalities. They have 60 days to get back. This is an important debate. I understand everybody's interest because of the effect it will have on the value of the company, but unfortunately, before the studies are concluded by the state government, which are performed by JLC, it is very difficult to know what the result is going to be. We are interested in contributing and guaranteeing that the process will follow all of the rules as transparent as possible, which is good for the company, the shareholders, and in special for the society and government. It is a journey where we are trying to align all interests. The Governor has already said, and this was repeated by the Secretary in terms of investment, environment and logistics, that privatization only makes sense if it generates benefits for the society. So we have to wait. See what model the state is going to choose so that we can generate more value and then once this is established the company will collaborate to carry this out the best way possible. Well, thank you, André. Antonio has another question. He asks if the company can talk a little bit about the investment plan for the next years. Will there be any major change? Antonio, we will probably have changes. Today, we have already published a plan. It was published last year. totaling 27 billion in five years. And according to the logic I commented, environmental compliance, regulatory compliance, this is something that we are already doing. We have not concluded the reprioritization of investments plan, but we will do that. Thank you, André. Well, right now, All of the questions we received have been answered. I will wait a little bit and if nobody has another question, we will stop with investors and start the interview with the journalists. Very well. We do not have any new questions, André. And then I will ask journalists to ask their questions using the Q&A button that can be seen on the platform. Taizy Data has asked a question. Hello, Thais Hirata from Valor Económico. I have two questions. The first one is about the investment plan. According to the report, the plan for 23 is investing 5.18 billion BRLs, and in 22, this amount was 5.39. What explains this deacceleration? Is this going to be reviewed by the new management? What will be the focus of investments for this year? And the second question is about the ongoing discussion on the new federal decree for sanitation. How does SABESP see the changes that are being discussed? What are the possible effects for the sector, for the company? Thank you for the questions regarding the investment plan. We have not reviewed it yet. It's ongoing. Also, the investment capacity, volume, and once again, we expect to have this soon. We would like to make decisions based on this plan. This number was defined by the prior management and we are reviewing it to determine whether it is aligned to our priorities. Regarding your second question, I have not read the minutes of the decree. I read a report about it today and what they are saying. I have already commented here that the regulatory framework always has an opportunity to improve and governments try to have a different view, trying to improve something. Along these lines, I think that the decree has some gaps. We are monitoring, we are very interested in this vision, and if it is good for the society to reduce some gaps, existing gaps, In municipalities whose contracts are not good enough, if we can do something via a new contract, this can be reviewed by the sector, and I think that this transition of the system in the regulatory context will help better organize the new context. In the debates we're having, the change of the regulatory framework has been accepted as something that is already established. The adjustment of the decree comes along the lines of trying to fill in these gaps which were left by the previous management, and in this regard, this tends to be very positive. Okay, André, thank you very much. Once again, if you have any other questions, please ask using the Q&A button in the platform. Let's wait a few more moments. We have a new question by Alberto Alarige Jr. He asks the following. Does SABESP intend to reopen any plan of voluntary resignation in this context of cost reduction? Well, If after the structuring we're submitting to the state, do we have an opportunity to reduce costs? Yes, I think that this is an option that the company can consider to encourage those who can resign and if it makes sense for them to adhere to a voluntary resignation plan. This is something I have received from the unions and the different associations with a new plan for voluntary resignation. This is being evaluated and we are... Actually, we have not decided anything yet, but there are ongoing conversations about this. Okay, Gabriel Caruso asks if there is anything you'd like to share with us that worries you in the new management. Gabriel, actually no. The transition process from the prior management to this one was very harmonious. We did not identify anything that should be highlighted. The company's controls, as far as we could question and talk to the external and internal monitors, the auditing committee, accounting, and also the management of the main systems of the company, There was really nothing that was raised by any of them. The company was managed very responsibly, regardless of the current or the prior administration. So, we do not have any concerns, but we do have a concern and we are worried about delivering results. I think there is an urgency in implementing the value triggers as soon as possible, but we work at a company whose decision-making process goes beyond the company itself, so we have to go through different decision-making levels in the state government. It's not a concern. It's a willingness, a legitimate willingness to deliver results as soon as possible. Otherwise, I think that Katja has already mentioned this, Katja, the company is well managed, we do have relevant opportunities that we will pursue. Very well, Andre. Next question is by Tiago Patricio. He asked the following. Good afternoon. Tiago Melo Patricio from Zigurati Company. In the ESG context directly applied to the operations, I think that SABESP could improve The losses in the networks are reuse of recycled water, composting, production of biomethane, and so on and so forth. Based on these technologies and techniques for optimization, which ones will have a priority for SABESP in the upcoming years? Thank you Tiago for your question. I understand that sanitation companies, not only SABESP, but the companies that work with sanitation, are perhaps the highest ESG trigger that a company can have. Today, we already have a clear view of circular economy. In our treatment stations we have pilot projects that are being trained for the production of biogas, biofertilizers, and also producing ceramic products for civil construction using mud. We are not the largest Actually, we are one of the largest recycled water providers in South America. Also, we want to leverage a value. Our commitment with the environment is very important for us so that we have renewable sources to supply our units efficiently. Also, manage the watersheds. We could have a specific day for ESG, because today we don't have a lot of time for that, but I would like to talk a little bit about the value leverage that we want to use. And Tiago, I thank you for your question. Okay, André, we have a question by Juliana Rocha from Red. When will the strategic plan be concluded and introduced? Her other question is about the funding for investments this year. Does SABESP intend to go to the market, issue debt using debentures or bilaterals? The strategic view of the company has already been defined in the structure that we have assembled. We are going to be more efficient, we are going to align everything with a regulator, prioritize clients at a residential level and the end consumer, also having an integrated ESG view to guarantee that our activities will promote environmental improvements, With more sustainable activities, helping cities to better interact with the environment with a lower impact, so our strategic view reflects the new composition and attribution of this new board of directors. Regarding the funding of investments, SABESP is very competent. We've seen the market capsule with a lot of intensity in the last two years because it was favorable, but at the same time we have a very close relationship with multilateral funding institutions. There is a Japanese institution that promotes investments, we have the IBD, The World Bank, we also have a public line with the BRICS and the Development Bank and therefore the company has always worked in different funds to guarantee that the funding of its investment plans will be well provisioned. For this year we have a very good opportunity that we'll be able to access Thank you, André. Let me see if we have any more questions. There is a new question by Alberto Alaridi Jr. Could you update the situation of the depollution of the Pinedas River program in terms of investments that have already been made and that will be made? The prior management said that the activities were Ahead, but we've read recent news on the high level of pollution. When will the river be returned to the population? Well, regarding the volume of investments and everything that has been made, I do not have the updated numbers here, but The most part of what has been done in terms of water recovery has already been made. There was a huge impact on the quality of the water of the river, but this process does not end on its own. There is a combination of factors that involves the participation of SABESP, but not only SABESP. It involves the municipality, The DAE that manage all of the different rivers and the Pinheiros River has a decreased water flow from its origin. Part of it has to do with the Billings Reservoir, which has been harmed. And that reduces the flow of water of the Pinedas River when compared to the past. We continue investing, there are different fronts of activities, and we've been doing everything that we can, but it's an effort made by the society so that we can move on with this agenda. We have used the example of the Pinedas River but we also have the Tietê River using the same models and the learning experiences we had in the Pinedas River to the Tietê River. We're coordinating it with the different municipalities that will be involved in the process and this will be done by means of the Environment Secretariat of this administration. Okay, Andrea. There is another question by Thais Hirata. She asks if you could detail what this activity in the Tietê River is going to be like. Well, Thais, if you give me a couple of days, I will. We are planning something along with the Environment Secretariat to launch it on Friday. So, today is Tuesday. So we will disseminate it on Friday in an integrated and structured way. We will inform what we're going to do in this first cycle of this government aiming at the Tietê River. Very well. Thais, thanks us. So I think this was the last question. We are reaching our last 15 minutes, Andrés, so perhaps you'd like to make a final comment? Yes, I will, Tiberio. Thank you very much. I wanted to thank all of you for being present here today and also for trusting us. We are really dedicated to transforming the company into a reference of efficiency, management and modernity. I would like to reinforce the message that we have an open door to receive criticism, suggestions, focus on communication and cooperation so that we can evolve as a society and as a company. I would like to reinforce the request for investors to participate in our assembly. It would be very important to count on your presence so that we can implement this change in the bylaws in the very first assembly, so that we're all in agreement with this vision on modernity, and therefore I wholeheartedly thank you for your presence to enable us to make this change in the assembly. Finally, I have a message that the whole company is very enthusiastic with the new management, with the perspective of having a modern management at all levels, We are inaugurating a new phase in the company. It's a promising phase, a relationship with the society, and the whole board of directors, myself, Katia, Bruno, Paulo, and Sabina, and Roberval, are dedicated to delivering a new company to the society and to the state. I also wanted to mention That for the first time in the history of SABESP, we have three women at the board of directors. They are extremely well trained. for the positions they occupy. And we wanted to more and more reinforce our commitment with inclusion in our company so that we can have a more robust decision-making process. Once again, thank you all for your attention. Tiberio, I think that from our side we can end. We're actually very happy to be here right now and we are very enthusiastic. Perfect, Andrea. So we see you all again in the next result conference call.