Q4 2019 Earnings Call

In Brazil without the negative effects impact that would have increased by 35% during this. We were able to reduce our Opex by 119 million years old. This reduction is mainly explained by efficiencies in Brazil and Argentina wage. We don't make the income increased by 34% reaching 1614 millionaire dollar. This is explained by the operational results and one of impact coming from a tax benefit in South Paulo and liability resolution in a month.

But I got to be out of e s default on December we received the award as the best company in Chile by Twenty being recognized as the number one company in terms of governance and sustainability in Chile. In addition some weeks ago. We were included again in the sustainability yearbook of robecosam and obtain bronze categories.

2019 was a very intense here for America and we got several important achievement on the following slide. We will see the main page of the.

On February last year, we announced Our intention to make a capital increase for three point five billion dollar as you know, how many meetings with most of our shareholders and having heard the market opinion. We decided to reduce the amount of two three billion years on this operation was approved on an extraordinary meeting and on September we concluded it off read the remarkable 19.5% level of subscription.

During the year, we received several recognition and awards. We were included in the msci Emerging Market Thursday responsibility investment index for the first time. And once again were included in 54 hood and DOW Jones sustainability index has month and also in the best emerging markets that are for ranking of the jail are we also recognized by David as a company we advance the Moon?

Put in the report ranking in finally in December. We were awarded at the best company in in terms of ESG by Alice wage along with this recognition. We receive the upgrades of our rating and the Outlook by speech and may respectively now on the new slide. Let's see the main operating highlights of the.

One Direction that business hour installed capacity remain basically the same as last year reaching 11267 mil what from which 55% are idle net production reached 4105 there an increase of 5% compared to last year from the total generation 61% could respond to hydrogen which increase the buy one pair of a power mainly used to hire generation in Brazil and Colombia. Our energy says increase by 11% reaching 72.6 terawatt-hours. This is explained by the above-mentioned increase in energy production, but also birth

Energy pastors contract in Brazil that allowed to improve our margins. Let's analyze distribution business in the coming month by distributed energy increase by 19% which is 120 terawatt-hours from which 43 date of birth to explain by n and South Paulo in emoji newsstand. Our energy sales remains substantially flat compared to last year.

they gotta be

Number of customers we had an increase of about a hundred and fifty thousand in spite of the client the reclassification process that we have been doing in Brazil and Argentina.

What is the indicator improve the in our subsidiaries except for energy Ram where we suffered a severe rainy season during August and an increase in the level of social violence at the beginning of the end real small increase in the number of service interruptions quality improvement is the main focus of our investments and this number confirm it I would like to mention dead set on 2019. We had the status revision processes of South Paulo regarding the the new car team in Columbia, May file an appeal you two different interpretation in the values recognized for the initial asset base costs and

What do you need incentive?

After that, we do not have any ordinary tires revision process until 2022 on the following slide. You will see any leaks and Thursday every tale businesses in business. You can see that regarding ECT public lighting Point slightly am reaching 417 thousand. We had a growth of 50% in for the business in the industry regarding people. We have the significant increase in the transactions of third-party billing and collection Services while the level of contract of my car insurance was slightly lower.

Finally in the immobility the number of charging station increased from 43 to 448 mainly in Colombia and Argentina wage. They got a business number of delivery points increased by 17% reaching 2731 month and the energy sold amounted to 17.76% higher than last year. Let's move to the financial wage. I'm ready for the. On ride a now the. Reach the $3,994 billion dollars in nineteen percent increase compare plan. If we exclude the extraordinary effect of the positive impact for dead

delusional pending a

Regulatory issues in Argentina increased by 13% to 3791 million years older age group. Netting can came in at $1,614 34% higher versus last year wage explain why better at em by an extraordinary effect related to attack benefit in connection with the merger between em, Sao Paulo and Elsa Dexter Thursday 5:30 of date by a negative one of impact in due to the recognition of accounts payable to the state of Georgia. We we explain in more detail later on.

If we isolate extraordinary effect from both 2019 and 2018 group net income would have increased by 21% off found from operation effect. A $2,147 16% off fire versus last year. This result includes a negative net working capital in the. For an amount of 790 million dollars mainly due to the payment of activities implemented at the end of 2018 in Brazil and Colombia and to a non-cash impact beautiful asset resolution in Argentina point three billion dollar 37 log.

Kind of 2018 mainly explained by the payment of the debt in Brazil in connection with the purchase of an adult South Paulo.

Let's take a look at our Evolution and breakdown by country on the camping supplies.

As you can see on the chart distribution business is the main contributor to our Consolidated increases with 751 million your solar, you know, traditional service while generation business increased by 314 million dollars from which 128 medium is from either generation retain increased by $113 y Lennox, we do three million.

Garden TV valuation in the four countries where we operate and the negative impact of 544 Million u.s. Dollar on account basis Brazil and Colombia are the most important countries in terms of in terms of a design with 41% and 31% responsible for Love by Argentina and Peru both with 15%

It is.

Twilight that 88% of our designs generated by zero direct initial activities, let's analyze Catholics on Monday during his light topics for the period amounted to $1,647 million years older a decrease of 4.8% compared to last year we are considering it affects affects our investment increased by 5%

Topics is well-balanced between Asset Management asset development and customers percent at 5% and 26% with 60 distribution capture most of our capex with seven and 79% share with in distribution business. We have to mention the effect of the consolidation of the following represents 16% of our Total distribution Capital invested in generation business represents 16% of the total while any leaks and Retail 3% each.

Tell me a joke.

Telephone interview 50% of the investment are devoted to our subsidiary in Brazil.

Now on the phone with his life, let's analyze our results on account Tree by country basis beginning with the Argentina.

It'd be ninety nine $17 increased by 39% $456 reaching 552 million years older is a very general terms of design pleased by four hundred and ten million dollars partially offset by a negative effects. In fact, 254 million dollars. It's important increase in a design mainly explained by the positive effects coming from the agreement reached the the the government in connection with the past liability which entail a positive impact of 203 million u.s. Dollar at 11.

in addition

Increase by 12% reaching 245 million dollar without considering sex effect that would have increased by 151 million or 66% This is merely explained by a higher-margin a payment $5. Right and you two thousand extra efficient fuel cost management. This was partially offset by lower physical sales due to lower demand.

In distribution business increased by 71% or 120 million years older mainly explained by the already mentioned one of the same demanding. Our concession area was 4.3% lower compared to last year while the number of clients slightly decreased off to Erica education process of our customer base in generation business decrease compared to last month by lowering definitely in dog food distribution business tax increase by 23% due to the Investments made to improve Quality Inn at home.

Let's continue.

Brazil on the phone ring light

in Brazil in the. Increase by 37% or $444 including 133 million u.s. Dollar negative impact coming from FedEx a design generation business increased by 32% or with 7077. Nissan has already explained by better results in Fortaleza as a consequence of wire generation and hydro interview. I want to design distribution business increased by 37% all three hundred and seventy six million dollar mainly explained by the consolidation of South Paulo.

We also better results in Rio and partially offset by decreased in any place in Brazil decreased by 5% compared to last year reaching 828 million dollar mainly explained by sex in bath. Nobody should on Saturday Catholic remains essentially like let's move to Columbia on the following slide in Columbia in a speech by 37 million years older or 3% compared to last year despite the negative impact of hundred and forty 1 million dollars due to current month.

No.

In a design that increased by 15% in the generation business remains flight, but without considering faith. In fact, we had an increase of 12% mainly due to higher revenues as a consequence of higher prices, which was offset by a negative impact of seventy nine million u.s. Dollar in distribution business has increased by 6% or 34 million dollar home, mainly explained by higher demand in the Fireside. It was partially offset by sex impact of 62 million US dollars.

Catholics in Colombia increased by 3% due to negative impact in local currency Cafe increased 80% compared to Los mainly focused on quality improvement project in Cadenza. Now, let's analyze the online number fourteen months and be 9:30 remained flat reaching 561 explained by better results in distribution business, but lower resulting Generation generation has decreased by 4% or 17 million dollar increase is mainly due to the 51 of expect that we reduced the last year in connection with the incident Insurance compensation due to a linear costero flute.

It was partially offset by higher energy.

Sales and higher average sales price increase will be some business 257 million dollar twenty-five million or 11% higher than last year sales increased by 2.1% compared to last year and average wage, but I was also higher the number of clients increased by $11,000 total capex decreased by 11% compared to last year may be explained by the completion of restoration work in Korea Wonka power plant and Technology Improvement projects National Distribution office. What's your name?

Let me now analyze. Our efficiencies in the following is light.

Starting from 1641 Museum of affects the last year we have to the effects of the month by month of 2018 awareness South Paulo. In order to properly feed the efficiencies gained in the. In this way. We get off of one thousand nine hundred and twenty five million u.s. Dollar for $0.28 from this amount. We obtained efficiency 419 million dollar mainly due to lower effects in any South Paulo in Louisville personal expenses in Argentina in addition to the induction of fifty-four million dollar explained by fix reaching a final effects of 1700. Yep.

Me see comedian. Yes.

The last representative action of nine percent with this we have reached 42% of the efficiency. And now in our previous plan 2019-2021 on the following slide who will make a Ford Focus on sustainability.

Sustainability is a key driver for creating long-term value among our shareholders and pull our stakeholder in this way. Our strategy is a Grace our community.

And our commitment on United Nation sustainable development goals recognizing the synergies between social progress and corporate income taxes.

We had our role in the growth and progress of the area where the company operates We Carry Out in 2019 more than 300 projects for who's on engaging the local communities and making them a part of the energy transition in life the our SV commitment. The focus has been on promoting access to education ensuring access to safe and quality Energy Services and fostering economic development through and threatened relationship.

we have

More than four point nine million people under the perspective of sustainable progress since 2015. When we first committed to the sdgs and America is also contributed to sdg nine and eleven related to build a sustainable industry wage structure and see this this way America relies on this low-carb on value-added products and services where this month and analytics business are relevant to the development of European areas. In addition in order to prevent fiber security. Then we call that order of our web application exposed to internet with Advanced cybersecurity Solutions and Thursday.

s s contributed

To fight against climate change by generating a 56% of its energy with either electric assets during this period I mentioned before and America was awarded as the best Chilean company in terms of ESG by Twenty and was included in the sustainability name of Rebecca, Sam and obtain Bruns category this recognition configure the good word that we are doing and the relevance that sustainability on our strategy.

Now let me endure it will resent our financial performance in the coming right? Thank you for calling 14995 for a million dollars for a 2019 the company registered depreciation amortization of an amount of $1,625 million dollars Thirty 3% higher than the last year mainly as a result of the consolidation of an example reached the mailbox of 2769 million dollars net Financial results and mounted 2 - $378 million dollars which represents a higher cost of 45,000 mainly due to higher Financial expenses in any Brazil related to financial expenses coming from the purchase of an example home.

Beck's registered the

You did was 236 million US Dollars, which is 46% lower than last year. Did CD's explain it by the one of effect already mentioned took it to the merger between Edison power and it also best total net income amounted to two thousand one hundred and seventy million US Dollars while attributable man. Income wage to $1,614. I think what percent increase compared to the previous see results with all these elements. Let's analyze the cash flow with the next light that's a full amounted to 2147 million dollars starting from Monday the dollar 300 3995 US Dollars these results includes a negative net working capital in the field for the amount of $790 million dollars due to rebound of networking cable.

actions taken into a

The 18th and not compensated by the end of 2019 with new actions mainly input on the Brazil. In addition. We have a new cash impact to do to the regular Google home in Argentina Texas paid during the period amounted to 592 million dollars while net Financial expenses and multitude 465 million dollars mainly related to our activities in Brazil and Colombia net cash flow amounted to -224 million dollars billion this year after Iverson's 1647 million bucks in maintenance and growth Catholics as indicated in the previews is lights dividends paid by the company amounted to $724,000 during the the. Operations amounted to two thousand nine hundred thirty-five million dollars mainly as a consequence of the capital increase the wage.

included in August

With energy with all these effects total net best decrease to $2,362 million dollars compared with December 28th. Let me know analyze the death of our company in the following slight plus that amounted to six point three billion dollars as a degrees or 28% of the first week of December 2018 this reduction it mainly explain it by the payment of the debt of Brazil in connection with the purchase of Anderson power off the debts, which amounted to more or less 2.5 billion dollars which paid in August 2nd with part of the proceeds of the capital in Queens off. These paid amount was lower than the original 2.65 billion dollars an ounce it thanks to the currency devaluation in Brazil and Thursday.

as a consequence of

Beats, we have a higher amount available to the risk of the pension fund. Thus the remaining five hundred use of the seats. As I said are still in the balance of the company ready to be used for the pension from the risk waiting for the predict approval expected to pay for the the coming months in terms of currency with the reduction in any Brazil's that's half of his power that he still in Brazilian reais and also half of its located in Brazil as you can see the right side charge finally regarding cost of that. We can see a reduction for this. From 7.3% in to 8:18 to 7:21 % into a month. Now, let's see how we have added value to our shareholders in the coming, right?

Even then I probably do it either. Which maximum storical amount of 807 million dollars these represents an increase of 34% compared to 2018 and implies a dividend per share of $53 slightly higher than last year due to the fact that after September is concluded in August. The number of shares of the company. This dividend have still to be approved by the general shareholders meeting that will take place in April this year off it comes up Shepherd, So you can see that end of America share has improved by 16.6% since the beginning of doing the 19th all the performance in a significant way that Chilean May index as a consequence of it is good performance market cap basically reached a maximum amount for this company and currently is at home.

15.7 billion

Dollars being the biggest company in the Chilean Mark market in terms of market cap. Let me now continue with the focus in in our life to acquisition wage distribution business. It's starting with an Impala. We are very satisfied with the performance of the company that region 638 million dollars home America's level and if we compare the number in the ice and revealing gaps, we see that increase by 150% mainly due to office with them and also hired that is due to the terrible set process go through this phone July 2019, which resulted in a higher rod for the for the company. And net income level. We have a positive results of seven hundred fifty-seven Million Lives while last year the company reported a loss of 350 Jun.

Yeah, he was in.

Okay, is it the movement is explained by a better operation or results in a better Financial results less capex reach it 281 million volts and it was mainly allocated to digitalize and modernize the network the distribution Network effects decreased by 23% as a reduction wage at the result of integration optimization process of innocent people in NL America group and has allows us to reduce the operating costs that profile has improved compared to the previous here. Thanks to a good liability manage made by the company regarding the operation of operational performance distributed energy slightly increased with respect. Our flag. And energy loss were aligned with Latvia.

We can see that the quality decays society and Society have included in on a significant matter reduced by 10% and 16% respectively as a result of the investments in the company distribution Network. In fact, the company has been recognized as Distribution Company with a better Improvement in 2019, according to the consumer perception survey elaborated every year by the regulated resident regulator. We are very confident. We are very confident that we took deeming adding value in line to what we are now on our strategy plan now on the the next slide, let me highlight the performance of an invoice during the the. Regarding quality indicators. We see a solid performance of which is explained by our strong carpets plants tacos in infrastructure. Yep.

Network

Indicators were improved by 13 and 25% respectively. It is important to mention that has accomplished all the agreements Define off the vestments been settled with the government and current quality indicators are the best that the company has ever had much better than the regulatory levels that in the construction agreement in August this year the company signed a voluntary agreement with the government of reacts to improve some closer area wage to accelerate the Investments and quality targets agreed in the original possession agreement, despite the financial and operational efforts that the company is doing we had a decrease in a bit of 5.5% in the delivery. I mainly explained by higher office, which is mainly explained by an improvement birth.

The Works to do quality there

In the company that the income register a negative amount of 100 million reais explained by a negative extraordinary effect of 557 million realize as a consequence of a reverse a reversal on the accounts receivable from the state of various this reversal refers to the judicial disputes on the rights of reversing replacement regarding legal and the Mississippi counting contingencies originated originated price by the company's acquisition of an Iraq, which should be then reverse it by the state of whereas through full Mac mechanism such rights of those stablish by the purchase agreement. It's correct being questioned by local Law changes and is under legal disputes as a result the accounts receivable regarding conditions from the south.

2012 to wait between 15 have been referred with this impact net income would have without disinfecting that it would have been a plus a positive of 188 million realize in terms of that. We have been able to reduce the cost of that by 1.1% of the company added more than 87,000 clients during the last twelve months and its energy distributed increased by 3.5% And if you lost a slightly increased compared of Latvia, which is 12.3%

No.

The following Slide by reach you will conclude this presentation with some closing remarks. Thank you have an idea we were able to gain a positive result in the second in this. Thanks to our operational performance driven by the distribution business hour story-telling a really consistent with our strategy allowing the company to reach Target despite the significant currency devaluation and other negative macroeconomic condition that we have seen in the region in the last month's we concluded our status review processes in Sierra in South Paulo & Tap. Acceleration plane. We have been able to significantly improve quality indicators in a garage.

Thanks to our good performance. We are going to be

View is dividend in the history of the company and we became the largest company in the S&P index by Marcus, The capital increase was successfully completed with 99.5% of our subscription and slightly more than 3 billion US dollar collected now. We are in the very solid position to continuing to continue with our group part in the region bank.

We have mentioned before we have substantially in the heart of our sustainability in the heart of our strategy and I bled to be recognized as an ESD focused company in 2019. We received several recognition on the estimators month and we're awarding the have the best company in Chile by 20.

well

Thank you for your attention. And I do apologize. Please proceed.

operator

as a reminder to ask a question, you will need to press star one on your telephone to withdraw your question. Press the pound key, please standby we can probably Q and A roster. Our first question comes from Enrico. Bartoli was made first page with your question. Hi, good afternoon. And so taking my question I have three. The first one is regarding the 4.7 billion Target for the date that you bought a 2020 if we strip out the one off in nineteen, it would imply around 1 billion dollar of increase compared to last year. If you can guy down on the driver's of this 1 billion in peace, and if you can remind us what the assumptions are in the guidance in terms of bath products second question is regarding engine Tina. If you can give us an update on let's say the approach or the new Administration towards the birth.

electricity sector

If you see any any kind of risk of the discussion of the regulatory framework particularly in in a disorder that had been implemented in in the past two years, and the last one is on the complex for 2020. If you can give us a guidance and possibly a breakdown on the areas where you came back to to implement the Investments. Thank you.

I will start to to reply the take then I will I will leave the floor to our area regarding the increase is mainly due to the fact that you will get the benefit of the full year of relation or the type in life and Apollo. Remember where we got the tires review starting from July. So we will get the first several months. Alex and in Brazil as well. You have the actualization of the types with inflation. So maybe if you through the increase in in remuneration of distribution Distribution Company, I don't know if on this one you just to add that. Yes.

repeat that distribution

Yeah, well ask you this all the the the the products considered be considered 3.7 but the actualizing this month we we we should have an adjuster of three hundred million dollars, right if we consider the the current consensus as you know, the the the the page always being evaluated. So this is the only other end on the other hand. We we are projecting some some upsides of these offer fishing in order to to try to compensate this this figure. But mainly it's the due to distribution regarding Argentina wage just to recall that we have in our in our budget twenty-twenty, you know in our budget twenty-twenty as we said during presentation of the our big dog

Blend we we put the six months.

Frozen and the exactly is going on regarding uh, as you can recall the Declaration of the gallery into the monetary fund into the market that they will not go over the six months of birth of that is

They got to be of course, the the announcement of the new revision really was an announcement. I you know exactly what will be the content of this of this reservation. As you can imagine that we are doing that. We are analyzing a seeing several aspects for example related to the Accord American two other items then can compensate some wage differentiation, bye-bye. Our I able to do so on the distribution side. We don't expect uh-uh big change compared to what we have assumed in our business plan regarding generation. There was as well in announcement regarding birth

that the fact that they want to

Eliminate the dollarization of the terrorists and going to pictures and some change regarding capacity capacity payment. The discussion is getting a higher price in dense of energy and we just sort of actual additional the time we'd the clock fuel inflation and based on our cap calculation. We don't see as well with any major change in remuneration of the generation as well. There are for example the possibility last year for the generator to buy their own gas. And now this is reserved to Camisha in the birth.

This is the majors change that right.

Now he's losing Argentina. So in the overall, we don't see for the time being a major change in the hypothesis of our month. We are starting some other adjustments. We are under negotiation. Of course, I'm a guy that just to recall the now the responsible of the confession of it is the garden of the month and the president of the province of Buenos Aires, even though the regulatory body will remain so we don't see any major major change and we are of course a huge one starting a plan B affect regarding carpet and request off.

The topic the topic is 62% located in Brazil.

Right guarantee 8% is located in colonial 60% then Argentina and Peru versus the major part is is a Brazil and in terms of business 82% wage is infrastructure the network division company. Of course, the total is 1.7 billion dollars for this for this year. And as as Thursday, we was explained it is published in quality improvement efficiency. And of course the the Wrath of the company to the next next era for sale.

Thank you very much better clear.

Thank you or next question comes from Elton mammadov with Bloomberg intelligence. You may proceed with your question. Hi there. I have three questions, please the first two on guidance. So your dog it. Can you confirm your 2020 2022 earnings guidance that you published last December? Obviously the consensus is way off. So I just wanted to see if you're still comfortable with your latest guidance and the second question of again on that your 2019 figures came just below your target. Shall we expect any mid-size Acquisitions firm to bridge the gap between your guidance and this foreign exchange headwinds that we're seeing holding you back and the last question is on minority buyouts. I mean shall expect more of them to come or you've done everything you could and and and and you've reached the target. Obviously you have some Headroom following the capital increased. Hence why I'm off

Thank you.

You have like a nice I will reply directly to the the third question and then I will leave the other to our daily. Oh, yes, the minority by of we continue along the 2019 line with our statement during the capital increase wage. I just called the capital increase with a sort of equity payment that means Focus mainly on repeating the bridge loan for the same position and the remaining you adjusted the risking the uh, the pension fund in South Paulo and we are doing we are I'm pulling the very possible, of course the topic an increase. We have a next day. They did that that will allow hard to get off.

Increase our day and mainly this before. For sending on five big over in a minority. This is regarding the guidance, uh went to the regarding our fax products project. But let me tell you that is the main difference if you compare, of course, you can calculate because you we probably should our outward assumptions the mini one that we see that are the effects has a difference with with the medical centers. We consider 3.7 and 494.1. Let's see the next one. But as I explained in the previous question, we expect the FAQ.

4D dear

Eats a balanced, you know these different mainly Brazil would represent the 250 to 300 million dollars India right off. Of course. We we have some some we are accelerating some activities in order to completely not with newer provision. But with the efficiency, okay, that's our our properties. What happened in in 2019? Yes. We serve the military defecting in in the business of life. You also I smoked part in Columbia, but baseball is in Columbia that affects of 317 million dollars wage reduction by these effects, very biased as you know, our our local revenues in other countries are in local currency. So, yep.

We have been translation.

Fact that we we we cannot control but on the same way, we have all the our depth in local current. So it's a it's a balance that situation back in the in the zip code. But let me remind you that into 8019. We announced at one point three billion dollars of income and we are delivering wage six billion dollars of America and we'll pay these 50% of this amount in next May 15th. Which is around eight hundred million million dollars of which we already paid in January one hundred million dollars. So we of course we are exposed but we we are with our efficiency and will report every every quarter the performance is dead.

effects of

Related before sensors from the the following quad especially because we are suffering. Uh this let's say this scenario of volatiles the managing the older they the International Financial Market.

Thank you.

Thank you. And next question comes from Charles Fishman with Morningstar. You may proceed with your question.

My question is concerning slide twenty-one.

So based on that slide your recommendation of the shareholders meeting dividend recommendation recommendation is $0.53 per ADR. I just wanted to confirm that number one and then number two is when you know at the one of the bullet points are the subtitle at the top higher dividends versus Guidance the $0.53 is actually a couple of cents less than the guidance in December. So I'm assuming when you say higher dividends versus guidance, that's the $807 million that you're referring to is higher than your guidance in December. If you could just clarify that I'd appreciate it. Thank you for your question. Yes, I will pay 50% of these amount this year. Okay, the number of of course if you calculate buy shares when we did the capital increase with each new shares.

so the amount by Cher

He's a slower. But in any case the amount that will pay is higher due to its higher wage, especially especially for some Paulo the condition of some Paulo is very important to be because it was it was only possible because one why the the fact that we do need some power and this is also possible to register this positive effects tax effect in our balance sheet of 2019. So that's why we we were very successful with this transaction and then we'll be doing it to the shareholders in June 23d. I don't know if I answered all your points know that was and then a follow-up question your target payout will be wage.

Fifty percent, correct?

Move my bank because that's all I had. Thank you.

Thank you.

Thank you or next question comes from Amarillo rajini with Banco Santander Chile. You may proceed with your question. Hi guys, good morning. Thanks for calling. Congratulations for the results. I have two questions. The first one is regarding this like 24, and the comment about future mene is the statement provided in a market. Even about the intention to consolidate the latest exhibition before new purchase maintained or should we see the statement of this page as a change in in Iraq to do to any new opportunities in the second question is what are the next targets to continue improving in the ESD rankings. Thank you.

Okay regarding the recall for the consistency of Storytelling the recording we were off telling during the capital during the capital increase you said? Okay, we'll cover the increase will solve the we will allow more money coming from America. And exactly we are fulfilling this commitment and we will open up the possibility for new been doing two things. We said that my vehicle minority and I already replied to the question. Yes. This is will continue along the 29th at 5:20 and the regarding a position as you know, uh, the opposition is depends by the availability of Target would be acquired and the interest and dead.

the financial peace

That's always always we apply to our to our acquisition. And as you know, we continue to monitoring them all of fourteen opportunity in the region and we will continue continue to do it and we will see exactly what will come out in the next month in country like like Brazil for example regarding regarding the ESG as you know, when you go home D calculation from one of the address that I mentioned during the presentation we can out with the with the the recommendation we we see and we analyze why and usually we do a checklist of improvement in terms of

Composition in terms of activity to be that needs to be done. So usually we recently received the money I would end as well in because I say we are analyzing let's say the reporters will be officially issued and then we will not work in improving our Target is hot in the ranking of this this this indexes and what is our driver is the analysis of the recommendation that comes from from the analysis of the checklist analysis. So we will continue off of course as we said during the presentation of the of the business plan. We will work on the sdgs 7 a.m.

9:00 11:30

We finally we the pristine we will work for the reduction of CO2. We will continue to work in the Improvement wage structure in cities in the reality South Paulo will continue in this respect to represent. Our our gas to go into the direction of Mac City. I don't know we have already done the work log in. We will continue demonstrating the concept related to not fatal digitalization and wage is of course, as I said in the closing in closing the Mac, we have more than four point nine million people under the perspective of birth.

Sustainable progress seems 2015.

We first commitment to actually we will continue in this Direction with the rules or the guidelines the stamps on the analysis of the wage indexes with intention to go up and we will continue on this sdgs that are letting off according to the our investment brand and we will continue to push into the direction as I told you took nine eleven and fifty.

Perfect. Thank you. You're welcome.

Thank you. And next question comes from Marcelo burrito with City. You may proceed with your question.

Hi, good afternoon. Everyone. Thank you for taking my question. The question is this passage. We certainly know that in Brazil. There has been a lot of administrative and legal disputes concerning the the ability of a company to realize that the Deferred tax assets Jamie from Goodwill amortisation. So the question is how confident is the company about its ability to fully realize it's the first time it's ever reduce its tax burden. Do you have any sort of legal opinion clearly stating that the company can actually fully amortized that the phone? No. Thank you.

Yes, of course. Thank you.

Yes, we have we have legal opinion. We did the balance sheet is audited by an independent Auditors provided by our dispatch their lives and and companies and so on how it was. Your question is very important. How can we assure that the company that we can conceive after the direct reset? You see that we doubled the the valve the company it doubled the result we reduce office and we took that for dinner limitation. If you project our our regulatory, what is that? You'll see that will more than compensate with these amounting the in the in the following years. So, of course if you look at the the previews and let rope out if it would be possible, but after birth

The the therapist test after the voluntary dismissal plan.

The the efficiencies in the company the procurement efficiency the invest the shift between effects with this is not included copies. You can see that you project season and we are born in comfortable that will be able to compensate. If not, if you wouldn't be possible to register the the the exacting in our email balance in the again resuming from this point of view. The strong results may have demonstrated in in in with numbers with the Improvement in the performance as well of the quality of the quality indicators of South Paulo in the in the reality. This strong results will allow us and allows as well the Auditors just to confirm the 16 a month.

Thank you.

And of course if you recall when we did the the capital increase we said that this Capital Thursday at the focus on some specific item. We said that at the end of the story with the with the with the investment in the the the possibility to sort of tax shield, uh will be expected a substantial length of 420 million just overall taxes in the next five years, you know, this is not acceptable. We we if you recall we are announced using the capital in trees and we are exactly pushing.

All right. Thank you.

Thank you, and as a reminder to ask a question, you will need to press star one on your telephone.

Our next question comes from Sarah too many with you may proceed with your question. Hi everybody and thanks for taking my questions. I have two questions. The first one that is on the growth which you can please guide us to the the growth maybe excluding the one of them and also it's clothing the the difference in the perimeter for 2019. That would be helpful. And the second question is on the networking car. If I'm not wrong. It was about 1 billion at nine months and still appear about eight hundred million. So do you expect this working capital to recover during 2006? Thank you.

Well regarding the let's say the same the same comparison the $80 from 2028 to sorry your question for 2018 to 2019. Right exactly.

Without without affects the increase it would be it would increase by thirty-five 35% Okay, mainly driven by subject. But if we adjust if I remove the the the effects effect, it would be 35% but we need to adjust all the the one the 80. From some powerful not let's say analyze it so This Is It Would Rain would agree for 12.9% So the dark roof was 19% off without the fax. It would prove Thirty 35% but alignment with the one North and the South

It would increase.

at 12:40 to 9:30 %

Is it clear this is the first one? Yeah. Yeah. Thank you. Thank you. Very clear. Thanks God. We we had two main main effects here.

First one is the the CVA which is the purchase of energy in distribution companies in Brazil to Thursday. The companies will do they have status in there. Let's say a spot price in there. There's so they if the the price the real price higher the company anticipates cash, okay, and then the following year recover test, but they will have a delay of one year. So this may affect was not totally recovered. Okay, it was not totally compensated and the other is fact is that since we had a timer set to English nineteen, especially from some Paulo and from that we needed to of course to to increase the

right, but we needed to anticipate or increase our

Our payments or topics payment in order to accelerate the process and translate this into into Iraq. So both Tracks Of course puts pressure in our working capital, but it will be recovered because the CPA is uh, a pass-through will will recover into any do any time if there is that this balance is rated way. It will be 21 and the Catholics, of course the higher traffic so be better remuneration, so it will be in a marching will recover these these electric this working Kendall.

You're welcome.

Thank you, and I'm not showing any further questions at this time. I would not like to turn the call back over to Raphael for any further remarks.

Well, there are no more question. I don't lose the results conference call investor relations still available for any doubt that you make a month.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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