ISA Energía Brasil S.A. (ISAE4) Earnings Call Transcript & Summary

Good morning, everyone. Once again, I'm Bruno I am the Investor Manager here with our relations. We're starting with our live stream now. We are streaming live in our YouTube channels in Portuguese and English. I'd like to thank everyone for being here today. This is a quite full event with many known faces here. The event was well designed for you. I'd like to go over the schedule for our event today before I give the floor to Rui. The agenda here divides our event in 2 different sections. We're going to go over those main topics. We're going to discuss a bit about company. The Paulista concession, the renewal contract we have in São Paulo, also greenfield projects, how we've been managing all the agenda, all the assets with discipline and efficiency, always maximizing our opportunities, then we're going to talk about the future, our strategy 2040 and opportunities that we see moving forward. To start our presentation, I'd like to invite Rui Chammas. He is the present Director to start the presentation.

Thank you so much. Thank you. Good morning, everyone. It's such a pleasure being here with you today. This meeting today, it's about accountability. It's about talking about what we have been doing and looking ahead for you to understand what we are foreseeing for the upcoming years. I'd like to remind everyone who we are. So we are a transmission operator company with heavy portfolio, concessions that supplies practically the whole country with our services, a historical concentration in the city of São Paulo and a series of concessions that connect many states in our country. When do we go more into depth. We have a portfolio of 24 concessions. We are responsible for transmitting 95% of the energy of the state of São Paulo with that transformation capacity and 23,000 kilometers of lines. So we have 30% of the energy of the country in our circuits, and we talk about 12% in the sector as a whole, 12 states with 132 substations and a market cap at the end of September of BRL 16 billion. As we look at our business, and we like to describe it with lines, the stations and market share. I think the main message here is reminding that we are a company that manages a concession portfolio. And as from the perspective of operational management aiming at excellence, delivering that service to society, which is part of our strategy, we add value, create, add and grow and value in all of our businesses, and this is something we're going to discuss shortly. We have today a 20-year average time in our maturity and concessions and all colleagues here with me are responsible for the success of the company. As we look at our portfolio of 34 concessions, we have something unique in the sector. We are the only company that have among its 34 concessions, 2 types of concessions, a renewable concession and a concession portfolio and procurement bidding process that are quite important. Here are the companies dedicated to transmission. When we look at our portfolio today, we have a RAP for the next few years of BRL 6.4 billion and they're divided. Well, in blue, we have our Concessão Paulista. Paulista Concessão, a historical concession of the company, renewable contract and its sort of composition, 56% of all coming in at the company. And then this is divided in 2 sections. One, the RBSE, we're talking about BRL 1.9 billion of all those who come in, and I'm going to go into detail about how this BRL 1.9 is divided because we have the RBSE financial would be paid by '28, and part of it, it's the economic one, which will be paid out until the end of concession. Now the RBSE is the nondepreciated assets pay out by -- that we had from 2012. BRL 1.7 billion, 26% of our total entry is in regards to the new investments that we have in the asset base of the company. Understanding the mechanics for the remuneration of those assets from the investments that we have in our base. And the compensation that we have for maintenance, this is essential to understand our strategy, and I'm going to talk a little bit further shortly. What's important is the investments that we have that compose the light blue color section are interesting ones that have this relation of RAP and CapEx of 17%. In other words, every BRL 100 that is invested, we have that percentage until the end. And this allows for trustability till the end of this business. Also, we have those projects that are in procurement. That's in the orange color. We have those that are at operational BRL 1.8 billion of entries in operation and BRL 1 billion in entries. Then our Project Manager here Director, will present the 5 ongoing projects under construction that will allow us to have more entries above 1 billion in upcoming years. That investment that we presented are investments of new concessions that have corporate longevity. Each of them has another 30 years of cash flow. And also, they allow for synergy with existing operations and a profitability that is quite interesting. When you look at our portfolio that has been delivered already, that we have presented with a average profitability above 2 digits. And also as we add to those in construction, and they also have a very interesting profitability when we look at it. More into detail about Concessão Paulista or Paulista Concessão. Historical one for the company in our state of São Paulo responsible for practically all the transmission in the state of São Paulo. First important point and you experience that. For a long time, there was a discussion in regards to how the RBSE had to be paid out, the immunization I just mentioned, in regards to the compensation of the nondepreciation assets at the moment of the renewal in 2012. This is a compensation that since 2012 is started paying part by 2017, part of 2020, and the discussion was about how those amounts should be adjusted over time. For some time, there was an increased concern even by us that this compensation had to be from us in the company, reducing substantially the amounts that we're entitled to. This year, we had a solution provided by the ANEEL, the Brazilian agency, defining future flows and we're very happy to see that this solution make things reasonable and the solution was much better than the expectations the market had. With that, we had the last 3 years of the payout of the RBSE financial one, BRL 3.8 billion to be received. So we're talking about a reduction of BRL 900 million, the total that we had, much lower expectations we had in the market out there by analysts as we heard. It's important to highlight that the RBSE in those 3 years and in the total, we're going to receive BRL 3.8 billion, also has an economic component to it. This economic component will be paid until by the end of concession, 2042, and this economic component has an amount that will be paid out and amounts that today would be BRL 4 billion. So the compensation of the nondepreciation assets from 2012, will have a payout that will be paid and is included in that BRL 1.9 billion that I mentioned and the first pizza chart that we saw in the beginning. Now the Brazilian -- excuse me, the Paulista Concessão or Concessão Paulista that had ending with the final definition in RBSE also is a business with lots of opportunities. Opportunities that our company is addressing as no one else the way I see. We have the possibility associated with the responsibility to update our assets. We have a concession that was partially built in the '70s and '80s -- or '60s and '70s that requires updating and very responsibly. We managed understanding our assets, the capacity they have, the criticity, they have and the needs for modernization. And then we start aiming at authorizations for reinforcement. We're talking about changes in equipment, higher capacity equipment, associating our status with new function and better capacity and improvements where we swap equipment to a new one with the same capacity. These investments, reinforcements and improvements, they are very profitable investments apart from being needed for our system, and they have peculiarities that are worth knowing more about so that we can better appreciate investments are being done. The 2 kind of investments lead economical effect since the onset of operation. So when I switch a transformer and when I add new capacity in the line, once it becomes operational, I have the economic effects of the investments that were done that I discussed a while ago. We had rentability of profitability, 12% to 17% in CapEx and the new entries. And considering our regulation, we have 2 ways of considering. For those who are large scale, both large-scale and improvements, we're talking about large machinery that are replaced under authorization, they have a cash flow impact since the beginning of operation when I switch a transformer and then it becomes operating according to the ANEEL, Brazilian agency, then I already have the results, and you can observe that in our quarterly results. Improvements, small scale improvements, they have the cash flow effect only when it's time for the revision that we have. The last one was in 2023, had its efficiency in '24, and the next one will happen in '28. So lots of the investments we've been doing already show results economically speaking immediately. But when it comes to cash flow, only a little bit down the line. When it comes to reinforcement improvements, what are we talking about? Concessão Paulista today has, and today's amount, assets that represent BRL 32 billion. But out of this BRL 32 billion, BRL 17.7 billion are totally depreciated. So these assets are assets we operate, maintain and they do not bring any entries when it comes to the profitability of the assets. They are depreciated. The complement are assets that are partially depreciated. Well, there's no asset that is not depreciated, but they're partially depreciated, and they add that complement of BRL 14.1 billion. Out of those BRL 14.1 billion, considering their average depreciation, we have in our remuneration base, we have over BRL 16 billion. So -- and now we're at BRL 6.6 billion. That's what we have in our income. From a financial perspective, we could say that we have the opportunity to have all the investment that is not depreciated and special, the orange color that's being depreciated, totally depreciated to increase the company's profitability. Well, we're not going to have all that investment right away, but it is an opportunity that we have associated to the needs of modernizing these assets. That's a moment where Orsted has an increasing demand connected to electric mobility, increasing demand connected to data centers and the needs to include the load considering all the economical growth that we've had just asked the increase in the quality of life of the population. So it is -- when we talk about the renewable energy with our company, well, we have increasing potential that needs to be explored. When we look at what we have been doing, that's exactly it. We've been better exploring this obligation that we have in modernizing assets and that becomes opportunity. To the left, we have a curve of the investments that we did from 2018 to '22, which was in the last tariff revision, we have here BRL 140 million, BRL 130 million, reaching BRL 825 million. And the last year, that was valid for that tariff reveal. What's more interesting about the growth is the orange color. The orange color compares how much we were investing in comparison to depreciation to depreciation. When I say depreciation, well, actually the technical term is QRR, which is the regulatory quota of the assets. But in the last year, we invested more than depreciation. So in terms of establishing the grid, here, we started investing more than we're depreciating. Now when we look at results of the tariff revision, the results were quite interesting. We invested BRL 1.3 billion in total, the numbers we can see here, and when we compare to the market because the competition in tariff reveal a synthetic compared to the price of the average of the market and what ANEEL did comparing the market. We are 89% more efficient than the average that exists in the market at that time, which actually caused to that BRL 3.3 billion CapEx was compared to the BRL 2.9 billion. And that's what we compared to last year's result when the tariff review came up from the cut point of 2023 and our remuneration base became positive. I will show on the next slide, the 2 next slides. So this incremented our revenue in BRL 360 million on 28% of CapEx realized. And that number from 2017 was shown in the relation of the market in a very better position. And when we look to the future, what we are forecasting is for 2023, what we did was BRL 1.2 billion, 2.9x our depreciation. 2029 -- we did 2019 and now much more. And the typical value of investment is next to BRL 1.5 billion. What we'll guarantee expectation of RTP that is very interesting. The new RTP will have a cut line from now to June '27, CapEx among 12% to 17%, and efficiency now will be measured. We already have reforce an improvement of BRL 2 billion R&M, which is amongst what I said. And remember, in the last review, we had BRL 1.3 billion in 5 years. We are still 3/5 of the review, and we have already a lot that is being reenergized. We have ongoing projects, so assets that are being immobilized, and we are projecting something that is very interesting. And what we are forecasting from small and large-scale projects, these are the values that we imagine where large scale with fast and immediate, it's amongst 1/3 of our total and 2/3 in investments that will appear in immediate results. So we see the net base of the company in a curve that can be very interesting when we look to the cut base. So when we renewed the concession, we had BRL 7.4 billion that was immobilized and then it dropped to BRL 6.5 billion. And then we saw something that was above our depreciation. Now we are investing above the depreciation. And we will increase even more the percentage of our investors. And we have actually something that is very similar and people like to say that we are Transco with the Discom business within it. We have concessions of 30 years that have a definite entrants, and we have our investment with a class of assets. And we are working very well, and we hope that it continues this way. And stopping and looking forward, it's a natural question up to which time are you going to invest this way? We have BRL 5.7 billion in investments. And we imagine to invest this in the next 5 years. When I look to the future, I believe that this number that in 2024 was around BRL 1.4 billion. And with the new changes, we will have a number close to BRL 1.5 billion per year in this period of 5 years. So this will depend on our capacity of delivery. But we understand that there is a necessity for that. And when we look forward or beyond these 5 years, we believe that we will invest 1.5x or 3.5x per year. On the operational capacity of our business. And we believe that our business, the Concessão Paulista, when we invest in the horizon that is forecasted BRL 1.5 billion and looking to the last tariff review and trying to reach the maximum review and then keeping to invest above the depreciation that was forecasted in order to update the assets as requested and then to create value to the shareholders. And I look to Concessão Paulista to Concessão Paulista, and I tried to explain their questions. Well, you're going to invest, and then there is the end of the concession in 2042. And what about what is not remunerated until then? The contract was renewed in 2012 and it was renewed, and there is a clause that guarantees the residual value that reinforces that all the investments that are not rentabilized or that is not at the moment of the eventual renewal on the end of the contract will be actually compensated at the end of the contract. So this keeps us very, very calm because the concessionaries know that will happen at the end of the contract, the termination at the end of it. So in terms of that compensation or indemnification at the end of the contract, these are very clearly defined. Two are very clear. One is still under discussion. At the first contract signed before 2015, the assets have a very well-defined rules. There is a concession that is due this year. There wasn't a dispute when it went to auction. We received an indemnization because it was within a company of us called Evrecy. And within that reality, today, we have 13 concessions including Concessão Paulista. So 27 of our operational possibilities are here. And this is very clear to us. So all our investments are here. So in terms of accounting, there are no indemnizations at the end of the concession. So the majority of the ones that were actually under auctions or bids are this way. And ANEEL did subsidies overtaken at the end of 2024, and it's in this rule, and it's under tendering and at the end of the concession. So we have to follow all that. And it can actually generate a value of the concession agreements or contracts, and it's worse acknowledging that. And we do not have any concession that will be due in the next years. The only one we have is due on 2038. So don't worry about that because there are no renewal of contracts in the coming years in the short-term. So we don't have to worry about guaranteeing values for our shareholders. I hope you have enjoyed what I shared up to now. We have an excellent opportunity in Concessão Paulista. Our view for the long-term, there is a lot to take from this opportunity. And now I will invite Mr. Urrego, who is our Director of Projects to come to stage. Thank you, Dayron Urrego will actually talk to us. Dayron Urrego, he is part of our future growth projects.

Thank you. My name is Dayron Urrego. I am Director of ISA EnergÃa. It's a great pleasure to be with you today. And also, I'm honored to have many people connected and online with us. And actually, now we will talk about the auction and other projects that will be auctioned. What we did since 2019 until today. From 2019, we have energized 14 projects that represented BRL 1.1 billion. It was an anticipation of 7 months and an efficiency of CapEx of 30% compared to ANEEL. And that meant an investment of approximately BRL 5 billion. And the projects, the 14 projects that we energized since 2019 until today, were Bauru in 2020, Itaquere, Tibagi as I've mentioned, they were BRL 1 billion. In 2021, we energized Aguapei in Lorena. And it's Important to highlight that it was the first digital solution in Brazil. And then in 2022, we energized Três Lagoas, Aimorés, Paraguacu, Ivai, Biguaçu and here, I'd like to highlight Biguaçu, which is the largest underground project in Brazil with the island of Florianópolis in the continent with 14 kilometers underwater with 14 kilowatts. And now we have the energy in the island. And at that time, we also worked in the Ivai project. Ivai, Paraguacu, we have a partnership with TAESA. We have 50% on our company. And Ivai project connected also Foz do Iguaçu. So all the generation of Foz do Iguaçu is also connected with the project Ivai. In 2023, we energized 2 other projects Triângulo Mineiro, Itaúnas. In 2024, the end of 2024, Minuano project in Rio Grande do Sul and in 2025, this year, we energized Agua Vermelha project. All that represented a RAP of BRL 1.1 billion. In the last 12 months that we energized the Minuano project, as I've said, and it's located in the state of Rio Grande do Sul with an efficiency CapEx 14% and in anticipation of 4 months. It's ready as planned. The project that we energized was this one, Agua Vermelha. Agua Vermelha basically was a substation with the transformers there in the project -- sorry, for the slide with an efficiency of 16% of CapEx and 16 months on anticipation. And it is also going as planned. Now our portfolio of projects that is being carried out, we have 5 projects that are being built. And one of them are being licensed and they are the following. We have Jacaranda project that is being built, and they are forecasted for March 2026, they are according to what has been planned, Iguaçu and it is close to Guarulhos. The other project that is being carried out is Riacho Grande project. The date for that one is March 2026. The investment is BRL 1.1 billion, very interesting project. It's an underground project in São Paulo. It was auctioned in 2020. And right now, we are on the commissioning stage. It's an energized building. We are finishing the commissioning of the project. In the coming weeks, it will be ready. So as I mentioned, it's an underground project here in São Paulo, approximately 42 kilometers in its secret 345 kilowatts. And then already, we have all the station all the way to São Caetano basically reinforcing the system that we have here in São Paulo, bringing more trustability in the region surrounding the city of São Paulo. And also, as we know pretty well, we have 3 macro projects as we call them Piraquê, Serra Dourada and Itatiaia. And those 3, we have 2 that are in assets at this moment and the other one is in the licensing process. Let's start first with Piraquê. The Piraquê project. We have here a deadline by September 2027 by ANEEL with a CapEx of BRL 3.7 billion and BRL 242 million. In terms of construction, just for us to understand the magnitude, we're talking about a construction of about 1,000 kilometers in its line. And here, 1,000 kilometers in its line connected to the states of Minas Gerais and EspÃrito Santo. Basically, it's what we have here. There is a stretch. The largest stretch is in the state of Minas Gerais and the other stretch in the state of -- excuse me, EspÃrito Santo, but they're not connected, they're separate. We are currently finalizing or actually just finalized the civil construction of the whole line in the state of Minas Gerais. We are now in the launching phase of the cables or deployment. And now we are already finishing the commissioning stage as planned. And in the EspÃrito Santo stretch, which is a smaller stretch about 100 kilometers of lines, now we are in the final stage, finishing the civil construction, starting all the assembly and the deployment of the cable, also. It's been going pretty well according to our planning. The other macro project is Serra Dourada project, connecting as we can see here, the state since the state of Bahia, all the way to the state of Minas Gerais. And as you can see here, this project, both Serra Dourada and Piraquê. And then I'll talk about another project that we have here in Itatiaia. Well, they all compose a large corridor, which will allow the outflow of the renewable energy, nonconventional ones that are allocated in this region of the country, all the way to our load center here in the southeast of the country. The Serra Dourada project has 2 licensing projects ongoing. One of them is already ready to go, which basically means the construction of what we call the south stretch. So from Bauru at all the way to the south, basically the whole project is 1 kilometers of lines. We are now starting, and we did in 2 months. In 2 months, we were going to start 600 of them, also going as planned. Now for the northern part of the stretch, the Y that we have on the map we are under licensing, and we expect in the upcoming weeks and the upcoming months because there are 2 different licenses. Well, we expect to obtain the licenses so that we can start the construction of this stretch as well. The southern stretch, as I mentioned, we are already ready and starting the civil construction there. Another major project that we have is the Itatiaia 1 connecting the state of Minas Gerais and the Governador Valadares substation. And we bring it all the way to the state of Rio de Janeiro. This is a 500-kilometer project and a double sector. This is a project of approximately BRL 2.3 billion and the data, the deadline is March of 2029. And here, we talk about the BRL 40 million to BRL 148 million. We are in the licensing stage of the project. And as planned, we -- once we have the licenses, we are going to start the work itself. What's most important, the essential points here that I'd like to highlight is the major corridor that we allow for the energy outflow coming from renewable sources. Very well, to finalize, you're familiar with this graph. Here, what we want to show is the progress when it comes to our -- the state of which each of them. Here at the bottom, we have the Riacho Grande project. As I mentioned, this is a project that is practically ready. We are in the energizing stage. We can see here, 98% of the work concluded. Piraquê licensed already, 82% of the construction already done. We are reaching then now the final stages of commissioning. Jacarandá, this is the smaller project I mentioned. We have here in the city of Guarulhos. We are at the assembly, equipment assembly stage. And shortly, we're going to start commissioning to then which is also in the final stages will be pretty soon. Now the other ones, Itatiaia, we don't have the licenses yet, but we are heading towards and Serra Dourada. Here, we represent with partial licensing because we do have the licensing for the southern stretch. Serra Dourada is the lot one from the auction of 2023 that were awarded to us. Basically, this is how our portfolio is set out. When it comes to auctions, and we are heading as we planned. Challenges are still out there, but projects are going quite well. Thank you so much. I'd like to now give the floor to Silvia Wada, our CFO. Thank you.

Good morning. Thank you, everyone, for being here with us today, both those who are here with us in person, also those who are with us remotely. I'd like to talk a little bit about how all this is reflected and financial aspects. As you saw with Dayron, well, you saw all our pipeline for projects under tendering and they add up to BRL 7 billion, and they will bring an RAP of BRL 1 million when it comes to allowed any revenue with Rui also discussed the Concessão Paulista or Paulista Concessão. I have the pleasure to show you how the combination of those revenue streams will lead to our portfolio in regards to revenue. Three important moments here. These are the tariff review years that we have. In 2018, we had this configuration, looking here at the blue and the Brazilian concession. Here, we see the blue ones that were already awarded. And the last revision that we had, we had a representativeness of 30% of the RBSE component, financial one. And we know that we will only be extended to 2028. So we were not going to wait till then to see a substantial reduction in our allowed annual revenue. We already knew about it. So we move ahead and strategy is established consistently over year, year after year. All the investments we've been doing will be reflected in the next tariff review when then we're going to have in 2028, not only the whole pipeline and the 5 projects underway. Well, they will be operational, but also all the R&M small-scale ones that when it comes to the cash flow, we only see in the tariff review, but also those will be completely recognized in our allowed any revenue or RAP. Both those under tendering and also the organic growth of the Concessão Paulista will more than offset this reduction of the financial RBSE, which we no longer have after 2028. At the end of the day, what that shows is that we made the most of this important cash flow that we had in this last few years to reinvest in profitable projects thinking in the longevity of our business beyond -- just beyond profitability and the trustability of the service. Our strategy, it's not composed of growth. It is also based on 2 other pillars that has to be considered. Financial discipline when we talk about consistent results also for our shareholders. First, the first aspect of financial discipline. Here, I bring to you all the trajectory and operational efficiency that we have reached in the last few years, and this trajectory consistently descending showing the relation between the percentage of our operational costs represented in regards in comparison to our net operational revenue from 47% in 2018, coming down all the way to 34% in 2024, which shows not only the financial discipline, but also the materialization of gains and scalability because as we bring in new projects, with a lower marginal cost to what would be an isolated project. Well, we are able to materialize these gains in scalability, the synergy as we manage our portfolio. This is a trend that should continue for the years to go as we energize the new projects. This confirms establishes ISA EnergÃa Brasil as an efficient manager when it comes to the portfolio of concessions. The second aspect financial discipline has to do with the quality of our credit that allows us to capture resources very competitively in our market. And this is a special relevant when we think that we are in the business of intensive capital. New projects might have leverage at around 80%. So accessing more competitive costs in the market, represent yes, a relevant competitive differential. Today, we have the highest rate when we talk about the AAA and the local scale in terms of investment grade and our average real cost is 7.5%. We have here 3.3% denominal credit below the interest rate in Brazil. Then we finished the half of the year with BRL 3.3 billion and the leverage of net debt. We know that today, the only debt that has financial governance is a debt that we have with the investment bank in Brazil, which is around BRL 700 million. And here, we're talking about 3x the net debt of the EBITDA. So we're above. We are not infringing the annual one. The last one was BRL 2.7 billion last year plus the EBITDA net debt. But also, yes, our perspective is to be above that indicator by the end of this year when the next measurement will be carried out. In that sense, we already have negotiations underway with the BNDES, the development bank in Brazil, so no difficulties are expected when it comes to that. For the next few years, leverage should keep on increasing. We have BRL 13 billion investment pipelines that we have already been authorized and they will be executed in the next few years. When we talk about revenue generation, the expectation for operationalization. We have already 3 projects that will be in operation in the next 12 months will bring around BRL 400 million of RAP and then the other projects becoming operational by 2028. We do expect this increase in leverage in the years of 2026 and '27 and a reduction from 2028 onwards when all those investments will be in a more maturity -- excuse me, more mature stage, more operational with a tariff reduction that will reflect all the cycle of R&M from 2023 to 2027. In 2025, we acquired BRL 2.2 billion in bank incentivize debentures. We have here the IPCA inflation rate of 7.41 and 6.70, which represents a negative spread in the sovereign debt. Here, we compare with NTNB and we have here 0.32% and 0.34% and the spread represent -- the spread represents 0.32% and 0.34% below NTNB, which shows the solidity of our balance sheet, the preservability of the cash flow of our business that has a very resilient business model. Now in regards to the resilience of the business model. It has a revenue that is adjusted by inflation, compensated by the availability of the assets with the opportunity for growth as well. So consistently, we look historically, we have a constant increase of revenue above inflation. We have average growth annually of 12.7%, and we have had since 2013, all the way to 2024. This shows good management of the business with that profile, which allows us for having amounts above expected to our shareholders. Here, we also see the cycles. Fluctuation in select IPCA, the inflation rates indexes in Brazil, showing very stable revenue, allowing us to browse and navigate through different economical scenarios. This also reflects in the indicators when we compare with our peers or -- excuse me, when we compare to the transmitters we have here the largest growth, all the indicators that we see here in the last few years, both revenue, EBITDA, net revenue. And then I'll let you have your own conclusions. This material will be made available to you so that we can further examine more carefully afterwards. Now to conclude our tripod growth, financial discipline. Now what's missing where we have here a minimum distribution of 75% of the regulatory net. This has been practiced profit. And this has been done since 2013 when we had the renewal of the Concessão Paulista, in this period, we had BRL 18 has been paid practically BRL 18 being paid by share to the shareholders. And in the period, a total return for the shareholder of 17%, much above the benchmark of CDI, PCA. When it comes to the shareholders' earnings. More recently, also, we started a distribution of earnings. Here, we had 70% distribution of the regulatory net profit. And we're talking about here different quarters. We have here October, November and December as deadlines for the payment between November and December, we're talking about BRL 445 million to be paid under those conditions. I'd like to invite Bruno now.

So well, a good way to close the first round and then we'll have a break. We'll now break for 20 minutes. We will be back soon. I'll show some videos from the company, advertisement videos anyways. For the ones who are here, we have a 20 minutes break. [Break]

Well, good morning, ladies and gentlemen. We are back from the break. Hope you have always had a great break. We've started this morning, and we've covered the main topics. We talked about our growth strategy on Concessão Paulista. We also talked about the materialization in financial terms for the company and for our shareholders as well. And now back from the break, I will invite our President. We will talk about the future and challenges and opportunities. So I will invite our President, Mr. Rui.

Thank you, Bruno. Silvia ended her presentation talking about the 3 three pillars. The 3 dimensions are paramount for our business. We want business that grows, adding value to the society. We want to keep the financial discipline, and we have a practice for payment, and we want this to be available for all. And we have said that for a long time in a consistent way, and we have delivered that. And a question that I would ask if I were a shareholder would be what are the next steps? Where is this company heading towards? And this is what I will show to you right now. Recently, we have designed our strategy 2040. Along pathway, we have several things throughout this way in order to define what we want to do. And I will go back on concepts that are base concepts. Several of those you hear about is business is a transition stable, almost fixed revenue business. And on our growth curve that Silvia showed and other talks showed we have a team that are in charge of ISA have accelerated in a disciplined and responsible way, having a growth above inflation rate. So looking forward, besides what we have already done, what else are we going to do? I will start with a new tripod. We declined some points and as analysts, the tripod of 2040 will start. First of all, let's remember our role. And for the ones who are peer financial investors, this can sound poetic. But we cannot forget that our role in this transition moment is to have everything being carried out, actually taking care of life. We have to keep our team calm and working very well. We have to fulfill 100% of all the services, the responsibility now looking forward, keeping in mind the climate changes, regulations, all aspects in terms of the environment and what needs to be adapted. So this is our role. And then on the left, which is the side that the financial analysts pay more attention. We want to keep building growth for the portfolio of concessions. What does this mean? We will explore the growth pathways. The Concessão Paulista, we will keep building the possibilities for growth. Also, we will respect the tripod that Silvia mentioned, the -- all the aspects that she mentioned and also concessions will have an active role. So the company can be opened to get more operational concessions and also try to evolve its portfolio. Besides all this, we will be alert and I will tackle on strengthening investments not only in transmission lines, substations, but in all services that are connected with energy possibilities and decarbonization. We -- in this area, we are good. We are the first company to have a digital substation, to have the registration batteries, also the first company to find a [indiscernible] electronic station and in Ribeirão Preto, we have a project that I will show to you. So from the point we are at the domain of knowledge of network we have, we will try to find new possibilities of investments that are related to this energy transition that exists in Brazil in a very peculiar way. We are a leader in energy transition. It allows us to leave an energy transition different from any other sector. We are able to find around the globe, the solution for our issues. We are the first ones, and we have to find the solutions and we want to be the main players. We will have to find the technology solutions. Remember the curve that Silvia showed, the reduction of the CapEx for the revenues, that is the efficiency of revenues in our portfolio. So it's about having the company able to consolidate some assets for having the digital transformation, more automation to improve what we already do. So having the base, this foundation, and that's impacting positively the society and then to have a net zero trajectory, reducing up to 2040 our carbon footprint. And this is it. This is our curve. The green gases is small. So having a company that generate its impacts from energy transition we will align ourselves and we will try to find the decarbonization for the sector. So we have a target curve to reach 2050 with a 90% reduction of our emissions. And this is something that we are already trying to do, and I believe that all companies are trying to do this, trying to optimize all of this and we are trying to influence the supplier chain. And what we are doing in this dimension, first, we are trying to mitigate what we have inside our company. We have an isolation gas that when it leaks, it is 20,000 times more hazardous than the CO2. So we are working to reduce 75% the leakage of that circularity, innovation, renewable fuels to mitigate what we do. There is a second dimension that is not smaller than that. And I would say that it is maybe the hardest one because we don't know what we are fighting against, which is the equation of our infrastructure. What we have today, the 23,000 kilometers today suffers of an aggressive climate. And this climate has climate events that are more frequent and more aggressive. So we have to understand what are the points that are fragile, and we have to adapt our operation to this climate risk. We had a study with control points from 2030 -- to 2030 with climate variables, if we have a climate variable that is materialized in order to diminish the climate impact, if it happens. And what does this mean? We will have people that will help us, and they will be waiting for these events 24/7. And we have showed to ANEEL and other utilities and we know that it's easier to be ready to recover a structure in case it's needed then to reinforce. So no fail and fail to save. So there is a hurricane that will reach Florida. So Americans do not worry about having a distribution station there, but they have a recovery, an immediate recovery team for an incident like that. And they are fast when there is a fault and they help to minimize all the damages. So we have an advocacy to foster innovative, sustainable technologies, and we aim and we try to have all our distributors to have the best practices, having transparent governance for our practices. And besides all that, talking about innovation that I was mentioning before, the energy transition has changed the scenario that we had in transmission. Energy transition or the evolution of our chain has changed. What was stable hydroelectric production and the work of the transmitters in a new moment where the generation is intermittent and the consumer that is now the producer. So the transmission that is in the middle and the cost that was linear and now is neural, we have frequency control, big shaving. We have to be responsible to find solutions to have curtailment, and all that in a company such as ours in following the rules of our regulations, we have a huge opportunity in Brazil. And it's on us to bring the best technologies. We have to present this technology so that we can invest, bringing solutions as we've done with batteries that came to operate and fix at the end of the year. And in Carnival season, they already operated, and we gained a lot. And usually, with facts, I will talk soon about facts. There transmission facts with alternate current that alternate -- the currents, and this is electrifying data centers with urban mobility, growth of demand, all that are opportunities for companies as ISA Brasil. And we are trying to find ways to take the best opportunities that are transforming in challenges and that we understand that are ready to be used. And I start talking about what is facts SSSC, so SSSC. From Ribeirão Preto to Porto Ferreira, there are 3 lines, and you can see on the left side of the slide, what we have is a connection between 2 cities and a line. I'm not sure if you know that electron is a lazy thing. Going through the easiest way, it overloads the line, and that's what happens in this region. The solution, the traditional solution for the ones who are classic engineers is to build a fourth line an easier way with a higher capacity. But there is another solution that we have in Brazil. So force the electron to be less lazy. That is to pump it to go or force it to take another way with negative impedance. And we can see this in the profile that we have here, then we have a better balance. So this is a system that we are launching now in Ribeirão Preto. There will be a fourth line that will be built. We are delaying that and this investment will be taken to another place. But when we finish that, we will help the system to operate its transmission network in its biggest [indiscernible]. That is a good investment for us, and it's a service searching for solutions in this more complex world that we live. What we have here are details of this investment. It's practically ready. We are in the last stage of its construction. We will have the kickoff soon, and it will allow us to prove the solution is good, and it will be actually launched this in -- in this quarter. Another opportunity or challenge, it's a topic that starts to get more reputation. I'm not sure if you have heard about curtailment, which are cuts that happen in the load generation due to excess of offer. But the cuts are due to lack. No, they are for excess. And this is a real graph. So we have the hydraulic power generation. We have wind generation and solar generation. Now the solar generation is very intense. But lately, the generation -- the solar generation that is distributed, which is not controlled neither observed by the national generator, we observed a net generation. It became so important that this curve, forget a little bit the orange one or red one, the one that is left is called the duck curve. It has such a stretched neck that when there is a lack of the solar generation, the operator needs to insert a gigantic amount in the system so that it doesn't lose the generation. For that, you need the reserve of that capacity. At the end of the day, this is the capacity of have a shift that speed things up, allowing for the system to deliver what the system needs to deliver. PEN, this is the electric generation that is done and that defines what the needed capacity, additional capacity, for the peak and multiple different years. So we said in 2026, we're going to need 6.9 gigawatts; then '27, 10 gigawatts; then '28, 12 gigawatts; '29, 14 gigawatts; and that's considering the micro and mini solar distribution standards. In the last few years, all the predictions done and the growth of the MMGD, they were subdimensioned. Reality proved to be higher than prediction. That's why we need more reserve in terms of capacity and power. How do we deliver? Basically, hydro -- hydropower plants, which are already at its limit. Now when we talk about thermal ones that are idle, yes, they can be used for reserve. But according to the ONS director, it's not with what we have today that we're going to deliver all that. No, we're going to need additional power. And that's where batteries come in and the opportunity. So before we had registrations that were for big shaving, not for reserve. But now we have an interesting opportunity for batteries. This is what we're looking at very closely, again, trying to apply our knowledge, our financial discipline, our operational capacity in another opportunity that addresses energy transmission issues. And here, we have a very important regulatory discussion. Batteries are something new in Brazil. That's why there is this doubt or discussion on how to regulate. And usually, what they talk about is, what kind of better solutions we could have. And yes, I guess also, we have a space, but also we're going to need batteries to address that issue. And then in the future, if new hydroelectric plants are in system, well, they can be used. Today, we already have the prediction auctions specifically for batteries in 2026. Also, there's this discussion when we talk about the granting of authorization. We talk about the discussions. And here, we're talking about an availability, very similar to the system of transmissions that we have. So penalty on unavailability, exactly the way we do. And the idea is that those reserve batteries should not have a revenue and pricing arbitrage. I was happy when I saw that pathway moving on because I think when you have an asset that is, as a reserve, you cannot allow it to operate in any way that will lead it to and the interest of price arbitrage is not loaded the way you need it. And certain questions that we have. First, the methodology and the billing and also payment of the TUST, the transmission use of system tariff. Also, we talk about that lines and contractual and also the stacking of services. We've been participating in public consultations. But again, this is another opportunity for growth that adds to Concessão Paulista, the new concession lines that will be needed and innovative ideas as I talked about the SSSC a while ago. With that, hopefully, I could provide some clarity on the future of the company. We look at it, and we are based on the consolidation we've been doing the last few years. Everything that we bring in efficiency, clarity on how portfolio management can grow. It has its potential and new opportunities emerge aligned with our capacities, with our competencies and aligned with the interest of the system that is always searching for new solutions. As we look at all that, I think it becomes clear to you the differential and value that we believe that we are delivering to the shareholders as managers of energy assets when we talk about energy in Brazil. There's an additional quality that I'd like to share with you today, which is, in the last few years, we've been working towards eliminating legacy themes. As you know, establishes ISA Energia Brasil has been a state company and as a state company had some legacy systems. And this is something we managed, and it hasn't been talked as much, but we had retirement plans, defined benefits and also we had benefits corrected or adjusted by IGP-M, the inflation index. And the idea was to eliminate the adjustment by IGP-M, the index and also having a proper retirement plan. Something that you saw is the RBSE, the receivable and also the proper use of the RBSE and that amount so that we can speed up and boost our growth. There is another legacy topic, which is known as SEFAZ. And then I have to admit every minute that I have with our analysts and everyone else, and then they always ask us how this is done. Some call it 4819, which is the Act, the number of the act of the bill that was passed that created -- this is very relevant for the company and perhaps the less legacy topic that we have to consider. I think it's important for you to understand and we have to dive deep to better understand what this is all about. But to do it, I prefer to have our Legal Director here, Carlos Lopes, who has part of its agenda really the topic of equation, this topic and making sure that we have the proper value. Well, I'll have him present it. So I'd like to give the floor to Carlos before we wrap up our presentation for us to be able to bring that value, this additional value that we are trying to create in the management of this topic. Carlos, please. The floor is yours.

Thank you, Rui. Can you guys hear me? Thank you, everyone, for being here. Good morning, everyone. I'm so happy about being here with you for us to discuss this topic and try to outline the general aspects of what the 4819 law or some of them know as the State Treasury Department of São Paulo topic. That's what SEFAZ stands for. And this is something that we've been discussing extensively. As we mentioned, we manage portfolios. And we also do the management of these topics that somehow could bring some contingency to us. If we don't have this very clearly, well, we have to connect also to the retirement plans that we mentioned, the retirement benefits. And we had favorable decisions being rolled to our favor and all that is connected to how we organize ourselves and then bring traction to relevant topics. Let me just make adjustments here. Yes. So let me discuss a little bit about that. For this conversation to be more fluid, let's try not to be technically where we don't need, but actually understand the overall aspect. What is the 4819 Act? This is a law from 1958, and it came for the mixed economy companies. So those companies that were controlled by the state of São Paulo. This act had retirement benefits for the employees of those companies. Usually -- the employees in mixed economy companies, usually, they are under the contract laws, payroll laws in Brazil. But here, we're talking about benefits for them to be -- also have the same benefits of public servants, considering the less salary and not the social security ceiling when it comes. Usually, we talk about those adjustments that we have every year. Well, it's going to be connected to the assets. For purposes of this conversation, this is the benefit that the act or law 4819, and this was all the way to 1974 when it was revoked. But then when it was revoked, it also determined that those who started working in those companies, they had that right assured. How did that work? Those who worked from 1958, all the way to 1974, as they retired, they had this benefit, which brought a complement to their retirement apart from what they collected from social security. And this was established in a format where a company operated a payroll, which is this CESP. Now it's VIVEST. Then they processed payroll. Payroll was checked by then CESP and then CTEEP and today, ISA Energia. And then that led to those numbers that were reported to the State Treasury Department of São Paulo, and then they considered those numbers to do the monthly payment of those social security benefits. Now in 2004, by a decreed, the State Treasury Department of São Paulo now brought it to DDP. That's the department of the state that processes payments for employees on a state level. To that, the State Treasury Department of São Paulo understood that those benefits should be applied just like they were used in the public sector. And then that's when we start having a claim reduction of more or less 30%, a general number because then, of course, this is on a case-by-case basis. And here, we're talking about almost 6,000 people, and we're going to see in the other graph how this is organized. But an average of 30% also now had a claim reduction. And this brought -- well, the population not to be as happy and then they reached the judiciary and then there was the association who presented this action and then the injunction brought it back to the previous mechanism. In other words, VIVEST would work the payroll and then the mechanism ISA requiring those numbers for the state of São Paulo and the state of São Paulo in turn would inform the numbers for the payments to be done. But the state of São Paulo is still restricted with the claim reduction. And then that's when the injunction happened in 2005. That's when the company made the payout of the claim reduction because of the injunction that was in place at the time, and that was in the accounts receivables of the company. That's where the entries went to. All the companies -- excuse me, all the payments that the company does today are entried and they are [ accountable ] in our accounts receivable. In 2010, there were this billing action, and this was favorable -- the decision was favorable and certain victories unfolded along the way, but this action is still underway. It is in the Supreme Court and is pending appeals. But still, we see here a possibility of bringing in 2024, we had the [indiscernible], which is a mediating body that was created by the Supreme Court at the end of 2004 according to the law, but then only in 2025, it became operational. So we -- with the prosecutor's office in São Paulo, we had an inclusion. And then in this case was a mediation. And then the prosecutor's office of the state of São Paulo agreed with the mediation. So today, we are in this mediation process with the prosecutor's office of the state of São Paulo with this new department that was created aiming at mediation in this particular case. Here, we can see the demographs because this benefit started in 2074 (sic) [ 1974 ]. I mean, was revoked, but kept the right of those who started to work at CESP -- our case at CESP, this was a limited population. I mean, only for those individuals this applied to, I mean. They have an average age of 78 and 80 years because the retirees -- and then we have those who have the pension with this demography -- demographs. And then most of them are male and the majority of those with the pension are female. And we have here 1,851 for the pension ones. So we don't have new players coming in. We're talking about a population that has already been established, and we've been monitoring since retirement. And this population is restricted to these numbers when it comes to those who retired and those entitled to pensions. Everything that is paid when we talk about the Act 4819, they are entered in accounts receivables against the state of São Paulo. We have this opening of BRL 3.2 billion in our accounting. How are they -- how the entries are done? The day of the payment, for example, last month, the 30th of the month when the payout is done. This -- the entry is done with this amount, no adjustments. This is a historical amount because this is how it's been since 2005. We do have a provision that was set together in 2012 of more or less BRL 500 million due to certain difficulties in receiving that at the time understood that could happen. So today, we have today this net amount in provision of BRL 2.7 billion. What does that mean annually? Approximately BRL 200 million. It's been higher. We have noticed a mild decrease and last year, what we had in accounting was BRL 193 million. What are the next steps in that regard? We continue with mediation. It has been organized with a series of meetings or hearings because we're talking about mediation. I prefer to say meetings rather than hearings. And then we have the stakeholders involved. We've had them on a monthly basis, bringing together both parties or multiple parties. Although it is in the judiciary, it is also by the competent body, but also we have the mediators participating. And what they're doing, they're playing a role in bringing those elements together. This is a complex issue. It has been dealt with for many, many years, and we are trying to bring together concepts from multiple parties. We continue with those meetings -- in the past, we had a 180 days deadline for mediations. It's being renewed all the way to December, but it might be renewed again as long as all the parties are willing to mediate, which is natural. And we feel [indiscernible] in both with the mediation, but also we see that it's reciprocal both with the prosecutor's office of the state and also our side. Conversations have evolved, always trying to have an agreement, a mediation that adds value to all parties involved. I think this is what I had to discuss. I'd like to give the floor back to Rui, and thank you so much for being here.

Thank you, Carlos. Well, you're the best one to explain this topic so peacefully, so calmly. So I'm very glad that you're leading that process and this discussion with the state treasury. So it's very important to advance in this topic and then have the spending issue addressed. We work very extensively in that. To come to a closing in our meeting, we presented what we did in the last years with our conviction that we know how to add value in the multiple tracks for growth that we have established. We presented the projects that have important capital to be developed, both in reinforcement improvements and also greenfield projects. Silvia presented the excellent evolution of results, both financial and productivity, showing our vocation to be a manager of a wide portfolio with an increased potential in concession. Before Carlos wrapped up with this relevant topic, which is very important to us, I presented how we're looking ahead. I'd say, which is to do what we're doing very well and looking for more opportunity in the surrounding areas of what we have as ISA Energia Brasil and things that also materialize with energy transition and its secondary effects. Based on that, our understanding is the company has a proven history, track record of results, a positive outlook and a belief that we're going to continue to grow and add value to you over time in a very consistent manner. That being said, I come to a closing to my remarks. And Bruno, I think now we could have a moment for exchange. I think they cut my mic -- well, yes, so that we can listen to questions you might have. We have here -- all of our Board here on stage. So Bruno, let's do it.

Thank you, Rui. Well, this is what we had to present to you today. Now we're going to have our Q&A while we wait for them to set up the seats and all that. I'd like to then invite to stage all the directors that presented Rui, Silvia, Dayron, Carlos and also [indiscernible], who is Statutory Director in operation. For Q&A session, you ask -- I'm not the one making questions or asking questions. So please say your name, stand up and ask everybody who is here to answer you. So they are actually putting all the chairs on stage. And as soon as they are on stage, we will start the Q&A session. We have a person with his hands raised -- 2 questions already.

I have two questions. First question -- Daniel Travitzky, Safra Bank. First question on batteries. I'd like to have you exploring the opportunities or the size of opportunities that you envision on the reserve of capacity that can happen here for batteries and the challenges, costs that you see for this type of projects? And a second question on the SEFAZ. We are on the second term on the period of mediations or negotiation. So if you could tell us if we are going towards an extension of this term or if we have meetings scheduled to talk about this topic?

Thank you, Daniel. I will start talking about the batteries. Well, after I will have Carlos also talking and adding. The opportunity and the size of opportunities is huge. And when I talked about reserves of capacities, I would say that batteries have a huge space in the market, and it takes the second part of the graphic. The first part, we have a trend on solutions of thermal and gas. If the definition on how the regulation will happen, it's very hard to define because what we are doing considering this difficulty is, to advance on structuring this offer and understanding what are the synergies that this can have with our current installations, what is the best location to put these batteries. And I would say that what is possible to do now is to work with high intensity, and there are some parts of the equation that hasn't been solved yet. Silvia, would you like to add on to what I said? No. So I believe this is it. We don't have more clarity or more explanation on this. I'd like to comment also that we have interest in setting batteries with capacity reserve, but we will not invest anything else respecting the gold tip that Silvia said, we will not advance just for advancing. We don't want things to get lost, and we have to be able to continue paying what is to be invested. And we have to continue the shareholders' payout. And we have a lot of interest. We are competent enough. And now, Carlos...

Thank you, Daniel, for your question. We have worked a lot, and we have tried to reach favorable results and favorable results mean to have a fast resolution. That means to have a mediation. So that means to be fast, opposite of having a judicial resolution. So that means the generation of value is paramount. If we understand that in this term, we cannot reach what generates value, then we need to postpone the term that was set. So we are trying to do the fastest possible once it generates value to the shareholders.

My name is [ Rafael Almeida ]. I'd like to know if there is a possibility of having the need to renew 17%, one of these lines to obtain international credit with Japan once there is a -- or partial 1.3% of the shares there. I'm not sure if it was clear.

Thank you for your provocation. We always analyze several sources for funding. And although we have recently done some debentures at each year, we analyze other possibilities. We look abroad and we try to see what is the swap cost. We don't have any indexed revenue to a foreign currency, and we would like to incorporate an exchange risk with no necessity. And when we do this hedge, incorporating this cost or comparing to the debentures possibilities, the cost today didn't make any sense. So this doesn't mean that in the future, it won't make sense, but there are other banks that may be possible alternatives. We love provocations, but right now, it doesn't make sense. But on the second part of your question, it would be very specific. The ones with participation at that ISA is ISA, which is our holding, ISA Colombia that has a participation. ISA Brasil has no participation in TAESA, which would be joint ventures, 50% in 3 assets, Paraguaçu, Aimorés and another one. And this is not in our governance. It's part of the asset portfolio that is part of our controller.

Thank you for the opportunity of being speaking. I am reporter of [ Ming ] Times. I'm a journalist. Rui, I'd like to ask you in regards to what you mentioned about the fixed income action that you mentioned before, which was quite interesting. So you want to be an action on fixed income revenue in the sense of being stable, but also you want to grow. Could you elaborate a bit about this dichotomy in the sense of being stable, but at the same time, wanting to grow, generating value to your shareholders. Also, I'd like to talk a little bit about the SEFAZ, the straight treasury. I'm sorry to go back to that topic. I know you talked about, but I'd like to know how optimistic you are and the sense of really being able to get this out of the way and being able to solve it in the upcoming months or years...

I'm sorry, what's your name again?

[indiscernible] .

[indiscernible], let me be a little bit more clear in my comment. Certain people tell me that they like ISA Energia Brasil because we are an extremely predictable company as if we're talking about fixed income, fixed revenue and since always and this is what we showed. We have always bringing from a predictable basis with very strong regulation. Brasil has very strong regulation in transmission. We've shown a work profile that keeps having company growing above inflation. So the revenue of the company has a trajectory as presented by Silvia that I think it's incredible. We've been growing year after year above inflation, consistently bringing value to the shareholder. So I would never classify our company as a fixed income company. Now I'd say we are a company that generates a concession portfolio, bringing growth, value from a predictable basis. We never get complacent in this preservability. We actually have it as a ground for our value, and we want to continue to do so. We believe this is the role we play as managers of the company. The second question, Carlos, please correct me if I'm wrong, but I don't think it's about being optimistic or not. We are working on the topic. We have always been a very dedicated management to the topic and an opportunity emerged with this mediation with the Supreme Court body that was created to add value to the company. So Carlos, would you please make a comment?

Yes, I think that's what I'd say. Optimism is fuel to it, but it's just a portion of what we are building, and we are doing so consistently. Personally, I do work optimistically to reach that result, but this is a fuel that is part of a much larger process.

Carlos, my question is to you in this phase, can you explore a little bit -- I know you are on mediation, but can you explore about ISA and SEFAZ, why they applied gloss, why they didn't apply or applied glosses and to understand a little bit more about the conversation on the disallowance?

On gloss and can you resume the 21 years -- I can say that in the past, it seemed that there was an understanding on the treasury that this population when they had the benefits stopped in the public service, they had their ways of disallowance. And this is something that we have to understand. So right now, they applied understanding that this population would also be under the limits of the -- of what was compared under the public services or the way it functions. And this was their original rationale. But recently, the Supreme Court, the Federal Supreme Court had acquired power not for that, and that changes and brings that for mediation. So trying to summarize so that we can have a parameter of what we are talking about. And I believe that I could answer your question this way.

I had a question here ready to go, which was -- well, now we start having the projection of investments, reinforcement and improvement as the last when it comes to depreciation of assets. Historically, when we talked about investment at around BRL 1 billion, as it was mentioned. Now it's much closer to BRL 1.5 billion than BRL 1 billion. So if you could, 2 questions from 3 different perspectives. First, in the long run, BRL 1.5 billion, we see a 17 billion base for depreciated assets. Do we have a need for the BRL 1.5 billion investment? Do we have operational capacity to execute that BRL 1.5 billion? And so necessity, capacity and third, how would be the funding or financing of those projects in the long term?

Well, hello. Let me start here. Thank you, Bruno. When it comes to our execution capacity, okay, that's what I'm going to address. As you saw, in 2019, 2020, we've been conducting investments at around BRL 150 million, BRL 200 million. This year, we are going to be around BRL 1.3 billion, BRL 1.4 billion. And as we understand, moving forward, we will have similar amounts. In other words, what we're going to execute this year has always been executed the previous year, very similar amount, which means that as we mentioned, the project factory is running and more and more, we've been more efficient. In other words, our operational capacity is ready to conduct projects that ISA Energia needs to. These projects are prioritized. We have a matrix -- and well, I'm going just to talk about in general terms and Bruno can go into depth. We're talking about those assets that have to be switched due to their conditions and also they are depreciated. Our supply chain and equipment, well, ISA Energia is ready. We have the contracts in place. We have the third parties, and we have everything aligned so that we can continue to renew the equipment as needed.

Well, [ Dayron ], if you allow me, when we talk about asset management, we have lots of clarity in our policy in the sense of how we understand and know about our assets, how critical they are so that we can have long-term vision in terms of replacement. And this has been done with [indiscernible] and we advance with that. Another challenge we have in the sector to have that factory run when we talk about all the issues surrounding energy transition is also the concessions that we need for that -- interventions, excuse me. We have about 30,000 interventions a year, which happens perhaps to you guys in a hidden manner, but it is a huge challenge as a national operator of the system. We have to find mechanisms to enable those disconnections and have true stability in energy supply.

Right. And if you allow me, Bruno, let me just add one thing, bringing a few figures for the years when we talk about improvements, not only we talked about the BRL 1.3 million, which is the annual investment amount. This year, we have energized more -- more than -- well, we have 132 substations, and we have mobilized in about 80 of those. In other words, we are in the whole system. And as Bruno mentioned, the limiting factor is the termination or actually the curtailments. But we have actually in the majority of our assets, we have that under control.

When it comes to financing, well, the guarantee that we have can be used in the emission of incentivized debentures for the low-scale ones, we can use institutional debentures or other credit lines that we might come to have. Also, we have a BNDES credit line that is a bit older. We still have certain disbursements, but it's coming to an end. So this is how we've been financing it.

I will ask another question. I'd like to talk about profitability of the project. So here, we have an opportunity, a huge one that you are talking about R&M on -- you're talking around BRL 3 billion per year. And also parallel, you're talking about possibilities for transmission this year 1 and next year 2. I'd like you to compare the rentability of R&M and the -- the ROI in the auctions that you expect? And another question, if you have expected to use the ISA Brazil or if this is concentrated in the vehicle ISA, in ISA itself?

An aspect that when -- first, the adversity is -- has its good side because we received the questions. The rentability of R&M, why don't you do only that? Some people could think. But this is a valid question. The point is as portfolio managers, R&M reinforcement and improvements in Concessão Paulista, we have a regulation for 2042 that is totally different and more complex than the ones that are tendered in a simpler way, wrap on the auction. And then basically, there is an inflation. So the tariff review comes with less variables, generating variations ahead. So what we also consider is the longevity of our portfolio. So when we add a concession that goes through a bid, we consider a longevity or the duration of our portfolio because we add 30 years to it with a forecast that is a different one. So there is no better or worse. There are different characteristics. In all cases, we will evaluate the optimization of profitability. And if it's not adequate to our capital for the cost of the project, we are not going to dive into an auction. We have to analyze our time line, the moment, and we don't have any target set up. So we consider all the variables in the decisions for the capital allocation. There was another question, right, which was about investing abroad. Okay, investing abroad. Yes. Today, our mandate doesn't cover that because ISA, which is our matrix has other possibilities in Chile, Peru, Bolivia, Colombia, and it accesses these markets through other ways or mandates, okay?

I'm Bruno. I'm an investor by [ Sofa ]. First of all, congratulations for the event, and thanks for the opportunity for being here. As a private individual investor, one of the main components of our assessment as investor is remuneration through dividends. We saw through your presentation, initially, we already have an announced amount for the first half of the year and then have a simplistic projection doubling for the second half of the year would have an estimate of about 5% to 6% of yield for this year. The question in regards to necessary investment, consider the end of RBCE and the level of projects that we have in the pipeline for the upcoming years. Well, what's your prediction is to keep that rhythm in dividends for the next years, 5%, 6%, considering now when we talk about the numbers we have today.

Thank you. Our decision, our governance is grounded in the long run. Every investment that is conducted by us, we look at the shareholders, the VPL of the decision. Well, we understand that year-over-year, we might have fluctuation, it end up being more of a short-term perspective because when we have higher investment, it might be -- it might carry over a bit more of financial expenses when we increase leverage. And if we take a snapshot of the first year, well, maybe you might say things got worse. But we're not looking at the short term only. We are thinking at the longevity of this portfolio and a balance between maintaining this dividend distribution because we know this is important and well appreciated by our shareholders, but also thinking of how the company is going to look like in the future. This is the balance we are looking for. And then it becomes not a target in itself, such as the yield for the next few years only.

Good morning. I'm [ Fabio ], also a private individual investor. In the last 5 years, both debt and leverage increased from 2020, BRL 1 billion, the leverage and now it was around BRL 1 billion. Now we're talking about above 10, 12, 12.5 billion in the net debt, almost 3.5% in leverage. With this interest rate at 15%, if in the next year, it comes down to 13 top, still way above 10. So what is your expectation for the upcoming years in terms of reducing leverage, considering that in 2006 (sic) [ 2026 ], '27, they say that leveraging should increase and how much will it increase? And in the next years after '27, '28, are you going to continue investing in greenfield or only improvement projects to then have a cash flow generation to decrease that leverage?

Thank you for your question. I believe that this is a point that is part, and we ask ourselves always on the additional growth rate because leverages grow, increase, and we were in a suboptimal level of capital structure. We were on a stage of growth before 2020 that was lower than what we are at today, but this leverage level was necessary to materialize that strategy and that composition of revenue, knowing that in 2028, we would not have the -- that level not to reduce our size. So we needed that leverage to invest on what would give us more revenue and longevity for our cash flow and financial flow. And in terms of what we are aiming, we believe that it will -- we will have an EBITDA and net debt '26, '27, another level. And from 2028, we would have deleveraging to have a profitability that is an interesting one, even when challenged in terms of macroeconomic terms where we had some possibilities to use and optimize some projects.

Just a comment that I believe is paramount for the ones who are investors of companies that work with concessions such as ours. The ones who manage concessions need throughout time to find a good moment to invest, as Silvia said, so that you can renew your concession portfolio and that you don't see yourself not doing this and that you are close to a wall, let's say, where you have concessions that do and who are expiring. So you have to think about long-term possibilities, and we are talking about a 2040 strategy. So you're aiming this 2040 strategy. So you are thinking about what you need to do to guarantee the growth throughout time on your concession portfolio. And I think this is a differential we have, which is a concern on the long term forecasting optimization and the management of our portfolio.

I believe that understanding this trend of growth and leverage, I'd like to know if in the plan 2040, you considered or if you contemplate the possibility of acquisitions, either without control jointly or other concessions and transmissions.

Sorry, the mic. Well, M&A possibilities and acquisitions such as alienations are part of what a good portfolio manager could evaluate from time to time. We evaluate that constantly. We don't discharge that, and there is nothing written on a stone about that. These are analysis that come with opportunities. They arise as the -- the opportunities come and we contemplate them.

Well, we are closing the Q&A session. I want to say thank you for being with us. We covered several topics of ISA Energy. We talked about our accountability on finance discipline. We talked about our past topics, we ended talking about future, the 2040 strategy, challenges, opportunities. And I want to say thank you all. I want to say thank you for the ones who are with us online. And also, thank you for the questions, for the participation and interaction. This makes our event very attractive and interesting for all of you. And I want to ask you, the ones who are here in person, if you can please answer our survey. There's a QR code [Audio Gap]. [Statements in English on this transcript were spoken by an interpreter present on the live call.]