Ladies and gentlemen, thank you very much for waiting. Welcome to the teleconference of Eletrobras in order to disclose our results regarding the Second Quarter of 2018. We inform you that all participants are only gong to be listening to the presentation. After that, we are going to have a Q&A session, and then we are going to provide more information. I would like to remind you that this presentation is available in PPT in the part of Investors Relations in our website. [Operator Instructions] Before we proceed, I’d like to say that any kind of a statement given during the presentations regarding the perspective of the company’s projections, operational goals, they are premises of the Board of Eletrobras, as well as information available for the company. Any forward-looking statements are not a result and are not assured because they are – they involve uncertainties. Investors should understand the economical conditions and other operating aspects may influence these forward-looking statements. Now, I’d like to give the floor to President, Wilson Ferreira Junior. Mr. Wilson Ferreira Junior, the floor is yours?

Good afternoon, everyone. I’d like to thank for the opportunity and for you being [Technical Difficulty] our results of second quarter of 2018. I have a quite large presentation. So let’s start on Page #4, where we have our main highlights – financial highlights regarding this quarter. And the three main ones, we have an increase of 36% in gross revenue. We had BRL 14 million – more than BRL $14,822 million. We had in terms of CVM EBITDA of BRL $5,293 million, an increase of 96%. And in terms of net income, we had an increase of more than 807% increase regarding the previous period of – the second quarter of 2017. And we’re going to introduce you the main results, which led to that. So going to Page 5, just to mention some highlights in terms of this analysis. The first one here that we kept on reducing our in-depthness in the second quarter and we were able to reach 3.4 and we are really close to our master plan of business and management, which is going to be rigid as we go on, especially due to the sales of the SPEs, which are expected to cover them all. We included more than 814 megawatts into the end of the second quarter. And we added also almost 200 kilometers of transmission in terms of line until 2018, and also, we are going to provide more details afterwards. We’ve had a great highlight on July, 26 which was a privatization of Distribuicao Piaui to Equatorial Energia. It was discount index of 119%, and we had the payment to the government and specifically the process of capitalization for the life of the company from now onwards. Another highlight of this quarter was the definition by ANEEL, and we had resolution…

Now we’re going to start a Q&A session [Operator Instructions] Our first question comes from Andre Sampaio from Santander.

Hello, I’d like to ask two questions. The first one regarding our decision to have this CVA book. I’d like to understand what is the rationale specifically regarding the retroactive regarding December 2016? Could you explain why you decided to make this provision? I’m sorry this book recording? And also I’d like to ask about the possibility of converting this debt after the privatization of the company. Could you provide more details? Would you have interest in converting this, looking at this strategic part of the company?

I will start from the second one, and afterwards, Armando is going to address the first one. This models is inspired in the privatization itself from [indiscernible]. At that time, Eletrobras had 32% of the company. I wouldn’t – I would say that is one of the best investment we made in the company BRL 1 of conversion of debt created and many billions of reais in terms of dividends. So these companies may operate in a better way if they have this leverage. So the option we – that we have debt in all of them for us to have a conversion for 30% inspired on this case. If you remember, we have a term – a period of time to do this. The law establishes that we have up to six months to acknowledge the business terms of the operator into – put into place what is established here. So at this moment, I cannot tell you anything in advance. I cannot any – make any forecast. I see they have a really positive experience from the past. And – but we’re going to analyze on a case by case basis and we’re going to disclose anytime we have an information.

Hello, Andre, good afternoon. The retroactive CVA comes from the beginning of the designation period We have RGR, which is about a 111% of [indiscernible] and we’re recording this in liability on our balance sheet, the counterpart of our revenues. We consulted ANEEL and the same recognition of this asset. And then after this was ratified by the Minister of Mining and Energy by the ordinance 301. And then we had the opportunity of registering. It is almost BRL 4 billion, which were already in the liability first to have the corresponding counterpart. Reminding you that inside the privatization process, the same counterpart amount is diluted and recognized in the tariff when the CVM by the same controller. And now even though we’re in designation period, we’re going to have this recognition. This was positive for the company, because we were recording a liability in our balance sheet and that was comprising our leveraging levels. So that was even more positive as long as we keep on being service providers during the period of designation. Now we’re going to have a book keeping of this record in terms of the finances we had for them designation period, which now were extended to December 31, 2018 until December 31.

Just to compliment, I think it was a critical year. But I’d like to confirm that there’s still no recognition related to the possibility of what do you mention in terms of the ordinance from August 2018 to December 2018. You would have a complete control of the agreement, so we didn’t do that, right? It’s just related to RGR, right?

Yes, just related to RGR that was allocated already.

Okay. Thank you.

Our next question comes from Maria Carolina Carneiro from Credit Suisse.

Good afternoon, everyone, and thank you for the call. I also have two questions. First one, regarding the privatization process. Just for us to understand what is the step by step of the company, given that now the bill is going to be logic in terms of time, we should know when it’s going to approve? I’d like to know how do you see this agenda in terms of privatization? And if – do you share the idea that this is not going to prevent the process for most distributors? Are you going to continue what was already started with Cepisa? I would like to know your opinion and views of the other companies? How do you see the process? And the second question is talking a little bit about the results just for me to be sure, what is left from PDC to be executed this year, the consensus dismissal plan? Would you have a relevant amount, or do you think – or did you consider that you have already implemented this and it’s already done? Just for us to have an idea what is expected in terms of PDC for the company?

Okay. Regarding privatization, which is the first question, I just would like to remind you that we mentioned 11.2 in terms of capitalization of the company regarding the debt with Petrobras. Apart from that, we have BRL 18.8 billion of additional debt with credits which are coming from PL, of course, the company has to analyze it. This change can go forward, because the credit is going to be remain with the company, with Eletrobras. So the company is going to have an analysis exclusively of risk of execution of this credit. I think everybody recognizes that. All of them are already recognized by ANEEL from the PL to have the budget. But the contracts, we already provide energy. And of course, the perspective of normalizing the agreement of Petrobras from Amazonas GT, these are absolutely necessary operations. They did not take place yet. But different from what was shown on the news, there were no increases and we have to return it as ANEEL itself said. We, in fact, have a normalization of this. So we are going to keep this cash. We have the perspective of the privatization of the second step on August 30 exclusively from Alagoas. Regarding the remaining PDC, we have authorization to implement it until December. So we opened the first stage. Next month, we move from the headquarters. We are going to be definitely in one building and we’re going to complement the shared services center. And from this perspective, I see that unfortunately, both in terms of RP, we have a small delay of three to six months of this twos, which demands people but it’s open until the end of the year. I mean, we have the possibility of opening until the end of the year. We closed for the first session, but we are going to have another additional PDC until the end of the year. At this moment, we already are authorized to open it again. Both processes, RP and PDC, during this half year are going to be made for us to be able to adjust the company to the processes and to be able to – maybe to not have as many employees. This is going to be informed to the market. At the moment, we are ready for it. And the provision of the project itself, we have 736 employees participating in it and this represents about one-fourth of our provisions by the subsidiaries of Eletrobras.

Thank you very much.

Our next question comes from Marcelo Sa from UBS.

Good afternoon, Wilson and Armando. My question is regarding the potential exercise of subsidiaries. I didn’t understand properly. Just to understand the mechanism. Understanding that you decided to appear, it means that in order to buy 30%, you’d have to convert debt or would in six months would have an appraisal report to define what would be the terms of this. It was not really clear for me. Could you explain me?

Well, BRL 380 million and we have in the capital BRL 1,063,000 billion. So the debt of this would be reducing BRL 308 million, and that represents 30% of the capital of the company.

Okay, understood now. Thank you.

Our next question comes from Marcelo Britto from Citigroup.

Good afternoon, everyone. Thank you for the call. I have two questions. First, regarding the privatization of CL [ph]. We know it’s suspended due to the determination of the Superior Court, but I’d like to understand what are the steps the company and the federal government is following to eventually to restore this process when this injunction is suspended, because I understand the bill we have today which is being analyzed by the Senate would not prevent the privatization? Also given the privatization of these SPEs, does the company understand, and what is the company doing to suspend the process and to carry out the sales? Because it’s under the same suspension regarding the privatization of CL? And the second question regarding the bill, which is being analyzed. There’s a highlight, the change of the base stage to determine which distributor from Eletrobras would flexiblize these regulatory penalties in the next two years. We understand that this includes Electro Agri and Rondônia as possible of having these penalties flexiblized. I’d like to understand the company’s perspective and how does it help or prevent this in terms of the impact if the process is restored? Thank you.

Well, regarding CL, the Supreme Court is conducting it with an injunction. And when we have the works, we see that there will be understanding between the federal and the state government. The topic under – being debated in the case of Cepisa is that at the moment at this company, we’re strategized. They had indemnification rules after the auction. The auction did not take place and these companies, of course, had their activity changed with the capitalization and so on. And the state government, I understand they have remaining rights on the 40%. They would have rights to 40% as long as they had carried out the auction. There’s a discussion with the federal government. I understand that we have to wait to this injunction. We are part of this and we have to wait for the term to be established. We have suspended the provision of service. And I believe that looking into the result we had with Cepisa for the consumers, for you – for this discussion, we just have to respect their decision. Regarding the SPEs, given the law and the powers granted by the institute and by law, they create the subsidiaries and they may constitute subsidiaries, which can be sold. So this was used. Regarding the PL from the Senate, from the bill, from the Senate, I’ll ask Armando to make the comment in terms of flexibilization of [indiscernible] and Rondônia?

They have two effects. The bill recognizes that in terms of the reimbursement of CCE, they recognize a period of 10 years, something later and for the effects in terms of deduction. But regarding the recognition of the tariffs, in terms of loans for you to have a positive result in the tariff and the recognition of cost of generation. Well, this was just normalized. Amazonas and Rondônia already have this instrument.

Do you believe there’s the potential of causing any further delay even if the Senate keeps it? What do you mean about delaying?

Delaying that maybe they have to change the bidding process, because they are changing the tariff, the total tariff. Well, at this moment, it was not approved yet and you have a session scheduled for August 30. At this moment, if they keep it, they keep the schedule.

Okay. Thank you for answering.

[Operator Instructions] We are going to close now the Q&A session. We are going to turn the floor to Wilson Ferreira Junior, the CEO for his final considerations.

I’d like to thank everyone for their attention for our teleconference of results. I’d like to emphasize that we are in a really important moment of our master plan of business and management, and this is something that we’ve been discussing for years and years, which corresponds to the process of focus of the company in the relevance sense, generation and transmission and privatization of transmission. Of course, they do not have advantages in comparison to others and somehow it’s recognized. We are talking a lot about Cepisa, which took place less than one month ago. But I would like to remind you that we have [indiscernible] and with similar results. We are optimists in terms of this process. I would like to emphasize that the company is in the process of leveraging. And at this moment, it is essential for you to put the mobilization of SPEs, which is going to allow the success, more than BRL 3 million. The company has a net debt about 8. So there would be a possibility of reaching a leveraging area which would be a good result. And this is what makes sure that the company now can conclude the projects, which were ongoing. Everything – almost everything is within expected. The company has reduced its investments in terms of BRL 50 billion to BRL 20 billion since its operation, but even though we have grown our line transmission and et cetera. So these are important elements. And in parallel, both of these elements related to corporate activities or to the consolidation and integrity of compliance, dissent of recognition. So I think it’s really important, the agreement with the Congress. In the company program, we are now almost turning a page and starting a new perspective. For the next quarter, I think it’s going to be significant and I’ll wait you here for the results of the third quarter. Thank you very much.

At this moment, the teleconference from Eletrobras is closed. Thank you very much for your participation. Have a great afternoon.