Good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to SABESP’s conference call to discuss its results for the second quarter of 2015. The audio for this conference is being broadcast simultaneously through the Internet in the website, www.sabesp.com.br. In that same address, you can also find the slide show presentation available for download. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of SABESP’s management and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of SABESP and could cause results to differ materially from those expressed in such forward-looking statements. Today with us, we have Mr. Rui Affonso, Chief Financial Officer and Investor Relations Officer; Mr. Mario Arruda Sampaio, Head of Capital Markets and Investor Relations; and Mr. Marcelo Miyagui, Head of Accounting. Now, I’ll turn the conference over to Mr. Arruda Sampaio. Sir, you may begin your conference.

Okay. Thank you and again good afternoon, everybody for one more earnings conference call. We have a nine slide presentation today to discuss the second quarter of 2015 and as already mentioned, after that, we will open for the Q&A session. Let’s start on the slide three. Here, we show the company’s billed water and sewage volume, which fell 7.5% between second quarter last year and second quarter this year. This is due to the decline in water availability and consequently the measures adopted since February 2014 to continue supplying the population in the Metro region of Sao Paulo on an ongoing basis. As a result of the water crisis, there was also a substantial decline in water production. Volume was 14.6% down in the quarter and 18.1% down in the first six months of this year. On the next slide, on four, we will discuss our financial results. Net operating revenue increased 2.5% compared to last year second quarter. Excluding construction revenue, net operating revenue decreased 7.6%. This is due to the granting of bonuses and the 7.5% reduction in total billed volume as we mentioned in the previous slide. The decrease was mitigated by the application of the contingency tariff and the application of the repositioning tariff index of 6.5% since December 2014, which you all are already aware and familiar with and plus the 15.2% tariff increase effective since June and impacting only 1.5% in this quarter. I would like also to remind you that this last tariff increase includes a 6.9% increase due to the extraordinary tariff revision and the balance to the 15.2% is the ordinary annual tariff adjustment to inflation, which happened in April. Cost and selling, administrative and construction expenses increased 1.5% in the period. If we exclude construction costs, there was a…

[Operator Instructions] Our first question comes from Carlos Remeika of Covalis Capital. Please go ahead.

Hello, thank you for taking my questions. I have a few rather simple ones. I’d like to ask what you expect for tax rate for full-year 2015, given you’re making quite a bit of adjustments on a quarterly basis. And second question, I saw in the second quarter, BRL117 million decrease in provisions for lawsuits. It’s already been better in the Q1 and I was just wondering what would you expect for second half if it’s possible at least directionally to save, if it still continues to be lower year-over-year? Thank you.

Okay. Carlos, just a second here. Carlos, Mario. Regarding the tax rate for this year, the only thing we can say without giving more guidance than we usually give is that we will continue working with 34%, okay. And no more detail we will give you because and again, it’s not part of what we do. On the next, on the provisions, what we can say is that there was a big provision of BRL70 million reversal of provision, which impacted specifically non-recurring this quarter. And again, we can’t comment and we are not – I mean, we don’t expect – we are not going to comment for the next quarter. I mean, we can’t say that there was BRL70 million reversal of this only provision of non-recurrence.

Okay, thank you.

Our next question comes from Hujan Yang [ph] of Hummingbird Partners. Please go ahead.

Hi, thank you for taking my question. So I have a question about tariff adjustments. I understand there is a back and forth between SABESP and ARSESP on determining adjustments. Could you give us more color on how much leverage that we have had in determining the adjustment? So what usually causes the difference in weighing inputs between the two parties, for example considering the Q1 differences caused by the [indiscernible].

Just a second, Hujan. Could you repeat the part on the different inputs, just that we can make sure we understand.

Sure. I was asking what cause the difference in weighing the input between the two parties, for example and currently I just pulled up the Q1 slides, there is the compensation period.

Okay, let me get that information to see if we can answer. Just a second.

Okay, let me jump in. It’s Mario. First off, for the leverage negotiation, let’s put it this way, it’s authority -- we have a discuss that is technical. They are very open for the discussions. We open and develop all the discussions on an agenda basis. So the leverage is just as usual, as you can see in the electricity sector. Although, the major company being regulated by the state regulatory agency is SABESP. If I understood the question, I mean, this would be the answer. As for the second point, the difference in input. We understand there are two issues. First, is the deferred implementation of the tariff revision, which should have happened in April last year and we SABESP postponed it to December. So that was deferred, but although deferred, we were granted an adjustment, a capitalized adjustment of that tariff implementation, so ultimately we implemented a 6.5 increase and not a 5.4, which was the original number. That is one. The other was the extraordinary tariff increase, the 15.21. The difference there is that we ask for compensation for the years of ’13, ’14, which were actual years plus expected ’15 and ’16 -- forecasted ’15 and ’16 and ultimately what the regulator, he recognized to a great extent, the ‘13 and ‘14 and agreed upon the projections on the ’15 and ’16, but he decided to implement only the ’15 and ’16 and the ’13 and ’14, he will add that as a regulatory asset for the next tariff revision as of April 2017 for the next cycle. Okay?

I see. So just a quick question on that point, so does that mean that the 2013 and 2014 compensation period then amounts to the 7.02%?

No, no, that’s the point. What happened this April was the ordinary, the normal tariff adjustment to inflation and the number there was something around 7%. I don’t have the -- I don’t remember the specific number, we’re going to get it. So that was just inflation. The extraordinary tariff increase that we were granted was 6.9%. What we asked for was ‘13 and we’re getting the -- I don’t have in the top of my mind was 13.2, 13.4 [ph] something like that. So the difference between what we ask for the extraordinary and what we got from the extraordinary is the deferred ‘13 and ‘14 revisions. So the ’15 rounding numbers, okay, about 7%, 6.9% is the actual revision, what was granted to us, and the difference to that is the inflation for the period. Okay. So what we did not get, we will get it in the next tariff cycle. So it was deferred to the next tariff cycle.

Okay. I got it. Thank you very much.

Our next question will come from Michael Gaugler of Janney Montgomery Scott. Please go ahead.

Hello, everyone.

Hi, Michael.

Just one question, a couple of mine have already been answered. I noticed in the quarter cash fell pretty substantially and I’m wondering what was behind that and if you would anticipate that cash levels will remain about where they were at the end of the second quarter going forward?

Okay. Michael, the reason that the cash fell this quarter substantially is basically because we anticipated that we paid down in anticipation a BRL500 million debt that was due in November this year. So we took the decision to anticipate, we prepaid, there was no fee for prepayment, it was already agreed to. So to that extent, we reduced our total debt for the quarter, albeit we did reduce the cash. Probably no, we won’t give you a guidance of where we see the cash flow at the end of the year, but we will come to market and we should, to some extent, replenish our cash availability. So can’t give you the number we’re working with, but I can anticipate that we should put our cash availability up from where it is today.

Okay. Thanks, everyone.

Thank you.

[Operator Instructions] Our next question comes from Kellyn Cailey of ZENA Investment Management. [ph] Please go ahead.

Hello, my question is on debt. Given that we’ve seen some depreciation of the Brazilian real since the quarter end and there are some forecasts out there that we could get to something like BRL4 per dollar by the end of the year. What are the levers that you have to deal with the impact that this will have on your debt balances and therefore your debt covenants to keep you in compliance?

Okay, just a second there. Kellyn, first our debt exposure went up to 46.2%. Last quarter it was 45.8 and quarter before that 40, so it’s actually going up because of the exchange rate against the real as we all know. What are we going to do about it is, we're not going to hedge our debt profile, it makes it inadequate to hedge. In addition to that the hedge would have no effect on our debt covenants. The way they are estimated, they did not take into account any hedging. S, again, in summary, it is very expensive. It doesn't make sense for the debt profile and the cash flow and it doesn’t affect our debt covenant estimate, but we are obviously doing a lot. We have been in the process of going after receivables. We are going after -- we have been able to increase tariff last December. We are just now in the discussion around an extraordinary tariff increase which has – which will be fully implemented, the 15% on the third quarter. So we have also done a lot of improvement in our cost structure. As you can see on the quarter to quarter basis, we’ve been able to reduce costs by 11.2%. So, yes, the covenants will continue fairly stressed, but I think we have many elements in front of us and actions we have taken that we are very well in a position to go over next quarters even if the exchange rate continues stressed as it is right now. Okay?

Okay, can I just ask a follow-up on the cost structure, so the cost reductions in the quarter, is that – do you view the run rate be 11% underlying decline as something that is sustainable as we move through the rest of the year?

Again, that would be -- giving you the specific would be giving you a guidance, but what we can tell you is that there are further actions we have taken that we expect coming in at some time. So again, it is hard to say exactly when, but we cannot tell you how much we expect. Okay?

Thank you.

Our next question comes from Doug Newton of The Wendakker Partnerships. [ph] Please go ahead.

Hi, good afternoon, Mario. The exploration of changes into the tariff structure, what impact might that have on the company's total revenue.

Doug, the effect is neutral. So it’s just how we cut the pie and not the size of the pie.

Got it, thank you.

[Operator Instructions] At this time, I’m showing no further questions. So, now I’d like to turn the conference back over to SABESP for their final remarks.

Okay everybody, thank you once more for participating of this call and we will obviously be back next quarter and hope to see you then. Thank you, bye, bye.

The conference has now concluded. Thank you for attending today’s presentation, you may now disconnect and have a great day.