Companhia Paranaense de Energia – COPEL (NYSE:ELP) Q2 2022 Earnings Conference Call August 10, 2022 9:00 AM ET
Corporate Participants
Daniel Pimentel Slaviero – Chief Executive Officer
Adriano Rudek de Moura – Chief Financial Officer
Conference Call Participants
Marcelo Sá – Itaú BBA
Daniel Travitzky – Safra
Operator
Good morning ladies and gentlemen. Welcome to Companhia Paranaense de Energia – COPEL video conference to discuss the results of the First Quarter (sic) [Second Quarter] of 2022. This video conference is being recorded and the replay may be accessed at the company’s website ri.copel.com. And the presentation is also available for download. We would like to inform you that participants will be in listen-only mode during the video conference, and afterwards we will have a Q&A session when further instructions will be given.
Before proceeding, I would like to reiterate that forward-looking statements are based on beliefs and assumptions of Copel’s management and information currently available to the company. These forward-looking statements may involve risks and uncertainties as they refer to a future event and therefore depend on circumstances that may or may not occur. Investors, analysts and journalists should understand that events related to the macroeconomic environment the segment and other factors may be the result that the materially different from those expressed in such forward-looking statement.
Today with us we have Mr. Daniel Pimentel Slaviero, CEO of Copel and Mr. Adriano Rudek de Moura, CFO of Copel and directors of subsidiaries, I would like now to turn the floor over to Mr. Daniel Pimentel Slaviero who will start the presentation, you may proceed.
Daniel Pimentel Slaviero
Good morning. Thank you all very much for participating in our video conference. And I would like to start the presentation with a pleasure of sharing the delivery of another quarter of consistent operating results, in which we reached adjusted EBITDA of 1.5 billion representing a growth of over 9% in relation to the same quarter in ’21, followed by a very strong cash generation of 1.4 billion. And I would like to highlight that on June 5, we paid 1.6 billion in earnings regarding the year of 2021. And with a total referring to the result of the previous year with a dividend yield of approximately 16%. We continue very well in relation to our operating performance at the end of June.
Federal law 14-385 was enacted which disciplined the destination of PIS/COFINS values, which were mandatorily collected by electricity distribution companies over the CMS, and it was recognized as unjustified by judiciary. And although it lacks regulation, it was based on the revision of risk assessment by the management that the provisioning around 1.2 billion with no immediate cash effect. And this had a negative impact on the net result of the company in the second quarter ’22. And this review and the position were supported by our legal advisors of Copel. I would like to reiterate that the company is evaluating the necessary measures including judicial measures to be taken because of the protection needed for something that has already be judged.
We will continue to look for this right and this assessment. A little bit of history in 2020 based on a favorable decision made final in a lawsuit of 2009 by Copel, it was recognized the right to include the full value of ICMs from the PIS/COFINS calculation base and the immediate effect was an average reduction of 3.8% of the energy bills for Parana consumers as of July 2020, until then Copel, this has already transferred to consumers by means of reductions in tariffs adjustments by of 2.3 billion. Moura will be talking more detail about the impact on the results of the quarter.
On the next slide, I’d like to reiterate the highlight of what’s happened in the last three months. And starting with the best possible grade, AAA by Finch that we affirmed the robust profile and consistent operating performance of Copel. And because of its integrated actions in the energy sector, which are characteristics that contribute to the mitigation of operating and regulatory risks. And in line with the operating performance, I would like to highlight that the second quarter, we had a reduction of 13% and personnel expenses already adjusted by the ANPC of the period because of reduction of 643 employees from our cadre by means of incentivized programs.
Now getting into our results. Copel GeT was responsible mostly for the results in the quarter, the improvement in the water scenario in 2022 together with our strategy of energy portfolio management and the result coming from transmission, this drove positively our EBITDA. I would like to congratulate [Vitto] [ph] and all the team at Copel generation and distribution. I would like to remind you that Jandaira wind hub of 90 megawatts in the final stages of contraction, we already have over 80% operating and tests and this reiterate our commitment with execution of projects and on scheduled delivery.
Over two years advanced delivery, in this case, trading arm continues to be the highlight in the domestic market continues to be the biggest energy trading company in the free market and preparing to the opening of the market. This continues to perform with two digit higher than the regulatory EBITDA, Moura, will be getting into details about the negative aspects of it, such as the higher provisions and cost of materials and as we had the tab review in July, the perspective is of a significant improvement in the consolidated result for the year.
I would like to mention that we registered Copel Dis as a publicly traded company and Category B not to issue shares, and it received the Abradee award as the best in management. And I would like to talk about Copel guys, as we had very slight delays, we are at the final stages of renewal of concession on the part of the government and it is being evaluated by the Attorney General and because of elections, we will not be selling Copel shares until the end of the year. Our intention is to sign the renew of the concession contract for an additional 30 years in the fourth quarter of 2022, so that we may sell to 51% that Copel has in Compagas.
On the next slide already go into the end of my part, a little bit of the strike that the transformation program has been bringing to Copel Dis. This program is a very broad investment plan with objective of modernizing automating and renewing the distribution grid and private communication among the benefits expected or the reinforcement of the rural region in order to reduce disconnections, and guarantee support to the growth of agribusiness in the state of Parana got reduction with services of OEM, and improvement in the control of DEC and FEC indicators. So we closed the first half of the year, with almost 9000 kilometers executed of 25,000 that are one of the front of the transformation program, which is the Parana three phase, which should be concluded by 2025. Nevertheless, I would like to highlight the smart grid program.
In phase one, up to June, we had already installed 375,000 smart meters in our concession area, representing a significant stride for operation, reduction of men hour and kilometers and non-technical losses and emissions of carbon gas and we expect the benefit of almost R$50 million R$49 to be precise, and these investments besides improving the quality of sale to consumers, pre-commitments of our company. First discipline in capital allocation, all investments will be the base for the remuneration, as has been our tradition, secondly, they reduce our operating costs as you saw the slide and third, they reinforced our ESG agenda contributing to optimize our resources and decreasing the greenhouse gas emissions.
And now already we have the Phase 2 over 28 municipalities and 500,000 consuming units in Mid-2024, we will have about 1 million, almost 30% of our base. And we are — this with the biggest smart grid program implemented in the whole of Brazil. Now Adriano Moura will take the floor and then we will open for questions.
Adriano Rudek de Moura
Thank you, Daniel. Good morning, everybody. Thank you very much for participating in our teleconference. And I think it’s important to clarify with more details the impact of the PIS/COFINS provision that Daniel has already referred to with the net effect on the result of the Copel Dis of 1.200 billion and as a consequence of the consolidated result of the Copel Group, EBITDA the effect was 810 million. There has been no cash impact only the extraordinary non-recurrent accounting recognition. This involves many -and the country and also many sectors, not only Copel. Many of you remember the lengthy discussion, the questioning of inclusion of the ICMS and the calculation based on PIS/COFINS and making a long story short, Copel also won the lawsuit of 2009 with a favorable decision, that was fine, no appeal possible after almost 11 years in June 2020. With a retroactive write of over five years before that is to say Copel obtained the right to recognize over 16 years of credit paid or overpaid, this was recognized in the balance sheet of Copel Dis 2020, the immediate effect, I think, July of 2020 was a reduction –every reduction of almost 4% in the energy bills consumers.
And since then, compensation or offsetting with a reduction of tariffs or adjustment of energy ratified by now 1.6 billion this year. But the new fact that provoked this supplementary provision was this law that was enacted in the last days of the quarter. And that generated the need for a view in the risk assessment of compensation of part of these credits, specifically those over 10 years from the date of the final decision, which Copel won the legal advisors understand our rights of the distribution company and with book rule is specifically the CPC 25 with a probability of exit, that is possible, we’re not probable. This is the reason why we needed to make this additional provision.
I would like to remind you that there is a public consultation of [indiscernible] 005-21 about the criteria for the refund of these credit to consumers, but this has not been concluded yet in this context. Copel will continue to evaluate all the necessary measures to preserve our rights. This has already been final and including the extraordinary impact as you can see the adjusted EBITDA of 1.5 billion in 2Q shows the consistent evolution in the year, almost 11% year-to-date to June 30 plus 9.4 in the quarter. As a result, also reflected the robust operating cash generation exceeding 1.5 billion in the quarter reflecting a significant improvement in the national hydrologic scenario with a lower need to buy energy. Besides many other factors that also contributed to the improvement of the results such as a higher revenue in the remuneration of transmission assets and ecosystems agenda for cost reduction as was said. And with that we closed another quarter with a sound financial position and cash balance of over 3.6 billion, even after paying dividend at the end of June amounted to 1.6 billion.
Regarding net income adjusted net income it was 667 million there was a drop vis-à-vis 2021. Although the EBITDA went up, the increase in inflation and in interest rate negatively impacted the cost of debt and it grew from 8 billion to 9 billion and this reduced the financial results by 260 million almost with an impact on the financial to revenue that we had added with a payment last year it was eliminated. And we are recognizing about 667 million with the amortization of the GSF.
Next page, adjusted EBITDA, comparing 21 to 22, the second quarter considering the contribution by each business, as we said before that gave the biggest contribution about 250. In spite of the negative impact of UEGA of 140 million approximately, due to the reduction in the level of dispatch, the consolidated result grew over R$100 million. So in relation to GeT, the improvement in the waters and areas we said especially the GSF in June, which was 07 and this year, it was 083, improving the result of the purchase and sale of energy by almost R$230 million.
I highlight the tariff review of some transmission assets; they improved the result of the own assets of transmission. They also helped in equity income and the consolidated results of the Vilas Wind complex, which is already part of the GeT results since December 21. And the quarter was affected by the lower growth of 0.5% besides higher expenditures with third-party services, because of some contract adjustments impacted by inflation and also the process of outsourcing some activities.
With materials we had the effect of variation of fuel costs and increase in material cost of the electrical system. ADA was higher than we expected. But we already see a reversal of the strength with an action plan that is already being executed and we expect an improvement for the next few quarters. And in terms of regulatory efficiency, we are around 12%. One additional remark although the ADA went up the level of delinquency it is decreasing and below 1.5.
On the next slide, I highlight the three main businesses we have already touched upon all of them GeT exceeding 1 billion of EBITDA in the quarter strong growth, like 12% growth, year-on-year already considering the consolidated results, including UEGA, a sound growth based on the execution of a consistent strategy for improvement of efficiency and cost reduction. Conclusion of the project, new acquisitions and mainly inefficient management of energy trading. That is a reduction of 11% for the reasons that we have already mentioned, reaching an EBITDA of 337 million in the quarter and we trust the recovery of evolution of regulatory efficiency with all the measures that we have been putting in place and we will continue to be focused on execution of the synergy and improvement of efficiency on an ongoing basis and we’re very successful there.
Copel Mercado Livre free market continues at the top of the biggest trading company in Brazil, with the relevant strategic importance in the energy trading of the group with a strong potential for a sustainable growth, capturing many opportunities because of the opening of the free market with a very positive outlook in terms of results a growth of R$2 million in the adjusted EBITDA undoubtedly a challenging year considering the higher volatility of energy prices.
Moving ahead in PMSO, I would highlight reduction of costs with personnel and management. Currently our biggest manageable cost. And they adjusted to reduce the consolidated over 2% vis-à-vis in 21, basically due to the reduction [indiscernible] 43 employees in the last year. And this more than offset the increase of almost 11% that the collective agreement in October last year because of the increase in the NPC.
In the AM line, we have already talked about this, but we are maintaining adequate levels if we consider the relevant inflation in the period even lower than inflation the provisional line besides the increasing ADA and some litigation and relevant impact and the comparison between the periods, while the recognition of UEGA which was positive in the quarter 2021. And this year, we had no impact. So in this comparison, you see a reduction of 139 million and net of these provisions, we see an increase which is lower than inflation 3%.
Before we go ahead, I would like to highlight the improvement in efficiency and cost reduction, which are pillars of our strategy, we continue to seek opportunities by means of investment in new technologies and process reviews, tools, prudent investment that we start to see positive results from these already, and this will continue.
Moving ahead talking about our investment program. We are following the physical and the financial plan and we are bringing forward some project such as Jandaira Wind Hub, very well advanced and we invested over 1.2 billion up to June 22. And we are focused now on the conclusion of the Jandaira Wind Hub and prudent investment it is all by itself, already invested 1 billion of a total of 1.6 billion, mainly the transformation program, which includes the three phase Paraná and the Smart Grid programs.
I would like to remind you that the investment for 2022 does not contemplate opportunities for new businesses, be them brownfield or Greenfield, but we have to consider these opportunities. And we are analyzing with the necessary discipline many opportunities.
To go ahead and already reaching the end of my presentation. Before the Q&A, we have the evolution of our leverage, which is 1.3 already considering the impact of the PIS/COFINS provision as we said at the beginning. I would like to remind you that is leverage still has the impact of the non-recurring results of 2021, such as the say of telecom, the renegotiation of GSM, the settlement of CRC last year, which occurred in the third quarter, and we will continue to focus on the improvement of a more balanced capital structure with our dividend policy and our investment policy. And we need to advance also in the capital — a more competitive capital structure.
And lastly, we have no exchange rate exposure in our debt. Our debt is very well-balanced regarding maturities in the next two quarters totally within our financial capacity.
Thank you very much for participating in our call and now we can open our Q&A.
Question-and-Answer Session
Operator
Now we will start the Q&A session for investors and analysts. [Operator Instructions]. Mr. [indiscernible] to the CFO.
Unidentified Analyst
Do you intend to reduce your debt because of the very high debt because of the CDI increase?
Adriano Rudek de Moura
Thank you [indiscernible] for the question. I think it’s very timely. And we’re monitoring this very closely. We have plans to regarding funding, regarding the minimum necessary to meet our demand for investment not affecting our physical or financial objectives, because they bring relevant returns which we are all expecting. So we are evaluating the market very carefully, not to have any debt beyond what is strictly necessary, so that we do not have this impact on our finances.
Operator
In order to ask a question, please write your question in the Q&A with your name and the company. [indiscernible].
Unidentified Analyst
Are you going to announce dividends shortly?
Adriano Rudek de Moura
Hi, Philippe, our dividend policy provides for two or no event. And we always deal with that in the third quarter such as was the case last year this will be analyzed by our Board of Directors. But what I can tell you is that it provides for the possibility of extraordinary dividends as well and they will be analyzed over the third quarter as I said before. So, this is the line that we are following. Of course, we comply with all our dividend policies. And in fact, this is very simple. The results were extraordinary results as we said, or extraordinary factors. So this will be analyzed in the third quarter, as I said, always comply with our dividend policy.
Operator
Marcelo Sá.
Marcelo Sá
Will you be adjusting your net income because of the non-recurring items of PIS/COFINS for the payment of dividend? You did not do that in the past, I would like to remind you, should we expect less dividends being paid out this year?
Adriano Rudek de Moura
Well, this is the big question mark Marcelo, both you and Philippe and many of our investors are a setting that policy deals with official results. But as I mentioned before, it already provides for the possibility of interim dividend being paid. As I said before, we will be dealing with that in the third quarter such as was the case last year considering all the bases and mainly our commitment of at least two annual dividend distributions. So our Board of Directors will be dealing with this in the third quarter. I would like to remind you that last year we published this at the end of September. So this is what we expect for the current year as well. late September or early October
Operator
[Indiscernible]
Unidentified Analyst
Congratulations to the Copel team. Considering the studies in the energy area are long-term, what about investment programs in energy generation in Parana?
Daniel Pimentel Slaviero
We do have an investment policy and it defines the main front, the areas and where we have synergies albeit wind or water or solar and also the minimum sizes for transmission. So all the parameters or the guidelines are part of our policy. We also have a ranking or priorities for bid in the transmission auctions or other opportunities that come to us. And we’re evaluating them very actively with focus on Parana. But I would like to remind you that we also have operations in 10 states.
So our policy looks for synergies and minimum sizes for the opening of new clusters. Oh this is in symphony with what we imagined for the growth of the company and as Moura said, you have an active participation in the transmission auctions, we look for opportunities in brownfield and also in Greenfield all this is within the scope of our investment policy.
Operator
[Indiscernible]
Unidentified Analyst
What is the company’s strategy regarding the impact of the ICMS in this segment?
Daniel Pimentel Slaviero
We’re following the exponential growth of distributed generation especially in 2022 because we have a deadline of the law of 6 January. So you can see very big moves there. We are studying this as a way to operate in this segment as well, because we see a defensive opportunity in terms of migration of clients who are in our base in Parana, but also as an opportunity in other areas of the Federation, distributed generation for any integrated company in the electrical sector is part of that we have to have this structured and we expect to be able to announce this very soon. Not only the [indiscernible], but also the first opportunities in distributed generation and all the growth opportunities that we have regarding the National Energy Plan. Would you like to add something Moura?
Adriano Rudek de Moura
Yes. We are paying keen attention to all these moves. And always try to adjust our contracted energy but this is according to what we have in our plan.
Operator
[Indiscernible]
Unidentified Analyst
I would like to know if the accounting impact regarding the PIS/CONFINS will be considered or excluded from your dividend base.
Daniel Pimentel Slaviero
Bruno, we have already mentioned here that our policy does not consider any purge of extraordinary fact, let it be EBITDA and the net income as they are no exclusion, but the policy itself beside the minimum to annual distributions, according to the cash generation and the level of leverage and investment capacity and the financial situation, it makes it possible for us to pay interim dividend to extraordinary dividend and then this will be evaluated such as it was last year over the third quarter.
Operator
[Indiscernible]
Unidentified Analyst
Do you expect to need more provision regarding PIS/COFINS? Or was the current amount enough to cover the 1.2 billion?
Daniel Pimentel Slaviero
Moura can give you more details, but it is fully recognized in our balance sheet already. We have no expectation of any additional provision for this. And as was said in our material fact and also during this presentation, we reassessed our risks. And we understand that the law in spite of the very correct spirit, a laudable spirit, it did not interfere or did not affect. Well, to make a long story short, no additional provision will be made for this purpose. This is an ongoing evaluation. This is something that we do all the time. And we may have some new facts in the future and the reversal of this amount even we have no expectation right now but this is a credit that can be invested in the future.
Operator
[Indiscernible]
Unidentified Analyst
Regarding the generation of your own energy 33% in this quarter, what is the future plan for wind energy?
Daniel Pimentel Slaviero
Today a major part of the growth in our generation came from the acquisition of Vilas wind farm, almost 20% of our generation capacity. And with that today, we already have in our portfolio 13% of pure renewable energy. I don’t like this term because we consider that hydro is also renewable. But if you look at wind and solar in the portfolio of the company, we already have 13% and our perspective but is that in the next few years and with together with GeT and the new businesses area of the company, we expect to be able to double this expectation so that we may have 1/4 of our generation portfolio be made of wind and sun energy because it supplements this diversification that is very healthy for cash generation for GSF mitigation and for the management of our portfolio withhold.
Well, I thank you much for your participation such as the other investors in this video conference and what is our expectation to increase generation already next month? Oh, the Jandaira wind hub will be operating and we will be producing 90 megawatts of installed capacity. Take advantage of the second half of the year in the northeast, which has better winds which facilitate generation we have other projects that we are reaching a final phase in terms of acquisition, and that might contribute to the increase of wind energy generation for Copel in hydro. The increase in GSF this year, we already have a forecast of an estimate of 83% of the GSF last year, it was 73%. So it’s a big leap. And for 2023, we project the capacity higher GSF. So a higher hydro generation and the higher availability of our wind turbines in the northeast, increasing our overall generation capacity.
Operator
[Indiscernible]
Unidentified Analyst
Do you intend to keep your partnership with Engie for the second auction in December. How do you see competition from now on?
Daniel Pimentel Slaviero
Bernardo, we had a very good experience with Engie. They are a global company. So we had a very good learning curve. For both companies because we have the same size, we have the same credibility, we have the same technical engineering knowledge. And for the next few quarters, or the next few auctions, it will depend on the size of the lot and the synergies with one or other company. We have nothing signed. And our preference is always to be working alone. With Copel with the financial expertise of Copel but we are open to partnerships, be it with Engie or with any other large company in the sector with the same standard of governance and capital allocation discipline which is the case with Engie.
Operator
Daniel Travitzky
Daniel Travitzky
What is your expectation for an extraordinary tariff review coming from this law? And do you have additional credit of PIS/COFINS to deliver in the tariff review?
Daniel Pimentel Slaviero
I will answer part of your question. And my colleagues will answer the remainder. We see no perspective for LTE. Now with the enactment of this law has already called the companies that they now understood that needed to revisit this question as Copel, as our adjustment was soon after the law. So we were not called to participate and we do not believe this will be the radar screen of a [indiscernible] up to the next tariff review.
We have no indication coming from the agency in this sense because we had 1.6 billion of the PIS/COFINS credit already used for the amortization or mitigation of the tariff adjustment. Moura, maybe you could talk about the remaining balance.
Adriano Rudek de Moura
We still have 1.8 billion approximately not considering the additional provision that we made. So with an additional 2.3 billion — the 1.6, that Daniel and you mentioned, that would be around four, which is a significant amount, but we still have a balance that we will probably not use next year. And we expect to use this amount in one or two years. Yes, no expectation regarding a new tariff adjustment whatsoever.
Operator
Marcelo Sá
Marcelo Sá
When you recognized the PIS/COFINS, you paid an income tax on that. And with this provision, what about the fiscal credit — the tax credit? Will you be able to discount this from your income tax?
Adriano Rudek de Moura
Marcelo in June we recognized this gain. We made a provision equivalent to the tax credit and we compensated this with the credit from the tax itself. So we had no disbursement whatsoever and we will not have a disbursement now. So no cash effect whatsoever.
Operator
[Indiscernible]
Unidentified Analyst
I’m an investor. I would like to know the company planning to do with the maturity of the [indiscernible] plant as it is coming closer.
Adriano Rudek de Moura
This is one of the major strategic themes for Copel for 2023. We already have all the bureaucratic process, the registration that everything regarding our intention, and we will do what the Q of 2019 establishes which is allows us to renew provided we sell control with the fourth quarter of 2023, there will be an auction to sell 51% or 50.1% of the [indiscernible].
And with that, we will be paying for the renewal for an additional 30 years. We are right now discussing it. The ministry has already — the bonus has been calculated for the concession. And we imagine that the references that were used for the calculation of the Eletrobras grant bonus will no mean new — it is very strategic for us. We are dealing with that cast with the new businesses area and in the fourth quarter of 2023, we will be holding an auction to sell these 50.1% and maintaining 49 in the hands of Copel.
The schedule for the sale of FDA is already — just a moment please because [Burtos] [ph] cellular phone was ringing here. We apologize for the interruption.
The schedule for the sale of FDA, we have already submitted this to the Ministry of Mines and Energy and they have already forwarded this to the court of account of the union and we hold regular meetings with the Ministry of Mines and Energy to work in all these fronts and to have a definition regarding the price of this grant that may preserve the interests of Copel as well as the interests of the Brazilian electricity sector with the capacity to renew for an additional 30 years the concession of this plant. And as Daniel says it’s the crown jewel of our generation projects.
So we have up to December 21st, the possibility to conclude the process 12 months before the maturity of the concession December 21, 2025. So, this is all — the CRE so that you may have the right to extend this for an additional 30 years. So, we’re very pleased with the situation and Copel will certainly do a very good business in this renewal and we expect a very high competition for this asset.
So, all the four plants were refurbished and increasing 75 megawatts and each one of the plants. So, it is a precious asset for the Brazilian energy sector, in the modeling the organization of this schedule and everything is on stream so that we may have the highest possible number of bidders for this plant.
Operator
[Indiscernible]
Unidentified Analyst
What about the P&D studies in when you investment in human resources, your biggest asset?
Daniel Pimentel Slaviero
In relation to this area, this and GeT have their policy established by [indiscernible] will significantly reduce the levels for research and development, R&D. As a company, we want to use these levers because we have a lot of expertise that they have already borne lots of fruit for the company. In the past, we launched the Copel vote program, the interaction with the start. We have already selected five companies in electromobility, improvement of performance of wind turbines, et cetera. so that we may be very open to this program of open innovation not only by the traditional R&D but also Copel voted the next few weeks or months. The team will launch phase number two in relation to people.
You said it very well, it is the most important asset that we have more than anything, any of our assets. So our people are most important asset. And we have been doing the reduction in the number of our personnel in a very well-planned fashion. So that people who stay in the company are not only by means of their own development may stay with us, but that we may bring artificial intelligence and technology experts so that we may continue to compete in the electricity sector, we see the discount in the auction, the competitive processes and we see that our sector is very dynamic, very fascinating and with a huge growth potential.
Operator
[Indiscernible]
Unidentified Analyst
What about the current strategy for the share buyback program? Anything you could say about this theme for the future?
Daniel Pimentel Slaviero
No, this is not being evaluated right now. We understand that this is not the right moment to do this. We’re not considering this right now.
Operator
Our Q&A session has come to an end. I would like to give the floor back to Mr. Daniels Slaviero for the closing remarks.
Daniel Pimentel Slaviero
Thank you very much once again for your participation. And I think that all the questions about the dividends and this will be addressed with the evaluation of the whole situation and this recognition of the PIS and COFINS taxes has been broadly discussed. This as part of a provision but I would like to stress the sound result or sound operating result the significant improvement of GeT, the moment of transition of Dis and even keeping two digits of regulatory efficiency something unthinkable years ago. This will be further improved when we have the reflex of the tariff review that occurred in June.
So we continue to be committed with our discipline and capital allocation, efficiency gain and delivery of consolidated results, which are more and more consistent quarter-on-quarter. We are very happy and we recognize the work be done by all the members of Copel, who make this possible. And we pay a lot of attention to opportunities. We have growth as one of our priorities, with the correct dividend policy and also generating the growth potential were better and the appreciation of our shares and the payment of future dividends.
So once again, thank you very much. I thank my friends and my companions here is the board — the executive board for delivering another quarter of consistent results.
Operator
Copel’s video conference has come to an end. Thank you very much for participating and have a very good day. Thank you.
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