Good morning. Thanking you for standing by. Welcome to Companhia Paranaense de Energia (COPEL) Earnings Call to discuss the results of the Fourth Quarter of 2016. All participants are in listen-only mode during the Company’s presentation. Later, we will hold a Q&A session and further instructions will be given. [Operator Instructions] Before proceeding, we should mention that forward-looking statements that might be made during this conference call related to Copel business, outlook, projections, operating and financial projections are based on beliefs and assumptions of the Company’s management and on information currently available to the Company. Forward-looking statements are no guarantee 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. General economic conditions, industry conditions and other operating factors may also affect the future results of Copel and could cause results to differ materially from those expressed in such forward-looking statements. With us today in the conference call: Mr. Antonio Sergio de Souza Guetter, CEO of Copel; Mr. Luiz Eduardo da Veiga Sebastiani, CFO and IR Officer; Mr. Gilberto Mendes Fernandes, Chief Corporate Management Officer; Mr. Fabio Malina Losso, Chief Governance, Risk and Compliance Officer; Mr. Sergio Luiz Lamy, CEO of Copel Geração e Transmissão; Mr. Ricardo Goldani Dosso, CEO of Copel Renováveis; Mr. Adir Hannouche, CEO of Copel Telecomunicações; and Mr. Franklin Kelly Miguel, CEO of Copel Comercialização. [Audio gap].

Good morning, and welcome to the conference call for 2016 results. Thank you for being with us today and thank you executives here and other professionals that are with us. I am glad to start by introducing our new CEO, Antonio Sergio de Souza Guetter, Engineer Guetter, as our Copel colleagues call him. Guetter started in Copel after being approved in Civil Service exam in 1987, and along a third-year trajectory in the Company. His professional background includes several technical and management positions and I highlight a few of them. CEO of [Indiscernible] CEO of Copel in Novartis, CFO and IR Officer of Copel and recently CEO of Copel Distribuição when he was able to follow all business regulatory challenges and the success on the full tariff review cycle. At the time our distribution company doubled its net remuneration basis, an important step to business opportunity. Therefore, I now turn the floor to our CEO for his initial remarks. Gutter welcome.

Thank you very much Sebastiani. Thank you all colleagues here from Copel. Good morning, everyone. Before anything else, I would like to thank you Vianna for the work he has done and he is [leaving us] today, and also I would like to thank all the executives that have worked with us. And also on behalf of Copel, I want to congratulate Luiz Fernando Leone Vianna for being appointed CEO of Itaipu Binacional, which are considered to be a great achievement for Copel and Parana. Once he is renowned Parana is in the domestic electric industry and I’m sure he will be great in managing the Company and hopefully, have important partnerships and such. I have accepted governor initiation with a commitment to keep in Copel in the excellent growth pace always focusing on project with the right profitability in order to maximize the Company’s value. We will aim more efficiency and greater sustainability without leaving site, of course, of our well known quality and also we are concentrating on safety, we will keep on working with ethics and this is a commitment strengthened by the development of our Governance, Risk and Compliance area, which improves even further the Company's management and this is an area that I have restructuring in 2015. Our challenges are not limited to running the Company facing such goals, Brazil is going to complex times because a political and economic instability in 2016 resulted in difficult day for the massive productive industry and there are low levels of energy consumption in general that an area brought major challenges upon the energy industry in Copel and we are going to discuss that along the presentation and despite of adverse environment. We have invested R$3.6 billion throughout in 2016, a record amount for us out of the total around R$600 million pay the rent bonus will lay that to the 30-year concession of part go HPP, a landmark for Paranaíba de Energiain the course of Parana, consolidating the right decision of not anticipating the concession renewal of that assets in 2012 with that [5009 Mesh]. Construction works have advanced in our Colíder HPP, resume the works by Baixo Iguaçu HPP, invested R$720 million in the construction of Cutia Wind Farm Complex [indiscernible]. In the transmission segment, we have concluded an important work with over 2,700 kilometers of transmission lines. We've had six projects totaling an increase of R$198 million in Copel RAP. In the beginning of 2017, we energized relative for the patient and the transmission line connecting it for the substation. In the Southeast of Paranaense part of it happened 60 days ahead of date established by now adding R$7 million to our RAP a few above the transmission segment. In 2016 we have developments on the RBSE indemnification as you already know the Ministry of Mines and Energy have determine the incorporation of our RBSE in the Regulatory Remuneration basis, the restatement of assets valid since 2012 and payment of indemnification by RAP starting on 2017 carry profits. On February of 2017, Aneel recently issued Technical Note 23, establishing the procedures and criteria to pay good indemnification and based on the same parameters, we remeasured the assets related to the RBSE allowing us to pull R$809 million to revenue from the power and we use for 2016. It is worth noting that the indemnification will be received for the period of eight years as of July 2017 and now has not rectified Copel’s final report. Therefore figures posted are based on this administration best estimate. Another highlight was the creation of Copel Comercialização, a Company focused on the energy commercialization for the free market especially dedicated to the retail market, having as a backup the energy to be generated by Copel GeT as agreed in the contract signed by the subsidiaries. And a telecommunications segment we have consolidated Copel Telecom as one of the main players of broadband Internet with record sales every month providing the fastest Internet in the country. Our grid has over 29,000 kilometers of optic fiber and it reaches all 399 municipalities in the State of Parana. As you can see on Slide 4, in the distribution segment, our quality indicators shows a significant performance. Our ELC, Equivalent Length of Interruption per Consumer was 10.82 and EFC 7.23. These figures represents respectively an increase of [21.13%] vis-à-vis 2015 and allow Copel to distribute relatively well positioned in order to meet required indicators to hold the confession. Really this is a major result, very good. Nevertheless and despite of constant improvement in quality, the economic downturn is still affecting the results of the distribution segment in 2016 consumption of the grid market, which includes captive market and all three consumers in Parana state has dropped 2%, a revenue loss of R$90 million. And despite of the impact in consumption, the economic crises has also caused delinquency rate to increase especially in the beginning of 2016 when it reached 2% of total sales. Along the year, we worked to bring down the delinquency and helped by tariff reduction. 2016 ended after the rate of 1.6% same level at the beginning of 2015, although a little over Copel's historic figures. And still 2016 closed with allowance for debt at R$161 million, R$123 million above the tariff coverage estimated for the year. I also would like to address the modernization that we have done in Copel’s Distribuição networks. We installed automatic equipment, top equipment that improved quality and now to reduce cost and also that opens the possibility to offer new and non-regulating services connected to the distribution network. All of that happen because we had a survey of employees’ satisfaction, although we have significantly reduced our headcount in [RPM itself]. Finally, we should stress the Company following the best accounting practices reviewed the recoupable value of its assets by applying impairment tests, which resulted in the recording of R$582 million in loss provision for 2016, especially because of CapEx increase for project under construction, low probability to start up Araucária TPP this year and work scenario for GAS sales by Copel GAS very well. I think I should say that we have management that is aiming for excellence and financial discipline that’s what we are trying to bring to you. Now I would turn the floor to our CFO and IR, Luiz Eduardo da Veiga Sebastiani will comment further on our results.

Thank you very much CEO, Guetter. Now turning to Slide 5, operating revenue was down 4% in the fourth quarter of 2016 vis-à-vis 4Q 2015 amounting to R$3.4 billion. And that was especially because of 31% decrease in the electricity sales revenue that can be explained by an average drop of 13% in tariffs in June, so because of the full tariff review cycle Copel Distribuição under decrease of 13% of the captive market with the migration of customers to the free markets. Revenues for electricity sales totaled R$681 million and increased 10% showing a higher CCEE revenues because of Copel Distribuição over contracting, which remaining energy infrastructure market. Revenue from the use of the power grid grew 23%, thanks to parts of the increase. So a result of the full tariff review cycle Copel Distribuição and 17% increase in Copel GeT RAP vis-à-vis 4Q 2015 as a result of this start up of new assets and the adjustment of contracts for inflation in the period. Other operating revenues including telecom, gas distribution and others posted a growth of 21%, a 32% increase in Copel Telecom revenue, thanks to the client base expansion. Now posting of the fair value of the distribution concessions indemnified assets dropped to 39% reflecting the lower financial asset balance due to concession agreement renewal in December of 2015. About this, a detailed explanation. In the 4Q 2015, the Company reviewed its main accounting policy and reclassified from financial revenue to operating revenue, the fair value of the distribution concessions indemnified assets. That reclassification stems from the understanding that the infrastructure built by the public distribution service concessionaire should be based on the new replacement value, which aims to adjust operating cash flow of the unamortized investments that will be indemnified at the end of the concession agreement. On Slide 6, costs and operating expenses totaling R$3.4 billion in 4Q 2016, 36% higher than the same period of 2016 mainly because of R$604 million in provisions and reversals. Of those, R$567 million referred to impairment of gas generation and distribution asset as explained by our CEO and other R$52 million related to ADD. Cost with electricity purchase amounted R$1.3 billion up 24% vis-a-vis the same period of 2015 reflecting a higher hydrologic gas in 4Q 2016, and the compares from very good start with the closing of R$135 million recovered from the cost of energy purchased with renegotiation of GSF in 4Q 2015. Charges for rig used were down 38%, thanks to lower costs with system service charges because of a lower thermal dispatch out of the Order of Merit. Managerial costs were up 4% in 4Q 2016 reflecting an increase of 8.7% with personnel partially offset by lower costs without outsourced services. Turning to Slide 7, our EBITDA was 78% lower than the amount recorded in 4Q 2015 amounting R$254 million in the fourth quarter of 2016 with a margin up 7% on the operating revenue. This drop is a result of the recording of R$567 million and impairments of gas generation and distribution assets and of a 2% decrease in the grid market of Copel Distribuição. In 2016 cash generation for Copel GeT accounted for 75% of the consolidated EBITDA. Copel Distribuição and Copel Telcom accounted for 4% each and other companies in the group added 17%, main contribution coming from Elejor. On Slide 8, consolidated net income for Copel. In the fourth quarter, the company's result was negative in R$110 million vis-a-vis net income of R$402 million posted in the same period of 2015. Analyzing the subsidiary results, we see that Copel Geração and Distribuição close the quarter with a loss of R$144 million. Copel Distribuição posted net income of R$71 million and Copel Telecom net income of around R$20 million. For 2016, the Company posted net income of R$948 million in that margin of 7.2%. These where our highlights. We are now available for your questions. Thank you very much.

Thank you. We will now start our Q&A session. [Operator Instructions] Our first question is from Mr. Caio from Brasil Plural. Mr. Caio? Mr. Caio, please.

Good morning. My question, extra I have two questions. First, I would like to focus on Araucaria. We have think that Araucaria about being dispatched into 2016. Did have a relevant impact in the prior year? We see that is around R$240 that were significant, but it is still much lower than the marginal cost to pre-review of the parameters that we are working on? So we have that amount pre-review for regulatory parameters and I would like to understand. What is the expectation for Araucaria dispatch, if you see possibilities of Araucaria being dispatched out of the order of merit and how do you see that operation of the parameter that should happen starting on May for Araucaria? My second question if you allow me, few more of an update. We see that there is a greater impact in the migration of the captive consumer to free consumer in the fourth quarter of 2016. Can you tell us how that is going the first quarter of 2017? Is it still at the same pace or not? These are my two questions. Thank you.

Thank you, Caio. I will turn the floor to Sergio Luiz Lamy, CEO of Copel Geração e Transmissão.

Good morning, Caio. About Araucaria HPP, we are following up and close of the perspective for the energy scenario in 2017. And the scenario is deteriorating itself a lot. We have a very discouraging expectation for wind energy for 2017 should be low. So our expectation is that this recent scenario will cause the possibility of dispatching Araucaria even if it is out of the order of merit still in 2017. And the second question, about migration from the captive market to the free market?

This is this Franklin, CEO of Copel Energia and Copel Comercialização. Yes, good morning. In fact of the migration for this year is much lower than last year and that is explained by what we thought of consumers were migrating because the energy is still more expensive. And so the consumers that are migrating now in 2017, they are migrating because they decided to do it in 2016. But most consumers should stay in the captive market. Thank you very much.

Our next question is from Lilyanna Yang from HSBC. Ms. Lilyanna?

Thank you for this opportunity. I have a question about impairment in the generation asset especially in Cutia Wind Farm. If you can tell us more how much that comes from CapEx? How much of that comes from discount and what do you expect in terms of returns in these projects? And doesn't mind, I also would like to know what is Copel’s strategy and Copel’s priority for this year for cash uses for choosing in real for CapEx in the year not including possible new auctions or new acquisitions. So what can we expect there? Thank you.

Good morning, Lilyanna. This is Sebastiani. I will turn to Adriano, our Accounting Superintendent, but will comment on your first question about the impairment.

Good morning, Lily. About our impairment as we mentioned in our wind farm two major events that recording the impairment as I mentioned was CapEx increase and discount rate. I believe that the major event was CapEx increase. We did have generators investments that represent 70% to 80% of the provision amount and the discount rate also impact and correspond to that 20% different. These are the two major events that happened in 2016. I am sure that amount impacts our return expectation, but this is something that could have an important impact in the Company. So now Lily, I will turn the floor to Sergio Guetter to talk about investment perspective for this year and also to talk about transmission, aligned in transmission investment that will happen.

Thank you very much and congratulation Mr. Guetter.

Thank you very much Lily, and its nice talking to you again. We are reviewing and analyzing investments possibilities and we will review our portfolio and we will try to focus on Paranaense investments or those that had synergy to those investments we already have especially investment for transmission auctions that will happen here in Parana and this probably will happen next month and I think that’s what we have right ahead, but we want to strengthen our footprint in Parana. We want to review our portfolio focusing on strengthening our scale gains here to have investments close by in the state.

Thank you. Can you tell me if you have a focus on cost reduction whether in the holding or in the distributor where there is low discipline level?

Yes. We have started in the distribution company because of the forecast reduction. We have identified any issues and worked with a cost reduction management investing in new technologies and also voluntary redundancy programs and we intend to expand that to the whole group. So as I said in the beginning of the presentation maybe this is one of the pillars for a strict management cost wise.

Thank you very much.

Our next question is from Ms. Carolina Carneiro, Banco Santander. Ms. Carolina?

Good morning. I just would like to have extra explanation on cost performance. Copel performance in this quarter was a little bit lower, but even then we are talking about R$100 million of EBITDA in the quarter and comparing that to the regulatory EBITDA potential for Copel. We do have a significant gap. So I would like to better understand what is that additional strategy? What is the target to drop cost in Copel and try to close this gap even considering the improvement we had seen in the PMSO and the distributors was higher, but lower than inflation? So I would like to understand how the Company is going to try to close this gap between the real EBITDA and the regulatory EBITDA? Thank you.

Hello, Carol. We came up with a plan of five years so that we can meet our regulatory levels, we have already started. Having the results of this plan which encompass cost reduction, but the main villain here for not reaching our target was really delinquency, especially because of a higher price of energies. So our ADD was higher and also judicial litigation, the markets dropped, so these were the main villains. But in terms of personnel, we did have a significant reduction of headcount. We did not hire anyone and we had a reduction of 200 people in our headcount. So we do want to work with outsourced services, and this is [indiscernible]. We have to analyze if we are in the right track and this is something for the long-term, and I am sure that we are on the right track. We also work rigorously in our ADD to break it down, but unfortunately we did have a few companies that broke large companies that really caught us by surprise. But I believe that everything that could happen on the bad side has already happened. We are restructuring ourselves for ADDs and delinquencies as well as with the litigations and I believe now we'll go back to the right track.

Thank you very much.

[Operator Instructions] Next question from Mr. [Gabriel Simons], Itaú BBA.Please Mr. Gabriel.

Good morning, Guetter and everyone. This is Pedro Manfredini from BBA. I have a quick question about new growth opportunities. We will have an auction of the 24th with [indiscernible] and Parana, and I would like to understand what is your mindset for this next auction and a few other transmission opportunities that might come up along the year? Can we have an idea of the size if Copel is coming in? What is the potential investment? Are you looking for a partner or not and also analyzing renewable opportunities. We have seen that in the prior year, you have grown with M&A and renewables. And I would say that this is not over. You probably have something ahead for renewables and M&As. And I'd like to know if your balance sheet will be able to absorb all these opportunities for growth that you might be envisioning.

It’s Sergio Guetter. About the auctions, yes, we are considering the possibilities of growing into some of them with partners, and obviously only if they have a good perspective for us who believe that this is a good possibility. But once again, as I said we will be working with financial discipline. We are going to do the math. But it seems that we do have good investments ahead to take part on. And about M&A, we are continuing it. So wait a little bit, I'm just arriving. The Company is considering the possibilities maybe for the second half of the year is might have something new. Next year let's wait for the right moment. Thank you very much and it's nice talking to you.

Thank you, Guetter and congratulations on your new position and congratulations on your challenges so. Thank you.

Our next question is from Mr. Caio Lombardi from Bradesco. Mr. Caio, the floor is yours.

Good morning, everyone. My question is also about investment program. I would like to know about leverage that has reached 3.1 times of EBITDA and your covenant is 3.5. So what do you have in mind there in terms of leverage is that in limit or could it reach the covenant of figures? Thank you.

Good morning Caio Lombardi. Yes, in fact we are paying close attention to that. And we did pay attention to that throughout 2016. We are a very little below the covenant and so the assets of – management of Copel is always reviewed. Our CEO Guetter is already seeing that our perspective of allowing of asset management and some actions that could be very important for the cash of the Company and asset for the Company's indicators in terms of liquidity. Also we have actions that we haven't started in a prior management with our former CEO Vianna. And now it’s track by Guetter to drop cost to have efficient management in the Company. We have a lot of challenges to be managed, but yes once again we are paying close attention to that topic. And we know that this year we will do that in on a drop off those indicators. This is on our work day, every day in the financial area and obviously we are working with our subsidiaries and we are working on revenue and expenses, and also to increase the efficiency of our Company with the building focus on quality, which is an important brand here for Parana. But we will go deeper on that financial management to drop costs and increase revenue. Thank you very much.

Next question is from Mr. Miguel Rodrigues from Morgan Stanley. Mr. Miguel?

Good morning, everyone. Going back to Araucaria, what is the situation of I guess contract and the depending of the situation. How do you foresee the possibility of success this year? And also of what to do you expect for a Parana this year?

I will turn the floor to Sergio Luiz Lamy, CEO of Copel Geração e Transmissão.

Good morning. About Araucaria, we are negotiating, we have not decided yet, not renewed the contract that we have last year with Petrobras, and this would entail to a very high of amount in terms of the generation. So we are setting a possibility of working with [confidence] at a lower rate, lower value and we are also negotiating a new gas contract with Petrobras in a way that we can get greater competitiveness for this year. But I believe that the dispatch out of the order of merit will be relevant in 2017, so that we can deal with. There is unfavorable condition in the energy market. And Migual, about your second question, in our balance sheet that relation of Copel would in the State of Parana government and the contract of CLC, we do have the state involved and that the state is saying the interest of that renewal process and now we are waiting the state to bring back to effectiveness. If that does not happen, we will go back to the center of the contract, but there is no delinquency identified in the process, but because as I said they have entail interest. And this is an important asset that Copel has with the difference and they are also an important revenue source.

Thank you very much.

[Operator Instructions] Our next question is from Ms. [indiscernible].

Good morning. I would like to know Copel Distribuição contracting for 2016 in perspective for 2017 in regulatory EBITDA after the fourth cycle of tariff review of the Company?

Lisa, on our contracting of 2016, I would turn the floor to Mr. [indiscernible] our Assistant Engineer for your question.

Good morning, Lisa. About the over contracting, this is a matter that has being faced by all distributing companies because of what is already have been explained, the migrations of consumers to the free market also caused by the economic recession the country went through in 2016. And the prospective there has to do with the regulatory discussion and how these contracts will be taken in higher than what was regulatory estimated and part of that is from the distribution company. And fourth quarter for Copel Distribuição, you can see that there is a reaction and it seems to be a reaction to the economic situation of the country and a good perspective, and the results of the fourth quarter of the distribution company. And that places us in a comfortable position because the situation should be mitigated in the beginning of 2017. That is our expectation. And about your second question, can you repeat it please?

After the fourth cycle of tariff review, you had an increase in the regulatory EBITDA, so what was the amount defined for the regulatory EBITDA in the Company?

I will turn the floor to Adriano.

And the level of over-contracting, can you inform us on that?

This is Mr. Guetter. Maybe 2% higher than the limit in over-contracting, but all mechanisms that ANEEL is placing should eliminate the problem. We do not consider that a problem. We don't think this is a problem. And about the EBITDA, we will have R$1 million more in the remuneration basis.

Thank you very much.

Thank you, Lisa.

Next question is from [indiscernible] from Itaú Investments.

Good morning. What is your forecast for profit in 2017?

We have a crystal ball here that we are just opening. Please bear with us. We don't have that type of forecast. We can't even say anything, but we expect that the market improved. We do have signs of economic recovery in the country and I’m sure that the worse is over. We also have signs of improvement in the electric segment regulatory issues that in the past we have balanced our industry and we believe that we have good prospective, but of course the amount we can’t say anything about it.

Thank you. End of Q&A

[Operator Instructions] If there are no further questions, I would like to turn the floor to the Company’s management for their final remarks.

Very well. Thank you very much for your questions, for participating in this conference call. We are always available to address your questions. Our team of Investor Relations [Audio Gap] also is available, so that we are growingly transparent. I feel very honored to be here with [Audio Gap].

The conference call for the results of the fourth quarter of 2016 of Copel is concluded. Thank you all for your participation and have a nice day.