Good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to SABESP’s Conference Call to discuss its results for year 2018. The audio for this conference is being broadcast simultaneously through the Internet on the website, www.sabesp.com.br, where you can also find a slideshow presentation available for download. We inform that this conference is being recorded and all participants will only be able to listen to the conference during the company's presentation. After the company's remarks are over there will be a Q&A period. [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, on the call today, we have Rui Affonso, Chief Financial Officer and Investor Relations Officer; Mario Arruda Sampaio, Head of Capital Market and Investor Relations and Sílvio Xavier, Head of Costs and Tariffs. Now I'd like turn the conference over to Mario Sampaio. Sir, you may begin your conference.

Hello, everybody. Good afternoon and on behalf of SABESP I thank everybody to participate in this conference call. Today we will discuss the full year results for 2018 as well as provide some updates on several important topics for the company. Presentation contains seven slides, after that as usual we'll go through a Q&A session. Let's start on Slide 3. Here we can see a company's billed water and sewage volume which increased by 1.5% in 2018. The greatest growth occurred in the residential category this is quite the changes in consumption habits therefore incorporated by the population doing and giving the water crisis that we went through in the years of 14 and 15. Now move to Slide 4. Here we provide you very quickly some financial highlights. Our gross operating revenue in 2018 increased by 16.6% when compared to 2017, which is going from then in 2017 from BRL12.2 billion BRL14.3 billion in 2018. This increase season mainly explained by the new agreement signed with the city of Guarulhos late in 2018. Leading to a BRL800 million increase in operating revenue during the year when compared to 2017. What also explains, the revenue growth is a tariff repositioning established by the regulator of 7.9% apply since November 2017 and 3.5% since June 2018. Added to this previously and already mentioned, we have also the increase in water and sewage billed volume of 1.5%. As for costs, in 2018 there was an increase of 2.8%, when considering all costs plus administrative and commercial expenses and construction costs. As a consequence of the highlighted variations, adjusted EBITDA reach BRL6.54 billion, which represents a growth of 24.1% compared to the BRL5.26 billion presented in 2017. As for the adjusted EBITDA margin in 2018 we reach 40.7% versus 36.1% in 2017. When we exclude construction revenues and costs, the adjusted EBITDA margins comes to 48.8% in 2018 against a margin of 45.4% in 2017. Let's go on to Slide 5, here we will comment briefly on the main variations in cost during the year of 2018. As we mentioned on the previous slides, costs selling and administrative expenses and construction costs increased BRL297 million or 2.8%. If we exclude construction costs and selling and as a mix such as total cost increased by BRL637.8 million or 8.4%. The main increase came from the general materials account that grew by 43.4%, which is explained by higher maintenance expenses and prices for maintenance material and 20.5% increase in electricity expenses due to higher energy costs and greater consumption during the year. As usual for a more detailed explanation of our costs please refer to our earnings release. If we go on to Slide 6, here we see the main variations affecting the company's net income in 2018 of BRL2.8 billion always compared to the same period of the previous year. Net operating revenue increased BRL1.5 billion, costs and expenses including construction costs wereBRL297 million higher. Other operating revenues and expenses including results from equity method had a positive variation of BRL35.1 million. Net financial results increased by BRL806 million. And finally income tax and social contribution increased by BRL93 million due to the higher taxable income presented in the period mainly explained by the tariffs increases and the agreement with Guarulhos albeit partially offset by the increased in expenses with services and electricity and most of all by higher exchange variation expected. Let's move to Slide 7. Here we briefly discussed the situation of the reservoirs that supply the Sao Paulo metro region. The hrdroelectrical year that started in October shows a below average range between until sorry – January, however with this high rainfall in February and March, the accumulated rainfall in six of the seven water systems that supply the metro region we're above the historical average for the wet period, which is the period that runs from October to March. Specifically for this period, we highlight the expected average a year average your maps free for the Cantareira System with 98%, the Guarapiranga System with 135% and the Alto Tietê System with 111%. Regarding the storage of bulk water in the metropolitan region of São Paulo today we have 74% of the capacity available. This figure is higher than March last year which was 63%. Today, considering current bulk water storage capacity, the works carried out to increase water security, especially with the new São Lourenço Production System and the Jaguari-Atibainha interconnection plus the changing consumption habits like part of the population. The company finds itself well prepared to face a dry period which runs from April to September, exactly when we have lower rainfall volumes. Let's move now to Slide 8, let’s comment on the investments made in last year and the investment plan for the period of 2019 to 2023. In 2018, the investments totaled BRL4.2 billion, of this amount BRL2.2 billion are non-cash investments, of which BRL928 million refers to the city of Guarulhos. For the 2019/2023 period, the company expects to invest approximately BRL18.7 billion, of which BRL7.7 billion will be in water and BRL11 billion in sewage collection and treatment. Regarding the investment mix in 2018, 55.6% were made in water and the balance in sewage. However, considering that investments in water security expansion are almost complete with only the reversal of the Itapanhaú river remaining, the mix will change in such that investments in sewage collection and treatment will return to pre-crisis levels. You can see in this slide, already in 2019 investments in sewage will be the majority with 52% and we will reach 60% of the total investment by 2022. Let's go to our last slide, let's go through this slide to comment on the latest updates regarding regulation. In January 2019 SABESP released the results of public consultation number on 09/18 with the objective to collect contributions and manifestations related to its proposal for the regulatory agenda for the period of 2019, 2020, which definitely is important and will affect the third tariff review. Among the subjects discussed was a criteria for the recognition in the tariffs of transfers made to the municipal fund of sanitation. On February 11, SABESP published a public notice consultation number 02/19 to discuss these criteria's and received contributions until March 11 when the consultation period was concluded so it's moving. Another important disclosure was our self response to SABESP request related to the final numbers of the second tariffs review. We're all expecting this. On May if you recall, what we are looking here is on May 24, 2018 SBS filed along with SABESP and administrative appeal questioning the methodology utilized for applying the compensatory adjustment in revenue, electricity costs and investments made during the first tariff Cycle. Also filed a request for verification of the reasons leading to a significant reduction in OPEC's projections for the period of the second cycle that is 2017 to 2020 and also a request to review estimates for the X factor calculations, the compensatory adjustment for the delay in the application of the second tariff review and the calculation of the financial components related to municipal funds. This last point related to the contract with the municipality of Sao Paulo. Our fast response as I mentioned took a long time but came on February 28 this year with regard to the administrative appeal, the agency decided not to accept the merits regarding the request for clarification and estimate review [SaaS] partially accepted our points and in such determined two things; first, the correction of the X factor reducing it from 0.885 to 0.6920. This just as a reminder in the first cycle that X factor was 0.9386 therefore we have now an improvement of 0.2466%. The second decision was to apply a compensatory adjustment of 0.8408% to the upcoming tariff adjustment to cover for two things. The delay in the application of the tariff revision in the second cycle specifically related to the capitalization of revenues, differences after June 2018, and; second, to an adjustment in the referenced price dates adopted in the OpEx calculation from December 2016 to April 2017. Last, as per calculation review for financial component of the transfers to municipal fund, again, this case related to the contract to the municipality of Sao Paulo, it was rejected by the agent. Well, this ends the presentation and we can go for the Q&A questions.

Thank you. [Operator Instructions] There is a question from Santiago Jariton with EV. Please go ahead.

I'm just wondering if you could share your expectations on MP 868, that's going to be discussed in the senate in a few minutes?

Santiago, just to make sure we understood, you want our comments on the provisional measure 868, correct?

Correct.

Okay, just give me a second here. The provisional measure has in fact several different points with some of them that could be considered very welcome in the sector and some others are not clearly final, and finally some others not in our point of view good for the improvement of the sanitation sector, that is for the first point. Generally speaking, to support those states or municipalities that cannot count with solid and sound regulatory agencies and regulatory bodies, these provisional measure addresses from our standpoint correctly and the points in a sense that they establish that there would be in ANA, a quite important anchor to define the general parameters for states or municipalities to deal with the regulation that's not possible due to the scale or lack of capabilities or lack of financials. So, from our point of view this is good. In spite of - it'll take time, several years probably that to be something concrete. This is from our point of view a well address. Second point, but we imply huge and important change for ANA that now a days all it deals is hydrological issues rather than regulatory issues related to water and sanitation. So it would be very important to change their technical quality to gain capability and it'll take time, but it's in the right direction from our standpoint. Second important thing is that to reiterate that from SABESP standpoint, competition and attract more private capital and more competition for the sector is not a bad thing, it's a good thing. SABESP welcomes competition, SABESP is ready to compete. But our only comment on that is that that competition should be fair. Fair in a sense that all the assets that are not fully depreciated to the moment that municipalities are - even state municipalities open new bidding process for new competitors. They will have to be paid by those new comers, that's the only point that we would like to point out to reiterate it. Otherwise it'd be expropriated attitude against not only public sector or the mixed capital sector like us, but against even with the private sector. So from our standpoint, private capital is very welcome and water sanitation sector. SABESP itself is a very well succeed joint venture called PPP, Public Private Partnership in a sense that we have in our capital structure with almost half of participation of the private capital. So, we are comfortable with that, very welcome. That's our general comment on that. Of course we can talk a lot of it, but to be very restrictive to the main issues, I'll finish with that.

[Operator Instructions] Since there appears to be no further questions, I'd like to turn the conference back over to SABESP Management, for any closing remarks.

Okay. Thank you for your time. We are always available here at the Company for any questions with the IR team, and see you soon for the first quarter release, bye-bye.

This conference is now concluded. Thank you for attending today's presentation.