Companhia de Saneamento de Minas Gerais Copasa MG

BOVESPA:CSMG3

Earnings Call Transcript 2020-Q4

[Operator]

Good morning. Welcome to the teleconference from COPASA about the fourth trimester results of 2020 and the year of 2020. We have here with us Dr. Carlos Eduardo Tavares de Castro, President, Director of COPASA; and Dr. Carlos Augusto Botrel Berto, Financial Director and Investment Relations Director. We would like to let you know that the presentation will be recorded in audio [Operator Instructions]. This event is also transmitted simultaneously via webcast, and it can be accessed in the Investment Relations site from COPASA ri.copasa.com.br, where the presentation is also available for download.

Before we continue, I would like to let you know that any declarations done during this teleconference related to the business perspectives, projections and operational goals, they are [ premises ] from the directors of the company as well as all the information already available. They involve risks and uncertainties as they deal with future results, and they depend on circumstances that may or may not happen. Alterations in the macroeconomical politics and other operational factors may affect the future development of COPASA, which maybe generate different results from the ones we are going to talk about today.

Now we'd like to pass on the microphone to the Financial Director and also the Investment Relations Director. Please, Dr. Carlos Berto, you have the word.

[Carlos Augusto Berto, executive]

Thank you, Marcelo. Good morning, everyone. I thank you all for participating in this teleconference. I'm here with our director of Carlos [indiscernible]; our director, [indiscernible]; our Technical Director, Ricardo Simões; and our Operational Director, Guilherme Frasson.

Let's start now talking about the development of the company in 2020. We have Slide 2, talking about the results in the fourth trimester of 2020 and we are going to show in detail the explanation for the behaviors for the main lines of our BRE.

We are showing the financial highlights of the fourth semester. Our net revenue has grown 4.1% compared to 2019, almost BRL 1.35 billion. The cost and expenses, which is BRL 959 million compared to BRL 898 million for 2019. So the growth was 6.7% year-on-year.

There are the revenues and operational expenses. In the quarter of 2019, the value was negative, minus BRL 33 million, but then we had BRL 6 million negative result. The EBITDA has grown 7% in the period, reaching BRL 547 million. And the margin went from -- was 38.8%. The financial result was more than BRL 22 million negative to BRL 25 million negative in 2020. Our net profit has increased by 5.3% relating to the same period of last year.

Now on Slide 3, we present our revenues for Water, Sewage and Solid Waste. The increase was 4.1% comparing to the same period of last year. The highlights that affected the revenue were the repositioning after the tariff repositioning on average of 3.05%, which impacts of 1.2% compared to 2019. We also had a change in tariff in 4 municipalities, and that has to do, of course, with the savings that we had from people [ saving ] water and sewage. It also has increased our revenue, the alteration of the tariff changes in 4 municipalities of the state. 7,000 economies migrated from EDC net to EDT.

In Slide 4, we can show the evolution of the administration costs, which have grown about 7.5%.

Now let's detail a little bit the variations registered in the main items that talk about administrative costs. The people cost has increased in 0.7% staff. One of the main reasons for increase, we had provisions done with -- regarding a collective work deal. We also had given them a participation in the profits, which was BRL 17.4 million compared to BRL 16.5 million. But they were balanced by a reduction of BRL 2.3 million in the expenses with health programs, also using less magical services and a reduction of 102 employees in the last 12 months before December 2020.

Now the third part is services. We registered a fall of 6.2%. There was a reduction of BRL 3.5 million in expenses with water trucks and other pulverized items.

Now talking about the loss by reduction. In the fourth trimester of 2020, there was an increase. In the second semester of 2020, we improved the calculations of PLCD. We started using a provisional matrix, where the receivables allocated in other lines of our wage are considered more risky and they are proportionally sent over with higher percentuals. This way, the increase in the provision for the fourth trimester of '20 comparing to 2019 can be attributed to the aging because of the context that we've had of all-in security because of COVID. And it was better reflected in our PLCD because of the adjustments in microbiology.

Also complementing, we've shown that the [indiscernible] currency levels considering the commercial, which is done by the -- what's left from accounts payable and what we've received in the last 2 months has fluctuated marginally during the year. The index has reached 4.52% in December 2020. In December 2019, it was 4.23%.

It's important to mention that as far as the public costs, things have been reduced. And it went down from 20% to 4.5%, mainly because of good negotiations that we had with the government of the state to pay off their debt. And in the private sector because of the economic stability that we had because of COVID, we had a growth of 2.3% from 2.32% to 4.5% growth.

We also have to highlight that the company has restarted the suspensions of supply for nonpaying customers as we have seen here. The other category which we still haven't done the electricity cuts is, of course, for families in need and a part of this is 5.3%.

And we also have the tariffs increases that we've had from the municipalities. And there has been a growth of 7.3% compared to 2019. This has happened because of a growth of revenue in this period and also the repass to monetary funds in the municipalities. In 2020, it includes 134 municipalities and the amount of revenues of BRL 137 million. The adjustment from the year before, which you can see here in the 1st of August 2019, the amount passed on that we had between August and July of 2019 and 2020, it was just 60 municipalities.

So going over to Slide 5. We show the evolution of the non administration costs, and they have reached BRL 142 million in 2020.

Let's talk a little bit about the main pay bill -- main bills. The electricity, it's very similar to 2019. The consumption was grow -- has grown by 7%. And also the tariff subsidy has gone down. But also the factors are compensated by effect that we had lower rates in 2020. So the expenses with treatment materials have grown 15% because the main chemical products have gone up. The prices that we use for water treatment. Also, we had an increase in tax credits by -- of 20 -- 12%, mainly happened because the depreciation of some companies that have generated credits when they were put on to results.

In Slide 6, we have the other revenues expenses that we have with our assets. So there was an elevation of BRL 23.6 million, basically mainly because we had nondeductible provisions. We had to reclassify this legal project, and there was an elevation of BRL 9.4 million when we thought about that state.

And for returns of -- on assets, we have also had some changes but not very big ones. We also had a fall in BRL 13.3 million compared to the fourth trimester in 2019 because of a reduction of payments and on deductible payments. We had BRL 13.3 million, which were from finalized lawsuits that the company has won. And there was an elevation of BRL 11.3 million in other expenses, mainly because of the assets reduction value.

Now let's go to Slide 7. We are going to talk about EBITDA. EBITDA has had a 7% growth reaching BRL 547 million, and the margin has got to 38.8%. The net profit in the fourth trimester of 2020 was of BRL 268.8 million. In 2019, the net profit had been BRL 255.3 million.

Now let's go on to Slide 8. We're going to talk about the financial highlights, annual financial highlights. The net revenue has gone over 5 million -- BRL 5 billion or 7% increase, which was in 12/19, BRL 4.7 billion. This revenue growth has been mainly because of this factor, an expansion of savings in Water and Sewage and an increase of the water amount by 1%; the tariff readjustment of 38% in 12/2019 and 3.4% in 2020 with a 5.6% average impact. The costs and expenses has reached the number of BRL 7.5 million. There was a growth of 6.9%. The main factor that explains this, the cost with people have grown 2.3%. And the main factors represented, main things were the changes that we've had with the system. And also, this forecast for people to receive assets.

Also, we had a decrease in the staff. The third-party services have had a 6.5% decrease showing -- the main reason for this, the reduction of BRL 7.1 million with the renting of trucks, and they have started being counting as depreciation and profit and a reduction of BRL 6.9 million with water trucks and a reduction of BRL 5.5 million in the expenses with professional technical service. We also had an increase in BRL 6.5 million with marketing because of campaigns, marketing campaigns, especially relating to things to do about the pandemic of new coronavirus and also the victims that we've had from the huge rains we've had in 2020.

Also, when we think about the accounts, receivable accounts, this has happened because there was an aging of receivable accounts that has related to COVID and because of the improvement of the calculation methodology. The electricity has had a 5% decrease comparing to 2019. This has happened mainly because of an alteration in the way of accounting of fiscal things which became a reductor in each account, which are considered as income.

The expenses with depreciation and amortization have had an increase of 6.9% because we had many new sites. And EBITDA has reached BRL 1.9 billion, showing an increase of 9.6% of EBITDA in the comparing. So the margin was 36.8%. In 2019, the margin was just 36.4%. And the liquid profit was BRL 816 million in 2020, which represents an increase of 8.2% comparing to 2019, which was BRL 754 million.

Moving on to Slide 9. Let's talk about CapEx. In 2020, the investments from the controllership added to BRL 490 million. So that was the whole of it, apart from BRL 99 million in development. These were the investments of COPANOR, they have come to BRL 47.2 million. We had an impact by the heavy rains that were registered in the state of Minas Gerais in the beginning of this year and the restrictions, of course, from the pandemic. There was also a competition level, a high competition level, which caused big discounts when hiring the new companies to do our building sites. So some things were -- so we were able to get to the same results with less expense. So to continue the improvement and the universalization of the service, the program sees an investment of BRL 6.5 billion for the next few years. 2021 itself will have BRL 1.3 billion. So let's talk about the index. And we had an increase of 1 percentual point and with the fall of the profits. So the main indexes -- so it represented 32% of the debt compared to 1.2% in 2019. But the 15 -- increase of BRL [ 500 million ] that we had in 2020. So we've had 20% percent of the whole debt in 2020. The debt related to EBITDA was also a smaller increase, which has come to 20% of the debt. So the net profit had 20% and the gross profit, 24%. As we've mentioned in our results, the debt with Bank of Brazil, which was more than 25 -- a little bit more than $25 million and as a warranty, we had $24 million, it was totally paid off in 2020. We paid BRL 7 million, thinking about all the profits. And of course, the interest. The debt degree -- the debt margin has grown in 2020. The fourth trimester, we went from 41.8% to 46.5%. In Slide 12, we had remind what the payments to the shareholders. We had the council that has defined the payout in 25% of the [ ALL ], 2.2% (sic) [ 2.2x ]. In 2020, we had declared BRL 228 million in JCP. And we also -- and the amount will be BRL 5.5 million that will be paid in 2021.

Talking about the extraordinary dividend. They have declared BRL 820 million. That happened in 10 of December 2020, BRL 820 million.

Now we're going to talk about some data. And we're going to talk about the concession contracts. COPASA and COPANOR have 640 water concessions, which 330 (sic) [ 630 ] are in operation. From the sewage system, we have 310 concessions, of which 265 are operated. At the end of the trimester, we had 11.8 million people with water and 8.3 million people with sewage. So we have here our income in 2020. We had somewhat concessions from the municipality of Santa Luzia and Joaquim Felício and -- which the population is about 212,000 inhabitants. In December 2020, we had 69 concessions that were due which are 39% of the revenue. Now thinking about Slide 14 and the regulatory environment. Some important things as far as talked about the tariff readjustment of 3.4% (sic) [ 3.04% ] on average. It has started down the 1st of November 2020. The second tariff revision started in May and talking about the revision and this has happened because of the plan that was talked about in July 2020. We had the second stage on the 26th of November, talking about operational costs, capital costs, the regulatory basis, the tariff incentives, tariff structure, among other issues. And the results will be launched by 22nd of March 2021. The third phase, which we're going to start initially in the 1st of April 2021, which we have the applying of methodologies and definitions of annual readjustment methodologies, the final result should be by the 2nd of July 2021, and the new tariffs will be available on the 1st of August. So now we're talking about the water situation of the region around Belo Horizonte. The levels that we have for each reservoir, is Rio Manso, Vargem das Flores and Serra Azul, which supply 47% of the metropolitan region of Belo Horizonte. They have more than 94% of the supply. And the [indiscernible] das Velhas, the average movement of the water has been 58 cubic meters per second. And the average release was 6.95 cubic meters by second -- per second. Okay. So with that, we finish our results, operational results and financial results operations from the fourth trimester of 2020. Now I'm going to pass on the word to our President and Director, Carlos Castro, for his considerations.

[Carlos Eduardo de Castro, executive]

Good morning, ladies and gentlemen. Today, more than just the presentation of the fourth trimester results, it's always an opportunity to pass on to you everything that has been built throughout the year 2020. For most organizations in Brazil, in the world and for the whole society, it was a very hard year considering the impacts of the pandemic, the ones we know, the ones we don't know of. But in the name of the direction of COPASA, from an operational point of view, we had a relevant year. There are challenges still ahead, but with concrete deliveries, which have shown themselves, we're delivering strong results from the company side, but also many actions that we have done to improve service to our customers. And also actions aiming at COVID, which was important for our public. And our management committee has taken very important measures that have resulted on having people working in home office, our banks, they have reflected in a very low level of contamination of our professionals. And from the external point of view, we supported many municipalities and actions that were beyond the measures from the regulatory and commercial point of view. But we acted from the solidary point of view, acting on disinfection of places where there's a lot of people, but also making available public points for people to wash their hands and other measures as well. So it's -- we have a feeling that we have accomplished our duty in such a tough year, and we are presenting our results here today. So in -- during this period, we've had so much learning within the company to be able, of course, to reach the challenges that we've had, not only as a company, of course, they were already huge, but they were reinforced by the pandemic, by the approval of regulatory legislation. But we see today that 1.5 years later from this administration that started, it's a company that it's a different standard from when we got here in July 2019. We are much better prepared to face the issues that will come our way.

So I thank you all for being here for participating. And now we make ourselves available for any questions that you all may have.

[Operator]

Great. So now we're going to start the Q&A session for investors and analysts and at the end of this session, we are going to open it to the journalists. [Operator Instructions] Okay. The first question will be from Lily Yang from HSBC.

[Lilyanna Yang, analyst]

Thanks for the very clear presentation. One question, your investment plan will triplicate compared to 2020 for the next few years. And we are going through a moment of tariff review. So I'd like to know a little bit more of what you hope and what you'd like to have as far as increases for tariffs, so that you can implement this investment plan you have.

[Carlos Eduardo de Castro, executive]

The investment plan for the next few years more than triples what has been done specifically in 2019. It aims at cover a deficit of the company as far support to the public. So we need to have the clarity to get investments that haven't yet been done. And the expectations we have of executing has to do with all the building sites that we already have in 2021. And another thing that -- and other sites that will be started by the end of the year. With -- as far as the tariff review, we have internal expectations of what we believe are reasonable tariffs. And we are dealing with this during this review process, and we have been very active about it. And acting on how we position our company for its own company, for the higher consultancy, so we have positive expectations. But I don't think that we should externalize them, just not to create any issues. But the company has acted very actively during the whole review process.

[Lilyanna Yang, analyst]

Great. So can I understand that the investments will be covered, let's say, by operational tax generation and, if necessary, more debt. If you could talk a little bit about what would be reasonable to have as far as [indiscernible] interest rates and costs? Can you give us an idea how this will happen?

[Carlos Eduardo de Castro, executive]

Well, as far as covering the investments, of course, the increment, the asset base that we have and the increment that will be generated, will allow this, no doubts about it and thinking about future tariffs. But we have a good cash flow, and we have a low leverage. So this allows us to raise the necessary results. That they will be sufficient to cover this program fairly easily. And just to complement, the whole CapEx of 2021 has already been equationed by the company. So it's all ready.

[Operator]

Next question will be from Andre Sampaio from Santander.

[Andre Sampaio, analyst]

I'd like to ask a simple question, a follow-up considering this discussion on the tariff review. Can you tell us a little bit whether there have been deeper discussions with the regulator as far as these tariffs with the -- and all the problems you had in the preliminary report. Can we have any idea of how we're going to go back to the proposal that we had before?

[Carlos Eduardo de Castro, executive]

The company, Andre, has positioned itself also in this point very strongly with the regulator. So it seems that the due date is March 22 for them to position themselves. We've questioned this issue of how we've classified this hybrid way, the way the regulator has done -- has had this approach. And we have an expectation that the regulator will return not just to the previous methodology, but also to more coherence and consistency in a point of view of our approach from our asset base. But we are taking technical contributions that are very based on very deep issues showing the impacts, the inconsistencies, the incoherences. But -- and that it wouldn't make sense the proposal to postergating the entry of assets for future recognition of our asset base. So we strongly believe in the technical work that we have done with the regulator.

[Operator]

[Operator Instructions]

[Carlos Eduardo de Castro, executive]

So Marcelo, let's answer the questions. There are currently four, five increment, okay? I'm going to read the question, and I'm going to answer it.

The first question is from Lucas Campos. How is the situation of the company debt that was done without that hedge?

It represents 5.6% of the whole debt. And because of the changes in the exchange rate, we have seen that these costs weren't worth it. And we didn't hire them as they were a long-term debt.

Another question that I will read from -- and Dr. Cristiane will answer. What has the company done in the -- for the generation of energy in plants?

[Cristiane Schwanka, executive]

Well, the company has implemented actions to reinforce its chain of charges. We've had -- from October 2020, we have gone back to the interruption of supply for those clients that are in debt with the company. And we have taken back not just these cuts, but also we are getting back clandestine connections. We are fighting fraud and clandestine connections. We've also identified that the biggest participation in this debt was due -- should the user some the social category, which are -- we are still -- we can't really have cuts because of our regulated to them. So they represented the biggest default level.

The other categories such as residential ones, we are executing them in the efforts that we are making to charge them. And we are fighting the prohibition of negativation, which our regulator body doesn't allow.

Also news in the chain of digital receivement such as [indiscernible], [ big pay and DVA, ] they are available to our clients to ensure that they will pay in new ways and fighting debt, personal debt.

[Carlos Eduardo de Castro, executive]

The third question was, what's the risk of management, political and management within the company?

This is very important for us to talk about. COPASA has a mixed economy company and has its control by part of it from the state. Of course, it can always be this kind of question. We have 3 issues that deserve should be highlighted. First, a strong governance structure. They are very well defined, the right stances for approval. In the same line, this causes an independence from its counselors, administrative counselors, and they are very experienced. So this has reflected in the point of view of acting the company -- how the company's acting its dependence.

As far as the management is concerned to have better results for its operation. And of course, supplying energy to its customer, water to its customers. It's been quite independent the way we've worked. But now, of course, with the actions from the government, we've had issues. One of them is that the tariffs were applied without really asking everybody. We've had, of course, problems from pandemic last year. The regulator word about aligning with the concessionaires, which would be the impact, but it was very possible to understand that there would be an adjournment of the beginning of this project. So this was very fundamental and very well registered in the treaties that we've had.

And also this postergación of the adjustment should be considered in the tariff revision process. The structure nowadays of governance that the company is inserted in allows us to understand and to confirm that there is some freedom of acting. Of course, always taking into consideration the best corporate practices. Marcelo, it seems that we have another question by phone from Lily Yang from HSBC.

[Lilyanna Yang, analyst]

Again, it's Lily. As a follow-up, could you explain the divergence points with the regulator relating to this tariff regulation? One of them is the tariff base. But is there any point that of this agreement, could you explain that to us, the level of investment of BRL 1.2 billion, BRL 1.3 billion a year, is that enough to reach the universalization goal in the next 10 years? And my third question, if you allow me, your contracts with Belo Horizonte are going to finish in 2034. Where are you looking for legal protection to ensure that you'll be compensated and remunerated by the non depreciative investments by the time that your contract expires?

[Carlos Eduardo de Castro, executive]

One question has turned into three. So let's try to organize ourselves. First of all, summarizing the point of view of protection, not just for COPASA, but to all companies who are believing in the legal framework and the regulatory marks. So this has been well-defined in the necessary actions that we might have in the future and what will be paid off to our investors. And this has made people more believing in this. From a point of view of investments and you mentioned universalization, the company right now has been, of course, much before the regulatory mark. But now bringing on other specialists from this point of things that need to be done, they will be done contract by contract. So there's a huge space from the point of view of not just regulation and following the goals that we already have, but also regulation of the contract which mentions as well future investments that may be necessary. The company believes in this rearranging of the contracts, which will be, of course, the metropolitan regions. Belo Horizonte is a very important concession, of course, not just for being the capital, but also because it's the great anchor of the metropolitan region. So I believe there's a lot of positive room to contribute to the advancement of the future -- adjustments in the future that the company will have.

And a lot of this investment that has already been made will lead to universalization, and we have been doing this gradually. Every year, not only we approve the next year's investment plan, but we also review the plan from the years before. So we've had a lot of responsibility in what we've been doing. So nowadays, we have projects to follow-on. But of course, there is a need to increase this volume to get to 33, but we've had the responsibility, not just by increasing for the sake of it and add enough volume to be notorious. But what we have added is consistent and will lead to a solid wage universalization and the following of the goals. And the first part of the question concerning the main points that we have been working together with the regulator, Dr. Cristiane will talk about it and she answer by regulatory area, and she has been led this process of tariff review.

[Cristiane Schwanka, executive]

So your question about the main differences with the regulator. I think the main thing to say is that they are in divergences. There are debates. The moment of -- the moment to talk about the tariff review is the time to talk about the structure of tariffs for the next cycle. And of course, what the concessionary says is that these discussions should be very well aligned to the market itself off sanitation. And as we have talked about in other situations, this tariff review from COPASA is the first review of a big company than thinking about the new regulatory mark. So it's important to adopt positioning and methodologies that are adjusted to what the new mark says. So it's not possible to have conventional methodologies before this new mark talking about the new structure of tariffs, as you have mentioned, which will, of course, cause universalization of services. There are issues, of course, that we can give an example and saying that there is a lack of coherence. And that's why COPASA has manifested itself the way that it's done in the process, in the public audiences and by written contributions opposing itself, for example, through the creation of a second category of social tariffs because this doesn't represent the condition that we have aligned to the new regulatory mark that prohibits into regional subsidies. Discussions are in very high technical level, and they are necessarily due to the changes in the regulatory mark and the new legal changes.

[Carlos Eduardo de Castro, executive]

One more question that we have received is from Luis Claudio. The loss level of the company has been 45%, well beyond the average, which is 33%. What do you plan to reduce this? At first, it's important to mention that we have regulatory goals, even though we are, as Luis Claudio said, the national average is 33%. Ours as a company is 38%, which we would like -- we want to have. We are working hard to ensure that we overcome in a short period of time this loss. We have got the company with a low level of asset reposition and aging assets. In 2020, we were able to organize this reposition of assets, especially the main ones, reviewed the whole intelligence system in macro and micro levels. And talking about the regulatory body about the definition levels of the indicators, the state of Minas Gerais is huge. And it can't be considered just one of the other -- one unit because they have such difficulties geographically and topographically. So the redesignation of homologations for suppliers and measures and the actions of vectorilizing and separated so that we can measure and control the loss, we know that we are going to reach this objective in a short term. Talking about the operational point of view, COPASA has had many actions, new contracts from -- for maintenance, seeking higher agility for the demands on leaks. Of course, we are going to keep them. We are going to have less losses with that. Also working on a hydrometers, checking all our measurement tools, ensuring that we have better measuring. And also a better planning for the operational works given more agility to the demands of loss and also checking hidden leakage. So all this integrated, this is to allow us in the medium-term to reach a regulatory goal and reduce even more our loss index. A question from Luis Claudio. Can we expect the distribution of dividends this year? As you have seen, we have distributed last year. We distributed BRL 820 million of extraordinary dividends in 2020. And according to our communication, the administration council has 25% of dividends for this year. And as you well know, we have the tariff review and this issue according to our dividend policy without, of course, putting the company in risk, we're going to talk about and approach it a little bit further in the year. One more question from [ João Tordesillas. ] What's the criteria adopted for extraordinary dividends? What are the chances of having a further distribution of dividends? I've just answered this in the question that was asked by Luis Claudio.

And in the same sequence, we've had a question from Luciano Centeno, which talks about the same theme about dividends and the distribution of extraordinary dividends. It's important to make clear that the company has a defined policy approved by its assembly, it's council. And in this company itself, we have due dates after the degradation of everything. So that we can go back to it, discuss and then talk about extraordinary dividends in the future. We are still living under the effects of the pandemic. And surely, 1 year ago, we would have thought that by now the pandemic would be finishing, but it's not possible from the company's point of view to be clear about that. Also, of course, the tariff revision and we have a group of obligations, of course, assets. So we have to -- the whole company understands it. It's paying attention to this policy. It's paying special attention to the health and to make sure that the company stays strong to win these challenges. But we are paying attention to taking the best measures for the interest of the company, the shareholders and its clients. So I think that we have been very objective and conscious of what we're going through. But we are going to follow-up and evaluate the situation, whether it's of the company or the economy as a whole to ensure that defined at the right moment whether we're going to have extraordinary distribution of dividends. A question from René, considering the new regulatory mark, which will be the main tonic of the company in the next few years?

Well, the main tonic of the company in the next few years, it should be a company that is efficient, especially increase in the operational capacity and being, of course, competitive. Of course, there is no doubt independently from any scenario, COPASA will be a relevant player for sanitation in Brazil. What this direction has been doing since the first day, which has been reported by my colleagues in the other positionings is taking measures to ensure that the company can win not just its challenges, but supply its clients, its customers and having all the contracts right. So this group, the set of actions that have been taken if people allow me to go back to the historical point of view, from the immediate actions that we've taken reducing the employers -- employees and reducing cases, we've changed the organizational structure. We've changed the way that the company works. A change, a big change, that goes through the edification of operational directorships. Guilherme has mentioned, talked about losses, now we have a way to cooperate, we have defined standards. Also the directorship relating to the market which brings -- putting -- which puts clients -- the customers in the center of our business. So we are looking at our customers in a very objective way. We have evolved the regulatory issues. And this directorship has established another standard of following up with the regulators. And also for us to be able to look at the company, to be efficient. The client is the center of the business. And also, we have a business journey that will supply, that will support the needs of our customer. So these many issues have been well addressed.

And talking about the second question by Dr. -- Mr. René in a scenario of nonrenewal of concessions in the future, will the other operators have to compensate COPASA for the assets that have been invested? Yes, of course, there's no doubt we have to believe that from the legal framework from 14 26 legislation, this makes it very clear. So we don't have to believe that nonrenewals in the future won't give us, of course, the remuneration should that contract not go ahead. We will receive our assets back. Okay. So following up, a question for the new regulatory mark. And I will be responsible for the centralization of the regulatory control. When will this start, and what's the main expectation from this? It's important, just to correct you, [ ERNA ] will be responsible for the mission of main rules. It doesn't mean that it will effectively follow-up on the regulatory side of things. It will just add the new -- the rules. There's a huge expectation from us. But this doesn't have a defined date yet. We have expectations, following up with our regional regulator, the movements that have been done by ANA with the regulators. And following up and hoping that this will happen as soon as possible so that we can have a comment from quality in the legal departments and aspects. One question from Diego. What was the meaning of paying almost -- dividends of almost BRL 6 billion for 2020? Well, Diego, one thing doesn't have anything to do with the other. We pay dividends in 2020. Facing the politics and the leverage we've had, we have a study talking about it with our administrative council. And relating to the debentures, they were issued to face the CapEx of 2021. And the extraordinary dividends that were paid in 2020, they were removed from the profit reserves from 2020.

[Operator]

Okay. So ladies and gentlemen, we will now start the Q&A session for the journalists. [Operator Instructions] The first question is from Taís from Valor Economico.

[Taís Mayumi Hirata]

I have 2 questions. First, I'd like to know, relating to the pandemic with this worsening of the pandemic, has it made or changed any projection for this year? And my second doubt is relating to this new tariff review that you've mentioned that you are talking about with the regulator. I haven't found here what's the tariff that's been proposed by the agency and whether there is a tariff that you consider fair?

[Carlos Eduardo de Castro, executive]

Taís, thanks for your questions. From the point of view of the pandemic, we are still paying attention. I think that the scenario of uncertainty is still around. It's very clear from the point of view of payment from our users. The company last year, aligning with the regulator, it has postergated some due dates from bills. The category social clients has had a different look at and this continues because these people are still immune to the charging processes and cuts. So we continue having this as a challenge. Of course, movements that we've seen from the point of view and the national fear of returns of new payment for support will also contribute to that. Of course, we can see that in the results for 2020 when this starts -- when these payments were liberated. So this may be our main challenge. But in parallel, to get over this question, Dr. Cristiane has mentioned actions that are being taken from the point of view of commercial management to ensure that this doesn't become a problem. So we have been very clear about this.

Relating to the perspective of readjusting, the regulatory agents as I said on our company, we don't anticipate what we understand as a target tariff resulting from the tariff process. We can reinforce what we've already said, that we were able to get in this review process, even though it's the first from a company, such a big company to have been passed the regulatory mark, we were able to pass on to the regulator all the relevant issues, from the point of view of questioning the methodology adopted also from the point of view of the challenges. They will need to be taken into consideration in a tariff process from a complete that has to reach all the goals defined by law. So we are very -- we are believing in the results, and we are comfortable with the level of argumentation that we have passed on from the company to the regulator.

[Operator]

[Operator Instructions] So we'd like to thank you all. The Q&A session is now closed. We are going to pass on the word to the Director of Financial and RE Director for the final considerations. Dr. Carlos, please.

[Carlos Augusto Berto, executive]

Glad to. I would like to thank you all for this teleconference. We are here with our RI available for other questionings you may have, and thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]