Good morning, and welcome to Ecovodovia's Second Quarter of 2021 Earnings Conference Call. With us here today are Marcelo Guidotti, CFO and IRO Andrea Fernandez, IR Director. This presentation is being recorded, and all participants will be in listen only mode during the presentation. After that, we will begin the question and answer session for analysts and investors only. When further instructions will be provided.
The audio and the slides of this conference call are being broadcast simultaneously@ri.ecorodovias.com.br, where you will find the presentation for download from the webcast form in the Investor Relations section. Before proceeding, we would like to clarify that the forward looking statements that may be made During this conference call, relating to Ecovidovias' business prospects, projections and operational and financial targets are based on the management's beliefs and assumptions as well as on currently available information. They involve risks, Uncertainties and assumptions as they refer to future events and hence depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect the future performance of EcoRodavillas and lead to results that differ materially from those expressed in such forward looking statements. I will now turn the floor over to Ms.
Andrea Fernandez, who will discuss the Q2 of 2021's results. Ms. Andrea, you may proceed. Good morning. Welcome to Grupo Eco Rodovias' conference call today discussing the earnings of Q2 of 2021.
We thank you all for your interest and participation. The Q2 was marked by some important achievements. We won the bid for the federal concession BR 153 3, Toquentine's Goyas, to operate it for 35 years, in line with the company's growth strategy. The concession agreement and EcoRod Ovieza's guidelines comply with the best ESG practices. The primary public offering of shares in the amount of BRL1.7 billion that will be allocated to new investments, maintenance and or expansion of its subsidiaries and to strengthen its cash positions.
Signing the agreement of Ecovias dosivigranches, which established the assumptions that guide the extension of the concession agreement from June 2026 to March 2033, considering our TASP's traffic projections and the methodology of marginal cash flows. These achievements confirm the de risking path adopted by the group and the extension of its portfolio. In May, Equivias dos Imiguentes issued BRL600 1,000,000 in debentures for a period of 1 year at the cost of CDI plus 1 0.05% per year to fulfill obligations within the scope of the economic financial rebalancing agreement and the extension of the concession agreement. In June, EcoSu issued BRL370 1,000,000 in debentures for a period of 3 years at the cost of CDI +1.65 percent per year. In the Q2 of 2021, The company made progress in its ESG agenda with the following highlights.
The company joined the Brazilian Business Council for Sustainable Development, which brings companies together to promote sustainable development in partnership with governments and the society. Enhancing the goals for the company's leaders, including the mitigation of carbon intensity and the improvement of diversity indices, The implementation of safety occupational safety committees at all business units. More details are available on Page 2 of the earnings release. Moving on to the operations performance on Slide 2. We can see the evolution of mostly consolidated traffic and comparable traffic during the Q1 of 2021 compared to the same periods in 2020 2019, it's important to note That during the months of May June 2021, comparable traffic presented an increase of 3.6% and 2.7%, respectively, compared to those months in 2019.
As regards to the Q2, we show on Slide 3 the variation in consolidated traffic with an increase of 41.4%. Excluding the start of operations at Ecovias do Cerrado, comparable traffic presented a 29.1% increase in the quarter due to the flexibilization of social distancing measures adopted by states and cities to fight COVID-nineteen. The highlight is light vehicles with an increase of nearly 50%. As for the group's consolidated financial performance, we present on Slide 4 net revenue, Excluding construction revenue, which was up 32.3% this quarter and net revenue of highway concessions, up 32.4% in the period. Moving on to Slide 5.
Adjusted cash costs amounted to BRL 270,800,000. This Cray's is mostly due to the increase in personnel expenses due to the salary adjustment in March 2021 and the compliance with the law that enabled a reduction in salaries and work hours in the Q2 of 2020. Conservation and maintenance expenses due to the rescheduling in the Q2 of 2020, which had been normalized this current quarter, among others. Pro form a EBITDA amounted to BRL 570.5 million in the 2nd quarter, 32.6% higher than in the Q2 of 2020 with margin of 66.6%. The EBITDA of the first half of twenty twenty one amounted to BRL1.1 billion.
On Slide 6, We see the evolution in net income in the Q2 of 2021, up BRL92 1,000,000 visavis the Q2 of 2020. Net income was impacted mainly by the increase and EBITDA in the quarter. As for investments on Slide 7, CapEx in the Q2 of 2021 reached BRL352 1,000,000, mainly for investments in road widening at ECCO 50 and ECCO 101. On Slide 8, we closed the quarter with net debt of BRL5.9 billion, a reduction of BRL1 1,000,000,000 from the previous quarter. This is mainly due to the BRL 1,700,000,000 in proceeds from the follow on carried out at the end of June 2021.
Leverage measured by the net debt over pro form a EBITDA indicator, was 2.6x compared to 3.3x in the Q1 of 2021. Moving on to Slide 9. We closed the quarter with Cash balance of BRL3.4 billion, which represents onetime the short term debt. On Slide 10, we see EcoRodovias' growth drivers. The capitalization of the company in the amount of BRL1.7 billion as well as partnerships for future bids.
Target projects that Generate cash already on D0, the extension of the contract for Ecovias dos Immigrantis, Dividend distribution in line with the growth cycle and future cash generation make us comfortable with the company's Financial and competitive capacity and will allow us to seek investment opportunities in the Brazilian highway market. On Slides 11 through 16, we present the main ESG indicators, in particular, the enhancement and the inclusion of new ESG goals for the leadership. The company is currently studying Federal concession BR116-101 Dutra, the Sao Paulo Coast Badge by the state of Sao Paulo's government, the federal concessions in Parana and the triangolominado batch in the state of Minas Gerais. Before we close, we would like to inform that we continue to take preventive and mitigative measures to minimize as much as possible the impact of the pandemic on the safety of our employees, our users and service providers and to the continuity of the company's business. This concludes our presentation.
We would like to move on to the question and answer session. Operator, we are ready for the questions from our analysts and investors. Thank you. Thank you. We will now begin the question and answer session for investors and analysts.
In order to maintain excellent sound quality. Our first question, Fernanda Reaca, BTG Pactual. Good morning. Thank you. I have two questions.
First, I'd like to explore a little bit more about this change in the share structure after the follow on And the group consolidating as the only controller, I'd like to understand what you see there in the long run in terms of management. You've been going through collegiate decisions. Is the idea to have a President, what's going to be like looking forward? You also had Joao leaving the Board of Directors, I'd like to know how this process to replace his name is. And the second, to talk a little bit about the auctions that Andrea mentioned At her introduction speech about the assets you have interest in, the Dutra, Triangluminero, Parana, I'd like to understand how you see the competition for this asset and what your strategy is.
Is it the idea to join as a consortium Good morning, Fernando. About the shareholder structure, There will be replacements, of course, with Board members leaving, and there's no general meeting called yet. We will call a meeting to have this definition, but there's nothing defined yet about management. We continue as we are. It's a situation that's developing well, and I don't have any other question.
We understand that the company has been well directed. And as soon as we have any updates on the change to the structure, everyone will be informed. About the auctions in general, The program in Minas Gerais, the federal programs are of our interest, as Andrea mentioned. There's also in Sao Paulo. There's Dutra, Triangluminero And the programs in Minas Virides and federal concessions interest us.
Competition will exist. Definitely, There will always be competition. These contracts have been enhancing, and they're safe with adequate returns, so there will be competition. We participated on 153 with a partner, and we will see if we will remain with this partner. And there are also other alternatives as well.
Thank you. Great. Thank you. Our next question, Henrique Simoes, Credit Suisse. Good morning, Marcelo and Andrea.
I'd like to ask you to talk about this drop of margin quarter on quarter and the level you expect for the end of for the remaining of the year. And if you could confirm when you have to pay the concession for BR 153? Hello, Henrique. About margin, the margin has been quite stable in this quarter, But it will depend on the costs now are also returning To normalcy, but it will depend on traffic. Traffic is behaving well And this compared to last year and even 2019, But in July, it remains positive compared to 2019, and the expectation is that the margins will continue to expand.
And we have very reasonable levels. There won't be any huge increase, but with the normalization of everything, we expect the recovery of margins. The second question about the concession grant. Is it 153 or 13515 3, the concession fee will be paid by SDB, Parts will go to the treasury and 4 times the value. The reserve accounts that will be used to the Balancing project.
A quarter of it goes to the treasurer paid by the partner, and they'll have resources from the equity Our next question, Lucas Barbosa, Santander. Please, Lucas, go ahead. Good morning, Gedoti and Andrea. My question is about the impact and the increase of Price of raw materials, the investments to be made in the concessions. If we look, there's very low variation in this quarter.
If you could Comment more if you think there's any risk of us seeing an impact of inflation on the company's expected CapEx, if you can give us any details, it would be helpful. Thank you. Lucas, thank you for the question. We are reviewing now our budget. We're anticipating this review And CapEx as well, definitely during this year, there is an impact, but our contracts overall are all corrected by the IPCA Index.
So the increase we saw now will have an impact, but not in this broader segment that is already inflated. And since its long term flows In 2, 3 years, inflation ends up being offset with these Increases of these the value of the amount of these raw materials, so Inflation and our CapEx for the long term is normalized, But we are updating it, and it's virtually nominal, and we'll decide this. But we don't expect or foresee any major impact. Next question, Andressa Varotto, UBS Bank. Andrea Guidotti.
I'd just like to explore a little bit more about the review of the methodology to account for The concession fee for 135, if there has been any impact on the financial results of this quarter and if you can Expect any impact due to this change? Andressa, thank you. It was a review of the discount rates for the concession fee. It stayed close to the concession, so there was an impact in the positive financial results of this quarter and also reflected in the balance sheet, the concession fee and The obligations with the concession authority. From now on, it changes a little bit the economic aspects of this concession.
But at the end of the day, what matters is the cash to be paid. The conditions are the same. It's the contractual cash. It was a change of representation in the accounting, Applying these discount rates to the concession fee, there was an impact, but it was an adjustment for the balance sheet. The cash that we have to pay is exactly the same, and it will remain the same.
Next question, Two questions. First about new projects. You mentioned Dutra, You had the studies approved by the TCU, but you also had the 381262 approval. So I'd like to know since we're considering a project that includes the state of Minas Gerais and the state of Spiritu Cento, if this project Makes sense in Ecogrodo Vios' portfolio. And the second question about the fare flow that will be implemented at Tutra, If you have the opportunity to also implement this in the other highway concessions of the groups.
Hello, Vitor. The federal program in general interest us. So Every auction in the federal level will be followed by us closely. 3.81 will happen. It's been approved.
We already had studied it. So we'll go back to it and see whether it makes sense. It's a project in regions supported in our portfolio, but it's a large complex product with a very relevant contract. If you can please repeat your second question. We had an audio issue.
The second is about the free flow that the federal government is implementing on Dutra. But if you see it as an opportunity for the group to try and bring this technology To the other highways on Ecogrodo Vias' portfolio, Ultra has this free flow and the Sao Paulo Coast as well. We have 2 pilot projects of free flow in the group authorized at Ecopista and Ecoponte, And I believe it's a technology that's here to stay. So I would say yes. How, when, to what extent, where it will be defined.
But I believe it's a technology that exists around the world and can be used here in Brazil now. So I think, yes, There is a possibility we have a number of internal studies, and I believe so, yes. It's a good opportunity for everyone. Thank you. Next question will be in English, Stephen Trent from Citi.
Please Stephen, you may go ahead.
Thank you very much and good morning, Guidoque and Andrea. A Question from me on leverage. So as you think about investing in these other concession assets, What's your long term view on what could be A reasonable target leverage for the company. And do you see opportunities To obtain longer tenor debt at a fixed interest rate considering what's happening with
Thank you, Stephen. He was asking the company that the company has a target leverage that is considered optimum. And whether we consider to Capture longer tenure debt at fixed interest rates. About the leverage targets, the company definitely monitors the financial situation and a reasonable debt target for the long term. Of course, that during growth phases, increasing investments in some specific Points, the target may increase a little bit, but we consider that a normalized long term target of 3 0.54 net debt to EBITDA is normal.
About the second question, definitely, Considering we negotiated and selected the liabilities at Equivias help us be able to tap into longer tenure debt lines. And about the fixed interest rate, we need to see if it's a possibility in the market. It's an opportunity, but the company continues to watch the debt linked to the inflation and considering its assets affected by inflation. Thank you, Stephen.
Thank you very much.
I'd like to turn the floor to Ms. Andrea Fernandez and Marcelo Gedoti for their final remarks. We thank you very much for your participation. Myself and my team are available for any doubts that you may have. Thank you.
Ecoprottovias' conference call is now closed. Thank you very much for your participation, and we wish you a very good day.