Good afternoon, ladies and gentlemen. Welcome to the conference call concerning the earnings of Q1 2018 for Enerchizen. We inform that the participants will be in the listen mode only during the presentation. Next, we will begin the Q and A session when more instructions will be supplied. If you need any assistance during the conference call, We also inform that this conference call will be done in Portuguese by the company's management and in English via simultaneous translation.
This event is also being transmitted simultaneously through the Internet via webcast. Before proceeding, we'd like to clarify that any declarations made during this conference call concerning business perspectives of the company projections and financial and operational goals are based on beliefs and assumptions of the Board of Energize as well as on information currently available to the company. Considerations about the future are not guarantees of performance and involve risks, uncertainties and assumptions. They refer to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operational factors may affect the future results of the company and may lead to results that will differ materially from those expressed in such future considerations.
Now I'd like to pass the floor to Mr. Mauricio Boteleho, who will begin the presentation. Sir, you have the floor. Thank you. Thank you to all for your participation in this conference call for the earnings of Q1 'eighteen.
We have with us Ricardo Botelho, Chairman of Energiza Chiarelli de Souza, Vice President, Distribution Mr. Alexandre Garcia, Vice President, Regulation Mr. Claudio Brendel, Corporate Finance and Marina Rocha, Investor Relations Manager. Sir, we will show the slides and then we will begin the Q and A session. Please let's go on to slide number 3.
Here we have the main highlights. Among the operational items, I'd like to highlight the growth of the markets. We are in a recovery since May 2017 and we closed Q1 with an increase of 3.5 percent, while the increase in the Brazilian market was only 0.4%. In terms of losses, we closed the quarter with 0.4 percentage points below the regulatory limit. In the case of EMT, which is continuing to decline, all we see that in quality, all the concessions are below the FEC limit in relation to deck.
The highlight is ETO, which reached the lowest historical level and went into the regulatory limit. Among financial highlights, the group closed the quarter with an adjusted EBITDA of 783,000,000 dollars and consolidated net profit of $142,000,000 Also subsequent events, we finalized 2 processes. First, the OPA of EMT together with Redi, now we have 97.5 percent of this distribution company. And also we concluded tariff reviews for EMT, EMS and ESE. Now let's go on to Slide number 4.
Here, we will show the growth of the market, 3.1 percentage points above the national level. We continued this with the growth. Among distribution companies, the highest growth in consumption was seen in the Midwest, especially in EMT, which grew another which grew 5.7% and influenced by higher consumption in residential and industrial. Also consumption showed growth, consistent growth in tocanteens, 5.5% growth, MT, EMT 2.7% and ESS grew 3.4%. We'd like to highlight that ESS now is the 3rd largest distribution of the group overcoming and surpassing EPB.
The consumption in the area of concession of Sergipe now has had growth for the 2nd consecutive quarter and went up 1.8 percent. On the other hand, E and F had a drop of 0.7% due to a reduction of clients in the steel sector, a steel works client and EBO with a drop of -1.5 percent due to heavy rainfall, higher rainfall. Now slide number 5. Here we have a slide on electrical losses of the group. On the graph on the left, we have total losses, which represented 11 point 87% of the energy injected.
Although the graph has high losses, although the graph presents high losses according to our release until 2017, the losses of ESE considered the total supply to the neighboring distribution company, SoulGP. With the closing of the data and the tariff cycle, we removed the energy. It is no longer injected. And therefore the denominator for the calculation changed. Using this same basis of comparisons, the total losses of the group would be 11.93% in December 2017.
This way a small drop of 0.07 percentage points in this quarter. We'd like to highlight the regulatory limit, which is 12.24%. It was reviewed to reflect this adjustment. Among the highlights in terms of electrical losses, I'd like to mention EMT, which had a reduction in losses for the 6th consecutive quarter. The total losses dropped 15.21% in Q1 'seventeen to 14.49% in this last quarter.
Now going on to Slide number 6, here we see the delinquency rate, which is a calculation of percentage between PDD and supply build, build supply. The increase among the quarters is due to a reversal of accruals or provisions that affected the indicator in March 2017. If we remove these non recurring factors on a consolidated basis, the indicator of delinquency of the group would be 0.8 3% in Q1 2018 in comparison with 0.98% in Q1 2017, which represents a reduction of 0.15 percentage points. On Slide number 7, here we see quality indicators. All the distribution companies are below the FEC limits and several of the countries continue breaking their own historical records.
In that, we'd like to highlight that since February, the ETO indicator is within the regulatory limit, reflecting the effectiveness of our recovery plans that were implemented as of 2017. The distribution company reduced by more than 10.7 hours deck in the last 12 months and in March we received our historical lowest historical level. In EPB, the 3rd in the ranking of quality of the regulating agency in 2018 reached a historical minimum limit of DECT effect. And EMT continues to improve the DECT indicator and reduced by 1 hour the indicator in March 2018 and in relation to 2017 and is well on its way to the regulatory limits. In EMS, we had the lowest level of BEC since the beginning of the concession in 2014.
Now going on to the next slide, number 8. Let's talk about PMSO, consolidated PSO. We had an increase of 4.2% close to the inflation of the period, which was 3%. In personnel, we had an impact of labor lawsuits in EMS, another $6,600,000 labor lawsuits, which have offsets in the reversal for accruals. In 3rd parties and material, we had an increase of $12,400,000 concerning readjustment of contracts and increase of teams hired for the summer plan for preventive maintenance and also to fight losses.
Finally, we had an improvement of 2,400,000 dollars in fines and compensations in the liquidation of the civil contingencies. Now going on to Slide number 9, here we will see consolidated EBITDA. The graph shows the evolution of EBITDA. It went up 35.7%. We'd like to highlight that there are non recurring events on the table on the right, which comes from EBITDA.
We'd like to highlight the drop in indemnity costs in 2 quarters. These events are now normalized. We had $45,000,000 concerning the reposting of CVA values of previous years, EMTMS, which improved the bit of these two companies. Also we had the effect of VNR as of 2016, it was considered as other revenue having a positive impact on EBITDA. Finally, we had we removed the lion on the airplane of EMT.
This happened in Q1, 2017. In this way, just considering non recurring events, EBITDA of the quarter grows 10.3% in relation to Q1 2018. This increase comes especially due to the improvement of 100 $2,000,000 in Part B of the distribution companies due to the growth of the market and tariff reviews that have already occurred. Going on to Slide number 10, we'd like to comment on the results apart from the effects that had an impact on EBITDA, we had another nonrecurring event, which is associated to the accounting record of the conversion of the emission of debentures of Energiza. This convertibility of the shares has a strike price BRL17.88 per unit, while our share closed the quarter negotiated at BRL34.70.
This is an option in cash, which reflects the high probability of conversion and this effect effect of this financial derivative had an impact on our profit, a negative impact of $107,000,000 or 40% of the profits of the period. Thus, the conversion becomes advantageous and thus we have this impact on results. Having said this, the profit with our week out recurring events was the same and grew 8.7% in the quarters. Slide number 11, we'd like to talk about the net debt. The net debt went to 8,100,000,000, an increase of 900,000,000 in relation to 7,200,000,000 in December.
The increase of the debt has this impact. First, we added $107,000,000 due to the debentures conversely debentures of Energiesa S. A. Totaling BRL257 7,000,000 in debt. The second disbursements concerning the payment of the acquisition of shares from EMT, we spent approximately R530 1,000,000 during this quarter.
Finally, also the loans to continue the investments of the group. On the graph on the left below, we see the evolution of the cost of the debt close to 8% at the end of the quarter. Here, investments in 2017, Slide 12, we closed the quarter with $252,000,000 a reduction of 19% due to the process that gave us a tariff review in EMT, MS and ESC. Now in transmission, we made investments of $7,000,000 in the quarter. And here, we updated some projects continuing within our schedule.
The share the contracts for sharing infrastructure CCI with the transmissions companies that were exited were signed and the development of executive projects is going well. We now concerning the environmental licenses, the regulating agencies are analyzing our studies. They are in progress and there are negotiations with the owners of the land of the transmission lines. All these activities are happening as planned. Now Slide 13, we'd like to talk about the compensation of Energiza due to our distribution being distribution companies being in the 4th cycle.
If we consider Energiza as a single company, we would have a compensation base of $9,200,000,000 which represents a real evolution of 32% in cycles Due to intensive investments and good management, this ensures the recognition of the investments majoring the last few years. On Slide number 14, we have a comparison of regulatory EBITDA versus reported EBITDA, actual reported EBITDA in the last 12 months. In the consolidated of the group, we are above the regulatory EBITDA around 33%. The evolution of the companies acquired by the Rede Group today are at 26% above the regulatory level with therefore consistent evolution since 2014. So I'd like to conclude the presentation and we would like to begin the Q and A session.
Thank you. We'd like to begin the Q and A session. While we poll the questions. Mr. Fernando Vozzi from UBS has a question.
Good afternoon. A question concerning the privatization of the distribution companies of Eletrobras. I'd like to know if you have any expectation about the timing when this should happen. Today, there was the news that the government is analyzing the privatizations and it would be difficult to have them before the elections. Do you have anything to say about when these companies will be privatized?
Well, our information is similar to the one you have. We don't have anything extra apart from that. It seems that during May, there should be a final report from the TCU and at the end of May or June. By mid June, we should have the results available. Thank Thank you.
We'd like to pass the floor to Mr. Mauricio for his final comments. I would like to pass the floor to Mr. Ricardo Botelho, who will make the final comments. Please.
Well, Mauricio, I would like to make some comments concerning the public offer for the acquisition of the shareholder control of Eletro Paulo. On May 4, we canceled our public offer. Our offer made on April 5, forecasted a maximum disbursement of $3,200,000,000 and capitalization of the company with another 1,000,000,000 dollars Our proposal was based on a careful analysis of the potential and risks of the assets and the distribution of electricity. We knew that the challenge would not be easy and we were going into a game to compete with responsibility. Since it is a regulated activity, we evaluated the level of competitors' offers and consider the long term sustainability for clients, vendors and shareholders.
And these levels went beyond what we understood as reasonable for the activity. In the same way, we are always prudent. 1 of our most important qualities is to make prudent capital allocations, always searching for value generation for our shareholders and sustainability of the business in the long term. These principles are the ones we use for during all our history. Thus, we are sure that we are here to preserve the balance and to take care of the interests of our clients, employees and shareholders today and in the future.
We thank you very much for your trust and we wish you a good afternoon. Thank you. Thank you. This concludes the conference call of Energiza. Please disconnect the lines and we wish you good afternoon.