Good afternoon, ladies and gentlemen. Welcome to the conference call concerning the earnings of Q1 2018 for Energisa. We inform that the participants will be in the listen mode only during the presentation. Next, we will begin the Q&A session when more instructions will be supplied. If you need any assistance during the conference call, please request the help of an operator by dialing star zero. 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 Energisa, 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. I'd like to pass the floor to Mr. Maurício Botelho, 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 2018. We have with us Ricardo Botelho, Chairman of Energisa, Fiorêncio de Souza, Vice President, Distribution, Mr. Alexandre Nardi, Vice President, Regulation, Mr. Cláudio Brandão, Corporate Finance, and Mariana Rocha, Investor Relations Manager.
We will show the slides, and then we will begin the Q&A session. Please, let's go on to slide number three. Here we have the main highlights. Among the operational items, I'd like to highlight the growth of the market. We are in a recovery since May 2017, and we closed Q1 with an increase of 3.5%, 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, we see that in quality, all the concessions are below the FEC limit in relation to DEC. 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 EBIT of BRL 783 million and consolidated net profit of BRL 142 million.
Subsequent events, we finalized two processes. First, the OPA of EMT together with Rede. We have 97.5% of this distribution company. We concluded tariff reviews for EMT, EMS, and ESE. Let's go on to slide number four. 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 5.7% and influenced by higher consumption in residential and industrial. Consumption showed consistent growth in Tocantins, 5.5% growth. MT, EMT, 2.7%, and ESE grew 3.4%. We'd like to highlight that ESE now is the third largest distribution of the group, overcoming and surpassing Energisa Paraíba. The consumption in the area of concession of Sergipe now has had growth for the second consecutive quarter and went up 1.8%.
On the other hand, ENF 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% 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 11.87% of the energy injected. 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, Sulgipe. 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 comparison, 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 sixth consecutive quarter. The total losses dropped 15.21% in Q1 2017 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 billed 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 0.83% 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 DEC, 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 DEC in the last 12 months, and in March, we received our lowest historical level. In EPB, the third in the ranking of quality of the regulating agency in 2018, reached a historical minimum limit of DEC and FEC. And EMT continues to improve the DEC indicator and reduced by one hour the indicator in March 2018 and in relation to 2017. And is well on its way to the regulatory limits.
In EMS, we have the lowest level of DEC since the beginning of the concession in 2014. Now, going on to the next slide number 8. Let's talk about PMSO, consolidated PMSO. 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 BRL 6.6 million labor lawsuits, which have offsets in the reversal for accruals. In third parties and material, we had an increase of BRL 12.4 million 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 BRL 2.4 million 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 two quarters. These events are now normalized. We had BRL 45 million concerning the reposting of CVA values of previous years, EMT, EMS, which improved the EBITDA 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 removed the auction of the airplane of EMT. This happened in Q1 2017. In this way, disconsidering non-recurring events, EBITDA of the quarter grows 10.3% in relation to Q1 2018. This increase comes especially due to the improvement of BRL 102 million in Parcela B of the distribution companies due to the growth of the market and tariff reviews that have already occurred.
Going on to slide 10, we'd like to comment on the result, apart from the effects that had an impact on EBITDA, we had another non-recurring event, which is associated to the accounting record of the conversion of the emission of debentures of Energisa. This convertibility of the shares has a strike price BRL 17.88 per unit, while our share closed the quarter negotiated at BRL 34.72. This is an option in cash, which reflects the high probability of conversion, and the effect of this financial derivative had an impact on our profit, a negative impact of BRL 107 million, 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 or without recurring events was the same and grew 8.7% in the quarters.
Slide 11, we'd like to talk about the net debt. The net debt went to BRL 8.1 billion, an increase of BRL 900 million in relation to BRL 7.2 billion in December. The increase of the debt has this impact. First, we added BRL 107 million due to the debentures, convertible debentures of Energisa S.A., totaling BRL 257 million in debt. The second, disbursements concerning the payment of the acquisition of shares from EMT. We spent approximately BRL 530 million 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 BRL 352 million, a reduction of 19% due to the process that gave us a tariff review in EMT, EMS, and ESE.
Now in transmission, we made investments of approximately BRL 7 million in the quarter, and here we updated some projects continuing within our schedule. The contracts for sharing infrastructure, CCI, with the transmissions companies that were signed, and the development of executive projects is going well. 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 Energisa due to our distribution companies being in the fourth cycle. If we consider Energisa as a single company, we would have a compensation base of BRL 9.2 billion, which represents a real evolution of 32% in cycles. Due to intensive investments and good management, this ensures the recognition of the investments made during 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 a consistent evolution since 2014. I'd like to conclude the presentation. We would like to begin the Q&A session. Thank you. We'd like to begin the Q&A session. If there are any questions, please dial star one. If your question was answered, you may leave the queue dialing the pound key. Questions will be answered as they are received. Please remove the handsets when asking the question. In this way, we will have an excellent sound quality. Please wait while we poll the questions. Mr. Fernando Boni 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, 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 result available.
Thank you. Reminding you to ask questions, please dial one. Please wait while we poll the questions. Reminding you to ask questions, please dial star one. Thank you.
We'd like to pass the floor to Mr. Maurício for his final comments. I would like to pass the floor to Mr. Ricardo Botelho, who will make the final comments. Please.
Well, Maurício. I would like to make some comments concerning the public offer for the acquisition of the shareholder control of Eletropaulo. On May 4th, we canceled our public offer. Our offer, made on April 5th, forecasted a maximum disbursement of BRL 3.2 billion and capitalization of the company with another BRL 1 billion. Our proposal was based on a careful analysis of the potential and risks of the asset and the distribution of electricity. We knew that the challenge would not be easy. We were going into a game to compete with responsibility. Since it is a regulated activity, we evaluated the level of competitors' offers and considered the long-term sustainability for clients, vendors, and shareholders.
These levels went beyond what we understood as reasonable for the activity. In the same way, we are always prudent. One 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 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. We wish you a good afternoon. Thank you. Thank you. This concludes the conference call of Energisa. Please disconnect the lines. We wish you a good afternoon.