Central Puerto S.A.

Good morning and welcome to the Central Porto conference call following the results announcement for the quarter ended on March 31st, 2020. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. If you do not have a copy of the press release, please refer to the investor support section on the company's corporate website. at www.centralpoorthrow.com. A replay of today's call may be accessed by accessing the webcast in the investor support section of the Central Poor Throw corporate website. Before we proceed, please note that certain statements made by the company during this conference call are forward-looking statements, and we refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. Central Poor Throw assumes no obligation to update forward-looking statements except as required under applicable security laws. In addition, all financial figures were prepared in accordance with IFRS and stated in Argentinian pesos, unless otherwise noted. For the discussion better, please download the webcast presentation available on the company's website. Please be aware that some of the numbers mentioned during the call may be rounded in order to simplify the discussion. On the call today from Central Puerto is Jorge Robert, Chief Executive Officer of Fernando Bonet, Chief Operating Officer, Milagros Grande, Financial Manager, and Tomas Daglian, Investor Relations Officer. And now, I'll turn the call over to Jorge Rabea. Mr. Rabea, you may begin.

Thank you, and good morning. I would like to begin today's call analyzing the developments of the first quarter. After that, I will comment on the advances of our expansion projects and analyze the operating figures of the quarter. Finally, Fernando will analyze the financial results and comment on the recent news on the company. As you know, the COVID-19 crisis has affected almost all the world, including Argentina. As a consequence, the federal and local government have issued mitigation measures in order to slow down the spread of the virus. Among them, on March 20, In 2020, the federal government released a stay-at-home order for quarantine, as you can see on page 3. However, the electricity generation activity was considered an essential service and thus exempt from the restrictions. In order to protect our essential workers, we have implemented strict health and safety protocols for them, while the rest of our personnel is doing home office. Quarantine did not have significant consequences during the first quarter, but it is expected to have a deeper impact during the second quarter. For example, as a consequence of the effects of the quarantine on the economic activity, electricity energy demand decreased 11.5% during April and 10% during the first three weeks of May compared to the same period of 2019, according to data from KEMESA. However, it's worth noting that the decrease has a less than proportional impact in the income of the generation companies. In the case of renewable energy units, they are unaffected since they have this much priority. and they do not lose energy generation. In the case of thermal units, they have a high proportion of their income associated to fixed power remuneration, which is not related to the energy generation of the units. Additionally, when demand decreases, the units that stop generating electricity first tend to be the older, inefficient ones. These units receive a lower remuneration under the Energy of Access Framework as compared to the new efficient ones that have a higher remuneration through contracts, also known as Power Purchase Agreement, or PPAs. As a consequence of the decrease of economic activity due to pandemic, on April 8, 2020, the Secretary of Energy instructed CAMESA to postpone until further notice the application of price update mechanism established by Resolution 31 for the energy above the units, that is, the spot sales. However, it's worth noting that during the first quarter 2020, around 50% of our EBITDA came from units that have contracts and not from the spot sales units. Furthermore, for the full 2020 year, We expect that 70% of our business will come from units that have their contracts set in U.S. dollars due to the new capacity coming online during this year. Finally, the COVID-19 crisis had an impact on our projects under construction, La Genoveva 1 and Terminal 6, as you can see on page 4. Initially, the construction of private sector energy infrastructure was not included as an exemption to the quarantine, but was included on April 7, 2020. Consequently, after taking all necessary precautions and implementing corresponding protocols to protect the personnel and the community where the projects are developed, The construction of La Genoveva 1 wind farm and Terminal 6 San Lorenzo thermal plant was resumed on April 9 and April 27 respectively. Additionally, in the case of La Genoveva 1 on February 21, 2020, Vestas, the supplier of the wind turbine of La Genoveva 1 wind project, notified the company that the COVID-19 outbreak affected its manufacturing activities worldwide, causing delays on the supply chain for the delivery of certain Chinese origin manufacturing components required for the completion of the wind turbines. This communication Vesta did not specify the impact that this situation may have on the agreed schedule. Furthermore, logistic restriction imposed by the federal and local governments may also slow down the construction. In the case of the Terminal 6 project, the construction was restarted after one month with one third of the personnel that was working prior to the quarantine due to the health and safety protocols agreed with the health authorities. Additionally, the project may also be affected by travel restrictions for international specialists that participate in the construction. Due to this restriction, the CODs of La Genoveva 1 and Terminal 6 San Lorenzo are expected to be delayed and depend on the evolution of the situation in the region. In both, projects are located and the measures implemented by the government. On the other hand, As you can see on page five, during the first quarter of 2020, we reached the commercial operation date for Los Olivos wind farm, adding 23 megawatts and increasing, increased the installed capacity of the wind farms Manque and La Castellana II, which now have 57 and 15 megawatts, respectively. Projects together with La Genoveva II wind farm have already signed long-term contracts with prices set in US dollars directly with private customers for 100% of their capacity. Finally, I would like to give you an update on the recent development for the second quarter. In April 2020, the Siemens-branded combined cycle of Lujan de Cuyo plant became unavailable due to significant failure in its main transformer. The normal lead time for a complete replacement of the equipment is around 12 months. However, the company is evaluating alternatives to return the unit service sooner, although This may reduce the energy generation from this unit during the time the equipment remains unavailable. The company has a comprehensive operational risk and loss of profit insurance that covers the breakdown cost and the consequential lost profits. Going now to our key performance indicators of the quarter, as you can see on page 6, Energy generation during the first quarter was 3.9 terawatt hours of electricity, 10% higher than the same period of 2018. As a reference, energy demand during the period increased 4.2% and domestic energy generation increased 7.4%. Increase in energy generation was first due to a 88% increase from renewable sources, mainly due to the positive impact of La Castellana II, La Genoveva II Manque, and Los Olivos wind farms. Second, hydro generation from Piedra del Agua increased 10% due to higher available water flows. Generations from our thermal units increased 5% mainly due to the positive impact of the purchase of the Brigadier Lopez plant and the new Lujan de Cuyo cogeneration unit, and to a lesser extent to an increase in energy generation on some of the steam turbines of the port complex due to higher temperatures during the summer. Regarding our thermal units, as you can see on the graphic on the right in the same page, we continue to show an excellent track in terms of availability, reaching 93%, three percentage points higher than the same quarter of 2019. This figure is 10 percentage points above the average availability of thermal units for the total market, showing Central Puerto's competitive advantage. And now I will turn the call over to Fernando, who will comment on the financial highlights.

Thank you, Jorge. Before starting, it's worth noting that the financial statement for the quarter ended on March 31, 2018, includes the effect of the inflation adjustment. Accordingly, the financial figures that I will mention, including the data from previous periods and the growth comparison, had been stated in terms of Argentine pesos of the end of the reporting period. I will first refer to the results of the first quarter 2020 as compared to the first quarter of 2019. As you can see on page 7, our revenues were 8 billion pesos in the quarter, a 13% decrease compared to 9.3 billion during the first quarter of 2019. This decrease was driven by the discontinuation of fuel purchase operations that we did during 2019 due to new regulations that centralized in CAMESA the fuel purchase for all generators. This effect represents a 3.5 billion variation, as you can see on page seven. Excluding this effect, revenues for the first quarter of 2020 will have increased approximately 40%. This increase was mainly driven by an increase in sales under contracts which amount to 3.4 billion during the first quarter of 2020, as compared to 768 million in the first quarter of 2019, mainly due to the revenues related to the Aguirre-López power plant, which was acquired in June 2019. The new Luján de Cuyo cogeneration unit, which starts operation in October, 2019, and the wind farms La Castellana II, La Genova II, Manque and Olivos, which started operation on June, September, December 2019, and February 2020, respectively. A 10% increase in energy generation, as Jorge mentioned before, and a 3% increase in the availability of thermal units and their energy-advanced framework. This increase was partially offset by A decrease in price for units under an AGEA-BASEL regulatory framework established by Resolution 31, enforced since February 1st, 2020. Going to page eight, we can see the changes in our EBITDA, which reflects the increase in our gross profit, which in the quarter rise 22% as compared to the same period of 2019. This was due to the variation in revenues mentioned before and was partially improved by a 39% decrease in our cost of sales that totaled 3.3 billion compared to 5.4 billion pesos in the same period of 2019. The decrease in the cost of sale was primarily driven by an 81% decrease in the purchase of fuel and related concepts due to the discontinuation of this operation in the quarter according to the new regulations. This was partially offset by a 29 increase in non-fuel-related cost of production, mainly due to an increase in our installed capacity following the acquisition of Brigadier López Power Plant and the COD of the new thermal and renewable energy projects. Gross profits marched in total 59% during the first quarter of 2020, as compared to 41% in the first quarter of 2019. This change was mainly a consequence of an operation of purchase of self-supply fuel, which was enforced during the first quarter of 2019, but not during the first quarter of 2020. Finally, other operating results net decreased 1.9 billion in the quarter, mainly due to an impairment in a property plant and equipment, which amounted to 774 million pesos in the quarter, due evaluation at fair value of two Siemens branded gas turbines stored in the suppliers facilities, which were evaluated using the fair value less cost of sales approach and a 2.4 billion gain during the first quarter 2020 from the foreign exchange difference and operating assets mainly due to a funny trade receivable. compared to 3.9 billion during the first quarter of 2019, mainly due to an 8% depreciation of the Argentine pesos during the first quarter of 2020, compared to the 15% depreciation during the same period in the previous year, and a lower average balance of the trade receivables maintained during the quarter. As a consequence of this variation, the adjusted EBITDA was around 7.6 billion in the first quarter of 2020, 7% lower than 8.2 billion in the same period of 2019. However, adjusted EBITDA excluding the foreign exchange difference and interest on monetary receivables and the impairment on property planning equipment was 5.8 billion in the first quarter of 2020, 53% higher than 3.8 billion during the same period of 2019, showing the solar result of the new plants. Going to page 9, the consolidated net income was 1 billion pesos compared to 1.8 billion in the same period of 2019. In addition to the factors mentioned before, the net income was mainly affected by higher financial expenses, which increased $2.2 billion due to the loans obtained for the thermal and renewable energy expansion projects and the acquisition of Brigadier López power plants, and a lower financial income due to lower interest rates during the quarter and a lower foreign exchange difference over U.S. dollars denominated financial assets, which exclude FONI and other trade receivables. These effects were partially compensated by affordable net monetary position during the first quarter of 2020, resulting in a gain in real terms while the situation was the opposite during the first quarter of 2019. Going to page 10, you can see the cash flow for the first quarter of 2020. Net cash provided by operating activities was 3.5 billion This includes 1.5 billion in collections from FRONI and CBO installments, which is not contained in EBITDA. The cash flow from operations was partially offset by 1.2 billion capex invested in the expansion projects and 1.5 billion used to service in-depth. Thank you, and now you are invited to ask any questions to our team.