Central Puerto S.A.

Good morning and welcome to the Central Puerto Conference call following the results announcement for the quarter ended on December 31st, 2020. All participants have been placed on a 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.centralparto.com. A replay of today's call may be accessed by accessing the webcast in the investor support section of the Central Puerto Comfort website. Before we proceed, please be aware that all financial figures were prepared in accordance with the IFRS and are stated in Argentinian pesos unless otherwise noted. It is worth noting that the financial statements for the quarter ended on December 31, 2020 include the effects of the inflation adjustment. Accordingly, the financial figures mentioned during the call, including the data from previous periods, and the growth comparisons have been stated in terms of Argentine pesos of the end of the reporting period. Also, please note that the 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. In recent filings with the SEC, Central Puerto assumes no obligation to update forward-looking statements, except as required under applicable security laws. To follow 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 to simplify the discussion. On the call today from Central Puerto is Jorge Sauber, Chief Executive Officer, Fernando Bonet, Chief Operating Officer, Milagros Gonde, Financial Management, and Nicolas Manchi, Investor Relations Officer. And now, I would like to turn the call over to Jorge Rauber. Mr. Rauber, you may begin. Thank you.

Thank you very much. Good morning and welcome. We're joining you today with our management team from Buenos Aires, Argentina, reporting the results of the fourth quarter and full year 2020, and then answer any questions you may have. We would like to begin today's call analyzing the developments of the fourth quarter, commenting on the progress of our expansion projects, and analyze the operating figures of the fourth and fifth year. Delilah will present the recent financial news and results. The COVID-19 crisis has affected almost all the world, and among other consequences, electricity demand in Argentina. As you can see on page 3, electricity demand decreased 2.2% during the fourth quarter of 2020 as compared to the same period of 2019. As a reference, during 2020, total electricity demand declined 1.3% as compared to the prior year. Nonetheless, as you may recall, it is worth noting that the electricity has a less than proportional impact in the income of generation companies. In the case of renewable energy units, they are unaffected since they have dispatched priorities so they can sell all the electricity that they generate. 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. Finally, when demand decreases, so does dispatch of the older inefficient units which are remunerated under the Energía Base framework as compared to the new efficient ones that have a higher remuneration for contracts, known also as Power Purchase Agreement or PPA. Going now to page 4, as you may recall, the measures adopted to prevent the spread of the COVID-19 virus had an impact on the progress of other projects and the construction. La Genoveva 1 wind farm and Terminal 6 nuclear generation unit. Regarding La Genoveva 1, we are pleased to announce that the project reached commercial operation for its 88.2 MW November 21, 2020 and is currently remunerated under a 20-year CPA with Chemeza. It should be highlighted that the wind farm had two partial CODs on September 11, 2020 and October 30, 2020 for 50.4 mW and 33.6 mW respectively. This is the seventh wind farm that we commissioned since 2016, reaching a total installed capacity of 374 mW of wind power. During the quarter, we have continued with the construction of the new Terminal 6 San Lorenzo Conjunction Plant. On November 21st, 2020, the plan obtained partial commissioning of its gas turbine, 269.5 mW saline energy under the spot market regulation, Resolution 31, 2020. Once the COD for the full project is achieved, which is expected for the quarter of 2021, The plan will be remunerated under a 15-year TPA on the energy side and sell steam to a private uptaker under another 15-year contract. Going now to our key performer indicators for the quarter, as you can see on page 5, energy generation during the fourth quarter was 3.8 per hour of electricity, 7% lower than the same period of 2019. This was, to a large extent, due to a 281 GWh drop in iteration from our period-related hydro plant related to lower water inflows, and a 159 GWh decline in iteration of Porpoise Compound Site and Brigadier López Power Plant, partially offset by degeneration from the new well-found Manque Olivos and Genovo Bar 1. Renewable energy increased 157 GWh compared to the same quarter of 2018. Steel production during the fourth quarter increased 4% due to a good dispatch and availability of the Lofán de Cuyo conservation plant. Regarding the availability of our thermal units, during the fourth quarter of 2020, it reached 91% as compared to 94% during the same quarter of 2019. It was mainly due to certain main failures in Porto's common cycle during October 2020 and the unavailability of some of the steel turbines of the Porto and Lujan de Cuyo Flames. Steel is indicated to be significantly higher than the market average availability for thermal units, which is 78% for the same period according to data from Canessa. By six, you can review the annual key indicators for 2020. generation reached 14.3 terawatt hours of electricity, 3% lower than 2019. The decline was due to a 485 j-watt hour decrease of Piedra de Laila due to lower water inflows and a 627 JWh drop in the refrigeration of Lujan de Cuyo's combine cycle due to the unavailability to register during the second quarter 2020 and to a lesser extent due to a lower dispatch of central port of the combine cycle partially upset by the full year of generation of the new Lujan de Cuyo cogeneration unit and the energy generation from renewable energy, which increased 598 GWh. La Castellana II and La Genoveva II, when funds that commenced their commercial operation during the third quarter of 2019, accomplished a full year of operation, while Manque, Los Olivos and La Genoveva I reached COD in 2020. During 2020, machine availability for thermal units reached 89% compared to 93% in 2019, mainly due to a significant failure in the main transformer of the cement branded compound cycle and to a lesser extent due to some power limitations on the steam turbines from Dujan de Cujo and in Porto Complex certain small failures in the compound cycle during June and October 2020. and the unavailability of some steam turbines. As reference, the market average availability for thermal units for the same period was 82% according to data from GEMESA. Finally, steam production showed an increase of 6% mainly due to Dujandecuyo's cogeneration COD. And now I will turn the call over to Milagros, who will comment on the financial highlights.

Thank you, Jorge. I will first refer to some recent financial news for the company and then comment on the results for the fourth quarter of 2020 and the full year. On December 22, the company signed an amendment to its syndicated loan obtained to fund the acquisition of the Ariel Lopez Thermal Plant. Modifying, among other terms, the amortization schedule in order to comply with the requirements of communication A7106 issued by the central bank, extending the final terms of December 2020 and March 2021 installments until June 23. Incorporating monthly repayments from January 2021 to January 2022, and maintaining the repayment for the initial schedule for June, September, and December 2021, each equivalent to 20% of the capital. Furthermore, in December 2024, 40% of the installment schedule for such months was canceled. In addition, the agreed modification included a limitation for the payment of dividends during 2021, and a maximum allow of $25 million for 2022. Likewise, third-hand guarantees were granted, including a pledge of the terms of the Daniel Lopez power plan, a mortgage on the land on which the power plan is located, and an assignment of third-hand foreign collections. On February 25, 2021, Central Bank extended the obligation to reprogram payment schedules between April and December of this year. Nowadays, we are working with the bank on this regard. Going now to the results for the quarter, as you can see on page 7, our revenues were $9.3 billion as compared to $15.5 billion during the fourth quarter of 2019. This decrease was driven by the discontinuation of the fuel purchases operations due to the regulation stated on December 31, 2019, that centralized the fuel purchases for all generators in Canessa. This effect represented a 4,565 million variations during the quarter compared to the same period of the prior year. Including this effect, revenues were 8.9 billion compared to 10.9 billion in the last quarter of 2019. This decrease was mainly driven by a decrease of 2,125 million in energy, that is, revenues coming from Resolution 31, which without considering the remuneration associated to the self-procured fuel mentioned above, totaled 3,000 $585 million in the fourth quarter of 2020 as compared to $5,710 million in the fourth quarter of 2019, mainly due to a lack of monthly price adjustment of resolution 31 instructed by the Secretary of Energy on April 8 of 2020 and to a drop of 6% of the energy generation from the thermal unit. Decrease in revenues was also explained by a decrease of $60 million in the steam phase, which totaled 240 million in the fourth quarter of 2020, compared to 300 million retos in the fourth quarter of 2019, despite an increase of 4% in the steam production. This was partially offset by an increase of 510 million in sales under contract, which amounted 4,750 million retos. 59 million during the fourth quarter of 2020 as compared to 4,249 million in the fourth quarter of 2019, mainly due to the new farmers mentioned above. The gross profit was 4.7 billion during the fourth quarter of 2020 as compared to 7 billion in the same period of 2019. This was due to the variation in revenues mentioned before and was partially offset by 46% reduction in cost of sales that totaled 4.5 billion compared to 8.5 billion pesos in the same period of 2019. The decrease in the cost of sales was primarily driven by a decrease of $3.8 billion in the purchase of fuel and related concepts due to the continuation of this operation according to the new regulations. Given the current scenario, no trade adjustments for units under energy about the framework, the company made a strong review on all non-fuel-related cost of production. Therefore, administrative and selling expenses were reduced 25% in real terms, saving more than $283 million during the fourth quarter of 2020, as compared to the same period of 2019. Gross profit margin totaled 51% during the quarter, as compared to 45% in the same period of 2019. Going to page 8H. we can see the change in our VBA, which was around $6.8 billion in the fourth quarter of 2020, compared to $5.6 billion in the fourth quarter of 2019. In addition to the variation in gross profit mentioned, this was due to an increase of $3,599 million in the other operating results, mainly due to foreign exchange difference gain of $980 million, mainly related to dollar-denominated funny trade receivables that generated a $3.1 billion gain during the fourth quarter 2020, compared to $2.1 billion during the fourth quarter 2019. As a reference, during the fourth quarter of 2020, the Argentine peso depreciated 10.4% compared to 3.9% for the same period of 2019. Variation was also due to a $2,544 million lower non-cash charge related to the property, plant and equipment impairment registers, which totaled 2,515 million pesos during the last quarter of 2020, compared to 5,015 million pesos for the fourth quarter of 2019. Mainly related to the price reduction of energy and water regulatory framework, established by Resolution 31. Going to page nine, the consolidated net income was 0.6 billion compared to 1.8 billion in the same period of 2019. In addition to the factors mentioned before, net income was positively impacted by higher financial income that increased 393 million in the fourth quarter of 2020 as compared to the same period of 2019 mainly due to higher tax difference results on the financial assets denominated in foreign currency. which excludes funny and other tradicibles, measured in Argentine pesos and a higher market gain on financial assets, and negatively affected by higher financial expenses, which increased $2,954 million due to a higher foreign exchange difference in loans, most of which are denominated in U.S. dollars. Additionally, the share of profit of associates had a negative impact of $237 million worth of assets. There was a $34 million gain during the fourth quarter of 2020 compared to $271 million during the same period of 2019, mainly due to a lower research from the operations of Ecogas, due to the lack of tariff adjustments for the natural gas distribution business during 2020. Finally, the gain on net monetary position totally 219 million pesos in the fourth quarter of 2020 as compared to 145 million in the fourth quarter of 2019, resulting in a positive impact of 73 million. Going to page 10, you can see our cash flow for the 12-month period ended in December of 2020. Net cash provided by operating activities was $19.3 billion, this included $6.6 billion in collections from FONI and CBO installments. The cash flow from Ovation was partially offset by $12 billion CAPEX investments for the expansion project and $5.5 billion used in short-term investments, among other things. Additionally, on the financing side, $7.5 billion were used for principal and interest debt services, which was partially offset by $4.1 billion in new loans received during the period, mainly related to the green bond issued during the third quarter of 2020, among other things. Finally, on page 11, the key financial figures for 2020 full year. Revenues decreased 38.1 billion for 2020 compared to 49 billion of 2019. The decrease in revenues was mainly affected by the abrogation of Resolution 70 of 2018 and lower remuneration given by Resolution 31 2020 and the lack of monthly adjustment as described in the quarterly analysis before. During 2020, energy generation decreased 3% despite the addition of in-thermal and renewable energy plants as described in the highlights. Adjusted ETA for 2020 reached $36.9 billion compared to $42.8 billion in 2019. Many EU to lower gross profit and operating income negatively impacted by lower effects difference and the interest on trade receivables which declined from 5.3 and 6.7 billion respectively. Finally, consolidated net income was 7 billion in 2020 compared to 11.8 billion in 2019. mainly due to a lower gain of 1.4 billion on the share of profit from households. Higher financial expenses for 617 million, partially offset by higher financial income for 258 million. Funny collection totaled 6.6 billion during 2020. Thank you, and now we invite you to ask any question you may have to our team.

We will now begin the question and answer session. To ask a question, you may press start then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press start then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from the line of Frank McGann with Bank of America. You may proceed with your question.

Okay. Thank you very much. Two questions if I could. One is just if you could just discuss potentially how the payment process is now with Kamesa, if it's continuing normally or what the length of time it is for you to receive payments. And secondly, just looking forward, when you think of, you know, the demand levels have been generally lower over the last year. I was just wondering how your dispatch might be potentially positively affected given more limited capacity being added to the system as demand starts to recover and begins to grow again. Do you expect that to be actually positive your volumes that you sell into the market over time.

Fernando, would you like to answer the first question? Okay, yes. In terms of I think, Frank, you asked for the delays in the Camisa payment. I think that in this way, Camisa is kind of stable in the delay between more or less stabilized in 30, between 30 and 35 days of delay. We are not suffering much more delays than that. We are collecting, this is in the terms of the energy payments. In terms of FONI payments, we are on schedule. We are receiving the FONI payments on time, and the renewable contracts, which are guaranteed for there, we are receiving also the payments on time. We are only having delays on the energy framework and the thermal contracts. And the delays are stable around 30, 35 days of delays and stable on that number. So we are not having additional problems that we suffered in terms of delay in the last year or so. It is more or less stable. The And for the news that we have, the Secretary of Energy and Camus are working towards regularization of that delay in terms of reaching an agreement with the distribution companies in terms of making an increase in tariffs and additional payment plans, payment scale for the past. And we see there some news, or we hope to see some news soon in that sense to reduce that 30 days of delay. But they are working on that. We hope to have some news during this month and the next one. So that is in terms of payment. Yes. Basically what they do, Frank, is the government is covering any delay we can see on the side of the customers. Particularly at the beginning of the quarantine here in Argentina, March or April last year, we had an impact in payment for the side of the final customer, but the government acted eagerly to reduce that and maintain the payment completely stable. So we don't have a position now which is worse than, I don't know, one a year before. So it's stable. On the side of dispatch, your second question, what we see is that we reach a kind of base dispatch for our plant. What we have today on dispatch is our more efficient plants, especially common cycles. Naturally, we have also the renewable energy operating because they have a dispatch priority. So we don't see... a real impact in terms of dispatch or in terms of revenue, especially because as we mentioned before in our speech was mentioned that we have a remuneration which is basically based on installed capacity instead of on dispatch, except for the side of the renewal where we have a priority in terms of details. So we don't see much, but perhaps if the demand increases after the quarantine, when the, I don't know, when the country started covering the consumption, perhaps we have a slight increase in terms of dispatch, but we don't see a huge impact in terms of revenue. What we have today is a kind of base, and we expect, I mean, to improve our remuneration, the price instead of the quantity. On the side of our project, Terminal 6 is also a very, very efficient unit, so we don't, I mean, we expect a full operation as soon as the plan is completed, but we expect by the third part of this year.

Okay, thanks. If I can follow up this. I'm sorry, sorry.

Sorry. Sorry, no, I want to add something that Jorge mentioned, which was clear, but I want to add that the main reduction, if you compare 2019 In 2020, I arrived by two facts. One is our big problem in our combined cycle in Mendoza, the transformer issue that we have during the second quarter. It was more than, I think, 70 days out of this combined cycle. That was a big impact in our production. And, of course, that was all that time since July last year. That was all. So this was a big impact in our production. This was not dispatched. It was a problem. It was a failure in transformer. And the second impact in our generation during 2020 was the lower inflows, water inflows in Piedra del Isla, which are not dispatched also. There's water to produce the electricity in our hydro plant. So if you see in terms of dispatch, the reduction is not so high. So And additionally, in the other hand, we increase production in terms of renewables. So if you see in terms of this patch, as Jorge mentioned, we are not seeing a problem in our efficient units. In the older ones, since we have additional exportation to Brazil during the last of the 2020 and the 2021, Also, all the equipment, the steam turbines were more dispatched than in the previous years. So, as Jorge mentioned, we are not seeing a problem, a really problem in our efficient units to reduce dispatching in the future.

Okay, great. If I could just follow up. In terms of legacy prices, has there been any movement or any discussions about possibly going back to have inflation adjustments or some sort of an adjustment factor?

Yes, in fact, we were having a lot of discussion with the government. The problem is that they are kind of linking the discussion with the prices, with the distribution companies. We are in a year where we have an election now, and this year so it's difficult in political terms but for sure we are having discussion with them according to the information we have they are convinced that they have to do something with the prices going somehow back to the price we agreed or they set in a resolution last year when they change and put in In place, the Resolution 31, they specified the prices at that time, reduced the prices in dollar terms, specified them, but they were supposed to have an adjustment. That adjustment was suspended somehow. So the discussions are basically focusing on this aspect, and we have to go back. The government is convinced that they have to go back. but they are kind of linking this with a bigger discussion they have with the distribution companies in order to, I mean, try to figure out how to solve that problem because basically our system now is relying, again, on a high portion of subsidies. So they have to complete the change.

Okay, great. Thank you.

But, I mean, the discussion is ongoing all the time. In fact, we have a meeting tomorrow with him again.

Okay. Well, good luck.

Again, if you have a question, please press star, then the number one. One moment while we poll for questions. This concludes our question and answer session. I would like to turn this conference back over to Mr. Robert for closing remarks.

Okay. Thank you to everyone for your interest in Central Puerto. We encourage you to call us for any information that you may need. Have a great day. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.