Central Puerto S.A.

Good morning and welcome to the Central Puerto Conference Call. Following the results announcement for the second quarter ended on June 30th, 2021, all participants will be in 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.centralpuerto.com. A replay for today's call may be accessed by accessing the webcast in the investor support section of the Central Puerto corporate 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 June 30, 2021, 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 Argentinian pesos at the end of the reporting period. Also, 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 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 for Central Puerto is Fernando Bonet, Chief Executive Officer, Enrique Terraneo, Chief Financial Officer, Milagros Grande, Financial Manager, and Nicolas Manchi, Investor Relations Officer. And now, I will now turn the call over to Fernando Bonet. Mr. Bonet, you may begin your presentation.

Thank you very much. Good morning and welcome. We are joining you today with our management team from Buenos Aires, Argentina, to report on the results of the second quarter 2021, and then answer any questions you may have. I would like to begin today's call by analyzing the recent developments, comment on the progress of our expansion project, and analyze the operative figures of the quarter. Milagros will present the latest financial news and results. First of all, I want to focus on the new resolution 440 published by the Secretary of Energy on May 21, which established a price adjustment of the thought market remuneration scheme. In general terms, the resolution updates the values to be collected by the generation nations in a 29% increase compared to the existing values. It is worth to remark that this tariff increase was below the inflation of 40.7% reached between the last tariff review in February 2020 and February 2021 when this new remuneration becomes applicable. Additionally, this new resolution repealed the Article 2 of the Resolution 31, which established an automatic inflation assessment for the spot market remuneration. In that sense, new tariff increases will require a new resolution from the Secretary of Energy. Going now to page 3, during the quarter, we have continued with the construction of the the new Terminal 6 San Lorenzo cogeneration plan. The expected progress was affected by the effects and restrictions imposed due to the second wave of COVID-19 that strongly impacts Argentina and especially Santa Fe province since April. In this complex context, we suffer a higher level of positive cases on the strategic staff on site. And additionally, we faced several restrictions, delays and rescheduling on the incoming flights of the main constructor specialists. Despite all of these difficulties, we expected to reach the commercial operation of the full project during the third quarter of 2021. It's important to remark that since November 2020, the plant obtained partial commissioning of its gas turbine, 269 MW, selling energy under the spot market regulation. Once the commercial operation for the full project is achieved, the plant will be remunerated under the 15-year PPA on the energy side and sell the steam to a private off-taker under also a 15-year contract. Going now to our key performance indicator for the quarter, as you can see on page four, energy generation during the second quarter of 2021 was 3.74 gigawatts hour of electricity 40% higher than the same period of 2020. This increase was mainly due to, first, at 739 GWh rise in thermal units production due to a higher generation from the recovery to average production of our Lujan-Dikusha Siemens branded combined cycle due to a failure of its main transformer in the second quarter of 2020. and due to a higher production of the steam turbines and Terminal 6 gas turbines. Second, 238 chia was increased in generation from our Piedra del Águila hydro plant, related to an exceptional higher dispatch during May 21 because of lack of natural gas. And third, an 89 GW rise in renewable generation from the new wind farms Manque, Olivos and La Genoveva I. Steam production during the second quarter of 2021 increased 5%, due to a good performance of Luján de Cuyo cogeneration plant. Regarding the availability of our thermal units during the second quarter of 2021, it reached 90%, in line with the strong availability history of central port equipment. The comparison with the 82% reached during the same quarter of 2020 shows the unavailability of Beluján de Cuyo-Siemens combined cycle related to the failure of its main transformer. As a reference, the market averaged availability for the thermal units for the second quarter 2021 was 82%, according data from CAMESA. And now I will turn the call over Milagros, who will comment on the financial highlights.

Thank you, Fernando. I will start referring to some recent financial news for the company and then comment on the results of the second quarter of 2021. On February 25, Central Bank extended until December 31, 2021, the effects regulatory restrictions established by communication A7106 through the issuance of the communication A72006. The installments under the syndicated loan signed with Citibank, Declan Morgan and Morgan Stanley, maturing on June, September and December 21, were under the scope of such regulation. On June 15, the company has signed a new amendment, which provides for the modification of the amortization schedule, with scheduling 60% of the installments maturing in June, September and December 2021, and extended the final term of the loan to January 2024. The current schedule, including this amendment and the one dated in December 2020, contemplates monthly repayments until January 2022, an amortization in June 2023 for $34 million, and a last installment in January 2024 of $55 million. Bills and restrictions for 2021 and limitation of a maximum of $25 million for 2022 remains without modification. For 2023, the maximum dividend distribution allowed is $20 million. Another important point to mention is that the company has identified as signs of potential impairment of its property, plant, and equipment, the changes are established for the spot market by resolution 440 explained before by Fernando. The company has estimated that the book value of the Aguilar-López thermal plant and the combined cycle plant located in Luján de Cuyo exceeds its recoverable asset value. Therefore, an impairment charge was determined and recorded in the Consolidating Income Statement for the six-month period ending June 31, 2021, for an amount of 3.9 billion pesos. Last, on June 16, 2021, the Argentine government issued the law number 27630, which established changes in the corporate income tax rate effective for the fiscal year beginning on January 1, 2021, which affected our consolidated net income. Going now to the results for this quarter, as you can see on page 5, our revenues were 12.3 billion as compared to 10.8 billion during the second quarter of 2020. This 14% increase was mainly due to a 39% increase in spot-safe energy assets, which totaled 6.2 billion pesos in the second quarter of 2021 as compared to 4.5 billion pesos in the second quarter of 2020. Due to a higher power generation, from the hydro plant Piedra del Águila, the recovery to average production of the Siemens-Brandit combined cycle of the Luján-Cuyo plant, the steam turbines, and terminal six. It is important to highlight that the average adjustment approved by the Actions of Resolution 440 mentioned before was 29% compared to an inflation of 36.1% for the full year of 2012. Also, this was due to a 30% increase in the steam sales, which totaled 0.4 billion pesos in the second quarter of 2021, compared to 0.3 billion in the second quarter of 2020, as the steam production increased 5% in the quarter. This was partially offset by a 5% decrease in sales under contract, which amounted $5.4 billion during the second quarter of 2021, as compared to $5.7 billion in the second quarter of 2020. Going to page six, we can see the changes in our EBITDA, excluding impairment and funding effects, difference and interest, which was $6.9 billion in the second quarter of 2021, compared to 7.2 billion in the second quarter of 2020. This increase was due to a 36% increase in the cost of sales that totaled 6.7 billion compared to 5.1 billion pesos in the second quarter of 2020, which was partially upset by the above mentioned variations in revenues. The rise in the cost of sales was primarily driven by a 31% increase in cost of productions which totaled 5.6 billion pesos in the second quarter of 2021 as compared to 4.2 billion pesos in the second quarter of 2020, mainly due to an increase in maintenance expenses of 0.6 billion pesos. Administrative and selling expenses were reduced 10% in real terms, saving more than 80 million pesos during the second quarter of 2021 as compared to the same period of 2020. Going to page seven, the consolidated net loss was 4.4 billion compared to consolidated net income of 3.3 billion pesos in the same period of 2020. In addition to the factors mentioned before, tenant income was affected by a 3.2 billion pesos or 486% increase in impairment of property, plant and equipment and intangible assets related to Brigadier Lopez and Lujan Decursions Plans. A 76% decrease in foreign exchange difference on operating assets mainly related to trade receivables that generated 1.1 billion pesos gained during the second quarter of 2021 compared to 4.6 billion pesos during the second quarter of 2020 due to a lower depreciation of the Argentine peso during the quarter and lower trade receivables balance maintained. As a reference, in the second quarter of 2021, the Argentine peso depreciated 3.77%, compared to 9.19% during the second quarter of 2020. A 6% decrease in interest from clients, which totaled 0.91 billion pesos during the second quarter of 2021, compared to 0.96 billion pesos of second quarter of 2020, mainly related to lower receivable balances and lower LIBOR rate. 2.4 billion or 266% increase in income tax expenses that amounted 3.4 billion pesos in the second quarter of 2021 compared to 0.9 billion in the second quarter of 2020, mainly due to the recent changes in the corporate income tax rate explained before. Lower financial income that amounted 0.2 billion loss in the second quarter of 2021 compared to 2.1 billion pesos gained in the second quarter of 2020 mainly due to interest rate shock losses and the net income on financial assets at fair value in the second quarter of 2020. And that's for lower financial expenses, which amounted to 2.9 billion during the second quarter of 2021, compared to 7.5 billion in second quarter of 2020, as there were less foreign exchange difference, which decreased from 6.2 billion pesos in the second quarter of 2020, to 2.1 billion pesos for second quarter of 2021, mainly due to a lower depreciation of the Argentine pesos during the quarter and lower debt balance denominated in dollars. Additionally, the share of profit associated was 0.4 billion pesos lost during the second quarter of 2021 compared to a loss of 0.1 billion in the second quarter of 2021. in the second quarter of 2020, mainly due to lower results from the operation on ECOVAX due to lack of tariffs and chestnuts for the natural gas distribution business. Finally, the gain on net monetary position totaled 0.02 billion pesos during the second quarter of 2021 as compared to 0.2 billion pesos in the second quarter of 2020. Money collection totaled 2.4 billion in the second quarter of 2021 associated to the furniture receivables of Huelta Obligado Plant compared to 2.0 billion of the second quarter of 2020. The amounts are being collected on time and according to the signed contract. Going to page 8, you can see our cash flow for the first half of 2021. Net cash provided by operating activities was 6.6 billion pesos This included 3.6 billion pesos in collections from . Net cash used by investing activities was 0.6 billion pesos mainly due to the construction of Terminal 6. Additionally, on the financing side, 6 billion pesos were used for payment of long term loans for 4.7 million pesos and interest and other loan costs for 2.3 million pesos partially offset by 1 billion pesos bank and investment account overdraft obtained. Thank you and now we invite you to ask any questions for our team.

We will now begin the question and answer session To ask a question, you may press star, 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 star, then 2. At this time, we will pause momentarily to assemble our roster. As a reminder, to ask a question, you may press star 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 star then 2. At this time, we will pause momentarily to assemble our roster. This concludes our question and answer session. I would like to turn this call back over to Mr. Bonet for closing remarks.

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

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.