Central Puerto S.A.

Good morning and welcome to the Centro Puerto conference call following the results announcement for the second quarter ended on June 30, 2022. All participants will be in a listen-only mode. Should you need any 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.centropuerto.com. A replay of today's call may be accessed by accessing the webcast in the Investor Support section of the Centro 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 second quarter ended on June 30, 2022, include the effects of inflation adjustments. Accordingly, the financial figures mentioned during the call, including the data from previous periods and the growth comparisons, have been stated in the terms of Argentine 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 to the forward-looking statements section of our earnings release and recent filings with the SEC. Centro Puerto assumes no obligation to update forward-looking statements except as required under applicable securities 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 Centro Puerto is Fernando Bonet, Chief Executive Officer, and Enrico Terranio, Chief Financial Officer, and Federico Borsori, Financial Controller. Today's presentation will be carried out by Federico as Fernando has a cold and has lost his voice. I will now turn the call over to Federico Borsori. Mr. Borsori, you may begin.

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Good morning and welcome. We are joining you today with our management team from Buenos Aires, Argentina, to report results for the second quarter of 2022. After the presentation, we will answer any questions you may have. I would like to begin today's call by analyzing the recent events the industry in general, and finally, the operating figures of the second quarter of 2022. First, I would like to comment on the latest regulatory news in industry. On April 21st, the Secretary of Energy issued the resolution number 238-22, which updated remuneration prices for energy and capacity of units under spot energy framework. Remuneration values increased by 30% retroactively to February 2022 and an additional 10% increase on June 2022. This resolution also eliminated the use factor adjustment that reduced the capacity payment calculation for the units with lower dispatch, paying all generation units regardless dispatch. In our steam turbine With low dispatch, this change implies an improvement of 30% in air capacity payments. Secondly, I would like to mention the following updates regarding the central portal. Central portal successfully built in Gameza's options for 10 megawatts of dispatch priority for our Parque Solar San Carlos project and the matter framework located in San Carlos Delta Province. Now I would like to comment on the main metrics of the industry, as you can see on pages 2 and 3. In terms of its total capacity, the system reached 42,882 megawatts in the second quarter of 2022, resulting in a 1% increase compared to the second quarter of 2021, mainly based in new renewable projects developed. As of June the install capacity continued to be 59% thermal, 25% hydro, 12% renewable, and 4% nuclear. In the second quarter of 2022, energy generation increased 1.8% to 34,486 compared to 33,872 gigawatts in the second quarter of 2021, mainly due to an increase of 41% in hydro, a 12% increase in renewables, partially offset by an 8% decrease in thermal, and 15% decrease in nuclear. Renewables rise was due to the new installed capacity and hydros is related with the increase in river worldwide flows that soften the growth that the region had experienced last year for thermal units there was low dispatch due to the increase of hydro and an overall lower availability of of 77 percent for the second quarter of the 2022 as compared to 83 percent in the second quarter of the 20 As for nuclear source, the decrease was related with the shutdown maintenance of Atucha II nuclear plant. During the second quarter of the 2022, the main sources of energy generation continued to be thermal and hydro, with a share of 60% and 22% respectively, while renewals were 13% and nuclear were 6%. In the first half of the 2022, energy generation increased 1.4% to 70,205 gigawatts compared to 69,204 gigawatts in the first half of the 2021, mainly due to an 80% increase in renewables, an 8% increase in nuclear, and 4% in high-proportional offset by a decrease of 3% in thermal. Finally, as you can see on page 4, energy demand increased 6% up to 34,948 gigawatts compared to 32,858 gigawatts in the second quarter of 2021, where commercial users grew 7%, residential grew 7%, Great demand grew 4%. As of the second quarter of the 2022, demand structure was 46% represented by residential users, 27% by commercial activity, and the remaining 27% was related to great demand industrial slash commercial. In the first half of the 2022, the composition remained stable with 46% residential 28% for commercial, and 27% linked to create demand in industrial slash commercial. Going now to our key performance indicators for the quarter, as you can see on page 5, energy generation during the second quarter of 2022 was 4,280 gigawatts of electricity. 14% higher than the same period of the 2021. The increase was mainly caused by a 39% increase in energy generation from thermal units, mainly from terminals 6, due to high dispatch related to the combined cycle full operation and higher dispatch of ported steam turbines. 45% decrease in energy generation from the hydro plant Piedra Iraiza. due to the lower water inflows of the Lima River compared with the second quarter of 2021. 4% decrease in energy generation from renewable units due to lesser wind results. Regarding the availability of our thermal units during the first quarter of 2022, it reached 83% in line with the strong availability history of the Central Port of Equipment. As a reference, the market average availability for thermal units for the second quarter of 2022 was 77%, according to the data from CAMESA. Steam production increased 104%, totaling 585,645 tons produced during the second quarter of 2022, compared to 287,000 tons 484 tons during the second quarter of 2021 due to the commissioning of the Terminal 6 cogeneration plans. Going now to our key performance indicators for the first semester, in the first half of 2022, energy generation increased 23% to 8,865 gigawatts compared to the 7,218 gigawatts for the same period in the 2021. As a reference, domestic energy generation increased 1% during the first half of the 2022 compared to the first half of the 2021, according to the data from CAMISA. Increase in the energy generated by Central Puerto was due to an increase of 37 in electricity generation for thermal units, mainly due to Terminal 6 generation The recovery to the average production of the Siemens-branded combined cycle of the Lujan de Cucho plant, 5% increase in the energy generation from renewable units. This was partially offset by a 16% decrease in energy generation from the hydro plant Tierra del Águila due to lower inflows of Limay River. During the first half of the 2022, machine availability for thermal units reached 83% compared to 89% in the same period of the 2021. Due to above-mentioned extraordinary maintenance in Luján de Cuyo 2 cogeneration and one steam turbine from Puerto Saiz, certain small failures and unavailability in some steam turbines. As a reference, the market average availability for thermal units for the same period was 76% according to the data from CAMESA. In production increases, 90% totaling 1,046,380 tons produced during the first half of the 2022 compared to 549,515 tons during the first half of the 2021 due to the commission of Terminal 6 cogeneration. And now, I will comment on the financial highlights. First, I would like to comment on certain key financial information related to Brigadier López Financial Trust. On April the 5th of the 2022, the existing financial debt under the Brigadier López Financial Trust was canceled. The scheduled majority of this indemnity was August the 2022 and was considered in April as a liability management policy with the aim to reduce financial costs. I will now comment on the results of the second quarter of 2022. Going now to the results for this quarter, as you can see on page 9, our revenues were pesos 19.1 billion as compared to pesos 20.1 billion during the second quarter of 2021. This 5% decrease was mainly due to, first, a 37% decrease in sport energy sales, which totaled pesos 6.4 billion in the second quarter of 2022, as compared to 10.2 billion in the second quarter of 2021. Due to higher inflation and price adjustment and lower generation from the hydro plant, Piedra del Aguila, scheduled maintenance of certain steam turbines from port to site, and the commitment of Terminal 6's plan and the beginning of that contract. Partially offset by, first, a 79% increase in steam sales, which totaled pesos 1.1 billion in the second quarter of 2022, compared to pesos 0.6 billion in the second quarter of the previous year, due to a 104% production increase. And second, a 26% increase in sales under contract, which amounted to pesos 11.1 billion during the second quarter of 2022, as compared to pesos 8.8 billion in the second quarter of 2021. Due to a higher generation of terminal sales, and their performance of wine plant despite a higher inflation adjustment over the pesos depreciation in the period. Going to page 10, we can see the changes in our EBITDA excluding impairment and funding effects difference and interest, which was pesos 12 billion in the second quarter of the 2022 compared to pesos 11.3 billion of the second quarter of the 2021. This 6% increase was driven by the following changes. First, a 5% decrease in revenues explained before. Second, a 5% decrease in the cost of sales that totaled pesos 10.5 billion compared to pesos 11 billion in the second quarter of 2021, primarily driven by lower operational costs. And third, an 8% increase in administrative and selling expenses that totaled pesos 1.3 billion during the second quarter of the 2022 compared to 1.2 billion in the second quarter of the 2021. Continuing with page 10, we can see that the consolidated net income was pesos 2.4 billion in the second quarter of the 2022 compared to a consolidated net loss of pesos 7.2 billion in the same period of the 2021. In addition to the above-mentioned factors, net income was negatively impacted by, first, an increase in financial expenses, which amounted to pesos 6.9 billion during the second quarter of the 2022, compared to pesos 4.7 billion in the second quarter of the 2021, mainly due to an increase in foreign exchange difference and a higher depreciation of Argentine pesos during the quarter. Second, an increase of net monetary position loss which amounted to pesos 4.8 billion during the second quarter of the 2022 due to a higher inflation during the second quarter of the 2022 and higher balance of monetary assets. And positively impacted by, first, the decrease in the impairment charge of property, land, and equipment, that total pesos 6.4 billion during the second quarter of the 2021. Second, 55% increase in foreign exchange difference on operating assets, mainly related to funny trade receivables that generated a Pesos 4.6 billion gain during the second quarter of 2022 compared to Pesos 1.8 billion gain during the second quarter of 2021 due to a higher depreciation of the Argentine Pesos during the quarter. an increase in financial income that amounted to pesos 2.2 billion in the second quarter of 2022, compared to pesos minus 0.3 billion in the second quarter of 2021, mainly due to higher financial assets results in the second quarter of 2022. lower income tax expenses that amounted to pesos 1.1 billion in the second quarter of 2022 compared to pesos 5.5 billion in the second quarter of 2021. Additionally, the share of profit of associates was pesos 0.3 billion gained during the second quarter of 2022 compared to a loss of pesos 0.7 billion in the second quarter of the previous year. Money collections related to trade receipts for Vuelta a Obligado plan total pesos 2.1 billion in the second quarter of 2022 as compared to 3.9 billion in the second quarter of 2021. The amounts are being collected on time and according to the signed contract. Going to page 11, you can see our cash flow for the second quarter of 2022. Net cash provided by operating activities was pesos 16.9 billion. This includes pesos 2.1 billion in collections from Vuelta a Obligados installment. Thank you, and now we invite you to ask any questions you may have.