Empresa Distribuidora Y Comercializadora Norte S.A. (Edenor) American Depositary Shares

Good morning, ladies and gentlemen, and thank you for joining. At this time, we would like to welcome everyone to Evernote's fourth quarter 21 earnings conference call. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the presentation. After the company's remarks are completed, there will be a question and answer section through the webcast chat. Before proceeding, let me mention that forward-looking statements are based on the belief and assumptions of Evenor's management and information currently available to the companies. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Adenauer and could cause results to differ materially from those expressed in such forelooking assignments. Now I'll turn the conference over to Mr. Herman Ranz, CFO of Adenauer. Thank you.

Good morning, everyone, and thank you for joining. Welcome to the no earnings webcast for the fourth quarter 2021. I truly hope that you and your family are safe and healthy. As you know, you can always call any member of our team for more details on the results of the period and any doubts you may have. First, we will focus on highlights. NR continues to guarantee the electricity distribution services to all its 3.2 million customers, representing a population of approximately 11 million people. Our mission is to provide a social responsibility to electricity services, leading the energy's transition to contribute to improve people's quality of life, business and community developments, as well as our employees and shareholders. We are committed to our community, which is why we have adopted the best environmental, social and governance practice. Enor was able to improve its quality service as well as a better management of its resources. The key indicators SAIDI and SAIFI represents the duration and frequency of energy cuts for the last 12 months, showing an improvement of 13% and 11% compared to the same indicators as of December 2020. Revenues from sales were 11% lower than the fourth quarter 2020 in real terms, mainly due to the fact that the company is still renegotiation the tariff of distribution value added. Investment reaches 16,246 million pesos in the 12 months of the year, with no material changes for the same period of the previous year, 3%. Regulatory framework. Public hearing resolution number 25, 2022. The ENRE arranged to convene a public hearing for February 17, 2020, in order to inform and hear opinions regarding the following. The treatment of the determination of the seasonal references prices of power, stabilize energy in the wholesale electric market, MEM, as well as establish prices of transportation, PET, and for the wholesale electricity market of Tierra del Fuego system. And second, the proposal of the concessionaries of the public services of transport and distribution of electrical energy aimed at obtaining a transitory adjustment of tariffs. In addition, the ENRE requested the company to submit an update of the financial projections and investment plan for the year 2022, already sent in January 19, 2021, for the years 2021 and 2022, respectively. In relationship to the investment, the annual requested a detailed presentation of the world's investment plan consisting with the new financial projections of the company. Decree 88-2022. Complementary provision for the general budget of the National Administration 2022-February 2022-2022. The National Executive Authority extended until December 31, 2022, the implementation of the special regime for the realization of obligations for debt help with CAMESA by the electrical power distribution and the special credit regime established by the Secretary of Energy with the framework of Article 87 of the law 27591 and Resolution 14-21 and 370-21. Approval of Tariff Tables of Resolution of ENRI 66, sorry, 2022 in February 25, 2022. The ENRI approved new values of Eleanor Tariff Tables, effectively as of March 1, 2022, in which increases are 8% in VAT was established, in the value-added service was established. It also incorporates an increase in the reference prices of power and the stabilized prices of energy of 38-34% for the residential categories and 50% for the non-residential categories, as well as an increase in 20% in the stabilized prices of transportation. Thus, the average tariff for the residential category varies by 19% with respect to the previous categories. tariff category and the general category by 22 percent approval of tariff table resolution of henry 41 2022 march the 2nd 2022 effectively as of february 1st 2022 the android approved the new values of the north tariff chart with such approval only the energy prices for Tariff 3, customers and contracted power of 300 kilowatt changes, for which the average energy prices went from 6,813 pesos per megawatt to 8,080 pesos per megawatt, which implies an increase of 19%. Third quarter results. The gross margin corresponding to the fourth quarter 2021 was 1,065 million pesos, which represents a fall of 13% compared to the same period of the previous years. Gross profit value are mainly explained by the decrease of revenues from sales of 11%, reaching 24,480 million pesos in the fourth quarter of 2021 against 27 557 million pesos in the fourth quarter of 2020. at the same time this is explained since the company is really negotiation the tariff of distribution value added and the effect of energy season seasonal prices purposes in an inflationary context beside this last effect was partially offset by an increase in demand driven by a recovery in commercial and industrial activities between the comparison periods in the tariff adjustments applies as from may the first ebitda had a 94 percent increase in the fourth quarter of 2021 and during the 12 months of year it increases 126 percent compared to the same period of the previous year however Adjusted EBITDA accumulates a drop of 20% in the annual terms compared to 2020. This is due to the fact that during 2020, a strong depreciation of assets was recognized, which had a direct impact on the financial statements and the decrease in sales revenues. Besides, it was offset by a decrease in operating costs and improvement in energy losses. and recognize income under the framework agreement for investments and an increase in the tariffs since May 1st, 2021. The volume of energy sales increases by 10%, reaching 5,241 gigawatts in the fourth quarter of 2021, against 4,752 gigawatts in the same period. As regards the annual accumulated, it also mean an increase of 8% reaching 21,710 gigawatts. Furthermore, Adenauer customers base roses by 2% compared to the same period of the previous years, reaching more than 3.2 million customers, mainly on accounts of the increases in residential customers and small commercials. As a result, of the market discipline action and the installation over the last year of more than 40,862 integrated energy meters that were mainly intended for the regularization of clandestine connections. financial results experienced a 71% increase in losses, reaching 8,292 million pesos in the fourth quarter of 2021, against a loss of 4,850 million pesos in the same quarter of 2020. This difference is mainly due to the higher interest accrued on the debt incurred by CAMESA, which to date accumulated interest for 23,879 million pesos. These results were partially offset by the lower losses from exchange differences in the amount of 659 million pesos due to the lower devaluation of the peso in the quarter and the lower debt in foreign currency and changes in the fair value of financial assets in the amount of 181 million pesos. To summarize, net results accumulated losses for 6,650 million pesos in the fourth quarter of 2021, decreasing losses by 16,980 million pesos compared to the same period of the last year. This can be explained why the impact of the impairment of the property plan and equipment in 2020 and was offset by the decrease in income from the sales of services and the increase in financial expenses. In addition, there was a lower loss in the operating income, higher financial charges due to the deferral of the payments of obligations with the wholesale electricity market price, and higher results from exposures to changes in purchasing power. Let's go into capital expenditures. During 2021, investments reached 8%. 16,247 million pesos, representing a 3% decrease in real terms compared to the same period of the previous year. Despite the annual decrease, it can be mainly explained due to the impact of extraordinary registration of 1,395 million pesos of the 500 and 220 kilowatts and 800 megawatts transformer bank at General Rodriguez Transformation Station registered in the second quarter of the last year, which has affected our comparison of 12 months. Among the most outstanding investments of the fourth quarter, we can highly highlight the following. Start of operations of the new Ara San Juan 160 megavatios substation, construction of 6.6 kilometers of high voltage network of Puerto Nueva Electroducto Austria, construction of 1.4 The investment plan executed in recent years continues to show results that are reflected in a continuous improvement in the quality of services. The investment plan executed in recent years continues to show results that are reflected in a continuous improvement in the quality of services. by reducing the duration and frequency of the outages since 2014, and thus exceeding the regulatory requirements set forth in the last comprehensive tariff review, and even exceeding this year the quality indicators required by the regulators for the end of the tariff period in February 2022. Services quality standards. Quality standards are measured based on the duration and frequency of the outages using CIDI and CIFI indicators. CIDI refers to the duration of outages and measures the number of outages hours and users experience per year. And CIFI refers to the frequency of outages and measures the number of times a user experience an outages during a year. At the closing of the fourth quarter of 2021, Saidiya and Safi indicators were 10.7 hours and 4.1 audits per year over the last 12 months, evidencing a 13% and 11% improvement respectively compared to the same period of the previous year. In turn, these indicators are 22% and 31% lower than the target value required by the RTI for the end of 2021. This recovery in services levels is mainly due to the investment plan devices by the company since 2014. The different improvements implemented in the operating processes and the adoption of technology applied to the grid to improve in terms of operations and management. Energy losses. In the fourth quarter of 2021, energy losses experienced a decrease of 17% against 18% of the same period of the previous years. Costs associated with these losses remain stable, experiencing a 45% decrease in real terms. This results in 681 million pesos of improvements in the real terms. The works of multidisciplinary teams to develop new solutions to energy losses continues, as well as market discipline actions aiming to reduce them. Analytical and artificial intelligence tools were used to enhance effectiveness in the routing of inspections and DIME actions continues with the objective of detecting and normalizing irregular connections, fraud and energy theft. In addition, during 2021, 13,000 inspections of tariff 1 residential users were conducted with a 52% efficiency, while for the same period of the previous years, 446,000 inspections were conducted with 57% efficiency. This means a 7% fall in inspections and a 5% fall in efficiency. Moreover, 4,000 41,862 integrated energy meters, MIDE, were installed during 2021, and 13,303 of which were installed during the last quarter. Regarding the recovery of energy, besides the normalization of customers with MIDE, meters, clandestine customers and conventional meters were also packed back to normal. Moreover, a new energy balance system was implemented, as well as the development of microbalances in private neighborhoods. In all cases, a streaking rate of recidivism in fraud has been observed. Finally, regarding the outstanding debt, it is a highly unleveraged company with a debt outstanding of $98.1 million in corporate bonds, which maturity is October 2022. This concludes my review on A&R, and I would like to thank you for your support shown by our investors and bondholders and your interest in participating today.

We are now open for questions through our chat.

We are waiting for the questions in the chat.

The question is, do you expect any other increases in VAT for the remaining of the year? The answer is yes. We are in the process of negotiating that with the regulatory entity, and we are working very close to them to find a solution for that and able to have another increase in our VAT. So if there are no further questions, I would like to thank you for joining this conference call, and please keep you and your family safe and healthy, and have a nice day. Thank you very much, everybody.