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

On behalf of Edenor, we would like to thank everybody for participating in this conference call to discuss the start of the second quarter ending June 30th, 2024. We would also highlight important recent developments and advances in our effort to strengthen our position as an agenda. If you would like to receive our earnings and leaves of presentation, you can download them easily from the investor relations section of our website located www.edenor.com. or contact our investor relations team to report the documents. This event is being recorded. After the conference remarks are completed, there will be a question and answer session from which you may submit questions through the website's chat. Before proceeding, Let me mention that the forward-looking statements are based on the belief and assumption of Adenauer's management and on information currently available to the company. They involve brief 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's accurately post results from those expressed in such forward-looking things. Now, let me pass it over to Germán Rastel, our CFO, who will guide us through the presentation.

Thank you, Solange. Good morning and welcome to everybody. Your presence here is very important to us, and we hope to provide you with a good understanding of Adenauer performance during the second quarter of 2024. Before beginning our review of our quarter with you, we would like to announce the appointment of Mr. Daniel Marks as chairman and CEO of the company. The board of directors of the company, in its meeting held yesterday, accepted the resignation of Mr. Neil Pleasdale for personal matters as chairman and board of directors and CEO of the company, keeping his position as regular director. After this, The board appointed Mr. Daniel Marks as chairman, member of executive committee, and CEO of Eleanor. He has a long and distinguished record at highest level in the public and private sector business. The change will be effective as of August 31, 2024. Before moving to the discussion of our financial performance during the second quarter of 2024, I would like to take a few minutes to re-emphasize our business strategy. We are highly focused on continuing to develop a sustainable business and to be positioned as a leader in the region through technology and innovation. Our business performance has seen a major improvement since the starting of the implementation of normalization of the tariffs from February 16th of this year. This restored the financial equilibrium of the company and needs to maintain in the long term through a five-year tariff review. The completion of the five-year full tariff review, which will be defined tariff for 2025 to 2029, will be completed by year-end. This should further enhance our financial performance and increase our opportunities for growth over the long term. This will continue adapting our distribution business to meet and benefit from the changes of the energy transition and to broader our scope of business opportunity, which would include include investments in renewables, conventional generation, non-regulatory business, and critical minerals. I would like also to highlight some important recent developments. Our results for the second quarter on the first six months have been benefited substantially from the tariff increase implemented in mid-February of this year, with an EBITDA rating of 277 billion pesos in the second quarter of 2024 versus a loss of last year of 27.6 billion pesos. The five-year charter review process is actively moving forward and looks to set to be completed in line with the original schedule by the end of this year. A public hearing is scheduled for October the 1st. This week, we issued $100 million equivalent in Class 5 and Class 6 notes at a very attractive rate. Four-year bullet at 9.5% coupon for Class 5 notes. This followed the issuance of $124 million equivalent in Class 3 and Class 4 notes during the first quarter. Together, this has essentially improved our debt profile. Standard and Polish fix and modus, Argentina has ratified the national scale credit rating. The national government continues to move forward on the regulatory, for which a clear objective to normalize the deregulation of the energy sector. This has led to a series of moves since the beginning of this year. A major 319.2% transition target increase become effective on February 16th, 2024. This led to a major improvement in EBITDA, which was 77.4 billion pesos in the second quarter of 2024 versus the prior for both the second quarter and the year to date periods. Monthly adjustment to the value added for distribution started in August in line with estimated future inflation, 3% on VAD. The adjustment for the months from May through July will be included in the new tariff as part of the five-year tariff review process. This estimation is approximately 25.86% of additional increase that we will receive. The government continues to implement gradually a reduction in energy subsidies. We continue to work together with our advisors and the regulator to continue to make progress on the five-year full target review. As mentioned, this is unscheduled and expected to be completed by year end 2024. The company has been paying its energy purchase cost to CAMESA unscheduled since April. It has also been paying unscheduled, rescheduled payments for past due debt with Camisa. Additionally, it's negotiating a payment plan for some additional debt that is remaining with Camisa. Finally, it is worth noting that the Argentine Congress recently approved a major law known as Ley Basis, which is expected to provide major investment opportunities. Amongst its provision is a new program called RIGI, Regimen de Incentivos a las Inversiones in Spanish, which provides incentives for major new investors on new investments. This is expected to encourage both foreign and domestic investments in Argentina. It is specially applicable to invest in the energy and infrastructure sectors. Now, let us look at the financial results, which show significant improvements during the quarter. As you can see in slide 10, sales rose 28% year to year in the second quarter of 2024, in constant currency pesos, to 436,721 million pesos in the second quarter of 2024. This was mainly due to the impact of the tariff adjustment, plus an increase in consumption by residential customers of 1.9%, which was partially offset by a reduced demand. Energy sales evolution. An enormous customer base, which is 3.3 million customers, 1% more versus the second quarter of 2023, due mainly to an increase in residential customers. This increase reflected greater market discipline measures and the installation of 3,890 smart meters in the second quarter of 2024 to convert clandestine connections into formal participants in the electricity system. Distribution margin. The distribution margin for the six months increased significantly to 340,000. 354 billion pesos, up 76% versus the first half of last year. The rise was largely driven by the major improvement in the second quarter of 2024, up 94% versus the second quarter of 2023, to 201.3 billion pesos. The positive effect from the tariff adjustment implemented from mid of February 2024, which more than upset the negative effect of the lower volumes and higher end costs due to the subsidies reduction. EBITDA. Second quarter EBITDA was a positive result of 77.4 billion pesos, a sharp swing from the last year loss of 27.3 billion pesos. The main factors driven the improvement were the following. Positive impacts. Higher revenues that resulted from the tariff adjustment implemented in February and further reductions in energy losses from 15.3% in the second quarter of 2023 versus 14.9% in the second quarter of 2024. Net financial expenses. Financial expenses on sale on slide 14 of 132.5 billion pesos in the second quarter of 2024 was up 2% versus the second quarter of 2023, mainly due to the Camisa debt considering interest and the impact of the devaluation of last December. Net results. For the net income, Illinois reports a net profit of 47.3 billion pesos for the second quarter, versus last year's loss in the second quarter of 17.9 billion pesos. The improvement was due to the better operating results. The sharp rise in the net income occurred despite a lower positive effect of RedCamp versus the second quarter of 2023. CapEx For the second quarter, we invested 76.9 billion pesos up 23% versus the last year's second quarter, which accumulated capex of 134.7 billion pesos for the first half of this year. Our investment program remains strong and reflecting our unwavering commitment to improve service quality, which is evident in the strong improvement that have been achieved in our service indicators. Our investment program spending allocation is made to fulfill our commitment to meet rising demands, further improve service quality, and reduce non-technical losses. Now looking at our operating indicators. Energy losses. We achieved an important reduction in energy losses, reaching 14.1% down from 15.3% year-to-year. This underscores our continuing efforts to find solutions to this challenge. Our multidisciplinary teams are consistently focused in finding innovations ways to compete energy losses. These efforts are complemented by our market discipline initiatives that are aimed to curbing inefficiencies and irregularities. Also analytical tools powered by artificial intelligence of mounted inspection efficiency and our market discipline actions continue to detect and rectify irregular connections. It is important to remember that the 14.9% total loss, 9.7% are technical losses which are recognized by the regulatory entity in our target. Quality of service. As mentioned earlier, our investment plan is continuing to provide improvement in service quality by reducing the duration and frequency of the outlays which have been on a downward path since 2014. These levels are and have been comfortable exceeding the levels required by the regulatory entity. At the end of the second quarter of 2024, the CIDI and CITI indicators show 8.7 hours duration of outages and 3.6 average outages per client respectively in the previous, both close to the record levels. This recovery in service is mainly due to the strong investment that the company has made over the last decade. The investments have been focusing on implementing improvements in operational process and the adoption of technology applied to the operations and management of the network. Financial debt. This week, as I told you before, we issued $100 million in Class 5 and Class 6 notes at a very attractive rate. This follows the issuance of $124 million in Chapter 3 and 4 during the first quarter of this year. Together, this has substantially improved our debt profile. Reforma total debt is now $300.5 million. Total net debt is $42 million. With the improvement in our risk profile due to important changes on the regulatory front, the three rating agencies that cover us, Standard & Poor's Fix and Moody's each made positive moves one notch related to our debt earlier this year. Standard & Poor's Fix raises their ratings and Moody's improves their outlook. We view these changes as a very positive signal. Most recently, Standard & Poor's Fix and Moody's have ratified the national scale credit ratings. Maturity schedule. In this slide, you can see the maturity schedule of our debt as of June and our performance for the recent transaction in which we issue $100 million in class five and class six. Closing remarks. To close, I would like to reiterate several key points showing in slide 15 that are the following. We remain focused on future transformation growth opportunities. The changes to our corporate purpose in our bylaws will allow us to open the spectrum of growth opportunities to other segments like energy generation, critical minerals, adapting our distribution business to the changes of the energy transition. We are an industry leader in Argentina with a leading 20% market share in the electricity distribution business. The five-year target review process should continue to result in material improvements in EBITDA and net income, as well as to keep making investments to further improve the quality service to our clients. Continue to transform the grid into a smart grid with technology and innovation. These improvements have restored partially the economic equilibrium of the company. The company is in the right track and is working accordingly with the regulatory entity to finalize the tariff increase for the last five years in order to have a stable and predictable plan for the coming future. With this, now we would like to open the call to for questions. To ask questions, please send a writing message to the IR or to the Q&A menu. Identify yourself and stating that you have a question. We thank you again for the support and your engagement as shareholder and one holder. For the use of proceeds of the $100 million debt that we have, my issue is infrastructure. We will continue in the process of continuing improving the business plan of the company.

There is another question from Google.

The second quarter figures give us an indication of the future earnings potential. They are a good start point, and it would not commit to analyze that number. Certainly, for 2024, the full EBITDA will be somewhat less because of the weaker quarter of the year. The rating agencies estimate

can be considered that are in accordance with our numbers for for this 2024 so i would suggest you to look into the the reports of the rating agencies as an estimation between 275 billion pesos to 325 billion pesos an explanation of visa and peace as an explanation of Yes, I would say yes, it's going to be a process that needs to be.

still regulated and put in a way normalized with the regulatory entity, because for today we don't have regulations on that respect. But I would say that that's going to be part of the process that the industry market will go for. I would think that that's going to be the goal for the future.

Thank you.

could you give us more color about your investment plan in the new or typical mirror not for the moment we just have created the the new company that's going to be a subsidiary of erinor and it's called a not fake but we will we will start analyzing different projects and different alternatives for the future

There is another question. Did you have an increase in the VAT moving over by how much?

Yes, we did have an increase and the increase is as of August the 1st and it's a 3% over the value added distribution amount. Okay. Thank you very much for your participation and your questions on our quarterly conference call. Please do not hesitate to contact us, our industrial relations department, for any further inquiries you may have. And good morning to all of you, and have a nice day.