Enel Chile S.A.

Good day, ladies and gentlemen, and welcome to Enel Chile First Health 2020 Results Conference Call. My name is Livia, and I will be your operator for today. During this conference call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect only on our current expectations, are not guarantees of future performance, and involve risks and uncertainties. Actual results may differ materially from those anticipated in forward-looking statements as a result of various factors. These factors are described in Enel Chili's press release reporting is first held 2020 results. The presentation accompanying this conference call and Enel Chili's annual report on form 20-F including under risk factors. You may access our first held 2020 results press release and presentation on our website www.enel.cl, NR20-F on the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their date. NLCHILI undertakes no application to update these forward-looking statements or to disclose any development as a result of which these forward-looking statements become inaccurate except as required by law. I would now like to turn the presentation over to Mrs. Isabella Clemes, Head of Investor Relations to Enel Chile. Please proceed.

Isabella Clemes Thank you very much, Lidia. Good morning, ladies and gentlemen, and welcome to Enel Chile's second quarter 2020 results presentation. I hope you are all well and safe in your homes and are following all the required safety measures that the prevailing circumstance requests to us all. I am Isabella Clemes, Head of Investor Relations. Our presentation will be hosted by Paolo Palotti, our CEO, and Giuseppe Tustarelli, our CFO. In occasion of this event, we are still adopting appropriate prevention measures. We are all connected from our homes. Paolo will open with the main highlights and will give us an update on the global situation that we are facing and how the company is responding to it. Then, Giuseppe will walk you through our financial results, our operation performance, and he'll give you more details on our 2020 EBITDA guidance update. The usual Q&A section will follow. Please note that questions will be received only via chat. available in our webcast at www.nl.ca at the investor relations section. At any time during your presentation, you can submit your question. Just select the link at the top of the web page, ask a question. Let me remind you that media participants are connected only on listener mode. As always, our IR team will be will continue to be available to provide you with any detailed information you may need with respect to the figures included in this presentation. Thank you all for your presence, and now let me hand over the call to Paulo.

Thank you, Isabella, and good morning, ladies and gentlemen. Let's start by mentioning the highlights of the period on slide two. The world is facing extraordinarily difficult times. Since the beginning of the health crisis, Enel Chile has realized the severity of the situation and implemented all necessary measures to continue offering a stable and safe energy supply service, safeguarding at all times the safety and health of our employees, our clients, and external providers. All our generation and network facilities are fully operational. Thanks to our commitment to digitalization, we have developed a solid platform that has turned out to be key in meeting our customer needs in the current scenario, while they are struggling with the difficulties in accessing traditional PlayStation channels of service. We have been promoting remote working methodology since several years by evolving our systems toward the cloud. Today, a significant number of employees are working remotely in an efficient and effective way. As part of our commitment with the energy transition, with the sustainable development of the country, on May 27th, Energy Generation Chile announced its decision to anticipate the closure of Bocamina 1 by December 31st, 2020. and Bocamina II by May 31st, 2022. The decision implies closing much earlier than committed in the national decarbonization plan, and will make an El Chile the first utility to stop generating from coal in Chile. In line with the previous announcement, El Chile is progressing in the development of renewable projects, including in our strategic plan. This initiative seeks to add a total of 2,000 megawatts of renewable restore capacity by 2022, half of which is already under construction. This project reaffirms our position as the first renewable operator in Chile. Lastly, we have a safe liquidity position to continue executing our strategy and to face this global challenge. Let's move to page three. First of all, I would like to thank all our people for their positive and strong commitment, highlighting with their actions the resilience of our company. I want to expand my thanks to our contractors that have been supporting deeply our activities. Since the beginning of this global crisis, we have taken all the necessary measures to guarantee the safety of our people, contractors, and clients, as well as ensuring the continuity of the service. As mentioned in the previous quarter, we have created a committee to analyze the situation on a day-by-day basis and to coordinate all the required action we may need to take. Therefore, 100% of our plans and network are fully operational. A large number of our people will continue to work remotely once the quarantine measure will be revoked. For the ones that need to be in our facilities, the process will be gradual, taking all the security measures. As of June 15th, We have gradually restarted manual readings and billing distribution with all the corresponding preventive health measures that includes personal projection gear to support the health of our customers, employees, and the community. Up to this date, following the regulation in place, we temporarily bill our clients using the average consumption of the last six months. To ease the impact of the probable differences between the billing of estimated electricity usage and the actual reading, we voluntarily decided to apply payment solutions to all our regulated clients to whom manual readings were suspended. For instance, if a client consumes more than what has been billed by the company, we will automatically split the difference in five-month payment installments without interest rates, readjustments, or any additional charges. In addition, to help our clients to cope with this crisis, we have voluntarily extended the benefits on deferred payments that we have offered to the most vulnerable clients until the end of the emergency period. Now, on page four, In these difficult times for Chile and for the world, we have reaffirmed our commitment to our communities, putting into action a voluntary campaign to respond to the challenge of COVID-19 and to support the most vulnerable communities, especially the ones most affected and closer to our activities. Under this program, we have donated two electric ambulances to the Red Cross with their respective charging points. The e-ambulances are the first of its kind in LATAM and will represent an important cost reduction for the institution once compared to the diesel technology. Thanks to a collaborative work with the Università Cattolica and with the UC Christus Health Network. We have implemented an electric bus that was adapted as a mobile laboratory to support detection of COVID-19 cases and enhance logistics for testing. We will continue with several other projects with our local communities as we clearly understand the importance of our role in the country. Together we will get ahead of this situation. Now on page five. Since the outbreak of COVID-19, volatility has spiked to levels last seen only during the global financial crisis, having the uncertainty of the depth and duration of the economic crisis due to the pandemic. Oil and gas prices have fallen sharply, enduring important declines once compared to 2019 figures. Emerging market currencies are under stress, and although the Chilean pesos currency is considered one of the most resilient in Latin, we have observed a depreciation of around 80% year-to-date basis, again the U.S. dollar. The index IMASEC, which measures the economic activity of the country, contracted by 15.3% in May 2020 versus last year data. Social distancing measures have impacted a larger number of workers and economic activities, especially in the main cities, bringing the unemployment rate at 11.2% in May. On government-directed side reaction, the Chilean central bank decided to leave the interest policy rate at 0.5% to continue supporting market liquidity and commercial lending. In addition to this measure, It is also carrying out U.S. dollar swap line arrangements to reduce volatility of Chilean pesos, particularly considering the recent approved law, which allowed a 10% voluntary withdrawal of the Chilean pension funds by their contribution. Now on slide six. The country's lockdown has impacted the electricity demand in many economic sectors related to industrial activity and commerce. Several companies have reduced its operation to minimal levels and, to some extent, shut down their operation, which resulted in an important decrease in demand. As we can see on these slides, both our generation distribution businesses face an important decrease particularly concentrated since March 2020, as a result of the lockdown measures. The demand reduction in both generation distribution businesses are mainly explained by the contraction of the regulated consumption. We can see this effect not only in the distribution concession area, but also in other regions of the country. This reduction is primarily driven by commercial industrial sector, as many stores, malls, and small industries are closed. On the free market perspective, at least in our generation business, we still see an increase in the demand versus last year, primarily driven by the resilience of our free market clients, as the mining companies, and by the new PPA secured by our company, especially in the first part of this year. On page seven, let's focus on distribution collection. Our efforts on digitalization have allowed allowed us to ensure the continuity of our business without compromising the safety of our clients and collaborators. We have put all our attention to strengthen our digital channels, improving the experience of our clients. As of June, our distribution client app was downloaded by 360,000 clients, a number 74% higher than last year's figures. we have also increased the number of payment channels available to our clients. As a result, in June, 88% of the payments were made through digital channels. By June 2020, we have executed more than 35,000 agreements with clients to modulate their payments and mitigate the impact on our collection, of which 10,000 have been subscribed with the most vulnerable ones by March 2020. As a result, we sustained the average collection level to 97% in the first semester of 2020 versus our historical levels of around 99%. Let's now focus on hydrology, on slide number 8. As you can see in the first graph, until June there was a significant rainfall deficit and therefore, the first semester of this year was the driest period registered in the country. To understand the performance of our company, we are presenting the accumulated rainfall for our most significant river basins, Maule, Laca, Biobio, and Rapel. As shown in the right side of the slide, since mid-June, we have observed a recovering rainfall, almost reaching normal levels to date. In addition, There has been an improvement in the levels of snow accumulated in the mountains since rains have been accompanied by a very low cold condition with a zero risk term at a very low altitude. The accumulated snow levels are higher than those observed last year. Under the current conditions, we expect the hydraulic generation of the second semester of 2020 to reach around 7 TWh approximately. So in terms of hydro generation, 2020 would be very similar to the previous years, reaching around 10, 11 terawatt hour. Let me remind you that generation with LNG natural gas is currently the natural edge of an El Chilo portfolio to cope with the draft, as you will see in the following slides. To conclude this section, let me update you on regulation framework evolution. We are in slide number nine. On the contingency front, we include the decision made by the executive or by the parliament. The Senate and the Congress have recently approved a new law known as the Basic Services Bill that aims to benefit the most vulnerable clients of basic services industries. This law includes benefits to vulnerable clients already voluntarily offered by our company and the obligation of not cutting off the domestic clients that are not paying their bills during the emergency period. This law has been opposed by the executive that applies its veto right for unconstitutionality. The Senate is expected to vote on this matter by today onwards. while the lower house has already rejected the presidential bid. If the Senate will vote in line with the lower house, the law will be effective. Another ministry decision is referred to the modification of the peak hours regulation during the winter period. After the decision on suspending the April and May peak hour tariffs, a new regulation, pending the executive decree, may suspend the peak hour tariffs during August and September. These changes will have a very marginal impact on generations, slightly more on distribution, especially for August and September period. To respond to the economic effects of the crisis, since the lockdown, the Chilean government has proposed more than $30 billion on measures to boost the economy. Of structural measures, The Minister of Energy has recently stated the next step referred to the new distribution law, so-called until now, Lay Larga de Distribución. According to the Minister of Communication, it foresees a three-step approach dealing with opening of the market and definition of the figures of traders, quality of service improvement, and distributed generation. On the first point, the government will present a bill with the required measure to open gradually the market, creating the figures of energy trading companies, and define the rules for the commercialization activities. On the second and the third topics, the government is expected to propose a new measure to add the concept of incentive regulation that should reward high-quality distribution companies and the new elements on distributed generation. On the new distribution regulatory cycle, The government recently published the bidding process to hire the external consultants to carry out the regulatory studies on the new reference model companies. We will share more details of the current framework in the next quarter, as we expect that the first appraisal report will be released by September 2020. Finally, the government is expected to rule on flexibility of the electric system. creating a mechanism to guarantee the continuity of the capitalization process and the renewable expansion in the country. On the hydrogen development, a global internal team has been created to focus on this new technology to evaluate all the business opportunities arising from the European Commission's New Green Deal, the agreement signed between the Chilean government and the European Union. Now, let's go through our strategy, starting with our descarbonization process. We are in page 11. On July 6, the CNE authorized us to proceed with the final decommissioning, disconnection, and termination of Bocamina 1 operation on December 31, 2020. More recently, on July 24th, the CNE has also authorized the early disconnection of Boccamina II by the end of May 22. Let me remind you that the decommissioning of the two units of Boccamina will be finalized without accessing to the energy strategic reserve. With this achievement, we will become the first utility to phase out its core fleet by 2022. We are working on a redeployment plan for all the workers of the units and the conversion of these facilities by circular economy perspective, with the aim of contributing to the development of this area where the units are located. Within our decision about the phase-out of Bocamina, we confirm our commitment with the local community in the perspective of just transition. Recently, we have financed the construction of a new school for the resettled community. In addition, local groups of artisanal fishermen will have access during the next months until the plant fades out to a special fund for projects aimed at improving their fishing activities or eventually entering into new businesses. Furthermore, all the resettlement process for over 1,300 families has been aligned to international standards. Our descarbonization strategy and just transition policy will improve the visibility of our sustainable model and our ESG profile. At the same time, we will reduce our exposure to commodity volatility and environmental risk, bringing better margins and allowing us to access new financing instruments reducing costs. In addition, We also believe, in medium term, that Enel Chile will benefit from potential increase in its liquidity and value, considering this the risking strategy. Let's now see more details on our discoverization strategy on page 12. To cope with our discoverization strategy and fit with our customer needs, we have under construction one gigawatt or renewable capacity. and another gigawatt ready to start the construction by 2021. In addition to that, we have approximately four gigawatts of renewable capacity in different phases of development, representing an optionality for the future to contribute to risking our generation portfolio from commodities and hydrology. On page 13, let me give you an update on the status of renewable projects that are under construction. During June 2020, we have started the construction of Renico 2 wind power plant. With a total investment of $177 million, Renico 2 will include 32 wind turbines of 4.5 megawatts each, reaching a stock capacity of 144 megawatts. The environmental permits have been already issued, and the wind turbines will be shipped to Chile in the next month. Part of the project will be in operation this year, and the remaining part in 2021. On Cerro Pavilion, the expansion of the plant will bring the total net capacity to 69 megawatts. Considering the COVID situation, we have reviewed the project timeline and devoted special attention to define the safe number of persons in our facility and to adjust properly our construction camp, limiting the number of persons according to health standards. Sarah Pauillon will be in operation next year. On page 14, on solar project. All the percentage solar projects have already received their environmental licenses. We are now working on some specific cases with the Ecological Institute of Chile to manage some findings encountered on site when we have started the civil works. The main EPC and BOP contracts were already signed, and particularly for Campos del Sol and Azabache, We are already receiving the photovoltaic models, indicating that our suppliers are in operation and committed with their concert timing. As the solar projects are constructed at the modular stage, part of this project will be online by 2020 and the remaining part by 2021. Before we go, let me give you a call on the Los Condores project. We are on page 15. Yesterday, NL Generation released a material fact indicating the conclusion of a full reassessment of the Spondylus islet project. Up to now, we have already completed the 10.5 kilometers of project tunnel out of 14. The remaining 3.5 kilometers will be excavated with a new tunnel boring machine. The assembly of the electromechanical equipment in the current powerhouse has been already completed. Let me highlight that during the construction of the vertical tunnel that connects the upper and the lower tunnel section already built, we have encountered a very challenging geological condition that forced us to change structurally the construction pattern. To guarantee technical efficiency and safety at work, of our employees and contractors, we have decided to adopt a different but more affordable construction solution that requires more time and additional budget. Therefore, with these changes in the project, we expect to finish the Civil Works construction of Los Condores Power Plant by the end of 2023, followed by the commissioning and commercial operation of the generation units of the project. Now let me drive you through our main industrial KPIs of the period for our generation business. We are on page 16. The total net production for the first half decreased by 14%, amounting to 9 terawatt-hours, given by minus 0.8 terawatt-hours or lower generation in our hydropower plants, reflecting the hydrology performance. and minus 0.6 terawatt-hour of lower thermal production, mainly in our coal-fired plants, due to the closure of Tarapa capital plants by 31st December 2019, and the impact of a lower system marginal cost. In terms of our energy balance, we remain a spot buyer in the market, with a purchase of 2.2 terawatt-hour in first half 2020, a variance of plus 0.2 8 TWh vessel first half 2019, also as a result of low hydrology and marginal cost. The lower system marginal cost is explained by the Argentinian natural gas availability, new transmission line fully in operation starting from June 2019, addition of new renewable capacity, and the reduction of countries' demand. As we saw in the previous slide, our physical energy sales decreased by 6% of 4.7, minus 0.7 terawatt-hour, mainly displayed by minus 1.1 terawatt-hour of lower consumption of distribution companies, mainly associated to the termination of regulated PPAs with SAISA and ML secured in 2006 auction, and the lower demand in the second quarter. partially offset by 0.6 terawatt hour or higher free market sales as part of our strategy to capture new clients and the ones recently immigrated to the free market. Now moving to slide 17 to explain the most relevant operating KPIs of our network business that are fundamental to answer countries' gratification. The energy distributed in first half 2020 decreased by 6% when compared with the first half 2019, mainly due to the lockdown measure applied by the government in Santiago. Our customer base increased by 43,000 clients when compared to the first half last year, with the last year reaching 1.99 million of clients. Under the suggestion of our distribution business, we continue to improve the quality of our service. And we have reached 2,249 telecontrol equipment installed in our grid. In the next two years, we are planning to add 585 additional units. To guarantee the system reliability and availability, we continue to focus on the critical area for SAIDI and SAIFI. replacing approximately 76 kilometers of cables in our low-tension grid, and executing approximately 14 kilometers of medium-voltage grid extension and reinforcement in the first half of 2020. Despite the logistic restrictions coming from social arrests and, lastly, from the pandemic situation, our interruption in the society decreased by 13%. Finally, as part of our plan of system quality and resilience, we were able to reduce of 53% the power interruptions due to adverse weather conditions in our networks. On page 18, let me go through our next network's main projects. On the high-voltage investment plan, We have concluded important interconnection projects in our concession area, introducing different measures to continue improving the resilience and the management of our network. On the medium voltage side, during the first half of 2020, we have concluded the construction of 52 kilometers of network and installation of 169 telecontroller equipment. We will continue to perform important civil and electric works to cope with the expansion of the mobility segment and to improve the electrification of the country. Let's move to analytics and digitalization on slide 19. Despite the COVID outbreak, we continue to consolidate leadership on electric mobility and on electrification. On 1st August 2020, we have secured new contracts on public lighting, upgrading the lighting infrastructures, with lead bringing a more efficient system in favor of the local municipalities. On supporting the e-mobility in the country, we have signed a partnership with Annex Shell, implementing fast charges for e-vehicles in Annex facilities. Our company will be responsible for the maintenance of all the charging units to be installed. Moreover, We have secured new contracts with large real estate groups to provide new charging infrastructure to their projects. In June, we put into operation additional 150 electric buses in the metropolitan region of Santiago. Additionally, we are promoting the use of and more efficient and clean technologies at the use of electric buses combined with solar energy and storage charging systems for the mining industries. Finally, and thanks to the collaboration with other public and private partners, we continued our effort to promote the use of efficient heating in order to replace the use of wood to contribute to the reduction of carbon emissions and particulates in Chile. Almost 7,000 devices have been installed since 2017, and we are estimating to avoid 22,000 tons of CO2 equivalents in Italy. Now, I will hand over to Giuseppe for the analysis of the results.

Thank you, Paolo. Before starting, let me explain how we have adjusted our figures on both 2019 and 2020 on page 21. For 2019, we are excluding from the adjusted figures the PPA early termination booked in first year 2019 and the net impact of impairment of Bocomino 1 and Trapaca booked in the second quarter 2019, largely commented in our previous calls. For the 2020 figures, we are adjusting the EBITDA and net income with the cold stock impairment, which consists in booking at once all the cold fuel that we have bought and not used yet for Bocamina 1 and Bocamina 2, the third asset that will be decommissioned soon. The impact on EBITDA would be around $50 million. In addition, we are also excluding the impact of the impairment of Bocamina 2 as a result of our decision to anticipate the closure of this coal facility. Let's now move to the financial summary for the first half 2020. First half 2020 adjusted EBITDA and net income are basically in line with the last year adjusted figures. Our total capex amounted $322 million. a 109% higher than previous year, focus on our decarbonization strategy and digitalization of our distribution business and new connections. The adjusted FFO increased 32%, mainly due to lower tax payments from previous period that will be further explained later on, partially offset by the impact of EBITDA. Our net debt in the period increased $448 million versus December 2019 figures, mainly due to the higher CapEx plan executed in June 2020, lower receivables from our company as a result of the energy stabilization mechanism, and lower collection and distribution. I will give you more details in the following slides. Now, on slide 22, Let's start with the capex. Our total capex amounted $322 million, as I said before, 109% higher than previous year. Focus on asset development. Customer capex totaled $26 million, 32% higher than June 2019, with the main investment allocated to build connection to new customers as a consequence of of the increase in our client base, particularly in the first quarter, and to improve our commercial system to guarantee better interface with our clients. The continuous digitalization of our customer interface and commission internal processes will continue to be a key factor to address future changes after this contingency period. Asset management CapEx reached $35 million, basically in line with the 2019 first half figures. The distribution activity represented 48% are mainly focused on repairs in low voltage underground failures and repairs in some facilities due to the social unrest. The generation activities represented 52% mainly related to the investment in digitalization to improve our unit. As of June 2020, our development capex reached $261 million, mainly allocated on renewables as a part of our decarbonization strategy, which recorded $244 million, and on digitalization of our network that is bringing up operational flexibilities. From our total development capex estimated for Emel Chile, we have deployed around 30% in the first half of 2020. The remaining part of our capex will be concentrated in the third and fourth two of 2020, according to the planned course of the project execution that reflects the normal construction activity of wind and solar projects. during the first half of 2020, almost 96% of our investment was allocated to achieve the SDG target that Enel China has committed. Now, let's move to slide 23 to see the second EBITDA breakdown. As you can see, the second Q2020 adjusted EBITDA has been impacted by hydrology for about $33 million. The lockdown measures had an impact in the demand of our generation and distribution business. In our generation business, the impact accounted for $23 million, driven by the performance of our regulated contracts, partially offset by the positive performance from our free clients. The demand has also affected our distribution business due to lower energy consumption, mainly in small businesses and industries, and regulated in free markets. The total effect of lower demand at the energy field reached $33 million. These effects were mainly offset by $31 million related to lower spot price as a result of commodity price reduction, lower demand, and full capacity of interconnection transmission system in 2020. $90 million associated to the net commodity coverage effect due to the recovery of brand price as shown in slide 3 in this presentation. $20 million of tariff harmonization mainly originated by the supplied cost recovery in regulated PPA, and $20 million on OPEX and others, which include a lower transmission cost, positive PPA indexation, insurance reimbursement, and management action to increase the efficiency in our business without compromising the safeguard of our employees and contractors. In addition to that, the cost of impairment had one-off impact on NL generation, deteriorating the second quarter results. Let's start with the EBITDA breakdown on slide 24, half year. As you can see in the slide, we have isolated two of non-recurring effects related to the early termination of PPA agreement in 2019. and the previously mentioned coal stock impairment in 2020. Excluding these effects, our adjusted EBITDA is nearly flat, mainly due to lower hydro generation impacted for $42 million as a consequence of drought that has been affecting the country, Lower demand on the regulated customer in generation business and lower energy consumption in distribution business, totaling a negative effect in EBITDA of $50 million, mainly related to the lockdown measures. Sales of two LNG cargos during the first half of 2019 that wasn't executed this year due to the lower price of commodity in the international market. with an impact of $22 million. These negative effects were offset by the following items. Lower spot crisis, totaling $54 million. Positive impact on PPA indexation, totaling $19 million. Tariff harmonization of $20 million. And other costs for about $8 million, mainly associated with the insurance reimbursement booked in 2021. In slide 25, we have a summary of the performance of our generation business, including Enel Generacion and Enel Green Power. On Generation EBITDA, I have already walked you through the main variation in the previous slide. What I would like to recall is that, in line with the last year's results, we have produced 58% of our generation with renewable sources. As a result of the already mentioned elements, our generation-adjusted EBITDA margin reached 47% in the second Q2020, which is 8% higher than the second quarter of 2018, despite lower hydro production and commodity scenarios. The first half of 2020 adjusted EBITDA margin was 2% higher than the first half, 2019 EBITDA margin. Please let me explain the most relevant operating fact of our distribution and NLX business. So moving to slide 26, the second Q 2020 EBITDA reached $46 million or 29% lower EBITDA comparing with the second Q 2018 mainly due to A lower energy consumption in both regulated and pre-market clients in the second Q2020 versus second Q2019 for about a million dollars, mainly due to lockdown measures applied by the government to contain the spread of COVID. Higher energy losses due to reduced cutting activity because of logistic restriction, increase on conventional process costs to cope with the current difficult situation that our clients are facing. As of June 2020, the EBITDA of Enel Distribution and Enel Access had a lower result due to the second quarter performance as above mentioned, decreasing the EBITDA in 50% compared with the first half of 2019. Now, on slide 27, let's go through the main driver of our net ordinary income. As already mentioned before, the 2019 EBITDA includes the PPA early termination rate. Depreciation and amortization in bad debt reached $166 million, increasing by 12%, mainly due to higher provision of bad debt mainly on distribution business due to the 2019 social unrest and COVID-19 effect. Higher depreciation in EGP Chile due to the depreciation of the Chilean pesos against dollars in the first half of 2020. higher depreciation of distribution business due to the higher investment in the last year, and partially offset by the closure of Tarapacá on December 31st last year, and the phase-out of Bocamina 1 and 2. The impairment increased by $513 million, mainly due to Bocamina 2 impairment, booked in June 2020, related to the early closure of the plant, plan in May 2022. Financial results of $74 million with a decrease of $90 million, mainly due to the lower average cost of our debt as a result of the renegotiation in energy-empowered net debt with Enel Finance International. and the foreign exchange rate appreciation in first half 2020 impacting positively in financial receivables in U.S. dollars. Income tax and minority reflect the lower results related to Bocamina 2 impairment effect. As a consequence of all the above, the reported first half 2020 net income reached a loss of $403 million. the first half 2020 adjusted net income by the Bocamina 2 impairment is in line with the results of the adjusted net income of first half 2019. Now, moving to the cash flow on slide 28. Our first half 2020 adjusted FFO reached $166 million, strongly impacted by COVID-19 that resulted on lower collection in our distribution business and lower EBITDA impacted by lower demand in our businesses. Despite this challenging situation, our adjusted 1,020 FFO was $40 million higher than 2019 adjusted figures mainly due to a lower income tax paid in the first half of 2020, mainly due to the tax credit reimbursement from previous year and a lower monthly provisional payment, lower financial expenses, mainly by the debt renegotiation with Enel Finance International, partially offset by lower adjusted EBITDA in 2020 versus 2019, And lower net working capital, mainly due to lower collection on distribution business for about $62 million. And in generation business for $29 million due to the energy stabilization mechanism. And analyzed buses payments held on 2020 that were in operation during the third quarter 2019. Let's now take a look at the net and gross debt on slide 29. Our gross debt increased by $567 million versus December 2019, amounting to $4.15 billion as of June 2020. Due to Enel Chile new funding with Enel Finance International to finance our renewable CAPEX plan in partial of state by Enel Generación Chile debt amortization. Our net debt as of June 2020 compared to January 1st 2020 increased $448 million mainly due to our CAPEX plan. Average cost of our net debt is was reduced from 5.2% in December 2019 to 4.6% as of June 2020, showing an important improvement in our financial condition as a result of our constant effort to optimize our financial expenses. The average term of our debt is almost 7 years. Finally, on our debt amortization on slide 30. I would like to highlight our total liquidity position reached $0.9 billion, making us able to finance our CapEx plan and being in a comfortable position to face the possible worsening scenario in the country. Our debt amortization, we don't see any concern considering the smooth debt profile in the next two years with an average of about $200 million. Moreover, we confirm our debt strategy to maintain our debt in fixed rates and U.S. dollars. And now, let me conclude this part of the presentation driving you through our new EBITDA targets for the year. Before moving to new guidance, let's take a look at what COVID-19 in the semester for our financial results. And now on slide 32. On EBITDA, the main impact from COVID-19 is associated with a sharp decline in volume in both generation and distribution business, particularly in the regulated demand. The remaining impact on EBITDA is related to the increase of losses and additional costs on our distribution businesses related to the customer care. All these costs have been partially offset by saving activities that we put in place. Moving down to the net income, we recorded a negative impact on the NA of $6 million, driven by the increase of bad debt provision in the second quarter. All in all, without the COVID impact, our adjusted net income by the cold stock impairment should have been higher by $37 million. And now, let me conclude this part of the presentation driving you through our new EBITDA target for the always net of cold stock impairment. As you can see in slide 33, During our presentation, we have shown many factors that came up in the past period, which changed our scenario for this year. Although our company is strongly committed and working hard to mitigate the negative factors, some impacts are difficult to control and manage, as by hydrology, all the impacts on COVID-19 as demand reduction, and macro assumption as commodity price fluctuation, effects, and among others. Seeking our transparency with our investors and all the interested parties, we have run several scenarios to reflect the deterioration of some variables that are extremely difficult to predict. Any possible changes on debt could drive to different scenarios. Therefore, our EBITDA is expected to have a devaluation from $350 million to $450 million to be in the range of $1.2 to $1.3 billion for 2020. We are not yet anticipating our review on net income projects as we are running several actions to offset at most the valuation of our EBITDA. On CAPEX, we don't see important deviation as the larger part of our development capital is expected to deploy now on the second half of this year. Paolo, I will hand over to you for closing remarks.

Thank you, Giuseppe. The current situation represents a challenge scenario to the sector. Despite that, our period-adjusted results show a steady and resilient performance based on safe work of our people, business reliability, digitalization, and quick reactions to external conditions. At the same time, we are confident on our mid-long-term performance considering the strength of our diversified business model. Our focus on decarbonization and the development of our project in generation and distribution business demonstrate that our company continues to create value in this new environment. To respond and anticipate our clients' needs is the best way to ensure the quality and reliability of our services tied to the continuous improvement of our digital platform. Finally, the resilience of our business as a sustainable strategy is supported by the strength of our balance sheets and by eventual additional liquidity measures to support eventual headwinds from external advice. Thank you for your attention, and let's now open the Q&A section. I will hand over to Isabella.

Hi, Paulo. Many thanks. So we have received a lot of questions, okay?

Yeah, I've seen that we have a lot of questions to manage.

Yeah. So we're going to select some of them, and the other questions we're going to send the same information from me to all of you that have asked questions to us. So the first question came from Morino Vicini from Santander. He's asking us if we can give more details on the IDB factoring from the receivables of our companies from both generation and distribution segments.

Yeah, I leave the answer to Giuseppe. Thank you, Isabella.

Let me see that. The agreements... with IDB is going ahead in a coordination also with all the other players in the market. The agreement basically consists in a potential facility to sell to IDB and other banks the receivables accumulated by all the generation companies of the market. And the factory has an availability period to sell periodically the receivables accumulated. And, of course, we are talking about only the receivables that are recognized on the decree. We are, you know, We are still evaluating whether the conditions are good for us, but we believe that it makes sense in order to reduce the risk of possible changes in regulatory scenario.

Okay. Thank you, Giuseppe. We also have questions also from Murillo Riccini, from Santander, and also from Tomas Gonzales from Gotcha, Ben. Asking a little more details on the delay on Los Congres projects and if you can give Tina or both of them a hint about how much we have already expanded during 2020 and what we are expecting in the next few years.

Yeah. Regarding the evolution of Los Congres projects, As we mentioned in our previous course, the project includes works on tunnels. The total amount is 14, and it includes also a vertical peak that connects to the higher and the lower section of the project. In the evolution, the critical part, we found the geological challenges in the development of the vertical connection that require us to review the technology to implement this connection. We use international advice to review this. At the end, we have decided to adopt the most the safest technology to connect the vertical connection between the two tangents. And all in all, this is in the critical pattern during the realization of this connection, we will be able also to finalize the missing part of the horizontal connection towards the lagoon with the new boring machine. So this is the reason why this delay that clearly brings together with delay some additional context. On the lower this year, we spent around 30 million of US dollars. What we are doing now, we are re-planning the CAPEX spending in order to evaluate and to, let's say, according to the evolution of the project and to the evolution of the civil works that we are planning between, let's say, the second part of 2020 until the end of 2023. Today, we have reached a total amount of $830 million.

Perfect. Thank you. Paulo, we also have questions from Javier Suarez from Mediabanca. He's asking some questions. The first one is that what we are seeing improvement in our working capital as a consequence of the completion of our digitalization process. Also, he's asking more detail if we can give on the likely impact of the basic services bill that the Lady Servitio's Basico's to favor the most vulnerable clients? And the third question is, which is likely the impact of the suspension in peak hour prices in August and in September that we also referred in our presentation? Thank you, Paolo.

Okay, let me manage, let's say, let's make some clarity, first of all, regarding the basic service law. And then we can comment about the performance of the collection and leave Giuseppe to comment on the numbers. Regarding the basic services law, since the end of March, we have offered to the most vulnerable clients an agreement in order to suspend their payments regarding the bills, the consumption of the energy, and to have an agreement to start the payment when the country will exit from the emergency period with 12 monthly installments without interest. And clearly with no risk of cutoff of the services. The segment of clients that has been interested in this voluntary proposal was referred to a percentage at the time was 40%. of the, let's say, poorest family that are counted in the social register, social internal register of the country. Regarding this evolution, there was a discussion regarding proposing it as a law. The content includes 60% of the same kind of vulnerable clients. And on June, when President Piñera extends the 90 days of emergency period, adding additional 90 days, we extend the period of this offer to and we expand the perimeter of the vulnerable clients according to the perimeter defined by law. So expanding to 60% and more some additional categories. And so today, when the discussion is ongoing still in the Parliament and the Senate, we are offering this kind of agreement and this kind of benefit to the vulnerable clients. The law... has been, let's say, approved by the lower house and the Senate during recent time, last week. Last week's end, at the end, the president decided to put a veto right regarding the constitutionality of this law. The discussion is still ongoing. The lower house rejected the veto, and now the discussion is ongoing in the Senate. Regarding the impact of the approval, the potential approval of this law is, in terms benefits to vulnerable clients, we have already offered since last March. So we don't see any impact on this. We have already signed some thousand agreements with vulnerable clients. We don't see any problem. We don't see material impact until now on our numbers. The problem is that the law includes also a statement regarding the inability to cut off the clients that are not paying their bill, even if they are not vulnerable. So this clearly may run the risk to enlarge the potential base of clients that may not pay the bills during the emergency period. Until now, the law states 90 days after the issuing of this law. So this is the real regression, and it depends on the attitude of the non-vulnerable clients in respecting the deadlines and the payment of their bills. Then there is also another question regarding our... Since March, we improved a lot our digital platform to switch all the services, including payment, into our digital channels through digital technical improvement and also through a strong communication to our clients. And as we mentioned in the presentation, by June we reached 88% of our of collection through these channels. What are the other questions? Isa?

Yes, from Aversuarez, it's also regarding, I think you summed up everything that was about the peak hours and also the Ah, the peak hour, yeah, correct, the peak hour.

Yeah, there was two decisions regarding the winter peak hour. The first has been issued, if I remember correctly, at the end of March and was referred to April and May period. And this has been applied until the end of May. Then we came back to the normal regulatory approach during June and July, and recently a new release coming from the regulator for defining, so to exclude August and September in the definition of the picking hours. The impact on the first decision regarding April and May was negligible in terms of impact on our distribution income. Considering the period of August and September, considering that we were still in during the wintertime with potential temperature and weather effects and considering also the current evolution of the pandemic, maybe that will have a larger impact on this decision that is still pending because the executive decree is still missing, may have an impact in the range of $3 million on our accounts.

Perfect. Thank you, Paolo. So we have another question from Cesar Perez from BPG, also from Credit Corp, and also Andrew McCartney. They are all asking more details regarding our guidance, okay, if you can give more details on the breakdown that we presented in our slide, and also if we can give more details on the dividends that we're going to be distributed in 2021 regarding 2020 results? Thank you.

Okay, let me give you the answer on the dividends and then I'll leave the answer to Giuseppe. Regarding dividends, you should take as example last year. Last year we had the impairment of Arapaca and Bocamina 1. that has an impact, an accounting impact on our side. And then we decided to, let's say, to apply our dividend policy on a pro forma basis without taking into account the accounting impact of the commissioning. So we have the flexibility to do the same this year. Until now, we have not changed the dividend policy. We will see the, let's say, evolution, the second half of 2020 in terms of cash generation in order to take the final decision on how to apply the dividend policy on which base. But the reference is what we decided last year. we can take a decision despite all the accounting impact of the impairment regarding the stabilization. And then we'll leave Giuseppe to provide details regarding the revised guidelines. Okay.

So for what concerns the guidance, as you see in the slide, we have three main effects. The first one is the COVID-19. When we talk about the COVID impact, we are talking about basically or mainly about the impact on the demand, both on generation and distribution. And especially we are talking about the part of the client that are the small businesses, like a mall or other kind of small industries, And that can be also regulated. So it's not a matter of free or they're not only free cash. And we have also, as we mentioned, we also took into consideration the impact of losses that can be because of restriction in the cut of energy in case of unpaid bills. Now, the hypothesis, the scenario, the assumption that we are taking to the consideration is that we are going to have, we are still to have a negative situation in all July, With a little bit of recovery in August, that doesn't mean that we increase the demand, but just that the demand will be lower than what we had in the previous month. And we assume to have a return to a normal situation in September. Of course, I mean, going back to a normal situation doesn't mean that the demand will be the same as we forecasted when we prepared the industrial plan, of course, because, you know, some of the small businesses have closed and so it will not be easy to go back easily. But, of course, we assume to have a a return to a normal demand at the end of the year. For what concerns the hydrology, again, I mean, the impact that we considered was thinking about an hydrology that is more or less in line with the last year. We are talking about 10.5 terawatt hours of hydro production. clear, I mean, the situation is getting better. So also in this case, you know, it's pretty difficult to understand how much will be the production, but as of today, we prefer to be a little bit conservative in order to have eventually positive results in the following months. And the last part of our negative impact is coming from the macro scenario. Here, of course, the variation is larger because we are talking about the impact of the foreign exchange effect, US dollar pesos, for what concerns our business that are, you know, fully in pesos-like distribution. But we are talking about also about the commodity price fluctuation, the impact on our aging activities, and we are talking about the impact of exchange rate that has in our financial aging for what's concerned with the debt. I mean, this kind of evaluation could have an important balance depending on the effects. What I can tell you is that as of today, you know, the assumption that bring us to have 450 million dollars or in other words, to have $260 million in macroeconomic scenario and other, use an exchange rate of a little bit more than 800 pesos per dollar. Okay.

Okay.

Thank you, Giuseppe. We have time just to do two more questions, okay? So the first one that we received is from Tomas Gonzalez, from Scotiabank, Rodrigo Moura, from Moneda, and also Murilo Riccini from Santander, is to give more details on our LNG contract, considering that we saw in the presentation the reduced credit price that we come online in the second half of the year so we can give a color on this contract and also if we can cancel and ask for more achievements on our contract. Thank you.

Yes, I leave this question to Giuseppe. Just let me add an important point and I think to be clarified regarding the, let's say, the development of the company, especially regarding the impact of the new timeline for Los Congres, because what we had planned in the development of the companies from today until the end of 2022 is to go through the 2,000 megawatts of renewable capacity that we are building and through the optimization of the portfolio regarding the decarbonization of the coal-fired facility. And this plan has not been impacted by the delay of Los Congres in the sense that the project that we have on the pipeline to reach 2,000 megawatts are already identified. One giga is under construction. The other one are ready to start. So there is no direct impact on the, let's say, development plan of the company to reach the target, to reach our potential position in the market due to the delay or the new schedule regarding Los Condores. And just an additional clarification, because this is an element that I'm assuming is under the spot for this period. We explained with this the effect of the basic service law. We already offer these benefits to the vulnerable clients. It is clear that the impact of these laws will be issued in a situation where the country, especially in the area like Santiago, the impact of the economic crisis is very strong. We are waiting for the effect of the old plan issued by the government in terms of inject liquidity in the system, especially to help the most vulnerable and the medium families. And we are working and struggling in order to help the clients to use our digital channels regarding payments. So in terms of cash collection, We are performing as much as we can in terms of the company performance and support to our clients. Clearly, this law may have an impact, especially regarding the no cutoff of bad payers that are not considered as vulnerable clients. And I'll leave Giuseppe for the commenting on the LNG contract.

Yeah, thank you, Paolo. I mean, talking about the LNG contracts, as you know, we have a long-term contract that is linked to which part is linked to the commodity. And, of course, we use the contract mainly for supplying our products. power plant, but if it is convenient, we can also resell the amount of gas that we buy under this contract. Now, last year, the price, the international market price, were pretty high, so we were able to make some trading with the amount of gas that we used to buy. And this is the reason because we had a very important result last year. Now, this year, you know, the commodity dropped, as you know. So the price, the final price of our contract reduced as well. And there is no, you know, no big possibility to do this kind of trading anymore. As a matter of fact, our contract price in the last, you know, let me say in July, for example, is almost around $4 per million BTU. And, I mean... This is the reason because we don't have such a positive effect like here. On the other hand, of course, we have cheaper gas available for our plants, of course.

Perfect, Gisette. Thank you very much. So we have other questions that we have to see. Okay, we'll try to summarize the most remaining, let's say, the questions that we see the most. Due to the time, we're going to have to disconnect, okay? But I would like to conclude this results conference call reminding you that our investor relations team will be available for any other doubts you may have. So I don't know, Paolo, if you want to just say the final words to our investors connected.

Yes. Let's say that just to confirm, first of all, I would like to confirm the resilience of the company and the fact that considering the quite tough situation that we are living in the country, from the health, first of all, and also from the economic point of view, we continue to, let's say, deliver and to develop our activities and specialty. And with all the area where we are involved, starting from the, let's say, management and the construction of the new plant, measurement of the plant, construction of the plant, improvement and investment in the grid, and also development of the activity is related to the, let's say, the new electricity services, even if we have to face with quite large difficulties in having the possibility to implement at full our, let's say, effort, our activities on the ground. And so I think that we can give a specific answer to the many questions that we have received through our investor relations channel. And we are available for any additional details. Considering that the evolution is quite complex, so there are changes very frequently. There is an impact that may have on regulation, on the management of the business. please feel free to ask us additional information or comments on changes that are going on in order to give you the answer in a more transparent way.

Perfect. Thank you, Paolo. And now I'll give the call to the operator. Thank you very much for your participation. Stay safe, you all. Thank you.

Thank you. Thank you very much to all of you.

Ladies and gentlemen, that's the conference for today. Thank you for your participation. You may all disconnect. Everyone have a great day.