Enel Chile S.A.

Today, ladies and gentlemen, and welcome to NL Chile fiscal year 2020 results conference call. My name is Carmen, and I'll be your operator for today. After the speaker's presentation, there will be a question and answer session. To ask the question during that session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star and zero. 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 our current expectations, are not guarantees of future performance, and involve risks and uncertainties. Actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. These factors are described in Enel Chile's press release reporting its fiscal year 2020 results. The presentation accompanying this conference call and Enel Chile's annual report on Form 20F, including under-risk factors. You may access our fiscal year 2020 results press release and presentation on our website, www.enel.cl. and Hour 20F 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 dates. NL Chile undertakes no obligation 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 Ms. Isabella Clements, Head of Investor Relations of Enel Chile. Please proceed.

Good morning, ladies and gentlemen, and welcome to Enel Chile's Four Years 2020 Results Presentation. Thanks to you all for joining us today. I hope this finds you and your families doing well and you stay healthy. Our presentation-related financial information are available on our website, www.nl.cl, in the Investors Relations section. A replay of the call will be also available. There will be an opportunity to ask questions after the presentation via phone or the chat through the link Ask a Question. Joining me this morning are our CEO, Paolo Palotti, and our CFO, Giuseppe Trucchiarelli. In the following slides, Paolo will open the presentation with the main highlights on business and targets, then Giuseppe will walk you through our financial results and operational performance. Let me remind you that media participants are connected only in this remote. As always, our RR team will continue to be available to provide you with any detailed information you may need concerning the figures included in this presentation. Thank you all for your attention. And now let me hand over the call to Paolo.

Thank you, Isabella. Good morning and thanks for joining us. Let me start with the main highlights of the period on slide number two. Last year was a challenging one at the global level as a consequence of the COVID outbreak. With reference to Chile, according to the last estimates, Chilean GDP decreased by 6% during 2020. Electricity demand at country level was almost flat, having been supported by certain sectors like the mining industry, while in certain areas of the country, in certain cities and some sectors, the decrease was double-digit. Despite this unprecedented extreme scenario, our operations have shown a larger resilience and a continuous support a continuous support to our clients. Last July, we have decided to review our guidance for 2020, adjusting it to the new market conditions, commodities volatility, implementation of lockdown measures, and several other regulatory adjustments that were in price in our estimates. With a consistent effort of all our companies, we have achieved our target on adjusted EBITDA net income. reaching amounts of $1.2 billion and $0.6 billion in spectra. We continue to be frontrunners on decarbonization, advancing in the discontinuity of our core facility, accelerating at the same time the renewable capacity additions. Today, we have more than 1.3 gigawatts in generation projection projects under construction. We continue to focus our action to fight climate change, We have already announced one of our ambition targets to reach a 64% reduction in our direct CO2 emissions by 2023 compared to our electricity generation business in 2017, meaning that Enel Chile is committed in having roughly 90% of its electricity generation carbon-free. Our effort is reflected in our ranking in several ESG indexes. we have been recognized as one of the best performers in LG in Latin America. Finally, regarding our yield and policy, our board of directors will propose at annual shareholder meetings an eventual dividend of approximately $3.9 per thousand shares to comply with our strategic plan and to avoid that accounting effects of the decarbonization process will affect our shareholder remuneration. Let's now have a look at our main 2020 results. I already mentioned our adjusted EBITDA and net income were in line with our 2020 revised guidance. On CAPEX deployment, despite the effects of the lockdown that have affected several areas where our projects are located and the delays produced by the processes for the ecological permits, We have been able to advance in the construction works in our working sites, doubling our capex of 2020 versus 2019, guaranteeing at the same time the safety of our people in construction on the field. Finally, on decarbonization, we successfully disconnect the first unit of Bocamina, contributing to the minus 1.5 centigrade scenario targets and making El Chile the most advanced company in the decarbonization process of the country. Let's now move to some data that shows the consistency of our strategy. Sustainability is the backbone of our strategy, aimed at decarbonization and electrification of the final consumption. Our plan is accelerating the energy transition. showing our compromise to our stakeholders and aiming at delivering sustainable value for all. During 2020, our company improved its score in all the main ESG ratings, maintaining the positive trend of the previous year. As you can see, this approach has been reflected in most of the main sustainability indexes, as well as in Chile, as being distinguished as prime by the ISS ESG. and has received a Silver Plus rating in the Sustainability Yearbook from Standard & Poor's Global, meaning that our company is within 1% and 5% of the industry's most sustainable companies worldwide, and Chile is the only Latin American utility located in that position. Let's now have some more details on our descarbonization strategy on page six. During 2021, we will consolidate our position in the Chilean market, reaching 72% of renewable capacity within our portfolio generation asset. Our team is focused not only on the execution of this project, but also on sizing new opportunities, targeting the best regions, developing new projects, and seeking higher sustainable returns. As a reference, today, We have more than 14 gigawatts in our pipeline, in different stages of development, which gives us enough flexibility to continue our decarbonization goal and risking our generation portfolio from commodities and hydrology. As an example of that, we have been recently confirmed that after a competitive bid process organized by the Ministry of National Assets, We were awarded over 2.5 thousand hectares for use in the development of new solar plants and storage systems, expected to contribute with more than 1,700 megawatts of clean energy to the country. As we have seen during this year, we continue to strive new opportunities in the market, coping with our target to reach net zero emissions by 2050. On page 7, you can see more details on the status of each project under construction. Today, we have more than 1.3 gigawatts in renewable capacity under construction. On average, the overall process of our project totals more than 50%. A large part of our project already has the equipment on site, which reduces significantly the risks of material supply. I would like to give more details on the first hydride project in Chile, a 61 megawatt solar project located in the same site of the wind farm of Valles de los Vientos. We have analyzed the connection of part of the solar panels during December. The city works and balance of plans are expected to be completed during the third quarter of this year. Azabache is an example of an idealization project in which we are increasing the efficiency of our land usage, bringing more competitiveness to our portfolio. The solar projects Sol de Lila, Domeico, and Campo del Sol are expected to be into operation during the third quarter of this year. During the next quarter, I will continue to keep you updated on the status of the construction of our projects. Still on generation, let me go through our main fourth quarter industrial KPI on page eight. The total net production for the fourth quarter increased a 4%, amounting to 5.3 terawatt hour, mainly due to hydro generation, reflecting the positive melting season of the last quarter of 2020. In terms of energy balance, As a consequence of lower spot price, we remain an export buyers in the market, with a purchase of plus 0.2 terawatt hour, higher than fourth quarter 2019. On physical energy sales, we increased 80% or 0.5 terawatt hour, mainly displayed by 0.7 terawatt hour of higher free market sales, including spot sales, as part of our strategy to capture new clients and the ones that recently immigrated to the pre-market. Partially offset by minus 0.3 TWh or lower demand from distribution companies primarily related to the termination of the regulated PPH with Saez and ML, secured in 2006 auction, and the lower energy demand related to the lockdown measures established in different cities in the country. Now, the full year figures on slide 9. Net production for the full year 2020 decreased 80%, amounting to 19.3 terawatt-hours. The variance between year 2020 and 2019 came mainly from minus 0.9 terawatt-hours of a lower generation in our hydropower plants, reflecting the very broad first half of 2020. minus 0.8 TWh or lower thermal production mainly in our core fire plants due to the closure of Tarapacapa oil plant in December 31st 2019 and the impact of the lower system marginal costs. In the year we remain a net spot buyer in the market with a total purchase of 3.6 TWh during 2020. equivalent to plus 1.2 terawatt-hours, higher than 2019, mainly due to low hydrology and lower marginal costs. On the other hand, our physical sales decreased 2 percent, or 0.6 terawatt-hours, mainly by minus 1.9 terawatt-hours or lower demand from distribution companies, primarily related to the determination of regulated PPAs with size and amount. and the lower national energy demand associated to lockdown and economic restrictions. This was partially offset by plus 1.3 terawatt hour of higher free market sales, including sport as part of our strategy in the free market. Now on hydrology, slide 10. With reference to our hydro generation business, We are presenting the accumulated rainfall for our most significant river basins, Maule, Biopio, Laja, and Rappel. In the chart, you can find the new metric, the green line, that highlights the average accumulated rainfall over the last 10 years. Since now, we will include this new reference under our materials. With regards to 2020 performance, having recorded a recovery in rainfall in June and July, Hydrology was rather poor during 2020. Methane season during the fourth quarter of 2020 was likely above the same quarter of 2019, explaining better performance in the period. Therefore, our hydro generation was 5% higher in the fourth quarter of 2020, which led us to reach six terawatt hour of hydro generation during the second half of 2020, meeting the expectation we have anticipated during the nine-month 2020 Result Conference call. For 2021, based on information available today, modest rainfall are expected considering the current conditions according to the La Niña phenomenon that will remain until the second quarter. Nevertheless, Pacific temperature should move to a natural condition during southern winter. which should imply an improvement in rainfall for the second semester of 2021. During the last weeks, a review of the regulation on the importation of the LNG in the country is under discussion. In our view, considering the volatility of the hydrology that has been experienced during the recent years, and the low predictability of the Argentina gas as an internal source, it is important to avoid strict limitation in the current availability of gas. This may create a situation where the overall cost of generation will increase with the dispatching of less efficient and high-contaminating plants. That is the opposite of the country's goals on decarbonization. Now, network business line on slide 11. Energy distributed in the period reflects the lockdown measures in our concession area. slightly offset by the increase in the household segment consumption. Our customer base continued to expand. During 2020, we had an increase around 36,000 new clients, 33.3,000 are residential, 2,000 commercial, exceeding the 2 million clients by year-end. On the quality of our services, we continue to improve our SAIDI and SAIFI indexes, performances associated with investment made in our concession area, despite of logistic restriction that we have faced, and with the decentralization of our networks. The effect of the social unrest at the end of 2019 and the pandemic explained the point-to-basis points increase in the total losses. We continue working to recover this KPI to historical level. We continue to improve the digitalization of our services. To provide more efficiency and agility, we have improved our customer hub, which supported the rise of digital interaction from 16% in 2019 to 52% in 2020. As of December, any distribution app reached approximately 450,000 downloads, 72% higher than in December 2019 accumulated figures. We are feeling that digital channels are the main way to communicate with our clients. In 2020, we also saw extraordinary growth in digital payment, as we show in slide 12. The increase of digital channels and the new payments agreement executed in 2020 supported the collection levels maintained at 97% versus historical levels of higher than 100%. By December 2020, we have executed almost 83,000 agreements with clients, which has been supported the decrease in bad debt, as Giuseppe will show later. On average, we executed more than 1 million contacts with our clients during the last quarter through direct calls, SMS, and other communication channels. Moving to analytics and electrification on slide 13. Despite the COVID-19 pandemic outbreaks in the country, we continue to consolidate our leadership on electric mobility and electrification. In 2020, we secured new contracts on public lighting, upgrading the lighting infrastructure we led, bringing more efficient systems in favor of the local municipalities. On e-mobility, in 2020, Analix assigned partnerships with McDonald's, with Enex, Sabah, Concessionaire Interveal, ESA, among others, to continue the development of the Electrolux project. Today, more than 22 partners have joined us in this initiative. Additionally, as analytics, we are developing the first project with the retail sector to attend the last mile logistics, boosting ePracs in Chile, reaffirming our commitment to the energy transition toward the use of clean energy in transportation. In 2020, we also secured new contracts with large real estate groups to provide energy efficiency solutions based on industrial hot water, industrial services, and new charging infrastructure for their projects. During this year, we are promoting several projects with mining industry, such as the use of electric buses combined with solar energy and storage charging systems. The first project with the mining sector developed with Anglo-American will begin operation in the next few days. Finally, and thanks to the agreement with other public and private partners, 40 companies have participated with Enel, we continue our effort to promote efficient heating, substitute the use of wood for electric heating, and reduce electrical emissions. 8,000 devices have been installed since 2017, and we estimate that this is avoiding 27,000 tons of CO2 equivalent per year. Now, to conclude this part of the presentation, a quick view on the main regulatory discussion ongoing on slide 15. On COVID contingent front, in January 2021, the basic service bill has been extended from its original timelines to support the most vulnerable clients for a more extended period. The law intends to support the vulnerable clients that have the option to postpone, under request, the payment of their bills with up to 36 installments without interest. The law, valid until May 15, including benefits to vulnerable clients, which our company already voluntarily offered before the law approval. Moreover, the law keeps the suspension of service cutting to small companies, other institutions, and all households. As of today, we have almost 21.9 thousand agreements under the Basic Service Law and an additional 20.9 thousand under our voluntary programs. On network tariff, on distribution, the government shall present its final report during second quarter 21, followed by final regulatory report on the VAD, which can be challenged in the expert panel instance. Consequently, we expect the release of the final distribution tariff retroactive to November 20, to be released in early 2022. On transmission, according to the transmission tariff cycle 2020-2023, by the second quarter we are expecting the regulator's report, which can also be challenged in the expert panel instance. Transmission tariff decrees are expected to be published by the fourth quarter in the year 2021. Moving to slide 16, other recent updates. On tariff stabilization mechanism during December 2020, the report published by the Chilean Energy Commission showed that the total balance accrual under the stabilization mechanism totals $856 million for the entire Chilean market as of September 2020. By the end of December 2020, the Chilean balance totals around $360 million. Early this year, the sales of accounts receivable generated by this mechanism were executed with Goldman Sachs and IBD, totaling around $290 million nominal value. The first tranche of around $90 million was already cashed in during February this year. A new rule on energy efficiency has been recently published. in which the government defined the regulatory framework for the rational and efficient use of the energy. In this new role, the government established certain goals on energy efficiency, like the implementation of a management energy system for large clients, or requirements for all the new buildings to tag their levels of energy consumption, as we currently have in the RFP quality map. In our view, this is an important initiative that Chile is giving towards the energy transition, and as I said, we are prepared to support our clients and their needs to comply with this new law. We are now in an open public hearing phase for the process, and the expectation is that the regulation related to the implementation of this law shall be published during this year. Now, I will hand it over to Giuseppe.