May 23, 2019 Disclaimer This earnings presentation contains - - PowerPoint PPT Presentation

2019 Results Conference Call

May 23, 2019

This earnings presentation contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “forecast”, “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions. The forward-looking statements included in this presentation relate to, among others: (i) our business prospects and future results of operations; (ii) the implementation of our combined cycle expansion project; (iii) the implementation of our financing strategy and the cost and availability of such financing; (iv) the competitive nature of the industries in which we operate; (v) future demand and supply for energy and natural gas; (vi) the relative value of the Argentine Peso compared to other currencies; (vii) weather and other natural phenomena; (viii) the performance of the South American and world economies; and (ix) developments in, or changes to, the laws, regulations and governmental policies governing our business, including environmental laws and regulations. These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our

• expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this release might

not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements. The forward-looking statements made in this earnings release relate only to events or information as of the date on which the statements are made in this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. This presentation does not constitute or form any part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any senior notes or other securities of the Company.

Disclaimer

3

 Solid operational performance amongst the top performers of Resolution 21  Expansion project fully funded and advancing according to schedule  Additional Gas Turbine in commercial operation at General Rojo and Villa Maria Plants. Current aggregate capacity

reached 550MW. Barker COD schedule for late May (50MW)

 Phase II, the conversion to combined cycle on target for first quarter of 2020; steam pipe rack completed, cooling tower

assembly in progress, boilers are being mounted and steam turbine foundations are near completion.

 By first quarter of 2020, our aggregate capacity will reach 750MW and 100% of our capacity will operate under combined

cycle and be fully contracted under long term dollar denominated take-or-pay contracts

 Effective January 1st 2019, the three Entities were merged into MSU Energy, key to simplify operation and gain efficiencies

MSU Energy - 2018 Highlights

State of the Art Power Generation Portfolio

4

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 18% 19% 9% 10% 29% 30% 18% 38% Jan-19 Feb-19 Mar-19 Apr-19 General Rojo Barker Villa María 1Q19 Average dispatch 1Q18 Average dispatch

Availability Factor

Commercial Availability

Solid operational performance

 Availability factor, our key performance driver, has reached 100% in 1Q19  Average Availability Factor since COD  General Rojo Plant (COD June 2017) 99.8%  Barker Plant (COD December 2017) 99.8%  Villa Maria Plant (COD January 2018) 93.5%  Lower than expected dispatch levels are explained by: (i) lower than expected energy demand as a result of the economic slow-down; (ii) below

average temperatures; and (iii) new scheme for gas cost allocation which affects General Rojo and Villa Maria Plants

1Q19 Average Availability= 100% Average Dispatch 1Q19 = 15% 1Q18 = 23%

5

22.8 26.9 1Q18 1Q19

Fixed Capacity Payment 94% Variable Payment 4% Other Revenues 2%

Revenues 1Q19 vs. 1Q18 – USD millions 2019 Revenues Breakdown – USD millions

8.9 9.1 8.9 Jan 19 Feb 19 Mar 19 General Rojo Barker Villa Maria 

Total Revenues in 1Q19 reached USD 26.9 million, 18% higher year-

• ver-year



Revenue growth was driven by the full ramp up of the Villa Maria Plant:

i.

Villa Maria Plant achieved COD on January 25,2018

• ii. Villa Maria Plant had an availability factor of 48% in March of 2018

due to a commissioning driven malfunction in one gas turbine



Fixed Capacity payments represent 94% of total revenues

By Type

Stable and predictable dollar denominated revenues

+ 18% By Month/Plant 1Q19

6

 20% decrease in year-over-year costs was driven by: i.

Devaluation of the ARS peso

ii.

Lower variable cost due to less dispatched energy;

• iii. Partially offset by higher maintenance expenses related to the

CSA for Barker and Villa Maria Plants which initiated during 2Q18

 1Q19 Cost / Revenues = 13%  Labor cost explained by salaries, social contributions and benefits  Maintenance expenses related to Contract Service Agreement with GE  Professional fees mainly related to audit, tax, legal services, project

advisory.

 Approximately 50% of cash costs are denominated in US dollar

Efficient costs structure

4.3 3.4 1Q18 1Q19

Costs 1Q19 vs. 1Q18 – USD millions 1Q19 Costs Breakdown

(20%)

Vehicles and Travel 1% Others 2% Selling Expenses 2% Office 3% Insurance 6% Professional fees 6% Taxes, rates and contributions 8% Maintenance 34% G&A #41 General Rojo O&M #22 Barker O&M #20 Villa Maria O&M #21

#104

Highly Efficient Operations Total MW per employee = 4.3

Headcount - # as of March 31, 2019

Labor Cost 38%

7

18.5 23.7 1Q18 1Q19

EBITDA 1Q19 vs. 1Q18 – USD millions

 EBITDA during 1Q19 reached USD23.7 million, 28% higher year-

• ver-year. This increase is mainly explained by:

i.

Ramp up of the Villa Maria Plant which did not operate fully during 1Q18

• ii. Lower costs

Net Income 1Q19 vs. 1Q18 – USD million

 Net Income during 1Q19 reached USD 2.3 million, 5.2 million

higher compared to 1Q18

 Depreciation & Amortization during 1Q19 reached USD 3.0 million,

USD 1.2 million lower than 1Q18

 Financial Losses during 1Q19 reached USD 17.7 million, in line

with 1Q18. Financial Losses for are explained by Net Interest Expenses of USD 11.0 million and non-cash Foreign Exchange losses of USD 6.7 million, driven by the negative effect of the devaluation of the Argentine peso over our VAT tax credits

• 2.9

2.3 1Q18 1Q19 Financial Expenses breakdown | USD mm 1Q18 1Q19 Net Interest expense (13.4) (11.0) Foreign exchange loss (4.4) (6.7) Total Financial expenses (17.9) (17.7)

Financial performance in line with full year forecasts

+ 28%

8

 Net Debt as of March 2018 stands at USD 778.7 million, consisting of:

• USD 600 million International Bond
• USD 250 million Private Placement Note

 Adjusted Operating Cash Flow(1) for 1Q19 reached USD 22.9 million,

33% higher year-over-year

 As of March 2019, VAT credit amounts USD 40.8 million. These credits

are progressively reimbursed through monthly billing

17.2 22.9 1Q18 1Q19

Adjusted Operating Cash Flow (1) - USD millions

Cash Flow & Balance Sheet highlights

Debt Breakdown | USD mm as of March 31, 2019 Senior secured notes* (830.6) Accrued bond interests* (11.6) Total Financial Debt (842.2) Cash 63.5 Net Financial Debt (778.7)

* Net of capitalized issuance expenses

Net Debt - USD millions

68 91 91 600 2019 2020 2021 2022 2023 2024 2025

 Private Placement Note  International Bond

 Debt amortization profile is well aligned with the incremental combined

cycle cash flows

 Steep deleveraging curve as of 2020. Net leverage stabilizing below 3.5x

by 2021

(1)Adjusted Operating Cash Flow is defined as Net Cash Flow Provided by Operating Activities net of

Tax Receivables related to investments in PP&E (Line item “Increase in tax receivables due to recoverable taxes paid for property, plant and equipment”).

(2)1Q18 Operating Cash Flow, line item “Trade Account Payable” excludes non cash capex.

+ 33%

(2)

Debt Amortization

9

 Completed works  Pending works

2018 2019 2021 2020

NTP EPC signed with AESA March 8, 2018 Engineering March 2018 Foundations GT & HRSG Soil movements Barker & Villa Maria plants COD (Combined-cycle) 2 months prior to PPA commitment General Rojo plant COD (Combined-cycle) 1 month prior to PPA commitment February 2020 General Rojo plant COD (achieved) Fourth Gas Turbine (GT) April 30, 2019 Villa Maria plant COD (achieved) Fourth Gas Turbine (GT) May 17, 2019 March 2020 Fourth GT and gas compressor mounted on each site Power Train Assembly & BOP Cooling tower assembly Boiler assembly Steam turbine assembly Pre-commissioning & Commissioning COD CC COD Fourth GT Switchyard expansion 132kv Pre-commissioning & Commissioning BOP installation

USD 286 million invested as of this report

Combined-Cycle project advancing according to schedule

May 2019

Barker plant COD Fourth Gas Turbine (GT) End of May 2019 Steam turbine manufacturing Steam turbine shipping Phase I Phase II

10

4th Gas Turbine Reached COD in General Rojo (50MW) and Villa Maria (50MW) Plants

Conversion to Combined-Cycle | Work in progress

Boilers Mounted in General Rojo Plant

11

Gas Compressor Mounted

Conversion to Combined-Cycle | Work in progress

Main Transformer Mounted Switchyard: Gantries, Profiles and Insulators Extension Water Tanks Completed | Paint in Progress

12

Steam Pipe Rack Completed in Two Plants Cooling Tower Assembly

Conversion to Combined-Cycle | Work in progress

Steam Turbine Foundation in Progress Steam Turbines Quality Ctrol.| Already Shipped - ETA June

13

Financial Statements

14

Financial Highlights – Income Statement

In USD As of March 31, 2019 As of March 31, 2018 Net revenue 26,912,180 22,831,154 Cost of sales (5,547,312) (7,256,813) Gross profit 21,364,868 15,574,341 Selling and administrative expenses (932,123) (1,317,099) Other income and expenses 243,848

• Operating profit

20,676,593 14,257,242 Financial income and expenses – net (17,705,846) (17,882,401) Gain (loss) before income tax 2,970,747 (3,625,159) Income tax (loss) benefit (683,241) 678,638 Net gain (loss) for the period 2,287,506 (2,946,521) Other comprehensive income

• Comprehensive gain (loss) for the period

2,287,506 (2,946,521)

15

Financial Highlights - Cash Flows

In USD As of March 31, 2019 As of March 31, 2018 Operating activities Gain (loss) for the period 2,287,506 (2,946,521) Adjustments for: Income tax 683,241 (678,638) Depreciation of property, plant and equipment 3,045,149 4,275,386 Foreign exchange loss 6,712,450 4,442,881 Accrued interest 10,993,396 13,389,745 Other income and expenses (370,333)

• Changes in operating assets and liabilities

Increase in accounts receivables (4,146,215) (10,768,427) Decrease (increase) in other receivables 1,089,608 (304,399) Decrease in tax receivables 4,320,635 7,746,673 (Decrease) increase in trade accounts payable (1,898,347) 22,189,985 Increase in taxes payable 133,705 8,408 Net cash flows provided by operating activities before Tax payments for PP&E 22,850,795 37,355,093 Tax payments for property, plant and equipment (5,574,284) (13,289,730) Net cash flows provided by operating activities 17,276,511 24,065,363 Changes in investment assets Interest income 323,593 102,316 Loans granted

• (35,610,000)

Advanced to purchase property, plant and equipment (3,463,398) (43,256,134) Acquisition of spare parts (210,062) (145,471) Payments of property, plant and equipment (40,056,674) (166,062,577) Net cash flows used in investing activities (43,406,541) (244,971,866) Financing activities Senior secured notes

• 600,000,000

Increase in loans

• 40,141,169

Interest senior secured notes (29,347,894) (4,098,000) Payments of loans

• (379,156,047)

Payments related to financing expenses (389,120) (12,307,835) Payments of taxes related to loans

• (4,880,353)

Decrease in other liabilities

• (50,903)

Net cash flows (used in) provided by financing activities (29,737,014) 239,648,031 Net (decrease) increase in cash (55,867,044) 18,741,528 Cash and cash equivalents at the beginning of year 119,326,703 6,363,169 Cash and cash equivalents at the end of period 63,459,659 25,104,697 Net (decrease) increase in cash (55,867,044) 18,741,528

16

Financial Highlights – Balance Sheet

In USD As of March 31, 2019 As of December 31, 2018 Assets Property, plant and equipment 684,764,359 649,176,598 Spare parts 5,675,994 5,095,599 Financial credits 38,486,340 37,875,796 Tax receivables 19,309,104 17,868,398 Deferred tax assets 455,434 1,138,675 Other receivables 13,839,534 15,040,287 Total non-current assets 762,530,765 726,195,353 Tax receivables 25,039,228 31,380,027 Other receivables 12,701,199 10,438,454 Trade receivables 27,266,260 24,243,850 Cash and cash equivalents 63,459,659 119,326,703 Total current assets 128,466,346 185,389,034 Total assets 890,997,111 911,584,387 Shareholders’ equity Capital 30,295,440 27,301,097 Merger premium (20,161,526)

• Legal reserve

116,084 116,084 Other reserves 2,157,498 2,157,498 Accumulated gain (loss) 4,307,269 (15,147,420) Total equity 16,714,765 14,427,259 Liabilities Loans 830,611,733 829,667,975 Trade accounts payables 13,112,093 12,426,095 Total non-current liabilities 843,723,826 842,091,070 Loans 11,584,587 20,116,174 Other liabilities 952,728 947,823 Taxes payable 215,406 81,701 Trade accounts payable 17,805,799 33,920,360 Total current liabilities 30,558,520 55,066,058 Total liabilities 874,282,346 897,157,128 Total liabilities and equity 890,997,111 911,584,387

17

Financial Highlights – EBITDA Reconciliation

In USD As of March 31, 2019 As of March 31, 2018 Comprehensive gain (loss) 2,287,506 (2,946,521) Financial income and expenses – net 17,705,846 17,882,401 Income tax 683,241 (678,638) Depreciation and amortization 3,045,149 4,275,386 EBITDA 23,721,742 18,532,628

Contact information Investor Relations Cerrito 1294 | 2nd floor I C1010AAZ I Buenos Aires +54 11 43162800 | ir@msuenergy.com | www.msuenergy.com