Central Puerto S.A. — Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual Form 20-F, not a standalone fourth-quarter filing. Financial statements are audited, prepared under IFRS as issued by the IASB, presented in Argentine pesos, and restated under IAS 29 for hyperinflation. Comparative figures are stated in the December 31, 2021 measuring unit and are not directly comparable with previously published financial statements.
Business context
Central Puerto is an Argentine electric-power generator with operations concentrated in Argentina. At December 31, 2021, it operated one hydroelectric plant, five thermal plants and seven wind farms, with installed capacity of approximately 4,809 MW. It generated approximately 14,392 net GWh and represented approximately 12.2% of electricity generated by private-sector SADI generators.
Revenue is highly dependent on Argentine regulation and collections from CAMMESA. The company sells power under Energía Base, long-term and private PPAs, RenovAr and MATER arrangements, and also earns revenue from steam sales, gas-transport-capacity resale and management of the Central Vuelta de Obligado plant.
Key financial metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | Ps.57.08 billion | Ps.57.52 billion | Down 0.77% |
| Gross income | Ps.27.52 billion | Ps.32.14 billion | Down 14.38% |
| Gross margin | 48.21% | 55.87% | Down 7.66 percentage points |
| Operating income | Ps.25.71 billion | Ps.42.18 billion | Down 39.04% |
| Income before tax | Ps.7.62 billion | Ps.18.23 billion | Down 58.19% |
| Net income attributable to parent | Loss of Ps.742.1 million | Income of Ps.10.40 billion | Turned to loss |
| Basic and diluted EPS | Loss of Ps.0.49 | Ps.6.91 | Declined |
| Cash flow from operations | Ps.26.04 billion | Ps.29.12 billion | Down 10.6% |
| Capital expenditures | Ps.5.20 billion | Ps.17.29 billion | Down substantially |
| Total debt | Ps.43.00 billion | Ps.76.93 billion | Down substantially |
All peso amounts above are in the filing’s inflation-restated measurement unit unless otherwise noted.
- Revenue mix: Energía Base generated Ps.23.82 billion, or 41.72% of revenue; sales under contracts generated Ps.30.12 billion, or 52.77%; steam sales represented 3.00%.
- Generation: Total generation was approximately 14,389 GWh, compared with 14,329 GWh in 2020. Piedra del Águila generation declined to 2,565 GWh from 3,435 GWh, while Terminal 6 and renewable projects contributed more.
- Availability: Weighted availability for thermal units was 87.55%, compared with 88.70% in 2020; weighted availability for thermal and hydro plants was 91.14%, compared with 91.94%.
- Liquidity: Cash and cash equivalents were Ps.281.7 million and current other financial assets were Ps.19.84 billion. Current trade and other receivables were Ps.22.75 billion, including significant CAMMESA receivables.
- Debt: Current debt was Ps.6.81 billion and non-current debt was Ps.36.18 billion. The filing states that 100% of financial liabilities were denominated in U.S. dollars.
- Debt reduction: Debt repayments and the absence of new borrowing reduced total debt materially. Management stated that the company was in compliance with its debt covenants.
- Cash flow allocation: Operating cash flow was used principally for debt service, capital expenditures and investments in financial assets. Net financing cash outflow was Ps.19.17 billion.
Material changes versus prior comparable periods
- Revenue was broadly stable year over year, but the mix shifted toward contracted sales and away from Energía Base. Energía Base revenue declined 9.70%, while sales under contracts increased 8.46%.
- Cost of sales increased 16.47%, driven by higher depreciation, maintenance, fuel and spare-parts costs. This compressed gross margin to 48.21%.
- Operating income fell 39.04%, reflecting higher operating costs, a Ps.7.77 billion impairment charge and lower other operating income.
- Finance expense declined 47.07%, primarily because of lower foreign-exchange losses on U.S.-dollar debt and a lower debt balance.
- The company recorded a Ps.564.5 million share-of-loss from associates, compared with a Ps.164.1 million gain in 2020. The Ecogas investment generated a Ps.518.9 million loss.
- Net loss attributable to the parent was Ps.742.1 million, compared with Ps.10.40 billion of net income in 2020. The effective tax rate was unusually high at 108.5%, partly because certain deferred tax assets related to tax-loss carryforwards were not recognized.
- Central Puerto’s interests in TJSM and TMB were diluted in 2021 from 30.8752% to 9.6269% and from 30.9464% to 10.8312%, respectively, following the Argentine Government’s subscription of shares.
- Terminal 6-San Lorenzo reached combined-cycle commercial authorization on August 15, 2021 and began steam-supply operations on October 31, 2021.
Unusual items, outlook and risks
- Impairment: The company recognized Ps.7.77 billion of impairment on property, plant and equipment and intangible assets, primarily related to Brigadier López, Luján de Cuyo, Nuevo Puerto and Terminal 6. The impairment analysis used probability-weighted scenarios and a 12.69% post-tax discount rate. Further impairment could result if discount rates, inflation, devaluation or energy-price assumptions worsen.
- Regulatory change: Resolution 440/21 increased remuneration values by approximately 29% from February 2021 but repealed the automatic price-adjustment mechanism. Subsequent Resolution 238/22, issued after year-end, increased remuneration values by 30% retroactively to February 2022 and provides an additional 10% increase from June 2022 while removing the use factor from capacity-payment calculations.
- CAMMESA exposure: CAMMESA accounted for approximately 94% of consolidated revenue in 2021. The company has historically experienced payment delays exceeding the contractual 42-day period, creating working-capital and credit risk.
- Concession: The Piedra del Águila concession expires December 28, 2023, has no automatic renewal clause, and represented approximately 9.2% of 2021 revenue. Non-renewal or early termination would materially affect results.
- Currency and inflation: Argentina’s CPI inflation was 50.9% in 2021 and the peso depreciated approximately 22.07%. The company has substantial U.S.-dollar debt and remains exposed to exchange controls, devaluation and restricted access to foreign currency.
- LIBOR transition: Certain receivables and borrowings, including CVO receivables and several project loans, remained indexed to LIBOR. The filing states that replacement rates had not yet been identified for all relevant instruments.
- Expansion: The Brigadier López combined-cycle closing remains pending. Estimated capital expenditures are approximately US$130 million, but the timing of construction is not defined and depends on financing, demand, regulation and project economics.
- Dividends: No dividends could be paid during 2021 under the Brigadier López loan amendment. Dividend payments are capped at US$25 million in 2022 and US$20 million in 2023.
- COVID-19 and supply chain: Management reported improved demand and operations but continued risks relating to personnel, imported equipment, construction delays, financing availability and customer collections.
- Legal and tax matters: The company is pursuing several income-tax recovery claims related to inflation adjustments and is subject to an Argentine tax-authority investigation concerning fiscal years 2014. Management believes the relevant positions are probable of acceptance, except for one HPDA-related 2011 claim.
Most important facts for investors to verify
- Whether CAMMESA collections remain timely and whether current receivables convert into cash without material additional delays.
- The effective impact of Resolution 238/22 on 2022 revenue, capacity payments and cash flow.
- The renewal, terms and economics of the Piedra del Águila concession before its December 2023 expiration.
- The final ownership and economic impact of the Argentine Government’s dilution of TJSM, TMB and the expected dilution of CVOSA.
- Whether Brigadier López’s combined-cycle expansion proceeds, its financing requirements and its recoverable value.
- The sensitivity of impairment charges, tax assets and earnings to inflation, devaluation, energy tariffs and discount-rate assumptions.
- The maturity schedule and refinancing requirements of U.S.-dollar debt, including LIBOR replacement terms and foreign-exchange restrictions.
- The company’s ability to pay dividends given loan covenants, Argentine exchange controls and the 2021 loss.
- The quality and liquidity of Ps.19.84 billion of current financial assets and the collectability of Ps.22.75 billion of current receivables.