Pampa Energía S.A. (PAM) Q1 2016 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen and thank you waiting. At this time, we would like to welcome everyone to Pampa Energia and Edenor's joint first quarter '16 results conference call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during both company's presentation. After the company's remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Pampa Energia and Edenor's management and on information currently available to both companies. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Pampa Energia and Edenor and could cause results to differ materially from those expressed in such forward-looking statements. Now I would like to turn the conference call over to Mr. Leandro Montero, CFO of Edenor. Mr. Montero, you may begin your conference.

Thank you very much. Good morning, everyone and thanks for joining us on this joint conference call of Pampa Energia and Edenor. As we usually do, I first Leandro Montero, will be presenting for Edenor first and then for this quarter, Lida Wang will be sent for Pampa Energia. First, we will focus on the main events that lately took place and then briefly review the results of the first quarter of 2016. As you know, you can always call any member of our team for more details on the results of the period or any doubts you might have. On April 16, this year, the Regulator issued a note number 12151 establishing that all final penalties imposed by the ENRE after this date must be valued according to the kilowatt hour values in effect off of the last date of the semester or period during which the even given rise to the penalty accrued including any increases or assessment applicable to our remuneration of such date. In addition fines and penalties set forth within the preview of the note will have interest from the last day of the semester and with the even giving rise to the penalty accrued until the date they are paid by us. Because of this note, the company accounted for an assessment of approximately AR$250 million regarding the penalties of the last semester, which is the September 2015, February 2016 period, and in addition registered the amount of AR$129 million to reflect a good interest according to the note terms. Then by means of Resolution number 31 of the ENRE issued on March 28, we started to compensate this small residential customer who had been affected by the power outage occurred during the period between February 12 and February 18 this year. The amount of such compensation depends on the duration of each relevant power outage. The total compensation to be prepared to our residential customers amounts to AR$73 million. Moving to the normalization of the sector has started with a new tariff of schemes issuing generally on April 1 this year the ENRE Resolution number 55 which approves that 2016 Tariff Revision Program and establish fixed tariff for mid out to be applied in the tailored tariff revision process as well as the compensation and penalties regulation together with a tentative schedule including the tariff of the working plan to be submitted. In our opinion, the EITR process we have to factor in our right analysis of our distribution cost, modifications to our quality of services standards and penalty scheme and finally a revision of our asset base of return and the balances and other issues resulting from the measures presently adopted by the Argentine government to provide us with temporary and partial release. Finally the Ordinary and Extraordinary Shareholders Meeting held on last April 28 appointed a permanent and alternate members of the Board of Directors and Commission. In connection with the Board of Directors New 10 Class B and C members were appointed five as permanent directors and another five as alternate directors. Now taken into consideration the results of Edenor in the first quarter of 2016, net sales increased 209% reaching about AR$2.9 billion compared to AR$969 million for the same period of 2015. This variation was mainly tariff increase obtained since February 1 this year, which means not only higher distributer added value with impact in the company's margin, but also an increase in the cost of energy included in the tariff. At the same time, the volume of energy sold in terawatt hour increased about 2% regarding to the volume of and regarding to the volume of sales reached to 5,671 terawatt hour in the first quarter this year from 5,567 kilowatt hour in the first quarter of last year basically due to an increase of 6% in medium commercial customers and a 3% growth in industrial and [system] customers. The electricity power purchases increased 152% to AR$1.3 billion in the first quarter of 2016, compared to AR$523 million in the same period of the year before, mainly due to the purchase price increase effective as from February 2016. Operating expenses increased approximately AR$829 million as a start of the right in salaries and Social Security taxes and ENRE penalties as a consequence of the accounting effect of the note 121-151 issued by the ENRE as described before. The sum of these two effects amounted to a loss of AR$734 million and represent about 89% of the total increase. As I mentioned in the previous conference call, the rise in salaries is basically explained by an increase in salaries agreed with the Unions last year of which 27.8% become effective as from September 2015. Now there is still an 11.9% remain on grace that will be since this March. Regarding Pampa Energía, the increase can be basically explained by the application of the new method of calculation which establishes our penalty should be based on the distribution added value that corresponds to the date on which event occurs. Edenor’s net operating income decreased AR$678 million amounting a gain of AR$238 million in the first quarter of 2016 compared to a gain of AR$916 million in the same period last year. This negative result was due to an increase in operating expenses as explained above and to a reduction in the amount of time as subsidies under Resolution 32 issued by the fixed rate of energy in March 2015 and cost maintain in maintenance increases with what continues since February 1 this year. Finally the net income of the period shows a decrease of AR$595 million, amounting in a loss of AR$125 million in 2016 first quarter, compared to a gain of AR$470 million in the same period last year, mainly due to the operating results explained above and to a decline in financial results caused basically by the effect of our debt of the devaluation in the first quarter this year of the Argentine Pesos related to U.S. dollar. In connection to Edenor’s adjusted EBITDA, it resulted in a gain of AR$338 million in the first quarter of 2016, compared to a gain of AR$366 million for the same quarter of 2015. This amount includes in 2016, AR$513 million of additional income of the Resolution 32 and its assessment for generally the last month effective. To end up, regarding Edenor’s capital expenditure, during the first quarter this year, our investment increased about 88% reaching about AR$629 million compared to AR$334 million in the same period of 2015, mainly focused on increased enhancement, new connections and maintenance and improvements. So this concludes my review on Edenor. I will now leave you with Lida Wang, Chief of Investor Relations at Pampa Energía, who will review other relevant events of the Group, as well as the consolidated results. After that, we will be open for questions.

Thank you, Leandro and good morning, everyone. Lots of developments have happened since our last call on March. As you may now consequently after the approvals obtained from Pampa and Petrobras Brazil, Board of Directors, last week we signed the SBA contract acquiring to controlling 67.2% stake of Petrobras Argentina for a base price of $892 million. The base price is subject to agreed adjustments, likely no material until the closing. As we signed the SBA contract, we deposit 20% of the base price in Escrow account being the remaining to be paid at the closing. Let me give you a quick glimpse of Petrobras Argentina. Petrobras Argentina [indiscernible] Argentina with a daily production of 28,000 barrels of oil and seven million cubic meters of gas, 60% gas and 40% oil currently. They also participate in refining and distribution business with our refinery install capacity of 30,000 barrels per day, plus a retail network of 260 gas stations across the country. In Petrochemicals segment, Petrobras Argentina operates two plants being the only national integrity producer of styrene, synthetic rubber, polystyrene and BOPS. In gas and energy segment, Petrobras Argentina controlled almost 1200 megawatts of the power generation capacity through two thermal gas fired power plants and one hydro plant, increasing Pampa capacity by more than 50% with premium quality asset. Petrobras Argentina also holds the other 25.5% of TGS, the largest gas transportation company and one of the leading natural gas liquids producer of Argentina. Last first quarter 2016, Petrobras posted a AR$2.4 billion of EBITDA and a net income of AR$931 million. To test this ticket Pampa was formed with a combination of own cash of up to $220 million, up to $250 million from the sale of TGS is completed prior to the closing and I'll explain later more details. Up to $700,000 of financing from a concert in a bank, prior financing of up to $225 million of which we have $140 million permitted from YPF and financing from the vehicle controlled by the controlling shareholders of the company for up to an amount of $115 million. As a part of the deal, and as of Petrobras Argentina taking over by Pampa, Petrobras Brazil will remain as a partner as they agree to acquire one third of their rights and obligations of Rio Neuquen block for an amount of $72 million. Likewise YPF we acquire the another one third of Rio Neuquen for the same amount. So the former Petrobras Argentina YPF and Petrobras Brazil will pin up with an ambitious investment plan of approximately AR$0.5 billion in Rio Neuquen one of the best and most respected gas fields in Argentina to be spend in the near future and period of which partners take in the block. Together with a one third of Rio Neuquen, YPF is also acquiring the 80% of Petrobras Argentina to state our Latina Block, another area with high gas potential in Neuquen Basin. After the completion of the aforementioned sales, Pampa Energía together with the former Petrobras Argentina will hold 8% of Argentina's total gas production, an important market share placing us as one of the country's leading oil and gas production company. Moreover after the closing, Petrobras Brazil to acquire 100% of the rights and obligations under the operating agreement Petrobras Argentina entered into by Petrobras Argentina branch and Yacimientos Petrolíferos Fiscales Bolivianos in relation to the Corporación Creada Block. We assign a negative value of AR$20 million in those assets. Furthermore, in compliance with the provisions of the Argentine Capital Markets Law, [Capitalist] relating to the mandatory tender offer to be made in the event of change of control and indirect acquisition, prior to the closing of this transaction, the company will launch a mandatory cash tender offer for the minority shareholders of Petrobras Argentina. As I mentioned before, when explaining how old this acquisition ticket, the company has the necessary terms to fulfill and the cash offer. In addition to that, the company thought to evaluating the net of simultaneously with the launching of the cash offer, offer of a loan tariff change of to Petrobras Argentina shares into Pampa shares. Both the cash and exchange offering as well as the call for Shareholders Meeting to deliberate on the corresponding capital increase will be probably submitted for approval of the Board of Pampa and duly reported to the market, in accordance with the requirement establishing the Argentine Capital Markets Law, the Argentine Security and Exchange Commission with CMB Regulation applicable U.S. laws and regulations. In the long term, after the closing and completion of the cash and exchange offering, the company felt assessing the possibility of managing Pampa with Petrobras Argentina, being Pampa the surviving entity. In the event of carrying out another and after total analysis, we will submit for its approval of full company's board and shareholders. Acquiring Petrolera Argentine is a huge milestone for Pampa, which not only will significantly increase the size of the company, but also will play as one of the key players in Argentina's energy sector and a few integrated energy private owned company in Latin America. Our strategy going forward is to significantly among other things, grow our focus in gas production a business that we believe is going to play a dominant role in the next few years in Argentina. Also as related to what I mentioned before on April 22, Pampa agreed with Harz Energy a subsidiary of Group Neuss a 45 days exclusivity period to complete the sale of the stake and rights held in TGS representing the 25.5% of its shared capital for an amount of $250 million, Harz Energy paying an amount of $3 million as a consideration for the exclusivity period, which will be deducted from the purchase price. Moving to the last news towards normalization in the utilities sectors set by the new government [indiscernible], the Secretary of Electric Energy issued Resolution 22 in which increases the prices of all generation as of February 2016. For Pampa generation unit, sales resolution represented an average increase of 42% in comparison with the previous pricing scheme under Resolution 428/15. Also TGS was granted 200.1% tariff increase in gas transportation as of April 2016. In line with the Resolution 21 issued by the Ministry of Energy and Mining and which also encourages an Internal Tariff Review, ITR by April 2017. That increase must be taking on account of the ITR and subject to compliance with the mandatory investment plan for the next 12 months to be overseen by Energas, the Gas Regulator Entity. In electricity distribution it was issued Resolution 55, which details was previously reviewed by Leandro. Going to more news and generation specially in Loma de la Lata Power Plant with the President of Argentina’s, Vice President, Gabriela Michetti the Gobernador de Neuquén province, Omar Gutiérrez National and Provisional Authorities and Executives from the company, on May 2,we inaugurated the new 105 megawatt gas turbine at Loma de la Lata, which increased its installed capacity to 645 megawatts. The total investment was AS$1.1 billion. The new LMS 100 gas turbine manufactured by GE, General Electric is the same model as suspension gas turbine build with the most advanced technology available which allows the high efficiency and flexibility. Currently the commission of this new gas turbine related by the last profit incurred are being covered by GE, the contractor because we engage with them in EPC contracts. Anyway we expect to start commercial operation soon. Moreover in our goal of supporting the development of renewable energy in the country, on April 18, Loma acquired 100% of share capital of Greenwind for $2 million. Greenwind is the developer of Corti Project, a 100 megawatt install capacity wind farm to be built in Bahía Blanca, south of Buenos Aires Province. Greenwind holds the right to usufruct a 1,500 hectares field in which the wind has been measured for the last four years. Regarding the Arbitration Award against Isolux, Loma has been able to collect a total compensatory agreed amount of $16 million, including interests and expenses leaving no remaining due amount from Isolux. In relation to debt transactions last month, our subsidiary Petrolera Pampa issued short term North BCP Series 14 for an amount of AR$296 million bullet in 12 months and at plus 590 basis. Also March, Petrolera Pampa was granted by ITVC new productive launch for AR$300 million aiming to repay along with the same bank granted back in July 2015, there along with a repay in 10 quarterly increased installments beginning on January, 2017 and at a combined 23% fixed rate for the first year and a variable rate of about core plus 575 basis for the remaining period. Finally, on the news recap, on April 29, Pampa Shareholder Meeting approved the appointment of Clarisa Lifsic, Santiago Alberdi, Javier Campos Malbran, Julio Suaya Demaria as Independent Directors replacing [indiscernible]. Moreover as other independent directors were appointed José María Tenaillon, Mariano González Álzaga and [Gomez]. Regarding the committee Santiago Alberdi and Clarisa Lifsic were appointed in replacement of [Marcelo and Hector]. On May 10, the Board of Pampa approved the designation of Marcello Mindlin as Chairman and Gustavo Mariani as Vice Chairman of the Company. So regarding Pampa’s consolidated results, first of all let me remind you that we are still not include in TGS figures in our figures and because we co-control Transener, we only consider 50% of its adjusted EBITDA. So moving on to the result, in the first quarter of 2016, we presented an EBITDA of AR$1,353 million compared to an EBITDA of AR$833 million in the same period of 2015, mainly due to increases of AR$56 million in generation and AR$517 million in oil and gas segment, partially offset by increases of AR$6 million in the transmission, AR$31 million in distribution and higher losses of AR$16 million in holding and other segment. The higher EBTIDA at our generation segment was many driven by prices for oil capacity remuneration, from the application of Resolution 22 compared to 2015's first quarter prices that were under an older resolution than 482 as well as the peso devaluation, which impacts our U.S. dollar contract to which we sell the energy to CAMMESA and under Energía Plus. This effect partially offset by a lower electricity dispatch, which mostly due to technical problems a lower availability of gas in our thermal units and also due to increasing operating cost as you may know fuel oil capacity generation is all provided by CAMMESA. In Transmission segment, the EBITDA fell AR$6 million and during the first quarter of 2016 versus the same period of last year, mainly due to increasing operating cost outpaced the accrual of renewal revenues corresponding to the renewal agreement plus the fact that as of January 2015, Transener stopped recording requiring financial income on the export line [cannon] which is instead O&M remuneration at sales. The interest on the full line registered in the queue first 2015 corresponds to one time restrictive adjustments to the tenants. Moving on to the distribution segment, which was previously reviewed by Leandro, during the first quarter of 2016, the EBITDA decreased by AR$31 million on a consolidated basis compared to the same period of 2015, mainly because the resolution for reduced income and tariff increase to end users were not able to offset the operating and energy processing cost. In the oil and gas segment, in the first quarter of 2016 we posted an adjusted EBITDA of AR$645 million compared to AR$127 million in the same period of 2015. This EBITDA was mainly driven by higher natural gas sales from our joint venture between Petrolera Pampa and YPF in [indiscernible] as well as the effect of the peso evolution impacting our U.S. dollar sales price. In that sense, during the first quarter of 2016, we produced an average of 2.1 million cubic meters per day versus 906,000 cubic meters in the same period 2015, which represents an increase of 136% increase quarter-over-quarter. The agreement with YPF signed in 2013 and initial committed to invest $150 million was later extended in May 2015 an increase to a total investment from Petrolera of around $350 million to be done by 2017. As of March under this JV we have 97 productive wells we around 1.7 million cubic meters per day of natural gas production during the quarter. Overall, including the agreement with Petrolera and Apache as of March, we have 121 productive wells. Finally our holding segment represented a negative EBITDA of AR$30 million in the first quarter of 2016, compared to a loss of AR$414 million in the same period of 2015. Finally in terms of net income, Pampa presented a consolidated profit of AR$673 million in the first quarter of 2016 of which AR$608 million corresponds to the shareholders of the company, compared to AR$902 million in the same period of 2015. This was mainly due to higher losses from financial exchange rate difference and interest. As a result of Peso depreciation against U.S. dollars partially offset by higher profits from results and exchange rate difference from the holding of financial instruments. So this concludes our review of Pampa and Edenor. Now we open the floor for questions. Thank you.

Ladies and gentlemen the floor is now open for questions. [Operator Instructions] Our first question comes from Frank McGinnis from Bank of America Merrill Lynch. Please go ahead with your question.

Hello, good day. Two questions if I could. One is just related to how you are managing the portfolio that you are acquiring with Petrobras Argentina? You are bringing in Petrobras into Rio Neuquen as well as YPF and then you're also YPF is going to take one of the others Aguada de la Arena, I was wondering if the YPF this is as I understand an exchange to the financing, but it appears that you might by that back or pay back to financing and maintain those stakes. I was wondering if that is your intention. And secondly related to that, would -- are you thinking of possibly adjusting a portfolio in other ways and selling other pieces to other participants in the market in Argentina?

Hey Frank, Leandro Montero here, begin by the end trying to remember all your questions, no, we are not planning at this moment to sell any additional part of the EMP portfolio. Regarding YPF, they will be operating Rio Neuquen. The idea is to keep one third Petrobras Brazil, one third YPF as an operator and one third will remain with ourselves. You mentioned to return the fund and keep the assets, I don’t know why you had a doubt, but that’s not the case. We plan to divest those assets to YPF as informed in the past few days.

Okay. Okay. Great. That’s very clear now. I just didn't read the Press Release that was the -- left me with a question related to that. Then if I could just have one more just in terms of generation capacity and capacity utilization, with all the changes going on in the market with potential changes in pricing and regulatory rules, I was just wondering how you're thinking about the generation business in terms of potential upside, in terms of both pricing as well as the ability to have a greater capacity utilization?

Okay. If you think, I'm sure as I mentioned, we will be increasing our capacity by more than 50% by adding [Canelma] which is state-of-the-art combined cycle and of 160 megawatts of capacity and we will be adding in also in Canelma of 860 megawatt of capacity where the project to add the steam turbine and closed cycle and convert that in a 240 megawatt combined cycle. It's already there and it's something that we will like to do as soon as possible. Although there is something that we need to negotiate with the Secretary of Energy, Petrobras has also made $80 million in grades, generally more than $80 million in grades that Petrobras has not utilized. We here in Pampa, we did use them and was part of the grades that we used to build the new 100 megawatt gas turbine that we had recently inaugurated in Loma. So that is where what concerns on the thermal plant in Petrobras, we're also going to be adding this 285 megawatt hydro plant [indiscernible] and the other plant that we have for our -- to increase our thermal capacity in Pampa, we will be participating in this billing process that will be taking place next week. We think we will be a placing something between 150 around 150 megawatts of thermal capacity and it has been announced we're also planning to be to participate in the renewable bidding that does not have a date, but we expect that bidding to take place in the next two or three months and for that auction we have already secured two facilities to our wind farms. So, that’s what we're expecting in terms of new generation of new project in generation capacity and regarding the regulatory environment we still have not much -- we don't have a clear view of what the government is going to do to accommodate what we call the old energy capacity. I've seen that something that this new government will focus after finishing in internal tariff region that they're planning to do this year on distribution and transmission and so we expect that a new regulatory framework for the end of the year or early next year, but that’s -- again that’s our guess, our assumption.

Okay. Great. Thank you very much. Very helpful.

Our next question comes from Walter Chiarvesio from Santander Bank. Please go ahead with your question.

Hi, yes hi good morning everyone. Thank you for taking the call. I have a few questions more focused on the distribution segment in Edenor. So the first one is the volume of residual has been quite resistant or quite strong even despite that the rates to the consumer has been increased. What is your view about it? How do you think that will perform in the upcoming quarters given that we will have the full impact of the tariff increases and I guess in the second quarter? The second question I’d like to ask is regarding the penalties imposed by the ENRE, if you can explain a little bit more how is that or what do you expect in the future about it, if the level that we saw in the first quarter is also expected for the upcoming quarters? And third question would be regarding the Resolution 55 by the ENRE and if you can develop a little bit on how this resolution determines the calculations of the asset base to determine the tariff. I understand that you have some freedom to propose some methodology. And the last one I saw a capital work increase receivables in Edenor I guess that is related to the increase of tariff, but my question is, is that just business as usual or you show some increase in delinquency or something related to the rate increases that we saw in the first quarter. That’s all my questions at the moment. Thank you.

Okay. Good morning, Walter. Well just to start with the first question, as you mentioned we have not seen any change in the behavior of our customers relating to the energy consumption. In fact during March we had a decrease a deep decrease in the residential consumption of around 20%, but this was because of the weather conditions and because it was in comparison with very high consumption period, which was March 2015. In fact all our customers have been receiving the new builds with full impact of the new tariff since April 1 and we didn’t see a change in the behavior. In fact during April, the average demand for Edenor increased 5.5% in comparison to the same month last year. So we don’t see any change in the behavior may be because increasing the tariff is still not as high as we as think or since the average build for our residential customer is between AR$80 and AR$300 per month that if you compare this with any other service or like cable or gas maybe it’s even lower. So we didn’t see any change. And then in relation to the penalties, during the quarter the Regulator issued this note, the 120/151 which was an instruction for the Regulator in order to set how they were going to establish the amount of the penalties to be imposed since February or since April. In that note they establish that new kilowatt per hour price should be taken to account in order to both the penalty taking into account the price of the kilowatt hour in the last day of the semester that was being punished. You know that penalties and fines are imposed every semester. So what we did was to assess the amount of the penalties for the semester from September '15 to February '16 and that had an impact of approximately AR$250 million. In addition we were imposed a penalty of AR$73 million because of the outreach we had during the period of February 12 and February 18 and in addition we started to work with our penalties taking into account the new tariff scheme. Of course we're discussing with the Regulator about the level of the quality of standard that should be taken into account in order to calculate the penalties. But these are discussions we think will be end with Integral Tariff Revision process. Then going to the Resolution 55 of ENRE as you mentioned the ENRE of the Regulator asked to present two different ways to determine the asset base. One they called the cash flow approach. In fact it's not the cash flow. It's a calculation taking into account the account in value of the assets and the other is the net realizable value or replacement value of the assets, which we think is most appropriate asset base calculation, but ENRE the Regulator is open to receive another methodology we consider. And then going to the working capital decrease -- increase, we have as you mentioned, the receivables increase because of the increase in the tariff, but we haven't seen yet an increase in the delinquency or the trough and even in bad debt. So by the moment it shuts the normal increase because of the higher amount in our bills.

Okay. Thank you very much.

You're welcome.

Our next question comes from Santiago Wesenack from Raymond James. Please go ahead with your question.

Hello everyone and thanks for taking the questions. Just three quick ones if I may. The first one on the Petrobras acquisition, if you can give any guideline if there is -- if you can give any guideline on the future dates, when should we expect anything on the closing side maybe and what's still missing to get the actual closing of the operation? Then the second question on the generation side well this quarter you had technical issues as Lida mentioned on the steam turbine both in [indiscernible], is there any news, any positive news for the second quarter? And also in terms of the gas supply from CAMMESA taken into consideration that we're now into one month and half after the closing of the first quarter, how is the gas flow coming from CAMMESA? And the last one for Leandro Edenor at the Edenor side, if we reclassify revenues, last year revenues under Resolution 32, was to the revenue line we saw this quarter, a decline in terms of EBITDA margins, mainly driven by distribution and distribution and electricity purchases going higher or growing higher than your revenues. What should we expect for second quarter, third quarter and the rest of the year? Thank you.

Okay. Regarding the timeline for the closing of the transaction, we expect closing to happen within the next 90 days and we need to fulfill all the condition prices basically a preference right of partners in some areas in the -- EMP areas in North Basin and in Endosa. Some lender consents, small issues and they refinance of Petrobras Argentina $300 million bond that we expect that to happen in the next six year or 90 days. Once those condition presences are fulfilled, we will go to the closing of the order transaction. The second question…

The second question was about CP, first quarter not performing so well compared to last year. Well in terawatt we just finished a major overhaul that this quarter it didn’t responded as we expected to, but the second quarter actually a little bit just brightly acted as closing the first quarter we started to work on this to reconnect and we expect the second quarter to do better than Güémez the thing that is not available it's not something discussions to us. Remember that gas is provided by CAMMESA but the old capacity generators and there wasn’t any gas available in the north part in Argentina. So, we always collected the cost because we're available and we are not collecting the generator the variable cost from that. Third question is going to be addressed by Leandro.

Good morning, Santiago. Well, yes your precision is correct because in 2015 in the first quarter 2015, we recorded an additional revenue because of one of the Resolution 32 effect, which was the recognition in revenues of the salary long we had received in 2014. That’s why the first quarter 2015 is impacted by AR$464 million regarding this long. If you see our last year EBITDA, this quarter is similar to the quarter last year, just taking out this special effect that was recognized in 2015. So we think that for the upcoming quarters, the EBITDA will remain similar to the EBITDA this quarter, taken out the one-time effect of the increasing penalties and final penalties line.

Okay. Great. Thank you very much.

Welcome.

[Operator Instructions] And ladies and gentlemen at this time it's showing no additional questions. This will conclude the question-and-answer session. I’d like to turn the floor back over to Mr. Montero and Ms. Wang for any closing remarks.

Okay. Thank you very much for attending this conference call. Have a nice day.

Thank you.