Empresa Distribuidora y Cmrclzdr Nort : Cuarto Trimestre 16 - Informe de Ganancias

Fourth Quarter

2016

	Edenor announces fourth quarter 2016 results
	Stock Information: Ticker: EDN New York Stock Exchange Ratio: 20 Class B = 1 ADR Buenos Aires Stock Exchange	Investor Relations Contacts: Leandro Montero Chief Financial Officer Verónica Gysin Planning and Capital Markets Manager
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Buenos Aires, Argentina, March 13, 2017. Empresa Distribuidora y Comercializadora Norte S.A. (NYSE: EDN; Buenos Aires Stock Exchange: EDN) ("EDENOR" or "the Company"), Argentina's largest electricity distributor, today announced its results for the fourth quarter of 2016. All figures are stated in Argentine Pesos and have been prepared in accordance with International Financing Reporting Standards ("IFRS"). Solely for the convenience of the reader, Peso amounts as of and for the quarter ended on December 31, 2016 have been translated into U.S. Dollars at the selling price quoted by Banco de la Nación Argentina of AR$ 15.89 per U.S. Dollar. HIGHLIGHTS Integral Tariff Revision (RTI)

Resolution No 63/2017

On January 31st 2017, the National Regulatory Entity for Electricity (ENRE) issued Resolution No 63/17 which approves Edenor´s VAD for the following 5 years. It was established by applying the NRV methodology, for which the Government evaluated our presentation and established a Capital Base, which includes the 91% of the requested depreciated assets. The rate of return applied was 12.46% before taxes, which had been previously stated by ENRE through Resolution No 494/16. The ENRE, as it did within the original concession contract and the Memorandum of Agreement established a non-automatic mechanism to adjust tariffs and preserve the economic-financial sustainability of the Company in the event of prices variations in the economy. As a result of the Integral Tariff Review process (RTI), the ENRE stated that the remuneration acknowledged to EDENOR was AR$12.5 billion as of December 2015, which adjusted to February 2017 reach AR$17.2 billion.

As per the Ministry of Energy and Mining (MEyM) request, the ENRE established a VAD increase in three stages, establishing an initial maximum increase of 42% to be applied as from February 1st 2017, and two subsequent increases in November 2017 and February 2018. In addition, the ENRE should acknowledge to the Company the

difference in VAD resulting from the application of the gradual tariff increase recognized by the RTI in 48 installments as from February 1st 2018, which will be incorporated to the VAD value on said date.

In connection with the quality standards, the ENRE approved new parameters, with the purpose to achieve the end of the 2017-2021 period with an acceptable quality. In this regard, it determined a penalties regime to be applied in the event of noncompliance related to the quality rates required.

Resolution No 20-E/2017

On February 1st, 2017, the Secretariat of Electric Power published Resolution No 20-E/2017 on the Official Gazette, by means of which it approved the Summer Seasonal Rescheduling for the Wholesale Electric Market corresponding to the period held between February 1st and April 30th, 2017.

In this regard, the SE established the power and electricity reference prices for the different categories of customers, which will be in force as from March 1st, 2017. It also included a discount for the reference prices, exclusively for the month of February 2017.

Provisional Remedies

Beginning the last quarter 2016, the provisional remedies against Resolution No 6/2016 MEyM and Resolution 1/2016 ENRE of the districts of Pilar and La Matanza were still in force, until October 24th and November 11th, 2016 when their term of validity expired, respectively.

As a consequence, on December 26th, 2016, the Company was notified that the MEyM instructed CAMMESA to issue credit notes in order to compensate the negative effects generated by the remedies mentioned above, as follows:

• the application of the difference between the seasonal prices established by Resolution No 6/2016 MEyM and the energy price set in force until January 2016, for the period February - June 2016 (AR$ 270.8 million); and

• the portion that corresponds to VAD of the tariff schedule established by Resolution No 1/2016 ENRE (AR$ 1,125.6 million).

Salary Increase

In December 2016 the Company implemented a 6% salary increase retroactive to November that year, and two non-remunerative payments of AR$ 6,000 in January and February, 2017.

In millon of Pesos

4° Q 2016

4° Q 2015

% Variation

Fourth Quarter 2016 Operating Figures

Revenue from sales	3,962.3	891.0	344.7%
Electricity pow er purchase	(1,294.3)	(474.1)	173.0%
Net operating income (loss)	1,280.5	558.5	129.3%
Net income (loss)	653.6	203.6	221.1%

Revenues from sales increased 344.7% to AR$ 3,962.3 million in the fourth quarter of 2016 compared to AR$ 891.0 million in the fourth quarter of 2015, mainly explained by the tariff increase obtained as from February 1st, 2016 through Resolution 1/2016 ENRE. This increase was partially offset by a negative impact in sales of AR$ 215.2 million, resulting from the injunctions reliefs issued by the courts for "Pilar" and "La Matanza" districts, suspending the mentioned above Resolution. However, the tariff was normalized according to the abrogation of the injunctions as from October 24, 2017, in the case of "Pilar" and November 11, 2017, in the case of "La Matanza". Volume of energy sold decreased 5.2% to 5,139 GWh in the fourth quarter of 2016 from 5,422 GWh in the fourth quarter of 2015, due basically to a decrease of 8.0% in residential demands and 6.5% in small commercial demands. Electricity power purchases increased 173.0% to AR$ 1,294.3 million in the fourth quarter of 2016 compared to AR$

474.1 million in the same period of 2015, mainly due to the growth in the average purchase price of approximately 282% since February 1st, 2016 through Resolution 6/2016 MEyM (Energy and Mining Ministry). This growth was partially offset by a reduction of AR$ 81.8 million due to the negative effect in the purchases cost due to the injunction reliefs explained above.

The amount of the present quarter of 2016 includes a credit of AR$ 270.8 million, corresponding to the recognition of the difference between the energy price paid to CAMMESA (at the tariff set in force by Resolution N° 6/2016) and the price billed to the customers (at the tariff valid until January 2016) for the period February-May for "Pilar" and February-June for "La Matanza".

Net operating income (loss) increased AR$ 722.0 million amounting a gain of AR$ 1,280.5 million in the fourth quarter of 2016 compared to a gain of AR$ 558.5 million in the same period of 2015. This positive result was mainly explained by the recognition of income of AR$ 1,125.6 million, product of the abrogation of the injunctions reliefs of "Pilar" and "La Matanza", and the credit over electricity power purchases of AR$ 270.8 million.

This outcome was partially compensated by a 94.7% increase in operating expenses, mainly explained by the raise in the accrued fines and penalties of AR$ 456.0 million principally caused by the changes in the estimation introduced by Note No.120,151 of the ENRE, a 46.2% increase in salaries attributable to the employee compensation granted during 2016, retroactive as from November 2016, and a reduction of AR$ 1,215.1 million in the amounts obtained through SE Resolution 32/15.

Net income (loss) shows an increase of AR$ 450.0 million, amounting a gain of AR$ 653.6 million in the fourth quarter of 2016, compared to a gain of AR$ 203.6 million in the same period of 2015, mainly due to the operating results explained above and to a lower loss of AR$ 448.7 million in financial results caused by a lower exchange rate difference in cash and cash equivalents of AR$ 626.5 million. These positive outcomes were partially compensated by a negative result of the income tax for an amount of AR$ 328.3 million.