UENSA Sociedad Anónima -...

UENSA Sociedad Anónima Unaudited interim financial statements for the nine-month period ended September 30, 2017

UENSA Sociedad Anónima UNAUDITED INTERIM FINANCIAL STATEMENTS as of September 30, 2017 for the nine-month period beginning January 1, 2017 and ended September 30, 2017 Contents Page Review report on interim financial statements General information 1 Unaudited interim statement of financial position 2 Unaudited interim statement of profit or loss and other comprehensive income 3 Unaudited interim statement of changes in equity 4 Unaudited interim statement of cash flows 5 NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS 6 NOTE 1 - GENERAL INFORMATION 6 1.1) Description of the business 6 1.2) Company's financial position and going concern 6 NOTE 2 - BASIS OF PRESENTATION 7 2.1) Adoption of International Financial Reporting Standards 7 2.2) Measurement and presentation basis 7 2.3) Comparative information 7 2.4) Translation of financial statements 7 2.5) Early adoption of Standards 8 2.6) New and revised IFRS not yet effective 8 2.7) Statement of compliance 8 2.8) Significant accounting policies 8 NOTE 3 - USE OF JUDGMENT AND ESTIMATES 11 NOTE 4 - OPERATING SEGMENTS 12 NOTE 5 - EARNINGS PER SHARE 12 NOTE 6 - INCOME TAX 12 NOTE 7 - FINANCIAL INSTRUMENTS - CLASSIFICATION AND RISK MANAGEMENT 13 NOTE 8 - BREAKDOWN OF THE MAIN ACCOUNT BALANCES OF THE INTERIM

STATEMENT OF FINANCIAL POSITION

17 NOTE 9 - BREAKDOWN OF THE MAIN ACCOUNT BALANCES OF THE INTERIM

STATEMENT PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

20 NOTE 10 - BALANCES AND TRANSACTIONS WITH PARENT COMPANY AND OTHER

RELATED COMPANIES

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UENSA Sociedad Anónima UNAUDITED INTERIM FINANCIAL STATEMENTS as of September 30, 2017 for the nine-month period beginning January 1, 2017 and ended September 30, 2017 Contents Page NOTE 11 - LOANS BECOMING DUE 21 NOTE 12 - CAPITAL AND PLEDGE OF SHARES 23 NOTE 13 - CONTRACTUAL COMMITMENTS 23 NOTE 14 - RESTRICTED ASSETS 24 NOTE 15 - SUBSEQUENT EVENTS 24

REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS

UENSA S.A. Cerrito 1266 – 11th floor – Suite 46 City of Buenos Aires

Report on the interim financial statements

We have reviewed the accompanying interim financial statements of UENSA S.A. (“the Company”), which comprise the interim statement of financial position as of September 30, 2017, the interim statement of profit or loss and other comprehensive income for the three and nine month period then ended and the interim statements of changes in equity and cash flows for the nine-month period then ended as well as a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards ("IFRS"), issued by the International Accounting Standards Board (“IASB”). Therefore, the Company's board of Directors is responsible for the preparation and fair presentation of the interim financial statements in accordance with the International Financial Reporting Standards (IFRS) including the requirements of IAS 34, ‘Interim Financial Reporting’.

Scope of the review

Our responsibility is to express a conclusion on these interim financial statements based on our review. Our review was made in compliance with the International Standard on Review Engagements 2410 – Review on Interim Financial Information Performed by the Independent Auditor of the Entity, as approved by the International Auditing and Assurance Standards Board. In accordance with such standard, a review is limited primarily to the performance of analytical procedures applied to financial data included in the interim financial statements and inquiries of personnel responsible for the preparation thereof. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the interim financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements of UENSA S.A. as of September 30, 2017 and for the nine-month period then ended are not presented fairly, in all material respects, in accordance with IFRS including the requirements of IAS 34.

Other matter

We draw attention to the fact that - as the Company was not bound to and did not prepare quarterly information for the previous period - we have not reviewed the accompanying interim statement of profit or loss and other comprehensive income of the Company as of September 30 2016 for the three and nine month period then ended and the interim statements of the cash flows for the for the nine month period then ended, or any of the related notes and accordingly, we do not conclude on them.

City of Buenos Aires, January 8, 2018.

KPMG Tamara Vinitzky Partner

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UENSA Sociedad Anónima Unaudited interim financial statements as of September 30, 2017 for the nine-month period ended September 30, 2017. Stated in USD

Legal address: Cerrito 1266 – 11th Floor – Suite 46, City of Buenos Aires Main business: Generation and distribution of electric power Expiration date of the Corporation: July 23, 2107 Parent company’s information:

Name: MSU Energy Holding Ltd. Address: Vineyards Business Centre Suite 3,36 Gloucester Avenue, London, United Kingdom. Main business: Investments Ownership interest and voting stock: 98.19 %

Subscribed, paid-in and registered capital (Note 12):

Amount

Type, nominal value and No. of votes of each share

Subscribed and paid-in

ARS USD 87,270,000 Registered, common shares, with a

nominal value of ARS 1, one vote per share

87.270.000

8,150,701

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UENSA Sociedad Anónima

UNAUDITED INTERIM STATEMENT OF FINANCIAL POSITION as of September 30, 2017 (in USD)

Notes 09/30/2017 12/31/2016 01/01/2016 ASSETS NON CURRENT ASSETS Property, plant and equipment 8 (g) 129,118,846 785,619 1,681 Other receivables 8 (a) 16,127,902 340,365 1,329,657 Total non current assets 145,246,748 1,125,984 1,331,338 CURRENT ASSETS Other receivables 8 (a) 14,485,807 3,201,029 2,498,326 Cash and cash equivalents 8 (b) 9,808,698 30,218 6,135 Total current assets 24,294,505 3,231,247 2,504,461 Total assets 169,541,253 4,357,231 3,835,799 Shareholders’ EQUITY Capital 8,150,701 6,150,701 6,150,701 Accumulated losses ( 5,767,337) (3,158,440) (2,484,816) Total equity (as per related statement) 2,383,364 2,992,261 3,665,885 LIABILITIES NON CURRENT LIABILITIES Deferred tax liabilities 85,796 - - Loans 8 (d) 150,470,575 - - Total non-current liabilities 150,556,371 - - CURRENT LIABILITIES Loans 8 (d) 9,905,478 - - Other liabilities 8 (f) 310,500 405,397 73,829 Taxes payable 8 (e) 7,974 1,638 6,880 Trade payables 8 (c) 6,377,566 957,935 89,205 Total current liabilities 16,601,518 1,364,970 169,914 Total liabilities 167,157,889 1,364,970 169,914 Total liabilities and equity 169,541,253 4,357,231 3,835,799 The accompanying notes are part of these unaudited interim financial statements.

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UNAUDITED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the three and nine-month period ended September 30, 2017 (in USD)

Notes 9/30/2017 9/30/2017 9/30/2016 9/30/2016 (3 months) (9 months) (3 months) (9 months) (*) (*)

Administrative expenses 9 (b) ( 31,867) ( 145,280) (147,391) (455,756) Operating loss ( 31,867) ( 145,280) (147,391) (455,756) Financial income and expenses -net 9 (a) (405,788) (2,208,163) 73,115 66,700 Loss before income tax (437,655) (2,353,443) ( 74,276) (389,056) Income tax 6 (339,583) ( 255,454) - ( 126) Net loss for the period (777,238) (2,608,897) ( 74,276) (389,182) Other comprehensive income (777,238) (2,608,897) ( 74,276) (389,182) Loss per share 0.015 0.049 0.001 0.007

(*) not subject to audit or review The accompanying notes are part of these unaudited interim financial statements.

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UNAUDITED INTERIM STATEMENT OF CHANGES IN EQUITY for the nine-month period ended September 30, 2017 (in USD)

Shareholders’

contributions

Items Capital Accumulated

losses

Total

Balances as of January 1, 2016 6,150,701 (2,484,816) 3,665,885 Net loss for the period - ( 673,624) ( 673,624) Balances as of December 31, 2016 6,150,701 (3,158,440) 2,992,261 Capital increase (1) 2,000,000 - 2,000,000 Net loss for the period - (2,608,897) (2,608,897) Balances as of September 30, 2017 8,150,701 (5,767,337) 2,383,364

(1) As per voted at the Extraordinary Shareholders’ Meeting held on September 30, 2017 The accompanying notes are part of these unaudited interim financial statements.

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UNAUDITED INTERIM STATEMENT OF CASH FLOWS for the nine-month period ended September 30, 2017 (in USD)

09/30/2017 09/30/2016 (9 months) (9 months) CAUSES OF CHANGES IN CASH (*) Operating activities Net loss for the period ( 2,608,897) ( 389,182) Adjustments for: Accrued income tax 255,454 126 Depreciation 5,804 1,716 Accrued interest ( 79,023) ( 165,215) Changes in operating assets and liabilities: (Increase) decrease in other receivables ( 20,356,544) 243,433 Increase in accounts payable 5,439,946 209,086 Decrease in social security liabilities ( 20,315) ( 23,417) Increase (decrease) in taxes payable 6,336 ( 1,668) Net cash flows used in operating activities ( 17,357,239) ( 125,121) Investing activities Interest income 79,023 165,215 Acquisition of property, plant and equipment (117,724,095) ( 8,337) Advances for property, plant and equipment ( 8,879,903) - Net cash flows (used in) provided by investing activities (126,524,975) 156,878 Financing activities Increase in loans and borrowings 156,959,766 66,618 Financing expenses ( 3,204,175) - Decrease in other liabilities ( 94,897) ( 71,437) Net cash flows provided by (used in) financing activities 153,660,694 ( 4,819) Net increase in cash 9,778,480 26,938 Cash and cash equivalents at the beginning of year 30,218 6,135 Cash and cash equivalents at period-end 9,808,698 33,073 Net increase in cash 9,778,480 26,938 Transactions that did not imply changes in cash for the nine months period ended September 30, 2017

Purchases and advances for property, plant and equipment in the amount of $ 3,233,792 (including capitalized interest amounting to $ 554,807), which were paid at the expense of the Company by its financial creditor. Purchases and advances for property, plant and equipment in the amount of $ 1,994,474 which were paid at the expense of the Company’s shareholder as a capital contribution. Unpaid interest capitalized to Property, plant and equipment in the amount of $ 5,386,670. Capitalization of loans in the amount of $ 2,000,000. The accompanying notes are part of these unaudited interim financial statements. (*) not subject to audit or review


NOTES TO THE INTERIM FINANCIAL STATEMENTS

as of September 30, 2017 (in USD)

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NOTE 1 - GENERAL INFORMATION 1.1) Description of the business Based on the Argentine Government’s search for a comprehensive solution to the energy supply shortage, on December 16, 2015, Executive Decree No. 134/2015 was signed. By means of such Decree, the Argentine Government declared the energy emergency and instructed the Energy and Mining Department to prepare, implement and enforce a plan of actions required for the energy generation and distribution segments in the national jurisdiction, in order to tailor the quality and assurance of the energy supply and secure the supply of the electric power service in technical and economic conditions. One of the first actions taken when the government took office at the end of was the adjustment of the electric power rates and benchmark framework, by means of the Resolution of the Department of Energy (SEE) No. 22/2016. In order to meet the short term needs, according to SEE Resolution No. 21/2016 dated March 22, 2016, such Department call for a bidding process for new capacity of thermal generation and electricity production associated with the commitment of being available in the Wholesale Electric Market to meet the basic requirements of demand in the season periods of summer 2016/2017, winter 2017 or summer 2017/2018. In the same resolution, the Department of Energy instructed Compañía Administradora del Mercado Mayorista Eléctrico S.A. (CAMMESA) to define the terms and conditions of the supply under the bidding process and submit the results thereof for approval. The project adjudged to UENSA S.A. (The Company) implies adding 150 MW of nominal power to the Argentine Interconnection Grid (SADI) by setting up a thermoelectric power plant in Villa María (“the Thermoelectric Power Station Villa María” or the “Station”) in the town of Villa María, Province of Córdoba (the “Project”). The Company will sell the total output of power of Thermoelectric Power Station Villa María by means of the regulatory scheme created by SEE Resolution No. 21/2016 through the Wholesale Demand Agreement entered into by and between the Company and CAMMESA dated December 29, 2016, involving average annual power of 142 MW; such capacity has been detailed in the economic terms and conditions and included in the agreement on a monthly basis, for a term of ten (10) years, at a price of $ 19,900 ($/MW-month) adjudged by the SEE Resolution No. 387-E/2016 mentioned above (the “Wholesale Demand Agreement”). It is estimated that the Thermoelectric Power Station Villa María will start operating in the first quarter of 2018. The Thermoelectric Power Station Villa María will be connected to the SADI through high voltage lines of 132 KV. Additionally, on October 17, 2017, by means of Resolution 926–E/2017 of the Department of Energy, CAMMESA was authorized to enter into a new Wholesale Demand Agreement with UENSA S.A. as a result of the fact that the Company was awarded the project for “completing the combined cycle (4+1)”. The project consists in adding a nominal power of 99 MW to the Argentine Interconnection System (AIS) through the installation of a fourth gas turbine and one steam turbine in the Thermal Plant of Villa María. The associated supply agreement will be effective for a term of 15 years as from the start-up expected by year 2020. 1.2) Company's financial position and going concern The Company records accumulated losses in the amount of $ 5,767,337 as of September 30, 2017, in excess of 50% of capital. This situation is related to the characteristics of the initial phase of the project. The interim financial statements have been prepared on a going concern basis, which assumes that the company will be able to meet the current liabilities as disclosed in Note 8 c) and d) Considering that the fully operational phase will start on mid-January current liabilities are planning to be paid with operating income then generate and with cash in banks. Management believes that the payment of their current liabilities will occur as required. Moreover, on November 8, 2017, a general partner of MSU Energy Investment Ltd., sole shareholder of the Company, has expressed its commitment and ability to continue with financial support. Management acknowledges that uncertainty remains over the company ability to meet its funding requirements and to refinance or repay its current liabilities as they fall due. However, as described above, management has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.




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NOTE 2 - BASIS OF PRESENTATION 2.1) Adoption of International Financial Reporting Standards The Company has applied for the registration with the public offering regime for the issuance of corporate bonds and, consequently, is bound to apply the standards issued by the Argentine Securities and Exchange Commission (CNV) and Technical Resolution No. 26 (as amended) of the Argentine Federation of Professional Councils of Economic Sciences (FACPCE), which require the presentation of financial statements under International Financial Reporting Standards (IFRS). These interim financial statements have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (“IASB”), which are mandatorily applicable to the Company, due to the decision adopted by the Extraordinary Meeting of Shareholders dated September 7, 2017, approving the creation of a program for the issuance of one or more classes or series of short-term debt securities subject to the public offering regime in a total outstanding nominal value of up to $ 650,000,000 or its equivalent in other currencies, through a co-issuance between by RIO ENERGY S.A., UENSA S.A. and the Company. The Company, as co-issuer, shall receive 32% of the funds obtained from such placement, i.e. up to $ 208,000,000 or its equivalent in other currencies. The Company is a first time adopter of IFRS in the annual financial statements ending December 31, 2017. Consequently, the interim financial statements for the period ended September 30, 2017 are related to the first period in which information is presented under IFRS. As it relates to the criteria adopted by the Company in the transition to IFRS regarding the alternatives available pursuant to IFRS 1, the items of property, plant and equipment have been stated at cost in the functional currency defined by the Company (see Note 2.4), at the exchange rates prevailing at the dates of addition of each asset (for the assets purchased in Argentine pesos). 2.2) Basis for measurement and presentation These interim financial statements have been prepared on the historical cost basis. The presentation in the statement of financial position distinguishes assets and liabilities between current and non current. Current assets and liabilities are those expected to be recovered or settled within twelve months following the reporting date. Additionally, the Company presents the statement of cash flows by using the indirect method. These interim financial statements are stated in USD, except as otherwise indicated. 2.3) Comparative information The interim statement of financial position is comparatively presented with balances as of December 31, 2016 and January 1, 2016; the latter is the transition date to IFRS. The interim statements of comprehensive profit or loss and other comprehensive income, changes in equity and cash flows consider operations for the nine-month period ended September 30, 2017. As the Company was not bound to and did not prepare quarterly information for the previous period - we have not reviewed the accompanying interim statement of profit or loss and other comprehensive income of the Company as of September 30 2016 for the three and nine month period then ended and the interim statements of the cash flows for the for the nine month period then ended, or any of the related notes. 2.4) Translation of the financial statements (a) Functional and presentation currency The Company’s functional currency is the US dollar, determined on the basis of the analysis of various relevant factors under IAS 21 issued by the IASB. (b) Transactions and balances Transactions denominated in foreign currencies other than the functional currency are translated to the functional currency by applying the exchange rates prevailing at the dates of the transactions or the fair value measurement, as the case may be. The interim statement of profit or loss and other comprehensive income includes exchange gains or losses derived from the settlement of these transactions and the translation of monetary assets and liabilities with an original currency other than the US dollar at exchange rates prevailing at period-end. Exchange gains or losses are presented in the interim statement of profit or loss and other comprehensive income under the Financial income and expenses-net line.




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NOTE 2 - BASIS OF PRESENTATION (cont.) 2.5) Standards early adopted The Company has not adopted any IFRS before the mandatory effective date. 2.6) New and revised IFRS not yet effective The Company is evaluating the impact that the following standards may have on its comprehensive profit or loss and financial position: (a) IFRS 9 Financial Instruments was issued by the IASB in July 2014 and will replace IAS 39 Financial

Instruments: Recognition and Measurement. IFRS 9 applies a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules of IAS 39. The approach applied by IFRS 9 is based on the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Most of the IAS 39 requirements for the classification and measurement of financial liabilities were adopted by the IFRS 9 without any changes. The new standard also requires a single impairment analysis method to be used, replacing the multiple impairment methods of IAS 39. The effective date of IFRS 9 was postponed to fiscal years beginning on or after January 1, 2018.

(b) IFRS 15 Revenue from contracts with customers sets forth a comprehensive framework to determine when revenue is recognized. It replaces existing guidelines on revenue recognition, including IAS 18 Revenue. IFRS 15 is effective for fiscal years beginning on or after January 1, 2018. The company is currently evaluating the adoption of IFRS 15.

(c) IFRS 16 Leases sets the principles for the recognition, measurement, presentation and disclosure of leases applicable to both parties of an agreement, the IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 will be effective as from January 1, 2019. Early adoption is only permitted if IFRS 15 Revenue from contracts with customers is also applied.

The following new or revised standards are not expected to have a significant impact on the Company’s financial statements: - IFRS 14 Regulatory Deferral Accounts

- Clarification of acceptable methods of depreciation and amortization (Amendments to IAS 16 and IAS 38)

- Equity Method in Separate Financial Statements (Amendments to IAS 27)

- Annual improvements to IFRS – 2012-2014 cycle - various standards

- Disclosure Initiative (Amendments to IAS 1)

- Disclosure Initiative (Amendments to IAS 7)

- Recognition of Deferred Tax Assets for Unrealized Losses (Amendments to IAS 12) 2.7) Statement of compliance As mentioned in Note 2.1 to these financial statements, these interim financial statements have been prepared for the purposes of registering the issuance of corporate bonds under the public offering regime and, therefore, they have been prepared under IFRS. The issuance of these interim financial statements for the period ended September 30, 2017 was authorized by the Company’s Board of Directors’ on January 8, 2018. 2.8) Significant accounting policies The main accounting policies applied to the preparation of these interim financial statements are presented below. These policies have been consistently applied to the fiscal years/periods presented: (a) Property, plant and equipment The items of property, plant and equipment are recognized at acquisition cost less accumulated depreciation, if applicable, and impairment losses, if any. The historical cost includes the spot purchase price and costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating as expected by management.




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NOTE 2 - BASIS OF PRESENTATION (cont.) 2.8) Significant accounting policies (cont.) (a) Property, plant and equipment (cont.) Works in progress (the plant under construction) have been stated at cost incurred to the period-end date. The cost of works in progress includes the capitalization of interest accrued at the effective rate relating to the external financing of works, included in the definition of qualified asset, under the terms of IAS 23. The disbursements arising from feasibility studies before deciding whether to invest in an asset or deciding which asset to be acquired were recorded as expenses as they were incurred. After completing the construction of the plant, the Company will amortize acquisition and construction costs by applying the straight-line method throughout its estimated useful life, recognizing the related depreciation in net profit or loss. The book value of the land where the plant is located will not be depreciated. The useful life of items of depreciating property, plant and equipment, corresponding to computers and tools, has been estimated at 3 and 5 years, respectively. (b) Losses on impairment of non-financial assets After starting up the Plant and other items of property, plant and equipment related to its operation, at each period-end, Management reviews the carrying amounts of this property to determine whether there is any indication of impairment in assets, i.e. to determine whether the carrying amount exceeds the recoverable amount of the assets, defined as the higher of the value in use and the net realizable value at each period-end. In case any such indication of impairment is identified, the recoverable value of the asset shall be estimated to determine the amount, if any, of the impairment loss. (c) Financial instruments As of September 30, 2017, the Company classifies non-derivative financial assets as loans and receivables. The Company classifies non-derivative financial liabilities as other financial liabilities. (i) Non-derivative financial assets and liabilities - recognition and derecognition The Company initially recognises loans and receivables on the date that they are originated. Other financial assets are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. The Company initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction where substantially all the risks and rewards of ownership of the financial asset are transferred, or substantially all the risks and rewards of ownership are not transferred or retained and the control over the transferred assets is not retained. Any interest in such derecognized financial assets that is created or retained by the Company is recognized as a separate asset or liability. The Company derecognizes a financial liability when its contractual obligations have been paid or settled, or have expired. A financial asset and a financial liability shall be offset and the net amount presented in the interim statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.




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NOTE 2 - BASIS OF PRESENTATION (cont.) 2.8) Significant accounting policies (cont.) (c) Financial instruments (cont.) (ii) Non-derivative financial assets - measurement − Financial assets carried at fair value through profit or loss A financial asset is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Directly attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and any variations, including revenues from dividends or interest, are recognized in profit or loss. − Loans and receivables They are initially recognized at fair value plus any directly attributable transaction cost. After initial recognition, loans and receivables are carried at amortized cost, using the effective interest rate method. − Impairment of financial assets At each period end, the Company evaluates whether there is objective evidence that a financial asset carried at amortized cost might have suffered impairment losses. A financial asset is considered to be impaired if there is objective evidence of impairment as a consequence of one or more events that have occurred after initial recognition and had a negative effect on the future cash flows of that asset, which can be estimated reliably. The criteria used by the Company to determine whether there is objective evidence of impairment include significant financial difficulties of the debtor; a breach of contract, such as a default or delinquency in interest or principal payments; it becoming probable that the borrower will enter bankruptcy or other financial reorganization. (iii) Non-derivative financial liabilities - measurement Non-derivative financial liabilities are initially recognized at fair value less the directly attributable transaction costs. After initial recognition, these liabilities are carried at amortized cost, using the effective interest rate method. The costs incurred by the Company and directly related to the issuance of debt and/or financing are recognized as advances in the statement of financial position until the issuance of debt instruments, and then deducted from the financial debt balance when it is initially recognized, or recognized as a loss in the event the financing is not effective. (d) Current and deferred income tax and minimum presumed income tax

(i) Current and deferred income tax

For annual periods, the Company applies the deferred tax method to recognize the effects for accounting purposes of the income tax. The income tax expense for each period includes the current tax expense, determined on the basis of applicable tax regulations, and the deferred tax expense or benefit. The deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities included in the interim financial statements and the tax bases used to assess the taxable income and also include tax loss carryforwards. The deferred tax liabilities are generally recognized for all taxable temporary differences. A deferred tax asset is generally recognized for deductible temporary differences, to the extent it is likely that the Company may record future taxable income against which these deductible temporary differences may be used. Therefore, the book value of deferred tax assets is subject to review at each reporting date to determine the recoverability thereof. Deferred tax assets and liabilities are measured at the tax rates expected to be applicable in the period where the liabilities are settled or the assets are realized, based on tax rates and laws approved or substantially approved at the end of the reporting period. The effective tax rate applicable to the Company in the Republic of Argentina is 35 % as of the date of issuance of these interim financial statements.




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NOTE 2 - BASIS OF PRESENTATION (cont.) 2.8) Significant accounting policies (cont.) (d) Current and deferred income tax and minimum presumed income tax (cont.)

(i) Current and deferred income tax (cont.) Both current and deferred income tax expenses are recognized in profit or loss, except to the extent they have been recognized in other comprehensive profit or loss or directly in equity, in which case the tax is also recognized, respectively, in the other comprehensive profit or loss or directly in equity. (ii) Minimum presumed income tax The Company determines the minimum presumed income tax (IGMP) by applying the effective 1% rate on the taxable assets at year-end. This tax is supplementary to the income tax. The Company’s tax liability in each period will be represented by the highest of the minimum presumed income tax amount assessed and the income tax amount assessed. However, if minimum presumed income tax exceeds income tax in a given fiscal year, such excess can be computed as a credit towards future income taxes occurring in any of the next ten fiscal years. e) Cash and cash equivalents Cash and cash equivalents in the interim statement of cash flows comprises cash and banks and short-term highly liquid investments maturing at acquisition date of three months or less. f) Equity accounts Capital It includes the nominal value of the owners’ contributions. NOTE 3 - USE OF JUDGMENT AND ESTIMATES The preparation of these interim financial statements under IFRS requires Management to apply judgment, estimates and assumptions that affect the application of accounting policies and the amounts of assets, liabilities, and expenses reported. The related estimates and assumptions are based on expectations and other factors deemed reasonable in the circumstances, the results of which are the basis of judgment on the value of assets and liabilities not easily evident from other sources. The actual value of future results may differ from these estimates. Estimates and underlying assumptions are continuously reviewed. The effect of reviews of accounting estimates is prospectively recognized. The critical judgments made in the application of accounting policies to these interim financial statements are related to the type of disbursements to be capitalized, such as works in progress (see Note 2.8.a), as the determination of capitalizable items requires a high degree of professional judgment. At the same time, Management recognizes estimation uncertainties with a significant effect on amounts recognized in these interim financial statements in relation to the following: - the assumptions to determine the amount of deferred tax assets related to tax loss carryforwards, and

- the recoverability of tax credit and property, plant and equipment balances, which will depend on the

Company's operating income/loss once it starts conducting business.




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NOTE 4 - OPERATING SEGMENTS The Company´s chief operating decision maker (“CODM”) is the Board of Directors. As the Company is in start-up phase, as of September 30, 2017, it has not yet generated any revenue. However, taking into account that there is only an energy plant, the Company has determined only one operating segment. All of the Company’s non-current assets are located in Argentina as of September 30, 2017 and December 31, 2016. The company will make their revenue to an unique client - CAMMESA (Note 13), which is the local government entity in charge of the management of the Wholesale Energy Market (WEM) administered and the dispatch of electricity into the SADI, Argentina’s main interconnected power grid, covering most of Argentina. NOTE 5 - EARNINGS PER SHARE Basic The basic earnings per share were calculated by dividing net income by the number of weighted-average number of ordinary shares outstanding

Loss for the nine-month period ended September 30, 2017 ( 2,608,897)

Weighted-average number of ordinary shares outstanding 52,776,813 Basic earnings per share for the period ended September 30, 2017: (0.049) Diluted The diluted earnings per share do not differ from the basic earnings per share because the Company has no instruments that may be converted into shares. Note 6 - INCOME TAX The breakdown of the main components of deferred tax assets and (liabilities) is as follows: 9/30/2017 12/31/2016 1/1/2016 Deferred tax assets and (liabilities) Accumulated tax loss carryforwards 3,648,177 155,535 189,334 Difference in measurement of property, plant and equipment (2,757,948) 93 - Difference in the measurement of loans and borrowings ( 976,211) - - Other 186 - - Total net deferred tax assets (liabilities) ( 85,796) 155,628 189,334 As of September 30, 2017, tax loss carryforwards estimated in relation to the income tax were broken down as follows, at the tax rate of 35%, according to their date of origin:

Year Amount Expires in

2012 9,910 2017 2013 3,305 2018 2014 39,746 2019 2015 102,513 2020 2016 61 2021

2017 (estimated for the 9 month period) 3,492,642 2022

Total 3,648,177

The Company’s income tax differs from the theoretical amount to be obtained in case of using the weighted average tax rate applicable to income, as follows:

9/30/2017 9/30/2017 9/30/2016 (for 9 months) (for 3 months) (for 9 months) (*) Loss before income tax (2,353,443) (437,655) (389,056) Income for the year at the tax rate of 35% 823,705 153,179 136,170 Non-deductible exchange differences to thin capitalization (1,078,809) (492,762) - Non-deductible expenses ( 350) - (136,296) Total income tax expenses charged in profit or loss ( 255,454) (339,583) ( 126)

(*) not subject to audit or review




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NOTE 7 - FINANCIAL INSTRUMENTS - CLASSIFICATION AND RISK MANAGEMENT (a) Classification of financial instruments The company uses the following hierarchy to determine the fair value of its financial instruments: 1 - Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments. 2 - Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). and 3. - Level 3: Inputs that are unobservable The table below shows the classification of financial instruments held by the Company:

Balances as of September 30, 2017

Account Note Loans and

receivables Other financial liabilities

Financial assets Other receivables 8 (a) 10,023,677 - Cash and cash equivalents 8 (b) 9,808,698 - Total financial assets 19,832,375 - Financial liabilities

Loans 8 (d) - 160,376,053 Trade payables 8 (c) - 6,356,558 Other liabilities 8 (f) - 310,500 Total financial liabilities - 167,043,111

Balances as of December 31, 2016

Account Note Loans

receivables Other financial liabilities

Financial assets Other receivables 8 (a) 3,163,223 - Cash and cash equivalents 8 (b) 30,218 - Total financial assets 3,193,441 - Financial liabilities Trade payables 8 (c) - 916,612 Taxes payable - 1,638 Other liabilities 8 (f) - 405,397 Total financial liabilities - 1,323,647




14

NOTE 7 - FINANCIAL INSTRUMENTS - CLASSIFICATION AND RISK MANAGEMENT (cont.) (a) Classification of financial instruments (cont.)

Balances as of January 1, 2016

Account Note Loans

and receivables Other financial

liabilities Financial assets Other receivables 8 (a) 3,551,251 - Cash and cash equivalents 8 (b) 6,135 - Total financial assets 3,557,386 - Financial liabilities

Trade payables 8 (c) - 50,654 Other liabilities 8 (f) - 73,829 Total financial liabilities - 124,483

As of the date of issuance of these interim financial statements, the balances disclosed for financial instruments are a reasonable estimate of their related fair values. (b) Financial risk management Financial risk management is addressed by the global policies of the Company, which are focused on the uncertainty of the financial markets and the alternatives to minimize the potential adverse effects on its financial performance. The Company’s activities entail certain financial risks: 1. Market risk 2. Liquidity risk 3. Credit risk The Administration and Finance Department is responsible for the financial risk management, which identifies, assesses and hedges the financial risks. Risk management policies and systems are regularly reviewed to reflect changes in market conditions and the Company’s activities. 1. Market risk Market risk stems from the potential fluctuation to which the Company is exposed upon changes in fair value or future cash flows that may be adversely affected by variations in the exchange rates, interest rates or other variables. Below we include a description of the referred risks as well as a detail of the extent to which the Company is exposed, and a sensitivity analysis for potential changes in each of the relevant market variables. • Currency risk It is the risk that the fair value or future cash flows of financial instruments may fluctuate due to exchange rate changes. Given that the functional currency of the Company is the US dollar, the currency increasing exposure in terms of effects on profit or loss is the Argentine peso (legal tender in Argentina). In order to minimize the results arising from exchange variations and, in an attempt to hedge the volatility risk in the fair value of assets and liabilities in foreign currency, the Company seeks to maintain a balance between assets and liabilities.




15

NOTE 7 - FINANCIAL INSTRUMENTS - CLASSIFICATION AND RISK MANAGEMENT (cont.) (b) Financial risk management (cont.)

1. Market risk (cont.) • Currency risk (cont.) The table below provides a breakdown of the net monetary position of the Company regarding the currencies used, stated in the functional currency and the reporting currency:

Net monetary position assets (liabilities)

Functional currency (US dollar) 09/30/2017 12/31/2016 01/01/2016

Argentine pesos 24,449,190 2,187,078 4,162,403

Total 24,449,190 2,187,078 4,162,403 Based on the table above, the Company’s analysis considers the exposure of local currency in relation to the US dollar (functional currency). The Company estimates that, for each period, should other factors remain constant, a 5% strengthening (or weakening) of the local currency in relation to the functional currency at period-end would increase (decrease) income before tax, as described in the table below (amounts stated in functional currency): Functional currency (US dollar) September 30, 2017 December 31, 2016 January 1, 2016 +5% -5% +5% -5% +5% -5% Argentine pesos 1,286,799 (1,164,247) 115,109 (104,147) 219,074 (198,210) Total 1,286,799 (1,164,247) 115,109 (104,147) 219,074 (198,210) • Interest rate risk It is the risk that the fair value or future cash flows of certain financial instruments may fluctuate due to changes in market interest rates in accordance with the different maturities and currencies in which the loans have been taken or investments have been made. To mitigate interest rate risks, the Company has long term financial loans with fixed rates with its majority shareholder and banks. Loans accrue interest at an annual weighted fixed interest rate of 8.54%. 2. Liquidity risk The liquidity risk is related to the Company’s capacity to finance its obligations and investments and business plans with stable financing resources. It is also associated with the level of indebtedness and the maturity profile of loans and borrowings.




16

NOTE 7 - FINANCIAL INSTRUMENTS - CLASSIFICATION AND RISK MANAGEMENT (cont.) (b) Financial risk management (cont.) 2. Liquidity risk (cont.) As the Company is engaged in the construction of its single plant for the generation of electricity to the date of issuance of these special-purpose financial statements, it is indebted to its Parent Company MSU Energy Investment Ltd and private banks. Considering that the fully operational phase will start on mid-January current liabilities are planning to be paid with operating income then generate and with cash in banks. Management believes that the payment of their current liabilities will occur as required. Additionally, trade payables are supported by the contract entered into with General Electric for the construction and start-up of the plant in Villa María. The table below includes an analysis of assets and liabilities of the Company grouped by maturity. The amounts in the table are undiscounted contractual cash flows:

0-3 months 3-6 months 6-9 months 9-12 months 1-2 years Over

2 years Total

As of 09/30/2017 Other liabilities 310,500 - - - - - 310,500 Loans - 9,602,253 - 303,225 20,825,989 129,644,586 160,376,053 Trade payables 2,684,241 - 3,693,325 - - - 6,377,566 Total 2,994,741 9,602,253 3,693,325 303,225 20,825,989 129,644,586 167,064,119

As of 12/31/2016 Other liabilities 405,397 - - - - - 405,397 Trade payables 957,935 - - - - - 957,935 Total 1,363,332 - - - - - 1,363,332 As of 01/01/2016 Other liabilities 2,120 - - 71,709 - - 73,829 Trade payables 89,205 - - - - - 89,205

Total 91,325 - - 71,709 - - 163,034

3. Credit risk

The credit risk is defined as the possibility that a third party be unable to meet its contractual obligations, generating losses to the Company. As the Company is in an investment stage, the credit risk it may face is related to the balances of advances to suppliers and tax credits. Regarding tax credits, the Company filed with the Energy Office the proceedings for the acknowledgement of the project as critical to be eligible to apply for the benefits under Law 26,360, which provides the early refund of the VAT. Additionally, the balances of advances to suppliers are supported by the contract entered into with General Electric for the construction and start-up of the plant in Villa María.




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NOTE 8 - BREAKDOWN OF THE MAIN ACCOUNT BALANCES OF THE INTERIM STATEMENT OF FINANCIAL POSITION

(a) Other receivables 09/30/2017 12/31/2016 01/01/2016

Non current Value added tax credit 16,108,145 168,988 35,605 Minimum presumed income tax 19,757 15,749 1,273 Deferred tax assets - 155,628 189,334 Related company (Note 10) - - 1,070,256 Other - - 33,189 Total 16,127,902 340,365 1,329,657 Current Value added tax credit 4,043,905 - - Advances to suppliers 8,879,903 14,953 290 Income tax credit balance 2,882 2,955 919 Turnover tax credit balance 145,628 34,687 13,677 Tax credit balance 223,208 164 2,735 Balances with shareholders (Note 10) 1,055,819 3,147,072 2,480,588 Prepaid insurance 86,751 - - Customs credit balances 46,507 - - Other 1,204 1,198 117 Total 14,485,807 3,201,029 2,498,326 (b) Cash and cash equivalents Cash on hands 5,961 4,363 4,250 Cash in banks 3,002,737 25,855 1,885 Fixed term deposit 6,800,000 - - Total 9,808,698 30,218 6,135 (c) Trade payables Ordinary 421,011 22,908 50,654 Turbine supplier 3,693,325 Provision for expenses 129,260 - - Deferred checks payable 2,112,962 - - Accrued expenses 21,008 41,323 38,551 Related company (Note 10) - 893,704 - Total 6,377,566 957,935 89,205 (d) Loans Non current Parent company (Notes 10 and 11) 48,977,101 - - Bank Loans (Note 11) 101,493,474 (*) - - Total 150,470,575 - - Current Bank loans (Note 11) 9,905,478 - - Total 9,905,478 - - (*) It includes expenses to be deferred due to financing net of 2,789,175. (e) Taxes payable Turnover tax payable - - 1,485 Withholdings to be deposited 7,974 1,638 5,395 Total 7,974 1,638 6,880 (f) Other liabilities Related companies (Note 10) 310,422 405,397 73,829 Other 78 - - Total 310,500 405,397 73,829




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NOTE 8 - BREAKDOWN OF THE MAIN ACCOUNT BALANCES OF THE INTERIM STATEMENT OF FINANCIAL POSITION (cont.) (g) Property, plant and equipment

Original values Depreciation Net as of

For the year

Main account

Balance at beginning

of year Additions At

year-end

Accumulated Rate

%

Accumulated at

year-end 12/31/2016 1/01/2016 at beginning

Amount of year Tools 300 - 300 83 20% 32 115 157 217 Computers 1,510 8,112 9,622 46 33% 2,075 2,121 7,529 1464 Work in progress - 777,933 777,933 - - - - 777,933 - Total as of December 31, 2016 1,810 786,045 787,855 129 2,107 2,236 785,619 Total as of January 1, 2016 199 1,611 1,810 23 106 129 1,681




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NOTE 8 - BREAKDOWN OF THE MAIN ACCOUNT BALANCES OF THE INTERIM STATEMENT OF FINANCIAL POSITION (cont.) (g) Property, plant and equipment (cont.) Original values Depreciation Net as of

For the period/year

Main account

Balance at beginning

of year Additions

At period/

year-end

Accumulated at beginning of period/year

09/30/2017 12/31/2016

Rate Amount Accumulated at

% (Note 9b) period/year-end Land - 520,000 520,000 - - - - 520,000 - Tools 110 604 714 24 20% 27 51 663 86 Computers 9,812 20,220 30,032 2,212 33% 5,777 7,989 22,043 7,600 Work in progress 777,933 127,798,207 128,576,140 - - - - 128,576,140 777,933 Total as of September 30, 2017 787,855 128,339,031 129,126,886 2,236 5,804 8,040 129,118,846 Total as of December 31,2016 1,810 786,045 787,855 129 2,107 2,236 785,619




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NOTE 9 - BREAKDOWN OF THE MAIN ACCOUNT BALANCES OF THE INTERIM STATEMENT

PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (a) Financial income and expenses -net 09/30/2017 09/30/2017 09/30/2016 09/30/2016 9 months 3 months 9 months 3 months Financial Income (*) (*) Interest income 79,023 - 165,215 125,185

Total financial income 79,023 - 165,215 -

Financial expenses

Foreign exchange loss (2,287,186) (405,788) ( 98,515) ( 52,070) Total financial expenses (2,287,186) (405,788) ( 98,515) ( 52,070) Total financial income and expenses - net (2,208,163) (405,788) 66,700 73,115

(*) not subject to audit or review (b) Expenses by nature

Administrative Total 9 months

Total 3 months

Total 9 months

Total 3 months

Items expenses 09/30/2017 09/30/ 2017 09/30/2016 09/30/2016 (*) (*) Wages, salaries and social contributions 2,992 2,992 - 380,194 121,491 Rentals 57,523 57,523 - - - Professional fees 11,784 11,784 - 24,537 13,967 Depreciation (Note 8g) 5,804 5,804 2,771 1,716 685 Taxes, rates and contributions 13,075 13,075 9,332 24,474 5,709 Freight 677 677 31 - - Travel and per diem expenses 10,296 10,296 3,949 3,675 2,514 Electricity 1,360 1,360 274 1,055 1,047 Telephone and communications 787 787 585 601 387 Bank expenses 525 525 - 4,779 1,514 Office supplies 863 863 797 383 35 Institutional expenses 35,002 35,002 14,128 - - Other expenses 4,592 4,592 - 14,342 42 Total as of 09/30/2017 145,280 145,280 31,867 455,756 31,867 (*) not subject to audit or review




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NOTE 10 - BALANCES AND TRANSACTIONS WITH PARENT COMPANY AND OTHER RELATED COMPANIES

1. Balances with shareholders and directors 09/30/2017 12/31/2016 01/01/2016 Other current receivables:

Manuel Santos De Uribelarrea 34,133 125,066 2,480,588 Manuel Santos Uribelarrea 32,931 31,762 - MSU Energy Holding Ltd. 988,755 2,990,244 - 1,055,819 3,147,072 2,480,588

Long term loans and borrowings

MSU Energy Holding Ltd. 48,977,101 - -

2. Balances with other related parties 09/30/2017 12/31/2016 01/01/2016

Other non current receivables: UCSA S.A. - - 1,070,256

Other liabilities: Juamarita S.A. - - 2,120 Rio Energy S.A. 310,422 - 71,709 UCSA S.A. - 405,397 - 310,422 405,397 73,829

Current trade payables: UCSA S.A. - 893,704 - 3. Transactions with shareholders Loans received MSU Energy Holding Ltd. 42,271,489 - - Interest capitalized to Property, plant and equipment MSU Energy Holding Ltd. 3,117,150 - - 4. Balances with other related parties Re-invoicing of expenses Rio Energy S.A. 310,422 - - 5. Balances and transactions with senior management and directors In the nine-month period ended September 30, 2017, there are no balances (except the disclose in 1) and/or loans to directors and/or top management. During the referred period, compensations were granted to directors and key management in the total amount of $ 31,774 being them short-term benefits and the only benefits granted to directors and key management. The Company has no long-term employees’ benefits, nor share-based payment. Additionally, there were no pending transactions and/or balances to be disclosed as of December 31, 2016 and as of the date of the transition. NOTE 11 - LOANS BECOMING DUE The Company has been granted a loan by its parent company, MSU Energy Investment Ltd., in the amount of $ 47,742,724 as of September 30, 2017, which has been disbursed in February 2017 and June 2017 in the amount of $ 17,992,724 and $ 29,750,000, respectively. On September 30, 2017, the amount of $ 2,000,000, corresponding to this loan was capitalized.




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NOTE 11 - LOANS BECOMING DUE (cont.) On the other hand, the Company signed loan agreements in the total amount of $ 9,500,000, with BAF Latam Credit Fund B.V, which were disbursed in May, July and September 2017 in the amounts of $ 2,500,000; $ 3,000,000 and $ 4,000,000, respectively. As of September 30, 2017, principal and interest payable by the Company amount to $ 9,905,478. The referred loans include certain financial commitments (i.e. not to reduce the capital, provide the creditor with audited annual financial statements within 120 calendar days as from year-end, among others), which are being complied with as of September 30, 2017. Additionally, in order to secure compliance in due time and manner of the related works, on April 7, 2017, the Company entered into a financing agreement through the Sustainability Guarantee Fund of the Argentine pension system (“the Fund”), created by Decree No. 897/07 issued by the Executive Branch and managed by Banco Galicia y Buenos Aires S.A., in the total amount of $ 115,000,000. On June 28, 2017, the Company decided to include an addendum to that agreement in order to receive a first disbursement in the amount of $ 102,500,000. This amount was allocated to the early payment of the supply agreement with GE International Inc. referred to in Note 13. The company GE International Inc. secured the syndicated bank loan up to 4 months after the plant receives the authorization to operate, in line with the original loan agreement. For these purposes, on June 28, 2017, the Company granted an irrevocable power of attorney to GE Company and GE International Inc. in order that the attorneys may create a registered pledge on equipment, a mortgage on the piece of real property, and execute a fiduciary transfer of title for security purposes. On the other hand, the loan agreement sets forth commitments and obligations assumed by the Company, which are being complied with as of September 30, 2017. In addition, there are other commitments and obligations related to financial ratios which would become effective as from the continuous operation of the Company or 4 months after the plant is granted an authorization to operate. During the period between the partial disbursement and the full disbursement or up to 4 months after the plant is granted an authorization to operate, these commitments and obligations are not effective as the Company has no cash flows or results associated with its electricity generation purpose. During such period, the guarantee granted by GE International Inc. mentioned above is in full force and effect. Once the authorization to operate is obtained and the date on which the work is deemed to be completed is determined, the Company shall be responsible for securing the loans granted by the banks. To such end, it will create security interests in the assets of the project, such as a mortgage on the building hosting the thermal station, a registered pledge on equipment and a fiduciary transfer of title for security purposes. The breakdown of loans per class with their related rate and maturity, comparative with the prior period is as follows:

Class Currency

Annual nominal

interest rate Maturity 09/30/2017 12/31/2016 07/01/2016 Financial US dollars 13 2022 48,977,101 - - Financial US dollars 9 2018 9,905,478 - - Financial US dollars ( 1) ( 1) 101,493,474 - -

Total loans 160,376,053 - -




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NOTE 11 - LOANS AND BORROWINGS (cont.)

(1) (a) Tranche “A” in the amount of $ 6,273,000 maturing on November 28, 2018, (b) Tranche “B” in the amount of $ 3,597,750 maturing on February 28, 2019, (c) Tranche “C” in the amount of $ 8,056,500 maturing on May 28, 2019, (d) Tranche “D” in the amount of $ 3,905,250 maturing on August 28, 2019, (e) Tranche “E” in the amount of $ 8,364,000 maturing on November 28, 2019, (f) Tranche “F” in the amount of $ 3,905,250 maturing on February 28, 2020, (g) Tranche “G” in the amount of $ 3,905,250 maturing on May 28, 2020, (h) Tranche “H” in the amount of $ 3,905,250 maturing on August 28, 2020, (i) Tranche “I” in the amount of $ 3,905,250 maturing on November 28, 2020, (j) Tranche “J” in the amount of $ 3,905,250 maturing on February 28, 2021, (k) Tranche “K” in the amount of $ 3,905,250 maturing on May 28, 2021, (l) Tranche “L” in the amount of $ 3,905,250 maturing on August 28, 2021, (m) Tranche “M” in the amount of $ 3,905,250 maturing on November 28, 2021, (n) Tranche “N” in the amount of $ 3,905,250 maturing on February 28, 2022, (o) Tranche “O” in the amount of $ 3,905,250 maturing on May 28, 2022, (p) Tranche “P” in the amount of $ 33,251,000 maturing on August 28, 2022, The loan was agreed in US dollars, at an annual nominal rate of 6.5% up to the effective date of the guarantee of GE International Inc. and then at an annual nominal rate of 7.5%, being interest paid on a quarterly basis.

NOTE 12 - CAPITAL AND PLEDGE OF SHARES As of December 31, 2016 and January 1, 2016, the capital stock amounted to $ 6,150,701 (ARS 52,650,000), represented by 52,650,000 non endorsable, registered, common shares, with a nominal value of ARS 1 each and one vote per share. As of September 30, 2017, it is fully subscribed, paid-in and registered with the Supervisory Board of Companies. On September 30, 2017, the Shareholders in their Extraordinary Meeting approved a capital increase by the majority shareholder MSU Energy Holding Ltd. in the amount of $ 2,000,000 (ARS 34,620,000), whereby its shareholding went from 97% to 98.19% and the capital was raised to $ 8,150,701 (ARS 87,270,000), made up of 87,270,000 common shares with a nominal value of ARS 1, one vote per share, and fully paid in. As of September 30, 2017, the total common shares representing UENSA S.A.'s capital are subject to a first pledge for the benefit of General Electric International, Inc. Argentine Branch, and G.E. Global Parts & Products GMBH, pursuant to EPC Agreements of Villa María, and to a second pledge for the benefit of all its creditors that are a party to the second loan from Gramercy, the lender of funds to MSU Energy Investment Ltd. that were then granted as a loan to the Company. NOTE 13 - CONTRACTUAL COMMITMENTS Agreement with CAMMESA for wholesale demand Based on the Argentine Government’s search for a comprehensive solution to the energy supply, UENSA S.A. wan the bidding process for the exploitation of Thermoelectric Power Station Villa María. By virtue of the agreement entered into for wholesale demand, the Company agrees to add 143.14 MW of nominal power to the Argentine Interconnection Grid (SADI) by setting up a thermoelectric power plant in Villa María (“the Station”) within the economic terms and conditions offered. The Company agrees to sell the total Station output of power by means of the regulatory scheme created by SEE Resolution No. 21/2016 through the Wholesale Demand Agreement entered into by and between the Issuer and CAMMESA dated December 29, 2016, involving power of 138 MW hired for a term of ten (10) years, at a price of $ 19,900 ($/MW-month) adjudged by the SEE Resolution No. 387-E/2016 mentioned above.




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NOTE 13 - CONTRACTUAL COMMITMENTS (cont.) Construction and after-sale service contract with General Electric Packaged Power Inc. and GE International Inc. In order to guarantee the supply of the necessary equipment for the development, start-up and operation of the Station, on February 18, 2017, the Company and General Electric Packaged Power Inc. (GEPPI) entered into a contract for the supply of equipment (EPC Off-shore), including three (3) turbines destined to the Station to be applied to engineering, procurement and construction (EPC) in the total amount of $ 70,015,774. At the same date, the Company entered into a contract with GE International Inc. (GEII) for the supply of certain services to be applied to engineering, procurement and construction (EPC) of the Station in the total amount of $ 56,859,226. On June 28, 2017, the Company signed an addendum to the original agreements with General Electric Packaged Power Inc. and GE International Inc. and agreed that the final amounts of those agreements shall be $ 65,059,434 and $ 53,999,758, respectively. As of September 30, 2017, the outstanding debt from the EPC Off-shore and EPC On-shore contracts is $ 3,703,850 and $ 3,271,919 (plus VAT) respectively, with due date in May 2018. Additionally, as of September 30, 2017, $ 3,807,484 is owed to GEII due to change orders requested under the agreement. Note 14 - RESTRICTED ASSETS There are no restricted assets as of September 30, 2017, December 31, 2016 and the transition date. However, the statements made in Note 11 shall be taken into account. NOTE 15 - SUBSEQUENT EVENTS Pursuant to the Company’s request to register and list its corporate bonds with the Comisión Nacional de Valores (the National Securities Commission), the Commission requested that certain collateral guarantees be granted in favor of the future bond holders. On December 20, 2017, the Board of Directors approved the creation of a chattel mortgage on the turbines installed at the plant. Except as indicated in the paragraph above and in the last paragraph of Note 1.1, no events or transactions have occurred from period-end to the date of issuance of these interim financial statements that would have a material effect on the financial position of the Company at period-end or the results of operations for the period ended September 30, 2017.

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