C OMPANY P RESENTATION 3Q 2013 Agenda Chilean Electricity Sector - - PowerPoint PPT Presentation

COMPANY PRESENTATION

3Q 2013

Company Overview

Agenda

Competitive Advantages Conclusion Chilean Electricity Sector Overview

2

Chilean Electricity Sector Overview

Chilean Electricity Sector

3

GENERATION

Regulated sectors (concessions)

RELEVANT INSTITUTIONS

Ministry of Energy Regulator: CNE Supervisor: SEC Coordinator: CDEC

3 SUB-SECTORS

TRANSMISSION DISTRIBUTION

4 SEPARATE GRIDS

Tal-Tal

Arica Antofagasta

Santiago

Castro Chaitén Cochrane

• Pto. Natales
• Pto. Williams

SING SIC SEA SAM

4,146 MW - 24% 16,751 GWh - 25% 13,332 MW - 76% 48,796 GWh - 74% 52 MW - 0% 166 GWh - 0% 103 MW - 0% 287 GWh - 0% Source: CNE, December 2012

Output from available plants (MWh)

*Margin = [Spot Price - Var. Cost]

Hydro OC-Diesel Coal Thermo-Diesel Variable Cost of the Plants (USD/MWh) CC-Diesel CC-LNG SPOT PRICE

Marginal Cost of the System

Demand Curve

Dispatched Plants Back Up Plants Plants receive revenues from Capacity charge Plants earn a Margin*

Centralized Dispatch Scheme Sector Segmentation

5 10 15 20 25 30 35 40 45 50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Others Diesel-Fuel LNG Coal /Petcoke Gas Hydro Diesel 7% Coal 27% Gas 0% Hydro 40% LNG 21% 5 10 15 20 25 30 35 40 45 50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Unregulated Demand Regulated Demand Unregulated: ~30% Regulated: ~70%

Evolution of Power Generation and Demand in the SIC

Annual Power Generation – SIC (TWh) Annual Electricity Demand – SIC (TWh)

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Source: “Producción Real por Sistema”, CNE/Colbún, 2013. Anuarios CDEC-SIC Source: “Generación Bruta en el SIC”, CNE 2012.

Chilean Electricity Sector Overview

35% 35% 20% 4% 6%

Jan-Sep 2013

0% 5% 10%

J F M A M J J A S O N D

2013 YoY monthly growth

Source: “Costos reales marginales mensuales Alto Jahuel”, CDEC/ Colbún; “Historia precios nudos”, CNE; “Informes Mensuales Systep”, www.systep.cl Note (*): The market Price is calculated by the Regulator upon information provided by all generation companies. This average price does not includes the capacity charge component.

Volatile Growing Prices Due to Lack of Efficient Supply

Electricity Prices-SIC (USD/MWh)

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50 100 150 200 250 300 350 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1) Energy Node Price Alto Jahuel (USD/MWh) 2) Average Auction price (USD/MWh) 3) Average Market price (USD/MWh)* 4) Energy Spot Market Price Alto Jahuel (USD/MWh)

Chilean Electricity Sector Overview

Chilean Electricity Sector Overview

Strong and Stable Regulation in a A+ Rating Country

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Country Risk Regulatory Aspects

GENERAL ELECTRIC POWER SERVICES LAW

Set: 1982 3 Main Amendments: “Short Law 1” - 2004 “Short Law 2” - 2005 NCRE - 2008

ENVIRONMENTAL LAW

Major Modification: 2009 Main Amendments: Environmental Ministry, Superintendence, Courts and the Biodiversity and Wild Protected Area Service - 2009

WATER CODE

Set: 1951 Main Amendment: Unused water right patents - 2005

ACCOUNTING STANDARDS

IFRS standards - 2009 Functional currency: US dollar

CCC+ BBB BBB BBB+ AA- CC BBB- BBB BBB A+

• 50

100

Argentina Colombia Brazil Perú Chile

Fitch S&P Electricity Market Structure

GENERATORS

REGULATED

CUSTOMERS

DISTRIBUTION COMPANIES

UNREGULATED

CUSTOMERS

“FREE” CUSTOMERS

SPOT

MARKET Spot Price /Marginal Cost

The variable cost of the most expensive dispatched plant at each moment.

Unregulated

Market Tariffs settled by both parties, generator and free customer.

Regulated Tender Tariffs

Auctioned under the supervision of the National Energy Commission.

CDEC

10 20 30 40 50 60 70 2013 2014 2015 2016 2017 2018 TWh

Source: “Informe Técnico Definitivo Fijación Precio Nudo SIC” ,CNE/Colbún, October 2013

Chile Has Growing Energy Requirements

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Chilean Electricity Sector Overview

Electricity Demand Outlook - SIC (TWh) Electricity per capita Consumption 2 4 6 8 10 12 14 MWh/ person

3.3 8.3

Company Overview

Agenda

Competitive Advantages Conclusion Chilean Electricity Sector Overview

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Colbún at a glance

• Leading Chilean generation company of reliable, competitive and

sustainable energy.

• Develop projects and manage power infrastructure to generate long

term value.

• Commit our power through long-term power purchase agreements

with distribution, industrial and mining companies.

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39% 20% 17% 2% 1% 21%

Endesa Colbún Gener Arauco CGE Others >15 players

Main Players in the Generation Sector-SIC

Generation (GWh) and Installed Capacity (MW)

Thermal 55% Hydro 45%

57 % 43 %

Market Cap (MMUSD)

1.000 2.000 3.000 4.000 5.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

4,830 618

CAGR: 23%

Capacity (MW)

1.000 2.000 3.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2,962 MW 1,260 MW

CAGR: 9%

Company Overview

Some relevant figures

• Revenues of US$ 1.4 billion in 2012.
• EBITDA of US$ 284 million in 2012.
• EBITDA of US$ 462 million LTM Sep 2013.
• Employees: 983 as of Sep 2013.

Source: Colbún, December 2012 Source: Colbún, December 2012

Generation

Capacity

Angelini Group 10% Pension Funds 18% Others 23%

Matte Group 49%

CONTROL

Matte Group (49%) since 2005, a leading economic group in Chile, with stakes in various sectors (forestry, financial, telecommunications, among others).

LARGE STAKEHOLDER

Angelini Group (9.6%) since 2006, also a leading Chilean economic group.

FLOAT

41% free float, with relevant local institutional investor presence.

GOVERNANCE

4 out of 9 are independent directors.

Solid committed controlling group with a strategic and long term vision

Company Overview

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Ownership Structure

Source: Colbún, September 2013

A+ BBB AA- BBB-*

• 20

40 60 80 100 Local International Fitch Humphreys S&P Credit Rating

* Negative Outlook

Company Overview

Agenda

Competitive Advantages Conclusion Chilean Electricity Sector Overview

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• Attractive Market
• Diversity of Asset Base
• High Quality Customers, Risk Sharing PPAs
• Strong Financial Discipline
• Committed to Sustainability
• Valuable Portafolio of New Projects

Diversity of Asset Base for Flexibility, Lower Generation Risk

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Type (as of Sep-13) Capacity (MW) Estimated Generation (1) (TWh/year) Hydro (operational) 1,273 6.5 Hydro (under construction) 316 1.5 Coal 342 2.5 CCGT (gas/diesel) (2) 766 5.0 Peaking (gas/diesel) 581 4.0 Total Total with hydro under construction 2,962 3,278 18 19.5

(1) For hydro, this estimation considers medium-to-dry hydrological conditions. For CCGT and peaking, they are estimated yearly productions (85% plant factor). (2) Gas generation will depend upon gas availability (3) Total figures reflect the commissioning of the Angostura hydro project, which is expected to start operations at the end of 2013.

172 249 630 9 213 103 442 270 874 316

500 1.000

520 mi 320 mi 160 mi 60 mi Santiago 70 mi

Installed capacity (MW) Hydro Under Construction Thermal Hydro

N S

Competitive Advantages

Increasingly Efficient Generation Matrix

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2% 29% 25% 37% 6% 33% 55% 35% 33% 40% 94% 67% 43% 35% 42% 11%

2009 2010 2011 2012 Sep12 Sep13 Coal LNG/Gas Diesel Colbún Thermal Production Breakdown (%)

6.580 5.567 5.462 5.233 4.066 3.411 2.980 3.836 4.415 6.335 4.493 5.017

2009 2010 2011 2012 Sep12 Sep13 Hydro Thermal Colbún Production (GWh) More Expensive Less Expensive

• Increasingly diversified generating matrix lowers volatility.
• Santa María I has become a key component of our thermal production.
• Since the entry into operations of the Quintero terminal Colbún has been able to secure LNG supply.

Source: Colbún

Competitive Advantages

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Sales by Type of Customer(1)

Regulated (distribution companies) 63% Un-regulated (mining and industrial companies) 37%

Diversified And Creditworthy Customer Portfolio

Historic Sales by Type of Customer (GWh)

Codelco (A/A+) 16% AngloAmerican (BBB/BBB+) 10% Chilectra (BBB+/BBB+)* 26% CGED (Local A+) 20% Saesa (Local AA) 17% Others 11% (1) As of September 2013 LTM (2) Average monomic prices are calculated by dividing the total amount of sales in US$, by physical energy sales in MWh

• Long term contracts with a diversified and creditworthy customer base
• Long-term average PPA price ~100 US$/MWh

Sales Volume by Customer (%) (1) Selected historical average monomic prices (2)

20 40 60 80 100 120 140

2010 2011 2012 Sep13

USD/MWh

Regulated customers Unregulated customers

*Enersis (Baa2/BBB+/BBB+) owns 99.1% of Chilectra

2.000 4.000 6.000 8.000 10.000 12.000 2010 2011 2012 Sep12 Sep13 Regulated customers Nonregulated customers

Competitive Advantages

The key driver in our results is our commercial policy

• 1. Define optimal

contract level

• 2. Incorporate indexation

formulas in sale prices, which reflect our cost structure

• 3. Business, operational

and financial management

Hydro capacity Efficient thermal capacity CPI Fossil Fuels prices

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Flexible prices for transitional periods

Corporate Risk Management Financial hedges Natural gas supply for certain periods

COMMERCIAL GOALS

Supply secure and competitive energy to our customers Maximize returns from our current and future assets Manage volatility given relevant hydro component

Competitive Advantages

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Commercial Balance Improving

5.566 5.462 5.233 4.577

95 1.853 2.745

1.273 2.418 2.242 3.202 2.563 1.901 2.240 912

8.829 10.687 9.834 11.433 2.000 4.000 6.000 8.000 10.000 12.000 14.000 2010 2011 2012 LTM Sep 2013

GWh

Hydro Coal Gas Diesel Contractual Sales Volume Contractual Sales vs. Generation (GWh)

Competitive Advantages

Income statement and FCF

32% 15% 20% 21% 0% 10% 20% 30% 40% 50% 2010 2011 2012 Sep 2013 LTM

EBITDA (MMUSD) Selected Sources & Uses of Funds (MMUSD) Key Metrics EBITDA margin (%)

100 200 300 400 500 600 2010 2011 2012 Sep 2013 LTM WK Capex EBITDA 331 205 287 462 100 200 300 400 500 2010 2011 2012 Sep 2013 LTM

17 2010 2011 2012 Sep 2013 LTM

Leverage Ratio (%) 65 62 71 69 Net debt to EBITDA (x) 3.1 5.9 5.3 4.1 EBITDA Interest coverage (x) 6.7 7.4 8.7 7.5

Competitive Advantages

Current Assets 692 Current Liabilities 548 Cash and equivalents 208 Long-Term Liabilities 1,924 Accounts receivable 147 Recoverable taxes 231 Other current assets 106 Non-Current Assets 5,352 Shareholders' Equity 3,572 Property, Plant and Equipment 5,014 Other non-current assets 338 Total Assets 6,044 Total Liabilities and Shareholders' Equity 6,044 Cash USD 208 million Committed lines UF 4 million (~USD 200 million), unused. Other sources of liquidity ~ USD 150 million in credit lines facilities, ~ USD 300 million registered domestic bonds ~ USD 100 million registered commercial papers Dividend policy 30% (minimum required by Chilean law). Amortization Schedule of LT Debt (MMUSD) Balance Sheet as of September 2013 (MMUSD)

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Strong financials

Liquidity Position Debt by Currency

Fixed 89% Varia ble 11% USD 78% UF 22%

Interest Rate Exposure

Competitive Advantages

EMPLOYEES COMMUNITY AND SOCIETY ENVIRONMENT CONTRACTORS AND PROVIDERS

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Colbún: a sustainable partner

INVESTORS CLIENTS AND SUPPLIERS Competitive Advantages

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Our expansion plan

OTHER GROWTH OPPORTUNITIES FINAL STAGES

(expected to begin generating by the end

• f 2013)

43% 53%

Angostura 316 MW

Hydro capacity (*NCRE)

San Pedro 150 MW La Mina* 34 MW Santa María II 342 MW

~ 4,300 MW 2,962 MW

Coal-fired capacity Combined-cycle capacity Open-cycle capacity (natural gas and/or diesel) LONG-TERM LNG SUPPLY Optimization of existing CCGT (766 MW) and open-cycles (270 MW) subject to securing a long-term competitive and flexible natural gas supply.

Hydro potential ~500 MW

Competitive Advantages

ANGOSTURA HYDRO POWER PLANT: 316 MW

Santa Barbara and Quilaco, Biobío Region

INVESTMENT POWER PLANT:

700 MMUSD

INVESTMENT TX LINE:

45 MMUSD

SPENT AS OF SEP. 2013:

668 MMUSD

ADVANCE SEP. 2013:

97% ESTIMATE START OF GENERATION: 4Q2013

SAN PEDRO HYDRO POWER PLANT: 150 MW

Riñihue Lake, Los Ríos Region

INVESTMENT AND SCHEDULE:

Under revision

SPENT AS OF SEP 2013:

114 MMUSD

ANGOSTURA SAN PEDRO

Business Strategy

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Our projects under development

LA MINA LA MINA HYDRO POWER PLANT: 34 MW

Maule River, Maule Region

SANTA MARÍA II COAL POWER PLANT: 342 MW

Coronel, Biobío Region

SANTA MARÍA II

Company Overview

Agenda

Competitive Advantages Conclusion Chilean Electricity Sector Overview

22

DIVERSITY OF ASSET BASE STRONG FINANCIAL DISCIPLINE COMMITED TO SUSTAINABILITY STRONG PIPELINE OF NEW PROJECTS

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Colbún

ATTRACTIVE MARKET HIGH QUALITY CUSTOMERS, RISK SHARING PPAs