Company Presentation 2Q 2014 SING Arica ~4,000 MW COLBUN AT A - - PowerPoint PPT Presentation

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Company Presentation 2Q 2014 SING Arica ~4,000 MW COLBUN AT A - - PowerPoint PPT Presentation

May 27, 2023 181 likes •403 views

Company Presentation 2Q 2014 SING Arica ~4,000 MW COLBUN AT A GLANCE ~17 TWh Business Power Generation Antofagasta Tal-Tal Size 2 nd largest generator in Chiles Central Grid (SIC), SIC with over 21% market share (MW) ~14,000 MW ~51

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SLIDE 1

Company Presentation 2Q 2014

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SLIDE 2

COLBUN AT A GLANCE

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Business Power Generation Size 2nd largest generator in Chile’s Central Grid (SIC), with over 21% market share (MW) The SIC covers 75% of Chile’s electricity demand Capacity 3,278 MW 48% hydro and 52% thermal Generation 11,253 GWh in 2013 43% hydro and 57% thermal Power plants 16 hydro plants in 4 different basins 7 thermal plants in 4 different regions Ownership Matte Group: ~49% Angelini Group: ~10% Pension funds: ~17% and others: ~24% As of June 2014: Assets US$ 6.1 billion Equity US$ 3.7 billion Market Cap US$ 4.4 billion EBITDA Jun.14’ LTM US$ 393 million SAM SEA SIC

~14,000 MW ~51 TWh

SING

~4,000 MW ~17 TWh

Tal-Tal

Arica Antofagasta

Santiago

Chaitén Cochrane

  • Pto. Natales

Pto. Williams

Source: CNE, December 2013

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SLIDE 3

CHILEAN POWER MARKET STRUCTURE

Leading Player in the SIC

38%

21%

18% 23%

Endesa Colbún Gener Others Market Share

>15 players

Electricity Market Structure

GENERATORS

REGULATED

CUSTOMERS

DISTRIBUTION COMPANIES Regulated Tender Tariffs

Auctioned under the supervision of the National Energy Commission.

UNREGULATED

CUSTOMERS

“FREE” CUSTOMERS Unregulated Tariffs

Market Price: settled by both parties, generator and free customer.

SPOT

MARKET

CDEC Spot Price /Marginal Cost

The variable cost

  • f the most

expensive dispatched plant at each moment.

1 2

3

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SLIDE 4

GENERATION AND PRICE EVOLUTION IN CHILE’S CENTRAL GRID

50 100 150 200 250 300 5 10 15 20 25 30 35 40 45 50 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/MWh Annual Power Generation – SIC TWh

Others Diesel-Fuel LNG Coal /Petcoke Gas Hydro Average SIC PPA Price Average Spot Market Price

  • Development based on hydro + competitive natural gas
  • Power purchase agreements signed under fixed prices (set by

regulator for distribution clients ) (+) Development based on gas turbine (diesel) (+) LNG re-gasification terminal since 2009 (+) Coal- power plants →New law: PPA tenders with price indexation

Source: CNE; CDEC; www.systep.cl

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SLIDE 5

STEADY GROWTH OVER THE PAST DECADE

500 1.000 1.500 2.000 2.500 3.000 3.500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14

3,278 MW 1,260 MW

CAGR: 10%

200 400 600 800 1.000 1.200 1.400 1.600 1.800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14

USD 1,632 million USD 258 million

CAGR: 19%

1.000 2.000 3.000 4.000 5.000 6.000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14

USD 4,400 million USD 1,323 million

CAGR: 12%

50 100 150 200 250 300 350 400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14

USD 359 million USD 131 million

CAGR: 10%

Source: Company Financial Statements; Bloomberg

Capacity (MW) Total Operating Revenues (MMUSD) Market Cap (MMUSD) 3-year Moving Average EBITDA (MMUSD)

1 2 3 4

5

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SLIDE 6

Nehuenco III (108 MW) Nehuenco I (368 MW) Nehuenco II (398 MW) NEHUENCO COMPLEX: 874 MW GAS/DIESEL Candelaria

Unit I (133 MW) Unit II (137 MW)

CANDELARIA POWER PLANT: 270 MW GAS/DIESEL Los Pinos (100 MW) LOS PINOS POWER PLANT: 100 MW DIESEL Antilhue

Unit I : 51 MW Unit II : 52 MW

ANTILHUE POWER PLANT: 103 MW DIESEL Chacabuquito (29 MW)* ACONCAGUA BASIN: 213 MW Los Quilos (39 MW)* Hornitos (55 MW) Blanco (60 MW) Juncal (29 MW) * Juncalito (1 MW)* Carena (9 MW)* CARENA POWER PLANT: 9 MW Colbún (474 MW) MAULE BASIN: 630 MW San Ignacio (37 MW)* San Clemente (5 MW)* Machicura (95 MW) Chiburgo (19 MW)* Rucúe (178 MW) LAJA BASIN: 249 MW Quilleco (71 MW) Canutillar (172 MW) CHAPO LAKE: 172 MW Santa María I (342 MW) SANTA MARIA I POWER PLANT: 342 MW COAL

Combined Cycle Open Cycle Run of the River (*NCRE mini-hydro) Reservoir Coal-fired

Angostura (316 MW) BIOBÍO BASIN: 316 MW

7 thermal power plants (1,689 MW) 16 hydro power plants (1,589 MW)

GENERATION ASSETS

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SLIDE 7

1,273 316 342 766 581 6.5 1.5 2.5 5.0 4.0

5 10 15 20 500 1.000 1.500 2.000 2.500 3.000 3.500

Capacity (MW) Generation (TWh/year)

MW

Capacity (MW) & *Estimated Generation (TWh/year) Breakdown

Hydro Angostura Coal 7

*For hydro considers medium-to-dry hydrological conditions, for CCGT and peaking, they are estimated yearly productions (85% plant factor). Gas generation will depend upon gas availability TWh

CCGT Diesel/Gas Peaking Diesel/Gas

3,278 MW 19.5 TWh

*For hydro considers medium-to-dry hydrological conditions, for CCGT and peakers, estimated yearly productions (85% plant factor). Gas generation will depend upon gas availability. Santa María I – Coal-fired power plant Colbún– Reservoir

GENERATION ASSETS

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SLIDE 8

INCREASINGLY EFFICIENT GENERATION MATRIX

2% 29% 41% 38% 35% 6% 33% 55% 35% 51% 54% 57% 94% 67% 43% 35% 9% 8% 8%

2009 2010 2011 2012 2013 2Q13 2Q14 Coal LNG/Gas Diesel

6,580 5,567 5,462 5,233 4,857 2,245 2,730 2,980 3,836 4,415 6,335 6,396 3,612 4,037

2009 2010 2011 2012 2013 2Q13 2Q14 Hydro Thermal More Expensive Less Expensive

  • Increasingly diversified generation matrix lowers volatility.
  • Santa María I has become a key component of our thermal production.
  • Recent market changes have resulted in higher LNG supply.
  • Angostura will provide a significant portion of zero-variable-cost generation production.

Source: Audited consolidated financial statements.

Colbun Total Production (GWh) Colbun Thermal Production Breakdown (GWh)

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SLIDE 9

6,578 5,566 5,462 5,233 4,857 5,342 95 1,853 2,616 2,662 323 1,273 2,418 2,242 3,234 3,564 2,802 2,563 1,901 2,240 546 595 4,760 3,800 6,085 6,912 7,224 7,170 4,879 5,031 4,602 2,893 4,431 4,365 0% 20% 40% 60% 80% 100% 120% 2.000 4.000 6.000 8.000 10.000 12.000 2009 2010 2011 2012 2013 2Q14 LTM GWh

Hydro Coal LNG Diesel Regulated Sales Unregulated Sales (Hydro+Coal+LNG)/Contractual Sales 9,639 8,831 10,687 11,655 11,535 9,805

Contractual Sales vs. Generation (GWh)

Graph Source: Colbun. Unregulated Sales 2013 & 2Q14 LTM excludes sales to Codelco at Marginal Cost

INCREASINGLY BALANCED COMMERCIAL POSITION

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SLIDE 10

4 5 6 7

100 200 300 400 500 2009 5 6 2010 7 8 2011 9 10 2012 11 12 2013 13 132 1Q14 LTM 14

EBITDA Hydro Generation

2009 2010 2011 2012 2013 2Q14 LTM

MMUSD TWh

EBITDA VS. HYDRO GENERATION EVOLUTION

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SLIDE 11

40% 60%

Sales by Type of Costumer (%) Unregulated Regulated Codelco - A 16% AngloAm erican - BBB 10% Chilectra BBB+ 26% CGED - Local A+ 20% Saesa - Local AA 17% Others 10% Sales Volume by Customer (%)

Graphs Sources: 1), 2), 3) Colbun as of Jun14 LTM. 4) Average monomic prices are calculated by dividing the total amount of sales in US$, by physical energy sales in MWh.

  • 50

100 150 Regulated Clients Unregulated Clients

Average Historic Monomic Price (US$/MWh)

2.000 4.000 6.000 8.000 10.000 12.000 14.000 2011 2012 2013 2Q13 LTM 2Q14 LTM Regulated customers Nonregulated customers

Historic Sales by Type of Costumer (GWh)

HIGH QUALITY CLIENTS

1 2 3 4

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SLIDE 12
  • 3. DEFINE

OPTIMAL PPA LEVEL

2. INCORPORATE

INDEXATION FORMULAS IN

SALE PRICES 1.

DEVELOPMENT COST

Maximize returns from our current and future assets Manage volatility given relevant hydro component Predictable Cash Flows

  • Active Risk Management
  • Financial Hedges
  • Natural gas for certain periods

8,000 GWh – Hydro(*) 5,000 GWh – Dual CCGT

4,000 GWh – OC

2,500 GWh – Coal

(*) Under medium-to-dry hydrological conditions. For CCGT and peaking, estimated yearly productions (85% plant factor). Gas generation will depend upon gas availability .

ADVANCED COMMERCIAL STRATEGY

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2 4 6 8 10 12 14 16 18 20 MWh/person ~3.3 MWh/capita ~8.3 MWh/capita

Source: World Bank

  • In the next decade, Chile is expected to become the first developed economy (by OECD standards) in Latin America. We expect

this transition to result in increased demand for power generation.

  • The National Energy Commission projects a CAGR of electricity demand of 4.8% for Chile by year 2020.

Electricity per capita consumption

CHILE HAS GROWING ENERGY REQUIREMENTS

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SLIDE 14

COLBUN HAS SEVERAL GROWTH OPPORTUNITIES

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La Mina - Hydroelectric Project

  • 34 MW of Installed Capacity
  • 180 GWh of expected annual generation
  • Phase: Environmentally Approved
  • Qualifies as NCRE

Santa María II - Coal-fired Project

  • 350 MW of Installed Capacity
  • 2,500 GWh of expected annual generation
  • Phase: Environmentally Approved

San Pedro - Hydroelectric Project

  • 150 MW of Installed Capacity
  • 930 GWh of expected annual generation
  • Phase: Existing Environmental Approval to

be modified Searching for investment opportunities in the region: Special focus on assets in Colombia and Perú Country Attractiveness:

  • Attractive business environment
  • Positive economic perspective
  • Well established regulatory framework
  • Growing electricity consumption
  • Diversification of:
  • Geography
  • Generation technology
  • Access to fuel sources
  • Water Rights ∼ 500 MW
  • Optimization* of existing CCGT (766 MW) and Open cycles (270 MW)
  • Potential Acquisitions of existing Power Plants
  • Licitaciones ERNC

* Subject to securing competitive and long-term natural gas supply

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SLIDE 15

Our Strategic Pillars

  • Strengthen our organization and people
  • Strengthen our operations
  • Strengthen our financial position
  • 1. Strengthening
  • 2. Diversification

and Risk Management

  • 3. Growth
  • Narrow our exposure to exogenous variables: diversified asset base

(technology, fuel and location) and clients

  • Risk-sharing mechanisms with our strategic clients and suppliers
  • Active risk-management policy
  • Identify and develop growth options to strengthen our competitive position

based on efficient capacity

  • Commercial strategy that generates long-term returns consistent with our

asset base

COLBUN’S CORPORATE STRATEGY

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EMPLOYEES COMMUNITY AND SOCIETY ENVIRONMENT CONTRACTORS AND PROVIDERS INVESTORS CLIENTS AND SUPPLIERS OUR OPERATIONS ARE SUPPORTED BY A DEFINED CORPORATE SOCIAL RESPONSIBILITY STRATEGY

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SLIDE 17

Graphs Sources: Colbún. .

337 331 205 287 352 393 29% 32% 15% 20% 21% 24% 0% 10% 20% 30% 40% 50% 100 200 300 400 500 2009 2010 2011 2012 2013 2Q14 LTM

  • Adj. EBITDA (US$ million) & EBITDA Mg

(%)

1,159 1,024 1,333 1,409 1,696 1,632 500 1.000 1.500 2.000 2009 2010 2011 2012 2013 2Q14 LTM

Operating Revenues (US$ million)

239 116 5 51 63 120 100 200 300 2009 2010 2011 2012 2013 2Q14 LTM

Net Income (US$ million)

100 200 300 400 500 600 2009 2010 2011 2012 2013 2Q14 LTM

Cash Flow (US$ million)

Capex EBITDA

IMPROVING RESULTS

3 4 2 1

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.

5.9 5.2 4.1 3.3 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 2011 2012 2013 June 2014 LTM 10.9 10.4 7.8 8.2 0,0 2,0 4,0 6,0 8,0 10,0 12,0 2011 2012 2013 June 2014 LTM 54% 65% 63% 56% 0% 10% 20% 30% 40% 50% 60% 70% 2011 2012 2013 June 2014 LTM 5% 19% 24% 23% 0% 5% 10% 15% 20% 25% 30% 35% 2011 2012 2013 June 2014 LTM

Net Debt / EBITDA Net Interest Coverage Net Liabilities / Equity Retained Cash Flow / Debt

Source: Colbún’s Financial Statements

SOLID INTEREST COVERAGE AND IMPROVING LEVERAGE

3 4 1 2

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200 400 600 800 1000 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Banks Bonds

As of June 30, 2014

A+ BBB (Stable)

BBB- (Negative)

AA-

Local International

Local & International Credit Ratings Fitch Humphreys S&P Amortization Schedule (MMUSD) Average Maturity: 6.3 years Average Interest Rate: 4.8%

Cash ~USD 350 million Committed lines ~USD 200 million, unused, signed with local counterparties. 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).

Liquidity Position

USD 88% UF 12%

Fixed 100%

A LOOK AT OUR DEBT AND LIQUIDITY

Debt by Currency Interest Rate Exposure

1,000 1 2 3 4 5

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Issued in July 2014

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  • Country: Operates in Chile, the highest-rated country in the region (Aa3/AA/A+)
  • Size: Second-largest generation company in Chile’s largest electricity grid
  • Competitive: High-quality, diversified asset portfolio and flexible commercial policy.
  • Stable: Diversified, solid and creditworthy customer portfolio
  • Shareholders: Strong, reliable controlling group with a strategic and long-term vision for the business
  • Management: Experienced management and high standards of corporate governance
  • Projects: Strong pipeline of new projects with improving efficiency and diversification of generation sources
  • Liquidity: Conservative financial strategy that emphasizes keeping a strong liquidity position

KEY INVESTMENT HIGHLIGHTS

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