CORPORATE PRESENTATION AES GENER September 2017 AES Gener at a - - PowerPoint PPT Presentation

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CORPORATE PRESENTATION AES GENER September 2017 AES Gener at a - - PowerPoint PPT Presentation

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CORPORATE PRESENTATION AES GENER September 2017 AES Gener at a Glance Leading power generation company controlled by AES Corporation AES GENER IS ENERGIZED BY A $813 M $2.8 B REGIONAL WORKFORCE OF +1,500 PEOPLE EBITDA MARKET CAP IMPROVING

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CORPORATE PRESENTATION

AES GENER September 2017

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Leading power generation company controlled by AES Corporation

AES Gener at a Glance

IMPROVING LIVES IN

CHILE, COLOMBIA AND ARGENTINA 5,813

GROSS MW in operation

4,150 1,020 643

531

GROSS MW in construction (Alto Maipo Project in Chile)

TECHNOLOGIES

COAL, 3,029 MW HYDRO, 1,291 MW GAS/DIESEL, 1,459 MW OTHERS, 34 MW

FOUNDED IN 1981

And Acquired by The AES Corporation in 2000, Who Currently owns 66.7% Named to

DOW JONES SUSTAINABILITY INDEX for Chile

AES GENER IS ENERGIZED BY A REGIONAL WORKFORCE OF

+1,500 PEOPLE

RECOGNIZED AS A

GREAT PLACE TO WORK in

CHILE (ranked 16th), COLOMBIA (ranked 16th) and ARGENTINA (ranked 15th)

$8.0 B

TOTAL ASSETS

OWNED & MANAGED

$813 M

EBITDA

2017-2Q LTM

$4.0 B

  • CONS. DEBT

2017-2Q

$2.8 B

MARKET CAP

AS OF AUG 8, 2017

RATED

Baa3 / BBB- / BBB- BY

MOODY’S, S&P GLOBAL FITCH RATINGS

MARKET SHARE

CHILE 30% by generation COLOMBIA 5% by generation ARGENTINA 3% by generation

COMMERCIAL BUSINESS LARGELY CONTRACTED

EFFICIENT GENERATION CONTRACTED WITH AN AVERAGE LIFE OF 11 YEARS LISTED N

SANTIAGO STOCK EXCHANGE

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3 Contains Forward-Looking Statements

2017 2Q HIGHLIGHTS

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 Highest LTM EBITDA of all time: $813mn

 Year-to-Date EBITDA of $380mn, +10% increase over 2016  Second quarter EBITDA of $191mn, +2% higher than 2016

 Continued enhancing Investment Grade Credit Profile by repaying Corporate Debt

 $132mn prepaid since December 2016

 In April, the Company declared dividends of $261mn payable in 2017, equal to 100% of Net

Income in 2016.

 $146mn distributed in May 2017

Second Quarter of 2017

Highlights

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 Advanced second phase of expansion, all projects other than Alto Maipo fully operational

 Cochrane Project fully operational and contracted since October 2016  New 743 MW generating earnings and cash flows

 We continue developing solar PV based distributed energy solutions

 4 contracts signed with new industrial customers

 Nueva Renca continues contributing margin through the tolling agreements. Secured renewal

for 2018 Second Quarter of 2017

Highlights

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 AES Gener continues to be the largest energy producer in Chile contributing 30% of gross

generation during the first half of 2017 Largest Energy Producer in Chile

Highlights (cont’d)

AES Gener 24% AES Gener 48%

SIC SING ~27.5 TWh ~9.0 TWh

AES Gener 30%

SIC + SING

~36.5 TWh

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5,000 10,000 15,000 20,000 25,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 GWH per Year Regulated Non-Regulated Guacolda Discos 27% Mining 64% Industrial 9%

  • Avg. Contract

life: 11 years

AES Gener Contracted Portfolio

Highlights (cont’d)

 Efficient

generation fully contracted with no relevant maturities until 2021/2022

Looking forward to present competitive bids in the upcoming regulated auction (October 2017)

 Guacolda re-contracted ~1,200 GWh with industrial customers

PPAs with tenors ranging between 3 and 7 years

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8 Contains Forward-Looking Statements

COMPANY OVERVIEW

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Markets Overview (2017-2Q LTM Figures)

CHILE ($590m EBITDA)

4,150 MW of installed capacity (SIC+SING)

COLOMBIA ($200m EBITDA)

83% 17%

ENERGY SALES

Unregulated Customers Spot Sales

ARGENTINA ($24m EBITDA)

99% 1%

GENERATION

Thermal Solar

7,643 GWh

SING

34% 60% 6%

ENERGY SALES

Unregulated Regulated Spot Sales

81% 19% 0%

GENERATION

Thermal Hydro Other

7,425 GWh

SIC

67% 33%

ENERGY SALES

Contract Sales Spot

100%

GENERATION

Hydro

4,439 GWh

SIN

54% 46%

ENERGY SALES

Contract Spot Sales

100%

GENERATION

Thermal

4,637 GWh

SADI

$727mn $861mn $363mn $122mn

SING ASSETS, 1,406 MW

NORGENER, 277 MW, coal ANGAMOS, 558 MW, coal COCHRANE, 550 MW, coal ANDES SOLAR, 21MW

SIC ASSETS, 2,744 MW,

VENTANAS, 884 MW, coal GUACOLDA, 760 MW, coal ELECTRICA SANTIAGO, 750 MW, gas & diesel HYDROS, 271 MW OTHERS, 78 MW, diesel

SADI ASSETS, 643 MW,

TERMOANDES, 643 MW, gas

SIN ASSETS, 1,020 MW,

CHIVOR, 1,000 MW, hydro TUNJITA, 20 MW, hydro

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We operate a 5,813 MW diversified portfolio in terms of market and technology

Portfolio Overview (2017-2Q LTM Figures)

71% 18% 11%

Chile Colombia Argentina

Countries

47% 24% 18% 11%

SIC SING SIN SADI

Markets

77% 23%

Thermal Renewable

Technology

52% 22% 23% 2% 1%

Coal Hydro Gas/Diesel Diesel Other

Fuel

37% 35% 25% 3%

SIC SING SIN SADI

EBITDA

5,813 MW 5,813 MW 5,813 MW 5,813 MW $813mn

72% 25% 3%

Chile Colombia Argentina $813mn

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Long term contracts with creditworthy and reliable offtakers

Commercial Strategy for Chile

Overview

Commercial strategy aims to maximize cash flow while minimizing volatility

Optimal contracted position seeks to match contracted energy with long term efficient generation

Contract customers include regulated customers (distribution companies) and unregulated customers (mining and industrial)

Contracts include Price indexation mechanisms (coal and US CPI) and passthrough provisions (regulatory risks)

~11 years average life of outstanding contracts

Customers

Discos 27% Mining 64% Industrial 9%

5,000 10,000 15,000 20,000 25,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 GWH per Year Regulated Non-Regulated Guacolda

Contract

  • avg. life:

11 years

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Colombia Argentina

Commercial Strategy for Colombia and Argentina

Contract Energy Energia Plus Contracts Remaining Generation Spot Sales to ISO

59% 41%

ENERGY SALES (YTD)

Contract Spot

~80% of Expected Generation Medium Term Contracts (1-4 Years) Remaining Generation Spot and Frequency Regulation Sales Firm Energy (~3,000 GWh) Reliability Charge Revenue

81% 19%

ENERGY SALES (YTD)

Contract Spot

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Phase I 2007-2013: 1,677 MW of new capacity

Successful Project Development and Construction

BESS Angamos I BESS Norgener 2 2  12 MW  Energy Storage  Start Date: Nov. 2009  20 MW  Energy Storage  Start Date: Dec. 2011 Guacolda III Guacolda IV 4 4  152 MW  Coal  Start Date: Jul. 2009  152 MW  Coal  Start Date: Mar. 2010 Angamos I & II 1  558 MW (2 units)  Coal  Start Date: Apr./Oct. 2011 1 2 Los Vientos 3  132 MW  Diesel  Start Date: Jan. 2007 4 Ventanas III Ventanas IV 6 7 Santa Lidia 5  139 MW  Diesel  Start Date: Apr. 2009  272 MW  Coal  Start Date: Feb. 2010  272 MW  Coal  Start Date: Mar. 2013 3 6 7 5 Antofagasta Santiago

 Extensive experience in project development

and execution on time and within budget

 49% increase of installed capacity between

2007 and 2014

 Total investment of $3bn

3,417 5,094

2007 2014

+49%

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Phase II 2015-2019: 1,256 MW of new capacity

Successful Project Development and Construction

 $4bn investment, fully funded

+21%

Guacolda V – 152 MW Angamos Desalinization Tunjita – 20 MW Andes Solar – 21 MW Cochrane – 532 MW Alto Maipo – 531 MW

Guacolda V - COMPLETED

Construction Progress

 152 MW  Coal  Start Date: Dec. 2015 Angamos Desal - COMPLETED  Desalination plant Andes Solar - COMPLETED  21 MW  Solar  Start Date: May 2016 Tunjita - COMPLETED  20 MW  Hydro  Start Date: Jun 2016 Cochrane - COMPLETED  550 MW (2 units)  Coal  Start Date: Oct 2016 Alto Maipo  531 MW  Run of River Hydro  Progress: 52%

152 573 531 2015 5.222 5.070 2019 6.326 5.795 2016 5.795 5.222

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IFRS 2017-2Q LTM Figures in US$ mn

Strong Financial Performance

Total debt and net debt / EBITDA EBITDA & EBITDA margin Total CAPEX Capital Allocation

377 426 581 590 263 246 172 201 32 19 25 22 672 691 778 813

29% 32% 34% 35%

2014 2015 2016 2Q-2017 LTM Chile Colombia Argentina EBITDA Margin 1,520 1,669 2,198 2,405 1,214 1,706 1,626 1,560 2,734 3,375 3,824 3,966

3.7x 4.5x 4.3x 4.4x

2014 2015 2016 2Q-2017 LTM PF/Non-Recourse Corporate Debt Net Debt/EBITDA 703 893 479 459 127 109 83 158 830 1,002 562 617 2014 2015 2016 2Q-2017 LTM Construction Maintenance 162 279 53 117 210 235 93 188 66 92 102 113 438 606 248 418 2014 2015 2016 2Q-2017 LTM Equity Contribution Dividends Paid Debt Payment

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Strong Capital Structure

Manageable Amortization Profile for $3,966mn as of June 30, 2017

  • Average Cost: 5.5%
  • Average Life: 14 years
  • Net Debt/EBITDA: 4.4x (2.4x excluding non recourse debt)
  • 98% denominated in USD
  • 93% at fixed interest rate

61% 39%

Non Recourse Debt Recourse Debt

$3.97bn

47 157 174 153 558 161 173 187 571 1,786 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026/2073

AMORTIZATION SCHEDULE (US$mn)

Non Recourse Debt Recourse Debt Note: Amortization Schedule does not include potential acceleration of Alto Maipo’s debt

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Key Investment Considerations

LEADING POSITION

Largest energy producer in Chile, and major producer in Colombia, with

  • ne of the most efficient plants in Argentina

DIVERSIFICATION

One of the most diversified Latin American generator in terms of geographical footprint and technology HIGH GROWTH

Outgrown peers in addition of new capacity and secured future growth through fully-financed pipeline STABLE CASH FLOWS

Largely contracted US dollar-denominated revenue streams with built in fuel and inflation passthrough provisions STRONG CAPITAL STRUCTURE

A successful financing history committed to investment grade rating

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18 Contains Forward-Looking Statements

APPENDIX

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We operate a 5,813 MW diversified portfolio in terms of market and technology

Assets Overview

SIC (2,744 MW) SING (1,406 MW) Colombia (1,020 MW) Argentina (643 MW)

VENTANAS, 884MW

4 coal units Located in Valparaiso Start of operations: 1964/1996/2010/2013

GUACOLDA, 760MW

5 coal units Located in Huasco Start of operations: 1995/1996/2009/2010/2015

ELECTRICA SANTIAGO 479MW

2 gas/diesel units

HYDRO PLANTS 271MW

4 run of river hydro units

Chile

NORGENER, 277MW

2 coal units Located in Tocopilla Start of operations: 1995/1997

ANGAMOS, 558MW

2 coal units Located in Mejillones Start of operations: 2011

COCHRANE, 550MW

2 coal units Located in Mejillones Start of operations: 2016

ANDES SOLAR, 21MW

1 PV solar Adjacent to Andes substation Start of operations: 2016

CHIVOR, 1,000MW

10 hydro units Located in Bocaya Start of operations: 1977/1981

TUNJITA, 20MW

1 hydro units Located in Bocaya Start of operations: 2016

TERMOANDES, 643MW

Combined Cycle Turbines: 2 gas, 1 steam Located in Salta Start of operations: 1999

Energy Storage (Chile)

ENERGY STORAGE 52MW

3 units in Norgener, Angamos and Cochrane

BACKUP PLANTS, 350MW

3 diesel plants: Los Vientos, Santa Lidia, Laguna Verde and Laja

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5 11 16 4 5 2013 2014 2015 2016 2Q-2017 LTM CAPEX 5.8x 6.8x 6.9x 6.2x 6.6x 3.1x 3.0x 2.5x 2.8x 2.5x 2013 2014 2015 2016 2Q-2017 LTM Net Debt/EBITDA EBITDA/Financial Expense 119 112 111 122 112 39% 38% 39% 39% 35% 2013 2014 2015 2016 2Q-2017 LTM EBITDA EBITDA Margin 225 214 238 252 242 81 83 44 52 72 2 1 2 5 10 308 298 284 309 323 2013 2014 2015 2016 2Q-2017 LTM Contracted Spot Other

Angamos

EBITDA and EBITDA Margin Revenue Credit Metrics Capital Expenditures

Summary of Historical Financials (US$mn)

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125 342 115 78 60 2013 2014 2015 2016 2Q-2017 LTM CAPEX 165 129 122 150 148 30% 25% 28% 39% 35% 2013 2014 2015 2016 2Q-2017 LTM EBITDA EBITDA Margin 554 515 438 381 425 554 515 438 381 425 2013 2014 2015 2016 2Q-2017 LTM Revenue

Guacolda

EBITDA and EBITDA Margin Revenue Credit Metrics Capital Expenditures

Summary of Historical Financials (US$mn)

2.9x 4.8x 6.3x 4.9x 4.7x 7.0x 7.3x 3.9x 3.5x 3.7x 2013 2014 2015 2016 1Q-2017 LTM

Net Debt/EBITDA EBITDA/Financial Expense

2.9x 4.8x 6.3x 4.9x 4.5x 7.0x 7.3x 3.9x 3.5x 3.7x 2013 2014 2015 2016 2Q-2017 LTM Net Debt/EBITDA EBITDA/Financial Expense

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22 Contains Forward-Looking Statements

2Q-2017 FINANCIAL REVIEW

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Consolidated Financials

EBITDA BY MARKET YTD Second Quarter

Key Financials (US$mn) 2017 2016

  • Var. (%)

2017 2016

  • Var. (%)

Operating Revenues 1,156 1,099 5% 599 544 10% Gross Profit 291 272 7% 145 150

  • 4%

EBITDA 380 345 10% 191 187 2% EBITDA Margin 33% 31% 32% 34% Net Income 88 108

  • 19%

41 67

  • 38%

36% 50% 40% 31% 22% 16%

2016 345

3%

2017 380

2%

Year to date Second Quarter

33% 47% 42% 28% 23% 23% 2% 2%

2017 191 2016 187

SADI SING SIN SIC

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EBITDA Increased 2%, $4mn

EBITDA Bridge

29 24 191

SIN 2017 SING

1

SADI

2

2016 SIC

187

Second Quarter

46 29 36

SADI

3

SING SIC 2016

344

2017

380

SIN

Year-to-Date EBITDA Increased 10%, $36mn

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 Lower efficient generation and higher coal costs due to indexation lag  Accrual of green taxes in 2017  Lower margin from Nueva Renca

YTD EBITDA Decreased by $36mn

SIC Market

87 63 24 12

2017 2016 1Q Var 2Q Var

171 84

  • 21%

135 72 2Q 1Q

Regulated Customers 62% Unregulated Customers 35% Spot Sales 3%

$440mn

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

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 Cochrane and Andes Solar started operations  Accrual of Green taxes in 2017  Lower margin from old Norgener contracts

YTD EBITDA Increased by $46mn

SING Market

17 29 51 80 +43%

2017

152 72

2Q Var 1Q Var 2016

106 55 1Q 2Q

Unregulated Customers 77% Spot Sales 23%

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

$382mn

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 Higher contract sales  Lower costs in energy purchases  Lower spot sales

YTD EBITDA Increased by $29mn

SIN Market

13 41 42

1Q Var

28

2016

55 84 43

2017

+52%

2Q Var

1 2Q 1Q

Contract Sales 81% Spot Sales 19%

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

$145mn

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 Higher fuel and transmission costs  Lower generation due to maintenance activities  Higher energy prices and higher volume of contract sales

YTD EBITDA Decreased by $3mn

SADI Market

6 4 1 2

  • 27%

2017

8 4

2Q Var 1Q Var 2016

11 5 1Q 2Q

Contract Sales 59% Spot Sales 41%

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

$62mn

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YTD, Attributable to AES Gener (US$mn)

Net Income

69

24 21 8 35 1H-2017

108

2

88

1H-2016

EBITDA Variation Depreciation (*) Higher Interest Expense (*) Non-controlling Interest Others

(*) Both higher depreciation and higher interest expense are related to new assets

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YTD (US$mn)

Cash Flow and Liquidity

93 174 379

Investment CF

Dec-16

470

Operating CF

Jun-17 2

356

FX Variation Financing CF Cash and Cash Equivalents $356 mn Undrawn Committed Facilities $240 mn

$596mn

Liquidity as of June 30, 2017

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31 Contains Forward-Looking Statements

APPENDIX

Distribution Companies PPA Auctions

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Distribution Companies PPA Auctions

Year of the Auction 2014 2015 2016 2017 2018 2019 2020

Start of Supply 2016-2019 2019 2021-2022 2024 2023 2024 2026 Tenor 15 20 20 20 20 20 20

13.0 1.2 12.4 2.2

Auction Size (TWh-Year) Auction Launch (Year)

2013 2015 2015-01 2017-01 2017 2018 2019

Last Auctions

Current Auction

7.0 7.0 4.5

  • Avg. Awarded Price

94.7 $/MWh (92% awarded w/o change in law)

  • Avg. Awarded Price

47.6 $/MWh (100% awarded)

  • Avg. Awarded Price

79.9 $/MWh

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Main Changes on Terms & Conditions

Distribution Companies PPA Auctions

Main Terms and Conditions 2015-01 Auction 2017-01 Auction

Energy Offered 12,400 GWh per year 2,200 GWh per year PPA Tenor 20 years, starting 2021-2022 20 years, starting 2024 Power Blocks Daily blocks Daily blocks + seasonal blocks for hydro (new, totaling 600 GWh) Guarantees Initial ~$4,000 per GWh (CLF$100) Performance ~$12,000 per GWh (CLF$300) Initial ~$8,000 per GWh (CLF$200) Performance ~$24,000 per GWh (CLF$600) Fines for Delays (for new projects, every two milestones delay) ~$200 per GWh (CLF$5) ~$1,200 per GWh (CLF$30)

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34 Contains Forward-Looking Statements

APPENDIX

About The AES Corporation

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We are part of The AES Corporation, one of the leading power companies in the world, who provides access to power globally

The AES Corporation Overview

$36B TOTAL ASSETS

OWNED & MANAGED

$14B

TOTAL 2016

REVENUES

17

COUNTRIES

6

MARKET-ORIENTED STRATEGIC BUSINESS UNITS

4,759 MW

GENERATION CAPACITY UNDER CONSTRUCTION

FUEL TYPES

Coal, Diesel, Gas, Oil, Pet Coke, Renewables

FORTUNE 200

Global Power Company

FOUNDED IN 1981

Named to

DOW JONES SUSTAINABILITY INDEX for North America

for the Third Year in a Row (2014-2016)

19,000 EMPLOYEES

AES serves

9M+

CUSTOMERS

7

UTILITY

COMPANIES

36,084

GROSS MW in operation

MISSION GLOBAL ACCESS TO

 Construction expertise and contractors  Financing  Equipment and fuel suppliers  Engineering, consulting and insurance

Improving lives by providing safe, reliable and sustainable energy solutions United States Brazil Mexico, Central America and the Caribbean Europe Asia (India, Philippines and Vietnam) Andes (Argentina, Chile and Colombia)

SBUs

25,610

Proportional MW generation portfolio

www.aes.com

Sources: The AES Corporation SEC flings. Note: According to information provided in the 2016 10-K of The AES Corporation

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AES Gener and AES Argentina Generación share the same senior leadership

Largest energy producer in Chile, a leading player in Argentina and a major producer in Colombia and Brazil

One of the most diversified LatAm generation player in terms of geographical footprint and technology

Owns InterAndes transmission line, connecting Chile and Argentina

AES has a strong regional presence (11,872 MW)(1), owning assets in Argentina, Chile and Colombia under Andes SBU (8,574 MW) and Brazil, under Brazil SBU (3,298 MW)

Sources: Preliminary OM, The AES Corporation 10-K 2015, AES Gener Financials as of September 30, 2016. 1) Adding up 8,555 MW of generation capacity under ANDES SBU as of September 30, 2016 and 3,298 MW under Brazil SBU as of December 31, 2015. 2) Including AES Gener’s Termoandes facility located in Argentina.

The AES Corporation Strong Footprint in South America

Andes SBU Overview

Andes SBU Brazil SBU

We leverage on our relationship with AES in negotiations with suppliers, regulators and creditors, and benefit from their technical expertise, and global best practices in optimizing performance

29% 28% 35% 8%

Chile Colombia Argentina(2) Brazil

643 MW 1,020 MW 4,150 MW + 52MW Energy Storage  2,760 MW  2 facilities for fuel procurement  Service center in Buenos Aires  172 people  Finance and HR transactional service to other AES affiliates  3,298 MW  1 utility

AES Electropaulo AES Tietê AES Uruguaiana

3,404 MW 1,020 MW 4,150 MW 3,298 MW

AES owns 11,872 MW in South America

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SLIDE 37

37 Contains Forward-Looking Statements

CORPORATE PRESENTATION

AES GENER