ENGIE Energa Per Corporate Presentation September 2017 (based on - - PowerPoint PPT Presentation

ENGIE Energía Perú

Corporate Presentation September 2017

(based on 2017 H1 financial figures)

2017 H1 – EEP HIGHLIGHTS

2

• During 2017 H1, EEP was the first private player of the sector accounting for 21% of the total

capacity and 15% of the total energy generation of the system

• Intipampa solar project at 73%. Expected to enter into commercial operation in early 2018
• New 15 year PPA with Marcobre @ 84MW to supply electricity demand of Mina Justa mining project

subject to final NTP

• In June 2017, EEP successfully issued ~101 MUSD of local corporate bonds in two tranches

(25MUSD @ 7y & 76MUSD @ 10y). Bonds were issued in local currency and backed by a cross currency interest rate swap, resulting in a final cost of debt in dollars of 3.15% and 3.55%, respectively

• 2017 H1 EBITDA reached 213.7MUSD while Net Result totalized 109.9MUSD, growing 17% and 7%

respectively compared to H1 2016. The increase was mainly explained by an extraordinary income from Las Bambas penalty and the start of Nodo Energetico project; which was partially offset by the end of Southern Peru Copper Corporation (SPCC) PPA

• The 20-year PPA with Southern Peru Copper Corporation (SPCC) ended in April 2017. As a result,

111.5MW from old units were disconnected from the grid as they will be no longer required. Units disconnection will not have an impact on commercial margin

• Las Bambas confirmed their intention to terminate its PPA at the end of August 2017. A termination

penalty of 28 MUSD due in July

2017 H1 - INDUSTRY HIGHLIGHTS

No significant changes in market context

3

• As of June 2017, annual energy generation (SEIN) grew 4.8% compared to similar period in 2016
• Installed capacity totalized 12,120MW. Among projects entering into operation:

+ Additional OCGT (+50MW): Malacas TG6 + Mini hydro projects (+40MW): Marañon & Potrero (RER auction 2011)

• The country was under emergency due to heavy rains and land slides. Fortunately, EEP operations

were not affected and all our generation plants were operating normally

• After cancelation of the Gas to South pipe contract, Government expects to tender the project again in

Q1 2018

• Natural Gas Price declaration norm was modified to allow two declarations periods (dry & rainy seasons)

instead of a single annual period

• Transmission line 500kv “Mantaro – Montalvo” (ISA), which increases the transmission capacity

connecting the center and south of the country, is expected by Q4 2017

• Consumer access to spot market (“mercado de corto plazo”) expected to be ready in Q4 2017

4

MAIN FINANCIAL RESULTS H1 2017

* Does not include penalty fee and its effect on the deferred tax

1004 951 2016 H1 2017 H1 182 186 2016 H1 2017 H1 102 90 2016 H1 2017 H1

EBITDA Net Result Debt

EBITDA MUSD

2.8 2.6 2016 H1 2017 H1 182 214 2016 H1 2017 H1 102 110 2016 H1 2017 H1

• 7%

+18% +7%

Total EBITDA (MUSD) Recurrent EBITDA* (MUSD) Total Net Result (MUSD) Net Recurrent Result* (MUSD) Net Debt / EBITDA (12m) Total Debt (MUSD)

+2%

• 12%
• 5%

2017 H1 SNAPSHOT

5

Operations

• Higher generation of Yuncan & Quitaracsa hydro-plants due to longer rainy season and higher generation of Ilo 21

due to transmission congestion in the south of the country

• Successful operation of new projects: Chilca2 & Nodo Energetico

Commercial

• New 15 year PPA with Marcobre (84MW) to supply energy demand of Mina Justa
• In addition to Marcobre, new contracts with Volcan (85MW) & Gloria Groups (60MW) will replace Las

Bambas contract

Finance

• Successful 100MUSD bond issuance in local capital market: 25MUSD @ 7 years and 75MUSD @ 10

years, at final rates in USD of 3.15% and 3.55%, respectively

• Reduction of average cost of debt and increase of average duration

Sustainability

• Training programs improved the technical and commercial capabilities of 900 entrepreneurs and small businesses
• Earth Hour show in Lima (La hora del planeta”), proving clean energy through solar panels
• Battery collection campaign with students from Huachon and Paucartambo communities

AGENDA

6

Peruvian Electricity Market

1

Company Overview

2

2016 Financial Results

3

Capital Structure

4

PERUVIAN ELECTRICITY MARKET

7

54% 46%

Regulated Clients Free Clients

• Main regulated clients are

Enel Distribución and Luz del Sur (Distribution companies in Lima)

• Main free clients are

Mining and industrial companies

• Clients with a consumption

above 0.2MW are able to contract directly with generation companies (free clients)

• Natural Gas generation is

concentrated in Chilca district (60km from Lima)

• Diesel plants dispatch in

case of emergency and transmission congestion

• Market share as of June in

terms of energy generation (12m)

• Others include: Fenix

Power, Duke, Statkraft, Termochilca, among

• thers

Clients Generation Market share Market Installed capacity 12,120 MW Peak demand 6,596 MW Annual energy Generation 49,217 GWh

+4.8% y/y +5.7% y/y +16.% y/y

Information as of June 2017

54% 3% 44% Hydro Non Conventional Renewables Natural Gas Coal & diesel 21% 13% 17% 18% 31% ENGIE Government Enel Generación IC Power Others

SUPPLY & DEMAND

8

System is based mainly on hydro and natural gas from Camisea Field 2 seasons: wet (from November to April) and dry (from May to October) Electricity demand increased on average 7% annually between 2005 and 2016 (YTD) and is expected to have

an average annual growth of 5-6% between 2017 and 2022;

Source: COES 0% 20% 40% 60% 80% 100%

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000 2017 2018 2019 2020 2021 2022 Reserve MW

Balance Supply - Demand - Wet Season

Hydro Renewable Natural Gas (CC) Natural Gas (OC) Coal Oil and Fuel Oil Max Demand Reserve Wet Season (%) 0% 20% 40% 60% 80% 100%

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000

2017 2018 2019 2020 2021 2022

Reserve MW

Balance Supply - Demand - Dry Season

Hydro Dry Season Renewable Natural Gas (CC) Natural Gas (OC) Coal Oil and Fuel Oil Max Demand Reserve Dry Season (%)

MARGINAL COST RESULTING FROM SETTING UP DISPATCH ORDER

9

AGENDA

10

Company Overview

2

2016 Financial Results

3

Capital Structure

4

Peruvian Electricity Market

1

ENGIE ENERGIA PERU OVERVIEW

11

ENGIE, 61.8 Prima, 11.4 Integra, 6.8 Profuturo , 5.0 Others, 15.0

Shareholders %

Largest private electricity generation company in Peru 2,562 MW of installed capacity & ~8,000 GWh of annual

generation

Diversified & decentralized portfolio of generation

sources

20 years operating in the country & listed since 2005 519 employees Solid clients

Strong financials to support ambitions, AAA local rating

Sponsored by a global leader

SPONSORED BY A GLOBAL ACTOR

12

LEADING THE ENERGY REVOLUTION THROUGH 3 PILLARS

13

ENERGY REVOLUTION & MEGA TRENDS Customer Centricity

Environmental awareness Energy efficiency Digitalization New technologies

3 pillars

WITH A CLEAR TRANSFORMATION PLAN

14

2018

OUR ROLE IN THE ENERGY TRANSITION

15

• Balanced portfolio of assets under

development

• Geographic diversification and proximity to our

clients

• Non conventional renewable pipeline
• Continue with hydro mapping and studies
• Studies for natural gas options
• M&A opportunities
• Focus on improving operational efficiency
• f existing assets

Reduce exposure to commodity prices

• Optimum contracting level
• Balanced portfolio between Regulated Clients (Distribution

Companies) and Free Clients

• Power Purchase Agreements under “pass-through”

scheme

• Minimize non-manageable risks

Focus on low CO2 Develop solutions for clients

• Customer focus: partnering with our clients to

help them finding efficiency gains

• Value added proposals
• Integral solutions “one shop” approach
• Leverage from worldwide experience to

elaborate tailor made solutions

16

SUPPORTED BY A STRONG PORTFOLIO OF ASSETS

Low Co2 generation base Largest private electricity company Diversified & decentralized asset base across 4 regions

#1

Quitaracsa

Hydro 112MW

Yuncan

Hydro 136MW

Chilca Complex

Natural Gas 963MW

Ilo Complex

• Nodo – 610 MW – Dual Fuel
• Ilo 31 (Cold Reserve) 500 MW - Dual Fuel
• Ilo 21 – 135MW - Coal
• Ilo 1 – 106 MW - Diesel

220 km of transmission lines + 1 substation

Natural Gas, 963, 38% Hydro, 248, 10% Dual fuel, 1110, 43% Coal, 135, 5% Diesel, 106, 4%

2,562MW

Intipampa

Solar 40MW [under construction]

PROVEN TRACK RECORD IN DRIVING ORGANIC GROWTH

17

Total Capacity

MW

374 676 1,064 1,820 2,673 EBITDA

MUSD

80 84 163 270 330 Market Cap

MUSD

• 645

1,600 2,005 1,611

2004 2007 2010 2013 2016 … 374 MW

Hydro Natural Gas Dual Fuel Solar

Upsides

Yuncan +134MW Chilca 1 +854MW Ilo 31 +500MW Quitaracsa +112MW Nodo Ilo & Chilca Dos +723MW Intipampa +40MW [under construction]

2,572 MW AVERAGE GROWTH

18%

More than 3x capacity in 10 years Investments for 1.6 BnUSD in 2010 - 2018

FIRST STEP IN NON –CONVENTIONAL RENEWABLES Intipampa (project under construction)

18

Status

Signature of Concession Contract Pre-operational studies Archeological permits Environmental studies Land EPC signed with Solairedirect Notice to Proceed

Construction @ 73%

Financing structure inside Balance Sheet Green certificates (last approval phase)

COD expected in early 2018

Key facts

• Location the project is located in the south of Peru, Moquegua
• Description: The project will deliver 108.404 GWh/year to the system
• Economics: the project is backed by a 20 year Investment Agreement with

Ministry of Energy and Mines @48.5$/MWh until 2038 (approx. 20-21 years)

• Investment: ~55MUSD
• Construction:

EPC contractor Solaire Direct. Site mobilization started in February, 2017

In 2016, ENGIE Energía Perú was awarded as part of the 4th Renewables Auction process the construction of a 40 MW solar plant, which will benefit 90,000 households and avoid 50,000t of CO2

POTENTIAL NATURAL GAS UPSIDES

19

A. Phase 1: up to 1,110MW of installed capacity serving as emergency plants but able to generate with natural gas once available in the south of Peru

• Cold Reserve: option granted under the

existing concession contract after 2018

• Nodo Energético: once Natural Gas arrives

to the South (~2022)

• Similar operation to Chilca 1 plant before it

was converted to Combined Cycle

• No significant investments required
• Similar operation and economic impact of Chilca 1 Combined Cycle

Project

• Approximately 700MUSD additional investments to convert to

combined cycle and 48 months for development and construction

B. Phase 2: up to an additional 550MW in steam turbines with the conversion to Combined Cycle

Delays in the GSP postpone these options and potential upsides

PORTFOLIO APPROACH Highly contracted portfolio and resilience in face of unfavorable market conditions

20

Challenging market conditions

Regulated clients Free clients Contract Renewals Efficient capacity ~1,000MW * Or local equivalent

Diversification

• 68 clients, consuming ~8,500 GWh/ year
• 45% free clients / 55% regulated clients

Limited spot market risk

• 97% contracted capacity on average in the next 3

years

• Average PPA life of 7.8 years
• Most of EEP´s contracts do not include

termination clauses

Strong credit profile

• 70% of portfolio investment grade clients*

Low commodity risk

• Indexation ~60% of portfolio to Natural Gas

prices in line with generation costs

ENERGY BALANCE 2017 H1

21

Lower thermal generation partially offset by higher hydro generation in first semester due to a longer than expected rainy season

ORGANIZATION, GOVERNANCE & ETHICS

22

Acting in accordance with an internal set of values based on honesty, integrity and respect to human rights…

• Ethics Chapter that guides our relationship

with clients, suppliers, partners and Government among our main stakeholders

• Practical approach

1. Annual training plan to all employees 2. Practical Guide to Ethics 3. Control systems 4. Anonymous ethical complaints channel

• Independent Ethics Officer, appointed by

the board of directors

Shareholders assembly Board of directors CEO Audit Committee Transactions between affiliates Committee Executive Operations Regulatory Commercial Development Construction Risk & Finance Ethics

COO CFO Commercial Development Corporate Affairs Legal

Committees & Task forces Internal Auditor

• The Board of Directors includes three independent members out of a total of 7 directors

HR

AGENDA

23

Company Overview 2017 H1 Financial Results

2 3

Peruvian Electricity Market

1

Capital Structure

4

MAIN RESULTS 2017 H1

24

(MUSD) 1H17 1H16 1H17 / 1H16 2016 2015 2016 / 2015 Income 370 378

• 2%

748 714 5% Recurrent EBITDA* 186 182 2% 330 325 1% EBITDA 214 182 18% 309 321

• 4%

Net Recurrent Result* 90 102

• 12%

175 173 1% Net Result 110 102 7% 132 181

• 28%

Net Debt 872 926

• 6%

981 951 3% Net Debt / EBITDA 12m 2.6 2.8

• 8%

3.2 3.0 7% Net Generation GWh 3,518 3,743

• 6%

7,914 7,072 12% Clients Demand GWh 4,688 4,665 1% 8,976 8,783 2%

Main KPIs

• 2017 H1 EBITDA grew 18% to 214MUSD and was positively impacted by non recurrent termination fee from Las
• Bambas. Recurrent EBITDA increased by 2% to 186MUSD explained by the start of operations of Nodo Energetico

project.

• 2017 H1 Net Recurrent Result was affected by higher D&A and the increase of the income tax rate from 28% to 29.5%.
• Total debt reached 951MUSD as of June 2017 following the expected amortization schedule and a new issuance in the

local capital markets of ~101MUSD.

* Does not include penalty fee and its effect on the deferred tax

+171.2 +182.0 +7.7

• 23.0

+19.0 +28.0 +213.7

EBITDA H1 2015 EBITDA H1 2016 ∆ CMg Clients Nodo Energetico Las Bambas Penalty EBITDA H1 2017

EBITDA: H1 2017 vs. H1 2016 +31.7 MUSD

25

+ 18%

+100.0 +102.3 +31.7

• 7.4
• 5.7

+1.0

• 12.0

+109.9

Net Result H1 2015 Net Result H1 2016 EBITDA growth D&A Net Financial Expenses FX & others Tax Net Result H1 2017

NET RESULT: H1 2017 vs. H2 2016 +7.6 MUSD

26

+ 7%

• Start of operations of Nodo

Energetico and Chilca Dos projects

• Tax effect,

including the increase in the income tax rate from 28% to 29.5%

AGENDA

27

Peruvian Electricity Market Capital Structure Company Overview & Strategy

2 4

Peruvian Electricity Market

1

Company Results

3

OUR FINANCIAL PRIORITIES

36

• 1. Maintain financial flexibility and access to capital markets to optimize capital structure
• Monitoring and compliance of Financial Covenant (Debt to EBITDA < 3.5x)
• Increasing duration of debt
• Protecting local rating to maintain best conditions in the local capital market (acceding to the lowest rates for corporate names)
• Minimum dividend pay-out ratio of 30%
• 2. Optimize cost structure to maximize value
• Minimizing cost, following closely market conditions to assess products and time to market
• Maintaining short debt up to a limit of 125MUSD, in line with working capital needs
• Minimizing cost of carry
• 3. Minimize risks
• Minimizing exposure to FX risks by contracting debt in USD or PEN + swap
• Keep an adequate balance between fixed and variable interest rates taking advantage of historic low interest rates for LT debt

IMPROVING OUR DEBT REPAYMENT PROFILE

36

544 57% 289 30% 118 13%

Debt Composition by Product (MUSD)

Financial Lease Bonds Corporate Loans

• EEP started an aggressive expansion plan in 2011. Total

investments between 2011 and 2017 for the execution of 6 projects adding 1,657MW will reach 1.6 BnUSD.

• Engie Energía Peru´s gross debt totalized 951 MUSD as of

June 2017

951

67 158 152 93 82 1

• 40

30 15 25 76 10 18 50 50

• 25

76

210 188 202 158

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Financial leases Bonds Corporate loans Debt amortized in H1 2017 New Bonds 2017

Debt repayment profile (MUSD)

100 11% 851 89%

Debt Composition by Interest Rate (MUSD)

Floating Rate Fixed Rate 273 29% 678 71%

Debt Composition by Currency (MUSD)

PEN + XCSY USD

LIMITED EXPOSURE TO FX AND INTEREST RATE VARIATIONS

30

• Debt 100% in USD: ENGIE Energía Perú’s

functional currency is the US Dollar and only a limited portion of its G&A and OPEX are in local currency (PEN). Revenues are either in US Dollars or in PEN indexed to the USD.

• Interest Rate: minimize the uncertainty of the cost of

debt 951 951

STOCK PRICE PERFORMANCE

31

Source: SMV, Lima Stock Exchange, estimated Financial Statements as of June 30rd 2017

Sound financial results and value creation due to its financial, commercial and development strategy, generating 3x increase in market value since IPO

Financial Market Data – June 2017 Number of shares issued 601,307,011 Share price (PEN) – 30/06/2017 7.83 VWAP (3m) – (PEN) 8.02 52 week – high – (PEN) 10.15 52 week – low – (PEN) 7.70 Market Cap (MUSD) 1,452 Enterprise Value (EV) (MUSD) 2,324 EV / EBITDA 6.8x Price to Book Value (P/B) 1.4x Price / Earnings ratio (P/E) 10.5x Daily avg. trading volume (mm sh) 0.18

EV: Market Cap + Net Debt P/B: Market Cap / Book Value of Equity

• Market Cap changes in USD is affected by share price movements and FX changes
• In Q2 2017, the share price decreased from 8.2 to 7.83 S/./sh; (-4.5%); while the

exchange rate was relatively stable at 3.25. The Market Cap decreased (-4.4%)

• Market Cap variation in 2015 is mainly explained by fx variations and portfolio

rebalance of an institutional investor and subsequent potential reclassification of Peru from Emerging Markets (“EM”) to Frontier market due to its low liquidity.

467 663 1,020 793 839 1,602 1,187 1,759 2,005 2,075 1,427 1,611 1,452 50 100 150 200 250 500 1,000 1,500 2,000 2,500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MUSD MUSD Net Result Dividends Market Cap

EQUITY ANALYST VIEW

32 32

PEN / Share

8 9 9.5 10 7.5

Credicorp Larrain Kallpa Inteligo Consensus Target price 8.4 8.8 9.7 9.2 9.0 Recommendation Underperform Sell Maintain Buy

2017 Sep Consensus

Price as of September 25th 7.9

14% Upside

8.5

DIVIDEND PAYMENTS: 622 MUSD since 2004

33

Change in Dividend Policy since 2010: Minimum 30%

34 36 42 32 42 28 13 12 15 20 20 24 31 24 43 31 11 13 16 18 22 30 9 41 15 10

34 77 42 71 85 59 24 25 31 38 42 54 50

10 20 30 40 50 60 70 80 90 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Extraordinary 2nd Half 1rst Half Annual

Extraordinary dividend of 10MUSD to avoid a negative impact to our shareholders given the non-recurrent events in 2016. Total dividends from 2016 totalized 49.5MUSD

THANKS

34

This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Perú S.A. (“Engie Energía Perú” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “believe”, “anticipate”, “expect”, “envisage”, “will likely result”, or any other words or phrases of similar meaning. Such statements are subject to a number of significant risks, uncertainties and assumptions. We caution that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In any event, neither the Company nor any of its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages. The Company does not intend to provide eventual holders of shares with any revised forward-looking statements of analysis of the differences between any forward-looking statements and actual results. There can be no assurance that the estimates or the underlying assumptions will be realized and that actual results of

• perations or future events will not be materially different from such estimates.

This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without ENGIE Energía Perú prior written consent.

FOR MORE INFORMATION ABOUT ENGIE ENERGIA PERU

Ticker: ENGIEC1

+51 1 616 79 79 investor.relations@pe.engie.com Rocío Vásquez, Head of Corporate Finance & Investor Relations – rocio.vasquez@pe.engie.com Marcelo Soares, Chief Financial Officer – marcelo.soares@pe.engie.com

• Av. República de Panamá 3490, Lima 27, Peru

www.engie.pe