Grupo Energa de Bogot First Half 2016 Key Results and - - PowerPoint PPT Presentation

Grupo Energía de Bogotá

First Half 2016 Key Results and Developments

August 18th 2016

2

DISCLAIMER

The information provided herein is for informational and illustrative purposes only and is not, and does not seek to be, a source of legal, investment or financial advice on any subject. This presentation does not purport to address any specific investment objectives, financial situation or particular needs of any recipient. It should not be regarded by recipients as a substitute for the exercise of their own judgment. This information does not constitute an offer of any sort and is subject to change without notice. EEB is no obligation to update or keep current the information contained herein. EEB expressly disclaims any responsibility for actions taken or not taken based on this information. EEB does not accept any responsibility for losses that might result from the execution of the proposals or recommendations presented. EEB is not responsible for any content that may originate with third parties. EEB may have provided, or might provide in the future, information that is inconsistent with the information herein presented. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. This presentation may contain statements that are forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements are based on current expectations, projections and assumptions about future events and trends that may affect EEB and are not guarantees of future performance. The shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or any U.S. State securities laws. Accordingly, the shares are being offered and sold in the United States only to qualified institutional buyers as defined under Rule 144A under the Securities Act, and outside the United States in accordance with Regulation S of the Securities Act. We converted some amounts from Colombian pesos into U.S. dollars solely for the convenience of the reader at the TRM published by the SFC as of each period. These convenience translations are not in accordance with U.S. GAAP and have not been audited. These translations should not be construed as a representation that the Colombian peso amounts were, have been or could be converted into U.S. dollars at those or any other rates.

01

EEB Overview

Contenido

02

Expansion Projects

03

Financial Performance

04

Q&A

EEB Overview

01

EEB Corporate Structure

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EEB generally controls its subsidiaries or partners with world class operators following a long track record of success.

Transmission Distribution Distribution Electricity Transport Natural Gas Services Generation 51.5% 2.5% 1.7% 51%(1) 16.2% 99.97%(2) 15.6% 25% 100%(3) 66%(3) 100% 51.5% 95.3% 100% 100% 40% 40% 100%(4)

Colombia Peru Guatemala Brazil

(1) EEB ownership through DECSA Special Purpose Vehicle. (2) EEB ownership directly and indirectly through IELAH Spain (additional 31.92%). (3) EEB effective ownership via direct and indirect stakes. (4) Through GEBBRAS Special Purpose Vehicle acquired on August 21, 2015 51% stake in four concessions for ~USD158 mm. Selling process Law 226 Companies in process of merger

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KEY UPDATES

Corporate Highligths Dividends Payment

• 05/07/2016: EEB paid dividends for its minority

shareholders, in one (1) installment, as following:

• Extraordinary Dividend: COP ~49.98 per share, related

with the release of occasional reserves approved on July 6th 2015.

• Ordinary dividend: COP ~24.43 per share, approved in

the shareholders meeting last march 31st 2016.

• 05/07/2016: EEB paid dividends for its major shareholder,

Bogotá Municipality, as following:

• 40% of the ordinary dividend: COP ~24.43 per share.
• The remaining 60% of the ordinary dividend will be paid

up to October 28th 2016

• 05/07/2017: EEB will start the payment of the extraordinary

dividend, COP ~49.98 per share, for its major shareholder in 10 annual installments until 2026, with the respective interest recognition.

ISAGEN Divestiture

• Bogota’s municipality council authorized EEB on March

31st 2016 to divest ISAGEN shares.

• On April 20th, the first phase addressed to the solidarity

sector (Law 226/95) started and it was open until June 20th 2016

• On July 21th, the second phase addressed to the

general public and it was open until July 28th 2016. After that date, the share was offer to any Open Tender Offer

• OPA (Oferta Publica de Acciones).
• On July 29th EEB accepted the BRE Colombia

Investment and BRE Colombia Hydro Investment Limited L.P. tender offer. The Acceptance consists of sixty-eight million seven hundred sixteen thousand (68.716.000) ordinary shares owned by EEB in Isagen S.A. E.S.P.

• On September 2016, EEB expects the final acceptance

by the purchaser (OPA) and to receive COP ~284,000 Mm for this sale.

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KEY UPDATES

Corporate Highligths Ecopetrol selling process

• Ecopetrol S.A. made public the announcement to Offer the

second phase of the Program to sell and award the shares it

• wns. This stake sale is ruled by Law 226 of 1995.
• Ecopetrol’s final share value was COP 1,815 which was

according to Law final value after applying CPI indexation to initial price of phase one (COP1,740/share).

• 3.03% of Ecopetrol’s stake in EEB was offered to

international investors and no orders were placed.

• On May 23rd, Ecopetrol announced the second offering of its

EEB’s participation of 3.03%. On June 1st 2016 the auction was open in the Colombian Securities Exchange.

• In this second auction, Ecopetrol sold 191,639,698 shares ,

77% was acquired by the pension funds and the remaining 23 % was allocated to retail investors.

• At this date, Ecopetrol has an outstanding shares of

86,585,888, 0.94% of EEB’s total shares.

TRECSA Financing

• June 15th, the Ministry of Finance by resolution No. 1733,

authorized EEB to guarantee payment obligations of its subsidiary Transportadora de Energía de Centroamérica S.A. – TRECSA, for up to EIGHTY SEVEN MILLION DOLLARS (US$87,000,000).

• (TRECSA ) signed a credit agreement, due on June 29th

2028, with Citibank Europe PLC UK Branch and Canadian export agency EDC (Exporting Development Canada), to finance the project PET 1-2009.

• The disbursement was made on August 8th.

EEBIS Financing

• June 23rd, the Ministry of Finance by resolution No. 1902,

authorized EEB to guarantee payment obligations of its subsidiary EEB Ingeniería y Servicios S.A. – EEBIS, for up to FORTY EIGHT MILLION DOLLARS (US$48,000,000).

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KEY UPDATES

Natural gas transportation & distribution activities

• Cálidda´s client base has increased 32% compared to first

half of 2015, at the closing of the first half 2016 Calidda has a client base of ~ 396,000 clients

• During the first half, 804 km of network were built, whereby

the distribution system has reached a total of 6,793 km of underground pipelines.

• The EBITDA finalize in USD 113.2 Mm, increasing in 13%

compared with the same period of 2015. This increase was mainly due to higher distribution services, mainly from Take-

• r-Pay contracts, and residential clients’ connection services

and lower operational expenses in USD from services and contracts in Soles. IELAH Merging:

• On May 11th 2016 TGI finalized the merger with IELAH;

which was the Final Phase of the acquisition plan. As a result the remaining debt of that entity will be in TGI´s BS

• Current outstanding debt of IELAH is USD 219 MM(1),

after three partial repayments done: i) March 2015 (USD 76 MM) ; ii) September 2015 (USD 175 MM); iii) On March 11th 2016 (USD 175 MM). Moody’s Rating Action

• On June 2nd, Moody’s ratings affirmed TGI’s corporate debt

and issuer rating in “Baa3” stable outlook.

(1) Excluding intercompanies loans

TGI Cálidda

Expansion Projects

02

EXPANSION PROJECTS REVIEW

Revenue growth has been sustained by a strong capex plan at the subsidiary and the associate level.

Source: Company filings. (1) Excludes Brazil – GEBBRAS Capex (2) Expected annual revenues.

Executed Capex by Segment(1)

(USD Mm)

Projects Update (2Q 2016)

UPME Project Status EAR(2) USD MM On Stream Chivor II 53,80% 5.5 08/07/2017 Cartagena Bolívar 44,20% 11.6 07/03/2017 Río Córdoba 43,20% 1.8 30/11/2016 Armenia 95,04% 1.3 26/11/2015 Tesalia 81,30% 11.0 14/02/2016 Sogamoso Norte 35,80% 21.1 30/09/2017 Refuerzo Suroccidental 500 kV 14,60% 24.4 30/09/2018 Ecopetrol San Fernando 38,40% 6.3 30/04/2017 Río Cordoba Transformadores 46,10% 0.6 30/11/2016 La Loma 500 Kv 48,03% 1.3 30/11/2016 La Loma 100 Kv 4,30% 6.9 30/06/2018 Drummond Rio Cordoba 20.62% 0.87 30/11/2016

Subsidiaries

Capex by Company (2Q 16) USD 74.6 Mm

15.5 9.9 47.5 23.4 15.7 5.0 22.6 31.2 Gas Transportation Electricity Distribution Gas Distribution Electricity Transmission 2Q 2016 2Q 2015

EEC 6.7% TGI 21.1% Contugas 0.8% Cálidda 29.5% Trecsa 14.2% EEBIS GTM/PE 10.2% EEB Trans. 17.5%

Expansion Projects Review

11

Revenue growth has been sustained by a strong capex plan at the subsidiary and the associate level.

Associates

Executed Capex by Segment

(USD Mm)

Projects Update (2Q 2016)

 On-going projects: Nueva Esperanza, Norte.  New and existing demand  Quality service and continuity  Control operational risk  On-going projects:  CONCESION - MANTARO – MARCONA  LA PLANICIE –INDUSTRIALES  FRIASPATA MOLLEPATA and ORCOTUNA Substation

Capex by Company (2Q 16) USD 219.7 Mm

1.2 10.7 43.0 18.3 205.0 1.2 34.7 96.0 65.6 22.1

Gas Distribution Gas Transportation Electricity Distribution Electricity Transmission Electricity Generation 2Q2016 2Q2015 Promigas 15.8% Gas Natural 0.5%

REP 2.9% Codensa 43.7% Emgesa 10.1% CTM 27.0%

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FINANCIAL PLAN

2013-2020 Investments and Funding Sources

Source: Company filings. (1) Mainly concentrated on electricity transmission businesses (COL / Overseas). (2) 2014 Incliudes M&A transaction IELAH Equity Portion (3) 2015 Includes M&A transaction Brazil Equity portion

2013 – 2020 Funding Investments

USD mm % Executed Capex 2013-2015 $1,330 49% Cash Generation After Dividends 2016-2020

$1,324

Incremental Debt 2016-20

$225

Subtotal 2016-2020(1) $1,549 51% TOTAL 2013-2019 $2,880

EEB Capex Profile – Controlled Companies

(USD mm)

64 80 69 221 398 98 84 74 94 107 178 35 36 29 68 88 60

17 16

202 143 101 47 81 34 30 29 264 55 $386 $597(2) $347(3) $443 $745 $192 $83 $86 2013 2014 2015 2016E 2017E 2018E 2019E 2020E Electricity Colombia Electricity Overseas Natural Gas Colombia Natural Gas Overseas M&A Natural Gas M&A Electricity

Financial Performance

03

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CONSISTENT FINANCIAL PERFORMANCE

Consolidated Results (IFRS) 2Q2015– 2Q2016

Revenues:

On YTD Basis: June 2016 compare to June 2015 showed positive increase

• f 13.7%
• (+45.2%; COP 42,277 mm) Electricity Transmission: coming on stream of

new projects

• (+28%; COP 154,124 mm) Natural Gas transportation.
• (+19.6%; COP 32,412 mm) Electricity Distribution
• (-1.6%; -COP 12,143 mm) Natural Gas distribution: 1% decrease in Cálidda’s

revenues due to tariff and FX conversion effects. Gross Profit from Operating Activities: On a YTD Basis (+61%).

by:

• (103%;COP 21,454 mm) ) Electricity distribution. Increase on energy sales

through EEC.

• (+54%;COP 24,354 mm) Electricity Transmission: new projects under

execution and some already on stream.

• (+140%; COP 143,633 mm) Natural gas distribution, new connected clients.
• (+37% COP 134,581 mm) Natural gas Transportation: Increase on transported

volume.

Operational costs and expenses on YTD showed an decrease -10%

(1) Excludes administrative expenses & net of other expenses and gains

1,581,969 1,798,639

45.2% 19.6% 28%

• 1.6%

13.7% 135,868 197,822 704,629 760,320

2Q 15 Electricity Transmission Electricity Distribution Natural Gas Transportation Natural Gas Distribution 2Q 16

EEB's Operating Revenues By Segment 2Q 16 - 2Q 15 COP Millions - Growth Rate

533,357 857,379

103% 54% 140% 37% 61% 42,271 69,141 246,379 499,588

2Q 15 Electricity Distribution Electricity Transmission Natural Gas Distribution Natural Gas Transportation 2Q 16

Gross EEB's Operating Profit By Segment (1)2Q 16 - 2Q 15 COP Millions - Growth Rate

2Q 15 2Q 16 COP % Net Profit from operating activities 462,762 662,099 199,337 43% Financial Income 66,722 62,627 7,328

• 6%

Financial Expenses

• 191,188
• 247,555
• 21,564

29% Exchange gain (loss)

• 82,786

143,235 226,021 273% Share of profit (loss) of associates for using equity method 409,654 500,655 91,001 22% Tax income (expense)

• 145,878
• 151,227
• 5,349

4% Net Profit (loss) 519,286 969,834 450,548 87% Owners of parent 492,511 924,534 432,023 88% Non-controlling interests 26,775 45,300 18,525 69% COP Million Var.

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CONSISTENT FINANCIAL PERFORMANCE

Consolidated Results (IFRS) 2Q2015– 2Q2016

(1) Includes administrative expenses & net of other expenses, other gains

• Finance income decreased 6% due to (a)

Valuation on hedging operations (b) less Interest returns on financial investments.

• Finance costs increased 29% due to:(a) Greater

Interest payments; (b) Exchange difference in interest payments, commisions and other banking costs.

• Net Exchange difference increase over 1H 15 in

273%

• Increase in equity method of Associates by 22%
• Net profit, grew by 87% due to operational

results and equity method contribution from associates.

(1) 462,762 66,722

• 191,188
• 82,786

409,654

• 145,878

519,286 492,511 662,099 62,627

• 247,555

143,235 500,655

• 151,227

969,834 924,534 43% 29% 20%

• 273%

22%

+24%

87% 88%

Profit from

• perating activities

Financial Income Financial Expenses Exchange gain (loss) Share of profit (loss)

• f associates for

using equity method Tax income (expense) Profit (loss) Owners of parent

2Q 15 2Q 16

(1)

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Operational EBITDA has increased from 19% to 74% of Consolidated Adjusted EBITDA over the last 10 years demonstrating increased strength of EEB’s controlled assets.

(COP mm)

Source: Company filings. Note: Figures for the years 2006–2013 are presented under ColGaap standards. For 2014, 2015 & 2016 are presented under IFRS (1) Normalized for timing differences in dividends declared and paid. 2010 excludes dividends declared based on an early close of Gas Natural, Emgesa and Codensa’s financial statements. These figures are included in 2011, when such dividends would normally have been declared. Anticipated dividends declared by Codensa on first half 2011, were included in 2012. 2014 excludes dividends declared based on an early close of Gas Natural, Emgesa and Codensa’s financial

• statements. These figures are included in 2015, when such dividends would normally have been declared.

Normalized Consolidated Adjusted EBITDA(1) Consolidated Adjusted EBITDA 2Q 16 LTM by Subsidiary

(USD mm)

Consolidated Adjusted EBITDA 2Q 16 LTM by Segment

EEB has significantly increased its operational EBITDA generation

EEB Transmisión, Trecsa & EEBIS Guate 6% TGI 49% Decsa/EEC 4% Cálidda, Contugás & EEBIS Perú 16% Emgesa 10% Codensa 6% Gas Natural 2% Promigás 1% ISA, REP & CTM 2% Otros 1% Electricity Generation 14.2% Electricity Transmission 7.5% Electricity Distribution 10.2% Gas Transportation 49.7% Gas Distribution 17.8% Others 0.4% 76% 64% 56% 52% 55% 56% 39% 45% 44% 33% 19% 24% 36% 44% 48% 45% 44% 61% 55% 56% 67% 81% 2,543,833 2,413,812 1,964,666 1,775,908 1,447,335 1,369,533 1,122,343 1,053,942 934,163 949,599 539,319 906 878 973 922 819 705 586 516 416 471 241

2Q 2016 LTM 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

EVOLUTION OF EBITDA

$1,543 $1,737 $1,733 $2,218 $3,009 $2,803 $2,646

3.4% 6.4% 2.9% 2.2% 0.7% 1.2% 3.11%

96.6% 93.6% 97.1% 97.8% 99.3% 98.0% 96.9%

2010 2011 2012 2013 2014 2015 2Q 16

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DESCRIPTION OF INDEBTEDNESS

2013-2020 Investments and Funding Sources

Net Debt / Consolidated Adjusted EBITDA(1)(2) Consolidated Adjusted EBITDA / Net Interest(1)(2) Consolidated Debt Composition Debt Maturity Profile(3)

(USD mm) (USD mm)

Source: Company filings. (1) Covenant associated to this indicator is currently suspended since the bond EEB 2021 has investment grade, granted by two out of three risk rating agencies monitoring the latter. Covenant established in Offering Memorandum of USD749,000,000 EEB 6.125% Senior Notes due 2021. It includes anticipated dividends. (2) Increase is mainly explained by increase of foreign exchange (USD/COP movements). (3) 2019:Syndicated loan acquired by Contugas (USD342 mm) and additional indebtedness incurred by SPV in order to reacquire 31.92% shares of TGI IELAH (USD219 mm outstanding debt) Debt maturity profile as of 2Q 2016.

COP| PEN USD

2.63x 2.78x 3.20x 3.27x 2.41x 4.50x 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 7.55x 8.80x 7.30x 11.12x 15.83x 2.25x 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15

155.8 149.0 52.6 606.0 14.5 749.5 750.0 320.0

2016 2017 2018 2019 2020 2021 2022 2023

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TRACK RECORD OF CREATING VALUE – SHARE PRICE APPRECIATION

EEB’s shares have outperformed the Colcap over the last year providing stable returns in a volatile market environment.

Historical Share Price Evolution

• Ticker EEB: CB | Part of COLCAP, COLEQTY and COLIR and DJSI
• As of June 30th 2016 EEB’s marketcap was USD 5.6 Billion
• Average Target Price COP1,865 (USD 0.59) (1)

Source: Bloomnerg since July 1st 2015 until June 30t 2016. (1) Average target price calculated as the average of the following brokers: Credicorp: COP1,810; BTG: COP1,820; Gobal Securities Colombia: COP1,900; Asesores en Valores: COP1,740; Corredores Asociados: COP1,940; Ultrabursatiles: COP1,850 & Valores Bancolombia: COP1,810. Larrainvial: COP 2,050.

• Dividend Payout Ratio 2015: 26% Avg 2008 - 2015: 77%
• Dividend Yield 2015: 4.3 % Avg 2010 - 2015: 4.2%
• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 20 40 60 80 100 120 140 07/2015 08/2015 09/2015 10/2015 11/2015 12/2015 01/2016 02/2016 03/2016 04/2016 05/2016 06/2016 Volume (COP mm) Price (Indexed 100) Volume EEB Equity Colcap

(14.4%) (-0.3%) Colombia Colcap

Q&A

04

Electricity Transmission

 Ongoing discussions on a new methodological

proposal to remunerate the electricity transmission activity (Res CREG 023 de 2016). The main issue currently under discussion is the transition to a new scheme to remunerate assets from the methodology Net Replacement Value (NRV) to a methodology of Depreciated Assets (DORC).

 The cross-sectional methodology was issued (for

all regulated activates undertaken by CREG) to calculate WACC rate. To date, WACC has not been calculated for the transmission activity.

Natural Gas Transportation

 Issuance of new cross-sectional methodology (for all

GREG regulated activities) for the calculation to WACC

• rate. To date WACC has not been calculated for gas

transport

 Procedure undertaken at CREG to assess 10 gas

pipelines that completed the Useful Life Standars (20 years). investment acknowledged in this pipelines, if are maintained working, increased 13.4% with respect to the value acknowledged in the last tariff review (Res CREG 121 of 2012), from US$ 56,5 to US$ 64,1 million.

Electricity Transmission- Guatemala

 Trecsa began a process at Ministry of Energy and

Mines aimed at being acknowledged US$331,076.24 per year, on account of force majeure of Acts of God during the performance of the project; this petition was accepted by the Ministry as per Resolution 599 of 23 February 2015.

 To date, it awaits that the National Commission for

Electric Power (CNEE - for its Spanish acronym) issues the final resolution to include those additional resources to TRECSA.

Natural gas Distribution

 Issuance of new cross sectional methodology (for

all activities regulated by CREG) to calculate WACC rate. The actual WACC rate before taxes was established annually for 2015-2019 as follows:

 Res.096/15

2015 2016 2017 2018 2019+ 13,28% 13,51% 13,97% 14,23% 12,47%

BUSINESS REGULATORY UPDATE

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EEB CORPORATE GOVERNANCE

Experienced Management and Board of Directors Corporate Governance and Transparency

 The government of the District of Bogotá is responsible for appointing a majority of the members of EEB’s board of directors and executive officers, including EEB’s president

 Shareholder’s Meeting approved new bylaws according to the OCDE.  High quality practices and standards in accordance with national listing requirements given that EEB is listed on the Colombian securities exchange.  The Board of Directors has created operations, management and control committees to aid in efficiently carrying out the activities of the Company Note: (1) The Board of Directors is responsible for establishing general business policies and guidelines, as well as long-term strategy. All directors are elected for an unlimited duration. Directors must remain in office until their successors are elected and have taken office (2) independent member. .

Executives Position Year of a appointment Astrid Álvarez President 2016 Leonardo Garnica Investments VP 2016 Ernesto Moreno Transmission VP 1997 Felipe Castilla Financial VP 2013 Lina Toro Human Resources & Services VP 2016 Diana Vivas Legal & Regulation VP 2016 Juan Daniel Avila Sustainable Development Director 2016 Mauro Hernan Mejia Strategic Supply Chain Director 2016 Sandra Aguillón Internal Audit Director 2011 Maria José Quiceno Communications Director 2016 Board of Director(1) Possition Actual Position Year Beatriz E. Arbeláez Martínez President District’s Finance Secretary 2016 Jaime E. Ruiz Llano Vice-president Colvivienda CEO 2016 Alberto Gutiérrez Bernal Director Titularizadora Colombiana CEO 2016 Gisele Manrique Director Major’s Office Chief Counsel 2016 Margarita Ma. Rehbein Dávila Director CFO Sanford Management 2016 Carlos A. Sandoval Reyes Director Structured Finance VP FDN 2016 Antonio J. Núñez Trujillo Director(2) Partner Nuñez Rincon Lawyers 2016 Rafael Herz Stenberg Director(2)

• Asoc. Colom. del Petróleo VP

2016 Gustavo Ramirez Director(2) Investment VP Corficolombiana 2012

Shareholders’ Meeting

Peak governance body

Compensation Committee and Financial insvestments Committee

Made up by three independent board members

External Controls

Tax Review, External Audit, specialized audits, City Controllers Office, SSPD and SFC

Strategic Supply Chain Committee and Executive Contract Committee

Analysis of contracting procedures and recommendations to the Executive Committee

Audit and risk Committee

Made up by three independent board members

Corporate Governance Committee

Three board members. At least one of them must be independent

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INVESTOR RELATIONS

For more information about Grupo Energía de Bogotá (GEB) contact our Investor Relations team:

Felipe Castilla Canales Rafael Andrés Salamanca

Investor Relations Advisor GEB +57 (1) 326 8000 Ext 1675 CFO rsalamanca@eeb.com.co

www.eeb.com.co www.grupoenergiabogota.com/en/investors

ir@eeb.com.co +57 (1) 326 8000 Ext 1501

Fabián Sánchez Aldana

Investor Relations Advisor GEB +57 (1) 326 8000 Ext 1827 fsanchez@eeb.com.co

Para uso restringido del Grupo de Energía de Bogotá. Todos los derechos reservados. Ninguna parte de esta presentación puede ser reproducida o utilizada en ninguna forma o por ningún medio sin permiso explícito de el Grupo de Energía de Bogotá.