C OMPANY P RESENTATION 4Q 2012 Agenda Company Overview Business - PowerPoint PPT Presentation

C OMPANY P RESENTATION 4Q 2012

Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 2

Company Overview Recent developments H YDRO CONDITION  2012 3rd consecutive extremely dry year S ANTA MARIA I COAL PROJECT  1,853 GWh generated during 2012 (out of the estimated 2,500 GWh/year)  Dec. 12’: Insurance settlement for USD 65 million (USD 40 million for ALOP) C OMMERCIAL BALANCE GWh Generation vs. commitments 12.000  Relevant input of coal (efficient thermal complement to hydro) 2.240 10.000  Net seller in the spot market, despite reduced hydro 1.901 2.242 2.563 8.000 2.418 1.273 1.853 6.000 N ATURAL GAS 95 10.687 9.834 8.829 4.000  Medium-term natural gas supply secured 5.566 5.462 5.233 2.000  2 CCGT with gas for Jan-Apr 2013 0 2010 2011 2012 A NGOSTURA PROJECT Contractual Sales Hydro Coal Natural gas (LNG) Diesel  Over 80% of progress, scheduled for end of 2013. C REDIT RATING  Fitch Ratings (12.17.2012): BBB rating reaffirmed  S&P (12.28.2012): BBB- rating reaffirmed, maintaining negative outlook 3

Company Overview Colbún at a glance Market Share (as a % of Installed Capacity) - SIC Business Power Generation & Trade 2 nd largest generator in Chile’s Central Grid Size Others (SIC), with over 20% market share (MW). Colbún 20% 21% The SIC covers 90% of the population AES Capacity 2,962 MW Gener Endesa 18% 43% hydro and 57% thermal 41% Generation 11,568 GWh in 2012 Source: CNE – December 2011 45% hydro and 55% thermal Generation (GWh) and Installed Capacity (MW) Assets 15 hydro plants in 4 different basins Generation 7 thermal plants in 4 different regions Capacity Hydro People 962 employees as of December’12 45% 43 57 Thermal % % 55% Results EBITDA of USD 283.9 million in 2012 Revenues of USD 1.4 billion in 2012 Source: Colbún 2012 Generation and Capacity 4

Company Overview A diversified asset base 7 T HERMAL P OWER P LANTS N EHUENCO C OMPLEX : 874 MW A CONCAGUA B ASIN : 213 MW 15 H YDRO P OWER P LANTS DIESEL/GAS Blanco Chacabuquito Nehuenco I Capacity: 60 MW Capacity: 29 MW Capacity: 368 MW Juncal Los Quilos Nehuenco II Capacity: 39 MW Capacity: 29 MW Capacity: 398 MW Juncalito Hornitos Nehuenco III Capacity: 55 MW Capacity: 1 MW Capacity: 108 MW C ANDELARIA POWER PLANT : 270 MW C ARENA POWER PLANT : 9 MW DIESEL/GAS Carena Candelaria Capacity: 9 MW Capacity Unit I : 133 MW Capacity Unit II : 137 MW M AULE B ASIN : 630 MW S ANTA M ARIA I POWER PLANT : 342 MW COAL Machicura Colbún Santa María I Capacity: 474 MW Capacity: 95 MW Capacity: 342 MW San Ignacio Chiburgo Capacity: 19 MW Capacity: 37 MW L OS P INOS POWER PLANT : 100 MW DIESEL San Clemente Los Pinos Capacity: 5 MW Capacity: 100 MW L AJA B ASIN : 249 MW A NTILHUE POWER PLANT : 103 MW DIESEL Rucúe Quilleco Antilhue Capacity: 71 MW Capacity: 178 MW Capacity Unit I : 51 MW Capacity Unit II : 52 MW C HAPO L AKE : 172 MW T RANSMISSION L INES Canutillar 47 KM Capacity: 172 MW Trunk Transmission System 68 KM Run of the River Combined Cycle Sub Transmission System Open Cycle Reservoir 737 KM 5 Additional Transmission System Coal-fired

Company Overview A diversified customer base R EGULATED C USTOMERS U N- R EGULATED C USTOMERS CODELCO CHILECTRA Salvador (2011- 2021/23/25) CONAFE CODELCO (Until 2020) Ventanas CGE-Río Maipo ANGLOAMERICAN (2010- 2021) Los Bronces Santiago CGE-Distribución CODELCO (2010- 2024) Andina METRO SAESA AGUAS ANDINAS (2010- 2019) La Farfana CMPC Puente Alto CODELCO Teniente CMPC Procart 6

Company Overview Colbún has grown steadily over the past decade Capacity (MW) Total Operating Revenues (MMUSD) 2,962 US$ 1,409 3.500 1.600 MW million 1.400 3.000 1.200 2.500 1.000 2.000 800 1.500 600 US$ 129 1.000 400 1,070 CAGR: 8% million CAGR: 20% 500 MW 200 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Market Cap (MMUSD) 3-year Moving Average EBITDA (MMUSD) US$ 4,830 6.000 350 US$ 273 million 300 million 5.000 250 4.000 200 3.000 150 2.000 US$ 54 100 US$ 435 million CAGR: 20% CAGR: 13% million 1.000 50 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 7

Company Overview Solid and reliable controlling group with a strategic and long term vision C ONTROL Ownership Structure Controlled by the Matte Group (49%), one of the leading economic groups in Chile, with Angelini stakes in various sectors (forestry, financial, Group telecommunications, among others). 10% Pension L ARGE S TAKEHOLDER Matte Funds The second important stakeholder, the Angelini 19% Group Group, is also a leading Chilean economic group 49% and owns 9.6% of Colbún. Others 22% F LOAT 41% free float, with relevant local institutional investor presence. G OVERNANCE Source: Colbún, December 2012 4 out of 9 are independent directors. A CCOUNTING S TANDARDS Disclosure under IFRS standards Functional currency: US dollar 8

Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 9

Business Strategy Corporate Strategy Who are we? We are a Chilean company, leader in the generation of reliable, competitive and sustainable energy What do we do? We seek to generate long-term value by developing projects and managing power infrastructure to meet the country’s energy demand. 10

Business Strategy Strategic Pillars  Identify and develop project options to consolidate our market share. 3. Growth  Commercial strategy that generates long-term returns consistent with our asset base.  Narrow our exposure to exogenous variables: diversified asset base 2. Diversification (technology, fuel and location) and clients. and Risk Management  Active risk management policy.  Consolidate our people, our operations, our projects, our financials… 1. Consolidation Long-term value generation (Profitability/EBITDA) 11

Business Strategy Value Chain Operational Risk / Return Project Development Excellence Profile Multidimensional High Risk / return profile challenge: standards: combining: Technical Reliability Commercial policy + + + Environmental / Social Security Financial strength + + + Financial Environmental Risk management Sustainability Value & Trust 12

Business Strategy Colbún: a sustainable partner E MPLOYEES I NVESTORS E NVIRONMENT C OMMUNITY AND C LIENTS AND S UPPLIERS S OCIETY C ONTRACTORS 13

Business Strategy Commercial policy C OMMERCIAL G OALS Supply secure and competitive energy to our customers Maximize returns from our current and future assets Manage volatility given large renewable component 1. CONTRACT LEVEL 2. SALE PRICE INDEXATION 3. HEDGE PROGRAM Define optimal Incorporate indexation Structure tailor-made Contract Level formulas of sale prices hedge programs Hydro capacity that reflect to protect from more (Output of a medium-dry year) our cost structure adverse + Hydro CPI 1) Hydrologic conditions Efficient thermal Efficient thermal Fossil Fuels 2) Fuel prices capacity Transitional periods Flexible Price (Output of coal-fueled plant) 14

Business Strategy Evolution of Colbún’s Business Model Contractual MMUSD GWh Commitments 12.000 500 446 450 “Base” 10.000 Generation 400 337 331 350 8.000 284 300 236 6.000 250 211 205 200 170 156 4.000 128 150 109 100 2.000 (58%) (60%) (60%) (48%) (45%) (59%) (1%) (18%) (29%) (32%) (15%) (20%) 50 EBITDA 19 (EBITDA Margin) 144% 125% 112% 97% 90% 92% 53% 70% 70% 87% 67% 74% 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Ratio: Base Generation / Base Generation 1 / Commitments 2 ≥ 90% B.G. / C ≤ 70% B.G. / C ≥ 85% Commitments 1: Commitments represent Colbún’s committed sales (through contracts) excluding commitments which price is indexed to the spot price 2: Base Generation represents Colbún’s electricity production @ low variable cost (hydro generation + gas generation during Phase I and coal generation in Phase III) 15

Business Strategy Our expansion plan Thermoelectric capacity 3,428 Hydroelectric capacity San Pedro MW Angostura 150 MW 2,962 316 MW MW 51% 43% Other Growth Opportunities Santa María II (350 MW) Environmental approval for the construction of a second unit Hydraulic Various water rights in different basins 57% Geothermal 49% Two concessions awarded for exploration, others under process Wind Two wind measurement towers located in Maule Region 16

Business Strategy Our projects under development A NGOSTURA HYDRO POWER PLANT : 316 MW Santa Barbara and Quilaco, Biobío Region I NVESTMENT POWER PLANT: 675 MMUSD I NVESTMENT TX LINE: 45 MMUSD S PENT AS OF DEC. 2012: 532 MMUSD A DVANCE DEC. 2012: 84% E STIMATE START OF O PERATION: 4Q2013 A NGOSTURA S AN P EDRO S AN P EDRO HYDRO POWER PLANT : 150 MW Riñihue Lake, Los Ríos Region I NVESTMENT: Under revision S PENT AS OF SEP 2012: 112 MMUSD E STIMATE START OF O PERATION: Under revision 17

Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 18