BofAML EM CORPORATE CREDIT CONFERENCE COMPANY PRESENTATION MAY 2018
AGENDA 1. OVERVIEW 2. VALUE PROPOSAL 3. CONCLUDING REMARKS 2
Company overview Leading position in Chile & Peru THE COMPANY Installed Capacity Ownership Market Share 1 3,884 MW 17 % / 8 % 49.96 % Matte Group 3,319 MW / 565 MW 9.58 % Angelini Group 20.77 % Pension Funds Power-Plants Transmission Lines 25 19.69 % Others ~940 km 24 / 1 KEY FINANCIALS Rating EBITDA LTM BBB Total Assets US$ 701 mm US$ 7.0 bn Fitch US$ 649 mm / US$ 52 mm BBB Cash Net Debt / EBITDA US$ 881 mm S&P 1.1 x Note: All figures as of Mar18 3 1 In terms of generation in the SEN in Chile (23% in the SIC, prior to the interconnection with the SING effective as of October 2017) and in the SEIN in Peru.
AGENDA 1. OVERVIEW 2. VALUE PROPOSAL 3. CONCLUDING REMARKS 4
Value proposal Leading position supported by competitive strengths 1 2 3 4 5 PRUDENT MAXIMIZING COST STABLE & ATTRACTIVE FINANCIAL VALUE TO ALL EFFICIENT AND PREDICTABLE PORTFOLIO OF MANAGEMENT OF OUR DIVERSIFIED CASH FLOWS GROWTH STAKEHOLDERS ASSET BASE OPTIONS 5
Value proposal Leading position supported by competitive strengths 1 2 3 4 5 PRUDENT MAXIMIZING COST STABLE & ATTRACTIVE FINANCIAL VALUE TO ALL EFFICIENT AND PREDICTABLE PORTFOLIO OF MANAGEMENT OF OUR DIVERSIFIED CASH FLOWS GROWTH STAKEHOLDERS ASSET BASE OPTIONS 6
1. Cost efficient & diversified asset base Generation assets diversified by technology & geography 3,884 MW Inst. Capacity: 1 FENIX POWER 12,772 MW 565 MW / Gas 1 Hydro: 1,634 MW SEIN 4 Reservoir: 1,065 MW 12 Run-of-the-river: 532 MW CENTRAL ZONE: Thermal: 2,250 MW 23,737 MW 210 MW / 1,128 MW SEN CENTER-SOUTHERN ZONE: 3 CCGT: 1,332 MW 1,204 MW / 454 MW SOUTHERN ZONE: 4 Diesel: 568 MW 172 MW / 103 MW 1 Coal: 350 MW 1 Includes 37 MW of La Mina power plant 7 Note: values as of Mar18
1. Cost efficient & diversified asset base Fenix Power: a state-of-the-art CCGT in Peru Most efficient CCGT in Peru KEY FIGURES SHAREHOLDERS Based on Heat Rate 51 % Colbún LTM EBITDA US$ 52 mm 36 % ADIA 40 miles south of Lima 13 % Sigma Capital of Peru and largest city of the country Cash 565 MW MARKET US$ 41 mm Gross effective capacity SHARE 1 3.5 TWh Others Internacional Peruvian 12% Net annual generation Huallaga Gov. Ratings 4% 22% Statkraft Baa3 Stable 3 TWh / year 5% Moody’s Long term contracts (~75% capacity) Fenix 8% BBB- Stable Orazul 18% S&P/Fitch Enel 15% Engie 16% Note: All figures as of Mar18 8 1 In terms of generation
1. Cost efficient & diversified asset base Secured long-term regasification capacity & LNG supply Long-term strategy: leveraging our efficient natural gas power facilities and diversifying our supply sources; contributing to a competitive, flexible, secure and sustainable power supply. MEDIUM AND SHORT TERM LONG TERM LNG SUPPLY LNG SUPPLY Regasification capacity and supply LNG supply with Metrogas and ENAP contract with ENAP Short term contracts (~3 months) available. Effective from 2018 onwards, for a period of 13 years. Medium term contracts: signed for 2 TWh of natural gas generation in 2018 and 2019 1 . Competitive LNG supply with ENAP and international providers. Capacity for up to two combined-cycle units per year. 9 1 For 2019, 1 TWh is optional.
1. Cost efficient & diversified asset base 100% of PPAs supplied with cost-efficient generation CONTRACTUAL COMMITTMENTS VS GENERATION. (TWh) TWh 47% 14 50% 0.2 45% 0.5 0.2 0.4 12 40% 0.5 3.0 0.3 3.9 3.4 3.9 10 35% 3.2 3.6 30% 8 2.6 2.4 2.6 2.6 25% 2.6 12.3 2.5 6 11.4 11.2 11.1 11.0 11.0 20% 15% 4 6.7 6.5 6.2 5.9 10% 4.9 4.8 2 5% 0 0% 2013 2014 2015 2016 2017 1Q18 LTM Hydro Coal LNG Diesel Total Committments EBITDA Mg (%) 10 Note: figures as of Mar18
1. Cost efficient & diversified asset base Relevant transmission assets Substations Transmission lines 28 ~940 km Market share 1 Annual EBITDA 2 ~5 % ~US$ 23 mm Length (km) Nacional 331 Zonal 79 Dedicada 531 Total 941 ~US$60 million in expansion projects in transmission Note: All figures as of Mar18 1 Nacional Transmission 11 2 Corresponds to Colbún Transmisión EBITDA as of Dec17
1. Cost efficient & diversified asset base Attractive markets GENERATION MATRIX. (%) 1 7% 1% 15% Hydro 29% Diversified generation profile. 1% Coal Stable regulatory framework. 19,132 12,491 Natural Gas 27% 16% US$ currency denominated markets. GWh GWh Diesel 66% Investment grade countries. Others High growth potential. 39% SEIN SEN POWER DEMAND GROWTH. (12 month average %) 2 MARGINAL COST. (US$/MWh) 3 Alto Jahuel Santa Rosa SEN SEIN 10% 120 100 8% 76 80 6% 60 3.0% 4% 40 1.4% 2% 20 5 0% 0 -2% 12 Note: All figures as of Mar18
Value proposal Leading position supported by competitive strengths 2 1 4 5 3 PRUDENT MAXIMIZING COST STABLE & ATTRACTIVE FINANCIAL VALUE TO ALL EFFICIENT AND PREDICTABLE PORTFOLIO OF MANAGEMENT OF OUR DIVERSIFIED CASH FLOWS GROWTH STAKEHOLDERS ASSET BASE OPTIONS 13
2. Stable & predictable cash flows High quality clients in Chile AVERAGE MONOMIC PRICE 1 (US$/MWh) 2 1 CUSTOMER BASE PROFILE 150 Regulated Customers Unregulated Customers +60 52%/48% ~93% ~10 YEARS 130 110 Total Regulated/ Average life Customers 90 customers unregulated of PPAs with credit 70 customers ratings 50 2014 2015 2016 2017 1Q18 LTM 3 PPAs IN CHILE: MAXIMUM CONTRACTED ENERGY COMMITMENT (TWh) Regulated Customers Unregulated Customers New Contracts with unregulated customers PPA expiring: PPA expiring: PPAs expiring: Saesa: 2.1 TWh Anglo American: CGE-2006: 0.7 TWh 15 14.1 1.2 TWh Chilectra: 0.5 TWh 14.1 12.0 12 10.8 9.0 9.0 9 6 3 0 2018 2019 2020 2021 2022 2023 Note: All figures as of Mar18 14 1 Average monomic prices are calculated by dividing the total amount of sales in US$, by physical energy sales in MWh
2. Stable & predictable cash flows Significant increase in number of clients over the past 2 years 2016 2018 3 +60 UNREGULATED UNREGULATED CUSTOMERS CUSTOMERS 15 15 REGULATED REGULATED CUSTOMERS CUSTOMERS 6 +200 SELLING SELLING POINTS POINTS 15 15 Note: All figures as of Mar18
2. Stable & predictable cash flows Long-term PPAs to ensure cash flow stability WHOLE-SALE POWER COMMERCIAL POLICY BASE OF ASSETS & PPAS LEVEL Optimal Contracting level 1 Available Contracting I. Renewable Capacity: Capacity Level Hydro, solar and wind II. Efficient thermal capacity: CCGT Coal and CCGTs Existent CCGT Cost structure properly reflected in 2 sale prices Existent Coal CPI Fuel Prices Expansion Solar & WInd Exchange rate opportunities Active risk management 3 Existent I. LNG purchases in the short and mid term Hydro + Projects II. Financial hedges 16 16
2. Stable & predictable cash flows PPAs renewal opportunities in Chile UNREGULATED CUSTOMERS REGULATED CUSTOMERS Upcoming regulated auctions: In the coming years there is a relevant amount of 13.4 TWh energy for large unregulated clients to be re- contracted. Colbun is currently participating in auctions with unregulated customers (mining and industrials). 1.6 8.0 3.8 * TWh TWh TWh Opportunities in medium-size clients due to changes in regulation. 2018 2019 2020 Year In the last months, Colbun has signed new Supply starting 2024 2025 2026 contracts with medium-size clients for a total of Duration (years) 20 20 20 ~1,700 GWh/year and average tenor ranging from 6 to 10 years. Decreasing prices in the last regulated auctions in Chile: Year 2013 2014 2015 2016 2017 Energy (TWh) 4.7 12.0 1.2 12.5 2.2 Price 126 108 79 48 33 (US$/MWh) Supply 2016/2019 2016/2019 2023 2023 2024 starting 17
Value proposal Leading position supported by competitive strengths 1 2 3 4 5 PRUDENT MAXIMIZING COST STABLE & ATTRACTIVE FINANCIAL VALUE TO ALL EFFICIENT AND PREDICTABLE PORTFOLIO OF MANAGEMENT OF OUR DIVERSIFIED CASH FLOWS GROWTH STAKEHOLDERS ASSET BASE OPTIONS 18
3. Prudent financial management Stable operational results & solid metrics EBITDA & EBITDA MG. (US$ million & %) 3 DEBT & NET DEBT. (US$ million) 1 EBITDA Chile EBITDA Fenix Mg EBITDA Debt 2,500 45% 45% 45% 45% 800 50% 2,236 Net Debt 1,894 52 54 2,000 36% 40% 1,710 1,700 1,668 1,660 600 56 1,440 1,500 30% 1,174 21% 1,061 1,043 400 1,061 1,000 649 788 639 20% 582 537 546 200 352 10% 500 0 0% 0 2013 2014 2015 2016 2017 1Q18 LTM 2013 2014 2015 2016 2017 1Q18 2 NET INCOME. (US$ million) 4 DEBT/EBITDA & NET DEBT/EBITDA. (x) 293 289 6 300 Debt/EBITDA 4.8 5 Net Debt/EBITDA 4.1 205 200 3.8 4 3.5 200 2.8 3 2.4 2.4 2.0 2.0 1.7 2 100 82 1.2 63 1.1 1 0 0 2013 2014 2015 2016 2017 1Q18 2013 2014 2015 2016 2017 1Q18 LTM 19 Note: All figures as of Mar18
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