GRUPO ENERGÍA DE BOGOTA Third Quarter 2014 Results and Key Developments November 6th, 2014
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 or financial advice on any subject. This information does not constitute an offer of any sort and is subject to change without notice. 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. 2
Agenda I. EEB Overview and Key Updates – 3Q 2014 II. Expansion Projects Review III. Financial Review – 3Q 2014 IV. Questions and Answers 3
Agenda I. EEB Overview and Key Updates – 3Q 2014 EEB Overview Key Updates Third Quarter 4
EEB Overview Transportation and distribution of energy with involvement in other areas in the energy sector. 100%* 100%* Focus on natural Growth in controlled Sound regulatory Ample access to monopolies subsidiaries framework capital markets 5
Key Updates Acquisition of 31.92% of TGI On July 2 nd 2014 EEB closed the acquisition of 31.92% of Transportadora de Gas Internacional (TGI) shares by means of acquiring a special purpose vehicle Inversiones en Energia Latino America Holdings, S.L.U. (IELAH), incorporated in Spain, at the head of which, The Rohatyn Group (former CVCI) maintained its investment in TGI. Currently, TGI is working on the merger with IELAH, this merger is expected to take place the 2Q 2015, which is the Phase 3 of the acquisition plan This transaction, which is part of EEB’s USD 7.5 billion 2013-2017 investment plan will generate positive value for EEB ´ s shareholders. Upme Projects (1/2) Armenia Project (UPME 02-2009): As of June 17, 2014 the ANLA (National Association of Environmental Licensing) notified EEB S.A. ESP of Resolution 0582 dated June 5, 2014 whereby an environmental license was granted for this project. With respect to easements, 75 tower sites have been released by means of registration and legal inspection, accounting for 90% of all the tower sites of the project. With ANLA’s authorization, EEB defined that the towers are installed at the limit of the Conservation district Barbas Bremen and are located in areas already involved which today develops agricultural economic activities and not in areas of forest or preservation. The project shows 64.32% progress. Upme Projects (2/2) The Energy Mining Planning Unit (UPME) awarded to Empresa Energía de Bogotá (EEB), UPME – 06 – 2014 Rio Cordoba Substation project with an estimated investment of a NPV of revenues amounting USD 14.7 Million. The project includes the design, acquisition of equipment, construction, operation and maintenance of the 220 kV Rio Cordoba. This project is part of the Expansion Plan, UPME 2013-2027. 6
Key Updates Fitch upgraded EEB’s credit rating to ‘BBB’ on Oct 28, 2014 On August 22th, Moody’s affirmed the EEB’s corporate debt and issuer rating in ‘ Baa3 ‘, upgraded outlook from stable to positive On August 28th, Standard & Poor’s upgraded EEB’s corporate debt rating from ‘BB+’ to ‘ BBB- ’ , and affirmed issuer rating ‘ BBB- ’ with stable Outlook. On October 28th, Fitch Ratings upgraded EEB’s corporate debt and issuer rating from ‘BBB - ‘ to ‘BBB’ , stable outlook. Also affirmed EEB’s local rating at ‘AAA(col)’ , the highest possible within the national scale. EEB’s current ratings are as follows: BBB Stable Outlook Baa3 Positive Outlook BBB- Stable Outlook Calidda OSINERGMIN published the resolution that sets Cálidda ´ s tariff scheme for the next 4 years (from May 8th, 2014 to May 7th, 2018). The approved average distribution tariff was increased by 6.37% when compared to the 2010 – 2014 average distribution tariff. Besides, OSINERGMIN resolution establishes an investment plan of USD 428 MM for the period 2014 – 2017. At the end of September, Cálidda has a client base of 235,000 customers, 67% more than in Q3 2013. Nonetheless, Calidda connected its costumer number 250,000 last Mmmm DD, 2014. Contugas Contugas is in the negotiation process of an addendum with the Camisea Consortium (Gas producer) to adjust the curve of gas supply contract. The subscription have an estimated date at the end of this year. TRECSA The project shows a execution progression of 76%. At the end of this quarter the following substations coming on stream: Pacific substation 230 KV via the connection of the LT Escuintla II - San Jose 230 KV. Substation San Agustín 230 KV through the connection LT Guatemala Norte - Panaluya connection 230Kv Further substations are coming on stream, which is subject to change by the administrator of the wholesale market. 7
Agenda II. Expansion Projects Review Controlled Subsidiaries Non Controlled Subsidiaries 8
Consolidating the Strategy Controlled Subsidiaries Projects Update EEB Transmission • Armenia – 64%, • Tesalia – 77% • Chivor II Norte – 37% • SVC Tunal – 83%. • Bolívar-TermoCartagena – 2.1% • Sogamoso-Norte-Nueva Esperanza: 5% • UPME awarded projects: Rio Cordoba TGI • La Sabana Compression Station – 91% • In operation since July 2014 TRECSA • Guatemala’s interconnection System – 76% Source: Company information. 9
Consolidating the Strategy Non - Controlled Subsidiaries Projects Update EMGESA • Quimbo Project (400 MW) • Total investment: USD 1,093 mm • Execution 3Q-14: 80% • Full operation: 1H 15 CODENSA • On-going projects: Nueva Esperanza, Norte, Bacatá Substations • New and existing demand • Quality service and continuity • Control operational risk Source: Company information. 10
Agenda III. Financial Review Operational Results Non – Operational Results EBITDA Debt Metrics Share Performance 11
Consistent Financial Performance Consolidated Results - Operational COP Million Variance USD Million Variance 3Q 14 3Q 13 $ % 3Q 14 3Q 13 $ % Operating revenue 1,708,003 1,451,107 256,896 17.7% 844.7 760.4 84.3 11.1% Cost of sales (910,338) (749,282) (161,056) 21.5% (450.2) (392.6) (57.6) 14.7% Gross profit 797,665 701,825 95,840 13.7% 394.5 367.8 26.7 7.3% Operating expenses (187,016) (166,078) (20,938) 12.6% (92.5) (87.0) (5.5) 6.3% Operating profit 610,649 535,747 74,902 14.0% 302.0 280.7 21.3 7.6% Operating margin 35.8% 36.9% 35.8% 36.9% Operating Revenues (+17.7%): Growth is Operating Profit (+14%): Operational costs and expenses showed a explained mainly by an increase of revenues in moderate increase due to: Contugas and Cálidda show increases mainly in costs related to natural gas business: Calidda: new connections (Residential and maintenance activities in the gas network and the cost of internal Commercial) and higher volume distributed installations by third parties. TGI increased transported volume and new EEC shows increases in personnel costs and third parties tariff: dehydration charges operations. 12
Consistent Financial Performance Consolidated Results – Non Operational COP Million Variance USD Million Variance 3Q 14 3Q 13 $ % 3Q 14 3Q 13 $ % Operating profit 610,649 535,747 74,902 14.0% 302.0 280.7 21.3 7.6% Non-operating revenues 880,535 662,330 218,205 32.9% 434.1 345.9 88.2 25.5% Non-operating expenses 382,508 294,221 88,287 30.0% 188.6 153.7 34.9 22.7% Consolidated Adjusted EBITDA YTD 1,692,660 1,491,682 200,978 13.5% 834.4 779.1 55.4 7.1% Net income before taxes and minority interest 1,108,676 903,856 204,820 22.7% 548.3 473.6 74.7 15.8% Minority interest (36,363) (52,280) 15,917 -30.4% (18.0) (27.4) 9.4 -34.3% Provision for income tax (135,623) (67,279) (68,344) 101.6% (67.1) (35.3) (31.8) 90.1% Net income 936,690 784,297 152,393 19.4% 463.2 410.9 52.3 12.7% Consolidated Adjusted EBITDA LTM 1,976,886 1,668,543 308,343 18.5% 974.6 874.4 100.2 11.5% Non Operating revenues: Dividends (+11.6%): Increase of COP 92,464 million in terms of dividends declared to EEB, particularly those coming from Emgesa, Codensa and Gas Natural. Foreign Exchange Account (-45.8%): Net effect of the foreign exchange account, as a result of updating consolidated financial obligations denominated in USD, which is only for accounting purposes and does not correspond to cash expenditures. Moving from expenses amounting to COP 200.9 billion during the same period of the previous year to revenues amounting to COP 109.0 billion as of September 2014 Non Operating Expenses: Financial Expenses (+26.7%): Increase due to higher amount of contracted debt as a result of IELAH’s Acquisition Net Income (+19.4%): reached COP 956.7 billion, growing in COP 237.8 billion vis-à-vis the same period in 2013. * EMSA, ISA, ISAGEN, REP-CTM, Others 13
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