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Investor Report
2Q 12
1
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Bogota, Colombia, August 2012
Index
Executive summary and relevant facts.
Performance of controlled investments.
- EEB - Transmission
- DECSA - EEC
- TGI
- CÁLIDDA Performance of Non - Controlled investments.
- Emgesa.
- Codensa.
- Promigas
- Gas Natural.
- REP and CTM. EEB consolidated financial performance.
Annex 1: Legal notice, clarifications.
Annex 2: Link to EEB´s consolidated and stand-alone financial statements.
Annex 3: Overview of EEB
Annex 4: Definitions of EBITDA included in this report. Consolidated Adjusted EBITDA reconciliation LTM and Quarterly
Annex 5: Tables and graphics’ footnotes.
Annex 6: Technical and regulatory terms
Investor Report
2Q 12
2
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Executive summary and relevant facts
Table # 1 – Overview of the electricity sectors Colombia Perú Guatemala Installed capacity – MW
14,463 9,196 2,182
Demand – GWh 14,599 10,125 4,258 Demand growth 1Q12/1Q11- %
4.84 6.60 2.67
Growth drivers Increase in mining activity due to the particularly Cerromatoso
Economic growth with outstanding increase in mining activity
Growth in industrial and demographic demand
Sources: XM, UPME, COES – Perú, AMM -- Guatemala
Table # 2 – Overview of the natural gas sectors as of 1H 12 Colombia Perú Proven and probable reserves – TPC
6.6 21.5
Domestic demand - mm cfd 970.3 1,152.6 Change In domestic demand as of 1H 12/ 1H 11- %
1.6 15.8
Explanation for demand variation
Decrease in thermal demand due to dissipation of El Niño.
Growth in residential (+38,33%), commercial (+34,86%), gas vehicles (+31,97%) and exports (+16,46%) demand.
Sources: UPME, CON, MEM, Osinergim
Table # 3 –EEB`s consolidated financial indicators COP million As of 1H 12 As of 1H 11 F 11 Operating revenue 747,311 665,599 1,421,664 Operating income 268,498 253,467 550,659 Consolidated Adjusted EBITDA Qtrly 215,693 166,042 353,008 Consolidated Adjusted EBITDA LTM 1,478,074 1,232,148 1,082,047 Consolidated EBITDA LTM 1,478,074 1,232,148 1,082,047 Dividends and reserves declared TO EEB 523,278 179,185 347,227 Net income 605,428 281,269 305,294 Dividends and reserves declared by EEB 319,964 - - Last international credit ratings
EEB’s net income increased by 115% in the first half of 2012 as compared to the first half of 2011, an increase of COP
324,000 million. This increase is principally the result of the improved operating results of controlled subsidiaries and
increased dividends received from non-controlled affiliates. During the first six months, operating income increased 6%
and non-operating income increased 252%.
On June 26, 2012, EEB paid a dividend of COP 34.85 per share, as approved by the Shareholders’ Meeting on March 14,
2012.
EEB`s Board of Directors authorized presenting bids for the construction and operation of electricity transmission lines in
Chile. In accordance with the timetable established by the Chilean government, the deadline for submitting bids is the
end of August, and the results will be announced in October 2012. The estimated total value of the projects being bid is
approximately USD 489 million.
On April 20, 2012, TGI closed a debt management operation by refinancing its principal debt obligation (the USD 750
million bond issued in 2007), which improved the debt maturity profile and reduce financial costs. Together with a similar
transaction carried out by EEB in November 2011, these transactions reduced annual financial costs by approximately
USD 44 million.
On July 16, 2012, Board of Directors authorized presenting bids to ECOPETROL for the construction of a substation of
230 kv and its necessary transmission lines for the connection with the National Transmission System.
Investor Report
2Q 12
3
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Enel of Italy is concentrating its various ownership stakes in companies in Latin America in Enersis Chile in order to
rationalize its portfolio of investments in the region. These operations are not expected to affect the shareholder
agreements that currently govern the relations of the partners in Emgesa and Codensa in Colombia, companies in which
EEB is a shareholder.
In May 2012, Fitch Ratings ratified the BBB- rating on Emgesa’s global bonds and changed the outlook from stable to
positive. Fitch also ratified the company’s AAA long-term local currency rating.
Emgesa is studying the potential for selling power to Panama. The operation depends on the results of two bids: one is
for building a 300MW transmission line and the second is the contract for commercializing the power.
Fitch ratified its AAA ratings on the Codensa local currency bonds on July 31, 2012. The total outstanding of these bonds
is COP 600,000 million.
Table # 4 - Summary of EEB’s expansion projects Project / Company Country Sector Capex USD mm Status In operation: Cusiana II - TGI Colombia T NG 235 Operating La Sabana - TGI Colombia T NG 57 Planning 4Q 13 ICA Peru - ConTUgas Perú T + D NG 348 Under construction 3Q 13 Lima - Cálidda (network expansion) Perú D NG – network expansion- 464 Under construction 2016 Guatemala - TRECSA Guatemala T E 373 Under construction 4Q 13 Substations Colombia T E 156 Planning 13-15 T: Transportation; D: Distribution; NG: Natural Gas; E: Electricity
TGI
- Cusiana Phase II: The company started operations of this expansion project. The company has now completed and
put into service three expansion projects (Guajira, Cusiana Phase I and Phase II) that increase its transportation
capacity by more 50%.
ConTUgas - ICA:
- As of the end of June 2012, this project was 52% completed. The company has acquired all the pipeline needed for
the trunk network, and started laying the pipeline.
- The company signed four contracts with industrial clients for 9.2 mm cfd of gas. It is also negotiating “take-or-pay”
contracts for 52 mm cfd and interruptible contracts for 35 mm cfd; these are expected to close in the second half of
2012.
- ConTUgas is completing the financial closing of a syndicated construction loan provided by Colombian and Peruvian
banks for USD 215 million and a term of 18 months.
TGI 35%
Contugas 23%
Trecsa 15%
Calidda 17%
EEB 7%
REP - CTM 3%
Investments 2012 - Grupo de Energía de Bogotá USD 614 millions
Investor Report
2Q 12
4
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Lima - Cálidda:
- As of June 2012, Cálidda had 82,700 customers and there were 139,000 natural gas powered vehicles in its area of
operations. The company’s target is to have 105,000 clients by the end of 2012 and 455,000 by 2016.
- The board of the company approved proposing to a shareholders meeting a capital increase of USD 60 million. If this
capitalization is approved, the capital would be provided in two tranches: USD 35 million in 4Q 12 and USD 25 million
in 1Q 13.
Guatemala – TRECSA:
- As of June 2012 the company had negotiated 39% of the rights of way required.
- The company has also received 56% of the municipal avals required and the Ministry of Environment has approved
94% of the change of land use studies needed.
- The construction of the transmission lines and substations were 14% and 9% completed, respectively.
EEB Transmission:
- The Armenia, Alferéz, and Tesalia substations: The projects are in the phase of detail design, getting the required
licenses and permits, and definition of the contract terms for the construction contracts. The company expects that the
three projects will start operation on the established timeline.
Table # 5 - Selected financial indicators - Non-controlled investments 1H 12 COP million USD million Emgesa Codensa Gas Natural Promigas * REP CTM Operating revenue 990,348 1,549,459 612,617 102,041 54.0 27.7 Operating income 561,067 396,245 148,002 19,318 16.9 15.6 EBITDA LTM 1,289,388 1,027,982 344,833 N.A. 64.4 37.9 Net income 349,561 247,051 118,926 87,941 9.8 8.1 Dividends and reserves declared to EEB 343,894 69,405 63,726 22,988 - - Capital reductions to EEB - - - - - - * Stand Alone Financial Statements
Table # 6 - Summary of expansion projects of non-controlled companies
Project Company Sector Country Capex
USD mm In operation:
El Quimbo Emgesa G E Colombia 837 14 Substations Codensa D E Colombia 68 11-12 Concession expansion REP E T Perú 89 12 Concession expansion and new con. CTM E T Perú 523 12 - 13 Expansions PROMIGAS Tr + D NG Colombia 192 14 G: Generation; T: Transmission; D: Distribution; NG: Natural Gas; E: Electricity; Tr: Transport
Investor Report
2Q 12
5
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Emgesa – El Quimbo:
- As of the end of 2Q 12, the project was 27% completed. The company expects that operations will begin before the
end of 2014.
- Colombia’s Financial Superintendency increased the time period for issuance of bonds by the company to July 2015.
The overall borrowing program has a cap of COP 1,900,000 million, of which COP 835,000 million has been issued.
These resources will be used to refinance debt maturities and complete the financing plan for El Quimbo.
Codensa – Substations
- Of the three substations included in Codensa’s expansion plan, two (Florida and Torca) have started operations, while
the Nueva Esperanza substation continues to be in construction.
REP – Concession expansions:
- The five expansion projects of REP are advancing on time and on budget.
- The company’s board approved in June making a loan to CTM for USD 65 million on market terms. The operation
seeks to optimize the cash position of REP and meet CTM’s financing requirements.
CTM - Concession expansions and new projects:
- The company’s projects, other the one at Machu Picchu, are advancing in line with timetables and budgets.
- On June 25, 2012, Peru’s Ministry of Mines issued a ruling that restarted construction of the Machu Picchu - Cotaruse
project, which had been on hold since November 2011.
Return to index
EMGESA 42%
Codensa 11%
REP 8%
CTM 29%
Promigas 10%
Distribution of 2012 estimated capex non-controlled investments
USD 976 mm
Investor Report
2Q 12
6
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Performance of controlled investments.
Table # 7 – EEB´s selected transmission business indicators As of 1H 12
As of 1H 11
Var % F 11
Operating income - COP million 27,232 25,984 4.8 49,662
EBITDA Qtrly. - COP million 16,942 15,967 6.1 14,747
EBITDA LTM - COP million 65,523 64,311 1.9 64,295
Investments - COP million 11,503 1,793 5,4 9.255
Infrastructure availability - % (1) 99.93 99.91 0.02 99.97
Compensation for unavailability - % (2) 0.001 0.001 - 0.0021
Maintenance program compliance - % (3) 100 100 - 100
Participation in Colombia’s transmission activity - % (4) 8.11 7.92 0.2 8.02
Footnotes in annex 5
All technical and operating indicators registered good levels and better than regulatory requirements.
The start of operation of new projects had a favorable impact on financial indicators in the transmission business.
Capex increased principally because of the execution of projects that were awarded at the start of 2012.
.
Table # 8 – EEC’s selected indicators - Controlled by DECSA
As of 1H 12 As of 1H 11 Var % F 11
Number of clients 250,189 243,441 2.7 248,043 Operating revenue - COP million 138,706 125,264 10.7 262,527 Operating income - COP million 30,153 22,511 33.9 45,505 EBITDA LTM - COP million 34,387 27,000 27.3 N.A Net Income - COP million 60,365 42,378 42.4 52,980 Dividends and reserves declared to EEB 12,871 10,536 22.2 30,678 Loses - % (1) 12.69 13.69 -7.3 12.53 * Controlled by DECSA; The data shown in the table is EEC information.
Footnotes in annex 5
The improved operating results and EBITDA generation are explained, principally by the increase in the number of clients
and management initiatives to reduce losses.
Table # 9 – TGI’s selected indicators As of 1H 12
As of 1H 11
Var % F 11
Operating revenue -COP million 330,063 307,489 7.3 626,838 Operating income -COP million 182,303 175,126 4.1 357,059 EBITDA Qtrly. - COP million 119,754 116,138 3.1 120,045 EBITDA LTM - COP million 489,659 443,272 10.5 481,570 Net income - COP million 131,595 161,763 -18.6 25,614 Transported volume - mmcfd 401 424 -5.5 420 Firm contracted capacity - mmcfd 548 540 1.5 560 International debt ratings
S&P - Mar. 12: BB; positive Fitch - Nov. 11: BB+; stable
Moody’s - Mar. 12: Baa3 stable
Investor Report
2Q 12
7
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Net income decreased principally as a result of the payment of the redemption premium on the debt management
operation carried out by TGI in the first quarter of 2011. As a result of this operation, the company substantially reduced
its financial costs and expects to realize annual savings of approximately USD 28.5 million.
The increase in LTM EBITDA is the result of the Guajira and Cusiana Phase I system expansions increasing the
company’s operating revenues.
Table # 10 – Cálidda’s selected indicators
As of 1H 12
As of 1H 11
Var % F 11
Number of clients 86,156 49,651 73.5 63,602 Operating revenue - COP million 167,744 141,042 18.9 304,485 Operating income - COP mm 24,343 22,463 8.3 45,262 EBITDA LTM - COP million 32,329 28,932 11.7 N.A Net Income - COP 62,765 46,157 35.9 59,368 Number of clients 13,164 12,759 3.1 25,809
Cálidda continues to expand successfully, as reflected in the increase in customers. The company expects to have more
than 100,000 customers connected to its network by the end of 2012.
Operating income grew at a slower rate than operating revenues as a result of the costs associated with the new
connections, principally with residential customers.
Net income grew at a slower rate than operating income as a result of a change in the accounting for amortization of
debt, in keeping with international accounting standards.
Return to index
Performance of Non - Controlled investments
Table # 11 – Overview of Emgesa As of 1H 12
Installed capacity - MW 2,879 Composition 10 Hydro y 2 thermal Generation - Gwh 6,396 Sales - Gwh 7,719 Operating revenue 11 - COP mm 990,348 EBITDA LTM - COP mm 1,289,388 Controlled by Endesa from Spain EEB’s stake 51.5% - 37.4% ordinary shares; 14.1% preferred non-voting shares
5,510
283
1,492 1,775
6,396
87.5
1,298.701,386
Production Contracts Spot Total
Supply GWh
1H11 1H 1216.1%
-69.1%
-13% -21.9%
5,080
2,144
7,224
5,654
2,065
7,719
Contracts Spot Total
Sales GWh
1H11 1H 12
11.3%
3.7%
6.9%
Investor Report
2Q 12
8
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
The increase in production was accompanied by increased contract sales and fewer purchases of power as a result of
improved hydrological conditions during the 2012 period as compared to the prior year. Emgesa’s reservoir levels are
above historical averages.
Table # 12 – Capex As of 1H 12 As of 1H 11 Var % F 11
COP mm 180,785 118,955 52.0 290.4 USD mm 101.3 66.821 51.6 149.5
The increase in capex results from the execution of the El Quimbo hydroelectric project. El Quimbo required funding of
approximately COP 160,000 million during the first six months of 2012.
Table # 13 – Selected financial indicators of Emgesa COP million COP million USD million
As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11 Operating revenue 990,348 897,013 10.4 1,899,062 554.9 503.9 Cost of sales -415,168 -348,966 18.9 -765,023 -232.6 -196 Administrative expenses -14,112 -14,987 -5.8 -29,336 -7.9 -8.4 Operating income 561,067 533,060 5.2 1,104,703 314.4 299.4 EBITDA LTM 1,289,388 1,199,078 7.5 1,256,231 722.5 673.6 Net income 349,561 313,483 11.5 667,755 195.9 176.1 Dividends and reserves declared to EEB 343,894 80,537 327 80,537 192.7 45.2 Capital reductions to EEB 0 0 0 0 0 0 Net debt (1) / EBITDA LTM N.D N.D N.A. 1.4 N.D N.D EBITDA LTM / Interests (2) N.D N.D N.A. 8.7 N.D N.D
Footnotes in annex 5
Operating income grew at a slower rate than operating revenues as a result of increased purchases of diesel fuel for the
Cartagena thermal power plant during the first months of 2012. Operating problems in the gas pipeline operated by
Promigas made it necessary for the Cartagena plant to use diesel fuel instead of natural gas, at a significantly higher
cost.
Net income grew more rapidly than operating income as a result of a lower level of indirect taxes.
On March 21, 2012, a Shareholders’ Meeting approved payment of dividends of COP 667,755 million based on results
for 2011. EEB’s share is COP 343,893 million, which will be received in four installments in April, June, and November
2012, and January 2013. The April and June installments to EEB for COP 171,946 million have been paid.
The increase in dividends declared in favor of EEB reflects, principally, the fact that at the end of 2010 the company
declared dividends based on an early close of the financial statements (for the period January through September). As a
result, dividends declared in 2011 corresponded only to the October-December 2010 period. In 2012, dividends were
declared based on full year 2011 results.
Table # 14 – Overview of Codensa
Number of clients 2,539,131 Market share - % 23.74 Codensa’s demand – Gwh 6,866 Var. of Codensa’s demand 1Q12/1Q11 - % 2.88 Operating revenues - COP million 1,549,459 EBITDA LTM - COP million 1,027,982 Controlled by Endesa from Spain EEB’s stake 51.5% -36.4% ordinary shares; 15.1% preferred non-voting shares
Investor Report
2Q 12
9
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Table # 15 – Capex As of 1H 12 As of 1H 11 Var % F 11
COP mm 92,046 92,074 -0.03 306,246
USD mm 51.58 51.72 -0.28 157.6
Capex during the first six months of 2012 was concentrated on expansion projects, improving service quality, and
modernizing the network.
Table # 16 – Selected financial indicators of Codensa COP million COP million USD million
As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11 Operating revenue 1,549,459 1,439,204 7.7 2,986,153 868.2 808.5 Cost of sales 1,114,504 1,050,617 6.1 -2,187,477 624.5 590.2 Administrative expenses 38,710 37,391 3.5 -75,231 0.1 21 Operating income 396,245 351,195 12.8 723,445 222.0 197.3 EBITDA LTM 1,027,982 1,046,272 -1.7 976,001 576.0 587.8 Net income 247,051 209,510 17.9 457,664 138.4 117.7 Dividends and reserves declared to EEB 69,405 69,214 0.3 237,172 38.9 38.9 Capital reductions to EEB 0 0 0 0 0 0 Net debt (1) / EBITDA LTM N.D N.D N.D 0.7 N.D N.D EBITDA LTM / Interests (2) N.D N.D N.D 11.4 N.D N.D
Footnotes in annex 5
Operating income grew more rapidly than operating revenues as a result of a significant reduction in operating losses as
compared to the prior year period.
Net income grew faster than operating income as a result of an increase in financial revenues from a higher level of cash
balances.
The low level of dividends in declared in favor of EEB in both the first six months of 2012 and the first six months of 2011
is the result of the fact that these dividends were declared based only on the results of the final months of the preceding
year. In both 2010 and 2011, Codensa declared dividends in December based on an early close of the financial
statements. It is worth noting that the dividends declared in December 2011 were COP 323,317 million, and an additional
COP 134,346 million were declared in 1Q 12. These dividends will be paid in installments in the months of April, June,
November 2012, and January. EEB received dividends of COP 226,898 million for the payments made in April and June
2012.
Nacional Codensa
Variation of demand National vs Codensa
3.50%
0.52%
2.81%3.38%
2.53%3.30%
1.44%
2.88%Codensa
23%
National77%
Composition of demandNational vs. Codensa
Investor Report
2Q 12
10
Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Table # 17 –Overview of Promigas
Number of clients N.D. Volume of sales - Mmcfd N.D. Market share - % N.D. Network – km N.D. Operating revenue F 11 - COP million 102,041 EBITDA LTM - COP million N.D. Controlled by N.D. EEB’s stake - % 15.64
Table # 18 – Capex
As of 1H 12 As of 1H 11 Var % F 11 COP mm 31.460 7.765 305.2 45,685 USD mm 17.629 4.362 304.2 23.5
The increase in capex is the result of the construction of a “loop” and installation of a compressor.
Table # 19 – Selected indicators of Promigas COP million COP million USD million
As of 1H 12 As of 1H 11 Var % F11 As of 1H 12 As of 1H 11 Operating revenue 102,041 108,479 -5.9 226,215 57.2 60.9
Cost of sales -51,643 -46,744 10.5 101,181 -28.9 -26.3
Administrative expenses -31,079 -26,763 16.1 55,908 -17.4 -15.0
Operating income 19,318 34,970 -44.8 69,125 10.8 19.6
EBITDA LTM - - -
Net income 87,941 85,698 2.6 186,508 49.3 48.1
Dividends and reserves declared to EEB 29,090 33,134 -12.2 33,134 N.A. 18.6 Capital reductions to EEB 0 0 0 - 0 0 Net debt (1) / EBITDA N.D N.D N.A 4.62 N.D N.D EBITDA / Interests (2) N.D N.D N.A 3.90 N.D N.D
Footnotes in annex 5 *Stand Alone Financial Statements
Table #20 – Overview of Gas Natural
Number of clients 1,798,521 Volume of sales - Mm cfd 141.25 Market share - % N.A Network – km 12,578 Operating revenue - COP million 612,617 EBITDA LTM - COP million 344,833 Controlled by Gas Natural from Spain EEB’s stake - % 25%
Investor Report
2Q 12
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Table # 21 - Capex As of 1H 12 As of 1H 11 Var % F 11
COP mm 8,195 5,670 44.5 23,624 USD mm 4.6 3.2 44.1 12.2
Capex in the first six months of 2012 was principally for improving the high-pressure network in the southern part of
Bogota and the remodeling of the corporate headquarters building to meet Colombian earthquake codes.
Table # 22 – Selected indicators of Gas Natural COP million COP million USD million
As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11 Operating revenue 612,617 519,282 17.9 1,101,644 343.3 291.7 Cost of sales -411,748 -296,864 38.7 -663,090 -230.7 -166.8 Administrative expenses -52,868 -51,735 -1.8 -101,981 -29.6 -29.1 Operating income 148,002 170,682 -13.0 336,573 82.9 95.9 EBITDA LTM 344,833 368,874 -6.5 368,986 193.2 207.2 Net income 118,926 130,465 -8.8 254,030 66.6 73.3 Dividends and reserves declared to EEB 63,726 17,593 262.2 17,594 35.7 9.9 Capital reductions to EEB 0 0 0 0 0 0 Net debt (1) / EBITDA N.D. 1.16 N.D. 0.3 N.D. N.D. EBITDA / Interests (2) N.D. 25.9 N.D. 24 N.D. N.D.
Footnotes in annex 5
The increase in the cost of sales reduced operating income and net income. This was the result of an increase in the cost
of gas from the Gibraltar field that has not been completely passed on to customers.
Table # 23 – Overview REP and CTM As of 12
REP CTM Network - km 6,041 1,716 Voltage – kv 220,138.6 220,138
Controlled by ISA Colombia EEB’s stake - % 40
Thermoelectric21%
Residential -commercial
24%
Indsutrial -refinery
46%
Vehicular- GNV7%
Petrochemical2%
Gas Natural demand in Colombia February 2012
Residential/Commercial
38%
Industrial47%
GNV10%
Others*5%
Sales by CustomerTotal: 145.1 mmcfd
* Others: Sales to other distributors and third party Access to the
network
Investor Report
2Q 12
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Table # 24 – selected indicators of REP USD million
As of 1H 12 As of 1H 11 Var % F 11 Operating revenue 54.0 49.3 9.5 143.4 Cost of sales -31.4 -30.8 1,9 -91.3 Operating income 16.9 18.4 -8.1 33.1 EBITDA LTM 64.4 61.5 4.7 63.3 Net income 9.8 9.5 3.16 16.9 Dividends declared to EEB 0 0 N.A 0 Capital reductions to EEB 0 0 N.A 0 Net debt (1) / EBITDA N.D. N.D. N.D. 3.3 EBITDA / Interests (2) N.D. N.D. N.D. 5.6
Footnotes in annex 5
The increase in cost of sales reduced operating income as a result of an increased amortization of the expansions carried
out by the company and increased personnel costs from a new labor contract.
Table # 25 – Selected financial indicators of CTM
USD Million As of 1H 12 As of 1H 11 Var % F 11
Operating revenue 27.7 16.1 72 231.1 Cost of sales -11.2 -6.4 75 -201.4 Operating income 15.6 9.7 60.8 24.9 EBITDA LTM 37.9 27.1 39.8 28.3 Net income 8.1 9.6 -1.2 17.6 Dividends declared to EEB 0 0 0 0 Capital reductions to EEB 0 0 0 0 Net debt (1) / EBITDA N.D. N.D. N.D. 5.5 EBITDA / Interest (2) N.D. N.D. N.D. 3
Footnotes in annex 5
Operating income grew more slowly than operating revenues as a result of increased amortization related to the start of
operations of the new projects.
The reduction in net income is principally the result of increased interest expense related to the financing costs of the
projects.
Return to index
Investor Report
2Q 12
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
EEB consolidated financial performance
Table # 26 – EEB’s Consolidated financial results
COP million Variation COP million USD million
As of 1H 12 As of 1H 11 % F 2011 As of 1H 12 As of 1H 11 Operating revenue (1) 747,311 665,599 12.2 1,421,664 418.8 373.9
Electricity transmission 51,966 48,798 6.5 100,106 29.1 27.4 Electricity distribution 138,166 124,954 10.6 262,527 77.4 70.2 Natural gas transportation 330,063 307,489 7.3 626,838 185.0 172.73 Natural gas distribution 227,116 184,358 23.2 432,193 127.3 103.6
Cost of sales (2) -380,844 -346,403 9.9 -704,603 -213.4 -194.6 Electricity transmission -21,302 -20,419 4.3 -43,157 -11.9 -11.5 Electricity distribution -99,007 -92,950 6.5 -190,698 -55.5 -52.2 Natural gas transportation -111,303 -101,929 9.2 -208,905 -62.4 -57.2 Natural gas distribution -149,232 -131,105 13.8 -261,843 -83.6 -73.7
Gross income 366,467 319,196 14.8 717,061 205.4 179.3 Operating expenses -97,969 -65,729 49.0 -166,402 -54.9 -36.9
Allocated to electricity transmission (3) -3,493 -2,414 44.7 -6,378 -2.0 -1.4 Electricity distribution -19,170 -16,253 18.0 -26,120 -10.7 -9.1 Natural gas transportation -31,820 -30,883 3.0 -39,161 -17.8 -17.4 Natural gas distribution -43,486 -16,179 168.8 -94,743 -24.4 -9.1
Operating income 268,498 253,467 5.9 550,659 150.5 142.4 Dividends (4) 523,278 179,185 192.0 347,228 293.2 100.7 Interest temp. investments & pension trusts (5) 29,579 28,225 4.8 51,873 16.6 15.9 Net exchange difference (6) 197,459 148,062 33.4 -28,172 110.7 83.2 Net valuation of hedging contracts (7) 1,087 -51,647 -102.1 -66,672 0.6 -29.1 Other revenue (8) 22,925 10,600 116.3 52,640 12.9 6.0 Non-operating expenses (9) -67,073 -57,831 16.0 -160,227 -37.6 -32.5 Financial expenses -272,364 -134,239 102.9 -330,189 -152.6 -75.4 Other expenses -6,603 -628 951.4 -7,924 -3.7 -0.4 Net income before taxes and minority interest 696,786 375,194 85.7 409,216 390.4 210.8 Minority interest (10) -59,464 -66,944 -11.2 -46,583 -33.3 -37.6 Provision for income tax -31,894 -26,981 18.2 -57,339 -17.9 -15.2 Net income 605,428 281,269 115.3 305,294 339.3 158.0
Footnotes in annex 5
The strong increase in net income is the result of a higher level of dividends declared in favor of EEB by non-controlled
affiliates and by the increase in operating income in controlled subsidiaries.
Operating results were driven by: () the natural gas transmission business (TGI) that accounts for 80% of the increase in
consolidated operating income. TGI increased operating revenues significantly as a result of increases in firm contracted
capacity and increased revenues from variable charges. Cost of sales of this line of business increased at a faster rate
than operating revenues as a result of professional fees related to the debt management operation, maintenance
expenses for some pipelines, and an increase in insurance premiums. () The electricity distribution business (EEC)
accounted for 28% of the increase in operating income. Here, the principal factors were the increase in the number of
clients served and management initiatives to reduce losses. () The electricity transmission business contributed 9% of
the increase in operating income as a result of the start of operations of new electricity assets as a result of the UPME
expansion projects. These were partially offset by () a 17% reduction in operating income from the natural gas
distribution business, principally from pre-operating expenses incurred by ConTUgas.
The increase in dividends declared in favor of EEB is explained by: () the increase in earnings of Emgesa in 2011, and
() the lower level of dividends declared in favor of EEB in 2011 by Emgesa, Codensa, and Gas Natural, as a result of the
fact that in 2010 these companies declared dividends based on an early close of their financial statements.
The increase in the exchange difference account reflects the impact on EEB’s dollar-denominated debt from the
revaluation of the Colombian peso against the U.S. dollar. Approximately 87% of EEB’s consolidated debt is contracted
in dollars.
The increase in financial expense is explained by the payment by TGI of a redemption premium of USD 69.2 million to
repurchase the USD 750 million in bonds due 2017. These bonds were replaced by an issuance of USD 750 million in
Investor Report
2Q 12
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
new bonds maturing in 2022 with a much lower coupon (5.7% vs. 9.5%). TGI estimates that the NPV savings of the
operation to be approximately USD 83 million.
Table # 27 – EEB’s Financial indicators
COP million COP million USD million As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11
Consolidated adjusted EBITDA 4Q 11 215,693 153,075 40.9 353,008 120.9 86 Consolidated adjusted EBITDA LTM 1,478,075 1,232,146 20.0 1,082,047 828.2 692.2 EBITDA LTM 1,478,075 1,232,146 20.0 1,082,047 828.2 692.2 Consolidated EBITDA margin % (1) 65.6 66.3 -1.0 59.3 65.6 66.3 Net debt (2) / Consolidated adjusted EBITDA LTM OM: < 4.5
1.7 1.9 -9.2 2.19 1.71 1.89
Consolidated Adjusted EBITDA LTM / Interest (3) OM: > 2.25
7.4 6.8 9.7 4.78 7.41 6.75
Footnotes in annex 5
NOTE: Based on the definitions in the indenture for the Notes issued by EEB in November 2011, the leverage and interest
coverage indicators are calculated based on Consolidated Adjusted EBITDA which includes capital reductions received by
EEB.
The increases in both quarterly EBITDA and LTM EBITDA are explained by the increases in operating results of
controlled subsidiaries and, in the case of LTM EBITDA, the increase in dividends declared in favor of EEB by non-
controlled affiliates.
2Q 11 3Q 11 4Q 11 1Q 12 2Q 12
Consolidated Adjusted EBITDA
1,232,148 1,320,148 1,082,047 1,428,424 1,478,075
Quarterly variation -15% 7% -18% 32% 3%
Consolidated adjusted EBITDA LTMCOP millions
1,082,047
1,320,1481,232,148
1,428,424 1,478,075
166,042224,541
353,008
684,833
215,693
0
170,000
340,000
510,000
680,000
850,000
2Q 11 3Q 11 4Q 11 1Q 12 2Q 12
Quarterly Consolidated Adjusted EBITDACOP millions
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
The leverage and interest coverage ratios improved as a result of the increase in EBITDA. In addition, the reduction in
peso terms of financial debt contributed to improving the leverage ratio.
Table # 28 - EEB Consolidated debt structure As of 1H 12
COP million Share
% As of 1H 11 COP million
Share %
F 11 USD mm
As of 1H 12 USD million
As of 1H 11 USD million
Financial debt in COP 174,410 5.2 198,000 6.1 110 98 111 Financial debt in USD 2,958,191 88.0 2,841,826 87.3 1,603 1.66 1,596 Derivatives position 227,144 6.8 217,165 6.7 102 127 122 Total financial debt 3,359,745 100 3,256,991 100 1,815 1.89 1,830
Consolidated financial debt was nearly unchanged from the prior year period, increasing only 3.2% as a result of the
slight depreciation of the peso against the dollar; dollar-denominated debt represents 88% of total debt. Dollar-
denominated debt increased slightly as a result of a USD 50 million loan to ConTUgas.
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Annex 1: Legal notice
This document contains projections and estimates, using words such as “anticipate,” “believe,” “expect,” “estimate”, and
others having a similar meaning. Any information other than historical information included in this report, including but not
limited to the Company’s financial condition, its business strategy, plans, and management objectives for future operations
are projections.
Such projections are based on economic, competitive, regulatory and operational scenarios and involve known and unknown
risks, uncertainties and other important factors that could cause the Company’s results, performance or actual achievements
to be materially different from the results, performance or future achievements that are expressed or implicit in the
projections. For these, reasons, the results may differ from the projections. Potential investors should not take them into
consideration and should not base their decisions on them. Such projections are based on numerous assumptions
concerning the Company’s present and future business strategies, and the environment in which the Company will operate in
the future.
The Company expressly states that it will be under no obligation to update or revise any projections contained in this
document.
The company´s previous results should not be taken as a pattern for the company´s future performance.
Clarifications
Only for information purposes, we have converted some of the figures in this report to their equivalent in USD, using the
TRM rate for the end of the period as published by the Colombian Financial Superintendency. The exchange rates used
are as follows:
− 1H 12: 1,784.06 COP/USD
− 1H 11: 1,780.2 COP/USD
In the figures submitted, a comma (,) is used to separate thousands and a point (.) to separate decimals.
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Annex 2: Link to EEB’s consolidated and stand alone financial statements 1Q 12
http://www.eeb.com.co/?idcategoria=7257
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Annex 3: overview of EEB
EEB is an integrated energy company with interests in the natural gas and electricity sectors and operations in Colombia,
Peru and Guatemala.
EEB was founded in 1896 and is controlled by the District of Bogota (76.2% ownership). The company, as a public
company in Colombia, adhered to global standards of corporate governance.
EEB has an expansion strategy focused on the transmission and distribution of energy in Colombia and other countries
within the region.
EEB participates in the entire electricity value chain and in almost all the natural gas value chain, except for exploration
and production.
EEB is one of the largest Colombian corporate debt issuers. Since 2009, EEB shares have been traded on the Colombian
stock market. In November 2011, EEB finished a Re-IPO in the Colombian stock market for approximately USD 400
million. In October 2007, EEB and TGI issued corporate bonds in the international markets for USD 1.36 billion. In 2011
and the beginning of 2012 both companies refinanced their notes extending their maturities and lowering its costs and
improving their credit ratings.
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Annex 4: Definitions of EBITDA included in this report. Consolidated adjusted EBITDA reconciliation LTM and
Quarterly
EBITDA is not an acknowledged indicator under Colombian or US accounting standards and may show some difficulties
as an analytical tool. Therefore, it must not be taken on its own as an indicator of the company´s cash generation.
EBITDA: EBITDA for a specific period of time (LTM; Q4) has been calculated by taking operating income (loss) and
adding amortization of intangibles and depreciation of fixed assets for that period.
EEB Consolidated EBITDA for a period, consists of operating revenues of EEB and its consolidated subsidiaries for
such period, minus the sum of (i) cost of sales, (ii) administrative expenses allocated to cost, (iii) administrative expenses
and (iv) interest income on investments of pension assets, plus dividends and interest earned (which includes dividends
declared by EEB’s related companies, whether such dividends are actually paid or not), taxes (other than income taxes),
amortization and depreciation, pension payments and provisions.
EEB Consolidated Adjusted EBITDA for a specific period is calculated taking the Consolidated EBITDA for such period
and adding the cash flows coming from investing activities during such period to the extent attributable to capital
distributions by EEB’s related companies.
EBITDA LTM
COP Million Variation COP Million USD Million As of 1H 12 As of 1H 11 % F 11 As of 1H 12 As of 1H 11
Operating revenue 565,691 307,701 83,8 550,661 316,9 172,85 Operating depreciation 102,734 70,787 45,1 100,961 57,5 39,76
Operating amortization 55,336 42,939 28,9 49,893 31,0 24,12 Operating Taxes 32,664 2,299 1320,8 32,233 18,3 1,29
Dividend & interests earned 749,476 733,534 2,2 404,029 419,9 412,05 Interests in autonomous equity -14,836 -14,082 5,4 -11,766 -8,3 -7,91
Administration expenses -169,469 -151,356 12,0 -160,227 -94,9 -85,02 Retirement pensions 33,123 26,148 26,7 29,070 18,5 14,69
Amortization 17,131 15,238 12,4 11,116 9,6 8,56 Depreciation 2,575 1,481 73,8 1,317 1,4 0,83
Provisions 25,586 159,822 -84,0 16,117 14,3 89,78 Taxes 78,064 37,637 107,4 58,645 43,7 21,14 Capital reductions - - - - - Consolidated adjusted EBITDA 1,478,074 1,232,148 20,0 1,082,048 828,2 692,1
EBITDA Quarterly COP Million Variation USD Million
As of 1H 12 As of 1H 11 % As of 1H 12 As of 1H 11 Operating income 131,678 123,988 6.2 73.7 69.6
Operating depreciation 20,035 32,339 -38.0 11.2 18.1 Operating amortization 15,173 7,221 110.1 8.5 4.0 Operating taxes 1,230 1,481 -16.9 0.6 0.8 Dividends & interests earned 44,486 13,000 242.2 24.9 7.3 Interests in autonomous equity -4,177 -3,537 18.1 -2.3 -1.9 Administration expenses -32,732 -27,505 19.0 -18.3 -15.4 Retirement pensions 10,000 7,809 28.0 5.6 4.3 Amortization 6,629 3,837 72.8 3.7 2.1 Depreciation 1,046 254 311.3 0.5 0.1 Provisions 6,532 477 1269.4 3.6 0.2 Taxes 15,793 6,677 136.5 8.8 3.7
EBITDA 215,693 166,042 29.9 120.8 93.2
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Annex 5: Tables and graphics’ footnotes
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Table # 7 - EEB´s transmission business indicators
(1) Percentage of the infrastructure available in a period of time. (2) Percentage of the revenue discounted due to accumulated unavailability of specific assets above the regulatory target. (3) Ratio between the number of maintenance operations carried out and number of scheduled maintenance operations to
be executed as part of the semi-annual Maintenance Plan. (4) Ratio of the number of transmission assets owned by EEB and the total number of transmission assets in Colombia.
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Table # 8 – Selected financial indicators of EEC - DECSA
(1) Percentage of energy losses. Return to table
Table # 13 – Selected financial indicators of EMGESA
(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.
(2) Accrued interest on financial debts for the previous twelve months.
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Table # 16 – Selected financial indicators of Codensa
(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.
(2) Accrued interest on financial debts for the previous twelve months.
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Table # 19 – Selected financial indicators of Promigas
(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.
(2) Accrued interest on financial debts for the previous twelve months.
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Table # 22 – Selected financial indicators of Gas Natural
(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.
(2) Accrued interest on financial debts for the previous twelve months.
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Table #24 – Selected financial indicators of REP
(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.
(2) Accrued interest on financial debts for the previous twelve months.
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Table # 25 – Selected financial indicators of CTM
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.
(2) Accrued interest on financial debts for the previous twelve months.
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Table # 26 - Consolidated results of EEB
(1) Operating revenue for transmission services rendered directly by EEB, natural gas transmission and distribution of TGI and Cálidda, respectively; as well as energy distribution services that Decsa consolidates for its participation in EEC.
(2) Cost of sales of the transmission services rendered directly by EEB, natural gas transportation and distribution services and electricity distribution services conducted by its controlled companies. It includes personnel, materials, operation and maintenance costs, depreciation, amortization and insurances related to those activities.
(3) Transmission activity is operated directly by EEB. Administrative costs are allocated by the ABC system. (4) Dividends declared by non-controlled companies and temporary investors and pension funds autonomous equity. (5) Interests of temporary investments that are generated by pension funds autonomous equity. (6) Refers to net losses or earnings due to exchange rate variations and its impact on assets and liabilities expressed in
foreign currency. (7) Valuation of hedging operations contracted by EEB and TGI to reduce currency risk. (8) Income from recovery of investments, leases and expenses. (9) Expenses are not related to operational activities. (10) Proportion of net income corresponding to minority investors in the company’s consolidated by EEB.
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Table # 27 - Financial indicators of EEB
(1) Is the result obtained when dividing consolidated EBITDA by operating income, added by dividends and accrued
interests (without including interests received from investments made to autonomous equity of pension funds) of the last 12 months.
(2) Consolidated debt less free cash.
(3) Consolidated financial expenses of the past 12 months
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Investor Report
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Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]
Annex 6: Technical and regulatory terms
BLN: US billion (109)
CAC: Compound Annual Growth
COP: Colombian Peso
CHB: Central Hidroeléctrica de Betania
CTM: Consorcio Transmantaro
CREG: Comisión de Regulación de Energía y Gas de Colombia. (Colombia’s Energy and Gas Regulating Commission).
Colombia’s state agency in charge of regulating electric power and natural gas residential public utility services.
DANE: Departamento Administrativo Nacional de Estadística (National Administrative Statistics Department). Agency
responsible for planning, collecting, processing, analyzing, and disseminating official statistics in Colombia.
Gwh: Gigawatt hour; unit of energy equivalent to 1,000,000 kwh
GNV: Natural Gas for vehicles
IPC: Colombian Consumer Price Index
KM: Kilometers
KWH: Unit of energy equivalent to the energy produced by a power of one kilowatt (kW) for one hour
MEM: Mercado de Energía Mayorista de Colombia; Wholesale Energy Market in Colombia
Mm: million
Ml: thousands
MW: Megawatt, power unit or work which equals one million watts
N.A. Not applicable.
Non Regulated Electricity User: electricity consumers who have a peak demand greater than 0,10 MW or a minimum
monthly consumption above 55.0 MWh
Natural Gas Non Regulated User: user with consumption above 100 kcfd
CFD: Cubic feet per day
Proinversión: Peruvian agency that promotes private investment in Peru
SIN: Sistema Interconectado Nacional, National Interconnected System
STN: Sistema de Transmisión Nacional, National Transmission System
SF: Superintendencia Financiera – Financial Superintendency. State entity in charge of regulating, overseeing and
controlling the Colombian financial sector
TRM: Market Representative Exchange Rate; it is an average of the transactions carried out in peso–dollar, and it is
calculated daily by the SF
UPME: State agency responsible for planning Colombia’s mining and energy sectors
USD: US dollars
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