grupo energa de bogot results and key developments

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Grupo Energía de Bogotá

Results and Key Developments

First Six Months of 2013

Investor Conference Call

September 3th 2013

Agenda

I. Strategy

II. Significant developments 1H 13

III. Investments

IV. Consolidated financial results and indicators EEB

V. Question and answer session

VI. Disclaimer

Annex 1. Panoramic view of Grupo Energía de Bogotá

Annex 2. Regulated natural monopoly

Annex 3. Leadership Market Position

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I. Strategy

3

Guatemala

Colombia

Peru

Transportation and distribution of energy with involvement in other areas in the

energy sector.

Operations in countries with strong growth potential

– Colombia: regional leader in electricty and natural gas and a center for

energy exports

– Peru: regional leader in mining and energy-intensive industries

– Guatemala: a window for future investments in Central America

Exploration of opportunities in America medium and long term strategy

Focus on

natural

monopolies

Ample access

to capital

markets

Ambitious

projects in

execution

Growth in

controlled

subsidiaries

Sound

regulatory

framework

Experienced

management

and partners

Current Markets

Potential Markets

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II. Significant developments

05.22.13. Payment to the minority shareholders of the total dividend declared by the

Assembly of shareholders, for a total value of COP 95,746 billion, corresponding to COP

43.96 per share. Also be paid COP 153,929 million to the shareholder, who shall be made

another installment the 27.11.13 by the same value.

04.16.13. EEB was awarded the UPME-03-2010 tender, an electric interconnection project

that is part of the National Transmission System. It includes the design, acquisition of

supplies, construction, operation and maintenance of Chivor II and Norte 230 V Substations

and the double circuit line with over 160 Km.This award, valued in USD101 million.

04.18.13. The Board of Directors authorized management to establish a company in Peru to

render engineering services in the natural gas transport and distribution sector and in the

electric power sector.

06.24.13.The Board of Directors of EEB, during its session, approved the following decisions:

(•) to modify the Company’s organizational and personnel structures to support Company’s

current realities and its future growth. (•) to explore and analyze a series of investment

alternatives in the natural gas and electric power transport sectors in Latin America.

07.03.13. EEB was authorized by the Finance and Public Credit Ministry to carry out

processes to undertake foreign public credit operations for up to USD 479 million or its

equivalent in other currencies, and said resources will be used to partially finance the energy

expansion plan in Colombia, Guatemala and Peru during the period comprising 2013-2017.

Likewise, to begin processes to grant guarantees to its affiliates in Guatemala, TRECSA and

EEBIS, for up to USD 230 million or its equivalent in other currencies.

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07.18.13 Ecopetrol S.A. announced that will carry out processes tending to sell its

investment in Empresa de Energía de Bogotá S.A. E.S.P and thus contribute to

financing its investment plan.

15.08.13 The Board of Directors of Empresa de Energía de Bogotá, approved EEB’s

participation in the stake acquisition process of ISAGEN S.A. ESP

07.05.13 the international risk-rating agency, Standard & Poor´s raised the ranking of TGI’s

debt in foreign currency from “BB” to “BBB-” with stable perspective. The foregoing increase

took into account the stability of long term income, the natural coverage offered by regulations

in force, due in part to the binding effect of part of the tariff to the dollar, the coming on stream

of expansion projects and the recent tariff revision and the support of its main shareholder –

EEB.

• Shareholders Meeting agreed to a capital increase under the mode of capitalization of

retained earnings accrued as of December 2012, amounting to USD 62.2 MM (BBB-;BBB-

;Baa3)

• 01.04.13 it issued a bond amounting to USD 320 million (2023 / 4.375% / 8x) in the

international capital markets (144A/Reg S). The resources obtained in this operation will

allow financing expansion plans from 2013 and 2014, and improve Cálidda’s debt profile.(

BBB-; BBB;- Baa3)

• The construction of the main network expansion project was concluded, which increased

the distribution capacity of 255 mm to 420 mm pcd pcd warm. The technical report of

OSINERGIM to start the implementation of commercial operation is awaited..

• In June of 2013 Cálidda had 124,078 customers and 162,516 vehicles operate with

natural gas in its area of operations. The aim of the company is to reach 455,000 clients

connected to its network in 2016.

.


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1H 13 the investment in the project amounts to USD 234 million.

1H 13, Contugas has more than 2711 enabled clients (with over 12,600 residential sales and

10.629 built internal installations pending to be enabled). The contractual obligation is to

reach 50,000 residential 6 years after the Declaration of commerciality that is expected to be

given in 1Q 14.

Contugas is in the process of closing a new 6 year bullet-type financing for USD 310MM.

This is a syndicate loan in which Regional and multilateral Banking are participating. Currently

Contugas has a bridge loan for up to USD 215 million. This syndicate loan includes resources

from Banco de Bogotá, Davivienda and BCP, for a term of up to 18 months with a wide range

of rates.

25.07.13 Contugas completed the works of the Chincha Operations Center and it began its

partial operation. President of Peru, Mr. Ollanta Humala and CEO of Grupo Energía de

Bogotá attended the event. The new operational center, among the most modern in Latin

America and operated by Contugas, will allow to render natural gas services to residential,

commercial and industrial customers in the Province of Chincha, south of Lima.

• After one year of negotiations, EMGESA closed the contract with Ecopetrol, whereby it will

supply during the next six years, the power required for the production of its wells and

production centers located to the east and south of the country. The power in question

represents consumption of approximately 5,614 GWh as of this year and until 2018.


• During the first six months of the year, Codensa achieved the lowest physical loss index in

the past ten years, reaching 7.14%.

• During the first half of 2013, Codensa invested around COP 93.500 billion, aimed at

improving service quality and focused on strengthening infrastructure, maintenance and

network expansions.

• Servicing New Demand: (•) In Nueva Esperanza all processes have been performed with

ICANH to define management of archeological remains found during excavations

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04.30.13. the Company made an international security placement offer under Rule 144ª and

Regulation S of the U.S. Securities Act of 1933. On May 7th 2013, it proceeded with the

liquidation and issuance of the bonds, known as “Senior Notes”. The issuance of Bonds

amounted to USD 450 MM an issuance price of 99.002%. It has a 10-year Bullet

amortization and six months coupons paying interest at an annual interest rate of 4.375%.

These resources will be used to prepay outstanding debt and to finance expansion projects

27.08.13 Meeting of shareholders accepted the assignment for the execution of the design,

financing, construction, operation and maintenance of transmission line 500 kV of 900 km

long, and its associated substations, project awarded by Proinversion ISA S.A on July 18th,

2013. Reference investment is USD 413 million and generate estimated annual revenues of

$ 41.5 million. The award is for 30 years from its entry into operation. The management of

the project will be headed by REP


III. Investments in Controlled Companies

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Distribution of natural gas in Perú

Investment: USD 464mm

By the end of 2006 it is expected

to have 455,000 customers

Transmisión Electricidad Guatemala

Investment : USD 373mm

Start of Operation: 2013 (partially)

Full Operation: 2015

Transportation and distribution of

Natural Gas in Perú

Investment USD 345mm

Progress of 81% by 1H 13

Construction in 1Q 14

Transportation of natural gas in

Colombia


Under construction: Sabana.Station

Contract signed:

Eng. y constr. : SNC – Lavalin

Equipment: Man Diesel & Turbo

Connection Project Ingenios


Progress: connection 5 ingenios, 90

km TL y 7 S/E

Progress: (1) Recruitment EIA for

LT design

(2) substations design

Armenia Substation 230 kV and

Associated Transmission Lines

Investment USD 20 mm

In construction: Dec.2013

Alférez Substation 230 kV and

Associated Transmission Lines


In construction: Dec 2013

Tesalia Substation 230 kV

and Associated Transmission

Lines


In construction: 2015

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Armenia Alférez Tesalia

Chivor II - Norte

Chivor II y Norte 230 kV

Substations and Asociated

Transmission Lines


In construction October 2015

SVC Tunal 230 kV

Installation of SVC +240/-60

MVAR Substation Tunal


In construction 2014

Progress

Progress Progress

Progress Progress

The project shows a progress

of 53.53% by 2Q 13

• Manufacture of auxiliary services

equipment shows an advance of 84%

• right of way 55.4% of the total

tower sites for the project.are ready

for notarial recording of deeds and

legal inspection

The Project shows a

progress of 64.12% by

2Q 2013.

The project shows a

progress of 29,05% by

2Q 2013

The project shows a

progress of 1% as

scheduled by 2Q 2013

EPC Contract Signed

III. Investments in Controlled Companies

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Electricity Transmission

Perú

Investment:USD 542 mm

Extensions and new

concessions

Beginnig of operation:

2013/2014


Perú

Investment: USD 127 mm

Extensions , Concessions

Beginning of operation

2013/2014

Generation of Electricity

Colombia


Progress of 44% by 1H

15

Beginning of operation

2014

I

Electricity Distribution

Colombia


Under construction 2013

Transportation and

Distribution of Natural

Gas in Colombia


2014

III. Investments in Non Controlled Companies

COP MILLION VARIACIÓN

2Q 13 2Q 12 Absolut %

Operating revenue 943,195 747,311 195,884 26,2

Cost of sales -492,788 -380,844 -111,944 29,4

Gross income 450,407 366,467 83,94 22,9

Operating expenses -109,509 -97,969 -11,54 11,8

Operating income 340,898 268,498 72,4 27,0

Operating margin 35,9% 36,1%

Consolidated adjusted

EBITDA 1.621,82 1.478,07 143,743 9,7

IV.Consolidated Financial Results -

Indicators EEB

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Operating Revenue: Grow mainly due to the increase of revenue for transport and distribution of Natural Gas in Colombia and

Peru.

Cost of Sales: Grows 29.4% due to expenses for natural gas distribution companies in phase of initial expansion and connection

of new customers (Contugas/Calidda).

Operating Income: Grows 27% as a result of an increase of operating revenues and a reduction of operational costs of the tnatural

gas transport and electricity distribution

Operational Performance

5%

15,0%

44,7%

34,7%

Operating Revenue -Contribution by Business 2Q 13



Natural Gas Transportation

Natural Gas Distribution

7% 5%

79%

9%

Net Income - Contribution by Business 2Q 13



Natural Gas Transportation

Natural Gas Distribution

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Indicators EEB

Non Operational Performance

Dividends:Grows 52.8% due to higher dividends received from non controlled companies (Emgesa COP405 billion;

Codensa COP 265 billion and Natural Gas COP 62 billion).

Non Operating Renevue Result: (*) It hit the foreign exchange account in a negative way due to the devaluation of

the Colombian peso during 1H 13, going from a revenue of COP 197 billion in 1H 2012 to an expense of COP 218

billion 2013 1H, as a result of the updating of financial obligations from the Group denominated in dollars, record that

simply accounting purposes and does not correspond to a delivery of cash. Lower financial costs result from the debt

management operations carried out by TGI and EEB in 2011 and 2012

Net Income:Grows COP 113 billion (+ 18.7%)

23%

4%

24% 24%

23%

2%

Participation Renevues + Dividends 1H 2013

Generation ofElectricityElectricityTransmissionElectricityDistributionNatural GasTransportation

COP Million Variation

2Q 13 2Q12 Absolut %

Operating income 340,898 268,498 72,400 27,0

Dividends 799,800 523,278 276,522 52,8

Non Operating Renevue Result -376,729 -94,990 -281,739 296,6

Net income before taxes and minority interest 763,969 696,786 67,183 9,6

Minority interest -7,596 -59,464 51,868 -87,2

Provision for income tax -37,473 -31,894 -5,579 17,5

Net income 718,900 605,428 113,472 18,7

Consolidated adjusted EBITDA LTM 1.621,817 1.478,074 143,743 9,7

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• 2010 excludes dividends declared based on an early close of Gas Natural’s, Emgesa’s and

Codensa’s financial statements. These figures are included in 2011, when such dividends

would normally have been declared.

In 2013 the operational management of controlled companies participates with 50% of

the total of adjusted EBITDA, compared to 15% of participation in 2006. The dividends

of non-controlled companies participates with the remaining 50%

IV.Consolidated Financial Results –

Evolution EBITDA

14

.

The increase in consolidated

EBITDA LTM is explained by the

best operational results of

controlled business and higher

dividends declared by non- controlled companies

Quarterly adjusted consolidated

EBITDA decreases from the 1Q 13

to the 2Q 13 since during the first

quarter non-controlled companies

announced dividend.


Indicators EEB

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• Net Leverage indicator increased

marginally by one increase more

than proportional growth

moderate in EBITDA net indebtedness.

• Coverage indicator fell slightly

by one increase of more than

proportional net interest

expense to moderate in

EBITDA growth.


Indicators EEB

Indicators EEB

16

Increased in the Financial debt

denominated in dollars due to :

() Disbursements of syndicated

credit for short-term Contugas

(USD 46 million during the quarter).

() Issuance of bonds in Cálidda

(USD 320 million), less repayment

of debt by close to USD197

million; and

( ) Higher value of EEB and TGI

debt due to exchange rate effect.

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EEB Share Price Performance 2012 -2013

Ticker EEB:CB

On June 30th, 2013 the EEB market capitalization

reached USD 6,520 MM

Trading volume tripled after the Equity Offering - nov

2011-

The stock makes part of IGBC, COL20 and

COLEQTY and the tradable index ETF-COLCAP.

* Values for years prior to the 2011 dividend were adjusted to split 100:1 which enforced the

20.06.11 stocks. Shares outstanding from Nov. 11: 9,181,177,017

* In 4Q 10 there was an advance cut of financial statements, reason why during 1Q 11 EEB

decreed no dividends. 1Q 12 normalizes this effect

34,85 36,01 33,95

82,02

34,85 43,96

1Q 08 1Q 09 1Q 10 4Q 10 1Q 11 1Q 12 1Q 13

Dividend per share

Evolution Decree Dividend per Share

Indicators EEB

Agenda

I. Strategy

II. Significant developments 1H 13

III. Investments

IV. Consolidated financial results and indicators EEB

V. Question and answer session

VI. Disclaimer

Annex 1. Panoramic view of Grupo Energía de Bogotá

Annex 2. Regulated natural monopoly

Annex 3. Leadership Market Position

18

Thank you

Additional information

─ WEB page / Investor relations

http://www.eeb.com.co/?idcategoria=3247

─ Página WEB / Relación inversionistas


─ Antonio Angarita

─ [email protected]

+571 326 8000 ext 1546

─ Rafael Andrés Salamanca

[email protected]

+571 326 8000 ext 1675

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mailto:[email protected]

mailto:[email protected]

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.

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A.Overview of Grupo Energía de Bogotá

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Key facts

More than 100 years’ experience in the sector; founded in 1896.

Regional leader in the energy sector; major player in the entire electricity and natural gas value chains (except E&P);

operations in Colombia, Peru, and Guatemala.

Largest stockholder is the District of Bogota - 76.2%.

Stock listed on the Colombia stock exchange; EEB adheres to global standards of corporate governance.

The EEB Group is one of the largest issuers of equity and debt in Colombia.

68.1%

25%

15.6%

Electricity

Transmission

40% 40%

1.8%

98.4%

Generation

51.5% *

2.5%

Distribution

51.5% *

16.2%

51%

82%

Distribution Transportation

Natural Gas

75%

60%

100%

99.94%

*EEB is not the controlling

shareholder and is a party to

signed shareholder

agreements.

40%

25%

B. Regulated Natural Monopoly

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Electricity

Transmission Generation Distribution Distribution Transport

Natural Gas

* ENFICC is a reliability charge which is regulated.

Regulated 81%

Un-regulated

16.5%

ENFICC * 2.5%

C. Leadership Market Position

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Electricity transmission

Market share (%)

(Km of 220-138 kV lines ) 60.0%

# 1 Peru

Electricity transmission

Market share (%)

(Km of lines) 8.0%

# 2 Colombia

Electricity distribution

Market share (%)

(Kwh) 26.6%

# 1 Colombia

Electricity generation

Market share (%)

(Generation)

# 2 Colombia

20.6%

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Gas distribution

Market share (%)

(No. clients) 59.0%

# 1 Colombia

Gas transportation

Market share (%)

(Average volume transported)

# 1 Colombia

88.4%

Gas distribution

Market share (%)

(No. clients)

# 1 Peru

100.0%

grupo energa de bogot results and key developments

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