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1 q 2015 earnings presentation geb vf

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1 q 2015 earnings presentation geb vf

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1 q 2015 earnings presentation geb vf

  1. 1. GRUPO ENERGÍA DE BOGOTA 1Q 2015 Key Results and Developments May 29th, 2015
  2. 2. Agenda I. EEB Overview and Key Updates – 1Q 2015 II. Expansion Projects Review III. Financial Review – 1Q 2015 IV. Convergence to IFRS 2 V. Questions and Answers
  3. 3. Agenda I. EEB Overview and Key Updates – 1Q 2015 EEB Overview Key Updates 3
  4. 4. EEB Overview Transportation and distribution of energy with involvement in other areas in the energy sector. Focus on natural monopolies Growth through controlled subsidiaries Sound regulatory framework Ample access to capital markets 4
  5. 5. Key Updates Shareholders Assembly Decision  Approved authorizing the legal representative of the Corporation to enter into liability management operations on the EEB bond, which maturity is in the 2021 for an effective amount of USD 749 million, as well as issuing bonds in the international capital markets for up to USD 1 billion and/or in the local capital markets for an amount equivalent in local currency to USD 500 million to finance its investment plan. Corporate Highligths ECOPETROL sale process EEB’s stake  ECOPETROL S.A. made public the announcement to Offer the First phase of the Program to sell and award the shares it owns in EEB. The offer started on 20th May 2015 and will be in force until 21th July of this year.  This stake sale is ruled by Law 226 of 1995  ECOPETROL S.A. currently owes 6.87% of the shares of Empresa de Energía de Bogotá S.A. ESP Convergence process to International Financial Reporting Standards – IFRS  In compliance with Law 1314 of 2009, and regulatory decree 2784 of December 2012, the company initiated a convergence process from Colombian Accounting Norms to International Financial Reporting Standards – IFRS. Since the company is part of group 1, the period of mandatory transition began on 1 January 2014 and the first comparative balance sheets under IFRS will be as of 31 December 2015. Dividends declared by EEB  EEB conducted an interim financial statements closing, with cut off date as of October 31, 2014. EEB’s net profit during January-October 2014 period reached COP 1.38 trillion, exceeding by 63.7% results recorded in 2013.  EEB declared dividends to its shareholders amounting to COP 1.1 trillion, equivalent to COP 119.91 per share, of which COP 105.26 correspond to ordinary dividends and COP 14.64 to extraordinary dividends. These dividends will be paid on June and October, 2015. The above represents an increase of 86.4% with respect to the dividend per share decreed in March 2014. Anticipated dividends declared to EEB  Emgesa, Codensa and Gas Natural closed financial statements for the period January 1 to August 31, 2014. Based on this, these companies declared dividends to EEB for an amount of COP 607,405 million, which will be paid during 2015. Otherwise, these dividends would have been declared on the 1Q 2015.
  6. 6. Key Updates Recently awarded UPME Projects 6 Electricity Transmission Business (1/2)  Investment: ~USD [330-350] mm  Annual revenues: USD 24.37 mm  Description: 500 kV project, which will improve the transmission grid in the departments of Antioquia, Caldas, Quindío, Risaralda and Valle del Cauca  Investment: ~USD[15–20] mm  Annual revenues: USD 1.81 mm  Description: Design, acquisition of equipment, construction, operation and maintenance of the 220 kV Rio Cordoba.  Investment: ~USD[19-25] mm  Annual revenues: USD 1.3 mm  Description: 500kV substation, will allow solving reliability problems and voltage levels, which the system currently presents in El Cesar and the entire Colombian Atlantic Coast. Southwest Reinforcement. Ecopetrol – San Fernando Rio Cordoba La Loma  Investment: ~USD[30–35] mm  Annual revenues: N.A  Description: The connection to the STN in La Reforma 230kV substation located in Villavicencio (Meta), to strengthen reliability of its operations in the fields of Castilla and Chichimene. Brazil Acquisition  Investment: ~R$ 490 Million (USD 170 Mm)  Annual revenues: ~R$ 100 Million  Brazilian states: Mato Grosso Goiás Mato Grosso do Sul São Paulo Mina Gerais Espirito Santo  On March 27th, EEB entered into a purchase agreement to buy 51% of four electricity transmission concessions in Brazil.  The contract signed contemplates the acquisition of Transenergía Renovável S.A., Transenergía São Paulo s.a., Goiás Transmissão S.A. y MGE Transmissão S.A. concessions.  Strategic Partner: Furnas, who has the 49% equity stake of the four concessions. Furnas is a company of mixt economy, has and maintains 17 hydroelectric plants, 2 thermal energy plants and 65 substations. It has a 12.621 MW installed capacity.  Length Lines: ~1.100 km | 500 kV  Substations: 500/345/230  New: 10  Expansion: 5  Status: Currently on going process in the final documentation.
  7. 7. Key Updates 7 Electricity Transmission Business (2/2) TRECSA  The project shows a execution progress of 83%. At the end of last year, five (5) substations are already in operation: Pacífico, La Vega II, Tatic, San Agustin, Rancho 69kV, as well as 122 km in transmission lines already in service.  Further substations are coming on stream, which is subject to change by the administrator of the wholesale market. Total investment as of March 31, 2015 amounted to US$328 million. Calidda  At the end of 1Q 2015, Cálidda has a client base of 278,028 customers, 9.1% more than in 4Q 2014.  Calidda enjoys a local market share of 83% in number of clients. Contugas  Company had over 32,555 enable clients. The gas pipeline will have capacity in excess of 300 MMCFD and will connect 50,000 residential clients during the first six years after start up of Commercial Operation.  On May 2015, Contugas formalized the distribution agreement with EGASA / Egesur (2 power generators average consumption is 24.59 mmcfd), will generate a monthly turnover of ~USD 1.2 MM, which detail the payment process is framed in the mechanism of compensation of Supreme Decree 035-2013-EM, which was approved by the Ministry of Energy on 13 April. Acquisition of 31.92% of TGI  Currently, TGI is working on the merger with IELAH; this merger is expected to take place on the 2H 2015, which is the Final Phase of the acquisition plan. Natural gas transportation & distribution business TGI –IFRS - Transported Volume  In compliance with Law 1314 of 2009, and regulatory decree 2784 of December 2012, the company initiated a convergence process from Colombian Accounting Norms to International Financial Reporting Standards – IFRS. Since the company is part of group 1, the period of mandatory transition began on 1 January 2014 and the first comparative balance sheets under IFRS will be as of 31 December 2015.  TGI’s average transported volume through its infrastructure reached 469.4 Mmpcd, and maintained a 47.8% market share closing first quarter 2015.
  8. 8. Agenda II. Expansion Projects Review Subsidiaries Associates 8
  9. 9. Consolidating the Strategy Subsidiaries Source: Company information. 9 Projects Update EEB Transmission as of 1Q 2015 (Expected Annual Revenue) TRECSA • Guatemala’s interconnection System – 81% UPME Project Status EAR USD MM On stream Armenia 78.5% 1.28 2Q 2015 Tesalia 82.6% 10.9 4Q 2015 Chivor II Norte 43.0% 5.52 3Q 2015 SVC Tunal --% 7.8 4Q 2014 Bolívar-TermoCartagena 10.9% 11.2 1Q 2017 Sogamoso-Norte 13.9% 21.2 3Q 2017 Rio Cordoba Substation Project Awarded 1.81 4Q 2016 Southwest Reinforcement Project Awarded 24.37 3Q 2018 Río Cordoba Transformadores Project Awarded 0.6 4Q 2016 La Loma Project Awarded 1.29 4Q 2016 Ecopetrol San Fernando Project Awarded N.A 2Q 2017 TOTAL 85.96 *It includes USD 170 million Brazil acquisition. This is an on-going process and disbursement will be completed during 2H 2015.
  10. 10. Consolidating the Strategy Associates Source: Company information. 10 Projects Update EMGESA • Quimbo Project (400 MW) • Total investment: USD 1,231 mm • Execution 1Q-15: 89 % • Full operation: 2H 15 CODENSA • On-going projects: Nueva Esperanza, Norte, Bacatá Substations • New and existing demand • Quality service and continuity • Control operational risk
  11. 11. Agenda III. Financial Review Operational Results EBITDA Debt metrics 11 Share Performance
  12. 12. Consistent Financial Performance Consolidated Results – IFRS Operating Revenues (-37.8%):  (-76.8% - COP 641,552 mm) Portfolio Segment: Due to the anticipated dividends from our main associates CODENSA, EMGESA and GAS NATURAL which were declared for the first 8 months of 2014. It is worth highlight these dividends in a normalized period would be received during 1Q 2015.  (+42.1% - COP 11,543 mm) Electricity Transmission: Coming on stream of the Alferez Substation.  (+20.4% - COP 46,070 mm) Natural Gas transportation: Exchange rate conversion. Functional currency for TGI since IFRS implementation is US Dollars. 12 Operating Profit (-53.7%): Operational costs and expenses showed an increase due to:  (+25.1% - COP 3,404 mm) Electricity Transmission: operational costs related to new projects that are coming on stream or in developing process.  (+26.8% - COP 14,178 mm) Natural Gas transportation: increase on depreciations of Property, Plant and Equipment, as well as to equity tax expenses.
  13. 13. Consistent Financial Performance Consolidated Results – IFRS EBIT(-60.5%):  Emgesa, Codensa and Gas Natural declared anticipated dividends to EEB for an amount of COP 607,405 million, which will be paid during 2015. Otherwise, these dividends would have been declared on the 1Q 2015. Net Income (-88.4%):  Dividends received in advanced by associates COP 607,405 mm  Major loss for exchange rate differences: – IELAH COP 178,405 mm – TGI COP 36,483 mm – EEB COP 17,495 mm  Higher income tax COP 68,979 mm  Decrease in equity method associates COP 26,332 mm. 13 1Q 2014 1Q 2015 $ % Operating profit 1,021,887 403,280 (618,607) -60.5% Financial Revenues 33,083 24,909 (8,174) -24.7% Financial Expenses (61,944) (108,335) (46,391) 74.9% Exchange (loss) gain (19,769) (252,750) (232,981) 1178.5% Participation Method Associates 214,898 188,567 (26,332) -12.3% Minority interest (40,632) (11,024) 29,608 -72.9% Provision for income tax (47,991) (116,970) (68,979) 143.7% Net income 1,099,533 127,676 (971,856) -88.4% COP Million Variance (1) EBIT includes other expenses, other revenues and administrative expenses. (1) 1,021,887 403,280 1,010,685 1Q 2014 1Q 2015 1Q 2015 Normalized Operating Profit (COP Million) 1,099,533 127,676 735,081 1Q 2014 1Q 2015 1Q 2015 Normalized Net Income (COP Million) EBIT (1) Financial Revenues Financial Expenses Exchange (Loss) Gain Equity Method Associates Minority interest Provision for income tax Net income
  14. 14. Consistent Financial Performance EBITDA 14 Normalized Dividends: (1) Figures for the years 2006 - 2014 are presented under ColGaap standards. For 1Q 2015 LTM are presented under IFRS. LTM IFRS figures are estimated and preliminary, subject to changes, independent auditor’s revision. Final Comparable figures will be available as of December 31th 2015. (2) 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.(2.1) Anticipated dividends declared by Codensa on first half 2011, were included in 2012. (3) 2014 excludes dividends declared based on an early close of Gas Natural’s, Emgesa’s and Codensa’s financial statements. These figures are included in 2015, when such dividends would normally have been declared. At the end of 1Q 2015, operational profits from controlled subsidiaries participated with 59% of the total adjusted EBITDA, compared to a participation of only 19% in 2006. Ordinary dividends from non-controlled companies participate with the remaining 41%.
  15. 15. Consistent Financial Performance Debt Metrics Indebtedness in USD increased as a result of TGI’s shares acquisition (31.92%) through IELAH’s SPV. 15 * Syndicated loan acquired by Contugas (USD 342 MM) and additional indebtedness incurred by SPV in order to reacquire 31.92% of TGI IELAH (USD 569 MM) * (1) Covenant associated to this indicator is currently suspended since the bond TGI 2022 has investment grade, granted by three risk rating agencies monitoring the latter. Covenant established in Offering Memorandum of USD.749,000,000 EEB 6.125% Senior Notes due 2021. *It includes anticipated dividends. (2) Only for comparative purposes and due to transition to IFRS, 1Q 15 debt metrics have been estimated by adjusting COLGAAP last year figures. These figures are subject to change. (3) Increase in mainly explained by increase of foreign exchange USD/COP movements.
  16. 16.  Ticker EEB:CB  As at Mar 31th, 2015 EEB’ market capitalization was USD 6.5 Billion  Trading volume tripled after the Equity Offering Nov 2011.  The stock is part of COLCAP, COLEQTY and COLIR  Average Target Price: COP 1,949.8 (USD 0.81)  Dividend Payout Ratio 2014: 74% Avg 2008 - 2014: 65 %  Dividend Yield 2014: 4.2% Avg 2010 - 2014: 3.5% EEB Share Performance 1Q 2015 16
  17. 17. Agenda IV. Convergence to IFRS Implementation Timeline Main Implementation Effects 17
  18. 18. Convergence process to International Financial Reporting Standards – IFRS (1/2) 18  EEB started the convergence process from COLGAAP to IFRS  Mandatory transition period began on January 1, 2014 and the issuance date of the first comparative financial statements under IFRS will be December 31, 2015  Since 2013, EEB carried out activities regarding preparation and adjustment of the resources needed to advance in the process of convergence to IFRS in accordance with legal requirements  EEB with technical support from external advisors, determined the effects that such changes will have on the financial statements
  19. 19. Analysis Impact amount Effect on equity Functional currency Functional currency TGI - USD According to IFRS, all materials of the company should be classified as properties, plant and equipment as they are contained in the former and because their useful life is more than one year, therefore will be recognized as a cost at their fair value on the date they were assigned. 155 As of December 31, 2013, Contugas S.A.C and Trecsa SA. have a balance in account receivables of COP 6,088 million, the payment has been agreed once the company initiates operation, this projected period is of 36 months. As a result of the above, the accrued cost on the account receivables are recorded producing an adjustment of $901 million. Additionally an accrued cost is recorded to retired employees’ account receivable. 1,059 During the adoption process the company recognized as initial value, the fair value of assets. From the analysis made on lease contracts, were trated as financial leasing. Likewise, provisions on Property, Plant and Equipment assigned under Colombian GAAP. 259,671 These investments were recorded at cost, the cost assumed was at book value according to Colombia GAAP as of December 31, 2013. 7,479 According to IFRS the deferred assets did not meet the asset definition, thus, they must be eliminated and recognized as an equity adjustment for first-time IFRS adoption. Studies, projects and tax on equity. In the same manner, goodwill is reclassified 6,702 Deferred taxes under IFRS are calculated by the balance method, thus presenting important changes compared to the manner it is currently being calculated applying Colombian GAAP. 46,359 The analysis of lease contracts was conducted, and processed under IFRS as financial leasing, and therefore the Company will have to recognize in the financial statements an asset (property, plant and equipment) and a liability (financial obligation). (12,009) Calculation of the long term benefits for current employees and an actuary's valuation for those who are pensioned was conducted, under IFRS requirements, to evaluate the impact on financial statements. Included in these benefits are loans to employees, which have a preferred interest rate applied under this concept, the company must recognize the financial cost it entails. (13,619) Debt Financial obligations recorded transactional costs, directly corresponding to liability and hence will have an impact according to IFRS. 5,602 The General Secretary area conducted an analysis of legal processes of any nature filed against the company. Under IFRS the analysis criteria and /or evaluation of these proceedings present changes in relation to how the amounts to be recognized are determined and as to how they are classified. 7,393 TOTAL COP millions 308,792 Account receivable Account concept Inventories Current Employee Benefits and pensioned employees Estimated Liabilities Property, Plant and Equipment Related Investments Other Assets- deferred Deferred Taxes Leasing 19 Convergence process to International Financial Reporting Standards – IFRS (2/2) *For more detailed information please review “IFRS Impact Presentation”
  20. 20. Agenda I. EEB Overview and Key Updates – 1Q 2015 II. Expansion Projects Review III. Financial Review – 1Q 2015 V. Questions and Answers 20 Webcast Link Participant Toll-Free Dial-In Number: +1 (877) 359-9508 Participant International Dial-In Number: +1 (224) 357-2393 Conference ID: 46902723 IV. Convergence to IFRS
  21. 21. Investor Relations For more information about Grupo Energía de Bogotá, please contact our Investor Relations team: http://www.eeb.com.co http://www.grupoenergiadebogota.com/en/investors Fabián Sánchez Aldana Investor Relations Advisor GEB +57 (1) 326 8000 – Ext 1827 fsanchez@eeb.com.co Nicolás Mancini Suárez Investor Relations Officer GEB +57 (1) 326 8000 - Ext 1536 nmancini@eeb.com.co Rafael Andrés Salamanca Investor Relations Advisor GEB +57 (1) 326 8000 – Ext 1675 rsalamanca@eeb.com.co Felipe Castilla Canales Chief Financial Officer – GEB +57 (1) 326 8000 - Ext 1501 ir@eeb.com.co 21
  22. 22. 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. We converted some amounts from Colombian pesos into U.S. dollars solely for the convenience of the reader at the TRM published by the SFC as of each period. These convenience translations are not in accordance with U.S. GAAP and have not been audited. These translations should not be construed as a representation that the Colombian peso amounts were, have been or could be converted into U.S. dollars at those or any other rates. 22

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