Investors Report First half of 2010

Transcription

1 1 Bogota D.C., August 2010 Index Executive summary and relevant facts. The natural gas market in Colombia. Operational performance. Commercial performance. Financial performance. Annex 1: Legal notice and clarifications Annex 2: Consolidated financial statements. Annex 3: Controlling company overview (EEB) Annex 4: TGI overview Annex 5: Technical and regulatory terms Annex 6: Tables footnotes Executive summary and relevant facts Table Nº 1 TGI selected indicators 1H 10 1H 09 Var % F 09 Operating revenue (copmm) 277, ,020 0,6 545,246 Operating income (cop Mm) 168, , ,073 Net income (cop Mm) 179, , ,663 Ebitda LTM (cop Mm) 418, , ,242 Transported volume (Mmcfd) Firmed contracted capacity (Mmcfd) Credit rating S&P ( ) Fitch ( ) BB BB Non-operating results had a significant and positive impact on the Net results of the company in the first half of 2010 (+ 50% YOY). The revaluation of the Cop was the main driver of the healthy Non-operating results, since a higher price of the Cop reduces the value in pesos of the company s financial debt (100% contracted in Usd) and of its financial expenses. Equally positive was the increase in the volume of natural gas transported by the company (+13%) increase which, however, was not reflected in the Operating income or the EBITDA. The explanation is also related to the revaluation of the Cop as about 60% of company sales were indexed to the dollar during the first half of this year. As part of its strategic plan, the company is advancing in three expansion projects in Colombia (Guajira, Cusiana phase I and Cusiana phase II) that will increase its current capacity by about 50% and will give greater reliability to the Colombian natural gas market. At the end of the first half of 2010, 50% of the

2 2 Guajira s expansion (35 mcfd out of a total of 70 mmcfd) came on stream. It is expected that expansion project will be fully operational before the end of 3Q 10. Expansion in Colombia will be supported with a private placement process already in progress. Several investors have expressed interest in acquiring TGI s shares and are conducting a due diligence process. Table Nº 2 - Expansion projects in Colombia Guajira (Ballena Barranca) Cusiana Phase I Cusiana Phase II Capex (usd Mm) Financing plan Company s cashflow EEB Loans/TGI Capitalization EEB Loans/ TGI Capitalization Additional capacity (Mmcfd): New nominal capacity Contracted capacity ( ) 99% 94% 84% Completed ( ) 84.01% 85.50% 46.87% In operation: 3 T 10 3 T 10 2 T 11 The three expansion projects (Guajira, Cusiana I and Cusiana II), which will increase TGI s transportation capacity by 50%, showed significant progress. Part of the Guajira expansion came on stream before the end of the 1H 10 (35 mmcfd out of the 70 mmcfd planned). The complete expansion of this system is expected to come on stream before the end of 3Q Similarly, the company expects Cusiana I and II, to be completed and in operation before the end of 3Q 2010 and 2Q 2011, respectively. Due to delays in these projects with respect to the initial time table, the company has implemented mitigation plans. Table Nº 3 - Expansion project of Congas Peru (estimated figures) ICA regional gas pipeline Capex (usd Mm) 287 Financing plan 30% capital / 70% debt Length (km) 280 Capacity (Mmcfd) 284 In construction: 2 S 10 In operation: 4 T 12 Concession duration (years) 30 Congas Perú (75% EEB; 25% TGI) is completing the detailed engineering of Gasoducto Regional de Ica and has initiated the process for the acquisition of pipelines and the construction of civil works. Furthermore, the company completed the public audience process related to the Environmental Impact Study and is pending approval from the Peruvian Ministry of Mines and Energy. In addition, the company entered into a supply contract with the gas producer, and expects to conclude negotiations of transportation contracts and commercial ones with end users, while it continues to work on its plan to develop its distribution network. The financial plan for the project includes 30% of equity (75% EEB and 25% TGI) and the remaining 70% with debt (multilateral banks, intercompany loans from EEB and local financing). Congas contracted the services of an Investment Bank to help the company in obtaining the require debt.

3 3 At the end of 2009, TGI s and Transcogas Shareholders Assemblies agreed to merge. The merger was approved by the Superintendence in April and was formalized in May. TGI, acting as the absorbing entity, will acquire the assets, rights and obligations, as well as the internal and external liabilities of Transcogas. Transcogas used to service the market of Bogotá through a small gas pipeline (150 km) which, in practice, was an extension of TGI s system. As a consequence of the merger TGI has incorporated into its financial statements the following gross accounts: Assets of Cop 82,271 mm, liabilities of Cop 47,385 mm, shareholders equity of Cop 34,886 mm, Operating income of Cop mm, Operating costs of Cop mm and expenses of Cop mm. TGI is still expecting the definition by CREG of the new methodology to remunerate its assets. In July 2010, the company entered into new hedging contracts for an amount of USD 100 mm to cover itself against exchange rate risk. The operation allows the company to set a future price at which it will acquire USD to pay for the principal of the notes issued in the international markets (USD 750 mm; October 2017; 9,75%). With the former operation, the company has made additional progress in its strategy to cover against exchange rate risk, completing contracts for a notional amount of USD 300 mm. The natural gas market in Colombia Table N 4 Colombia Natural gas demand - GBTU/d 1H 10 1H 09 Var. % 2009 Final Thermal Residential - commercial Industrial Refineries Vehicle Petrochemical Internal demand 1, Exports Total 1, Source: CNO Gas Higher consumption in gas fired plants triggered internal demand during the first four months of Higher consumption in this sector is explained by the reduced capacity of hydro generation due to lower rains (El Niño), combined with a higher GDP growth. In order to ensure electricity generation, Minminas took measures to prioritize gas supply. The measures taken explain the reduction of exports to Venezuela and also, to a certain extent, the lower gas consumption in industrial and GNV (vehicles) sectors. The Ministry of Mines and Energy recently issued some resolutions removing some of the restrictions on the assignment of gas. This will probably lead to the return to normal behavior of exports and consumption in the industrial and GNV sectors.

4 4 Operational performance Table Nº 5 Selected operational indicators 1H 10 1H 09 Var % F 09 Unit Total capacity (1) Mcfd Transported volume (3) Mcfd Firmed contracted capacity (2) Mcfd Load factor (4) % Availability (5) % Losses (6) % Gas pipeline lenght 3,679 3, ,529 Km Gas pipeline lenght 2,286 2, ,193 Mi Note: Footnotes in annex 6 Chuchupa RIOHACHA STA. MARTA BARRANQUILLA VALLEDUPAR CARTAGENA SINCELEJO Curumaní Cúcuta Cerromatoso Barrancabermeja MEDELLIN Mariquita MANIZALES cogua PEREIRA BOGOTA CALI Bucaramanga Belén YOPAL Tunja Ballena Cusiana Pitalito Hobo NEIVA TGI Transcogas Promigas Centros de Producción Total transport capacity increased due to the partial coming on stream of the enlargement of the Guajira system (35 mmcfd out of a total of 70 mmcfd). Higher transported volume is mainly explained by greater consumption in gas fired plants due to lower rains (El Niño) and therefore a lower production capacity in hydro plants. Higher losses are related to failures in some measuring systems as a result of the higher volume transported. The most significant failures occurred in the BOMT Transgas de Occidente. TGI agreed with this company to take on actions to solve inconveniences in the measuring points. Is worth noting that the current level of losses is well below the one recognized by CREG in the tariff (1%) The length of the gas pipeline changed due to an asset swap between TGI and Promigas (Dec 09) and the merger of TGI with Transcogas. TGI owned small stretches of pipelines embedded in the Promigas system (209 km). In turn, the latter company also owned small stretches of pipelines embedded in the TGI system (39 km). With the objective of streamlining the system, the two companies agreed to swap these assets. In addition, at the end of May, the merger between TGI and Transcogas was materialized increasing the length of TGI s system by 150 Km.

5 5 Commercial performance Table Nº 6 Volume by transporter Mmcfd 2010 Jan - Apr Share % 2009 Jan - Apr Share % TGI Promigas Others Total Source: TGI TGI lost 8 percentage points in market share, despite the volume growth (+ 17% yoy in the first four months of 2010). This is explained because most of the gas fired plants, which were the main driver of demand growth, are located in Promiga s area of operations. Sales by customer F 09 Total 1H 10: Uas 134,080 thousands Total 1H 09: Usd 113,977 thousands Isagen 5% Others 22% Gas Natural 21% EPM Ecopetrol 9% 26% Gases de Occidente 17% Others 19% Isagen 6% EPM 8% Gases de Occidente 17% Gas Natural 25% Ecopetrol 25% Table Nº 7 Summary of TGI most important customers Company Summary Financial summary F 09 (cop Mm) Integrated oil company with operations in crude, natural gas and fuels. It is among the group of the 39 largest oil companies in the world. Listed in the Colombian and US public markets International rating: BB+ (144A) Largest distributor and retailer of natural gas in Colombia, with over 1,500,000 customers. Controlled by Gas Natural from España. Local rating: AAA Natural gas distributor and retailer with operations in the south west of Colombia. It renders services to over users. Local rating: AAA The second largest electricity generation company in Colombia. Local rating. AAA The third largest electricity generation company in Colombia. International Rating: BB+ Operating revenue 2009: 30,400,000 Ebitda 2009: 11,400,000 Net income 2009: 5,130,000 Operating revenue 2009: 1,013,349 Ebitda 2009: 375,189 Net income 2009: 271,436 Operating revenue 2009: N.A. Ebitda 2009: N.A. Net income 2009: N.A Operating revenue 2009: 4,368,791 Ebitda 2009: 1,994,300 Net income 2009: 1,697,812 Operating revenue 2009: 1,410,552 Ebitda 2009: 622,413 Net income 2009: 385,752

6 6 At the end of the 1H 10, TGI had a total of 46 customers and 78% of its sales were concentrated in five of them. They are considered sound companies at a local and international level. Table N 8 Contractual structure As of June 10 As of june 09 No Volume Average remaining No Volume Average remaining Type of contract Mmcfd life (years) Mmcfd life (years) Firm (1) Interrumptible (2) Firm expansion Guajira * Firm expansion Cusiana Note: Footnotes in annex 6 * This is not a firm volume jet because the expansion of Guajira has not been completed In the last twelve months four firm contracts expired, reducing the contracted volume under this modality in 3 mmcfd. Part of the volume of the contracts that expired is being served by interruptible contracts and the remaining, by new firm contracts. As mentioned, practically half of the additional capacity of the Guajira system entered on stream before the end of 1H 10. The company expects the expansion project to be fully operational before the end of the 3Q 10, thus adding 64 mmcfd in firm contracted volume. The Guajira enhancement is backed by long term contracts expiring in Financial performance Table N 9 Revenue structure F 09 Cop Mm Operating revenue 545,246 By currency Sales linked to USD (1) 338,094 Sales in COP (1) 207,152 By type of charge Capacity charges (2) 387,024 Variable charges (3) 100,490 No recurring charges (4) 40,320 Other (5) 17,411 Note: Footnotes in annex 6 Cop 39% Total sales - share by type of currency Index to USD 61% Totals as of 1H: 09: Cop 276,020 mm 10: Cop 277,682 mm Cop 37% Index to USD 63%

7 7 Total sales - share by type of charge Non - recurring charges 6% Others 3% Totals as of 1H: 09: Cop 276,020 mm 0: Cop 277,682 mm Non - recurring charges 9% Others 2% Variable charges 22% Capacity charges 69% Variable charges 16% Capacity charges 73% Operating income remained steady although the increase in volume sales (+13.4%) and the consolidation of TCG s revenues (given its merger with TGI). The revaluation of the Cop is the reason behind this behavior, as around 60% of all company sales were indexed to the USD in the 1H10. In fact, the average invoicing rate during 1H 09 was Cop 2,354 / usd, while during the same period of 2010, it reached Cop 1,951 / Usd (a 17% reduction). The negative impact resulting from the revaluation of the Cop on the company s Operating income was more than offset by the positive impact on Non-operating results. Table Nº 10 - Selected financial indicators Mm COP Variation Mm COP Mm USD 1H 10 1H 09 COP % F 09 1H 10 1H 09 Operating revenue 277, ,020 1, , Operating income 168, ,605-6, , Operating margin % EBITDA LTM (1) 418, ,373-5, , EBITDA margin LTM% Net income 179, ,575 59, , Note: Footnotes in annex 6 Ebitda LTM 93,446 95,169 92,019 90, ,05 331, , , , , , ,385 Jun Final Jun Jun Depreciations, amortizations y provisions Operating income Table Nº 11 Operational results Mm COP Variation Mm COP Mm USD 1H 10 1H 09 COP % F 09 1H 10 1H 09 Operating revenue 277, ,020 1, , Operating cost 92,050 85,720 6, , Operation and maintenance 51,168 42,782 8, , Provisions, depreciations and 40,882 42,938-2, , amortizations Gross margin 185, ,299-4, , Operating and administrative 17,051 15,695 1, , expenses Personnel y general services 13,445 14,422 1, , Provisions, depreciation and 3,606 3, , amortization Operating income 168, ,605-6, ,

8 8 The reduction in Operating income is explained by: ( ) Lower operating revenues as a result of the revaluation of the Cop; ( ) Higher operating costs, mainly due to increases in the consumption of natural gas in TGI s compression stations, and; ( ) Greater administrative costs due to a service agreement entered into between TGI and EEB. The main reasons behind the increase in Operation and maintenance costs (+ cop 8,386) are: ( ) greater consumption of gas in TGI s compression stations (+ Cop 3,784 mm) resulting from the higher volume transported and; ( ) and the cost of operating leases (+ Cop million) as a result of TGI and Transcogas merger. Increase in administrative expenses (+ Cop 1,356 mm) is explained by higher fees (+ Cop 917 mm) mainly due to the service agreement between TGI and EEB to support the former in matters such as project evaluation, legal, administrative, technological, among others. Table Nº 12 Non-operating results Mm COP Variation Mm COP Mm USD 1H 10 1H 09 COP % F 09 1H 10 1H 09 Operating income 168, ,605-6, % 331, Non operating income 152, ,498 45, % 254, Financial (1) 2,572 9,045-6, % 14, Exchange differences (2) 146,350 96,127 50, % 223, Hedging Valuation (3) N.A Others 3,641 2,326 1, % 16, Non operating expenses 130, ,909-22, % 315, Financial (4) 107, ,743-14, % 226, Exchange differences (5) N.A Hedging valuation (6) 21,064 28,419-7, % 86, Others 1,482 1, % 2, Income before income tax 190, ,194 61, % 269, Income tax 11,613 9,619 1, % 21, Net Income 179, ,575 59, % 247, Note: Footnotes in annex 6 In despite of the lower Operating income (-3.4% yoy), Net income showed a significant increase in the 1H 10 (+41.9% yoy), due mainly to: ( ) Higher Non operating income reflecting the reduction in the value of foreign denominated debt as a consequence of the Cop revaluation; ( ) a reduction in Financial expenses due also to the revaluation of the Cop and; ( ) a reduction in expenses related to the valuation of hedging contracts. As of June 2010, TGI had acquired hedging contracts for a notional amount equivalent to USD 300 million. This is intended to cover the payments of the principal of the notes due in 2017, against exchange rate risk.

9 9 Table Nº 13 Debt indicators As of As of Unit june 10 June 09 Net debt (1) / EBITDA LTM (2) OM: < 4,8 EBITDA LTM (2) / Interest expenses LTM (3) OM: > 1, Debt structure Rate Due Senior (4) % 03-Oct-2017 S&P: BB ( ) F.R.: BB ( ) Subordinated (5) % 10-Oct-2017 Note: Footnotes in annex 6 Table Nº 14 - Indicators reconciliation - Cop Mm Jun 10 Jun 09 EBITDA LTM 418, ,373 Gross debt 1.437,345 1,619,003 Cash and temporary investments 159, ,236 Net debt 1,278,187 1,404,767 Interests LTM 201, ,124 4,08 3,67 3,32 3,05 OM < 2,01 1,97 Net debt / EBITDA 1,7 2,08 OM > EBITDA / Interest expenses Jun 08 Jun 09 Jun 10 Jun 08 Jun 09 Jun 10 The revaluation of the Cop had a greater impact in reducing the value in pesos of foreign denominated debt than the negative impact it had on EBITDA, therefore the reduction in the leverage ratio. Interest coverage indicator (EBITDA LTM / interests) was higher thanks to the reduction of interests payments as a consequence of the revaluation of Cop. Table Nº 15 - Capex Mm COP Variación Mm USD 2010 Jan Mar 2009 Jan - Mar COP Var % 2010 Jan - Mar 2009 Jan - Mar Investment (1) 180,234 34, , Maintenance (2) 2,900 2, Note: Footnotes in annex 6 Higher capex investments reflect the expansion of the Guajira system (+ Cop 95,000 mm) and assets related to the merger of Transcogas (+ Cop 65,000 mm).

10 10 Annex 1: Legal notice and clarifications This document contains projections and estimates, using words such as anticipate, believe, expect, estimate, and others having a similar meaning. Any information different from the historical data included in this submittal, including but without limitation, that relative to the Company s financial situation, its business strategy, plans, and objectives from Management for future operations (including the development of plans and objectives relative to Company products and services), corresponds to projections. Such projections involve known and unknown risks, uncertainties and other important factors that may 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. 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. These estimates pertain only to the date of this submittal. The Company expressly declares itself to be exempt from any obligation or commitment to distribute updates or reviews of any projection contained in this submittal, so as to reflect any change to the Company s expectations regarding them or any change in the events, conditions or circumstances on which these projections may be based. Financial projections and other estimates included in this report are made under assumptions and considerations inherent in uncertainties regarding the economic, competitive, regulatory and operating environment of the business, as well as the conditions and risks that are beyond the Company s control. Financial projections are inevitably speculative, and one or several of the assumptions under which such projections and other estimates contained in this report are made, can be expected to be invalid. Furthermore, unexpected events or circumstances may be expected to occur. Actual results may vary from the financial projections and the variations may be materially adverse. Consequently, this report must not be deemed as a registration by the Company or by any other party, which indicates that the financial projections shall be achieved. Potential investors must not rely on projections and estimates herein contained, and neither should they base their investment decisions on them. The company s past performance cannot be considered a guide for its future performance. Clarifications to the Report 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 09: 2,158.7 COP/USD 1H 10: 1,916.5 COP/USD In the figures submitted, a comma (,) is used to separate thousands and a point (.) to separate decimals. 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.

11 11 Annex 2: Consolidated financial statements

12 12

13 13

14 14 Annex 3: Controlling company overview EEB EEB is an integrated energy company with interests in the natural gas and electricity sectors and operations in Colombia, Peru and Guatemala; EEB operates directly or through controlled companies assets in electricity transmission and natural gas transportation; EEB is engaged in the electricity generation and distribution, and gas distribution sectors through companies which it does not control; EEB has an expansion strategy focused on the transmission and distribution of energy in Colombia and other countries within the region. EEB s main share holders are the District of Bogotá (81.5%), Ecopetrol (7.3%), Corficolombiana (3.8%), and the Colombian pension funds.

15 15 Annex 4: TGI overview TGI is key to EEB s growth strategy; It is the largest natural gas transporter in Colombia and operates a natural monopoly in a sector with high growth potential and whose development is of central interest to the Colombian Government; TGI is the only natural gas transporter in Colombia connecting the main sources of supply (Guajira and Cusiana) with the main consumption centers (TGI s area of influence represents approximately 60% of the country s total consumption). TGI is subject to regulations issued by the Ministry of Mines and Energy and by CREG. Creg defines the maximum tariffs that TGI may charge its customers based on the principals of financial feasibility and economic efficiency. The tariff scheme is designed to provide the transporter with an appropriate return on investment and to recover operation and maintenance costs. The part of the tariff that repays the investment is indexed to the exchange rate (peso / dollar) which gives the company a natural hedge against its foreign currency obligations. Almost all company s sales are supported by in firm and long term contracts entered into with sound companies that operate in Colombia. TGI is currently undertaking the two most ambitious expansion projects in the Colombian natural gas transport infrastructure: the enhancement of the Guajira and Cusiana gas pipelines, with an estimated capex of Usd 550 m. TGI holds a 25% interest in the Peruvian company Congas (the remaining 75% is held by EEB). Congas is the company awarded with a concession to build the natural gas transport and distribution network in southern Peru (department of ICA). The estimated cost of the aforementioned project amounts to Usd 274 m. Official forecasts estimate that in the coming years the natural gas demand in the ICA region will experience the fastest growth in the country.

16 16 Annex 5: Technical and regulatory terms ANH: Agencia Nacional de Hidrocarburos. Colombian entity in charge of managing and promoting the appropriate use of hydrocarbons. AOM: Administrative, operation and maintenance expenses and costs. Bln or bln: US billion (109). BOMT: Build, Operate, Maintain and Transfer Contract. A contract to develop natural gas pipelines, whereby a third party commits to building, operating, maintaining and transferring the pipeline. BR: Banco de la República. Colombia s Central Bank; responsible for the country s monetary and exchange policy. BTU: British Thermal Unit. COP / Cop: Colombian peso. CFD o Cfd: cubic feet per day. 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. Cuota de Fomento Development Quota: Refers to resources collected by Ecogas from users to build new natural gas infrastructure projects. DANE: Departamento Administrativo Nacional de Estadística (National Administrative Statistics Department). Agency responsible for planning, collecting, processing, analyzing, and disseminating official statistics in Colombia. DNP: Departamento Nacional de Planeación. National Planning Department. Entity in charge of the country s economic planning. EEB: Empresa de Energía de Bogotá. TGI s major shareholder. GNV: Natural Gas for vehicles. GPC: Giga cubic feet (109 ) IED: Foreign Direct Investment IPC: Índice de precios al consumidor de Colombia. Km: Kilometers. MEM: Ministerio de Energía y Minas del Perú. Ministry of Mines and Energy - Peru. State entity in charge of preparing mining and energy policies for Peru.Mi: Millas de los Estados Unidos. Mm/mm: Million Minminas: Ministerio de Minas y Energía Ministry of Mines and Energy. State entity in charge of preparing mining and energy policies for Colombia. Mi: US miles. PIB: Producto Interno Bruto Gross Domestic Product - GDP. Pbs: Basis points; 100 basis points is equal to one percent.

17 17 SF: Superintendencia Financiera Financial Superintendence. State entity in charge of regulating, overseeing and controlling the Colombian financial sector. TGI: Transportadora de Gas del Interior. 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. R/P: Reserves production ratio. Calculates the duration of reserves given the production level at a given moment. SSPD: Household Public Utility Superintendence. State agency in charge of controlling, inspecting and overseeing household utility companies. UPME: State agency responsible for planning Colombia s mining and energy sectors. USD: US dollars.

18 18 Annex 6: Table footnotes Footnote table Nº 5: Selected operational indicators; (1) Nominal transporting capacity at the end of a period. (2) Contracts by which TGI is obliged to keep a certain transporting capacity available to the costumer. (3) Average volume transported in a certain period. (4) Ratio between the nominated volume by costumers and the transporting capacity. (5) Real gas transporting capacity in a certain period in relation with the nominal capacity. (6) Difference between gas volumes received and gas volumes delivered considering the changes in inventories. It is measured as a percentage with respect to the volume received by the customers. CREG acknowledges 1% in its tariff structure as maximum losses that can be transferred to the customers. Back to table Footnote table Nº 8: Contractual structure (1) Contracts where TGI S.A ESP guaranties the availability of a defined transportation capacity during a certain period of time. Remuneration for this type of contracts may be fixed and/or variable. (2) Contracts in which the transport service foresees and allows for its interruption by any party for any reason, without this giving rise to any type of compensation by the party suspending the service. (3) Agreement with Promigas for embedded pipelines. Back to table Footnote table Nº 9: Income structure (1) Gas regulation in Colombia divides the tariff to users into two parts; one part is set to recognize investments and the other one the administration, operation and maintenance - AOM - expenses and costs. The portion of the tariff acknowledging investments is linked to the dollar and is adjusted on an annual basis based on the U.S. Capital Equipment IPP; and it is paid in pesos at the TRM at the end of every month. The portion that acknowledges the AOM is defined in pesos and is linked annually with the Colombian IPC (consumer price index). (2) Capacity charges or fixed charges obliged the transporter to maintain a certain transport capacity available when required by the customer. In turn, the customer undertakes to pay for such capacity irrespective of the volume transported. (3) Variable charges obliged the transporter to maintain an available capacity when required by the customer. Nevertheless, and unlike the previously described scheme, the customer only pays for the volume effectively transported, although at a higher tariff. In general terms, TGI customers maintain contracting schemes that combine fixed and variable charges. (4) Non-recurring charges do not generate the obligation of firmness for the transporter. That is to say, the transporter has the right to interrupt the service.

19 19 (5) Additional services provided by the company, such as new connections or odorization. Footnote table Nº 10: Selected financial indicators (1) It is the Operating income plus amortizations, depreciations and provisions. LTM: Last twelve months. Back to table Back to table Footnote table Nº 12: Non-operational results (1) Includes the financial returns of the temporary investments. (2) Reflects the impact of the peso devaluation in the value of the assets and liabilities in foreign currency. (3) Valuate the hedges contracted by the company to reduce the risk in the payment of principal of the debt in foreign currency. (4) Are the financial expenses related to the company s debt. (5) Reflects the impact of the peso revaluation in the valuation of the assets and liabilities in foreign currency. (6) Valuate the hedges contracted by the company to reduce the risk in the payment of principal of the debt in foreign currency. Back to table Footnote table Nº 13: Debt indicator UDM: Últimos doce meses (1) According to the indenture of the Notes, the company s net debt only considers TGI s senior debt less the value of cash and temporary investments. (2) Corresponds to the EBITDA generated by TGI in the last 12 months. (3) Corresponds to the accrued interest of financial obligations incurred by TGI in the last 12 months. (4) Is the value of the notes issued by TGI ltd and guaranteed by TGI. (5) It corresponds to the inter-company debt between TGI and EEB. Back to table Footnote table Nº 15: Capex (1) Applies to all investments to increase the transport capacity of the company. (2) Applies to all investments aimed to maintain in an appropriate state the assets of the company to allow normal operation of the system. Back to table