Investors Report Second Quarter 2010

Transcription

1 1 Bogota D.C., September 2010 INDEX Executive summary and relevant facts. Performance of controlled investments. EEB transmission. TGI. DECSA EEC. Performance of Non - Controlled investments. Emgesa. Codensa. Gas Natural. REP y CTM. EEB financial performance (consolidated). Link to TGI s Investors Report 1S 10: Annex 1: Legal notice and clarifications. Annex 2: EEB s consolidated and stand alone financial statements for 1Q 10. Annex 3: Overview of EEB Annex 4: Technical and regulatory terms. Annex 5: EBITDA LTM reconciliation. Annex 6: Tables and graphics footnotes.

2 2 Executive summary and relevant facts Table No 1 Overview of the electricity sectors Colombia Peru Guatemala Installed capacity (MW) 13,496 7,158 2,029 Demand 1H 10 (GWh) 27,862 2, Demand growth (%) 4.7 7,2 10,3 Growth drivers 1H 10 Non regulated demand, specifically, industry and mining. Sources: XM, Upme, COES (Peru), AMM (Guatemala) High economic growth driven by the mining sector. High temperatures due to El Niño Higher industrial activity Table No 2-0verview of the natural gas sectors Colombia Peru Proven and probable reserves (TPC) Demand 1H 10 (mm pcd) 1, Demand growth (%) 16, Growth drivers 1H 10 Thermal demand related to low rainfall levels due to El Niño. High economic growth driven by the mining sector. Sources: UPME; CNO; MEM (Peru) Table No 3 - Summary of EEB s expansion projects Project Country Sector Capex Usd Mm Status In operation: Guajira TGI Colombia Natural gas transmission % of the expansion in operation (35 mmpcd of a total of 70 mmpcd) 3Q 10 Cusiana I y II TGI Colombia Natural gas transmission 370 Under construction Phase I: 3T 10 Phase II: 2T 11 ICA - Congas Perú Natural gas transmission 287 Financing and contracting 4Q 12 and distribution processes. Expansion of transmission system Trecsa Guatemala Electricity transmission 373 Financing and contracting processes. 4Q 13

3 3 Table No 4 - Summary of expansion projects in non controlled companies Company Sector Country Capex Usd Mm In Project Estimated operation: Quimbo Emgesa Electricity Colombia generation Subestations (3) and network Codensa Electricity Colombia distribution Enhancement to concessions (4) REP Electricity Perú transmission Enhancement to concessions and new concessionss (13) CTM Electricity transmission Perú Table No 5 EEB s consolidated financial indicators 1H 10 Cop Mm 1S 10 1S 09 Var % F 09 Operating revenue 471, , ,820 Operating income 214, , ,282 Dividends and reserves decreed to EEB (full year) 603, , ,566 Net income 776, , ,213 Dividends and reserves decreed by EEB (full year) 291, , ,272 Consolidated EBITDA 1,242,854 1,059, ,053,942 Last credit rating international bonds (144A) S&P ( ): BB+ Fitch ( ): BB Table No 6 - Selected financial indicators 1H 10 - Non-controlled investments Cop mm Usd mm Cop Mm Emgesa Codensa Gas Natural REP CTM Operating revenue 979,203 1,368, , Operating income 438, , , Dividends and reserves decreed to EEB 251, ,199 69, Capital reductions to EEB 229, Net income 264, , , EBITDA 1S , , , EEB s EBITDA (LTM) showed a significant increase (+17.3%) driven by dividends received from Non-controlled investments (+29.0%). EBITDA s result had a positive impact on leverage and interest coverage ratio. Increase in EEB s Net income (+48.3%) was driven by non operational results thanks to the impact that the revaluation of the COP had on the valuation of financial debt and lower financial expenses. CREG approved (Resolution 110 of 2010), establishing the asset and parameters that will be used to determine the remuneration of transmission assets in operation prior to 2001 (which represented around 80% of EEB s transmission revenues). According to company estimates, EEB s transmission revenues may increase by 2.2%. The company expects that the new remuneration scheme will be effective before year end. TGI s increase in Net income (+49,8%) was driven by Non-Operating results. The revaluation of Cop had a significant impact on Non-operating results, because it lowered the value in pesos of the financial debt and reduced financial expenses.

4 4 In July 2010, TGI entered into new hedging contracts amounting for US$ 100 mm. This operation reduces TGI s the exchange rate risk exposure, as it allows it to set the future prices at which the company will buy the dollars needed to pay the principal of the notes (USD $750 million; October 2017; 9,75%). With this operation, the company made progress in the implementation of its exchange rate risk hedging strategy, completing to date operations amounting to US$300 million. DECSA s Net income (EEC s controlling company) increased seven fold due to the implementation of programs aimed at reducing energy losses, recovering overdue bills, streamlining payroll, among others. Congas Perú (75% EEB; 25% TGI) is currently completing detailed engineering of Gasoducto Regional de Ica and it s starting the contracting process in order to acquire pipelines and civil work services. Furthermore, the company completed the public audience process related to the Environmental Impact Study and is waiting for approval thereof from the Peruvian Ministry of Energy and Mines. It also signed the supply contract with the gas producer, and it expects to complete negotiations of the transport and commercial contracts with end users, while it continues working in the construction of its distribution network. The company expects to finance the project with a capital contribution of 30% (75% EEB and 25% TGI) and the remaining 70%, through debt (multilateral banking, intercompany loans and local financing). Congas hired the services of an investment bank to support the company s funding strategy. TRECSA (90% EEB / 10% EDEMTEC) is carrying out works related to the project in Guatemala. Last August, the company delivered the final schedule of the project to the Electricity Energy National Commission (Comisión Nacional de Energía Eléctrica), establishing the 4Q 13 as the date by which the project will be operational. In addition, it entered into contracts of essential importance for the development of the project: ( ) Preparation of environmental impact studies for each of the six lots that make up the project (8 months); ( ) cable supply (27 months); ( ) transmission towers supply (25 months) and; ( ) negotiations of rights of way. Similarly, the socialization program with communities showed an execution of 83%. The company expects to finance the project with an equity contribution of 50% and the remaining through an intercompany loan and local banks debt. EEB Shareholders Meeting approved, on July 30th, a reduction of the company s subscribed and paid up capital for an amount of Cop mm. Such reduction shall enter into force by means of a reimbursement to shareholders, which will reduce the value of each share from Cop 7, to Cop 5, To carry out the aforementioned operation, the company requires authorization from the Societies Superintendency and the Social Protection Ministry. Upon approval, reimbursement of contributions will be paid the shareholders registered as such on the day the reform of the bylaws is formalized. Resources from the capital reduction come from the money received in May from Emgesa s own capital reduction (Cop 229,000 mm). Emgesa completed the conciliatikon settlement with the Ministry of the Environment regarding the environmental license of El Quimbo. This settelment is pending confirmation from the Court of

5 5 Cundinamarca. Progress has also been made in the valuation and negotiation of the necessary plots of land for the construction of the project. In May, Fitch Ratings confirmed the AAA rating of all issuances made by the company. Codensa recorded lower cash generation during the first half of this year. Two factor affected the afore mentioned result: the tariff review entered into force at the end of last year and had a marginal result on cash generation and the sale of the business Codensa Hogar, which was also materialized at the end of last year. REP is negotiating with MINEM new enhancements to its concession contract to include the following projects: ( ) a second circuit of 220 kv transmission line (Trujillo Guadalupe Chiclayo) and the enhancements of the associated substations (Chiclayo Oeste, Guadalupe, Chimbote 1 and Huacho); ( ) the reinforcement of the Pomacocha Pachachaca transmission line and the enhancement of associated Pomacocha substation, and: ( ) the enhancement of the Chilca - Nueva Conexión Chilca 1 in Enersur reactor. These projects have an estimated capex of Usd 86 mm. Two new concessions were awarded to CTM for the construction and operation of two transmission lines and its related assets. With these new concessions, the company completes an investment plan valued in Usd 504 mm, which will be undertaken until EEB s Board of Directors approved, in 2009, a capital injection to CTM for an amount of Usd 61 mm. The rest of the funds will be financed with an ewquity contribution provided by ISA and loans and local notes. Return to index

6 6 Performance of controlling investments Table No 7 EEB s transmission business indicators 1H 10 1H 09 Var. % F 09 Infrastructure availability (%) (1) Compensation for unavailability (%) (2) Maintenance program compliance (%) (3) Participation in Colombia s transmission activity (%) (4) Investments (Mm COP) 1,604 1, ,410 Note: Footnotes in annex 6 Lower ratios for Infrastructure availability and thus for Availability compensation are explained are a consequence of a partial in a substation. The company expects to solve the problem before year end. Investments made are related to: ( ) Infrastructure upgrading to mitigate unavailability risks, ( ) performance of environmental commitments and; ( ) assessment of growth opportunities at national and international level. Table No 8 TGI s selected indicators 1H 10 1H 09 Var % F 09 Operating revenue (cop Mm) 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) Firm contracted capacity (Mmcfd) Credit rating S&P (Jun 10): BB Fitch (Feb 10): BB Non operational results drive the company s Net income (+49.8%). The revaluation of Cop affected positively Non-operating results due to its impact on the value in pesos of the financial debt (100% contracted in USD) and on the reduction of financial expenses. Transported volume recorded a significant increase (+13%) but it was not reflected neither in Operational income nor EBITDA. The explanation thereof relates to the revaluation of COP, given that around 60% of company sales were indexed to the USD throughout the first half of the year. The company continues with the development of an ambitious expansion plan in Colombia, valued in Usd 540 mm. Part of this expansion shall be financed with company s cash flow and the remaining portion shall be supported by means of a private equity placement process without implying that EEB may be losing control. A group of investors have expressed their interest in TGI and have started a due diligence process. XXXX

7 7 Table No 9 Consolidated selected indicators of DECSA 1H 10 1H 09 Var % F 09 Number of clients 236, , ,557 Operational revenue (cop Mm) 147, , ,486 Operational income (cop Mm) 18,700 10, ,737 Net Income (cop Mm) 21,088 3, ,898 Decsa (51% EEB; 49% Codensa) is the controlling shareholder (82.34%) of Empresa de Energía de Cundinamarca, an electricity generation, commercialization and distribution company, with operations in the province of Cundinamarca (Codensa s area of influence). As of last year, EEC is carrying out programs to reduce energy losses, recovering overdue bills, adjusting accounting provisions and streamlining its payroll by means of a voluntary retirement plan, among others. Return to index Performance of Non - controlled investments Table No 10 Overview of Emgesa Installed capacity (MW) 2,895 Composition 10 Hydro y 2 thermo Generation 1H 10 (Gwh) 5,098 Sales 1H 10 (Gwh) 7,138 Operating revenue 1H 10 (Cop Mm) Ebitda 1H 10 (Cop Mm) 517,890 Controlled by Endesa of Spain EEB s stake 51.5% (37.4% common; 14.1% preferential without the right to vote) Sales (1) - gwh Energy suply - gwh 0.9% 1H 10 1H % % H 10 1H 09 Purchases % % % Contracts Spot Total Production Contracts Spot

8 8 The decrease in energy sales during the first half of the year is explained by lower capacity generation in two main hydro plants (Betania and Guavio), as a result of extreme low rainfall levels (El Niño). As per the foregoing, the company had to increase its energy purchases in the spot market to meet contractual obligations. Table No 11 Investments 1H 10 1H 09 Var F 09 % Mm COP 8,856 20,731-57,3 76,666 Mm USD 4, , Source: Emgesa Investments are lower in value when compared to budgeted figures, mainly as a consequence of the rescheduling of maintenance activities and delays in environmental investments and land negotiations related to El Quimbo project. Table No 12 - Selected financial indicators of Emgesa Mm COP Mm COP Mm USD 1H 10 1H 09 Var % F 09 1H 10 1H 09 Operating revenue 979, , ,929, Cost of sales 531, , , Administrative expenses 8,969 10, , Operating income 438, , , Net income 264, , , Ebitda 1H 10 (1) 517, , ,102, Dividends and reserves decreed to EEB 251, , , Capital reductions to EEB 229,143 0 N.A Net debt (2) / Ebitda N.A N.A N.A 1.7 N.A N.A Ebitda / Interests (3) N.A N.A N.A 5.7 N.A N.A Note: Footnotes in annex 6 Lower Operating income is explained by: ( ) reduced production of energy as a result of El Niño (offset with higher prices of energy sold) and; ( ) increase in the Cost of sales due to higher fuel purchases for thermo plants and a higher amount of energy purchased in the spot market to meet contractual obligations.

9 9 Table No 13 Overview of Codensa Number of customers 2,376,749 Market share (%) 24.5 Codensa demand 1Q 10 (Gwh) 6,471 National demand 1Q 10 (Gwh) 27,841 Var. % of Codensa s demand 1H 10 (%) 2.6% Var. % of National demand 1H 10 (%) 4.6% Operational revenues 1H 10 (Cop Mm) 1,368,756 Ebitda 1H 10 (Cop Mm) 477,220 Controlled by Endesa of Spain EEB s stake 51,5% of the company shares (36.4% common; 15,1% preferential without right to vote) Demand of Codensa vrs. National Demand gwh 1H 10 1H 09 F % % Codensa National in GWh Demand in Codensa s area of influence grew below the national average. This result is explained by the stagnation of household consumption in despite of industry growing demand, which is showing signals of recovery. It is important to note that demand at national level is being driven, mainly, by the mining sector, whose main operations are located outside of the company s area of influence. Table No 14 - Quality of accounts receivable (Cop mm) 1H 10 1H 09 Var % F 09 Overdue accounts receivable Cop Mm (1) 96, , ,588 Average monthly invoicing Cop Mm (2) 221, , ,085 Delinquency index - % (3) Note: Footnotes in annex 6 Reduction of delinquent index is explained by the sale of the business of Codensa Hogar to Banco Colpatria at the end of 2009.

10 10 Table No 15 Investments 1H 10 1H 09 Var % F 09 Mm COP 68,793 97, ,649 Mm USD 35, Source: Codensa Codensa is carrying out an investment plan that includes the construction of three new substations and the enhancement of its distribution network (organic growth). The 2010 investment expansion plan has an estimated value of Usd 68 mm. Table No 16 Selected financial indicators of Codensa Mm COP Mm COP Mm USD 1H 10 1H 09 Var % F 09 1H 10 1H 09 Operating revenue 1,368,756 1,380, ,771, Cost of sales 992, , ,924, Administrative expenses 21,265 37, , Operational Income 355, , , Net income 229, , , Ebitda 1H (1) 477, , ,044, Dividends and reserves decreed to EEB 263, , , Capital reductions to EEB Net debt (2) / Ebitda N.A N.A N.A 0.23 N.A N.A Ebitda / Interests (3) N.A N.A N.A 9.78 N.A N.A Note: Footnotes in annex 6 The reduction in the company s Operating income is explained by: ( ) the five year tariff review carried out by CREG, which reduced the discount rate (WACC) by which distribution assets are remunerated; ( ) lower revenues of the Codensa Hogar business, which was sold last year to Banco Colpatria, and; ( ) higher prices of energy as a consequence of El Niño. Table No 17 Overview of Gas Natural Number of customers 1,652,389 Sales volume (Mmcfd) 122,6 Market share (%) N.D Network (km) 12,250 Operational revenues (1S 10) MmCOP 442,144 Ebitda (1S 10) MmCOP 160,465 Controlled by Gas Natural of Spain EEB s stake 25%

11 11 Sales per type of customer Total: 122,6 mmcfd 1.3% 1H 10 1H % 64,8 64,0 36,5 38,4-5.0% 21,3 22,4 Residential/Commerce Industry Vehicles Sales in household and commercial markets fell as a result of a more efficient consumption of gas. GNV demand was impacted by supply restrictions established by Minminas to service increased demand in the thermal sector. (El Niño). Table No 18 Investments 1H 10 1H 09 Var % F 09 Mm COP 4,065 9, ,051 Mm USD 2, Source: Gas Natural SA ESP The company s low investment level is reflecting lower expansion needs in medium pressure networks in a saturated market such as Bogotá. The company will expand its distribution network in a municipality close to Bogotá (La Calera). It is currently negotiating the gas supply and opening bids for the performance of civil works.

12 12 Table No 19 Selected financial indicators of Gas Natural Mm COP Mm COP Mm USD 1H 10 1H 09 Var % F 09 1H 10 1H 09 Operating revenue 442, , ,013, Cost of sales 251, , , Administrative expenses 45,789 48, , Operational Income 145, , , Net income 120, , , Ebitda 1H (1) 160, , , Dividends and reserves decreed to EEB 69,004 62, , Capital reductions to EEB Net debt (2) / Ebitda N.A N.A N.A 0.1 N.A N.A Ebitda / Interests (3) N.A N.A N.A 26.1 N.A N.A Note: Footnotes in annex 6 Reduction in Operating income is the result of lower sales and a reduced tariff (resulting from the revaluation of Cop. Table No 20 - Overview Rep and CTM REP CTM Network (km) 5,837 1,227 Voltage (kv) 220, 138, Control led by ISA Colombia EEB s stake(%) 40 Table No 21 Selected financial indicators of REP Mm USD Mm USD 1H 10 1H 09 Var % F 09 Operating revenue Cost of sales Operating income Net income Ebitda 1H (1) Dividends decreed to EEB Capital reductions to EEB Net debt (2) / Ebitda N.A N.A N.A 2.6 Ebitda / Interests (3) N.A N.A N.A 6.9 Note: Footnotes in annex 6 Although the revaluation of the Sol had a negative impact on revenues (revenues in Soles are adjusted every based on exchange rate fluctuations to ensure a fixed remuneration in USD), Operating income increased, due to: ( ) the inclusion of new revenues derived from two enhancement projects of the concession, and; ( ) the

13 13 annual adjustment of rates based on the index of Finished Goods Less Food and Energy. Increase in the cost of sales reflects higher maintenance activities in the lines. Higher Operating income and Net income is partly explained by the annual adjustment of tariffs based on the Finished Goods Less Food and Energy index. Table No 22 - Selected financial indicators of CTM Mm USD Mm USD 1H 10 1H 09 Var % F 09 Operating revenue Cost of sales Operating income Net income Ebitda 1H (1) Dividends decreed to EEB Capital reductions to EEB Net debt (2) / Ebitda N.A N.A N.A 1.5 Ebitda / Interests (3) N.A N.A N.A 6.3 Note: Footnotes in annex 6 Return to index

14 14 EEB s Financial performance Table No 23 EEB s consolidated results Mm COP Mm COP Mm USD 1H 10 1H 09 Var % F 09 1H 10 1H 09 Operating revenue (1) 471, , , ,2 224,8 Electricity transmission 46,434 47, ,696 24,2 21,9 Electricity distribution 147, , ,486 77,1 67,5 Natural Gas transmission 277, , , ,9 135,5 Cost of sales (2) 220, , , ,2 105,2 Electricity transmission 19,073 18, ,983 10,0 8,7 Electricity distribution 109, , ,441 57,3 53,4 Natural Gas transmission 92,050 92, ,926 48,0 43,0 Gross income 251, , , ,0 119,7 Administrative expenses allocated 37,001 36, ,188 19,3 16,8 Electricity transmission 2,437 2, ,451 1,3 1,0 Electricity distribution 19,361 19, ,308 10,1 9,0 Natural gas transmission 15,203 14, ,429 7,9 6,9 OPERATING INCOME 214, , , ,7 102,9 Dividends (3) 603, , , ,0 199,4 Temp. investments & pension trusts (4) 31,669 36, ,857 16,5 16,7 Exchange difference (5) 166, , ,226 87,0 50,5 Net valuation of hedges (6) -23,512-45, ,212-12,3-21,0 Other revenue (7) 26,891 8, ,555 14,0 3,8 Administrative expenses -58,321-45, ,748-30,4-21,1 Financial expenses -137, , ,935-71,7-75,6 Other expenses -3,387-4, ,123-1,8-2,0 Income before taxes and minority 820, , , ,1 253,5 interest Minority interest (8) -19,215-4, ,260-10,0-2,3 Income tax -25,016-19, ,995-13,1-8,8 Net income 776, , , ,0 242,4 Note: Footnotes in annex 6 The reduction in Operating income is explained, mainly, by the impact that the revaluation of the Cop had on Operating revenues from the natural gas transport business. In this activity, revenues linked to the USD represent around 60% of total revenues. The reduction in Operating income was more than offset by Non-operating results due to: ( ) higher dividends decreed by the companies in which EEB has no control; ( ) the item Difference in exchange rate reflecting the impact of the Cop revaluation on the debt value and; ( ) the reduction of financial expenses, also due to the revaluation of COP.

15 15 Table No 24 - Financial indicators of EEB Mm Cop Mm Cop Mm USD As of Jun As of Jun Var % F 09 As of Jun As of Jun Ebitda LTM (1) 1,242,854 1,059, ,053, Adjusted Ebitda LTM (2) 1,471,974 1,059, ,053, Ebitda margin % (3) Net debt (4) / Ebitda (1) OM: < 4.5 Ebitda (1) / Interests (5) OM: > 2.25 Note: Footnotes in annex 6 EBITDA LTM - Cop mm QT 09 4Q 09 1Q 10 2Q 10 EBITDA Variation 0,2% -0,8% 4,5% 12,8% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% -2,0% Net debt / EBITDA LTM Net debt / EBITDA LTM OM < 4.5 EBITDA LDM / Interest EBITDA UDM / Intereses OM < ,56 2,05 2,42 2,04 4,65 4,89 5,32 1,58 3Q 09 4Q 09 1Q 10 2Q 10 3Q 09 4Q 09 1Q 10 2Q 10 The significant increase in EBITDA LTM (+17.3%) is due mainly to greater dividends received (+29.0%), which were Cop 175,567 mm higher when compared to the results as of June 2009.

16 16 The leverage ratio continues its lower trend due to: a higher EBITDA, as well as a lower value of the financial debt thanks to the Cop revaluation. Interest coverage ratio also shows a favorable trend thanks to a higher EBITDA, as well as lower financials costs a result of the appreciation of Cop. Table No 25 - EEB Consolidated debt structure As of Jun 10 Cop Mm Part. % As of Jun 09 Cop Mm Part. % F 09 Cop mm As of Jun 10 Usd Mm As of Jun 09 Usd Mm Financial debt in COP 100, , , Financial debt in USD 2,805, ,163, ,994,835 1,464 1,466 Hedge contracts 145, , , Total financial debt 3,050, ,316, ,266,693 1,592 1,536 The revaluation of Cop had a significant impact on the value of the company s financial debt, as well as in the valuation of hedging operations. Thus, in despite of maintaining steady figures in foreign currency (reduced marginally by the amortization of loans entered into in the past with the Swiss Government and KFW), when expressing the debt in pesos, one may observe a decrease of approximately 11 during the past year. As a result of the foregoing, the relative share of indebtedness in foreign currency changed from 95.4% in June 2009 to 92.0% in June Return to index

17 17 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 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: 2T 09: 2,158.7 Cop/USD 2T 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.

18 18 In accordance to the offer memorandum of the notes issued by EEB (Usd 610 m; 8.75%; 2014); the company s consolidated EBITDA for a specific period is calculated taking operating revenues for such period and subtracting the cost of sales, administrative expenses and interests generated in pension funds. One must add decreed dividends (irrespective of whether they have been paid or not), interests of temporary investments, indirect taxes, amortization of intangibles, depreciation of fixed assets and provisions and contributions made to pension funds. Consolidated and adjusted EBITDA for a specific period is calculated taking the consolidated EBITDA for such period and adding the cash coming from EEB attributable to capital reductions of those companies where EEB has shares. Return to index

19 19 Annex 2: Consolidated financial statements 1H 10

20 20

21 21

22 22

23 23 Stand alone financial statements

24 24

25 25

26 26 Return to index

27 27 ANNEX 3: EEB S OVERVIEW EEB is an integrated energy company with interests in the natural gas and electricity sectors and operations in Colombia, Peru and Guatemala; The company was founded in 1896 and it is controlled by the District of Bogotá (81,5%; S&P BBB- rating); The vision of the group of Companies led by EEB is: to become, by 2024, the first independent natural gas transporting company in Latin America, and an important player in the transmission of electric energy at national and international level with significant stakes in other energy sector businesses ; EEB has an expansion strategy focused on the transmission and distribution of energy in Colombia and other countries within the region. A big chunk of its investments are invested in natural monopolies regulated by the Government, which allows the company to enjoy a stable and predictable cash flow influx; It participates, either directly or indirectly (through companies with control) in the transmission of energy and in the transportation of natural gas; The company participated in energy generation, transmission and distribution sectors as well as in the natural gas distribution sector by means of investments in companies it does not control. The aforementioned refers to alliances with companies such as ISA Colombia, Endesa and Gas Natural Spain. It entered into two shareholder agreements with Endesa; these in turn regulate the governance of Emgesa and Codensa. Amongst other things, the parties are bound to cast a vote in favor of the distribution of as maximum dividends as permitted by law. EEB S structure Return to index

28 28 ANNEX 4: TECHNICAL AND REGULATORY TERMS BLN: US billion (10 9 ) 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: Miles, MW: Megawatt, power unit or work which equals one million watts, N.A. Not applicable. CFD: Cubic feet per day Proinversión: Agencia peruana encargada de la promoción de la inversión privada en el Perú, SIN: Sistema Interconectado Nacional, National Interconnected System STN: Sistema de Transmisión Nacional, National Transmission System SF: Superintendencia Financiera Financial Superintendence. 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. 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 kpcd, Return to index

29 29 ANNEX 5: EBITDA RECONCILIATION LTM M COP Var M COP M USD As of June 10 As of June 09 % F 09l As of June 10 As of June 09 Operating income 408, , , Operating depreciation 49,066 43, , Operating amortization 54,802 61, , Operating taxes 3,576 5, , Dividends & interests earned 780, , , Interests in autonomous equity -18,675-35, (25,688) Administration expenses -113,608-92, (100,747) Retirement pensions 26,236 26, , Amortizations 22,713 13, , Depreciations Provisions 14,326 7, , Taxes 14,822 12, , EBITDA LTM 1,242, ,053, Return to index

30 30 ANNEX 6: FOOT NOTES Table No 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. Return to table Table 12 Selected financial indicators of EMGESA (1) Ebitda for the period under analysis was calculated by taking the operating profit and adding the amortizations of intangibles and depreciations of fixed assets for such period. (2) 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. (3) Accrued interest on financial debts for the previous twelve months. Return to table Table 14 Quality of accounts receivable (1) Accounts receivable with a delinquency level in excess of 30 days. (2) Monthly invoicing average: Monthly average of invoicing in the past twelve months. (3) Delinquency level index: (1)/(2) Return to table Table 16 Selected financial indicators of Codensa (1) Ebitda for the period under analysis was calculated by taking the operating profit and adding the amortizations of intangibles and depreciations of fixed assets for such period. (2) 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. (3) Accrued interest on financial debts for the previous twelve months. Return to table Table 19 Selected financial indicators of Gas Natural (1) Ebitda for the period under analysis was calculated by taking the operating profit and adding the amortizations of intangibles and depreciations of fixed assets for such period.

31 31 (2) 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. (3) Accrued interest on financial debts for the previous twelve months. Return to table Table 21 Selected financial indicators of REP (1) Ebitda for the period under analysis was calculated by taking the operating profit and adding the amortizations of intangibles and depreciations of fixed assets for such period. (2) 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. (3) Accrued interest on financial debts for the previous twelve months. Return to table Table 22 Selected financial indicators of CTM (1) Ebitda for the period under analysis was calculated by taking the operating profit and adding the amortizations of intangibles and depreciations of fixed assets for such period. (2) 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. (3) Accrued interest on financial debts for the previous twelve months. Return to table Table No 23 - Consolidated results of EEB (1) Operating revenue for transmission services rendered directly by EEB, natural gas transmission of its controlled companies, TGI and Transcogas and energy distribution services that Decsa consolidates for his participation in EEC. (2) Cost of sales of the transmission services rendered directly by EEB, natural gas transportation services of its controlled companies TGI and Transcogas and energy distribution services that Decsa consolidates for his participation in EEC. It includes personnel, materials, operation and maintenance costs, depreciation, amortization and insurances related to those activities. (3) Dividends decreed by non-controlled companies and temporary investors and pension funds autonomous equity. (4) Interests of temporary investments that are generated by pension funds autonomous equity. (5) Refers to net losses or earnings due to Exchange rate variation and its impact on assets and liabilities expressed in foreign currency. (6) Valuation of hedging operations contracted by EEB and TGI to reduce currency risk. (7) Income from recovery of investments, leases and expenses. (8) Proportion of net income corresponding to minority investors in the company s consolidated by EEB. Return to table

32 32 Table 24 - Financial indicators of EEB (1) Consolidation of EEB income less cost of sales, administrative expenses, interest on pension funds autonomous equity, plus dividends of participated companies, interest of Accounts receivable investments, indirect taxes, amortization of intangibles, depreciation of fixed assets, pension payments and provisions for the last 12 months. It is consolidated Ebitda plus capital reeducations of participated companies. (2) Consolidated EBITDA plus capital reductions of participated companies. (3) 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. (4) Consolidated debt less free cash. (5) Consolidated financial expenses of the past 12 months Return to table Graph 1 Sales (1) The sum of purchases and production is lower than sales because a small portion is destined to internal consumption. Return to graph Return to index