Investors Report Second Quarter 2009

Transcription

1 1 Bogotá D.C., September INDEX Clarifications. Relevant facts. Market information. Emgesa performance (electricity generation in Colombia). EEB transmission performance (electricity transmission in Colombia). REP and Transmantaro performance (electricity transmission in Peru). Codensa performance (electricity distribution in Colombia). Gas Natural performance (natural gas distribution in Colombia). EEB financial performance. Link to TGI s Investors Report Annex 1: Legal notice. Annex 2: Technical and regulatory terms. Annex 3: EEB non-audited consolidated financial statements. Annex 4: EEB group structure. 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 Superintendencia Financiera de Colombia. The exchange rates used are as follow: - Second quarter : 1, COP/USD - Second quarter : 2, 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. RELEVANT FACTS Recently, there have been some moderate signs of optimism with respect to the recovery of the world s economy. Some of the world main financial firms results exceeded analyst expectations in the second quarter; furthermore, some key indicators in the US economy have slowed their downturn pace and some Asian economies, including China, experienced significant growth rates in 2Q. These results have provided for the recovery of stock markets and the prices of basic commodities. Indeed, these are positive signs, but they have not yet cleared the risks inherited from the crisis in the financial sector. Colombia s economic performance also exceeded expectations. GDP fell during 1Q over de previous quarter (-0.6) but it decreased its pace when compared to 4Q (-0.7). This contraction reflects the fall in industrial production (around 6 in June compared with the same month of last year), but sectors such as financial services and specially mining experienced high growth rates. By the end of the first half of

2 2 the year, the Consumer s Confidence Index (DANE Fedesarrollo) reverted its downward trend, and that may be signaling the beginning of a recovery in industrial production. IMF latest forecast (April) predicted a fall for the Colombian economy of 0.6 for this year, and at the end of the day, the final balance will depend upon what happens with industrial production as the mining and financial sectors show positive perspectives. The former, supported by higher international prices and an increasing flow of investments (foreign direct investment in the oil and mining sector grew by 13 in the first quarter of when compared with the same period of last year); and the latter, sustained by the reduction of interest rates which, in turn, have driven profits in this segment of the economy. Annual inflation as of June was below the floor set by the Central Bank (3.81 v. 4.5). This provides support to the expansionist policy carried out by this agency, which has been able to reduce by 450 basic points its intervention rate (today at 4.5) in the past few months. Market expectations indicate that the intervention rate will be maintained in the coming months. On June 30,, DNP submitted a report on the anti-cyclic measures aimed at counteracting the effects on decreased demand. To date, 34 of the plan has been executed, where the mining and energy sectors are the greatest recipients of resources with investments amounting to COP 11.5 billion of a total of COP 28 billion assigned in the plan to this particular sector. Peruvian GDP grew by 1,1 in the first quarter of. IMF foresees a growth rate in of around 2, the highest growth rate for the region. As of June, electricity demand in Colombia grew less than 1. The fall in industrial production resulted in a fall in electricity demand, which during grew at rates above 4. Electricity demand in Peru also experienced a downturn during the first semester of. In the said period, and when compared to the same period last year, it grew by 0.5. In 2Q, natural gas consumption in Colombia fell by almost 6, when compared to the same period in. Part of this fall is explained by the contraction in industrial production. During the same period, the decrease in transported volume for TGI (-1.1) was significantly less when compared to the decrease in consumption at national level. In despite of the above, company s sales show a sound growth (27) driven mainly by the devaluation of the peso. According to OSINERGIM, natural gas demand in Peru fell during the first semester of when compared to the same period in. Decreased demand is explained by a reduced consumption in the electric generation segment that accounts for aprox. 42 of total consumption. In contrast, the demand in the GNV sector continues growing, mainly as a result of the Peruvian Government financing program for the conversion of vehicles into GNV. Emgesa Board of Directors modified the company s ordinary notes placement program. This modification is subject to the approval by the Financial Superintendency. With the modification, the global offer is broaden from Cop 1,200,000 mm to Cop 1,900,000 mm and it is extended until 2012, which is the expiration date to carry out the public bid. Last July, Emgesa placed in the Colombian market ordinary notes amounting to Cop 400,000 mm, with expirations ranging from 5 to 12 years. The company wishes to use these resources to refinance debt expiring in the next 5 years and to finance El Quimbo project. After being awarded the environmental license on May 15 th, Emgesa began its civil works and equipment supply contracting process to undertake El Quimbo project. This is a hydrogeneration project with an installed capacity of 400 MW, generation mean of 2,216 gwh and a cost of aprox. Usd 690 mm. It should come on stream before the end of EEB is assessing its involvement in two projects, which UPME will open to bid for the construction and operation of electricity transmission assets. One of the projects consists on a substation and transmission lines related to the former, with an approximate cost of Usd 24 mm. The bidding term expires on September 11 th and it should be awarded by September 17 th. UPME has not yet summoned the bidding process for the second project, which consists of a substation in the whereabouts of Bogota, and which has an estimated

3 3 cost of Usd 76 mm. Furthermore, the company is assessing the possibility of participating in a public bidding process summoned by the government of Guatemala aimed at enhancing the transmission system in the said country. The process should start in December of this year. On August 10, ISA was awarded a concession for the construction and operation of an electricity transmission project in the south of Peru (Independencia-Ica line). It is expected that the project will be constructed and operated by CTM. It consists of a 55 Km line and with an estimated investment of Usd 9.1 mm. Peru is also pending the awarding of Zapallal-Trujillo line, which would reinforce the transmission system in the south of the country. The offers should be submitted by September 15 th. REP and CTM are assessing their possible involvement in this bidding process. Another concession pending in Peru, is Chilca Marcona, which bidding offer should be submitted on October 27 th. REP and CTM are also assessing their involvement in this process. Awards of Peruvian concessions are competitive processes and are awarded to whoever offers the lower net present value of annual revenues for a period of 30 years. REP continued negotiating with MINEM the enhancement projects of its concession. In this line context, it entered into a clause to enhance the capacity of 6 substations and began the respective construction works in last January. It is expected that these works should be completed by October of next year, and the investment thereof will amount to approx. Usd 26 mm. Last June, CTM entered into an addendum to its concession with MINEM to enhance the transmission capacity of the Mantaro Socabaya line. The project s has an estimated investment of USD 93 mm and the execution term is 22 months. In June, during a General Shareholders Meeting, Codensa approved the placement of ordinary notes in the Colombian public market for an amount of Cop 600,000 mm. The term approved by the shareholders for such placement is three years. The notes were rated AAA by Fitch Ratings. The company hopes to use these resources to refinance debt that is due to expire in the next 5 years. CREG continues assessing the proposal on electricity distribution charges submitted by the distribution companies at the beginning of the year. The agency should define the new charges and the new distribution areas in the second half of the year. EEB notes have had a favorable performance during the first semester of. In March, they reached a minimum price of and from then on reverted the downtrend, reaching a maximum high of in this first half of the year. The spread between the yield of EEB s notes and the Colombian sovereign foreign debt expiring on 2014 decreased from 593 pbs to 263 pbs. MARKET INFORMATION Electricity demand in Colombia Change Final Demand GWh 53,870 26,458 26, Peak Demand Mw 9,079 8,541 8, Instalalled Capacity Mw 13,458 13,474 13, Source: XM- UPME The reduced growth in electricity demand is explained by the downturn in industrial production. In fact, at a national level and in June, industry non regulated electricity demand, which represented 43 of the total non regulated demand, fell 9 with respect to the same month of the previous year. However, other sectors, such as mining and trade show positive growth rates.

4 4 Peru Energy demand evolution Change Final GWh 29, , Source: COES-SINAC After experiencing growth rates of around 10 in 2007 and, energy demand in Peru, practically stopped growing. However, this should not hinder the Government from moving forward with its concession plan to undertake electric projects, as the country currently faces a backward state in terms of its development of electricity infrastructure. EMGESA PERFORMANCE Availability of infrastructure Final Jan Jun () () Jan Jun () Minor plants (1) Hydroelectric plants (2) Thermal plants Total Source: Emgesa (1) Plants or generation units with installed capacity below 20 MW, which are not centrally dispatched. (2) Plants or generation units with installed capacity above 20 MW, which conduct energy transactions in MEM. The availability indicator of hydro central plants decreased in the period under analysis, given that in semester of this year the Betania hydroelectric plant went underwent maintenance. This fall was offset by a greater availability of thermal and minor plants units. Bottom line, the company s energy production grew over 10 during the first half of this year in relation to the same period in the previous year. Electrical Balance - GWh Change Final Contracts 11,169 5,395 5, Sales (1) Spot 5,199 2,496 3, Total 16,368 7,891 8, Production 12,915 6,004 6, Contracts Purchases Spot 2,726 1,529 1, Total 3,611 1,980 1, Source: Emgesa (1) The sum of purchases and production is lower than sales because a small portion is destined to internal consumption. Wholesale market prices have had an upward trend during the first half of. Under the current situation, sale prices in the spot market have exceeded prices of bilateral contracts which explain the 20 increase in Emgesa s sales in the spot market.

5 5 Higher sales have been supported by a greater production, which in turn has allowed the company to reduce its purchases in the spot market. Investments Change Final Mm COP 70,478 19,379 20, Mm USD Source: Emgesa Most part of the company s investments were aimed at maintenance works in generation units and to activities related to the construction of El Quimbo hydroelectric project. El Quimbo is a water powered generation project with an estimated value of approx. Usd 690 mm. In recent months, the company began the contracting process for civil works and equipment. Selected financial indicators Mm COP Mm COP Mm USD Change Final Jan Jun Operating revenues 1,510, , , Cost of sales -699, , , Administrative expenses -21,760-9,685-9, Operating income 789, , , Net income 454, , , Ebitda (1) 924, , , Dividends decreed to EEB 359,001 78, , Net debt (2) / Ebitda 1.3 N.D N.D N.D. N.D. N.D. Ebitda / Interests 5.3 N.D N.D N.D. N.D. N.D. Net financial debt 1,162,509 1,393,389 1,236, Source: Emgesa (1) Ebitda for the analysis period was calculated taking Emgesa s operating revenue and adding the amortization of intangibles and depreciations of fixed assets for said period. (2) It is the result of current financial debt at the end of the analysis period less cash and temporary investments at that moment. The increase in operating revenue came hand in hand with a less proportionate increase in the cost of sales. As mentioned, the company s marketing strategy has allowed the company to take advantage of the upward trend experienced in the spot market. In addition, increase in production allowed the company to reduce its purchases in the spot market, which translated in an increase in the cost of sales, which was lower than the increase in operating revenues. In July of this current year, the company completed the distribution of decreed dividends for the period. Furthermore, at the end of the month, in the general shareholders meeting, the company authorized a capital reduction amounting to around Cop 444,000 mm. The necessary actions for the capital reduction are being taken to obtain approval from Government entities and note holders.

6 6 EEB TRANSMISSION PERFORMANCE Operating indicators Final Change Jan Jun Availability of infrastructure (1) Compensation for unavailability (2) Maintenance Program Compliance (3) Participation in Colombia s transmission activity (4) Source: EEB (1) of infrastructure avaladle time (2) of revenue received discounted due to the unavailability of specific assets above regulatory targets. (3) Maintenance operations carried out and number of schedule maintenance operations to be executed ratio according to Semi-Annual Maintenance Plan (4) Ration of the number of EEB transmission assets and total Colombian transmission assets. EEB s transmission unit continues exceeding the availability level established by regulations in force (99.7), due in part to the strict maintenance program and the execution of investments aimed at improving infrastructure and operation standards. Investments Final Change Jan Jun Jan Jun Mm COP 5,773 2,401 1, Mm USD Source: EEB This year, EEB transmission unit has carried out geotechnical stabilization works in tower sites, improvement of communication signals with the control center, environmental management and activities related to public bids in Colombia and Guatemala. REP AND TRANSMANTARO PERFORMANCE REP Selected financial indicators Mm USD Mm USD Final Change Operating revenues Cost of sales Operating income Net income Ebitda (1) Dividends decreed to EEB (2) N.A. Total debt (3) / Ebitda 3.3 N.D N.D N.D Ebitda / Interests 5.9 N.D N.D N.D Net financial debt Source: REP (1) Ebitda for the analysis period was calculated taking REP s operating revenue and adding the amortization of intangibles and depreciations of fixed assets for said period. (2) Includes distributed reserves. (3) It is the result of current financial debt at the end of the analysis period less cash and temporary investments at that moment.

7 7 In March, the company updated the rates applied to its concession with a positive result for the company. It is important to take into account that the imbalance between revenues in USD actually perceived and those defined in the concession are adjusted annually (in March) establishing a higher or lower remuneration in Soles. That was exactly the situation presented in the last rate review when due to the devaluation of the Peruvian currency; revenues in USD from the concession had deteriorated. This rate adjustment together with additional revenues obtained by means of the enhancements to the concession, explain most of the company s increase in operating revenues. Increase in the cost of sales reflects the salary adjustment program undertaken by REP, which seeks to level workers wages with market standards. Transmantaro - Selected financial indicators Mm USD Mm USD Final Change Operating revenues Cost of sales Operating income Net income Ebitda (1) Dividends decreed to EEB (2) N.A. Total debt (3) / Ebitda 2.2 N.A. N.A. N.A. Ebitda / Interests 5.5 N.A. N.A. N.A. Net financial debt Source: CTM (1) Ebitda for the analysis period was calculated taking the operating revenue and adding the amortization of intangibles and depreciations of fixed assets for said period. (2) Includes distributed reserves. (3) It is the result of current financial debt at the end of the analysis period less cash and temporary investments at that moment. Similarly to REP, CTM concession rates were adjusted in March of this year, and such adjustment includes a compensation for revenues the company didn t received during the preceding year as a result of the devaluation of the Sol. This in turn, explains the increase in operating revenues and Ebitda. Net profit increase is the result of reduced non-operating expenses, which in turn is the result of a decrease in the Libor rate, which positively impacted the financial cost of a significant chunk of the company s financial debt. CODENSA PERFORMANCE Growth of Codensa vs. national demand Change Final Codensa GWh 12,861 6,328 6, Nacional GWh 53,895 26,454 26, Source: Codensa; XM

8 8 Demand in the area of operation of Codensa during the period comprising January-June, is less than that registered for the same period during the preceding year, and it is also less than the growth rate at national level. It is important to note that Codensa s area of operations concentrates the largest industrial customers base in Colombia and that industrial production fell during the first half of this year. Quality of accounts receivables - Cop mm Change Final Jan Jun Overdue accounts (1) 164,472 97, , Average Monthly Invoicing (2) 200, , , Delinquency Index (3) Source: Codensa (1) Accounts receivable with a delinquency level in excess of 30 days. (2) Average monthly invoicing: This average refers to the past 12 months (3) Delinquency Index: (1)/(2) The efforts the company has made to reduce the impact of overdue accounts in the Codensa Hogar line are paying off and there is evidence of desacceleration in the growth pace of the said accounts (it has hardly grown in the past six months) and it also shows a reduction in delinquency rate. It is important to remember that provisions had been made to cover the total amount of overdue accounts exceeding 90 days in the business line of Codensa Hogar. The company made a decision recently to explore alternatives aimed at reducing the risks related to the Codensa Hogar business line, and thus, it is currently under a contracting process with an investment bank that will be in charge of identifying said alternatives that may include selling the portfolio of this business line. Investments Change Final Jan Jun Mm COP 272,135 86,242 97, Mm USD Source: Codensa The company s investments have focused on the construction of the necessary infrastructure to service vegetative growth in the market and to modernize existing networks. The most important project for the company relates to the construction of a substation to service the needs of the airport in Bogotá. This project faced some initial hurdles related to permits, which the company has already overcome. The construction is expected to start during the second half of this year. Selected financial indicators Mm COP Mm COP Mm USD Change Final Operating revenues 2,537,338 1,214,115 1,380, Cost of sales -1,717, , , Administrative expenses -96,062 33,110-37, Operating income 724, , , Net income 434, , , Ebitda (1) 999, , , Dividends decreed to EEB (2) 196, , , Total debt (3) / Ebitda 1.34 N.A. N.A. N.A. N.A. N.A. Ebitda / Interests 8.69 N.A. N.A. N.A. N.A. N.A. Net financial debt 1,642,854 1,191,647 1,144,

9 9 Source: Codensa (1) Ebitda for the analysis period was calculated taking the operating revenue of Codensa and adding the amortization of intangibles and depreciations of fixed assets for said period. (2) Includes distributed reserves. (3) It is the result of current financial debt at the end of the analysis period less cash and temporary investments at that moment. Ebitda grows at a lower rate than operating revenues, mainly due to the fact that the pace of growth in the cost of sales is higher than that of sales. This behavior is explained based on the increase in electricity prices, where lead CREG to define an optional scheme that allows distribution companies to defer the increase in the cost of energy to the end user, charging some interests for the cost of energy that it is not invoicing. Codensa embraced this scheme which entered into operation in January this year. As of May, one may observe that the invoiced value to customers corresponds to the actual cost of energy and as of June it began to exceed this amount. GAS NATURAL PERFORMANCE Number of customers per type Change Final Residential 1,506,487 1,464,512 1,545, Commercial- Industrial 31,706 30,303 32, Total Costumers 1,538,193 1,494,815 1,577, Source: Gas Natural SA ESP In despite of the fall in the demand of natural gas, the number of customer the company has grew by 5.6 during the period under analysis. Growth in the household sector is supported by the effort the company makes in delivering the product to existing homes that do not have the service yet and to new household units. It is worth highlighting the growth in the number of commercial and industrial customers, which are two of the sectors that have been the most affected by the economic downturn. Despite of the downturn in industrial production, Colombia continues receiving an important influx of investments. Sales volume per type of customer Mmcfd Final Jan Jun Change Residential Commercial- Industrial GNV Total Source: Gas Natural SA ESP. Conversion to Mmcfd por EEB Contraction in industrial production and the fall in retail sales explain lower consumption of natural gas by the commercial-industrial sector. Similarly, a reduced consumption in the GNV sector is a consequence of the reduction in the differential between the price of natural gas and its substitutes, particularly diesel fuel. The price setting scheme in the Guajira field generated temporary distortions in the price GNV. Although the observed downturn in GNV`s demand, the conversion program of motor vehicles continues progressing at a good pace. According to figures from the Ministry of Mines and Energy, as of May, 12,552 motor vehicles were converted to this type of fuel, totaling around vehicles at national level. Bogotá has the largest concentration of converted vehicles, amounting to 34 of the country s total.

10 10 Investments Final Jan- Jun Change Mm COP 43,557 7,365 9, Mm USD Source: Gas Natural SA ESP Most part of the investments during the period under analysis was made to connect non regulated consumers. Generally, they usually implied a financial scheme by which the company gives credit to larger customers in order to connect them to the natural gas distribution network. Selected Financial Indicators Mm COP Mm COP Mm USD Final Change Jan Jun Jan Jun Operating revenues 942, , Cost of sales 577, , Administrative expenses , Operating income 280, , Total debt 250, , Ebitda (1) 313, , Dividends decreed to EEB (2) 48,098 48, Total debt (2) / Ebitda 0.15 N.A. N.A. N.A. N.A. N.A. Ebitda / Interests N.A. N.A. N.A. N.A. N.A. Net financial debt , Source: Gas Natural SA ESP (1) El Ebitda for the analysis period was calculated taking the operating revenue of Gas Natural S.A. and adding the amortization of intangibles and depreciations of fixed assets for said period. (2) Includes distributed reserves. (3) It is the result of current financial debt at the end of the analysis period less cash and temporary investments at that moment. The main reason explaining why operating costs increased at a higher rate than operating revenues relates to the fact that increases in the cost of natural gas and transportation rates are not automatically transfer to the end user. It is worth pointing out that both the well head gas price and the transport rate are expressed in Usd and this currency experienced significant fluctuations during the first half of the year. EEB FINANCIAL PERFORMANCE Consolidated Income Statement Mm COP Mm COP Mm USD Final Jan Jun Change Operating Revenues (1) 591, , , Transmission and distribution of elect. 91,152 43, , Natural gas transport 500, , , Cost of sales (2) 203, , , Transmission and distribution of elect. 40,092 20, , Natural gas transport 163,535 87, , Gross income 387, , , Dividends decreed and interests (4) 527, , , Exchange difference (5) -277, , ,

11 11 Net valuation of hedges 0-45,275 N.A Other revenue (6) 27,937 11,427 8, Administrative Expenses 116,893 36,236 45, Financial expenses 288, , , Other expenses 2,931 3,058 4, Income before taxes and minority interest 256, , , Minority interest (7) 3,769-3,532-4, Income tax -41,612-19,086-19, Net Income 219, , , (1) Operating revenue for transmission services rendered directly by EEB, the electricity distribution business in Cundinamarca and natural gas transportation services of its controlled companies, TGI and Transcogas. (2) Cost of sales of the transmission services rendered directly by EEB, DECSA and natural gas transportation services of its controlled companies TGI and Transcogas. It includes personnel, materials, operation and maintenance costs, depreciation, amortization and insurances related to those activities. (3) Partners in operations. (4) Dividends decreed by non-controlled companies and temporary investors and pension funds autonomous equity. (5) Refers to net losses or earnings due to Exchange rate variation and its impact on assets and liabilities denominated in foreign currency. (6) Income from recovery of investments, leases and expenses. (7) Proportion of net income corresponding to minority investors in the companies consolidated by EEB. Variations in operating revenues and costs in the transmission and distribution of electricity are explained by the Decsa in EEB s results. Decsa, in turn, controls Empresa de Energía de Cundinamarca (EEC) which operates a distribution network near Bogotá. EEB and Codensa, through Decsa, acquired 82 of EEC in March. The devaluation in the exchange rate had a positive impact in the behavior of operating revenues in the natural gas transport activity. Almost 60 of TGI and TCG revenues are linked to the Usd. Increase in operating costs in the natural gas activity is the result of higher operating and maintenance costs, which is also the result of greater consumption of gas in TGI compressor stations and greater maintenance costs in some pipelines (maintenance that could not be undertaken during the first half of ). The increase of dividends and interests during the period under analysis is explained by a lower distribution of net income by Emgesa during first semester of that was decreed during 3Q of that. In addition, Emgesa s shareholders decided to retain net income amounting to Cop 155,000 mm. At the end of the first semester of, EEB received 40 of the dividends decreed by the companies where it has investments. The positive balance in the difference in the exchange rate account is explained by the impact of the revaluation of the Cop during the first half of the year on liabilities expressed in foreign currency, particularly those pertaining to TGI. This is an accounting effect that does not affect the companies cash generation. To reduce the exchange risk, the group is currently developing a coverage strategy that includes swaps and forwards at TGI that amount to Usd 200 mm and swaps at EEB that amount to Usd 133 mm. The valuation of these contracts yielded a negative balance as of June for an amount of Cop mm, as a result of the revaluation of the peso. Lastly, the increase in financial expenses is the result of the devaluation of the peso during the first half of and the same period in. In fact, during the first half of the year, the average TRM reached Cop 1,839 while for the same period during the preceding year it reached Cop 2,320

12 12 Financial Indicators Mm Cop Mm USD Jul 2007 Jun Jul Jun Change Jul 2007 Jun Jul Jun Consolidated Ebitda (last 12 months) (1) 1,087,034 1,059, Consolidated and adjusted Ebitda (last 12 months) 1,087,034 1,059, (2) Consolidated Ebitda margin (3) Consolidated total debt (4) /Consolidated Ebitda (1) OM: < 4.5 Consolidated Ebitda (1) /Consolidated Interests (5) OM: > (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 reduccitions of particpated 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 The company s consolidated EBITDA for the last twelve months showed a slight negative variation of 2.5. This result is explained by Emgesa s decision to retain net income amounted to Cop 155,000 mm. However the growth in operating results (Cop 69,578 mm) allowed the company to lessen the effects of the reduced dividends. Consolidated debt structure Final Cop Mm Jun Cop Mm Share Jun Cop Mm Share Jun Mm USD Jun Mm USD Financial debt in COP (1) 101, , , Financial debt in USD (1) 3,318,005 2,873, ,220, ,494 1,492 Hedging operations , Total financial debt 3,419,322 2,977, ,374, ,548 1,563 (1) Includes accrued interest. The group has not taken any additional indebtedness during the period under analysis. The variation in the balance thereof is totally explained by the effect of the devaluation in the exchange rate. Consolidated balance sheet accounts Mm COP Mm COP Mm USD Final Jun Jun Change Jun Jun Current assets 883, ,411 1,177, Fixed assets 1,313,122 1,314,895 1,390, Other assets 7,923,124 7,671,055 8,264, ,989 3,828 Total Assets 10,119,544 9,881,361 10,831, ,139 5,018 Current liabilities 265, , , Long term liabilities 3,637,470 3,107,539 3,638, ,616 1,685 Total liabilities 3,903,340 3,631,391 4,210, ,888 1,950 Minority interest 18,436 34, , Equity 6,197,768 6,215,304 6,400, ,232 2,965 Source: EEB

13 13 ANNEX 1: LEGAL NOTICE This document contains projections and estimates, using words such as anticipate, believe, expect, estimate, and others having a similar meaning. Any information 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.

14 14 ANNEX 2: 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 (10 9 ) BR: Banco de la República. Colombia s Central Bank; responsible for the country s monetary and exchange policy. BTU: British Thermal Unit. 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. 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. IPC: Colombian Consumer Price Index. KM: Kilometers. 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. Ml: US miles. PIB: Producto Interno Bruto Gross Domestic Product - GDP. Pbs: Basis points; 100 basis points is equal to one percent. 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.

15 15 ANNEX 3: NON-AUDITED FINANCIAL STATEMENTS

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18 18 ANNEX 4: EEB GROUP STRUCTURE