ENGIE Energía Perú. Results as of December 2016

Transcription

1 ENGIE Energía Perú Results as of December 2016

2 2016 HIGHLIGHTS Total Installed Capacity grew 723MW reaching 2,673 MW In December, Chilca 2 combined cycle project entered into commercial operation, reaching a total installed capacity of 113 MW In October, Nodo Energetico project entered into commercial operation, reaching a total installed capacity of 610MW (dual fuel diesel / gas) In June, EEP raised 250MPEN (~76MUSD) through a 10 year bond in the local capital markets at a final fixed rate in dollars of 3.38% In February, EEP won a bid to build and operate a 40 MW solar plant, planned to enter into commercial operation during Q Recurrent EBITDA reached a record of 330MUSD while Net Recurrent Result totalized 175MUSD. After changes in the income tax rate and the impairment of assets, the final Net Result accounted for 132MUSD 2

3 2016 INDUSTRY HIGHLIGHTS Total Installed Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro del Aguila (+514MW) & Chaglla (+461MW) in Q New Cold reserves (+1,242MW) dual plant in Ilo & Moquegua (Q3-Q4 2016) Demand grew 8.5%, mostly explained by the start of operations of two mining projects: Cerro Verde (300MW) & Las Bambas (150MW) Non renewable auction was awarded for 430MW (1,740 GWh), including mainly 160MW of wind, 180MW of solar, 80MW of mini-hydro. These projects should enter into operation before December 2018 Government of Peru cancelled the contract of the Gas to South pipe project because the consortium did not meet the financing deadline 3

4 MAIN FINANCIAL RESULTS Solid recurrent results. Net Result affected by extraordinary events EBITDA Net Result Debt Recurrent EBITDA MUSD Net Recurrent Result MUSD Total Debt MUSD +1% +1% +6% EBITDA MUSD Net Result MUSD Net Debt / EBITDA x -4% -28% +13% * Does not include impairments of fixed assets ** Does not include impairments nor changes in income tax rates and their effect on the deferred tax liability 4

5 2016 SNAPSHOT Operations Higher generation of Ilo plants (Ilo1, Ilo 21 & Ilo 31) due to transmission congestion in the south of the country Successful full year operation of Quitaracsa hydro power plant Maintenance optimization program Commercial New contracts with free & regulated clients for 440MW Net buyer position in the spot balance Low PPA prices due to oversupply and low prices in the spot market Finance Successful 10 year bond issuance in local capital market at a final rate of 3.38% Reduction of average cost of debt (4.9%) Focus on cost control and process optimization Sustainability 3,500 people benefited by infrastructure improvements in our areas of influence Training programs improved the technical and commercial capabilities of 900 entrepreneurs and small businesses High health & safety and environmental standards 5

6 AGENDA 1 Peruvian Electricity Market 2 Company Overview Financial Results 4 Capital Structure 6

7 PERUVIAN ELECTRICITY MARKET Market Clients Generation Market share 29% 18% 2% Installed capacity 12,135 MW 46% 54% 47% 4% 46% 14% 17% 21% +26% Peak demand 6,492 MW Energy Generation 48,326 GWh +3.5% +8.5% Regulated Clients Free Clients Main regulated clients are Edelnor and Luz del Sur (Distribution companies in Lima) Main free clients are Mining and industrial companies Clients with a consumption above 0.2MW are able to contract directly with generation companies (free clients) Hydro Natural Gas Renewable Coal & diesel Natural Gas generation is concentrated in Chilca district (60km from Lima) Diesel plants dispatch in case of emergency and transmission congestion Enel Government ENGIE Kallpa Others Market share in terms of energy generation Others include: Fenix Power, Duke, Statkraft, Termochilca, among others 7

8 SUPPLY & DEMAND System is based mainly on hydro and natural gas from Camisea Field 2 seasons: wet (from November to April) and dry (from May to October) Electricity demand increased on average 7% annually between 2005 and 2016 (YTD) and is expected to have an average annual growth of 4-5% between 2017 and 2019; MW Balance Supply - Demand - Wet Season Reserve MW Balance Supply - Demand - Dry Season Reserve 14, % 14, % 12,000 10,000 90% 80% 70% 12,000 10,000 90% 80% 70% 8,000 6,000 60% 50% 40% 8,000 6,000 60% 50% 40% 4,000 30% 4,000 30% 2,000 20% 10% 2,000 20% 10% - 0% - 0% Hydro Renewable Natural Gas (CC) Natural Gas (OC) Coal Oil and Fuel Oil Max Demand Reserve Wet Season (%) Hydro Dry Season Renewable Natural Gas (CC) Natural Gas (OC) Coal Oil and Fuel Oil Max Demand Reserve Dry Season (%) 8

9 MARGINAL COST New hydro (+975MW) supports low level of marginal cost 9

10 AGENDA 1 Peruvian Electricity Market 2 Company Overview Financial Results 4 Capital Structure 10

11 ENGIE ENERGIA PERU OVERVIEW Valuable team & assets 519 employees Quitaracsa 8 Power Plants totalizing 2,673MW 1 Substation and +200km Transmission Lines Yuncan Our first solar power plant under construction ChilcaUno ChilcaDos Solid Financials ~750MUSD revenue ~300MUSD EBITDA 20 years operating in the country Ilo1 Ilo21 Intipampa Nodo Energetico Ilo31 (Cold Reserve) ~1,600-1,800 MUSD Market Cap Sponsored by a global player Coal 5% Dual fuel 42% Diesel 8% 2,673 Hydro 9% Natural Gas 36% Market data source: ENGIE as of December 2016 CCGT: Combined Cycle Gas Turbines OCGT: Open Cycle Gas Turbines HPP: Hydro Power Plant. 11

12 OUR HISTORY Proven track record in driving organic growth and integrating the developed projects. Committed investments for approximately 1.6 BnUSD between 2010 and 2018 Acquisition Ilo1 261MW Coal Plant Ilo21 135MW COD Yuncán HPP 134MW COD Chilca 1 OCGT11 180MW COD Chilca 1 OCGT12 180MW COD Chilca 1 OCGT12 180MW COD 1. Chilca 1 CCGT 292MW NTP 2. Quitaracsa HPP 112 NTP 3. Ilo31 500MW NTP Chilca MW CCGT COD (85MW CCGT) Ilo31 500MW COD Nodo Energetico 600MW Auction Chilca 2 113MW CCGT NTP Intipampa 40 MW Solar Auction Nodo 610MW & Chilca Dos 113MW COD Private Placement 21% Offering 17% First Dividend Payment OCGT 12 Financial Lease 400 MUSD Corporate Bond Program 1 st, 2 nd & 3 rd issuances Bond Program 4 th & 5 th issuances Chilca 1 CCGT 310 MUSD F. Lease Bond Program 6 th & 7 th issuance Cold Reserve 200 MUSD Subordinated Financial Lease Capital Increase Quitaracsa HPP % 60 MUSD Subscription Financial Lease 100 MUSD MTL Chilca MUSD Financial Lease Total Capacity MW ,090 1,068 1,068 1,360 1,820 1,860 1,952 2,673 EBITDA* MUSD Net Income* MUSD Dividends MUSD Market Cap MUSD ,600 1,200 1,759 2,005 2,075 1,427 1,611 *Recurrent Figures MW: Nominal Capacity 12

13 ORGANIC GROWTH In 2016, ENGIE Energía Perú reached 2,673MW MW 3, MW 3065 MW 3,000 2,500 AVERAGE GROWTH 18% Ilo MW Nodo Ilo & Chilca Dos +723MW Quitaracsa +112MW Intipampa +40MW under construction CCGT Nodo +350MW 2,000 1,500 1,000 Yuncan +134MW Chilca MW Chilca MW Chilca MW 1068 MW Chilca 1 Combined Cycle +292MW Growth options Hydro Natural Gas MW Investment Plan1.6 BUSD Dual Fuel Solar * In 2015, Ilo1 Steamed Turbine 1 was decommissioned (-22MW) 13

14 NODO ENERGETICO - ILO, +610MW On October 21 st EEP announced the commercial operation of Nodo Energético project, 5 months ahead of the scheduled contractual date and below budget Key facts Location the project is located in the south of Peru, in Moquegua Region (adjacent to existing operations) Description: dual fuel (diesel / gas) plant, expected to operate with diesel as a back up plant for the system until the Gas Pipe to the South Project is completed. Besides the 3 turbines generators, the project includes a 75km transmission line (500kV) to Montalvo Substation and 6 new fuel oil tanks Economics: the project is backed by a 20 year Investment Agreement with the Peruvian State for 600 MW at 5.75 USD/kW-month Construction: construction contracts were performed by Técnicas Reunidas/JJC (power plant) & Abengoa (transmission line) Financed through Financial Leases for 290 MUSD with BCP and BBVA Health & Safety: record of 3.4M man hours without disabling accidents Community and local impact during the project, Engie strengthened relations with the local community, contributing with local employment, specialized trainings to increase employability and working in partnership with the community to achieve the highest environmental standards 14

15 CHILCA DOS, +113MW On December 21 st EEP announced the commercial operation of Chilca Dos combined cycle project. The project started operations as planned and in line with budget Key facts Location the project is located in Chilca district, 60km south of Lima (adjacent to existing operations ChilcaUno) Description the power plant consists in one gas turbine and one steam turbine with a combined capacity of 113 MW Economics: the project is sold under EEP PPA portfolio, the investment totalized 130MUSD Construction: construction was successfully completed in 22 months. Main contractor was Duro Felguera Financed through Financial Lease for 125 MUSD with BBVA Health & Safety: 1.3M man hours without disabling accidents Community and local impact during the project, Engie benefited the local community, improving infrastructure, contributing with local employment, trainings curses to increase self-sustainability 15

16 INTIPAMPA, +40MW (UNDER CONSTRUCTION) On February 2016, ENGIE Energía Perú was awarded by Osinergmin as part of the 4th Renewables Auction process the construction of a 40 MW solar plant which will be located in Moquegua The project will deliver GWh/year to the system and is backed by an investment agreement with the Ministry of Energy and until 2038 (approx. 20 years). Total investment estimated in 55 MUSD. Site mobilization in order to start construction was launched on February 22nd, Status Signature of Concession Contract Pre-operational studies Archeological permits Environmental studies Land EPC signed with Solairedirect Notice to Proceed Construction Financing structure inside Balance Sheet COD expected in Q

17 STRATEGY A. Development B. Commercial C. Financial Balanced portfolio of assets under development Geographic diversification and proximity to our clients Renewable pipeline Continue with hydro mapping and studies Studies for gas options M&A opportunities Focus on improving operational efficiency of existing assets Optimum contracting level Balanced portfolio between Regulated Clients (Distribution Companies) and Free Clients Power Purchase Agreements under pass-through scheme Minimize non-manageable risks Maintain a strong position for unexpected events and opportunities 17

18 PROJECTS UNDER DEVELOPMENT: GAS TO SOUTH OPTION A. Phase 1: up to 1,110MW of installed capacity serving as emergency plants but able to generate with natural gas once available in the south of Peru Cold Reserve: option granted under the existing concession contract after 2018 Nodo Energético: once Natural Gas arrives to the South (~2022) Similar operation to Chilca 1 plant before it was converted to Combined Cycle No significant investments required B. Phase 2: up to an additional 550MW in steam turbines with the conversion to Combined Cycle Similar operation and economic impact of Chilca 1 Combined Cycle Project Approximately 700MUSD additional investments to convert to combined cycle and 48 months for development and construction Delays in the GSP postpone these options and potential upsides 18

19 COMMERCIAL PORTFOLIO Challenging market conditions Highly contracted portfolio with creditworthy clients Diversified portfolio with medium/long term contracts 44 clients Consuming 8,976 GWh & 1,527 MW in peak hours Regulated Clients Free Clients 60% free clients / 40% regulated clients Indexation 58% of portfolio to Natural Gas prices New PPAs in 2016 for +400MW Challenging market conditions Oversupply pushing PPA market prices down Market conditions pushing new and existing contractual terms Most of EEP contracts do not include termination clauses Las Bambas (150MW) has the option to terminate the contract in August 2017 by paying a termination fee 19

20 ENERGY PRODUCTION AND BALANCE 2016 Growth in net generation and contracted level in line with commercial operation of new efficient generation plants and commercial efforts GWh 2016 / Q Q Q'16 / 4Q'15 Yuncán HPP % % % % 760 8% -16% 211 9% 173 8% -18% Quitaracsa HPP 0 0% 0 0% 0 0% 88 1% 484 5% 448% 88 4% 112 5% 27% Chilca1 CCGT 4,222 68% 5,771 78% 5,979 80% 5,838 66% 5,617 63% -4% 1,499 65% 1,516 71% 1% Chilca2 0 0% 0 0% 0 0% 0 0% 220 2% n.a 0 0% 88 4% 0% Ilo21 (Coal) 556 9% % 163 2% 248 3% 773 9% 212% 202 9% 191 9% -5% Ilo1 (Diesel) 106 2% 130 2% 30 0% 62 1% 210 2% 240% 35 2% 17 1% -53% Ilo31 (Cold Reserve) 0 0% 5 0% 5 0% 35 0% 100 1% 184% 11 0% 9 0% -20% NEPI 0 0% 0 0% 0 0% 0 0% 18 0% n.a. 0 0% 4 0% 0% Importaciones (Ecuador) 0 0% 0 0% 0 0% 0 0% 21 0% n.a 0 0% 0 0% 0% Auxiliaries % % % % % 188% -52-2% -82-4% 58% NET GENERATION 5,528 89% 7, % 6,887 92% 7,072 81% 7,914 88% 12% 1,994 86% 2,028 95% 2% COES: NET % % 609 8% 1,711 19% 1,061 12% -38% % 117 5% -64% CLIENTS DEMAND 6, % 7, % 7, % 8, % 8, % 2% 2, % 2, % -8% 20

21 AGENDA 1 Peruvian Electricity Market 2 Company Overview Financial Results 4 Capital Structure 21

22 MAIN RESULTS 2016 & Q4 16 Solid Recurrent Results Main Financial Results (MUSD) / Q16 4Q15 4Q16 / 4Q15 Income % % Recurrent EBITDA* % % EBITDA % % Net Recurrent Result** % % Net Result % % Total Debt 1, % Net Debt % Net Generation GWh 7,914 7,072 12% 2,028 1,994 2% Clients Demand GWh 8,976 8,783 2% 2,145 2,320-8% Net Debt / EBITDA % Solid recurrent EBITDA and Net Result, positively impacted by start of operations of new projects and full year operation of Quitaracsa hydro power plant Net Result after non-recurrent events totalized 132MUSD, 28% below The decrease was explained by two extraordinary effects: i) change in income tax rate (22.5MUSD) & ii) impairment of Ilo1 and development capex (20.9MUSD) Total debt increased by 6% and totalized 1,009MUSD due to capex related with projects such as Nodo Energético and Chilca 2 that started operations in Q * Does not include impairments of fixed assets ** Does not include impairments nor changes in income tax rates and their effect on the deferred tax liability 22

23 NON RECURRENT EVENTS Income Tax changes & Impairments 1. Changes in Income Tax rates + In 2015, the Government announced a progressive decrease of the income tax rate from 30% to 26% in 2019 and a progressive increase of the withholding tax on dividends from 4.1% to 9.3% + In 2016, the new Government changed the tax rules, setting a flat income tax rate of 29.5% and a withholding tax on dividends of 5% Given the deferred income tax liability. In 2015, EEP recorded a nonrecurrent gain of 13.2MUSD In 2016, EEP recorded a nonrecurrent loss of 22.5MUSD 2. Impairment of assets + Ilo 1 (12.7MUSD) Generation assets operating with diesel acquired in 1997 from Southern Peru Copper Corporation (SPCC). The plant is currently operating under emergency circumstances only and it is foreseen to be withdrawn from the interconnected system when the new 500kv Montalvo Transmission Line enters into operation; which is expected mid Development capex (8.2MUSD) related with projects which are not longer feasible undercurrent circumstances Total Net Result impact of -43MUSD, EBITDA impact of -21MUSD 23

24 RECURRENT EBITDA: 2016 vs MUSD + 1% Higher marginal cost due to: New mining projects entering into operation Delay in rainy season 2017 End of contracts Migration from regulated clients to free clients Quitaracsa (+9.5MUSD) Chilca2 (+5.3MUSD) Nodo (+8.2MUSD) EBITDA 2014 EBITDA 2015 CMg Regulated Clients COD effect Others EBITDA

25 NET RECURRENT RESULT: 2016 vs MUSD + 1% Recurrent Net Result 2014 Recurrent Net Result 2015 EBITDA growth D&A Financial expenses FX Others Recurrent Net Result

26 EBITDA: 2016 vs MUSD - 4% Additional nonrecurrent effect EBITDA 2014 EBITDA 2015 Ch. Impairment of assets CMg Regulated Clients COD effect Others EBITDA

27 NET RESULT: 2016 vs MUSD Net Result decreased significantly mainly due to change in income tax rate and impairment of assets - 28% Change in income tax rate in 2015: i) from 30% to 28% in 2015 ii) to 26% expected in 2019 (impact on deferred tax) Change in income tax rate from 28% to 29.5% (impact on deferred tax) Higher EBITDA Positive FX effect compared to 2015, among others R. Neto 2014 R. Neto 2015 Change in income tax rate 2015 Change in income tax rate 2016 Impairment 2015 Impairment Ilo 1 Impairment of development capex Others R. Neto

28 AGENDA 1 Peruvian Electricity Market 2 Company Overview & Strategy 3 Company Results 4 Capital Structure 28

29 FINANCIAL PRIORITIES 1. Maintain financial flexibility and access to capital markets to optimize capital structure Monitoring and compliance of Financial Covenant (Debt to EBITDA < 3.5x) Increasing duration of debt Protecting local rating to maintain best conditions in the local capital market (acceding to the lowest rates for corporate names) Minimum dividend pay-out ratio of 30% during expansion phase 2. Optimize cost structure to maximize value Minimizing cost, following closely market conditions to assess products and time to market Maintaining short debt up to a limit of 125MUSD, in line with working capital needs Minimizing cost of carry 3. Minimize risks Minimizing exposure to FX risks by contracting debt in USD or PEN + swap Keep an adequate balance between fixed and variable interest rates taking advantage of historic low interest rates for LT debt 36

30 DEBT STRUCTURE EEP started an aggressive expansion plan in Total investments between 2011 and 2017 for the execution of 6 projects adding 1,657MW will reach 1.6 BnUSD. After Nodo Energetico Ilo and Chilca2 projects COD in Q4 2016, Engie Energía Peru s gross debt totalized 1,009 MUSD as of December % Debt Composition by Product (MUSD) % 1, % Short Term Debt Financial Lease Bondholders Corporate Loans % 36

31 LIMITED EXPOSURE TO FX AND INTEREST RATE VARIATIONS FX: ENGIE Energía Perú s functional currency is the US Dollar and only a limited portion of its G&A and OPEX are in local currency (PEN). Revenues are either in US Dollars or in PEN indexed to the USD. Debt Composition by Currency (MUSD) Interest Rate: minimize the uncertainty of the cost of debt. Debt Composition by Interest Rate (MUSD) % % 1,009 1, % % PEN + XCSY USD Floating Rate Fixed Rate 31

32 MUSD STOCK PRICE PERFORMANCE Sound financial results and value creation due to its financial, commercial and development strategy, generating 4x increase in market value since IPO 2,500 2,000 1,500 1, , ,602 1,187 Market Cap changes in USD is affected by share price movements and FX changes In 2016, the share price increase from 8.0 to 9.0 S/./sh; (+12.5%); at the same time the exchange rate decreased from 3.41 to 3.36, which contributed to the Market Cap increase (+13.0%) 1,759 2,005 2,075 1,427 1, MUSD Financial Market Data December 2016 Number of shares issued 601,307,011 Share price (PEN) 31/12/ VWAP (3m) (PEN) week high (PEN) week low (PEN) 6.85 Market Cap (MUSD) 1,611 Enterprise Value (EV) (MUSD) 2,594 EV / EBITDA 8.0x Price to Book Value (P/B) 1.6x Price / Earnings ratio (P/E) 12.2x Daily avg. trading volume (mm sh) 0.12 EV: Market Cap + Net Debt P/B: Market Cap / Book Value of Equity Market Cap variation in 2015 is mainly explained by portfolio rebalance of an institutional investor and subsequent potential reclassification of Peru from Emerging Markets ( EM ) to Frontier market due to its low liquidity. Dividends distributed between 2005 and 2016 reached 597 MUSD (50MUSD in 2016) Source: SMV, Lima Stock Exchange, estimated Financial Statements as of December 31 st

33 STOCK EVOLUTION AND COMPARABLE TRADING COMPANIES Return ENGIE S&P_BVL Index YTD 0% 3% 3M -6% 7% 6M 5% 4% Underperform Outperform Correlation with BVL Index although with certain lag In October, EEP share price increased as a result of pension funds increasing their exposure to the stock In November / December the share Price decreased as some smaller investors realized gains Company Market Cap - Dec 16 (USDMM) EV /MW - installed Revenue /GWh - generation EPS (Earnings in USD per share) EV/EBITDA 2016e P/E 2016e P/BV 20016e ROE (%) Engie Energia Peru 1, , % 2.60 n/a Net Debt /EBITDA Credit Rating (int) Kallpa n/a n/a 72,571 n/a n/a n/a n/a n/a 2.71 BBB - Enel Generación PE 2, , % 0.60 n/a Engie Energia Chile 1, , % 1.90 BBB Colbun - Chile 3, , % 2.00 BBB - Enel GX - Chile 5,408 n/a 145, % 1.40 n/a Average 2, , % 1.87 BBB/BBB - Sources: Larrain handbook 2017, Credicorp - Perú Perspectivas y Estrategia

34 PEN / Share ANALYSTS: 4Q ACTUAL Price 9.0 Consensus % in Sell - Underperfom Neutral - Market Perform Buy - Outperform Inteligo Credicorp Larrain Consensus Target price Recommendation Buy Underperform Sell 34

35 DIVIDEND PAYMENTS: 622 MUSD since Change in Dividend Policy since 2010: Minimum 30% Extraordinary 2nd Half 1rst Half Annual Extraordinary dividend of 10MUSD to avoid a negative impact to our shareholders given the non-recurrent events in Total dividends from 2016 will totalize 49.5MUSD 35

36 THANKS This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Perú S.A. ( Engie Energía Perú or the Company ) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like believe, anticipate, expect, envisage, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a number of significant risks, uncertainties and assumptions. We caution that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In any event, neither the Company nor any of its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages. The Company does not intend to provide eventual holders of shares with any revised forward-looking statements of analysis of the differences between any forward-looking statements and actual results. There can be no assurance that the estimates or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from such estimates. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without ENGIE Energía Perú prior written consent. ENGIE Energía Perú Av. República de Panamá 3490 San Isidro, Lima, Peru (511) Investor relations contacts: Rocío Vásquez Head of Corporate Finance & Investor Relations rocio.vasquez@pe.engie.com Eduardo Milligan CFO eduardo.milligan@pe.engie.com Investor.relations@pe.engie.com 36