Investor Report 1H 2014

Transcription

1 1H 2014 Bogotá D.C., 12 August 2014 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY AND HIGHLIGHTS Overview of Electricity and Natural Gas Sectors Served Summary of Financial Results EEB 1H Highlights of EEB and Grupo Energía de Bogotá FINANCIAL PERFORMANCE OF GRUPO ENERGÍA DE BOGOTÁ PERFORMANCE OF CONTROLLING COMPANIES DECSA EEC Transportadora de Gas Internacional - TGI CALIDDA CONTUGAS TRECSA EEBIS Guatemala y Perú Empresa de Movilidad de Bogotá PERFORMANCE OF COMPANIES WITHOUT CONTROL EMGESA CODENSA PROMIGAS GAS NATURAL REP y CTM Perú Annexes Annex 1: Legal notice, clarifications and definitions of EBITDA included in this report Clarifications Annex 2: Definitions of EBITDA included in this report. Consolidated adjusted EBITDA reconciliation Annex 3: EEB Consolidated Adjusted EBITDA UDM and Quarterly Annex 4: Link to EEB s consolidated and stand-alone financial statements Anexo 5: Technical and regulatory terms Annex 6: Tables and graphics footnotes Annex 7: Overview of EEB... 31

2 1. EXECUTIVE SUMMARY AND HIGHLIGHTS 1.1 Overview of Electricity and Natural Gas Sectors Served Table N 1 - Overview of the electricity 1H 14 Colombia Perú Guatemala Installed capacity MW 14,699 8,339* 2,979 Demand - GWh 31,189 3,457 2,309 Demand growth 2Q 14 / 2Q 13 - % Two power plants began operations; (i) Marcona The growth of Wind Farm (Ica) began Demand was driven by better electricity demand to produce electricity (32 economic performance, presented a MW); (ii) Huanza installation of new networks, higher growth for hydroelectric plant, new residential, domiciliary or the regulated and which began producing industrial circuits. Installed Growth drivers 2Q 14 / 2Q 13 unregulated at 100% capacity in May. capacity also increased markets and The Huanza comparatively from the first economic activity related to mining hydroelectric belongs to Egehuanza, a subsidiary half of 2013, by the incursion of new power plants, two and quarrying of Cia. De Minas hydroelectric plant and solar exploitation. Buenaventura and power. provides 90.6 MW to the system. Sources: XM, UPME, COES Peru, AMM Guatemala * Value extracted from the COES Annual Statistics of Table N 2 - Overview of the natural gas sectors 2Q 14 Colombia Perú Reserves, proved and probable - TCF (2012) Domestic demand - Mm cfd GBTUD 1,034 MMCFD Change in domestic demand 2Q 14 / 2Q 13 - % % Explanation for demand variation The thermoelectric consumption experienced an increase of 23%, mainly due to hydrological conditions that remained on alert for the second quarter due to the high probability of occurrence of the El Niño phenomenon, raising the consumption within this sector. The change in demand between 2Q 14 to 2Q 13 is -93 MMCFD due to lower domestic demand despite an increase in the consumption of Lima (in Lima increased by 26%). Sources: UPME, CON, MEM, Osinergim 1

3 1.2 Summary of Financial Results EEB 1H 2014 Table N 3 - EEB s consolidated financial indicators COP Millions 2Q 14 2Q 13 Var. Operating revenue 1,123, , Operating income 434, , Consolidated Adjusted EBITDA Qtrly. 322, , Consolidated Adjusted EBITDA LTM 1,970,539 1,621, Dividends and reserves declared to EEB 863, , Net income 956, , Dividends and reserves declared by EEB 590, , Latest international credit ratings L/T: S&P May 14 BBB-; stable Fitch April 14 BBB-; stable Moody s - April 14 Baa3; stable At the end of 1H 2014, the net profit of EEB, head of Grupo Energía de Bogotá GEB-, closed at COP 956,772 million exceeding in COP 237,872 million the result obtained during the same period of the preceding year, meaning an increase of 33%. This performance results primarily from the growth of operating profit in COP 93,456 million, including operating results obtained by the natural gas distribution business in Peru (an increase in residential connections in Cálidda and the commercial commissioning of Contugas) and electricity distribution in Colombia (through Empresa de Energía de Cundinamarca -EEC-). On its part, Transportadora de Gas Internacional -TGI-, largest natural gas transportation company in Colombia maintained its performance and consolidation in terms of the generation of operating revenues and the EBITDA arising from recent expansions in its transport capacity. Non-operating profit benefited from the increase of COP 63,650 million in dividends decreed in favor of EEB, particularly those provided by Emgesa, Codensa and Gas Natural. On the other hand, the revaluation of the Colombian peso during the first half of 2014 had a positive impact on the foreign exchange account, shifting from an expense of COP 217,988 million during the same period of the preceding year, to a revenue of COP 27,552 million in June of 2014; these records are for accounting purposes only and do not correspond to an inflow or outflow of cash. The consolidated EBITDA LTM (Last Twelve Months) of GEB continued growing consistently until reaching COP 1.97 billion, representing an increase of 22% vis-à-vis the same period of 2013, and 11% vis-à-vis the closing of 2013, and 54% vis-à-vis the closing of The above reflects the permanent commitment of Grupo Energía de Bogotá towards strengthening the operating performance of its affiliates. 1.3 Highlights of EEB and Grupo Energía de Bogotá Empresa de Energía de Bogotá announced the acceptance by The Rohatyn Group (formerly Citi Venture Capital International -CVCI) of its offer to acquire 31.92% of Transportadora de Gas Internacional (TGI) for an amount of USD 880 million, increasing the direct and indirect participation of EEB in TGI to 99.97%. The 2

4 above, as per decision dated December 11, 2013 whereby the Board of Directors of Empresa Energía de Bogotá approved making an offer for this participation, which makes part of the investment plan of the Company valued at USD 7.5 billion and currently under execution On April 14 the incorporation of Empresa de Movilidad de Bogotá S.A.S. E.S.P., in which EEB has 99.98% participation, was recorded at the Chamber of Commerce of Bogotá. In December 2013 EEB received authorization from the Board of Directors to assess the participation in electric mobility projects with a third-party operator of mass passenger transport systems. In development of this authorization the first step was the incorporation of the mobility company The Energy and Mining Planning Unit (UPME) awarded Empresa Energía de Bogotá (EEB) the UPME Sogamoso-Norte-Nueva Esperanza project for a net present value of revenues totaling USD million. The project comprises the design, equipment acquisition, construction, operation and maintenance of the 500 kv North Substation and the 500kV Sogamoso-Norte-Nueva Esperanza transmission line. This project is included in UPME s Expansion Plan and joins other projects currently being executed by EEB in different areas of the country The Extraordinary Shareholders Assembly of Empresa de Energía de Bogotá (EEB) appointed new members for its Board of Directors. Among the independent members are Mr. Mauricio Cabrera, Mr. Mauricio Cárdenas Müller, and Ms. Claudia Castellanos; and among the members representing main shareholders are Mr. Gustavo Petro, Mayor of Bogotá, Mr. Guillermo Perry, ex-finance Minister, Mr. Fernando Arbeláez Bolaños, Researcher and Coordinator of Universidad Externado de Colombia s Economics and Numeric Operations Observatory - ODEON, Mr. Alberto Merlano Alcocer, Manager of Empresa de Acueducto y Alcantarillado de Bogotá -EAAB-, Mr. Saúl Kattan Cohen, President of Empresa de Telecomunicaciones de Bogotá -ETB-, and Mr. Germán Corredor Avella, Coordinator of Universidad Nacional s Colombian Energy Observatory Credit rating agency Standard & Poor s confirmed debt ratings as issuer of debt and TGI s corporate debt with investment grade of BBB- with stable outlook. EEB s rating reflects the company s strong competitive position primarily resulting from its low risk regulated businesses in countries with stable regulatory and institutional frameworks. In the case of TGI the rating reflects a satisfactory business profile, the predictability of stable and predictable generation of cash flow The Energy and Mining Planning Unit (UPME) ratified the awarding to Empresa Energía de Bogotá (EEB) of invitation to bid project UPME Bolívar-Termo Cartagena 220 kv Second Transmission Line. This project includes the construction of a 220 kv simple-circuit transmission line with a length of approximately 21 km, the installation of a 220 kv line module at the Bolívar 220 kv substation, and the installation of a 220 kv line module at the Cartagena 220 kv substation. One of the main points characterizing this project is the existence of a 3.8 km underground line to be executed with digital horizontal drilling. EEB uses innovation and technology in benefit of Colombian users Empresa Energía de Bogotá (EEB) informed that through Consorcio Transmantaro -CTM- and ISA, in which it has a participation of 40% and 60%, respectively, it was awarded a new electric transmission line in Peru to develop the design, financing, construction, operation and maintenance of a 220 kv transmission line aimed at strengthening the demand in Lima. 3

5 In development of the transaction to purchase the 31.92% participation owned by The Rohatyn Group (formerly CVCI) in Transportadora de Gas Internacional S.A. (TGI), which was announced on April 4, 2014 Empresa de Energía de Bogotá S.A. E.S.P. (EEB) constituted the company Transportadora de Gas Iberoamericana S.L., domiciled in Madrid, Spain. EEB is the sole shareholder of this limited liability company, which includes in its corporate purpose the activities enabling it to execute the aforementioned transaction, such as the management and administration of securities representing the equity of companies and other entities, in particular companies dedicated to gas transport and investment in companies and other entities, whether residing or not in Spanish territory, all of which is subject to the applicable laws (CNAE Spain). Additionally, it may participate in financing activities of the Group s affiliates or companies in the terms laid out in Article 42 of the Spanish Trade Code and the applicable laws (CNAE 6492), among other activities. TGI TGI acquired 7.78% of the share in Oleoducto al Pacífico, a project intended to transport heavy oil from the Llanos Orientales to Buenaventura and ultimately export it to the markets of Asia Pacific and the western coast of North America. The construction of Oleoducto al Pacífico (OAP), which is to cross the three mountain ranges to connect San Martín (Meta) and Buenaventura (Valle del Cauca), with an approximate cost of USD 5,000 million, is expected to be in operation in The diameters of this 760 km length pipeline range between 30 and 36 inches and its six pumping substations are expected to transport between 250 and 400 barrels of oil per day. The partners of Colombian company Oleoducto al Pacífico SAS are Talisman, Vitol, ISA, CENIT, Enbridge, and TGI EEB acquired 31.92% of the stock of Transportadora de Gas Internacional (TGI) upon purchasing special purpose vehicle Inversiones en Energía Latino América Holdings, S.L.U., IELAH domiciled in Spain, on behalf of which The Rohatyn Group (formerly CVCI) maintained its investment in TGI. To this end, on June 26, 2014 EEB capitalized in USD 264 million the company Transportadora de Gas Iberoamericana S.L, -TGISL-, a vehicle incorporated in Spain by EEB for this transaction, according to the financing plan announced during the past month of April. Short-term intercompany loans obtained by TGISL for an amount of USD 616 million were added to complete the total value of the transaction of USD 880 million The Company proceeded to initiate commercial operation of the natural gas compression station to increase transport capacity of La Sabana gas pipeline. This project joins the gas transport increase of 215 MMPCD in the country to which the company has committed. - Throughout this year, the average volume transported by TGI s infrastructure is of Mmpcd, exceeding what was initially budgeted by the company. - TGI reached 51.5% market share at the closing of 1H Cálidda - On the first half of 2014, Cálidda reached a client base of 215,000, achieving a new record in monthly connections during the month of June with 10,808 new clients. - Early in July 2014, OSINERGMIN, the regulator of the Peruvian energy sector, published the final resolution establishing the distribution rate for Cálidda for the period comprised between 08 May 2014 and 07 May 4

6 2018 (approved average distribution rate). This resolution is in line with Company expectations and showed an increase of approximately 6.37% duly recognizing past and future investments. Contugas Contugas successfully carried out the inauguration and commercial start-up (POC) of the regional pipeline of Ica complying with one of the most important milestones of the concession agreement signed with the Peruvian Government. This shall transform the area in the first decentralized energy gas region of Peru, as it comprehensively provides natural gas for household users, commercial businesses, Vehicle Natural Gas service stations, and capital-intensive industries, improving the quality of life of people and contributing to the progress of the region. This investment totaled USD 345 million and was financed by institutions such as Corporación Andina de Fomento -CAF-, Banco de Bogotá, and Banco Davivienda. Consorcio TransMantaro -CTM and Red de Energía del Perú The Seventh Issue of Bonds Series A of the Third Corporate Bond Program took place, with REP placing an amount of USD 20 million at an Annual Nominal Interest fixed rate of 3.75% and an amortizable 7-year term. The placement reached a total demand of USD 41.4 million with the participation of all investment groups, among which are Pension Funds Associations (AFPs), insurance companies, mutual funds and government funds. It is worth indicating that REP carried out its last placement of bonds in dollars in February 2013 for an amount of USD 10 million, at a 4.62% rate and a 5-year term Mr. Eleodoro Mayorga, Minister of Mines and Energy, inaugurated Línea de Transmisión Trujillo- Chiclayo-Piura en 500 kv, a project that was built by Consorcio Transmantaro (CTM) with an investment by the company of approximately USD 128 million, and comprising 327 km of 500 kv line with which CTM completes over 1,000 km of circuits in operation in this voltage level, with a total investment of around USD 500 million. EEB ENERGY Re Ltd: The company was founded in the city of Hamilton / Bermuda on January 7, 2013 and is intended to serve as an instrument of transfer to the insurance market, the risks of companies of Grupo Energía de Bogotá, both Colombia and abroad. Fundación Grupo Energía de Bogotá: The Foundation was created in 2008 as an instrument for the implementation of social policies and projects of the companies belonging to Grupo Energia de Bogota (GEB). The Foundation works to identify, build and implement programs, projects and actions which potentiate its ability to promote social development through energy, through four strategic axes: Knowledge Management, Human Development Projects with Communities and Communication for Development. The foundation works in more than 80 municipalities in the area of influence of the group, in the departments of Cundinamarca, Huila, Putumayo, Nariño, Meta, Cauca, Tolima, Antioquia, Bolívar, Santander, Casanare, Cesar and Boyacá, where more than 30,000 people benefit from our projects. 5

7 2. FINANCIAL PERFORMANCE OF GRUPO ENERGÍA DE BOGOTÁ Table N 4 - EEB s consolidated financial results COP Million Var. USD Million Var. % 2Q 14 2Q 13 COP 2Q 14 2Q 13 Var. USD Var. % Operating revenue 1,123, , , Cost of sales -566, ,788-74, Gross profit 557, , , Operating expenses -122, ,509-13, Operating profit 434, ,898 93, Dividends 863, ,800 63, Non-operating expenses -116, , , Net income before taxes and minority interest 1,181, , , Minority interest -84,449-7,596-76, ,040.0 Provision for income tax -140,079-37, , Net income 956, , , Consolidated operating revenues of the Group increased 19.2% during 1H 2014 as compared with the same period of 2013 due to: (i) Increase of revenues from natural gas distribution in Peru, owing to increased connections of household and commercial users that are enabled and connected to the network in Cálidda and to higher distributed and billed volume; (ii) Start-up of Contugas on April 30, 2014; (iii) Commissioning of the Alférez substation on March 30, 2014 favoring electricity transmission revenues by means of construction contracts and connection agreements; (iv) Improved operating performance of Empresa de Energía de Cundinamarca; and (v) Higher revenues on account of gas transport in Colombia, TGI, thanks to the current tariff scheme that remunerates investment and is linked to US dollars. Operating profits increased at a faster pace than operating revenues given that operating costs and expenses showed moderate growth, as follows: (i) TGI experienced a slight increase in operating costs and expenses of 4.1% mainly because of a reduction of fuel gas costs (negotiation of new rates) and an increase in contingency provisions; (ii) On their part, Contugas and Cálidda showed an increase primarily in the cost of third-party internal facilities in the Peruvian gas distribution business, which had a significant increase in connections and clients during the first semester of 2014; (iii) EEB Transmisión and TRECSA showed an increase of expenses on account of fees and services, supplies and personnel services; and (iv) an increase of the cost of energy purchased by Empresa de Energía de Cundinamarca both in contracts and in the Stock Exchange. As a result of the above, operating profit during 2Q 2014 reached COP 434,354 million representing an increase of 27.4% vis-à-vis the same period of the preceding year. As regards revenues and non-operating expenses, the main variances corresponded to (i) Dividends decreed by noncontrolled companies amounting to COP 863,450 million and representing an increase of 8.0%; (ii) Increased financial expenses as a result of new contracted debt in 2013 by Cálidda and Contugas and the reopening of EEB bond in 2021; (iii) Colombian peso revaluation during first half of 2014 positively impacted the exchange rate difference account, shifting from expenses of COP 217,988 million in March 2013 to revenues of COP 27,552 million in June 2014, as a result of upgrading the Group s financial obligations denominated in dollars; these records are for 6

8 accounting purposes only and do not correspond to a cash disbursement. The Group continues working in structuring operations aimed at establishing a loss cap for existing contracted coverage limits at the level of some affiliates. Finally, net profit for the first semester closed at COP 956,772 million representing a growth of 33% vis-à-vis the same period of the preceding year. Table N 5 - EEB s Financial indicators Millions COP Millions USD 2Q 14 2Q 13 Var. Var Var Var. % 2Q 14 2Q 13 COP USD % Consolidated adjusted EBITDA Qtrly 322, ,594 89, Consolidated adjusted EBITDA LTM 1,970,539 1,621, , Consolidated EBITDA margin % The Adjusted Consolidated EBITDA of 2Q 2014 (QoQ), including the dividends received from non-controlled affiliates, totaled COP 322,220 million, representing an increase of 38.5% vis-à-vis the figure generated in the same period of 2013, and explained by (i) higher earned dividends and interests for a value of COP 29,169 million and (ii) improved operating performance for a value of COP 57,945 million. The Adjusted Consolidated EBITDA LTM (last twelve months) (YoY) totaled COP 1,970,539 million, showing a growth of 21.5% also resulting from (i) higher earned dividends and interests for a value of COP 149,718 million; and (ii) improved operating performance for a value of COP 93,446 million. Figure 1 - Consolidated Adjusted EBITDA LTM - COP Consolidated Adjusted EBITDA Var. Figure 2 - Quarterly Consolidated Adjusted EBITDA - COP 1,115,360 Consolidated Adjusted EBITDA 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 1,621,817 1,668,543 1,775,908 1,880,913 1,970,539 Var. 1.1% 2.9% 6.4% 5.9% 4.8% 322, , , ,226 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 Table N 6 - EEB s Consolidated debt structure 2Q 14 COP Millions Part. 2Q 13 Part. % COP Millions % 2Q 14 2Q 13 USD Millions USD Millions Financial debt in COP 327, , Financial debt in USD 4,148, ,781, , ,960.4 Derivatives position 216, , Total financial debt 4,692, ,010, , ,078.9 Net Debt/Consolidated Adjusted EBITDA LTM OM: < Consolidated Adjusted EBITDA LTM / Interest OM: >

9 Total consolidated financial debt grew 17% (YoY) vis-à-vis the balance on first half of 2013, owing to (i) repayment of short-term syndicated bank loans in Contugas (USD 215 million) and disbursement of a new loan for USD 300 million -additional net USD 85 million-; (ii) reopening of EEB 2021 bond -USD139 million minus repayment of debt with multilateral banks (CAF) for USD 14 million-; and (iv) taking on of indebtedness in EEC to finance its investment plan. Total consolidated financial debt grew 1.3% (QoQ) vis-à-vis Q1 2014, on account of (i) taking on of indebtedness with local banks for COP 223,000 million in EEB to finance the acquisition of TGI; compensated by (i) lower balance for exchange difference account. Figure 3 Debt Indicators Net Debt/ Consolidated Adjusted LTM EBITDA Net Debt / Consolidated Ajusted EBITDA OM < Consolidated Adjusted EBITDA / Interest Consolidated Adjusted EBITDA / Interests OM > Q 13 3Q 13 4Q 13 1Q 14 2Q 14 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 N.B: In accordance with the definitions of the agreement of bonds issued by EEB in November 2011, leverage and interest coverage indicators are calculated based on the Adjusted Consolidated EBITDA, including the dividends and reductions of equity received by EEB from its affiliates. The net leverage indicator (YoY) experienced a reduction due to an increase of the EBITDA (+21.5%) and a reduction in net indebtedness (-6.5%). The interest coverage indicator (YoY) shows a moderate increase of 21.5% in the Adjusted Consolidated EBITDA vis-à-vis an increase in the net financial expense on account of interest (+20.7%). Figure No. 4 Debt Maturity Profile 8

10 3. PERFORMANCE OF CONTROLLING COMPANIES Table N 7 Financial indicators of Controlled investments 2Q 14 COP Millions USD millions EEB* TGI Calidda EEB* TGI Calidda Operational revenue 55, , , Operational utility 31, ,352 60, EBITDA LTM 69, , , Net income 19, ,552 36, *Transmisssion Business directly operated by EEB. Table N 8 - Overview of the EEB group Controlled companies expansion projects Project / Company Country Sector USD MM Status In operation La Sabana/CApiay TGI Colombia T NG 120 On stream* On stream ICA Perú Contugas Perú T + D NG 358 On stream** On stream Lima Callao Cálidda Perú D NG network extension- 500 Under construction Guatemala TRECSA Guatemala T Electricity 376 Under construction Substations EEB Colombia T Electricity 611 Under construction EEC Colombia D Electricity 114 Maintenance EEBIS Guatemala T Electricity 111 Planning T: Transporte; D: Distribution ; NG: Gas Natural; E: Electricity * La Sabana Compresor Station. 7/7/2014 **Contugas Start-up: 30/4/2014. Figure 5 - Executed Companies 2Q Controlled Companies USD MM EEBIS Guatemala, USD 3.0, 2% Transmission EEB, USD 24.7, 17% Contugas, USD 10.5, 7% TRECSA, USD 31.5, 22% Calidda, USD 41.0, 28% TGI, USD 22.6, 15% EEC, USD 13.0, 9% 9

11 3.1. EEB Transmission Business Table N 9 - EEB s selected transmission business indicators 2Q 14 2Q 13 Var % Operating income - COP MM 31,209 24, EBITDA Qtrly. - COP MM 69,859 63, Investments - COP MM 46,500 17, Infrastructure availability - % (1) Compensation for unavailability - % (2) Maintenance program compliance - % (3) Participation in Colombia s transmission activity - % (4) Technical indicators show stability in the company s operating management maintaining compliance exceeding the regulatory requirements without harming the Company. The investments of the period include amounts associated to the construction of expansion projects in the National Transmission System in Colombia. Progress of Investment Projects of EEB Transmission Business: Armenia Project (UPME ): As of June 17, 2014 the ANLA (National Association of Environmental Licensing) notified EEB S.A. ESP of Resolution 0582 dated June 5, 2014 whereby an environmental license was granted for this project. With respect to easements, 64 tower sites have been released by means of registration and legal inspection, accounting for 77% of all the tower sites of the project. The project shows 56.23% progress as compared to the expected 78.59%; in the meantime, construction activities of the project have initiated. Tesalia Project (UPME ): As of June 30, 2014 the overall project shows a weighted progress of 66.74% with respect to the expected 84.77%. For the Tesalia-Altamira section, the reconfiguration of the Betania- Jamondino line, the Tesalia substation, and the expansion of the Altamira substation the progress is of 82.29%. This part of the project ensures energy connection and evacuation for El Quimbo project. The Tesalia-Altamira transmission line and the reconfiguration of Betania-Jamondino required the assembly of 75 towers from a total of 116, achieving 65% progress regarding this activity. This line is currently being laid out. As regards substations: the assembly of the Tesalia substation shows physical progress of 85%; the assembly of the Altamira substation expansion was completed and the expansion of the Alférez substation was finalized in Completion of the remaining 11 km of the Tesalia-Alférez transmission line is expected, in order to conclude the 200 km design stage. We will file the Environmental Impact Assessment before the ANLA in September North Project (UPME ): As of June 30, 2014 the detailed design of transmission lines was completed in the Chivor-Chivor II and Chivor II-Norte sections. The Norte-Bacatá section shows a few access restrictions, thus this activity will be completed using aerial photographs. Collectively, the line design shows 89.4% progress. The Environmental Assessment of Alternatives was filed at the ANLA on October 31, 2013; we are still waiting for a 10

12 statement from ANLA on the selected alternative. The project shows 28% progress with respect to the expected 37%. SVC TUNAL: As of June 30, 2014 the bases for several of the main equipment were installed and progress was made in the control room. The month of June showed good performance in civil works due to the increase of work fronts. The nationalization process is under way for the first shipping of equipment of the SVC project. The project shows progress of 63.4% vis-à-vis the expected 68.7% DECSA EEC Table N 10 - EEC s selected indicators - Controlled by DECSA* 2Q 14 2Q 13 Var % Number of clients 270, , Operating revenue - COP MM 151, , Operating income - COP MM 28,274 21, EBITDA Qtrly. - COP MM 19,972 14, Net Income - COP MM 13,381 10, Dividends and reserves declared to DECSA 0 8,898 - Losses - % (1) Net Debt / EBITDA LTM EBITDA LTM / interest UDM * Controlled by DECSA (SPV) A 4% growth was experienced in the number of clients between 2013 and 2014 equal to 10,584 new clients of the regulated market, mainly strata 1, 2 and 3 households and the commercial segment. National demand for electricity grew 1,176 GWh equal to 3.92%, primarily driven by construction, manufacture, and trade sectors. Growth in operating revenues for COP 9,265 million, equal to +6.53% with respect to 2T 2014 due to an increase in energy sales of 6.9% resulting from market seasonality in which vacation and holiday periods are important; the second quarter included the energy sold during Easter week and in June. Improved performance of the contribution margin on account of a lower index of energy losses, higher sales, and better control of fixed costs. There is a reduction in the TAM index of energy losses of 1.12 percentage points resulting from the development of the action plan for losses where macromedia equipment were installed and commercial visits were carried out. Operating profit grows at a higher pace in comparison with the growth of operating revenues, primarily due to a decline in fixed costs of O&M. During 2Q 2014, perceived as twelve accumulated months, there is an improvement of the EBITDA margin for COP 1,580 million mainly because of a lower fixed cost on account of improved performance in the control of O&M costs compensating the largest average plant of personnel. The EBITDA LTM totaled USD 36.5 million as compared with USD 34.8 million for the same period of the preceding year. The amount of net debt vis-à-vis the same period of the preceding year showed an increase primarily due to taking on of financial debt in local currency with national banks. EEC decreed dividends for an amount of COP 2,000 MM payable in November 2014 to all its shareholders. 11

13 Lastly, particularly noteworthy is that EEC expects an upgrade of distribution costs on account of the revision of the new tariff period, although amendments shall be published in 4Q 2014 according to CREG s agenda Transportadora de Gas Internacional - TGI Tabla N 11 - TGI s selected indicators 2Q 14 2Q13 Var % Operating revenue - COP MM 486, , Operating income - COP MM 317, , EBITDA YTD - COP MM 398, , EBITDA LTM - COP MM 741, , Net income - COP MM 195,552 2, Transported volume - Mm cfd Calificación crediticia internacional: S&P - may. 14: Fitch - abr.14: Moody s abr. 14 BBB-, sstable BBB-, stable Baa3, stable Operational revenues during 2Q 2014 showed an increase of 15.5% vis-à-vis the same period of the previous year. In addition to the tariff scheme in force, which was fully applied at the end of 1Q 2013, this increase was mainly the result of an increase in transported volume, growing by 24.7% with respect to 2Q 2013, as well as the increase in firm contracted capacity, which showed an increase of 3.5% for this period. When compared with the previous quarter, at closing of June 2014, operational profit increased by 22.6%, well above the increase in operational revenues. This growth was the result of the sound financial performance of operation revenues and operation costs and expenses showed a slight positive variation of 4.1% due mainly to the provision, depreciations and amortizations line item. With respect to the non-operational line items, these showed a net reduction of 94.6%. During 2Q 2013, expenses in the in the exchange rate difference account amounted to COP 179,497 million, generated by the devaluation of the Colombian peso and its impact on re-expressing TGI s debt in legal tender, which was originally agreed in US$. For this period, the reduction of the loss on the exchange rate difference was (COP 51,906 million) and revenues perceived on account of the valuation of hedging operations represent the accounts with greater impact during the period. Accordingly, net profit of the company increased by COP 193,125 million, when compared with the same period in Progress of TGI investment projects: La Sabana Station: Construction of the La Sabana natural gas compression station (ECGSB), which is part of the gasduct expansion project having the same name, shows progress of 68.8%. On 7 July, the company began the commercial operation in this station, to increase transport capacity of the gas pipeline in La Sabana from 140 MMPCD to 215 MMPCD and an expected peak of 270 MMPCD. Start-up of ECGSB represents an opportunity to ensure the 12

14 supply of service in coming years and the possibility of securing industry development in the city of Bogota and the Cundiboyacense Sabana. To date, construction of civil work is under way, as well as the installation and connection of transformers, switch gear, and grids required for the control system, among others, to complete the entire station. Enhancement Cusiana - Apiay San Fernando. The company is currently assessing alternatives intended to make a project viable, consisting on increasing the capacity in the stretch Cusiana-Apiay, considering that ECOPETROL stated that it did not required, at least for now, natural gas transport capacity from Cusiana to San Fernando. TGI has been introducing the enhancement project of the transport system to its major customers CALIDDA Table N 12 - Cálidda s selected indicators 2Q 14 2Q 13 Var % Number of clients 215, , Operating revenue - USD Thousands 252, , Operating income USD Thousands 34,706 23, EBITDA Qtrly USD Thousands 24,398 15, EBITDA LTM USD Thousands 85,117 64, Net Income USD Thousands 19,309 3, Operation profit grew by 45% from USD 24 million to USD 35 million, while year-to-date EBITDA grew by 33% due to (i) greater volume invoiced by the three generation plants (Fenix, Termochilca and Kallpa); (ii) Greater volume sold to GNV stations; (iii) Greater revenues on account of services of internal installations; (iv) Greater demand in volume due to a growing client base. As of 1Q 2014, the client base reached A new record was achieved in monthly connections during the month of June, with new clients (vis-à-vis connections in June 2013). In April 2014, a significant industrial client was connected to Calidda s distribution network: Quimpac II, meaning that consumption amounts to 1 MMPCD. The former adds to the 10 industrial plants connected in over 30 districts. In June 2014, Cálidda begins its connection to residential clients in a new district known as Santa Anita. As a result thereof, Cálidda has now presence in 15 district for the residential and commercial segment. At the beginning of July 2014, OSINERGMIN, regulator of the Peruvian energy sector, published a definite resolution setting a distribution tariff for Cálidda for the period comprised between 8 May 2014 and 7 May 2018 (Approved average distribution tariff). Such resolution is in line with the expectation of the Company and had an increase of approximately 6.37%, duly acknowledging future and past investments. Progress of Calidda investment projects: There is continuity of project, start-up is individual and by stretches built. However, one may highlight that both the Enhancement of the Main Network and the Chilca Generators have been completed. 13

15 3.5. CONTUGAS The Commercial Start-up of Contugas Infrastructure was conducted on 30 April 2014, after entering into a joint deed with the Ministry of Mines and Energy of Peru and Enbridge Technology INC, international inspector, the final Minutes of tests certifying that these works have met all applicable standards, declaring that the natural gas system is fit for service. The Peruvian State had granted 33 additional days for the commercial start up, on account of force majeure, mainly due to lack of water in water sources foreseen for the hydrostatic tests of the gas pipeline, thus the new deadline is , but as previously explained, they were able to conduct such test within the time frame set. During 2Q 2014 the connection of industrial clients is still being conducted, having connected 4 fishing industries, the first GNV station, Aceros Arequipa (major consumer steel mill), among others. The volume of contracts signed amounts to MMPCD or m3 std/day and the corresponding volume to contracts under negotiation, exceed 54 MMPCD or m3 std/day. At the closing of June 2014, the company has over enabled clients (with over residential sales performed and internal installation built). As of May 2014, the Board of Directors of Contugas appointed Mr. Bruno Seidel as the new General Manager of Contugas for this new operating phase, which the Company has started. Mr. Bruno has over 20 years of experience in the power sector, he has been Assistant manager of Transmission and Distribution if EPM, General Manager of Central Hidroeléctrica de Caldas (Chec) and Gas Natural Eje Cafetero. Progress of Contugas investment projects: As of 2Q 2014, project execution was set at 94% with a total investment to date of US$ 316 million. The project comprises over 340 km of the main network and high-pressure branches and over 700Km of lowpressure polyethylene networks. The gas pipeline will have a capacity exceeding 300 MMPCD and will connect 50,000 residential clients in the first six years after the Start-up of the Commercial Operation TRECSA Progress of Trecsa investment projects: At 2Q 2014 the project s progress is 79%. Energizing el Pacífico Substation. TRECSA has started the operation of the Transmission Expansion Plan PET , one of the most important power infrastructure projects in Guatemala, by means of energizing the Pacifico substation, which will allow to increase reliability of the power system, allowing connection to new generation projects and industrial, commercial and residential users to the system, as well as improving electricity coverage to new Guatemalan populations. Project Permits 100% of land acquired for the substations Over 60 municipal endorsements (81%) for lines forest licenses have been obtained (ECUTs before the INAB) representing 70% of the total estimated. Agreements have been entered on 670 km (81%), of which title has been granted to 613 km (74%) and there are 477 km available (57%) for construction works of transmission lines There are 1,166 available sites (57%) for construction works of transmission line structures 14

16 Construction There are 944 (46%) civil work structures completed and 829 (40%) structures that have been mounted. Conductor cable laying has taken place of 74 km (9%). Progress in civil works of substation is at 58% (work is being conducted in 17 substations), of which 45% mounted (in 15 substations) and 26% under tests (8 substations). Supplies Transmission Lines; 98% Substations; 89% Environmental Licenses EIA (Environmental Impact Studies) All properties have been granted an environmental license EEBIS Guatemala y Perú On April 7, 2011 the company EEB Ingeniería y Servicios, Sociedad Anónima was incorporated in Guatemala, whose objective is to provide comprehensive solutions in electrical engineering and related areas. Progress of EEBIS Guatemala investment projects: Currently a project is under execution, which consists of the construction of 90km of transmission lines, 4 new substations and enhancement of 3 existing ones and it is being developed jointly with 5 sugar mills located in the southwestern area of the country. The corresponding contract was formalized and made official on July 11, Project Investment amounts to US$ 43.4 million approximately. The project shows execution progress of 7% as of 2Q EEBIS Guatemala currently negotiates the construction and mounting of projects of substations with generators and cement plants in Guatemala.. Progress of EEBIS Peru investment projects: The incorporation of an affiliate in Peru was authorized by EEB s Board of Directors on 18 April 2013, with the purpose of materializing market opportunities in said country, regarding engineering services and projects, particularly in the energy sector (gas and electricity). The company was incorporated on 25 June Empresa de Movilidad de Bogotá The Board of Directors of EEB authorized the Company to participate in mobility projects that incorporate a significant electrical component, once profitability and convenience thereof is assessed. To that end, it incorporated the company Empresa de Movilidad de Bogotá SAS ESP. The main purpose of this new company is (i) generation, distribution and commercialization of electric power for mass transport systems, passengers, freight or other modalities, (ii) planning, preparation of studies and designs, supply, construction, installation, supervision, auditing, operation and maintenance of the power and gas infrastructure for mass transport systems, of passengers, freight or other modalities, and (iii) manage the electrical and gas component of passengers mass transport projects. It is currently assessing its participation in some mass transport projects in Bogota, which have a high involvement of the electrical component, and is being performed by means of public-private joint ventures. 15

17 4. PERFORMANCE OF COMPANIES WITHOUT CONTROL Table N 13 - Non-controlled investments financial indicators 2Q 14 COP Millions USD Thousands Emgesa Codensa Gas Natural Promigas REP CTM Operating revenue 1,274,073 1,668, , ,813 63, ,275.0 Operating income 757, , ,152 86,613 26, ,572.0 EBITDA LTM 830,410* 530,315* 162,152 49,790 33,659 96,756 Net income 489, , , ,528 11, ,709.0 Dividends and reserves declared to EEB 450, ,944 67,311 44, Capital reductions to EEB *EBITDA YTD Table N 14 - Expansion projects of non controlled companies 2Q Execution Proyecto Company Sector Country Capex In operation USD MM Quimbo/Others Emgesa G Electricity Colombia 199 1S 2015 New Demand Codensa D Electricity Colombia Concessions / Extensions REP T Electricity Perú Concessions / Extensions CTM T Electricity Perú Concessions / Extensions PROMIGAS T + D natural gas Colombia Maintenance GAS NATURAL D natural gas Colombia 6 14 Figure 5 - Executed Non controlled companies 2Q 2014 USD MM REP, USD 29, 8% CTM, USD 53, 15% Gas Natural, USD 6, 1% Promigas, USD 19, 5% Codensa, USD 58, 16% Emgesa Total, USD 199, 55% 4.1. EMGESA Table N 15 Overview of Emgesa 2Q 14 Instaled capacity - MW 3,041 Capacity s Composition 9 Hydro y 2 thermo Generation - Gwh 6,154 Sales - Gwh 7,398 Control 51.5% % ordinary shares; 14.1% preferred EEB s stake non-voting shares 16

18 Sales GWh -7.1% -5.1% 2Q 13 2Q 14 7,965 7,398 5,504 5, % 2,461 2,176 Contracts Spot Total 6, % 6,154 Supply GWh 2Q 13 2Q % -18.8% -21.1% Power Generation Contracts Spot Total Supply At the closing of 1H 2014, Emgesa maintains within its sales make up 71% through bilateral long-term contracts and 29% in the spot market and AGC mechanism. Emgesa total sales in the spot market and contracts market decrease as a result of reduced generation and due to low water levels in hydric plants (Pagua and Guavio) and to maintenance in thermal plants (Cartagena and Termozipa). The sales make up was 69% (3,593 GWh) through contracts with clients in the wholesale market and the remaining 31% (1,629 GWh) through the non-regulated market. Sales cost was reduced by 0.4%, compared to the first half of 2013, as a result of coal generation instead of fuel oil. Emgesa s generation represented 19.5% of the total system and was slightly lower to generation during the same period in In terms of gross installed capacity, Emgesa represents 20.7% of the country s installed capacity. 17

19 Table N 16 - Selected financial indicators of Emgesa COP Millions USD Millions 2Q 14 2Q 13 Var % 2Q 14 2Q 13 Operating revenue 1,274,073 1,184, Cost of sales 500, , Administrative expenses 15,695 12, Operating income 757, , EBITDA YTD 830, , EBITDA Margin 65.2% 62.8% 65.2% 64.3% Net income 489, , Dividendos y reservas decretados a EEB 450, , Dividends and reserves declared to EEB Debt / EBITDA LTM EBITDA / Interests Pies de página en anexo 6 Operational profits grew at a greater pace vis-à-vis operations revenues as a result of lower hydric and thermal generation, and therefore lower purchase of energy in the spot market and reduced fuel consumption levels. The intermediation in the spot market has allowed Emgesa to offset these lower levels of generation. Net profit showed an increase of 16.2%, compared to the first half of 2013, due mainly to an improved operational result and lower sales costs, resulting from lower consumption of fuels. On 16 May 2014, within the program Issuance and Placement of Ordinary Bonds, EMGESA S.A. E.S.P. announced the placement of the sixth stretch of up to COP 590,000 million and by a Dutch bid through the Electronic System of the Colombian Stock Exchange. Resources thereof will be destined to finance construction investment of el Quimbo Hydro electrical Plant, to pre-finance bond expirations and to service working capital needs of Emgesa S.A. E.S.P. during On 29 May 2014, the General Shareholders Assembly of EMGESA S.A. E.S.P. during its extraordinary session, elected the new Board of Directors with 7 principal members and 2 independent members who will make up the Good Governance and Audit Committees as per that announced by EMGESA S.A. E.S.P. on 18 June On 19 June 2014, the Board of Directors during its ordinary session authorized the enhancement of the global limit of the issuance and placement of local bonds from COP 315,000 million to a total of COP 3,065,000 million, while at the same time it approved amendments to regulations of the program to implement such increase and further authorized the General Manager, or whoever he appoints, to conduct all processes and enter into all the required contracts or documents to implement such enhancement before competent bodies. EMGESA s international rating is BBB with stable outlook, granted by Standard & Poor s and Fitch Ratings, and local AAA granted by the same Entity. These ratings were ratified on 12 and 13 May Risk Rating Agencies highlight the sound competitive position, low cost generation and efficient operation, its sound financial performance, generation of cash flow, healthy financial metrics and moderate financial leverage expectations during the el Quimbo construction. Progress of EMGESA investment projects: Tabla N 17 Capex 2Q 14 2Q 13 Var % COP Million 374, , USD Million

20 Expansion investments undertaken by Emgesa were concentrated in the construction of Central Hidroeléctrica El Quimbo and the revamping of the generation chain Salaco. Likewise, preventive maintenance investments were also undertaken in hydraulic and thermal plants of the company to ensure reliability and availability thereof. The El Quimbo hydro electrical project: Investment in El Quimbo project as of 2Q 2014 amounts to US$ million and shows progress of 71.8%. Quimbo will increase Emgesa s generation capacity in excess of 18% by Progress on the revamping of the Salaco generation chain is 86.5%, and will add installed capacity of 185 MW CODENSA Tabla N 18 - Panorámica de Codensa al 2T 14 Number of clients 2,733,186 Market share - % 23.4% Codensa s demand Gwh 7,226 Var % - Codensa s demand 2Q 14 / 2Q % Losses Index (%) 7.12 Control Endesa from Spain EEB s stake 51.5% -36.4% ordinary shares; 15.1% preferred non-voting shares Energy demand in Codensa s area grew by 1.46% as of June 2014, resulting from the recovery of the regulated market (residential and commercial clients), chemical and plastic industries and the use of Codensa s lines by other energy retailers. Electric power national demand grew 3.14% as of June 2014, maintaining a slight recovery in the mining and manufacturing industries in the country s central region and due to high temperatures in the northern and eastern areas of the country. Tabla N 19 - Indicadores financieros seleccionados de Codensa COP Millones USD Millones Al 2T 14 Al 2T 13 Var % Al 2T 14 Al 2T 13 Ingresos operacionales 1,668,868 1,570, Costo de ventas 1,226,938 1,134, Gastos administrativos 42,927 38, Utilidad operacional 399, , EBITDA YTD 530, , Margen EBITDA (%) Utilidad neta 243, , Dividendos y reservas decretados a EEB 277, , Reducciones de capital Deuda Neta / EBITDA UDM EBITDA / Intereses Pies de página en Anexo 6 19

21 During the period, Codensa generated operational revenues amounting to approximately COP 1.6 billion, meaning an increase of 6.3% with respect to the 1Q 2013, as a result of: (i) Growing demand by 1.46% in its area of influence and (ii) Greater revenues related to the increase in the acknowledgement of maintenance costs in the tariff. (iii) increase of energy sales volume in the regulated market. Sales cost increased by 8.19%, compared to first half 2013, as a result of greater purchases of energy for possible Niño phenomenon expectations. Codensa s Year-over-Year EBITDA as of 2Q 2014 reached COP 530,315 million, which represents an increase of +1.1% vis-à-vis 2Q 2013, mainly due to greater operating revenues. Codensa reached a COP 243,513 million of net income, compared to first half 2013, Codensa managed to reach a total loss index of 7.12% at the closing of 2Q 2014, which represents a reduction of 3.1% due to an increase the financial costs (higher inflation rate, Codensa s debt is indexed on the 94% to this indicator as of June 2014). On 18 June 2014, the General Shareholders Assembly approved, during its ordinary meeting, the new list of Board Members, which is made up of 7 members of which, 2 are independent who also make up the Corporate Governance and Auditing Committees. CODENSA S.A. ESP informed that by means of Resolution No of 13 March 2014 issued by the Colombian Financial Superintendence, it authorized increasing the global cap on the Issuance and Placement Program for ordinary bonds of Codensa by one hundred and eighty five billion pesos (COP$185 billion) thus, increasing the total global cap of the Program to seven hundred and eighty five billion pesos (COP$785 billion). Table N 20 Capex 2Q 14 2Q 13 Var % COP Million 109,109 93, USD Million Progress of CODENSA investment project: Investments are mainly focused on: (i) servicing demand growth to ensure the supply of energy in the country, (ii) improve the quality and continuity of service and (iii) control operating risks and non-technical loss control PROMIGAS Table N 21 - Overview of Promigas 2Q 14 Number of clients 11 Volume of sales - Mm cfd Market share - % 40 Network km 2,367 Ingresos operacionales - COP MM 172,813 EEB s stake - %

22 Table N 22 Capex Promigas 2Q 14 2Q 13 Var % COP Million 36,271 37, USD Million Table N 23- Selected indicators of Promigas COP Millions USD Millions 2Q 14 2Q 13 Var % 2Q 14 2Q 13 Operating revenue 172, , Cost of sales 40,376 36, Administrative expenses 33,311 31, Operating income 86,613 59, EBITDA Quarterly 49,790 36, EBITDA Margin 202, , Utilidad neta 44,189 37, Net income Dividends and reserves declared to EEB Capital reductions to EEB Net debt (1) / EBITDA 172, , Pies de página en anexo 6 Operational profit grew at a greater pace mainly due to greater operational revenus when compared to 1Q 2013, resulting from (i) increase in transported volume due to more severe hydrological conditions during 2014 (El Niño phenomenom), increasing gas demand as a result of increased thermal dispatch; (ii) it began with invoicing Gascaribe within the netwrok construction contracts, and increased of contracted capacity due to the involvement of Termocandelaria (40 MMPCD), which increased transport capacity from 575 MMPCD to 615 MMPCD. On the other hand, operational costs and expenses show a slight increase vis-à-vis the same period in 2013 on account of registration of costs on works undertaken at Gases del Caribe and Chevron s invoice on gas inbalance. Promigas net results grew at a rate of 17% due to an increase in non-operational revenues, resulting from greater profits on account of the sale of a pipeline. On 25 March 2014, the General Shareholders Assembly took place in which it decreed dividends amounting to COP 207,289 million, of which COP 61,658 million correspond to dividend on shares. Award of bid to Sociedad Portuaria El Cayao - SPEC, with the participation of Promigas with 49% for the construction and operation of the first import and LNG regasification plant in Colombia. The plant will have a regasification capacity of 400 MMPCD and operations are expected to start in During the 1H, Promigas was awarded the construction of the Bosconia gas pipeline of Gases del Caribe, which amounts to COP 101,500 millions with an extension of 260 km in steel and 90 km in polyethylene; works should be completed by November Promigas informed that its Legal Representative had been authorized by the Board to constitue a Letter of Credit for US$ 27 million. This guarantee is required to process the pipeing purchase for the gas pipeline San Mateo Mamonal and would be handed in favor of Tubomar, acting as the selling party. The Board of Directors of Promigas S.A. E.S.P., authorized the legal representative to contract the loan to pay working capital needs amounting to seventy billion Colombia Pesos to the entities offering the best market conditions. 21

23 The Board of Directors of Promigas authorized contracting a Bank Guarantee for US$ in favor of SENER INGENIERIA Y SISTEMAS S.A., Spanish engineering and construction company with over 50 years of experience. The foregoing to comply with the obligations set forth in the turnkey contract with SENER for the construction and start up of the LNG micro plant and the Atlantico Department. On 12 June 2014 Fitch Ratings confirmed the ratings AAA(col) and F1(col) as short and long term national ratings for Promigas S.A. E.S.P. respectivelly. The outlook is stable. This is grounded on the sound competitive position of the company in terms of distribution and commercialization of natural gas and the regulated nature of the business, which provided a stable and predictible influx of cash-flow. Promigas and its subsidiaries operate under regulated businesses, which are characterized by moderate legal and regulatory risk exposure. The rating also reflects adequate cash-flow position and manageable debt expiry profile. Issuance by CREG of resolution 082 of 2014, regarding the new tariffs on account of the change on standard of useful life of gas pipelines. Progress of Promigas investment projects: Promigas, together with five international companies in the electric power, fuel, land and maritime transportation signed a Development Agreement to assess possibilities of building a terminal for the import of LNG in the Dominican Republic and study the options of supplying such fuel to the country s industrial sector. The Mini Loop project consits on the construction of 24 loops between Palomino and Don Diego rivers, and estimated length of 6 Km, to increase transport capacity. Start-up is expected in The project Loop 14 Hocol - San Mateo - Mamonal consists on the construction of a gaspipeline between HOCOL and San Mateo wells in 12 diameters and approximately 22 km in length, a 14 loop between San Mateo and Mamonal and approximately 163 Km in length to transport 60 million cubic feet. The project will come on stream in The prooject Microplanta GNL La Arenosa consists on the construction of a micro plant for liquefied natural gas, with a capacity of 78,000 gallons/day to reach markets that are not serviced through the Traditional Gaspipeline System and the GNV market. Its start-up is foreseen for Project Enhancement of SRT Loop Mamonal consisting on the construction of a loop to service the expansion project and new requirements of clients in the industrial area of Mamonal. Start-up is foreseen for Project Sistema de Filtración Tramo Arenosa-Caracolí consisting on the installation of a Sand Filtering Station, a line which will connect crossing of 32 diameter with 18 diameter to take gas to Caracolí. The project has not started yet and its start up is foreseen for

24 4.4. GAS NATURAL Table N 24 - Overview of Gas Natural 2Q 14 Number of clients 1,956,557 Volume of sales - Mm cfd 536 Market share - % 94.1 Network km 96.2 Operating revenue - COP MM 711,688 EBITDA YTD - COP MM 162,152 Controlled by Gas Natural de España EEB s stake 25% Table N 25 - Selected indicators of Gas Natural COP Millones USD Millones Al 2T 14 Al 2T 13 Var % Al 2T 14 Al 2T 13 Operating revenue 711, , Cost of sales 491, , Administrative expenses 58,097 51, Operating income 162, , EBITDA YTD 162, , Net Income 125, , Dividends and reserves declared to EEB 67,311 62, Pies de página en anexo 6 Operational revenues grew at a 12% rate resulting from greater sales due mainly to GNV and ATR markets. Table N 26 Capex 2Q 14 2Q 13 Var % COP Millions 11,172 8, USD Millions Investments performed during 2Q 2014 reach COP 11,172 million, growing by 26.5% concentrated in (i) distribution networks, 104,119 km of network, with progress set at 48% as of 1H 2014; (ii) 1 Regulation Station for the Municipality of el Colegio, showing progress of 29.9% as of 1H (iii) Ancillary installations in the network, progress as of 1H 2014 is 31.5%; and (iv) Maintenance and infrastructure CAPEX amounting to COP 2,060 million for that same period. 23

25 4.5. REP y CTM Perú Table N 27 - Selected financial indicators of REP USD Thousands 2Q 14 2Q 13 Var % Operating revenue 63,686 60, Cost of sales -36,973-34, Operating income 26,713 26, EBITDA LTM 33,659 30, Net income 11,850 10, Dividends declared to EEB 14,000 20, Capital reductions to EEB Pies de página en anexo 6 Increased operational revenues as a result of increases in the annual guaranteed remuneration due to adjustments in the Finished Goods Less Food and Energy Index; and the increase in the annual remuneration on account of enhancements. Increase in the cost of sales due to a greater provision on maintenance and replacements of products with respect to the forecasts in the Asset Streamline Plan.. Less financial expenses as a result of greater capitalized expenses from construction enhancement, which require greater amounts in terms of investments in June 2014, vis-a-vis the same period in 2103 The Seventh Issuance of Series A of the Third Program of Corporate Bonds took place on 11 July 2014, in which REP placed US$ 20 million at a fixed Annual Nominal Interest rate of 3.75% and a 7-year amortizable term. Demand placement amounted to US$ 41.4 million and the participation of investment groups, among them AFPs, Insurance Companies, Mutual Funds and Government Funds. It is worth mentioned that the last placement of bonds conducted by REP took place on February 2013, for US$10 million at a rate of 4.62% for a five-year term bullet payment. According to the report Merco Personas 2014 prepared by Monitor Empresarial de Reputación Corporativa (MERCO), the first world-wide and well-reputed verified report and audited by KPMG; Red de Energía del Perú (REP) is placed among the best 100 companies in terms of human talent and second in the energy sector and best place to work. The Merco Personas 2014 report was conducted with more than 7 thousand surveys under the multiskateholder methodology among workers, university alumni, and exalumni of business schools, experts in HR topics in the labor market in addition to a corporate analisys on management policies. The labor quality, employer brand and internal reputation were the three values considered by MERCO to measure the reputation of a good employer among 30 sector companies. Enhancement No 13. Consists of the construction of the Pariñas 220 kv - Reactor R-10 of 20 MVAR substation and 220 kv connection cell from the Talara substation to Pariñas substation. Progress of this project is set at 90.6% and it is expected to come on stream during 1Q Enhancement No 14. Consists of the construction of Reque substation and the installation of an additional 100MVA transformer in the Trujillo Norte Substation. Progress is set at 73% and it is expected to come on stream during 1H Enhancement No 16. Construction of the new Amarilis substation, capacity enhancement of 138kV transmission lines Paragsha II-Huánuco of 45 to 75 MVA and a link between Amarilis substation and Huánuco substation. Bypass at the exist of the Paragsha substation. Progess is at 46% and it is expected to come on stream during 1Q Table N 28 - Selected financial indicators of CTM 24

26 USD Thousands 2Q 14 2Q 13 Var % Operating revenue 45,275 40, Cost of sales -21,703-19, Operating income 23,572 20, EBITDA 96,756 57, Net income 12, Dividends declared to EEB Capital reductions to EEB Net debt (2) / EBITDA EBITDA / Interests (2) Pies de página en anexo 6 Increased revenues, +12%, due to start-up of por TL Talara - Piura and LT Pomacocha - Carhuamayo Increased revenues due to POC of private TL FENIX and Termochilca, which began their commercial operation in March and August 2013 respectively. Increased expenses on account of maintenance and amortization due to start-up of the previously mentioned lines. Increased interest related to the volume of disbursments for construction projects. 2Q14, shows a reduction as a result of lower levels of disbursements. Increase in adjusted EBITDA is the result of greater revenues due to the Commercial Start Up of the previously mentioned projects and due to the extraordinary revenues on the controversy of Addendum No. 10, which will be charged during a 17-year period as of May On 22 July 2014, Mr. Eleodoro Mayorga, Ministry of Energy and Mines inaugurated the Transmission Lines Trujillo-Chiclayo-Piura in 500 thousand volts, built by Consorcio Transmantaro (CTM). This project required an investment of approx. US$128 million by the company and comprises 327 km of 500 thousand volt lines, with which CTM completed over 1,000 km of operation circuits at this power level, total investment amounted to appox. US$ 500 million. On 29 May 2014, CTM was awarded the Buena Pro of the Project Transmission Line 220 kv La Planicie Industriales and Related Substations during the envelope opening activity of the agency - Agencia de Promoción de la Inversión Privada ProInversión, in charge of undertaking this bidding process. The value of the investment offered was US$ 35.3 million and will be included in the electrical power tariff and will be paid by the demand serviced by such facilities. The 220 kv Transmission Line kv Planicie-Industriales is part of the Investment Plan approved by OSINERGMIN, its estimated length is 16,6 km and capacity of 400 MVA per circuit, made up by 11.7 km of overhead lines and 4.9 km buried lines. Such transmission line will allow the supply of energy to Industriales Substation in 220kV. Similarly, it will facilitate the expansion system in 220kV in the Metropolitan are of Lima, which is necessary to service forseen growing demand in that area in a timely manner and under adequate quality condtions. Among the main projects currently under way is the Machupicchu-Abancay-Cotaruse, 421 km and 220 kv, investment amounting to arround US$ 107 million and physical progress is of 74.5% as of 1H 2014 and its coming on stream is expected to take place during 1Q In this regard, the transmission line project consisting of 920 km and 500 kv Mantaro-Marcona Nueva- Socabaya-Montalvo 500kV, which investment is US$ 446 million, with progress of 8.89% as of 1H 2014 and its start-up is expected during the last quarter of

27 5. Annexes Annex 1: Legal notice, clarifications and definitions of EBITDA included in this report This document contains projections and estimates, using words such as anticipate, believe, expect, estimate, and others having a similar meaning. Any information other than historical information included in this report, including but not limited to the Company s financial condition, its business strategy, plans, and management objectives for future operations are projections. Such projections are based on economic, competitive, regulatory and operational scenarios and involve known and unknown risks, uncertainties and other important factors that could 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. For these, reasons, the results may differ from the projections. Potential investors should not take them into consideration and should not base their decisions on them. 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. The Company expressly states that it will be under no obligation to update or revise any projections contained in this document. The company s previous results should not be taken as a pattern for the company s 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: 2Q 14: 1, COP/USD 2Q 13: 1, COP/USD En las cifras presentadas se utiliza la coma (,) para separar los miles y el punto (.) para separar los decimales. Annex 2: Definitions of EBITDA included in this report. Consolidated adjusted EBITDA reconciliation 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. EBITDA: EBITDA for a specific period of time (LTM; Q1) has been calculated by taking operating income (loss) and adding amortization of intangibles and depreciation of fixed assets for that period. EEB Consolidated EBITDA for a period, consists of operating revenues of EEB and its consolidated subsidiaries for such period, minus the sum of (i) cost of sales, (ii) administrative expenses allocated to cost, (iii) administrative expenses and (iv) interest income on investments of pension assets, plus dividends and interest earned (which includes dividends declared by EEB s related companies, whether such dividends are actually paid or not), taxes (other than income taxes), amortization and depreciation, pension payments and provisions. 26

28 EEB Consolidated Adjusted EBITDA for a specific period is calculated taking the Consolidated EBITDA for such period and adding the cash flows coming from investing activities during such period to the extent attributable to capital distributions by EEB s related companies. Annex 3: EEB Consolidated Adjusted EBITDA UDM and Quarterly Table N 29 EEB s Consolidated financial results Millions COP Var. Millions USD 2Q 14 2Q 13 % 2Q 14 2Q 13 Operating revenue (1) 1,123, , Electricity transmission 55,222 52, Electricity distribution 151, , Natural gas transportation 486, , Natural gas distribution 430, , Cost of sales (2) -566, , Electricity transmission -23,828-22, Electricity distribution -112, , Natural gas transportation -122, , Natural gas distribution -308, , Gross income 557, , Operating expenses -122, , Electricity transmission -10,656-6, Electricity distribution -16,750-16, Natural gas transportation -35,053-22, Natural gas distribution -60,324-63, Operating income 434, , Dividends (4) 863, , Interest temp. investments & pension trusts (5) 59,726 34, Foreign exchange (6) 27, , Other revenue (8) 19,091 14, Non-operating expenses (9) -97,150-83, Financial expenses -120, , Other expenses -4,937-4, Net income before taxes and minority interest 1,181, , Minority interest (10) -84,449-7, Provision for income tax -140,079-37, Net income 956, ,

29 Table N 30 GEB's Consolidated EBITDA LTM breakdown EBITDA LTM COP MM Var. USD MM 2Q 14 2Q 13 % 2Q 14 2Q 13 Operating revenue 2,139,306 1,780, Operating costs -1,118, , Operating expenses -319, , Operating depreciation 114, , Operating amortization 69,300 47, Operating Taxes 5,292 4, Dividend & interests earned 1,021, , Hedging -17,716-17, Interests in autonomous equity -9,166-11, Administration expenses -170, , Retirement pensions 33,594 39, Amortizaciones 32,066 36, Amortization 6,753 6, Depreciation 103,712 18, Taxes 79,866 66, Capital reductions Consolidated adjusted EBITDA 1,970,539 1,621, Table N 31 GEB's Consolidated EBITDA quarterly breakdown CONSOLIDATED EBITDA QUARTERLY COP MM Var. USD MM 2Q 14 2Q 13 % 2Q 14 2Q 13 Operating income 217, , Operating depreciation 28,887 27, Operating amortization 21,448 12, Operating taxes 1, Dividends & interests earned 57,296 32, Hedging Operations (7,761) (12,357) Interests in autonomous equity (1,344) 4, Administration expenses (48,466) (39,637) Retirement pensions 9,569 9, Amortization 6,809 9, Depreciation 1,780 1, Provisions 18,621 2, Taxes 16,684 13, EBITDA 322, , Annex 4: Link to EEB s consolidated and stand-alone financial statements Anexo 5: Technical and regulatory terms BLN: US billion (109) CAC: Compound Annual Growth COP: Colombian Peso CHB: Central Hidroeléctrica de Betania CTM: Consorcio Transmantaro CFD: Cubic feet per day 28

30 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. D Electricity: electricity distribution, D Natural Gas: Natural Gas Distribution, DANE: Departamento Administrativo Nacional de Estadística (National Administrative Statistics Department). Agency responsible for planning, collecting, processing, analyzing, and disseminating official statistics in Colombia. G Electricity: electricity generation, 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 LTM: last twelve months MEM: Mercado de Energía Mayorista de Colombia; Wholesale Energy Market in Colombia Mm: million Ml: thousands MW: Megawatt, power unit or work which equals one million watts N.A. Not applicable. 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 kcfd SIN: Sistema Interconectado Nacional, National Interconnected System STN: Sistema de Transmisión Nacional, National Transmission System SF: Superintendencia Financiera Financial Superintendency. State entity in charge of regulating, overseeing and controlling the Colombian financial sector T Electricity: Electricity transmission, T natural Gas: natural gas transportation, 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 N.B. Figures in this English report in terms of one USD billion corresponds to COP 1,000,000,000 and one COP trillion corresponds to USD Annex 6: Tables and graphics footnotes. 29

31 Table 9 - 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 Table 10 Selected financial indicators of EEC - DECSA (1) Percentage of energy losses. Return Table 16 - Selected financial indicators of EMGESA (1) 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. (2) Accrued interest on financial debts for the previous twelve months Return Table 19 - Selected financial indicators of Codensa (1) 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. (2) Accrued interest on financial debts for the previous twelve months. Return Table 23 Selected financial indicators of Promigas (1) 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. (2) Accrued interest on financial debts for the previous twelve months. Return Table 25 Selected financial indicators of Gas Natural (1) 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. (2) Accrued interest on financial debts for the previous twelve months. Return Table 27 Selected financial indicators of REP (1) 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. (2) Accrued interest on financial debts for the previous twelve months. Return Table 28 Indicadores financieros seleccionados de CTM 30

32 (1) 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. (2) Accrued interest on financial debts for the previous twelve months. Return Table 29 - Consolidated results of EEB (3) Operating revenue for transmission services rendered directly by EEB, natural gas transmission and distribution of TGI and Cálidda, respectively; as well as energy distribution services that Decsa consolidates for its participation in EEC. (4) Cost of sales of the transmission services rendered directly by EEB, natural gas transportation and distribution services and electricity distribution services conducted by its controlled companies. It includes personnel, materials, operation and maintenance costs, depreciation, amortization and insurances related to those activities. (5) Transmission activity is operated directly by EEB. Administrative costs are allocated by the ABC system. (6) Dividends declared by non-controlled companies and temporary investors and pension funds autonomous equity. (7) Interests of temporary investments that are generated by pension funds autonomous equity. (8) Refers to net losses or earnings due to exchange rate variations and its impact on assets and liabilities expressed in foreign currency. (9) Valuation of hedging operations contracted by EEB and TGI to reduce currency risk. (10) Income from recovery of investments, leases and expenses. (11) Expenses are not related to operational activities. (12) Proportion of net income corresponding to minority investors in the company s consolidated by EEB. Annex 7: Overview of EEB Return EEB is an integrated energy company with interests in the natural gas and electricity sectors and operations in Colombia, Peru and Guatemala. EEB was founded in 1896 and is controlled by the District of Bogota (76.2% ownership). The company, as a public company in Colombia, adhered to global standards of corporate governance. EEB has an expansion strategy focused on the transmission and distribution of energy in Colombia and other countries within the region. EEB participates in the entire electricity value chain and in almost all the natural gas value chain, except for exploration and production. Since 2009, EEB shares have been traded on the Colombian stock market. In November 2011, EEB finished a Re-IPO in the Colombian stock market for approximately USD 400 million. EEB is one of the largest Colombian corporate debt issuers. In October 2007, EEB and TGI issued corporate bonds in the international markets for USD 1.36 billion. In 2011 and the beginning of 2012 both companies refinanced their notes extending their maturities and lowering its costs. 31

33 100%* 100%* 32