ENGIE Energía Perú. Corporate Presentation. September (based on 2017 H1 financial figures)

Transcription

1 ENGIE Energía Perú Corporate Presentation September 2017 (based on 2017 H1 financial figures)

2 2017 H1 EEP HIGHLIGHTS During 2017 H1, EEP was the first private player of the sector accounting for 21% of the total capacity and 15% of the total energy generation of the system Intipampa solar project at 73%. Expected to enter into commercial operation in early 2018 New 15 year PPA with 84MW to supply electricity demand of Mina Justa mining project subject to final NTP In June 2017, EEP successfully issued ~101 MUSD of local corporate bonds in two tranches 7y & 10y). Bonds were issued in local currency and backed by a cross currency interest rate swap, resulting in a final cost of debt in dollars of 3.15% and 3.55%, respectively 2017 H1 EBITDA reached 213.7MUSD while Net Result totalized 109.9MUSD, growing 17% and 7% respectively compared to H The increase was mainly explained by an extraordinary income from Las Bambas penalty and the start of Nodo Energetico project; which was partially offset by the end of Southern Peru Copper Corporation (SPCC) PPA The 20-year PPA with Southern Peru Copper Corporation (SPCC) ended in April As a result, 111.5MW from old units were disconnected from the grid as they will be no longer required. Units disconnection will not have an impact on commercial margin Las Bambas confirmed their intention to terminate its PPA at the end of August A termination penalty of 28 MUSD due in July 2

3 2017 H1 - INDUSTRY HIGHLIGHTS No significant changes in market context As of June 2017, annual energy generation (SEIN) grew 4.8% compared to similar period in 2016 Installed capacity totalized 12,120MW. Among projects entering into operation: + Additional OCGT (+50MW): Malacas TG6 + Mini hydro projects (+40MW): Marañon & Potrero (RER auction 2011) The country was under emergency due to heavy rains and land slides. Fortunately, EEP operations were not affected and all our generation plants were operating normally After cancelation of the Gas to South pipe contract, Government expects to tender the project again in Q Natural Gas Price declaration norm was modified to allow two declarations periods (dry & rainy seasons) instead of a single annual period Transmission line 500kv Mantaro Montalvo (ISA), which increases the transmission capacity connecting the center and south of the country, is expected by Q Consumer access to spot market ( mercado de corto plazo ) expected to be ready in Q

4 MAIN FINANCIAL RESULTS H EBITDA Net Result Debt Total EBITDA EBITDA MUSD(MUSD) Total Net Result (MUSD) Net Debt / EBITDA (12m) +18% +7% -7% H H H H H H1 Recurrent EBITDA* (MUSD) Net Recurrent Result* (MUSD) Total Debt (MUSD) +2% -12% -5% H H H H H H1 * Does not include penalty fee and its effect on the deferred tax 4

5 2017 H1 SNAPSHOT Operations Higher generation of Yuncan & Quitaracsa hydro-plants due to longer rainy season and higher generation of Ilo 21 due to transmission congestion in the south of the country Successful operation of new projects: Chilca2 & Nodo Energetico Commercial New 15 year PPA with Marcobre (84MW) to supply energy demand of Mina Justa In addition to Marcobre, new contracts with Volcan (85MW) & Gloria Groups (60MW) will replace Las Bambas contract Finance Successful 100MUSD bond issuance in local capital market: 7 years and 10 years, at final rates in USD of 3.15% and 3.55%, respectively Reduction of average cost of debt and increase of average duration Sustainability Training programs improved the technical and commercial capabilities of 900 entrepreneurs and small businesses Earth Hour show in Lima (La hora del planeta ), proving clean energy through solar panels Battery collection campaign with students from Huachon and Paucartambo communities 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 21% Installed capacity 12,120 MW 46% 54% 44% 3% 54% 31% 18% 13% 17% Peak demand 6,596 MW Annual energy Generation 49,217 GWh +16.% y/y +5.7% y/y +4.8% y/y Regulated Clients Free Clients Main regulated clients are Enel Distribución 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 Non Conventional Renewables Natural Gas Coal & diesel Natural Gas generation is concentrated in Chilca district (60km from Lima) Diesel plants dispatch in case of emergency and transmission congestion ENGIE Enel Generación Others Government IC Power Market share as of June in terms of energy generation (12m) Others include: Fenix Power, Duke, Statkraft, Termochilca, among others Information as of June

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 5-6% between 2017 and 2022; MW Balance Supply - Demand - Wet Season Reserve MW Balance Supply - Demand - Dry Season Reserve 14, % 14, % 12,000 10,000 80% 12,000 10,000 80% 8,000 60% 8,000 60% 6,000 40% 6,000 40% 4,000 4,000 2,000 20% 2,000 20% - 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 (%) Source: COES 8

9 MARGINAL COST RESULTING FROM SETTING UP DISPATCH ORDER 9

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

11 ENGIE ENERGIA PERU OVERVIEW Largest private electricity generation company in Peru 2,562 MW of installed capacity & ~8,000 GWh of annual generation Diversified & decentralized portfolio of generation sources 20 years operating in the country & listed since 2005 Profuturo, 5.0 Others, employees Solid clients Integra, 6.8 Prima, 11.4 Shareholders % ENGIE, 61.8 Strong financials to support ambitions, AAA local rating Sponsored by a global leader 11

12 SPONSORED BY A GLOBAL ACTOR 12

13 LEADING THE ENERGY REVOLUTION THROUGH 3 PILLARS ENERGY REVOLUTION & MEGA TRENDS Environmental awareness Customer Centricity Energy efficiency New technologies Digitalization 3 pillars 13

14 WITH A CLEAR TRANSFORMATION PLAN

15 OUR ROLE IN THE ENERGY TRANSITION Focus on low CO2 Balanced portfolio of assets under development Geographic diversification and proximity to our clients Non conventional renewable pipeline Continue with hydro mapping and studies Studies for natural gas options M&A opportunities Focus on improving operational efficiency of existing assets Reduce exposure to commodity prices Optimum contracting level Balanced portfolio between Regulated Clients (Distribution Companies) and Free Clients Power Purchase Agreements under pass-through scheme Minimize non-manageable risks Develop solutions for clients Customer focus: partnering with our clients to help them finding efficiency gains Value added proposals Integral solutions one shop approach Leverage from worldwide experience to elaborate tailor made solutions 15

16 SUPPORTED BY A STRONG PORTFOLIO OF ASSETS #1 Largest private electricity company Quitaracsa Hydro 112MW Yuncan Hydro 136MW Dual fuel, 1110, 43% Coal, 135, 5% Diesel, 106, 4% 2,562MW Hydro, 248, 10% Natural Gas, 963, 38% Chilca Complex Natural Gas 963MW Low Co2 generation base Diversified & decentralized asset base across 4 regions 220 km of transmission lines + 1 substation Ilo Complex Intipampa Solar 40MW [under construction] Nodo 610 MW Dual Fuel Ilo 31 (Cold Reserve) 500 MW - Dual Fuel Ilo MW - Coal Ilo MW - Diesel 16

17 PROVEN TRACK RECORD IN DRIVING ORGANIC GROWTH Investments for 1.6 BnUSD in ,572 MW Nodo Ilo & Chilca Dos +723MW More than 3x capacity in 10 years AVERAGE GROWTH 18% Quitaracsa +112MW Ilo MW Intipampa +40MW [under construction] Upsides Hydro Natural Gas 374 MW Yuncan +134MW Chilca MW Dual Fuel Solar Total Capacity MW ,064 1,820 2,673 EBITDA MUSD Market Cap MUSD ,600 2,005 1,611 17

18 FIRST STEP IN NON CONVENTIONAL RENEWABLES Intipampa (project under construction) In 2016, ENGIE Energía Perú was awarded as part of the 4th Renewables Auction process the construction of a 40 MW solar plant, which will benefit 90,000 households and avoid 50,000t of CO2 Status Signature of Concession Contract Pre-operational studies Archeological permits Environmental studies Land Key facts Location the project is located in the south of Peru, Moquegua Description: The project will deliver GWh/year to the system Economics: the project is backed by a 20 year Investment Agreement with Ministry of Energy and until 2038 (approx years) EPC signed with Solairedirect Notice to Proceed 73% Financing structure inside Balance Sheet Green certificates (last approval phase) Investment: ~55MUSD Construction: EPC contractor Solaire Direct. Site mobilization started in February, 2017 COD expected in early

19 POTENTIAL NATURAL GAS UPSIDES 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 19

20 PORTFOLIO APPROACH Highly contracted portfolio and resilience in face of unfavorable market conditions Diversification 68 clients, consuming ~8,500 GWh/ year 45% free clients / 55% regulated clients Limited spot market risk 97% contracted capacity on average in the next 3 years Average PPA life of 7.8 years Most of EEP s contracts do not include termination clauses Strong credit profile 70% of portfolio investment grade clients* Low commodity risk Indexation ~60% of portfolio to Natural Gas prices in line with generation costs Efficient capacity ~1,000MW Regulated clients Free clients Challenging market conditions Contract Renewals * Or local equivalent 20

21 ENERGY BALANCE 2017 H1 Lower thermal generation partially offset by higher hydro generation in first semester due to a longer than expected rainy season 21

22 ORGANIZATION, GOVERNANCE & ETHICS Audit Committee Transactions between affiliates Committee Shareholders assembly Board of directors CEO Committees & Task forces Executive Operations Regulatory Commercial Development Acting in accordance with an internal set of values based on honesty, integrity and respect to human rights Ethics Chapter that guides our relationship with clients, suppliers, partners and Government among our main stakeholders Practical approach Construction 1. Annual training plan to all employees Internal Auditor HR Risk & Finance Ethics 2. Practical Guide to Ethics 3. Control systems COO CFO Commercial 4. Anonymous ethical complaints channel Development Corporate Affairs Legal Independent Ethics Officer, appointed by the board of directors The Board of Directors includes three independent members out of a total of 7 directors 22

23 AGENDA 1 Peruvian Electricity Market 2 Company Overview H1 Financial Results 4 Capital Structure 23

24 MAIN RESULTS 2017 H1 Main KPIs (MUSD) 1H17 1H16 1H17 / 1H Income % % Recurrent EBITDA* % % 2016 / 2015 EBITDA % % Net Recurrent Result* % % Net Result % % Net Debt % % Net Debt / EBITDA 12m % % Net Generation GWh 3,518 3,743-6% 7,914 7,072 12% Clients Demand GWh 4,688 4,665 1% 8,976 8,783 2% 2017 H1 EBITDA grew 18% to 214MUSD and was positively impacted by non recurrent termination fee from Las Bambas. Recurrent EBITDA increased by 2% to 186MUSD explained by the start of operations of Nodo Energetico project H1 Net Recurrent Result was affected by higher D&A and the increase of the income tax rate from 28% to 29.5%. Total debt reached 951MUSD as of June 2017 following the expected amortization schedule and a new issuance in the local capital markets of ~101MUSD. * Does not include penalty fee and its effect on the deferred tax 24

25 EBITDA: H vs. H MUSD + 18% EBITDA H EBITDA H CMg Clients Nodo Energetico Las Bambas Penalty EBITDA H

26 NET RESULT: H vs. H MUSD + 7% Start of operations of Nodo Energetico and Chilca Dos projects Tax effect, including the increase in the income tax rate from 28% to 29.5% Net Result H Net Result H EBITDA growth D&A Net Financial Expenses FX & others Tax Net Result H

27 AGENDA 1 Peruvian Electricity Market 2 Company Overview & Strategy 3 Company Results 4 Capital Structure 27

28 OUR 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% 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

29 IMPROVING OUR DEBT REPAYMENT PROFILE 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. Debt Composition by Product (MUSD) % Engie Energía Peru s gross debt totalized 951 MUSD as of June Financial Lease Bonds Corporate Loans % % Debt repayment profile (MUSD) Financial leases Bonds Corporate loans Debt amortized in H New Bonds

30 LIMITED EXPOSURE TO FX AND INTEREST RATE VARIATIONS Debt 100% in USD: 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) % % % % PEN + XCSY USD Floating Rate Fixed Rate 30

31 STOCK PRICE PERFORMANCE Sound financial results and value creation due to its financial, commercial and development strategy, generating 3x increase in market value since IPO MUSD 2,500 2,000 1,500 1, Net Result Dividends Market Cap 1, ,602 1,187 1,759 2,005 2,075 1,611 1,427 1, MUSD Financial Market Data June 2017 Number of shares issued 601,307,011 Share price (PEN) 30/06/ VWAP (3m) (PEN) week high (PEN) week low (PEN) 7.70 Market Cap (MUSD) 1,452 Enterprise Value (EV) (MUSD) 2, EV / EBITDA 6.8x Price to Book Value (P/B) 1.4x Market Cap changes in USD is affected by share price movements and FX changes In Q2 2017, the share price decreased from 8.2 to 7.83 S/./sh; (-4.5%); while the exchange rate was relatively stable at The Market Cap decreased (-4.4%) Price / Earnings ratio (P/E) 10.5x Daily avg. trading volume (mm sh) 0.18 EV: Market Cap + Net Debt P/B: Market Cap / Book Value of Equity Market Cap variation in 2015 is mainly explained by fx variations and portfolio rebalance of an institutional investor and subsequent potential reclassification of Peru from Emerging Markets ( EM ) to Frontier market due to its low liquidity. Source: SMV, Lima Stock Exchange, estimated Financial Statements as of June 30 rd

32 EQUITY ANALYST VIEW PEN / Share % Upside Consensus Price as of September 25th Sep 7.5 Credicorp Larrain Kallpa Inteligo Consensus Target price Recommendation Underperform Sell Maintain Buy 32

33 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 totalized 49.5MUSD 33

34 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. FOR MORE INFORMATION ABOUT ENGIE ENERGIA PERU Ticker: ENGIEC investor.relations@pe.engie.com Av. República de Panamá 3490, Lima 27, Peru Rocío Vásquez, Head of Corporate Finance & Investor Relations rocio.vasquez@pe.engie.com Marcelo Soares, Chief Financial Officer marcelo.soares@pe.engie.com 34