Terpel S.A. Organization and its Subsidiaries Consolidated Financial Statement. December 31 st, 2012 and 2011

Transcription

1 Terpel S.A. Organization and its Subsidiaries Consolidated Financial Statement December 31 st, 2012 and 2011

2 Tax auditor s report For Organización Terpel S.A. shareholders February 13 th, 2013 I have audited the general balance statement of Organización Terpel S.A. and its subsidiary companies consolidated as of December 31 st, 2012, and the corresponding consolidated income statement, as well as the statements of changes in the shareholders equity, changes in the financial situation, and cash flows of the year that ended on that date, and the summary of the main accounting policies listed in the Note 2, and other explanatory notes. The 2011 Organización Terpel S.A. consolidated financial statements were not audited as it was not required. The Administration is responsible for the adequate drawing up and submission of these financial statements in accordance with the accounting principles generally accepted in Colombia. This responsibility includes the design, implementation, and the conservation of the internal control necessary for these financial statements to be free of mistakes of relative significance due to fraud or error. Such responsibility also includes the selection and application of the adequate accounting policies, as well as the establishment of the reasonable accounting estimations for the circumstances. My responsibility consists in expressing an opinion regarding the mentioned financial statements based on my auditing. I acquired the necessary information to fully carry out my tax auditing functions, and I did my work following the auditing regulations generally accepted in Colombia. These regulations require me to plan and perform the audit in order to obtain a reasonable sureness about the fact that the financial statements are actually free of mistakes of relative significance. A financial statement audit consists in, among other aspects, carrying out procedures to obtain auditing evidence related to the figures, values, and disclosures contained in the financial statements. The selected procedures depend on the auditor s judgment, including the relative significance mistake risk assessment regarding the financial statements. In the assessment of these risks, the tax auditor shall consider the relevant internal control of the entity for reasonably drawing up and submitting the financial statements in order to design the adequate auditing procedures in view of the respective circumstances. An audit also includes the assessment of how adequate the used accounting policies and the entity administration accounting estimation are, as well as the evaluation of the financial statement joint submission. I consider that the auditing evidence I obtained provides a reasonable basis to found the opinion described below.

3 For Organización Terpel S.A. shareholders. February 13 th, 2013 It is my opinion that the mentioned consolidated financial statements that I have audited, which were duly acquired from the consolidation files, reasonably exhibit the financial situation of Organización Terpel S.A. and its subsidiaries regarding all significant aspects as of December 31 st, Also, the statements evidence the result of Organización Terpel S.A. operations, the change in its financial situation and its cash flows for the year that ended in the mentioned date, in accordance with the accounting principles generally accepted in Colombia, which were applied on a uniform basis with the ones of the prior year. As it has been pointed out in the Note 4 of the financial statements, in September, 2011, Organización Terpel S.A. entered into a purchase-sale contract with Quiñenco S.A. (a Chilean company), which involved 100% of the shares and participations of Petróleos Transandinos S.A. and Operaciones y Servicios Terpel Ltda. that its subsidiaries, Organización Terpel Chile S.A. and Petrolera Nacional S.A., own. Initially, the transaction was not approved by the Chilean Free Competition Defense Tribunal, which pronounced a sentence that was appealed by Organización Terpel Chile, Enex, Petroleas Trasandinos, and Quiñenco. In January, 2013, the Chilean Supreme Court accepted the appeal claims, and approved the merger, subject to several mitigation measures, which are described in Note 29. Therefore, and taking into account that such shares and participations represent the main asset of Organización Terpel Chile S.A., the Company recorded the investment in the aforementioned subsidiary s books, under the cost category as of December 31 st, The investment recovery value in Organización Terpel Chile S.A. will depend on the final result of the previously mentioned sale process. (Signed) Iván Fernando Guzmán Tax Auditor Professional License No T Member of PricewaterhouseCoopers Ltda. Page 2 of 2

4 Certification by the legal representative and the accountant of the Company For Organización Terpel S.A. shareholders February 13 th, 2013 The undersigning Legal Representative and Accountant of the Company certify that the consolidated financial statements of the Company Organización Terpel S.A. as of December 31 st, 2012, have been duly taken from the consolidation files, and that prior to being placed at your disposal and at the disposal of third parties, we have verified the following assertions that are contained in them: 1. All the assets and liabilities included in the consolidated financial statements of the Company as of December 31 st, 2012, do exist, and all the transactions listed in such statements have been carried out over the specific years closed on the stated dates. 2. All the economic actions performed by the Company and its subsidiaries over the years closed on December 31 st, 2012, have been acknowledged in the financial statements. 3. Assets represent probable, future economical benefits (rights), and the liabilities represent probable, future economic sacrifices (obligations) obtained or payable by the Company and its subsidiaries as of December 31 st, All the elements have been acknowledged due to their appropriate values, in accordance with the accounting principles generally accepted in Colombia. 5. All the economic actions that affect the Company and its subsidiaries have been correctly classified, described, and disclosed in the financial statements. (Signed) (Signed) Sylvia Escovar Gómez Julián Andrés Viracachá M. Legal Representative Public Accountant Professional License No T

5 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES GENERAL BALANCE STATEMENT (All figures are stated in thousand Colombian Pesos) Assets Note No. December 31 st of Current assets Cash 3 169,810, ,717,743 Temporal investments 4 7,673,143 84,054,196 Temporal investments available for sale 4 369,219, ,308,555 Debtors 6 606,835, ,589,103 Inventories 7 486,291, ,991,724 Expenses paid in advance 17,479,851 13,022,553 Total current assets 1,657,309,769 1,495,683,874 Non-current assets Permanent investments 5 193,843, ,981,777 Debtors 6 10,312,797 9,683,437 Properties, plant, and equipment 8 687,153, ,875,413 Intangible assets 9 646,947, ,387,978 Deferred charges ,784, ,285,269 Other assets 238, ,567 Asset appreciations ,008, ,893,606 Total assets 3,807,598,943 3,527,033,921 Liabilities and shareholders equity Current liabilities Financial obligations ,060, ,203,416 Suppliers ,357, ,801,406 Accounts payable 14 93,426,289 73,949,808 Taxes, encumbrances, and duties 15 92,306, ,450,937 Labor obligations 16 7,562,232 12,994,631 Estimated liabilities and provisions 17 94,597,059 52,503,674 Other liabilities 18 57,186,583 35,243,576 Total current liabilities 1,216,496, ,147,448 Non-current liabilities Financial obligations ,479, ,618,733 Taxes, encumbrances, and duties 15 18,614,006 37,228,010 Labor obligations 16 1,420,034 2,538,254 Deferred liabilities ,711,687 93,230,048 Total liabilities 2,167,722,015 1,875,762,493 Minority interest 967, ,495

6 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES GENERAL BALANCE STATEMENT (CONTINUATION) (All figures are stated in thousand Colombian Pesos) December 31 st of Assets Note No. Shareholders equity (see enclosed statement) 20 Subscribed and paid capital 191,915, ,915,420 Issue premium 664,534, ,854,829 Reserves 182,361, ,954,031 Equity revaluation 12,562,478 28,998,447 Year s net profit 128,898, ,485,222 Accumulated and non-appropriated profit 180,561, ,484,290 Participation method surplus 26,623,425 94,810,868 Surplus due to appreciations 251,452, ,358,826 Shareholders total equity 1,638,909,824 1,650,861,933 Shareholders total liabilities and equity 3,807,598,943 3,527,033,921 Memorandum accounts ,334, ,680,436 The supplementary notes are an integral part of the financial statement. (Signed) (Signed) (Signed) Sylvia Escovar Gómez Julián Andrés Viracachá M. Iván Fernando Guzmán Legal Representative Public Accountant Tax Auditor (See enclosed certificate) Professional License No T Professional License No T (See enclosed certificate) (See enclosed report)

7 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES INCOME STATEMENT (All figures are stated in thousand Colombian Pesos) Year closed on December 31 st of Note No. Operating income Sale of fuels 11,793,365,062 10,129,009,613 Sale of lubricants and additives 210,767, ,539,464 Other sales 73,624,330 67,724,794 12,077,757,330 10,385,273,871 Sales costs (11,115,465,959) (9,506,183,617) Gross profit 962,291, ,090,254 Operating expenses of: Administration 22 (172,621,177) (139,463,413) Sales 23 (477,729,191) (397,549,819) Operating profit 311,941, ,077,022 Other non-operating income (expenses): Net participation method income 16,292,655 17,302,378 Financial income 24 18,431,053 45,338,276 Financial expenses 24 (131,123,327) (129,923,225) Other income 25 37,032,195 31,665,883 Other expenses 25 (60,623,167) (51,311,835) Profit before provision 191,950, ,148,499 for income tax Provision for income tax (63,286,682) (84,463,790) Profit before minority interest 128,663, ,684,709 Minority interest 234, ,513 Year s net profit 128,898, ,485,222 Net profit per share The supplementary notes are an integral part of the financial statement. (Signed) (Signed) (Signed) Sylvia Escovar Gómez Julián Andrés Viracachá M. Iván Fernando Guzmán Legal Representative Public Accountant Tax Auditor (See enclosed certificate) Professional License No T Professional License No T (See enclosed certificate) (See enclosed report)

8 Subscribed and paid capital ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES SHAREHOLDERS EQUITY CHANGE STATEMENTS (All figures are stated in thousand Colombian Pesos) Issue premium Participation method surplus Reserves Equity revaluation Year s net profit Accumulated non-appropriated profit Surplus due to appreciations Shareholders total equity Balance as of December 31 st, ,915, ,854, ,634, ,337,902 45,434, ,748,800 10,351, ,879,954 1,640,157,446 Profit appropriation (4,383,871) - (97,748,800) 102,132,669 - (1) Dividends paid to shareholders (118,000,000) - - (118,000,000) Year s net earnings ,485, ,485,222 Equity tax (16,435,968) (16,435,968) Transactions due to integration - - (21,823,638) (4,521,128) (26,344,766) Balance as of December 31 st, ,915, ,854,829 94,810, ,954,031 28,998, ,485, ,484, ,358,826 1,650,861,933 Own shares reacquired (519,480) (519,480) Profit appropriation ,944,341 - (71,485,222) 58,540,884-3 Dividends paid to shareholders (100,000,000) - - (100,000,000) Year s net earnings ,898, ,898,727 Equity tax (16,435,969) (16,435,969) Transactions due to integration - (63,319,883) (68, ) 31,982, ,535,835 66,093,756 (23,895,390) Balance as of December 31 st, ,915, ,534,946 26,623, ,361,237 12,562, ,898, ,561, ,452,582 1,638,909,824 The supplementary notes are an integral part of the financial statement. (Signed) (Signed) (Signed) Sylvia Escovar Gómez Julián Andrés Viracachá M. Iván Fernando Guzmán Legal Representative Public Accountant Tax Auditor (See enclosed certificate) Professional License No T Professional License No T (See enclosed certificate) (See enclosed report)

9 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES FINANCIAL SITUATION CHANGE STATEMENT (All figures are stated in thousand Colombian Pesos) Year closed on December 31 st of Financial resources were provided by: Year s net earnings 128,898, ,485,222 Plus (less) - Charges (credits) to the year s income that did not affect the working capital Depreciation of properties, plant, and equipment 60,510,065 52,625,626 Amortization from: Deferred charges 92,067,500 60,175,814 Intangible assets 5,042,019 4,508,959 Deferred indexation (monetary correction) (1,745,420) (188,062) Recovery of provision of properties, plant, and equipment (48,301) (91,725) (Recovery) provision for investors (34,020) 416,471 Net deferred tax 11,170,783 14,274,397 (Decrease) increase in the actuarial valuation of retirement (1,118,220) 55,301 pensions Permanent investments exchange rate adjustment charged (62,175) (489,881) to income Net participation method income (16,292,655) (17,302,379) Loss (profit) from the sale of properties, plant, and equipment 269,040 (4,847,267) Profit from the sale of permanent investments (6,419,854) (1,970,267) Equity tax charged to income 224,168 - Share in the profits of the minority interest (234,997) (800,513) Working capital provided by the year s operations 272,226, ,851,696 Non-consolidated net assets Product of the sale of: Properties, plant, and equipment 2,100,877 8,934,481 Investments 13,331,504 5,128,823 Net liquidation of investments 758,668 - (Increase) of permanent investments (21,397,805) (21,823,641) Exchange rate adjustment of the investments available for sale 3,089,296 - Dividends received 10,683,799 - Decrease of other assets 4, ,655 Minority interest 792, ,426 Total of the financial resources provided 281,590, ,121,440 Financial resources were used in: The acquisition of: Properties, plant, and equipment (165,110,114) (193,117,091) Permanent investments (350,918) (10,010,976) Increase of the deferred (85,348,871) (133,177,279) Increase of the intangible assets (41,601,496) 12,865,697 Dividends paid to shareholders (100,000,000) (118,000,000) Reacquired own shares (519,480) - (Increase) decrease of long-term debtors (629,360) 7,624,012 (Decrease) increase of long-term financial obligations (43,138,954) 21,667,019 Transfer of short-term taxes, encumbrances, and duties (18,614,004) (16,436,068) Total of the financial resources used (455,313,197) (428,584,686) Working capital decrease (173,723,166) (157,463,246)

10 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES FINANCIAL SITUATION CHANGE STATEMENT (CONTINUATION) (All figures are stated in thousand Colombian Pesos) Year closed on December 31 st of Changes in the components of the working capital: Cash 54,092,822 63,909,335 Temporal investments (79,470,349) (114,708,943) Debtors 158,246, ,900,725 Inventories 24,299, ,518,680 Expenses paid in advance 4,457,298 2,067,661 Financial obligations (234,856,813) (59,713,392) Suppliers (46,555,839) (149,402,936) Accounts payable (19,476,481) (32,206,026) Taxes, encumbrances, and duties 24,144,065 (77,635,343) Labor obligations 5,432,399 (5,730,626) Estimated liabilities and provisions (42,093,385) (10,271,002) Other liabilities (21,943,007) (4,191,379) Working capital decrease (173,723,166) (157,463,246) The supplementary notes are an integral part of the financial statement. (Signed) (Signed) (Signed) Sylvia Escovar Gómez Julián Andrés Viracachá M. Iván Fernando Guzmán Legal Representative Public Accountant Tax Auditor (See enclosed certificate) Professional License No T Professional License No T (See enclosed certificate) (See enclosed report)

11 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES CASH FLOW STATEMENTS (All figures are stated in thousand Colombian Pesos) Year closed on December 31 st of Cash flow of operating activities: Year s net earnings 128,898, ,485,222 Adjustments for settling the year s net earnings with the net cash provided by operation activities: Depreciation, and properties, plant and equipment 60,510,065 52,625,626 Amortization of: Deferred charges 92,067,500 60,175,814 Intangible assets 5,042,019 4,508,959 Deferred indexation (monetary correction) (1,745,420) - Provision for: Inventories 3,241, ,914 Net uncollectable debts 943,865 (543,359) (Recovery) provision for investors (34,020) 416,471 Properties, facilities, and equipment provision (48,301) (91,725) Net deferred income tax 11,170,783 14,086,335 (Decrease) increase in the actuarial valuation of retirement pensions (1,118,220) 55,301 Permanent investments exchange rate adjustment charged to income (62,175) - Net participation method income (16,292,655) (17,302,379) Loss (profit) from the sale of properties, plant, and equipment 269,040 (4,847,267) Permanent investment sale profit (6,419,854) (1,970,267) Equity tax charged to income 224,168 - Share in the profits of the minority interest (234,997) (800,513) 276,411, ,198,132 Changes in operating assets and liabilities: Debtors (159,819,491) (93,733,353) Inventories (27,541,045) (128,918,594) Expenses paid in advance (4,457,298) (2,067,661) Other assets 4, ,655 Suppliers 46,555, ,402,936 Accounts payable 19,476,481 32,206,026 Taxes, encumbrances, and duties (24,144,065) 77,635,343 Labor obligations (5,432,399) 5,730,626 Estimated liabilities and provisions 42,093,385 10,271,002 Other liabilities 21,943,007 4,191,379 Equity tax (18,614,004) (16,436,068) Minority interest 792, ,426 Net cash provided by the operation activities 167,269, ,509,849

12 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES CASH FLOW STATEMENTS (CONTINUATION) (All figures are stated in thousand Colombian Pesos) Year closed on December 31 st of Cash flow of investment activities: Product of the sale of: Investments 13,331,504 5,128,823 Properties, plant, and equipment 2,100,877 8,934,480 Net liquidation of investments 758,668 - Decrease of investments for sale 3,089,296 36,073,460 (Increase) of permanent investments (18,659,424) (32,324,498) Reacquired own shares (519,480) - Dividends received 10,683,799 - Acquisition of properties, plant, and equipment (165,110,114) (193,117,091) Increase of deferred charges (85,348,871) (133,177,279) Increase of intangible assets (41,601,496) 12,865,697 Net cash used in investment activities (281,275,241) (295,616,408) Cash flow of financing activities: Dividends paid to shareholders (100,000,000) (118,000,000) Increase of financial obligations 191,717,859 81,380,411 Net cash provided by (used in) financing activities 91,717,859 (36,619,589) (Decrease) in cash and cash equivalents (22,288,231) (14,726,148) Cash and cash equivalents as of the year s beginning 199,771, ,498,087 Cash and cash equivalents as of the year s end 177,483, ,771,939 The supplementary notes are an integral part of the financial statement. (Signed) (Signed) (Signed) Sylvia Escovar Gómez Julián Andrés Viracachá M. Iván Fernando Guzmán Legal Representative Public Accountant Tax Auditor (See enclosed certificate) Professional License No T Professional License No T (See enclosed certificate) (See enclosed report)

13 ORGANIZACIÓN TERPEL S.A. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31 ST, 2012 AND 2011 (All figures are stated in thousand Colombian Pesos, except the ones expressly stated in U.S. dollars, numbers of shares, and exchange rates) NOTE 1 - REPORTING ENTITY AND OPERATIONS Reporting Entity Organización Terpel S.A. was incorporated in accordance with Colombian laws by means of Public Deed No. 6038, November 2001, filed with Bogotá Notary s Office No. 6. The corporate purpose of the company includes the purchase, sale, acquisition in any capacity, import, export, distribution, and supply of hydrocarbons and their byproducts, as well as their refining, transportation, storage, bottling, packaging, and canning. Also the Company corporate purpose comprises the purchase, sale, import, export, distribution, supply, storage, and transportation by land, sea, and rivers, as well as through multi-purpose pipelines, oil pipelines, gas pipelines, and propane pipelines of natural gas or propane gas (LPG), and any other fuel product, whether they are hydrocarbons byproducts or not. The Company headquarters are located in Bogotá, and its duration term expires on December 31 st, The following are the companies considered in the consolidations of Organización Terpel S.A. and its subsidiaries, and the operations of these companies are also listed below: Company Type Incorporation date Operating location Organización Terpel S.A. Fuels November 21 st, 2001 Bogotá, Colombia GNC Inversiones S.A.S. (Under liquidation) Holding July 12 th, 2005 Barranquilla, Colombia Combustibles Ecológicos Mexicanos S.A. de C.V. Fuels September 2 nd, 1997 Mexico Petrolera Nacional S.A. Fuels February, 2006 Panama Orlyn S.A. Fuels February, 2006 Panama Fuel Petroleum Services S.A. Inactive May 19 th, 2003 Panama Transmarine Transportation & Barging S.A. Supply May 7 th, 2001 Panama Inversiones Organización Terpel Chile Ltda. Holding December 21 st, 2010 Chile Lutexa Industrial Comercial Cia. Ltda. Fuels July 8 th, 1988 Ecuador Noliber S.A. (Under liquidation) Real property March, 2000 Ecuador C.I. Terpel Combustibles S.A.S. Fuels April 19 th, 2011 Bogotá, Colombia Organización Terpel República Dominicana SLR Fuels May 20 th, 2011 Dominican Republic Operaciones y Servicios de Combustibles S.A.S. Fuels January 17 th, 2012 Barranquilla, Colombia As of December of 2012 and 2011, the company Organización Terpel Chile S.A. was not included in the consolidation because it was undergoing a sale process. By means of Act No. 10, held on December 1 st, 2011, the definitive liquidation of OT Inversiones S.A.S. (formerly OT Inversiones Ltda.) was carried out.

14 The company GNC Inversiones S.A.S., although being under liquidation, was consolidated because its main asset is the share it owns of Peruana de Gas and Combustibles Ecológicos Mexicanos S.A. de C.V. Once the liquidation of the company is completed, these net assets will be owned by Organización Terpel S.A. due to the fact that the its share of the company under liquidation is 95%. As of December 2012, Organización Terpel S.A. operates with a total of 29 fuel supply plants, 15 aviation plants, and 2,016 liquid fuels and gas service stations (269 solely owned, 1,576 associated stations, 135 as franchises, 30 in co-investment, and 6 corporate stations) across the entire country. The share percentages of the parent company in the capital of the subsidiary companies are the following: Subsidiary Direct and indirect share percentage of OT Gas Natural Comprimido S.A.S. (G.N.C. S.A.S. - Gazel S.A.S.) - 100% GNC Inversiones S.A.S. (Under liquidation) 95% 95% Combustibles Ecológicos Mexicanos S.A. de C.V % 90.33% Petrolera Nacional S.A. 100% 100% Orlyn S.A. 100% 100% Fuel Petroleum Services S.A. 100% 100% Transmarine Transportation & Barging S.A. 100% 100% Inversiones Organización Terpel Chile Ltda. 100% 100% Lutexsa Industrial Comercial Cía. Ltda. 100% 100% Noliber S.A. (Under liquidation) 99.99% 99.99% C.I. Terpel Combustibles S.A.S. 100% 100% Organización Terpel República Dominicana SLR 100% 100% Operaciones y Servicios de Combustibles S.A.S. 100% - The following are the companies considered in the consolidations of Organización Terpel S.A., and the operations of these companies are also listed below: Organización Terpel S.A. Purchase, sale, acquisition in any capacity, import, export, distribution, and supply of hydrocarbons and their byproducts, as well as their refining, transportation, storage, bottling, packaging, and canning. Purchase, sale, import, export, distribution, supply, storage, and transportation by land, sea, and rivers, as well as through multi-purpose pipelines, oil pipelines, gas pipelines, and propane pipelines of natural gas or propane gas (LPG), and any other fuel product, whether they are hydrocarbons byproducts or not. GNC Inversiones S.A.S. Under liquidation Its corporate purpose is to plan, project, and execute investments in projects, businesses, corporations, companies or similar entities in any line of production or services, whether it is directly or by means of contracts with third parties. Its headquarters are located in Barranquilla, Colombia. According to Minute No. 13 of the Extraordinary Shareholders Assembly meeting held on December 14 th, 2010, the dissolution was approved from that same date, and the liquidation of the corporate equity of the company GNC Inversiones S.A.S. was commanded. This amendment was recorded on December 22 nd, 2010, on the commercial registry of Barranquilla Chamber of Commerce.

15 Combustibles Ecológicos Mexicanos S.A. de C.V. Its main operation consists in the design, construction, administration, and setting up of stations for the supply of compressed natural gas to automotive vehicles. GNC Inversiones S.A.S. Under liquidation Its corporate purpose is to plan, project, and execute investments in projects, businesses, corporations, companies or similar entities in any line of production or services. Petrolera Nacional S.A. Its corporate purpose comprises the wholesale distribution of fuels, and "Accel" and "Terpel motor oils. Orlyn S.A. Its corporate purpose comprises the retail purchase and sale of fuels, and "Accel" motor oils. Fuel Petroleum Services S.A. The company is not currently exercising its corporate purpose. Transmarine Transportation & Barging S.A. Its corporate purpose is to supply fuels to ships. Inversiones Organización Terpel Chile Ltda. This company deals with revenue-generation investments, not with the sale intention of all kinds of tangible and intangible assets. It also carries out any activity related to movable and real property capitals, and in general, its corporate purpose includes the signing of any act or contract and the carrying out of any activity directly or indirectly related to the previously mentioned objectives. Lutexsa Industrial Comercial Cía. Ltda. Its corporate purpose is the purchase, sale, distribution, and commercialization of fuels and other oil byproducts in the Ecuadorian territory. Noliber S.A. Its corporate purpose consists in the purchase, sale, lease, and exploitation of real estate property. Organización Terpel República Dominicana SLR Its corporate purpose is to carry out the operation of the airport facilities and aviation service stations, as well as the distribution of fuels, the provision of aircraft fuel supply service, and the maintenance of the fuel facilities and fuel transportation equipment.

16 C.I. Terpel Combustibles S.A.S. Its corporate purpose includes the purchase, sale, acquisition in any capacity, import, export, exploitation, storage, bottling, packaging, canning, transportation, supply, and distribution of hydrocarbons and their byproducts. It also includes the international and local provision of any service as port operator, and in particular the services of maritime cargo management (large liquid volumes), storage, and supply to ships. Operaciones y Servicios de Combustibles S.A.S. The corporate purpose of the company consists in carrying out any commercial activity, in particular, the purchase, sale, acquisition in any capacity, import, export, storage, bottling, packaging, canning, supply, and distribution of hydrocarbons and their byproducts as retail distributor by means of own or leased (or held in any way) automotive, aviation, maritime, and fluvial service stations. Operations Merging process The General Shareholders Assembly, in the meeting held on June 25 th, 2012, approved the merger project submitted by the administration, in which Organization Terpel S.A. absorbed the company Gas Natural Comprimido S.A.S. (G.N.C. S.A.S. - Gazel S.A.S.). On August 24 th, 2012, through Resolution No , the Superintendency of Companies authorized the merging project into only one company, between the company Gas Natural Comprimido S.A.S. (G.N.C. S.A.S. - Gazel S.A.S.) and la Organización Terpel S.A. This merger was formalized and recorded on the Public Deed No. 2099, which was filed with Notary s Office No. 16, Bogotá D.C., on October 19 th, The Company owned 100% of the investment on Gas Natural Comprimido S.A.S. (G.N.C. S.A.S. - Gazel S.A.S.). Thus, the Company absorbed assets amounting to $550,391,499; liabilities amounting to $363,055,410; equity amounting to $179,656,694; and profits that amount to $7,679,394. Integration process In order to guarantee the unity in the strategic business direction, favor the financial and administrative stability, and promote the brand for competing in the market, in June, 2004, Terpel Antioquia S.A., Terpel del Norte S.A., Terpel Bucaramanga S.A., Terpel de la Sabana S.A., Terpel del Centro S.A., Terpel del Occidente S.A., and Terpel Sur S.A. proceeded to deliver contributions in kind equivalent to $308,554,773, determined based on appraisals carried out by independent experts on June, 2003, in exchange for 135,528,081 shares issued by the Terpel Organization (with a par value of COP $1,000 per share, and a placement premium of COP $1,500.28). The difference between the net value in the books of the assets and liabilities received ($308,554,773), and the value of the issued shares and the placement premium ($338,857,920) was recorded as business credit. International expansion operations In accordance to the Organización Terpel S.A. expansion plan, the investments in the international sector have been the following:

17 In June, 2006, Organization Terpel S.A. purchased the share of Lutexsa Industrial Comercial Cía. Ltda. (Lutexsa), which was owned by Lubricantes Tambores del Ecuador C.A. and consisted of 1,000 shares with an intrinsic value of USD $ per share. The amount paid for the transaction was USD $6,870,000, which generated a business credit for USD $6,865,350 (including working capital accounts for USD $898,630). As a result of the foregoing, Organization Terpel S.A. received 100% of the share in Lutexsa Industrial Comercial Cía. Ltda., which has as corporate purpose the import, transport, and commercialization of fuels and other oil byproducts in the Ecuadorian territory. As of December 31 st, 2012, Lutexsa operates with a total of 18 own stations, and 39 associated stations (2011: 16 own stations, and 42 associated stations). In February, 2007, through Organización Terpel lnversiones S.A. (Panama), the Company acquired 100% of the shares in the Panamanian company Corporación Nacional de Energía S.A. (CONADE), which owned Petrolera Nacional S.A., a company with a corporate purpose that consists in the commercialization of Accel energy products in Panama, and the area of the Panama Canal. The amount of the transaction totaled USD $49,011,974. As of December 31 st, 2012, Petrolera Nacional operates with a total of 67 own stations, and 21 associated stations (2011: 49 own stations, and 23 associated stations). This transaction generated a business credit for USD $22,906,859, which is registered in Petrolera Nacional S.A. financial statements. In December, 2007, Organización Terpel S.A. and Organización Terpel lnversiones S.A. (Panama) founded in Chile the Company Organización Terpel Chile Ltda., which in turn, on December 27 th, 2007, acquired the operating companies Petróleos Transandinos YPF S.A. (Petrans) and Operaciones y Servicios YPF Ltda. (Opese). The amount of the transaction totaled USD $210,010,000. This transaction generated a business credit for USD $63,666,282, which is registered in Organización Terpel Chile Ltda. financial statements. As of December 31 st, 2012, Organización Terpel Chile operates with a total of 187 own stations, and 19 associated stations (2011: 182 own stations, and 19 associated stations). In August 2009, Organización Terpel Chile Ltda. purchased from Organización Terpel S.A. 100% of the Lutexsa shares for USD $22,850,000; this transaction was formalized and recorded on the Public Deed No in San Francisco de Quito, capital of the Republic of Ecuador. In December 2010, Organización Terpel Chile Ltda. was demerged into two companies: Organización Terpel Chile S.A., which continues with the operation of distribution and sale of fuels in the Chilean territory; and "Inversiones Organización Terpel Chile Ltda., which owns % of the company Lutexsa, a company that operates in the territory of the Republic of Ecuador. On September 2 nd, 2011, Organización Terpel S.A. entered into a share purchase-sale contract, subject to condition precedent, with Organización Terpel Chile S.A. and Petrolera Nacional S.A. (subsidiaries owned by such company in Chile and Panama, accordingly) as sellers, and Organización Terpel S.A. as guarantor and Quiñenco S.A. (Chilean company) as purchaser, by virtue of which the sellers shall transfer to the purchaser 100% of the ownership of Petróleos Transandinos S.A. (formerly Petróleos Trasandinos YPF S.A.) and Operaciones y Servicios Terpel Ltda. (formerly Operaciones y Servicios YPF Ltda.), two companies that carry out the business of

18 combustible fuels in Chile. The transaction amount totaled USD $320 million, which shall be fitted according to the debt and working capital adjustment. Initially, the transaction was not approved by the Chilean Free Competition Defense Tribunal, which pronounced a sentence that was appealed by Organización Terpel Chile, Enex, Petroleas Trasandinos, and Quiñenco. In January, 2013, the Chilean Supreme Court accepted the appeal claims, and approved the merger, subject to several mitigation measures, which are described in Note 28. Therefore, and taking into account that such shares and participations represent the main asset of Organización Terpel Chile S.A., Organización Terpel S.A. recorded the investment in the aforementioned subsidiary s books, under the cost category as of December 31 st, Merging process of different Terpel companies On August 3 rd, 2009, by means of Resolution No , the Superintendency of Companies authorized the merging project into only one company, of the companies Terpel de la Sabana S.A., Terpel Bucaramanga S.A., Terpel del Norte S.A., Terpel del Occidente S.A., Terpel Antioquia S.A., Terpel Sur S.A. (absorbed companies) and Organización Terpel S.A (absorbing company). This merger was formalized and recorded on the Public Deed No. 5303, on September 14 th, Accordingly, Organización Terpel S.A. absorbed assets equivalent to $121,861,572, liabilities equivalent to $306,785, equity equivalent to $121,554,788, and profits equivalent to $8,926,372. In addition, the Company subscribed 18,747,358 shares with a par value of $1,000 per share. Moreover, Organización Terpel S.A. owns a share of 34.61% of Terpel del Centro S.A., which in turn owns a 28.46% share of Organización Terpel S.A. Incorporation of C.I. Terpel Combustibles S.A.S. By means of a private document dated April 19 th, 2011, the company C.I. Terpel Combustible S.A.S. was incorporated, which started operating in October, Organización Terpel S.A. is the owner of 100% of said company. Incorporation of Organización Terpel República Dominicana Pursuant to Ordinary Shareholders Assembly meeting act of May 20 th, 2011, the Company Organización Terpel República Dominicana S.R.L. was incorporated, which started operating in October, Organización Terpel S.A. is the owner of 100% of said company. Incorporation of Operaciones y Servicios de Combustibles S.A.S. By means of a private document dated January 17 th, 2012, the company Operaciones y Servicios de Combustibles S.A.S. was incorporated, which is 100% owned by Organización Terpel S.A. NOTE 2 - Accounting Policies and Practices For its accounting records, and for the drawing up of its financial statements, the Company and its subsidiaries observe accounting principles generally accepted in Colombia, which were established by the Superintendency of Companies and other regulations. These principles can differ in some aspects from the ones established by other State control

19 bodies. The consolidated financial statements of the subsidiaries abroad were standardized in terms of the Colombian principles for consolidation purposes. The main policies and practices observed by the Company, and adopted in accordance with the foregoing are described below: Foreign currency transactions Foreign currency transactions are registered at the exchange rates applicable on the date when they were carried out, and according to the legal regulations in force. The balances listed in foreign currency are stated in Colombian Pesos at the representative market exchange rates as of the closing of each period. The exchange rate adjustment generated by the assets and liabilities in foreign currency is recorded in the transaction results reports, except when such adjustment is chargeable to equity investments in controlled entities, case in which it affects the equity. The financial costs, including the exchange rate adjustment, for the acquisition of assets under construction are part of the asset cost until the moment when they are in conditions for being used. For the conversion of the financial statements of the subsidiaries that use a currency different than the Colombian Peso, the corresponding foreign currency was converted into U.S. Dollars, and then into Colombian Pesos. For the conversion of assets and liabilities balances, the Representative Market Exchange Rate recorded for December 31 st, 2012 and 2011 respectively, was used; for the conversion of the figures of the income statements, the month-average Representative Market Exchange Rates were used; and for the equity figures, the historical rates were used. Currency unit In accordance with the legal provisions, the currency united used by the Company is the Colombian Peso. Consolidation basis The Company shall draw up the unconsolidated general-purpose individual financial statements, which are the basis for the profit distribution definition, and shall be submitted to the General Shareholders Assembly. The Code of Commerce demands the drawing up of consolidated general-purpose financial statements, which shall also be submitted to the General Shareholders Assembly for being approved, but they are not the basis for the profit distribution definition. Financial statements include Organización Terpel S.A. accounts, consolidated with the subsidiaries mentioned in Note 1, applying the global integration consolidation method, which consists in including in the company financial statements the entirety of the assets, liabilities, equity, and income of the subsidiaries, provided a prior elimination of the existing reciprocal balances, transactions, and investments. The consolidation process implied the elimination of the balances and transactions of the companies that were included in said consolidation process, in accordance with the transaction origin, in both balance and income accounts, as follows:

20 The equity of the subsidiaries was eliminated considering the investment the Company has in them, and the corresponding minority interest was acknowledged in the consolidated general balance statements. The Company participation method income was eliminated considering the year s earnings of the subsidiaries, acknowledging the corresponding minority interests in the consolidated income statement. The receivable and payable balances, sales, other income, costs, and expenses were eliminated in the process. The minority interest amount was calculated based on the investment participation percentage owned by the other shareholders in the subsidiary companies. The following is the value of the assets, liabilities, equity, and income of the exercise as of December 31 st of Organización Terpel S.A. and its subsidiaries: 2012 Assets Liabilities Equity Exercise income Inversiones Organización Terpel Chile Ltda. Consolidated 38,499, ,269 37,984, ,508 Petrolera Nacional S.A. Consolidated 274,791, ,036, ,755,121 13,070,083 C.I. Terpel Combustibles S.A.S. 16,196,478 19,664,665 (3,468,187) (3,706,187) Organización Terpel República 35,622,540 24,566,009 11,056,531 1,907,040 Dominicana S.L.R. GNC Inversiones S.A. (under 45,411,264 34,122,736 11,288,528 (3,854,611) liquidation) consolidated Operaciones y Servicios de Combustibles S.A.S. 38,782,706 36,623,336 2,159,370 2,158, Assets Liabilities Equity Exercise income Inversiones Organización Terpel Chile Ltda. Consolidated 49,138,211 11,897,013 37,241,198 3,262,174 Gazel S.A.S. Consolidated 530,356, ,890, ,465,672 29,084,053 Petrolera Nacional S.A. Consolidated 256,003, ,324, ,679,341 13,522,845 C.I. Terpel Combustibles S.A.S. 5,013,734 4,825, ,000 - Organización Terpel República Dominicana S.L.R. 36,813,439 26,732,276 10,081,153 1,655 Standardization of accounting policies and methods In the cases in which the Company and its subsidiaries use different accounting policies and methods for similar transactions and events in similar circumstances, the subsidiary financial statements shall be adjusted in the working documents drawn up for such effect. If the adjustments lack relative significance, they can be omitted, as long as it is so disclosed. Such omission can be performed according to the Superintendency of Companies joint circular No , Accounting period

21 The Company has established to draw up and disclose general-purpose financial statements as of December 31 st every year. Temporal and permanent investments The provisions of the Superintendency of Companies require that the investments owned by the Company are classified as negotiable according to the intention of being carried out by the management not later than three years, and as permanent after three years; and in fixed-income or variable-income investments according to the return they generate. Once they are classified, investments are registered and appraised as follows: a. Fixed-income investments (debt rights), notwithstanding their classifications as negotiable or permanent, are initially registered with their acquisition cost, and they appreciate every month due to their realizable value, which is determined based on their stock exchange market value (or in the absence of the latter, based on the internal rate of return of each title that has been placed at the moment of the purchase). The resulting adjustment is used in the income statement. b. Variable-income investments in shares or equity interests in entities that are not controlled by the Company are registered with the cost adjusted by inflation as of December 31 st, 2006, and they appreciate to their realizable value. The adjustment, whether it is positive or negative, is registered in the appreciations account of the asset with payment or charge to surplus for appreciations in the equity, as the case may be, for investments classified as permanent. In the case of investments classified as negotiable, if the resulting adjustment is negative, it is registered as a provision charged to the income. The market value is determined for high or medium marketability shares that are listed on the stock exchange, based on the average stock exchange listing of the last month; and based on their intrinsic value for low marketability shares, or the shares that are not listed in the stock exchange. Provision for doubtful collection debtors The provision for debtors is reviewed and updated at the end of each period based on the analysis of the balance dates, and the assessments performed by the administrations regarding the probability of the individual accounts to be successfully collected. The amounts deemed uncollectable are regularly charged to the provision. Inventories Inventories are recorded at the acquisition cost, at the exercise period closing, they are reduced to their market value if it is lower. The cost is determined based on the weighted average method. A provision is created for obsolete and slow-movement inventories when each exercise period is being closed. Properties, plant, equipment, and depreciation These assets are recorded at cost (adjusted for inflation until December 31 st, 2006), which regarding all relevant purposes includes charges for financing or currency exchange expenses. The sales and withdrawals of these assets are discharged on the corresponding adjusted net cost, and the differences between the sale price and the net adjusted cost are charged to income. Likewise, the assets transferred on gratuitous loan to

22 service stations, which are depreciated over the term of the corresponding contracts, are registered in this account. Depreciation is calculated through the straight line method, on the inflation adjusted cost, based on the life cycle of the assets at the 5% yearly rates for constructions and buildings, 10% for machinery and equipment, furniture and chattels, plants and networks, and 20% for computer and communications equipment, vehicles and transportation equipment. The Company capitalizes as highest value of the constructions in progress for accounting purposes, the financial expenses of the debt acquired for financing them. The repairs and maintenance of these assets are charged to income, but the improvements and additions are added to the cost of such assets. Appreciations Appreciations correspond to: a. Surplus arising from the difference between the realizable value determined by highly valued technical appraisals, and the net value in the properties, plant, and equipment books. Devaluations of properties, plant, and equipment are directly registered on the income statement as expenses of the period. b. The appreciations of investments that are part of the shareholders equity include surplus from the commercial or intrinsic value of permanent investments at the end of the period over their inflation adjusted net cost, and through the participation method, as the case may be. When the realizable value in permanent investments of noncontrolling companies is lower than the book cost, the difference reduces the appreciation to its amount, and in the case the realizable value is higher, it constitutes a devaluation, notwithstanding that the net balance is of opposite nature. These appreciations are recorded on separate accounts within the assets, and as a surplus from appreciations, which is not subject to distribution. Leasing contracts Financial leasing contracts, which are different to the ones related to infrastructure projects, are capitalized as intangible assets, acknowledging the corresponding financial obligation, if the structure of the specific contract clearly indicates that an asset is being acquired. These contracts depreciate during their validity term. Deferred depreciation The tax depreciation surplus over the accounting depreciation is registered as deferred depreciation, and the corresponding tax effect is registered as deferred tax liability. In order to be entitled to a tax deduction, the Company creates a reserve equivalent to 70% of the highest value requested for tax purposes. Deferred charges Deferred charges are recorded at cost, and they include mainly the following:

23 Improvements to third party properties: Costs and expenses incurred in improvements to third party properties, which are amortized over the validity term of the leasing or fuel supply contract. Software and licenses: Costs and expenses incurred in the systematization of the Company, such as software, which are amortized in a three-year period; consultancy and other incurred payments, which are amortized in a ten-year period. Deferred income tax debit: It corresponds to the temporal differences between the income tax private liquidation and the accounting records. Indexation (Monetary Correction): the charge for deferred indexation (monetary correction) debit, which was charged until 2005, is amortized proportionally to the life cycle of the respective asset, from the date on which the said asset became productive. Equity tax: It corresponds to the tax caused on January 1 st, 2011, which is paid in eight installments (two per year) over a four-year period. Other deferred charges: It corresponds to the program to promote the conversion of standard and public service liquid fuel vehicles into vehicle natural gas. The total amount of this incentive is amortized in a straight line over a maximum term of 36 months (3 years). Intangible assets and/or liabilities These are mainly business credits generated in the acquisition of permanent investments, as well as the business credit originated in the process of integration and/or merger, which corresponds to the difference between the net value in the books of the assets and liabilities received from the integrated companies, and the value of the shares delivered to such companies. They are amortized in a 20-year period by means of the method of inverse balance reduction with a residual value. Labor obligations Labor obligations are adjusted at the end of each exercise period based on the legal provisions and the labor agreements in force. The yearly adjustments of the retirement pension liability payable by the Company, fundamentally correspond to long-tenure staff, are made based on the actuarial studies complying with the legal regulations, without specific fund investment. The increase in the actuarial liability, as well as the pension fund payments are directly charged to income. For 2010, Colombian Financial Superintendency issued the Resolution 1555, through which the mortality tables of both rentier men and rentier women were updated, and it was used as the basis for calculating the mathematical reserve as of December 31 st, 2011 and Use of estimations The drawing up of financial statements pursuant to the accounting principles generally accepted in Colombia requires that the administration makes certain estimations and uses certain assumptions in order to determine the valuation of some of the individual budget items of the financial statements, and to make the necessary disclosures. Even when it is possible that the estimations differ from the actual final figures, the administrations