COLBÚN PRESENTATION 216 M A Y Southern Cone & Andean Opportunities Conference J.P. Morgan
A G E N D A O VERVIEW OPERATIONS IN CHILE AND PERU FINANCIALS G R O W T H O P P O R T U N I T I E S VALUE PROPOSAL
O V E R V I E W POWER GENERATION BUSINESS IN CHILE AND PERU COLBUN S PRESENCE IN PERU PERU Main Grid: SEIN 9,311 MW Inst. Capacity 94% of the demand 57 MW Inst. Capacity Thermal: 57 MW 3,621 GWh annual generation 9% market share* COLBUN S PRESENCE IN CHILE CHILE 4 separated grids Main Grid: SIC 15,838 MW Inst. Capacity 74% of the demand 3,282 MW Inst. Capacity Hydro: 1,62 MW Thermal: 1,686 MW 12,535 GWh annual generation 25% market share* Consolidated installed capacity: 3,852 MW * In terms of generation All information as of December 215 3
O V E R V I E W SECTOR SEGMENTATION 1 CHILE 2 PERU GENERATION GENERATION TRANSMISSION DISTRIBUTION Regulated sectors (concessions) TRANSMISSION DISTRIBUTION RELEVANT INSTITUTIONS RELEVANT INSTITUTIONS Ministry of Energy Regulator: CNE Supervisor: SEC Coordinator: CDEC Ministry of Energy and Mines Supervisor: OSINERGMIN Coordinator: COES 4
4% 6% 11% 17% 13% 21% 17% 26% 21% 36% 29% O V E R V I E W RELEVANT PLAYERS IN MARKET SIC (Market Share by Installed Capacity) SEIN (Market Share by Installed Capacity) E N D E S A C O L B Ú N G E N E R O T H E R S EGENOR FENIX POWER PERU ELECTROPERU KALLPA EDEGEL ENERSUR OTHERS Source: Colbún Dec15 5
O V E R V I E W MARKET STRU C TURE GENERATORS REGULATED CUSTOMERS UNREGULATED CUSTOMERS SPOT MARKET DISTRIBUTION COMPANIES INDUSTRIAL CUSTOMERS DISPATCH CENTER Regulated Auction Tariffs Unregulated Auction Tariffs Marginal Cost /Spot Price 6
Annual Power Generation SIC TWh O V E R V I E W GENERATION AND PRICE DEVELOPMENT IN CHILE S CENTRAL GRID (SIC) 6 Development based on hydro + competitive natural gas Fixed price power purchase agreements (set by regulator for distribution companies) LNG re-gasification terminal since 29 Coal-fired power plants PPA tenders with price indexation 3 5 25 4 3 2 15 USD/MWh 2 1 ~9% of the energy is generated with base load power plants 1 5 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 Hydro Gas Coal LNG Diesel-Fuel Others Marginal Cost 7
Annual Power Generation SIC TWh O V E R V I E W GENERATION AND PRICE DEVELOPMENT IN PERU S NATIONAL GRID (SEIN) 6 5 Development based on hydro + competitive natural gas 212: Open Cycle converted to Combined Cycle plants Lower average marginal cost compared to Chile 1 9 8 4 3 2 1 7 6 5 4 3 2 1 USD/MWh 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 Hydro Gas Coal Diesel-Fuel Others Marginal Cost 8
O V E R V I E W HYDROLOGICAL CONDITIONS IN CHILE Acc. Rainfalls 1 Colbún Hydro Generation (GWh) Los Quilos (mm) 215 216 2,6 3,4 7. 6. 5. 5.566 5.462 5.234 4.858 6.655 6.464 6.655 Armerillo (mm) 215 216 24,8 8,3 4. 3. 2. Abanico (mm) 215 216 33,5 1. 21 211 212 213 214 215 216 Canutillar (mm) 215 216 131,5 194,5 *Updated in March 216 considers real figures. Jan-Mar. 9
A G E N D A O V E R V I E W O PERATIONS IN CHILE AND PERU FINANCIALS G R O W T H O P P O R T U N I T I E S VALUE PROPOSAL
O P E R AT I O N S I N C H I L E A N D P E R U OV ERV IEW INSTALLED CAPACITY OF 3,852 MW - MARKET SHARE BY GENERATION: 25% IN CHILE (SIC); 9% IN PERU (SEIN) Gx. ASSET DIVERSIFICATION. (MW) FINANCIALS. As of Mar 16 (US$ Million) OWNERSHIP% 4 Reservoir: 1,65 12 Run-of-the-river: 532 Assets: 7,2 Equity: 3,7 21,1% Matte Group Angelini Group Pension Funds 3 CCGT: 1,337 4 Diesel: 568 Mkt Cap: 4,7 EV: 5,882 18,4% Others 1 Coal: 35 1 Wind Farm: 45* 1 Biomass: 26* *Through PPAs EBITDA LTM: 661 Cash: 1,63 Net Debt: 1,182 49,9% 9,6% Committed Controlling Group High Standards of Corporate Governance Tx. ASSETS. NET DEBT/EBITDA: 1.8x. INTER. RATINGS LOCAL RATINGS ~9 Km Dividend Policy: 3% : BBB : A+ 27 Substations : BBB- : AA- *All information as of Mar216 11
O P E R AT I O N S I N C H I L E A N D P E R U 3,852 MW OF INSTALLED CAPACITY 1,337 MW CCGT 45% Peru 59% Thermal 2,256 MW Chile 41% Hydro 1,62 MW 532 MW Run-of-the-river 33% 35 MW Coal 2% 1,65 MW Reservoir 67% 568 MW Diesel 35% 12
O P E R AT I O N S I N C H I L E A N D P E R U COMMERCIAL POLICY IN CHILE Balanced position between existent and future efficient generation capacity and medium to longterm power supply commitments Hydro: contract output considering medium to dry hydrology Coal: contract output considering an efficient load factor Secure long-term contracts with creditworthy counterparties Balanced mix between Regulated and Unregulated clients Incorporate risk-sharing mechanisms LNG: secure long-term competitive LNG Supply for Combined Cycle units NCRE: add additional assets to our generation matrix Back-up capacity: available for the spot market and other opportunities Expand operations to selected Latam countries and maintain a relevant market share in the SIC Diversify geography, markets, technologies and regulation frameworks 13
O P E R AT I O N S I N C H I L E A N D P E R U CHILE S COMMERCIAL STRATEGY: MAXIMIZE RETURNS, WHILE MANAGING VOLATILITY MW Capacity (MW) & *Estimated Generation (TWh/year) Breakdown TWh 3.5 3,282 MW 18.5 TWh 2 3. 2.5 2. 1.5 581 766 342 4. 2.5 2.5 2.5 12. TWh 15 1 Hydro Coal CCGT Diesel/Gas 1. 1,589 7. 12. 5 Peaking Diesel/Gas 5 Capacity (MW) Generation (TWh/year) Contracted Sales (*) Under medium hydrological conditions. This graph is shown for illustrative purposes and represents estimated and potential output of our power plants and approximate level of contractual commitments. Real output from our power plants and variable production costs are dependent on many factors, such as hydrology, plant availability, access to fuels (coal and LNG) and commodity prices, among others. 14
O P E R AT I O N S I N C H I L E A N D P E R U COMMERCIAL POSITION IN CHILE 12. 1. GWh 546 3,234 11,655 4,431 Contractual Committments vs. Generation (GWh) 546 244 17 1,998 11,53 11,29 3,11 3,421 3.487 3,794 4,428 4.492 5% 45% 4% 35% 8. 6. 2,616 2,623 2,45 2.313 3% 25% 2% 4. 2. 4,857 7,224 6,655 7,24 6,464 6,625 6.655 6.536 15% 1% 5% 213 214 215 1Q16 % Hydro Coal LNG Diesel Regulated Sales Unregulated Sales EBITDA Mg Graph Source: Colbún. Unregulated Sales 215 & 1Q16 excludes sales to Codelco at Marginal Cost 15
O P E R AT I O N S I N C H I L E A N D P E R U LNG: MEDIUM TERM AGREEMENTS IN CHILE Contracted Gas Generation: Metrogas and ENAP (GWh) 3. 2.5 2. 1.5 GWh 2,5 2,5 2, 2, Optional 1. 5 216 217 218 219 Efficient complement to hydro and coal Nehuenco I & II 766 MW 16
O P E R AT I O N S I N C H I L E A N D P E R U LNG: LONG-TERM RESERVE REGASIFICATION CAPACITY IN CHILE Long-term strategy: leveraging our efficient natural gas power facilities Contributing to provide competitive, secure and sustainable power supply. 22-24 2,5 GWh 17
O P E R AT I O N S I N C H I L E A N D P E R U HIGH QUALITY CLIENTS IN CHILE 1 Sales by Type of Costumer (%) 3 Average Monomic Price (US$/MWh) Regulated Unregulated 4% 15 Temporary Mg Cost Indexation in some PPAs 6% 1 2 Sales Volume by Customer (%) Codelco (A+) 29% Chilectra (BBB+/BBB+) 21% CGED (Local A+) 2% Saesa (Local AA) 17% AngloAmerican (BBB-/BBB-) 9% Others 4% 5 Regulated Costumers Unregulated Costumers 24 25 26 27 28 29 21 211 212 213 214 215 1Q16 Graphs Sources: 1), 2), 3) Colbún as of Mar16 LTM. 3) Average monomic prices are calculated by dividing the total amount of sales in US$, by physical energy sales in MWh. 18
O P E R AT I O N S I N C H I L E A N D P E R U OUR PPAs IN CHILE: 9.8 YEARS AVERAGE MATURY GWh Indexation 14. 12. Unregulated Regulated Fossil Fuels 35% CPI 65% 1. Available energy to re-contract 8. 6. 4. 2. - 216 217 218 219 22 221 222 223 19
O P E R AT I O N S I N C H I L E A N D P E R U FENIX POWER PERU: MOST EFFICIENT CCGT IN PERU Ownership Colbún Sigma ADIA 36% 51% 13% Fenix Power Peru: Thermal combined cycle unit. Location: Chilca district, 64 km south of Lima, Peru. Installed capacity: 57 MW. Expected annual generation: 4,4 TWh. Market share: 9% in terms of generation. Commissioning date: December 24th 214. Source: Osinergmin 2
O P E R AT I O N S I N C H I L E A N D P E R U PERU S COMMERCIAL STRATEGY: COMMITED ENERGY THROUGH LONG-TERM PPAs MW TWh 6 57.6 TWh spot sales 4,4 5 5 3.8 TWh 4 Secure long term contracts with creditworthy counterparties 4 3 3 Relevant regulated costumers (stable demand) Incorporate risk-sharing mechanisms 2 2 US$ currency market 1 1 Average PPA Portfolio Maturity: 7.5 years Installed Capacity (MW) Generation (TWh/year) 21
A G E N D A O V E R V I E W OPERATIONS IN CHILE AND PERU FINANCIALS P R O J E C T S VALUE PROPOSAL
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 F I N A N C I A L S STRONG FINANCIAL RESULTS 1 2. 1.5 1. 5 Operating Revenues (US$ million) 1.696 1.53 1.314 1.36 2 7 6 5 4 3 2 1 EBITDA (US$ million) & EBITDA Mg (%) 661 583 537 352 21% 44% 36% 49% 5% 4% 3% 2% 1% 213 214 215 1Q16 213 214 215 1Q16 % 3 2 15 1 5 17 8 16 Quarterly EBITDA (US$ million) 74 27 25 116115 89 13 26 159 141 11 12 117 93 136 181 173 17 4 2 15 1 5 63 Net Income (US$ million) 22 12 82 Hidro Aysén 271 213 214 215 1Q16 Source: Colbún s Financial Statements 23
F I N A N C I A L S STRONG FINANCIAL RESULTS 1 2.5 2. 1.5 Debt Debt & Net Debt (US$ million) Net Debt 2.244 2 7 6 5 4 4.1 Net Debt / EBITDA 1. 3 2 2. 2. 1,8 5 1 213 214 215 1Q16 213 214 215 1Q16 3 1 8 6 4 2 7 Leverage Ratio* (%) 9 96 93 4 7 6 5 4 3 2 1 Capex EBITDA 329 Cash Flow (US$ million) 116 88 12 213 214 215 1Q16 213 214 215 1Q16 Source: Colbún s Financial Statements. (*) Calculated as Liabilities/Equity 24
F I N A N C I A L S ADEQUATE DEBT PROFILE AND STRONG LIQUIDITY Debt Profile Total Debt: MMUS$ 2,244 Avrg. Maturity: 5.2 years BANKS 36% UF 4% FLOATING 16% Avrg. USD Interest Rate: 4.7% Cash: MMUS$ 1,63 Net Debt: MMUS$ 1,182 BONDS 64% USD 96% FIXED 84% Dividend Policy 3% Banks Committed Lines: MMUS$ 146 6 5 Amortization Structure (US$ million) Banks Bonds 4 Fenix 3 2 1 216 217 218 219 22 221 222 223 224 225 226 227 228 29-33 All figures as of March 216 / Source: Colbún s Financial Statements 25
A G E N D A O V E R V I E W OPERATIONS IN CHILE AND PERU FINANCIALS GROWTH OPPORTUNITIES VALUE PROPOSAL
G R O W T H O P P O R T U N I T I E S INSTALLED CAPACITY EVOLUTION: LAST 1 YEARS MW 4. 3,852 MW 3.5 3. HYDRO 466 MW DIESEL 1 MW COAL 35 MW FENIX 57 MW 2.5 2,37 MW 2. 26 216 27
G R O W T H O P P O R T U N I T I E S GROWTH OPPORTUNITIES IN CHILE: BASE LOAD CAPACITY AND RENEWABLES 34 MW La Mina Run-of-the-river / NCRE Hydro Coal 35 MW Santa María II Coal 5 MW equivalent of water rights under study 17 MW NCRE under study San Pedro Reservoir 28
G R O W T H O P P O R T U N I T I E S LA MINA RENEWABLE ENERGY FOR THE SYSTEM 34 MW of Installed Capacity and 19 GWh of expected annual generation Under construction since Dec14. As of March 216 it has 63% progress, according to plan Expected to be commissioned in early 217 29 29
G R O W T H O P P O R T U N I T I E S SANTA MARIA II COAL FIRED BASE LOAD CAPACITY 35 MW of Installed Capacity and 2,5 GWh of expected annual generation Santa María II Environmentally Approved Social, economic and commercial dimensions of the project are being analyzed, in order to timely define the beginning of its construction 3
G R O W T H O P P O R T U N I T I E S SAN PEDRO HIGHLY EFFICIENT HYDROELECTRIC PROJECT Riñihue Lake San Pedro reservoir Project ~17 MW of Installed Capacity and 95 GWh of expected annual generation Broad explicative and clarifying meeting process plan 31
G R O W T H O P P O R T U N I T I E S SEARCHING FOR INVESTMENT OPPORTUNITIES IN THE REGION Special Focus on Colombia and Peru Growing Electricity Consumption Well established regulatory framework Diversification: Hydrological Conditions Generation Technology Fuel Access Regulation 32
G R O W T H O P P O R T U N I T I E S SUNEDISON S ASSETS AQUISITION Long-term energy supply contracts with regulated customers. 35 GWh per year 15 years Starting 217 Two photovoltaic solar parks in development in SIC Parque Solar Olmué 145 MW (Environmentally approved) Parque Solar Santa Sofía 57 MW (Environmental approvals in process) Long-term supply contract by which SunEdison will build a solar plant of 1 MW. 2 GWh per year 15 years Starting 221 33
A G E N D A O V E R V I E W OPERATIONS IN CHILE AND PERU FINANCIALS P R O J E C T S VALUE PROPOSAL
VA L U E P R O P O S A L OUR VALUE PROPOSAL Leading corporate citizen, committed to sustainability Strong pipeline of new projects with improving efficiency and diversification of generation sources Strong financial discipline with sound credit metrics Be a leading and growing company of profitable and sustainable power generation in selected countries of Latin America Diversified asset base for flexibility, lower generation risk Advanced commercial strategy focused on high quality customers, risk sharing contracts 35
DISCLAIMER AND CONTACT INFORMATION This document provides information about Colbún S.A. In no case this document constitutes a comprehensive analysis of the financial, production and sales situation of the company. To evaluate whether to purchase or sell securities of the company, the investor must conduct its own independent analysis. This presentation may contain forward-looking statements concerning Colbún's future performance and should be considered as good faith estimates by Colbún S.A. In compliance with the applicable rules, Colbún S.A. publishes on its Web Site (www.colbun.cl) and sends the financial statements of the Company and its corresponding notes to the Superintendencia de Valores y Seguros, those documents should be read as a complement to this presentation. INVESTOR RELATIONS TEAM CONTACT Miguel Alarcón malarcon@colbun.cl + 56 2 246 4394 Verónica Pubill vpubill@colbun.cl + 56 2 246 438 Soledad Errázuriz serrazuriz@colbun.cl + 56 2 246 445 36