Endesa Chile IR Presentation As of March 31, 2014
2 Organization structure ITALY 92% Committed Shareholders SPAIN 61% ENERSIS CHILE Chilean Pension Funds 60% 6% 3%3%13% 15% 60% Institutional Shareholders ADR Holders Minority Shareholders Other Institutional Shareholders CHILE PEHUENCHE, 93% CELTA, 96% COLOMBIA PERU ARGENTINA BRAZIL EMGESA, 27% EDEGEL, 62% COSTANERA, 76% EL CHOCÓN, 65% ENDESA BRASIL, 39% AMPLA COELCE FORTALEZA CDSA CIEN
A unique portfolio in LatAm s generation business COLOMBIA No. 2 2,956 MW inst. capacity Renewables: 2,512 MW Thermal : 444 MW 20% market share 2 PERU No. 1 BRAZIL 987 MW inst. capacity Renewables: 665 MW Thermal : 322 MW 1% market share 2 1,539 MW inst. capacity Renewables: 750 MW Thermal : 789 MW 20% market share 2 No. 2 ARGENTINA CHILE No. 1 3,652 MW inst. capacity Renewables: 1,328 MW Thermal: 2,324 MW 5,571 MW inst. capacity 1 Renewables: 3.456 MW Thermal : 2,028 MW NCRE: 87 MW 30% market share 2 1 From April 1, 2014, GasAtacama will be included in Chilean capacity (+780 MW) 2 Calculated based on installed capacity 12% market share 2 Consolidated installed capacity : 13,717 MW Capacity including Brazil : 14,704 MW Consolidated energy sales 2012 : 58,621 GWh Consolidated energy sales 2013 : 57,754 GWh 3
Well diversified generation assets throughout the region Renewables: 8,711 MW Coal: 896 MV Colombia: 2,512 MW Peru: 750 MW Brazil 1 : 665 MW Installed Capacity 87 Colombia: 236 MW Chile: 3,456 MW Argentina: 1,328 MW 5,010 RENEWABLES COAL Chile: 660 MW 8,711 OIL-GAS Oil-Gas: 5,010 MW 896 NCRE NCRE 2 : 87 MW Colombia: 208 MW Peru: 788 MW Chile: 1,368 MW Brazil 1 : 322 MW Argentina: 2,324 MW 60% of Endesa Chile s installed capacity corresponds to renewable resources Chile: 87 MW 1 Brazil assets are recognized as equity method investments. 2 Non Conventional Renewable Energy. 4
Consolidated financial highlights Ch$ million 1 1Q14 1Q13 Change MM US$ 2 1Q14 Revenues 521 489 6% 943 Costs (283) (245) 15% (512) Contribution Margin 238 245 (3%) 432 EBITDA 184 196 (6%) 333 EBIT 136 148 (8%) 246 Net Financial Expenses (49) (35) 39% (88) Related Company Results 38 29 29% 68 Taxes (41) (35) 15% (74) Net Income 84 109 (23%) 153 Attributable to shareholders of Endesa Chile 36 63 (43%) 65 1 Under IFRS, Endesa Chile has adopted the Chilean Peso as functional currency, comparisons between periods have been only made under Ch$. 2 Referential average exchange rate was 551.91 Ch$/US$ as of March 31, 2014. 5
Diversified source of EBITDA Total Installed Capacity 1: 13,717 MW Total Generation 1 (TTM): 49,827 GWh Argentina 27% Chile 41% Argentina 20% Chile 37% Peru 11% Peru 17% Colombia 21% EBITDA 1Q14 (TTM): US$ 1,751 million Argentina 6% Colombia 26% Peru 17% Chile 35% Endesa Brasil Endesa Chile s ownership: 38.6%. Net Attributable Income (TTM) 2 : US$ 186 million. Colombia 42% 1 Excludes the proportional assets from GasAtacama (390 MW) and Endesa Brasil (987 MW). 2 Considers the total contributions of Endesa Brasil recognized by Endesa Chile as an equity method investment. 6
Balanced commercial policy Physical Sales as of March 2014 Chile Colombia Peru Argentina 18% 9% 13% 31% 47% 36% 55% 82% 22% 87% Distribution Companies Free Customers Spot Physical Sales as of March 2013 Chile Colombia Peru Argentina 1% 13% 18% 24% 32% 49% 34% 53% 75% 19% 82% Distribution Companies Free Customers Spot 7
Revenue stability through long term contracts Energy contracts with established prices (GWh) Chile Contracted energy (GWh) Colombia Contracted energy (GWh) Peru Contracted energy (GWh) Brazil Contracted energy (GWh) Peru Hired energy 8
Healthy debt maturity profile 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 US$ million 871 174 209 Financial Debt Maturity 1 as of March 2014 Total Debt: US$ 3,845 MM 210 76 115 89 19 69 25 1,865 < 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years and beyond Bonds Banks and Other 123 Cash: US$ 556 MM Commited Credit Lines: US$ 485 MM Non-Commited Credit Lines: US$ 345 MM Average life of debt: 6.7 years Debt by Country (MM US$) Debt by Type Debt by Currency 1 1 1 Peru 7% Others 19% UF + CLP 16% Colombia 42% Argentina 5% Chile 46% 1 Includes arrangements and other consolidation adjustments. Bonds 67% Bank Debt 14% US$ 41% Other Local Currency 43% 9
Consistent consolidated cash flow generation (US$ million) 1 1,714 1,977 1,751 494 697 599 (300) (277) (233) (538) (590) (539) (381) (414) (381) EBITDA Net Financial Result Payments for Additions of Fixed Assets Income Tax Free Cash Flow 2012 2013 1Q 2014 TTM *Attributable to each period 1 Amounts translated into US$ at the average exchange rate for each period. * For year 2012, jointly controlled companies are included 10
Total Sales in GWh (%) Increasing electricity demand in LatAm 180% Historic electricity demand growth (CAGR, last ten years) 170% 5.6% 160% 150% 140% 130% 4.9% 4.0% 3.1% 2.7% 120% 110% 100% 90% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Years CHILE COLOMBIA PERU BRAZIL ARGENTINA 11
Electricity consumption, per capita (Kwh per year) Markets with high potential for growth 18,000 Direct relation between GDP and electricity demand 16,000 CANADA FINLAND 14,000 12,000 10,000 AUSTRALIA UNITED STATES 8,000 6,000 RUSSIA GREECE JAPAN AUSTRIA FRANCE GERMANY SPAIN ITALY UNITED KINGDOM 4,000 CHILE CHINA ARGENTINA BRAZIL 2,000 MEXICO INDIA PERU IRELAND BOLIVIA COLOMBIA 0 0 10,000 20,000 30,000 40,000 50,000 60,000 GDP per capita (current PPP, US$) Data source: The World Bank. Chile aims to be in the group of developed countries. There is no development without energy. 12
Projects under construction Colombia El Quimbo Hydro power plant. Located in the Huila Department, Colombia Utilizes stream coming from Magdalena River. 400 MW of installed capacity. Estimated load factor: 60%. River detour in March 2012. 13
Projects under construction Colombia Salaco Chain (optimization) Repowering the minor plants to reach 221 MW capacity. Located in the Bogotá River system, Colombia Optimization works started in January 2013. 145 MW will be added to the capacity. As of March 31, 2014, 2 repowered units have been commissioned, adding 42 MW of installed hydro capacity. 14
Investments recently approved Chile Los Cóndores Hydro power plant, run of the river. Located in San Clemente, in Maule region, Chile. 150 MW of installed capacity. Estimated load factor: 46% FID 1 approved on March 31, 2014. Chile Gas Atacama Thermal power plant, Gas - CCGT Located in Mejillones, in Atacama region, Chile. 780 MW of installed capacity. Estimated load factor: 46% FID 1 approved on March 31, 2014 to buy the 50% outstanding non controlling stake. 1 Final Investment Decision. 15
Expected evolution for Endesa Chile s installed capacity 22% increase over March 2014 installed capacity through new projects Hydro plant Thermal plant 815 MW Curibamba - 188 MW Punta Alcalde - 740 MW Salaco- 145 MW Los Cóndores - 150 MW El Quimbo- 400 MW Taltal - 120 MW Neltume - 490 MW GasAtacama- 780 MW 13,717 13,717 13,717 13,717 March - 2014 Acquisition of Non- Controlling Interest Under Construction In basic enginering Under study In March 2014, Endesa Chile s Board of Directors approved the acquisition from Southern Cross of their 50% interest in GasAtacama, adding 780 MW of installed capacity from April 2014. 16
Projects under study Chile Punta Alcalde Thermal, coal-steam power plant. Located in Huasco, in the Atacama region (SIC), Chile. 740 MW of installed capacity. Estimated load factor: 83% On Jan 17, 2014, the Supreme Court of Chile reaffirmed the approval of the EIS 1, in line with the ruling of the Ministers Committee on Dec 3, 2012. Chile Taltal (Conversion) Closure to upgrade the existing LNG power plant. Conversion to Combined Cycle. Located in the Antofagasta region (SIC), Chile. 120 MW will be added to the current 245 MW capacity. EIS 2 submitted for approval in Dec 2013 1 Environmental Impact Study. 2 Environmental Impact Statement. 17
Projects under study Chile Neltume Hydro power plant, run of the river. Located in Panguipulli, in the Los Ríos Region (SIC). 490 MW of installed capacity. EIS 1 under review. Perú Curibamba Hydro power plant, run of the river. Located in the Junín Department, utilizes streams coming from the Comas and Uchubamba Rivers. 188 MW of installed capacity. EIS 1 approved. 1 Environmental Impact Study. 18
Projects under study Chile HidroAysén Hydro power plants located in Aysén Region. Endesa Chile owns 51% and Colbún 49%. 2,750 MW of installed capacity Estimated average load factor: 77%. EIS 1 approved the generation plants (5). 1 Environmental Impact Study. 19
Market value and dividends EBITDA 1 (US$ Million) Market Value 2 (US$ Million) 2,248 117 204 514 1,413 2,098 2,014 117 212 96 292 584 601 1,184 1,025 1,661 52 287 773 549 1,977 113 318 811 736 13,963 15,364 12,102 13,297 12,230 2009 2010 2011 2012 2013 CHILE COLOMBIA PERU ARGENTINA 2009 2010 2011 2012 2013 Consolidated CAPEX 1 (US$ Million) Dividends (Ch$ per Share) 565 507 545 529 590 26.8 32.5 27.2 14.3 21.6 2009 2010 2011 2012 2013 Source: Purchases of property, plant and equipment 2009 2010 2011 2012 2013 Source: Bloomberg 1 Amounts expressed in US$, using the average exchange rate for each period. For Years 2010 and 2011 only consider jointly controlled companies. 2 Amounts expressed in US$, using the last exchange rate for each period. 20
Prepared to face challenges Increasing installed capacity in countries with more attractive economic outlooks with an ever-increasing commitment to sustainability Know-how and vast experience to develop new projects in less favorable conditions Ensure energy supply to all customers with efficiency, sustainability and responsibility through conservative commercial policy and commitment to communities Judicial delay of new projects is leading us to optimize existing generation capacity Continue supporting the development in each country through a well-diversified pipeline of projects over 13 GW including different generation sources 21
Key investment considerations One of the largest electricity generation company in Chile -Proven track record with more than 70 years of experience Unique and well diversified portfolio of assets Balanced commercial policy leading to revenue and margin stability Markets with stable regulatory environment and high potential growth Solid liquidity and financial position 22
Endesa Chile s corporate history December 1943, Endesa Chile is incorporated as a Stock Company and an affiliate of the Corporacion de Fomento de la Produccion (CORFO) July 1994, Endesa Chile s stock begins to trade at the New York Stock Exchange September 2004, Ralco hydroelectric plant started operations adding 690 MW of installed capacity to Endesa Chile As of December 2013, Endesa Chile operates directly or through subsidiaries 178 electricity units with an installed capacity of 13,688 MW 1943 1987 1994 1999 2004 2005 2013 In 1987,the process of privatization begins and through a series of public offerings is completed in 1989 May 1999, Enersis S.A. becomes the majority owner of Endesa Chile In 2005, the Company incorporates Endesa Brasil S.A. 23
Endesa Chile s Investor Relations Team Susana Rey Investor Relations Director (56-2) 2630 9606 susana.rey@endesa.cl Catalina Gonzalez Head of Investor Relations (56-2) 2630 9603 cbgs@endesa.cl Guillermo Berguecio Investor Relations Executive (56-2) 2630 9506 gabb@endesa.cl Contact us at: ir@endesa.cl 24
EXHIBITS 25
1Q 2014 Highlights 43% decrease in Net Income attributable to Endesa Chile s shareholders, mainly due to a higher procurement and services costs and a larger negative exchange rate difference 6% decrease in consolidated EBITDA mainly due to a 15% increase in Operating Costs due to higher energy purchases in Chile, and greater transportation expenses in Chile and Peru. 6% growth in Operating Revenues due to higher average energy sales prices, mainly in Chile and Peru. 6% increase in hydro generation in Chile because of better water availability in the period. 26
Argentina Installed Capacity: 3,652 MW Market Share*: 12% Total Generation: 1,942 GWh EL CHOCON El Chocón: 1,328 MW Renewables 1,328 MW Million US$ 1Q 2014 1Q 2013 Change Revenues 11 15 (25%) EBITDA 5 7 (22%) EBITDA Margin 49.1% 47.2% 4% Physical Sales (GWh) 735 574 28% COSTANERA Costanera: 2,324 MW Thermal 2,324 MW Million US$ 1Q 2014 1Q 2013 Change Revenues 33 84 (60%) EBITDA 14 4 261% EBITDA Margin 43.5% 5% - Physical Sales (GWh) 1,487 2,230 (33%) El Chocón Buenos Aires Costanera Based on installed capacity 27
Chile Los Molles: Rapel-Sauzal: Maule: Laja: Ralco-Pangue: Tarapaca 18 MW 466 MW 875 MW 940 MW 1,157 MW 182 MW D. Almagro Taltal: 269 MW Huasco: 64 MW San Isidro 1 and 2: 778 MW Bocamina 1 and 2: TG Quintero: Installed Capacity: 5,571 MW Market Share*: 30% Total Generation: 4,062 GWh ENDESA CHILE 478 MW 257 MW 62% Renewables 3,456 MW 36% Thermal 2,028 MW Tarapaca D. Almagro Taltal Huasco San Isidro Bocamina Los Molles Santiago Cachapoal Maule Laja Bio Bio Canela: Canela II: Ojos de Agua: 18 MW 60 MW 9MW 2% NCRE 1 87 MW Million US$ 1Q 2014 1Q 2013 Change Revenues 485 393 24% EBITDA 61 106 (42%) EBITDA Margin 12.6% 27.1% (53%) Physical Sales (GWh) 4,822 5,006 (4%) 1 Non Conventional Renewable Energy. Based on installed capacity 28
Colombia Installed Capacity: 2,956 MW Market Share*: 20% Total Generation: 2,974 GWh EMGESA Cartagena Guavio: 1,213 MW Betania: 541 MW Río Bogotá: 758 MW Cartagena: 208 MW Termozipa: 236 MW 85% Renewables 2,512 MW 15% Thermal 444 MW Termozipa Bogotá Guavio Betania Río Bogotá Million US$ 1Q 2014 1Q 2013 Change Revenues 273 278 (2%) EBITDA 178 170 5% EBITDA Margin 65.1% 61.2% 7% Physical Sales (GWh) 3,678 3,833 (4%) * Based on installed capacity 29
Peru Installed Capacity: 1,539 MW Market Share*: 20% Total Generation: 2,080 GWh EDEGEL Cuenca Río Rímac: 556 MW Yanango: 43 MW Chimay: 151 MW 45% Renewables 750 MW Ventanilla: 485 MW Santa Rosa: 304 MW 55% Thermal 789 MW Million US$ 1Q 2014 1Q 2013 Change Revenues 141 118 19% Ventanilla Lima Río Rimac Yanango Sta Rosa Chimay EBITDA 74 68 8% EBITDA Margin 52.3% 57.5% (9%) Physical Sales (GWh) 2,184 2,270 (4%) * Based on installed capacity 30
Brazil Installed Capacity: 987 MW Market Share*: 1% Total Generation: 1,383 GWh Cachoeira: 665 MW CACHOEIRA Renewables 665 MW Fortaleza Million US$ 1Q 2014 1Q 2013 Change Revenues 111 58 91% Cachoeira EBITDA 81 35 130% EBITDA Margin 73.2% 60.7% 21% Physical Sales (GWh) 1,189 923 29% CIEN Rio de Janeiro Fortaleza: 322 MW FORTALEZA Thermal 322 MW Million US$ 1Q 2014 1Q 2013 Change Revenues 75 75 (1%) EBITDA 18 21 (13%) EBITDA Margin 24.6% 28.3% (13%) CIEN: Transmission Brazil-Argentina Interconnection Two 500 Km lines Total interconnection capacity: 2,100 MW Million US$ 1Q 2014 1Q 2013 Change Revenues 26 29 (12%) EBITDA 21 20 4% EBITDA Margin 80.5% 68.7% 17% Physical Sales (GWh) 713 804 (11%) *Based on installed capacity 31
Installed capacity and energy generation MW CHILE COLOMBIA PERU ARGENTINA TOTAL RENEWABLE 3,456 2,512 750 1,328 8,046 Installed Capacity (MW) COAL 660 236 0 0 896 OIL-GAS 1,368 208 788 2,324 4,688 NCRE 87 0 0 0 87 Total 5,571 2,956 1,539 3,652 13,717 Gwh / Change 1 CHILE COLOMBIA PERU ARGENTINA TOTAL RENEWABLE 2,241 5% 2,749 2% 1,138 (10%) 487 7% 6,615 1% Net Generation (GWh) COAL 434 (61%) 218 (23%) - 0% - - 653 (53%) OIL-GAS 1,332 (13%) 7 (80%) 942 3% 1,455 (33%) 3,737 (20%) NCRE 54 (6%) - - - - - - 54 (6%) Total 4,062 (16%) 2,974 (1%) 2,080 (5%) 1,942 (26%) 11,058 (13%) 1 Compared with 1Q2013 32
Strong financial position Ch$ Million 1Q 2014 1Q 2013 Change % Change Th US$ 1 1Q 2014 Gross Debt 1,919,545 1,894,496 25,049 1% 3,483 Cash 306,555 323,807 (17,253) (6%) 556 Net Debt 1,612,990 1,570,689 42,301 3% 2,926 Leverage 0.94 0.88 0.06 6% 0.94 Financial Coverage 3.56 5.15 (1.59) (45%) 3.56 1 Amounts translated into US$ at closing exchange rate for the period (Ch$ 551.18. per US$) 33
Credit Risk Agencies recognition Since: Jan. 2010 Apr. 2011 Feb. 2010 Jan. 2010 Apr. 2010 BBB+ Baa2 BBB+ AA (cl) AA Affirmed: Aug. 2013 Sept. 2013 Apr. 2014 Aug. 2013 Jul. 2013 International market Chilean market RATINGS BASED UPON: Well diversified and efficient assets Leading market share in the four countries where we operate Transparent and favorable regulatory framework in Chile Solid financials, good cash flow generation and prudent financial management Conservative commercial policy 34
Healthy debt maturity profile in each country Financial Debt Maturity 1, as of March 2014 US$ million 2014 2015 2016 2017 2018 Balance TOTAL Chile 300 576 14 12 12 857 1,770 Argentina 161 32 17 0 - - 211 Peru 31 38 62 51 37 46 265 Colombia 47 127 10 107 132 1,175 1,599 TOTAL 2 538 773 104 171 180 2,079 3,845 1 Includes arrangements and other consolidation adjustments. 2 May not total exactly due to rounding. 35
Strong performance paired with a conservative financial policy 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500-4,126 8.9 3,535 3,336 7.4 8.0 3,116 3,106 7.1 2,994 6.8 2,805 5.6 5.4 2,248 2,031 2,097 2,014 1,977 2,017 1,661 2.0 2.1 1.5 1.5 1.5 1.5 1.4 2008 2009 2010 2011 2012 2013 1Q14 TTM 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Net Debt EBITDA Net Debt/ EBITDA EBITDA/Net Financial Expenses Endesa Chile 2013 2012 Financial Expense Coverage 1 6.3 5.0 ROE (%) 13.6% 9.2% ROA (%) 8.5% 6.5% 1 EBITDA / (Financial expenses + Income (Loss) for indexed assets and liabilities + Foreign currency exchange differences, net) 36
This presentation contains statements that could constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this announcement and include statements regarding the intent, belief or current expectations of Endesa Chile and its management with respect to, among other things: (1) Endesa Chile business plans; (2) Endesa Chile cost-reduction plans; (3) trends affecting Endesa Chile financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere; (4) supervision and regulation of the electricity sector in Chile or elsewhere; and (5) the future effect of any changes in the laws and regulations applicable to Endesa Chile or its subsidiaries. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets of the United States or Chile, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere and other factors described in Endesa Chile Annual Report on Form 20-F. Readers are cautioned not to place undue reliance on those forwardlooking statements, which state only as of their dates. Endesa Chile undertakes no obligation to release publicly the result of any revisions to these forwardlooking statements.