Management report and results 2013 Medellín, March 28, Todos los derechos reservados por Interconexión Eléctrica S.A. E.S.P.

Transcription

1 Management report and results 2013 Medellín, March 28, 2014

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3 Corporate Strategy Definitions: Big choices The Group's profitability and the generation of value are the main strategic aspirations The mix of business and geography will be a product of ISA's capacity to create value based on the synergy with its existing assets and its capabilities. As for the business and participation model, ISA is positioned as a company that aspires to create value through the "excellent" development and operation of infrastructure. Growth will depend on the opportunities that meet the desired level of profitability (superior). All rights reserved by Interconexión Eléctrica S.A. E.S.P. 3

4 Corporate Strategy Definitions: Goals by Business Unit To grow profitably focusing on the countries and businesses where we have a presence, strengthen already developed capabilities and competencies, transfer knowledge. In the Energy Transport Business Unit, ISA will remain as the operator with the largest presence in Latin America, will consolidate its position in the region and will reach levels of operational efficiency that are aligned with worldwide "best practices". In the Road Concessions Business Unit, ISA will seize regional opportunities, focusing on Colombia. In the Telecommunications Transport Business Unit, ISA will consolidate its leadership as an independent transporter in Latin America and will have developed an IP ecosystem in the region. In the Real-Time Systems Intelligent Management, ISA will extend its capacities towards new services, accessing new highly profitable opportunities in other businesses. All rights reserved by Interconexión Eléctrica S.A. E.S.P.

5 Corporate Strategy Definitions: Strategic Pillars INCOME AOM expenses REVENUES Income x 3 Profitable growth Focus on Latin America Operational efficiency Portfolio optimization STRATEGIC CORNERSTONES Capture of growth opportunities with superior profitability. Improvement of current and core business profitability Dynamic adjustment of geography and business portfolio 5

6 Corporate Strategy Implementation plan External and internal communication of ISA's 2020 Strategy Strengthening of capabilities Organizational change Efficiency initiatives

7 Corporate Strategy Implementation progress The most relevant organizational change is the formal separation of the parent company role. Corporate Role ISA is the investor and owner of the assets Other companies in Colombia Other companies Outside Colombia INTERCOLOMBIA is in charge of the administration, operation and maintenance of the transmission assets. Operating commercially as of January 1st, companies in 8 countries 7

8 Corporate Strategy Implementation progress The efficiency initiatives are developed mainly by the Energy Transport companies Strengthen the formulation and development of projects Optimize operations and maintenance Joint use of procurement Increased competitiveness Technical positioning Cost reduction Energy Transport Companies Intervial Chile 8

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10 ISA makes progress in Latin America: 4 business units, 8 countries, 33 companies, over 3,700 employees

11 Energy Transport Main projects that started operations Brazil Madeira Line, the largest HVDC transmission line at 600 kv (2,385 km). Itapeti Substation (800 MVA). Peru Colombia El Bosque Substation at 220 kv. Termocol Substation at 220 kv. Increase of transformation capacity by 500 MVA. Gecelca connection to STN at 220 kv. Talara - Piura Line at 220 kv (100 km). Pomacocha - Carhuamayo Line at 220 kv (110 km). 40,630 km of high-voltage grid 75,960 MVA of transformation capacity

12 Energy Transport Main awarded projects Investments for USD 3,000 million 5,000 km of circuits 16,000 MVA of transformation Colombia, expansion of Copey substation at 500 kv (450 MVA); second Betania Mirolindo circuit at 230 kv (206 km); STATCOM (200 MVAr) at Bacatá substation at 500 kv Perú, Mantaro Montalvo line at 500 kv (900 km) and associated substations (1,600 MVA) Awarded projects represent annual revenues of USD 60 million Bolivia, expansion of Sucre substation to 230 kv. Chile, Encuentro Lagunas line to 220 kv (308 km). We incorporated INTERCHILE, a new subsidiary to strengthen the power system and develop new projects.

13 Energy Transport Highlights by business unit BRAZIL Early termination and subsequent renewal of Concession Contract 059 of 2001 in subsidiary CTEEP On December 4, 2012, CTEEP signed an additional clause to the contract with the Government, extending the concession by 30 years. The BRL 2,891 million corresponding to the compensation for new investments (assets after May 2000), are collected as follows: January 2013: initial 50% was received Remaining 50%: 31 monthly installments (January 2013 to July 2015, IPCA indexed rate* % annually). In order to define the value of the pending compensation, the Government of Brazil issued Technical Note 499 on December 2013 to indicate the methodology. CTEEP is conducting the pertinent studies. IPCA: Adjusted Consumer Price Index in Brazil

14 Road Concessions Highlights Chile: Revenue increased by 10.8% and traffic by 7.9% Toll collections of USD 400 million Started construction of third lanes between Santiago and Rancagua (Ruta del Maipo) Colombia: Participation in the "Fourth Generation of Road Concessions (4G)" projects: pre-qualified in consortium with other companies for six projects: Girardot - Puerto Salgar - Honda, Neiva - Girardot, Santa Ana - Mocoa - Neiva, Bogotá - Villavicencio - El Tablón, Popayán - Santander de Quilichao and segments of Palmar de Varela - Puerta de Hierro and Carreto - Cruz de Viso 907 km of roads in Chile with 95 tolls

15 Telecommunications Transport Highlights Brazil: Acquisition of the company Nelson Quintas Telecomunicações NQT. Rio de Janeiro - Belo Horizonte - Sao Paulo ringing Authorization from ANEEL to lay 4,000 km of fiber optics cables over CTEEP infrastructure IFC, operations partner in Brazil Chile: ringing work of the network between the Valparaiso and Bio Bio regions was completed, covering 25 cities Value added offer: Access to information transport infrastructure Largest IP operator in South America Integrated ICT solutions 25,500 km of fiber optics network that connects seven countries and 100 cities in Latin America

16 Gestión de Sistemas de Tiempo Real Highlights Power sector: XM met regulatory requirements despite the weather conditions, attacks and constraints COP 4,300,000 million in SIC and LAC invoicing Financial sector: Derivex Cámara Central de Riesgo de Contraparte Traffic and transport sector: Control Center for Antioquia's Road Infrastructure: "Strategy definition for managing road primary information based on collaborative management and public government" project" Sistemas Inteligentes en Red Mobility Control Center

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18 Consolidated financial results Relevant aspects Increase in consolidated income by approximately COP 250,000 million as the result of recognizing the concessions in Brazil and Chile(*) as financial assets (previously intangible assets). Decrease of Brazil's operating revenue (approximately 70%) due to the early termination and subsequent renewal of CTEEP Concession Contract 059 (62% of the impact of this decrease is borne by minority shareholders). The debt was reduced with the resources received in 2013 from the partial collection of CTEEP's compensation. Partial provision of the CTEEP recognized account receivable associated with Law 4819, with an effect on ISA's net income of COP 15,078 million. (*) According to the technical opinion issued by the Colombian General Accounting Office CGN Communication N of May 28, 2013

19 Consolidated financial results Operating results Operating revenues Millons USD 2, , ,869.0 Decrease in revenue mainly due to: COP Milions 24.3% -1.5% -16.3% Early termination and subsequent renewal of Concession Contract 059 of 2001 in subsidiary CTEEP The decrease was offset by: Recognition of the concessions in Chile and Brazil as financial assets Start of operations of the Zapallal Trujillo project (2012)

20 Consolidated financial results Operating results Operating costs and expenses Millons USD 1, , ,064.0 Decrease in costs and expenses mainly due to: COP Milions 32.4% 5.8% -10.9% Elimination of the amortization of intangible assets associated with the concessions in Chile and Brazil due to their recognition as financial assets* *Financial assets are amortized in the Balance Sheet

21 EBITDA and EBITDA margin Consolidated financial results Operating results Millons USD COP Milions 69.3% 67.5% 55.9% EBITDA decreased by 30.7% due to the lower revenues in Brazil EBITDA margin went from 67.5% in 2012 to 55.9% in 2013

22 Consolidated financial results Operating results Operating income and operating margin Millons USD 50.2% 46.5% 43.1% COP Milions Operating income decreased by 22.6% relative to 2012 Decrease in operating income mainly due to: Decrease of revenues due to the termination and subsequent renewal of Concession 059 in Brazil Lower costs due to the elimination of the amortizations of the intangible assets associated with the concessions in Chile and Brazil

23 Consolidated financial results Non operating results Millons USD COP Milions 69.7% % 139.8% Non-operating results generated a 139.8% increase in expenses relative to the previous year Non-operating results increased mainly due to: Higher financial expenses in Chile and Peru* and higher expenses in Brazil due to the net effect of the provision for the account receivable from the state of Sao Paulo (Law 4819 in CTEEP and ISA Capital do Brasil) *Financial update of the preexisting infrastructure liabilities in Chile and costs of debt amortization and exchange difference expenses in Peru

24 Consolidated financial results Income tax Millons USD % % COP Milions -86.2% Decrease in income tax mainly due to: In 2012, higher taxes for the income associated with the compensation of new assets at CTEEP In 2013, lower taxes in Brazil due to the decrease in revenue and the recognition of the deferred tax in favor of the provision for the account receivable from the state of Sao Paulo associated with Law 4819

25 Consolidated financial results Net income Millons USD 23.6% 22.4% 15.8% COP Milions 24.1% of the consolidated income (COP 569,943 million) corresponded to minority shareholders Net income totaled COP 433,048 million, 58.7% more than in 2012, due to the positive impact of the recognition of the concessions in Chile and Brazil as financial assets

26 Consolidated financial results Summary Financial information is consolidated using the global integration method

27 Consolidated financial results Balance sheet Millons USD 13,723 14,574 13,269 Assets 26,659,165 25,770,989 25,567,362 COP Milions The main variations in the balance sheet are due to: Assets: decrease of the account receivable from the state of Sao Paulo due to the provision associated with Law 4819 at CTEEP, offset by the recognition of the concessions as financial assets Liabilities: decrease of CTEEP debt and decrease of preexisting infrastructure liabilities in Chile Minority interest: decrease due to the partial repurchase of preferred stock in ISA Capital do Brasil and to the lower results in CTEEP. Equity: increase due to recognition of concessions in Chile and Brazil as financial assets and to results of the period

28 Consolidated financial results Debt Ratios Net Debt / EBITDA = 3.4x EBITDA / Interest = 3.6x International Risk Rating Moody s: Baa3 stable outlook (December 2013) S&P: BBB- stable outlook (July 2013) Fitch: BBB stable outlook (May 2013) Corporate risk ratings ratified the strength and financial soundness of ISA and its companies

29 Consolidated financial results Investments ISA and its companies invested COP 1,200,000 million according to their expansion plans COP Millon

30 Individual financial results ISA Matriz (COP Million) (COP Million) Decrease in operating revenue due to construction contracts for third parties Lower maintenance and construction costs, and lower depreciation expenses Non-operating income generated by higher revenue from equity method of subsidiaries abroad Higher provision for income tax as the result of higher revenues from exchange differences and lower financial expenses The increase in assets and equity is mainly the result of the change of the concessions in Chile and Brazil to being financial assets

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32 ISA share performance ISA's stock had a defensive performance throughout the year in a market environment that had significant devaluations. The stock reached a peak quote of COP 10,200, an average quote of COP 8,873 and a closing quote of COP 9,100, for an accumulated yearly drop of 5.21%, which is below the value for the market (COLCAP index: %)

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34 Corporate Social Responsibility highlights Corporate Social Responsibility, comprehensive management system that covers the entire organization to create economic, environmental and social value. Institutional Strengthening 122 social organizations strengthened in 58 municipalities. Sustainable development of the communities (398 municipalities). Dignified Employment 3,500 families and 100 organizations (16 municipalities) with productive projects. Education: educational transformation for life. 53,211 students (452 educational institutions), 1,163 qualified teachers in 59 municipalities. Human rights Promotion and advocacy of human rights in 33 municipalities and 6 provinces. Carbon Footprint Compensation We measure greenhouse gases and compensate them by purchasing certified neutral carbon. Climate Change Support for the Ventures Award, ISA Award for Energy Efficiency and Climate Change. Dialog sessions with stakeholders. We know and manage their expectations.

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36 Final Messages IN THE YEAR 2020 ISA WILL HAVE MULTIPLIED its income by 3 By the year 2020 ISA will have focused its management on the capture of more profitable growth opportunities within its current businesses in Latin America ISA will reach operational efficiency levels that are aligned with global best practices. ISA develops and operates linear infrastructure systems. ISA contributes to the sustainable development of the communities where it has a presence. Leading Multi-Latin Company committed to the development of the countries and the region. Technical Excellence.

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38 Acknowledgements None of the achievements of 2013 would have been possible without the commitment of the associates of ISA and its companies, their participation was essential to achieving the goals that were set out. Thank you very much to the suppliers for thinking of us as their allies in achieving their development, to the customers for giving us the opportunity to serve them every day, to the shareholders and investors for honoring the Company with their trust, and to the countries where we have a presence for welcoming us and allowing us to participate in their development.

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