Colbun Sa · BCS:COLBUN
Colbun Sa — Global Emerging Markets Corporate Conference – JP Morgan 2019
38 slides from Colbun Sa's conference presentation, February 2019
Slide 1: Global Emerging Markets Corporate Conference – JP Morgan Company Presentation
Global Emerging Markets Corporate Conference – JP Morgan COMPANY PRESENTATION FEBRUARY 2019
Slide 2: Disclaimer & Contact Information
Disclaimer & Contact Information ▪ This document provides information about Colbún S.A. In no case this document constitutes a comprehensive analysis of INVESTOR RELATIONS the financial, production and sales situation of the company. TEAM CONTACT ▪ To evaluate whether to purchase or sell securities
Slide 3: Agenda
AGENDA 1. OVERVIEW 2. VALUE PROPOSITION UPDATE ON STRATEGIC AGENDA 3. PROGRESS 4. CONCLUDING REMARKS 3
Slide 4: Company overview: Leading position in Chile & Peru
Company overview Leading position in Chile & Peru THE COMPANY Installed Capacity Market Share1 3,893 MW 17% / 8% Ownership 3,328 MW / 565 MW 49.96% Matte Group Power-Plants 9.58% Angelini Group Transmission Lines 26 ~940 km 20.82% Pension Funds 25 / 1 19.64% Others KEY FINANCIALS Ratings Total Asset
Slide 5: Agenda
AGENDA 1. OVERVIEW 2. VALUE PROPOSITION UPDATE ON STRATEGIC AGENDA 3. PROGRESS 4. CONCLUDING REMARKS 5
Slide 6: Value proposition: Leading position supported by competitive strengths
Value proposition Leading position supported by competitive strengths 1 2 3 4 5 COST STABLE & PRUDENT ATTRACTIVE MAXIMIZING EFFICIENT AND PREDICTABLE FINANCIAL PORTFOLIO OF VALUE TO ALL DIVERSIFIED CASH FLOWS MANAGEMENT GROWTH OF OUR ASSET BASE OPTIONS STAKEHOLDERS 6
Slide 7: Value proposition: Leading position supported by competitive strengths
Value proposition Leading position supported by competitive strengths 1 2 3 4 5 COST STABLE & PRUDENT ATTRACTIVE MAXIMIZING EFFICIENT AND PREDICTABLE FINANCIAL PORTFOLIO OF VALUE TO ALL DIVERSIFIED CASH FLOWS MANAGEMENT GROWTH OF OUR ASSET BASE OPTIONS STAKEHOLDERS 7
Slide 8: Cost efficient & diversified asset base: Attractive markets
1. Cost efficient & diversified asset base Attractive markets GENERATION DEMAND GROWTH MARGINAL COST MARKET SHARE1 GWh 12 month average % US$/MWh % 4% SEIN Santa Rosa Others Others 4% 40 25% Peruvian 7% Gov. 3% 30 20% 2% 20 8% Natural 50,817 1% 9 Gas 10 SEIN 37% Hydro Engie Kallpa 13 GW 56% 0% 0 10%
Slide 9: Generation assets diversified by technology & geography
1. Cost efficient & diversified asset base Generation assets diversified by technology & geography 3,893 MW Inst. Capacity: SEIN FENIX POWER 565 MW Hydro: 1,634 MW 4 Reservoir: 1,065 MW 12 Run-of-the-river: 532 MW CENTRAL ZONE: Solar: 9 MW SEN 210 MW / 9 MW / 1,128 MW Thermal: 2,250 MW CENTER-SOUTHE
Slide 10: 100% of PPAs supplied with cost-efficient generation
1. Cost efficient & diversified asset base 100% of PPAs supplied with cost-efficient generation WHOLE-SALE POWER COMMERCIAL POLICY GENERATION ASSETS & PPAS LEVEL 2018 1 Optimal Contracting level I. Renewable Capacity: Generation Commitments (TWh) (TWh) Hydro, solar and wind II. Efficient thermal cap
Slide 11: Secured long-term regasification capacity & LNG supply
1. Cost efficient & diversified asset base Secured long-term regasification capacity & LNG supply Long-term strategy: leveraging our efficient natural gas power facilities and diversifying our supply sources; contributing to a competitive, flexible, secure and sustainable power supply. MEDIUM AND SH
Slide 12: Relevant transmission assets
1. Cost efficient & diversified asset base Relevant transmission assets Transmission lines ~940 km National 330 km Zonal 80 km Dedicated 530 km Substations 28 Market share 1 ~6% Note: All figures as of Dec18 12 1 Nacional Transmission
Slide 13: Fenix Power: a relevant & efficient CCGT in Peru
1. Cost efficient & diversified asset base Fenix Power: a relevant & efficient CCGT in Peru THE COMPANY SHAREHOLDERS One of the most efficient CCGT in Peru 36% Based on Heat Rate 51% 40 miles south of Lima Capital of Peru and largest city of the country 13% 565 MW KEY FIGURES International Gross eff
Slide 14: Value proposition: Leading position supported by competitive strengths
Value proposition Leading position supported by competitive strengths 1 2 3 4 5 COST STABLE & PRUDENT ATTRACTIVE MAXIMIZING EFFICIENT AND PREDICTABLE FINANCIAL PORTFOLIO OF VALUE TO ALL DIVERSIFIED CASH FLOWS MANAGEMENT GROWTH OF OUR ASSET BASE OPTIONS STAKEHOLDERS 14
Slide 15: Stable & predictable cash flows: High quality clients in Chile
2. Stable & predictable cash flows High quality clients in Chile 1 CUSTOMER BASE PROFILE +200 52% / 48% ~93% ~9 YEARS Total Regulated/ Customers Average life of customers unregulated with credit PPAs customers ratings 2 PPAs IN CHILE: MAXIMUM CONTRACTED POWER SUPPLY (TWh) Regulated Customers Unregul
Slide 16: PPAs renewal opportunities in Chile
2. Stable & predictable cash flows PPAs renewal opportunities in Chile 1 UNREGULATED CUSTOMERS. ▪ In the coming years there is a relevant amount of energy for large unregulated clients to be re-contracted. ▪ Since 2016, Colbun has signed new contracts with large and medium-size clients for a total o
Slide 17: Value proposition: Leading position supported by competitive strengths
Value proposition Leading position supported by competitive strengths 1 2 3 4 5 COST STABLE & PRUDENT ATTRACTIVE MAXIMIZING EFFICIENT AND PREDICTABLE FINANCIAL PORTFOLIO OF VALUE TO ALL DIVERSIFIED CASH FLOWS MANAGEMENT GROWTH OF OUR ASSET BASE OPTIONS STAKEHOLDERS 17
Slide 18: Stable operational results & solid metrics
3. Prudent financial management Stable operational results & solid metrics 1 EBITDA & EBITDA MG. (US$ million & %) 3 DEBT & NET DEBT. (US$ million) EBITDA Chile EBITDA Fenix Mg EBITDA Debt 800 45% 45% 45% 50% 2.500 44% 2.236 Net Debt 36% 54 36 2.000 1.894 600 40% 1.700 1.710 1.660 56 1.603 1.440 30%
Slide 19: Stable operational results & solid metrics
3. Prudent financial management Stable operational results & solid metrics 1 CASH POSITION. (US$ million) 2 DIVIDEND DISTRIBUTION. (US$ million & %) 1.200 100% 1.081 300 100% 833 810 230 900 788 271 80% 667 67% 200 600 50% 50% 60% 50% 30% 102 100 40% 300 261 100 45 55 20% 0 0 0% 2013 2014 2015 2016
Slide 20: Long term debt profile US$1,603 million
3. Prudent financial management Long term debt profile 1 DEBT PROFILE US$1,603 million 100% bonds 4.5% Interest Rate average US$1,253 million 95% USD and 5% UF 6.7 years average life US$350 million 100% Fixed rate 2 AMORTIZATION STRUCTURE. (US$ million) 600 Fenix Bonds 527 527 500 Colbun Bonds 400 3
Slide 21: Value proposition: Leading position supported by competitive strengths
Value proposition Leading position supported by competitive strengths 1 2 3 4 5 COST STABLE & PRUDENT ATTRACTIVE MAXIMIZING EFFICIENT AND PREDICTABLE FINANCIAL PORTFOLIO OF VALUE TO ALL DIVERSIFIED CASH FLOWS MANAGEMENT GROWTH OF OUR ASSET BASE OPTIONS STAKEHOLDERS 21
Slide 22: Attractive portfolio of growth options: Expansion considerations
4. Attractive portfolio of growth options Expansion considerations STRATEGY LOCAL EXPANSION MAIN GUIDELINES 1. Pipeline of Renewable Projects 1. Increase presence in Chile and a. Solar and wind Perú b. Hydro 2. Expand operations to selected countries in the region (Argentina 2. M&A Opportunities and
Slide 23: Diversify our operations at a regional level
4. Attractive portfolio of growth options Diversify our operations at a regional level COLOMBIA • Competitive electricity market with stable regulatory framework • Ample space to increase per capita consumption of the country • System requires reliable operators OTHERS that provide security against
Slide 24: Large pipeline of renewable projects
4. Attractive portfolio of growth options Large pipeline of renewable projects HORIZONTE SOL DE TARAPACÁ SOLAR & ▪ Tal Tal, II Region ▪ La Tirana, II Region WIND PROJECTS ▪ Inst. capacity : ~607 MW ▪ Inst. capacity: 150 – 200 MW ▪ Gx: ~2,000 GWh/year ▪ Gx: ~470 GWh/year ▪ Preparing EIA1 ▪ Preparing
Slide 25: Value proposition: Leading position supported by competitive strengths
Value proposition Leading position supported by competitive strengths 1 2 3 4 5 COST STABLE & PRUDENT ATTRACTIVE MAXIMIZING EFFICIENT AND PREDICTABLE FINANCIAL PORTFOLIO OF VALUE TO ALL DIVERSIFIED CASH FLOWS MANAGEMENT GROWTH OF OUR ASSET BASE OPTIONS STAKEHOLDERS 25
Slide 26: Sustainability strategy
5. Maximizing value to all of our stakeholders Sustainability strategy SUSTAINABILITY IS OUR BUSINESS AND IT IS INTEGRATED IN ALL AREAS OF THE COMPANY ▪ Since 2015 we started publishing an Integrated Annual Report, with all the financial, social and environmental information of the Company. 26
Slide 27: Adding value to all of our stakeholders
5. Maximizing value to all of our stakeholders Adding value to all of our stakeholders STAKEHOLDER EXAMPLES OF ADDED VALUE CUSTOMERS ▪ Secure, competitive and sustainable energy 12,851 GWh of energy sold ▪ Long-term relationships INVESTORS US$684 million of EBITDA ▪ Profitability and economic value
Slide 28: Awards and recognitions
5. Maximizing value to all of our stakeholders Awards and recognitions 2018 2017 2017 2017 2017 2017 Colbún listed in the Dow Colbún listed in the Dow Colbún listed in the ranking Angostura power plant was Colbún obtained the first Fenix power plant was Jones Sustainability Index Jones Sustainabilit
Slide 29: Agenda
AGENDA 1. OVERVIEW 2. VALUE PROPOSAL UPDATE ON STRATEGIC AGENDA 3. PROGRESS 4. CONCLUDING REMARKS 29
Slide 30: Update on strategic agenda progress: Overview
Update on strategic agenda progress Overview 1. ENTER INTO NEW POWER PURCHASE AGREEMENTS ▪ During 2018, the Company has contracted approximately 1,400 GWh/year of its generation with new unregulated customers. 2. GROW IN RENEWABLE ENERGY FROM VARIABLE SOURCES (SOLAR AND WIND) ▪ Add 4,000 MW of new r
Slide 31: Update on strategic agenda progress: Details
Update on strategic agenda progress Details ENTER INTO NEW POWER PURCHASE GROW IN RENEWABLE ENERGY FROM 1 2 AGREEMENTS VARIABLE SOURCES (SOLAR AND WIND) ▪ Since 2016, Colbun has signed new contracts ▪ Add 4,000 MW of new renewable energy capacity over with large and medium-size clients for a total 1
Slide 32: Horizonte wind project details
Update on strategic agenda progress Details 70 km at the northeast of Taltal, Location HORIZONTE Región de Antofagasta Capacity and 607 MW generation ~2,000 GWh/year of generation Program Estimated COD: 2024 Generation through 130 wind turbines distributed on ~ 8,000 Features ha of land granted by t
Slide 33: Sol de Tarapacá solar project details
Update on strategic agenda progress Details SOL DE Pozo Almonte, Región de TARAPACÁ Location Tarapacá Capacity 150-200 MW Program Estimated COD: 2022 Photovoltaic solar panels Features distributed on 422 ha Developing engineering studies Status Preparing EIA1 1EIA: Environmental impact study 33
Slide 34: Cost efficiency plan and digitalization program
Update on strategic agenda progress Details COMPLETE DIGITALIZATION AND 3 IMPLEMENT COST EFFICIENCY PLAN 4 AUTOMATION PROGRAM ▪ This initiative will translate to annual fixed costs ▪ Simplify operational, administrative and savings of US$20 million. maintenance processes in order to increase Colbún’
Slide 35: Leverage transmission asset base; explore new business opportunities
Update on strategic agenda progress Details 5 LEVERAGE TRANSMISSION ASSET BASE 6 EXPLORE NEW BUSINESS OPORTUNITIES ▪ In October 2018, Colbún grouped all of its DEMAND RESPONSE transmission assets into Colbún Transmisión S.A., with the objective of achieving a greater focus on management, reporting a
Slide 36: Agenda
AGENDA 1. OVERVIEW 2. VALUE PROPOSAL UPDATE ON STRATEGIC AGENDA 3. PROGRESS 4. CONCLUDING REMARKS 36
Slide 37: Concluding remarks
Concluding remarks 1 Shareholders: Strong, reliable controlling group with a strategic and long-term vision of the business. 2 Size: Leading position in Chile’s power market and a relevant presence in Peru. 3 Management: Experienced management and high standards of corporate governance. 4 Customers:
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