Slide 1: 1Q14 Results
ENERGIA ESENCAL SIE-CL
Slide 2: Agenda
AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 2
Slide 3: Highlights
HIGHLIGHTS In 1Q14 E.CL reported EBITDA of US$80 million, a 20% improvement compared to 1Q13 due to better operating performance of coal-fired plants and higher average realized prices. Net income reached US$25 million, 49% higher than in 1Q13 due to improved EBITDA aided by lower depreciation c
Slide 4: Highlights
HIGHLIGHTS An 8.2 Richter-scale earthquake affected the north of Chile in April, with no casualties or injuries amongst E.CL personnel nor any material damage on E.CL’s generation and transmission assets. A draft tax reform bill was sent to Congress in early April which, if approved, would gradu
Slide 5: Agenda: Industry and Company
AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 5
Slide 6: Chilean electricity industry – 1Q14
Chilean electricity industry – 1Q14 INDUSTRY Growth Generation GWh Main players Market Clients (2013-2023)¹ (1Q14) (% installed capacity 1Q14) Regulated Diesel Ren. 2% Endesa 12% 7% 25% capacity 6.2% Gas 9% 23% E.CL 51% 4,146 MW SING 26% demand 4,265 GWh AES Gener Unregulated Coal 82% 20% 88% Diesel
Slide 7: Characteristics of the SING
Characteristics of the SING INDUSTRY Nearly 100% of installed capacity based on coal, natural gas (LNG) and diesel No exposure to hydrologic risk Long-term contracts with unregulated clients (mining companies) account for 88% of demand Flexibility to negotiate prices and supply terms Maxim
Slide 8: Mining sector in Chile: Announced investments in new projects
INDUSTRY Mining sector in Chile: Announced investments in new projects Estimated Estimated Possible International investment copper production Rating Mining Project Sponsor (US$ mm) production start date (Moody’s/S&P) Lomas Bayas III Súlfuros $1,600 70 Th TPA 2019 Xstrata Baa2/BBB+ Esperanza Sur (ex
Slide 9: Ownership structure (as of end-March 2014)
COMPANY Ownership structure (as of end-March 2014) GDF SUEZ Local Foreign Other Pension Funds Institutions Institutions 52.77% 16.06% 20.44% 10.20% 0.53% Inv. Punta de E.CL S.A. Rieles Ltda. 40% Inversiones Central Gasoducto Edelnor Transmisora Hornitos S.A. Termoeléctrica Norandino S.A. Transmisión
Slide 10: Installed capacity – SING & E.CL
COMPANY Installed capacity – SING & E.CL SING - Gross installed capacity – December 2013 (MW) E.CL - Growth in installed capacity in recent years 2,108 MW 2.500 2.500 2,108 MW 10 10 1,665 MW 12 12 2.000 2.000 317 317 288 288 10 13 13 317 317 1.500 176 1.500 688 688 688 688 688 688 688 962 MW 1.000 1
Slide 11: E.CL's Assets
COMPANY Installed Capacity (Mar. 14) E.CL’s Assets Technology Coal Renewables Diesel/FO Chapiquiña (10MW) Natural gas 1% El Aguila I (2MW) Renewables Diesel 14% Coal 53% Diesel Arica (14MW) Diesel Iquique (43MW) TE Tocopilla (1,004MW) Collahuasi Tocopilla puerto El Abra Gas/diesel Chuquicamata 33% C
Slide 12: Evolution of PPA portfolio balance
COMPANY Evolution of PPA portfolio balance (as of March 2014) Average realized monomic Average estimated consumption (MWh/h) sale price (USD/MWh) 1Q13 1Q14 2014 2015 2016 2017 Coal and renewables (MW-net) 895 895 895 895 Gas (MW-net) 256 215 215 215 A) “Contractable” efficient capacity 1,151 1,110 1
Slide 13: PPA portfolio indexation
COMPANY PPA portfolio indexation Overall indexation applicable (as of March 2014) Other: CPI, PPI, node price Marginal Cost 16,5% Diesel 2,3% 0,4% Fuel Oil 0,1% Coal Gas 59,1% 21,6% As a percentage of effective demand …matched with an aligned cost structure, through indexation formulas in PPAs. 13
Slide 14: Indexation of the EMEL PPA
COMPANY PPA portfolio indexation Indexation of the EMEL PPA Timetable of tariff adjustments: May and November of each year The tariff is determined in US dollars and converted to CLP at the average observed exchange rate of March and September of each year. Such exchange rate prevails for 6 mont
Slide 15: E.CL's energy supply curve – 1Q2014
COMPANY E.CL’s energy supply curve – 1Q2014 US$/MWh 180 Average realized monomic price: 160 US$ 115/MWh 140 120 100 Average fuel & electricity purchase cost per MWh sold: US$65/MWh FO-Di 80 60 Spot purchases U16-CTM3 40 20 CTA U-15 CTH CTM2 U-14 CTM1 U-13 U-12 00 Renewables Coal 1,571 GWh LNG 374 GW
Slide 16: Generation overcosts in the SING
Generation overcosts in the SING INDUSTRY The so-called “overcosts” (“sobrecostos”) are regulated by OVERCOSTS IN THE SING IN US$ MILLION Resolution 39/2000 (RM39) and by Supreme Decree 130/2012 2013 2014 2014 vs 2013 (DS130) to cope with the costs stemming from the SING’s TOTAL E.CL TOTAL E.CL TO
Slide 17: Agenda: Projects
AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 17
Slide 18: Infraestructura Energética Mejillones (IEM)
PROJECTS Infraestructura Energética Mejillones (IEM) Characteristics Gross capacity (IEM1 & IEM2) 2 x 375 MW Net capacity 2 x 320 MW Availability (plant factor) 90% Location Mejillones Mechanized port Associated infrastructure (Capesize carriers) Transmission line IEM1 New 170-km, 220kV, 350 MVA Exp
Slide 19: SIC-SING transmission line (1 of 2)
PROJECTS SIC-SING transmission line (1 of 2) E.CL acquired Transmisora Eléctrica del Norte (“TEN”) from E.CL’s main shareholder, GDF Suez Energy Andino (“GSEA”), for the purpose of developing a transmission line connecting Mejillones (SING) to Copiapó (SIC). In 1Q14 E.CL paid US$13.7 million to
Slide 20: SIC-SING transmission line (2 of 2)
PROJECTS SIC-SING transmission line (2 of 2) Characteristics Type Double circuit, 500 kV, alternate current Capacity 1,500 MVA per circuit Length 580 km connecting Mejillones (SING) to Copiapó (SIC) T.E.N. (Transmisora Eléctrica del Norte), wholly Sponsor owned by E.CL Private initiative meeting all
Slide 21: Eléctrica Monte Redondo (EMR) potential acquisition
PROJECTS Eléctrica Monte Redondo (EMR) potential acquisition EMR operates in the SIC, is owned by GDF SUEZ, and comprises a 48MW wind farm in operations and the 34MW Laja Hydro plant under construction. GDF SUEZ has stated that E.CL will be its investment vehicle for the electricity generation b
Slide 22: Solar Projects
PROJECTS Solar Projects E.CL has the operational and commercial skills to be a leading player in solar-based electricity generation in the SING. El Águila I (2MW) was developed as a pilot project and inaugurated in July 2013. Pampa Camarones I (6MW 1st stage) is under development: • Expected t
Slide 23: Environmental CAPEX
PROJECTS Environmental CAPEX Stricter particle-matter and gas (NOx and SOx) emission requirements were approved by Chilean authorities in 2011. E.CL is investing to comply with the new emission requirements well before the due dates. The estimated CAPEX will amount to approximately US$170 mill
Slide 24: Innovation and sustainability
E.CL S.A. PROJECTS Innovation and sustainability Cobia Solar Microalgae Wind Biomass Steam-solar E.CL is committed to continuous social and environmental improvement. 24
Slide 25: Approved CAPEX program
E.CL S.A. PROJECTS Approved CAPEX program CAPEX (US$ million) 1Q14 9M-2014e 2015e 2016e Generation: Maintenance & Life ext. 12 25 88 40 Generation: Environmental project 4 15 - - Transmission - 16 32 13 Development (1) 16 34 6 4 Other (2) 4 8 4 7 TOTAL 36 98 130 64 Notes: 1. “Development” includes o
Slide 26: Agenda: Financial Results
AGENDA • HIGHLIGHTS • INDUSTRY AND COMPANY • PROJECTS • FINANCIAL RESULTS 26
Slide 27: Electricity sales, generation and average prices
FINANCIAL RESULTS Electricity sales (GWh) Gross electricity generation (GWh) Total 2,406 Total 2,271 Total 2,260 Total 2,204 2.500 33 2.500 75 87 77 2.000 444 451 2.000 451 381 1.500 1.500 1.000 1.930 1.000 1.745 1.710 1.731 500 500 0 0 1Q13 1Q14 1Q13 1Q14 Unregulated Regulated Spot Coal LNG Diesel
Slide 28: Income Statement
FINANCIAL RESULTS Income Statement (US$ millions) 1Q13 1Q14 Var. % Operating revenues 285.1 308.4 8% Operating income (EBIT) 31.0 47.0 51% EBITDA 66.8 79.9 20% Net income 16.6 24.8 49% Average realized monomic sale price (US$/MWh) 110.4 115.4 5% Total operating revenues increased 8% due to a combi
Slide 29: EBITDA Comparison - 1Q14 vs. 1Q13
FINANCIAL RESULTS In millions of US$ EBITDA Comparison - 1Q14 vs. 1Q13 100 90 +3 -6 +6 -3 +4 80 +10 70 60 50 40 80 30 67 20 10 0 EBITDA 1Q13 Improved Increased spot Final settlement Increased gas Volume effect Other EBITDA 1Q14 margins sales EPC contractor sales Significant EBITDA improvement 29
Slide 30: Business streamlining and cost saving actions
FINANCIAL RESULTS Business streamlining and cost saving actions GASODUCTO NORANDINO ARGENTINA (“GNAA”) RESTRUCTURING – October 2013 E.CL’s subsidiary GNAA reached an agreement with its supplier TGN regarding gas transportation and O&M services, through which GNAA made an advanced payment of US$15.
Slide 31: Net Income comparison 1Q14 vs. 1Q13
FINANCIAL RESULTS In millions of US$ Net Income comparison 1Q14 vs. 1Q13 35 Minority +2 -2 Interest 30 +11 -2 25 2 Minority Interest 20 1 15 25 10 17 5 0 Net income 1Q13 Increase in EBITDA Lower depreciation Other FX difference (+2.2 in Net income 1Q14 figures 1Q13 vs. -0.1 in 1Q14) Almost 50% incre
Slide 32: Strong liquidity and low leverage
FINANCIAL RESULTS Available Cash (millions of US$) Gross Debt / LTM1 EBITDA 250 4,0 200 3,0 150 2,0 213,4 204,9 3,0 2,9 100 1,0 50 0,0 12/31/2013 3/31/2014 12/31/2013 3/31/2014 Available cash Gross Debt / LTM EBITDA Net Debt / LTM1 EBITDA LTM1 EBITDA / LTM1 Gross interest Expense 2,5 6,0 5,0 2,0 4,0
Slide 33: E.CL's Debt breakdown (as of March 31, 2014)
FINANCIAL RESULTS E.CL’s Debt breakdown (as of March 31, 2014) ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- E.CL has only two debts, with a current average cost
Slide 34: Net debt evolution during 1Q14
FINANCIAL RESULTS In millions of US$ Net debt evolution during 1Q14 630 +6 -9 -43 610 +11 +14 590 +9 +22 +6 570 550 530 510 562 548 490 470 450 Net debt as of CAPEX Net income Net VAT TEN Net interest Swap MTM Other Cash flow Net debt as of 12/31/13 tax payments Payments acquisition expenses variati
Slide 35: Dividends
FINANCIAL RESULTS Dividends E.CL has a flexible dividend policy, which consists of paying the minimum legal required amount (30% of annual net income), although higher payout ratios may be approved in function of (among others) anticipated capital expenditures: Payout ratio in recent years: 2009
Slide 36: International and national credit ratings
FINANCIAL RESULTS International ratings Solvency Perspective Date Standard & Poors BBB Stable December 2013 Fitch Ratings BBB- Positive August 2013 National ratings Solvency Perspective Shares Date Feller Rate A+ Stable 1st Class Level 2 January 2014 Fitch Ratings A Positive August 2013 ICR A Stable
Slide 37: Forward-looking statements disclaimer
This presentation may contain certain forward-looking statements and information relating to E.CL S.A. (“E.CL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking statements include, without limitat