Slide 1: Company Presentation 4Q 2012
COMPANY PRESENTATION 4Q 2012
Slide 2: Agenda
Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 2
Slide 3: Recent developments
Company Overview Recent developments HYDRO CONDITION 2012 3rd consecutive extremely dry year SANTA MARIA I COAL PROJECT 1,853 GWh generated during 2012 (out of the estimated 2,500 GWh/year) Dec. 12’: Insurance settlement for USD 65 million (USD 40 million for ALOP) COMMERCIAL BALANCE GWh 12.00
Slide 4: Colbún at a glance
Company Overview Colbún at a glance Business Power Generation & Trade Market Share (as a % of Installed Capacity) - SIC Size 2nd largest generator in Chile’s Central Grid Others (SIC), with over 20% market share (MW). 20% Colbún 21% The SIC covers 90% of the population AES Capacity 2,962 MW Gener 18
Slide 5: A diversified asset base
Company Overview A diversified asset base NEHUENCO COMPLEX: 874 MW ACONCAGUA BASIN: 213 MW 15 HYDRO POWER PLANTS 7 THERMAL POWER PLANTS DIESEL/GAS Chacabuquito Blanco Nehuenco I Capacity: 29 MW Capacity: 60 MW Capacity: 368 MW Los Quilos Juncal Nehuenco II Capacity: 39 MW Capacity: 29 MW Capacity: 3
Slide 6: A diversified customer base
Company Overview A diversified customer base UN-REGULATED CUSTOMERS REGULATED CUSTOMERS CHILECTRA CODELCO (2011- 2021/23/25) Salvador CONAFE CODELCO (Until 2020) Ventanas CGE-Río Maipo ANGLOAMERICAN (2010- 2021) Los Bronces Santiago CGE-Distribución CODELCO (2010- 2024) Andina METRO SAESA AGUAS ANDI
Slide 7: Colbún has grown steadily over the past decade
Company Overview Colbún has grown steadily over the past decade Capacity (MW) Total Operating Revenues (MMUSD) 3.500 2,962 1.600 US$ 1,409 MW million 3.000 1.400 1.200 2.500 1.000 2.000 800 1.500 600 1.000 US$ 129 400 1,070 CAGR: 8% million CAGR: 20% 500 MW 200 0 0 1999 2000 2001 2002 2003 2004 2005
Slide 8: Solid and reliable controlling group with a strategic and long term vision
Company Overview Solid and reliable controlling group with a strategic and long term vision CONTROL Ownership Structure Controlled by the Matte Group (49%), one of the leading economic groups in Chile, with Angelini stakes in various sectors (forestry, financial, Group telecommunications, among othe
Slide 9: Agenda
Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 9
Slide 10: Corporate Strategy
Business Strategy Corporate Strategy Who are we? We are a Chilean company, leader in the generation of reliable, competitive and sustainable energy What do we do? We seek to generate long-term value by developing projects and managing power infrastructure to meet the country’s energy demand. 10
Slide 11: Strategic Pillars
Business Strategy Strategic Pillars Identify and develop project options to consolidate our market share. 3. Growth Commercial strategy that generates long-term returns consistent with our asset base. Narrow our exposure to exogenous variables: diversified asset base 2. Diversification (technolog
Slide 12: Value Chain
Business Strategy Value Chain Project Operational Risk / Return Development Excellence Profile Multidimensional High Risk / return profile challenge: standards: combining: Technical Reliability Commercial policy + + + Environmental / Social Security Financial strength + + + Financial Environmental R
Slide 13: Colbún: a sustainable partner
Business Strategy Colbún: a sustainable partner EMPLOYEES INVESTORS ENVIRONMENT COMMUNITY AND CLIENTS AND SUPPLIERS SOCIETY CONTRACTORS 13
Slide 14: Commercial policy
Business Strategy Commercial policy COMMERCIAL GOALS Supply secure and competitive energy to our customers Maximize returns from our current and future assets Manage volatility given large renewable component 1. CONTRACT LEVEL 2. SALE PRICE INDEXATION 3. HEDGE PROGRAM Define optimal Incorporate inde
Slide 15: Evolution of Colbún's Business Model
Business Strategy Evolution of Colbún’s Business Model Contractual GWh MMUSD Commitments 12.000 500 446 450 “Base” 10.000 Generation 400 337 331 350 8.000 284 300 236 6.000 250 211 205 170 200 156 4.000 128 150 109 100 2.000 (58%) (60%) (60%) (48%) (45%) (59%) (1%) (18%) (29%) (32%) (15%) (20%) EBIT
Slide 16: Our expansion plan
Business Strategy Our expansion plan Thermoelectric capacity Hydroelectric capacity 3,428 San Pedro MW Angostura 150 MW 2,962 316 MW MW 51% 43% Other Growth Opportunities Santa María II (350 MW) Environmental approval for the construction of a second unit Hydraulic Various water rights in different
Slide 17: Our projects under development
Business Strategy Our projects under development ANGOSTURA HYDRO POWER PLANT: 316 MW Santa Barbara and Quilaco, Biobío Region INVESTMENT POWER PLANT: 675 MMUSD INVESTMENT TX LINE: 45 MMUSD SPENT AS OF DEC. 2012: 532 MMUSD ADVANCE DEC. 2012: 84% ESTIMATE START OF OPERATION: 4Q2013 ANGOSTURA SAN PEDRO
Slide 18: Agenda
Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 18
Slide 19: Income Statement
Financial Profile Income Statement Revenues, EBITDA (MMUSD) & EBITDA Margin 1.600 Revenues EBITDA EBITDA margin (%) 1.400 59% 1.200 1.000 Average EBITDA 2006-2012: MMUSD 265 32% 800 29% Non-operational result from past years affected 600 20% by payments to early terminate old natural gas 400 18%
Slide 20: Capital Structure and Credit Metrics
Financial Profile Capital Structure and Credit Metrics Key Credit Metrics Cash, Debt & Net Debt (MMUSD) 2006 2007 2008 2009 2010 2011 2012 2.000 Cash 1.800 Total debt 1.600 Net debt 18.8 26.0 25.0 27.0 31.1 30.1 32.9 to total capital (%) 1.400 Total debt 1.200 Net debt 0.4 36.6 2.3 2.3 3.1 5.9 5.3 1
Slide 21: Free Cash Flow Analysis
Financial Profile Free Cash Flow Analysis Selected Sources & Uses of Funds (MMUSD) 700 K WK Capex EBITDA 600 Negative FCF in past years due to intensive 500 capex program 400 Intensity of capex diminishes in 2013 300 Expected recovery of VAT Credit in coming years (current stock of MMUSD 258)
Slide 22: Conservative Financial Strategy
Financial Profile Conservative Financial Strategy: Smooth debt profile coupled with a strong liquidity position Amortization Schedule of LT Debt (MMUSD) Balance Sheet as of December 2012 (MMUSD) 600 Banks Bonds Current Assets 500 789 Cash and equivalents 218 400 Accounts receivable 203 300 Recoverab
Slide 23: A quarterly look at Colbún's results
Financial Profile A quarterly look at Colbún’s results Sales vs. Generation - quarterly (GWh) Revenues - quarterly (MMUSD) 3.000 402 361 362 2.500 335 332 315 315 320 2.000 1.500 1.000 500 0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q 2Q 3Q 4Q Contractual Sales Hydro Coal Natural gas (LNG) Diesel Rev
Slide 24: Agenda
Agenda Company Overview Business Strategy Financial Profile Chilean Electricity Sector Overview 24
Slide 25: Sector Segmentation
Chilean Electricity Sector Overview Sector Segmentation 3 SUB-SECTORS 4 SEPARATE GRIDS SING Arica 3,964 MW - 25% 15.881 GWh - 25% GENERATION Antofagasta SIC Tal-Tal 12,365 MW - 75% 46.052 GWh - 74% TRANSMISSION Santiago Regulated sectors (concessions) DISTRIBUTION Castro Chaitén SEA 52 MW - 0% 146 G
Slide 26: Market Structure
Chilean Electricity Sector Overview Market Structure Electricity Market Structure Main Players in the Generation Sector-SIC GENERATORS 41% >15 REGULATED UNREGULATED SPOT players CUSTOMERS CUSTOMERS MARKET 21% 18% 17% DISTRIBUTION “FREE” CDEC COMPANIES CUSTOMERS 2% 1% Regulated Unregulated Marginal C
Slide 27: Evolution of Power Generation and Demand in the SIC
Chilean Electricity Sector Overview Evolution of Power Generation and Demand in the SIC Annual Power Generation – SIC (TWh) Annual Electricity Demand – SIC (TWh) 50 Others 50 Diesel-Fuel Unregulated Demand Regulated Demand 45 LNG 45 Gas Diesel 7% Coal /Petcoke 40 40 Hydro LNG 21% 35 35 Unregulated:
Slide 28: Dispatch and pricing model: a technical guide
Chilean Electricity Sector Overview Dispatch and pricing model: a technical guide Dispatch Model Dispatch Scheme OBJECTIVE Meet demand at the lowest cost possible Demand Curve Variable Cost of the Plants (USD/MWh) INSTITUTION Independent load dispatch center (CDEC) coordinates the efficient dispatch
Slide 29: Evolution of electricity prices
Chilean Electricity Sector Overview Evolution of electricity prices Electricity Prices-SIC (USD/MWh) 350 1) Energy Node Price Alto Jahuel (USD/MWh) 300 2) Average Auction price (USD/MWh) 3) Average Market price (USD/MWh)* 250 4) Energy Spot Market Price Alto Jahuel (USD/MWh) 200 150 100 50 0 2001 20
Slide 30: Demand and Supply: what to expect in the coming years
Chilean Electricity Sector Overview Demand and Supply: what to expect in the coming years Electricity Demand - SIC (TWh) Available Power by type - SIC (MW) Hydro (1) Wind Coal Gas (2) 70 Diesel Max demand 16.000 Min demand Average demand Additional installed capacity: 60 14.000 562 MW Hydro 214 MW W
Slide 31: Colbún
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