decsa - eec cÁlidda emgesa. codensa. promigas gas ......calidda 17% eeb 7% rep - ctm 3% investments...

Investor Report

2Q 12

1

Contacto: Juan Felipe González Rivera Teléfono: 571 3268000 ext 1546 E mail: [email protected]

Bogota, Colombia, August 2012

Index

Executive summary and relevant facts.

Performance of controlled investments.

- EEB - Transmission

- DECSA - EEC

- TGI

- CÁLIDDA Performance of Non - Controlled investments.

- Emgesa.

- Codensa.

- Promigas

- Gas Natural.

- REP and CTM. EEB consolidated financial performance.

Annex 1: Legal notice, clarifications.

Annex 2: Link to EEB´s consolidated and stand-alone financial statements.

Annex 3: Overview of EEB

Annex 4: Definitions of EBITDA included in this report. Consolidated Adjusted EBITDA reconciliation LTM and Quarterly

Annex 5: Tables and graphics’ footnotes.

Annex 6: Technical and regulatory terms

Investor Report

2Q 12

2


Executive summary and relevant facts

Table # 1 – Overview of the electricity sectors Colombia Perú Guatemala Installed capacity – MW

14,463 9,196 2,182

Demand – GWh 14,599 10,125 4,258 Demand growth 1Q12/1Q11- %

4.84 6.60 2.67

Growth drivers Increase in mining activity due to the particularly Cerromatoso

Economic growth with outstanding increase in mining activity

Growth in industrial and demographic demand

Sources: XM, UPME, COES – Perú, AMM -- Guatemala

Table # 2 – Overview of the natural gas sectors as of 1H 12 Colombia Perú Proven and probable reserves – TPC

6.6 21.5

Domestic demand - mm cfd 970.3 1,152.6 Change In domestic demand as of 1H 12/ 1H 11- %

1.6 15.8

Explanation for demand variation

Decrease in thermal demand due to dissipation of El Niño.

Growth in residential (+38,33%), commercial (+34,86%), gas vehicles (+31,97%) and exports (+16,46%) demand.

Sources: UPME, CON, MEM, Osinergim

Table # 3 –EEB`s consolidated financial indicators COP million As of 1H 12 As of 1H 11 F 11 Operating revenue 747,311 665,599 1,421,664 Operating income 268,498 253,467 550,659 Consolidated Adjusted EBITDA Qtrly 215,693 166,042 353,008 Consolidated Adjusted EBITDA LTM 1,478,074 1,232,148 1,082,047 Consolidated EBITDA LTM 1,478,074 1,232,148 1,082,047 Dividends and reserves declared TO EEB 523,278 179,185 347,227 Net income 605,428 281,269 305,294 Dividends and reserves declared by EEB 319,964 - - Last international credit ratings

EEB’s net income increased by 115% in the first half of 2012 as compared to the first half of 2011, an increase of COP

324,000 million. This increase is principally the result of the improved operating results of controlled subsidiaries and

increased dividends received from non-controlled affiliates. During the first six months, operating income increased 6%

and non-operating income increased 252%.

On June 26, 2012, EEB paid a dividend of COP 34.85 per share, as approved by the Shareholders’ Meeting on March 14,

2012.

EEB`s Board of Directors authorized presenting bids for the construction and operation of electricity transmission lines in

Chile. In accordance with the timetable established by the Chilean government, the deadline for submitting bids is the

end of August, and the results will be announced in October 2012. The estimated total value of the projects being bid is

approximately USD 489 million.

On April 20, 2012, TGI closed a debt management operation by refinancing its principal debt obligation (the USD 750

million bond issued in 2007), which improved the debt maturity profile and reduce financial costs. Together with a similar

transaction carried out by EEB in November 2011, these transactions reduced annual financial costs by approximately

USD 44 million.

On July 16, 2012, Board of Directors authorized presenting bids to ECOPETROL for the construction of a substation of

230 kv and its necessary transmission lines for the connection with the National Transmission System.

Investor Report

2Q 12

3


Enel of Italy is concentrating its various ownership stakes in companies in Latin America in Enersis Chile in order to

rationalize its portfolio of investments in the region. These operations are not expected to affect the shareholder

agreements that currently govern the relations of the partners in Emgesa and Codensa in Colombia, companies in which

EEB is a shareholder.

In May 2012, Fitch Ratings ratified the BBB- rating on Emgesa’s global bonds and changed the outlook from stable to

positive. Fitch also ratified the company’s AAA long-term local currency rating.

Emgesa is studying the potential for selling power to Panama. The operation depends on the results of two bids: one is

for building a 300MW transmission line and the second is the contract for commercializing the power.

Fitch ratified its AAA ratings on the Codensa local currency bonds on July 31, 2012. The total outstanding of these bonds

is COP 600,000 million.

Table # 4 - Summary of EEB’s expansion projects Project / Company Country Sector Capex USD mm Status In operation: Cusiana II - TGI Colombia T NG 235 Operating La Sabana - TGI Colombia T NG 57 Planning 4Q 13 ICA Peru - ConTUgas Perú T + D NG 348 Under construction 3Q 13 Lima - Cálidda (network expansion) Perú D NG – network expansion- 464 Under construction 2016 Guatemala - TRECSA Guatemala T E 373 Under construction 4Q 13 Substations Colombia T E 156 Planning 13-15 T: Transportation; D: Distribution; NG: Natural Gas; E: Electricity

TGI

- Cusiana Phase II: The company started operations of this expansion project. The company has now completed and

put into service three expansion projects (Guajira, Cusiana Phase I and Phase II) that increase its transportation

capacity by more 50%.

ConTUgas - ICA:

- As of the end of June 2012, this project was 52% completed. The company has acquired all the pipeline needed for

the trunk network, and started laying the pipeline.

- The company signed four contracts with industrial clients for 9.2 mm cfd of gas. It is also negotiating “take-or-pay”

contracts for 52 mm cfd and interruptible contracts for 35 mm cfd; these are expected to close in the second half of

2012.

- ConTUgas is completing the financial closing of a syndicated construction loan provided by Colombian and Peruvian

banks for USD 215 million and a term of 18 months.

TGI 35%

Contugas 23%

Trecsa 15%

Calidda 17%

EEB 7%

REP - CTM 3%

Investments 2012 - Grupo de Energía de Bogotá USD 614 millions

Investor Report

2Q 12

4


Lima - Cálidda:

- As of June 2012, Cálidda had 82,700 customers and there were 139,000 natural gas powered vehicles in its area of

operations. The company’s target is to have 105,000 clients by the end of 2012 and 455,000 by 2016.

- The board of the company approved proposing to a shareholders meeting a capital increase of USD 60 million. If this

capitalization is approved, the capital would be provided in two tranches: USD 35 million in 4Q 12 and USD 25 million

in 1Q 13.

Guatemala – TRECSA:

- As of June 2012 the company had negotiated 39% of the rights of way required.

- The company has also received 56% of the municipal avals required and the Ministry of Environment has approved

94% of the change of land use studies needed.

- The construction of the transmission lines and substations were 14% and 9% completed, respectively.

EEB Transmission:

- The Armenia, Alferéz, and Tesalia substations: The projects are in the phase of detail design, getting the required

licenses and permits, and definition of the contract terms for the construction contracts. The company expects that the

three projects will start operation on the established timeline.

Table # 5 - Selected financial indicators - Non-controlled investments 1H 12 COP million USD million Emgesa Codensa Gas Natural Promigas * REP CTM Operating revenue 990,348 1,549,459 612,617 102,041 54.0 27.7 Operating income 561,067 396,245 148,002 19,318 16.9 15.6 EBITDA LTM 1,289,388 1,027,982 344,833 N.A. 64.4 37.9 Net income 349,561 247,051 118,926 87,941 9.8 8.1 Dividends and reserves declared to EEB 343,894 69,405 63,726 22,988 - - Capital reductions to EEB - - - - - - * Stand Alone Financial Statements

Table # 6 - Summary of expansion projects of non-controlled companies

Project Company Sector Country Capex

USD mm In operation:

El Quimbo Emgesa G E Colombia 837 14 Substations Codensa D E Colombia 68 11-12 Concession expansion REP E T Perú 89 12 Concession expansion and new con. CTM E T Perú 523 12 - 13 Expansions PROMIGAS Tr + D NG Colombia 192 14 G: Generation; T: Transmission; D: Distribution; NG: Natural Gas; E: Electricity; Tr: Transport

Investor Report

2Q 12

5


Emgesa – El Quimbo:

- As of the end of 2Q 12, the project was 27% completed. The company expects that operations will begin before the

end of 2014.

- Colombia’s Financial Superintendency increased the time period for issuance of bonds by the company to July 2015.

The overall borrowing program has a cap of COP 1,900,000 million, of which COP 835,000 million has been issued.

These resources will be used to refinance debt maturities and complete the financing plan for El Quimbo.

Codensa – Substations

- Of the three substations included in Codensa’s expansion plan, two (Florida and Torca) have started operations, while

the Nueva Esperanza substation continues to be in construction.

REP – Concession expansions:

- The five expansion projects of REP are advancing on time and on budget.

- The company’s board approved in June making a loan to CTM for USD 65 million on market terms. The operation

seeks to optimize the cash position of REP and meet CTM’s financing requirements.

CTM - Concession expansions and new projects:

- The company’s projects, other the one at Machu Picchu, are advancing in line with timetables and budgets.

- On June 25, 2012, Peru’s Ministry of Mines issued a ruling that restarted construction of the Machu Picchu - Cotaruse

project, which had been on hold since November 2011.

Return to index

EMGESA 42%

Codensa 11%

REP 8%

CTM 29%

Promigas 10%

Distribution of 2012 estimated capex non-controlled investments

USD 976 mm

Investor Report

2Q 12

6


Performance of controlled investments.

Table # 7 – EEB´s selected transmission business indicators As of 1H 12

As of 1H 11

Var % F 11

Operating income - COP million 27,232 25,984 4.8 49,662

EBITDA Qtrly. - COP million 16,942 15,967 6.1 14,747

EBITDA LTM - COP million 65,523 64,311 1.9 64,295

Investments - COP million 11,503 1,793 5,4 9.255

Infrastructure availability - % (1) 99.93 99.91 0.02 99.97

Compensation for unavailability - % (2) 0.001 0.001 - 0.0021

Maintenance program compliance - % (3) 100 100 - 100

Participation in Colombia’s transmission activity - % (4) 8.11 7.92 0.2 8.02

Footnotes in annex 5

All technical and operating indicators registered good levels and better than regulatory requirements.

The start of operation of new projects had a favorable impact on financial indicators in the transmission business.

Capex increased principally because of the execution of projects that were awarded at the start of 2012.

.

Table # 8 – EEC’s selected indicators - Controlled by DECSA

As of 1H 12 As of 1H 11 Var % F 11

Number of clients 250,189 243,441 2.7 248,043 Operating revenue - COP million 138,706 125,264 10.7 262,527 Operating income - COP million 30,153 22,511 33.9 45,505 EBITDA LTM - COP million 34,387 27,000 27.3 N.A Net Income - COP million 60,365 42,378 42.4 52,980 Dividends and reserves declared to EEB 12,871 10,536 22.2 30,678 Loses - % (1) 12.69 13.69 -7.3 12.53 * Controlled by DECSA; The data shown in the table is EEC information.


The improved operating results and EBITDA generation are explained, principally by the increase in the number of clients

and management initiatives to reduce losses.

Table # 9 – TGI’s selected indicators As of 1H 12

As of 1H 11

Var % F 11

Operating revenue -COP million 330,063 307,489 7.3 626,838 Operating income -COP million 182,303 175,126 4.1 357,059 EBITDA Qtrly. - COP million 119,754 116,138 3.1 120,045 EBITDA LTM - COP million 489,659 443,272 10.5 481,570 Net income - COP million 131,595 161,763 -18.6 25,614 Transported volume - mmcfd 401 424 -5.5 420 Firm contracted capacity - mmcfd 548 540 1.5 560 International debt ratings

S&P - Mar. 12: BB; positive Fitch - Nov. 11: BB+; stable

Moody’s - Mar. 12: Baa3 stable

Investor Report

2Q 12

7


Net income decreased principally as a result of the payment of the redemption premium on the debt management

operation carried out by TGI in the first quarter of 2011. As a result of this operation, the company substantially reduced

its financial costs and expects to realize annual savings of approximately USD 28.5 million.

The increase in LTM EBITDA is the result of the Guajira and Cusiana Phase I system expansions increasing the

company’s operating revenues.

Table # 10 – Cálidda’s selected indicators

As of 1H 12

As of 1H 11

Var % F 11

Number of clients 86,156 49,651 73.5 63,602 Operating revenue - COP million 167,744 141,042 18.9 304,485 Operating income - COP mm 24,343 22,463 8.3 45,262 EBITDA LTM - COP million 32,329 28,932 11.7 N.A Net Income - COP 62,765 46,157 35.9 59,368 Number of clients 13,164 12,759 3.1 25,809

Cálidda continues to expand successfully, as reflected in the increase in customers. The company expects to have more

than 100,000 customers connected to its network by the end of 2012.

Operating income grew at a slower rate than operating revenues as a result of the costs associated with the new

connections, principally with residential customers.

Net income grew at a slower rate than operating income as a result of a change in the accounting for amortization of

debt, in keeping with international accounting standards.

Return to index

Performance of Non - Controlled investments

Table # 11 – Overview of Emgesa As of 1H 12

Installed capacity - MW 2,879 Composition 10 Hydro y 2 thermal Generation - Gwh 6,396 Sales - Gwh 7,719 Operating revenue 11 - COP mm 990,348 EBITDA LTM - COP mm 1,289,388 Controlled by Endesa from Spain EEB’s stake 51.5% - 37.4% ordinary shares; 14.1% preferred non-voting shares

5,510

283

1,492 1,775

6,396

87.5

1,298.701,386

Production Contracts Spot Total

Supply GWh

1H11 1H 1216.1%

-69.1%

-13% -21.9%

5,080

2,144

7,224

5,654

2,065

7,719

Contracts Spot Total

Sales GWh

1H11 1H 12

11.3%

3.7%

6.9%

Investor Report

2Q 12

8


The increase in production was accompanied by increased contract sales and fewer purchases of power as a result of

improved hydrological conditions during the 2012 period as compared to the prior year. Emgesa’s reservoir levels are

above historical averages.

Table # 12 – Capex As of 1H 12 As of 1H 11 Var % F 11

COP mm 180,785 118,955 52.0 290.4 USD mm 101.3 66.821 51.6 149.5

The increase in capex results from the execution of the El Quimbo hydroelectric project. El Quimbo required funding of

approximately COP 160,000 million during the first six months of 2012.

Table # 13 – Selected financial indicators of Emgesa COP million COP million USD million

As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11 Operating revenue 990,348 897,013 10.4 1,899,062 554.9 503.9 Cost of sales -415,168 -348,966 18.9 -765,023 -232.6 -196 Administrative expenses -14,112 -14,987 -5.8 -29,336 -7.9 -8.4 Operating income 561,067 533,060 5.2 1,104,703 314.4 299.4 EBITDA LTM 1,289,388 1,199,078 7.5 1,256,231 722.5 673.6 Net income 349,561 313,483 11.5 667,755 195.9 176.1 Dividends and reserves declared to EEB 343,894 80,537 327 80,537 192.7 45.2 Capital reductions to EEB 0 0 0 0 0 0 Net debt (1) / EBITDA LTM N.D N.D N.A. 1.4 N.D N.D EBITDA LTM / Interests (2) N.D N.D N.A. 8.7 N.D N.D


Operating income grew at a slower rate than operating revenues as a result of increased purchases of diesel fuel for the

Cartagena thermal power plant during the first months of 2012. Operating problems in the gas pipeline operated by

Promigas made it necessary for the Cartagena plant to use diesel fuel instead of natural gas, at a significantly higher

cost.

Net income grew more rapidly than operating income as a result of a lower level of indirect taxes.

On March 21, 2012, a Shareholders’ Meeting approved payment of dividends of COP 667,755 million based on results

for 2011. EEB’s share is COP 343,893 million, which will be received in four installments in April, June, and November

2012, and January 2013. The April and June installments to EEB for COP 171,946 million have been paid.

The increase in dividends declared in favor of EEB reflects, principally, the fact that at the end of 2010 the company

declared dividends based on an early close of the financial statements (for the period January through September). As a

result, dividends declared in 2011 corresponded only to the October-December 2010 period. In 2012, dividends were

declared based on full year 2011 results.

Table # 14 – Overview of Codensa

Number of clients 2,539,131 Market share - % 23.74 Codensa’s demand – Gwh 6,866 Var. of Codensa’s demand 1Q12/1Q11 - % 2.88 Operating revenues - COP million 1,549,459 EBITDA LTM - COP million 1,027,982 Controlled by Endesa from Spain EEB’s stake 51.5% -36.4% ordinary shares; 15.1% preferred non-voting shares

Investor Report

2Q 12

9


Table # 15 – Capex As of 1H 12 As of 1H 11 Var % F 11

COP mm 92,046 92,074 -0.03 306,246

USD mm 51.58 51.72 -0.28 157.6

Capex during the first six months of 2012 was concentrated on expansion projects, improving service quality, and

modernizing the network.

Table # 16 – Selected financial indicators of Codensa COP million COP million USD million

As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11 Operating revenue 1,549,459 1,439,204 7.7 2,986,153 868.2 808.5 Cost of sales 1,114,504 1,050,617 6.1 -2,187,477 624.5 590.2 Administrative expenses 38,710 37,391 3.5 -75,231 0.1 21 Operating income 396,245 351,195 12.8 723,445 222.0 197.3 EBITDA LTM 1,027,982 1,046,272 -1.7 976,001 576.0 587.8 Net income 247,051 209,510 17.9 457,664 138.4 117.7 Dividends and reserves declared to EEB 69,405 69,214 0.3 237,172 38.9 38.9 Capital reductions to EEB 0 0 0 0 0 0 Net debt (1) / EBITDA LTM N.D N.D N.D 0.7 N.D N.D EBITDA LTM / Interests (2) N.D N.D N.D 11.4 N.D N.D


Operating income grew more rapidly than operating revenues as a result of a significant reduction in operating losses as

compared to the prior year period.

Net income grew faster than operating income as a result of an increase in financial revenues from a higher level of cash

balances.

The low level of dividends in declared in favor of EEB in both the first six months of 2012 and the first six months of 2011

is the result of the fact that these dividends were declared based only on the results of the final months of the preceding

year. In both 2010 and 2011, Codensa declared dividends in December based on an early close of the financial

statements. It is worth noting that the dividends declared in December 2011 were COP 323,317 million, and an additional

COP 134,346 million were declared in 1Q 12. These dividends will be paid in installments in the months of April, June,

November 2012, and January. EEB received dividends of COP 226,898 million for the payments made in April and June

2012.

Nacional Codensa

Variation of demand National vs Codensa

3.50%

0.52%

2.81%3.38%

2.53%3.30%

1.44%

2.88%Codensa

23%

National77%

Composition of demandNational vs. Codensa

Investor Report

2Q 12

10


Table # 17 –Overview of Promigas

Number of clients N.D. Volume of sales - Mmcfd N.D. Market share - % N.D. Network – km N.D. Operating revenue F 11 - COP million 102,041 EBITDA LTM - COP million N.D. Controlled by N.D. EEB’s stake - % 15.64

Table # 18 – Capex

As of 1H 12 As of 1H 11 Var % F 11 COP mm 31.460 7.765 305.2 45,685 USD mm 17.629 4.362 304.2 23.5

The increase in capex is the result of the construction of a “loop” and installation of a compressor.

Table # 19 – Selected indicators of Promigas COP million COP million USD million

As of 1H 12 As of 1H 11 Var % F11 As of 1H 12 As of 1H 11 Operating revenue 102,041 108,479 -5.9 226,215 57.2 60.9

Cost of sales -51,643 -46,744 10.5 101,181 -28.9 -26.3

Administrative expenses -31,079 -26,763 16.1 55,908 -17.4 -15.0

Operating income 19,318 34,970 -44.8 69,125 10.8 19.6

EBITDA LTM - - -

Net income 87,941 85,698 2.6 186,508 49.3 48.1

Dividends and reserves declared to EEB 29,090 33,134 -12.2 33,134 N.A. 18.6 Capital reductions to EEB 0 0 0 - 0 0 Net debt (1) / EBITDA N.D N.D N.A 4.62 N.D N.D EBITDA / Interests (2) N.D N.D N.A 3.90 N.D N.D

Footnotes in annex 5 *Stand Alone Financial Statements

Table #20 – Overview of Gas Natural

Number of clients 1,798,521 Volume of sales - Mm cfd 141.25 Market share - % N.A Network – km 12,578 Operating revenue - COP million 612,617 EBITDA LTM - COP million 344,833 Controlled by Gas Natural from Spain EEB’s stake - % 25%

Investor Report

2Q 12

11


Table # 21 - Capex As of 1H 12 As of 1H 11 Var % F 11

COP mm 8,195 5,670 44.5 23,624 USD mm 4.6 3.2 44.1 12.2

Capex in the first six months of 2012 was principally for improving the high-pressure network in the southern part of

Bogota and the remodeling of the corporate headquarters building to meet Colombian earthquake codes.

Table # 22 – Selected indicators of Gas Natural COP million COP million USD million

As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11 Operating revenue 612,617 519,282 17.9 1,101,644 343.3 291.7 Cost of sales -411,748 -296,864 38.7 -663,090 -230.7 -166.8 Administrative expenses -52,868 -51,735 -1.8 -101,981 -29.6 -29.1 Operating income 148,002 170,682 -13.0 336,573 82.9 95.9 EBITDA LTM 344,833 368,874 -6.5 368,986 193.2 207.2 Net income 118,926 130,465 -8.8 254,030 66.6 73.3 Dividends and reserves declared to EEB 63,726 17,593 262.2 17,594 35.7 9.9 Capital reductions to EEB 0 0 0 0 0 0 Net debt (1) / EBITDA N.D. 1.16 N.D. 0.3 N.D. N.D. EBITDA / Interests (2) N.D. 25.9 N.D. 24 N.D. N.D.


The increase in the cost of sales reduced operating income and net income. This was the result of an increase in the cost

of gas from the Gibraltar field that has not been completely passed on to customers.

Table # 23 – Overview REP and CTM As of 12

REP CTM Network - km 6,041 1,716 Voltage – kv 220,138.6 220,138

Controlled by ISA Colombia EEB’s stake - % 40

Thermoelectric21%

Residential -commercial

24%

Indsutrial -refinery

46%

Vehicular- GNV7%

Petrochemical2%

Gas Natural demand in Colombia February 2012

Residential/Commercial

38%

Industrial47%

GNV10%

Others*5%

Sales by CustomerTotal: 145.1 mmcfd

* Others: Sales to other distributors and third party Access to the

network

Investor Report

2Q 12

12


Table # 24 – selected indicators of REP USD million

As of 1H 12 As of 1H 11 Var % F 11 Operating revenue 54.0 49.3 9.5 143.4 Cost of sales -31.4 -30.8 1,9 -91.3 Operating income 16.9 18.4 -8.1 33.1 EBITDA LTM 64.4 61.5 4.7 63.3 Net income 9.8 9.5 3.16 16.9 Dividends declared to EEB 0 0 N.A 0 Capital reductions to EEB 0 0 N.A 0 Net debt (1) / EBITDA N.D. N.D. N.D. 3.3 EBITDA / Interests (2) N.D. N.D. N.D. 5.6


The increase in cost of sales reduced operating income as a result of an increased amortization of the expansions carried

out by the company and increased personnel costs from a new labor contract.

Table # 25 – Selected financial indicators of CTM

USD Million As of 1H 12 As of 1H 11 Var % F 11

Operating revenue 27.7 16.1 72 231.1 Cost of sales -11.2 -6.4 75 -201.4 Operating income 15.6 9.7 60.8 24.9 EBITDA LTM 37.9 27.1 39.8 28.3 Net income 8.1 9.6 -1.2 17.6 Dividends declared to EEB 0 0 0 0 Capital reductions to EEB 0 0 0 0 Net debt (1) / EBITDA N.D. N.D. N.D. 5.5 EBITDA / Interest (2) N.D. N.D. N.D. 3


Operating income grew more slowly than operating revenues as a result of increased amortization related to the start of

operations of the new projects.

The reduction in net income is principally the result of increased interest expense related to the financing costs of the

projects.

Return to index

Investor Report

2Q 12

13


EEB consolidated financial performance

Table # 26 – EEB’s Consolidated financial results

COP million Variation COP million USD million

As of 1H 12 As of 1H 11 % F 2011 As of 1H 12 As of 1H 11 Operating revenue (1) 747,311 665,599 12.2 1,421,664 418.8 373.9

Electricity transmission 51,966 48,798 6.5 100,106 29.1 27.4 Electricity distribution 138,166 124,954 10.6 262,527 77.4 70.2 Natural gas transportation 330,063 307,489 7.3 626,838 185.0 172.73 Natural gas distribution 227,116 184,358 23.2 432,193 127.3 103.6

Cost of sales (2) -380,844 -346,403 9.9 -704,603 -213.4 -194.6 Electricity transmission -21,302 -20,419 4.3 -43,157 -11.9 -11.5 Electricity distribution -99,007 -92,950 6.5 -190,698 -55.5 -52.2 Natural gas transportation -111,303 -101,929 9.2 -208,905 -62.4 -57.2 Natural gas distribution -149,232 -131,105 13.8 -261,843 -83.6 -73.7

Gross income 366,467 319,196 14.8 717,061 205.4 179.3 Operating expenses -97,969 -65,729 49.0 -166,402 -54.9 -36.9

Allocated to electricity transmission (3) -3,493 -2,414 44.7 -6,378 -2.0 -1.4 Electricity distribution -19,170 -16,253 18.0 -26,120 -10.7 -9.1 Natural gas transportation -31,820 -30,883 3.0 -39,161 -17.8 -17.4 Natural gas distribution -43,486 -16,179 168.8 -94,743 -24.4 -9.1

Operating income 268,498 253,467 5.9 550,659 150.5 142.4 Dividends (4) 523,278 179,185 192.0 347,228 293.2 100.7 Interest temp. investments & pension trusts (5) 29,579 28,225 4.8 51,873 16.6 15.9 Net exchange difference (6) 197,459 148,062 33.4 -28,172 110.7 83.2 Net valuation of hedging contracts (7) 1,087 -51,647 -102.1 -66,672 0.6 -29.1 Other revenue (8) 22,925 10,600 116.3 52,640 12.9 6.0 Non-operating expenses (9) -67,073 -57,831 16.0 -160,227 -37.6 -32.5 Financial expenses -272,364 -134,239 102.9 -330,189 -152.6 -75.4 Other expenses -6,603 -628 951.4 -7,924 -3.7 -0.4 Net income before taxes and minority interest 696,786 375,194 85.7 409,216 390.4 210.8 Minority interest (10) -59,464 -66,944 -11.2 -46,583 -33.3 -37.6 Provision for income tax -31,894 -26,981 18.2 -57,339 -17.9 -15.2 Net income 605,428 281,269 115.3 305,294 339.3 158.0


The strong increase in net income is the result of a higher level of dividends declared in favor of EEB by non-controlled

affiliates and by the increase in operating income in controlled subsidiaries.

Operating results were driven by: () the natural gas transmission business (TGI) that accounts for 80% of the increase in

consolidated operating income. TGI increased operating revenues significantly as a result of increases in firm contracted

capacity and increased revenues from variable charges. Cost of sales of this line of business increased at a faster rate

than operating revenues as a result of professional fees related to the debt management operation, maintenance

expenses for some pipelines, and an increase in insurance premiums. () The electricity distribution business (EEC)

accounted for 28% of the increase in operating income. Here, the principal factors were the increase in the number of

clients served and management initiatives to reduce losses. () The electricity transmission business contributed 9% of

the increase in operating income as a result of the start of operations of new electricity assets as a result of the UPME

expansion projects. These were partially offset by () a 17% reduction in operating income from the natural gas

distribution business, principally from pre-operating expenses incurred by ConTUgas.

The increase in dividends declared in favor of EEB is explained by: () the increase in earnings of Emgesa in 2011, and

() the lower level of dividends declared in favor of EEB in 2011 by Emgesa, Codensa, and Gas Natural, as a result of the

fact that in 2010 these companies declared dividends based on an early close of their financial statements.

The increase in the exchange difference account reflects the impact on EEB’s dollar-denominated debt from the

revaluation of the Colombian peso against the U.S. dollar. Approximately 87% of EEB’s consolidated debt is contracted

in dollars.

The increase in financial expense is explained by the payment by TGI of a redemption premium of USD 69.2 million to

repurchase the USD 750 million in bonds due 2017. These bonds were replaced by an issuance of USD 750 million in

Investor Report

2Q 12

14


new bonds maturing in 2022 with a much lower coupon (5.7% vs. 9.5%). TGI estimates that the NPV savings of the

operation to be approximately USD 83 million.

Table # 27 – EEB’s Financial indicators

COP million COP million USD million As of 1H 12 As of 1H 11 Var % F 11 As of 1H 12 As of 1H 11

Consolidated adjusted EBITDA 4Q 11 215,693 153,075 40.9 353,008 120.9 86 Consolidated adjusted EBITDA LTM 1,478,075 1,232,146 20.0 1,082,047 828.2 692.2 EBITDA LTM 1,478,075 1,232,146 20.0 1,082,047 828.2 692.2 Consolidated EBITDA margin % (1) 65.6 66.3 -1.0 59.3 65.6 66.3 Net debt (2) / Consolidated adjusted EBITDA LTM OM: < 4.5

1.7 1.9 -9.2 2.19 1.71 1.89

Consolidated Adjusted EBITDA LTM / Interest (3) OM: > 2.25

7.4 6.8 9.7 4.78 7.41 6.75


NOTE: Based on the definitions in the indenture for the Notes issued by EEB in November 2011, the leverage and interest

coverage indicators are calculated based on Consolidated Adjusted EBITDA which includes capital reductions received by

EEB.

The increases in both quarterly EBITDA and LTM EBITDA are explained by the increases in operating results of

controlled subsidiaries and, in the case of LTM EBITDA, the increase in dividends declared in favor of EEB by non-

controlled affiliates.

2Q 11 3Q 11 4Q 11 1Q 12 2Q 12

Consolidated Adjusted EBITDA

1,232,148 1,320,148 1,082,047 1,428,424 1,478,075

Quarterly variation -15% 7% -18% 32% 3%

Consolidated adjusted EBITDA LTMCOP millions

1,082,047

1,320,1481,232,148

1,428,424 1,478,075

166,042224,541

353,008

684,833

215,693

0

170,000

340,000

510,000

680,000

850,000

2Q 11 3Q 11 4Q 11 1Q 12 2Q 12

Quarterly Consolidated Adjusted EBITDACOP millions

Investor Report

2Q 12

15


The leverage and interest coverage ratios improved as a result of the increase in EBITDA. In addition, the reduction in

peso terms of financial debt contributed to improving the leverage ratio.

Table # 28 - EEB Consolidated debt structure As of 1H 12

COP million Share

% As of 1H 11 COP million

Share %

F 11 USD mm

As of 1H 12 USD million

As of 1H 11 USD million

Financial debt in COP 174,410 5.2 198,000 6.1 110 98 111 Financial debt in USD 2,958,191 88.0 2,841,826 87.3 1,603 1.66 1,596 Derivatives position 227,144 6.8 217,165 6.7 102 127 122 Total financial debt 3,359,745 100 3,256,991 100 1,815 1.89 1,830

Consolidated financial debt was nearly unchanged from the prior year period, increasing only 3.2% as a result of the

slight depreciation of the peso against the dollar; dollar-denominated debt represents 88% of total debt. Dollar-

denominated debt increased slightly as a result of a USD 50 million loan to ConTUgas.

Return to index

Investor Report

2Q 12

16


Annex 1: Legal notice

This document contains projections and estimates, using words such as “anticipate,” “believe,” “expect,” “estimate”, and

others having a similar meaning. Any information other than historical information included in this report, including but not

limited to the Company’s financial condition, its business strategy, plans, and management objectives for future operations

are projections.

Such projections are based on economic, competitive, regulatory and operational scenarios and involve known and unknown

risks, uncertainties and other important factors that could cause the Company’s results, performance or actual achievements

to be materially different from the results, performance or future achievements that are expressed or implicit in the

projections. For these, reasons, the results may differ from the projections. Potential investors should not take them into

consideration and should not base their decisions on them. Such projections are based on numerous assumptions

concerning the Company’s present and future business strategies, and the environment in which the Company will operate in

the future.

The Company expressly states that it will be under no obligation to update or revise any projections contained in this

document.

The company´s previous results should not be taken as a pattern for the company´s future performance.

Clarifications

Only for information purposes, we have converted some of the figures in this report to their equivalent in USD, using the

TRM rate for the end of the period as published by the Colombian Financial Superintendency. The exchange rates used

are as follows:

− 1H 12: 1,784.06 COP/USD

− 1H 11: 1,780.2 COP/USD

In the figures submitted, a comma (,) is used to separate thousands and a point (.) to separate decimals.

Return to Index

Investor Report

2Q 12

17


Annex 2: Link to EEB’s consolidated and stand alone financial statements 1Q 12

http://www.eeb.com.co/?idcategoria=7257

Return to index

http://www.eeb.com.co/?idcategoria=7257

Investor Report

2Q 12

18


Annex 3: overview of EEB

EEB is an integrated energy company with interests in the natural gas and electricity sectors and operations in Colombia,

Peru and Guatemala.

EEB was founded in 1896 and is controlled by the District of Bogota (76.2% ownership). The company, as a public

company in Colombia, adhered to global standards of corporate governance.

EEB has an expansion strategy focused on the transmission and distribution of energy in Colombia and other countries

within the region.

EEB participates in the entire electricity value chain and in almost all the natural gas value chain, except for exploration

and production.

EEB is one of the largest Colombian corporate debt issuers. Since 2009, EEB shares have been traded on the Colombian

stock market. In November 2011, EEB finished a Re-IPO in the Colombian stock market for approximately USD 400

million. In October 2007, EEB and TGI issued corporate bonds in the international markets for USD 1.36 billion. In 2011

and the beginning of 2012 both companies refinanced their notes extending their maturities and lowering its costs and

improving their credit ratings.

Return to index

Investor Report

2Q 12

19


Annex 4: Definitions of EBITDA included in this report. Consolidated adjusted EBITDA reconciliation LTM and

Quarterly

EBITDA is not an acknowledged indicator under Colombian or US accounting standards and may show some difficulties

as an analytical tool. Therefore, it must not be taken on its own as an indicator of the company´s cash generation.

EBITDA: EBITDA for a specific period of time (LTM; Q4) has been calculated by taking operating income (loss) and

adding amortization of intangibles and depreciation of fixed assets for that period.

EEB Consolidated EBITDA for a period, consists of operating revenues of EEB and its consolidated subsidiaries for

such period, minus the sum of (i) cost of sales, (ii) administrative expenses allocated to cost, (iii) administrative expenses

and (iv) interest income on investments of pension assets, plus dividends and interest earned (which includes dividends

declared by EEB’s related companies, whether such dividends are actually paid or not), taxes (other than income taxes),

amortization and depreciation, pension payments and provisions.

EEB Consolidated Adjusted EBITDA for a specific period is calculated taking the Consolidated EBITDA for such period

and adding the cash flows coming from investing activities during such period to the extent attributable to capital

distributions by EEB’s related companies.

EBITDA LTM

COP Million Variation COP Million USD Million As of 1H 12 As of 1H 11 % F 11 As of 1H 12 As of 1H 11

Operating revenue 565,691 307,701 83,8 550,661 316,9 172,85 Operating depreciation 102,734 70,787 45,1 100,961 57,5 39,76

Operating amortization 55,336 42,939 28,9 49,893 31,0 24,12 Operating Taxes 32,664 2,299 1320,8 32,233 18,3 1,29

Dividend & interests earned 749,476 733,534 2,2 404,029 419,9 412,05 Interests in autonomous equity -14,836 -14,082 5,4 -11,766 -8,3 -7,91

Administration expenses -169,469 -151,356 12,0 -160,227 -94,9 -85,02 Retirement pensions 33,123 26,148 26,7 29,070 18,5 14,69

Amortization 17,131 15,238 12,4 11,116 9,6 8,56 Depreciation 2,575 1,481 73,8 1,317 1,4 0,83

Provisions 25,586 159,822 -84,0 16,117 14,3 89,78 Taxes 78,064 37,637 107,4 58,645 43,7 21,14 Capital reductions - - - - - Consolidated adjusted EBITDA 1,478,074 1,232,148 20,0 1,082,048 828,2 692,1

EBITDA Quarterly COP Million Variation USD Million

As of 1H 12 As of 1H 11 % As of 1H 12 As of 1H 11 Operating income 131,678 123,988 6.2 73.7 69.6

Operating depreciation 20,035 32,339 -38.0 11.2 18.1 Operating amortization 15,173 7,221 110.1 8.5 4.0 Operating taxes 1,230 1,481 -16.9 0.6 0.8 Dividends & interests earned 44,486 13,000 242.2 24.9 7.3 Interests in autonomous equity -4,177 -3,537 18.1 -2.3 -1.9 Administration expenses -32,732 -27,505 19.0 -18.3 -15.4 Retirement pensions 10,000 7,809 28.0 5.6 4.3 Amortization 6,629 3,837 72.8 3.7 2.1 Depreciation 1,046 254 311.3 0.5 0.1 Provisions 6,532 477 1269.4 3.6 0.2 Taxes 15,793 6,677 136.5 8.8 3.7

EBITDA 215,693 166,042 29.9 120.8 93.2

Return to index

Annex 5: Tables and graphics’ footnotes

Investor Report

2Q 12

20


Table # 7 - EEB´s transmission business indicators

(1) Percentage of the infrastructure available in a period of time. (2) Percentage of the revenue discounted due to accumulated unavailability of specific assets above the regulatory target. (3) Ratio between the number of maintenance operations carried out and number of scheduled maintenance operations to

be executed as part of the semi-annual Maintenance Plan. (4) Ratio of the number of transmission assets owned by EEB and the total number of transmission assets in Colombia.

Return to table

Table # 8 – Selected financial indicators of EEC - DECSA

(1) Percentage of energy losses. Return to table

Table # 13 – Selected financial indicators of EMGESA

(1) It is the result of the financial debt in force at the end of the period under analysis, less cash and temporary investments in the same period.

(2) Accrued interest on financial debts for the previous twelve months.

Return to table

Table # 16 – Selected financial indicators of Codensa



Return to table

Table # 19 – Selected financial indicators of Promigas



Return to table

Table # 22 – Selected financial indicators of Gas Natural



Return to table

Table #24 – Selected financial indicators of REP



Return to table

Table # 25 – Selected financial indicators of CTM

Investor Report

2Q 12

21




Return to table

Table # 26 - Consolidated results of EEB

(1) Operating revenue for transmission services rendered directly by EEB, natural gas transmission and distribution of TGI and Cálidda, respectively; as well as energy distribution services that Decsa consolidates for its participation in EEC.

(2) Cost of sales of the transmission services rendered directly by EEB, natural gas transportation and distribution services and electricity distribution services conducted by its controlled companies. It includes personnel, materials, operation and maintenance costs, depreciation, amortization and insurances related to those activities.

(3) Transmission activity is operated directly by EEB. Administrative costs are allocated by the ABC system. (4) Dividends declared by non-controlled companies and temporary investors and pension funds autonomous equity. (5) Interests of temporary investments that are generated by pension funds autonomous equity. (6) Refers to net losses or earnings due to exchange rate variations and its impact on assets and liabilities expressed in

foreign currency. (7) Valuation of hedging operations contracted by EEB and TGI to reduce currency risk. (8) Income from recovery of investments, leases and expenses. (9) Expenses are not related to operational activities. (10) Proportion of net income corresponding to minority investors in the company’s consolidated by EEB.

Return to table

Table # 27 - Financial indicators of EEB

(1) Is the result obtained when dividing consolidated EBITDA by operating income, added by dividends and accrued

interests (without including interests received from investments made to autonomous equity of pension funds) of the last 12 months.

(2) Consolidated debt less free cash.

(3) Consolidated financial expenses of the past 12 months

Return to table

Return to index

Investor Report

2Q 12

22


Annex 6: Technical and regulatory terms

BLN: US billion (109)

CAC: Compound Annual Growth

COP: Colombian Peso

CHB: Central Hidroeléctrica de Betania

CTM: Consorcio Transmantaro

CREG: Comisión de Regulación de Energía y Gas de Colombia. (Colombia’s Energy and Gas Regulating Commission).

Colombia’s state agency in charge of regulating electric power and natural gas residential public utility services.

DANE: Departamento Administrativo Nacional de Estadística (National Administrative Statistics Department). Agency

responsible for planning, collecting, processing, analyzing, and disseminating official statistics in Colombia.

Gwh: Gigawatt hour; unit of energy equivalent to 1,000,000 kwh

GNV: Natural Gas for vehicles

IPC: Colombian Consumer Price Index

KM: Kilometers

KWH: Unit of energy equivalent to the energy produced by a power of one kilowatt (kW) for one hour

MEM: Mercado de Energía Mayorista de Colombia; Wholesale Energy Market in Colombia

Mm: million

Ml: thousands

MW: Megawatt, power unit or work which equals one million watts

N.A. Not applicable.

Non Regulated Electricity User: electricity consumers who have a peak demand greater than 0,10 MW or a minimum

monthly consumption above 55.0 MWh

Natural Gas Non Regulated User: user with consumption above 100 kcfd

CFD: Cubic feet per day

Proinversión: Peruvian agency that promotes private investment in Peru

SIN: Sistema Interconectado Nacional, National Interconnected System

STN: Sistema de Transmisión Nacional, National Transmission System

SF: Superintendencia Financiera – Financial Superintendency. State entity in charge of regulating, overseeing and

controlling the Colombian financial sector

TRM: Market Representative Exchange Rate; it is an average of the transactions carried out in peso–dollar, and it is

calculated daily by the SF

UPME: State agency responsible for planning Colombia’s mining and energy sectors

USD: US dollars

Return to index

decsa - eec cÁlidda emgesa. codensa. promigas gas ......calidda 17% eeb 7% rep - ctm 3% investments...

Documents