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© TODOS LOS DERECHOS RESERVADOS POR INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.© TODOS LOS DERECHOS RESERVADOS POR INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.

Integrated Report Resummee

© TODOS LOS DERECHOS RESERVADOS POR INTERCONEXIÓN ELÉCTRICA S.A. E.S.P. 2

Bernardo Vargas GibsoneISA´S CEO

I am glad to present to you the outstanding resultsof our management for 2018, a solid commitmentwith our stakeholders.

We are aware of our achievements and wecelebrate them. However, we know that today weface great challenges that test our ability to adapt.So, it is crucial to prepare ourselves to ensure ourpermanence, to transcend, to be far fromobsolescence, and to be protagonists of thetransforming processes of this industry. And that isprecisely the spirit of the ISA2030 Strategy, called“Our Future Inspired by Sustainable Value”.This new strategic cycle brings us big andambitious challenges. On the one hand, biggercompetitors as a result of the arrival of newstakeholders in the region (China and India, amongothers), which will most likely compress marginsseen in previous years.

The ISA2030 Strategy also includes our fullcontribution to fulfill Sustainable DevelopmentGoals (SDG) and is framed under the concept ofSustainable Value, based on 4 pillars whose initialsmake up the acronym VIDA (LIFE) a meaningfulword: ecofriendly representing our environmentalawareness and commitment towards our planet;“Innovación” (Innovation), as our leverage to growthrough new technologies and trends, potentiallydisruptive; “Desarrollo” (Development) to keepgrowing with profitability and through newentrepreneurship proposals, business models, andgeographies; and “Articulación” (Articulation) ofnew collaboration mechanisms and alliances tostrengthen our capabilities and scope.

ISA achieved outstanding financial results, whichconfirms the company’s leadership and soundness.

These results are even better than results from 2017, thathad been the best ones in the Company’s history. This ismainly from healthy operational management, coherentprevious business decisions, and the consolidation of aprofitable portfolio.

One fact that must be mentioned is that ISA’s sharereached its historic peak –COP 15.100 in April 2018-, thehighest value since ISA entered the Colombia StockExchange. This ratifies our value proposition with thecompany’s shareholders. During 2018, ISA’s revenuesreached COP 7,2 trillion, a 4% increase; net incomereached COP 1,5 trillion, a 6% increase; EBITDA reachedCOP 4,8 trillion, an 8,4% increase; the EBITDA marginwas 66,5% (73,0% excluding construction activities); andfinally, assets reached COP 45 trillion, a 3,6% increase,all compared with 2017.

In terms of sustainability, our Conexión Jaguar® programwas internationalized through the consolidation of thefirst project in Peru, added to projects developed inColombia for biodiversity conservation, climate changemitigation, and connectivity of natural habitats of thisfeline, considered one of the most emblematic animals ofLatin America since times of our ancestral indigenouscultures.

I am happy to tell you about us being included, for thefourth consecutive year, in the Dow Jones SustainabilityIndex, getting the highest ratings in the corporatecitizenship and philanthropy categories for the energycompanies segment.

In the same way, we are ratified in the MILAsustainability index for countries of the Pacific Alliance,and we are included again in the prestigious SustainabilityYearbook, two of the most relevant rankings of theRobecoSam group.

Additionally, for the second consecutiveyear, ISA was included in the FTSE4Good,an index of the London Stock Exchangecreated to recognize companies included inthe stock exchange that comply with globalstandards of corporate investment and bestcorporate sustainability practices. In termsof ethics, we are a reference in the regiondue to our administrative autonomy,transparency, and good governance.

As we are convinced that ethics is anintelligent decision and the only way forcorporate survival, we work every day toevolve, learn and share knowledge withexperts. who reaffirmed our strongconviction of acting ethically under thepremise that not only statements define us,but also facts and daily actions before bigand small challenges.

Finally, I would like to thank all ourstakeholders for trusting the Company; butespecially our people, our collaborators, forall their efforts and commitment and whoare, undoubtedly, a determining factor forour results.

Please, join us in the journey that we haveundertaken aiming at 2030 and which wehope will lead us not only to continuebeing a reference in the region, butworldwide, always building CONNECTIONSTHAT INSPIRE.

© TODOS LOS DERECHOS RESERVADOS POR INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.

ETHICS AND COMPLIANCE

5

cases of inadequate management of information

0

0

Proven cases

During 2018, different actions were carried out aimed at strengthening the ethical culture of ISA companies:

▪ New anti-corruption regulations and standards applicable to the Group were incorporated, gaps identified were closed and the Compliance System was updated.

▪ The Compliance function was consolidated for the ISA group. Its scope is the management of risks regarding corruption, bribery, fraud, money laundering and terrorism financing.

▪ The Ethics Code and Conduct was updated. It guides the behavior of employees, stakeholders and third parties related to the Organization.


INCENTIVES

6

Net Income, EBITDAShareholder’s equity appreciation

Future revenues

Management Operation and Maintenance Expenses

P 32 http://www.isa.co/en/press/Documents/our-company/corporate-reports/2019/IntegratedReport2018.pdf

Fixedcompensation

Short Termvariable

Long Term variable compensation

Benefits Total

65% 16% 16% 2% 100%


2889

Total employees Energy Transmission

199Directors

6,8%

total number of employees in managment positions

81%

2338

Mens

19%

551

Womens

41 years

Average age

11 years

Employees average

time

Employee turnover

rate

5,42%

78%

155

Male directors

22%

44

Female directors

Perú Chile

Brasil

Colombia

382 REP

193 Transelca

557 Intercolombia

202 ISA

1504 CTEEP

51 Interchile

Boomers (1951 – 1965)

Z Generation (1995 – Hoy)

Millennials (1981 – 1994)

X Generation (1966 – 1980)

Silence generation (< 1950)

Ge

ne

rati

on

s

2,1 %

41,4 %

37,8 %

0,3 %

18,4 %

Breakdown of workforce


SUPPLY CHAIN

9

Suppliers evaluated for quality, opportunity, HSE, ethics, and anti-fraud

ISA 72%ISA INTERCOLOMBIA: 88%ISA REP: 13%ISA CTEEP: NDISA TRANSELCA: 29%ISA INTERCHILE: 0%ISA Bolivia: NA

ISA 50%ISA INTERCOLOMBIA: 50%ISA REP: 28%ISA CTEEP: 61%ISA TRANSELCA: NDISA INTERCHILE: NDISA Bolivia: NA

ISA 75%ISA INTERCOLOMBIA: 75%ISA REP: 43%ISA CTEEP: 100%ISA TRANSELCA: 90%ISA INTERCHILE: NDISA Bolivia: NA

Annually evaluate 100% of the suppliers that meet the criteria for the evaluation.

Target year: 2019

The total number and percentage of agreements and meaningful investment contracts with Human Rights clauses or evaluated in Human Rights.

Percentage of savings compared to the baseline in centralized categories.

Optimization of costs in purchases of critical and relevant categories with equal or superior savings by 5% of its baseline.

Target year: 2019

100% of meaningful agreements with Human Rights clauses or evaluated in Human Rights every year

Target year: 2019100% for every year

Savings in USD 6.000.00017 % savings on the baseline

Savings in USD 2.356.82012,1 % savings on the baseline

Savings in USD 104.000.0007,6 % savings on the baseline

2016 2017 2018

ISA 90%ISA INTERCOLOMBIA: 100%ISA REP: 100%ISA CTEEP: NDISA TRANSELCA: 100%ISA INTERCHILE: NDISA Bolivia: 0

ISA 77%ISA INTERCOLOMBIA: 77%ISA REP: 69%ISA CTEEP: 0%ISA TRANSELCA: 0ISA INTERCHILE: NDISA Bolivia: 0

ISA 100%ISA INTERCOLOMBIA: 100%ISA REP: 26%ISA CTEEP: 72%ISA TRANSELCA: 26%ISA INTERCHILE: NDISA Bolivia: 0

IR P 87, 90, 475 http://www.isa.co/en/press/Documents/our-company/corporate-reports/2019/INTEGRATED%20MANAGEMENT%20REPORT.pdf


OCCUPATIONAL HEALTH AND SAFETY

10

Occupational Health and Safety and Environmental Management HSE

Occupational Health and Safety (SST) is a commitment of ISA and its companies and their suppliers. Among the main actions implemented in 2018 to guarantee them, the following stand out:

▪ Follow-up to the contractor SST management

▪ Review of contractor SST management documentation and SST records of employees of contractor companies

▪ On-site follow-up to the contractor SST management

▪ Work Control: on-site supervision by a third party (auditing) that allows monitoring compliance with occupational health and safety, and environmental management in the development of construction projects

Lost-time injury frequency rate

LTIFR Unit FY 2015 FY 2016 FY 2017 FY 2018

Employees n/million hours worked 15.52 5,61 3.04 2.09

Contractors n/million work h 20.74 25.72 13.30 17,81

Data coverage percentage of:

Employee/Contractors

100% 100% 100% 100%

The intervention plan for accidents was applied to contractors through the MisiónCuidarnos campaign:During the year, this initiative was developed covering more than 3.400 people, 21 contractor companies, and 55 subcontractor companies. As a result of the implementation of the campaign, scope 2018, a decrease in the number of labor accidents and the accident frequency rate for contractor companies of ISA INTERCOLOMBIA was achieved


Issue or Topic Description of Position /Engagement

Total spend in FY 2018

Conditions ofbeginning of thepayments of theRed Básica del Sistema Existente –RBSE–

Asociación Brasilera de las Empresas de Transmisión de Energía Eléctrica (ABRATE).

With respect to the Basic Network of the Existing System (RBSE), ISA CTEEPmet with the Ministry of Mines and Energy and with parliamentarians, seeking to amend the text of the draft legislation so that it includes the payment of the financial component in eight years, and also including the remuneration throughout the 2013-2017 period. Initially, the projects contemplated a solution for the RBSE that would impact the companies of the Eletrobras group only. However, after the various diligences led by ISA CTEEP, the project’s rapporteur adhered to the suggestion made to include the Company and maintain the eight-year term initially established to pay for the economic component.In addition, the Company has also worked with the Contas da União Tribunal in order to demonstrate the need for the remuneration. All these actions are supported and represented by the Brazilian Association of Energy Transmission Companies (ABRATE).

USD 40.499

Schemes of remuneration and quality for the activity of transmission.(ANDESCO)

Challenges related to the regulatory management in Colombia are focused on the review of remuneration and quality schemes for the transmission activity, which is part of the regulator’s agenda. The scheme to be defined is expected to continue ensuring an efficient service provision, with high quality standards that have been met to date, for which, among other aspects, a proper remuneration of investments in new networks is required, as well as in the renewal and/or replacement of the existing network. In 2018, the promotion of meetings between ISA, ISA INTERCOLOMBIA, the Energy and Gas Regulatory Commission (CREG), and the Ministry of Mines and Energy was maintained. These successful rapprochements allowed addressing the analysis of the regulatory proposal for the remuneration scheme for the transmission activity and other related relevant issues that support its sustainability.

USD 18.505

POLICY INFLUENCE


HUMAN CAPITAL DEVELOPMENT

12


ENVIRONMENTAL MANAGMENT

14