tgi & cálidda earnings call 2014

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MARCH 5 TH 2015 TGI 2014 RESULTS AND KEY DEVELOPMENTS

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Page 1: Tgi & cálidda earnings call 2014

MARCH 5TH 2015

TGI 2014 RESULTS AND KEY DEVELOPMENTS

Page 2: Tgi & cálidda earnings call 2014

Table of contents

2

I. TGI Overview and history

II. Key Updates

III. Financial and operating highlights

IV. Expansion Projects

Appendix

1. Economic industry and regulatory environment

2. Shareholders and management team

3. EEB Overview

Page 3: Tgi & cálidda earnings call 2014

1. TGI overview and history

Page 4: Tgi & cálidda earnings call 2014

Company historyCompany history

TGI history

Pipeline networkPipeline networkHighlightsHighlights

Owns ~61% of the national pipeline network (3,957 km) and transports 49% of the gas consumed in the country

− Serves ~70% of Colombia’s population, reaching the most populated areas (Bogota, Cali, Medellin, the coffee region and Piedemonte Llanero, among others)

− Has access to the two main production regions, La Guajira and Cusiana/Cupiagua

38% interest in Contugas (Peru)

− 30-year concession for natural gas transportation and distribution

TGI was created as a result of the privatization of Ecogás and has experienced remarkable growth since then, under the leadership of its controlling shareholder EEB.

Creation of Ecogas

1997

2005

Start of Ecogas Privatization Process

2006

Ecogas assets awarded to EEB

Creation of TGI

Inaugural bond issuance Transfer of first

BOMT pipeline (GBS)

Pipelines exchange with Promigas

CVCI capitalization

Transfer of second BOMT pipeline (Centragas)

Cusiana expansion phase I: start of operations

Refinancing of subordinated debt with EEB

2008

TGI takes over the O&M of owned pipelines

Refinancing of bonds issued in 2007

Cusiana expansion phase II: start of operations

TGI takes over the O&M of compressor stations

Awarded investment grade rating by Moody’s and Fitch

2010

Awarded investment grade rating by S&P

Headquarters relocation from Bucaramanga to Bogotá

Redesign of organizational structure

2012

2013

2007

2009

2011

2014 EEB acquired 31.92% stake in TGI from TRG (formerly CVCI)

Sabana Compressor starts operations

Contugas Concession starts operations

TGI´s first dividend Payment

Fitch Upgraded TGI’s investment grade to BBB

Cartagena Refinery

Barrancabermeja Refinery Bucaramanga

Bogota

NeivaCali

Medellin

3.15 tcf

1.97 tcf

EasternProducers:EcopetrolEquion

Upper Magdalena Valley

Lower and Middle Magdalena Valley

NorthernProducers:ChevronEcopetrol 1.89 tcf

Ballena

Cusiana

ReferencesTGI Pipelines

Natural Gas ReservesCityFieldRefinery

Third Party Pipelines

Source:Mining and Energy Planning Unit. National Hydrocarbons Agency.

4

Page 5: Tgi & cálidda earnings call 2014

Overview

5

Stable and growing Colombian economy with sound investment environment

Constructive and stable regulatory framework

Largest natural gas pipeline system in Colombia

Stable and predictable cash flow generation, strongly indexed to the US Dollar

Strong and consistent financial performance

Experienced management team with solid track record in the sector

Expertise, financial strength and support of shareholders

Natural monopoly in a regulated environment

Strategically located pipeline network

Page 6: Tgi & cálidda earnings call 2014

2. Key Updates

Page 7: Tgi & cálidda earnings call 2014

Key updates

Since 2H 2011, TGI designed a strategy to improve its credit ratings in order to (i) reduce financial expenses, (ii) provide better access to debt capital markets and (iii) broaden its potential investor base

On August 28th, Standard & Poor’s affirmed the TGI corporate debt and issuer rating in ‘BBB-‘, perspective stable

On October 28th, Fitch Ratings upgraded TGI’s corporate debt and issuer rating from ‘BBB-’ to ‘BBB’, with stable perspective

TGI’s current ratings are as follows:

Baa3 Stable OutlookBBB Stable Outlook BBB- Stable Outlook

Fitch upgraded TGI’s credit rating to BBB on Oct 28, 2014

7

Page 8: Tgi & cálidda earnings call 2014

Hedge Restructuring During the first quarter of 2014, TGI executed synthetic unwinds to cap losses related to 3 of 4 cross-

currency swaps booked in 2009 On September 2014, TGI executed the fourth synthetic unwind, hedging the whole cross-currency swaps

booked in 2009

Key updates

8

Page 9: Tgi & cálidda earnings call 2014

TGI’s acquisition EEB closed the TGI 31.92% share acquisition on the first half of 2014, through the acquisition of the 100% of

IELAH (SPV) To bridge the acquisition EEB used cash on hand and short term financings with affiliates. USD $ 645 MM were disbursed on September 2014 trough long term credit facilities to IELAH TGI is currently working on the merger with IELAH, this merger is expected to take place the 3Q 2015.

On 2014 TGI paid out ~ USD 270 MM in dividends as a result of distributable profits corresponding to 2013 and the first eight months of 2014, and release of one reserve.

Dividends distributed

On July 7th TGI started operations of La Sabana Compression Station Project has been succesfully completed

La Sabana Compression Station

Key updates

9

USD MM(1)

Distributed profits 2013 54.4

Distributed profits Jan – Aug 2014 60.5

Reserves released 155.4

(1) USD in millions –2014 (EOY) exchange rate, only for informative purposes.

Page 10: Tgi & cálidda earnings call 2014

3. Financial and operating highlights

Page 11: Tgi & cálidda earnings call 2014

Solid operational performance

(1)The trend line refers to the ratio: Firm contracted capacity/available capacity. The Available capacity differs from the Total Capacity as TGI requires a percentage of it for its own use. Source: Company information.

Network lengthNetwork length(km)

CapacityCapacity(MMscfd)

Firm Contracted Capacity(1)Firm Contracted Capacity(1)

(MMscfd)

Transported VolumeTransported Volume Load factorLoad factor(MMscfd) (%)

2009 2010 2011 2012 2013 2014

3,529

3,7743,774

3,9573,9573,957

2009 2010 2011 2012 2013 2014

478548

618

730 730 730

2009 2010 2011 2012 2013 2014

437

485

560

604628

647

92% 90% 92%85% 88% 91%

2009 2010 2011 2012 2013 2014

396 422 420 422454

494

2009 2010 2011 2012 2013 2014

69% 71%

58% 59% 61% 64%

Pipeline & Compression Stations Reliability Pipeline & Compression Stations Reliability

11

2012 2013 2014

99.6% 99.7% 99.8%96.0% 96.5% 96.5%

Pipeline SystemCompression System

Page 12: Tgi & cálidda earnings call 2014

Stable and predictable cash flow generation

• TGI’s revenues are highly predictable, with approximately 98% coming from regulated tariffs that are reviewed al least every 5 years, ensuring cash flow stability and attractive rates of return

• Main sectors served by the Company (75(1)% of revenues) present stable consumption patterns (no seasonality)• The Company enjoys excellent contract quality

– 100% of TGI’s contracts are firm contracts with an average remaining life of 8.02 years– 84% of regulated revenues are based on fixed tariffs, not dependent on the transported volume– 63% of revenues are linked to tariffs in USD, that are indexed to US PPI (Capital Equipment)

12

Revenues breakdownRevenues breakdown

(% of revenues)

Source: Company information.(1) Includes Distributors, Ecopetrol´s refinery and Natural gas for Vehicles.

TGI’s revenues are highly predictable as a result of regulated tariffs and stable consumption

as of December 31- 2014

Distributor59%

Refinery13%

Thermal18%

Traders3%

Vehicles3%

Others*4%

By Sector

Ecopetrol15%

Gas Natural 21%

Gases de Occidente

16%

EPM 12%

Isagen 7%

Others30%

By Client

Linked to USD 63.4%

COP 36.6%

By Currency

Page 13: Tgi & cálidda earnings call 2014

Revenues EBITDA and EBITDA marginRevenues EBITDA and EBITDA margin

Funds from operations (1)Funds from operations (1)

(US$ in millions – average exchange rate for each period)

Source: Company information

(US$ in millions – average exchange rate for each period)

(US$ in millions – average exchange rate for each period)

(1) FFO calculated as net income plus depreciation, amortization and provisions, adjusted for effect from exchange rate and hedges. On 2012 FFO includes the LM transaction premium~ USD 69 million (one time event)

TGI Financial performance 2014

Historical CaPex - YTDHistorical CaPex - YTD

(US$ in millions – average exchange rate for each period)

2014 Preliminary figures subject to shareholders assembly approval

2009 2010 2011 2012 2013 2014

252294

338390

465 477

2009 2010 2011 2012 2013 2014

196222

257289

359383

78% 75% 76% 74%77%

80%

2009 2010 2011 2012 2013 2014

96 108 117 133

268289

13

2008 2009 2010 2011 2012 2013 2014

14

69

174

387

185

32 36

Page 14: Tgi & cálidda earnings call 2014

Total Assets PPETotal Assets PPE

Cash and EquivalentsCash and Equivalents

(US$ in billions – end-of-year exchange rate for each period)

Source: Company information

(US$ in billions – end-of-year exchange rate for each period)

(US$ in billions – end-of-year exchange rate for each period)

TGI Financial performance 2014

2014 Preliminary figures subject to shareholders assembly approval

2009 2010 2011 2012 2013 2014

2.00 2.12

2.562.88 2.98

2.33

2009 2010 2011 2012 2013 2014

1.25 1.30 1.34 1.40 1.40 1.37

0.76 0.811.22

1.48 1.580.96

LIABILITIES

2009 2010 2011 2012 2013 2014

11071

182160

364

205

LiabilitiesLiabilities

(US$ in billions – end-of-year exchange rate for each period)

2009 2010 2011 2012 2013 2014

0.620.77

1.40

1.671.49

1.19

Page 15: Tgi & cálidda earnings call 2014

Strong and consistent financial performance

Total debt / EBITDA Total debt / EBITDA

Financial debt breakdown (3)Financial debt breakdown (3)

Subordination Agreement The lender is EEB (major shareholder) No repayment of principal allowed before payment of senior debt Interest can only be paid if there is no default or event of default and if

the payment does not trigger any such scenario Subordinated debt acceleration is not allowed until senior debt is not

repaid

Source: Company information. Total debt includes senior debt, subordinated debt and mark-to-market. Note: Ratios calculated in local currency.(1) Senior Net debt excluding EEB´s short term intercompany Loans. Including the ICL the ratio lowers to 1.2x(2) Interest coverage ratio calculated as EBITDA / Net interest (3) Senior debt stands for the US$750 million Senior Unsecured Notes due 2022. Subordinated debt stands for intercompany loan with EEB.

Senior net debt (1) / EBITDA Senior net debt (1) / EBITDA Interest coverage (2)Interest coverage (2)

2009 2010 2011 2012 2013 2014

5.6 5.44.9

4.23.5 3.8

2009 2010 2011 2012 2013 2014

2.0 2.12.5

4.0

5.96.5

(X) (X) (X)

2009 2010 2011 2012 2013 2014

3.3 3.4

2.72.4

1.5

2.0

Page 16: Tgi & cálidda earnings call 2014

4. Expansion Projects

Page 17: Tgi & cálidda earnings call 2014

Description: TGI will increase existing capacity of Armenia and Chinchina branches with the construction of two new loops; Armenia Branch: 37.5 km 8” loop parallel to exiting 6” pipeline and Chinchina – Santa Rosa – Dosquebradas Branch: 7.5km 3” loop parallel to existing 3” pipeline

Cost: ~$ 28 mm

Status: — Engineering stage— Expected Completion: 2017

Expansion projects pipeline

Description: Adapt compression stations, delivery and receipt locations along the Ballena - Barrancabermeja pipeline so that it can transport natural gas in both directions, in order to allow natural gas to be transported from the central region to the north

Cost: ~$ 20 mm

Expected Completion: 2016

Ballena – Barrancabermeja Bidirectionality

Description: Increase capacity in 20 mmscfd by adapting Vasconia, Miraflores, Puente Guiillermo compression stations

Cost: ~$ 31 mm

ExpectedCompletion: Dec. 2015

Cusiana Phase III

Cusiana - Apiay – Villavicencio - Ocoa

Description: Increase capacity in 32 mmscfd. 2 New compression stations

Cost: ~USD $ 48 mm

ExpectedCompletion: 2H 2016

Eje Cafetero Branches

17

Page 18: Tgi & cálidda earnings call 2014

5. Questions and answers

Page 19: Tgi & cálidda earnings call 2014

Investor Relations

For more information about TGI contact our Investor Relations team:

Antonio José Angarita VegaCFO

+57 (1) 3138400 - ext [email protected]

Sergio Andrés Hernández AcostaFinance Manager

+57 (1) 3138400 - ext. [email protected]

Fabián Sánchez AldanaIR Advisor - EEB

+57 (1) 3268000 - ext. [email protected]

http://www.tgi.com.co

19

Page 20: Tgi & cálidda earnings call 2014

Appendix 1 – Economic industry and regulatory environment

Page 21: Tgi & cálidda earnings call 2014

Source: UPME

Energy sources 2012

Growing Demand of Natural Gas Significant Availability of Natural Gas

Reserves mostly located in the north and east regions of the country

Key fields (Ballena, Chuchupa, Cusiana and Cupiagua) concentrate virtually all of the natural gas production

Long distances between production and main consumption areas

Minimal gas storage capacity across the country

Total DomesticDemand(mmcf/d)

Expected 2014A-2018E

Growth by Sector

Natural Gas in Colombia: Increasing Demand and Vast Reserves

21

Bucaramanga

Bogotá

Cali

Medellín

3.15 Tcf

1.97 Tcf

EasternProducers:EcopetrolEquion

Lower and Middle Magdalena Valley

NorthernProducers:ChevronEcopetrol

References

Natural Gas Reserves

Main Oil & Gas Basins

City

1.89 Tcf

Llanos Orientales

Catatumbo

Guajira

Sinu

Tumaco

Choco

Cau

ca P

atia

Cordillera Oriental

Valle InferiorDel

Magdalena

Valle MedioDel

Magdalena

2012 total natural gas reserves of 7.01 tcf (5.73 tcf proven and 1.28 Tcf unproven), source MME & ANH

Data from UPME as of 31-Dec-2012Data from ANH as of 31-Dec-2014

RESERVES PER UPME RESERVES PER ANH

11.7

6,0

Proved Probable + possible Yet to Find Conventional Non Conventional

Organic9,1%

Coal9,8%

Natural Gas

25,1%

Hydro12,9%

Oil 43,2%

(Million Equivalent Oil Tons)

Petrochemical Industrial Residential Power Generation

NGV Petroleum

0.4%3.3% 2.7% 2.7%

4.5%

25.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 … 2017 2018

695 731 723810 841 829 847

9461034 1035

1240

CAGR: 2006-2014: 5,1%

CAGR: 2014-2018: 4,6%

..

.

Source: Mining and Energy Planning Unit. Reserves as 2012.

Source: UPME, Concentra

Source: UPME

Page 22: Tgi & cálidda earnings call 2014

Source: Banco de la República, DNP, MINHACIENDA., Bloomberg

5-year CDS5-year CDS Foreign currency reservesForeign currency reserves

Real GDP growth and inflationReal GDP growth and inflation Foreign direct investmentForeign direct investment(US$ in billions)(% growth)

(%) (US$ in billions)

Stable and growing Colombian economy with sound investment environment

2008 2009 2010 2011 2012 2013 2014 (e)-

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

4%

2%

4%

7%

4% 4% 4%

7.7%

2.0%

3.2%3.7%

2.4%1.9%

3.7%

Real GDP growth Inflation

2008 2009 2010 2011 2012 2013 2014 -

3.0

6.0

9.0

12.0

15.0

18.0

10.6

7.1 6.4

14.6 15.116.4 15.6

12/2

003

07/2

004

01/2

005

07/2

005

01/2

006

07/2

006

01/2

007

07/2

007

01/2

008

07/2

008

01/2

009

07/2

009

01/2

010

07/2

010

01/2

011

07/2

011

01/2

012

07/2

012

01/2

013

07/2

013

01/2

014

07/2

014

0

100

200

300

400

500

600

700

2008 2009 2010 2011 2012 2013 201405

101520253035404550

0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%

24 2528

3237

4447

19.0%22.9% 22.6% 22.5% 21.3%

24.4% 24.9%

International reservesDebt as % of GDP

Page 23: Tgi & cálidda earnings call 2014

Regulatory framework established to attract private sector investment

Law 142 (1994) establishes system of open entry to the natural gas transportation sector− No term limitation for the provision

of the service− Assets used in the provision of

the service are not owned by the state but by the company providing such service

CREG required by law to seek input from market participants

CREG is an independent regulatory body that controls natural gas regulation− Sets tariffs, promotes competition

and monitors quality of service

Tariff calculation based on the principle of financial feasibility and economic efficiency

Tariffs are set in order to allow the service provider to:− Recover operational costs and

investments− Obtain a return on investment

comparable to what an efficient company would obtain in a sector of similar risk

Cost recovery, attractive regulated return on investment and protection against inflation

Transporters are given full recovery of operating and maintenance expenses− Adjusted by Colombian Price

Index (CPI) Dollar indexation of investment

remuneration tariff Different rates of return applied

when determining fixed and variable charges

Constructive and stable regulatory framework

Source: Company information.

The Colombian gas transportation regulatory framework was established to attract private strategic investors and to provide adequate cost recovery and regulated returns

23

Page 24: Tgi & cálidda earnings call 2014

CREG RESOLUTIONS 083 AND 112 OF 2014

Establishes regulations for natural gas market.

Definition of contractual arrangements in the primary market.

Definition of marketing mechanisms. Defines secondary market with its

respective regulations.

The following reliability aspects in the Decree have not yet been defined by the Regulatory Commission: The CREG will establish the reliability

criteria which shall secure the demand coverage and must set the rules for the evaluation and remuneration of these investment projects.

CREG RESOLUTION 047 OF 2014

Recent Regulatory Decisions

The regulatory framework for natural gas transportation in Colombia is in a stage of important definitions. The main recent regulatory decisions are:

CREG RESOLUTION 089 OF 2013

DECREE 2100 OF 2011

Establishes the principles that will be considered in the next natural gas transportation tariff update process.

The resolution mentions the principles that will be kept from the actual tariff methodology.

Remuneration based on contracts. Price cap methodology.

It also mentions aspects that must be evaluated.

System expansion based on government signals.

Tariff calculation based on historical demand and not projected.

The resolution CREG 083 proposes the methodology to determine the WACC for regulated activities including gas transportation.

The resolution CREG 112, proposes the value for the Beta Adjustment (Delta Beta - Δβ) , which recognizes the difference between the reference market in the USA and the Colombian Regulatory framework.

Both resolutions were available for agents comments’, and the final resolutions are expected to be issued at the end of the year.

24

Page 25: Tgi & cálidda earnings call 2014

Appendix 2 – Shareholders and management team

Page 26: Tgi & cálidda earnings call 2014

Experienced management team with solid track record in the sector

David RiañoCEO

19 Over 20 years of experience in the natural gas and electricity industries. Worked as Advisor to the Energy and Gas

Regulatory Commission (CREG), Superintendent for Energy and Gas and Executive Vicepresident of the Colombian Electricity Generators Association

Electrical Engineer from Universidad de La Salle , Master in Industrial Engineering from Universidad de los Andes and in Economics from Pontificia Universidad Javeriana

TGI´s CEO since October 2014

Antonio J. Angarita CFO

20

OfficerOfficer Key highlightsKey highlightsYears of relevant experience

Years of relevant experience

Jose ArcosVice –President of Legal Affairs and regulatory

16 Over 16 years serving the public and private sectors. Worked as General Secretary to the Colombian Gas

Association (Naturgas) and as Legal Advisor to the Energy and Gas Regulatory Commission (CREG) Lawyer from Universidad del Cauca, Master in Utilities Regulation from Universidad de Barcelona, post graduate

studies in Government and Markets from Harvard University, specialization in Business Law and trust from Universidad Externado de Colombia and Santo Tomás

Over 20 years of experience in financial management in different industries (10 years in Energy & Gas), former IRO in EEB, CFO in Bayport Colombia, Regional CFO in Amnet Central America (Tigo Home), Financial Controller and Financial Planning Manager in Colombia Movil - Tigo, Head of Financial Planning in ETB, Head of Management Control in Codensa and Advisor of the CFO in EEB.

Civil Engineer and MBA from Universidad de los Andes (Bogotá) TGI’s CFO since July 2014

Miguel AriasCOO

Former Judicial Defense Manager at National Infrastructure Agency (ANI); Expert in PPP contracts, infrastructure law, arbitration, M&A and antitrust law

Attorney from Universidad de la Sabana; PhD in International Public Law from Universidad Alfonso X, Master in Law from Universidad Sergio Arboleda, specialization in Administrative Law from Universidad del Rosario

Carlos ToledoVice-President for Administration and services

10 Over 10 years serving the public and private sectors Vice-President for Administration and Public Relations since May 2012. Degree in Law from the Universidad UNICIENCIA. Degree in Electrical Engineering and specialization in telecommunications from Universidad Industrial de Santander

Master’s degree in Applied Political Studies from FIIAPP. Master in Social Cohesion from Universidad de Mendez Pelayo, España.

Oscar IbañezVice-President of growth and development

24

Over 24 years of experience in the Oil and Gas Industry Former Project Manager at Audubon Engineering Colombia Degree in Petroleum Engineering from Universidad de America and specialization in Gas Engineering form

Universidad Industrial de Santander

24

Page 27: Tgi & cálidda earnings call 2014

Appendix 3 – EEB Overview

Page 28: Tgi & cálidda earnings call 2014

EEB Strategy and Overview

Strategy Transportation and distribution

of energy

Key facts More than 100 years’ experience in the sector; founded in 1896. Regional leader in the energy sector; major player in the entire

electricity and natural gas value chains (except E&P); operations in Colombia, Peru, and Guatemala.

Largest stockholder is the District of Bogota - 76.2%. Stock listed on the Colombia stock exchange; EEB adheres to global

standards of corporate governance. The EEB Group is one of the largest issuers of equity and debt in

Colombia

USD Million 2014Operating revenue 963.7Operating profit 330.3EBITDA LTM 1,075.1Net Income 410.0

 Consolidated - Covenants 2014Leverage Ratio 2.09Interest Coverage Ratio 11.8

Focus on natural

monopolies

Ample access to capital markets

Ambitious projects in execution

Growth in controlled

subsidiaries

Sound regulatory framework

Experienced management and partners

28

Page 29: Tgi & cálidda earnings call 2014

Disclaimer

This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are only predictions and are not guarantees of future performance. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include, among other things, statements concerning the potential exposure of TGI, its consolidated subsidiaries and related companies to market risks and statements expressing management’ expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “objectives”, ”outlook”, “probably”, “project”, “will”, “seek”, “target”, “risks”, “goals”, “should” and similar terms and phrases. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Although TGI believes that the expectations and assumptions reflected in such forward-looking statements are reasonable based on information currently available to TGI’s management, such expectations and assumptions are necessarily speculative and subject to substantial uncertainty, and as a result, TGI cannot guarantee future results or events. TGI does not undertake any obligation to update any forward-looking statement or other information to reflect events or circumstances occurring after the date of this presentation or to reflect the occurrence of unanticipated events.

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Page 30: Tgi & cálidda earnings call 2014

Cálidda´s 4Q 2014 Results

Page 31: Tgi & cálidda earnings call 2014

I. Introduction and Perspectives

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

31

Table of Contents

Page 32: Tgi & cálidda earnings call 2014

I. Introduction and Perspectives

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

32

Page 33: Tgi & cálidda earnings call 2014

Introduction and Perspectives

33

Page 34: Tgi & cálidda earnings call 2014

I. Introduction and Perspectives

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

34

Page 35: Tgi & cálidda earnings call 2014

In October Termochilca Power plant turned its interruptible contract into a firm volume contract (45.03MMCFD).

In November the industrial client La Pampilla Refinery contracted firm volumes.

Additionally in November Enersur power plant increased its firm contract from 102.41 MMCFD to 121.38 MMCFD.

Calidda has a client base of 255,005 customers, 56% more than the 163,817 customers achieved in 2013.

The residential segment increase its penetration rate from 50% (2013) to 55%.

Calidda´s 2014 Invoiced volume increased 18% vs. 2013, mostly explained by the full operation of Fénix and Termochilca power plants during 2014.

Calidda invest USD 83MM during 2014 developing its Distribution System Infrastructure, expanding the network in 1,274 km.

Calidda achieved the recertification of ISO 9001 and 14001 standards.

Significant Developments

2) Total Adjusted Revenues and Adjusted EBITDA Margin exclude Pass-through and IFRIC 12 revenues.3) Adjusted EBITDA Margin excludes Pass-through and IFRIC 12 revenues.4) In 2013 ratio does not include 2013´s debt prepayment penalties (USD 7.8MM).

35

Significant Developments

Financial Results (Year - end) 2014 2013 Var %

Total Revenues (USD MM): 512.1 460.9 11%

Total Adj. Revenues (USD MM) 2 : 185.8 146.2 27%

EBITDA (USD MM): 91.2 72.1 27%

Adjusted EBITDA Margin 3 : 49.1% 49.3%

Interest Coverage (x) 4 6.3x 5.6x 13%

1) Clients who are adjacent to Cálidda's distribution network.

Operational Results ( Year - end ) 2014 2013 Var %

Accumulated Clients: 255,005 163,817 56%

Invoiced Volume (MMCFD): 679.2 577.1 18%

Network Lenght (km): 4,678 3,404 37%

Potencial Clients 1 466,249 330,678 41%

Operational Results (Year – end) 2014 2013 Var %Operational Results (Year – end) 2014 2013 Var %

Financial Results (Year – end) 2014 2013 Var %Financial Results (Year – end) 2014 2013 Var %

Page 36: Tgi & cálidda earnings call 2014

I. Introduction and Perspectives

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

36

Page 37: Tgi & cálidda earnings call 2014

Client Base

37

2009 2010 2011 2012 2013 20140

50,000

100,000

150,000

200,000

250,000

300,000

18,75634,619

63,602

103,090

163,129

254,280

Residential & Commercial Residential & Commercial

Cálidda has residential network in 15 districts and industrial network in 34 districts within Lima & Callao (Metropolitan area).

During 2014, Cálidda added 91,151 clients to the Residential & Commercial segment. As to residential clients only, 90,062 were connected over such period, and, therefore, a total of 250,752 households are now Cálidda’s clients.

Main grid expansion

Natural gas main pipeline

Industrial customers

Residential customers

Page 38: Tgi & cálidda earnings call 2014

Client Base (Cont’d)

38

2009 2010 2011 2012 2013 201402468

1012141618

8

1113 13

16 16

2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

321360

394429

466 489

Clients Segments Growth Highlights

No new power generators where connected in 2014. Fénix Power and Termochilca thermoelectric plants were connected in 2013.

During 2014, Kallpa and Enersur power plants increased their firm contract.

23 new industrial plants were connected during the 2014 period. Cálidda was able to attend the demand for this segment in more than 34 districts.

2009 2010 2011 2012 2013 20140

100

200

300

400

0

50,000

100,000

150,000

200,000

250,000

103 143 172 192 206 220

81,029103,712

126,586151,781

171,541197,154

NGV Stations Converted Vehicles

14 new NGV stations joined Cálidda’s distribution system and almost 200,000 converted vehicles were attended in the City of Lima in 2014.

Power Generation

Industrial

GNV Stations

Page 39: Tgi & cálidda earnings call 2014

Volume Sold (Invoiced)MMCFD

Cálidda now invoices more than 3.7x the volume in 2009. As of December, 2014 TPO contracts amount 541 MMCFD, 80% of Total Invoiced Volume. Most important increase comes from Power Generator and Industrial Segment.

CAGR(09-14): 3

0%

39

2009 2010 2011 2012 2013 2014

52.2%

63.9%

71.6%71.6%

72.5%

74.2%

34.0%

25.0%

19.2%

18.1%

17.2%

16.0%

13.4%

10.6%

8.8%

9.7%

9.6%

9.0%

182

303

457

508

577

679

Total MMPCD

Residential & Commercial

NGV Stations

Industrial

Page 40: Tgi & cálidda earnings call 2014

Volume Sold by Client SegmentMMCFD

NGV StationsNGV Stations Residential & CommercialResidential & Commercial

IndustrialIndustrialPower GenerationPower Generation

40

2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

95

193

327364

418

504

CAGR('09-'14): 40%

2009 2010 2011 2012 2013 20140

20

40

60

80

100

120

62

7688 92

99109

2009 2010 2011 2012 2013 20140

10

20

30

40

50

60

70

24

32

40

4956

61

CAGR('09-'14): 20%

2009 2010 2011 2012 2013 20140.0

1.0

2.0

3.0

4.0

5.0

6.0

0.81.3

1.9

2.9

3.9

5.8

C

AGR('09-'14): 47%

Page 41: Tgi & cálidda earnings call 2014

I. Introduction and Perspective

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

41

Page 42: Tgi & cálidda earnings call 2014

Operational Performance

Distribution System Infrastructure Distribution System Infrastructure

Network EfficiencyNetwork Efficiency

In 2014, Cálidda’s distribution network was expanded by 1,274 km, out of which 20 km were steel high pressure network mainly used for the Industrial and NGV Stations segments, while the remaining 1,254 km were polyethylene pipelines and focused on connecting residential customers.

Total network now consists of 4,678 km of underground pipelines and its 4.8x longer than what it was in 2009.

The network penetration rate has increased to 55% over the years due to Cálidda’s commercial strategy main focus: districts characterized by medium and low income families where the savings produced by the use of natural gas against other alternative fuels are more appreciated.

42

Clie

nts

(‘000

)

2009 2010 2011 2012 2013 20140

1,000

2,000

3,000

4,000

5,000

273 303 359 387 408 428701

1,0201,465

2,163

2,996

4,249

9741,324

1,824

2,550

3,404

4,678

Steel Network Polyethylene Network Total

km

2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

-10%

0%

10%

20%

30%

40%

50%

60%

19 35 64

104 164

255

94 126

174

244

331

466

20%28%

37%42%

50%55%

(*) Clients who are adjacent to Cálidda's distribution network.

Page 43: Tgi & cálidda earnings call 2014

Operational Performance (Cont’d)

43

Cálidda capacity is 420MMPCD (from citigate Lurín to Lima). Independent and regulated customers uses 298MMPCD equivalent to 70% of its capacity.

Cálidda has enough Gas Supply Contract (Pluspetrol) and Transportation Contracts (TGP) to attend its regulated customers.

Calidda Capacity 420 MMCFD

Gas178MMCFD

Transport204 MMCFD

Jan-

14

Feb-1

4

Mar

-14

Apr-1

4

May

-14

Jun-

14

Jul-1

4

Aug-1

4

Sep-1

4

Oct

-14

Nov-1

4

Dec-1

4120

144

168

192

216

240

Regulated Clients

Jan-

14

Feb-1

4

Mar

-14

Apr-1

4

May

-14

Jun-

14

Jul-1

4

Aug-1

4

Sep-1

4

Oct

-14

Nov-1

4

Dec-1

40

50100150200250300350400450

Regulated Clients Independent Clients

Edegel Ventanilla

Enersur

Edegel Santa Rosa

Kallpa

Duke

Cálidda's City Gate

Thermal Plants (Clients)

Conventions

Cálidda Capacity = 420MMCFD

Regulated Customers = 150 MMCFD

Termochilca

Fénix

Independent Customers = 148 MMCFD

Chilca P.G.= 381 MMCFD

Page 44: Tgi & cálidda earnings call 2014

I. Introduction and Perspective

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

44

Page 45: Tgi & cálidda earnings call 2014

Total Adjusted Revenues by Segment

2

1) Total Adjusted Revenues exclude Pass-through and IFRIC 12 revenues.2) Installation Services Revenues include revenues from connection fees and financing.3) Others: mainly derived from network relocation and other non recurrent services.

3

45

Firm contract volume (541MMCFD) represent 80% of invoice volume.

Residential & Commercial Industrial NGV Stations Power Generation Installation ServicesOthers

2014 Total Adjusted Revenues 2014 Total Volume (MMCFD)

1%

16%

9%

74%

Page 46: Tgi & cálidda earnings call 2014

Financial PerformanceMillion US$

Funds from Operations (FFO)1Funds from Operations (FFO)1

EBITDA & Adj. EBITDA Margin (%)EBITDA & Adj. EBITDA Margin (%)Total RevenuesTotal Revenues

46

Debt & Net Debt / EBITDADebt & Net Debt / EBITDA

2) Net Debt = Debt - Cash Balance. 1) FFO = Net Profit + Depreciation + Amortization

2009 2010 2011 2012 2013 201443 64 103 125 146 186116 125

201245

315326

160188

304370

461512

Total Adjusted Revenues Pass-through & IFRIC 12

Series3

CAGR( 09 - 14): 26%

2009 2010 2011 2012 2013 2014

1929

59 6472

91

44.5% 46.1%

57.6% 51.6% 49.3% 49.1%

EBITDA Adjusted EBITDA Margin(*) Last Twelve Months.

2009 2010 2011 2012 2013 2014

12

18

40 43

36

57

2009 2010 2011 2012 2013 2014

3.9x 3.9x

2.8x 3.0x

4.4x

3.5x

3.1x 3.1x

2.3x 2.3x

3.0x 2.6x

Debt / EBITDA Net Debt / EBITDA

2

Page 47: Tgi & cálidda earnings call 2014

Financial Metrics

Interest Coverage2Interest Coverage2 FFO / Net DebtFFO / Net Debt

Debt / Capitalization (%)Debt / Capitalization (%)Total Debt1Total Debt1

2) In 2013 ratio does not include 2013’s debt prepayment penalties (USD 7.8 MM)

1) Total Debt: net of debt associated costs.

47

2009 2010 2011 2012 2013 2014 28

67119 149

318 318

4747

4747

75 114

166 196

318 318

Senior Debt Shareholders' Subordinated Debt

2009 2010 2011 2012 2013 2014

41.4%

49.8%54.1%

49.2%

56.6%53.2%

2009 2010 2011 2012 2013 2014

3.5x 3.8x

5.8x 5.5x 5.6x 6.3x

2009 2010 2011 2012 2013 2014

20.9% 20.2%

28.9% 28.3%

16.8%

23.9%

Page 48: Tgi & cálidda earnings call 2014

CapExCapExNet IncomeNet Income

EquityEquityTotal AssetsTotal Assets

Equity Injection:

$35MM

Equity Injection:

$25MM

48

2009 2010 2011 2012 2013 2014

$218 $289

$383

$492

$648 $696

2009 2010 2011 2012 2013 2014

$106 $115 $141

$202

$244

$280

2009 2010 2011 2012 2013 2014

$7 $10

$26 $27

$17

$35

2009 2010 2011 2012 2013 2014

48 5032

63

9283

353

33

5

51 50

85

96 98

83

Secondary Network Main Network

MM

US

D

Financial Metrics (Cont’d)

Page 49: Tgi & cálidda earnings call 2014

I. Introduction and Perspective

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

49

Page 50: Tgi & cálidda earnings call 2014

Conclusions

50

Page 51: Tgi & cálidda earnings call 2014

I. Introduction and Perspective

II. Significant Developments

III. Commercial Performance

IV. Operational Performance

V. Financial Performance and Key Metrics

VI. Conclusions

Annexes:

(i) Strong Sponsorship with Optimal Experience

(ii) Experienced and Proven Management Team & Board

Table of Contents

51

Page 52: Tgi & cálidda earnings call 2014

For more information about Cálidda, please contact our Investor Relations team:

http://calidda.com.pe/inversionistas/

http://www.grupoenergiadebogota.com.co

Adolfo HeerenCEO

[email protected]

Rafael Andrés Salamanca RodriguezInvestor Relations Advisor GEB

+57 1 326 8000 – ext. [email protected]

Isaac FingerCFO

+51 1 625 7310 [email protected]

Investor Relations

52

Gabriela Vasquez - MejíaFinance Director+51 1 625 7390 

[email protected]

Page 53: Tgi & cálidda earnings call 2014

Strong Sponsorship withOptimal Experience

Leading energy holding company with interests across the electricity and natural gas sectors in Colombia, Peru and Guatemala.

Founded in 1896, controlled by the Distrito de Bogotá since 1956 with a 76.2% ownership stake.

Leader in the Energy Sector: major player in the transmission and distribution of electricity and natural gas.

– Only vertically-integrated and one of the largest natural gas distribution and transportation companies in Colombia.

– Founded in 1974 by the government of Colombia. Currently controlled by Grupo Aval.

– Major player in the gas distribution sector in Colombia through Gases de Occidente, Surtigas and Gases del Caribe.

– Participation in the power distribution in Colombia and telecommunications sector in Panama and Costa Rica.

– EEB has 15.6% stake in Promigas.

Controlling Investments

Non Controlling Investments

Non Controlling Investments

Controlling Shareholder – 60% Ownership in CáliddaControlling Shareholder – 60% Ownership in Cálidda

Shareholder – 40% Ownership in CáliddaShareholder – 40% Ownership in Cálidda

Controlling Investments

53

Page 54: Tgi & cálidda earnings call 2014

Experienced and ProvenManagement Team & Board

Board of Directors

Management Team

54

PresidentRicardo Roa

Barragán

Participation in the Boards of Codensa,

Emgesa, Gas Natural, REP Perú, Cálidda,

Contugas, Trecsa and President of

Transportadora de Gas Internacional TGI.

Luis BetancurEscobar

Served as Director of Fondo Financiero

Desarrollo Urbano.

President of Colombia's

restructuring of the Energy and Gas

Regulatory Commission

Jose Elias Melo Acosta

President of Corporación Financiera

Colombiana S.A

Minister of Colombia's Treasury and Public Credit and Labor and

Social Security

departments.

Antonio CeliaMartínez-Aparicio

President ofPromigas

Served on the board of directors of various companies in the

natural gas sector.

Manuel GuillermoCamargo Vega

Management positions in distribution and

transportation utilities of natural gas and

project experience in transportation of crude

oil and natural gas.

David Alfredo Riaño Alarcón

President of Transportadora de Gas Internacional

TGI.

19 years of experience in the energy sector

and utilities.

Luis ErnestoMejía Castro

Director ofPromigas.

Minister of Mines and Energy and Vice Minister of

Hydrocarbons and Mines.

Chief Operating

Officer

JorgeMonterroza

Years in industry:17 years

Years at Cálidda:3 years

Chief Executive OfficerAdolfo Heeren

Years in Industry: 17 yearsYears at Cálidda: 3 years

Chief Commercial

Officer

CarlosCerón

Years in industry:17 years

Years at Cálidda:3 years

ChiefProcurement

Officer

PatriciaPazos

Years in industry:17 years

Years at Cálidda:9 years

Chief FinancialOfficer

IsaacFinger

Months in industry:5 months

Months at Cálidda:5 months

Chief Human Resources

Officer

RosarioJiménez

Years in industry:5 years

Years at Cálidda:5 years

Chief External Affairs Officer

TaniaSilva

Years in industry:3 years

Years at Cálidda:2 years

Chief Legal and

Regulatory Officer

AmadeoArrarte

Years in industry:12 years

Years at Cálidda:10 years

Chief Strategy Officer

TatianaRivas

Years in industry:6 years

Years at Cálidda:6 years

Chief Internal Auditor

CarolinaHernández

Years in industry:8 years

Years at Cálidda:6 years

Page 55: Tgi & cálidda earnings call 2014

Disclaimer

The information provided here is for informational and illustrative purposes only and is not, and does not seek to be, a source of legal or financial advice on any subject. This information does not constitute an offer of any sort and is subject to change without notice.

Cálidda and its Shareholders expressly disclaim any responsibility for actions taken or not taken based on this information. Neither Cálidda nor its Shareholders accept any responsibility for losses that might result from the execution of the proposals or recommendations herein presented. Neither Cálidda nor its Shareholders are responsible for any content that may originate with third parties. Cálidda or its Shareholders may have provided, or might provide in the future, information that is inconsistent with the information herein presented.

55