Grupo Odinsa S.A. Third Quarter 2014 Results Presentation ...The presentation is included in Odinsa’s web page. It starts with a few highlights. We will talk about the public private

Grupo Odinsa S.A. Third Quarter 2014 Results Presentation

Presented by Victor Cruz Vega President of Grupo Odinsa S.A.

November 5 2014 Good morning to all and welcome to the third quarter results presentation of Grupo Odinsa. The presentation is included in Odinsa’s web page. It starts with a few highlights. We will talk about the public private partnerships (PPPs) of private initiative, the PPPs of public initiative, structured by ANI, International Projects, and the results for the first nine months of 2014.

Of the highlights included in the presentation, we will go through each of the concessions we have:

In Autopistas del Café, our concession in Risaralda, Quindío and Caldas; we can notice the

growth in traffic and collections, of 7% and 7.81% respectively. Total collections reached

Cop$106,000 Million in the first nine months of 2014, compared to Cop$98,000 Million in

2013. In AKF we are making some major improvements in the technology used in the tolls,

replacing it with a U.S. system, defined by the INVIAS, to make it faster and easier for

users. This concession has a very important agreement, where 50% of the income

obtained after the Minimum Guaranteed Revenue, goes to the concessionaire and the

other half goes to the ANI; that means, that AKF generates annually Cop$14,000 Million

for maintenance or new maintenance works as decided by the ANI.

In Autopistas de los Llanos, we no longer have a concession since November of 2013,

however we have a contract with the ANI for the operation and maintenance of the road

until the PPP of Private Initiative “Malla Vial del Meta” or the PPP of public initiative “Via

Restrepo-Yopal” are consolidated. With this, what we receive from traffic revenue in

Autopista de los Llanos went down from 100% to 46.35%. Traffic evidences a decrease

due to the reversal of the Vanguardia toll station and the start of operations of the

Bicentennial pipeline, which impacted the toll station of La Libertad. However we can

see how slowly the transportation of alternative products is filling in the gap in tolls.

In Santa Marta – Paraguachón, Traffic has increased by 8%, given higher tourism and

border with Venezuela activity; for us the traffic increase is very important since this

concession is not structured with a guaranteed minimum income but instead is subject to

the expected revenue of the concession. As a highlight we had an issue in Muchachitos, a

protected zone in the Sierra Nevada, where the sea was eroding the beach, the mountain

and the road; for this we constructed a "SEA WALL". For us this is very important

because it was built with all the permission and consent of the Wayu communities.

In Hatovial, traffic has increased by 8.97%. This concession operates under an expected

revenue (NPV) scheme and is estimated to go until 2021. The most important thing about

this concession is that it has proposed a PPP of private initiative to substitute the

“Magdalena 1” PPP of public initiative scheduled by the ANI, because we believe it’s the

continuation of Hatovial.

In Via de las Américas, we are mainly working on the Talaegua Bridge, it connects

Talaegua Nuevo and Santa Ana. This bridge it expected to be completed by may 2015; it

consists of 300 mts. We are proposing a deadline extension in this concession from May

to September, because we have been only able to begin with 50% of the works due to

right of way acquisition delays and environmental permissions. The concession is

expected to be completed by 2015, but we might get an extension until 2017 to solve

these issues.

In Conexión Pacífio 2 (Bolombolo – La Pintada – Primavera), our recent concession

awarded in June of this year, has a Capex of Cop$910.000 Million, and requires the

construction of the road from Bolombolo and La Pintada, and also the rehabilitation of

the road between La Pintada and Primavera. The concessionaire has the following

composition: Grupo Odinsa (25%), Mincivil (21,15%), Construcciones El Cóndor (21,15%),

Termotécnica Coindustrial (13,5%), Icein (9,20%) and Portugal's largest construction

company Mota Engil Engenharia e Construcao (10%). Currently, we are working really

hard on this concession; it is possible that we will be signing the act of initiation tomorrow

in a meeting we have with the ministry. We have had to make an inventory of the

existing roads ANI will give us and we have to wait until November to receive part of the

road because it’s currently held by another contractor. The Act of initiation is the

procedure that initiates the completion period; however we have been working as if we

had signed the start since the concession was awarded. The most important thing for

concessionaires in this fourth generation contracts is to finish works as soon as possible,

because depending on when the works are finished you receive payments earlier. He have

been working on La Pintada for four month already and every day we like it even more.

There are two concessions in the Dominican Republic, as you may be aware, Boulevard Turístico del Atlántico and Autopistas del Nordeste. These concessions are currently in operation and maintenance. Traffic has increased, however it doesn´t have a significant impact on income because they rely on minimum guaranteed revenue payments from the government. Nowadays, the government of Dominican Republic is current with all of these payments. This month we are closing all pending payments for the year 2014 within the budgets of the Dominican State, which would give us confidence that the concession will continue as expected and also will give assurance to our lenders and bondholders in both of the concessions.

In Aruba, we finished the Pre-Work tasks of the “Green Corridor”. Currently, we are

working on the financial closing with the Aruba Investment Bank; this financial close will

be the first one in Aruba and in the Dutch Antilles. Next year we will start with the works

of the road between the Airport and San Nicolas. We have been on a Road show, with the

Aruba investment bank; they are touring the region to find the funding for the project.

The funding is a joint responsibility of Odinsa and the Aruban Government; we both study

the possibilities and decide what entity will finance it. By the end of this month, we hope

to choose the financer and by January start with the works. The most important thing is

that Aruba has an A rating and the market is interested in investing there. With this

processes, Bonne Air and Curacao will also be able to look up to this projects for their own

development.

With regards to the El Dorado Airport, under the Opain concession; reported a growth in the number of passengers who pay the airport tax of 7.5% and growth of the total number of passengers. We count with 20 million passengers so far this year; however, by the end of the year we hope to reach 27 million approximately. Unregulated revenues increased by 14 % compared to 9M2013, reaching Cop$137,000 Million and regulated revenues grew from Cop$225,000 Million to Cop$257,000 Million. We proposed and expansion that consist on enlarging the national area by adding eight new positions and also finishing the operational building that completes El Dorado. We hope we will be able to destroy the current control tower in order to construct 6 new contact positions that will help to reduce traffic in rush hours. The international area will have 4 new contact positions and would expand by 300mts towards El Puente Aereo, this 4 positions will be able to supply the need requested by the new green liners (airplanes) brought by Avianca. El Dorado has the advantage of having a significant capacity for enlargement if needed; as the concessionaire we will keep on working on making it as subtle and comfortable for the passengers by studying new expansion projects as required. it is important to note that as much as the airport is expanded, distances will grow, however by having an “H” shape (design) it reduces this impact.

In Sociedad Portuaria de Santa Marta, we can see a reactivation of cargo (containers, bulk cargo and cargo in general) in almost all categories of cargo, however, coal cargo is reduced because of its low production due to lower market prices.

In CONFASE, the works that included slab pouring and beam lifting to form the superstructure of Bicentennial Park were completed. We think these works have been something very meaningful because it has transformed the downtown part of the city. What is left here are the claims to the IDU, made through an arbitration tribunal to settle differences regarding the cost and construction time; derived from delays on works

because we were not given enough time to deviate traffic and finish what was budgeted causing higher costs for us.

Turning to our other business units, energy, we have GENPAC in the Copiapo desert, Chile; a plant of 96 MW. This plant is designed for fast starts and to support the system in the northern part. This trimester rainfall has increased, so the plant hasn’t been turned on. However, it continues charging for availability fees.

As for GENA in Panama, this plant is one of the pillars on which our growth model is based on, due to the cash flow that is being generated. In this first nine months, it has shown an increase in generation compared to 2013, and we hope to generate more in the remaining months of this year. Gena continues growing its effect on Odinsa’s Contribution Margin. It is very important for us because of two main reasons: 1) its growth in generation and 2) the cash flow it generates.

As for the Toll Collection project with INVIAS, currently we have five less toll stations and as a result of this the project had less revenue in this first semester of the year. Nevertheless, less collection does not equal less profit; it only means the contract will be extended until the expected collection is achieved. Currently we are proposing an American system for toll booths, using the technology dictated by INVIAS, where all the traffic barriers will become automatic and more comfortable for users. If we sign an agreement with INVIAS for this, in 2015 all tool booth of INVIAS will have this TAP system.

As for the Private Public Initiatives – PPPs of Public Origin, ANI “Fourth Generation

Concessions”; those marked in red are the tenders that have been awarded. We will

continue presenting offers in the next round of bids expected for 2015; however we will

only take in to account those where we find a positive value proposition. Returns in these

projects are limited; there is a risk with the rising of interest rates over the long term, so

we want to be prudent. We believe this initiative from the Colombian Government is

gaining every time more interest and strength in the national and international market; all

the bids that have been presented have already been awarded; we have many hopes for

the “second wave” of concessions and we plan on choosing 2 to 3 of these, because

resources are limited.

As for public-private partnerships, we have high hopes on our initiative “Vías de los Llanos”, we believe the Ministry of Finance will approve it shortly; we have reached an agreement with the ANI, which was then passed to the Ministry of Finance Hacienda and the National Planning Department; and with this the requirements of a new decree regulating PPPs was met. For us the legal framework is clear and concrete so it will make possible the approval of “Vías de los Llanos” by November and it will be posted on the SECOP web page in December and January and then awarded on February. We believe this initiative is viable, we have worked really hard together with communities and the

Grupo Corredor Valor Km. Estado Adj.

1 * Honda - P. Salgar - Girardot 995$ 200 Adj. 06/03

2 Mulalo - Loboguerrero 1.200$ 32 Ofertas 10/31

3 Perimetral Oriente 1.200$ 153 Adj. 07/23

4 * Cartagena - Barranquilla 995$ 153 Adj. 07/02

5 Autopista Conexión Norte 980$ 145 Adj. 10/17

6 * Río Magdalena 2 1.370$ 144 Adj. 10/22

7 * Conexión Pacífico 1 1.790$ 49 Adj. 06/03

8 * Conexión Pacífico 2 910$ 98 Adj. 05/22

9 Conexión Pacífico 3 1.290$ 142 Adj. 07/15

10 * Pasto - Rumichaca 1.580$ 80 ANI reactiva

11 P. del Hierro - Cruz del Viso 468$ 173 ANI reactiva

12 * Santa Ana - Mocoa 1.200$ 422 ANI reactiva

13 Bogotá - V/Vicencio 2.040$ 34 ANI reactiva

14 * Autopista al Mar 2 1.560$ 139 ANI reactiva

15 * Autopista al Rio Magdalena 1 2.130$ 156 ANI reactiva

16 * Autopista al Mar 1 1.537$ 221 ANI reactiva

17 Bucaramanga - Barranca - Yondo 1.600$ 167 Por Precalificar

18 Transversal del Sisga 477$ 137 Por Precalificar

19 Neiva - Girardot 1.140$ 191 Aplazado

20 Villavicencio - Yopal 1.580$ 260 Aplazado

21 * S. de Quilichao - Popayán 1.200$ 76 Aplazado

Total ====> 27.242$ 3.172

needs of government agencies in the area when proposing this idea. As for our initiative of La Paila-Cajamarca, after a meeting with the Vice-president in Armenia and with the local government about the final details; we have presented all the necessary information and we expect its feasibility will be accepted shortly after “Via de los Llanos”. Due to the above, Odinsa has two important projects besides de PPP of public initiative. On the other hand, we are working on new initiatives in AKF and in the El Dorado airport. The idea for El Dorado is to expand the northern runway by 800 mts. For us, what’s remaining is the complete understanding of the award process, because after the approvals from the ANI, the Planning Department and the Ministry of Finance it is publicized in the SECOP web page, and depending on the number of companies interested there will be a mechanism for the award: either a public tender o abbreviated selection. This last step isn’t really defined, because the government is still deciding on the key variable for the selection. One aspect that has been analyzed are prices; for us this is not the correct one because in this process we have verified with the ANI, the Ministries and the specialized consulters that the prices and the rate of return are already adjusted and are the best in the market, so it’s really hard to find something lower. However, we are trying that prices are considered as an important variable but not as the most significant.

On other Projects, we are working on the bid for the Matecaña International Airport in Pereira, the PPP of public initiative from the local government. We are also working on the Bid for the International Airport in Santiago de Chile; this airport counts with a demand of 14 million passengers, half of what we manage in the El Dorado Airport. For us this airport is very interesting and we will present an offer with a Spanish company called OHL. In addition, we are working on an offer for the Watty Vos Boulevard in Aruba; it connects the airport with the other side of the island, as a continuation of the Green Corridor. As for Gena in Panama, we are performing maintenance on unit 100, because during October and November the reservoirs are generally full due to the increase in rain fall and the plant is not needed, however we will have it ready for December to support the system for the increase in the demand during this month. For 2015 we hope to generate more than we did this year. As in improvement we hope to convert the plant into gas; we are examining the possibility of using GLP or GNL. In the next bid we will present a proposal to enlarge Gena. As for GENPAC, next week the bid for the photovoltaic plant will be open, this plant will count on 14 MWH; we already have all the permissions, 8 possible bidders and the financial closing. We have already requested more land to the government to construct an additional 20 Mwh. Finally in Guatemala we continue working on the Mass transportation infrastructure – Bus terminal Project and in 2015 we will have the final project.

As of September Grupo Odinsa continues reporting a strong operational performance for the first nine months of the year, as evidenced by the strength of its various business lines, allowing it to report an increase in revenue of 6,8%, to reach Cop$732.632 Million, and in the Contribution Margin of 3,3%, to reach Cop$316,592.

o Concessions are still the main source of income that contributes to the generation of

Odinsa´s EBITDA. In 9M2014, the absolute amount decreased by 14,2% as a result of the decrease in revenue due to the reversal of A. Llanos. This was compensated in part

by increased collections in AKF, reaching Cop$171,000 Million against Cop$200,000 Million last year.

o Revenue and Contribution Margin from the Energy Business increased from Cop$45,000 to Cop$49,000 Million.

o In the Operation Business we remain stable, we reported Cop$34,000 against Cop$38,000 million in 2013.

o Despite lower construction volumes, the Construction Business contribution margin increased from Cop$306 to Cop$316 Billion, as a result of having completed works of low profitability and the higher level of works performed at AKF.

o As for Other Services the contribution margin presents a significant growth considering the treatment given this year to the income generated from the Dominican Republic concessions and increased electricity generation.

In the first nine months of 2014, EBITDA presented an increase of 9,6% as a result of: o The higher Contribution Margin already mentioned. o Lower operating expenses in the same period. A significant decrease in expenses

occurred, related with the plans to improve the efficiency of the company.

3Q2014 3Q2013 Var. %

Ingresos por Concesiones Viales 177.301$ 201.311$ -11,93%

Costos por Concesiones Viales 5.551$ 1.164$ n.a.

Margen de Contribución $ 171.750$ 200.147$ -14,19%

Margen de Contribución % 96,87% 99,42%

Ingresos por Negocio Energía 340.417$ 223.765$ 52,13%

Costos por Negocio Energía 290.669$ 178.234$ 63,08%

Margen de Contribución $ 49.748$ 45.531$ 9,26%


Ingresos por Operación 62.749$ 67.598$ -7,17%

Costos por Operación 28.433$ 29.330$ -3,06%

Margen de Contribución $ 34.316$ 38.268$ -10,33%


Ingresos por Constuccion 123.935$ 190.039$ -34,78%

Costos por Constuccion 89.637$ 168.855$ -46,91%



Ingresos por Otros Servicios 28.230$ 3.203$ 781,36%

Costos por Otros Servicios 1.750$ 1.914$ -8,57%



As of September 2014, EBIT fell 6,6% as a result of an increase in Depreciation and Amortization, which increased by 42,2% to reach Cop$102,010 Million. This is attributable to the following: o Amortization and depreciation of additional Capex at AKF, A. Llanos and GENA.

Additionally, costs associated with the preparation of tenders in Colombia and abroad were amortized.

o Amortization of goodwill from increased investments in Gena and AKF.

The items under the EBIT line had the behavior listed below, which resulted in a net profit of Cop$56.301 Million for the first nine months of 2014, for an increase of 23,5%; o Uncontrolled Investment Result: These decreased by Cop$1,474 Million, due to

variations in the dividends received from companies where we have a minority stake. o Net Interest Expense: Decreases by 3,4%. This is mostly attributable to the decrease in

interest expense in Odinsa Holding and Generadora del Pacifico; where debt levels have lowered.

o Other income / expenses: Decreased by Cop$5,613 Million mainly due to lower expenditures presented at AKF.

o Corporate Tax: Decreased by 38.4% due to lower tax levels at Odinsa level as a result of not having received untaxed dividends from AKF, as was the case in 2013. Also reports a decrease in taxes of A .Llanos due to the lower results recorded as of

3Q2014 3Q2013 Var. %

Ingresos Totales 732.632$ 685.917$ 6,81%

Costos Totales 416.040$ 379.497$ 9,63%

Margen de Contribución 316.592$ 306.420$ 3,32%


Gastos Operativos 79.252$ 89.777$ -11,72%

EBITDA 237.340$ 216.643$ 9,55%

Margen EBITDA % 32,40% 31,58%

Depreciacion y Amortización 102.010$ 71.722$ 42,23%

EBIT - Utilidad Operacional 135.330$ 144.921$ -6,62%


Resultado Inversiones No Controladas 1.474$ 4.413$ -66,60%

Gasto Financiero Neto 43.038$ 44.567$ -3,43%

Otros Ingresos / Egresos 8.048$ 13.661$ -41,09%

Utilidad antes de Impuestos 101.814$ 118.428$ -14,03%

Impuestos de Sociedades 23.694$ 38.470$ -38,41%

Beneficio Grupo Odinsa 78.120$ 79.958$ -2,30%

Resultado Interes Minoritario 21.819$ 34.368$ -36,51%

Beneficio Neto Grupo Odinsa 56.301$ 45.590$ 23,49%

Margen Neto % 7,68% 6,65%

09/2014. These decreases were partially offset by monthly provisions of CREE Tax at AKF

o Minority Interest Result: Decreased 41,6% or Cop$10,157 million as a result of lower profits generated in Autopistas de los Llanos and consolidating a greater percentage of the result of AKF, as a result of having a higher stake in this company.

Between EBITDA and the operating profit there is an increase in amortization due to Autopistas de los Llanos, because it was our concession for many years and we are currently amortizing the costs deferred in time; this is why it distorts the line. Financial expense in Odinsa decreased from Cop$44,500 to Cop$43,000 Million improving our coverage ratio. We have become more solid as our EBITDA is greater than the interest expense and makes us capable of performing more operations and assuming more credit. This trend has persisted in the past years; we have reduced our operational expenses from Cop$89 to Cop$79 billion pesos and improved our efficiency by 11%:

What we read and analyze from this results it’s that it has been a good year, where operational and financial expenses are reduced and the EBITDA and the net income have increased. The reduction in taxes that we see, it’s something natural due to the tax derived from dividend payments of AKF that were not recorded. We believe that by year´s end this tendency will continue with a growth in Ebitda and the decrease in operational expenses; however, we do believe that financial expenses will remain stable.

3Q2014 3Q2013 Var. %

Ingresos Totales 732.632$ 685.917$ 6,81%

Costos Totales 416.040$ 379.497$ 9,63%

Margen de Contribución 316.592$ 306.420$ 3,32%


Gastos Operativos 79.252$ 89.777$ -11,72%

EBITDA 237.340$ 216.643$ 9,55%


Depreciacion y Amortización 102.010$ 71.722$ 42,23%

EBIT - Utilidad Operacional 135.330$ 144.921$ -6,62%


Resultado Inversiones No Controladas 1.474$ 4.413$ -66,60%

Gasto Financiero Neto 43.038$ 44.567$ -3,43%

Otros Ingresos / Egresos 8.048$ 13.661$ -41,09%

Utilidad antes de Impuestos 101.814$ 118.428$ -14,03%

Impuestos de Sociedades 23.694$ 38.470$ -38,41%

Beneficio Grupo Odinsa 78.120$ 79.958$ -2,30%

Resultado Interes Minoritario 21.819$ 34.368$ -36,51%

Beneficio Neto Grupo Odinsa 56.301$ 45.590$ 23,49%

Margen Neto % 7,68% 6,65%

We are very optimistic for 2015, as we believe it will be a completely different year for the sector; we all had to gain efficiencies by reducing operating and financial expenses in order to be prepared for what will come next year. When we say what will come next year, we refer to Pacifico 2, the closing of Green Corridor, the PPPs of private initiative and the possible bid we will be able to win from the fourth generation concessions. All of this projects will increase and reactivate the construction and infrastructure sector. We believe we have two main sources that give us advantage over our competitors and this is the cash flow that our electric generation plants and our mature concessions give us; it is also important to remark that next year we will start receiving cash flows from Opain, because so far we have only invested in this project and by 2015 we will receive dividends. We have a 35% stake in Opain and it will give us growth for the following 10 years. With these 3 sources we will receive sufficient resources to finance future projects.

Documents

Grupo Odinsa S.A. Third Quarter 2014 Results Presentation ...The presentation is included in Odinsa’s web page. It starts with a few highlights. We will talk about the public private