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Financial Results This report presents the corresponding variations under the International Financial Reporting Standards (IFRS), of the comparative financial statements as of the close of June 30, 2017 (YTD 2018) and 2018 (Q2 2018 - YTD). Income
The consolidated income for YTD 2018 reached COP$1.7 billion, a 7.7% increase with respect to the same period of the previous year, responding to a positive dynamic in each one of the lines of business.
The largest variation was reported in the energy transmission line of business with a 41.8% growth, from COP$154,531 million to COP$219,142 million, as a result of: Higher income recognized from UPME (Bolivar – Cartagena COP$5,079 million, Bolivar – Santa Rosa COP$4,880 million, Sogamoso – Betulia COP$10,852 million, Sogamoso – Gachancipa COP$20,582 million and Sogamoso – Soacha COP$5,998 million) projects and from CEMPRO and for the Prónico lines of EBBIS for USD$5.7 million. The natural gas distribution line of business reported income for COP$855,749 million, with a 4.5% growth, taking into account that it was the largest participation in the total with 50.5%, a behavior that was due to: • Contugas – Income from construction for the G&M Award; construction of networks for USD$2.6 million;
new industrial clients due to fishing season from April to June for USD$2.7 million; and increase of interests from financing to residential clients.
• Cálidda – Increase in the number of internal installations in USD$6.3 million; increase in the hired capacity, which has a positive impact in transportation and natural gas consumptions in USD$4.6 million; and higher income from gas distribution based on higher volumes.
Regarding the natural gas transportation segment, there is a growth of 3.3% due to an increase in fixed charges and the start of operations of the Cusiana-Apiay-Ocoa project from February, which will have a positive impact in the performance of this line of business during the entire year.
Graph N°1 – Operating Income per business unit (Numbers in Millions COP$ YTD 2018)
855.749 818.622
620.975 600.901
219.142154.531
2T 2018 2T 2017
Distribución de Gas Natural Transporte de Gas Natural Transmisión de Electricidad
1,695,866
1,574,074
Costs and expenses The largest increase was in the energy transmission line with 28.6%, as a result of higher maintenance and operating costs in COP$3.4 million, increase in contributions for COP$4.4 million with respect to UPME projects; with respect to Trecsa an increase can be seen in maintenance expenses for lines and substations in COP$3.9 million, including personnel costs, utilities cost and billing costs to EBBIS. In the gas distribution line, there is a 0.6% increase, highlighting that it is the largest contributor over the total with 64% and its behavior is related to: • Contugas – Greater supply costs, due to more consumption in the market and construction of networks
(CINIIF 12 expansion) in USD$2.6 million. • Cálidda – More amortizations and depreciations in USD$4.5 million, increase of the costs of installations
and increase in the natural gas costs due to more transported volume (USD$3 million). Regarding the natural gas transportation segment, there is a increase of 14.4% compared to YTD 2017, as a result of: Increase in personnel costs (COP$7,182 million), maintenance costs for right of way (COP$3,876 million) and costs of repair for changes in coating (COP$4,121 million).
The total gross margin is 39% and due to the following: Natural gas distribution 21.1%, natural gas transportation 59.7% and energy transmission 50.4% Results of operational activities An increase of 14% and an operating margin of 37.8% is shown, due to the large increase of the income compared to the costs and expenses, highlighting that the most significant variation was reported in the line of other income with 6.3%, going from COP$90,250 million to COP$95,943 million, corresponding to dividends from Promigas, professional fees and ancillary services. Consolidated EBITDA
Table N°1 – Consolidated EBITDA
COP$ Million
YTD 2018 YTD 2017
EBITDA 1,666,442 1,559,648
EBITDA Margin (%) 64.3 65.6
The performance of the consolidated EBITDA reflects the profitability and sustainability of the operational activity and execution of Group projects, closing for the 6 months ending on June 2018 in USD$1,666,8442 million, a 6.85% increase and in COP$2,562,019 (USD$874 million) if the last 12 months are analyzed. Regarding the EBITDA margin, this remains stable and for the reported period was 64.3%.
Graph N°2 – Consolidated EBITDA by line of business Graph N°3 – Consolidated EBITDA by GEN
Likewise, the EBITDA historical levels provide the Company with flexibility and growth capacity in each one of the Strategic Business Groups (GEN), by being historically below the limits of the established covenants, both in the Net Total Debt/EBITDA, as well as EBITDA/Net Financial Expenses. Non operational The largest variation is reported by the difference in net change with a 66.7% increase, comparing YTD 2017 to YTD 2018 by going from COP$-21,398 to COP$-35,662, maintaining a correlation with the behavior of the exchange rate during the analyzed period in the countries where GEB has presence; thus, the main cause was given in Gebbras, as a consequence of the depreciation of the Real with respect to the American Dollar (USD$), thus impacting the expenses associated with a bank obligation expressed in that currency. Taxes Deferred tax has been significantly reduced, mainly by the performance of such item in TGI, responding to the legislative change of the fiscal effects, with respect to the useful lives of fixed assets. For the close of Q2 2018, the expense for fiscal depreciation is less as a result of the recalculation made. Net profit The YTD 2018 net profit closed in COP$814,456 million, a 6.2% increase compared to the same period in 2017, a behavior that is due to the solid generation of income in each on of the business segments and in the countries where the Company has presence and control of costs and expenses in the operational and administrative performance, reaching efficiencies in the development of each one of the executed activities. The controlling interest was placed at COP$772,739 million and the non-controlling interests in COP$41,717 million.
Electricity Transmission
14.9%
Electricity Distibution
13.9%
Natural Gas Transportat
ion32.7%
Natural Gas Distribution
18.5%
Electricity Generation
19.5%
Other0.5%
Market Development
Interconection47%
Urban Energy
Solutions33%
Low Emission
Generation19%
Other0.01%
Debt profile
Table N°2 – Debt structure June 2018
Obligation Amount
COP$ Million Currency Original
Coupon (%) Maturity
Syndicated GEB 2023 2,214,927 USD$ Libor 6M + 2.15% January 2023
CAF GEB 83,430 USD$ Libor 6M + 1.60% May 2020
GEB Bond COP 2024 1st Batch 187,092 COP$ 7 years CPI + 3.19% E.A. February 2024
GEB Bond COP 2032 1st Batch 283,139 COP$ 15 years CPI + 3.85%
E.A. February 2032
GEB Bond COP 2042 1st Batch 180,087 COP$ 25 years CPI + 4.04%
E.A. February 2042
GEB Bond COP 2024 2nd Batch 128,790 COP$ 7 years CPI + 3.21% E.A. February 2024
GEB Bond COP 2032 2nd Batch 189,289 COP$ 15 years CPI + 3.85%
E.A. February 2032
GEB Bond COP 2042 2nd Batch 323,753 COP$ 30 years CPI + 4.1% E.A. February 2042
Financial leasing GEB and TGI 39,925 COP$ GEB – DTF+3.75%
TGI – DTF+2.9% TA GEB – Jan 2024 TGI – Jan 2024
TRAGSA Bond 2,193,663 USD$ Fixed 5.7% March 2022
BBVA / Itaú /Scotiabank (TGI - IELAH) 114,608 USD$ Libor 6M + 2.25% September 2019
CALLAO Bond 934,377 USD$ Fixed 4.375% April 2023
Cálidda Loan 233,607 USD$ Fixed 4.75% June 2019
Banco de crédito del Perú Contugas 38,031 USD$ Fixed 5.95% October 2018
Contugas Syndicated Loan 1,010,400 USD$ Libor 6M + 3.50% September 2019
Trecsa Loan 254,980 USD$ Libor 6M + 2.97% December 2028
EEBIS Loan 140,678 USD$ Libor 6M + 2.40% October 2021
Total Debt $8,550,776 Interests $65,436 Total Debt + Interests $8,616,212 Total Debt + Interests Short-Term $145,335 Total Debt + Interests Long-Term $8,470,877 Intercompany Loan - TGI Subsidiary USD$370 million
Table N°3 – Classification of debt COP$ Million (LTM)
June 2018 June 2017 Variation % EBITDA 2,562,019 2,292,033 269,986 11.8 Net Total Debt 7,255,239 7,295,634 -40,395 -0.5 Gross Total Debt 8,550,776 8,999,241 -448,465 -5.0 Net Financial Expenses 293,846 350,960 -117,314 -28.5
The total gross debt reported a decrease of 5%, a behavior generated by: GEB made a payment of the credit of the Capital District, Cálidda canceled one of the credits with BCP, Contugas did a major adjustment to the amortized cost and TGI made a prepayment of the syndicated credit acquired from the merger with IELAH for USD 44 million, with a remaining balance of USD$ 40 million from Q1 2018.
Table N°4 – Coverage ratios June 2018 June 2017
Net Total Debt / EBITDA OM: < 4.0 2.83x 3.18 x EBITDA / Net Financial Expenses OM: > 2.25 8.72x 6.53x
According to the above, as of June 2018 the Group reached a Net Total Debt/EBITDA indicator of 2.83x and EBITDA/Net Financial Expenses of 8.72x.
Graph N°4 – Debt profile June 2018 Number ins USD$ Million
Participation method
Table N°5 – Participation method by company
Numbers in COP$ Million YTD 2018 YTD 2017
Emgesa 263,448 217,476
Codensa 151,699 159,172
Gas NaturalXXX 30,843 29,368
REP 23,740 20,464
CTM 28,833 25,249
EMSA 3,518 4,341
Promigas - 49,495
Joint Ventures (Gebbras) 5,378 20,177
Total 507,459 526,142
In the equity participation method, the largest contribution as of the close of June 2018 was from Emgesa with 51.9%, followed by Codensa with 29.9% and Gas Natural with 6.1%. It should be noted that the joint ventures are with companies in Brazil: GOT, MGE, TER and TSP.
382
29 48
830
1,069
12287
162
61112
2019 2020 2021 2022 2023 2024 2028 2032 2042 2047
Executed CAPEX
The executed CAPEX for GEB's consolidated analyzed in the YTD 2018 period was USD$157 million, concentrating mainly in the transmission business with 32%, followed by Cálidda with 27% and lastly by TGI with 26%.
Sector Results
Electricity Installed Capacity (MW) 16,877 Demand (GWh) 17,104 Demand Variation Q218 / Q217 (%) 2.87 Gas NaturalXXX Proven and probable reserves (GBTUD) 4,024 Internal Demand (Mmpcd) 964.1 Demand Variation Q218 / Q217 (%) 7.0
Guatemala
Colombia
Perú
Electricity Installed Capacity (MW) 3,404 Demand (GWh) 1,650 Demand Variation Q218 / Q217 (%) 2.0
Electricity Installed Capacity (MW) 12,958 Demand (GWh) 4,210 Demand Variation Q218 / Q217 (%) 4.16 Gas NaturalXXX Proven and probable reserves 17.9 Internal Demand (Mmpcd) 1,314.87 Demand Variation Q218 / Q217 (%) 10.9
Strategic Group Results of the Business Urban Energy Solutions (SEU)
Table N°6 – Financial Ratio Indicators SEU YTD 2018
Numbers in Millions Codensa
COP$
Cálidda Gas NaturalXXX
COP$
Contugas
USD$ USD$
Operating Income 2,414,319 301 1,100,159 42
Operating Profit 547,847 61 160,390 5
EBITDA 728,852 74 182,652 8
Net profit 290,071 37 123,174 -6
The portfolio of Companies of the Group SEU is focused in strengthening the energy infrastructure in developing cities (Bogota and Lima), with the objective of serving the market needs. The foregoing is accomplished by analyzing the demand and contributing to the development of an agenda that involves the energy sector in different aspects (uses, applications, services and technologies), generating as a result, a positive impact in the development and consolidation dynamics.
I. Codensa
Table N°7 – Codensa Overview
Results YTD 2018
Number of clients 3,388,428 Market participation (%) 21.7% Codensa Demand (Gwh) 7,502
Var demand (%) 1.6
Loss index (%) 7.9 Control Enel Energy Group
GEB Participation 51.5% (36.4% ordinary; 15.1%
preferred without voting rights)
Table N°8 – Codensa Selected Financial Indicators
COP$ Million USD$ Million
YTD 2018 YTD 2017 Var % YTD 2018 YTD 2017 Var %
Operating Income 2,414,319 2,220,925 8.7 847 760 11.4
Contribution Margin 957,416 976,666 -2.0 336 334 0.6 EBITDA 728,852 763,167 -4.5 261 256 1.9 EBITDA Margin (%) 30.19 34.36 -12.1 30.81 33.68 -8.5
Net profit 290,071 309,484 -6.3. 102 106 -3.8
Paid dividends 262,660 409,277 -35.8 92 140 -34.3
Regarding regulatory matters, during Q2 2018, the following developments occurred: • Decree 943/2018 of the Ministry of Mining and Energy - Public lighting:
Introduces important changes in public lighting such as: definitions, duties of the municipalities, methodology of cost of service, among others.
• Res. CREG 085/2018, Methodology for the remuneration of the distribution: Clarifies and corrects certain provisions of resolution CREG 015/2018 with respect to the methodology of remuneration for the distribution activity.
The Capex execution in Colombia as of YTD 2018 was COP$407,000 million, focused on the Investment Plan for the Distribution business.
Analyzing the numbers in dollars, Codensa reported an increase in income of 11.4% and 1.9% EBITDA closing in USD$847 million and USD$261 million, respectively.
Table N°9 – Codensa Investments
YTD 2018 YTD 2017 Var %
COP$ Million 333,533 275,469 21.1
USD$ Million 117 94 24.5
II. Cálidda
Table N°10 – Cálidda Overview
Results
YTD 2018
Number of clients 655,131
Sold Volume (MMPCD) 773
Total Extension of the Network (Km) 8,926
Potential Clients 886,049
Network Penetration (%) 74
Table N°11 – Cálidda Selected Financial Indicators
Q2 2018 Q2 2017 Var %
Operating Income (Thousands USD$*) 301,023 284,538 5.8
Operating Profit (Thousands USD$) 61,011 49,026 24.4
EBITDA (Thousands USD$) 74,117 66,671 11.2
EBITDA Margin (%) 24.6 23.4 -
Net profit (Thousands USD$) 36,879 30,157 22.3
Net debt / EBITDA LTM 2.47x 3.02x -
EBITDA LTM / Financial expenses LTM 8.80x 8.15x -
Cálidda maintains the right of distribution and operation of the only natural gas distribution network in Lima and Callao: • Gas pipeline: 8,926 km. • Capacity: 420 Mmpcd (Lurín-Ventanilla system). • Average of hired firm capacity for supply and transportation: 229 Mmpcd. • Covers 75% of the market in Peru.
Total executed Capex totals USD$880 million. On March 16, 2018, a Mandatory Yearly Shareholders Meeting of Cálidda was held, in which the
distribution of dividends in an amount of USD$52.7 million was agreed, until August 31, 2018. On June 16 , an increase of approximately 11% in the distribution tariff was approved, applied from
the beginning of May 2018, within the framework of the Quinquennial Investment Plan 2018 -2022. On July 7, Moodys improved the credit rating in foreign currency of Cálidda from Baa3 to Baa2, with a
stable perspective. Recognizing the successful implementation of the investments and the stable regulatory framework in Peru.
On July 20, Corporate Bonds in Soles were issued in the local market equal to USD$61.5 million, reaching a highly competitive rate in the Stock Exchange of Lima. This instrument was hedged in American Dollars.
III. Gas Natural
Table N°12 – Gas Natural Overview
Results YTD 2018 COP$ Million
Operating Income 1,100,159
EBITDA 182,652
Control Gas Natural SDG S.A. (España)
GEB Participation 25%
Table N°13 – Gas Natural Selected Financial Indicators
COP$ Million
YTD 2018 YTD 2017 Var %
Operating Income 1,100,159 1,132,514 -2.9
Cost of Sales 877,695 911,673 -3.7
Operating Profit 160,390 161,732 -0.8 EBITDA 182,652 180,795 -1.0 EBITDA Margin (%) 16.6 16.0 -
Net profit 123,174 117,517 4.8
Net debt / EBITDA LTM 3.2x 3.5x -
EBITDA LTM / Financial expenses LTM 13.4x 13.3x -
In the second semester, subsidies from the Ministry of Mining were received. Dividends from subsidiaries and affiliates were received. In May, 50% of the decreed dividends were paid. The firm EY was appointed as new Statutory Auditor of the company, replacing PWC. Partially amend the bylaws with respect to the matters related to the legal representation, anticipating
different types of legal representatives (type A, B and C, with different powers), establishing limits for
the powers in contracting for the legal representatives, that were not previously in the bylaws; and, granting powers to the Board of Directors to approve contracting after certain amount.
Gas Natural S.A. E.S.P. informed that on June 1, 2018, Gamper Acquireco S.A.S. acquired a stake of 43.71% in the Company (corresponding to 16.137.037 shares), which added to the stake of Gamper AcquireCo II S.A.S. (one of its affiliates and also part of Brookfield Infrastructure Group), equals 11.22% of the Company (represented in 4.142.772 shares), and gives Gamper Acquireco S.A.S and Gamper AcquireCo II S.A.S joint control in the Company with a stake of 54.93% in the Company (represented in 20,279,809 shares).
43.71% of the share participation in the Companies acquired by Gamper Acquireco S.A.S. on June 1, 2018, correspond to the sale by Gas Natural Distribución Latinoamericana S.A. of 41.89% of the issued and paid capital of the Company and from the sale by the other shareholders of 1.82% of the issued and share capital of the Company, through a public acquisition offer issued by Gamper Acquireco S.A.S. on May 5, 2018, whose acceptance period finalized on May 28, 2018 and whose fulfillment took place on June 1, 2018.
IV. Contugas
Table N°14 – Contugas Overview
Results Q2 2018
Number of clients Demand (%)
49,027 50.9
Hired capacity (MMCF/d) Transported volume (MMCF/d) Network Length (km)
119.1
24.35 1,271
Table N°15 – Contugas Selected Financial Indicators
YTD 2018 YTD 2017 Var %
Operating Income (Thousands USD$) 41,916 39,831 5.2
Operating Profit (Thousands USD$) 4,580 5,228 -12.4
EBITDA (Thousands USD$) 7,876 9,770 -19.4
EBITDA Margin (%) 18.8 24.5 -
Net profit (Thousands USD$) -6.065 -1,952 -210.7
Net debt / EBITDA LTM 26.9x 20.9x -
EBITDA LTM / Financial expenses LTM 0.7x 1.0x -
On April 30, a short-term debt was disbursed (180 days) for an amount of PEN$12.92 million (USD$3.99 million approximately) at a fixed rate of 3.95%.
Among the activities to guarantee the optimal condition of the infrastructure, the analysis of the particulate material collected during the runs of the tool ILI (In-Line Inspection Tool), finding that the
infrastructure does not present corrosion problems and that the particulate material comes from the transporter.
Contugas received the ISO 9001:2015 certification, a new version of the prior ISO 9001:2008 certification, ratifying the commitment for applying the world class best practices in its practices.
In May USD$31.38 in income were received, for the capital contribution for the payment of the obligations from the arbitration award; USD$7.12 million are still outstanding.
The arbitration claims started by Consorcio Graña & Montero (CG&M) – Conciviles against Contugas, were for an amount of USD$80 million. Nevertheless, after the evidentiary debate and the claims by the parties, the tribunal decided a single sum in favor of CG&M for USD$38.4 million, sentencing also CG&M to pay in favor of Contugas the replacement of the valves, ordering Contugas to pay a final amount of approximately USD$30 million. Also, it is noted that from December 2016, the tribunal issued a partial award of jurisdiction in favor of GEB and excluded GEB from the award as parent company of Contugas.
In the month of June, a payment was made to CGMC from the arbitration award in USD$27 million.
Table N°16 – Contugas Investments
Q2 2018 Q2 2017 Var %
USD$ Million 1.54 1.15 34.3
Interconnection for Market Development (IDM)
Table N°17 – IDM Financial Indicators YTD 2018
Numbers in USD$ Million GEB
Transmission TGI TRECSA REP CTM
Operating Income 63,637 218,016 4,679 78,481 94,566
Operating Profit 42,703 129,380 1,040 34,728 57,616
EBITDA 45,639 169,560 2,706 55,900 84,869
Net profit 25,065 60,344 1,603 20,231 25,040
IDM is focused on interconnecting the energy sources with consumption centers and large users. Likewise, it has the mandate of consolidating a multi-Latin energy transmission company from the transmission assets, thus contributing to the process of consolidation of the most important gas transportation company in Colombia and deepening the Peruvian market to have more presence.
I. GEB Transmission
Table N°18 – GEB Transmission Overview
Q2 2018 Q2 2017 Var %
Infrastructure availability (%) 99.91 99.86 0.05
Compensation for unavailability (%) 0.010 0.009 15.9
Maintenance program compliance (%) 98.5 95.0 3.7
Participation in the transmission activity in (%) 18.1 15.2 19.2
Table N°19 – GEB Transmission Selected Financial Indicators
Thousands USD$
YTD 2018 YTD 2017 Var % Operating Income 63,637 44,767 42.2 Operating Profit 42,703 28,757 48.5 EBITDA 45,639 31,306 45.8 EBITDA Margin (%) 71.7 69.9 - Net profit 25,065 13,919 80.1
Pursuant to resolution 40689 of the Ministry of Mining and Energy, the amendment of the date of
start of operations of the UPME 01-2014 SE La Loma project was approved for December 31, 2018. Pursuant to resolution 40690 of the Ministry of Mining and Energy, the amendment of the date of
start of operations of the UPME 13-2015 SE La Loma 110 kV project was approved for September 30, 2020.
CREG issued resolution 039/2018, pursuant to which the expected annual income for Grupo Energia Bogota for the design, acquisition of supplies, construction, operation and maintenance of SE Colectora 500 kV were officialized, according to the UPME 06 2017 call.
As of the close of Q2 2018, the detailed information for the investment projects is as follows: Chivor II 230 kV
Progress – 57% Start of Operations – Q3 2018 Expected Annual Income – USD$5.5 million
Cartagena – Bolívar 220 kV Progress – 94.7% Start of Operations – Q3 2018 Expected Annual Income – USD$11.6 million
Armenia 230 kV Progress – 98.0% Start of Operations – Q3 2018 Expected Annual Income – USD$1.3 million
Tesalia 230 kV Progress – 91.0% Start of Operations – Q3 2018 Expected Annual Income – USD$10.9 million
Sogamoso – Norte 500 kV Progress – 80.12% Start of Operations – Q2 2019 Expected Annual Income – USD$21.1 million
Refuerzo Suroccidente 500 kV Progress – 42.49% Start of Operations – Q3 2018 Expected Annual Income – USD$24.4 million
Ecopetrol San Fernando 230 kV Progress – 77.97% Start of Operations – Q1 2019 Expected Annual Income – USD$6.0 million
La Loma 500 kV Progress – 70.31% Start of Operations – Q2 2018 Expected Annual Income – USD$1.3 million
Altamira Transformer 230/115 kV Progress – 25.65% Start of Operations – Q1 2019 Expected Annual Income – USD$0.66 million
Colectora 500 kV Progress – 3.16% Start of Operations – Q4 2022 Expected Annual Income – USD$21.46 million
Expansion La Loma 500 kV Progress – 70.31% Start of Operations – Q2 2018 Expected Annual Income – USD$0.35 million
II. TGI
Table N°20 – TGI's relevant financial indicators
YTD 2018 YTD 2017 Var %
Operating Income – USD$ Mm 218.0 204.7 6.5
Operating Profit - USD$ Mm 129.4 126.1 2.6
EBITDA - USD$ Mm 169.6 170.2 -0.4
Net profit - USD$ Mm 60.3 54.1 11.6
International credit rating: S&P - Oct. 31 | 17: Fitch - Oct.12 | 17:
Moody’s – Aug. 01 | 17:
BBB-, stable BBB, stable Baa3, stable
Table N°21 – TGI's relevant operating indicators
Q2 2018 Q2 2017 Var %
Transported volume – Mmpcd 439.86 421.10 4.5
Firm hired capacity – Mmpcd 716.27 687.00 4.3
Firm hired capacity – Mm3d 20.28 19.45 4.3
TGI continues to have the control and operation of the largest gas pipeline network in Colombia:
• Gas pipeline: 3,994 km, Capacity: 784.9 Mmpcd • Firm hired capacity average: 716.3 Mmpcd • Covers 54% of the market in Colombia.
Capitalizations in Contugas as of June 2018 amount to USD$12.9 million. A payment of dividends by GEB was mad in an amount of COP$150,038 million, the remaining will be
paid in October 2018, taking into account that the total decreed was COP$300,077 million. June 1 – The Cusiana Phase IV project started operations with its compression unit No. 8, located at
the gas station of Puente Guillermo (Puente Nacional – Santander) and with an additional transportation capacity of 17 Mmpcd. As of the close of the period, firm transportation contracts were
signed with Gas Natural (15 Mmpcd for the period between June 2018 until December 2024) and with contracts with future funds with: Gases de Occidente, Emgesa, Organización Terpel, Alcanos de Colombia and Cogasen.
June 9 – The Subfluvial Crossing of the Magdalena River (La Dorada – Caldas y Guaduas – Cundinamarca) started operations, eliminating the risk of shortage for 84 municipalities and 8 departments of the southwestern part of the country.
June 14 – The Loop Armenia with a 37 Km of length and a capacity of 8.3 Mmpcd started operations, supplying 8 municipalities in Quindio, 2 municipalities in Valle del Cauca and distribution companies of the region.
In compliance with the provisions set-forth in Resolution CREG 107 of 2017, TGI declared before the CREG and the UPME its interest in executing projects related to the Transitory Plan of Natural Gas Supply, susceptible of being executed and that were defined by the UPME through Resolution 803 of 2017, which are mentioned below:
• Loop Mariquita – Gualanday • Barrancabermeja – Ballena Bidirectionality • Yumbo – Mariquita Bidirectionality
UPME, through Resolution 280 of 2018 dated June 22, 2018, defined the Jamundi - Aguas Abajo Branch Compressor project of the Pradera node as priority IPAT project and susceptible of being executed firstly by TGI SA ESP. Currently, the Company is preparing the necessary information to state its interest to CREG in executing the project. As of the close of Q2 2018, the detailed information for the investment projects is as follows:
Cusiana Phase IV Increase the natural gas transportation capacity in 58 Mmpcd between Cusiana and Vasconia, which the construction of 39.6 Km of 30" diameter loops.
• Expansion of the Gas Compression Station of Puente Guillermo. • Adaptations of the Gas Compression Stations of Miraflores and Vasconia.
Capex – USD$70.7 million Executed Capex Q2 2018 – USD$5.85 million Execution – 33.5% Start of Operations – 17 Mmpcd Q2 2018 and 41 Mmpcd Q4 201
Loop Armenia
Increase of 8.28 Mmpcd of capacity through the construction of a 37 Km Loop of approximately 8" of diameter, parallel to the exiting 6" line. Allows to supply gas to the municipalities of Caicedonia and Sevilla in the department of Valle del Cauca, La Tebaida, Calarcá, Montenegro, Armenia, Quimbaya, Filandia, Circasia and Salento in the department of Quindío.
Stat
us On June 1, the compression unit No. 8
came into operation with 17 Mmpcd. Also, the contract for the supply and
commissioning for the Puente Guillermo Station in Puente Nacional
9Santander), was renewed, adding one month to the execution term.
Capex – USD$19.20 million Executed Capex Q2 2018 – USD$3.58 million Execution – 98.21% Start of Operations – Q2 2018
Replacement of Branches
Replacement of 4 branches for reaching their regulatory useful lifespan in accordance with resolution CREG 126 of 2016. Replacement of the following branches of Sur de Bolivar, which represent 16 Km of pipelines (2" in diameter) and 12 Km of pipeline (4" in diameter):
• Branch Yarigüíes - Puerto Wilches • Branch Z. Industrial Cantagallo – Cantagallo • Branch Cantagallo – San Pablo • Total Galán – Casabe – Yondó
Capex – USD$49 million (Replacement USD$17 million and maintenance (USD$32 million) Executed Capex Q2 2018 – USD$0.43 million Execution – 14.55% Start of Operations – Q2 2019
Expansion Cusiana Phase III Increase of the Cusiana - Vasconia Capacity in 20 MPCD to service the center of the Country. Basic Engineering, details, environmental studies, request of environmental permits before the CAR, procurement of compression units, equipment and pipes, environmental and social compensation, Supervision and Construction for the expansion of the Miraflores, Puente Guillermo, Vasconia stations and Vasconia Hub Adaptations.
Capex – USD$31.59 million Executed Capex Q2 2018 – USD$1.75 million Execution – 97.13% Start of Operations – Q2 2017
Expansion Cusiana Apiay – Villavicencio – Ocoa
Construction of two new gas compression stations, the Partebueno station on the Cusiana - Apiay Gas Pipeline and the Villavicencio Station on the Apiay-Villavicencio-Ocoa Gas Pipeline. The project will increase the transportation capacity to meet the natural gas demand of shippers who requested transportation capacity from Cusiana, Apiay and Villavicencio for 32 MMSCFD; of the 32 Mmpcd, 7.7 Mmpcd will deviate for the Apiay-Villavicencio-Ocoa gas pipeline.
Stat
us On June 14, the Loop Armenia came
into operation with 37 Km of length, with a 8.3 Mmpcd capacity. The
contracts for supervision and construction will be extended.
Stat
us
The permit for the substraction of reserve was obtained on June 1. With respect to the Corporación Autónoma
de Santander, are currently negotiating the land 2/2 to provide information required for permits.
Stat
us An extension was signed for the
contract to supply compression units with Shandong Jerui. Also, the
contracts with Insurcol and Ferreimportaciones dial were settled.
Capex – USD$48.26 million Executed Capex Q2 2018 – USD$8.77 million Execution – 99.7% Start of Operations – Q1 2018
III. Trecsa
Table N°22 – TRECSA Selected indicators
Thousands USD$
YTD 2018 YTD 2017 Var %
Operating Income 9,440 6,903 36.8
Cost of Sales 2,344 1,319 77.7
Operating Profit 1,945 1,015 91.6
EBITDA 5,258 3,800 38.4 EBITDA Margin (%) 55.7 55.1 -
Net profit -208 1,573 -113.2
On December 29, Palestina-Palin and Palestina-Pacifico were energized, generating USD$1.33 million
for the first semester 2018. Effects of Fiscal Planning (GTQ$5.24 million in savings from the fiscal strategy started in 2017 and that
generates positive impact throughout 2018). Capitalization of investment by the Parent Company (USD$11.987.500.00.). Costs of Costs and Expenses (USD$1.7 million in expenses and costs containment mainly in O&M,
Payroll, Consulting and Professional Fees). New personnel increased because of the formation of a new structure to face the challenges in 2018.
IV. EEBIS Guatemala
New income from the following projects for: APS, CEMPRO and Pronico for USD$8.8 million. Effects of Fiscal Planning (GTQ$2.34 million in savings from the fiscal strategy started in 2017 and that
generates positive impact throughout 2018). Capitalization of substation and transmission lines of the APS project for USD 48.4 million. Reduction of financial income from deposit divestments. Progress in the Construction of Lines and substations CEMPRO, (Professional fees and services,
procurement, civil works, assemblies and designs). Reduction of financial income from deposit divestments.
V. REP Perú
Table N°23 – REP Investments
YTD 2018 YTD 2017 Var %
USD$ Million 1.9 14.8 -87.16
Stat
us
The contract for supervision for the development, construction and
assembly for the commissioning of the compression stations in Paratebueno
and Villavicencio was extended.
Table N°24 – REP Overview
Results Q2 2018
Infrastructure availability (%) 99.6
Compensation for unavailability (USD$) -
Maintenance program compliance (%) 84.4
Transmission lines or Network (Km) 6,351.6
Table N°25 – REP Selected indicators
Thousands USD$ YTD 2018 YTD 2017 Var %
Operating Income 78,481 70,319 11.6
Cost of Sales -37,799 -35,730 5.8
Operating Profit 34,728 29,065 19.5
EBITDA 55,900 48,503 15.2
EBITDA Margin (%) 71.23 68.98 -
Net profit 20,231 17,514 15.5
Net debt / EBITDA LTM 2.4x 3.1x -
EBITDA LTM / Financial expenses LTM 10.4x 8.7x -
Tariff update. Investments were reduced because of the start of commercial operation of the expansion 13,
expansion 17 and expansion 19. Less sale of junk and contractual penalties. More expenses for increase in personnel costs and asset disposal. Sale of obsolete goods of fixed assets. Start of the amortization of expansion 13, expansion 17 and expansion 19. More expenses for increase of the percentage of execution of maintenance. Less financial income for reduction of available cash balance. Less capitalization of interests for reduction of investments. Less tax base.
VI. CTM Perú
Table N°26 – CTM Overview
Results Q2 2018
Demand (Gwh) 4,210 Infrastructure availability (%) 99.7 Maintenance program compliance (%) 86.21
Transmission lines or Network (Km) 4,251
Table N°27 – CTM Selected indicators
Thousands USD$
YTD 2018 YTD 2017 Var %
Operating Income 94,566 69,418 36.2
Cost of Sales -35,024 -25,297 38.5
Operating Profit 57,616 43,721 31.8
EBITDA 84,869 61,760 37.4
EBITDA Margin (%) 89.7 89.0 -
Net profit 25,040 21,609 15.9
Net debt / EBITDA LTM 5.48x 5.99x -
EBITDA LTM / Financial expenses LTM 4.11x 4.09x -
Start of operations of the MAMO, Orcotuna, Planicie Industriales project and Cotaruse expansion. Less investment in the MAMO project. Increase in tariffs of connectivity services, surveillance and contractors. Start of operations of Orcotuna, Planicie Industriales project and Cotaruse expansion and MAMO. Less expenses for the reduction of the percentage of execution of maintenance. Update of tariffs of addendum 5 and 10. Less capitalization of interests for subexecution with respect to the budget (NIC23). Increase in the fall of exchange rate.
Table N°28 – CTM Investments
Q2 2018 Q2 2017 Var %
USD$ Million 18.6 43.6 -57.3
Low Emission Generation (GBE)
GBE is today focused in Colombia and its objective is, in addition to supporting the consolidation of the current position of Emgesa, to seek new opportunities of renewable energies in countries were the transition of the energy matrix is occurring to this sustainable source and low emission, in the prioritized geographic scopes.
I. Emgesa
Table N°29 – Emgesa Selected Financial Indicators
COP$ Million USD$ Million
YTD 2018
YTD 2017
Var % YTD 2018
YTD 2017
Var %
Operating Income 1,767,113 1,607,494 9.93 620 550 12.7
Contribution Margin 1,147,704 1,083,895 5.89 403 371 8.6 EBITDA 1,048,138 978,966 7.07 368 335 9.8 EBITDA Margin (%) 59.31 60.90 - 59.3 60.9 - Net profit 505,051 420,544 20.09 177 144 23.1
Paid dividends 368,279 402,129 -8.42 129 138 -6.1
Table N°30 – Emgesa Overview
Results Q2 2018
Gross Installed Capacity (MW) 3,547
Composition of Capacity 11 Hydro and 2 thermal Generation (Gwh) 6,746
Sales (Gwh) 8,843
Control Enel Energy Group
GEB Participation
51.5% corresponding to: 37.4% ordinary shares and 14.1%
preferred shares without voting rights
The results of the companies of Enel Group in Colombia during YTD 2018, were driven by the
generation business (Net Income + 20.1% A/A), while the distribution business recorded a 6.3% decrease over the results.
Emgesa is now the largest generation company in Colombia in terms of net installed capacity, with a portfolio of 3,504 MW.
Graph N°5 – Emgesa Generation Transactions
With respect to the demand, the total of the sales in terms of Gwh had a growth of 1.7%, concentrating in the mechanism of contracts 81.8% and the rest in the spot market.
With respect to the offer, a reduction of 9.4% was evidences, with respect to the contracts a growth of 342.1% was generated from 95 Gwh to 420 Gwh. The Spot market also reached 1,811 Gwh, a growth of 42.3%.
Table N°31 – Emgesa Investments
Q2 2018
Q2 2017
Var %
COP$ Million 73,439 72,600 1.2
USD$ Million 25.8 24.9 3.7
+
Annexes Annex 1. Financial Results
Table N°32 – Financial statement
COP$ Million Variation USD$ Million
Q2 2018 Q2 2017 COP$ Var % Q2 2018
Income 1,695,866 1,574,054 121,812 7.7% 579
Natural Gas Distribution 855,749 818,622 37,127 4.5% 292
Natural Gas Transportation 620,975 600,901 20,074 3.3% 212
Electricity Transmission 219,142 154,531 64,611 41.8% 75
Costs and expenses -1,054,698 -1,011,609 -43,089 4.3% -360
Natural Gas Distribution -675,043 -671,120 -3,923 0.6% -230
Natural Gas Transportation -250,326 -218,732 -31,594 14.4% -85
Electricity Transmission -108,607 -84,457 -24,150 28.6% -37
Administrative Expenses -81,403 -68,916 -12,487 18.1% -28
Other income (expenses), net 60,681 31,616 29,065 91.9% 21
Results of Operational Activities 641,168 562,445 78,723 14.0% 219
Financial Income 95,943 90,250 5,693 6.3% 33
Financial Expenses -258,482 -269,194 10,712 -4.0% -88
Difference in Exchange (Expense) Income, net -35,662 -21,398 -14,264 66.7% -12
Participation in Profit (Losses) of the affiliates accounted by the equity participation method
507,459 526,142 -18,683 -3.6% 173
Profit Before Taxes 950,426 888,245 62,181 7.0% 324
Tax on Current Income -145,058 -228,506 83,448 -36.5% -49
Differed Tax on Income 9,088 107,203 -98,115 -91.5% 3
Net profit 814,456 766,942 47,514 6.2% 278
Comprehensive Result
Profit Attributed to Controlling Entity 772,739 731,463
Profit Attributed to Minority Stake 41,717 35,479
814,456 766,942
Table N°33 – Balance Sheet
COP$ Million Variation USD$ Million
Q2 2018 Q2 2017 COP$ Var % Q2 2018
Assets
Cash and cash equivalents 1,295,538 1,703,607 -408,069 -24.0% 442
Financial assets 48,508 725,715 -677,207 -93.3% 17
Accounts receivable 613,778 760,142 -146,364 -19.3% 209
Accounts receivable from affiliates 406,003 378,366 27,637 7.3% 139
Assets for taxes 155,493 142,573 12,920 9.1% 53
Inventories 176,130 165,594 10,536 6.4% 60
Assets available for sale 705,472 863,191 -157,719 -18.3% 241
Other assets 28,233 34,368 -6,135 -17.9% 10
Total Current Assets 3,429,155 4,773,556 -1,344,401 -28.2% 1,170
Investments in affiliates and joint ventures 6,603,767 7,020,152 -416,385 -5.9% 2,253
Property, plant and equipment 9,022,737 8,833,053 189,684 2.1% 3,079
Investment properties 47,021 211,677 -164,656 -77.8% 16
Financial assets 17,768 13,427 4,341 32.3% 6
Accounts receivable 243,746 157,762 85,984 54.5% 83
Commercial Loan 50,171 50,171 0 0.0% 17
Intangible assets 3,766,774 3,623,178 143,596 4.0% 1,285
Assets for taxes 108,409 108,752 -343 -0.3% 37
Assets for differed taxes 110,982 96,685 14,297 14.8% 38
Other assets 24,955 21,299 3,656 17.2% 9
Total Non Current Assets 19,996,330 20,136,156 -139,826 -0.7% 6,823
Total Assets 23,425,485 24,909,712 -1,484,227 -6.0% 7,993
Liabilities
Financial liabilities 145,335 227,058 -81,723 -36.0% 50
Accounts payable 860,145 1,177,177 -317,032 -2.9% 293
Accounts payable to affiliates 60,299 6,094 54,205 889.5% 21
Provisions for benefits to employees 74,608 66,679 7,929 11.9% 25
Other provisions 73,590 66,156 7,434 11.2% 25
Liabilities for taxes 150,728 163,367 -12,639 -7.7% 51
Other liabilities 195,643 226,305 -30,662 -13.5% 67
Total Current Liabilities 1,560,348 1,932,836 -372,488 -19.3% 532
Financial liabilities 8,470,877 8,871,339 -400,462 -4.5% 2,890
Liabilities for current taxes 653 0 653 100.0% 0
Accounts payable to affiliates 0 0 0 0.0% 0
Provisions for benefits to employees 162,057 144,465 17,592 12.2% 55
Other provisions 263,491 255,237 8,254 3.2% 90
Liabilities for differed taxes 1,435,559 1,520,953 -85,394 -5.6% 490
Other liabilities 23,395 359,295 -335,900 -93.5% 8
Total Non Current Liabilities 10,356,032 11,151,289 -795,257 -7.1% 3,534
Total Liabilities 11,916,380 13,084,125 -1,167,745 -8.9% 4,066
Equity
Issued capital 492,111 492,111 0 0.0% 168
Premium in placement of shares 837,799 837,799 0 0.0% 286
Reserves 2,999,690 2,555,404 444,286 17.4% 1,024
Period profit 772,739 731,463 41,276 5.6% 264
Withheld profits 6,048,356 6,852,240 -803,884 -11.7% 2,064
Total Equity from Controlling Entity 11,150,695 11,469,017 -318,322 -2.8% 3,805
Non controlled stake 358,410 356,570 1,840 0.5% 122
Total Equity 11,509,105 11,825,587 -316,482 -2.7% 3,927
Total Liability and Equity 23,425,485 24,909,712 -1,484,227 -6.0% 7,993
Annex 2. Legal note
This document contains words such as “anticipate”, “believe”, “expect”, “estimate” and others with similar meaning. Any information that is different to the historic information, including, but without limiting to that refers to the Company’s financial situation, its business strategy, its plans and management objectives, relates to forecasts. Forecasts in this report were made under assumptions related to the economic, competitive, regulatory and operational environment of the business and considered risks beyond the Company’s control. Forecasts are uncertain, and they may not materialize. One may also expect that unexpected events or circumstances occur. Because of the foregoing, actual results may differ significantly from forecasts herein contained. Therefore, forecasts in this report must not be considered as true facts. Potential investors must not consider the forecasts or assumptions herein contained, neither should they base their investment decisions upon them. The Company expressly waives any obligation or commitment to distribute updates or revisions of any of the forecasts herein contained. The company’s past performance may not be considered as a pattern of its future performance. The numbers presented correspond to the numbers reported by the subsidiary or associated companies at the time of preparation of this report. The numbers are not audited and may change in time. Annex 3. Clarifications Only for information purposes, we have converted some of the numbers in this report to its equivalent in United States Dollars using the TRM at the end of the period as published by the Superintendency of Finance of Colombia. The exchange rates used in the conversion are the following:
• TRM as of June 30, 2018: 2,930.80. • TRM as of June 30, 2017: 3,038.26. • The comma (,) is used in the numbers presented to separate thousands and the period (.) is used to
separate decimals.