ENGIE ENERGÍA CHILE S.A - Presentation to investors Full year 2019 - ENGIE Energía Chile
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ENGIE ENERGÍA CHILE S.A. Presentation to investors Full year 2019
SNAPSHOTS
2
Supporting our clients in their zero BUSINESS LINE – CLIENT SOLUTIONS
carbon roadmap
Focus on 20 countries, 30 urban areas,
BUSINESS LINE – RENEWABLES
500 global clients
Decentralized organization:
BUSINESS LINE – NETWORKS
24 business units; 4 business lines
CAPEX 2019-2021:
BUSINESS LINE – THERMAL
€ 12 bn & 9 GW in renewables
Capacity breakdown Revenue breakdown EBITDA breakdown
88% low CO2 0.2
5% 4.5 0.2
7% 7.0 37.1 1.1 5.7
6%
104 GW(1) € 60.6 bn(3) € 9.2 bn(3)
4.0
55% 1.8
4.6
27% 3.4 0.2
Natural gas Nuclear Other Europe North America Latin America Europe North America Latin America
Renewables(2) Coal Africa & Asia GEM Other Africa & Asia GEM Other
(1) At 12/31/2018, at 100% (2) Including pump storage for hydro (3) 2018 Consolidated
3
Engie Energía Chile - Presentation to Investors – FY 2019
3
Gross installed Generation
capacity (MW) 2019 (GWh)
Solar Hydro
11% 27%
Wind
Wind Hydro 6%
9% 27%
Solar
8%
SEN 25,206 MW 77,382 GWh
3,300 Km Thermal
Thermal
59%
53%
Clients Market Share
(% of sales 2019) (% installed capacity Dec-19)
Enel
Regulated 29%
42% Engie
9%
Colbún
13% 25,206 MW
10,793 MW AES Gener
14%
Tamakaya
2%
Unregulated Other
58% 33%
Source: CNE
4
Engie Energía Chile - Presentation to Investors – FY 2019
4
RELEVANT PLAYER IN
THE ENERGY CONTRACTED
INDUSTRY GROWTH UNDERWAY BUSINESS
Leader in northern mining 15-yr regulated PPA Capacity contracted under
region, 4th largest electricity w/distribution companies => long-term sales agreements;
generation company in contracted physical sales 12 years remaining average
Chile growth in 2018 & 2019 life
~2.2 GW gross generation Strong counterparties
50%-owned TEN ~US$ 0.8
capacity bn transmission project Unregulated: mining and
began operations in 4Q17 industrial companies;
3rd largest transmission Regulated: distribution
company companies
~US$ 1 bn new power
generation capacity + port
Seaport infrastructure, gas
(COD: May 16, 2019) Strong sponsorship
pipeline
Float
24.84%
52.76%
Engie
Energía
Prepared to provide energy Good delivery in growth AFPs (Chilean
Chile
pension funds)
solutions to its customers strategy implementation 22.40%
5
Engie Energía Chile - Presentation to Investors – FY 2019
Technology
Chapiquiña (11MW) Coal
El Aguila I (2MW) Diesel/Fuel oil
2,204 MW (*) Natural gas
Pampa Camarones (6MW) Renewables
Baterías - Arica (2MW) Collahuasi
Diesel Arica (14MW)
El Abra
2,293 kms HV + MV TE Tocopilla (708MW) Chuquicamata
transmission lines.
50% share in TEN Tocopilla port Gaby
C. Tamaya (104MW) Mining Operations
TE Mejillones (580MW)
CT Andina (177MW)
TEN Escondida
2 seaports:
Tocopilla CT Hornitos (178MW) Gasoducto Norandino
Chile - Argentina (Salta)
Andino (Mejillones) IEM (377MW)
Los Loros (46MW)
Gas pipelines &
L.T. LNG supply
agreements
Andacollo (1MW)
(*) Units 12 and 13 in Tocopilla (171MW combined gross capacity) were closed on June 7, 2019. The company announced the closure of Units 14 and 15 in Tocopilla (268MW combined gross capacity) by YE
2021 and CTM1 & 2 in Mejillones (334MW combined gross capacity) by YE 2024. The Los Loros & Andacollo PV plants were acquired in April 2019. Their capacity is shown in MW, which differs from the MW-
peak figure reported in other slides of this presentation. 6
Engie Energía Chile - Presentation to Investors – FY 2019
. 6
NEW PPA:
NEW POWER
REVENUE & EBITDA INTERCONNECTION
SUPPLY
GROWTH
Contracted revenue growth TEN: 600-km, 500 kV, IEM + Puerto Andino
• ~8,200 GWh p.a. in 2017 ~US$0.8bn, transmission
company ~US$1 bn investment including
• ~11,000 GWh p.a. in 2019
port
More balanced portfolio Operating since 24-Nov-17 Port: In operations
(Unregulated/regulated) IEM: COD: May 16, 2019
• 77%/23% in 2017 Regulated & contracted revenue;
• 57%/43% in 2019 ~US$80 million EBITDA p.a. IEM: 375 MWe gross capacity
EBITDA growth (94% 2019 vs. +2 LNG cargoes – 2018
2017) +1 LNG cargo – 2019
TEN: 50/50 Joint Venture
85% project financed Power supply contracts with
Clients’ Sales (GWh) generation companies
Red
2017 2018 2019 EECL
Eléctrica
50%
Unregulated Regulated 50%
7
Engie Energía Chile - Presentation to Investors – FY 2019
Early steps
OUR PERFORMANCE
• Development of TEN project => procurement of low-carbon energy sources
• Decision not to build any new coal plants
PPA renegotiation with mining companies
RENEGOTIATED PPAs
• New tariff scheme: price reduction
• Decarbonization (tariff indexed to CPI rather than to coal prices starting 2021) ~3 TWh
• Contract life extension (10+ years)
COAL CAPACITY
DISCONNECTED IN 2019
Asset rotation plan
• Coal plant closures: 171MW in 2Q19, 268MW by YE 2021, 334MW by YE 2024 171 MW
• Renewable developments: 1GW / USD1bn plan
COAL CAPACITY TO BE
• Long-term power supply agreement to reduce volatility during transition DISCONNECTED YE 2024
Government-private agreement to phase-out coal generation
602 MW
• Gradual process concerning 28 coal units/5.5 GW installed capacity:
ASSET ROTATION PLAN
• Binding commitment by Engie, Enel & AES to close 8 units/1GW by 2024
• Chile’s challenge: To become carbon-neutral by 2050 1GW $1bn
8
Engie Energía Chile - Presentation to Investors – FY 2019
RECENT EVENTS
9
Jun. 4, 2019: Agreement with Dec. 8, 2019, COP 25: Engie to close 2
government to phase-out coal-based more coal units => 773 MW of coal
generation capacity closed by YE 2024
• Binding commitment by Engie, Enel & AES • Letter of Intent signed w/ IDB Group to
to close 8 units/1GW by 2024 structure US$125 million L.T. financing
• Commitment to reassess feasibility of • 3 coal units w/730 MW capacity left after
further closures every five years 2024
Decarbonization process
OUT 773 MW COAL
U12 U13 U14 U15 CTM1 CTM2
171 MW 268 MW 334 MW
2019 2020 2021 2022 2023 2024
AFTER-TAX IMPAIRMENTS:
2018: US$53 MILLION 2019: US$134 MILLION
10
Engie Energía Chile - Presentation to Investors – FY 2019October 7, 2019: Launching of first 3 renewable projects out of 1GW/US$1bn investment plan
Los Loros Calama Capricornio Tamaya
Acquired in April 2019 Site mobilization 10-19 1st cargo w/solar panels on Construction to start 1Q20
US$ 35 million US$159 million CAPEX site - US$64 million CAPEX US$68 million CAPEX
Green and cost-efficient project pipeline
IN 417 MW RENEWABLES + ~600 MW TO COME
LOS LOROS CALAMA CAPRICORNIO TAMAYA
55 MWp 151 MW 97 MWp 114 MWp
2019 2020 2021 2022
ACQUISITIONS + FIRST 3 PROJECTS
2019-2021: US$326 MILLION
11
Engie Energía Chile - Presentation to Investors – FY 2019Jan 28, 2020: New 10 yr., 3.4%, US$500 million 144A/RegS bond to refinance US$400 million notes due Jan-2021
600.000 6%
500
500.000 Before: 4.83%
400 5%
400.000 350
300.000 4%
200.000 After: 3.72%
80 3%
100.000
0.000 2%
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
• Average debt maturity extended to 7.4 years
• Average debt coupon rate lowered to 3.72%
Letter of intent signed with IDBI to finance renewable projects contributing to accelerate decommissioning of coal units
• Letter of intent signed at COP 25
• IDB Invest seeks to finance renewable energy
projects contributing to accelerate decarbonization
• ~US$125 million, 12-yr. financing, with A-Loan
funded by IDB and B-Loan funded by Clean
Technology Fund
12
Engie Energía Chile - Presentation to Investors – FY 2019PEC = Adjusted upwards if
Dec. 2020
Dec. 2025
Jul. 2023
• Law #21,185 (Nov-19): Electricity
PEC = Fixed price to
consumers in nominal
PEC = Fixed price to consumers in
PEC = Adjusted upwards if
necessary to avoid breaching
necessary to permit full
price stabilization mechanism for CLP adjusted for inflation repayment of fund in USD
CLP @ 1H19 levels US$1,350 million fund cap
by YE 2027
regulated customers
• 9.2% rise in electricity prices annulled
System average
• As long as stabilized price (PEC) contract price “PNP”
remains below average contract price
(PNP), generation Co.s will accrue an Receivable build-up
account receivable (the “Fund”) (Fund increase)
Receivable refund
• As lower priced PPAs awarded in
(Fund decrease)
power auctions become effective Stabilized consumer
starting 2021, PNP will fall below PEC price “PEC”
and receivable will be repaid
• Generation co’s to bear working
2019 2020 2021 2022 2023 2024 2025 2026 2027
capital cost. Monetization alternatives
being studied
PNP > PEC
• CLP/USD FX rate: main variable Generation Co’s accrue
affecting fund size and recovery pace account receivable Stabilization fund
(“Stabilization fund”) PNP > PEC
The Fund can grow until the first to The fund accrues interest
from distribution Co’s. The account receivable begins to
•
occur: July 2023 or fund reaches starting 2026.
EECL’s receivable at YE 2019 = Consumers pay at PEC US$1,350 million cap.
be refunded.
US$73.5 million while generators are
entitled to charge PNP.
13
Engie Energía Chile - Presentation to Investors – FY 2019• Interchile’s Cardones-Polpaico transmission Project: COD = May 29, 2019:
Together with increased gas supply, full interconnection contributed to
SING SEN
“Sistema
• reduced marginal cost volatility
Eléctrico • lower average marginal costs
Nacional”
SIC • EECL contracted up to 4.6 TBtu of gas imports from Argentina for the
Oct-2019 - Apr-2020 period
Chile Argentina
GNA TGN
YPF/Tecpetrol/Winter
EECL: up to 0.6 Mm3/day (no ToP / no DoP) ECS (Related)
U16/CTM3 shall/Pluspetrol
Gas imports will enhance dispatch of CCGTs
=> lower and more stable marginal cost throughout the day
14
Engie Energía Chile - Presentation to Investors – FY 2019OUR CLIENTS OUR ASSETS
• 55MWp Solar PV acquisition 17-Apr-19
• PPA renegotiations & new contracts Los Loros & Andacollo @ US$35 million
Antucoya, Molycop & others ~778 GWh p.a.
• 248MWp Wind +Solar PV in construction
Calama wind farm and Capricornio solar PV plant
• 15-yr. PPA w/distribution companies
88% demand increase in 2019 • IEM commercial operation 16-May-19
Cost efficient 377 MW gross capacity
OUR RATINGS OUR SHAREHOLDERS
• Final dividend 2018
• Fitch: BBB Positive Outlook
US$ 22 million paid in May 2019.
June 2019
• US$90 million provisional 2019 dividend
• Feller AA-(cl) Stable outlook
• US$ 50 million paid in June 2019
January 2019
• US$ 40 million paid in November 2019
15
Engie Energía Chile - Presentation to Investors – FY 2019KEY MESSAGES
162019 results exceeding guidance
Mastering the growth achieved
Building our future together with our clients
PPA renegotiation, decarbonization & life extension
Paving the way for our energy transformation plan
Development focused on replacing coal with renewable capacity
Robust and flexible capital structure
Ample room to finance energy transformation plan
17
Engie Energía Chile - Presentation to Investors – FY 2019PROFITABLE LONG-TERM GROWTH; IMPROVED RISK PROFILE OUR PERFORMANCE
New PPAs w/distribution companies and Free Clients
• Growth in contracted portfolio reaching >11 TWh of contracted demand
• Portfolio diversification (regulated vs. unregulated) 2017 2018 2019
ENERGY SALES (TWh)
Operation in an interconnected market. SIC + SING = SEN
• 50%-owned TEN company
6.51 9.72 11.10
• ISA’s Interchile Project completed in May 2019
ENERGY SALES REGULATED PPA
• Up to 1,300MW of power transported
(SIC)
• Trapped solar PV production released
• Lower and less volatile marginal costs 1.64 3.14
EBITDA
New power supply sources => risk control
• New gas supply to run our CCGTs or to sell to other producers
201 376 535
• IEM project in operation since May 2019. Puerto Andino port servicing
NET RECURRING INCOME
Mejillones complex since late 2017
• PPAs signed with other generation companies to reduce our exposure to 61 156 244
the spot market in south-central Chile
18
Engie Energía Chile - Presentation to Investors – FY 2019
182018 2019 Variation
Operating Revenues (US$ million) 1,275.3 1,454.5 +14%
EBITDA (US$ million) 375.7 534.9 +42%
EBITDA margin (%) 29.5% 36.8% +7.3 pp
Net income (US$ million) 102.6 110.8 +8%
Net income-recurring (US$ million) 155.5 244.4 +57%
Net debt (US$ million) 841.7 682.7 -19%
Spot energy purchases (GWh) 4,009 5,520 +38%
Contracted energy purchases (GWh) 880 500 -43%
Physical energy sales (GWh) 9,729 11,103 14%
• 42% EBITDA increase mainly explained by higher regulated sales due to step-up in
contracted energy with distribution companies in center-south SEN
(*) Net debt as of 12/31/2018
19
Engie Energía Chile - Presentation to Investors – FY 2019Coal plant decom m issioning schedule
US$/MWh Capacity % of 2019
Plant Date
(MW) pow er supply
140 U12+U13 171 Jun-19 0.1%
U14+U15 268 Dec-21 1.2%
Average monomic price
120 US$112/MWh CTM1+CTM2 334 Dec-24 3.8%
100
Diesel
Average fuel &
80 electricity purchase cost:
US$62/MWh
60
Toll G.A.
U15 CTM3 U16 U14 U12
40 IEM &
(270 U13
IEM CTA CTH CTM GWh Energy purchases CTM
20 (May – 1 in test 2
Dec.) mode)
Firm capacity
ToP Regas + other fixed costs
0
Renewables Coal Energy purchases 6,025 GWh Coal LNG Coal Diesel
139 GWh 2,870 GWh (spot: 5,525 GWh / contracted: 500 GWh) 305 GWh 2,000 GWh 45 GWh 23 GWh
Total energy available for sale before transmission losses 2019 = 11,522 GWh
Average realized monomic price, spot purchase costs and average cost per MWh based on EECL’s accounting records and physical sales per EECL data.
Average fuel & electricity purchase cost per MWh sold includes fuel costs, LNG regasification cost, green taxes, firm capacity, self consumption & transmission losses
Sufficiency capacity provision amounted to US$8.5/MWh; ToP regasification + net system over-costs, ancillary service costs, and tolling fees paid to Gas Atacama averaged US$0.7 per each MWh withdrawn by
EECL to supply PPA demand 20
Engie Energía Chile - Presentation to Investors – FY 2019Sound contract portfolio with average remaining life of
A GROWTH
12 years
DRIVING PPA
600
● Regulated contracts
• 2018: Up to 2,016 GWh
● Unregulated contracts (230 MW-avg.)
• 2019-2032: Up to 5,040 GWh
Renegotiated contracts
500 Distribution per year (575 MW-avg.)
Average demand (MW)
Companies
(South SEN)
400
Clients’ credit ratings (S&P/Moody’s/Fitch):
300 AMSA Codelco Codelco • Codelco: A+/A3/A-
CGE
• Freeport-MM (El Abra ): BB/Ba1/BB+
AMSA
200 (North • Antofagasta PLC (AMSA + Zaldívar): BBB+(Egan-Jones)
SEN)
Glencore Glencore
• Glencore (Lomas Bayas, Alto Norte): BBB+/Baa1/--
100 El
• CGE: A+(cl) (Fitch) / AA-(cl) (Feller)
Abra
Other (South SEN)
Other (North SEN)
0
0 2 4 6 8 10 12 14 16 18 20 22
Remaining life of contracts (years)
21
Engie Energía Chile - Presentation to Investors – FY 2019PPA renegotiations signed by EECL in 2018 and 2019
Antucoya
50MW Price discount, Price discount, CPI-indexed
& others
PPA life extension
coal-indexed
23MW
Price discount, Price discount,
Chuqui PPA life extension @ new, CPI-indexed price
200MW
coal-indexed CPI-indexed
Alto Norte Price discount,
Price discount, CPI-indexed Price discount, CPI-indexed PPA life extension
34MW coal-indexed
16MW Price discount, coal-indexed Price discount, CPI-indexed PPA life extension
Lomas Bayas Price discount,
Price discount, CPI-indexed PPA life extension
34MW coal-indexed
16MW Price discount, coal-indexed PPA life extension
El Abra Price discount,
CPI-indexed
110MW coal-indexed
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
• Extending the life of our PPAs and leaving behind their price indexation to coal will allow us to invest in
renewable power sources and replace coal capacity
• Our clients will benefit from lower power prices and a reduction in their carbon footprint
22
Engie Energía Chile - Presentation to Investors – FY 2019GWh CONTRACTED DEMAND: OUR VISION THROUGH 2030
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Regulated SING Regulated SIC Free clients-renegotiated+new free clients Other free clients
• We will potentially invest ~US$1 bn in renewable power projects over the 2019-2023 period on the basis
of the recent PPA life extension + new PPAs
Source: Engie Energía Chile: Average expected demand under existing contracts following 2018 and 2019 renegotiations
23
Engie Energía Chile - Presentation to Investors – FY 2019ACQUISITIONS:
Arica y
Parinacota
Tamaya
Los Loros & Andacollo solar PV plants
114 MWp • 54 MWp + 1.3 MWp
Calama • Acquired by EECL in April, 2019 for ~US$35 million
151.2 MW
Antofagasta
Capricornio
97.4 MWp GREEN-FIELD PROJECTS:
• 3 projects with approved “RCA”
Atacama Los Loros
54 MWp
• 2 under construction, 1 to start in 1Q20
• Aggregate investment of ~US$ 300 million
Coquimbo Andacollo • 2.2 GW projects in different stages of development
1.3 MWp
Calama wind farm (151.2 MW)
O’Higgins • NTP Sep-19; COD 2Q21
• Siemens Gamesa (WTGs1); GES (BOP2)
Bío-Bío
Wind Capricornio solar PV plant (97.4 MWp)
Solar PV • NTP Sep-19; COD 1Q21
Development • Trina (PV panels); Nclave (trackers); Sungrow (inverter); GES (BOP)
Los Lagos Construction
Operation Tamaya solar PV plant
• NTP 1Q20; COD 1Q21
Source: Engie Energía Chile
(1) WTG = Wind Turbine Generator; (2) BOP = Balance of Plant 24
Engie Energía Chile - Presentation to Investors – FY 2019Nueva Chuquicamata
Arica y
Parinacota
• Substation + 2 x 220 kV line
• Referential investment value: US$ 18 million
Nueva • AVI: US$ 0.9 million
Chuquicamata
Antofagasta
• COD: 24 / 48 months
• RCA approved May-19
Atacama Algarrobal Algarrobal
• Sectioning 220 kV substation
Coquimbo • Referential investment value: US$ 13.9 million
• AVI: US$ 0.4 million
• COD: 24 months
O’Higgins
• RCA approved Jun-19
Bío-Bío
El Rosal El Rosal
• Sectioning 220 kV substation
Wind • Referential investment value: US$ 7.3 million
Solar PV • AVI: US$ 0.2 million
Los Lagos
• COD: 24 months
• RCA approved May-19
Source: Engie Energía Chile
25
Engie Energía Chile - Presentation to Investors – FY 2019• 377MWe gross capacity => 348MWe net
base-load capacity
• Pulverized coal-fired power plant w/
strict environmental standards
• Turnkey EPC contractor: SK
Engineering & Construction (Korea)
• Commercial operation date:
May 16, 2019
• 1,466 GWh injected to SEN in 2019
• US$0.9 billion investment
Source: Engie Energía Chile
26
Engie Energía Chile - Presentation to Investors – FY 2019• Mechanized port, with 6 million TPY
transfer capacity
• 3,000 TPH unloading speed => lower
demurrage costs
• Conventional & tubular conveyor belts =>
better environmental standards
• Space for mineral product exports =>
diversification opportunities
• 1.5 million tons of coal + 62 thousand
tons of limestone unloaded in 2019
• 18 shipments, including 5 Capesize
carriers in 2019
• US$122 million total investment at CTA
subsidiary
Source: Engie Energía Chile
27
Engie Energía Chile - Presentation to Investors – FY 2019• FREE CASH-FLOW POSITIVE STATUS STARTING 2019 HAS RELEASED FINANCING CAPACITY FOR ENERGY
TRANSFORMATION PLAN
MUSD 4.0
500 TEN 30
3.5
400
3.0
TEN 35
Net debt capacity at
~US$1.2bn @ 2.5x 2.5
Debt/EBITDA
300
IEM & Port
2.0
436
IEM & Port
200 314 1.5
Renewables
Renewables 64 241
IEM & Port 1.0
183 Tansmission 13
100
IEM & Port
78 0.5
Recurring Recurring Recurring Transmission 25
56 58 42 Recurring 35 Recurring 30
0 0.0
2016 2017 2018 2019 2020 (e)
Net Debt-to-EBITDA EBITDA (left axis) Net Debt-to-EBITDA (right axis)
(*) Recurring CAPEX includes maintenance expenditures and upgrade investing in transmission assets
(**) Renewables includes Los Loros & Andacollo PV plants acquisition, first projects of Asset Rotation Plan
28
Engie Energía Chile - Presentation to Investors – FY 2019Demand & prices
+ New PPA w/distribution co’s. US$ 160 to 180
US$ 244 mln
+ New PPAs w/free Clients mln
US$ 75 mln LDs (*)
- Client migration & lower demand
US$ 450 to
- PPA renegotiation
US$ 161 mln 470 mln
US$ 460 mln
Marginal cost risks
- Coal prices
US$ 87 mln
US$ 376 mln
- Hydrologic conditions
US$ 276 mln
Power supply
1,369 MW avg.
- Plant unavailability 1,267 MW avg.
1,108 MW avg.
+ Renewables COD
937 MW avg.
+ Thermal plant closures
+ Power supply contracts
2017 2018 2019 2020
Regulation
Contracted Sales EBITDA IEM LDs (*) Net Recurring Income
- Green taxes
- Ancillary services (*) The LDs paid by the IEM EPC contractor compensate for lost operating income attributed to the delayed
start-up of the project. Of the total amount, US$35 million compensate for lost operating income in 2018 and
US$40 million for lost income during 2019.
Source: Engie Energía Chile
29
Engie Energía Chile - Presentation to Investors – FY 2019FINANCIAL UPDATE
30+107 (135)
By main effect
In US$ Million
+72
(63)
Lower
+24 +5 Physical
+33 prices (125)
Other on energy energy
+83 OPEX, purchases
Spot sales operating purchases Sufficiency
Fuel Transmission SG&A,
income capacity
+158 costs Gas
other 535
(LDs) purchases
Volume Average
sales free realized
clients electricity
376 prices
Volume Regulated
sales - Unregulated
distribution
company
EBITDA EBITDA
PPAs
2018 2019
EBITDA 2018 Incremental volume sales - PPA Incremental volume sales - free Fuel costs Spot sales, transmission & gas Operating costs, SG&A & other LDs/Insurance compensations Energy purchases - price Energy purchases - volume Capacity purchases Average realized prices EBITDA 2019
w/distribution co's clients businesses businesses
31
Engie Energía Chile - Presentation to Investors – FY 2019Recurring Results
In US$ Millions
(9) 244
116 +8
(19)
minority
Other interest (134)
Depreciation
Financial
FX Diff.
expenses
Insurance PD
156
+9
minority
52 interest
111
103 EBITDA +8
+9 increase minority
minority interest
interest
Impairment
Impairment
Net Net
Net Net
Recurring Recurring
Income Income
Income Income
2018 2019
2018 2019
32
Engie Energía Chile - Presentation to Investors – FY 2019Main cash flows
In US$ Million
+72 (22) (569)
+49 +23
+119 Cash
Leases Income payment
Accrued (IFRS 16) Taxes from TEN
+135 +33 Interest/ + Green
Dividends deferred Taxes
Acquisition
(including financial
842 Los Loros 40% CTH)
Andacollo cost +
CAPEX (*) MTM on
(**) 683
hedges
Operating
cash flow
(***)
(***)
Net Debt Net Debt
as of as of
12/31/18 09/30/19
(*) excludes capitalized interest
(**) net of available cash in acquired co’s.
(***) includes US$80 million in liquidated damages received from IEM EPC contractor
33
Engie Energía Chile - Presentation to Investors – FY 2019Net debt/EBITDA well below 2.5x NET DEBT/EBITDA @ 1.4 X
4.000
3.500
Rating confirmed @ BBB 3.000
2.8
2.2
2.500 2.0
1.7
• International: 2.000
1.3
1.500
Fitch (June 2019) Positive Outlook 1.000
• S&P (July 2018) Stable Outlook 0.500
0.000
• National scale: Dec 15 Dec 16 Dec 17 Dec 18 Dec 19
• Fitch (June 2019) AA- Positive Outlook
• Feller Rate (January 2019): AA- Stable Outlook
MODERATE DEBT LEVELS
Debt details:
In US$ Millions
• US$ 750 million 144-A/Reg S Notes: 1,000
899 922 7%
900 850
• 5.625%, US$400 million 2021 (YTM=2.498% at 12/31/19) (*) 62 6%
800 750 750 78 239
• 4.500%, US$350 million 2025 (YTM=3.211% at 12/31/19) 700 6%
147 5.10% 5.10%
279 4.86%
• 2.269%, US$80 million bank loans maturing 2020 600 4.69% 4.83%5%
500 772 837
683 5%
• US$58 million 20-yr. financial lease w/TEN for 400 603
471 4%
300
dedicated transmission assets
200 4%
2015 2016 2017 2018 2019
• US$23 million financial leases per IFRS 16 Net Debt Cash Average coupon rate
(*) To be fully refinanced with new US$500 million 144 A/Reg S issue @ 3.4%
34
Engie Energía Chile - Presentation to Investors – FY 2019DIVIDENDS PAID MARKET CAP & DIVIDEND YIELD
In US$ Millions In US$ Millions
120 100% 112 100% 7.0%
90%
100 22 6.0%
5.8%
2,000
80% 5.4%
78 70% 5.0%
80
7 60% 1,500
47% 56 3.4% 4.0%
56
60 50%
47 2,265
1,000 3.0%
17 34 90
40% 1,922 1,819 1,866 2.5%
12 30% 30% 30% 30
40
72 30% 2.3%1,657 2.2% 1,620
1,440 2.0%
20 13
20% 500
20 39 35 1.0%
26 10% 0.8%
14 13
- 0% - 0.0%
2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019
Provisional Final & Additional Policy % Market Cap Dividend Yield %
SHARE PRICE EVOLUTION
Dec. 29, 2018 Dec. 30, 2019
115 EECL: CLP 1,187 EECL: CLP 1,145 (-4%)
110 IPSA: 5,105 IPSA: 4,669 (-9%)
105
100
95
90
85
80 IPSA ECL
75
Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
Includes dividends
Dividend yield: dividends per share actually paid in year n divided by year n-1 closing price
35
Engie Energía Chile - Presentation to Investors – FY 2019DELIVERY AND CLIENTS AND
DEVELOPMENT OPERATION
LEADERS IN ENERGY
IEM+PORT
TRANSITION
RENEWABLES PPA PORTFOLIO
PORTFOLIO EXTENSION
NEW PPA WITH
ASSET ROTATION
DISTRIBUTION CO’S
CAPITAL STRUCTURE
CUSTOMER SOLUTIONS
& LEAN PROGRAM
36
Engie Energía Chile - Presentation to Investors – FY 2019ADDENDA
37ENERGY SALES AND PRICES
Energy sales Prices
GWh US$/MWh
3,000 150
2,500
2,000 100
1,500
1,000 50
500
0 0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
Unregulated Regulated Spot
Energy+Capacity Price->Unregulated Energy+Capacity Price->Regulated Spot Energy Price-Crucero
Spot Energy Price-Quillota
38
Engie Energía Chile - Presentation to Investors – FY 2019Renewables
Diesel 7% 3%
Coal 61% • Increased spot purchases due to (i) coal, gas and renewable efficient
Installed capacity additions in the grid since 2016 and (ii) start-up of PPA with
Gas distribution companies in central Chile
29% capacity
2,204 MW • Fuel prices, CO2 taxes, emission-reduction costs, intermittency, and
(Dec-19) drought have put pressure on average supply cost
GWh
ENERGY SOURCES AND AVERAGE SUPPLY COST US$/MWh
3,500 150
3,000
2,500
100
2,000
1,500
50
1,000
500
0 0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
Coal Gas Diesel Renewable Contracted Purchases Spot Purchases Average Supply Cost
39
Engie Energía Chile - Presentation to Investors – FY 2019• Limited exposure to hydrologic risk until interconnection became fully operative
• Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand
(bilateral negotiation of prices and supply terms)
• Maximum demand: ~ 2,983 MW in 4Q 2019; expected 3.4% compounded average annual growth rate
for the 2019-2030 period
MW US$/MWh
Coal Gas Diesel Renew. Spot price
3,000 350
Average generation (MW)
Marginal cost (US$/MWh)
300
2,500
250
2,000
200
1,500
150
1,000
100
500
50
0 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
40
Engie Energía Chile - Presentation to Investors – FY 2019MW Generation North SEN – December 1 to 10, 2019 US$/MWh
3,500 100
90
3,000
80
2,500 70
60
2,000
50
1,500
40
1,000 30
20
500
10
0 0
1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21
1 2 3 4 5 6 7 8 9 10
Solar Wind Geothermal Coal Others
Coal EECL Gas EECL Gas Others Diesel
SIC to SING SING to SIC SING Demand Marginal cost @ Crucero (US$/MWh)
Full interconnection, at times inflexible LNG supply, intermittent renewable power sources
• Full interconnection since end-May and greater gas supply have contributed to stabilize, lower and couple average marginal costs in the
north and south grids
• Marginal costs are lower during sun & wind hours
• Higher system costs to cope with intermittent output (frequent CCGT start-ups, greater spinning reserve required from thermal plants)
require ancillary services regulation and development of economic 24 x 7 renewable generation solutions
Source: CEN
41
Engie Energía Chile - Presentation to Investors – FY 2019More agile, diversified, client-focused approach to face industry change
INCREASED TECHNOLOGIC RECOVERY IN
COMPETITION DISRUPTION DEMAND GROWTH
More flexible power auction Lower investment cost of Mining industry recovery
regulations (Law # 20,805) renewable capacity w/copper >2.7 $/lb: revival
De-risked regulated PPA to of large mining projects
foster competition Shorter development period
for renewables GDP growing at low rates
Falling energy prices
Improved plant efficiency Energy saving programs
Carbon footprint reduction create x-sales opportunities
=> PPAs indexed to CPI Lower operational costs
Smart grid initiatives and
Increased difficulty to electric mobility
execute projects
High penetration of
Evolution of Market Design in
Renewables and new energy Potential demand increase
continuous change
management products
42
Engie Energía Chile - Presentation to Investors – FY 2019SEN – December 2019
25,206 MW
SING SEN
“Sistema 8,838 MW
Eléctrico
7,370 MW
Nacional”
1,100
4,382
SIC
3,450
3,452 MW 3,310 MW
21 45
270 2,204 MW 1,370
127 61
57
1,611 10
195
2,033 610
2,990 2,586
(*)
1,304 532 MW
1,332
660 532
350
Enel Generación AES Gener Colbún EECL Kelar Other
Coal Gas Diesel Hydro Renewable (*) Thermoelectric
Source:
CNE (www.cne.cl)
43
Engie Energía Chile - Presentation to Investors – FY 2019Overall indexation applicable to Overall indexation applicable to
electricity and capacity sales electricity and capacity sales
(as of December 2019) (2021, proforma PPA
U.S. CPI
renegotiation)
U.S. CPI
U.S. PPI U.S. PPI
Gas 11%
Node Node Price
Price 66%
57%
Coal
31%
1,450 MW 1,428 MW
Contracted * Coal
Contracted *
22%
Marginal Indexation frequency: Marginal
Cost 1% Regulated : Semiannual Cost 1% Gas 11%
Others : Monthly
(*) Projected average annual demand over the life of the (*) Projected average demand over the life of the
contracts outstanding as of December 31, 2019 contracts as of 2021
EMEL(CGE) contract tariff adjustment: New PPA with distribution Co’s tariff adjustment:
• Energy tariff: ~40% US CPI, ~60 % Henry Hub gas price: • Energy tariff: ~66.5% US CPI, ~22% coal, 11.5% HH gas:
• Based on average HH reported in months n-3 to n-6 • Based on average HH reported in months n-3 to n-8
• Immediate adjustment triggered in case of any variation of 10% or more • Immediate adjustment triggered in case of any variation of 10% or more
• Capacity tariff per node price published by the National • Capacity tariff per node price published by the National
Energy Commission (“CNE”) Energy Commission (“CNE”)
• Actual collections under this contract are subject to price • Actual collections under this contract are subject to price
stabilization mechanism stabilization mechanism
44
Engie Energía Chile - Presentation to Investors – FY 2019EECL operates 23 substations with total
2,293 kms. capacity of 844 MVA
844 MVA
5
US$ 19.4 million regulated revenue p.a.
Transmission
substations
EECL operates 2,293 kms. of
transmission lines Generation 844
substations MVA
18
Kms of transmission lines
8%
891
2,293
Kms.
AVI + COMA for National & Zonal systems
92% (in millions of US$)
Owned & Operated Operated
589
8.4
US$ 19.4 million National toll
351 11.0 Zonal toll
124
213
98 28
Dedicated National Zonal
13.8-23 kV 66 kV 110 kV 220 kV
45
Engie Energía Chile - Presentation to Investors – FY 2019• Double circuit, 500 kV, alternate current TEN annual revenue:
(HVAC), 1,500 MW, 600-km long (in USD millions
transmission line at Dec.31, 2019 FX rates)
• National transmission system
AVI (VI annuity): 74.0
interconnecting SIC and SING grids since + COMA (O&M cost): 8.3
Nov. 24, 2017 -------------------------------------------------------
= VATT 82.3
• Regulated revenues on “national assets” + Toll (paid by EECL): ~7.0
(AVI) + contractual toll with EECL on
TEN 50%-owned “dedicated assets”
(COD: Nov- AVI = annuity of VI (Investment
17) • AVI + Toll ≈ MUSD 81, a good proxy of value) providing 10% pre-tax
return on assets (at least 7%
TEN’s annual EBITDA post-tax return beginning 2020)
Project Financing as of Dec-31-19
Interchile Senior 18-yr USD Loan
“ISA”
(COD: Jun- 26-yr USD Fixed-rate note
19)
Senior 18-yr Local UF Loan
~US$0.8 bn
of which >85%= Equity-Red Eléctrica
Senior Debt
Equity-Engie Energía Chile
Project
financed Total senior debt = ~USD 0.7 bn
46
Engie Energía Chile - Presentation to Investors – FY 2019US¢/lb Copper production in Chile ('000 tons) GWh
6,500
500 8,000
Copper price LME (US¢/lb) SEN monthly electricity demand
450
7,000
5,500
400
6,000
350
4,500
5,000
300
3,500
250 4,000
5,776 5,761 5,772 5,832 5,786
5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,434 5,553 5,504
200 5,263
2,500 4,739 4,904 3,000
4,602 4,581
150
1,500 2,000
100
1,000
50
500
0 -
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-500
Chile’s world-class copper industry is facing challenges: Engie is prepared to help our clients:
• Scarce water resources => increasing sea water pumping • Power production & transmission; financial
and desalination needs => higher power costs; strength; group expertise in the water business;
• New port infrastructure required; • Available port infrastructure;
• Need to keep cash cost under control; • Ready to provide energy efficiency services;
• Need to reduce carbon footprint and social impact. • Asset rotation program / decarbonization.
Source: COCHILCO
47
Engie Energía Chile - Presentation to Investors – FY 2019Pension funds Local institutions Foreign institutions Individuals
52.76% 22.14% 15.52% 9.15% 0.42%
ENGIE ENERGÍA CHILE S.A.
Inversiones Punta de Red Eléctrica Chile
Rieles Ltda. (“EECL”) S.A.
40% 50%
Central Central Gasoducto Edelnor Transmisora
Termoeléctrica Termoeléctrica Norandino S.A. Transmisión S.A. Eléctrica del Norte
Hornitos S.A. (“CTH”) Andina S.A. (“CTA”) S.A. (“TEN”)
60% 100% 100% 100% 50%
Electroandina Gasoducto Los Loros Solar
S.A. Norandino Andacollo Solar
(port) Argentina S.A. (Acquired April-2019)
100% 100% 100%
48
Engie Energía Chile - Presentation to Investors – FY 2019Shareholders’
assembly
Committee Functional committees:
Board of directors - Management
of directors - Commercial origination
- Development
- Business knowledge
CEO - Stakeholders & Regulation
- Change management
- Construction
- Portfolio & risk management
Internal auditor
Finance & Human Commercial Commercial Corporate
Legal
Shared Services Resources Large clients BTB Affairs
Portfolio Project
Operations TEN
management implementation
• The Board of directors includes three independent members out of a total of 7 directors
• The Committee of directors is formed by the three independent members and oversees all transactions among related parties
49
Engie Energía Chile - Presentation to Investors – FY 2019Ticker: ECL
+562 2783 3307
inversionistas@engie.com
http://www.engie-energia.cl
MORE INFORMATION ON 2019 RESULTS IN OUR WEB PAGE
2019
Presentation Addenda Press Recorded Financial Analyst
Release conference report pack
audiocast
50
Engie Energía Chile - Presentation to Investors – FY 2019Disclaimer
Forward-Looking statements
This presentation may contain certain forward-looking statements and information relating to Engie Energía Chile S.A. (“EECL” or the “Company”) that
reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking statements include,
without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like
“believe”, “anticipate”, “expect”, “envisage”, “will likely result”, or any other words or phrases of similar meaning. Such statements are subject to a number
of significant risks, uncertainties and assumptions. We caution that a number of important factors could cause actual results to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in this presentation. In any event, neither the Company nor any of its affiliates, directors,
officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in
reliance on the information and statements contained in this presentation or for any consequential, special or similar damages. The Company does not
intend to provide eventual holders of shares with any revised forward-looking statements of analysis of the differences between any forward-looking
statements and actual results. There can be no assurance that the estimates or the underlying assumptions will be realized and that actual results of
operations or future events will not be materially different from such estimates.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without EECL’s
prior written consent.
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