AES GENER/ 2016
AES GENER 3Q 2016 RESULTS
AES Gener reported the highest EBITDA in the last 5 years for
the first nine months period
AES Gener recorded an EBITDA of ThUS$571,388 during the
first nine months of 2016, 17% higher than EBITDA recorded in
the same period of 2015
AES Gener continues to be the largest energy producer in Chile
contributing with 31% of the total generation in the country as of
September 30, 2016.
Cochrane Units 1 and 2 (532 MW totaled), Andes Solar (21 MW)
and Tunjita (20 MW) projects finalized their construction and
began their commercial operation during this period.
During July, August and September, three of the Rating Agencies
that evaluate the Company, reaffirmed “BBB-” international
credit Rating of the company, with a “Stable” outlook.
CONSOLIDATED FINANCIAL SUMMARY
Financial Summary (ThUS$)
Revenue
September
September
2016
2015
Var.
%
1,722,454
1,665,093
3%
Gross Profit
463,020
392,174
18%
EBITDA (1)
571,388
490,335
17%
Net Income
189,674
191,927
-1%
Net Operating Cash
256,867
193,846
33%
Earnings per share
0.023
0.023
(1)
Tomás González
(56 2) 2 686 8813
IR Manager
[email protected]
Denisse Labarca
(56 2) 2 686 8541
Head of IR
[email protected]
EBITDA is calculated as the sum of gross profit plus administrative expenses, depreciation and other minor adjustments.
1
AES GENER/ 2016
HIGHLIGHTS IN 2016 TO DATE
AES Gener power plants, as in 2014 and 2015, maintained its leading position in generation in Chile,
contributing 31% of the total generation of the country during the first nine months of 2016.
During the first nine months of 2016, Nueva Renca plant continued generating revenues through gas
and tolling agreements with Enap and Endesa, allowing our facility to increase its generation and to sell
energy in the spot market. From August and until December 2016, a new tolling agreement with Endesa
started to operate.
The company received the 2016 Carlos Vial Espantoso Award, annual recognition that singles out
companies that build participatory labor relations, based on respect and transparency, positive impact
on the sustainability and productivity of the company, the development of their workers and the progress
of the country.
On September 12th, AES Gener was designated for the second consecutive year, to integrate the Dow
Jones Sustainability Index in Chile.
AES Gener won for the third consecutive year the 1st place in the ranking of the Most Innovative Chilean
Companies within the generation sector. This acknowledgement is conducted by the ESE Business
School of the Universidad de Los Andes in alliance with La Tercera newspaper.
On October 26th, AES Gener was awarded “Buen Ciudadano Empresarial 2016” from Amcham Chile.
Progress on projects under construction:
AES Gener continues to consolidate its second phase of expansion, which includes a portfolio of
projects of power generation from diverse technology for a total of 1,104 MW, which employs more
than 7,500 people directly. It is also working on a new line of business such as water desalination for
sale to third parties.
During 2016, the commercial operation of the Tunjita Hydroelectric Plant in Colombia, Andes Solar in
the SING, and so did the Unit 1 and 2 of the Cochrane Complex also in the SING.
Project
Capacity
Type
Progress
Start of Operation
Tunjita
20 MW
Hydro
100.0%
06-30-2016
Andes Solar
21 MW
Solar
100.0%
05-28-2016
Cochrane 1st Unit
266 MW
Coal
100.0%
07-09-2016
Cochrane 2nd Unit
266 MW
Coal
100.0%
10-12-2016
Alto Maipo
531 MW
Hydro
39.2%
1H 2019
In February, AES Gener started to commercialize energy from the SING to the SADI through its
transmission line Interandes. At September 30, 2016, it had exported approximately 102 GWh
generated.
In March, continuing the process associated with the LNG Quintero Open Season launched in
November 2014, where AES Gener won a regasification capacity of 1.45 million m3 / day, an agreement
with GNL Chile was signed allowing the latter to continue the studies necessary for the expansion of
the Quintero terminal.
In December 2015, the Argentine authority partially released restrictions on the foreign exchange
market, allowing access to the Company to purchase US dollars in the country. This allowed
Termoandes to distribute to AES Gener US$17.5 million to date.
2
AES GENER/ 2016
In April, the partial early redemption of the Bonds 144 RegS / was made to 4.875% of Angamos in the
amount of US $ 199 million, at a value of 94% of its nominal value, which were refinanced through
syndicated loans under the same conditions of amount and term. Regarding the interest rate, we
achieved its decrease to 4.5% in average.
In April, Guacolda was downgraded by Standard & Poors from BBB- to BB+ with Stable Outlook.
EXTERNAL FACTORS
Annual Inflation Rate
Nine month period ended September 30, 2016
Exchange Rate as of September 30,
2016
2015
Chile
Colombia
Argentina
Chile
Colombia
Argentina
3.1%
7.3%
41.8%
GDP (forecast for current Year)
Nine month period ended September 30, 2016
Chile
Colombia
Argentina
1.7%
2.0%
-1.2%
658.02
2,879.95
15.31
698.72
3,121.94
9.42
Var. (%)
(6%)
(8%)
63%
Growth in Electricity Consumption, nine month
period ended on September 30, 2016:
SIC
0.1%
SING
1.9%
Colombia
0.8%
Argentina
1.1%
REVIEW OF 2016 RESULTS
Income Statement
As of September 30 2016, AES Gener S.A. (hereinafter referred to as AES Gener or the Company) recorded
a net income of ThUS$189,674, 1% lower than the ThUS$191,927 recorded in the same period of the
previous year. EBITDA as of September 30, 2016 was ThUS$571,388, 17% higher than the EBITDA of
ThUS$490,335 recorded at the close of September 2015. The positive variation in EBITDA is mainly
explained by improved operating results in the SING and the SIC in Chile and the SADI in Argentina.
From an operational standpoint, gross profit as of September 30, 2016 totaled ThUS$463,020 representing
a positive variation of 18% when compared to the ThUS$392,174 recorded at the close of September of the
previous year. Main variations in gross profit between September 2016 and 2015 were the following:
•
In the SIC: the positive variation of the gross profit of ThUS$47,888 is mainly due to higher physical
sales to unregulated customers and higher efficient generation of our facilities in the SIC. In addition,
AES Gener higher sales in the spot market were because of the higher generation with Natural Gas
from central Nueva Renca. These positive effects were offset partially by the termination of the
margins coming from the agreement of Nueva Renca lease executed in the first half of 2015.
•
In the SING, gross profit increased by ThUS$54,119. Among the most important variations is the
improved margins associated to unregulated customers due to the expiration of old contracts and
the start-up of new ones at Norgener at better terms, higher spot prices and the energy exports to
Argentina.
•
In the Argentine Interconnected System (SADI), Argentina´s gross margin increased by
ThUS$13,995 when comparing both periods, mainly as a result of the regulatory improvements in
force since end of 2015, benefitting spot sales of Termoandes’ gas turbines, partially offset by lower
physical sales to contracted clients under the “Energia Plus” program.
•
In the SIN, the negative variation of ThUS$45,156 was a result of devaluation of the Colombian
Peso, lower sales to customers and higher spot prices related to energy purchases of Chivor.
3
AES GENER/ 2016
Within the non-operating result, the main explanations are the negative variations in financial costs of
ThUS$12,227 mainly due to the increase in the corporate debt and equity in earnings of associates of
ThUS$68,775 associated to the restructuring of Guacolda Energía. This effect was partially offset by lower
losses in the Other gains/losses by ThUS$14,400 due to losses registered during 2015 originated by debt
refinancing related to Ventanas and Gener.
9M 2016 Income Statement
Income Statement (ThUS$)
September
September
Var
2016
2015
%
1,516,047
1,510,962
0%
Operating Revenue
Energy and capacity sales
Other operating revenue
206,407
154,131
34%
1,722,454
1,665,093
3%
Fuel consumption
(349,611)
(438,819)
(20%)
Fuel cost of sales
(125,304)
(66,726)
88%
Energy and capacity purchases
(358,723)
(300,882)
19%
Total Operating Revenue
Cost of sales
Transmission tolls
(68,003)
(71,195)
(4%)
Other cost of sales
(176,935)
(222,264)
(20%)
Depreciation and amortization
(180,858)
(173,033)
5%
(1,259,434)
(1,272,919)
(1%)
463,020
392,174
18%
1,984
1,651
20%
(76,891)
(79,465)
(3%)
Total Cost of Sales
Gross Profit
Other operating revenues
Selling, general and administrative expenses
Other operating expense
(1,951)
(2,185)
(11%)
Other income / (expense)
(543)
(14,943)
(96%)
Financial income
6,188
6,202
(0%)
(114,324)
(102,097)
12%
Financial expense
Equity in earnings of associates
9,865
78,640
(87%)
Foreign currency exchange differences
(19,298)
(24,372)
(21%)
Net Income (Loss) before Tax and Non-Controlling Interest
268,050
255,605
5%
Income tax income (expense)
(80,800)
(72,715)
11%
Net Income (Loss) After Tax
187,250
182,890
2%
Income (Loss) Attributable to Shareholders of Parent
189,674
191,927
(1%)
Non-controlling interest
NET INCOME
(2,424)
187,250
(9,037)
182,890
(73%)
2%
4
AES GENER/ 2016
EBITDA
AES Gener operates in four independent markets, the SIC and the SING in Chile, the SIN in Colombia and
the SADI in Argentina. The following section explains the variations in gross earnings separated in the four
markets mentioned above.
As of September 30, 2016, EBITDA was ThUS$571,388 compared to the ThUS$490,335 recorded in the
same period in 2015. This positive variation of ThUS$81,053 is mainly explained by improved margins in the
SING in Chile, due to new contracts with better terms, higher margins in the SADI in Argentina associated to
higher sales under Resolutions 482/2015 and 22/2016; and increased margins in the SIC led by higher
physical sales to unregulated customers and higher spot market sales. Improved margins were partially offset
by the negative impact of foreign exchange effect and lower physical sales to contracted customers and
ancillary services in the SIN in Colombia.
The table below shows EBITDA by market for 2016 and 2015:
EBITDA by Market (ThUS$)
September
2016
September
2015
Var.
%
SIC
SING
SIN
SADI
255,714
169,649
128,333
17,692
203,144
105,205
174,826
7,160
26%
61%
(27%)
147%
TOTAL EBITDA
571,388
490,335
17%
Note: For EBITDA calculation, please see page 27, Consolidated EBITDA.
In nine-month period ended on September 30, 2016 and 2015, the contribution to EBITDA from the SIC,
SING, SIN and the SADI was the following:
9M 2016
9M 2015
5
AES GENER/ 2016
GROSS PROFIT
Gross profit increased by ThUS$70,846 mainly as a result of increases in SING, SADI and SIC by
ThUS$54,119, ThUS$47,888 and ThUS$13,995, respectively, partially offset by a decrease in the SIN of
ThUS$45,156. The account "Consolidation Adjustments" represents intercompany coal sales from AES
Gener to Eléctrica Angamos in SING. Within SIC revenues, these sales are included in "Other Ordinary
Revenues".
Gross Profit (ThUS$)
September
2016
September
2015
Operating Revenue
SIC
SING
SADI
SIN
Consolidation adjustments
Total Operating Revenue
909,737
460,536
78,787
342,841
(69,447)
1,722,454
883,341
420,336
106,926
375,273
(120,783)
1,665,093
3%
10%
(26%)
(9%)
(43%)
3%
Cost of Sales
SIC
SING
SADI
SIN
Consolidation adjustments
Total costs of sales
(685,730)
(356,514)
(77,457)
(209,180)
69,447
(1,259,434)
(707,222)
(370,433)
(119,591)
(196,456)
120,783
(1,272,919)
(3%)
(4%)
(35%)
6%
(43%)
(1%)
463,020
392,174
Total Gross Profit
Var.
%
18%
Central Interconnected Grid (SIC)
In the SIC, gross profit increased by ThUS$47,888 mainly due to higher physical sales to unregulated
customers associated with a higher demand. A significant part of this increase could be supplied by the
increase in the efficient generation of plants of AES Gener in the SIC. On the other hand, the agreement
signed with ENAP allowed higher sales at in the spot market also obtaining attractive margins. All the abovementioned made possible not only compensate, but also improve the margins obtained in 2015 by the leasing
agreement Nueva Renca signed with ENDESA in the year 2015.
The following table presents gross profit in the SIC for both periods:
6
AES GENER/ 2016
SIC
Gross Profit (ThUS$)
Operating Revenue
Regulated customer sales
Unregulated customer sales
Spot sales
Other operating revenues
Total Operating Revenue
Cost of Sales
Fuel consumption
Energy and capacity purchases
Transmission tolls
Fuel cost of sales
Depreciation and amortization
Other cost of sales
Total Cost of Sales
Total Gross Profit
September
2016
September
2015
Var.
%
353,392
190,452
99,917
265,976
909,737
349,511
221,496
51,627
260,707
883,341
1%
(14%)
94%
2%
3%
(178,531)
(82,819)
(59,475)
(193,251)
(82,176)
(89,478)
(685,730)
(188,733)
(85,875)
(65,765)
(185,410)
(81,128)
(100,311)
(707,222)
(5%)
(4%)
(10%)
4%
1%
(11%)
(3%)
224,007
176,119
27%
The following table shows AES Gener energy sales, purchases and generation by source in the SIC as of
September 30, 2016 and 2015:
SIC
Energy Sales (GWh)
Distribution Companies
Other Customers
Spot
Intercompany Sales
Total Energy Sales
Average monomic price for unregulated customers (US$/MWh)
Average monomic price for regulated customers (US$/MWh)
SIC
Energy Purchases (GWh)
Other generators
Spot
Intercompany
Total Energy Sales
SIC
Net Generation (GWh)
Hydro
Coal
LNG
Diesel
Biomass
Total
September
2016
September
2015
Var.
%
3,741
2,239
1,105
3,867
10,952
3,794
1,906
443
3,275
9,418
(1%)
17%
149%
18%
16%
94
82
92
95
3%
(13%)
September
2016
September
2015
Var.
%
774
0
3,867
4,641
582
200
3,275
4,057
33%
18%
14%
September
2016
September
2015
Var.
%
1,005
4,453
724
132
29
6,343
826
4,227
115
168
27
5,363
22%
5%
530%
(21%)
7%
18%
7
AES GENER/ 2016
Main variations in the period ended on September 30, 2015 and 2016:
Sales in the spot market increased by ThUS$48,290 mainly due to the contract signed with ENAP, which
resulted in an increase in spot sales of 662 GWh. This positive effect is partially offset by lower prices in the
Spot market, which moved from an average of 105.01 US$/MWh in the nine month period ended September
30, 2015 to 65.6 US$/MWh in same period of 2016.
Sales to unregulated customers decreased by ThUS$31,044, associated with the short-term lease of Nueva
Renca registered in the first half of 2015, present during a shorter time in the first nine months of 2016,
partially offset by higher physical sales to unregulated customers of 333 GWh, as a result of higher demand.
It is important to highlight the increase of 18% (980 GWh) on the efficient generation of plants of AES Gener
in the SIC mainly associated to the higher availability of units 1 and 2 of the Ventanas’ complex and better
hydro availability of our run-of-the-river plants in the central regions.
Other revenues include mainly coal sales and purchases both intercompany and third parties, transmission
revenues, and revenues from services primarily to related companies. The positive variation of ThUS$5,269
is mainly due to higher sales of coal, which are offset by higher costs of fuel sales, as well as lower revenues
from transmission.
Fuel consumption as of September 30, 2016 decreased by ThUS$10,202 compared to the same period in
2015, mainly associated with lower coal prices, and lower diesel generation partially offset by higher
consumption of Liquefied Natural Gas (LNG) generation mostly at Eléctrica Santiago due to the agreement
with ENAP previously mentioned.
Purchases of energy and power, including purchases at spot market and from contract with Guacolda and
other third parties (mainly generators of non-conventional renewable energy), decreased with regards to
2015 in ThUS$3,056, due to lower spot prices.
Other costs of sales as of September 30 declined by ThUS$10,833 with respect to that recorded during the
same period 2015 mainly explained by a reduction in maintenance costs.
Greater Northern Interconnected Grid (SING)
In the SING, the gross profit increased by ThUS$54,119. This is a consequence of the improved margins
associated with the start-up of new contracts at Norgener, under better conditions, replacing previous
contracts, which expired in December 2015. In addition, it is important to highlight the revenues from of the
start of operations of the Unit 1 of Cochrane mainly with their not regulated sales. Finally, note the increase
in the margin of the SING by the effect of energy exports.
The following table presents gross profit in the SING for both periods:
SING
Gross Profit (ThUS$)
Operating Revenue
Unregulated customer sales
Spot sales
Other operating revenues
Total Operating Revenue
Cost of Sales
Fuel consumption
Energy and capacity purchases
Transmission tolls
Fuel cost of sales
Depreciation and amortization
Other cost of sales
Total Cost of Sales
Total Gross Profit
September
2016
September
2015
Var
%
419,101
36,073
5,362
460,536
405,365
7,562
7,409
420,336
3%
377%
(28%)
10%
(123,083)
(104,900)
(8,283)
0
(70,512)
(49,736)
(356,514)
(167,939)
(71,907)
(5,053)
(1,266)
(60,308)
(63,960)
(370,433)
(27%)
46%
64%
17%
(22%)
(4%)
104,022
49,903
108%
8
AES GENER/ 2016
The following table shows AES Gener energy sales, purchases and generation by type of fuel in the SING
as at September 30, 2015 and 2016:
SING
Energy Sales (GWh)
Unregulated customers
Spot
Total Energy Sales
Average monomic price for unregulated customers (US$/MWh)
SING
Energy Purchases (GWh)
Spot
Total Energy Sales
SING
Net Generation (GWh)
Coal
LNG
Total
September
2016
September
2015
Var.
%
5,180
791
5,971
4,567
704
5,271
13%
12%
13%
81
89
(9%)
September
2016
September
2015
Var.
%
967
967
1,057
1,057
(9%)
(9%)
September
2016
September
2015
Var.
%
5,014
0
5,014
3,803
478
4,281
32%
(100%)
17%
Main variations in the period ended on September 30, 2015 and 2016:
Between the first nine months of 2016 and the same period 2015 an increase in sales to unregulated
customers of ThUS$13,736 was registered mostly due to higher sales volume, increasing from 4,567 GWh
as of September 30, 2015 to 5,180 GWh at the close of September 2016, or by 13%. This increase is the
result of a larger demand from unregulated customers, and to a lesser extent to energy exports to the SADI
in Argentina, started on February 2016, representing 102 GWh as of September 30, 2016.
As in the SIC, the generation significantly increased (17% or 733 GWh) due to the greater availability of
Norgener and Angamos’ facilities, together with the entrance of Cochrane Unit 1.
Regarding net effects, transactions in the spot market recorded greater losses for ThUS$ 4,482 in the first
nine months of 2016 compared with same period of 2015, product of the rise in the average spot price, from
54.7 US$ / MWh to the 30 September 2015 to 61.8 US$ / MWh in 2016.
The cost of fuel consumption decreased in ThUS$ 44,856, due to the lower consumption of Natural Gas in
Norgener and the lower prices of coal, despite a higher generation with this fuel of 1,211 GWh.
Other costs of sales as of September 30 declined by ThUS$14,224 with respect to that recorded during the
same period 2015, mainly due to lower costs associated with coal management, lower personnel costs, as
well as a reduction in maintenance costs.
9
AES GENER/ 2016
Colombian National Grid (SIN)
The gross profit in the SIN decreased by ThU$45,156 because of the depreciation of the Colombian peso
and lower sales to contracted customers. In addition, the increase in Spot prices had a negative impact on
energy purchases that was partially offset by lower maintenance, transmission and distribution costs.
The following table presents gross profit in Colombia for both periods:
SIN
Gross Profit (ThUS$)
Operating Revenue
Contract sales
Spot sales
Other operating revenues
Total Operating Revenue
Cost of Sales
Fuel consumption
Energy and capacity purchases
Depreciation and amortization
Other cost of sales
Total Cost of Sales
Total Gross Profit
September
2016
September
2015
Var.
%
166,760
171,565
4,516
342,841
180,268
188,207
6,798
375,273
(7%)
(9%)
(34%)
(9%)
0
(170,814)
(8,202)
(30,164)
(209,180)
0
(142,137)
(8,723)
(45,596)
(196,456)
20%
(6%)
(34%)
6%
133,661
178,817
(25%)
The following table shows AES Gener energy sales, purchases and generation in the SIN in the first nine
months of 2015 and 2016:
SIN
Energy Sales (GWh)
Contracts
Spot
Total Energy Sales
Average monomic price for contracts (US$/MWh)
SIN
Energy Purchases (GWh)
Spot
Total Energy Sales
SIN
Net Generation (GWh)
Hydro
Total
September
2016
September
2015
Var.
%
2,746
2,508
5,254
2,740
2,250
4,990
0%
11%
5%
61
66
(8%)
September
2016
September
2015
Var.
%
1,853
1,853
1,650
1,650
12%
12%
September
2016
September
2015
Var.
%
3,402
3,402
3,358
3,358
1%
1%
10
AES GENER/ 2016
Main variations in the period ended on September 30, 2015 and 2016:
Contract sales decreased by ThUS$13,508 explained by lower average prices (from 59.17 US$/MWh during
first nine months of 2015 to 53.52 US$/MWh in the same period 2016), mainly explained by the devaluation
of the Colombian peso against the US dollar. It is important to mention that the decline in revenues due to
tariffs reduction was partially offset by exchange rate hedging arranged for these effects that are reflected in
the account of exchange differences (in the non-operational side), which, at the end of September 2016,
registered a positive effect of ThUS$2,151.
Purchases of energy increased by ThUS$ 28,677 due to higher average spot prices, which went from 84.25
US$ / MWh in 2015 to 111.82 US$ / MWh in 2016, together with major physical purchases of 203 GWh.
Meanwhile energy spot sales recorded a decrease of ThUS$ 16,642 explained mainly by a devaluation of
the Colombian peso against the dollar, since notwithstanding we observed an increase in physical sales to
the spot market, the dollar conversion generates sales registered in the period 2016 to be lower than those
registered in the period 2015.
Regarding the reduction in other costs of sales of MUS$ 15,432, it is explained by lower costs of distribution
and transmission of existing contracts in the non-regulated market and a reduction in maintenance costs
associated mainly to the de-watering of the tunnel of Tunjita at the beginning of 2015.
Interconnected Argentine Grid (SADI)
Gross profit in SADI increased by ThUS$13,995 as a result of the improvement in the regulatory framework
for the uncommitted production of gas turbines of Termoandes, coupled with the lower programmed
maintenances boosted availability that resulted in higher generation, generating an increase in margins in
SADI. These positive impacts were partially offset by lower physical sales to free customers under “Energia
Plus” program.
The following table presents gross profit in the SADI for both periods:
SADI
Gross Profit (ThUS$)
Operating Revenue
Contract sales
Spot sales
Total Operating Revenue
Cost of Sales
Fuel consumption
Energy and capacity purchases
Transmission tolls
Depreciation and amortization
Other cost of sales
Total Cost of Sales
Total Gross Profit
September
2016
September
2015
Var.
%
45,031
33,756
78,787
55,273
51,653
106,926
(19%)
(35%)
(26%)
(47,997)
(190)
(245)
(19,968)
(9,057)
(77,457)
(82,147)
(963)
(377)
(22,874)
(13,230)
(119,591)
(42%)
(80%)
(35%)
(13%)
(32%)
(35%)
1,330
(12,665)
(111%)
The following table shows AES Gener energy sales, purchases and generation in the SADI in the first nine
months of 2016 and 2015:
11
AES GENER/ 2016
SADI
Energy Sales (GWh)
September
2016
September
2015
625
2,836
3,461
783
2,036
2,819
72
71
2%
September
2016
September
2015
Var.
%
3,461
3,461
2,801
2,801
24%
24%
Customers
Spot
Total Energy Sales
Average monomic price for contracts (US$/MWh)
SADI
Net Generation (GWh)
Natural Gas
Total
Var.
%
(20%)
39%
23%
Main variations in the period ended on September 30, 2015 and 2016:
Physical generation recorded an increase of 660 GWh comparing September 2016 to equal period of 2015,
mainly related to lower maintenance days in in the 2016, which translates into higher physical sales to the
spot market of 39%. Due to the change in the application of Resolutions 482 / 2015 and 22 / 2016, regulatory
scheme (outstanding for Termoandes since November 2015) under which the gas is granted in directly by
CAMMESA, currently the net margin of energy sales is recorded as revenue. This margin is higher than the
one obtained in the spot market in 2015 and spot sales, in turn, diminished by ThUS$ 17,897. On the other
hand, fuel costs, also decreased by ThUS$ 34,150.
Revenues from contracts decreased by ThUS$ 10,242 as a result of lower physical sales of 158 GWh,
equivalent to a decrease of 20% related to a drop in industrial demand operating under Energía Plus
Program.
In turn, other costs of sales decreased by ThUS$ 4,173 comparing the period 2016 and 2015, mainly
explained by lower costs of programmed maintenance.
Selling, General and Administrative Expenses
Administration expenses decreased by 3% from ThUS$79,465 as of the close of September 2015 to
ThUS$76,891 in the same period in 2016. The most important variations include uncollectable accounts
recovery for ThUS$1,362 related to EMELCA bankruptcy process and lower equity taxes in Colombia by
ThUS$963 where the rate fell from 1.4% in 2015 to 1% in 2016.
Financial Results
The non-EBITDA variations between the first nine months of 2016 and the same period of 2015 are listed in
the following table:
Financial Results (ThUS$)
Other income / (loss)
Finance income
Finance expense
Equity in earnings of associates
Foreign currency exchange differences
September
2016
(543)
6,188
(114,324)
9,865
(19,298)
September
2015
(14,943)
6,202
(102,097)
78,640
(24,372)
Var.
%
(96%)
(0%)
12%
(87%)
(21%)
A negative variation of ThUS$5,074 was recorded in exchange rate differences.
12
AES GENER/ 2016
The following table shows variation in exchange rates in the countries in which AES Gener has operations:
Chilean Peso (CLP/US$)
Colombian Peso (COP/US$)
Argentine Peso (ARS/US$)
September
2016
658.02
2,879.95
15.31
December
2015
710.16
3,183.00
13.04
Var.
%
(7%)
(10%)
17%
September
2015
698.72
3,121.94
9.42
December
2014
606.75
2,376.51
8.55
Var.
%
15%
31%
10%
The negative variation of the net finance expenses of ThUS$12,227 as of September 2016 is mainly due to
the higher interest expenses driven by higher corporate debt since July 2015 due to the issuance of a 144/A
bond, compensated by a positive effect of valuation of derivative instruments and an increase in financing
costs for projects under construction.
The negative variation in equity in earnings of associates of ThUS$ 68.775 is due mainly to the extraordinary
results of Guacolda in 2015 as a consequence of the restructuring approved. Likewise, there was a positive
variation of ThUS$ 14,400 in other gains (losses), is primarily associated to higher losses recorded in the
year 2015 due to the extraordinary register of deferred expenses amortization related to the refinancing of
Ventanas’ debt and the partial purchase of the local AES Gener dollar bond.
Income Tax
As of September 30, 2015, the income tax expense was 11% higher in comparison to the same period of
2015, from ThUS$72,715 as of September 2015 to ThUS$80,800 in the same period of 2016. This variation
in fundamentally explained by higher income before tax in Chile.
CASH FLOW
The final balance of cash and cash equivalent as of September 30, 2016 was ThUS$449,294, 52% higher
than the final balance of ThUS$295,928 as of the close of September 2015. The total net flow of the period
was positive for ThUS$176,184 as of September 30, 2016 that positively compares with the positive flow of
ThUS$82,138 as of September 30, 2016.
Cash Flow (ThUS$)
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Total Net Cash for the Period
Effects of Foreign Exchange Variations
Total Cash at the End of the Period
September
2016
256,867
(413,580)
332,897
176,184
5,877
449,294
September
2015
193,846
(752,556)
640,848
82,138
(14,901)
295,928
Var.
%
33%
(45%)
(48%)
114%
(139%)
52%
Net cash from operating activities recorded a positive variation of ThUS$63,021 as of the close of September
2016 compared with the same period in 2015 mainly due to:
•
•
Improvements in margins previously analyzed for the SING, SIC and SADI,
Higher receipts from AES Chivor of as a result of extraordinary generation level in December 2015
which allowed to mitigate the drop in operations in SIN and higher income tax in Colombia.
Net cash from investment activities showed a positive variation of ThUS$338,976 comparing the first nine
months of 2016 and the same period in 2015. The main variations corresponds to a decrease in acquisitions
of property, plant and equipment of ThUS$396,267 related to Cochrane project which started operations in
October 12th.
Net cash from financing activities represented a negative variation of ThUS$307,951 as of the close of
September 2016 compared to the same period in 2015. This is a consequence of:
13
AES GENER/ 2016
a) Lower loans obtained mainly related to Cochrane and AES Gener, partially offset by higher loans
for Alto Maipo
b) Higher payment to loans mainly in AES Gener
c) Together with the decrease in the amounts received from the issuance of shares, mainly
associated with lower principal payments in the first quarter of 2016, by not controlling stakes in
Cochrane and Alto Maipo.
FINANCIAL DEBT
As of September 30, 2016, approximately 90.8% of AES Gener’s credit agreements are at a fixed rate,
including a significant portion of the debt held by the subsidiaries Eléctrica Cochrane and Alto Maipo for
which interest rate swap agreements have been executed. The remaining 9.2% of the Company’s
consolidated debt maintains a variable interest rate.
As of September 30, 2016, approximately 97.8% of AES Gener’s long-term debt accruing interests was
denominated in U.S. dollars, including the Chilean bond issued in December 2007 for which a cross-currency
swap was executed. Of the remaining debt, 0.9% was denominated in Chilean UF (Eléctrica Santiago’s bond)
and 1.3% in Colombian pesos (the leasing executed by AES Chivor to finance the Tunjita Project).
In April 2016, Eléctrica Angamos partially refinanced its US$800 million bond through a tender process,
purchasing US$199 million. The Company refinance this debt with syndicated loans under the same terms
and conditions with local bank facilities at a lower average interest rate of 4.50%.
In addition, as of September 30, 2016 AES Gener has disbursed US$17.5 million in 90 days not committed
lines in order to finance working capital.
In June 2016, AES Gener partially bought-back its 2025 bonds for a total amount of U$16 million. As of
September 30, 2016 the outstanding notional reach out US$409 million. Afterwards, AES Gener 2025 Bonds
were cancelled.
The following graph details AES Gener’s consolidated amortization schedule for the outstanding principal of
ThUS$3,836,512 as of September 30, 2016, excluding issuance costs and including non-recourse project
finance debt.
Schedule of Maturities as of September 30, 2016
US$ million
Average Rate
2016
2017
2018
Fixed
(UF con swap a US$)
(US$)
(US$)
(US$)
(US$)
(UF)
(US$)
(CLP/UF con swap a US$)
Variable
(US$)
(US$)
(Col$)
(US$)
Total
2019
2020 +
7.34%
5.25%
8.00%
5.00%
8.38%
7.00%
4.88%
4.50%
1.02
-
1.11
-
15.66
1.19
52.28
17.32
15.66
24.50
1.33
52.28
17.32
140.94
401.68
409.00
450.00
29.72
496.40
164.40
Libor + 1.45% - 2.10%
Libor + 3.20% - 3.50%
IPC + 5.5%
Libor + Spread
0.43
17.50
39.55
1.85
100.00
57.02
2.12
-
59.21
13.73
2.42
-
823.72
384.11
43.06
-
18.95
142.51
145.58
186.44
3,343.03
14
AES GENER/ 2016
Total Consolidated Financial Debt
US$ Million
2,025
574
19
2016
143
146
186
165
2017
2018
2019
2020
2021
179
195
205
2022
2023
2024
2025 +
MARKET INFORMATION
In Chile, AES Gener operates principally in two large interconnected electric systems: the Central
Interconnected System or SIC, that runs from the southern part of Region II to Region X, and the Greater
Northern Interconnected System or SING, that encompasses Region I and Region XV, as well as part of
Region II. AES Gener’s Colombian subsidiary, AES Chivor, is one of the principal electric generators in the
Colombian National Interconnected System or SIN. AES Gener affiliate, TermoAndes sells electricity to the
Argentine market.
SIC
During the first nine months of 2016, better hydrological conditions allowed reservoir level to show an
improvement compared to the same period of the previous year. This resulted in an increase in hydro
generation that, together with the drop in commodity prices, drove a spot price decrease in the system by
39.5% when compared to the same period in 2015. As of September 30, 2016, the companies of the AES
Gener Group, including Guacolda, contributed with 24.3% of the net generation in the SIC.
The table below shows certain principal variables in the SIC for the period ended on September 30, 2016
and 2015.
SIC
Demand growth
Average monthly consumption
Average spot price (Quillota 220 kV)
(%)
(GWh)
US$/MWh
September
2016
0.1
4,125
65.6
September
2015
1.5
4,120
105.1
SING
The average marginal cost rose by 13%. As of September 30, 2016, the companies of AES Gener Group
contributed with 37.2% of the net generation in the SING. The table below shows the main variables in the
SING in during the period ended on September 30, 2015 and 2016:
SING
Demand growth
Average monthly consumption
Average spot price (Crucero 220 kV)
(%)
(GWh)
US$/MWh
September
2016
1.9
1,414.6
61.8
September
2015
7.6
1,388.0
54.7
15
AES GENER/ 2016
SIN
Given extreme dry conditions, spot prices exceeding the scarcity price (~ 110 US$/MWh), and thermal plants
not being able to operate as they have variable costs above the scarcity price; in October of 2015 the
government established a cap for the spot price at 810 Col$/KWh (~ 268 US$/MWh) as a temporary measure.
Spot prices increased in average by 55.8% in Colombian pesos during the first nine months 2016 compared
to the same period in 2015; while in dollars they increased by 32.7% due to the devaluation of the Colombian
peso. As of September 30, 2016, the generation of AES Chivor represented 6.9% of the demand in Colombia.
The following table shows the main variables in the SIN during the period ended on September 30, 2016 and
2015:
SIN
Demand growth
Average monthly consumption
Average marginal cost
(%)
(GWh)
US$/MWh
September
2016
0.8
5,515.6
111.8
September
2015
3.8
5,474.0
84.2
SADI
In November 2015, the Argentine Energy authority (CAMMESA) confirmed that the energy sold by
Termoandes, in excess of what is sold under the Energía Plus program, would receive an extra remuneration
determined by Resolution 482/2015, which is higher than the spot price currently received for these sales.
By the end of March 2016, the Secretariat of Energy in Argentina issued Resolution 22/2016 replacing, from
February 1, 2016 onwards, Annexes from Resolution 482/2015 enacted on July 10, 2015, updating
remunerations for fixed costs, non-fuel variable costs, additional remunerations, non-recurring maintenances,
investment resources for 2015-2018 and Availability Remunerations. These adjustments benefit
Termoandes, thus improving prices received for the energy form the gas turbines sold at the spot market.
As of September 30, 2016, the generation of Termoandes in the SADI represented 3.8% of Argentinean
demand. The following table shows the main variables in the SADI for the period ended on September 30,
2016 and 2015:
SADI
Demand growth
Average monthly consumption
Average marginal cost
(%)
(GWh)
US$/MWh
September
2016
1.1
10,037.7
11.3
September
2015
4.8
9,925.0
13.4
RISK ANALYSIS
Market and Financial Risks
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to a
change in market prices. Market risks include the following three categories: foreign currency risk, interest
rate risk and commodity price risk. Financial risk relates to the potential occurrence of events, which could
have a negative financial impact on the Company and specifically includes credit risk and liquidity risk.
Foreign Currency Risk
With the exception of operations in Colombia, the Company’s functional currency is the US dollar given that
its revenue, expenses and investments in equipment and debt are mainly determined based in US dollar. In
addition, the Company is authorized to file and pay its income taxes in Chile in US dollars. Exchange rate
risk is associated with any revenue, expenses, investments and debt denominated in any currency other than
US dollars. The main items denominated in Chilean pesos are contract sales and tax credits mainly
associated with VAT. As of September 30, 2016, AES Gener maintained several currency forwards with
banks to mitigate its exposure to foreign exchange variations associated with energy sales, given that even
though most of the Company’s energy supply agreements have prices denominated in US dollars, payments
are made in Chilean pesos at an exchange rate that is fixed for a specific period of time, and VAT payments.
16
AES GENER/ 2016
Given the Company's net asset position in Chilean pesos as of September 30, 2016, the impact of 10%
devaluation in the exchange rate of the Chilean peso with respect to the US dollar could have resulted in a
realized negative impact of approximately ThUS$9,782 in AES Gener net income.
During the nine-month period ended on September 30, 2016 approximately 78.4% of operating revenue and
89.66% of the Company’s costs of sales were denominated in US dollars compared to 86.1% of operating
revenue and 88.3% of costs of sales during the first nine months of 2015.
The functional currency of Chivor, the Company’s Colombian subsidiary, is the Colombian peso since the
majority of its revenue, particularly contract and spot sales and operating costs are linked to the Colombian
peso. For the period ended on September 30, 2016, sales in Colombian pesos represented 19.6% of the
Company’s consolidated operating revenue, while they represented 10.8% in the same period of 2015.
Additionally, AES Chivor’s dividends are determined in Colombian pesos, although financial hedge
instruments are used to fix the amount to be distributed in US dollars. Given AES Chivor's net liability position
in US Dollars as of the close of September 2016, a 10% devaluation in the exchange rate of the Colombian
peso with respect to the US dollar could have generated a negative impact of approximately ThUS$4,670 in
AES Gener’s net income.
Spot prices in the Argentine market are denominated in Argentinean pesos. Argentine-peso denominated
sales represented 2.0% of the Company’s consolidated operating revenue for the first nine months of 2016,
representing 3.1% for the year ended on September 30, 2015. Given TermoAndes' net asset position in
Argentine pesos as of September 30, 2016, a 10% devaluation in the exchange rate of the Argentine peso
with respect to the US dollar could have generated a negative impact of approximately de ThUS$690 in AES
Gener’s net income. It is worth mentioning that the Argentine government devalued the Argentinean peso by
approximately 35%, the fastest devaluation since 2002, resulting in a non-material impact on results given
the limited exposure Termoandes had to the Argentine peso at that time. A weaker Argentinean peso and
economy could cause significant volatility in TermoAndes' operating income and cash flows.
Argentina defaulted on its public debt in 2001, when it stopped making payments on about $100 billion amid
a deep economic crisis. In 2005 and 2010, Argentina restructured its defaulted bonds into new securities
valued at about 33 cents on the dollar. Between the two transactions, 93% of the bondholders agreed to
exchange their defaulted bonds for these new bonds. The remaining 7% did not accept the restructured deal.
Since then, a certain group of such bondholders has been in judicial proceedings with Argentina regarding
payment. In June 2014, the United States District Court ruled that Argentina would need to make payment
to all bondholders, according to the original applicable terms. After on July 30, 2014 the parties failed to reach
a settlement agreement, as referred by S&P and Fitch, Argentina fell into a selective default resulting from
failure to make interest payments on its Discount Bonds maturing in December 2033. Since then, Argentina
has advanced in negotiations with bondholders, reaching a preliminary agreement with some of them,
involving the payment of approximately $900 million in defaulted notes and has already secured US$5bn in
loans from international banks to pursuit a final agreement with 100% of them. The current proposal is to pay
approximately about US$6.5bn in cash to US holdouts. Main holdouts stated that they reject the proposal,
expecting the payment of full US$9,000 million claimed. S&P raised the country’s local credit rating by one
notch from CCC- to B- as they consider the new administration presents a credible plan to face the macro
economical imbalance. Fitch, in turn, currently rates Argentina at 'B'; Outlook Stable. Argentina has been
able to resume service on its restructured bond debt, after meeting the conditions to lift the injunction that
blocked payments. The government obtained congressional approval to remove the Lock Law and Sovereign
Payments Law (two pieces of legislation that prevented authorities from negotiating with holdouts) and paid
settlement agreements with holdout creditors on April 22nd after raising the necessary funds in external
markets. After an absence of more than a decade and a half, Argentina was able to directly tap international
capital markets for a total of USD16.5 billion in order to pay for settlement agreements with holdouts creditors
and meet part of its 2016 financing needs, thus increasing the government sources of financing and removing
a key constraint to Argentina's creditworthiness over the past decade. Greater availability of market financing
would reduce pressure on the central bank through the phasing out of both monetary financing and the use
of international reserves to meet FC debt repayments. Improved financing sources complement the increased
coherence and credibility of Argentina's new policy framework characterized by the removal of FX controls,
increased exchange rate flexibility, and revived focus of monetary policy on fighting inflation with the objective
of implementing a fully-fledged inflation-targeting regime. Monetary policy has been tightened by the current
administration, and decelerated the growth of monetary aggregates, which has been fueled in previous years
by monetary financing of the budget deficit. Fitch expects better coordination with fiscal policy and access to
fresh sources of financing to allow authorities to phase out central bank financing, a key source of inflationary
pressures. After the removal of FX controls in December 2015, the government has increased the flexibility
of the Argentine peso, which should contribute towards improving the capacity of the economy to absorb
external shocks and relieve pressure on international reserves. Moreover, these policy changes have
17
AES GENER/ 2016
removed growing exchange rate distortions, evident by a widening spread between the official and parallel
exchange rates during 2015. International reserves have increased to USD31.5 billion in early May, driven
by the liquidation of agricultural export proceeds, reduced pressure to intervene in the FX market and external
borrowing by the central bank, and most recently the external issuance of the sovereign and non-financial
sector entities. This situation has not caused any significant changes that impact our current exposures other
those that are discussed above in regards to the macroeconomics within the country.
In consolidated terms, investments in new plants and maintenance equipments are principally denominated
in US dollars. Short-term investments are also mostly held in U.S. dollars. As of September 30, 2016, 90.43%
of short-term investments and current account balances were in US dollars, 5.91% in Chilean pesos, 1.59%
in Colombian pesos and 2.07% in Argentine pesos. Cash balances in Argentine pesos are subject to
exchange restrictions and exchange rate volatility particular to the Argentine market. As of September 30,
2016, 89.7% of investments and balances were in US dollars, 1.3% in Colombian pesos, 7.6% in Chilean
pesos and 1.4% in Argentinean pesos.
With regard to debt (bank loans and bonds payable) denominated in currencies other than the U.S. dollar,
AES Gener has executed coverage in the form of cross-currency swaps to reduce exchange rate risk. AES
Gener executed a cross-currency swap for the UF-denominated bonds issued in 2007 for approximately
ThUS$219,527 and the swaps extend throughout the duration of the debt. It should be noted that a portion
of this swap was unwound in June, 2014, associated to the Series O Bonds with maturity in 2015, and the
swap related to the Series N Bonds, with maturity in 2028 for ThUS$172,264 remained in force.
In addition, in April 2016 Angamos S.A. made partial advanced rescue of the 144 RegS/A bond in the amount
of ThUS$199,028. This rescue was financed with loans with local banks denominated in Pesos and UF. Also,
Eléctrica Angamos S.A. hired currency and interest rate swaps with the same banks in order to redenominate
all debt to U.S. dollars.
As of September 30, 2016, 97.87% of AES Gener and its subsidiaries’ debt was denominated in U.S. dollars,
including the local bonds mentioned above and the associated swaps.
The following table shows the composition of debt by currency as of September 30, 2016 and December 31,
2015:
Currency %
US$
UF
Col$
September
2016
97.8
0.9
1.3
December
2015
97.9
0.9
1.2
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest
rates relates primarily to the Group’s long-term debt obligations with variable interest rates.
AES Gener manages its interest rate risk by having an important percentage of its debt at fixed rate or with
interest rate swaps, to fix it. Additionally, AES Gener has entered into interest rate swaps to mitigate interest
rate risk for long-term obligations. Currently, AES Gener has interest rate swaps for an important part of the
debt associated with subsidiaries Eléctrica Cochrane and Alto Maipo. It should be noted that in July 14, 2015
Eléctrica Ventanas’ project finance was refinanced through the issuance of a 144A / Reg S bond in the
international markets at the AES Gener level, which also included the partial repurchase of the local Series
Q of AES Gener, allowing this debt to be at fixed rate from July 2015 onwards. A 10% increase in variable
interest rates would not have a significant impact on net income as 90.8% of the Group's debt is at fixed rates
or rate swaps. The following table shows the composition of debt by type of interest rate as of September 30,
2016 and December 31, 2015:
Rate (%)
Fixed or with Swap
Variable
September
2016
90.8
9.2
December
2015
88.5
11.5
18
AES GENER/ 2016
It should be noted that the subordinated bond issued in December 2013 for a total of ThUS$450,000 with
tenor of 60 years, is at a fixed interest rate of 8.375% until year 5.5 from the issuance. From that period
onwards, the interest rate is recalculated based on the 5-year swap rate published by Bloomberg plus a
margin (spread) established in the offer and subsequently recalculated, based on the same conditions, every
5 years to maturity of debt.
Commodity Price Risk
The Group is affected by the volatility of certain commodity prices. The fuels used by the Company, mainly
coal, diesel and liquefied natural gas (LNG), are commodities with international prices set by market factors
outside of the Company’s control. In Argentina, the Company’s subsidiary TermoAndes purchases natural
gas at a fixed price under short-term contracts, which is reflected in the energy contract price fixation.
The price of fuel is a key factor in plant dispatch and spot prices both in Chile and Colombia. Since AES
Gener is a company based mainly on thermal generation, fuel costs represent a significant portion of the cost
of sales.
Currently, the majority of the Company’s power purchase agreements include indexation mechanisms that
adjust prices based on the increase and decrease in the price of coal in accordance with the indexes and
adjustment periods specified under each contract, in order to mitigate major variations in the fuel cost.
Currently, AES Gener’s contracted energy is balanced with energy generation of facilities with high probability
of dispatch (efficient generation) and the remaining facilities (back-up facilities) which utilize diesel or LNG
are expected to generate only during periods with limited market supplies such as dry hydrological conditions
in the SIC, selling energy on the spot market. Currently, diesel and LNG purchases are not hedged as spot
market sales allow variations in fuel prices to be transferred to the sale price. However, the price of fuel
(particularly LNG or diesel) directly affects the spot price and plant dispatch.
However, the price of fuel (particularly LNG or diesel) directly affects the spot price and plant dispatch. It is
estimated that a 10% increase in the cost of diesel would have resulted in a negative impact on the
Company's consolidated gross profit of approximately ThUS$5,645 for the period ended September 30,
2016. It is worth noting that Eléctrica Santiago’s Nueva Renca plant can use either diesel or LNG and
acquires defined volumes of LNG volumes using short-term contracts when the LNG price is more
competitive than diesel.
Credit Risk
Credit risk relates to the credit quality of counterparties with which AES Gener and its subsidiaries establish
relationships. These risks are reflected primarily in accounts receivables and financial assets including bank
and other deposits and other financial instruments.
With regard to accounts receivable, AES Gener’s counterparties in Chile are mainly distribution companies
and industrial customers of elevated solvency and over 90% of these customers or their parent companies
have local and/or international investment grade credit ratings. Necessarily, sales made by the AES Gener
Group companies in the spot market must be made to other generators, members of the CDEC, in
accordance with the economic dispatch determined by this entity.
In Colombia, AES Chivor performs risk assessments of its counterparties based on an internal credit quality
evaluation, which in some cases may include guarantees. In 2010, also in low hydrological conditions, AES
Chivor suffered collection problems with an energy trader and eventually registered a loss of ThUS$1,300.
In this case, the trader was suspended from participating in the Bolsa or spot market and AES Chivor
presented actions to recover the outstanding amount. During 2015, under a new period of dry hydrological
conditions, a thermal generator accumulated penalties and debts with the Colombian market, including AES
Chivor, owing the Company approximately ThUS$7,500. This member of the market was intervened by the
Colombian authority, freezing its debt as of the date of the intervention. As of June 3 of 2016 the majority of
creditors of Termocandelaria signed an agreement of payment so Termocandelaria could pay its credits with
the commercial energy exchanges system within 60 months with an interest rate of IBR +0.5%. Interests will
be cancelled from the 61 month onwards, spread in 12 monthly installments. Also, it was agreed that
Termocandelaria would advance to its creditor, a cash surplus by the date of the signature of the agreement,
corresponding to AES Chivor the amount of MCOP$ 2.833.425 (MUS$ 972), which was paid the 17 of June
of 2016.
19
AES GENER/ 2016
In Argentina, the principal counterparties are CAMMESA (Compañía Administradora del Mercado Mayorista
Eléctrico S.A.) and large unregulated consumers with contracts under the Energía Plus program.
TermoAndes carries out internal credit evaluations of its unregulated customers and therein include
guarantees to secure payments.
Financial investments by AES Gener and its subsidiaries such as mutual funds, time deposits and derivatives,
are executed with local and foreign financial institutions, which have national and/or international credit
ratings greater than or equal to “A” under the S&P and Fitch scale and “A2” under the Moody’s scale.
Similarly, derivatives for financial debt are executed with first class international entities. Cash, investment
and treasury policies direct the management of the Company's cash portfolio and minimize credit risk.
Liquidity Risk
Liquidity risk relates to the funding requirements to meet payment obligations. The Company's objective is to
maintain a balance between continuity of funding and financial flexibility, through internally generated cash
flows, bank loans, bonds, short-term investments, committed credit lines and uncommitted credit lines.
As of September 30, 2016, AES Gener had available liquid funds of ThUS$449,294 included in cash and
cash equivalent. Meanwhile, as of the closing of December 2015, the balance in liquid resources amounted
to ThUS$295,242 including cash and cash equivalent of ThUS$267,233 and short-term time deposits for
ThUS$28,009 included in other current financial assets. It should be noted that the balance of cash and cash
equivalents includes cash, term deposits with expiration of less than 90 days, securities, low risk immediately
available mutual funds in U.S. dollars and re-sale and fiduciary agreements.
Additionally, as of September 30, 2016, AES Gener has committed and uncommitted credit lines for
approximately ThUS$239,120 and uncommitted and unused credit lines for approximately ThUS$198,671.
For more detail of the restricted cash see note 8 of Financial Statements "Effective and equivalent to the
cash".
During April 2016, our subsidiary Angamos completed the partial rescue of the 144-A/Reg S bond with
expiration on 2029 in international markets for ThUS$199,028, which was funded with a credit line with the
local banks Banco de Chile, Corpbanca, Banco del Estado de Chile, Banco de Crédito e Inversiones by equal
notional and under similar conditions to the ones prevailing for the international bond.
Additionally, in June 2016, AES Gener repurchased its 144-A/Reg S bond due 2025 totaling MUS $16,000,
which was financed with available funds. As of June 30, 2016, the remaining current notional international
bond is MUS $409,000. Rescued bonds were cancelled.
In addition, as of September 30, 2016 AES Gener has disbursed ThUS$ 17,500 in 90 days uncommitted
lines, to finance working capital.
With regard to the amortization schedule, the Company seeks to maintain an adequate debt profile. More
detail of the current debt profile, please see Financial Debt on page 14.
Operational Risks
Operational risks relate to the possibility of future outages or deficiencies that can negatively affect the
Company’s strategic operational and/or financial objectives.
Hydrology
AES Gener’s operations in the SIC and Colombia may be affected by hydrological conditions, as hydrology
is key to plant dispatch and prices in both grids. The Company uses its own statistical models to evaluate the
risks associated with its contractual commitments. In general terms, AES Gener’s commercial strategy in
Chile is to execute long-term contracts for its efficient generation plants, reserving other more expensive
units for sales in the spot market. In Colombia, the commercial strategy focuses on optimal use of the
reservoir with the general objective of contracting on average 75% of expected generation.
Currently, efficient generation of AES Gener’s facilities in the SIC is balanced with contracted volume, which
mitigates most of the exposure to hydrology variations, and additionally, the Company has back-up facilities
which allow to limit maximum exposure.
20
AES GENER/ 2016
Natural Gas Supply
The combined cycle plants in Chile, including Eléctrica Santiago’s Nueva Renca plant, currently operate with
diesel or LNG alternatively. Eléctrica Santiago does not have long–term LNG contracts and acquires volumes
on the spot market or under short–term contracts according to dispatch projections. In Argentina,
TermoAndes holds natural gas supply contracts with Argentine producers and the Company estimates that
in the case of potential gas supply restrictions, TermoAndes has certain alternatives to mitigate the impact
of gas supply interruptions which include contract price indexation mechanisms, spot gas purchases and
back-up supply from other generators.
Operational Failures and Maintenance
Mechanical failures, accidents or planned and unplanned maintenance affecting the availability of the
Company’s efficient capacity could have a material adverse effect on results.
Although the Company performs regular maintenance and operational enhancements to guarantee the
commercial availability of its generation plants and operational insurance policies remain in effect,
mechanical failures or accidents could result in periods of commercial unavailability. Significant periods of
unavailability of AES Gener’s efficient plants as a result of mechanical failure or maintenance (planned or
unplanned) would require the Company to meet its contractual obligations by using more expensive back up
generation or by purchasing energy on the spot market, both of which could result in higher costs that would
adversely affect operating results. In the SIC, the maximum exposure to this risk is limited by variable costs
of our back-up facilities.
Investment Projects
The execution of the investment projects being developed by the Company depends on numerous factors
that could defer from the originally projected. Among these factors, projects can experience increases in
costs of construction or investment on equipment, potential delays, difficulty in finding skilled labor, financing
costs, and the effect of potential delays or difficulties in the regulatory authorization and permitting process,
including potential litigation or lawsuits. It should be noted that adequate project development includes
making investments related to diverse project areas such as studies, easements, land preparation and
construction of roads, among others, before the approval and final execution of the project.
Currently, generation projects are facing a high opposition from organized groups or communities located
next to them. The Company cannot ensure that this opposition will not affect projects under construction.
AES Gener, in its interest of being a good neighbor and through its “Policy on Ties and Relations with Local
Communities”, works to be locally respected and to be valued by its good economic, social and environmental
performance and by its contribution to the sustainable development to the communities where the Company
is inserted.
Decoupling Risk
Given certain transmission restrictions in Chile due to the concentration of energy renewable plants, there
may be differences between prices of injection and withdrawal (decoupling), which should be assumed by
the generation companies and can, in turn, affect their operating margins. Currently, there are contracts in
which this risk cannot be pass-through, although in new contracts with unregulated customers, clauses to
mitigate this risk are being negotiated.
Regulatory Risks
AES Gener, its subsidiaries and related companies are subject to regulation in diverse aspects of their
businesses in the countries in which they operate. Regulatory risk is related to potential modifications in
existing legislation that could adversely affect the Company’s financial results.
Regulatory Framework
As electric generation companies, AES Gener, its subsidiaries and related companies are subject to
regulation in diverse aspects of their business. The current regulatory framework, which governs all electricity
supply companies, has been in effect in Chile since 1982 and in Colombia since 1994.
21
AES GENER/ 2016
In Chile, in July 2016, Transmission Law was enacted, which established transmission facilities will have to
be paid entirely by the demand through a single charge. For this, the current payment by transmission
facilities will be systematically transferred to demand between 2019 and 2034, excluding installations of
transmission which come into operation from the year 2019 onwards and those associated to the SIC-SING
interconnection, which will be paid entirely by the demand from its entry into operation.
During the first quarter of 2016 Colombian regulator applied resolutions in order to mitigate the critical period
caused by El Niño phenomenon, highlighting the following: i) Resolution CREG 009-2016, which limited
energy exports only to plants that supply safety energy with liquid fuels in the importing country, ii) Through
CREG resolutions 025-2016 and CREG 029-2016 regulator defined options so demand could receive
benefits through schemes like the Detachable Voluntary Demand (DDV) and Demand Response (RD), iii)
Resolution CREG 027-2016 modified remuneration formula for AGC (automatic generation control) service
and defined an interim procedure for the allocation of the reserve's regulation, the price signal reduced its
coupling with the exchange price and could only be reviewed if an auction of allocation of this service takes
place in the future (iv) CREG resolution 041-2016 added ruling to guarantees in order to cover incremental
firm energy for the reliability charge.
In the second quarter 2016 and once El Niño phenomenon ceased and with the recovery of facilities Guatape
and Flores IV, who also presented unavailability at the most critical period, started some CREG resolutions
which annulled the interim rules and the market returned to a normal situation. After the crisis, CREG has
released a proposal to market in order to encourage expansion in the market and that is complementary to
the current reliability charge. What they seek is that under an auction scheme energy could be allocated with
a duration of up to 20 years and based not on the firm energy but on the average energy of projects, which
could give more options to renewable technologies. After the publishing and comments reception process,
the authority expects to have the first draft of resolution by the end of September 2016.
During the third quarter 2016, some regulatory developments have been enacted with the aim of enhance
market operation: i) CREG090-2016 by which establishes general criteria for the remuneration of the service
of transportation of natural gas and the general scheme of charges of the national transport system, and
enacting other provisions for transport of natural gas", ii) CREG094-2016 by which some aspects of the
CREG resolution 089 of 2013 have been modified and compiled and basically aims to regulate the
commercial aspects of the wholesale market of natural gas, iii) CREG097-2016 that enacted provisions for
the commercialization of natural gas in the year 2016. The resolution establishes the schedule to advance
gas market auctions primary under the scheme “use it or sell it long term”, iv) CREG122-2016 which is
summoned to an auction of reconfiguration of sale for the period 2016-2017. The resolution sets the timetable
to carry out the auction of reconfiguration of sale for the period between December 1, 2016 and November
30, 2017, v) CREG138-2016 by which modifies the resolution CREG 004 2003 laying down applicable to the
short term international electricity transactions regulation (TIE) vi) CREG139-2016 by which is set the
percentage of contribution that must pay the entities subject to the regulation of the Commission of Regulation
of Energy and Gas in the year 2016, and there were set others provisions.
In Argentina, since 2001, significant modifications have been introduced to the electricity regulatory
framework. These modifications include tariff conversion to Argentine Pesos, freezing of tariffs, the
cancelation of inflation adjustment other mechanisms and the introduction of a complex pricing system, which
have materially affected electricity generators and market agents, and generated substantial price differences
within the market. On March 26, 2013, the Argentine government introduced a resolution (Resolution 952013), which amended the current regulatory framework and is to be applied to electric generation companies
with certain exceptions. In accordance with this regulation, a new compensation system moving from a
“marginal cost” to “average cost” market, which is based on compensating fixed costs, variable non-fuel costs
and an additional margin. On May 20, 2014, the Argentine Government published the resolution (RES SE
529/14) under which the additional margin to compensate generators is updated. On July 10th 2015,
Resolution 482/15 was published, updating figures previously published in Resolutions 95/13 and 529/14.
Since November 2015, and retroactive from February 2015, all the exceeding energy sold by Termoandes
over the Energía Plus program, will be paid according to the resolution 482/15, which sets prices higher than
the spot for this type of sales. In the month of January 2016, through resolutions N° 6 and 7, the Min istry of
Mining and Energy (MME) adjusted distribution tariffs, updating seasonal prices and reducing subsidies.
On March 11, 2016 the Argentine Government issued note SEE N°111, updated values of the Average
Incremental Charge for Over Demand, increasing them to 650 AR$/MWh for the GUMA/GUME and with null
value for the GUDI. In addition, during the March 2016, two resolutions have been published within the
framework of the electricity generation.
The Resolution N°21, made for purposes of a call to incorporate new firm capacity for the next seasonal
period of summer (nov16-abr17) and the subsequent seasonal periods of winter (may17-oct17) and summer
22
AES GENER/ 2016
(nov17-abr18). This rule seeks to cover the scarcity in the short term through contracts with CAMMESA that
remunerates installed capacity for up to ten years.
Resolution N° 22, released on March 30, that update s the remuneration for generators according to
Resolutions N° 95/13, Res. No. 529/14 and Res. No. 482/15.
In addition to the thermal bid, through the resolution MEM 71/2016 it was called an auction for renewable
energy called RenovAr Ronda 1. With this new tender, they seek to increase the supply of wind power in 600
MW, solar power 300MW, biomass 65MW, 20MW of 15 MW of biogas and small hydro. As a result of this
bid, the Government received a total of 123 projects with a total capacity of 6,343 MW.
AES Gener cannot guarantee that the laws or regulations in the countries in which it operates or has
investments will not be modified or interpreted in a manner that could adversely affect the Company, or that
governmental authorities will effectively grant any approval requested. AES Gener actively participates in the
development of the regulatory framework, submitting comments and proposals to the proposed regulations
presented by authorities.
Environmental Regulation
AES Gener, its subsidiaries and associates are also subject to environmental regulations, which, among
others, require that it perform environmental impact studies for its future projects and obtain regulatory
permits. AES Gener cannot guarantee that governmental authorities will effectively grant any environmental
approval requested.
It should be noted that in June 2011, a new regulation on air emission standards was enacted, which
established new emission limits for particulate matter and gases produced of thermoelectric power
generation. For existing plants, including those currently under construction, the new limits for particulate
matter emission will go into effect by the end of 2013 and the new limits for SO2, NOX and mercury emission
will begin to be applied by mid-2016, with the exception of plants that operates in zones declared as latent
or saturated, where the limits went into effect in June 2015.
In order to comply with the new emission standards, between 2012 and June 2016, AES Gener completed
investments for approximately ThUS$529,000 million, at a consolidated level, in emission reduction
equipment in order to adequate its existing facilities and the coal units owned by the equity-method investee
Guacolda. Today, our plants comply with the regulatory requirements and there is no need of additional
investments.
The increasingly demanding environmental regulations are continuously under development, which can
modify the operations and/or require additional investments to comply with this regulation.
As of March 29, 2016, the Ministry of Health published in the official gazette, the Supreme Decree N ° 43
("DS 43/2016") concerning to "storaging of dangerous substances", by modifying the existing Decree N° 78
and establishing new requirements. DS 43/2016 began to apply after 180 days of its publication (i.e., from
September 25, 2016) for new storage infrastructure and non-structural enhancement of existing storage
facilities, and giving a timeframe of 2 years since its publication (IE, March 29, 2018) for structural
improvements to existing facilities. To comply with this new regulation, investments will be required to
improve reservoirs, wineries and lime storage.
It is estimated that the total investment required to implement these improvements and to comply with this
new regulation, including subsidiaries and associates, would amount to around ThUS $15.900,
improvements that must be carried out during the year 2017 and the first quarter of the year 2018.
New plans for prevention and environmental decontamination (for municipalities of Concón, Quintero and
Puchuncavi, the Metropolitan Region and also for Huasco) are being developed by the authority, which could
impose new environmental requirements in these areas, although is expected their compliance shouldn’t
have material impact in our operations and/or investments.
Tax Regulation
AES Gener, its subsidiaries and affiliates are subject to existing tax legislation in each country where they
operate. Amendments to laws or modification in tax rates may have a direct effect on earnings.
On February 8, 2016, it was published in the official gazette, Law N°20.899, which modifies the existi ng tax
system and modified in some respects the law N ° 20 .780.
23
AES GENER/ 2016
Law N °20.899, establishes that the society would be taxed –since it is an open and publicly traded company, the Partially Integrated System (PIS), and will not be allowed to choose opt for the Attributed Profits Income
(API), as it was initially established previously in Law N°20.780.
This modification to the original reform did not have impact on the Company, since it chose from the beginning
the Partially Integrated System (PIS). Also, the tax reform law incorporated a tax emissions from stationary
sources by boilers and turbines that, individually or jointly, add a thermal input greater than or equal to 50
MWT. In the case of CO2 emissions, the tax corresponds to US$5 per ton emitted. In order to determine the
tax to pay, the Environmental Superintendence shall certify, in March of each year, the emissions of each
taxpayer emitted in the previous calendar year. The first payment of this tax will take place in April 2018 by
the emissions accrued in the year 2017. Many of the AES Gener’s energy contracts have clauses which
allow to adjust contracts in order to cover the higher cost derived from new taxes, which mitigates the negative
effect of this tax.
Because of this, the quantification of this effect for the company and the subsidiaries of the consolidation
perimeter, according to preliminary analyses estimate an average impact between MUS$ 10-15 per year.
In Colombia, As of October 19, 2016, it was presented to the Congress a project of structural tax reform,
which generally unifies and diminishes corporate tax, eliminates CREE tax and sets an interim tax overrate
of 5% and 3% for the years 2017 and 2018 respectively, thus gradually lowering the corporate tax, from 39%
in 2017 to 32% from 2019 onwards. In addition, the Law Project establishes a 10% tax on dividends
distribution over the amount of the remittance.
The Bill includes many other modifications at the level of income, regarding anti elusion, circumvention of
obligations of information, as well as VAT and is expected to be approved to come into force from January
1, 2017. In the contingent to AES Gener, if approved the project in its present wording, it will decrease the
tax charge of the profits generated in Colombia since, in view that subsequently would not be affected to the
new tax on distributions, in implementation of article 10 of the Convention to avoid double taxation between
Chile and Colombia, their tax burden would only correspond to the corporate tax payable in Colombia. (2017:
from 42% decreases to 39%; 2018: from 43% to 36% and 2019 onwards: drops from 34% to 32%). Should
be noted also that the text of the project confirms that the energy electric not would have the quality of well,
by what its sale not would be affects to VAT.
In Argentina, on July 23, 2016, entered into force a new law that includes tax reforms. Among the most
relevant measures is the removal of the 10% tax to dividends distribution, reduction of the personal tax rate
from 0.5% to 0.25%; and the elimination of alleged minimum tax since January 1, 2019.
24
AES GENER/ 2016
AES GENER AND SUBSIDIARIES
Consolidated Balance Sheet
As of September 30, 2016 and December 31, 2015
International Financial Reporting Standards (IFRS).
Assets
9/30/2016
ThUS$
12/31/2015
ThUS$
Current Assets
Cash and Cash Equivalents
Other Current Financial Assets
Other Current Non-Financial Assets
Trade and Other Receivables
Related Party Receivables
Inventory
Taxes Receivables
Total Current Assets
449,294
23,371
8,672
389,865
19,009
138,153
33,366
1,061,730
267,233
40,161
5,787
362,558
13,213
122,853
42,149
853,954
Non-Current Assets
Other Non-Current Financial Assets
Other Non-Current Non-Financial Assets
Trade and other Receivables
Investments in Associates
Intangible Assets
Goodwill
Property, Plant and Equipment
Deferred Taxes
Total Non-current Assets
13,059
34,443
17,934
414,301
49,937
7,309
6,103,191
122,517
6,762,691
34,359
29,764
14,832
402,178
53,238
7,309
5,795,506
94,893
6,432,079
Total Assets
7,824,421
7,286,033
25
AES GENER/ 2016
AES GENER AND SUBSIDIARIES
Consolidated Balance Sheet
As of September 30, 2016 and December 31, 2015
International Financial Reporting Standards (IFRS).
Liabilities and Shareholders' Equity
9/30/2016
ThUS$
12/31/2015
ThUS$
143,364
301,005
10,840
982
13,912
3,014
33,966
507,083
159,552
288,589
18,392
3,455
45,595
3,689
34,086
553,358
Current Liabilities
Other Non-Current Financial Liabilities
Trade and Other Payables
Related Party Payables
Provisions
Deferred Taxes
Employee Benefits
Other Non-Current Non-Financial Liabilities
Total Non-Current Liabilities
Total Liabilities
3,934,262
18,250
238,027
110,921
566,544
31,540
10,210
4,909,754
5,416,837
3,456,919
26,283
229,788
106,599
542,540
27,960
10,352
4,400,441
4,953,799
Net Equity
Issued Capital
Retained Earnings (Losses)
Share premium
Other Components of Equity
Other Reserves
Total Equity Attributable to Shareholders of Parent
2,052,076
473,425
49,864
237,242
(499,407)
2,313,200
2,052,076
377,125
49,864
236,567
(492,188)
2,223,444
Non-Controlling Interest
Total Net Equity
94,384
2,407,584
108,790
2,332,234
Total Liabilities and Equity
7,824,421
7,286,033
Current Liabilities
Other Current Financial Liabilities
Trade and Other Payables
Related Party Payables
Provisions
Taxes Payable
Employee Benefits
Other Current Non-Financial Liabilities
Total Current Liabilities
26
AES GENER/ 2016
AES GENER AND SUBSIDIARIES
Consolidated Income Statement for the periods ended on
As of September 30, 2016 and 2015
International Financial Reporting Standards (IFRS).
Income Statement
Operating Revenue
Cost of Sales
Gross Profit
Other Operating Revenues
Selling, general and administrative Expenses
Other Operating Expenses
Other Income / (Loss)
Financial Income
Financial Expense
Equity Participation in Net Income of Associates
Foreign Currency Exchange Differences
Net Income (Loss) before Taxes
Income Tax Income (Expense)
Income (Loss) from Discontinued Activities
Net Income (Loss)
Income Attributable to Shareholders of Parent
Income (Loss) Attributable to Non-Controlling Interests
Net Income (Loss)
9/30/2016
ThUS$
9/30/2015
ThUS$
1,722,454
(1,259,434)
463,020
1,984
(76,891)
(1,951)
(543)
6,188
(114,324)
9,865
(19,298)
268,050
(80,800)
187,250
1,665,093
(1,272,919)
392,174
1,651
(79,465)
(2,185)
(14,943)
6,202
(102,097)
78,640
(24,372)
255,605
(72,715)
182,890
189,674
(2,424)
187,250
191,927
(9,037)
182,890
27
AES GENER/ 2016
AES GENER AND SUBSIDIARIES
Consolidated cash flow statements
As of September 30, 2016 and 2015
International Financial Reporting Standards (IFRS).
Consolidated Cash Flow Statement (ThUS$)
Net Cash Flows provided by (used in) Operating Activities
Receipts from Customers
Other Receipts from Operating Activities
Payments to Suppliers
Payments made to Employees
Other Payments for Operating Activities
Payments of Dividends
Receipt of Dividends
Payment of Interests
Receipt of Interests
Income Taxes Paid
Other Operating Outflows from Operating Activities
NET CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net Cash Flows provided by (used in) Investing Activities
Proceeds from Sale of Property, Plant and Equipment
Purchases of Property, Plant and Equipment
Proceeds from sale of Intangible Assets
Purchases of Intangible Assets
Proceeds from other Long-Term Assets
Purchase of Long –Term Assets
Other Outflows from Investing Activities
Net Cash Flows provided by (used in) Investing
Activities
Net Cash Flows provided by (used in) Financing Activities
Proceeds from Share Issuance
Proceeds from Long –Term Borrowings
Proceeds from Short –Term Borrowings
Proceeds from Related Parties Borrowings
Repayments on Loans
Payments on Financial Leasing Liabilities
Other Inflows (Outflows) of Cash and Cash Equivalent
NET CASH FLOWS FROM (USED IN) FINANCING
ACTIVITIES
INCREASE (DECREASE) IN NET CASH AND CASH
EQUIVALENT
Effects of Foreign Exchange Variations on Cash and Cash
Equivalents
Increase (Decrease) in Net Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of Period
Cash and Cash Equivalent at the End of Period
From Jan. 1, 2016
to Sep. 30, 2016
From Jan. 1, 2015
to Sep. 30, 2015
1,845,229
0
(1,149,369)
(62,665)
(73,112)
(93,256)
(105,379)
10,733
(92,237)
(23,077)
1,651,269
11,007
(1,114,875)
(53,833)
(32,274)
(63,500)
(129,999)
1,529
(67,747)
(7,731)
256,867
193,846
0
(450,148)
1,098
(521)
141,920
(94,622)
(11,307)
7,325
(846,415)
0
(2,467)
0
0
89,001
(413,580)
(752,556)
15,268
593,737
23,600
(277,712)
(1,204)
(20,792)
83,880
895,662
50,000
(380,110)
(1,357)
(7,227)
332,897
640,848
176,184
82,138
5,877
(14,901)
182,061
267,233
449,294
67,237
228,691
295,928
28
AES GENER/ 2016
AES GENER CONSOLIDATED EBITDA
Ebitda (ThUS$)
September
September
2016
2015
Gross Profit
463,020
392,174
18%
Depreciation (-)
180,858
173,034
5%
1,983
1,651
20%
Administrative Expenses
(76,891)
(79,465)
(3%)
Other operating Expense
(1,951)
(2,185)
(11%)
4,369
5,126
(15%)
571,388
490,335
Other Operating Revenues
Other Costs not included in Ebitda (-)
Total Ebitda
Var.
%
17%
29
AES GENER/ 2016
ANNEX 1: GUACOLDA ENERGÍA S.A
Summarized income statement for the period
As of September 30, 2016 and 2015
International Financial Reporting Standards (IFRS).
Income Statement (ThUS$)
Contract sales
Spot sales
Other operating revenues
Operating Revenues
Fuel consumption
Energy and capacity purchases
Transmission tolls
Other cost of sales
Depreciation
Total Costs of Sales
Total Gross Profit
Administrative expenses
EBITDA
Financial expenses
Net Income (Loss) before Taxes
Income Tax Income (Expense)
Net Income (Loss)
Balance Sheet Information (ThUS$)
CASH AND CASH EQUIVALENT
PROPERTY PLANT AND EQUIPMENT
Other Current Financial Liabilities
Other Non-Current Financial Liabilities
TOTAL OTHER FINANCIAL LIABILITIES
September
2016
September
2015
Var.
%
254,895
5,730
27,384
288,008
(83,192)
(17,399)
(24,757)
(40,159)
(51,928)
(217,435)
70,573
(10,225)
112,275
301,446
3,911
43,351
348,708
(88,816)
(84,928)
(23,552)
(47,384)
(35,200)
(279,880)
68,828
(9,302)
94,726
(33,153)
(22,030)
50%
27,223
(7,497)
19,726
9,855
147,394
157,249
176%
(105%)
(87%)
September
2016
September
2015
65,278
105,427
1,633,181
1,586,275
71,762
739,554
811,316
14,341
825,719
840,060
(15%)
47%
(37%)
(17%)
(6%)
(80%)
5%
(15%)
48%
(22%)
3%
10%
19%
Var.
%
(38%)
3%
400%
(10%)
(3%)
30
AES GENER/ 2016
Guacolda Financial Debt
US$ Million
28.8
2016
57.5
57.5
57.5
2017
2018
2019
500.0
100.0
2020
2021
2022
2023
2024
2025
Energy Generation, purchases and sales
Energy (GWh)
September
2016
September
2015
Var.
%
Generation
Thermal
Total Generation
3,428
3,428
3,047
3,047
13%
13%
Purchases
Spot
Other generators
Total Purchases
16
16
79
55
134
(71%)
(88%)
(29)
11
355%
615
2,133
667
3,415
1,692
1,500
0
3,192
(64%)
42%
7%
Losses
Sales
Regulated
Unregulated
Spot
Total Sales
As of September 30, 2016, the increase of ThUS$1,745 gross profit is explained mainly by a reduction in
energy purchases associated to the termination of CONAFE contract by end 2015 and to a significant
reduction in the spot market prices. In addition, variable costs declined due to a lower cost of coal. The latter
was partially compensated by higher depreciation cost led by the start of operation of Guacolda’s Unit 5 on
December 2015.
During first nine months of 2016, there were lower volumes of sales to regulated customers, explain by the
CONAFE termination contract, which was partially offset by an increase in demand from current contracts
and higher sales to unregulated customers due to new contracts signed during this period, and higher sales
to the spot market.
In non-operating terms, it is important to mention the positive effect in other gains (losses), associated with
refinancing activities in April 2015, which generated losses by ThUS$10,882, as a consequence of the higher
amortization of the financing costs of the refinance debt.
The negative variation of the net financial costs by ThUS$11,123 as of September 30, 2016, is due mainly
to the higher level of debt and to lower capitalized interests as a result of the start of operations of the Unit 5
on December 2015, partially compensated by a positive result in derivatives instruments.
31
AES GENER/ 2016
ANNEX 2: EMPRESA ELÉCTRICA ANGAMOS S.A
Summarized income statement for the period
As of September 30, 2016 and 2015
International Financial Reporting Standards (IFRS).
Income Statement (ThUS$)
September
2016
September
2015
187,578
33,962
3,226
224,766
(71,965)
(18,955)
(2,135)
(31,568)
(36,791)
(161,414)
63,352
(5,916)
95,643
181,066
25,005
863
206,934
(74,864)
(9,306)
(1,737)
(40,021)
(35,538)
(161,466)
45,468
(5,449)
76,703
4%
36%
274%
9%
(4%)
104%
23%
(21%)
4%
(0%)
39%
9%
25%
Financial expenses
(14,467)
(28,108)
(49%)
Net Income (Loss) before Taxes
Income Tax Income (Expense)
Net Income (Loss)
42,970
(10,638)
32,332
11,911
(3,294)
8,617
261%
223%
275%
September
2,016
September
2,015
Var.
%
73,774
53,081
39%
PROPERTY PLANT AND EQUIPMENT
931,273
953,673
(2%)
Other Current Financial Liabilities
Other Non-Current Financial Liabilities
TOTAL OTHER FINANCIAL LIABILITIES
14,191
791,065
805,256
14,428
780,381
794,809
(2%)
1%
1%
Contract sales
Spot sales
Other operating revenues
Operating Revenues
Fuel consumption
Energy and capacity purchases
Transmission tolls
Other cost of sales
Depreciation
Total Costs of Sales
Total Gross Profit
Administrative expenses
EBITDA
Balance Sheet Information (ThUS$)
CASH AND CASH EQUIVALENT
Var.
%
32
AES GENER/ 2016
Angamos Financial Debt
US$ Million
312.8
2016
2017
69.6
69.6
69.6
69.6
69.6
69.6
69.6
2018
2019
2020
2021
2022
2023
2024
2025 +
Energy Generation, purchases and sales
Energy (GWh)
September
2016
September
2015
Var.
%
Generation
Thermal
Total Generation
2,913
2,913
2,466
2,466
18%
18%
Purchases
Spot
Other generators
Total Purchases
-
-
(24)
(10)
140%
2,561
328
2,889
2,211
245
2,456
16%
34%
18%
Losses
Sales
Regulated
Unregulated
Spot
Total Sales
-
As of September 30, 2016, the increase of ThUS$17,884 in Angamos’ gross profit compared to the same
period of 2015, is mainly explained by higher volume sales to the spot market by 83 GWh, a higher average
spot price in the SING grid of 12%, in addition to a reduction in coal prices.
In non-operating terms, the higher income as of June 2016 compared with same period of 2015 in other gains
(losses) for ThUS$7,585 related to refinancing debt in 2016. In April, Angamos executed a partial early
redemption of its US$800 million 4.875% 144A / Reg S for a total amount of US$199 million, at 94% of its
nominal value. Tendered bonds were refinanced through banks facilities with the same amount and
conditions. In regards to interest rate, the Company achieved a decrease to 4.5%.
Additionally there is a positive variation in the financial income of ThUS$6,866, which is mainly due to higher
intercompany interest expense associated with higher loans receivables with AES Gener.
33
AES GENER/ 2016
ABOUT AES GENER
AES Gener generates and sells electricity in four markets: the Central
Interconnected Grid (SIC) and the Greater Northern Interconnected Grid (SING)
in Chile and the National Interconnected Grid (SIN) in Colombia. Additionally, the
Company sells electricity to the Argentine Interconnected Grid (SADI). At the date
of this report, in Chile, AES Gener is the second largest electricity generation
group in terms of generation capacity, with installed capacity of 4,132 MW
composed of 3,861 MW of thermoelectric and 271 MW of hydroelectric capacity.
The Company is the principal thermoelectric generator in Chile, with a diversified
plant portfolio that utilizes coal, natural gas, diesel and biomass as fuel. AES
Gener also owns a dam-based hydroelectric plant in Colombia with a total nominal
operating capacity of 1,020 MW and a natural gas –fired combined cycle plant in
Argentina with an installed capacity of 643 MW. AES Gener possesses an
attractive portfolio of development projects. AES Gener is 66.7% owned by The
AES Corporation (AES). To learn more about AES Gener, please visit
www.aesgener.com.
ABOUT AES
The AES Corporation (NYSE: AES) is a Fortune 200 global power company. AES
provides affordable, sustainable energy to 17 countries (figures as of year 2015)
through its diverse portfolio of distribution businesses as well as thermal and
renewable generation facilities. AES' workforce of 21,000 people is committed to
operational excellence and meeting the world’s changing power needs. AES'
2015 revenues were US$15 billion and AES owns and manages US$37 billion in
total assets. To learn more, please visit www.aes.com. Follow AES on Twitter
@TheAESCorp.
34