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ENGIE Energía Perú Results as of December 2016

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Page 1: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

ENGIE Energía Perú

Results as of December 2016

Page 2: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

2016 HIGHLIGHTS

Total Installed Capacity grew 723MW reaching 2,673 MW

2

In December, Chilca 2 combined cycle project entered into commercial operation, reaching a total

installed capacity of 113 MW

In October, Nodo Energetico project entered into commercial operation, reaching a total installed

capacity of 610MW (dual fuel diesel / gas)

In June, EEP raised 250MPEN (~76MUSD) through a 10 year bond in the local capital markets at a

final fixed rate in dollars of 3.38%

In February, EEP won a bid to build and operate a 40 MW solar plant, planned to enter into

commercial operation during Q4 2017

Recurrent EBITDA reached a record of 330MUSD while Net Recurrent Result totalized 175MUSD.

After changes in the income tax rate and the impairment of assets, the final Net Result accounted for

132MUSD

Page 3: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

2016 INDUSTRY HIGHLIGHTS

Total Installed

3

Installed capacity grew 26% to 12,135MW, among projects entering into operation:

+ Additional Hydro (+975MW), Cerro del Aguila (+514MW) & Chaglla (+461MW) in Q3 2016

+ New Cold reserves (+1,242MW) dual plant in Ilo & Moquegua (Q3-Q4 2016)

Demand grew 8.5%, mostly explained by the start of operations of two mining projects: Cerro Verde

(300MW) & Las Bambas (150MW)

Non renewable auction was awarded for 430MW (1,740 GWh), including mainly 160MW of wind,

180MW of solar, 80MW of mini-hydro. These projects should enter into operation before December

2018

Government of Peru cancelled the contract of the Gas to South pipe project because the consortium

did not meet the financing deadline

Page 4: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

4* Does not include impairments of fixed assets

MAIN FINANCIAL RESULTS

Solid recurrent results. Net Result affected by extraordinary events

** Does not include impairments nor changes in income tax rates and their effect on the deferred tax liability

325 330

2015 2016

173 175

2015 2016

EBITDA Net Result Debt

954 1009

2015 2016

2.81 3.18

2015 2016

+1%+1% +6%

+13%

321 309

2015 2016

181

132

2015 2016

-4%

-28%

Recurrent EBITDA MUSD Net Recurrent Result MUSD Total Debt MUSD

EBITDA MUSD Net Result MUSD Net Debt / EBITDA x

Page 5: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

2016 SNAPSHOT

5

Operations• Higher generation of Ilo plants (Ilo1, Ilo 21 & Ilo 31) due to transmission congestion in the south of the country

• Successful full year operation of Quitaracsa hydro power plant

• Maintenance optimization program

Commercial• New contracts with free & regulated clients for 440MW

• Net buyer position in the spot balance

• Low PPA prices due to oversupply and low prices in the spot market

Finance• Successful 10 year bond issuance in local capital market at a final rate of 3.38%

• Reduction of average cost of debt (4.9%)

• Focus on cost control and process optimization

Sustainability• 3,500 people benefited by infrastructure improvements in our areas of influence

• Training programs improved the technical and commercial capabilities of 900 entrepreneurs and small businesses

• High health & safety and environmental standards

Page 6: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

AGENDA

6

Peruvian Electricity Market1

Company Overview2

2016 Financial Results3

Capital Structure4

Page 7: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

PERUVIAN ELECTRICITY MARKET

7

46%

4%

47%

2%

Hydro Renewable

Natural Gas Coal & diesel

18%

21%

17%

14%

29%

Enel Government

ENGIE Kallpa

Others

54%46%

Regulated Clients Free Clients

• Main regulated clients are

Edelnor and Luz del Sur

(Distribution companies in

Lima)

• Main free clients are

Mining and industrial

companies

• Clients with a consumption

above 0.2MW are able to

contract directly with

generation companies

(free clients)

• Natural Gas generation is

concentrated in Chilca

district (60km from Lima)

• Diesel plants dispatch in

case of emergency and

transmission congestion

• Market share in terms of

energy generation

• Others include: Fenix

Power, Duke, Statkraft,

Termochilca, among

others

Clients Generation Market shareMarket

Installed capacity

12,135 MW

Peak demand

6,492 MW

Energy

Generation

48,326 GWh

+8.5%

+3.5%

+26%

Page 8: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

SUPPLY & DEMAND

8

System is based mainly on hydro and natural gas from Camisea Field

2 seasons: wet (from November to April) and dry (from May to October)

Electricity demand increased on average 7% annually between 2005 and 2016 (YTD) and is expected to have

an average annual growth of 4-5% between 2017 and 2019;

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2016

2017

2018

2019

2020

Reserve MWBalance Supply - Demand - Wet Season

Hydro Renewable

Natural Gas (CC) Natural Gas (OC)

Coal Oil and Fuel Oil

Max Demand Reserve Wet Season (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2016

2017

2018

2019

2020

Reserve MWBalance Supply - Demand - Dry Season

Hydro Dry Season Renewable

Natural Gas (CC) Natural Gas (OC)

Coal Oil and Fuel Oil

Max Demand Reserve Dry Season (%)

Page 9: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

MARGINAL COST

New hydro (+975MW) supports low level of marginal cost

9

Page 10: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

AGENDA

10

Company Overview2

2016 Financial Results3

Capital Structure4

Peruvian Electricity Market1

Page 11: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

ENGIE ENERGIA PERU OVERVIEW

11Market data source: ENGIE as of December 2016

CCGT: Combined Cycle Gas Turbines | OCGT: Open Cycle Gas Turbines | HPP: Hydro Power Plant.

Valuable team & assets

Solid Financials

20 years operating in the

country

519 employees

8 Power Plants totalizing 2,673MW

1 Substation and +200km Transmission Lines

Our first solar power plant under construction

~750MUSD revenue

~300MUSD EBITDA

~1,600 -1,800 MUSD Market Cap

Sponsored by a global player

Natural Gas36%

Hydro9%

Dual fuel42%

Coal5%

Diesel8%

Quitaracsa

Yuncan

ChilcaUno

ChilcaDos

Ilo21

Ilo1

Ilo31 (Cold Reserve)

Nodo Energetico

Intipampa

2,673

Page 12: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

OUR HISTORY

12

Proven track record in driving organic growth and integrating the developed projects.

Committed investments for approximately 1.6 BnUSD between 2010 and 2018

1997-2003 2004-2005 2006 2007-2008 2009 2010 2011 2012 2013 2014 2015

Acquisition Ilo1

261MW

Coal Plant Ilo21

135MW COD

Yuncán HPP

134MW COD

Chilca 1

OCGT11

180MW COD

Chilca 1

OCGT12

180MW COD

Chilca 1

OCGT12

180MW COD

1. Chilca 1 CCGT 292MW NTP

2. Quitaracsa HPP 112 NTP

3. Ilo31 500MW NTP

Chilca 1 292 MW

CCGT COD

(85MW CCGT)

Ilo31 500MW COD

Nodo Energetico

600MW Auction

Chilca 2

113MW CCGT

NTP

Intipampa

40 MW

Solar Auction

Private Placement 21%

Offering 17%

First Dividend Payment

OCGT 12

Financial

Lease

400 MUSD

Corporate

Bond Program

1st, 2nd & 3rd

issuances

Bond Program

4th & 5th

issuances

Chilca 1 CCGT

310 MUSD F. Lease

Bond Program

6th & 7th issuance

Cold Reserve

200 MUSD

Subordinated

Financial Lease

Capital Increase

150 MUSD @ 100%

Subscription

Quitaracsa HPP

60 MUSD

Financial Lease

100 MUSD

MTL

Chilca 2

125 MUSD

Financial Lease

MW: Nominal Capacity

2016

Nodo 610MW &

Chilca Dos 113MW

COD

Total Capacity MW 676 836 1,090 1,068 1,068 1,360 1,820 1,860 1,952 2,673

EBITDA* MUSD 84 185 134 163 168 188 270 287 325 330

Net Income* MUSD 42 94 66 81 86 101 127 138 173 175

Dividends MUSD 42 84 59 24 26 30 38 41 54 50

Market Cap MUSD 645 870 877 1,600 1,200 1,759 2,005 2,075 1,427 1,611

*Recurrent Figures

Page 13: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

ORGANIC GROWTH

In 2016, ENGIE Energía Perú reached 2,673MW…

13

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019 … 2022

MW

3065

MW

374

MW

Hydro

Natural Gas

Dual Fuel

Investment Plan1.6 BUSD

1068

MW

* In 2015, Ilo1 Steamed Turbine 1 was decommissioned (-22MW)

2673

MW

Yuncan

+134MW

Chilca 1

+180MW

Chilca 1

+180MW

Chilca 1

+200MW

Chilca 1

Combined

Cycle

+292MW

Ilo 31

+500MW

Quitaracsa

+112MW

Nodo Ilo &

Chilca Dos

+723MW

Intipampa

+40MW

CCGT

Nodo

+350MW

AVERAGE

GROWTH

18%

Growth options

Solar

under construction

Page 14: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

NODO ENERGETICO - ILO, +610MW

14

On October 21st EEP announced the commercial operation of Nodo Energético project, 5 months

ahead of the scheduled contractual date and below budget

Key facts

• Location the project is located in the south of Peru, in Moquegua Region (adjacent to

existing operations)

• Description: dual fuel (diesel / gas) plant, expected to operate with diesel as a back up

plant for the system until the Gas Pipe to the South Project is completed. Besides the 3

turbines generators, the project includes a 75km transmission line (500kV) to Montalvo

Substation and 6 new fuel oil tanks

• Economics: the project is backed by a 20 year Investment Agreement with the Peruvian

State for 600 MW at 5.75 USD/kW-month

• Construction: construction contracts were performed by Técnicas Reunidas/JJC (power

plant) & Abengoa (transmission line)

• Financed through Financial Leases for 290 MUSD with BCP and BBVA

• Health & Safety: record of 3.4M man hours without disabling accidents

• Community and local impact during the project, Engie strengthened relations with the

local community, contributing with local employment, specialized trainings to increase

employability and working in partnership with the community to achieve the highest

environmental standards

Page 15: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

CHILCA DOS, +113MW

15

On December 21st EEP announced the commercial operation of Chilca Dos combined cycle

project. The project started operations as planned and in line with budget

• Economics: the project is sold under EEP PPA portfolio, the

investment totalized 130MUSD

• Construction: construction was successfully completed in 22 months.

Main contractor was Duro Felguera

• Financed through Financial Lease for 125 MUSD with BBVA

• Health & Safety: 1.3M man hours without disabling accidents

• Community and local impact during the project, Engie benefited the

local community, improving infrastructure, contributing with local

employment, trainings curses to increase self-sustainability

Key facts

• Location the project is located in Chilca district, 60km south of Lima

(adjacent to existing operations ChilcaUno)

• Description the power plant consists in one gas turbine and one steam

turbine with a combined capacity of 113 MW

Page 16: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

INTIPAMPA, +40MW (UNDER CONSTRUCTION)

16

On February 2016, ENGIE Energía Perú was awarded by Osinergmin as part of the 4th Renewables

Auction process the construction of a 40 MW solar plant which will be located in Moquegua

Status

Signature of Concession Contract

Pre-operational studies

Archeological permits

Environmental studies

Land

EPC signed with Solairedirect

Notice to Proceed

Construction

Financing structure inside Balance Sheet

COD expected in Q4 2017

The project will deliver 108.404 GWh/year to the system and is backed by an

investment agreement with the Ministry of Energy and Mines @48.5$/MWh

until 2038 (approx. 20 years). Total investment estimated in 55 MUSD.

Site mobilization in order to start construction was launched on February

22nd, 2017.

Page 17: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

STRATEGY

17

Balanced portfolio of assets under

development

Geographic diversification and

proximity to our clients

Renewable pipeline

Continue with hydro mapping

and studies

Studies for gas options

M&A opportunities

Focus on improving

operational efficiency of

existing assets

A. Development

Optimum contracting level

Balanced portfolio between

Regulated Clients (Distribution

Companies) and Free Clients

Power Purchase Agreements

under “pass-through” scheme

Minimize non-manageable risks

Maintain a strong position for

unexpected events and

opportunities

B. Commercial C. Financial

Page 18: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

PROJECTS UNDER DEVELOPMENT: GAS TO SOUTH OPTION

18

A. Phase 1: up to 1,110MW of installed capacity serving as emergency plants but able to generate with

natural gas once available in the south of Peru

Cold Reserve: option granted under the

existing concession contract after 2018

Nodo Energético: once Natural Gas arrives

to the South (~2022)

Similar operation to Chilca 1 plant before it

was converted to Combined Cycle

No significant investments required

Similar operation and economic impact of Chilca 1 Combined Cycle

Project

Approximately 700MUSD additional investments to convert to

combined cycle and 48 months for development and construction

B. Phase 2: up to an additional 550MW in steam

turbines with the conversion to Combined Cycle

Delays in the GSP postpone these options and potential upsides

Page 19: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

COMMERCIAL PORTFOLIO

19

• 44 clients

• Consuming 8,976 GWh & 1,527 MW in peak hours

• 60% free clients / 40% regulated clients

• Indexation 58% of portfolio to Natural Gas prices

• New PPAs in 2016 for +400MW

Challenging market conditionsHighly contracted portfolio with creditworthy clients Diversified portfolio with medium/long term contracts

• Oversupply pushing PPA market prices down

• Market conditions pushing new and existing contractual terms

• Most of EEP contracts do not include termination clauses

• Las Bambas (150MW) has the option to terminate the contract in

August 2017 by paying a termination fee

Challenging market conditions

Regulated Clients

Free Clients

Page 20: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

ENERGY PRODUCTION AND BALANCE 2016

20

Growth in net generation and contracted level in line with commercial operation of

new efficient generation plants and commercial efforts

GWh2016 /

2015

4Q'16 /

4Q'15

Yuncán HPP 898 14% 948 13% 921 12% 901 10% 760 8% -16% 211 9% 173 8% -18%

Quitaracsa HPP 0 0% 0 0% 0 0% 88 1% 484 5% 448% 88 4% 112 5% 27%

Chilca1 CCGT 4,222 68% 5,771 78% 5,979 80% 5,838 66% 5,617 63% -4% 1,499 65% 1,516 71% 1%

Chilca2 0 0% 0 0% 0 0% 0 0% 220 2% n.a 0 0% 88 4% 0%

Ilo21 (Coal) 556 9% 837 11% 163 2% 248 3% 773 9% 212% 202 9% 191 9% -5%

Ilo1 (Diesel) 106 2% 130 2% 30 0% 62 1% 210 2% 240% 35 2% 17 1% -53%

Ilo31 (Cold Reserve) 0 0% 5 0% 5 0% 35 0% 100 1% 184% 11 0% 9 0% -20%

NEPI 0 0% 0 0% 0 0% 0 0% 18 0% n.a. 0 0% 4 0% 0%

Importaciones (Ecuador) 0 0% 0 0% 0 0% 0 0% 21 0% n.a 0 0% 0 0% 0%

Auxiliaries -255 -4% -188 -3% -212 -3% -100 -1% -289 -3% 188% -52 -2% -82 -4% 58%

NET GENERATION 5,528 89% 7,502 101% 6,887 92% 7,072 81% 7,914 88% 12% 1,994 86% 2,028 95% 2%

COES: NET 691 11% -109 -1% 609 8% 1,711 19% 1,061 12% -38% 326 14% 117 5% -64%

CLIENTS DEMAND 6,219 100% 7,393 100% 7,496 100% 8,783 100% 8,976 100% 2% 2,320 100% 2,145 100% -8%

2012 4Q 20164Q 20152013 2014 2015 2016

Page 21: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

AGENDA

21

Company Overview

2016 Financial Results

2

3

Peruvian Electricity Market1

Capital Structure4

Page 22: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

MAIN RESULTS 2016 & Q4´16

Solid Recurrent Results

22

Solid recurrent EBITDA and Net Result, positively impacted by start of operations of new projects and full year

operation of Quitaracsa hydro power plant

Net Result after non-recurrent events totalized 132MUSD, 28% below 2015. The decrease was explained by two

extraordinary effects: i) change in income tax rate (22.5MUSD) & ii) impairment of Ilo1 and development capex

(20.9MUSD)

Total debt increased by 6% and totalized 1,009MUSD due to capex related with projects such as Nodo Energético and

Chilca 2 that started operations in Q4 2016

(MUSD) 2016 2015 2016 / 2015 4Q16 4Q15 4Q16 / 4Q15

Income 748 714 5% 184 187 -2%

Recurrent EBITDA* 330 325 1% 73 73 -1%

EBITDA 309 321 -4% 53 69 -24%

Net Recurrent Result** 175 173 1% 38 31 20%

Net Result 132 181 -28% -6 40 -115%

Total Debt 1,009 954 6% - - -

Net Debt 981 902 9% - - -

Net Generation GWh 7,914 7,072 12% 2,028 1,994 2%

Clients Demand GWh 8,976 8,783 2% 2,145 2,320 -8%

Net Debt / EBITDA 3.18 2.81 13% - - -

Main Financial Results

* Does not include impairments of fixed assets

** Does not include impairments nor changes in income tax rates and their effect on the deferred tax liability

Page 23: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

NON RECURRENT EVENTS

Income Tax changes & Impairments

23

Total Net Result impact of -43MUSD, EBITDA impact of -21MUSD

2. Impairment of assets

+ Ilo 1 (12.7MUSD) Generation assets operating with diesel acquired in 1997 from Southern Peru Copper

Corporation (SPCC). The plant is currently operating under emergency circumstances only and it is foreseen to

be withdrawn from the interconnected system when the new 500kv Montalvo Transmission Line enters into

operation; which is expected mid 2017

+ Development capex (8.2MUSD) related with projects which are not longer feasible under current circumstances

In 2015, EEP recorded a non-

recurrent gain of 13.2MUSD

In 2016, EEP recorded a non-

recurrent loss of 22.5MUSD

Given the deferred income tax liability….1. Changes in Income Tax rates

+ In 2015, the Government announced a progressive decrease of

the income tax rate from 30% to 26% in 2019 and a progressive

increase of the withholding tax on dividends from 4.1% to 9.3%

+ In 2016, the new Government changed the tax rules, setting a

flat income tax rate of 29.5% and a withholding tax on dividends

of 5%

Page 24: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

+287.2

+325.5 -6.3-14.8

+23.0 +2.4 +329.9

EBITDA2014

EBITDA2015

∆ CMg Regulated Clients COD effect Others EBITDA2016

RECURRENT EBITDA: 2016 vs. 2015 +4.4 MUSD

24

• End of contracts

• Migration from

regulated clients

to free clients

• Higher marginal

cost due to:

• New mining

projects entering

into operation

• Delay in rainy

season 2017

• Quitaracsa

(+9.5MUSD)

• Chilca2

(+5.3MUSD)

• Nodo (+8.2MUSD)

+ 1%

Page 25: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

+137.6

+173.0 +4.4 -13.5

-5.1+8.8

+7.4 +175.0

Recurrent NetResult 2014

Recurrent NetResult 2015

EBITDA growth D&A Financial expenses FX Others Recurrent NetResult 2016

NET RECURRENT RESULT: 2016 vs. 2015 +2.0 MUSD

25

+ 1%

Page 26: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

- 16.3

- 6.3 - 14.8

23.0 2.5

287.2

320.8

309.0

EBITDA2014

EBITDA2015

Ch. Impairment ofassets

∆ CMg Regulated Clients COD effect Others EBITDA2016

EBITDA: 2016 vs. 2015 -11.8 MUSD

26

- 4%

Additional non-

recurrent effect

Page 27: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

+131.5+137.6

+181.5 -13.2

-22.5

+4.7 -12.7

-8.2+1.9

R. Neto2014

R. Neto2015

Change in incometax rate 2015

Change in incometax rate 2016

Impairment 2015 Impairment Ilo 1 Impairment ofdevelopment capex

Others R. Neto 2016

NET RESULT: 2016 vs. 2015 -50.0 MUSD

27

• Change in

income tax rate

in 2015:

i) from 30% to

28% in 2015

ii) to 26%

expected in

2019 (impact

on deferred

tax)

• Change in

income tax

rate from 28%

to 29.5%

(impact on

deferred tax)

• Higher EBITDA

• Positive FX effect

compared to

2015, among

others

Net Result decreased significantly mainly due to change in income tax rate and impairment of assets

- 28%

Page 28: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

AGENDA

28

Peruvian Electricity Market

Capital Structure

Company Overview & Strategy2

4

Peruvian Electricity Market1

Company Results3

Page 29: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

FINANCIAL PRIORITIES

36

1. Maintain financial flexibility and access to capital markets to optimize capital structure

Monitoring and compliance of Financial Covenant (Debt to EBITDA < 3.5x)

Increasing duration of debt

Protecting local rating to maintain best conditions in the local capital market (acceding to the lowest rates for corporate names)

Minimum dividend pay-out ratio of 30% during expansion phase

2. Optimize cost structure to maximize value

Minimizing cost, following closely market conditions to assess products and time to market

Maintaining short debt up to a limit of 125MUSD, in line with working capital needs

Minimizing cost of carry

3. Minimize risks

Minimizing exposure to FX risks by contracting debt in USD or PEN + swap

Keep an adequate balance between fixed and variable interest rates taking advantage of historic low interest rates for LT debt

Page 30: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

DEBT STRUCTURE

36

808%

61061%

18418%

13513%

Debt Composition by Product (MUSD)

Short Term Debt

Financial Lease

Bondholders

Corporate Loans

EEP started an aggressive expansion plan in 2011.

Total investments between 2011 and 2017 for the

execution of 6 projects adding 1,657MW will reach 1.6

BnUSD.

After Nodo Energetico Ilo and Chilca2 projects COD in

Q4 2016, Engie Energía Peru´s gross debt totalized

1,009 MUSD as of December 2016

1,009

Page 31: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

18018%

82982%

Debt Composition by Interest Rate (MUSD)

Floating Rate Fixed Rate

19419%

81581%

Debt Composition by Currency (MUSD)

PEN + XCSY USD

LIMITED EXPOSURE TO FX AND INTEREST RATE VARIATIONS…

31

• FX: ENGIE Energía Perú’s functional currency is

the US Dollar and only a limited portion of its G&A

and OPEX are in local currency (PEN). Revenues

are either in US Dollars or in PEN indexed to the

USD.

• Interest Rate: minimize the uncertainty of the cost of

debt.

1,009 1,009

Page 32: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

STOCK PRICE PERFORMANCE

32

Sound financial results and value creation due to its financial, commercial and development

strategy, generating 4x increase in market value since IPO

Financial Market Data – December 2016

Number of shares issued 601,307,011

Share price (PEN) – 31/12/2016 9.00

VWAP (3m) – (PEN) 9.20

52 week – high – (PEN) 10.15

52 week – low – (PEN) 6.85

Market Cap (MUSD) 1,611

Enterprise Value (EV) (MUSD) 2,594

EV / EBITDA 8.0x

Price to Book Value (P/B) 1.6x

Price / Earnings ratio (P/E) 12.2x

Daily avg. trading volume (mm sh) 0.12

EV: Market Cap + Net Debt

P/B: Market Cap / Book Value of Equity

Source: SMV, Lima Stock Exchange, estimated Financial Statements as of December 31st 2016

• Market Cap changes in USD is affected by share price movements and FX changes

• In 2016, the share price increase from 8.0 to 9.0 S/./sh; (+12.5%); at the same time the

exchange rate decreased from 3.41 to 3.36, which contributed to the Market Cap

increase (+13.0%)

• Market Cap variation in 2015 is mainly explained by portfolio rebalance of an

institutional investor and subsequent potential reclassification of Peru from Emerging

Markets (“EM”) to Frontier market due to its low liquidity.

• Dividends distributed between 2005 and 2016 reached 597 MUSD (50MUSD in 2016)

467

663

1,020

793839

1,602

1,187

1,759

2,0052,075

1,427

1,611

0

50

100

150

200

250

0

500

1,000

1,500

2,000

2,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MU

SD

MU

SD

Page 33: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

STOCK EVOLUTION AND COMPARABLE TRADING COMPANIES

33

• Correlation with BVL Index although with

certain lag

• In October, EEP share price increased as

a result of pension funds increasing their

exposure to the stock

• In November / December the share Price

decreased as some smaller investors

realized gains

Sources: Larrain handbook 2017, Credicorp - Perú Perspectivas y Estrategia 2017

Underperform

Outperform

Return ENGIE

S&P_BVL

Index

YTD 0% 3%

3M -6% 7%

6M 5% 4%

Company

Market Cap -

Dec 16

(USDMM)

EV /MW -

installed

Revenue

/GWh -

generation

EPS

(Earnings in

USD per

share)

EV/EBITDA

2016eP/E 2016e P/BV 20016e ROE (%)

Net Debt

/EBITDA

Credit Rating

(int)

Engie Energia Peru 1,611 0.65 104,587 0.28 7.5 9.7 1.6 16.04% 2.60 n/a

Kallpa n/a n/a 72,571 n/a n/a n/a n/a n/a 2.71 BBB -

Enel Generación –PE 2,200 2.36 329,821 0.03 12.2 25.6 2.7 11.00% 0.60 n/a

Engie Energia Chile 1,665 1.85 112,641 0.26 7.7 6.0 0.8 14.20% 1.90 BBB

Colbun - Chile 3,448 3.53 127,127 0.01 8.0 17.8 1.0 5.50% 2.00 BBB -

Enel GX - Chile 5,408 n/a 145,737 0.08 7.1 8.0 2.0 11.00% 1.40 n/a

Average 2,866 2.10 148,747 0.13 8.5 13.4 1.6 11.55% 1.87 BBB/BBB -

Page 34: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

ANALYSTS: 4Q´16

3434

Sell - Underperfom Neutral - Market Perform Buy - Outperform

PE

N /

Sh

are

9

8

10

11

12

7

+12.5%

in 2016

ACTUAL Price 9.0

Inteligo Credicorp Larrain Consensus

Target price 10.87 10.70 8.8 10.1

Recommendation Buy Underperform Sell

2015

2016

Consensus

Page 35: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

DIVIDEND PAYMENTS: 622 MUSD since 2004

35

Change in Dividend Policy since 2010: Minimum 30%

34 3642

32

42

28

13 1215

20 2024

31

24

43

31

11 13

16

1822

30

9

41

15

10

34

77

42

71

85

59

24 25

31

3842

5450

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Extraordinary 2nd Half

1rst Half Annual

Extraordinary dividend of 10MUSD to avoid a negative impact to our shareholders given the non-recurrent

events in 2016. Total dividends from 2016 will totalize 49.5MUSD

Page 36: ENGIE Energía Perú · 2016 INDUSTRY HIGHLIGHTS Total Installed 3 Installed capacity grew 26% to 12,135MW, among projects entering into operation: + Additional Hydro (+975MW), Cerro

THANKS

36

This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Perú S.A. (“Engie Energía Perú” 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 ENGIE

Energía Perú prior written consent.

ENGIE Energía Perú

www.engie-energia.pe

Av. República de Panamá 3490 San Isidro, Lima, Peru

(511) 616 79 79

Investor relations contacts:

Rocío Vásquez

Head of Corporate Finance & Investor Relations

[email protected]

Eduardo Milligan

CFO

[email protected]

[email protected]