ANNUAL REPORT 2019 REPORT ANNUAL OPEN POWER FOR A BRIGHTER FUTURE. WE EMPOWER SUSTAINABLE PROGRESS. enel.com.co ANNUAL REPORT 2019 ANNUAL REPORT 2019 “We are pleased to share the results achieved by the previous years, while Colombia is resilient, growing at Emgesa S.A. ESP in 2019”. LETTER TO 3%. This indicates a superior result with respect to the re- SHAREHOLDERS gion and a growth mainly leveraged by higher investment as a result of the ratified financing law in the month of Dear Shareholders, December. Some economic indicators of 2019: We are pleased to share the results achieved by Emgesa > An unemployment rate of 10.5% S.A. ESP in 2019, which are the outcome of an approach of > GDP growth of 3.3% a renewed strategy and based on an inspiring concept to solve the greatest challenges, as well as the reflection of > Inflation of 3.8% teamwork, the passion for the best results and the great > Producer Price Index (PPI) Internal Supply of 4.7% commitment to deliver our customers a quality product > A current account deficit of approximately 4.4% of na- that drives the development, sustainability and growth of tional GDP the communities where we operate. Accordingly, Colombia continues to be one of the promis- The global economy is experiencing a slowdown with a ing economies in the region and is perceived as such by the growth close to 2.9%, and low growth in developed and risk rating agencies that grant the country the investment emerging economies. The United States stalled as a con- rating. Within this macroeconomic scenario, during 2019 sequence of the uncertainty of the trade war with China, we continued to achieve successes and progress along our although the tension between these countries has de- path as part of the Enel Group, a global business group. creased, and the outlook for Latin America is marked by Our country had a national demand for electrical energy low growth rates derived from lower productivity, lower during 2019 that was 71,925 GWh, which represents a demand for commodities and social protests in several growth of 4% compared to the previous year. countries that reflect needs for fiscal, labour and pension reforms. Latin America showed a GDP growth lower than During the first months of 2019, the contributions of the 4 ANNUAL REPORT 2019 Emgesa S.A ESP. 5 main rivers nationwide were deficient in the dry season focused on Unit 2. Additionally, within the Automation Emgesa registered a financial debt of $3.01 trillion, 20.7% pated in 25 events as speakers of best practices in gender due to the weak El Niño phenomenon 2018-2019. In the and Telecontrol project, the Darío Valencia, Laguneta and less than in 2018. In 2019, $0.74 trillion corresponding to equality management. second half-year there was a deficit of contributions espe- El Salto power plants had remote control from the Guaca maturities of local bonds and credits were amortised. At Regarding sustainability, in 2019 Emgesa continued to cially in the Antioquia region. The hydrological contributions Power Plant. The same project also advanced in the auto- the end of the year, we maintained 100% of the debt in develop its actions with local communities within the during 2019 of the basins afferent to the Bogota and Guavio mation of other power plants in the Bogota River Chain. pesos, of which 65% have interest indexed to the CPI, and framework of the shared value creation policy, promoting River chain were slightly above the historical average. the remaining 35% have a fixed rate. Finally, at the end of From an environmental perspective, we highlight the con- sustainability based on principles of equitable and mutual the period, 92% of the financial debt was long-term. On In 2019, Emgesa’s net power generation reached 15,229 struction of an artificial wetland in the Cartagena Power development for all parties involved. This, taking into ac- the other hand, the growth in net income was also due to GWh, with an increase of 8.4% compared to 2018, mainly Plant, in order to eliminate dumping into the bay of do- count the operational policies and practices that increase a lower current tax rate, as a result of the reduction of the due to greater hydraulic and thermal generation as a result mestic wastewater generated in the powerhouse. In El competitiveness, contributing to improve the economic income tax rate by 4 percentage points for the year 2019. of the greater requirement of power plants for the system, Quimbo, the investments associated with the fulfilment and social conditions of the communities where we op- which positioned us as the first generator in Colombia. of the commitments of the Environmental License contin- Assets totalled $9.11 trillion, with net property, plant and erate. Emgesa’s net installed capacity is 3,506 MW, 20.1% of the ued, we made progress in the restoration plan for tropical equipment representing 89.2%, and cash and cash equiva- In 2019 we strengthened our positioning at the national lev- country’s capacity (17,465 MW). dry forest, which has 11,079 ha, and within the framework lents 3.1% of total assets. el by presenting the Circular Economy strategy, developed of the Fish and Fishing Programme of Upper Magdalena, We were able to carry out optimal portfolio management We carried out preventive collection management pro- in spaces with unions, national and local governments, ac- the permits from the aquaculture and fisheries authority that contributed to achieving an annual variable margin of grammes, and obtained a manageable portfolio ratio of ademia and the private sector. On the other hand, we con- to start the repopulation project with the planting of 500 $2.56 trillion (11% higher than in 2018), obtained by total 0.04%. However, the average ratio of consolidated past tinued with our support for the country’s comprehensive thousand fingerlings. energy sales of 18,291 GWh. due loans for the year reached 29.6%, mainly due to the development, generating actions to strengthen and build In 2019 we carried out the intervention at risk of electri- Electricaribe S.A. ESP portfolio, which amounts to $98,990 territorial peace, through a partnership with the Prodepaz In 2019, we participated in the auction for the assignment cal contact in electrical panels of the Cartagena, Termozipa million. Network. of firm energy obligations of the Reliability Charge for the and Bogota River power plants, and we certified the per- period December 2022 - November 2023. In this process, For the seventh year in a row, Emgesa received the IR In 2019, the Company adequately carried out best prac- sonnel exposed to electrical risk in protection control mea- Emgesa acquired obligations in its plants for 12,404 GWh- (Investor Relations) recognition for its commitment, trans- tices in Corporate Governance, had an adequate internal sures. Within the Fatality Prevention Programme, safety year at a price of 15.1 USD/MWh. parency and high standards in terms of disclosure of in- control system, implemented all the proposed improve- conditions were evaluated in order to improve operational formation and relationship with investors. In turn, Fitch ment actions and fully complied with current regulations. In 2019 we supplied energy in the Wholesale Market controls in electrical and mechanical risks, potential situ- Ratings Colombia gave Emgesa a Long Term and Short In addition, it has a robust compliance system made up through contracts, as a result of public calls or private in- ations of impact with objects and entrapments, work at Term national rating of ‘AAA (col)’ and ‘F1 + (col)’, respec- of different elements such as the Criminal Risk Prevention vitations, reaching sales of 24.5 TWh, distributed between height and lifting of loads. Additionally, we implemented tively. It also gave a ‘AAA (col)’ rating to the Bonds and Model, the Code of Ethics and the Zero Tolerance Plan the years 2019 and 2028. We also maintained an 18% the Fire Systems Improvement Plan under the guidelines Commercial Paper Programme worth $4.4 trillion, with a against Corruption, among others, which has led us to the share in the country’s Non-regulated Market with a sale of of the technical standard NFPA 850. stable outlook. In addition, Emgesa’s international rating as certification of our Anti-Bribery Management System un- 4,043 GWh at the end of the year. In the gas sale business, In the financial area, Emgesa’s operating income in 2019 an issuer of long-term corporate debt in local and foreign der the ISO 37001 standard. Emgesa and Codensa are the we continued to consolidate our participation with 3.9% of reached $4.09 trillion, showing an increase of 10.0% com- currency was ratified at BBB by Standard & Poor’s and by first companies in the country to have this certification. By the Non-regulated Market. pared to 2018, explained mainly by an increase in energy Fitch Ratings, with a stable outlook. the 2020, all relevant steps will be taken to be recertified At the end of 2019, the availability of the Emgesa gener- prices on the Stock Exchange, resulting from a deficit of in the ISO 37001 standard and continue with the proper In relation to our workers, Emgesa closed 2019 with a di- ating park was 90.3%, with a decrease of 0.9 percentage rains. performance of best practices in Corporate Governance. rect staff of 599 employees. Change management, strong points compared to 2018, due to the implementation of the Fixed operating costs increased by 7.9% YoY, and amount- leadership, talent evolution and leveraging the digital cul- We conclude this tour of the Company’s management by Life Extension project and environmental improvement at ed to $ 0.22 trillion, mainly due to higher operation and ture are the engine to continue working for the people’s expressing our conviction that the growth prospects of the the Termozipa power plant.