Codensa’s net income increased by 15.7% in 1h 2017

Financial Results 1H 2017

(1) Short-term Financial Debt + Long-term Financial Debt - Cash and Cash Equivalents

(2) As of December 31st, 2016

Lucio Rubio, Enel’s Country Manager for Colombia, said: "We are extremely pleased with the results recorded during the first half of the year. During this period we improved our overall indicators and continued our intensive investment programme, focused on technology innovations and grid modernisation. The implementation of this programme has positioned us as one of the companies with the best quality indicators in the country”.

• Revenues increased during the 1H 2017 compared with the same period in 2016, mainly due to:
  • The incorporation of revenues from the market previously served by Empresa de Energía de Cundinamarca S.A. ESP (EEC), which was absorbed by CODENSA in October 2016.
  • An increase in the regulated remuneration component of the distribution activity, due to the incorporation of new high voltage assets into CODENSA’s remunerated asset base, such as the Bacatá Substation, as well as the positive variations of the Consumer Price Index (CPI), to which the regulated remuneration component is indexed.
  • An increase in the regulated remuneration component of the trading activity, as a result of the positive variations of the CPI, to which that component is indexed.

• EBITDA increased as a result of:
  • Higher revenues, which more than offset, in combination with the impact of lower spot market prices, the increase in cost of sales (+ 8.0%). Higher cost of sales were due to a higher volume of energy purchases and transmission costs, driven by higher demand in the regulated market.
  • Increase in personnel, operation and maintenance expenses (+15.5%), due to the integration of EEC commercial activities, which, as address more rural areas, demanding proportionally higher costs than those traditionally required by CODENSA.

• EBIT increased, reflecting the EBITDA growth, partially offset by the rise in depreciation (+19.5%) due to the increase in the asset base, mainly as a result of the merger with EEC.

• CODENSA’s Net Income increased during 1H 2017, reflecting the rise in EBIT and a lower effective tax rate compared to the same period of last year. CODENSA’s net income increase also reflected a 9% increase in net financial expenses due to higher average financial debt balances, which was increased to finance part of the investments carried out in 2016.

• CODENSA’s Net Financial Debt increased compared to December 31st, 2016, mainly due to the payment of dividends during 1H 2017.

• Major investments were carried during 1H 2017 and were aimed at improving service quality and meeting the growth of electricity demand in CODENSA’s concession area. Nevertheless, investments in 1H 2017 declined compared with the same period of the previous year, mainly due to the rescheduling of projects for the second half of the year, given the difficulty presented to develop some activities as a consequence of heavy rains registered in CODENSA’s operational areas between March and May 2017.

Operating Results 1H 2017

(2) As of December 31st, 2016

• The National Energy Demand continued to decrease in 1H 2017 in line with the behavior observed since the National Government's energy-saving campaign that was launched in 1H 2016. In turn, CODENSA’S Energy Demand increased compared to the same period in 2016, due to the incorporation of EEC.

• During 1H 2017 the Company’s Average Energy Loss Index, increased slightly over the same period in 2016, mainly attributable to the incorporation of EEC, which had at the time of the integration a higher level of energy losses than CODENSA.

• CODENSA’s total number of customers grew as a result of the new connections that were carried out during the period.

Dividends:

During the first half of 2017, CODENSA paid a total of 409,277 million COP in dividends to its shareholders.