Grupo Energía Bogotá S A E S P : TGI - Informe de Resultados 4Q21

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Financial Performance

TGI (Transportadora de Gas Internacional) develops and provides integrated midstream solutions for low-emission hydrocarbons to large users, producers and developers of energy markets, connecting sources with consumption centers through long-term relationships. TGI is incorporated under Colombian law

This report discloses the corresponding variations under International Financial Reporting Standards (IFRS) of the comparative financial statements for 4Q20 and 4Q21 (3 months), and the year-to-date figures for 2020 and 2021 (12 months).

Quarterly Results 4Q21

Revenue

Table N°3 - Revenue Breakdown

USD '000	4Q20	4Q21	Var	Var %	2020	2021	Var	Var %
By type of charge
Capacity + AO&M (Fixed)	111.425	81.668	-29.757-26,7%	424.726	327.212	-97.514	-23,0%
Variable	6.390	13.184	6.794	106,3%	24.274	49.973	25.700	105,9%
Other Revenues	2.067	2.745	678	32,8%	6.769	7.548	779	11,5%
By Currency
Indexed to USD	83.114	72.012	-11.102	-13,4%	313.052	284.455	-28.598	-9,1%
Indexed to COP	36.767	25.585	-11.182	-30,4%	142.716	100.278	-42.438	-29,7%
Total	119.881	97.597	-22.284	-18,6%	455.769	384.733	-71.036	-15,6%

Revenue performance by type of charges in 4Q21 is detailed below:

• Capacity charges were USD 58,4 mm in 4Q21, representing a reduction of USD 18 mm (- 23,6%) mainly due to: i) the non-renewal of contracts for the Ballena-Barranca gas pipeline. Hiring for this section went from an average of 252,5 MPCD in 2020 to 58 MPCD in 2021. ii) the switch of contracts that had 100%-0% charge pairs to contracts with 80%-20% charge pairs (USD -5,0 mm), which makes the fixed component lower and the variable component higher (which is why in 4Q21 fixed charges represent a lower percentage of total revenues).
• AO&M charges, which are remunerated in COP, were 90.179 mm (USD 23,2 mm), with a decrease of USD -11,7 mm (-33,6%) due to the same reasons explained above: i) maturities of Ballena-Barranca and ii) modification of contracts that had 100%-0% charge pairs to contracts with 80%-20% charge pairs (USD -2.2 mm).
• Variable charges in USD (13,5% of total revenues) increased mainly due to: i) higher capacity transported through contracts with the 80%-20% charge pair, directly through the contractual route and through the bypass mode; ii) the average volume transported increased +11,5% from 477 MPCD in 4Q20 to 532 MPCD in 4Q21. Other non-regulated operating revenues, classified as ancillary services (2,8% of total revenues) increased mainly due to the collection of gas losses (USD 0,7 mm).

As for revenues by currency, 73,8% came from USD-denominated charges (mainly fixed charges for capacity and variable charges) and the remaining 26,2% came from COP- denominated charges (mainly fixed charges for AO&M).

• Revenues denominated in USD fell mainly due to a USD 18mm (-23,6%) drop in revenues from fixed charges, following the non-renewal of the Ballena-Barranca contracts, partially offset by the growth in revenues from variable charges of USD +6,8mm (+106,3%) due to

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increased capacity transported through contracts associated with the 80%-20% charge pair.

• Revenues denominated in COP fell mainly as a result of the non-renewal of Ballena- Barranca contracts.

Revenues in 2021 were lower due to the commercial effects of contract expirations that affected the company throughout the year. The effects initially expected for 2021 and reported were - 19%, and it was thanks to active commercial management that the company was able to mitigate this impact by 3% this year.

Operating Costs

Table N°4 - Operating Costs
USD '000	4Q20	4Q21	Var	Var %	2020	2021	Var	Var %
Professional Services	6.036	4.639	-1.397	-23,1%	21.302	17.367	-3.934	-18,5%
Maintenance	4.862	6.644	1.783	36,7%	19.203	11.783	-7.420	-38,6%
Taxes, fees and contributions	1.300	977	-323	-24,8%	3.123	2.656	-467	-15,0%
Depreciation and amortization	23.650	21.656	-1.994	-8,4%	89.103	90.186	1.082	1,2%
Other costs	9.995	8.186	-1.809	-18,1%	33.675	26.544	-7.131	-21,2%
Total	45.842	42.102	-3.740	-8,2%	166.406	148.536	-17.871	-10,7%

Operating costs were reduced in USD 3,7 mm (-8,2%) between 4Q20 and 4Q21, mainly due to lower professional services and D&A costs, partially offset by higher maintenance costs in accordance with the infrastructure integrity plan:

• Depreciation and Amortization: According to the annual valuation of the assets for dismantling, there was a positive effect in the recalculation of accumulated depreciation, which led to a lower value of USD 2 mm.
• Other costs: Explained by lower costs in 4Q21 resulting from: i) USD 1,99 mm for IT and support services ii) USD 0,58 mm in fees and provision of technological services.
• Maintenance: Mainly explained by an effect of higher costs in 4Q21 of USD 1,7 mm associated with the Gas Pipeline Integrity plan (inspection, diagnosis and evaluation services of cathodic protection systems of gas pipelines belonging to TGI) and right- of-way maintenance, related to the execution of the mechanical integrity plan of the company's infrastructure.

Operating costs decreased by 10.7% in 2021 vs. 2020 by USD 17.9 mm, thanks to the high focus on efficiencies and cost control that the company established since the beginning of 2021.

Administrative and Operating Expenses (net)

Table N°5 - Administrative and Operating Expenses (Net)

USD '000	4Q20	4Q21	Var	Var %	2020	2021	Var	Var %
Personal services	2.476	2.752	276	11,2%	8.354	10.453	2.099	25,1%
Overhead expenses	4.409	2.046	-2.363	-53,6%	13.668	12.996	-672	-4,9%
Taxes	2.593	382	-2.211	-85,3%	4.910	2.180	-2.731	-55,6%
DA&P	4.872	400	-4.473	-91,8%	9.098	8.588	-510	-5,6%
Other expenses	381	296	-85	-22,2%	400	337	-63	-15,8%
Other income	-380	-58	322	-84,8%	-2.471	-7.005	-4.534	183,5%
Total	14.351	5.818	-8.533	-59,5%	33.958	27.548	-6.410	-18,9%

*DA&P: Depreciation, Amortization and Provisions

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Administrative and operating expenses (net of other expenses and revenues) decreased by USD 6,4 mm / 18,9% in 2021 vs. 2020, in line with the company's efficiency and cost and expense control plan. During 4Q21 vs. 4Q20, such decrease was USD 8,5 mm mainly due to:

• Depreciation, Amortization and Provisions: In accordance with the commercial management carried out during 2021, TGI managed to recover in 4Q21 provisioned portfolio for USD 2,8 mm. Additionally, there were lower provisioned values in the year for USD 1,6 mm.
• Taxes, levies and fees: Lower costs in 4Q21, due to the non-recognition of the extraordinary contribution to the Superintendencia de Servicios Públicos Domiciliarios for USD 2,2 mm in accordance with the ruling of the Constitutional Court.
• Overhead expenses: During the year 2021, efficiency initiatives were implemented that allowed capturing structural and sustainable savings compared to 2020, framed in the strategy implemented by the Company. In the 4Q21, efficiencies of USD 3 mm were captured related to contractual renegotiations.

Non-Operating Result (net)

The non-operating result (net) went from USD -3,2 mm in 4Q20 to USD -10,5 mm in 4Q21, mainly explained by:

• Exchange Difference (USD -6,0 mm; 96,0%): Lower exchange gain associated with the lower variation of the COP/USD exchange rate considering the net position in foreign currency.
• Equity method result (USD -1,5 mm; -23,8%): Contugas presented a profit of USD 14,9 mm in 4Q21 vs. USD 19,5 mm in 4Q20, as a result of the revision of the recoverable value of the assets due to a higher probability of recovery of the portfolio evaluated for both years. This profit represents an equity method result for 4Q20 of USD 6,2 mm and for 4Q21 of USD 4,7 mm.

Income Taxes

Income tax decreased by USD -2,6 mm (-14,1%) from 4Q20 to 4Q21, reaching USD 15,7 mm, as a result of a lower taxable income in 4Q21 compared to the same period of the previous year.

On the other hand, there was a decrease in deferred tax income from USD 5.5 mm in 4Q20 to USD 1,1 mm in 4Q21 (-80,8%), as a consequence of the variations in the calculation bases caused by the exchange rate differential on the Company's liabilities and assets in foreign currency, as well as the impact of the provisions made at the end of the year, which will be deductible in the following period.

Net Income

Net income went from USD 43,7 mm in 4Q20 to USD 24,5 mm in 4Q21, a decrease of 44,0%, due to the effects on operating income that were partially offset by a better non-operating result.

Net income for 2021 was USD 100,4 mm (USD -50,4 mm; -33,4% vs. 2020). The initial projection revealed a decrease of USD 70 mm, so thanks to the transformation process that TGI started in 2021 and the focus on margin protection, opex control and efforts in new revenues, it was possible to partially mitigate such decrease. Additionally, the lower financial cost, in line with the company's financial efficiency strategy, and the gains from participation in the results of associates due to the improvement in the business profile of Contugas, stand out..

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EBITDA

Table N°6 - EBITDA

USD '000	4Q20	4Q21	Var	Var %	2020	2021	Var	Var %
EBITDA	88.212	71.971	-16.241	-18,4%	351.533	300.754	-50.780	-14,4%
EBITDA margin	73,6%	73,7%		0,2 pp	77,1%	78,2%		1,0 pp

The decrease in EBITDA is explained by a USD 22,3mm (-18,6%) drop in revenues, which was partially offset by a USD 6,0mm (-19,1%) reduction in Opex. It is important to highlight that the company's efficiency efforts are reflected in maintaining the 73.7% margin compared to 73.6% in 4Q20.

The variation in accumulated EBITDA is explained by the drop in revenues of USD 71,0 mm (- 15,6%), which was partially offset by a reduction of USD 20,3 mm (-19.4%) in OPEX. The reduction in OPEX corresponds to the capture of operating efficiencies of USD 10,9 mm and savings of USD 9,4 mm, for a total of USD 20,3 mm.

Debt Profile

Table N°7 - Relevant debt items

USD '000	2020	2021	Var	Var %
Total net debt	991.325	987.972	-3.352	-0,3%
Gross senior debt	757.952	758.714	762	0,1%
Total gross debt	1.127.952	1.128.714	762	0,1%
EBITDA LTM*	351.533	300.754	-50.780	-14,4%
Financial Expenses LTM*	70.244	67.115	-3.130	-4,5%
Debt ratios
Gross total debt / EBITDA*	3,2x	3,8x	0,5x
Net Debt/EBITDA*	2,8x	3,3x	0,5x
EBITDA* / Financial expenses*	5,0x	4,5x	-0,5x

• EBITDA and financial expenses in the last twelve months (LTM)

LTM financial expenses showed a decrease versus the previous period thanks to the reduction of the intercompany loan rate from 6,125% to 5,02%, which materialized in May 2021.

In line with updated expectations for 2021, the gross debt/EBITDA ratio was 3.8x, given the decrease in revenues due to contractual maturities in the Ballena-Barranca section and better cost and expense estimates.

Table N°8 - Debt Profile	Amount USD mm	Currency	Coupon (%)	Maturity
Senior - international bond	750	USD	5,55%	1-nov-28
Intercompany - Subordinated	370	USD	5,02%	21-dic-22
Leasing - Renting	3,5	COP	N/A	Long-term
Financial Liability IFRS 16	8,5	COP	8,64%	N/A

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