aes gener 6m 2015 results -...

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AES GENER 6M 2015 RESULTS

AES Gener recorded EBITDA of ThUS$310,391 during the first half of 2015, 9% higher than the EBITDA recorded in the same period in 2014.

Net income recorded as of June 30, 2015 was ThUS$83,265, representing a 20% increase compared to the first half of the previous year.

The increases of 9% in EBITDA and 10% in gross margin between the first half of 2014 and 2015 were driven by improved results in Chile due to higher efficient generation in the Central Interconnected Grid (SIC) in the first quarter of 2015 and an increase in the demand unregulated customers in the Greater Northern Interconnected Grid (SING).

Net income increased by 20% in the six-month period ended June 30, 2015 compared to the same period in 2014 principally due to the higher EBITDA and a positive variation in foreign exchange rate, partially offset by lower equity in earnings of associates related to the gain registered in the first quarter of 2014 from the sale of a transmission line and a one-off

amortization of deferred expenses associated to the refinancing of affiliate Guacolda’s debt in April 2015.

CONSOLIDATED FINANCIAL SUMMARY

1 EBITDA is calculated as the sum of gross profit plus depreciation plus other minor adjustments. 2 Earnings per share shown in US$/share.

FINANCIAL SUMMARY THUS$ %

6M 2015 6M 2014 Var

Revenue 1,073,014 1,184,865 -9%

Gross Profit 245,833 222,997 10%

EBITDA1 310,391 286,057 9%

Net Income 83,265 69,205 20%

Net Operating Cash 42,970 140,009 -69%

Earnings per Share2 0.010 0.008

Constanza López

(562) 2686 8968

IR Manager [email protected]

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HIGHLIGHTS IN 2015 TO DATE

� AES Gener, same as in 2014, continued being the leader in energy generation in Chile, contributing with its plants with 28.5% of the total generation during the first quarter of 2015.

� The SIC market registered record EBITDA for the first quarter of US$86.8 million, contributing with 54.3% of total consolidated EBITDA.

� Progress of projects under construction: AES Gener continues to consolidate its 2nd phase of expansion with 1,256 MW of diverse generating projects, with direct employment for 9,195 people, and the start of a new business, a desalinization plant for the sale to third parties.

Project Capacity Type Progress Start of

Operation

Tunjita 20 MW Hydro 98% 1H16

Andes 21 MW Solar 64% 2H15

Desalinization plant

4.800 m3/d

Water Desalinization 84% 2H15

Guacolda V 152 MW Coal 99% 2H15

Cochrane 532 MW Coal 90% 2016

Alto Maipo 531 MW Hydro 16% 2018

� At the beginning of February 2015, the Chilean Government announced the authorization for AES Gener to export energy to Argentina, which had been requested by the Company in 2014. In June 2015, the corresponding Decree was published in the Official Gazette by the Ministry of Energy authorizing the export and defining the applicable regulations to start exporting from the SING to the SADI. The energy sales from the SING to the SADI are expected to start in the coming months.

� On April 23, 2015 the entire Empresa Eléctrica Guacolda’s debt was refinanced through the issuance of a bond with international investment grade (BBB- by Fitch Ratings and Standard & Poor’s) in the international markets for ThUS$500,000 due in 2025 and a syndicated loan for ThUS$330,000 with amortization over a five

year period. The bonds were issued pursuant to 144-A and Regulation S of the U.S. Securities Act.

� In July 14, 2015, the refinancing process for Eléctrica Ventanas’ outstanding project finance debt was completed, debt that was already considered as consolidated debt by the credit rating agencies given the fact that AES Gener is the sole off-taker of its energy, the operator, as well as the fuel supplier of the subsidiary, and the partial repurchase of the local Series Q bond due in 2019, through the issuance of an investment grade bond (BBB- by Fitch & Standard & Poors, Baa3 by Moodys) in the international markets at the AES Gener level for a total of ThUS$425,000 due in 2025. The bonds were issued pursuant to 144-A and Regulation S of the U.S. Securities Act. The outstanding amount of Series Q bond is ThUS$39,820.

� In July 2015, Standard & Poors reaffirmed the Company’s investment grade credit rating of BBB- with stable outlook.

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EXTERNAL FACTORS

REVIEW OF Q1 2015 RESULTS NET INCOME As of June 30 2015, AES Gener S.A. (hereinafter referred to as AES Gener or the Company) recorded an EBITDA of ThUS$310,391, 9% higher than the EBITDA of ThUS$286,057 recorded at the close of June 2014. Net income was ThUS$83,265 or 20% higher than the ThUS$69,205 recorded in the same period of the previous year. The increase in EBITDA is mainly explained by the better performance of the operations in Chile, partially offset by lower gross profit in Colombia and Argentina. In Chile, the efficient plants of the company in the SIC recorded higher generation particularly in the first quarter, and in the SING, an increase in demand in the long-term agreements with mining clients was registered.

From an operational standpoint, gross profit as of June 30, 2015 totaled ThUS$245,833 representing a positive variation of 10% when compared to the ThUS$222,997 recorded at the close of June in the previous year. The main variations in gross profit are:

In the SIC, during the first half of 2015, gross profit increased by ThUS$38,120 principally explained by higher availability of units at the Ventanas Complex during the first quarter of 2015 and, additionally, an additional revenue was recorded associated with the lease of Nueva Renca of ThUS$39,245.

In the SING, gross profit increased by ThUS$8,726 as of June 30, 2015 when compared to the same period in 2014. Among the most important variations is the increase in volume demand from mining customers, mainly related to long-term power purchase agreements of Norgener S.A (hereinafter, Norgener).

In turn, in the National Interconnected Gris (SIN) in Colombia, gross profit at AES Chivor & Cia S.C.A.E.S.P. (hereinafter, AES Chivor) was lower by ThUS$10,588 due to lower average spot prices of 43% driven by the significant reduction of inflows in April and May 2014, compared to better hydrological conditions during 2015 in the system, impacting spot and ancillary services sales. It should be noted that lower water inflows were registered during the first quarter in AES Chivor basin, situation that was reverted from June onwards, when generation almost doubled compared to June last year.

In the SADI, In Argentina, gross earnings decreased by ThUS$13,422 when comparing both periods, as a result of lower spot sales as a consequence of lower generation by 29% associated with the maintenance of one gas turbine and the steam turbine during the first quarter of 2015. Additionally, TermoAndes registered lower contract sales under the Energía Plus methodology related to a lower demand in the market.

Within the non-operating income, a positive variation was registered in exchange rate differences of ThUS$20,966 due to a lower devaluation of the local currency in Argentina during the half of 2015 when compared to the same period the previous year. This effect was partially offset by lower earnings associates of ThUS$20,638 driven by lower results in Empresa Eléctrica Guacolda S.A. (hereinafter, Guacolda) as a consequence of the sale of a transmission line registered during the first quarter 2014 and the one-off impact of the amortization of deferred expenses registered as of June 2015, associated with the refinancing process of Guacolda’s debt.

Annual Inflation Rate Exchange Rate as of March 31, Var (%) Twelve month period ended March 31, 2015 2015 2014 Chile 4.2% Chile 626.6 551.1 16% Colombia 4.6% Colombia 2,599.6 1,929.5 24% Argentina 29.8% Argentina 8.8 6.5 31% GDP Growth in Electricity Consumption, twelve month period end ed March 31, 2015:

Twelve month period ended Dec 31, 2014 SIC 3.1% Chile 1.9% SING 6.3% Colombia 4.2% Colombia 3.3% Argentina 0.5% Argentina 7.6%

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6M 2015 INCOME STATEMENT

INCOME STATEMENT 6M 2015

THUS$

6M 2014

THUS$

Var

%

Operating Revenue

Energy and capacity sales 1,002,414 1,120,948 -11%

Other operating revenue 70,600 63,917 10%

Total Operating Revenue 1,073,014 1,184,865 -9%

COST OF SALES

Fuel consumption (297,983) (419,947) -29%

Fuel cost of sales (6,056) (5,760) 5%

Energy and capacity purchases (205,518) (235,205) -13%

Transmission tolls (51,283) (45,279) 13%

Other cost of sales (152,881) (143,467) 7%

Depreciation and amortization (113,460) (112,210) 1%

Total Cost of Sales (827,181) (961,868) -14%

GROSS PROFIT 245,833 222,997 10%

Other operating revenues 1,278 2,064 -38%

Selling, general and administrative expenses (51,754) (52,606) -2%

Other operating expense (1,820) (629) 189%

Other income / (expense) 1,260 (2,956) -143%

Financial income 4,393 5,704 -23%

Financial expense (64,720) (73,202) -12%

Equity in earnings of associates 5,400 26,038 -79%

Foreign currency exchange differences (11,578) (32,544) -64%

NET INCOME (LOSS) BEFORE TAX AND NON-CONTROLLING INTEREST 128,292 94,866 35%

Income tax income (expense) (49,240) (29,133) 69%

Net Income (Loss) After Tax 79,052 65,733 20% Income (loss) from discontinued operations, net of tax - -

Net Income 79,052 65,733 20%

Income (Loss) Attributable to Shareholders of Paren t 83,265 69,205 20% Non-controlling interest (4,213) (3,472) 21%

NET INCOME 79,052 65,733 20%

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EBITDA AES Gener operates in four independent markets, SIC and 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 June 30, 2015, EBITDA was ThUS$310,391 compared to the ThUS$286,057 recorded in the same period in 2014. This positive variation of ThUS$24,334 is mainly explained by higher efficient generation in the SIC due to higher availability of Ventanas units, fundamentally during the first quarter of 2015, and an increase in the demand of mining customers in the SING. This variation was partially offset by lower spot sales in Colombia and lowers spot and contract sales in Argentina.

EBITDA (THUS$) 6M 2015 6M 2014 VAR

% SIC 155,268 119,010 30%

SING 68,899 53,819 28%

SIN 83,511 97,385 -14%

SADI 2,713 15,843 -83%

TOTAL EBITDA 310,391 286,057 9%

Note: For EBITDA calculation please see page 29, Consolidated EBITDA.

In the six-month periods ended June 30, 2015 and 2014, the contribution to EBITDA from the SIC, SING, SIN and the SADI was the following:

6M 2015 6M 2014

GROSS PROFIT Gross profit increased by ThUS$22,836 mainly as a result of increases in SIC and SING of ThUS$38,120 and ThUS$8,726 respectively, partially offset by the reduction by ThUS$13,422 in the SADI and ThUS$10,588 in the SIN. The item “consolidation adjustment” represents intercompany coal sales of AES Gener to the subsidiaries Norgener and Empresa Eléctrica Angamos (Eléctrica Angamos) in the SING. In revenues in the SIC, these sales are included in “Other operating revenues”.

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GROSS PROFIT (THUS$) 6M 2015 6M 2014 VAR

%

OPERATING REVENUE

SIC 619,244 683,912 -9%

SING 297,120 287,349 3%

SADI 65,673 76,095 -14%

SIN 222,439 269,317 -17%

Consolidation adjustments (131,462) (131,808) 0%

Total Operating Revenue 1,073,014 1,184,865 -9%

COST OF SALES

SIC (483,356) (586,144) -18%

SING (263,344) (262,299) 0%

SADI (76,053) (73,053) 4% SIN (135,889) (172,179) -21%

Consolidation adjustments 131,461 131,807 0%

Total costs of sales (827,181) (961,868) -14%

TOTAL GROSS PROFIT 245,833 222,997 10%

Central Interconnected Grid (SIC)

In the SIC, gross profit increased by ThUS$38,120 or 39% mainly due to higher efficient generation associated with improved availability of AES Gener coal-fired plants, given that during the first quarter of 2014, certain units of Ventanas were under maintenance. The following table presents gross profit in the SIC for both periods:

SIC GROSS PROFIT (THUS$)

6M 2015 6M 2014 VAR

%

OPERATING REVENUE Regulated customer sales 238,666 256,576 -7%

Unregulated customer sales 159,339 125,584 27%

Spot sales 47,828 123,897 -61%


Total Operating Revenue 619,244 683,912 -9%

COST OF SALES




Fuel cost of sales (117,397) (121,047) -3%

Depreciation and amortization (53,168) (53,847) -1%




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The following table shows AES Gener generation by source in the SIC as at June 30, 2015 and 2014:

SIC NET GENERATION (GWH)

6M 2015 6M 2014 VAR

% Hydro 657 663 -1%

Coal 2,842 2,870 -1%

LNG 114 208 -45%

Diesel 165 572 -71%

Biomass 21 18 16%

Total 3,799 4,332 -12%

Main variations between the six-month periods ended June 30, 2014 and 2015: Sales to regulated customers decreased by ThUS$17,910 due to lower physical sales for 228 GWh in the first half of 2015 when compared to the same period 2014 mainly due to the expiration of the contract with CGE Distribución in 2014. In turn, sales to unregulated customers increased by ThUS$33,755 as of June 30, 2015 associated with the lease of Nueva Renca, despite lower physical sales for 28 GWh. Sales in the spot market decreased by ThUS$76,069 between the first six months of 2014 and 2015, associated with lower physical sales for 380 GWh and lower spot prices that decreased from an average of 155.5 US$/MWh the first half 2014 to 130.0 US$/MWh in the same period in 2015. It should be noted that the lower volume sale to the spot market was partially compensated by the lease of Nueva Renca previously mentioned. Also, energy and capacity purchases (including purchases on the spot market, contract purchases to affiliate Guacolda and other third parties mainly contracts with Non-Conventional Renewable Energy generators, NCRE) were lower compared to the first half of 2014 by ThUS$9,228 and in volume terms by 105 GWh. Fuel consumption as of June 30, 2015 decreased significantly by ThUS$96,211 compared to the same period in 2014, mainly associated with lower diesel and Liquefied Natural Gas (LNG) generation by 407 GWh and 94 GWh, respectively, mostly in Eléctrica Santiago due to the lease of Nueva Renca, and additionally, lower coal generation of 28 GWh mostly related to the programmed maintenance at units II and IV of Ventanas Complex. It should be noted that hydroelectric generation decreased by 6 GWh.

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Greater Northern Interconnected Grid (SING)

In the SING, the gross profit increased by ThUS$8,726, equivalent to 35% higher than the first half of 2015 as compared to the same period in 2014. This is a consequence of the increase of sales to unregulated customers, mostly associated with the increase in contracted demand of Norgener’s mining customers. This effect was partially offset by higher volumes of energy and capacity sales. The following table presents gross profit in the SING for both periods:

SING GROSS PROFIT (THUS$)

6M 2015 6M 2014 VAR

%

OPERATING REVENUE Unregulated customer sales 268,462 235,296 14%

Spot sales 24,181 33,991 -29%


Total Operating Revenue 297,120 287,349 3%

COST OF SALES


Energy and capacity purchases (72,627) (35,824) 103%


Fuel cost of sales - (16,522) -100%

Depreciation and amortization (39,536) (35,479) 11%


Total Cost of Sales (263,344) (262,299) 0%


The following table shows AES Gener generation by type of fuel in the SING as at June 30, 2014 and 2015:

SING NET GENERATION (GWH)

6M 2015 6M 2014 VAR

% Coal 2,518 2,815 -11% LNG 242 156 55%

Total 2,761 2,972 -7%

Main variations between the six-month periods ended June 30, 2014 and 2015: Between the first half of 2015 and the same period 2014 an increase in sales to unregulated customers for ThUS$33,166 was registered mostly due to a larger demand volume. Contract sales increased from 2,403 GWh as of the close of June 2014 to 3,006 GWh in the same period in 2015, which is equivalent to a 25% increase. This effect is mainly explained by higher sales in Norgener associated with the increase of the demand of mining customers.

Energy and capacity sales in the spot market decreased by ThUS$9,810 as a result of lower average spot prices, associated with a reduction of fuel prices. The average spot price decreased from 87.8 US$/MWh as of June 30, 2014 to 54.0 US$/MWh in the same period in 2015. Likewise, physical sales decreased by 102 GWh as a result of lower generation from Angamos and the start of operations of renewable energy projects in the grid. Additionally, energy and capacity purchases increased by ThUS$36,803 between the first half of 2014 and the same period in 2015 as a result of a larger volume or physical purchases mainly in Norgener as the result of a programmed maintenance at unit 2, which increased from 217 GWh as of June 30, 2014 to 874 GWh in the same period in 2015.

The cost of fuel consumption decreased by ThUS$25,414 as a result of lower coal average prices and lower generation by 211 GWh with this fuel comparing both periods. This effect was partially offset by higher generation with LNG by 86 GWh during the first half of 2015. The latest is associated with the lease of units running with such fuel in order to make the generation at minimum technical load more efficient in the case of the most expensive units in the SING and hence reduce the withdrawal costs of the grid.

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Colombian National Grid (SIN)

In Colombia, gross profit decreased by ThUS$10,588 equivalent to 11% comparing the first half of 2015 and the same period in 2014. This negative variation is mainly explained by a reduction of net sales in the spot market and ancillary services associated with a decrease in average spot prices and lower generation of the plant particularly during the first quarter of 2015. Lower generation is the consequence of lower inflows to AES Chivor’s reservoir during the first months of 2015, however it should be noted that this situation was reverted during the second quarter of the year. The following table presents gross profit in Colombia for both periods:

SIN GROSS PROFIT (THUS$)

6M 2015 6M 2014 VAR %

OPERATING REVENUE

Contract sales 114,799 112,741 2%

Spot sales 103,253 156,774 -34%

Other operating revenues 4,387 (198) 2,316%


COST OF SALES





TOTAL GROSS PROFIT 86,550 97,138 -11%

The following table shows AES Gener generation in the SIN in the years ended June 30, 2014 and 2015:

SIN NET GENERATION (GWH)

6M 2015 6M 2014 VAR

% Hydro 1,590 1,570 1%

Total 1,590 1,570 1%

Main variations between the six-month periods ended June 30, 2013 and 2014: Sales to distribution companies under contract increased by ThUS$2,058 explained by higher volume of physical sales of 141 GWh, partially offset by lower average prices that fell from 72.5 US$/MWh in the first half of 2014 to 61.3 US$/MWh in the same period 2015 due to the devaluation of the Colombian peso in comparison with the US dollar. It should be noted that the decrease in tariffs was partially compensated by foreign exchange forwards executed for these purposes.

Spot energy sales and ancillary service sales decreased by ThUS$53,521 as a result of lower average spot prices that fell from 136.9 US$MWh the first half of 2014 to 78.3 US$/MWh the same period in 2015 partially compensated by higher physical sales of 139 GWh, mainly in the second quarter of 2015 given the recovery in water inflows in the reservoir. In turn, spot energy purchases decreased by ThUS$37,900 due to lower average spot prices, partially offset by higher physical purchases of 251 GWh, which is the result of the lower plant generation particularly in the first quarter of 2015.

In addition, higher other costs of sale for ThUS$3,326 were recorded in the first half of 2015 associated with the maintenance of certain units.

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Interconnected Argentine Grid (SADI)

The gross profit in SADI decreased by ThUS$13,422 which represent a negative variation of 441% between the first half of 2015 and the same period 2014, as a result of lower volumes of energy spot sales and under the Energía Plus methodology, at lower prices. Such effects were slightly offset by lower fuel consumption associated with a decrease generation of Termoandes that in turn relates to the maintenance of two units during the period. The following table presents gross profit in the SADI for both periods:

SADI GROSS PROFIT (THUS$)

6M 2015 6M 2014 VAR

%

OPERATING REVENUE

Contract sales 37,170 40,001 -7%

Spot sales 28,503 36,088 -21%

Other operating revenues - 6


COST OF SALES


Energy and capacity purchases (425) -

Transmission tolls (91) (141) -35%



Total Cost of Sales (76,053) (73,053) 4%

TOTAL GROSS PROFIT (10,380) 3,042 -441%

The following table shows AES Gener generation in the SADI in the years ended December 31, 2013 and 2014:

SADI NET GENERATION (GWH)

Q1 2015 Q1 2014 VAR

% LNG 1,561 2,209 -29%

Total 1,561 2,209 -29%

Main variations between the six-month periods ended June 30, 2014 and 2015:

Between the first half of 2014 and 2015, contract revenues decreased by ThUS$2,831 as a result of lower physical sales for 150 GWh equivalent to 23% associated with a drop in the volume of industrial demand and lower contract prices under the Energía Plus methodology.

Spot sales decreased by ThUS$7,585 as a result of lower physical sales for 489 GWh and lower spot prices in dollars associated with the exchange rate devaluation. The spot price in Argentina pesos remained at AR$120/MWh and, in average, the spot price in dollars dropped from 15.3 US$/MWh the first half of 2014 to 13.6 US$/MWh the same period 2015.

The cost of fuel consumption decreased by ThUS$339 associated with a lower gas consumption in Termoandes explained by a decrease in generation for 648 GWh the first six months of 2015 associated with the maintenance of two units during the period, the steam turbine and one of the gas turbines.

In addition, higher other costs of sales were recorded for ThUS$3,376 as a result of higher maintenance costs, which was partially offset by a lower depreciation recorded in the period for ThUS$412.

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Physical energy sales in each market were as follows in the six-month periods ended June 30, 2014 and 2015:

PHYSICAL SALES (GWH) 6M 2015 6M 2014 VAR

%

SIC - Chile 4,189 4,825 -13% Distribution companies 2,535 2,762 -8%

Other customers 1,219 1,248 -2% Spot (CDEC) 435 815 -47%

SING - Chile 3,598 3,098 16% Distribution companies - - - Other customers 3,006 2,403 25% Spot (CDEC) 592 694 -15%

SIN - Colombia 2,857 2,577 11% Distribution companies 1,680 1,539 9% Spot and other 1,177 1,038 13%

SADI - Argentina 1,575 2,214 -29% Customers 515 665 -23% Spot 1,060 1,549 -32%

TOTAL SALES 12,219 12,714 -4%

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Administration expenses decreased by 2% from ThUS$52,606 as of the close of June 2014 to ThUS$51,754 in the same period in 2015. Such positive variation is mostly the result of the devaluation of the Chilean peso against the US Dollar.

FINANCIAL RESULTS The non-EBITDA variables which experienced the most important changes comparing the first half of 2014 and the same period in 2015 include positive variables in exchange rate differences for ThUS$20,966 and in finance expenses for ThUS$8,482. These effects were partially offset by a negative variation in the earnings of associates for ThuS$20,638. The following table shows the variations aforementioned:

FINANCIAL RESULTS (THUS$) 6M 2015 6M 2014 VAR

%

Other income / (loss) 1,260 (2,956) 143% Finance income 4,393 5,704 -23%

Finance expense (64,720) (73,202) 12%

Equity in earnings of associates 5,400 26,038 -79%

Foreign currency exchange differences (11,578) (32,544) 64%

A positive variation of ThuS$20,966 was recorded in exchange rate differences explained mainly by the positive variation in Termoandes due to a lower devaluation of the Argentine peso the first half of 2015, since the devaluation in the same period 2014 it was approximately by 23%, which affected the value of net tax credits and cash and cash equivalent denominated in Argentine pesos. It is important to mention that Termoandes keeps Argentine Sovereign Bonds payable in dollars for ThUS$32,847 with the purpose of mitigating the exchange rate risk. The negative variation in foreign currency exchange difference was partially offset by a positive variation related to the hedge instruments executed to mitigate the exchange rate effect of prices for regulated customers.

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The following table shows variation in exchange rates in the countries in which AES Gener has operations:

DECEMBER JUNE VAR DECEMBER JUNE VAR

2013 2014 % 2014 2015 %

Chilean Pesos ($) 524.61 552.72 5% 606.75 639.04 5% Colombian Pesos (Col$) 1,929.51 1,877.44 -3% 2,376.51 2,603.90 10% Argentine Pesos (Ar$) 6.52 8.13 25% 8.55 9.09 6%

The positive variation of the net finance expenses for ThUS$7,171 as of June 2015 is mainly due to the lower corporate debt due to the payments of the bond of AES Chivor for ThUS$170,000 in December 2014 and the early redemption of the Series O local bonds for ThUS$47,042 in July 2014. This positive variation was partially offset by the increase of corporate debt at lower rates than the paid debts.

In turn, the negative variation of ThUS$20,638 in the equity in earnings (losses) of associates is explained by the extraordinary gain for ThUS$32,132 recorded as of June 30, 2014 from the sale of the 2x220 kV 330 km transmission line Maintencillo – Cardones sold for a total of ThUS$54,720, as well as the one-off amortization of deferred expenses associated to the refinancing of Guacolda’s debt registered as of June 2015.

INCOME TAX As of June 30, 2015 the income tax expense doubled in comparison to the same period in 2014 from ThUS$29,133 in the first half of 2014 to ThUS$49,240 in the same period of 2015 which is mostly explained by an increase in deferred taxes at AES Gener and Eléctrica Campiche, as well as better results in the six-month period ended June 30, 2015 and higher income tax expenses related to the tax rate increase from 20% to 22.5%.

CASH FLOW The final balance of cash and cash equivalent as of June 30 2015 was ThUS$190,367, 66.3% lower than the final balance of ThUS$565,588 as of the close of June 2014. The total net flow of the period was negative for ThUS$33,233 as of June 30, 2015 that positively compares with the negative flow of ThUS$125,999 as of June 30, 2014. The net flow of the period is explained by the negative flow in investment activities, partially offset by positive net flows in financing and operation activities.

Cash Flow (ThUS$) 6M 2015 6M 2014 Variation (%) Net cash from operating activities 41,997 136,105 -69%

Net cash from investing activities (617,459) (405,794) 52%

Net cash from financing activities 542,227 143,690 277%

Total Net Cash for the Period (33,235) (125,999) -74%

Effects of Foreign Exchange Variations (5,089) (15,929) -68%

Total Cash at the End of the Period 190,367 565,588 -66%

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Net cash from operating activities recorded a positive variation of ThUS$11,682 as of the close of March 2015 compared with the same period 2014 mainly due to better operating results in the first quarter of 2015 than results registered in the same period of 2014.

Net cash from investment activities showed a negative variation of ThUS$203,936 comparing the close of March 2015 and the same period in 2014. The main variation corresponds to an increase in acquisitions of property, plant and equipment of ThUS$236,336 associated with the construction works of Cochrane and Alto Maipo and the investments in emission control equipment in the oldest coal-fired units of AES Gener. This was partially offset by a positive variation of ThUS$32,493 related to the VAT recovery due to the fixed assets of Cochrane.

Net cash from financing activities represented a positive variation of ThUS$436,537 as of the close of March 2015 compared to the same period in 2014. This is a consequence of the long-term loan increase, such as the disbursement for ThUS$75,000 made by AES Gener to finance working capital requirements and that to finance projects Cochrane and Alto Maipo. Additionally, the positive variation of ThUS$63,400 of share issuance registered as of March 31, 2015 corresponds to the equity portion made by the partners of Cochrane and Alto Maipo. Finally, the positive variation of ThUS$148,701 is mainly associated with the early redemption of the bonds 144-A for ThUS$147,050 executed in January 2014 with maturity in March of the same year.

FINANCIAL DEBT

Consolidated financial debt, including principal, interest and issuance costs, increased from ThUS$2,733,750 as of December 31, 2014 to ThUS$3,038,073 as of March 31, 2015.

As of March 31, 2015, approximately 89.4% of AES Gener’s credit agreements are at a fixed rate, including a significant portion of the debt held by the subsidiaries Eléctrica Ventanas, Eléctrica Cochrane and Alto Maipo for which interest rate swap agreements have been executed. The remaining 10.6% of the Company’s consolidated debt maintains a variable interest rate.

As of March 31, 2015, approximately 97.5% 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, 1.3% was denominated in Chilean UF (Eléctrica Santiago’s bond) and 1.2% in Colombian pesos (the leasing executed by AES Chivor to finance the Tunjita Project).

On January 27, 2014, the Company used a portion of the proceeds from the ThUS$450,000 subordinated bond issued in December 2013 to prepay the Senior Bond due in March, 2014 for a total of ThUS$147,050. Additionally, in July 2014, the Company prepaid the Series O Bonds for UF1.2 million with maturity in June 2015. The cross-currency swap associated to this debt executed to convert UF payments to US dollars was unwound in June 2014. Furthermore, in November 2014, the Company refinanced the outstanding debt associated with its subsidiary Eléctrica Angamos for approximately ThUS$780,000, with a Senior Bond issuance for ThUS$800,000 at Eléctrica Angamos level. Finally, AES Chivor paid its Senior Bond for ThUS$170,000 with maturity in December 2014, with cash from operations in addition to an intercompany loan provided by AES Gener.

In December 2014, the Company entered into a three-year credit agreement with Banco Estado, Bank of Nova Scotia, Misuho and SMBC for a total of ThUS$100,000 out of which ThUS$75,000 were disbursed during the first quarter of 2015 to cover the working capital requirements.

The following graph details AES Gener’s consolidated amortization schedule for the outstanding principal of ThUS$3,083,225 as of March 31, 2015, excluding issuance costs and including non-recourse project finance debt.

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AES GENER GROUP OPERATING STATISTICS

2014 2013 GENERATION (GWH) 2014 2013

Installed Capacity SIC 3,103 3,437

SIC (1) MW 2,617 2,618 Gener Hydro 442 429

SING (2) MW 822 822 Gener Thermal 354 346

Colombia MW 1,000 1,000 Eléctrica Campiche 519 415

SADI MW 643 643 Eléctrica Ventanas 530 520

Total MW 5,082 5,083 Eléctrica Santiago 192 494

Guacolda 1,067 1,234

SING 1,383 1,381

Norgener (3) 550 520

Net Generation Eléctrica Angamos 833 861

SIC (1) GWh 3,103 3,437 SIN - Colombia 621 808

SING (2) GWh 1,383 1,381 AES Chivor 621 808

Colombia GWh 621 808 SADI – Argentina 617 1,066

SADI - Argentina GWh 617 1.066 TermoAndes 617 1,066

Total GWh 5,724 6,692 Total 5,724 6,692

(1) Includes AES Gener, Eléctrica Ventanas, Eléctrica Santiago and Guacolda (2) Includes Norgener and Angamos (3) Includes CTM3 generation

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AES GENER CONSOLIDATED Q1 2015

ENERGY GENERATION, PURCHASES & SALES

SIC

SING SADI SIN

ENERGY (GWH) AES GENER

ELÉCTRICA SANTIAGO

ELÉCTRICA VENTANAS

ELÉCTRICA CAMPICHE NORGENER

ELÉCTRICA ANGAMOS TERMOANDES AES CHIVOR TOTAL

GENERATION

Hydro 442 - - - -

-

- 621 1,063

Thermo 354 192 530 519 550 833 617 - 3,595

TOTAL GENERATION 796 192 530 519 550 833 617 621 4,657

PURCHASES

Spot - - -

-

381

- - 555 936

Other generators 198 - -

-

-

-

- - 198

Intercompany 1,241 - -

- -

-

- - 1,241

TOTAL PURCHASES 1,439 - - - 381 - - 555 2.375

Losses (19) - - - (14) (16) (1) 11 (39)

SALES

Regulated(1) 1,310 - - - - - - 760 2,071

Unregulated 570 - - - 916 530 249 - 2,265

Spot 335 - - - - 287 368 427 1,417

Intercompany - 192 530 519 - -

- - 1,241

TOTAL SALES 2,215 192 530 519 916 817 616 1,187 6,993

(1) Regulated sales include obligatory sales to distribution customers of a generation company which was declared in bankrupt in September 2011

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MARKET INFORMATION

In Chile, AES Gener does business 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 The first quarter of 2015 had better hydrological conditions that allowed the levels of the reservoirs to show an improvement in comparison with the same period last year. This made it possible to increase hydroelectric generation, which, along with the drop of fuel prices at the end of 2014, helps reducing the average marginal costs by 18% in comparison with the first quarter of 2014. As of March 31, 2015, the companies of the Group AES Gener, including Guacolda, contributed with 24% of the net generation in the SIC. The table below shows certain principal variables in the SIC for the periods ended March 31, 2015 and 2014.

SIC Q1 2015 Q1 2014

Demand growth (%) 3.1 1.6

Annual consumption (GWh) 4,163 4,048

Average annual spot price (Quillota 220 kV) US$/MWh 131.6 159.5

SING The average marginal cost decreased by 44% in comparison with the same period the previous year associated with the fuel price drop and the commissioning of renewable energy projects that had no contracts so they sold their generation in the spot market. As of March 31, 2015, the companies of the Group AES Gener contributed with 33% of the net generation in the SING. The table below shows the main variables in the SING in the first quarters of 2014 and 2015.

SING Q1 2015 Q1 2014


Annual consumption (GWh) 1,350 1,268

Average annual spot price (Crucero 220 kV) US$/MWh 49.4 86.3

Colombia The weak El Niño reduced the hydrology in the first quarter of 2015 in comparison with the same period the previous year. Also, the hydrological conditions in March were below expected, particularly the first weeks of the month. Thus, spot prices expressed in Colombian pesos increased by 12% in average during the first quarter of 2015 in comparison with the same period in 2014; while in dollars they decreased by 9% due to the devaluation of the Colombian peso. As of March 31, 2015, the generation of AES Chivor represented 4% of the demand in Colombia. The following table shows the main variables in the SIN during the first quarters of 2014 and 2015:

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COLOMBIA Q1 2015 Q1 2014


Annual consumption (GWh) 5,297 5.129

Average annual marginal cost US$/MWh 76.1 83.4

SADI As of the closing of March 2015 the spot price remained at 120 AR$/MWh. However, the depreciation of the Argentine peso has reduced the average marginal cost in dollars by 12%. In turn, the energy generation increase was a consequence of higher availability of plants and higher hydro generation, despite the dry hydrological conditions in the region Camahue. As of March 31, 2015, the generation of Termoandes in the SADI represented 2% of the demand in Argentina. In March 2015 the Undersecretariat of Energy in Argentina changed the Incremental Mean Charge of Excess Demand in the SADI, which changed from 320 AR$/MWh for GUME/GUMA to 450 AR$/MWh and from 455 Ar/MWh for GUDI to 550 Ar/MWh. Users with the non-contract plus type of demand have to pay these new amounts on top of the 120 Ar/MWH of spot price and 7 Ar/MWh for capacity and sustainability charge. The following table shows the main variables in the SADI during the first quarters of 2014 and 2015:

SADI Q1 2015 Q1 2014

Demand growth (%) 7,6 2,2

Average monthly consumption (GWh) 10.065 9.353

Average annual marginal cost US$/MWh 13,8 15,8

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 using the US dollar. Also, the Company is authorized to file and pay its 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 March 31, 2015, AES Gener maintained several currency derivative instruments to decrease its foreign exchange risk from energy sales. This risk arises from the fact that although most energy supply contracts are denominated in US dollars, they are paid in Chilean pesos using an exchange rate that is fixed over a certain period of time, and VAT payments. Given the Company's net asset position in Chilean pesos as of March 31, 2015, the impact of 10% depreciation in the exchange rate of the Chilean peso with respect to the US dollar could have generated a realized negative impact of approximately ThUS$11,703 in the Group’s Income Statement.

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During the quarter ended March 31, 2015 approximately 87.8% of operating revenue and 85.8% of the Company’s costs of sales were in US dollars in comparison to 88.2% of operating revenue and 90.7% of costs of sales during the period ended March 31, 2014. The functional currency of Chivor, the Company’s Colombian subsidiary, is the Colombian peso since the majority of its revenue, particularly contract sales and operating costs are linked to the Colombian peso. For the period ended March 31, 2015, sales in Colombian pesos represented 10.3% of the Company’s consolidated operating revenue (8.7% for the same period 2014). 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 that date, a 10% depreciation in the exchange rate of the Colombian peso with respect to the US dollar could have generated a negative impact of approximately ThUS$691 in the Group’s Income Statement. Spot prices in the Argentinean market are denominated in Argentinean pesos. Argentinean-peso denominated sales represented just 2% of the Company’s consolidated operating revenue for the quarter ended March 31, 2015 (3.1% for the period ended March 31, 2014). Given TermoAndes' net asset position as of March 31, 2015, 10% depreciation in the exchange rate of the Argentinean peso with respect to the US dollar could have generated a negative impact of approximately de ThUS$1,883 in the Group’s Income Statement. It is worth mentioning that the Argentinean government devalued the Argentinean peso by approximately 22% in January 2014, the fastest devaluation since 2002, which implied a negative impact for approximately US$16.7 million in the Company’s result in January due to the reasons aforementioned. A weaker Argentinean peso and economy could cause significant volatility in TermoAndes' operating income, cash flow, capacity to pay dividends to Gener and the value of its assets. Argentina, after ceasing to pay its public debt in 2001 for approximately US$100 billion between 2005 and 1020, restructured its bonds in defaults for new debt instruments for close to 33 cents of dollars per each dollar owed in the past. Between both operations, 93% of the bond holders agreed to exchange their default bonds for new bonds for 33%their original nominal value. The remaining 7% of debtors did not accept the restructured agreement. A group of such bond holders filed a suit against Argentina for the non-payment of the debt. In June 2014, the District Court of USA ruled that Argentina had to pay such bond holders “Initial holders” according to the original applicable terms. Despite intense negotiations with then, and the mediator of the District Court of the UA, the parties did not reach an agreement by July 30th, 2014 therefore, (as per the provisions of the risk rating agencies, Standard & Poor and Fitch) Argentine went into a selective default resulting from not paying the interests of their restructured bonds due in December 2033. This situation has caused significant changes that impact our current exposure related to the country’s macro economy. In consolidated term, investments in new plants and maintenance of equipment are denominated in US dollars. As of March 31, 2015, 71.7% of short-term investments and current account balances were in US dollars, 16.4% in Colombian pesos, 6.0% in Chilean pesos and 5.8 % in Argentine pesos. Cash balances in Argentinean pesos are subject to exchange restrictions and exchange rate volatility particular to the Argentinean market. As of March 2014, 81.9% of investments and balances were in US dollars, 9.8% in Argentinean pesos, 6.1% in Chilean pesos and 2.2% in Colombian pesos. With respect to debt denominated in currencies other than the US dollar, AES Gener has entered into currency swaps to reduce the majority of the foreign exchange risk. AES Gener has a cross currency swap for the duration of the UF-denominated bonds issued in 2007 for approximately ThUS$219,527. As for the O series of the bond due in 2015, it was settled in June 2014 and only the N series is valid now with maturity in 2028 for ThUS$172,264. As of the closing of March 2015, 97.5% of the Group’s debt is denominated in US dollars, including the bonds series N mentioned above and the related swaps. The following table shows the composition of debt by currency as of March 31 2014 and 2015:

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CURRENCY % MARCH

2015 MARCH

2014

US$ 97.5 97.2

UF 1.3 1.3

Col$ 1.2 1.5

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.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans. Additionally, AES Gener has entered into interest rate swaps to mitigate interest rate risk for long-term obligations. Currently, the Group has interest rate swaps for an important part of the debt associated with subsidiaries Eléctrica Ventanas, Eléctrica Cochrane and Alto Maipo. A 10% increase in variable interest rates would not have a significant impact on net income as 89.4% 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 March 31, 2014 and 2015:

RATE (%) MARCH

2015 MARCH

2014

Fixed or with Swap 89.4 92.4

Variable 10.6 7.6

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 commodities. 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 sale price of the contract.

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 Gener’s energy sales contracts incorporate an indexation factor that adjusts the energy sales price to the variations in coal prices, according to the indexes and schedules contained in each contract, which in turn helps mitigating most of the fuel price variations.

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Currently, the energy volume under contract in AES Gener is balanced with the generation of the plants with high probability of dispatch (efficient generation), so it is expected that the other units (backup units) that use diesel or LNG will only operate in circumstances such as drought conditions in the SIC and will be sold at market spot price. 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. It is estimated that a 10% increase in diesel fuel cost would have caused a negative impact on the Company's consolidated gross profit of approximately ThUS$6,043 for the period ended March 31, 2015. It is worth noting that ESSA’s Nueva Renca unit can use either diesel or LNG and is able to acquire the necessary LNG volumes using short-term contracts when the LNG price is more competitive than diesel.

Credit Risk Credit risk is related to the risk rating of the parties with whom AES Gener and its subsidiaries do business. The Company is exposed to credit risk primarily from its operating activities related to trade receivables and from its financing activities including deposits with banks and financial institutions and other financial instruments.

With respect to trade receivables, AES Gener’s counterparties are mainly distribution companies and other generators with high solvency and over 90% of its counterparties or their parent companies have local and/or international investment grade credit ratings. As per Chilean regulations, the Company’s spot sales are required to be with other CDEC participants that have energy deficits according to economic dispatch performed by the CDEC. In September 2011, a generator participant of the CDEC declared bankruptcy that was caused by financial losses due to dry hydrological conditions experienced in the SIC. In the proceedings, Gener and ESSA recovered close to 30% amounting to MUS$3,000 approx. At the end of 2013, a distribution company part of the SIC declared bankruptcy after stop paying energy purchase invoices. As a result, AES Gener filed a legal claim to recover at least a portion of the debt, for which it created a provision for ThUS$1,626.-

In Colombia, Chivor performs risk assessments of its counterparties based on internal credit quality evaluations, which in some cases may include guarantees. In 2010, also in dry hydrological conditions, 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 spot market and Chivor filed actions to recover the outstanding amount.

The commercial operations of the Argentine subsidiary, Termoandes, are primarily with Argentina’s wholesale electric market administrative agent, CAMMESA, and unregulated clients denominated “Major Users of the Electric Market” whose contracts operate under Energía Plus legislation. Termoandes makes internal credit analyses of unregulated clients and it includes guarantees to secure payments.

As for the financial investments carried by AES Gener and its subsidiaries such as mutual funds, time deposits and derivatives are executed with local and foreign financial institutions that have national and/or international credit ratings greater than or equal to “A” under the S&P and Fitch scale and “A2” in Moody’s rating scale. Similarly, derivatives executed for financial debt are carried out with top-level international entities. The Company has cash, investment and treasury policies to guide its cash management and minimize credit risk.

Liquidity Risk Liquidity risk relates to the need for funds to meet payment obligations. The Company’s objective is to maintain balance between fund continuity and financial flexibility through normal operating cash flows, bank loans, public bonds, short-term investments and committed and uncommitted credit lines. As of March 31, 2015, AES Gener had available liquid resources of ThUS$292,009 that includes cash and cash equivalent for ThUS$285,811 and time deposits and short-term mutual funds of immediate liquidity for a total of ThUS$6,198 recorded under other current financial assets. Meanwhile, as of the closing of December 2014, the balance in liquid resources amounted to ThUS$228,691 included in cash and cash equivalent.

21

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 75% to 85% 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.

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 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, including construction, investment on equipment, 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.

Additionally, as of March 31, 2015, AES Gener has committed and uncommitted credit lines for approximately ThUS$235,783 and uncommitted and unused credit lines for approximately ThUS$220,931.

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 13.

22

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 non-regulated 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.

Recently, in Chile there was a regulatory risk associated with the lack of energy supply contracts for distribution companies (distcos.), a situation that was not addressed by the regulation. In January 2015, the Government approved a law modifying the bidding process of distribution companies that incorporates an allocation mechanism for the energy without contract for each operation hour, pro rata of the effective injection from each generator in the same period, at a price determined as the maximum between the short term node price and the variable cost, plus the difference between the price of injection and withdrawal. Additionally, it includes the alternative for certain distcos to transfer a portion of its unused supply to others with lack of contracts, which means that a generation company that signs an agreement with a distco.might end-up supplying another. Furthermore, in early 2014, the Independent Electric Systems Interconnection Law was enacted, with the aim of promoting the SIC-SING interconnection through a 600 kilometers transmission line connecting both systems. The regulation on the repayment mechanism for this project investment is not yet enacted, and therefore the participation of each generator is not defined to date.

In the past few years, Colombian authorities have discussed proposals to make certain regulatory changes. Among the most important issues under development are (i) Creation of MOR Organized Market seeking to change contract methodology to centralized bids, with the purpose of eliminating price discrimination between agents and making the market more efficient. On this matter, more clarity regarding participation guarantees and tax aspects are being asked (ii) Law 1715 from 2014 creates the option for renewable energies to be introduced into the market as well as energy surplus sales from self-generators; however, regulations to clarify the entrance of new participants is pending to avoid over-installation and affect the revenues of existing plants. (iii) Under Resolution CREG 206 from 2014, a hydrological crisis such as severe drought conditions will be monitored in order to implement measures to prevent shortages and other negative economic impacts. All potential regulatory changes could affect AES Chivor’s results.

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 95-2013), 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 a new resolution (RES SE 529/14) under which the additional margin to compensate generators is updated. Based on Note 2053, sent by the Ministry of Energy in March 2013, it is understood that TermoAndes’ units are not affected by the resolution. As a result, the Company does not expect this amendment to have an impact on TermoAndes’ operations.

23

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 will go into effect in June 2015.

In order to comply with the new emission standards, between 2012 and 2015, AES Gener will invest approximately US$251 million, at a consolidated level, in emission reduction equipment in four older coal plants (constructed between 1964 and 1997) and approximately US$110 million in the coal units owned by the equity-method investee Guacolda. Both AES Gener and Guacolda have already executed contracts with equipment suppliers and initiated works in order to comply within the required timeframe. It should be noted that works at AES Gener Group are currently underway, in compliance with current regulation. AES Gener initiated these investments in 2012, and the total investment reached approximately ThUS$212,940 million as of March 31, 2015. Additionally, in 2013, Guacolda initiated the installation of emission control equipment at Units I, II and IV, totaling, as of March 31, 2014, an investment of ThUS$166,092. AES Gener’s coal plants that initiated operations in recent years (Nueva Ventanas and Ventanas IV in the SIC and Angamos Units I and II in the SING) will not require additional 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.

In Chile, in September 2014, the new tax reform was passed, which, among others, will gradually increase the first category corporate tax rate from the current 20% to a rate that will depend on the regime chosen considering two alternatives: (i) Attributed Profits Income (API) gradual increase in the rate to 25% in 2017 and (ii) Partially Integrated System (PIS) gradual increase in the rate to 27% in 2018. According to a Chilean Securities and Insurance Authority (SVS) resolution, the impact on deferred taxes related to the tax reform will not be registered in the net income, but it will be registered in the equity. Additionally, the tax reform incorporates an emission tax for thermo plants effective from 2017. A great portion of the Company’s PPAs have clauses that allow to pass-through the costs arising from new laws, which mitigates the negative impact from this new tax. However, the estimated negative impact is near Th$30,000 from 2017 to 2020, and from 2021 the impact decreases gradually reaching cero in 2025.

In Colombia, on December 23, 2014, the Colombian Government approved a Tax Reform including, among others, an increase in the tax rate in four years of 5% in 2015, 6% in 2016, 8% in 2017 and 9% in 2018, and a wealth tax of 1.15% in 2015, 1% in 2016 and 0.4% in 2017, disappearing in 2018. Additionally, a tax on transactions will be maintained until 2018, decreasing to 0.3% in 2019, 0.2% in 2020 and 0.1% in 2021. With regard to this tax reform, a negative impact of ThUS$2,900 on deferred taxes was registered in 2014.

On March 13th, 2015, the Argentine Undersecretary of Energy increased by approximately 40% the Incremental Mean Charge of Excess Demand in the SADI, which corresponds to part of the charge the large users and large clients must pay in Argentina when they buy energy in the spot market, which changed from 320 Ar/MWh to 450 Ar/MWh for certain users. With this change, users with non-contracted plus type of demand that purchase their energy requirements on the spot market would have an incentive to contract their demand with an Energía Plus generator.

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 which 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 is 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.

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AES GENER AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 INTERNATIONAL FINANCIAL REPORTING STANDARDS

ASSETS 03-31-2015 12-31-2014

THUS$ THUS$

Current Assets

Cash and Cash Equivalents 285,811 228,691 Other Current Financial Assets 15,387 7,205 Other Current Non-Financial Assets 10,063 18,359 Trade and Other Receivables 445,879 384,596 Related Party Receivables 10,539 3,631 Inventory 117,183 116,820 Taxes Receivables 40,765 43,794

Total Current Assets 925,627 803,096 Non-Current Assets

Other Non-Current Financial Assets 41,522 39,429 Other Non-Current Non-Financial Assets 43,738 38,367 Trade and other Receivables 57,453 50,632 Investments in Associates 350,674 343,502 Intangible Assets 50,699 53,308 Goodwill 7,309 7,309 Property, Plant and Equipment 5,627,414 5,432,043 Deferred Taxes 86,340 69,211

Total Non-current Assets 6,265,149 6,033,801

TOTAL ASSETS 7,190,776 6,836,897

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AES GENER AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 INTERNATIONAL FINANCIAL REPORTING STANDARDS

LIABILITIES AND SHAREHOLDERS' EQUITY 03-31-2015 12-31-2014

THUS $ THUS$

Current Liabilities

Other Current Financial Liabilities 127,542 103,533

Trade and Other Payables 424,784 495,432 Related Party Payables 34,767 28,256 Provisions 3,849 3,541 Taxes Payable 45,753 40,451 Employee Benefits 1,864 2,684 Other Current Non-Financial Liabilities 25,159 36,952

Total Current Liabilities 663,718 710,849

Current Liabilities

Other Non-Current Financial Liabilities 3,202,989 2,869,307 Trade and Other Payables 66,644 46,223 Related Party Payables 160,033 158,169 Provisions 122,382 120,741 Deferred Taxes 526,089 522,001 Employee Benefits 34,769 34,320 Other Non-Current Non-Financial Liabilities 10,786 10,928

Total Non-Current Liabilities 4,123,692 3,761,689 Net Equity Issued Capital 2,052,076 2,052,076

Retained Earnings (Losses) 409,433 358,103

Share premium 49,864 49,864

Other Components of Equity 224,995 224,791

Other Reserves (430,728) (372,282)

Total Equity Attributable to Shareholders of Parent 2,305,640 2,312,552

Non-Controlling Interest 97,726 51,807

Total Net Equity 2,403,366 2,364,359

TOTAL LIABILITIES AND EQUITY 7,190,776 6,836,897

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AES GENER AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR THE PERIOD

MARCH 31, 2015 AND 2014 INTERNATIONAL FINANCIAL REPORTING STANDARDS

INCOME STATEMENT

3M 2015 3M 2014

THUS$ THUS$

Operating Revenue 532,535 559,034 Cost of Sales (401,410) (463,680)

GROSS PROFIT 131,125 95,354

Other Operating Revenues 852 823

Selling, general and administrative Expenses (28,988) (24,302)

Other Operating Expenses (824) (281)

Other Income / (Loss) 335 (302)

Financial Income 2,844 2,776

Financial Expense (32,394) (37,965)

Equity Participation in Net Income of Associates 8,030 22,500

Foreign Currency Exchange Differences (7,758) (25,553)

NET INCOME (LOSS) BEFORE TAXES 73,222 33,050

Income Tax Income (Expense) (24,947) (12,150)

Income (Loss) from Discontinued Activities - -

NET INCOME (LOSS) 48,275 20,900

INCOME ATTRIBUTABLE TO SHAREHOLDERS OF PARENT 51,330 23,301

Income (Loss) Attributable to Non-Controlling Interests (3,055) (2,401)

NET INCOME (LOSS) 48,275 20,900

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AES GENER AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS AS OF MARCH 31, 2015 AND 2014 INTERNATIONAL FINANCIAL REPORTING STANDARDS

CONSOLIDATED CASH FLOW STATEMENT FROM JAN 1, 2015

TO MARCH 31, 2015 THUS$

FROM JAN 1, 2014 TO MARCH 31, 2014

THUS$

Net Cash Flows provided by (used in) Operating Activities

Receipts from Customers 654,787 649,882 Other Receipts from Operating Activities 4,473 16,621 Payments to Suppliers (507,562) (517,542) Payments made to Employees (20,761) (8,802) Other Payments for Operating Activities (21,027) (14,953) Payments of Dividends - - Receipt of Dividends - - Payment of Interests (17,574) (28,197) Receipt of Interests 590 2,437 Income Taxes Paid (6,706) (20,076) Other Operating Outflows from Operating Activities (5,773) (11,341)

NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES 80,447 68,765

Net Cash Flows provided by (used in) Investing Activities

Loss of Control over a Subsidiary or other business - - Other Payments to purchase equity - - Other receipts for sale of equity or debt instruments of other entities - - Purchase of Non-Controlling Interest - - Proceeds from Sale of Property, Plant and Equipment 1 3 Purchases of Property, Plant and Equipment (407,101) (170,765) Purchases of Intangible Assets (288) (197) Purchase of Long –Term Assets - - Other Outflows from Investing Activities 31,148 (1,345)

NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES (376,240) (172,304)

28

AES GENER AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT AS OF MARCH 31, 2015 AND 2014 INTERNATIONAL FINANCIAL REPORTING STANDARDS

CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) FROM JAN 1, 2015

TO MARCH 31, 2015 THUS$

FROM JAN 1, 2014 TO MARCH 31, 2014

THUS$

Net Cash Flows provided by (used in) Financing Activities Proceeds from Share Issuance 65,200 1,800 Proceeds from Long –Term Borrowings 297,047 127,894 Proceeds from Short –Term Borrowings - - Repayments on Loans - (148,701) Payments on Financial Leasing Liabilities (524) (575) Other Inflows (Outflows) of Cash and Cash Equivalent (4,531) (59,763)

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 357,192 (79,345)

INCREASE (DECREASE) IN NET CASH AND CASH EQUIVALENT 61,399 (182,884)

Effects of Foreign Exchange Variations on Cash and Cash Equivalents (4,279) (1,811)

Increase (Decrease) in Net Cash and Cash Equivalents 57,120 (184,695)

Cash and Cash Equivalents at the Beginning of Period 228,691 707,516

CASH AND CASH EQUIVALENT AT THE END OF PERIOD 285,811 522,821

29

CONSOLIDATED EBITDA

EBITDA (ThUS$) Q1 2015 Q1 2014 Var % Gross Profit 133,130 95,354 40%

Depreciation and amortization (-) 55,937 55,646 1%

Other operating revenues 852 823 4%

Selling, general and administrative expenses (30,993) (24,303) 28%

Other operating expense (824) (281) 193%

Other costs not included in EBITDA 1,685 1,003 68%

TOTAL EBITDA 159,787 128,242 25%

30

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). In Chile, AES Gener is the second largest electricity generation group in terms of generation capacity, with installed capacity of 3,439 MW composed of 3,168 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 1,000 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 70.71% 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 18 countries through its diverse portfolio of distribution businesses as well as thermal and renewable generation facilities. AES' workforce of 18,500 people is committed to operational excellence and meeting the world’s changing power needs. AES' 2014 revenues were US$17 billion and AES owns and manages US$39 billion in total assets. To learn more, please visit www.aes.com. Follow AES on Twitter @TheAESCorp.

aes gener 6m 2015 results -...

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