Good morning. Welcome to Grupo Energía Bogotá first quarter 2026 financial and operating results conference call. The results reports were published yesterday and are available on GEB's website for your reference. The conference will start with an overview of the result, the main events in the economic and industry environment of the four countries where GEB operates, followed by the group's financial milestones. At the end of the presentation, a Q&A session will follow. On the bottom right of your screens, you will find a question-and-answer section for you to write your questions at any time, or you can raise your hand if you would like to ask your question. CEO, Juan Ricardo Ortega, and CFO, Jorge Tabares. [inaudible]
2026. During the first quarter, our business significant challenges with impacts across our four operating geographies, particularly driven by non-recurring events that we will describe at the end. In this period, we reported total revenues of COP 1.8 trillion and an adjusted revenue of COP 2.4 trillion. Primarily driven by the dividend declared by our associate company in Colombia on April 1 this year, amounting to COP 1.117 trillion, which resulted in a 4% increase in adjusted for the quarter compared to the first quarter of 2025. Adjusted contribution was distributed as follows: 27% power generation, 24% power distribution, 19% gas transportation, 16% electricity transmission, and 14% gas distribution, reflecting the consistent progress of our diversification strategy across business lines. Adjusted over the last month, reached trillion. Increasing 14% compared to March 2025.
Controlled net income as of March 2026 was COP 5,000 million compared to the first quarter of 2025, mainly explained by three factors. A 12% year-over-year appreciation of the Colombian that affects our transmission business and the international investment. A higher recognition of the wealth tax derived from the declaration of the national economic emergency, which is still being litigated at the Constitutional Court, and the provision associated with receivables at the end. There are corrective actions on behalf of the Minister of Mines. In terms of profitability, the return on equity reached 15.7%, increasing by 70 basis points compared to the first quarter of 2025. The last 12 months, ROIC reached 12.5%, increasing 27 basis points, mainly driven by extraordinary dividend received from our investments in Brazil at the end of last year.
The group's dividend yield will reach 8.5% based on the dividend decal shareholders assembly held on March 27, amounting to COP 250.86 per share, of which 81.7% ordinary dividend and 18.2% extraordinary dividend, representing a 5.4% increase compared to the 2025 dividend. Within the framework of the shareholders meeting, the 2025 financial statements and the proposed profit distribution were approved, along with the delegation to the board of directors for a potential international bonds the group financial flexibility in line with commitment to more than 23,600 shareholders. At the end of January, our major shareholder, Anacotora, asked for the potential of up to 9.4% stake in Grupo Energía Bogotá S.A. Has been in place since 2018. If executed, this transaction would seek to increase the free float, attract new investors, and improve our weighting in local international equity indices.
In line with this, in February, GEB launched a market maker program in coordination with Alianza Valores with the objective of improving liquidity and trading efficiency of GEB shares and contributing to more dynamic local capital markets. As part of our strategy roadmap, we continue working to maximize value generation in markets where we operate and see growth potential. In this regard, we recently announced an agreement with Axia for [inaudible] to acquire the remaining four transmission concessions in Brazil. Through our subsidiary, reaching 100% ownership of existing assets, the transaction is subject to the corresponding regulatory approvals, including those of the National Electric Energy Agency, ANEEL, with an expected closing within months. These concessions include 10,086 km of transmission lines at 15 substations with regulated revenues of approximately COP 280 million. An estimated COP 10 million daily under standards.
This transaction will allow us to fully capture the cash flows of our operating assets, increasing scale and transmission in Brazil, and strengthening a platform with stable revenues and long-term receivability in one of the most relevant markets within our core portfolio. Next slide, please. Moving to operational highlights, I would like to highlight the following. In Colombia, we announced that UPME, the Planning Institute of the Energy Sector, has awarded the installation of the first synchronous condensers in the country at the substations of Santa Marta, Maicao, El Banco, Guatapurí, and La Guajira , marking a technical and historical milestone for the National Interconnected System. This technology is widely used in countries such as Brazil to support systems with high penetration of renewable energy, as it provides stability, inertia, and voltage control to the grid, enabling safe and reliable integration of solar and wind generation.
These projects are expected to enter operation by December 2028. In addition, they will strengthen the reliability of the power system and support the modernization and transmission in Colombia, positioning us as the leading player in the implementation of critical infrastructure for an orderly and sustainable energy transition. In power generation, Colombia advances renewable expansion with the commercial operation of Guayepo III and the start of generation at Parque Solar Atlántico, both with the installation capacity of 180 MW solar projects in the Atlántico Department as one of the country's main solar clusters.
In power distribution, in strengthening and modernizing the network in Bogotá, Cundinamarca, with investments focused on improving service reliability and resilience to climate events, including intensive preventive maintenance, vegetation management, and infrastructure upgrades in more than 15 municipalities: Belachi.
In gas transportation, we are pleased to announce that on May 7, we achieved a significant milestone in the structuring of the Llojeta Regasification Project, following the announcement made by the Ministry of Mines and Energy regarding the inclusion of the project within the IPADF framework after the technical evaluation conducted by the Mining and Energy Planning Unit, through which it was determined that the project meets the required criteria and is relevant to strengthening the security and reliability of the country's gas supply. The initiative contemplates the injection of up to 250 million per day, establishing a strategic supply hub.
Under this framework, TGI has the right, as incumbent transporter, to develop the project within a regulatory scheme that recognizes remuneration, enhancing investment visibility, and reinforcing its role in the expansion of the system, and is the only transport infrastructure in the country that can supply the gas that is needed in the interior of Colombia, and it will be connected to that pipe owned by TGI. In parallel, on the regulatory front, the Energy and Gas Regulatory Commission, CREG, through the Resolution CREG 054 of 2024, resolves the reconsideration appeal related to TGI's current tariff application. It confirmed the interpretation of a 10.94 remuneration rate for the gas transportation activities in line with the current regulatory framework in Peru. On March 1st, a rupture occurred in a section of the pipeline that operated by Transportadora de Gas del Perú, TGP, resulting in a temporary restriction in natural gas supply.
As a preventive measure, the Ministry of Energy and Mines declared a state of emergency prioritizing two critical users, including residential, commercial, and public transportation segments in this context. While service continuity for regulated users was not affected, there were impacts on supply to the industrial sector and thermal generation plants. TGP is the main pipeline that brings all the Camisea gas into Lima. The event was addressed in a timely manner and was fully resolved on March 14th, at which point normal gas flows were restored with no sustained effects on the operation of the distribution system. During this period, the natural gas distribution system operated by Cálidda remained 100% operational, confirming its ability to respond to external events. The incident had no structural implications and did not compromise the service continuity for regulated users at any time.
Finally, on the regulatory front, we expect clear signals from the national government regarding the resolution that includes additional 8 per k. Income users solidarity mechanism, adding financial serene or getting of SIM or FISM. Thank you so much. Jorge, p lease go ahead.
Thank you, Juan Ricardo. Good morning, everyone. Consolidated operating revenues decreased by 12% compared to the first quarter of 2023, partly explained by the conversion effect of the Colombian peso against the US dollar. FX exchange rate for March 2024 was COP 3,690 compared to COP 4,300 in March 2023, representing a 12% appreciation of the peso against the dollar and resulting in lower revenues of COP 121 billion.
The natural gas distribution segment recorded a 19% year-on-year contraction, mainly explained by two factors. A conversion effect, which resulted in lower revenues of 11%, and second, a non-recurring event in gas transportation system in Peru, 66% impact associated with the state of emergency declaration following the incident in the pipeline operated by Transportadora de Gas del Perú, TGP, which was the first of its kind in history. The prioritized supply to critical users temporarily restricting dispatch to industrial and power generation sectors for 14 days.
While the distribution system operated by CIE remained 100% available, this regulatory restriction had a direct impact on distributed volumes, which declined by 9.5% in March. Excluding this effect, quarterly volumes will have increased by 1.4%, confirming that the impact was one of structural. As a result, revenue in the distribution segment decreased by 19% and excluding pass-through revenues declined by 7%. Consolidated revenues in functional currency decreased by 7% year-over-year, mainly $15.7 million, mainly affected by lower pass-through revenues, which do not impact margin, and the temporary restriction in distribution. It's worth highlighting that excluding the TGP event, regulated distribution revenues will have increased by 2.1% year-over-year, reflecting resilient underlying demand. Additionally, lower revenues from installation services and material sales were observed.
The natural gas transportation segment recorded a 6% year-over-year decrease in revenues as a result of an adjustment in contracted transportation capacity aligned with lower structural demand and reduced gas availability. The electricity transmission segment recorded a 3% year-over-year declines mainly driven by Colombia, where revenues decreased by 1.8%, explained by lower revenues from awarded assets associated with updates in macroeconomic variables such as PPI and the appreciation of the Colombian peso against the US dollar. The electricity distribution segment recorded a 6% year-over-year decline, driven by COP 6,000 million conversion effect, and the non-recurring TGP event, which temporarily interrupted gas supply to thermal power plants, limiting self-generation operations for approximately 15 days.
Consolidated operating costs decreased by 11% year-over-year, mainly reflecting the conversion effects of COP 83 million and lower, and DG levels in distribution driven by the TGP event, and gas transportation and gas distribution operating costs decreased by 9%, in line with lower activity and reduced distributed volumes. At Cálidda, the decline was mainly driven by lower pass-through costs and reduced investment execution. In functional currency cost COP 12.3 million. Natural gas transportation operating costs decreased by 5% and COP 10.6 million, mainly due to reductions in fuel gas and insurance, and electricity transmission operating cost increased by 13%, with Colombia transmission showing the highest growth, mainly explained by higher personal expenses of COP 10 million. Administrative expenses increased by 38% compared to March 2025, mainly due to the provisioning of ID Invest within the electricity transmission segment for COP 55 million.
The wealth tax for corporations introduced under the economic emergency decree with an impact of COP 38 million, and the annual salary and bonus adjustments of COP 25 million. This was partially offset by a conversion effect of COP 14 million. As a result, the operating margin decreased by 25% compared to Q1 2025 with electricity transmission and gas transportation showing the most significant impact on operating results, mainly due to the high provision, lower industrial demand associated with reduced gas availability in the country. The next slide, I will present the key drivers behind the evolution of net income during the quarter. Net income for the first quarter reached COP 568 billion, representing a 43% year-over-year decrease, mainly explained by three factors.
Gross profit declined by the conversion effect associated with the appreciation of the Colombian peso against the dollar, as well as the TGP event affecting the gas distribution operations in Peru, the COP 66 total impact in pesos at the consolidated level. The administrative expenses increased mainly due to the provision of COP 55, the wealth tax of COP 38, and the salary adjustment of COP 25. A decrease in FX differences in COP 167 due to lower quarterly peso appreciation compared to Q1 2025. Finally, the results include a lower contribution from the equity method of COVID-19 compared to the same period of the previous year. As a result, controlled net income for the quarter closed at COP 3 billion. Next slide, please. The equity method recorded a 13% year-over-year decrease in the first quarter of 2026, driven by specific dynamics.
Colombia contribution decreased by 42.25% mark due to high hydrology, which prices, as well as higher tax linked to the economic emergency and the increase in the minimum wage. In Brazil, the contribution decreased by 20%, mainly due to higher financial expenses associated with debt linked to advanced dividend paid to GEB last year as well as FX effects. Gas contribution decreased by 14% due to the implementation of new gas distribution tariff which impacted core results. Next slide, please. Organic CapEx executed during the first quarter of 2026 amounted to $6 million, representing a 33% year-over-year increase compared to Q1 2025. Driven mainly by higher execution of electricity transmission in Colombia and natural gas transportation. Transmission Colombia accounts for a significant share of CapEx, with a million increase associated with progress in project Colectora, Refuerzo Suroccidental.
Norte, Chivor to Norte, and the second circuit of Colectora, as well as of substations and private projects in natural gas transportation. TGI executed COP 42 billion, reflecting progress in IPAD capacity expansion projects, Mariquita and Ramalund. Execution remains stable, focused on distribution networks in line with the closing phase of the 5IE investment plan. The five-year CapEx outlook to $1.6 billion, with Transmission Colombia and gas transportation representing 69% of the total investment, followed by Cálidda at 8%.
Transmission Colombia investments remain focused on structural and private projects. TGI CapEx is focused on ongoing IPAD projects and maintenance. During the quarters, the UPME awarded in LA, the first synchronous condensers project in Colombia, which are already incorporated into this year's CapEx plan. Next slide, please. Consolidated adjusted reach COP 2.4 trillion, including Enel dividends, which were declared on April 1st, representing a 4% year-over-year increase.
Control companies reduced their contribution by COP 160 billion, while dividend contributions from associated companies increased by COP 259, with dividends declared by Enel for COP 1.2 trillion on April 1 standout. Seats are included in this quarter to maintain year-over-year consistency, as in 2025, they were declared during the first quarter of the year. The decrease in control companies is mainly explained by the provision on revenues billed to Air-e in Colombia transmission, lower margins and higher expenses in TGI, and appreciation of the Colombian peso, and the impact of the TGP event in Cesar. Moving now to the deduction, I will hand over to Karen Guzman, Head of Financing and Investor Relations. Please go ahead.
Thank you, Jorge. Good morning, everyone. In the first quarter of 2026, the group's consolidated reach COP 5.6 billion, maintaining stable structure by currency and interest rate compared to previous periods and such to previous periods. 53% of the debt belongs to Grupo Energía Bogotá, while the remaining 47% is distributed across its subsidiaries, with Cálidda accounting for 18% and TGI for 15%. In terms of currency, the debt composition remains denominated in US dollars, with a 67% participation, followed by Colombian pesos 30% and sols 3%. Regarding interest rate structure, 40% of the debt remains fixed rate, while 60% is indexed to SOFR, IBR, and CPI. The average life of the debt 5.6 years, reflecting self-management of the maturity profile.
In terms of cost, there was an increase in the cost of debt in Colombian pesos, consistent with the local rate environment, rising from 10.82% in March 2025 to 11.68% in March 2026. While the cost of debt in the US dollars decreased from 6.0% in March 2025 to 5.74% in March 2026. The group financing structure remains diversified, with 52% in bonds, 38% allocated to commercial banks, and 10% to multilateral institutions. In terms of financial metrics, leverage measure as net debt adjusted decreased from 3.48 x in March 2025 to 2.91 x in March 2026. This improvement reflects a 14% increase in last 12 months adjusted and a 76% increase in the group's cash position. The interest coverage ratio, measured as adjusted over net financial expenses, increased from 4.88 x to 5.83 x over the same period, reflecting an improvement in the group's cover financial expenses and expenses.
At the company level, the most relevant developments were as follows. An additional COP 5 million were disbursed under the CAF A/B Loan, completing the total contracted amount of COP 0.0 million at Contugas. A COP 1 million per payment was made on the syndicated loan, reducing the overall balance to COP 0.0 million. In this regard, the general shareholders' meeting approved the granting of guarantee for Contugas gas payment obligations in proportion to its ownership as part of their financing process structure. For Trecsa, a COP 50 million club deal financing was executed with IS and Blade's aim at refinancing existing debt and optimizing the maturity profile at EOG. This transaction includes a corporate guarantee from GEB authorized by the Ministry of Finance and Public Credit. I will now hand it back to Jorge to continue with ESG matters.
Thank you. The first quarter of 2026, the group continued to advance sustainability agenda focused on transparency, risk management, and discipline execution of environmental, social, and governance initiatives aligned with its long-term strategy. In terms of ESG reporting and governance, GEB published its 2025 integrated sustainability report, covering the group at its seven control subsidiaries, incorporating for the first time the results of its double materiality assessment. Additionally, the group released its first human rights report outlining due diligent processes, risk identification, and action plans, as well as the role of energy as an enabler of rights, developed in coordination with the legal vice president external advisors. On the environmental front, the group publishes its first nature report under the TNFD framework.
The task force on nature-related financial disclosures focused on assessing impacts, risks, opportunities, and dependencies related to nature across the Group and subsidiaries based on a pilot exercise conducted during the period 2025. Greenhouse gas emissions were independently verified under the ISO 14064 standards for GEB and subsidiaries. Cálidda, Contugas, Electro Dunas connected. In addition, the Group launched the Evolve 2030 program, identifying innovative technologies and solutions to reduce emissions across its business. Environmental investment execution exceeded $1.6 million. COP 15,000 million for the Life Legacy Program for territories, training for energy transition, benefiting communities in Casanare, La Guajira, Cesar, Bogotá, [inaudible] . In total, more than 39 social investment initiatives benefiting 246 indigenous communities and 5 community councils. Social investments during the quarter exceeded COP 0.5 million.
Finally, at the General Assembly on March 27th, 95.5% of shareholders represented at the corporate assembly approved the financial statements, profit distribution, amendments to the bylaws, and the election of the Board of Directors for the 2026-2028 period. Additionally, the board evaluation self-assessment process was completed with the support of laying the foundation for the implementation of improvement plans during 2026. Please move to the next slide.
The first quarter was primarily impacted by conversion effects and foreign exchange movements compared to the same period the previous year, as well as the impact of the equity method and the non-recurring event previously mentioned, which affected the performance of certain businesses during the quarter. In response to specific events, operational, regulatory, and structural solutions have been implemented across all fronts. In Peru, the event is currently being reviewed by regulatory authorities with the objective of determining responsibilities and the recovery of the economic impact generated.
Regarding provisions recorded, reflect its condition as an intercompany. The national government is advancing regulatory measures aimed at ensuring compliance with its obligations. The context of lower gas availability in the country is being addressed in a structural solution, with the development of the Llojeta Regasification Project recently incorporated into the IPAD framework, which establishes a clear pathway to strengthen the security and reliability of the system in the medium term.
In this context, EBITDA adjusted over the last 12 months increased by 14%, reflecting the Group's ability to sustain consolidated performance. From a profitability perspective, ROE of 15.7% and ROIC over the last 12 months of 12.5%, remaining 5% above the weighted average cost of capital. In terms of investment, execution was concentrated in transmission and gas transportation projects, aligned with the expansion of capacity and reliability of the system, while maintaining a leverage profile consistent with the Group's capital discipline.
During the quarter, relevant progress was achieved in the Group's strategic roadmap. In Colombia, the award of the synchronous condensers project reinforces our leadership in the implementation of key technologies for system stability. At a regional level, the agreement to acquire the remaining 49% stake in four existing transmission assets in Brazil strengthens the Group's scale in this market and its ability to capture long-term cash flow. Additionally, progress was made in sustainability and corporate governance, particularly in reporting, environmental certification, and social investments. I thank you very much for your attention. We now move to the question-and-answer session. We have the team ready to respond.
Thank you. We'll now move to the question-and-answer section. If you'd like to ask a question, please press star two on your phone and wait to be prompted. To ask a voice question, or to queue for the questions- [inaudible] Corficolombiana, please go ahead, open.
Hello. Okay, I have four questions. Three of them are related to Grupo Energía, another question specifically on TGI. Let me do the first three, then one, if time allows it, the other one. The questions on Grupo Energía. One related to Axia. What do you expect on the acquisition of Axia's concessions in Brazil on your results, which I understand will be affected by the equity method. The second question has to do with the process of selling part of the district stake on Grupo Energía. Could you please confirm me, sorry, whether the sale prices established for 2018 is currently subject to inflation regulations under current regulations, and what's your current unhedged or open position on US dollars and the real denominated debt? This one on a consolidated basis. Thank you.
Can you hear me? Hello? Sorry, I don't know what happened. On the I think I'm going to go back to Axia questions. The Axia, roughly half of the assets that we co-own with Axia, we just announced another transaction by which we're going to combine that asset with some other assets or participation in Argo and the participation of GEB is in some other assets. I think we're asking about the equity method and how we were going to account for it. It becomes, the question does not apply any longer because of the recent announcement that we just did. We had to announce as soon as we signed the transaction, and it happened to happen just before this conference call. We can expand on that at the end of the call.
On the district, the share price, the minimum price used in 2018 is not applicable under Law 220. This is a subsequent event. Transaction, there is another technical law, but it does not have to in line with the original inflated price. On the hedging, the US dollar debt that we have is basically hedged. Because of the natural hedge, the U.S. assets, asset revenue, the U.S. revenue that we have, plus some hedging, some cross-currency swaps or some principal-only swaps, US dollar- peso, also we converted a Brazilian real asset into US dollar a while back. We're basically neutral at this point in the exposure to US dollar.
Can I do a follow-up and then a final question specifically on TGI? Or there's no time for that?
Go ahead.
Thank you. Thank you, Jorge. The question, the unhedged, the open position on dollars and reais. Before, you had three and- I had that figure from a year ago. I was wondering if you had something like an update on that, just in order to follow the results related to effects.
On the investment side of our balance sheet. Yes, we do not hedge the peso position or the Peruvian sol position. We consider that as a structural diversification, long-term investment. Given that approach, we basically ride with the exchange rate variations between the peso and the Peruvian sol.
The specific question on TGI, is the regulation a reduction of about 96 basis points, which comes from the 2023 resolution from CREG? The question is, can you include in your analysis information from after to also recent rising interest rates in Colombia, or are you limited to information available as of that year?
Let me try to answer. When TA calculates the tariff to the clients, it uses the existing resolutions. CREG had published a resolution with a WACC. They updated the while back, and we were applying that resolution. The CREG just issued a new resolution saying that we had to use the previous WACC and not the one that they had published. We started doing that in April 2026 onwards. There is no retroactive calculation, and we had the right to charge that because that was the regulation that valid at the time that we charged the customer. This is the situation. Just from April forward, the CREG clarified and made publicly in the resolution that we had to use the old.
Now we are waiting for the actual proper calculation of the tariffs using all the regulatory resolutions existing to calculate the proper tariffs that they miscalculated when they published last year. Once we start using that, the new will be part of that formula.
Thank you.
Thank you.
Thank you. Thank you very much. Before I move to the next question, just a quick reminder, if you're connected via the phone and you would like to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. Our web participants can also request to ask a voice question or send a question as a text. Our next question is a question from Jose Maria from AB1 Capital. "Hello. Congratulations on the transaction recently announced in Brazil. I would like to understand whether the deal with CDPQ includes any long-term call or put options for either party, or if the intention is to hold the entire portfolio through maturity and the amount of deal.
Thank you for everybody. As I mentioned, the Superintendencia Financiera of a transaction that really combines our participation in Argo Energia, our participation in BR, which has recently acquired part of the transaction of the asset, and adding a cash position of about $60 million to combine with Verene, which is the asset that they have created for a long time, in Brazil, including recent acquisitions.
That combination of assets, when added all up, will account for about 7% of the total revenue of the Brazilian transmission system. It is a simple long-term transaction by which we aim to continue growing in Brazil. No put or call options or any structure that will signal any short-term relationship with LAES. We are looking at this as a long-term investment opportunity growth platform by which we combine both the technical capabilities and financial capabilities of both groups.
With CDPQ, which has very ample financial possibility, given how much money they manage and their appetite to continue growing in Brazil.
Thank you. Thank you very much. Another person, if you connected the phone and would like to ask a voice question, please star one your phone keypad and wait for your name to be prompted. If connected via the web, request to ask a voice question or send your question as a text. Just give a moment or so for any additional questions to come in. Looks like we have no further questions at this time. I would like to pass the line back to Jorge for his closing remarks.
Thank you for your interest. As mentioned, we had a relatively unusual quarter affected by tax issues, by updates in personal costs and some volume reduction at TGI. We also announced two transactions in Brazil during the last month, which are a core of the execution of the strategy of the group and one that reinforces our intent to continue growing in transmission in Brazil. We remain open for further questions after the call to our IR team. Thank you very much.
Thank you. This concludes the call for today. We are now closing all the lines. Goodbye.