Interconexión Eléctrica S.A. E.S.P. (ISA) Earnings Call Transcript & Summary

Good morning. My name is Mateo Ochoa, and I'm part of the team of Investor Relations of ISA. We'd like to thank you all for joining us in this presentation of results of the fourth quarter of 2023 of ISA and its companies. [Operator Instructions] Okay. Today, we have Gabriel Melguizo Posada, Acting President of ISA; Daniel Isaza, VP of Corporate Finance; Patricia Castaño, VP of Corporate Strategy; and [indiscernible], Acting VP of Road Concessions. The agenda today begins with the highlights of the fourth quarter. Explained by Gabriel Melguizo. Next, Daniel Isaza will give our quarterly financial results and then we'll have a special chapter to talk about the operating report of the adjusted EBITDA that we published in the report of the quarter. Then we'll return with Gabriel for the closing remarks followed by the Q&A session. Okay.

[Interpreted] Thank you, Mateo. As always, I'm very thankful to be with all of you. Thank you for joining us. Let's move on to the next slide, please. Okay. Within the dimensions of the ISA 2030 strategy, which is based on sustainable value generation, we have several milestones we'd like to mention. And the first time I mentioned which is our responsibility to create value for our shareholders. We keep our commitment through growing financial results, executed projects that increase our base of assets and revenue and continuous search of new awards from bids. We highlight that we have 36 projects under construction which at the end of their constructive stage, add up to COP 1.7 billion to our annual revenue. During 2023, we were awarded contracts that will represent investments of COP 9.8 billion in next years. Consolidating this way of sustained growth path in our business and geographies and determinedly advancing and the goals set forth in ISA 2030 strategy. Also, if we add to this figure, the award of the road concession in Panamericana Este in Panama, this figure would increase to COP 11 billion. Our ROAE at the end of 2023 remains at a healthy level, up 14.4%, and the net profit reached COP 2.5 billion. Okay. Within the second dimension, which is creating a positive social and environmental impact, we proudly would like to highlight that we are one of the best companies in the energy sector according to the sustainability Dow Jones Index. In addition, ISA was awarded by ALAS20 Colombia '23 and the company leader in relations with investors. This is the highest category that any company could aspire to when it comes to ALAS20. In addition, ISA was third as the company leader in sustainability. This acknowledgment ratifies the good corporate governance that we have transparency and sustainability at ISA. Lastly, in the dimension of ensuring corporate prevalence or validity, we keep using innovation and technology for a more flexible and safe energy transition and as leverage for growth. An example, we are currently implementing 2 projects which are part of the SmartValves Technology solutions that improve the distribution of power transfer and the operation of the network. Of the investments committed, which are pending to execute. 2023 ends with COP 29.9 billion. In short, on this slide, you can see that at ISA, we are committed to create value for shareholders through sound financial results to execute our 2030 strategy. Next slide, please. In 2023, ISA invested a total of COP 4.6 billion, the execution of the investment in the last quarter of the year was aligned with the execution of the prior quarters. That is COP 1.1 billion. Projects underway will give way to nonconventional renewable energies and will enhance the transmission network. The CapEx executed in the fourth quarter was distributed as follows: 82% in Power Transmission, 16% in Roads and 2% in Telecommunications. Colombia received 25% of total investment, advancing the construction of expansion projects, connections, expansions and bilateral business. Brazil instead received 39% of the investment with a wide portfolio of reinforcements and improvements and in the advancement of energy transmission projects. During the fourth quarter of 2023, 2 expansion projects were commissioned in Brazil. Now in Chile, this country received 20% of the CapEx in energy transmission and road infrastructure. In energy transmission, we increased capacity, expanded the network, built a substation, and in the project, Kimal-Lagunas, which is 100% of ISA and Kimal Lo-Aguirre, which is 33% of ISA. In terms of roads, we're still building Ruta del Loa and several improvement and road security works at Ruta de la Araucania and Ruta de los Rios. Peru received 16% of the investments, ending the construction of 3 energy projects, which began to generate new revenue. So we continue working with the construction with 36 power transmission projects and 2 of roads, which is made by companies in which ISA has control. These projects will represent more than 5,500 kilometers of transmission lines and the interventions of more than 161 kilometers of roads. Next slide, please. Thank you. During the fourth quarter we have new victories in our growth process, ending the year in terms of the value of the projects we won, and electrical power transmission, we won the bid in Peru to build, operate and maintain [Foreign Language] that is more than 1,000 kilometers of transmission lines, up 500 kilowatts which benefits more than 1 million -- more than millions of Peruvians. This has to do with $833 million for CapEx. And once in operation, will represent annual revenue of $83.5 million. The execution and financing of this project will be made through Consorcio Eléctrico Yapay, owned 50% by ISA and 50% by the Grupo de Energia de Bogota. Since this is a joint corporation, the financial results of Yapay will be known on the financial statements of ISA consolidated using the equity method. In Brazil, ISA CTEEP was awarded 40 expansions, which we'll add a CapEx of BRL 229 million, about COP 181,000 million. In addition, in Colombia, ISA entered an agreement with Ecopetrol to execute the Respaldo Demanda Vicepresidencia Regional de Orinoquia project. In terms of roads, ISA Intervial presented the best bid for the concession Orbital Sur, Santiago in Chile, to design, build and operate 25 kilometers of a new urban road. The CapEx reference estimated by the Public Works Ministry of Chile adds up to $500 million. At ISA, we continue expanding our business with the arrival of new projects in our investments portfolio. Soon, we will be looking at growth opportunities in the region. Next slide, please. In the fourth quarter of 2023, the balance of our committed investments which are pending to execute increased COP 1.8 billion compared to the end of the third quarter of 2023. The variation is mainly because of the execution of COP 1.1 billion and new awards, which arise to COP 2.9 billion. This is a note. If you include Panamericana Este, which was awarded January '24, the amount of new investments bid would rise to COP 4.1 billion. Okay. Now the net of the wins and the execution of CapEx of the fourth quarter of 2023, the balance of committed investments pending to execute ends 2023 with a very good figure of COP 29.9 billion. Here on this slide and the bars in the middle, you can see the composition of this figure as follows: COP 23.9 billion between bids and awards won, which add to COP 19 billion. reinforcements and improvements at CTEEP of COP 3.3 billion in contributions of capital for corporations that are in charge of Kimal Lo-Aguirre TOCE/CEPI of COP 1.6 billion. In projections, we have COP 3.9 billion in reinforcements and improvements pending of approval from the regulators, especially in Brazil. And COP 2.1 billion to maintain the network and optimize assets. On the right-hand side of the slide, on the orange bars, you can see the estimated execution of these investments. Until 2030, an average, we have an annual CapEx execution of COP 5 billion from 2024 to '30. Next slide, please. During the fourth quarter, we completed the construction of 6 projects and 26 reinforcements to enhance the energy matrix in the region. In Colombia, we commissioned the connection of substation Sabanalarga of 500 kilowatts of the solar park Guayepo 1 and 2, which is currently in construction. In Brazil, we have the commercial operation of 26 reinforcements and projects, Triangulo Mineiro and IE Itaunas. Remember that last project, Itaunas, entered a partial commercial operation in March 2023. Lastly, in Peru, we have an operation substations, Chincha Nueva and Nazca Nueva and reinforcement 2, which is the expansion of Planicie substation. These projects together contribute more than 250 kilometers of circuit to the transmission network and will generate annual revenue for more than COP 120,000 million. We'd like to highlight that the commission Sabnalarga and Colombia Triangulo Mineiro in Brazil will give way to nonconvention renewable energy sources to the network. Next slide. In Latin America, we see great opportunities of investment that rise to $11 billion in the next 12 months, of which 66% corresponds to the Energy Transmission business, while 34% to the road infrastructure business. In Colombia, we see opportunities in the bids of the UPME for an investment of about $380 million. Also bids and road projects from ANI, which is a National Agency of Infrastructure for an investment of $2 billion. With the recent entrance of ISA to the road business in Panama, we have found opportunities in road project builds, like the revamping the West Panamericana Road and the fourth transmission line in Panama. In Brazil, there are business opportunities promoted by ANEEL valued at about $3 billion. On the other hand, Chile has great opportunities in energy transmission with bids to store energy in the north to build substations and several expansion works. In addition, Chile has a wide portfolio of opportunities in the roads business with an estimated investment of $3.7 billion. In Peru, the portfolio of energy transmission opportunities for 2024 is about $700 million in investment. Now let's look at the next slide, please, to hear Daniel Isaza with the financial results of the quarter and the section of the operating report of the adjusted EBITDA.

[Interpreted] Thank you, Gabriel, and good morning to everyone. I'd love to say hello to all of you again for this fourth quarter of 2023 results. Next slide, please. 2023 displayed growth that were quite positive and historic with growth in the main items, revenue. Operating revenue, we reached COP 14.2 billion. This is an increase of 6% compared to 2022. In EBITDA, we ended with COP 9 billion also up 6%. In net profit, COP 2.5 billion, 12% more than in 2022 and with a range that we talked about in the shareholders' meeting in 2023 -- no, in 2022. To be in 2023 with a net profit that was above -- the net -- the ROAE is at 13.8% above 2022. In terms of operating margins, the EBITDA remains at 64% and net margin increased 1 percentage point, ending at 70%. All of these figures were showing very positive growth. Next slide, please. Here, what you see and that we saw with the update of the last quarter of 2023. You can see that there is an important sign that we've been discussing, and it's a relation between the variations and the exchange rates and the results of ISA which is so diversified in the region and exposed to several currencies in its balance sheet. And the most relevant are the dollar. Remember, we have revenues in dollar, in Peru, we have revenue in dollars also in Colombia and in Chile in the transmission business. And there's exposure also to the Brazilian real when we consolidate the figures of CTEEP. So I think what's interesting about this slide is to look at both graphs together and look at the profile of the revenue that's growing in the first quarter of '22 until the first quarter of '23. And you can also see the that due to the devaluation of the peso in that period, when we have currencies like the real, the dollar and the Chilean pesos, we can see more pesos for every real and dollar and Chilean peso. So that devaluation reverts at the end of the first quarter of 2023 and a bit more in the second one. And you can see a revaluation of the peso. As we start to see the evaluation of the peso, the revenue of the second and third quarter drop, and they're really linked to this topic. And in the fourth quarter, with more stable exchange rates, we see an increase, and this increase is -- reflects more the nominal increases of the functional currencies that we use outside of Colombia. So this is a story that's present in the last 8 quarters, and you can clearly see the effect of this topic on the quarterly results of ISA. Next slide, please. Here, on the top, we see revenue of 2023 of the 12 months per business. It's Power Transmission, Roads and Telecom and both on the bottom and on the top. Again, operating revenue grew 6%. And per business, it means 9% in Power Transmission, our main business, a decrease of 4% in Roads and a decrease of 2% in Telecommunications. What's happening in the financial sheets. On Roads, we've talked about a lot in our teleconferences. And we have to keep in mind that what you're seeing here is a reflection in part of the accounting model that we're using now, which is of the financial asset. And under this model, what you can see through the balance sheet is the financial yields. And when we have concessions that are about to end like del Bosque, which was completed and in 2026, Rios and Araucania will end there is a base of financial assets, and of course, a lower yield. And that's the effect that you see there. Also, there's an effect from a monetary correction in which in '22 there were big inflations with more monetary corrections on the financial asset. And that means a revenue on the balance sheet, and this situation is less important in 2023. And when you compare the basis in terms of monetary correction, you can see a decrease in revenue in 2023. Ahead, I'll talk about, when it comes to the operating report of the adjusted EBITDA. I'll discuss this a bit more. And here, you will see how we do not follow the parameters of the financial asset, but instead of more of the cash flow. So you can see how you can interestingly compare the IFRS financial deal and really understand what's happening with the cash flow generated with roads, with tolls and everything has to do with our Roads. Next slide, please. Here, and keeping in mind our backlog, our committed investments pending to execute. Here, you can see that we've had a long path of victories that have led to a significant number of investments committed pending to execute. And it's important for the market to keep in mind, that we have the balance to face this challenge. The debt or the -- yes, the debt balance by the end of December '23 is of COP 34 billion. And here, you can see two things. Although there are increases in our platforms in the regions in local currency and in Colombia, with an increase of COP 1.5 billion. When you look at the revaluation of the peso in 2023, the depths that we have in currencies other than pesos, are charged on our balance sheet, and that's why there is a reduction of COP 31 billion. When it comes to the leverage, remember that the limit of the risk rates or rating firms, which is 4.5%. We're ending at 4.4%. So we're very well when it comes to the recommendations of the investment degree. And that gives us the flexibility and the balance to face the growth that's coming, which, as Gabriel said, will make us make investments of COP 5 billion in a year. Next slide, please. Okay. Here, you can see the dividends, historic dividends of ISA it's expressed in pesos per share. And we're pleased to talk with the market and report to everyone that the Board of Directors of ISA will recommend to the General Shareholders' Meeting. In March, to pay a dividend, ordinary dividend, COP 1,110 per share. And this amount multiplied by outstanding shares is equivalent -- and it's 50% of the net profits of 2023. When you look at a long period, the performance of ISA's dividends, there's a constant growth of 5% in 5 years of 15%. And in 2023, there was a decrease because of what the Board decided regarding the cash flow, which was quite flexible, and that was related to refinancing the debt of Inter Chile, which moves from construction to the operation stage. And we made -- we refinanced our debt -- our banks to 35 years, which not only pays a debt but also allows us to have an additional cash flow, which is like a return of the capital invested. So the money we had in Chile is the one that really sustained the payment of the special dividend in 2023. So after the situation was normalized. In 2024, we're providing a dividend that's at the top of the policies, which is 40% to 50% of the dividend that's ordinary and the consideration for 2024 to make this recommendation, keeps in mind the discipline to keep the cash flow and the policy to assign capital to have the flexibility required to face the challenges that are ahead. This ordinary dividend will be paid in 3 allotments in May, July and December this year. Next slide, please. Okay. In this section, before the closing remarks, given by Gabriel. I'd like to talk to you about the adjusted EBITDA operational report. This report is published in the quarterly results report, and it has been prepared during part of the year 2023. And that we published mainly to improve and increase the understanding of the companies of ISA to our stakeholders. As an introductory remark, I want you to understand that ISA's accounting is prepared in accordance with the IFRS along with their interpretations issued by the International Accounting Standards Board. This has been in place since 2015. 54% of our assets under IFRS are recognized in the accounting under 3 models that we need to understand. Intangible assets, financial assets and contractual assets. Let me mention also that in the report that we published, there's a technical attachment that refers to the logic that we used for all of these adjustments for this report of the adjusted EBITDA. Also, I'd like to add, this report of the adjusted EBITDA is complementary to what IFRS demands. And it's interesting, the case of Brazil, where the assets or the concessions are through the contractual asset and transmission companies report figures under IFRS and a scheme called the Regulatory Mode. And we'll be talking about Brazil's assets ahead. And since ISA has assets in Chile and Peru. ISA has been making adjustments throughout the different geographies to provide the market and EBITDA margin that's closer to the operating margin. Lastly, this report is prepared by the company based on non-GAAP premises detailed in the technical annex, and it was audited by Ernst & Young, which is our auditor in accordance with the international standard on auditoring which is 805. Next. Okay. So now let's look at this table, which shows 3 types of models of accounting of concessions. And here, we see several parameters, for instance, with the fixed asset. Depending on the duration of the concession, if it's perpetual or finite you start to see a difference between the accounting models. Those are perpetual for the Transmission in Colombia and Chile, are looked at fixed assets, but those in Peru and Brazil, since they are finite, they are counted differently and more with the financial asset. How they're shown on the financial report is what you can see in the different balances. Intangible assets are seen as intangible assets, while the contract assets are more like accounts receivable. So as you can see, for the same or very similar businesses. It really depends on the duration of concession, and this gives way to different accounting models. Next. This discussion, as we, as I said before, is important because the concessions using the 3 models are very relevant in ISA's assets. As of December of 2023, we're talking about total assets of COP 71,000 million. And when it comes to contractual and finite, they're different. Here, you can see COP 38.8 billion. As I said before, in an energy transmission, Colombia, Chile and some concessions in Peru have fixed assets, while those in Peru, Bolivia and Inteia are intangible assets and Brazil are contract assets. In roads and tire in Chile and Colombia, our financial asset and telecommunications and ICTs are fixed assets. So what did we do? Next slide, please. What we did was to reexpress these figures and models. And we made some adjustments to look at the IFRS-16 effect to get the market something much more closer to the market to the cash flow. So here you can see for the models, of IFRS fixed assets, the model remains identical. It remains the same. So here, it's the effect of the less is withdrawn. The 16 is withdrawn for lessees. For instance, what does this mean? When we think about connections, the connections that we made with private clients with ports with network operators. These types of contracts since they're long term, they are financial assets. Therefore, the revenue from this, under the IFRS accounting, will be seen in financial yields. Now to acknowledge this we receive revenue that is related to our main business, which is to operate and maintain electrical or power assets. So we received the assets under operational, operating assets. Also, we have the annual amortization of deferred revenue from IRIS which are agreements of optical fibers made in the past with anticipated payments for a long period under the IFRS-7 but this is on the income statement as revenue linearly, but it was received already. So to look at this more as a cash flow, we move -- we reduced the revenue and the same happens with some UPMEs, especially those -- the initial ones which generated an amortization of deferred revenue, which was very different to the cash flow, we withdrew this to show the cash flow other reports. When it comes to intangible assets. And here, it has to do with energy in Peru with several adjustments, for instance, we withdrew revenue and construction costs. And you know in ISA, we have main businesses and also to develop infrastructures, and when it comes to intangible assets, what we're doing is developing infrastructures, and we start to see construction costs within costs. And also our revenue which is theoretical, if you wish, that comes from the construction that's proper for the sector that we're in. So the revenue and the construction costs in the intangible assets are removed, withdrawn and the construction cost, of course, is still a CapEx within the cash flow. What appears in the net is the construction margin. Also, the effect of IFRS-16 is withdrawn. And there are other adjustments, for instance, there to, and you can see them in the report per se, but the provision for major maintenance is withdrawn and the payment for major maintenance is included. The major maintenance is more like the financial yield and they are incorporated as operating revenue, especially what we collect from tools. While those of the effective assets we have in Brazil. Let me give you another comment. We also remove the preexisting infrastructure payments. This means, in Chile, we have contracts that say that payments will be made by the concession during the life of the preexisting infrastructure. In the financial models, at the beginning when we have a contract like this. We have that obligation, and we can collect the money from tolls. This becomes a financial asset. And it's, and in the present net value, and while in liabilities, we look at the obligation of those payments. So when you start to receive the money from tolls. All this happens on the balance sheet, but you don't see it on the income statement. So what we do is eliminate those items and place an operating cost or expense for infrastructure. So this is the type of adjustment that we've made. And they are aimed to have our market and our stakeholders to be better informed to complement our IFRS accounting. So you can -- so everybody can understand ISA better. And make, of course, better decisions. Next, here on the screen, you can see a picture of the report. It's only 2 pages long, 6 and 7. Pages 6 and 7, and here, you can see in detail the adjustments of IFRS to reach the adjusted reforms, and here we go from AOM to Adjusted AOM. And on the next slide, there are 2 considerations that I'd like to highlight. When you compare this with the IFRS results. To conclude this section of the presentation. What you see here is a comparison of IFRS indicators, '22, '23, the bit columns versus the adjusted income statement of both years as well. So if you look at operating revenue, the variation from '23 to '22 is 6%, as we said early on. But when you look at the adjusted, the increase really is of 19%. These are figures that are lower and mainly the AOM does not include construction costs, which, as I said before, this is withdrawn as well as -- and also the construction margin. And this adjusted part is remote. When it comes to AOM, the increase is similar. The figures are different because of the adjustments made because we reclassified things differently to the models of the contract and tangible/intangible assets and the increase from '22 to '23 is up 18%. And it's IFRS and also, as you can see with the adjusted. What does this lead to? When it comes to the EBITDA, now we're looking at the operating EBITDA or the EBITDA, although the increase in IFRS is 6% from '23 to '22. The adjusted is 21% from '22 to '23. This figure is lower than the IFRS, the adjusted EBITDA is [ 7.5 ] and it's approximately 96% of the EBITDA IFRS. And as I said, it's just a complementary figure. Both models are both ways of looking at these figures, tell an important story IFRS figures are very important for many things, but the adjusted are as well. And I think that these will help the market to make a more precise follow-up of topics that are relevant and that can be followed up in these businesses of infrastructure, like the commissioning of new projects, the expansion of future terms. And of course, everything is related to revenue from concessions. There's a final note that I'd like to share with you regarding the growth of our Roads business, which are figures of IFRS, which dropped 4%. When you look at the adjusted EBITDA report, you will see that the collection of tolls and the revenue that we place on this adjusted EBITDA after withdrawing the financial yield. Does that decrease, but instead increase 33%. And why? The reason is really interesting. The -- what we collected from tolls in Chile, although there is a reduction in the volume of vehicles that go through the tolls, there are significant increases in the rate. So the revenue in Chilean pesos slightly increased. Also, there are payments made by related to complementary works in which the MOP or the Ministry of Public Works of Chile -- and we received from there COP 119 billion related to advanced payments when it comes to the projects of Rios and Araucania and Loa. In Colombia, we received an award above COP 163 million, and we also received a differential collection of 8 of more than COP 100,000 million. So that allows me to underline the importance of providing the measure, both under the IFRS and the adjusted, and you can see what, how much better this provides information regarding concessions, the story of the adjusted. When you look at the generation of cash flow and businesses, it's very robust, up 33%. So with this, I end this section. We are very pleased to have this Q&A session, and we're here in the team at your service. To better explain this tool and to turn it into something powerful to benefit and to better understand our business. Thank you.

[Interpreted] Thank you, Daniel. Now then let's have some closing remarks before we begin the Q&A session. In 2023, as you've seen, we continued our growth path with increases in operating revenue in the EBITDA and net profit, net margin and equity returns. Committed to the growth and corporate validity, we added COP 9.8 billion in new investments awarded in 2023. Also keeping in mind that if we add Panamericana Este in Panama, we're talking about COP 11 billion. Committed investments pending to execute end the year in COP 29.9 billion. We have a sound balance sheet, which gives us the financial flexibility to leverage growth. Our debt -- our gross debt over EBITDA indicator closes 2023 at 3.4x. And lastly, the growth of our financial results and the sound position of our balance allow our Board of Directors to recommend to the general shareholders meeting that will be held on March 21, a distribution of dividends of COP 1,110 per share. Equivalent to COP 1.2 billion and 50% of the net profit observed in 2023. Thank you all. Now let's begin the Q&A session.

Thank you, Gabriel. Now let's open this Q&A session. We have received several questions from analysts and investors. Let's begin the first question from Florencia who asks. Do you have a comment on your proposal -- of the proposal of the reform of public utilities made by President Pedro.

[Interpreted] Thank you for your question. Okay. We begin by thinking that we have a positive legal framework. These laws are -- have been issued 30 years now, and they have been great for the sector. Still, we are aware that we need to think in a regulation that includes the developments and challenges of energy transitions. We are aware of this new law or this reform of public utilities. And we understand that we have to review it closely. We do not know the official text, but we've been working among guilds to contribute to build a public policy that promotes improvements. Florencia, we are keeping a close look at what's happening with regards to this law.

Thank you, Gabriel. Next question from Florencia. Could you please provide an update on Yana in Peru and Kimal Lo-Aguirre?

[Interpreted] Yes. I can reply that Florencia, everyone, the Yana project, to give you a background. Remember, this project was part of a large project, which was called Yana project. There are really two projects. Coya was inaugurated this past October 19. And the Yana project, December -- on December 2023, we completed the technical information of the major ports to the Peruvian authorities. We've held meetings with these authorities to give the more context and we've seen them very receptive. We had to change the location of the Yaros substation because of deep geological failure. Right now, we are advancing on the environmental impact and new designs. Our expectation Florencia and everyone is that the project will be commissioned in 2027, given the need of having the permits required to make this project. This is just about [indiscernible]. And when it comes to KILO or Kimal Lo-Aguirre, which is to have direct current in Chile. Let me tell you that we began the environmental impact study, and according to the licensing phase, we are answering several comments made by the stakeholders, we are making the contracting and the designs now. We're meeting the timetable, and there is no surprise so far.

Next question from Ricardo, and he wants to know if from now on, we will have the calculation of the, of every quarter with this adjusted EBITDA. Will it be included?

[Interpreted] Yes. Thank you, Ricardo. Indeed, that's our commitment. Quarterly, in every quarter, we will provide the adjusted EBITDA report, and it will be revised by Ernst & Young every quarter, which is our external auditor. So the market can make a lot of quarterly follow-up of our figures under this methodology. That's the purpose. So indeed, yes.

Thank you, Daniel. Next question from Andres Duarte. He ask, what do you expect to grow in the different countries in 2024 in terms of CapEx?

[Interpreted] Thank you, Andres, for your question. Indeed, in 2024, we project a CapEx of COP 6.5 billion. This is compared with the COP 4.6 billion that we executed in 2023. And that execution, that CapEx, there's an amount that's most relevant of more than COP 3 billion in Brazil. Remember in Brazil, we've had major wins. So the execution will double almost compared to 2023. Also, we have a big execution in Colombia of about COP 1.6 billion. And in Chile, of COP 1.1 billion. These are the most relevant figures in Peru. Although we want [indiscernible], the investments are ahead. Also ending the project of Yana in Peru, we will be investing less than COP 900 billion in 2024.

Perfect, Daniel. Thank you so much. Now give us a second. We're trying to look at another questions so we can read the next ones. Thank you for waiting. Let's continue with another question from Andres Duarte. He needs to understand better the ISA debt because the contractual escalators increased and decreased?

[Interpreted] Firstly, we have to think about the balance of the debt, which dropped. And this has to do with the exchange rate. And since there was a peso revaluation, the balance of the debt dropped to COP 31 billion. Now of that debt and looking at the contractual escalators and the natural coverage or hedge that we have in ISA. In the income statement, we always say how much of the debt is in fixed rate or in variable rate. So in fixed rate, our international bonds are in geographies where we have revenue in dollars. Where there is a hedge of the currency between the revenue and the cost of the debt or the currency of the debt. So there is a natural hedge between revenue and expenses, 53% of the debt is variable. But most of the debt that's variable of ISA is an indicator that follows changes as to prices. It could be the IPC in Brazil or that of Colombia. It could be the UF in Chile and in the countries where we take a debt, which has a variable component. These indicators that follow the movement of prices, revenue also has an escalator at the moment of practice. So when you have a debt a variable rate, there's a natural hedge between revenue and the financial cost of the debt. This is really the effect of the escalators in revenue and debt. And they determine somehow the strategy to finance that tries to have an actual coverage or hedge according to the revenue that we receive. But when it comes to the debt with variable depths, the variable component really tries to look at the escalator in revenue.

Perfect, Daniel. Thank you. We have another question from Patricia who could you please -- you talk about a technical attachment? Is it the last one that you provided on Friday, she asks?

[Interpreted] Yes, Patricia. The technical report appears on the income statement that we published on Friday. And indeed, it's after Table 11. It's a report that's 4 pages, and it gives you a summary, the logic that is followed to make these adjustments and to incorporate accounts for the adjusted EBITDA. Of course, this does not intend to be a comprehensive report of the technique used. So that's why our Investor Relations team and the accounting team and myself are more than willing to provide you more information and teach you about this. So this can become a tool that will allow you to understand ISA better and to transfer simpler messages to the market depending on the drivers of the financial results of ISA.

Thank you, Daniel. We have a last question from Andres Duarte from Corficolombiana. His question is, what about the vertical integration of Ecopetrol? Will this affect ISA?

[Interpreted] Well, the vertical integration will allow ISA to give more contribution in the energy transition. When it comes to what ISA does, in addition to power transmission is something good, and we have to look at this way. And let me say this. The vertical integration is not something new for the electrical sector. In Colombia, we have more than 5 companies vertically integrated, that participate in every activity of the sector. And they existed before the laws that regulate 140 and 145 of '94. This was allowed since then, to conserve that condition during the almost 30 years since they were enacted. Okay, of the existing companies before these 2 laws only ISA can do so -- cannot do so because of a legal restriction enacted 30 years ago. And 30 years ago, of course, we did not look at the challenges that we have today in the sector for the energy transition. So it's a prohibition that makes no sense now regarding the new challenges of the sector. Okay. Although the investment portfolio, you said in the next 5 years focuses 70% or more in power transmission, we have to look at other core capabilities. What are we talking about? Several things, including storage of power and batteries, contribution for distributed power transmission, those that are interconnected, where we can provide solutions for communities and territories. So Andres and everyone, we believe that it's quite positive to have on ISA that vertical integration.

Thank you, Gabriel, for your answer. And now we have a last question from Ricardo who asked details of the increases of AOMs in Colombia.

[Interpreted] Ricardo, thank you for your question. Indeed, there are increases of AOMs. In Colombia and they're quite relevant in 2023. And I referred to the figure, the global figure, the complete figure, which under IFRS and under the EBITDA adjusted, is up 18%. This figure, when you look at it, only under IFRS, it seems very separate from the increase of the operating revenue. But again, really what's happening with those operating revenues is that there -- it has to do really with the accounting model of the intangible asset. And I think that's why we're using the adjusted EBITDA because when you look at the cash flow revenue, when you look at 2023 and compared to '22, there's a 19% increase. It's a double-digit increase above the increase of the AOM. I mentioned this, and I begin with this because evidently, from financial planning, we procure to protect the operating margins. And while the cost grows below the revenue, we're protecting our operating margins. Something else that's important to keep in mind is that since this company prepares for historical investment period, as we said before, of about COP 5 billion a year. But even more in the next 2 years, the company has to prepare and strengthen for what's come. So it's not only increases in Colombia related to inflation, which in '22 was 13%. But also, there's an increase of people. The company is preparing for a strong execution. So you can say that there's a momentum from the time when the company will prepare to execute the investments in the time when the revenue of those investments enters, but the logical sequence in which you have a company of infrastructure like ours that invests in projects that take 5 years is something worth looking at.

Okay, Daniel, thank you. With this answer, we end our Q&A session and our teleconference. If you have any more -- if we receive more questions, we'll be answering them by e-mail. Thank you all so much for joining us today, and we'll see you next quarter. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]