Argos Plant in Florida, United States.

Performance of the businesses

Cement
On a consolidated basis, revenue of Cementos Argos at the end of 2016 reached 8.5 trillion pesos, 7.7% more than in 2015. The EBITDA rose 8.7% to 1.7 trillion pesos, leveraged especially for its good performance in the United States, the Caribbean and Central America.

In 2016, Cementos Argos focused on efficiency as a driver for competitiveness, with the goal to be the best operator in the markets where it participates. It seeks effective transformation by taking advantage of productive assets, using more alternative fuels and strengthening the value proposition, plus capturing synergies with other companies of the Argos Corporate Group.

Regional United States

Cement shipments grew 19% and reached 4 million tons, driven by the strong demand in Georgia, Florida and the Carolinas, mainly. The growth in volume of cement in states where Cementos Argos operates exceeded the country’s average. Concrete shipments rose 3%, reaching 7.6 million cubic meters, which consolidates the company as a leader in several markets where it participates.

The Regional United States closed with revenue of 1,388 million dollars, 12% more than in 2015, and a historical EBITDA of 181 million dollars, with a EBITDA margin that, for the first time since the crisis, achieved double-digit at 13%.

Regional Colombia

After more than a decade of continued growth, construction experienced a deceleration typical of a cyclical market highly correlated with the performance of the economy, which reduced consumption and cement shipments. The infrastructure is still in transition, and significant consumption is expected between 2017 and 2020. To do this, Cementos Argos executed supply agreements with approximately 70% of the 4G projects experiencing financial closure.

Because of this, regional revenues fell 13% in comparison to 2015. The EBITDA was 668 billion pesos, with a margin of 26%.

Regional Caribbean and Central America

The diversity of this regional provided stability and growth opportunities with profitable operations, in which the value offer was adapted depending on the needs of each market. Volumes allowed income of 551 million dollars, driven by positive behavior in Honduras, Panama and international marketing. The EBITDA of the region closed at 207 million dollars.

Alto Anchicayá Hydropower Central Station, Valle del Cauca, Colombia.

Energy
On a consolidated basis, revenue of Celsia went from 3.7 trillion pesos in 2015 to 3.8 trillion pesos in 2016, with a 3% increase. Meanwhile, costs decreased by 6%, which drove the consolidated EBITDA to grow to 51%, exceeding a trillion pesos. Net profit went from a loss of 51 billion pesos to a profit of 171 billion pesos in 2016.

The business of power generation had relevant operational improvements, recovering its profitability and advancing its strategy of balance between traditional power generation assets and new business. After the “El Niño” phenomenon, contingency actions were designed to reduce possible future impacts from a new climatic phenomenon. There was active participation in the search for regulatory solutions and a more flexible contractual schedule. Regarding the operation of the thermal generation park, we were pleased to announce the start of operation of the Cartagena re-gasification plant, allowing for gas supply to the Franca Celsia Zone in Barranquilla in a stable manner and independent of local supply, one of the factors that most affected the crisis in 2015.

Central American operations recorded positive financial and operating indicators. In 2016, the region reached an EBITDA of 260 billion pesos, with a growth of 34%.

Aware of technological changes, Celsia explores new business paths and new ways to generate power, primarily from solar and wind sources. For example, projects identified in different regions of Colombia and Panama are under study in solar farms to develop 250 MW of installed power, and construction of the first large-scale solar farm in Colombia was announced, which, with 9.9 MW of capacity, will initiate operations at the end of 2017 in the Valle del Cauca.

Guanacaste Wind Park, Costa Rica.

Concessions
Consolidated revenue of Odinsa went from 902 billion pesos in 2015 to 1.5 trillion pesos in 2016. Net profit and the EBITDA have relevant positive variations, but they are not comparable on the same basis, since they include the recognition of asset valuations. Therefore, net profit of the controlling participation of Odinsa went from 133 billion pesos to 670 billion in 2016.

The company concentrated on organizing itself as a focused and consistent infrastructure platform, integrated into the culture and values of the Argos Corporate Group, prepared to develop its future competitive strategy in the region.

During 2016, Odinsa’s portfolio was thoroughly cleansed, aimed at consolidating its exposure in the road and airport concessions business. In the careful clearance of assets, by sale, acquisition and swapping of shares, it moved from a structure with 13 projects with minority shares to a platform consisting of three road concessions in operation (Highways of the Café, and the Highways of the Northeast and Bulevar Turístico in Dominican Republic), two construction projects (Pacific 2 and Malla Vial del Meta in Colombia) and two large airport assets (Bogota and Quito).
Odinsa continues its divestment plan of other non-strategic assets, among which we highlight the sale in 2016 of a minority share in the Sociedad Portuaria in Santa Marta.

As far as road concessions, among others, the increase by 79% of shares in the La Pintada Concession, partnership dealership of the Pacific 2 project (Bolombolo-La Pintada-Primavera), stands out, which reached its financial closure and start of construction. Internationally, Odinsa increased shares in Highways of the Northeast (DNA) and Bulevar Turístico del Atlántico (BTA) corporations, both located in the DominicanRepublic, going from 42.5% to 67.5%.

El Dorado Airport, Bogota, Colombia.

Ports
2016 was a year of consolidation of alliances for Compas with the building of its future growth platform. The construction of the port of Aguadulce in Buenaventura was significant, which with an investment of more than 120 million dollars, constitutes the most modern port terminal of great depth on the Pacific. Consequently, Compas reinforces its presence in the two oceans of Colombia. Likewise, an agreement with APM Terminals, subsidiary company of Maersk Group and globally recognized in the port industry, was achieved to create CCTO (Cartagena Container Terminal Operator) and to operate the terminal in Cartagena. Jointly with APM, work was undertaken for the start of this project to increase the current capacity of the port by three times, specializing in general cargos and containers. We are pleased to report that the project is moving along smoothly.

Total cargos handled in the year decreased by 9%, for a total of 4.3 million tons. For accounting purposes, the non-consolidation of CCTO means that the revenue growth results and EBITDA are not comparable between the two periods, as Compas records its income based on the equity method and not by consolidation.
Because of this, at the end of 2016, the consolidated revenue amounted to 125 billion pesos, a decrease of 22% in comparison to 2015. Removing the effect of CCTO, the Compas revenue would have grown 8%. Likewise, the EBITDA accumulated was 47 billion pesos, with a margin of 38%.

Aguadulce Port, Compas, Buenaventura, Colombia.

Real Estate
During the year 1.8 million square feet were deeded for 217 billion pesos. We point out that the urban development business recognizes revenue once the title deeds occur, while the cash flow is given in accordance with the payment terms specific to each business.

Among relevant transactions there is the Alameda del Rio project with Amarilo and Constructora Bolivar for 108 billion pesos for the development of 183 hectares in Barranquilla.
Additionally, the urban planning process for the Riomar project was begun with 249 hectares in that same city, on which mixed uses and a network of parks will be developed in approximately 25% of the net developable area. In Barú, the CalaBlanca project of 66 hectares was granted a zoning license and an environmental permit.

In real estate income, Pactia reported revenues of 179 billion pesos and an EBITDA of 100 billion pesos, for a net profit of 93 billion pesos. These figures are not comparable, since 2016 was the first full year of operation of Pactia as a separate entity.

Urbanism with public spaces in northern Barranquilla, Colombia.