AGUAS ANDINAS Corporate Presentation October 2018
AGUAS ANDINAS Chile’s largest 100% coverage in 2,249,314 clients 50% of the industry’s water utilitiy potable water and Representing 43% of the potable water (m 3 ) company sewage treatment industry’s clients billing R.M. / Santiago COMBINED POTABLE WATER AND SEWAGE TARIFFS FOR THE MAIN CITIES OF OECD COUNTRIES 7,00 Aguas Andinas COMPARISON IN USD/M 3 BASED ON A COMSUMPTION OF 15 M 3 PER MONTH 6,00 5,00 4,00 3,00 X Region de Los Lagos y XIV Region de Los Ríos / Pto.Montt 2,00 Essal 1,00 0,00 Berlin, Germany Washington D.C., USA Luxembourg, Luxembourg Zurich, Switzerland Oslo, Norway Sydney Australia Amsterdam, Netherlands Vienna, Austria Brussels, Belgium Reykjavik, Iceland Helsinki, Finland Paris, France Prague, Czech Republic Auckland, New Zealand London, United Kingdom Warsaw, Poland Ottowa, Canada Bratislava, Slovakia Tallin, Estonia Istambul, Turkey Budapest, Hungary Jerusalem, Israel Lisbon Portugal Liubliana, Slovenia Tokyo, Japan Madrid, Spain Riga, Latvia Rome, Italy Athens, Greece Santiago, Chile Seoul, South Korea Note: In the cases of Australia, New Zealand and Switzerland, the cities considered are Sydney, Auckland and Zurich respectively. Source: Global Water Intelligence Water Tariff Survey 2018, SISS 2016 Management Report
CORPORATE STRUCTURE Chilean Pension Funds CORFO Chilean Pension Funds 0.0% 1.7% 5.0% Others Stock Brokers 100% 14.3% 7.7% Others AGUAS 7.2% Stock Brokers IAM’S ANDINAS’ 15.0% SHAREHOLDER Suez IAGSA IAM SHAREHOLDER STRUCTURE 50.1% 50.1% STRUCTURE 50.1% 30/09/2018 30/09/2018 International 50.1% Shareholders International 28.3% Shareholders 20.6% 100% 100% 53.5% 100% 100% 100% 100% REGULATED COMPANIES NON-REGULATED COMPANIES
HEMOS SIDO PARTE DE UN IMPORTANTE Vision Go beyond water, managing resources sustainably. DESAFÍO PAÍS We are dedicated to our clients 24 hours a day. We manage the underground city in order to guarantee the continuity of our services. Mission We deliver quality water and transform residues into resources. We create shared value with our surroundings. We are committed with the quality life of people and the development of the country. Excellence - Co-creation - Shared value – Commitment - Values Talent - Sustainability.
STRATEGY THE BEST FOR SANTIAGO Business Model Resilience Digitalization Circular Economy Social Legitimacy Innovation and People SANTIAGO DESERVES AN A+ Water and Quality of Life
ALIGNED WITH THE • Transform its sewage SUSTAINABLE treatment plants into DEVELOPMENT GOALS biofactories • Reuse 100% of residues and transform them into energy for their production. • Drastically reduce its carbon foot print and that of the country. • Aguas Andinas and its subsidiaries are contributing to the country, through 15 of the 17 Sustainable Development Goals. • The SDGs were suscribed to by the Chilean Government as a guide in sustainable development matters.
REGULATORY TEXTO FRAMEWORK
XV y I Región / Iquique Indefinite Concessions: 6 Aguas Del Altiplano CHILEAN 1998 30 Year Concessions: 8 WATER UTILITY The privatization II Región / Antofagasta process starts Aguas De Antofagasta INDUSTRY III Región / Copiapó Aguas De Chañar IV Región / La Serena Aguas Del Valle V Región / Valparaíso Esval R.M. / Santiago TWO CONCESSION Aguas Andinas VI Región / Rancagua Essval MODELS VII Región / Talca Aguas Nuevo Sur VIII Región / Concepción Indefinite Concessions Essbio IX Región / Temuco 30 Year Concessions Aguas Araucanía Los Ríos / Valdivia X Región de Los Lagos y XIV Región Aguas Décima de Los Ríos / Pto.Montt Essal Xi Región / Coyhaique Aguas Patagonia 96.5% of clients are supplied by private providers Xii Región / Pta.Arenas Aguas Magallanes
Model Aguas Company Andinas Technical regulatory framework defined by law HIGHLY REGULATED Superintendence of Sanitation Services (SISS) acts as the INDUSTRY Greenfield operation Existing infrastructure regulator counterpart in the tariff setting process, which lasts for 1 year approximately Combination of new Tariffs are reset every five years, based on an unbiased and Latest technology and existing technologies technical model: Based on the long term total cost of a model company Discrepancies are solved by an independent experts Cost efficiency Real costs committee Minimum real return on assets of 7% after taxes Automatic interim adjustments linked to polynomials based 100% coverage in all on CPI and WPI indexes Real coverage services Government subsidies for low-income clients Self-financing of Self-financing of investments through investments through tariffs tariffs The regulatory framework of the Chilean water industry has been fundamental to the development of the sector. Ability to use debt to Minimum finance Capex and enhance return on Return on Assets equity
SISS PROPOSAL STAGES OF THE TARIFF Publication of the Tariff Setting Process Parameters and Methodology NEGOTIATION PROCESS Aguas Andinas provides information about the Real Company to the SISS SISS analyses the Aguas Andinas analyses Model Company the Model Company Aguas Andinas highlights discrepancies Negotiation Agreement? No Yes Experts Committee Committee Decision Tariff Decree
TIMELINE List of ‘middle Final candidate’ for parameters Expert and Committee is methodology determined published SISS requests Tariff studies Expert minutes from SISS rules on Publication of Final exchanged committee SISS expert New Tariff Observations observations Administrative 2013-18 info Company parameters and Parameters between called by establishes committee to Settlement on preliminary on preliminary appeal over the provided presents methodology company SISS new tariffs make final parameters parameters SISS decision on for tariff study discrepancies / and SISS ruling made the parameters observations 31 OCT 2018 30 NOV 2018 14 DEC 2018 26 DEC 2018 14 JAN 2019 16 FEB 2019 01 OCT 2019 01 NOV 2019 17 NOV 2019 02 JAN 2020 30 JAN 2020 01 MAR 2020 30 days 16 days 46 days 30 days
In December 2016, the Chamber of Deputies approved the Project of Law Bulletin Nº 10795-33 which intends to modify the legislation which applies to public sanitation services in regards to: PROJECT OF LAW non-regulated services, the tariff-setting process and 10.795-33 the fulfillment of development plans by service providers. This initiative has been submitted to the Senate in its second legislative instance and is currently in the Commission of Public Works. Sessions of the Commission of Public Works: January 4 th 2017 Commission of Public Works requests May 3 rd 2017 June 13th 2018 constitutionality report Comission of Public Works MOP proposes Technical from the Secretary General receives the reports from Committee to discuss the of the President (Segpres) the MOP and Segpres Project of Law March 1 st 2017 May 2018 October 2018 Commission of Public The Comission of Public Discussion in Progress Works requests formal Works requests a formal report from the Ministry of report from the new Public Works (MOP) Minister of Public Works stating its opinión on the Project of Law
INVESTMENTS
Investments (USD MN$) as of June 2018 INVESTMENTS 14.33 Pirque Tank Construction Asset Replacement in the La Farfana-Trebal Wastewater Treatment Plants 6.18 Sewerage Networks Renovation 5.54 Construction of Emergency Works for Turbidity Events 3.73 Replacement of Starters and Meters 3.61 3.52 Talagante Wastewater Treatment Plant Expansion Potable Water Network Preventive Renovation 3.49 Construction of a Potable Water Treatment Plant for Chamisero 3.25 Annual Investments (USD MN$) 252 200 193 183 172 Título del eje 135 131 2013 2014 2015 2016 2017 2018e 2019e Source: Aguas Andinas, Exchange Rate: $657.5 CLP / $1 USD
PROGRESS IN 16 $ 24 9 2018 INCREASED Reserve tanks Wells to extract Million USD with 54 milllion liters underground water. invested. of capacity. AUTONOMY 11 OF AUTONOMY WORKS for emergencies HOURS $ 121 6 with 1,500 2019 mega reserve milllion liters Million USD tanks. of capacity. invested. 34 OF AUTONOMY for emergencies HOURS Stage 1 Progress: 37.6% Construction Civil Works, Supply of Equipment, Assembly and Commissioning, Elevation and Emptying Works – Reserve Tanks
BIOFACTORIES BIOFACTORY + 0 0 0 Positive Social Impact Waste Energy Environmental processes Impact 100% AUTO-GENERATION CLEAN WATER 100% The City Clean water O% EMISSIONS Transforming your waste into energy Biosolids Biogas 0% POLLUTION 100% WASTE TO ENERGY
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