AGUAS ANDINAS CORPORATE PRESENTATION August 2018 AGUAS ANDINAS - PowerPoint PPT Presentation

AGUAS ANDINAS CORPORATE PRESENTATION August 2018

AGUAS ANDINAS Chile’s largest water utilitiy 100% coverage in potable 2,249,314 clients 50% of the industry’s One of the lowest tariffs in potable water (m 3 ) billing company water and sewage Representing 43% of the Chile and in OECD nations treatment industry’s clients Combined Potable Water and Sewage Tariffs for the Main Cities of OECD Countries 7,0 Comparison in USD/m 3 based on a comsumption of 15 m 3 per month 6,0 5,0 4,0 3,0 2,0 1,0 0,0 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 2017, Suez , SISS 2016 Management Report

CORPORATE STRUCTURE Chilean Pension Chilean Pension Funds CORFO 0,0% Funds 5,0% Others 1,7% Stock Brokers 12,3% 100% 7,9% Others AGUAS Stock Brokers IAM’S 7,2% ANDINAS’ 19,0% SHAREHOLDER Suez IAGSA IAM SHAREHOLDER STRUCTURE 50,1% 50,1% STRUCTURE 50.1% 07/08/2018 31/07/2018 International 50.1% Shareholders International 28,2% Shareholders 18,6% 100% 100% 53.5% 100% 100% 100% 100% REGULATED COMPANIES NON-REGULATED COMPANIES Aguas Andinas 3

CONCESSION AREAS Aguas Andinas 4

STRATEGY TO ACCOMPLISH OUR COMMITMENT 1. BUSINESS MODEL 2. RESILIENCE 3. DIGITALIZATION 4. CIRCULAR ECONOMY 5. SOCIAL LEGITIMACY 6. INNOVATION AND PEOPLE 7. WATER AND QUALITY OF LIFE

ALIGNING OUR CORPORATE STRATEGY WITH KEY SUSTAINABILITY OBJECTIVES THROUGH OUR 2018-2022 SUSTAINABILITY ROADMAP 6 Aguas Andinas 6

ALIGNING OUR CORPORATE STRATEGY WITH KEY SUSTAINABILITY OBJECTIVES THROUGH OUR 2018-2022 SUSTAINABILITY ROADMAP 7 Aguas Andinas 7

ALIGNING OUR CORPORATE STRATEGY WITH KEY SUSTAINABILITY OBJECTIVES THROUGH OUR 2018-2022 SUSTAINABILITY ROADMAP 8 Aguas Andinas 8

CHALLENGES Aguas Andinas’ goal is to achieve zero • Transform its sewage treatment plants into emissions 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 FRAMEWORK

CHILEAN WATER UTILITY INDUSTRY XV y I Región / Iquique Aguas Del Altiplano II Región / Antofagasta Aguas De Antofagasta III Región / Copiapó Aguas De Chañar IV Región / La Serena Aguas Del Valle V Región / Valparaíso Two Concession Esval R.M. / Santiago Aguas Andinas, Aguas Cordillera, VI Región / Rancagua Models 1998 96.5% Aguas Manquehue Essel VII Región / Talca Aguas Nuevo Sur VIII Región / Concepción The privatization Indefinite Concessions of clients are supplied by IX Región / Temuco Essbio Aguas Araucanía process starts private providers Los Ríos / Valdivia X Región de Los Lagos y XIV Región 30 Year Aguas Décima de Los Ríos / Pto.Montt Essal Concessions Xi Región / Coyhaique Aguas Patagonia Xii Región / Pta.Arenas Aguas Magallanes 11 Aguas Andinas

HIGHLY REGULATED INDUSTRY Model Company Aguas Andinas • Technical regulatory framework defined by law Greenfield operation Existing infrastructure • Superintendence of Sanitation Services (SISS) acts as the regulator counterpart in the tariff setting process, which lasts for 1 year approximately Combination of new and Latest technology • Tariffs are reset every five years, based on an unbiased and technical model: existing technologies • Based on the long term total cost of a model company • Discrepancies are solved by an independent experts committee • Minimum real return on assets of 7% after taxes Cost efficiency Real costs • Automatic interim adjustments linked to polynomials based on CPI and WPI indexes • Government subsidies for low-income clients 100% coverage in all services Real coverage • The regulatory framework of the Chilean water industry has been fundamental to the development of the sector Self-financing of investments Self-financing of investments through tariffs through tariffs Ability to use debt to finance Minimum Capex and enhance return on Return on Assets equity 12 Aguas Andinas

TARIFF PROCESS 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 Final Publication of exchanged committee SISS expert observations New Tariff Observations Administrative 2013-18 info Company Parameters parameters and between called by establishes committee to on preliminary Settlement 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 01 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 13 Aguas Andinas

STAGES OF THE TARIFF NEGOTIATION PROCESS SISS PROPOSAL Publication of the Tariff Setting Process Parameters and Methodology Aguas Andinas provides information about the Real Company to the SISS SISS analyses the Aguas Andinas analyses the Model Company Model Company Aguas Andinas highlights discrepancies Negotiation Agreement? No Yes Expert Committee Committee Decision Tariff Decree 14 Aguas Andinas

REGULATORY RISK: PROJECT OF LAW 10.795-33 • 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: • non-regulated services, • the tariff-setting process and • 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 May 3 rd 2017 Commission of Public Works June 13th 2018 requests constitutionality report Comission of Public Works MOP proposes Technical from the Secretary General of the receives the reports from the Committee to discuss the Project President (Segpres) MOP and Segpres of Law March 1 st 2017 May 2018 Commission of Public Works The Comission of Public Works requests formal report from the requests a formal report from the Ministry of Public Works (MOP) new Minister of Public Works stating its opinión on the Project of Law 15 Aguas Andinas

REGULATORY RISK: PROJECT OF LAW 10.795-33 Conclusions from the Constitutionality Report from the SEGPRES Conclusions from the MOP’s Report 2017 • • “… In short, we are dealing with a bill that transgresses the rules on the The Ministry of Public Works does not sponsor: formation of the law, the framework of which has been established by the • The elimination of the current cost of capital rate Constitution and the National Congress, which should never have been • The decrease of the risk premium dealt with in the Chamber of Deputies and which, given its current state • The change to the composition and functioningof the Committee of progress, warrants the rejection of the Senate, given its of Experts. inadmissibility” • The Ministry of Public Works provides improvement recommendations on: • Three main reasons determining the unconstitutionality of the articles in • The calculations of the costs and variables included in the non- the project of law: regulated businesses discount • The modifications included in December suprass the foundations • The public participation aspect of tariff setting processes of the initiative and are indadmisible • The incorporation of territories to concession areas • The executive branch of government is the only entity that can • pass laws that affect the Government’s budgets The compensations provided to consumers due to water cuts • • The executive branch of government is the only entity that can The elimination of the charge for cut and replenishing of service pass laws that can determine the role of public entities • Increasing the faculties of the SISS to require information • Modernizing the sanctions system 16 Aguas Andinas