AGUAS ANDINAS RESULTS BREAKFAST June 2017
FIN INANCIAL PERFORMANCE MARCH 2017
FINANCIAL PERFORMANCE AS OF MARCH 31 2017 Numbers in millions of Pesos Revenues 600.000 492.003 440.734 Revenue CAGR of 6.5% and EBITDA CAGR of 4.7% over 473.397 500.000 403.879 382.886 the 2012-2016 period 400.000 300.000 200.000 145.870 139.313 2015-2016 Growth: +3.9% revenues, +3.1% EBITDA y 100.000 +16.7% Net Income 0 2012 2013 2014 2015 2016 mar-16 mar-17 EBITDA & EBITDA Margin Net Income & Net Income Margin 400.000 100% 15.233 160.000 40% 90% 140.000 35% 273.746 80% 291.513 242.404 282.624 248.532 300.000 120.000 30% 70% 100.000 25% 60% 200.000 50% 80.000 20% 40% 135.343 129.008 121.738 60.000 119.422 15% 116.676 95.791 30% 91.043 100.000 40.000 10% 20% 50.837 48.294 20.000 5% 10% 0 0% 0 0% 2012 2013 2014 2015 2016 mar-16 mar-17 2012 2013 2014 2015 2016 mar-16 mar-17 EBITDA EBITDA Margin Recurring Net Income Non-Recurring Income Net-Income Margin 3 Aguas Andinas
REVENUES INCREASED BY 4.6% • Revenues increased to $145,870 million due to: ‒ Increase in volumes: +4.5% in potable water & +4.1% in sewage treatment Revenues Clients (Million of Pesos) 160.000 2.112.640 140.000 11.656 10.995 Sewerage 4.061 4.768 120.000 2.161.626 100.000 67.546 64.404 80.000 60.000 2.165.647 Potable Water 40.000 2.215.289 62.606 59.145 20.000 0 mar-16 mar-17 0 500.000 1.000.000 1.500.000 2.000.000 2.500.000 Potable Water Sewage Other Regulated Revenues Non-Regulated Revenues mar-16 mar-17 4 Aguas Andinas
COSTS INCREASED BY 3.7% • Raw materials and consumables decreased due to : – Lower costs of CLP $213 million in power energy, due to the re-liquidations registered during the first quarter of 2016, together with a lower consumption of kWh due to lower groundwater abstraction, and a decrease in material costs of CLP $181 million due to lower sales of materials by Gestión y Servicios • Personnel Expenses increased due to: – Higher compensation and gratuities associated to CPI adjustments, together with a larger work force • Other expenses, by nature: – Higher provision of CLP $1,331 million for uncollectible bills, – Higher costs of CLP $484 million for sanitation infrastructure transfers, – Higher costs of CLP $417 million for transportation service leasing, mainly in order to lease tank trucks Raw Materials and Consummables Used Personnel Expenses Other Expenses, By Nature (Millions of Pesos) (Millions of Pesos) (Millions of Pesos) 8.915 28.916 12.799 2.67 % +7.54% -6.18% 26.888 8.364 12.466 mar-16 mar-17 mar-16 mar-17 mar-16 mar-17 5 Aguas Andinas
OTHER RESULTS TO NOTE • Financial earnings showed a loss of CLP $9,283 million, which was CLP $1,111 million less than the same quarter last year. This was mainly the result of a lower revaluation of the debt that can be adjusted in Unidades de Fomento (UFs). • Income tax expense at the end of the first quarter of 2017 was CLP $16,878 million, which was CLP $2,466 higher than the same quarter of the prior year. This change is mainly explained by a higher pre-tax gain of CLP $4,719 together with the change in tax rate from 24% to 25.5% due to the Tax Reform in force since September 2014. • Net income as of March 31, 2017 amounted to CLP $50,837, which was CLP $2,544 higher (5.3%) than that obtained in the previous year. 6 Aguas Andinas
DEBT STRUCTURE AS OF MARCH 31 2017 $120.000 $100.000 $80.000 Millions of Pesos $60.000 $40.000 $20.000 $- 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Promissory Notes Bonds Bank Loans • Leverage: 1.41x Limit: 1.91 Variable Promissory Notes 12% 23% Fixed • Coverage of Financial Expenses: 8.30x 88% DEBT BREAK • Local Credit Rating: AA+ DOWN BY Bank Loans DEBT BREAK 12% INTEREST DOWN BY TYPE INSTRUMENT • Total Net Financial Debt: CLP 808 billion • Net Debt / EBITDA* Ratio: 2,73x Bonds 65% 7 (*) EBITDA last 12 months Aguas Andinas
RIS ISKS
REGULATORY RISK: PROJECT OF LAW 10.705-33 • 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. • The project of law includes six articles through which it seeks to modify the norms which are stipulated in the following legislations: • Decree with Force of Law N ° 382, from 1989, of the Ministry of Public Works, General Law on Sanitation Services. • Decree with Force of Law N ° 70, from 1988, of the Ministry of Public Works, about Sanitation Service Tariffs. • Law N ° 18.902, which created the Superintendence of Sanitation Services. 9 Aguas Andinas
CLIMATE CHANGE RISK: TURBIDITY • Due to climate change, there has been an increase in convective rains CLIMATE CHANGE AND ITS INFLUENCE Y THE HIGHER FREQUENCY with isotherm zero (> 3,600 meters) in the pre-mountain area. 35 OF FLOODS • This produces an increase in turbidity in the Maipo river caused by >5000 NTU 29 30 floods and landslides. >15000 NTU Number of events • 25 Due to these events of force majeure, there have been water cuts as when turbidity levels surpass the design conditions of the potable water plants, the only measure that can be taken is to stop the plants to 20 prevent embankments. 15 • Since 2008 and to date, there have been 6 events of high turbidity that have paralyzed the plants. 9 10 8 • However, 30 events have been mitigated in which the plants have not 6 had to stop production. 5 1 1 • Aguas Andinas is doing all of the necessary investments in order to mitigate this risk. 0 1990-2007 2008-2012 2012-2017 Table: Number of turbidity events whose duration has been over 12 hours over 5,000 and 15,000 NTU, during the 1990-2017 period. Source: Water Footprint published by the Water Rights and Management Center of the UC (CDGA) 10 Aguas Andinas
CLIMATE CHANGE RISK: DROUGHT EL YESO RESERVOIR LEVELS Short-Term Plan: Drought Mitigation Plan • New capacity in wells 120% • Purchase of raw water • Renting of water rights 100% • Agreements with other users of the river 84,10% • Monitoring and control of illegal water usage/extraction 80% Long-Term Plan: Drought and Climate Change Plan 2016-2030 Volume (% of capacity) 60% • Preliminary studies in development: • Demand projection • Demand management 40% • International experiences in drought 20% • Other actions: • Actions to increase supply • Water supply projection 0% jan feb mar apr may jun jul aug sept oct nov dec • Synergies at a user level 2010 2011 2012 2013 2014 2015 2016 2017 11 Aguas Andinas
IN INVESTMENTS
INVESTMENTS TO MANAGE TURBIDITY EVENTS PHASE I WHAT HAVE WE DONE? • 25% more potable water reserves (225,000 m 3 ). • Habilitation of the Cerro Negro wells with a flow of 300 l/s. • Conduction from the El Yeso Reservoir to Laguna Negra • Double the number of hours of autonomy from 4 to 9 hours. • 30 turbidity events without impact. • Investments: CLP 39 billion. Estanque Las Vizcachas of 161,000 m 3 Aguas Andinas 13
COMPLIMENTARY WORKS TO AVOID WATER CUTS DUE TO New works for 2018 Associated investment: CLP$15 billion TURBIDITY EVENTS CONSTRUCTION OF 8 CONSTRUCTION OF NEW HABILITATION OF 13 SUPPLY POTABLE WATER TANKS WELLS with a capacity of 400 EMERGENCY WELLS with a AUTONOMY with reserves of 54,000 liters per second in the production capacity of 500 From 9 hours to cubic meters, in the pre- communes of Pedro Aguirre liters per second in the 11 hours. mountain area. Cerda and Lo Espejo. communes of Conchali, Independencia, and Investment: CLP$11 Investment: CLP$2 billion Recoleta. billion Investment: CLP$2 billion
INVESTMENTS TO MANAGE TURBIDITY EVENTS PHASE II WHAT ARE WE DOING? • Tripling the autonomy from 9 to 32 hours with an investment of CLP$64.22 billion • Working with municipalities and authorities in emergency situations. • Increasing the capacity of the Padre Hurtado Plant and four new filters in the Vizcachas Complex. • New Chamisero potable water plant in construction. 1,500,000 cubic meters • New interconnection works (lifting and impulsion plants) of water Aguas Andinas 15
TURBIDITY WORKS: PHASE III 4 possible alternatives to have over 48 hours of SAFETY WORKS autonomy A1. INCREASE CAPACITY of A2. COYANCO A3. WATER RECYCLING, A4. CONDUCTION raw water reserves with a RESERVOIR and the through the regeneration from the El Yeso second tank next to the conduction to the of water treated in Aguas Reservoir to the one in progress (Pirque Pirque Tank. Andinas’ WWTP and Pirque Tank. Tank, Phase II). transporting them to Estimated investment: Estimated Investment: supply points. Estimated investment: USD $238 million USD $410 million USD $115 million Estimated investment: Over USD $500 million Exchange rate used: 650 CLP/USD
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