AGUAS ANDINAS Results lts Present entati tion on Nine Mont nths hs 2019 19 www.aguasandinas.cl www.aguasandinasinversionistas.cl
Financial Summary Investments Water Situation Tariff Process
FINANCIAL SUMMARY
Financial Results Figures in Million Pesos Revenues 530.405 550.000 509.541 +3.8% 492.003 473.397 y/y 500.000 440.734 450.000 405.379 390.691 400.000 350.000 300.000 250.000 200.000 150.000 100.000 50.000 2014 2015 2016 2017 2018 sept-18 sept-19
Financial Results Figures in Million Pesos EBITDA & EBITDA Margin 400.000 70% -0.9% 350.000 60% 309.664 298.604 291.513 y/y 273.746 282.624 300.000 50% 227.589 225.542 250.000 40% 200.000 30% 150.000 20% 100.000 10% 50.000 0% 2014 2015 2016 2017 2018 sept-18 sept-19 EBITDA EBITDA Margin Net Income & Net Income Margin 200.000 35% 180.000 30% 136.057 150.576 160.000 -1.6% 139.620 25% 129.008 140.000 y/y 119.422 120.000 20% 135.343 137.677 132.851 100.000 15% 101.566 80.000 99.946 60.000 10% 40.000 5% 20.000 0 0% 2014 2015 2016 2017 2018 sept-18 sept-19 Recurring Net Income Non-Recurring Net Income Net Income Margin
Revenues Increased by 3.8% Company’s revenues increased to $405 billion Regulated Revenue: +$9.457 million (increase of 2.7mainly due to the rate indexations recorded during 2018 and 2019, the last being in July 2019 (ESSAL) and for Aguas Andinas in September 2018, along with a higher sale volume. Non-Regulated Revenue: +$5.230 million during the third quarter of 2019 (4.5% increase). This variation was mainly explained by higher income in non-sanitary subsidiaries, agreements with developers, technical advice to rural drinking water and higher activity in home services requested by customers. Non-Regulated Revenues Other 10.2% Regulated Revenues (Million $) Potable Revenues Water 1.9% 39.9% 5.230 405.379 273 Revenues 5.529 Sept-19 3.655 390.691 Sewage Treatment +3.8% +14.5% +2.9% +2.3% 48.0% y/y y/y y/y y/y 9M2018 Potable Water Sewage Other Regulated Non-Regulated 9M2019 Treatment Revenues Revenues
Costs Increased by 7.4%* Raw Materials and Consumables: +$3,419 millon (+11.6% y/y) Employee Benefits: +151 millon (+0.3% y/y) Other Expenses by Nature: +$13,164 millon (+14.6% y/y) Depreciation and Amortization: -$560 millon (-1.0% y/y) *Include depreciation and amortization. Without depreciation 10.3%
Efficiency Projects Efficiency improvement projects: The development of process improvement projects and digital transformation has continued, that have allowed containing and reducing certain cost line items such as the following: Biosolid management Other projects Lower electric rates Savings of $413 million were Improvements in costs of Savings obtained as a result of the made from the beneficial use of customers management services migration plan for clients regulated sludge as fertilizer and soil by $391 million . to free clients, for 52 company recuperator. enclosures. .
Other Highlights Financial Result $957 million of lower expenses Mainly explained by a lower revaluation of the debt due to lower variation of the Unidad de Fomento (1.75% vs 2.09% in 2018), partially offset by a higher level of indebtedness. Net profit $ 99,946 million Lower in $1,619 million than the one obtained in the previous year, this represents a 1.6% decrease.
Debt Structure as of September 30, 2019 $100.000 $90.000 $80.000 $70.000 Millones de Pesos $60.000 $50.000 $40.000 $30.000 $20.000 $10.000 $- 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 AFR Bonos BVS Préstamos Bancarios • Leverage: 1,8x Limit: 2,0x Bank Loans Variable Fix • Financial Expense Coverage: 6,9x 10,7% 10,7% 89,4% • Local Credit Rating: AA+ DEBT BREAK DOWN BY • Total Net Financial Debt: $1.000.629 million DEBT BREAK INTEREST AFR DOWN BY Bonds TYPE 18,6% INSTRUMENT • Net Debt/EBITDA Ratio: 3,3x 70,8% Considers only Capital BVS: Bono Verde y Social (Series AC and AE)
INVESTMENTS
Investments: continuous growth Investments as of September 2019 Million CLP Investments as of September 2019 Construction of Pirque Tanks 28.307 Non Other Potable Water Networks Renewal 7.431 Sanitation Activities subsidiaries 5% 1% Sewerage Networks Renewal 5.851 Sewage Potable Disposal Water Asset replacement Biofactories La Farfana-Trebal 5.378 21% production 42% 4.483 Cogeneration capacity for La Farfana-Trebal Starters and Meters 4.145 Potable Ammonia Treatment Plant Sewage Treatment Water 3.429 Farfana-Trebal distribution 23% 16 Filters Renewal inn Las Vizcachas Potable 2.918 Sewage Water Plant collection 8% Other Investments 31.199 TOTAL 93.142
PIRQUE PROJECT: tripling hours of autonomy 9 ~ $ 24 16 2018 Reserve Wells to Million tanks with 54 extract USD milllion liters undergroun invested of capacity d water 11 of AUTONOMY for emergencied hours ~ $ 121 6 1,500 2019 Million mega milllion liters USD reserve of capacity invested tanks 34 34 of AUTONOMY for emergencies hours
PIRQUE PROJECT: start of operations by the end of 2019 high zone Civil Works, Supply of Equipment, Assembly and Commissioning, Corresponding to Each of the Six Water Reservoir Tanks for Human Consumption. low zone Construction of the Civil Works, Supply of Equipment, Assembly and Commissioning, Corresponding to the Elevation and Emptying Works - Water Reserve Tanks for Human Consumption. * As of June 30, 2019
WATER SITUATION
Rainfall in Metropolitan Region The drought that currently affects the Metropolitan Region, dates from the beginning of the decade, transforming the decade of 2010 into the driest of the last 190 years. This is how between the 1820s and 2010, Santiago went from having average rainfall of 460 to 198 mm / year. Rainfall in Santiago, 1824 - 2019 Rainfall in Santiago, 1824 - 2019 3 similar events: 1924 (66 mm/year) 1968 (69 mm/year) 1998 (89 mm/year) Annual Rainfall Trend Decade Avg
Addressing water scarcity
Addressing water scarcity : media campaign
Tariff Revision TEXTO
Tariff Process 2020-2025 Agreement with SISS List of ‘middle released on Nov 14th candidate’ for Final Expert parameters Committee is and determined methodology published SISS requests SISS rules on Expert Administrative Tariff studies Publication of SISS minutes from observations Final New Tariff Observations committee appeal over the exchanged Company parameters and 2013-18 info establishes expert on Parameters Settlement on preliminary called by SISS decision on between presents methodology provided new tariffs committee to preliminary AA parameters SISS the parameters company discrepancies / for tariff study make final parameters AM made and SISS observations ruling AC 28 FEB 30 NOV 30 JAN 15 MAR 27 MAR APR 15 MAY 01 OCT 01 NOV 16 NOV 28 NOV 30 JAN 18 MAY 29 JUN 2018 2019 2020 Outstanding Tariff 09/12/2016 – 09/11/2021
Seventh Rate Process 2020-2025 Tariff level agreed as of Dec 31. 2018 Compared to 2010-2015 -3% rates for current services CLP 397,058 million and standards. Total Net Long Term Cost (TNLTC) • constant annual value required to cover efficient operating and investment costs of an optimized replacement project of the concessionaire dimensioned to meet demand, which is consistent with NPV = 0, in a horizon not less than 35 years • • corresponds to the income (under a theoretical demand) of a sanitation company, which has been deducted from the replacement value that part corresponding to the networks and facilities provided by third parties Investment Annual Costs Annuity Annual Taxes Annuity Provided Own Investment Model Company Costs by Third Parties (with 7% discount rate)
Seventh Rate Process 2020-2025 Additional works under construction Pirque tanks for a TNLTC of Ch $ 6,596 million Nutrient removal at Farfana and Trebal treatment plants for a TNLTC of Ch $ 4,900 million Biosolids encapsulation in El Rutal TNLTC of Ch $ 1,087 million Works for up to 37 hours of autonomy, for a TNLTC of Ch $ 2,399 million Works for up to 48 hours of autonomy for a TNLTC of Ch $ 3,047 million
Seventh Rate Process 2020-2025 New fundamental works to address drought and climate change, which will be incorporated into the Development Plan obras para reutilizar 3 m3/s de aguas servidas works to reuse 3 m3/s of wastewater boreholes in the central aquifer for 1.8 m3/s investments to reduce losses in the network and re-wastewater treatment
Water Quality Standards Source: US Centers for Disease Control (CDC)
Chile is a world leader in urban wastewater treatment coverage
OECD Tariffas Comparison in USD / M3 based on monthly consumption of 15 Mt3 • Aguas Andinas tariffs (i) do not include any type of subsidy (ii) Santiago is located in a semi-desert area, unlike most other capitals plotted • Seoul's low rates are due to the existence of subsidies for drinking water and sewage, which allows drinking water accounts to represent less than 2% of the family income of the lowest income decile. Fuente: SISS
Evolution Water and Sanitation Tariffs Latam & Caribbean Source : Global Water Intelligence’s Global Water Tariff Survey 2019
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