AGUAS ANDINAS 1st Hal alf 2019 19 Results ults 27 September, 2019 www.aguasandinas.cl www.aguasandinasinversionistas.cl
Financial Summary Investments Water Situation Tariff Revision ESSAL
FINANCIAL SUMMARY
Financial Results Figures in CLP million Revenues 530.405 550.000 509.541 492.003 473.397 500.000 440.734 450.000 +3,1% 400.000 a/a 350.000 284.900 276.307 300.000 250.000 200.000 150.000 100.000 50.000 2014 2015 2016 2017 2018 jun-18 jun-19
Financial Results Figures in CLP million EBITDA & EBITDA Margin 400.000 70% 350.000 60% 309.664 298.604 291.513 273.746 282.624 +2,5% 300.000 50% a/a 250.000 40% 170.982 166.761 200.000 30% 150.000 20% 100.000 10% 50.000 0% 2014 2015 2016 2017 2018 jun-18 jun-19 EBITDA EBITDA Margin Net Income & Net Income Margin 200.000 35% 180.000 30% 150.576 160.000 136.057 139.620 25% 140.000 129.008 119.422 -0,7% 120.000 20% 135.343 137.677 132.851 a/a 100.000 15% 80.000 81.165 80.610 60.000 10% 40.000 5% 20.000 0 0% 2014 2015 2016 2017 2018 jun-18 jun-19 Recurring Net Income Non-Recurring Net Income Net Income Margin
Revenues Increased by 3.1% Company’s revenues increased to $285 billion Regulated Revenue: mainly explained by tariff indexations recorded in the previous year, partially offset by lower volumes supplied in Potable Water and Served Water (-0.4% and -0.4% respectively). Non-Regulated Revenue: mainly explained by higher revenues in non-sanitary subsidiaries, technical advice for the rural drinking water segment, and greater activity in modifications of sanitary infrastructure requested by clients, compensated by lower activity in customer home services. Operating Revenues Non Reg Revenues; (Million CLP) 09% Other Reg Revenues; 02% 2.370 1.025 Potable 3.483 Water; 41% 1.715 Sewage +25,0% +9,9% +2,6% 284.900 +1,5% Treatment; 48% a/a a/a a/a a/a 276.307 1H2018 Potable Water Sewage Other Reg Non Reg 1H2019 Treatment Revenues Revenues
Costs Increased by 4.0% Raw Materials and Consumables: Higher cost of sale of materials by the subsidiary Gestión y Servicios for $ 1,016 million together with greater use of chemical inputs for $ 590 million. Higher energy consumption partially offset by lower electricity rates due to the entry into force of supply free customers contracts for 52 of the Company's premises. Other expenses, by nature: Lower costs for biosolid management for $ 380 million and other general services for $ 269 million. Higher expenses for advisory and studies of $ 1,007 million, maintenance of equipment and enclosures for $ 767 million and cost of sale associated with greater activity in modifications of sanitary infrastructure for $ 359 million. Operating Costs (Million CLP) ( ) 1.682 598 49 2.091 151.487 147.165 +2,0% -0,1% +10,8% +2,8% a/a a/a a/a a/a 1H2018 Raw Materials Employees Depr. & Amort. Other Expenses by 1S2019 Nature
Proyectos de eficiencia 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 $380 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 $269 million . to free clients, for 52 company recuperator. enclosures.
Other Highlights Financial Result $ 1,059 million of higher expenses, mainly due to higher interest on financial debt and lower financial income. Net profit $ 80,610 million figure lower by $ 555 million or 0.7% than the one obtained in the previous year.
Debt Structure as of June 30, 2019 90.000 80.000 70.000 60.000 Million CLP 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 AFRS Bonds Bank Loans • Leverage: 1,8x Limit: 2,0x AFRs 11% • Financial Expense Coverage: 7,0x Fixed Variable 89% 11% • Local Credit Rating: AA+ DEBT BREAK DEBT BREAK • Total Net Financial Debt: CLP $1,015 billion DOWN BY Bank Loans DOWN BY INTEREST Bonds INSTRUMENT 18% • Net Debt/EBITDA Ratio: 3,2x TYPE 70%
INVESTMENTS
Investments: continuous growth Investments as of June 2019 Investments as of June 2019 Million CLP Other Activities Non Sanitation 6% subsidiaries Construction of Pirque Tanks 18,640 1% Potable Water Networks Renewal 5,038 Sewage Disposal Potable 25% Cogeneration capacity for La Farfana-Trebal 4,096 Water production 40% Asset replacement Biofactories La Farfana- 3,544 Trebal Sewerage Networks Renewal 3,132 Ammonia Treatment Plant Sewage Treatment Potable 2,544 Farfana-Trebal Water distribution Other investments 23,641 20% Sewage collection Total 60,635 8%
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 Hydro Efficiency Plan / Leak Detection Drilling and Enabling New Wells Purchase of raw water in autumn- Purchase / lease of additional winter months shares to canalistas Management with W aterS w ap w ithirrigato rs Municipalities and fraud control Mass Awareness Purchase of water in summer Campaigns (November to March) Reservoir closure El Yeso Reuse of treated Nov-Aug instead of Nov-Mar water Intensive use Rent of additional water rights of drilling Short, medium and long term strategy
Tariff Revision TEXTO
Tariff Process 2020-2025 List of ‘middle candidate’ for Final Expert parameters Committee is and determined methodology published SISS requests SISS rules on Expert Administrative Tariff studies SISS Publication of minutes from observations Final New Tariff Observations committee appeal over the exchanged Company establishes parameters and 2013-18 info expert on Parameters Settlement on preliminary called by SISS decision on between presents new tariffs methodology provided 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
OECD’S Tariffs 0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 Berlin, Germany Washington D.C., USA Luxembourg, Luxembourg Zurich, Switzerland Oslo, Norway Sydney Australia Comparative in USD / M3 based on monthly consumption of 15 Mt3 Amsterdam, Netherlands Vienna, Austria ntegrated Tariff for Drinking Water and Sewerage Service Brussels, Belgium Reykjavik, Iceland Helsinki, Finland Main cities OECD countries 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 Source: SISS Management Report, 2016 Madrid, Spain 100% sewage coverage self-financed, and with Tariff without subsidies, Riga, Latvia Rome, Italy Athens, Greece Santiago, Chile Seoul, South Korea
ESSAL
Background 07/21/19 07/21/19 07/ 07/11/ 11/19 19 A hydrocarbon spill occurs at the Osorno Drinking Water Production Plant. Safety protocols were activated and ESSAL had to suspend the supply of drinking water, for several days, at the same time as necessary repairs were made. The service is gradually restored from July 17, normalizing the supply for all customers on July 21.
Actions at the operational level 140 tons of filter material were moved and replaced More than 500 people worked, including Essal's own staff, contractors and technicians from Aguas Andinas The drinking water plant was completely rehabilitated in very limited times given the magnitude of the damage
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