Investor Presentation June 2020 Aquafin Finance Team Key Elements - PowerPoint PPT Presentation

Investor Presentation June 2020 Aquafin Finance Team

Key Elements  Aquafin is the sole actor for household waste water treatment and supra-municipal sewerage activities in Flanders  Aquafin has full autonomy concerning the design, construction, financing and operation of the supra-municipal sewer systems, pumping stations and wastewater treatment plants  Management Agreement with Flemish Government: 20 years rolling agreement  Green Finance Framework in place, with positive Second Party Opinion from Sustainalytics  Very limited debtor risk thanks to high quality of our main debtors (six Flemish drinking water companies or “DWC”) and Flemish region as codebtor  Strong and stable cash flow generation  Aa2 rating by Moody’s 2 Investor Presentation www.aquafin.be

Aquafin Finance Team Sofie De Clercq Manager Finance Johan Maes sofie.declercq@aquafin.be CFO +32 3 450 44 83 johan.maes@aquafin.be Eefje Lemmens +32 3 450 40 05 Treasury Officer eefje.lemmens@aquafin.be Glenn Van Olmen +32 3 450 46 70 Manager Finance & Procurement Jan Van den Bergh Treasury Officer glenn.vanolmen@aquafin.be +32 3 450 40 02 j.vandenbergh@aquafin.be finance@aquafin.be +32 3 450 43 20 3 Investor Presentation www.aquafin.be

Table of Contents Company Profile Sustainability Focus • • Sustainability at Aquafin p. 23 Activity p. 6 • • Targets, Results & Project Examples p. 24 Legal Structure & Regulation p. 7 • Playing Field p. 10 • Looking Back / Looking Forward p. 18 Green Finance Framework Financial Profile • • Use of Proceeds p. 29 Financials p. 37 • • Project Evaluation & Selection p. 30 Rating p. 42 • • Management of Proceeds p. 31 Debt Profile p. 42 • Reporting p. 32 • Second Party Opinion p. 35 Disclaimer p. 46 4 Investor Presentation www.aquafin.be

Investor Presentation Company Profile 5 Investor Presentation www.aquafin.be

Activity Aquafin collects household wastewater from the municipal sewers in collector sewers and transports it to its own wastewater treatment plants, where it is treated in accordance with European and Flemish standards. Aquafin has full autonomy concerning the • OUR MISSION design, • construction, • Clean watercourses financing, • for successive operation generations and a of the supra-municipal sewer systems, living environment in pumping stations and wastewater treatment harmony with water plants. 6 Investor Presentation www.aquafin.be

Legal Structure & Regulation Economic & Ecological Legal Structure Regulatory Framework Regulator • European Urban Wastewater Flemish Environmental Flemish Region Directive (1991) Agency • European Water Framework 100% (1) - Directive (2000) Vlaamse Milieu Flemish Participation Agency NV (“PMV”) Maatschappij (“VMM”) • Flemish Regulation on Environmental 100% Permit (VLAREM) Regulator • Flemish Decree on Integral Water Economic and Policy (2003) Ecological Decision to establish Aquafin NV (1991) and 99% to draw up the Management Agreement (1993) (1) Foreseen by decree: the Flemish Region will at all time (directly or indirectly) own more than 50% of all Aquafin shares 7 Investor Presentation www.aquafin.be

The EU Water Framework Directive has to be reached by 2027 Clean watercourses and a Integrated approach for In Flanders (and Europe), Optimal use of financial living environment in waste and storm water enormous efforts are resources implies harmony with water. is needed to achieve required to achieve the minimal social costs. This is Aquafin’s goal. substantial ecological quality standards. progress.

Activity: Seven Strategic Focus Areas Asset management on a Flemish level Innovation Safety and cost efficiency Pionier in a modern and inclusive HR policy Environmental impact Digitalisation Diversification in services and products 9 Investor Presentation www.aquafin.be

Activity: Flemish Coalition Agreement - An Extensive Role for Aquafin ‘Due to the strong interaction between sewage and stormwater networks, Aquafin needs to coordinate asset management for all networks with the various sewage managers’ 10 Investor Presentation www.aquafin.be

Playing Field: Position of Aquafin in the Flemish Sewer Operator Sector Flemish Flemish Region Municipalities Management Agreement + Decree Free market Municipal company, Intermunicipal cooperation, Assigned entity (Aquafin) Municipal Supra municipal waste and storm water 1 2 waste and storm water infrastructure infrastructure Household connection Smaller sewers Waste Water Collector sewers Treatment Plant (“WWTP”) 11 Investor Presentation www.aquafin.be

Playing Field : Position of Aquafin in the Flemish Sewer Operator Sector 10% of 90% of  Storm water plans  Collect turnover turnover  Transport  Consulting assignments  Treat  Asset Management Household waste water from the Flemish Region  Maintenance contracts  � � of Flemish communities are client of Aquafin Municipal Supra municipal waste and storm water waste and storm water 1 2 infrastructure infrastructure Household connection Smaller sewers Waste Water Collector sewers Treatment Plant 12 Investor Presentation www.aquafin.be

Playing Field: Management Agreement & Allocation Agreement Management Agreement Allocation Agreement (“Beheersovereenkomst”) (“Affectatieovereenkomst”) Date Signed 10/11/1993 29/11/1994 + 7 addenda afterwards + 3 addenda afterwards • • • Contractual Parties Flemish Region Flemish Region Agent • • • Aquafin Aquafin EIB • • Content Duties of Aquafin In case of unlikely financial distress at Aquafin:  The drinking water companies pay directly to the • Control of Aquafin Agent, who allocates these amounts to the Long-Term Investors for the reimbursement of their loans, • Funding & Remuneration of • Aquafin Any material changes to the Management Agreement with financial impact must be approved by all Long-Term Lenders • • Flemish Region is codebtor of the Allocation Ratio • obligations of the drinking water Role of the agent companies to Aquafin Duration 20 years notice period Same end date as the Management Agreement 13 Investor Presentation www.aquafin.be

Playing Field: Aquafin’s role in the Flemish sewer landscape + financial flows Contracts LT Investor Money Drawing Financing contract & repaying Agency Agreement loans Agent to the Allocation Agreement Allocation Agreement Flemish Region Management Agreement Working allowance 30% + administration costs DWCs Agreement with the DWC Integrated water bill TAP WATER Invoice Invoice CITIZEN Flemish Region as Co-debtor 14 Investor Presentation www.aquafin.be

Allocation Agreement: Allocation Ratio & Debtor Risk Total claims = “Future Invoices to Drinking The Allocation Agreement stipulates Water Companies”. 85 - 90% of Aquafin’s turnover comes from the Total future invoices to the 6 Flemish drinking water companies: drinking water companies > 1 Total outstanding Long Term Debt issued under the Allocation Agreement Allocation Ratio �.���.���.��� As per 31/12/2019: �.���.���.���  All of them are in public hands.  the Flemish Region is codebtor !  Aquafin has only very limited Debtor Risk 15 Investor Presentation www.aquafin.be

Project Timeline & Financing Delivery to the Flemish Flemish Government Government appoints project to Aquafin Invoices to Drinking Water Companies Design & Annual Repayment. Tenor depending on lifespan of the construction asset (e.g. 30 years for construction) 7 – 9 Years Sum = “Future Invoices to Drinking Water Companies” Outside Allocation Agreement Under Allocation Agreement Short & Medium Term Debt Long Term Debt  Commercial Paper  (Green) Bonds  Namensschuldverschreibung  Straight Loans  Bank Loans  European Investment Bank  (Green) Bonds  Private Placement 16 Investor Presentation www.aquafin.be

Remuneration of Aquafin Expense Type Calculation Paid to Aquafin by … Capex Yearly % of approved project  Approved Projects cost, depending on the lifespan  Asset Management of the asset (e.g. 1/30 for  Energy Projects construction). Drinking Water Companies (quarterly invoices) Opex: Performance Based Budget: The DWC collect the money as follows:  Personnel • Based on output • 70% from citizens through integrated water bill  Overhead costs • Efficiency factor • 30% from Flemish Region through working allowance  Energy • Possibility to index costs  Chemicals • Exogenous elements (e.g.  … new legislation) Other  Interests (on short term and Entirely invoiced to the drinking long term debt) water companies. 17 Investor Presentation www.aquafin.be

Looking Back: Achievements Aquafin was established in 1991 with 1 major purpose: Improve the quality of Flemish surface water, by rapidly expanding the waste water treatment infrastructure. Assets operated 2.000 350 Each year, Aquafin builds on average : 1.800 300 1.600 250 - 9 new WWTP’s 1.400 1.200 200 1.000 - 61 new pumping stations 150 800 600 100 - 202 kilometers of new sewers 400 50 200 0 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 WWTP (right axis) Pumping stations (left axis) 18 Investor Presentation www.aquafin.be