AGUAS ANDINAS Results lts Present entati tion on Nine Mont - - PowerPoint PPT Presentation

www.aguasandinas.cl www.aguasandinasinversionistas.cl

AGUAS ANDINAS

Results lts Present entati tion

• n

Nine Mont nths hs 2019 19

Financial Summary Investments Water Situation Tariff Process

FINANCIAL SUMMARY

Figures in Million Pesos

440.734 473.397 492.003 509.541 530.405 390.691 405.379

50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000 500.000 550.000

2014 2015 2016 2017 2018 sept-18 sept-19

Revenues

+3.8% y/y

Financial Results

Figures in Million Pesos

273.746 282.624 291.513 298.604 309.664 227.589 225.542

0% 10% 20% 30% 40% 50% 60% 70% 50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000

2014 2015 2016 2017 2018 sept-18 sept-19

EBITDA & EBITDA Margin

EBITDA EBITDA Margin

119.422 129.008 135.343 137.677 132.851 101.566 99.946 139.620 136.057

0% 5% 10% 15% 20% 25% 30% 35% 20.000 40.000 60.000 80.000 100.000 120.000 140.000 160.000 180.000 200.000

2014 2015 2016 2017 2018 sept-18 sept-19

Net Income & Net Income Margin

Recurring Net Income Non-Recurring Net Income Net Income Margin

• 0.9%

y/y

• 1.6%

y/y

150.576

Financial Results

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.

+2.3% y/y

+2.9% y/y +3.8% y/y +14.5% y/y

Revenues Increased by 3.8%

Potable Water 39.9% Sewage Treatment 48.0% Other Regulated Revenues 1.9% Non-Regulated Revenues 10.2%

Revenues Sept-19

390.691 3.655 5.529 273 5.230 405.379

9M2018 Potable Water Sewage Treatment Other Regulated Revenues Non-Regulated Revenues 9M2019

Revenues (Million $)

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)

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 Savings of $413 million were made from the beneficial use of sludge as fertilizer and soil recuperator. Other projects Improvements in costs of customers management services by $391 million .

Efficiency Projects

Lower electric rates Savings obtained as a result of the migration plan for clients regulated to free clients, for 52 company enclosures. .

Other Highlights

Net profit $ 99,946 million Lower in $1,619 million than the

• ne obtained in

the previous year, this represents a 1.6% decrease. 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.

• Leverage: 1,8x Limit: 2,0x
• Financial Expense Coverage: 6,9x
• Local Credit Rating: AA+
• Total Net Financial Debt: $1.000.629 million
• Net Debt/EBITDA Ratio: 3,3x

AFR 18,6% Bonds 70,8% Bank Loans 10,7%

DEBT BREAK DOWN BY INSTRUMENT

Variable 10,7% Fix 89,4%

DEBT BREAK DOWN BY INTEREST TYPE

Debt Structure as of September 30, 2019

$- $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 $70.000 $80.000 $90.000 $100.000

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

Millones de Pesos

AFR Bonos BVS Préstamos Bancarios

Considers only Capital BVS: Bono Verde y Social (Series AC and AE)

INVESTMENTS

Other Activities 5% Non Sanitation subsidiaries 1% Potable Water production 42% Sewage collection 8% Potable Water distribution 23% Sewage Disposal 21%

Investments as of September 2019

Investments as of September 2019 Million CLP

Construction of Pirque Tanks 28.307 Potable Water Networks Renewal 7.431 Sewerage Networks Renewal 5.851 Asset replacement Biofactories La Farfana-Trebal 5.378 Cogeneration capacity for La Farfana-Trebal 4.483 Starters and Meters 4.145 Ammonia Treatment Plant Sewage Treatment Farfana-Trebal 3.429 16 Filters Renewal inn Las Vizcachas Potable Water Plant 2.918 Other Investments 31.199

TOTAL 93.142

Investments: continuous growth

PIRQUE PROJECT: tripling hours of autonomy

2018

Reserve tanks with 54 milllion liters

• f capacity

Wells to extract undergroun d water Million USD invested

11

hours

• f AUTONOMY

for emergencied

mega reserve tanks milllion liters

• f capacity

~$24

16 9

2019

Million USD invested

34 34

hours

• f AUTONOMY

for emergencies

~$121

1,500 6

PIRQUE PROJECT: start of

• perations by the end of 2019

Civil Works, Supply of Equipment, Assembly and Commissioning, Corresponding to Each of the Six Water Reservoir Tanks for Human Consumption. Construction of the Civil Works, Supply of Equipment, Assembly and Commissioning, Corresponding to the Elevation and Emptying Works - Water Reserve Tanks for Human Consumption.

low zone high zone

* 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.

3 similar events: 1924 (66 mm/year) 1968 (69 mm/year) 1998 (89 mm/year)

Rainfall in Santiago, 1824 - 2019 Rainfall in Santiago, 1824 - 2019

Annual Rainfall Decade Avg Trend

Addressing water scarcity

Addressing water scarcity : media campaign

TEXTO

Tariff Revision

Tariff studies exchanged between company and SISS 2013-18 info provided for tariff study Final parameters and methodology published SISS rules on

• bservations
• n

preliminary parameters Company presents discrepancies /

• bservations

Expert committee called by SISS SISS requests minutes from expert committee to make final ruling SISS establishes new tariffs New Tariff Settlement AA AM AC Administrative appeal over the SISS decision on the parameters Final Parameters Publication of parameters and methodology List of ‘middle candidate’ for Expert Committee is determined Observations

• n preliminary

parameters made

01 OCT 15 MAR 15 MAY 01 NOV 16 NOV 28 NOV 30 JAN 28 FEB 18 MAY 29 JUN 27 MAR APR 30 NOV 30 JAN 2018 2019 2020

Tariff Process 2020-2025

Agreement with SISS released on Nov 14th

Outstanding Tariff 09/12/2016 – 09/11/2021

Seventh Rate Process 2020-2025

Tariff level agreed as of Dec 31. 2018

CLP 397,058 million

Total Net Long Term Cost (TNLTC) Compared to 2010-2015 rates for current services and standards.

• 3%
• 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

Annual Costs Model Company

Annuity Own Investment

(with 7% discount rate)

Investment Annuity Provided by Third Parties Annual Costs Taxes

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

Additional works under construction

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

• bras 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

Seventh Rate Process 2020-2025

Water Quality Standards

Source: US Centers for Disease Control (CDC)

Chile is a world leader in urban wastewater treatment coverage

OECD Tariffas

Fuente: SISS

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
• ther 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.

Evolution Water and Sanitation Tariffs

Source: Global Water Intelligence’s Global Water Tariff Survey 2019

Latam & Caribbean