Good morning, and welcome to this webinar, Aguas Andinas, to review results up to June 2025. We have here Miquel Sans, CEO of the company, together with Antonela Laino, the Financial and Investor Relations Manager for Aguas Andinas. As usual, we would like to invite you to send the questions through the chat of the Zoom, and they will be responded at the end of the event. Also, I would like to remind you that there will be a replay available in our webpage, and any other question that you might have, the investor relations team will be available to help you in everything. We will start, and I will offer the floor to Miquel Sans.
Good morning, everybody. As usual, I would like to start with some of the financial context. On one hand, this first semester in terms of the rainfall or precipitation levels have been lower than last year. That was exceptionally high. Nonetheless, at the El Yeso Reservoir, it was still at a very good level, at 82%, a level that up to yesterday had already increased to 84% with the rainfall of the past week and of course, also with important rainfall in the area of the reservoir that can contribute to those levels of this area. In terms of tariff, given the last tariff process from March on, a 3% that was agreed in the first stage of Aguas Andinas is being accepted. Up to date, there is a decree published today, and in the next period of time, we can start using the new tariffs.
In the next weeks also start with the retroactive income that we had already acknowledged. In terms of the Aguas Cordillera and Aguas Manquehue decree, this is still working properly with tariffs that are coming in later, and they are following the normal activity. In terms of the projects that have additional tariffs and the alternative supply plan, the first one that we were believing that would start earlier, we are in a very fine stage to be able to activate these tariffs, what we believe could be happening in the following weeks. This is really the context, and I would like to leave the floor to Antonela, who will be explaining in detail what has been happening throughout the first semester.
Thank you, Miquel. Good morning. I hope that after this snowfall in Santiago, everybody is doing well in your homes and your offices. Starting with the performance, the operational performance of the company and linked to what Miquel just mentioned with regard to one of the main drivers is the revenue that is related to the tariff indexation. Additionally to the typical polynomial, that is the automated indexation of Aguas Andinas, we can highlight what was already mentioned in the first semester 2025, with a high relevance of this first semester, where it is the important tariffs that have been determined, the increase in tariffs that was determined in the eighth tariff process closed last year. It acknowledges this 3% for Aguas Andinas and Aguas Manquehue as well. These almost CLP 21 billion is the main impact in the growth of the revenue.
A factor that is not a minor issue that comes together with the weather performance in the metropolitan region is related to consumption. Consumption has increased in 1.6 million, which is the comparison with last year. It is important to mention the effect that we of course mentioned in the first semester, which is the additional day we had last year. As this additional day existed and to be included in the first quarter, the quarter of higher temperatures, that with more demand are correlated with more demand, we would have grown at 1.2% comparatively. It is important to mention this as we are considering this growth trend in terms of consumption, of course, being the most relevant element, which is the tariff indexation, and it is in this year, and in the following months, these new tariffs will be part of this.
The perspective of the non-sanitary revenue, we have a small increase of CLP 135 million with different explanations. Basically, we had an effect that was positive last year, meaning that they are being netted together to the good performance that we have had in the non-regulated sector of the company. In the net area, all these effects have generated an increase of revenue of 6.7%. In terms of cost, the increase is more than CLP 12 billion. It is important to mention in a context of increasing inflation is moderate, but it is growing, nonetheless, but highly volatile and of course, affects dollar-peso relationship. The impact of these variables, almost all in the U.S., because 75% of our costs are related to the U.S., means that there is an increase in cost of more than CLP 95 billion.
It is important to mention that we have an additional amount, but in terms of power, we have had an increase of the regulated tariff, which is above CLP 3 billion, generating an impact when closing the semester. We have to highlight now, and it has been mentioned in the previous quarter and the other quarters as well, that the company has been managing and working on how to migrate towards a larger scope of allocation in terms of the free tariff. We still cannot mention the tangible data as we are ending all of the information, but by the beginning of 2026, you will be able to see a relevant effect in everything related to more growth in the allocation of free tariffs and of course, the efficiency and cost.
We also have operational costs that have different items or explanations, and of course, everything related to the system maintenance, which is more than CLP 1.5 billion. It is also related to everything that occurred last year that has meant that there are problems right after the rainfall. I think I mentioned this, of course, means that there will be a negative effect and with associated or related costs and everything else, which are the costs generated by the different maintenance activities and others that are in the OpEx and not the CapEx. With good news, it is important to highlight that we are still having good numbers in terms of the provision or the debt.
There is 1.5% and that can be compared to 1.9% of the first semester 2024, and we have already mentioned this in previous calls. This is important as we are returning to our average elements, average numbers. In terms of efficiency, we have an accumulated number up to date where you will be seeing the positive effects throughout the year. I would also like to mention the different efficiencies that we have had in d ifferent activities that have already been mentioned in the first presentation of results of this year.
Now, all these effects mean a growth in EBITDA of 6% with margins above 51%. Now, talking about the effects that are in the operational aspects, we have to highlight that the financial result has meant an increase of CLP 9 billion. The main explanation here, we have mentioned it earlier as well, but I would like to highlight it again, is that we were able to refinance the different activities of the year with local bonds issued to a 3.19% coupon with favorable decisions if we compare it with the different alternatives that exist around the world where Enel is working.
This refinancing within the different uses is going to refinance credit loans that were financing lower rates in an average of a 2% nominal rate expressed in Chilean pesos. Therefore, there is a relevant effect of a higher financial cost related to this topic. On the other hand, another effect that we are continuously having in the recent inflation that we have is the revaluation of our debt in U.S. dollar and explained and related to what I mentioned previously, to have a higher debt stock expressed in U.S. dollar as these were expressed in Chilean pesos, there is a relevant effect. Now, all this has a counterpart with the financial aspects, where we have a stock and we have a higher cash with more profitability and more financial income, of course.
In terms of other results, we do not have any news for this period of time, but the negative variation can be explained by the relevant effects that we had last year, given the sales of assets The net effect of inflation. We have our profits before taxes and with the monetary correction and the taxes have had this effect. Having felt this effect, we have a profit that is slightly lower, compared to the same period last year, and we ended June 25 with CLP 1.5 million. Now next slide, please.
How do we translate all of these effects in the cash generation? It is important to mention different effects in operational terms. We have a positive effect of CLP 1.8 billion, and this has the explanation or is related to what I said before, the level of collection. We have had good performance during the semester and throughout the past few years, we have done some commercial management and there is a reduction in bad debt. This explains this growth. On the side of the payment, I would say that I know that this growth makes this growth not as relevant because we have had some effects that have to do with seasonal payments, and this has a negative impact. On the side of taxes, they're good news.
Due to the management of several periods, we have had a tax return of more than CLP 26 billion, and this has to do with compared to the prior tax period. This can be seen in the cash at the end of June. Due to the management that we have done, and also due to the accelerated depreciation, we have had slower rate of provisional payments every month. When this entered into force in May, it caused an effect in terms of taxation. On the side of the CapEx paid, we are slightly lower compared to the prior period, but this has to do with the seasonality of the projects. It is not a relevant issue when we see the whole period for 2025.
All of these effects have allowed us to have a strong cash flow of that is higher than we had at the end of June 2024. Now, going to the different effects that we may have under this line, particularly in this year, we have the effects of the dividend. This has been communicated and has been already news for the first semester. This was mentioned in the board of April, and by unanimous vote, it was decided then to reduce the payout to 70%. This has generated some payments that are lower in terms of dividends. Another temporary effect is that the dividend that was going to be paid in December was paid in January.
This generates a positive cash flow of CLP 5.3 billion, which is compared positively with a variation of CLP 44 billion versus the pre-prior period. Now going to the debt, how it has been performing and how we continue with the diversification, it is important to mention that there are slight variations because the largest % of the debt is in bonds, both local and international. You will see a small drop with respect to the % allocated in bank credits. This is due to maturities and also the way the maturity progresses during the year. This is not a change in the strategy that we have done or anything like that.
We have a debt expressed in different types of currency in U.S. dollars or the Chilean pesos. We also have it in Swiss francs and also Australian dollars. Everything has been covered. And this is taking into account the nominal amount and also the interest. This is the variable portion that you see and puts us at 4.4% of exposure. In terms of the uses of the cash, we can mention the issuing of the bond in January, which is reflected in the issuing of bonds that we can see in the upper right section here. The positive cash flow also has allowed us to end up in a treasury position of CLP 186 billion. All of these effects make our financial debt to grow in a stable manner, 2.7%, which is explained by the positive effect of the cash flow and the revaluation of the debt in U.S. dollar.
In terms of CapEx, how has the investment of the company performed? By June, the CapEx has increased to CLP 68.4 billion. It is important to mention, as you can see, in the most relevant area that has to do with the development plan, the renewal of the network. Both of clean water and wastewaters. We have more kilometers, more than 13,000 in these items. This is one of the most relevant pillars for Aguas Andinas. That is why we have delivered more than CLP 30 billion. On the other hand, another topic that is relevant and in line with all the news that we are receiving after the closing of our eighth tariff process, it's the projects that have an additional tariff.
We already mentioned that by the end of the first quarter, we were deploying the project of deodorization in La Farfana Biofactory. This is an increase in tariffs once this starts or when it's finalized. We are now in this process, and we hope to end the project by the end of this year or the beginning of next year, if nothing changed in terms of the context. On the other hand, it is important, and we are continuing to work on a great focus with our hydraulic efficiency plan, the replacement of meters, and so that we can be more efficient every day in our metrics and to contribute to this reduction of water that has not been accounted for. All of these aspects that I mentioned lead us to show very healthy ratios for the company.
You know that in certain prior quarters, we have done some revalorization of assets, and this has to do with the tariff process that we have confronted. We have talked about that. When we do the comparison with the first quarter, there are not many variations in the enterprise value, EBITDA or in the capital used. Our covenants are also stable, and it is important to highlight, in line with the commitment of the company and with our rating classification companies, and also in line with maintaining this financial robustness, so the EBITDA ratio has been reduced. In terms of ESG credentials, you know that we have a great commitment on this topic. We are working hard to improve this and to maintain our position in the different relevant indices in the market.
In terms of rating, we don't have any novelties because we haven't had the annual reviews yet. Locally, we have three rating classifications, and all of them are from double to more. Internationally, Standard & Poor's is also having a good rating. Now I leave you with Denisse Labarca so that we can go to the Q&A for the close of this semester.
Thank you, Antonela. We have here some questions. We will begin with project, and it says, "In what process is the alternative supply plan? When will it be implemented, and what will be the additional tariff for this project?"
Thank you, Denisse. As I was saying during the context part, the alternative supply plan is separated. It was placed at the hands of the regulators so that we could do the right deployment. We hope that in the next few weeks, we will have the approval on their part. As a reminder, this project is associated to 0.5% in Aguas Andinas and an increase in the other companies that is lower. The main one is the one that I mentioned about Aguas Andinas.
Thank you, Miquel. Here we have another question. Antonela, could you please answer it? It says, "During the second semester, there was news of an agreement that the company had with SERNAC regarding compensations to clients. Could you talk about what does this mean?"
Yes. First of all, I need to say that this was a voluntary collective procedure, and this was something that the company created with SERNAC in order to reach an agreement and avoid any unnecessary conflicts. It is quite usual, and it is done several times. I would say that there are no great impacts compared to what we said before, and this has to do with regular processes that the company carries out, and this is managed with the authorities. We manage these situations with the authorities, and the situations might be also very recurrent.
Thank you. The next question for Miquel. It says, "There were property sales during 2025. Are you contemplating a property sale for the rest of the year? What would be the estimate of this lands for sale in Aguas Andinas for the future?
Thank you, Denisse. During the first semester of 2025, there have not been any land sales, and for now, we don't foresee any for the rest of the year. As a reminder, the main properties that are not used by the company, we sold them in the past few years and therefore, if there is an outlet of these type of assets, it won't be significant.
Thank you, Miquel. Another question related to collectibility. It says, during the pandemic and after it, there were bad debts, and this led to the generation of provisions in the company. Now, this behavior has been normalized positively. This trend has been reverted. What has happened with the previous debts? Have they been recovered or are they being punished?
With respect to the old debts, we have provided different plans to the clients in order to facilitate the payment. When these plans end, by the clients that have not paid or the clients that have taken this possibility, and when we have done all the collection procedures, then they are going to be punished during the year. At June, we are at 1.3%. We closed last year at 1.1%, so those levels are similar. These are the levels that we had in the pandemic and the margin has downward been limited. The active management that we are doing for the collections has allowed us to maintain these low levels from the end last part of the year.
Thank you, Miquel. We have questions related to the FR costs. How relevant has this become in the structure of the company? Which are the trends that we should be seeing forward in the rest of the year? Which are the impacts that we see given the increases in the regulated rates or tariffs?
The costs of power by the end of last year were approximately 10% of the CapEx. As a reminder, last year, there were two increases in July and October, and the last one was at the beginning of this year. Therefore, throughout this year, we will be negatively increasing these or receiving these three increases according to those two months compared to last year. As a company, we are going through different activities to mitigate these negative effects that are the regulatory aspects with better energy efficiency on one hand.
At the same time, we transfer regulated customers or clients to free clients. In the following quarters, we will be seeing how this will be behaving. Therefore, there will be a lower cost. As mentioned by Antonela previously, we also have the last stage of the power contract adjudication for the following years, with some very positive offers to the company that we should start seeing in the future.
Thank you, Miquel. There's another question related to the drought situation. Should we expect a scenario of costs that are reasonable for this year? Nowadays, with the levels that we have in El Yeso Reservoir, how can we tackle the situation of a future that is probably with less rainfall and maybe for 2026 as well?
As mentioned in the context, this reservoir is yesterday at 84%. These days, we believe that there will be more snow, so we have to expect or wait for the end of the wintertime, so that we can really have the idea of how the following quarters will be behaving. Up to today, this reservoir is in a very good level, very similar to the good years, compared to good years. Therefore, this is a very good level. Of course, we still have some weeks of wintertime that will show us that we will probably be in a different situation. Right now, it's not negative, but we have to see if the following situations will be good or even better.
Thank you, Miquel. We have another question that is a general question with regard to the situation as customers of power, of why nowadays we have a matrix where our on one hand, free customers, but on the other hand, we are regulated customers.
There are different stages or levels. From certain level of power, the customers have to be free customers. Under certain levels, they have to be regulated. There are certain area where we can manage from regulated to free. As mentioned earlier, in this energy area, we're working in an intermediate level to optimize costs, but this is not the possibility to go through fully to free customers because there are some that we, under regulatory aspects, cannot go straight to the other situation.
Thank you. Hydrology and resources. There's a question here that is, if we could go into detail about how to manage the water resources in this year, the water transfers, the level of the reservoirs, the wintertime activity and others, which has been our activity.
In terms of the level of the reservoir, I already mentioned it. In the first semester, we had some water transfers, and the idea was to optimize our production by working on the voluntary activities, when closing down canals and others, and going through the, if there were no voluntary transfers of waters, maybe we could do other activities.
Thank you, Miquel. I see that there are no more questions so far. We would like to remind you that this webinar will be recorded in Spanish and English, and that any question that you might have after the event, we will be happy, from Investor Relations, to help you. Thank you very much, and we will meet in a following event. Thank you very much. Hope you have a great weekend. Thank you, Miquel. Thank you, Antonela.