Good morning, everyone. It is a great pleasure to welcome you to our video conference, where we will sharing the results for the earnings statement at the end of 2024. We thank you for your interest and your time to be with us. We have the privilege with Miquel Sans, our CFO since September 2023, and Antonella Laino, the finance and investor relations manager. They really have played a major role in the management of our company, in the implementation of our position in the market. Through this conference, Miquel and Antonella will give the analysis of our earnings statement and the initiatives we're implementing in order to guarantee a quality service that is sustainable for the customers. With no further ado, I will give the floor to Miquel Sans, who will start out.
Good morning, everyone.
First of all, I would like to thank you for being with us today for the close of this year, 2024. Last year was a year that was favorable, with rainfalls that were very important in the mountain range, as it was not before. However, we had some events of rainfalls in July and August, and they were very important rainfalls. That we also had some blackouts that endangered our operations. However, we were able to keep the supply of water stable. Concerning the rates now for the planning and the results we have for 2024, we have already closed the process for Aguas Andinas, and in December, we agreed the rates for the next five years for the Aguas Andinas and Aguas Manquehue that will be presented at the end of this presentation.
With this process of rates, we have the local and international rating, and we have the placement of a bond issuance a few months ago in January bonus [without issuance in this month]. This rate process is accompanied with an ambitious plan for investments with additional rates, and at the same time, we'll be reducing the profile of risks for the company. This is why the board in last month agreed to have a dividend of 70% of the profits for 2024.
This proposal is compatible with the financing of our plan of investments and the key projects for the mitigation of the climate change, including droughts and other phenomena, the renewal of our network of potable waters and sewage, and also for the treatment of waste waters to help the communities in the localities. In this context, the company has concluded also the transformation and we are now opening a new plan in order to have more efficiency as well as more sustainability. If we go now to the results obtained for last year, here we have the last quarter that was positive in changing some of the trends in some of the items, for example, including the regulated profits and the indexations had been under the IPC.
In September, it is in line with the consumer price index and also with the concept we have for this concept. On the other hand, we have the consumption that has been regularized in the last term, over 1% at levels that are growing up before the pandemic. In September, the growth rate was around 0.3%, and the trend in the last term has been very positive. Now concerning the costs, on one hand, we have the dollar and the consumer price index that are the most important elements are growing up in the last term of the year as the beginning of the 2025. We have the operational costs. In the next slide, I will delve into these elements, but these items were normalized in the first part of the year.
Since in the fourth quarter, the evolution of the water had an improvement of the transfers. There was no additional improvement in 2024 in the first quarter. Concerning now the insolvency, in the last quarter, it went down to 1.1%, and the improvement was not so relevant as in the first months of the year, because now it's been regularized. Now, concerning the efficiencies, they were over 1% of the costs, and we expect that with a new plan of transformation, this will continue to provide more efficiency for the next coming months and years. Now, for the financial earnings, we have the same trend that we had in the past quarters, and now we are at a level that is more adjusted.
Punctually, we had, during the COVID, levels of cash flow that were higher than needed. Now is coming back to normal or regular levels. There is also a level of lower rates of rate distribution, and this is the most important part of the earnings statement comparing to the last year. The UF is still very high. At the end of 2023, it also was the case, so with a high value for the UF, and therefore, the impact is not so relevant. Concerning now other results, we have, for example, the exceptional impact at the end of 2023, with a very important reversal of CLP 5 billion that were comparative to the next year and explaining part of what is occurring with the EBITDA. Here we would like to highlight some of the elements of evolution.
As I said before, we have the non-collectible that were at a level of 9.1%, that are very similar to 0.8% or 1% that we had before 2020. In terms of volume, we are also growing at the pre-pandemic rates, with a growth rate that is over 1%. I would like to highlight two additional points. First of all, we have networks and energy. As you recall, in networks in 2022, we started to implement a shock plan for all the complaints we have, and we had to do the corrective maintenance and to increase the preventive maintenance to revert the increasing curve that we had in the previous years. We succeeded to do so in 2024, and the growth of the last quarter was lower.
We expect that this is the trend as we go on, and we'll not see the increases that we saw in the previous years. This year should be more stable to work in the optimization of these networks in the future. Concerning the energy now, we have the defrosting of the rates that was enacted by the Congress. We have also the charge for mechanisms of protection to the consumer, and it has impacted us very importantly in the first quarter. The rate increases were in June and October last year, and we have added the last increase in January 2025. This is impacting 30% more or less of the energy structure of the company, and therefore is a very important element for the evolution of costs.
To mitigate the impact of growing or increasing of the energy costs, the company, for many years, is implementing the measures for energy efficiency that has impacted in these rates. We have, for example, the management of the wells, the optimization of the different potable water treatment plants, and these are some of the examples that allow to mitigate the increase for the regulated price. As far as the cash flow is concerned, on the one hand, we wanted to highlight the good evolution of the collection process. We have a very good evolution so far, and this has allowed to go from 1.9% of insolvency in 2023 to 1.1% in 2024. This should allow to continue with this positive evolution in insolvencies.
In the other items, for the cash flow, I would like to underscore that the CapEx for the first part of the year, had a component, of payment and the accrued investment that were normalized throughout the year, and the CapEx paid off is in line with the CapEx that we have been executing throughout the year. Finally, as far as the dividends are concerned, I would like to remind you that the dividend paid in 2024 corresponds to the definitive, dividend of May 2024, and the provisional dividend over the earnings in 2024 was approved in December, but was paid in January 2025, and therefore is not reflected in this cash flow. Concerning investments now in this last year and previous to this five-year period for the rates process, we do not have major investments to be underscored.
I would like to say that these are some of the actions that we have for the enlargement of plants. For example, the treatment plant in Padre Hurtado or in two other localities, and we have continued with our plan for renewal. With the prevention of meters, over 60,000 meters that are being replaced in 2024. We have another important action, the water efficiency that is allowing to regulate the non-billed water. We have continued with over 100 kilometers renewed for potable water conveyance and sewage. Finally, I will give now the floor to Antonella.
Good morning. Good morning, everyone. Sorry to interrupt you, but I would like to continue with these effects that were previously mentioned by Miquel in the cash flow of the company and in connection with the indebtedness or the net financial debt.
First of all, I would like to tell you that the treasury position at the end of 2024 has remained unchanged since the closing of 2023. The major reason for that, additionally to the flow generated by the company that goes to CLP 15 billion, is related to the operations of refinancing of liability that has been conducted in May 2024, and is related to our first issuance of public debt in the Swiss market with the equivalent of CLP 101 billion . This has been done in the Swiss currency. A financing from the bank that is CLP 30 billion, and as a whole has amounted to CLP 130 billion.
This refinancing of liabilities, added to the flow of the company generated throughout the year, has allowed to cope with the maturity that we had to cope with. This is explained with the maturity of the bank financing or the bank credits that have been contracted at the beginning of the pandemic period, and with the motivation that had, as a main explanation, being prepared in face of shocks of liquidity as a result of the pandemic. Well, the net financial debt and the fluctuation is 3.6x , and this is explained basically by the revaluation of the debt as a result of the variation of the UF index. Over 87% of Aguas Andinas' debt is expressed in UFs. After the coverage and all of that, and the impact of this is what explains finally the variation.
This is countered by the inflow generated by the company in this period of time. Another important point to underscore is although the financial structure or the instrument we have in the company, most of the debt is allocated to bonuses or bonds. Most of these bonds we have now in place, in force, is related to international issuance. This is a change for a different trend that we're exhibiting in the last years, and this is connected to the openness to the international markets. It is important to highlight and in line with our commitment in terms of sustainability, we should say that 23% of this debt at the closing of 2024 is green and social.
In connection now with the currencies, where our debt is expressed, it's important to say that all the debt that is issued in a different currency to the local currency is converted to pesos and UF, and that's why we do not have exposure to other kinds of currencies. Now, in the next slide, we see an important point before we delve into the financial issues of the company. At the end of September 2024, we had already made reference to our first regularization of the assets that is related to the water rights, and that is up to CLP 390 billion. That is the figure that amounted in the balance sheet.
Finally, in our assets at the end of December, we did a new updating of these related to the land properties, and is related to something that we had done before in 2020, and amounts to the amount of CLP 170 billion. Why we have this revaluation of the assets? This is in connection with having a valuation that is more in line or more updated. In connection with everything we do in every rating process, and also in accordance with all the international accounting regulation and what is requested here by the regulator.
The main explanation is to have these valuations available online. Obviously, in a certain period of time, you will see the revaluations that will be lower in amount that will affect not only the asset, but you will see in this breakdown, there is a sector related to an impact on liability with the fair value, the taxation, and so on. In the next slide, we can see this in connection with the financial information of the company. We continue to work committed and showing term by term the financial soundness that is not only seen in the financial ratios of the company, also in the financial ratings.
As Miquel said before, we close in 2024 with the international and national ratings, financial ratings that are carried out by the Standard & Poor's, that give us or provide A- or A+, which is finally supporting this sound credit rating. It is very important to say also that in terms in leverage, we closed 2024 with 1.34x , and this is dropped or is explained by the revaluing of the assets. It's important to say at the same time that we can see an important decrease. If we do the pro forma calculation, we can say that this is around 1.85x , which is very comfortable regarding the covenants and is in connection with the national bonds, where they have a ceiling of 2x .
Regarding EBITDA, net EBITDA, net debt EBITDA, we are closing at 3.74x , and this is also a very good sound credit rating. Now we'll go and mention the bond issuance that was after 2024, but is in connection with the return of the company to the national marketplace. We are refinancing liabilities that are upon maturity in 2025. As in 2024, they have the very important amount related to bank credits that we have contracted at the beginning of the pandemic. It is important to highlight that this was a long-term issuance with 21-year term, with a very good demand, which has been reflected obviously in the spreads with the prices that we have obtained.
It is important to highlight also that this is not just a very good reception of the investors at the local level, but a commitment of the company at the level of sustainability. That's why we're doing this mission with a characteristic based on sustainability related to the green and social issues. The use of funds, as I said before, they said they used to refinance a liability that will be mature in this year, 2025. Concerning now the covenants or restrictions, we still have the indebtedness that is in force with some bonds that have been issued in the local market. With no further ado, I will give the floor to Miquel once again, who will refer to some topics, new issues that we had in this period of time at the closing of 2024.
Hello again.
First of all, I would like to remind you the close of these three rate processes. Although this closing of the rate process that was materializing November, in December we agreed to rates for Aguas Cordillera and Aguas Manquehue. In the case of Aguas Cordillera, it was an increase of 12%, with an initial increase of 10%, and then two additional ones of 1% at the end of 2025 and beginning of 2026. In Aguas Manquehue, we have a 5% in June 2025. As a tariff with the change of standard, we have a project for Aguas Cordillera with an increase of 2% of their rates. I will go into the details.
When these three processes concluded, and each one of the three corporates has a different weight in the regulations, the rates at the end of this five-year term would be of around 12%. The rates process, as I said before, would be accompanied with some important larger scale investments. Many of them will be rated, and they are part of the projects that have been submitted as part of BioCiudad in 2023 that will be implemented in this five-year term. There is a part of BioCiudad that is projected to be implemented in the next five-year period.
Additionally to these projects in this five-year term, we calculate that most of the plants of sewage waters that we have in the localities that are expanded, are expanding with a lot of population or are expected to be expanded. We calculate that an important part of these plants should be enlarged during this five-year period. Finally, as a reminder, I would like to say that in 2024 is where we have 0.5% of renewal of the plants, and therefore is a very significant item for the investments, annual investments. With this rate process, we were able to convert this climate change opportunity in further growth with these tariffs or rates that are appropriate in order to cope with the needs of investments that we'll be doing.
Now, the projects that make part of the additional rates. We have the projects of Aguas Andinas that are depicted here that were explained before. We have 2/3 are related to BioCiudad and the rest to other projects for the reduction of risks, operational risks. In Aguas Cordillera, we agreed a project that is tackling the reduction of the risks of extreme conditions and the connections that we have that we expect to implement during this five-year term. The total of the investment with the associated rates will be around CLP 400 billion for six years. With all of that, the projects with new rates and the CapEx to ensure a good service to be provided with the same presence and standard.
We calculate that in this six-year term, we will have an annual average, CLP 200-CLP 250 billion in this period of time. This will be changing based on the timelines of the different projects and also based on the technical solutions that we have available for each one of them. They can change from one year to another based on the permits that are required. This is our outlook of how this investment levels should appear for the next six years. With this additional rate, we have allowing an important expansion, at the same time reducing the risks.
also we simultaneously expect to maintain a sound financial standing for the company, as it was proposed by the board, with a payout of 70% in order to create some leeway and to cope with the investment for the next coming years.
Thank you very much, Miquel and Antonella. now we'll go to the Q&A section. We remind you that you can leave your questions in the chat box of the platform as usual. Antonella, this question is for you. How are we going to finance the next maturities?
Well, this is a very wide question, but I will try to be as quick as possible. As I said in the presentation, as of 2022, with the obtain of the international rating, the company started to have access to different markets.
However, all the alternatives of financing are assessed, and that's why we're coming back to the local markets, since there are better conditions prevailing in January 2025. Well, with the commitment of having the financial soundness and ratio of indebtedness with what we explained for 2024, I would say that we will continue to assess all the alternatives that we have available out there around the different markets to make the best decision. An important point to explain is that everything related to the refinancing of the liabilities, we are considering everything that will occur in the year and is related to the liability management.
The next question is for Miquel. Do we include in the basic rate the repositioning or replacement of the supply?
Well, one of the discussion is whether we could include in the indexation any index allowing to capture the evolution of the energy costs. As a part of the process, the Superintendency did not accept, but we should say that the three indicators that exist, consumer price index and others, are impacted by the evolution of energy directly. We expect, therefore, that the evolution of this energy will be captured by the indexation that we'll have as a result of the evolution of these three indicators. I would like to remind you that they are commensurate with the seventh rates process.
The next question. You already mentioned this in your presentation, but maybe we can delve into the details, which is the level of CapEx that we estimate for 2025.
For 2025, although there are some projects that are being defined, and they should be between 220 and 250, and they will depend on how the bidding processes evolve and how the studies perform. But it should be around 200, but it's still very flexible as there is a lot of seasonality for these events.
The next question is. Which will be the rate per cubic meter after the adjustments that will be applied till the end of the cycle?
Well, the rate per cubic meter is in connection with the evolution of the polynomial. Then we have the average rates. Considering the base rates should go up by 12%, and there we should add the evolution of the three indicators that today cannot be anticipated.
Antonella or Miquel can answer the next question.
Do you envisage pressure or change from the other countries or the countries that you are always comparing?
Can you repeat the question, please, because it was not clear.
Sorry for that. Sorry again. She's trying to ask the question properly. Do you see any pressure or relevant change of other cities or other countries that you always take into account?
Well, the present rate that we have is a rate of capitals of countries, which is the most economical one. Internationally speaking, and based on the data we have, this is one of the lowest rates that we have in the OECD. Therefore, we think that is an evolution that we expect to be not so demanding for the household budget, so it's not going to affect negatively our company.
Thank you very much.
The cost could go up more importantly compared to the inflation rate. Concerning costs, I would make a difference by typology. First of all, in 2025, we should have the impact of the electrical energy, because as I said before, there are three elements that we have partially in 2024 or we did not have. First, we have in July, and there another increase would take place. In January 2025, well, in energy, there should be a very important increase of the costs. On the other hand, we have the labor-related reforms that are underway or approved. We have an act for 40 hours of work every week and the retirement act that will have also an impact on the costs of the company. Finally, we have the increase by the installations that we implement from the rates.
We have the evolution of the consumer price index, and as mitigation, as I said before, we are launching the new transformation plan that is focused in improving the margins. Taking into account all of this, we expect that in 2025, with the exception of the energy item, we expect that it will be more restricted or contained in terms of costs more related to the consumer price index.
Thank you. Next. Antonella, the next question is for you. Debts in international currency are covered or the company is getting indebted?
No. As I mentioned before, all the debt that is contracted in a currency different to the Chilean peso or UF are covered by maturity, and therefore, all that you can see in our financial statements has this and including the interest at term.
Thank you, Antonella.
Now concerning energy, is it convenient to have our own energy through solar panels?
Well, one of the projects, the BioCiudad and the new transformation plan includes initiatives to improve from the energetic point of view and also in terms of the footprint. We'll continue to advance in these initiatives, although the energy level we have is very difficult to be covered by direct solar panels. However, we have some initiatives to expand this operation with solar panels, but it will not be overall, at least in the short term.
Thank you, Miquel. The next question is related to dividends. Will have a space to come back to 100% of dividends in the short term, I mean one or two years from now?
As I was saying before, the dividend is t o provide some leeway to face these investments that have an additional rate.
Year- by- year, as the situation evolves in the company and taking into account the perspective, the board will decide how this payout can move on. It's difficult to foresee how it will be this payout. Now we have a distribution of 30%, and we expect to arrive at the 70% additional based on the financial evolution of the company, and that's the way it will continue.
Next question is related to volumes. Do you think that based on what we have seen in 2024, the volumes should continue in positive levels in the future? Do you have a certain range of values that you consider as a company?
Yes.
As I've mentioned before, the production that we have in the second part of 2024, we see that should continue the same way, at least in the next coming months. Next, we should see some reduction of the average consumption rate. The trends and the studies we have conducted show that the evolution should be positive at around 1% in the next coming years. It's something that will depend on how the demographics evolves, as well as the availability for further resources, or funds. This is something that we have confirmed since a few quarters. Now, concerning refinancing the capital structure that the company would use for the some ratios you can have, or leverage that has been considered.
As I said before, and in connection with the closing we had for 2024 and in connection with the financial ratings and the EBITDA and the commitments we have internationally, the idea is to be in this level of below 4x , as Miquel said before, and also this punctual decrease of dividends we had for the profits in 2024. The comfortable levels for the company will be 3.5x and the net debt and EBITDA, considering the context of investments that we are facing right now. Coming back at the end of the five-year term to the lower range of the 3.5x , to call it some way.
The last question we have for you: Which is the percentage of energy that is used as a regulated customer, and how much as a free one?
Regulated customer supposes 30% or a little bit more of the energy. A free customer, 60%, over 60%. As part of the initiatives of improvement in the energy sector, we consider to have more free customers rather than regulated customers.
Thank you very much, all the participants. Thank you, Miquel and Antonella, for this video conference today, and we'll see you in the next quarter. Thank you very much. Thank you, everyone.