Financial statements, where we will be discussing the financial performance and some other topics to June 2026. In this opportunity, we have with us Miquel Sans, CFO of the company, and Cristian Torres, the Manager of Management Control and Accounting at Aguas Andinas. We will start out with a first overview, a original review of the financial context. I will give the floor now to Miquel Sans. Miquel, you have the floor now.
Good morning, everyone. First of all, I would like to give you some context to start. I would like to highlight that at the level of Aguas Andinas, we do not have many new novelties, but there is a lot of progress made for the National Reconstruction Bill. In the point number three of the presentation, this will be further developed by Cristian.
We will start with this conflict in the Middle East and the uncertainty that comes up today. We have not experienced any major effects so far, but there is, however, this international uncertainty, and it is likely to have some impacts from that conflict. We have the reservoir at El Yeso that is at 65% of its capacity in June this year. Today, it would be at very similar levels. At the level of rainfalls, we should say that a year has been broken up in two parts. The first semester of the year till June, in the mountain range and in the city, we have received just a few rains. In the month of July and August, this has been offset with the deficit of rains we had, as we will further discuss.
These are the major topics for discussion. We will delve into the details for the financial statement. I will give the floor now to Cristian Torres so that he can get into the first topic, that is to say, the statement till this present month.
Thank you, Miquel, and thank you, everyone. It is a pleasure to be with you once again to present the evolution of the financial statements of the company at the closing of the first semester. The first semester continues with a positive trend in terms of revenues and operational results, with a growth rate of the EBITDA of 7.5%. We will also explain the evolution of the net profit and the growth of the first semester. We will start with the revenue.
It is important to point out, as we see in this slide, that the revenue or the growth of the revenue is leveraged by these sanitation or regulated revenues, and this is a result of the rates. We should remember that as a company, the three water companies already concluded the eighth rate-fixing process. At this time, all the agreements were applied to the basic rate. The only pending issue is in March, 1% adjustment, and in Aguas Cordillera with 1%. Therefore, all the rate-related agreements associated to the base rate are already agreed upon in the three water companies. Additionally, we should consider that we have polynomial indexations. The last one was triggered in May in Aguas Andinas with a weighted average of 1%, and in the case of Aguas Cordillera and Aguas Manquehue as of June, with a weighted average of 3.2%.
Also, in connection with the rate-fixing process, there are some additional rates related to investment projects. As of the end of January, we activated the rates related to the alteration of La Farfana. As of September last year, we have the application of the plan of alternative supply. Also considering the compensations for water transfers, we are invoicing new rates as of May. All of this explains the main effect of the growth of incomes of CLP 18 billion in the first semester. Speaking about the consumption, we have an evolution of consumption, which is slightly higher than last year with a growth of 0.3%, which has a different breakdown. On one hand, we have the overconsumption of this additional rate for the customers consuming more than a limit, which is possible, then we have the normal consumption where we have a decrease.
In general terms, the consumption rates are very stable and a little bit higher compared to what we observed in the same period of time last year. The combined effect is over CLP 1 billion compared to the last fiscal year. If we speak about the non-sanitation or non-regulated income, we have a growth of 13.6%. Basically, in here we have three lines of business explaining this growth. The first one are the non-sanitary facilities that have a very acute activity during this period of time, and mainly in the industrial liquid waste and the services of the clients. That is to say, the new connections we have within the operational area that has experienced a growth and the services of engineering, all the modifications or alteration of engineering that are requested by third parties.
In here we have a line of business that is increasing by CLP 1.4 billion. These are three main pillars explaining the growth of the non-sanitary or sanitation income. At the closing of the first semester, we have a positive evolution of 7.6% of growth in revenue. By this amount, we have over CLP 386 million, and this is leveraged by the services and the regulated revenues. In the next slide, we can see the evolution of EBITDA with this increase of 7.5% that I was discussing before. Additionally to the income we discussed before, we can see that the evolution of the cost. 80% of the growth of the cost is associated to additional rates or income. In the first concept, we have the cost related to the sanitation or regulated services.
We have CLP 342 million that are associated to the new services for the alternative supply, the authorization of La Farfana, and also the bad debt associated to these better results. Then we have the other positive CLP 800 million, and we have an important part of the higher income. As I said, is approximately 80% of the income growth in this period of time. It has an income that is linked. Another positive point that we were envisaging at the closing of March is the management of the bad debts. At the closing of this period of time, we have a ratio of 1%, and we are at the same time that we had as a company before the pandemic.
This is thanks to the active management that the company has been implemented, the commercial effort, so as to recover those clients that after the pandemic had insolvency problems. Our cost structure is influenced on the one hand by inflation, and the other one is because of the variation of the exchange rate with the US dollar. Basically, for chemical products and also computer programs. Here we have a variation of CLP 4.2 billion that is explained by inflation and in positive, the variation of the exchange rate with the US dollar with about CLP 1.4 billion, which is explained by two reasons. One, the average exchange rate for the year, which was lower than last year. As a company, we also had some forwards in monetary coverage for operational expenses in the company, and that gave a positive result by the end of this period.
Talking about other operational costs in the company, we have the employee benefits. This is the main income or the main increase, and this is due to three factors. One, we need to remember that there are new legal measures, the benefit reform, the increase in salary and the 40-hour working hour, and this has implied a cost so as to be able to comply with those laws. Also there has been an increase in personnel in order to improve and increase our services and also adjusting to the new regulatory standards. Finally, we have an accounting effect associating to the payment of services and according to the benefits established by the unions. In other operating costs, we have a positive evolution that is given by the energy and chemical products. In both cases, they are related to the optimization of consumption.
Although it is true that the energy costs have increased, as a company, we have contained this increase because of the efficiency in operational processes, particularly in the cleaning of wastewaters and also the production of drinking water. The same thing with chemical products that applying technologies and new measures and metrics allows us to dose these products so that we can be more efficient along these lines. Regarding the IT services here, we are talking about the computer licenses that are necessary for the business and that have had increases in their prices. Also the company continues developing continuously different efficiency plans so as to contain costs and also update our processes.
The plan and the program is still the basis on which we generate these kind of initiatives in the purchases, in the contributions of insurance to capture this efficiency at the closure of the first fiscal year. As fundamental issues, we can say that the evolution of EBITDA is based on the constant and solid growth rate, has been leveraged by the growth rate or by the increase of the rates with an increase of the cost associated to the revenue flow, and also the increase of the structural costs related to the exchange rate and the inflation rate. At the global level, we show the efficiencies that can curb and improve the margin in the context that we are developing now.
If we go now to the next slide, in this slide, we can show here the evolution of the consumption rates by each one of the quarters and the evolution of the temperatures and the recorded rainfalls. This has an important effect on the evolution of the consumption rates. Here, we can see that in the first quarter, the consumption rate was equal to last year, and we had an improvement during the second quarter. The average temperatures have not changed dramatically compared to last year, and the rainfall at the end of June were well below the records of last year in a normal year. This situation will be updated by Miquel when we zoom into the operational issues. If we continue with the presentation now, we already explained that the evolution of the EBITDA, the growth has been around CLP 14 billion.
To explain the evolution of the net profits, we should point out the three important points at the appreciation, amortization of our fixed assets, and the growth rate is explained by the major investments that the company is doing throughout this period of time. At the level of the financial statement, the main element that accounts for this is the monetary correction in the financial debt in UFs and was a negative of CLP 7.8 billion. Because of the variation of the UF in this period of time of around 2.8% and 2025 and last year was around 2%, this is compensated or offset with the improvement that we have in the financial costs of the company as we improve the debt that we have or the mixing of the debt that we have and also an improvement experienced in the financial revenues.
To conclude this part of the presentation, we have a growth rate for the tax rates. As we had an improvement of the revenue before the application of taxes, we closed the first term with over CLP 75 billion, representing this 2.3% of improvements compared to last year. Now, continuing with the presentation, in addition to this positive evolution of the financial statement of the company, we also have a solid cash flow generation. The collection is consistent with the evolution of the bad debt. In the operational cash flow, we have a positive variation of CLP 28 billion. At the level of the taxes, we should recall that in June last year, we already had a recuperation related to the accelerated position last year, but we already have a rate of the provisional payments that is offset, and this is optimized from this point of view.
At the level now of the payment of the investments of Capex paid out, we should point out that the execution of the Capex has a seasonality that also has an influence in the payment. We have some additional payments in the present fiscal year, additional to the higher Capex that were developed. The free cash flow is CLP 78 billion at the closing of this term. That is higher compared to last year. The third important topic or fourth important topic are the dividends paid out during this period of time. We should recall that we pay the dividend as a company that is agreed by the shareholders. Compared to last year, we have a lower level of dividends paid because last year we paid the provisional and the definite dividends.
This explains for the generation of the positive cash flow in this period of time that is over CLP 15 billion, representing CLP 9.7 billion compared to last year. In the next slide, we can see the evolution of our cash flow positioning compared to the beginning of this financial year and the closing of this semester, where we have the positive generation of cash flow that I explained before. We also have the amortization of the debt throughout this period of time. The evolution of the net debt is stable and is growing up as an effect of the monetary correction and then going down as the evolution of the cash flow takes place. We should say also that the makeup of this debt is shown in the slide, and the bonuses are still our main instrument of financing for the company.
We have a minimum part of it related to the variable rates, and we minimize therefore the risk. The makeup of the currencies is mainly in UF form. I should point out that a third of our debt is related to the emission of green and social bonds emissions. In the next slide, we are going to comment how the evolution of our investment plan is occurring for this period of time, where we have performed projects of CLP 9.91 million, and the main categories or levels of action are related to renewal of the potable water and waste waters networks. We are also doing some improvements in the plants or factories of wastewater to allow the increased demand requirements. The hydraulic efficiency still is one of the strategic projects in the company in order to control the losses in the networks of the region.
As the fourth element that is fundamental is one related to the reinforcement and new explorations to improve our performance of potable water. This is always within the framework of the emissions of long run and our plan of investment to guarantee the water supply for our clients and the quality of the service, all of this under the context of the Biociudad project. We now move to the next slide. As a result of the preceding slide, we can see the positive evolution of the businesses. We have a sustainability vision that we harbor as a company, and this allows to have very solid financial indicators and a sound financial structure throughout this period of time. Our level of indebtedness is very well controlled with 1.46 times, and the generation of this of 3.53 times. Our ROCE is around 9.8%, steady.
Based on this, we have the overview of our financial situation with the corresponding results of these indicators for the first semester of the year. I will now give the floor to Miquel, who will explain the situation of climate and rainfalls for this period of time.
Thank you. For hydrology, we wanted to show two slides. The first one refers to turbidity in the Maipo River, and the second one is related to the hydrology in the reservoir. We will focus first on this first slide. As a reminder, I would like to say that this first quarter of the year was more abundant in rainfalls for the city. Normally, in the summertime, it doesn't rain at all or very poorly, but this year was higher than the average.
In the second semester, it was very poor in rains, and this led to a situation of a deficit of water at the closing of June. Although this is part of the third quarter, and considering the rainfalls we had in July and early August, we wanted to transfer this situation to this presentation of financial statement to give you some context of the last weeks. In July and August, we have had rainfalls very strong throughout the country, and particularly in the metropolitan region, but with less impacts compared to the damages in the rest of the country. This has been presented in the city and on the mountains, and we focus on the rainfalls for the mountains of the most important volumes of rainfalls are translated into these issues, more volumes of water in the rivers in some weeks and later.
This translated into a flow rate that is higher compared to the previous period of time. Although we had these higher volumes of water in the rivers throughout the period, this led to more periods of turbidity, as we can see on the right-hand axis, of over 10,000 NTUs at some points in time, as compared to the weeks or days where those events did not take place. But we are prepared for those events. What we did, on one hand, we activated some wells in Pozos de Cerro Negro that are used to give more autonomous status to the company and to bring water from the mountain compared to the one that comes from the river.
Concerning the mega reservoirs of Pirque, they were used just in 5% of their capacity, and this was just a very punctual situation, and therefore we have an autonomy that is higher to-
All of this led to a lower effect in the supply of drinking water to the city, and this was one of the two focuses that we have in these rainfall episodes. As I was saying, those flow rates in the river increased because of the rainfall. However, and just to put this into context, these are lower flow rates compared to the previous two years compared to the historic average on this period of the year. So there has been an increase or improvement in the river situation because of the rainfall. However, there are deficits both in the river as well as in the mountain range. In the city, the great rainfalls were continuous and very intense for many days.
This pressured our infrastructure because of the preventive work that we did in the operational aspects in the previous weeks before the events, because they were already announced. This allowed us to prepare ourselves, and we had to do some emergency care during those days. These were limited effects in turn, compared to other regions in the country. If we go to the next slide, and we put our focus on the rainfall in the mountain range, we see here that there is an accrued precipitation in June that is lower than the previous years, and it is comparable in the last 10 years to the hydrologic year 2015-16. As a reminder, the hydrological year goes from April to March. That is why with distribution starts in April. In June, there was a relevant deficit of rainfall in the mountain range.
However, with the rains of July and the first part of August, we have had levels that although they are lower historically, they are quite similar to the levels. However, this is important because this rainfall will allow us to provide supply during the summer months. Based on the rain flow that we have, or the water flow that has increased, but not significantly, this means that most of the precipitation in the mountain range was snow, so this will remain in the mountain range for some months. As you know, this is our water storage for the summer months. Therefore, with these rains of July and August, we have recovered part of the deficit. However, we are still below the historic average. This is what we wanted to say regarding the hydrology in terms of the rainfall that was quite intense in the past two months.
Now I give the floor to Cristian so that he talks about the reform that will be approved in the short term.
Thank you, Miquel. Now, I wanted to talk about a very present topic. As you all know, to date, the law is quite advanced in terms of the bill for National Reconstruction and the economic and social development. This project has already been approved by both chambers in the Congress, and most of its articles and proposals have been approved, and still pending is the resolution on some specific aspects. What is most important, and which I want to mention now, is that this project contemplates a reduction, a gradual reduction of the first category taxes, which is the income tax for companies. From 27%, which we have as the rate, to 23%.
This will be gradual, considering a reduction that goes to 25.5% for the commercial year of 2027, and 23.3, starting from the commercial year 2029. What will this impact the company? First, we have a potential impact associated to the rates, and in the next slide, we will see the deferred taxes. Let us start with the rates. It is well known that the Chilean sanitation model considers a rate or capital cost or returns on the assets of the company after the taxes. In each rate process, this implies that the rates must be adjusted at the rate that is in force for the period. The table that you see here is the table that is considered and is included in the rates of Aguas Andinas.
Aguas Andinas and Aguas Cordillera and Aguas Manquehue, they all have their own table, because this will depend on the models of each zone. Here, the example corresponds to Aguas Andinas, and as you can see here, it is defined in an anticipated manner. If there is no change in the rate, this will have an adjustment on the rate. This starts on January of every year with the ongoing rate for the period. In the specific case of Aguas Andinas for the first year, which is 25.5%, and also this has to be interpolated linearly. This is a factor of 0.99 at 023, and so on and so forth for the next years, 2028 and 2029 with their corresponding factor. This means that starting on January 1st of each fiscal year, we are going to invoice with the new rates applying this factor.
What is the impact that we have estimated for the company? For the first year, at the level of net profits, the effect is CLP 1.8 billion less profits. It is important to remind you that all of this is calculated based on the model company. Let us consider that the model company is a theoretical company that has no debt. Therefore, it is different from the real company, and the returns are calculated by an estimated amount, an estimated cost that is different from the real company. This explains why there is not 100% adjustment between the reduction in income and the net profits. For the first year, we predict a reduction of CLP 1.8 billion, which is a reduction of CLP 6.5 billion in terms of revenues.
For the next year, the impact compared to the previous years is what you see on this slide. On average, for the next year will be CLP 2 billion, and the next year will be CLP 1.3 billion because the exchange rate will be 1%. This is the impact in the income. The main issue associated to the rates is explained here and corresponds to the automatic adjustment that is defined by the law in each rate process or decree. Here, the impact at the level of deferred taxes will depend on the composition that each company has, based on its assets and liabilities on the deferred taxes. What we are showing here is the situation by June 30 of this year. Then you will be able to see this in the note on the financial statements.
It is important to mention that as a company, we have two great categories. We have liabilities and assets, and the evolution has an effect on the results. We do have liabilities because of deferred taxes, and this affects only the equity. This corresponds to the liabilities that were generated in 2024 because of the revaluation of property and water rights that we have as a company. The accounting rules establishes that these effects should be recorded once the law has been enacted or substantially enacted. In practice, this means that this will be when it is signed by the executive. Once the law has been signed off, the company will need to recognize these effects in its results or in its balance.
Because the regulations establishes that both the assets and the liabilities due to deferred taxes need to be recognized according to the tax rate that will be promulgated once a law is promulgated. As a function of the estimated period of reverse of liquidation of assets and liabilities, I need to apply the corresponding rate, 25.5% for the next year, 24% for the year 2028. All of those liabilities and assets that have the expectation of liquidation starting on 2029 have 23%. In doing this exercise, we estimate the following impact. First of all, because of the liabilities and assets that have an impact on the result, where we have a net position of assets of CLP 58.8 billion, when we apply this technology of reversal, the one-off impact that we need to recognize this year will be CLP 5.8 billion on expenses because of deferred taxes.
As I said before, this is done once we have the knowledge that this has been signed off by the executive. Also, we need to do the same exercise for the liabilities because of deferred taxes, and this is against the equity, and the impact is an increase in the equity with more than CLP 30.6 billion. As a consequence, the net position or the net variation with impact on the equity would be CLP 24.8 billion once we record these impacts. As a summary, we have these two categories of deferred taxes, one that affects the results and the other one on the equity, and this has an effect of increase in the equity and a reduction in the net position because of the deferred taxes. Denisse, I give you now the floor.
Thank you, Cristian. Thank you, Miquel. We remind you that this video conference will be available on our webpage, both in English as well as in Spanish. You can ask questions through the chat that is available for you. I remind you of that. Also, we need to mention that during the video conference, some questions have been raised, which have already been answered in the presentation, particularly those that have to do with climate issue as well as the tax reform. We will start now to ask some questions that we have collected, and that will ask about additional topics. There is a question on the climate issue, and this will be done for Miquel. It says: Could we elaborate on how the hydrology improves that we have recorded since mid-July? Will this affect the results for the next 12 months of the company? Miquel Sans.
As I was saying, the improvement has been because of the rainfall in the mountain range, and in the next months, this will mean an improvement in the hydrology, but this will depend on other factors. For example, when the increase in temperature in the mountain range increases, then this will lead to a greater hydrology. This greater hydrology that we will have will mean a greater availability of surface waters for the production of drinking water, and we won't depend as much on third parties. Therefore, we could expect that we will have less transfers in the next few months. Also, we would use the wells less compared to what we have been doing in the previous months.
Today, when we look at the general situation, we see that for the rest of the year, the situation will be similar to what we have had in terms of costs, except for the parts of the transfers if we confirm the present situation. During the summer and after the summer of next year, this is a vision that we will have in the next few months. Our reservoir is a short-term reservoir, so it is difficult to anticipate beyond the end of this year and maybe part of the summer to anticipate the hydrological availability that today, as we said, because of the rainfall or the snowfall, this will compensate the deficit that we had in this hydrological year.
Thank you very much, Miquel. Now we have another question focused on the tax reform, and we will be posing this question to Cristian. The question is: What other impact could be arising for the group as a result of this reform that the government is tackling? Are there some other sides or effects that may impair the company or impact the company?
Thank you, Denisse. The main aspect was this one on the income, but maybe I could comment on some additional ones. First of all , we have the decrease of the SENCE credit, the one related to the staff training, which will be decreased by 1% to 0.7% on the remunerations. Here we have a lower credit that we can use for tax purposes. Also, this new act establishes the different limits for co-financing inside the company.
In global terms, we can refer to CLP 150 million or CLP 200 million of use of this tax benefit or relief. That is not very significant, but it will change our training programs for the workers. Another comment that has been publicly discussed is related to the substitution tax that is called this FUT for the funds of the taxable profits. This project established an interval of 8 months so that the company can redistribute at a single tax rate of 10%, that is to say, the profits that they have in the taxable funds.
In the case of Aguas Andinas, this is not a penalty because as a company that is constantly redistributing the dividends, we do not have a balance or pending or outstanding profits of associated funds. Therefore, the impact in this case will not be applicable. This is an issue that was, however, discussed. I would say that those are the main issues affecting the company. Then we have some other issues that pertain to the shareholders related to the reintegration of the tax-related system. By 2029, we will be able to use 100% the credits that the company redistributes as a result of their profits. This is an additional effect for the shareholders.
Thank you, Cristian. The next question goes to the macro context, and we will pose this question to Miquel Sans. The question is: taking into account the macro and global situation nowadays, how does the company see the evolution of the cost in the next quarters, particularly in connection with the supplies, materials, and other costs?
Thank you, Denisse. By now, as Cristian was saying when he showed the EBITDA situation, there are some increases in costs related to revenues, and then the rest of the cost has been very restricted. All of this in this medium positioning that has put some restrictions. As I was commenting at the beginning of my presentation, there is uncertainty concerning the prices and depending on how the conflict evolves in the Middle East. But by now, we do not see any significant effects that may occur in the next coming months as a decrease of the prices.
We have some indexation associated to some contracts, and they have already occurred, particularly in the area of the chemical supplies. These indexations are very restricted considering the global volume of materials in Aguas Andinas. But for now, we think that this will not be a significant effect.
Thank you, Miquel. The next question will be posed to Cristian Torres, and this is in connection with the effects of the income tax in the last quarter. If you can further elaborate on the main aspects that it influenced in this quarter in connection with this record.
I can mention something related to the income tax and the links with the financial statement. If the result goes up or down will depend on the payable tax, and then we have to consider the inflation rate because the tax and financial accounting systems are different.
We have to consider also the monetary correction that is related to the tax issues. During the financial or fiscal year, we have transitory effects, but at the closure, we can see the creation of taxes that we are going to forward to the next financial year. So I can say that the evolution continues considering these two aspects, the results of the company and the inflation rate that also has an effect on the tax capital. This is considered the effective rate, consider the nominal and effective tax rates applicable for the income tax.
Thank you, Cristian. The next question is focused on hydrological conditions and operational activities. There are many questions related to water transfers. The investors and analysts would like to know about the water transfers that occurred during this first semester in 2026. Is there any pass-through that we are expecting in these costs that can be reflected during the third or fourth quarter? Are those effects already recorded, if they happen at all? We have another question related to the transfers related to the adjustment of the rates. Maybe we can see some of these water transfers rated as a cost in the rest of the year.
A previous explanation would be to say what we are doing right now out of the water transfers as occurred last year, 2025. We have the conditions so that we have some rates associated with that. As of April this year, we are invoicing, and these costs will be invoiced in the non-peak period of Aguas Andinas, and therefore, this is being invoiced as of April, the transfers that are subjected to the rates of last year.
Concerning now the water transfers of this year, we did some water transfers this year, and we have the income or revenues related to them based on the conditions that were established so that the rates could be generated. We are recording already the best estimation of the income related to those costs related to water transfers, and they should be recovered next year as we are recovering in the present year the transfers that were recorded last year.
Thank you, Miquel. Thank you for this thorough answer. I will forward some questions from the market concerning the last climate events and in general terms, the resilience capacity we have vis-à-vis turbidity. How much the operational cost could be increased considering the use of the infrastructure as it happens in Cerro Negro? We have also a more generic question focused on how we have been able to tackle the strong rainfalls in the last month, if we had any additional costs that are significantly related to these weather-related effects.
First of all, concerning the cost by turbidity, operating the wells obviously is more expensive compared to surface water, but these events only last a few hours. As we see the whole year for these episodes, they do not appear to be significant. The answer would be that they are not influential. It is very differential to a basic scenario. Now, concerning the rainfall in the city, if it has some additional costs related. In fact, there was very intense activity in this regard, but we do not expect that this will have a cost associated, a cost that is very high.
In previous years, we already had some incidents with relevant costs in this aspect, and although during this year, we had some very intense works for prevention and maintenance that were urgent works, I would not say that we are expecting now a very relevant effect from all of that, and it will be always at a lower level compared to similar events in preceding years.
Thank you, Miquel. We see that there are no further questions for now. No further questions. We would like to thank you once again for logging in. We had a high number of participants. We would like to remind you once again that this presentation will be available at the website of investors. There will be also simultaneous interpretation available.
And in case you have any concerns or questions, you can contact the investor relations team, and we will be very happy to answer your questions. Thank you very much for logging in, and see you next time.