ANNUAL Sustainability report
CORPORATE
profile
We are
Aegea Participações
e Saneamento S.A.
We are Aegea Participações e Saneamento S.A., a leading company in the private sanitation segment in Brazil in terms of consumption units.
We'll keep growing!!
In 2019, we celebrated our victory in the dispute for the Public-Private Partnership tendered by Companhia Riograndense de Saneamento (Corsan) for the execution of sanitation works and services. This achievement marks our entry into Rio Grande do Sul, where nine cities will be served as of 2021.
8.9 million
people1
municipalities2
1. Estimated population according to the latest IBGE release (October/2019).
2. Considers the nine municipalities that make up the PPP Ambiental Metrosul, not yet in operation (contract was signed in March/2020).
Map of operations
(PPPs) in sewerage
The points highlighted on the map refer to the concession, sub-concession and Public-Private Partnership (PPP) agreements in effect.
concessions
public-private partnership (PPP)
1. 20 water and sewage concessionaires and seven water concessionaires (Poconé,
Nortelândia, Santa
Carmem e Carlinda).
2. Serves five municipalities (Cabo Frio, Armação dos Búzios, Iguaba Grande,
Arraial do Cabo e São
Pedro da Aldeia).
3. The PPP is only responsible for collection and treatment of sewage.
4. Will serve nine municipalities: Alvorada, Cachoeirinha, Canoas, Eldorado do
Sul, Esteio,
Gravataí, Guaíba, Sapucaia do Sul, and Viamão.
According to the schedule, the PPP contract is scheduled to be signed in March
2020.
5. Estimated population according to the latest IBGE release (October/2019).
BUSINESS model
CORPORATE
governance
As a publicly-held company registered with the Securities and Exchange Commission (CVM), we are controlled by Grupo Equipav, which has been operating in the Brazilian infrastructure sector for more than 50 years. We also rely on the Singapore Sovereign Wealth Fund (GIC Private Limited), an international investor with an unquestionable reputation.
We have been improving our corporate governance practices year by year, following criteria, regulations and concepts of excellence in the global market.
100% of our Board of Directors is independent. Of the seven members, five were appointed by Equipav, one by GIC (proportionate to their share), and one was jointly elected by the two shareholders.
All executives holding statutory positions are professionals with experience in various segments of the economy, including in the third sector, and have different academic backgrounds, which, in addition to being a good governance practice, broadens the ways of perceiving and interpreting social, regulatory and market trends.
integrity
Our Integrity Program completed two years in 2019, and matured to consolidate the commitment to ethics and compliance practices in place since the beginning of our activities.
In the year, 930 hours of training specifically related to the Code of Conduct were provided. These training courses are developed according to the needs of each unit, identified based on data collected through the Ethics Channel, which has been growing stronger year by year as a reliable tool for recording concerns regarding behavior that violates the Code of Conduct and legislation.
Specifically, leaders and managers were involved in training on our Government Relations Policy, which provides measures for records and controls regarding the relationship between our executives and local political authorities.
All contracts signed with business partners in 2019 were evaluated by our Integrity team.
The international certification Anti-Bribery Management Systems (ISO 37001) confirms the seriousness with which we handle this topic.
risk
management
We instituted the Internal Audit, Risks and Internal Controls Department. We also launched the Policy on the Performance of the Audit, Risks and Internal Controls Department, whose purpose is to further disseminate the concept of Corporate Governance; and the Internal Controls and Risk Management policies, which provide general guidelines for mapping processes, assessing controls, and analyzing and assessing risks.
The processes are indicated, described and mapped, which makes it possible to understand the chain of activities performed, as well as the interrelationships between the different areas. Subsequently, the risks inherent to each operation are listed, classified, analyzed and evaluated in order to identify causes, consequences and control measures to be adopted.
After the risks are assessed, they are allocated in a matrix, which visually expresses probability and impact, and classified as acceptable, manageable, mitigable or intolerable. This classification is directly related to risk appetite, defined by Senior Management.,
innovation
More than 100 projects on four strategic fronts - Loss Control Management (GCP), Energy Management and Efficiency (GEE), Process Management (GPROC) and Innovation and Water Resources -, which are monitored monthly by the Executive Board for strategic decisions. In 2019, R$ 22 million was invested in the scope of these initiatives.
In 2019, we also implemented the Aegea Innovation Program, which covers all actions performed in the units related to this topic. As part of this program, and in continuity with previous years, we held the third edition of the Efficiency and Technology Award, which aims to recognize ideas internally; and launched Inovae, a platform that drives innovation among employees. In the first month after launch, 113 projects had already been registered.
OPERATIONAL
performance
The number of consumption units served totaled 2.9 million in 2019—1.8 million with water withdrawal, treatment and supply, and 1.1 million with sewage collection and treatment.
The 5.4% increase in active water consumption units between 2018 and 2019 is mainly due to the results obtained with the Program "Vem com a Gente" in the Águas de Manaus concessionaire, which included innovative overhead systems for distribution of treated water and itinerant service initiatives, debt negotiation, inspections, installation of water meters, change of account holder, guidelines for conscious consumption, among others.
The number of active consumption units with sewage collection and treatment also grew in the same period. This growth is associated with the expansion of the coverage system, with concessionaires Águas de Manaus and Águas Guariroba being primarily responsible for this increase.
FINANCIAl
results
We ended 2019 with net operating revenue of R$ 2,222.4 million
Earnings before interest, tax, depreciation and amortization (EBITDA) in 2019 totaled R$ 1.2 billion, up 47.1% (R$ 381.8 million) from the previous year.
EBITDA margin stood at 53.6%, 6.8 p.p. higher than the 2018 margin3, which reflects the increase in our operational efficiency.
The average maturity of debt, at the end of the year, was 4.6 years, with short-term debt accounting for 14.7% of total indebtedness.
Financial leverage, measured by the ratio between net debt and EBITDA, ended 2019 at 3.1x, giving us an adequate liquidity position.
INTERNAL
talents
4,734 employees in our team.
In 2019, we anticipated movements related to the Talent and Succession Management Program, whose goal, since 2015, has been to identify and train internal talent in a structured, systemic and continuous manner for mobility at all leadership levels - from coordinators to CEO. In this regard, revisions were made to the structure and composition of the Executive Board, in addition to specific changes to the Board of Executive Officers of our subsidiaries.
Since 2014, we have invested in the Aegea Academy, responsiblefor developing technical and behavioral training. In 2019, a total of R$ 4,387,397.17 was invested in training and capacity building. The number of participants in the year was 48,188, totaling 125,382 hours of training.
The Aegea Academy also acts as an important development arm of the Trainee Program, whose goal is to recruit and prepare future leaders. Currently, five units are already headed by former trainees. An example is the operation in Teresina (PI), which in only two years under our management, has significantly improved the performance indicators. Other nine hold leadership positions in the corporate areas.
All selection processes are conducted in accordance with the guidelines of the "Respeito Dá o Tom" Program, which provides for mandatory participation of blacks and browns in the final selection stages for hiring. The initiative has been in place since 2017 in order to promote equality in work opportunities and the professional growth of employees.
Regional Committees on Diversity and Racial Equality, which foster ethnic-racial debate and support the implementation of affirmative initiatives under the program have been implemented in all units. The members of these committees are trained to better understand racial issues.
SOCIAL AND
ENVIRONMENTAL
responsability
In 2019, approximately R$ 7.8 million was invested in social projects and community relations activities.
Our work is based on the pillars that make up the Human Development Index (HDI-M) of the municipalities in which we operate (health, education, and income generation), which allows us to adopt a methodology to measure the impact of the projects implemented.
The process of investing in projects with tax incentives has also been improved over the past two years. The selection is now conducted by a Project Selection Committee, with the participation of shareholder representatives, presidents of concessionaires, and corporate areas, such as Financial Planning, Communication and Social Responsibility.
We have a Sustainability Policy in place in order to raise and maintain among our team the awareness that respecting the environment and people is inherent to the provision of water supply and sanitation services.
Also, since 2016 we have been signatories to the United Nations Global Compact, having, as of the following year, joined the Brazilian Committee of the Global Compact, the body that manages the network's activities in Brazil. We have also collaborated to the achievement of the Sustainable Development Goals (SDG), especially goal 6 - “Ensure availability and sustainable management of water and sanitation for all.”
