Strategy and Competitive Advantages

Strategy

In order to be recognized as an innovate and entrepreneurial company, grow in a sustainable manner and lead the public water and sewage services sector, the IGUÁ Saneamento‘s main business strategies are:

Accelerated growth and industry consolidation:

The Company has achieved aggressive growth targets and developed a consolidating role in the industry through the signing of new concession and public-private partnership contracts, as well as the acquisition of private concessionaires that are in keeping with its strategic positioning in the regions where they operate and benefited by the fact of having experience in the industry. For this purpose, it has a decentralized matrix management model, which provides agility in the decision-making process and the management of operations. IGUÁ‘s commercial operations are currently divided among five regional offices - Săo Paulo I, Săo Paulo II, Mato Grosso, the South Region and the Northeast Region, whose mission are to seek to expand the number of contracts.

Geographically spreading and diversifying contracts.

In order to reduce dependency on a small number of contracts, IGUÁ is aims to: (i) diversify the contracting modalities, which are concessions or public-private partnerships; (ii) expand the area of operations to municipalities and states where it does not yet operate; (iii) sign new concession contracts with small, medium and large municipalities, as well as public-private partnerships with state and municipal companies, all with minimum 15-year terms; and (iv) diversify the provision of services, which can be partial - only water or sewage - or full, including both services.

Improving operational expertise through technical training and the development of new technologies.

IGUÁ believes that investments in training and the technical improvement of its employees, as well as the development and adoption of new technologies to reduce operating expenses, increase productivity and improve the quality of services being provided, are fundamental and strategically important.

To carry this out, it was created the Innovation Committee and the IGUÁ Innovate Project, which aims to develop new technologies, foster a culture of innovation and promote knowledge management by sharing it with all of the companies controlled by IGUÁ, which, together with the ongoing technical improvement of its professionals, will increase its competitiveness and highlight it in relation to the competition.

Industry leadership in Brazil.

Currently, IGUÁ is one of the largest private companies to provide public water and sewage services in Brazil, in terms of the number of people directly and indirectly services, according to ABCON. Considering the growth potential of private sector participation in the provision of public water and sewage services, IGUÁ‘s goal is achieve, over the medium term, leadership in the private sector provision of public water and sewage services, in terms of the number of concessions, net revenue and population served.

Competitive advantages

The IGUÁ’s mission is to provide solutions and improved quality of life to society through the provision of public water and sewage services, adding value to the environment, to its employees and shareholders. To carry this out, IGUÁ has the following competitive advantages:

Technical and operational excellence.

IGUÁ operates 14 concessions and 4 public-private partnerships providing public water and sewage services indirectly to more than 6.5 million people. Due to the experience that it has in the sector, it develops and implements new technologies, allowing for improved cost/benefit ratios on its services both for the granting authority as well as the end user, the optimization of its investments and the reduction of operating and commercial losses that have historically existed in this industry. These actions result in the provision of differentiated quality services that are perceived by users, with an 85% satisfaction rate in surveys conducted by independent companies, as well as a maximization of operating results and the return on investments.

Ability to identify and develop new business opportunities in the industry.

Due to its decentralized matrix model of management, IGUÁ is able to provide public water and sewage services to small, medium and large municipalities, due to the gains in scale resulting from the sharing of expenses among its subsidiaries. Given the experience both in concession contracts and public-private contracts, IGUÁ has the flexibility to enter into either of these contractual models, on an individual basis or together with local partners. In addition, it is one of the only private companies in Brazil focused on the provision of public water and sewage services, which makes it highly specialized and equipped with differentiated technical expertise for carrying out its activities. The combination of the factors cited above allows IGUÁ to identify and develop the appropriate solutions that best meet the needs of the granting authority, which, together with its financial strength, debt capacity and differentiated technical assets, make it more competitive in the generation of new business in the industry, both through the adjudication of new concessions and through the acquisition of concessionaires.

Strong environmental and social education and awareness programs for the populations in the municipalities where IGUÁ operates.

In order to reduce operating costs and raise awareness in society about the relevance of its services, IGUÁ seeks to remain close to the users of its services, making communication channels available, providing information that serves the collective interest and proactively resolving environmental and social problems. IGUÁ promotes and supports environmental awareness and educational initiatives in its communities. It promotes awareness program such as "Grease doesn‘t go in the drain", "Mobile service", "Rain water isn’t sewage", "Water and citizenship for life" and its "Open doors program".

The contracts expire beginning in 2024 and most of them were signed under the current regulatory framework.

IGUÁ’s concession contracts for the most part have 30-year terms. The projects in this industry have an estimated average 5-year term of intensive investment, after which most or practically all of these investments have been made and being to provide for greater profitability. Considering that most of the contracts are in the intermediate phase of intensive investment, the period of higher profitability, which is expected in the coming years, has not yet been reached.

Experienced management and technical team with ample experience and a solid professional history.

IGUÁ‘s managers and technicians are a prominent factor in the development of its activities. It has highly qualified professionals with vast technical, operational, commercial and financial expertise in the provision of public water and sewage services, acquired through experience in key position with prominent national and international companies in the industry with which it maintains ongoing exchanges.

Last Update on October 17, 2017

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