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Commercial Offices

Valparaíso San Ignacio, 348 San Ignacio Valparaíso Blanco, 738 Blanco Viña Del Mar, 275 1 Norte Concón, 25420 Borgoño Av.Quilpué, 625 Claudio Vicuña Villa Alemana, 654 Santiago Casablanca, 56 General Bonilla Quillota, 452 Chacabuco

La Calera, 673 Latorre Av.Limache, 338 Urmeneta Quintero, 2025 Normandie La Ligua, 255 Uribe Cabildo, 748 Humeres Av.Petorca, 535 Silva Papudo, 176 Miraflores Zapallar, 156 Diego Sutil

San Felipe, 233 Freire Putaendo, 670 Sarmiento Llay Llay, 139 San Francisco Los Andes, 572 Santa Rosa San Antonio, 2352 Ramón Barros Luco Av.Cartagena, 390 Cartagena Av.Algarrobo, 700 Peñablanca Av.Central Offices Valparaíso, Cochrane 751

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Main Offices of Esval

General Management and Headquarters 751 Cochrane, Valparaíso, ChileTelephone (32) 2209000, Fax (32) 2209502

Quillota Area452 Chacabuco, QuillotaTelephone (33) 291700, Fax (33) 310916Mailing address: P.O. Box 66, Quillota

San Felipe - Los Andes Area 233 Freire, San FelipeTelephone (34) 494300, Fax (34) 494390

Southern Coast Area2410 Barros Luco, San AntonioTelephone (35) 205500, Fax (35) 205520

Call Center 600 600 6060

www.esval.clinfoesval@esval.cl

Annual Report

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Table of ContentsLetter from the Chairman 7

Letter from the CEO 11

Company Information 14

Historical Account 17

Company’s Equity 20

Line of business and Activities 24

Board of Directors and Administration 26

Organizational chart 29

Management Report 31

Administration Report 55

Statement of Liability 67

Financial Statements 69

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Letter from the Chairman

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to submit the 2011 Annual Report.

Regarding the consolidated outcome at December 2011, it reached profits for $15 thousand 354 million 326 thousand, and shows a decrease of 11.2% compared to December 2010. The decrease of the outcome of 2011, compared to 2010, is of 1 thousand 938 million and 861 thousand Chilean pesos. Although the EBITDA was 3% higher than the previous year due to greater ordinary income, the significant drop of the global result is explained by a greater loss per adjustment unit (UF), when going from an UF variation of 2.45% in 2010 to 3.91% in 2011. This effect has caused a decrease in the outcome of the company for this item of -3 thousand 365 million and 363 thousand pesos.

It is important to mention that the company has continued to make substantial investments that reached $25 thousand 545 million pesos, out of which 8 thousand 257 million correspond to Aguas del Valle. Said investments have mainly been aimed at improving the current infrastructure and at increasing the water resources to mitigate the effects of a severe draught that has been affecting us for the last three years.

As you know, this financial year was affected by the persistence of this water shortage, which forced the company to double their human and material efforts to provide a normal supply of drinking water to the community.

Regarding this matter, there are some considerations I would like to express. First, I would like to thank you, in my name and on behalf of the Board of Directors, for the personnel’s effort and for the hard work that has meant to supply all the communities under very difficult conditions, which will probably continue in the future. Second, we are pleased to report that no franchise area had any problems due to the water shortage in 2011. In this respect, the company permanently performed in a preventive manner and developed strong alternatives, broadening and interconnection works.

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success of these efforts that had to stop being fed from the plant located at Embalse Peñuelas, due to the dramatic decrease of its reserves, which were practically not used.

In order to face this situation, we had worked in advance in the interconnection of the resources existing at Las Vegas Plant, 100 kilometers away; also, Concón Plant, more than 50 kilometers away, which became the new supply sources for said areas.

Simultaneously, the Productive System of Concón was increased in 250 liters per second and, by means of an agreement with national and regional authorities and the people who irrigate, it was possible to reinforce Los Aromos level, with the contribution of 10 wells located in the surroundings of Llay Llay. As a result, the supply for Concón and the North Coast was guaranteed; also, some areas of Viña del Mar and Valparaíso, including the aforementioned areas of Curauma and Placilla.

Also, a decanter in the Productive System of Poza Azul (Quilpué) was built to increase the treatment capacity from 301/s to 801/s. Likewise, the conduction system from Cachagua to Zapallar was reinforced, so, all the North Coast, including Papudo, from 2011, is supplied from the Concón plant, as mentioned in the previous paragraph.

In total, during this financial year, as a result from the draught, Esval allocated more than 6 thousand 300 million Chilean pesos to expenses and investment.

I also want to say that, in 2011 there were important changes in the senior administration of the company, because the former Chairman of the Board of Directors, Mr. Pedro Pablo Errázuriz Domínguez, and former CEO, Mr. Gustavo González Doorman, submitted their resignation to take on other positions. We thank both for their effort and for their commitment to the growth of Esval.

On last 1 October, Mr. Rodrigo Azócar took on as the company’s CEO. Given his broad professional experience, I am sure he will boost the modernization the company requires now. The Board of Directors wishes him and his work team the greatest success.

As our shareholders know, once the construction of the great works was over, we dedicated to the renewal and broadening of the networks. In this context, one of the main works we carried out was the renewal of the water main of Alemania Avenue, between Las Cañas and Mariposas Hills, with an extension of 2,678 meters and with an investment of $1,741 million.

Additionally, and with an investment above 754 million Chilean pesos, the strengthening of the drinking water San Antonio-Algarrobo net was carried out. A water main was renewed and enlarged in 1,247 lineal meters to increase the availability of drinking water in 15% for the South Coast.

It is also worth highlighting that we advanced six years of investments above 500 million Chilean pesos to change the drinking water matrices and the waste water collectors of Concepción and Alegre hills. In order to do so we entered into an agreement with the Recovery and Urban

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Development Program of Valparaíso (PRDUV, in Spanish), the Honorable Municipality of Valparaíso and Serviu (Housing and Urbanism Service). We think it was a very good decision to join this urban remodeling project with the modernization of the sanitary infrastructure, because it will boost tourism and the services for these historical neighborhoods of our city.

Finally, I want to thank my Board of Directors’ colleagues, and the shareholders, who trusted me to chair this important company in the V Region and Aguas del Valle, of IV Region. Therefore, I will continue working to add value to the company and to contribute with the best of all the team to the development of the Valparaíso and Coquimbo regions.

Jorge Lesser García-HuidobroChairman of the Board of Directors

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Messrs Shareholders,

As CEO of Esval, I am pleased to inform you about the most relevant events occurred during financial year 2011, which, as the Chairman of the Board of Directors said, was marked by complex situations arising from the water shortage that is affecting the Valparaíso Region. In this situation, the company acted with diligence and precaution, without sparing any resources or efforts, and was able to comply with their usual customers and with the thousands of tourists that arrived to the region to enjoy the beaches, rivers, mountains and countryside.

It was not an easy task, as my arrival to the company coincided with the end of the winter, when the Aconcagua River flow had decreased 87% with respect to a normal year. For this reason, I would like to leave on record the dedication and responsibility of the company’s personnel, especially those who were on the front line of the draught; also, of the authorities and representatives of the private area, with whom I found, from the first moment, a commendable collaboration spirit to face an extremely complex situation. This allowed us to face summer 2011-2012 without any important stress and to make sure that every home and family of the V Region had a secure and continuous supply.

As from the last quarter of 2011, we have been working on the update of the Strategic Plan, focusing each and every worker on our clients, to be acknowledged for the service quality, closeness, empathy, credibility, regional leadership and care for the environment, closing relationships with the community and the authorities. This was made with a long-term perspective of increasing our operations level and margin, thus adding value to our shareholders.

Together with the aforementioned, in the different areas an administration analysis was carried out in order to detect the most important risks at an earlier stage to determine its possible impact and mitigation measures.

Letter from the CEO

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PORT As part of the improvement and update of the company’s practices, in

the internal order we also work for the re-certification of our Integrated Management System, that includes ISO 9001: 2008 (Quality Management System), OHSAS 18:2007 (Occupational Safety and Health Management System) and ISO 14001:2004 (Environmental Management System) for the next three years.

In the labor aspect, within the deadlines established by the law and at the fullest satisfaction of the parties, in 2011 we signed the collective bargaining contract that will be in force for the next two years. This shows the good understanding between the company’s administration and their workers.

As the shareholders know, Esval has a relationship policy with the community that is acknowledged everywhere. Campaign “Agua Sana Vida Sana” [Healthy Water, Healthy Life] and “Las Gotitas” [The Droplets] are known in countless cultural, educational, sport and social activities, and, in 2011, the campaigns directly contacted more than 237 thousand people, in almost 1,250 activities.

In this respect, I would like to highlight that in 2011 we made an important effort to de-centralize the activities and so this is how the launching of the Campaign was carried out in Valparaíso, but also in Las Cruces, Algarrobo and San Antonio. We were also in San Felipe and Los Andes for the official presentation of the III Sustainability Report. Additionally, we prepared Training Seminars, to which 415 social leaders of Marga Marga, San Antonio and Valparaíso Provinces attended.

We carried out 45 Workshops with municipalities, neighbors, public entities and others, to deal with situations related with drinking water, draught and others. We also continued with the implementation of program Al Día con Esval, and during this financial year we carried out a ceremony to acknowledge 100 new clients that satisfactorily complied with the commitments undertaken.

We supported new sport activities, stimulating the participants and arranging the delivery of water in hydration points. We directly participated in the sponsoring of two relevant ones: The Full Marathon of Viña del Mar, which summoned thousands of runners; and the cycling event “A Pedalear por San Felipe” [Pedal for San Felipe] organized together with Instituto Nacional del Deporte, the Province Governorship and the Honorable Municipality.

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In the cultural scenario, we received more than 3 thousand 400 hundred papers from schools from all the corners of the Region for the Painting Contest, with which, year by year, we select the motifs that are later printed in the company’s Christmas cards. For the seventh year in a row, we made contributions for the realization of the Science and Technology Regional Congress, organized by Explora Conicyt and the Pontificia Universidad Católica de Valparaíso, among other activities.

Messrs shareholders, we are aware of the difficult times we are undergoing due to the draught that is affecting different human and economic activities. We hope to win through once more, with the support of the company’s Board of Directors, its workers, suppliers and contractors. I am clear of the commitment we have with the Valparaíso and Coquimbo Regions, and we will continue making our best efforts to contribute to the wellness and prosperity of their inhabitants.

Rodrigo Azócar HidalgoCEO

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•Corporate Name •Fantasy Name •Tax Card •Type of Company •Registry of Securities •Address •Telephone •Fax •Postal Code •P.O. Box •Internet •E-mail address

Esval S.A.Esval89.900.400-0Public Limited CompanyNo. 0348 dated 24 October, 1989 751 Cochrane, Valparaíso, Chile (56-32) 2209000(56-32) 22095022370020616 Valparaísohttp://www.esval.clinfoesval@esval.cl

CompanyInformation

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Documents of Incorporation

INCORPORATION OF THE COMPANY Act of Incorporation granted on 12 June 1989, before the Notary of Santiago, Mr Raúl Undurraga Laso, summary of which was registered in the Register of Business of Valparaíso on page 449 reverse side, number 469 of 1989, and published in the Official Gazette on 15 June of 1989.

Comments and Proposals of Shareholders

The shareholders representing 10% or more of the shares issued, with right to vote have not made any comments or proposals regarding the progress of the social businesses, so comments and proposals in said respect are not included in this annual report.

Corporate Changes

Year Date Notary City Record in Registry of Business of Valparaíso Official Gazette

1 17/01/1991 Eduardo Bravo Ubilla Valparaíso Page 73 reverse page No. 76/1991Rectification of Summary 12/02/1991-20/02/1991

2 08/11/1995 Eduardo Bravo Ubilla Valparaíso Page 902 reverse page No. 805/1995 06/12/1995

3 25/06/1996 Eduardo Bravo Ubilla Valparaíso Page 462 No. 434/1996 31/07/1996

4 03/06/1998 Eduardo Bravo Ubilla Valparaíso Page 395 reverse page No. 353/1998 12/06/1998

5 30/09/1998 Eduardo Bravo Ubilla Valparaíso Page 835 reverse page No. 682/1998 14/11/1998

6 03/02/1999 Eduardo Bravo Ubilla Valparaíso Page 73 reverse page No. 63/1999Page 180 No. 155/1999 06/02/1999-16/03/1999

7 11/11/1999 Eduardo Bravo Ubilla Valparaíso Page 449 reverse page No. 469/1991 06/02/1999-16/03/1999

8 27/03/2000 Eduardo Bravo Ubilla Valparaíso Page 449 reverse page No. 469/1991 (*)

9 08/05/2000 Eduardo Bravo Ubilla Valparaíso Page 364 No. 353/2000 (*)

10 04/08/2000 Eduardo Bravo Ubilla ValparaísoPage 496 No. 456/2000Page 599 No. 546/2000

(Complements Summary)10/08/2000-21/09/2000

11 21/07/2003 Eduardo Bravo Ubilla Valparaíso Page 550 reverse page No. 473/2003Complement to Notary Certification 01/08/2003

12 08/09/2003 Eduardo Bravo Ubilla Valparaíso Page 878 reverse page Nº820/2003 19/12/2003

13 26/11/2003 Eduardo Bravo Ubilla Valparaíso Page 82 No. 71/2004 31/01/2004

14 26/01/2004 Eduardo Bravo Ubilla Valparaíso Page 1143 reverse page No. 977/2007 15/12/2007

15 26/08/2011 Alejandro Sepulveda Valenzuela Valparaíso Page 946 No. 888/2011 21/09/2011

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PORTHistorical Account

The Chilean Development Agency and the Chilean Treasury constituted Esval S.A. (hereinafter “Esval” or the “Company”) in 1989 under law No 18.777.

In December 1998, Esval was the first sanitary company to open to the process of incorporating private capital, considered in law 19.459, by a bidding process. Aguas Puerto S.A., company formed, at that time, by Enersis Group (72%) and Anglian Water Chile Ltda. (28%), affiliate of Anglian Water Inc. (hereinafter “Anglian Water”) from UK, was awarded 40% of Esval’s property. The property transfer and take-over on the part of Aguas Puerto S.A. were carried out on 15 April 1999.

On 4 August 2000, Anglian Water bought their share in Aguas Puerto S.A. from Enersis Group, becoming the controller of the Company. By the end of 2000, a 25,063 million Chilean pesos capital increase was carried out, which consisted in the issuance of 541,559,555 shares, in order to finance the early termination of the Investment Management Agreeement between Esval and Aguas Quinta S.A. With the shares subscribed, Aguas Puerto S.A. remained with 49.82% of Esval’s property.

On 12 November 2003, Consorcio Financiero S.A. signed a share purchase agreement by means of which they bought from Aguas Puerto S.A. 1,484,000,000 Esval series A shares, accounting for 44.78% of their issued shares; therefore, the take-over by Consorcio Financiero S.A. materialized that same day.

On 14 November 2003, through public writ of Accountability and Release between Consorcio Financiero S.A. and Proyectos e Inversiones Longovilo S.A., BP S.A., Inversiones Teval S.A., Consorcio Inversiones Limitada and Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., granted on the same day before notary of Santiago Mr Humberto Santelices Narducci, Consorcio Financiero S.A. transferred: 140,314,207 shares to Consorcio Inversiones Limitada and 240,000,000 shares to Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., both companies completely controlled by Consorcio Financiero S.A., 30,915,792 shares to BP. S.A., company completely owned by the General Manager and the Chairman of Consorcio Financiero S.A., 320,583,321 shares to Inversiones Teval S.A., company controlled by the directors of Consorcio Financiero S.A. Mr Eduardo Fernández León and Mr José Antonio Garcés Silva, and member of the business group to which Banvida S.A. belongs which, in turn, is holder of 47.70% of Consorcio Financiero S.A., and 320,583,321 shares to Proyectos e Inversiones Longovilo S.A., company controlled by the directors of Consorcio Financiero S.A. Mr Juan Hurtado Vicuña and Mr Pedro Hurtado Vicuña, and his four

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holder of 22.7% of Consorcio Financiero S.A. and Altas Cumbres S.A. holder of 25% of Consorcio Financiero S.A.

On 25 November 2003, Esval was awarded, for a 30 years period, the right of exploitation of the water treatment concessions operated by Essco S.A., water treatment plant of the 4th Region, for UF 3,177,000 VAT included, through their affiliate Aguas del Valle S.A. Thus, Esval achieved a market share close to 17% of the customers of that area in the country. In January 2004, share transfers subscribed by Cía. de Seguros Generales Consorcio Nacional de Seguros S.A. by the end of 2003 were recorded in the shareholder registry, in virtue of which, the company was completely clear of all their shares; Compañía de Seguros de Vida CN Life S.A. purchased 110,000,000 shares, and Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. 130,000,000 shares. These last two companies are controlled by Consorcio Financiero S.A.

In Extraordinary Meeting on 23 January 2004, it was agreed to increase the capital in $24,136 million, with the issuance of 462,372,090 payment shares, to partly finance the payment of the contract price, by which Esval S.A. obtained the right to exploit the sanitary concessions held by Essco S.A. in the Region of Coquimbo.

The capital increase was signed in a 92.27%, with which Esval’s signed and paid capital is TH$162,384,714.- After the capital increase, Esval S.A.’s controller was constituted by Consorcio Corredores de Bolsa (4.34%), CN Life Compañía de Seguros de Vida S.A. (9.91%), Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. (9.55%), Compañía de Seguros de Vida Vitalis S.A. (3.45%), Proyectos e Inversiones Longovilo S.A. (10.37%), BP S.A. (1.0%), and Inversiones Teval S.A. (10.37%), with 49.00% of Esval S.A.’s shares.

On 18 November 2007, Inversiones OTPPB Chile III Limitada and Westwater Investments Limited published a notification establishing a Takeover bid (in Spanish Oferta Pública de Adquisición, OPA) for all Esval’s series “A” shares, including series B shares that may have been exchanged for series A shares, by virtue of what the social statutes states. In order to declare the takeover bid as successful, Esval shareholders had to agree, in an Extraordinary Shareholder Meeting, on a reform of their statutes, which consisted in modifying the denomination and distribution of the shares in which the social capital is divided in, without increasing the latter, so that the capital is divided in three new share series, called Series A, B and C.

On 12 December 2007, Esval’s Extraordinary Shareholder Meeting was held, which was called to discuss all the modifications to the statutes of incorporation, under the terms requested by the bidders. Among other matters, they agreed to increase the number of shares in which the capital of the Company is divided, 3,740,569,084 to 14,962,276,336,000, without increasing the social capital, under the following terms: (i) Series A and B shares were withdrawn and new series A, B and C shares were created; (ii) the new series A and B shares keep all the rights and privileges, respectively, that the old series A and B shares had; (iii) the new series C shares do not have the right to chose directors, but they will have the privilege of calling an extraordinary shareholder meeting, when they request it so, at least 5% of these shares. The aforementioned preference and limitation were established for a period of 5 years as from 12 December 2007, which were renewed for a new period of 5 years as from 26 August 2011, according to what was established in the General Shareholder’s Meeting held that day.

All the new shares, no matter the series they belong to, participate in the profits and other economic rights on equal terms. In Esval’s Extraordinary Shareholder’s meeting held on 12 December 2007, the exchange between the old series A and B shares and the new series A, B and C shares was approved, according to which the shareholders received a new series A or B share for each series A or B they had, plus

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3,999 of the new series C shares. Also, they provided that the allocation of the new shares and their update in the Shareholder Registry had to be carried out at the closing day of the publication of the result notification that states the takeover bid as successful. The record of the meeting was prepared as public writ of the same date in the notary of Valparaíso of Mr. Eduardo Bravo Ubilla and a summary of said writ was published in the Official Gazette on 15 December 2007 and recorded in page 1143 reverse side, No. 977 of the Registrar of Real State and Commerce of Valparaíso of 2007.

On 21 December 2007, the notification that stated the takeover bid as successful was published. This takeover bid was made by Inversiones OTPP Chile III Limitada and Westwater Investments Limited to have the control of the Company. By virtue of the aforementioned, said companies became Esval’s controllers with 69.37% of the total of the shares issued by the Company, which came into effect that same day.

As in said takeover the bidders purchased more than two thirds of the shares issued with voting power of Esval, the new controllers made a new takeover tender for the total shares of the Company, under the terms established by article 69 of Law 18.046 on Public Limited Companies.

Due to this second takeover bid, which finished on 18 February 2008, said controllers obtained up to that date, 69.72% of the total of the shares issued by Esval.

On 21 December 2009, Westwater Investments Limited sold the total of their shares of Esval to company Mareco Holdings Corp, which signed a shareholders’ agreement with Inversiones OTPPB Chile III Limitada. By virtue of the aforementioned, these companies are currently Esval´s controllers.

In July 2011, Corporación de Fomento de la Producción (CORFO) sold part of their share in ESVAL, where Inversiones OTPPB Chile III Ltda, purchased 3,654,310,102,023 Series C shares and Mareco Holdings Corp, 913,805,977 Series A shares, both amounting to 94.2% of the total shares issued by the Company.

Inversiones OTPPB Chile III Limitada is a Chilean limited liability company, which up to 31 December 2011 owned 1,122,170,725 series A shares, and 14,092,092,951,289 series C shares of Esval. The direct controlling institution is Inversiones OTPPB Chile III Limitada, a company that is, in turn, controlled by Inversiones Southwater Ltda. (“ISL”), subsidiary of AndesCan SpA., investment vehicle in Chile of the Canadian company Ontario Teachers’ Pension Plan Board (OTPPB). Apart from Esval, they are related to Inversiones OTPPB Chile III Limitada, OTPPB Chile Inversiones S.A. (Tax Card No. 76.833.170-7), Castlefrank Investments Limited (Tax Card No. 59.141.730-4), Inversiones OTPPB Chile I Limitada (Tax Card No. 76.833.300-9), Inversiones OTPPB Chile II Limitada (Tax Card No. 76.833.340-8), and Essbio S.A. (Tax Card No. 96.579.330-5). On the other hand, Ontario Teachers Pension Plan Board has an indirect participation with 50% of Inversiones Los Lagos Limitada, holding company of Sociedad Austral de Electricidad S.A. (SAESA) with 99.99% of the shares of said company.

Mareco Holdings Corp. is a limited liability company incorporated according to the laws of the Ontario Province, Canada; as at 31 December 2011 it owned 2,401,326,543 series A shares of Esval.

Morgan McCague is the final controller of Mareco Holdings Corp. There is a shareholder agreement between Inversiones OTPPB Chile III Limitada and Mareco Holdings Corp, by virtue of which certain limitations were established for the free assignment and transfer of their shares in Esval, as well as certain preferential purchase/sale rights regarding shares. Some regulations regarding the exercise of voting power corresponding to Mareco Holdings Corp. in regard to the election and renewal of Esval’s board of directors were also established.

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Company’s EquityAs at 31 December 2011, the main shareholders were:

Corporate NameShares

Total PercentageESVAL-A ESVAL-B ESVAL-C

INVERSIONES OTPPB CHILE III LIMITADA 1,122,170,725 0 14,092,092,951,289 14,093,215,122,014 94.1917%

CORPORACION DE FOMENTO DE LA PRODUCCION 0 187.028.455 747,926,791,545 748,113,820,000 5.0000%

INVERSIONES GUALLATIRI LTDA 2,494,988 0 14,170,179,125 14,172,674,113 0.0947%

SUC ZAMORA VILLALBA DAVID 1,734,690 0 6,937,025,310 6,938,760,000 0.0464%

BANCO ESTADO SAC DE B 489,787 0 6,657,386,086 6,657,875,873 0.0445%

BUSTILLOS MUNOZ MANUEL 1.390.000 0 6,598,610,000 6,600,000,000 0.0441%

INVERSIONES TACORA LIMITADA 1.192.426 0 6,586,440,512 6,587,632,938 0.0440%

LARRAIN VIAL S A CORREDORA DE BOLSA 368.952 0 4,477,996,878 4,478,365,830 0.0299%

BANCHILE C DE B S A 706.939 7.877 4,133,799,800 4,134,514,616 0.0276%

THE CHILEAN TREASURY 877.294 0 3,508,298,706 3,509,176,000 0.0235%

GALLARDO BILBAO ANA MARIA 786.039 0 3,143,369,961 3,144,156,000 0.0210%

ALIAGA PONCE TEODORO 750,000 0 2,999,250,000 3,000,000,000 0.0201%

TOBAR LEIVA MANUEL 800,000 0 2,899,200,000 2,900,000,000 0.0194%

INMOB E INVERS LUIGI MATTERA MAZZELLA S A 722,674 0 2,889,973,326 2,890,696,000 0.0193%

MARECO HOLDINGS CORP 2,401,326,543 0 0 2,401,326,543 0.0160%

Other shareholders 17,625,489 96,206 53,514,494,378 53,532,216,073 0.3578%

Total 3,553,436,546 187,132,538 14,958,535,766,916 14,962,276,336,000 100.0000%

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Summary of Share Transactions of the Company

Year Quarter No. of Sold/Purchased Shares Total Sold/Purchased Amount Average Price

2009 1 2,681,334,318 45,717,243 0.01705

2009 2 1,116,005,398 16,086,206 0.01441

2009 3 540,202,848 10,857,942 0.02010

2009 4 1,278,098,811 25,578,129 0.02000

2010 1 136,737,638 2,767,275 0.02024

2010 2 1,086,061,535 37,356,441 0.03440

2010 3 581,499,910 25,865,874 0.04448

2010 4 118,699,892 44,082,376 0.03941

2011 1 8,199,807,161 1,833,413,555 0.22359

2011 2 3,354,971,041 349,451,682 0.10416

2011 3 3,659,143,137,957 106,588,034,081 0.02913

2011 4 6,615,721,963 286,383,067 0.04329

* Including the Stock Exchange of Santiago, the Stock Exchange of Valparaíso and the electronic stock exchange

The controller group is made up by the following members:

SharesTotal Percentage

ESVAL-A ESVAL-B ESVAL-C

INVERSIONES OTPPB CHILE III LIMITADA 1,122,170,725 0 14,092,092,951,289 14,093,215,122,014 94.19%

Participation in Share Series 31,58% 0.00% 94.21%

Participation in Series with Political Rights (A and B) 30.00%

MARECO HOLDINGS CORP. 2,401,326,543 0 0 2,401,326,543 0.02%

Participation in Share Series 67.58% 0.00% 0.00%

Participation in Series with Political Rights (A and B) 64.20%

TOTAL SHARES RELATED WITH OTPPB III CHILE LIMITADA 3,523,497,268 0 14,092,092,951,289 14,095,616,448,557 94.21%

Participation in Share Series 99.16% 0.00% 94.21%

Participation in Series with Political Rights (A and B) 94.20%

OTPPB and MARECO’s control is based on having 99.16% of series A shares, with which they own 94.20% of the political rights of the Company (30.00% owned by the former and 64.20% by the latter).

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PORT Dividend policy / Payment of dividends

In the Ordinary Shareholder Meeting, held on 29 April 2011, it was agreed to distribute as definite dividends for the financial year 2010, $0.00115578584 per share, which corresponds approximately to 100% of the profit obtained in said financial year.

In addition, the meeting agreed on distributing an additional dividend of $0.00033943157 per share obtained from the profits accumulated in former financial years.

2011 Dividend Policy

The Shareholders Meeting was informed of the Agreement of Esval S.A.’s Board of Directors on provisional dividend policy, which consists in the distribution of up to two provisional dividends of 0.00025 per share as maximum – each time - charging it to the profits of financial year 2011 under the condition that said provisional dividends do not exceed 80% of the profits of financial year 2011, and that have been verified as at the closure of June and September 2011. If said dividends are to be distributed, they will be paid in August 2011 and February 2011.

Regarding the definite dividends related to that same financial year, the shareholders were informed that the purpose of the Board of Directors is to distribute at least 80% of the profits of financial year 2011. However, the respective Ordinary Meeting will decide on the distribution of said definitive dividends.

It was left on record that the aforementioned policy, both regarding provisional dividends and definite dividends, corresponds to an intention of the Board of Directors of the Company; therefore, their compliance

will depend on the profits actually obtained, as well as on the results indicated by the projections periodically made by the Company, or on the existence of certain conditions that may make said policy vary. The dividends paid per share during the last three years are the following:

Dividend Paid 2009 – 2011

Financial Year Type of Dividend Payment Date $ Per Share

2008 PROVISIONAL 23-02-2009 0.000250000

2008 DEFINITIVE 18-05-2009 0.000848889

2009 PROVISIONAL 20-08-2009 0.000250000

2009 PROVISIONAL 02-02-2010 0.000250000

2009 DEFINITIVE 24-05-2010 0.001002960

2010 PROVISIONAL 27-08-2010 0.000250000

2010 PROVISIONAL 04-02-2011 0.000250000

2010 OBLIG MIN DEF 27-05-2011 0.000655786

2010 DEFINITIVE ADDITIONAL 27-05-2011 0.000339432

2011 PROVISIONAL 06-09-2011 0.000250000

1.- In nominal currency upon the payment date.

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Risk Classification

In 2011, ESVAL hired the risk classification services for their shares, bonds and lines of bonds from Feller Rate Clasificadora de Riesgo Limitada and ICR Clasificadora de Riesgo Limitada.

Valid Issues Inscription No. Serie

Classification

Feller Rate ICT

Shares - A, B, C Level 4 Level 4

Negotiable Instruments 43 * --- AA- / Level 1+ AA / Level 1+

Negotiable Instruments 44 * --- AA- / Level 1+ AA / Level 1+

Negotiable Instruments 87 13A AA- / Level 1+ AA / Level 1+

Bonds 232 A AA- AA

Line of Bonds 293 D AA- AA

Line of Bonds 375 E AA- AA

Line of Bonds 419 H AA- AA

Line of Bonds 493 J AA- AA

Line of Bonds 561 K AA- AA

Line of Bonds 562 M AA- AA

On 31 December 2011, the lines of negotiable instruments 43 and 44 do not have series issued with valid debt.

Distributable Profit 2011 2010 2009(**)

PROFIT OF FINANCIAL YEAR 15,324,326 17,293,187 22,476,545

DEFINITIVE DIVIDEND 17,293,187 22,476,545

PROVISIONAL DIVIDENDS 7,481,138

% SHARED AS DIVIDENDS (*) 100% 100%

(*) This amount will be agreed on the next Ordinary Meeting of Shareholders (**) Values estimated according to the accounting regulation in force during that annual period

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Line of business and ActivitiesEsval is a drinking water production and distribution company engaged in the collection, treatment, and disposal of wastewater, which also renders services regarding said activities, under the conditions stated by the Law authorizing its creation and other applicable norms.

The operational territory of the Company includes the urban areas of the Region of Valparaíso, which former Empresa de Obras Sanitarias of the Region used to attended until 27 January 1986 - except the areas franchised to private or municipal services - plus the expansion areas included within the development plans approved by the Superintendence of Sanitary Services, according to what is stipulated by Law No. 18.777 and decree No. 2.166/78 and 69/89 of the Ministry of Public Works.

Additionally, the company renders drinking water services to other locations outside the awarded area in the commune of Algarrobo based on agreements signed with the communities of Algarrobo Norte, Mirasol and Las Brisas.

On 25 November 2003, Esval took over, by public bidding, the right of exploitation for 30 years of the awardings, holder of which is ECONSSA CHILE S.A. (at that time ESSCO S.A.), water supply and sanitary company of the Region of Coquimbo. For such effects, a subsidiary public limited company was incorporated, called Aguas del Valle S.A., on 4 December 2003, under the regulations for joint-stock companies. Aguas del Valle produces and distributes drinking water and collects, treats and disposes wastewater. For this, it also renders services related to those activities, under the terms stated in DFL No. 382 of 1988, of the Ministry of Public Works, and other applicable norms.

The body that regulates the activity of Esval and the sanitary sector in its totality is the Superintendence of Sanitary Services, created in 1990, through Law No. 18.902, to guarantee the population that the rendering of sanitary services - in terms of amount, quality and price - corresponds to the one offered and can be maintained in the long term, and that the water, once used, will be treated and disposed in keeping with sustainable development.

Operation Data 2011

ESVAL Aguas del Valle Consolidated

Urban population * 1,502,584 573,855 2,076,439

Drinking Water Clients 536,420 193,657 730,077

Sewerage Clients 484,951 185,005 669,956

Drinking Water Coverage (%) * 99.3 99.9 99.5

Sewerage Coverage (%) * 92.3 96.4 93.5

Drinking Water Invoicing (000m3) 100,305 35,282 135,586

Sewage Invoicing (000m3) 87,976 31,955 119,932

* Sanitary Sector Management Report 2010, published by SISS [Superintendence of Sanitary Services].

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Valparaíso Region

Province of PetorcaPetorca, La Ligua, Cabildo, Papudo, Zapallar.

Province of Los AndesCalle Larga, Los Andes, Rinconada.

Province of San FelipeSan Felipe, San Esteban, Santa María, Catemu, Llay Llay, Putaendo.

Province of QuillotaLa Cruz, La Calera, Hijuelas, Quillota, Nogales.

Valparaiso Region

Coquimbo Region

(*)

(*)Province of Limarí

Province of Choapa

Province of Elqui

Province of Petorca

Province of Marga Marga

Province of Quillota

Province of San Felipe

Province of Los Andes

Province of Valparaíso

Province of San Antonio

(*)

(*)

(*)

Province of Marga MargaLimache, Villa Alemana, Quilpué.

Province of ValparaísoPuchuncaví, Viña del Mar, Valparaíso, Concón, Quintero.

Province of San AntonioAlgarrobo, Casablanca, El Quisco, El Tabo, Cartagena, San Antonio.

Locations outside the awarded area (*):Sto. Domingo, Olmué, Panquehue.

Coquimbo Region

Province of ElquiLa Serena, Coquimbo, Vicuña, Paihuano, Andacollo.

Province of LimaríOvalle, Monte Patria, Punitaqui, Combarbalá.

Province of ChoapaCanela, Illapel, Salamanca, Los Vilos.

Locations outside the awarded area (*): La Higuera, Río Hurtado.

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Board of Directors and ManagementAs at 31 December 2011, the board of directors of Esval was constituted by the following members:

PRESIDENTJorge Lesser García Huidobro6.443.633-3, Industrial Civil Engineer

VICE-PRESIDENTJuan Ignacio Parot Becker7.011.905-5, Industrial Civil Engineer

DIRECTORSStacey Leanne Purcell48.121.218-9, Bachelor of Commerce,Dalhousie University

Olivia Penelope Steedman48.120.868-8, Civil Engineer,Queen’s University

Nicolás Navarrete Hederra11.947.222-9, Industrial Civil Engineer

Juan Pablo Armas Mac Donald6.198.258-2, Industrial Civil Engineer

Alejandro Ferreiro Yazigi6.362.223-0, Lawyer

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Directors’ Committee

Since the Company does not comply with the requirements stated in sub-paragraph 1 of article 50 bis of the Law of Limited Companies – which was modified by Law No. Nº20.382 – Directors’ Committee constituted in Esval S.A. ceased its functions on 31 December 2009.

Remuneration of the Board of Directors

During financial year 2011, the directors did not receive direct remunerations from Aguas del Valle S.A.

From the headquarters, the directors received the following gross remunerations for expenses, fees and meetings of the board of directors.

Expenses for Board of Directors and Committee of Directors

In 2011, the Board of Directors and the Directors’ Committee recorded expenses for TH$2,947.

Allowances and Payments for Committees of Directors

Year 2011 Year 2010

Allowances TH$

Fees TH$

Committees TH$

Allowances TH$

Fees TH$

Committees TH$

Kevin David Kerr - - - 11,353 - -

Pedro Pablo Errázuriz Domínguez 7,732 - 515 76,463 15,087 5,098

Jorge Lesser García Huidobro 89,682 - 1,817 34,332 - 3,052

Stacey Leanne Purcell 27,572 - - 13,443 - -

Carlos Williamson Banaprès 3,770 - 2,611 7,658 - 2,046

Olivia Steedman 23,629 - - 22,888 - -

Alexander Galetovic Potsch 15,652 - 4,174 15,344 - 4,092

Nicolás Navarrete Hederra 23,629 - 782 15,344 - -

Juan Pablo Armas Mac Donald 15,862 - 4,230 - - -

Alejandro Reyes Vergara - 7,544 2,012

Mónica Singer González - 7,544 1,006

Rodrigo Pérez Mackenna - 7,544 1,006

Alejandro Ferreiro Yazigi 9,954 - 2,127 - - -

Juan Ignacio Parot Becker - - - - - -

General Total 217,482 - 16,256 219,457 15,087 18,312

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1. CEORodrigo Azócar Hidalgo6.444.699-1, Civil Engineer

2. Planning and Studies ManagerFrancisco Ottone Vigorena7.523.281-0, Civil Engineer

3. Human Resources Manager Sergio Pinto Fernández8.018.789-0, Psychologist

Main Executives

4. Engineering Manager Leonel Fuentes Espinoza4.899.487-3, Civil Engineer

5. Legal Advisor Domingo Tapia Navarro6.645.077-5, Lawyer

6. Operations Manager George Seal Comte5.390.299-5, Civil Engineer

7. Finance and Administration Manager Agustín Benavente Font de la Vall7.067.713-k, Business Administrator

8. Commercial and Development ManagerMauricio Coll Olivares11.471.960-9, Industrial Civil Engineer

3

78

2

1

65

4

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Organizational Chart Board of Directors

Commercial Management and Development

Operations Management

Planning and Studies Management

Engineering Management

Human Resources Management

Administration and Finance Management

Legal Advisor

General Management

Public Relations

CorporateManagement

InternalAudit

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Management Report

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Investment 2011

During this financial year, the Company continued to expand the services of production and distribution of drinking water, collection and decontamination of waste waters and maintenance of assets. For this, investments for TH$ 18,640,370.- were made in the Region of Valparaíso.

Replacement of Avenida Alemania’s water main between Cerro Las Cañas and Cerro Mariposas. This iron main with polyethylene inner and outer coating, with a diameter of 700 millimeters, stretches for 2,678

meters. The works required an investment of $1,741 million, including the installation of fire faucets, valves, air relief valves and drains in its respective chambers.

Additionally, with an investment higher than 754 million Chilean pesos, the reinforcement of San Antonio-Algarrobo’s drinking water piping system was carried out. The work consisted in replacing and expanding the 700 millimeter spun concrete water main stretch for a 900 and 800 mm iron pipe with a total length of 1,247 lineal meters. These works were needed to increase the drinking water conduction capacity from San Antonio to Algarrobo in order to back up the urban growth due to the population increase and to face the increasingly growing demand of drinking water in summer time. With this work, the availability of drinking water increased in 15% for the South Coast area.

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69,9%8,0%

22,1%

Drinking WaterProduction and Distribution

Equipment, Technology, Others

Sewage Water Treatment

and collection

We must highlight the agreement signed by the Programa de Recuperación y Desarrollo Urbano de Valparaíso (PRDUV) [Urban Recuperation and Development Program for Valparaíso], the Illustrious Municipality of Valparaíso, Serviu and Esval, to carry out the Public Spaces Improvement Project in Cerro Alegre and Concepción. Upon request by the authorities, Esval invested in six years over $500 million to change the drinking water mains and the sewage water collector of these two world heritage hills. During this financial year, several road paving, rainwater collector improvement, lighting and landscaping works were financed with contributions from Banco Interamericano de Desarrollo (BID). It was very wise to join urban redevelopment and sanitary infrastructure modernization, because this will encourage tourism and the services area in these historical neighborhoods of our city.

La Viuda-Villa Italia Drinking Water Construction/Conduction

This work is the constructive stage of the project “San Juan-Villa Italia Drinking Water Conduction Reinforcement” and entails the reinforcement of the construction of a stretch between pool La Viuda Bajo and ring road Los Romos in the Llo-Leo area. The length of the Reinforcement is 1,247 meters. This work was carried out in a period of 180 days and its investment amounted to $665,925,176.

Production Capacity Increase Distribution and Construction South Coast Drinking Water

The drinking water production plant of San Juan Llo-Lleo stretches along the northern bank of river Maipú, approximately 6 km away from the river mouth.

The works included the increase of drinking water treatment from the current design capacity of 750 liters per second. This ambitious project entailed the construction of three new filtering units, the improvement of the 11 existing filtering units and the expansion of the dosing systems

for the production of drinking water, increase of the pre and post chlorination of the interconnection with the existing filters and related electric works.

This work was carried out in a period of 150 days and its investment amounted to $674,754,210.

ESVAL’s Investment as per Stage-Gate Process

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Esval and its Clients

Esval’s main management aim is satisfying its clients. For this reason, its actions are focused on continuously improving its services, keeping permanent communication with the Valparaíso Region and maintaining constant participation of the company in the different activities of the region to strengthen the links and communication channels between Esval and its clients.

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Meetings with the Community

During 2011, 159 meetings and activities were held in relation to the delivery of information and contact with the community. In general, this process is carried out with the participation of social organizations, clients, neighborhood organization leaders and local authorities. The topics addressed in these meetings are related to the needs and concerns stated by neighbors, clients and neighborhood leaders through service fairs and other on-site activities. The most discussed matters were: Care of sewage and fire faucets, works to be carried out, drinking water subsidy and commercial information.

No. of MeetingsSan

Antonio Quillota San Felipe Valparaíso Total

Meeting with the authorities 6 2 17 4 29

Meeting with UNCOS and Neighborhood Committees 10 6 15 48 79

Workshop with organizations 9 18 2 18 47

Meetings for works 3 4 3 3 13

28 30 37 73 168

Esval’s Seminaries with the Community

During 2011, 4 Seminaries called “Esval together with the Community” with the participation of 415 community leaders were carried out. The objective of this activity was to train and prepare them to strengthen the strategic alliance created throughout the past recent years between the company and the community.

“Al Día con Esval” Recognition Ceremony

In order to recognize the effort of those families that regularized their debt situation with the company, a ceremony with more than 150 invitees was carried out in December.

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Workshops

45 workshops with neighborhood committees, communal councils and local Health councils were formed. The topics addressed water supply pressure and quality, drought and subsidies, among others. In addition, 27 workshops with municipal and regional authorities of Valparaíso, Quilpué, Villa Alemana and Quintero were conducted.

Guided Tours

During 2011, educative and guided tours to different drinking water treatment and production plants of the company were carried out. For this, specialized signs to help the visitors follow the route and understand in a more didactic way the process and the importance of the works carried out by Esval were installed in Concón’s drinking water plant.

Coordination and Support

To strengthen the relationship and contact with the community, Esval participated together with other public services in several Service Fairs in the region.

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Al Día con ESVAL

AreasNo. of Education for Consumption

WorkshopsNo. of Participants No. of Plumbing

Workshops

Gran Valparaíso 237 1.425 45

Litoral Sur 77 523 23

Quillota 77 309 22

San Felipe - Los Andes 52 317 19

General Total 443 2,574 109

Agreements signed in 2011

Areas No. of Agreements No. of Currently Valid Agreements

No. of Terminated Agreements

Gran Valparaíso 2,061 3,105 343

Litoral Sur 580 583 105

Quillota 332 358 90

San Felipe - Los Andes 713 763 153

General Total 3,686 4,809 691

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Rural Drinking Water Service

During 2011, the Directorate of Hydraulic Works extended in twelve more months the agreement with ESVAL for technical assistance and project management of rural drinking water systems projects. Thus, the technical assistance has allowed assisting 150 rural drinking water systems in 2011, benefiting an estimated population of 200,000 inhabitants. In 2011, 237 scheduled visits to the services were performed. The purpose of this was to improve and consolidate their management as well as to provide technical, administrative and financial sustainability to the people in charge of management. Within the frame of the technical assistance, it is worth mentioning the legal assistance provided to the rural drinking water services, aimed at supporting the users in regularizing their water rights, land titles and water concessions. Thus, in 2011, 227 interviews with the technical assistance lawyer were carried out, regularizing 8 water right issues, 5 properties and 6 water concessions.

Additionally, seven unscheduled interventions to the services were carried out in order to solve operational emergencies. These interventions benefitted 8,000 people approximately.

We must also mention the training conferences provided to all the services. In 2011, three training workshops were carried out – one in each province of the 5th Region – with an attendance of 450 people approximately. The core topic in the workshops was Economy in the Management of the Drinking Water Resource.

Regarding the project management, new works and designs for an investment amount of 860 million pesos financed by the Chilean State were conducted. Among the works carried out are the construction of two semi-buried pools and the installation of 8,100 meters of network, with 170 new home drinking water connections.

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Image and Communication Esval is a regional company committed to providing a service of

excellence to its clients and with this, contributing to the standard of living of the inhabitant’s of the Valparaíso Region.

Over the years, the company as worked closely with the regional, provincial and communal authorities as well as social organizations and the organized community in order to know their needs, problems and possible solutions regarding issues related to the service rendered by Esval.

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Over time, this link has strengthened and today we can say that we are working together, taking into account the needs of our clients and the region, framed in a process of continuous improvement that we have adopted as a cornerstone in the development of our business.

The campaign “Agua Sana, Vida Sana” is one of our on-site strongholds. With 9 years of work experience, we have visited housewives, providing information on the campaign, our activities and willingness to listen and work together; to children in their school – thinking in them as future generations – we have taught about the water resource and its different and complex purification processes as well as about environmental care and our key role as humans regarding this duty.

Only in 2011, the campaign “Agua Sana, Vida Sana” contacted 237,163 people and participated in 1,264 activities. They include massive activities like: Family running and cycling events, communal fairs, street activities for children, carnivals and artistic-cultural events, among others.

Among the sport activities carried out is the cycling event organized by Esval “A Pedalear por San Felipe” [Pedal for San Felipe], which gathered more than 600 people from San Felipe. In it, bikers of all ages gathered in the Main Square of said city and enjoyed cycling along a stretch of 7.2 kilometers that included the city’s main avenues and streets with hydration stations and refreshing points.

Another important event was Esval’s participation in the event Full Maratón de Viña del Mar, a 5 and 10 K running event that gathered thousands of runners along Viña del Mar’s coastline. Esval participated as one of the main sponsors and with providing hydration points for the runners.

During 2011, our campaign’ motto was “Contigo en Cada Gota”, an expression that reflects the how important is water in our daily life and the appreciation of this vital resource.

As a way of getting closer to the little ones, the visits of Las Gotitas to schools this year brought an innovative element. This year they came with games and a coloring book full of magic, which were well received by the children, who learnt in a didactic and fun way how to take care of the water, fire faucets and sanitary installations as well as how to recycle, among other things.

The launching of this campaign was carried out in two important events in 2011. The first one took place in school Juana Ross de Edwards in Valparaíso, with the participation of Regional Secretariat of Education Patricia Colarte and several other regional authorities. Same event was also carried out in Las Cruces, San Antonio, with the participation of the Mayor and many children of the area, who actively participated in the event.

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As customary, we supported the Regional Congress of Science and Technology, organized by the Program Explora CONICYT, objective of which is to encourage the scientific research, promote learning and the use of the scientific method among primary and secondary school students.

This year, in December, the company organized the Contest “Paint and Recycle this Christmas Together with Las Gotitas de Esval”, which invited the children to soak up the Christmas spirit and capture in their drawings their artistic creations and send them to Las Gotitas. More than 3,400 drawings were received. The first 6 places were awarded and 30 prizes to the effort and beauty of the works made were recognized.

Number of Contacts in Campaign “Agua Sana, Vida Sana”

Area Community Area

Education Area Office Door to

DoorTotal of

Contacts

Gran Valparaíso 85,101 37,337 7,645 1,150 131,233

Quillota 21,303 7,860 4,615 818 34,596

San Felipe - Los Andes 7,150 6,256 1,325 305 15,036

South Coast 41,412 12,220 2,420 246 56,298

Total 154,966 63,673 16,005 2,519 237,163

Number of Activities in Campaign “Agua Sana, Vida Sana”

Area Community Area

Education Area Office Door to

DoorTotal of

Contacts

Gran Valparaíso 256 256 77 15 604

Quillota 135 83 49 29 296

San Felipe - Los Andes 26 53 19 9 107

Litoral Sur 115 109 25 8 257

Total 532 501 170 61 1,264

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Human ResourcesStaff

As at 31 December 2011, Esval staff was made up by 372 employees. According to its distribution in levels, it was made up as follows:71%

27%

2%

Professionalsand Technicians

Administrators and operators

Executives

Prevention

In 2011, Risk Prevention has continued its work to prevent accidents and occupational diseases among our employees and continuously given support to the most risky works.

In March of this year the company re-certified its occupational Health and Safety management system in OHSAS 18001:2007, together with ISO 901 and ISO 14001, Quality and Environment Management, respectively, which together comprise the Company’s Integrated Management System (SIG in Spanish).

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surveillance job with the companies that render services by supporting more risky works such as the entrance to confined spaces, mainly waste water chambers. These support operations are carried out with special equipments and staff trained to perform these works.

Continuous on-site inspections and check-ups to several works were carried out in order to: 1.- Verify compliance with the safety standards, 2.- Notify the remarks to the company and 3.- Follow up the remarks in order to check the solutions implemented. All of this was carried out to have the works comply with Esval’s requirements in the contractual basis regarding risk prevention.

In 2011, 9 employees had accidents, resulting in 183 days lost because of accidents at work. In all the cases, the employees received timely and due medical attention, had a satisfactory recuperation and returned to their usual activities.

The accidents that caused more days lost were: A left leg exposed fibula fracture occurred while trying to open a stuck manhole cover hammering with chisel and sledgehammer. This caused the chisel to jet off towards the worker’s leg, causing the injury. This accident resulted in 136 days of medical leave (74.3% out of the total); a worker had his left hand trapped while replacing the retention valve of a pumping station. The trapping occurred while disassembling the tripod used to move the valve. The worker spent 17 days with medical leave (9.3%), and a worker twisted her foot while approaching her workplace and stumbling with a slot on the floor, twisting her ankle. This required 15 days of rest (8.2%). The remaining accidents did not involve more than 6 days of lost days and were mostly caused by falls or blows without serious consequences.

During the year, 1,846 man hours of training in Occupational Health and Safety were carried out. This year, the chlorine gas safe handling course was conducted in several sub-manager offices in the area for workers and contractor staff.

During the year, the “Headquarters, Bustamante and San Ignacio offices Health and Safety at work Joint Committee” was renewed and the “South Coast Health and Safety at work Joint Committee” was formed.

This year, the amount of occupational accidents increased, with lost time for the contractor companies, totalizing 75 accidents and 667 lost days.

Training

During 2011, 156 courses, seminars and workshops were given, amounting to 17,363 man hours of training, corresponding to 2.25% of the hours available in the year. This means that each employee of Esval received, as an average, 48.45 hours of training along the year.

Out of the total training hours, 38.44% hours were conducted in the Update Department. In this group, training courses such as Strategic Planning, SAP Finance Module, Estimation of Remunerations, Drinking Water Network Conduction, New Assistance System, Configuration of the Material Management Module in SAP, English, Instruction Manual on the Chilean Standard 409, Liquid Industrial Waste (RILES in Spanish), Compliance and Control system were performed.

Secondly, 28.23% was spent in Professional Development. Within this area, we must highlight the diploma-level Training Course in Rough Building Works and Sanitary Facilities aimed at improving the competence of Operations Management Supervisors, the diploma-level Training Course in Logistics Management for professionals of the Supply Department and the Professional Internship Program with shared funding, allowing our professionals to specialize themselves in postgraduate programs as Master’s Degree in Management, Master’s

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Degree in Business Administration, Post-graduate Course in Knowledge Management and Organizational Processes and Diploma-level Course in Marketing Management.

Thirdly, 11.87% were channeled to Personal Development issues, mainly aimed at strengthening the work teams through Communications and Focusing workshops. In a more comprehensive ground, some Conferences and Workshops on Welfare and Health Insurance were carried out together with Management Planning and Savings Encouragement workshops.

The training courses focused on the Quality and Environment Management Integrated System are in fourth place with 10.83%. We must highlight the training courses in IsoEasy Improvement Awareness-Raising, IsoEasy Action and Audit Module, Integrated System Awareness Raising (SIG in Spanish) ISO 14.001, 9.001 and OHSAS 18.001, Continuous Improvement Supporting Management, Costs of Quality and Non-Quality and Continuous Improvement Applied to Internal Auditors. The SIG is in the Process Maintenance stage, incorporating as from 2011 the Operational Risks issues in their Identification and Assessment Stages.

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The group of training courses in Occupational Health and Safety Integrated System, with a 10.63%, was trained in strengthening Responsible Handling of Chlorine Gas (focused on the reinforcement of preventive knowledge), carried out in all the provinces, courses in Hazardous Substances Storage and reinforcement of Hazard Identification Methods and Risk Assessment.

Law 20.454 of Pre-Contract Encouragement

In 2011, after the approval of Law 20.454, which allowed the use of an additional 0.25% of the Monthly Taxable Income for Training, Esval allocated resources for 9 training events, broken down in 4 courses with the participation of 40 people and 5 courses in Works in Public Spaces. This allowed training 109 people. In total, 1,352 hours of training were conducted.

In addition, in relation to the Pre-contract with allocation of franchisable resources in the Normal Account of the year, a course of Water Meter Reading was conducted to train 18 people for 360 hours in total.

Social Scholarships 2011

In the scope of social responsibility - and in consistency with the company’s vision, which is to contribute to the development of the community surrounding it – like in recent years, resources from the remnants of the Sence [National Service of Employment and Training] tax exemption were allocated to Social Scholarships, benefitting socially vulnerable sectors with Water Meter Reading and Pastry Making courses, with the participation of 27 people and a total of 1080 man-hour of training.

Welfare

Regarding Welfare, in 2011 School Assistance benefits for students (dependant sons and daughters of the employees) in Kindergarten, Primary, Secondary and Special School, University and Technical Studies.

Likewise, the employees and their children who studied at the University or Professional Technician Education could apply to social welfare-related Study Scholarships for Academic Excellence.

Regarding the administration of benefits, the company has arranged dental and optical care allowances for its workers and their families as well as allowances for marriage, birth and death in coordination with the services rendered by Caja de Compensación 18 de Septiembre.

In 2011, the Agreement with Clínica Reñaca was renewed. This alliance allows offering a wide variety of benefits for medical care and cover for the employees and their families, such as the preventive Health program.

We must also mention the Vaccination campaigns for the company’s personnel against seasonal influenza and H1N1 in coordination with the Medical Center of Caja 18 de Septiembre.

Outsourcing

Esval widened its commitment with the Quality, Environment and Occupational Health and Safety Policy, establishing the need for: “Gradually committing its contractors and suppliers so that their performance regarding quality, environment, occupational health and safety are consistent with the provisions of this policy in the activities and services they render to the organization”.

Considering the importance of the relationship with contractors, the Company gives clear and timely information regarding matters like bidding processes, requirements and compliance as well as performance assessments and requires from all the companies rendering services that their processes be measured according to quality standards, stipulating the termination of services and the requirements by the parties in a civil contract.

To guarantee proper performance of the work plan with contractors, Esval has a Contract Management System that centralizes the administration of contracts and demands from them special compliance with Esval’s Occupational Health and Safety Standards provided in the Special Regulation for Contractors and Subcontractors; in addition, the Company supports different training and updating programs.

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By means of on-site audits on compliance with the labor and safety legislation, the contractors have greatly improved their administrative and risk prevention responsibility.

In 2011, Esval started relationships with 52 contractors, thus generating 1,307 indirect full-time jobs.

Collective Bargaining

In August and September, the collective bargaining process with the three unions of the company was conducted, reaching two collective agreements, before the legal negotiation deadline expired, which will be in effect until 31 August 2013.

International Standards ISO 9.001, ISO 14001 and OHSAS 18001

The maintenance of managing systems certified under Quality standard ISO 9.001, Environmental standard 14.001 and Occupational Health and Safety standard OHSAS 18.001, which make up our Integrated Management System, comprising all the activities of the Organization, is one of the corner stones of our strategy.

In 2011, the commitment with the audit by an external institution, Bureau Veritas, was renewed for a period of 3 years together with the international certification of the 3 standards. This allow us to witness the commitment signed by the executives and employees of submitting our daily work to an external audit, six years ago, in the case of the environment preservation activities, and three years ago, in the case of the continuous effort focused on the client and safe work management for our workers.

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Aguas del ValleSubsidiary

Investments

In 2011, Aguas del Valle invested a total of TH$8.256.832 in infrastructure and operational improvement.

At an urban level, 72 works were carried out, intervening 15 meters of piping in the region to replace drinking water and sewage networks. These works, essential to improve the service and increase the coverage, also generated other benefits such as the renovation of pavement in streets and sidewalks, thus contributing to the growth of cities and locations of the region. In the province of Elqui, the Works benefitted La Serena, Coquimbo, Vicuña and Paihuano; in Limarí: Ovalle, Huamalata, Monte Patria, El Palqui and Combarbalá and in the province of Choapa: Illapel, Salamanca, Los Vilos, Canela Alta and Canela Baja.

Another challenge in 2011 for Aguas del Valle was to face the water scarcity problem that affected some areas of the region. For this, important investments were made in order to secure the supply to all the locations. For this, the company allocated 1,203 million pesos in works intended to mitigate the impact of the draught and face the growth of population that arrive in the region for the summer season.

37,3%

14,4%Equipment,Technology,

Others

Waste Water Treatment and Collection

48,4%Drinking Water Production and Distribution

Process-Stage Investment of Aguas del Valle

Infrastructure

3,468 Km of Drinking Water and Sewage Networks25 Drinking Water Production Systems22 Decontamination Plants449 Motor Pumps80 Drinking Water Pools173 Drinking Water (121) and Waste Water (52) Pumping Stations

Communications

Aguas del Valle has a close relationship with different kinds of publics of the region, joining and participating in several activities with the community. Among them, we can highlight the visits made during the campaign “Agua Sana – Vida Sana” to schools, kindergartens and universities and colleges with presentations in which “Las Gotitas” of Aguas del Valle handed down didactic material encouraging the care of water, environment and healthy life. The company also participates

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in events organized by the neighborhood committees, sports clubs and social organizations, and receives permanent visits from students and neighbors interested in knowing the processes that the Company develops in drinking water production and waste water decontamination plants. In 2011, campaign Agua Sana of Aguas del Valle took part in 2,317 activities, contacting more than 205,000 people around the entire region.

Drinking Water for Rural Areas

In 2011, through the Agreement with the Directorate of Hydraulic Works of the Coquimbo Region, Aguas del Valle provided technical assistance for the project management of rural drinking water systems in the three provinces of the region. Thus, the technical assistance has allowed assisting 179 rural drinking water systems in 2011, benefiting an estimated population of 186,335 inhabitants.

Customers

Aguas del Valle’s users increased in 25 thousand clients between 2004 and 2011. This – for a proportion per house – represents around 100 thousand people.

These new clients have joined in due to the management and construction of 104 real state projects. With this, now there are more than 193,722 clients that the Company currently assists in the provinces of Elqui, Limarí and Choapa.

Subsidy

Dec. 2004

Dec. 2005

Dec. 2006

Dec. 2007

Dec. 2008

Dec. 2009

Dec. 2010

Dec. 2011

ALLOCATED SUBSIDIES 35,646 35,132 35,972 36,380 37,321 37,791 39,184 39,101

% OF ALLOCATED SUBSIDIES

99.71 96.86 97.70 96.08 97.87 98.95 98.95 98.25

% OF SUBSIDIZED CLIENTS

25.50 21.55 21.42 21.15 20.98 20.65 20.74 20.19

Al Día con Aguas del Valle Program

Provinces No. of Workshops Agreements Signed

ELQUI 22 115

LIMARÍ 11 50

CHOAPA 11 29

Total YEAR 2010 44 194

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Prevention

This year, several topic-specific training courses regarding Occupational Health and Safety issues – in terms of gaps – such as Electric Risks or Responsibility for serious or fatal accidents were conducted by specialists in order to improve the safety at work for in-house and contractor staff.

In 2011, 6 employees had accidents with minor injuries resulting in 111 days lost in the year. In all the cases, the employees received due medical attention, recovered satisfactorily and their cases generated preventive actions.

The accidents that caused more days lost were: A car crash causing a wrist injury to a worker, leading to 65 days of medical leave (58.56%) and a fall while the worker was descending from the rear of a truck, in which the worker twisted his right foot, causing muscular tear that required 30 days of medical leave (27.03%). The rest of the accidents are mainly falls and twisting incidents that do not exceed 5 lost days and had no serious consequences.

Human Resources

Staff

As at 31 December 2011, the staff reached 155 employees, distributed as follows:

66%

33%

1%

Professionalsand Technicians

Administrative Sta� and Operators

Executives

We carried out the important work of making the Managers and Supervisors aware of their responsibilities in safekeeping the safety of their workers they are in charge of and the consequences of serious of fatal accidents. Meetings with the Health and Safety specialists of the contractors were coordinated in order to standardize work criteria and methods regarding Occupational Health and Safety.

In May, for the third consecutive year, Aguas del Valle together with the Joint Committees, participated in the “Month of Occupational Health and Safety”, awarding three people from different departments for being “the worker with the safest job performance and care of others”.

Along the year, the Matrix for Hazard Identification, Risk Assessment and Control Determination was completely updated.

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Training

In 2011, 127 courses, seminars and workshops were conducted, totaling 9,909 man hours of training, corresponding to 2.98% of the hours available that year. This means that every employee of Aguas del Valle was trained, as an average, 64.66 hours during the year.

From the total of training courses, the higher concentration of hours of training, with 36.52%, was conducted in the Occupational Health and Safety Integrated System formational area. In this area, we can highlight the training courses such as the Stress Handling Workshop, Gymnastics during Work Breaks, Seminar on Labor, Civil and Criminal Liability for Occupational Accidents and the Integrated Management System Course for Internal Auditors ISO 9.001, 14.001 and OHSAS 18.001.

In second place, with 35.38%, were the topics related to Personal Development. In this area, it is worth mentioning the training courses in Technical Report Draft and Effective Negotiation Techniques. Here we must also highlight the company’s Scholarship plan, which has allowed some workers to attend their studies as Constructor Technician, Industrial Electrician and Diploma-course in Business Administration, among others.

In third place, amounting to 20.29%, are the Update-related training courses such as Excel Intermediate level course, Water Fluoridation, Water Control Standardization and Operational Aspects and Efficacy of Water Control Systems.

In fourth place, with 6.01%, is the Personal Development area, with the courses Knowledge of the Welfare and Financial System for a Better Future, Team Work and Strategic Planning.

In addition, we can also highlight the training courses focused on the Quality and Environment Management Integrated System and the participation in the AIDIS 19th Chilean Congress of Sanitary and Environmental Engineering.

International Standards ISO 9.001, ISO14.001 and OHSAS 18.001

In November 2011, Aguas del Valle S.A. underwent for the first time a simultaneous re-certification of its integrated management system in the three standards, obtaining the recommendation by the certifying company to maintain the certification of the three standards.

This certifies the company’s dedication for the quality of the service, the respect for the environment and the health and safety of its employees, clients and the community.

Outsourcing

Aguas del Valle linked with 43 contractors, generating 441 full-time indirect jobs.

Drinking Water for Rural Areas

In 2011, the Directorate of Hydraulic Works extended in ten months the agreement with Aguas del Valle for technical assistance and project management of rural drinking water systems projects. Thus, the technical assistance has allowed assisting 179 rural drinking water systems in 2011, benefiting an estimated population of 186,335 inhabitants. In 2011, 279 scheduled visits to the services were performed. The purpose of this was to improve and consolidate their management as well as to provide technical, administrative and financial sustainability to the people in charge of management. Framed under the technical assistance, it is worth mentioning that the legal assistance provided to the rural drinking water services, aimed at supporting the users in regularizing their water rights, land titles and water concessions. Thus, in 2011, 43 interviews with the technical assistance lawyer were carried out, regularizing 16 water right issues, 18 properties and 5 water concessions.

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In addition, 141 emergency technical/operational assistance visits to the Rural Drinking Water services were made together with 18 unscheduled visits in order to find a solution for serious community issues, election of community leaders, neighborhood committees and/or accounting revisions due to ill management by the administration.

These interventions benefitted 52,099 people approximately.

We must also mention the training conferences provided to all the services. In 2011, three training workshops were carried out – one in each province of the 4th Region – with an attendance of 369 people approximately. The main topics addressed in the workshop were: Gender-related Issues, Labor Law and 2012 Project Portfolio.

Regarding the project management, new works and designs were implemented for an investment amount of $2,292,193,000, financed by the State. Among the works conducted we can highlight the construction of 5 new systems, Emergency Works, Restoration Works and Prefeasibility Works.

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AdministrationReport

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Consolidated Annual Report

In 2011, the ordinary income increased in 8.2%, from M$ 109.552 in 2010 to M$ 118.565 in 2011. This can be explained by an increase of the mean rate and a greater consumption of drinking water and sewage services compared to the former year. The EBITDA (calculated as the incomes of the ordinary activities less the costs for raw materials and consumables used, for benefits for the employees and other expenses, per nature) increased 3.1%, reaching M$61,078. These EBITDA costs increased 14.2%, with greater expenses in Services for $4,627 million (21.9%) and Energy and Fuels for $1,196 million (17.2%) mainly due to the effects of the draught.

The Non-Operational component of the Income Statement decreased 21.3%, from M$18,684 recorded in 2010 to M$22,660 in 2011, mainly because of a greater re-evaluation of the financial debt than the previous year. As at December 2011, the UF increased 3.9% versus 2010, when it value decreased 2.4%.

The Net Result of 2011 was M$15,354, 11.2% less than that recorded in 2010.

Consolidated Annual Report 1

Financial Year Operational Result 2 Result of the Financial Year

2001 28,389 15,481

2002 28,117 15,614

2003 30,302 15,867

2004 39,804 21,434

2005 41,241 22,823

2006 42,755 24,904

2007 41,205 23,893

2008 38,325 19,819

2009 39,977 26,333

2010 39,852 17,293

2011 41,625 15,354

Figures of periods 2001 to 2008 under Accounting Principles Generally Accepted in Chile, in millions of Chilean pesos of December 2009.

Figures of 2009 and 2011 under IFRS Norm, in millions of Chilean pesos of each year.

1 Esval prepares Consolidated Financial Statements since December 2003.2. In 2009, 2010 and 2011, the Operational Result is calculated as Ordinary Income minus raw materials and consumables used, minus benefits for the employees, minus depreciation and amortization minus other inherent expenses.

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Aguas del Valle

In 2011, the operational income reached M$29,087 (11.2% more than in 2010); the EBITDA was M$13,214 (7.1% more than in 2010) and the Net Result obtained profits for M$7,311 (17.4% more compared to 2010).

Annual Report

Financial Year Operational Result 3 Result of the Financial Year

2004 8,139 4,841

2005 8,570 5,301

2006 9,159 6,181

2007 8,958 6,346

2008 8,614 5,822

2009 9,058 7,691

2010 8,667 6,230

2011 9,448 7,311

Figures of periods 2004 to 2008 under Accounting Principles Generally Accepted in Chile, in millions of Chilean pesos of December 2009.

Figures of 2009 and 2011 under IFRS Norm, in millions of Chilean pesos of each year.

3. From 2009 to 2011, the Operational Result was calculated as Ordinary Income minus raw materials and consumables used, minus benefits for the employees, minus depreciation and amortization minus other inherent expenses.

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EBITDA

EBITDA is calculated as the income from the ordinary activities, minus the costs for raw materials and consumables used, by the benefits to the employees and other inherent expenses.

2001

65.000

60.000

55.000

50.000

45.000

40.000

35.000

30.000

25.000

20.000

15.000

10.000

5.000

0

37.6

37

37.7

65

41.0

37

5

3.63

6

56.0

10

58

.222

5

7.89

1

55.3

09

5

8.91

6

59.2

32

61.0

78

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Figures of periods 2001 to 2008 under Accounting Principles Generally Accepted in Chile, in millions of Chilean pesos of December 2009.

Figures of 2009 and 2011 under IFRS Norm, in millions of Chilean pesos of each year.

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Financing StructureNegotiable Instruments

On 25 February 2009, the company recorded in the Registry of Securities of the S.V.S., two lines of negotiable instruments, under Nos. 43 and 44.

On 1 June 2011, the placing of Series 9A was carried out, charged to line No. 44 for an amount of $12,850 million, obtaining $12,432 million as a result of said operation. This way, an average interest of 0.54% per month is obtained. These documents expired on 5 December 2011.

On 7 June 2011, a new line under No. 87 was registered with a maximum issuance amount of $14,900 million.

On 2 August 2011, the placing of Series 13A was carried out, charged to line No. 87 for an amount of $7,450 million, obtaining $7,002 million as a result of said operation. This way, an average interest of 0.55% per month is obtained. These documents expire on 13 July 2012.

Bank Credit

On 21 October 2011, a bank credit was signed with Banco BBVA for UF 1,500,000.- This credit shall be entirely paid in a period of 5 years (bullet) in half-yearly payments with an annual interest rate of 3.85%.

Remunerations of Managers and Main ExecutivesThe remunerations and benefits obtained in 2011 by the company’s managers and main executives amount to $ 918,141,477.

Incentive PlansEsval has, for its executives, a plan of annual bonuses for the fulfillment of objectives and individual contribution to the company’s profits. This plan includes a definition of bonuses rank, according to the executives’ hierarchy level. The bonuses that are eventually given consist of a certain number of monthly gross remunerations.

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Subsidiaries and AffiliatesAccording to the concepts stipulated in articles 86 and 87 of Law No. 18.046, investments in other companies; for the effects of operating the franchises in the Region of Coquimbo, of which ESSCO S.A., today ECONSSA CHILE S.A., was titular, on 4 December 2003, Esval incorporated closed limited company Aguas del Valle S.A., subsidiary that abides by the norms applied to open held corporations, with the only purpose of producing and distributing drinking water; collecting, treating and disposing waste waters; and providing the other services established in the current sanitary legislation.

Esval S.A. participated in the formation of this company, with 99%, and Sociedad de Servicios Sanitarios Las Vegas Limitada, with 1%. The latter is also subsidiary of Esval S.A., and was incorporated on 1 December 2003 for said purpose. In this case, Esval S.A. participated with 99.99%.

Sanitary Services Las Vegas Ltda.

99,99%

1,00%

99,00%

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Tax Card No.: 99.541.380-9

Equity: TH$71,263,023

Subscribed and paid up Capital: TH$20,441,842

Purpose

Produce and distribute drinking water; collect, treat and dispose waste waters, and provide the other services established in the current sanitary legislation.

Board of Directors(1)

President: Jorge Lesser García Huidobro Vice-President: Juan Ignacio Parot Becker Director: Stacey Purcell Director: Olivia Steedman Director: Nicolás Navarrete Hederra Director: Juan Pablo Armas Mac Donald Director: Alejandro Ferreiro Yazigi

(1) All the Directors hold the same position in the Parent Company.

Executives

CEO: Rodrigo Azócar Hidalgo (2) 4th Region Manager: Ricardo Lalanne Sáez(2) CEO of the Parent Company.

Aguas del Valle

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Participation of Esval S.A.: 99,00%

Investment proportion on Esval S.A.’s assets: 11,1%

Commercial relations with Esval S.A.

The accounts payable to Esval S.A. correspond to money the Company has received from the Parent Company in order to cover its initial opera-tional and investment costs.

Deeds and contracts with Esval S.A.

As from the taking over of the concession, Esval S.A. provides administrative, commercial and managerial services to Aguas del Valle S.A. This contract has an indefinite validity.

Market

Aguas del Valle S.A. is engaged in water purification, comprising the processes of collection, treatment and distribution of the product; as well as the purification of waste waters, including collection, treatment and final disposal of said waters. Its coverage area comprises the urban areas of thirteen of the fifteen communes of the Region of Coquimbo.

In order to comply with their functions, they operate eighteen productive systems that serve the same quantity of drinking water distribution systems and have twenty two systems of treatment and disposal of waste waters that clean the residual waters collected from twenty two collection systems.

In 2011, 193,657 drinking water customers were served, with a sales volume of 35,281 million of cubic meters. Regarding waste waters, the figures reached 185,005 customers, with sales for 31,955 million of cubic meters.

Investments

As at 31 December 2011, Aguas del Valle made annual investments for an amount of TH$8,256,832.

Related Companies

Aguas del Valle S.A. does not have any investments in related companies.

Results

The net result of Aguas del Valle S.A. reached profits for $7,311 million for financial year 2011.

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PORT Type of Company: Limited Partnership

Equity: TH$712,570

Subscribed and paid up Capital: TH$165,000

Purpose

Produce and distribute drinking water, collect, treat and dispose waste waters and carry out any other related activity, directly or indirectly, operating or rendering said services.

Administration

Rodrigo Azócar Hidalgo (1) Legal Representative of Las Vegas Ltda.(1) CEO of the Parent Company.

Sanitary Services Las Vegas Ltda.

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Participation of Esval S.A.: 99,99%

Investment proportion on Esval S.A.’s assets: 0,1%

InvestmentsAs at 31 December 2011 no investments are recorded.

Related Companies

Sociedad de Servicios Sanitarios Las Vegas Ltda. has a participation of 1.0% of Aguas del Valle.

Results TH$73,114

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HighlightsEsval

Date Document No.: Subject

17/01/11 CEO Letter No. 20 REPORTING ON CHANGES IN THE MANAGEMENT

25/01/11 CEO LETTER NO. 42 REPORTING ON CHANGES IN THE MANAGEMENT

25/01/11 CEO LETTER NO. 43 REPORTING ON CHANGES IN THE MANAGEMENT

29/04/11 CEO LETTER NO. 147 REPORTING ON THE PROFIT SHARE (DIVIDEND PAYMENT)

29/04/11 CEO LETTER NO. 148 REPORTING ON ORDINARY SHAREHOLDER’S MEETING, SUMMONS, AGREEMENTS AND PROPOSALS

29/04/11 CEO LETTER NO. 151 REPORTING ON CHANGES IN THE MANAGEMENT

01/06/11 CEO LETTER NO. 203 REPORTING ON ALLOCATION OF VALUES IN INTERNATIONAL AND/OR DOMESTIC MARKETS

26/07/11 CEO LETTER NO. 275 REPORTING ON CHANGES IN THE MANAGEMENT

02/08/11 CEO LETTER NO. 284 REPORTING ON ALLOCATION OF VALUES IN INTERNATIONAL AND/OR DOMESTIC MARKETS

17/08/11 CEO LETTER NO. 295 REPORTING ON THE PROFIT SHARE (DIVIDEND PAYMENT) POLICY ON DIVIDENDS

26/08/11 CEO LETTER NO. 308 REPORTING ON EXTRAORDINARY SHAREHOLDER’S MEETING, SUMMONS, AGREEMENTS AND PROPOSALS

26/08/11 CEO LETTER NO. 309 REPORTING ON EXTRAORDINARY SHAREHOLDER’S MEETING, SUMMONS, AGREEMENTS AND PROPOSALS

29/09/11 CEO LETTER NO. 360 REPORTING ON CHANGES IN THE MANAGEMENT

30/09/11 CEO LETTER NO. 367 INFORMING ON THE AMENDMENT AGREEMENT TO THE BONUS ISSUANCE CONTRACT TO COMPLY WITH THE IFRS NORMS

07/10/11 CEO LETTER NO. 374 REPORTING ON CHANGES IN THE MANAGEMENT

24/10/11 CEO LETTER NO. 388 REPORTING ON THE SUBSCRIPTION AND RENEGOTIATION OF CREDITS

03/11/11 CEO LETTER NO. 401 INFORMING ON THE AMENDMENT AGREEMENT TO THE BONUS ISSUANCE CONTRACT TO COMPLY WITH THE IFRS NORMS

07/12/11 CEO LETTER NO. 451 REPORTING ON THE PROFIT SHARE (DIVIDEND PAYMENT)

These essential facts have not influenced or affected the operation and results of the Company.

Aguas del Valle

Date Document No.: Subject

17/01/2011 CEO LETTER No. 09 REPORTING ON CHANGES IN THE MANAGEMENT

25/01/2011 CEO LETTER NO. 12 REPORTING ON CHANGES IN THE MANAGEMENT

25/01/2011 CEO LETTER NO. 15 REPORTING ON CHANGES IN THE MANAGEMENT

29/04/2011 CEO LETTER NO. 56 REPORTING ON ORDINARY SHAREHOLDER’S MEETING, SUMMONS, AGREEMENTS AND PROPOSALS

29/04/2011 CEO LETTER NO. 57 REPORTING ON CHANGES IN THE MANAGEMENT

26/07/2011 CEO LETTER NO. 98 REPORTING ON CHANGES IN THE MANAGEMENT

26/08/2011 CEO LETTER NO. 112 REPORTING ON EXTRAORDINARY SHAREHOLDER’S MEETING, SUMMONS, AGREEMENTS AND PROPOSALS

29/09/2011 CEO LETTER NO. 125 REPORTING ON CHANGES IN THE MANAGEMENT

07/10/2011 CEO LETTER NO. 131 REPORTING ON CHANGES IN THE MANAGEMENT

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Statement of LiabilityComments and Proposals

of the Shareholders

The shareholders representing 10% or more of the shares issued, with right to vote have not made any comments or proposals regarding the progress of the social businesses, so com-ments and proposals in said respect are not in-cluded in this annual report.

The undersigned declare under oath to be responsible for the truthfulness of the information contained in the Annual Report Esval corresponding to financial year 2011.

PRESIDENT, Jorge Lesser García-Huidobro6.443.633-3

VICE-PRESIDENT, Juan Ignacio Parot Becker7.011.905-6

DIRECTOROlivia Penelope Steedman48.120.868-8

DIRECTORAlejandro Ferreiro Yazigi6.362.223-0

DIRECTORJuan Pablo Armas Mac Donald6.198.258-2

CEORodrigo Azócar Hidalgo 6.444.699-1

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estadosfinancieros

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Esval S.A. y filiales

StatesFinancial

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ConsolidatedFinancial StatementsEsval S.A. ans Subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAS OF DECEMBER 31, 2011 AND 2010(In thousands of Chilean pesos - ThCh$)

AssetsNote 31/12/11 31/12/10

N° ThCh$ ThCh$

CURRENT ASSETS:

Cash and cash equivalents 4 14,915,169 17,073,589

Other current non-financial assets 1,883,809 1,814,016

Trade and other receivables, net 5 - 6 28,974,896 26,888,436

Inventories 8 473,005 453,903

Current tax assets 21 628,873 1,683,081

Total current assets 46,875,752 47,913,025

NON-CURRENT ASSETS:

Other non-current financial assets 5 - 12 4,850,139 3,705,752

Non-current other non-financial assets 13 14,272,158 14,626,951

Non-current receivable 6 26,409 29,514

Intangible assets other than goodwill 9 121,258,374 117,929,042

Property, plant and equipment, net 20 472,562,572 470,849,917

Activos por impuestos diferidos 21 - -

Total non-current assets 612,969,652 607,141,176

Total Assets 659,845,404 655,054,201

The accompanying notes are an integral part of these consolidated financial statements.

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AS OF DECEMBER 31, 2011 AND 2010(In thousands of Chilean pesos - ThCh$)

Equity And LiabilitiesNote 31-12-2011 31-12-2010

N° ThCh$ ThCh$

CURRENT LIABILITIES:

Other current financial liabilities 5 34,292,805 47,885,459

Trade and other payable 5 12,450,965 10,957,968

Account payable to related companies 7 - 646

Other current provisions 14 492,748 434,297

Current tax liabilities 21 458,158 788,214

Current provisions for employee benefits 14 2,954,897 3,008,656

Other current non-financial liabilities 15 13,751,221 14,324,587

Total current liabilities 64,400,794 77,399,827

NON-CURRENT LIABILITIES:

Other non-current financial liabilities 5 253,625,087 231,756,666

Deferred tax liabilities 21 48,539,629 46,866,797

Non-current provisions for employee benefits 14 430,498 535,123

Total non-current liabilities 302,595,214 279,158,586

EQUITY:

Issued capital 15 196,176,015 196,207,284

Retained earnings 15 80,746,979 86,323,943

Share premium 15 11,112,721 11,150,887

Other reserves 15 4,813,610 4,813,610

Equity attributable to owners of the Parent Company 292,849,325 298,495,724

Non-controlling interest 16 71 64

Total equity 292,849,396 298,495,788

Total Equity And Liabilities 659,845,404 655,054,201

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statements Of Comprehensive Income per Nature FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010(In thousands of Chilean pesos - ThCh$)

Note from 01/01/2011to 12/31/2011

from 01/01/2010to 12/31/2010

N° ThCh$ ThCh$

Revenues 18 118,565,474 109,552,694

Raw material and consumable used (15,331,403) (13,455,298)

Employee benefits expense (10,429,087) (10,125,797)

Depreciation and amortization expense (19,453,517) (19,379,699)

Other expenses 2.6 (31,726,548) (26,739,653)

Other gains (losses) 2.6 (754,491) (476,730)

Financial income 947,720 401,246

Financial costs (13,181,096) (12,301,097)

Results for readjustment units (9,672,479) (6,307,116)

Profit before tax 18,964,573 21,168,550

Tax income (expense) 21 (3,610,240) (3,875,357)

Profit from continuing operations 15,354,333 17,293,193

Profit from discontinuing operations - -

Profit 15,354,333 17,293,193

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Note from 01/01/2011to 12/31/2011

from 01/01/2010to 12/31/2010

N° ThCh$ ThCh$

Profit from:

Profit from owners of the Parent Company 15,354,326 17,293,187

Profit from minority interests 16 7 6

Profit 15,354,333 17,293,193

Profit per Share:

Basic earnings per share:

Basic earnings per share from continuining operations 22 0.0010 0.0012

Basic earnings per share from discontinuining operations 0.0000 0.0000

Basic earnings per share 0.0010 0.0012

Diluted earnings per share

Diluted earnings per share from continuinig operations 0.0010 0.0012

Diluted earnings per share from discontinuinig operations 0.0000 0.0000

Diluted earnings per share 0.0010 0.0012

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statement Of Comprehensive Income

from 01/01/2011to 12/31/2011

from 01/01/2010to 12/31/2010

ThCh$ ThCh$

Profit 15,354,333 17,293,193

Total comprehensive income 15,354,333 17,293,193

Comprehensive income attributable to

Owners of the Parent Company 15,354,326 17,293,187

Non-controlling interest 7 6

Total comprehensive income 15,354,333 17,293,193

The accompanying notes are an integral part of these consolidated financial statements.

(Continued)

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Statements Of Changes In Net EquityFOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010(In thousands of Chilean pesos - ThCh$)

Issues Capital

Share Premiums

Shares In Own Portfolio

Other Reserves

Retained Earnings/(Losses)

Equity Attributable To Owners Of The

Parent Company

Non-Controlling Interests

Total Equity

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Equity at beginning of current period 01/01/2011 196,207,284 11,150,887 - 4,813,610 86,323,943 298,495,724 64 298,495,788

Profit - - - - 15,354,326 15,354,326 7 15,354,333

Dividends - - - - (20,931,290) (20,931,290) - (20,931,290)

Increase (decrease) through transfers and other changes (31,269) (38,166) - - - (69,435) - (69,435)

Total increase (decrease) in equity (31,269) (38,166) - - (5,576,964) (5,646,399) 7 (5,646,392)

Equity at end of current period 12/31/2011 196,176,015 11,112,721 - 4,813,610 80,746,979 292,849,325 71 292,849,396

Equity at end of current period 01/01/2010 196,207,284 11,150,887 - 4,813,610 97,882,276 310,054,057 58 310,054,115

Profit - - - - 17,293,187 17,293,187 6 17,293,193

Dividends - - - - (28,851,520) (28,851,520) - (28,851,520)

Increase (decrease) through transfers and other changes - - - - - - - -

Total increase (decrease) in equity - - - - (11,558,333) (11,558,333) 6 (11,558,327)

Equity at end of prior period 12/31/2010 196,207,284 11,150,887 - 4,813,610 86,323,943 298,495,724 64 298,495,788

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Direct Statements Of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010(In thousands of Chilean pesos - ThCh$)

Net cash flows from (used in) operating activitiesNote from 01/01/2011

to 12/31/2011from 01/01/2010

to 12/31/2010

N° ThCh$ ThCh$

Classes of cash receipts from operating activities:

Receipts from sales of goods and rendering of services 138,517,747 130,450,360

Other cash receipts from operating activities 4,465,160 2,442,135

Classes of payments from operating activities:

Payments to suppliers for good and services (56,180,461) (48,067,342)

Payments to and on behalf of a employees (10,513,584) (9,578,885)

Other cash payments from operating activities (14,147,371) (13,229,660)

Interest paid (10,322,243) (10,700,645)

Interest received 702,376 169,008

Net cash flows from operating activities 52,521,624 51,484,971

Net cash flows from (used in) investing activities

Amounts received from sale of property, plant and equipment 13,848 -

Purchase of property, plant and equipment and intangible assets (27,647,400) (28,350,588)

Other inflows (outflows) of cash (315,454) (259,467)

Net cash flow used in investing activities (27,949,006) (28,610,055)

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Net cash flows from (used in) financing activities

Proceeds from long-term borrowings - -

Proceeds from long-term borrowings 33,730,319 479,960

Total proceeds from borrowings 33,730,319 479,960

Repayments of borrowings (57,894,501) (32,391,582)

Dividends paid (22,364,015) (22,487,725)

Other inflows (outflows) of cash 19,797,159 25,360,440

Net cash flow used in financing activities (26,731,038) (29,038,907)

Net decrease in cash and cash equivalents (2,158,420) (6,163,991)

Cash and cash equivalents at the beginning of period 17,073,589 23,237,580

Cash and cash equivalents at the end of period 4 14,915,169 17,073,589 The accompanying notes are an integral part of these consolidated financial statements.

(Continued)

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Notes To The Consolidated Financial Statements

1. General Information

Esval S.A. and its subsidiaries make up the Esval Group. Its legal domicile is Cochrane 751, Valparaiso, Chile and its taxpayer number is 89.900.400-0

Esval SA. was incorporated as a corporation by means of a public deed dated June 12, 1989, in Santiago, drawn up and executed before Notary Public Raúl Undurraga Laso. An excerpt of its by-laws was published in the Official Gazette on June 15, 1989, and it was registered on page (verso) 449, No. 469 of the 1989 Business Register. It is also registered with the Superintendency of Securities and Insurance under registration number 0348, and, therefore, is subject to inspection by that Superintendency. The Company’s corporate purpose is to produce and distribute drinking water and to collect, treat and dispose of sewage. Additionally, it renders other services related to such activities, in the manner and subject to the terms and conditions stipulated in the law that authorized its incorporation and any other applicable regulations. With the exception of sectors granted to private or municipal services, the Company currently maintains the rights of distribution throughout the urban areas of the Valparaiso Region previously serviced by the Region’s former Sanitation Company as of January 27, 1986, in addition to expansion zones considered in the development plans of the Ministry of Public Works approved by the Superintendendency of Sanitary Services, as stipulated in Law 18777 and decrees 2166/78 and 69/89. The Company’s service area additionally includes urban locations whose sanitary concessions have been awarded to Esval S.A. by the Authorities after that date, either by regularizing the expansion areas considered in its development plans or by expanding its concession zones. The Company also provides drinking water services in other locations, outside the concession area, in the Community of Algarrobo, based on agreements signed with the communities of Algarrobo Norte, Mirasol and Las Brisas.

On November 25, 2003, in a competitive bidding, the Company was awarded the right to exploit the concessions held by ECCONSA CHILE S.A. (at that time ESSCO S.A.), the sanitary company in the Region of Coquimbo, for 30 years. To that end, it incorporated a closely-held subsidiary corporation called Aguas del Valle S.A., on December 4, 2003, registered under number 88 of the Special Record of Reporting Entities (REEI) of the Superintendency of Securities and Insurance, which is therefore subject to the inspection of such Superintendency. Aguas del Valle produces and distributes drinking water, and collects,

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treats and disposes of sewage, and also renders other services related to such activities, under the terms and conditions stipulated in Statutory Decree 382 of 1988 by the Ministry of Public Works and other applicable regulations.

The direct controlling entity is Inversiones OTPPB Chile III Limitada, which is in turn is controlled by Inversiones Southwater Limitada (“ISL”), a subsidiary of AndesCan SpA., an investment vehicle in Chile of the Canadian institution Ontario Teachers’ Pension Plan Board (OTPPB).

Esval S.A. and subsidiaries have a staff of 527 workers, comprised of 65 managers, assistant managers and department heads.

2. Basis Of Preparation And Accounting Policies2.1 Basis of Preparation

The consolidated financial statements of Esval S.A. and subsidiaries as of December 31, 2011 have been prepared in conformity with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (hereinafter “IASB”), and were approved by its Board of Directors at their meeting held on March 21, 2012. The Company is fully in compliance without exception with IFRS.

These consolidated financial statements faithfully reflect the financial position of Esval S.A. and subsidiaries as of December 31, 2011 y 2010 and the results of its operations, changes in net equity and cash flows for the year ended December 31, 2011.

The financial statements as of December 31, 2010, include a reclassification of a portion of the item “Intangible assets” to the item “Other financial assets” for an amount of ThCh$3,705,752, related to a revised calculation performed during 2011of the estimated value of accounts receivable pertaining to Aguas del Valle S.A. upon termination of the concession with Ecconsa Chile S.A. – See note 12.

The Company and its subsidiaries comply with all legal requirements of the environment in which activities are developed under normal operating conditions in all areas of the business. Projections show that the Company will continue to be profitable and has the ability to access the financial system to finance its operations. As such, in the opinion of management, the Company has the ability to continue as a going concern in accordance with the accounting standards under which these financial statements are issued.

Functional currency

The balances included in the financial statements of each of the consolidated entities are measured using the currency of the main economic environment in which the entity oper-ates (Functional currency), in accordance with IAS 21.

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The consolidated financial statements are presented in Chilean pesos, which is the Com-pany’s functional and presentation currency.

Changes to Accounting Standards As of 2011, the Group has adopted International Financial Reporting Standards (IFRS) for the first time and this is the first presentation of the comparative financial statements under these standards.

These consolidated financial statements for the year ended December 31, 2011 and 2010 comply with each of the international financial reporting standards enforced at this date.

2.2 New accounting pronouncements

a) New and revised IFRS effective in the current yearThe following new and revised IFRS have been adopted in these financial statements:

Amendments to IFRSs Effective date

IAS 24, Related Party Disclosures – Revised definition of related parties Annual periods beginning on or after January 1, 2011.

IAS 32, Financial Instruments: Presentation – Amendments relating to classification of rights issues Annual periods beginning on or after February 1, 2010.

Annual Improvements to IFRS 2010 – A collection of amendments to seven IFRSs Mostly for annual periods beginning on or after January 1, 2011.

New Interpretations Effective date

IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments Annual periods beginning on or after July 1, 2010.

Amendments to Interpretations Effective date

IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. Annual periods beginning on or after January 1, 2011.

The application of these new and revised IFRS has not had any material impact to the financial statements of the Group.

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b) New and revised IFRS in issue but not yet effectiveAs of the date of issuance of these consolidated financial statements, the following accounting pronouncements have been issued by the IASB but there are not yet effective:

New Standards, Interpretations and Amendments Effective date

IFRS 9, Financial Instruments – Classification and Measurement Annual periods beginning on or after January 1, 2015.

IFRS 10, Consolidated Financial Statements Annual periods beginning on or after January 1, 2013

IFRS 11, Joint Arrangements Annual periods beginning on or after January 1, 2013

IFRS 12, Disclosure of Involvement with Other Entities Annual periods beginning on or after January 1, 2013

IAS 27 (2011), Separate Financial Statements Annual periods beginning on or after January 1, 2013

IAS 28 (2011), Investments in Associates and Joint Ventures Annual periods beginning on or after January 1, 2013

IFRS 13, Fair Value Measurements Annual periods beginning on or after January 1, 2013

Amendments to Standards Effective date:

IAS 1, Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income Annual periods beginning on or after July 1, 2012

IAS 12, Income Taxes – Limited scope amendment (recovery of underlying assets) Annual periods beginning on or after January 1, 2012.

IAS 19, Employee benefits (2011) Annual periods beginning on or after January 1, 2013

IAS 32, Financial instruments: presentation – Clarified requirements for offsetting of financial assets and financial liabilities and amends disclosures Annual periods beginning on or after January 1, 2014

IFRS 1 (Revised), First Time Adoption of IFRS – (i)Replacement of ‘fixed dates’ for certain exceptions with ‘the date of transition to IFRSs’ – (ii) Additional exemption for entities ceasing to suffer from severe hyperinflation

Annual periods beginning on or after July 1, 2011.

IFRS 7, Financial Instruments: Disclosures – Amendments enhancing disclosures about transfers of financial assets Annual periods beginning on or after July 1, 2011.

New Interpretations Effective date

IFRIC 20, Stripping costs in the production phase of a surface mine Annual periods beginning on or after January 1, 2013

Management of Esval S.A. and subsidiaries estimates that the adoption of the Standards and Interpretations above will not have a significant impact in the Group’s consolidated financial statements.

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2.3 Responsibility for the Information and Estimates made

The information contained in these consolidated financial statements is the responsibility of the Company’s Board of Directors who expressly states that the principles and criteria included in IFRS have been fully applied.

In preparing these financial statements the following estimates have been used:

• Vida útil de activos fijos e intangibles• Losses for impairment of assets • Assumptions used in the actuarial calculation of employee benefits • Unbilled revenue estimates • Provisions for commitments with third parties • Risks arising from current litigations

These estimates and judgments were made based on the best information available about the events analyzed as of December 31, 2011 and 2010. Any event that may occur in the future requiring changes (upwards or downwards) in estimates in future years will be recognized when they are known and the effects of such changes will be recognized within the statement of income or equity accounts in the financial statements, as appropriate.

2.4 Accounting policies

The following are the main accounting principles which have been consistently applied in the preparation and presentation of the financial statements as of December 31, 2011.

A. Basis for consolidation

Subsidiaries are those entities over which the Company has the power to direct their financial and operating policies. Such power is generally accompanied by ownership of more than 50% of the voting rights.

The consolidated financial statements include the assets, liabilities, revenue and expenses and results of the parent and the subsidiaries of Aguas del Valle S.A. and Servicios Sanitarios Las Vegas Limitada.

As of December 31, 2011 and 2010, the parent owns a 99% interest in Aguas del Valle S.A., and 99.99% interest in Servicios Sanitarios Las Vegas Limitada. Additionally, Servicios Sanitarios Las Vegas Limitada owns a 1% interest in Aguas del Valle S.A.

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Tax ID Name Country of origen Functional currencyParticipation percentage

Origen Currency Total

% %

99.541.380-9 Aguas del Valle S.A. Chile Pesos Chilenos 99.00 0.99 99.99

76.027.490-9 Servicios Sanitarios Las Vegas Ltda. Chile Pesos Chilenos 99.99 0 99.99

The effects of transactions between consolidated companies have been eliminated and the ownership interest related to non-controlling shareholders is presented in the consolidated financial statements under Non-controlling Interests.

The accounting policies adopted by the subsidiaries are consistent with the policies adopted by the Parent.

B. Transactions and non-controlling interests

The Group´s transactions with non-controlling interests are considered transactions with third parties unrelated to the Company.

C. Operating segments

The Group discloses information by segment in accordance with IFRS 8, Operating Segments, which establishes the reporting requirements for operating segments and disclosures related to products and services. Operating segments are defined as components of an entity for which there is discrete financial information regularly reviewed by Management to make decisions about resources to be allocated and assess their performance. The Group manages and measures the performance of its operations by business segment. The following are the operating segments internally reported:

• Operations related to transactions within the Valparaiso Region. • Operations related to transactions within the Coquimbo Region.

D. Intangibles Assets

The Company and its subsidiaries recognize an identifiable intangible asset when they can demonstrate that it is probable that the future economic benefits attributed to the asset will flow to the entity and the cost can be measured reliably.

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Esval S.A. and its subsidiaries measure their intangible assets using the cost model defined in IAS 38.

The main intangible assets with indefinite useful lives are water rights and easements, whereas the main intangible assets with finite useful lives are the right to exploit the sanitary concession in the Coquimbo Region, software applications and other rights.

In measuring water rights with indefinite useful lives, Esval and its subsidiaries have elected to measured them at their fair value at December 31, 2008, defined as deemed cost at the transition date to IFRS.

The remaining intangible assets with definite useful lives are measured at the price-level restated acquisition cost, net of amortization, at December 31, 2008, which became the attributed deemed cost, under the exemption allowed in IFRS 1.

The following factors, among others, should be considered in estimating the useful life:

• Legal, regulatory or contractual limitations. • Foreseeable life of the business or industry. • Economic factors (obsolescence of the products, changes in demand). • Natural, climate and technology change factors affecting the ability to generate benefits.

The useful life may require modifications over time due to changes in estimates resulting from changes in the assumptions related to the above factors.

Intangible assets with finite useful live

The amortization method applied by the Company reflects the pattern in which the asset’s future economic benefits are expected to be used by the entity. To that end, the Company uses the straight-line method of depreciation.

The main intangible asset with a finite useful life is the right to exploit the sanitary concession in the Region of Coquimbo. Its initial useful life is for the term of the concession contract, which is 30 years beginning in December of 2003. For software applications, the estimated useful life determined is 4 years.

Assets related to the right of exploitation of the Sanitary Concession in the Coquimbo region are additionally recognized as intangible assets which are amortized according to their technical specifications and individually assigned.

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Estimated useful lives or amortization rates used for identifiable intangible assets with finite useful lives are as follows:

The estimated useful life of software applications is 4 years. For other intangibles assets with finite useful lives, the amortization period corresponds to the period established in the contracts or rights from which they originate, which is 30 years in the case of the contract related to the right of exploitation of the sanitary concession in the Coquimbo region.

Intangibles with indefinite useful lives:These mainly related to water rights and easements, which were obtained for an indefinite period.

The cost of some intangibles includes direct remunerations, consultancy services and other inherent identifiable costs.

Service concessions:The Aguas del Valle S.A. subsidiary owns the rights to exploit the sanitary concessions in the Coquimbo Region that were awarded through a public bidding by Empresa de Servicios Sanitarios de Coquimbo (ESSCO) (currently ECONSSA Chile Ltda.). These service concession arrangements are measured in accordance with the requirements of IFRIC 12, Service Concession Arrangements, as they correspond to public-to-private service concession arrangements, where: (i) the grantor controls or regulates what services the operator must provide with the infrastructure, to whom and at what price, and; (ii) the grantor controls through ownership the beneficial entitlement or any other significant residual interest in the infrastructure at the end of the term of the agreement.

The infrastructure under the scope of this Interpretation is not recognized as property, plant and equipment of Aguas del Valle (the ‘operator’), independently from the degree at which the operator assumes the incidental risk and rewards to ownership and regardless of which party of the contracts has legal title to ownership during the agreement, given that the asset is ‘controlled’ by the grantor. Rather, the operator recognizes a financial asset when it has an unconditional right to receive cash or another financial asset from the grantor (‘Financial Asset Model’); and/or an intangible asset when it has a right to charge users of the public service (‘Intangible Asset Model’). Under both models, the operator accounts for revenue and costs related to the construction services in accordance with IAS 11, Construction Contracts. Revenue and costs relating to operating services are accounted for in accordance with IAS 18, Revenue. In addition, the contractual obligations establish that as a condition of the concession received the operator should comply with the following: (a) maintain the infrastructure to a specified level of operability, and (b) restore the infrastructure to a specified condition before it is handed over to the grantor at the end of the concession agreement. The contractual obligations to maintain or restore infrastructure shall be recognized and measured in accordance with IAS 37, i.e. at the best estimate of the expenditure that

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would be required to settle the present obligation at the end of the reporting period. Finally, in accordance with IAS 23, borrowing costs attributable to the arrangement shall be recognized as an expense in the period in which they are incurred unless the operator has a contractual right to receive an intangible asset (a right to charge users of the public service). In this case, borrowing costs attributable to the arrangement shall be capitalized during the construction phase of the arrangement. In conformity with the concession contract signed by the Company, it has the right to recover the value of the investments that are not repaid upon termination of the concession, generating an account receivable presented in the item “Other non-current financial assets” and the detail shown in Note No. 12 “Other non-current financial assets”. An intangible asset has been recorded for the investments made (in infrastructure) that shall be transferred to ECONSSA CHILE S.A. upon termination of the term of the concession contract, or 30 years as of December 2003.

Information to be disclosed on internally generated intangible assets:

The Company does not have any internally-generated intangible assets.

E. Property, plant and equipment

Basis for measurement of property, plant and equipment:

The Company and its subsidiaries measure their property, plant and equipment under the cost model in accordance with IAS 16. Nevertheless, upon first-time adoption of IFRS certain land was revalued and that value was recognized at deemed cost. The historical cost includes all expenses directly attributable to the acquisition of the assets.

Expansion, modernization and improvement costs that represent an increase in productivity, capability or efficiency or an increase in the useful lives of the assets are accounted for as costs of the corresponding assets.

Direct remunerations, advisory fees and other inherent and identifiable costs as well as borrowing costs are included in the cost of certain projects in progress.

Repair and maintenance costs are recorded as an expense in the period in which they are incurred. Borrowing costs incurred during the construction of any qualifying asset are capitalized over the period necessary to complete and prepare the asset for its intended use. Other borrowing costs are expensed when incurred.

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Construction works in progress are transferred to assets in service once the testing period has been completed and the assets are available for use, which is the date depreciation of the asset begins.

Subsequent costs are included in the carrying amount of the initial asset or are recognized as a separate asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any item replaced is derecognized from the accounting records. All other repairs and maintenance costs are expensed in the period when they are incurred.

Due to the nature of the assets constructed by the Company and as there are no contractual obligations, such as those mentioned in the IFRS, the recognition requirements for dismantling costs are not applicable to the Company.

Depreciation method for property, plant and equipment:The depreciation method used by the Company corresponds to the pattern in which the asset’s future economic benefits are expected to be consumed by the entity. In this regard, the Company uses the straight-line method of depreciation over the technical useful life of the asset, which has been determined by studies carried out by independent valuation experts. The residual value and useful lives of the assets are reviewed and revised if necessary at the end of each reporting period.

Estimated useful lives for property, plant and equipment:The useful lives considered in calculating depreciation were estimated via studies carried out by independent valuation experts. Useful lives of assets are reviewed in the event that there is any new information indicating that useful life of an asset might have changed.

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The useful lives applied by the Company are the following:

Item Minimum useful life (In years)

Maximum useful life (In years)

Useful life for buildings 20 80

Useful life for plant and equipament 5 50

Useful life for equipament and It 4 5

Useful life forfixed facilities and accessories 5 80

Useful life for motor vehicles 7 10

Useful life for other property, plant and quipament 10 50

The useful lives of the assets are determined based on several factors, which generally include:

• Nature of the material components used in the equipment and construction • Means of operation of the equipment • Intensity of use • Legal, regulatory or contractual limits on the use of the asset.

The Company and its subsidiaries depreciate their assets using the straight-line method over the estimated useful lives.

Policy for disposal of property, plant and equipment:The gain or loss on disposal of property, plant and equipment is determined as the difference between the net proceeds received and the carrying amount and is recognized in comprehensive income. When disposing of assets measured at revalued amounts, the revaluation surplus included in equity is transferred to retained earnings.

Policy for impairment of property, plant and equipment:The Company and its subsidiaries, based on the results of the impairment test described in Note 2.2.f, have determined that the carrying amount of assets does not exceed their recoverable amount.

The recoverable amount of assets is determined in accordance with IAS 16. Assets are tested for impairment on an ongoing basis by estimating whether there will be sufficient future economic benefits to cover all the costs including the depreciation of the property, plant and equipment in accordance with IAS 36.

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Assets for Urbanizations:Included in the line item for property, plant and equipment are payments made for urbanizations financed by third parties in the development of their projects designed for the purpose of connecting their customers to Esval S.A.’s sanitary service network.

These assets mainly correspond to drinking and sewage water networks that are required in order to provide sanitary services to newly incorporated customers. According to the Sanitary Services Law, these assets neither represent assets of the sanitary companies for purposes of establishing tariffs, nor do they give rise to any obligation for the Company with those making such urbanizations.

Articles 36 to 43 and 53 of Decree Law No. 382/1998 of the Ministry of Public Works (the General Law on Sanitary Services’) establish the responsibilities related to the installation, for the developer, and also state that the sanitary service provider is responsible for the maintenance and replacement of these assets.

The Company recognizes such assets at fair value and with a corresponding credit to a complementary account named “Assets financed from developers”. The assets are recorded as property, plant and equipment and the complementary accounts are amortized over the same useful life associated with the corresponding assets.

F. Impairment of assets

Impairment of assets is determined based on the level of the related contribution expected to generate financial resources for the company.

As such, based on performance of continuous service, the capacity to generate financial resources in the Company is bundled within the operating assets, to form the aggregate value of the “cash generating units” of Esval and Aguas del Valle, respectively.

In testing the above Cash Generating Units for impairment, the Company estimates the present value of the expected future cash flows by using a discount rate that reflects both the time value of money and the specific risks associated with the asset. The present value amount is then compared to the carrying amount of the assets comprising the cash generating unit.

Based on the comparison mentioned in the preceding paragraph, the Company has determined that the carrying amount of the assets composing the cash-generating units is less than the present value of the expected future cash flows. Therefore, no impairment loss has been recognized in the period.

When the recoverable amount of an asset is less than its carrying amount, the difference is recognized as an “Impairment loss of assets” in comprehensive income. Impairment losses are reversed in the event of a change in estimate of the recoverable amount. Reversals of

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impairment losses are recognized immediately in profit or loss by increasing the carrying amount of the asset. The increased carrying amount of an asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.

G. Financial assets

Current and non-current financial investments are classified in the following categories:

Financial assets held-for-tradingThese are assets acquired principally for the purpose of generating benefits as a result of fluctuations in their value. Financial assets included in this category are measured in the consolidated statement of financial position at fair value. Changes in fair value are recognized as an expense or income in the income statement accounts, as appropriate.

Loans and receivablesLoans and receivables are initially are measured at amortized cost using the effective interest method.

Investments held-to-maturityThese are financial investments held by the Company until maturity. They are measured at their amortized cost using the effective interest method.

Available-for-sale financial assetsThese include all of Esval’s financial assets not included in the three previous categories. These investments are measured in the consolidated statement of financial position at their fair value. Highly liquid short-term investments that are readily convertible into known amounts of cash which are subject to insignificant risk of change in value, such as time deposits, repurchase agreements and mutual funds, are considered as cash equivalents in accordance with IAS 7.

H. Inventories

Inventories are measured at the lower of cost and net realizable value.

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I. Trade and other receivables

Trade and other receivables are recognized initially at their fair value; subsequently, they are measured at amortized cost. This item also includes a provision for impairment losses due to uncollectible receivables from third parties.

Policy for Uncollectible AccountsThe provision for uncollectible accounts is determined based on the following factors:

• Aging of the unpaid balance• Type of customer• Compliance with repayment agreements

The analysis of payment behavior from the different classes of debtors is affected by: i) the classification as subsidized and non-subsidized debtors and ii) the fact that the Company is legally entitled to suspend the service provided to customers who do not make payments.

The carrying amount of the asset is reduced in the same amount as that increasing the provision for uncollectible accounts that is recognized as an expense in the statement of income within the line item “finance costs”. When a receivable is determined to be uncollectible, it is written off against the provision for uncollectible accounts.

J. Basis of translation of foreign currency

Assets and liabilities in Unidades de Fomento (UF = inflation index-linked unit of account) and/or foreign currencies are measured at each corresponding date as follows:

Currency12/31/2011 12/31/2010

ThCh$ ThCh$

Unidad de Fomento 22,294.03 21,455.55

US dollar 519.20 468.01

Euro 675.20 627.61

Exchange differences are recognized in profit or loss for the period, within the line item “Results for readjustment”

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K. Financial obligations

Borrowings and bonds payable are initially recognized at their fair value, which corresponds to the value of the proceeds received, net of transaction costs incurred. Subsequently, they are measured at amortized cost using the effective interest method.

L. Derivative financial instruments and hedge accounting

The Company has not entered into any derivative or hedging relationships.

M. Provisions and contingent liabilities Provisions are measured taking into account the best information available about events and their probable outcome. Provisions are revised at the end of each reporting period. The Company recognizes a provision when there is a present obligation of uncertain timing or amount with third parties arising from past events for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent liabilities are not recognized in the financial statements.

N. Unearned income

This item essentially includes amounts of cash received from customers or government agencies to finance the construction or acquisition of certain facilities and, in some cases, the facilities directly received from them.

These amounts are recorded as unearned income within the liability section in the statement of financial position and are recognized through profit or loss over the useful life of the corresponding assets within the line item “Other operating income”, thereby offsetting depreciation expense in the statement of comprehensive income.

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O. Income tax and deferred taxes

Income tax expense for the period includes both current tax from applying the tax regulations on the taxable income for the year, once all applicable tax additions and deductions have been made, as well as the variation in deferred tax assets and liabilities and tax credits arising from taxable losses.

Deferred tax assets and liabilities include all deductible and taxable temporary differences arising from the differences between the carrying amount of assets and liabilities and their tax base, as well as unused tax credits arising from taxable losses and other tax deductions. Deferred tax assets and liabilities are recognized by applying the tax rate at which the temporary differences are expected to be realized or settled.

Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are only recognized to the extent it is probable that sufficient taxable income will be available in the future against which the deductible temporary differences can be utilized.

Current tax assets and liabilities (in each consolidated company), as well as deferred taxes, are offset in the consolidated statement of financial position.

P. Employee benefits

The Company recognizes in the financial statements obligations arising from employee benefits included in collective or individual contract agreements.

The severance indemnity obligation recognized as a liability in the Company’s financial statements corresponds to employees whose individual work contracts establish this severance indemnity in any event and is recorded at the actuarial value. The positive or negative effect on severance indemnities caused by changes in estimates or deviations in turnover, mortality, early retirement due to dismissal, salary increases, inflation, discount rate or number of employees is recognized directly in profit or loss.

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Q. Revenue and expenses

Revenue and expenses are recognized on an accrual basis, which is when the transfer of the goods or the rendering of the services takes place, regardless of when payment is made.

Revenue from regulated sales is recognized based on each customer’s reading and billing consumption and is measured using the tariff rates stipulated in the respective decrees. Tariff rates are applied over a five-year period plus an estimate of unbilled sales at the end of the reporting period. The unbilled sales estimate is determined based on the proportion of the last reading in each billing group and measured at the tariff rates effective at the end of the period which is quarterly adjusted.

The Company’s service area is divided into billing groups, which determine the reading dates and subsequent billing. This process is carried out based on a monthly calendar.

R. Environmental information

Assets of an environmental nature are considered to be those that are used on a permanent manner in the Company’s activity and whose main purposes are to minimize adverse environmental impacts and to protect and improve the environment, including the reduction or elimination of any future contamination by the Group’s operations. For these purposes the Company has an ISO 14.001 environmental certification.

S. Earnings-per-share

Basic earnings-per-share is calculated by dividing profit or loss attributed to equity holders of the parent company by the weighted average number of shares outstanding during the period.

During the years ended December 31, 2011 and December 31, 2010, the Group has not performed any kind of operation with potential dilutive effects that led to a diluted gain per share differing from the basic earnings per share.

T. Dividends

Article 79 of the Chilean Corporations Law establishes that, unless otherwise unanimously agreed in the respective shareholders’ meeting by all of the shares issued, corporations shall distribute a cash dividend to their shareholders every year, on a pro rata basis to their shares

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or in the proportion stipulated in the by-laws if there are any preferential shares, equivalent to at least 30% of the net profits from each year, except when accumulated losses from prior years need to be absorbed.

Interim and final dividends are recorded as a deduction to “Equity” when approved by the respective body, which typically for interim dividends is the Company’s Board of Directors and, and for final dividends is at the General Shareholders’ Meeting.

As of December 31, 2011, dividends payable is presented in the item “Other financial liabilities, current” in the amount of ThCh$8,669,820 that will be paid in the months of February 2012 (interim dividend decided in November 2011 for ThCh$3,740,569) and May 2012 (ThCh$4,929,251 determined in order to adjust in compliance with the dividend distribution policy agreed upon by the Shareholders’ Meeting in 2011, under which the Company is to distribute 80% of net income for the year, reduced by the interim dividends paid in August 2011 for ThCh$3,740,569 and the dividend that will be paid in February 2012 of ThCh$3,740,569), as per the established in the dividends policy for 2011.

U. Statement of Cash Flows

The cash flow statement uses the terms defined below:

Cash and cash equivalents: inflows and outflows of cash and equivalent financial assets, with the latter being understood as short-term highly liquid investments subject to a low risk of changes in value.

Operating activities: principal revenue-producing activities from the normal operations of Esval and subsidiaries, and other activities that are not investing or financing activities.

Financing activities: activities that result in changes in the size and composition of the equity and liabilities that are not part of ordinary activities.

Investing activities: the acquisition, sale, or disposal by other means of non-current assets and other investments not included in cash equivalents.

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2.5 Issued capital and equity

The Company’s capital is divided into 14,962,276,336,000 registered, no-par-value shares distributed as follows:

SerieNo. Of Shares

Subscribed Paid-In With Voting Right

A 3,553,436,546 3,553,436,546 3,553,436,546

B 187,132,538 187,132,538 187,132,538

C 14,958,535,766,916 14,958,535,766,916 14,958,535,766,916

Total 14,962,276,336,000 14,962,276,336,000 14,962,276,336,000

During the Extraordinary Shareholders’ Meeting held on August 26, 2011, an extension of five additional years for the structure of the share capital established in the by-laws was agreed upon. Under this structure, the Series C shares have the privilege to call for an Extraordinary Shareholders’ Meeting upon the request of at least 5% of these shares, and they will not have the right to choose Directors. Accordingly, the text of article five of the Social By-laws was modified, informing the shareholders that this agreement grants to the rights of withdrawal, as per the indicated in Law No. 18.046.

Due to this change of the by-laws, some shareholders have exercised their right for withdrawal conferred to them in Article 69 of Law 18.046, for a total of 1,439,791 Series A shares, and 2,383,059,200 Series C shares, paying them a total amount of ThCh$69,435, of which ThCh$31,269 have been reduced from the account Paid-in Capital and ThCh$38,166 from the account Issuance Premium, considering that the value paid to the former shareholders is higher than the book value of the shares.

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This repurchase of shares was performed during October 2011. The mentioned shares, from parting shareholders, are available for placement in the stock market as of January 1, 2012, as follows:

Reason for Repurchase of shares Date of repurchase of shareRepurchase of Shares

Number of Shares Series Amount paidThCh$

Change of by-laws October 25, 2011 1,439,791 A 29

Change of by-laws October 25, 2011 2,383,059,200 C 69,406

Shares in portafolio as of December 31, 2011 2,384,498,991 69,435

2.6 Other income and expenses

Additional information to be disclosed as specified in IAS 1, with regard to other income and expenses is as follows:

Other income and expensesfrom 01/01/2011

to 12/31/2011from 01/01/2010

to 12/31/2010

ThCh$ ThCh$

Other expenses per nature 31,726,548 26,739,653

Services 28,094,732 23,283,146

Overhead 3,034,762 2,895,073

Doubtful accounts 597,054 561,434

Other income (expenses) (754,491) (476,730)

Other non-operating income 1,330,323 1,528,225

(-) Other non-operating expenses (2,084,814) (2,004,955)

2.7 Current and non-current classification

In the accompanying statement of financial position, balances are classified according to their maturities; that is, those with a maturity less than twelve months are classified as current and those with a maturity more than twelve months are classified as non-current.

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Obligations with a maturity of less than twelve months, but whose long-term refinancing can be ensured by the Company’s discretion through unconditionally available credit agreements with long-term maturities could be classified as long-term liabilities.

3. Consolidated And Separate Financial Statements

The Company considers investments in subsidiaries to be those investments made in other companies intented to be kept as a long-term investment and over which it exercises control or significant influence.

The Company does not present separate financial statements in accordance with IFRS.

Summarized Financial Information Of Subsidiaries As Of December 31, 2011:

12/31/2011 SubsidiariesCurrentassets

Non-currentassets

Currentliabilities

Non-currentliabilities Equity

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Aguas del Valle S.A. 6,845,486 98,266,604 7,935,954 25,913,113 71,263,023

Servicios Sanitarios Las Vegas Ltda. - 712,263 60 - 712,203

12/31/2010 SubsidiariesProfit or lossfor the year

Ordinaryincome

Ordinaryexpenses

(-) Other expenses(+) Other income

ThCh$ ThCh$ ThCh$ ThCh$

Aguas del Valle S.A. 7,311,353 29,086,570 (9,581,319) (9,515,884)

Servicios Sanitarios Las Vegas Ltda. 73,114 0 0 0

Summarized Financial Information Of Subsidiaries As Of December 31, 2010:

12/31/2011 SubsidiariesCurrentassets

Non-currentassets

Currentliabilities

Non-currentliabilities Equity

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Aguas del Valle S.A. 5,891,758 93,259,131 6,862,632 28,336,587 63,951,670

Servicios Sanitarios Las Vegas Ltda. - 639,516 60 - 639,456

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12/31/2010 SubsidiariesProfit or lossfor the year

Ordinaryincome

Ordinaryexpenses

(-) Other expenses(+) Other income

ThCh$ ThCh$ ThCh$ ThCh$

Aguas del Valle S.A. 6,230,013 26,168,429 (8,837,461) (8,408,345)

Servicios Sanitarios Las Vegas Ltda. 62,300 0 0 0

4. Cash And Cash Equivalents

The composition of this item is as follows:

Cash and cash equivalent12/31/2011 12/31/2010

ThCh$ ThCh$

Cash and banks 157,723 158,500

Mutual fund units - -

Repurchase agreements 14,757,446 16,915,089

Total 14,915,169 17,073,589

There are no restrictions in the availability or use of cash and cash equivalents.

No investing or financing transactions were carried out that do not require the use of cash and cash equivalents.

Cash equivalents correspond to financial assets, time deposits, marketable securities, and repurchase agreements with maturities of less than 90 days from their date of acquisition.

Details of certain cash flow statement items are as follows:

- Other inflows or outflows from other operating activities correspond to services additional to the operation of the business.

- Income from financing sources: These correspond to the issue of Reimbursable Financial Contributions used in the construction of infrastructure works, which will be reimbursed in the short and long term, as stipulated in current legislation (Statutory Decree 70 of 1988).

- Reimbursement of other financial liabilities: Payment and prepayment of promissory notes issued as Reimbursable Financial Contributions.

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5. Financial Instruments

I. Financial instrument detail

The Group’s financial instruments consist of:

Kind of financial instruments31/12/2011 31/12/2010

CategoryThCh$ ThCh$

ASSETSCash and cash equivalents 157,723 158,500 Cash and checking accounts

Financial Investments 14,757,446 16,915,089

Investments in Mutual Funds - - Financial asset at fair value with changes in income

Resale agreements 14,757,446 16,915,089 Loans and accounts receivable

Trade debtors 29,149,355 26,917,950

Trade and other receivables, current 29,122,946 26,888,436 Loans and accounts receivable

Trade and other receivables, non-current 26,409 29,514 Loans and accounts receivable

Other non-current financial assets 4,850,139 3,705,752 Loans and accounts receivable

Due from related companies - - Loans and accounts receivable

LIABILITIESLoans

Current 34,292,805 47,885,459

Bank loans, current 247,396 - Financial liabilities measured at amortized cost

Other loans, current 34,045,409 47,885,459 Financial liabilities measured at amortized cost

Non-Current 253,625,087 231,756,666

Bank loans, non-current 33,441,045 - Financial liabilities measured at amortized cost

Other loans, non-current 220,184,042 231,756,666 Financial liabilities measured at amortized cost

Trade accounts payable 12,450,965 10,957,968

Trade and other accounts payable, current 12,450,965 10,957,968 Financial liabilities measured at amortized cost

Trade and other accounts payable, non-current - -

Due to related companies - 646 Financial liabilities measured at amortized cost

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II. Financial Instrument Accounting Policies

A. Hedging Instruments Policy:The Group does not have any hedging instruments.

B. Trade and other receivables policy:Trade receivables, corresponding to billings for the consumption of drinking water, sewerage services, sewage treatment and other services, are recorded at the net value of the estimate for uncollectible or doubtful accounts.

Trade receivables are subject to the Company’s credit policy, which stipulates the terms and conditions of payment, as well as the different scenarios to renegotiate with past due customers. Interest on past due customers is also charged as required by the law.

C. Policy for uncollectible or doubtful accounts:La estimación de deudores incobrables se efectúa a través de un análisis dependiendo de The estimate of uncollectible accounts is made based on an aging analysis of the outstanding receivables, their collection history, and collection of accounts receivable from customers and other debtors, all of which are specifically identified. The analysis for different groups of debtors’ behavior is affected by: i) the type of customer; ii) classification between renegotiation or non-renegotiation term debtors; and iii) aging of debt. A provision of 100% has been made for withdrawn or suspended customers.

D. Cash and cash equivalent policy:Cash surpluses are invested in instruments with a high-risk rating standard.

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E. Bank overdraft policy:The Company keeps lines of credit and overdraft facilities and/or working capital in banking institutions for any possible cash shortages and to finance short-term working capital.

There is also planning, supervision and follow- p in place for both short- and long-term strategic and budgetary objectives to detect and, if applicable, correct any risks arising from deviations that could affect achievement of the objectives.

The company invests in low risk instruments that meet the rating standards stipulated in its investment policies. Thus, mutual investment funds must have an AAfm / M1 rating (Units with a high protection against loss, associated with credit risks / units with the lowest sensitivity to changes in economic conditions). Fixed term deposits and agreements contracted are N-1 rated instruments (Instruments with the highest capacity to pay capital and interest under the conditions and terms agreed to).

The institutions issuing these instruments are Banks or Bank subsidiaries with N-1 risk rating, with instruments with at least an AA rating (with a very high capacity to pay the capital and interest under the conditions and terms agreed to, which would not be significantly affected by any possible changes in the issuer, the industry to which it belongs or the economy).

F. Dividend policy:The dividend policy is approved every year at the Ordinary Shareholders’ Meeting.

G. Financial instrument policy:The Group’s financial instruments consist of:

• Financial assets: Mutual funds are valued at fair value (fund unit), while fixed term deposits, repurchase agreements and trade debtors and other receivables are measured at amortized cost using the effective interest method.

• Financial Liabilities: Bank borrowings, commercial papers, bonds, reimbursable financial contributions (RFC) and trade and other payables are measured at amortized cost using the effective interest method.

Financial instruments are subject to risk control policies, as specified below:

i. For liquidity risk, the Company keeps reasonable debt leverage, complying with the financial covenants stipulated in its debt contracts. It maintains a local market risk rating equivalent to AA- and AA for Bonds and N1 for commercial papers.

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ii. Interest rate risk, resulting from possible impact on profit or loss from changes in interest rates, is mitigated by the Company’s fixed rate debt structure.

H. Basis for recognition and measurement of income and expenses from financial assets and liabilities:Instruments quoted actively in the market, whose market price is observable and which are available to the general public, are measured at fair value.

Instruments with no active market are measured at cost.

I. Criterion to determine whether there is any objective evidence of impairment loss:Financial assets are assessed each period to determine whether there is any objective evidence of impairment. A financial asset is considered to be impaired if there is objective evidence indicating that one or more events have had a negative effect on the future cash flow estimate for the asset.

III. Information to Be Disclosed on Financial Assets and Liabilities

A. Financial Liabilities: Reimbursable Financial Borrowings, current portion:

DebtorCompany

Bank Or Institution

Current Nominal AmountIndexation

UnitNominalInterest

Rate

EffectiveInterest

RateMaturity

Periodicity Book Value

31.12.2011 31.12.2010 InterestPayments

AmortizationPayments

31.12.2011 31.12.2010

ThCh$ ThCh$Uf Uf

ESVAL S.A. BANCO BBVA - - U.F. 3.85% 3.98% 10-21-2016 6-MONTHLY BULLET 247,396 0

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Reimbursable Financial Borrowings, non-current portion:

DebtorCompany

Bank Or Institution

Current Nominal Amount

IndexationUnit

NominalInterest

Rate

EffectiveInterest

RateMaturity

Periodicity Book Value

InterestPayments

AmortizationPayments

31.12.2011 31.12.2010 31.12.2011 31.12.2010

Thch$ Thch$Uf Uf

ESVAL S.A. BANCO BBVA 1,500,000 - U.F. 3.85% 3.98% 21-10-2016 6-MONTHLY BULLET 33,182,998 0

Reimbursable financial contributions, current portion

Inscription Nº or identification

of the Instrument

CurrencyAdjustment

rate

Nominal Amount Book ValueNominal

RateIssuing

CompanySecured(YES/NO)31.12.2011 31.12.2010 31.12.2011 31.12.2010

UF UF ThCh$ ThCh$

Promissory note UF 18,386.72 394,497 1.99% ESVAL S.A. NO

Promissory note UF 1,687.82 36,213 2.58% ESVAL S.A. NO

Promissory note UF 122,551.69 2,732,171 2.98% ESVAL S.A. NO

122,551.69 20,074.54 2,732,171 430,710

Reimbursable Financial Contributions, non-current portion

Regis. Nr.or ident.

of Instrum.

CurrencyAdjustment

rate

Nominal Amount U.F. Book ValueNominal

Rate Issuer Secured(YES/NO)31/12/2011 31/12/2010

31/12/2011 31/12/2010

ThCh$ ThCh$

Promissory Note UF 94,517.19 75,686.43 2.107.169 1,623,894 2.19% ESVAL S.A. NO

Promissory Note UF 10,249.35 10,015.99 228.499 214,899 2.32% ESVAL S.A. NO

Promissory Note UF 2,975.90 2,907.86 66.345 62,390 2.33% ESVAL S.A. NO

Promissory Note UF 107.09 104.63 2.387 2,245 2.35% ESVAL S.A. NO

Promissory Note UF 5,932.43 5,794.52 132.258 124,325 2.37% ESVAL S.A. NO

Promissory Note UF 57,137.48 51,546.77 1.273.825 1,105,964 2.39% ESVAL S.A. NO

Promissory Note UF 10,924.00 10,658.59 243.540 228,686 2.47% ESVAL S.A. NO

Promissory Note UF 18,765.20 11,461.82 418.352 245,920 2.48% ESVAL S.A. NO

Promissory Note UF 3,958.28 3,861.36 88.246 82,848 2.49% ESVAL S.A. NO

Promissory Note UF 5,183.58 5,053.70 115.563 108,430 2.55% ESVAL S.A. NO

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Regis. Nr.or ident.

of Instrum.

CurrencyAdjustment

rate

Nominal Amount U.F. Book ValueNominal

Rate Issuer Secured(YES/NO)31/12/2011 31/12/2010

31/12/2011 31/12/2010

ThCh$ ThCh$

Promissory Note UF 9,976.23 222,410 2.58% ESVAL S.A. NO

Promissory Note UF 4,346.50 4,235.53 96,901 90,876 2.60% ESVAL S.A. NO

Promissory Note UF 51,687.53 50,348.45 1,152,323 1,080,254 2.64% ESVAL S.A. NO

Promissory Note UF 5,180.71 5,045.48 115,499 108,254 2.66% ESVAL S.A. NO

Promissory Note UF 38,292.84 35,284.73 853,702 757,053 2.68% ESVAL S.A. NO

Promissory Note UF 11,545.09 11,240.49 257,387 241,171 2.69% ESVAL S.A. NO

Promissory Note UF 2,210.51 2,150.93 49,281 46,149 2.75% ESVAL S.A. NO

Promissory Note UF 12,969.25 12,616.00 289.137 270,683 2.78% ESVAL S.A. NO

Promissory Note UF 7,120.27 6,924.98 158,740 148,579 2.80% ESVAL S.A. NO

Promissory Note UF 2,841.59 2,763.38 63,350 59,290 2.81% ESVAL S.A. NO

Promissory Note UF 2,185.14 2,124.39 48,716 45,580 2.84% ESVAL S.A. NO

Promissory Note UF 62,019.33 54,077.46 1,382,661 1,160,262 2.88% ESVAL S.A. NO

Promissory Note UF 3,712.11 3,606.08 82,758 77,371 2.92% ESVAL S.A. NO

Promissory Note UF 90,990.00 207,322.80 2,028,534 4,448,225 2.98% ESVAL S.A. NO

Promissory Note UF 1,673.06 37,299 3.06% ESVAL S.A. NO

Promissory Note UF 7,514.59 7,282.98 167,530 156,260 3.16% ESVAL S.A. NO

Promissory Note UF 17,011.49 16,484.01 379,255 353,673 3.17% ESVAL S.A. NO

Promissory Note UF 3,249.78 72,451 3.18% ESVAL S.A. NO

Promissory Note UF 4,430.13 4,289.85 98,766 92,041 3.24% ESVAL S.A. NO

Promissory Note UF 4,236.64 4,102.10 94,452 88,013 3.25% ESVAL S.A. NO

Promissory Note UF 68,916.44 66,714.88 1,536,425 1,431,404 3.27% ESVAL S.A. NO

Promissory Note UF 4,303.30 4,164.62 95,938 89,354 3.30% ESVAL S.A. NO

Promissory Note UF 2,992.49 2,894.10 66,715 62,095 3.37% ESVAL S.A. NO

Promissory Note UF 2,013.60 1,946.64 44,891 41,766 3.41% ESVAL S.A. NO

Promissory Note UF 2,127.84 2,056.48 47,438 44,123 3.44% ESVAL S.A. NO

Promissory Note UF 1,343.67 29,956 3.46% ESVAL S.A. NO

Promissory Note UF 36,221.41 34,996.53 807,521 750,870 3.47% ESVAL S.A. NO

Promissory Note UF 2,647.49 2,557.22 59,023 54,867 3.50% ESVAL S.A. NO

Promissory Note UF 645.51 14,391 3.51% ESVAL S.A. NO

Promissory Note UF 7,024.54 6,782.41 156,605 145,520 3.54% ESVAL S.A. NO

Promissory Note UF 4,282.33 4,130.33 95,470 88,619 3.65% ESVAL S.A. NO

(Continued)

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Regis. Nr.or ident.

of Instrum.

CurrencyAdjustment

rate

Nominal Amount U.F. Book ValueNominal

Rate Issuer Secured(YES/NO)31/12/2011 31/12/2010

31/12/2011 31/12/2010

ThCh$ ThCh$

Promissory Note UF 10,949.12 10,558.47 244,100 226,538 3.67% ESVAL S.A. NO

Promissory Note UF 4,118.52 3,970.42 91,818 85,188 3.70% ESVAL S.A. NO

Promissory Note UF 5,566.71 5,366.01 124,104 115,131 3.71% ESVAL S.A. NO

Promissory Note UF 2,421.15 2,333.18 53,977 50,060 3.74% ESVAL S.A. NO

Promissory Note UF 6,400.88 6,167.15 142,701 132,320 3.75% ESVAL S.A. NO

Promissory Note UF 2,302.80 2,217.65 51,339 47,581 3.80% ESVAL S.A. NO

Promissory Note UF 4,739.92 4,560.25 105,672 97,843 3.90% ESVAL S.A. NO

Promissory Note UF 8,887.90 8,543.61 198,147 183,308 3.99% ESVAL S.A. NO

Promissory Note UF 2,209.84 2,120.56 49,266 45,498 4.17% ESVAL S.A. NO

Promissory Note UF 1,290.18 1,237.82 28,763 26,558 4.19% ESVAL S.A. NO

Promissory Note UF 3,637.58 3,489.29 81,096 74,865 4.21% ESVAL S.A. NO

Promissory Note UF 3,570.81 3,423.92 79,608 73,462 4.24% ESVAL S.A. NO

Promissory Note UF 6,129.75 5,868.04 136,657 125,902 4.41% ESVAL S.A. NO

Promissory Note UF 3,529.32 3,371.20 78,683 72,331 4.64% ESVAL S.A. NO

Promissory Note UF 2,659.55 2,539.44 59,292 54,485 4.68% ESVAL S.A. NO

Promissory Note UF 1,355.22 1,291.43 30,213 27,708 4.88% ESVAL S.A. NO

Promissory Note UF 2,764.54 2,633.14 61,633 56,496 4.93% ESVAL S.A. NO

Promissory Note UF 1,536.80 1,461.52 34,261 31,358 5.09% ESVAL S.A. NO

Promissory Note UF 4,325.13 4,107.05 96,425 88,119 5.24% ESVAL S.A. NO

Promissory Note UF 25,389.91 24,079.96 566,043 516,649 5.37% ESVAL S.A. NO

Promissory Note UF 5,192.17 4,923.83 115,754 105,643 5.38% ESVAL S.A. NO

Promissory Note UF 18,721.57 17,725.40 417,379 380,308 5.54% ESVAL S.A. NO

Promissory Note UF 11,272.92 10,664.01 251,319 228,802 5.63% ESVAL S.A. NO

Promissory Note UF 23,695.86 22,400.24 528,276 480,609 5.70% ESVAL S.A. NO

Promissory Note UF 12,217.37 11,500.87 272,374 246,757 6.14% ESVAL S.A. NO

Promissory Note UF 4,592.90 4,311.77 102,394 92,511 6.42% ESVAL S.A. NO

Promissory Note UF 8,750.86 8,155.52 195,092 174,981 7.17% ESVAL S.A. NO

Promissory Note UF 7,860.54 7,274.23 175,243 156,073 7.90% ESVAL S.A. NO

Promissory Note UF 2,542.29 2,323.00 56,679 49,841 9.23% ESVAL S.A. NO

884.094,01 921,853,48 19,710,019 19,778,874

(Continued)

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Commercial papers, current:

InstrumentReg. No. Series Adjustment

UnitNominal

ValueThCh$

Maturity Promissory NoteOr Line Of Credit

InterestRate

Carrrying ValuePlacement In

Chile Or Abroad1231/2011 31/12/2010

ThCh$ ThCh$

43 5A 0 12,850,000 22-11-2011 0.49 12,208,245 DOMESTIC

44 9A 0 12,850,000 05-12-2011 0.54 12,547,992 DOMESTIC

87 13A 0 7,450,000 13-07-2012 0.55 7,196,975 DOMESTIC

33,150,000 7,196,975 24,756,237

Bonds

Total Current Portion.

Regis. Nr.Instrument Series

Current Nominal Value

AdjstUnit

Nomin.Ints.Rate

Efect.Ints.Rate

Maturity Date

Periodicity Carrying ValuePlacement

In ChileOr AbroadPayment

Of InterPaymentAmortiz.

12.31.2011 31.12.2010 12.31.2011 31.12.2010

ThCh$ ThCh$UF UF

232 A 37,232 35,094 UF 7.00% 7.60% 15-10-2021 Semester Semester 927,606 1,050,646 Nacional

293 D 87,820 82,779 UF 6.00% 6.87% 01-06-2027 Semester Semester 2,145,400 2,370,610 Nacional

348 E 537,500 537,500 UF 3.80% 4.13% 15-07-2012 Semester Semester 12,207,994 12,069,618 Nacional

419 H 166,667 83,333 UF 3.50% 3.75% 15-02-2026 Semester Semester 4,465,149 2,712,470 Nacional

493 J 121,053 121,053 UF 3.40% 3.73% 15-03-2028 Semester Semester 3,091,234 3,323,933 Nacional

561 K - - UF 4.95% 4.83% 27-01-2014 Semester Semester 257,330 237,193 Nacional

562 M - - UF 4.90% 4.72% 27-01-2030 Semester Semester 1,021,550 934,042 Nacional

950,271 859,759 24,116,263 22,698,512

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Total Non-Current Portion

Regis. Nr.Instrument Series

Current Nominal ValueAdjstUnit

Nomin.Ints.Rate

Efect.Ints.Rate

Maturity Date

PERIODICITY CARRYING VALUEPlacement

In ChileOr Abroad

PaymentOf Inter

PaymentAmortiz.

12.31.2011 31.12.2010 12.31.2011 31.12.2010

ThCh$ ThCh$UF UF

232 A 455,590 492,822 UF 7.00% 7.60% 15-10-2021 SEMESTER SEMESTER 9,939,982 10,113,885 DOMESTIC

293 D 2,075,345 2,163,165 UF 6.00% 6.87% 01-06-2027 SEMESTER SEMESTER 43,916,816 43,537,922 DOMESTIC

348 E - 537,500 UF 3.80% 4.13% 15-07-2012 SEMESTER SEMESTER - 11,374,730 DOMESTIC

419 H 2,250,000 2,416,667 UF 3.50% 3.75% 15-02-2026 SEMESTER SEMESTER 49,475,679 50,926,309 DOMESTIC

493 J 1,876,316 1,997,368 UF 3.40% 3.73% 15-03-2028 SEMESTER SEMESTER 40,942,861 41,574,613 DOMESTIC

561 K 500,000 500,000 UF 4.95% 4.83% 27-01-2014 SEMESTER SEMESTER 11,164,370 10,767,232 DOMESTIC

562 M 2,000,000 2,000,000 UF 4.90% 4.72% 27-01-2030 SEMESTER SEMESTER 45,292,361 43,683,100 DOMESTIC

9,157,252 10,107,522 200,732,070 211,977,791

Summary of Financial Liabilities:

Current Portion

Registrion oridentification Nr.

of instrument

Currencyadjustment

index

Nominal amount U.F. Carrying valueNominal

rate12/31/2011 12/31/201012/31/2011 12/31/2010

ThCh$ ThCh$

Bank borrowings UF - - 247,396.00 - 3.85%

Promissory note AFR UF 122,551.69 20,074.54 2,732,171 430,710 2.98%

Commercial paper ThCh$ 7,450,000 25,700,000 7,196,975 24,756,237 0.00%

Bonds UF 950,270.64 859,758.93 24,116,263 22,698,512 4.03%

34,292,805 47,885,459

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Non-current Portion

Registrion oridentification Nr.

of instrument

Currencyadjustment

index

Nominal amount U.F. Carrying valueNominal

rate12/31/2011 12/31/201012/31/2011 12/31/2010

ThCh$ ThCh$

Bank borrowings UF 1,500,000 - 33,182,998 - 3.85%

Promissory note AFR UF 884,094.01 921,853.48 19,710,019 19,778,874 3.34%

Bonds UF 9,157,251.57 10,107,522.20 200,732,070 211,977,792 4.61%

253,625,087 231,756,666

The company has complied with payment of all liabilities according to the corresponding maturities and there have been no renegotiations of debt.

B. Risks

B.1 Business RiskThe sanitary market is a regulated market, including the pricing processes for drinking water distribution and sewer systems. The regulatory authority, in addition to establishing the tariff rates, issues product and operating quality regulations that are necessary to provide these services. The business risks are related to the current regulatory framework, where the regulatory authority establishes tariff rates after a process of seeking optimal operations and investment in each system, establishing tariff rates that allow the recovery of the initial investment and the necessary costs to operate in agreement with current regulations.

B.2 Financial RiskThe principal objectives of financial risk management are ensuring the availability of funds in order to comply with financial commitments, and protecting the economic flow of value of the Group’s assets and liabilities.

Such management is performed by identifying risks, determining each risk’s tolerance, hedging of such financial risks and controling established hedge operations. In order to achieve the objectives, financial risk management is based on hedging all significant exposures to the extent there are adequate instruments and the cost is reasonable.

In addition, financial risks exist related to the financing of investments, the recovery periods of such investments, as well as the costs of financing.

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i. Credit Risk

Credit risk refers to the possibility of financial loss from failing to discharge obligations by the Company’s counterparties (customers).

The Company has a dispersed market, which means that the credit risk of a particular customer is not significant.

The objective is to maintain minimum levels of uncollectible amounts. There is a credit policy in place stipulating the terms and conditions and methods of payment, and also the terms and conditions for reaching agreements with past due customers. Management has developed processes to control, estimate and evaluate uncollectible accounts for the purpose of taking corrective actions to achieve the proposed fulfillments. One of the main actions performed to maintain a low level of uncollectible accounts is the suspension of the provision of services. The method of analysis is based on historical records of accounts receivable from customers and other debtors.

Current plus non-current credit risk31/12/2011 31/12/2010

ThCh$ ThCh$

Exposure according to Balance Sheet for the following risks:

Trade and other Receivables, (gross) 36,963,845 34,340,314

Estimates for uncollectible accounts -7,988,949 -7,451,878

Net exposure, risk concentrations 28,974,896 26,888,436

Trade accounts receivable and other accounts receivable(by aging)

31/12/2011 31/12/2010

ThCh$ ThCh$

Under three months 26,433,194 24,914,595

Between three and twelve months 1,691,141 1,172,301

Over twelve months 8,839,510 8,253,418

Estimates for uncollectible accounts -7,988,949 -7,451,878

Total 28,974,896 26,888,436

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ii. Liquidity risk

Liquidity risk is the possibility of adverse market situations denying the Group access to sources of financing and failure to finance its acquired commitments, such as long-term investments and working capital needs, at reasonable market prices.

Management follows up on provisions for the Group’s liquidity reserve in light of expected cash flows.

Various preventive measures, such as diversifying financing sources and instruments, are used to manage liquidity risk.

Liquidity risk is controlled regularly so as to perceive, detect and correct deviations to minimize any possible effects on profit or loss.

Maturity profiles

Other Current Financial Liabilities:Unsecured obligations (commercial paper) that accrue interests as of 12/31/2011:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Nominal

valueRegistration

NumberSVS

Interestrate

contract

Effectiveinterest

rateFinalTerm

Payment ofinterests

1 to 90 days

91 days to 1 year Company

creditorcompanyThCh$ ThCh$

89.900.400-0 ESVAL S.A. Commercial bills Serie 13A

Ch$ pesos not indexed 7,450,000 87 0.55% 0.55% 13-07-2012 Semester 7,450,000 Chile

7,450,000 7,450,000

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Unsecured obligations (commercial paper) that accrue interests as of 12/31/2010:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Nominal

valueRegistration

NumberSVS

Interestrate

contract

Effectiveinterest

rateFinalTerm

Payment ofinterests

1 to 90 days

91 days to 1 year Company

creditorcompanyThCh$ ThCh$

89.900.400-0 ESVAL S.A. Commercial bills Serie 5A

Ch$ pesos not indexed 12,850,000 43 0.49% 0.49% 22-11-2011 Anual 12,850,000 Chile

89.900.400-0 ESVAL S.A. Commercial bills Serie 7A

Ch$ pesos not indexed 12,850,000 44 0.46% 0.46% 06-06-2011 Semester 12,850,000 Chile

25,700,000 25,700,000

Unesecured obligations (bonds) that accrue interests as of 12/31/2011:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Nominal

valueRegistration

NumberSVS

Interestrate

contract

Effectiveinterest

rateFinalTerm

Payment ofinterests

1 to 90 days 91 days to 1 year Company

creditorcompanyThCh$ ThCh$

89.900.400-0 ESVAL S.A. Bonds Serie A of 15/10/2000 U.F. 70,674 232 7.00% 7.60% 15-10-2021 Semester 0 1,572,056 Chile

89.900.400-0 ESVAL S.A. Bonds Serie D of 01/06/2002 U.F. 214,403 293 6.00% 6.87% 01-06-2027 Semester 0 4,780,738 Chile

89.900.400-0 ESVAL S.A. Bonds Serie E of 15/07/2004 U.F. 552,746 348 3.80% 4.13% 15-07-2012 Semester 6,218,947 6,103,986 Chile

89.900.400-0 ESVAL S.A. Bonds Serie H of 15/02/2005 U.F. 249,077 419 3.50% 3.75% 15-02-2026 Semester 2,792,578 2,760,346 Chile

89.900.400-0 ESVAL S.A. Bonds Serie J of 15/03/2007 U.F. 187,375 493 3.40% 3.73% 15-03-2028 Semester 2,100,050 2,077,304 Chile

89.900.400-0 ESVAL S.A. Bonds Serie K of 27/01/2009 U.F. 24,451 561 4.95% 4.83% 27-01-2014 Semester 272,556 272,556 Chile

89.900.400-0 ESVAL S.A. Bonds Serie M of 27/01/2009 U.F. 96,828 562 4.90% 4.72% 27-01-2030 Semester 1,079,343 1,079,343 Chile

1,395,554 12,463,474 18,646,329

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Unsecured obligations (bonds) that accrue interests as of 12/31/2010:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Nominal

valueRegistration

NumberSVS

Interestrate

contract

Effectiveinterest

rateFinalTerm

Payment ofinterests

1 to 90 days 91 days to 1 year Company

creditorcompanyThCh$ ThCh$

89.900.400-0 ESVAL S.A. Bonds Serie A of 15/10/2000 U.F. 70,829 232 7.00% 7.60% 15-10-2021 Semester 0 1,519,668 Chile

89.900.400-0 ESVAL S.A. Bonds Serie D of 01/06/2002 U.F. 214,367 293 6.00% 6.87% 01-06-2027 Semester 0 4,599,358 Chile

89.900.400-0 ESVAL S.A. Bonds Serie E of 15/07/2004 U.F. 572,952 348 3.80% 4.13% 15-07-2012 Semester 6,203,924 6,089,086 Chile

89.900.400-0 ESVAL S.A. Bonds Serie H of 15/02/2005 U.F. 170,081 419 3.50% 3.75% 15-02-2026 Semester 930,608 2,718,568 Chile

89.900.400-0 ESVAL S.A. Bonds Serie J of 15/03/2007 U.F. 191,457 493 3.40% 3.73% 15-03-2028 Semester 2,064,854 2,042,963 Chile

89.900.400-0 ESVAL S.A. Bonds Serie K of 27/01/2009 U.F. 24,451 561 4.95% 4.83% 27-01-2014 Semester 262,305 262,305 Chile

89.900.400-0 ESVAL S.A. Bonds Serie M of 27/01/2009 U.F. 96,828 562 4.90% 4.72% 27-01-2030 Semester 1,038,749 1,038,749 Chile

1,340,965 10,500,440 18,270,697

Reimbursable Financial Contributions (Promissory Notes) as of 31/12/2011:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Kind of

Rate BasisAverageInterest

Rate

EffectiveInterest

Rate

1 to 90 days 91 days to 1 year Companycreditor

companyThCh$ ThCh$

89.900.400-0 ESVAL S.A. Promissory notes UF Fixed Half-year 3.00% 3.00% 444,913 2,331,554 Chile

444,913 2,331,554

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Reimbursable Financial Contributions (Promissory Notes) at 31/12/2010:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Kind of

Rate BasisAverageInterest

Rate

EffectiveInterest

Rate

1 to 90 days 91 days to 1 year Companycreditor

companyThCh$ ThCh$

89.900.400-0 ESVAL S.A. Promissory notes UF Fija Half-year 2.04% 2.04% 0 434,263 Chile

434,263

Loans from financial entities at 01/01/2011:

Tax NumerIssuing

Company

NameIssuing

Company

Country Debtor

Company

Tax Nr.Creditor

Institution

NameCreditor

InstitutionCurrency Kind of

Rate BasisInterest

ratecontract

Effective Interest

Rate

1 to 90 days 91 days to 1 year Company

creditorcompanyThCh$ ThCh$

89.900.400-0 ESVAL S.A. CHILE 97.032.000-8 Banco BBVA UF Fixed Semester 3.85% 3.98% 1,275,308 Chile

0 1,275,308

Other Non-Current Financial Liabilities:

Unguaranteed obligations (bonds) that accrue interests at 31/12/2011:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Nominal

valueRegistration

NumberSVS

Interestrate

contract

Effectiveinterest

rateFinalTerm

Payment of

interests

More than 1 year to 3

More than3 years to 5

More than5 years Company

creditorcompanyThCh$ ThCh$ ThCh$

89.900.400-0 ESVAL S.A. Bonos Serie A del 15/10/2000 U.F. 652,142 232 7.00% 7.60% 15-10-2021 Semester 3,121,377 3,087,909 7,544,471 Chile

89.900.400-0 ESVAL S.A. Bonos Serie D del 01/06/2002 U.F. 3,228,295 293 6.00% 6.87% 01-06-2027 Semester 9,566,790 9,574,616 50,439,711 Chile

89.900.400-0 ESVAL S.A. Bonos Serie E del 15/07/2004 U.F. - 348 3.80% 4.13% 15-07-2012 Semester 0 0 0 Chile

89.900.400-0 ESVAL S.A. Bonos Serie H del 15/02/2005 U.F. 2,796,510 419 3.50% 3.75% 15-02-2026 Semester 10,719,048 10,203,337 41,423,088 Chile

89.900.400-0 ESVAL S.A. Bonos Serie J del 15/03/2007 U.F. 2,382,410 493 3.40% 3.73% 15-03-2028 Semester 8,081,740 7,717,781 37,314,008 Chile

89.900.400-0 ESVAL S.A. Bonos Serie K del 27/01/2009 U.F. 536,677 561 4.95% 4.83% 27-01-2014 Semester 11,964,682 0 0 Chile

89.900.400-0 ESVAL S.A. Bonos Serie M del 27/01/2009 U.F. 3,186,143 562 4.90% 4.72% 27-01-2030 Semester 4,317,373 4,317,373 62,397,231 Chile

12,782,177 47,771,010 34,901,015 199,118,509

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Unguaranteed obligations (bonds) that accrue interests as of 12/31/2010:

Tax NumerIssuing

Company

NameIssuing

CompanyInstrument Currency Nominal

valueRegistration

NumberSVS

Interestrate

contract

Effectiveinterest

rateFinalTerm

Payment of

interests

More than 1 year to 3

More than3 years to 5

More than5 years Company

creditorcompanyThCh$ ThCh$ ThCh$

89.900.400-0 ESVAL S.A. Bonos Serie A del 15/10/2000 U.F. 687,440 232 7.00% 7.60% 15-10-2021 Semester 3,018,714 2,988,354 8,742,342 Chile

89.900.400-0 ESVAL S.A. Bonos Serie D del 01/06/2002 U.F. 3,335,505 293 6.00% 6.87% 01-06-2027 Semester 9,203,538 9,210,637 53,150,924 Chile

89.900.400-0 ESVAL S.A. Bonos Serie E del 15/07/2004 U.F. 552,746 348 3.80% 4.13% 15-07-2012 Semester 11,859,467 Chile

89.900.400-0 ESVAL S.A. Bonos Serie H del 15/02/2005 U.F. 3,045,587 419 3.50% 3.75% 15-02-2026 Semester 10,564,069 10,067,749 44,712,916 Chile

89.900.400-0 ESVAL S.A. Bonos Serie J del 15/03/2007 U.F. 2,569,786 493 3.40% 3.73% 15-03-2028 Semester 7,952,920 7,602,650 39,580,599 Chile

89.900.400-0 ESVAL S.A. Bonos Serie K del 27/01/2009 U.F. 561,128 561 4.95% 4.83% 27-01-2014 Semester 1,049,219 10,990,080 Chile

89.900.400-0 ESVAL S.A. Bonos Serie M del 27/01/2009 U.F. 3,282,971 562 4.90% 4.72% 27-01-2030 Semester 4,154,996 4,154,996 62,127,965 Chile

14,035,163 47,802,923 45,014,465 208,314,745

Reimbursable Financial Contributions (Promissory Notes) at 31/12/2011:

Tax NumerIssuing

Company

NameIssuing

Company

Identificationof the

InstrumentsCurrency Kind of

Rate BasisInterest

ratecontract

Effectiveinterest

rate

More than 1 year to 3

More than3 years to 5

More than5 years Company

creditorcompanyThCh$ ThCh$ ThCh$

89.900.400-0 Esval S.A. Promissory Notes UF Fixed Half-Year 3,44% 3,44% 4.146.034 9.229.900 10.243.282 Chile

4.146.034 9.229.900 10.243.282 -

Reimbursable Financial Contributions (Promissory Notes) at 31/12/2010:

Tax NumerIssuing

Company

NameIssuing

Company

Identificationof the

InstrumentsCurrency Kind of

Rate BasisInterest

ratecontract

Effectiveinterest

rate

More than 1 year to 3

More than3 years to 5

More than5 years Company

creditorcompanyThCh$ ThCh$ ThCh$

89.900.400-0 ESVAL S.A. Promissory notes UF Fixed Half-year 3.33% 3.33% 3,964,375 6,133,979 13,890,866 Chile

3,964,375 6,133,979 13,890,866 -

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Loans from financial entities at 12/31/2011:

Tax NumerIssuing

Company

NameIssuing

Company

Country Debtor

Company

Tax Nr.Creditor

Institution

NameCreditor

InstitutionCurrency Kind of

Rate BasisInterest

ratecontract

Effective Interest

Rate

Más de 1 año a 3

Más de 3 años a 5

Companycreditor

companyThCh$ ThCh$

89.900.400-0 ESVAL S.A. CHILE 97.032.000-8 Banco BBVA UF Fixed Semester 3.85% 3.98% 2,550,615 35,991,660 Chile

2,550,615 35,991,660

iii. Interest Rate Risk

The Company has a fixed rate debt structure as specified in the table below:

Debt Instruments InterestRate

12/31/2011 12/31/2010

% %

Bank Borrowings Fixed 11.61% 0.00%

Commercial Papers Fixed 2.50% 8.85%

Bonds Fixed 78.10% 83.92%

AFR Fixed 7.79% 7.23%

Total 100.00% 100.00%

Total other financial assets by company are:

Company Instruments12/31/2011 12/31/2010

ThCh$ ThCh$

Esval S.A. Cash and banks 157,723 158,500

Esval S.A. Mutual Fund - -

Esval S.A. Covenants 14,757,446 16,915,089

Total Investments (other assets) 14.915.169 17.073.589

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IV. Risk UF variation

97.5% of the financial debt is structured in UF, which is consistent with the cash flows of the Company.

The revenues of the Company correspond 100% to Chilean pesos and are mostly related with tariff indexations. Sales tariff rates include in indicators associated to the economy (CPI and IPMN), which indicate an adequate hedging between revenues and liabilities.

C. Derivative instrumentsThe Company does not have any derivative instruments.

D. Fair Value of Financial InstrumentsFair value of financial instruments measured at amortized cost is as follows:

12/31/2011 12/31/2010

Amort. Cost Fair Value Amort. Cost Fair Value

ThCh$ ThCh$ ThCh$ ThCh$

Financial Assets

Investments held at amortized cost 43,912,312 43,912,312 43,803,525 43,803,525

Investments in marketable securities - - - -

Trade and other accounts receivable, net 29,154,866 29,154,866 26,888,436 26,888,436

Resale agreements 14,757,446 14,757,446 16,915,089 16,915,089

Financial Liabilities

Financial liabilities held at amortized cost 300,368,121 310,366,227 290,600,093 290,600,093

Bank borrowings 33,430,394 33,403,923 - -

Trade and other accounts payable 12,450,229 12,450,229 10,957,968 10,957,968

Commercial papers 7,196,975 6,942,922 24,756,237 24,756,237

Bonds 224,848,333 235,856,334 234,676,303 234,676,303

AFR 22,442,190 21,712,819 20,209,585 20,209,585

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Methodology and assumptions used in determining fair value.

Fair value of financial assets and liabilities is determined using the following methodology:

The fair value of the financial assets (Trade debtors and other receivables and the Repurchase agreements), as these are of short-term, is considered to be similar in value to the amortized cost of such assets.

The fair value of trade and other payables, as these are short-term, is considered to be similar in value to the amortized cost of such liabilities.

The fair value of bank loans is determined by comparison with investments in financial credit institutions with similar characteristics, at the date of the financial statements.

The fair value of trade securities is determined by the value of the transactions of such instruments published as of December 30, 2011 by the Superintendency of Pension Fund Administrators.

The fair value of bonds is determined by the value of the transactions of these instruments published in December of 2011 by the Santiago Stock Exchange.

As there exists no active market for these instruments and all transactions are not informed to the public, the fair value of reimbursable financial contributions is determined based on the following characteristics:

• Assimilation at market value of the J Bonds, as these have similar average rates and company risk.

• Consideration of a higher risk effect of the J Bond, representing approximately 0.5% as they do not count on backup clauses as those of J Bonds.

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6. Trade And Other Receivable

The detail of this item is as follows:

Current

12/31/2011 12/31/2010

Esval S.A. Aguas del Valle S.A. Total Esval S.A. Aguas del Valle S.A. Total

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Trade accounts receivable 25,229,549 7,254,122 32,483,671 23,547,484 6,386,475 29,933,959

Provision for uncollectible accounts (5,575,057) (1,201,275) (6,776,332) (5,127,210) (1,141,746) (6,268,956)

Trade accounts receivable, net 19,654,492 6,052,847 25,707,339 18,420,274 5,244,729 23,665,003

Notes receivable 128,383 44,488 172,871 83,032 38,628 121,660

Provision for uncollectible accounts (71,892) (32,655) (104,547) (45,610) (29,242) (74,852)

Notes receivable, net 56,491 11,833 68,324 37,422 9,386 46,808

Sundry debtors 3,884,733 422,569 4,307,302 4,044,489 240,206 4,284,695

Provision for uncollectible accounts (1,084,940) (23,129) (1,108,069) (1,084,941) (23,129) (1,108,070)

Sundry debtors, net 2,799,793 399,440 3,199,233 2,959,548 217,077 3,176,625

Total trade receivables and other receivables, current, net 22,510,776 6,464,120 28,974,896 21,417,244 5,471,192 26,888,436

Non Current

12/31/2011 12/31/2010

Esval S.A. Aguas del Valle S.A. Total Esval S.A. Aguas del Valle S.A. Total

M$ M$ M$ M$ M$ M$

Long-term accounts receivable 203,764 0 203,764 206,869 0 206,869

Provision for uncollectible accounts (177,355) 0 (177,355) (177,355) 0 (177,355)

Total trade receivables and other receivables, non current, net 26,409 0 26,409 29,514 0 29,514

In general, balances included in this item do not bear interest.

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There are no significant restrictions on disposing of this kind of account receivable.

There are individually no customers that maintain significant balances in relation to the Group’s total revenues or receivables.

See Note 7 for amounts, and terms and conditions related to accounts receivable from related parties.

Average period of collection:

Esval S.A. : 1.82 monthsAguas del Vallle S.A. : 1.52 months

The analysis of trade and other receivable at the end of each reporting period is as follows:

Detail12/31/2011 12/31/2010

ThCh$ ThCh$

Aged less than one month 14,143,247 12,346,715

Aged from one to three months 3,486,472 3,110,469

Aged from four to six months 523,944 474,852

Aged from seven to eleven months 1,167,198 697,449

Aged more than twelve months 7,438,314 7,146,662

Suspended clients 1,401,195 1,106,756

Clients from other services 8,803,475 9,457,411

Total 36,963,845 34,340,314

Changes in the debtor impairment provision were as follows:

Initial balance al January 1 7,451,878 7,069,992

Increase in the provision during the year 537,071 381,886

Final balance 7,988,949 7,451,878

Trade and Other Receivables, Net, Current 28,974,896 26,888,436

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7. Related Party Disclosures

Identification Of Subsidiaries:

Taxpayer No. Name of companyDirec % Indirect % Total 2011 Total 2010

% % % %

99.541.380-9 Aguas del Valle S.A. 99.0000 0.9999 99.9999 99.9999

76.027.490-9 Servicios Sanitarios Las Vegas Ltda. 99.9900 0.0000 99.9900 99.9900

Balances and Transactions with related parties:

Transactions between the Company and its subsidiaries are performed under market conditions. These transactions have been eliminated in the process of consolidation and are not broken down in this note.

At December 31, 2010, accounts payable to the related company Lago Peñuelas S.A. of ThCh$646 has been recorded.

Remuneration to Board of Directors and Directors Committee:

Esval S.A.At December 31, 2011

Fee For attendance Remuneration Directors

Committe Other

ThCh$ ThCh$ ThCh$ ThCh$

Pedro Pablo Errazuriz Domínguez 7,732 - 515 -

Jorge Lesser García Huidobro 89,682 - 1,817 -

Stacey Leanne Purcell 27,572 - - -

Carlos Williamson Banaprès 3,770 - 2,611 -

Olivia Steedman 23,629 - - -

Alexander Galetovic Potsch 15,652 - 4,174 -

Nicolás Navarrete Hederra 23,629 - 782 -

Juan Pablo Armas Mac Donald 15,862 - 4,230 -

Alejandro Ferreiro Yazigi 9,954 - 2,127 -

Juan Ignacio Parot Becker - - - -

Total 217,482 - 16,256 -

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Esval S.A.At December 31, 2010

Fee For attendance Remuneration Directors

Committe Other

ThCh$ ThCh$ ThCh$ ThCh$

Kevin Davi Kerr 11,353 - - -

Pedro Pablo Errazuriz Domínguez 76,463 - 5,098 15,087

Jorge Lesser García Huidobro 34,332 - 3,052 -

Stacey Leanne Purcell 13,443 - - -

Carlos Williamson Banaprès 7,658 - 2,046 -

Olivia Steedman 22,888 - - -

Alexander Galetovic Potsch 15,344 - 4,092 -

Nicolás Navarrete Hederra 15,344 - - -

Juan Pablo Armas Mac Donald - - - -

Alejandro Reyes Vergara 7,544 - 2,012

Mónica Singer González 7,544 - 1,006 -

Rodrigo Pérez Mackenna 7,544 - 1,006 -

Total 219,457 - 18,312 15,087

The fees paid to Directors and Directors Committee are presented in the Statements of Income under the item Other Expenses.

Details of Related Parties and Transactions with Related Parties between Directors and Executives:

- The Company’s management is not aware of any transactions between related parties and directors and/or executives.

Key management personnel incentive plans:

Esval S.A. has set up an annual bonus plan for its key executives based on to accomplishment of goals and the level of their individual contribution to the company’s profit or loss.

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8. Inventories

Inventory Measurement Policy:

Inventories are measured at the lower of cost and net realizable value. The cost method is the weighted average cost.

Classes of inventories 12/31/2011 12/31/2010

ThCh$ ThCh$

Domestic material in warehouse 323,397 317,139

Chemical products 87,513 82,920

Fuel (petrol cards) 20,967 20,587

Fuel (petroleum cards) 47,295 34,583

Provision for obsolescence -6,167 -1,326

Total inventories 473,005 453,903

The cost of inventories recognized as an expense during the year ended to December 2011 was ThCh$1,725,281 (ThCh$1,825,613 in 2010).

9. Intangible Assets

The table below presents movements in intangible assets for the reported periods, measured as described in Note 2.4 letter d.

TABLE OF INTANGIBLE MOVEMENTS JANUARY TO DECEMBER 2011 (Consolidated)

ItemOpening Balance Additions Transfers Sales Amortization

ExpensesOther Increases

(derecognitions) Total Changes Closing Balance

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

WATER RIGHTS (Indefinite useful life) 25,139,666 252,974 (467,846) 0 0 0 (214,872) 24,924,794

EASEMENTS (Indefinite useful life) 2,775,142 178,515 467,846 0 0 0 646,361 3,421,503

SOFTWARE AND LICENSES NET 939,051 936,217 0 0 (339,908) 0 596,309 1,535,360

OTHER INTAGIBLE NET 2,519,522 61,930 0 0 (202,742) 0 (140,812) 2,378,710

INTANGIBLES COQUIMBO SANITATION CONCESSION NET - (Initial payment) 42,749,971 0 0 0 (1,861,133) 0 (1,861,133) 40,888,838

INTANGIBLES COQUIMBO SANITATION CONCESSION NET - (Operating assets) 43,805,690 5,794,263 0 0 (1,490,784) 0 4,303,479 48,109,169

Total Intangibles 117,929,042 7,223,899 0 0 (3,894,567) 0 3,329,332 121,258,374

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TABLE OF INTANGIBLE MOVEMENTS JANUARY TO DECEMBER 2010 (Consolidated)

Item

Opening Balance Additions Transfers Sales Amortization

ExpensesOther Increases

(derecognitions) Total Changes Closing Balance

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

WATER RIGHTS (Indefinite useful life) 24,997,555 159,737 (17,626) 0 0 0 142,111 25,139,666

EASEMENTS (Indefinite useful life) 2,753,489 71,311 (49,658) 0 0 0 21,653 2,775,142

SOFTWARE AND LICENSES NET 1,542,710 112,386 0 0 (716,045) 0 (603,659) 939,051

OTHER INTAGIBLE NET 2,430,664 543,547 (111,904) 0 (342,785) 0 88,858 2,519,522

INTANGIBLES COQUIMBO SANITATION CONCESSION NET - (Initial payment) 44,657,746 0 (25,198) 0 (1,882,577) 0 (1,907,775) 42,749,971

INTANGIBLES COQUIMBO SANITATION CONCESSION NET - (Operating assets) 43,227,373 4,637,854 204,386 0 (558,171) (3,705,752) 578,317 43,805,690

Total Intangibles 119,609,537 5,524,835 0 0 (3,499,578) (3,705,752) (1,680,495) 117,929,042

As of December 31, 2011, the Company and its subsidiaries do not keep contractual agreements for the acquisition of new intangible assets.

10. Property, Plant And Equipment

The following information is related to Property, Plant and Equipment:

Net Values:

Property, Plant And Equipment12/31/2011 12/31/2010

ThCh$ ThCh$

Construction in Progress, Net 12,910,834 20,253,389

Land, Net 30,277,521 29906296

Buildings, Net 14,007,861 14,241,139

Plant and Equipment, Net 16,881,816 17,498,251

IT Equipment, Net 436,602 471,827

Fixtures and Fittings, Net 394,114,200 384,750,250

Motor Vehicles, Net 404,507 371,651

Plant and Equipment, Net 1,206,602 1,229,370

Other Property, Plant and Equipment, Net 1,049,246 1,079,993

Other Allocations Support Activities 1,273,383 1,047,751

Property, Plant and Equipment, Net 472,562,572 470,849,917

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Gross values:

Property, Plant And Equipment12/31/2011 12/31/2010

ThCh$ ThCh$

Construction in Progress, Gross 12,910,834 20,253,389

Land, gross 30,227,521 29,906,296

Buildings, gross 20,626,974 20,422,559

Plant and Equipment, gross 42,547,967 40,502,545

IT Equipment, gross 2,922,675 2,668,084

Fixtures and Fittings, gross 572,188,910 551,648,382

Motor Vehicles, gross 1,646,593 1,578,425

Plant and Equipment, gross 4,499,714 4,316,844

Other Property, Plant and Equipment, gross 1,518,760 1,520,366

1,273,383 1,047,751

Property, Plant and Equipment, gross 690,413,331 673,864,641

Detail of Accumulated depreciation:

Property, Plant And Equipment12/31/2011 12/31/2010

ThCh$ ThCh$

Buildings, 6,619,113 6,181,420

Plant and Equipment 25,666,151 23,004,294

IT Equipment, 2,486,073 2,196,257

Fixtures and Fittings, 178,074,710 166,898,132

Motor Vehicles, 1,242,086 1,206,774

Furniture and Equipment, 3,293,112 3,087,474

Other Property, Plant and Equipment 469,514 440,372

Accumulated Depreciation 217,850,759 203,014,723

Reconciliation of changes to property, plant and equipment by class:

As specified in IAS 16, paragraph 73, information is provided for each class of the entity’s Property, Plant and Equipment.

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Movement Chart Consolidated Fixed Assets January And December 2011:

Concept

Initial balance Additions Transfers Netting

Urbanizations Sales Depreciation expenses

Other increases

(decreases)Changes

Total Final Balance

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Construction in Progress, Net 20,253,388 13,077,154 (20,321,906) 0 0 0 (97,802) (7,342,554) 12,910,834

Land, Net 29,906,297 304,700 81,524 0 0 0 (15,000) 371,224 30,277,521

Buildings, Net 14,241,155 129,533 74,883 0 0 (437,710) 0 (233,294) 14,007,861

Plant and Equipment, Net 17,492,285 1,302,981 758,544 0 0 (2,658,142) (13,852) (610,469) 16,881,816

IT Equipment, Net 472,070 164,266 76,931 0 0 (206,198) 0 34,999 507,069

Fixes installations and accessories, Net 384,758,198 6,793,462 19,385,322 (5,296,437) 0 (11,293,507) (303,306) 9,285,534 394,043,732

Motor vehicles, Net 371,651 205,373 19,494 0 (21,695) (139,800) 0 63,372 435,023

Furniture and equipment, Net 1,230,581 111,728 8,044 0 0 (174,121) (146) (54,495) 1,176,086

Other property, plant and equipment, Net 1,078,388 1,605 0 0 0 (30,747) 0 (29,142) 1,049,246

Other Charges Supporting Activities 1,045,904 409,250 (82,836) 0 0 0 (98,934) 227,480 1,273,384

Total Operating Assets in Concession Coquimbo 0 0 0 0 0 0 0 0 0

Total Assets Esval 470,849,917 22,500,052 0 (5,296,437) (21,695) (14,940,225) (529,040) 1,712,655 472,562,572

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Movement Chart Consolidated Fixed Assets January And December 2010:

Concept

Initial balance Additions Transfers Netting

Urbanizations Ventas Depreciation expenses

Other increases

(decreases)Changes

Total Final Balance

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$

Construction in Progress, Net 13,740,670 14,337,401 (7,809,483) 0 0 0 (15,200) 6,512,718 20,253,388

Land, Net 29,763,200 141,766 1,331 0 0 0 0 143,097 29,906,297

Buildings, Net 12,616,819 141,101 1,908,776 0 0 (416,496) (9,061) 1,624,320 14,241,139

Plant and Equipment, Net 18,285,008 1,297,054 488,301 0 0 (2,525,816) (46,296) (786,757) 17,498,251

IT Equipment, Net 488,250 152,757 22,089 0 0 (305,217) 0 (130,371) 357,879

Fixes installations and accessories, Net 388,629,665 12,765,142 6,891,887 (12,786,894) 0 (10,645,142) (104,408) (3,879,415) 384,750,250

Motor vehicles, Net 338,989 36,758 20,201 0 0 (87,429) (1,227) (31,697) 307,292

Furniture and equipment, Net 938,610 180,472 49,049 0 0 (211,800) (1,214) 16,507 955,117

Other property, plant and equipment, Net 1,634,904 0 (237,978) 0 0 (316,932) 0 (554,910) 1,079,994

Other Charges Supporting Activities 898,448 1,096,471 (1,284,148) 0 0 0 0 (187,677) 710,771

Total Operating Assets in Concession Coquimbo 806,668 161,048 (50,025) 0 0 (128,152) 0 (17,129) 789,539

Total Assets Esval 468,141,231 30,309,970 0 (12,786,894) 0 (14,636,984) (177,406) 2,708,686 470,849,917

The fixed assets contributed by third parties and which are associated to urbanizations, at each year-end, are stated net of the complementary account associated with its capitalization.

The capitalization costs during the periods ended December 31, 2011 and December 31, 2010 are as follows:

Year 2011: Esval S.A. : ThCh$241,147 Aguas del Valle S.A. : ThCh$255,987

Year 2010: Esval S.A. : ThCh$309.242 Aguas del Valle S.A. : ThCh$211.454

For the year ended December 31, 2011, restrictions and commitments for the Company and its Subsidiaries are as follows:

- There are no restrictions on the ownership of the property, plant and equipment, nor are they subject to any kind of guarantees for the compliance of obligations;

- No commitments for the acquisition of property, plant and equipment that need to be disclosed exist.

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11. Impairment Of Assets

Information to be disclosed on impairment of the value of the assets by cash generating unit:

Each Company separately, i.e. Esval S.A. y Aguas del Valle S.A., is defined as a Cash Generating Unit, since each is individually capable of generating future economic benefits. As specified in the standard, the Company will assess whether there is any indication of impairment of the value of any asset at each year-end. If there is any such indication, the Company will estimate the recoverable amount of the asset. Indefinite-lived assets will be tested for impairment at each year-end.

According to the impairment tests performed upon the first-time adoption of the international standards, there was no impairment of either of the two companies.

Esval S.A. y Aguas del Valle S.A. perform annual impairment tests on their indefinite-lived intangible assets, and property, plant and equipment.

The respective impairment tests were performed at December 31, 2011 and 2010 based on the estimates and projections available to the Company, with no impairment occurring in either of the Company’s two Cash Generating Units.

Comparison of the value of the property, plant and equipment and the projected future flows:

12/31/2011 12/31/2010

ThCh$ ThCh$

PROJECTED FUTURE FLOWS 722,034 722,034

Fixed assets gross 690,414 673,865

Accumulated depreciations -217,851 -203,015

Carrying value 472,563 470,850

Intangible assets gross 150,237 147,879

Accumulated amortization -28,978 -26,244

Carrying values 121,259 121,635

ASSETS IFRS 593,822 592,485

Construction in progress 12,911 33,405

IMPAIRMENT ADJUSTED ASSETS 580,911 559,080

24% 29%

Difference (if negative, there is impairment) 141,123 162,954

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12. Other Non-Current Financial AssetS

Accounts receivable from ECONSA CHILE S.A.:

The Aguas del Valle S.A. subsidiary owns exploitation rights of the sanitary concessions of the Coquimbo region awarded through public bid by Empresa de Servicios Sanitarios de Coquimbo (ESSCO) (currently ECONSSA CHILE S.A.). This concession agreement is valued as established in IFRIC 12.

According to the criteria defined in Note 2.4 d) and pursuant to the concession contract signed by Aguas del Valle S.A., the latter will be entitled to recover the value of the investments that are not paid through tariffs at the end of the concession. Therefore, Aguas del Valle S.A. has recognized accounts receivable that is expected to be recovered upon termination of the concession (in 2033), considering the following parameters for its determination:

• Allactualinvestmentsininfrastructurehavebeenconsidered(whoseusefullifeexceedsthe concession period) incurred in the years corresponding from 2004 to 2011, and which were informed on an annual basis to Econssa Chile S.A. through Appendix 24 of the Concession Contract.

• Theindexationoftheaccountreceivablehasbeendeterminedaspertheestablishedinthe contract signed by the parties.

• The present value of the account receivable has been determined, considering adiscount rate of 7%.

The amount of this account receivable for the years ended 2011 and 2010, is as follows:

2011:Amount of accounts receivable valued upon termination of the concession contract (December 2033) ThCh$ 22,992,228

Present value of the account receivable ThCh$ 4,850,139 (*)

2010:Amount of accounts receivable valued upon termination of the concession contract (December 2033) ThCh$ 17,567,230

Present value of hte account receivable ThCh$ 3,705,752 (*)

(*) = A discount rate equivalent to the expected performance rate (7% per annum) of the business and the expected collection period is considered for these accounts receivable.

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13. Other Non-Current Non-Financial Assets

Other non-current non-financial assets as of December 31, 2010 and 2011 is as follows:

12/31/2011 12/31/2010

ThCh$ ThCh$

Recovery contract management Litoral Sur 12,769,705 13,535,300

Sanitary study Esval S.A. 664,843 945,076

Tariff study Aguas del Valle S.A. 837,610 0

Other assets - 146,575

Totals 14,272,158 14,626,951

14. Provisions And Contingent Liabilities

A. Provisions

The detail of this item is as follows:

Clases de provisiones12/31/2011 12/31/2010

ThCh$ ThCh$

Other provisions, current

Provision for legal claims 242,931 141,702

Other provisions, current 249,817 292,595

Total other provisions, current 492,748 434,297

Provisions for employee benefits, current:

Participation in income and expenses 2,954,897 3,008,656

Total provisions for employee benefits, current: 2,954,897 3,008,656

Provisions for employee benefits, non-current:

Severance indemnity provision 430,498 535,123

Total provisions for employee benefits, non-current: 430,498 535,123

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As of December 31, 2011 and 2010, movement in current provisions is as follows:

Legalclaims

Other provisions

Interestsin profits and

bondsTotal

ThCh$ ThCh$ ThCh$ ThCh$

Initial balance provisions 141,702 292,595 3,008,656 3,442,953

Changes to provisions - - - 0

Increases (decreases) in existing provisions 101,229 -42,778 1,666,667 1,725,118

Provision used - - -1,703,244 -1,703,244

Other increase (decrease) - - -17,182 -17,182

Total changes to provisions 101,229 -42,778 -53,759 4,692

End balance provisions 242,931 249,817 2,954,897 3,447,645

B. Contingent liabilities

ESVAL S.A.:

- Lawsuits or other legal actions in which the Company is involved:

As of December 31, 2011, the Company is involved in lawsuits that, in aggregate could result in an estimated loss of ThCh$242.931 (ThCh$141.702 at December 31, 2010), which has been reserved for as shown in Letter A of this note.

The Company has various civil lawsuits principally related to compensation for damages that are currently in process. The most significant lawsuits represent in aggregate a possible contingency of approximately ThCh$6.065.938 in total.

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The most significant legal proceedings are as follows:

Case No. Court Parties Amount Origin Current Status and Evaluation

350-2000 1st Civil Valparaíso Euro América Seguros vs.Esval S.A.

5.765 UF There are insurance covers witha deductible of 350 UF

Compensation for damagesfor alleged drop in pressure

in fire hydrants in a fire

First appealable sentence favorable. Appeal for annulmentin the form and appeal lodged by the plaintiff dismissed and

first appealable sentence confirmed.Appeal for annulment in form and substance filed by the

plaintiff. The sentence appealed against is expected to be validated

1952-2002 1st Civil Valparaíso Herrera and others vs.Esval

ThCh$1,011,857,118 plus interest,

indexation and costs.There are insurance covers with

a deductible of UF 350.

Compensation for damagesfor alleged non-contractual

liability in a fire

First appealable sentence favorable. Appeal for annulmentin the form and appeal lodged by the plaintiff dismissed and

first appealable sentence confirmed.Appeal for annulment in form and substance filed

by the plaintiff. The sentence appealed againstis expected to be validated

3027-2010 2º Civil ValparaìsoMunicipality

of Viña del Mar with Esval S.A.

ThCh$111,092,505, plusinterests (Arts. 47 and 48 L.

Municipal Incomein relation to Arts. 53,

54 and 55 of the Tax Code).

Executive lawsuits for charges ofmunicipal rights due

to breakdown of pavement and occupation of public road

In first instance filed execution exceptionswhich are pending of resolution

2550-2006 5th Civil Valparaíso Fernández Toro vs.Esval S.A.

ThCh$105.000 plus indexation,interest and costs

Compensation for damagesnon-contractual liability in

presence of sewer in premises ofplaintiff

In first instance and the period of discussion is ongoing. Probable sentence favorable to Esval S.A.

2108-2002 2nd Civil Viña del Mar Selame vs.Constructora CRY and others

ThCh$274.116 plus indexation, interest and costs, with insurance covers with a

deductible of US$10.000.

Compensation for damagesfor flooding of houses

In first instance. Perìodo probatorio extraordinario en desarrollo. Sentence probably favourable to Esval S.A.

1946-2008 1st Civil Valparaíso Lea (Cubillos) vs.Esval S.A.

ThCh$774.529 plus indexation,interest and costs

Compensation for damagesfor non-contractual liability

stemming from allegednon-performance by Esval S.A.

In first instance Probable sentence favorable to Esval S.A.

2026-2007 4th Civil ValparaísoRiberas del Aconcagua

vs Esval S.A.

Ch$ 394,517 plus indexation, interest and costs plus

affirmative covenant. There are insurance covers

with a deductible of 10% of the loss with a minimum of

UF 1400

Compensation for damagesfor damage to propertyfrom overflow of sewer

In first instance the discussion stage has beencompleted. Evidence stage being developed. Probable

sentence favorable to ESVAL S.A.

1304-2009 5th Civil Valparaiso Stella S.A. vs. Esval S.A. ThCh$3.765.972, plus interest, indexation and costs

compensation for damagesfor alleged non-performance

of contract

In first instance. Probablesentence favorable to Esval S.A.

3011- 2010 1st Civil of Valparaíso Municipality of Viña del Mar vs. Esval S.A.

$485.189.877, plus interests, indexation and costs

Executive lawsuit, for municipal rights due to rupture and replacement of pavement.

Appeals have been files to the execution, with are currently pending resolution.

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4375-2009 5th Civil of Valparaíso Pérez Romero Valentina vs. Esval S.A.

Ch$167.000.000, plus interests, indexation and costs. There are insurance covres for the claim with a deductible of 10% of the loss with a minimum of

UF 1400.

Ordinary lawsuits for compensation of damages for

the death in a traffic accident of a company employee, Mr. Jaime

Santibáñez Campos

In first instance. Extraordinary proof period pending. Probable sentence favorable to Esval S.A..

65.604-2009 1º de Letras de San Antonio Jiménez y otros con Esval S.A. Ch$106,200,000,plus interest,

adjustments and court costs

Indemnity for damages caused by the entry of wastewater to

different premises.Pending in first instance.

2736-2007 1º Civil de Valparaíso Singecom Limitada con Esval S.A. Ch$506,168,583.-

Indemnity for damages for contractual responsibility and in subsidy, extracontractual, for the nullity and breach of

contracts that plaintiff signed with Esval S.A.

Pending in first instance.

In addition, the Company expects a favorable outcome in the following minor lawsuits grouped by subject matter as follows:

Matter Amount Procedural Stage Total Amount Involved

Compensation for damages 22 16 in first instance, 4 in secondinstannce and 2 in cassation

ThCh$825,907,943 plus and undetermined amount

Easements 3 All in first instace Ch$294,847,915 pluse anundetermined amount

Municipal Fees 2 2 in first instance ThCh$95,773,199

Restitution of property 7 All in first instance 5 of undetermined amount and 2 forThCh$48.700.000

Collection of pesos 3 All in first instance ThCh$87,814,300

Enviromental action 1 In first instance Undetermined amount

Total cases 38

Total Amounts Involved Ch$1,353,043,357

In addition, at December 31, 2011, the Company is subject to the following embargos and precautionary measures under the terms and conditions specified in each particular case:

a) Ordinary proceedings entitled “Illustrious Municipality deLimache vs. ESVAL S.A.”, heard by the Fourth Civil Court of Valparaiso, case number 3.069-2003, for collection of municipal fees for execution of works on public thoroughfares. In this proceeding in which nolle prosequi was declared Ch$75,194,142 in funds deposited in a checking account held by Esval S.A. at Banco Santiago were seized.

(Continued)

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b) Ordinary proceedings entitled “Le Roy vs. Esval S.A.” for restitution of property. This case resulted in the establishment of a precautionary measure to prohibit the negotiation of acts or contracts on the same property which forms part of the El Rebaño Farm in Quilpué. These proceedings have concluded and Esval S.A. petitioned for, and the Court granted, the removal of the precautionary measure. Such action currently needs to be registered in the Real Estate Register in Quilpué.

Aguas del Valle S.A.:

The Company currently faces two civil lawsuits for an undetermined amount and one labor lawsuit for compensation of damages for approximately ThCh$772,200.

If these lawsuits, identified in the two tables below, result in an unfavorable decision, provided that such resolution is final and enforceable, at that time a determination will be made in regards to the the appropriate treatment in the equity of ECONSSA CHILE (formerly ESSAN S.A) or Aguas del Valle S.A. as provided by the “Contract of Transfer of the Right to Exploit Sanitary Concessions” and its respective appendices, signed by Empresa de Servicios Sanitarios de Coquimbo S.A., ECONSSA CHILE (formerly ESSCO S.A.) and Aguas del Valle S.A., on December 22, 2003.

The significant lawsuits of a determinable amount that are included in the regulation indicated in the previous paragraph, with the except for the last one, are as follows:

Report On Proceedings Aguas Del Valle S.A.

Case No. Court Parties Amount Origin Current Status and Evaluation

10-2007 3rd Civil Coquimbo Valdés Chirinos vsAguas del Valle S.A.

Ch$100,000,000plus insurance for

30.000 UF and costs

Compensation for damagesin non-contractual setting due to

existence of drinking waterpiping on the premises of the

plaintiff

Unfavorable first appealable sentence issued. Appeal sentence reduces

compensation to be paid be Aguas del Valle S.A. from Ch$142,560,000, to

Ch$100,000,000 Aguas del Valle S.A.makes cassation appeal that is rejected

by sentence dated 11.04.11 Waiting for the execution of sentence

452-2010 3rd Court of Ovalle González Saint Loupvs. Aguas del Valle Ch$265,000,000 Adjustment of easement and

compensation for damagesEvidence stage concluded. Parts

summoned for sentencing

22-2009 Civil court of IllapelHernández Juarez, Teresa vs.

Rojas Espinoza and Aguas del Valle

Ch$407,200,000.- Damage indemnity for labor accident Awaiting for notification to the main defendant, archived on 03.23.11

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In addition, the following lawsuits related to the application of the standard mentioned above for which the Company expects a favorable result are as follows:

Easement 2 All in first instance Ch$50,000,000, plus an undetermined amount

Total Law suits 2

Total Amount Ch$50,000,000

Further, the following table presents lawsuits which only affect the results of Aguas del Valle S.A. grouped according to the nature of the case . Such lawsuits include three immaterial judgments that are expected to have a favorable result for the Company.

Matter Amount Procedural Stage Amount Involved

Damage Indemnity 2 In first instance Ch$43,000,000

Collective or diffused interest 1 In first instance Indetermined. Request return of amounts charged and the application of fines

Consumer Protection 1 In first instance Ch$44,605,000

Easement 1 In first instance Ch$50,000,000

Total Lawsuits 5

Monto total $ 93.000.000.-

TOTAL AMOUNTS INVOLVED Ch$187,605,000

In certain of the Parent Company’s debt contracts Aguas del Valle S.A. is prohibited from pledging the exploitation rights of the sanitary concessions of Essco S.A.(currently ECONSSA CHILE) and also the rights derived from such contract related to the use and benefit of the exploitation rights, as well as those from current or future revenues or cash flows.

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15. Net Equity

15.1 Equity of the Parent

15.1.1 Subscribed and paid-in capital and number of sharesAt December 31, 2011, the issued capital stock of Esval S.A. was ThCh$196.176.015 (ThCh$196.207.284 at December 31, 2010), comprised of 14.962.276.336.000 face value shares fully registered and paid (as detailed in note 2.5) which have listed with the Santiago Stock Exchange of Santiago de Chile, Electronic Stock Exchange of Chile, and the Stock Exchange of Valparaíso.

These amounts decreased due to the effect of the share repurchase exercised by the shareholders during 2011, whose shares will be given a preferential option as of January 2, 2012. See detail of this transaction in note 2.5.

15.2 Dividends:

The dividends payment policy is determined on an annual basis. Dividends approved and paid by Esval S.A. during 2011 and 2010 were as follows:

At the Ordinary Shareholders’ Meeting held on April 29, 2011, shareholders agreed to distribute 100% of 2010net income, equivalent to Ch$0.00115578584 per Company share, reduced by the interim dividends paid on August 27, 2010 and February 3, 2011. The remainder was paid to the shareholders on May 27, 2011, comprising an aggregate balance of Ch$17,293,187, equivalent to Ch$0.00115578584 per Company share. At the same meeting, shareholders approved the distribution of an additional divided of Ch$0.00033943157 per share, equivalent to Ch$5,078,669, recorded as a reduction to prior year retained earnings. This additional dividend was paid as of May 27, 2011.

At the Meeting, Shareholders were informed of the decision of the Board of Esval S.A. with respect to 2011 net income and the interim dividend policy which includes the possible distribution of up to a maximum of two interim distribution of Ch$0.00025 per share, respectively, recorded as a reduction to 2011 net income, as long as such interim dividends are not in excess of 80% of 2011 income verified at the close of June and September 2011, respectively. The amount of ThCh$3,740,569 accrued in June 2011 was paid in September 2011.

At December 31, 2011, “Other financial liabilities, current” includes ThCh$8,669,820 of dividends payable in the months of February 2012 (interim dividend approved in November 2011 for ThCh$3,740,569) and May 2012 for ThCh$4,929,251, in accordance with the dividend distribution policy decided at the Shareholders’ Meeting of 2011.

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The Board has informed Shareholders of its intent to distribute at least 80% of 2011 income, however a final determination will be made at the Ordinary Meeting.

At the Ordinary Shareholders’ Meeting held on April 30, 2010, shareholders agreed to distribute 100% of 2009 net income, equivalent to Ch$0.00150221 per Company share, reduced by interim dividends paid on August 20, 2009 and the final dividend paid on February 2, 2010. The remainder was paid to the shareholders on May 24, 2010, comprising an aggregatel amount of ThCh$22,476,481, equivalent to Ch$0.001502214 per Company share.

Details of dividends paid at December 31, 2011 and 2010 are as follows:

Year 2010:

Dividend No. Type of Dividend Date of Payment Pesos per Share Charged to Year Amount paid ThCh$

30 Interim 02.02.2010 0.000250000 2009 3,740,569

31 Final 05.24.2010 0.001002960 2009 15,006,565

32 Interim 08.27.2010 0.000250000 2010 3,740,569

Total paid 22,487,703

Year 2011:

Dividend No. Type of Dividend Date of Payment Pesos per Share Charged to Year Amount paid

ThCh$

33 Interim 02.03.2011 0.000250000 2010 3,740,569

34 Final 05.27.2011 0.000655786 2010 9,812,049

35 Additional 05.27.2011 0.000339432 2010 5,078,669

36 Interim 09.06.2011 0.000250000 2011 3,740,569

Total paid 22,371,856

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15.3 Other reserves:

The nature and purpose of the Other reserves is as follows:

31/12/2011 31/12/2010

ThCh$ ThCh$

Other opening movements 195,942 195,942

Adjustment for monetary correction of capital 2009 (1) 4,617,668 4,617,668

Total Other Reserves 4,813,610 4,813,610

(1) This balance corresponds mainly to the price-level restatement of 2009 paid-in capital(ThCh$4,617,668), as indicated in Circular Letter No. 456 of the Superintendency of Securities and Insurance.

15.4 Retained earnings:

The movement of retained earnings is as follows:

31/12/2011 31/12/2010

ThCh$ ThCh$

Opening balance (does not include IFRS convergence adjustments) 59,249,870 70,808,203

Initial adjustments for IFRS implementation (1) (9,510,588) (9,510,588)

Initial adjustments for IFRS implementation (2) 36,584,661 36,584,661

Dividends (20,931,290) (28,851,520)

Income for the period 15,354,326 17,293,187

Total Retained Earnings 80,746,979 86,323,943

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(1) Corresponds to the adjustment determined at the date of convergence to IFRS (January 01, 2009), with the exception of revaluations of fixed assets and intangible assets, presented under the following item (2).

31/12/2011 31/12/2010

ThCh$ ThCh$

Adjustment for aplication of effective rate to obligations (775,680) (775,680)

Adjustment to deferred taxes complimentary account (2,862,210) (2,862,210)

Adjustment for deflation in litoral sur contract (5,494,166) (5,494,166)

Taxes for fixed asset depreciation (378,532) (378,532)

(9,510,588) (9,510,588)

(2) Corresponds to the adjustment determined at the date of convergence to IFRS (January 01, 2009), corresponding to the revaluation of fixed assets and intangible assets, net of deferred taxes. This amount is not distributable to the shareholders, until it is realized. The detail is as follows:

12/31/2011 12/31/2010

ThCh$ ThCh$

Adjustment for land revaluation 23,084,472 23,084,472

Adjustment for water rights revaluation 20,993,433 20,993,433

Adjustment value of fixed and intagible assets 308,044 308,044

Associated deferred taxes -7,801,288 -7,801,288

Total Revaluation of Assets 36,584,661 36,584,661

Disclosures related to Retained Earnings:

The following reserves are included in Retained Earnings:

1. Revaluation of land and intangibles2. Contribution from third parties3. Share premium4. Other reserves due to adjustments related to the intial adoption of IFRS

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The reserves for revaluation have distribution restrictions, as this balance corresponds to the application of such amounts through the use or sale in order for distribution, as indicated in IAS 16, IFRS 7 and Official Letter No 456 June 29, 2008 of the Securities and Insurance Superintendency.

15.5 Issuance premiums:

Issuance premiums as of December 31, 2011 and 2010 are as follows:

12/31/2011 12/31/2010

ThCh$ ThCh$

Initial balance 11,150,887 11,150,887

Movements -38,166 0

Total issuance premiums 11,112,721 11,150,887

Issuance premiums correspond to the surcharge for the investment in the Company’s own shares generated in the 1996, 1997, 1998, 1999 and 2004. In 2011, a charge of ThCh$38,166 was recorded, corresponding to the higher value paid in the repurchase of shares performed in October 2011, due to the dissidence of shareholders.

16. Non-controlling interest

Non-controlling interest is as follows:

Rodrigo Bezanilla PumarinoTaxpayer Number: 7.658.247-5Ownership interest in Servicios Sanitarios Las Vegas Limitada: 0,01%

12/31/2011 12/31/2010

ThCh$ ThCh$

Minority interest of equity 71 64

Minority interest of profit or loss 7 6

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17. Guarantees and Restrictions

17.1) Direct guarantees

Guarantee policies and performance bonds have been issued by various institutions, including the following principal parties: The Superintendency of Sanitary Services to guarantee the conditions for provision of services and development programs in the Company’s concession areas; SERVIU to guarantee replacement of pavement; and to other institutions, in the amount of ThCh$15,430,147 at December 31, 2011, and ThCh12,236,110 at December 31, 2010, respectively

The grantors of these performance bonds do not have the power to sell or pledge these documents

Details of the direct guarantees furnished are as follows:

Creditor of the Guarantee Name of Debtor Type of Guarantee

12/31/2011 12/31/2010

ThCh$ ThCh$

S.I.S.S. Esval S.A. Performance bond 7,444,489 5,075,954

SERVIU V REGION Esval S.A. Performance bond 372,117 620,139

DIRECC.REG.VIALIDAD Esval S.A. Performance bond 11,571 10,728

DIRECTOR OBRAS HIDR. Esval S.A. Performance bond 250,312 187,336

I. MUNIC. QUILPUE Esval S.A. Performance bond - 2,462

EMP. DE FERROCARRILES Esval S.A. Performance bond - 6,437

S.I.S.S. Aguas del Valle S.A. Performance bond 2,486,141 2,307,308

SERVIU IV REGION Aguas del Valle S.A. Performance bond 1,015,991 653,959

ESSAN S.A. Aguas del Valle S.A. Performance bond 3,310,382 3,185,879

DIRECC.REG.VIALIDAD Aguas del Valle S.A. Performance bond 10,344 17,551

DIRECTOR OBRAS HIDR. Aguas del Valle S.A. Performance bond 187,572 158,195

SERV.SALUD.COQMBO. Aguas del Valle S.A. Performance bond - 10,162

CIA. MINERA DELPACÍFICO Aguas del Valle S.A. Performance bond 22,294 -

MINIST. OBRAS PUBLICAS Aguas del Valle S.A. Performance bond 207,602 -

DIR. GRAL. TERR. MARIT. Aguas del Valle S.A. Performance bond 111,332 -

Total in Thousands of Ch$ 15,430,147 12,236,110

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17.2) Restriction on bond issues

La Sociedad mantiene restricciones y obligaciones producto de las emisiones de bonos efectuadas en el mercado nacional y son las siguientes:

a) Submit to the representative of the Bond Holders, in the same term in which these have to be delivered to the Superintendence of Securities and Insurances, a copy of its quarterly and annual financial statements, and all other public information, without exception, that must be sent to such institution.

b) Submit to the bond-holders’ representative a copy of the risk rating reports, within no more than ten working days after receipt from the risk rating agencies.

c) Inform the bond-holders’ representative of the sale, assignment, transfer, contribution or disposal in any other mannner, whether for valuable consideration or not, of the Essential Assets, as soon as such action takes place.

d) Submit to the bond-holders’ representative information on any reduction in its share in the capital of subsidiaries, within no more than thirty working days after such reduction is made.

e) Maintain in its financial statements a ratio between Net Consolidated Financial Debt and the Consolidated Adjusted EBITDA of the last twelve months less than 5.50 times (applicable to the bond series K and M).

f ) Maintain a current liability to adjusted equity ratio of no more than 1.5 in the consolidated balance sheet, when this balance shall be prepared under the circumstances indicated in article ninety of the Law on Corporations (applicable to the bond series A, E, H, J).

g) Maintain a Coverage Ratio of Net Financial Assets no less than 2.0 in the Financial Statements (applicable to Bonds Series K and M).

h) Maintain a Coverage Ratio of Net Financial Expenses no less than 2.0 in the Financial Statements (applicable to Bonds Series A, D, E, H, J, K and M).

i) Submit to the bond-holders’ representative, together with the information specified in letter a) above, the available information to verify compliance with the financial indicators specified in letters e), f ), g) and h).

j) Inform the bond-holders’ representative of any breach of the obligations specified in the above letters, as soon as the event or infraction occurs or is made known.

k) Do not perform transactions with persons related to Esval S.A. in conditions of equality different from those commonly prevailing in the market, as provided for in article 89 of the Law on Corporations.

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l) Maintain insurance covers that protect the operating assets of Esval S.A., understood to be the fixed assets subject to the sanitary concessions where Esval S.A. is the holder or which are exploited by Esval S.A.

m) Make provisions for all adverse contingencies that might occur, which shall be reflected in the financial statements of Esval S.A. and subsidiaries, according to generally accepted accounting criteria.

n) Esval S.A. or its subsidiaries must not become insolvent or be in a situation in which they recognize their inability to pay their obligations at their respective maturities, or reach agreements with their creditors to avoid bankruptcy.

o) With regard to Aguas del Valle S.A., (i) maintain, directly or indirectly, ownership of at least two thirds of its shares or of each of the series of shares, if applicable; and (ii) maintain control of the company;

p) Do not furnish collateral or liens or prohibitions of any kind on the shares of Aguas del Valle S.A. owned by the Issuer, without the prior consent of the bond-holders’ representative.

q) Aguas del Valle S.A. must not furnish collateral or liens or prohibitions of any kind on (i) the ESSCO Contract; (ii) the right to exploit the sanitary concessions acquired by Aguas del Valle pursuant to the ESSCO Contract; (iii) the use and possession of the right to exploit the sanitary concessions acquired by Aguas del Valle pursuant to the ESSCO Contract; and (iv) the rights granted to Aguas del Valle S.A. from the ESSCO Contract, with regard to present or future cash flows or revenues from the collection of tariffs and the income earned and/or that might be earned by Aguas del Valle S.A. from the ESSCO Contract; r) Do not contract preferential obligations related to those originated from the Bond Issues, unless the Bond Holders participate in the guarantees furnished under the same terms and conditions and with the same degree of preference as the other creditors.

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17.3) Restriction due to the issue of the Commercial Papers

a) Maintain in its financial statements, a ratio between Net Consolidated Financial Debt and the Consolidated Adjusted EBITDA of the last twelve months less than 5.75 times during 2011 and less than 5.50 times as of 2012 and thereafter. This ratio shall be verified in the quarterly financial statements, as of the date of the Issuance Deed.

b) Maintain a Coverage Ratio of Net Financial Expenses, no less than 2.0 and a Coverage Ratio of Financial Expenses no less than 2.0 in the financial statements.

c) Maintain insurance coverage protecting the operating assets of Esval S.A., understood to be the fixed assets subject to the sanitary concessions where Esval S.A. is the holder or which Esval S.A. exploits, insofar as such insurance coverage is available and the cost is economically reasonable in relation to the value of the asset, the coverage and the insurable risk.

d) Do not perform transactions with persons related to Esval S.A. in conditions of equality different from those commonly prevailing in the market, as provided for in article 89 of the Law on Corporations.

e) With regard to Aguas del Valle S.A. (i) maintain, directly or indirectly, ownership of at least two thirds of its shares or of each of the series of shares, if applicable; and (ii) maintain control of the company;

f ) Aguas del Valle S.A. must not furnish collateral or liens or prohibitions of any kind on (i) the ESSCO Contract; (ii) the right to exploit the sanitary concessions acquired by Aguas del Valle pursuant to the ESSCO Contract; (iii) the use and enjoyment of the right to exploit the sanitary concessions acquired by Aguas del Valle pursuant to the ESSCO Contract; and (iv) the rights issuing for Aguas del Valle S.A. from the ESSCO Contract, with regard to present or future cash flows or revenues from the collection of tariffs and the income earned and/or that might be earned by Aguas del Valle S.A. from the ESSCO Contract;

17.4) Restriction for Credit Bank BBVA:

a) Submit a copy of the Consolidated Financial Statements of the Debtor to the Bank within sixty days of the delivery of such information to the Superintendence of Securities and Insurance.

b) Submit to the Bank a certificate issued by the general manager and/or finance manager of the Debtor or their replacements certifying that no Non-Compliance Clause has been infringed, or any non-compliance, together with the delivery of the Financial Statements referred to above.

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c) Inform the Bank in writing, as soon as possible, but at the latest within five working days after the date on which any Senior Executive of the Debtor, becomes aware of a) the occurrence of any Non-Compliance Clause or of any non-compliance; b) any related pending legal or administrative action, lawsuit or proceeding that could generate a Significant Adverse Effect; c) any circumstance or situation that could lead to Significant Adverse Effect in the business, activities, operations or financial situation of the Debtor or its subsidiaries.

d) The Debtor shall maintain, and ensure that each of its subsidiaries maintain, all necessary assets for the conduct of its business and operations in good state of preservation and maintenance, except for the wear caused by normal use. Further, the Debtor shall maintain, and ensure that each of its Subsidiaries maintain, adequate insurance to cover such assets in conformity with industry practices.

e) The Debtor and/or its Subsidiaries shall ensure that all operations performed with related parties, as defined in Law No. 18,045, whether directly or through other related parties, are performed on an arm’s length basis.

f ) Maintain in its Financial Statements a ratio between Net Consolidated Financial Debt and Adjusted Consolidated EBITDA of the last twelve months less than or equal to 5.50 times.

g) Maintain a Financial Expense Hedge, greater than or equal to 2.0 times.

h) The Debtor shall not issue, grant or allow the existence of, and ensure that its Subsidiaries will not issue, grant or allow the existence of, personal guarantees to guarantee third party obligations and/or pledges over their real estate, copyrights or any other tangible or intangible asset for its property as of the date of this document or that will be acquired in the future, with the sole exception of Allowed Pledges and the personal guarantees and/or Pledges granted to guarantee obligations of Subsidiaries as of the date of the instrument.

i) The Debtor shall not sign or allow the existence of, and ensure that its Subsidiaries do not sign or allow the existence of, any contract, agreement or convention that limits, restricts or conditions the grant of actual guarantees over any of its goods or assets, unless such contracts, agreements or conventions allow the Debtor or its subsidiaries to grant actual guarantees in favor of the Bank for the total of the owed amounts, in capital and interests, except for the clauses included in the contracts for the issuance of bonds and securities currently enforced or which will be signed in the future by the Debtor as follows: (1) Maintain assets free of liens, based on the Financial Statements, for an amount of at least 1.5 times the amount of the total issuance of debt included in each of the corresponding issuance contracts of bonds and securities; (2) Refrain from granting actual pledge rights or issue liens or prohibitions of any nature over the shares of the Subsidiary Aguas del Valle S.A. owned

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by the Debtor; and (3) The Subsidiary Aguas del Valle S.A. must not grant pledge rights or issue liens or prohibitions of any nature over (i) the ESSCO Contract (Transfer Contract of exploitation right of sanitary concessions of Empresa de Servicios Sanitarios de Coquimbo S.A.(”ESSCO”), signed by Aguas del Valle S.A., as operator, and by Empresa de Servicios Sanitarios de Coquimbo S.A., per public deed dated December 22, 2003; (ii) the exploitation right of the sanitary concessions acquired by Aguas del Valle S.A. per the ESSCO Contract; (iii) the use and benefit of the exploitation right of the sanitary concessions acquired by Aguas del Valle S.A. per the ESSCO Contract; and, (iv) the rights arising for Aguas del Valle S.A. from the ESSCO Contract, related to the current or future income or cash flows from the collection of tariffs and the income perceived and/or that could perceive Aguas del Valle S.A. in conformity with the ESSCO Contract.

j) The Debtor will not dispose of or transfer, and will ensure that its Relevant Subsidiaries do not dispose of or transfer, directly or indirectly, its Essential Assets.

17.5) Compliance with covenants

Based on the information at December 31, 2011, the Company is in compliance with each and every one of the covenants established in the contracts referenced above related to the issuance of bonds and contracts for the issuance of commercial paper, in conformity with the provisions of each of the corresponding contracts and their ammendments.

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1.

Financial Debt Consolidated Dic-11

Dic-11

Other Financial Liabilities - Current 34,292,805

Plus: Other Financial Liabilities - Non-Current 253,625,087

Plus: Financial Costs of Debt Issue 3,644,703

Less: AFR Promissory Notes 22,442,191

Financial Debt 269,120,404

Cash and Cash-Equivalent 14,915,169

Plus: Other financial Assets - Current 0

Financial Assets 14,915,169

Financial Debt - Net 254,205,235

2.

EBITDA And Individual Financial Costs - Net (See 1) dic-11

Revenue from Ordinary Activities 89,478,904

Less: Raw materials and Fuel Used 11,993,338

Less: Employee Benefits Expenses 7,952,033

Less: Other Expenses by Nature 23,625,502

INDIVIDUAL EBITDA 45,908,031

dic-11

Financial Costs 13,096,221

Less: Financial Revenue 1,390,650

INDIVIDUAL FINANCIAL COSTS - NET 11,705,571

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(1) See information of these individual financial statements of Esval S.A. in Note 21 Operating Segments.

Information related to calculation of Covenants (Bonds Series A, D, E, H and J):

Debt To Equity Ratiodec-11

ThCh$

Total Current Liabilities 64,400,794

Total Non-Current Liabilities 302,595,214

Total Liabilities in IFRS 366,996,008

Dividends Provisiones and not Declared (4,923,251)

Financial Costs of Debt Issue - Current 682,275

Financial Costs of Debt Issue - Non-Current 2,962,428

Net Deferred Tax Assets - Current 2,487,737

Net Deferred Tax Assets - Non-Current 0

Balance of deferred tax rappraissals in the implementation of IFRS (7,493,244)

Total Current Liabilities 360,711,953

Adjusted Equity

To determine Adjusted Equity, the adjusted equity determined the previous quarter must be adjusted by the variation in the CPI of the quarter and to this amount add the IFRS equity of the last quarter, determined as follows:

Equity under IFRS Current Quarter 292,849,396

Dividends Provisioned and not Declared 4,923,251

Equity under IFRS Current Quarter 297,772,647

Equity under IFRS Previous Quarter (discounting dividends not declared) 296,786,867

Equity Variation for the Quarter 985,780

According to the idicated methodology, the Debt to Eauity covenant at the December 31, 2011 closure is 1.30

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Relationship Debt-Equity (12 mobile months)dec-11

ThCh$

Revenue from Ordinary Activities 118,565,474

Other Revenue by Nature 0

Raw materials and Fuel Used (15,331,403)

Employee Benefits Expenses (10,429,087)

Other Expenses by Nature (31,726,548)

EBITDA Calculated 61,078,436

Financial Costs According To Financial Statements (13,181,096)

Financial Costs Coverage 4.63

18. Ordinary Income Revenue from all normal operations and other events is recorded at the fair value of the payment received or receivable, in consideration of the terms and conditions of payment, deductions and credit memorandums.

Revenue from the sale of services is measured at fair value. Invoicing is done based on actual consumption or work performed, net of returns, trade discounts and deductions. Therefore, revenue is recognized when it is transferred to the buyer, recovery is considered probable, and associated costs and possible discounts for erroneous charges may be estimated reliably.

Information based on metered consumption readings is available for the various different billing groups and the respective rate is applied to such consumption. When days of consumption are left out of the reading at month-end, an estimate is made based on the historical data from the prior month valued at the current rate, for which the rate for normal or excess consumption is considered, as applicable. Any difference between current and estimated consumption is adjusted in the following month.

The provisions for services and all of their associated collections are made according to actual consumption, and a monthly provision is made for consumption readings based on prior billings rather than actual billings.

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Policy for recognizing revenue from sales of Potable water and Sewerage services:

Classes of Ordirnary Incomefrom 01/01/2011

to 12/31/2011from 01/01/2010

to 12/31/2010

ThCh$ ThCh$

Ordinary Income

Sale of potable water 67,642,360 63,873,836

Sewarage System Service 46,588,053 42,243,509

Other Ordinary Income 4,335,061 3,435,349

Total 118,565,474 109,552,694

19. Employee Benefits

The company, at consolidated level, has a workforce of 527 employees, 65 of which are Managers and executives.

There are 338 (Esval 219 and ADV 119) employees that participate in collective agreements at consolidated level .

Disclosures related to benefits upon termination of contractual relationships:

Severance indemnities for termination of labor relationships are governed by the provisions of the Labor Code, except for in special clauses of the respective collective or individual work contracts.

Actuarial assumptions related to the individual terms and conditions of the employees are used for calculating the severance indemnity provision.

The collective and individual work contracts of non-executive personnel of Esval and Aguas del Valle do not include an all-event severance indemnity.

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20. Borrowing Costs Policy of interest-accruing loans:

The borrowing costs directly attributable to the acquisition, construction or production of assets that comply with the conditions for qualification are capitalized as part of the cost of such assets.

Capitalization policy: Interest paid or accrued from debt that finances exclusively qualified assets is capitalized, as stipulated in IAS 23.

Capitalized interest costs, Property, plant and equipment 12/31/2011 12/31/2010

Interest cost capitalization rateCapitalized, Property, plant and equipment 4.21% 4.23%

Amount of capitalized interest costs,Property, plant and equipment ThCh$497,134 ThCh$520,696

21. Income Tax

Income tax and deferred taxes

Income tax is recorded based on the net taxable income calculated under in the provisions of Income Tax Law. Deferred taxes are recognized based on current regulations, considering all of the existing temporary differences, tax loss benefits and other events.

Income tax

As of December 31, 2011, Esval S.A. has recorded a provision for income taxes of ThCh$164,594 (ThCh$30,891 at December 31, 2010).

As of December 31, 2011, Aguas del Valle S.A. has recorded a provision for income taxes of ThCh$1,664,935 (ThCh$715,314 at December 31, 2010).

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As of December 31, 2011 and 2010, the company Servicios Sanitarios Las Vegas Ltda. does not present Net Taxable Income.

The detail of recoverable taxes is as follows, which is presented “net” for each company of the Esval Group:

Concepts:12/31/2011 12/31/2010

ThCh$ ThCh$

Monthly provisional payments, net 1,940,140 1,626,280

Credits for training expenses 68,611 56,801

Remainder VAT fiscal credit 0 0

Total Recoverable Taxes 2,008,751 1,683,081

The detail of taxes payable is as follows, presented “net” for each company of Esval Group:

Concepts:12/31/2011 12/31/2010

ThCh$ ThCh$

Provision for income tax, net 1,829,529 746,205

Other taxes payable 8,507 42,009

Total recoverable taxes 1,838,036 788,214

The net position of recoverable (payable) taxes, per consolidated entity, is as follows:

Concepts:12/31/2011 12/31/2010

ThCh$ ThCh$

Total recoverable taxes - ESVAL 628,873 1,683,081

Total taxes aqpyable - AGV -458,158 -788,214

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Deferred taxes

Balances of non-current tax assets and liabilities is as follows:

CONCEPTSTemporary differences

Deferred tax assets Deferred tax liabilities

12/31/2011ThCh

12/31/2010ThCh

12/31/2011ThCh

12/31/2010ThCh

Trade and other Receivables, net, current 1,477,955 1,268,064 - -

Inventories 1,140 265 - -

Intangible Assets, net - - (8,954,938) (8,239,525)

Revaluation of intangibles - - (3,568,884) (3,568,884)

Depreciation and MC Property, Plant and Equipment - Net - - (33,100,442) (29,552,348)

Capitalized Interest - - (3,384,628) (3,352,777)

Revaluation Plant and Equipment - - (3,924,360) (3,924,360)

Other Assets - Non-Current - - (2,461,746) (2,301,001)

Deferred Effects From Bond Issues and Effective Rate Differences - - (83,089) (525,980)

Uncollectible Accounts - Non-Current 32,812 35,471 - -

Vacations Provision 239,966 203,975 - -

Accounts Payable Provision 515,800 187,686 - -

Other Provisions - Current 333,303 293,288 - -

Tax Loss - - - -

Other Liabilities - Non-Current 4,337,482 2,609,329 - -

Other Events - - - -

Subtotal 6,938,458 4,598,078 (55,478,087) (51,464,875)

Netting of Balances (6,938,458) (4,598,078) 6,938,458 4,598,078

Total - Net - - (48,539,629) (46,866,797)

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Reconciliation of tax expense using the legal rate and tax expense using the effective rate:

Current and deferred income tax expense (income) 31-12-2011 31-12-2010

ThCh$ ThCh$

Current income tax expense 1,829,529 746,205

Income tax on disallowed expenses 44,150 42,009

Current income tax expense, net, total 1,873,679 788,214

Adjustment to Prior Period Current Tax 0 0

Deferred income tax expense 1,736,561 3,087,143

Total tax expense 3,610,240 3,875,357

Numerical reconciliation of tax expense (income) and the result of multiplying accounting gains by applicable tax rate or rates:

31-12-2011 31-12-2010

ThCh$ ThCh$

Tax expenses using the legal rate 3,792,915 3,598,654

Adjustments to tax expenses using the legal rate, total -182,675 276,703

Tax expenses using the effective rate 3,610,240 3,875,357

Reconciliation of the legal tax rate and the effective tax rate:

31-12-2011 31-12-2010

ThCh$ ThCh$

Legal tax rate 20.00% 17.00%

Other increases (decreases) in the legal tax rate -1.00% 1.3%

Effective tax rate 19.0% 18.3%

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22. Earnings Per Share

The basic earnings per share is calculated by dividing profit or loss attributed to equity holders of the parent company by the weighted average number of shares outstanding during the period.

Information to be disclosed on diluted earnings per share:

The Company has not performed any operations with potential dilutive effects that lead to a diluted gain per share differing from the basic earnings per share.

12/31/2011ThCh$

12/31/2010ThCh$

ThCh$ ThCh$

Net profit or loss for the year ThCh$ 15,354,333 17,293,193

Number of shares at year-end 14,959,891,837,009 14,962,276,336,000

Gains (losses) per share ThCh$ 0.0000010 0.0000012

23. Business Segments

Description of the types of products and services providing the ordinary income of each reportable segment:

The Coquimbo Region Segment involves sanitary services to allow for the delivery of production Products and Services , distribution of drinking water, together with collection and treatment of sewage, developed operationally in Region IV. It also includes other services such as Cut-off and Restoration, Fixed Charge for Faucets, Postal Dispatch, Sales of Drinking Water in Water Trucks, Treatment of Excess Liquid Industrial Waste, and sales of sanitary solutions (for people, companies and institutions) etc. Aguas del Valle S.A. is classified in this segment.

The Valparaiso Region Segment includes sanitary services to allow for the delivery of production Products and Services, distribution of drinking water, together with collection and treatment of sewage, developed operationally in Region V. It also includes other services such as Cut-off and Restoration, Fixed Charge for Faucets, Postal Dispatch, Sales of Drinking Water in Water Trucks, Treatment of Excess Liquid Industrial Waste, and sales of sanitary solutions (for people, companies and institutions) etc. Esval S.A. is classified in this segment.

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Significant Income and Expense Items by segment

Coquimbo Region and Valparaiso Region SegmentSignificant items of ordinary income and expenses are mainly those related to the activity of the segment. There are also significant amounts related to depreciation, personnel and other sundry expenses, included in those relavant to Power and Utilities.

Income

Our income mainly derives from the regulated services that we provide involving: Production and distribution of drinking water and the collection, treatment and disposal of sewage.

Rates

The most important factor in determining the results of our operations and our financial situation are the rates set for our regulated sales and services. As a natural monopoly, we are regulated by the SISS, and our rates are set in accordance with the Sanitary Services Rates Law - Statutory Decree 70 of 1988.

Our rate levels are reviewed every five years and, during that period, they are subject to additional adjustments linked to an indexation polynomial, if the accumulated change since the previous adjustment is 3.0% or more (rate increase), or -3.0% or less (rate decrease), according to calculations made as a function of various inflation indices.

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Tariffs Segment Region of Coquimbo

In 2011, the tariffs’ negotiation process of Aguas del Valle concluded for the period 2011-2016. The tariffs were approved by Decree No. 117 (31.08.2011) of the Ministry of Economy, Development and Tourism, effective as of September 14, 2011 through September 13, 2016.

Valparaiso Region Segment Rates

In 2010, the rate negotiation process for the 2010-2015 period concluded. The new rates approved by Decree 59 (29.01.2010) for Esval S.A., by the Ministry of Economy, Development and Reconstruction came into effect on March 01, 2010.

Details of significant expense items

Coquimbo Region SegmentsThe significant expense items are mainly those related to Payroll, Utilities and Amortization of Intangibles.

Valparaiso Region Segment The significant expense items are mainly those related to Payroll, Power, Depreciation of Fixed Assets and Financial Expenses.

Details of the explanation of measurements of profit or loss, assets and liabilities of each segment:

The measurement applicable to each segment corresponds to the company directly related to the respective region.

The accounting criterion is the accounting record of the economic events from which rights and obligations arise in the same way as they arise in economic relations with third parties. In particular, such records will generate committed balances in an asset and liability account according to the nature of the transaction in each related company, in light of the segment in which it participates. This account is known as Account due to or from Related Companies. Upon consolidation such balances must be netted according to the same consolidation rules explained in IAS 27.

There are no differences in the nature of the measurement of the profit or loss in the various operating segments.

There are no differences in the nature of the measurement of assets and liabilities in the various operating segments.

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Information to be disclosed on the entity as a whole

Information on the main customers:The information on main customers is not relevant, as they are dispersed in a very large number of clients in both segments.

Types of products Coquimbo Region – Valparaiso Region Segments:

Coquimbo Region Segment

The types of products and services for the Water segment are:

•Production and distribution of drinking water.•Collection and treatment of sewage.•Aguas del Valle S.A. Segment.

Valparaiso Region Segment

The types of products and services for the water segment are:

• Production and distribution of drinking water.• Collection and trealment of sewage.• Esval S.A. Segment.

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As of December 31, 2011:

Financial situation statement per business segment

Esval Aguas del Valle Las Vegas Addition Adjustments Esval Consolidated

dec-11 dec-11 dec-11 dec-11 dec-11 dec-11

Assets

Total current assets 40,310,428 6,845,486 0 47,155,914 -132,112 47,023,802

Total non-current assets 604,218,348 98,266,604 712,630 703,197,582 -90,375,980 612,821,602

Total assets 644,528,776 105,112,090 712,630 750,353,496 -90,508,092 659,845,404

Equity and liabilities

Liabilities

Current liabilities

Total current liabilities 56,596,394 7,935,954 60 64,532,408 -132,112 64,400,296

Total non-current liabilities 295,082,559 25,913,113 0 320,995,672 -18,400,458 302,595,214

Total liabilities 351,678,953 33,849,067 60 385,528,080 -18,532,570 366,995,510

Equity

Paid-in capital 196,138,347 20,441,842 209,232 216,789,421 -20,651,074 196,138,347

Retained earnings 80,746,979 50,339,950 469,353 131,556,282 -50,809,303 80,746,979

Share premiums 11,150,887 0 0 11,150,887 0 11,150,887

Treasury shares 0 0 0 0 0 0

Other equity interest 0 0 0 0 0 0

Other reserves 4,813,610 481,231 33,985 5,328,826 -515,216 4,813,610

Equity attributable to owners of the parent company 292,849,823 71,263,023 712,570 364,825,416 -71,975,593 292,849,823

Minority interests 0 0 0 0 71 71

Total equity 292,849,823 71,263,023 712,570 364,825,416 -71,975,593 292,849,823

Total equity and liabilities 644,528,776 105,112,090 712,630 750,353,496 -90,508,163 659,845,333

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Statemet of income result per business segmentIn thousand of Chilean pesos Esval Aguas del Valle Las Vegas Addition Adjustments Esval Consolidated

Statement of income

Gains (losses)

Income fromordinary activities 89,478,904 29,086,570 0 118,565,474 0 118,565,474

Raw material and consumables used -11,993,338 -3,338,066 0 -15,331,404 0 -15,331,404

Expense from employees' benefits -7,952,033 -2,477,054 0 -10,429,087 0 -10,429,086

Expense from depreciation and amortization -15,687,318 -3,766,199 0 -19,453,517 0 -19,453,517

Other expenses -23,625,502 -10,056,972 0 -33,682,474 1,459,671 -32,222,803

Other gains (losses) 660,348 541,088 0 1,201,436 -1,459,671 -258,235

Financial income 1,390,650 0 0 1,390,650 -326,722 1,063,928

Financial costs -13,096,221 -527,805 0 -13,624,026 326,722 -13,297,303

Gain (loss) in associates and joint-ventures accounted for using the equity method of accounting 7,311,346 0 73,114 7,384,460 -7,384,460 0

Exchange differences 0 0 0 0 0 0

Income from readjustment units -9,055,889 -616,590 0 -9,672,479 0 -9,672,479

Gain (loss) before taxes 17,430,947 8,844,972 73,114 26,349,033 -7,384,460 18,964,574

Expense from income tax -2,076,621 -1,533,619 0 -3,610,240 0 -3,610,241

Gain (loss) from continuing operations 15,354,326 7,311,353 73,114 22,738,793 -7,384,460 15,354,333

Gain (loss) from minoritary interest 0 0 0 0 -7 -7

Gain (loss) 15,354,326 7,311,353 73,114 22,738,793 -7,384,467 15,354,326

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As of December 31, 2010:

Financial situation statement per business segment

Esval Aguas del Valle Las Vegas Addition Adjustments Esval Consolidated

dec-10 dec-10 dec-10 dec-10 dec-10 dec-10

Assets

Non-current assets

Total current assets 42,004,992 6,040,067 0 48,045,059 -132,033 47,913,025

Total non-current assets 597,679,525 94,033,577 639,516 692,352,618 -85,211,441 607,141,176

Total assets 639,684,517 100,073,644 639,516 740,397,677 -85,343,474 655,054,201

Equity and liabilities

Liabilities

Current liabilities

Total current liabilities different to the liabilities included in the groups of assets for disposal classified as held for sale.

70,520,859 7,010,941 60 77,531,800 -132,033 77,399,827

Total non-current liabilities 270,667,932 29,111,032 0 299,778,964 -20,620,379 279,158,586

Total liabilities 341,188,791 36,121,973 60 377,310,764 -20,752,412 356,558,013

Equity

Paid-in capital 196,207,284 20,441,842 209,232 216,858,358 -20,651,074 196,207,284

Retained earnings 59,249,870 43,028,598 396,239 102,674,707 -43,424,837 59,249,870

Share premiums 11,150,887 0 0 11,150,887 0 11,150,887

Treasury shares 0 0 0 0 0 0

Other equity interest 0 0 0 0 0 0

Other reserves 31,887,683 481,231 33,985 32,402,899 -515,216 31,887,683

Equity attributable to owners of the parent company 298,495,725 63,951,670 639,456 363,086,851 -64,591,126 298,495,725

Minority interests 0 0 0 0 64 64

Total equity 298,495,725 63,951,670 639,456 363,086,851 -64,591,062 298,495,789

Total equity and liabilities 639,684,516 100,073,643 639,456 740,397,615 -85,343,474 655,054,201

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Consolidation Statement of Income per NatureIn thousand of Chilean pesos - ThCh$ Esval Aguas del Valle Las Vegas Sum Adjustments Esval

Consolidated

Statement of Income

Income (loss)

Revenues from ordinary activities 83,384,264 26,168,429 0 109,552,693 0 109,552,693

Used raw material and supplies -10,714,933 -2,740,366 0 -13,455,299 0 -13,455,299

Expenses for employee benefits -7,697,566 -2,428,231 0 -10,125,797 0 -10,125,797

Expense for depreciation and amortization -15,710,835 -3,668,864 0 -19,379,699 0 -19,379,699

Other expenses, per function: -19,970,349 -8,663,853 0 -28,634,202 1,894,549 -26,739,653

Other income (losses) 1,162,311 255,508 0 1,417,819 -1,894,549 -476,730

Financial income 1,068,782 0 0 1,068,782 -667,536 401,246

Financial expenses 12,168,484 -800,148 0 -12,968,632 667,536 -12,301,096

Participation in income (losses) of investees and joint ventures that are recorded using the equity method 6,230,007 0 62,300 6,292,307 6,292,307 12,584,614

Results per adjustment units -5,760,441 -546,674 0 -6,307,115 0 -6,307,115

Income (loss) before taxes 19,822,757 7,575,800 62,300 27,460,857 -6,292,307 21,168,550

Income tax expense -2,529,570 -1,345,787 0 -3,875,357 0 -3,875,357

Income (loss) from continued operations 17,293,187 6,230,013 62,300 23,585,500 -6,292,307 17,293,193

Income (loss) of minority interest 0 0 0 -6 -6

Income (loss) 17,293,187 6,230,013 62,300 23,585,500 -6,292,313 17,293,187

24. Environment

Since 2005, Esval S.A. has certified its processes under standard ISO 14001:2004, whose environmental management system includes capturing and distributing drinking water up to collection, treatment and final disposal of waste water, including trading and support processes for rendering services.

The compliance of environmental sustainability objectives in the Company depends on each corresponding area, for which management is directly responsible for actions taken in order to reach goals for the Company’s commitments related to this matter. Esval’s voluntary commitment has achieved improvements in its environmental performance.

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Actions taken to improve the Environmental Performance are:

• Adopting a permanent improvement strategy in the Company’s processes.

• Avoiding pollution by pouring residual liquids from the Company’s processes.

• Avoiding pollution by controlling residuals by recycling or proper disposal.

The Environmental Management System is part of the Integrated System of management of quality, environment, Safety and Occupational health which is based on the Integral System Management Policy (“SIG”).

To comply with commitments in the SIG policy, the Company has established objectives associated with a number of indicators, goals and control points, which allow the monitoring and evaluation of compliance.The Company has established programs to be developed, including the assignment of responsibilities, means and terms in order to achieve its environmental objectives and goals.. In March 2011, Esval S.A. was re-certified under the standards of ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007, by the company Bureau Veritas Certification-Chile.

Disbursements committed in environmental material:

Esval:

Adjustments to be made for environmental aspectsAbout 58 million

Aguas del Valle:

Handling of sludge generated in Sewage Water Treatment Plants: 288 (millions approximately).

Environmental Monitoring:

The Company performs regular control testing over the sanitation systems in the various coastal towns and locations with treatment facilities near ocean shores. The environmental monitoring campaigns defined by the Maritime Authorities are performed on a monthly basis and include taking samples and performing analyses in: Effluents in the sea water by taking samples at different depths, on beaches and along the coastline, as well as taking samples of the benthonic communities and sediments on the sea floor, in order to determine

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how the diversity, uniformity and richness of the species have changed. Oceanographic studies are also performed in the areas where the emissions discharge into the sea. All of this monitoring and analysis is performed in order to ensure compliance with the environmental quality standards stipulated by authorities. The cost of these contracts at December 31, 2011 was ThCh$504,829 (ThCh$406,860 at December 31, 2010).

Furthermore, control of the existing sewage treatment plants in locations and towns located mainly in the inland regions, based on activated sludge and full mixture aerated ponds, includes the implementation of monthly monitoring initiatives as defined by the Superintendency of Sanitary Services and the Ministerio del Medio Ambiente in order to ensure compliance with the emissions discharged into surface water, as required by Supreme Decree 90/00.

Likewise, control is exercised over liquid industrial waste entering our sewage collectors to control and verify compliance with Supreme Decree 609/98. To that end, the company has rates approved by the Superintendency of Sanitary Services for monitoring these emissions, which are paid by industrial clients.

The Company has a modern laboratory equipped for microbiological and physical-chemical analyses both of the drinking water mains and the sewage collectors. The lab is accredited under the INN-SISS Agreement as a Testing Lab according to NCh-ISO 17025 Of. 2001.

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25. Subsequent Events

On February 1, 2012, concluded the period of first refusal to the sale of the Series A and C shares of the Company, as described in note 15.1, according to the following detail:

SeriesN° Shares

% AvanceIssue Suscribed Surplus

A 1.439.791 3.277 1.436.514 0,23

C 2.383.059.200 5.787.971 2.377.271.229 0,24

The remainder of the shares series A and C were placed on the stock exchange, in accordance with the provisions of Article 27 of the Law 18.046.

On March 1, 2012, it was reported that Mr. Nicolas Navarrete Hederra, has resigned as Director of the Company.

On March 8, 2012, it was reported that Ms. Stacey Purcell, submitted his resignation as Director of the Company.

Between January 1, 2012 and the date of issuance of these financial statements have been other events of a financial or otherwise, significantly affecting stocks or interpretation of these consolidated financial statements.

Rodolfo Toro CarrascoGeneral Accountan

Rodrigo Azócar HidalgoCEO

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