Table of Contents Letter from the Chairman of the Board Description of Enersis Identification of the Company Articles of Incorporation and By-laws Historical Overview Corporate Purpose Growth and Development Strategy Investments and Divestments made during 2000 Prospects for the year 2001 Investment and Financing Policy for the year 2001 Ownership of the Company Risk Classification Dividend Policy for the year 2001 Board of Directors Organizational Structure Management of the Company Management of Subsidiaries Human Resources Corporate Structure Subsidiaries Generation Endesa - Chile Distribution Chilectra - Chile Río Maipo - Chile Edesur - Argentina Edelnor - Perú Cerj - Brazil Coelce - Brazil Codensa - Colombia Other Businesses CAM Synapsis Diprel Manso de Velasco Execution of the Annual Report Herein 2 5 9 12 14 17 18 20 24 26 28 32 34 36 38 40 42 44 46 48 50 52 54 56 58 Identification of Subsidiaries and Related Companies Enersis’ Consolidated Financial Statements Enersis’ Unconsolidated Financial Statements Subsidiaries’ Financial Statements 59 63 161 205 1 Letter from the Chairman of the Board To our Shareholders: If one adds to the aforementioned amounts the US$562 I am pleased to submit the 2000 Annual Report on the management and operations of the Enersis Group for your consideration. Before starting this brief summary of the major activities that took place in 2000, I would like to thank all our shareholders who participated in the first portion of our capital increase. We appreciate the trust million invested in the capital expenditures of our subsidiaries so as to allow for their natural growth, we reach an aggregate amount of approximately US$1.25 billion, which is the largest investment carried out by any Chilean industrial group during 2000, thereby corroborating the trust that we have in our business, the region and in the medium and long-term development that you deposited in the Company, in its businesses and in our management. The account below will show prospects. you that you made the correct decision in reinvesting in Enersis. Suffice it to say that we turned around a loss of US$143 million in 1999 into a US$157 million profit in 2000. The year just ended could be described as one of adjustment and intense preparation by the Group in order to allow us to meet the new challenges posed by a global business environment characterized by fast change. In fact, 2000 may be identified with the explosive growth of the “.com” companies and the subsequent outburst of investment options in high-tech virtual corporations of whirling yet precarious capitalization. This large investment has been carried out on the basis of very stable and certain growth, such as that sustained by the demand for electricity above and beyond the growth of the economy. In fact, during 2000, while the GDP of the five countries in which we operate grew by an average of 3.1%, energy sales increased by 5.1% and energy produced by 5.7%. This example was not a mere chance outcome last year. When reviewing a thirty-year period in the region, we observe that the energy demand normally grows between two and three percentage points above the variation of economic growth. In fact, demand for electricity grows even during recessive cycles. Nevertheless, Enersis, with a clear understanding of In addition to the rather inelastic residential or personal its core business, decided to increase its equity share consumption, we have to take into account the in energy distribution subsidiaries, as an unequivocal emergence of new industries, growing commercial indication of expected growth. During the year, the activity and the expansion of utility services, which following investments were carried out: US$364 million certainly represent a new source of electricity demand to increase our equity share in Chilectra, US$150 that has to be satisfied on a timely and reliable basis. million in the acquisition of a 10% equity stake of our Argentinean subsidiary Edesur, equity interest that This growth in demand, combined with the fact that, workers had since the company was privatized; US$132 to a large degree, there is no substitute for electricity, million in the acquisition of an additional stake of presents us not only with the benefits of an industry our Brazilian subsidiary, Cerj; and US$23 million to experiencing constant growth, but also poses important purchase an incremental 15% equity share in our Chilean challenges. For example, it is not possible to plan for subsidiary, Río Maipo. ever increasing distribution of electricity if the generation 3 3 / 2 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A capacity does not grow in tandem. In this sense, the goes “if it is not mentioned, it is forgotten.” This is an incentives that generation companies are given in issue about which we are greatly concerned; namely, order for them to meet this growing demand are of vital neither in Chile nor in any of the countries where we importance. Taking into account the long-term horizon operate should there exist a threat of an energy deficit. that is needed for power generation and the capital- It is indispensable to have a generation capacity that is intensive investments made in this business, the signals suitable, reliable and stable over time. that drive such decisions must also be long-term, sustainable and consistent. Of course, as in any market, this one requires some minimum price balance between demand and supply. An interference on behalf of one end of the chain, to the detriment of the other, could result in regrettable consequences, such as those recently occurred in California, where impacts are still difficult to assess. Such events not only directly concern the companies involved and the related financial system, but they also have an impact on consumers. The lessons that may be learned from this crisis should serve to work out the significant unsolved regulatory problem; namely, the acceptance of market rules at the beginning of the chain, and yet the price interference at its end. On the other hand, we are still confident that the region’s authorities will continue to act in accordance with essentially technical grounds in order to have companies always provide an ever improving quality Alfredo Llorente Enersis’ Chairman of service at reasonable prices, for which economic On the other hand, and in order to meet both the rationality becomes an objective factor for analysis and domestic and cross-border energy requirements in fundamental understanding. a practical way, electric interconnections within and between countries have prevailed as a result of the We are aware of the true interest to support the current energy unbalances that are evidenced within the and expected levels of development in each of the region. This is a great opportunity for Enersis, and countries where we operate. Toward that end, it is not we will certainly not miss it. Thus, during 1999, for only essential to expect good will; it is also critical to example, we started our electric interconnection project be able to count on the energy necessary to enable the between Argentina and Brazil, of which the first of two larger industrial, mining, commercial, public works and lines has been fully operational since June, 2000. In city development projects. the meantime, the activities for the construction of the second line, with a transportation capacity of an I wish to stress this point because it is of the greatest additional 1,000 MW, similar to the first one, have importance to keep in mind an element which is, already started so as to enable the energy exchange because self-evident, often not articulated. As the saying between these two countries. 3 3 / 2 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Another key element in performing our activities I wanted to share with you what seems to me to have is a financial situation that is well managed and been an exceptionally good year, one that signals the increasingly more solid. Within such context, important return to our historic profitability levels, and which we operations were carried out during 2000. These may will undoubtedly improve. The task has certainly not be summarized as follows: the Company’s equity been easy. As most large-scale projects, we have increased by US$520 million. Furthermore, proceeds of encountered great obstacles along the way, but we US$1.4 billion were received as a result of the sale of have persevered in overcoming them for the benefit of our subsidiaries Transelec, Esval, Aguas Cordillera and our shareholders. Burdens of considerable magnitude some real estate investments, within the strategic scope become much lighter when they are addressed by a provided for in the Genesis Project. In this manner, first-rate team such as the one we have in Enersis. US$1.6 billion were applied toward the prepayment of outstanding debt, and the remaining US$300 million, The challenge for 2001 will be to achieve similar together with our internally generated cash, were profitability levels, but shifting the burden instead toward allocated to finance the US$1.25 billion acquisitions and operating income, and continuing to advance on the capital investments mentioned before. growth path initiated in the second half of 2000. This is our commitment. Within this framework, Enersis also rescheduled debt of over US$4.6 billion under quite favorable conditions, thereby relieving the pressure on short-term obligations, and strengthening the company’s capital structure. The resulting lower leverage will have a positive impact Sincerely yours, on Enersis’ 2001 financial statements since the interest expense associated with the lower debt levels will drop substantially. In addition, the company’s financial position is strengthened and is thereby reflected in better coverage and liquidity ratios. These considerations are fundamental for maintaining the Group’s investment grade credit ratings, and as such, allow us to tap the markets with the flexibility required for future investment alternatives. Alfredo Llorente Chairman of the Board 5 5 / 4 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Description of Enersis ARTICLES OF INCORPORATION AND BY-LAWS HISTORICAL OVERVIEW The company was originally organized as Compañía On June 19, 1981, the Compañía Chilena de Electricidad Chilena Metropolitana de Distribución Eléctrica S.A., as S.A. was restructured in a parent company and three recorded in public deed of June 19, 1981, executed subsidiaries, one of which was Compañía Chilena before Patricio Zaldívar, Notary Public in the city of Metropolitana de Distribución Eléctrica S.A. Santiago and amended by notary deed of July 13 the same year. In 1985, as result of the privatization policy enacted by the Government of Chile, the transfer of the capital stock of The existence of the Company was authorized and its Compañía Chilena Metropolitana de Distribución Eléctrica by-laws were approved pursuant to resolution N° 409-S of S.A. to the private sector began. This process was July 17, 1981, issued by the Superintendency of Securities completed on August 10, 1987. Through this process, and Insurance. The abstract of such authorization and its private pension funds (A.F.P.), the company’s workers, approval was recorded in the Official Commerce Register of Santiago, on page 13,099 No 7,629 of the year 1981, and published in the Official Gazette on July 23, 1981. institutional investors and thousands of small investors became stockholders of the Company. The organizational structure was based on operating To date, the by-laws were subsequently amended. The activities or functions in which attainments were evaluated existence of the company under the current name of on a functional basis and profitability was limited by a tariff Enersis S.A. dates back to August 1, 1988. The latest mechanism originating from the exclusive involvement of of such amendment is acknowledged in public deed of the Company in the business of electricity distribution. May 26, 1999, executed before Patricio Zaldívar. The In 1987, the Board of Directors proposed a division of abstract was recorded in the Official Commerce Register the different activities of the parent company. Thus, four of Santiago on page 12,533, No 10,005 and published in subsidiaries were formed that made it possible to manage the Official Gazette on June 8, 1999. them as business units with objectives of their own, thereby expanding the activities of the company to other non-regulated businesses, though still related to the main scope of business. IDENTIFICATION OF THE COMPANY Name ENERSIS S.A. Type of company Limited Liability Stock Company Tax register number 94.271.000 - 3 Address Avda. Kennedy N° 5454 Vitacura, Santiago Telephone (56-2) 353 4400 Fax (56-2) 378 4768 P.O. Box 1557 Santiago Web site www.enersis.com E-mail comunicacion@e.enersis.cl Securities register number Nº 175 External auditors Arthur Andersen - Langton Clarke Subscribed and paid-in capital (ThCh$) 707,398,979 Chilean Stock Exchange ticker symbol ENERSIS New York Stock Exchange ticker symbol ENI Custodian bank Banco de Chile Depositary bank Citibank N.A. Investor relations office in New York Citigate Dewe Rogerson National risk rating companies Feller Rate - Fitch Chile International risk rating companies Fitch - Moody’s - Standard & Poor’s 5 5 / 4 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A This proposal was approved by the Extraordinary Chilectra S.A., a company engaged in electric energy Shareholders’ Meeting held on November 25, 1987, distribution in the Metropolitan Region and abroad. which established its new corporate purpose. As a result, Compañía Chilena Metropolitana de serves the distribution needs of, and sells snergy in the Compañía Eléctrica del Río Maipo S.A. that currently Distribución Eléctrica S.A. became an investment areas mentioned earlier. company. On August 1, 1988, by virtue of the resolution adopted by the Shareholders’ Meeting held on April12, Synapsis S.A., a company involved in the provision of 1988, the Company changed its corporate name to data processing and engineering services and equipment. Enersis S.A. Compañía Americana de Multiservicios S.A. (CAM), Furthermore, with view to provide enhanced customer engaged in the provision of engineering services, metering service, as of June 1, 1989, it was approved the division technology and market trend. of subsidiary Distribuidora Chilectra Metropolitana S.A. into a successor company that retained the corporate Inmobiliaria Manso de Velasco S.A., implements real name, and a new company incorporated under the name estate development projects. of Compañía Eléctrica del Río Maipo S.A., that currently serves the electric energy distribution needs of the rural Distribuidora de Productos Eléctricos S.A. (Diprel), the and semiurban areas of Chile’s Metropolitan Region. purpose of which is to act as purchasing agent, importer and exporter, as well as trader and supplier of materials The Extraordinary Shareholders’ Meeting held on April for the subsidiary companies of Enersis and third parties. 27, 1994 approved changing the corporate name of subsidiary Distribuidora Chilectra Metropolitana S.A. to INTERNATIONAL EXPANSION that of Chilectra S.A., effective as from June 1, 1994. In Chile, Enersis is the majority shareholder in the following process of expansion to other countries in the region. Concurrently, during the year 1992, Enersis began its subsidiaries: Thus in July 1992, Edesur, that distributes electric energy in the city of Buenos Aires, Federal Republic Empresa Nacional de Electricidad S.A. (Endesa), of Argentina was awarded to Distrilec Inversora S.A., a a company engaged in electric energy generation company in which Enersis participates. Subsequently, in throughout the country and abroad. December 1995, Enersis acquired an additional 39% of that company, thus becoming its controlling shareholder, as from that date. CORPORATE PURPOSE The purpose of the company is to undertake both in Chile or abroad, the exploitation, distribution, transmission, transformation and/or sale of energy of whatever nature and in any form, directly or through other companies, as well as, the provision of engineering advisory services, either in Chile or abroad, in matters related to such purposes. Its purpose will further be to manage company investments in subsidiaries or related companies whose scope of business is similar, related to or connected to energy of whatever nature and in any form or to the provision of public utilities, or which has energy as their main input. In order to comply with its main purpose, the Company will perform the following functions: a) Promote, organize, set up, modify, dissolve or liquidate companies of any nature, whose corporate purpose is similar or related to those of the Company. b) Propose to its subsidiary companies investment, financing and commercial policies as well as the accounting practices and principles which such companies shall abide by. c) Supervise and coordinate the management of its subsidiary companies. 7 7 / 6 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Subsequently, between July 1994 and December 1995, Enersis, through the company called Inversiones Distrilima S.A. acquired 60% of the equity interest of Empresa de Distribución Eléctrica de Lima Norte S.A., Edelnor, and Edechancay. Furthermore, during the year 1996, Enersis participated for the first time in the Brazilian market, acquiring an important part of the shares of Companhia de Eletricidade do Río de Janeiro, Cerj, which distributes electric energy in the city of Río de Janeiro, Brazil. In 1997, Enersis successfully participated in the process of capitalization and subsequent control of Codensa S.A. ESP, a company that distributes electricity in the city of Bogotá and the district of Cundinamarca, Colombia. At the beginning of 1998, Enersis once again participated in the Brazilian market. This time, through a consortium, was awarded a major percentage in the ownership of Companhia Energética de Ceará S.A., Coelce, a company that distributes electricity in Northern Brazil, in the State of Ceará. During 1999, Endesa España became the controlling On May 11, 1999, Enersis acquired an additional 35% stockholder of Enersis. Through a Tender Offer (OAA), interest in the ownership of Endesa Chile, where it in which it offered Ch$320 per share, the Spanish already held a 25% of the capital stock. Consequently, multinational company bought 32% of Enersis, which Enersis attained a 60% share in the ownership of added to the 32% it had acquired in August 1997, the generation company and became its controlling increased Endesa Spain’s final stake in the ownership of shareholder, allowing Enersis to consolidate itself as the Enersis to 64%. The transaction, ended on April 7, 1999 largest private electricity Group in Latin America. involved an investment of US$ 1,450 million. d) Provide its subsidiary or related companies with the needed financial resources to develop their business activities, and in addition, furnish management services as well as financial, commercial, technical legal and auditing services and, in general, any other services such as may appear necessary for a more adequate performance. In addition to its core business purpose and acting always within the bounds of the Investment and Financing Policy approved at the ordinary Shareholders’ General Meeting, the company may invest in: 1.- The acquisition, exploitation, construction, rental, management, marketing and disposal of any kind of real property, either directly or through subsidiary companies. 2.- All types of financial assets, including shares, bonds, debentures, commerce paper and in general all manner of securities and equity contributions to companies. CORPORATE PURPOSE 7 7 / 6 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A 9 9 / 8 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A El Guavio Hydroelectric Power Plant, Colombia Growth and Development Strategy Enersis’ main objective is to maximize the economic INVESTMENTS AND DIVESTMENTS value of its equity, through a stable growth founded on electric businesses rigorously evaluated and managed. CHILE The attainment of this objective is sustained by an investment strategy, focused on increasing the value of As envisaged in the Genesis Project, the subsidiary the subsidiaries and related companies, as well as to Endesa Chile sold, in October 23, 2000 the entire block acquiring new companies. of shares and the control it owned in Transelec S.A. (Compañía Nacional de Transmisión Eléctrica) to the On the other hand, Enersis has been defined by Endesa canadian company Hydro Québec through a process of España, as the vehicle through which this company international bidding, thus anticipating to the trends of will invest in Latin America. This further strengthens the future regulations of the electric sector in Chile. This development and expansion strategy that Enersis has maintained in the region. operation involved a payment of US$1,076 million and meant a US$225 million profits for Endesa Chile. Both, the price paid by this canadian company, and the implied A key factor of this strategy involves making investments discount rate clearly exemplify the investors’ confidence in that significantly call for the experience, management skills the region, particularly in Chile. and operating capabilities of Enersis and its subsidiaries. Such requirement makes it necessary to invest in Moreover, Enersis sold its indirect stake in the companies in which Enersis will have a final decision in ownership of Esval, (Empresa de Obras Sanitarias de their management and operation, as well as the power to Valparaíso S.A.) through Aguas Puerto S.A., as a result of approve or reject its investment projects. Another development factor consists in having an exceptional team of professional that interact actively a transaction involving US$137 million. Likewise, Enersis sold its stake in the ownership in Aguas Cordillera for a total of US$189 million. Disposal of these stakes is justified by the inability to secure an operative synergy with the subsidiaries, providing them with assistance in between the electric and the sanitary business given evaluating their investment projects and are permanently the limitations on overlapping concessions imposed by alert to new business opportunities in their respective Chilean laws. business areas in the Latin American market. The above mentioned factors enable Enersis to make Additionally, Enersis obtained US$50 million for the disposal of single family land lots and macrolots of investments that contribute to the growth of profits, with Santuario del Valle Project and industrial land lots and an adequate weighting of risks deriving from the business macrolots of Enea Project. activities in which it participates. In relation to acquisitions, Enersis successfully negotiated In the last year, important businesses were concluded the offers intended to increase its stake in the ownership with the intended purpose of improving Enersis’ financial of subsidiaries Chilectra and Río Maipo. With an position. To this end, some assets were sold and the investment of US$364 million, Enersis’ share control in Company’s stake in electric energy distribution companies the ownership of Chilectra rose from 72.6% to 98.0%. was strengthened. Besides, an investment intended to Likewise, Enersis acquired an additional 14.7% interest in start a line of business of new technology was made. the ownership of Río Maipo. This transaction involved a payment of US$23 million, thus increasing Enersis’ control 9 9 / 8 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A in this company up to 98.4%. Consequently, Enersis In anticipation to electric market integration trends in increases its participation in its traditional businesses Latin America, in June, the first power interconnection without requiring additional management efforts in one of (1,000 MW) between Brazil and Argentina was the areas with the highest growth and lower risk rating commissioned. This project was developed through CIEN in the region. (Compañía de Interconexión Energética) in which Enersis participated through Endesa Chile. Enersis also acquired from Endesa Spain a 15% interest of Endesa Marketplace’s capital stock, currently By the end of 2000, CIEN awarded the construction of Opciona.com, a company involved in Business to the second 1,000 MW-power interconnection line between Business (B2B) type of transactions via Internet. This Brazil and Argentina. This development further strengthen transaction involved an investment of US$2 million. the Group’s strategic positioning in energy interchanges in Through its participation in this company, Enersis South America, a marketplace in which Enersis is present positions itself in the new technology sector, a market in both electric energy generation and distribution. with important development opportunities. Between April and July, 2000 an additional 240 MW ARGENTINA generation capacity was commissioned at the Tal Tal Edesur acquired in US$150 million, 10% of the equity Power Generation Station. This project located in the SIC interet that workers had owned since the company was (Central Interconnected System) consumes the natural privatized. Following this transaction, Edesur reduced gas needed from the generation subsidiary of Endesa its capital stock by an amount similar to that of the Chile, Gas Atacama. acquisition. As a result, Enersis’ stake in the ownership of BRAZIL Edesur rose from 51.0% to 64.3%. PERÚ By executing an option received from Endesa Spain, Enersis increased its stake in the ownership of Cerj The Peruvian energy generation subsidiary of Endesa distributor by an additional 8% involving an amount Chile, Edegel, acquired a part of the ownership held by of US$57 million. At the same time, Chilectra’s stake the Peruvian State in this Peruvian electricity generation rose by a 10.5% involving an investment of US$75 company. Following this acquisition, Edegel proceeded to million. Through this operation, Enersis’ direct and indirect reduce its capital. ownership in Cerj rose to 57.4%. Also, during the year 2000, Edegel began to operate the 42 MW Yanango and the 149 MW Chimay generation plants. Río de Janeiro, Brazil 1 1 1 1 / 0 1 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A PROSPECTS FOR THE YEAR 2001 Final decision to pursue potential business opportunities CHILE in the Brazilian marketplace will not only consider their strategic importance but their profitability and risk factors as well. In the year 2001, the process of consolidation set by efficiency improvements, as set forth in the Genesis Moreover, construction works of the second Project, will continue. interconnection line between Argentina and Brazil will Chile’s most important project will be Ralco hydroelectric plant, develop by Endesa Chile. This ARGENTINA 570 MW plant will increase power generation supply in continue. response to the consumption growth experienced by the Edesur will continue to execute its investment program in country during the year 2000, which made Chile attain excess of US$500 million over a five-year period, directed once again the growth rate levels that had plummeted to service quality and network growth. during the 1999 economic recession. Two potential electricity distribution businesses are Feasibility of new power generation projects along the anticipated in the provinces of Córdova and Santa Fé. The country will be assessed on the basis of demand growth Argentinean Government has expressed its intention to and node price estimates for the future. develop a Federal Plan for the transportation network. The Following the 2000 tariff revision process, Chilectra and to the Argentine electric sector and it will reflect upon Río Maipo will continue to invest in power distribution Enersis’ assets in this country. As provided for the Federal networks, with the objective of maintaining their existing Plan, not only will investment opportunities but also its good quality standards, and meeting the demand growth impact upon the Group’s assets. development of such a plant is of paramount importance anticipated for the forthcoming years. BRAZIL Argentina will also proceed with the construction works of the second interconnection line with Brazil. On the basis of its large physical size and population of PERÚ 170 million people, Enersis assigns Brazil a high strategic importance in the region. The Peruvian State has expressed its intention to continue with the disposal of its stakes in electric companies. It is It is envisaged that during the year 2001 Brazil will possible that opportunities to buy the state’s stake in the continue with the process of privatization. Consequently, Peruvian distribution subsidiary Edelnor will arise. monitoring of resulting opportunities will be kept up. The area of hydroelectric generation will specifically COLOMBIA offer business opportunities in the states of Sao Paulo It is expected that Codensa will maintain its performance (CESP) and, possibly, of Paraná (COPEL). In addition, both in reducing generation losses and improving its medium and small-size electricity distribution companies service quality, thus prevailing in its future management are likely to be privatized, particularly in the Northern and objectives an orientation to customer satisfaction and Northeastern regions of Brazil. profitability. Additionally, participation in thermo electric power In the electricity generation area, the country has once generation projects sponsored by the Brazilian State as again recorded positive demand growth rates. This part of the priority program of thermo electric generation situation suggests better prospects for energy stock will be considered, particularly in the same areas where exchange prices. the distribution concessions are located. 1 1 1 1 / 0 1 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Investment and Financing Policy for the year 2001 All present members of the Board of Directors unanimously agreed to submit to the Shareholders’ Meeting, scheduled for April 2, 2001 the following Investment and Financing Policy for the year 2001: 1. INVESTMENTS (a) Investment areas. iii) Other Investments, such that the clean assets factor for accounting purposes of Enersis, calculated on the basis of the individual balance sheet should not represent, as a proportion of Enersis’ assets, a percentage not below that stipulated in the first paragraph of article 45 bis of Decree Law N° 3,500. (c) Controlling participation in areas of investment. Enersis will make investments, pursuant to the provisions in its by-laws, in the following areas: • Equity contributions to its public utility subsidiaries • Equity contributions for investment or creation of subsidiary or related companies the scope of business of which is similar, related or connected to energy in any of its forms or nature, or the provision of utility services that have energy as their main input. • Other investments in real property or in any other kind of financial assets, negotiable commercial instruments, securities and equity contributions to companies. (b) Maximum investment limits. In order to control areas of investment and pursuant to what is defined in the general scope of business of the company, actions will be taken as follows: • Propose to the Shareholders’ Meetings of the subsidiary and related companies, the appointment of directors that correspond to Enersis’ participation in the ownership of such companies, with appointees originating preferably from the Board of Directors of the senior management of both the Company or other subsidiary companies. • Propose to the subsidiary companies the investment, financial and commercial policies, as well as the accounting systems and criteria, which they are to abide by. • Supervise the management and operation of the The maximum investment limits for each investment subsidiary and related companies. area will be as follows: i) Investment in its public utility subsidiaries as needed to enable such subsidiaries to attain their scope of business and perform their function as concessionaires. • Maintain a permanent control of the borrowing limits and the clean assets factor for accounting purposes, in a manner such that the investments or equity contributions made or to be made do not involve a variation that departs from the parameters defining the maximum investment ii) Investment in other subsidiary companies, such as limits. the total of the proportions of the fixed assets that correspond to the participation in each one of these other subsidiary company should not exceed the proportion of fixed asset that corresponds to the participation of the public utility subsidiaries in the parent company. 3 3 1 1 / 2 1 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A 3 3 1 1 / 2 1 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Betania Hydroelectric Power Plant, Colombia 2. FINANCING (c) Authority of management to agree with creditors on granting collateral. (a) Maximum leverage level. The maximum leverage level for Enersis will be based on granting real and personal collateral within the on a ratio of total debt to equity plus minority interest frame of the provisions in standing laws and the Management has the authority to agree with creditors equal to 1.75 of the consolidated balance sheet. The Company’s by-laws. above notwithstanding, such ratio may increase up to 2.40 on a temporary basis and until the total (d) Essential assets for the operation of the company placement of the capital increase approved at the Extraordinary Shareholder’ Meeting held on April 30, The shares of common stock that represent equity 1999. contributions made by the Company to its subsidiaries Chilectra and Río Maipo are essential assets for the (b) Authority of management to agree with creditors operation of the company. on restrictions to dividend distributions. Restrictions to dividend distributions may be agreed solely provided that they are previously approved at a Shareholders’ Meeting (either Ordinary or Extraordinary). Ownership of the Company The capital stock of the Company is divided into 9,380,000,000 shares of the same and only one series with no par value. At December 31, 2000, a total of 8,291,020,100 shares of common stock were subscribed and paid-in, with the following breakdown: SHAREHOLDERS Endesa España (*) A.F.P. Citibank N.A. Stockbrokers, Mutual Funds and Insurance Co´s Foreign Investment Funds Other Shareholders Total N° SHAREHOLDERS N° SHARES 3 8 1 81 9 10,039 10,141 5,389,163,065 1,117,475,269 1,050,933,600 230,546,117 122,981,833 379,920,216 % 65.00 13.48 12.68 2.78 1.48 4.58 8,291,020,100 100.00 (*) The ownership interest of Endesa España in Enersis of 65% derives from the controlling stake that it has in the ownership of Compañía de Inversiones Chispa Uno S.A. and Endesa Internacional S.A. plus the 35.1% direct interest in the ownership through Elesur S.A. List of twelve largest shareholders: As of December 31, 2000, Enersis was owned by 10,141 shareholders. The twelve largest were: NAME Elesur S.A. N° SHARES % ACCUMULATED % 2,914,325,536 35.150386 35.150386 Compañía de Inversiones Chispa Uno S.A. 1,780,246,340 21.471982 56.622368 Citibank N.A. (Según Circ. 1.375 S.V.S.) 1,050,933,600 12.675564 69.297932 Endesa Internacional S.A. A.F.P. Provida S.A. (Pension Fund) A.F.P. Habitat S.A. (Pension Fund) 694,591,189 8.377632 77.675564 350,306,087 4.225126 81.900691 245,522,488 2.961306 84.861997 A.F.P. Cuprum S.A. (Pension Fund) 171,798,610 2.072105 86.934102 A.F.P. Santa María S.A. (Pension Fund) 152,474,967 1.839037 88.773139 A.F.P. Summa Bansander S.A. (Pension Fund) 133,186,721 1.606397 90.379537 The Chile Fund Inc. (Bea Pension Funds Mg. Company) 37,427,265 0.451419 90.830956 The Chile Emerging Markets (Index Common Trust Fund) 34,366,184 0.414499 91.245455 A.F.P. Planvital S.A. (Pension Fund) 31,739,610 0.382819 91.628274 Subtotal : 12 Shareholders Others : 10,129 Shareholders 7,596,918,597 91.628274 91.628274 694,101,503 8.371726 100.000000 Total : 10,141 Shareholders 8,291,020,100 100.000000 100.000000 5 5 1 1 / 4 1 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A SUMMARY OF REMARKS AND PROPOSALS the Santiago Stock Exchange and the Chilean Electronic SUBMITTED BY SHAREHOLDERS Stock Exchange, as well as in the United States, through the New York Stock Exchange (NYSE). Enersis received no remarks regarding the operation of the business activities undertaken between January 1 and Santiago Stock Exchange and Chilean Electronic December 31, 2000, submitted by majority shareholders Stock Exchange or groups of shareholders, who add up to more than 10% of the shares of common stock issued voting rights in pursuance to the provisions in article 74 of Law No 18,046 During 2000, on the Santiago Stock Exchange 588 million shares were trade, equivalent to Ch$121,078 million. On and in Articles 82 and 83 of the Regulations in the Chilean the other hand, on the Chilean Electronic Stock Exchange Company Law. 258 million shares were traded, equivalent to Ch$53,082 STOCK EXCHANGE TRADING million. The graphs that follow show the number of shares and stock of the Company closed at year-end with a price the amounts traded, as well as the closing prices at each of Ch$202.0 on the Santiago Stock Exchange and year-end of the shares of Enersis, both in Chile, through Ch$202.4 on the Electronic Stock Exchange. In addition, it can be noted that the share of common SHARES TRADED (Million shares) AMOUNTS TRADED (Million Ch$ at December each year) CLOSING PRICE (Ch$ at December each year) New York Stock Exchange ( NYSE ) In the United States, 23 million ADR’s (1 ADR = 50 shares), equivalent to US$443 million were traded. The price of the ADR closed at US$17.6 millones. ADR´s TRADED (Million ADR´s) AMOUNTS TRADED (Million US$ at December each year) CLOSING PRICE (US$ at December each year) 5 5 1 1 / 4 1 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Furthermore, as the following graph shows, the stake in the ownership of Enersis by ADR holders went down from 13.9% in December 1999 to 12.7% in December 2000. PARTICIPATION OF ADR´s TO TOTAL NUMBER OF SHARES OF ENERSIS RISK CLASSIFICATION The following table details the international risk rating assigned to the Company at December 31, 2000: Debt in Local Currency Debt in Foreign Currency A A- - Baa1 A A- FITCH MOODY’S STANDARD & POOR’S Furthermore, it is worth pointing out that the shares and bonds issued by the company have been rated as follows: Shares Bonds FITCH CHILE FELLER RATE First Class Level 1 First Class Level 1 AA- AA+ 7 7 1 1 / 6 1 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Dividend Policy for the year 2001 All present members of the Board of Directors 4.- Profits generated by subsidiary companies organized unanimously agreed to submit to the Shareholders’ Meeting, scheduled for April 2, 2001 the following Dividend Policy they expects to enforce during 2001: Distribute in the months of May, August and November of the year 2001 and in the month of February 2002 a interim dividend to be charged to the net income of the year 2001, amounting to 85% of the net income from normal operations in the quarters ending in the months of March, June, September and December of such fiscal year. For purposes of the above calculation, the interim dividends for the year 2001 already distributed on such distribution date will be deducted from 85% of the cumulative net income. Dividends established in pursuance of this policy will be applied to the income originated from normal company operations, understanding as such the net income obtained by the Company in fiscal year 2001, without considering those originating from the following events: 1.- Accounting effects deriving from the valuation of equity contributions made to subsidiary companies. 2.- Accounting effects deriving from the recognition of the premium in equity placement by subsidiaries of their own stock. 3.- Profits arising directly or indirectly from participation in related companies organized in Chile or abroad. abroad or by subsidiary companies in which the participation of the Company, either directly or indirectly, is less than 60% of the capital stock of those companies, as well as profits deriving from the disposal of assets in such companies. 5.- Accounting recognition of positive and negative goodwill associated with the investments. The Board of Directors shall not distribute interim dividends based on profits that arise from the above events and the Ordinary Shareholders’ Meeting will state their view thereon when approving the final dividend. The foregoing is the intention of the Board of Directors of the Company and, consequently, its compliance will be subject to the actual profits as well as to the results reflected in the projections that the Company makes from time to time, or to the existence of given conditions. As for the final dividend policy, it is the purpose of the Board of Directors that such dividends will be as a minimum the interim dividends already distributed or the minimum stated by the Chilean Law on Joint Stock Companies, whichever of the two be higher. The following table shows the dividends per share paid out over the last five years. DIVIDEND NUMBER 57 58 59 60 61 62 63 64 65 66 67 68 69 70 DIVIDEND TYPE Interim Definitive Interim Interim Interim Interim Definitive Interim Interim Interim Interim Definitive Interim Definitive CLOSING DATE 16.02.96 02.05.96 16.05.96 23.08.96 22.11.96 21.02.97 11.04.97 22.05.97 22.08.97 21.11.97 20.02.98 07.05.98 20.11.98 11.05.99 DUE DATE 22.02.96 08.05.96 23.05.96 29.08.96 28.11.96 27.02.97 17.04.97 28.05.97 28.08.97 27.11.97 26.02.98 13.05.98 26.11.98 17.05.99 Ch$ PER SHARE (Ch$ AT EACH YEAR) 1,10 4,16 1,30 1,65 2,00 1,00 4,66 1,50 2,00 2,40 0,80 4,50 1,60 4,00 Ch$ PER SHARE (Ch$ AT DEC 2000) 1,39 5,13 1,60 2,00 2,39 1,18 5,43 1,74 2,30 2,69 0,89 4,96 1,72 4,24 DIVIDEND ACCRUED IN 1995 1995 1996 1996 1996 1996 1996 1997 1997 1997 1997 1997 1998 1998 7 7 1 1 / 6 1 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Board of Directors Sitting: Rafael Miranda, Alfredo Llorente and Ernesto Silva Standing: Hernán Somerville, José Fesser, Luis Rivera and Eugenio Tironi A Board of Directors made up by seven members, who DIRECTORS serve a term of three years, and may be reelected, manages Enersis. As of December 31, 2000, the Board of Directors of Enersis was composed by the following members: CHAIRMAN Alfredo Llorente Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Madrid VICE-CHAIRMAN Rafael Miranda Industrial Engineer Instituto Católico de Artes e Industrias (ICAI) de Madrid José Fesser Lawyer Universidad de Sevilla Luis Rivera Civil Engineer (Infrastructure) Universidad Politécnica de Madrid Ernesto Silva Commercial Engineer Pontificia Universidad Católica de Chile Hernán Somerville Lawyer Universidad de Chile Eugenio Tironi Sociologist Escuela de Altos Estudios en Ciencias Sociales de París SECRETARY OF THE BOARD OF DIRECTORS Domingo Valdés Lawyer Universidad de Chile 9 9 1 1 / 8 1 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A REMUNERATION OF THE BOARD OF DIRECTORS Pursuant to the provisions of article 33, Law 18,046 for the Board of Directors for the accounting period 2000. on Joint Stock Companies, the Ordinary Shareholders’ Details on amounts paid to the board of Directors of Meeting held on April 6, 2000, approved the remuneration Enersis and of those who were Directors of subsidiaries are shown below: AT DECEMBER 31, 2000 AT DECEMBER 31, 1999 DIRECTOR ENERSIS OTHER SUBSIDIARIES Alfredo Llorente Carlos Vicuña Enrique García Ernesto Silva Eugenio Tironi Felipe Montt Héctor López Hernán Somerville José Guzmán José Fesser Juan Errázuriz Leonidas Vial Luis Rivera Miguel Poduje Rafael Miranda Rodolfo Martín Total ThCh$ 49,824 10,239 - 24,912 7,338 - - 24,912 - 24,912 - - 22,144 - 33,216 - 197,497 ThCh$ 3,777 - 13,768 28,750 - - 18,215 - - - - 54,623 - - - - 119,133 TOTAL ThCh$ 53,601 10,239 13,768 53,662 7,338 - 18,215 24,912 - 24,912 - 54,623 22,144 - 33,216 - 316,630 ENERSIS OTHER SUBSIDIARIES ThCh$ 56,640 18,878 - 36,584 - - 21,236 11,801 30,706 14,163 15,353 - 14,163 15,353 18,882 34,778 288,537 ThCh$ 3,753 - - 24,689 - 7,591 16,151 - - 233 12,236 34,630 - - - - 99,284 TOTAL ThCh$ 60,393 18,878 - 61,274 - 7,591 37,387 11,801 30,706 14,396 27,589 34,630 14,163 15,353 18,882 34,778 387,821 COMMITTEE OF DIRECTORS Activities carried out by the Committee of Directors during the period ended at December 31, 2000 Enersis’ Committee of Directors was established through agreement Nº 076/2000 in the Ordinary Meeting of the Since it was established in August , 2000 and up Company’s Board of Directors Nº 12/2000 dated August to December 31 of same year, Enersis’ Committee of 23 of 2000. This committee was made up by the following Directors has principally been in charge of the analysis members: Alfredo Llorente, Hernán Sommerville, Ernesto of the accounting criteria of Enersis’ Financial Statements Silva and José M. Fesser. as of September 30, 2000, of the analysis of Enersis’ Financial Statements as of September 30, 2000 and of On January 20, 2001, Enersis’ Board of Directors, the analysis of the Operating Income of the Financial in Ordinary Meeting Nº 01/2001, unanimously agreed Statements as September 30, 2000. though the attending members to conform the Committee of directors to the number of members provided in article Expenses of Enersis’ Committee of Directors and its 50 bis of Law Nº 19,705, consequently reducing the advisors during the period ended at December 31, members number of said Committee from four to three. 2000. As of said date, Enersis’ Committee of Directors was made up by the following persons: Alfredo Llorente, Since it was established in August, 2000 up to December Hernán Sommerville and Ernesto Silva. 31 of same year, Enersis’ Committee of Directors has not incurred in any expense nor has it required professional advisory service for carrying out its duties. 9 9 1 1 / 8 1 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Organizational Structure 1 1 2 2 / 0 2 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A MANAGEMENT OF ENERSIS CHIEF EXECUTIVE OFFICER CHIEF INVESTMENTS AND RISK OFFICER Enrique García Civil Engineer (Infrastructure) Escuela Técnica Superior de ICCP de Madrid Ricardo Alvial Public Administrator Universidad de Chile ADJUNCT CHIEF EXECUTIVE OFFICER CHIEF INFORMATION SYSTEMS OFFICER Juan Domínguez Commercial Engineer Universidad de Chile BUSINESS EXECUTIVE OFFICER Alberto López Industrial Engineer Universidad Politécnica de Madrid PLANNING AND CONTROL EXECUTIVE OFFICER Martín Madrid Industrial Engineer Universidad Politécnica de Madrid CORPORATE COMMUNICATIONS DIRECTOR Fernando Nadal Journalist and Lawyer Universidad Alcalá de Henares de Madrid COMPTROLLER José Martín B.S. in Economic Sciences Universidad Complutense de Madrid ORGANIZATION AND HUMAN RESOURCES EXECUTIVE OFFICER Luis de la Barra Psychologist Pontificia Universidad Católica de Chile LEGAL COUNSEL Domingo Valdés Lawyer Universidad de Chile INSTITUTIONAL AFFAIRS DIRECTOR José Domínguez Civil Engineer Pontificia Universidad Católica de Chile COMPTROLLER DIRECTOR Rolf Heller Public Accountant and Auditor Pontificia Universidad Católica de Chile Cristóbal Sánchez B.S. Information Systems Universidad Politécnica, Madrid CHIEF PROCUREMENT OFFICER Francisco Núñez Civil Engineer (Infrastructure) Universidad Politécnica de Madrid CHIEF CORPORATE ACCOUNTING OFFICER Fernando Isac Economist Universidad de Zaragoza CHIEF FINANCIAL OFFICER Mauricio Balbontín Commercial Engineer Universidad de Chile ADJUNCT BUSINESS DIRECTOR Ramón Vázquez Mining Engineer Escuela Técnica Superior de Ingenieros de Minas de Oviedo CHIEF REGULATION OFFICER José Kindelán Mining Engineer Escuela Superior de Ingenieros de Minas de Madrid CHIEF DIVERSIFICATION OFFICER Emilio García Industrial Engineer Escuela Superior de Ingenieros Industriales de Bilbao CHIEF DEVELOPMENT OFFICER Ignacio Blanco Industrial Engineer and Economist Universidad Politécnica de Barcelona and Universidad de Zaragoza ENERGY BUSINESS DIRECTOR Juan Vásquez Civil Engineer (Electric) Universidad de Chile CHIEF ORGANIZATION OFFICER Gonzalo Martín B.S. in Chemistry Universidad Complutense de Madrid 1 1 2 2 / 0 2 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A CHIEF INDUSTRIAL RELATIONS OFFICER CHIEF EXECUTIVE OFFICER ENDESA CHILE MANAGEMENT OF SUBSIDIARIES Alfonso Brito Commercial Engineer Universidad de Chile CHIEF HUMAN RESOURCES OFFICER Francisco Silva Public Administrator Universidad de Chile CHIEF PLANNING OFFICER Juan Spöerer Commercial Engineer Pontificia Universidad Católica de Chile MANAGERS’ REMUNERATION The total remuneration obtained by the aforementioned Enersis’ managers, during the year 2000, amount to Ch$2,035 million. This amount includes the remuneration Héctor López B.S. in Law and Economic Sciences ICADE de Madrid CHIEF EXECUTIVE OFFICER REGIONAL DISTRIBUTION BUSINESS Marcelo Silva Commercial Engineer Universidad de Chile CHIEF EXECUTIVE OFFICER CHILECTRA Julio Valenzuela Civil Engineer (Electric) Pontificia Universidad Católica de Chile CHIEF EXECUTIVE OFFICER RÍO MAIPO Alejandro Gómez Civil Engineer Universidad de Chile of the existing managers at December 31, 2000, as well CHIEF EXECUTIVE OFFICER EDESUR as those managers who disassociated along the period. José Rovira Industrial Engineer (Electric) Universidad Técnica Industrial de Barcelona INCENTIVE PLAN Enersis has a yearly bonus plan for its executives for goal achievement and individual contribution level to the company’s results. This plan includes a definition of bonus ranges in accordance with its executives’ hierarchical level. The bonuses that are occasionally given to the executives consist of a given number of monthly gross remunerations. CHIEF EXECUTIVE OFFICER EDELNOR José Hidalgo Licentiate on Economic and Business Administration Sciences Universidad Santiago de Compostela CHIEF EXECUTIVE OFFICER CERJ Javier Villar Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales and Telecomunicaciones de Bilbao CHIEF EXECUTIVE OFFICER COELCE Manuel Montero Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Madrid CHIEF EXECUTIVE OFFICER CODENSA Marcelo Llévenes Commercial Engineer Universidad de Chile CHIEF EXECUTIVE OFFICER ENERSIS ENERGÍA DE COLOMBIA Carlos Restrepo Electric Engineer Escuela Colombiana de Ingeniería 3 3 2 2 / 2 2 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A CHIEF EXECUTIVE OFFICER COMPAÑÍA AMERICANA CHIEF EXECUTIVE OFFICER DIPREL DE MULTISERVICIOS Pantaleón Calvo Civil Engineer Universidad de Chile Eduardo López Commercial Engineer Pontificia Universidad Católica de Valparaíso CHIEF EXECUTIVE OFFICER INMOBILIARIA CHIEF EXECUTIVE OFFICER SYNAPSIS MANSO DE VELASCO Victor Muñoz Civil Engineer Universidad Federico Santa María de Valparaíso Andrés Salas Civil Engineer Universidad de Chile HUMAN RESOURCES The distribution of human resources at Enersis and its subsidiary, at December 31, 2000, was as follows: COMPANY EXECUTIVES PROFESSIONALS AND TECHNICIANS ADMINISTRATIVE STAFF Enersis Endesa Chile (1) Chilectra (2) Río Maipo Edesur Edelnor Cerj Codensa Coelce CAM (3) Diprel (4) Synapsis (5) Manso de Velasco Total 58 44 28 2 34 24 33 25 32 7 6 15 5 313 100 1,473 342 32 574 287 263 364 625 104 47 74 7 109 247 498 58 1,771 307 1,106 580 935 290 59 388 4 4,292 6,352 10,957 (1) Includes: Endesa Chile - Ingendesa - Pangue - Pehuenche - San Isidro - Central Costanera - El Chocón - Edegel - Emgesa - Betania Cachoeira Dourada - Infraestructura 2000 - Autopista Los Libertadores - Autopista El Sol - Túnel El Melón. (2) Includes: Empresa Eléctrica de Colina (3) Includes: CAM Chile - CAM Argentina - CAM Colombia - CAM Perú (4) Includes: Diprel Chile - Diprel Colombia - Diprel Perú (5) Includes: Synapsis Chile - Synapsis Argentina - Synapsis Colombia - Synapsis Brasil - Synapsis Perú TOTAL 267 1,764 868 92 2,379 618 1,402 969 1,592 401 112 477 16 3 3 2 2 / 2 2 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Corporate Structure 5 5 2 2 / 4 2 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A 5 5 2 2 / 4 2 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Generation 7 7 2 2 / 6 2 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A More than 12,800 MW of installed capacity in Latin America. 7 7 2 2 / 6 2 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Endesa Chile OWNERSHIP STRUCTURE OF THE COMPANY Enersis, is the main stockholder in Endesa Chile with 60% this figure, 71.9% is hydraulic energy, and the rest is thermal. Its annual generation reached 15,346 GWh and its sales, 20,086 GWh during the year. Endesa Chile participates in the Central Interconnected System (SIC), the most important interconnected system in the country, covering an area that serves approximately 93% of the national population, with an installed capacity of 3,853 MW, which represents approximately 55% of the of the property, and it has channeled through same the SIC. investment in the area of electric generation. Additionally, the other shareholders are: Endesa also participates on the Northern Interconnected System (SING), through its subsidiary Celta and indirectly through company Gas Atacama and Nopel, serving various mining companies and featuring sales and selling energy on the spot market. Celta’s installed capacity in this system is 182 MW, which represents 6% of the SING. This subsidiary has presence in Argentina, through Central Costanera S.A., Hidroeléctrica El Chocón S.A. and Central Termoeléctrica Buenos Aires S.A., operating ELECTRIC BUSINESS The main activities carried out by Endesa Chile and its subsidiaries are related to the generation and supply of electric energy, transportation of natural gas, engineering and infrastructure. Endesa Chile is the main electric energy generation company in Chile and one of the country’s largest companies. In Chile it operates a total of 4,035 MW, representing 40% of the country’s installed capacity. From IDENTIFICATION OF THE COMPANY Corporate name Empresa Nacional de Electricidad S.A Type of company Limited Liability Stock Company Tax register number 91,081,000-6 Address Santa Rosa N°76 Santiago, Chile Telephone (56-2) 630 9000 Fax (56-2) 635 4720 Web site www.endesa.cl E-mail comunicacion@endesa.cl Securities register number N°114 External auditors Deloitte & Touche Total number of shares 8,201,754,580 9 9 2 2 / 8 2 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Subscribed and paid-in capital (ThCh$) 979,156,712 Participation of Enersis (direct and indirect) 60,0% Corporate purpose Generation, transport and provision of electric energy, sale of consulting and engineering services within the country and abroad and the construction and explotation of infrastructure works. BOARD OF DIRECTORS Chairman Pablo Yrarrázaval Vice-Chairman Antonio Pareja Directors Jaime Bauzá Jesús Burillo José Hidalgo Pedro Larrea Andrés Regué Antonio Tuset Leonidas Vial Chief Executive Officer Héctor López Costanera Power Plant, Argentina a total of 3,622 MW, which represents 17% of the In Perú, through Edegel, operating a total of 997 MW, Argentinean Interconnected System’s total, an annual representing 22 % of the Peruvian system, an annual generation of 10,129 GWh and annual sales of generation of 3,623 GWh and annual sales of 3,604 GWh. 15,549 GWh. Finally in Colombia, through Central Hidroeléctrica The company has presence in Brazil, through Centrais de Betania S.A. E.S.P. and the power generation Elétricas Cachoeira Dourada S.A., operating a total of company Emgesa, operating a total of 3,035 MW, 658 MW, representing approximately 1% de of the representing 25% of the installed capacity in Colombia, installed capacity in that country, an annual generation of an annual generation of 9,618 GWh and annual sales of 3,406 GWh and annual sales of 3,887 GWh. 13.356 GWh. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 9 9 2 2 / 8 2 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A The second phase, currently under development, shall enable to duplicate the export capacity, that is, marketing a firm power of 2,000 MW in Brazil. The characteristics of the works to be carried out are similar to those of the first phase and the date for its commissioning is estimated to be May 2002. The estimated investment for the two phases is approximately US$650 million. Pangue Hydroelectric Power Plant, Chile RALCO ELECTRIC PROJECTS The Ralco project is located at the Alto Biobío area, about 120 km south-east of Los Angeles and 30 km upstream from the Pangue power station. This power station, the Among the most relevant electric projects the following nominal power of which is 570 MW, shall permit the ones may be pointed out; average annual contribution of 3,100 GWh to the electric CIEN, Interconexión Energética Argentina-Brazil system. This project, which was devised to export energy from construction was 31.0%, a situation that matches the Argentina into Brazil, is operated by CIEN (Compañía de schedule that contemplates the commissioning to take Interconexión Energética), a company related to Endesa place by the end of the first half of year 2003. At December 31, 2000 the physical progress of the works Chile, a company where Endesa España also participates as a partner. CENTRAL – SIC JOINT It contemplates two phases, the first one, already in This project corresponds to a transmission system service, consists in establishing an electric interconnection enabling the interconnection between the Ralco Power to market a firm power of 1,000 MW, with associated energy from Argentina in Brazil. This phase started Station and the Charrúa Substation, through a 220 kV and 140 km two-circuit line. This line is located at the Biobío operations on June 22, 2000 and at present it is operating region, at about 125 km east and 45 km north of the city without any problems. of Los Angeles. CIEN Line Argentina-Brazil 1 1 3 3 / 0 3 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A 1 1 3 3 / 0 3 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Ralco Project , Chile TALTAL Taltal Station and to industrial, mining and gas distribution customers operating in the areas of Mejillones, During April and July off year 2000, the phase one Antofagasta and Paposo. of the Taltal Power Station was placed into service, corresponding to two gas-driven turbines of 120 MW OTHER BUSINESSES each, which are fed with natural gas conveyed from Argentina, which is carried by Gas Atacama. Among the other businesses we may point out company TALTAL GAS PIPE Ingendesa, which participated in important investment projects, particularly in the areas of energy, infrastructure, mining, public works and telecommunications, through During February 2000 this gas pipe was placed into services rendered to both companies of the Group and service. It runs between Mejillones (First Region) and other non-related customers. Paposo (Second Region), with a total length of 229 km, divided into two spans. The first one runs from Mejillones Additionally, Tunel El Melón S.A., which operates on and La Negra, with 88 km of length and 16 inches of Ruta 5 Norte, Sociedad Concesionaria Autopista diameter, and the other one runs between the towns of La del Sol S.A. engaged in the design, construction and Negra and Paposo, being 141 km long and its diameter operation of the Santiago - San Antonio highway and being 12 inches. Proyecto Autopista Los Libertadores comprising the expansion and improvement of the These works are owned by Endesa Chile’s related General San Martín highway. company Gasoducto Atacama Compañía Ltda. and the purpose of this gas pipe is to supply natural gas to the Distribution 3 3 3 3 / 2 3 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A 9.6 million customers in five contries of South America. 3 3 3 3 / 2 3 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Chilectra During year 2000 Chilectra purchased energy from several generation companies in the country, among others, Endesa Chile (28.9%), Gener (26.9%), Pehuenche (15.2%), Pangue (11.5%) and Colbún (10.4%). OPERATING ACTIVITY TARIFF SETTING PROCESS Chilectra is the largest electric energy distribution company in the country. It serves 33 boroughts of the Metropolitan Region over an area of 2,118 km2 within its concession area. Enersis, its main stockholder with 98.0%, after purchasing in November 2000, an additional 25.4% of the shares through a Public Tender Offer that ended in January 2001, has appointed it as its operator in the investments it conducts in the distribution business area. SALE AND PURCHASES OF ENERGY At December 31, 2000, the physical energy sales reached 8,854 GWh, representing a 5.1% increase as compared to the identical period of 1999. From the total energy invoiced during year 2000, 30.6% corresponds to residential sales, 29.0% to industrial sales, 20.3% to commercial sales and 20.1% to other areas. The electricity rates are set every four years. Pursuant to the electric law, a supply tariff review took place in the year 2000, which in terms of the 1999 period considered for the tariff setting process, represents an 18.1% decrease in the company’s operating income. ENERGY LOSSES During year 2000, Chilectra continued with its process to control losses. The investments in new projects related to technical measures for controlling and maintaining those already existing were kept. This set of measures enabled to reduce the energy loss index, reaching 5.2% at the end of the period. COMMERCIAL ACTIVITY The number of customers reached 1,261,544 at December 31, 2000, which represents a 1.9% increase as compared to 1999. Chilectra has consolidated its position in the energy distribution market, reaching leading efficiency levels in the region. Within the bounds of the campaign to introduce the electric energy as the best solution, both on a IDENTIFICATION OF THE COMPANY Corporate name Chilectra S.A Type of company Limited Liability Stock Company Tax register number 96,524,320-8 Address Santa Rosa N°76 Santiago, Chile Telephone (56-2) 675 2000 Fax (56-2) 675 2999 Web site www.chilectra.cl E-mail rrpp@chilectra.cl Securities register number N°321 External auditors Arthur Andersen – Langton Clarke Total number of shares 366,045,401 Subscribed and paid-in capital (ThCh$) 265,666,994 Vice-Chairman José Fernández Participation of Enersis (direct and indirect) 98.0% Corporate purpose Distribution, transmission, purchase and sale of hydraulic, thermal, or any other form of electric energy. BOARD OF DIRECTORS Chairman Jorge Rosenblut Directors Enrique García Chief Executive Officer of Enersis Juan Domínguez Adj. Chief Executive Officer of Enersis Álvaro Quiralte Hernán Errázuriz Pedro Buttazzoni Chief Executive Officer Julio Valenzuela 5 5 3 3 / 4 3 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Santiago, Chile technological and ecological basis, a sales plan of new generate instances for recreational activities in low-income product to satisfy the customers’ needs was implemented sectors (lightning of sports facilities; construction of during 2000. Among said new products are heat pumps, community centers and gyms; implementation of fire air conditioning and electric thermoses. The purpose is to stations, etc). diversify the use of electricity among our customers by incorporating clean and safe energy where other energy Furthermore, an agreement between the Detective Police sources have dominated the market. Department and Chilectra was subscribed to advertise Chilectra has approached the community through a side of the electric bills. Together with the program focused on the community within its area implementation of the Braille Bill for the blind of concession. The purpose of this plan has been to customers. the pictures of lost children on the back FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 5 5 3 3 / 4 3 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Río Maipo OPERATING ACTIVITY Río Maipo is the fourth largest electric energy distribution company in Chile. Its concession area comprises the boroughs of San José de Maipo, Puente Alto, La Pintana, SALES AND PURCHASES OF ENERGY At December 31, 2000, the physical sales of energy reached 1,191 GWh, representing a 13.4% increase as compared to the identical period during 1999. From this total, 44.5% corresponds to residential sales, 6.3% to the industrial sector, 40.2% to the commercial sector and 9.0% to other sectors. During year 2000, Río Maipo purchased energy from Gener and Chilectra. The maximum demand, 223 MW, El Bosque, San Bernardo, Calera de Tango, Isla de Maipo, occurred in December. Talagante, Peñaflor, Padre Hurtado and Curacaví, serving a population of about 1,300,000 people, in 11 boroughs over an area of 1,500 km2. TARIFF SETTING PROCESS Enersis its main stockholder with 98.4% of the ownership, after purchasing an additional 14.7% of the shares through a Public Tender Offer in November 2000. The electricity rates are set every four years. The latest Tariff Setting Process occurred in year 2000 which culminated with the issuance of Decree No 632 of the Ministry of Economy, Development and Reconstruction. ENERGY LOSSES During year 2000, Río Maipo proceeded with its efforts to reduce losses, anticipating the execution of the investments contemplated for that year, which were completed during the first half, and developing additional investments during the second half. Likewise, the effectiveness levels of the theft control were improved, enabling to reduce the energy loss index to 5.4% at the end of this period. 7 7 3 3 / 6 3 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A IDENTIFICATION OF THE COMPANY Corporate name Compañía Eléctrica del Río Maipo S.A. Type of company Limited Liability Stock Company Tax register number 96,557,330-5 Address Buenos Aires N°720, San Bernardo, Chile Telephone (56-2) 858 5858 Fax (56-2) 859 1859 E-mail riomaipo@rmaipo.enersis.cl Securities register number N°345 External auditors Arthur Andersen – Langton Clarke Total number of shares 360,613,552 Subscribed and paid-in capital (ThCh$) 14,561,360 Participation of Enersis (direct and indirect) 98.4% Corporate purpose (abstract) Operate the distribution and sale of thermal and hydraulic electric energy, or energy from any other source. BOARD OF DIRECTORS Chairman Alberto López (Business Executive Officer of Enersis) Vice-Chairman Pantaleón Calvo Directors Julio Valenzuela Jorge Claro Rolando Hechenleitner Chief Executive Officer Alejandro Gómez COMMERCIAL ACTIVITY ones, during year 2000 various extension works were executed, as well as medium tension line reinforcements At December 31, 2000, the company’s customers totaled and distribution substations . 287,132, which represents an increase of 4.7% as compared to the same period in 1999. From that figure, Río Maipo aims its commercial work at achieving 96.2% are residential customers, 2.1% are commercial excellence in service quality and service to its residential customers and the remaining 1.7% corresponds to and industrial customers. In connection to the latter industrial and other customers. mentioned, and due to the successful experience of During year 2000, Río Maipo executed various projects continued to develop. This unit is dependent of the Large previous years, during year 2000 the New Businesses unit intended to guarantee an adequate service quality to Customers Area. customers. For this reason an specifically in order to reduce the number of interruptions in the supply and the The management and coordination of all the new special duration of same, various technical works and innovations services provided by the company to its customers has were carried out. been expanded with new horizons, among which are the sale, installation and maintenance of equipment, the Additionally, in order to process requests on new technical inspection of industrial plants, customers and increases in the power of the existing measurements of harmonics, projects and construction of works. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 7 7 3 3 / 6 3 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Edesur DISTRILEC INVERSORA S.A. OWNERSHIP STRUCTURE OF THE COMPANY In July 1992 and as a result of an international public bidding process, 51% of Edesur’s ownership was awarded to Distrilec Inversora S.A. In December 1995, Enersis Group increased its direct and indirect interest in Edesur through the purchase of 39% of the company that was owned by the Argentinean Government, thus becoming in the Group with the largest stock ownership and controller. On March 31, 2000, Edesur completed the operation of redemption of Class “C” shares of the Participant Ownership Program, representing 10% of the corporate capital of the distribution company . Enersis Group because of said redemption appoints an additional Director in Edesur’s class ¨ B ¨. As a consequence of such variations, the ownership structure of Edesur and Distrilec Inversora S.A. is as follows: EDESUR 9 9 3 3 / 8 3 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A IDENTIFICATION OF THE COMPANY Corporate name Empresa Distribuidora Sur S.A. E-mail servicio@edesur.com.ar Type of company Limited Liability Stock Company Address San José N°140, Buenos Aires, Argentina Telephone (54-11) 4370 3700 Fax (54-11) 4381 0708 Web site www.edesur.com.ar External auditors Arthur Andersen - Pistrelli Díaz y Asociados Total number of shares 898,585,028 Subscribed and paid-in capital (ThCh$) 546,108,328 Participation of Enersis (direct and indirect) 64.3% OPERATING ACTIVITY Edesur’s main purpose is the distribution and commercialization of electric energy in the southern area of Buenos Aires, comprising two thirds of the Federal Capital and twelve districts in the Province of Buenos Aires, which represents a total concession area of 3,309 km2. Chilectra has been Edesur’s exclusive operator in accordance with the bidding condition since 1992. SALES AND PURCHASES OF ENERGY The physical sales of energy during the period reached 12,597 GWh and the maximum power recorded during the year reached 2,593 MW, representing a 2.2% and 9,5% increase respectively as compared to 1999. During the year the respective supply contracts with Central Puerto y Central Costanera expired, and Edesur purchased the entire demand in the Wholesale Electric Market. TARIFF SETTING PROCESS Pursuant to the concession contract, in September 2002 the first review of the initial tariffs shall take place. The Corporate purpose Distribution and marketing of electric energy and related operations. BOARD OF DIRECTORS Chairman Rafael Fernández Directors Enrique García Chief Executive Officer of Enersis Mariano Grondona Rafael Arias Tadeo Perich Marcelo Silva Jorge Ortúzar Manuel Benites Sustituting Directors Domingo Valdés Legal Counsel of Enersis Alan Arntsen Augustina Monferran Horacio Babino Juan Verbitsky Santiago Direaux Mónica Diskin Pedro Aramburu Chief Executive Officer José Rovira Buenos Aires, Argentina tariffs were initially set for a period of ten years. One an exact comparison between the indices of the previous year in advance, Edesur must submit to the National years and that of the last period. Electricity Regulating Entity (ENRE) a proposal for the new tariff structure. The ENRE shall analyze such proposal and COMMERCIAL ACTIVITY another proposal submitted by an independent consultant to be contracted by said entity, and shall define the tariffs The total number of customers served by Edesur as to be applied until 2007. ENERGY LOSSES During year 2000, Edesur has developed all of the plans and projects aimed at controlling energy losses. However, during this period, the energy losses interrupted the falling tendency reaching an annual index of 10.3%. Among the causes of this adverse evolution is the social situation characterized by an increase in the levels of poverty and the high rates of unemployment. It is also important to point out that from year 2000 the methodology to calculate the index of energy losses has been changed. The change consisted in considering the energy by consumption not recorded as part of the invoiced energy, and the estimation of the energy read in meters was included for the structuring of the periodic energetic balance. This methodology change prevents at December 31, 2000 was 2,108,472. From this total, 86.3% are residential customers, 13.4% are general customers and the remaining 0.3% corresponds to large consumers. In year 2000, Edesur made major investments tending to improve the quality of service and the conditions of safety of the installations, such as the construction of new substations, the expansion of substations and networks, various technological innovations, etc. During the year 2000, the commercial activity was aimed at consolidating its position in view of the future changes in the Argentinean electric market, and the strengthening of the corporate image change started during the previous year. All the foregoing without losing sight of the traditional variables of the business; improvement of the service quality, control of losses and past dues and improvement of the efficiency of the management. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 9 9 3 3 / 8 3 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Edelnor OPERATING ACTIVITY Edelnor is the concession holding company of the public electricity service for the north part of Metropolitan Lima and the Constitutional Province of Callao, as well as for the provinces of Huaura, Huaral, Barranca and Oyón. OWNERSHIP STRUCTURE OF THE COMPANY It serves 52 districts on an exclusive basis and shares another 5 districts with the distribution company for the As of December 31, 2000 Edelnor’s domestic investors south part. had a 99,8% participation, while the foreign ones had the remaining 0.2%. In the Metropolitan Area, Edelnor’s concession mainly comprises the industrial zone of Lima and some As a consequence of said variations, the ownership populated districts of the city. The concession area structure of Edelnor and Inversiones Distrilima S.A. is as awarded to Edelnor extends over an area of 2,440 km2, follows: EDELNOR INVERSIONES DISTRILIMA S.A. 1,838 km2 of which correspond to the north part of Lima and Callao. SALE AND PURCHASES OF ENERGY The physical sales of energy in the period reached 3,583 Gwh, which represents an increase of 4.7% as compared to 1999. From the total of energy sold, 35.8% corresponds to residential sales, 32.8% to industrial sales, 15.2% to commercial sales and 16.2% to sales to other sectors. Additionally, a maximum demand of 653 MW was recorded. During the year 2000, Edelnor, purchased energy from four generation companies; Electroperú (45.4%), Edegel (39.5%), Eepsa (12.0%) and Cahua (3.0%), whereas the remaining 0.1% corresponds to self-generation of the isolated systems, through thermal and hydraulic generators, supplying the rural areas of the Norte Chico zone. IDENTIFICATION OF THE COMPANY Corporate name Empresa de Distribución Eléctrica de Lima Norte S.A.A. Type of company Limited Liability Stock Company Address Jr. Teniente César López Nº201, Urb. Maranga, San Miguel, Lima, Perú Telephone (51-1) 561 2001 Fax (51-1) 561 0451 Web site www.edelnor.com.pe E-mail enlinea@edelnor.com.pe External auditors Medina, Zaldívar y Asociados - Arthur Andersen Total number of shares 1,131,891,016 Subscribed and paid-in capital (ThCh$) 183,586,515 Participation of Enersis (direct and indirect) 32.4% Corporate purpose Engage in the activities pertaining to the delivery of the services of distribution, transmission and generation of electric energy. BOARD OF DIRECTORS Chairman Reynaldo Llosa Vice-Chairman José Hidalgo Directors Alberto López Business Executive Officer of Enersis Jesús Beoutis Jorge Manzur Ben Schneider Fernando Urbina Sustituting Directors Fernando Font Marciano Izquierdo Antonio Sebater José Milla José Oporto Rocío Montero Pablo Casado Chief Executive Officer José Hidalgo 1 1 4 4 / 0 4 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A COMMERCIAL ACTIVITY Edelnor’s total number of customers represents over half the total number in Metropolitan Lima and they consume 50.2% of the city’s energy. In year 2000 the number of clients reached 851,783, which represents an increase of 1.7% as compared to 1999. Edelnor, interested and concerned about the wellbeing of its customers, prepared during the entire year 2000, standardized questionnaires to interview clients of different socioeconomic levels who called-in the modules of commercial service, in order to evaluate the service being Lima, Perú TARIFF SETTING PROCESS The distribution tariffs remain in force for four year periods provided as compared to that provided by other public and may be adjusted during this period by means of utility companies. The analysis reveals Edelnor is still ahead updating formulas set by the CTE (Comisión de Tarifas of other companies as far as satisfaction, image and Eléctricas). The last tariff setting for distribution entered service quality is concerned, with special relevance being into force on November 1, 1997 and shall conclude on stressed in its good customer service infrastructure. October 31, 2001. ENERGY LOSSES During the year 2000, Edelnor continued to apply its efforts in pursuit of fulfilling the needs of its clients though a commercial strategy aimed at solving problems in an In order to detect the sources of energy loss at supply efficient and timely fashion. To this end, important projects SET level and to be able to provide the company with were conducted, some of which are: Service Centers, reliable information in pursuit of optimizing efforts and Customer Phone, Edelnor at Home, etc. resources, during the year the customers have been subject to a direct and focalized treatment, with the Additionally, during the year major investments were energy loss index reaching 9.9%. made which were intended to improve the reliability and operation of the networks and installations. This However, said effect has not reflected due to the new fact, along with the enhancement of the coordination in methodology to calculate this index, which only includes preventive tasks, on the basis of a conscientious task the re-invoicing during a maximum period of 12 months, regarding the management of the number and duration non-recorded consumption is not included (CNR) and the of the interruptions, have enabled the estimation of the energy in meters is done on a client-to- company to provide an improved level of client basis over a mobile 12-month period. service to customers. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 1 1 4 4 / 0 4 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Cerj OWNERSHIP STRUCTURE The ownership structure of Companhia de Eletricidade do Rio de Janeiro, Cerj, is as follows: During the year 2000, Cerj, bought electric energy mainly from generating companies Furnas (76.3%), Itaipu (27,0) and the remainder was self-generated. TARIFF SETTING PROCESS Cerj’s distribution tariffs are adjusted as set forth in concession agreement entered into in November, 1996. In December of each year, ANEEL reviews management and non-management costs, in addition to the variation of the IGP-M index for the period, determining the adjustment value to be applied. The last adjustment, applied on December, 2000, included a 15.9% rise to be applied as of December 31, 2000, plus a 1.9% increment to be applied as of February 7, 2001. Cerj’s tariffs will be reviewed by ANEEL in December, 2003, based on the cost structure and efficiency achieved, procedure that is conducted every four years. OPERATING ACTIVITY ENERGY LOSSES Cerj distributes electric energy in most of the State of Rio Janeiro, Brazil, serving a population of 4.1 million inhabitants, comprising 66 municipal districts distributed over an area of 31,741 km2. SALES AND PURCHASES OF ENERGY Physical energy sales in the period amounted to 7,656 GWh. Of the total energy sold in the year 2000, 44.0% corresponded to residential sales, 20.0% to the industrial sector, 19.0% to the commercial sector and 17.0% to other sectors. In addition, peak demand totaled 1.621 MW. IDENTIFICATION OF THE COMPANY Company name CERJ-Companhia de Eletricidade do Rio de Janeiro Type of company Stock Company Address Praça Leoni Ramos, N°01 – São Domingos, Niteroi, Río de Janeiro, Brasil Telephone (55-21) 613 7000 Fax (55-21) 613 7153 Web site www.cerj.com.br E-mail cerj@cerj.com.br External auditors Arthur Andersen S/C Total number of shares 1,704,025,408,820 Subscribed and paid-in capital (ThCh$) 137,453,941 Participation of Enersis (direct and indirect) 57.4% Cerj is implementing loss control investment projects in order to reduce this index. However, during this period, the energy losses accumulated in the 12-month period interrupted its decreasing tendency, reaching a 19.7% annual index. It must be noted that, among the causes for this unfavorable evolution, as of the year 2000, the methodology by which this index was calculated was changed by disregarding energy from consumptions not recorded (CNR), within the energy invoiced, and by incorporating energy estimates on meters for carrying out the periodical energy balance. This methodological change Company purpose Generation, distribution of electric energy. BOARD OF DIRECTORS Chairman Eduardo Bernini Directors Emilio López Maria João Méndez Ramón Vázquez Adj. Business Director of Enersis Enrique García Chief Executive Officer of Enersis Ignacio Blanco Chief Development Officer of Enersis Fernando Nadal Corp. Communications Director of Enersis Geraldo Da Rocha José Martínez Sustituting Directors Juan Madrigal Francisco Arias Luis Goncalves Fernando das Neves Vacantes (5) Chief Executive Officer Javier Villar 3 3 4 4 / 2 4 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Río de Janeiro, Brazil prevents an accurate comparison between indices from In the year 2000, Cerj made importants investments previous years and that corresponding to the last period. in order to improve service quality, namely: the general COMMERCIAL ACTIVITY restructuring of Call Center, which since April has had 50 lines for providing this service; the development and implementation of the Customer Commercial Service The total number of Cerj’s customers during the year Management System (GAC), which allows the on-line 2000 amounted to 1,581,001, representing a 1.4% access to customers’ complaints from any place in the increase with respect to 1999. Of this total, 89.7% State ; and the implementation of the 0800 free service is residential customers, and the remainder 10.3% is which takes care of both commercial comprised of industrial, commercial customers, and requests and emergency calls. others. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 3 3 4 4 / 2 4 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Coelce INVESTLUZ S.A. COMPANY OWNERSHIP As from April, 1999, Coelce is operated by the consortium Distriluz Energía Eléctrica S.A., made up of Endesa de España, Enersis, Chilectra and Cerj. In September of same year, the group increased its stake in OPERATING ACTIVITY the company by 6% through the acquisition of the shares in the hands of investments clubs, formed by workers Coelce’s main objective is to distribute and commercialize when the company was privatized. electric energy in the city of Fortaleza, State of Ceará, representing a total concession area of approximately In September, 1999, Distriluz Energía Eléctrica S.A. was 147,000 km2 in 84 municipal districts. dissolved and a new controlling company, Investluz S.A., was created, taking over the former company. As a result SALES AND PURCHASES OF ENERGY of said changes, the ownership structure of Coelce and Investluz is as follows: COELCE Energy sales within the period amounted to 5,894 GWh, representing a 3.2% increase with respect of the previous period. Of the total energy sold in the year 2000, 33.8% corresponded to residential sales, 29.3% to the industrial sector, 18.3% to the commercial sector, and 18.6% to other sectors. Peak demand for the year amounted to 1,110 MW in December, an 11.1% rise with respect to 1999. During the year 2000, Coelce bought almost all the energy from the generating company Chesf (99.2%). IDENTIFICATION OF THE COMPANY Company name Companhia Energética do Ceará E-mail comunicacion@coelce.com.br Type of Company Limited Liability Stock Company Address Av. Barão de Studart No 2917, Aldeota, BarrIo Dionísio Torres, Fortaleza, Ceará, Brasil Telephone (55-85) 216 1100 Fax (55-85) 216 1410 Web site www.coelce.com.br External auditors Arthur Andersen Total number of shares 155,710,600,088 Subscribed and paid-in capital (ThCh$) 214,713,537 Participation of Enersis (direct and indirect) 26.3% Corporate purpose Distribute and sell electric, thermal, hydraulic energy and of any other nature. BOARD OF DIRECTORS Chairman José Mayoral Vice-Chairman Javier Villar Directors Ricardo Gómez Ignacio Blanco Chief Development Officer of Enersis José Kindelán Chief Regulation Officer of Enersis Francisco de la Fuente Javier Arias Antonio Uchoa Mauricio Balbontín Chief Financial Officer of Enersis José Martínez Laércio Peixoto Sustituting Directors Antonio Pires Rogério Cruz Priscilla Sartori Emilio López Antonio Gouvea Luis Goncalves Isabel Carvalho Antonio Vianna Arturo Silva Miguel del Valle Juarez Ferreira Chief Executive Officer Manuel Montero 5 5 4 4 / 4 4 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A TARIFF SETTING PROCESS Coelce’s distribution tariffs are regulated by the Aneel Concession Contract dated 01/98 and are adjusted every 22 of April for the review of non-management cost increases. The last adjustment, applied on April 22, 2000, included a 10.2% increase plus a 1.0% rise in the rate of contribution for social security financing (COFINS). On April, 2003, Aneel will review Coelce’s costs in order to effect the first tariff review, which will be subsequently applied every four years. ENERGY LOSSES Fortaleza, Brazil platform. In addition to the implementation of the new commercial system, the centralized 24-hour-a-day customer service system covering the entire Ceará Coelce is implementing loss control investment projects in through a 800 phone line, was put into operation. order to reduce this index. During the year 2000, through Commercial coverage was expanded through the the Standardization Project, Greater Customer Projects, implementation of the “Points of Service” project, which etc. The energy losses accumulated in the 12 month made it possible to extend service to the 184 municipal period reached, as of December 2000, a 13.3% index. districts of the State. COMMERCIAL ACTIVITY Further, a Coelce program was started in neighborhoods, through mobile offices providing the poorest communities The total number of customers served by Coelce as of in Fortaleza and within the State with solutions, advice December, 2000, was 1,795,824, representing a 8,7% and educational information. Special service facilities to increase with respect to December, 1999. provide attention to customers with hearing problems As for customer service, the company’s policy was for customers with visual disabilities were implemented. oriented towards the modernization of the information Finally, a virtual office where Coelce’s systems, expansion of channels to access the company customers may get information and services, and globalization of the commercial service request services on the internet, was set as well as the delivery of energy bills written in Braille FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) up. 5 5 4 4 / 4 4 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Codensa OWNERSHIP STRUCTURE On September 15, 1997, Empresa de Energía de Bogotá S.A. E.S.P., capitalized 48.5% of its ownership, which was acquired by the consortium Luz de Bogotá, made up of the companies Enersis, Chilectra and Endesa Desarrollo. Subsequently, on October 23, Codensa S.A. E.S.P. was organized. OPERATING ACTIVITY SALES AND PURCHASES OF ENERGY Physical energy sales during the period amounted to 8,776 GWh representing a 3.2% increase with respect to 1999. Of the total energy sold in the year 2000, 83.0% of it was sold on the regulated market, 11.7% on the non-regulated market, and 4.4% to public lightning. The energy purchase level dropped by 13% respect to 1999 purchases. 89.2% was purchased to serve the regulated market and 10.8% for the non-regulated market. The ownership structure of Codensa and of the consortium Luz de Bogotá S.A. is as follows: TARIFF SETTING PROCESS CODENSA LUZ DE BOGOTÁ S.A. The distribution tariffs are in effect during 5 years. The latest distribution tariff setting came into effect in 1998. During 2001 the policies and norms to be applied in the next 2003-2007 period shall be defined. The service rendering unit cost was affected during 2000 due to the regulatory changes and restrictions. Because of the validity of the new CREG resolution as of October, 100% of the restriction will be charged to the distribution companies. ENERGY LOSSES At the end of the year 2000, the company recorded an index for energy losses of 10.5%, a figure involving three point drop with respect to the previous year’s closing. IDENTIFICATION OF THE COMPANY Company name Codensa S.A. ESP Type of Company Public Services Company Address Carrera 13ª No 93-66 Bogotá, Colombia Telephone (571) 601 6060 Fax (571) 601 5917 Web site www.codensa.com.co E-mail yacero@codensa.com.co External auditors Arthur Andersen Total number of shares 187,162,104 Subscribed and paid-in capital (ThCh$) 882,141,517 Participation of Enersis (direct and indirect) 22.6% Corporate purpose Distribution and selling electric energy, and performance of similar, kindred, complementary and related activities. BOARD OF DIRECTORS Chairman Andrés Regué Directors José Kindelán Chief Regulation Officer of Enersis Fernando Urbina Juan Vásquez Adj. Business Director of Enersis José Vargas Carlos Sandoval Jorge Amaya Sustituting Directors Marcelo Llévenes Lucía Piedrahíta José Inostroza Lucio Rubio Henry Navarro Mario Trujillo Jorge Pinzón Chief Executive Officer Marcelo Llévenes 7 7 4 4 / 6 4 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A The structure designed for the Loss Control Project, which the customer. Two new customer service facilities opened is based on the Technical Measure Investment Project up, Centro Internacional and Soacha which were added to (PIMT), Standardization Project and Greater Customer the Regional, Center and South respectively. Projects. In September, 2000, the development of a new project called “Consumption Standardization Project” was started in order to replace 15,000 obsolete meters showing sub-readings, as compared to those of standardized customers, with which Codensa’s loss cut down plan was supported. COMMERCIAL ACTIVITY By the end of the year 2000, the company is selling energy to 1,802,049 customers. The number of regulated customers rose by 55,654 and the non- regulated customers by 43, with respect to 1999, which is a 3.2% increase in the number of customers served by Codensa. Bogotá, Colombia In accordance with the plan to become the best utility After the goal for 1999, focusing on quality service company and with the need of modernizing customer improvement, was achieved, a new strategic plan service processes, in August 2000, the Year 2000 was developed in the year 2000, centered on three Customer Information System, a modern tool which fundamental aspects: customer service, implementation integrates commercial information related to customer of new technologies, and operating efficiency. service, invoicing, delinquency, loss control, collection The strategic plan integrates the operating activity with value added services to customers and financial income, Within the implementation of the Year 2000 Customer by optimizing all commercial resources. Customers is the Information System, investments were made for plan’s objective, based on efficiency and effectiveness in the technological upgrade at the CADES providing and management, was put into operation. operations. commercial services throughout the Capital District. As a result of this project, seven CADES were incorporated The implementation of this plan was based on into the commercial information system, with which a decentralization intended to have greater facilities to serve level of service equal to that provided at the other service facilities, was achieved. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 7 7 4 4 / 6 4 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Other Businesses 9 9 4 4 / 8 4 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A The coverage is extended to other countries in Latin America 9 9 4 4 / 8 4 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A CAM GENERAL INFORMATION Compañía Americana de Multiservicios S.A. (CAM), wholly owned by Enersis, is the successor in charge of continuing the electric engineering and service activities of Ingeniería e Inmobiliaria Manso de Velasco S.A. It was organized in late 1999 with the purpose to enhance and consolidate its presence in the area of massive support services to electricity, water, gas and telecommunications companies. CAM has gradually consolidated its presence in the market , with a number of work services rendered to various public service companies that have placed it in an outstanding level on a national basis. On the other hand, internationally speaking, the opening of the subsidiary companies in Colombia and Perú, besides the already existing subsidiary in Argentina, has enabled it to consolidate its presence in the area of tailored associated integral service rendering to electric distribution companies. For the year 2001, it is intended to start this type of activities in Brazil. MAIN ENGINEERING ACTIVITIES AND SERVICES During the year 2000, the services platform enabling the development of the multiple services framework was devised. The consolidation of the network and joints construction, besides the incorporation of the commercial services of reading meters and delivery of bills, past dues, cutting and replacing utility services and market discipline, have enabled it to place itself among the main public utility services. Thus at present, the meter-reading services are being provided to several companies, namely Chilectra, Chilquinta and Río Maipo and the bill delivery service is provided to the aforementioned companies in addition to Emos and Smartcom PCS. As for metering, the service of quality diagnostic of the meters installed by Chilectra, Río Maipo, Edelnor, Cerj and Codensa was implemented, which enabled those companies to acquire a full knowledge of the recording being made of consumed energy and power invoiced . In the area of engineering and major urban services, important projects were set in place, such as the completion of the 220 kV transmission system over an extension of 57 km, 30 of which are located in a high mountain area. The execution of a roadway lighting turnkey project for the Autopista Los Libertadores. The participation in roadway lighting engineering IDENTIFICATION OF THE COMPANY Corporate name Compañía Americana de Multiservicios S.A. Type of company Closed Limited Liability Stock Company Tax register number 96,530,650-1 Address Tarapacá N° 934 Santiago, Chile Telephone (56–2) 632 5000 Fax (56–2) 639 7608 External auditors Arthur Andersen - Langton Clarke Total number of shares 29,462,263 Subscribed and paid-in capital (ThCh$) 1,031,693 Participation of Enersis (direct and indirect) 100% Corporate purpose Perform proffesional and technical services for the management of warehouses, control execution of works, measure and gauce, start-up and maintenance of systems, machinery and apparatus, maintenance of distribution and transmision networks. BOARD OF DIRECTORS Chairman Francisco Núñez Chief Procurement Officer of Enersis Vice-Chairman Ernesto Silva Director of Enersis Directors Víctor Jarpa Pedro Bermejo Chief Executive Officer Pantaleón Calvo 1 1 5 5 / 0 5 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A and relocation of networks in the main concessions currently under construction, along with the execution of these works for the underground parking areas in Providencia and Santa Lucía. As regards services for telecommunications, four 36 and 42-meter high antennas were erected at Chilectra’s Substations on a turnkey basis for Smartcom PCS, and advisory services were also provided in order to familiarize them with the formalities and execution of joints at a national level, as well as the support provided in the technical inspection of towers erected by third parties. In the area of public utility services, a massive replacement of 90,000 water meters was carried out for Esval. Construction works were completed involving telephone networks, optical fiber, burying of communications networks and multiple-pipe projects conducted on a joint basis with Chilectra for the Municipality of Vitacura and Providencia. Works of installation and replacement of lighting was carried out in various boroughs of Santiago as per the contract entered into with Chilectra. New urban development works were carried out with nearly 19,100 electric joints, representing 65% of the market, a work that also comprised the installation of aerial and underground electric networks. On an international basis, the Colombian subsidiary of CAM was organized, after the awarding of the public bidding process called by Codensa for the services of laboratory, integral telemeasurement and annexed services provided to non-regulated customers, massive installations for new supplies and integral servicing of major customers. Likewise, it provides the services of telemeasurement and annexed services to non-regulated customers for the electric trading company Enersis Energía de Colombia. Santiago, Chile Also, the Peruvian subsidiary of CAM was organized, after the awarding of the laboratory services and field services associated to major customers for Edelnor. In Argentina, CAM’s subsidiary was awarded with the contract of the commercial cycle for the integral servicing of the Rivera Sur branch with 488,000 customers. This implies providing the services of meter reading and bill delivery, market discipline, past dues, cutting and reconnection, installation and removal of meters, commercial services and collection. Likewise, it was awarded with the contract of the technical cycle for serving the areas of Avellaneda and Quilmes. This implies providing the services of customer complaints, preparation of projects in LT and MT networks, construction, maintenance and operation of aerial and underground LT and MT networks. Both contracts are for a three year period. In Brazil, the subsidiary CAM Brasil Multiservicios Ltda. was organized during December 2000. It is expected to be in operations by the beginning of year 2001, providing laboratory and field services. FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 1 1 5 5 / 0 5 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Synapsis GENERAL INFORMATION For Synapsis, a company 100% owned by the Enersis Group, the year 2000 was the year of its consolidation as a supplier of integral services to public utility companies in Latin America, especially companies of the Enersis Group, all of the foregoing in the framework of the execution of the Systems Master Plan as a part of the Genesis Project. OPERATING ACTIVITY Hard work was conducted during the year in pursuit of said project, which implied the transfer of personnel from subsidiary companies, negotiation of contracts for telecommunications and control systems, participation in bidding processes with the purpose of providing its customers both within the Group and external, the services of data processing, telecommunications and control systems. In this same context, the tasks began for the execution of the projects defined as corporate; relevant in this context is the organization of Synapsis Perú, the improvement of the data processing center in Chile, the corporate backbone, the corporate intranet consisting in setting up a network comprising the companies of the Group in America, joining Endesa España’s Intranet, the CDP convergence project the purpose of which is centralizing the operations of the CPDs for all the companies within a country around one CPD, the project of standardized commercial synergy, which seeks to incorporate the best practices and the latest technologies into said product and the Setting Up of the SIE2000A (a SAP R/3-based solution) at a corporate level in Chile. During the year, Synapsis was awarded several important outsourcing services contracts and executed major projects with state-of-the-art technology which it set up with optimized timing and resources. In Edelnor, Perú, the CDP outsourcing services started. In Codensa, Colombia, it was awarded with the bidding process involving the outsourcing of data processing services, telecommunications and control systems. The commercial management synergy solution setting up was completed, and the services of processing and maintenance of said solution began. In Coelce, Brazil, it was awarded with the project comprising the setting up of the distribution technical systems, and by the end of the year, it was awarded with the contract for the outsourcing services, which shall commence in January of year 2001. IDENTIFICATION OF THE COMPANY Corporate name Synapsis S.A. Type of company Closed Limited Liability Stock Company Tax register number 96,529,420-1 Address Catedral N° 1284, Santiago, Chile Telephone (56–2) 632 1240 Fax (56–2) 696 5999 Web site www.synapsis-sa.com E-mail synapsis@synapsis.enersis.cl External auditors Arthur Andersen - Langton Clarke Total number of shares 10,570,778 Subscribed and paid-in capital (ThCh$) 3,943,580 Participation of Enersis (direct and indirect) 100% Corporate purpose Supply and sell services and equipment related to computers and data processing for public utility companies and others, both national and foreign. BOARD OF DIRECTORS Chairman Cristóbal Sánchez Chief Information Systems Officer of Enersis Directors Emilio García Chief Diversification Officer of Enersis Francisco Núñez Chief Procurement Officer of Enersis Chief Executive Officer Víctor Muñoz 3 3 5 5 / 2 5 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A service. In Edenor, Argentina, it was awarded with the The year ends with the beginning of the project outsourcing of the data processing center. comprising the renewal of Endesa Chile’s, Transelec’s, In Esval, Chile, it completed the setting up of the Emos of the project for the merger and upgrading of the awarded solutions (Commercial Management Synergy, commercial systems of Emos and Aguas Cordillera. SIE2000A, Human Resources Synergy, Shares Synergy, etc.) to support the overall management of the company This year’s success for Synapsis lies on its technological Chilectra’s and Río Maipo’s SCADA, the awarding by and started the outsourcing services. strategy, its broad knowledge of both the public utility business and the outsourcing business and the vast In the Depósito Central de Valores (DCV), Chile, it was experience of the professionals that worked for Synapsis awarded with a services contract for the processing of and those who were transferred from the subsidiary the shares synergy. companies as a consequence of the execution of the systems master plan and the services outsourcing In Smartcom, Chile, the CPD outsourcing services were systems, a sound policy of alliances, which caused it to contracted, a project was started for the setting up of be awarded with important contracts. By the end of the SIE2000A and it was awarded with a Datawarehouse year its main task shall be to work project. in pursuit of upgrading its levels of FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 3 3 5 5 / 2 5 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Diprel OPERATING ACTIVITY During the year 2000, Diprel experienced a boost in its results by approximately 58%, basically explained by the results obtained abroad. Although the economic crisis undergone by the country has restrained an expedite recovery of the businesses intended for the sectors of construction, housing and industry, as a counteraction, important benefits have been achieved in the reduction of costs in the purchase of materials, contracting of works and services and in administrative expenses. Likewise, the international business experienced dramatic changes, from exporters to domestic operators in Perú and Colombia, and supporting the management of supplies of the Enersis subsidiaries in Brazil. Always within the mission to optimize the functions of supply, purchase and contracts in the Enersis Group, during the year 2000 important goals were set, namely, attaining a global reduction of at least 17% in the prices of costs and reaching an important reduction of stocks at the Group’s level, tasks that have been achieved by 100%. The integral management of provision in Chile was consolidated; it includes the management of purchases, contracts and services, administration, management and control of the warehouses of Chilectra, Río Maipo, CAM, Synapsis and Colina. In this same fashion, the creation of subsidiary companies in Perú and Colombia was achieved. These companies are in charge of the management of purchases and contracts, stock and warehouse management of the electric companies comprising the Enersis Group in such locations. In the area of domestic businesses, the important participation in the Public Lighting projects is highlighted, with relevance being in the projects carried out in the boroughs of Santiago, Ñuñoa, La Reina, Florida and Macul. It is worthy to point out the company’s continuous concern for labor accidents, an effort which translated in the Year 2000’s Merit Award 2000 being conferred to the company by the Asociación Chilena de Seguridad. In order to reach higher levels of productivity, it was necessary to dismiss 14% of the personnel, a process that was carried out in accordance with the policies set in place by the Group, providing economic support IDENTIFICATION OF THE COMPANY Corporate name Distribuidora de Productos Eléctricos S.A. Type of company Closed Limited Liability Stock Company Tax register number 96,543,670-7 Address Bulnes N° 1238 Santiago, Chile Telephone (56-2) 688 4502 Fax (56-2) 681 2219 Web site www.diprel.com E-mail info@diprel.enersis.cl External auditors Arthur Andersen - Langton Clarke Total number of shares 4,362,440 Subscribed and paid-in capital (ThCh$) 1,540,344 BOARD OF DIRECTORS Chairman Francisco Núñez Chief Procurement Officer of Enersis Participation of Enersis (direct and indirect) 100% Corporate purpose Purchase, sale, import and distribution of products related to electricity. Directors Pantaleón Calvo Ernesto Silva Director of Enersis Chief Executive Officer Eduardo López 5 5 5 5 / 4 5 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A 5 5 5 5 / 4 5 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A to alleviate the effects of the dismissals, somehow Sales Management Department and the Purchase guaranteeing sufficient levels of employability. and Contracts Management Department were created, thereby taking advantage of both units’ synergies in The internal restructuring of the company was everything in connection to bidding processes, contract carried out as a consequence of the creation of management, price negotiation and others. Enersis’ Supply Management Department. Thus the FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) Manso de Velasco REAL ESTATE PROJECTS ENEA The project has been consolidated strengthened by important elements, such as the formalization of urban soil use classification of 57 additional hectares west of Av. Américo Vespucio and the generation of important road developments in the neighborhood that evidently the project’s connectivity. SANTUARIO DEL VALLE During the year 2000, the Santuario del Valle project It corresponds to a real property development on a mainly consisted in the marketing of single-family 1,000 hectares area strategically located in West Santiago, residential lots of land and macro-lots, with reported sales borough of Pudahuel, in the vicinity of the International in the amount of US$43 million. Airport and integrated to important structural highways of the Metropolitan Region. At present, Phase I is being Insofar as macro land lots is concerned, the surface developed; it corresponds to the concept of Industrial and sold during 2000 rose to 150.8 hectares, a figure Business Park, notwithstanding the sale of other areas for that represents 88.2% of the land lots whose housing purposes. commercialization has concentrated on third parties’ In year 2000’s fiscal period, ENEA featured important development. progress in commercial terms and in the conduct of ifs As for single-family residential lots, the accumulated sales urban development works. Thus , ENEA was able to amount to 473 lots, a figure representing 85.4% of the commercialize over 30 hectares of land with associated total available in Sectors 1 through 6 of the First Stage of income in excess of US$10 million. the subdivision. To this respect, it is worthy to point out that during the third quarter of year 2000 the marketing of 68 lots corresponding to Sector 6 began. As for the general urban development works corresponding to the First Stage of Santuario del Valle, they feature a progress rate that exceeds 95%. TAPIHUE The Tapihue project contemplates properties corresponding to lands associated to the farms Tapihue, Amancay – lot B – and La Petaca. Said properties, Enea Project IDENTIFICATION OF THE COMPANY Corporate name Inmobiliaria Manso de Velasco S.A. Fax (56–2) 378 4702 Subscribed and paid-in capital (ThCh$) 5,848,651 BOARD OF DIRECTORS Type of company Closed Limited Liability Stock Company Tax register number 96,909,280-8 Address Av. Kennedy No 5454, Vitacura, Santiago Telephone (56–2) 378 4700 Web site www.mvelasco.cl E-mail gercom@mvelasco.enersis.cl External auditorsr Arthur Andersen - Langton Clarke Total number of shares 29.462.263 Participation of Enersis (direct and indirect) 100% Corporate purpose Buy, sell, parcel, subdivide, market and commercially operate, at any title, all types of real property, either on its own behalf or on behalf of third parties, invest the company’s funds in all kinds of assets, real property or securities. Chairman Emilio García Chief Diversification Officer of Enersis Directors Victor Jarpa Jorge Alé Diversification Manager of Enersis Chief Executive Officer Andrés Salas 7 7 5 5 / 6 5 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Santuario del Valle Project as a whole, involve an area of 7,302 hectares in the accumulated incomes in the amount of US$4.5 million borough of Til-Til, province of Chacabuco, Metropolitan during the year 2000. Region, and are classified as ZDUC (Zona de Desarrollo Urbano Condicionado) per the Santiago Metropolitan It is worth pointing out that during the year 2000 period Urban Development Plan. PROPERTY LEASE a property disinvestment process began caused by the restructuring and new strategic and business definition of Enersis. This way, the sale of important properties was carried out which yielded incomes in the amount of As part of its real estate business, Manso de Velasco US$1.7 million. manages a total of 47,892 m2 built, corresponding to buildings, stores and offices, which generated MANSO DE VELASCO FINANCIAL INFORMATION (Thousand Ch$ as of December 2000) 7 7 5 5 / 6 5 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Execution of this Annual Report Pursuant to General Rule N º 30 issued by the Superintendency of Securities and Insurance, the annual report herein was approved and signed by the members of the board of Directors of the Company. Alfredo Llorente Chairman Rafael Miranda Vice-chairman Ernesto Silva Director Luis Rivera Director Hernan Somerville Director José Fesser Director Eugenio Tironi Director Santiago, March 2, 2001 9 9 5 5 / 8 5 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Identification of Others Subsidiaries and Related Companies Distrilec Inversora S.A. Enersis de Argentina S.A. Enersis International Limited Corporate name Distrilec Inversora S.A. Type of company Foreing Limited Liability Stock Company Address San José Nº 140 (1076) Buenos Aires - Argentina Telephone (54-11) 4370 3700 Fax (54-11) 4381 0708 External auditors Arthur Andersen/ Pistrelli Díaz y Asoc. Corporate name Enersis de Argentina S.A. Type of company Foreing Limited Liability Stock Company Address Suipacha N° 1111 Piso 18, Buenos Aires, Argentina Telephone (54-1) 315 9959 Fax (54-1) 311 2317 External auditors Arthur Andersen/ Pistrelli Díaz y Asociados Corporate name Enersis International Limited Type of company Foreing Limited Liability Stock Company Address P.O. BOX 309, Ugland House, South Church St, Grand Cayman, Cayman Islands Telephone (345) 949 8066 Fax (345) 949 8080 External auditors Arthur Andersen Subscribed and paid-in capital (ThCh$) 291,130,604 Subscribed and paid-in capital (ThCh$) 77,937 Subscribed and paid-in capital (ThCh$) 192,744,152 Participation of Enersis (direct and indirect) 100% Corporate purpose Any activity related to energy or fuels. BOARD OF DIRECTORS Chairman José Palomo Vice-Chairman Juan Domínguez Adj. Chief Executive Officer of Enersis Director Leopoldo López Participation of Enersis (direct and indirect) 50.7% Participation of Enersis (direct and indirect) 100% Corporate purpose Participate on its own behalf or on behalf of third parties in the sold of shares of Edesur and Edenor. Corporate purpose Primarily finacial, performing any type of financial or investment activity. BOARD OF DIRECTORS BOARD OF DIRECTORS Chairman Enrique García Chief Executive Officer of Enersis Chairman Enrique García Chief Executive Officer of Enersis Vice-Chairman Rafael Fernández Directors Manuel Benites Mariano Grondona Jorge Ortúzar Marcelo Silva Horacio Babino Carlos Cuirolo Tadeo Perich Juan Verbitsky Sustituting Directors Santiago Daireaux Domingo Valdés Legal Counsel of Enersis Agustina Monferrán Mónica Diskin Jorge Casagrande Darío Lamanna Mario Lagrosa Antonello Tramonti Jorge Barros Pedro Aramburu Vice-Chairman Juan Domínguez Adj. Chief Executive Officer of Enersis Directors Domindo Valdés Legal Counsel of Enersis Mariano Grondona Alan Arntsen Betina Di Croce María Justo Sustituting Directors Martín Madrid Planinng & Control Executive Officer of Enersis Fernando Nadal Corp. Comunications Director of Enersis Manuel Benites Alberto López Business Executive Officer of Enersis Vacantes (3) 9 9 5 5 / 8 5 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Enersis Investment S.A. Electric Investment S.A. Corporate name Enersis Investment S.A. Type of company Foreing Limited Liability Stock Company Corporate name Electric Investment S.A. Type of company Foreing Limited Liability Stock Company Address Av. Samuel Lewis y Calle Nº 53, Edificio Omega, Mezzanine, Panamá, República de Panamá Address Av. Samuel Lewis y Calle Nº 53, Edificio Omega, Mezzanine, Panamá, República de Panamá Telephone (507) 263 5333 Fax (507) 263 6983 External auditors Arthur Andersen Telephone (507) 263 5333 Fax (507) 263 6983 External auditors Arthur Andersen Subscribed and paid-in capital (ThCh$) 291,883,141 Subscribed and paid-in capital (ThCh$) 16,579,077 Participation of Enersis (direct and indirect) 100% Corporate purpose Any activity related to energy or fuels. Participation of Enersis (direct and indirect) 100% Corporate purpose Any activity related to energy or fuels. BOARD OF DIRECTORS BOARD OF DIRECTORS Chairman Enrique García Chief Executive Officer of Enersis Chairman Enrique García Chief Executive Officer of Enersis Vice-Chairman Juan Domínguez Adj. Chief Executive Officer of Enersis Directors Domindo Valdés Legal Counsel of Enersis Vice-Chairman Juan Domínguez Adj. Chief Executive Officer of Enersis Directors Domindo Valdés Prieto Legal Counsel of Enersis Sustituting Directors Alberto López Business Executive Officer of Enersis Martín Madrid Planinng & Control Executive Officer of Enersis Fernando Nadal Corp. Comunications Director of Enersis 1 1 6 6 / 0 6 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Empresa Eléctrica de Panamá S.A. Interocean Development Inc. Corporate name Empresa Eléctrica de Panamá S.A. Corporate name Interocean Development Inc. Type of company Foreing Limited Liability Stock Company Type of company Foreing Limited Liability Stock Company Address Av. Samuel Lewis y Calle Nº 53, Edificio Omega, Mezzanine, Panamá, República de Panamá Address Av. Samuel Lewis y Calle Nº53, Edificio Omega, Mezzanine, Panamá, República de Panamá Telephone (507) 263 5333 Fax (507) 263 6983 External auditors Arthur Andersen Telephone (507) 263 5333 Fax (507) 263 6983 External auditors Arthur Andersen Subscribed and paid-in capital (ThCh$) 131,338,995 Subscribed and paid-in capital (ThCh$) 123,450,168 Participation of Enersis (direct and indirect) 99.6% Corporate purpose Any activity related to energy or fuels. Participation of Enersis (direct and indirect) 100% Corporate purpose Any activity related to energy or fuels. BOARD OF DIRECTORS BOARD OF DIRECTORS Chairman Enrique García Chief Executive Officer of Enersis Chairman Enrique García Chief Executive Officer of Enersis Vice-Chairman Juan Domínguez Adj. Chief Executive Officer of Enersis Directors Domindo Valdés Legal Counsel of Enersis Vice-Chairman Juan Domínguez Adj. Chief Executive Officer of Enersis Directors Domindo Valdés Legal Counsel of Enersis Sustituting Directors Alberto López Business Executive Officer of Enersis Martín Madrid Planinng & Control Executive Officer of Enersis Fernando Nadal Corp. Comunications Director of Enersis Sustituting Directors Alberto López Business Executive Officer of Enersis Martín Madrid Planinng & Control Executive Officer of Enersis Fernando Nadal Corp. Comunications Director of Enersis 1 1 6 6 / 0 6 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Inversiones Distrilima S.A. Corporate name Inversiones Distrilima S.A. Type of company Foreing Limited Liability Stock Company Luz de Bogotá S.A. Corporate name Luz de Bogotá S.A. Type of company Foreing Limited Liability Stock Company Address Tnte. César López Rojas Nº 201, Urbanización Maranga, San Miguel, Lima, Perú Address Carrera 7 Nº 71-52, Piso 15 Of. 1502, Bogotá, Colombia Investluz S.A. Corporate name Investluz S.A. Type of company Foreing Limited Liability Stock Company Address Av. Barao de Studart No 2917, Aldeota, Cep 60.127-900, Fortaleza, Ceará, Brasil Telephone (085) 216 1123 Fax (085) 216 1423 External auditors Arthur Andersen Telephone (51-1) 561 1604 Fax (51-1) 561 0174 External auditors Arthur Andersen Telephone (571) 312 2473 Fax (571) 312 2573 External auditors Arthur Andersen Subscribed and paid-in capital (ThCh$) 176,010,181 Participation of Enersis (direct and indirect) 44.2% Corporate purpose Any activity related to energy or fuels. BOARD OF DIRECTORS Chairman Andrés Regué Directors José Kindelán Chief Regulation Officer of Enersis Fernando Urbina Juan Vázquez Energy Business Director of Enersis Sustituting Directors Marcelo Llévenes Lucía Piedrahíta José Inostroza Lucio Rubio Subscribed and paid-in capital (ThCh$) 499,531,166 Subscribed and paid-in capital (ThCh$) 106,415,219 Participation of Enersis (direct and indirect) 46.5% Corporate purpose Participate in the capital stock of Coelce or in other companies in Brazil and abroad either as partner or stockholder. MANAGERS COMMITTEE (Without Board of Directors) Chairman Director Manuel Montero Vice-Chairman Financial Director Juan Garade Executive Officer Director Lucía de Souza Participation of Enersis (direct and indirect) 53.9% Corporate purpose Make investments in other companies, in special those related to the distribution and generation of electric energy. BOARD OF DIRECTORS Chairman José Kindelán Chief Regulation Officer of Enersis Directors Ricardo Alvial Chief Inv. & Risk Officer of Enersis José Hidalgo Alberto López Business Executive Officer of Enersis Fernando Urbina José Chueca Reynaldo Llosa Sustituting Directors José Alonso Narciso López Marciano Izquierdo Pablo Casado Walter Piazza Fernando Fort Vacante (1) 2 6 / 2 6 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Enersis S.A. and Subsidiaries Audited Financial Statements Audited Consolidated Financial Statements for the years ended December 31, 1999 and 2000. INDEX Accounts Inspector’s Report Report of Independent Accountants Consolidated Balance Sheets as of December 31, 1999 and 2000 Consolidated Statements of Income for the years ended December 31, 1999 and 2000 Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 1999 and 2000 Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 2000 Notes to the Consolidated Financial Statements Consolidated Management Analysis Consolidated Relevant Facts 64 65 66 68 69 70 72 132 142 Application of Constant Chilean Pesos The consolidated financial statements included herein have been restated for general price-level changes and expressed in constant Chilean pesos of December 31, 2000 purchasing power. 3 6 , s Report Accounts Inspector Pursuant to the provisions in law No. 18,046 on Limited Liability Stock Companies and in compliance with the mandate granted by the Ordinary Shareholders’ Meeting held on April 06, 2000, we have examined the Consolidated Financial Statements of Enersis S.A. for period between January 1 and December 31, 2000. Our assignment was focused on verifying, on a selecyive basis, the coincidence of the figures presented in the Financial Statements with the official records of the Company and its subsidiaries and to such and end we compared the figures presented in the ledger with the grouping and classificaton worksheets. To subsequently ascertain if these amounts which are the balances of accounts of the same nature match with those included in the Financial Statements, a revision which entailed no objections. Marcela Araya Accounts Inspector Marco Acevedo Accounts Inspector Santiago, January 19, 2001 5 5 6 6 / 4 6 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Report of Independent Accountants (Translation of a report originally issued in Spanish – See Note 2 to the consolidated financial statements) To the Shareholders of Enersis S.A.: We have audited the accompanying consolidated balance sheets of Enersis S.A. and Subsidiaries (the “Company”) as of December 31, 1999 and 2000, and the related consolidated statements of income, shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of the subsidiary Endesa – Chile S.A., whose total assets and revenues constitute 30 percent and 18 percent, respectively, of the related consolidated totals but were furnished with the report of other accountants of their audit of those statements. We conducted our audits in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Enersis S.A. and Subsidiaries as of December 31, 1999 and 2000, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles in Chile. Accounting practices used by the Company in preparing the accompanying consolidated financial statements conform with generally accepted accounting principles in Chile, but do not conform with accounting principles generally accepted in the United States. A reconciliation of consolidated net income and shareholders’ equity under accounting principles generally accepted in Chile to the corresponding amounts that would be reported in accordance with United States generally accepted accounting principles, except for the omissions, as allowed pursuant to Item 17 of SEC Form 20-F, of adjustments necessary to eliminate the effect of price-level changes and the translation of non-Chilean operations described in Notes 2 (c), is set forth in Note 31 to these financial statements. Cristián Bastián E. ARTHUR ANDERSEN – LANGTON CLARKE Santiago (Chile) January 30, 2001 (except for Notes 2 (a), 2 (c) and 31 for which the dates are February 23, 2001) 5 5 6 6 / 4 6 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Audited Consolidated Balance Sheets Translation of financial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2000, and thousands of US dollars) ASSETS Current Assets: Cash Time deposits Marketable securities Accounts receivable, net of allowance for doubtful accounts of ThCh$64,441,520 and ThCh$106,106,731 as of December 31, 1999 and 2000, respectively Notes receivable Other accounts receivable Amounts due from related companies Inventories Income taxes recoverable Deferred income taxes Prepaid expenses and other Other current assets 1999 ThCh$ As of December 31, 2000 ThCh$ 29,553,523 166,381,748 7,871,972 26,436,064 75,049,856 11,593,312 426,854,949 12,652,066 83,994,657 34,781,217 109,190,547 34,684,869 4,031,679 7,792,749 190,731,952 460,608,356 9,222,100 58,413,820 18,912,917 70,937,392 - 47,499,632 9,182,229 130,148,804 2000 ThUS$ 46,084 130,829 20,210 802,943 16,076 101,828 32,969 123,660 57,749 82,802 16,007 226,878 Total current assets 1,108,521,928 918,004,482 1,600,287 Property, plant and equipment, net 8,865,136,367 8,423,166,129 14,683,459 Other Assets: Investments in related companies Investments in other companies Long-term receivables Goodwill, net Negative goodwill, net Amounts due from related companies Intangibles Accumulated amortization Other assets Total other assets TOTAL ASSETS 162,497,486 123,339,346 82,412,492 1,240,521,104 (185,389,017) 86,032,954 56,939,246 (6,842,453) 113,484,638 148,690,335 127,319,553 44,726,193 1,264,102,774 (189,910,076) 139,607,534 56,610,640 (13,999,891) 140,144,865 259,200 221,946 77,968 2,203,613 (331,056) 243,367 98,685 (24,405) 244,304 1,672,995,796 1,717,291,927 2,993,623 11,646,654,091 11,058,462,538 19,277,369 The accompanying notes are integral part of these consolidated financial statements. 7 7 6 6 / 6 6 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Due to banks and financial institutions current portion Current portion of due to banks and financial institutions long -term Current portion of bonds payable Current portion of notes payable Dividends payable Accounts payable Notes payable Miscellaneous payables Amounts payable to related companies Accrued expenses Withholdings Income taxes payable Deferred income Deferred income taxes Other current liabilities 1999 ThCh$ As of December 31, 2000 ThCh$ 2000 ThUS$ 178,133,709 461,954,163 805,289 270,055,123 155,476,072 30,523,051 8,232,603 197,227,302 15,601,845 86,435,639 36,434,304 69,141,333 58,482,211 - 8,531,057 7,820,291 210,385,898 207,048,806 100,867,367 28,405,069 5,569,099 240,776,424 13,841,141 29,928,840 31,081,343 69,239,716 63,607,642 44,669,097 10,354,000 18,722,155 161,178,593 360,932 175,834 49,516 9,708 419,727 24,128 52,173 54,182 120,700 110,882 77,868 18,049 32,637 280,970 Total current liabilities 1,332,480,438 1,487,243,455 2,592,597 Long-term Liabilities: Due to banks and financial institutions Bonds payable Notes payables Accounts payable Amounts payable to related companies Accrued expenses Other long-term liabilities 2,465,216,323 1,676,474,846 261,231,618 48,985,304 1,165,953,887 128,934,586 64,091,452 1,812,844,436 1,648,857,553 221,616,694 27,280,956 1,019,144,155 119,080,880 108,639,266 3,160,193 2,874,327 386,327 47,557 1,776,596 207,585 189,382 Total long-term liabilities 5,810,888,016 4,957,463,940 8,641,966 Minority interest 3,771,786,095 3,513,154,913 6,124,213 Commitments and Contingencies Shareholders’ Equity: Paid-in capital, no par value Additional paid-in capital – share premium Other reserves Retained earnings Net income (loss) for the year 417,359,942 25,321,471 24,390,158 346,260,160 (81,832,189) 707,398,979 31,423,970 7,266,721 264,427,970 90,082,590 1,233,154 54,779 12,668 460,957 157,034 Total shareholders’ equity 731,499,542 1,100,600,230 1,918,592 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 11,646,654,091 11,058,462,538 19,277,369 7 7 6 6 / 6 6 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Audited Consolidated Statements of Income (Translation of financial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2000, and thousands of US dollars) Operating Income: Sales Cost of sales Gross profit Administrative and selling expenses 1999 ThCh$ Years ended December 31, 2000 ThCh$ 2000 ThUS$ 2,377,629,141 (1,671,970,549) 705,658,592 (256,244,645) 2,589,957,068 (1,754,706,541) 835,250,527 (314,736,350) 4,514,873 (3,058,845) 1,456,028 (548,656) Operating income 449,413,947 520,514,177 907,372 Non-operating Income and Expense: Interest income Equity participation in income of related companies Other non-operating income Equity participation in losses of related companies Amortization of goodwill Interest expense Other non-operating expenses Price-level restatement, net 108,928,518 1,931,390 329,674,186 (310,726) (54,902,126) (465,783,351) (193,192,052) (145,403,667) 69,836,856 4,282,246 444,670,257 (4,249,486) (67,531,576) (470,882,090) (111,917,062) (23,740,790) 121,741 7,465 775,160 (7,408) (117,723) (820,853) (195,096) (41,385) Non-operating expense, net (419,057,828) (159,531,645) (278,099) Income before income taxes, minority interest and amortization of negative goodwill Less: Income taxes Income before minority interest and amortization of negative goodwill Minority interest 30,356,119 (89,252,431) 360,982,532 (137,790,160) 629,273 (240,199) (58,896,312) (59,034,607) 223,192,372 (173,269,639) 389,074 (302,048) Income before amortization of negative goodwill Amortization of negative goodwill (117,930,919) 36,098,730 49,922,733 40,159,857 87,026 70,008 NET INCOME (LOSS) FOR THE YEAR (81,832,189) 90,082,590 157,034 The accompanying notes are integral part of these consolidated financial statements. 9 9 6 6 / 8 6 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Audited Consolidated Statements of Changes in Shareholders’ Equity (Expressed in thousands of historical Chilean pesos, except as stated) Number of shares Paid-in capital (in thousands) ThCh$ Additional paid-in capital ThCh$ Other reserves ThCh$ Retained earnings ThCh$ Net income (loss) for the Year ThCh$ Total ThCh$ 6,800,000 388,522,988 23,571,916 22,570,979 259,203,984 90,093,175 783,963,042 - - - - - - - - - - - - (27,200,000) 90,093,175 (90,093,175) - 10,101,598 612,870 586,845 8,619,326 - - - - - - (2,633,340) 2,770,796 - - - - - - - - (27,200,000) 19,920,639 (2,633,340) 2,770,796 (78,158,729) (78,158,729) As of January 1, 1999 Transfer of prior year income to retained earnings Dividends Price-level restatement of capital Changes in equity of affiliates Cumulative translation adjustment Net loss for the year As of December 31, 1999 6,800,000 398,624,586 24,184,786 23,295,280 330,716,485 (78,158,729) 698,662,408 As of December 31, 1999 (1) 6,800,000 417,359,942 25,321,471 24,390,158 346,260,160 (81,832,189) 731,499,542 As of January 1, 2000 6,800,000 398,624,586 24,184,786 23,295,280 330,716,485 (78,158,729) 698,662,408 Transfer of prior year income to loss to retained earnings Price-level restatement of capital Changes in equity of affiliates Cumulative translation adjustment - - - - Issuance of shares Net income for the year 1,491,020 286,758,950 6,035,445 - - - - - - - - (78,158,729) 78,158,729 - 22,015,443 1,203,739 1,094,879 11,870,214 - - - - (18,382,462) 1,259,024 - - - - 36,184,275 (18,382,462) 1,259,024 292,794,395 90,082,590 90,082,590 - - - - As of December 31, 2000 8,291,020 707,398,979 31,423,970 7,266,721 264,427,970 90,082,590 1,100,600,230 (1) Restated in thousands of constant Chilean pesos as of December 31, 2000. 9 9 6 6 / 8 6 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Audited Statement of Consolidated Cash Flows (Translation of financial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2000, and thousands of US dollars) Cash flows from operating activities: Net income (loss) for the year Gain (losses) from sales of assets: Gain on sales of property, plant and equipment Gain on sale of investments Charges (credits) to income which do not represent cash flows: Depreciation Amortization of intangibles Write-offs and accrued expenses Equity participation in income of related companies Equity participation in losses of related companies Amortization of goodwill Amortization of negative goodwill Price-level restatement Other credits to income which do not represent cash flows Other charges to income which do not represent cash flows Changes in assets which affect cash flows: Decrease (increase) in trade receivables Decrease in inventory Decrease (increase) in other assets Changes in liabilities which affect cash flows: Increase in accounts payable associated with operating results Increase in interest payable Increase (decrease) in income tax payable Increase in other accounts payable associated with non-operating results Net increase (decrease) in value added tax and other similar taxes payable Income attributable to minority interest 1999 ThCh$ Years ended December 31, 2000 ThCh$ 2000 ThUS$ (81,832,189) 90,082,590 157,034 5,130,193 - (59,228,834) (195,971,285) (103,249) (341,622) 350,368,395 29,322,948 69,490,062 (1,931,390) 310,726 54,902,126 (36,098,730) 145,403,667 (172,832,518) 35,520,039 377,258,837 32,085,813 88,649,669 (4,282,246) 4,249,486 67,531,576 (40,159,857) 23,740,790 (46,684,910) 106,729,116 657,646 55,933 154,536 (7,465) 7,408 117,723 (70,008) 41,385 (81,382) 186,053 33,416,561 36,268,652 (143,116,747) (103,014,395) 21,758,068 (50,288,516) (179,577) 37,929 (87,664) (41,670,579) 200,246,681 16,452,583 (2,582,870) 94,122,598 10,804,371 (4,503) 164,077 18,834 128,790,287 (79,220,249) (138,099) (104,606,789) 59,034,607 (1,574,103) 173,269,639 (2,744) 302,048 Net cash flows provided by operating activities 582,568,585 507,275,288 884,294 Continue 1 1 7 7 / 0 7 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Audited Statement of Consolidated Cash Flows (Translation of financial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2000, and thousands of US dollars) Cash flows from financing activities: Issuance of shares Proceeds from the issuance of debt Proceeds from bond issuances Other loans from related parties Proceeds from other loans obtained from related companies Other sources of financing Dividends paid Payment of debt Payment of bonds Payment of loans obtained from related companies Payment of expenses from bond issuances Payment of other loans from related companies Other disbursements for financing 1999 ThCh$ Years ended December 31, 2000 ThCh$ 2000 ThUS$ - 3,037,056,805 374,326,557 27,546,745 295,993,584 1,506,890,805 49,474,264 - 1,088,353,987 143,816,846 (29,143,355) (3,177,565,896) - (83,061,575) (115,064,427) - (503,046,047) - 42,246,795 (141,545,504) (1,999,634,645) (198,096,865) (78,941,069) - (69,713,083) (173,476,321) 515,983 2,626,847 86,245 - - 73,646 (246,745) (3,485,810) (345,327) (137,612) - (121,525) (302,408) Net cash provided by (used in) financing activities 763,219,640 (766,802,039) (1,336,707) Cash flows from investing activities: Proceeds from sales of property, plant and equipment Sale of investment in related companies Proceeds from sales of other investments Proceeds from loans obtained from related parties Other loans received from related companies Other receipts from investments Additions to property, plant and equipment Long-term investments Investment in financial instruments Payment of capitalized interest Other loans granted to related companies Other investment disbursements 4,784,878 - 42,814,996 - - 2,094,029 (376,417,124) (1,210,857,679) (42,810,409) (2,935,133) (50,811,969) (41,528,200) 132,051,800 488,628,855 - 3,630,809 15,402 202,197,389 (323,005,759) (304,288,269) (1,789,138) - - (31,124,976) 230,196 851,789 - 6.329 27 352,475 (563,071) (530,442) (3,119) - - (54,258) Net cash provided by (used) in investing activities (1,675,666,611) 166,316,113 289,926 Positive (negative) net cash flow for the year (329,878,386) (93,210,638) 162,487 Effect of price-level restatement on cash and cash equivalents (49,216,926) 3,875,434 6,756 Net increase (decrease) in cash and cash equivalents (379,095,312) (89,335,204) (155,731) Cash and cash equivalents beginning of year 582,139,576 202,370,624 352,777 CASH AND CASH EQUIVALENTS END OF YEAR 203,044,264 113,035,420 197,046 1 1 7 7 / 0 7 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Notes to the Audited Consolidated Financial Statements (Translation of financial statements originally issued in Spanish – See Note 2 (Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2000, and thousands of US dollars) NOTE 1 DESCRIPTION OF BUSINESS: Enersis S.A. (the “Company”) is registered in the Securities Register under No. 0175 and is regulated by the Chilean Superintendency of Securities and Insurance (the “SVS”). The Company issued publicly-registered American Depositary Receipts in 1993 and 1996. Enersis S.A. is a reporting company under the United States Securities and Exchange Act of 1934. The Company’s subsidiaries, Chilectra S.A., Compañía Eléctrica del Río Maipo S.A. (Río Maipo S.A.), Empresa Nacional de Electricidad S.A. (Endesa S.A.) and Aguas Cordillera S.A. are registered in the Securities Register under No.’s 0321, 0345, 0114 and 0369, respectively. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a) General: The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in Chile and the regulations established by the SVS (collectively “Chilean GAAP”), and the specific corporate regulations of Law No. 18.046, related to the formation, registration and liquidation of Chilean corporations, among others. Certain accounting practices applied by the Company that conform with generally accepted accounting principles in Chile do not conform with generally accepted accounting principles in the United States (“US GAAP”). Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year’s presentation. The preparation of financial statements in conformity with Chilean GAAP, along with the reconciliation to US GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying financial statements reflect the consolidated results of operations of Enersis S.A. and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Investments in companies in the development stage are accounted for using the equity method, except that income or losses are included directly in equity instead of being reflected in the Company’s consolidated statement of income. The Company consolidates the financial statements of companies in which it controls over 50% of the voting shares, which are the following: 3 3 7 7 / 2 7 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A Company Name Chilectra S.A. Compañía Eléctrica del Río Maipo S.A. Synapsis S.A. Inmobiliaria Manso de Velasco S.A. Distribuidora de Productos Eléctricos S.A. Endesa Chile S.A. (1) Enersis de Argentina S.A. Enersis International Ltd. Inversiones Distrilima S.A. Empresa Distribuidora Sur S.A. (Edesur) Empresa Eléctrica de Panamá S.A. Enersis Investment S.A. Electric Corporation Inc. Panaguide Corporation Inc. Interocean Developments Inc. Enersis de Buenos Aires S.A. Aguas Cordillera S.A. Aguas Puerto S.A. Luz de Bogotá S.A. (2) Cerj (2) Investluz (2) Compañía Americana de Multiservicios S.A. Electric investment (1) Includes certain majority owned companies not presented herein. Percentage participation as of December 31, 1999 Total 72.56 83.74 99.99 100.00 100.00 59.98 100.00 100.00 47.87 50.99 94.78 100.00 100.00 100.00 100.00 99.98 100.00 72.00 39.70 37.41 36.79 100.00 - Direct 95.91 98.38 99.99 99.99 99.93 59.98 99.99 100.00 14.79 16.02 80.09 100.00 - - 100.00 - - - - 7.99 - 99.99 100.00 2000 Indirect 2.05 0.01 0.01 0.00 0.06 - 0.00 - 39.14 48.27 19.51 - - - - - - - 44.21 49.39 46.50 0.00 - Total 97.97 98.40 99.99 100.00 100.00 59.98 100.00 100.00 53.93 64.29 99.61 100.00 - - 100.00 - - - 44.21 57.38 46.50 100.00 100.00 (2) The Company obtained shareholder agreements dated June 25, 1999, from Endesa Internacional, the majority shareholder of these companies, giving the Company the right to elect a majority of the Board of Directors. The Superintendency of Securities and Insurance were notified on June 28, 1999. (b) Periods covered: These financial statements reflect the Company’s financial positions as of December 31, 1999 and 2000, and the results of its operations, the changes in its shareholders’ equity and its cash flows for the years ended December 31, 1999 and 2000. (c) Constant currency restatement: The cumulative inflation rate in Chile as measured by the Chilean Consumer Price Index (“CPI”) for the three-year period ended December 31, 2000 was approximately 12.04%. Chilean GAAP requires that the financial statements be restated to reflect the full effects of loss in the purchasing power of the Chilean peso on the financial position and results of operations of reporting entities. The method described below is based on a model that enables calculation of net inflation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power of local currency. The model prescribes that the historical cost of all non-monetary accounts be restated for general price-level changes between the date of origin of each item and the year-end. The financial statements of the Company have been price-level restated in order to reflect the effects of the changes in the purchasing power of the Chilean currency during each year. All non-monetary assets and liabilities, all equity accounts and income statement accounts have been restated to reflect the changes in the CPI from the date they were acquired or incurred to year-end (see also Note 4). 3 3 7 7 / 2 7 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A The purchasing power gain or loss included in net income reflects the effects of Chilean inflation on the monetary assets and liabilities held by the Company. The restatements were calculated using the official consumer price index of the National Institute of Statistics and based on the “prior month rule,” in which the inflation adjustments are based on the CPI at the close of the month preceding the close of the respective period or transaction. This index is considered by the business community, the accounting profession and the Chilean government to be the index that most closely complies with the technical requirement to reflect the variation in the general level of prices in Chile, and consequently it is widely used for financial reporting purposes. The values of the Chilean consumer price indices used to reflect the effects of the changes in the purchasing power of the Chilean peso (“price-level restatement”) are as follows: November 30, 1999 November 30, 2000 Change over Previous November 30, 2.6% 4.7% Index 102.04 106.82 By way of comparison, the actual values of the Chilean consumer price indices as of the balance sheet dates are as follows: December 31, 1999 December 31, 2000 Change over previous December 31, 2.3% 4.5% Index 102.31 106.94 The above-mentioned price-level restatements do not purport to represent appraisal or replacement values and are only intended to restate all non-monetary financial statement components in terms of local currency of a single purchasing power and to include in net income or loss for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of inflation. Index-linked assets and liabilities Assets and liabilities that are denominated in index-linked units of account are stated at the year-end values of the respective units of account. The principal index-linked unit used in Chile is the Unidad de Fomento (“UF”), which is adjusted daily to reflect the changes in Chile’s CPI. Certain of the Company’s investments are linked to the UF. As the Company’s indexed liabilities exceed its indexed assets, the increase in the index results in a net loss on indexation. Values for the UF are as follows (historical Chilean pesos per UF): December 31, 1999 December 31, 2000 Comparative financial statements Ch$ 15,066.96 15,769.92 For comparative purposes, the historical December 31, 1999 and 2000 consolidated financial statements and their accompanying notes have been presented in constant Chilean pesos as of December 31, 2000. Amounts previously presented in constant Chilean pesos as of each balance sheet date have been adjusted by the percentage changes in the CPI to December 31, 2000, as follows: Year 1999 Change in Index 4.7% (1) (1) Equivalent to the amounts for 1999 multiplied by the change in the CPI for 2000. 5 5 7 7 / 4 7 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A This updating does not change the prior periods’ statements or information in any way except to update the amounts to constant Chilean pesos of similar purchasing power. Convenience translation to U.S. dollars The financial statements are stated in Chilean pesos. The translations of Chilean pesos into US dollars are included solely for the convenience of the reader, using the observed exchange rate reported by the Chilean Central Bank as of December 31, 2000 of Ch$ 573.65 to US$ 1.00. The convenience translations should not be construed as representations that the Chilean peso amounts have been, could have been, or could in the future be, converted into US dollars at this or any other rate of exchange. (d) Assets and liabilities in foreign currencies: Assets and liabilities denominated in foreign currencies are detailed in Note 18. These amounts have been stated at the observed exchange rates reported by the Central Bank of Chile as of each year-end as follows: United States dollar (Observed) British pound sterling Argentine peso Colombian peso New Peruvian sol Brazilian real Italian lira Japanese yen Euro German Marc Pool Unit (IBRD) Unidad de Fomento (UF) IBRD unit of account (BID) (e) Time deposits: Symbol used 1999 Ch$ 2000 Ch$ US$ £ $ Arg $ Col Soles Rs Lira ¥ € DM UP UF UC 530.07 855.92 530.07 0.28 151.04 295.80 0.28 5.17 - 272.47 7,135,091.92 15,066.96 819.34 573.65 856.58 573.65 0.26 162.69 294.33 0.28 5.01 538.84 275.50 7,230,629.88 15,769.92 850.92 Time deposits are presented at cost plus accrued interest and UF indexation adjustments, as applicable. (f) Marketable securities: Marketable securities consist of short-term highly liquid Chilean Government debt securities valued at cost plus accrued interest, which approximates market value. (g) Investments in related companies: Investments in related companies are included in “Other assets” using the equity method. This valuation method recognizes in income the Company’s equity in the net income or loss of each investee on the accrual basis (Note 10). Investments in foreign affiliates are recorded in accordance with Technical Bulletin No.64 of the Chilean Association of Accountants (Technical Bulletin No. 51 in 1997). (h) Allowance for doubtful accounts: Accounts receivable are classified as current or long-term, depending on their collections terms. Current and long-term accounts receivable are presented net of an allowance for doubtful accounts of ThCh$64,441,520 and ThCh$106,106,731 as of December 31, 1999 and 2000, respectively. 5 5 7 7 / 4 7 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A (i) Inventories: Inventory of materials in transit and operation and maintenance materials, are valued at the lower of price-level restated cost or net realizable value. The cost of real estate projects under development, included in inventory, include the cost of land, demolition, urbanizing, payments to contractors and other direct costs. The costs and revenues of construction in progress are accounted for under the completed contract method in accordance with Technical Bulletin No. 39 of the Chilean Association of Accountants and are included in current assets as their completion is expected in the short-term. (j) Property, plant and equipment: Property, plant and equipment are shown at contributed amounts or cost, as appropriate, plus price-level restatement. In 1986, an increase based upon a technical appraisal of property, plant and equipment was recorded in the manner authorized by the SVS in Circulars No.’s 550 and 566 dated October 15 and December 16, 1985, respectively, and Communication No. 4790, dated December 11, 1985. Property, plant and equipment received in leasing which qualify as capital leases, are accounted as acquisitions, recording the total of the lease obligation and interest on an accrual basis. Depreciation expense is calculated on the revalued balances using the straight-line method over the estimated useful lives of the assets. (k) Power installations financed by third parties: As established by D.F.L. 1 of the Ministry of Mines dated September 13, 1982, power installations financed by third parties are treated as reimbursable contributions. As such, the installations constructed using this mechanism form part of the Company’s plant and equipment. Such installations made prior to D.F.L. 1 are deducted from Plant and equipment and their depreciation is charged to Power installations financed by third parties. (l) Intangibles, other than goodwill: Intangibles, other than goodwill, correspond mainly to easements, parent company contributions, and rights for the use of telephone lines and are amortized over 20 to 40 years in accordance with Technical Bulletin No.55 of the Chilean Association of Accountants. (m) Severance indemnity: The severance indemnity that the Company is obliged to pay to its employees under collective bargaining agreements is stated at the present value of the benefit under the vested cost method, discounted at 9.5% and assuming an average employment span which varies based upon years of service with the Company. (n) Operating income: Energy supplied and unbilled at each year-end is valued at the selling price using the current rates and has been included in revenue from operations. The amount is presented in current assets as trade receivables. The corresponding cost is included in cost of operations. 7 7 7 7 / 6 7 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A (o) Deferred income taxes: In accordance with circular No. 986 issued in 1991 by the SVS and Technical Bulletin No.41 issued by the Chilean Association of Accountants, the Company records the effects of deferred taxes resulting from significant timing differences that will not be fully offset when they reverse by similar new differences. In accordance with circular No. 1466 issued on January 27, 2000 by the SVS, deferred taxes are presented in accordance with BT’s No.’s 60 and 68 of the Chilean Association of Accountants, which became effective as of January 1, 2000. (p) Accrued vacation expense: In accordance with Technical Bulletin No.47 issued by the Chilean Association of Accountants, employee vacation expenses are recorded on the accrual basis. (q) Reverse repurchase agreements: Reverse repurchase agreements are included in “Other current assets” and are stated at cost plus interest and indexation accrued at year end, in conformity with the related contracts. (r) Cash equivalents: The consolidated statement of cash flows have been prepared in accordance with the indirect method. Investments considered as cash equivalents, as indicated in point 6.2 of Technical Bulletin No. 50 issued by the Chilean Association of Accountants, include time deposits, investments in fixed income securities classified as marketable securities, repurchase agreements classified as other current assets, and other balances classified as other accounts receivable with maturities less than 90 days. For classification purposes, cash flows from operations include collections from clients and payments to suppliers, payroll and taxes. (s) Forward foreign exchange contracts: As of December 31, 2000, the company has forward contracts with various financial institutions, which are recorded according to Technical Bulletin No. 57 of the Chilean Association of Accountants. (t) Goodwill and negative goodwill: Goodwill and negative goodwill are determined according to Circular No. 368 of the SVS. Amortization is determined using the straight-line method, considering the nature and characteristic of each investment, foreseeable life of the business and investment return, and does not exceed 20 years. (u) Pension and post-retirement beneftis: Pension and post-retirement benefits are recorded in accordance with the respective Collective Bargaining Contracts of the employees based on the actuarially determined projected benefit obligation. (v) Bonds: Bonds payable are recorded at the face value of the bonds. The difference between the face value and the placement value, equal to the premium or discount, is deferred and amortized over the term of the bonds. (w) Reclassifications: Certain amounts in the prior years’ financial statements have been reclassified in order to conform with the current year’s method of presentation. 7 7 7 7 / 6 7 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A NOTE 3 CHANGE IN ACCOUNTING PRINCIPLES: (a) Deferred taxes: In accordance with Technical Bulletin’s No. 60 and 68 issued by the Chilean Association of Accountants and Circular No. 1,466 issued by the SVS, the Company has recorded the tax effects of temporary differences on a prospective basis beginning January 1, 2000. The effect of accounting for deferred taxes according to criteria mentioned in the Technical Bulletins, resulted in the recognition in assets and liabilities complementary accounts amounting to ThCh$5,362,147 and ThCh$20,840,742, respectively, which are presented in the balance sheet as current and non-current, depending on the amortization period that management has determined. The amortization of the accumulated balances at the beginning of the period of the complementary assets and liabilities resulted in a net credit to income of ThCh$13,172. In addition, the credit to earnings for new temporary differences generated during the period amounted to ThCh$3,950,449 (See Note 17.), which has been recorded in the Statement of Income under the item “Income taxes”. (b) Concession contracts: As of January 1, 2000, the subsidiaries “Autopista del Sol S.A.” and “Autopista Los Libertadores S.A.”, adopted Technical Bulletin No. 67 of the Chilean Association of Accountants, which defines the accounting treatment of concession contracts. The main effects of the application of these rules are related with determining the cost of the complementary works under the depreciation method, and the recognition of revenues from fares and services. NOTE 4 PRICE-LEVEL RESTATEMENT: The charge to income for price-level restatement as of each year-end is as follows: Credits (charges) to income for the restatement of: Shareholders’ equity Property, plant and equipment Other assets Current and long-term liabilities Minority interest Foreign exchange Indexation Net charges for price-level restatement of balance sheet accounts Price-level restatement of the income statement accounts As of December 31, 1999 ThCh$ 2000 ThCh$ (20,856,909) 68,172,528 59,368,143 (18,284,063) (20,098,487) (194,941,336) (18,027,018) (36,184,275) 96,682,710 83,246,359 (17,719,403) (24,983,688) (62,867,911) (59,342,192) (144,667,142) (21,168,400) (736,525) (2,572,390) Net charge to income (145,403,667) (23,740,790) 9 9 7 7 / 8 7 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A NOTE 5 TIME DEPOSITS: Time deposits as of each year-end are as follows: Financial Institution ABN Amro Bank American Express Ahorromás Banco Alfa Banco Bilbao Vizcaya Banco Bozano Banco Bozano Simonsen Banco Bradesco Banco CCF-Brasil-Commodities Banco Colpatria Banco Continental Banco Cooperativo Banco Crédito del Perú Banco de Bogotá Banco de Chile – Nueva York Banco do Estado do Ceará Banco Galicia Banco Galicia Banco Ganadero Banco HSBC-Bamerindus Banco Itau – Brasil Banco Liberal – Perú Banco Provincia de Buenos Aires Annual Rate % 12.50% - - 1.28% 6.70% - - 15.00% 1.28% 12.51% - - 6.50% 13.00% - 14.52% 11.00% - 12.24% 12.00% 1.28% 1.28% - Scheduled Maturity Jan 02, 2001 - - Jan 01, 2001 Jan 26, 2001 - - Jan 01, 2001 Jan 01, 2001 Jan 02, 2001 - - April 14, 2001 Jan 02, 2001 - Jan 01, 2001 Jan 01, 2001 - Jan 06, 2001 Jan 01, 2001 Jan 01, 2001 Jan 01, 2001 - As of December 31, 2000 ThCh$ 1999 ThCh$ - 12,255,167 385,041 - 48,617,314 869,399 1,000,451 1,918,060 1,294,071 3,827,793 4,003,634 16,820 - 93,523 490,523 1,597,661 1,698,636 3,917,154 - 2,963,305 635,935 283 5,100,293 2,004,654 - - 598,756 2,391,547 - - 1,316,594 664,274 3,872,919 - - 20,072 344,977 - 956,292 2,190,195 - 16,131,019 2,770,835 2,818 308,534 - 9 9 7 7 / 8 7 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A Financial Institution Banco Popular Banco Río de la Plata Banco Río de la Plata Banco Río de la Plata Banco Río de la Plata Banco Safra Banco Santander Banco Santander Banco Santander Banco Santiago Banco Sudameris Banco Terraquemada Bancosur – Perú Bank Boston Bank Boston Bank Boston Bank Boston Bank Boston Caja de Ahorro Pesos Caja de Ahorro Dolares Caja de Ahorro Pesos Chase Manhattan Bank Citibank N.A. Citibank N.A Citibank N.A Citibank N.A Citiliquid Reserves-NY Corfivalle Fiduciaria Banco de Bogotá Fiduciaria BanColombia Fiduciaria de Crédito Fiduciaria Santander Fiduciaria Santander Fiduciaria Cititrust Fiducolombia Fiducredito Fiduganadero Fiduoccidente ING Barings Plazo fijo Banco Roberts Las Villas Liberal Perú Standard chareted- soles Unibanco Wiese-Perú Total Annual Rate % - 11.00% 8.69% 12.25% - - 6.00% - - - 12.93% 12.29% - 0.37% 16.36% 1.17% 1.17% 1.28% 13.38% 3.00% 3.00% 1.28% 12.30% 6.70% 5.65% 12.73% 6.65% 12.89% 13.11% 14.81% 13.29% 12.22% 9.11% 11.16% 11.00% 11.23% 12,57% 12.68% - 13.61% 13.00% - - - 9.25% Scheduled Maturity - Jan 01, 2001 Jan 02, 2001 Jan 29, 2001 - - Jan 01, 2001 - - - Mar 07, 2001 Jan 02, 2001 - Jan 02, 2001 Jan 01, 2001 Aug 27, 2001 Jan 30, 2001 Jan 01, 2001 Jan 01, 2001 Jan 31, 2001 Jan 31, 2001 Jan 01, 2001 Jan 01, 2001 Jan 01, 2001 Jan 01, 2001 Jan 29, 2001 Jan 01, 2001 Jan 02, 2001 Jan 02, 2000 Jan 02, 2001 Jan 02, 2001 Jan 02, 2001 Jan 31, 2001 Jan 02, 2001 Jan 31, 2001 Jan 01, 2001 Jan 02, 2001 Jan 02, 2001 - Jan 11, 2001 Jan 02, 2001 - - - Jan 01, 2001 As of December 31, 2000 ThCh$ 1999 ThCh$ 612,215 203,958 231,373 1,078,814 6,871,258 155,096 2,214,240 3,377,451 2,093,780 263,084 3,536,776 - 5,550,431 1,418,673 178,681 3,760,105 - - - - - 1,542,162 4,087,352 105,470 1,948,641 6,537,156 - 1,227,015 11,727,932 1,947,706 829,328 1,249,726 5,383,457 1,818,908 213,430 - - - 768,887 - 799,702 933,174 425 283,215 2,747,064 - 1,026,834 30,271 5,265,378 - - 456,451 - - - 5,635,704 681,942 - 449,945 668,729 1,893,001 69,861 1,739,156 3,194 750 1,553 650,519 9,187,591 74,672 192,717 5,765,359 3,237,096 2,704,080 430 437 839 219 80,311 1,013 574 89,476 127 3,958 1,264,586 155,689 - - - 143,908 166,381,748 75,049,856 1 1 8 8 / 0 8 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A NOTE 6 MARKETABLE SECURITIES: Marketable securities as of each year-end are as follows: Financial Institution Security Empresa Eléctrica de Melipilla S.A. Cía de Teléfonos de Chile S.A. C.G.E. S.A. Chilectra S.A. Citicorp Chile de Fondos Mutuos S.A. National Treasury Banco Nazionale de Paris Banco Roberts Banco Nazionale del Lavoro Bank Boston Banco Santander Stocks Stocks Stocks Stocks Mutual Funds Treasury Documents Mutual Funds Mutual Funds Mutual Funds Mutual Funds Mutual Funds Total NOTE 7 INVENTORIES: As of December 31, 2000 ThCh$ 1999 ThCh$ 1,864 1,157 306 63,692 492,166 - 2,843,765 2,892,869 - - 1,576,153 1,830 307 1,159 1,276 - 116,497 - 1,293,296 4,123,799 5,460,497 594,651 7,871,972 11,593,312 Inventories include the following items and are presented net of a provision for obsolescence amounting to ThCh$6,800,619 and ThCh$6,254,607 as of December 31, 1999 and 2000, respectively: Real estate under development Materials in transit Operation and maintenance materials Computer equipment Other As of December 31, 1999 ThCh$ 50,620,684 3,926,072 52,955,012 89,356 1,599,423 2000 ThCh$ 30,321,108 2,674,537 29,309,364 150,816 8,481,567 Total 109,190,547 70,937,392 1 1 8 8 / 0 8 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A NOTE 8 PROPERTY, PLANT AND EQUIPMENT: The composition of property, plant and equipment as of each year-end is as follows: Land Buildings and infrastructure Distribution and transmission lines and public lighting Less: third party contributions Sub-total As of December 31, 1999 ThCh$ 2000 ThCh$ 143,465,160 132,077,115 5,300,248,691 2,803,267,125 (51,066,132) 8,052,449,684 4,247,607,736 3,789,721,641 (68,350,232) 7,968,979,145 Machinery and equipment 2,690,954,853 2,629,787,825 Work in progress Construction materials Equipment in transit Sub-total Technical appraisal 403,380,126 275,599,035 12,221,624 311,400,668 80,697,481 18,879,207 691,200,785 410,977,356 590,712,007 872,189,698 Total property, plant and equipment 12,168,782,489 12,014,011,139 Less: accumulated depreciation (3,303,646,122) (3,590,845,010) Total property, plant and equipment, net 8,865,136,367 8,423,166,129 The depreciation charged to income amounted to ThCh$350,368,395 and ThCh$377,258,837 for the years ended December 31, 1999 and 2000, respectively. NOTE 9 OTHER CURRENT ASSETS: Other current assets as of each year-end are as follows: Forward contracts (1) Guarantees and indemnities Deferred expenses Post-retirement benefits Deposits for commitments and guarantees Suppliers fines and payments Investment projects Other Reverse repurchase agreements (2) As of December 31, 1999 ThCh$ 2000 ThCh$ 161,412,692 3,031,840 8,236,524 626,725 2,038,583 5,018,714 - 6,066,258 4,300,616 112,435,400 1,012,488 6,270,753 834,009 2,762,680 94,752 2,871,528 3,867,194 - Total 190,731,952 130,148,804 3 3 8 8 / 2 8 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A (1) As of December 31, 2000, the nominal values of forward contracts are the following: Rights US$196,000,000 Obligations UF 6,978,258 (2) The details of reverse repurchase agreements as of December 31, 1999 and 2000 are as follows: Issuer Financial Instrument Agreement Date Maturity Date Market Value at Purchase Date ThCh$ Banco Central Banco Central Banco Central Banco Central Banco BBVA Banco del Estado Banco Santander Banco Santander Banco Santiago Total P.R.B.C. P.C.D. P.C.D P.T.F. P.D.B.C. P.R.C. P.R.C. L.H. P.C.D Dec. 1999 Dec. 1999 Dec. 1999 Dec. 1999 Dec. 1999 Dec. 1999 Dec. 1999 Dec. 1999 Dec. 1999 Jan. 2000 Jan. 2000 Jan. 2000 Jan. 2000 Jan. 2000 Jan. 2000 Jan. 2000 Jan. 2000 Jan. 2000 572,713 489 2,763 87,100 1,968,046 39,786 17,335 767,976 839,903 4,296,111 4,300,616 Balance ThCh$ 573,645 489 2,767 87,170 1,968,833 39,823 17,393 770,509 839,987 Currency or Index Ch$ Ch$ Ch$ Ch$ Ch$ Ch$ Ch$ Ch$ Ch$ NOTE 10 INVESTMENT IN RELATED COMPANIES: a. Investments as of each year-end are as follows: Related Companies Administradora Proyecto atacama Atacama Finance Co. Autopista Los Libertadores S.A. (1) Cemsa Cia. De Interconexion Energetica S.A. Compañia Electrica Tal Tal Ltda. Consorcio Ing. B y R Ingendesa Ltda. Distrilec Inversora S.A. Electrogas S.A. Energex Co. Gasoducto Atacama Ltda. Gasoducto Cuenca Norteste ltda. Inversiones electricas Quillota S.A. Inversiones Electrogas S.A. Nopel Ltda. Sacme Endesa market place Transquillota Ltda. Percentage owned Number of Shares % 50.00 50.00 - 45.00 45.00 - 50.00 51.50 0.02 50.00 50.00 50.00 50.00 42.50 50.00 50.00 15.00 50.00 500 5,000 - 6,305,400 128,270,527 - - 256,270,191 85 5,000 - - 608,676 425 - 12,000 210 - Related Equity ThCh$ (274) 4,141,534 - 8,753,998 106,783,107 - 8,478 312,716,472 8,868,644 (12,006) 33,841,645 55,433,540 14,913,550 13,301,162 67,736,868 133,406 5,241,390 4,374,836 Carrying value of investment Equity in net earnings (losses) 1999 ThCh$ 2000 ThCh$ 1999 ThCh$ 2000 ThCh$ - 1,536,523 23,635,451 3,632,281 47,912,917 44,212 10,367 (1,828) 1,728 3,975 12,827,122 24,972,668 7,796,493 4,209,426 33,819,763 - - 2,096,388 (137) 2,070,767 - 3,939,298 48,052,398 - 4,239 (28,237) 1,885 (6,003) 16,920,823 27,716,770 7,456,775 5,652,994 33,868,434 66,703 786,208 2,187,418 (127) 99,135 - 89,240 - - 33,091 (1,828) 5 (21,235) (60,948) (226,588) 1,129,773 85,729 403,209 - - 91,208 (138) 85,513 - 184,848 (1,472,056) - 3,348 (28,237) 158 (11,141) 2,781,023 270,767 580,007 282,727 (2,443,882) 2,826 (294,032) 91,029 Total 162,497,486 148,690,335 1,620,664 32,760 (1) Development stage subsidiary, which began operations September 1, 2000, and was subsequently consolidated. 3 3 8 8 / 2 8 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A b. In accordance with current standards, recognition has been given to the excess of the equity in the net assets acquired over the purchase price (negative goodwill) in the purchase of shares as of December 31, 1999 and 2000 as follows: Company Synapsis S.A. Edelnor S.A. Central Hidroelectrica Betania S.A. Cía Eléctrica Cachoeira Dourada Edegel S.A. Empresa de Energía de Bogotá S.A. Cerj S.A. Coelce CAM Argentina S.A. (ex Elenet) Initial Balance Reserve Period activity ThCh$ ThCh$ ThCh$ 176,673 5,130,747 - - - - - 101,757,599 3,422,589 29,890,521 1,005,359 - 37,106,190 3,352,937 34,399,516 - 2,012,722 - (62,314) 3,661,261 - 8,155,178 62,314 - (1,359) - - As of Amortization December 31, for the period ThCh$ 2000 ThCh$ (14,422) (993,185) (28,798,639) (1,670,048) (8,065,490) (203,403) - (414,670) - 162,251 4,137,562 76,381,549 29,225,832 66,793,153 3,457,858 2,011,363 7,740,508 - Total 185,940,483 7,779,526 36,349,924 (40,159,857) 189,910,076 c. Following current standards, recognition has been given to the excess of the purchase price over the equity in the net assets acquired (goodwill) in the purchase of shares as of December 31, 2000 as follows: Company Initial Balance Reserve ThCh$ ThCh$ Period activity ThCh$ As of Amortization December 31, for the period ThCh$ 2000 ThCh$ Endesa S.A. Chilectra S.A. Río Maipo S.A. Esval S.A. Inversiones Distrilima S.A. Distrilec Inversora S.A. Edesur S.A. Emgesa S.A. C. Eléctrica Cachoeira Dorada Cerj S.A. Luz de Bogotá Codensa S.A. Central Costanera S.A. Edegel S.A. Hidroinvest S.A. Investluz S.A. Coelce Lajas Holding Inc. Aguas Cordillera S.A. Emp. Eléctrica de Colina S.A. Gas Atacama Hidroeléctrica El Chocón S.A. 750,065,817 12,368,062 372,501 18,590,323 17,378 10,078,631 8,376,979 23,005,313 60,440,371 95,665,531 5,909,834 25,453,818 21,038,689 - 1,182,030 948,386 191,528,717 2,178,799 12,116,689 2,920,995 - 5,854,138 - - - - 585 338,992 281,758 - 2,032,895 3,217,684 198,775 - 917,335 - 51,539 31,899 - 18,969 - - - 255,254 - 96,821,740 9,974,801 (18,590,323) - - - - - - - - - - - - - - (12,116,689) - 86,135 - (33,557) - (1,198) (561,948) (544,004) (1,290,017) (3,470,737) (5,786,094) (342,539) (1,427,304) (1,391,075) - (66,084) (52,988) (40,453,024) 709,612,793 (979,356) 108,210,446 10,313,745 - 16,765 9,855,675 8,114,733 21,715,296 59,002,529 93,097,121 5,766,070 24,026,514 20,564,949 - 1,167,485 927,297 (10,352,904) 181,175,813 2,075,819 - 2,746,607 81,641 5,631,476 (121,949 - (174,388) (4,494) (477,916) Total 1,248,113,001 7,345,685 76,175,664 (67,531,576) 1,264,102,774 Income and losses recognized by Enersis S.A. according to the participation in the related companies as of December 31, 2000, amount to ThCh$1,931,390 and ThCh$4,282,246, and ThCh$310,726 and ThCh$4,249,486, in 1999 and 2000, respectively. 5 5 8 8 / 4 8 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A d. The investments made by Enersis during the period ended as of December 31, 2000, amounted to US$524 million. Of this amount, US$390 million was used to the purchase the remaining shares of Chilectra and Rio Maipo in Chile and in the United States, and US$132 million was used to buy an additional 14% of “Companhia de Electricidades do Rio de Janeiro (Cerj), which are described as follows: Acquisitions Additional shares in Chilectra S.A. Additional shares in Río Maipo S.A. Additional shares in Cerj S.A. Endesa Market Place Percentage 26.0% 15.0% 18.5% 15.0% Amount ThUS$ 367 23 132 2 e. In accordance with current standards, the Company has credited income for ThCh$8,420,986 and ThCh$2,342,385 for the year ended December 31, 1999 and 2000, respectively, for the premium obtained on the placement of shares by the subsidiaries Chilectra S.A. which are reported in “Other non-operating income” as adjustments to investments in related companies. f. As of 1998, under Technical Bulletin No. 64 of the Chilean Association of Accountants, the foreign exchange gains and losses of liabilities related to net investments in a foreign countries, and that are denominated in the functional currency of those foreign investments, must be included in the cumulative translation adjustment in shareholders’ equity, and, in this way, acted as a hedge of the exchange risk affecting the investments. As of December 31, 2000 the amounts are as follows: Company Country of origin Edesur S.A. Edelnor S.A. Cerj S.A. Endesa Colombia (Emgesa-Betania) Endesa Argentina (Costanera) Compañía Eléctrica Cono Sur S.A. Luz de Bogotá S.A. Investluz Argentina Peru Brasil Colombia Argentina Panamá Colombia Brasil Investment ThCh$ 383,609,363 93,146,812 365,313,205 338,788,787 261,967,909 774,614,301 250,319,173 123,652,023 Reporting Currency US$ US$ US$ US$ US$ US$ US$ US$ Liability ThCh$ 330,032,678 18,573,131 194,861,629 149,926,313 161,006,703 878,346,580 185,556,052 78,168,658 Total 2,591,411,573 1,996,471,744 5 5 8 8 / 4 8 S E G A P 0 0 0 2 S I S R E N E T R O P E R L A U N N A NOTE 11 INTANGIBLES: Intangibles as of December 31, 2000 is as follows: Description Easements Water rights Rights to telephone lines Parent company contributions Mineral rights Trademarks Contracts rights Other Initial Balance ThCh$ 32,614,778 15,464, 875,940 1,376,813 177,452 9,101 5,750,531 13,894,858 Period Activity ThCh$ (25,894,839) 13,568,493 (9,873) - - - (5,540,912) 13,614,289 Amortization for the period ThCh$ As of December 31, 2000 ThCh$ (378,433) (240,162) - (114,734) - (3,540) (147,967) (6,956,510) 6,341,506 13,343,795 866,067 1,262,079 177,452 5,561 61,652 20,552,637 Total 54,714,937 (4,262,842) (7,841,436) 42,610,749 NOTE 12 OTHER ASSETS: Other assets as of each year-end are as follows: Description Bond discount Deferred expenses Deferred income taxes (Note 17) Deferred loan commissions Concession rights Pension and post-retirement benefits Deposit guarantees Others As of December 31, 1999 ThCh$ 11,912,521 38,535,452 1,582,489 7,630,217 15,839,092 7,769,961 10,832,936 19,381,970 2000 ThCh$ 11,464,258 41,396,166 37,372,661 13,651,642 906,884 4,427,769 18,009,474 12,916,011 Total 113,484,638 140,144,865 7 7 8 8 / 6 8 S E G A P I 0 0 0 2 S S R E N E T R O P E R L A U N N A NOTE 13 DUE TO BANKS AND FINANCIAL INSTITUTIONS: a. Short-term: Financial Institution American Express Atlantic Security Banco BBV Bhif Banco Bandeirantes Banco Bayernische Landes Banco BBVA Argentarilia Banco Bogotá Banco Bice Banco Beal Banco Bradesco Banco Colombia Banco do Brasil Banco Itau Banco Medio Credito Banco Nationale de