Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 657 7533
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
www.enersis.cl
Santa Rosa 76, Santiago-Chile
(56 2) 353 4400 - (56 2) 378 4400
Fax: (56 2) 378 4788
2003 annual report Enersis
generated energy
42,929 GWh +4.6%
i
s
s
r
e
n
E
t
r
o
p
e
r
l
a
u
n
n
a
3
0
0
2
debt reduction
US$ 2,573 million -28.7%
distribution sales
49,677 GWh +4.2%
S A N T I A G O S T O C K E X C H A N G E
ENERSIS
N E W Y O R K S T O C K E X C H A N G E ( N Y S E )
ENI
L A T I N A M E R I C A N S T O C K E X C H A N G E
O F M A D R I D S T O C K E X C H A N G E ( L A T I B E X )
XENI
ENI
LISTED
NYSE
Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 657 7533
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
www.enersis.cl
Santa Rosa 76, Santiago-Chile
(56 2) 353 4400 - (56 2) 378 4400
Fax: (56 2) 378 4788
2003 annual report Enersis
generated energy
42,929 GWh +4.6%
i
s
s
r
e
n
E
t
r
o
p
e
r
l
a
u
n
n
a
3
0
0
2
debt reduction
US$ 2,573 million -28.7%
distribution sales
49,677 GWh +4.2%
S A N T I A G O S T O C K E X C H A N G E
ENERSIS
N E W Y O R K S T O C K E X C H A N G E ( N Y S E )
ENI
L A T I N A M E R I C A N S T O C K E X C H A N G E
O F M A D R I D S T O C K E X C H A N G E ( L A T I B E X )
XENI
ENI
LISTED
NYSE
table of contents
2
L E T T E R F R O M T H E C H A I R M A N O F T H E B O A R D
6
I N F O R M AT I O N O N T H E C O M P A N Y
1 0
O W N E R S H I P A N D C O N T R O L
1 7
B O A R D O F D I R E C T O R S
2 2
O R G A N I Z AT I O N A L S T R U C T U R E
2 3
M A N A G E M E N T
2 6
A C T I V I T I E S
3 0
B U S I N E S S
3 5
I N V E S T M E N T A N D F I N A N C I N G P O L I C Y
3 6
E V O L U T I O N O F T H E F I N A N C I A L S TAT E M E N T S
3 7
C O R P O R AT E S T R U C T U R E
3 8
E V O L U T I O N O F T H E O P E R AT I N G D ATA
4 1
G E N E R A T I O N
4 3
E N D E S A C H I L E
4 9
E N D E S A F O R TA L E Z A
5 3
D I S T R I B U T I O N
5 5
C H I L E C T R A
6 1
E D E S U R
6 7
E D E L N O R
7 3
C E R J
7 9
C O E L C E
8 5
C O D E N S A
9 1
O T H E R B U S I N E S S E S
9 3
S Y N A P S I S
9 9
C A M
1 0 5
M A N S O D E V E L A S C O
1 1 0
L I A B I L I T Y S TAT E M E N T
1 1 1
O T H E R S U B S I D I A R I E S A N D R E L AT E D C O M P A N I E S
F I N A N C I A L S T A T E M E N T S
1 1 3
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S O F E N E R S I S
2 4 3
U N C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S O F E N E R S I S
2 8 7
F I N A N C I A L S TAT E M E N T S O F S U B S I D I A I R E S
letter from the chairman of the board
Dear Shareholder:
The year 2003 shall be remembered for its intense and successful
financial activity. In order to appreciate the magnitude of what
I am pleased to present you with the Annual Report corresponding
was done, we must highlight that throughout the year, the Enersis
to the performance of the Enersis Group for the year 2003.
Group carried out multiple operations for approximately US$ 7,000
million, which is the equivalent to some 20% of the foreign debt of
Before I go on to the summary of the activities of the Group during last
this country.
year, I must remind you of the situation that we have had to face in recent
times. Our results have been seriously affected by a crisis that touched
The step to refinance US$ 4,018 million was completed utilizing
and still touches upon our region, and especially upon several countries
various alternatives such as new syndicated loans, bond issues on the
in which we possess important investments, having a significant impact
local and international markets, pre-payment of bank debts and other
2
on the electricity business and, consequently, on our liquidity.
operations. In this context, Enersis took advantage of the improved
market conditions to refinance its debt at very favorable rates and
In these circumstances, Enersis was forced to implement what was
this allowed it to obtain important savings in terms of future interest
called “The Financial Strengthening Plan”, launched in October, 2002 that
payments. These operations permitted the booking of Enersis’ debt with
sought not only to strengthen our companies and reduce the risks for the
a payment schedule in line with the generation of cash by the Group.
investors, but also to reinforce the financial and equity situation of Enersis,
recovering in this way, the confidence of the financial markets.
On the other hand, the divestment of assets achieved the best
expectations as the prices offered were within the top level expected.
As was decided, this plan contained three fundamental pillars, each
In total, assets were sold for US$ 757 million, including the Canutillar
with a clear target announced at the time: Refinance the short and
Power Plant and the Compañía Eléctrica del Río Maipo S.A. distribution
medium term debt of US$ 2,300 million; strengthen the equity base by
company, excellent assets that had to be disposed of as a result of
means of a capital increase of US$ 2,000 million; and the sale of assets
the liquidity requirements of the Company. Given the adverse market
for a figure in the region of US$ 900 million, including their debts.
conditions, the most attractive assets were those located in Chile.
Enersis / 2003 annual report
of which corresponded to the capitalization of debts of US$ 1,219 million
made by the controlling shareholder and US$ 799 million provided by
the minority shareholders, reaffirming their confidence in the future
of the Company. All this led to Latin America’s largest capital increase
in recent history.
Nevertheless, I must point out that the 175 MW of installed capacity
All together, these operations permitted not only the extension of
of the Canutillar hydroelectric power plant that was sold, will be amply
the maturity curve of Enersis’ debt but also a substantial reduction in the
exceeded by the 570 MW capacity of the new Ralco power plant which
financial debt of the Group, from US$ 8,980 million at the end of 2002
will come on stream during this year 2004. This is not considering the 310
to US$ 6,407 million as of the close of the 2003 period, strengthening
3
MW capacity of the new Endesa Fortaleza thermoelectric power plant in
in a decisive manner the financial situation of the Company.
the northeast of Brazil, which has been in operation since January 2004
and in which Enersis holds 49% of the ownership. With respect to the sale
These operations also brought with them an improved risk
of the Río Maipo distribution company, I should mention that in 2003
perception of the Company which, together with the recovery in demand
the number of distribution clients rose by 504,000, 1.5 times the size of
for electricity in most of the areas under concession, is reflected in a
the aforementioned distribution company.
sustained growth in the liquidity of Enersis’ shares, both on the local and
on the international markets and a sustained rise in share and ADR prices
With regard to the capital increase, this exceeded even the most
which, during 2003, increased by 49% and 80%, respectively.
optimistic expectations. In this respect, we must recall that when we
launched this operation, stock markets were still very depressed and some
With regard to the results for the year 2003, Enersis showed a
sectors were more than skeptical about our possibilities of obtaining the
profit of Ch$ 12,468 million which compares favorably with the loss of
participation of the shareholders. In fact, this permitted the Company to
Ch$ 225,985 million registered as of December, 2002. In this regard,
increase its equity base by more than US$ 2,104 million, a significant part
we should remember that this loss was fundamentally due to once only
letter from the chairman of the board
accounting adjustments in relation to the investments in Argentina and
This period has also signified a new orientation in the way we perform
Brazil and to the effects from the regional crisis.
our activities. Enersis has been consolidated as the head of the Group
and the fundamental depository of investors confidence. In turn, we have
Net Operating Income amounted to Ch$ 531,098 million during this
boosted its role as the financial holding company, retaining its part as
period, reflecting a slight reduction due principally to the deconsolidation
controller of Endesa Chile and Chilectra. These companies have become
of the assets referred to above. I must point out the negative impact that
the operating heads of the Generating and Distribution lines in Latin
the important appreciation of the Chilean Peso against the US Dollar had
America, with outstanding success.
during the year as a consequence of the adjustment to Chilean norms on
the application of Technical Bulletin Nº 64 issued by the Chilean College
Not only the performance of our business has been successful. Today
of Accountants.
4
we are able to confirm that our commitment with society has been widely
recognized by the community with such projects as: “Illuminating Churches
I must highlight the increase of 4% in physical sales in distribution,
in America”, which has provided more than 30 temples in Chile, Colombia
reaching 49,677 GWh and a rise of 5% in the sales of generated energy
and Peru with modern ornamental illumination; libraries for the remote
amounting to a total of 51,053 GWh, which is consistent with the pace of
communities in the country, with which, together with the El Mercurio
the economic recovery of most of the countries in which the Enersis Group
newspaper, we have provided over three thousand books; The Energy
operates and which permits us to assume that there will be a sustained
Information Center open to children and youths in the country where they
improvement in the level of sales in 2004.
can learn, in an interesting and educational way, about the use and forms
of energy; and other support activities in different cultural areas.
These two elements, together with the strengthening of the
currencies, are the most important when evaluating our main business,
Furthermore, Enersis was awarded the “Heritage Prize” granted by the
its projections and perspectives.
Corporación de Patrimonio Cultural de Chile, in recognition of its sustained
commitment in matters of Corporate Social Responsibility.
Enersis / 2003 annual report
Likewise, we have continued with a constant effort to maintain
order to further improve the quality of service and customer attention.
all our investors and shareholders fully informed. For this purpose we
We shall also continue in our pursuit of a fair return to our shareholders
have restructured our Web Page with a change in design, content and
who have placed their confidence in our Company.
technology. This has been acknowledged by a jury of specialists from the
capital markets who awarded Enersis a prize for first place in the “Best
Yours faithfully,
Investor Relations Website” category for the “Southern Cone, Andean
Region and Bermuda” for its technical criteria.
Today, the Company possesses a solid base for future projections,
not only in Chile, but also in the rest of Latin America. Thus, for the year
2004, we hope to invest some US$ 500 million, resources required for
the conclusion of the generating projects under development and for
investments required for the natural growth of the business.
In addition, we are taking all the steps necessary to reduce and curtail
the regulatory risks in relation to our business in Brazil and Argentina in
order to obtain the expected return .
Pablo Yrarrázaval
Chairman
Enersis S.A.
Finally, I wish to convey to our shareholders that the effort we have
made has been of significant importance, but at the same time, I wish to
leave on record our firm desire not to fail in our commitment to preserve
and enhance our leadership in the Latin American electricity sector in
letter from the chairman of the board
5
Enersis
INFORMATION ON THE COMPANY
Corporate Name:
ENERSIS S.A.
Type of Company
Limited Liability Stock Company
Tax Register Number
94.271.000.3
Address
Santa Rosa Nº 76, Piso 17, Santiago, Chile
Postal Code
833-0099 Santiago
Telephones
(56-2) 353 4400, (56-2) 378 4400
Fax
(56-2) 378 4788
Articles of Incorporation and By-laws
Businesses of the Property Register of Santiago on page
The company that gave rise to Enersis S.A. was
13,099 Nº 7,269 of the year 1981 and was published
originally established as Compañía Chilena
in the Official Gazette on July 23, 1981
To date, the
Metropolitana de Distribución Eléctrica S.A.,
by-laws have been the subject of various amendments.
as recorded in a public deed of June 19, 1981,
On August 1, 1988 the company changed its name to
executed before Patricio Zaldívar, Notary Public
Enersis S.A. The latest amendment is recorded in the
6
in the city of Santiago and amended by public
public deed dated April 9, 2003 granted before Patricio
deed of July 13 of the same year before the
Zaldívar, Notary Public in Santiago. The extract was
same Notary Public mentioned above
The
recorded in the Register of Businesses of the Property
existence of the Company was authorized and its
Register of Santiago on page 11,109, Nº 8,665 of the
by-laws were approved pursuant to Resolution
Business Register of 2003 and published in the Official
No 409-S of July 17, 1981 of the Superintendency
Gazette on April 29, 2003
of Securities and Insurance. The extract of the
Historic overview
existence authorization and the approval of
The origins of Enersis S.A. date back to June 19, 1981
the by-laws were recorded in the Register of
when Compañía Chilena de Electricidad S.A.
Enersis / 2003 annual report
P.O.Box
1557, Santiago
Web Site
www.enersis.com
E-mail address
comunicacion@e.enersis.cl
Securities Register Number
Nº 175
External Auditors
Deloitte & Touche
Number of Shares
32,651,166,465
Number of Shareholders
10,294
Paid-in Capital (ThCh$)
2,227,711,340
Reference Name on Chilean Stock Markets
ENERSIS
Depository Bank ADR Program
Citibank N.A.
Reference Name on NYSE
ENI
Latibex Custodian Bank
Banco Santander
Reference Name on Madrid Stock Market
XENI
Latibex Liaison Entity
Santander Central Hispano Investment S.A.
ADRs Custodian Bank
Banco de Chile
Local Risk Rating Companies
Feller Rate, Fitch, Humphreys
International Risk Rating Companies
Fitch, Moody´s, Standard & Poor´s
was restructured into a parent company and three
fact that the company was devoted exclusively to the
subsidiaries. One of these was Compañía Chilena
distribution of electricity. In 1987, the Board of Directors
Metropolitana de Distribución Eléctrica S.A.
In
proposed a division of the various activities of the
1985, as a result of the privatization policy enacted for
parent company. Thus, four subsidiaries were formed
state-owned companies by the Government of Chile,
enabling them to be run as separate business units,
the transfer of the capital stock of Compañía Chilena
each with its own objectives and in this way expanding
Metropolitana de Distribución Eléctrica S.A. to the
the activities of the company into other non-regulated
7
private sector began. This process concluded on August
businesses, though still related to the core business
10, 1987. Through this process, private pension funds
This proposal was approved by the Extraordinary
(A.F.P.), the company’s workers, institutional investors
Shareholders’ Meeting held on November 25, 1987,
and thousands of small investors became stockholders
which determined its new corporate purpose
As a
of the Company
The organizational structure was
result of the above, Compañía Chilena Metropolitana
based upon operating activities or functions in which
de Distribución Eléctrica S.A. became an investment
the achievements were evaluated on functions and its
company. On August 1, 1988, under a resolution adopted
profitability was limited by a scheme of tariffs, due to the
by the Shareholders’ Meeting held on April 12, 1988, the
information on the company
Company changed its corporate name to Enersis S.A.
Corporate Purpose
Furthermore, for the purpose of providing a better
The purpose of the company is to undertake both in
quality of service to its customers, as of June 1, 1989,
Chile and abroad, the management, development,
approval was given for the division of the subsidiary,
operation, generation, distribution, transmission,
Distribuidora Chilectra Metropolitana S.A. into a
transformation and/or sale of energy of whatever
company that would continue in the business with
form or nature, directly or through other companies,
8
the name Chilectra S.A. and a new company that was
as well telecommunications activities and the
established with the name Compañía Eléctrica del Río
provision of engineering consultancy services,
Maipo S.A., which currently serves the demand for the
either in Chile or abroad. Its purpose will also be to
distribution and sale of electric power in the rural and
invest and manage the company’s investments in
semi-urban zones of the Metropolitan Region of Chile
subsidiaries or related companies that generate,
The Extraordinary Shareholders’ Meeting held on
transmit, distribute or sell electric power or that are
April 27, 1994 approved the change of name of the
involved in any of the following lines of business: (i)
subsidiary Distribuidora Chilectra Metropolitana S.A.
energy in any of its forms or of any nature, (ii) the
to that of Chilectra S.A., effective as of June 1, 1994
supply of public services or companies having energy
Enersis / 2003 annual report
as their main raw material, (iii) telecommunications and
legal and auditing advice and in general, services of
information technology, (iv) intermediation business
any nature that might appear necessary for its better
through Internet. In the fulfillment of its main objective,
performance
In addition to its main objective and
the company will develop the following functions:
acting always within the bounds determined by the
a) Promote, organize, establish, modify, dissolve or
Investment and Financing Policy approved at the Ordinary
liquidate companies of any nature, whose corporate
General Meeting of Shareholders, the company may
purpose is similar or related to those of the Company.
invest in: a) The acquisition, management, construction,
9
b) Propose to its subsidiary companies policies on
rental, intermediation, marketing and divestment of any
investments, financing and marketing as well as
kind of property and real estate, either directly or through
accounting systems and criteria which they must
subsidiary or related companies. b) All types of financial
adhere to. c) Supervise the operations of its subsidiary
assets, including shares, bonds and debentures, financial
companies. d) Provide its subsidiary or related companies
instruments and, in general, all types of securities and
with the financial resources necessary to develop its
capital investments in companies, either directly or
business and, in addition, provide its subsidiaries with
through subsidiary or related companies
management services, financial, commercial, technical,
information on the company
ownership and control
Ownership Structure
Controllers
The capital of the Company is divided into 32,651,166,465 shares
Pursuant to Title XV of Law Nº 18,045, the controller of the Company,
with no nominal value, all from a same and single series.
Endesa S.A., Spain, possesses 60.62% of Enersis through the control the
latter has over Endesa Internacional S.A. and Sociedad de Inversiones
As of December 31, 2003 there were 32,651,166,465 shares subscribed
Chispa Uno S.A.
and paid-up, distributed over 10,294 shareholders.
10
Enersis / 2003 annual report
The twelve largest shareholders of the Company
As of December 31, 2003, Enersis was owned by 10,294 shareholders. The twelve largest were:
Shareholders
Tax Register Number
Number of Shares
Endesa Internacional S.A.
Citibank N.A. (ADRs and Chapter XIV)
AFP Provida S.A.
AFP Cuprum S.A.
AFP Summa Bansander S.A.
AFP Santa María S.A.
AFP Habitat S.A.
Banchile Corredores de Bolsa S.A.
Cía. de Seg. de Vida Consorcio Nacional de Seguros
Bolsa Electrónica de Chile Bolsa de Valores
Consorcio Corredores de Bolsa S.A.
BCI Corredores de Bolsa S.A.
Subtotal: 12 shareholders
Others: 10,282 shareholders
Total: 10,294 shareholders
59.072.610-9
97.008.000-7
98.000.400-7
98.001.000-7
98.000.600-K
98.000.000-1
98.000.100-8
96.571.220-8
99.012.000-5
96.551.730-8
96.772.490-4
96.519.800-8
19,794,583,473
3,131,712,672
2,054,685,902
912,855,104
729,762,948
691,869,309
679,461.335
673,750,034
213,109,789
178,161,247
168,087,039
150,826,312
29,378,865,164
3,272,301,301
32,651,166,465
%
60.62
9.59
6.29
2.80
2.24
2.12
2.08
2.06
0.65
0.55
0.51
0.46
89.98
10.02
100.00
Principal changes in ownership
During 2003, the principal changes in the ownership of Enersis were:
11
Shareholders
Endesa Internacional S.A.
Citibank N.A. (ADRs and Chapter XIV)
AFP Provida S.A.
AFP Cuprum S.A.
AFP Summa Bansander S.A.
AFP Santa María S.A.
AFP Habitat S.A.
Banchile Corredores de Bolsa S.A.
Cía. de Seg. de Vida Consorcio Nacional de Seguros
Bolsa Electrónica de Chile Bolsa de Valores
Consorcio Corredores de Bolsa S.A.
BCI Corredores de Bolsa S.A.
Larraín Vial S.A. Corredores de Bolsa
Santander Investment Corredores de Bolsa
Bolsa de Comercio de Santiago
AFP Plantival
BICE Corredores de Bolsa S.A.
Celfin Cardeweg S.A. Corredores de Bolsa
Compañía de Inversiones Chispa Uno S.A.
Elesur S.A.
Bancard S.A.
Tax Register Number
Number of Shares
as of 31/12/2002
Number of Shares
as of 31/12/2003
% Variation
59.072.610-9
97.008.000-7
98.000.400-7
98.001.000-7
98.000.600-K
98.000.000-1
98.000.100-8
96.571.220-8
99.012.000-5
96.551.730-8
96.772.490-4
96.519.800-8
80.537.000-9
96.683.200-2
90.249.000-0
98.000.900-9
79.532.990.0
84.177.300-4
96.641.060-4
96.800.570-7
96.894.180-1
694,591,189
328,916,750
255,812,109
178,611,688
91,054,355
150,793,071
323,304,197
178,368,323
61,996,453
18,274,684
42,267,412
27,866,141
72,983,101
8,832,648
47,995,976
30,275,201
9,361,088
32.272.220
1,780,246,340
2,914,325,536
91,338,455
ownership and control
19,794,583,473
2,749.82
3,131,712,672
2,054,685,902
912,855,104
729,762,948
691,869,309
679,461.335
673,750,034
213,109,789
178,161,247
168,087,039
150,826,312
138,605,309
138,085,786
135,192,884
129,016,633
122,996,154
110,658,803
34,666
-
-
852.13
703.20
411.08
701.46
358.82
110.16
277.73
243.75
874.91
297.68
441.25
89.91
1,463.36
181.68
326.15
1,213.91
242.89
N/A
N/A
N/A
Stock Exchange Transactions by Directors and Senior Executives
The following are the stock exchange transactions carried out by the Directors and Senior Executives during the year 2003:
Shareholder
Tax Register Number
Buyer/
Seller
Date Transaction
in Shareholders’
Register
Number of
Shares Traded
Unit Price of
Transaction (Ch$)
Relationship with the Company
Inversiones Santa Verónica Ltda.
79.880.230-5
Inversiones y Asesorías Sydarta Ltda.
78.133.360-3
Ernesto Silva
Cristián Herrera
5.126.588-2
10.545.763-4
Inversiones Santa Verónica Ltda.
79.880.230-5
Rosario Alvial S.
Ricardo Alvial S.
Consuelo Alvial S.
Ricardo Alvial M.
María Elena Valdés
María Elena Yrarrázabal
Pablo Yrarrázabal
Jorge Alé
Jorge Alé
17.409.139-0
16.607.480-0
16.209.886-1
7.330.389-3
2.471.642-2
5.710.932-7
5.710.967-K
8.360.211-2
8.360.211-2
Inversiones y Asesorías Sydarta
78.133.360-3
Inversiones y Asesorías Sydarta
78.133.360-3
12
Ernesto Silva
5.126.588-2
Inversiones Santa Verónica Ltda.
79.880.230-5
Renzo Costa
Rosario Alvial S.
Ricardo Alvial S.
Consuelo Alvial S.
María Elena Valdés
María Elena Yrarrázabal
Pablo Yrarrázabal
Cristián Herrera
Jorge Alé
Beatriz García Huidobro
7.353.051-2
17.409.139-0
16.607.480-0
16.209.886-1
2.471.642-2
5.710.932-7
5.710.967-K
10.545.763-4
8.360.211-2
6.981.877-3
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
7/5/03
1,500,000
63.6700
Related to Hernán Sommerville, Director
13/6/03
2,940,891
60.4202
Related to Ernesto Silva, Director
13/6/03
400,125
60.4202
Director
25/6/03
13,366
60.4202
Executive
25/6/03
4,411,337
60.4202
Related to Hernán Sommerville, Director
26/6/03
26/6/03
26/6/03
26/6/03
402
402
402
2
60.4202
Daughter of Executive
60.4202
Son of Executive
60.4202
Daughter of Executive
60.4202
Executive
27/6/03
399,958
60.4202
Related to Pablo Yrarrázaval, Chairman of the Board
27/6/03
362,447
60.4202
Related to Pablo Yrarrázaval, Chairman of the Board
27/6/03
362,447
60.4202
Chairman of the Board
30/6/03
8/10/03
62,370
62,370
60.4202
Executive
81.4900
Executive
22/10/03
2,940,891
86.7500
Related to Ernesto Silva, Director
2/12/03
2/12/03
3/12/03
10/12/03
17/12/03
17/12/03
17/12/03
19/12/03
19/12/03
19/12/03
19/12/03
19/12/03
20/12/03
119,642
64,150
60.4202
Related to Ernesto Silva, Director
60.4202
Director
707,248
60.4300
Related to Hernán Sommerville, Director
488
60.4202
Executive
64
64
64
64,123
58,109
58,109
2,142
2,537
259
60.4202
Daughter of Executive
60.4202
Son of Executive
60.4202
Daughter of Executive
60.4202
Related to Pablo Yrarrázaval, Chairman of the Board
60.4202
Related to Pablo Yrarrázaval, Chairman of the Board
60.4202
Chairman of the Board
60.4202
Executive
60.4202
Executive
60.4202
Wife of Executive
Enersis / 2003 annual report
Santiago Stock Exchange, Chilean Electronic Stock Exchange and Valparaiso Stock Exchange
The transactions carried out on the stock exchanges in which Enersis
Quarterly Stock Exchange Information for the last three years
shares are traded, both in Chile, through the Santiago Stock Exchange,
the Chilean Electronic Stock Exchange and the Valparaíso Stock Exchange,
During the year, 8,038 million shares were traded on the Santiago
and in the United States and Spain, through the New York Stock Exchange
Stock Exchange for a total value of Ch$ 577,374 million. The closing price
(NYSE) and the Latin American Stock Exchange of the Madrid Stock
of the share as of December 30 was Ch$ 86.00.
Exchange (Latibex) respectively, were as follows:
Santiago Stock Exchange
Units
Amounts (Ch$)
Average Price (Ch$)
1st Quarter of 2001
2nd Quarter of 2001
3rd Quarter of 2001
4th Quarter of 2001
1st Quarter of 2002
2nd Quarter of 2002
3rd Quarter of 2002
4th Quarter of 2002
1st Quarter of 2003
2nd Quarter of 2003
3rd Quarter of 2003
4th Quarter of 2003
217,618,425
292,388,256
226,195,786
393,051,599
512,037,133
474,079,058
692,521,240
684,639,252
435,639,838
2,037,701,115
2,615,141,119
2,949,415,326
44,437,043,299
57,663,194,013
41,936,113,910
73,344,332,507
72,041,084,807
48,911,115,424
54,285,443,986
44,147,517,186
26,289,331,211
126,168,454,878
183,158,237,990
241,758,079,458
205.94
197.59
185.74
183.26
140.70
103.17
78.39
64.48
60.35
61.92
70.04
81.97
13
During the year, 2,703 million shares were traded on the Electronic Stock Exchange of Chile for a total value of Ch$ 196,015 million. The closing
price of the share as of December 30 was Ch$ 86.00.
Electronic Stock Exchange of Chile
Units
Amount (Ch$)
Average Price (Ch$)
1st Quarter of 2001
2nd Quarter of 2001
3rd Quarter of 2001
4th Quarter of 2001
1st Quarter of 2002
2nd Quarter of 2002
3rd Quarter of 2002
4th Quarter of 2002
1st Quarter of 2003
2nd Quarter of 2003
3rd Quarter of 2003
4th Quarter of 2003
83,608,430
158,055,600
109,886,421
169,896,292
269,920,400
190,914,137
175,890,647
209,062,958
129,900,766
701,457,496
798,685,064
1,073,262,130
17,152,644,402
31,321,294,251
20,354,381,577
31,038,862,776
37,714,503,611
19,585,092,537
13,502,731,692
13,168,996,825
7,816,872,780
44,548,746,027
56,421,436,525
87,227,786,087
205.77
197.13
186.42
182.94
139.72
102.59
76.77
62.99
60.18
63.51
70.64
81.27
ownership and control
During the year, 70 million shares were traded on the Valparaíso Stock Exchange for a total value of Ch$ 5,016 million. The closing price of the
share as of December 30 was Ch$ 85.91.
Valparaíso Stock Exchange
1st Quarter of 2001
2nd Quarter of 2001
3rd Quarter of 2001
4th Quarter of 2001
1st Quarter of 2002
2nd Quarter of 2002
3rd Quarter of 2002
4th Quarter of 2002
1st Quarter of 2003
2nd Quarter of 2003
3rd Quarter of 2003
4th Quarter of 2003
Units
1,170,182
2,746,772
2,071,416
4,724,089
18,797,002
7,970,306
22,259,663
9,087,665
9,976,687
16,722,391
20,788,077
22,763,455
Amount (Ch$)
Average Price (Ch$)
241,026,099
532,712,377
389,093,093
856,465,194
2,597,626,847
748,664,861
1,751,836,764
570,105,970
588,061,758
1,076,487,907
1,486,507,277
1,864,617,521
205.97
193.94
187.83
181.29
138.19
93.93
78.70
62.73
58.94
64.37
71.51
81.91
New York Stock Exchange (NYSE)
Enersis’ shares began to be traded on the New York Sock Exchange
During the year 2003, in the United States of America, 96 million
14
(NYSE) on October 20, 1993. The Company’s ADR is composed of 50 shares
ADRs were traded for a total value of US$ 543 million. The price of the
and their trading name is ENI. Citibank N.A. acts as the depository bank
ADR closed at US$ 7.36
and the Banco de Chile as the custodian in Chile.
New York Stock Exchange
1st Quarter of 2001
2nd Quarter of 2001
3rd Quarter of 2001
4th Quarter of 2001
1st Quarter of 2002
2nd Quarter of 2002
3rd Quarter of 2002
4th Quarter of 2002
1st Quarter of 2003
2nd Quarter of 2003
3rd Quarter of 2003
4th Quarter of 2003
ADR’s
6,105,000
6,181,500
4,750,900
6,703,000
10,004,100
4,378,200
3,304,200
4,063,400
2,396,400
22,642,100
28,205,200
43,052,600
Amount (US$)
Average Price (US$)
109,434,411
100,399,572
64,675,499
88,799,879
103,381,378
35,266,409
17,965,659
17,549,621
9,594,354
103,382,511
144,246,700
285,393,515
17.93
16.24
13.61
13.25
10.33
8.06
5.44
4.32
4.00
4.57
5.11
6.63
Enersis / 2003 annual report
Latin American Stock Exchange of the Madrid Stock Exchange (LATIBEX)
The Enersis shares began to be traded on the Latin American Stock
Santander Central Hispano Bolsa S.A. S.V.B acts as the liaison entity
Exchange (Latibex) on October 17, 2001. The contracting unit for the
and the Banco Santander as the custodian in Chile.
Company is 50 shares and its trading name is XENI.
Latibex
1st Quarter of 2001
2nd Quarter of 2001
3rd Quarter of 2001
4th Quarter of 2001
1st Quarter of 2002
2nd Quarter of 2002
3rd Quarter of 2002
4th Quarter of 2002
1st Quarter of 2003
2nd Quarter of 2003
3rd Quarter of 2003
4th Quarter of 2003
During the year 2003, 329 million shares for a total value of € 1,466
million were traded on the Latin American Stock Exchange of the Madrid
Stock Exchange. The closing price of the share was € 5.86.
Titles
Amount (€)
Average Price (€)
-
-
-
91,330
547,410
735,956
1,168,892
1,332,800
1,674,520
1,590,018
289,159,472
36,196,071
-
-
-
1,376,275
6,513,823
6,439,734
6,518,111
6,028,207
6,217,505
6,210,510
1,246,411,078
207,310,744
-
-
-
15.07
11.90
8.75
5.58
4.52
3.71
3.91
4.31
5.73
15
Dividend policy for the year 2004
The Board of Directors, with the unanimous vote of its present
derived from the normal operations of the Company, these being, the
members, agreed to propose to the Ordinary Meeting of Shareholders
income before amortizations and negative goodwill made during the 2004
of Enersis due to take place on March 26, 2004, the following Dividend
period, without considering those produced by the following events:
The dividends established in this policy will be applied on the results
Policy with which the Board of Directors expects to comply during the
2004 period:
1. The effects of accounting produced as a result of the revaluation
adjustments made to the contributions to subsidiaries.
Distribute in May, August and November, 2004 and in February,
2005 an interim dividend of 85% of the net profits derived from the
2. The effects of accounting produced by the registration of the over-
normal operations of the quarters ending in March, June, September and
price when the subsidiaries place their own shares.
December of the period, to be charged to the profits for 2004. For the
purposes of calculating the above, the interim dividends corresponding
3. By the profits generated, directly or indirectly, from the investments
to the 2004 period that might have been paid as of the date of the
in affiliates established both in the country and abroad.
distribution will be discounted from the 85% of the accumulated income
before amortizations and negative goodwill.
ownership and control
4. By the profits generated by overseas subsidiaries or by subsidiaries in
The above is the intention of the Board of Directors but its compliance
which the Company’s direct or indirect participation is less than 60%
will be conditioned to the net profits that are effectively obtained and
of their equity and by the profits derived from the sale of assets.
also to the results projected periodically by the Company or the existence
5. By the registration of the positive or negative goodwill of those
investments.
of determined conditions.
With respect to definitive dividends, the Board of Directors proposes
that these should be at least for the amount of the interim dividends
The Board of Directors will not distribute dividends against a charge
already distributed or those established in the Law of Quoted Companies,
to the net profits deriving from the events listed above and the Ordinary
whichever of the two is the greater.
General Meeting of Shareholders will have to decide on that issue when
approving the definitive dividend.
The following table shows the dividends per share paid during the
last five years.
Dividend
Number
67
68
69
70
71
Type of
Dividend
Interim
Definitive
Interim
Definitive
Definitive
Date of
Closure
20.02.98
07.05.98
20.11.98
11.05.99
19.04.01
Date
Paid
26.02.98
13.05.98
26.11.98
17.05.99
25.04.01
Chilean Pesos per Share
(Ch$ of each year)
Charged to
Period
0.800000
4.500000
1.600000
4.000000
1.806391
1997
1997
1998
1998
2000
16
Distributable Profit
Summary of the comments and proposals of
the shareholders
We should recall that in accordance with the Policy on Interim
Dividends proposed to the Ordinary General Meeting of Shareholders of
No comments were received by Enersis with respect to the progress
the Company that took place on March 31, 2003, no interim dividend has
of the business during the period between January 1 and December 31,
been distributed. However, the Ordinary General Meeting of Shareholders
2003 from the majority shareholders or from the group of shareholders
to be held in March 2004 will decide on the possibility of distributing a
that represent 10% or more of the issued shares with voting rights, in
definitive dividend.
accordance with the regulations established in Article 74 of Law Nº
18,046 and Articles 82 and 83 of the Regulations of the Law on Quoted
Companies.
Profit for the Period
Negative goodwill amortization (less)
Net Loss
ThCh$
12,467,863
51,176,198
(38,708,335)
Enersis / 2003 annual report
board of directors
Enersis is managed by a Board of Directors comprised
of seven members who serve a three-year term and may
be reelected. This Board of Directors was elected at the
Ordinary Shareholders Meeting on March 31, 2003.
CHAIRMAN
Pablo Yrarrázaval
Tax Register Number:
5.710.967-K
Chairman of the Santiago de
Chile Stock Exchange
VICECHAIRMAN
Rafael Miranda
Tax Register Number:
48.070.966-7
Profession: Industrial Engineer
Instituto Católico de Artes e
Industrias (ICAI) de Madrid
DIRECTOR
Alfonso Arias
Tax Register Number:
48.087.945-7
Profession: Bachelors Degree in
Law and Economics and Business
Administration Universidad
Complutense de Madrid
DIRECTOR
José Luis Palomo
Tax Register Number:
51.316.595-F
Profession: Bachelors Degree in
Economic and Business Sciences,
in Law and in Sociology
University of Madrid
17
DIRECTOR
Ernesto Silva
Tax Register Number:
5.126.588-2
Profession: Business
Administration Graduate
Pontíficia Universidad Católica
de Chile
DIRECTOR
Hernán Somerville
Tax Register Number:
4.132.185-7
Profession: Attorney
University of Chile
DIRECTOR
Eugenio Tironi
Tax Register Number:
5.715.860-3
Profession: Sociologist
School of Higher Studies in
Social Sciences, Paris, France
SECRETARY OF THE BOARD
OF DIRECTORS:
Domingo Valdés
Tax Register Number:
6.973.465-0
Profession: Attorney
University of Chile
board of directors
remunerations of the board of directors
In accordance with the contents of Article 33 of Law Nº 18,046 on
Below we give the details of the amounts paid to the Directors of
Quotes Companies, the Ordinary General Meeting of Shareholders held
Enersis as such, or as members of a Committee and to the Directors of
on March 31, 2003 agreed on the remuneration corresponding to the
the Company who act or have acted as Directors of subsidiaries.
Board of Directors of Enersis for the 2003 period.
As of December 31, 2003 (ThCh$)
As of December 31, 2002 (ThCh$)
DIRECTOR
PabloYrarrázabal
Rafael Miranda
José Luis Alvarez
José María Fesser
Alfonso Arias
Ernesto Silva
Hernán Sommerville
Eugenio Tironi
TOTAL
Board
of Enersis
50,311
34,957
24,540
9,120
17,249
25,156
25,156
25,156
211,644
Committee
of Enersis
8,584
-
-
-
-
8,584
8,584
-
25,753
Total
58,895
34,957
24,540
9,120
17,249
33,740
33,740
25,156
237,397
Board of
Enersis
22,814
37,524
11,407
24,406
-
25,015
25,015
24,413
170,594
Committee
of Enersis
2,411
-
-
-
-
3,591
3,591
-
9,593
Total
25,225
37,524
11,407
24,406
-
28,606
28,606
24,413
180,187
18
expenses of the board of directors
During the year 2003, the Board of Directors did not utilize the expense allowance approved by the Ordinary Shareholders Meeting of the
Company held in March, 2003.
board practices
Corporate Governance
for a three year term and the term of each of the seven directors expires
on the same day. Staggered terms are not permitted under Chilean law.
Enersis is managed by its executive officers under the direction of its
If a vacancy occurs on the board during the three year term, the board
board of directors which, in accordance with the estatutos, or articles of
of directors may appoint a temporary director to fill the vacancy until
incorporation and bylaws, of Enersis, consists of seven directors who are
a permanent replacement is elected at the next general shareholders
elected at the annual regular shareholders meeting. Each director serves
meeting. The current board of directors was elected in March 2003 and
Enersis / 2003 annual report
their terms expire in March 2006. The members of the board of directors
do not have service contracts with Enersis or any of its subsidiaries that
Compliance with NYSE Listing Standards on
Corporate Governance
provide benefits upon termination of employment.
Chilean corporate law provides that a company’s board of directors is
responsible for the management, administration and representation of a
company in all matters concerning its corporate purpose, subject to the
provisions of the company’s estatutos and the stockholders’ resolutions.
In addition to the estatutos, the Board of Directors of Enersis S.A. has
adopted regulations and policies that guide our corporate governance
principles. The most important of these regulations and policies are the
following:
The Internal Regulations on Conduct in Securities Markets, approved
by the Board on January 31, 2002, which determine the rules of conduct
that must be followed by members of the Board of Directors, senior
management and other managers and employees who, due to the
nature of their job responsibilities, may have access to sensitive or
confidential information, with a view to contributing to transparency
and to the protection of investors. These regulations are based on the
principles of impartiality, good faith, placing the company’s interests
before one’s own, and care and diligence in using information and acting
in the securities markets.
The Charter Governing Executives (“Estatuto del Directivo”), approved
by the Board on May 28, 2003, and the Employees Code of Conduct, which
develop our principles and values, establish the rules governing dealings
with customers and suppliers, and establish the principles that should be
followed by employees in their work: ethical conduct, professionalism and
confidentiality. They also impose limitations on the activities our senior
executives and other employees may undertake outside the scope of their
employment with us, such as non-compete limitations.
The above regulations and rules reflect our core principles of
transparency, respect for stockholders’ rights, and the duty of care and
loyalty of the directors imposed by Chilean law
Following is a summary of the significant differences between our
corporate governance practices and those applicable to domestic issuers
under the corporate governance rules of the New York Stock Exchange.
Because we are a “controlled company” under the NYSE rules (a company
of which more than 50% of the voting power is held by an individual, a
group or another company), we would not, were we a domestic U.S.
company, be subject to the requirement that we have a majority of
independent directors, or nomination and compensation committees.
Independence and functions of the Audit
Committee
Under the NYSE corporate governance rules, all members of the audit
committee must be independent. We will be subject to this requirement
effective July 31, 2005. As required by Chilean Law, Enersis has a Comité
de Directores composed of three directors. Although Chilean Law requires
that a majority of the Comité de Directores (two out of three members)
must be composed of directors who were not nominated by the controlling
19
shareholder and did not seek votes from the controlling shareholder (a
“non-control director”), it permits the Comité de Directores to be
composed of a majority or even a unanimity of controlled directors, if
there are not sufficient non-control directors on the board to serve on
the committee. Currently, our Comité de Directores is composed by one
non-control director and by two directors appointed by the controlling
shareholder. Our Comité de Directores does not currently meet the
independence requirements to which the audit committee of Enersis,
whether the Comité de Directores or a different committee, will become
subject on July 31, 2005, or the additional independence requirements
to which the audit committees of U.S. companies are subject.
Under the NYSE corporate governance rules, the audit committee of
a U.S. company must perform the functions enumerated in NYSE Listed
Company Manual Rules 303A.06 and 303A.07. Non-U.S. companies
are required to comply with Rule 303A.06 beginning July 31, 2005, but
are not at any time required to comply with Rule 303A.07. We do not
currently comply with these rules, but we expect that, when we become
subject to Rule 303A.06, we will comply with both the independence and
the function requirements of the rule.
board of directors
Corporate Governance Guidelines
Committee of Directors
The NYSE’s corporate governance rules require U.S. listed companies
In accordance with the regulations of Article 50 bis of Law Nº 19,705,
to adopt and disclose corporate governance guidelines. Chilean law does
Enersis has a Committee of Directors, comprised of three members, with
not contemplate this practice, other than with respect to the codes of
the powers and duties considered in that article.
conduct described above.
Committees and Other Advisory Bodies
The Comité de Directores
On April 1, 2003, the Board of Directors of the Company designated
as members of the Committee of Directors of Enersis, Messrs. Pablo
Yrarrázaval, Hernán Sommerville and Ernesto Silva. In turn, in its meeting
Nº 6 held on May 15, 2003, the Committee of Directors of Enersis agreed,
The Comité de Directores is composed of three members who are
with the unanimous vote of its members present, to designate Pablo
simultaneously directors of the Company. It performs the following
Yrarrázaval as its Chairman and Domingo Valdés as its Secretary.
functions:
Consequently, as of December 31, 2003, the Committee of Directors
• examination of Annual Report, Financial Statements and the Reports
of Enersis was comprised as follows:
of the External Auditors and Inspectors of the Accounts;
•
formulation of the proposal to the Board of Directors for the selection
of external auditors and private rating agencies;
CHAIRMAN:
Pablo Yrarrázaval
Tax Register Number: 5.710.967-K
Chairman of the Santiago de Chile Stock Exchange
20
• examination of information related to operations by the Company
with related parties and/or related to operations in which the
MEMBER:
Ernesto Silva
Company board members or relevant executive officers may have
personal interest;
Tax Register Number: 5.126.588-2
Business Administration Graduate
Pontíficia Universidad Católica de Chile
• examination of the remuneration framework and compensation
plans for managers and executive officers; and
• any other function mandated to the committee by the estatutos, the
board of directors or the shareholders of the company.
MEMBER:
Hernán Somerville
Tax Register Number: 4.132.185-7
Attorney
University of Chile
SECRETARY OF THE COMMITTEE:
Domingo Valdés
Tax Register Number: 6.973.465-0
Attorney
University of Chile
Enersis / 2003 annual report
Activities of the Committee during
the year 2003
Expenses of the Committee
In its first session for the year held on January 15, 2003, the
budget for functional expenses approved by the Ordinary Shareholders
Committee of Directors agreed to propose to the Board of Directors,
Meeting held in March, 2003 and has not had the need to employ
a list of potential candidates to be nominated as experts on the non-
professional consultancy to carry out its functions.
During the year 2003, the Committee of Directors did not utilize the
monetary contributions consisting of financial debts accepted as a form
of payment towards the capital increase undertaken by the Company
during the year 2003.
In the meeting held on February 3, 2003, the Committee was
informed on the progress made on the Financial Strengthening Plan of
the Company.
In the session held on February 10, 2003, the Committee proposed
to the Board of Directors that Deloitte & Touche be designated External
Auditors for the year 2003 and also agreed to propose to the Board of
Directors, the designation of Feller Rate and Fitch Chile as the Local Private
Risk Rating Agencies and Fitch, Moody´s and Standard & Poor´s as the
International Private Risk Rating Agencies for Enersis for the year 2003.
In its meeting held on March 7, 2003, the Committee was informed
on the Experts´ Report on the capital increase prepared by the expert,
Eduardo Walker.
Furthermore, the Committee of Directors analyzed each quarter
the Unconsolidated and the Consolidated Financial Statements of the
Company; examined the information on the operations referred to in
Articles 44 and 89 of Law Nº 18,046 on Quoted Companies and prepared
reports on these subjects; it also examined the system of remunerations
and plans on the compensation to managers and senior executives.
To conclude, during the 2003 period, the Committee of Directors of
Enersis has fully covered the matters indicated in Article 50 bis of the Law
Nº 18,046 on Quoted Companies.
capitulo
21
organization structure
22
Enersis / 2003 annual report
management
Management of Enersis
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Tax Register Number:
5.850.972-8
Business Administration
Graduate
Universidad Católica de
Valparaíso
REGIONAL CHIEF FINANCIAL
OFFICER:
Alfredo Ergas
Tax Register Number:
9.574.296-3
Business Administration
Graduate
University of Chile
REGIONAL CHIEF PLANNING AND
CONTROL OFFICER
Macarena Lama
Tax Register Number:
21.495.901-1
Agronomist
Escuela Técnica de Ingenieros
Agrónomos de Madrid
REGIONAL CHIEF ACCOUNTING
OFFICER
Fernando Isac
Tax Register Number:
14.733.649-7
Economist
University of Zaragoza
23
GENERAL COUNCEL
Domingo Valdés
Tax Register Number:
6.973.465-0
Attorney
University of Chile
COMMUNICATIONS OFFICER
José Luis Domínguez
Tax Register Number:
6.372.293-6
Civil Engineer
Pontificia Universidad Católica
de Chile
AUDITING OFFICER
Francisco Herrera
Tax Register Number:
7.035.775-5
Civil Engineer
Pontificia Universidad Católica
de Chile
HUMAN RESOURCES OFFICER
Francisco Silva
Tax Register Number:
7.006.337-9
Public Administration Graduate
University of Chile
Managers’ remunerations
of the Company. This plan includes a definition of the range of bonuses
according to the level of seniority of the executives. The bonuses paid
The total remunerations received by the managers and senior
to the executives consist of a determined number of gross monthly
executives of Enersis during the year 2003 amounted to Ch$ 2,379
remunerations.
million.
Incentive plans
Indemnities paid
Enersis has a plan of yearly bonuses for its executives based on the
This amount corresponds to that managers that left the Company during
compliance of targets and the individual contribution towards the results
the year.
Indemnities paid during the year 2003 amounted to Ch$ 241 million.
management
Management of subsidiaries
CHIEF EXECUTIVE OFFICER ENDESA CHILE
CHIEF EXECUTIVE OFFICER OF COELCE
Héctor López
Tax Register Number: 48.062.402-5
B.Sc. in Law and Economic Sciences
ICADE de Madrid
Cristián Fierro
Tax Register Number: 9.921.311-6
Civil Engineer
University of Chile
CHIEF EXECUTIVE OFFICER OF CHILECTRA
CHIEF EXECUTIVE OFFICER OF CODENSA
Rafael López
Tax Register Number: 14.709.119-2
B.Sc. in Economic and Business Sciences
University of Malaga
CHIEF EXECUTIVE OFFICER OF EDESUR
José M. Hidalgo
NIF Nº (Spain): 10.120.778-G
B.Sc. in Economic and Business Sciences
Universidad de Santiago de Compostela
24
CHIEF EXECUTIVE OFFICER OF EDELNOR
Ignacio Blanco
Tax Register Number: 14.677.073-8
B.Sc. in Economic and Business Sciences
University of Zaragoza
CHIEF EXECUTIVE OFFICER OF CERJ
José Inostroza
José M. Martínez
NIF Nº (Spain): 36.547.347-W
Senior Industrial Engineer
Escuela de Barcelona
CHIEF EXECUTIVE OFFICER OF SYNAPSIS
SOLUCIONES Y SERVICIOS IT LTDA
Victor H. Muñoz
Tax Register Number: 7.479.024-0
Civil Engineer
Universidad Federico Santa María de Valparaíso
CHIEF EXECUTIVE OFFICER OF COMPAÑÍA AMERICANA
DE MULTISERVICIOS LTDA
Pantaleón Calvo
Tax Register Number: 6.611.573-9
Civil Engineer
University of Chile
Tax Register Number: 6.917.769-7
CHIEF EXECUTIVE OFFICER OF INMOBILARIA
Civil Engineer
University of Chile
MANSO DE VELASCO LTDA
Andrés Salas
Tax Register Number: 6.002.870-2
Civil Engineer
University of Chile
Enersis / 2003 annual report
Distribution of human resources
The distribution of the human resources of Enersis in subsidiaries and affiliates as of December 31, 2003 was as follows:
Company
Enersis
Endesa Chile (1)
Chilectra (2)
Edesur
Edelnor
Cerj
Codensa
Coelce
Synapsis (3)
Cam (4)
Inm. Manso de Velasco
Total
Senior
Executives
Professionals
and Technicians
Workers
and Others
18
54
26
32
14
29
19
22
14
8
4
98
1,323
502
1,622
340
1,028
754
533
692
797
9
90
138
217
604
200
460
85
820
51
542
11
Total
206
1,515
745
2,258
554
1,517
858
1,375
757
1,347
24
240
7,698
3,218
11,156
(1) Includes: Endesa Chile, Ingendesa, Pangue, Pehuenche, Celta, El Chocón, Edegel, Emgesa, Betania, Cachoerira Dourada and Túnel de Melón.
(2) Includes: Empresa Eléctrica de Colina
(3) Includes: Synapsis Chile, Synapsis Argentina, Synapsis Colombia, Synapsis Brazil and Synapsis Peru.
(4) Includes: Cam Chile, Cam Argentina, Cam Brazil, Cam Colombia and Cam Peru.
25
During the period, we restructured the way Human Resources
Furthermore, we carried out different training programs for workers
functions in order to respond to the new organization structure of the
and their families such as the Supervision Program, Development of
Group.
Technical and Personal Competence and Induction Courses, amongst
others, totaling 9,880 hours of training, distributed in the following
The principal activities of this management were directed towards
manner: 5% training of Senior Personnel, 45% training professionals
improving the perception of the working atmosphere within the
and 50% training for clerical staff.
organization, affected by the organization restructuring that has taken
place over the past few years.
We also developed programs to bring Senior Management closer
During 2003, we successfully negotiated the Collective Employment
General Management and Human Resources, Committee of Managers,
Contract with the Company’s labor unions: Workers’ Union and the Union
Communicational Activities and Sporting Events.
of University Professionals, substantially improving the historic good labor
relations between the workers and the Company.
With respect to infrastructure, we enlarged, remodeled and
to all the levels within the Company by means of breakfasts with the
modernized some of the installations inside the Corporate Building.
management
activities
Cultural activities
the historic heritage of the country. Furthermore, Enersis published a
book entitled “Illuminating Churches in America” with the images of all
Enersis maintains its commitment to the community, working in
the temples illuminated, both in Chile and in Colombia, Peru and the
the fields of education and culture. In the latter, the Company’s effort
Dominican Republic, thanks to this outstanding project.
was acknowledged by the Corporación de Patrimonio Cultural de Chile
which awarded it the “Heritage” prize in the Conservation category,
Donation of libraries to the remote communities of the country
thanks, amongst other things, to the “Illuminating Churches in the
Three years ago, Enersis joined forces with the El Mercurio newspaper
South of the World” project that provided modern lighting for temples
to develop a campaign to provide libraries to the most remote
in different parts of Chile, which became an important contribution to
communities in the country. To date, we have delivered more than three
those communities.
thousand books to public libraries belonging to remote communities in
the country. The beneficiaries in 2003 were Puerto Natales, Putre and
This acknowledgement, according to the above institution, “confirms
Easter Island.
the importance of uniting the private world with works related to the
national identity because, in addition to protecting the cultural and
Exhibition of works by Matta
intellectual heritage, it permits the Company to acquire a purpose if it
Enersis, together with the Fundación Plaza del Mulato Gil, arranged
projects itself within the society of which it forms a part”. It is for this
the Roberto Matta exhibition in the Museo de Artes Visuales that paid
reason that this prestigious award ratified the noble works that Enersis
homage to someone that became one of the most important exponents
has been doing, year after year, in the area of culture and that in 2003
of plastic arts in the last century. The exhibition comprised more than
26
can be summarized as follows:
eighty works including paintings, graphics and ceramics. “Simply Matta”
was open to the public between March and May of 2003.
Illuminating Churches
Since October 2001, the Endesa Foundation and the Enersis Group
Energy Information Center (EIC)
have developed the noble program of illuminating the most emblematic
In addition to the sponsoring activities supported by Enersis through
temples in the country in order to conserve and highlight the architectural
its subsidiaries Chilectra and Endesa Chile, Enersis owns the Energy
and spiritual value of the greatest number of monuments possible. From
Information Center (EIC) where children and youths in the country may
the moment of signing the agreement between the companies of the
learn about the use and the various forms of energy in an educational
Group and the Chilean Episcopal Conference, 18 churches have been
and interesting manner.
inaugurated throughout the country. In 2003, nine architectural works
have been illuminated. These are: the Cathedral in Santiago, the Cathedral
In 2003, the EIC received 8,618 visitors who learned about electricity
in Valparaíso, the Basílica de María in Antofagasta, the Cathedral in Arica,
through games, interactive maps and a video that explains the electricity
the Cathedral in La Serena, the San Francisco Church in Santiago, the
generation and distribution activities.
Parroquia San Antonio del Mar in Barraza, the Nuestra Señora del Rosario
Church in Quilpué and the Military Museum in Santiago.
Furthermore, the Company complemented this educational activity
with the work by a team trained to give talks on this subject to students
We should point out that during this period, we decided to illuminate
that reside in areas near to the electricity generating plants in the
the Military Museum in Santiago due to the importance it has within
country.
Enersis / 2003 annual report
Financial activities
The year 2003 will be remembered as one of intense and productive
financial activity. During this year we carried out an important Financial
Strengthening Plan announced in October 2002 and conceived to
fulfill three fundamental objectives: refinance the short and medium
term debts, strengthen the equity base of the Company with a capital
increase and improve the liquidity situation by means of the sale of some
chosen assets.
Subsequently, in the month of November, Enersis launched a bond
issue for US$ 350 million on the Yankee market to mature in ten years
at a face rate of 7.375%. Simultaneously, the Company obtained a new
syndicated loan for US$ 500 million at a rate of LIBOR + 225 basis points
led by the Bank of Tokio-Mitsubishi Ltd., Banco Bilbao Vizcaya Argentaria
S.A., Caja Madrid, Deutsche Bank AG, San Paolo IMI S.p.A and Santander
Central Hispano Investment Securities Inc.
These two operations allowed Enersis to amortize the entire
syndicated loan received in May, eliminating all the restrictions and
With a greater success than expected, this plan achieved a reduction
releasing the security established.
in financial debts of 29%, from US$ 8,980 million as of December 31,
2002 to US$ 6,407 million as of December 31, 2003. Furthermore, the
equity base increased by US$ 2,104 million.
Refinancing of debt
The refinancing stage included different forms of financing such as
new syndicated loans, bond issues on the local and international markets,
prepayment of bank debts and other minor operations.
In the month of May, the first syndicated loan for the year was signed
On the other hand, during July, Endesa Chile issued yankee bonds for
US$ 600 million maturing in 10 and 12 years that permitted the payment
of Euros 400 million in bonds on the European market (EMTN) and the
prepayment of the syndicated loan received in May 2003.
Subsequently, in October 2003, this subsidiary placed bonds on the
local market for an amount of UF 8,000,000 which were utilized for the
additional prepayment of US$ 197 million and improvement in the term
of the credit of US$ 743 million mentioned above, leaving only US$ 284
for a total of US$ 2,330 million. This consisted of US$ 1,587 million for
million outstanding as of December.
27
Enersis at a rate of LIBOR + 350 basis points and US$ 743 million for its
subsidiary Endesa Chile at a rate of LIBOR + 300 basis points, at a term of
five years with a grace period of 30 months on payments of principal.
Finally, in February 2004, Endesa Chile obtained a new syndicated
loan of US$ 250 million at a rate of LIBOR + 115 basis points with which
this company prepaid the entire amount pending mentioned above.
In this case, the operation was headed by the following banks:
BBVA, Dresdner, Kleinwort Wasserstein, Salomon Smith Barney Inc. and
Capital increase
Santander Central Hispano Investments Inc. and included the participation
of a further 28 banks.
The increase in capital was done in three stages with the idea of
offering the shareholders all the possible guarantees to permit them to
take a well-informed decision.
This transaction included a series of restrictions such as obligatory
prepayments, limits on new investments and compliance of financial ratios
as well as taking the guarantee over the shares and the inter-company
loan between Enersis and Chilectra.
For this reason, in the month of July, with the funds received from the
capital increase undertaken by the Company, we proceeded to prepay
US$ 582 million of this loan.
The first stage took place between May 31, 2003 and June 30, 2003.
This consisted of a first period of a preferential offer during which the
shareholders of the Company had the right to subscribe 2.9409 shares for
each share they possessed. During this stage Endesa Spain capitalized a
debt of US$ 1,406 million owed by Enersis and the minority shareholders
contributed US$ 663 million, in a clear sign of support of the Company.
activities
The second stage consisted of a period of exchange of local bonds
In accordance with its commitment assumed at the Extraordinary
that took place between November 1, 2003 and November 15, 2003, an
Meeting of Shareholders held in March 2003, Endesa Spain decided not
operation in which over US$ 86 million were swapped.
to participate in this period in order to assure a greater pro rata for the
rest of the shareholders that contributed an additional US$ 136 million.
Finally, the third stage was carried out between November 20, 2003
and December 20, 2003 and consisted of a second preferential offer
To summarize, the capital increase ended up being the largest in
period when the right to the preferential subscription for the shareholders
Latin America in recent times, and collected more than US$ 2,100 million,
was 0.1196 shares for each share they possessed.
surpassing even the most optimistic expectations. In this respect, we must
remember that when this operation was launched, the stock markets were
still fairly depressed and some sectors were very skeptical.
28
Sale of assets
The divestment of assets satisfied the most optimistic expectations as the prices offered for the assets on sale were in the upper levels of those
expected. Assets were sold for a total of US$ 757 million, including their debts.
Divestments
Río Maipo
Canutillar
Transmission Lines
Infraestructura 2000
Total
Deconsolidation
Debt
33
-
-
220
253
Total
203
174
110
270
757
Cash
170
174
110
50
504
Date of Sale
March 2003
April 2003
May 2003
June 2003
Date of
Deconsolidation
April 2003
May 2003
-
January 2003
Enersis / 2003 annual report
Control of debts and capital markets
Grade” rating beyond the contingencies experienced by some countries
in the region during the past year.
Another important aspect was the creation of a Control of Debts and
Capital Markets area that arose in response to the greater requirements of
the international financial and securities markets, responsible for ensuring
the compliance of all the obligations that emanate from the agreements
on credits signed by the companies of the Group.
The corporate strategy applied to contain the inherent risks to an
investment company in the electricity sector has been to manage the
Company’s assets in a prudent and responsible manner. This policy has
materialized in the past year in the strengthening of cash, reduction of
debt, improvement of the ratios on quality of service, concentration of
With respect to the Capital Markets, the tasks of this area include
the primary activities and permanent monitoring of the economic and
the active participation in the financial operations of the companies
regulatory situation in each country where it has operations.
of the Group, especially of the Chilean companies, on the local and
international markets.
Credit Risk Rating
Enersis is an investment company whose assets are adequately
diversified in five countries in the region, which provides a well-distributed
corporate risk profile.
In the same way, the financial cash flows of Enersis are equally
diversified, with the added advantage that they are produced by the
business of generation, distribution and other related activities, providing
the financial situation of the Company with a greater stability.
A concrete measure in the global contex t of the proac tive
management of the Group’s risk has been the creation of the Committee
on Risks, established to identify the broadest variety of risks that could
affect the Company and to rapidly propose the necessary measures to
contain them. This Committee has drawn up a map of risks to the Group
and is operating under the most modern techniques of Management of
Corporate Risks.
Amongst other activities, the Committee on Risks must periodically
inform the Board of Directors on the various measures generated such
as mechanisms to protect cash flows, assets and the continuity of the
29
business operation.
The above has been duly acknowledged by the local and international
risk rating agencies. In fact, these institutions recognize, amongst others,
that one of the strengths of the Group lies in the adequate portfolio of
Both Enersis’ international and local risk rating, as of December
2003 may be seen in the following table, highlighting the fact that their
investments which has permitted Enersis to maintain an “Investment
outlook are all “stable”.
Debt in local currency
Debt in foreign currency
Fitch
BBB-
BBB-
Standard & Poor’s
Moody’s
BBB-
BBB-
-
Ba2
Shares
Bonds
Fitch
1st Class Level 1
A
Feller Rate
1st Class Level 1
A
Humphreys
1st Class Level 2
BBB
activities
business
Historic Expansion
International development
Enersis is the largest electricity Group in Latin America, achieved
Enersis commenced its international expansion process during 1992
through a steady and stable growth in its electricity businesses, generation
through its participation in various privatizations in the neighboring
and distribution, as well as in businesses related to this activity.
countries in the continent, in this way establishing a significant presence
in the electricity sectors of Argentina, Peru, Colombia and Brazil.
The development of the business of distributing electric power has
been achieved jointly with its Chilean subsidiary Chilectra, a company
In July of that year, Distrilec Inversora S.A., a company in which Enersis
involved in the distribution of electric power in the Metropolitan Region
holds a participation, was awarded Empresa Distribuidora Sur S.A.,
of Chile and overseas.
Edesur, a company that distributes electric power in the city of Buenos
Its investments in the generation of electric power in the country and
further 39% of this company and became its controlling shareholder.
Aires, Argentina. Subsequently, in December 1995, Enersis acquired a
abroad have been developed through its subsidiary Empresa Nacional de
Electricidad S.A. (Endesa Chile).
Between July 1994 and December 1995 and through Inversiones
Furthermore, the Company is involved in businesses that complement
de Distribución Eléctrica de Lima Norte S.A. Edelnor in Peru. Also that
its principal activities through a majority holding in the following
year, it acquired Edechancay, a company that distributes electricity.
Distrilima S.A., Enersis purchased 60% of the stock capital of Empresa
companies:
Synapsis Soluciones y Servicios IT Ltda.
market, acquiring jointly with other partners an important part of
Involved in supplying services and equipment related to information
the shares in Companhia de Eletricidade do Rio de Janeiro, Cerj that
technology and data processing.
distributes electric power in the city of Rio de Janeiro, Brazil.
During 1996, Enersis ventured for the first time into the Brazilian
30
Inmobiliaria Manso de Velasco Ltda.
In 1997, Enersis participated successfully, through a consortium, in
Involved in the real estate business, through the integral development
the process of capitalization and subsequent control of Codensa S.A. ESP,
of real estate projects and in the management, rental, purchase and sale
a company that reserved the business of the distribution of electricity in
of the real estate holdings of Enersis and its subsidiaries in Chile.
the city of Bogotá and the department of Cundinamarca, Colombia.
Compañía Americana de Multiservicios Ltda.
At the beginning of 1998, Enersis ventured once again into the
Its activities are related to business and other operations in
Brazilian market. This time, through a consortium, which acquired
networks for public service companies, preferably in the service of
control of Companhia Energética de Ceará S.A. Coelce, a company that
measuring systems for public service companies and as a purchasing
distributes electricity in the State of Ceará in Northern Brazil.
agent, importer and exporter, and also seller and supplier of materials
for Enersis’ subsidiaries and third parties.
Enersis / 2003 annual report
During 1999, Endesa Spain became the controlling shareholder
During the year 2003, Enersis carried out the capital increase that
of Enersis. Through a Tender Offer (OAA – an Offer of the Acquisition
permitted an increase in the Company’s equity base by more than US$
of Shares), in which Ch$ 320 were offered for each, the multinational
2,104 million. In addition, refinancing operations were carried out for
company bought another 32% of Enersis which, added to the 32% acquired
US$ 4,108 million through different instruments such as new syndicated
in August 1997, increased Endesa Spain’s final stake in the ownership of
loans, bond issues on the local and international markets, prepayment
Enersis to 64%. The transaction, concluded on April 7, 1999, involved an
of syndicated loans and other minor operations. Finally, assets worth US$
investment of US$ 1,450 million.
757 million were sold, including the Canutillar generating plant and the
electricity distribution company, Río Maipo.
On May 11, 1999, Enersis acquired an additional 35% of Endesa Chile,
in which it already held 25% of the capital stock. Consequently, Enersis
Risk factors
attained approximately 60% of the ownership of the generating company,
which it already controlled by appointing the majority of its directors.
Enersis is a holding company that operates on the basis of the
Thus, Enersis was consolidated amongst the largest private electricity
payments from its subsidiaries and affiliates in order to be able to meet
Groups in Latin America.
its financial obligations. A significant part of the business of some of
these subsidiaries depends on the conditions of water supplies, and thus,
Important operations were carried out during 2000 that may be
possible drought conditions could affect the profits of the Company.
summarized as follows: the Company’s capital was increased by US$ 520
Furthermore, certain generating subsidiaries could find themselves in a
million. Furthermore, US$ 1,400 million were incorporated as a result of
situation of having to pay administrative fines due to drought.
the sale of the subsidiaries, Transelec, Esval, Aguas Cordillera and the
real estate divestments, within the strategic scope provided for in the
Changes in regulations by the governments of the different countries
Genesis Project.
where the subsidiaries and affiliates operate might mean additional
operating expenses that could have an impact on their profits.
Important investments were made during 2001: US$ 364 million to
increase the company’s stake in the capital stock of Chilectra; US$ 150
Enersis has debts subject to financial covenants and other contractual
million in the purchase of 10% of the capital stock of Edesur, Argentina
conditions. Also, possible variations in exchange rates could have a
that was owned by the company´s workers; US$ 132 million to increase
negative effect on the operating results of the Company.
the participation in the Brazilian company Cerj and US$ 23 million to
increase by 15% the participation of Enersis in Río Maipo.
Some Latin American economies in which the Company has
During the year 2002, progress continued in Chile on the construction
by government authorities. For example, the Argentine authorities have
of the Ralco hydroelectricity plant located in the VIII Region and in Brazil
introduced a series of measures on monetary and exchange control that
of the Endesa Fortaleza Thermoelectricity Plant in the State of Ceará.
have negatively affected the operating results and could continue to have
investments have been known for their occasional drastic interventions
31
Furthermore, the second phase of the electricity interconnection between
an impact on them, affecting them negatively.
Argentina and Brazil commenced operations, achieving a transmission
capacity of 2,000 MW between the two countries. In addition, during this
Development and growth
year, Enersis strengthened the financial position of Cerj by converting into
equity US$ 100 million in convertible bonds and with a capital increase
Enersis’ principal objective is to maximize the economic value of its
of US$ 100 million and invested US$ 1.6 million to increase by 1.73% its
equity through stable growth founded on electric businesses rigorously
share of the capital of Distrilima, the company through which it controls
evaluated and managed. The attainment of this objective is sustained by
Edelnor.
an investment strategy focused on increasing the value of the subsidiaries
and related companies and the acquisition of new companies.
business
32
A key factor of this strategy involves making investments that
The capital increase was materialized through the issue and
significantly call for the experience, management skills and operating
subscription of 770,833,333,333 ordinary shares at a price of R$ 0.48
capabilities of Enersis and its subsidiaries. This requirement makes it
for each lot of one thousand shares, raising the capital of the Company
necessary to invest in companies in which Enersis has a final decision on
by US$ 259 million.
their management and operations as well as the power to approve or
reject their investment projects.
With this operation, the percentage of Enersis’ direct shareholding
through its agency increased momentarily from 20.38% to 40.03% having
Another development factor consists in having an exceptional team
to register a greater value in investments of Ch$ 71,610 million. On May 5,
of professionals that actively interact with the subsidiaries, providing
2003, Enersis transferred to Chilectra 392,660,478,826 shares, equivalent
them with assistance in evaluating their investment projects and that
to 13.56% of the capital of Cerj, for an amount of US$ 57 million. This
are permanently alert to new business opportunities in their respective
implied a reduction of the greater value by Ch$ 47,402 million, leaving a
business areas in the Latin American market.
balance of Ch$ 24,208 million. With this sale, the relative participations
of Chilectra and Enersis in Cerj that existed prior to the capital increase
The above-mentioned factors enable Enersis to make investments
in that company are maintained.
that contribute to the growth of profits with an adequate weighting of
risks deriving from its business activities.
Continuing with the strategic objective of increasing the presence in
Investments and Divestments
CHILE
the generating sector in Brazil, Enersis jointly with Endesa Spain proceeded
with the construction of the Fortaleza Thermoelectric Power Plant in the
State of Ceará. This power station has an installed capacity of 310 MW
and an investment of approximately US$ 250 million. In this manner,
Chile’s most important investment during 2003 was the continuation
Coelce’s electric supply is assured, in a market with one of the highest
of the construction of the Ralco hydroelectric power plant, which is being
growth rates in Brazil.
developed by our subsidiary Endesa Chile . During the present year US$ 221
million were invested in the construction of the power plant and a physical
In effect, by December 2003 the first operating tests of the power
progress rate of 95.7% was achieved at the end of the year.
plant had been carried out with excellent results, permitting the initiation
of full operations during the first quarter of the year 2004.
In line with Enersis’ Financial Strengthening Plan, during 2003 a series
of divestments took place and are detailed as follows: In the month of
Prospects for the Year 2004
March, Compañía Eléctrica del Río Maipo was sold to CGE Distribución S.A.,
a subsidiary of Compañía General de Electricidad S.A. This operation was
CHILE
for an amount of US$ 203 million, of which US$ 33 million corresponded
In the distribution business, the introduction of the so-called
to a deconsolidation of debt. In the month of April, the Canutillar power
“Short Law” (Ley Corta) on the electricity sector in Chile has curtailed
plant belonging to Endesa Chile was sold. The amount of the sale came
the uncertainty on investments in transmission and in other matters
to US$ 174 million. In June Infraestructura 2000 was sold for US$ 270
concerning the sector. A first sign of confidence in the conditions for
million, of which US$ 220 million corresponded to a deconsolidation of
investing appeared in 2003 when, for the first time in several years,
debt. Finally, in May some assets in transmission lines in the north of the
different generating companies submitted bids in response to a tender
country were sold for a total amount of US$ 110 million.
for power from Chilectra.
BRAZIL
We believe that the Governmental and legislative authorities created
On December 10, 2002 the Extraordinary General Meeting of
the right conditions to enable the companies in the sector to continue
Shareholders of Cerj approved a capital increase for an approximate
providing their clients with a service of the best quality. This requires an
value of US$ 100 million.
adequate return on investments that must be reflected in the price of
Enersis / 2003 annual report
this service. In virtue of this, the periodic process of reviewing the tariffs
BRAZIL
is currently underway. The stage at which the New Replacement Value is
The focus of the efforts in Brazil will be placed on a determined and
set has been completed and the only matter pending is the setting of the
significant progress in energy losses in the Cerj concession area following
Added Distribution Value, which will permit the definition of the tariff that
the important investments made during 2003 in the distribution of
will rule the distribution of electric power for the next 4 years.
electricity in Rio de Janeiro.
The commitment of the Company with the city and its clients during
During the first quarter, we expect the third stage of Cerj’s financial
2004 is to surpass their expectations in terms of quality of service, satisfy
strengthening plan to be completed. This considers the restructure of
their needs and become a substantial factor in the improvement of the
the short-term bank borrowings by means of a bond issue and the new
quality of life in the city of Santiago. Furthermore, we wish to contribute
capitalization of inter-company loans for an amount of US$ 250 million.
this experience to all our distribution companies throughout Latin America
These measures will enable the company to strengthen its equity base,
and, at the same time, emulate their best practices.
giving it a more solid financial position. All this will permit the company
The tendency observed in 2004 for the countries in which Enersis has
of electricity and fundamentally on the application of the plans to reduce
operations is towards an increase in demand for electricity, of over 4%,
the losses mentioned above.
to concentrate its efforts principally on the main business, the distribution
in line with the rising economic activity, a similar range to the historic
growth rates of the 90s.
Both Cerj and Coelce, the distribution company in the State of Ceará,
will have to face during the period just starting a new regulatory model
With regard to the generating business, on December 10, 2003 Endesa
of the electricity business in Brazil that implies a degree of uncertainty
Chile submitted a project on the expansion of the San Isidro Power Plant to
for our operations. This new scheme is characterized by an increase in the
the Environmental Impact Evaluation Authorities with the presentation of
role of the State in the regulatory functions, even when the initial rumors
a Study on the Environmental Impact before the Regional Environmental
indicate that the distribution sector will continue being, essentially, a
33
Commission for the V Region.
pass-through business.
The purpose of the project is to ensure a reduction of the dependence
Should the pace of stabilization of the Brazilian economy continue,
on the hydroelectricity plants in the southern zone of the country and to
just as we have been able to appreciate throughout the second semester
satisfy future demand for power in the Central Interconnected System
of 2003, this should result in a sustained growth in demand for energy.
(CIS). For this, Endesa Chile needs to increase the generating capacity of
In that case, it would be logical to expect an interesting growth in the
the San Isidro combined cycle thermoelectric power plant owned by its
sales of both companies.
subsidiary, Compañía Eléctrica San Isidro S.A.
ARGENTINA
The project consists of the construction and start-up of a second
The operations in Argentina will be marked by the process of
combined cycle unit with 370 MW of power, duplicating its current
renegotiation of the concession contract of Edesur, as defined by law
generating capacity. We expect an annual generation of approximately
at the end of last year. This process commenced with positive signs. The
2,500 GWh and its connection to the CIS will be through a 220 kV power
Argentine Government has taken steps to readjust the tariffs for the large
line between the station and the Quillota sub-station belonging to HQI
industrial clients and we trust that during the course of the year there will
Transelec Chile S.A. The characteristics of the enlargement will be very
be a possibility of authorizing increases for the distribution companies
similar to the current San Isidro plant. The investment required to develop
for account of the negotiations. These signs are particularly opportune
this project is estimated at US$ 190 million.
considering that Enersis has taken all the necessary measures to permit
business
the full operation of Edesur, though some of them, such as the strong
Just as in other countries in which the Enersis Group has operations,
reduction of Capex, may not be possible to maintain in medium and long
if the macroeconomic conditions in Peru remain stable, this subsidiary
term due to, amongst other reasons, the important growth in demand in
could experience an interesting growth in its sales of energy.
our concession area. Thus, our subsidiary, Edesur, may benefit from the
growth in demand that the recovery of the Argentine economic activity
COLOMBIA
would suggest, an aspect confirmed by some of the main industrial activity
In Colombia, in the financial area, Codensa expects to conclude a
statistics throughout 2003.
bond issue on the local market during 2004.
In any case, the adequate resolution of the matter of tariffs will
The company will multiply its efforts to venture into new businesses
continue being an essential aspect in the overall performance of Edesur,
such as the recent opening of a new line of credit for the clients interested
as also of the other electricity distribution companies in the country.
in acquiring electrical appliances. In this way, and by facilitating the access
PERU
to equipment that consumes electricity, it is hoped to stimulate the
consumption of electricity preferably in the business and residential areas.
In Peru, during the second half of the year, Edelnor will commence
This would have an important effect not only on the added consumption
its process of fixing tariffs in an atmosphere of strong questioning of
but also on the diversification of the source of demand and the result of
the performance of the privatized companies. In any case, Edelnor can
which should be a more stable increase in revenues.
demonstrate in its favor a permanent policy of expansion of its coverage
and improvement in its technical quality. In fact, the statistics on the
It is also hoped to make progress on the subject of reducing non-
interruption of supply and their respective duration have improved
technical losses in order to reach a position more in line with the Chilean
ostensibly since the company was privatized.
and Peruvian companies. In fact, Codensa has the technical capacity and
sufficient trained human resources to achieve a better level of efficiency
It is interesting to point out that since the year 1996 this subsidiary
in this area.
has significantly reduced its energy losses, which reflects growing signs
of efficiency.
34
Enersis / 2003 annual report
investment and financing policy
The Ordinary Meeting of Shareholders held on March 31, 2003
participation in their capital with appointees originating preferably
approved the Investment and Financing Policy for the year 2003
from the Board of Directors or the senior management of both the
described below:
1. Investments
(a) Investment areas
Company and its subsidiaries.
• 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.
• Super vise the management of the subsidiar y and related
As approved in the by-laws, Enersis will make investments in the
companies.
following areas:
• Maintain a permanent control of the borrowing limits such that
• Equity contributions for investment or creation of subsidiary or related
the investments and contributions made or planned do not imply a
companies whose activity is similar, related or connected to energy
variation beyond the norms on parameters that define the maximum
in any of its forms or nature, or to the supply of public services or
limits for investments.
that have energy as their main raw material.
•
Investments consisting in the acquisition, exploitation, construction,
2. Financing
rental, management, marketing and sale of any kind of real estate,
be it directly or through subsidiary companies.
(a) Maximum level of indebtedness
• Other investments in any kind of financial assets, titles and
The maximum level of indebtedness for Enersis will be based on a
instruments.
ratio of total debt to equity plus minority interests equal to 1.75 times
35
the consolidated balance sheet.
(b) Maximum investment limits
The maximum investment limits for each investment area will be
(b) Attributes of management to agree with creditors on
as follows:
restrictions to dividend payments
i)
Investments in its subsidiaries in the electric sector, as needed
Restrictions on dividend payments may only be agreed to with
to enable such subsidiaries to fulfill their respective corporate
creditors when these restrictions have been previously approved at a
purposes.
General Meeting of Shareholders (either Ordinary or Extraordinary).
ii)
Investments in other subsidiary companies, such that the total
of the proportions of the fixed assets corresponding to the
(c) Attributes of management to agree with creditors on the
participation in each one of these other subsidiary companies
granting of collateral
does not exceed the proportion of fixed assets corresponding to
The management of the Company may agree with the creditors
the participation in the subsidiaries of the electric sector and of
to grant real or personal security, if complying with the law and the
Enersis S.A.
Company’s by-laws.
(c) Controlling participation in investment areas
(d) Essential assets for the operation of the Company
In order to control areas of investment and in accordance with the
The shares that represent the equity investments made by Enersis
definition of the corporate purpose of Enersis, actions as far as possible
in its subsidiaries Chilectra and Compañía Eléctrica del Río Maipo are
will be taken as follows:
essential assets for the operation of the Company.
• Propose to the Shareholders’ Meetings of the subsidiary and related
companies, the appointment of Directors that correspond to Enersis’
investment and financing policy
evolution of the financial statements
Millions of Ch$ (nominal)
Total Assets
Total Liabilities
Minority Interests
Shareholders’ Equity
Liquidity Ratio
Debt Ratio (1)
Operating Income
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Profit (Loss) for the Period
1994
743,066
226,364
132,123
384,579
1.28
0.44
343,432
(251,033)
(38,142)
54,257
24,156
68,811
1995
1,524,737
704,661
311,971
508,105
0.75
0.86
736,026
(561,474)
(86,030)
88,522
57,516
97,542
1996
4,136,432
2,028,207
1,465,902
642,323
1.17
0.96
1,160,667
(718,014)
(117,240)
325,413
(14,845)
105,969
1997
6,180,415
3,202,042
2,272,352
706,021
1998
7,442,034
4,017,266
2,640,805
783,963
1.20
1.08
0.94
1.17
1,334,977
(857,444)
(115,129)
362,404
(66,693)
103,516
1,548,497
(942,288)
(129,857)
476,352
(184,815)
90,093
(1) Total Liabilities / (Shareholders’ Equity plus Minority Interests)
36
Millions of Ch$ (nominal)
Total Assets
Total Liabilities
Minority Interests
Shareholders’ Equity
Liquidity Ratio
Debt Ratio (1)
Operating Income
Operating Costs
1999
11,123,834
6,822,701
3,602,470
698,662
2000
2001
11,058,463
12,388,155
6,444,707
3,513,155
1,100,600
7,254,045
3,954,923
1,179,186
2002
12,621,165
7,564,982
4,050,603
1,005,580
2003
10,732,747
4,835,073
3,349,282
2,548,392
0.81
1.59
0.62
1.40
0.71
1.41
0.56
1.50
1.02
0.82
2,270,897
2,589,957
2,970,273
2,485,873
2,352,333
(1,596,916)
(1,754,707)
(1,966,322)
(1,730,050)
(1,651,732)
Selling and Administrative Expenses
(244,742)
(314,736)
Operating Income
Non-Operating Income
Profit (Loss) for the Period
(271,383)
732,567
429,240
520,514
(400,246)
(159,532)
(483,496)
(78,159)
90,083
40,926
(223,179)
532,644
(796,530)
(223,748)
(169,503)
531,098
(449,911)
12,468
(1) Total Liabilities / (Shareholders’ Equity plus Minority Interests)
Enersis / 2003 annual report
corporate structure
DISTRIBUTION
GENERATION
TRANSMISSION
R
O
T
C
E
S
Y
T
I
C
I
R
T
C
E
L
E
S
E
S
S
E
N
I
S
U
B
R
E
H
T
O
37
MASSIVE SERVICES
ENGINEERING
INFRASTRUCTURE
INFORMATION AND
TELECOMMUNICATIONS
GAS PIPELINE
REAL STATE
corporate structure
evolution of the operating data
GENERATION
ENDESA CHILE
Sale of Energy (GWh)
Production of Energy (GWh)
Installed Capacity (MW)
Employees
Sales/ Employee (MWh) / employee)
ENDESA FORTALEZA (CGTF) (*)
Sale of Energy (GWh)
Production of Energy (GWh)
Installed Capacity (MW)
Employees
Sales/ Employee (MWh) / employee)
DISTRIBUTION
CHILECTRA
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
38
EDESUR
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
EDELNOR
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
CERJ
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
CODENSA
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
COELCE
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
1994
22,075
20,027
5,093
2,679
8,240
-
-
-
-
-
1994
6,358
9.3%
1,064
1,811
8,897
16.2%
2,043
4,324
2,650
18.8%
580
866
-
-
-
-
-
-
-
-
-
-
-
-
1995
26,613
23,663
5,967
2,950
9,021
-
-
-
-
-
1995
6,676
9.0%
1,099
1,801
9,731
12.0%
2,050
3,950
2,756
16.1%
673
758
-
-
-
-
-
-
-
-
-
-
-
-
1996
32,765
27,680
6,837
2,300
14,246
-
-
-
-
-
1996
7,256
8.6%
1,133
1,643
10,398
10.1%
2,042
3,515
2,993
13.8%
749
943
5,733
29.3%
1,217
4,376
-
-
-
-
-
-
-
-
1997
39,953
28,722
10,247
2,753
14,513
-
-
-
-
-
1997
7,647
7.6%
1,169
1,664
11,160
8.3%
2,078
3,180
3,256
11.7%
805
777
6,424
25.3%
1,341
2,288
7,929
23.8%
1,536
2,067
-
-
-
-
(*) Station inaugurated in January 2004. Number of employees as of December 31, 2003.
Enersis / 2003 annual report
1998
50,291
37,000
11,886
3,158
15,925
-
-
-
-
-
1998
8,175
6.0%
1,212
1,674
11,680
8.1%
2,094
2,999
3,389
9.7%
816
765
7,208
19.1%
1,452
2,260
8,217
19.5%
1,628
1,904
5,377
13.3%
1,508
1,834
1999
50,812
39,892
12,251
2,526
20,116
-
-
-
-
-
1999
8,425
5.4%
1,239
1,383
12,325
7.8%
2,105
2,630
3,423
8.8%
843
722
7,694
15.3%
1,559
1,782
8,502
14.4%
1,746
1,213
5,709
11.2%
1,652
1,958
2000
56,482
42,122
12,347
1,764
32,019
-
-
-
-
-
2000
8,854
5.2%
1,262
868
12,597
10.3%
2,108
2,379
3,583
9.9%
852
618
7,656
19.7%
1,581
1,402
8,776
10.5%
1,802
969
5,894
13.3%
1,796
1,592
2001
54,234
42,227
12,253
1,752
30,955
-
-
-
-
-
2001
9,585
5.4%
1,289
772
12,909
9.9%
2,097
2,267
3,685
8.9%
867
557
6,739
22.7%
1,691
1,354
8,673
11.8%
1,850
813
5,352
13.0%
1,917
1,464
2002
48,629
41,022
11,953
1,623
29,962
-
-
-
-
-
2002
9,952
5.6%
1,319
720
12,138
11.6%
2,090
2,251
3,872
8.5%
871
565
7,146
22.6%
1,778
1,451
9,015
10.3%
1,911
802
5,558
12.9%
2,009
1,401
2003
51,053
42,929
11,599
1,515
33,698
-
-
-
310
45
2003
10,518
5.6%
1,341
745
12,638
11.8%
2,117
2,258
3,972
8.4%
892
554
7,398
23.6%
1,905
1,517
9,254
10.2%
1,972
858
5,897
13.5%
2,255
1,375
GENERATION
ENDESA CHILE
Sale of Energy (GWh)
Production of Energy (GWh)
Installed Capacity (MW)
Employees
Sales/ Employee (MWh) / employee)
ENDESA FORTALEZA (CGTF) (*)
Sale of Energy (GWh)
Production of Energy (GWh)
Installed Capacity (MW)
Employees
Sales/ Employee (MWh) / employee)
DISTRIBUTION
CHILECTRA
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
EDESUR
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
EDELNOR
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
CERJ
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
CODENSA
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
COELCE
Sale of Energy (GWh)
Loss of Energy
Clients (Thousands)
Employees
1994
22,075
20,027
5,093
2,679
8,240
1994
6,358
9.3%
1,064
1,811
8,897
16.2%
2,043
4,324
2,650
18.8%
580
866
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1995
26,613
23,663
5,967
2,950
9,021
-
-
-
-
-
1995
6,676
9.0%
1,099
1,801
9,731
12.0%
2,050
3,950
2,756
16.1%
673
758
-
-
-
-
-
-
-
-
-
-
-
-
1996
32,765
27,680
6,837
2,300
14,246
1996
7,256
8.6%
1,133
1,643
10,398
10.1%
2,042
3,515
2,993
13.8%
749
943
5,733
29.3%
1,217
4,376
-
-
-
-
-
-
-
-
-
-
-
-
-
1997
39,953
28,722
10,247
2,753
14,513
-
-
-
-
-
-
-
-
-
1997
7,647
7.6%
1,169
1,664
11,160
8.3%
2,078
3,180
3,256
11.7%
805
777
6,424
25.3%
1,341
2,288
7,929
23.8%
1,536
2,067
1998
50,291
37,000
11,886
3,158
15,925
-
-
-
-
-
1998
8,175
6.0%
1,212
1,674
11,680
8.1%
2,094
2,999
3,389
9.7%
816
765
7,208
19.1%
1,452
2,260
8,217
19.5%
1,628
1,904
5,377
13.3%
1,508
1,834
1999
50,812
39,892
12,251
2,526
20,116
-
-
-
-
-
1999
8,425
5.4%
1,239
1,383
12,325
7.8%
2,105
2,630
3,423
8.8%
843
722
7,694
15.3%
1,559
1,782
8,502
14.4%
1,746
1,213
5,709
11.2%
1,652
1,958
2000
56,482
42,122
12,347
1,764
32,019
-
-
-
-
-
2000
8,854
5.2%
1,262
868
12,597
10.3%
2,108
2,379
3,583
9.9%
852
618
7,656
19.7%
1,581
1,402
8,776
10.5%
1,802
969
5,894
13.3%
1,796
1,592
2001
54,234
42,227
12,253
1,752
30,955
-
-
-
-
-
2001
9,585
5.4%
1,289
772
12,909
9.9%
2,097
2,267
3,685
8.9%
867
557
6,739
22.7%
1,691
1,354
8,673
11.8%
1,850
813
5,352
13.0%
1,917
1,464
2002
48,629
41,022
11,953
1,623
29,962
-
-
-
-
-
2002
9,952
5.6%
1,319
720
12,138
11.6%
2,090
2,251
3,872
8.5%
871
565
7,146
22.6%
1,778
1,451
9,015
10.3%
1,911
802
5,558
12.9%
2,009
1,401
39
2003
51,053
42,929
11,599
1,515
33,698
-
-
310
45
-
2003
10,518
5.6%
1,341
745
12,638
11.8%
2,117
2,258
3,972
8.4%
892
554
7,398
23.6%
1,905
1,517
9,254
10.2%
1,972
858
5,897
13.5%
2,255
1,375
evolution of the operating data
Pangue Power Plant, Chile
generation
Colombia
2,589 MW
Peru
967 MW
Brazil
968 MW
Argentina
3,622 MW
Chile
3,763 MW
41
Ralco Power Plant, Chile
Endesa Chile
information of the company
BOARD OF DIRECTORS
SENIOR EXECUTIVES
Chairman of the Board
Luis Rivera
Chief Executive Officer
Héctor López
Vice-Chairman
Antonio Pareja
Directors
Jaime Bauzá
Ignacio Blanco
Enrique García
Carlos Torres
Andrés Regué
Antonio Tuset
Leonidas Vial
Chief Communications Officer
Renato Fernández
Legal Counsel
Carlos Martín
Chief Financial Officer
Alejandro Gonzalez
Chief Human Resources Officer
Juan Carlos Mundaca
Chief Planning and Control
Officer
Julio Valbuena
Chief Trading and Sales Officer
José Venegas
Chief Energy Planning Officer
Rafael Errázuriz
Chief Production and Transport
Officer
Rafael Mateo
43
Chief Chile Generation Officer
Claudio Iglesias
Corporate Name
Empresa Nacional
de Electricidad S.A.
Stock Company
Tax Register Number
91.081.000-6
Address
Santa Rosa Nº 76
Santiago, Chile
Telephone
(56-2) 630 9000
Fax
(56-2) 635 4720
P.O. Box
1392, Santiago
Web Site
www.endesa.cl
E-Mail
comunicacion@endesa.cl
Inscript. Securities Register
Nº 114
External Auditors
Ernst & Young Servicios
Profesionales de Auditoría
Ltda.
Number of Shares
8,201,754,580
Number of Shareholders
27,334
Subscribed and Paid-in Capital
(ThCh$) 1,050,193,846
Participation of Enersis
(direct and indirect)
59.98%
Corporate purpose
Generation and supply
of electric power, sale of
consulting and engineering
services within the country and
abroad and construction and
management of infrastructure
works.
generation
Enersis is the principal shareholder of Endesa
the interconnecting lines with Brazil; and CEMSA,
Chile with 59.98% of its property. Through
a sales company that has established contracts
Endesa Chile, the Group has channeled
for exports to that country through the related
its investments into the area of electricity
Brazilian company, CIEN. The latter is supplied
generation. The principal activities it carries
mainly by Central Costanera that has committed
out are related to the generation and sale of
962 MW with the Brazilian market
In Brazil,
electric power. In addition, its sells consultancy
through Centrais Elétricas Cachoeira Dourada S.A.
44
and engineering services in all its specialities
it operates a total of 658 MW of power that
In Argentina, through Central Costanera S.A.
represents 1% of the national installed capacity.
and Hidroeléctrica El Chocón S.A., it operates
During the year 2003 it generated 3,024 GWh and
a total of 3,622 MW of power. In this way,
sold 3,770 GWh. Furthermore, it participates in
Endesa Chile is one of the principal operators
the sales market through the interconnection line
in the generating activity with 16% of the
operated by CIEN that has 2,000 MW committed
total of the Argentine Interconnected System.
Endesa Chile is the principal generating company
During the year it generated 8,128 GWh and
of electric power in Chile and one of the largest
sold 9,259 GWh. Endesa Chile also controls
companies in the country. In Chile, it operates a
CTM and TESA, transport companies that own
total of 3,763 MW of power, which represents 35%
Enersis / 2003 annual report
of the installed capacity in the country. Some 73% of the
on the spot market. The installed capacity of Celta S.A.
installed capacity of Endesa Chile and its subsidiaries
in this system amounts to 182 MW, 5% of NIS and if we
is hydroelectric and the rest is thermal. Endesa Chile
include GasAtacama Generación, of which Endesa Chile
participates in the Central Interconnected System (CIS),
owns 50%, the installed capacity in NIS amounts to 27%.
the principal interconnected system in the country and
Thus, during the year, Endesa Chile generated 16,524
that extends through an area where approximately 93%
GWh and sold 18,861 GWh
In Colombia, through
of the population of the country resides. Endesa Chile
Central Hidroeléctrica de Betania S.A. E.S.P. and Emgesa,
and its subsidiaries have an installed capacity of 3,581
it operates a total of 2,589 MW of power that represents
45
MW in this system, accounting for approximately 50%
20% of the Colombian installed capacity. During 2003,
of CIS. The company also participates in the Northern
they generated 10,794 GWh with an annual sale of
Interconnected System (NIS) through its subsidiary,
14,900 GWh
In Peru, through Edegel, it operates a
Celta S.A. and indirectly through Gasoducto Atacama
total of 967 MW of power that represents 22% of the
Chile Limitada and GasAtacama Generación Limitada,
Peruvian system with an annual generation of 4,458 GWh
supplying different mining companies and with sales
and annual sales of 4,443 GWh
With respect to the
generation
most important projects developed during 2003, we
would highlight the Ralco Power Plant that is located
in the Alto Bío Bío area, approximately 120 kilometers
southeast of the city of Los Angeles and some 30
kilometers above the Pangue Plant. Its nominal
power will be 570 MW. This will permit an annual
contribution to the Central Interconnected System of
46
an average generation of 3,100 GWh and its start-
Interconnected System
Another important project
up is expected during 2004. As of December 31,
is the Enlargement of the San Isidro II Plant, whose
2003, the physical progress in the construction works
objective is to ensure a reduction in the dependence
reached 96%
Related to this project, we highlight
on the hydroelectricity plants in the southern zone
the Link between the Ralco Station and the CIS. This
of the country and to satisfy future demand for
project was concluded on June 27, 2003 and included
energy from the Central Interconnected System (CIS)
the construction of a transmission line of 2x220 kV
This consists of constructing and putting into
and 140 kilometers in length that connects the Ralco
operation an enlargement of the combined cycle
Hydroelectricity Plant to the Charrúa sub-station
plant (Second Unit) i.e. natural gas-steam, with 370
where the energy will be delivered to the Central
MW of power, increasing the generating capacity of
Enersis / 2003 annual report
San Isidro by 100%. The annual generation is expected
areas of energy, infrastructure, mining, public works
to be approximately 2,500 GWh and the investment
and telecommunications, through services provided to
amounts to US$ 190 million
With respect to CIEN, the
the Group and other unrelated clients
Furthermore,
contracts associated with the Argentina-Brazil power
Endesa Chile manages the concessionaire, Túnel El
interconnection lines are: 300 MW with Tractebel, 700
Melón S.A. that operates on Route number 5 North. This
MW with Furnas, 400 MW with Copel (previously 800
company began its definite operations in September 1995
MW that were renegotiated to the current 400 MW) and
when it placed its use and installations at the disposal of
200 MW with Cerj. With power purchased from Petrobras
its customers. The horizon of the concession stretches till
47
and Dona Francisca, in 2003 the Company supplied 106
May 2016
During 2003, we very successfully concluded
MW to Coelce and 54 MW starting in 2004. In addition,
the sale of Infraestructura 2000 S.A. to the Spanish
commencing in January 2004, the sale to Cerj will
company OHL Concesiones S.L. for a total amount of
increase by 84 MW
In addition to generation, Endesa
approximately US$ 50 million. This transaction permitted
Chile possesses other businesses in which we highlight
the deconsolidation of approximately US$ 220 million
Ingendesa that participated in important investment
in debts that Infraestructura Dos Mil S.A. had with third
projects in Chile and in Latin America, particularly in the
parties
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative and Expenses
Operating Income
Non-Operating Income
Net Income
2003
920,281
(550,447)
(31,324)
338,511
(179,005)
78,131
2002
947,480
(561,142)
(36,652)
349,687
(316,559)
(9,412)
Var 02-03
(27,199)
10,695
5,328
(11,176)
137,554
87,543
% Var
(2.9%)
1.9%
14.5%
(3.2%)
43.5%
930.1%
generation
Endesa Fortaleza Power Plant, Brazil
Endesa Fortaleza
information of the company
BOARD OF DIRECTORS
Chairman
Francisco Javier Bugallo
Directors
Juan Pablo Herrera
Marcelo Llévenes
Chief Executive Officer
Hernán Salazar
Corporate Name
CGTF- Central Geradora
Termelétrica
Fortaleza S.A.
Type of Company
Foreign Stock Company
Address
Rua Adolfo Pinheiro 176,
Dionisio Torres
Postal Area Code
60.120-040
Telephone
(55-85) 216 4551/52
Fax
(55-85) 216 4564
External Auditors
Deloitte & Touche Tohmatsu
Subscribed and Paid-in Capital
(R$) 151,935,779
Participation of Enersis
(direct and indirect)
48.82%
Corporate purpose
Development of projects for
thermoelectricity generation
in Brazil.
49
generation
Endesa Fortaleza, a combined cycle station
of the PPT was to stimulate the diversification of
located 50 kilometers from the capital of
the sources of generation and, with it, reduce the
the Brazilian State of Ceará, commenced
strong dependence Brazil had on hydroelectric
its business operations in December 2003.
energy
The fact that the Endesa project was
This plant is 51% owned by Endesa and 49%
included in the PPT has meant some advantages
by Enersis
The new plant, which has an
such as the guaranteed supply of natural gas to the
50
net installed capacity of 310 MW and which
station during 20 years by the Government of Brazil,
has involved an investment of US$ 250
investment incentives and facilities to obtain lines
million, is included in the Priority Program
of credit required for Brazilian equipment
Built
for Thermoelectricity (PPT) promoted by
in the Pecém Industrial and Port Complex, the new
the Brazilian government in February 2000,
plant, whose construction works started in March
following the serious crisis in the supply of
2002, lies on 70,000 square meters and has the
electricity suffered by the country as a result
capacity to supply electric power to a population of
of the drought it faced. The primary objective
around 1,200,000 inhabitants, between industrial
Enersis / 2003 annual report
51
and residential clients. We should point out that the
was perceived to assure the supply of energy to Coelce,
Fortaleza thermoelectric station, which is capable of
a company that distributes energy in the State of Ceará
covering 30% of the current electricity consumption of
and belongs to Enersis. It is sufficient to mention that
Ceará, already has a contract that assures the sale of
during the 2001-2003 period, sales of energy in the
all the energy it generates.
The start-up of the new
State of Ceará rose by 10.2%, whilst the number of
Fortaleza plant included in Endesa’s Strategic Plan for
clients increased by nearly 250,000
Latin America, was justified, on the one hand, by the
interest of the Company to increase its relative weight
in the generation business in Brazil (1%), less than it has
in distribution (4.6%), and on the other, by the wish to
accompany the important growth being experienced
by the Brazilian electric market which, undoubtedly,
means taking advantage of the business opportunities
that exist in that country. Furthermore, this investment
generation
Niteroi, Rio de Janeiro, Brazil
distribution
Colombia
1,972,016 clients
Peru
891,589 clients
Brazil
4,160,181 clients
Argentina
2,117,254 clients
53
Chile
1,340,717 clients
Las Condes, Santiago, Chile
Chilectra
information of the company
BOARD OF DIRECTORS
Chairman
Jorge Rosenblut
Vice-Chairman
José M. Fernández
Directors
Pedro Buttazzoni
Hernán F. Errázuriz
Marcelo Llévenes
Alberto Martín
Álvaro Quiralte
SENIOR EXECUTIVES
Chief Executive Officer
Rafael López
Chief Communications Officer
Marcelo Castillo
Legal Counsel
Gonzalo Vial
Chief Regional Distribution
Officer
Marcelo Silva
Chief Regional Services Officer
Cristóbal Sánchez
Chief Financial Officer
Juan Pablo Spoerer
Chief Planning and Control
Officer
Jorge Faúndez
Chief Regulation Officer
Guillermo Pérez
Chief Operations Officer
Juan Camilo Olavarría
Chief Marketing Officer
Alfredo Herrera
Chief Contract Control Officer
Victor Orduña
Chief Human Resources Officer
Carmen Paz Urbina
Chief Technical Officer
Alejandro Gómez
Chief Corporate Business Officer
Christian Mosqueira
55
Corporate Name
Chilectra S.A.
Type of company
Limited Liability Stock
Company
Tax Register Number
96.524.320-8
Address
Santa Rosa N°76, Piso 8
Santiago, Chile
Telephone
(56-2) 675 2000
Fax
(56-2) 675 2999
P.O. Box
1557, Santiago
Web Site
www.chilectra.cl
e-mail
rrpp@chilectra.cl
Securities Register Number
Nº 0321
External Auditors
KPMG Jeria y Asociados
Auditores y Consultores Ltda.
Number of shares
366,045,401
Number of shareholders
5,999
Subscribed and Paid-in Capital
(ThCh$) 284,940,949
Trading name on Chilean Stock
Markets
Chilectra
Participation of Enersis
(direct and indirect)
98.25%
Corporate purpose
Operate in the country or
abroad in the distribution and
sale of hydroelectric, thermal,
caloric
or any other form of electric
energy.
distribution
Chilectra is the largest electric energy
Furthermore, in the case of Codensa in Colombia,
distribution company in the country. It serves
it has the responsibility for the commercial area
33 boroughs of the Metropolitan Region
and for the control of energy losses
In 2003, the
and covers 2,118 square kilometers within its
physical sales of energy reached 10,518 GWh, an
concession area, including the zones serviced
increase of 5.7% with respect to the same period of
by Empresa Eléctrica Colina Ltda. and Luz Andes
2002. With regard to the supply to Large Clients, the
56
Ltda. It has 661 kilometers of different high
new business projects and the expansion of capacity
tension circuit lines, 53 sub-stations and 127
requested amounted to 90,000 KW. The renewal
power transformers with a capacity of 5,558
of important long-term contracts amount to over
MVA
Enersis, its principal shareholder
3,300 GWh in projected sales of energy. We should
and controller with a direct participation of
especially mention the start-up of the new Aguas
98.24% of its equity, has chosen Chilectra as
Servidas La Farfana wastewater treatment plant
its technical and administrative operator of the
belonging to Aguas Andinas, considered one of the 5
investments in Cerj and Coelce in Brazil, Edesur
largest plants of this type in the world
In addition,
in Argentina and Edelnor in Peru
in 2003 Chilectra purchased energy from various
Enersis / 2003 annual report
generators in the country, the most important being: AES
market, maintaining leading levels of efficiency in the
Gener (34.5%), Endesa Chile (32.5%), Colbun (18.5%),
Latin American area. In this way, we would point out that
Pangue (10.9%) Puyehue (0.9%) and others (2.7%)
the loss of energy index, accumulated as of December
The tariffs for the supply of electric energy, in accordance
2003, was 5.6%. This figure permitted Chilectra to be,
with the sector’s legislation (Decree Law Nº 1 of 1982
once more, one of the most efficient companies in the
issued by the Ministry of Mining) are set every four years.
world in controlling losses. These results are due to the
During 2003, Chilectra submitted to the authorities
continuous efforts of the company in this activity, taking
57
all the information required in accordance with the
a series of steps and making investments in new projects
current legislation for the process of setting the tariffs
on technical measures as well as in the control and
on distribution. This process will conclude in November
maintenance of those already in existence, added to the
2004 with the publication in the Official Gazette of the
permanent preventative and corrective actions carried
new decree that will set the tariffs for the next period
out on site
The staff headcount of Chilectra as of
Chilectra has consolidated in the energy distribution
December 31, 2003 amounted to 745 people, including
distribution
the personnel in Chilectra, Luz Andes and Empresa
as an example, during the year and jointly with
Eléctrica de Colina
With respect to the business
the Association of Bread Makers, Indupan A.G. and
activities, as of December 31, 2003 the total number
the National Environmental Corporation, Conama,
of clients of Chilectra was 1,340,717, an increase of
Chilectra presented an Electric Heater for Chilean
1.6% with respect to the same date of the previous
Ovens as a solution directed at energy reconversion.
year
During the year 2003 Chilectra boosted its
New payment channels were also implemented
58
process of strengthening and positioning the company
(Servipag and Internet), the consumption bill was
as a source of clean, safe and convenient energy to
redesigned to incorporate shadings and to include
the market, responding to the new requirements in
a magazine with information and entertainment.
the area of technological innovation, safety, lighting
Chilectra continued its consolidation as an integral
and source of heat. Amongst the principal activities in
provider of electric services and products in the
the year, Chilectra continued with the promotion of its
home, companies and industries. In this perspective,
Full Electric service that permits houses, apartments
Chilectra intensified its sales plan of products that
and industries a complete operation through the
utilize electric power as fuel, as well as services such
use of electric power at competitive prices
Thus,
as insurance on protected energy
As a result of
Enersis / 2003 annual report
the actions taken during 2003, Chilectra achieved third
life for its inhabitants. Amongst the activities carried out
place in the Ranking of Concessionaire Companies of
during the year 2003, we highlight the recovery of the
Public Distribution Services and first place amongst the
historic heritage, the promotion of the use of electricity,
companies with more than 50,000 clients, in accordance
prevention of juvenile drug addiction, the promotion of
with the ranking drawn up by the Superintendency of
reading and literary creation, amongst other projects
Electricity and Fuels
In December 2003 Chilectra
had the satisfaction of receiving the prize for Social
59
Responsibility awarded by the Society for Fomenting
Industry (SOFOFA) in recognition of the efforts made
by the company to strengthen its relationship with the
community and contribute towards a better quality of
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
426,823
(304,334)
(34,438)
88,052
(59,338)
51,470
2002
401,917
(281,512)
(32,212)
88,193
(131,220)
(31,312)
Var 02-03
24,906
(22,822)
(2,226)
(141)
71,882
82,782
% Var
6.2%
(8.1%)
(6.9%)
(0.2%)
54.8%
264.4%
distribution
Puerto Madero, Buenos Aires, Argentina
Edesur
information of the company
SENIOR EXECUTIVES
Chief Executive Officer
José María Hidalgo
Chief Environmental and Quality
Officer
José María Gottig
Chief Communications Officer
Daniel Horacio Martini
Chief Internal Audit Officer
Jorge Lukaszczuk
Legal Affairs Director
Alvaro Eduardo Estivariz
Human Resources Director
Héctor Hernán Ruiz
Marketing Director
Sandro Ariel Rollan
Distribution Director
Daniel Héctor Colombo
Services Director
Daniel Roberto Alasia
Planning and Financial Control
Director
Juan Grande
Administration and Finance
Director
Juan Eduardo Verbitsky
61
Corporate Name
Empresa Distribuidora Sur S.A.
BOARD OF DIRECTORS
Chairman
Rafael Fernández
Vice-Chairman
Rafael López
Directors
Rafael Arias
Pablo Alejandro Ferrero
Alfredo MacLaughlin
Marcelo Silva
Julio Valenzuela
Gonzalo Vial
Jorge Volpe
Deputy Directors
Pedro Eugenio Aramburu
Alan Antes
Manuel María Benites
Jorge G. Casagrande
Santiago Daireaux
Roberto Fagan
Horacio Babino
Mariano F. Grondona
Pablo Martin Lepiane
Type of company
Stock Company
Tax Register Number
30-65511651-2
Address
San José 140 (1076)
Capital Federal, Argentina
Telephone
(54-11) 4370 3700
Fax
(54-11) 4381 0708
Web Site
www.edesur.com.ar
E-mail
servicio@edesur.com.ar
External Auditors
Deloitte & Co. S.R.L.
Number of shares
898,585,028
Number of shareholders
141
Subscribed and Paid-in Capital
(Ar$) 2,076,134,560
Participation of Enersis
(direct and indirect)
65.10%
Corporate purpose
Distribution and sale of
electric power in the southern
zone of Buenos Aires and other
areas of the Province of
Buenos Aires and related
Services.
distribution
Edesur’s principal purpose is the distribution
With respect to the tariff process, the company’s
and sale of electricity in the southern zone
operations during the year 2003 continued to be
of the autonomous city of Buenos Aires and
affected by the stipulations of the Public Emergency
twelve districts in the Province of Buenos
Law decreed in January, 2002. These established,
Aires. It has a concession area that covers
amongst other measures, the freezing of the tariffs
3,309 square kilometers
The financial
on public services at values in Argentine Pesos similar
62
restrictions obliged the company to develop
to those in place before the devaluation. Only in the
the operating, maintenance and investment
month of October was the Government authorized by
activities under severe budgetary limitations.
law to renegotiate all the public service contracts in a
In 2003 investments were made for a total of
process that should conclude in December 2004. This
Ar$ 111 million with the purpose of maintaining
will permit the adjustment of the contracts beyond
the supply and quality of the service
Physical
the bounds of the current regulatory framework and
sales amounted to 12,638 GWh, representing an
contemplates the possibility of approving increases
increase of 4.1% with respect to the year 2002
for account of the results of the renegotiations
At
Enersis / 2003 annual report
the beginning of December 2003, the first formal meeting
business activities, as of December 31, 2003 the total
took place between the representatives of the electricity
number of clients of Edesur amounted to 2,117,254, a
transmitting and distribution companies and the Unit
net increase of 1.3%. The staff complement amounted to
for the Renegotiation of Works and Services Contracts
2,258 people
Faced with the unprecedented economic
at which a chronogram of activities was handed out
crisis in Argentina, in 2003 Edesur directed its business
with the definition of “partial agreements” in a term
activities towards trying to contain the loss of energy
of six months and the signature of the new contracts,
and delayed payments, the optimization of the cash
63
as stated, by December 2004
With respect to the
flows and the quality of the processes. As of December
(cid:37)(cid:86)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:192)(cid:79)(cid:70)(cid:192)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83)(cid:192)(cid:65)(cid:78)(cid:68)(cid:192)(cid:67)(cid:76)(cid:73)(cid:69)(cid:78)(cid:84)(cid:83)
(cid:48)(cid:72)(cid:89)(cid:83)(cid:73)(cid:67)(cid:65)(cid:76)(cid:192)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83)
(cid:46)(cid:85)(cid:77)(cid:66)(cid:69)(cid:82)(cid:192)(cid:79)(cid:70)
(cid:67)(cid:76)(cid:73)(cid:69)(cid:78)(cid:84)(cid:83)
(cid:8)(cid:73)(cid:78)(cid:192)(cid:84)(cid:72)(cid:79)(cid:85)(cid:83)(cid:65)(cid:78)(cid:68)(cid:83)(cid:9)
distribution
64
31 the level of losses was 11.8% and during the
year punctual payments improved slightly to
99.1% of the total invoicing
With the purpose
of responding to the new needs of the clients, the
company developed new products and services
amongst which we highlight the collection for
other services and the advertising by third parties
on the invoices. Furthermore, in the context of the
serious social crisis, Edesur has implemented ideas
that tend to demonstrate its social responsibility
and its integration into the communities in which
Enersis / 2003 annual report
it operates and develops its activities: a program with
is not in default. As a recognition to its performance, the
Food Aid in zones of extreme poverty jointly with Caritas
company was granted an improvement in its credit risk
Argentina for the donation of the change. Donation
rating, the only such case among the companies in the
towards the emergency created by the floods in Santa
sector
Fe. Search for lost children through the electricity
invoices, amongst others
From the financial point of
view, the company has been able to refinance its entire
debt maturities, being one of the few companies that
65
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
183,942
(161,166)
(28,023)
(5,247)
(9,347)
(27,101)
2002
201,473
(183,448)
(30,891)
(12,866)
(13,586)
8,287
Var 02-03
(17,531)
22,282
2,868
7,619
4,239
% Var
(8.7%)
12.1%
9.3%
59.2%
31.2%
(35,388)
(427.0%)
distribution
Lima, Peru
Edelnor
information of the company
BOARD OF DIRECTORS
SENIOR EXECUTIVES
Chairman
Reynaldo Llosa
Vice-Chairman
Ignacio Blanco
Directors
Fernando Bergasa
Cristián Herrera
José M. Hidalgo
Guillermo J. Morales
Ricardo Vega
Chief Executive Officer
Ignacio Blanco
Chief Marketing Officer
Enrique Demarini
Chief Human Resources Officer
Rocío Pachas
Chief Technical Officer
Walter Sciutto
Chief Administration and
Juan Yamamoto
Legal Counsel
Luis Salem
67
Corporate Name
Empresa de Distribución
Eléctrica de Lima Norte S.A.A.
Type of company
Limited Liability Stock
Company
Tax Register Number
20.269.985.900
Address
Jr. Teniente César López
Rojas Nº201, Rub. Maranjas,
San Miguel, Lima, Perú
Control Officer
Telephone
(51-1) 561 2001
Fax
(51-1) 452 3007
Web Site
www.edelnor.com.pe
e-mail
enlinea@edelnor.com.pe
External Auditors
Gris, Hernández y Asociados S.C.
- Deloitte & Touche
Number of shares
1,074,902,874
Number of shareholders
867
Subscribed and Paid-in Capital
(Pe$) 1,074,902,874
Participation of Enersis
(direct and indirect)
33.41%
Corporate purpose
distribution, transmission
and generation of
electric power
distribution
Edelnor is a concessionaire of the electricity
the year 2003, physical sales of energy amounted
public service for the northern zone of
to 3,972 GWh, an increase of 2.6% with respect
Metropolitan Lima and the Constitutional
to the same period of 2002
During the year
Province of Callao, as well as the Provinces
2003, Edelnor purchased energy from 6 generating
of Huaura, Huaral, Barranca and Oyón. It
companies: Electroperú (51.9%), Edegel (24.8%),
serves 52 districts on an exclusive basis and
Eepsa (4.5%), Egenor (14.0%), Cahua (4.4%),
68
shares another 5 districts with the distribution
Pacasmayo (0.3%) and the other 0.1% corresponds
company for the southern zone
In the
to the self generation of the isolated systems that
metropolitan zone, Edelnor’s concession
feed the rural areas in the zone of Norte Chico
covers principally the industrial area of Lima
With respect to the distribution tariffs, for Edelnor
and some heavily populated districts of the
these are set every four years and are determined
city. The concession zone granted to Edelnor
considering as a basis, a model of an efficient
covers a total of 2,440 square kilometers of
distribution company and taking into account
which 1,838 square kilometers correspond to
the commercial costs associated with the client,
the northern part of Lima and Callao
In
standard losses of power and energy, standard costs
Enersis / 2003 annual report
of investments, maintenance and distribution operations
and expand the electricity and public lighting systems
per unit of power supplied. The last adjustment of tariffs
and to implement corporate computer systems
To
came into force on November 1, 2001 and shall be in
this date, there are close to 4,500 sub-stations with
force until October 31, 2005
Energy losses as of
measured distribution, 75% of the total sub-stations of
december 2003 were 8.4%. This result was achieved
the company, with balances of energy that permit the
following the strategic plan based on the follow-up of
optimization of inspection costs and the assignment of
the losses by distribution sub-station. For this reduction
the resources available in a more rapid and adequate
69
to be possible, it was vital to first install totalizers in each
manner, achieving a substantially speedier detection of
sub-station, using as an installation criteria a decreasing
theft. This, for sure, does not merely mean a temporary
order according to the level of losses of the feeders, thus
solution but also a medium and long term one, which in
maximizing the return on the investment
During the
time will permit a sustainable reduction in the company’s
year, Edelnor invested US$ 22 million mainly to improve
losses of energy. Furthermore, the appropriate policy
distribution
70
on power cuts and the reduction in the invoicing
period from 1.5 days down to 1 day made a significant
contribution towards obtaining an index of 100.5%
punctual payments
As of December 31, 2003,
the number of clients came to 891,589 which
represents an increase of 2.3% with respect to the
same date of the previous year. On the other hand,
the staff complement of Edelnor as of December was
554 people
Within Edelnor’s policy of providing
the best service to its clients, contracts have been
signed for collection services of bills-invoices with
such companies as TIM, Bellsouth and Cable Express
and the shared collection agreement with Telefónica
Enersis / 2003 annual report
and Sedapal continues. Through these contracts and
September 2003 Edelnor placed its sixth corporate bond
agreements, clients can enjoy the convenience of paying
issue on the local market, for an amount of approximately
in one single place, in any of the Service and Payments
US$ 11.4 million at 4 years, achieving a cut-off rate of
Centers, both Edelnor’s bills and those of the other
4.47%. A new issue approved for up to a maximum of US$
companies with no added cost
Finally, we would
50 million is kept current with the purpose of maintaining
mention that a new Electric Power Receipt format was
active the access to the local money market and face the
designed. This arose as part of the policy of continuous
obligations to refinance
71
improvement of the company with the object of being
able to inform, foment and offer the products and
services to the more than 800,000 residential clients in
the area under concession
In its financial activities, in
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
175,947
(132,315)
(17,094)
26,538
(3,072)
13,078
2002
205,670
(152,721)
(19,725)
33,224
(943)
19,957
Var 02-03
(29,723)
20,407
2,631
(6,686)
(2,129)
(6,879)
% Var
(14.5%)
13.4%
13.3%
(20.1%)
(226.0%)
(34.5%)
distribution
Cabo Frio, Rio de Janeiro, Brazil
Cerj
information of the company
BOARD OF DIRECTORS
SENIOR EXECUTIVES
Chairman
António Melo Martins
Vice-Chairman
Gonzalo Carbó
José Alves de Mello Franco
Directors
Alfonso Arias
(Director of Enersis)
Marcelo Llévenes
Rafael López
Fernando Nadal
Francisco C. Pereira
Marcelo Silva
Carlos Silva de Almeida
Deputy Directors
Joaquim Ferreira da Silva
José Alves de Mello
Antonio José Sellare
Fernando G. Urbina
Chief Executive Officer
José A. Inostroza
Chief Regulations and
Energy Officer
José Alves
Chief Administration and
Finance Officer
Julio Moratalla
Chief Marketing Officer
Gonzalo Mardones
Chief Technical Officer
María M. L M Olano
Chief Human Resources Officer
Eunice Rios Guimaraes
Chief Institutional Relations
Officer
Mario de Carvalho Rocha
Chief Losses Officer
Claudio M. Rivera
73
Corporate Name
Cerj-Companhia de
Eletricidade do Rio
de Janeiro
Type of company
Stock Company
Tax Register Number
33.050.071/0001-58
Address
Praça Leoni Ramos Nº1, Säo
Domingos, Niterói, Rio de
Janeiro, Brazil
Telephone
(55-21) 2613 7000
Fax
(55-21) 2613 7153
Web Site
www.cerj.com.br
E-mail
cerj@cerj.com.br
External Auditors
Deloitte Touche Tohmatsu
Number of shares
2,895,563,869,685
Number of shareholders
1,227
Subscribed and Paid-in Capital
(R$) 915,424,306
Participation of Enersis
(direct and indirect)
71.82%
Corporate purpose
Generation, transmission,
distribution and
sale of electric power.
distribution
Cerj distributes electric power to a large part of
During the year 2003, Cerj had to confront the
the State of Rio de Janeiro in Brazil, supplying
periodic process of reviewing the tariffs corresponding
a population of over 8 million inhabitants
to its concession contract. This process must be carried
belonging to 66 boroughs in an area of 31,741
out every 5 years with the exception of the first one
square kilometers. The principal areas in which
that was due in 2003. The percentage adjustment in
it provides its services are Niterói, Sao Gonçalo,
tariffs was determined at 15.52% and a further 1.3%
74
Petrópolis, Campos and the Los Lagos Zone
for its productivity factor
The company paid special
The sales of energy in 2003 amounted to 7,398
attention to the control of energy losses for which it
GWh, an increase of 3.5% with respect to the
implemented a series of projects with the purpose of
previous year. In order to satisfy this market,
reducing this level. In 2003, the company managed
the company purchased energy from Furnas
to focus on the more problematic neighborhoods
(58.6%), Itaipú (19.1%), CIEN (16.7%), Enertrade
and to segment the losses by geographic zones and
(3.3%) and the rest was self-generated (2.3%)
type of client: Improvements were made to the
Enersis / 2003 annual report
computer system and to the processes that permitted an
inspected 515,805 clients, regularizing 159,763 clients.
increase in efficiency and effectiveness in the detection
With respect to large clients, the company inspected
of theft. Police and legal actions against thieves were
14,477 clients, regularizing 1,409 of them
Finally,
also intensified. However, as a result of the variation in
innovative solutions were created and tested to reduce
tariffs mentioned above and the current economic crisis,
losses such as: 1) The DAT network, directed at minimizing
the index came to 23.6%
In the areas with a high
the fraudulent connection of clients in areas with high
75
index on losses (PIMT), the company attended 132,003
losses; 2) new alarm and remote measuring technology
clients of which 53,850 clients were regularized. In
in the process of being adopted by large clients; and 3)
the areas with traditional regularization, the company
new actions for treatment of the poor areas (mass census
(cid:37)(cid:86)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:192)(cid:79)(cid:70)(cid:192)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83)(cid:192)(cid:65)(cid:78)(cid:68)(cid:192)(cid:67)(cid:76)(cid:73)(cid:69)(cid:78)(cid:84)(cid:83)
(cid:48)(cid:72)(cid:89)(cid:83)(cid:73)(cid:67)(cid:65)(cid:76)(cid:192)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83)
(cid:46)(cid:85)(cid:77)(cid:66)(cid:69)(cid:82)(cid:192)(cid:79)(cid:70)
(cid:67)(cid:76)(cid:73)(cid:69)(cid:78)(cid:84)(cid:83)
(cid:8)(cid:73)(cid:78)(cid:192)(cid:84)(cid:72)(cid:79)(cid:85)(cid:83)(cid:65)(cid:78)(cid:68)(cid:83)(cid:9)
distribution
for the application of low income tariffs, reforms
discipline through operating and administrative
to the client’s internal installations and a general
actions that permitted a better payment behavior by
agreement with government entities on the payment
the clients. In this way, in 2003 the power cuts due to
of consumption in the shanty towns)
Furthermore,
unpaid bills rose by 8% to 960,000 and reconnections
Cerj’s performance permitted a rise in the collections
rose by 17% with respect to the year 2002, with an
and recoverability, achieving a 97.4% success
In
improved replacement timing
Just as the business
76
2003, the total number of clients of Cerj reached
activity of Cerj during the year 2003 was principally
1,905,202, which represented an increase of 7.1%
focused on increasing the index on collections, there
with respect to the year 2002. On the other hand,
were also projects directed at improving the quality
as of December 2003, the company had 1,517
of customer service. Amongst these projects we
employees, mainly operating technicians
This
highlight the new contractual mode practiced in the
year, the main focus was on the search for market
Call-Cerj Attention Center which has produced positive
Enersis / 2003 annual report
results that can be perceived in terms of agility and
quality of attention. Similarly, we highlight the Letter-
Service and Cerj Easy projects, both destined to improve
customer service
77
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
317,593
(282,156)
(10,925)
24,512
(151,141)
2002
348,613
(306,380)
(21,624)
20,608
(40,163)
(98,773)
(9,103)
Var 02-03
(31,020)
24,224
10,699
3,904
(110,978)
(89,670)
% Var
(8.9%)
7.9%
49.5%
18.9%
(276.3%)
(985.1%)
distribution
Fortaleza, Ceará, Brazil
Coelce
information of the company
BOARD OF DIRECTORS
SENIOR EXECUTIVES
Chairman
Marcelo Llévenes
Vice-Chairman
Luciano Galasso
Directors
Luis Gastao Bitencourt
Jorge Parente
José Alves de Mello
Fernando de Moura
Fernando Nadal
Manuel das Neves Bento
Manuel Soto
Fernando Urbina
Antonio Uchoa
Deputy Directors
José Nunes de Almeida
Priscila Cassoli
Juarez Ferreira de Paula
Luiz Fernando Gonçalves
Antonio A. Gouvêa Vieira
Isabel Carvalho Pinto
Antonio B. Pires e Albuquerque
Rogério Cruz Themudo
Antonio C. Viana de Barros
Chief Executive Officer
Cristián Fierro
Chief Institutional Projects
Officer
José Nunes de Almeida
Chief Marketing Officer
Luciano Alberto Galasso
Chief Distribution Officer
José Távora Batista
Chief Planning and Control
Officer
Abél Pérez Claros
Chief Human Resources Officer
José R. Ferreira Barreto
Chief Administration and
Finance Officer
Antonio O. Alves Texeira
79
Corporate Name
Companhia Energética
do Ceará
Type of company
Limited Liability
Stock Company
Tax Register Number
07.047.251/0001-70
Address
Av. Barão de Studart, 2917/83,
Bairro Dionísio Torres,
Fortaleza, Ceará, Brazil
CEP 60.127-900
Telephone
(55-85) 216 1100
Fax
(55-85) 216 1410
Web Site
www.coelce.com.br
E-mail
investor@coelce.com.br
External Auditors
Deloitte Touche Tohmatsu
S/C Ltda.
Number of shares
155,710,600,088
Number of shareholders
4,411
Subscribed and Paid-in Capital
(R$) 433,057,723
Participation of Enersis
(direct and indirect)
29.43%
Corporate purpose
Production, transmission,
distribution and sale of
electric power and related
services in the State of
Ceará.
distribution
Coelce is the electric power distribution
thermographic inspections, with which the quality
company of the State of Ceará, in the northeast
of service indicators improved considerably
The
of Brazil, covering a total concession area of
sales of energy as of December 31, 2003 amounted to
146,817 square kilometers in 184 districts. In
5,897 GWh, an increase of 6.1% in relation to the same
this area, the company serves a population
date in 2002. In order satisfy demand, the company
of more than seven million inhabitants.
purchased a total of 6,825 GWh, 6.8% greater than
80
Complying with its objective of providing
the accumulated figure for the previous year
With
a better service to its clients, during 2003,
regard to the tariff process, as per the definition in
Coelce performed a series of activities in
the concession contract, the tariffs were readjusted
protection and maintenance of its electricity
by 31.29% as from April 22, 2003. In addition to this,
system amongst which we highlight the
other extraordinary revenues were acknowledged
inspection of more than 124,000 kilometers
making the total adjustment 31.8%. This increase
of lines, the replacement of transformers and
was applied in differentiated stages according to the
Enersis / 2003 annual report
various levels of tension, with a lower percentage on
number of clients served by Coelce as of December 31 was
the clients of low tension and a greater one for those of
2,254,979, reflecting a growth of 12.2% with respect to
high tension. This falls within the tariff realignment plan
the year before. With regard to the number of employees
promoted by the government over the next five years
as of December 31, 2003, this amounted to 1,375 people
The TTM (Trailing Twelve Months) energy losses as
In respect of its relationship with clients, customer
of December 31, 2003 came to 13.5%, slightly higher
service improved, a 3+1 Insurance was implemented
81
than the level registered in the year 2002. In regard to
and the Coelce Plus brand was created to sell the
collections, the company managed to increase these
services of maintenance to its clients. Furthermore,
from 98.4% to 99.7% as of December 2003
The
the company continued with its improvement in the
distribution
82
quality and continuity of the distribution of electric
energy service. These achievements have been
acknowledged in the last opinion poll carried out
by the National Electric Energy Agency (Aneel) for
the northeast sector of Brazil where Coelce gained
the first place amongst the larger distribution
companies
During the year 2003, Coelce made
investments in a project to remodel and expand the
agencies that attend the public in order to improve
customer service, respond to the new functional
needs and uniform the visual aspect of the offices,
Enersis / 2003 annual report
strengthening the Coelce brand image before its clients.
through educational activities and mobile demonstrations
Furthermore, we would point out that in a new pioneering
such as, for example, educational shows on electric power
project during the year 2003, Coelce, jointly with the
with safety in schools and neighborhoods
Finally,
insurance companies, offered its clients a collection of
Coelce was selected from among 46 participants as
personal accident, financial protection and residential
the best energy distribution company in Brazil in the
insurance policies
With respect to the community,
Financial Performance category, as per the award from
83
Coelce invested approximately US$ 2 million in social
the Brazilian Association of Electric Energy Distributors
and cultural projects through the State Law to Promote
(Abradee)
Culture. It also developed project in benefit of society
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
207,387
(158,070)
(29,622)
19,695
(25,742)
(10,188)
2002
230,002
(164,954)
(40,713)
24,335
756
20,555
Var 02-03
(22,615)
6,884
11,091
(4,640)
(26,498)
(30,743)
% Var
(9.8%)
4.2%
27.2%
(19.1%)
(3504.5%)
(149.6%)
distribution
Bogotá, Colombia
Codensa
information of the company
BOARD OF DIRECTORS
SENIOR EXECUTIVES
Chairman
Andrés Regué
Directors
Israel Fainboim
José María Martínez
Moisés Rubinstein
Cristóbal Sánchez
Juan Pablo Spoerer
José Antonio Vargas
Deputy Directors
David Acosta
Germán Castro
Silvia Escobar
Henry Navarro
Roberto Ospina
Lucía Piedrahita
Carmenza Saldías
Chief Executive Officer
José María Martínez
Chief Marketing Officer
David Felipe Acosta
Chief Communications Officer
Emilia Sarracino
Chief Distribution Officer
Germán Castro
Chief Financial Officer
Lucía Piedrahita
Legal Counsel
Alvaro Camacho
Chief Planning and Control
Officer
Roberto Ospina
Chief Human Resources Officer
Carlos Alberto Niño
Chief Regulation Officer
Omar Serrano
85
Corporate Name
Codensa S.A. E.S.P.
Type of company
Private Stock Company
Tax Register Number
830.037.248-0
Address
Carrera 13 A N° 93-66
Bogotá, Colombia
Telephone
(57-1) 601 6060
Fax
(57-1) 601 5917
Web Site
www.codensa.com.co
e-mail
tservice@codensa.com.co
External Auditors
Deloitte Colombia Ltda.
Number of shares
132,093,274
Number of shareholders
77
Subscribed and Paid-in Capital
(ThCol$) 1,320,927,675
Participation of Enersis
(direct and indirect)
21.65%
Corporate purpose
Distribution and sale of
electric power and activities
related, complementary to or
connected with the distribution
and sale of energy, carrying
out works, designs and
consultancy in electrical
engineering and the sale of
products for the benefit of
clients
distribution
Codensa distributes and sells electric power in
where the charge for distribution was raised by an
the City of Bogotá and in 96 municipal districts
average of 38% with respect to the previous tariffs.
in the Departments of Cundinamarca, Boyacá
This adjustment was made in two stages: 15.29%
and Tolima. In total, the company’s area of
between October 2002 and April 2003 and the
operations comprises 14,087 square kilometers
rest on a gradual basis from September 2003 until
of which 1,587 square kilometers correspond
completing the final 38% towards the middle of 2004.
86
to urban areas
Physical sales amounted to
These new adjustments will reign from September 1,
9,254 GWh in 2003, representing an increase
2003 until the end of 2007
During this year, the
of 2.7% with respect to the same period of the
company managed to lower its TTM (trailing twelve
previous year. With regard to the demand for
months) energy losses which as of December showed
energy in 2003, this reached 10,310 GWh, an
accumulated losses of 10.2%, an improvement of
increase of 2.4% in comparison with the year
0.1% with respect to last year. The company continued
2002
The year 2003 saw the conclusion of
with its plans developed for the collection activity,
the process of setting tariffs for the company,
achieving at the end of the year an improvement
Enersis / 2003 annual report
in collections, closing the year 2003 with a percentage
number of people employed by Codensa as of December
of 99.7% as compared to 98.4% in 2002
During the
31, 2003 was 858, essentially comprised of professionals
year, 125,729 regularization inspections were made and
and technicians
In business matters, the company
27,017 job orders were issued. For the Large Consumers
was consolidated as the leader in complementary services
9,994 inspections were carried out and 907 job orders
such as the financing of household electrical appliances
issued. The control of energy losses area invoiced 80 GWh
and invoicing of insurance, to such an extent that the
corresponding to CNR
The company’s number of
company currently has 128,000 of its own clients of these
87
clients as of December 31, 2003 amounted to 1,972,016,
businesses. Furthermore, Codensa achieved an average
an increase of 3.2% over the figure for the year 2002. The
of 8.1 points out of 10 in the perception of quality of
distribution
88
service ratings. Some of the tasks that contributed
towards this good perception were the customer
service program in which 168 operating contractors
participated and the program of self-preparation
and training for 274 workers of the company’s
sub-contracting companies
With respect to the
performance in quality and environmental issues
in 2003, the company obtained the ISO 14001
certification of its Environmental Protection System.
At the same time, the implementation of the Quality
Control System reflected a progress of 81% at the
end of the year. Also, the company developed the
Enersis / 2003 annual report
diagnosis and the action plan for the implementation
needs of the Company. The Legal Activity permitted an
of the Occupational Health and Safety System (OHSAS
adequate control of the legal risks to which the company
18001)
With respect to legal matters, the company
is exposed
In its social activities, Codensa carried out
adopted the Code of Corporate Management and the
different activities such as the Guarding Energy program
Code of Good Management, which include all the criteria
with the purpose of training young people to promote
that the norms require for the institutions interested
the productive, safe and efficient use of energy and
in reflecting values. In order to achieve this, it was
the environmental responsibility, the awareness of the
89
necessary to modify some of the articles in the by-laws
obligations and rights of the clients, and the programs of
and also reform others in order to adapt them to the
illuminating cathedrals
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
292,155
(248,022)
(10,402)
33,731
6,344
18,020
2002
334,820
(283,172)
(29,884)
21,764
(8,595)
(6,723)
Var 02-03
(42,665)
35,150
19,482
11,967
14,939
24,743
% Var
(12.7%)
12.4%
65.2%
55.0%
173.8%
368.1%
distribution
Feeder Construction for Communications Antenna, Chile
other businesses
Colombia
Synapsis
CAM
Peru
Synapsis
CAM
Brazil
Synapsis
CAM
Argentina
Synapsis
CAM
91
Chile
Synapsis
CAM
Inmobiliaria Manso de Velasco
Synapsis’ Office, Chile
Synapsis
information of the company
AGENTS
SENIOR EXECUTIVES
Cristóbal Sánchez
Victor H. Muñoz
Chief Executive Officer
Victor H. Muñoz
Chief Financial and Admin.
Officer
Rodrigo A. Morelli
Chief Consulting Services Officer
Gustavo Pardo
Chief Operations Officer
María A. Letelier
Chief Plant Officer
José M. Gil
Chief New Business Officer
Manuel de Andrés
93
Corporate Name
Synapsis Soluciones
y Servicios IT Ltda.
Type of company
Limited Liability
Stock Company
Tax Register Number
96.529.420-1
Address
Catedral N° 1284, Piso 10
Santiago, Chile
Telephone
(56-2) 397 6600
Fax
(56-2) 397 6601
Web Site
www.synapsis-it.com
e-mail
synapsis@synapsis-it.com
External Auditors
Deloitte & Touche Soc. de
Auditores y Consultores Ltda.
Subscribed and Paid-in Capital
(ThCh$) 3,943,580
Participation of Enersis
100%
Corporate purpose
Supply and sale of services
and equipment related to
computers, data processing,
telecommunications systems
and control systems for public
utility companies and others,
both domestic and foreign.
other businesses
Synapsis Soluciones y Servicios IT is the
in the search and implementation of technical
professional services company in information
solutions to support the Business Process; the
technology of the Enersis Group. Synapsis is
Integration of services and products; Services of
currently positioned as the leading company in
Development, Implementation and Maintenance
Latin America in IT solutions for Government
of Systems; Outsourcing and Infrastructure
94
and service companies
Its Head Office is
Services; Data Centers, Contact Centers,
located in Santiago, Chile and it has branch
Mass Printing; and Consultancy, execution
offices in the most important cities in the
of projects and Support in Telecontrol and
region: Buenos Aires, Argentina; Rio de Janeiro
Telecommunications
Currently, Synapsis
and Fortaleza, Brazil; Bogotá, Colombia and
does not only provide services throughout the
Lima, Peru, assuring in this way, the coverage
companies of the Enersis Group but it has also
of the whole of Latin America
Synapsis’
significantly increased the number of other
principal areas of activities are: consultancy
clients in its total portfolio of revenues
In
Enersis / 2003 annual report
Chile, amongst the most important contracts within
the Fleet Control System of the CCU (Compañía
the Group awarded to Synapsis are the Technical
Cervecerías Unidas) trucks; the extension for a
Distribution System and the participation in the
further 15 months of the ESVAL contract and the
Communications and Telecontrol Projects for the
implementation of all the systems for Aguas del
El Salto Sub-Station (Chilectra); the hydroelectric
Valle in the IV Region; the Televenta contract
power plant projects and the execution of the
for Autopista Central; and the new Contract for
95
project to renew the Operations Support Systems
Data Processing for Smartcom
In Colombia,
Platform for Endesa Chile. With respect to contracts
Synapsis was awarded the contracts for the Projects
awarded from outside the group, we highlight the
for Eléctrica del Norte de Santander, Ecopetrol,
Heracles project for INP, the Government Social
Acueducto de Bogotá and the Municipality of
Security Authority, which makes the company
Medellín. The latter is the first successful experience
one of the principal technological partners of
of an electronic municipal Government in the
the Chilean Government; the implementation of
world utilizing SAP technology
In Panama, the
other businesses
project to implement the business system for
return, the company achieved a growth of 54%
Aguas de Panama IDDAN
In Venezuela
with respect to 2002, an operating return on
the implementation of the business system
sales close to 19% and a profit of nearly US$ 10
in ENELBAR was successfully concluded
million thanks to having being awarded important
In Brazil, the Cerj Call Center was put into
contracts and to the execution of significant
operation with which the operations for the
projects for public and private companies in Latin
96
Enersis Group of companies in this country
America
Finally, following the strategic policy
were consolidated
In Peru, we highlight
of Synapsis, during the year 2003, it transferred its
the important developement achieved on the
Business Synergy and Electric Distribution Systems
project for the Control System of the company
software factory to the Argentine subsidiary in
San Gabán
With respect to the operating
Buenos Aires
Enersis / 2003 annual report
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
45,283
(30,331)
(6,214)
8,738
(292)
5,943
2002
50,028
(37,603)
(6,178)
6,247
(467)
4,440
Var 02-03
(4,745)
7,272
(36)
2,491
(273)
1,503
% Var
(9.5%)
(19.3%)
0.6%
39.9%
58.7%
(33.8%)
97
other businesses
Candelaria Substation Mounting, Chile
CAM
information of the company
Corporate Name
Compañía Americana
de Multiservicios Ltda.
Type of company
Limited Liability
Stock Company
Tax Register Number
96.543.670-7
Address
Bulnes N°1238,
Santiago, Chile
Telephone
(56-2) 389 7300
Fax
(56-2) 389 7342
Web Site
www.camchile.cl
e-mail
cam@cam.enersis.cl
AGENTS
Pantaleón Calvo
Eduardo López
DEPUTY AGENTS
Andreas Gebhardt
Cristóbal Sánchez
SENIOR EXECUTIVES
Chief Executive Officer
Pantaleón Calvo
Chief Executive Officer,
CAM Brazil
Fernando Foix
Chief Executive Officer,
CAM Peru
Mario Albornoz
Chief Executive Officer,
CAM Colombia
Carlos Restrepo
External Auditors
Deloitte & Touche Soc. de
Auditores y Consultores Ltda.
Legal Representative,
CAM Argentina
Mauricio Naser
99
Subscribed and Paid-in Capital
(ThCh$) 2,572,038
Participation of Enersis
100%
Corporate purpose
Perform for its own account
or on behalf of third parties
and/or in association with
third parties, both in Chile and
abroad, general services, real
estate services and building of
real estate, import, export and
distribution of products of any
nature.
other businesses
CAM’s business is directed towards providing
subsidiaries for their Measurement Laboratories
integral, mass and multiservice solutions,
services
During 2003, CAM was awarded new
taking advantage of its experience in operations
contracts worth US$ 47 million in the different lines
to service companies and its knowledge of
of business it manages, of which 42.5% came from
management and logistics. Furthermore, in
third party clients and the other 57.5% corresponds
recent years, CAM has positioned itself strongly
to contracts with related companies. Of this last
100
in the sector of construction and assembly of
percentage, US$ 5 million correspond to the award
sub-stations and transmission lines
The Head
of joint contracts with Chilectra and for the transfer
Office in Chile and its subsidiaries in Argentina,
of networks and the construction of polyducts for
Brazil, Colombia and Peru have consolidated
highway concessions, the Subway system and the
their regional presence, successfully expanding
Ministry of Public Works
In Chile, with respect to
the portfolio of clients. The commitment to
the lines of business for public service companies, we
an excellent service made by CAM is reflected
highlight the important contracts such as the Cut and
in the ISO certifications obtained in all its
Replacement contract signed with Aguas Andinas. In
Enersis / 2003 annual report
the area of Measuring Systems, the joint effort of CAM
a Commercial and Technical Cooperation Agreement
and Chilectra has permitted within its integral solutions,
with COMPLANT International Trade Company from the
the incorporation of Integrated Measuring Cells. Examples
Popular Republic of China
With regard to engineering,
of these are Entel Chile, Clinica Alemana, Jumbo-Easy,
construction and the assembly of electric sub-stations,
the Florida Center Mall, Sodimac and Carrefour, amongst
the company carried out a series of important works and
others
In order to assure the metrological quality
projects, amongst which we highlight the assembly of the
of the meters owned by the clients of Chilectra, CAM
Los Maquis Sub-station and the assembly of the CMPC
101
signed a contract with the distribution company to carry
Santa Fe and Pacífico Sub-station in Los Angeles
An
out a mass maintenance and control plan to verify the
important level of activity and participation was achieved
exactitude of 80,000 meters. A similar contract was
in the Telecommunications Sector and the development
signed with Empresa Eléctrica de Colina but for 20,000
and installation of the Monitoring Network for the
meters
Another important event was the signing of
Autopista del Sol. It also built the Cellular Telephone
other businesses
site in Valle Nevado for Smartcom PCS and the
installation of repeater equipment for Smartcom
In the area of sales of electrical materials,
Breakdown of sales by country
outstanding amongst these was the business
z
signed with ANDE, a distribution company in
Paraguay, for the sale of electrical materials, cells,
102
transformers and sectioners for an amount of
its mass services initiated in previous years and,
US$ 1 million
Amongst the important events
furthermore, it is now consolidated in the market as
in the regional market, CAM Colombia stood out
a supplier of electrical solutions for industrial clients
for venturing into the non electric-related sector,
CAM Argentina passed the audit renewing the
into gas and water, thus becoming a leader in
ISO 9,002/2000 on Quality and the ISO 14,001/1996
the supply of services to public utility companies
on Environmental Matters for a further year for the
During 2003, CAM Peru has strengthened
Measuring Systems both in the laboratories and on
its supply services, its measuring systems and
site. In respect of the operation, outstanding were the
Enersis / 2003 annual report
works on normalizing the pumping chambers and wells
and the replacement of meters for Aguas Argentinas.
For Edesur, a full maintenance was carried out on the
measuring equipment.
In 2003, the CAM Brazil
operation was expanded with the award of the contracts
with Cerj and Coelce, reflected in the increase in invoicing
of R$ 26 million with respect to the year 2002. This was
103
the beginning of the first two long term contracts with
“Control and Identification of Losses”, a 5-year contract
Cerj: “Laboratory Services and Integral Management
for R$ 60 million and for the Cerj “Materials, Safety
of Large Clients”, and “Control of Commercial Services”
Material and Control of Project Materials Logistics”, a 5-
In December, CAM Brazil won the bids for the Coelce
year contract for R$ 23 million
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Administration and Sales Expenses
Operating Income
Non-Operating Income
Net Income
2003
91,718
(71,828)
(6,151)
13,739
(288)
10,820
2002
94,885
(74,422)
(7,994)
12,469
(1,977)
8,062
Var 02-03
(3,167)
2,594
1,843
1,270
1,689
2,758
% Var
(3.3%)
(3.5%)
(23.1%)
10.2%
(85.5%)
(34.2%)
other businesses
Enea Project, Santiago, Chile
Manso de Velasco
information of the company
AGENTS
Cristóbal Sánchez
Andrés Salas
SENIOR EXECUTIVES
Chief Executive Officer
Andrés Salas
Legal Counsel
Alfonso Salgado
Chief Real Estate Development
Officer
Gustavo Cardemil
ENEA Project Manager
Bernardo Küpfer
Corporate Name
Inmobiliaria Manso
de Velasco Ltda.
Type of company
Limited Liability
Stock Company
Tax Register Number
96.909.280-8
Address
Santa Rosa N°76, Piso 9
Santiago, Chile
Telephone
(56-2) 378 4700
Fax
(56-2) 378 4702
e-mail
rch@mvelasco.enersis.cl
External Auditors
Deloitte & Touche
Subscribed and Paid-in Capital
(ThCh$) 5,848,651
Participation of Enersis
100%
Corporate purpose
Purchase, sale,
subdivision, division
into lots, sale and operation,
in any way, of any type of
real estate for own account
or on behalf of third parties.
105
other businesses
Manso de Velasco centers its activities on the
with the construction of roads linking it with Américo
development of important real estate projects.
Vespucio, San Pablo and the future concession
During the year 2003 significant progress was
expressway, Costanera Norte that should come
made in real estate development and sale of
into operation in the year 2005. These works will
the different projects, destined principally to
permit ENEA to have an excellent connection with
the residential sector (Santuario del Valle and
the nerve center of the city, which will permit an
106
Puerto Pacífico) and to the industrial sector
important development of this Business Park
The
(ENEA)
The ENEA Project corresponds to
project is currently in Phase I that corresponds to the
the real estate development of 1,000 hectares
concept of an Industrial and Business Park. During
strategically located in eastern Santiago, in the
2003, work started on improving the road links
borough of Pudahuel, close to the Arturo Merino
between the project and the main artery, Américo
Benítez Airport. The evident roadway connection
Vespucio, which, at the same time, will permit
that the project has was strengthened in 2003
the sale of part of the land (Phase III-A) situated
Enersis / 2003 annual report
to the east of Américo Vespucio. The project has an
Park. During the period sales amounted to Ch$ 3,648
innovative infrastructure and according to the master
million
Within this project is also Aguas Santiago
plan green areas will be implemented that will offer
Poniente S.A. that provides the water services associated
better equipment and service areas to the subdivision
with the ENEA real estate development project. As a
and to its users
During the fiscal year 2003 ENEA
result of the significant sales achieved from the project,
continued its progress with important advances in the
the company was forced to activate the waterworks and
107
business area. New important companies joined our
sewage infrastructure with which it has to serve, to date,
Business Park, the most important being: Bredenmaster,
more than 1,600 residential and industrial clients and
Intertrade, Carlos Herrera A., Apresto Ltda. and the
to treat 100% of the effluents from the project. In such
continuation of the housing development projects such
a perspective, Aguas Santiago Poniente is in a phase
as the Santa Catalina II Project. Some companies that
of notoriously increasing its financial value on having
already form part of the project are carrying out works
the assurance of the existence of clients associated
to expand their center of operations within the Business
to the development of ENEA that require the services
other businesses
provided by this company
The Santuario del
Nueva Libertad Street) close to important shopping
Valle Project, located in the La Dehesa sector, has
centers and only 5 minutes from the center of Viña
been consolidated as one of the most important real
del Mar
During 2003, after the subdivision of
estate development projects in the country, directed
the Meseta into 9 sub-lots, which brought with it a
at the sale of Single Home Residential Lots for the
significant added value for its sale, the marketing
high class segment of the population
During the
process had, as a result, the sale of 4 lots, generating
108
year 2003, sales of the lots located in Sector 6, the
revenues of Ch$ 3,213 million
In addition to the
last lots to be developed, amounted to Ch$ 4,442
projects mentioned above, we would especially
million. The sale of this sector concludes the sale of
mention the Tapihue Project that contemplates
this successful urban project
The Meseta Puerto
lots corresponding to the land that used to be the
Pacífico Project is situated on land measuring more
Tapihue, Amancay – Lot B – and La Petaca farms.
than 35,000 square meters located in Viña del Mar,
This land, jointly, covers an area of 7,302 hectares in
with a privileged location (15 Norte Street with
the borough of Til-Til in the Province of Chacabuco
Enersis / 2003 annual report
in the Metropolitan Region and possesses the ZDUC
buildings and shops that are mainly rented to related
qualification (Conditioned Urban Development Zone)
companies or third parties, achieving revenues in 2003
in accordance with the Metropolitan Regulatory Plan.
of Ch$ 1,680 million
As of December 31, 2003 the
Work is currently underway to regularize the water
company had a total of 24 employees, distributed as
rights and other requirements that imply added value
follows: 4 executives, 9 professionals and technicians
to the project
Within the real estate business,
and 11 clerical and other staff, outsourcing the
109
Manso de Velasco manages a total of 40,014 square
engineering and architectural work required for the
meters of constructed property corresponding to office
various projects
Summary of Income Statement
Millions of Chilean Pesos
Operating Revenues
Operating Costs
Selling and Administrative Expenses
Operating Income
Non-Operating Income
Net Income
2003
11,334
(10,501)
(1,691)
(858)
2,075
1,307
2002
11,492
(6,037)
(1,641)
3,814
(16,103)
(10,036)
Var 02-03
(159)
(4,465)
(50)
(4,673)
18,178
11,342
% Var
(1.4%)
74.0%
3.0%
(122.5%)
(112.9%)
113.0%
other businesses
liability statement
The Directors and the Chief Executive Officer of Enersis, signatories to this declaration, are liable, under oath, for the truthfulness of all
the information provided in the present annual report, in compliance with General Rule Nº 30 issued by the Superintendence of Securities and
Insurance.
CHAIRMAN
Pablo Yrarrázaval
Tax Register Number: 5.710.967-K
DIRECTOR
Ernesto Silva
Tax Register Number: 5.126.588-2
110
VICECHAIRMAN
Rafael Miranda
Tax Register Number: 48.070.966-7
DIRECTOR
Hernán Somerville
Tax Register Number: 4.132.185-7
DIRECTOR
Alfonso Arias
Tax Register Number: 48.087.945-7
DIRECTOR
Eugenio Tironi
Tax Register Number: 5.715.860-3
DIRECTOR
José Luis Palomo
Tax Register Number: 51.316.595-F
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Tax Register Number: 5.850.972-8
Enersis / 2003 annual report
other subsidiaries and related companies
Distrilec
Enersis Intenacional
Investluz
Corporate Name
Distrilec Inversora S.A.
Type of company
Foreign Closed Stock Company
Address
San José Nº 140
(C1076AAD), Buenos Aires, Argentina
Telephone
(54-11) 4114 3000
Fax
(54-11) 4114 3001/3002
External Auditors
Deloitte & Touche
Subscribed and Paid-in Capital
(ThCh$) 301,356,842
Participation of Enersis
(Direct or Indirect)
50.73%
Corporate Name
Enersis Internacional
Type of company
Foreign Stock Company
Corporate Name
Investluz S.A.
Type of company
Foreign Stock Company
Address
P.O. Box 309, Ugland House South Church St.,
Grand Cayman
Cayman Islands
Address
Av. Barao de Studart Nº 2917,
Bairro Dionísio Torres Fortaleza, Ceará, Brazil
Telephone
(345) 949 8066
Fax
(345) 949 8080
External Auditors
Deloitte & Touche
Subscribed and Paid-in Capital
(ThCh$) 206,727,605
Participation of Enersis
(Direct or Indirect)
100%
Telephone
(55-85) 216 1123
Fax
(55-85) 216 1423
External Auditors
Deloitte & Touche Tohmatsu
Subscribed and Paid-in Capital
(ThCh$) 506,670,818
Participation of Enersis
(Direct or Indirect)
52.00%
Corporate purpose
The exclusive purpose of capital investment in
companies, already that have as their main activity the
distribution of electric power.
Corporate purpose
Any legitimate activity related with energy or fuel.
Corporate purpose
Participation in the capital of Coelce and in other
companies in Brazil and established or to be established
abroad, as a shareholder.
111
BOARD OF DIRECTORS
Chairman
Rafael Lopez
Vice-Chairman
Rafael Juan Fernández
Directors
Alan Arntsen
Mariano Florencio Grondona
Marcelo Silva
Gonzalo Vial
Horacio Ricardo Babino
Jorge Gustavo Casagrande
Daniel Jorge Maggi
Luis Miguel Sas
Deputy Directors
Luis Diego Barry
Santiago Daireaux
Manuel María Benítes
Roberto José Fagan
Pedro Eugenio Aramburu
Rigoberto Mejía
Nicolás Carusoni
Pablo Alejandro Ferrero
Jorge Roberto Barros
Antonello Tramonti
SENIOR EXECUTIVE
Chief Executive Officer
José Maria Hidalgo
BOARD OF DIRECTORS
Chairman
Mario Valcarce
(Chief Executive Officer Enersis)
Director
Máximo de la Peña
(Enersis Chief Taxation Officer)
BOARD OF DIRECTORS
Chairman
Cristián Fierro
Directors
Manuel Fernando das Neves
José Renato Ferreira
Luciano Alberto Galasso
Silvia Pereira
Abel Pérez
Antonio Osvaldo Texeira
SENIOR EXECUTIVE
Chief Executive Officer
Cristián Fierro
other subsidiaries and related companies
Distrilima
Luz de Bogotá
Endesa Market Place
en Liquidación S.A.
112
Corporate Name
Inversiones Distrilima S.A.
Type of company
Foreign Stock Company
Address
Tnte. César López Rojas Nº 201,
San Miguel,
Lima, Perú
Telephone
(51-1) 561 1604
Fax
(51-1) 452 3007
External Auditors
Gris Hernández y Asociados S.C.
- Deloitte & Touche
Subscribed and Paid-in Capital
(ThCh$) 99,876,835
Participation of Enersis
(Direct or Indirect)
55.69%
Corporate purpose
Investments in other companies,
related with the distribution and
generation of electric power
BOARD OF DIRECTORS
Chairman
Ignacio Blanco
Vice-Chairman
Reynaldo Llosa
Directors
Fernando Bergaza
Cristián Herrera
José María Hidalgo
José Chueca
Marciano Izquierdo
Deputy Directors
Pilar Dávila
Walter Sciutto
Patricia Marcaró
Luis Enrique Demarini
Mario Albornoz
Marco de Andrea
Fernando Fort
SENIOR EXECUTIVE
Chief Executive Officer
Ignacio Blanco
(in liquidation)
Corporate Name
Endesa Market Place en
Type of company
Stock Company
Address
Rivera de Loira, 60
CEP 28042
¿DONDE? OJO
Telephone
(34-91) 213 1000
Fax
(34-91) 213 1072
External Auditors
Deloitte & Touche
Subscribed and Paid-in Capital
(ThCh$) 5,024,427
Participation of Enersis
(Direct or Indirect)
15.00%
Corporate purpose
B2B and new technologies
LIQUIDATOR
Jean Paul Zalaquett
(in liquidation)
Corporate Name
Luz de Bogotá S.A.
Liquidación S.A.
Type of company
Foreign Stock Company
Address
Carrera 13A Nº 93-66, Piso 6,
Bogotá,
Colombia
Telephone
(57-1) 601 5402
Fax
(57-1) 601 5905
External Auditors
Deloitte Colombia Ltda.
Subscribed and Paid-in Capital
(ThCh$) 125,218,347
Participation of Enersis
(Direct or Indirect)
44.66%
Corporate purpose
Any legitimate commercial, industrial,
financial, real estate, air, marine,
mining or agricultural activity
related to energy or fuels in any
form or nature with supply to
public utilities or that have energy
as a prime input. II) Investments in
electric power generating and
distribution and particularly the
acquisition of shares in any electric
power generating, distribution or
transmission company
LIQUIDATORS
Chief Liquidator
Alvaro Pérez
Deputy Liquidator
Carlos Mario Restrepo
Enersis / 2003 annual report
consolidated financial statements
I N D E X
1 1 7
C O N S O L I D A T E D B A L A N C E S H E E T S
1 1 8
C O N S O L I D A T E D I N C O M E S T A T E M E N T
1 1 9
C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y
1 2 0
S T A T E M E N T S O F C O N S O L I D A T E D C A S H F L O W S
1 2 2
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
1 8 2
A P P E N D I X U . S . G A A P
2 1 7
C O N S O L I D A T E D S I G N I F I C A N T E V E N T S
2 2 9
R A T I O A N A L Y S I S O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
113
consolidated financial statements
REPORT FROM THE INSPECTORS OF ACCOUNT
In accordance with the stipulations of Law Nº 18,046 on Limited Liability Stock
Companies and in compliance with the mandate conferred by the Ordinary
General Meeting of Shareholders held on March 31 2003, we have proceeded
to examine the Financial Statements of Enersis S.A. for the period between
January 1 and December 31 of the year 2003.
Our task was centered on the verification, on a selective basis, of the match
between the amounts included in the financial statements and the official regis-
ters of the Company and for this purpose we compared the figures presented
in the general ledger against the grouping and classification spreadsheets, in
order to subsequently verify that these amounts, which represent the totals of
the accounts under one item, coincided with those included in the financial sta-
tements, We have no observations on this review.
114
Marcelo Villaseca
Inspector of Accounts
Luis Bone
Inspector of Accounts
Santiago, January 26, 2004
Enersis / 2003 annual report
115
consolidated financial statements
consolidated balance sheets
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003 and thousands of US dollars)
ASSETS
CURRENT ASSETS
Cash
Time deposits
Marketable securities
Accounts receivable, net
Notes receivable, net
Other accounts receivable, net
Amounts due from related companies
Inventories
Income taxes recoverable
Prepaid expenses
Deferred income taxes
Other current assets
2002
ThCh$
48,666,727
147,083,163
1,558,723
463,428,121
5,182,662
63,403,857
197,352,823
60,986,480
54,980,336
7,742,678
42,958,648
133,341,824
As of December 31,
2003
ThCh$
26,370,232
256,254,606
11,155,741
467,170,365
8,362,627
94,194,266
17,060,125
44,308,194
61,286,338
16,452,494
69,459,772
73,928,782
Total current assets
1,226,686,042
1,146,003,542
116
PROPERTY, PLANT AND EQUIPMENT
Land
Buildings and infrastructure and works in progress
Machinery and equipment
Other plant and equipment
Technical appraisal
Acumulated depreciation
131,203,835
11,738,526,563
1,998,142,088
540,209,473
753,652,675
(5,183,481,869)
115,453,784
10,053,936,197
1,762,236,656
348,089,694
619,471,230
(4,802,827,051)
Total property, plant and equipment, net
9,978,252,765
8,096,360,510
OTHER ASSETS
Investments in related companies
Investments in other companies
Goodwill, net
Negative goodwill, net
Long-term receivables
Amounts due from related companies
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
The accompanying notes are an integral part of these consolidated financial statements
196,105,799
161,061,462
855,988,634
(96,124,680)
127,109,018
907,149
81,725,052
(34,994,773)
241,143,152
180,211,471
133,460,297
780,397,218
(79,234,632)
127,935,044
129,103,833
77,170,981
(39,272,322)
180,611,025
1,532,920,813
1,490,382,915
12,737,859,620
10,732,746,967
Enersis / 2003 annual report
LIABILITIES AND SHAREHOLDERS´EQUITY
CURRENT LIABILITIES:
Short-term debt due to and financial institutions
Current portion of long-term debt due to banks and financial institutions
Promissory notes
Current portion of bonds payable
Current portion of long-term notes payable
Dividends payable
Accounts payable
Short-term notes payable
Miscellaneous payables
Amounts payable to related companies
Acrued expenses
Withholdings
Income taxes payable
Deferred income
Other current liabilities
2002
ThCh$
429,299,753
611,314,573
13,321,409
503,486,357
42,045,203
14,699,745
224,296,744
4,881,405
74,151,727
16,448,569
85,779,624
56,040,617
27,807,349
9,176,531
60,137,375
As of December 31,
2003
ThCh$
312,156,562
165,695,013
-
70,945,193
21,433,863
3,158,548
215,444,227
21,069,881
43,916,496
30,748,293
53,704,224
63,702,463
47,840,056
11,975,374
65,360,835
Total current liabilities
LONG-TERM LIABILITIES:
Due to banks and financial institutions
Bonds payable
Long-term notes payable
Accounts payable
Amounts payable to related companies
Acrued expenses
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
MINORITY INTEREST
SHAREHOLDERS´ EQUITY:
Paid-in capital, no par value
Additional paid-in capital
Other reserves
Retained earnings
Net income (loss) for the year
Deficit of subsidiaries in development stage
2,172,886,981
1,127,151,028
117
1,708,252,057
2,118,824,024
197,801,287
22,832,594
998,174,521
254,486,113
52,841,577
105,015,620
833,894,860
2,299,294,966
145,343,166
26,802,731
84,320
317,416,983
24,748,583
60,336,617
5,458,227,793
3,707,922,226
4,091,108,748
3,349,281,823
758,720,279
33,703,758
47,348,383
406,835,727
(225,985,568)
(4,986,481)
2,227,711,340
159,323,362
(25,671,685)
176,016,726
12,467,863
(1,455,716)
Total shareholders´ equity
1,015,636,098
2,548,391,890
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
12,737,859,620
10,732,746,967
consolidated financial statements
consolidated income statement
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003 and thousands of US dollars)
OPERATING INCOME:
Sales
Cost of Sales
GROSS PROFIT
As of December 31,
2002
ThCh$
2003
ThCh$
2,510,731,952
(1,747,350,860)
2,352,333,380
(1,651,731,835)
763,381,092
700,601,545
Administrative and Selling Expenses
(225,410,287)
(169,503,861)
OPERATING INCOME
537,970,805
531,097,684
NON-OPERATING INCOME:
Interest income
Equity in income of related companies
Other non-operating income
Equity in income of related companies
Amortization of goodwill
Interest expense
Other non-operating expenses
Price-level restatement, net
Exchange difference, net
118
86,137,470
15,146,206
311,225,325
(6,799,786)
(511,407,613)
(449,331,872)
(238,208,379)
5,014,539
(16,271,349)
67,235,139
17,754,503
197,576,789
(237,707)
(53,228,237)
(420,432,628)
(248,024,672)
(4,499,391)
(6,054,305)
NON-OPERATING RESULT
(804,495,459)
(449,910,509)
INCOME (LOSS) BEFORE INCOME TAXES
(266,524,654)
81,187,175
Income Taxes
Extraordinary Items
(66,677,155)
(22,599,396)
(41,570,717)
-
INCOME (LOSS) BEFORE MINORITY INTEREST
(355,801,205)
39,616,458
Minority Interest
16,445,385
(78,324,793)
LOSS BEFORE AMORTIZATION OF NEGATIVE GOODWILL
(339,355,820)
(38,708,335)
Amortization of Negative Goodwil
113,370,252
51,176,198
NET INCOME (LOSS) FOR THE YEAR
(225,985,568)
12,467,863
The accompanying notes are an integral part of these consolidated financial statements
Enersis / 2003 annual report
consolidated statements of changes
in shareholders’ equity
(Expressed in thousands of historical Chilean pesos, except as stated)
Paid-in
capital
Additional
paid-in
capital
Other
reserves
Retained
earnings
Deficit of
subsidiaries in
development
stage
Net income
(loss) for
the year
Total
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
As of January 1, 2002
729,328,347
32,398,114
25,517,158
350,149,143
867,381
40,926,246
1,179,186,389
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in the development stage
Cumulative translation adjustment
Price-level restatement of capital
Net loss for the year
-
-
-
-
-
-
-
-
-
-
-
20,596,914
40,926,246
-
-
-
21,879,850
971,943
765,515
11,732,261
-
-
(5,830,512)
-
26,021
(40,926,246)
-
-
-
-
-
-
(5,830,512)
20,596,914
35,375,590
-
-
-
-
-
(223,748,087)
(223,748,087)
As of December 31, 2002
751,208,197
33,370,057
46,879,587
402,807,650
(4,937,110)
(223,748,087)
1,005,580,294
As of December 31, 2002 (1)
758,720,279
33,703,758
47,348,383
406,835,727
(4,986,481)
(225,985,568)
1,015,636,098
As of January 1, 2003
Capital increase
Transfer of prior year loss to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in the development stage
Cumulative translation adjustment
Price-level restatement of capital
Net income for the year
751,208,197
33,370,057
46,879,587
402,807,650
(4,937,110)
(223,748,087)
1,005,580,294
1,471,844,920
125,881,577
-
-
-
-
-
-
-
-
-
-
(11,432,599)
-
(61,587,469)
-
-
-
1,597,726,497
(228,581,520)
4,833,433
223,748,087
-
-
-
-
-
(1,302,667)
-
119
-
-
-
-
(11,432,599)
(1,302,667)
(61,587,469)
6,939,971
4,658,223
71,728
468,796
1,790,596
(49,372)
-
-
-
-
-
12,467,863
12,467,863
As of December 31, 2003
2,227,711,340
159,323,362
(25,671,685)
176,016,726
(1,455,716)
12,467,863 2,548,391,890
(1) Restated in thousands of constant Chilean pesos as of December 31, 2003.
The accompanying notes are an integral part of these consolidated financial statements
consolidated financial statements
statements of consolidated cash flows
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003 and thousands of US dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) for the year
GAIN (LOSSES) FROM SALES OF ASSETS:
Losses (gain) on sale of property, plant and equipment
Gain on sale of investments
Losses on sale of other assets
CHARGES (CREDITS) TO INCOME WHICH DO NOT REPRESENT CASH FLOWS:
Depreciation
Amortization of intangibles
Write-offs and accrued expenses
Equity in income of related companies
Equity in losses of related companies
Amortization of goodwill
Amortization of negative goodwill
Price-level restatement, net
Exchange difference, net
Other credits to income which do not represent cash flows
Other changes to income which do not represent cash flows
120
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:
Decrease in acounts payable associated with operating results
Increase (decrease) in interest payable
Decrease in income tax payable
Increase in other accounts payable associated
Net decrease (increase) in value added tax and other similar taxes payable
Income (loss) attributable to minority interest
As of December 31,
2002
ThCh$
2003
ThCh$
(225,985,568)
12,467,863
(1,106,875)
-
-
459,015,845
10,493,180
56,497,694
(15,146,206)
6,799,786
511,407,613
(113,370,252)
(5,014,539)
16,271,349
(231,345,363)
149,131,944
56,532,837
11,886,420
(23,278,402)
(50,083,576)
55,676,296
(46,296,619)
30,330,183
(1,910,207)
(16,445,385)
6,254,224
(89,285,108)
399,487
396,415,628
8,583,470
54,402,387
(17,754,503)
237,707
53,228,237
(51,176,198)
4,499,391
6,054,305
(29,777,139)
153,256,564
(84,407,019)
10,372,331
19,368,706
31,758,837
(11,090,838)
(41,018,493)
39,198,600
24,163,738
78,324,793
Net cash flows provided by operating activities
634,060,155
574,476,970
Enersis / 2003 annual report
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares to minority shareholders
Proceeds from the insuance of debt
Proceeds from bond issuances
Other sources of financing
Distribution of capital in subsidiary
Dividends paid
Payment of debt
Payment of bonds
Payment of loans obtained from related companies
Payment of share issuance costs
Payment of bond issuance costs
Other disbursements for financing
As of December 31,
2002
ThCh$
2003
ThCh$
1,924,710
988,703,723
132,830,563
26,611,951
(120,479,434)
(101,450,778)
(1,105,491,293)
(29,640,676)
(44,833,529)
-
(11,252,187)
(24,813,311)
546,464,851
1,022,598,818
828,121,856
24,038,068
(24,031,631)
(80,795,294)
(2,128,072,013)
(487,071,031)
(4,467,535)
(10,831,654)
(5,681,393)
(116,030,617)
Net cash used in financing activities
(287,890,261)
(435,757,575)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment
Sales of investment in related companies
Other loans receiver from related companies
Other receipts from investments
Additions to property, plant and equipment
Long-term investments
Investment in financial instruments
Other loans granted to related companies
Other investments disbursements
121
22,831,460
-
-
18,741,707
(321,094,597)
(23,699,930)
(731,647)
-
(36,294,538)
160,760,440
121,827,367
24,972,489
49,788,337
(258,785,648)
(2,987,209)
-
(312,412)
(6,887,966)
Net cash provided by (used in) investing activities
(340,247,545)
88,375,398
POSITIVE NET CASH FLOW FOR THE PERIOD
5,922,349
227,094,793
EFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
(2,524,628)
(119,497,566)
NET INCREASE IN CASH AND CASH EQUIVALENTS
3,397,721
107,597,227
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
220,005,877
223,403,598
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
223,403,598
331,000,825
The accompanying notes are an integral part of these consolidated financial statements
consolidated financial statements
notes to the consolidated financial statements
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003, except as stated) As of
and for the years ended December 31, 2002 and 2003
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. and Empresa Nacional de
Electricidad S.A. (Endesa S.A.) are registered in the Securities Register under
No. 0321 and 0114, respectively.
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 amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation.
The preparation of financial statements in conformity with Chilean 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
122
amounts of revenues and expenses during the reporting year. Actual results
could differ from those estimates.
In certain cases generally accepted accounting principles require that
assets or liabilities be recorded or disclosed at their fair values. The fair value
is the amount at which an asset could be bought or sold or the amount
at which a liability could be incurred or settled in a current transaction
between willing parties, other than in a forced or liquidation sale. Where
available, quoted market prices in active markets have been used as the
basis for the measurement; however, where quoted market prices in active
markets are not available, the Company has estimated such values based
on the best information available, including using modeling and other
valuation techniques.
Reclassifications - For purposes of comparison, the following reclassifications were made in the 2002 financial statements:
From
Balance sheet reclassifications
Charge
ThCh$
To
Technical appraisal
Accounts payable long-term
Deferred income taxes long-term
5,600,813
25,294,270
9,516,702
Accumulated depreciation
Accrued expenses long-term
Deferred income taxes short-term
From
Statement of operations reclassifications
Credit
ThCh$
To
Credit
ThCh$
(5,600,813)
(25,294,270)
(9,516,702)
Charge
ThCh$
Other non-operating expenses
(5,400,191)
Interest expense
5,400,191
Enersis / 2003 annual report
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 operations. The
Company consolidates the financial statements of companies in which it controls over 50% of the voting shares, which are the following:
Percentage participation as of December 31,
Company
Chilectra S.A.
Compañía Eléctrica del Río Maipo S.A. (2)
Synapsis Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
Cía. Americana de Multiservicios Ltda.
Endesa Chile S.A.
Enersis de Argentina S.A. (3)
Enersis Internacional Ltda.
Inversiones Distrilima S.A.
Empresa Distribuidora Sur S.A. (Edesur)
Luz de Bogotá S.A. (1)
Cerj
Investluz (1)
Enersis Energía de Colombia S.A. (3)
2002
Total
98.239845
98.742447
100.000000
100.000000
100.000000
59.980924
100.000000
100.000000
55.682800
65.092614
44.660541
61.952071
48.405907
100.000000
Direct
98.239845
-
99.990000
99.999999
99.931231
59.980924
-
100.000000
15.930000
16.022778
25.714285
26.466946
15.610000
-
2003
Indirect
-
-
0.010000
0.000001
0.068769
-
-
-
39.752800
49.069836
18.946256
45.347910
36.388920
-
Total
98.239845
-
100.000000
100.000000
100.000000
59.980924
-
100.000000
55.682800
65.092614
44.660541
71.814856
51.998920
-
(1)
Investluz is Parent Company of Companhia Energética do Céará S.A. Coelce and Luz de Bogotá S.A. is Parent Company of Codensa S.A.. The Company obtained shareholder agreements dated June 25, 1999, from Endesa
International, 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 was notified on June 28, 1999.
(2) On April 30, 2003, Compañía Eléctrica del Río Maipo S.A. was sold to Compañía General de Electricidad Industrial S.A. and, as a result, that company ceased to be reflected in our consolidation from January 1, 2003 and was
treated as an equity - method investee until its sale.
On June 23, 2003 Infraestructura 2000 Holding and its consolidated subsidiaries as was sold, and a result, these companies ceased to be reflected in financial statements of Endesa from January 1, 2003 and were treated as
equity - method investees until their sale.
Enersis de Argentina S.A. and Enersis Energía de Colombia S.A. have been dissolved this year.
(3)
123
b. Years covered
These financial statements reflect the Company’s financial position
as of December 31, 2002 and 2003, and the results of its operations,
the changes in its shareholders’ equity and its cash flows for years ended
December 31, 2002 and 2003.
c. Constant currency restatement
The cumulative inflation rate in Chile as measured by the Chilean
Consumer Price Index (“CPI”) for the two-year ended December 31, 2003
was approximately 3.94%.
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 25).
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 year 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, 2002
November 30, 2003
Index
113.36
114.44
Change over Previous November 30,
3.0%
1.0%
By way of comparison, the actual values of the Chilean consumer price
indices as of the balance sheet dates are as follows:
December 31, 2002
December 31, 2003
Index
112.86
114.07
Change over Previous December 31,
2.8%
1.1%
consolidated financial statements
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
e. Time deposits and marketable securities
Time deposits are presented at original placement plus accrued interest
and UF indexation adjustments, as applicable. Marketable securities
include investments in quoted shares that are valued at the lower of cost
or market value. The investments are in both short-term highly liquid fixed
rate investment shares and mutual fund units valued at cost plus interest
and indexation or redemption value as appropriate (Note 4).
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, 2002
December 31, 2003
Ch$
16,455.03
16,946.03
f. Allowance for doubtful accounts
Accounts receivable are classified as current or long-term, depending
on their collection terms. Current and long-term trade accounts receivable,
notes receivable and other receivables are presented net of allowances
for doubtful accounts (see Note 5). Write-offs of uncollectible accounts
amounted to ThCh$118,986,788 and ThCh$104,385,199 for the years
ended December 31, 2002 and 2003, respectively. In addition, the total
sum owed by the companies that have gone into bankruptcy amounting
to ThCh$821,469 (ThCh$714,833 in 2002) is included in the bad debt
allowance estimation.
Comparative financial statements
g. Inventories
For comparative purposes, the 2002 consolidated financial statements
and the amounts disclosed in the related Notes have been restated in terms
of Chilean pesos of December 31, 2003, purchasing power.
Convenience translation to U.S. dollars
124
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, 2003 of Ch$593.80 to US$1.00. The
convenience translations should not be construed as representations that
the Chilean peso amounts have been, could have been, or could in the
future be, converted into US dollars at this or any other rate of exchange.
d. Assets and liabilities in foreign currencies
Assets and liabilities denominated in foreign currencies are detailed
in Note 32. These amounts have been stated at the observed exchange
rates reported by the Central Bank of Chile as of each December 31, as
follows:
Currency
Symbol
used
2002
Ch$
2003
Ch$
United States dollar (Observed)
British pound sterling
Colombian peso
New Peruvian sol
Brazilian real
Japanese yen
Euro
Pool Unit (IBRD)(1)
Unidad de Fomento (UF)
Unit of Account (IDB) (1)
Argentine peso
US$
£
$ Col
Soles
Rs
¥
€
UP
UF
UC
$ Arg
718.61
1,152.91
0.25
204.73
203.57
6.07
752.55
593.80
1,056.21
0.21
171.62
205.52
5.55
744.95
9,089,158.76 8,408,776.27
16,920.00
970.23
200.61
16,744.12
1,093.75
219.09
(1) Units of measurement used by the International Bank for Reconstruction and Development (IBRD) and
Interamerican Development Bank (IDB) to express the weighted-average of multicurrency loan obligations
granted using fixed currency rates to the US dollar, at a determined date.
Inventory of materials in transit, land 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 realization is expected in the short-term.
h. Property, plant and equipment
Property, plant and equipment are valued at net replacement cost as
determined by the former Superintendency of Electric and Gas Services
(SEG) adjusted for price-level restatement in accordance with D.F.L. No.4
of 1959. The latest valuation under the D.F.L. 4 was in 1980.
Property, plant and equipment acquired after the latest valuation of net
replacement cost are shown at cost, plus price-level restatement. Interest
on debt directly obtained to finance construction projects is capitalized
during the year of construction (only in power generators).
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.
In accordance with Chilean GAAP, the Company has evaluated the
recoverability of its foreign investments as required by Technical Bulletin
No. 33 of the Chilean Association of Accountants. It is the Company’s policy,
when evidence exists of an other than temporary impairment of fixed assets,
such that the Company’s operations are not expected to produce sufficient
net cash flows, to recover all fixed asset costs, including depreciation, that
the book values of those assets must be reduced to their net realizable
values with a charge to non-operating expenses. The Company has not
identified impairments in the net book values of its property, plant and
equipment.
Enersis / 2003 annual report
i. Depreciation
o. Revenue recognition
Depreciation expense is calculated on the revalued balances using
the straight-line method over the estimated useful lives of the assets.
Depreciation expense was ThCh$459,015,845 and ThCh$396,415,628 as
of December 31, 2002 and 2003, respectively. Depreciation expense of
ThCh$444,302,226 and ThCh$382,896,216 was included in Cost of sales
and ThCh$14,713,619 and ThCh$13,519,412 included in Administrative and
selling expenses, respectively in the years ended December 31, 2002 and
2003.
Revenue consists of revenue for electric power generation and
distribution, among which is included energy supplied and unbilled at
each year-end, valued at the selling price using the current rates which
has been included in revenue from operations. The unbilled amount is
presented in current assets as trade receivables and the corresponding cost
is included in cost of operations. The Company also recognizes revenues
for amounts received from highway tolls for motorized vehicles, income
related to computer advisory services, engineering services and sale of
materials.
j. Leased assets
The leased assets, whose contracts have financial lease characteristics,
are accounted for as an acquisition of property plant and equipment,
recognizing the total obligation and the unrecorded interest. Said assets
do not legally belong to the Company, for which reason, as long as the
purchase option is not exercised, it will not be able to freely dispose of
them.
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 completed 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.
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 an
accrual basis (Note 11).
p. Income tax and deferred income taxes
At December 31, 2002 and 2003, the Company recorded current
tax expense according to the tax laws and regulations in each country of
ThCh$75,840,151 and ThCh$100,753,177, respectively and, additionally,
it recorded the effect of temporary differences due to differed taxes of
ThCh$59,182,460 (net credit of ThCh$9,162,996 in 2002) with a net
credit to the year’s income. The Company records deferred income taxes
in accordance with Technical Bulletin No.60 of the Chilean Association of
Accountants, and with circular No.1466 issued on January 27, 2000 by the
SVS, recognizing, using the liability method, the deferred tax effects of
temporary differences between the financial and tax values of assets and
liabilities using the tax rates estimated to be in effect at the time of reversal
of the temporary differences that gave rise to them.
q. Accrued vacation expense
In accordance with Technical Bulletin No.47 issued by the Chilean
Association of Accountants, employee vacation expense is recorded on the
accrual basis.
125
r. 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.
Investments in foreign affiliates are recorded in accordance
with Technical Bulletins No.42 and 64 of the Chilean Association of
Accountants.
s. Statements of cash flows
In accordance with Chilean GAAP, the Company has evaluated the
recoverability of its foreign investments as required by Technical Bulletins
No. 33 and No. 42 of the Chilean Association of Accountants. The Company
has not identified impairments in the net book values of its investments.
m. Intangibles, other than goodwill
Intangibles, other than goodwill, correspond mainly to easements,
adjustments to carrying value for spum-off assets, and rights for the use
of telephone lines and are amortized in accordance with Technical Bulletin
No.55 of the Chilean Association of Accountants.
The Consolidated Statements 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 cash 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.
n. Severance indemnity
t. Financial derivative contracts
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.
As of December 31, 2003 the Company and its subsidiaries have forward
contracts, currency swaps, and interest rate swaps and collars with several
financial institutions, defined as cover, which are recorded according to
Technical Bulletin No.57 of the Chilean Association of Accountants. Forward
foreign exchange contracts gains and losses are recorded at estimated fair
value with certain gains and losses deferred as assets or liabilities until
consolidated financial statements
settlement if the instrument qualifies as a hedge and included in earnings
as “Other non-operating income and expense.”
3. change in accounting principles
There were no changes in accounting principles during the year ended
December 31, 2002 and 2003 that would affect the comparison with the
prior year financial statements.
u. 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.
As of December 31, 2002 and 2003 the Company evaluated the
recoverability of its goodwill and negative goodwill value arising from
investments abroad and in virtue of Technical Bulletin No.56 of the
Chilean Association of Accountants, under IAS 36 “Impairment of Assets
Value”, an impairment of goodwill and negative goodwill was recorded
(See Note 13).
At December 31 2002, and as a result of the recoverability analysis
specified in the previous paragraph, the Company amortized all of the
goodwill and negative goodwill recorded by investments in Argentina and
Brazil, since rebated flows from the Companys in those countries did not
cover the goodwill and negative goodwill recorded. Effects in 2002 were a
net charge to income of ThCh$238,798,904, net of minorities and included
in the income statement under item amortization of negative goodwill.
v. Pension and post-retirement benefits
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.
126
w. 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.
x.
Investments in other companies
Investments in other companies are presented at acquisition cost
adjusted for price-level restatement and they do not have market value.
y. Research and development costs
Costs incurred by the Company in research and development are which
general in nature (water-level studies, hydroelectric research, seismic-activity
surveys) are expensed as incurred. Costs incurred in performing studies
related to specific construction projects are capitalized.
During the year end December 31, 2002 and 2003, there were no
research and development costs incurred.
z. Cost of share issue
Costs incurred to date associated with issuing and placing shares are
recorded according to the provisions of Circular No. 1370 of 1998 of the
Superintendency of Securities and Insurance. The amounts under these
items are deducted from the premium account. Breakdown of the costs
is shown in Note 28.
Enersis / 2003 annual report
4. time deposits
Time deposits as of each year end are as follows (annual rate and scheduled maturity in table below represent such at December 31, 2003).
As of December 31,
Financial Institution
Banco Bilbao Vizcaya
Banco Colpatria
Banco Continental
Banco Crédito del Perú
Banco de Bogotá
Banco de Chile
Banco de Chile N.Y.
Banco do Brasil
Banco do Estado do Ceará
Banco Frances
Banco Holandes
Banco Interbank
Banco Itau
Banco Nationale de Paris
Banco Pactual
Banco Provincia de Buenos Aires
Banco Real
Banco Rio de la Plata
Banco Safra
Banco Santander
Banco Santander Do Brasil
Banco Santos
Banco Tequendama
Banco Unión
Banco Votorantim
Banco Wiese Sudameris
Bancolombia
Bank Boston
Bank of America
Bradesco
BTM
Citibank N.Y.
Citiliquit
Colcorp S.A.
Corficol S.A.
Corfinsura
Corfivalle
Corporacion las Villas
Encargo Fiduciario Banco Santander
Fiduciaria Banco Colpatria
Fiduciaria Bancolombia
Fiduciaria de Santander
Fiducolombia
Fiduoccidente
Fiduvalle
Granahorrar
HSBC - Bamerindus
Interbolsa S.A
Merril lynch
Porvenir
Pruential Securiti
Serfinco
Suvalor
Unibanco
Otros
Total
Annual
Rate %
0.97%
9.35%
1.48%
-
10.50%
-
-
1.37%
1.37%
2.50%
3.75%
0.70%
1.44%
1.44%
1.39%
-
-
1.59%
16.03%
1.51%
1.37%
1.39%
8.50%
9.75%
1.39%
-
1.00%
0.80%
0.56%
1.38%
0.60%
0.53%
0.95%
-
9.66%
1.41%
1.70%
9.95%
6.51%
7.71%
7.37%
6.72%
8.14%
-
7.08%
8.90%
1.39%
9.68%
0.60%
3.22%
0.20%
8.05%
9.10%
-
-
Scheduled Maturity
05-01-04
02-01-04
06-01-04
-
02-02-04
-
-
02-01-04
02-01-04
20-01-04
28-01-04
02-01-04
02-01-04
02-01-04
15-01-04
-
-
28-01-04
02-01-04
02-01-04
02-01-04
15-01-04
02-01-04
01-03-04
15-01-04
-
05-01-04
02-01-04
05-01-04
15-01-04
02-01-04
05-01-04
02-01-04
-
02-01-04
02-01-04
02-01-04
01-03-04
02-01-04
02-01-04
02-01-04
04-01-04
02-01-04
-
02-01-04
02-01-04
15-01-04
02-01-04
05-01-04
02-01-04
30-01-04
02-01-04
02-01-04
-
02-01-04
2002
ThCh$
4,584,493
14,956,447
3,402,753
4,152,837
613,024
150,979
348,392
1,070,955
-
609,612
436,058
2,891,618
215,200
700,763
2,952,372
657,112
-
5,176,989
-
2,366,916
1,182,363
-
-
-
3,260,288
435,478
-
95,035
5,373,623
3,801,902
-
55,796,821
-
1,034,481
3,724,255
-
3,761,704
-
2,387,475
-
228
163,304
-
9,825
768,985
-
5,504,531
-
8,293,650
-
-
-
4,055,608
2,145,470
1,617
2003
ThCh$
68,469,616
8,454,519
2,104,459
-
202,040
-
-
3,469,083
3,019,595
278,814
201,973
1,301,911
6,238
404,796
2,698,006
-
379,939
2,480,797
2,659,815
5,514,171
246
861,954
751,813
10,311,678
981,676
-
1,246,980
440,462
16,444,649
855,934
651,994
43,612,454
3,077,936
-
6,925,006
1,968,859
4,513,569
919,059
501,514
1,648
5,315,138
1,520
1,095,663
-
1,722,823
806,257
18,052,231
10,279,888
5,993,536
14,906,595
1,029,285
88,380
1,244,538
-
5,549
147,083,163
256,254,606
consolidated financial statements
127
5. accounts, notes and other receivables
Current accounts, notes and other receivables and their related allowances for doubtful accounts as of each December 31, are as follows:
Account
Under 90 days
91 days to 1 year
Sub total
Current
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
Long term
2002
ThCh$
2003
ThCh$
As of December 31,
Account receivable
492,269,288 496,640,838
77,681,457
62,052,667
558,693,505
569,950,745
467,170,365
Allowance for doubtful accounts
(38,380,312)
(33,028,933)
(68,142,312)
(58,494,207)
(91,523,140)
(106,522,624)
Notes receivables
4,700,533
7,981,338
1,457,111
1,152,322
9,133,660
6,157,644
8,362,627
Allowance for doubtful accounts
(120,165)
(116,344)
(854,817)
(654,689)
(771,033)
(974,982)
-
-
-
-
Other receivables
53,062,242
52,477,241
19,347,036
50,286,032
102,763,273
72,409,278
94,194,266
129,592,779
131,457,063
Allowance for doubtful accounts
(3,033,127)
(2,779,433)
(5,972,294)
(5,789,574)
(8,569,007)
(9,005,421)
(2,483,761)
(3,522,019)
Total
532,014,640 569,727,258
127,109,018
127,935,044
Current and long-term accounts receivable per country as of each December 31, are as follows:
128
Country
Chile
Perú
Argentina
Colombia
Brazil
Panamá
Total
As of December 31,
2003
2002
ThCh$
146,118,266
58,769,018
40,866,386
100,786,120
311,586,391
997,477
%
22.17%
8.92%
6.20%
15.29%
47.27%
0.15%
ThCh$
169,757,602
45,292,103
46,986,117
110,553,416
324,777,530
295,534
%
24.33%
6.49%
6.73%
15.85%
46.55%
0.04%
659,123,658
100.00%
697,662,302
100.00%
Enersis / 2003 annual report
6. transactions with related companies
The balances of accounts receivable and payable are as follows at December 31, 2002 and 2003:
a. Notes and accounts receivable:
Company
Aguas Santiago Poniente S.A.
Atacama Finance Co.
CGTF Fortaleza
Cía. Interconexión Energética S.A.
Com. de Energía del Mercosur S.A.
Consorcio Energetico Punta Cana-Macao
Distrilec Inversora S.A.
Elesur S.A.
Empresa Eléctrica de Bogotá S.A.
Empresa Eléctrica Piura S.A.
Endesa España
Endesa Internacional S.A.
Etevensa
Fundación Endesa
Gas Atacama S.A.
Gas Atacama Generación Ltda.
Gasoducto Atacama Chile
Gasoducto Tal Tal Ltda.
Ingendesa do Brasil
Consorcio Ara-Ingendesa Ltda.
Inversiones Electricas Quillota S.A.
Sacme
Smartcom S.A.
Soc. de Inv. Chispa Uno S.A.
Transmisora Eléctrica de Quillota Ltda.
As of December 31,
Short-term
Long-term
2002
ThCh$
260,374
183,867,364
3,900
4,142,233
4,467,110
948
7,330
24,459
173,464
282,337
325,343
1,648,410
222,220
166,926
-
576,149
-
146,320
-
-
1,010
102,108
625,597
1,956
307,265
2003
ThCh$
578,492
1,904,970
144,600
2,669,983
5,058,905
939
5,996
27,313
34,433
32,431
-
1,279,417
93,762
37,937
2,615,689
29,846
123,521
-
-
452,110
2,000
88,515
1,571,083
1,973
306,210
2002
ThCh$
-
-
-
37
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,181
-
-
-
-
-
890,931
2003
ThCh$
-
128,184,900
-
155,439
-
-
-
-
-
-
-
169,245
-
-
-
-
-
-
-
-
-
-
-
-
594,249
129
Total
197,352,823
17,060,125
907,149
129,103,833
b. Notes and accounts payable:
Company
Aguas Santiago Poniente S.A.
Cía. Interconexión Energética S.A.
Cía. de Transmisión del Mercosur S.A.
CGTF Fortaleza
Com. de Energía del Mercosur S.A.
Electrogas S.A.
Elesur S.A.
Empresa Eléctrica de Bogotá S.A.
Empresa Eléctrica Piura S.A.
Endesa Internacional S.A.
Endesa Servicios
Gasoducto Tal Tal Ltda.
Ingendesa do Brasil
Sacme
Smartcom S.A.
Transmisora Eléctrica de Quillota Ltda.
As of December 31,
Short-term
Long-term
2002
ThCh$
637
-
108,115
-
767,772
236,175
11,580,352
1,238,934
866,000
1,120,838
125,876
162,165
-
102,737
55,741
83,227
2003
ThCh$
6
20,940,972
1,008,377
3,194,163
569,799
194,463
133,160
2,851,852
385,358
1,200,147
95,887
-
7,126
112,315
31,848
22,820
2002
ThCh$
-
-
-
-
-
-
997,244,777
929,744
-
-
-
-
-
-
-
-
2003
ThCh$
-
-
-
-
-
-
-
84,320
-
-
-
-
-
-
-
-
Total
16,448,569
30,748,293
998,174,521
84,320
consolidated financial statements
c. Effects in income (expense) in each year end December 31, 2002 and 2003 are as follows:
Company
Nature of Transaction
As of December 31, 2002
Amount
ThCh$
Income (Expense)
ThCh$
As of December 31, 2003
Amount
ThCh$
Income (Expense)
ThCh$
Aguas Santiago Poniente S.A.
Atacama Finance Co.
CGTF Fortaleza
Cía. Interconexión Energética S.A.
Consorcio ARA-Ingendesa
Com. de Energía del Mercosur S.A.
Com. Transmisión del Mercosur S.A.
Empresa Eléctrica de Bogotá S.A.
Elesur S.A.
Empresa Eléctrica Piura S.A.
130
Electrogas S.A.
Endesa Internacional S.A.
Endesa Servicios
Empresa Propietaria de la Red
Etevensa
Gasoducto Atacama Generación Ltda.
Gasoducto Tal Tal Ltda.
Ingendesa do Brasil
Sacme
Smartcom S.A.
Soc. de Inv. Chispa Uno S.A.
Transmisora Eléctrica de Quillota Ltda.
Interest
Services
Interest
Monetary correction
Exchange difference
Services
Purchase of energy
Sale of energy
Purchase of energy
Interest
Services
Exchange difference
Services
Sale of energy
Purchase of energy
Interest
Services
Purchase of energy
Exchange difference
Interest
Monetary correction
Services
Sale of energy
Purchase of energy
Services
Services
Services
Interest
Services
Services
Sale of energy
Services
Services
Services
Services
Services
Services
Services
Interest
Monetary correction
Services
22,128
15,159
5,540,261
1,737,790
28,991,652
1,144,349
3,127,438
21,407,084
50,556,652
66,539
54,867
-
2,077,094
19,987,902
2,125,804
-
18,353
2,058,111
2,148,962
9,267,916
15,675,723
35,744
488,777
4,794,788
96,395
2,615,631
127,134
188,999
122,745
149,404
2,214,085
128,047
78,694
-
24,940
308,575
3,759,498
8,518
107,246
24,733
128,294
22,128
15,159
5,540,261
1,737,790
(28,991,652)
1,144,349
(3,127,438)
21,407,084
(50,556,652)
66,539
54,867
-
2,077,094
19,987,902
(2,125,804)
-
18,353
(2,058,111)
(2,148,962)
(9,267,916)
(15,675,723)
35,744
488,777
(4,794,788)
96,395
(2,615,631)
127,134
(188,999)
(122,745)
149,404
2,214,085
128,047
78,694
-
(24,940)
(308,575)
3,759,498
8,518
107,246
24,733
128,294
(62,589,841)
71,465
32,381
6,726,455
5,038,575
11,218,729
478,557
21,852
27,260,902
-
-
275,635
3,558
-
19,344,388
1,977,795
63,144
74,594
1,411,673
-
43,842,919
29,373,511
16,078
1,471,956
9,715,844
177,673
3,008,489
184,543
1,036,799
-
350,464
5,815,456
155,153
591,737
40,899
-
368,040
3,441,365
8,516
145,491
44,434
5,117
71,465
32,381
6,726,455
5,038,575
11,218,729
478,557
(21,852)
27,260,902
-
-
275,635
(3,558)
-
19,344,388
(1,977,795)
(63,144)
74,594
(1,411,673)
-
(43,842,919)
(29,373,511)
16,078
1,471,956
(9,715,844)
177,673
(3,008,489)
184,543
(1,036,799)
-
350,464
5,815,456
155,153
591,737
(40,899)
-
(368,040)
3,441,365
8,516
145,491
44,434
5,117
(7,934,859)
The transfer of short-term funds between related companies, is on the
basis of a current cash account, at a variable interest rate based on market
conditions. The resulting accounts receivable and accounts payable are
essentially on 30 day terms, with automatic rollover for the same year and
settlement in line with cash flows.
Detail of the long-term payables / receivables is as follows:
Company
Elesur S.A.
Transmisora Eléctrica de Quillota Ltda.
Atacama Finance Co.
Type
Due Date
Capital
Currency
Interest Rate
Cta. por pagar
Cta. por pagar
Account receivables
Account receivables
5/13/04
5/13/04
2006
2005
35,827,779.56
22,873,999.43
70,242.29
215,872,179
U.F.
U.F.
U.F.
US$
1.31%
1.68%
9.00%
3.42%
Enersis / 2003 annual report
7. inventories
Inventories include the following items and are presented net of
an allowance for obsolescence amounting to ThCh$4,385,619 and
ThCh$2,683,638 as of December 31, 2002 and 2003, respectively:
Real state under development
Materials in transit
Operation and maintenance material
Fuel
Others
Total
8. deferred income taxes
As of December 31,
2002
ThCh$
24,042,270
1,115,246
27,986,470
6,760,428
1,082,066
2003
ThCh$
16,157,076
135,300
22,051,283
5,964,453
82
60,986,480
44,308,194
Income taxes (recoverable) payable as of each year-end are as
a.
follows:
c. The balance of taxed retained earnings (tax losses) and the related tax
credits are as follows:
As of December 31,
Year
2002
ThCh$
2003
ThCh$
Income tax provision - current
Recoverable tax credits
27,807,349
(54,980,336)
47,840,056
(61,286,338)
2002
2003
Amount of loss
ThCh$
Credit
ThCh$
23,935,936
4,569,803
199,692,930
-
131
Total
(27,172,987)
(13,446,282)
b. Enersis (individual legal entity) incurred taxable losses of
ThCh$112,077,596 and ThCh$201,568,234 for the year ended December
31, 2002 and 2003, respectively.
d. The net effect of recording deferred tax expense resulted in a net credit
to income of ThCh$9,162,996 and ThCh$59,182,460 during the year ended
December 31, 2002 and 2003, respectively.
consolidated financial statements
e.
In accordance with BT No.60 and 69 of the Chilean Association of
Accountants, and Circular No.1,466 of the SVS, the Company and its
subsidiaries have recorded consolidated deferred income taxes as of
December 31, 2002 and 2003 as follows:
Concepts
Short-term
ThCh$
Long-term
ThCh$
Short-term
ThCh$
Long-term
ThCh$
Short-term
ThCh$
Long-term
ThCh$
Short-term
ThCh$
Long-term
ThCh$
As of December 31, 2002
As of December 31, 2003
Asset
Liability
Asset
Liability
Allowance for doubtful accounts
Deferred income
Vacation accrual
Intangibles
Leasing assets
Fixed assets depreciation
Severance indemnities
Other
Contingencies
Bond discount
Cost of studies
Finance cost
Imputed interest on construction
Deferred charges
Actuarial deficit (Brazil)
Withholdings
Obsolescence
Materials used
Tax losses
Provision real state project
Sie2000A project
Provision for employee benefits
Difference between the financial and
tax value Río Maipo
Derivative contracts
Exchange difference subsidiaries
Operating fees
Energy in measurers
Regulated assets
Capitalized expenses
Intangibles Chocon
Complementary account - net
Valuation allowance
27,035,992
1,494,877
769,811
72,015
-
146
-
3,594,092
7,938,072
-
-
-
-
-
-
574,558
302,156
-
29,982,094
-
-
699,478
1,409,835
5,359,656
-
-
-
6,886,751
-
1,606,843
44,976,491
-
-
-
-
-
11,775,837
-
76,847
-
97,925,200
2,873,023
-
2,527,267
90,863
-
-
12,393
-
-
-
938,639
-
109,977
-
-
-
1,755,492
-
5,721
-
-
-
-
-
527
-
-
-
1,502
-
374,043,309
948,245
3,901,701
-
1,745,623
7,980,878
10,638,763
4,550,251
2,736,926
-
1,219
-
3,716,538
-
-
178,733
-
25,532,561
930,762
1,223,410
-
-
-
-
4,253,906
6,660,238
-
-
-
-
-
-
1,253,029
-
-
15,458,979
-
-
451,937
8,170,065
1,842,789
-
-
2,324,725
7,733,690
5,300
2,103,847
38,423,059
-
-
118,204
-
-
6,834,095
869,566
-
-
100,984,920
2,682,607
-
1,191,673
-
-
-
-
-
64,631
-
4,420,170
-
156,053
-
-
-
778,509
-
5,549
-
-
-
-
-
522
-
-
-
-
-
429,741,603
822,383
7,986,537
-
1,734,298
8,052,280
13,893,414
4,912,067
3,143,392
2,324,725
195,075
-
1,097,152
-
-
-
521
-
-
910,639
4,981,513
-
-
-
-
(60,887)
-
-
305,207
2,731,918
-
-
-
-
-
(21,245,613)
(2,619,849)
-
965,095
-
-
2,730,718
2,226,949
-
-
(1,590)
-
-
-
-
-
-
13,224,702
1,414,276
2,725,964
(248,470,634)
-
-
354,326
1,301,759
-
-
-
-
-
(3,683,753)
-
-
236,516
3,905,276
-
-
-
-
-
(42,590,056)
(2,294,384)
1,489,974
-
-
-
-
3,866,280
-
37
(3,219)
-
-
-
-
-
-
-
1,498,430
2,926,732
(292,945,140)
-
Total
78,294,556
154,589,413
8,834,784
179,337,996
53,737,154
132,541,892
10,778,506
185,383,469
Income tax benefit (expense) for the year ended December 31, 2002
f.
and 2003 is as follows:
132
Item
Income tax provision
Adjustment for tax expense - prior year
Deferred taxes
Benefits for tax losses
Amortization of complementary accounts
Valuation allowance
Other charges or credits
Total
As of December 31,
2002
ThCh$
(75,327,507)
(512,644)
24,716,698
5,093,617
(15,656,230)
(127,841)
-
(4,863,248)
2003
ThCh$
(100,751,537)
(1,640)
50,210,225
27,116,024
(18,105,168)
(38,621)
-
-
(66,677,155)
(41,570,717)
Enersis / 2003 annual report
9. other current assets
Other current assets are as follows:
Forwards contracts and swap (1)
Guaranties and indemnities
Deferred expenses
post-retirement benefits
Deposits for commitments and guarantees
Bond discount
Account receivables from the Chilean Ministry of Public Works
Recoverable - taxes
Fair value derivatives contracts
Others
Reverse repurchase agreements (*)
Total
(1)
See detail in Note 29.
As of December 31,
2002
ThCh$
73,528,595
1,195,240
5,766,204
917,756
26,359,504
-
8,483,476
2,887,193
11,719,458
2,484,398
-
2003
ThCh$
10,923,643
2,371,350
6,614,476
865,286
12,659,720
722,598
-
2,354,873
1,177,039
755,709
35,484,088
133,341,824
73,928,782
(*)
The detail of reverse repurchase agreements is as follows:
Date
As of December 31, 2002
Code
Start
End
Financial institution
Currency
Document
Interest rate Current amount
%
ThCh$
Nominal
ThCh$
Fair value
ThCh$
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
12/23/03
12/23/03
12/23/03
12/23/03
12/23/03
12/23/03
12/23/03
12/23/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
12/30/03
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/5/04
1/2/04
1/2/04
1/2/04
1/2/04
1/2/04
1/2/04
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BCI C. Bolsa S.A.
BCI C. Bolsa S.A.
BCI C. Bolsa S.A.
BCI C. Bolsa S.A.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
133
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Bono
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
Bono
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
D.P.R.
P.D.B.C.
CERO
D.P.F.
L.H.
L.H.
L.H.
L.H.
L.H.
D.P.R.
D.P.R.
D.P.R.
D.P.R.
D.P.F.
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.20%
0.20%
0.25%
0.25%
0.25%
0.25%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
41,682
3,747
411,177
201,207
4,625,621
13,849,961
600,893
280,112
55,117
3,450
1,289,499
919,240
911,798
347,418
1,380,795
807,441
207,268
106,637
1,399,906
306,264
2,226
270,192
402,243
4,435,471
305,586
18,931
20,681
396,015
176,185
1,092,832
597,439
17,054
41,652
3,744
410,881
201,062
4,622,293
13,839,996
600,461
279,911
55,112
3,450
1,289,387
919,161
911,719
347,388
1,380,675
807,371
207,250
106,627
1,399,784
306,238
2,226
270,174
402,210
4,435,101
305,560
18,929
20,679
395,979
176,170
1,092,733
597,386
17,053
41,682
3,747
411,177
201,207
4,625,621
13,849,961
600,893
280,112
55,117
3,450
1,289,499
919,240
911,798
347,418
1,380,795
807,441
207,268
106,637
1,399,906
306,264
2,226
270,192
402,243
4,435,471
305,586
18,931
20,681
396,015
176,185
1,092,832
597,439
17,054
Total
35,484,088
35,468,362
35,484,088
consolidated financial statements
10. property, plant and equipment
The composition of property, plant and equipment is as follows:
Land
Buildings and infrastructure
Distribution and transmission lines and public lighting
Less: third party contributions
Sub-total
Machinery and equipment
Work in progress
Construction materials
Leased assets
Furniture and fixtures, tools, and computing equipment
Vehicles
Equipment in transit
Other assets
134
Sub-total
Technical appraisal
Buildings and infrastructure
Machinery and equipment
Other assets
Total technical appraisal
As of December 31,
2002
ThCh$
2003
ThCh$
131,203,835
115,453,784
6,672,031,327
5,112,002,563
(45,507,327)
5,720,327,311
4,372,434,555
(38,825,669)
11,738,526,563
10,053,936,197
1,998,142,088
1,762,236,656
368,152,002
57,023,213
722,292
80,047,377
13,228,900
7,537,621
13,498,068
159,006,562
51,432,701
615,332
76,291,759
13,710,401
6,199,631
40,833,308
540,209,473
348,089,694
611,329,810
142,061,512
261,353
502,988,090
116,269,308
213,832
753,652,675
619,471,230
Total property plant and equipment
15,161,734,634
12,899,187,561
Accumulated depreciation at beginning of year
Buildings and infrastructure
Machinery and equipment
Other assets
(3,844,983,403)
(635,172,469)
(77,638,424)
(3,659,649,792)
(567,927,448)
(44,393,681)
Accumulated depreciation at beginning of year
(4,557,794,296)
(4,271,970,921)
Accumulated depreciation at beginning of year technical appraisal
Buildings and infrastructure
Machinery and equipment
Other assets
(111,126,219)
(55,171,029)
(374,480)
(87,418,330)
(46,705,243)
(316,929)
Total accumulated depreciation at beginning of year technical appraisal
(166,671,728)
(134,440,502)
Depreciation of the year
(459,015,845)
(396,415,628)
Total accumulated depreciation at end of year
(5,183,481,869)
(4,802,827,051)
Total property, plant and equipment, net
9,978,252,765
8,096,360,510
Enersis / 2003 annual report
At December 31, 2002 and 2003 Enersis S.A. and its local subsidiaries have
proceeded to carry out an analysis of the book values of their property, plant and
equipment and of the companies in which it has invested abroad. The analysis
consisted of evaluating both the recoverability of property, plant and equipment
of these companies’, and the recorded goodwill and negative goodwill, in
accordance with accounting principles generally accepted in Chile.
the company’s operations do not have sufficient earnings to cover all costs,
including the depreciation of property, plant and equipment taken as a
whole, and when the book value of said assets exceed its realization value,
these values must be written down to recoverable amounts, charging non
operating income.
The property, plant and equipment recoverability analysis, as explained
in Note 2h, was carried out considering that when there is evidence that
The results of this analysis determined that no adjustments affecting
the Company and its Subsidiaries’ book values of property, plant and
equipment are required.
11. investment in related companies
a.
Investments as are as follows:
Related Companies
Number of shares
Percentage owned
2003
2002
Shareholders’ equity of investee
Net income of investees
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
Equity in income
2003
2002
ThCh$
ThCh$
Investment book value
2003
2002
ThCh$
ThCh$
Cía. de Interconexión Energética S.A. (2)
Gas Atacama Generación S.A.
Gasoducto Atacama Argentina S.A.
Gasoducto Atacama Chile S.A.
Inversiones Eléctricas Quillota S.A.
Inversiones Electrogas S.A.
Cía. de Energía del Mercosur S.A. (3)
Transmisora Eléctrica de Quillota Ltda.
Atacama Finance Co.
Endesa Market Place (4)
Sacme
Electrogas S.A.
Consorcio ARA- Ingendesa
Consorcio Ingendesa - Minmetal Limited (1)
Gas Atacama S.A.
Inversiones Gas Atacama Holding Ltda.
Central Geradora Termelectrica Fortaleza S.A.(*)
Ingendesa do Brasil Limitada
Distrilec Inversora S.A.
Aguas Santiago Poniente S.A. (*)
Total
128,270,106
-
-
-
608,676
425
6,305,400
-
3,150,000
210
12,000
85
-
-
1,147
-
20,246,908
-
4,416,141
1,031,949
45.00%
50.00%
50.00%
50.00%
50.00%
42.50%
45.00%
50.00%
50.00%
15.00%
50.00%
0.02%
50.00%
50.00%
-
-
48.82%
100.00%
-
55.00%
45.00%
0.05%
0.05%
0.05%
50.00%
42.50%
45.00%
50.00%
-
-
50.00%
0.02%
50.00%
50.00%
0.0011%
50.00%
48.82%
-
-
55.00%
119,509,231
68,448,335
64,868,716
56,417,660
17,298,638
15,869,870
7,690,175
5,082,987
5,230,813
3,231,944
79,470
11,302,024
106,824
3,713
-
-
44,134,443
58,016
-
2,293,024
121,877,449
59,258,642
54,547,284
51,450,616
21,995,615
18,797,232
7,708,759
5,392,454
-
-
86,122
17,267,942
124,272
3,326
164,950,845
164,948,946
33,459,443
-
8,683
2,192,591
16,228,851 24,759,084
3,258,586
(9,682,534)
4,820,005
1,475,845
6,489,614 5,293,292
2,646,460 6,580,436
5,856,912
1,517,084
1,355,690
(3,421,870)
310,329
255,588
-
(269,198)
-
(1,893,847)
31,355
14,280
5,965,918
1,613,238
100,775
114,992
38,210
-
385,814
-
(475,414)
-
-
-
-
(81,816)
8,683
-
-
-
7,302,991
(4,841,267)
2,410,003
3,244,807
1,323,229
644,761
(1,539,842)
127,794
(134,600)
(284,077)
15,678
342
57,496
19,105
-
-
-
-
-
-
11,141,588
1,629
738
2,647
3,290,216
2,489,188
610,060
155,165
-
-
7,140
1,268
50,388
-
4
(237,707)
-
-
4,472
-
53,779,154 54,844,852
29,629
34,224,168
27,274
32,434,358
25,725
28,208,829
10,997,808
8,649,319
7,988,824
6,744,695
3,468,942
3,460,579
2,696,227
2,541,493
-
2,615,406
484,793
-
43,061
39,735
3,669
2,402
62,136
53,412
1,663
1,856
1,891
-
82,474,473
-
16,334,900
21,546,421
-
58,016
4,472
-
1,205,925
1,261,163
135
8,346,420
17,516,796
196,105,799
180,211,471
(1) Related companies unconsolidated with subsidiary Ingendesa Ltda.
(2) Related companies unconsolidated with subsidiary Compañía Eléctrica Cono Sur S.A.
(3) Related companies unconsolidated with subsidiary Endesa Argentina S.A.
(4) Company with negative equity
(5) These subsidiaries were in the development stage for the years shown and accordingly, were not consolidated under Chilean GAAP.
b.
Income and (losses) recognized by Enersis S.A. based on the
participation in the related companies as of December 31, 2003, amounted
to ThCh$17,754,503 (ThCh$15,146,206), ThCh$237,707 (ThCh$6,799,786)
in 2002.
Company
Country of origin
Edesur S.A.
Edelnor S.A.
Companhia de Eletricidade do Río de Janeiro
Luz de Bogotá S.A. (Codensa S.A.)
Investluz S.A. (Coelce)
Central Hidroeléctrica Betania S.A.
Cachoeira Dourada S.A.
Edegel S.A.
Cía. Interconexión Energética S.A.
Hidroeléctrica El Chocón S.A.
Comercializadora de Energia del Mercosur S.A.
Central Costanera S.A.
Total
Argentina
Perú
Brasil
Colombia
Brasil
Colombia
Brasil
Perú
Brasil
Argentina
Argentina
Argentina
c.
In accordance with Technical Bulletin No.64 of the Chilean Association of
Accountants for the nine month years ended December 31, 2002 and 2003,
the Company has recorded foreign exchange gains and losses on liabilities
related to net investments in foreign countries that are denominated in
the same currency as the functional currency of those foreign investments.
Such gains and losses are included in the cumulative translation adjustment
account in shareholders’ equity, and in this way, act as a hedge of the
exchange risk affecting the investments. As of December 31, 2003 the
corresponding amounts are as follows:
Investment
ThCh$
376,658,893
18,790,742
323,818,995
224,263,713
74,616,732
388,075,105
358,414,232
180,701,515
54,844,852
189,748,674
3,468,942
92,380,475
2,285,782,870
Reporting currency
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Liability
ThCh$
232,116,929
19,323,450
348,180,545
253,090,879
95,856,203
275,373,220
405,082,294
165,456,684
48,193,748
81,628,031
2,271,562
57,636,346
1,984,209,891
consolidated financial statements
d. The investments made by Enersis S.A. and it affiliates ended as of
December 31, 2002 and 2003, amounted to ThCh$23,699,930 and
ThCh$2,987,209, respectively, which are detailed as follows:
Company
Central Termeléctrica Fortaleza S.A.
Central Eléctrica Cachoeira Dourada S.A.
Pangue S.A.
Inversiones Distrilima S.A.
Central Costanera S.A.
Aguas Santiago Poniente S.A.
Luz de Río Ltda.
Compañía Electrica del Río Maipo S.A.
Otros
As of December 31,
2002
ThCh$
2003
ThCh$
15,635,180
59,520
5,048,883
1,202,192
-
1,649,613
62,084
1,145
41,313
-
24,761
-
-
2,962,448
-
-
-
-
Total
23,699,930
2,987,209
• Capital increase in Cerj
• Sale of Infraestructura 2000 S.A.
On November 15, 2002, at an Extraordinary Meeting Nº16, the Board
of Directors of Enersis approved a capital increase in its subsidiary Cerj in
Brazil. Such increase will be done in a direct and indirect way through its
subsidiaries Chilectra and Luz de Río in order to maintain its participation
percentage in Cerj.
On June 23, 2003, Endesa S.A. sold 330,939,522 shares of the
subsidiary Infraestructura 2000 S.A. in the amount of M$39,097,079 and
3,741 shares of Sociedad Concesionaria Autopista del Sol S.A., in the amount
of M$40,147, which amounts represent 100% of its participation in these
related Companies (Note 24)
On December 10, 2002, the Extraordinary General Shareholders’
Meeting of the Company Cerj agreed to an increase in the authorized
capital for an approximate total amount of MUS$105.000.
• Sale of Shares
On December 29 2003, Compañía Eléctrica Cono Sur S.A. sold GasAtacama
S.A. 3,150,000 shares in Atacama Finance for US$ 4,400,000. (Note 24)
136
On January 6, 2003, the companies Endesa Internacional, Endesa
Internacional Energía, Chilectra S.A. have written over 100% of the rights
of share subscription of the company Cerj and part of the rights of Luz de
Río S.A. to Enersis.
A capital increase was made on January 10, 2003 through the issuance
and the subscription of 770.833.333.333 ordinary shares, at a value of
R$0,48 by lot of thousand shares totaling the MUS$100.000 approved
by the Meeting and increasing the authorized capital of the Company to
MUS$259.085.
With this operation, the percentage of direct and indirect participation
held by Enersis S.A. and branches increased from 61.9521% to 71.8148%.
• Sale of Río Maipo
The purchasing contract between Enersis and Compañía General de
Electricidad – Distribución was signed on April 30, 2003 for the entire
share participation held by Enersis (356.078.645 shares) in the Company
Río Maipo.
The attribution to the Company CGE Distribución was made by the Board
of Directors of Enersis on March 28, 2003, with a bid of US$170 million
for the shares held by Enersis and was ratified later at an Extraordinary
Shareholders Enersis’ Meeting dated March 31, 2003.
The signature of the purchasing contract marked the end of the process
of attribution of the Company Río Maipo, which is part of the strategic
plan of Enersis approved on October 4, 2002. The effects for the sale of
the shares are detailed in the Note 24.
On December 29 2003, Compañía Eléctrica Cono Sur S.A. sold
GasAtacama S.A. 5,000 shares in Energex Co. for US$ 5,000. (Note 24)
• Incorporation of Companies
On October 1 and November 17 2003 the Company Inversiones Gas
Atacama Holding Limitada, of which Inversiones Endesa Norte S.A. owns
50%, was incorporated by public deed; to that end, it provided ThCh$700,000
in cash and ownership and control of 99.90% of its ownership rights in
subsidiaries Gasoducto Atacama Chile Limitada, Gasoducto Atacama Argentina
Limitada and Gas Atacama Generación Limitada, which are equivalent to
49.95% of all of its rights in the aforementioned subsidiaries.
On December 1 2003 the firm names of subsidiaries Gasoducto
Atacama Chile Limitada, Gasoducto Atacama Argentina Limitada and Gas
Atacama Generación Limitada were amended by public deeds and changed
to Gasoducto Atacama Chile S.A., Gasoducto Atacama Argentina S.A. and
Gas Atacama Generación S.A., respectively.
• Merger of Inmobiliaria Manso de Velasco Limitada and Sociedad
Agrícola el Gobernador Limitada. Partners of these Companys agreed
by public deed dated December 31 2003 to a merger by absorption of
Inmobiliaria Manso de Velasco into Constructora el Gobernador Ltda.,
which, for all legal intents and purposes, became the successor, changing
its name as of that date to Inmobiliaria Manso de Velasco Limitada. As a
result of this merger, Inmobiliaria Manso de Velasco Ltda. was dissolved,
and its partners received rights in the continuing Company.
• Dissolution of Investment Vehicles. During 2003, Companys Enersis
Energía de Colombia S.A. and Enersis de Argentina S.A. were dissolved
Enersis / 2003 annual report
12. investments in other companies
Investments in other companies at December 31, 2002 and 2003 are as follows:
As of December 31,
Company
Electrificadora de la Costa
Electrificadora del Caribe
Autopista del Río Maipo S.A.
Banco Destak
CDEC-SIC Ltda.
CDEC-SING Ltda.
Club de la Banca y Comercio
Club Empresarial
Coger
Cooperativa Eléctrica de Chillán
Emgesa S.A.
Edegas
Distasa S.A.
Empresa Eléctrica de Aysen S.A
Empresa Eléctrica de Bogotá S.A.
Financiera Eléctrica Nacional S.A.
Inmobiliaria España S.A.
Inverandes S.A.
Menescal Produciones Artisticas
Prod. Cinematográfica
Saelpa
Supra CCVM Ltda.
Termocartagena
Teleceara
Telebras
Total
13. goodwill
Number of Shares
Percentage owned
%
3,599,191
85,568,116
25
-
-
-
2
1
-
-
1
1
1
2,516,231
12,818,264
4,098
1
1,011,899
-
-
-
-
22
-
-
0.06%
0.23%
-
-
24.35%
7.69%
1.00%
1.00%
-
-
-
1.00%
-
-
11.00%
0.10%
-
-
-
-
-
-
-
-
-
2002
ThCh$
-
-
4,875
43,376
225,345
-
2,726
6,212
2,055
13,037
3
3,456
6
1,997,810
158,367,971
357,091
98
3,455
5,896
-
732
26,790
6
522
-
2003
ThCh$
26,475
1,343,089
-
-
169,004
100,655
1,945
6,290
-
13,037
-
-
-
1,997,810
129,566,567
108,998
98
3,455
51,444
24,663
1,932
-
-
1,375
43,460
161,061,462
133,460,297
137
As of December 31,
a.
In accordance with current standards, recognition has been given to
the excess of purchase price of the proportional equity in the net assets
acquired (goodwill) in the purchase of shares as of December 31, 2002
and 2003, as follows:
2002
Company
Central Cachoeira Dourada S.A.
Central Costanera S.A.
Chilectra S.A.
Cía. de Eletricidade do Río de Janeiro
Cía. Eléctrica del Río Maipo S.A.
Codensa S.A.
Coelce S.A.
Distrilec Inversora S.A.
Edegel S.A.
Edesur S.A.
Emgesa S.A.
Empresa Eléctrica de Colina S.A.
Empresa Eléctrica Pangue S.A.
Empresa Nacional de Electricidad S.A.
Gasoducto Atacama Chile Ltda.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Inversiones Distrilima S.A.
Investluz S.A.
Lajas Inversora S.A.
Luz de Bogotá S.A.
Amortization
ThCh$
70,260,190
24,259,256
6,306,827
110,468,063
580,158
1,805,878
216,129,350
11,758,649
41,430
9,578,673
1,631,589
187,040
70,389
43,387,863
4,820
10,170,013
1,393,519
1,515
1,106,194
1,816,112
450,085
Net Balance
ThCh$
-
-
107,339,283
-
10,329,890
26,787,488
-
-
614,544
-
24,210,381
2,571,792
3,308,270
674,318,980
77,926
-
-
18,180
-
-
6,411,900
2003
Amortization
ThCh$
-
-
6,277,891
-
-
1,477,454
-
-
33,895
-
1,335,456
187,038
168,933
43,387,862
4,820
-
-
1,239
-
-
353,649
Net Balance
ThCh$
-
-
101,061,394
-
-
18,960,902
-
-
468,885
-
18,471,931
2,384,754
3,139,337
630,931,117
73,106
-
-
13,635
-
-
4,892,157
Total
511,407,613
855,988,634
53,228,237
780,397,218
consolidated financial statements
b. Following current standards, recognition has been given to the excess
of the equity in the net assets purchased over the purchase price (negative
goodwill) in the purchase of shares as of December 31, 2002 and 2003 as
follows:
Company
Central Cachoeira Dourada S.A.
Central Costanera S.A.
Central Hidroeléctrica Betania S.A.
Hidroeléctrica El Chocón S.A.
Cía. de Eletricidade do Río de Janeiro (*)
Coelce S.A.
Edegel S.A.
Edelnor S.A.
Empresa Eléctrica de Bogotá S.A.
Inversiones Distrilima S.A.
Synapsis Soluciones y Servicios IT Ltda.
2002
2003
As of December 31,
Amortization
ThCh$
37,238,402
-
35,234,878
3,649,603
16,033,466
9,268,830
10,397,103
1,256,602
257,351
18,550
15,467
Net Balance
ThCh$
-
-
25,067,747
-
-
-
63,714,136
2,721,743
3,860,510
617,459
143,085
Amortization
ThCh$
-
424,069
6,448,438
-
34,517,091
-
8,506,245
1,028,071
210,799
26,017
15,468
Net Balance
ThCh$
-
16,538,687
14,322,281
-
-
-
43,620,591
1,198,685
2,947,623
479,150
127,615
Total
113,370,252
96,124,680
51,176,198
79,234,632
(*)
According to the provisions of Circular 368 of the Superintendency of Securities and Insurance, the Company has amortized higher quarterly installments due to the revaluation of Cerj, caused by the capital increase in January
2003.
14. other assets
Other assets as of each year end are as follows:
138
Bond discount
Bond issuance cost
Forwards contracts and swap
Deferred expenses
Deferred commissions on foreign currency loans
Post-retirement benefits
Security deposits for judicial obligations
Recoverable - taxes
Reimbursable contributions
Regulatory assets
Fair - value derivative contracts
Others
As of December 31,
2002
ThCh$
21,025,338
11,628,452
9,457,463
25,699,828
17,552,614
19,470,838
23,887,123
14,721,537
1,460,199
36,406,966
52,419,114
7,413,680
2003
ThCh$
19,583,113
6,495,002
4,864,823
30,638,221
28,485,979
2,079,192
28,818,185
12,449,928
1,283,129
23,944,832
16,263,309
5,705,312
Total
241,143,152
180,611,025
The debt refunding plan was completed in March 2003, which meant
incurring in expenditures required to obtain the loans, which are amortized
in the same term as the debt. Disbursements for this item amount to
ThCh$56,100,807, classified in the statements of cash flow under item
disbursements for financing, within the flow for financing activities.
Continuing with the company’s refunding plan, Enersis S.A. and its
subsidiary Endesa Chile prepaid US$2,045 million of the last loan obtained
in May 2003. These payments were made with funds from sale of assets,
capital increase, issuance and placement of bonds and obtaining new
loans.
As a result of these pre-payments, speedy amortizations of deferred
expenses for ThCh$39,095,216 were made and charged to financial
expenses.
Enersis / 2003 annual report
15. due to banks and financial institutions
a. Short-term debt due to banks and financial institutions:
Financial Institution
US$
2002
ThCh$
2003
ThCh$
Euros
2002
ThCh$
2003
ThCh$
Other foreing currency
2003
2002
ThCh$
ThCh$
Ch$
2002
ThCh$
2003
ThCh$
As of December 31,
2003
2002
ThCh$
ThCh$
Foreign currency
ABN Amro Bank
AV Villas
Banco Alfa
Banco Banrisul
Banco Bayerische Landes
Banco BBVA
Banco BBVA Bhif
Banco Beal
Banco Continental - Soles
Banco Crédito
Banco Crédito Inversiones
Banco Crédito Nacional
Banco Davivienda
Banco de Bogota
Banco de Chile
Banco de Colombia
Banco de Occidente
Banco do Brasil
Banco Europeo de Investimentos
Banco Ganadero
Banco HBSC
Banco Hermes
Banco Itau
Banco Lloyds
Banco Nacional del Lavoro
Banco Nationale de Paris
Banco Popular
Banco Río
Banco Safra
Banco Santander
Banco Santander Central Hispano
Banco Santiago
Banco Sudameris
Banco Tequendama
Banco Union
Bank Boston
Bank of Tokio - Mitsubishi
Barings
Bndes
Brandesco
Caixa General de Depósitos
Citibank
Colpatria
Conavi
Corfisura
Deutsche Bank
Electrobras - Brasil
Granahorrar
Interbank
Banco San Paolo
Unibanco
6,622,851
-
-
-
8,831,904
15,543,762
15,016,903
14,218,335
9,057
-
-
-
-
-
1,409,375
-
-
-
996,155
-
15,116,121
-
17,509,425
11,111,737
-
-
-
5,221,052
-
10,599,649
89,380
953,597
-
-
-
21,789,155
12,329,952
5,085,087
-
4,110,296
-
17,250,924
-
-
-
-
-
-
24
40,715,709
4,013,202
5,955,112
-
-
-
684,183
-
-
460,216
-
3
-
2,436,019
-
-
393,370
-
-
5,249,210
-
-
9,929,412
3,290,246
14,872,587
7,907,429
2,515,387
-
-
3,662,785
2,018,355
-
22,245,103
2,057,182
-
-
-
5,662,876
16,274,281
3,644,804
-
9,146,376
-
7,914,720
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,356
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,533,855
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,500,552
-
-
-
-
-
-
-
-
-
-
-
-
2,943,726
2,054,159
-
7,248,037
-
-
24,667,303
20,739,383
-
-
2,320,628
12,731,982
-
-
5,074,494
-
-
893,455
-
-
-
971,971
-
1,746,177
-
4,685,030
-
11,349,245
6,823,709
-
-
-
-
7,693,681
-
-
3,835,526
-
-
10,728,750
-
-
-
731,210
-
5,109,129
-
-
-
13,711,031
6,510,896
-
391,505
-
13,359,061
-
-
21,145,202
12,725,091
-
-
3,254,460
10,842,960
-
14,004,996
1,714,007
-
-
8,752,484
-
-
-
4,397,147
-
1,451,120
4,369,870
3,023,178
-
-
10,359,095
-
1,316,225
1,755,593
1,096,602
17,526,889
-
-
14,078
-
-
16,926,318
4,391,074
2,840,258
2,010,410
-
5,466
-
7,220
-
2,055,240
-
-
-
-
-
-
20,591,559
-
-
-
5,734,680
-
-
-
7,145,575
-
-
-
-
-
-
-
-
-
-
-
-
-
-
117
-
30,348,364
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,849
-
-
-
175
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,370,847
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,622,851
-
2,943,726
2,054,159
8,831,904
22,791,799
35,608,462
14,218,335
24,676,360
20,739,383
5,734,680
-
2,320,628
12,731,982
8,609,306
-
5,074,494
-
996,155
893,455
15,116,121
-
17,509,425
12,083,708
-
1,746,177
-
9,906,082
-
21,949,011
6,913,089
31,301,961
-
-
-
29,482,836
12,329,952
5,085,087
3,835,526
4,110,296
4,533,855
27,979,674
-
-
-
731,210
-
5,109,129
24
40,715,709
4,013,202
19,666,143
6,510,896
-
391,505
684,183
13,359,061
7,849
460,216
21,145,202
12,725,094
175
2,436,019
3,254,460
10,842,960
393,376
14,004,996
1,714,007
5,249,210
-
8,752,484
9,929,412
3,290,246
14,872,587
12,304,576
2,515,387
1,451,120
4,369,870
6,685,963
2,018,355
2,370,847
32,604,198
2,057,183
1,316,225
1,755,593
1,096,602
23,189,765
16,274,281
3,644,804
14,078
9,146,376
3,500,552
24,841,038
4,391,074
2,840,258
2,010,410
-
5,466
-
7,220
-
2,055,240
Total
228,543,652
126,319,656
4,588,211
3,500,552
132,347,595
179,957,476
63,820,295
2,378,878
429,299,753 312,156,562
Total principal
174,509,774
120,003,673
4,358,800
3,325,524
118,837,220
170,959,602
63,655,109
2,378,693
361,360,903 296,667,492
Weighted average annual interest rate
8.14%
8.20%
4.38%
5.00%
14.84%
15.93%
2.48%
1.01%
10.35%
10.40%
139
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
As of December 31,
2003
2002
%
%
99.24%
0.76%
85.13%
14.87%
100.00%
100.00%
consolidated financial statements
140
b. Current portion of long-term debt due to banks and financial institutions:
Financial Institution
ABN Amro Bank
Bancafe
Banca Intesa S.P.A. London Branch
Banco Bayerische Landes
Banco BBVA Bhif
Banco BBVA
Banco Beal
Banco Colpatria
Banco Corfinsura
Banco Davivienda
Banco de Sabadell
Banco do Brasil
Banco do Estado de Ceará
Banco do Nordeste do Brasil
Banco Español de Crédito
Banco Estado
Banco Europeo de Investimentos
Banco HBSC
Banco Hermes
Banco Lloyds
Banco Medio Crédito
Banco Nacionale del Lavoro
Banco Popular Español
Banco Real
Banco San Paolo
Banco Santander - Santiago
Banco Santander Central Hispano
Bancolombia
Banesto
Bank Boston
Bank of América
Bank of Tokio - Mitsubishi
Banque Nationale París
Birf
Bndes
Caja de Ahorros y Monte de Piedad de Madrid
Citibank N.A.
Credit Lyonnais N.Y.
Conavi
Corporación Financiera del Valle
Dresner B. Luxemburg
Deutsche Bank A.G.
Eximbank
Export Develop. Corp.
Granahorrar
ING Bank N.V.
Israel Discount Bank N.Y.
J.P.Morgan Chase Bank
Kreditanstal Fur Weideraubau
Landesbank Rheiniland-Pfalz
Midland Bank
Mizuho Corporate Bank Ltd.
Nord LB Norddeutshe Landes
Royal Bank of Canada
Santander Investment Bank Ltd.
Skandinaviska Enskildabnken
Societe Generale
Westlb A.G. N.Y. Branch
Unibanco
Total
Total principal
US$
2002
ThCh$
2003
ThCh$
Euros
2002
ThCh$
2003
ThCh$
Foreign currency
Yen
2002
ThCh$
2003
ThCh$
Other foreign currency
2002
2003
ThCh$
ThCh$
Ch$
2003
ThCh$
2002
ThCh$
As of December 31
2003
ThCh$
2002
ThCh$
2,663,133
-
-
5,678,769
1,461,868
-
-
-
-
-
-
154,365
-
-
-
940,631
-
10,933,205
5,445,443
7,291,639
-
172,877
-
-
-
776,322
218,106,678
108,190
4,647,067
606,567
98,757,351
47,458,466
11,980,120
-
-
-
24,538,356
-
-
56,385
83,762,158
-
-
2,532,048
-
-
-
1,015,169
429,022
-
5,725,137
-
-
-
6,412,718
2,398,873
1,863,978
-
-
1,761,445
-
10,498
337,528
-
213,887
9,900,548
-
-
-
2,087
321,635
-
-
5,233
3,867
896,489
19,750
-
-
-
-
7,352
-
137,340
81,025
197,438
-
5,093,156
-
46,438,382
5,887,459
11,763,016
-
-
118,463
10,253,572
10,498
-
-
16,448
55,936
-
1,827,243
-
10,498
1,682
315,209
346,974
9,345
-
4,205
-
10,496
3,057,654
1,985,176
1,140,973
10,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128,565
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,591,217
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
123,767
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,138,324
-
3,399,301
-
-
-
-
6,546,225
-
-
14,784,096
-
14,731,635
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,180,928
-
424,533
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
73,710
-
-
-
-
-
49,140
196,560
159,212
-
1,001,256
-
45,113
2,195
-
-
-
-
-
1,820,338
-
-
-
-
-
-
297,351
-
-
-
412,346
-
1,117,055
8,245,660
-
-
-
122,850
-
-
-
-
-
73,710
-
-
-
-
-
-
-
-
-
-
-
-
-
55,982
-
-
-
-
-
-
-
-
-
-
-
-
891,815
2,007
-
42,973
-
-
-
-
-
2,433
-
475,035
-
-
-
-
-
-
-
-
7,143,098
-
2,039,576
-
-
-
-
-
-
-
464,068
-
-
-
-
1,207,721
-
-
-
-
-
-
-
-
-
-
53,325
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,040,302
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,756,624
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,761,445
73,710
10,498
337,528
-
213,887
9,900,548
49,140
196,560
159,212
2,087
1,322,891
-
45,113
7,428
36,044,169
896,489
19,750
-
-
1,820,338
-
7,352
-
137,340
81,025
197,438
297,351
5,093,156
13,180,928
46,438,382
6,848,105
11,763,016
1,117,055
8,245,660
118,463
10,253,572
10,498
122,850
-
16,448
55,936
-
1,827,243
73,710
10,498
1,682
315,209
346,974
9,345
-
4,205
-
10,496
3,057,654
1,985,176
1,140,973
10,498
55,982
2,663,133
-
-
5,678,769
1,461,868
-
-
-
-
-
-
154,365
891,815
2,007
-
2,740,228
-
10,933,205
5,445,443
14,429,963
-
3,574,611
-
475,035
-
776,322
224,652,903
108,190
4,647,067
15,390,663
98,757,351
62,318,666
19,123,218
-
2,039,576
-
24,538,356
-
-
56,385
83,762,158
-
464,068
2,532,048
-
-
-
6,814,107
429,022
-
5,725,137
-
-
-
6,412,718
2,398,873
1,863,978
-
53,325
545,916,535
102,253,005
4,719,782
123,767
46,599,581
13,605,461
13,672,478
12,322,051
36,040,302
1,756,624
165,695,013
611,314,573
518,620,707
98,286,131
4,693,974
121,738
46,284,777
13,594,206
12,673,182
8,973,553
35,813,075
1,569,638
160,488,332
580,142,649
Weighted average annual interest rate
3.24%
4.96%
3.79%
3.00%
2.08%
3.46%
16.79%
8.53%
4.56%
8.73%
5.64%
3.30%
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
As of December 31,
2003
2002
%
%
78.25%
21.75%
99.71%
0.29%
100.00%
100.00%
On May 15, 2003, Enersis S.A. and its subsidiary Empresa Nacional de
Electricidad S.A. and a body of 32 banks, subscribed syndicated loans to
refinance bank debts in an amount of US$2.330 million.
Due to this refinancing, the obligations which expired in 2003 and 2004,
were postponed until 2008, with capital amortizations from 2005.
The covenants which regulate these loans do not trigger prepayment
of the obligations if the Company or its subsidiary Endesa Chile’s risk rating
falls below investment grade.
On July 28 2003, Enersis S.A. prepaid US$ 582 million with resources
from the sale of Río Maipo and the capital increase.
On November 24 2003, Enersis S.A. prepaid all the subscribed loan for
May; this prepayment was made mostly with funds from a new loan of US$
500 million subscribed with six banks on November 14 2003 and from the
issuance and placement of bonds worth US$ 350 million on the American
market and a further US$ 155 million from other cash sources. This final
payment released all the securities pledged to the first thirty two banks.
Similarly, Endesa Chile has prepaid US$ 458 million with resources from
the sale of assets and issuance and placement of bonds.
Enersis / 2003 annual report
16. long-term portion of debt due to banks and financial institutions
Financial Institution
Currency
As of December 31, 2003
After 1 year but
within 2 years
ThCh$
After 2 years but
within 3 years
ThCh$
After 3 years but
within 5 years
ThCh$
After 5 years but
within 10 years
ThCh$
After 10 years
Years
ThCh$
Total Long-term
portion 2003
ThCh$
Annual interest
rate
average
Total long-term
portion - 2002
ThCh$
ABN Amro Bank
Bancafe
Banca Intesa S.P.A.
Banco Bayerische Landes
Banco BBVA
Banco Colpatria
Banco Estado
Banco Español de Crédito
Banco Europeo de Investimentos
Banco Davivienda
Banco de Sabadell
Banco do Brasil
Banco Medio Crédito
Banco Nacionale de Paris
Banco Popular Español
Bancolombia
Banco Santander Central Hispano
Banesto
Bank Tokio - Mitsubishi
Banco do Estado de Ceará
Banco do Nordeste do Brasil
BIRF
BNDES
Caja de Ahorros y Monte de Piedad de Madrid
Citibank N.Y.
Conavi
Corfinsura
Credit Lyonnais N.Y.
Deutsche Bank A.G.
Dresdner Bank
Export Develop. Corp.
Granahorrar
HBSC Bank
ING Bank N.V.
Israel Discount Bank of N.Y.
J.P.Morgan Chase Bank
Kreditanstal Fur Weideraubau
Landesbank Rheinland Pflaz Giroz
Lloyd’s Bank
Mizuho Corporate Bank Ltd.
Royal Bank of Canadá
San Paolo IMI S.P.A.
Santander Investment
Skandinaviska Enskildabnken
Societe Generale
Westlb A.G. N.Y. Branch
Unibanco
Total
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
US$
$ Colom
US$
US$
US$
$ Colom
$ Reaj.
US$
US$
US$
$ Colom
US$
Rs
US$
$ Arg
US$
US$
$ Colom
US$
US$
Yen
US$
US$
Libra
Yen
Euros
Rs
Rs
U.P.
Rs
US$
US$
$ Colom
$ Colom
US$
US$
US$
US$
US$
$ Colom
US$
US$
US$
US$
US$
US$
US$
Yen
US$
US$
US$
US$
US$
US$
US$
Rs
-
-
947,190
1,210,897
1,484,025
-
1,395,900
-
472,190
213,065
-
188,314
-
-
1,797,897
12,791,168
663,314
-
-
7,310,509
-
2,418,557
14,954,039
402,154
422,438
121,738
-
-
-
1,783,205
-
11,762,358
-
-
-
947,190
1,484,025
1,484,025
1,691,051
-
1,781,954
947,190
151,775
32,659,000
324,830
843,196
6,900,518
-
379,438
947,192
1,703,256
-
1,962,604
-
947,190
-
8,313,200
-
1,894,380
10,038,124
2,968,050
-
1,694,640
-
944,380
-
-
376,628
1,779,121
441,448
1,797,897
13,675,789
1,326,628
-
-
14,621,019
-
2,418,557
1,894,380
-
-
-
172,996
81,691
-
76,815,884
-
4,862,430
-
-
-
1,894,380
2,968,050
2,968,050
1,691,051
-
3,563,908
1,894,380
303,551
-
324,830
1,686,392
-
-
758,876
1,894,381
3,406,512
-
1,962,509
-
1,894,380
27,839
-
3,206,021
2,841,570
1,686,392
78,677,075
2,137,347
1,273,686
-
1,416,570
9,896,667
6,412,312
564,942
1,779,121
384,610
1,797,897
25,867,553
1,989,942
8,549,390
352,696
96,156,528
-
4,837,114
47,376,570
-
-
-
-
-
-
2,989,260
44,535,000
7,293,645
5,343,369
8,549,390
-
2,841,570
19,297,075
4,452,075
3,382,102
3,206,021
5,345,862
2,841,570
455,326
14,845,000
649,660
2,529,588
-
-
1,138,314
2,841,573
49,644,768
-
981,302
-
2,841,570
-
-
-
-
-
-
-
-
-
-
19,793,333
-
-
4,447,804
2,406,728
6,292,887
9,054,045
-
-
-
-
-
7,255,675
-
-
-
-
-
-
-
3,994,579
-
-
-
-
-
-
-
-
5,437,396
-
-
-
-
-
162,415
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
518,910
-
-
1,644,520
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
828,802
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,313,200
3,206,021
5,683,140
12,935,413
83,129,150
2,137,347
4,364,226
-
2,833,140
29,903,065
6,412,312
1,129,884
8,524,956
3,232,786
11,686,578
63,033,075
3,979,884
8,549,390
352,696
118,088,056
-
16,929,903
64,224,989
402,154
422,438
121,738
172,996
81,691
-
85,582,928
44,535,000
23,918,433
5,343,369
8,549,390
-
5,683,140
23,749,150
8,904,150
13,030,402
3,206,021
10,691,724
5,683,140
910,652
47,504,000
1,461,735
5,059,176
6,900,518
-
2,276,628
5,683,146
54,754,536
-
4,906,415
-
5,683,140
27,839
2.75%
12.55%
4.16%
5.63%
3.50%
12.55%
9.00%
-
4.16%
1.37%
12.55%
4.16%
17.74%
14.21%
1.75%
4.73%
4.16%
12.55%
29.08%
3.69%
-
4.29%
3.52%
4.63%
0.89%
3.00%
13.00%
15.79%
-
22.64%
3.42%
3.86%
12.55%
12.55%
4.16%
3.70%
4.16%
2.23%
12.55%
4.16%
4.16%
4.16%
8.53%
4.85%
4.16%
5.50%
-
4.16%
4.16%
3.56%
-
0.65%
-
4.16%
14.21%
84,854,044
-
-
-
471,767,465
-
57,203,605
4,650
-
36,289,805
-
-
8,348,419
4,592,606
12,090,311
76,093,655
-
-
489,590
290,318,440
7,048,945
28,650,213
13,928,001
886,725
933,276
248,420
147,003
119,893
1,201,425
90,316,657
-
397,114,151
-
-
32,935,663
-
-
-
17,817,287
-
-
-
-
58,063,688
2,183,691
-
1,146,528
1,088,694
-
-
-
3,701,560
7,196,504
1,391,829
-
79,314
115,493,392
173,356,331
483,208,043
58,844,862
2,992,232
833,894,860
1,708,252,057
141
As of December 31,
2002
%
17.84%
82.16%
2003
%
10.52%
89.48%
100.00%
100.00%
consolidated financial statements
17. other current liabilities
Other current liabilities are as follows:
Advances and guarantee on construction
Taxes payables
Contingencies - third party claims
Customer advances
Provision Azopardo
Accrued employees benefits - other
Forward contracts and swaps
Fair value - derivative contracts
Emergency energy provision (Brazil)
Other current liabilities
As of December 31,
2002
ThCh$
608,017
2,507,700
15,364,751
3,326,514
2,360,050
2,250,384
5,787,192
11,364,036
10,815,538
5,753,193
2003
ThCh$
123,101
1,033,592
19,372,593
2,450,478
3,052,829
1,685,050
25,868,021
7,466,784
1,625,660
2,682,727
Total
60,137,375
65,360,835
18. promissory notes
142
Financial Instruments
Currency
Face value Maturity date
Interest rate
As of December 31,
2002
ThCh$
2003
ThCh$
3,120,503
2,145,548
123,350
%
5.00%
5.25%
10.00%
-
3,500,603
5.00%
289,162
-
4,142,243
13,321,409
-
-
-
-
-
-
-
Commercial papers
Commercial papers
Promissory note - AFR
OPP-027/2002
Promissory note - Banco Santander
OPP-058/2002
Total
Soles
Soles
U.F.
Soles
Soles
Soles
3,030,678
2,081,801
-
1,000
286,299
1,000
5/1/03
8/1/03
12/31/03
6/10/03
1/3/03
9/5/03
Enersis / 2003 annual report
19. bonds payable
a. Details of the current portion of bonds payable is as follows:
Instrument
Series
Face value
outstanding
Currency
Interest rate %
Maturity date
As of December 31,
2002
ThCh$
2003
ThCh$
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds II - Enersis
Bono N° 269
Bono N° 269
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Pehuenche
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Eurobono
Endesa Chile Internacional
Bonos Autopista del Sol S.A
Bonos Autopista del Sol S.A
Bonos Autopista del Sol S.A
Bonos Autopista del Sol S.A
Total
Uno
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
Uno
Dos
Tres
Uno
B-1
B-2
Uno
Dos
Tres
Uno
Uno
E-1 y E-2
C2; D1 Y D2
F
G
H
144A
144A
Uno
Uno
Dos
Tres
Cuatro
Cuatro A
Cinco A
Cinco B
Uno A
Tres A
Tres B
A-1
B-3
B-5
B-7
B-10
B-10
C-10
C-10
B-10 2° emision
A-5
B-1
Unica
Unica
A-1
A-2
B-1
B-2
4,891,900
80,000,000
18,570,000
30,000,000
20,000,000
100,000,000
40,000,000
300,000,000
350,000,000
150,000,000
350,000,000
445,863
2,500,000
230,000,000
220,000,000
200,000,000
400,000,000
400,000,000
6,000,000
1,251,257
1,500,000
4,000,000
4,000,000
400,000,000
200,000,000
170,000,000
30,000,000
30,000,000
30,000,000
20,000,000
50,000,000
30,000,000
35,000,000
100,000,000
50,000,000
50,000,000
15,000,000
31,525,018
12,750,000
19,500,000
229,825,000
60,000,000
7,701,962
19,777,918
50,000,000
172,858
85,000,000
400,000,000
150,000,000
3,446,160
861,540
964,372
243,578
Soles
Soles
Soles
Soles
Soles
Soles
Soles
US$
US$
US$
US$
U.F.
U.F.
US$
US$
US$
US$
US$
U.F.
U.F.
U.F.
U.F.
U.F.
US$
US$
US$
US$
US$
US$
US$
Soles
Soles
Soles
Soles
Soles
Soles
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
Euro
US$
U.F.
U.F.
U.F.
U.F.
9.61%
VAC + 7,5 %
VAC + 6,2 %
6.50%
6.34%
VAC + 6,9%
4.47%
6.90%
7.45%
6.63%
7.38%
5.50%
5.75%
7.88%
7.33%
8.13%
7.75%
8.50%
6.20%
6.80%
6.20%
4.80%
6.20%
8.35%
8.63%
7.30%
8.75%
8.41%
8.75%
8.46%
4.75%
11.60%
6.00%
6.00%
4.13%
4.88%
9.89%
14.79%
9.97%
10.29%
10.60%
10.57%
9.88%
10.25%
15.18%
8.35%
13.95%
3.34%
7.20%
5.80%
5.80%
5.80%
5.80%
01/02/2011
01/07/2006
26/04/2007
01/01/2004
24/01/2004
10/10/2006
11/09/2007
21/11/2006
21/11/2016
21/11/2026
01/12/2014
15/06/2009
15/06/2022
01/02/2027
01/02/2037
01/02/2097
15/07/2008
01/04/2009
01/08/2006
01/11/2010
01/08/2022
15/10/2010
15/10/2008
01/08/2013
01/08/2015
01/05/2003
13/06/2007
14/02/2007
03/06/2006
26/11/2005
12/12/2006
22/08/2003
22/02/2004
06/06/2005
05/05/2006
30/10/2006
26/07/2006
08/02/2003
09/10/2004
09/10/2006
09/10/2009
10/11/2009
09/10/2009
08/10/2009
26/06/2006
08/10/2004
26/07/2006
24/07/2003
01/04/2006
15/01/2018
15/01/2018
15/01/2018
15/01/2018
6,005
601,008
44,225
180,123
49,499
292,190
-
1,210,264
1,080,485
578,822
-
7,677,871
106,535
4,906,923
4,873,420
1,019,215
10,312,351
6,169,267
2,581,888
2,473,129
645,472
-
-
-
-
124,886,525
150,293
697,526
98,468
136,680
-
7,524,632
132,188
-
-
-
1,308,919
10,264,100
75,658
119,344
1,449,421
-
81,486
44,130
223,180
70,746
-
306,778,275
1,959,649
1,648,440
412,110
491,702
124,193
5,024
522,743
37,402
5,292,702
3,470,489
247,110
93,654
1,024,305
926,706
2,802
1,532,747
152,759
77,343
4,005,132
3,987,121
769,694
8,436,908
5,047,300
2,583,176
2,600,930
645,794
668,867
861,052
8,649,357
4,467,626
-
122,974
570,865
80,569
111,835
22,356
-
5,250,320
68,568
113,923
70,800
58,942
-
2,788,242
99,864
1,213,243
196,835
73,690
39,903
1,164,287
-
1,185,974
-
1,603,260
-
-
-
-
503,486,357
70,945,193
143
consolidated financial statements
b. Details of the long-term portion of bonds payable is as follows at each year ended:
Instrument
Series
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds II - Enersis
Bono N° 269
Bono N° 269
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Autopista del Sol S.A
Bonos Autopista del Sol S.A
Bonos Autopista del Sol S.A
Bonos Autopista del Sol S.A
Bonos Endesa Internacional
Total
144
Uno
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
Uno
Dos
Tres
Uno
B-1
B-2
Uno
Dos
Tres
Uno
Unica
E-1 y E-2
C2; D1 Y D2
F
G
H
144A
144A
Uno
Dos
Tres
Cuatro
Cuatro A
Uno A
Cinco B
Tres A
Tres B
A-1
B-1
B-5
B-7
B-10
B-10
C-10
C-10
B-10 2° emision
A-1
A-2
B-1
B-2
Unica
Face value
outstanding
4,891,900
80,000,000
100,000,000
30,000,000
20,000,000
18,570,000
40,000,000
300,000,000
350,000,000
150,000,000
350,000,000
2,928,543
2,500,000
230,000,000
220,000,000
200,000,000
400,000,000
400,000,000
6,000,000
1,251,257
1,500,000
4,000,000
4,000,000
400,000,000
200,000,000
30,000,000
30,000,000
30,000,000
20,000,000
50,000,000
100,000,000
35,000,000
50,000,000
50,000,000
15,000,000
85,000,000
12,750,000
19,500,000
229,825,000
60,000,000
7,701,962
19,777,918
50,000,000
3,446,160
861,540
964,372
243,578
150,000,000
Currency
Interest rate %
Maturity date
As of December 31,
2002
ThCh$
2003
ThCh$
Soles
Soles
Soles
Soles
Soles
Soles
Soles
US$
US$
US$
US$
U.F.
U.F.
US$
US$
US$
US$
US$
U.F.
U.F.
U.F.
U.F.
U.F.
US$
US$
US$
US$
US$
US$
Soles
Soles
Soles
Soles
Soles
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
U.F.
U.F.
U.F.
U.F.
US$
9.61%
VAC + 7,5 %
VAC + 6,9 %
6.50%
6.34%
VAC + 6,2%
4.47%
6.90%
7.45%
6.63%
7.38%
5.50%
5.75%
7.88%
7.33%
8.13%
7.75%
8.50%
6.20%
6.80%
6.20%
4.80%
6.20%
8.35%
8.63%
8.75%
8.41%
8.75%
8.46%
4.75%
6.00%
6.00%
4.13%
4.88%
9.89%
13.95%
9.97%
10.29%
10.60%
10.57%
9.88%
10.25%
15.18%
5.80%
5.80%
5.80%
5.80%
7.20%
01/02/2011
01/07/2006
10/10/2006
01/01/2004
24/01/2004
26/04/2007
11/09/2007
21/11/2006
21/11/2016
21/11/2026
01/12/2014
15/06/2009
15/06/2022
01/02/2027
01/02/2037
01/02/2097
15/07/2008
01/04/2009
01/08/2006
01/11/2010
01/08/2022
15/10/2010
15/10/2008
01/08/2013
01/08/2015
13/06/2007
14/02/2007
03/06/2006
26/11/2005
12/12/2006
06/06/2005
22/04/2004
05/05/2006
30/10/2006
26/07/2006
26/06/2006
09/10/2004
09/10/2006
09/10/2009
10/11/2009
09/10/2009
08/10/2009
26/07/2006
15/01/2018
15/01/2018
15/01/2018
15/01/2018
01/04/2006
1,010,394
16,647,508
20,884,730
6,196,324
4,130,883
3,898,572
-
217,738,830
181,255,964
108,869,415
-
49,526,236
42,278,903
149,427,626
159,675,142
29,333,775
290,318,440
290,318,440
101,469,367
20,029,882
25,367,342
-
-
-
-
21,773,883
21,773,883
21,773,883
14,515,922
-
-
6,196,324
-
-
3,800,258
21,534,796
3,230,219
4,940,336
58,226,188
-
-
5,331,860
15,201,032
58,279,946
14,569,986
16,309,031
4,119,290
108,869,414
838,813
14,079,415
17,662,273
-
-
3,297,092
6,858,793
178,140,000
148,292,049
509,480
207,830,000
679,076
32,740,200
122,252,138
130,636,000
23,999,021
237,520,000
237,520,000
101,520,000
17,662,331
25,380,000
67,680,000
67,680,000
237,520,000
118,760,000
17,814,000
17,814,000
17,814,000
11,876,000
8,571,016
17,142,033
-
8,571,016
8,571,016
3,206,021
18,167,453
0
4,167,827
49,121,888
12,824,085
3,086,739
1,734,454
10,686,737
-
-
-
-
89,070,000
2,118,824,024
2,299,294,966
c. Bonds payable consist of the following:
(1) Enersis S.A. Series B1-B2
On September 11, 2001, Enersis S.A. registered two series of bearer bonds dated June 14, 2001, as follows:
Series
B1
B1
B2
B2
Total amount
In UF
1,000,000
3,000,000
1,000,000
1,500,000
No.of bonds per series
Face value in UF
1,000
300
1,000
150
1,000
10,000
1,000
10,000
Enersis / 2003 annual report
The scheduled maturity of the Series B-1 bonds is 8 years, interest and
principal payable semi-annually. Annual interest is 5.50%, compounded
semi-annually.
The scheduled maturity of the Series B-2 bonds is 21 years, principal
payments beginning after 5 years, interest and principal payable semi-
annually. Annual interest is 5.75%, compounded semi-annually.
In November 2003, these series were voluntarily exchanged for
shares in connection with the capital increase. The holders converted
ThCh$63,656,586 into 893,612,466 first issue shares. Underwritten amounts
were determined by experts. Capitalized amounts were ThCh$46,968,180
for the B1 series and ThCh$7,028,064 for the B2 series (Note 23b).
(2) Enersis S.A. (Yankee Bonds)
Repurchase of Yankee Bonds
Enersis Internacional, a 100% subsidiary of Enersis during November
2001 made a tender offer to repurchase all or a portion of the Series
2 Yankee Bonds. The offer expired November 21, 2001 and the Enersis
Internacional repurchased a total of US$100,266,000 in bonds with accrued
interest, at a price of US$95,536,000.
(3) Bonos Internacionales (Yankee Bonds II)
On November 24 2003, the Company, through its Cayman Islands
Agency, issued and placed Yankee Bonds on the American market for
US$350 million. This placement was made in a single tranche, whose
features are as follows:
On November 21, 1996, the Company, acting through its agency in the
Cayman Islands, issued corporate notes (Yankee Bonds) for US$800 million
in three series, as follows:
Series
Total amount
in US$
Years to maturity Stated annual interest rate
1
350.000.000
10
3,4%
Series
Total amount
in US$
Years to maturity Stated annual interest rate
Interest is paid six-monthly and amortization of capital is a single
1
2
3
300,000,000
350,000,000
150,000,000
10
20
30
6.9%
7.4%
6.6%
Interest is payable on a semi-annual basis and principal is due upon
maturity. The Series 3 bond holders has a pre-redemption option in year
seven, which was exercised by nearly all holders in November 2003 for
US$149,142,000.
installment at the end of the term.
(4) Bonds of Chilectra S.A.
On October 13, 2003, Chilectra S.A. registered, in the Superintendency
of Securities and Insurance, 2 lines of bonds corresponding to Nº 347 and
348 for a maximum line amount of UF4,200,000 and UF4,000,000
respectively; the placement has a maturity of 10 years from August 22,
2003. To date, the placement of the related bonds has not been made.
145
consolidated financial statements
(5) Edelnor Bonds (Subsidiary of Distrilima S.A.)
First issue
Date of Issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Principal amortization
Second issue
Date of Issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Anticipated redemption option
: March 1, 1996
: 49,919
: 100 soles each
: 15 years
: 9.6136% annual
: Annually, on coupon maturity
: Amortization of total principal upon maturity
: November 10, 1998
: 146,300
: 1,000 soles each
: 4 years
: 14.396% annual
: Accrued and paid within 90 days
: Early redemption option
At December 31, 2003, this issue is totally cancelled.
Third issue
Date of Issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
: August 7, 1998
: 15,000
: US$1,000 each
: 3 years
: 7.7% annual
: Accrued and paid within 90 days
At December 31, 2003, this issue is totally cancelled.
146
First program of Corporate Bonds
First issue
Date of Issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Second issue
Date of Issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Third issue
Date of issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Fourth issue
Date of issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
: October 29, 2001
: 146,300
: 30,000 soles each
: 5 years
: 7.5% annual
: Semi - annual
: October 19, 2001
: 20,000
: 5,000 new soles each
: 5 years
: 6.9% annual + VAC
: Semi – annual
: January 24, 2002
: 6,000
: 5,000 (new soles each)
: 2 years
: 6.5 % annual
: Semi - annual
: April 24, 2002
: 4,000
: 5,000 (new soles each)
: 2 years
: 6.34 % annual
: Semi - annual
Enersis / 2003 annual report
Fifth issue
Date of issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Sixth issue
Date of issue
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
(6) Endesa Chile S.A.
: March 1, 2003
: 3,714
: 5,000 (new soles each)
: 4 years
: 6.2 % annual + VAC
: Semi - annual
: September 12, 2003
: 8,000
: 5,000 (new soles each)
: 4 years
: 4.46875 % annual
: Semi - annual
The Company made five public bond issues on the domestic market on the following dates:
• On September 12 1988, the Company registered a first bond issue of U.F. 5,000,000 under No. 15 in the Securities Register of the Superintendency
of Securities and Insurance; this was placed completely by year-end on December 31 1988; this issue was totally paid in at September 1 2000.
• On August 24 1989, it registered the second bond issue worth U.F. 6,000,000 under No. 111; this issue was placed completely at December 31 1990.
This issued was totally paid in at October 1 2001.
• On December 7 1990, it registered the third issue of bonds worth U.F. 4,000,000 under No. 131. U.F. 2,030,000 of this issue had been placed at
December 31 1997. The balance of U.F. 1,970,000 has been cancelled, because its placement deadline has expired.
• On August 9 2001, it registered the fourth bond issue worth U.F: 7,500,000 under No. 264; this was totally placed at December 31 2001.
• On November 26 2002, it registered the fifth bond issue worth U.F. 8,000,000 under Nos. 317 and 318 and then amended it on October 2 2003;
147
this issue was totally placed at December 31 2003.
I Risk rating of the issued bonds is a follows as of the date of December 31, 2003:
- Comisión Clasificadora de Riesgo
- Fitch IBCA Chile Clasificadora de Riesgo Ltda
- Clasificadora de Riesgo Humphreys Ltda.
Category
BBB+
A+
BBB+
ISSUANCE TERMS
Third Issuance
Issuer
Securities issued
Issuance Value
Indexation
Amortization year
Capital amortization
Early Redemption
dates.
Nominal interest rate
readjusted
: Empresa Nacional de Electricidad S.A.
: Bearer bonds in local currency, denominated in Unidades de Fomento
: Four million Unidades de Fomento (UF4,000,000) divided into:
- Series C-1: 120 bonds at UF10,000 each
- Series C-2: 800 bonds at UF1,000 each
- Series D-1: 120 bonds at UF10,000 each
- Series D-2: 800 bonds at UF1,000 each
: Based on variations in Unidad de Fomento index
: Series C-1 and C-2: 15 years (5-year grace year and 10 years to pay off at principal).
Series D-1 and D-2: 20 years (5-year grace year and 15 years to pay off at principal).
: Series C-1 and C-2: 20 consecutive installments payable semi-annually, starting April 1, 1996. Series
D-1 and D-2: 30 consecutive installments payable semi-annually, starting May 1, 1996. Paydown
installments are incremental
: As elected by the issuer, starting May 1, 1996 and only on the interest payment and amortization
: 6.8% annually upon expiration, compound and actual rate per semester on outstanding principal,
by the value of the Unidad de Fomento. The applicable semi-annual interest rate will be equal to
3.34409%.
consolidated financial statements
Interest Payments
Guarantee
Placement year
Fourth Issuance
Issuer
Securities issued
Issuance Value (1)
Readjustment
Amortization year
: Interest will be paid semi-annually each May 1 and November 1, starting May 1, 1991. Accrued
interest as of December 31, 2003 and 2002 amounts to ThCh$223,384 and ThCh$248,075, and is
shown under current liabilities.
: There is no specific collateral ration, however, a general guarantee collateralizes all the issuer’s
assets.
: 48 months from the registration date in the Chilean Securities Register of the Superintendency of
Securities and Insurance.
: Empresa Nacional de Electricidad S.A.
: Bearer bonds in local currency, denominated in Unidades de Fomento
: Up to seven and a half million (UF7,500,000) divided into:
Series E-1: 1,500 bonds at UF1,000 each.
Series E-2: 600 bonds at UF10,000 each.
Series F: 200 bonds at UF10,000 each.
: Variation in the UF
: Series E-1 and E-2: August 1, 2006.
Series F: August 1, 2022.
: Only in the Series F case, beginning February 1, 2012.
: 6.2% annually, compounded semi-annually and effective on the outstanding principal adjusted for
: Accrued interest as of December 31, 2003 amounts to ThCh$3,228,970 (ThCh$3,227,360 in 2002)
: There is no specific collateralization; however, a general guarantee covers all the issuer’s assets
: 36 months from the registration date in the Chilean Securities Register of the Superintendency of
Early redemption
Nominal interest rate
the value of the Unidad de fomento. The semi-annual interest rate will be 3.0534%.
Interest payments
which is shown under current liabilities.
Guarantee
Placement year
Securities and Insurance
(1) Through cross a currency swap, the UF debt was exchanged for US dollar debt, leaving a net position of ThCh$4,843,040 as of December 31, 2003 which is included in other assets.
Fifth Issue
Issuer
Securities issued
Amount of issue
148
Adjustment
Amortization term
: Empresa Nacional de Electricidad S.A.
: Dematerialized bearer bonds in local currency, expressed in Unidades de Fomento.
: Eight million Unidades de Fomento (U.F. 8,000,000) divided into:
- Series G: 4,000 bonds U.F. 1,000 each.
- Series H: 4,000 bonds U.F. 1,000 each.
: Variation in Unidad de Fomento.
: Series G: October 15 2010.
Series H: Six-monthly and successively as of April 16 2010.
: Only for series G bonds, as of October 16 2004.
: Series G: 4.8% per year, compounded every six months and effective on the capital not fully paid
Pre-redemption
Nominal interest rate
adjusted by the value of the Unidad de Fomento. The interest rate to be applied every six months will be 2.3719%.
Series H
the value of the Unidad de Fomento. The interest rate to be paid every six months will be 3.0534%.
Placement deadline
Insurance.
Security
Payment of interests
2004. Interests accrued at year-end are ThCh$1,529,919 and they are presented in current liabilities.
: 6.2% per year, compounded every six months and effective on the capital not fully paid adjusted by
: 36 months as of date of registration in Securities Register of the Superintendency of Securities and
: No specific security, except for general security of all the issuer’s properties.
: Interests will be paid six-monthly, due on April 15 and October 15 of each year starting from April 15
II The Company has issued and placed three public offerings of bonds in the international market as follows:
First Issuance
Issuer
Securities issued
Issuance Value
Readjustment
Amortization year
Nominal interest rate
: Empresa Nacional de Electricidad S.A.
: Marketable securities denominated in US$(Yankee bonds) in the US market.
: Six hundred and fifty million US Dollars (US$650,000,000) divided into:
Series 1: US$230,000,000
Series 2: US$220,000,000
Series 3: US$200,000,000
: Variation in the US Dollar
: Series 1 matures on February 1, 2027: Series 2 matures on February 1, 2037 (Put Option on February 1,
year 2009, on which date the holders may redeem 100% of bonds plus accrued interest).
Series 3 matures on February 1, 2097.
: Series 1: 7.875% annually
Series 2: 7.325% annually
Series 3: 8.125% annually
Enersis / 2003 annual report
Interest Payments
Second Issuance
Issuer
Securities issued
Issuance Value
Readjustment
Capital amortization
Nominal interest rate
Interest Payments
Third Issuance
Issuer
Securities issued
Issuance Value
Readjustment
Capital amortization
Nominal interest rate
Interest Payments
:
Interest will be paid semi-annually each February 1 and August 1 annually, starting January 27, 1997.
Accrued interest as of the year end amounts to ThCh$12,488,977 (ThCh$15,265,158 in 2002), which
is shown under current liabilities.
: Empresa Nacional de Electricidad S.A.
: Marketable securities denominated in US$(Yankee bonds) in the US market.
: Four hundred million US Dollars (US$400,000,000) :
: Variation in the US Dollar
: Series 1 matures on July 15, 2008 year
: Series 1: 7.75% annually
: Interest will be paid semi-annually each January 15 and July 15 annually, starting January 15, 1999.
Accrued interest as of the year end amounts to ThCh$8,436,908 (ThCh$10,312,351 in 2002), which
is shown under current liabilities.
: Empresa Nacional de Electricidad S.A.
: Marketable securities denominated in US$(Yankee bonds) in the US market.
: Four hundred million US Dollars (US$400,000,000) :
: Variation in the US Dollar
: Series 1 matures on April 1, 2009.
: Series 1: 8.502% annually
: Interest will be paid semi-annually each October 1 and April 1 annually, starting October 1, 1999.
Accrued interest as of the year end amounts to ThCh$5,047,300 and ThCh$6,169,267 in 2003 and
2002, respectively, which is shown under current liabilities.
Fourth Issue
Issuer
Securities issued
under rules “Rule.144A” and “Regulation S”.
Amount of issue
Adjustment
Capital amortization term
Nominal interest rate
Payment of interests
: Empresa Nacional de Electricidad S.A.
: Electronic negotiable bonds expressed in American dollars on the American and European markets,
: Six hundred million US dollars (US$600,000,000) divided into:
Series 01.08.2013: US$400,000,000
Series 01.08.2015: US$200,000,000
: Variation in US dollar.
: Series of ThMUS$ 400 total maturity on August 1 2013.
: Series of ThMUS$ 200 total maturity on August 1 2015.
: Series of ThMUS$ 400 8.35% per year.
Series of ThUS$ 400 8.625% per year.
: Interests will be paid six-monthly on February 1 and August 1 each year starting from July 23 2003.
Interests accrued at year-end were ThCh$13,116,983 and they are presented in current liabilities.
149
The risk rating of these bonds is as follows as of the date of these financial statements:
- Standard & Poor’s
- Moodys Investors Services
- Fitch
Repurchase of Yankee Bonds
Category
BBB-
Ba 2
BBB-
Endesa Chile Internacional, a 100% subsidiary of Endesa, made a tender offer in November 2001, for the total or partial purchase, in cash, of the
following bond issue in US dollar (Yankee Bonds) made by its parent company, Endesa.
• Series 1: ThCh$230,000 at 30 years, maturing in 2027.
• Series 3: ThCh$200,000 at 100 years, maturing in 2097.
As a result of the offer which expired on November 21, 2001, series 1 and series 2 bonds, for ThUS$21,324 and ThUS$134,828, respectively, were
purchased, whose nominal values amounted to ThUS$24,119 and ThUS$159,584 for each series.
consolidated financial statements
(7) Subsidiaries of Endesa S.A.
I
Endesa Chile Internacional issued Yankee Bonds on April 1, 1996.
Risk rating of the bond issuance is as follows as of December 31, 2002:
- Standard & Poor’s
- Moodys Investors Services
ISSUANCE TERMS
First Issuance
Issuer
Securities issued
Issuance Value
Capital amortization
Nominal interest rate
Interest Payments
Guarantee
Category
BBB-
Ba 2
: Endesa Chile Internacional.
: Marketable securities denominated in US$(150,000 bonds).
: One hundred and fifty million Dollars (US$150,000,000):
: Maturity as of April 1, 2006
: 7.2 % annually in arrears.
: Interest will be paid semi-annually in arrears starting October 1, 1996. Accrued interest as of the year
end amounts to ThCh$1,603,260 (ThCh$1,959,649 in 2002) and is shown under current liabilities.
: Guarantee from Empresa Nacional de Electricidad S.A.
As of July 24, 2000, the first issue of Eurobonds (European Medium Term Note Programme) was registered in England for 1,000 million Euros.
ISSUANCE TERMS
First Registration
Securities registered
Issuance value
Capital amortization
Nominal interest rate
Interest payments
Guarantee
150
: 1,000 million Euros
: Euros 400,000,000 (*)
: Principal due July 24, 2003
: Euribor + 0.80%
: Quarterly beginning October 24, 2000 in arrears. Accrued interest as of December 31, 2003 and
2002 amounts to ThCh$0 and ThCh$2,333,602 and is shown in current liabilities.
: Empresa Nacional de Electricidad S.A.
(*) By way of a cross-currency swap operation, the debt in Euros was exchanged for U.S. dollar debt.
At December 31, 2003, this issue is totally cancelled.
II Empresa Eléctrica Pehuenche S.A. issued bonds on May 2, 1996.
First Issuance
Issuer
Securities issued
Issuance Value
Capital amortization
Nominal interest rate
Interest payments
December 31, 2003 and 2002 amounts to ThCh$0 and ThCh$1,501,188 and is shown in Current Liabilities.
: Empresa Eléctrica Pehuenche S.A.
: Marketable securities denominated in US$.
: One hundred and seventy million US Dollars (US$170,000,000)
: Maturity as of May 1, 2003
: 7.3 % annually
: Interest will be paid semi-annually in arrears, starting November 1, 1996. Accrued interest as of
At December 31, 2003, this issue is totally cancelled
III Edegel S.A. issued bonds on June 4, 1999, February 15, 2000, June 14, 2000 and November 27, 2000, August 22, 2001, June 6,
2003, September 4, 2003, October 29, 2003 and December 12, 2003 as per the following:
First Issuance
Issuer
Securities issued
Issuance value
Capital amortization
: Edegel S.A.
: Marketable securities denominated in US$(120,000 bonds).
: US$120,000,000
: June 3, 2006, February 14, 2007, June 13, 2007, November 26, 2005 and February 22, 2004,
respectively.
Enersis / 2003 annual report
Nominal interest rate
Interest payments
Issuer
Securities issued
Issuance value
Capital amortization
Nominal interest rate
Interest payments
Issuer
Securities issued
Issuance value
Capital amortization
Nominal interest rate
Interest payments
Issuer
Securities issued
Amount of issue
Capital amortization
Nominal interest rate
Payment of interests
Issuer
Securities issued
Amount of issue
Capital amortization
Nominal interest rate
Payment of interest
: 8.75%, 8.41%, 8.75%, 8.4375% and 6.0% annually
: Interest will be paid semi-annually, starting December 3, 1999. Accrued interest as of December 31,
2003 and 2002 amounts to ThCh$1,269,600, and ThCh$1,318,190 and is shown in other current
liabilities.
: Edegel S.A.
: Marketable securities denominated in new soles (20,000 bonds).
: 100,000,000 new soles
: Maturity as of June 6, 2005.
: 6.0% annually
:
ThCh$68,568 and ThCh$0 and is shown in other current liabilities.
Interest will be paid semi-annually. Accrued interest as of December 31, 2003 and 2002 amounts to
: Edegel S.A.
: Marketable securities denominated in new soles (10,000 bonds).
: 50,000,000 new soles
: Maturity as of May 5, 2006.
: 4.13% annually
:
ThCh$113,923 and ThCh$0 and is shown in other current liabilities.
Interest will be paid semi-annually. Accrued interest as of December 31, 2003 and 2002 amounts to
: Edegel S.A.
: Negotiable Instruments in Nuevos Soles (10,000 bonds)
: Fifty million nuevos soles (NS50,000,000).
: Total maturity at October 10 2006.
: 4.875% per year.
:
Interests will be paid six-monthly. Interests accrued at year-end are ThCh$70,800 and they are presented
in current liabilities.
: Edegel S.A.
: Negotiable instruments in Nuevos Soles (10,000 bonds)
: Fifty million Nuevos Soles (NS50,000000).
: Total maturity at October 10 2006.
: 4.75% per year.
:
Interests will be paid six-monthly. Interests accrued at year-end are ThCh$22.356 and they are presented
in current liabilities.
151
IV Emgesa S.A. issued bonds on October 8, 1999 and July 9, 2001 of com the first issuance, and on February 26, 2003 from the second
issuance as per the following:
First Issuance
Issuer
Securities issued
Issuance Value
Capital amortization
Interest nominal rate
Interest payment
Second Issuance
Issuer
Securities issued
Issuance value
Capital amortization
Nominal interest rate
Interest payments
: Emgesa S.A.
: Marketable securities denominated in Colombian pesos
: $Col 530,000,000
: Maturities as of 2002, 2006, 2007, 2009 and 2010 for $Col 31,525,000; $Col 100,000,000; $Col
81,407,744; $Col 19,500,000 and $Col 297,567,256 respectively.
: 15.5% annual average rate
:
ThCh$1,904,178 and ThCh$5,439,841 and is shown under current liabilities.
Interest will be paid semi-annually. Accrued interest as of December 31, 2003 and 2002 amounts to
: Emgesa S.A.
: Marketable securities denominated in Colombian pesos
: $Col 50,000,000
: Maturity as of July 26, 2006.
: 15.18% annual average rate
: Interest will be paid annually. Accrued interest as of December 31, 2003 and 2002 amounts to
ThCh$1,164,287 and ThCh$223,180 and is shown in other current liabilities.
Amortized bond discounts of Enersis S.A. and its affiliates of ThCh$21,025,338 and ThCh$19,583,113 as of December 31, 2002 and 2003, respectively
are included in Other Assets (see Note 14).
consolidated financial statements
20. accrued expenses
a. Short-term accruals:
b. Long-term accruals:
Accrued expenses included in current liabilities are as follows:
As of December 31,
2002
ThCh$
2003
ThCh$
As of December 31,
2002
ThCh$
2003
ThCh$
Bonus and other employee benefits
27,180,757 23,848,378
Advance monthly corporate and other taxes
7,070,602
7,639,831
Legation and other contingencies
21,468,598 4,802,668
Post-retirement benefits-Chilean subsidiaries
10,401,086
11,400,723
Construction and other
Energy purchases a other
Pension accruals
Suppliers and services
Others
Total
7,244,769
2,711,826
Post-retirement benefits (Cerj Coelce)
39,019,281 37,982,596
14,606,379
6,403,478
Severance indemnity
1,811,021
1,773,893
Labor contingencies (Cerj)
8,641,873 10,636,080
109,134,019 158,876,188
6,357,124
12,985,061
Post-retirement benefits-foreign subsidiaries
72,758,940 87,905,846
7,110,976
1,178,920
Others
7,460,312
2,975,719
85,779,624 53,704,224
Total
254,486,113 317,416,983
Bad debts write-offs of ThCh$1,309,980 and ThCh$3,195,380 were recorded
for the years ended December 31, 2002 and 2003, respectively.
21. severance indemnities
152
Long-term accruals include employee severance indemnities, calculated in accordance with the policy described in Note 2n. An analysis of the
changes in the accruals in each year is as follows:
Opening balance as of January 1
Increase in accrual
Transfer to short-term
Payments during the period
Total
As of December 31,
2002
ThCh$
7,388,911
2,081,794
-
(828,832)
2003
ThCh$
8,400,118
2,801,092
(41,058)
(524,072)
8,641,873
10,636,080
Enersis / 2003 annual report
22. minority interest
a. Minority shareholders’ participation in the shareholders’ equity of the Company’s subsidiaries is as follows:
As of December 31, 2002
As of December 31, 2003
Equity
ThCh$
Participation
%
Total
ThCh$
Equity
ThCh$
Participation
%
Total
ThCh$
Company
Autopista Los Libertadores S.A.
Cam Argentina S.A.
Cam Colombia S.A.
Capital de Energía S.A.
Central Hidroeléctrica Betania S.A.
Central Cachoeira Dourada
Central Costanera S.A.
Cía. do Electricidade do Río do Janeiro
Chilectra S.A.
Cía. Eléctrica San Isidro S.A.
Cía. Peruana de Electricidad S.A.
Codensa S.A.
Companhia Energetica Do Ceara - Coelce
Compañía Eléctrica del Río Maipo S.A.
Constructora y Proyectos Los Maitenes S.A.
Edegel S.A.
Edelnor S.A.
Edesur S.A.
Emgesa S.A.
Empresa Eléctrica Pangue S.A.
Endesa
Endesa Argentina S.A.
Generandes Perú S.A.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Inecsa 2000 S.A.
Infraestructura 2000 S.A.
Ingendesa S.A.
Inmobiliaria Centro Nuevo Ltda.
Inmobiliaria y Constructora Stgo. 2000 Ltda.
Inversiones Distrilima S.A.
Investluz S.A.
Luz de Bogotá S.A.
Pehuenche S.A.
Soc. Agrícola de Cameros Ltda.
Soc. Agrícola Pastos Verdes Ltda.
Túnel El Melón S.A.
25,465,151
550,915
1,883,440
571,885,956
524,653,325
491,582,589
173,176,401
585,356,719
425,908,659
34,559,972
43,634,109
1,019,559,638
701,533,656
22,849,917
353,458
687,370,285
294,969,042
737,116,149
973,289,667
75,180,999
1,444,941,673
22,016,613
373,148,990
229,449,565
93,395,129
25,666,499
64,642,503
2,289,440
(13,460)
81,804
174,521,754
361,127,823
606,535,104
184,730,491
7,005,739
53,431,384
(4,273,191)
0.05%
0.10%
0.001%
49.10%
14.38%
0.41%
48.07%
37.42%
1.76%
50.00%
49.00%
51.52%
43.41%
1.26%
45.00%
36.44%
40.00%
34.11%
51.52%
5.01%
40.02%
0.01%
40.37%
34.81%
30.07%
2.68%
40.00%
2.36%
0.08%
7.50%
31.61%
37.55%
55.00%
7.35%
42.50%
45.00%
0.05%
12,733
550
25
280,796,004
75,433,605
2,002,022
83,241,500
219,056,803
7,440,146
17,279,986
21,380,713
525,985,364
304,537,745
287,350
159,056
250,503,852
117,987,616
251,415,708
501,408,665
3,766,568
-
513,485
2,268,316
464,741,947
427,549,420
406,438,881
169,484,178
446,403,953
426,495,495
43,956,845
32,999,474
827,256,794
533,453,412
-
(547,964)
544,119,075
221,638,247
575,959,955
795,386,193
85,397,699
578,252,302
1,492,669,040
56,988,038
302,246,635
201,332,047
83,655,531
-
-
2,202
150,636,590
79,871,394
28,083,916
687,863
25,857,001
54,088
(10)
6,136
55,166,327
135,603,498
333,594,313
13,577,691
2,977,439
24,044,123
(2,136)
-
0.10%
0.001%
49.10%
14.38%
0.39%
35.74%
27.46%
1.76%
50.00%
49.00%
51.52%
43.41%
-
45.00%
36.44%
40.00%
34.11%
51.52%
5.02%
40.02%
0.01%
40.37%
34.81%
30.07%
-
-
-
513
30
228,188,296
61,472,200
1,601,856
60,565,015
122,584,959
7,449,863
21,978,423
16,169,742
426,206,054
231,573,636
-
(246,584)
198,297,667
88,655,299
196,448,526
409,758,310
4,283,719
597,352,354
5,699
122,014,005
70,083,686
25,155,218
-
-
153
2,561,114
2.36%
60,506
-
-
132,003,816
286,769,700
487,492,327
194,308,570
6,918,050
55,277,858
(6,539,494)
-
-
31.61%
37.55%
55.00%
7.35%
42.50%
45.00%
0.05%
-
-
41,726,407
107,682,022
268,120,785
14,281,680
2,940,171
24,875,036
(3,270)
Total
4,091,108,748
3,349,281,823
consolidated financial statements
b. Minority shareholders’ participation in the net (income) or loss of the Company’s subsidiaries is as follows:
Company
Autopista Los Libertadores
Cam Argentina S.A.
Cam Colombia S.A.
Capital de Energía S.A.
Central Hidroeléctrica Betania S.A.
Central Cachoeira Dourada
Central Costanera S.A.
Cía. do Electricidade do Río do Janeiro
Chilectra S.A.
Cía. Eléctrica San Isidro S.A.
Cía. Peruana de Electricidad S.A.
Codensa S.A.
Companhia Energetica Do Ceara - Coelce
Compañía Eléctrica del Río Maipo S.A.
Constructora y Proyectos Los Maitenes S.A.
Edegel S.A.
Edelnor S.A.
Edesur S.A.
Emgesa S.A.
Empresa Eléctrica Pangue S.A.
Endesa
Endesa Argentina S.A.
Generandes Perú S.A.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Inecsa 2000 S.A.
Infraestructura 2000 S.A.
Ingendesa S.A.
Inmobiliaria Centro Nuevo Ltda.
Inmobiliaria y Constructora Stgo. 2000 Ltda.
Inversiones Distrilima S.A.
Investluz
Luz de Bogotá S.A.
Pehuenche S.A.
Soc. Agrícola de Cameros Ltda.
Soc. Agrícola Pastos Verdes Ltda.
Túnel El Melón S.A.
Total
154
As of December 31, 2002
As of December 31, 2003
Net income
Participation
ThCh$
%
Total
ThCh$
Net income
Participation
ThCh$
%
Total
ThCh$
84,611
188,475
(719,263)
(23,907,723)
7,428,523
35,856,858
(24,982,628)
9,102,554
31,311,681
(5,302,727)
(3,290,720)
6,722,511
(20,555,300)
(11,844,565)
592,704
(4,600,041)
(19,956,887)
(8,287,192)
(56,730,401)
(19,039,350)
9,412,247
10,888,971
(13,236,381)
26,030,227
26,767,299
99,306
(417,093)
(932,483)
1,298
(6,293)
(13,202,015)
200,235,743
4,557,123
(20,212,254)
(105,662)
(99,316)
2,946,920
0.05%
0.10%
0.001%
49.10%
14.38%
0.41%
48.07%
37.42%
1.76%
50.00%
49.00%
51.52%
43.41%
1.26%
45.00%
36.44%
40.00%
34.11%
51.52%
5.01%
40.02%
0.01%
40.37%
34.81%
30.07%
2.68%
40.00%
2.36%
0.08%
7.50%
31.61%
37.55%
55.00%
7.35%
42.50%
45.00%
0.05%
42
189
(9)
(11,738,692)
1,068,058
146,031
(12,008,515)
3,406,431
547,161
(2,651,364)
(1,612,453)
3,463,437
(8,923,114)
(148,952)
266,717
(1,676,429)
(7,982,755)
(2,826,597)
(29,225,744)
(953,871)
3,766,694
1,089
(5,343,397)
9,061,122
8,048,926
2,661
(166,837)
(22,030)
1
(473)
(4,173,157)
75,188,523
2,506,419
(1,485,601)
(44,907)
(44,693)
1,474
16,445,385
-
(62,762)
(727,405)
(8,613,883)
1,688,410
(4,314,551)
(27,802,310)
98,773,475
(51,469,555)
(13,177,857)
(2,205,560)
(18,020,379)
10,188,005
-
901,422
(31,881,870)
(13,077,512)
27,101,386
(22,221,183)
(37,165,525)
(78,130,912)
(38,333,485)
(28,556,438)
(13,610,490)
(7,105,008)
-
-
-
0.10%
0.001%
49.10%
14.38%
0.39%
35.74%
27.46%
1.76%
50.00%
49.00%
51.52%
43.41%
-
45.00%
36.44%
40.00%
34.11%
51.52%
5.02%
40.02%
0.01%
40.37%
34.81%
30.07%
-
-
-
(63)
(10)
(4,229,417)
242,756
(17,005)
(12,253,976)
27,123,735
(899,957)
(6,588,929)
(1,080,724)
(9,284,172)
4,422,642
-
405,640
(11,618,965)
(5,231,005)
9,243,746
(11,447,665)
(1,864,297)
(31,267,269)
(3,833)
(11,527,954)
(4,737,812)
(2,136,476)
-
-
(1,601,578)
2.36%
(37,837)
-
-
(8,857,512)
8,682,013
(4,206,442)
(45,798,189)
87,689
(788,606)
2,266,302
-
-
31.61%
37.55%
55.00%
7.35%
42.50%
45.00%
0.05%
-
-
(2,799,860)
3,260,096
(2,313,543)
(3,366,167)
37,268
(354,873)
1,133
(78,324,793)
23. shareholders’ equity
a. Paid capital
The Extraordinary General Meeting of Shareholders of Enersis held on
March 31st 2003 approved a capital increase of about US$2,000 million.
The issue was registered in the Securities Register on May 23 2003 under
No. 686 for Ch$1,473,225,403,563 pesos, divided into 24,382,994,488
shares. The operation was structured as follows:
2) Voluntary redemption of local bonds (from November 1 to 15), in
which holders of local 269 bonds (series B1 and B2) may exchange
their bonds for Enersis shares, according to the value assigned by the
aforementioned independent expert and at placement price - Ch$
60.4202 per share.
1) First preferential underwriting period (from May 31 to June 30), in
which shareholders registered in the company register at last May 26
have the option of taking up 2.9408 new shares for each old one at a
price of Ch$60.4202 per share.
3) Second preferential underwriting period (from November 20 to
December 20), in which all Enersis shareholders registered five
working days before the start of this new period, except for the
controlling partner and its members, may participate.
Enersis / 2003 annual report
In this phase, shareholders may take up the remaining shares that were
not underwritten at the close of the preferential underwriting period and at the
conclusion of the voluntary redemption of local bonds. In this period, new issue
shares may only be paid in cash at the same price of Ch$ 60.4202 per share.
e. Other reserves
ThCh$
Once the deadline for the capital increase has expired (December 30 2003),
Reserve for accumulated conversion differences
(15,428,363)
Reserve for transaction entities using remeasurement method
(10,243,322)
its final amount will be the amount actually underwritten and paid in.
At June 30 2003, end date of the first preferential underwriting
period, 22,113,264,060 shares were underwritten for a sum of
Ch$1,336,087,841,061 equivalent to 90.69% of the total issue. Of total
shares underwritten in this preferential period, 14,406,840,511 shares
were taken up by controlling shareholder Elesur for the equivalent of
Ch$870,464,185,043 pesos and 7,706,423,549 shares by minority
shareholders for the equivalent of Ch$465,623,656,018 pesos.
Elesur underwrote and paid in its shares by capitalizing the financial
credits that it held with Enersis on the date of underwriting, which, according
to expert report drawn up by Mr. Eduardo Walker, which was approved by
the Extraordinary Shareholders’ Meeting on March 31 2003, amounts to
86.84% of its par value, with the difference being recorded as a share
premium of Ch$131,912,812,936.
The second preferential underwriting period in November 2003 involved
the voluntary exchange of 269 bonds, series B1 and B2. Holders converted
Ch$63,656,586,836 into the equivalent of 893,612,466 first issues shares;
the amounts underwritten were determined by experts by capitalizing
Ch$46,964,178,894 for series B1 and Ch7,028,065,024 for series B2, at
Ch$ 60.4202 per share. This operation meant recording a share premium
of Ch$6,247,821,056.
During the second preferential underwriting period, 1,244,542,758
shares equivalent to Ch$75,195,523,918 were subscribed.
The second share underwriting period concluded on December 30,
determining the capital increase, in which 99.9% of the capital authorized
by the Extraordinary General Meeting of Shareholders, in other words
24,360,146,365 shares, was subscribed, leaving Enersis’ capital with a
total of 32,651,166,465 subscribed and paid in shares.
b. Dividends
During the years ended December 31, 2002 and 2003 the Company
no paid dividends
c. Number of shares
As of December 31, 2003 and December 31, 2002, respectively the
number of shares authorized, issued and outstanding was 32,651,166,465
and 8,291,020,100 all of which have voting rights.
d. Subscribed and paid capital is as follows:
Total
(25,671,685)
Other reserves are composed of the following:
Initial
balance at
January 1, 2003
Reserve
for assets
Reserve
for liabilities
Final balance
at December
31, 2003
ThCh$
ThCh$
ThCh$
ThCh$
Cumulative translation adjustment 46,159,106
(253,265,921) 191,678,452 (15,428,363)
Total
46,159,106
(253,265,921) 191,678,452 (15,428,363)
Detail of changes in the reserve for accumulated conversion differences
is as follows:
Distrilec Inversora S.A.
Inversiones Distrilima S.A.
Cía. Peruana de Electricidad S.A.
Edesur S.A.
Cerj S.A.
Luz de Bogotá S.A.
Investluz S.A.
Central Geradora Termelétrica Fortaleza S.A.
Synapsis de Colombia Ltda.
Endesa Market Place
Endesa Argentina S.A.
Compañía Eléctrica Conosur S.A.
Endesa de Colombia S.A.
Central Costanera S.A.
Ingendesa Do Brasil Ltda.
Total
155
ThCh$
(7,733,126)
2,471,385
1,302,547
(4,503,144)
(2,915,573)
(4,985,333)
3,629,135
(2,662,889)
19,801
367,029
2,557,220
(2,954,154)
68,499
(79,994)
(9,766)
(15,428,363)
The detail of the accumulated conversion difference reserve at
December 31, 2003 is as follows:
f. Net losses from operations and accumulated net income (losses) of
development-stage subsidiaries are as follows:
As of December 31, 2003
ThCh$
Shares
Company
As of December 31, 2003
Net income lossfor
the period
ThCh$
Retained earnings
(accumulated deficit)
ThCh$
As of December 31, 2002
Intercompany loan capitalization
Bonds capitalization
Subscribed shares
8,291,020,100
14,406,840,511
893,612,466
9,059,693,388
758,720,279
868,723,257
53,830,267
546,437,537
Compañía Eléctrica Taltal Ltda.
Central Generadora Termoelectrica Fortaleza S.A.
Aguas Santiago Poniente S.A.
Infraestructura 2000 S.A.
Gas Atacama Generación
Ingendesa (Ingendesa do Brasil)
Enigesa (Ingendesa do Brasil)
-
(1,292,923)
(55,238)
-
-
44,914
580
147,835
(2,608,453)
(167,940)
355,245
819,520
(1,855)
(68)
As of December 31, 2003
32,651,166,465
2,227,711,340
Total
(1,302,667)
(1,455,716)
consolidated financial statements
24. other income and expenses
a. The detail of other non-operating income is as follows:
Adjustments to investments in related companies
Gain on sale of property, plant and equipment
Gain on sale of materials
Gain on forward contracts and swaps
Services - projects and inspections
Penalties charged to contractors and suppliers
CDEC-SING power settlement gain
Public lighting and telephone lines
Cost recoveries
Recoverable taxes
Effect of application of BT 64 (1)
Gain on sale of subsidiaries
Indemnities and commissions
Dividend from investees
Other
Total
(*) Sale of Compañía Eléctrica del Rio Maipo S.A. and Infraestructura 2000 S.A.
156
b. Other non-operating expenses are as follows:
Adjustments to investments in related companies
Cost of sales – materials
Loss on sale of fixed assets
Donations
Effect of application of BT 64 (1)
Contingencies and litigation
Deferred expense amortization
SIC power settlement loss
Pension plan expense
Revenue recovery
Index UFIR Brasil Cerj
Penalties and fines
Cost of projects, inspections and other
Provision for real estate projects
Provision for write-off work in progress
Other taxes Argentina and Brazil
Loss on forward contracts and swaps
Write-off fixed assets
Others
Total
Enersis / 2003 annual report
As of December 31,
2002
ThCh$
517,322
3,511,474
2,681,149
4,863,450
14,525,962
7,017,364
11,264,690
13,660,931
5,163,916
6,451,499
212,921,872
-
3,213,534
10,839,568
14,592,594
2003
ThCh$
7,529,538
3,142,819
3,830,847
-
16,165,628
7,283,913
1,604,824
11,996,639
12,278,321
5,080,587
19,677,720
89,285,108
3,591,404
4,288,277
11,821,164
311,225,325
197,576,789
As of December 31,
2002
ThCh$
4,208,128
1,662,559
2,404,599
148,062
31,075,441
48,776,456
3,676,482
17,148,228
5,802,577
5,154,802
-
12,482,466
5,307,741
16,766,197
46,775,052
6,798,645
-
7,299,621
22,721,323
2003
ThCh$
8,188,085
3,139,887
9,397,043
1,494,374
87,189,396
52,974,009
6,818,702
2,676,757
20,790,427
3,610,872
6,829,656
4,365,336
6,222,466
-
2,483,690
9,594,035
1,142,690
15,638,914
5,468,333
238,208,379
248,024,672
25. price-level restatement
The (charge) credit to income for price-level restatement is as follows:
Assets
Inventory
Current assets
Property, plant and equipment
Accounts receivable from subsidiaries
Investment in subsidiaries
Amortization of goodwill
Other assets
Price-level restatement of the income statement
Net credits - assets
Liabilities and Shareholders’ equity
Shareholders equity
Current and long-term liabilities
Minority interest
Accounts payable to subsidiaries
Non-monetary liabilities
Price-level restatement of the income statement
Net charge-liabilities and shareholders’ equity accounts
Net credits (charge) to income
26. exchange differences
Index
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C. - U.F.
I.P.C.
U.F.
I.P.C.
As of December 31,
2002
ThCh$
1,092,619
6,117,451
51,700
71,893,309
5,083,009
2,701,811
26,045,738
23,398,374
189,167
18,451,848
2003
ThCh$
324,537
9,634,298
12,493
23,367,200
1,762,523
1,990,421
6,259,407
18,247,746
69,242
(66,109)
155,025,026
61,601,758
(35,729,346)
(79,057,836)
(8,701,419)
17,707,548
(24,290,502)
(52,471)
-
(19,886,461)
(6,939,971)
(50,396,993)
(1,412,702)
7,619,133
(15,675,723)
(93,288)
(72,800)
871,195
(150,010,487)
(66,101,149)
5,014,539
(4,499,391)
157
The (charge) credit to income for foreign currency translation is as follows:
Assets
Cash
Time deposits
Marketable securities
Accounts receivable, net
Prepaid expenses
Other current assets
Amounts due from related companies
Non-current assets
Long-term receivables
Amounts due from related companies
Deferred expenses
Other assets
Forward contracts and swaps
Currency
US$
Euro
Other
US$
Other
US$
Other
US$
Euro
Other
US$
US$
Other
US$
US$
U.C.
US$
US$
US$
US$
As of December, 31
2002
ThCh$
2,698,211
-
(13,835)
266,765
(31,365)
494,092
-
220,306
-
42,961
29,736
6,786,792
(142,245)
-
2003
ThCh$
2,850,565
(1,524)
(238,858)
(26,152,483)
(6,922)
(169,033)
(19,546)
(458,528)
32,835
(47,542)
(62,642)
2,541,960
(1,355)
(80,463)
605,943
204,029
11,193,324
230,340
6,606,448
16,197,938
(12,379,444)
(222,446)
(28,911,189)
-
(204,265,262)
21,876,845
Liability
Currency
Short-term debt due to banks
and financial institutions
Current portion of long-term
debt due to banks
and financial institutions
Current portion of bonds payable
Current portion of notes payable
Accounts payable
Miscellaneous payables
Accrued expenses
Deferred income
Other current liabilities
Dividends payable
Long-term liabilities
Due to banks and
financial institutions
Bonds payable
Notes payable
Accounts payable
Other long-term liabilities
Forward
US$
Euro
US$
Yen
U.P.
Euro
US$
US$
US$
Euro
Other
US$
US$
Other
US$
US$
Other
Other
US$
Yen
Euro
U.P.
US$
US$
US$
US$
Other
US$
As of December, 31
2002
ThCh$
2003
ThCh$
(2,659,647)
-
3,587,599
(72,424)
(244,524)
(26,389)
(2,123,443)
(865,294)
477,636
-
(870,274)
(655,650)
(104)
-
(365,914)
84,826
-
1,858
6,653,542
(3)
7,374,930
56,071
167,230
87,199
13,329,822
2,248,465
110,039
(45,861)
432,188
1,325,272
640,372
(975)
19,356
775,133
631,225
45
(22,873,343)
(182,578)
(61,092)
(372,406)
(25,245,051)
(2,842,535)
361,815
(6,713,858)
3
-
108,669,368
39,275
1,008
14,043
111,608,434
5,972,670
(173,051)
10,852,174
-
(31,127,244)
Total gain (loss)
45,389,440
(245,715,032)
Total gain (loss)
(61,660,789)
239,660,727
Exchange difference - net loss
(16,271,349)
(6,054,305)
consolidated financial statements
27. cash flow statement
• Other financing disbursements for the year ended 2003
In the item “Other financing disbursements”, in the cash flow from
financing activity, the following items are included disbursements of
commissions for debt refinancing in the amount of ThCh$57,188,457, forward
contract payments in the amount of ThCh$40,816,629, collar and collateral
derivative contracts premiums in the amount of ThCh$5,459,187, payments
to Siemens A,G, Alemania of ThCh$4,555,075 and other disbursements in
an amount of ThCh$8,011,269.
• Other investment incomes for the year ended 2003
In the item “Other investment incomes”, in the cash flow from
investment activities, the following items are included income from the
recovery of loans granted to the ex-subsidiary Infraestructura 2000 in the
28. share issuance costs
amount of ThCh$47,899,341, capital return amount of ThCh$1,230,126
and other items in the amount of ThCh$658,870.
Non-Cash Financing Transactions
• Capital increase.
On June 2 2003 Elesur S.A. capitalized the financial credits that it held
with Enersis S.A. for ThCh$1,002,376,998, which transaction did not generate
a cash flow. Details of this transaction are explained in note 23b).
In November 2003 there was a voluntary exchange of bonds in connection
with the capital increase of Enersis. Holders converted ThCh$63,656,587 into
893.612.466 first issue shares; this operation did not generate any cash flow.
Details of this transaction are referred to in note 23b).
a. Expenses incurred at the close of these financial statements for issuing
and placing the shares, outstanding at December 30 2003, were recorded
as described in Note 2 ab) and break down as follows:
b. Expenses incurred for issuing and placing debt instruments incurred
each year in placing bonds are as follows:
As of December 31
As of December 31
158
Appraisal services
Printing costs
Legal cost
Financial adviser
DCV commissions
Bank commissions
Risk classification services
Total
2002
ThCh$
-
-
-
-
-
-
-
-
2003
ThCh$
75,326
13,954
199,989
10,377,599
2,990
1,448,873
139,613
12,258,344
2002
ThCh$
1,463,307
755,595
1,725,416
7,307,869
-
2003
ThCh$
2,176,804
2,595,871
853,328
-
55,390
Taxes
Commissions
Financial adviser
Insurance issue
Others
Total
11,252,187
5,681,393
Enersis / 2003 annual report
29. financial derivatives
As of December 31, 2003 the Company and its subsidiaries held the following financial derivative contracts with financial institutions with the object
of decreasing exposure to interest rate and foreign currency risk, as follows:
Type
derivative
Type
contract
Nominal
amount
US$
Date of maturity
Item
Sale / Purchase
Hedge item
Amount
Amount Hedge item
ThCh$
ThCh$
Assets/Liabilities
Account
ThCh$
FR
FR
FR
FR
FR
FR
FR
FR
FR
FR
OE
OE
OE
OE
OE
OE
OE
OE
OE
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S
S (1)
S (1)
S (2)
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCTE
CCTE
CCTE
CCTE
CI
CI
CI
CI
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCTE
CCTE
CCTE
CCTE
CCTE
CCTE
CCTE
CI
CI
CCPE
CCPE
CCPE
17,000,000
I quarter 04
Exchange rate
17,000,000
I quarter 04
Exchange rate
20,000,000
I quarter 04
Exchange rate
17,000,000
I quarter 04
Exchange rate
17,000,000
I quarter 04
Exchange rate
20,000,000
I quarter 04
Exchange rate
14,000,000
I quarter 04
Exchange rate
219,000,000
III quarter 03
Exchange rate
76,000,000
I quarter 04
Exchange rate
5,000,000
II quarter 04
Exchange rate
11,800,000
III quarter 04
Interest rate
50,000,000
III quarter 04
Interest rate
50,000,000
III quarter 05
Interest rate
150,000,000
I quarter 06
Interest rate
550,000,000
II quarter 06
Interest rate
100,000,000
II quarter 04
Interest rate
350,000,000
III quarter 04
Interest rate
150,000,000
I quarter 06
Interest rate
250,000,000
III quarter 06
Interest rate
273,495
IV quarter 03
Exchange rate
13,008,308
I quarter 04
Interest rate
98,916,783
I quarter 04
Exchange rate
10,800,763
II quarter 04
Interest rate
5,750,485
II quarter 04
Exchange rate
62,746,133
III quarter 04
Exchange rate
546,990
IV quarter 04
Exchange rate
820,485
I quarter 05
Exchange rate
175,000,000
II quarter 08
Interest rate
50,000,000
I quarter 04
Interest rate
15,000,000
I quarter 04
Interest rate
50,000,000
III quarter 04
Interest rate
3,191,000
III quarter 04
Interest rate
35,381,000
IV quarter 04
Interest rate
14,000,000
II quarter 05
Interest rate
50,000,000
II quarter 06
Interest rate
11,657,290
I quarter 04
Exchange rate
115,000,000
II quarter 08
Interest rate
94,470,311
III quarter 06
Exchange rate
94,470,311
III quarter 06
Exchange rate
50,000,000
III quarter 06
Exchange rate
S (2)
CCPE
50,000,000
(1) Fr = Forward, S = Swap
III quarter 06
Exchange rate
P
P
P
S
S
S
P
S
P
P
P
P/S
P/S
P/S
P/S
P/S
P/S
P/S
P/S
P
P
P
P
P
P
P
P
P
P/S
P
P/S
P
P
P
P
P
P/S
P
P
S
S
Bonds
Bonds
Bonds
Bonds
Bonds
Bonds
Bonds
10,094,600
10,094,600
Other assets/liabilities s/t
10,094,600
10,094,600
Other assets/liabilities s/t
11,876,000
11,876,000
Other assets/liabilities s/t
10,094,600
10,094,600
Other assets/liabilities s/t
10,094,600
10,094,600
Other assets/liabilities s/t
11,876,000
8,313,200
11,876,000
Other assets/liabilities s/t
8,313,200
Other assets/liabilities s/t
Accounts
Amount
ThCh$
910,556
910,556
1,062,641
(688,330)
(688,482)
(812,650)
31,311
Income
Realized
ThCh$
Unrealized
ThCh$
-
-
-
-
-
-
-
945,243
945,030
1,101,819
(688,330)
(688,482)
(812,650)
31,360
Other current assets
130,042,200
130,042,200
Other assets/liabilities s/t
8,570,040
11,384,569
8,420,887
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
45,128,800
45,128,800
Other assets/liabilities l/t
2,969,000
7,006,840
2,969,000
Other liabilities s/t
7,006,840
Other liabilities l/t
29,690,000
29,690,000
Other liabilities s/t other assets l/t
29,690,000
29,690,000
Other liabilities l/t
89,070,000
89,070,000
Other liabilities s/t other assets l/t
2,129,811
(52,182)
(484,967)
(35,105)
(1,057,852)
(2,157,097)
Bank obligations
326,590,000
326,590,000
Other liabilities s/t other assets l/t
(12,474,660)
Bank obligations
Bank obligations
29,690,000
29,690,000
Other liabilities s/t
44,535,000
44,535,000
Other liabilities s/t
-
-
-
-
Other liabilities s/t
Other liabilities s/t
162,401
7,724,333
162,401
Other liabilities s/t
7,724,333
Other liabilities s/t
58,736,786
58,736,786
Other liabilities s/t
(656,251)
(1,108,795)
(230,914)
(120,816)
(16,637,093)
(2,182,501,690)
(11,243,673,373)
(9,734,826)
(1,569,669)
-
(114,728)
(310,843)
(642,231)
(1,210,272)
(5,554,191)
(1,411,094)
(2,237)
47,352
(7,571)
(111,812)
(99,276)
(1,318,021)
(656,251)
(5,423,005)
(1,108,795)
(4,138,451)
(3,481,620)
(230,914)
(120,816)
-
-
-
(23,390,093)
(2,186,184,690)
(11,198,577,048)
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bank obligations
Bonds
Bonds
Bonds
Bonds
6,413,493
3,414,638
6,413,493
Other liabilities s/t
(1,082,648,739)
(20,808,251)
(1,105,905,990)
3,414,638
Other liabilities s/t
(777,432,324)
(23,907,865)
(813,301,189)
37,258,654
37,258,654
Other liabilities s/t
(3,034,406,503)
(1,379,621,025)
(5,314,493,527)
324,803
487,204
324,803
Other liabilities s/t
487,204
Other liabilities s/t
103,915,000
103,915,000
Other liabilities s/t other assets l/t
29,690,000
29,690,000
Other liabilities s/t
8,907,000
8,907,000
Other liabilities l/t
29,690,000
29,690,000
Other liabilities l/t
1,894,816
1,894,816
Other liabilities l/t
21,009,238
21,009,238
Other liabilities l/t
8,313,200
8,313,200
Other liabilities l/t
29,690,000
29,690,000
Other liabilities l/t
6,922,099
6,922,099
Bank obligations
-
0
Other liabilities s/t
66,384,753
66,384,753
Others asstes/liabilities l/t
1,689,160
35,135,243
307,398
1,689,160
Others asstes s/t
35,135,243
Others asstes/liabilities l/t
307,398
Others asstes s/t
(34,413,842)
(48,375,002)
486,670
394,874
(277,898)
1,100,608
(213,174)
(353,311)
(1,166,223)
(1,653,733)
(442,792)
(165,046)
10,288,282
1,060,056
(5,445,243)
(434,352)
-
-
(46,751,842)
(70,158,002)
159
(901,962)
(1,482,082)
-
(747,764)
-
-
-
-
-
(22,460)
(264,761)
(227,128)
(277,898)
(458,817)
(213,174)
(353,311)
(1,166,223)
(1,653,733)
(442,792)
(165,046)
-
15,242,584
7,276,312
1,060,055
-
(6,605,724)
(1,610,706)
(434,351)
Within the compass of the financial strengthening plan, approved
in October 2002, Enersis and its subsidiary Endesa Chile have obtained
financing during this year by placing bonds on the local market and on the
US market; this has enabled them to obtain financing with a fixed rate debt
and prepay obligations with banks which had a variable rate.
The above, together with prepayment of borrowings made using
resources obtained from the capital increase, has reduced the variable
debt by about US$1,550 million.
As a result of the above, hedging instruments covering variable rate
borrowings, which were refinanced at fixed rates or prepaid, now have
no associated debt and, therefore, appear in the derivatives schedule as
investments.
consolidated financial statements
-
-
-
-
-
-
-
-
-
-
-
-
30. commitments and contingencies
Direct guarantees held by third parties:
Guarantee
Banco del Estado de Chile
Arriendo Maq. y Const. Talca Ltda.
Director Aduana de Chile
Bancos Acreedores
Mitsubishi Corp.
Pehuenche S.A.
Pehuenche S.A.
Pangue S.A.
Pangue S.A.
San Isidro S.A.
Chat. Mortg. Without conveyance Equipment
Bank bond
Bill of exchange
Mortgage and pledge
Real Estate, properties
Chattel mortgage
Facilities
Crédito Sindicado Citibank N.A.
Pehuenche S.A., Pangue, Celta
Financial guarantee
Banco Estado
Tunel el Melón
Pledge over 45% of income
Soc. de Energía de la República Argentina Endesa Argentina, Central Costanera S.A. Pledge
Mitsubishi
Banco Santander Central Hispano
Varios Acreedores
J.P. Morgan e ING Baring
Central Costanera S.A.
Cono Sur S.A.
Endesa Matriz
Central Costanera
Pledge
Prenda
Bank bond
Pledge
Shares
Facilities
Shares
Facilities
Indirect guarantees held by third parties:
Subsidiary
Type guarantee
Type
Currency Accounting value
Currency
2003
2002
2004
2005
2006
Commited assets
Pending balance at December 31,
Release of guarantees
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
9,940,774
-
53,442
86,239,360
80,895,593
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
3,867
2,519
53,442
940,632
-
3,867
2,519
65,322
53,442
-
-
-
-
-
-
14,350,944
20,433,809
3,149,680
3,149,585
2,168,378
33,809,253
57,972,160
-
-
-
-
ThCh$
168,639,200
- 28,106,531
140,532,669
1,348,922
88,013,134
12,624,188
54,844,852
-
60,567,600
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
5,729,877
7,148,286
11,686,578
12,090,308
12,624,188
-
90,033,203
139,032,394
1,309,333
1,133,633
60,567,600
-
-
-
-
-
-
-
-
-
-
-
-
Guarantee
Subsidiary
Relation
Type
Currency
Accounting Value
Currency
2003
2002
2004
2005
2006
2008
Committed assets
Pending balance at December 31
Release of guarantees
Citibank N.A.
Midlabank (BSCH)
Endesa Chile Internacional
Endesa Chile Internacional
Banco Santander Central Hispano
Endesa Chile Internacional
J.P. Morgan & Co. Y C.S.F.B.
BNP
BBVA
Mitsubishi Co.
Banco Español de Crédito
Banco Santander
ABN Bank
Chase Manhattan Bank
Endesa Chile Internacional
Endesa Chile Internacional
Endesa Chile Internacional
Cía. Eléctrica San Isidro S.A.
Cía. Eléctrica Tarapacá S.A.
Cía. Eléctrica Tarapacá S.A.
Cía. Eléctrica Tarapacá S.A.
Endesa de Colombia S.A.
Banco Santander Central Hispano
Cía. Eléctrica Conosur S.A.
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
Subsidiary
Guarantor
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
-
-
-
90,673,260
-
-
33,809,252
22,023,058
-
1,758,906
-
90,033,203
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
-
-
-
363,285,519
5,725,137
112,031,532
-
-
-
-
-
-
-
-
-
90,673,260
110,829,064
- 90,673,260 99,145,500
-
-
153,389,137
153,389,137
33,809,252
49,589,674
22,023,058
33,297,279
-
776,322
-
-
-
-
-
1,758,906
4,310,602
1,758,906
-
207,576,479
90,033,203
139,032,394
-
-
-
-
-
-
-
-
-
-
-
-
- 33,809,252
- 22,023,058
-
-
-
-
-
-
- 90,033,203
160
Litigation and other legal actions:
Enersis S.A. Individual
i. Mercedes Jimenez de Arechaga with Enersis S.A., Enersis S.A. Agencia
Islas Caimán, Enersis Internacional, Chilectra S.A., Chilectra S.A. Agencia
Islas Caimán and Empresa Nacional de Electricidad.
On May 30, 2000 Pérez Companc S.A., today PECOM ENERGIA S.A.
and PCI Power Edesur Holding Limited (together, “PECOM”) commenced
an action against Endesa-Chile, Chilectra and Enersis (together, “Enersis
Group”) before the Arbitration Court of the International Chamber of
Commerce, Paris, France. PECOM has petitioned the court to either:
Recognize its alleged right to nominate both a director and an alternate
director in addition to the directors whom it already has the right to
nominate in Distrilec Inversora; or State that PECOM and the Enersis Group
should each have an equal number of directors in Distrilec Inversora.
On August 2, 2000, Enersis Group contested PECOM’s action and
presented a counterclaim requesting the court to terminate several
agreements among the parties. Likewise, PECOM requested to be
compensated by the Enersis Group if the agreements among the parties
were terminated. Based on the provisional estimates made by PECOM, the
Arbitration Court determined that the amount of the suit is between US$
180-200 million. The parties have presented their arguments, evidence
and final allegations. The Arbitration Court issued an arbitration award on
September 2, 2002, ruling that Enersis Group and PECOM keep their rights
to nominate equal number of board members in Distrilec Inversora S.A.
and rejecting not only the Enersis Group’s counterclaim, but also Epsom’s
claim for compensation of approximately US$ 200 millions. Enersis Group
challenged the arbitration award through an appeal for annulment, which
was filed before the Uruguayan Court of Appeals. The Republic of Uruguay
is the domicile established by the Arbitration Court for all legal purposes.
The Uruguayan Court of Appeals has concluded the probative year and is
working on the final judgment.
On June 18, 2003, Montevideo’s Civil Court of Appeals, 2nd Circuit,
ruled on an unappealable basis that the ruling of the Arbitration Court
of the International Chamber of Commerce stands, therefore the Arbitral
Award remains definitive.
In this context, on November 5 2003 notice has been served of the
petition to regulate lawyers’ fees arising from challenging the arbitral
award as invalid, petitioning that they be set at between US$1,270,000
and US$15,210,000.
These amounts are based on differing circumstances.
US$15,210,000 is calculated on the basis of the amount set for the
Arbitral Award in the respective “Mission Record”. This figure is a claim
enforced by Petrobrás Argentina at the end of the arbitration proceeding’s
hearing period in the sense that, if the ruling declared the aforementioned
agreements of shareholders null and void, said Groups should be
indemnified with the above amount. Since the above ruling declared that
the shareholders’ agreements remained in force, the International Chamber
of Commerce rejected this subsidiary claim.
US$1,270,000, in contrast, is obtained based on the amount of Ur$400
million set by the court for certain social security contributions demanded
from the lawyers in Uruguay.
Since both figures are not presented as subsidiary to each other, the
Company’s Uruguayan lawyer understands that the most the plaintiff could
aspire to is an award for the lower figure, i.e. US$1,270,000.
Enersis / 2003 annual report
Furthermore, when the remedy of invalidity was filed it stated that
the matter was not susceptible to pecuniary valuation, and this was not
disputed.
On November 19 2003, a plea was raised in defense against the petition
to regulate the fees.
On December 10 2003, notified on December 16 2003, the appeal for
reconsideration of judgment filed by the Company’s side so that proceedings
would move on to receiving evidence was disallowed, and the proceeding
stayed in the award stage.
ii. Court: 2nd Labor Court of Santiago
Process number
Cause
Process status
:
:
:
Amounts involved
:
6061-2001
Complaint filed for severance pay for years of
service on December 19, 2001 by Mr. Guillermo
Calderón Ortega against Enersis S.A.
On 01/31/2003 appealable judgment was
passed, endorsing the petition. An appeal for
annulment was filed in the manner
ThCh$52,858
iii. The Ordinary Labor Trial, titled “Acevedo Bravo, Efraín and Others with
Enersis S.A.”, case list N°4.175-2002, heard before the 4th Labor Court for
Santiago, arising from the claim for the payment of 2% monthly contribution
made to finance the claimants’ conventional severance indemnity. The
claim was notified on 11/06/2002, against which dilatory exceptions were
opposed on 12/09/2002 and the claim was answered on a subsidiary basis.
On December 18 2003, all parts of the petition were disallowed, since the
court judged that it was incompetent to try the case. Decision appealed.
iv. Court : 25th Civil Court of Santiago
Process number
Cause
Process status
:
:
:
Amounts involved
:
3151-00
Complaint filed for compensation of damages
by Mrs. Odette Legrand Halcartegaray against
Enersis S.A..
On January 31 2003 the decision was handed
down disallowing the petition. This decision
has been appealed.
ThCh$50,000
v. Economic protection appeal, filed before the Court of Appeals
for Santiago, List N°4591-2002, for Compañía de Teléfonos Complejo
Manufacturero de Equipos Telefónicos S.A.C.I., CMET, against Enersis S.A..
The appeal was filed on 08/27/02 by CMET against Enersis S.A., which
seemed to be based on the fact that Enersis S.A., through various acts,
facts or omissions, would have breached article 19 N°21 of the Political
Constitution of the Republic, preventing CMET from developing its
commercial activities.
On 09.17.02, Enersis S.A. informed the Court, as requested, carrying out
all the discharges it deemed reasonable in accordance with law and expressly
rejected CMET’s accusations because of their unfounded nature.
On 11.09.03, the Court ruled on this appeal, disallowing all of its parts,
with costs.
CMET filed an appeal for reconsideration of this verdict, with alternative
appeals, which have still not been ruled on.
Amounts involved: Undeterminable.
vi.
In a Meeting on March 7 2003, the Board of Directors of the Company
agreed unanimously to submit the dispute with the Argentine Republic
over the investments made by the Enersis Group in that country through
Enersis S.A., Empresa Nacional de Electricidad S.A., Enersis Internacional,
Chilectra Internacional and Chilectra S.A., to international arbitration by the
International Center for the Settlement of Differences Involving Investments
between States and Nationals of other States, C.I.A.D.I. On July 22 2003,
Ciadi recorded the petition for arbitration. The procedure for appointing
and forming the arbitration panel is currently ongoing.
vii. Appealable tax proceeding, that is to say, before the Internal Revenue
Service, because of the difference of ThCh$62,400 between First Category
Income Tax and Repayment of Monthly Provisional Payments for absorbed
profits from the 1998 tax year. This proceeding is at the sentencing
stage.
viii. Appealable tax proceeding, that is before the Internal Revenue Service,
because of the difference of ThCh$1,461,400 between First Category Income
Tax and Repayment of Monthly Provisional Payments for profits absorbed
from the 1999 tax year. This proceeding is at the discussion stage.
ix. Appealable tax proceeding, that is before the Internal Revenue Service,
because of the difference of ThCh$900,000 between First Category Income
Tax and Repayment of Monthly Provisional Payments for profits absorbed
from the 2000 tax year. This proceeding is at the discussion stage.
Enersis’ Subsidiaries:
Chilectra
At December 30 2003, there are legal actions for compensation for
damages against the Company, whose effects management does not
consider significant, based on reports by its legal advisors and the fact
that the Company has taken out insurance covering this kind of event,
making provisions for the respective deductibles.
161
Inmobiliaria Manso de Velasco Limitada
Mr. Mauro Valero Gómez arbitration proceeding. Mr. Valero performed
some services and professional consultancy activities aimed at obtaining
property tax rebates, agreeing to a sucess fee for results within a specified
period of time. The contract was terminated at the stipulated term,
subsequent to which Mr. Valero sued for about Ch$ 100 million. The litigation
is currently in the Santiago Court of Appeal, because of an appeal by this
Company. Court case 6.196 – 2000. The case appears on the Court of Appeal’s
schedule on Friday January 23 in the fourth position. The appealable arbitral
award ruled payment of Ch$37 million of the Ch$100 million claimed.
Filiales Construcciones y Proyectos Los Maitenes S.A. y Sociedad Agrícola
Pastos Verdes Limitada.
The subsidiaries Construcciones y Proyectos Los Maitenes S.A. and
i.
Sociedad Agrícola Pastos Verdes Limitada, Lawsuit against Appraisal of
Compensation for Expropriation of Land for the Road Junction in Arturo
Merino Benítez Airport Access Road. In order to build the Road Junction,
the Chilean Government expropriated a piece of land and compensation
was paid based on an appraisal by experts according to Expropriation
Procedures. Suit was filed against the Appraisal, and there is an appealable
decision which raised the compensation by about UF 35,000. The case is
pending in the Court of Appeal, Court Case 7930-1999, and to date it has
still not appeared on the Schedule.
consolidated financial statements
ii. Arbitration proceeding involving Carlos Alberto Cruz Claro y Compañía
Ltda. Plaintiff: Carlos Alberto Cruz Claro y Compañía Ltda.
against the assessment and fines for Income Tax (years 1997, 1998 and
1999), and for IGV (year 1999).
iii. Defendant: Inmobiliaria Manso de Velasco Limitada, who also sued.
Contents of lawsuit: Carlos Alberto Cruz Claro y Compañía Ltda. is the entity
that provided professional architectural services for the Puerto Pacífico
Project. The other party considers that a clause of the contract, clause 12,
stipulates an all event indemnity for sale of the land. Manso de Velasco
asserts that payment only applies, if the architectural project is included
in the sale, which is not the case. Amount: the Company’s being sued for
UF 7,440 (Ch$127 million). Process status: Pleas for defense have been
raised and the litigation is in the period allowed for producing evidence.
Conciliation hearing took place.
Based on the decision by the Tax Court in Decision 06604-2002 of
November 20, 2002, the Superintendency of Tax Administration SUNAT has
issued Intendency Resolution 01501-50000031 on July 9, 2003 which, with
regard to the most significant discrepancy, in other words, the objection
to excessive tax allowance and cost taken on revalued property, plant and
equipment in 1996 as a result of the merger, resolves to object to the 1996
appraisal process and, therefore, to disregard the revaluation assigned to
EDELNOR’S fixed assets, imputing income tax debts to the company for
about (in thousands) US$35,466, US$5,300 and US$19,525 respectively,
including fines and interest, for the years 1997, 1998 and 1999.
iv. There are other legal actions involving expropriations affecting
properties of Agrícola e Inmobiliaria Pastos Verdes Ltda. These involve
complaints about the amount of compensation set. According to the
company’s lawyers, none imply any contingencies for the company.
Edelnor S.A.
i. At December 31 2003, the subsidiary has various legal actions filed
against it for about US$ 10.4 million. According to Management and its
legal advisors, these legal actions will not result in significant liabilities for
the financial statements of Inversiones Distrilima S.A. (the Company).
From November 2000 to July 2001, tax authorities reviewed the
subsidiary’s Income Tax and General Sales Tax (IGV) for the period
from 1995 to 1999. As a result of that review, in July 2001 the National
Superintendency of Tax Administration (SUNAT) notified the subsidiary via
several resolutions of assessments and fines regarding Income Tax and IGV
for the periods under review.
162
From the items mentioned, the amount not accepted and not paid
by the subsidiary concerns the Tax Administration’s pretension of applying
Final Temporary Provision Seven of Law 27034 and, therefore, to disregard,
as of 1999, the subsidiary’s right to a tax allowance for depreciation from
the increase in value as a result of the revaluation of its assets resulting
from the merger that took place in 1996, pursuant to Law 26283, even
though the subsidiary has a Legal Stability Agreement that has stabilized
its income tax system until the year 2006. The amount claimed is about
(in thousands) US$129,720.
On August 9 2001, the subsidiary commenced an arbitration proceeding
against the Ministry of Energy and Mines, representing the State of Peru,
according to the provisions of clause eight of the Legal Stability Agreement.
On August 14 2001, the Ministry of Energy and Mines expressed its
agreement to an arbitration proceeding and, subsequently, it expressed
its agreement to the make-up of the Arbitration Court, whose members
were appointed by agreement of the parties.
On November 22 2001, the Arbitration Court issued it arbitration
award whereby it declared that the subsidiary’s complaints regarding
the inapplicability of Final Temporary Provision Seven of Law 27034 were
well-founded, pursuant to the Legal Stability Agreement signed with the
State of Peru. Therefore, the Arbitration Court recognizes the subsidiary’s
right to a tax allowance for the depreciation on the increase in value from
revaluations made in previous years.
On August 1 2003, the subsidiary filed an appeal against the
Intendency Resolution. The subsidiary appealed against payment of the
above items.
By means of Note 722-2003-2H3100 of August 27 2003, Tax Administration
sent the case file of the appeal lodged by the subsidiary with the Tax Court,
after having evaluated compliance with admissibility requirements.
On September 11 2003, the subsidiary lodged a argument brief with
the Tax Court expanding the appeal. On the same date, the subsidiary
lodged an argument brief attaching evidence defending the position put
forward in the appeal.
To date, the subsidiary is waiting for a pronouncement by the Tax Court.
Management and the legal advisors of the Company and subsidiary are
of the opinion that there are solid arguments for the Tax Court to issue a
pronouncement in due time that will be favorable to the interests of the
subsidiary.
ii. On December 17 2003, the subsidiary received Assessment 012-003-
0001833, whereby the Tax Administration intends to collect (in thousands)
US$3,758 for an alleged higher Income Tax for year 1996, and (in thousands)
US$1,561 for an alleged infringement of numeral 1 of Article 178 of the Tax
Code, consisting of declaring false figures or data that influence assessment
of the income tax liability for the year 1998.
This assessment was issued in compliance with the provisions of
Intendency Resolution 1501-50000031, subject of appeal case file 5047-
2003.
To date, the subsidiary is in the process of preparing a recourse of
complaint, whose deadline for presentation expires on January 16 2004.
Management and the legal advisors of the Company and its subsidiary are
of the opinion that there are solid arguments for obtaining a result that is
favorable to the interests of the subsidiary.
Cerj S.A.
On the basis of management estimates and the legal counsel opinion,
Cerj established a provision of ThUS$232,346 of which ThUS$60,136 relates
to labor lawsuits related to overtime, unjustified layoffs and hardship pay,
ThUS$43,528 to civil lawsuits filed by former customers for interest and
penalties charged on late payments of energy bills and ThUS$128,682 to
tax lawsuits, related to collection of taxes and penalties.
SUNAT did not void its decisions as a result of the arbitration award,
so, on December 3, 2001, the subsidiary filed an appeal in the Tax Court
The Company is the defendant in other civil, tax and labor cases
amounting to ThUS$ 83,362 at December 31 2003. The company’s legal
Enersis / 2003 annual report
advisors consider that these contingencies will not have an adverse impact
on the Company.
Endesa S.A. – Parent Company
i. Court: Supreme Court of Argentina
Process number
Cause
:
:
Process status
:
Amounts involved
:
ii. Court: Arbitration Court
Process numbe
Cause
:
:
Process status
:
Amounts involved
:
2753-4000/97
Dirección Provincial de Rentas, Provincia de
Neuquén versus TGN (Transportadora de Gas
del Norte S.A.). Resolution regarding Stamp
Tax sum that eventually should be paid jointly
by TGN and ENDESA.
TGN requested a precautionary measure before
the Supreme Court of Argentina to paralyze the
proceeding filed by the Province of Neuquen,
which was accepted. Therefore the administrative
complaint proceeding is paralyzed.
ThCh$3,156,128 ($Arg 13,943,572.54) (Includes
tax, interest and fines).
N/A
On December 27, 2001, Empresa Nacional
de Electricidad S.A. was notified of an
arbitration to resolve controversies related
to insurance policy N°94.676, issued by
Compañía de Seguros Generales Consorcio
Allianz, currently AGF/Allianz Chile Compañía
de Seguros Generales S.A., in favor of Endesa,
for the construction of the Ralco Hydroelectric
Plant.
Endesa replied to the complaint sustaining
that the plaintiff is distorting the facts, omitting
information that was provided by Endesa-Chile,
altering the risks covered by the contract and is
unaware of the stipulations in the policy; that
the flood that affected the Cofferdam was an
insurable risk, included in the policy, and
therefore it should be rejected since it has no
foundation in fact or in law.
ThCh$6,531,800 (ThUS$11,000).
iii. Hqi Transelec Chile S.A. vs. Endesa.
Lawsuit Contents: Action by arbitration proceeding on the additional
usage charges for the connections of Endesa’s customers, Codelco Salvador,
since October 1, 2001, CMP (Cia. Minera del Pacifico), Emelat and Eso La
Silla, since January 1, 2002, for the usage of transmission facilities by the
plaintiff.
Transelec requests that Endesa be sentenced to pay $3,617,831,425
(US$4,955,933), which Endesa would owe it by way of additional usage
charge, for Endesa’s usage of its transmission system to supply electricity to
the abovementioned customers. Endesa states that said usage charge is not
applicable, because the sectors of the transmission system it uses to provide
such supply is within the area of influence of Endesa’s Power Stations, and
as provisioned in the Basic Usage Charge Agreement signed with Transelec,
Endesa is entitled to circulate electricity for those customers without paying
additional usage charges. Endesa also argues that the Additional Usage
Charge Agreement for said customers expired along with the validity of
the past supply agreements, and therefore a new additional usage charge
agreement should be entered into with Transelec; in the meantime, the
law should be abided by regarding the sectors contained within the area
of influence of Endesa’s Power Stations, and neither payment of additional
usage charges, nor payment of basic usage charges regarding backflow
sectors are applicable.
Process Status: On July 30, 2003, the Court pronounced sentence. The
ruling was in favor of ENDESA and completely rejected the action in all its
parts, unanimously. HQI TRANSELEC filed a complaint and dismissal recourse
in the form. ENDESA became a party arguing against the recourse, and
requested a joint hearing. The recourses were heard in Court on January
9 2004. The trial hearing is pending.
iv. Arbitration proceeding for Breach of Contract and Forced Performance
Thereof filed by Empresa Eléctrica Capullo S.A. against Endesa. Judge Mr.
Sergio Urrejola
Parties:
Plaintiff
:
Defendant :
Empresa Eléctrica Capullo S.A.
Empresa Nacional de
Electricidad S.A.
Two actions are being brought in the lawsuit:
The first, contained in the main petition, is for breach of contract,
enforced performance thereof and a subsidiary action for compensation
for damages: The arbitrator is petitioned:
1.- To declare that Endesa has not performed the contract that is the
subject of this litigation (contract dated April 1 1995 for the purchase of
electricity).
2.- Declare that Endesa must pay Capullo Ch$ 1,243,489,606, plus current
interest, by reason of payment of the purchase price for energy supplied to
Endesa from January 1998 to March 2000, inclusive, or, alternatively, the
amounts and interests determined by the arbitrator on the merits of the
case; all of this plus any VAT that might apply according to the respective
law and as determined by the arbitrator;
163
3.- As an alternative to the above two petitions, declare that Endesa should
be sentenced to pay Ch$1,243,489,606 by way of compensation for damages
caused as a result of failing to comply with said payment obligation, plus
legal interests and adjustment from the date on which the lawsuit was
filed to its actual payment, or, alternatively, the amount, adjustment and
interest determined by the Arbitrator on the merits of the case plus VAT, if,
as determined by the Arbitrator, said tax should be imposed.
The second, which is contained in the lawsuit’s first accessory petition,
is for compensation for damages due to breach of the aforementioned
contract for the sale of energy during the period from January to December
1997 and petitions that Endesa should be sentenced to pay Ch$ 170,419,646
plus legal interest and readjustment from the date on which the lawsuit
was filed to its actual payment, or, alternatively, the amount, adjustments
and interest determined by the Arbitrator on the merits of the case plus
VAT, if so considered and decreed by the Arbitrator.
Endesa contested the lawsuit, stating that it owes nothing to Capullo,
since the price stipulated in the Contract for the Sale of Energy was the
differential cost of energy determined by CDEC-SIC, and that the differential
costs for the periods in the lawsuit have not been officially determined by
CDEC-SIC, since there are differences for determining said prices that are
pending a resolution by the Ministry of Economy. It also points out that
the values determined by CDEC-SIC, which are referred to in the lawsuit, are
referential values and have not been officially approved, so the difference
consolidated financial statements
between what Endesa paid provisionally for the energy purchased from
Capullo and the amounts demanded by the latter have not been able
to be established, since one of the essential parameters for making the
comparison is missing.
Defendants
:
Empresa Nacional de Electricidad S.A.
Francisco Fernández Montero
Luis Felipe Acuña Rivas
Rene Agustín Lara Montoya
Inversiones Cirrus
Current Process status: Once the period of discussion had concluded,
the arbitrator summoned the parties to a conciliation hearing on June 5
2003, which was held. Each party presented its proposal. Awaiting for a
further summons to the parties as part of conciliation procedures.
Arbitration Proceeding Minera Los Pelambres against Endesa. San
v.
Isidro – Piuquenes Line.
Parties:
Plaintiff
:
Defendant :
Arbitrator
:
Minera Los Pelambres
Empresa Nacional de
Electricidad S.A.
Mr. Orlando Poblete Iturrate
Summary of proceedings: On October 28 1996 Endesa and Minera Los
Pelambres signed a contract for the supply of electrical power and energy.
In this contract, ENDESA promised to build several installations to provide
this supply, including a 220 kV line between the San Isidro Substation and
the Los Piuquenes Substation. According to the contract, Pelambres had an
option to purchase that line, which it exercised. The purchase was executed
on June 12 2002, by a public deed drawn up and registered by Notary Public
Raúl Undurraga Laso. This purchase contract contains several declarations
by ENDESA in the sense that the line is in perfect working order and that it
was designed and built under criteria defined in the supply contract.
Summary of proceedings: An incident occurred in Fundo La Esperanza
de Marchigue owned by the plaintiffs on August 21 1998. The lawsuit is
based on the fact that, as a result of these incidents, the defendants filed
a criminal complaint for kidnapping, which criminal complaints were
dismissed because of a lack of merit, after hearing the plaintiffs.
The plaintiffs consider that the criminal complaints that were dismissed
have caused them moral damages for which they seek the following
indemnities:
Francisco Javier Errázuriz Talavera
Francisco Javier Errázuriz Ovalle
Matías Errázuriz Ovalle
Ch$ 700,000,000.-
Ch$ 350,000,000.-
Ch$ 350,000,000.-
The total lawsuit is for Ch$ 1,400,000,000.- (US$ 2,153,846.-)
Process status: All defendants notified. Pleas for defense raised.
Plaintiff’s answer lodged. Rejoinder given. Parties summoned for
conciliation hearing, notification pending.
vii. Ordinary Proceedings for Invalidity and Other Actions filed by Sociedad
Punta de Lobos S.A. against Endesa, Celta and Chilean Treasury in the 30th
Civil Court of Santiago. Case Number 4061-2002.
164
Minera Los Pelambres considers that the declarations made by ENDESA
in the line purchase contract were not true, since the line has evidenced
several technical problems that would seem to be the result of design faults,
so it has sued ENDESA petitioning that ENDESA should be sentenced to pay
for the damages caused, which it considers to be of two types:
:
Parties
Defendants
:
Contents of lawsuit :
: Sociedad Punta de Lobos S. A.
Plaintiff
Endesa, Celta and Chilean Treasury.
On August 22 2002 Endesa and Celta were
notified of a lawsuit filed by Sociedad Punta
de Lobos S.A. in the 30th Civil Court of Santiago
against Endesa, Celta and the Chilean Treasury.
Those involving the cost of repairing the line, which it estimates to be
US$ 22,752,263.
Those arising from the decrease in equity of Minera Los Pelambres
because of having purchased a line in conditions other than those that
it could study when it opted to purchase it, which it estimates to be US$
6,486,009.
The total amount of the lawsuit is US$ 29,238,272.
Alternatively, if this lawsuit is not accepted, it sues ENDESA petitioning
that the latter should be sentenced to pay damages arising from its liability
as designer and builder of the line, which damages it estimates to be the
same as the amounts specified above.
Process status: Discussion period has been concluded. The conciliation
hearing took place. There was no conciliation. Term for presenting evidence
is running.
vi. Errázuriz Francisco Javier and Others against Empresa Nacional de
Electricidad and Others.
Suit for compensation for damages in the 24th Civil Court of Santiago.
The lawsuit petitions that the assign and transfer, or any legal
transaction by Endesa to Celta, whether for valuable consideration or not,
whose object is the real estate by nature or adhibition that makes up or
forms part of the maritime concession given to Endesa in the sector of
Punta Patache, should be declared absolutely null and void.
It also petitions the forfeiture of the maritime concession as Endesa has
committed a series of violations of the law regulating maritime concessions
that constitute grounds for forfeiture of the concession, and, therefore, all
construction built on the concession’s land must be incorporated cost-free
into the equity of the Chilean Treasury, and that Sociedad Punta de Lobos is
entitled to obtain a reward, recompense or prize amounting to 20% of the
net value of those assets for having recovered them for the Treasury.
Endesa maintains that the lawsuit is unfounded, since there has never
been any transaction by Endesa alienating the maritime concession or
the properties making up the concession to Celta; that the buildings or
improvements built by Celta on the properties of the concession have
been done in performance of a mandate given to it by its parent company
Endesa to act on its own behalf; that the plaintiff has no legal interest in
the invalidity filed, since it is not party to the concession contract.
Case Number 3622-2003.
Parties
:
Plaintiffs
: Francisco Javier Errázuriz Talavera
Francisco Javier Errázuriz Ovalle
Matías Errázuriz Ovalle
Process status: On August 28 2002, the plaintiff managed to secure
that Court decree a precautionary measure prohibiting any transactions or
Amount: There is no given amount for the litigation.
Enersis / 2003 annual report
contracts to be entered into on the maritime concession given to Endesa
and on the real estate by nature or adhibition that makes up or forms part
of said concession.
Endesa y Celta raised dilatory pleas consisting of the incompetence of the
Court to hear the case. A) With regard to the declaration of forfeiture because
it is a matter exclusively within the jurisdiction of the Ministry of National
Defense B) with regard to the declaration of invalidity, because, if there is any
contravention, the law considers another penalty to be imposed by another
authority other than the Courts, and C) with regard to the reward or prize,
because it is the exclusive prerogative of the President of the Republic.
Process status: On June 19 2003, the plaintiff sought and procured
that the Court decree a precautionary measure prohibiting transactions or
contracts to be entered into with regard to Puerto Patache and ordered the
Undersecretary for the Navy to be notified, which was done.
By a decision on July 14 2003, the Court specified the scope of the
precautionary measure decreed in the proceeding in the sense that it does
not prevent Puerto Patache from being transferred, which decision was
appealed by Punta de Lobos, since the injunctions against further petitioned
moves had been denied twice.
The Court endorsed the plea of incompetence with regard to forfeiture
and reward, but maintained its competence with regard to the invalidity
action and ordered pleas to be raised in defense against the petition.
With regard to the substance of the case, the discussion stage is over
and the evidence submission stage has concluded; on November 6 2003
the Court summoned the parties to hear the verdict.
The plaintiff appealed. Endesa and Celta also appealed.
ix. Sociedad Punta de Lobos against Chilean Treasury, Case Number 553-
2003, in 21st Civil Court of Santiago.
On September 8 2003, the Court of Appeal endorsed the appeal filed
by Punta de Lobos with regard to the plea of incompetence endorsed in
the first instance.
As a result of the above, Endesa and Celta raised pleas in defense
against the second and third petitions and then Punta de Lobos lodged its
answer; the enjoinder procedure which terminates the discussion stage to
give rise to the evidence stage is still pending.
Procedures for the petition by Endesa and Celta to have the
precautionary measure lifted continued in parallel fashion.
viii. Ordinary Proceeding for Performance of Contract Filed by Sociedad
Punta de Lobos S.A. against Endesa, Celta and Terminal Marítimo Minera
Patache S.A. in the 8th Civil Court of Santiago, Case Number 129-2003.
Parties
Plaintiff
Defendant
:
:
:
Sociedad Punta de Lobos S.A.
Chilean Treasury
Summary of Proceedings: The plaintiff petitions that Supreme Decree
139 of 2002 of the Ministry of Defense, Undersecretary for the Navy, should
be declared invalid by public law, since it was issued contravening the
provisions that the Law considers for its issuance; that the aforementioned
Supreme Decree 139 has not entered into effect in a valid fashion, and,
therefore, it cannot have any legal effect.
Decree 139 endorsed the expansion of Endesa’s Maritime Concession
for shipping salt through Puerto Patache, which was one of the conditions
stipulated in the promise of purchase/sale signed by Endesa and Celta and
Terminal Marítimo Puerto Patache S.A..
165
Parties
Plaintiff
Defendants
:
:
:
Sociedad Punta de Lobos S.A.
Empresa Nacional de Electricidad S.A.
Cía. Eléctrica Tarapacá S.A.
Terminal Marítimo Minera Patache S.A.
Process status: The Treasury was notified of the lawsuit. The plaintiff
obtained a precautionary measure to “immediately stay any effect of decree
139 of 2002 of the Ministry of Defense’s Undersecretary for the Navy, and
said agencies must refrain from performing any administrative action, or
action of any kind, that impinges on or is related to said Decree.”
Summary of proceedings: The plaintiff petitions that forced performance
of the so-called “Bidding Contract” called by Celta and in which both the
latter and Endesa, Terminal Marítimo Patache S.A. and Punta de Lobos
S.A. were involved, should be ordered; that the act whereby all the bids
submitted to Celta on occasion of the Puerto Patache bidding process were
rejected is inexistent, or alternatively absolutely invalid, or alternatively
imputable to Punta de Lobos, since it comes from exercising a right that
is only apparent and not real and is based on catering to an interest that
has not been protected by the Regulations regulating said bidding; that
the Purchase and Sale Contract of November 30 2001 between Celta and
Endesa, as selling promisors, and Terminal Marítimo Minera Patache, as
purchaser promisor, is invalid; that the intent manifested by the bidders
Endesa and Celta in the Contract of Promise of Sale/Purchase of November
30 2001, entered into with Terminal Marítimo Minera Patache S.A., was
a tacit acceptance of the bid submitted by Punta de Lobos in the Puerto
Patache bidding process.
Endesa maintains that the lawsuit is unfounded since, according to the
bidding conditions, both Endesa and Celta were fully empowered to reject
all bids submitted in the bidding process, without giving their reasons;
that there has never been any contract, not even a tacit one with Punta de
Lobos, so there are no grounds for requesting that a non-existent contract
that does not exist be performed.
After several incidences, the court accepted Endesa’s participation as
a contributory third party with the Treasury.
Amount: Undeterminable.
The discussion stage is over, in other words, the Treasury and Endesa
raised pleas in defense asking for the lawsuit to be rejected. Punta de Lobos
answered and the former two made their rejoinders, with the court order
for evidence having been issued on October 17 2003.
With regard to the precautionary measure, Endesa’s petition for it to
be declared null and void, is pending a decision.
x. Other contingencies
There are other proceedings for lesser amounts that in aggregate
amount to ThCh$2,500,013 at December 31 2003 (ThCh$ 1,914,034 in
2002).
consolidated financial statements
Endesa-Chile Subsidiaries
Pehuenche S.A.
i. Court: 20th Civil Courthouse of Santiago
Process number
Cause
Process status
Amounts involved
:
:
:
:
5863-2001
Empresa Eléctrica Pehuenche S.A. versus
Empresa Eléctrica Colbún S.A. This complaint
is for services rendered by Pehuenche S.A. to
Colbún during a drought.
Case is awaiting sentencing.
ThCh$1,187,600 (ThUS$2,000).
ii.
Actions were filed related to the payment of compensation as per
Supreme Decree N°287, dated 1999 and issued by the Ministry of Economy,
Development and Reconstruction and modification of Art. 99 bis of DFL
N°1/82 of Mining Law.
iii. Court : 24th Civil Court of Santiago
Process number
Cause
:
:
Process status
:
166
Amounts involved
:
3908-99
A precautionary prejudicial measure was
presented and denied by the Tribunal. In the
same proceeding Pehuenche presented
an ordinary public law motion to vacate against
Sociedad Austral de Electricidad S.A.
Sentence was passed on December 10, 2002.
Pehuenche has appealed the verdict and is
awaiting the decision of the Appeals Court of
Santiago.
Undeterminable.
iv. Court: 17th Civil Courthouse of Santiago
Process numbe
Cause
:
:
Process status
Amounts involved
:
:
3940-99
Pehuenche versus Chilectra S.A. A precautionary
prejudicial measure was presented and denied
by the Tribunal. Pehuenche presented in the
same case, an ordinary suit to annul public
rights against Chilectra S.A.
Summoned to hear sentence
Undeterminable.
v. Court: 20th Civil Courthouse of Santiago
Process number
Cause
:
:
Process status
Amounts involved
:
:
4005-99
A precautionary prejudicial measure was
presented and denied by the Tribunal.
Pehuenche presented in the same case, an
ordinary public law motion to vacate against
Empresa Eléctrica Atacama S.A.
Summoned to hear sentence
Undeterminable.
vi. Court: Santiago Court of Appeals
Process number
Cause
:
:
6515-99
CDEC-SIC failure to provide timely information
to the CNE. Resolution 1,557 dated October
1, 1999. The State Defense Council made itself
a party to the case.
Process status
:
Amounts involved
:
Pending hearing. CDEC-SEC report ordered
once again to hear the case.
Scheduling is pending
Five fines for a total of 1,610 Units of Tax
Measurement (“UTM”) or ThCh$47,880.
vii. Court: 5th Civil Courthouse of Santiago
Process number: 2272-99
Cause: Resolution 631 dated April 27, 1999, for not establishing Dispatch
Center before January 1, 1999. Sentenced passed but not notified.
Process status: Verdict notification pending.
Amounts involved: Fine of ThCh$14,870 (500 UTM).
x. Court : 16th Civil Courthouse of Santiago
Process number
Cause
Process status
Amounts involved
:
:
:
:
4164-97
Claim against Resolution 856, resulting in a
fine imposed on October 16, 1997, for failure
on May 11, 1997.
Rejected recourse, appeal prepared, awaiting
reopening of file.
Fine of ThCh$13,383 (450 UTM).
xi. Court: 16th Civil Courthouse of Santiago
Process number
Cause
Process status
Amounts involved
:
:
:
:
1928-98
Claim against Resolution 331 dated May 8,
1998, for failure on October 13, 1997.
Rejected recourse, pending appeal.
Fine of ThCh$8,922 (300 UTM).
xii. Authority: Superintendence of Electricity and Fuels (SEC)
Process number
Cause
Process status
Amounts involved
:
:
:
:
N/A
Reposition appeal before the SEC for Resolution
805 dated May 2, 2000 for a fine for failure on
July 14, 1999.
Pending resolution.
Fine of ThCh$142,747 (400 UTA).
xiii. Appeal for Reconsideration of Judgment before the SEC for Resolution
No. 1,429 dated August 14, 2003. Said resolution imposed a fine of UTA
1,500, for the blackout which occurred on September 23, 2002.
xiv. Court: 3rd Local Police Court of Santiago
Process number
Cause
Process status
:
:
:
Amounts involved
:
50419-AGO
SERNAC with Pehuenche, claim for lack of
electricity supply
The accusation was rejected and SERNAC
appealed. The case was tried. Decision is
pending. SERNAC’S appeal endorsed. Court
ordered 3rd Court to hear the accusation directly.
Sentence was passed and Pehuenche was
ordered to pay a fine of 50 UTM. Appeal lodged
with the Santiago Court of Appeal.
Fine of ThCh$1,487 (50 UTM).
Enersis / 2003 annual report
Empresa Eléctrica Pangue S.A.
i. Court: 1st Civil Court of Santiago
Process number
Cause
:
:
Process status
Amounts involved
:
:
1294-99
Claim against Resolution SEC 415 dated March
12, 1999 which fined Pangue for not complying
with Article 9 of rationing Decree 640, which
is to inform the SEC of normal usage of its
customers. Pangue made itself a party before
the Court of Appeals. A motion to vacate was
filed before the Supreme Court.
Case is pending to be heard.
Fine of ThCh$297 (10 UTM).
ii. Court: 1st Civil Court of Santiago
2273-99
Claim against SEC Resolution N°631 dated April
27, 1999 that fined Pangue for infraction of
Article 183 of the Regulation when it did not
build an independent Dispatch and Control
Center. Process status: On June 16, 2002, a
judgment was passed ordering a fine to be paid.
Pending official notification of judgment.
Fine of ThCh$14,870 (500 UTM).
4293-97
Claim against SEC Resolution N°856 dated
October 16, 1997, which fined for a blackout
on May 1, 1997.
On May 31, 1999, judgment was passed
ordering fine to be paid. Appeal made on
November 29, 1999 and is pending hearing.
Fine of ThCh$13,383 (450 UTM).
Process number
Cause
:
:
Amounts involved
:
iii. Court: 23rd Court
Process number
Cause
Process status
:
:
:
Amounts involved
:
iv. Court: 23rd Court
Process number
Cause
Process status
:
:
:
Amounts involved
:
Request to annul obligation to pay
compensation to regulated price users derived
from electric rationing decree N°287 issued
by the Ministry of Economy.
Judgment pronouncement pending
Undeterminable.
Process status
Amounts involved
:
:
vii. Appeal for Reconsideration of Judgment before the SEC for Resolution
No. 1.432 dated August 14, 2003. Said resolution imposed a fine of UTA
1,000, for the blackout which occurred on September 23, 2002.
viii. There are 37 administrative oppositions presented by Pangue S.A. before
the Provincial Government of Malleco, to the corresponding requests of diverse
individuals to amend water use rights in the Commune of Lonquimay.
ix. Remedy of Protection – Illustrious Municipality of Hualqui and Empresa
Eléctrica Pangue. Court of Concepción. Case Number 1.799-2002.
Parties:
Appellant
:
Respondent :
Illustrious Municipality of Hualqui,
VIII Región,
Empresa Eléctrica Pangue S.A.
Contents of Lawsuit: The Illustrious Municipality of Hualqui filed a
constitutional demand for protection against EMPRESA ELECTRICA PANGUE
S.A., claiming an illegal, arbitrary omission, which caused damages and
ravages among the population on the shores of the Bío Bío River in the
community of Hualqui, as a result of opening the floodgates in the winter of
2001, as the river rose suddenly following the rains, without prior warning.
Amount: Not quantified.
Process status: The Court of Appeal rejected the demand. The appellant
appealed to the Supreme Court. The Supreme Court upheld the decision
of the Court of Concepción.
167
Closed with favorable result for Pangue S.A.
x. Appeal of Protection Carlos Castillo Osorio and others against Empresa
Eléctrica Pangue S.A., in the Concepción Court of Appeal. Case Number
2.178-2003.
1910-98
Claim against SEC Resolution N°331 dated May 8,
1998 that fined Pangue for a blackout on
October 13, 1997. The Tribunal rejected the
recourse in its verdict dated July 30, 1999.
Appealed to the Court of Appeals and is
pending hearing.
Fine of ThCh$14,870 (500 UTM).
Parties: Appellant
:
Respondent:
Contents of appeal :
Carlos Castillo Osorio and others
Empresa Eléctrica Pangue S.A.
The appellants, all inhabitants of Hualqui,
filed a remedy of protection against
Pangue S.A. maintaining that the generating
company has systematically flooded the lands
of the inhabitants of Hualqui, due to arbitrary
handling of the dam’s floodgates. Pangue
claimed expiry of the statutory time limit and
lack of entitlement of the appellants.
Pangue obtained information about the remedy.
Data requested from government departments
is being attached.
The remedy should be rejected
as being unfounded.
v. Authority: Superintendence of Energy and Fuels (SEC)
Process number
Cause
Process status
Amounts involved
:
:
:
:
N/A
Appeal before the SEC to set aside SEC
Resolution N°740 dated April 26, 2000 which
fined Pangue for a blackout on July 14, 1999.
Decision on appeal for reconsideration of
judgment is pending.
Fine of ThCh$107,060 (300 UTA).
vi. Court: 18th Civil Court of Santiago (Chilectra)
Process number
Cause
:
:
3886-99
Ordinary public right annulment complaint.
Process status
Prognosis
:
:
xi. Remedy of Protection Junta de Vecinos Hualqui against Empresa
Eléctrica Pangue Case Number 2126-2003, Court of Concepción.
Parties: Appellant
:
Respondent:
Junta de Vecinos Hualqui and others.
Empresa Eléctrica Pangue S.A., Intendent of
Region VIII of Bio Bio.
consolidated financial statements
168
The plaintiffs filed a constitutional action against the generating
company, alleging that, on June 21 2003, it committed an illegal, arbitrary
act in handling the dam’s floodgates.
Process status: The suit was notified on December 31 2003. Since
procedures were violated in serving the notice, the Court was petitioned to
declare the notice null and void. This petition has still not been ruled on.
Pangue raised a plea in defense that the plaintiffs are not principals
of the constitutional actions, that the remedy is unintelligible, that there
is no violation of constitutional guarantees, that it is inadmissible because
the grounds or facts on which the plaintiffs base their suit are unjustified.
Process status: Information on remedy obtained by Intendent and by
Pangue S.A., steps and documents pending to hear the remedy.
xiv. Municipality of Hualqui and Pangue S.A. in Second Civil Court of
Concepción Case Number 6693-2003.
This is a summary judgment lawsuit based on Law 19.300 on the
Environment, which seeks redress and compensation for environmental
damages allegedly caused by operation of the Pangue Power Station,
especially by the flows in 2001 and 2002.
xii. Petition for Invalidity and other Actions “Aranguiz and Others and
Inversiones Ilihue S.A. and Others”, Case Number 4.663-2003 in 29th
Civil Court of Santiago
The following actions and measures of protection and mitigation are
being petitioned for redress of environmental damages:
1. Construction of a retaining wall with the following characteristics:
Contents of lawsuit: A group of minority shareholders, former workers
of Pangue S.A., filed suit against Asesorías e Inversiones Ilihue S.A., Bancard
S.A., Empresa Eléctrica Pangue S.A., Elesur S.A., Servicios Financieros S.A.
and José Cox Donoso.
The suit petitions that a series of transactions and contracts pursuant to
which these shareholders sold their shares to Ilihue S.A. and Bancard S.A.
should be declared invalid, since they are impaired by several irregularities
of consent, with compensation for damages amounting to UF. 75,557.97;
that, as a result of these invalidities, other transactions made by Servicios
Financieros S.A. should be declared null and void; that Elesur S.A. must
return Pangue S.A.’s shares acquired on June 2 2003 to the plaintiffs and
that the transactions entered into by Pangue S.A., omitting their summons
to the shareholders’ meeting, are unenforceable on the plaintiffs, and,
especially, that the agreements reached in the Shareholders’ meeting on
April 10 2003 are unenforceable.
a.
b.
c.
Rock fill on the right bank of the Bío Bío River along 2,200
meters; cost Ch$770,000,000.
Levees with about 200 meters of rock fill protection; cost
Ch$30,000,000.
Channeling of 600 meters of the Hualqui Stream; cost
Ch$120,000,000;
2. Obligation to issue a warning when the Pangue Power Station’s
floodgates are opened.
3. Compensation for damages caused, evaluated at Ch$1,000,000,000.
Current process status: Conciliation hearing held, petition was made
in the hearing to change the proceeding to ordinary law and, alternatively,
a plea was raised in defense against the suit.
Current status: Pangue S.A. was notified of the lawsuit on November
San Isidro S.A.
19 2003. Pleas were raised in defense against the suit.
i. Court: 7th Civil Court of Santiago
xiii. Petition for Invalidity and Compensation for Damages “Aránguiz and
others against Empresa Eléctrica Pangue S.A., and Empresa Nacional
de Electricidad S.A.” Case Number 8895-2003 in the 7th Civil Court of
Santiago
Process number
Cause
:
:
Parties: Plaintiffs
:
Defendants :
Aránguiz Córdoba Juan Francisco and others (all
former shareholders of Pangue S.A.)
Empresa Eléctrica Pangue S.A.
Empresa Nacional de Electricidad S.A.
Process status
Amounts involved
:
:
2195-99
Resolution No. 628 dated April 27, 1999 for
infraction of Article 183 of Supreme Decree
327, issued by the Chilean Ministry of Economy,
by not establishing the independent Dispatch
and Control Center before January 1, 1999.
Summoned to hear sentence.
Fine of ThCh$14,870 (500 UTM).
Summary of proceedings: The plaintiffs, all former shareholders of
Pangue S.A., petition that the contract signed by Pangue S.A. and Endesa
on September 25 2000, called “Establishment of Voluntary Easement”,
should be declared invalid, because, in the opinion of the plaintiffs, it suffers
from several defects that are grounds for invalidity. They assert that they
have active competency to sue because they were shareholders of Pangue
S.A. when said contract was signed. They assert that, as a result of that
contract, their shares in Pangue S.A. dropped in value, and therefore they
are suing for Ch$2,521,996,400 (US$4,424,555). They also assert that, if
said contract had not been signed, Pangue S. A. would have distributed
dividends to the plaintiffs for US$ 1,742,211.
It must be pointed out that, via the aforementioned contract, Pangue
S.A. established a voluntary easement on its water rights so as to allow the
tailwater of Endesa’s Ralco Power Station, located upstream, to use the
end part of the Pangue dam’s tailwater.
ii. Court: Superintendence of Energy and Fuels (SEC)
Process number
Cause
Process status
Amounts involved
:
:
R
:
:
N/A
Appeal to set aside before the SEC the SEC
esolution N°719 dated April 24, 2000, which
fined San Isidro ThCh$53,530 (150 UTA), for a
blackout on July 14, 1999.
Decision on appeal for reconsideration of
judgment is pending.
Fine of ThCh$53,530 (150 UTA).
iii. Appeal for reconsideration of judgment before SEC for SEC Resolution
1.428 of August 14 2003. This resolution imposed a fine on San Isidro of
ThCh$178,434 (500 UTA), for the black out on September 23 2002.
Enersis / 2003 annual report
iv. File No. 2753-4000/97
Cause: Resolution regarding Stamp Tax (includes taxes, interest and
fines), amount that eventually must be paid by TGN and Endesa, according
to gas transportation contracts signed by both companies on October 17,
1995 and February 20, 1998. Notified on March 27, 2001. Reconsideration
will be requested. TGN filed a precautionary measure with the Supreme
Court of Argentina to interrupt the procedure initiated by the Providence
of Neuquén, which was accepted, and in consequence, the administrative
claim proceeding is currently pending.
Amounts involved: ThCh$3,156,128 ($Arg13,943,572.54).
v. Cause: On June 12, 2003, an arbitration proceeding was filed were
against San Isidro and Endesa-Chile by Minera Los Pelambres in order for the
arbitrator to declare the non-fulfillment of San Isidro with the energy and
power supply contract originally signed by Endesa-Chile with Pelambres on
October 28, 1996 and which on January 26, 2000, Endesa-Chile assigned to
San Isidro, leaving it subsidiarily obligated for the obligations arising from
the contract with San Isidro. The complaint is founded on interruptions and
unavailability of electricity during 2001 and 2002, which according to the
contract are penalized with fines, which San Isidro has refused to pay.
Process status: Evidence issues set and term for presenting evidence
is running.
Amounts involved: ThCh$1,589,745 (US$2,677,241) plus the
readjustment established in the contract and common interest up to the
date of the effective payment.
also requests that the concession be taken
away from Endesa-Chile due to alleged violations
of the laws that regulate marine concessions,
and that all assets constructed on the concession
lands be converted to property of the
Government. Endesa-Chile contends that the
plaintiff lacks a legal interest in its claim due to
the fact that it is not a party to the
concession contract.
On August 28, 2002 the Tribunal declared as a
precautionary measure the prohibition to take
action or execute contracts in respect to the
marine concession granted to Endesa-Chile and
in respect to the real estate which by nature
composes or forms part of that concession.
Process status
:
On September 8, 2003, the Court of Appeals accepted the recourse of
appeal filed by Punta de Lobos regarding the exception of in competence
accepted in first instance.
As a result of the above, Endesa and Celta defended the suit regarding
the second and third claims to which Punta de Lobos replied, and the
rejoinder proceeding is still pending which ends the discussion stage and
commences the evidence stage.
Similarly, the request by Endesa and Celta for the lifting of the
precautionary measures continued.
Amounts involved: Undeterminable.
Compañía Eléctrica de Tarapacá S.A.
iv. Court: 12th Civil Court of Santiago
169
i. Court: Superintendence of Energy and Fuels (SEC)
Process number
Cause
:
:
Process number
Cause
Process status
Amounts involved
:
:
:
Official Letter 4966
Formulation of SEC charges, dated August 3,
2000 for SING blackout on September 23,
1999.
Pending SEC Resolution.
Undeterminable.
ii. Court: 20th Civil Court of Santiago
Process number
Cause
Process status
:
:
:
Amounts involved
:
2760-2000
Verification of Credit in Inmobiliaria La
Cascada Agreement.
Report No. 1 was received from the Liquidating
Commission. A first distribution of funds from
the sale of goods took place; Celta received
ThCh$60,557.
ThCh$203,718.
Process Status
:
iii. Court: 30th Civil Court of Santiago
Amounts involved
:
5237-2002
Lawsuit against Empresas Eléctricas del
Norte Grande S.A. (EDELNOR et al, including
Celta) for reimbursement of compensation paid
by the electrical distributors Empresa Eléctrica
de Arica S.A., Empresa Eléctrica de Iquique
S.A. and Empresa Eléctrica de Antofagasta S.A.,
to their customers due to the blackout on
July 25, 1999 of the Sistema Interconectado
del Norte Grande (SING). The complaint is
directed against EDELNOR, Electroandina,
Norgener, AES Gener and Celta to jointly
reimburse the electrical distributors for the
sums paid to end users in compensation for
unsupplied energy.
The discussion period ended. On August 19,
2003, the Court issued a resolution that
admitted the evidence and set the evidence
issues. It is in the evidence stage, pending
notice.
ThCh$64,269 (US$91,378)
Process number
Cause
:
:
4061-2002
Lawsuit for annulment and other actions
filed by Sociedad Punta de Lobos S.A. against
Endesa-Chile, Celta and the Chilean Government.
The complaint requests that any attempted
assignment, transfer, or any legal action
presented by Endesa-Chile to Celta be rejected
with respect to the marine concession granted to
Endesa-Chile in the Punta Patache sector. It
v. Court: 8th Civil Court of Santiago.
Process number
Cause
:
:
129-2003
Lawsuit brought against Endesa S.A., Celta S.A.
and Terminal Marítimo Minera Patache S.A.
by Sociedad Punta de Lobos S.A. regarding the
rejection of its offer for the concession to
operate the Minera Patache sea terminal,
which Punta de Lobos S.A. considers a breach
consolidated financial statements
of contract.
Endesa S.A. maintains that no such contractual
obligations regarding the concession exists.
In discussion.
Undeterminable.
Process status
Amounts involved
:
:
On July 14, 2003, the Court issued a resolution that specified the scope
of the precautionary measures pronounced in the trial, stating it does not
prevent the transfer of Puerto Patache. Said resolution was appealed by
Punta de Lobos, and the requested injunction to preserve the status quo
was denied twice.
In the background, the discussion stage and the period to submit
evidence have ended. On November 6 2003, the court summoned the
parties to hear the verdict.
vi. Court: 21th Civil Court of Santiago.
Plaintiff
Defendant
Cause
:
:
:
Process status
:
170
Sociedad Punta de Lobos S.A.
Chilean Treasury
The plaintiff requests that decree 139 is filed.
This decree accepted extension of Endesa’s
Marine Concession for shipping salt via Puerto
Patache, which was one of the conditions
established in the promise of sale that Endesa
and Celta signed with Terminal Marítimo Puerto
Patache S.A. Therefore, if the lawsuit is
accepted, said operation would be at risk.
The plaintiff obtained a precautionary measure
for “immediate suspension of the decree.
Endesa and Celta are parties in the lawsuit.
The discussion stage has ended, that is, the IRS
and Endesa defended the suit requesting
its denial, Punta de Lobos replied, and IRS
and Endesa replied to the counterclaim, and
a writ of evidence was issued on October 17,
2003, therefore after the presented
reconsiderations are resolved, the trial stage
will begin.
As regards to the precautionary measures, Endesa’s request to set
them aside is still pending
Amounts involved
:
Undetermined.
Hidroeléctrica El Chocón S.A.
Federal Public Revenues Administration - General Tax Services (FPRA-
i.
GTS)
On December 28, 2000 the Federal Public Revenues Administration
- General Tax Services (FPRA-GTS) notified Hidroeléctrica El Chocon S.A. that
it owed ThCh$352,055 of taxes related to failure to withhold income tax on
certain payments made abroad for a bank loan obtained in 1994. It was also
determined that Hidroeléctrica El Chocón S.A. must pay ThCh$799,868 for
related accrued interest calculated as of December 20, 2000. Hidroeléctrica
El Chocón S.A. did not make these payments as it considered them relating
to foreign source income and therefore not subject to taxes. Hidroelectrica
El Chocon S.A. entered a plea in which it objected to payment of the taxes.
FPRA-GTS has also fined Hidroeléctrica El Chocón S.A. ThCh$246,438 which
Hidroeléctrica El Chocón S.A appealed by on February 20, 2001.
On December 28, 2000 Hidroeléctrica El Chocón S.A. was notified
that it owed accrued interest related to value-added-tax for the year from
December 1993 to July 1995 amounting to ThCh$159,302 as of December
11, 2000, as well as an imposed fine of ThCh$210.111. On February 20,
2001 Hidroeléctrica El Chocón S.A. filed an appeal with the courts under the
premise that Chilean law does not require payment of fines, including accrued
interest, for obligations or infractions committed before July 31, 1995. On
February 20 2001 the Company filed an appeal in the Nation’s Tax Court.
ii. Royalties
On June 26, 2000, Hidroeléctrica El Chocón S.A. was notified of a
lawsuit for interest to be paid related to royalties, initially amounting to
ThCh$356,290. Additionally, on September 27, 2000, the Company was
notified of a new complaint from the province of Neuquén against the
State and hydroelectric generators of Comahue to obtain royalties earned
on accumulated funds in the Salex Account. The complaint does not state
the precise amount or date as of which the sums claimed are considered
as owed, but seeks charges from each generator equal to 12% of the funds
contributed to the account.
iii. Provincial Revenue Department of the Province of Buenos Aires
On September 10 2001 the Company received a notice from the
Provincial Revenue Department of the Province of Buenos Aires of an official
assessment of ThCh$ 347,567 (which does not include interests or fines)
for tax on gross income from tax periods from February 1995 to December
1998. The differences claimed are due to: a) failure to pay tax in the Province
of Buenos Aires from February 1995 to June 1996 on contracts entered into
by the Company, and b) the use of a lower rate than should have been
applied, according to the Treasury. On October 25 2001, the Company
included a debt of ThCh$ 128,906 in the easy payment system provided for
in Law 12.727. On December 28 2001, the Provincial Revenue Department
notified the Company of Resolution 655/01, which (i) determined that the
Company had a tax shortfall of ThCh$197,389 for tax on gross income during
the tax periods from February to December 1995, January to December
1996, January to December 1997 and January to December 1998; and (ii)
imposed a fine on the Company of ten percent of the amount that allegedly
was not paid. On January 22 2002, the Company filed an appeal asserting
that the amount included in the extended period payment system had not
been computed and the reasons why the rate specified by the Provincial
Revenue Department should not be applied.
The Management of Hidroeléctrica El Chocón S.A., as well as its legal
advisors, are of the opinion that the claims made by the aforementioned
tax authorities are unfounded, so these issues will probably not give rise to
any significant adverse effect on the Company’s equity and results recorded
at December 31 2003.
Hidroinvest S.A.
On December 27, 2000 Hidroinvest S.A. was notified that it owed
tax of ThCh$782,157 for gains made in 1993 on the difference between
the acquisition cost and transfer price of bonds, accrued interest of
ThCh$1,682,419 and related fines of ThCh$547,510. On February 19, 2001,
Hidroinvest S.A. filed an appeal against the notice. On September 12 2002,
Hidroinvest S.A. was notified of the registration of the General Property
Restraining Order on the Company’s properties as part of a precautionary
procedure commenced by AFIP-DGI pursuant to the provisions of article
111 of law 11.683, as a result of the obligation to pay the above amounts.
An appeal was filed against the resolution that decided the admissibility
Enersis / 2003 annual report
of the precautionary measure, and this was granted on November 25
2002. Likewise, on July 10 2003, the Nation’s Tax Court issued a decision
confirming the precautionary measure and Hidroinvest S.A. was notified
on December 29 2003.
Hidroinvest S.A.’s legal advisors are of the opinion that these issues will
probably not result in any significant negative impact on the Company’s
equity and results at December 31 2003
Central Costanera S.A.
Central Costanera S.A. has a debt obligation corresponding to an
agreement related to Work Order No. 4322 (the “Agreement”). Central
Costanera S.A. has fixed the obligation at the rate of one peso equal to
one US dollar in accordance with applicable laws. However, certain laws
have excluded several obligations from this fixed exchange rate, and should
the Secretary of Energy rule that the obligations of Central Costanera S.A
be excluded, an appeal would be filed.
Central Costanera S.A. considers that the obligation resulting from the
Agreement does not dovetail with any of the hypotheses provided for in
the aforementioned decree and, even in the event that it was understood
to do so, there are solid grounds for deciding the unconstitutionality of the
aforementioned decree.
In November 2002, the Tax Court issued its decision stating that: (i) SUNAT
will have to review and make a new pronouncement considering the provisions
of the Arbitration Award of April 22 2002, which was favorable to Edegel S.A.,
and which involves deducting the depreciation due to revaluation of the fixed
assets and (ii) decided against it in other issues brought by SUNAT.
On July 9 2003, Edegel S.A. was notified by the National
Superintendency of Tax Administration (SUNAT) of Intendency Resolution
1501–150032 regarding its review of the tax notes required by the Tax
Court for years 1996 to 1999. The total amount of the new tax note is
about US$160 million, mainly arising from: (i) non-recognition of the
revaluation of Edegel S.A.’s fixed assets and, consequently, non-deduction
of their respective depreciation, (ii) non-deduction of interest and exchange
rate difference on loans related to the purchase of Lajas Holding’s shares,
since they are not associated with generation of taxable income and
(iii) capitalization of overheads associated with fixed assets (“taxes on
expenses”). On August 1 2003, the company filed an appeal in the Tax
Court, whose decision to date is still pending.
It has to be mentioned that management estimated and recorded a
provision for contingencies of about US$16.5 million at December 31 2003
(about US$16.1 million at December 31 2002) for all those items mentioned
in the resolution referred to in the previous paragraph and appealed in the
tax court, which, in the opinion of its tax advisors, has very little chance of
success (points (ii) and (iii) above).
Edegel S.A.
i.
Edegel / SUNAT
From November 2000 to October 2001, tax authorities reviewed the
Subsidiary’s income tax and general sales tax (IGV) for the period from
1995 to 1999. As a result of that review, in December 2001 the National
Superintendency of Tax Administration (SUNAT) notified the subsidiary of
its comments via several Resolutions of Assessments and Fines regarding
Income Tax and IGV for the periods under review.
From the items mentioned, the amount not accepted and not paid
by the subsidiary mainly concerns the Tax Administration’s desire to apply
Final Temporary Provision Seven of Law 27034 and, therefore, to disregard,
as of 1999, the subsidiary’s right to a tax allowance for the depreciation
from the increased value attributed as a result of the revaluation of its
assets resulting from the purchase of the subsidiary 1995, pursuant to
Law 26283, even though the subsidiary has a Legal Stability Agreement
that has stabilized its income tax system until the year 2005, as has been
mentioned in Note 8(a). The total estimated amount claimed is about
Th$61,550,412 (MUS$84,804).
On February 11 2002, the subsidiary commenced an arbitration
proceeding against the State of Peru, represented by CONITE, according
to the provisions of clause eight of the Legal Stability Agreement. On
April 22 2002, the Arbitration Court issued it arbitration award whereby
it declared that the subsidiary’s complaints regarding the inapplicability
of Final Temporary Provision Seven of Law 27034 were well-founded,
pursuant to the Legal Stability Agreement signed with the State of Peru.
Therefore, the Arbitration Court recognized the subsidiary’s right to deduct
the depreciation from the increased value assigned by revaluations made
in previous years, from the income tax base.
In spite of the award, the litigious tax proceeding continued, so, on
July 12 2002, the subsidiary filed an appeal in the Tax Court against the
resolutions of assessment and fines regarding income tax (years 1996,
1997, 1998 and 1999).
On April 28 2003 the company filed rectifying tax returns of its sworn
annual income tax returns for years 2000 and 2001 – pending inspection
and review – adopting the criterion of the most recent Intendency
Resolution regarding the interests and exchange rate difference on loans
linked to the purchase of Lajas Holding’s shares and the tax on expenses
and SUNAT’s original criterion regarding the economic life of the assets.
As a result, it made an additional payment of S/21,196,000 (equivalent to
US$6,056,000 and Ch$3,600 million) charging it to the provision referred
to in the previous paragraph.
171
Similarly, on November 14 2003 the company presented a
partial discontinuance of the appeal filed in the Tax Court against the
aforementioned Intendency Resolution, in order to avail itself of the Special
System for Updating and Paying Tax Debts – SEAP – approved by Statutory
Decree 914, accepting all the objections made by SUNAT except for the
objection due to non-recognition of the depreciation of the revaluation
excess by applying Clause Eight of the Tax Code and the objection for non-
deduction of expenses related to the Olympic project. The amount paid was
about US$ 14,290,000, which settled all unpaid tax in the years 1996 to
1999, charging it to the provision for contingencies referred to above. The
Company’s management and its external legal advisors are of the opinion
that the result of this dispute will be favorable to the Company.
Furthermore, the sworn annual tax return for the year 2002 (submitted
on April 2 2003) and the calculation of income tax accrued in 2003 have
already taken SUNAT’S criteria regarding tax on expenses and on interest
and exchange rate difference on loans linked to the purchase of Lajas
Holding’s shares and SUNAT’S original criterion regarding the economic
life of the assets when determining taxable income, so the Company’s
Management and its legal advisors are of the opinion that the result of
the review of 2000 to 2003 will not result in additional liabilities for the
Company at December 31 2003.
ii. Lawsuits filed by ESSALUD for payment of contributions of Statutory
Decrees 22482, 19990 and 18846 amounting to THCh$3,055,250 (US$4.21
million). Management and its legal advisors are of the opinion that a favorable
consolidated financial statements
decision will probably be obtained for the Subsidiary, so no liabilities have
been recorded for these items at December 31 2003 and 2002.
On December 26 2003, the judge granted a stay to the appeal for
reconsideration of judgment filed by CELG, accepting the offer of collateral
made by CELG.
iii. Resolutions of Assessment and Fine for ThCh$421,687 (MUS$581) issued
against Talleres Moyopampa S.A., against which the subsidiary has filed
the respective complaints and appeals since it was formed by the division
of the above company. These complaints and appeals, are pending a final
decision by the Tax Administration. Management and its external legal
advisors are of the opinion that these actions, individually or collectively,
will not have any significant negative effect on the Company’s financial
position or its operating results or its liquidity, since it is clear from the
terms of the agreement signed with Electrolima and the State of Peru that
Electrolima is the company bound to pay the taxes.
iv. Lawsuit filed by the Subsidiary’s workers union petitioning that the
percentage of participation in the profits, which the Law stipulates as 5
percent, should be increased to 10 percent, thereby doubling the payment in
this regard in 1994, 1995 and 1996 by about ThCh$3,387,291 (ThUS$4,667).
The appealable judgment was pronounced on August 24 2000, declaring
that the lawsuit was unfounded.
In a decision dated December 12 2000 (notified on November 13
2001), the Second Division of Lima’s Supreme Court voided the appealable
judgment which declared the lawsuit unfounded. The subsidiary filed an
appeal for annulment against that decision, which was not admitted, so the
case will return to the Court for a new ruling. Management and its external
legal advisors are of the opinion that the final decision will be favorable
to the subsidiary and no liabilities for these items have been recorded at
December 31 2003 and 2002.
172
Central Cachoeira Dourada S.A.
In April 2003, Companhia Elétrica do Estado de Goiás S.A. (“CELG”),
the sole customers the Company’s Brazilian subsidiary, Cachoeira Dourada,
obtained an interim order that allowed CELG to suspend payments in respect
to a firm contract for long-term purchase of energy it has with Cachoeira
Dourada. On July 4, 2003, the Court presiding over this dispute determined
that CELG had to make payments to Cachoeira Dourada until the final
resolution of the litigation with price ranges inferior to those of R$61.63
per MWh, amounts included in the current purchase contract. Cachoeira
Dourada has decided to appeal this decision.
On July 23, 2003, the Regional Federal Court of the 1st Region has
decided in favor of Cachoeira Dourada finding that CELG must pay the
entire amount owed.
On July 29, 2003, the ruling was reconsidered and the previous decision
was maintained which compels CELG to pay R$31.00 per MWh to CDSA;
this is currently in force.
On August 18, 2003, the Judge approved the holding of a settlement
hearing between CDSA and CELG on September 04, 2003, but no agreement
was reached. A technical evaluation has been ruled on that is in progress.
On December 19 2003, a temporary measure was granted to determine
that CELG should admit into the proceeding the difference between the
value paid to CDSA and the value stipulated in the contract.
On December 23 2003, CELG filed an appeal for reconsideration of
judgment.
Compañía de Interconección Energética (CIEN)
In January 2003, Companhia Paranaense de Energía – COPEL (“Copel”)
suspended its payments to Companhia de Interconexão Energética (CIEN),
in respect of the firm contract for purchase of energy and power, which was
signed in 1999. In addition CIEN sells energy to another three Brazilian
companies. Copel cited the economic and financial imbalance of the 1999
contracts as the reason for its violation. In addition Copel has requested
a review of the previously agreed upon prices.
On August 18, 2003, CIEN and COPEL reached an agreement and
signed a “Memorandum of Understanding” that reflects the renegotiation
of Agreements 001/99 and 002/99.
Said agreement will be the basis for the contractual additions to be
signed, and essentially determines the following: (i) a reduction in the
Agreements signed that modifies the agreed amounts from 400 MW to
200 MW each; (ii) a term of seven (7) years for the additions, starting on
January 1, 2003, and ending on December 31, 2009; (iii) CIEN’s taking on
the portion that refers to the CUST for the introduction of energy in the
basic network up to the center of gravity; (iv) the reference annual payment
flow, which will be paid in monthly portions of the payable invoices; and
(v) new conditions for price adjustment.
The Memorandum of Understanding establishes that the
Commercialization Agreement signed by the parties on December 13,
1999, should be canceled by mutual settlement.
In December 2003 supplementary or additional agreements between
investee Cien and Brazilian company COPEL, pursuant to which the original
contracts between both companies were amended, were signed. As a direct
result of the signing of these additional agreements, 203 million reales
were immediately paid to Cien by COPEL.
Emgesa S.A.
Environmental contingency – Group action against Emgesa S.A. E.S.P.,
Empresa de Energía de Bogotá S.A. E.S.P. and CAR for alleged material and
moral damages caused by the environmental damage that occurred in the
Muña reservoir. The plaintiff’s initial claim is for ThCh$890,700,000. The
Company’s Management and its legal advisors consider that, if the decision
goes against the company, the maximum amount of the claim would be
ThCh$35,564,000, which should be assumed by the three entities being
sued. However, the Company’s legal advisor considers this contingency
to be remote.
Enersis S.A. and its subsidiaries are defendants or plaintiffs in other
minor lawsuits with probable or reasonably possible risk of loss, but whose
individual effects, if the decision is unfavorable, are not significant in these
consolidated financial statements.
Restrictions:
Enersis S.A.
The Company’s loan agreements establish an obligation to comply
with the following financial ratios, on a consolidated level:
Enersis / 2003 annual report
• Enersis’s ratio between debt and cash flow for four quarters and that
Pangue S.A.
of its Chilean subsidiaries did not exceed 8.75x;
• The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 5.0x;
• The ratio of Enersis and its Chilean subsidiaries cash flow to financial
expenses for four quarters, not less than 1.25x;
• The ratio of consolidated debt to shareholders’ equity plus minority
interest not exceeding 80%;
• Assets corresponding to companies whose business is regulated, is
not to be less than 50% of the total consolidated assets.
• Minimum shareholders’ equity at least equal to ThCh$ 456,840,000
(U.F.27 million)
As of December 31, 2003 all these obligations have been met.
The following is a summary of the main obligations, which Empresa
Eléctrica Pangue S.A. must comply with as per agreements with financial
institutions.
• Maintain creditors duly informed regarding its financial situation.
• Different conditions with the objective of guaranteeing a healthy
financial situation. Thus, the institutions have defined certain indexes
such as restrictions for the payment of dividends and indebtedness,
and acceleration clauses. In regard to the long-term debt limit for
loans in cash, for these events, the limit is 2.0 times shareholders’
equity.
Insure and maintain insured all assets.
•
Chilectra S.A.
As of December 31, 2003 all these obligations have been met.
The Company did not have any management restrictions or financial
Central Costanera S.A.
covenants during the years ended December 31, 2002 and 2003.
The Company holds long-term energy purchase contracts with Endesa,
Gener S.A., Pangue S.A., Colbún Machicura S.A., Carbomet Energía S.A.,
Empresa Eléctrica Puyehue S.A. (formerly Pilmaiquén), Sociedad Canalistas
del Maipo and Iberoamerica de Energía IBENER S.A., the terms of which extend
to beyond 2003, in order to ensure its supply and corresponding cost.
Endesa S.A.
On a consolidated level, Endesa must comply with financial covenants
and requirements derived from loan agreements with financial institutions,
among which are the following:
• Endesa’s ratio between debt and cash flow for four quarters and that
of its Chilean subsidiaries did not exceed 9.5x;
• The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 6.75x;
• The ratio of Endesa Chile and its Chilean subsidiaries cash flow to
financial expenses for four quarters, not less than 1.5x;
• The ratio of consolidated debt to shareholders’ equity plus minority
interest not exceeding 115%;
• Assets corresponding to companies whose business is regulated, is
In virtue of the arrangement in Annex VI-A of the “Concurso Público
Internacional para la Venta de las Acciones de Central Costanera Sociedad
Anónima” (International Public Tender for the Sale of shares of Central
Costanera Sociedad Anonima), the domain of Central Costanera S.A.’s
land was transferred subject to the condition that it used as the location
for an electric power plant for a term of twenty five years as of the date
of possession.
If under any circumstance whatsoever the land ceases to be used for
than purpose during the indicated year, its domain shall be considered
revoked due to this cause, and return of such title will be effective
immediately, and as a matter of law, to SEGBA S.A. or, as applicable, to
the National State.
173
The most demanding requirements in respect to financial coefficients
are those contained in the Syndicated loan, the Agent of which is Bank of
America, and in the bilateral with JP Morgan, which are the following:
• The long-term debt with third parties cannot exceed US$347 million;
the debt with a maximum of 30 days cannot exceed US$10 million.
• Clauses that restrict change of Control;
• Clauses
restrict payments
that
to
shareholders,
including
not to be less than 50% of the total consolidated assets.
subordination of the related debt.
• Minimum shareholders’ equity at least equal to ThCh$ 761,400,000
(U.F.45 million)
Edegel S.A.
As of December 31, 2003 all these obligations have been met.
Financial indicators originated by credit contracts, Bonds Program and
Short-term instruments:
Pehuenche S.A.
The Santander Investment Bank Ltd. and the Chase Manhattan Bank
N.A., in relation to loans granted to the Company, place obligations
and restrictions on Pehuenche S.A., some of which are of a financial
nature, such as: long-term financial liabilities not exceeding 1.5 times the
shareholders’ equity, and a minimum company equity of ThCh$160,740,000
(UF9,500,000).
As of December 31, 2003 all these obligations have been met.
• Net Shareholders’ Equity must not be less than Soles 2,400 million,
inflation-indexed.
• Debt ratio no greater than 1.5
• EBITDA/twelve month interest expense no less than 4.5 to 1.5
• Financial Debt no greater than 3.0 to 1.0.
• Net Liabilities (Liabilities-Cash) no greater than 0.55 to 1.0.
consolidated financial statements
Hidroeléctrica Betania S.A.
Covenants include limitations on the payment of related debt and
limitations on change in control and the following financial ratios:
• EBITDA/Senior Financial Debt no less than 1.4
• Cash Flows before Dividend Payments/Senior Financial Debt no less
than 1.3
• Shareholders’ Equity/Senior Debt no less than 5.
Other restrictions
i. As a common and habitual practice for some bank loan debts and
also in capital markets, a substantial portion of Enersis S.A.’s financial
indebtedness is subject to cross-failure provisions. Some failures of relevant
subsidiaries, if not corrected in time (as to those specific provisions allowing
a year of time to correct the problem), might result in the cross-failure
at the Endesa-Chile and Enersis S.A. level., and, in this case, significant
percent of Enersis S.A.’s consolidated liabilities might eventually become
on demand.
There are no longer debt covenants that specify the acceleration of
maturities, if the Company’s risk-rating falls below investment-grade.
The syndicated loan signed during May 2003 specifies that cash
obtained from the sale of Company assets, capital increases, new debt
issuances, and at least 75% of excess annual cash is to be used to pre-pay
the syndicated loan.
At December 31, 2002 and 2003, these obligations and restrictions
have been fully met.
ii. Endesa Chile has Compañía Eléctrica Tarapacá S.A., Pangue S.A., Endesa
Chile Internacional S.A. and Pehuenche S.A. as joint sureties through joint
securities and debts for the full amounts owed from the syndicated loan,
in other words, ThUS$742,857.
31. sureties obtained from third parties
Enersis S.A.
Endesa S.A.
The Company has received certificates of deposit for ThCh$228,082 at
December 31 2003 (ThCh$256,000 in 2002).
174
Chilectra S.A.
The Company has received performance bonds from contractors
and third parties to guarantee jobs and construction (mainly the Ralco
Project), for ThCh$19,465,542 as of December 31, 2003 (ThCh$25,047,366
in 2002).
The Company presents among its current liabilities, deposits received
in cash for the use of temporary connections by customers of the company
for ThCh$45,378 and ThCh$48,129 at December 31, 2002 and 2003,
respectively.
San Isidro S.A.
Documents in guarantee received for ThCh$1,389,669 as of December
31, 2003 (ThCh$4,723,754 in 2002).
Inmobiliaria Manso de Velasco Ltda.
Compañía Eléctrica de Tarapacá S.A.
The Company has received guarantees from third parties to guarantee
obligations incurred in the acquisition of assets of ThCh$3,084,700 as of
December 31, 2003.
The Company has received documents in guarantee for ThCh$287,026
as of December 31, 2003 (ThCh$289,896 in 2002).
Compañía Americana de Multiservicios Ltda..
The Company has delivered bank bonds for ThCh$855,496
(ThCh$742,219 in 2002) and has received bank bonds for ThCh$2,090,246
(ThCh$1,526,984 in 2002).
Pangue S.A.
The Company has received documents in guarantee for ThCh$9,827
as of December 31, 2003 (ThCh$ 8,968 in 2002).
Enersis / 2003 annual report
32. foreign currencies
As of December 31, 2002 and 2003, foreign currency denominated assets and liabilities are as follows:
a. Current assets
Account
Cash
Time deposits
Marketable securities
Accounts receivable, net
Notes receivable
Other receivables
Amounts due from related companies
Inventories, net
Income taxes recoverable
Prepaid expenses and other
Deferred income taxes
Other current assets
Currency
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
$ Arg.
Reales
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
US$
$ Col.
$ Arg.
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
U.C.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
2002
ThCh$
5,788,827
2,160,583
46,450
329
12,523,238
1,286,336
4,511,726
22,349,238
75,905,747
31,897,980
4,905,424
9,507,348
24,866,664
4,870
1,276,716
277,137
-
6,671,078
106,088,706
6,806,024
80,422,109
36,122,348
42,594,258
184,723,598
-
2,146,369
1,119,350
25,278
1,891,665
58,223
11,961,868
3,447,244
14,525,588
10,566,901
1,269,043
20,403,806
1,171,184
1,918,671
186,040,780
173,464
504,558
4,569,218
4,146,132
35,710,977
8,953,589
12,659,809
1,977,870
1,684,235
27,797,051
478,455
231,921
10,850,700
15,622,209
937,491
2,595,712
125,461
558,892
484,120
3,041,002
20,359,733
1,162,684
7,504,259
13,931,972
700,230
43,563,049
38,528,887
897,084
404,514
3,031,489
46,216,571
As of December 31,
2003
ThCh$
4,366,271
1,026,270
-
-
7,929,796
1,020,537
4,122,947
7,904,411
146,982,431
63,307,495
1,748,487
4,410,142
39,806,051
4,871
2,830,725
231,125
8,089,020
1,046,341
101,858,793
6,775,774
84,202,512
28,841,723
43,692,757
200,752,465
4,517,969
1,300,807
632,141
22,796
1,888,914
39,902,763
9,696,238
1,302,969
19,761,136
5,246,655
953,696
16,323,724
1,007,085
5,680,924
3,250,576
34,433
126,193
5,153,416
2,814,583
28,788,239
4,333,120
9,048,884
1,607,923
530,028
34,170,548
588,720
743,820
4,690,838
21,092,412
1,097,393
1,494,553
213,159
246,320
777,746
12,623,323
34,416,516
3,319,951
9,123,931
22,599,374
798,303
45,432,597
10,626,857
-
1,366,258
2,207,110
13,497,657
175
Total current assets
1,226,686,042
1,146,003,542
consolidated financial statements
b. Property, plant and equipment
Account
Land
Building, infrastructure and work in progress
Machinery and equipment
Other plant and equipment
Technical appraisal
Accumulated depreciation
Currency
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
As of December 31,
2002
ThCh$
41,866,427
34,478,422
10,312,312
10,039,567
34,507,107
3,788,311,757
3,291,744,168
1,188,708,130
1,660,123,728
1,809,638,780
55,812,812
15,630,227
461,991,240
788,901,749
675,806,060
120,590,946
4,140,014
60,548,176
163,453,511
191,476,826
31,777,948
74,140,072
511,049,848
136,684,807
(1,591,311,321)
(716,220,943)
(984,492,558)
(1,225,841,949)
(665,615,098)
2003
ThCh$
40,758,597
28,423,186
8,459,010
8,214,593
29,598,398
3,451,715,480
2,697,689,287
997,026,075
1,389,142,982
1,518,362,373
52,033,499
21,958,804
379,000,445
649,667,638
659,576,270
124,216,778
9,241,536
35,393,490
119,315,444
59,922,446
28,879,432
60,656,670
418,108,337
111,826,791
(1,563,199,720)
(673,389,749)
(838,391,706)
(946,081,154)
(781,764,722)
Total property, plant and equipment
9,978,252,765
8,096,360,510
176
c. Other assets
Account
Investments in related companies
Investments in other companies
Goodwill, net
Negative goodwill, net
Long-term accounts receivable
Amounts due from related companies
Other assets
As of December 31,
Currency
$ no Reaj.
US$
Euro
$ Arg.
$ no Reaj.
$ Col.
Soles
Reales
$ no Reaj.
US$
$ Col.
$ no Reaj.
US$
$ Col.
Soles
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
U.C.
$ no Reaj.
US$
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
2002
ThCh$
114,086,546
81,494,725
484,792
39,736
2,244,620
158,725,075
12,394
79,373
797,946,141
7,044,625
50,997,868
(143,085)
(617,459)
(28,928,256)
(66,435,880)
1,537,677
2,069,969
7,209,126
6,617,950
1,762,125
2,119,167
104,670,530
1,122,474
890,930
-
16,219
2,991,117
93,804,042
23,322,875
39,084,349
4,660,955
8,988,891
115,021,202
2003
ThCh$
105,437,088
74,731,322
-
43,061
2,284,059
131,045,129
8,235
122,874
737,589,708
5,374,677
37,432,833
(16,666,302)
(13,188,948)
(4,560,106)
(44,819,276)
3,490,210
1,906,343
4,548,181
7,623,915
2,051,708
2,443,258
105,871,429
-
594,249
128,354,145
155,439
5,293,263
62,381,600
20,721,449
24,755,128
3,461,991
16,164,285
85,731,968
Total other assets
1,532,920,813
1,490,382,915
Enersis / 2003 annual report
d. Total assets
Account
Total assets by currency
Total assets by currency
e. Current liabilities
Currency
2002
2003
As of December 31,
$ Reaj.
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
$ Arg.
Reales
U.C.
11,958,325
3,714,225,344
436,334,935
531,242
329
3,081,845,735
1,255,357,445
1,494,149,709
2,741,162,898
2,293,658
55,048,849
3,294,744,008
395,463,122
-
-
2,524,798,080
1,008,687,186
1,323,762,429
2,129,236,208
1,007,085
12,737,859,620
10,732,746,967
Account
Currency
Within 90 days
91 day to 1 year
As of December 31, 2002
Amount
ThCh$
Average Rate
As of December 31, 2003
Amount
ThCh$
Average Rate
As of December 31, 2002
Amount
ThCh$
Average Rate
As of December 31, 2003
Amount
ThCh$
Average Rate
Short-term debt due to banks and financial
institutions
Current portion of long-term debt due to
banks and financial institutions
Promissory notes
Current portion of bonds payable
Current portion of long-term notes payable
Dividends payable
Accounts payable
$ no Reaj.
US$
Euro
$ Col.
Soles
$ Arg.
Reales
Others
$ Reaj.
US$
Euro
Yen
$ Col.
$ Arg.
Reales
U.P.
Libra
Others
$ Reaj.
Soles
$ Reaj.
US$
Euro
$ Col.
Soles
US$
$ Arg.
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
Others
$ no Reaj.
US$
Euro
$ Col.
Soles
$ Arg.
Reales
Others
61,450,630
114,803,536
4,588,211
7,678,923
37,562,298
16,417,063
8,833,410
-
316,182
210,008,448
-
39,583,181
-
1,379,521
2,158,075
-
-
-
123,350
5,659,198
-
3,303,376
-
-
1,173,050
30,053,579
-
432,729
8,368,039
18,714
-
-
734,541
54,805,509
12,466,164
-
27,445,681
24,026,113
27,218,931
60,255,618
11,073,624
2.48%
8.14%
4.38%
14.35%
8.68%
6.00%
9.24%
-
8.73%
3.24%
-
2.08%
-
22.75%
11.23%
-
-
-
10.00%
4.50%
-
7.06%
-
-
7.28%
9.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,378,878
82,745,591
3,500,552
114,491,527
27,764,763
10,259,883
234,126
15,825,350
1,443,405
21,833,533
-
13,180,928
960,741
-
3,760,739
-
-
921,390
-
-
230,102
4,372,803
-
6,820,980
6,621,600
7,977,202
-
982,140
2
80,106
731
1,379,089
-
64,751,606
840,065
152,918
28,253,765
16,936,632
28,381,438
76,127,463
-
2.99%
12.71%
5.00%
15.93%
15.93%
15.93%
15.93%
15.93%
4.56%
4.96%
-
3.46%
16.79%
-
16.79%
-
-
16.79%
-
-
5.88%
7.87%
-
11.25%
4.94%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,369,665
113,740,116
-
44,136,355
14,671,059
3,048,487
-
-
1,440,442
335,908,087
4,719,782
7,016,400
-
662,488
5,206,028
1,207,721
461,251
1,246,967
-
7,538,861
16,161,340
154,776,512
306,778,275
13,636,984
7,656,820
11,991,624
-
982,146
-
-
-
4,163,576
-
5,870,198
1,134,906
-
-
-
-
-
-
2.48%
8.14%
-
14.75%
4.07%
6.00%
-
-
8.73%
3.24%
3.79%
2.08%
-
1.75%
11.23%
5.32%
4.81%
8.53%
-
4.50%
5.80%
7.06%
3.34%
13.70%
13.70%
9.00%
-
-
-
-
-
-
-
9.00%
-
-
-
-
-
-
-
-
43,574,065
-
-
11,381,827
-
-
-
34,596,897
80,419,472
123,767
424,533
-
-
5,601,259
1,117,055
412,346
898,948
-
-
7,359,819
36,966,398
-
-
8,573,491
13,456,661
-
716,480
-
-
-
-
-
-
340
-
-
-
-
-
-
-
12.71%
-
-
15.93%
-
-
-
4.56%
4.96%
3.00%
3.46%
-
-
16.79%
16.79%
16.79%
16.79%
-
-
5.88%
7.87%
-
-
4.94%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
177
consolidated financial statements
e. Current liabilities (continuation)
Account
Currency
Within 90 days
91 day to 1 year
As of December 31, 2002
Amount
ThCh$
Average Rate
As of December 31, 2003
Amount
ThCh$
Average Rate
As of December 31, 2002
Amount
ThCh$
Average Rate
As of December 31, 2003
Amount
ThCh$
Average Rate
Short-term notes payables
Miscellaneous payables
Amounts payable to related
companies
Accrued expenses
Withholdings
178
Income tax payable
Deferred income
Other current liabilities
Total current liabilities by currency
$ no Reaj.
Reales
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
Others
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
Others
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
Others
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
Reales
$ Arg.
U.P.
Libra
Others
-
16.89%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
577
1,067,230
9,336,767
8,310,295
22,774,897
5,897,275
3,085
6,841,564
379,511
11,580,352
537,944
1,246,715
1,238,934
866,000
978,624
-
14,295
12,517,102
102,588
13,411,977
2,338,800
2,155,138
23,945,150
81,796
7,199,028
1,891,296
5,164,141
10,935,836
29,405,859
2,581
542,553
20,111,038
690
3,366,238
1,122,010
5,874,167
417,793
3,350
460,762
15,262,624
2,016,785
50,647
16,034,314
20,484,347
12,037,529
153,157,768
395,557,325
4,588,211
39,583,181
105,355,363
82,756,926
154,113,263
78,488,750
-
-
12,272,053
18,350
21,051,531
5,268,913
6,708,584
10,741,843
8,605,921
2,520
7,027,596
-
-
249,137
1,429,194
2,851,852
385,358
1,690,491
24,142,261
29,361
7,019,432
1,024
5,573,186
1,528,330
2,867,494
5,372,542
-
7,830,494
2,210,532
5,030,010
16,852,919
31,621,088
-
16,411,961
22,933,978
19,326
-
3,365,633
5,978,448
4,072,490
9,992
10,652
9,151,633
1,460,594
44,555
20,848,457
29,827,087
1,712,860
110,900,011
135,059,629
3,653,470
13,180,928
200,371,490
67,016,601
203,909,155
80,903,933
-
-
16,746,740
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16.89%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,813,598
421,043
8,735,432
-
11,451,858
-
-
-
-
-
-
-
-
-
-
8,456
28,863,812
90,138
-
2,250,372
-
-
-
1,441,876
-
-
-
-
-
-
-
2,664,820
-
-
2,884,571
-
5,827
5,527,866
290,853
-
-
-
-
17,616,065
48,361,177
626,667,668
311,498,057
7,016,400
57,773,339
46,233,790
13,183,202
3,710,975
1,207,721
461,251
1,246,967
-
-
5,498,770
62,349
-
-
-
-
-
-
-
-
-
-
-
-
82,808
28,676,767
67,877
-
2,474,566
-
10,837
-
157,420
-
-
-
-
-
-
2,175,016
2,934,142
-
-
1,924,436
-
5,935
2,796,045
1,205,885
-
-
-
-
42,045,459
39,769,918
175,753,047
123,767
424,533
2,175,016
25,364,026
5,612,096
-
1,117,055
412,346
898,948
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total current liabilities
1,037,910,369
833,454,817
1,134,976,612
293,696,211
Enersis / 2003 annual report
f.
Long-term liabilities as of December 31, 2003
(g) Long-term liabilities as of December 31, 2002
Account
Currency
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Amount
ThCh$
Average Rate
Amount
ThCh$
Average Rate
Amount
ThCh$
Average Rate
Amount
ThCh$
Average Rate
Due to banks and financial institutions
Bonds payable
Long-term notes payable
Miscellaneous payable
Amounts payable to related companies
Accrued expenses
Deferred income taxes
Other long-term liabilities
Total long-term liabilities by currency
$ Reaj.
US$
Euro
Yen
$ Arg.
$ Col.
Reales
Pound
$ Reaj.
US$
$ Col.
Soles
US$
Reales
$ Reaj.
$ no Reaj.
US$
Reales
$ Col.
$ no Reaj.
US$
$ Col.
Reales
$ no Reaj.
$ Col.
Soles
Reales
$ Reaj.
$ no Reaj.
US$
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
$ Arg.
Reales
Pound
3,090,540
200,556,323
121,738
422,438
3,595,794
-
80,660,736
402,154
6,110,308
118,760,000
102,995,204
74,596,769
40,470,881
11,328,176
-
863,350
5,226,699
8,480,593
84,320
2,450,592
-
20,701,649
226,924,205
10,455,989
-
2,626,425
1,773,652
9,200
3,455,877
12,779,861
2,058,195
7,972,337
23,241,894
9,210,048
17,225,808
377,793,764
121,738
422,438
123,781,173
79,281,389
11,568,131
352,409,256
402,154
9.00%
4.77%
3.00%
0.89%
1.75%
-
22.50%
4.63%
5.88%
7.91%
10.50%
4.39%
7.42%
14.46%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,273,686
437,964,229
-
-
1,797,897
37,403,850
4,768,381
-
110,427,387
213,768,000
-
10,155,885
48,220,374
4,581,768
-
-
-
3,145,337
-
2,609,663
2,971,683
45,091,420
-
6,904,019
1,639,845
1,348,653
-
11,512
974,342
5,155,183
698,247
-
-
111,712,585
10,488,024
708,079,469
-
-
84,135,115
12,202,785
1,797,897
12,495,486
-
9.00%
3.83%
-
-
1.75%
12.55%
20.81%
-
5.88%
7.91%
-
4.39%
7.42%
14.46%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,109,592
-
-
6,292,887
-
8,442,383
-
101,832,395
475,040,000
-
838,813
31,840,790
8,901,177
-
-
-
-
-
6,235,668
-
-
-
-
-
-
-
6,415
1,142,803
-
1,189,040
-
-
101,838,810
7,378,471
550,990,382
-
-
-
2,027,853
6,292,887
17,343,560
-
-
3.36%
-
-
1.75%
-
20.06%
-
5.88%
7.91%
-
4.39%
7.42%
14.46%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,473,322
-
-
-
-
518,910
-
94,971,517
989,798,688
-
-
-
-
163,434
17,574
8,905,744
-
-
10,432,103
-
-
-
-
-
-
-
-
1,641,711
-
-
-
-
95,134,951
12,091,388
1,001,177,754
-
-
-
-
-
518,910
-
-
3.89%
-
-
-
-
17.74%
-
5.88%
7.91%
-
-
-
-
-
-
3.26%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
179
Total long-term liabilities
972,215,899
940,911,361
685,871,963
1,108,923,003
consolidated financial statements
g. Long-term liabilities as of December 31, 2002
Account
Due to banks and financial institutions
Bonds payable
Long-term notes payable
Miscellaneous payable
Amounts payable to related companies
Accrued expenses
Deferred income taxes
180
Other long-term liabilities
Currency
$ Reaj.
US$
Euro
Yen
$ Arg.
Reales
U.P.
Libra
$ Reaj.
US$
$ Col.
Soles
US$
Reales
$ Reaj.
$ no Reaj.
US$
Reales
$ Reaj.
$ Reaj.
$ no Reaj.
US$
$ Col.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
$ Reaj.
$ no Reaj.
US$
Soles
$ Arg.
Reales
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Amount
ThCh$
Average Rate
Amount
ThCh$
Average Rate
Amount
ThCh$
Average Rate
Amount
ThCh$
Average Rate
54,237,250
1,345,934,070
248,420
9,070,915
3,723,918
82,481,803
1,201,425
886,725
-
341,124,167
-
54,055,768
44,904,268
36,859,991
-
2,151,638
7,215,480
2,610,107
998,174,521
-
3,531,357
3,769,628
-
26,142,431
6,801,356
-
-
199,151
10,913
4,306,898
38,401,268
4,657,394
7,531,040
13,518,788
3.66%
3.19%
4.13%
1.96%
1.75%
17.11%
5.32%
4.81%
-
7.00%
-
7.19%
7.50%
9.50%
-
-
-
-
3.33%
-
-
-
-
-
-
-
-
-
-
4.55%
-
-
-
-
2,966,355
104,732,270
-
-
1,861,959
1,628,960
-
-
101,469,367
355,640,089
33,505,610
3,898,572
42,289,050
4,647,622
-
-
-
-
-
57,854
3,288,636
-
-
82,397,881
3,782,966
-
1,236,961
132,767
10,115
14,948,249
-
259,501
115,184
-
3.66%
3.19%
-
-
1.75%
11.23%
-
-
6.20%
8.06%
14.35%
7.19%
7.50%
9.50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.55%
-
-
-
-
-
71,457,319
-
-
6,504,433
14,696,907
-
-
69,556,117
290,318,440
78,759,079
1,010,395
60,063,668
8,787,084
-
-
10,640,919
-
-
-
7,684,362
-
-
2,120,404
14,137,664
-
-
597,452
472,290
4,730,059
-
2,235,811
-
-
-
3.19%
-
-
1.75%
11.23%
-
-
6.00%
8.50%
14.35%
7.19%
7.50%
9.50%
-
-
9.48%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,415,711
-
-
-
203,617
-
-
160,924,499
628,561,921
-
-
-
249,604
163,399
51,051
-
-
-
-
7,525,626
-
68,363,088
49,604,846
22,328,589
3,624,671
-
-
-
13,818,110
-
-
-
-
-
3.19%
-
-
-
11.23%
-
-
6.00%
8.06%
-
-
-
9.50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.55%
-
-
-
-
Total long-term liabilities by currency
$ Reaj.
1,052,422,684
104,503,691
70,028,407
161,087,898
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
$ Arg.
Reales
U.P.
Libra
16,791,249
1,781,348,881
248,420
9,070,915
-
58,713,162
11,454,109
161,613,120
1,201,425
886,725
22,019,851
502,661,409
-
-
33,505,610
5,395,034
2,109,910
88,674,463
-
-
26,552,085
432,480,346
-
-
78,759,079
3,246,206
7,101,885
25,604,395
-
-
43,723,376
634,977,632
-
-
71,987,759
-
-
50,058,067
-
-
Total long-term liabilities
3,093,750,690
758,869,968
643,772,403
961,834,732
Enersis / 2003 annual report
33. sanctions
Endesa S.A.
The Company and its directors has not been the subject to sanctions
by the SVS nor by any other administrative authorities.
During the year from January 1 to December 31, 2003, the Company and
its subsidiaries have made disbursements for a value of ThCh$12,145,906,
which mainly corresponds to:
34. environment
Chilectra S.A.
The Company has made disbursements during the year of
ThCh$1,561,001, mainly for the following items:
Investments:
• Audit El Salto 220 KV Line
•
La Cisterna Environmental Impact Statement
• Santa Elena Environmental Impact Statement
• San Bernardo Environmental Impact Statement
• Chena Maipú Environmental Impact Statement
• Construction of oil retaining pits
• TAP Chacabuco reafforestation construction
• Multipurpose Pipelines
Expenses:
• High Voltage Network Maintenance Unit
• Southern Maintenance Center
• Northern Maintenance Center
• Eastern Maintenance Center
Operating expenses: corresponding to studies, follow-up procedures
and laboratory analysis (ThCh$379,802 expenses in 2003), Environment
Law N°99 (Colombia) and ISO 14,001 certification in Central Costanera
and El Chocón ThCh$5,846,734 (US$9,846,302).
Investments related to the following projects:
• Central Ralco’s environmental program.
•
Implementation of environmental management system (S.G.A.) and
its ISO 14.001 certification in San Isidro, Central Tarapacá, Central Rapel,
Pehuenche, Loma Alta and Curillinque Power Stations.
• Construction of transformer pools Rapel Power Station,
Sauzal and Los Molles.
• Pangue Power Station – Restoration of former ore deposit camp
Works on Muña reservoir (Emgesa)
35. subsequent events
No significant events that might affect these financial statements have
occurred in the period from January 1 2004 to their date of issue.
181
JUAN CARLOS WIECZOREK C.
General Account
MARIO VALCARCE DURAN
Chief Executive Officer
consolidated financial statements
appendix U.S. GAAP
Differences Between Chilean and United States Generally
Accepted Accounting Principles
Restatements of U.S. GAAP Consolidated Net Income,
Shareholders’ Equity, Balance Sheet, and Statement of Cash
Flows
Chilean GAAP varies in certain important respects from U.S. GAAP. Such
differences involve certain methods for measuring the amounts shown in
the financial statements.
i.
Differences in Measurement Methods
The principal differences between Chilean GAAP and U.S. GAAP are
described below together with an explanation, where appropriate, of
the method used in the determination of the adjustments that affect net
income and total stockholders’ equity. References below to “SFAS” are
to Statements of Financial Accounting Standards issued by the Financial
Accounting Standards Board in the United States.
In addition to the restatement of its 2001 Chilean GAAP Statement of
Cash Flows as described in Note 2, the Company also made certain
adjustments to its previously -reported consolidated shareholders’
equity as of December 31, 2002 and consolidated net income (loss)
for the years ended December 31, 2002 and 2001, that only had an
impact on the Company’s previously reported U.S. GAAP amounts.
The total impact of these adjustments on consolidated shareholders’
equity as of December 31, 2002 and consolidated net income (loss)
the years ended December 31, 2002 and 2001 under U.S. GAAP
are presented below. Restatements of ThCh$4,212,536 relating to
periods prior to January 1, 2001 were recorded as a reduction of
opening retained earnings as of January 1, 2001:
Year ended December 31,
Net income (loss) in accordance with US GAAP as previously reported
Price level restatement as of December 31, 2003
Subtotal
182
Effect of restatements on previously-reported US GAAP net income (loss):
Goodwill - Codensa
Minority interest impact of above restatement
Net income (loss) in accordance with US GAAP as restated
Basic and diluted earnings (loss) per share as previously reported
Basic and diluted earnings (loss) per share as restated
2001
ThCh$
3,088,583
30,886
3,119,469
(1,107,905)
853,973
2,865,537
0.38
0.35
2002
ThCh$
(329,910,417)
(3,299,104)
(333,209,521)
(333,209,521)
(40.19)
(40.19)
Shareholders’ equity in accordance with US GAAP, as previously reported
Price level restatement as of December 31, 2003
Subtotal
Effect of restatements on previously-reported US GAAP net income (loss):
Goodwill - Codensa
Minority interest impact of above restatement
Shareholders’ equity in accordance with US GAAP, as restated
As of December 31, 2001
ThCh$
1,154,673,833
11,546,738
1,166,220,571
17,271,396
(13,312,792)
1,170,179,175
Enersis / 2003 annual report
The following is a description of the adjustments that only had an
impact on net income (loss) and shareholders’ equity determined in
accordance with U.S. GAAP:
Goodwill – Codensa
Under Chilean GAAP, when we initially recorded the purchase of our
interest in Codensa in 1997, the Company recognized a deferred balance,
“Reorganization expenses - Codensa”, and an Allowance for Doubtful
Accounts in the opening balance sheet related to certain receivables that
the Company and the acquiree agreed had previously been overvalued.
Our deferred expenses under Chilean GAAP are disclosed in Note 14, Other
Assets. Under U.S. GAAP, this amount should have been recognized as
goodwill and not a separate deferred balance. Further, this deferred balance
was incorrectly expensed as reorganization expenses in 1999. Under U.S.
GAAP, we have restated our previous results to include this balance in
goodwill. This adjustment reflects the effect of the capitalization of the
goodwill and the subsequent amortization recognized. Under U.S. GAAP,
prior to the adoption of SFAS No. 142 effective January 1, 2002, goodwill
was capitalized and amortized over a period not exceeding 40 years. After
the adoption of SFAS No. 142, goodwill is no longer amortized, but tested
for impairment at least annually.
ii. As described above (and Note 2), the Company made certain
adjustments to its 2001 Chilean GAAP Statement of Cash Flows. The
effect of the restatements on the U.S. GAAP 2001 Statement of Cash
Flows is set forth in the table below:
US GAAP Cash flow provided by (used in)
Operating Activities
Financing Activities
As previously reported
Price level restatement as of December 31, 2003
Subtotal
Interest payments
Settlement of forward exchange contracts
Subtotal
As restated
ThCh$
662,920,609
6,629,206
669,549,815
(85,953,318)
(17,470,297)
(103,423,615)
566,126,200
ThCh$
(61,414,127)
(614,141)
(62,028,268)
85,953,315
17,470,297
103,423,612
41,395,344
iii.
In addition, as discussed in Note 19, Bonds Payable, the holders of our Series 3 Yankee Bonds had the option to require redemption of the bonds
in December of 2003. The Company has made adjustments to its previously reported U.S. GAAP current and long-term liabilities to classify these
bonds as current as of December 31, 2002. The effect of the restatements on the U.S. GAAP balance sheet as of December 31, 2002, is set forth in
the table below:
183
US GAAP liabilities:
As previously reported
Price level restatement as of December 31, 2003
Subtotal
Restatement to current
As restated
Current
ThCh$
2,122,819,104
21,228,191
2,144,047,295
108,869,415
2,252,916,710
Long-term
ThCh$
5,347,252,501
53,472,525
5,400,725,026
(108,869,415)
5,291,855,611
a. Inflation accounting
b. Reversal of revaluation of property, plant and equipment
The cumulative inflation rate in Chile as measured by the Consumer
Price Index for the three-year period ended December 31, 2003 was
approximately 7.25%. Pursuant to Chilean GAAP, the Company’s financial
statements recognize certain effects of inflation. The inclusion of price-
level adjustments in the accompanying consolidated financial statements
is considered appropriate under the prolonged inflationary conditions
affecting the Chilean economy even though the cumulative inflation rate
for the last three years does not exceed 100%. As allowed pursuant to Item
17 c (iv) of Form-20-F the reconciliation included herein of consolidated net
income, comprehensive income and shareholders’ equity, as determined
in accordance with U.S. GAAP, excludes adjustments attributable to the
effect of differences between the accounting for inflation under Chilean
GAAP versus U.S. GAAP.
In accordance with standards issued by the SVS., certain property,
plant and equipment are recorded in the financial statements at amounts
determined in accordance with a technical appraisal. The difference between
the carrying value and the revalued amount is included in shareholders’
equity, beginning in 1989, in “Other reserves”, and is subject to adjustments
for price-level restatement and depreciation. Revaluation of property, plant
and equipment is an accounting principle not generally accepted under
U.S. GAAP, therefore, the effects of the reversal of this revaluation, as well
as of the related accumulated depreciation and depreciation expense are
included in paragraph (gg) below.
consolidated financial statements
c. Depreciation of property, plant and equipment
Under Chilean GAAP, certain costs related to the cost of acquisition of
Edesur S.A., at the time of the acquisitions in 1992 and 1994 by Distrilec
Inversora S.A., were charged to earnings as incurred. Under U.S. GAAP, these
costs would have been included in the purchase price and would have been
allocated to the net assets acquired based upon fair values. For purposes of
the reconciliation to U.S. GAAP, these costs were considered to be of part of
property, plant, and equipment, the primary assets of Edesur S.A.
As discussed in paragraph (i), under Chilean GAAP, assets acquired and
liabilities assumed are recorded at their carrying value, and the excess of the
purchase price over the carrying value is recorded as goodwill. Under U.S.
GAAP, assets acquired and liabilities assumed are recorded at their estimated
fair values, and the excess of the purchase price over the estimated fair value
of the net identifiable assets and liabilities acquired is recorded as goodwill.
As part of the purchase of the majority ownership interest in Endesa-Chile,
under U.S. GAAP, the cost of the purchase price would have been allocated
to the fair value of property, plant and equipment.
The effect on shareholders’ equity and net income for the years
presented is included in paragraph (gg) below.
d. Intangibles
Under Chilean GAAP, the Company has recorded intangible assets
(consisting mainly of rights of way) relating to the transfer of revalued
assets which originate in the predecessor company, “Compañía Chilena
de Distribución Eléctrica S.A.” at the time of the Company’s formation.
Under U.S. GAAP, such intangible assets would have been recorded at the
Predecessor Company’s carrying values which was zero. The estimated
aggregated amortization expense to be reversed for US GAAP purposes
for each of the five succeeding fiscal years to be as follows:
184
Year
2004
2005
2005
2007
2008
Amortization
ThCh$
5,722,698
5,248,917
4,173,231
2,160,654
1,775,204
in accordance with Technical Bulletin No. 60 of the Chilean Association
of Accountants, recognizing, using the liability method, the deferred tax
effects of temporary differences between the financial and tax values of
assets and liabilities. As a transitional provision, a contra (referred to as
“complementary”) asset or liability has been recorded offsetting the effects
of the deferred tax assets and liabilities not recorded prior to January 1,
2000. Such complementary asset or liability are being amortized to income
over the estimated average reversal periods corresponding to the underlying
temporary differences to which the deferred tax asset or liability relates.
Under U.S. GAAP, companies must account for deferred taxes in
accordance with SFAS No. 109, which requires an asset and liability
approach for financial accounting and reporting of income taxes, under
the following basic principles:
i. A deferred tax liability or asset is recognized for the estimated
future tax effects attributable to temporary differences and tax loss
carryforwards.
ii. The measurement of deferred tax liabilities and assets is based on the
provisions of the enacted tax law. The effects of future changes in tax
laws or rates are not anticipated.
iii. The measurement of deferred tax assets are reduced by a valuation
allowance, if, based on the weight of available evidence, it is more
likely than not that some portion of the deferred tax assets will not be
realized.
Temporary differences are defined as any difference between the
financial reporting basis and the tax basis of an asset and liability that
at some future date will reverse, thereby resulting in taxable income or
expense. Temporary differences ordinarily become taxable or deductible
when the related asset is recovered or the related liability is settled. A
deferred tax liability or asset represents the amount of taxes payable or
refundable in future years as a result of temporary differences at the end
of the current year.
The principal difference relates to the reversal of the complementary
assets and liabilities recorded as a transitional provision for unrecorded
deferred taxes as of January 1, 2000 and their corresponding amortization
into income. The effect of these differences on the net income and
shareholders’ equity of the Company is included in paragraph (gg)
below.
f. Severance indemnity
The effects of adjusting shareholders’ equity for this intangible asset
net of accumulated amortization, inclusive of accumulated price-level
restatement, and net income for the annual amortization expense are
included in paragraph (gg) below.
e. Deferred income taxes
Under Chilean GAAP, until December 31, 1999, deferred income taxes
were recorded based on non-recurring timing differences between the
recognition of income and expense items for financial statement and
tax purposes. Accordingly, there was an orientation toward the income
statement focusing on differences in the timing of recognition of revenues
and expenses in pre-tax accounting income and taxable income. Chilean
GAAP also permitted not providing for deferred income taxes where a
deferred tax asset or liability, was either offsetting or not expected to be
realized. Starting January 1, 2000, the Company recorded income taxes
As described in Note 2 n, under the Company’s employment contracts,
it has committed to provide a lump sum payment to each employee at the
end of their employment, whether due to death, termination, resignation
or retirement. Those obligations are calculated based on the present value
of the liability determined at each year-end based on the current salary,
average service life of each employee and discounted at an interest rate
determined every three years. The Company and certain of its subsidiaries
used a discount rate of 9.5% for the years ended December 31, 2002 and
2003, and assumed an average service life which varies based upon years
of service with the Company.
Under US GAAP, this arrangement is considered to be a termination
indemnity plan and should therefore be accounted for in accordance with
SFAS No. 87, “Employers’ Accounting for Pensions”. The liability would
be measured at the actuarial present value as of the balance sheet of all
benefits attributed by the severance indemnity benefit formula to employee
service rendered prior to the balance sheet. The projected benefit obligation
Enersis / 2003 annual report
is measured using assumptions as to future compensation levels. For U.S.
GAAP purpose the discount rate has to be reassessed every year, to the
relevant discount rate for the period between the date and the expected
date of payment. Consequently, the discount rates to be applied for
each of the years should have been 8.1% of 2001 and 6.5% for 2002. In
practice, the Company believes that the salary progression rate will not
differ significantly from the general inflation rate. In 2003 the Company
for US GAAP purposes used 6.5% discount rate in according with the above
guidance the impact of using the appropriate discount rates under US GAAP
for 2001 and 2002 would have not resulting a material difference than the
rate use in accordance with Chilean GAAP.
paragraph (gg) below. The principal U.S. GAAP adjustments affecting the
Company’s equity investees are as follows:
(a) Reversal of complementary accounts (asset or liability) recorded
as a transitional provision as of January 1, 2000.
(b) Organizational costs deferred under Chilean GAAP that, under
U.S. GAAP, should have been included in income.
(c) For the year beginning January 1, 2001, the recording of
derivative instruments in accordance with SFAS No. 133.
The Company recognizes actuarial gains and losses immediately for
(d) The deferred income tax effects of adjustments (b) and (c).
Severance indemnity plans for both Chilean GAAP and U.S. GAAP.
The effects of accounting for severance indemnity benefits under US
GAAP have been presented in paragraph (gg).
g. Pension and post-retirement benefits
The Company has obligations related to post-retirement benefits as
stipulated in collective bargaining agreements and pension obligations as
stipulated by contract for its subsidiares in Brazil, Colombia and Chile under
U.S. GAAP, post-retirement benefits are accounted for under SFAS 106 and
pension obligations are accounted for under SFAS 87 which results in the
following differences:
•
In 2000, the Company recorded its obligation for post-retirement
benefits at our consolidated subsidiaries, Cerj and Coelce under
Chilean GAAP. Technical Bulletin 8 allows the Company to record a
transition asset for post-retirement benefits and pension obligations,
as calculated under Chilean GAAP, and to amortize the amount, on a
straight-line basis, for up to five years. The Company is amortizing this
amount over a period of three years. Cerj and Coelce had adopted
U.S. GAAP for external reporting purposes prior to 2000 and there
was no remaining unamortized transition obligation. Therefore,
the amortization that is appropriately being recorded under Chilean
GAAP for the transition asset related to post-retirement benefits and
pensions is reversed in our reconciliation to U.S. GAAP.
• Under both Chilean GAAP and US GAAP, actuarial gains/losses
are deferred over the average remaining service period when the
cumulative amount of deferred actuarial gains and losses exceeds
10% of the higher of the projected benefit obligation or fair value of
plan assets.
• Chilean GAAP recognizes an additional minimum liability, similar to
that defined under SFAS 87, through the income statement. Under
US GAAP if the amount of the additional minimum liability required
to be recognized exceeds the unrecognized prior service costs, the
excess shall be reported as a separate component within other
comprehensive income net of any tax benefits, if no excess exists
the additional minimum liability is recognized an intangible asset is
recognized in respect of the prior service cost not get recognize.
The effects of accounting for post-retirement benefits under US GAAP
have been presented in paragraph (gg).
h. Investments in related companies
The Company’s equity share of the effect of the adjustments from
Chilean GAAP to U.S. GAAP of equity accounted investees is included in
i. Goodwill and long-lived assets
(i) Under Chilean GAAP, assets acquired and liabilities assumed are
recorded at their carrying value, and the excess of the purchase price
over the carrying value are recorded as goodwill. Circular No. 1358,
dated December 3, 1997 issued by the SVS, extended the maximum
amortization period of goodwill to 20 years form the previous 10
years.
Under U.S. GAAP, assets acquired and liabilities assumed are recorded
at their estimated fair values, and the excess of the purchase price
over the estimated fair value of the net identifiable assets and
liabilities acquired are recorded as goodwill. Up until December 31,
2001, the Company amortized goodwill on a straight-line basis over
the estimated useful lives of the assets, ranging from 20 to 40 years.
Goodwill acquired after June 30, 2001 is not amortized (see Note 34
II (o)). In accordance with SFAS No. 142, the Company discontinued
amortizing goodwill on January 1, 2002. The effects of recording
the different amortization periods and reversing the amortization of
goodwill for 2002 are included in paragraph (gg) below.
185
Under Chilean GAAP, the Company has evaluated the carrying
amount of goodwill net of negative goodwill for impairment.
The measurement of the impairment loss was based on the fair
value of the investment which the Company determined using a
discounted cash flow approach and recent comparable transactions
in the market. In order to estimate fair value, the Company made
assumptions about future events that are highly uncertain at the time
of estimation. The results of this analysis showed that the goodwill
and negative goodwill associated with investments in Argentina and
Brazil were impaired because estimated future discounted cash flows
were not sufficient to recover goodwill and negative goodwill. During
2002, under Chilean GAAP the Company recorded a net charge
related to its investments in Central Costanera S.A., Hidroeléctrica El
Chocón S.A., Hidroinvest S.A., Lajas Inversora S.A., Central Eléctrica
Cachoeira Dourada S.A., Cía. de Electricidade do Rio de Janeiro S.A.,
Coelce S.A., Distrelec Inversora S.A., Edesur S.A., and Investluz S.A., in
the amount of ThCh$238,798,904 net minority interest, to write-off
all amounts of goodwill and negative goodwill.
In accordance with U.S. GAAP, the Company adopted SFAS No. 142
“Goodwill and Other Intangible Assets”, (SFAS No. 142) as of January
1, 2002. SFAS 142 applies to all goodwill and intangible assets
acquired in a business combination. Under the new standard, all
goodwill, including that acquired before initial application of the
standard, and indefinite-lived intangible assets are not amortized,
as of the effective date but must be tested for impairment at least
annually. The transitional impairment test required by the standard
consolidated financial statements
was performed and no adjustment for impairment was required.
However, based on subsequent testing of the Company’s investments
in Argentina and Brazil performed as of December 31, 2002, it was
determined that these investments were impaired. The following net
effects are included in the net income (loss) and shareholders’ equity
reconciliation to U.S. GAAP under paragraph (gg) below:
(a) the reversal of goodwill amortization related to reporting units
that were not found to be impaired under U.S. GAAP for the
year ended December 31, 2002, and adjustment of goodwill
amortization which is different in amount because of goodwill
basis differences in 2001.
(b) the adjustment to record the reversal of the impairment recorded
under Chilean GAAP during 2002, which is different in amount
because of goodwill basis differences,
(c) the adjustment to record the impairment under US GAAP from
investment in Argentina and Brazil.
The adjustment as of each year are as follows:
Adjustment of goodwill amortization
Reversal of impairment record under Chilean GAAP
Impaiment of goodwill under US GAAP
2001
ThCh$
(2,218,785)
As of December 31,
2002
ThCh$
54,467,593
456,940,020
(606,383,813)
2003
ThCh$
51,133,050
Totals
(2,218,785)
(94,976,200)
51,133,050
Had we adopted SFAS No 142 effective January 1, 2001 and accordingly not amortized goodwill for the years ended December 31, 2001 our net gain
(loss) and basic income (loss) per share should have been as follows:
186
2001
ThCh$
2002
ThCh$
2003
ThCh$
Net income (loss) in accordance with U.S. GAAP before cumulative
effect of change in accounting principle
(18,359,658)
(333,209,521)
29,268,881
Goodwill amortization under US GAAP add back
(83,600,896)
-
-
Adjusted net income (loss) in accordance with U.S. GAAP before
cumulative effect of change in accounting principle
65,241,238
(333,209,521)
29,268,881
Basic earnings per share:
Net income (loss) in accordance with U.S. GAAP before effect of
discontinued operations, and cumulative effect of change in accounting
principle
Goodwill amortization under US GAAP add back
Adjusted net income (loss) in accordance with U.S. GAAP before effect
cumulative effect of change in accounting principle
2001
Ch$
2002
Ch$
2003
Ch$
(2.21)
(10.08)
(40.19)
-
7.87
(40.19)
1.45
-
1.45
Enersis / 2003 annual report
(ii) The company has considered important factors, which could trigger
an impairment review, such as the following:
• Significant underperformance relative to expected historical or
projected future operating results;
• Significant changes in the manner of use of the acquired assets or the
strategy for our overall business; and
• Significant negative industry or economic trends
In accordance with SFAS No.121, “Accounting for the Impairment of
Long-Lived Assets and for Long Lived Assets to Be Disposed Of’ during 2001,
which was superceded by SFAS No.144, “Accounting for the Impairment or
Disposa1 of Long-Lived Assets” beginning in 2002, the Company eva1uates
the carrying amount of property, plant and equipment and other long-lived
assets, in relation to the operating performance and future undiscounted
cash flows of the underlying business. These standards require that an
impairment loss be recognized in the event that facts and circumstances
indicate that the carrying amount of an asset may not be fully recoverable.
Impairment is recorded based on an estimate of future discounted cash
flows, as compared to current carrying amounts. For the years ended
December 31, 2001, 2002, and 2003, no additional amounts were
recorded for impairment under U.S. GAAP, except for adjustments for this
concept recorded under Chilean GAAP in the subsidiaries Centrais Eléctrica
Cachoeira Dourada S.A. and Inmobiliaria Manso de Velasco Limitada, which
are included in other non-operating expenses (see Note 23). This amounts
are reclassified to operating income for US GAAP purposes.
j. Negative Goodwill
Under Chilean GAAP, the excess of the carrying value of the assets
assumed in a business combination over the purchase price is recorded as
negative goodwill. Circular No. 1358, dated December 3, 1997 issued by
the SVS, extended the maximum amortization period of negative goodwill
to 20 years from the previous 5 years. Under U.S. GAAP, the fair values of
the assets acquired less the fair values of the liabilities assumed in excess
of over the purchase price is allocated proportionately to reduce the
values assigned to non-current assets. If the allocation reduces the non-
current monetary assets to zero, the remainder of the excess is recorded
as a deferred credit account called negative goodwill upon adoption of
SFAS 142 in January 1, 2002 the excess will no longer be deferred but
recognized immediately in income. The effect of reducing depreciation
expense, due to the proportionate allocation of the excess purchase price
to property, plant and equipment, as compared to the amortization of
negative goodwill under Chilean GAAP and the reversal of negative goodwill
write-offs described in paragraph (i), which did not meet the U.S. GAAP
impairment criteria for long-lived assets under SFAS No. 144 described
above, and updated amortization period under the Circular No. 1.358 are
included in paragraph (gg) below.
k. Capitalized interest and exchange differences
In accordance with Chilean GAAP, the Company has capitalized both
interest on debt directly related to property, plant and equipment under
construction and finance costs corresponding to exchange differences
generated by the loans associated with such assets. The capitalization
of interest costs associated with projects under construction is optional
when incurred on debt that is not directly related to such projects. The
Company has optioned for not capitalizing indirect interest cost under
Chilean GAAP.
debt directly related to a project to the extent that interest cost would have
been available if the project had not been done. In addition, under U.S.
GAAP, foreign translation exchange differences may not be capitalized. The
accounting differences between Chilean and U.S. GAAP for financing costs
and the related depreciation expense are included in the reconciliation to
U.S. GAAP under paragraph (gg) below.
l. Accumulated deficit during the development stage
Under Chilean GAAP, the losses incurred during the development stage
of subsidiary companies is recorded directly in the parent company’s equity.
Under U.S. GAAP, such costs must be charged to income as incurred. The
effects are included in paragraph (gg) below.
m. Minimum dividend
As required by the Chilean Companies Act, unless otherwise decided
by the unanimous vote of the holders of issued and subscribed shares,
the Company must distribute a cash dividend in an amount equal to at
least 30% of its net income for each year as determined in accordance
with Chilean GAAP, unless and except to the extent the Company has
unabsorbed prior year losses. Since the payment of the 30% dividend out
of each year’s income is required by Chilean law, an accrual was made
in the reconciliation in paragraph (gg) below to reflect the unrecorded
dividend liability for 2001.
In April 2002, the meeting of shareholders decided, that dividends
would consist of the income from normal company operations defined
as income before amortization of negative goodwill in the income
statement. Therefore, the distributable profit at December 31, 2001 was
zero, necessitating a reversal of the prior year accrual under U.S. GAAP.
187
n. Capitalized general and administrative expenses
Until 1993, Endesa-Chile capitalized a portion of its administrative and
selling expenses as part of the cost of construction in progress because
a substantial portion of the efforts of management were involved in
the administration of major projects. Under U.S. GAAP, general and
administrative expenses are charged to expense unless they can be directly
identified with the supervision of the construction of specific projects. The
effects of eliminating capitalized general and administrative expenses and
the related depreciation for U.S. GAAP purposes are shown below under
paragraph (gg).
o. Involuntary employee termination benefits
Under Chilean GAAP, the Argentine subsidiaries, Central Costanera and
Hidroelectricidad, recorded an accrual of certain involuntary employees
termination benefits related to the restructuring plan announced in 1997.
Since that date employees have continued to be made redundant pursuant
to this plan. In accordance with U.S. GAAP, at that time in order to recognize
a liability at the balance sheet date for the cost to terminate employees
involuntarily, there must be a plan that specifically includes notification
to employees prior to the balance sheet date. As of December 31, 2001,
2002 and 2003, this requirement had not been met. The net effect of
eliminating the accrued liability recognized under Chile GAAP is presented
in paragraph (gg) below.
p. Adjustment in selling price of investment
Under U.S. GAAP, the capitalization of interest on qualifying assets under
construction is required, regardless of whether interest is associated with
Under Chilean GAAP, pursuant to the share transaction contract entered
into in 1995 between Endesa-Chile and Endesa Overseas Co. with Enersis
consolidated financial statements
Intemational Limited, Chilectra S.A. and Chilectra IntemationaI Limited,
Endesa Argentina recognized income related to an adjustment of the
share purchase price. Under U.S. GAAP, the contingent price adjustment
would be considered a part of the purchase price, and would therefore be
offset against the amount of goodwill that was originally determined. As
described in paragraph (i), the Company determined goodwill amounts
recorded in investments in Argentina were impaired as of December 31,
2002, thus the adjustment in selling price of investment is a basis difference
between Chilean and U.S. GAAP was eliminated after the impairment charge
recorded in 2002. The effects of the adjustments to conform to U.S. GAAP
are included under paragraph (gg) below.
q. Elimination of capitalized interest in Brazil
Under Chilean GAAP, the Company capitalized interest to property, plant
and equipment as a result of the creation of a legal reserve specifically
permitted in Brazil for the electricity industry with credit against interest
expense. Under U.S. GAAP, interest capitalized must be based on actual
interest incurred, and as such the effects of the elimination of the interest
capitalized to property, plant and equipment and the effects on depreciation
expense are included in paragraph (gg) below.
r. Organizational and start-up costs
Certain costs related to the organization and creation of certain
subsidiaries of the Company are deferred and capitalized under Chilean
GAAP and amortized. Under U.S. GAAP, such organizational and start-up
costs may not be deferred and must be included in income as incurred. The
effects of the difference are included in paragraph (gg) below.
188
s. Translation of Financial Statements of Investments
Outside of Chile
Under Chilean GAAP, in accordance with Technical Bulletin 64 (“B.T.
64”) the financial statements of foreign subsidiaries that operate in
countries exposed to significant risks (“unstable” countries), and that are
not considered to be an extension of the parent company’s operations,
are remeasured into US dollars. The Company’s foreign subsidiaries in
Argentina, Perú, Brazil, and Colombia all meet the criteria of foreign
subsidiaries that operate in countries exposed to significant risks under BT
64, and are remeasured into US dollars. The Company has remeasured its
foreign subsidiaries into US dollars under this requirement as follows:
Monetary assets and liabilities are translated at year-end rates of
exchange between the US dollar and the local currency.
All non-monetary assets and liabilities and shareholder’s equity are
translated at historical rates of exchange between the US dollar and the
local currency.
Income and expense accounts are translated at average rates of
exchange between the US dollar and local currency.
The effects of any exchange rate fluctuations between the local currency
and the US dollar are included in the results of operations for the period.
Under BT 64, the investment in the foreign subsidiary is price-level
restated, the effects of which are reflected in income, while the effects of
the foreign exchange gains or losses between the Chilean Peso and the
US dollar on the foreign investment measured in US dollars, are reflected
in equity in the account “Cumulative Translation Adjustment”.
The amount of foreign exchange gain (loss) included in income
that is attributable to operations in unstable countries because these
amounts have been remeasured into US dollars was ThCh$23,479,750,
ThCh$181,846,422 and ThCh$(67,511,676) for the years ended December
31, 2001, 2002 and 2003, respectively (See Note 24).
Company’s Management believes that, foreign currency translation
procedures described above are part of the comprehensive basis of
preparation of price-level adjusted financial statements required by
Chilean GAAP. Inclusion of inflation and translation effects in the financial
statements is considered appropriate under the inflationary conditions
that have historically affected the Chilean economy, and accordingly, are
not eliminated in the reconciliation to U.S. GAAP as permitted by Item 17
b (iv) of Form 20-F.
t. Derivative instruments
Under Chilean GAAP, forward foreign exchange contracts and currency
swaps are used to hedge existing balance sheet risks or “fair value” hedges,
while interest swaps and collars are used to hedge against future transaction
risks or “cash flow” hedges. Fair value hedges are recorded at fair values
with losses recorded at the time of their estimation and gains deferred until
the transaction date or to the extent losses have been previously recorded,
while gains and losses from cash flow hedges are deferred as either an
asset or a liability until the transaction date. The hedging criteria and
documentation requirements under Chilean GAAP are less onerous than
U.S. GAAP. Realized gains and losses are recorded in “Other non-operating
income and expense”.
Prior to January 1, 2001. under U.S. GAAP, contracts that were
designated and effective as hedges of existing assets and liabilities were
recorded at the closing spot exchange rate and included in earnings with
the initial discount or premium amortized over the life of the contract as
interest expense. However, contracts not designated or ineffective were
recorded at fair value with the unrealized gains and losses recognized in
income. For contracts with fair values different from the values of the
contracts at the closing spot exchange rate, a difference between U.S. and
Chilean GAAP resulted. The effects of the difference were not considered
material to the consolidated financial statements and accordingly were
not previously included in paragraph (gg) below.
Currently under U.S. GAAP, the accounting for derivative instruments is
described in SFAS No. 133 “Accounting for Certain Derivative Instruments and
Certain Hedging Activities” (SFAS No. 133) and other complementary rules
and amendments. SFAS No. 133, as amended, establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded
in the balance sheet as either an asset or liability measured at its fair
value. SFAS No. 133 requires that changes in the derivative instrument’s
fair value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges
allows a derivative instrument’s gains and losses to offset related results
on the hedged item in the income statement, to the extent effective, and
requires that a company must formally document, designate, and assess
the effectiveness of transactions designated for hedge accounting.
The Company adopted SFAS No. 133, as amended, on January 1, 2001.
SFAS No. 133 required that as of the date of initial adoption, the difference
between the market value of derivative instruments recorded on the balance
sheet and the previous carrying amount of those derivatives be reported
in net income or other comprehensive income, as appropriate, as the
cumulative effect of a change in accounting principle in accordance with
Enersis / 2003 annual report
Accounting Principles Board Opinion No. 20, “Accounting Changes.” SFAS
No. 133 cannot be applied retroactively. SFAS No. 133 must be applied to (a)
derivative instruments and (b) certain embedded derivative instruments.
As permitted under this standard, the Company has applied SFAS No.
133 to only those embedded instruments that were issued, acquired, or
substantively modified after January 1, 1999.
SFAS No. 133, in part, allows special hedge accounting for “fair value”
and “cash flow” hedges. SFAS No. 133 provides that the gain or loss
on a derivative instrument designated and qualifying as a “fair value”
hedging instrument as well as the offsetting loss or gain on the hedged
item attributable to the hedged risk be recognized currently in earnings in
the same accounting period. The accounting standard provides that the
effective portion of the gain or loss on a derivative instrument designated
and qualifying as a “cash flow” hedging instrument be reported as
a component of other comprehensive income and be reclassified
into earnings in the same period or periods during which the hedged
forecasted transaction affects earnings. The remaining gain or loss on the
derivative instrument, if any, must be recognized currently in earnings.
While the Company enters into derivatives for the purpose of mitigating
its global financial and commodity risks, these operations do not meet the
documentation requirements to qualify for hedge accounting under U.S.
GAAP. Therefore changes in the respective fair values of all derivatives are
reported in earnings when they occur.
Current Chilean accounting rules do not consider the existence of
derivative instruments embedded in other contracts and therefore they are
not reflected in the financial statements. For U.S. GAAP purposes, certain
implicit or explicit terms included in host contracts that affect some or all
of the cash flows or the value of other exchanges required by the contract
in a manner similar to a derivative instrument, must be separated from
the host contract and accounted for at fair value. The Company separately
measures embedded derivatives as freestanding derivatives instruments
at their estimated fair values recognizing changes in earnings when they
occur.
Estimates of fair values of financial instruments for which no quoted
prices or secondary market exists have been made using valuation
techniques such as forward pricing models, present value of estimated
future cash flows, and other modeling techniques. These estimates of fair
value include assumptions made by the Company about market variables
that may change in the future. Changes in assumptions could have a
significant impact on the estimate of fair values disclosed. As a result
such fair value amounts are subject to significant volatility and are highly
dependent on the quality of the assumptions used.
The Company is also exposed to foreign currency risk arising from
long-term debt denominated in foreign currencies, the majority of which
is US dollar. This risk is partially mitigated, as a substantial portion of
the Company’s revenues are either directly or indirectly linked to the US
dollar. Additionally, the Company records the foreign exchange gains and
losses on liabilities related to net investments in foreign countries which
are denominated in the same currency as the functional currency of those
foreign investments. Such unrealized gains and losses are included in the
cumulative translation adjustment account in shareholders’ equity, and
in this way act as a net investment hedge of the exchange risk affecting
the investments (see Note 11 (c) and Note 22 (e) for further detail). The
Company also uses short duration forward foreign currency contracts and
swaps, and cross-currency swaps, where possible, to manage its risk related
to foreign currency fluctuations.
The effect of adopting SFAS No. 133 as of January 1, 2001, resulted in a
cumulative effect on net income of ThCh$21,225,196 net of deferred taxes
for ThCh$47,041,680 and minority interest for ThCh$63,247,656, which is
presented under the caption “Cumulative effect of changes in accounting
principles”, the effects of the adjustment with respect to financial derivatives,
commodity derivatives, and embedded derivatives for the year ended on
December 31, 2001 is included in the net income and shareholders’ equity
reconciliation to U.S. GAAP under paragraph (gg) below.
u. Fair value of long-term debt assumed
As discussed in paragraph (i), under Chilean GAAP, assets acquired
and liabilities assumed are recorded at their carrying value, and the excess
of the purchased price over the carrying value are recorded as goodwill.
Under U.S. GAAP, assets acquired and liabilities assumed are recorded at
their estimated fair values, and the excess of the purchased price over the
estimated fair value of the net identifiable assets and liabilities acquired are
recorded as goodwill. As part of the purchase of the majority ownership
interest in Endesa-Chile, under U.S: GAAP, the cost of the purchase price
would have been allocated to the fair value of long-term debt. The effect
on shareholder’s equity and net income for the years presented is included
in paragraph (gg) below.
v. Effects on US GAAP of sale of subsidiary Río Maipo
The adjustment of the net gain obtained from the sale of the subsidiary
Compañía Eléctrica del Río Maipo S.A results from the reversal of the
accumulated US GAAP adjustment at December 31, 2002. As explained
in Note 11d) this subsidiary was sold in April 2003. The reversal of these
adjustment increased by ThCh$489,353 the gain obtained from the sale
of this subsidiary.
189
The operating income generated by Río Maipo until disposal date
amounted to ThCh$2,759,358 (sales amounted to ThCh$14,462,630
less cost of sales amounted to ThCh$10,817,530 and administrative and
selling expenses amounted to ThCh$885,742) was reclassified from Non-
operating income to Operating Income in accordance with US GAAP (see
Note 37 II (k)).
The sales of subsidiaries Infraestructura 2000 and Canutillar Plan did
not provide for any US GAAP difference adjustment.
w. Deferred income
During 2000, fiber optic cable was contributed to the Company in return
for granting the contributing company access to the fiber optic network after
installation in the Company’s electricity distribution system. Under Chilean
GAAP, the contributed assets were recorded at their fair market value, with
a corresponding credit recognized as income in 2000. Under U.S. GAAP,
the amount was deferred and amortize over the life of the related service
contract. This adjustment reverses the gain under Chile GAAP and records
the amortization of the deferred income recognized under U.S. GAAP. The
effect on shareholders’ equity and net income for the years presented is
included in (gg) below.
x. Regulated assets and deferred costs
The electricity sector in Chile and other countries of operation in Latin
America is regulated pursuant to the Chilean and other country electricity
laws. Most of the Company’s sales are subject to node price regulation,
which is designed to ensure an adequate supply of energy at reasonable,
consolidated financial statements
190
determined prices, which considers a variety of factors. The marginal cost
pricing model is not solely based upon costs incurred by the Company, and
as a result, the requirements of U.S. GAAP under SFAS No.71, “Accounting
for the Effects of Certain Types of Regulation”, related to a businesses
whose rates are regulated are not applicable to the Company’s financial
statements, except for the Company’s operations in Brazil as described
below.
As a result of changes in Brazilian Electricity Laws and Regulations, the
Company’s distribution subsidiaries in Brazil, Companhia de Electricidad
do Rio de Janeiro (Cerj) and Companhia Energética do Ceará (Coelce), are
subject to the provisions of SFAS No. 71 beginning on January 1, 2001. With
the new regulations issued by the National Agency of Electrictric Energy
(ANEEL), the rate-setting structure in Brazil is now designed to provide
recovery for allowable costs incurred, which will be recovered through future
increases in energy tariffs in order to recover losses experienced during the
period of Brazilian Federal Government mandated energy rationing from
June 1, 2001 to December 31, 2001. The Company estimates remaining
costs will be recovered over a period estimated of three years, from the
balance date.
Accordingly, the Company capitalizes incurred costs as deferred
regulatory assets when there is a probable expectation that future revenue
equal to the costs incurred will be billed and collected as a direct result of
the inclusion of the costs in an increased rate set by the regulator. The
deferred regulatory asset is eliminated when the Company collects the
related costs through billings to customers. ANEEL perform a rate review
on an annual basis. If ANEEL excludes all or part of a cost from recovery,
that portion of the deferred regulatory assets is impaired and is accordingly
reduced to the extent of the excluded cost. The Company has recorded
deferred regulatory assets, which it expects to pass on to its customers in
accordance with and subject to regulatory provisions.
The regulations also included certain VPA costs, which are certain
that each distribution company is permitted to defer and pass on the
their customers using future rate adjustments. VPA costs are limited by
concession contracts to the cost of purchased power and certain other costs
and taxes. Due to uncertainly in the Brazilian economy, ANEEL delayed the
approval of such VPA rate increases. An Executive Order in October 2001
created a tracking account mechanism, in order to calculate the variation in
the VPA costs for future rate adjustment calculation purposes. The Company
has not recognized any regulatory assets for VPA costs incurred prior to
2001, because costs incurred prior to January 1, 2001, are not recoverable
through the tracking account.
Under Chilean GAAP, the Company recognized revenue and deferred
costs related to the regulated assets. Under U.S. GAAP, in accordance with
Emerging Issues Taskforce (EITF) No. 92-7, “Accounting by Rate Regulated
Utilities for the Effects of Certain Alternate Revenue Programs”, revenue
amounts not expected to be collected within 24 months, have been
deferred. The effect of deferring revenues expected to be collected after
two years is included in (gg) below.
y. Reorganization of subsidiaries
Corresponds to the reorganization of the Company’s subsidiaries
Central Costanera and Central Buenos Aires (CBA) during 2001, in which
Central Costanera acquired the minority interest in CBA from third parties
and exchanged shares with Endesa Argentina. Under Chilean GAAP, the
Company recorded the goodwill for the proportional minority interest
acquired as the difference between the purchase price and the carrying
values of the assets acquired and liabilities assumed. Under U.S. GAAP, the
proportional fair value of the assets acquired compared to the purchase
price was recorded as goodwill. The effect on shareholders’ equity is
included in (gg) below.
z. Assets held for sale
Under Chilean GAAP the Company records divestitures of investments
or assets in the year in which they occur. Under U.S. GAAP, in accordance
with SFAS No. 144, long-lived assets for which there is a plan to sell the
assets within the following year, shall be disclosed separately from the
Company’s other assets, provided all the criteria are met. Additionally,
long-lived assets classified as held for sale must be measured at the lower
of their carrying amount or fair value less cost to sell. Long-lived assets
shall not be depreciated while they are classified as held for sale, while
interest and other expenses attributable to the liabilities of a disposal group
classified as held for sale shall continue to be accrued.
The Company’s Board of Directors approved a plan to sell a number of
the Company’s assets during October 2002. The following assets to be sold
meet the definition of, reporting units or long-lived assets held for sale:
•
•
•
•
•
Compañía Eléctrica del Río Maipo S.A.
Central Canutillar power plant
Gas Atacama transmission lines
CELTA transmission lines
Infraestructura 2000 S.A.
The Company evaluated the carrying values of all assets held for sale,
recording a loss to the extent that one of the assets’ fair values less cost
to sell was lower than the carrying value of those assets. Additionally,
the Company ceased recording depreciation expense once the assets
met the qualification criteria of held for sale, which varied from October
to December 2002. The effect of these adjustments is included in the
net income and shareholders’ equity reconciliation to U.S. GAAP under
paragraph (gg) below.
aa. Elimination of discontinued operations
Under Chilean GAAP, no restatement to the financial statement
information presented in previous years is required after a divestiture
has occurred. Under US GAAP, in accordance with SFAS No. 144, the
discontinued operations of a component must be retroactively separated
from the continuing operations of an entity, when the operations and
cash flows of a component which will be eliminated from the ongoing
operations of an entity as a result of a disposal transaction will not have
any significant continuing involvement in the operations of a component
after the disposal transaction.
The Company evaluated whether any of the assets held for sale met
either criteria, noting that the transmission lines and power plant are not
components, as they are included as a part of larger cash flow generating
groups, and the operations of these assets cannot be separated from
their respective groups. Additionally, Endesa-Chile plans to continue
generating revenues from Canutillar through a purchase power agreement,
management agreement, and a transmission leasing arrangement with
the future buyer. Infraestructura 2000 S.A. meets the conditions for being
classified as a discontinued operation, because it has distinct and separable
financial results from operations and cash flows. As a result of the disposal
the results of operations of the reporting unit have been eliminated from
the ongoing operations of Enersis, as Enersis will not have any continuing
Enersis / 2003 annual report
involvement in the operations of Infraestructura 2000 S.A. after its sale.
The Rio Maipo facility was classified as “held for sale” on December 31,
2002. In April, 2003, the Company sold facility. In accordance with SFAS
144, the Company determined that the Rio Maipo did not meet the criteria
to be classified as a discontinued operations as Enersis will have a significant
continuing involvement through continuing sales to Rio Maipo’ though its
subsidiary Endesa – Chile. The effect of restating discontinued operations
is included in the net income reconciliation to U.S. GAAP under paragraph
(gg) below.
bb. Effects of minority interest on the U.S. GAAP adjustments
The net income and shareholders’ equity under Chilean GAAP is
adjusted at the U.S. GAAP footnote for the impact of the U.S. GAAP
reconciling items on the allocation of income and loss to minority interests.
The effect of this adjustments is included in net income and shareholders’
equity reconciliation to US GAAP under paragraph (gg) below. The sum
of this adjustment and the minority interest reflected in our consolidated
income statement and balance sheet for each period presented under
Chilean GAAP represents the allocation of our results and shareholders’
equity to our minority shareholders under U.S. GAAP.
cc. Extraordinary Items
In 2002, the Company incurred a Chilean GAAP extraordinary charge
in accordance with Decree No. 1,949 of the Republic of Colombia for a tax
that will be used for Colombia’s democratic security, as disclosed in Note 27
Extraordinary Items. Under U.S. GAAP, this charge is classified as income tax
expense in accordance with SFAS 109, Accounting for Income Taxes (SFAS
109), as discussed in Note 37 II k) Reclassification to U.S. GAAP.
dd. Negative Goodwill CERJ
In January 2003, CERJ, one of our Brazilian subsidiaries approved a
capital increase as a result of which our ownership interest in CERJ increases,
as certain minority shareholders, including certain wholly owned subsidiaries
of Endesa-Spain, Enersis ultimate parent company did not participate.
Under Chile GAAP in accordance with BT. No 42 and SVS Circular 368
the company recognized the value of the discount between the amount
contributed and the underlying net book in the company was recognized as
a negative goodwill, to be amortized over a 20 year period. In accordance
the appropriate guidance, Enersis is allowed to fully amortized into income
the amount of any negative goodwill, if during the first year subsequent
to the capital increase the amount of the losses incurred by the subsidiary
is in excess the amount of negative goodwill. During 2003, CERJ incurred
losses in excess of the negative would recognized consequently Enersis
fully amortized into income the negative goodwill originally recognized.
Under US GAAP, the transaction would be considered a transaction
between entities under common control in which the minority interest
did not participate, consequently similar to the guidance in FTB No. 85-5,
Issues Relating to Accounting for Business Combinations the transaction is
accounted for as a recovery from the minority interest.. Consequently the
amount of the discount under book value is accounted for directly as an
increase of consolidated equity.
ee. Extinguishment of debt
In March 2003, certain bondholders were granted an option to
exchange between November 1, and 15 2003 their bonds in exchange for
shares of the Company at a fixed price of Ch 60.4202. Under Chile GAAP
the transaction was accounted for as an exchange of debt for equity with
the difference between the carrying amount of the debt and the strike price
of the conversion recognized directly in equity a share premium. Under
US GAAP the transaction should be recognized as an extinguishment of
debt in accordance with APB No. 14, using as reacquisition price of the
extinguished debt the value of the common issued or the value of the
debt—whichever is more clearly evident, as Enersis stock is publicly trade
the fair value of the shares is being considered to be more clearly evident.
The average conversion price during November 2003, the conversion period
was Ch 78 per share.
The effects in net income and shareholders’ equity of the US GAAP
adjustment are presented in note (gg) below.
ff. Asset retirement obligations
Under Chilean GAAP, there is no requirement to record obligations
associated with the retirement of tangible long-lived assets. Under U.S.
GAAP, the Company adopted SFAS No. 143, “Accounting for Asset Retirement
Obligations” effective January 1, 2003. Previously, the Company had not
been recognizing amounts related to asset retirement obligations under
U.S. GAAP.
SFAS No. 143 requires entities to record the fair value of a legal
liability for an asset retirement obligation in the period of its inception.
For the Company, such liabilities primarily relate to assets. The liability
is recorded at its net present value with a corresponding increase in the
carrying value of the related long-lived asset. The liability is accreted each
period, representing the time value of money, and the capitalized cost is
depreciated over the remaining useful life of the related asset.
191
As SFAS No. 143 required retrospective application to the inception
of the liability, the effects of the adoption reflect the accretion and
depreciation from the liability inception date through December 31, 2002.
The cumulative effect of the change in accounting principle on prior years
resulted in a charge to income of ThCh$280,490 (net of income taxes
and minority interest of ThCh$150,612) (Ch$0.03 per share) during the
year ended December 31, 2003. The effect of the adoption of SFAS No.
143 on the year ended December 31, 2003 was to decrease net income
in accordance with U.S. GAAP before the cumulative effect of the change
in accounting principle by ThCh$25,719 (net of income taxes and minority
interest of ThCh$12,760) (Ch$0.001 per share). The effects of this U.S.
GAAP adjustment on net income and shareholders’ equity are presented
in note (gg) below.
In Peru, where we have eight hydroelectric plants and one
thermoelectric plant, existing legislation includes the requirement for
entities with electrical assets to conduct retirement activities when
operations cease. In Chile, under certain concession decrees governing
four distribution lines, we are similarly required to conduct retirement
activities upon cessation of operations.
The effects in net income of the US GAAP adjustment are presented
gg. Effect of conforming to U.S. GAAP
in note (gg) below
The reconciliation of reported net income required to conform with U.S.
GAAP is as follows:
consolidated financial statements
Net income (loss) in accordance with Chilean GAAP
42,575,573
(225,985,568)
12,467,863
Reversal of amortization of revaluation of property, plant and equipment (paragraph b)
1,918,777
3,370,176
1,612,891
2001
ThCh$
As of December 31,
2002
ThCh$
2003
ThCh$
Depreciation of property, plant and equipment and difference in fixed assets
value at acquisition date (paragraph c)
Amortization of intangibles (paragraph d)
Deferred income taxes (paragraph e)
Pension and post-retirement benefits (paragraph g)
Investments in related companies (paragraph h)
Amortization and impairment of goodwill (paragraph i)
Amortization of goodwill (paragraph i)
Amortization of negative goodwill (paragraph j)
Capitalized interest (paragraph k)
Depreciation capitalized interest (paragraph k)
Difference foreign exchange capitalized (paragraph k)
Accumulated deficit during the development stage (paragraph l)
Capitalized general and administrative expenses (paragraph n)
Involuntary employee termination benefits (paragraph o)
Adjustment in selling price of investment (paragraph p)
Elimination of amortization of capitalized legal reserve (paragraph q)
Amortization of organizational and start-up costs (paragraph r)
Derivative instruments operating income (paragraph t)
Derivative instruments non operating income (paragraph t)
Fair value of long-term debt assumed (paragraph u)
Sale of subsidiaries (paragraph v)
Deferred income (paragraph w)
Regulated assets (paragraph x)
192
Reorganization of subsidiaries (paragraph y)
Asset held for sale (paragraph z)
Reclassification of discontinued operations (paragraph aa)
Effects of minority interest on the U.S. GAAP adjustments (paragraph bb)
Effects of minority interest on the U.S. GAAP adjustments (paragraph bb)
Deferred tax effects on the U.S. GAAP adjustments
Extinguishment of debt (paragraph ee)
Reversal amortization of negative goodwill Cerj. (paragraph dd)
Staff severance indemnities (paragraph f)
Asset retirement cost - (paragraph ff)
Asset retirement obligations - liabilities (paragraph ff)
(5,510,241)
123,058
(21,360,619)
23,361,327
21,069,544
(94,976,200)
(2,405,077)
123,058
9,181,675
11,856,234
27,398,946
51,138,178
-
-
(1,863,883)
192,945
(28,905,022)
3,776,020
(18,300,848)
(1,110,880)
(1,107,905)
(27,172,670)
19,854,278
(1,167,465)
(13,750,019)
(415,483)
(128,237)
(8,885)
(77,193)
597,394
3,999,877
60,004,530
5,837,022
(175,971)
(83,137,442)
(25,528,504)
2,454,240
(9,780,446)
(5,888,817)
1,978,009
(350,560)
4,536,226
912,401
5,418,734
(51,878,218)
(26,978,871)
(92,475)
-
-
167,073
(42,322,272)
(362,123)
(4,245,704)
853,973
(17,309,814)
-
-
-
-
-
277,577
(51,750,311)
(322,979)
(896,113)
(150,103)
128,905,670
-
78,804,214
-
-
-
-
-
(13,332,392)
10,363,942
(3,012,696)
29,339,287
(1,302,667)
(2,252,144)
11,876
-
520,763
3,486,794
(163,699,107)
24,344,422
(64,682)
489,353
119,722
57,517,976
(264,242)
896,113
(296,070)
21,771,883
-
5,559,569
(17,703,656)
(34,517,091)
174,385
(1,453)
(43,389)
Net income (loss) in accordance with U.S. GAAP before effect of discontinued
operations, and cumulative effect of change in accounting principle
(18,646,912)
(333,376,291)
29,480,264
Income from discontinued operations net of taxes and minority interest (paragraph aa)
287,254
166,770
69,107
Net income (loss) in accordance with U.S. GAAP before effect of cumulative effect
of change in accounting principle
(18,359,658)
(333,209,521)
29,549,371
Cumulative effect of change in accounting principle, net of the tax and minority interest
21,225,195
-
(280,490)
Net income (loss) in accordance with U.S. GAAP
2,865,537
(333,209,521)
29,268,881
Other comprehensive income (loss):
Cumulative translation adjustment determined under Chilean GAAP net of taxes and minority
19,653,919
20,802,883
(73,020,068)
Cumulative translation adjustment related to U.S GAAP adjustments net of taxes
and minority interest
(3,007,132)
(12,276,027)
51,171,555
Comprehensive income (loss) in accordance with U.S.GAAP
19,512,324
(324,682,665)
7,420,368
Enersis / 2003 annual report
The reconciliation to conform shareholders’ equity amounts to U.S. GAAP is as follows:
As of December 31,
2002
ThCh$
2003
ThCh$
Shareholders’ equity in accordance with Chilean GAAP
1,015,636,097
2,548,391,890
Reversal of revaluation of property, plant and equipment net of accumulated
amortization revaluation of property, plant and equipment (paragraph b)
Depreciation of property, plant and equipment and difference in fixed asset value
at acquisition date (paragraph c)
Intangibles (paragraph d)
Deferred income taxes (paragraph e)
Pension and post-retirement benefits assets long term (paragraph g)
Pension and post-retirement benefits liabilities long term (paragraph g)
Investments in related companies (paragraph h and paragraph z)
Goodwill (paragraph i)
Goodwill (paragraph i)
Goodwill gross amount (paragraph i)
Negative goodwill (paragraph j)
Capitalized interest (paragraph k)
Exchange diference (paragraph k)
Minimum dividend (paragraph m)
Capitalized general and administrative expenses (paragraph n)
Reversal of accrual of certain involuntary employee termination benefits (paragraph o)
Adjustment in selling price of investment (paragraph p)
Elimination of capitalized legal reserve (paragraph q)
Amortization organizational and start-up costs (paragraph r)
Derivative instruments (paragraph t)
Fair value of long-term debt assumed (paragraph u)
Reorganization of subsidiaries (paragraph y)
Asset held for sale (paragraph z)
Deferred income (paragraph w)
Regulated assets (paragraph x)
Effects of minority interest on the U.S. GAAP adjustments (paragraph bb)
Effects of minority interest on the U.S. GAAP adjustments (paragraph bb)
Elimination of result of discontinuing operations
Deferred tax effects on the U.S. GAAP adjustments
Staff severance indemnities (paragraph f)
Asset retirement cost (paragraph ff)
Asset retirement obligations - liabilities (paragraph ff)
Shareholders’ equity in accordance with U.S. GAAP
The changes in shareholders’ equity in U.S. GAAP as of each year-end are as follows:
Shareholders equity in accordance with U.S. GAAP - January 1
Reversal of minimum dividend payable as of previous balance sheet date (m)
Negative goodwill Cerj (paragraph dd)
Extinguishment of debt (paragraph ee)
Cumulative translation adjustment
Capital increase
Net income (loss) in accordance with U.S. GAAP for the year
Shareholders equity in accordance with U.S.GAAP-December 31
consolidated financial statements
(14,292,454)
(12,160,106)
(3,095,667)
(1,107,525)
(280,732,850)
(16,516,169)
(13,311,718)
4,329,102
234,348,121
18,954,776
4,410,196
(301,274,313)
62,343,128
(45,234,295)
(7,821,500)
(984,467)
(241,904,311)
-
(12,691,906)
30,940,961
280,623,341
15,662,663
4,410,196
(395,338,766)
60,073,352
(14,447,201)
-
-
(25,932,290)
93,627
(26,295,885)
88,476
-
-
(9,455,672)
(38,058,571)
151,399,321
1,278,540
6,130,801
(896,113)
(3,471,483)
(98,077,436)
227,423,329
(14,610,341)
732,011
(2,742,970)
-
-
-
193
(7,215,264)
(27,650,297)
(24,918,299)
1,213,858
4,751,588
-
(2,720,428)
(22,722,716)
233,609,202
(12,072,781)
-
141,986,835
174,385
62,696
(524,556)
858,269,182
2,512,520,960
2002
ThCh$
As restated
1,170,179,175
12,772,672
-
-
8,526,856
-
(333,209,521)
858,269,182
2003
ThCh$
858,269,182
-
34,517,091
17,703,656
(21,848,513)
1,594,610,663
29,268,881
2,512,520,960
II. ADDITIONAL DISCLOSURE REQUIREMENTS:
a. Goodwill and negative goodwill
The following is an analysis of goodwill and negative goodwill,
determined on Chilean GAAP basis, as of December 31, 2002 and 2003,
respectively:
Goodwill
Less: accumulated amortization
Goodwill, net
Negative goodwill
Less: accumulated amortization
Negative goodwill, net
2002
ThCh$
1,247,825,338
(391,836,704)
855,988,634
(346,245,075)
250,120,396
(96,124,680)
2003
ThCh$
1,682,402,179
(902,004,961)
780,397,218
(446,721,526)
367,486,894
(79,234,632)
b. Basis and diluted earnings per share:
For the year ended December 31,
Chilean GAAP (loss) earnings per share
U.S. GAAP (loss) earnings per share:
194
U.S. GAAP (loss) earnings per share before effect of discontinued
operations and cumulative effect of change in accounting principle
Discontinued operations (net of tax)
U.S. GAAP (loss) earnings per share before effect of
cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle (net of tax)
Basic and diluted U.S. GAAP (loss) earnings per share
Total number of common outstanding shares at December 31,
Weighted average number of common shares outstanding (000’s)
2001
Ch$
5.13
(2.24)
0.03
(2.21)
2.56
0.35
8,291,020
8,291,020
2002
Ch$
(27.26)
(40.21)
0.02
(40.19)
-
(40.19)
8,291,020
8,291,020
2003
Ch$
0.61
1.44
0.003
1.44
(0.01)
1.43
32,651,166
20,471,093
(1)
The earnings per share figures for both U.S. GAAP and Chilean GAAP purposes have been calculated by dividing the respective earnings (loss) amounts in accordance with U.S. GAAP and Chilean GAAP, respectively, by the
weighted average number of common shares outstanding during the year. The Company has not issued convertible debt or contingent equity securities. Consequently, there are no potentially dilutive effects on the earnings
per share of the Company.
Enersis / 2003 annual report
c.
Income taxes:
The provision (benefit) for income taxes charged to the results of operations determined in accordance with U.S. GAAP is a follows:
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
2001
Brazil
ThCh$
Colombia
ThCh$
Other
ThCh$
Total
ThCh$
Income tax provision under Chilean GAAP
Current income taxes as determined under Chilean GAAP (1)
(14,215,006)
(45,655,129)
(8,294,461)
(22,887,411)
(31,814,033)
(72,499)
(122,938,539)
Deferred income taxes as determined under Chilean GAAP
(6,123,588)
(2,421,935)
(13,305,356)
13,814,973
(174,193)
-
(8,210,099)
Total income tax provision under Chilean GAAP
(20,338,594)
(48,077,064)
(21,599,817)
(9,072,438)
(31,988,226)
(72,499)
(131,148,638)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
(1,004,780)
(23,621,204)
(696,907)
(3,416,340)
(165,791)
Deferred tax effect of adjustments to U.S. GAAP
3,126,564
(3,063,845)
784,668
6,442,004
(24,599,205)
Deferred tax effect of comulative effect of change in accounting
principle
Total U.S. GAAP adjustments:
US GAAP reclassifications (2)
1,859,794
(41,945,155)
3,981,578
(68,630,204)
(216,491)
(128,730)
205,276
(6,945,105)
3,230,940
(31,710,101)
8,197,975
-
-
-
(28,905,022)
(17,309,814)
(47,041,681)
(93,256,517)
8,197,975
Total Income tax provision under U.S. GAAP
(16,357,016)
(116,707,268)
(21,728,547)
2,356,477
(63,698,327)
(72,499)
(216,207,180)
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
2002
Brazil
ThCh$
Colombia
ThCh$
Other
ThCh$
Total
ThCh$
Income tax provision under Chilean GAAP
Current income taxes as determined under Chilean GAAP
(13,425,130)
62,744
(12,787,952)
(2,628,912)
(45,700,626)
Deferred income taxes as determined under Chilean GAAP
(3,246,886)
34,416,658
(30,625,633)
5,938,454
1,320,128
Total income tax provision under Chilean GAAP
(16,672,016)
34,479,402
(43,413,585)
3,309,542
(44,380,498)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
(2,321,768)
30,730,636
(21,703,800)
(24,542,702)
(3,522,985)
Deferred tax effect of adjustments to U.S. GAAP
13,349,961
(13,924,852)
21,801,269
20,567,000
37,010,836
Total U.S. GAAP adjustments:
US GAAP reclassifications (2)
11,028,193
16,805,784
97,469
(3,975,702)
33,487,851
296,480
6,155,018
(22,599,396)
-
-
-
-
-
-
(74,479,876)
7,802,721
(66,677,155)
(21,360,619)
78,804,214
57,443,595
(16,147,898)
195
Total Income tax provision under U.S. GAAP
(5,347,343)
51,285,186
(43,316,116)
5,488,858
(33,492,043)
-
(25,381,458)
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
2003
Brazil
ThCh$
Colombia
ThCh$
Other
ThCh$
Total
ThCh$
Income tax provision under Chilean GAAP
Current income taxes as determined under Chilean GAAP
(28,348,929)
-
(14,649,203)
(8,938,095)
(48,816,949)
Deferred income taxes as determined under Chilean GAAP
23,735,924
20,598,165
(15,627,624)
29,871,477
604,518
Total income tax provision under Chilean GAAP
(4,613,005)
20,598,165
(30,276,827)
20,933,382
(48,212,431)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
5,697,010
(1,890,566)
5,323,258
51,973
-
Deferred tax effect of adjustments to U.S. GAAP
(4,667,672)
57,850,670
(18,544,339)
(26,290,516)
(2,788,575)
U.S. GAAP reclassifications (2)
Total U.S. GAAP adjustments:
97,540
-
-
4,983,047
-
1,126,878
55,960,104
(13,221,081)
(21,255,496)
(2,788,575)
-
-
-
-
-
-
-
(100,753,176)
59,182,460
(41,570,716)
9,181,675
5,559,568
5,080,587
19,821,830
Total Income tax provision under U.S. GAAP
(3,486,127)
76,558,269
(43,497,908)
(322,114)
(51,001,006)
-
(21,748,886)
The income tax provisions under Chilean GAAP for the years ended December 31, 2001 are stated net of income tax recovery of ThCh$8,116,807.
(1)
(2) US GAAP reclassifications are tax related expenses under Chilean GAAP are classified as non-operating expenses, but under US GAAP would be classified as income taxes.
consolidated financial statements
Deferred tax assets (liabilities) as of balance sheet dates are summarized s follows:
SFAS No. 109
Applied to
Chilean
GAAP
Balances
ThCh$
2002
SFAS No.
109 applied
to U.S. GAAP
Adjustments
Total
Deferred
Taxes under
SFAS No. 109
ThCh$
ThCh$
SFAS No. 109
Applied to
Chilean
GAAP
Balances
ThCh$
2003
SFAS No.
109 applied
to U.S. GAAP
Adjustments
Total
Deferred
Taxes under
SFAS No. 109
ThCh$
ThCh$
6,092,340
13,976,184
20,068,524
6,886,897
3,471,272
10,358,169
-
-
33,346,329
22,369,938
32,539,943
6,834,095
2,773,552
3,285,278
2,682,607
590,842
5,301
1,223,410
1,643,609
117,632,905
51,441,049
118,204
3,966,075
5,207,034
(3,483,390)
-
-
-
1,180,304
-
-
9,088,367
419,419
-
10,959,331
-
-
-
5,639,274
-
-
-
33,346,329
22,369,938
32,539,943
6,834,095
3,953,856
3,285,278
2,682,607
9,679,209
424,720
1,223,410
12,602,940
117,632,905
51,441,049
118,204
9,605,349
5,207,034
(3,483,390)
-
-
28,445,827
12,350,395
6,854,533
10,253,712
3,252,026
305,207
-
769,811
3,226,745
140,743,998
52,914,563
-
-
3,642,557
(2,619,849)
-
-
7,725,723
9,515,638
-
-
924,944
-
-
4,281,408
-
-
5,418,377
-
-
-
1,574,341
-
(1,026,722)
135,981
7,725,723
9,515,638
28,445,827
12,350,395
7,779,477
10,253,712
3,252,026
4,586,615
-
769,811
8,645,122
140,743,998
52,914,563
-
1,574,341
3,642,557
(3,646,571)
135,981
Deferred income tax assets
Property, plant and equipment
Regulated assets and related deferred
cost (conpanies in Brazil)
Negative goodwill
Allowance for doubtful accounts
Actuarial deficit (companies in Brazil)
Deferred income
With-holdings
Provision real estate projects
Derivative contracts
Severance indemnities
Vacation accrual
Post retirement benefits
Tax loss carryforwards (1)
Contingencies
Finance costs
Salaries for construction-in progress
Exchange difference -subsidiaries
Valuation allowance
Others
196
Total deferred income tax assets
232,552,854
96,979,146
329,532,000
267,026,422
32,020,962
299,047,384
Deferred income tax liabilities
Property, plant and equipment
Severance indemnities
Regulated assets
Actuarial deficit (companies in Brazil)
Finance costs
Derivative contracts
Bond discount
Cost of studies
Imputed interest on construction
With-holdings
Materials used
Hid. El Chocón investment
Capitalized expenses
Capitalized interest
Post retirement benefits
Contingencies
Others
463,864,534
5,281,301
469,145,835
378,897,544
(131,867,382)
247,030,162
822,383
3,866,280
2,324,725
13,893,414
-
-
-
-
-
70,442,401
1,890,351
8,052,280
4,912,067
200,624
1,097,152
2,926,769
3,921,901
-
-
-
-
-
-
-
-
1,043
21,105,052
530,557
13,905,137
-
-
2,362,805
822,383
3,866,280
2,324,725
13,893,414
70,442,401
1,890,351
8,052,280
4,912,067
200,624
1,097,152
2,926,769
3,921,901
21,105,052
531,600
13,905,137
2,362,805
948,245
15,451,651
-
10,638,763
965,095
1,855,600
7,980,878
4,550,251
-
3,716,538
2,725,964
5,906,694
-
-
3,007,781
-
-
29,646
-
-
-
311,282
-
-
-
-
-
-
-
19,462,302
1,325,219
-
773,060
977,891
15,451,651
-
10,638,763
1,276,377
1,855,600
7,980,878
4,550,251
-
3,716,538
2,725,964
5,906,694
19,462,302
1,325,219
3,007,781
773,060
-
-
Differences between the financial and
tax value of Río Maipo S.A.
1,489,974
-
1,489,974
Total deferred income tax liabilities
523,168,634
99,722,116
622,890,750
436,645,004
(109,965,873)
326,679,131
Net deferred assets (liabilities)
(290,615,780)
(2,742,970)
(293,358,750)
(169,618,582)
141,986,835
(27,631,747)
(1)
Tax loss carryforwards relate primarily to Peruvian, Chilean and Brazilian entities. In accordance with the current enacted tax law in Chile and Brazil, such tax losses may be carried-forward indefinitely, however Peruvian tax
carryforwards expire after five years.
Enersis / 2003 annual report
A reconciliation of the Chilean Statutory Income Tax rate to the Company’s effective tax rate on net income is as follows:
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
2001
Brazil
ThCh$
Colombia
ThCh$
Other
ThCh$
Total
ThCh$
Statutory Chilean tax
Effect of higher foreign tax rates
(35,559,239)
(33,377,079)
(8,345,121)
757,531
(19,963,764)
32,899,600
(63,588,072)
-
(64,286,128)
(16,626,493)
(1,657,047)
(30,400,164)
6,625,823
(106,344,009)
Increase (decrease) in rates resulting from:
Price-level restatement not accepted
for tax purposes
Non-taxable items
Non-deductible items (2)
Prior years income tax
Effect of Chilean tax rate increase
Other
US GAAP reclassifications (1)
(10,939,483)
476,112
477,541
1,166,548
(15,126,317)
-
(23,945,598)
20,057,025
(13,024,156)
(4,736,306)
-
(39,525,423)
(37,324,479)
24,413,911
(20,534,132)
(2,006,509)
(8,294,744)
(4,027,977)
7,649,848
(405,301)
-
-
(95,619)
319,665
2,185,396
-
-
726,865
-
-
-
-
-
14,038,115
257,284
(8,517,972)
1,065,053
(72,499)
8,197,975
12,576,157
(226,414)
(8,294,744)
2,742,004
8,197,975
Tax expense at effective tax rate
(16,357,016)
(116,707,268)
(21,728,547)
2,356,477
(63,698,327)
(72,499)
(216,207,180)
Statutory Chilean tax
Effect of higher foreign tax rates (3)
Increase (decrease) in rates resulting from:
Price-level restatement not accepted
for tax purposes
Non-taxable items
Non-deductible items (2)
Prior years income tax
Other
US GAAP reclassifications (1)
Chile
ThCh$
67,168,315
(430,542)
Argentina
ThCh$
Perú
ThCh$
2002
Brazil
ThCh$
(167,432)
(198,824)
(13,114,914)
(14,344,438)
74,751,569
58,337,620
Other
ThCh$
Colombia
ThCh$
(6,834,175)
6,969,289
Total
ThCh$
121,803,363
50,333,105
(6,897,315)
23,588,346
(571,201)
(1,951,871)
(13,678,525)
1,281,470
(7,906,847)
(8,395,157)
(44,416,218)
(65,503,689)
35,639,598
(7,057,169)
(88,139,584)
(2,696,489)
1,434,427
296,480
330,345
(1,368,126)
1,534,889
752,324
(1,962,698)
6,155,018
(22,599,396)
201
4,098,513
514,748
489,434
(59,436,551)
(120,962,331)
(3,549,867)
2,089,287
(16,147,898)
197
Tax (benefit) expense at effective tax rate
(5,347,343)
51,285,186
(43,316,116)
5,488,858
(33,492,043)
-
(25,381,458)
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
2003
Brazil
ThCh$
Colombia
ThCh$
Other
ThCh$
Statutory Chilean tax
(54,608,415)
28,242,985
(12,716,631)
8,189,725
(12,546,195)
Effect of higher foreign tax rates (3)
(1,229,007)
32,016,055
(13,090,131)
14,397,858
(16,728,261)
Increase (decrease) in rates resulting from:
Price-level restatement not accepted
for tax purposes
7,796,437
(16,232,476)
Non-taxable items
Non-deductible items (2)
Prior years income tax
Other
US GAAP reclassifications (1)
21,941,298
25,352,956
(1,381,708)
(1,455,228)
97,540
35,741,549
(1,397,456)
5,162,000
(1,932,546)
(1,160,034)
146,194
16,962,743
(2,310,618)
(19,606,532)
(23,875,022)
(36,081,848)
-
(899,226)
(355,686)
(1,493,472)
-
-
(925,142)
4,983,047
(2,753,639)
Total
ThCh$
(43,438,531)
15,366,514
(11,619,847)
78,647,556
(56,521,064)
(1,737,394)
(7,526,707)
5,080,587
Tax (benefit) expense at effective tax rate
(3,486,127)
76,558,269
(43,497,908)
(322,114)
(51,001,006)
-
(21,748,886)
(1)
(2)
(3)
US GAAP reclassifications are tax related expenses that under Chilean GAAP are classified as non-operating expenses, but under US GAAP would be classified as income taxes.
This represents mainly deductible temporary differences related to investments in subsidiaries that are permanent in nature for which deferred tax asset are not recognized.
This amount represents the foreign tax rate applied certain branches opened in 2002 that are taxed outside Chile eventhough.
consolidated financial statements
d. Segment disclosures
• Distribution - Operating Revenues
The Company is primarily engaged in the distribution and generation
of electricity in Chile, Argentina, Brazil, Colombia and Perú. Enersis
provides these and other services through four business segments:
Revenue is recognized when energy and power is provided at rates
specified under contract terms or prevailing market rates.
• Generation
• Distribution
• Engineering Services and Real State
• Corporate and other
Generation involves the generation of electricity primarily through its
subsidiary Endesa-Chile. Distribution involves the supply of electricity
to regulated and unregulated customers. Engineering Services and
Real Estate includes engineering services and real estate development.
Corporate and other includes computer-related data processing services
and the sale of electric-related supplies and equipment. The Company’s
reportable segments are strategic business units that offer different
products and services and are managed separately. The methods of
revenue recognition by segment are as follows:
• Generation
Revenue is recognized when energy and power output is delivered and
capacity is provided at rates specified under contract terms or prevailing
market rates.
• Distribution - Non Operating Revenues
Revenue is recognized as services are provided, such as public light posts,
telephone poles, and other services related to distribution services.
• Engineering Services and Real Estate
Revenue is recognized as services are provided, or when projects are
sold.
• Corporate and Other
Revenue is recognized as services are provided, or when supplies or
equipment are sold.
The following segment information has been disclosed in accordance
with U.S. reporting requirements, however, the information presented
has been determined in accordance with Chilean GAAP:
198
Enersis / 2003 annual report
Sales to unaffilated customers
Intersegment sales
Generation
Distribution
2001
Engineering services
and real estate
ThCh$
ThCh$
844,506,320
2,147,389,446
211,225,793
44,142,772
ThCh$
35,397,122
28,620,014
Corparate
and other
ThCh$
62,681,681
30,868,358
Eliminations
Consolidated
ThCh$
ThCh$
-
3,089,974,569
(314,856,938)
-
Total revenues
1,055,732,113
2,191,532,218
64,017,136
93,550,039
(314,856,938)
3,089,974,569
Operating income
351,454,915
390,365,680
10,234,607
(4,590,746)
14,624,750
762,089,205
Participation in net income of
affialate companies
(10,458,607)
(347,178)
(10,805,785)
Depreciation and amortization
150,676,964
262,879,718
1,253,711
57,056,905
(269,097)
471,598,201
Identifiable assets including
investment in related companies
6,425,187,081
6,373,163,204
136,740,449
4,995,187,129
(5,042,880,558)
12,887,397,305
Capital expenditures
(53,502,146)
(290,870,798)
(419,649)
(176,680)
344,969,273
Sales to unaffiliated customers
Intersegment sales
Generation
Distribution
2002
Engineering services
and real estate
ThCh$
731,955,841
215,524,302
ThCh$
1,729,173,357
50,558,319
ThCh$
34,499,156
71,877,991
Corparate
and other
ThCh$
15,103,598
43,288,180
Eliminations
Consolidated
ThCh$
ThCh$
2,510,731,952
(381,248,793)
Total revenues
947,480,143
1,779,731,676
106,377,147
58,391,778
(381,248,793)
2,510,731,952
Operating income
339,988,226
185,330,075
13,513,095
(112,154)
(748,437)
537,970,805
199
Participation in net income of
affiliate companies
8,627,162
(280,742)
8,346,420
Depreciation and amortization
223,572,979
517,672,939
1,425,329
111,930,386
12,944,753
867,546,386
Identifiable assets including
investment in related companies
6,589,443,410
6,118,309,478
142,194,426
4,337,837,501
(4,449,925,195)
12,737,859,620
Capital expenditures
136,206,696
183,677,826
762,643
447,432
321,094,597
Sales to unaffiliated customers
Intersegment sales
Generation
Distribution
2003
Engineering services
and real estate
ThCh$
643,554,766
276,726,632
ThCh$
1,591,449,768
12,397,751
ThCh$
38,357,529
64,694,441
Corparate
and other
ThCh$
10,585,159
39,029,949
Eliminations
Consolidated
ThCh$
ThCh$
-
2,283,947,222
(324,462,615)
68,386,158
Total revenues
920,281,398
1,603,847,519
103,051,970
49,615,108
(324,462,615)
2,352,333,380
Operating income
338,510,897
184,150,775
12,880,852
(5,078,576)
633,736
531,097,684
Participation in net income of
affiliate companies
17,369,712
-
-
147,084
Depreciation and amortization
167,081,095
208,174,509
1,466,036
32,329,497
-
-
17,516,796
409,051,137
Identifiable assets including
investment in related companies
5,465,335,840
5,206,741,058
147,442,898
3,897,847,886
(3,984,620,715)
10,732,746,967
Capital expenditures
131,139,818
126,927,756
527,549
190,525
-
258,785,648
consolidated financial statements
A summary of activities by geographic area is as follows:
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
2001
Total revenues
813,163,450
835,626,392
268,144,033
698,574,698
474,465,995
3,089,974,569
Long lived assets (net) (1)
2,389,497,306
1,578,515,030
1,185,701,940
1,963,493,584
2,604,092,296
9,721,300,156
2002
Total revenues
807,456,701
300,610,346
295,351,398
630,532,907
476,780,600
2,510,731,952
Long lived assets (net) (1)
2,398,481,937
1,567,339,505
1,248,150,159
2,060,027,668
2,704,253,496
9,978,252,765
2003
Total revenues
854,422,820
292,342,045
249,728,449
550,603,624
405,236,442
2,352,333,380
Long lived assets (net) (1)
2,136,131,207
1,219,885,731
999,287,802
1,596,985,069
2,144,070,701
8,096,360,510
(1)
Long-lived assets include property, plant and equipment.
e. Concentration of risk:
The Company does not believe that it is exposed to any unusual credit risk from any single customer. The Company’s debtors are dependent on the
economy in Latin America, which could make them vulnerable to downturns in the economic activity in the countries in which the Company operates.
No single customers accounted for more than 10% of revenues for the years ending December 31, 2001, 2002 and 2003.
f. Schedule of debt maturity:
200
Following is a schedule of debt maturity in each of the next five years and thereafter:
2004
2005
2006
2007
2008
Thereafter
Total
ThCh$
521,267,537
177,433,204
671,698,377
347,306,127
470,030,250
1,617,016,564
3,804,752,059
g. Disclosure regarding interest capitalization:
Interest expense incurred
Interest capitalized under Chilean GAAP
Interest capitalized under U.S. GAAP
2001
ThCh$
461,793,511
24,492,823
29,429,617
Year ended December 31,
2002
ThCh$
450,524,679
19,662,407
23,893,073
2003
ThCh$
420,432,628
10,479,354
15,663,609
Enersis / 2003 annual report
(h) Cash flow information:
(i) The statement of cash flows under Chile GAAP differs in certain respects from the presentation of a statement of cash flow under U.S. GAAP as
follows:
Year ended December 31,
2001
Restated
ThCh$
2002
ThCh$
2003
ThCh$
Cash provided by operating activities under Chilean GAAP
566,126,200
634,060,155
574,476,970
Development stage companies
1,316,935
Cash provided by (used in) operating activities under U.S. GAAP
567,443,135
634,060,155
574,476,970
Cash provided by (used in) financing activities under Chilean GAAP
(137,545,216)
(287,890,263)
(435,757,575)
Development stage companies
(995,575)
Cash provided by (used in) financing activities under U.S. GAAP
(138,540,791)
(287,890,263)
(435,757,575)
Cash provided by (used in) investing activities under Chilean GAAP
(329,735,425)
(340,247,545)
88,375,398
Development stage companies
Time deposits (1)
(314,002)
(10,278,615)
Cash provided by (used in) investing activities under U.S. GAAP
(330,049,427)
(350,526,160)
88,375,398
201
(1)
Time deposits with maturities longer than 90 days.
(ii) Cash and cash equivalents includes all highly liquid debt instruments purchased with an original maturity of three months or less:
Cash
Time deposits
Marketable securities
Other current assets
Total cash and cash equivalents under chilean GAAP
Time deposits with maturities longer than 90 days
Year ended December 31,
2001
ThCh$
38,025,284
179,894,366
200,230
1,885,996
220,005,877
2002
ThCh$
48,666,727
147,083,163
1,558,723
26,094,984
223,403,597
2003
ThCh$
26,370,232
256,129,167
11,150,635
37,350,791
331,000,825
-
10,278,615
-
Total cash and cash equivalents under US GAAP
220,005,877
233,682,212
331,000,825
consolidated financial statements
(iii) Additional disclosures required under U.S. GAAP are as follows:
Interest paid during the year
Income taxes paid during the year
Assets acquired under capital leasing
2001
ThCh$
409,290,777
133,520,396
240,976
Years ended December 31,
2002
ThCh$
460,105,547
137,777,819
2003
ThCh$
392,987,628
396,388,375
-
-
i. Disclosures about fair value of financial instruments
• Long-term accounts receivable
The following methods and assumption were used to estimate the fair
value of each class of financial instruments as of December 31, 2002 and
2003 for which it is practicable to estimate that value:
The fair value of long-term accounts receivable was estimated using
the interest rates that are currently offered for loans with similar terms and
remaining maturities.
• Cash
• Long-term debt
The fair value of the Company’s cash is equal to its carrying value.
The fair value of long-term debt was based on rates currently available
to the Company for debt with similar terms and remaining maturities.
• Time deposits
The fair value of time deposits approximates carrying value due to the
• Derivative instruments
relatively short-term nature.
• Marketable securities
202
The fair value of marketable securities is based on quoted market
prices of the mutual money market funds held and approximates carrying
value.
Estimates of fair values of derivative instruments for which no quoted
prices or secondary market exists have been made using valuation
techniques such as forward pricing models, present value of estimated
future cash flows, and other modeling techniques. These estimates of fair
value include assumptions made by the Company about market variables
that may change in the future. Changes in assumptions could have a
significant impact on the estimate of fair values disclosed. As a result
such fair value amounts are subject to significant volatility and are highly
dependent on the qualify of the assumptions used.
The estimated fair values of the Company’s financial instruments compared to Chilean GAAP carrying amounts are as follows:
Cash
Time deposits
Marketable securities
Accounts receivable
Notes receivable, net
Other accounts receivable, net
Amounts due from related companies
Long-term accounts recievable
2001
2002
2003
Carrying
amount
ThCh$
38,025,284
179,894,366
205,103
Fair
Value
ThCh$
38,025,284
179,894,366
205,103
Carrying
amount
ThCh$
48,666,727
147,083,163
1,558,723
Fair
Value
ThCh$
48,666,727
147,083,163
1,558,723
555,751,482
555,751,482
463,428,121
463,428,121
12,138,388
66,544,701
190,574,244
102,922,598
12,138,388
66,544,701
190,574,244
102,922,598
5,182,662
63,403,857
198,259,972
127,109,018
5,182,662
63,403,857
198,259,972
127,109,018
Carrying
amount
ThCh$
Fair
Value
ThCh$
26,370,232
26,370,232
256,254,606
256,254,606
11,155,741
467,170,365
8,362,627
94,194,266
146,163,958
127,935,044
11,155,741
467,170,365
8,362,627
94,194,266
146,163,958
127,935,044
Accounts payable and other
(268,624,170)
(268,624,170)
(238,996,489)
(238,996,489)
(218,602,775)
(218,602,775)
Notes payable
long-term debt
(282,189,682)
(282,189,682)
(227,976,962)
(227,976,962)
(166,413,047)
(166,413,047)
(6,294,849,228)
(6,253,197,087)
(6,441,166,465)
(6,406,158,889)
(3,804,752,059)
(3,934,702,914)
Derivatives instruments
(80,782,182)
131,689,145
129,973,402
129,973,402
(735,991)
(735,991)
Enersis / 2003 annual report
j. Derivative instruments
The Company is exposed to the impact of market fluctuations in the
price of electricity, primary materials such as natural gas, petroleum, coal,
and other energy-related products, interest rates, and foreign exchange
rates. The Company employs policies and procedures to manage its
risks associated with these market fluctuation on a global basis through
strategic contract selection, fixed-rate and variable-rate portfolio targets,
net investment hedges, and financial derivatives. All derivatives that do
not qualify for the normal purchase and sales exemption under SFAS No.
133 are recorded at their fair value. On the date that swaps, futures,
forwards or option contracts are entered into, the Company designates
the derivatives as a “hedge”, if the documentation is not appropriate
to designate as a “hedge” the derivative’s mark-to-market adjustment
flows through the income statement. The Company does not have the
appropriate documentation in place to designate contracts as hedges of a
forecasted transaction or future cash flows (cash flow hedge) or as a hedge
of a recognized assets, liability or firm commitment (fair value hedge).
The Company has classified its derivatives into the following general
categories: commodity derivatives, embedded derivatives, and financial
derivatives. Certain energy and other contracts for the Company’s
operations in Chile are denominated in the US dollar. According to SFAS
No. 133, an embedded foreign currency derivative should be separated
from the host contract because none of the applicable exclusions are met
(See Embedded Derivative Contracts below). For purposes of evaluating
the functional currency of the Company’s subsidiaries in Argentina, Perú,
Brazil, and Colombia, the Company applied BT 64, consistent with the
methodology described in paragraph (s), thus the functional currency of
these subsidiaries was the US dollar as these subsidiaries were remeasured
into US dollars because foreign subsidiaries operate in countries exposed
to significant risks as determined under BT 64.
The following is a summary of the Company’s adjustment to fair values
for all identified derivative contracts as of December 31, 2002 and 2003.
Embedded derivatives
Financial derivatives
Investment in related companies
Derivative instruments U.S.GAAP Shareholders equity adjustment
Embedded derivatives
Financial derivatives
Investment in related companies
Derivative instruments U.S.GAAP Shareholders equity adjustment
Distribution
ThCh$
(11,088,082)
(28,717,230)
(39,805,312)
-
(39,805,312)
Distribution
ThCh$
(1,481,950)
(13,418,260)
(14,900,210)
(14,900,210)
2003
Generation
ThCh$
208,326,850
(17,122,217)
191,204,633
7,725,718
198,930,351
2003
Generation
ThCh$
(7,095,906)
(2,922,182)
(10,018,088)
36,864,544
26,846,456
Total
ThCh$
197,238,768
(45,839,447)
151,399,321
7,725,718
159,125,039
Total
ThCh$
(8,577,856)
(16,340,442)
(24,918,298)
36,864,544
11,946,246
203
Certain Company’s generation and distribution commodity contracts
could be seen as contracts that meet the definition of a derivative under
SFAS No. 133 and would be required to be accounted for at fair value. These
conditions are (i) have an underlying, which is the market price of power at
the delivery location and a notional amount specified in the contract; (ii)
have no initial payment on entering into the contract; and (iii) have a net
settlement provision or have the characteristic of net settlement because
power is readily convertible to cash, as it is both fungible and actively traded
in the country of generation or country of distribution.
The Company assessed that its commodity contracts that are
requirements contracts do no meet the above definition because the
contracts do not have notional amounts, as they only have maximum
amounts or no specified amounts, and do not include an implicit or explicit
minimum amount in a settlement or a default clause. A requirements
contract allows the purchaser to use as many units of power as required
to satisfy its actual needs for power during the period of the contract, and
the party is not permitted to buy more than its actual needs.
The Company concluded that all of its power is readily convertible to
cash as energy is actively traded, or the Company has access, to markets
where energy is actively traded. However, only certain participants have
access to the energy markets, thus determination as to whether energy
could be considered readily convertible to cash was analyzed on a country
by country basis. Currently, Chilean distributors do not have access to the
Chilean spot market, however this could change in the future if energy
regulations are changed. The Company has also concluded that multiple-
delivery long-term power contracts meet the net settlement characteristic.
Management multiple-delivery long-term power contracts are readily
convertible to cash because the Company operates in countries with
active spot markets, that although they contain varying levels of liquidity,
can rapidly absorb the contract’s quantities at each delivery date without
significantly affecting the price, and thus meet the definition of net
settlement, consequently these contracts are accounted for as derivatives
that under SFAS No.133.
consolidated financial statements
Net lnvestment Hedges
The Company is also exposed to foreign currency risk arising from long-
term debt denominated in foreign currencies, the majority of which is the
US dollar. This risk is mitigated, as a substantial portion of the Company’s
revenues are either directly or indirectly linked to the US dollar. Additionally,
the Company records the foreign exchange gains and losses on liabilities
related to net investments in foreign countries which are denominated in
the same currency as the functional currency of those foreign investments.
Such unrealized gains and losses are included in the cumulative translation
adjustment account in shareholders equity, and in this way act as a net
investment hedge of the exchange risk affecting the investments (see Note ll
(c) and Note 22 (f) for further detail). The Company also uses short duration
forward foreign currency contracts and swaps, and cross-currency swaps,
where possible, to manage its risk related to foreign currency fluctuations.
These contracts are considered “cover” contracts under Chilean GAAP. In
accordance with Chilean GAAP the gain and losses on these contracts are
deferred until realized as assets or liabilities.
For U.S. GAAP purposes, as the Company has not met the requirements
for designating these derivatives contracts as “hedges”, the contracts are
recorded at fair value in the balance sheet with any unrealized gain and/or
losses being directly recorded in the income statement.
k. Reclassification to U.S. GAAP
Certain reclassifications would be made to the Chilean GAAP income
statement in order to present Chilean GAAP amounts in accordance with
presentation requirements under U.S. GAAP. Amortization of negative
goodwill, amortization of goodwill, and certain other non-operating income
and expense, would be included in operating income. Recoverable taxes
included in other non-operating revenues would be recorded as part of
income taxes under U.S. GAAP. Equity participation in income or losses of
related companies included in non-operating income would be presented
after income taxes and minority interest in accordance with U.S. GAAP. The
following reclassifications included in the column labeled “Reclassifications”
disclose amounts using a U.S. GAAP presentation, although the amounts
displayed have been determined in accordance with Chilean GAAP:
Because both the purchases and sales interconnection contracts are for
periods up to 20 years in complex markets, where no similar term forward
market information is available, the Company has estimated such values
based on the best information available, including using modeling and
other valuation techniques. The Company has recorded the best estimate
of fair value, however with different assumptions such as interest rates,
inflation rates, exchange rates, electricity rates, and increases in cost trends,
materially different fair values could result. As a result such estimates are
highly volatile and dependent upon the assumptions used. The assumption
to measure the fair value of these interconnection related contracts using
the Argentine market prices may have a significant effect on the Company’s
net income and shareholders’ equity.
Such values are included in the reconciliation to U.S. GAAP in Note 37
paragraph (gg).
Embedded Derivative Contracts
The Company enters into certain contracts that have embedded features
that are not clearly and closely related to the host contract. As specified
in SFAS No. 133, bifurcation analysis focuses on whether the economic
characteristics and risks of the embedded derivative are clearly and closely
related to the economic characteristics and risks of the host contract. In
certain identified contracts, the host service contract and the embedded
feature are not indexed to the same underlying and changes in the price
or value of service will not always correspond to changes in the price of the
commodity to which the contract is indexed. U.S. GAAP requires embedded
features to be measured at fair value as freestanding instruments. Unless
the embedded contracts are remeasured at fair value under otherwise
applicable GAAP, the embedded feature must be valued at fair value with
changes in fair value reported in earnings as they occur.
Embedded foreign currency derivative instruments are not separated
from the host contract and considered a derivative instrument if the host
contract is not a financia1 instrument and it requires payments denominated
in either: (1) the functional currency of any substantial patty to the
contract. (2) the local currency of any substantial party to the contract,
(3) the currency used because the primary economic environment is highly
inflationary, or (4) the currency in which the good or service is routinely
denominated in international commerce.
Financial Derivatives
Changes in interest rates expose the Company to risk as a result of
its portfolio of fixed-rate and variable rate debt. The Company manages
interest rate risk exposure on a global basis by limiting its variable rate
and fixed-rate exposures to certain variable/fixed mixes set by policy. The
Company manages interest rate risk through the use of interest rate swaps
and collars and cross-currency swaps. The Company does not enter into
financia1 instruments for trading or speculative purposes.
204
Enersis / 2003 annual report
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Net income before extraordinary gain
Extraordinary gain
Net income
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Net loss before extraordinary items
Extraordinary items
Net loss
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Net loss before extraordinary items
Extraordinary items
Net loss
Chilean GAAP
ThCh$
762,089,205
(502,981,290)
(138,054,415)
(126,404,145)
-
47,926,219
42,575,574
-
42,575,574
Chilean GAAP
ThCh$
537,970,805
(804,495,458)
(66,677,155)
16,445,384
-
113,370,252
(203,386,172)
(22,599,396)
(225,985,568)
Chilean GAAP
ThCh$
531,097,684
(449,910,509)
(41,570,717)
(78,324,793)
-
51,176,198
12,467,863
12,467,863
2001
Reclasificattion
ThCh$
(84,856,195)
111,036,253
8,197,975
-
(10,805,785)
(47,926,219)
(24,353,971)
24,353,971
-
2002
Reclasificattion
ThCh$
(447,432,384)
546,004,716
(16,147,897)
-
8,346,421
(113,370,252)
(22,599,396)
22,599,396
U.S. GAAP
Presentation
ThCh$
677,233,009
(391,945,038)
(129,856,440)
(126,404,145)
(10,805,785)
-
18,221,602
24,353,971
42,575,574
U.S. GAAP
Presentation
ThCh$
90,538,421
(258,490,742)
(82,825,052)
16,445,384
8,346,421
-
(225,985,568)
-
-
(225,985,568)
2003
Reclasificattion
ThCh$
23,609,549
4,969,266
5,080,587
-
17,516,796
(51,176,198)
-
-
U.S. GAAP
Presentation
ThCh$
554,707,233
(444,941,243)
(36,490,130)
(78,324,793)
17,516,796
-
12,467,863
12,467,863
205
Certain reclassifications would be made to the Chilean GAAP
balance sheet in order to present Chilean GAAP amounts in accordance
with presentation requirements under U.S. GAAP. Deferred taxes from
depreciation differences that are recorded as short-term under Chilean
GAAP would be recorded as long-term under U.S. GAAP. Real estate
properties under development and construction-in-progress are included
in current assets as inventory in Chilean GAAP and under U.S. GAAP such
assets would have been included as property, plant and equipment.
Additionally, the regulated asset recorded during 2001 by Coelce and
Cerj, Brazilian subsidiaries, has been partially recorded in trade receivables
and an additional component was recorded in current assets by Coelce
under Chilean GAAP. However, under U.S. GAAP the presentation of these
regulated assets should be classified as non-current assets as the recovery
of these assets is not expected in the short term. These reclassifications
exclude consolidation of development stage companies, the effect of which
is immaterial.
consolidated financial statements
The effect of the following reclassifications included in the column labeled “Reclassifications” discloses amounts using a U.S. GAAP presentation
although the amounts displayed have been determined in accordance with Chilean GAAP:
Current assets
Property, plant an equipment, net
Other assets
Total assets
Current liabilities
Long-term liabilities
Minority interest
Shareholder’s equity
2002
Chilean GAAP
Reclassification
ThCh$
ThCh$
U.S. GAAP
ThCh$
1,226,686,042
(85,538,392)
1,141,147,650
9,978,252,764
1,532,920,813
12,737,859,619
24,042,272
10,002,295,036
(24,846,332)
(86,342,452)
1,508,074,481
12,651,517,167
2,172,886,981
80,029,729
2,252,916,710
5,458,227,793
(166,372,182)
5,291,855,611
4,091,108,748
1,015,636,098
-
-
4,091,108,748
1,015,636,098
Total liabilities and shareholders’ equity
12,737,859,620
(86,342,453)
12,651,517,167
Current assets
Property, plant an equipment, net
206
Other assets
Total assets
Current liabilities
Long-term liabilities
Minority interest
Shareholder’s equity
2003
Chilean GAAP
Reclassification
ThCh$
ThCh$
U.S. GAAP
ThCh$
1,146,003,542
(50,015,206)
1,095,988,336
8,096,360,510
16,157,076
8,112,517,586
1,490,382,915
(18,323,797)
1,472,059,118
10,732,746,967
(52,181,927)
10,680,565,040
1,127,151,028
3,707,922,226
3,349,281,823
2,548,391,890
(11,470,682)
(40,711,245)
-
-
1,115,680,346
3,667,210,981
3,349,281,823
2,548,391,890
Total liabilities and shareholders’ equity
10,732,746,967
(52,181,927)
10,680,565,040
l. Employee Benefit Plans
Benefits for Retired Personnel
Enersis S.A. and its subsidiaries sponsor various benefit plans for its
current and retired employees. A description of such’ benefits follows:
Severance indemnities
The provision for severance indemnities, included in the account
“Accrued expenses” short and long-term is calculated in accordance
with the policy set forth in Note 2 (n), using the current salary levels of
all employees covered under the severance indemnities agreement, an
assumed discount rate of 9.5% for the years ended December 31,2001,2002
and 2003, and an estimated average service period based on the years of
services for the Company.
Other benefits provided to certain retired personnel of Enersis include
electrical service rate subsidies, additional medical insurance and additional
post-retirement benefits. Descriptions of these benefits for retired personnel
are as follows:
i) Electrical rate service
This benefit is extended only to certain retired personnel of Enersis.
These electric rate subsidies result in the eligible retired employees
paying a percentage of their total monthly electricity costs, with
Enersis paying the difference.
Enersis / 2003 annual report
ii) Medical benefits
This benefit provides supplementary health insurance, which covers a
portion of health benefits not covered under the institutional health
benefits maintained by employees of Enersis. This benefit expires at
the time of death of the pensioner.
iii) Supplementary pension benefits
Eligible employees are able to receive a monthly amount designed to
cover a portion of the difference between their salary at the point of
retirement and the theoretical pension that would have been received
had the employee reached the legal retirement age of the Institución
de Previsión Social (Institute of Social Welfare). This benefit expires
upon the death of the pensioner for the Enersis employee, however,
continues to cover the surviving-spouse in the case of employees of
the subsidiary Endesa-Chile.
iv) Worker’s compensation benefits
Employees that were entitled to Worker’s compensation insurance
in prior years for work related injuries receive benefits from the
Company when that insurance expires. This benefit continues at the
time of death of the pensioner, to cover the surviving-spouse.
The Company has recognized liabilities related to complementary
pension plan benefits and other postretirement benefits as stipulated
in collective bargaining agreements. Under U.S. GAAP, post-retirement
employee benefits have been accounted for in accordance with SFAS No. 87
and SFAS No. 106, with inclusion of prior-period amounts in current year’s
income as the amounts are not considered significant to the overall financial
statement presentation. The effects of accounting for post-retirement
benefits under U.S. GAAP have been presented in paragraph (gg), above.
The following data represents Chile GAAP amounts presented under FAS
N°132 Revised 2003 Employers’ Disclosures about Pensions and other
postretirement Benefits, for Company’s post-retirement benefit plans.
Followings is a schedule of estimated pay-out of pension benefits in
each of the next five years:
2004
2005
2006
2007
2008 y más
As of December 31,
2003
ThCh$
19,323,700
19,169,900
19,057,500
20,742,900
227,275,400
Components of net periodic
Benefits expenses
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of prior service cost
Net periodic expenses
Total assets of discontinued operations
305,569,400
At december 31, 2001
207
Non
Contributory
ThCh$
(545,019)
(9,727,157)
-
3,124,848
(1,108,677)
(8,256,005)
Pension Benefits
Contributory
ThCh$
(159,677)
(14,103,948)
15,984,583
(7,002,042)
(1,394,346)
(6,675,430)
Total
ThCh$
(704,696)
(23,831,105)
15,984,583
(3,877,194)
(2,503,023)
(14,931,435)
Other Benefits
Total
ThCh$
(11,240,471)
(996,389)
-
-
(212,744)
(12,449,604)
consolidated financial statements
Assets and obligations
Accumulated benefit obligation
Plan assets at fair value
Unfunded accumulated benefit
Changes in benefit (obligations)
Benefit (obligations) at January 1
Price-level restatement
Foreign exchange effect
Net periodic expense
Benefits paid
Company contributions
At december 31, 2002
Unfunfed
ThCh$
Pension Benefits
Funded
ThCh$
(30,025,642)
(150,206,029)
-
(30,025,642)
94,128,798
(56,077,231)
Total
ThCh$
(180,231,671)
94,128,798
(86,102,873)
Other Benefits
Total
ThCh$
(33,521,901)
-
(33,521,901)
(60,885,105)
(99,016,529)
(159,901,634)
(18,978,461)
-
-
-
1,298,767
6,823,162
(7,076,864)
2,530,551
-
2,883,977
(9,362,510)
(6,709,096)
12,263,081
32,880,421
4,182,744
(2,539,348)
(13,785,960)
14,793,632
32,880,421
-
473,409
-
(19,172,729)
(171,947)
4,069,724
Benefit (obligations) at December 31
(57,309,489)
(67,060,656)
(124,370,145)
(33,780,004)
Funded Status of the Plans
Proyected Benefits Obligation
Fair value of the plans assets
Funded Status
Unrecognized loss
Unrecognized net prior service cost
Net liability recorded under U.S. GAAP
Change in the plan assets
208
Fair value of plans assets, beginning
Foreign exchange effect
Actual return on the plan assets
Employer contributions
Plan participant contributions
Benefits paid
Fair value of plans assets, ending
Components of net periodic
Benefits expenses
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of transition asset
Net periodic expenses
(59,352,440)
(151,599,190)
(210,951,630)
(33,626,130)
-
(59,352,440)
849,966
1,192,985
94,128,797
(57,470,393)
(18,160,143)
8,569,880
94,128,797
(116,822,833)
(17,310,177)
9,762,865
(57,309,489)
(67,060,656)
(124,370,145)
-
(33,626,130)
(13,187,275)
13,033,401
(33,780,004)
-
-
-
-
-
-
-
(53,845)
(3,322,547)
-
(3,079,729)
(620,743)
(7,076,864)
87,310,089
(19,531,524)
28,344,308
13,802,233
4,151,502
(19,947,810)
94,128,798
(968,655)
(10,311,252)
6,607,326
(1,001,112)
(1,035,403)
(6,709,096)
87,310,089
(19,531,524)
28,344,308
13,802,233
4,151,502
(19,947,810)
94,128,798
(914,810)
(13,741,489)
6,607,326
(4,080,841)
(1,656,146)
(13,785,960)
(4,451,331)
(2,612,864)
-
(10,222,116)
(1,886,418)
(19,172,729)
Assumptions as of December 31
Weighted - discount rate (1)
Weighted - salary increase
Weighted - return on plan assets (1)
Weighted - long term inflation (2)
(1) Includes fixed long term inflation assumption detail in (2)
Pension Benefits
Other Benefits
Chile
9.5%
3.0%
Colombia
13.5%
8.3%
3.0%
8.3%
Brazil
11.3%
5.5%
11.3%
4.5%
Chile
9.5%
Brazil
11.3%
Colombia
13.5%
3.0%
4.5%
8.3%
Enersis / 2003 annual report
Assets and obligations
Accumulated benefit obligation
Plan assets at fair value
Unfunded accumulated benefit
Changes in benefit (obligations)
Benefit (obligations) at January 1
Price-level restatement
Foreign exchange effect
Net periodic expense
Benefits paid
Company contributions
Benefit (obligations) at December 31
Funded Status of the Plans
Proyected Benefits Obligation
Fair value of the plans assets
Funded Status
Unrecognized loss (gain)
Unrecognized net prior service cost
Net liability recorded under U.S. GAAP
Change in the plan assets
Fair value of plans assets, beginning
Foreign exchange effect
Actual return on the plan assets
Employer contributions
Plan participant contributions
Benefits paid
Fair value of plans assets, ending
Components of net periodic
Benefits expenses
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of transition asset
Net periodic expenses
At december 31, 2003
Unfunfed
Pension Benefits
Funded
(36,887,534)
-
(36,887,534)
(172,849,877)
119,095,191
(53,754,686)
Total
(209,737,411)
119,095,191
(90,642,220)
Other Benefits
Total
(29,592,497)
-
(29,592,497)
(58,159,448)
(67,060,656)
(125,220,104)
(34,854,960)
410,068
8,351,963
(11,645,290)
2,344,522
-
(58,698,185)
663,967
11,531,944
(17,064,442)
10,398,385
286,269
(61,244,532)
1,074,035
19,883,907
(28,709,732)
12,742,907
286,269
(119,942,717)
262,893
4,035,814
1,417,669
49,158
(1,745,146)
(30,834,572)
(57,553,854)
(174,368,245)
(231,922,099)
(30,132,395)
-
(57,553,854)
(1,748,907)
604,576
(58,698,185)
-
-
-
-
-
-
-
(26,988)
(7,446,986)
-
(3,556,718)
(614,598)
(11,645,290)
119,095,191
(55,273,055)
(15,935,576)
9,964,098
(61,244,532)
94,128,798
(11,049,701)
35,619,325
9,032,029
3,827,173
(12,462,433)
119,095,191
(1,325,391)
(16,247,928)
25,046,215
(22,555,598)
(1,981,739)
(17,064,442)
119,095,191
(112,826,909)
(17,684,483)
10,568,674
(119,942,717)
94,128,798
(11,049,701)
35,619,325
9,032,029
3,827,173
(12,462,433)
119,095,191
(1,298,403)
(23,748,890)
25,046,215
(26,112,316)
(2,596,337)
(28,709,732)
-
(30,132,395)
(12,214,579)
11,512,402
(30,834,572)
209
740,956
229,975
-
(351,347)
798,085
1,417,669
Assumptions as of December 31
Weighted - discount rate (1)
Weighted - salary increase
Weighted - return on plan assets (1)
Weighted - long term inflation (2)
(1) Includes fixed long term inflation assumption detail in (2)
Pension Benefits
Other Benefits
Chile
9.5%
3.0%
Colombia
12.8%
7.5%
3.0%
7.5%
Brazil
11.3%
5.5%
11.3%
4.5%
Chile
9.5%
Brazil
11.3%
Colombia
12.8%
3.0%
4.5%
7.5%
consolidated financial statements
m. Comprehensive income (loss)
In accordance with U.S. GAAP, the Company reports a measure of all changes in shareholders’ equity that result from transactions and other economic
events of the period other-than transactions with owners (“comprehensive income”). Comprehensive income is the total of net income and other non-
owner equity transactions that result in changes in net shareholders’ equity.
The following represents accumulated other comprehensive income balances as of December 31, 2001, 2002 and 2003 (in thousands of constant
Chilean pesos as of December 31, 2003).
Beginning balance
Credit (charge) for the period
Ending balance
Beginning balance
210
Credit (charge) for the period
Ending balance
Beginning balance
Credit (charge) for the period
Ending balance
Chilean GAAP
cumulative translation
adjustment
2001
Effect of U.S. GAAP
adjustments on
cumulative
translation adjustment
Accumulated other
comprehensive
income (loss)
ThCh$
9,889,646
19,653,919
29,543,565
ThCh$
10,734,366
16,646,787
27,381,153
ThCh$
844,720
(3,007,132)
(2,162,412)
2002
Chilean GAAP
Effect of U.S. GAAP
Accumulated other
cumulative translation
adjustment
adjustments on
cumulative
translation adjustment
comprehensive
income (loss)
ThCh$
29,543,565
20,802,883
50,346,448
ThCh$
27,381,153
8,526,856
35,908,009
ThCh$
(2,162,412)
(12,276,027)
(14,438,439)
2003
Chilean GAAP
Effect of U.S. GAAP
Accumulated other
cumulative translation
adjustment
adjustments on
cumulative
translation adjustment
comprehensive
income (loss)
ThCh$
50,346,448
(73,020,068)
(22,673,620)
ThCh$
(14,438,439)
51,171,555
36,733,116
ThCh$
35,908,009
(21,848,513)
14,059,496
The Company does not recognize deferred tax assets associated to
cumulative translation adjustment due to the permanent nature of the
investment is associated with consequently the amounts in the table have
not tax effected.
(n) Discontinued operations
In October of 2001, the FASB issued SFAS No. 144 which is effective for
fiscal years beginning after December 15, 2001. SFAS No. 144 establishes
accounting and reporting standards for the impairment and disposal of
long-lived assets and discontinued operations. The Company adopted
SFAS No. 144 in 2002. All prior year reporting periods have been restated
to reflect the adoption. The application of this statement resulted in the
classification, and separate financial presentation of certain entities as
discontinued operations, the results of which are not included in continuing
operations. There was no impairment of assets related to discontinued
operations, as their fair value exceeded their carrying value. Fair values
used in these calculations has been determined by using the agreed upon
sales prices.
In 2002, the Endesa Chile (Enersis Subsidiary) committed to a plan to
dispose the 60% equity participation it held in the consolidated subsidiary,
Infraestructura Dos Mil S.A. It was accounted for as discontinued operations
in accordance with SFAS No. 144 and, accordingly, amounts in reconciliation
of net income to US GAAP and the additional disclosure notes required under
US GAAP for all periods shown, reflect that component as a discontinued
operation.
Enersis / 2003 annual report
The net sales from discontinued operations for the years 2001 and
2002 were ThCh$20,150,123 and ThCh$20,202,007, respectively. The major
classes of discontinued consolidated assets, consolidated liabilities and
minority interest included in the Chilean GAAP Endesa Chile consolidated
Balance Sheet are as follows:
Assets:
Cash
Account receivable, net
Other current assets
Property, plant and equipment, net
Intangibles
Other assets
Total assets of discontinued operations
Liabilities:
Current liabilities
Long term liabilities
Income taxes payable (including deferred)
Minority interest
Total liabilities and minority interest of
discontinued operations
As of December 31,
2002
ThCh$
191,966
14,917,106
35,708,670
170,181,293
34,764
18,236,278
239,270,078
74,919,888
98,127,832
843,429
736,427
174,627,576
The major classes of consolidated revenues and expenses included in the US GAAP Enersis consolidated Income Statement are as follows:
211
Sales
Costs of sales
Gross profit
Administrative and selling expenses
Operating income
Non operating (loss) income
Income before taxes and minority interest
Income tax
Minority interest
Net income for the year
2001
ThCh$
20,351,624
(10,562,356)
9,789,268
(1,304,346)
8,484,922
(7,073,841)
1,411,081
(611,188)
(512,639)
287,254
2002
ThCh$
20,404,027
(10,061,349)
10,342,678
(1,322,735)
9,019,943
(7,576,012)
1,443,931
(982,180)
(294,981)
166,770
2003
ThCh$
-
-
-
(o) Goodwill and intangible assets
As discussed in Note 37 paragraph (i), Enersis S.A. adopted SFAS
142, which requires companies to stop amortizing goodwill and certain
intangible assets with an indefinite useful life. Instead, FAS 142 requires
that goodwill and intangible assets deemed to have an indefinite useful life
be reviewed for impairment upon adoption of SFAS 142, effective January
1, 2002 and annually thereafter. Under SFAS 142, goodwill impairment
is deemed to exist if the net book value of a reporting unit exceeds its
estimated fair value. The Company’s reporting units are at the operating
subsidiary level. This methodology differs from Enersis’s previous policy,
as provided under accounting standards existing at that time of using
undiscounted cash flows on an enterprise-wide basis to determine if
goodwill was recoverable. Subsequent to adoption 2002 of SFAS No. 142
due to change in circunstances, the Company recognized a non-cash charge
of ThCh$600,380,013 to reduce the carrying value of goodwill.
consolidated financial statements
In calculating the impairment charge, the fair value of the impaired
reporting units underlying the segments were estimated using discounted
cash flow methodology. The ThCh$600,380,013 goodwill impairment is
associated entirely with goodwill associated with investments in Argentina
and Brazil. The impairment reflects the decline in the Company’s revenues
and forecasted cash flows in their Argentina and Brazilian subsidiaries and
the increase in inflation and interest rates and decreasing expectations of
the currencies in Argentina and Brazil. Prior to performing the review for
impairment, SFAS 142 required that all goodwill deemed to be related to
the entity as a whole be assigned to all of the Company’s reporting units,
including the reporting units of the acquirer.
A summary of the changes in the Company’s goodwill under U.S.
GAAP during the year ended December 31, 2002 and 2003, by country of
operation and segment is as follows:
212
By Country
Chile
Argentina
Brazil
Colombia
Perú
Total
By Segment
Generation
Distribution
Other
Total
By Country
Chile
Colombia
Perú
Total
By Segment
Generation
Distribution
Other
Total
January 1,
2002
ThCh$
Acquisitions
ThCh$
2002
Translation
adjustment
ThCh$
Impairment
December 31,
2002
ThCh$
ThCh$
1,008,326,553
3,367,279
-
(1,730,261)
1,009,963,571
84,027,989
487,804,583
78,463,830
20,193,668
-
-
-
-
6,690,514
(90,718,503)
26,130,466
(513,935,049)
-
-
3,758,050
1,322,608
-
-
82,221,880
21,516,276
1,678,816,623
3,367,279
37,901,638
(606,383,813)
1,113,701,727
January 1, 2002
Acquisitions
ThCh$
ThCh$
Goodwill
Translation
adjustment
ThCh$
Impairment
December 31,
2002
ThCh$
ThCh$
1,051,082,728
3,304,022
11,775,309
(140,832,760)
925,329,299
626,004,310
1,729,585
-
26,126,329
(463,821,468)
188,309,171
63,257
-
(1,729,585)
63,257
1,678,816,623
3,367,279
37,901,638
(606,383,813)
1,113,701,727
January 1, 2003
ThCh$
Acquisitions
(sales)
ThCh$
2003
Translation
adjustment
ThCh$
1,009,965,464
(10,942,944)
-
73,227,440
21,516,276
-
-
(15,971,976)
(3,912,545)
1,104,709,180
(10,942,944)
(19,884,521)
Impairment
December 31,
2003
ThCh$
ThCh$
-
-
-
-
999,022,520
57,255,464
17,603,731
1,073,881,715
January 1, 2003
ThCh$
Acquisitions
(sales)
ThCh$
925,329,298
74,637
179,316,625
(11,017,581)
Translation
adjustment
ThCh$
(9,224,750)
(10,659,771)
63,257
-
-
1,104,709,180
(10,942,944)
(19,884,521)
Impairment
December 31,
2003
ThCh$
ThCh$
-
-
-
-
916,179,185
157,639,273
63,257
1,073,881,715
The Company’s intangible assets were ThCh$71,697,080 and
ThCh$80,915,893 and related accumulated amortization were
ThCh$25,148,069 and ThCh$34,648,290 as of December 31, 2001 and
2002, respectively. There is no difference between Chilean and U.S. GAAP
in the amortization of intangible assets because all of the Company’s
intangible assets are subject to amortization, since they relate to finite
contracts or concessions.
Enersis / 2003 annual report
p. Asset retirement obligations
As discussed in Note 37 paragraph (ff), the Company adopted SFAS No.
143 effective January 1, 2003. The following table describes all changes
to the Company’s U.S. GAAP asset retirement obligation during the year
ended December 31, 2003:
Liability recognized at adoption on January 1, 2003
Liabilities incurred
Liabilities settled
Revisions in estimated cash flows
Current translation adjustment
Accretion expense
Asset retirement obligation as of December 31, 2003
2003
ThCh$
588,126
(106,959)
43,389
524,556
The pro forma effects of the application of SFAS No. 143 as if the
Statement had been adopted on January 1, 2001 (rather than January 1,
2003) are as follows (on a U.S. GAAP basis):
Pro forma amounts assuming
the accounting change is
applied
retroactively net-of-tax:
2001
ThCh$
2002
ThCh$
2003
ThCh$
(Unaudited)
(Unaudited)
(Unaudited)
Net income (loss)
2,827,469
(333,261,011)
29,268,881
Net income (loss) per common
share – basic and diluted
2.93
(40.19)
1.43
The pro forma asset retirement obligation liability balances as if SFAS
No. 143 had been adopted on January 1, 2001 (rather than January 1, 2003)
are as follows (on a U.S. GAAP basis):
December 31,
2002
ThCh$
2003
ThCh$
(Unaudited)
Pro forma amounts of liability for asset retirement
obligation at beginning of year
443,620
588,126
Pro forma amounts of liability for asset retirement
obligation at end of year
588,126
524,556
q. Recent accounting pronouncements
The following new accounting standards have been adopted by the
Company during the year-ended December 31, 2003 and the impact of
such adoption, if applicable, has been presented in the accompanying
consolidated financial statements.
i.
In October 2002, the EITF reached a final consensus on EITF Issue No.
02-03. Primarilly, the final consensus provided for (1) the rescission
of the consensus reached on EITF Issue No. 98-10, (2) the reporting
of gains and losses on all derivative instruments considered to be
held for trading purposes to be shown on a net basis in the income
statement, and (3) gains and losses on non-derivative energy
trading contracts to be similarly presented on a gross or net basis,
in connection with the guidance in EITF Issue No. 99-19, “Reporting
Revenue Gross as a Principal versus Net as an Agent”.
The Company adopted the on EITF Issue No. 02-03, as of January 1,
2003 the adoption of this consensus did not have a material impact
on the Company’s consolidated results of operations, cash flows or
financial position.
ii. SFAS No. 149, “Amendment of Statement 133 on Derivative
Instruments and Hedging Activities.”In April 2003, the FASB issued
SFAS No. 149, which amends and clarifies financial accounting and
reporting for derivative instruments and for hedging activities,
including the qualifications for the normal purchases and normal
sales exception, under SFAS No. 133. The amendment reflects
decisions made by the FASB and the DIG process in connection
with issues raised about the application of SFAS No. 133. Generally,
the provisions of SFAS No. 149 are to be applied prospectively for
contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. SFAS No. 149
provisions that resulted from the DIG process that became effective
in quarters beginning before June 15, 2003 continue to be applied
based upon their original effective dates. The Company adopted the
provisions of SFAS No. 149 on July 1, 2003. Certain modifications and
changes to the applicability of the normal purchase and normal sales
scope exception for contracts to deliver electricity led The Company
to re-evaluate its policy for accounting for forward sales contracts. As
a result, The Company elected to designate substantially all forward
contracts to sell power entered into after July 1, 2003 as cash flow
hedges on a prospective basis. Contracts that were being accounted
for under the normal purchases and normal sales exception under
SFAS No. 133 as of June 30, 2003 will continue to be accounted
for under such exception, including following any modifications to
these contracts, as long as the requirements for applying the normal
purchases and normal sales exception are met.
iii. On June 25, 2003, the FASB cleared the guidance contained in DIG
Issue C20, “Scope Exceptions: Interpretation of the Meaning of ‘Not
Clearly and Closely Related’ in Paragraph 10(b) regarding Contracts
with a Price Adjustment Feature.” DIG Issue C20, which applies
only to the guidance in paragraph 10(b) of FASB No. 133 and not
in reference to embedded derivatives, describes circumstances in
which the underlying in a price adjustment clause incorporated into
a contract that otherwise satisfies the requirements for the normal
purchases and normal sales exception would be considered to be
“not clearly and closely related to the asset being sold or purchased.”
The guidance in DIG Issue C20 was effective for the Company on July
1, 2003. The Company’s review of existing contracts designated as
normal purchases and normal sales under FASB No. 133 yielded
no instances where an embedded price adjustment clause was
not clearly and closely related to the contract’s underlying. As a
result, this issue did not have a material impact on The Company’s
consolidated results of operations, cash flows or financial position.
iv. EITF Issue No. 01-08, “Determining Whether an Arrangement
Contains a Lease.” In May 2003, the EITF reached consensus in EITF
Issue No. 01-08 to clarify the requirements of identifying whether an
arrangement should be accounted for as a lease at its inception.
The guidance in the consensus is designed to broaden the scope of
arrangements accounted for as leases. EITF Issue No. 01-08 requires
both parties to an arrangement to determine whether a service
contract or similar arrangement is, or includes, a lease within the
scope of SFAS No. 13, “Accounting for Leases.” The Company has
historically provided capacity agreements both as the lessee and as
a lessor. Upon application of EITF Issue No. 01-08, the accounting
requirements under the consensus may impact the timing of revenue
and expense recognition, and amounts previously reported as
213
consolidated financial statements
majority of the expected residual returns of the variable interest
entity’s activities. In December 2003, the FASB issued FIN 46R, which
supercedes and amends certain provisions of FIN 46. While FIN 46R
retains many of the concepts and provisions of FIN 46, it also provides
additional guidance related to the application of FIN 46, provides for
certain additional scope exceptions, and incorporates several FASB
Staff Positions issued related to the application of FIN 46.
The provisions of FIN 46 are immediately applicable to variable
interest entities created, or interests in variable interest entities
obtained, after January 31, 2003 and the provisions of FIN 46R are
required to be applied to such entities, except for special purpose
entities, by the end of the first reporting period ending after March
15, 2004 (December 31, 2004 for The Company). For variable interest
entities created, or interests in variable interest entities obtained,
on or before January 31, 2003, FIN 46 or FIN 46R is required to be
applied to special-purpose entities by the end of the first reporting
period ending after December 15, 2003 (December 31, 2003 for
calendar-year entities) and is required to be applied to all other
non-special purpose entities by the end of the first reporting period
ending after March 15, 2004 (December 31, 2004 for calendar-year
entities). FIN 46 and FIN 46R may be applied prospectively with a
cumulative-effect adjustment as of the date it is first applied, or by
restating previously issued financial statements with a cumulative-
effect adjustment as of the beginning of the first year restated. FIN 46
and FIN 46R also require certain disclosures of an entity’s relationship
with variable interest entities.
The Company has not identified any material variable interest entities
created, or interests in variable entities obtained, after January 31,
2003 which requires consolidation or disclosure under FIN 46 and
continues to assess the existence of any interests in variable interest
entities created on or prior to January 31, 2003. The Company
continues to assess the potential impacts of FIN 46R but does not
anticipate that it will have a material impact on its consolidated
results of operations, cash flows or financial position.
214
revenues may be required to be reported as rental or lease income.
Should capital lease treatment be necessary, purchasers in these
arrangements are required to recognize assets on their balance
sheets. The consensus will be applied prospectively to arrangements
agreed to, modified, or acquired in business combinations on or
after January 1, 2004. Previous arrangements that would be leases
or would contain a lease according to the consensus will continue to
be accounted for under historical accounting. The adoption of EITF
Issue No. 01-08 would not have a material effect on the Company’s
consolidated results of operations, cash flows or financial position.
v. EITF Issue No. 03-11, “Reporting Realized Gains and Losses on
Derivative Instruments That Are Subject to FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, and Not
Held for Trading Purposes. ”In July 2003, the EITF reached consensus
in EITF Issue No. 03-11 that determining whether realized gains and
losses on derivative contracts not held for trading purposes should be
reported on a net or gross basis is a matter of judgment that depends
on the relevant facts and circumstances and the economic substance
of the transaction. In analyzing the facts and circumstances, EITF
Issue No. 99-19, and Opinion No. 29, “Accounting for Nonmonetary
Transactions,” should be considered. EITF Issue No. 03-11 was effective
for transactions or arrangements entered into after December 31,
2003. The adoption of EITF Issue No. 03-11 would not have a material
effect on The Company’s consolidated results of operations, cash
flows or financial position.
vi. Revised SFAS No. 132, “Employers’ Disclosures about Pensions and
Other Postretirement Benefits. ”In December 2003, the FASB revised
the provisions of SFAS No. 132 to include additional disclosures
related to defined benefit pension plans and other defined benefit
postretirement plans, such as the following: (1) long-term rate of
return on plan assets along with narrative discussion of basis for
selecting the rate of return used; (2) information about plan assets
for each major asset category (i.e. equity securities, debt securities,
real estate, etc) along with the targeted allocation percentage of
plan assets by each major asset category and the actual allocation
percentage at the measurement date; (3) amount of benefit
payments expected to be paid in each of the next five years and the
following five year period, in the aggregate; (4) current best estimate
of range of contributions expected to be made in following year; (5)
the accumulated benefit obligation for defined benefit pension plans;
and (6) disclosure of measurement date utilized. The provisions of
revised SFAS No. 132 do not change the measurement or recognition
provisions of defined benefit pension and postretirement plans
as required by previous accounting standards. Except as discussed
below, the provisions of revised SFAS No. 132 are effective for fiscal
years ending after December 15, 2003 (December 31, 2003 for
calendar-year entities). The disclosure provisions of estimated future
benefit payments and information about foreign plans are effective
for fiscal years ending after June 15, 2004 (December 31, 2004 for
the Company). See Note 37 II (l) for additional disclosures required
as of December 31, 2003.
vii. FASB Interpretation No. 46 (FIN 46), “Consolidation of Variable
Interest Entities.” In January 2003, the FASB issued FIN 46 which
requires the primary beneficiary of a variable interest entity’s
activities to consolidate the variable interest entity. FIN 46 defines
a variable interest entity as an entity in which the equity investors
do not have substantive voting rights and there is not sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support. The primary beneficiary is the party
that absorbs a majority of the expected losses and/or receives a
Enersis / 2003 annual report
condensed financial information
Comercializadora de Energía del Mercosur S.A. - CEMSA
( Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003)
Condensed balance sheet:
Current assets
Fixe assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Equity
Total liabilities and equity
Condensed income statement:
Net sales
Gross margin
Net income
2003
ThCh$
24,856,076
177,649
-
25,033,725
As of December 31,
2001
TcCh$
21,108,703
147,059
64,910
21,320,672
17,324,966
13,630,496
-
7,708,759
25,033,725
2003
ThCh$
3,514,138
-
1,355,690
-
7,690,175
21,320,672
For the year ended December 31,
2001
ThCh$
2,809,318
-
(3,421,870)
2001
ThCh$
14,700,312
56,949
230,090
14,987,351
4,558,416
-
10,428,936
14,987,351
2001
ThCh$
301,000
-
34,043
215
consolidated financial statements
Companhia de Interconexao Energética
( Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003)
Condensed balance sheet:
Current assets
Fixed assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Equity
Total liabilities and equity
Condensed income statement:
216
Net sales
Gross margin
Net income
2003
ThCh$
106,812,150
356,019,916
53,893,288
516,725,354
296,330,546
98,517,952
121,876,856
516,725,354
2003
ThCh$
226,389,219
(95,307,275)
24,758,491
As of December 31,
2001
ThCh$
68,993,451
334,999,174
63,913,605
467,906,230
104,821,650
243,574,994
119,509,586
467,906,230
For the year ended December 31,
2002
ThCh$
168,756,303
52,935,213
16,228,801
2001
ThCh$
30,383,486
248,096,969
73,277,854
351,758,310
47,644,088
245,573,598
58,540,624
351,758,310
2001
ThCh$
106,669,075
(5,396,974)
(13,077,937)
Enersis / 2003 annual report
consolidated significant events
Enersis S.A. (Parent Company)
Capital Increase of Cerj
With reference to the above, and taking into consideration the
provisions established, the effects of the extraordinary adjustments and
charges on the results of the company will amount to approximately the
equivalent in Chilean Pesos of US$ 290 million.
On December 10, 2002 the Extraordinary General Meeting of the
Shareholders of the Company approved an increase in the capital of CERJ
of approximately US$M 105,000.
Provisional dividend
This increase took place on January 10, 2003 by means of an issue and
subscription of 770,833,333,333 new ordinary shares valued at R$ 0.48
per lot of one thousand shares, totaling the US$M 100,000 approved at
the Meeting and which increased the capital of the Company by US$M
259,085.
With this operation, the direct participation held by Enersis S.A. through
its agency rose from 20.38% to 40.03%.
Accounting adjustments and extraordinary charges
during the 2002 period
At an extraordinary meeting held on January 15, 2003 the Board of
Directors of Enersis S.A. agreed to take note of the fact that the Company
was to make accounting adjustments and extraordinary charges to the
Balance Sheet with respect to its investments in its subsidiaries in Chile
and abroad for a total of the equivalent of US$ 387 million in Chilean
Pesos, reflecting these extraordinary adjustments in the results for the
year 2002.
These adjustments and extraordinary charges will not have an
impact on the cash flows of the Company and will be reflected in the
financial statements of Enersis S.A. corresponding to the year 2002. The
adjustments and extraordinary charges made and the provisions established
as of November 30, 2002 are broken down as follows (the figures shown
correspond to the impact on the financial statements of Enersis S.A.):
At a meeting held on February 10, 2003 the Board of Directors of Enersis
S.A. unanimously agreed to pay a dividend in the month of February, 2003
as the conditions foreseen not in the Company’s Policy on Dividends were
not present.
Financial strengthening
At an extraordinary meeting held on October 4, 2002 the Board of
Directors of Enersis S.A. approved a financial strengthening plan aimed
at strengthening the equity by improving its credit structure to permit
the Company to face the situation in the region that was affecting its
investments.
For this, the same letter announced a capital increase of US$
1,500,000,000 (One thousand five hundred million United States Dollars),
which contemplated cash contributions and / or contributions consisting
of financial credits.
With respect to this capital increase, the Board of Enersis S.A., in its
meeting held on February 17 of this year, has decided, with the unanimous
vote of those members present, to propose to the shareholders at a General
Meeting to be held for that purpose, that the amount of the capital increase
be for the Chilean Peso equivalent to US$ 2,000,000,000 (Two thousand
million United States Dollars), thus increasing by US$ 500,000,000 (Five
hundred million Unites States Dollars) the figure originally contemplated.
As informed in the mentioned Essential Fact letter, the capital increase
contemplates cash contributions and / or contributions consisting of
financial credits.
217
Country
Generation
Distribution
Services
Total
Brazil
US$ 60 million US$ 255 million
Argentina US$ 23 million US$ 26 million
US$ 315 million
US$ 49 million
Increase in capital of Enersis, debts to be capitalized
Chile
US$ 23 million US$ 23 million
At the meeting held on March 7, 2003, the members of the Board of
Totals
US$ 83 million US$ 281 million US$ 23 million US$ 387 million
Enersis S.A. present, unanimously agreed the following:
We should point out that of the US$ 387 million, US$ 329 million came
from the acceleration of the amortization of the net balance of the positive
and negative goodwill of the investments in generation and distribution
in Brazil and Argentina.
To the above figure should be subtracted the provisions made as of
November 30, 2002, in accordance with the following breakdown:
US$ 81 million
Brazil
Argentina
Total Provisions
US$ 16 million
US$ 97 million
1. The credits eligible for capitalization in the capital increase process
that the Board has decided to propose at the Extraordinary General
Meeting of Shareholders to be held on March 31, 2003, are the
following:
a) Credits outstanding granted to Enersis S.A. by Edesur S.A. for UF
58,701,778.99, and
b) Debts outstanding corresponding to the issue of the local B1 and B2
bonds for UF 5,874,406.15, in accordance with the contract on the
bond issue established in the deeds dated June 14 and August 30,
both of 2001, drawn up before Notary Public Humberto Quezada in
Santiago.
consolidated financial statements
2. Place at the disposal of the Shareholders a specialists report on the
obligations referred to in the point above, which shall be submitted
for the approval of the Extraordinary General Meeting of Shareholders
indicated above.
The purchase price of the shares mentioned above offered by CGE
Distribución S.A. amounts to US$ 170,071,000 (One hundred and seventy
million and seventy one thousand United States Dollars). The effects of
this operation on the results of ENERSIS S.A. will be approximately US$
126 million before tax.
Refinancing bank debt
At a meeting held on March 11 of this year, the Board of the Company
agreed the following:
1. ENERSIS S.A. (Enersis) and its subsidiary, Empresa Nacional de
Electricidad S.A. (Endesa-Chile) gave mandates in order to initiate
the syndication of credits for approximately US$ 2.3 thousand
million, after reaching an agreement with the four lead banks. BBVA
S.A., Dresdner Kleinwort Wasserstein, Salomon Smith Barney Inc.
and Santander Central Hispano Investment Securities have agreed
with Enersis and Endesa Chile to put into place an operation to
refinance their bank borrowings. Enersis’ credit is for approximately
US$ 1.6 thousand million whilst that of Endesa Chile amounts to
approximately US$ 0.7 thousand million. The group of four entities
holding the mandate account for approximately US$ 1.1 thousand
million of the debt to be refinanced by the Group on a consolidated
basis.
2. The principal objective of this refinance that falls within the Financial
Strengthening Plan of these companies is, amongst others, to
reduce consolidated borrowings by approximately US$ 2.2 thousand
million.
218
3. The refinancing proposed has a new term up to 2008 with half-yearly
amortizations commencing 30 months from the initiation of the new
operation. Furthermore, the clause that permitted a demand for the
pre-payment in the event of a deterioration of the credit rating given
by the risk rating agencies will be replaced by a series of new financial
covenants and commitments that will match their business plan.
4. Also considered is that the new operation will have certain additional
guarantees, within the Enersis Group, that will be compatible with
the limits permitted by the contracts that cover the rest of the current
debts of Enersis and Endesa Chile.
5. The conditions of the operation have been agreed by the four banks
mentioned and by the Directors of Enersis and Endesa Chile and will
be presented shortly to the rest of the banks for their consideration
and approval.
Río Maipo awarded
At a meeting held on March 28, 2003 the Board of Directors of ENERSIS
S.A. analyzed the offers received for the entire shares that ENERSIS S.A.
holds in its Chilean subsidiary, Compañía Eléctrica del Río Maipo S.A. (Río
Maipo).
Furthermore, the Board has agreed to propose to the Extraordinary
General Meeting of Shareholders of ENERSIS S.A. to be held on March 31,
2003 that it authorize the sale of all the shares owned by ENERSIS S.A.
issued by Río Maipo (356,078,645 shares), declared as essential assets,
in favor of CGE Distribución S.A., a subsidiary of Compañía General de
Electricidad S.A., that has presented the best purchase offer.
Increase in capital of Enersis, repurchase of Yankee Bonds
At a meeting held on March 28, 2003 the Board of Enersis S.A. agreed
to propose the following operation to the Board of Directors of its subsidiary
Enersis Internacional: To purchase from the shareholders of Enersis S.A.
that hold the right to participate in the second preferential option period of
the capital increase to be submitted to the Extraordinary General Meeting
of Shareholders to be held on March 31, 2003, the American bonds that
Enersis S.A.’s agency in Cayman Islands issued in November 1966 on the
international market (Yankee Bonds). This purchase will take place with
a global and total limit of US$ 50 million and in the other conditions
established below or those additional terms that may be established by
Enersis Internacional and will be advised to the market at the time. This
acquisition will reflect a sign of support of the shareholders of Enersis S.A.
who, in addition are holders of Yankee Bonds, which will motivate a greater
subscription of the shares issued in this capital increase. The mechanism
described shall have the additional benefit of reducing the consolidated
debt of the Company, replacing it with equity. The purchase of the Yankee
Bonds will be made at the same price estimated by the expert, Eduardo
Walker in his expert report dated March 6, 2003 which has been widely
circulated amongst the shareholders and the market in general and, for a
limited amount, considering each shareholder individually, equivalent to
the amount required for the shareholder to be in a condition to subscribe
the pro rata that corresponds to him in the second period of the preferential
offer of the capital increase of Enersis S.A. In accordance with the terms
of the contract covering the purchase of the bonds he subscribes with
Enersis Internacional, the shareholder that is selling is obliged to utilize
the resources he will receive from the sale of his Yankee Bonds to subscribe
the shares from the new issue of the Company. If the offers for sale of Yankee
Bonds exceed the total and global amount of US$ 50 million, the purchase
will be carried out, amongst all the interested parties, pro rata, in the
conditions that will be determined by the Board of Enersis Internacional.
Signing of the syndicated loans
On May 12, 2003, syndicated loan agreements were signed by Enersis
S.A. and its subsidiary Endesa Chile with 32 banks to refinance borrowings
of US$ 2,330 million. We trust this operation will be concluded at the latest
May 15, 2003 as it is subject to the satisfaction of the various conditions
precedent.
The US$ 2,330 million that mature during the current year and in 2004
will have a new term expiring in 2008 with amortizations commencing
in the year 2005. These syndicated loans eliminate the possibility of any
accelerated repayment of the credits due to a deterioration in the degree
of investment rating.
In accordance with Circular Nº 988 issued by that Superintendency, we
inform you that the rise in the average financial costs of the debt involved in
this operation will be more than compensated by the effects of the measures
considered in the Financial Strengthening Plan of the Group, amongst which
is the reduction of some US$ 2,300 million in consolidated debt.
Enersis / 2003 annual report
Refinancing
part of the process of rationalization and simplification of the corporate
structure of the Endesa Group.
Following the agreement reached by the Board of Directors of Enersis
S.A. in the meeting on May 15 of this year, we report the following:
Provisional dividend
1. Enersis S.A. (Enersis) and
its subsidiary Empresa Nacional de
Electricidad S.A. (Endesa-Chile) as of this date, have complied with all
the conditions precedent required for the syndicated loans, signed by
these companies with 32 banks, amongst which are all the banks that
participated in the previous bank credits – on last May 12. Thus, the
operation has been closed. The signing of these credits has already
been informed to that Superintendency in our Essential Fact letter
dated May 12, 2003.
2. These syndicated loans will be utilized to refinance the debts of Enersis
and Endesa Chile for some US$ 2,330 million, US$ 1,587 million
corresponding to Enersis and US$ 743 million to Endesa-Chile.
3. The principal objective of this refinance that falls within the Financial
Strengthening Plan of these companies, is to reduce consolidated
borrowings by approximately US$ 2.3 thousand million.
4. The syndicated loans consider a new term up till 2008, at fixed
annual rates for the life of the credits of Libor + 350 basis points for
Enersis S.A. and Libor + 300 basis points for Endesa-Chile, with half-
yearly amortizations of capital to commence from November 2005.
These credits contemplate a grace period of 30 months from May
15, 2003 during which interest will be paid only on the new credits.
This will permit Enersis and its subsidiary Endesa-Chile a better
compatibility with its respective cash flows during the initial years
with an adequate service of the current debt. The clause that allowed
for an acceleration of the repayment in the potential case of a loss of
the investment grade by Standard & Poor’s due to a deterioration in
the risk rating granted by the risk rating agency and the clause that
linked the interest of the credit to the risk rating of the Companies
have been eliminated and were replaced by a series of new covenants
and financial commitments in line with the business plans of the
companies.
5. For the purposes of this refinancing, Enersis and Endesa-Chile have
granted certain guarantees in favor of the 32 banks mentioned
above. Enersis has given in lien all the shares it owns in Chilectra
S.A. and has also given under lien the credits owed to it by Chilectra
S.A. The obligations assumed by Endesa-Chile under the new credits
are guaranteed by personal guarantees and co-debtor conditions
its subsidiaries Empresa Eléctrica Pehuenche S.A.,
granted by
Empresa Eléctrica Pangue S.A. and Compañía Eléctrica Tarapacá S.A.
6. The rise in the average financial costs of the aforementioned operation
will be compensated by the effects of the measures considered in the
Financial Strengthening Plan of the Group, amongst which is the
reduction of some US$ 2,300 million in consolidated debt.
Transfer of shares in Enersis
On August 1, 2003 this company was informed that Elesur S.A. sold
to Endesa Internacional S.A., both companies 100% controlled by the
Endesa Spain Group, 17,321,166,047 shares in Enersis S.A. corresponding
to 56.9697% of the capital of Enersis S.A. at a price equivalent to 68.5
pesos per share.
This transfer does not mean any change in the total share participation
the Endesa Group holds in Enersis S.A. nor in the control that the Group
has over Enersis S.A. Furthermore, we are advised that this was done as
At a meeting held on July 30, 2003 the Board of Directors of Enersis
S.A. unanimously agreed not to pay a provisional dividend in the month
of August 2003, charged to the results of the month of June, 2003 in
accordance with current policy on the matter, as the conditions foreseen
in the Company’s Policy on Dividends were not present.
Provisional dividend
At a meeting held on October 31, 2003 the Board of Directors of Enersis
S.A. unanimously agreed not to pay a provisional dividend in the month of
November 2003, charged to the results of the month of September 2003,
in accordance with current policy on the matter, as the conditions foreseen
in the Company’s Policy on Dividends were not present.
Voluntary redemption of local bonds
The process of “The Offer to Voluntarily Redeem Bonds Nº 269, Series
B1 and B2, initiated last November 1 was concluded on November 15, 2003.
This process gave all holders of these bonds issued by Enersis S.A. the option
to exchange them for first issue payment shares in the Company.
On concluding this process, we report that a total of 893,612,466
shares were subscribed, corresponding to Ch$ 53,992,243,918. This sum
implies a reduction in debt for Enersis S.A. of UF 3,666,621. With this
operation, 64.84% of the UF value of the Bonds Series B1 and B2 when it
started were exchanged.
219
Furthermore, as a consequence of the exchange of these bonds, the
shareholders of Enersis S.A. registered as of the close of November 14, 2003
may participate in the so-called Second Preferential Offer Period of the
capital increase of the Company, having the right to subscribe 0.1196427367
shares of a new issue for each share registered in their names as of the
date indicated above.
Prepayment of syndicated loans
In a meeting held on Tuesday, November 25, the Board of Directors of
the Company agreed to report the following:
1. Enersis S.A. has prepaid the entire syndicated loan it had with BBVA
S.A., Dresdner Kleinwort Wasserstein, Salomon Smith Barney, Inc.
and Santander Central Hispano Investment Securities together with
a further 27 institutions which was granted on May 15, 2003 for
approximately US$ 1,587 million. This last prepayment implied for
the Company the liberation of security established in favor of those
creditor banks, i.e., the lien on the shares owned by Enersis S.A. and
issued by its subsidiary, Chilectra S.A. as well as the lien on inter-
company loans granted by Enersis S.A. in favor of Chilectra S.A.
2. This last prepayment was made principally with funds from a credit
for US$ 500 million signed on November 14, 2003 with the Banco
Bilbao Vizcaya Argentaria, The Bank of Tokio-Mitsubishi Ltd., Caja
Madrid (Agency), Deutsche Bank Securities Inc. and San Paolo IMI
S.p.A., from the issue and placement of bonds on the United States
market (Yankee Bonds) on November 24, 2003 for US$ 350 million
and from other sources. The Yankee Bonds were issued at a term of
ten years and with a bullet payment, under Rule 144A at a rate of
7.375% per annum.
consolidated financial statements
3. The refinancing mentioned falls within the Financial Strengthening
Plan adopted by the Company on October 4, 2002.
Capital increase is concluded
At a meeting held on last December 18, the Board of Directors informed
you by means of an Essential Fact letter of the conclusion of the Second
Preferential Subscription Period of the capital increase of Enersis S.A.
agreed by the Extraordinary General Meeting of Shareholders on March
31, 2003.
As is public knowledge, this capital increase contemplated three phases;
two periods of preferential subscription and one period to redeem local
bonds payable in new issue shares.
The First Preferential Subscription Period commenced on May 31, 2003
and concluded on June 30, 2003. The Second Preferential Subscription
Period ran from November 20, 2003 to December 20, 2003.
Furthermore, as also reported at the time to that Superintendency
and to the general public, between last November 1 and 15, there was an
“Offer to Voluntarily Redeem Bonds Nº 269, Series B1 and B2”, the result
of which was informed to you by means of an Essential Fact letter dated
last November 17. This process gave all the bearers of these local bonds
issued by Enersis S.A. the option to exchange them for first issue payment
shares in the Company.
220
On concluding the Second Preferential Subscription Period of the capital
increase mentioned, we report that a total of 24,360,123,331 shares were
subscribed, corresponding to Ch$ 1,471,843,528,820. This sum implies
that 99.9% of the capital increase approved by an Extraordinary General
Meeting of Shareholders of Enersis S.A. on March 31 is fully subscribed and
paid in as of this date. (The part of the capital increase not subscribed and
paid in will mature on December 30, 2003, leaving the capital of Enersis
S.A. reduced to that actually subscribed and paid in).
The effects this capital increase will have on the results of Enersis S.A.,
in accordance with Circular Nº 988 of that Superintendency cannot be
reasonably quantified as of this date.
Notwithstanding the above, we must bear in mind that this capital
increase significantly strengthens the equity structure of the company.
Elesur shares
On December 22, 2003 Enersis S.A. was informed that its shareholder
Elesur S.A. had sold and transferred to Endesa Internacional S.A., both 100%
subsidiaries of the Endesa Spain Group, 1,778,826,237 shares in Enersis
S.A., representing 5.448475% of the registered capital of Enersis S.A., at a
price equivalent to Ch$ 84.50 per share.
This transfer does not mean any change in the control that this Group
has over the Company and we have been advised that this operation was
done as part of the process of rationalization and simplification of the
corporate structure of the Endesa Group in Spain.
Chilectra S.A.
Policy on dividends, investments and financing 2003
The policy on dividends with which the Board of Directors of
Chilectra S.A. hopes to comply with a charge to the 2003 period is the
following:
Distribute in May, August and November, 2003 and in February,
2004 provisional dividends charged to the profits of 2003. In each of
these months 85% of the profits derived from the normal operations
of the Company during the quarters ending in March, June, September
and December of that period. For the purposes of calculating the above,
from 85% of the accumulated profit as of the quarter will be deducted the
provisional dividends corresponding to the 2003 period already distributed
as of the date of the payment.
It will be understood that the results deriving from the normal
operation, are those profits that the Company makes during the 2003
period, without considering those received from the following events:
• The effects of accounting produced as a result of the revaluation
adjustments made to the contributions to subsidiaries.
• The effects of accounting produced by the registration of the over-
price when the subsidiaries place their own shares.
• By the profits generated, directly or indirectly by the investments in
affiliates established both in the country and abroad.
• By the profits generated by overseas subsidiaries or by subsidiaries in
which the Company’s direct or indirect participation is less than 60%
of their equity and by the profits derived from the sale of assets.
• By the registration of the positive or negative goodwill of those
investments.
In the event that the total contribution from these events should be
negative, this will be taken into consideration in the calculation of the
profit to be distributed.
Consequently, the Board of Directors will not distribute dividends against
a charge to the profits deriving from these events and the Ordinary General
Meeting of Shareholders will have to decide on that issue when approving
the definite dividend. The above is the intention of the Board of Directors
of the Company but its compliance will be conditioned to the profits that
are effectively obtained and also to the results projected periodically by the
Company or the existence of determined conditions.
With respect to policy on definite dividends, it is the Board of Directors’
resolve that the total dividends to be distributed and charged to the period
be at least for the amount of the provisional dividends already distributed or
the same as those established in the Law of Quoted Companies, whichever
of the two is the greater.
2. Policy on Investments and Financing Year 2003
The Board of Directors agreed to establish the following Policy on
Investments and Financing for the year 2003:
1. Investments
The Company will make investments as approved in the by-laws, in areas
related to works to expand the capacity of supply related to the demand
for electric power, in contributions to its subsidiaries or related companies
and in contributions for investments in or the foundations of subsidiary or
related companies whose corporate purpose is similar, related or linked
to energy in any of its forms, to the supply of public services or that have
energy as their principal raw material.
Enersis / 2003 annual report
Investments related to the expansion of the Company will be necessary
in order to adequately satisfy demand for electricity in the area under
concession. Investments in its related public service companies will be
required to enable these subsidiaries or related companies to comply
with their corporate purpose and with their functions as concessionaires.
These investments will be made in projects to maximize the value of the
Company, considering the level of risk associated with these investments
and in line with the by-laws of the Company.
For the purposes of controlling investments and in accordance with
the Company’s corporate purpose, a proposal shall be submitted at the
General Meeting of Shareholders of the subsidiaries and related companies
to designate directors to represent the Company and these should preferably
be members of the Board or senior executives, both of the company and of
other related companies. In addition, policies on investments, financing and
business will be established within the subsidiaries as well as on accounting
criteria with which these must abide and the performance of the subsidiary
and related companies will be supervised.
2. Financing
The resources required for the local and international expansion process
of the Company and the resources generated by the company’s operations
are obtained in accordance with special plans for their financing. Alternatives
considered amongst these are, according to the needs, share issues, supplier
credit, bank finance and syndicated loans, multinational credit agencies,
simple and convertible bonds and others. Furthermore, the resources may
be obtained from local and international and other investors.
Shareholders’ Meetings
At the Ordinary General Meeting of Shareholders held on March 26,
2003 the following agreements were reached:
1. Approval of the Annual Report, Balance Sheet, Financial Statements
and Report from the External Auditors corresponding to the period
ended on December 31, 2002.
2. Approval and distribution of profits and information on the Policy on
Dividends for the 2003 period.
3. Complete renewal of the Board of Directors.
4. Setting the remunerations of the Board of Directors.
5. Setting of the remunerations of the Committee of Directors and its
budget.
6. Designation of the External Auditors.
Accounting adjustments
At an Extraordinary Meeting held on January 15, 2003 the Board of
Directors of Chilectra S.A. unanimously agreed to be informed on certain
accounting adjustments in the results of the financial statements of
Chilectra S.A. as of December 31, 2002 deriving from the investments in
its subsidiaries in Argentina and Brazil for an amount in local currency to
US$ 145 million.
These adjustments will not have an impact on the cash flows of the
Company and are reflected in the financial statements of Chilectra S.A.
corresponding to the year 2002.
The adjustments are broken down as follows (the figures shown
correspond to the impact on the financial statements of Chilectra S.A):
Argentina
Brazil
Total
Millions of US$
14
131
145
Furthermore, as a result of these adjustments, the Board of Directors
of Chilectra S.A. agreed to cancel the payment of the dividend in February
2003 agreed to in the Ordinary Meeting of the Board Nº 13/2002 held on
December 19, 2002 with the amount to have been decided in the Board
Meeting in January, 2003. The above indicates a change in the Policy on
Dividends declared at the Ordinary general Meeting of Shareholders held
on April 10, 2002.
Definite dividend
On March 26, 2003 the Ordinary General Meeting of Shareholders
agreed to distribute a definite dividend, to be charged to retained earnings
from previous years, of Ch$ 38,837,417,504 and to assign this amount to
the dividends paid to the shareholders during the year 2002 that totaled
the same amount.
Renewal of the Board of Directors and the Committee
of Directors
221
During the Ordinary General Meeting of Shareholders held on March
26, 2003 the following were elected Directors of the Company:
Jorge Rosenblut
José Manuel Fernández
Hernán Felipe Errázuriz
Pedro Buttazzoni
Alvaro Quiralte
Alberto Martín Rivals
Marcelo Llévenes
In addition, in the Extraordinary Meeting Nº 5/2003 of the Board of
Directors held on March 26, following on from the Ordinary General Meeting
of Shareholders, Jorge Rosenblut was appointed Chairman of the Board and
José Manuel Fernández as Vice-Chairman. During the same meeting and
in accordance with Circular Nº 1,526 of the Superintendency of Securities
and Insurance, the following were appointed members of the Committee
of Directors of Chilectra S.A.: Jorge Rosenblut, Hernan Felipe Errázuriz and
Alberto Martín Rivals.
Bond issue
At Meeting Nº 13/2003 held on August 18, 2003, the Board of
Directors of Chilectra agreed to carry out a Bond Issue in order to prepay
debts, by means of the inscription with the Superintendency of Securities
and Insurance of two lines of titles for up to a total equivalent amount in
Chilean Pesos of UF 8.2 million.
consolidated financial statements
Organizational Structure
1. On Ordinary session number 6, 2004, celebrated on March 27, 2003,
Chilectra’s Board of Directors approved the new organizacional
structure for the Company.
This structure is as follows:
BOARD OF DIRECTOR
Chairman
Jorge Rosenblut
Chief Executive
Officer
Julio Valenzuela
Chief
Communications
Officer
Marcelo Castillo
Chief Planning and
Control Office
Jorge Faúndez
Chief Regulation
Officer
Guillermo Pérez Del Río
Financial Area
José Luis Acuña
Legal Counsel
Gonzalo Vial
Chief Human
Resources Officer
Carmen Pas Urbina
Chief Corporate
Business Officer
Edgardo González
Chief Contract
Control Officer
Víctor Orduña
222
Chief Distribution
Officer
Rolando Hechenleitner
Chief Marketing
Officer
J. Camilo Olavarría
Sub-Manager
Technical Processes
Miguel Del Valle
Sub-Manager
Planning and
Engineering
Sergio Zúñiga
Sub-Manager
Operations
Sub-Manager Works
and Maintenance
Sub-Manager
Sales
Sub-Manager
Business Operations
Pedro Miquel
Raúl Moya
Sergio Urrutia
Alfredo Herrera
Sub-Manager
Customer Service
and Marketing
Christian Mosqueira
Sub-Manager
Business Processes
Mario Chávez
2.
In Extraordinary Meeting Nº 11/2003 held on June 30, 2003 the
Board of Directors of Chilectra S.A. approved a new organization
structure which was established as follows:
BOARD OF
DIRECTORS
Chairman
Jorge Rosenblut
Chief Executive
Officer
Rafael López Rueda
Chief
Communications
Officer
Marcelo Castillo
Chief Distribution
Officer
Rafael López (I)
Chief Regional
Distribution and
Services Officer
Marcelo Silva Iribarne
As a consequence of the above, the resignation of Julio Valenzuela
as Chief Executive Officer was accepted and Rafael López was named
Chief Executive Officer in his place. At the same time, a new position
of Chief Executive Officer Distribution Chile was created, reporting to
the Chief Executive Officer, and this post will be held on an interim
basis by Rafael López and a new Chief Regional Distribution and
Services Officer position was created and will be occupied by Marcelo
Silva.
3.
In Ordinary Meeting Nº 12/2003 held on July 29, 2003 the Board
of Directors of Chilectra S.A. named Rafael López as Chief Executive
Officer of Distribution Chile and created the Financial and Control
Management to be headed by Juan Pablo Spoerer. We would
mention that up until last July 29, Rafael López occupied the position
of Chief Executive Officer of Distribution Chile on an interim basis.
Enersis / 2003 annual report
4.
In Extraordinary Meeting Nº 18/2003 held on December 18, 2003
the Board of Directors of Chilectra S.A. approved a new organization
structure of the Company which was established as follows:
Chairman
Jorge Rosenblut R.
Chief Executive
Officer
Rafael López R.
Chief
Communications
Officer
Marcelo Castillo S.
Chief Regional
Services Officer
Cristóbal Sánchez
Legal Counsel
Gonzalo Vial V.
Chief Regulation
Officer
Guillermo Pérez Del Río.
Chief Regional
Distribution Officer
Marcelo Silva I.
Chief Financial and
Control Officer
Juan P. Spoerer H.
Chief Planning and
Control Officer
Jorge Faúndez P.
Chief Operations
Officer
J. Camilo Olavarría
Chief Contract
Control Officer
Victor Orduña R.
Chief Human
Resources Officer
Carmen Paz Urbina S.
Chief Distribution
Officer
Chief Corporate
Business Officer
Chief Marketing
Officer
Rolando Hechenleitner K.
Edgardo González G.
NN.
Amongst the most important changes, we highlight the elimination
of the position of Chief Distribution Chile Officer and the creation of its
replacement, Chief Operations Officer occupied by Juan Camilo Olavarría.
Also, the current Chief Regional Distribution and Services Officer position
has been split into the Chief Regional Distribution Officer occupied by
Marcelo Silva and the Chief Regional Services Officer occupied by Cristóbal
Sánchez.
Endesa S.A. (Parent Company)
• On March 11, 2003 we reported as an Essential Fact that the Board of
Directors, at its meeting held on February 27, 2003 agreed to advise
as an Essential Fact, when it would occur, that an agreement had
been reached with the banks listed below, to proceed with a process
of refinancing part of the bank borrowings of Empresa Nacional de
Electricidad S.A. (Endesa).
On this matter, we would point out that today, Endesa reached an
agreement with BBVA S.A., Salomon Smith Barney Inc., Dresdner Kleinwort
Wasserstein and Santander Central Hispano Investment Securities to initiate
the process of refinancing part of the bank debts of the company for a total
amount of approximately US$ 0.7 million. The banks mentioned represent
approximately 45% of the figure mentioned above.
The terms of the operation that consider certain additional security
compatible with the limits permitted by the contracts that cover the rest
of the current debt of Endesa, have already been agreed by the Board of
Directors of Endesa and by the four mentioned banks and will shortly be
presented to the rest of the banks for their consideration and approval.
The refinancing proposed has a new term up to 2008 with half-yearly
amortizations commencing 30 months from the initiation of the operation.
Furthermore, the clause that permitted a pre-payment in the event of a
deterioration of the credit rating given by the risk rating agencies will be
replaced by a series of new financial covenants and commitments that will
match the business plan of the company.
This process of refinancing the company falls within the Financial
Strengthening Plan adopted recently by the company with the main object
of reducing the company’s debts.
223
• On March 27, 2003 we informed as an Essential Fact that at a
meeting held today, the Board of Directors agreed to inform as an
Essential Fact that the Board of Directors of the Company agreed to
approve the offer to acquire the assets of the Canutillar Plant for an
amount of US$ 174,000,000 submitted by Hidroeléctrica Guardia
Vieja S.A., payable in cash upon the signature of the respective sale
contracts, all within the tender process of those generating assets led
by the Dresdner Kleinwort Wasserstein Bank, as the advisor to Endesa
in this private tender process. This award on the part of the Board of
Directors is subject to the authorization of the Extraordinary General
Meeting of Shareholders of Endesa to be held on March 31 of this year
to divest the Plant in question, in accordance with Article 28 Letter f)
of the by-laws of the company and the dispositions of the Policy on
Investments and Financing of the company.
The Board of Directors further agreed, also subject to the conditions
indicated above, to provide the corresponding powers of attorney in order
that all the necessary acts, contracts and agreements related to the sale
of all the properties, assets, rights and concessions involved in the sale of
the mentioned Plant be signed.
The divestment of the Canutillar Plant falls within the Financial
Strengthening Plan approved by the Board of Directors in October, 2002
that contemplates, amongst other main steps to be taken, the divestment
of those assets announced at the time to the market. The funds received
from these sales will be utilized to reduce the debt of the Company.
• Ordinary and Extraordinary General Meetings of Shareholders were
held on March 31, 2003 with the object of deciding over the following
matters:
consolidated financial statements
ORDINARY GENERAL MEETING
1. Approval of the Annual Report, Balance Sheet, Financial Statements,
Report from the External Auditors and Inspectors of Accounts
corresponding to the period ended on December 31, 2002; and
registration of the result for the period in the capital and reserves
accounts;
2. Explanation on the Policy on Dividends of the company and
information on the procedures to be followed on the distribution of
dividends;
3. Policy on Investments and Financing proposed by the Board of
Directors;
4. Election of the Board of Directors of the Company;
5. Setting the remunerations of the members of the Board of Directors.
6. Setting of the remunerations of the Committee of Directors and its
budget.
7. Report from the Committee of Directors;
8. Designation of the External Auditors.
9. Election of two principal Inspectors of Accounts and two deputies and
the setting of their remunerations;
224
10. Other matters of interest to the company and responsibility of the
Shareholders Meeting and information on the operations referred to
in Article Nº 44 of Law Nº 18,046.
EXTRAORDINARY GENERAL MEETING
1.
In accordance with Article 28 Letter f) of the by-laws of the company
and the indications in the Policy on Investments and Financing of the
Company, request the authorization of the Extraordinary General
Meeting of Shareholders to divest the Canutillar Hydroelectricity
Plant;
At the same meeting, the Board agreed to designate Luis Rivera, Jaime
Bauzá and Antonio Tuset as members of the Committee of Directors.
• On April 1, 2003 we reported by means of an Essential Fact letter that
at the Extraordinary General Meeting of Shareholders of Empresa
Nacional de Electricidad S.A. held yesterday, approval was granted
with the unanimous vote of the shareholders present, to sell the
Canutillar Hydroelectricity Plant owned by Endesa.
In virtue of this, the condition established by the Board of Directors of
awarding the Plant mentioned to Hidroeléctrica Guardia Vieja S.A. at a price
of US$ 174,000,000 has been met, as agreed by the Board of Directors
of the Company in the Board Meeting held on March 27 of this year and
communicated in an Essential Fact letter on that same date.
• On April 7, 2003 we reported by means of an Essential Fact letter
that on April 4, 2003 we complied with the conditions established to
continue with the process of selling to HQI Transelec, the transmission
assets owned by our subsidiary Compañía Eléctrica Tarapacá S.A.
(Celta) and by our related company Gasatacama Generación Ltda. in
the Northern Interconnected System (SING).
In effect, with the selling and buying companies having ratified the
terms and conditions of the sale of the transmission lines and sub-stations
included in the operation, the conditions established at the time in order to
go ahead with this commitment to sell the assets, have been met.
With regard to our subsidiary Celta, the operation includes the sale of
285 Kms. of 220 KV. tension circuit lines. In the case of our related company,
Gasatacama Generación Ltda., in which Endesa has a 50% interest, the
transfer includes 673 Kms. of circuit lies with the same tension. In both
cases, the operations contemplate the transfer of certain sub-stations
owned by the two companies.
The total assets to be sold represent nearly 20% of the transmission
assets of the SING.
The price received by our subsidiary Celta is approximately US$ 32
million and with respect to our related company, Gasatacama Generación
Ltda., the amount is approximately US$ 78 million.
2. Adopt all the agreements required to comply with and carry out
adequately the above approval.
The estimated date of the signature of the transfer contracts is May
30 of this year.
In accordance with the indications in Point 4 of the Ordinary General
Meeting of Shareholders a new Board of Directors was appointed for
the Company which is comprised as follows:
With respect to Endesa, the sale of the transmission assets falls within
the Financial Strengthening Plan approved by the Board of Directors in
October 2002 that contemplates, amongst other main steps to be taken,
the divestment of those assets announced at the time to the market.
Jaime Bauzá
Ignacio Blanco
José María Hidalgo
Antonio Pareja
Luis Rivera
Andrés Regue
Carlos Torres
Antonio Tuset
Leonidas Vial
At an Extraordinary Meeting of the Board of Directors held on the
same date, the Board 0f Directors designated Luis Rivera as Chairman of
the Board and Antonio Pareja as Vice Chairman.
• On April 30, 2003 we reported by means of an Essential Fact letter
that today we closed the operation involving the divestment of the
Canutillar Hydroelectric Plant to CENELCA S.A., a subsidiary of Minera
Valparaíso S.A. for a sum of US$ 174,000,000, having signed the
respective transfer contracts
In this way, we have concluded the process of divestment of the
Plant mentioned that has an installed capacity of 172 MW and is located
in the X Region of the country. The award to the purchasing group was
communicated in our Essential Fact letter dated April 1, 2003.
This divestment falls within the Financial Strengthening Plan approved
by the Board of Directors of the company which has been progressing as
planned.
Enersis / 2003 annual report
As of March 31, 2003, the Company established provisions for ThCh$
5,032,803 corresponding to the estimated loss on this operation.
• On May 12, 2003 we reported by means of an Essential Fact letter
that today Empresa Nacional de Electricidad S.A. and a group of
24 banks led by BBVA S.A., Salomon Smith Barney Inc., Dresdner
Kleinwort Wasserstein and Santander Central Hispano Investment
Securities, signed a syndicated loan to refinance the bank borrowings
of the Company for US$ 743 million. The preliminary agreement with
the lead banks on this financial operation was advised to the market
by means of our Essential Fact letter dated March 11 of this year.
Standard & Poor’s due to a deterioration in the risk rating granted by the
risk rating agencies and the clause that linked the interest of the credit to
the risk rating of the Companies have been eliminated and were replaced
by a series of new covenants and financial commitments in line with the
business plans of the companies.
Furthermore, and as we pointed out in our last Essential Fact letter dated
May 12 of this year, the increase in the financial cost of the debt associated
to this financial operation will be compensated by the effect we hope to
attain from the compliance with all the financial and divestment operations
considered in the Financial Strengthening Plan of the Company.
The conclusion of this refinancing operation is subject to the compliance
with several conditions precedent that must be completed on Thursday,
May 15.
This refinancing process concluded today is a significant aspect within
the Financial Strengthening Plan being carried out by the company.
As a result of this refinancing, Endesa’s obligations that originally
matured this year and next, are deferred until the year 2008, with
amortizations of capital commencing in the year 2005.
The syndicated loan that covers the refinancing eliminates the event of
an accelerated repayment of the obligations due to a deterioration in the
risk rating of the Company to levels below the investment grade.
The increase in the average financial costs of the debt associated to
this operation will be compensated by the effects that we expect to reach
with the compliance of all the financial operations and the divestments
considered in the Financial Strengthening Plan of the Company.
This refinancing covers most of Endesa’s bank borrowings and
represents a significant ingredient of the Financial Strengthening Plan
approved by the Board of Directors of the Company in October 2002 and
which has been complied with as expected.
• On May 15, 2003 we reported by means of an Essential Fact letter that,
complementing our Essential Fact letters of March 11 and May 12, 2003,
both with reference to the process initiated by the Company to sign a
syndicated loan to refinance the Company’s bank borrowings for US$
743 million with 24 banks led by BBVA S.A., Salomon Smith Barney
Inc., Dresdner Kleinwort Wasserstein and Santander Central Hispano
Investment Securities, we advise that as of this date, we have complied
with all the conditions precedent required in this syndicated loan and
this operation has been definitely closed.
Endesa’s obligations under this syndicated loan are secured by personal
guarantees and co-debtor responsibilities provided by its subsidiaries
Empresa Eléctrica Peheunche S.A., Empresa Eléctrica Pangue S.A., Compañía
Eléctrica Tarapacá S.A. and Endesa Chile Internacional.
A fundamental effect of the refinancing signed is that the obligations of
the Company that originally matured in 2003 and 2004, now have a term
that expires in 2008 with half-yearly amortizations of capital commencing
30 months after the date of signature. This implies that the amortizations
of capital will start on November 15, 2005. During this period of 30 months,
the Company will only pay interest accrued on the new credits which, all
told, will permit Endesa a harmony between an adequate service of the
current debt and its generation of cash flows.
The annual rate for the duration of these credits will be Libor + 300
bases points.
The clause that allowed for a demand for an anticipated acceleration
of the repayment in the potential case of a loss of the investment grade by
• On June 23, 2003 we reported by means of an Essential Fact letter
that today we proceeded to close the process of the sale of the
entire stock participation that Empresa Nacional de Electricidad
S.A. maintained directly in Infraestructura Dos Mil S.A., Inecsa
Dos Mil S.A., Sociedad Concesionaria Autopista del Sol S.A. and
in Sociedad Concesionaria Autopista Los Libertadores S.A. to the
Spanish company, OHL Concesiones S.L., a subsidiary of the Spanish
company, Obrascón Huarte Lain S.A. for a total sum of UF 2,305,507,
having signed all the respective transfer contracts.
• On July 23, 2003 we reported by means of an Essential Fact letter
that, in accordance with the indications of Articles 9 and 10, Point
2 of Law Nº 18,045 and the conditions of Circular Nº 1072 of the
Superintendency of Securities and Insurance, Empresa Nacional de
Electricidad S.A., through its Agency overseas, has today proceeded
to issue, in line with Rule Nº 144-A of the Securities Act of 1933 of the
United States of America, two series of bonds on the international
markets for a total amount of US$ 600,000,000.
225
The purpose of these bond issues is to provide the Company with
financial resources to refinance the maturity of the three-year bonds,
known as European Floating Rate Notes (FRN’s), issued by the subsidiary
Endesa Chile Internacional, for an amount of Euros 400 million expected
to mature on July 24, 2003. In order to cover the payment of the FRN’s, the
company signed a Euro/US$ swap contract resulting in the net obligation
to pay US$ 381 million for the FRN’s at maturity.
The remaining funds coming from the bond issue will be utilized
fundamentally to prepay bank borrowings of the Company.
The operation is structured in two stages:
- US$ 400 million in unsecured bonds to mature in 2013 at a rate of
8.35%.
- US$ 200 million in unsecured bonds to mature in 2015 at a rate of
8.625%
• On August 1, 2003 we reported by means of an Essential Fact letter
that, in accordance with the indications of Articles 9 and 10, Point
2 of Law Nº 18,045 and the conditions of Circular Nº 1072 of the
Superintendency of Securities and Insurance, we complemented our
communication by means of an Essential Fact letter dated July 23
of this year in which we reported that on that same date Empresa
Nacional de Electricidad S.A., through its Agency overseas, had
proceeded to issue, in line with Rule Nº 144-A of the Securities Act
of 1933 of the United States of America, two series of bonds on the
international markets for a total amount of US$ 600,000,000.
consolidated financial statements
Adding to this information, we advise that yesterday the aforementioned
issue was registered before the Securities and Exchange Commission.
• On October 6, 2003 we reported by means of an Important Fact
letter that, during the night of last Friday, October 3 the operations
of 9 of the 10 turbines in the hydroelectricity plant of our subsidiary in
Brazil, Cachoeira Dourada S.A. were paralyzed by order of the Goias
Federal State Environmental Agency. As a result, of the 658 MW
capacity of the Plant, for technical reasons only 1 with a capacity of
17MW is operating.
The reason alluded for this measure was apparently the lack of the
corresponding environmental license authorizing Cachoeira Dourada S.A.
to operate the electricity plant. The requirement to have an environmental
license was imposed by law in Brazil in 1996.
We would point out that Endesa acquired the ownership of Cachoeira
Dourada S.A. during the process of privatization organized by the State
of Goias and by the Federal Union in the year 1997. As of the date of
privatization, Cachoeira Dourada S.A. did not possess an environmental
license to operate the plant, just as none of the hydroelectricity generating
stations operating in the State of Goias had one then or have one now.
During the year 1998, Cachoeira Dourada S.A. initiated the process
required to obtain the mentioned license before the Federal Environmental
Authority (IBAMA) that claimed the authority to issue the environmental
licenses to all the Hydroelectricity Generating Stations that make use of
federal rivers, which is the case of our subsidiary, Cachoeira Dourada S.A.
226
Currently, the process to obtain an environmental license continues its
normal administrative procedure before the federal environmental authority
and we would mention that Cachoeira Dourada S.A. is the company most
advanced in this administrative process in respect of the other electricity
plants in the State of Goias.
From the above, it is clear that the measure taken by the Environmental
Agency of the State of Goias, without precedent in the Federal Republic
of Brazil, is clearly arbitrary and discriminatory as we feel that it should
have been lifted in the short term as it reveals the existence of a conflict
of authority, the solution of which should not be delayed.
the turbines decreed by that agency, in compliance with the Agreement
signed yesterday in the city of Brasilia between Cachoeira Dourada S.A. and
the State Environmental Agency mentioned, by virtue of which the latter
promised to leave without effect the administrative order it had decreed.
As a result of the above-mentioned judicial resolution and the
administrative act issued by the Environmental Agency of the State of
Goias, the Plant belonging to Cachoeira Dourada S.A. proceeded on that
same day to reinitiate the normal operations with all its turbines.
• On October 24, 2003 we reported that Empresa Nacional de
Electricidad S.A. placed a bond issue on the local market for the sum
of UF 8,000,000.
This placement was made in two series, each one for UF 4,000,000,
the first at a term of seven years at a rate of 5.65% and the second at a
term of twenty-five years at a rate of 6.76%.
The resources obtained from this operation, which forms part of the
Financial Strengthening Plan, will go towards refinancing the company’s
debts.
Pehuenche
• An Ordinary General Meeting of Shareholders was held on March
31, 2003 with the object of discussing and approving the following
matters:
ORDINARY GENERAL MEETING
1. Approval of the Annual Report, Balance Sheet, Financial Statements
and the Report from the External Auditors corresponding to the
period ended on December 31, 2002;
2. Distribution of Profits and payment of dividends;
3. Explanation on the Policy on Dividends of the company and
information on the procedures to be followed on the distribution of
dividends;
4. Setting of the remunerations of the Committee of Directors and its
Notwithstanding the above, the subsidiary, Cachoeira Dourada S.A., will
appeal to all the administrative and judicial levels with the same purpose.
budget.
We would point out that, according to the information contained in
our last consolidated financial statements, Cachoeira Dourada S.A. has only
one client, that being the state distribution company of the State of Goias,
CELG that is in litigation with our subsidiary, having obtained a judicial
resolution to provisionally suspend the payment of its invoices as of the
month of April of this year with respect to the contract for energy. At this
moment and following a new judicial decision, the Goias State distribution
company must pay 50% of the contract.
• On October 10, 2003 we reported by means of an Important Fact
letter that, with respect to the paralyzation of 9 of the 10 turbines
in our subsidiary, Cachoeira Dourada S.A. in the State of Goias in
Brazil, today the competent tribunal in that State accepted a limiting
measure submitted yesterday by our subsidiary, Cachoeira Dourada
S.A., in order to suspend the measure decreed by the agency of the
State of Goias that ordered the paralyzation in question.
Notwithstanding the above and also on this date, the Environmental
Agency of the State of Goias proceeded to suspend the order to paralyze
5. Report from the Committee of Directors;
6. Designation of the External Auditors.
7. Other matters of interest to the company and responsibility of the
Shareholders Meeting and information on the operations referred to
in Article Nº 44 of Law Nº 18,046.
EXTRAORDINARY GENERAL MEETING
1. Modify Article Nº 4 of the by-laws by adding to the corporate purpose
the granting by the company of personal guarantees and tangible
security in favor of third parties;
2. The granting by the Company in favor of its parent company, Empresa
Nacional de Electricidad S.A., of a personal guarantee and a co-debtor
condition for up to US$ 268 million to secure the credit obligations of
Empresa Nacional de Electricidad S.A. in the terms and conditions
agreed by the Extraordinary General Meeting of Shareholders;
Enersis / 2003 annual report
3. Adopt all the agreements necessary to comply with and carry out the
4. Setting the remunerations of the members of the Board of Directors.
decisions made in regard to the above points;
• On March 28, 2003, we reported that the Ordinary General Meeting
of the Shareholders of the Company held on March 27, 2003 October
24, 2003 approved the payment of a definite dividend of Ch$
13.155865 per share. This dividend will be paid as of April 8, 2003.
• On May 16, 2003 we reported by means of an Important Fact letter
that by public deed dated May 15 of this year, granted before Notary
Public Patricio Zaldívar, Empresa Eléctrica Pehuenche S.A. became a
guarantor for up to US$ 185 million in the terms indicated under Title
Thirty Six of Book IV of the Civil Code of the Republic of Chile, assuming
its obligation as co-debtor in the terms stated in Title Nine of Book IV
of the same Code with respect to the integral and prompt compliance
of all and each one of the obligations in favor of the creditors and
that were assumed by Empresa Nacional de Electricidad S.A., acting
through its agency abroad, emanating from the Loan Agreement on
the credit that, on May 12 of this year, a series of financial institutions
led by Banco Bilbao Vizcaya Argentaria, Dresdner Bank A.G., Banco
Santander Central Hispano S.A. and Citibank N.A. granted to Empresa
Nacional de Electricidad S.A., acting through its Agency overseas. The
credit amounts to US$ 742,857,142.86.
We would point out that the personal guarantee and the co-debtor
condition granted by Empresa Eléctrica Pehuenche S.A. was approved at
the Extraordinary General Meeting of the Shareholders of the Company
held on March 27 of this year.
• On June 27, 2003 we reported that at a meeting held on June 26,
2003 the Board of Directors agreed to pay a provisional dividend
amounting to Ch$ 11.617344 per share on July 25, 2003. This
provisional dividend is in accordance with the policy advised to the
Ordinary General Meeting of Shareholders.
•
•
In a meeting held on September 30, 2003 the Board of Directors
agreed to pay a provisional dividend in accordance with the policy
advised to the Ordinary General Meeting of Shareholders. This
provisional dividend will amount to Ch$ 15.346562 per share and will
be paid on October 27, 2003.
In a meeting held on December 29, 2003 the Board of Directors
agreed to pay a provisional dividend in accordance with the policy
advised to the Ordinary General Meeting of Shareholders. This
provisional dividend will amount to Ch$ 19.006468 per share and
will be paid on January 28, 2004.
Pangue
• An Ordinary General Meeting of Shareholders was held on March 27, 2003
with the object of debating over and approving the following matters:
ORDINARY GENERAL MEETING
1. Approval of the Annual Report, Balance Sheet, Financial Statements
and the Report from the External Auditors corresponding to the
period ended on December 31, 2002;
2. Distribution of Profits and payment of dividends;
3. Explanation on the Policy on Dividends of the company and information
on the procedures to be followed on the distribution of dividends;
5. Designation of the External Auditors.
6. Other matters of interest to the company and responsibility of the
Shareholders Meeting and information on the operations referred to
in Article Nº 44 of Law Nº 18,046.
• On March 28, 2003 we reported that the Ordinary General Meeting
of Shareholders held on March 27, 2003 approved the payment of
a definite dividend of Ch$ 11.335754 per share. This dividend will be
paid as of April 23, 2003.
• On April 11, 2003 Empresa Eléctrica Pangue S.A. reported that the
Extraordinary General Meeting of Shareholders held on April 10,
2003 authorized the company to grant a personal guarantee and to
act as a co-debtor for an amount up to US$ 743 million to secure the
credit obligations of Empresa Nacional de Electricidad S.A.
The meeting left on record that, in accordance with Point 4 of Article Nº
69 of Law Nº 18,046, this approval by the Extraordinary General Meeting
of Shareholders on the subject covered by the paragraph above, grants
the right to any dissident shareholder to withdraw from the company after
paying the value of his shares.
A dissident shareholders is considered one that at the Extraordinary
General Meeting of Shareholders opposed the agreement, giving him the
right to withdraw, or that, not having attended the Meeting, expressed
his opposition in writing to the company within the term established in
the following paragraph.
The right to withdraw, according to Article Nº 70 of the Law quoted,
must be exercised within a term of 30 days from the date of the
Extraordinary General Meeting of Shareholders in question, i.e. between
April 10 and May 9, 2003, both dates inclusive.
227
The right to withdraw covers only the shares that the dissident
shareholder had inscribed in his name in the register of shareholders of
the company as of the date that determined his right to participate in the
Extraordinary General Meeting of Shareholders that adopted the respective
agreement which was April 3, 2003.
The price to be paid per share for the right to withdraw will be the
book value of the share as of March 31, 2003 which was Ch$ 258.57 per
share.
• On May 16, 2003 we reported by means of an Essential Fact letter that
by public deed dated May 15 of this year, granted before Notary Public
Patricio Zaldívar, Empresa Eléctrica Pangue S.A. became a guarantor
for an initial period of 364 days taken from the aforementioned date,
in the terms indicated under Title Thirty Six of Book IV of the Civil
Code of the Republic of Chile, assuming its obligation as co-debtor
in the terms stated in Title Nine of Book IV of the same Code with
respect to the integral and prompt compliance of all and each one
of the obligations in favor of the creditors and that were assumed
by Empresa Nacional de Electricidad S.A., acting through its agency
abroad, emanating from the Loan Agreement on the credit that,
on May 12 of this year, a series of financial institutions led by Banco
Bilbao Vizcaya Argentaria, Dresdner Bank A.G., Banco Santander
Central Hispano S.A. and Citibank N.A. granted to Empresa Nacional
de Electricidad S.A., acting through its Agency overseas. The total
amount of the credit is US$ 742,857,142.86.
consolidated financial statements
We would point out that the personal guarantee and the co-debtor
condition granted by Empresa Eléctrica Pangue S.A. was approved at the
Extraordinary General Meeting of the Shareholders of the Company held
on April 10 of this year.
• On June 27, 2003 we reported that at a meeting held on June 26,
2003 the Board of Directors agreed to pay a provisional dividend
amounting to Ch$ 19.716808 per share on July 25, 2003. This
provisional dividend is in accordance with the policy on dividends
advised to the Ordinary General Meeting of Shareholders held on
March 27, 2003.
• On July 4, 2003 we reported that at a meeting held on June 26,
2003 the Board of Directors of the Company agreed to call for an
Extraordinary General Meeting of Shareholders for July 29, 2003.
The purpose of the Extraordinary Meeting is to debate and decide on
the following matters:
1. Request the Superintendency of Securities and Insurance to strike off
the inscription of Empresa Eléctrica Pangue S.A. from the Securities
Register.
The meeting left on record that, in accordance with Point 4 of Article Nº
69 of Law Nº 18,046, this approval by the Extraordinary General Meeting
of Shareholders on the subject covered by the paragraph above, grants
the right to any dissident shareholder to withdraw from the company after
paying the value of his shares.
A dissident shareholders is considered one that at the Extraordinary
General Meeting of Shareholders opposed the agreement, giving him the
right to withdraw, or that, not having attended the Meeting, expressed
his opposition in writing to the company within the term established in
the following paragraph.
The right to withdraw, according to Article Nº 70 of the Law quoted,
must be exercised within a term of 30 days from the date of the
Extraordinary General Meeting of Shareholders in question, i.e. between
July 29 and August 27, 2003, both dates inclusive.
The right to withdraw covers only the shares that the dissident
shareholder had inscribed in his name in the register of shareholders of
the company as of the date that determined his right to participate in the
Extraordinary General Meeting of Shareholders that adopted the respective
agreement which was July 22, 2003.
2. Modify Articles 10, 18, 23 and 30 from the by-laws of the Company
in order to adapt them to the regulations applicable to unquoted
corporations.
The price to be paid per share for the right to withdraw will be the
book value of the share as of June 30, 2003 which was Ch$ 286.461711
per share.
3.
Insert a modified text into the Company’s Bylaws.
4. Adopt all the agreements required to comply with and carry out
adequately the decisions in relation to the above points.
228
• On July 30, 2003 we reported that in view of the contents of Article
69 a) of the Law on Stock Companies and General Norm Nº 30 of
the Superintendency of Securities and Insurance, I hereby inform
you that the Extraordinary General Meeting of Shareholders of the
company held on July 29, 2003 agreed to request the elimination of
the Company from the Register of Securities of the Superintendency
of Securities and Insurance.
• On September 26, 2003 we reported that, in compliance with
the subject approved by the Extraordinary General Meeting of
Shareholders of Empresa Eléctrica Pangue S.A. held on July 29, 2003
we request the cancellation of the inscription dated August 10, 1992
corresponding to Empresa Eléctrica Pangue S.A. in the Register of
Securities of the Superintendency of Securities and Insurance shown
as Nº 419.
• On November 26, 2003, the Superintendency of Securities and
Insurance, by means of Exempt Resolution Nº 440 struck off, at
the request of the interested party, the inscription in the Register of
Securities Nº 419 corresponding to Empresa Eléctrica Pangue S.A.
Enersis / 2003 annual report
ratio analysis of the consolidated
financial statements
for the period ended on December 31, 2003
economic-financial summary
The net result as of December 31, 2003 was a profit of Ch$ 12,468
million, which compares favorably with the loss of Ch$ 225,985 million
registered in December, 2002. In this respect, we must remember the this
loss was fundamentally the result of the acceleration of the amortization
of the balances of the positive and negative goodwill accounts related to
the investments made by the Company in Argentina and Brazil.
Operating Revenues amounted to Ch$ 531,098 million for the period
ended on December 31, 2003, a slight decrease of Ch$ 6,873 million, or
1.3%, with respect to the same period of the year 2002. In order to compare
these on an equal basis, it is important to mention that this decrease is
principally due to the effects of the divestment and consequently of the
deconsolidation of the subsidiaries, Río Maipo and Infraestructura Dos
Mil S.A. as, leaving aside this effect, the operating result would have risen
by 2.2%.
At the same time, we must point out the strong impact that the
important appreciation of the Chilean Peso versus the US Dollar had on
the operating result (17.4%), falling from a rate of Ch$ 718.61 to Ch$ 593.8
in December, 2003. This is an important consideration as, if we isolate this
effect, the operating result would have grown by 12.4%.
In this consideration, the increase in the operating results of the
subsidiaries Codensa, Cerj, Edesur and the service and engineering
companies Synapsis and CAM have compensated the fall in the results
obtained in the subsidiaries Endesa Chile, Edelnor, Coelce and Inmobiliaria
Manso de Velasco.
Still on the operations area, the basis of the Company’s business, we
must highlight the increase of 4.2% in physical sales in the distribution
business that rose from 47,679 GWh to 49,677 GWh, which is consistent
with the pace of the economic recovery of most of the countries in which
the Enersis Group has operations. On the other hand, sales of power in
the generation area also rose from 48,629 GWh to 51,053 GWh, a growth
of 5.0%.
Physical sales of distribution, when compared to last year, showed the
following behavior:
Chilectra
Edesur
Edelnor
Cerj
Coelce
Codensa
5.7%
4.1%
2.6%
3.5%
6.1%
2.7%
Physical sales of generation, by country, grew as follows:
Chile
Argentina
Peru
Colombia
Brazil
1.8%
17.2%
6.8%
1.8%
4.9%
These partial increases permit us to confirm what we have been saying
with respect to the recovery in consumption of electricity after two years
and a half in which physical sales grew at rates slightly over 1%.
This greater volume of physical sales, added to the greater generation
of electricity, is also a reflection of the recovery in consumption, confirming
what we said in the preceding paragraph. These two elements are of great
importance in the evaluation of our principal business, its projections and
its expectations.
Furthermore, in the operating area, we should highlight the rise
of 5.1% in the number of clients that went from 9,978 thousand to
10,482 thousand, representing an increase of 504 thousand clients or
the equivalent to incorporating, in one year, a company one and a half
times the size of Río Maipo. This growth, added to the recovery in demand
mentioned above, permits us to presuppose a sustained improvement in
the level of sales in the year 2004.
Another important element in the field of operations, labor productivity
improved by 5.1%, rising from 1,367 clients per employee to 1,436 clients
per employee, confirming the positive tendency experienced throughout
the last four years.
Losses of energy (aggregate of all the companies), another variable
in the distribution business, grew from 11.9% to 12.2%. This variation is
explained principally by the increase experienced by Edesur, Cerj and Coelce,
negative effects that were not able to be compensated by the fall in loss of
energy registered by Edelnor and Codensa.
229
The Ch$ 158,399 million fall in Operating Revenues, equivalent to 6.3%,
were partially compensated by an important reduction of 5.5% in Operating
Costs which fell by Ch$ 95,619 million and by the important reduction of
24.8% in Administrative and Selling Expenses, confirming the great effort
made by this area.
The company managed to improve its Net Financial Result by Ch$
9,996 million, an increase of 2.8% with respect to the close of the year
2002. This was principally due to a the strong reduction in debt carried
out during the year 2003 and to the benefits of lower interest rates. This
allowed Enersis to reach levels of borrowings compatible with those of
international companies, qualified suppliers of electric services classified
as A or higher.
With regard to Net Results from Investments, these rose by 109.9%
from a profit of Ch$ 8,347 million to a profit of Ch$ 17,517 million, as a
consequence of a greater profit on the investments in related companies
and of a smaller loss from same, explained in the detail shown in the
following pages.
consolidated financial statements
(cid:46)(cid:69)(cid:87)(cid:192)(cid:48)(cid:69)(cid:82)(cid:85)(cid:86)(cid:73)(cid:65)(cid:78)(cid:192)(cid:51)(cid:79)(cid:76)(cid:192)(cid:192)
(cid:34)(cid:82)(cid:65)(cid:90)(cid:73)(cid:76)(cid:73)(cid:65)(cid:78)(cid:192)(cid:50)(cid:69)(cid:65)(cid:76)
(cid:33)(cid:82)(cid:71)(cid:69)(cid:78)(cid:84)(cid:73)(cid:78)(cid:69)(cid:192)(cid:48)(cid:69)(cid:83)(cid:79)
(cid:35)(cid:79)(cid:76)(cid:79)(cid:77)(cid:66)(cid:73)(cid:65)(cid:78)(cid:192)(cid:48)(cid:69)(cid:83)(cid:79)
(cid:35)(cid:72)(cid:73)(cid:76)(cid:69)(cid:65)(cid:78)(cid:192)(cid:48)(cid:69)(cid:83)(cid:79)
(cid:34)(cid:79)(cid:78)(cid:79)(cid:83)(cid:192)(cid:57)(cid:65)(cid:78)(cid:75)(cid:69)(cid:69)(cid:192)(cid:37)(cid:78)(cid:69)(cid:82)(cid:83)(cid:73)(cid:83)(cid:192)
(cid:0)(cid:0)
(cid:19)
(cid:16)
(cid:16)
(cid:18)
(cid:13)
(cid:78)
(cid:65)
(cid:42)
(cid:19)
(cid:16)
(cid:16)
(cid:18)
(cid:13)
(cid:82)
(cid:80)
(cid:33)
(cid:19)
(cid:16)
(cid:16)
(cid:18)
(cid:13)
(cid:71)
(cid:85)
(cid:33)
(cid:19)
(cid:16)
(cid:16)
(cid:18)
(cid:13)
(cid:67)
(cid:69)
(cid:36)
(cid:20)
(cid:16)
(cid:16)
(cid:18)
(cid:13)
(cid:78)
(cid:65)
(cid:42)
Furthermore, the high volatility of the local currencies against the US Dollar,
in this case, the appreciation since January of this year, as can be noted from the
above graph, has implied registering accounting losses of Ch$ 67,511 million in
the year 2003 as a result of the adjustments on conversion to Chilean norms,
as a consequence of the application of Technical Bulletin Nº 64. This, net of
minority interests, amounts to a loss of Ch$ 40,786 million. This is closely related
to the appreciations of the Brazilian Real and the Argentine Peso and their
impact with respect to the structure of the monetary assets and liabilities.
230
With respect to the financial area, the year 2003 will be remembered as
one of intense activity due to the multiple and successful operations carried
out in order to strengthen the financial and equity situation of Enersis.
Firstly, we must highlight that throughout the year, the Enersis Group
carried out multiple operations for approximately US$ 7,000 million, as
part of the Financial Strengthening Plan launched by the Company in the
month of October, 2002.
Financial Debt in Millions of US$
�
These operations can be summarized in three large stages:
Refinancing Operations
Selective Divestment of Assets
Capital Increase
Total
US$ 4,018 million
US$ 757 million
US$ 2,104 million
US$ 6,879 million
The refinancing stage was undertaken through various instruments
such as syndicated loans, bond issues on local and overseas markets,
prepayment of the Jumbo II credit and other less important operations.
The moment to undertake this restructuring was also the most appropriate
considering that interest rates were at a historic low whilst at the same time
the improved perception of risk of the Enersis Group allowed for a prize on
risk which was a lower spread on the new debt. Many of these operations
took place during the year 2003, the last of these being the payment of
US$ 149 million corresponding to the put undertaken by the holders of the
2026 Yankee Bonds.
All these operations permitted not only a greater flexibility in the maturity
of Enersis’ debt, resulting in a payment schedule more in accord with the
Group’s generation of Cash flows, but also a reduction of the debt by US$
2,573 million, significantly strengthening the financial situation of Enersis.
The divestment of assets achieved the best expectations as the prices
offered for the assets on sale were in the top level of those expected. With
regard to the “replacement” of those assets divested, we would point out
that the 172 MW of installed capacity corresponding to the Canutillar Plant
that was sold will be easily surpassed by the 570 MW of installed capacity
of the new Ralco plant coming on stream during the year 2004. This does
not consider the 311 MW installed capacity of the new thermoelectricity
plant in Ceará (CGTF), in the northeast of Brazil, in operation since January
2004, 49% owned by Enersis. These divestments also produced an effect
on the comparative analysis of the results as of December 2002 versus
December 2003, an important aspect to bear in mind.
Divestments
Río Maipo
Canutillar
Infraestructura 2000
Transm. Lines
Total
Cash
Debt Discounted
Total
170
174
50
110
504
33
-
220
-
253
203
174
270
110
757
Enersis / 2003 annual report
With regard to the capital increase, this exceeded even the most optimistic
expectations. In this respect, we must recall that when we launched this operation
for US$ 2,000 million, the stock markets were still fairly depressed and some
sectors were very skeptical about our possibilities of obtaining the participation of
the shareholders in the largest capital increase in recent times in Latin America.
In fact, the capital increase, conceived in three stages, permitted the
Company to increase its equity base by more than US$ 2,104 million, a
significant part of which corresponded to the capitalization of debts of US$
1,219 million made by the controlling shareholder.
Total Shares Authorized
Ist Period
Shares subscribed by ELE
Shares subscribed by 3rd parties
24,382,994,488
Nº of Shares
14,406,840,511
7,706,423,549
ThUS$
1,218,967
663,034
% Total
59.09%
31.61%
Total shares subscribed
22,113,264,060
1,882,001
90.69%
Exchange Local Bonds
Exchange Bonds B1 and B2
Nº of Shares
893,612,466
ThUS$
86,474
% Total
3.66%
2nd Period
Shares subscribed by 3rd parties
Nº of Shares
1,353,269,839
ThUS$
135,552
% Total
5.55%
Total shares subscribed
24,360,146,365
2,104,027
99.91%
Aside from any internal considerations with respect to the success of the
strengthening process carried out is the perception that the markets had of
this corporate effort. In this sense, in the following graph, it is possible to
appreciate how and by how much the risk perception of Enersis improved
by way of the spread or prize on risk required from our debt instruments.
(cid:76)
(cid:69)
(cid:85)
(cid:65)
(cid:54)
(cid:192)
(cid:82)
(cid:65)
(cid:48)
(cid:192)
(cid:70)
(cid:79)
(cid:5)
(cid:192)
231
Furthermore, the improved risk perception, together with the recovery in demand for electricity in the majority of the areas under concession,
is reflected in a sustained growth in the liquidity of Enersis’ shares, both on the local market and on the NYSE through the ADRs. The above is easily
appreciated from the following graph.
Average Daily Volume of Daily Transactions
Santiago Stock Exchange
Millions of Shares
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consolidated financial statements
(cid:33)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:192)(cid:36)(cid:65)(cid:73)(cid:76)(cid:89)(cid:192)(cid:54)(cid:79)(cid:76)(cid:85)(cid:77)(cid:69)(cid:192)(cid:79)(cid:70)(cid:192)(cid:36)(cid:65)(cid:73)(cid:76)(cid:89)(cid:192)(cid:52)(cid:82)(cid:65)(cid:78)(cid:83)(cid:65)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)
(cid:46)(cid:69)(cid:87)(cid:192)(cid:57)(cid:79)(cid:82)(cid:75)(cid:192)(cid:51)(cid:84)(cid:79)(cid:67)(cid:75)(cid:192)(cid:37)(cid:88)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(cid:69)(cid:192)(cid:8)(cid:46)(cid:57)(cid:51)(cid:37)(cid:9)
(cid:8)(cid:17)(cid:192)(cid:33)(cid:36)(cid:50)(cid:192)(cid:29)(cid:192)(cid:21)(cid:16)(cid:192)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:83)(cid:9)
Thousands of ADRs
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The improved risk perception, together with the strong liquidity of its paper, also provoked a sustained rise in the level of the prices of the shares
and of the ADRs throughout the year 2003, particularly from the beginning of the month of May, date on which the strengthening process started to
consolidate.
(cid:54)(cid:65)(cid:82)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:192)(cid:73)(cid:78)(cid:192)(cid:48)(cid:82)(cid:73)(cid:67)(cid:69)(cid:192)(cid:79)(cid:70)(cid:192)(cid:51)(cid:72)(cid:65)(cid:82)(cid:69)(cid:192)(cid:86)(cid:69)(cid:82)(cid:83)(cid:85)(cid:83)(cid:192)(cid:33)(cid:36)(cid:50)(cid:83)
232
(cid:34)(cid:79)(cid:78)(cid:79)(cid:83)(cid:192)(cid:57)(cid:65)(cid:78)(cid:75)(cid:69)(cid:69)(cid:192)(cid:37)(cid:78)(cid:69)(cid:82)(cid:83)(cid:73)(cid:83)(cid:192)
(cid:0)(cid:0)
The financial elements described, i.e., the recovery in demand and the
strengthening of the currencies, as is known, are essential factors required
to obtain a better return on the investments in our sector of activities.
The detail of the variations of the income accounts and the balance
sheet described above, together with a greater analysis of the evolution
of the main businesses are in the following pages, in the Comparative
Analysis of the Financial Statements, of the different entries in the Income
Statement, of the Balance Sheet and the Principal Cash Flows, compared
to the information corresponding to December 31, 2002.
Consequently, and even when the figures for the year 2003 did not
manage to register all the positive events described, it is necessary to
highlight them considering the impact that these will have, not only on
the results for 2004 and subsequent years, but also on the financial strength
of the Group as a whole, in the medium and long term.
Enersis / 2003 annual report
market in which the company participates
The business activities of Enersis are performed through subsidiaries
that operate in different businesses in the countries in which it they have a
presence. The most important business activities for Enersis are Distribution
and Generation of electricity.
Distribution Business
The following tables illustrate the key statistics in the different
countries.
Sales of Energy
(GWh) ( * )
Loss of Energy
(%)
Clients
(thousands)
Clients / Employee
Company
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Chilectra
Edesur
Edelnor
Cerj
Coelce
Codensa
Total
9,952
12,138
3,872
7,145
5,558
9,014
10,518
12,638
3,972
7,398
5,897
9,254
47,679
49,677
5.6%
11.6%
8.5%
22.6%
12.9%
10.3%
11.9%
5.6%
11.8%
8.4%
23.6%
13.5%
10.2%
12.2%
1,319
2,090
871
1,778
2,009
1,911
9,978
1,341
2,117
892
1,905
2,255
1,972
10,482
1,812
924
1,434
1,215
1,517
2,278
1,367
1,800
938
1,610
1,256
1,640
2,315
1,436
(*) These include sales to end consumers, tolls and inter-company sales.
Generation Business
Country
Chile
Argentina
Peru
Colombia
Brazil
Total
Markets in which it
participates
SIC and SING
SIN
SICN
SIN
SICN
Sales of Energy (GWh)
Market Share
Dec-2002
Dec-2003
Dec-2002
Dec-2003
233
18,344
7,897
4,158
14,639
3,591
48,629
18,681
9,259
4,443
14,900
3,770
51,053
46.1%
9.5%
22.8%
23.6%
1.0%
43.9%
11.9%
21.5%
21.6%
1.0%
consolidated financial statements
1. analysis of the income statement
The result achieved by the company as of December 31, 2003 is a
profit of Ch$ 12,468 million, representing an increase of Ch$ 238,453
million with respect to the year before when the company made a loss of
Ch$ 225,985 million.
The variations in each item of the income statement are shown in the
following table.
Income Statement (Millions of CH$)
Dec-02
Dec-03
Variation Dec 03-02
% Variation Dec 03-02
Operating Revenues
Operating Expenses
Operating Margin
Selling and Administrative Expenses
Operating Income
Profit (Loss) in Related Companies
Net Others Non Operating Income
Net Financial Margin
Positive Goodwill Amortization
Monetary
Exchange Differences
Non Operating Income
Income Tax
Extraordinary Items
Minority Interests
Negative Goodwill Amortization
234
Net Income
Ebitda (*)
Earnings per Share
2,510,732
(1,747,351)
763,381
(225,410)
537,971
8,347
73,017
(363,194)
(511,408)
5,014
(16,271)
(804,495)
(66,677)
(22,599)
16,445
113,370
(225,985)
1,090,707
(27.26)
2,352,333
(1,651,732)
700,601
(169,503)
531,098
17,517
(50,448)
(353,198)
(53,228)
(4,499)
(6,054)
(449,910)
(41,571)
(78,325)
51,176
12,468
1,010,295
0.41
(158,399)
95,619
(62,780)
55,907
(6,873)
9,170
(123,465)
9,996
458,180
(9,513)
10,217
354,585
25,106
22,599
(94,770)
(62,194)
238,453
80,412
27.67
(6.3%)
5.5%
(8.2%)
24.8%
(1.3%)
109.9%
(169.1%)
2.8%
89.6%
(189.7%)
62.8%
44.1%
37.7%
(576.3%)
(54.9%)
105.5%
(7.4%)
101.5%
(*) Earnings Before Income Tax, Interest, Deprecation and Amortization of Extraordinary Items
a. Net Operating Income:
The Net Operating Income amounted to Ch$ 531,098 million for the
period ended on December 31, 2003, reflecting a slight decrease of Ch$
6,873 million, or 1.3%, with respect to the same period of the year 2002.
This decrease is principally due to the effects of the sales and subsequent
deconsolidation of the of the subsidiaries, Río Maipo and Infraestructura
Dos Mil S.A. as, leaving aside this effect, the operating result would have
risen by 2.2%.
Furthermore, what occurred with the Chilean Peso this year, which
appreciated 17.4%, moving from a rate of Ch$ 718.61 in December 2002
to Ch$ 593.8 in December 2003, had an important impact on the net
operating income as, if we isolate this effect, the operating result would
have grown by 12.4%.
On the other hand, the net operating income of the subsidiaries
CODENSA, CERJ, EDESUR and the service and engineering companies
SYNAPSIS and CAM have compensated the fall in the results obtained
in the subsidiaries ENDESA, EDELNOR, COELCE and Inmobiliaria Manso
de Velasco.
In the Generating business, Endesa Chile presented a net operating
income of Ch$ 338,510 million as of December 2003, 3.2% lower than that
obtained in the year 2002. This decrease in the net operating income that
is mainly due to the results of the subsidiaries in Peru and Brazil, was partly
compensated by the good performance in Argentina and Colombia. We
should also point out the positive effect on the sales of energy in the region
as a consequence of the large growth in demand for energy, the abundance
of water in Argentina and the improved prices in Colombia. Furthermore,
we should mention the reduction of 14.5% in the administrative and selling
expenses to Ch$ 31,324 million in 2003, Ch$ 5,328 million less than in the
same period of the year 2002. During 2003 sales amounted to 51,053 GWh,
an increase of 5% over those of the same period of 2002.
In Chile, the net operating income for the year 2003 amounted to Ch$
155,260 million, falling by 10.0% with respect to the result for the year
2002. Nevertheless, if we compare this with the year 2002, excluding the
effects of the deconsolidation following the divestment of Infraestructura
Dos Mil S.A., the operating result in Chile would have risen by 3.2%. On
the other hand, revenues from sales of energy grew by 5.0% despite the
sale of the Canutillar Plant at the end of April 2003, compensated in part
by higher costs of energy, greater costs of fuel due to an increase in the
generation of thermoelectricity and by higher toll costs.
In Colombia, the net operating income rose by 12.9% to Ch$ 85,984
million. This increase is due to the higher prices on the spot market as a
result of the fall in the availability of water that has affected that country,
to a better sales mix, to a slight increase in physical sales and to larger
revenues from capacity during the period.
Enersis / 2003 annual report
In Argentina, the net operating income for the year 2003 increased by 154%
with respect to the year 2002, amounting to Ch$ 32,313 million. This increase
in the operating result is due to the good performance of the subsidiaries El
Chacón and Central Cordillera whose operating results rose by Ch$ 12,568 and
Ch$ 7,021 million, respectively. In El Chacón, the improved result is due to a
greater production of energy during the year 2003 as a result of larger water
supplies, added to better average sales prices on the spot market. In the case
of Central Costanera, the increase in the result is explained principally by larger
revenues in payment of power from contracts on the second interconnection
line with Brazil that started being registered as of May, 2002.
On the other hand, in Peru, the net operating income for the year
2003 fell by 13.9% with respect to the year 2002, amounting to Ch$ 61,296
million. The income from sales of energy decreased despite the increase in the
physical sales of energy due to the effects of the appreciation of the Chilean
Peso against the US Dollar during the period as well as to a higher cost of
purchases of energy and transport resulting from the rise in physical sales.
In Brazil, the net operating income of Cachoeira Dourada S.A. decreased
by 78.7% to Ch$ 3,657 million principally as a result of the lower revenues on
sales of energy due to lower average prices on the spot market and to the 10%
reduction in the original contract with the distributor Celg as of September
2002 and an additional 10% reduction as of September, 2003.
We point out that during the year 2003, the contract signed between our
related company CIEN and Copel for the second interconnection line between
Argentina and Brazil was successfully renegotiated. The definite agreement,
with the approval of ANEEL, in combination with the negotiations undertaken
on the contracts with the Argentine suppliers that support this contract, meant
an equilibrium in the margins similar to the previous ones for CIEN, providing in
addition the advantage of a smaller exposure to risk by diversifying in a better
manner both the sales and the purchases of the associated energy. Furthermore,
the subsequent modifications made in Argentina have only had a reduced effect
on Costanera whose main participation in the business of exporting to Brazil is in
the first interconnection line and not in the second, which was the subject of the
modifications. Even so, in the contracts associated with the second interconnection
line, Costanera maintains a power close to 200 MW in the short term that grows
to 300 MW in the long term, to price levels and conditions that represent to it a
very convenient alternative with respect to the internal Argentine market.
The Distribution Business in Latin America continues showing important
increases in physical sales and in the number of clients during the current
year in respect of the previous one. Consolidated physical sales grew by
4.2% to 49,677 GWh, which is the equivalent to an increase of 1,998 GWh
in sales in the period. The number of clients rose by 504 thousand, an
increase of 5.1% to reach 10.5 million clients.
In Chile, Chilectra presented a net operating income practically the same
as last year, amounting to Ch$ 88,051 million as of December 2003. This is
principally due to the increase of Ch$ 24,907 million in operating income related
to the 5.7% rise in physical sales, compensated by higher operating expenses of
Ch$ 22,822 million, the result of a greater purchase of physical energy and of
an increase in administrative and selling expenses by Ch$ 2,226 million, owing
to the increase in operating, maintenance and remunerations expenses.
In Brazil, the subsidiaries Cerj and Coelce obtained net operating results
amounting to Ch$ 24,513 and Ch$ 19,684 million, respectively. In the case of Cerj,
this represents an improvement of Ch$ 3,904 million with respect to the previous
year and for Coelce, a reduction of Ch$ 4,548 million compared to the same period
of the year 2002. We point out that both companies registered a regulatory asset for
an approximate amount of US$ 45 million (Cerj US$ 25 million and Coelce US$ 20
million) corresponding to the period between January 1 and March 1, 2002 with the
object of recovering the economic-financial equilibrium of the concession contracts,
to recover the losses of consumption observed during the period of rationing of
energy that lasted from the year 2001 to March 1, 2002. Sales of energy rose by
253 GWh in Cerj and 339 GWh in Coelce, 3.5% and 6.1%, respectively.
In Colombia, Codensa showed an increase of Ch$ 9,035 million in the net
operating income that amounted to Ch$ 30,617 million which is explained principally
by a higher unit value, the increase of 2.7% in physical sales and less administrative
and selling expenses, mainly in operating and personnel expenses.
In Peru, the subsidiary, Edelnor reduced its operating result by Ch$
6,687 million provoked basically by a reduction in the unit sale margin
due to the fall in tariffs and a lower sale of power. Physical sales of energy
grew by 100 GWh going from 3,872 GWh to 3,972 GWh as of December
2003, and the losses of energy fell from 8.5% to 8.4% during this period.
235
In Argentina, Edesur showed an improvement in the net operating
income of Ch$ 7,618 million, going from a loss of Ch$ 12,865 million in 2002
to a lower loss of Ch$ 5,247 million during the year 2003. This is principally
the result of an improvement in demand for energy observed in the country
that has provoked an increase in physical sales of 4.1% rising from 12,138 GWh
in the year 2002 to 12,638 GWh in 2003. This meager result, despite the
improvement, is principally due to the economic instability the country went
through and that provoked a reduction in income for the service company
due mainly to the freezing of the tariffs, to losses from the devaluation of
the Argentine Peso and the increase in losses of energy through theft, rising
from 11.6% in December 2002 and 11.8% in December 2003.
The operating income and expenditure and the administrative and
seling expenses of the subsidiaries of the Enersis Group for the periods
ended in December 2003 and 2002 are shown below:
Companies
Endesa S.A.
Chilectra S.A.
Rio Maipo S.A.
Edesur S.A.
Edelnor S.A.
Cerj
Coelce
Codensa S.A.
Cam Ltda.
Inmob. Manso de Velasco Ltda
Synapsis Soluc. y Servicio Ltda
Enersis Parent and Invest. Co.
Adjustment on Consolidation
December 2002
December 2003
Operating
Income
Operating
Expences
Admin.and
Selling Expenses
Net Operating
Income
Operating
Income
Operating
Expences
Admin.and Selling
Expenses
Net Operating
Income
947,480
401,916
57,237
201,473
205,670
348,613
230,002
334,820
94,885
11,492
50,028
4,325
(377,209)
(561,142)
(281,512)
(42,852)
(183,447)
(152,721)
(306,380)
(164,954)
(280,417)
(74,422)
(6,037)
(37,603)
(1,097)
345,233
(36,652)
(32,212)
(4,009)
(30,891)
(19,729)
(21,624)
(40,816)
(32,821)
(7,994)
(1,641)
(6,178)
(22,070)
31,227
349,686
88,192
10,376
(12,865)
33,220
20,609
24,232
21,582
12,469
3,814
6,247
(18,842)
(749)
920,281
426,823
-
183,942
175,947
317,593
207,387
292,155
91,718
11,334
45,283
4,332
(324,462)
(550,447)
(304,334)
-
(161,166)
(132,315)
(282,155)
(158,070)
(244,654)
(71,828)
(10,501)
(30,331)
(1,130)
295,199
(31,324)
(34,438)
-
(28,023)
(17,099)
(10,925)
(29,633)
(16,884)
(6,151)
(1,691)
(6,214)
(17,018)
29,897
338,521
88,051
-
(5,247)
26,533
24,513
19,684
30,617
13,739
(858)
8,738
(13,816)
634
Total on Consolidation
2,510,732
(1,747,351)
(225,410)
537,971
2,352,333
(1,651,732)
(169,503)
531,098
consolidated financial statements
Net Operating Income by Line of Business
In the following table we show the operating income and expenditure by line of product for the period ended on December 31, 2003 and 2002:
Negocio
Generation
Distribution
Engineering & Real Estate
Services
Parent Company and
Other Services
Eliminations
Totals
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Operating Revenues
Coperating Costs
Net Operating Income
Administrative and Selling Expenses
906,504
(532,134)
374,370
(34,382)
896,228
(529,762)
366,466
(30,261)
1,779,732
(1,412,284)
367,448
(182,118)
1,603,848
(1,282,694)
321,154
(137,003)
52,468
(35,045)
17,423
(3,910)
35,387
(31,186)
4,201
(2,753)
149,237
(113,122)
36,115
(36,227)
141,333
(103,289)
38,044
(29,383)
(377,209)
345,234
(31,975)
31,227
(324,463)
295,199
(29,264)
29,897
2,510,732
(1,747,351)
763,381
(225,410)
2,352,333
(1,651,732)
700,601
(169,503)
Net Operating Income
339,988
336,205
185,330
184,151
13,513
1,448
(112)
8,661
(748)
633
537,971
531,098
236
b. Non Operating Income:
The non operating income of the company rose by Ch$ 354,585 million,
or 44.1%, from a loss of Ch$ 804,495 million in the year 2002 to a loss of
Ch$ 449,910 in the year 2003.
This is explained principally by the reduction in the amortization of
the negative goodwill of the investments, after the write-offs in December
2002 of the entire negative goodwill of the investments in the companies in
Argentina and Brazil; by the improved results obtained from the investments
in related companies, specifically CIEN and by lower financial costs due to
the reduction in the financial debt. This was partially compensated by the
registration in 2003 of the losses from the conversion in accordance with
Technical Bulletin Nº 64 of the subsidiaries in Argentina and Brazil, caused
by the appreciation of the Brazilian Real against the US Dollar.
Financial costs net of financial income show a reduction of Ch$ 9,996
million, falling from net costs of Ch$ 363,194 million as of December 2002 to
net costs of Ch$ 353,198 million this year, a reduction of 2.8%. The decrease
in these costs is the result of the reduction in debt and to the lower interest
rates on the international markets with respect to the previous period. The
decrease would have been much greater (13.5%) had there not been an
acceleration in the amortization of the fees of Ch$ 39,095 million paid in
relation to the loans that were cancelled in advance with resources obtained
from the capital increase or were refinanced during the year 2003.
The profits from investments in related companies increased by
Ch$ 9,170 million or 109.9% rising from a profit of Ch$ 8.347 million in
December, 2002 to a profit of Ch$ 17,517 million as of December, 2003. This
was fundamentally due to the results of the related companies, particularly
CIEN and GASATACAMA Generación Ltda. whose registered profits rose by
Ch$ 3,839 million and Ch$ 4,843 million, respectively.
The amortization of the negative goodwill on investments decreased by
Ch$ 458,180 million, equivalent to a reduction of 89.6% with respect to the
year 2002, amounting to Ch$ 53,228 million. The larger amortization in the
previous year was the result of the deterioration of the negative goodwill
of the investments in Argentina and Brazil which signified an accelerated
amortization, in December 2002, of the entire negative goodwill held in
the companies in those countries.
The other non operating income and expenses reflect a negative
variation of Ch$ 123,465 million, declining from a profit in 2002 of Ch$
73,017 million to a loss of Ch$ 50,448 million as of December 2003. The
main reasons that explain this variation in the results are detailed below:
- An increase in losses of Ch$ 249,358 million deriving from the
conversion adjustment to Chilean Norms, as a result of the
application of Technical Bulletin Nº 64, principally of the subsidiaries
in Brazil and Argentina. This is mainly the product of the appreciation
of the Brazilian Real and the Argentine Peso against the US Dollar and
its impact on the structure of the monetary assets and liabilities.
-
-
-
-
-
Increase in expenses on provisions for obsolescence and write-offs of
assets of Ch$ 8,339 million.
Increase in expenses on pension plans and UFIR taxes in Brazil by Ch$
21,818 million.
Losses on sale of materials and fixed assets of Ch$ 7,689 million.
Ch$ 4,863 less profit on forward operations.
Ch$ 6,551 million less in dividends from related companies.
The above was partially compensated by:
-
-
-
-
Profit before tax of Ch$ 89,285 million on sale of Río Maipo and
Infraestructura 2000.
Ch$ 68,171 million less in provisions on real estate and works projects
in progress.
Ch$ 8,117 million less in Tax Fines.
Ch$ 4,812 less on losses on recalculation of Power on SIC.
The price-level restatement and exchange differences reflect a net positive
variation of Ch$ 704 million with respect to the previous year, rising from a loss
of Ch$ 11,257 million as of December 31, 2002 to a loss of Ch$ 10,553 million
in the year 2003. The above is principally due to the effects of the nominal
appreciation of the Chilean Peso of 17.4% against the US Dollar as of December
31, 2003 in comparison with the nominal devaluation of 9.7% existing as of
the same date of the previous year. These effects were compensated to a
large extent by exchange insurance held by the company.
Income and deferred tax expenses fell by Ch$ 25,106 million in
comparison to last year, decreasing from Ch$ 66,677 million as of December
2002 to Ch$ 41,571 million this year. This is explained mainly by an increase
of Ch$ 24,913 million in income tax expenses and a positive effect of Ch$
50,019 million from deferred taxes. The larger income tax expense reflects
the tax effect of Ch$ 16,285 million on the profit on the sale of Río Maipo,
compensated by the reduced taxes for Cerj and Coelce.
Enersis / 2003 annual report
Extraordinary items show a reduction in the loss of Ch$ 22,599 million
that corresponds to the tax for preserving democratic security imposed
in the year 2002 by the Government of Colombia on all corporations
established in Colombia.
Amortizations of the positive goodwill of investments shows a decrease
in the amortization of Ch$ 62,194 million reflecting the accelerated
amortization carried out in December 2002 of the positive goodwill held
in the companies established in Argentina and Brazil, partially compensated
by the amortization of the positive goodwill generated by the investments
made through the capitalization of the loan undertaken in the month of
January 2003 in Cerj for Ch$ 34,517 million.
Interest Rate Risk
On a consolidated basis, as of September 30, 2003 12% of the total
debt was expressed in variable terms whilst 88% was at fixed rates and
secure.
As of the close of December 31, 2003 the debt linked to variable rates
represented 1% of the total debt whilst 99% was at fixed rates and secure.
The company manages its interest rate risks by concentrating its debt
structure on the long term with a suitable combination of debt at fixed
rates and at variable rates.
In the specific case of Argentina, most of the debts are tied to Libor
interest rates. In the context of historic continuous falls in this rate, it was
decided to maintain a high percentage of variable debt having taken
advantage of this situation to arrange a significant reduction in financial
costs. In Brazil, given that the tariffs are updated on the basis of a price
index that is linked to the evolution of the local interest rate, it was decided
to maintain the greater portion of the debt at variable interest rates.
Exchange Risk
The Company’s exposure to an exchange risk is derived from the
assets and liabilities denominated in foreign currency, most of which in
US Dollars.
On a consolidated basis, as of the close of September 30, 2003 Enersis
had 80% of its total debt expressed in US Dollars. Bearing in mind the US$/
Ch$ forward position, the weight of this debt in US$ was reduced to 79%.
As of December 31, 2003, 73% of the debt was expressed in US Dollars.
Considering the US$/Ch$ hedging policy mentioned below, the percentage
of the debt expressed in US Dollars is 76%.
The reason behind the largest part of our debt being denominated in
US Dollars is the fact that an important proportion of our revenues is directly
or indirectly related to the US Dollar. Thus, the tariffs of the majority of the
countries in which we have operations are tied to a significant extent to
the evolution of the US Dollar, particularly in Chile and Peru. In countries
where the indexation to the US Dollar is lower, companies borrow a greater
proportion of their loans in local currency.
With respect to the operating revenues in our Generating subsidiaries,
in the case of Central Costanera in Argentina, a large portion of its income
comes from exports to Brazil and these contracts are indexed to the US
Dollar. On the other hand, El Chocón’s contracts, though expressed in US
Dollars, are currently being paid in Argentine Pesos. In Brazil, Cachoeira
Dourada does not have tariffs indexed to the US Dollar and its revenues
are in local currency, indexed to fluctuations in inflation. In Colombia the
contracts are at spot and at short term that mainly follow the variations of
the US Dollar exchange rate. In Chile and Peru, the tariff process and the
contracts are indexed to changes in the US Dollar rate.
In Argentina, Costanera has benefited from the contracts expressed in
US Dollars for the exports through its related company, CIEN, which minimize
the risks of further devaluations in that country. On the other hand, in Brazil,
given that both the income and the expenses are expressed in local currency,
with no indexation to foreign currencies, and that the company has no
significant debt denominated in US Dollars (which would produce financial
costs in US Dollars), there is no important risk with respect to the exchange
rate. In Chile, operating costs have hardly been affected by the variations in
the rate of exchange in view of the high volume of hydroelectricity generation
in these last two years. With respect to our overseas subsidiaries, the same
thing occurs, as they are principally hydroelectricity generating plants.
Although Costanera in Argentina is a thermoelectricity generator, the
supplies of natural gas are currently invoiced in pesos.
In the case of the Distribution companies, in Argentina the tariffs for the
companies that distribute electric power under a federal concession, amongst
them Edesur, are contractually established in US Dollars and indexed to the
inflation rate in the United States. However, the Emergency Law promulgated
in January 2002 established the tariffs in Pesos and these have been kept
frozen. For this reason, the companies have had to absorb, without any form
of compensation whatsoever, the effects of devaluation and inflation. Within
the process of renegotiation underway between the government and the
companies, conditions have to be established under which the tariffs will be
ruled in future. In Brazil, tariffs are indexed to the General Market Price Index.
In Colombia, the Added Distribution Value (ADV) is readjusted in accordance
with the Producer Price Index every time that there is a variation of more
than 3% in any of its components. For further information, we show below
operating revenues and expenses grouped by country.
237
Net Operating Income by Country Periods ended as of December 31, 2002 and 2003 (In millions of Chilean Pesos)
Country
Chile
Argentina
Brazil
Perú
Colombia
Totals
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Dec-02
Dec-03
Operating Income
% consolidated / r
Operating Expenses
% consolidated / r
Operating Income
% consolidated / r
Administrative and Selling Expenses
% consolidated / r
807,457
32%
(484,752)
28%
322,705
42%
(68,754)
30%
854,422
36%
(544,413)
33%
310,009
44%
(59,953)
35%
300,610
12%
(265,048)
15%
35,562
5%
(32,734)
15%
292,342
12%
(231,198)
14%
61,144
9%
(30,000)
18%
630,533
25%
(504,235)
29%
126,297
17%
(60,706)
27%
550,604
23%
(464,369)
28%
86,235
12%
(38,645)
23%
295,351
12%
(162,042)
9%
133,309
17%
(22,711)
10%
249,728
11%
(142,505)
9%
107,223
15%
(20,400)
12%
476,781
19%
(331,273)
19%
145,508
19%
(40,514)
18%
405,236
17%
(269,247)
16%
135,989
19%
(19,917)
12%
2,510,732
2,352,332
(1,747,351)
(1,651,732)
763,381
700,600
(225,410)
(168,915)
Net Operating Income
253,960
250,056
2,828
31,144
65,591
47,590
110,598
86,823
104,994
116,072
537,971
531,685
consolidated financial statements
238
The exchange risk exposure is currently handled on a consolidated
basis, taking into consideration the portion of this risk that our Chilean
subsidiaries have not covered. The Company’s policy is to hedge between
70% and 85% of the booked exposure to exchange risks.
For the specific case of Chile, the exchange risk exposure depends on
the fluctuation of the exchange rates at which the Company’s assets and
liabilities are maintained. For accounting purposes, our results are also
affected considering the contents of Technical Bulletin Nº 64. In accordance
with this Chilean accounting regulation, debts in foreign currency that were
utilized to finance investments in countries with an “unstable currency”
are matched to their corresponding investment and the variations in the
US$/Chilean Peso rate on those matched debts are not reflected by entries
in the Income Statement.
The existing Ch$/US$ exchange exposure is controlled by means of the
use of financial derivatives, basically US Dollar/Ch$ Forwards, with which
the exchange risk is covered.
On a consolidated basis, as of the close of December 31, 2003 the
Company had US$/Ch$ forward contracts for US$ 166 million in sale contracts
whilst as of September 30, 2003 the total was US$ 31 million in purchase
contracts. This decrease in the purchase position is due to a smaller exposure
to the variations in the US Dollar on the debts expressed in that currency.
In Argentina, the generating subsidiaries have their debts expressed
in US Dollars, given that their operating cash flows are largely related to
that currency. Edesur has most of its debts in US Dollars because before
the emergency law, its tariffs were indexed to that currency. Since then,
the restrictions imposed and the volatility of the local financial market
have prevented any form of hedging of the exchange risk. Thus, to date,
the exposure to the US Dollar remains. On the other hand, in Brazil, our
generating subsidiary is not exposed to the US Dollar as it has a very small
debt and this is expressed in Brazilian Reales. In the distribution subsidiaries,
the companies originally borrowed from third parties in local currency. Only
Cerj received inter-company financing in US Dollars.
Others
We give below a detail of the defaults by Enersis or its subsidiaries that,
if not rectified in time, could result in a cross-default for Enersis and/or its
subsidiaries:
• Failure to pay capital and interest on the corresponding debt.
• Failure by ENERSIS, Endesa-Chile or by one of their respective
subsidiaries to pay a single debt of US$ 30 million or more (debt
considered individually, not jointly) on the date the corresponding
payment should be made (be it on the maturity date or by
acceleration).
• Bankruptcy or suspension of payments by ENERSIS, Endesa-Chile or
one of their respective subsidiaries.
• Judicial sentences against ENERSIS S.A., Endesa-Chile or one of their
respective subsidiaries that imply an obligation for a joint amount
equal or superior to US$ 30 million and judicial resolutions whose
contents are different to the payment of a monetary obligation
against ENERSIS S.A., Endesa-Chile or any of their respective
subsidiaries that could have a substantial adverse effect on the
consolidated accounts of ENERSIS S.A. or Endesa-Chile, whichever the
case.
• Governmental action by virtue of which all or a substantial part
of the property or assets of ENERSIS S.A., Endesa-Chile or one of
their subsidiaries are nationalized, embargoed or expropriated or
government action that could impede the continuity of operations or
an important part of them, of ENERSIS S.A., Endesa-Chile or one of
their respective subsidiaries.
• Default on the corresponding contract clauses and that are not
corrected within the grace period established, such as commitments to
maintain determined debt ratios and coverage of interest payments.
In most credits - and in general terms - the expression subsidiary refers
to those relevant ones both in Chile and abroad.
Borrowings that may be called in with respect to each default and the
respective creditor subsidiary are detailed as follows:
Bank Borrowings
As is customary in most bank credit contracts and on capital markets,
a substantial proportion of the financial debt of Enersis S.A. is subject to
cross-default conditions. Some defaults on the part of Endesa Chile or its
subsidiary, if not cured in time (in those specific conditions that permit some
time to resolve the problem), could result in a cross-default for Endesa-Chile
and for Enersis S.A.
Amounts in millions of US Dollars as of December 31, 2003
Enersis
Endesa
Total
Syndicated
500
284
784
Total
500
264
784
Enersis
Effect on Parent Company
1. Debt Default > = US$MM 30 (1)
2. Bankruptcy o Suspension of Payments
3. Substantially Unfavorable Sentences
4. Government Action (2)
Events of potentially active default in subsidiaries that could generate
a cross default by the Parent Company
US$ 500 million
The grounds noted only have an effect on the Parent Company if
they occur in a so-called Relevant Subsidiary. Defaults in other Subsidiaries have no effect on the Parent Company. The Relevant
Subsidiaries are classified on the basis of the financial statements for the latest tax year under U.S. GAAP rules. On the basis of
the financial statements as of December 31, 2002, the Relevant Subsidiaries of ENERSIS are; Endesa Chile, CERJ, CONO SUR,
CHILECTRA, C.H. Betania S.A.
Endesa
Effect on Parent Company
1. Debt Default > = US$MM 30 (1)
2. Bankruptcy o Suspension of Payments
3. Substantially Unfavorable Sentences
4. Government Action (2)
(1) On individual debts
(2) Nationalization, expropriation, dissolution, etc.
US$ 284 million
The grounds noted only have an effect on the Parent Company if they occur in a so-called Relevant Subsidiary. Defaults in other
Subsidiaries have no effect on the Parent Company. The Relevant Subsidiaries are classified on the basis of the financial statements
for the latest tax year under U.S. GAAP rules. On the basis of the financial statements as of December 31, 2002, the Relevant
Subsidiaries of ENDESA are; C. E. Cono Sur, Endesa Chile Internacional, Betania S.A., Pehuenche S.A., Pangue S.A., C.E. Tarapacá,
Edegel S.A.A., Centrais Elétricas Cachoeira Dourada S.A., EMGESA, Lajas Inversora.
Enersis / 2003 annual report
International Yankee Bonds
Amounts in millions of US Dollars as of December 31, 2003
Enersis
Endesa Chile
Total
Yankee Bonds
901
2,016
2,917
Events of potentially active default in subsidiaries that could generate
a cross default by the Parent Company
Enersis
1. Debt Default > = US$MM 30 (1)
2. Initiation of Bankruptcy Proceedings
Endesa
1. Debt Default > = US$MM 30 (1)
2. Initiation of Bankruptcy Proceedings
(1) Only on individual debts of Issuer or of a Subsidiary
Local Bonds
Default on a debt of Enersis or of a Subsidiary. The Subsidiaries of Enersis with debts with third parties of
over US$ 30 million are: CERJ, Endesa, Betania, Celta, Central Costanera, Coelce, Edegel, Emgesa, Endesa
Chile Internacional and Pehuenche.
In Enersis or in any Significant Subsidiary of Enersis. On the basis of the financial statements as of December
31, 2002, the Significant Subsidiaries of Enersis are; CERJ, Endesa and Investluz.
Default on a debt of Endesa or of a Subsidiary. The Subsidiaries of Endesa with debts with third parties
of over US$ 30 million are: Betania, Celta, Central Costanera, Coelce, Edegel, Emgesa, Endesa Chile
Internacional, Pehuenche and San Isidro.
In Endesa or in any Significant Subsidiary of Endesa. On the basis of the financial statements as of
December 31, 2002, the Significant Subsidiaries of Endesa are; Betania, Cachoeira Dourada, CESA, Cono
Sur, Edegel, Emgesa, Endesa Argentina, Endesa Chile Internacional, Hidroinvest, Lajas Inversora, Pangue
and Pehuenche .
239
Amounts in millions of US Dollars as of December 31, 2003
Enersis
Endesa Chile
Total
Local Bonds
57
467
524
The ENERSIS bonds have a cross default only with its own debt that
exceeds 3% of the assets.
Events of Potentially Active Default in Subsidiaries
(would cause a cross default in the Parent Company)
Endesa Chile
1. Insolvency or unable to pay its debts
2. Debt Default > = UFMM 2
3. Initiation of Bankruptcy Proceedings
Relevant Subsidiaries
Cono Sur
( (in brackets amounts affected US$MM)
Yes ($434)
no
Yes ($434)
Subsidiaries
Rest of Subsidiaries
Yes ($34)
no
no
consolidated financial statements
2. analysis of the balance sheet
The Total Assets of the Company show a decrease of Ch$ 2,005,113
million with respect to the same period of the year before. This is principally
due to the following:
Assets (Millions of Ch$)
Current Assets
Fixed Assets
Other Assets
Total Assets
Dec-02
1,226,686
9,978,253
1,532,921
12,737,860
Dec-03
1,146,004
8,096,360
1,490,383
10,732,747
Variation
(80,682)
(1,881,893)
(42,538)
(2,005,113)
% Variation
(6.6%)
(18.9%)
(2.8%)
(15.7%)
• Decrease of Ch$ 1,881,893 million in Fixed Assets, equivalent to a
fall of 18.8%, as a result of the sale of the Canutillar Plant for Ch$
121,191 million, the sale of transmission lines for Ch$ 30,702 million,
the deconsolidation following the sale of Río Maipo for Ch$ 40,479
million and of Infraestructura 2000 for Ch$ 251,118 million. These
were also affected by the effect of the exchange rates on the fixed
assets of the foreign companies as a result of the application of the
methodology of taking the non-monetary assets in historic US Dollars
in the subsidiaries located in unstable countries, in accordance with
Technical Bulletin Nº 64.
• Current Assets decreased by Ch$ 80,682 million due principally to the
fall by Ch$ 180,293 million in short-term accounts receivable from
related companies explained basically by the transfer to long-term
of the loan to Atacama Finance for Ch$ 128,185 million, a reduction
of Ch$ 59,413 million in other current assets, principally due to a
reduction of Ch$ 62,605 million in Investment Forwards compensated
by a larger volume of purchases of financial instruments with a
240
resale agreement, for Ch$ 35,484. These reductions were partially
compensated by the increase of Ch$ 109,171 million in term deposits,
by the increase of Ch$ 30,790 million in sundry debtors and Ch$
26,501 million in deferred taxes.
• Other long term assets present a reduction of Ch$ 42,538 million
explained principally by a reduction of Ch$ 58,701 million in the
net negative and positive goodwill of investments as a result of the
amortization for the period, the decrease in investments in related
companies and in other companies of Ch$ 15,894 and Ch$ 27,601
million respectively, mainly due to the effect of the exchange rate in
Chile and the reduction of Others by Ch$ 60,532 million. The above
was partially compensated by the increase in long-term accounts
receivable from related companies following the transfer of the loan
of Ch$ 128,185 million to Atacama Finance.
The total liabilities of the Company show a decrease of Ch$ 2,005,113 million
with respect to the same period of the year before. This is mainly due to:
Liabilities (Millions of Ch$)
Current Liabilities
Long-Term Liabilities
Minority Interests
Equity
Total Liabilities
Dec-02
2,172,887
5,458,228
4,091,109
1,015,636
Dec-03
1,127,151
3,707,922
3,349,282
2,548,392
Variation
Dec-03-02
(1,045,736)
(1,750,306)
(741,827)
1,532,756
12,737,860
10,732,747
(2,005,113)
% Variation
Dec 03-02
(48.1%)
(32.1%)
(18.1%)
150.9%
(15.7%)
Current liabilities decreased by Ch$ 1,045,736 million or 48.1%
explained principally by the decrease of Ch$ 445,619 million in the short
term portion of the long term obligations with banks, as a result of the
advanced payments of loans and the refinancing of the debt with banks
that was concluded during this year 2003, a reduction of Ch$117,143 million
in the short term obligations with banks and a decrease of Ch$ 432,541
million in obligations with the public (bonds).
Long term liabilities fell by Ch$1,750,306 million, or 32.1%, mainly as a
result of the reduction of Ch$ 998,090 million in accounts payable to related
companies following the capitalization of the debt with Elesur, a reduction
of Ch$ 874,357 million in obligations with banks and Ch$ 52,458 million in
accounts payable and a reduction of Ch$ 41,822 million in other long term
liabilities, partially compensated by an increase of Ch$ 180,471 in obligations
with the public and a rise of Ch$ 62,931 million in provisions.
Minority interests fell by Ch$ 741,827 million as a result of the increase
in the participation in Cerj and Costanera, to the deconsolidation of
Infraestructura 2000 and to the reduction of the net worth of the overseas
subsidiaries controlled in US Dollars as per Technical Bulletin Nº 64.
With regard to equity, we should point out that this rise by $1,532,756
million with respect to December 2002. This variation is explained principally
by the subscription of shares for a value of $1,468,991 million during the
year 2003 in relation to the capital increase and the increase of Ch$ 125,620
million in the overprice for the capitalization of the debt of Elesur and the
B1 and B2 series bonds. It also increased by Ch$ 12,468 million due to the
booking of the profit for the period.
Enersis / 2003 annual report
Ratio
Liquidity
Debt
Return
Unit
Dec-02
Dec-03
Variation
Dec-03-02
% Variation
Dec 03-02
Current Liquidity
Acid Test (1)
Working Capital
Debt Ratio
Short-Term Debt
Long-Term Debt
Financial Expenses Coverage (2)
Return on Equity
Return on Assets
Times
Ch$MM
Times
Times
%
%
Times
%
%
0.56
0.56
(946,201)
1.49
0.28
0.72
2.43
-22.25%
-1.77%
1.02
0.96
18,853
0.82
0.23
0.77
2.40
0.49%
0.12%
0.46
0.40
965,054
(0.67)
(0.05)
0.05
(0.03)
0.23
0.02
82.1%
71.4%
(102.0%)
(45.0%)
(17.9%)
6.9%
(1.2%)
(102.2%)
(106.8%)
(1) Current Assets net of Stocks and Pre-paid Expenses
(2) We utilized EBITDA divided by Financial Expenses
The liquidity ratio as of December 2003 was 1.02 that reflects an
improvement of 82.1% with respect to the same date of the previous year.
This improvement is the result of the cash flows collected from the capital
increase of US$ 920 million, the sale of Río Maipo for US$170 million and
the sale of Canutillar for US$174 million that permitted the anticipated
payment of short-term obligations with banks as of December 2002 as well
as the transfer to long term of the obligations with banks that were in the
short term following the first refinancing in the month of May 2003.
The debt ratio as of December 31, 2003 was 0.82 times. When compared
to the same period of the year 2002, there is a decrease of 0.67 points. The
reduction is due principally to the capitalization of the debt from Elesur, to the
capital increase on the part of the minority shareholders and to the effect of the
exchange rate, given that a large part of the debt is indexed to the US Dollar.
On the other hand, the return on equity closed at 0.49%. As of the
same date of the previous year, this was –22.25%. This improvement in
the return is due to the increase in the profit for the period with respect to
the loss in the previous year.
The return on assets rose from –1.77% as of December 2002 to 0.12%
as of December 2003. This was basically the result of the rise in the profit
for the period and to the decrease in total assets.
Operating activities generated a positive cash flow of Ch$ 574,477 million,
Ch$ 59,583 million less than during the same period of last year. This cash
flow is comprised mainly of the profit of Ch$ 12,467million for the period, plus
the net charges to results of Ch$ 676,678 million that do not represent cash
flow, that correspond principally to the Depreciation of Ch$ 396,416 million
for the period, write-offs and provisions of Ch$ 54,402 million, amortization
of Ch$ 53,228 million on the negative and positive goodwill on investments
and Ch$ 153,256 million for other charges that do not represent cash flow,
the main item of this being Ch$ 68,424 million for the effect of the conversion
to Technical Bulletin N° 64, increased by the rise in liabilities that affect the
cash flow by Ch$ 43,011 million. The above was partially compensated by
the increase of Ch$ 54,665 million in assets that affect operating cash flows,
principally due to the increase in sales debtors in Argentina and Brazil, to Ch$
51,176 in amortizations of positive goodwill and of Ch $29,777 million in other
credits that do not represent cash flow, of which Ch$ 8,377 million correspond
to the positive effect of the conversion of the overseas subsidiaries.
Financing activities produced a negative cash flow of Ch$ 435,757 million,
explained basically by loan repayments of Ch$ 2,128,072 million, dividend
payments for Ch$ 80,795 million, payments of obligations with the public
for Ch$ 487,071 million and other disbursements on investments for Ch$
116,031 million. The above is partially compensated by the issue of shares
for Ch$ 546,465 million, loans granted for Ch$ 1,022, 599 million and the
placement of bonds for Ch$ 828,121 million.
Investment activities generated a net positive cash flow of Ch$ 88,375
million that corresponds principally to the sale of Fixed Assets, Canutillar and
Transmission Lines for Ch$ 160,760 million, to the sale of investments for Ch$
121,827 million in Río Maipo and to other income from investments for Ch$
49,788 million, partially compensated by the incorporation of fixed assets
for Ch$ 258,786 million, with the most important being the investment
Endesa is making in the Ralco Plant that for this period amounts to Ch$
131,140 million and other disbursements for Ch$ 6,888 million.
241
consolidated financial statements
3. principal cash flows
During the period, the company generated a net cash flow of Ch$
227,095 million, which is comprised of the following items:
Cash Flow (Millions of Ch$)
From Operations
From Financing
From Investments
Dec-02
634,060
(287,890)
(340,248)
Dec-03
574,477
(435,757)
88,375
Variation
Dic-03-02
(59,583)
(147,867)
428,623
%Variation
Dic 03-02
(9.4%)
51.4%
(126.0%)
Net Cash Flow for the Period
5,922
227,095
221,173
3,734.8%
Information on Fixed Asserts by Company (Millions of Ch$)
Disbursements on Acquisition of Assets
Dec-03
Dec-02
Depreciation Fixed Assets
Company
Endesa S.A.
Chilectra S.A.
Río Maipo S.A.
Edesur S.A.
Edelnor S.A.
Cerj
Coelce
Codensa S.A.
Cam Ltda
Inmobiliaria Manso de Velasco Ltda.
Synapsis Soluciones y Servicios Ltda.
Enersis Parent Company
Consolidated Total
242
136,207
19,948
6,128
21,624
23,857
34,746
48,622
28,753
317
445
447
-
321,094
131,140
24,977
-
25,026
18,840
23,084
19,157
15,844
528
-
190
-
Dec-02
197,818
12,810
1,908
66,540
17,495
55,521
42,505
60,673
1,094
222
1,380
1,051
Dec-03
179,489
12,758
-
52,409
15,705
45,062
37,169
50,414
1,152
228
944
1,085
396,415
258,786
459,016
4. book value and market value of the assets
With regard to the more important assets, we mention the
following:
The value of the items in fixed assets have been adjusted in accordance
with the accounting criteria established by the Chilean Superintendency of
Securities and Insurance in its Circulars Nº 550 and 556 issued in 1985. In
the case of the foreign company, Inversiones Distrilima S.A., the value of the
fixed assets were adjusted in accordance with the exception criteria indicated
in Technical Bulletin Nº 45 issued by the Chilean College of Accountants,
the norm in force at the time the investment was made and which was not
modified by Technical Bulletin Nº 51 that replaced it.
and issued by the Superintendency of Securities and Insurance, as of the
close of the financial statements for the 2002 period, the company has
evaluated the recoverability of the assets related to its investments, applying
the accounting principles generally accepted in Chile which are Technical
Bulletins Nº 33 for fixed assets and in accordance with the indications of
Technical Bulletin Nº 56, the company has applied NIC 36 for the positive
or negative goodwill values of those investments.
Assets expressed in foreign currency are shown at the exchange rate
as of the close of the period.
Depreciation is calculated on the updated value of the goods in
accordance with the years of useful life remaining for each item.
Investments in financial instruments with repurchase/resale agreements
are shown at their purchase value plus the proportion of the interest
calculated on the implicit rate of each operation.
Investments in related companies are valued at their proportional
equity value. In the case of foreign companies, this methodology has been
applied on the basis of the financial statements prepared in accordance with
the norms established in Technical Bulletin Nº 64 of the Chilean College
of Accountants and intangible values have been adjusted by price-level
restatement and are amortized according to the norms indicated in
Technical Bulletin Nº 55 of the Chilean College of Accountants.
In accordance with Official Circular Nº 150 dated January 31, 2003
Accounts and bills receivable from related companies are classified
according to their short and long-term maturities. The operations are
adjusted to equal conditions similar to those that are normally applied
in the market.
In summary, assets are valued according to generally accepted
accounting principles and norms and to instructions issued on this matter
by the Superintendency of Securities and Insurance explained in Note 2 of
the Financial Statements.
Enersis / 2003 annual report
unconsolidated financial statements
I N D E X
2 4 6
U N C O N S O L I D A T E D B A L A N C E S H E E T S
2 4 8
U N C O N S O L I D A T E D I N C O M E S T A T E M E N T
2 4 9
S T A T E M E N T S O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y
2 5 0
S T A T E M E N T S O F U N C O N S O L I D A T E D C A S H F L O W S
2 5 2
N O T E S T O T H E U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
2 7 8
U N C O N S O L I D A T E D S I G N I F I C A N T E V E N T S
2 8 2
R A T I O A N A L Y S I S O F T H E U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
243
unconsolidated financial statements
REPORT FROM THE INSPECTORS OF ACCOUNT
In accordance with the stipulations of Law Nº 18,046 on Limited Liability Stock
Companies and in compliance with the mandate conferred by the Ordinary
General Meeting of Shareholders held on March 31 2003, we have proceeded
to examine the Financial Statements of Enersis S.A. for the period between
January 1 and December 31 of the year 2003.
Our task was centered on the verification, on a selective basis, of the match
between the amounts included in the financial statements and the official regis-
ters of the Company and for this purpose we compared the figures presented
in the general ledger against the grouping and classification spreadsheets, in
order to subsequently verify that these amounts, which represent the totals of
the accounts under one item, coincided with those included in the financial sta-
tements, We have no observations on this review.
244
Marcelo Villaseca
Inspector of Accounts
Luis Bone
Inspector of Accounts
Santiago, January 26, 2004
Enersis / 2003 annual report
245
unconsolidated financial statements
unconsolidated balance sheets
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003)
ASSETS
CURRENT ASSETS:
Cash
Time deposits
Notes receivable, net
Other accounts receivable, net
Amounts due from related companies
Income taxes recoverable
Prepaid expenses
Deferred income taxes
Other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT:
Buildings and infraestructure
Machinery and equipment
Other assets
Technical appraisal
Accumulated depreciation
246
Total property, plant and equipment, net
OTHER ASSETS:
Investments in related companies
Goodwill, net
Negative goodwill, net
Long-term receivables
Amounts due from related companies
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
The accompanying notes are an integral part of these financial statements
As of December 31,
2002
ThCh$
2003
ThCh$
424,171
4,645,095
744
4,770,740
189,818,602
9,344,985
24,185
13,840,925
5,053,069
332,918
1,152,306
737
1,730,919
125,426,886
14,481,845
54,080
27,820,558
16,881,389
227,922,516
187,881,638
20,798,254
2,260,279
785,804
33,182
(10,781,577)
20,798,233
2,301,896
798,232
33,176
(11,628,486)
13,095,942
12,303,051
2,316,302,919
795,599,874
(760,544)
480,134
505,640,490
1,437,928
(351,586)
53,141,309
2,172,567,483
734,738,083
(606,765)
475,380
440,541,432
1,437,928
(423,618)
26,726,999
3,671,490,524
3,375,456,922
3,912,508,982
3,575,641,611
Enersis / 2003 annual report
LIABILITIES AND SHAREHOLDERS´ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt due to banks and financial institutions
Current portion of bonds payable
Dividends payable
Accounts payable
Miscellaneous payables
Amounts payable to related companies
Accrued expenses
Withholdings
Income taxes payable
Unearned income
Other current liabilities
Total current liabilities
LONG -TERM LIABILITIES:
Due to baks and financial institutions
Bonds payable
Amounts payable to related companies
Accrued expenses
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
SHAREHOLDERS´ EQUITY:
Paid-in capital, no par value shares
Additional paid-in capital
Other reserves
Retained earnings
Net income (loss) for the year
Deficit of subsidiaries in development stage
Total shareholders´ equity
As of December 31,
2002
ThCh$
2003
ThCh$
269,236,251
11,087,782
212,195
354,521
227,515
35,693,493
5,553,310
203,922
16,842
200,478
4,099,460
789,754
4,071,574
111,612
173,004
241,059
33,960,434
21,642,293
133,370
16,284,563
135,718
8,468,298
326,885,769
86,011,679
247
834,665,515
672,442,019
1,018,223,736
2,014,151
4,240,426
38,401,268
296,900,000
627,728,756
-
2,502,841
4,700,566
9,405,879
2,569,987,115
941,238,042
758,720,279
33,703,758
47,348,383
406,835,727
(225,985,568)
(4,986,481)
2,227,711,340
159,323,362
(25,671,685)
176,016,726
12,467,863
(1,455,716)
1,015,636,098
2,548,391,890
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
3,912,508,982
3,575,641,611
unconsolidated financial statements
unconsolidated income statement
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003)
OPERATING INCOME:
Sales
Cost of Sales
GROSS PROFIT
Administrative and selling expenses
OPERATING LOSS
NON-OPERATING INCOME :
Interest income
Equity in income of related companies
Other non-operating income
Equity in losses of related companies
Amortization of goodwill
Interest expense
Other non-operating expenses
Price-level restatements, net
Exchange difference, net
NON-OPERATING RESULT
LOSS BEFORE INCOME TAXES
Income taxes
248
Years ended December 31,
2003
2002
ThCh$
ThCh$
4,324,336
(1,096,812)
4,332,016
(1,130,291)
3,227,524
3,201,725
(22,047,860)
(17,018,287)
(18,820,336)
(13,816,562)
57,665,112
72,606,599
22,602,401
(81,134,551)
(108,967,612)
(145,596,315)
(18,249,143)
1,596,506
(18,323,195)
39,627,790
113,734,272
99,732,781
(71,649,236)
(49,863,556)
(142,566,879)
(23,109,000)
(4,426,198)
30,533,147
(217,800,198)
(7,986,879)
(236,620,534)
(21,803,441)
9,581,493
12,635,903
LOSS BEFORE AMORTIZATION OF NEGATIVE GOODWILL
(227,039,041)
(9,167,538)
Amortization of negative goodwill
NET INCOME (LOSS) FOR THE YEAR
1,053,473
21,635,401
(225,985,568)
12,467,863
Enersis / 2003 annual report
unconsolidated statements of changes
in shareholders’ equity
(Expressed in thousands of historical Chilean pesos, except as stated)
Paid-in
capital
ThCh$
Additional
paid-in
capital
ThCh$
Deficit of
Net income
Other
reserves
ThCh$
Retained
subsidiaries in
(loss) for
earnings
development stage
the year
ThCh$
ThCh$
ThCh$
Total
ThCh$
As of January 1, 2002
729,328,347
32,398,114
25,517,158
350,149,143
867,381
40,926,246
1,179,186,389
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in the development stage
Cumulative translation adjustment
-
-
-
-
-
-
-
-
-
-
-
20,596,914
40,926,246
-
-
-
Price-level restatement of capital
21,879,850
971,943
765,515
11,732,261
-
-
(5,830,512)
-
26,021
(40,926,246)
-
-
-
-
-
-
(5,830,512)
20,596,914
35,375,590
Net loss for the year
-
-
-
-
- (223,748,087)
(223,748,087)
As of December 31, 2002
751,208,197
33,370,057
46,879,587 402,807,650
(4,937,110)
(223,748,087) 1,005,580,294
As of December 31, 2002 (1)
1,509,928,476
67,073,815
94,227,970
809,643,377
(9,923,591)
(449,733,655) 2,021,216,392
As of January 1, 2003
Capital increase
751,208,197
33,370,057
46,879,587 402,807,650
(4,937,110)
(223,748,087) 1,005,580,294
1,471,844,920
125,881,577
-
-
-
- 1,597,726,497
Transfer of prior year loss to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in the development stage
Cumulative translation adjustment
-
-
-
-
-
-
-
-
(11,432,599)
-
(61,587,469)
-
-
-
-
(1,302,667)
-
Price-level restatement of capital
4,658,223
71,728
468,796
1,790,596
(49,372)
-
-
-
-
(11,432,599)
(1,302,667)
(61,587,469)
6,939,971
- (228,581,520)
4,833,433
223,748,087
-
249
Net income for the year
-
-
-
-
-
12,467,863
12,467,863
As of December 31, 2003
2,227,711,340
159,323,362
(25,671,685)
176,016,726
(1,455,716)
12,467,863 2,548,391,890
(1) Restated in thousands of constant Chilean pesos as of December 31, 2003.
The accompanying notes are an integral part of these consolidated financial statements
unconsolidated financial statements
statements of unconsolidated cash flows
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003.)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) for the year
GAIN (LOSSES) FROM SALES OF ASSETS:
Gain on sales of investments
250
CHANGES (CREDITS) TO INCOME WICH DO NOT REPRESENT CASH FLOWS:
Depretiation
Amortization of intangibles
Equity in income of related companies
Equity in losses of related companies
Amortization of goodwill
Amortization of negative goodwill
Price-level restatement, net
Exchange difference, net
Other credits to income which do not represent cash flows
Other changes to income which do not represent cash flows
CHANGES IN ASSETS WHICH AFFECT CASH FLOWS (INCREASE) DECREASE:
Trade receivables
Other assets
CHANGES IN LIABILITIES WHICH AFFECT CASH FLOWS:
Increase (decrease) in accounts payable associated with operating results
Increase in interest payable
Decrease in income tax payable
Increase in other accounts payable associated with non-operating results
Net decrease in value added tax and other similar taxes payable
Years ended December 31,
2003
2002
ThCh$
ThCh$
(225,985,568)
12,467,863
-
(87,827,096)
1,051,655
72,032
(72,606,599)
81,134,551
108,967,612
(1,053,473)
(1,596,506)
18,323,195
(14,088,548)
21,319,737
1,084,945
72,032
(113,734,272)
71,649,236
49,863,556
(21,635,401)
4,426,198
(30,533,147)
(292,285)
53,184,071
419,149
30,664,160
(443,759)
17,781,809
1,119,595
42,271,931
(9,581,494)
9,869,159
(681,995)
(5,769,787)
(27,408,737)
(12,635,903)
1,507,622
4,714
Negative net cash flows used in operating activities
(10,381,407)
(88,238,341)
Enersis / 2003 annual report
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of shares
Loans obtained
Proceeds from bond issuances
Loans obtained from related companies
Other sources of financing
Dividends paid
Payment of loans
Payment of bonds
Payment of loans granted by related companies
Payment of other loans obtained from related companies
Payment of bond issuance costs
Other disbursements for financing
Negative net cash used in financing activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of long-term investments
Proceeds from loans obtained from related companies
Long-term investments
Loans granted to related companies
Other receipts from investments
Other loans granted to related companies
Other investment disbursements
Net cash provided by investing activities
NET CASH FLOW FOR THE YEAR
Years ended December 31,
2002
ThCh$
2003
ThCh$
-
66,700,429
-
56,916,083
-
(137,362)
(77,459,982)
(7,120,809)
(99,900,769)
(22,394,079)
-
-
546,464,851
367,500,129
219,384,315
-
17,710,486
(70,757)
(1,054,710,719)
(85,430,527)
(4,467,535)
(60,430,647)
(10,831,654)
(60,304,504)
(83,396,489)
(125,186,562)
1,142
257,502,017
(16,899,455)
(164,491,518)
29,776,143
(1,592,098)
(9,151,081)
161,428,334
53,071,377
-
(5,788,156)
1,635,460
-
-
95,145,150
210,347,015
1,367,254
(3,077,888)
251
EFFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
(231,430)
(506,154)
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
1,135,824
(3,584,042)
3,933,442
5,069,266
5,069,266
1,485,224
unconsolidated financial statements
notes to the financial statements
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2003, except as stated)
1. description of business
Enersis S.A. (the “Company”) is registered in the Securities Register
under N°0175 and is regulated by the Chilean Superintendence of Securities
and Insurance (the “SVS”). The Company issued American Depositary
Receipts in 1993 and 1996 and is also subject to the regulation of the
Securities and Exchange Commission (SEC) of the United States.
2. summary of significant accounting policies
a. Periods covered
Currency
Symbol used
2002
2003
These financial statements cover the years ended December 31, 2002
and 2003.
b. Basis of preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in Chile and the regulations
established by the SVS (collectively “Chilean GAAP”), except for the
investment in subsidiaries, which is shown in one line of the balance
sheet under the equity method and, therefore, have not been consolidated
line by line. This treatment does not affect the net income of the year or
shareholders’ equity.
252
These financial statements have been prepared order an individual
analysis of the Company and they should be read along with the
consolidated financial statements required by accounting principles
accepted in Chile.
United States dollar (Observed)
Euro
Unidad de Fomento (UF)
US$
€
UF
Convenience translation to U.S. dollars
Ch$
718.61
752.55
16,744.12
Ch$
593.80
744.95
16,920.00
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, 2003 of Ch$593.80 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.
f. Time deposits
These financial statements include assets, liabilities and result of the
agency established in 1996 by Enersis S.A. in Cayman Islands.
Time deposits are presented at original placement plus accrued interest
and UF indexation adjustments at each year end.
c. Basis of presentation
The 2002 financial statements and its corresponding notes are
presented updated and restated by 1.0% to facilitate comparison. This
percentage corresponds to the Consumer Price Index variation within the
last twelve months, with a one-month lag.
d. Price-level restatement
The financial statements have been price-level restated in accordance
with generally accepted accounting principles, to reflect the effects of
the changes in the purchasing power of the Chilean peso for the years
ended December 31, 2003 and 2002. The effects of these off-the-books
restatements are shown in Note 19.
e. Currency conversion
Assets and liabilities denominated in foreign currencies and/or Unidad
de Fomento (UF, Inflation index linked units of accounts) are shown at their
corresponding values and/or exchange rates effective at each year end
using the following year-end rates:
g. Property, plant and equipment
Property, plant and equipment are stated at cost plus price-level
restatement.
In 1986, the increase resulting from 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 N°4790, dated December 11, 1985.
The Company has evaluated the recoverability of the book value of its
property, plant and equipment in accordance with Technical Bulletin N°33
of the Chilean Accounting Association. As a result of this evaluation no
adjustments have been determined that affect the book values of these
assets.
h. Depreciation
Depreciation expense is calculated on the revalued balances using
the straight-line method over the estimated useful lives of the assets.
Depreciation expense was ThCh$1,051,655 and ThCh$1,084,945 in 2002
and 2003, respectively.
Enersis / 2003 annual report
i.
Intangibles
o. Accrued vacation expense
Intangibles are mainly easements, and amortized in accordance with
Technical Bulletin N°55 of the Chilean Association of Accountants.
In accordance with Technical Bulletin No.47 issued by the Chilean
Association of Accountants, employee vacation expense is recorded on
the accrual basis.
j.
Investments in related companies
Investments in related companies are presented under the equity
method of accounting, on the basis of the corresponding financial
statements of the invested.
p. Pension and post-retirement benefits
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, discounted at 9.5%.
Investments in foreign affiliates are recorded in accordance
with Technical Bulletins No.42 and 64 of the Chilean Association of
Accountants.
q. Revenue recognition
The Company has evaluated at December 31, 2002 and 2003, the
recoverability of the book value of its investments abroad in accordance with
Technical Bulletins N°33 and N° 42 of the Chilean Accounting Association.
As a result of this evaluation no adjustments have been determined that
affect the book values of these assets.
The Company recognizes revenues for amounts received from
substations rental and electrical distribution lines in accordance with
contracts with Chilectra S.A. These amounts are presented in current
assets as amounts due from related companies and the corresponding
cost is included in cost of sales as depreciation of the aforementioned
equipment and electrical installations.
k. Goodwill and negative goodwill
r. Financial derivative contracts
Goodwill and negative goodwill are determined according to Circular
N°368 of the SVS. Amortization is calculated 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.
As of December 31, 2003 the Company has forward contracts, currency
swaps, and interest swaps and collars with several financial institutions,
defined as cover, which are recorded according to Technical Bulletin N°57
of the Chilean Association of Accountants.
The Company has evaluated at December 31, 2002 and 2003, the
recoverability of its goodwill and negative goodwill arising on investments
abroad, and in virtue of Technical Bulletin N°56 of the Chilean Association
of Accountants, it has resorted to IAS 36 “Impairment of Assets Value”. As
a result of this evaluation, in 2003 no adjustments have been determined
that affect the book values of these assets. In 2002, was write-off amounted
to ThCh$53,647,938 for this concept.
l. 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.
m. Income tax and deferred income taxes
At December 31, 2003 and 2002, the Company recorded current tax
expense according to the tax laws. The Company records income taxes in
accordance with Technical Bulletin N°60 and its complements of the Chilean
Association of Accountants, and with circular N°1466 and N°1560 issued
by the SVS, recognizing the deferred tax effects of temporary differences
between the financial and tax values of assets and liabilities using the tax
rates estimated to be in effect at the time of reversal of the temporary
differences that gave rise to them.
n. 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.
s. Software
Software has acquired by the Company and its subsidiaries as
253
computing packages and is amortized over a 3-year term.
t. Research and development costs
During 2002 and 2003 there have been no expenses under this caption
which require footnote disclosure as required by Circular No. 981 of SVS
dated December 28, 1990.
u. Statements of cash flows
Investments considered as cash equivalents, as indicated in point 6.2 of
Technical Bulletin N°50 issued by the Chilean Association of Accountants,
include cash and time deposits.
For classification purposes, cash flows from operations include
collections and payments to related companies for services and dividends
paid.
v. Cost of share issue
Costs incurred to date associated with issuing and placing shares are
recorded according to the provisions of Circular No. 1370 of 1998 of the
Superintendence of Securities and Insurance. The amounts under these
items are deducted from the premium account. Breakdown of the costs
is shown in Note 22.
w. Reclassification
Do not reclassification was made at December 31, 2002.
unconsolidated financial statements
3. change in accounting principles
There were no changes in accounting principles during 2003 that would
affect comparison with the prior year financial statements.
4. transactions with related companies
Balances of accounts receivable and payable are as follows at December 31, 2002 and 2003:
254
a. Notes and accounts receivable:
Company
Chilectra S.A.
Synapsis, Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
Cía. Americana de Multiservicios Ltda.
Compañía Eléctrica del Río Maipo S.A.
Enersis Internacional
Chilectra S.A.(Cayman Islands Agency)
Enersis de Argentina S.A.
Edelnor S.A.
Companhia de Eletricidade do Río de Janeiro
Luz de Bogotá S.A.
Edesur S.A.
Luz de Rio Ltda.
Cerj Overseas
Codensa S.A.
Empresa Eléctrica de Colina Ltda.
Endesa S.A. (Chile)
Elesur S.A.
Inversiones Distrilima S.A.
Ingendesa S.A.
Infraestructura 2000 S.A.
Túnel el Melón S.A.
Smartcom S.A.
Compañía Eléctrica Tarapacá S.A. (Celta)
Autopista Los Libertadores S.A.
Endesa S.A. (España)
Pehuenche S.A.
Autopista del Sol S.A.
Chispa Uno S.A.
Agencia Endesa Chile S.A.
Luz Andes Ltda.
Empresa Eléctrica Pangue S.A.
Empresa Eléctrica Pehuenche S.A.
Aguas Santiago Poniente S.A.
Compañía Eléctrica San Isidro S.A.
As of December 31 ,
Short-term
Long-term
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
147,194,952
36,143
37,180
4,619,430
3,890,208
2,223,214
9,727
1,246
69,814
21,759
25,193
64,694
17,391
1,134,225
14,845
742
29,612,065
21,305
493
59,801
43,018
80,615
344
32,194
2,551
325,343
-
3,397
282
244,395
53
53
31,877
69,051,205
51,997
34,188
388,704
-
-
-
-
-
-
1,749,367
9,295
45,401,901
359,057,882
-
57,118
17,803
20,612
52,928
14,228
4,588,969
12,145
304
48,703,885
21,433
488
1,627
-
81,017
341
28,724
-
509,546
683
-
279
-
-
-
-
-
-
-
-
-
41,442,944
36,289,805
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,447,958
-
-
-
-
-
93,226,443
-
-
-
-
-
311,609,667
-
-
-
-
-
35,705,322
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53
30,000
-
Total
189,818,602
125,426,886
505,640,490
440,541,432
Enersis / 2003 annual report
b. Notes and accounts payable:
Company
As of December 31 ,
Short-term
Long-term
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
Chilectra S.A.
2,253,613
673,377
13,395,831
Synapsis, Soluciones y Servicios IT Ltda.
6,270,335
5,150,703
-
Inmobiliaria Manso de Velasco Ltda.
Cía. Americana de Multiservicios Ltda.
Compañía Eléctrica del Río Maipo S.A.
Enersis Internacional
Endesa S.A. (Chile)
Edelnor S.A.
Enersis de Argentina S.A.
Edesur S.A.
Elesur S.A.
Smartcom S.A.
Infraestructura 2000 S.A.
Túnel el Melón S.A.
Ingendesa S.A.
Chilectra Internacional
Chilectra S.A.(Cayman Islands Agency)
Endesa Inversiones Generales S.A.
6,175,519
18,111,851
2,337,984
245,994
8,455,637
-
7,255,154
-
5,245,144
1,617,152
1,327,436
67,256
17,035
39,261
25,050
74,172
13,936
-
13,264
-
-
-
-
-
11,580,351
-
997,244,777
19,591
19,397
414
62
380
49
37,121
89,156
-
61
376
41
30,370
89,813
-
-
-
-
-
-
-
Total
35,693,493
33,960,434
1,018,223,736
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
255
unconsolidated financial statements
c. Effects in income (expense) in each year are as follows:
Company
Chilectra S.A.
Inmobiliaria Manso de Velasco Ltda.
Compañía Americana de Multiservicios Ltda.
Synapsis, Soluciones y Servicios IT Ltda.
Compañía Eléctrica del Río Maipo S.A.
Empresa Distribuidora Sur S.A.
256
Endesa S.A. (España)
Elesur S.A.
Endesa S.A. (Chile)
Endesa Inversiones Generales S.A.
By agency intermediation:
Chilectra S.A.(Cayman Islands Agency)
Luz de Río
Enersis Internacional
Endesa Chile Internacional
Cerj Overseas
Endesa Agencia
Total
Nature of Transaction
Income (expense)
2002
ThCh$
2003
ThCh$
Loans
13,112,158
10,163,758
Property rental
4,324,335
4,332,016
Services
Loans
Property rental
Loans
Services
Materials
4,033,984
4,675,198
138,562
(376,861)
348,957
129,723
(18,235)
(577,288)
(379,254)
(175,559)
192,849
(12,720)
Property maintenance
(418,486)
(342,850)
Loans
Services
Loans
Services
Services
Services
Loans
Loans
Services
(451,135)
(559,645)
(285,749)
519,776
(374,729)
(596,661)
-
-
1,790,327
3,168,666
325,343
-
(43,842,919)
(9,267,916)
2,857,101
1,739,648
721,753
722,024
Property rental
(685,204)
(929,205)
Loans
Loans
Loans
Loans
Loans
Loans
24,788,831
23,020,412
2,441,563
1,799,353
1,502,421
438,826
2,848,973
283,349
2,886
-
498,550
371,226
13,967,748
38,030,404
Enersis / 2003 annual report
The transfer of short-term funds between related companies is on the
basis of a current cash account, at a variable interest rate based on market
conditions. The resulting accounts receivable and accounts payable are
essentially on 30 day terms, with automatic rollover for the same period
and settlement in line with cash flows.
Conditions of the long-term receivables and payables are as follows:
Company
Chilectra S.A.
Account receivable
Chilectra S.A.(Cayman Islands Agency)
Account receivable
Luz de Rio Ltda.
Account receivable
5. deferred income taxes
a.
Income taxes payable as of each year-end are as follows:
Credits for absorbed profits
PPM, donations, training expense
Total income taxes recoverable
Tax for sale of investments
Income tax prior year
Total income tax payable
Type
Due Date
Currency
Capital
Interest Rate
2005
2007
2007
US$
US$
US$
156,999,734.86
524,722,090.72
46,919,950.58
7.56%
7.01%
6.21%
As of December 31,
2002
ThCh$
9,213,787
131,198
9,344,985
-
16,842
2003
ThCh$
14,336,947
144,898
14,481,845
16,284,563
-
16,842
16,284,563
257
b. The Company has
losses of ThCh$112,077,596 and
ThCh$201,568,234 for the years ended December 31, 2002 and
2003, respectively.
tax
c. The balance of taxed retained earnings and related tax credits are as
follows:
Year
2002
2003
As of December 31,
Loss
ThCh$
-
199,692,930
Credit
ThCh$
-
-
unconsolidated financial statements
d.
In accordance with BTs N°60 and 69 of the Chilean Association of
Accountants, and Circular N°1,466 of the SVS, the Company has
recorded deferred income taxes as of December 31, 2002 and 2003
as follows:
As of December 31, 2002
Asset
Liability
As of December 31, 2003
Asset
Liability
Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Unearned income
Vacation accrual
Depretiation
Severance indemnities
Other events
Provisions
Bond discount
Deferred charges
Differences between the financial and tax
value of Rio Maipo S.A.
Tax losses
Complementary account, net
34,081
99,160
-
-
73,558
391,189
-
-
-
-
-
-
95,025
-
-
-
-
-
-
-
-
5,549
156,053
567,430
-
-
1,849,339
104,716
-
6,953
1,497,310
1,045,799
23,072
71,560
-
-
85,073
376,238
-
-
-
-
-
-
94,017
-
-
-
-
-
58,798
-
-
5,721
109,977
1,110,662
-
-
1,735,726
40,694
-
1,219
1,178,615
1,991,081
-
15,458,979
-
-
-
-
1,489,974
-
(2,964)
-
-
- 28,548,291
-
(168,666)
-
-
-
-
-
(1,482)
-
-
(152,752)
Total
16,056,967
95,025
2,216,042 4,335,451 29,104,234
94,017
1,283,676 4,794,583
e.
Income tax expense for the years ended December 31, 2002 and
2003 is as follows:
258
Income tax provision
Effect on deferred tax assets or liabilities for the year
Benefits for tax losses
Amortization of complementary accounts
Total
As of December 31,
2002
ThCh$
2003
ThCh$
-
-
9,579,046
2,447
(16,284,564)
387,873
28,548,291
(15,697)
9,581,493
12,635,903
Enersis / 2003 annual report
6. other current assets
Other current assets as of each year-end are as follows:
Forward contracts
Deferred costs-loans
Post-retirement benefits
Deferred expense Collar contracts
Bond discount
Fair value - derivative contracts
Unrealized loss derivative contracts
Other
Total
(*) See Note 10.
7. property, plant and equipment
La composición del saldo del activo fijo al cierre de cada período es
la siguiente:
Buildings and infraestructure
Machinery and equipment
Other assets transit
Technical appraisal of buildings and infraestructure
Total fixed assets
Accumulated depreciation at beginnig of year
Buildings and infraestructure
Machinery and equipment
Other assets in transit
As of December 31,
2002
ThCh$
2003
ThCh$
11,900
818,952
34,681
2,727,484
975,334
-
353,026
131,692
8,420,565
1,967,742
34,674
4,646,734
666,529
149,153
809,537
186,455
5,053,069
16,881,389
As of December 31,
2002
ThCh$
2003
ThCh$
259
20,798,254
2,260,279
785,804
33,182
20,798,233
2,301,896
798,232
33,176
23,877,519
23,931,537
(8,958,214)
(716,603)
(33,492)
(9,427,976)
(858,322)
(234,441)
Total accumulated depretiation at beginning of year
(9,708,309)
(10,520,739)
Accumulated depreciation at beginning of year-
technical appraisal of buildings and infraestructure
Technical appraisal
Depreciation of the year
Total accumulated depreciation at end of year
Total property, plant and equipment, net
(21,613)
(22,802)
(21,613)
(22,802)
(1,051,655)
(1,084,945)
(10,781,577)
(11,628,486)
13,095,942
12,303,051
unconsolidated financial statements
8. investment in related companies
a. Investments as of each year-end are as follows:
Related Companies
Number of shares
Percentage owned
Shareholder’s equity of investee
Net income of investees
Equity in income
Share of equity
Unrealized income
Investment book value
Empresa Nacional de Electricidad S.A.
Chilectra S.A.
Enersis Internacional
Luz de Bogotá S.A.
2002
%
59.98%
98.24%
4,919,488,794
359,602,436
-
100.00%
15,529,421,297,372
Companhia de Eletricidade do Río de Janeiro
766,367,324,842
Empresa Distribuidora Sur S.A.
Investluz S.A.
Distrilec Inversora S.A.
Inmobiliaria Manso de Velasco Ltda.
Inversiones Distrilima S.A.
Compañía Eléctrica del Río Maipo S.A.
143,996,758
15,681,945,734
101,684,374
29,462,253
95,363,337
-
Central Geradora Termelétrica Fortaleza S.A. (*)
20,246,908
Compañía Americana de Multiservicios Ltda.
Synapsis, Soluciones y Servicios IT Ltda.
Endesa Market Place
Enersis Energía de Colombia S.A.
Enersis de Argentina S.A.
Synapsis Colombia S.A.
Luz de Río Ltda.
Constructora El Gobernador Ltda.
Codensa S.A.
-
-
210
-
-
1
-
-
1
25.71%
20.38%
16.02%
15.61%
20.43%
99.99%
15.93%
98.74%
48.82%
99.99%
99.99%
15.00%
99.99%
99.99%
0.10%
43.24%
-
-
2003
%
59.98%
98.24%
100.00%
25.71%
26.47%
16.02%
15.61%
20.43%
2002
ThCh$
2003
ThCh$
1,444,941,674
1,492,669,037
425,908,659
426,495,495
2002
ThCh$
(9,412,247)
(31,311,681)
2003
ThCh$
78,130,908
51,469,555
352,192,877
295,713,345
39,332,609
(36,689,385)
606,535,104
487,492,327
(4,557,123)
4,206,442
585,356,719
446,403,953
(9,102,554)
(98,773,475)
737,116,149
575,959,954
8,287,192
(27,101,386)
361,127,824
286,769,700
(200,235,743)
(8,682,013)
415,421,881
324,606,610
4,663,076
(15,265,033)
100.00%
40,590,431
41,841,947
(10,035,583)
15.93%
0.00%
48.82%
99.99%
99.99%
15.00%
0.00%
0.00%
0.10%
0.00%
0.00%
0.00%
174,521,754
132,003,816
13,202,015
22,849,917
44,134,413
25,283,631
8,847,200
3,231,944
218,464
79,898
829,875
3,666,178
-
11,844,565
33,459,443
35,091,832
10,221,225
-
-
-
813,133
-
8,061,728
4,439,999
(1,893,847)
(106,692)
(19,097)
579,366
-
22,557,357
1,306,753
8,857,512
-
-
6,856,001
5,652,106
-
-
-
670,021
-
21,296,187
22,255,006
269,895
376,991
1,019,559,638
827,256,794
(6,722,511)
18,020,379
260
Total
(*)
These subsidiaries were in the development stage for the years shown and accordingly, were not consolidated under Chilean GAAP
38,878,108
(36,689,385)
2002
ThCh$
(5,645,553)
(30,760,547)
(1,171,831)
(1,854,687)
1,328,009
(31,256,488)
952,874
(10,035,579)
2,103,081
11,695,613
-
4,823,694
3,069,892
(284,077)
(106,692)
(19,097)
580
9,754,748
-
-
2003
ThCh$
46,863,646
50,563,611
1,081,657
(26,142,322)
(4,342,952)
(1,355,249)
(3,119,328)
1,306,753
1,411,002
6,855,391
5,651,541
-
-
-
-
-
-
1
-
670
2002
ThCh$
866,689,475
418,412,009
352,192,877
155,966,178
119,269,128
118,121,638
56,371,492
84,889,255
40,590,417
27,801,316
22,562,567
21,546,421
25,281,382
8,846,315
484,792
218,464
79,897
830
1,585,409
32
5
2003
ThCh$
895,316,792
418,988,515
295,713,343
125,355,171
118,149,493
92,296,626
44,764,304
66,331,637
41,841,933
21,028,208
-
16,334,900
35,088,709
10,220,203
-
-
-
-
813
34
4
2002
ThCh$
2003
ThCh$
(3,237,317)
(1,369,663)
(7,202,800)
(1,660,402)
2002
ThCh$
866,689,475
418,412,009
352,192,877
155,966,178
119,269,128
118,121,638
56,371,492
84,889,255
40,590,417
27,801,316
22,562,567
21,546,421
22,044,065
7,476,652
484,792
218,464
79,897
830
1,585,409
32
5
2003
ThCh$
895,316,792
418,988,515
295,713,343
125,355,171
118,149,493
92,296,626
44,764,304
66,331,637
41,841,933
21,028,208
-
16,334,900
27,885,909
8,559,801
-
-
-
-
813
34
4
(8,527,952)
42,085,036
2,320,909,899
2,181,430,685
(4,606,980)
(8,863,202)
2,316,302,919
2,172,567,483
b.
In accordance with Technical Bulletin N°64 of the Chilean Association of
Accountants, at December 31, 2002 and 2003, the Company has recorded
foreign exchange gains and losses on liabilities related to net investments
in foreign countries that are denominated in the same currency as the
functional currency of those foreign investments. Such gains and losses are
included in the cumulative translation adjustment account in shareholders’
equity, and in this way, act as a hedge of the exchange risk affecting the
investments. As of December 31, 2003 the corresponding amounts are as
follows:
Acquisitions
c.
Investments
The investments made by Enersis S.A. during the year ended December
31, 2003, are detailed as follows:
Company
Country of
origin
Investment
Reporting
currency
Liability
ThCh$
ThCh$
Central Termeléctrica Fortaleza S.A.
Luz de Río Ltda.
Inversiones Distrilima S.A.
Edesur S.A.
Argentina
158,628,263
US$
65,944,546
Brasil
118,149,493
US$
184,321,716
Companhia de Eletricidade
do Río de Janeiro
Luz de Bogotá S.A. (Codensa
S.A.)
Investluz S.A. (Coelce)
Brasil
44,764,304
Colombia
128,145,242
US$
US$
192,073,884
80,914,406
Total
449,687,302
523,254,552
Total
d. Capital increase in Cerj
On November 15, 2002, at an Extraordinary Meeting Nº16, the Board
of Directors of Enersis approved a capital increase in its subsidiary Cerj in
Brazil. Such increase will be done in a direct and indirect way through its
subsidiaries Chilectra and Luz de Río in order to maintain its participation
percentage in Cerj.
As of December 31,
2002
ThCh$
2003
ThCh$
15,635,180
62,084
1,202,192
16,899,456
-
-
-
-
Enersis / 2003 annual report
Companhia de Eletricidade do Río de Janeiro
766,367,324,842
585,356,719
446,403,953
(9,102,554)
(98,773,475)
15,529,421,297,372
606,535,104
487,492,327
(4,557,123)
4,206,442
Empresa Nacional de Electricidad S.A.
Chilectra S.A.
Enersis Internacional
Luz de Bogotá S.A.
Empresa Distribuidora Sur S.A.
Investluz S.A.
Distrilec Inversora S.A.
Inmobiliaria Manso de Velasco Ltda.
Inversiones Distrilima S.A.
Compañía Eléctrica del Río Maipo S.A.
Endesa Market Place
Enersis Energía de Colombia S.A.
Enersis de Argentina S.A.
Synapsis Colombia S.A.
Luz de Río Ltda.
Constructora El Gobernador Ltda.
Codensa S.A.
Total
Central Geradora Termelétrica Fortaleza S.A. (*)
20,246,908
Compañía Americana de Multiservicios Ltda.
Synapsis, Soluciones y Servicios IT Ltda.
2002
%
59.98%
98.24%
25.71%
20.38%
16.02%
15.61%
20.43%
99.99%
15.93%
98.74%
48.82%
99.99%
99.99%
15.00%
99.99%
99.99%
0.10%
43.24%
4,919,488,794
359,602,436
143,996,758
15,681,945,734
101,684,374
29,462,253
95,363,337
210
-
-
-
-
-
1
-
-
1
2003
%
59.98%
98.24%
100.00%
25.71%
26.47%
16.02%
15.61%
20.43%
15.93%
0.00%
48.82%
99.99%
99.99%
15.00%
0.00%
0.00%
0.10%
0.00%
0.00%
0.00%
100.00%
40,590,431
41,841,947
(10,035,583)
174,521,754
132,003,816
13,202,015
737,116,149
575,959,954
8,287,192
(27,101,386)
361,127,824
286,769,700
(200,235,743)
(8,682,013)
415,421,881
324,606,610
4,663,076
(15,265,033)
22,849,917
44,134,413
25,283,631
8,847,200
3,231,944
218,464
79,898
829,875
3,666,178
-
11,844,565
-
33,459,443
35,091,832
10,221,225
-
-
-
8,061,728
4,439,999
(1,893,847)
(106,692)
(19,097)
579,366
813,133
670,021
-
22,557,357
1,306,753
8,857,512
6,856,001
5,652,106
-
-
-
-
-
-
-
-
21,296,187
22,255,006
269,895
376,991
1,019,559,638
827,256,794
(6,722,511)
18,020,379
(*)
These subsidiaries were in the development stage for the years shown and accordingly, were not consolidated under Chilean GAAP
Related Companies
Number of shares
Percentage owned
Shareholder’s equity of investee
Net income of investees
Equity in income
Share of equity
Unrealized income
Investment book value
2002
ThCh$
2003
ThCh$
1,444,941,674
1,492,669,037
425,908,659
426,495,495
2002
ThCh$
(9,412,247)
(31,311,681)
2003
ThCh$
78,130,908
51,469,555
2002
ThCh$
(5,645,553)
(30,760,547)
2003
ThCh$
46,863,646
50,563,611
-
100.00%
352,192,877
295,713,345
39,332,609
(36,689,385)
38,878,108
(36,689,385)
(1,171,831)
(1,854,687)
1,328,009
(31,256,488)
952,874
(10,035,579)
2,103,081
11,695,613
-
4,823,694
3,069,892
(284,077)
(106,692)
(19,097)
580
9,754,748
-
-
1,081,657
(26,142,322)
(4,342,952)
(1,355,249)
(3,119,328)
1,306,753
1,411,002
-
-
6,855,391
5,651,541
-
-
-
670
-
1
-
2002
ThCh$
2003
ThCh$
(3,237,317)
(1,369,663)
(7,202,800)
(1,660,402)
2002
ThCh$
866,689,475
418,412,009
352,192,877
155,966,178
119,269,128
118,121,638
56,371,492
84,889,255
40,590,417
27,801,316
22,562,567
21,546,421
25,281,382
8,846,315
484,792
218,464
79,897
830
1,585,409
32
5
2003
ThCh$
895,316,792
418,988,515
295,713,343
125,355,171
118,149,493
92,296,626
44,764,304
66,331,637
41,841,933
21,028,208
-
16,334,900
35,088,709
10,220,203
-
-
-
813
-
34
4
2002
ThCh$
866,689,475
418,412,009
352,192,877
155,966,178
119,269,128
118,121,638
56,371,492
84,889,255
40,590,417
27,801,316
22,562,567
21,546,421
22,044,065
7,476,652
484,792
218,464
79,897
830
1,585,409
32
5
2003
ThCh$
895,316,792
418,988,515
295,713,343
125,355,171
118,149,493
92,296,626
44,764,304
66,331,637
41,841,933
21,028,208
-
16,334,900
27,885,909
8,559,801
-
-
-
813
-
34
4
(8,527,952)
42,085,036
2,320,909,899
2,181,430,685
(4,606,980)
(8,863,202)
2,316,302,919
2,172,567,483
261
On December 10, 2002, the Extraordinary General Shareholders’
Meeting of the Company Cerj agreed to an increase in the authorized
capital for an approximate total amount of MUS$105.000.
On January 6, 2003, the companies Endesa Internacional, Endesa
Internacional Energía, Chilectra S.A. have written over 100% of the rights
of share subscription of the company Cerj and part of the rights of Luz de
Río S.A. to Enersis.
A capital increase was made on January 10, 2003 through the issuance
and the subscription of 770.833.333.333 ordinary shares, at a value of
R$0,48 by lot of thousand shares totaling the MUS$100.000 approved
by the Meeting and increasing the authorized capital of the Company to
MUS$259.085.
With this operation, the percentage of direct and indirect participation
held by Enersis S.A. and branches increased from 58.1631% to 71.8148%.
e. Sale of Río Maipo
The purchasing contract between Enersis and Compañía General de
Electricidad – Distribución was signed on April 30, 2003 for the entire
share participation held by Enersis (356.078.645 shares) in the Company
Río Maipo.
The attribution to the Company CGE Distribución was made by the Board
of Directors of Enersis on March 28, 2003, with a bid of US$170 million
for the shares held by Enersis and was ratified later at an Extraordinary
Shareholders Enersis’ Meeting dated March 31, 2003.
The signature of the purchasing contract marked the end of the process
of attribution of the Company Río Maipo, which is part of the strategic
plan of Enersis approved on October 4, 2002. The effects for the sale of
the shares are detailed in the Note 18a.
f. Merger of Inmobiliaria Manso de Velasco Limitada and
Sociedad Agrícola El Gobernador Limitada
Partners of these companies agreed by public deed dated December
31 2003 to a merger by absorption of Inmobiliaria Manso de Velasco into
Constructora el Gobernador Ltda., which, for all legal intents and purposes,
became the successor, changing its name as of that date to Inmobiliaria
Manso de Velasco Limitada. As a result of this merger, Inmobiliaria Manso
de Velasco Ltda. was dissolved, and its partners received rights in the
continuing corporation.
g. Dissolution of investment vehicles.
During 2003, the companies Enersis Energía de Colombia S.A. and
Enersis de Argentina S.A. were dissolved.
unconsolidated financial statements
9. goodwill and negative goodwill
In accordance with current standards, recognition has been given to the
a.
excess of purchase price over the equity in net assets acquired (goodwill) in
the purchase of shares as of December 31, 2002 and 2003, as follows:
Company
Empresa Nacional de Electricidad S.A.
Distrilec Inversora S.A.
Chilectra S.A.
Inversiones Distrilima S.A.
Compañía Eléctrica del Río Maipo S.A.
Empresa Distribuidora Sur S.A.
Companhia de Eletricidade do Río de Janeiro
Investluz S.A.
Luz de Bogotá S.A.
As of December 31,
2002
2003
Amortization
ThCh$
Net balance
ThCh$
Amortization
ThCh$
Net balance
ThCh$
(43,387,863)
(4,626,121)
(6,272,762)
(1,515)
(580,158)
(4,175,834)
(49,026,109)
(632,903)
(264,347)
674,318,980
(43,387,862)
630,931,117
-
-
-
107,276,026
18,180
10,329,890
-
-
-
(6,272,763)
(1,239)
101,003,264
13,635
-
-
-
-
-
-
-
-
3,656,798
(201,692)
2,790,067
Total
(108,967,612)
795,599,874
(49,863,556)
734,738,083
b. Following current standards, recognition has been given to the excess
of the equity in the net assets purchased over the purchase price (negative
goodwill) in the purchase of shares as of December 31, 2002 and 2003 as
follows:
262
Company
Amortization
Net balance
Amortization
Net balance
ThCh$
ThCh$
ThCh$
ThCh$
As of December 31,
2002
2003
Companhia de Eletricidade do Río de Janeiro (*)
1,019,455
-
21,593,916
-
Inversiones Distrilima S.A.
Synapsis Soluciones y Servicios IT Ltda.
18,550
15,468
(617,459)
(143,085)
26,017
15,468
(479,150)
(127,615)
Total
1,053,473
(760,544)
21,635,401
(606,765)
(*) According to the provisions of Circular 368 of the Superintendence of Securities and Insurance, the corporation has amortized higher quarterly installments due to the revaluation of Cerj, caused by the capital increase
in January 2003.
c. Recoverability of goodwill
To carry out the analysis of the recoverability of goodwill and negative
goodwill on investments abroad, as explained in Note 2 k, the Company
used International Accounting Standard (IAS) N°36.
The analysis determined that at December 31, 2002, the impairment
of goodwill and negative goodwill in the companies, related to investments
in Argentina and Brazil, is 100%, as, when comparing cash flows generated
by the companies in said countries, such flows do not cover the recorded
goodwill and negative goodwill. Thus, these balances have been fully
amortized, resulting in a higher net charge to income for the period of
ThCh$53,647,938, which is included in goodwill and negative goodwill
amortization in the income statement.
Enersis / 2003 annual report
10. others
Other assets as of each year-end are as follows:
Deferred commissions on foreign currency loans
Deferred expenses collar contracts
Post-retirement benefits
Bond discount
Fair value - derivative contracts
Unrealized loss derivative contracts
As of December 31,
2002
ThCh$
545,968
5,316,341
41,916
8,835,815
8,646,895
29,754,374
2003
ThCh$
7,751,524
3,882,337
7,171
6,933,029
589,688
7,563,250
Total
53,141,309
26,726,999
11. due to banks and financial institutions
Currency
US$
Other foreign
U.F.
Ch$
As of December 31,
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
2002
ThCh$
2003
ThCh$
Financial Institution
ABN Amro Bank
Dresdner Bank
Dresdner Bank (swap)
465,821
83,762,158
458,168
-
-
-
Banco Bilbao Vizcaya Argentaria S.A. (swap)
252,304
197,439
SAN PAOLO IMI S.p.A.
Caja de Ahorros y Monte de Piedad de Madrid, Caja Madrid
-
-
118,463
118,463
Banco BBVA
Mizuho Corporate Bank, Ltd.
Banco HSBC
JP Morgan - Chase (swap)
1,461,868
-
10,933,205
253,121
-
-
-
-
Banco Santander Central Hispano
105,236,964
197,438
Banco Santander Central Hispano (swap)
251,225
Bank of América
Bank of Tokio - Mitsubishi
Deutsche Bank
29,789,185
-
36,372,232
118,463
-
39,488
Total
269,236,251
789,754
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
465,821
83,762,158
458,168
263
-
-
-
252,304
197,439
-
-
118,463
118,463
1,461,868
-
10,933,205
253,121
-
-
-
-
105,236,964
197,438
251,225
29,789,185
-
36,372,232
118,463
-
39,488
269,236,251
789,754
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
As of December 31,
2002
%
2003
%
100.00
100.00
-
-
100.00
100.00
unconsolidated financial statements
12. long-term portion of debt due to banks and financial institutions
Financial Institution
Currency
but within
but within
but within
but within
After 10 years
long-term
interest
long-term
After 1 year
After 2 year
After 3 year
After 5 year
Years to maturity
Average
annual
Total
Total
2 years
ThCh$
3 years
ThCh$
5 years
ThCh$
10 years
years
Thch$
ThCh$
portion
ThCh$
rate
portion- 2002
%
ThCh$
ABN Amro
Santander Central Hispano
BBVA
BBVA
Banco Santander Central Hispano S.A.
The Bank of Tokyo-Mitsubishi, Ltd.,
New York Branch
SAN PAOLO IMI S.p.A.
Caja de Ahorros y Monte de Piedad
de Madrid, Caja Madrid
Deutsche Bank AG, New York Branch
Banco Bilbao Vizcaya Argentaria S.A.
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,225,000
44,535,000
44,535,000
44,535,000
14,845,000
74,225,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
72,579,610
290,318,440
108,869,415
362,898,050
74,225,000
3.42%
44,535,000
44,535,000
3.42%
3.42%
44,535,000
14,845,000
74,225,000
3.42%
3.42%
3.42%
-
-
-
-
-
-
Total
-
- 296,900,000
-
296,900,000
834,665,515
13. other current liabilities
Other current liabilities at each year-end are as follows:
264
As of December 31,
Forward contract obligations
Swap Enersis bonds-rate and currency
2002
ThCh$
352,925
2,293,515
2003
ThCh$
-
-
Unrealized gain on fair value of forward contract
4,602
149,153
Fair value - derivative contracts
Swap collar rate contract
-
5,667,236
1,448,418
2,651,909
Total
4,099,460
8,468,298
Enersis / 2003 annual report
14. bonds payable
a. Details of the current portion of bonds payable is as follows at each year-end:
Instrument
Series
Face value
outstanding
ThCh$
Currency
Interest Rate
Yankee Bonds
Yankee Bonds
Yankee Bonds
Yankee Bonds II
Bono N° 269
Bono N° 269
Total
1
2
3
1
B-1
B-2
-
-
-
-
-
-
US$
US$
US$
US$
U.F.
U.F.
6.90%
7.40%
6.60%
7.38%
5.50%
5.75%
b. Details of the long-term portion of bonds payable is as follows at each year-end:
Maturity
Date
Dec-06
Dec-16
Dec-26
Dec-14
Jun-09
Jun-22
As of December 31,
2002
ThCh $
1,210,264
1,514,290
578,822
-
7,677,871
106,535
2003
ThCh $
1,024,305
1,281,618
2,802
1,532,747
152,759
77,343
11,087,782
4,071,574
Instrument
Series
Yankee Bonds
Yankee Bonds
Yankee Bonds
Yankee Bonds II
Bono N° 269
Bono N° 269
Total
1
2
3
1
B-1
B-2
Face value
outstanding
ThCh$
300.000.000
350.000.000
150.000.000
350.000.000
40.135
1.935.000
Currency
Interest Rate
Maturity
Date
US$
US$
US$
US$
U.F.
U.F.
%
6,90%
7,40%
6,60%
7,38%
5,50%
5,75%
Dec-06
Dec-16
Dec-26
Dec-14
Jun-09
Jun-22
As of December 31,
2002
2003
ThCh$
217,738,830
254,028,635
108,869,415
-
49,526,236
42,278,903
ThCh$
178,140,000
207,830,000
509,480
207,830,000
679,076
32,740,200
672,442,019
627,728,756
265
c. Bonds payable are comprised of the following:
i. Enersis S.A. Series B1-B2
On September 11, 2001, Enersis S.A. registered two series of bearer
bonds as of June 14, 2002, as follows:
Series
B1
B1
B2
B2
Total amount
In UF
1,000,000
3,000,000
1,000,000
1,500,000
N° of bonds
per series
1
300
1
150
The scheduled maturity of the Series B-1 bonds is 8 years, interest and
principal payable semi-annually. Annual interest is 5.50%, compounded
semi-annually.
The scheduled maturity of the Series B-2 bonds is 21 years, principal
payments beginning after 5 years, interest and principal payable semi-
annually. Annual interest is 5.75%, compounded semi-annually.
In November 2003, these series were voluntarily exchanged for
shares in connection with the capital increase. The holders converted
ThCh$63,656,586 into 893,612,466 first issue shares. Underwritten amounts
were determined by experts. Capitalized amounts were ThCh$46,968,180
for the B1 series and ThCh$7,028,064 for the B2 series.
unconsolidated financial statements
As of December 31,
2003
2002
ThCh$
ThCh$
1.452.720
561.431
1.949.798
553.043
ii. Yankee Bonds
During 2002 and 2003 there were no debt write-offs.
On November 21, 1996, the Company, acting through its agency in the
Cayman Islands, issued corporate notes (Yankee Bonds) for US$800 million
in three series, as follows:
b. Long-term accruals:
Accrued expenses included in long term liabilities as of each year-end
Series
1
2
3
Total amount
In US$
300,000,000
350,000,000
150,000,000
Years to maturity
are as follows:
10
20
30
Interest is payable on a semi-annual basis and principal is due upon
maturity. The Series 3 bond holders has a pre-redemption option in year
seven, which was exercised by nearly all holders in November 2003 for
US$149,142,000.
iii. Yankee Bonds II
On November 24 2003, the Corporation, through its Cayman Islands
Agency, issued and placed Yankee Bonds on the American market for
US$350 million. This placement was made in a single Series, whose
features are as follows:
Series
Total amount
in US$
Years to
maturity
Stated annual
interest rate
1
350.000.000
10
7,375%
Interest is paid on a semi-annual basis and principal is due upon
maturity.
266
iv. Discount on bonds placed
The discounts on Enersis S.A. bonds placed have been deferred over
the same periods as the periods of the related bonds issues. The balance
at December 31, 2003 amounts to ThCh$6,933,029 (ThCh$8,835,815 in
2002), are included in “Other assets” and ThCh$666,529 (ThCh$975,334
in 2002) are included in “Other current assets”.
Severance indemnities
Post-retirement benefits
Total
2.014.151 2.502.841
16. severance indemnities
Include employee severance indemnities, calculated in accordance with
the policy described in Note 2n, post-retirement benefits and others. An
analysis of the changes in the accruals in each year is as follows:
Opening balance as of January 1
Increase in accrual
Payments during the year
As of December 31,
2002
ThCh$
2003
ThCh$
1.254.243
659.792
(461.315)
1.438.337
900.050
(388.589)
Sub-total
1.452.720
1.949.798
Post-retirement benefits
561.431
553.043
15. accrued expenses
Total
2.014.151 2.502.841
a. Short-term accruals:
Accrued expenses included in current liabilities as of each year-end
are as follows:
As of December 31,
2003
2002
ThCh$
ThCh$
Negative equity of investments
Profit sharing and other employee benefits
Commission banks provision
Contracts collar expeneses provision
Notes receivable provision
-
2.301.186
-
3.252.124
11.142.793
2.037.818
1.448.873
5.732.628
1.280.181
Total
5.553.310 21.642.293
(*)
Provision for ownership in negative equity of Luz de Rio Limitada and Endesa Market Place
for ThCh$10,887,229 and ThCh$225,564 respectively.
Enersis / 2003 annual report
17. shareholders’ equity
a. Paid capital
The Extraordinary General Meeting of Shareholders of Enersis held on
March 31st 2003 approved a capital increase of about US$2,000 million.
The issue was registered in the Securities Register on May 23 2003 under
No. 686 for Ch$1,473,225,403,563 pesos, divided into 24,382,994,488
shares. The operation was structured as follows:
1) First preferential underwriting period (from May 31 to June 30), in
which shareholders registered in the company register at last May 26 have
the option of taking up 2.9408 new shares for each old one at a price of
Ch$60.4202 per share.
2) Voluntary redemption of local bonds (from November 1 to 15),
in which holders of local 269 bonds (series B1 and B2) may exchange
their bonds for Enersis shares, according to the value assigned by the
aforementioned independent expert and at placement price - Ch$ 60.4202
per share.
3) Second preferential underwriting period (from November 20 to
December 20), in which all Enersis shareholders registered five working
days before the start of this new period, except for the controlling partner
and its members, may participate.
In this phase, shareholders may take up the remaining shares that
were not underwritten at the close of the preferential underwriting period
and at the conclusion of the voluntary redemption of local bonds. In this
period, new issue shares may only be paid in cash at the same price of
Ch$ 60.4202 per share.
Once the deadline for the capital increase has expired (December
30 2003), its final amount will be the amount actually underwritten and
paid in.
At June 30 2003, end date of the first preferential underwriting
period, 22,113,264,060 shares were underwritten for a sum of
Ch$1,336,087,841,061 equivalent to 90.69% of the total issue. Of total
shares underwritten in this preferential period, 14,406,840,511 shares
were taken up by controlling shareholder Elesur for the equivalent of
Ch$870,464,185,043 pesos and 7,706,423,549 shares by minority
shareholders for the equivalent of Ch$465,623,656,018 pesos.
Elesur underwrote and paid in its shares by capitalizing the financial
credits that it held with Enersis on the date of underwriting, which, according
to expert report drawn up by Mr. Eduardo Walker, which was approved by
the Extraordinary Shareholders’ Meeting on March 31 2003, amounts to
86.84% of its par value, with the difference being recorded as a share
premium of Ch$131,912,812,936.
The second preferential underwriting period in November 2003 involved
the voluntary exchange of 269 bonds, series B1 and B2. Holders converted
Ch$63,656,586,836 into the equivalent of 893,612,466 first issues shares;
the amounts underwritten were determined by experts by capitalizing
Ch$46,964,178,894 for series B1 and Ch7,028,065,024 for series B2, at
Ch$ 60.4202 per share. This operation meant recording a share premium
of Ch$6,247,821,056.
During the second preferential underwriting period, 1,244,542,758
shares equivalent to Ch$75,195,523,918 were subscribed.
The second share underwriting period concluded on December 30,
determining the capital increase, in which 99.9% of the capital authorized
by the Extraordinary General Meeting of Shareholders, in other words
24,360,146,365 shares, was subscribed, leaving Enersis’ capital with a
total of 32,651,166,465 subscribed and paid in shares.
b. Dividends
During the years ended December 31, 2002 and 2003 the Company
no paid dividends
c. Number of shares
As of December 31, 2003 and December 31, 2002, respectively the
number of shares authorized, issued and outstanding was 32,651,166,465
and 8,291,020,100 all of which have voting rights.
267
d. Subscribed and paid capital is as follows as of the year-end:
As of December 31, 2003
Shares
ThCh$
As of December 31, 2002
8.291.020.100
758.720.279
Intercompany loan capitalization
14.406.840.511
868.723.257
Bonds capitalization
Subscribed shares
893.612.466
53.830.267
9.059.693.388
546.437.537
As of December 31, 2003
32.651.166.465
2.227.711.340
unconsolidated financial statements
e. Accumulated net income (losses) of development-stage subsidiaries are as follows:
Company
Compañía Eléctrica Taltal Ltda.
Central Generadora Termoelectrica Fortaleza S.A.
Aguas Santiago Poniente S.A.
Infraestructura 2000 S.A.
Gas Atacama Generación
Ingendesa (Ingendesa do Brasil)
Enigesa (Ingendesa do Brasil)
Total
f. Other information
Detail of other reserves is as follows:
ThCh$
Reserve for transaction entities using remeasurement method
(10,243,322)
Reserve for accumulated conversion differences
(15,428,363)
268
Total
(25,671,685)
As of December 31, 2003
Net income loss
for the period
ThCh$
Retained earnings
(accumulated deficit)
ThCh$
-
(1,292,923)
(55,238)
-
-
44,914
580
147,835
(2,608,453)
(167,940)
355,245
819,520
(1,855)
(68)
(1,302,667)
(1,455,716)
Detail of changes in the reserve for accumulated conversion differences are as follows for the year ended December 31, 2003:
Initial
balance at
January 1, 2003
ThCh$
Reserve
for assets
ThCh$
Reserve for
liabilities
ThCh$
Final
balance at
December 31, 2003
ThCh$
Cumulative translation adjustment
46,159,106
(253,265,921)
191,678,452
(15,428,363)
Total
46,159,106
(253,265,921)
191,678,452
(15,428,363)
Enersis / 2003 annual report
The detail of the accumulated conversion difference reserve at
December 31, 2003 is as follows:
18. other income and expenses
Distrilec Inversora S.A.
Inversiones Distrilima S.A.
Cía. Peruana de Electricidad S.A.
Edesur S.A.
Cerj S.A.
Luz de Bogotá S.A.
Investluz S.A.
Central Geradora Termelétrica Fortaleza S.A.
Synapsis de Colombia Ltda.
Endesa Market Place
Endesa Argentina S.A.
Compañía Eléctrica Conosur S.A.
Endesa de Colombia S.A.
Central Costanera S.A.
Ingendesa Do Brasil Ltda.
Total
ThCh$
(7,733,126)
2,471,385
1,302,547
(4,503,144)
(2,915,573)
(4,985,333)
3,629,135
(2,662,889)
19,801
367,029
2,557,220
(2,954,154)
68,499
(79,994)
(9,766)
(15,428,363)
a. The detail of other non-operating income in each year
is as follows:
As of December 31,
2002
ThCh$
2003
ThCh$
Adjustments to investment in related companies
9,225,097
292,285
Proyect administration, maintenance and construction
7,719,017
8,827,460
Gain on sales of Compañía Eléctrica del Río Maipo S.A.
- 87,827,096
Gain on forward contracts
4,863,450
-
Other
Total
794,837
2,785,940
22,602,401
99,732,781
b. Other non-operating expenses in each year are as follows:
As of December 31,
2002
ThCh$
2003
ThCh$
Adjustments to investments in related companies
235,659
2,361,710
269
Provision of negative equity of Luz de Rio Ltda.
-
11,328,960
Provision of negative equity of Endesa Market Place
-
789,474
Loss for non-participation in Cerj capital
increase (Note 8d)
Provisions
Other tax expenses
Other
Total
17,190,230
-
362,898
5,732,630
-
748,810
460,356
2,147,416
18,249,143
23,109,000
unconsolidated financial statements
19. price-level restatement
The (charge) credit to income for price-level restatement as of each year-end is as follows:
Assets
Current assets
Property, plant and equipment
Prepaid expenses
Accounts receivable from subsidiaries short-term
Accounts receivable from subsidiaries short-term
Accounts receivable from subsidiaries long-term
Investment in subsidiaries
Investment in other companies
Amortization of goodwill
Prepaid expenses
Other current assets
Other assents
Credit for cost and expense accounts
Net credit-assets
Liabilities and Shareholders´ equity
270
Shareholders´equity
Current liabilities and long- term
Accounts payable to subsidiaries short-term
Accounts payable to subsidiaries long-term
Due to banks and financial institutions short-term
Due to banks and financial institutions long-term
Bonds payable long-term
Non monetary liabilities
Charge to income accounts
Net charge-liabilities and shareholders´equity
Net credits (charges) to income
Index
As of December 31,
2002
ThCh$
2003
ThCh$
I.P.C.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
U.F.
U.F.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
-
433,195
-
8,444,991
176,503
14,227,632
51,328,742
15,684,376
26,188,502
-
20,090
19,353
1,064,987
3,225,743
12,317
141,439
(5,306)
1,173,857
158
4,124,724
17,442,066
7,211,473
7,146,970
(22,020)
-
-
92,558
37,167
120,618,258
37,355,245
(35,729,346)
-
-
(612,395)
(193,074)
(30,728,349)
(31,601,117)
-
(15,872,110)
(3,042,184)
(3,039,352)
(1,436,251)
(6,939,971)
(1,326,553)
(1,342,254)
59,206
59,206
(15,652,100)
(2,155,830)
(11,021,767)
(5,366,824)
-
-
622,396
(119,021,752)
(41,781,443)
1,596,506
(4,426,198)
Enersis / 2003 annual report
20. exchange differences
The (charge) credit to income for foreign currency translation as of each year-end is as follows:
Assets
Current assets
Cash
Time deposits
Other accounts receivable, net
Other current assets
Amounts due from related companies
Non-current assets
Amounts due from related companies
Forward
As of December 31 ,
Liabilities
Currency
2002
ThCh$
2003
ThCh$
Current liabilities
Currency
US$
US$
US$
US$
US$
US$
US$
(223,820)
99,239 Due banks and financial institutions
324,252
(16,634,718) Bonds payable
(576,633)
(158,602) Amount payable to related companies
16,527,632
- Forward
(61,652)
(153,616) Other liabilities
Long-term liabilities
30,087,184
(96,951,835) Due banks and financial institutions
-
21,876,845 Bonds payable
Amount payable to related companies
US$
US$
US$
US$
US$
US$
US$
US$
As of December 31 ,
2002
ThCh$
2003
ThCh$
(321,328)
666,827
426,150
(43,448)
-
308,521
-
-
(10,492,599)
(64,165)
(44,586,105)
64,077,725
(19,901,484)
67,996,595
26,057
(37,070)
Total gain (loss)
46,076,963
(91,922,687) Total gain (loss)
(64,400,158)
122,455,834
Exchange difference- net income (loss)
(18,323,195)
30,533,147
21. cash flow statement
22. share issuance costs
On June 2 2003 Elesur S.A. capitalized the financial credits that it
held with Enersis S.A. for ThCh$1,002,376,998, which transaction did not
generate a cash flow. Details of this transaction are explained in note
17a).
In November 2003 there was a voluntary exchange of bonds in
connection with the capital increase of Enersis. Holders converted
ThCh$63,656,587 into 893.612.466 first issue shares; this operation did
not generate any cash flow. Details of this transaction are referred to in
note 17a).
In the item “other financing disbursements”, in the cash flow from
financing activity, the following items are included disbursements of
commissions for debt refinancing in the amount of thch$39,959,736
forward contract payments in the amount of thch$14,740,450, collar and
collateral derivative contracts premiums in the amount of thch$5,459,187,
and other disbursements in an amount of ThCh$145,131.
Expenses incurred at the close of these financial statements for issuing
and placing the shares, outstanding at December 30 2003, were recorded
as described in Note 2 v) and break down as follows:
271
Appraisal services
Printing costs
Legal cost
Financial adviser
DCV commissions
Bank commissions
Risk classification services
Total
As of December 31
2003
2002
ThCh$
ThCh$
75,326
-
13,954
-
-
199,989
- 10,377,599
2,990
-
-
1,448,873
- 139,613
- 12,258,344
unconsolidated financial statements
23. financial derivatives
As of December 31, 2003 the Company and held the following financial derivative contracts with financial institutions with the object of decreasing
exposure to interest rate and foreign currency risk, as follows:
Type
Nominal
Date of
Sales/
Hedged
Type
Contract
Amount
Maturity
Item
Purchase
Item
US$
Amount
Hedged
item
ThCh$
Amount
ThCh$
Accounts
Assets / Liabilities
Income
Account
Amount
ThCh$
Realized
Unrealized
ThCh$
ThCh$
FR
S
S
OE
OE
S
OE
OE
OE
OE
PE
CCTE
CCTE
CCTE
CCTE
CI
CI
CI
CI
CI
219,000,000 III-2003
Exchange rate
50,000,000 I-2004
Interest rate
50,000,000 III-2004
Interest rate
350,000,000 II- 2006
Interest rate
50,000,000 III- 2005
Interest rate
115,000,000 II-2008
Interest rate
50,000,000 II-2004
Interest rate
275,000,000 III -2004
Interest rate
150,000,000 I- 2006
Interest rate
250,000,000 III- 2006
Interest rate
S
P/S
P/S
P/S
P/S
P/S
P/S
P/S
P/S
P/S
(1)
Fr = Forward, S = Swap
Other current assets
130,042,200
130,042,200 Other current assets
8,570,040
11,384,569
8,420,887
Bank obligations
29,690,000
29,690,000 Other liabilities long-term
394,874
(1,482,082)
(227,128)
Bank obligations
29,690,000
29,690,000 Other liabilities long-term
1,100,608
(747,764)
(458,817)
Bank obligations
207,830,000
207,830,000 Other liabilities long-term
(7,483,151)
(3,303,038) (865,941)
Bank obligations
29,690,000
29,690,000 Other liabilities long-term
(1,057,852)
(642,231)
(111,812)
-
- Other liabilities short-term
(165,046)
(22,460) (165,046)
-
- Other liabilities short-term
(124,104)
(621,753)
(124,104)
-
- Other liabilities short-term
(347,332)
(4,402,289)
(347,332)
-
- Other liabilities short-term
(230,914)
(4,138,451)
(230,914)
-
- Other liabilities short-term
(120,816)
(3,481,620)
(120,816)
Within the compass of the financial strengthening plan, approved
in October 2002, Enersis and its subsidiary Endesa Chile have obtained
financing during this year by placing bonds on the local market and on the
US market; this has enabled them to obtain financing with a fixed rate debt
and prepay obligations with banks which had a variable rate.
272
The above, together with prepayment of borrowings made using
resources obtained from the capital increase, has reduced the variable
debt by about US$1,550 million.
As a result of the above, hedging instruments covering variable rate
borrowings, which were refinanced at fixed rates or prepaid, now have
no associated debt and, therefore, appear in the derivatives schedule as
investments.
24. commitments and contingencies
a. Litigation and other legal actions:
i. Court : 2nd Labor Court of Santiago
Process number : 6061-2001
Cause : Complaint filed for severance pay for years of service on
December 19, 2001 by Mr. Guillermo Calderón Ortega against Enersis
S.A.
Process status : On 01/31/2003 appealable judgment was passed,
endorsing the petition. An appeal for annulment was filed in the
manner
of the petition were disallowed, since the court judged that it was
incompetent to try the case. Decision appealed.
Amounts involved: Indeterminate.
iii. Court : 25th Civil Court of Santiago
Process number: 3151-00
Cause: Complaint filed for compensation of damages by Mrs. Odette
Legrand Halcartegaray against Enersis S.A..
Process status: On January 31 2003 the decision was handed down
disallowing the petition. This decision has been appealed.
Amounts involved: ThCh$50,000
iv. Economic protection appeal, filed before the Court of Appeals for
Santiago, List N°4591-2002, for Compañía de Teléfonos Complejo
Manufacturero de Equipos Telefónicos S.A.C.I., CMET, against Enersis
S.A.. The appeal was filed on 08/27/02 by CMET against Enersis S.A.,
which seemed to be based on the fact that Enersis S.A., through
various acts, facts or omissions, would have breached article 19
N°21 of the Political Constitution of the Republic, preventing CMET
from developing its commercial activities.
On 09.17.02, Enersis S.A. informed the Court, as requested, carrying
out all the discharges it deemed reasonable in accordance with
law and, expressly rejected CMET’s accusations because of their
unfounded nature.
Amounts involved: ThCh$52,858
On 11.09.03, the Court ruled on this appeal, disallowing all of its
parts, with costs.
ii. The Ordinary Labor Trial, titled “Acevedo Bravo, Efraín and Others
with Enersis S.A.”, case list N°4.175-2002, heard before the 4th Labor
Court for Santiago, arising from the claim for the payment of 2%
monthly contribution made to finance the claimants’ conventional
severance indemnity.
CMET filed an appeal for reconsideration of this verdict, with
alternative appeals, which have still not been ruled on.
Amounts involved: Undeterminable.
The claim was notified on 11/06/2002, against which dilatory
exceptions were opposed on 12/09/2002 and the claim was
answered on a subsidiary basis. On December 18 2003, all parts
v. In a Meeting on March 7 2003, the Board of Directors of the
Company agreed unanimously to submit the dispute with the
Argentine Republic over the investments made by the Enersis
Enersis / 2003 annual report
Group in that country through Enersis S.A., Empresa Nacional de
Electricidad S.A., Enersis Internacional, Chilectra Internacional and
Chilectra S.A., to international arbitration by the International Center
for the Settlement of Differences Involving Investments between
States and Nationals of other States, C.I.A.D.I. On July 22 2003, Ciadi
recorded the petition for arbitration. The procedure for appointing
and forming the arbitration panel is currently ongoing.
vi. Appealable tax proceeding, that is, before the Internal Revenue
Service, because of the difference of ThCh$62,400 between First
Category Income Tax and Repayment of Monthly Provisional
Payments for absorbed profits from the 1998 tax year. This
proceeding is at the sentencing stage.
vii. Appealable tax proceeding, that is, before the Internal Revenue
Service, because of the difference of ThCh$1,461,400 between
First Category Income Tax and Repayment of Monthly Provisional
Payments for profits absorbed from the 1999 tax year. This
proceeding is at the discussion stage.
viii. Appealable tax proceeding, that is, before the Internal Revenue
Service, because of the difference of ThCh$900,000 between
First Category Income Tax and Repayment of Monthly Provisional
Payments for profits absorbed from the 2000 tax year. This
proceeding is at the discussion stage.
ix. Mercedes Jimenez de Arechaga con Enersis S.A., Enersis S.A. Agencia
Islas Caimán, Enersis Internacional, Chilectra S.A., Chilectra S.A.
Agencia Islas Caimán y Empresa Nacional de Electricidad.
On May 30, 2000 Pérez Companc S.A., today PECOM ENERGIA
S.A. and PCI Power Edesur Holding Limited (together, “PECOM”)
commenced an action against Endesa-Chile, Chilectra and Enersis
(together, “Enersis Group”) before the Arbitration Court of the
International Chamber of Commerce, Paris, France. PECOM has
petitioned the court to either:
Recognize its alleged right to nominate both a director and an
alternate director in addition to the directors whom it already has
the right to nominate in Distrilec Inversora; or State that PECOM and
the Enersis Group should each have an equal number of directors
in Distrilec Inversora.
On August 2, 2000, Enersis Group contested PECOM’s action and
presented a counterclaim requesting the court to terminate several
agreements among the parties. Likewise, PECOM requested to be
compensated by the Enersis Group if the agreements among the
parties were terminated. Based on the provisional estimates made
by PECOM, the Arbitration Court determined that the amount of the
suit is between US$ 180-200 million. The parties have presented
their arguments, evidence and final allegations. The Arbitration
Court issued an arbitration award on September 2, 2002, ruling
that Enersis Group and PECOM keep their rights to nominate equal
number of board members in Distrilec Inversora S.A. and rejecting
not only the Enersis Group’s counterclaim, but also Epsom’s claim
for compensation of approximately US$ 200 millions. Enersis Group
challenged the arbitration award through an appeal for annulment,
which was filed before the Uruguayan Court of Appeals. The Republic
of Uruguay is the domicile established by the Arbitration Court for
all legal purposes. The Uruguayan Court of Appeals has concluded
the probative year and is working on the final judgment.
On June 18, 2003, Montevideo’s Civil Court of Appeals, 2nd Circuit,
ruled on an unappealable basis that the ruling of the Arbitration
Court of the International Chamber of Commerce stands, therefore
the Arbitral Award remains definitive.
In this context, on November 5 2003 notice has been served of
the petition to regulate lawyers’ fees arising from challenging the
arbitral award as invalid, petitioning that they be set at between
US$1,270,000 and US$15,210,000.
These amounts are based on differing circumstances.
US$15,210,000 is calculated on the basis of the amount set for the
Arbitral Award in the respective “Mission Record”. This figure is a
claim enforced by Petrobrás Argentina at the end of the arbitration
proceeding’s hearing period in the sense that, if the ruling declared
the aforementioned agreements of shareholders null and void, said
Groups should be indemnified with the above amount. Since the
above ruling declared that the shareholders’ agreements remained
in force, the International Chamber of Commerce rejected this
subsidiary claim.
US$1,270,000, in contrast, is obtained based on the amount
of Ur$400 million set by the court for certain social security
contributions demanded from the lawyers in Uruguay.
Since both figures are not presented as subsidiary to each other,
the Company’s Uruguayan lawyer understands that the most
the plaintiff could aspire to is an award for the lower figure, i.e.
US$1,270,000.
Furthermore, when the remedy of invalidity was filed it stated that
the matter was not susceptible to pecuniary valuation, and this was
not disputed.
273
On November 19 2003, a plea was raised in defense against the
petition to regulate the fees.
On December 10 2003, notified on December 16 2003, the appeal
for reconsideration of judgment filed by the Company’s side so that
proceedings would move on to receiving evidence was disallowed,
and the proceeding stayed in the award stage.
b. Restrictions:
• The Company’s loan agreements establish an obligation to comply
with the following financial ratios, on a consolidated level:
• Enersis’s ratio between debt and cash flow for four quarters and
that of its Chilean subsidiaries did not exceed 8.75x;
• The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 5.0x;
• The ratio of Enersis and its Chilean subsidiaries cash flow to
financial expenses for four quarters, not less than 1.25x;
• The ratio of consolidated debt to shareholders’ equity plus
minority interest not exceeding 80%;
• Assets corresponding to companies whose business is regulated,
is not to be less than 50% of the total consolidated assets.
• M i n i m u m s h a re h o l d e r s ’ e q u i t y a t l e a st e q u a l to
ThCh$ 456,840,000 (U.F.27 million)
As of December 31, 2003 all these obligations have been met.
unconsolidated financial statements
• As a common and habitual practice for some bank loan debts and
also in capital markets, a substantial portion of Enersis S.A.’s financial
indebtedness is subject to cross-failure provisions. Some failures of
relevant subsidiaries, if not corrected in time (as to those specific
provisions allowing a year of time to correct the problem), might
result in the cross-failure at the Endesa-Chile and Enersis S.A. level.,
and, in this case, significant percent of Enersis S.A.’s consolidated
liabilities might eventually become on demand.
25. sureties obtained from third parties
As of December 31, 2002, the Company has received sureties as follows:
• There are no longer debt covenants that specify the acceleration
of maturities, if the Company’s risk-rating falls below investment-
grade.
At December 31, 2003 these obligations and restrictions have been
fully met.
Operation
Contractor
Relation
Support contract
Support contract
Seriousness of supply
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Others
Total
274
CIA. DE TELECOMUNICACIONES DE CHILE
METROPOLIS INTERCOM S.A.
HOLLEY GROUP CO LTD
VTR GLOBAL COM
GTD TELEDUCTOS
ENTEL S.A.
MANQUEHUE NET
AGUAS ANDINA
BELLSOUTH COMUNICACIONES
GTD TELESAT
ALFREDO RUIZ CORNEJO
XEROX DE CHILE S.A.
RESGUARDO
AGUAS CORDILLERA
• As of December 31, 2003, the Company has received sureties as follows:
Operation
Contractor
EMPRESA NACIONAL DE COMUNICACIONES
AT & T CHILE NETWORKS S.A.
GTD TELEDUCTOS S.A.
VTR GLOBAL COM
CIA. DE TELECOMUNICACIONES DE CHILE
METROPOLIS INTERCOM
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Others
Total
Third
Third
Third
Third
Third
Third
Third
Third
Third
Third
Third
Third
Third
Third
Relation
Third
Third
Third
Third
Third
Third
Third
Amount
ThCh$
59,190
59,190
28,780
25,367
18,434
16,235
15,221
8,456
8,456
8,456
5,073
1,691
1,657
1,015
795
258,016
Amount
ThCh$
15,397
16,920
16,920
22,199
49,914
52,706
54,026
228,082
Enersis / 2003 annual report
26. foreign currencies
As of December 31, 2002 and 2003, foreign currency denominated assets and liabilities are as follows:
a. Current assets
Account
Cash
Time deposits
Notes receivables
Other receivables
Amounts due from related companies
Income taxes recoverable
Prepaid expenses
Deferred income taxes
Other current asset
Total current assets
b. Property, plant and equipment
Account
Buildings and infraestructure
Machinery and equipment
Other fixed assets
Technical appraisal
Depretiation
Total property, plant and equipment
Currency
As of December 31,
2002
ThCh$
2003
ThCh$
Ch$
US$
US$
Ch$
Ch$
Ch$
US$
U.F.
Ch$
Ch$
Ch$
Ch$
US$
280,789
143,382
4,645,095
744
4,770,740
38,755,996
150,508,136
554,470
9,344,985
24,185
13,840,925
5,041,169
11,900
179,618
153,300
1,152,306
737
1,730,919
113,433,147
11,522,544
471,195
14,481,845
54,080
27,820,558
8,460,824
8,420,565
227,922,516
187,881,638
Currency
Ch$
Ch$
Ch$
Ch$
Ch$
As of December 31,
2002
ThCh$
2003
ThCh$
20,798,254
2,260,279
785,804
33,182
(10,781,577)
20,798,233
2,301,896
798,232
33,176
(11,628,486)
13,095,942
12,303,051
275
unconsolidated financial statements
c. Other assets
Account
Investment in related companies
Goodwill, net
Negative goodwill, net
Other receivables
Amount due from related companies
Intangibles
Less: Acculated amortization
Other assets
Total other assets
Total activos por moneda
Total
276
d. Current liabilities
Account
Due to banks and financial institutions
Bonds payable
Dividends payable
Accounts payable
Miscellaneous payables
Amounts payables to related companies
Accrued expenses
Withholdings
Income tax payable
Deferred income
Other current liabilities
Total current liabilities
Currency
US$
U.F.
US$
Ch$
Ch$
US$
Ch$
U.F.
Ch$
US$
Ch$
Ch$
Ch$
Ch$
$ no Reaj.
US$
U.F.
Ch$
US$
Currency
As of December 31,
2002
ThCh$
2003
ThCh$
Ch$
US$
Euro
Ch$
US$
Ch$
US$
Ch$
US$
Ch$
Ch$
Ch$
US$
Ch$
US$
Euro
U.F.
1,731,634,231
584,183,896
484,792
791,924,896
3,674,978
(143,085)
(617,459)
480,134
1,688,307,140
484,260,343
-
731,934,381
2,803,702
(127,615)
(479,150)
475,380
505,640,490
1,437,928
(351,586)
53,141,309
-
440,541,432
1,437,928
(423,618)
18,574,061
8,152,938
3,671,490,524
3,375,456,922
2,663,279,302
1,248,190,418
484,792
554,470
2,618,642,436
956,527,980
-
471,195
3,912,508,982
3,575,641,611
Within 90 days
91 days to 1 year
As of December 31, 2002 As of December 31, 2003 As of December 31, 2002 As of December 31, 2003
Avg Rate
%
Avg Rate
%
Avg Rate
%
Avg Rate
%
Amount
ThCh$
Amount
ThCh$
Amount
ThCh$
Amount
ThCh$
-
-
-
-
-
-
-
-
5.04%
-
-
-
-
-
-
1.85%
4,861,699
-
-
212,195
353,819
703
227,515
11,710,592
22,247,233
105,683
3,012,413
203,922
16,842
200,478
-
4,099,460
11,710,592
26,474,417
9,067,545
-
5.06%
-
-
-
-
-
-
4.92%
-
-
-
-
-
-
-
-
230,102
3,841,472
111,612
173,004
-
241,059
-
30,227,519
51,492
2,037,818
133,370
16,284,563
135,718
-
8,468,298
230,102
49,344,663
12,361,262
264,374,552
7,784,405
3,303,377
-
-
-
-
-
-
1,629,984
2,540,897
-
-
-
-
-
7,784,405
2,540,897
269,307,913
2.69
5.50
7.06
-
-
-
-
-
-
-
-
-
-
-
-
-
3.35%
-
-
-
-
-
-
5.16%
-
-
-
-
-
-
-
-
789,754
-
-
-
-
-
-
2,347,868
-
1,333,555
19,604,475
-
-
-
-
-
2,347,868
19,604,475
2,123,309
Total current liabilities
47,252,554
61,936,027
279,633,215
24,075,652
Enersis / 2003 annual report
e. Long-term liabilities, December 31, 2003
Account
Due to banks and financial institutions
Bonds payable
Accrued expenses
Deferred income taxes
Other liabilities
Total long-term liabilities
by currency
1 to 3 years
3 to 5 years
5 to 10 years
Currency
Amount
ThCh$
Avg Rate
%
Amount
ThCh$
Avg Rate
%
Amount
ThCh$
Avg Rate
%
More than 10 years
Amount
ThCh$
Avg Rate
%
-
5.50%
-
-
-
-
-
US$
U.F.
US$
Ch$
Ch$
$ no Reaj.
US$
U.F.
Ch$
US$
-
930,810
-
-
4,700,566
-
9,405,879
930,810
4,700,566
9,405,879
3.35%
5.54%
6.90%
-
-
-
-
296,900,000
3,076,000
178,140,000
-
-
-
-
3,076,000
-
475,040,000
-
5.63%
-
-
-
-
-
-
8,482,869
-
553,043
-
-
-
8,482,869
553,043
-
-
5.75%
7.38%
-
-
-
-
-
20,929,597
416,169,480
1,949,798
-
-
-
20,929,597
1,949,798
416,169,480
Total current liabilities
15,037,255
478,116,000
9,035,912
439,048,875
f. Long-term liabilities, December 31, 2002
Account
Due to banks and financial institutions
Bonds payable
Amounts payables to related companies
Deferred income taxes
Other liabilities
Total long-term liabilities
by currency
1 to 3 years
3 to 5 years
5 to 10 years
Currency
Amount
ThCh$
Avg Rate
%
Amount
ThCh$
Avg Rate
%
Amount
ThCh$
Avg Rate
%
More than 10 years
Amount
ThCh$
Avg Rate
%
2.64%
5.50%
-
3.33%
-
-
-
-
US$
U.F.
US$
U.F.
Ch$
US$
Ch$
US$
U.F.
Ch$
US$
834,665,515
16,347,446
-
1,018,223,736
-
-
4,240,426
38,401,268
1,034,571,182
4,240,426
873,066,783
-
5.53%
6.90%
-
-
-
-
-
-
20,752,562
233,171,630
-
-
-
-
-
20,752,562
-
233,171,630
-
5.60%
-
-
-
-
-
-
-
25,237,127
-
-
561,431
-
-
-
25,237,127
561,431
-
-
5.75%
7.16%
-
-
-
-
-
-
29,468,004
347,465,250
-
1,452,720
-
-
-
29,468,004
1,452,720
347,465,250
277
Total long-term liabilities
1,911,878,391
253,924,192
25,798,558
378,385,974
27. sanctions
28. subsequent events
The Company and its directors has not been the subject to sanctions
by the SVS nor by any other administrative authorities.
No significant events that might affect these financial statements have
occurred in the period from January 1 2004 to their date of issue.
29. environment
As of December 31, 2003, the Company has not incurred in
environmental expenses.
JUAN CARLO WIECZOREK C.
Contador General
MARIO VALCARCE DURAN
Gerente General
unconsolidated financial statements
unconsolidated significant events
Capital Increase of Cerj
Provisional dividend
On December 10, 2002 the Extraordinary General Meeting of the
Shareholders of the Company approved an increase in the capital of CERJ
of approximately US$M 105,000.
This increase took place on January 10, 2003 by means of an issue and
subscription of 770,833,333,333 new ordinary shares valued at R$ 0.48 per lot
of one thousand shares, totaling the US$M 100,000 approved at the Meeting
and which increased the capital of the Company by US$M 259,085.
With this operation, the direct participation held by Enersis S.A. through
its agency rose from 20.38% to 40.03%.
Accounting adjustments and extraordinary charges during the
2002 period
At an extraordinary meeting held on January 15, 2003 the Board of
Directors of Enersis S.A. agreed to take note of the fact that the Company
was to make accounting adjustments and extraordinary charges to the
Balance Sheet with respect to its investments in its subsidiaries in Chile
and abroad for a total of the equivalent of US$ 387 million in Chilean
Pesos, reflecting these extraordinary adjustments in the results for the
year 2002.
278
These adjustments and extraordinary charges will not have an
impact on the cash flows of the Company and will be reflected in the
financial statements of Enersis S.A. corresponding to the year 2002. The
adjustments and extraordinary charges made and the provisions established
as of November 30, 2002 are broken down as follows (the figures shown
correspond to the impact on the financial statements of Enersis S.A.):
Generation
Distribution
Services
Total
US$ 60 million US$ 255 million
Argentina
US$ 23 million US$ 26 million
US$ 315 million
US$ 49 million
US$ 23 million
US$ 23 million
US$ 83 million US$ 281 million US$ 23 million US$ 387 million
Country
Brazil
Chile
Totals
We should point out that of the US$ 387 million, US$ 329 million came
from the acceleration of the amortization of the net balance of greater
and lesser values of the investments in generation and distribution in
Brazil and Argentina.
To the above figure should be subtracted the provisions made as of
November 30, 2002, in accordance with the following breakdown:
US$ 81 million
Brazil
Argentina
Total Provisions
US$ 16 million
US$ 97 million
With reference to the above, and taking into consideration the
provisions established, the effects of the adjustments and extraordinary
charges on the results of the company will amount to approximately the
equivalent in Chilean Pesos of US$ 290 million.
At a meeting held on February 10, 2003 the Board of Directors
of Enersis S.A. unanimously agreed to pay a dividend in the month of
February, 2003 as no such conditions were foreseen in the Company’s
Policy on Dividends.
Financial strengthening
At an extraordinary meeting held on October 4, 2002 the Board of
Directors of Enersis S.A. approved a financial strengthening plan aimed
at strengthening the equity by improving its credit structure to permit
the Company to face the situation in the region that was affecting its
investments.
For this, the same letter announced a capital increase of US$
1,500,000,000 (One thousand five hundred million United States Dollars),
which contemplated cash contributions and / or contributions consisting
of financial credits.
With respect to this capital increase, the Board of Enersis S.A., in its
meeting held on February 17 of this year, has decided, with the unanimous
vote of those members present, to propose to the shareholders at a General
Meeting to be held, that the amount of the capital increase be for the
Chilean Peso equivalent to US$ 2,000,000,000 (Two thousand million
United States Dollars), thus increasing by US$ 500,000,000 (Five hundred
million Unites States Dollars) the figure originally contemplated. As informed
in the mentioned Essential Fact, the capital increase contemplates cash
contributions and / or contributions consisting of financial credits.
Increase in capital of Enersis, debts to be capitalized
At the meeting held on March 7, 2003, the members of the Board of
Enersis S.A. present, unanimously agreed the following:
1. The credits eligible for capitalization in the capital increase process
that the Board has decided to propose at the Extraordinary General
Meeting of Shareholders to be held on March 31, 2003, are the
following:
a) Credits outstanding granted to Enersis S.A. by Edesur S.A. for UF
58,701,778.99, and
b) Debts outstanding corresponding to the issue of the local B1 and
B2 bonds for UF 5,874,406.15, in accordance with the contract on
the bond issue established in the deeds dated June 14 and August
30, both of 2001, drawn up before Notary Public Humberto
Quezada in Santiago.
2. Place at the disposal of the Shareholders a specialists report on the
obligations referred to in the point above, which shall be submitted
for the approval of the Extraordinary General Meeting of Shareholders
indicated above.
Enersis / 2003 annual report
Refinancing bank debt
Increase in capital of Enersis, repurchase of Yankee Bonds
At a meeting held on March 11 of this year, the Board of the Company
agreed the following:
1. ENERSIS S.A. (Enersis) and its subsidiary, Empresa Nacional de
Electricidad S.A. (Endesa-Chile) gave mandates in order to initiate
the syndication of credits for approximately US$ 2.3 thousand
million, after reaching an agreement with the four lead banks. BBVA
S.A., Dresdner Kleinwort Wasserstein, Salomon Smith Barney Inc.
and Santander Central Hispano Investment Securities have agreed
with Enersis and Endesa Chile to put into place an operation to
refinance their bank borrowings. Enersis’ credit is for approximately
US$ 1.6 thousand million whilst that of Endesa Chile amounts to
approximately US$ 0.7 thousand million. The group of four entities
holding the mandate account for approximately US$ 1.1 thousand
million of the debt to be refinanced by the Group on a consolidated
basis.
2. The principal objective of this refinance that falls within the Financial
Strengthening Plan of these companies, is to reduce consolidated
borrowings by approximately US$ 2.2 thousand million.
3. The refinancing proposed has a new term up to 2008 with half-yearly
amortizations commencing 30 months from the initiation of the
operation. Furthermore, the clause that permitted a pre-payment in
the event of a deterioration of the credit rating given by the risk rating
agencies will be replaced by a series of new financial covenants and
commitments that will match their business plan.
4. Also considered is that the new operation will have certain additional
guarantees, within the Enersis Group, that will be compatible with
the limits permitted by the contracts that cover the rest of the current
debts of Enersis and Endesa Chile.
5. The conditions of the operation have been agreed by the four banks
mentioned and by the Directors of Enersis and Endesa Chile and will
be presented shortly to the rest of the banks for their consideration
and approval.
Río Maipo awarded
At a meeting held on March 28, 2003 the Board of Directors of ENERSIS
S.A. analyzed the offers received for the entire shares that ENERSIS S.A.
holds in its Chilean subsidiary, Compañía Eléctrica del Río Maipo S.A. (Río
Maipo).
Furthermore, the Board has agreed to propose to the Extraordinary
General Meeting of Shareholders of ENERSIS S.A. to be held on March 31,
2003 that it authorize the sale of all the shares owned by ENERSIS S.A.
issued by Río Maipo (356,078,645 shares), declared as essential assets,
in favor of CGE Distribución S.A., a subsidiary of Compañía General de
Electricidad S.A., that has presented the best purchase offer.
The purchase price of the shares mentioned above offered by CGE
Distribución S.A. amounts to US$ 170,071,000 (One hundred and seventy
million and seventy one thousand United States Dollars). The effects of
this operation on the results of ENERSIS S.A. will be approximately US$
126 million before tax.
At a meeting held on March 28, 2003 the Board of Enersis S.A. agreed to
propose the following operation to the senior management of its subsidiary
Enersis Internacional: To purchase from the shareholders of Enersis S.A.
that hold the right to participate in the second preferential option period of
the capital increase to be submitted to the Extraordinary General Meeting
of Shareholders to be held on March 31, 2003, the American bonds that
Enersis S.A.’s agency in Cayman Islands issued in November 1966 on the
international market (Yankee Bonds). This purchase will take place with
a global and total limit of US$ 50 million and in the other conditions
established below or those additional terms that may be established by
Enersis Internacional and will be advised to the market at the time. This
acquisition will reflect a sign of support of the shareholders of Enersis S.A.
who, in addition are holders of Yankee Bonds, which will motivate a greater
subscription of the shares issued in this capital increase. The mechanism
describer shall have the additional benefit of reducing the consolidated
debt of the Company, replacing it with equity. The purchase of the Yankee
Bonds will be made at the same price estimated by the expert, Eduardo
Walker in his expert report dated March 6, 2003 which has been widely
circulated amongst the shareholders and the market in general and, for a
limited amount, considering each shareholder individually, equivalent to
the amount required for the shareholder to be in a condition to subscribe
the pro rata that corresponds to him in the second period of the preferential
offer of the capital increase of Enersis S.A. In accordance with the terms of
the contract covering the purchase of the bonds he subscribes with Enersis
Internacional, the shareholder that is selling is obliged to utilize the resources
he will receive from the sale of his Yankee Bonds to subscribe the shares
from the new issue of the Company. If the offers for sale of Yankee Bonds
exceed the total and global amount of US$ 50 million, the purchase will be
carried out, amongst all the interested parties, pro rata, in the conditions
that will be determined by the Board of Enersis Internacional.
Signing of the syndicated loans
As of May 12, 2003, syndicated loans agreements have been signed
by Enersis S.A. and its subsidiary Endesa Chile with 32 banks to refinance
borrowings of US$ 2,330 million. We trust this operation will be concluded
at the latest May 15, 2003 as it is subject to the satisfaction of the various
conditions precedent.
The US$ 2,330 million that mature during the current year and in 2004
will have a new term expiring in 2008 with amortizations commencing
in the year 2005. These syndicated loans eliminate the possibility of any
accelerated repayment of the credits due to a deterioration in the degree
of investment rating.
In accordance with Circular Nº 988 issued by that Superintendency, we
inform you that the rise in the average financial costs of the debt involved in
this operation will be more than compensated by the effects of the measures
considered in the Financial Strengthening Plan of the Group, amongst which
is the reduction of some US$ 2,300 million in consolidated debt.
Refinancing
Following the agreement reached by the Board of Directors of Enersis
S.A. in the meeting on May 15 of this year, we report the following:
1. Enersis S.A. (Enersis) and its subsidiary Empresa Nacional de Electricidad
S.A. (Endesa-Chile) as of this date, have complied with all the conditions
precedent required for the syndicated loans, signed by these companies
with 32 banks, amongst which are all the banks that participated in the
279
unconsolidated financial statements
previous bank credits – on last May 12. Thus, the operation has been
closed. The signing of these credits has already been informed to that
Superintendency in our Essential Fact letter dated May 12, 2003.
2. These syndicated loans will be utilized to refinance the debts of Enersis
and Endesa Chile for some US$ 2,330 million, US$ 1,587 million
corresponding to Enersis and US$ 743 million to Endesa-Chile.
3. The principal objective of this refinance that falls within the Financial
Strengthening Plan of these companies, is to reduce consolidated
borrowings by approximately US$ 2.3 thousand million.
4. The syndicated loans consider a new term up till 2008, at fixed annual
rates for the life of the credits of Libor + 350 basis points for Enersis
S.A. and Libor + 300 basis points for Endesa-Chile, with half-yearly
amortizations of capital to commence from November 205. These
credits contemplate a grace period of 30 months from May 15, 2003
during which interest will be paid only on the new credits. This will
permit Enersis and its subsidiary Endesa-Chile a better compatibility
with its respective cash flows during the initial years with an adequate
service of the current debt. The clause that allowed for an acceleration
of the repayment in the potential case of a loss of the investment grade
by Standard & Poor’s due to a deterioration in the risk rating granted
by the risk rating agency and the clause that linked the interest of the
credit to the risk rating of the Companies have been eliminated and
were replaced by a series of new covenants and financial commitments
in line with the business plans of the companies.
280
5. For the purposes of this refinancing, Enersis and Endesa-Chile have
granted certain guarantees in favor of the 32 banks mentioned
above. Enersis has given in lien all the shares it owns in Chilectra
S.A. and has also given under lien the credits owed to it by Chilectra
S.A. The obligations assumed by Endesa-Chile under the new credits
are guaranteed by personal guarantees and co-debtor conditions
its subsidiaries Empresa Eléctrica Pehuenche S.A.,
granted by
Empresa Eléctrica Pangue S.A. and Compañía Eléctrica Tarapacá S.A.
6. The rise in the average financial costs of the aforementioned operation
will be compensated by the effects of the measures considered in the
Financial Strengthening Plan of the Group, amongst which is the
reduction of some US$ 2,300 million in consolidated debt.
Transfer of shares in Enersis
On August 1, 2003 this company was informed that Elesur S.A. sold to
Endesa Internacional S.A., both companies 100% controlled by the Endesa
Spain Group, 17,321,166,047 shares in Enersis S.A. corresponding to 56.9697%
of the capital of Enersis S.A. at a price equivalent to 68.5 pesos per share.
This transfer does not mean any change in the total share participation
the Endesa Group holds in Enersis S.A. nor in the control that the Group
has over Enersis S.A. Furthermore, we are advised that this was done as
part of the process of rationalization and simplification of the corporate
structure of the Endesa Group.
Provisional dividend
At a meeting held on July 30, 2003 the Board of Directors of Enersis
S.A. unanimously agreed not to pay a provisional dividend in the month
of August 2003, charged to the results of the month of June, 2003 in
accordance with current policy on the matter, as no such conditions are
foreseen in the Company’s Policy on Dividends.
Provisional dividend
At a meeting held on October 31, 2003 the Board of Directors of Enersis
S.A. unanimously agreed not to pay a provisional dividend in the month of
November 2003, charged to the results of the month of September 2003,
in accordance with current policy on the matter, as no such conditions are
foreseen in the Company’s Policy on Dividends.
Voluntary redemption of local bonds
The process of “The Offer to voluntarily redeem Bonds Nº 269, Series B1
and B2, initiated last November 1was concluded on November 15, 2003.
This process gave all holders of these bonds issued by Enersis S.A. the option
to exchange them for first issue payment shares in the Company.
On concluding this process, we report that a total of 893,612,466
shares were subscribed, corresponding to Ch$ 53,992,243,918. This sum
implies a reduction in debt for Enersis S.A. of UF 3,666,621. With this
operation, 64.84% of the UF value of the Bonds Series B1 and B2 when it
started were exchanged.
Furthermore, as a consequence of the exchange of these bonds, the
shareholders of Enersis S.A. registered as of the close of November 14, 2003
may participate in the so-called Second Preferential Offer Period of the
capital increase of the Company, having the right to subscribe 0.1196427367
shares of a new issue for each share registered in their names as of the
date indicated above.
Prepayment of syndicated loans
In a meeting held on Tuesday, November 25, the Board of Directors of
the Company agreed to report the following:
1. Enersis S.A. has prepaid the entire syndicated loan it had with BBVA
S.A., Dresdner Kleinwort Wasserstein, Salomon Smith Barney, Inc.
and Santander Central Hispano Investment Securities together with
a further 27 institutions which was granted on May 15, 2003 for
approximately US$ 1,587 million. This last prepayment implied for
the Company the liberation of security established in favor of those
creditor banks, i.e., the lien on the shares owned by Enersis S.A. and
issued by its subsidiary, Chilectra S.A. as well as the lien on inter-
company loans granted by Enersis S.A. in favor of Chilectra S.A.
2. This last prepayment was made principally with funds from a credit
for US$ 500 million signed on November 14, 2003 with the Banco
Bilbao Vizcaya Argentaria, The Bank of Tokio-Mitsubishi Ltd., Caja
Madrid (Agency), Deutsche Bank Securities Inc. and San Paolo IMI
S.p.A., from the issue and placement of bonds on the United States
market )Yankee Bonds) on November 24, 2003 for US$ 350 million
and from other sources. The Yankee Bonds were issued at a term of
ten years and with a bullet payment, under Rule 144A at a rate of
7.375% per annum.
3. The refinancing mentioned falls within the Financial Strengthening
Plan adopted by the Company on October 4, 2002.
Capital increase is concluded
At a meeting held on last December 18, the Board of Directors informed
you by means of an Essential Fact letter of the conclusion of the Second
Preferential Subscription Period of the capital increase of Enersis S.A. agreed
by the Extraordinary General Meeting of Shareholders on March 31, 2003.
Enersis / 2003 annual report
As is public knowledge, this capital increase contemplated three phases;
two periods of preferential subscription and one period to redeem local
bonds payable in new issue shares.
The effects this capital increase will have on the results of Enersis S.A.,
in accordance with Circular Nº 988 of that Superintendency cannot be
reasonably quantified as of this date.
The First Preferential Subscription Period commenced on May 31, 2003
and concluded on June 30, 2003. The Second Preferential Subscription
Period ran from November 20, 2003 to December 20, 2003.
Notwithstanding the above, we must bear in mind that this capital
increase significantly strengthens the equity structure of the company.
Furthermore, as also reported at the time to that Superintendency
and to the general public, between last November 1 and 15, there was an
“Offer to Voluntarily Redeem Bonds Nº 269, Series B1 and B2”, the result
of which was informed to you by means of an Essential Fact letter dated
last November 17. This process gave all the bearers of these local bonds
issued by Enersis S.A. the option to exchange them for first issue payment
shares in the Company.
On concluding the Second Preferential Subscription Period of the capital
increase mentioned, we report that a total of 24,360,123,331 shares were
subscribed, corresponding to Ch$ 1,471,843,528,820. This sum implies that
a 99.9% capital increase approved by an Extraordinary General Meeting
of Shareholders of Enersis S.A. on March 31 is fully subscribed and paid in
as of this date. (The part of the capital increase not subscribed and paid
in will mature on December 30, 2003, leaving the capital of Enersis S.A.
reduced to that actually subscribed and paid in).
Elesur shares
On December 22, 2003 Enersis S.A. was informed that its shareholder
Elesur S.A. had sold and transferred to Endesa Internacional S.A., both 100%
subsidiaries of the Endesa Spain Group, 1,778,826,237 shares in Enersis
S.A., representing 5.448475% of the registered capital of Enersis S.A., at a
price equivalent to Ch$ 84.50 per share.
This transfer does not mean any change in the control that this Group
has over the Company and we have been advised that this operation was
done as part of the process of rationalization and simplification of the
corporate structure of the Endesa Group in Spain.
281
unconsolidated financial statements
I. ratio analysis of the unconsolidated
financial statements
1. analysis of the income statement
The result achieved by the company as of December 31, 2003 is a
profit of Ch$ 12,468 million, representing an increase of Ch$ 238,453
million with respect to the year before when the company made a loss of
Ch$ 225,985 million.
Income Statement (Millions of CH$)
Operating Revenues
Operating Expenses
Operating Margin
Selling and Administrative Expenses
Operating Income
Profit (Loss) in Related Companies
Net Others Non Operating Income
Net Financial Margin
Positive Goodwill Amortization
Monetary
282
Exchange Differences
Non Operating Income
Income Tax
Negative Goodwill Amortization
Net Income
Ebitda (*)
Earnings per Share
Dec-02
4,325
(1,097)
3,228
(22,048)
(18,820)
(8,528)
4,353
(87,931)
(108,968)
1,597
(18,323)
(217,800)
9,581
1,053
(225,986)
14,713
(27.26)
The variations in each item of the income statement are shown in the
following table.
Dec-03
Variation
% Variation
4,332
(1,130)
3,202
(17,018)
(13,816)
42,085
76,624
(102,939)
(49,864)
(4,426)
30,533
(7,987)
12,636
21,635
12,468
95,161
0.38
7
(33)
(26)
5,030
5,004
50,613
72,271
(15,008)
59,104
(6,023)
48,856
209,813
3,055
20,582
238,454
80,448
27.64
0.2%
(3.0%)
(0.8%)
22.8%
(26.6%)
593.5%
1,660.3%
(17.1%)
54.2%
(377.1%)
266.6%
96.3%
31.9%
1954.6%
105.5%
546.8%
101.4%
(*) Earnings Before Income Tax, Interest, Deprecation and Amortization of Extraordinary Items
a. Net Operating Income had a positive variation of Ch$ 5,004 million
that is explained by lower costs of personnel and general services.
b. The Net Non Operating Income of the Company rose by Ch$ 209,813
million or 96.3% from a loss of Ch$ 217,800 million in the year 2002
to a loss of Ch$ 7,987 million in 2003.
This is explained by the following variations:
The net financial margin suffered a negative variation of Ch$ 15,008
million with respect to the same period of the previous year. This variation
is principally due to an increase of Ch$ 39,316 million in financial costs with
third parties, of which Ch$ 25,638 million correspond to the acceleration of
deferred expenses related to the refinancing of debt, compensated by lower
costs and financial revenues with related companies whose net effect was
Ch$ 24,308 million, explained by the elimination of the debt with Elesur
S.A. capitalized in the month of June 2003.
Investments in related companies as of December 31, 2003 show a
net profit of Ch$ 42,085, an increase of Ch$ 50,613 million from the loss
of Ch$ 8,528 for the same period of the previous year. This increase is due
principally to an increase in the results from investments in Endesa S.A.,
Chilectra S.A., Investluz, Inmobiliaria Manso de Velasco S.A., Synapsis IT
Ltda., Cam Ltda., Luz de Bogotá S.A., compensated by a reduction of Ch$
131,741 million in the results from Edesur S.A., Distrilec S.A., Cerj, Enersis
Internacional, Luz de Río and Río Maipo S.A.
The amortization of negative goodwill fell by Ch$ 59,104 million to Ch$
49,864 million as of December 31, 2003. This reduction is fundamentally
due to a lower amortization in the companies that are established in Brazil
and Argentina as a result of the accelerated amortization applied to the
balances of negative goodwill as of December 31, 2002.
The other non operating income and expenses achieved a net profit
of Ch$ 76,624 million as of December 31, 2003, a positive variation of Ch$
Enersis / 2003 annual report
72,271 when compared to the loss of Ch$ 4,353 as of the same date in
2002. This explained principally by:
Interest Rate Risk
• The accounting of the profit on the sale of Río Maipo of Ch$ 87,827
million.
• A reduction of Ch$ 17,190 million in the loss for not having participated
in the capital increase of Cerj in July 2002.
• Compensated by a decrease of Ch$ 8,932 million in the profit on the
adjustment on investments in related companies.
• By a reduction of Ch$ 4,863 million in the profit on forward
contracts.
• By an increase of Ch$ 11,329 million in the provision on the negative
net worth of the subsidiary Luz de Río and the increase of Ch$ 2,915
million in the loss from the adjustment on investments in related
companies.
• By an increase of Ch$ 5,370 million in the extraordinary provision.
The price-level restatement and exchange differences reflect a net
positive variation of Ch$ 42,833 million with respect to the same period
of the previous year, rising from a loss of Ch$ 16,726 million as of December
31, 2002 to a profit of Ch$ 26,107 million in the year 2003. The above is
principally due to the greater impact from the appreciation of the Chilean
Peso against the US Dollar during this year.
The variation in the exchange rate during the period ended December
31, 2003 is an actual appreciation of 18.47% of the Chilean Peso against
the US Dollar compared to a real devaluation of 6.75% of the Chilean Peso
with respect to the US Dollar during the same period of the year 2002.
Income and deferred taxes show a rise in profit of Ch$ 3,055 million in
comparison to the same period of last year, increasing from a profit of Ch$
9,581 million as of December 2002 to a profit of Ch$ 12,636 million during
this period. This is explained mainly by an increase of Ch$ 19,339 million
in the profit from deferred taxes, compensated by a rise of Ch$ 16,285 in
taxes payable due to the sale of Río Maipo S.A.
Amortizations of the positive goodwill of investments shows an increase
of Ch$ 21,635 million in the amortization during the period, reflecting
the accelerated amortization of the positive goodwill generated by the
investment made in January 2003 in Cerj.
As of the close of December 31, 2003 Enersis had its entire variable
debt (indexed to Libor-US$) covered by derivatives, thus there was no
significant exposure to fluctuations in the rates of interest. As of December
31, 2002,Enersis also had the entire variable debt (indexed to Libor-US$)
hedged against fluctuations in interest rates.
The decrease in the proportion of the variable debt is due to the
capitalization of the loans granted by the Parent Company, to the issue
of international bonds at fixed rates and to the successful capital increase
process from which the resources were utilized to pay variable loans in US
Dollars (indexed to Libor-US$).
Bearing in mind the debt situation of all its subsidiary companies,
this structure would be 1% and 12% as of the close of December 2003 and
December 2002 respectively.
Exchange Risk
Enersis’ individual exposure to an exchange risk is derived from
the liabilities denominated in foreign currency, most of which are in US
Dollars.
As of December 31, 2003, 96% of the individual debt was expressed
in US Dollars.
Enersis holds forward sales contracts in US Dollars to hedge its Assets/
Liabilities mismatch.
As of the close of September 30, 2003 97% of the debt was
denominated in US Dollars.
283
The reason behind the largest part of our debt being denominated
in US Dollars is the fact that an important proportion of our revenues is
directly or indirectly related to the US Dollar.
The exchange risk exposure is currently handled on a consolidated basis.
The Company’s policy is to hedge between 70% and 85% of the booked
exposure to exchange risks.
The application of this policy lies basically in the maintenance of a
position of US$/CLP forward contracts. As of the close of December 2003
and September 2003, Enersis had an overbought position in US$/CLP
forwards of –US$ 219 million and an overbought position in US$/CLP of
–US$ 163 million, respectively. The variation in the hedging contracts is
explained by the reduction in the debt in US Dollars.
unconsolidated financial statements
2. analysis of the balance sheet
The following has been the evolution of the principal financial ratios:
Assets (Millions of Ch$)
Current Assets
Fixed Assets
Other Assets
Total Assets
Variation
% Variation
Dec-02
M$
227,922
13,096
Dec-03
M$
187,882
12,303
3,671,491
3,375,457
(40,040)
(793)
(296,034)
3,912,509
3,575,642
(336,867)
(17.6%)
(6.1%)
(8.1%)
(8.6%)
The total assets of the Company show a decrease of Ch$ 336,867 million
• Reduction of Ch$ 7,908 million in the fair value of derivative contracts
with respect to the same period of the previous year, due principally to:
of Ch$ 21,734.
• Reduction of Ch$ 129,491 million in short and long-term accounts
• Reduction of Ch$ 2,212 million in the discount on the placement of
receivable from related companies.
bonds.
• Reduction of Ch$ 143,735 million
in
investments
in related
•
Increase of Ch$ 19,119 million in tax rebates and deferred taxes.
companies.
• Reduction of Ch$ 57,892 in the negative goodwill of the investments
due to the accelerated amortization applied on the balances as of
December 31,2002.
•
Increase in current assets and other long-term assets of Ch$ 8,354
million due to expenses associated to the refinancing of bank debts.
•
Increase of Ch$ 8,409 million in rights on forward contracts.
284
Liabilities (Millions of Ch$)
Current Liabilities
Long-Term Liabilities
Equity
Total Liabilities
Variation
% Variation
Dec-02
M$
326,886
2,569,987
1,015,636
Dec-03
M$
86,012
941,238
2,548,392
(240,874)
(1,628,749)
1,532,756
3,912,509
3,575,642
(336,867)
(73.7%)
(63.4%)
150.9%
(8.6%)
Current liabilities decreased by Ch$ 1,869,623 million or 64.54% with
• An increase of Ch$ 16,268 million in income tax mainly due to the
respect to December 31, 2002, explained principally by:
sale of Río Maipo S.A.
• A reduction of Ch$ 1,018,224 million in short and long-term accounts
payable to related companies, principally to Elesur S.A. whose debt
was capitalized.
• An increase of Ch$ 11,143 million in the negative net worth
of investments and an increase of Ch$ 4,943 million in other
provisions.
• A reduction of Ch$ 835,972 million in obligations with banks and with
the public due to payments of Ch$ 1,195,040 million made during the
period and to the variation in the exchange rate between December
31, 2003 and December 31, 2002 whose effect amounted to Ch$
228,739 million, compensated by loans for Ch$ 367,699 million
obtained from banks and by an international bond issue for Ch$
220,108 million.
• A reduction of Ch$ 23,328 million in other short and long-term assets
related mainly to the calculation of a fair value of the derivative
contracts.
With regard to the equity, we point out that this rose by Ch$ 1,532,756
million with respect to December 31, 2002. This variation is explained
principally by:
• The increase of Ch$ 1,468,991 million in paid-in capital following
the subscription of 24,360 million shares as a result of the overprice
principally due to the capitalization by Ch$ 125,619 million of Elesur
and to the recording of the profit of Ch$ 12,468 million for the period.
This is compensated in part by the reduction of Ch$ 73,020 million in
other reserves.
Enersis / 2003 annual report
Ratio
Liquidity
Debt
Return
Unit
Dec-02
Dec-03
Variation
Dec 03-02
% Variation
Dec 03-02
Current Liquidity
Acid Test (1)
Working Capital
Debt Ratio
Short-Term Debt
Long-Term Debt
Financial Expenses Coverage (2)
Return on Equity
Return on Assets
Times
Times
Ch$MM
Times
%
%
Times
%
%
0.70
0.70
2.18
2.18
1.48
1.48
(98,964)
101,870
200,834
2.85
0.11
0.89
0.10
-22.25%
-5.78%
0.40
0.08
0.92
0.67
0.49%
0.35%
(2.45)
(0.03)
0.03
0.57
22.74%
6.13%
211.4%
211.4%
202.9%
86.0%
(27.3%)
3.4%
570.0%
102.2%
106.1%
(1) Current Assets net of Stocks and Pre-paid Expenses
(2) We utilized EBITDA divided by Financial Expenses
Principal Ratios
The liquidity ratio as of December 2003 was 2.18 times, a rise of 1.48
points with respect to the same date of the previous year due principally to
the reduction in short-term obligations with banks that were paid during
the period.
The debt ratio as of December 31, 2003 was 0.40 times. When
compared to the same period of the year 2002, there is a decrease of
2.45 points. This reduction is due principally to the increase in Enersis’
capital and to a reduction in accounts payable to related companies and
to the payment of bank credits.
The return on equity closed at 0.49%. As of the same date of the
previous year, this was –22.25%. This increase in the return is due to the
improvement in the profit for the period with respect to the 2002 period.
3. principal cash flows
During the period, the company generated a net cash flow of Ch$ 3,078
million, which is comprised of the following items:
285
Cash Flow (Millions of Ch$)
From Operations
From Financing
From Investments
Net Cash Flow for the Period
Dec-02
(10,381)
(83,397)
95,145
1,367
Dec-03
Variation Dec 03-02 % Variation Dec 03-02
(88,238)
(125,187)
210,347
(3,078)
(77,857)
(41,790)
115,202
(4,445)
750.0%
50.1%
121.1%
(325.2%)
The operating activities generated a negative cash flow of Ch$ 88,238
million that represents a reduction of 750.0% with respect to December
2002. This cash flow is comprised principally by the profit of Ch$ 87,827
million on sales of assets and a fall of Ch$ 26,964 million in the assets and
liabilities that affect the operating cash flow, compensated by a profit for
the period of Ch$ 12,468 million and by charges for Ch$ 14,085 million to
the income statement that do not represent cash flows.
The financing activities generated a negative cash flow of Ch$ 125,187
million, originated mainly by the payment of loans of Ch$ 1,140,141 million
to third parties, by disbursements of other financial expenses of Ch$ 60,305
million and by the payment of loans to related companies for Ch$ 64,898
million, all compensated by the share issue for Ch$ 535,633 million and
by the receipt of loans from banks and other sources of financing for Ch$
604,594 million.
Investment activities generated a net positive cash flow of Ch$ 210,347
million explained fundamentally by the sale of fixed investments for Ch$
161,428 million, by the collection of loans from related companies for Ch$
53,071 million and by the collection of other revenues from investments
of Ch$ 1,635 million, compensated by payments of Ch$ 5,788 million to
related companies.
unconsolidated financial statements
4. book value and market value of the assets
With regard to the more important assets, we mention the
following:
The value of the items in fixed assets have been adjusted in accordance
with the accounting criteria established by the Chilean Superintendency of
Securities and Insurance in its Circulars Nº 550 and 556 issued in 1985. In
the case of the foreign company, Inversiones Distrilima S.A., the value of the
fixed assets were adjusted in accordance with the exception criteria indicated
in Technical Bulletin Nº 45 issued by the Chilean College of Accountants,
the norm in force at the time the investment was made and which was not
modified by Technical Bulletin Nº 51 that replaced it.
Depreciation is calculated on the updated value of the goods in
accordance with the years of useful life remaining for each item.
Investments in related companies are valued at their proportional
equity value. In the case of foreign companies, this methodology has been
applied on the basis of the financial statements prepared in accordance with
the norms established in Technical Bulletin Nº 64 of the Chilean College
of Accountants and intangible values have been adjusted by price-level
restatement and are amortized according to the norms indicated in
Technical Bulletin Nº 55 of the Chilean College of Accountants.
In accordance with Official Circular Nº 150 dated January 31, 2003
and issued by the Superintendency of Securities and Insurance, as of the
close of the financial statements for the 2002 period, the company has
evaluated the recoverability of the assets related to its investments, applying
the accounting principles generally accepted in Chile which are Technical
Bulletins Nº 33 for fixed assets and in accordance with the indications of
Technical Bulletin Nº 56, the company has applied NIC 36 for the positive
or negative goodwill values of those investments.
Assets expressed in foreign currency are shown at the exchange rate
as of the close of the period.
Investments in financial instruments with repurchase/resale agreements
are shown at their purchase value plus the proportion of the interest
calculated on the implicit rate of each operation.
Accounts and bills receivable from related companies are classified
according to their short and long-term maturities. The operations are
adjusted to equal conditions similar to those that are normally applied
in the market.
In summary, assets are valued according to generally accepted
accounting principles and norms and to instructions issued on this matter
by the Superintendency of Securities and Insurance explained in Note 2 of
the Financial Statements.
286
Enersis / 2003 annual report
financial statements of subsidiaries
I N D E X
S U M M A R I Z E D B A L A N C E S H E E T S B Y S U B S I D I A R Y
287
S U M M A R I Z E D I N C O M E S T A T E M E N T S B Y S U B S I D I A R Y
S U M M A R I Z E D C A S H F L O W S T A T E M E N T S B Y S U B S I D I A R Y
unconsolidated financial statements
Summarized Balance Sheets by Subsidiary
As of December 31, 2002 and 2003 in thousands of Chilean Pesos
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Long Term Liabilities
Minority Interests
Capital and Reserves
Retained Earnings (Losses)
Profit (Loss) for the Period
Provisional Dividends
Surplus (Deficit) during Development Period Subsidiary
CHILECTRA
SYNAPSIS
2003
2002
2003
2002
I. MANSO DE VELASCO
2002
2003
CAM
2003
2002
ENERSIS INTERNACIONAL
2002
2003
DISTRILIMA
EDESUR
ENDESA CHILE
LUZ DE BOGOTÁ
CERJ
INVESTLUZ
2003
2002
2003
2002
2003
2002
2003
2002
2003
2002
2003
2002
143,985,957
329,414,610
589,791,336
95,614,481
304,038,524
748,585,147
21,901,808
2,764,950
14,458
23,044,051
2,374,920
13,532
43,008,704
38,268,742
6,621,658
40,047,602
39,521,595
6,978,219
44,366,468
14,780,685
329,597
39,579,124
13,258,431
2,809,455
197,254,057
-
100,271,002
272,021,666
-
127,874,350
35,132,181
324,561,730
4,030,749
46,129,495
399,972,411
3,107,431
62,849,087
683,548,351
16,347,871
58,302,712
874,504,955
32,991,452
392,862,056
4,667,941,801
404,531,983
547,619,749
5,726,547,619
315,276,042
218,597,485
816,435,459
98,828,901
137,946,645
1,041,313,825
148,821,994
165,739,650
618,803,340
291,480,724
200,386,850
768,569,646
287,184,330
141,920,431
597,135,519
65,585,754
134,082,349
758,977,275
77,779,877
1,063,191,903
1,148,238,152
24,681,216
25,432,503
87,899,104
86,547,416
59,476,750
55,647,010
297,525,059
399,896,016
363,724,660
449,209,336
762,745,309
965,799,119
5,465,335,840
6,589,443,410
1,133,861,845
1,328,082,464
1,076,023,714
1,256,140,826
804,641,704
970,839,501
151,300,289
480,080,607
5,315,512
280,079,850
94,946,090
51,469,555
-
-
243,655,378
455,664,360
23,009,755
330,962,570
166,378,657
(31,311,681)
(40,120,887)
-
13,759,207
697,053
3,732
4,278,543
-
5,942,681
-
-
16,031,502
552,242
1,558
4,378,673
28,529
4,439,999
-
-
18,006,785
331,129
27,568,670
6,272,967
34,580,739
1,306,753
-
(167,939)
1,400,889
17,218,734
27,186,789
6,160,265
44,616,322
(10,035,583)
-
-
22,392,985
1,991,389
544
2,747,544
21,524,634
10,819,654
-
-
24,180,086
6,182,717
577
3,662,768
13,559,134
8,061,728
-
-
1,811,714
4,869,771
-
204,282,237
132,557,209
(36,689,385)
(9,306,487)
-
2,301,235
51,354,176
-
213,683,395
93,679,101
38,878,109
-
-
61,042,367
82,023,178
88,655,299
110,962,834
18,898,330
8,857,512
(6,714,860)
-
66,780,079
89,919,887
117,987,616
146,948,835
22,275,693
13,202,015
(7,904,789)
154,040,522
32,744,832
-
578,102,077
24,959,264
(27,101,386)
-
-
211,752,579
16,930,391
-
706,608,678
22,220,279
8,287,192
-
-
465,289,017
2,289,634,773
1,217,743,010
1,303,698,640
109,151,303
78,130,912
-
1,688,185
1,145,546,302
2,485,741,892
1,513,213,543
1,334,178,034
126,108,187
(9,412,247)
-
(5,932,301)
172,133,829
48,029,635
426,206,054
477,855,243
18,373,030
4,206,442
(12,942,388)
-
143,576,048
51,985,948
525,985,364
582,320,219
28,772,008
(4,557,123)
-
-
365,106,850
264,512,911
-
555,618,369
(10,440,941)
(98,773,475)
-
-
385,084,994
285,699,114
-
598,118,582
(3,659,309)
(9,102,555)
-
-
140,273,793
146,024,575
231,573,636
508,472,603
(213,020,890)
(8,682,013)
-
-
171,955,736
133,218,197
304,537,745
621,501,232
(60,137,666)
(200,235,743)
-
-
TOTAL LIABILITES AND EQUITY
1,063,191,903
1,148,238,152
24,681,216
25,432,503
87,899,104
86,547,416
59,476,750
55,647,010
297,525,059
399,896,016
363,724,660
449,209,336
762,745,309
965,799,119
5,465,335,840
6,589,443,410
1,133,861,845
1,328,082,464
1,076,023,714
1,256,140,826
804,641,704
970,839,501
Summarized Income Statements by Subsidiary
As of December 31, 2002 and 2003 in thousands of Chilean Pesos
CHILECTRA
SYNAPSIS
2003
2002
2003
2002
I. MANSO DE VELASCO
2002
2003
CAM
2003
2002
ENERSIS INTERNACIONAL
2002
2003
DISTRILIMA
EDESUR
ENDESA CHILE
LUZ DE BOGOTÁ
CERJ
INVESTLUZ
2003
2002
2003
2002
2003
2002
2003
2002
2003
2002
2003
2002
OPERATING INCOME
Operating Incomes
Operating Costs
Administrative and Selling Expenses
426,823,402
(304,333,838)
(34,437,614)
401,916,783
(281,511,962)
(32,211,599)
45,283,092
(30,331,333)
(6,213,773)
50,028,085
(37,603,305)
(6,177,952)
11,333,580
(10,501,287)
(1,690,676)
11,492,120
(6,036,763)
(1,640,989)
91,718,390
(71,827,760)
(6,151,395)
94,885,027
(74,422,088)
(7,994,068)
NET OPERATING INCOME
88,051,950
88,193,222
8,737,986
6,246,828
(858,383)
3,814,368
13,739,235
12,468,871
-
-
-
-
-
-
-
-
175,946,657
(132,314,640)
(17,099,124)
205,670,020
(152,721,306)
(19,729,480)
183,942,104
(161,165,734)
(28,022,927)
201,473,331
(183,447,614)
(30,891,391)
920,281,398
(550,446,696)
(31,323,805)
947,480,143
(561,141,752)
(36,651,655)
292,155,057
(244,654,216)
(13,883,076)
334,819,739
(280,417,334)
(32,820,660)
317,593,035
(282,155,547)
(10,925,369)
348,613,018
(306,380,130)
(21,624,471)
207,387,264
(158,070,042)
(29,633,552)
230,001,986
(164,953,714)
(40,816,144)
26,532,893
33,219,233
(5,246,557)
(12,865,674)
338,510,897
349,686,736
33,617,765
21,581,745
24,512,119
20,608,417
19,683,670
24,232,128
NON OPERATING INCOME
Non Operating Incomes
Non Operating Expenses
Price-Level Restatement and Exchange Difference
37,007,722
(105,048,067)
8,702,442
54,275,168
(170,433,168)
(15,061,589)
665,749
(885,294)
(72,199)
1,498,018
(2,339,354)
373,881
4,056,508
(2,082,635)
101,397
2,010,666
(17,893,047)
(220,717)
795,599
(958,067)
(125,187)
552,693
(2,297,744)
(232,067)
19,302,821
(1,194,214)
(54,797,992)
24,929,676
(3,130,606)
17,079,039
5,350,225
(8,431,247)
8,638,287
(9,600,874)
13,500,376
(22,847,834)
25,252,753
(38,838,275)
77,578,673
(266,114,576)
9,530,894
134,080,395
(454,230,585)
3,591,022
14,639,138
(12,713,717)
-
21,342,280
(18,982,696)
-
20,608,340
(171,749,126)
-
131,489,825
(171,653,036)
-
26,491,157
(54,642,023)
-
35,860,161
(256,137,540)
-
NET NON OPERATING INCOME
(59,337,903)
(131,219,589)
(291,744)
(467,455)
2,075,270
(16,103,098)
(287,655)
(1,977,118)
(36,689,385)
38,878,109
(3,081,022)
(962,588)
(9,347,458)
(13,585,522)
(179,005,009)
(316,559,168)
1,925,421
2,359,584
(151,140,786)
(40,163,211)
(28,150,866)
(220,277,379)
Income Tax
Extraordinary Items
Minority Interests
Negative Goodwill Amotizations
(413,697)
-
10,246,030
12,923,175
(9,119,064)
-
(11,370,491)
32,204,241
(2,500,033)
-
(3,528)
-
(1,339,277)
-
(97)
-
1,831
-
88,035
-
2,076,500
-
176,647
(2,631,852)
-
(74)
-
(2,396,330)
(33,875)
180
-
-
-
-
-
-
-
-
-
(10,391,425)
-
(5,231,005)
1,028,071
(12,328,477)
-
(7,982,755)
1,256,602
(12,507,371)
-
-
-
34,738,388
-
-
-
(27,378,083)
-
(69,586,444)
15,589,551
(71,334,682)
(11,039,393)
(46,943,077)
86,777,337
(22,052,572)
-
(9,284,172)
-
(20,435,760)
(11,526,129)
3,463,437
-
27,855,192
-
-
-
10,452,239
-
-
-
(4,637,460)
-
4,422,643
-
(4,536,208)
-
(8,923,114)
9,268,830
Profit (Loss) for the Period
51,469,555
(31,311,681)
5,942,681
4,439,999
1,306,753
(10,035,583)
10,819,654
8,061,728
(36,689,385)
38,878,109
8,857,512
13,202,015
(27,101,386)
8,287,192
78,130,912
(9,412,247)
4,206,442
(4,557,123)
(98,773,475)
(9,102,555)
(8,682,013)
(200,235,743)
Summarized Cash Flow Statements by Subsidiary
As of December 31, 2002 and 2003 in thousands of Chilean Pesos
Net Positive (Negative) Cash Flow from Operating Activities
Net Positive (Negative) Cash Flow from Financing Activities
Net Positive (Negative) Cash Flow from Investment Activities
CHILECTRA
SYNAPSIS
2003
91,383,964
9,321,372
(65,404,116)
2002
99,482,237
(145,522,146)
46,561,866
2003
3,559,475
(4,487,464)
878,011
2002
4,345,395
(3,275,352)
(1,620,845)
I, MANSO DE VELASCO
2002
2003
16,092,471
11,268,286
(12,003,069)
(697,143)
(4,009,355)
(10,629,045)
CAM
2003
12,065,074
(1,339,396)
(10,357,136)
2002
6,190,916
135,812
(7,512,169)
ENERSIS INTERNACIONAL
2002
2003
27,922,144
2,462,705
(30,311,459)
9,767,126
(10,813,081)
4,380,842
NET POSITIVE (NEGATIVE) CASH FLOW FOR THE PERIOD
Effect of inflation on cash and cash equivalent
35,301,220
(779,643)
521,957
(1,515,014)
(49,978)
(11,867)
(550,802)
(58,658)
(57,902)
(5,049)
80,047
(10,655)
368,542
(153,801)
(1,185,441)
(231,011)
3,334,887
15,490
NET VARIATION OF CASH AND CASH EQUIVALENT
34,521,577
(993,057)
(61,845)
(609,460)
(62,951)
69,392
214,741
(1,416,452)
3,350,377
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
7,100,605
8,093,662
2,357,797
2,967,257
127,872
58,480
1,606,433
3,022,885
45,034
73,390
(60,230)
13,160
31,874
DISTRILIMA
EDESUR
ENDESA CHILE
LUZ DE BOGOTÁ
CERJ
INVESTLUZ
2003
50,837,198
(31,263,110)
(19,495,401)
2002
48,563,725
(22,219,306)
(26,003,367)
2003
50,711,505
(14,186,987)
(30,560,505)
2002
65,006,965
(11,053,226)
(41,397,718)
2003
280,072,307
(320,914,687)
111,617,036
2002
355,730,731
(221,161,631)
(114,522,729)
2003
37,392,809
15,567,681
(15,843,549)
2002
85,185,679
(99,688,625)
(28,752,820)
78,687
-
341,052
-
5,964,013
-
12,556,021
-
70,774,656
(31,221,612)
20,046,371
9,131,221
37,116,941
(2,048,019)
(43,255,766)
(10,600,838)
2003
85,570,106
(11,892,411)
(23,083,381)
50,594,314
(59,813,803)
2002
67,572,188
(25,529,500)
(34,745,748)
2003
88,530,590
1,607,135
(29,479,537)
2002
43,221,769
(4,780,266)
(28,263,226)
7,296,940
958,674
60,658,188
(41,959,957)
10,178,277
(4,085,680)
78,687
341,052
5,964,013
12,556,021
39,553,044
29,177,592
35,068,922
(53,856,604)
(9,219,489)
8,255,614
18,698,231
6,092,597
1,038,441
928,224
13,952,428
2,423,093
124,093,634
94,916,042
29,399,933
89,791,864
13,225,613
7,909,928
8,231,615
8,313,931
FINAL BALANCE OF CASH AND CASH EQUIVALENT
41,622,182
7,100,605
2,295,952
2,357,797
64,921
127,872
1,821,174
1,606,433
3,395,411
45,034
1,117,128
1,269,276
19,916,441
14,979,114
163,646,678
124,093,634
64,468,855
35,935,260
4,006,124
16,165,542
26,929,846
14,406,528
Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 657 7533
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
www.enersis.cl
Santa Rosa 76, Santiago-Chile
(56 2) 353 4400 - (56 2) 378 4400
Fax: (56 2) 378 4788
2003 annual report Enersis
generated energy
42,929 GWh +4.6%
i
s
s
r
e
n
E
t
r
o
p
e
r
l
a
u
n
n
a
3
0
0
2
debt reduction
US$ 2,573 million -28.7%
distribution sales
49,677 GWh +4.2%
S A N T I A G O S T O C K E X C H A N G E
ENERSIS
N E W Y O R K S T O C K E X C H A N G E ( N Y S E )
ENI
L A T I N A M E R I C A N S T O C K E X C H A N G E
O F M A D R I D S T O C K E X C H A N G E ( L A T I B E X )
XENI
ENI
LISTED
NYSE
Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 657 7533
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
www.enersis.cl
Santa Rosa 76, Santiago-Chile
(56 2) 353 4400 - (56 2) 378 4400
Fax: (56 2) 378 4788
2003 annual report Enersis
generated energy
42,929 GWh +4.6%
i
s
s
r
e
n
E
t
r
o
p
e
r
l
a
u
n
n
a
3
0
0
2
debt reduction
US$ 2,573 million -28.7%
distribution sales
49,677 GWh +4.2%
S A N T I A G O S T O C K E X C H A N G E
ENERSIS
N E W Y O R K S T O C K E X C H A N G E ( N Y S E )
ENI
L A T I N A M E R I C A N S T O C K E X C H A N G E
O F M A D R I D S T O C K E X C H A N G E ( L A T I B E X )
XENI
ENI
LISTED
NYSE