S A N T A R O S A 7 6 , S A N T I A G O , C H I L E / T E L . ( 5 6 2 ) 3 5 3 4 4 0 0 , 3 7 8 4 4 0 0 / W W W . E N E R S I S . C O M
T
R
O
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E
R
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A
U
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A N N U A L R E P O R T
SANTIAGO STOCK EXCHANGE ENERSIS
NEW YORK STOCK EXCHANGE ENI
LATIN AMERICAN STOCK EXCHANGE OF MADRID STOCK EXCHANGE (LATIBEX) XENI
ENERSIS S.A. WAS CONSTITUTED WITH THE NAME OF COMPAÑÍA CHILENA METROPOLITANA
DE DISTRIBUCIÓN ELÉCTRICA S.A., AND ON AUGUST 1, 1988, THE COMPANY BECAME
KNOWN AS ENERSIS S.A.. THE CAPITAL OF THE COMPANY AMOUNT TO TH.CH$2,415,284,412,
DIVIDED INTO 32,651,166,465 SHARES. ENERSIS SHARES ARE TRADED IN CHILEAN STOCK
EXCHANGES, NEW YORK STOCK EXCHANGE IN THE FORM OF AMERICAN DEPOSITARY
RECEIPTS (ADR) AND IN THE LATIN AMERICAN STOCK EXCHANGE OF MADRID STOCK
EXCHANGE (LATIBEX). THE OBJECTS OF THE COMPANY ARE TO EXPLORE, DEVELOP,
OPERATE, GENERATE, DISTRIBUTE, TRANSMIT, TRANSFORM AND/OR SELL ENERGY IN
ANY OF ITS FORMS OR NATURE, IN CHILE OR ABROAD, EITHER DIRECTLY OR THROUGH
OTHER COMPANIES, AND ACTIVITIES IN TELECOMMUNICATIONS AND THE PROVISION
OF ENGINEERING IN CHILE OR ABROAD, AND ALSO HAS THE OBJECT OF INVESTING
AND MANAGING ITS INVESTMENTS IN SUBSIDIARY AND ASSOCIATE COMPANIES. ITS
TOTAL ASSETS WERE TH.CH$11,062,409,283 AT DECEMBER 31, 2006. ENERSIS CONTROL
A GROUP WHO OPERATE IN THE ELECTRICITY MARKET ON FIVE COUNTRIES IN LATIN
AMERICA. IN THE YEAR 2006 OBTAINED A NET INCOME OF TH.CH$285,960,366 AND AN
OPERATING INCOME OF TH.CH$805,366,156. EMPLOYEES: AT THE END OF 2006 IT GAVE
DIRECT OCCUPATION TO 11,784 PEOPLE, THROUGH ITS SUBSIDIARIES COMPANIES OVER
LATIN AMERICA.
ENERSIS MANAGEMENT
CHAIRMAN
PABLO YRARRÁZAVAL
PHONE (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
IGNACIO ANTOÑANZAS
PHONE (56-2)353 4510
COMMUNICATIONS OFFICER
JOSÉ LUIS 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
REGIONAL ACCOUNTING OFFICER
FERNANDO ISAC
PHONE (56-2) 353 4685
REGIONAL CHIEF FINANCIAL OFFICER
ALFREDO ERGAS
PHONE (56-2) 630 9130
REGIONAL PLANNING AND CONTROL OFFICER
MACARENA LAMA
PHONE (56-2) 353 4684
INVESTOR AND SHAREHOLDER RELATIONS
CHIEF INVESTMENTS AND RISKS OFFICER
RICARDO ALVIAL
PHONE (56-2) 353 4682
CITIBANK NY
RICARDO SZLEZINGER
PHONE (1-212) 816 6852
SANTANDER CENTRAL HISPANO INVESTMENT
ENRIQUE ROMERO
PHONE (34-91) 289 3943
enersis06
CHAIRMANS’ LETTER TO SHAREHOLDERS
HIGHLIGHTS OF 2006
THE COMpANy
OWNERSHIp AND CONTROL
SHARE TRANSACTIONS
DIVIDEND pOLICy 2007
INVESTMENT AND FINANCE pOLICy
MANAGEMENT AND HUMAN RESOURCES
BUSINESS ACTIVITIES
ELECTRICITy BUSINESS By COUNTRy
OTHER BUSINESSES
RISK FACTORS
ACTIVITIES OF THE COMpANy
ESSENTIAL FACTS
SUBSIDIARIES AND ASSOCIATE COMpANIES
DECLARATION OF RESpONSIBILITy
CONSOLIDATED FINANCIAL STATEMENTS
UNCONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS OF SUBSIDIARIES
2
6
8
11
14
17
19
22
33
38
60
68
71
79
94
118
121
257
295
Ralco, Chile
CHAIRMANS’
LETTER TO SHAREHOLDERS
Dear shareholder,
I have pleasure in presenting you the Annual Report of Enersis for the year 2006.
As the chairman of Enersis, head of ENDESA’s business in Latin America, I like to give a special welcome to all
our shareholders. As an energy holding company with headquarters in Chile, heading a group that is leader in
the Latin American region, we strive to improve our processes and management day by day in order to grow and
continue recompensing in the best possible way all those that support our business endeavors.
We are very satisfied with respect to Enersis’s performance during 2006, as the results show a net income after
tax of 285,960 million Chilean pesos, more than 300% higher than the year before.
This result reflects an important improvement in the operating income of Enersis, which increased by 29% to
1,068,042 million pesos.
It is also remarkable the positive effect, of 107,000 million pesos, on the Company’s results of the merger between
Chilectra and Elesur, plus the better non-operating result which improved by 10,932 million pesos.
These figures reflect the positive performance in 2006 in the Group’s two main businesses, electricity generation and
distribution, as consequence of the favourable economic conditions in the countries where we operate: Argentina,
Brasil, Colombia, Peru and, of course, Chile. This economic factor strongly stimulated the consumption of electricity
and therefore sales rose by approximately 20% in generation and transmission and 6% in distribution.
SUCCESSFUL ECONOMIC AND FINANCIAL INDICATORS
The strong operating improvement has led the Enersis’ EBITDA, one of the main indicators of the Company’s
progress, to increase by 23% to 1,490,519 million pesos during the year.
It is also worth mentioning the increase in the return on equity, which reached approximately 10% at the end of
2006, positively compared with the 2.6% recorded a year ago.
The good news are that these excellent results have been translated into a recognition by the financial markets,
clearly visible in the Enersis’ share price which rose by 53%, at the same pace with the ADR price rising by 45.6%,
during the year. The market capitalization of Enersis has therefore increased enormously in the last twelve months
to over 10,000 million dollars by the end of 2006.
2
| Annual Report 2006
CHAIRMANS’
LETTER TO SHAREHOLDERS
This solid financial, operational and commercial position, has also
been recognized by the international credit-rating agencies. On
December 14, Moody’s increased its rating for Enersis and our
subsidiary Endesa Chile to investment grade, from Ba1 to Baa3,
with stable outlook. This improvement reflects the higher financial
flexibility achieved by both companies. Enersis and Endesa Chile
are rated unanimously as investment grade companies by Fitch,
Standard & Poor´s and Moody´s.
ELECTRICITY BUSINESS
In the operating area, our electricity distribution companies in
the region continued presenting significant improvements in
their results as of December 31, 2006. The number of customers
served increased by over 350 thousand, which implies provide
electricity service to 11.6 million customers, the equivalent of
some 45 million inhabitants of Latin America.
Regarding energy losses, an important indicator in the distribution
business, these figures continued on a decline trend, recording
approximately 11% at the consolidated level, reflecting the efforts
made in applying medium and long-term plans and programs
in order to reduce losses in all the subsidiaries, with special
emphasis on Brazil where the indicators are substantially higher
than in other countries.
Electricity generation and transmission business recorded a
34% increase in operating income, mainly due to improvements
in Chile and Argentina.
Consolidated energy production was approximately 12%
Pablo Yrarrázaval Valdés
more than in the previous year, whereas installed capacity
President
reached 13,299 MW following the incorporation of 142 MW
of the Cartagena plant (Colombia), 387 MW from the merger
of Etevensa and Edegel (Peru), and 70 MW from the second
combined cycle of the Ventanilla plant (Peru).
Annual Report 2006 | 3
CHAIRMANS’ LETTER TO SHAREHOLDERS
INVESTMENTS
The Enersis Group considers that an essential part of its strategy is to deliver a service in line with the highest
quality standards in electricity distribution. Meeting this objective requires permanent investments in different
consumer segments, such as industrial, street lighting, commerce and homes, in order to keep their daily lives
not impaired.
Investments planned for the distribution business during the period 2007-2011 exceed 500 million dollars annually,
which are fully financed by our respective subsidiaries and contribute to meet reliable and on time the electricity
supplies for all the customers incorporated each year.
In addition to this plan, the Enersis Group intends to invest in new generating projects that contribute to the
development of the different countries in which it has a presence. In the case of Chile, our subsidiary Endesa Chile
is carrying out various projects that exceed 2,800 MW of capacity, where a special emphasis has been placed
on using our natural resources. In the area of renewable energies, the first wind-turbine generating farm will be
introduced to the Central Electricity Grid in the district of Canela, as well as the Ojos de Agua project which is a
mini hydroelectric plant located on a tributary of the Maule river. The Palmucho plant is also under construction
and will use the constant flow from the Ralco plant, and the San Isidro II plant is under construction to use liquefied
natural gas. Lastly, studies are being carried out for the important Aysén hydroelectric project that could meet a
large part of the growing electricity demand.
SOCIETY
Conscious of our actions in a society that, as ourselves as an organization, works to improve and grow, we have
participated in a wide range of activities, involving both the public and the private sectors, for making life in our
cities and countries more dignified and developed.
Enersis, together with its subsidiaries Endesa Chile and Chilectra, and the Fundación Endesa, Spain, have
continued to develop their ‘Illuminating Monuments in the South of the World’ program, an idea that allows to
provide ornamental lighting for religious buildings and monuments in order to add value to the buildings and
collaborate with the conservation of the cultural heritage.
During 2006, we illuminated eight buildings in Chile including the Moneda Palace Cultural Center, the Santiago
Cathedral crypt, the Evangelical Cathedral of Santiago, the Military Cathedral, Los Angeles Cathedral and the
Naval Museum in Valparaiso.
And to reaffirm our commitment, we recently in 2007, renewed an agreement with the Chilean Episcopal Conference
to continue with this program until the year 2011.
As Enersis, we have focused our contributions in Chile mainly on the cultural area. The most notable actions
were donations of libraries for children and young people in remote areas of the country, and the publication of
two books: ‘The last paths of the Huemul’ together with the Fundación San Ignacio del Huinay, and ‘Monumental
Light’ that gathers together the work carried out in illumination in Chile, Colombia and Peru.
4
| Annual Report 2006
AWARDS
Proof of our good corporate actions, knowing how to do our work well, is that we can proudly show off three
prizes won by Enersis during 2006: “Best Companies for Working Mother and Fathers” awarded by Fundación
Chile Unido together with the Ya magazine of the El Mercurio newspaper; the ‘City’ prize awarded by Fundación
Futuro to the Enersis Group for its program for Illuminating Churches in the South of the World; and the ‘Joint
Action Prize’ by the Chilean Safety Association, thanks to the innovative contributions made by Enersis’s Joint
Committee on Hygiene and Safety.
In additions to these awards, there were also those received by our main businesses. In the case of Endesa
Chile, the company won the Sofofa 2006 prize for Corporate Social Responsibility, and in the case of Chilectra,
won the Energy Efficiency Prize awarded by CIGRE, the Chilean Committee of the International Council of Large
Electricity Networks.
These prizes are a solid proof that our group of companies is acting correctly, being clear that as well as obtaining
good financial results, with the consequent returns for you, our shareholders, we are facing the respective
businesses with the society in which they operate.
All that I have mentioned was possible thanks to the great human team our Company has. I should therefore like
to thank all the personnel for the valuable collaboration and constant dedication.
The task that lies ahead is to continue working, giving the best personal and professional contributions, and
continuing to re-invent ourselves in our business so that our companies continue along the road to continuous
success that has characterized us in recent times.
Yours sincerely,
Pablo Yrarrázaval Valdés
Chairman
Annual Report 2006 | 5
HIGHLIGHTS
OF 2006
In March the General Shareholders
In August, Enersis organized the
In October the Board of Enersis
Meeting of Enersis appointed on a
Second International Conference
appointed Mr. Ignacio Antoñanzas
new Board, which is renewed every
for the Chilean Issuers, which was
Alvear as new CEO who assumed his
three years.
attended by over 200 people linked
position as on October 26th, 2006.
to the national and the international
financial markets.
The clients served by the distribution
The sales of energy in the generation
The Enersis Group is developing
companies of electrical energy of
and transmission business increased
various generation projects which
the Group increased by 3.2% to 11.6
by 19.2%, and in the distribution
surpass 2,800 MW, which includes the
million.
business grew by 5.5%.
significant Project of Aysen.
6
| Annual Report 2006
During the year, the International
During the year, regarding Fitch,
Enersis obtained three awards: ‘Best
Fi n a n c e C o r p o r at i o n (I FC) wa s
Moody’s y Standard & Poor’s upgraded
Company for Working Parents”; the
incorporated into the participation of
the classification and risk tendency in
prize “Ciudad”, for their program
the electrical holding Endesa Brasil.
Enersis, unanimously all reaching the
Lighting Churches in the South of
investment grade.
the World; and the “Premio Acción
Paritaria”, of the Chilean Association
of Security.
The consolidated operational result
The profits for the fiscal year greatly
The share value increased by 52.6%
of Enersis increased 28.9% reaching
increased to by 311.8%, reaching
during this year, to 169.68 pesos,
1,068,042 million pesos.
285,960 million pesos.
whereas the value of the ADS Grew
by 45.6%, to 16.00 dollars.
Annual Report 2006 | 7
THE COMpANy
8 | Annual Report 2006
NAME
LOCATION
ENERSIS S.A.
SANTIAGO, BEING ABLE TO ESTABLISH AGENCIES OR BRANCHES IN OTHER
PARTS OF THE COUNTRY OR ABROAD
KIND OF COMPANY :
PUBLICLY HELD LIMITED
TAX Nº
ADDRESS
TELEPHONES
FAX
PO BOX
WEB SITE
94,271,000 - 3
SANTA ROSA Nº 76, SANTIAGO, CHILE
(56-2) 353 4400 - (56-2) 378 4400
(56-2) 378 4788
1557, SANTIAGO
WWW.ENERSIS.CL
ELECTRONIC MAIL
INFORMACIONES@E.ENERSIS.CL
SECURITIES REGISTRY NO
Nº 175
EXTERNAL AUDITORS
DELOITTE & TOUCHE
SUBSCRIBED AND PAID CAPITAL (THCH$)
2,415,284,412
CHILEAN STOCK EXCHANGES TICKER CODE
ENERSIS
NEW YORK STOCK EXCHANGE TICKER CODE
ENI
MADRID STOCK EXCHANGE TICKER CODE
XENI
ADR PROGRAM CUSTODIAN BANK
BANCO DE CHILE
ADR PROGRAM DEPOSITARY BANK
CITIBANK N. A.
LATIBEX CUSTODIAN BANK
BANCO SANTANDER
LATIBEX LINK ENTITY
SANTANDER CENTRAL HISPANO INVESTMENT S.A.
CHILEAN CREDIT RATING AGENCIES
FELLER RATE AND FITCH
INTERNATIONAL CREDIT RATING AGENCIES
FITCH, MOODY´S AND STANDARD & POOR´S
CONSTITUTION DETAILS
amendment is that appearing in public deed dated April 13,
2006 signed before the Santiago notary Patricio Zaldívar
The company predecessor of Enersis S.A. was constituted
Mackenna, whose extract was inscribed in the Santiago
with the name of Compañía Chilena Metropolitana de
Trade Register (folio 15,343 No. 10,611) for 2006, and was
Distribución Eléctrica S.A., under public deed dated
published in the Official Gazette on April 22, 2006.
June 19, 1981 signed before the Santiago notary Patricio
Zaldívar Mackenna and amended by public deed dated
July 13 the same year and signed before the same notary.
CORpORATE pURpOSES
Its existence was authorized and its bylaws approved by
The corporate purposes of the company are to explore,
Resolution No.409-S of July 17, 1981 of the Superintendency
develop, operate, generate, distribute, transmit, transform
of Securities and Insurance (SVS). The extract of these two
and/or sell energy in any of its forms or nature, in Chile
documents was registered in the Santiago Trade Register
or abroad, either directly or through other companies,
(folio 13,099 No.7,269) for 1981, and was published in the
and activities in telecommunications and the provision of
Official Gazette on July 23, 1981. The bylaws have been
engineering in Chile or abroad. It also has the object of
the subject of various amendments. On August 1, 1988,
investing and managing its investments in subsidiary and
the company became known as Enersis S.A. The last
associate companies that are generators, transmitters,
Annual Report 2006 | 9
THE COMpANy
distributors or sellers of electrical energy or whose business
with management ser vices, financial, commercial,
is related to any of the following: (i) energy in any of its
technical and legal advice, auditing services and in general
forms or nature; (ii) the supply of public utilities or which have
services of any kind that appear necessary for their best
energy as their principal input; (iii) telecommunications and
performance.
information technology; and (iv) internet trading activities.
Apart from its principal corporate purposes and acting always
In compliance with its principal object, the company shall
within the limits set by the Investment and Financing Policy
develop the following functions: a) promote, organize,
approved by the ordinary shareholders’ meeting, the company
constitute, modify, dissolve or liquidate companies of any
may invest in i) the acquisition, exploitation, construction,
kind whose objects are related to those of the company; b)
rental, administration, intermediation, commercialization
propose investment, financing and commercial policies to
and disposal of all kinds of movable and immovable assets,
the subsidiary companies as well as accounting systems
directly or through subsidiary or associate companies, ii)
and criteria which they should follow; c) supervise the
all kinds of financial assets including shares, bonds and
performance of its subsidiaries; d) provide its subsidiaries or
debentures, trade paper and in general all kinds of securities
associate companies with the financial resources necessary
and contributions to companies, whether directly or through
for developing their businesses and provide its subsidiaries
subsidiary or associate companies.
10
| Annual Report 2006
Power Plant Rapel, Chile
OWNERSHIp
AND CONTROL
Annual Report 2006 | 11
OWNERSHIp AND CONTROL
OWNERSHIp STRUCTURE
The capital of the company is divided into 32,651,166,465 shares of no par value and all of the same and sole series.
As of December 31, 2006, the total number of shares were subscribed and paid, whose property was distributed as
follows:
SHAREHOLDER
Endesa Internacional S.A.
Pension Funds Administrators (AFPs)
ADR´s (Citibank N.A. Per Circular N° 1375)
Stockbrokers, Mutual Funds & Insurance Companies
Citibank Chile (Chapter XIV )
Foreign Investments Funds
Others
Total
NUMBER OF SHARES
19,794,583,473
6,088,088,095
2,791,284,650
2,110,306,154
611,256,799
274,628,613
981,018,681
32,651,166,465
%
60.62%
18.65%
8.55%
6.46%
1.87%
0.84%
3.00%
100%
IDENTIFICATION OF THE CONTROLLERS
In accordance with the definition in Title XV of Law 18,045, the controller of the company, Endesa S.A, Spain, holds 60.62%
of the share capital of Enersis through its control of Endesa Internacional S.A.
Endesa Internacional, S.A. on the other hand, is controlled in a 100% by Endesa S.A., Spanish society whose main
shareholders as of December 31, 2006, and in accordance with the publishes in the CNMV (National Commission of
the Market of Values of Spain, are: Grupo Entrecanales S.A. with 20.00%, Caja Madrid with 9.94% and AXA, S.A. with
5.35%.
12
| Annual Report 2006
THE TWELVE LARGEST SHAREHOLDERS OF THE COM pANy
As of December 31, 2006, Enersis was owned by 8,728 shareholders. The twelve largest were:
NAME
TAX Nº.
NUMBER OF SHARES
Endesa Internacional, S.A.
Citibank N.A. (Per circular 1375)
AFP Provida S.A.
AFP Habitat S.A.
AFP Cuprum S.A.
AFP Bansander S.A.
AFP Santa María S.A .
Citibank Chile Chapter XIV
Banchile Corredores de Bolsa S.A.
AFP Planvital S.A.
Larraín Vial S.A. Corredora de Bolsa
Ultra Fondo de Inversión
SUBTOTAL 12 SHAREHOLDERS
Other 8.716 shareholders
TOTAL 8.728 SHAREHOLDERS
59,072,610-9
97,008,000-7
98,000,400-7
98,000,100-8
98,001,000-7
98,000,600-K
98,000,000-1
97,008,000-7
96,571,220-8
98,001,200-K
80,537,000-9
96,966,250-7
19,794,583,473
2,791,284,650
1,952,198,706
1,518,357,657
863,954,735
848,566,411
690,445,050
611,256,799
429,730,676
214,565,536
185,024,008
133,903,238
30,033,870,939
2,617,295,526
32,651,166,465
MORE IMpORTANT CHANGES IN SHAREHOLDINGS
The more important changes in shareholdings in Enersis during 2006 were:
(%)
60.62%
8.55%
5.98%
4.65%
2.65%
2.60%
2.11%
1.87%
1.32%
0.66%
0.57%
0.41%
91.98%
8.02%
100.00%
NAME
TAX Nº
SHARES AT
31/12/2006
SHARES AT
31/12/2005
% CHANGE
Citibank N.A. (Per circular 1375)
97,008,000-7
2,791,284,650
3,068,642,900
AFP Provida S.A.
AFP Habitat S.A.
AFP Cuprum S.A.
AFP Bansander S.A.
AFP Santa María S.A.
Citibank Chapter XIV
98,000,400-7
1,952,198,706
1,802,617,868
98,000,100-8
1,518,357,657
1,324,577,958
98,001,000-7
863,954,735
919,861,776
98,000,600-K
848,566,411
663,086,985
98,000,000-1
690,445,050
667,574,861
97,008,000-7
611,256,799
572,445,448
Banchile Corredores de Bolsa S.A.
96,571,220-8
429,730,676
476,723,543
AFP Planvital S.A.
98,001,200-K
214,565,536
214,039,681
Larraín Vial S.A. Corredora de Bolsa
80,537,000-9
185,024,008
157,932,687
Ultra Fondo de Inversión
BCI Corredor de Bolsa S.A.
96,966,250-7
133,903,238
-
96,519,800-8
127,297,628
132,995,256
(9.04)
8.30
14.63
(6.08)
27.97
3.43
6.78
(9.86)
0.25
17.15
-
(4.28)
Annual Report 2006 | 13
SHARE
TRANSACTIONS
14
| Annual Report 2006
SHARES TRANSACTIONS IN STOCK EXCHANGES
The quarterly transactions during the last 3 years on the stock exchanges where Enersis shares are traded, in Chile, through
the Santiago Stock Exchange, as in Chilean Electronic Stock Exchange and Valparaiso Stock Exchange, and in the United
States of America and Spain, through the New York Stock Exchange (NYSE) and the Latin American Stock Market on the
Madrid Stock Exchange (Latibex) respectively, are detailed as follows:
SANTIAGO STOCK EXCHANGE
During 2006, 7,715 million shares were traded on the Santiago Stock Exchange, equivalent to Ch$1,069,304 million. The
closing share price at December was Ch$169.68.
SANTIAGO STOCK EXCHANGE
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
Quarter 2004
4th
1st
Quarter 2005
2nd Quarter 2005
3rd Quarter 2005
Quarter 2005
4th
1st
Quarter 2006
2nd Quarter 2006
3rd Quarter 2006
Quarter 2006
4th
UNITS
1,413,791,567
1,032,271,059
2,236,312,231
2,248,285,905
1,348,339,507
2,112,530,098
1,840,936,792
2,212,992,708
1,963,504,194
1,391,561,107
1,424,604,249
2,935,194,633
AMOUNT (CH$)
114,464,836,990
70,883,441,314
180,354,445,209
202,705,192,331
129,184,082,805
229,190,716,985
215,658,892,589
265,485,390,022
241,782,332,100
170,737,146,206
185,750,114,705
471,034,884,328
AVERAGE PRICE
80.96
68.67
80.65
90.16
95.81
108.49
117.15
119.97
123.14
122.69
130.39
160.48
CHILEAN ELECTRONIC STOCK EXCHANGE
During the year, 1,474 million shares were traded on the Chilean Electronic Stock Exchange, equivalent to Ch$203,251
million. The closing share price at December was Ch$169.75.
CHILEAN ELECTRONIC STOCK EXCHANGE
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
Quarter 2004
4th
1st
Quarter 2005
2nd Quarter 2005
3rd Quarter 2005
Quarter 2005
4th
1st
Quarter 2006
2nd Quarter 2006
3rd Quarter 2006
Quarter 2006
4th
VALPARAISO STOCK EXCHANGE
UNITS
534,792,384
219,310,562
565,021,305
763,885,464
254,172,086
476,168,653
498,204,288
569,457,331
363,061,858
280,361,371
278,723,806
551,462,369
AMOUNT (CH$)
43,742,052,276
16,749,908,612
44,917,950,788
68,403,030,387
24,362,432,413
51,910,060,501
58,397,117,390
68,028,424,373
44,427,922,583
34,161,027,229
36,216,066,265
88,445,858,217
AVERAGE PRICE
81.79
76.38
79.50
89.55
95.85
109.02
117.22
119.46
122.37
121.85
129.94
160.38
During the year, 44 million shares were traded on the Valparaiso Stock Exchange, equivalent to Ch$5,936 million. The
closing share price at December was Ch$167.70.
VALPARAISO STOCK EXCHANGE
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
Quarter 2004
4th
1st
Quarter 2005
2nd Quarter 2005
3rd Quarter 2005
Quarter 2005
4th
1st
Quarter 2006
2nd Quarter 2006
3rd Quarter 2006
Quarter 2006
4th
UNITS
17,400,165
15,688,115
12,719,018
12,601,377
21,367,282
12,853,040
9,405,452
21,499,005
11,090,794
7,727,889
8,279,320
16,427,067
AMOUNT (CH$)
AVERAGE PRICE
1,414,623,582
1,200,734,218
1,209,656,286
1,160,034,348
2,057,215,407
1,427,487,132
1,107,429,833
2,591,673,759
1,365,417,295
938,354,614
1,049,392,923
2,582,363,519
81.30
76.54
95.11
92.06
96.28
111.06
117.74
120.55
123.11
121.42
126.75
157.20
Annual Report 2006 | 15
SHARE TRANSACTIONS
NEW YORK STOCK EXCHANGE (NYSE)
Enersis shares began to be traded on the New York Stock Exchange (NYSE) on October 20, 1993. The ADR of Enersis
consists of 50 shares in the company and its ticker code is ENI. Citibank N.A. acts as the depositary bank and Banco de
Chile as the custodian in Chile.
During 2006, 79 million ADRs were traded in the United States of America, equivalent to US$994 million. The closing ADR
price was US$16.00.
NEW YORK STOCK EXCHANGE
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
Quarter 2004
4th
1st
Quarter 2005
2nd Quarter 2005
3rd Quarter 2005
Quarter 2005
4th
Quarter 2006
1st
2nd Quarter 2006
3rd Quarter 2006
Quarter 2006
4th
ADS
36,556,900
26,246,600
26,505,200
30,515,600
19,729,400
24,619,700
28,894,300
27,267,100
24,652,200
20,778,900
13,510,900
20,414,300
AMOUNT (US$)
AVERAGE PRICE
251,401,801
159,600,325
166,479,161
231,918,560
162,167,776
232,313,951
307,507,588
309,549,753
290,316,633
242,325,610
161,661,972
299,702,338
6.88
6.08
6.28
7.60
8.22
9.44
10.64
11.35
11.78
11.66
11.97
14.68
LATIN AMERICAN STOCK MARKET OF THE MADRID STOCK EXCHANGE ( LATIBEX )
The shares of Enersis began to be traded on the Latin American Stock Market of the Madrid Stock Exchange (Latibex) on
December 17, 2001. The trading unit (block) for the company is 50 shares and its ticker code is XENI. Santander Central
Hispano Bolsa S.A. S.V.B. acts as the link entity and Banco Santander as the custodian in Chile.
During 2006, 1.9 million blocks were traded on Latibex, equivalent to €18 million. The closing price was €12.08.
LATIBEX
1ro Quarter 2004
2do Quarter 2004
3er Quarter 2004
4to Quarter 2004
1ro Quarter 2005
2do Quarter 2005
3er Quarter 2005
4to Quarter 2005
1ro Quarter 2006
2do Quarter 2006
3er Quarter 2006
4to Quarter 2006
BLOCKS
AMOUNT(€$)
AVERAGE PRICE
599,507
665,930
713,812
589,448
590,534
559,731
449,276
499,837
472,690
479,532
433,281
475,391
3,288,305
3,377,061
3,688,468
3,455,069
3,711,369
4,172,973
3,916,131
4,829,056
4,652,963
4,411,956
4,059,131
5,367,646
5.49
5.07
5.17
5.86
6.28
7.46
8.72
9.66
9.84
9.20
9.37
11.29
SHARES TRANSACTIONS CONDUCTED By DIRECTORS
AND MAIN EXECUTIVES
SHAREHOLDER
TAX N°
BUYER/
SELLER
TRANSACTION
DATE
NUMBER
OF SHARES
TRADED
TRANSACTION
UNIT PRICE
TRANSACTION
TOTAL AMOUNT
Francisco Silva B.
y Cía. Ltda.
Inversiones Santa
Verónica Ltda.
78.134.200-9
Vendedor
27/9/06
1.070.738
146,00
156.327.748
79.880.230-5
Vendedor
27/9/06
2.000.000
145,50
291.000.000
PURPOSE
OF THE
TRANSACTION
Financial
Investment
Financial
Investment
RELATIONSHIP WITH
THE COMPANY
Relationship with Francisco Silva,
Ejecutivo
Relationship with Hernán
Somerville, Director
16
| Annual Report 2006
DIVIDEND pOLICy 2007
Annual Report 2006 | 17
DIVIDEND pOLICy
DISTRIBUTABLE EARNINGS
The following shows the distributable earnings for the year 2006:
Net income for the year
Amortizaction of negative goodwill
Net income
DIVIDEND pOLICy
THOUSAND CH$
285,960,366
(6,077,557)
279,882,809
The Board is willing to propose to the Ordinary Shareholders Meeting of Enersis, which be celebrated within the first four
months of 2008, a distribution of an amount equivalent to 70% of the net income for 2007.
In addition, the Board has the intention of distribute interim dividends against net income for the year 2007 of till 15% of
net income as of September 30, 2007, according to the financial statements at that date, being payable as of December,
2007.
The definitive dividend will correspond to the approved by the General Ordinary Shareholders Meeting that will take place
on first four months of 2008.
The Compliance of this program will keep conditioned, in terms of dividends, to the effective income, as well as the results
of projections periodically made by the company or the existence of certain conditions.
The following shows the dividends per share paid in recent years:
DIVIDEND
N°
69
70
71
72
73
74
KIND OF
DIVIDEND
Interim
Definitive
Definitive
Definitive
Definitive
Interim
DATE OF
CLOSING
20.11.98
11.05.99
19.04.01
14.04.05
28.03.06
19.12.06
PAID
DATE
26.11.98
17.05.99
25.04.01
20.04.05
03.04.06
26.12.06
Ch$ PER
SHARE
1.600000
4.000000
1.806391
0.416540
1.000000
1.110000
YEAR
CHARGED TO
1998
1998
2000
2004
2005
2006
SUMMARy OF SHAREHOLDERS’ COMMENTS AND pROpOSALS
No comments were received in Enersis with respect to the business between January 1 and December 31, 2006
from the majority shareholders or groups of shareholders representing 10% or more of the issued shares with voting
rights, in accordance with provisions of clause 74 of Law 18,046 and clauses 82 and 83 of the regulations of the
Corporations Law.
18
| Annual Report 2006
INVESTMENT AND
FINANCE pOLICy 2006
Power Plant San Isidro II, Chile
Annual Report 2006 | 19
INVESTMENT AND FINANCE pOLICy
The General Ordinary Shareholders Meeting held on March
21, 2006 approved the Investment and Finance Policy which
C) PARTICIPATION IN THE CONTROL OF THE AREAS
OF INVESTMENT.
is detailed below:
1. INVESMENTS
For the control of the areas of investment and according
to that established in the social objective of Enersis S.A.,
as is possible, the procedure will be as far as possible, the
A) AREAS OF INVESTMENT
following:
Enersis S.A. will make investments accordingly authorized
•
In the General Shareholders Meetings of the affiliate
by its by-laws, in the following areas:
companies, the proposed designation of directors to
participate in Enersis S.A., preferably should be drawn
• Contributions for investment or formation of affiliates
from among the directors or executives of the Company
or related companies whose activities coincides with,
and its affiliate companies.
or are related or linked to energy in any of its forms or
states or the supply of public services which use energy
•
Investment, financial, and commercial policies will
as a main resource.
be proposed to the affiliate companies; likewise
the systems and accounting criteria which must be
•
Investments consistent with the acquisition, exploitation,
followed.
construction, rental, administration, commercialization
and sale or transfer of all types of real estate, directly
•
Affiliate and related companies will be supervised.
or through affiliates.
• Other investments in all types of financial assets,
limits, so that investments or contributions made or
valuables and bearer securities.
planned do not vary from the norms and limits defined
•
A permanent control will be maintained regarding debt
as maximum investments.
B) MAXIMUM INVESTMENT LIMITS
2. FINANCING
The maximum investment limits for each investment area
A) MAXIMUM DEBT LEVEL
are the following:
•
Investments in electric sector affiliates, those needed
by a ratio of total debt/assets plus minority interest equal to
for these affiliates to fulfill their respective social
1.75 times the consolidated balance.
The maximum level of debt for Enersis S.A. will be given
obligations.
•
Investments in other affiliate companies, in such a way
that the sum of the proportions of the corresponding
fixed assets of the participation of each one of these
affiliate companies does not exceed the proportion of
the fixed assets corresponding to the participation of the
affiliates in the electricity sector, and of Enersis S. A.
20
| Annual Report 2006
B) THE ADMINISTRATION’S POWERS TO
AGREE WITH CREDITORS TO RESTRICT THE
DISTRIBUTION OF DIVIDENDS.
Restrictions regarding the distribution of dividends may
be agreed only if such restrictions have been previously
approved of by the General Shareholders Meeting (Common
and Extraordinary).
C) THE ADMINISTRATION’S POWER TO AGREE
WITH CREDITORS ON THE GRANTING OF PLEDGES.
The administration of the Company may agree with creditors
to grant real or personal pledges, in accordance with the law
and social statutes.
D) ASSETS ESSENTIAL FOR THE FUNCTIONING OF
THE COMPANY
The assets essential for the functioning of Enersis S.A. are
the shares represented by the contributions the former makes
to its affiliate Chilectra S.A.
In the event of the affiliate Elesur S.A. absorbs Chilectra
S.A. through a corporate merger and as a consequence
Chilectra S.A. is dissolved, for the effects of Law 3,500 it
will be declared that the shares issued by Elesur S.A. and
that Enersis S.A. may receive as a result of the merger
will be essential assets, and that from the date the General
Shareholders Meeting of Elesur S. A. and Chilectra
S.A. approve such merger. In any case, those General
Shareholders Meetings will take place within six months
from the date of approval of Investment and Financing Policy.
If that period of six months has passed and the General
Shareholders Meetings have not taken place to approve
the merger, the shares represented by the contributions that
Enersis S.A. makes to its affiliate Chilectra S.A. will continue
as essential assets.
Power Plant Ralco, Chile
Annual Report 2006 | 21
MANAGEMENT AND
HUMAN RESOURCES
22
| Annual Report 2006
BOARD OF DIRECTORS
CHAIRMAN
VICE CHAIRMAN
DIRECTOR
DIRECTOR
Pablo Yrarrázaval
Chairman of the Santiago
Stock Exchange
Tax Nº:5,710,967-K
Rafael Miranda
Industrial Engineer
Instituto Católico de Artes
e Industrias
(ICAI) de Madrid
Tax Nº: 48,070,966-7
Patricio Claro
Industrial Engineer
Universidad de Chile
Tax Nº: 5,206,994-7
Juan Ignacio de la Mata
Degree in Law
Universidad de Madrid
Tax Nº: 48,101,910-9
DIRECTOR
DIRECTOR
DIRECTOR
SECRETARY
Rafael Español
Degree in Law
Universidad de Barcelona
Tax Nº: 48,101,912-5
Hernán Somerville
Degree in Law
Universidad de Chile
Tax Nº: 4,132,185-7
Eugenio Tironi
Ph,D,in Sociology
L’Ecole des Hautes Etudes en
Sciences Sociales, Paris,
France
Tax Nº: 5,715,860-3
Domingo Valdés
Degree in Law
Universidad de Chile
Tax Nº: 6,973,465-0
Enersis is managed by a Board of Directors of seven
DIRECTORS’ REMUNER ATION
members who remain in their positions for a period of
three years and may be re-elected. The current board was
As required by clause 33 of the Corporations Law 18,046,
elected at the ordinary shareholders’ meeting held on March
and the XVI Article of By-Laws the ordinary shareholders’
11, 2006. In the board session on March 29, 2006, were
meeting held on March 21, 2006, agreed the remuneration
designed the Chairman, Vice-Chairman and Secretary of
of the board of Enersis for the year 2006.
the Board Directors.
Annual Report 2006 | 23
MANAGEMENT AND HUMAN RESOURCES
The amounts paid to Enersis directors as such, to members of the committee and to those that performed as directors of
subsidiaries during 2006 are as:
AS OF DECEMBER 31, 2006, IN PESOS *
EXERCISE
PERIOD
ENERSIS
BOARD
SUBSIDIARIES
BOARD
BOARD
COMMITTEE
AUDITING
COMMITTEE
SINCE-TILL
TITLE
DIRECTOR
01.01.06 - 31.12.06
Chairman
Pablo Yrarrázaval Valdés
Rafael Miranda Robredo
Vice Chairman 01.01.06 - 31.12.07
Rafael Español Navarro
Director
01.01.06 - 31.12.08
01.01.06 - 31.12.09
Juan Ignacio de la Mata Gorostizaga Director
Director
Hernán Somerville Senn
01.01.06 - 31.12.10
Director
Ernesto Silva Bafalluy
01.01.06 - 31.12.11
Director
Patricio Claro Grez
21.03.06 - 31.12.12
Eugenio Tironi Barrios
Director
01.01.06 - 31.12.13
TOTAL
GROSS Ch$
49,506,410
34,675,548
24,426,313
24,426,313
25,080,099
6,526,647
19,016,069
24,426,315
208,083,714
GROSS Ch$
-
-
-
-
-
-
-
-
-
GROSS Ch$ GROSS Ch$
-
-
2,638,813
2,638,813
1,986,461
652,352
-
-
7,916,439
7,932,541
-
-
-
7,932,541
1,304,198
6,628,343
-
23,797,623
* Gross amounts
BOARD ASSESSMENT EXPENSES
regulations and policies that guide our corporate governance
principles. The most important of these regulations and
There were no assessment expenses during 2006.
policies are the following:
CORPORATE GOVERNANCE
The Internal Regulations on Conduct in Securities Markets,
approved by the Board on January 31, 2002, defines the rules
Enersis is managed by its Executive Officers under the
of conduct that must be followed by members of the Board
direction of its Board of Directors which, in accordance
of Directors, senior management and other executives and
with the estatutos, or articles of incorporation or by-laws,
employees who, due to the nature of their job responsibilities,
consists of seven directors who are elected at an annual
may have access to sensitive or confidential information, with
regular shareholders’ meeting. Each director serves
a view to contributing to transparency and to the protection
for a three-year term and the term of each of the seven
of investors. These regulations are based on the principles
directors expires on the same day. Staggered terms are
of impartiality, good faith, placing the company’s interests
not permitted under Chilean law. If a vacancy occurs on the
before one’s own, and care and diligence in using information
board during the three-year term, the Board of Directors may
when acting in the securities markets.
appoint a temporary director to fill the vacancy. In addition,
the vacancy will trigger an election for every seat on the
The Charter Governing Executives (“Estatuto del Directivo”),
Board of Directors at the immediately succeeding Ordinary
approved by the Board on May 28, 2003, and the Employees
Shareholders’ Meeting. The current Board of Directors was
Code of Conduct, provide the rules governing dealings with
elected in March 2006 and their terms expire in March 2009.
customers and suppliers, and establish the principles that
The members of the Board of Directors do not have service
should be followed by employees , including ethical conduct,
contracts with Enersis or any of its subsidiaries that provide
professionalism and confidentiality. They also impose
benefits upon termination of employment.
limitations on the activities that our senior executives and
other employees may undertake outside the scope of their
Chilean corporate law provides that a company’s Board of
employment with us.
Directors is responsible for the management, administration
and representation of a company in all matters concerning its
The regulations and rules mentioned above reflect our core
corporate purpose, subject to the provisions of the company’s
principles of transparency, respect for stockholders’ rights,
by-laws and the stockholders’ resolutions. In addition to
and the duty of care and loyalty of the directors imposed
the by-laws, the Board of Directors of Enersis has adopted
by Chilean law.
24
| Annual Report 2006
COMPLIANCE WITH NYSE LISTING STANDARDS ON
CORPORATE GOVERNANCE
“non-control director”), it permits the Directors’ Committee
to be composed of a majority or even a unanimity of control
directors, if there are not sufficient non-control directors on
The following is a summary of the significant differences
the board to serve on the committee. Currently, our Directors’
between our corporate governance practices and those
Committee is composed of one non-control director and of
applicable to domestic issuers under the corporate
two directors appointed by the controlling shareholder.
governance rules of the New York Stock Exchange. Because
we are a “controlled company” under NYSE rules (a company
CORPORATE GOVERNANCE GUIDELINES
of which more than 50% of the voting power is held by an
individual, a group or another company), we would not, were
The NYSE’s corporate governance rules require U.S.-listed
we to be a U.S. company, be subject to the requirement that
companies to adopt and disclose corporate governance
we have a majority of independent directors, or nomination
guidelines. Although Chilean law does not contemplate this
and compensation committees.
practice, the Company has adopted the codes of conduct
INDEPENDENCE AND F UNCTIONS OF THE A UDIT
COMMITTEE
held on March 2006, approved the inclusion of articles in its
bylaws that govern the creation, composition, attributions,
described above, and its Special Shareholders’ Meeting
functions and retribution of the Directors’ Committeee and
Under the NYSE corporate governance rules, all members
the Audit Committee.
of the Audit Committee must be independent. We are subject
to this requirement as of July 31, 2005.
COMMITTEES AND O THER ADVISORY BODIES
Under the NYSE corporate governance rules, the audit
Directors’ Committee (Comité de Directores)
committee of a U.S. company must perform the functions
detailed in, and otherwise comply with the requirements of
The Directors’ Committee is composed of three members
NYSE Listed Company Manual Rules 303A.06 and 303A.07.
who are simultaneously directors of the Company. It performs
Non-U.S. companies have been required to comply with Rule
the following functions:
303A.06 beginning July 31, 2005, but are not required to
comply with Rule 303A.07. We do not currently comply with
• examination of Annual Report, Financial Statements and
Rule 303A.07, but as of July 31, 2005, we do comply with
the Reports of the External Auditors and Inspectors of
the independence and the functional requirements of Rule
the Accounts;
303A.06. As required by the Sarbanes-Oxley Act and the
• formulation of the proposal to the Board of Directors
NYSE corporate governance rules, on June 29, 2005, the
for the selection of external auditors and private
Board of Directors of Enersis created an Audit Committee.
rating agencies;
The Audit Committee is currently composed of three directors
• examination of information related to operations by the
meeting the applicable independence requirements of the
Company with related parties and/or related to operations
NYSE: Mr. Juan Ignacio de la Mata (Chairman), Mr. Rafael
in which the Company board members or relevant
Español and Mr. Hernán Somerville. Mr. Español is relying
executive officers may have personal interest;
on the exemption provided by Rule 10A-3(b)(1)(iv)(B), but
• examination of the compensation framework and plans
otherwise meets such independence requirements.
for managers and executive officers; and
• any other function mandated to the committee by the
As required by Chilean Law, Enersis also has a Directors’
by-laws, the board of directors or the shareholders of
Committee composed of three directors. Although Chilean
the company.
Law requires that a majority of the Directors’ Committee
(two out of three members) must be composed of directors
Pablo Yrarrázaval, Chairman of the Board, has also served
who were not nominated by the controlling shareholder
as chairman of this committee since July 31, 2002. The other
and did not seek votes from the controlling shareholder (a
members are Hernán Somerville and Patricio Claro.
Annual Report 2006 | 25
MANAGEMENT AND HUMAN RESOURCES
The Audit Committee (Comité de Auditoría)
Soluciones y Servicios IT Limitada (“Synapsis”), declaring
that meets the conditions of equality similar to those normally
The Audit Committee is composed of three independent
prevailing in the market. The Committee also examined the
members who also serve as directors of the Company. It
loan between Enersis S.A. and Elesur S.A. for an amount
performs the following functions:
of 200 million pesos and agreed that this transaction mets
conditions of equality similar to those normally prevailing
• submits a proposal for the appointment and compensation
in the market. The Directors’ Committee was also formally
of independent auditors at the Shareholders’ Meeting;
informed of the report of the external auditors on banking
• oversees the work of independent auditors;
business and money brokerage, as established in Circular
• pre-approves audit and non-audit services provided by
960 of the Superintendence of Banks and Financial
the independent auditors;
Institutions and of Securities and Insurance. In addition, the
• establishes procedures for receiving and dealing with
Directors’ Committee proposed to the board the appointment
complaints regarding accounting, internal control and
of the external audit firm Deloitte & Touche for the year
auditing matters.
DIRECTORS´COMMITTEE
2006 and agreed to propose to the board the appointment
of the firms Feller Rate Clasificadora de Riesgo Limitada and
Fitch Chile Clasificadora de Riesgo Limitada as the private
credit-rating agencies for domestic risk and the firms Fitch
In accordance with the provisions of clause 50 bis of the
Ratings, Moody’s Investors Service and Standard & Poor’s
Corporations Law 18,046, Enersis S.A. has a Directors’
International Ratings Services as the private credit-rating
Committee consisting of three members who have the
agencies for international risk of Enersis S.A. for the year
powers and duties set out in that clause.
2006. Finally, the Directors’ Committee approved the text
of the report to be presented to the Company’s ordinary
On March 29, 2006, the Company’s board appointed as the
shareholders meeting about the activities carried out by the
members of the Directors’ Committee Pablo Yrarrázaval
Committee during 2005, and the expenses it has incurred,
Valdés (related to the controller), Hernán Somerville
including of advisers, during that year.
Senn (related to the controller) and Patricio Claro Grez
(independent of the controller). The Committee, at its meeting
At the second meeting held on February 28, 2006, the
held on March 29, 2006, agreed to appoint Pablo Yrarrázaval
Directors’ Committee examined the expert reports published
Valdés as its chairman and Domingo Valdés Prieto as the
by Elesur S.A. and Chilectra S.A., the respective exchange
secretary.
equation and the financial statements of these subsidiaries,
with respect to the merger of these companies, and agreed
ACTIVITIES OF THE DIRECTOR’S COMMITTEE
to propose their approval to the board of Enersis S.A., in
order be voted favourably at the extraordinary shareholders
The Directors’ Committee met twelve times during 2006.
meetings to be held for this purpose.
It examined and approved information related to the
transactions referred in clause 89 of Law 18,046, and
The Committee, at its third meeting held on March 29, 2006,
reported on such transactions. The following specific matters
agreed to appoint Pablo Yrarrázaval Valdés as its chairman
were also dealt with at its meetings:
and Domingo Valdés Prieto as the secretary.
At its first meeting in the year, held on January 25, 2006,
At its fourth meeting on April 26, 2006, the unconsolidated
the Directors’ Committee examined the unconsolidated
and consolidated financial statements of the Company as
and consolidated financial statements of the Company
of March 31, 2006 were examined, including notes, Income
as of December 31, 2005 and their notes and material
Statement and Essential Facts.
information, as well as the reports of the external auditors
and inspectors of accounts. It also examined the terms of the
At its fifth meeting on May 31, 2006, the Directors’ Committee
services contracted for Datacenter, Support and Maintenance
examined a joint and several guarantee agreement to be
systems between Enersis S.A. and the subsidiary Synapsis
signed by Enersis S.A. with its Brazilian subsidiary Luz de
26
| Annual Report 2006
Río Limitada (Luz de Río) covering the subsidiary’s future
its subsidiary Chilectra S.A., and agreed that this agreement
obligations with the International Financial Corporation (IFC),
met conditions of equality similar to those normally prevailing
part of the World Bank group, in the context of the entry of IFC
in the market. The Committee also examined the terms of the
as a shareholder in Endesa Brasil S.A. The Committee also
rental agreement regarding an offices property at Marcoleta
agreed to report that the extension of the terms for certain
street number 634, Santiago, that Enersis S.A. will sign with
loans granted by Enersis S.A. and Enersis Internacional to
its subsidiary Endesa Inversiones Generales S.A., as these
the subsidiary Chilectra S.A. meets conditions of equality
terms meet conditions of equality similar to those normally
similar to those normally prevailing in the markets. It also
prevailing in the market.
examined the merger transaction of Endesa Brasil S.A.
(absorber company) and Endesa Internacional Energía
At its eight meeting on August 30, 2006, the Directors’
Limitada (absorbed company), making the respective capital
Committee examined the remuneration systems and
increase in Endesa Brasil S.A. and then immediately making
compensation plans of the managers and senior executives
a capital reduction in the same company, and declared that
of Enersis S.A.
this transaction met conditions of equality similar to those
normally prevailing in the market.
At its ninth meeting, held on September 27, 2006, the
Directors’ Committee examined information relating to the
At its sixth meeting on June 28, 2006, the president of the
transactions referred to in clause 89 of Law 18,046 made by
Committee explained the strategic alliance signed between
Enersis S.A. during the month of August 2006.
Enersis S.A. and Endesa, S.A. and its main contents. The
Directors’ Committee agreed to report that, based on the
At its tenth meeting on October 25,, 2006, the unconsolidated
information received, it was reasonable to agree to the
and consolidated financial statements of the Company
modifications proposed in order to preserve the strategic
as of September 30, 2006 were examined, together with
alliance. Consequently, the Directors’ Committee of Enersis
the notes and material information. The Committee also
S.A. considered it appropriate to qualify the modifications
examined the information related to a real-estate services
requested as convenient for the best corporate interests of
contract to be provided to Enersis S.A. by its real-estate
Enersis S.A., and that meet conditions of equality similar to
subsidiary Inmobiliaria Manso de Velasco Limitada (IMV),
those normally prevailing in the market. These modifications
and the signing of a money desk and treasury, accounting
consisted of replacing the prior notice foreseen in the fourth
and taxation services contract to be provided by Enersis S.A.
clause, No.1, of the strategic alliance, which is currently six
to its subsidiary IMV, and declared that this contract meet
months, by one of three months, and replacing the term of
conditions of equality similar to those normally prevailing
the automatic renewal foreseen in the same clause, which is
in the market. The Committee examined information
currently three years, to a period of one year. The Directors’
related to the amendment of the rental agreement, signed
Committee agreed to declare having examined the renewal
in January 2000 between Enersis S.A. and IMV, whereby
of the insurance policies of the Enersis Group through a
the Enersis Group stadium located at Carlos Medina street
captive reinsurance company scheme called Compostilla
858, Independencia, Santiago was rented to Enersis S.A.
Re, formed in Luxembourg by Endesa, S.A., as the market
by IMV, as this contract meet conditions of equality similar
quotes and methodology used in the tender and division of
to those normally prevailing in the markets. The Committee
the premiums enabled it to state that the contracting met
also examined information relating to the amendment of two
conditions of equality similar to those normally prevailing
service contracts for the use of the Enersis Group stadium
in the market.
signed between Enersis S.A. and IMV in January 2000, and
between Enersis S.A. and its subsidiary Chilectra S.A. in
At its seventh meeting, held on July 26, 2006, the Directors’
December 2002, and approved the signing of the contractual
Committee examined the unconsolidated and consolidated
amendments as these met conditions of equality similar to
financial statements of the Company as of June 30, 2006 and
those normally prevailing in the markets.
the report of the external auditors. It also examined the terms
of a contract for the sale of Site 29 and “Hijuela Oriente”, that
At its eleventh meeting on November 29, 2006, the Directors’
form part of the Buín electricity substation, by Enersis S.A. to
Committee agreed to take formal and express note of the
Annual Report 2006 | 27
MANAGEMENT AND HUMAN RESOURCES
internal control letter of Enersis S.A., dated November 27,
2006, prepared by the Company’s external auditors, Deloitte,
AUDIT COMMITTEE
as referred to in Circular 980 of the Superintendence of
The constitution of the Audit Committee was agreed by the
Securities and Insurance. It also examined and approved
board of Enersis S.A. at its meeting on June 29, 2005. The
the terms of the services contract for the implementation
Audit Committee is different compared to the Board and the
of the “Identities Management (IM) and Unique Connection
Directors’ Committee, required by the Corporations Law
LogOn (SSO)” project to be signed between Enersis S.A.
18,046. The Audit Committee is required by the United States
and its subsidiary Synapsis, and approved its signing, as the
Sarbanes Oxley Act and the complementary regulations
contract met conditions of equality similar to those normally
issued by the Securities and Exchange Commission (SEC)
prevailing in the markets.
and the New York Stock Exchange (NYSE), considering
that Enersis S.A. is an issuer of American Depositary
At its twelfth meeting held on December 14, 2006, the
Receipts (ADRs) which are duly registered with the NYSE,
Directors’ Committee examined the terms of the service
and an issuer of bonds registered in the United States of
contract for creating an information technology solution for
America. Its functions include: i) to be one of the proponents
configuring “Control Tables” especially designed for the
of the appointment of the external auditors to the ordinary
corporate finance and treasury management of Enersis S.A.,
shareholders meeting; ii) to be responsible for checking the
including the assignment of the right of use of the SAP BW
work of the company’s external auditors; iii) to pre-approve
software licences required for the operation of the solution, to
the external audit services and other services provided by
be signed between Enersis S.A. and its subsidiary Synapsis,
the external auditors; and iv) to set procedures for reception
as this contract met conditions of equality similar to those
and processing of claims in accounting, internal control or
normally prevailing in the markets. The Committee examined
auditing areas. The extraordinary shareholders meeting of
the contract for services and assignment of rights to use
Enersis S.A. held on March 21, 2006 amended the bylaws of
the respective software licences that Enersis S.A. will sign
the Audit Committee, regulating the generation, membership,
with Synapsis in order to implement a documents-entering
functioning and powers of this committee.
solution for the corporate treasury sub-management of
Enersis S.A., as the terms of the contract met conditions of
On March 29, 2006, the Company’s board appointed as
equality similar to those normally prevailing in the markets.
members of the Audit Committee of Enersis Juan Ignacio de
The Committee examined the terms of a services contract
la Mata Gorostizaga, Rafael Español Navarro and Hernán
for the implementation of a new cash budget system for the
Somerville Senn, who satisfied and declared satisfying the
Company’s treasury sub-management, to be signed between
requirements of independence required to the members of
Enersis and Synapsis, as the contract met conditions of
the Audit Committee by the United States Sarbanes Oxley
equality similar to those normally prevailing in the markets.
Act, the Securities and Exchange Commission and the New
Finally, the Committee agreed to approve the calendar for
York Stock Exchange, according to the applicable rules to
its ordinary meetings for 2007.
Enersis S.A.. The board also appointed Rafael Español
In conclusion, the Directors’ Committee of Enersis S.A. during
Audit Committee, at its meeting held on April 26, 2006, also
2006 has been fully committed to comply with the issues set
unanimously appoint Juan Ignacio de la Mata Gorostizaga
out in clause 50 bis of the Corporations Law 18,046 and has
as chairman of this committee and Domingo Valdés Prieto
Navarro as the Committee’s financial expert. Enersis’s
analyzed and contributed to the best outcome of the above
as the secretary.
analyzed transactions.
ACTIVITIES OF THE AUDIT COMMITTEE
DIRECTOR’S COMMITTEE EXPENSES
The Directors’ Committee in 2006 made no use of the
Committee examined the unconsolidated and consolidated
functioning expenses approved by the ordinary shareholders
financials statements of Enersis S.A. as of December 31,
meeting held on March 21, 2006. The Committee has not
2005, with their notes and material information, as well as the
needed to contract professional advisers for carrying out
reports of the external auditors of Enersis S.A. The chairman
At its first meeting held on January 24, 2006, the Audit
its duties.
28
| Annual Report 2006
of the Audit Committee explained that Enersis S.A. has been
and in accordance with the procedure for the Ethic Channel
preparing for more than a year a group of internal control
and the Treatment of Claims approved in accordance with
procedures in order to comply with the Sarbanes Oxley Act,
the Sarbanes Oxley Act, the Committee issued its opinion
giving a presentation of the work carried out by Enersis S.A.
on each of the claims presented and gave the directions
on this subject. The Committee took formal and express
to be followed in each case. Also in accordance with the
note of the internal control letter of Enersis S.A., dated
Sarbanes Oxley Act, the Committee agreed to pre-approve
November 30, 2005, prepared by the Company’s external
the contracting of certain auditing services and others un-
auditors, Deloitte & Touche, as referred to in Circular 980
related to auditing services to be provided by the external
of the Superintendence of Securities and Insurance dated
auditors.
December 24, 1990. The Committee also took formal note
of the report of Deloitte & Touche on banking business and
At its third meeting on July 25, 2006, the Audit Committee
money brokerage for the year 2005, issued on January 20,
examined the unconsolidated and consolidated financials
2006. The Committee agreed that it should be informed of
statements of Enersis S.A. as of June 30, 2006, with their
the result of each and every one of the investigations made
notes and material information and the report of the external
following complaints received since October 25, 2005 and
auditors. At the same time, and in accordance with the
that the Ethics Channel should contemplate direct information
procedure for the Ethics Channel and Treatment of Claims
to the chairman of the Audit Committee. In addition, and in
approved in accordance with the Sarbanes Oxley Act, the
accordance with Section 202 of the Sarbanes Oxley Act,
Committee issued its opinion on each of the claims presented
the Audit Committee agreed unanimously to pre-approve
and gave the directions to be followed in each case. Also in
to contract external audit services and those un-related to
accordance with the Sarbanes Oxley Act, the Committee
the external audit to be provided by the external auditors
agreed to pre-approve the contracting of certain auditing
and which were presented in that meeting for their pre-
services and others un-related to auditing services to be
approval. Likewise, and in accordance with Section 201(a)
provided by the external auditors
of the Sarbanes Oxley Act, the Audit Committee of Enersis
S.A. agreed to establish a procedure for the pre-approval
At its fourth meeting on October 24, 2006, the Audit
of professional services by the external auditors and submit
Committee examined the unconsolidated and consolidated
them for the final approval of the board. At the same meeting,
financials statements of Enersis S.A. as of September 30,
the Audit Committee agreed to propose the appointment of
2006, with their notes and material information. At the same
the firm of independent external auditors Deloitte & Touche
time, and in accordance with the procedure for the Ethics
for the year 2006. The Committee also approved the text
Channel and Treatment of Claims approved in accordance
of the report that should be presented to the Company’s
with that set out in the Sarbanes Oxley Act, the Committee
ordinary shareholders meeting concerning the activities
issued its opinion on each of the claims presented and
of the Committee during 2005, and the expenses it has
gave the directions to be followed in each case. Also in
incurred that year, including those of its advisers, introduced
accordance with the Sarbanes Oxley Act, the Committee
in the Annual Report of Enersis S.A. Finally, the Committee
agreed to pre-approve the contracting of certain auditing
approved the proposed Audit Committee expense budget for
services and others un-related to auditing services to be
2006, and agreed to submit it to the board and the ordinary
provided by the external auditors
shareholders meeting of Enersis S.A. for a final resolution
of this matter. It also approved the calendar of its ordinary
EXPENSES OF THE AUDIT COMMITTEE
meetings for 2006.
In its second meeting, held on April 26, 2006, the Audit
budget for its functioning expenses approved by the
Committee elected Juan Ignacio de la Mata Gorostizaga
ordinary shareholders meeting held on March 21, 2006. The
as its chairman and Domingo Valdés Prieto as secretary.
Committee has not required the services of professional
It also examined the unconsolidated and consolidated
advisers for carrying out its duties.
During 2006, the Audit Committee made no use of the
financials statements of Enersis S.A. as of March 31, 2006,
with their notes and material information. At the same time,
Annual Report 2006 | 29
MANAGEMENT AND HUMAN RESOURCES
SENIOR EXECUTIVES
CHIEF EXECUTIVE OFFICER
Ignacio Antoñanzas
Mines Engineer Universidad
Politécnica de Madrid
Tax Nº: 22,298,662-1
LEGAL COUNSEL
Domingo Valdés
Lawyer
Universidad de Chile
Tax Nº: 6,973,465-0
CHIEF REGIONAL FINANCE OFFICER
Alfredo Ergas
Business Administration Graduate
Universidad de Chile
Tax Nº: 9,574,296-3
CHIEF COMMUNICATIONS OFFICER
José Luis Domínguez
Civil Engineer
Pontificia Universidad Católica
de Chile
Tax Nº: 6,372,293-6
CHIEF REGIONAL PLANNING
AND CONTROL OFFICER
Macarena Lama
Tax Nº: 21,495,901-1
Agronomist
Escuela Técnica Superior de
Ingenieros Agrónomos de Madrid
CHIEF REGIONAL
ACCOUNTING OFFICER
Fernando Isac
Economist
Universidad de Zaragoza
Tax Nº: 14,733,649-7
CHIEF AUDITING OFFICER
Francisco Herrera
Civil Engineer
Pontificia Universidad Católica de Chile
Tax Nº: 7,035,775-5
CHIEF HUMAN RESOURCES OFFICER
Francisco Silva
Public Administration
Universidad de Chile
Tax Nº: 7,006,337-9
30 | Annual Report 2006
ORGANIZATION STRUCTURE
(cid:35)(cid:40)(cid:33)(cid:41)(cid:50)(cid:45)(cid:33)(cid:46)
(cid:48)(cid:65)(cid:66)(cid:76)(cid:79)(cid:192)(cid:57)(cid:82)(cid:65)(cid:82)(cid:82)(cid:199)(cid:90)(cid:65)(cid:86)(cid:65)(cid:76)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:35)(cid:47)(cid:45)(cid:45)(cid:53)(cid:46)(cid:41)(cid:35)(cid:33)(cid:52)(cid:41)(cid:47)(cid:46)(cid:51)(cid:192)
(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)
(cid:42)(cid:79)(cid:83)(cid:206)(cid:192)(cid:44)(cid:85)(cid:73)(cid:83)(cid:192)(cid:36)(cid:79)(cid:77)(cid:210)(cid:78)(cid:71)(cid:85)(cid:69)(cid:90)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:33)(cid:53)(cid:36)(cid:41)(cid:52)(cid:192)(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)
(cid:38)(cid:82)(cid:65)(cid:78)(cid:67)(cid:73)(cid:83)(cid:67)(cid:79)(cid:192)(cid:40)(cid:69)(cid:82)(cid:82)(cid:69)(cid:82)(cid:65)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:37)(cid:56)(cid:37)(cid:35)(cid:53)(cid:52)(cid:41)(cid:54)(cid:37)(cid:192)(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)
(cid:41)(cid:71)(cid:78)(cid:65)(cid:67)(cid:73)(cid:79)(cid:192)(cid:33)(cid:78)(cid:84)(cid:79)(cid:214)(cid:65)(cid:78)(cid:90)(cid:65)(cid:83)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:40)(cid:53)(cid:45)(cid:33)(cid:46)(cid:192)(cid:50)(cid:37)(cid:51)(cid:47)(cid:53)(cid:50)(cid:35)(cid:37)(cid:51)(cid:192)
(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)
(cid:38)(cid:82)(cid:65)(cid:78)(cid:67)(cid:73)(cid:83)(cid:67)(cid:79)(cid:192)(cid:51)(cid:73)(cid:76)(cid:86)(cid:65)
(cid:44)(cid:37)(cid:39)(cid:33)(cid:44)(cid:192)(cid:35)(cid:47)(cid:53)(cid:46)(cid:51)(cid:37)(cid:44)
(cid:36)(cid:79)(cid:77)(cid:73)(cid:78)(cid:71)(cid:79)(cid:192)(cid:54)(cid:65)(cid:76)(cid:68)(cid:206)(cid:83)
(cid:33)(cid:35)(cid:35)(cid:47)(cid:53)(cid:46)(cid:52)(cid:41)(cid:46)(cid:39)(cid:192)(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)(cid:192)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:50)(cid:37)(cid:39)(cid:41)(cid:47)(cid:46)(cid:33)(cid:44)(cid:192)
(cid:38)(cid:69)(cid:82)(cid:78)(cid:65)(cid:78)(cid:68)(cid:79)(cid:192)(cid:41)(cid:83)(cid:65)(cid:67)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:50)(cid:37)(cid:39)(cid:41)(cid:47)(cid:46)(cid:33)(cid:44)(cid:192)(cid:38)(cid:41)(cid:46)(cid:33)(cid:46)(cid:35)(cid:37)(cid:192)
(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)
(cid:33)(cid:76)(cid:70)(cid:82)(cid:69)(cid:68)(cid:79)(cid:192)(cid:37)(cid:82)(cid:71)(cid:65)(cid:83)
(cid:35)(cid:40)(cid:41)(cid:37)(cid:38)(cid:192)(cid:50)(cid:37)(cid:39)(cid:41)(cid:47)(cid:46)(cid:33)(cid:44)(cid:192)(cid:48)(cid:44)(cid:33)(cid:46)(cid:46)(cid:41)(cid:46)(cid:39)(cid:192)
(cid:33)(cid:46)(cid:36)(cid:192)(cid:35)(cid:47)(cid:46)(cid:52)(cid:50)(cid:47)(cid:44)(cid:192)(cid:47)(cid:38)(cid:38)(cid:41)(cid:35)(cid:37)(cid:50)
(cid:45)(cid:65)(cid:67)(cid:65)(cid:82)(cid:69)(cid:78)(cid:65)(cid:192)(cid:44)(cid:65)(cid:77)(cid:65)(cid:192)
REMUNERATIONS OF SENIOR EXECUTIVES
AND MANAGERS
INCENTIVE PLANS FOR SENIOR EXECUTIVES
AND MANAGERS
The total gross remunerations received by the above
Enersis has an annual bonus plan for its executives based on
mentioned senior executives and the rest of the managers
compliance of objectives and on the individual contribution
of Enersis, that do not report directly neither Chairman nor
towards the Company’s results. This plan includes a definition
Chief Executive Officer, for the exercise 2006, amounted to
of the range of bonuses according to the level of seniority of
Ch$ 2,581 million.
the executives. The bonuses paid to the executives consist
of a determined number of gross monthly remunerations.
INDEMNIFICATIONS PAID TO SENIOR EXECUTIVES
AND MANAGERS
During 2006, there was not indemnification payment made
by the company.
Annual Report 2006 | 31
MANAGEMENT AND HUMAN RESOURCES
DISTRIBUTION OF HUMAN RESOURCES
Enersis’ personnel distribution, including information regarding to subsidiaries within the five countries the Group operates,
as of December 31, 2006, was the following:
COMPANY
Enersis
Endesa Brasil (1)
Endesa Chile (2)
Chilectra (3)
Edesur
Edelnor
Codensa
Synapsis (4)
Cam (5)
Manso de Velasco (6)
Total
SENIOR
EXECUTIVES
PROFESSIONALS
AND TECHNICIANS
WORKERS
TOTAL
24
62
58
12
30
14
19
14
10
5
248
102
1,997
1,777
514
1,664
328
872
640
820
13
8,727
94
879
193
182
713
206
43
204
283
12
2,809
220
2,938
2,028
708
2,407
548
934
858
1,113
30
11,784
(1)
(2)
(3)
(4)
(5)
(6)
Includes: Ampla Energía, Coelce, CIEN, Cachoeira Dourada, Fortaleza, CTM and TESA.
Includes: Ingendesa, Pangue, Pehuenche, Celta, San Isidro, Central Costanera, El Chocón, Edegel, Emgesa, Betania, Enigesa and Túnel El Melón.
Includes: Empresa Eléctrica de Colina and Luz Andes.
Includes: Synapsis Chile, Synapsis Argentina, Synapsis Colombia, Synapsis Brasil and Synapsis Peru.
Includes: Cam Chile, Cam Argentina, Cam Brasil, Cam Colombia and Cam Peru.
Includes: Soc. Agrícola de Cameros Ltda., Aguas Santiago Poniente S.A., Agrícola e Inmobiliaria Pastos Verdes Ltda., Const. and Proyectos los Maitenes S.A.
32
| Annual Report 2006
BUSINESS ACTIVITIES
Annual Report 2006 | 33
BUSINESS ACTIVITIES
HISTORIC OVERVIEW
The electricity distribution business abroad has been
developed jointly with its subsidiary Chilectra, a company
On June 19, 1981 Compañía Chilena de Electricidad S.A.
involved in the distribution of electricity in the Metropolitan
created a new corporate structure, giving rise to a Holding
Region of Santiago, Chile.
Company with three subsidiaries. One of these was Compañía
Chilena Metropolitana de Distribución Eléctrica S.A. In
Enersis has developed its investments in the generation
1985, as a result of the privatization policy enacted for state-
of electricity in the country and abroad mainly through
owned companies by the Government of Chile, the transfer
its subsidiary Empresa Nacional de Electricidad S.A.
of the capital stock of Compañía Chilena Metropolitana de
(Endesa Chile).
Distribución Eléctrica S.A. to the private sector began. This
process concluded on August 10, 1987. Through this process,
In addition, the Company is present in businesses that
private pension funds (A.F.P.), the company’s workers,
complement its principal activities through majority equity
institutional investors and thousands of small investors
holdings in the following companies:
became stockholders of the Company. The organization
structure was based upon operating activities or functions in
Synapsis Soluciones y Servicios IT Ltda., involved in
which the achievements were evaluated on functions and its
supplying services and equipment related to information
profitability was limited by a scheme of tariffs, due to the fact
technology and data processing.
that the company was devoted exclusively to the distribution
of electricity.
Inmobiliaria Manso de Velasco Ltda., involved in the real
estate business, through the integral development of real
In 1987, the Board of Directors proposed a division of
estate projects and in the management, rental, purchase and
the various activities of the parent company. Thus, four
sale of the real estate holdings of Enersis and its subsidiaries
subsidiaries were formed enabling them to be run as separate
in Chile.
business units, each with its own objectives, and in this way
expanding the activities of the company into other non-
Compañía Americana de Multiservicios Ltda. (CAM),
regulated businesses, though still related to the core business.
which activities are related to business and other operations
This proposed division was approved by the Extraordinary
in networks for public service companies, preferably in the
Shareholders’ Meeting held on November 25, 1987, which
service of measuring systems for public utilities and as a
determined its new corporate purpose. As a result of the
purchasing agent, importer and exporter, and also seller
above, Compañía Chilena Metropolitana de Distribución
and supplier of materials for Enersis’ subsidiaries and
Eléctrica S.A. became an investment company.
third parties.
On August 1, 1988, under a resolution adopted by the
Shareholders’ Meeting held on April 12, 1988, one of the
INTERNATIONALIZATION
companies born out of the division changed its corporate
Enersis started its international expansion process during
name to Enersis S.A. The Extraordinary General Meeting
1992 through its participation in various privatizations in the
of Shareholders held on April 12, 2002 modified the corporate
neighboring countries in the continent, in this way establishing
purpose of the Company, introducing the activities in
a significant presence in the electricity sectors of Argentina,
telecommunications and the investment and management of
Peru, Colombia and Brazil.
companies involved in telecommunications and information
technology and brokerage via Internet.
In July 1992, Distrilec Inversora S.A., a company in which
Today, Enersis is one of the largest private electricity groups in
Distribuidora Sur S.A., Edesur, a company that distributes
Latin America, in terms of consolidated assets and operating
electricity in the city of Buenos Aires, Argentina. Subsequently,
income, achieved through stable and balanced growth in its
in December 1995, Enersis acquired a further 39% of this
electricity generating and distribution businesses, as well as
company and became its controlling shareholder.
Enersis holds a participation, was adjudicated Empresa
in other businesses related to these activities.
34
| Annual Report 2006
Between July 1994 and December 1995 and through
which it offered a price of 320 Chilean Pesos per share, the
Inversiones Distrilima S.A., Enersis purchased 60% of the
multinational company bought a further 32% of Enersis, which,
capital stock of Empresa de Distribución Eléctrica de Lima
added to the 32% acquired in August 1997, increased its final
Norte S.A., Edelnor, in Peru. Also that year, it acquired
shareholding to 64%. The transaction, concluded on April 7,
Edechancay, another Peruvian distribution company.
1999, involved an investment of US$ 1,450 million.
During 1996, Enersis ventured for the first time into the Brazilian
On May 11, 1999, Enersis acquired an additional 35% of
market, acquiring jointly with other partners an important
Endesa Chile, in which it already held 25%. Consequently,
part of the shares in Companhia de Eletricidade do Rio de
Enersis attained approximately 60% of the ownership of the
Janeiro S.A., Cerj, that distributed electricity in the city of Rio
generating company, becoming its parent company and
de Janeiro, Brazil. This company changed its name to Ampla
consolidating Enersis’ position as one of the leading private
Energía e Serviços S.A.
electricity groups in Latin America.
In 1997, Enersis participated successfully, through a
Important operations were carried out during 2000 that are
consortium, in the process of capitalization and subsequent
summarized as follows: the Company’s capital was increased
control of Codensa S.A. ESP, Codensa, a company involved
by US$ 520 million. Furthermore, US$ 1,400 million were
in the electricity distribution business in the city of Bogotá and
incorporated as a result of the sale of the subsidiarie, Transelec,
the Department of Cundinamarca, Colombia.
Esval, Aguas Cordillera and the real estate divestments, within
the strategic framework of the Genesis Plan.
At the beginning of 1998, Enersis ventured once again into the
Brazilian market. This time, through a consortium, which was
Significant investments were made during 2001: US$ 364
awarded the control of Companhia Energética de Ceará S.A.,
million to increase the company’s shareholding in Chilectra;
Coelce, a company that distributes electricity in the State of
US$ 150 million in the purchase of a 10% holding in Edesur,
Ceará in the north east of Brazil.
Argentina, which was owned by the company employees;
During 1999, Endesa S.A. (Spain) became the controlling
company Cerj (Ampla) and US$ 23 million to increase by 15%
shareholder of Enersis. Through a share purchase offer, in
the shareholding of Enersis in Río Maipo.
US$ 132 million to increase the participation in the Brazilian
Power Plant Ralco, Chile
Annual Report 2006 | 35
BUSINESS ACTIVITIES
During the year 2002, progress continued in Chile on the
Furthermore, in August, Endesa initiated the construction of
construction of the Ralco hydroelectric plant located in the VIII
the San Isidro II combined cycle thermoelectric plant, which
Region and in Brazil, of the Fortaleza Thermoelectric Plant in the
will have an installed capacity of 377 MW. Also, in October, it
State of Ceará. Furthermore, the second phase of the electricity
commenced the construction of the Palmucho hydroelectric
interconnection between Argentina and Brazil commenced
plant with 32 MW of power.
commercial operations, CIEN, achieving a transmission capacity
of 2,100 MW between the two countries.
During February 2006, Endesa Chile bought for approximately
US$17 million, the Termocartagena Plant (142 MW) in Colombia,
Also, Enersis strengthened the financial position of Ampla
which operates with either fuel oil or gas, and which has the
with the conversion of US$ 100 million of convertible bonds
ability of being converted into coal.
into equity and with a capital increase of US$ 100 million.
Furthermore, Enersis invested US$ 1.6 million to increase by
On March, Enersis informed to the Superintendency of Securities
1.73% its shareholding in Distrilima, the company through which
and Insurance about the merger between Elesur and Chilectra,
it controls Edelnor.
through the absorption of the former by the first one. The legal
effects started to be valid on April 1, 2006.
During the year 2003, Enersis carried out a capital increase
that permitted a rise in the Company’s equity base by more
On May, Endesa Chile started environmental base studies for
than US$ 2,104 million. With this operation, the shareholding
Hydro Aysén Project, located on XI Region of Chile which will
of Endesa (Spain) in Enersis fell to 60.62%.
finish on 2007 and in August constituted the company Centrales
In addition, the Company refinanced US$ 4,018 million with
between Edegel and Etevensa, was accomplished, the latter
various financial transactions such as new syndicated loans,
is subsidiary of Endesa Internacional. And as of September,
bond issues on the local and international markets, prepayment
Endesa Chile, jointly with ENAP, Metrogas and GNL Chile signed
of the “Jumbo II” loan and other minor operations. Finally,
the agreement which defines the structure of Proyecto Gas
Enersis sold assets worth US$ 757 million, which included
Natural Licuado (GNL), which is expected to solve the lack of
Hidroeléctricas de Aysén S.A.as of June, in Peru the merger
the Canutillar generating plant and the electricity distribution
gas from Argentina.
company, Río Maipo.
In 2004, the Company refinanced debts of US$ 2,100 million with
incorporation into Endesa Brasil, the IFC (International Finance
various financial transactions such as new syndicated loans,
Corporation), which contributed with US$50 million to the
Another relevant operation during 2006 was the new shareholder
bond issues on the local and international markets, prepayment
Brazilian Holding.
of the “Jumbo III” loan and other minor operations.
Finally, as of October 2006, the auction of electricity supply for
Also, the Ralco generating plant, a subsidiary of Endesa Chile,
the period 2009-2020 was closed and Chilectra made contracts
came on stream with a contribution of 690 MW of power.
for 49,720 GWh, which amounts the energy enough in order
to fulfill its contracts until year 2009, whereby Endesa Chile
In 2005, a Holding Company domiciled in Brazil was created, a
and subsidiaries achieved approximately 6,400 GWh per year,
subsidiary of Enersis S.A., by the name of Endesa Brasil S.A.
corresponding to the 100% of its bids and 59% of the total bids,
This new company was incorporated with all the assets that the
under a price close to US$65 per MWh.
Enersis Group and Endesa Internacional had in Brazil: CIEN,
Fortaleza, Cachoeira Dourada, Ampla, Investluz and Coelce.
GROWTH, RESEARCH AND DEVELOPMENT
Also during 2005, Endesa Chile, with the participation of
The principal objective of Enersis is to maximize the economic
Ingendesa, started drawing up the feasibility study of the projects
value of its equity through stable growth based on rigorously
on the Baker and Pascua rivers that will imply more than 2,400
evaluated and managed electrical businesses. The compliance
MW of new installed capacity for Chile. In March, Endesa Chile
with this objective is supported by an investment strategy focused
created the company, Endesa ECO S.A. whose corporate
on increasing the economic value of the subsidiaries and affiliate
purpose is to develop renewable energy in Latin America.
companies, as well as the acquisition of new companies.
36
| Annual Report 2006
In this context, Enersis has based its strategy on four
Regarding the third pillar, to have a better and healthier financial
fundamental pillars:
structure, the unanimous consensus should be noted from
the international credit-rating agencies, which in 2006 issued
•
•
Increase the profitability of the businesses
favorable reports on the financial position of our Group. For
Increase the value of the investment for its
example, Moody´s restored Enersis’ investment grade category,
shareholders
based on the financial improvements shown by the Company,
• Strengthen the balance sheet and financial position
its improved liquidity, and the recognition of a better business
• Take advantage of the best investment opportunities
environment in the region. For its part, Fitch also raised its rating
of Enersis based on its greater financial strength and better
Regarding the first pillar for development, our Company in
predictability of cash flows from its principal businesses. Lastly,
2006 continued to improve the returns of the main subsidiaries,
Standard & Poor´s raised the outlook of Enersis by placing the
both in electricity generation and in distribution. For example,
present rating under revision with positive implications, based
the returns on sales in both lines of business showed
on the Company´s improved performance.
important progress as a result of the permanent application
of improvements in production processes and the constant
Finally, with respect to the fourth pillar, investment
research carried out.
opportunities, Enersis is constantly evaluating the best options
for growth in both lines of business, in the countries where it
Regarding the second pillar, to increase the value of the
is currently operating. The Company rigorously evaluates the
investment for shareholders, remarkable was the more than
different options, bearing in mind the contribution they might
50% growth in the Company’s market capitalization. This
have on the previously-commented three pillars.
was the result of the better and more informed perception
that the market has internalized with respect to the prudent
A key factor in this matter involves performing investments
diversification of the businesses managed by Enersis. In fact,
that require significant amounts of experience, management
our Group capitalized well the growth shown by the economies
skills and operating capacities of Enersis and its subsidiaries.
of the five countries in which we operate, which impacted
This requirement means investing in companies in which its
favorably on the demand for energy, an essential element in
management and operation have a full involvement and the
the sustainability of development.
power to approve or reject its investment projects.
Baker River, Chile
Annual Report 2006 | 37
ELECTRICITy BUSINESS
By COUNTRy
38
| Annual Report 2006
ELECTRICITY GENERATION
Electricity generation is mainly carried out through our
subsidiary Endesa Chile. In this business, the Group has
subsidiaries operating in Chile, Argentina, Brazil, Colombia
and Peru.
In all, the installed capacity amounted to 13,299 MW as of
December 2006 and our consolidated electricity production
was 57,439 GWh in 2006, 12% more than the 51,116 GWh
produced in 2005.
In the electricity industry, the segmentation of the business
between hydroelectric and thermal generation is common as
the variable costs of generation are different for each form.
Thermal generation requires the purchase of fossil fuels
and hydroelectric generation needs water from reservoirs
and rivers.
64% of our consolidated generating capacity comes from
hydroelectric sources while the remaining 36% is thermal.
ELECTRICITY TRANSMISSION
For the Enersis Group, the electricity transmission business is
concentrated on the interconnection line between Argentina
and Brazil, through CIEN, a subsidiary of Endesa Brasil.
ELECTRICITY DISTRIBUTION
Our electricity distribution business is carried on through
Chilectra in Chile, Edesur in Argentina, Ampla and Coelce
(owned by Endesa Brasil) in Brazil, Codensa in Colombia
and Edelnor in Peru. Our principal subsidiaries and related
distribution companies sold 58,280 GWh during 2006.
Chilectra, Edesur, Edelnor, Ampla, Coelce and Codensa
serve the principal cities of Latin America and provide an
electricity service to over 11.6 million customers. These
companies face demand that is growing by around 6%
annually. This obliges them to invest constantly both in
expansion and in the maintenance of their facilities.
Annual Report 2006 | 39
ELECTRICITy BUSINESS By COUNTRy
ARGENTINA
INDUSTRY STRUCTURE
Law 24,065 of January 1992, the Argentine Electricity Law, divides
the electricity industry into three sectors. The generation sector is
organized on the basis of independent producers which compete in
selling their production on the Wholesale Electricity Market (MEM) or
under private contracts with other parties in the MEM. The transmission
sector is organized on a regulated basis which requires transmission
companies to operate, maintain and provide to third parties access to
their transmission systems and are authorized to charge a toll for the
transmission services. Transmission companies are forbidden from
generating or distributing electricity.
Distribution covers the transfer of electricity from the transmitters’ supply
points to the users. Distribution companies operate as geographic
monopolies, providing the service to almost all users within a specific
region. Distributors’ tariffs therefore are regulated and the companies
are subject to specified quality service . While distribution companies
can acquire from the MEM at seasonal prices or under contracts with
generating companies the electricity they need to meet their demand, all
prefer to buy electricity in the MEM as they are only allowed to transfer
to final customers the seasonal prices that reflect the average energy
spot price.
The Argentine electricity dispatch system, like that in Chile, is designed
to ensure that the least expensive electricity reaches the consumer.
The National Interconnected System (NIS) coordinates the generation,
transmission and distribution of electricity. Generating companies sell their
electricity to distribution companies, energy traders and large users in the
competitive MEM under freely negotiated contracts or on the spot market
at prices set by the Compañía Administradora del Mercado Mayorista
Eléctrico S.A. (CAMMESA) which is responsible for the operation of
the MEM.
All the generating companies that are in the common NIS fund operate
in the MEM. Distribution companies, energy traders and large users that
have supply contracts with the generating companies pay the contractual
price. The large users that contract directly with the generating companies
also pay to the distribution companies a toll for the use of their distribution
network. The seasonal price is that paid by distributors for the electricity
obtained in the common fund and is a fixed price that CAMMESA updates
every six months and adjusts every three months, and that the Secretary
for Energy approves according to supply, demand, available capacity
and other factors. The spot price is that paid to generating companies,
or paid by the energy traders that sell generating capacity, for the energy
dispatched under the administration of CAMMESA and for the capacity
that CAMMESA requires for maintaining adequate reserves. The hourly
spot price paid for energy reflects the marginal cost of generation.
40
| Annual Report 2006
GENERATION
Plant Costanera
Type
Installed Capacity
Plant Arroyito
Type
Installed Capacity
Plant El Chocón
Type
Installed Capacity
Thermal
2,319 MW
Hydro
120 MW
Hydro
1,200 MW
CÓRDOBA
MENDOZA
ROSARIO
BUENOS AIRES
NEUQUÉN
DISTRIBUTION
Edesur
Energy Sales
Clients
Energy Losses
14,837 GWh
2,195,914
10.5%
Annual Report 2006 | 41
ELECTRICITy BUSINESS By COUNTRy
ELECTRICITY GENERATION
Enersis participates in electricity generation in Argentina
In Argentina, other generators connected to the NIS include
through Endesa Chile and its subsidiaries Endesa
Piedra del Águila, Puerto, San Nicolás, Paraná, Alicura,
Costanera and El Chocón, with a total installed capacity
Genelba, Pichi Picún Leufú and TermoAndes.
of 3,639 MW. It has five plants, two of which are hydroelectric
and three thermal.
ENDESA COSTANERA
Enersis indirectly holds 38.5% of the share capital of
2,319 MW is steam-gas thermal and uses natural gas, fuel
Costanera and 28.5% of El Chocón.
oil and diesel oil as fuel for generating.
Located in the city of Buenos Aires, its installed capacity of
In 2006, the Group’s Argentine generating plants represented
Its capacity represented around 10% of the total installed
15% of the installed generating capacity of the Argentine
capacity on the MEM as of December 2006.
electricity grid.
Total electricity generation in Argentina was 104,341 GWh
is the largest of its kind in Argentina, and can operate with
in 2006, 11% more than in 2005, and our market share in
natural gas and diesel. Its 1,138 MW steam plant can operate
terms of generation was approximately 13%.
with natural gas or fuel oil.
The combined cycle II plant of 859 MW of Endesa Costanera
Of our total generation, hydroelectric represented almost
The net generation of Endesa Costanera was 8,709 GWh,
37%, higher than in 2005 as this year was relatively wet.
3.7% more than the year before.
Physical energy sales of the Group in Argentina were
CHOCÓN
13,926 GWh in 2006, of which 98% was generated by our
Located in the provinces of Neuquén and Río Negro, its
facilities.
installed capacity of 1,320 MW is hydroelectric from an
artificial reservoir that uses the waters of the Limay and
As of December 2005, Endesa Costanera and El Chocón
Collón Curá rivers.
have shareholdings in two new companies, Termoeléctrica
Manuel Belgrano S.A. and Termoeléctrica José de San
Its capacity represented around 5% of the total installed
Martín S.A., created to construct new generating facilities
capacity on the MEM as of December 2006.
in connection with FONINVEMEM.
Enersis and Endesa Chile also participate in the transmission
year enabled the company to break its generation record
and sale of electricity in Argentina through their related
established in 2001 (4,502 GWh), with a total of 5,041 GWh
companies, Compañía de Transmisión del Mercosur S.A.
in 2006, 28% higher than the previous year.
The continued favourable hydrological conditions of last
(CTM), the owner of the Argentine side of the interconnection
line with Brazil, CIEN, and CEMSA, a trading company
that has signed contracts with generators in Argentina for
exporting electricity from Argentina to Brazil and Uruguay.
42
| Annual Report 2006
ELECTRIC DISTRIBUTION
Enersis participates in electricity distribution in Argentina
It provides an electricity service to 2,195,914 customers,
through its subsidiary Edesur.
1.4% more than the year before. Of the total, 86.8% are
residential customers, 11.6% commercial, 1.2% industrial
Enersis directly and indirectly holds 65.4% of the share
and 0.4% other customers.
capital of Edesur.
Edesur has an exclusive concession for the distribution of
its end customers, representing a 5.8% increase over 2005.
electricity within a concession area for a period of 95 years
This was distributed 38.2% to the residential sector, 26.5%
from August 31, 1992. The concession consists of an initial
to the commercial sector, 10.3% to industry and 25.0% to
During 2006, energy sales amounted to 14,837 GWh to
period of 15 years and eight additional periods of 10 years
others.
each.
Energy losses declined by 10.5% in 2006.
The concession contract obliges Edesur to supply electricity
at the request of the owners or inhabitants of properties within
Regarding the tariff situation, with the publication in the
its concession area, meet certain quality standards regarding
Argentine Official Gazette of Decree 1959/06 of the National
the electricity supplied, meet certain operational requirements
Executive Power, the renegotiation agreement minutes that
regarding the maintenance of the distribution assets, and bill
Edesur and the Public Utilities Contracts Renegotiation Unit
customers on the basis of effective metering.
signed on February 15, 2006 were ratified.
The market share of Edesur in terms of physical sales was
Edesur will therefore receive an increase in its remuneration
17% in 2006.
for the first time since the devaluation of 2001, amounting to
28% and applicable to all tariff categories except for Tariff
Other distributors participating in the Argentine electricity
1 Residential.
system include Empresa Jujeña de Energía (EJESA),
Empresa de Distribución de Energía de Tucumán (EDET),
The coming into Effect of this Agreement is an important
Empresa Distribuidora de Energía de Santiago del Estero
event in the process of re-composition of the Company’s
(EDESE), Empresa Distribuidora y Comercializadora
economic-financial equation as it not only permits the first
Norte (EDENOR) and Empresa de Distribución de la Plata
increase in the remuneration of Edesur but establishes the
(EDELAP).
EDESUR
realization of a later Integral Tariff Revision that will enable
the Company to achieve a successful renegotiation of
its Contract.
The principal objective of Edesur is to distribute and
commercialize electricity in the southern part of the city of
Buenos Aires, comprising two-thirds of the Federal Capital
region and twelve districts of the province of Buenos Aires.
Its concession area covers 3,309 km2.
Annual Report 2006 | 43
ELECTRICITy BUSINESS By COUNTRy
BRAZIL
44
| Annual Report 2006
INDUSTRY STRUCTURE
The Brazilian electricity industry is organized in a large interconnected
electricity system called the National Interconnected System (Brazilian
NIS), which is comprised of electricity companies in most of the regions
and a small, isolated system in the northern region.
Generation, transmission, distribution and supply businesses are
separated by law.
Under the present regulatory framework, the principal regulatory authority
in the Brazilian electricity industry is the União, acting through the Ministry
of Mines and Energy, which has exclusive authority over the electricity
sector through its concessionary and regulatory powers. The regulatory
policies for the sector are implemented by the National Electricity Agency
(ANEEL), established in accordance with Law 9,427/96.
During recent years, the Brazilian electricity industry has suffered many
changes and transformations. In March 2004, federal laws 10,847 and
10,848 established a new model for the electricity sector in Brazil. The
new model intends to offer reduced tariffs to the customer and ensure
the expansion of the system, within EPE (Energy Inquiry Company), a
state entity responsible for the planning of generation and transmission
activities, which defines two spheres of contracting: the free and the
regulated environments.
As part of the regulations of the new model, the contracting of energy
by distributors for supplying their regulated customers should be done
through a centralized bidding process.
Another important change imposed on the sector is the separation of the
bidding process for “existing energy” and “energy from new projects”.
The plants in existence prior to 2000 are considered as “existing
energy” plants and those completed after 2000 are “energy from new
projects” plants.
The new model also established the separation of sector activities to
prevent distributors from participating in generation, transmission and
in other companies.
The first tender took place in December 2004 in which the energy that
the existing generating plants were going to produce was contracted with
the distributors for periods of five to eight years, and the first tender for
energy to be produced at future plants was held in December 2005.
The concessions law establishes three kinds of modifications regarding
the tariff in the supply of energy to end customers: the annual tariff setting,
the ordinary tariff correction and the extraordinary tariff correction.
GENERATION
Plant Fortaleza
Type
Installed Capacity
Thermal
322 MW
Plant Cachoeira Dourada
Type
Hydro
Installed Capacity
658 MW
DISTRIBUTION
Ampla
Energy Sales
Clients
8,668 GWh
2,316,251
Energy Losses
21.9%
Coelce
Energy Sales
Clients
6,769 GWh
2,543,257
Energy Losses
13.0%
TRANSMISSION
CIEN
Installed Capacity
Energy Sales
2,100 MW
6,394 GWh
BELEM
FORTALEZA
SALVADOR
BRASILIA
GOIANIA
RiO DE JANEIRO
SAO pAULO
Annual Report 2006 | 45
ELECTRICITy BUSINESS By COUNTRy
ENDESA BRASIL
Enersis participates in Brazil through Endesa Brasil. Enersis
Enersis also par ticipates in the transmission and
began to consolidate Endesa Brasil in October 2005, with a
commercialization of electricity through an interconnection
direct and indirect shareholding of 53.6%.
line between Argentina and Brazil, through CIEN.
The objective of the reorganization of all the assets in Brazil
CACHOEIRA DOURADA
was to simplify the organizational structure, thus permitting
Located in the state of Goias, 240 km. south of Goiania, its
greater efficiency, transparency in the flows and stability of
installed capacity of 658 MW is pass-through hydroelectric
local cash flows by being managed centrally, and thus reduce
and uses the waters of the Paranaiba river for generation.
financing costs. In addition, to improve the financing by third
parties and lastly to strengthen the Group’s positioning in
Its capacity represented approximately 0.7% of the total
considering new investment opportunities.
installed capacity on the NIS as of December 2006.
ELECTRIC GENERATION
The net generation of Cachoeira was 4,241 GWh, 19% more
Enersis participates in electricity generation in Brazil through
Endesa Brasil and its subsidiaries Cachoeira Dourada and
FORTALEZA POWER PLANT
than in the previous year.
Endesa Fortaleza, with two plants, one hydroelectric and
Located in the district of Caucaia, 50 km. from the capital of
one thermal, with a total installed capacity of 980 MW.
the state of Ceará, it is a combined-cycle thermal plant of 322
MW that uses natural gas and diesel-oil for generation.
In 2006, the hydroelectric generation plant contributed
approximately 1% of the installed capacity of the NIS.
Its capacity represented around 0.3% of the total installed
capacity on the NIS as of December 2006.
Enersis directly and indirectly holds 53.4% of the share capital
of Cachoeira Dourada and 53.6% of Endesa Fortaleza.
The gross generation was 248 GWh, 28% below the level
Total electricity generation in Brazil was 416,343 GWh
in 2006, 4% more than in 2005, and our market share in
of 2005.
CIEN
generation was approximately 1%.
This company permits the export and import of electricity
The Group’s hydroelectric generation represented almost
transmission lines with a total installed capacity of 2,100
94% of total generation in 2006.
MW which cover a distance of approximately 500 km., from
between Argentina and Brazil, in either direction. It has two
Rincón Santa María in Argentina to Itá in the state of Santa
The Group’s physical sales of energy in Brazil were 13,276
Catarina in Brazil.
GWh in 2006, of which 33% was own generation.
CIEN’s energy sales in 2006 were 6,394 GWh.
Other generators connected to the NIS include CHESF,
Furnas, Cemig, Electronorte, Cesp, Copel, Eletrobras
and Eletropaulo.
46
| Annual Report 2006
ELECTRIC DISTRIBUTION
Enersis participates in electricity distribution in Brazil through
The DAT network was introduced to 112,092 customers this
Endesa Brasil and its subsidiaries Ampla and Coelce.
year. At December, 361,952 customers were connected, the
objective being to reach 500,000 in the next few years.
Enersis directly and indirectly holds 69.9% of the share
capital of Ampla and 34.9% of Coelce.
Regarding the tariff situation, the average tariff adjustment
for Ampla was defined on March 13, with an increase
The market share of our subsidiaries in Brazil, in terms of
of 2.9%.
physical sales, was approximately 4%.
COELCE
The other electricity distributors in Brazil include CPFL,
This is the electricity distribution company of the state of
Brasiliana de Energía, AES Elpa, Cemig, Light, Coelba,
Ceará, in north-east Brazil, and covers a concession zone
and Copel.
AMPLA
of 148,825 km2. The company serves a population of more
than seven million people.
This is an electricity distribution company that covers 73.3%
The customers of Coelce number 2,543,257, of which 79.4%
of the area (32,054 km2) of the state of Rio de Janeiro. The
are residential, 5.6% commercial, 0.3% industrial and 14.7%
population of the area is around eight million living in 66
other sectors.
districts, the principal ones being Niteroi, São Gonçalo,
Petrópolis, Campos and the coastal area of Los Lagos.
Energy sales to December 2006 were 6,769 GWh, 2.9%
higher than in 2005. Of this total, 32.1% was to residential
It provides an electricity service to 2,316,251 customers,
customers, 18.5% to commercial, 17.3% to industrial and
4.5% more than the previous year. Of these, 89.7% are
32.1% to other customers.
residential, 7.1% commercial, 0.3% industrial and 3.0%
other customers.
During 2006, the company sold 8,668 GWh to its end
Total energy losses showed a significant improvement,
reducing from 14.0% in 2005 to 13.0% in 2006.
customers, representing a 6.0% increase over 2005. Of this,
Regarding the tariff situation and as defined in the
38.2% was sold to residential customers, 10.6% to industrial,
concession contract, supply tariffs were adjusted by 10.0%
18.5% to commercial and 32.7% to other customers.
on April 22, 2006. In April 2007, Coelce will be subject to the
second tariff revision cycle as foreseen in the distribution
The fight against energy losses obtained positive results
services concession contract.
in 2006, reaching the objective of containing the natural
increase in the loss ratio due to the aggressiveness of
the market. In terms of energy losses, these have fallen
by 2.5%, from 22.4% in December 2005 to 21.9% in
December 2006.
Annual Report 2006 | 47
ELECTRICITy BUSINESS By COUNTRy
CHILE
48
| Annual Report 2006
INDUSTRY STRUCTURE
The Chilean electricity sector is regulated by three government entities
that are responsible for the application of and compliance with the law:
the National Energy Commission (CNE), which has the authority to
propose the regulated tariffs (node prices) and to prepare indicative
plans for the construction of new generating units; the Superintendency
of Electricity and Fuels (SEC), which regulates and checks compliance
with the laws, regulations and technical standards for electricity
generation, transmission and distribution, liquid fuels and gas; and
the Ministry of the Economy which revises and approves the tariffs
proposed by the CNE and regulates the granting of concessions
to electricity generating, transmission and distribution companies,
following a report from the SEC.
According to the Chilean electricity law, generating companies have
to coordinate their operations through the Economic Load Dispatch
Center (CDEC) in order to operate each electricity grid at the lowest
cost while preserving service security. The CDEC therefore plans and
carries out the grid’s operation, including the calculation of the marginal
cost, the price of energy transfers between generators.
From a physical point of view, the Chilean electricity sector is divided
into four electrical systems: SIC (the Central Electricity System), SING
(the Northern Electricity Sistem), and two minor isolated systems in
Aysén and Magallanes.
The SIC, the principal electricity grid, is 2,400 km long, from Taltal
in the north to Quellón, on the island of Chiloé, in the south. With an
installed capacity of 8,561 MW as of December 2006, the system is
mainly hydroelectric, with 58% of the total, while thermal generation
contributes 42%. Peak demand on the SIC in 2006 was 6,064 MW and
sales were 38,259 GWh, representing an increase of 7%.
The SING covers the north of the country, from Arica to Coloso in the
south, covering some 700 km. This system, with an installed capacity
of 3,611 MW as of December 2006, is predominantly thermal. Peak
gross generation on the SING in 2006 was 1,774 MW and energy sales
were 12,027 GWh, representing an annual increase of 4%.
Regarding the tenders for long-term supplies carried out in 2006,
Endesa Chile and Chilectra were able to successfully carry out their
commercial commitments. It is expected that during 2007, the energy
tender processes imposed by the authority will continue.
ANTOFAGASTA
SANTIAGO
TALCA
LINARES
CONCEpCIÓN
GENERATION
Plant Tarapacá
Type
Installed Capacity
Plant Atacama
Type
Installed Capacity
Plant Tal - Tal
Type
Installed Capacity
Thermal
182 MW
Thermal
751 MW
Thermal
245 MW
Plant Diego de Almagro
Type
Installed Capacity
Thermal
47 MW
Plant Huasco
Type
Installed Capacity
Plant Los Molles
Type
Installed Capacity
Plant San Isidro
Type
Installed Capacity
Plant Rapel
Type
Installed Capacity
Plant Sauzal
Type
Installed Capacity
Plant Sauzalito
Type
Installed Capacity
Plant Cipreses
Type
Installed Capacity
Plant Isla
Type
Installed Capacity
Thermal
80 MW
Hydro
18 MW
Thermal
379 MW
Hydro
377 MW
Hydro
77 MW
Hydro
12 MW
Hydro
106 MW
Hydro
68 MW
Plant Curillinque
Type
Installed Capacity
Plant Loma Alta
Type
Installed Capacity
Plant Pehuenche
Type
Installed Capacity
Plant Bocamina
Type
Installed Capacity
Plant Abanico
Type
Installed Capacity
Plant Antuco
Type
Installed Capacity
Plant El Toro
Type
Installed Capacity
Plant Ralco
Type
Installed Capacity
Plant Pangue
Type
Installed Capacity
Hydro
89 MW
Hydro
40 MW
Hydro
566 MW
Thermal
128 MW
Hydro
136 MW
Hydro
320 MW
Hydro
450 MW
Hydro
690 MW
Hydro
467 MW
DISTRIBUTION
Chilectra
Energy Sales
Clients
12,377 GWh
1,437,381
Energy Losses
5.4%
Annual Report 2006 | 49
ELECTRICITy BUSINESS By COUNTRy
ELECTRIC GENERATION
Enersis participates in electricity generation in Chile through
Endesa Chile and its subsidiaries, the largest electricity
PEHUENCHE
company in the country in terms of installed capacity. It is
Located in Chile’s 7th Region, 60 km to the east of Talca, its
also involved in engineering services.
installed capacity of 695 MW is hydroelectric, with a reservoir
that uses the waters of the Melado river and waters from the
Enersis directly holds 60% of the share capital of
discharge of the Loma Alta plant, for its generation.
Endesa Chile.
The net generation of Pehuenche was 4,346 GWh, 7%
Endesa Chile and its subsidiaries Pehuenche, Pangue, San
more than the year before.
Isidro and Celta, own and operate a total of 22 generating
plants in Chile, 14 of them hydroelectric and 8 thermal plants
PANGUE
using coal, oil or natural gas, with a total installed capacity
Located in Chile’s 8th Region, 100 km to the east of Los
of approximately 4,477 MW, representing 37% of Chile’s
Angeles, its installed capacity of 467 MW is hydroelectric,
total installed capacity.
with an artificial reservoir that uses the waters of the Bío-Bío
The total electricity generation in Chile was 53,595 GWh
in 2006, 6% more than in 2005, and our market share in
The net generation of Pangue was 2,432 GWh, 9% more
terms of generation was around 37%.
than the previous year.
river for generation.
The Group’s hydroelectric generation represented 86% of
SAN ISIDRO
total generation in 2006.
Located in Chile’s 5th Region, 8 km from Quillota, its installed
capacity of 379 MW is thermal in combined cycle, using
The Group’s physical energy sales in Chile were 20,923
natural gas and fuel oil for generation.
GWh in 2006, of which 94% were own generation.
The net generation of San Isidro was 802 GWh, 32% more
Endesa Chile supplies electricity to the principal regulated
than the previous year.
distributors, large unregulated industrial companies (mainly
in the mining, wood-pulp and steel-making sectors) and on
CELTA
the spot market.
Located in Chile’s 1st Region, 65 km from Iquique, its
installed capacity of 182 MW is steam-gas thermal, using
The most important supply contracts of Endesa Chile with
coal and oil for generation.
regulated customers refer to its contracts with Chilectra
and CGE, the two largest distributors in Chile, and with
The net generation of Celta was 751 GWh, 96% more than
unregulated customers like Codelco and Inforsa, among
the previous year.
others.
Other generators connected to the Chilean electricity
grid include AESGener, Colbún, Electroandina, Edelnor
and Norgener, among others.
50
| Annual Report 2006
ELECTRIC DISTRIBUTION
Enersis participates in electricity distribution in Chile through
During 2006, the company sold 12,377 GWh to its end
its subsidiary Chilectra.
customers, representing a 4.4% increase over 2005.
This was distributed 27.3% to the residential sector,
En e r s i s d i r e c t l y h o l d s 9 9 % o f t h e s h a r e c a p i t a l
24.8% to commercial, 25.7% to industrial and 22.0% to
of Chilectra.
other sectors.
According to Chile’s tariff regulations covering the activities of
Chilectra bought 13,088 GWh of energy during 2006 from
electricity distributors, the service area of Chilectra is mainly
various generators which included AES Gener, 31.8%,
defined as one of high density and includes all the residential,
Endesa Chile, 32%, Colbún, 31.1% and others, 5%.
commercial, industrial, state customers and those that pay
tolls, plus Compañía Eléctrica del Río Maipo S.A.. The
Chilectra continued with its efforts to control energy losses
Santiago Metropolitan Region is a densely-populated area
in 2006, these being 5.4% at the end of 2006.
and has the largest concentration of industries, industrial
parks and commercial installations in Chile.
Regarding the tariff situation, Chilectra does not foresee
The market share of Chilectra, in terms of physical sales,
was 44%.
any changes until 2008.
As a result of the “Short Law II”, Chilectra periodically makes
open tenders for energy purchases in order to cover its
Other distributors participating in the Chilean electricity
customers’ long-term energy needs.
system include Empresa Eléctrica de Arica S.A.,Empresa
Eléctrica de Aysén S.A., Empresa Eléctrica EMEL S.A,
On April 18, 2006, Chilectra together with Empresa Eléctrica
Compañía Eléctrica del Río Maipo S.A., Sociedad Austral
de Puente Alto Ltda., Empresa Eléctrica de Colina Ltda.,
de Electricidad S.A., Empresa Eléctrica de la Frontera S.A.,
Luz Andes Ltda. and Empresa Eléctrica Municipal de Til
Compañía General de Electricidad S.A. and Luz Andes Ltda.,
Til, began a tender process for the supply of energy and
among others.
CHILECTRA
capacity for supplying their regulated customers for the
period 2009 - 2020. The tender contemplated a total of 4,500
GWh annually, which contracts were awarded on November
Chilectra is the largest electricity distribution company in
10, 2006.
Chile in terms of energy sales. It covers 33 districts of the
Metropolitan Region and its concession zone covers an area
On September 27, Chilectra, together with the companies
of 2,118 km2, including those of Empresa Eléctrica Colina
mentioned in the previous paragraph, began a second tender
Ltda. and Luz Andes Ltda.
process for the supply of energy and capacity for supplying
their regulated customers for the period 2011 - 2025. The
It provides an electricity service to 1,437,381 customers,
tender contemplated a total of 6,000 GWh annually, which
2.4% more than the year before. Of the total, 89.6%
contracts are expected to be awarded in August 2007.
corresponds to residential customers, 8.0% to commercial,
0.8% to industrial and 1.5% to other customers.
With the tenders mentioned, Chilectra has covered its
contracted demand until 2010.
Annual Report 2006 | 51
ELECTRICITy BUSINESS By COUNTRy
COLOMBIA
INDUSTRY STRUCTURE
The Colombia Electricity Law establishes certain principles for the
industry which are implemented by resolutions published by the
Electricity and Gas Regulation Committee (CREG) and other electricity
regulatory entities.
Prior to the publication of that law, the Colombian electricity sector
was heavily vertically integrated. The law separately regulates the
generation, transmission, commercialization and distribution (the
“Activities”). Any Colombian or international company can participate
in any of the Activities, but their participation has to be exclusively
limited to one of the Activities, although commercialization may be
combined with generation or distribution. The companies that were
vertically integrated when the law came into effect can continue to
participate in all the Activities in which they participated prior to the
effective date of the law, but have to keep separate accounting for
each activity.
The Ministry of Mines and Energy defines government policies for
the energy sector. Other entities that also play an important role
in the electricity industry are the Superintendence of Public and
Residential Services (SSPD), the CREG and the Mining and Energy
Planning Unit.
The only interconnected electricity system in Colombia is the National
Electricity Grid (Colombian NIS), formed by the generating plants,
interconnection network, regional and inter-regional transmission
lines, distribution lines and the electricity loads of the users.
The generating sector is organized on a competitive basis in which
generating companies sell their production on the spot market in a
common energy fund known as the Energy Exchange at the spot price
or through private long-term contracts with certain market participants
and unregulated users at freely-negotiated prices.
Purchases and sales of electricity are carried out through bilateral
transactions which can be made between generators, distributors,
traders and unregulated customers. However, the CREG has
been working since 2004 on a proposal to modify contracting
procedures in the Colombian market, to becoming an Electronic
Contracting System.
52 | Annual Report 2006
DISTRIBUTION
Codensa
Energy Sales
Clients
10,755 GWh
2,138,497
Energy Losses
8.9%
BARRANQUILLA
MEDELLIN
BOGOTA
CALI
NEIVA
GENERATION
Plant El Guavio
Type
Installed Capacity
Plant Termozipa
Type
Installed Capacity
Plant La Guaca
Type
Installed Capacity
Plant Charquito
Type
Installed Capacity
Plant La Junca
Type
Installed Capacity
Plant Tequendama
Type
Installed Capacity
Plant Limonar
Type
Installed Capacity
Plant Paraiso
Type
Installed Capacity
Plant La Tinta
Type
Installed Capacity
Plant Cartagena
Type
Installed Capacity
Plant Betania
Type
Installed Capacity
Hydro
1,163 MW
Thermal
236 MW
Hydro
325 MW
Hydro
20 MW
Hydro
20 MW
Hydro
20 MW
Hydro
18 MW
Hydro
277 MW
Hydro
20 MW
Thermal
142 MW
Hydro
541 MW
Annual Report 2006 | 53
ELECTRICITy BUSINESS By COUNTRy
ELECTRIC GENERATION
Enersis participates in electricity generation in Colombia
Other generators connected to the Colombian electricity
through Endesa Chile and its subsidiaries Emgesa
grid include Empresa Pública de Medellín, Isagen, Corelca,
and Betania, with a total of eleven plants, nine of them
EPSA and Chivor, among others.
hydroelectric and two thermal, with a total installed capacity
of 2,779 MW.
EMGESA
Enersis indirectly holds 14.1% of the share capital of Emgesa
Colombia, located close to the city of Bogotá. It has ten
This is the largest electricity generating company in
and 60.0% of Betania.
plants with a total capacity of 2,238 MW, among which is
the El Guavio 1,163 MW plant, the largest hydroelectric plant
In 2006, the generating plants accounted for 21% of the
in Colombia. It has just one steam-coal thermal plant which
country’s total installed capacity.
uses coal for generation.
Total electricity generation in Colombia was 52,340 GWh
Its capacity represented around 17% of the total installed
in 2006, 4% more than in 2005 and our market share, in
capacity of the Colombian grid at December 2006.
terms of generation, was approximately 24%.
The net generation of Emgesa was 10,360 GWh, 6% more
The Group’s hydroelectric generation represented 97% of the
than the year before.
total generation in 2006.Our physical generation depends
on the reservoir water levels and annual rainfall.
BETANIA
Apart from the hydrology conditions, generation depends on
MW is hydroelectric, with an artificial reservoir fed by the
our commercial strategy. The Colombian electricity market
waters of the Magdalena, Páez, Yaguará and other rivers,
Located 340 km south of Bogotá, its installed capacity of 541
is less regulated than the markets of the other countries in
for generation.
which we operate. Companies are free to offer their electricity
at the price determined by market conditions, instead of being
Its capacity represented around 4% of the total installed
obliged by a centralized operator entity to generate electricity
capacity of the Colombian grid at December 2006.
according to the system’s minimum marginal costs.
The net generation was 2,204 GWh, 5% more than the
The Group’s physical energy sales in Colombia
year before.
were 15,327 GWh in 2006, of which 81% was from own
generation.
54
| Annual Report 2006
ELECTRIC DISTRIBUTION
Enersis participates in electricity distribution in Colombia
Provides electricity services to 2,138,497 customers, 3%
through its subsidiary Codensa.
more than in 2005. Of the total, 88.6% are residential, 9.6%
Enersis directly and indirectly holds 21.7% of the share
capital of Codensa.
commercial, 1.7% industrial and 0.2% other customers.
During 2006, energy sales were 10,755 GWh to its end
customers, representing an increase of 6.6% over 2005.
Since 2001 Codensa has provided services to regulated
These were distributed 35.9% to residential, 14.6%
customers only . More than 9.5 million people, or around
commercial, 6.0% industrial and 43.5% to other sectors.
20.7% of the Colombian population, live in the service area
of Codensa.
Codensa acquired 41% of its energy in 2006 from Emgesa,
a generator controlled by Endesa Chile, and 59% from
Codensa’s market share, in terms of physical sales,
other suppliers.
was 23%.
Other distributors participating in the Colombian electricity
2006. Loss management is focused on metering, seeking
system include Empresa de Energía Cundinamarca,
greater effectiveness from loss inspections. Suburb
EEPP Medellín, Electrificadora de la Costa Atlántica and
electricity networks were also standardized through
Electrificadora del Caribe, among others.
‘micropimt’ programs.
Energy losses were reduced from 9.4% in 2005 to 8.9% in
CODENSA
Regarding the tariff situation, Codensa began to obtain
The company contributes and sells electricity in Bogotá and
remuneration for its high-tension assets associated with the
in 96 districts of the departments of Cundinamarca, Boyacá
Chía substation, whose additional revenues were received
and Tolima, comprising an area of 14,087 km2.
by the company from January 1, 2006.
Bogota City, Colombia
Annual Report 2006 | 55
ELECTRICITy BUSINESS By COUNTRy
PERU
56
| Annual Report 2006
INDUSTRY STRUCTURE
The regulatory framework of the Peruvian electricity industry is similar
to the Chilean one. In Peru, the Ministry of Energy and Mines defines
the policies of the energy sector and regulates matters related to
the environment. It is also responsible for the granting, supervision
and expiry and termination of licenses, permits and concessions for
generating, transmission and distribution activities. Other entities
that play an important role in the electricity industry are the Energy
Investment Supervisory Organism (OSINERG) and the System
Economic Operation Committee (COES).
Some of the most relevant features of the regulatory framework
applicable to the Peruvian electricity sector are: (i) the vertical
disintegration or separation of the three principal activities: generation,
transmission and distribution; (ii) freedom of prices for the supply
of energy on competitive markets and a regulated price system
based on efficiency principles, and (iii) the private operation of the
electricity interconnection systems subject to principles of efficiency
and service quality.
The Peruvian electricity sector consists of just one main grid system,
the National Electricity Grid (SEIN), plus many isolated and smaller
regional systems that provide electricity to rural areas.
Some technical standards were introduced in October 1997 to compare
service quality and conditions provided by electricity companies.
Effective October 1999, those companies not complying with the
minimum quality standards are subject to fines and tax surcharges
by the OSINERG, apart from the compensation mechanisms for
customers whose service did not meet the standards.
The Tariff Regulation Management is the executive arm of Osinerg,
responsible for proposing to its directive council the electricity tariffs,
and tariffs for the transportation of liquid hydrocarbons and natural
gas by pipeline, according to the criteria set out in the Electricity
Concessions Law and the regulations applicable to the Hydrocarbons
sub-sector.
The methodology used for dispatch and price setting for generators in
Peru is practically the same as that used in Chile. At the transmission
level, lines are divided into two systems, the principal and the
secondary, and electricity distribution tariffs are set on the basis of
voltage levels.
GENERATION
Plant Huinco
Type
Installed Capacity
Plant Matucana
Type
Installed Capacity
Plant Callahuanca
Type
Installed Capacity
Plant Moyopampa
Type
Installed Capacity
Plant Huampani
Type
Installed Capacity
Plant Santa Rosa
Type
Installed Capacity
Plant Ventanilla
Type
Installed Capacity
Plant Yanango
Type
Installed Capacity
Plant Chimay
Type
Installed Capacity
Hydro
247 MW
Hydro
129 MW
Hydro
75 MW
Hydro
65 MW
Hydro
30 MW
Thermal
229 MW
Thermal
457 MW
Hydro
43 MW
Hydro
151 MW
DISTRIBUTION
Edelnor
Energy Sales
Clients
Energy Losses
4,874 GWh
951,560
8.2%
CHICLAyO
TRUJILLO
LIMA
CUZCO
AREQUIpA
Annual Report 2006 | 57
ELECTRICITy BUSINESS By COUNTRy
Power Plant Ventanilla, Peru
ELECTRIC GENERATION
Enersis participates in electricity generation in Peru through
copper and gold production, which in turn reflect the higher
Endesa Chile and its subsidiary Edegel, with a total of nine
prices of those metals on the international markets.
plants with a installed capacity of 1,426 MW.
Enersis indirectly holds 19.8% of the share capital
in Peru, the competition can be considered to be all the
of Edegel.
generators connected to this system.
As the SEIN is the only interconnected transmission system
In 2006, our hydroelectric and thermal generating plants
Other generators connected to the Peruvian electricity grid
accounted for 30% of the country’s total installed capacity.
include Electroperú and Egenor, among others.
Total electricity generation in Peru was 24,763 GWh in
The market share of Edegel in terms of physical sales was
2006, and our market share, in terms of generation, was
30% in 2006 and contracted sales represented 91% of total
approximately 27%.
physical sales and spot market sales the remaining 9%.
The Group’s hydroelectric generation represented 63% of
EDEGEL
the total generation in 2006.
This company is located close to the city of Lima. It has nine
plants with a total capacity of 1,426 MW, two of which are
The Group’s physical energy sales in Peru were 6,766
thermal plants that use gas as their generating fuel.
GWh in 2006, of which 96% was from own generation. The
growing demand in Peru is partly due to the mining sector,
The net generation of Edegel was 6,662 GWh, 48% higher
whose increased electricity requirements reflect the growing
than in the previous year.
58
| Annual Report 2006
ELECTRIC DISTRIBUTION
Enersis participates in electricity distribution in Peru through
Edelnor provides electricity services to 951,560 customers,
its subsidiary Edelnor.
of which 93.7% are residential, 4.3% commercial, 0.1%
industrial and 1.9% other customers. The number of
Enersis directly and indirectly holds 33.5% of the share
customers increased by 27,000 in 2006.
capital of Edelnor.
Physical energy sales in 20 0 6 were 4,874 GWh ,
Edelnor is the electricity service concession holder for the
representing a 7.6% increase over 2005 as a result of
northern part of Metropolitan Lima and the province of Callao,
increased demand in the country. Of the total energy
as well as the provinces of Huaura, Huaral, Barranca and
sold, 36.3% relates to residential, 25.9% industrial, 18.9%
Oyón. It serves 52 districts exclusively and shares in another
commercial and 18.9% other customers.
5 districts with the distribution company for the southern
part of the zone. Edelnor’s concession mainly includes
Edelnor in 2006 bought energy mainly from Electroperú
Lima’s industrial zone and some densely-populated parts
(52.4%), Edegel (19.9%), Egenor (14.5%), Cahua (5.9%)
of the city.
and Eepsa (4.0%).
Edelnor’s market share, in terms of physical sales, was
Energy losses at December 2006 were 8.2%.
approximately 30%.
Other participants in Peru’s electricity distribution system
an amendment to the Electricity Concessions Law, seeking
include Luz del Sur, Electro Sur, ENOSA, ENSA and
to ensure the efficient development of electricity generation.
Regarding the tariff situation, Congress approved in 2006
Hidrandina, among others.
EDELNOR
The regulation thus accepts practically all the proposals of
the Ministry of Energy and Mines and of Osinerg concerning
tenders for long-term energy contracts with distributors, the
The concession zone granted to Edelnor covers a total area
planning of energy transmission and the restructuring of
of 2,440 km2, of which 1,838 km2 relate to northern Lima
the COES with the participation of independent and fully-
and Callao.
dedicated directors.
Annual Report 2006 | 59
OTHER
BUSINESSES
60
| Annual Report 2006
SyNApSIS
Synapsis Soluciones y Servicios IT Ltda. is an information
supporting business processes; the integration of services
technology (IT) professional services company. With
and products, and services of development, implementation
more than 19 years’ experience, it has positioned itself
and maintenance of information systems; construction and
as a Latin American leader in the field of IT solutions,
development of IT solutions for highly-available and complex
mainly in the services, energy, telecommunications and
business processes.
government markets.
Located in Santiago, Chile, it has offices in the principal
years toward companies that are un-related to Enersis,
cities of the region: Buenos Aires in Argentina; Rio de
this source last year providing a third of the company’s
The company has developed a policy of growth in recent
Janeiro, Fortaleza and a commercial office in Sao Paulo, in
revenues.
Brazil; Bogotá in Colombia and Lima in Peru, thus providing
coverage of a large part of the Latin America.
Synapsis continued with its growth strategy in 2006,
obtaining important new contracts and outsourcing renewals,
The most important areas of the business of Synapsis
in the areas of consulting and in the development of
relate to outsourcing and infrastructure services, data
software solutions, and made significant investments like
centers, contact centers, mass printing, remote services
the completion of the construction of the company’s data-
applications (ASP), and advice and implementation of
processing center in Fortaleza, Brazil, and the renovation
solutions in telemetries, remote control, security and location
of data-storage infrastructure in the processing centers in
of vehicles and telecommunications; consultancy in the
Chile, plus investment in the development of Synapsis’s
search for and implementation of technological solutions for
human resources.
Annual Report 2006 | 61
OTHER BUSINESSES
MANSO DE VELASCO
CAM
Inmobiliaria Manso de Velasco Ltda. focuses its business
Compañía Americana de Multiservicios Ltda. (CAM)
on real-estate development projects. During 2006, it made
focuses its business on providing integral, mass and multi-
important progress in the urbanization and sale of its principal
service solutions, mainly in operations related to the field of
project in the industrial sector (ENEA) and completed the
measurement, large works, market discipline, distribution
Puerto Pacífico residential project.
and commercialization network works and materials and
equipment logistics.
In addition, there is the Tapihue Project which contemplates
plots corresponding to land associated with the Tapihue,
The parent company in Chile and its subsidiaries in
Amancay (Plot B) and La Petaca farms.
Argentina, Brazil, Colombia and Peru, have consolidated
a regional presence, successfully expanding its customer
The business of Manso de Velasco also includes managing
portfolio in the electrical, sanitation, gas, industrial, mining
a total of 33,985 m2 of construction corresponding to office
and telecommunications sectors.
buildings and commercial offices which are mainly rented
to related companies and other parties.
CAM obtained its ISO 9001:2000 certification for all its
subsidiaries, thus complying with the corporate objective
of cultivating a culture oriented to quality, based on the
commitment to achieve organizational efficiency and
continuous improvement.
CAM was awarded contracts for US$77 million in 2006, of
which US$45 million is business with third party customers
and US$32 million with related companies.
62
| Annual Report 2006
DIRECT AND INDIRECT ECONOMIC INTEREST (*)
ARGENTINA
Costanera
El Chocón
Edesur
Cam Argentina
Gasoducto Atacama Argentina
Synapsis Argentina
CTM
TESA
CEMSA
Business
Gx
Gx
Dx
Ox
Ox
Ox
Tx
Tx
Tx
Ownership
38.5%
28.5%
65.4%
100.0%
30.0%
100.0%
53.6%
53.6%
27.0%
Endesa Brasil
Cachoeira Dourada
Fortaleza
Ingendesa Brasil
Cam Brasil
Synapsis Brasil
Ampla
Coelce
CIEN
BRASIL
Business
Gx, Dx, Tx
Gx
Gx
Ox
Gx
Ox
Dx
Dx
Tx
Ownership
53.6%
53.4%
53.6%
60.0%
100.0%
100.0%
69.9%
34.9%
53.6%
CHILE
COLOMBIA
Endesa Chile
Celta
Pangue
Pehuenche
San Isidro
Chilectra
Gasoducto Atacama Chile
Gasoducto Tal Tal
Electrogas
Ingendesa
Túnel El Melón
Cam
Synapsis
Inmobiliaria Manso Velasco
Transquillota
Business
Gx
Gx
Gx
Gx
Gx
Dx
Ox
Ox
Ox
Ox
Ox
Ox
Ox
Ox
Tx
Ownership
60.0%
60.0%
57.0%
55.6%
60.0%
99.1%
30.0%
30.0%
25.5%
60.0%
60.0%
100.0%
100.0%
100.0%
30.0%
Emgesa
Betania
Codensa
Synapsis Colombia
Business
Gx
Gx
Dx
Ox
Ownership
14.1%
60.0%
21.7%
100.0%
Edegel
Edelnor
Synapsis Perú
Cam Perú
PERÚ
Business
Gx
Dx
Ox
Ox
Ownership
19.8%
33.5%
100.0%
100.0%
Gx: Generation
Tx: Transmission / Trading
Dx: Distribution
Ox: Pipelines and Others
(*) It considers operating companies of the Group.
Annual Report 2006 | 63
(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:214)(cid:210)(cid:65)(cid:192)
OTHER BUSINESSES
ENERSIS GROUp STRUCTURE
(cid:37)(cid:78)(cid:68)(cid:69)(cid:83)(cid:65)(cid:192)
(cid:45)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:192)(cid:48)(cid:76)(cid:65)(cid:67)(cid:69)(cid:192)(cid:51)(cid:14)(cid:33)(cid:14)
(cid:17)(cid:21)(cid:14)(cid:16)(cid:16)(cid:5)
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64
| Annual Report 2006
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(cid:18)(cid:16)(cid:14)(cid:24)(cid:20)(cid:5)
(cid:21)(cid:16)(cid:5)
(cid:51)(cid:65)(cid:67)(cid:77)(cid:69)(cid:192)(cid:51)(cid:14)(cid:33)(cid:14)
(cid:16)(cid:14)(cid:16)(cid:16)(cid:16)(cid:16)(cid:18)(cid:20)(cid:5)
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(cid:18)(cid:14)(cid:18)(cid:23)(cid:19)(cid:20)(cid:20)(cid:24)(cid:5)
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(cid:35)(cid:65)(cid:67)(cid:72)(cid:79)(cid:69)(cid:73)(cid:82)(cid:65)
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(cid:21)(cid:22)(cid:14)(cid:21)(cid:25)(cid:20)(cid:16)(cid:16)(cid:23)(cid:5)
Annual Report 2006 | 65
OTHER BUSINESSES
ENDESA CHILE GROUp STRUCTURE
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66
| Annual Report 2006
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Annual Report 2006 | 67
RISK
FACTORS
68 | Annual Report 2006
Power Plant Betania, Colombia
Enersis is an investment society which assets correspond
hiring about the 70% of the capacity, reducing the exposure
mainly to the investment made through its subsidiaries. In
to sudden variations in the spot market during the periods
order to face our liabilities, we depend on the dividends,
of water scarcity.
credits payment of interests, capital reductions and other
payments in cash that we receive from our subsidiaries, in
If any of the regulatory authorities would impose a rationing
addition to our own capital stock and borrowing capacity.
policy resulting from the extremely adverse hydrological
conditions in the countries where we operate, the business
Given the nature of our business, as well as the geographical
and financial condition, as well as the operating incomes
diversity of our investments, there are different factors that
might be affected. However, the above mentioned conditions
might, eventually, threaten the stability of our business in
are permanently monitored by the business areas of each
some of the countries where we operate.
company in order to avoid the negative effects coming from
those circumstances.
However, the vast experience in the electrical business in
the Region trained us to search and apply all the possible
In Argentina, the low price imposed by the regulatory
preventive measures aiming at avoiding or minimizing
authorities in natural gas had a direct effect on production
contingencies or damages that might be motivated by
and investment in the natural gas deposits, which affected, in
external issues beyond our control.
turn, the availability of this fuel in the long and medium term
in Chile. The scarcity of natural gas may oblige the electricity
Even though usually the risk factors appear combined or
generating companies to use the most expensive fuel oil,
have correlated effects, only for the Annual Report herein
which would increase significantly the production costs.
we offer the following principal structure:
OPERATING / COMMERCIAL RISK
together with a low level of investments in the electrical
A strong demand of electricity in the central region of Chile,
sector, make this particular area in Chile to be exposed to
A significant part of the business of some of the above
the adverse effects of the Argentinean natural gas crisis.
mentioned subsidiaries depend on the hydrology conditions of
the area where they operate, and thus, the eventual drought
ECONOMICAL – FINANCIAL RISKS
conditions can have a negative impact in Enersis’ profitability.
Nearly 64% of our consolidated generating capacity in Latin
The ability of subsidiaries to pay dividends, interests, and
America is hydroelectric. Therefore, adverse hydrological
credits or make any other distributions is subject to certain
conditions may have a negative impact in the business and
legal limitations such as contractual restrictions, and
in the operating income.
exchange controls that might be imposed in any of the five
countries in which our subsidiaries have operations, and
During dreught periods, the electricity produced from thermal
depends, besides, on its operating income.
electricity plants is dispatched more frequently; this includes
the electricity coming from those generating plants that use
Furthermore, the results of Enersis’ subsidiaries and affiliates
natural gas, fuel oil and coal as fuel. Our operating costs
depend on the macroeconomic conditions of countries in
rise during those periods and, according to the scope of
which they operate. The growing rate of the product and the
the commitments engaged, it is possible that we have to
variation of the intensive added economic activity in electrical
purchase electricity to third parties in order to accomplish
consumption, have a great impact on the demand of energy
with the energy committed. The cost of these purchases
and, consequently, over the sales ratio. Likewise, inflation,
in the spot market may exceed the agreed price, causing
exchange rate and interests rates are important elements
therefore losses. Thus, our generating companies have
in determining the operating incomes of companies. In that
developed a wise business policy which consists basically in
sense, even though the spread of flows in five countries in
Annual Report 2006 | 69
RISK FACTORS
two lines of business constitutes a natural protection, the
POLITICAL/REGULATORY RISKS
Enersis Group uses financial products aimed at reducing
the eventual impact of dramatic changes in the exchange
Considering that most of the generation and distribution
and interest rates.
business constitute regulated activities, these are exposed
to changes in the regulations and tariffs made by the
The method in which we value the company’s overseas
authorities of the different countries where our subsidiaries
investments, according to the Chilean GAAP, forces us to
and affiliates operate. These may, in fact, impact on the
convert the non monetary assets and liabilities of our non
company’s revenues.
Chilean subsidiaries and related companies to the US dollar,
at historical exchange rates. Due to this accounting system,
In addition, the operating subsidiaries are subject to
it is possible that the balance sheet being reported does not
environmental regulations. At this respect, it is important to
include the effect of a devaluation of our non monetary assets
underline the permanent concern and commitment of the
in the countries where our subsidiaries and investments are
Enersis Group in this matter. In fact, each project must have
located, as the devaluation of the local currencies against
a rigorous environment impact study as essential background
the US dollar or the Chilean peso are not reflected. In
of its global evaluation. Subsequently, they are submitted
fact, in order to reduce the impact of the appreciations or
before the authorities in order to fully satisfy the institutional
devaluations of local currencies against the US dollar, it is
and legal requirements demanded by each country.
being promoted to denominate, on the merits of the case,
the debt of the subsidiaries in local currency.
Likewise, given the enforcement of the supply in concession
Finally, Enersis has debt subject to financial covenants and
our activities may be subject to regulatory fines for failing
other standard contractual restrictions related to the maximum
to comply with any of the regulations currently in force,
ratios on debt levels in cash flows, debt-EBITDA, debt-equity
including failures in the energy supply or problems related
areas, and as electric power is considered a basic input,
and cash flow ratios related to the financial cost. A significant
to its quality.
part of Enersis’ debt contains cross-default clauses that may
usually result in its anticipated payment when other debts
Some Latin American economies where Enersis have
amounted in more than 30 million dollars, individually, are not
investments undergone drastic and occasional interventions
paid. In case our creditors claim the immediate acceleration
from the government authorities. For example, the
of the payment of obligations, a significant part of our
Argentinean authorities have implemented a series of
indebtedness would become overdue.
measures for monetary and exchange control that affected
negatively the operating income and that could continue
However, the above mentioned situation has been balanced
having a negative impact.
by the current financial strength of Enersis, which resulted in
overdraft lines without any restriction for its withdrawal.
Even though the above mentioned risks are hard to anticipate,
Enersis is permanently monitoring the legal, juridical and
Finally, the permanent concern of the management, in terms
regulatory situation of that sector in order to evaluate the
of having a strong balance and a solid financial situation
tendencies that might result, in those cases, unfavorable
has been clearly ratified by the risk rating Agencies which,
for the business of the group in the region.
unanimously, raised Enersis ranking or its expectations.
70
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ACTIVITIES
OF THE COMpANy
Annual Report 2006 | 71
ACTIVITIES OF THE COMpANy
FINANCIAL ACTIVITIES
LOCAL FINANCES
As of December 2006, the Enersis Group had a total financial
In November 2006, the market capitalization of Enersis
debt of 6,951 million dollars. Of this, 3,857 million dollars
exceeded 10 billion dollars for the first time.
was of Endesa Chile consolidated and 3,094 million dollars
of Enersis and its foreign subsidiaries. This debt was mainly
In November 2006, the Yankee bond of Enersis matured, for
composed of bank debt and locally- and internationally-
300 million dollars, which was financed from the available
issued bonds.
revolving credit facility. With this, the amount drawn as of
TOTAL DEBT
Enersis Individual
Endesa Chile Individual
Other Generation Companies
Other Distribution Companies
Total (MMUS$)
ENERSIS INDIVIDUAL
Banks
International Bonds
Local Bonds
Total (MMUS$)
ENDESA CHILE INDIVIDUAL
Banks
International Bonds
Local Bonds
Total (MMUS$)
Dec / 06
1,147
2,378
1,526
1,900
6,951
315
766
66
1,147
185
1,866
327
2,378
December was 315 million dollars.
In December 2006, Enersis and Endesa Chile signed new
revolving credit facilities for 200 million dollars each, without
Material Adverse Effect clauses for drawings. The facilities
are for a 3-year term and serve to increase the companies’
liquidity. The interest rate is Libor+25 bps. The same month,
and partly due to the flexibility provided by these facilities,
the credit-rating agency Moody´s improved its ratings for
Enersis and Endesa Chile to Baa3, thus restoring investment
grade status by the three rating agencies that evaluate
the Company.
The financial debt as of December 2006 shows an increase
over December 2005 mainly due to the consolidation of the
Peruvian generating company Etevensa-Edegel.
INTERNATIONAL FINANCES
Chile
During 2006, the foreign subsidiaries of the Enersis Group
In January 2006, Endesa Chile signed a new 5-year credit
have continued to refinance their debt to improve its
facility for 200 million dollars at an interest rate of Libor+30
pricing conditions and term, taking advantage of the better
bps. This financed the repayment of the Yankee bond for
macroeconomic and industry conditions. They have also
300 million dollars that matured in April.
continued to seek financing in local currency and at longer
term, to the extent that their operating cash flows are in those
In July 2006, the domestic bond of Endesa Chile, for
currencies and that the market conditions are reasonable.
approximately 200 million dollars, matured which was
financed from the company’s own cash flow.
Consequently, the year 2006 saw refinancing transactions
like new issues for the equivalent of around 1,616 million
In June 2006, the generating companies Edegel (a
dollars, of which 202 million dollars were in Argentina, 935
subsidiary of Endesa Chile) and Etevensa (a subsidiary of
million dollars in Brazil, 326 million dollars in Colombia and
Endesa Internacional) were merged, causing an increase in
153 million dollars in Peru.
consolidated debt of approximately 150 million dollars.
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| Annual Report 2006
Particularly notable were the following transactions:
Perú
Argentina
Edelnor placed domestic bonds for a total equivalent to 53
million dollars with terms of between 3 and 10 years, used
El Chocón obtained a 5-year bank loan for 100 million dollars
to refinance debt. Edelnor also contracted interest-rate
to refinance all its financial debt. Edesur refinanced bank
swaps for 25 million dollars. Edegel managed to refinance
debt repayments for approximately 50 million dollars with
short-term bank debt at 3 years for 44 million dollars. It also
a local-currency syndicated loan with a 3.5-year term. The
issued domestic bonds for a total of 25 million dollars with
company also refinanced a bank loan for around 17 million
terms of between 4 and 7 years. These issues were used
dollars for 3 years. These transactions have permitted the
to refinance debt maturing during the year and were made
continuation of the plan to lengthen the average life of the
on more attractive pricing conditions.
debt in Argentina.
Brasil
COVERAGE POLICIES
CIEN refinanced debt for approximately 280 million dollars
Exchange rate
with a local-currency syndicated loan, for a 6-year term
The Group’s exchange rate hedging policy in based on
with 3 year’s grace. Ampla issued domestic debentures
cash flows and is intended to maintain a balance between
at a 6-year term for approximately 173 million dollars, to
dollar-indexed flows and the level of assets and liabilities in
refinance bank debt, and signed an agreement with Bndes
that currency. During 2006, Enersis, in consolidated terms,
for the equivalent of 140 million dollars at a 5.5-year term to
contracted exchange rate swaps for approximately 175 million
finance investments. All these facilities have enabled Ampla
dollars, which enabled it to maintain a level of dollar debt
to reduce the cost of its debt and lengthen its maturities.
meeting its expected flows in that currency.
Fortaleza obtained financing led by the International Finance
Corporation (IFC) for approximately 130 million dollars for 10
This policy also sets mis-matching accounting limits
years to refinance debt, and also contracted an interest-rate
for Enersis and Endesa Chile consolidated for which it
swap for approximately 22 million dollars. Coelce contracted
occasionally needs to contract short-term cover. During
an exchange rate swap for 50 million dollars, permitting
2006, the Company contracted forwards for approximately
the transformation of a dollar debt into local currency, and
236 million dollars. Following the actions taken during the
signed two loan agreements for a total of approximately 90
year, the levels of accounting mis-matches remained within
million dollars to finance investments. At the Endesa Brasil
the limits set in the Company’s policies.
level, notable was the incorporation of IFC as a shareholder,
contributing 50 million dollars, equivalent to 2.7% of the
Interest Rates
share capital.
Colombia
The Group’s policy consists of maintaining an interest-rate
coverage level, corresponding to most-protected fixed-rate
debt, of around 70%. During 2006, as the Group companies
Regarding the generating subsidiaries, Betania managed to
have refinanced part of their original fixed-rate debt with
refinance a loan with a group of banks for 120 million dollars
floating-rate debt, they have contracted interest-rate swaps
in local currency for 7 years and to issue a domestic bond for
and collars for approximately 267 million dollars, reaching
56 million dollars for 5.5 years, achieving a spread below the
a coverage of 71.3% as of December 2006.
sovereign credit rating of Colombia at the time of placement.
Emgesa refinanced debt with bank loans for approximately
Every time that debt is prepaid, the associated hedging
60 million dollars. On the other hand, Codensa drew short-
instruments are liquidated in order not to keep those without
term bank loans for approximately 90 million dollars.
an assigned underlying obligation.
Annual Report 2006 | 73
ACTIVITIES OF THE COMpANy
CREDIT RATING
PROPERTIES AND INSURANCES
The perception of Enersis risk has been declining in
The Company is the owner of some equipment and
recent years. This has been confirmed by the national and
substations in Chile’s Metropolitan Region. The Company
international credit-rating agencies, which have raised their
has insurance cover for risks like fire, lightning, explosions,
ratings of the Company during the year.
malicious acts, earthquake, flooding, landslides, etc.
In May, Fitch improved its rating of Enersis from BBB- to BBB
TRADEMARKS
with stable outlook, reflecting a sustained improvement in
The Company has registered its trademarks and slogans
the Group’s finances.
Enersis, Chispazos, Dixsa, EnersisPLC and Internet at the
In December, Moody’s raised its ratings of Enersis and
its subsidiary Endesa Chile from Ba1 to Baa3, with stable
outlook. This new rating permits both companies to recover
speed of light Enersis PLC.
HUMAN RESOURCES
investment grade from all the different rating agencies.
The Human Resources Management has carried out various
activities related to internal Corporate Social Responsibility
In December also, Standard & Poor’s placed the BBB- rating
(CSR), including:
of Enersis in revision, with positive implications, reflecting
a potential change as a result of the improvement in the
Activities with employees:
Company’s debt-service ratio and its financial flexibility.
•
Cycle of talks with parents called “Work and the Family”
The rating tendency of all the international agencies is
on how to reconcile work with the family.
positive, the consequence of the better financial profile,
•
Anti-sedentar y courses organized by the Joint
the good business performance, favorable changes in the
Committee, exercises at the work-place, ergonomic
Chilean regulatory framework, the solid competitive position
campaigns and formation of safety at home.
in the different countries where the Group operates, the
•
Inter-company sports olympics.
given by the philosopher Carolina dell’ Oro, to reflect
growing demand for electricity in the region, etc. Further
improvements in these trends could also result in new
Family activities:
positive actions in the Company’s credit rating.
• Dance, spor ts, physical exercise and painting
KIND OF DEBT
Local Currency
Foreign Currency
Tendency
FITCH
BBB
BBB
Stable
STANDARD &
POOR’S
BBB-
BBB-
Possitive
MOODY’S
-
Baa3
Stable
INSTRUMENT
Shares
Bonds
Tendency
FITCH
1st Class Level 1
A+
Stable
FELLER RATE
1st Class Level 1
A+
Possitive
workshops.
• Recreational programs and summer camps for
employees’ children during their summer and winter
vacations.
•
Prizes for academic excellence to employees’ children
who obtain the best marks in the corresponding
teaching period, in basic, secondary and tertiary
education.
•
Activities for employees’ children: Christmas party and
Paint Christmas.
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| Annual Report 2006
Development based on skills and according to the needs of
SOCIAL RESpONSIBILITy
each group of workers:
•
•
Senior management programs for managers.
CULTURE
Advanced management program for professionals,
with participation of 75% of the professionals of all
the Company’s areas (the remaining 25% carried
ILLUMINATING CHURCHES AND MONUMENTS THE
SOUTH OF THE WORLD
out the program at the end of 2005). Its purpose was
Enersis, together with its subsidiaries Endesa Chile and
to update knowledge and provide tools on the basis
Chilectra, and Fundación Endesa, have been carrying out
of new management trends in matters like strategy,
this program since 2000, modernizing the ornamental lighting
and political, economic, technological and social
of churches and monuments, thus providing great support
responsibility areas.
for the conservation of the cultural heritage.
•
“Diploma in International Accounting Standards” for
standardizing the technical skills of staff working in the
During 2006, eight buildings were illuminated in Chile,
financial areas of the business.
including churches, cathedrals and monuments. Projects
benefiting in the Santiago Metropolitan Region were the
Continuing with the skills management processes, the
Moneda Palace Cultural Center, the Santiago Cathedral
objective this year was to check the generic and technical
crypt, and the Evangelical Cathedral of Santiago. In the
skills identified the year before and measure the adaptation of
rest of Chile, these were the church of San Agustín de
people to the requirements of each job. As a result, policies
Concepción, the Naval Museum in Valparaiso, Los Ángeles
will be developed in 2007 in formation and development
Cathedral, the Los Ángeles Cultural Center and cross, the
oriented to reducing the gaps identified in the process.
Santa Clara de Pucón Monastery, the Castrence Cathedral
T h e f o r m at i o n p r o g r a m s d eve l o p e d du r i n g 2 0 0 6
totaled 14,500 hours of training, distributed as follows:
DONATION OF LIBRARIES
6% for managers, 50% for professionals and 44% for
Enersis, jointly with El Mercurio newspaper has provided
and the Virgen de las Rosas, Santiago.
administrative staff.
four thousand books thanks to a reinforcement campaign
to support the culture of communities that are remote from
urban centers. Another two new municipal libraries were
donated in 2006 to benefit children and young people
in Cochrane, in Chile’s 11th Region, and Mincha, in the
4th region.
Annual Report 2006 | 75
ACTIVITIES OF THE COMpANy
THE LAST PATHS OF THE HUEMUL BOOK
SPONSORSHIPS
Enersis sponsored the book “The last paths of the huemul”,
published by the Fundación San Ignacio del Huinay and
With the sponsorship of Enersis, an exhibition of the Chilean
describing in detail the research and gathering of information
painter Matías Movillo, called ‘Unjustified Painting’, was given
on the huemul (a Chilean deer in danger of extinction). This
at Isabel Aninat Gallery, Santiago, between June 27 and
scientific-technical work summarizes the life of this animal
July 30. Enersis also sponsors on a monthly basis cultural
through the work of well-known field photographers in
activities organized by the municipality of Vitacura which
various locations in Chile like Chillán, the Tamango National
are free of charge for residents. These include theatre
Reserve, Cerro Castillo, Río Simpson National Reserve,
productions, painting exhibitions and musical concerts.
Bernardo O`Higgins National Reserve and Torres del Paine.
In the same municipality, the Company participated in the
The authors also describe 30 years of effort by a handful of
creation of a library so that residents of Villa Comunitaria El
academics, conservationists and game-keepers in trying to
Dorado can have greater access to reading. The company
avoid the extinction of this deer.
also sponsors the “Cultural Panorama” program, given four
times a day on Radio Beethoven.
MONUMENTAL LIGHTING
The “Illuminating monuments in the south of the World”
EDUCATION
program was recorded in a second book edited by Enersis
that reflects the work of the Fundación Endesa and
DIGITAL “CIEL”
companies in the Enersis Group in the program for the
Enersis has designed a web site of Information on Electricity
illumination of churches and monuments. This quality edition
(CIEL) so that Chilean children and young people can learn
explains the delicate and complex work of beautifying and
about electricity, according to the depth of learning required
renovating religious buildings through the modernization of
by the Ministry of Education. The site is presented in a playful
their lighting, and this time has an appendix consisting of
way, segmented to suit the age and school level of visitors
a compact disc with all the photographs of the illuminated
and is accessed directly from Enersis’s web site.
churches and monuments under this initiative in Spain, Chile,
Colombia, Peru and the Dominican Republic.
76 | Annual Report 2006
UNIVERSIDAD DE CHILE SCHOLARSHIPS
and foundations that clearly carry out activities for the
Enersis, jointly with its subsidiaries Endesa Chile and
public good and that have good reputations within Chile.
Chilectra, signed an agreement with the Economics and
The beneficiaries include:
Business Management Faculty of the Universidad de
Chile to grant scholarships to students and professors in
Hogar De Cristo: This institution seeks to give dignified
commercial engineering and auditing. The scholarship for
shelter to the very poorest people, inviting and involving
students consists of the equivalent of the annual tuition fees,
the community in its social responsibility with society’s poor
while the award for the best professor takes the form of the
and excluded. The Group companies, together with volunteer
financing a scholarship for study or improvement in Chile
employees, took part in the 1+1 campaign for helping the
or abroad.
SOCIETY
Los Patroncitos creche and kindergarten (in the Estación
Central district of Santiago), which looks after more than
30 children.
CHRISTMAS FOR CHILDREN UNDER SOCIAL RISK
Fundación Las Rosas: Fundación las Rosas has for 38
More than 55 thousand children between 5 and 12, from
years been concerned about poor and disabled old people
189 institutions that care for children at social risk take part
in Chile. It is currently looking after 2,400 old people in 40
in a Christmas party held in December organized by the
homes throughout the country. Enersis made a significant
Chilean government. This party is the most important artistic
contribution to the development of this institution’s
and cultural event held annually for these children, who see
activities.
a top-level show and enjoy an evening of recreation and
relaxation. Enersis collaborates with the transportation of
Paz Ciudadana: This entity contributes to reducing
the children and the safety plan.
delinquency through technical collaboration in the formulation
CONTRIBUTIONS TO FOUNDATIONS AND
INSTITUTIONS FOR THE PUBLIC GOOD
of policies and the development and transfer of work tools.
Fundación Miguel Kast: This institution was created in
As an important party in Chilean society, Enersis contributes
commemoration of the former minister of that name in order
with sponsorships of and donations to different institutions
to work in overcoming poverty.
Annual Report 2006 | 77
ACTIVITIES OF THE COMpANy
REGIONAL CONFERENCES
AWARDS
Enersis sponsored another cycle of conferences in ten of
During 2006, Enersis was recognized in various areas
Chile’s largest cities, organized by Diario Financiero, to
of its internal and external affairs, receiving the following
encourage economic, political and social debate in various
awards:
regions of the country. Each conference attracts an audience
of some 200 leaders of opinion, including the businessmen,
CITY PRIZE OF THE FUNDACIÓN FUTURO
politicians and academics of each region. The Company
Fundación Futuro awarded the Company its ‘City’ prize for
also sponsors conferences organized by the Estrategia
its outstanding work through its support for the enhancement
newspaper jointly with the central bank, to explain that bank’s
and improvement of the quality of life in the city of Santiago
economic reports throughout the country. Other panellists
through its program ‘Illuminating Churches in the South of the
were also invited to complement the central bank’s reports
World’, which for six years has been enriching and giving new
with the views of economists and academics.
life to religious buildings and different monuments. The prize-
winning ceremony was attended by well-known personalities
CSR SEMINAR FOR UNIVERSITY STUDENTS
from the academic and cultural worlds.
For the third consecutive year, Enersis sponsored the
corporate social responsibility seminar organized by Acción
RSE, called “Chile commits Chile learns. Is Chile seizing
BEST COMPANIES FOR WORKING MOTHERS AND
FATHERS
sustainable development?” for 600 university students from
Enersis received the distinction as one of the ten best
Chile’s most prestigious universities. The theme for the
companies for working mothers and fathers in Chile,
meeting was the contribution to sustainable development of
according to an annual survey made by Fundación Chile
the new professionals, the role of companies and the World
Unido jointly with Ya magazine and El Mercurio newspaper,
Business Council for Sustainable Development (WBCSD)
in which over 400 companies throughout the country were
in today’s world and “from cup to lip”, real CSR business
evaluated. This is the first time that Enersis has participated
cases in Chile.
FRIENDS OF THE PRADO MUSEUM FOUNDATION
in this survey which involves an exhaustive evaluation of the
practices, benefits and flexibilities offered by a company to its
employees and their children, who answered the respective
The principal art works of Velázquez, Goya, El Greco and
survey. The prize-winning ceremony was attended by the
Rubens are part of the Prado Museum collection brought
President of Chile, Michelle Bachelet.
to Chile through a series of interactive talks at 26 schools in
Santiago, where more than five thousand students enjoyed
a cultural presentation of excellence at no cost to them.
CHILEAN SAFETY ASSOCIATION (ACHS) JOINT
ACTION
This had the sponsorship of Enersis, Endesa Chile and
Enersis´s joint committee was awarded the Chilean Safety
Chilectra, was organized by the Friends of the Prado Museum
Association Joint Action prize at the XXXII Annual Safety
Foundation and was also appreciated by the employees of
Meeting, for its efficiency and excellent management of
the Group companies.
prevention and safety. The award was made in recognition of
the various initiatives taken by the committee in internal and
external safety matters, including training in the defensive
driving of vehicles, alcoholism and drug-addiction programs,
and the anti-sedentary campaign “Energy is Life, Live it”.
78
| Annual Report 2006
ESSENTIAL FACTS
Annual Report 2006 | 79
ESSENTIAL FACTS
CONSOLIDATED
ESSENTIAL FACTS
Senn, and Mr. Patricio Claro Grez. In compliance with
that established in Circular Nº 1.526 of the SVS (Chilean
Securities and Exchange Commission), it is informed that
ENERSIS S.A. (PARENT COMPANY )
the Director, Mr. Patricio Claro Grez was elected by votes
distinct from those of the controller, its members, or any
Dividends
related persons.
As agreed upon in the General Ordinary Shareholder’s
Meeting held on March 21st, 2006, agreement was reached
Next, the Directors Committee designated as President Mr.
to pay a final dividend Nº 73 of 60% of the liquid Company
Pablo Yrarrázaval Valdés, and as Secretary Mr. Domingo
profits, which is $0.9651 per share, rounded off to the closest
Valdés Prieto.
whole number, the result of which is $ 1.00 per share.
Also the Board of Enersis S.A., in compliance with that
This represents a disbursement reaching M$ 32,651,166
provided in the Company’s Social Statutes, in the session
charged to the results of December 31, 2005.
held on March 29th 2006, the new members of the Audit
The aforementioned modifies the effect of the dividend policy
of the Sarbanes Oxley Law of the United States of America.
on this subject, which provided a proposed disbursement of
The Audit Committee of Enersis S.A. is composed of Mr.
a final dividend of 50% of the liquid Company profits.
Juan Ignacio de la Mata Gorostizaga, Mr. Rafael Español
Committee were designated, a body created by the demands
For this reason, a minimum obligatory dividend of $ 0.48256
the requirements provided in the Sarbanes Oxley Law and
Navarro, and Mr. Hernán Somerville Senn, all of whom fulfill
will be paid, and an additional dividend of $ 0.51744 per
its complementary norms.
share, which together make up the Definitive Dividend
Nº 73.
Finally, it is important to inform that the Board has designated
Mr. Rafael Español Navarro as Financial Expert of the
Changes in the Board
mentioned Audit Committee.
In the Board Meeting held on March 29th, 2006, Mr. Pablo
Yrarrázaval Valdés was elected as President of the Board
MERGER ELESUR - CHILECTRA
and the Company, and Mr. Rafael Miranda Robredo was
elected as Vice President, and Mr. Domingo Valdés Prieto
The Extraordinary Shareholders General Meeting of the
as Secretary. As a result, the Board elected in the General
subsidiaries Elesur S.A. (called Chilectra S.A. as of 31.03.06)
Ordinary Shareholder’s Meeting on the 21st of March is
and Chilectra S.A., both held on the 31st of March 2006,
established as follows:
Pablo Yrarrázaval (President)
Rafael Miranda (Vice President)
Juan Ignacio de la Mata
Rafael Español
Hernán Somerville
Eugenio Tironi
Patricio Claro
informs that it has been agreed upon by the shareholders
of each company that, among other things, Elesur S.A. and
Chilectra S.A. shall merge by the absorption of the last by
the first, Chilectra being the merged company or absorbed by
Elesur S.A. the absorbing company, merging its agencies in
the Cayman Islands, which is Chilectra S.A. Cayman Islands
Agency, the one which is absorbed, and Elesur S.A. Cayman
Islands Agency the one that absorbs the former.
Domingo Valdés (Secretary)
Due to the merger, Chilectra S.A. will dissolve, incorporating
itself into Elesur S.A. so that the shareholders of Chilectra
Likewise, in the aforementioned Board Meeting the
S.A. will become shareholders of Elesur S.A. a product
designation of the Directors Committee established in Article
of its capital increase and the exchange of corresponding
50 Bis of Law 18.046, was carried out, which is made up
shares acquired by Elesur S.A. the totality of the assets
of Mr. Pablo Yrarrázaval Valdés, Mr. Hernán Somerville
and liabilities of Chilectra S.A., conceding all of its rights,
80
| Annual Report 2006
permits and obligations. Likewise as a result of the merger,
all of the assets and liabilities of Chilectra S.A. Cayman
1. To approve the financial statements and balance
Islands Agency shall be incorporated and acquired by Elesur
audits as of the 31st of December 2005, for Chilectra
S.A. Cayman Islands Agency, which shall take over all of
S.A. and Chilectra S.A. (former Elesur) for the
the rights and obligations of Chilectra S.A. Cayman Islands
purpose of the merger and submit these to respective
Agency. The legal effects of the merger will occur as of April
Shareholder’s Meeting for the merger’s approval.
1st, 2006. The exchange conversion will be to the amount
Copies of the aforementioned will accompany said
of 3.0337 shares of Elesur for each share of Chilectra S.A.
presentation.
According to current accounting regulations Elesur S.A. will
recognize as of March 31, 2006, an accountable profit of near
2. Bring forth the expert report regarding the economic
Ch$100,000 million, for the right to compensate future taxes
value of the Chilectra S.A. and Chilectra S.A. (former
with tributary losses from previous fiscal years. Enersis S.A.
Elesur) equity, and the results of the exchange
through the consolidation of this subsidiary will take in to its
equation for shareholders of said company’s, to
Financial Statements on that date the accountable profit
inform and for the approval of, the Extraordinary
proportional with its participation.
General Shareholders Meeting. A copy expert
report for the merger is attached to the present
Change of Administration
communication.
In the session held on October 25th, 2006, the Board received
and accepted the resignation of the General Manager, Mr.
3. Approval of absorbent company’ by-laws, namely
Mario Valcarce Durán, effective as of October 26th, 2006,
Chilectra S.A. (former Elesur) and other modifications
and the said Board, in the same meeting has designated Mr.
that the Board of Directors of the aforementioned
Ignacio Antoñanzas Alvear as General Manager, who will
company will propose to shareholders in light of the
assume his duties on October 26th, 2006.
merger.
Interim Dividend
4. Set up a Extraordinary General Shareholders Meeting
In the session held on November 29th, 2006, the Board
for Chilectra S.A. to take place March 31, 2006 at
agreed to declare an Interim Dividend Nº 74 of $ 1.11 per
3:00 pm , in the Chilectra S.A. Auditorium, located
share, dated December 26th, 2006, charged to the results
on Santa Rosa street, N° 76, mid level, Santiago;
of the fiscal year 2006, which corresponds to 14.91% of the
the object of said Shareholders Meeting is to get the
liquid profits calculated on October 31st, 2006, in compliance
shareholders acquainted with the following topics:
with the Company’s dividend policy.
CHILECTRA S.A.
Merger of Companies
a. Study and approve the merger of Chilectra S.A.
with Chilectra S.A. (former Elesur S.A.) and its
respective foreign agencies; whereby Chilectra
S.A. will be absorbed by Chilectra S.A. (former
a. The Chilectra S.A. Board of Directors adopted the
Elesur) and Chilectra Cayman Islands Agency,
following agreements, dated February 27, 2006, with the
absorbed by Chilectra S.A. (former Elesur)
aim of suggesting to shareholders, the eventual merger
Cayman Islands Agency as of April 1, 2006.
(by absorption) of Chilectra S.A. with Chilectra S.A.
The assets and liabilities as also the rights and
(former Elesur S.A.), with their registered agencies in
obligations pertaining to Chilectra S.A. will be
the Cayman Islands, whereby the former will be dissolved
absorbed and legally continued by Chilectra S.A.
and totally incorporated into the latter, including the
(former Elesur) through the merger. Further, the
hole equity of Chilectra S.A. in Chilectra S.A. (former
entire Chilectra S.A. equity and shareholders
Elesur), constituted in the Cayman Islands, will absorb
pertaining will dissolve without the need for
as well the agency of Chilectra S.A., constituted in the
liquidation, and incorporated in Chilectra S.A.
same place:
(former Elesur) as stipulated in article 99 of
Annual Report 2006 | 81
ESSENTIAL FACTS
the Law N 18,046 regarding public companies.
of Shareholder s M eeting dec isions, the
Where the merger with Chilectra (former Elesur)
authorization and subscription of instruments
is approved, dissenting shareholders will have
required to declare the merger and to perfect
the right to retire in line with the stipulations in
the transfer of total assets and liabilities from
the aforementioned law. The right to retire could
Chilectra S.A. to Chilectra S.A. (former Elesur
be exercised by the shareholders within 30 days
S.A.). Those shareholders that appear recorded
from the date of the Extraordinary Shareholders
in the shareholder registry of March 25, 2006
Meeting.
have the right to participate in the aforementioned
Shareholders Meeting.
b. Study and approve the individual and consolidated
financial statements and audited balance sheet of
g. Approve that, where fractions of shares are
the companies involved in the merger (prepared
produced through the exchange of shares,
December 31, 2005).
minority shareholders of Chilectra with a fraction
of an Elesur share, be given an entire share rather
c. Study and approve the expert reports regarding
than the fraction of a share that would correspond
the merger, the exc hange equation and
them, given the exchange relation. This would
consequently, the number of shares that will
be charged to the shares that corresponded to
rightfully due to Chilectra S.A. shareholders,
Enersis S.A. in the exchange (as Enersis is a
following the incorporation of the total equity
shareholder of Chilectra S. A.).
of said company into Chilectra S.A. (former
Elesur). The exchange equation of shares will be
The positive effects estimated in the absorbed company’
put into effect within the shape and opportunity
results will increase to approximately Ch$100,000 million,
granted by the Chilectra (former Elesur) Board
during the next years, mainly due to the optimization of
of Directors.
the tributary structure and the reductions in operating
and financial expenses. In consideration of current
d. In approving the merger through incorporation, to
accounting norms, the central part of the aforementioned
study and approve the by-laws of the absorbing
sum, foreseeable corresponds to the optimization of the
company (Chilectra, former Elesur), considering
tributary structure, recognizable as accountable profit at
the modifications that should be explained in
the moment the merger is perfected. Despite this, the
and approved by the Extraordinary General
economic result associated with monetary effects will
Shareholders Meeting of said company, as well
extend over various exercises, as indicated below.
as other statutory modifications the shareholders
of Chilectra S.A. (former Elesur S.A.) could agree
This measure has been taken before by the company,
upon.
given the impossibility of foreseeing precisely how the
merged company’s profits will behave perform in future,
e. Approve the dissolution of Chilectra S.A., that
it would be considered for the annual quantification of he
will take place without the need for liquidation, as
economic result related to cash effects, that the merged
consequence of the merger through incorporation
company would behave in the future as it has been in the
to Chilectra S. A. (former Elesur S. A.), as
past. Under this hypothetical base, the merged company
stipulated in article 99 of Law N 18,046 (regarding
could quantify Ch$10,000 million per year, and as such,
Public Company’s).
the effect would extend for over approximately 10 years.
The aforementioned effect will depend on factors such
f. Adopt all agreements that may be necessary
as the growth of demand, number of company’ clients,
to complete the merger through incorporation,
unitary consumption, applicable tariffs, human resources
of Chilectra S.A. into Chilectra S.A. (former
costs, operating and maintenance costs, financial
Elesur S.A.). This includes: the certification
expenses, interest rates, exchange rates, etc., and
82
| Annual Report 2006
therefore, also, the profit the company obtains through
d. In the Extraordinary General Shareholders meeting dated
each exercise.
March, 31, 2006, the following was agreed:
Regarding reductions in operating costs and financial
1. The merger of Chilectra S.A. (former Elesur S.A.) and
expenses, it has been estimated that in each exercise
Chilectra S.A. through the absorption of the latter by
following the completion of the merger, the results of the
the former, being Chilectra S.A. the absorbed and
merged company will improve by Ch$820 million. This is
Chilectra S.A. (former Elesur S.A.) the absorbent
due to reduced fixed expenses (by Ch$240 million) and
company, as also to merge the company agencies in
reduced financial expenses (Ch$580 million).
the Cayman Islands; where Chilectra S.A. Cayman
Islands Agency will be absorbed be Chilectra S.A.
b. A copy was sent to that Superintendence (on March 3,
(former Elesur) Cayman Islands Agency. Due to
2006), of the expert report regarding the economic value
the merger, Chilectra S.A. will be dissolved and
of the equity of Chilectra S.A. and Chilectra S.A. (former
incorporated into Chilectra S.A. (former Elesur S.A.),
Elesur S.A.) as well as the determinations stipulated
whereby shareholders of Chilectra S.A. will become
in the exchange equation of shares pertaining to said
shareholders of Chilectra S.A. (former Elesur) due
companies. The aforementioned report was published
to the increase in capital and the exchange equation
on January 31, 2006, made by Mr. Eduardo Walker
of the corresponding shares, assets, liabilities, rights
Hitschfeld, and financed by Chilectra S.A. (former Elesur
and obligations from Chilectra S.A to Chilectra S.A.
S.A.). This expert report and the one financed by Chilectra
(former Elesur).
S.A. under equal expertise, published on the same
date as the former, and sent to that Superintendence
Likewise, due to the merger, the totality of the assets
(as annex to the essential facts sent by Chilectra S.A.
and liabilities of Chilectra S.A. Agencia Cayman
on February 27, 2006), will be subject to the study and
Islands will be incorporated and acquired by Chilectra
approval of the Chilectra S.A. Extraordinary General
S.A. (former Elesur S.A.) Agencia Cayman Islands
Shareholders (aimed for March 31, 2006); said meeting
which will take the place of Chilectra S.A. Agencia
will mainly concern the merger between Chilectra S.A.
Cayman Islands in all of its rights and obligations.
and Chilectra S.A. (former Elesur S.A.).
The effects of the merger will take place from April
c. The merger through incorporation between Chilectra
the 1st 2006.
S.A. and Chilectra S.A. (former Elesur S.A.) will take
2. Approve the audited balances and f inancial
effect since April 1, 2006, or as of the date stipulated in
statements of Chilectra S.A. (former Elesur S.A.) and
the company’s Extraordinary Shareholders Meeting.
Chilectra S.A. on December 31, 2005, and the expert
reports that formed the fundaments of the merger.
The aforementioned was decided in the Chilectra S.A.
Board of Directors Session N° 3 (of March 14, 2006),
3. Approve the by-laws of the absorbing company.
whereby it was agreed to modify section (a) of Agreement
N° 9/2006, adopted in Session N° 2 of the company’s
4. Approve that the absorbed company will be made
Board of Directors (in February 27, 2006).
responsible and is obliged to pay all the taxes due
In the end, it was unanimously agreed to allow the
necessary to give notice about end of business.
Company Executive Officer to put the relevant notices,
It also obliged to authorize the use of instruments
citations and publications into effect, as also, to follow
deemed necessary (specially mainly to facilitate the
through with the other formalities (that proceed to carry
certification, materialization and completion of merger
out the necessary completion of any legal prerequisites)
agreements) and to authorize and subscribe to the
by the absorbed company, whereby it won’t be
for the convening.
instruments required to declare the merger has been
carried out, and to perfect the transfer of the total
Annual Report 2006 | 83
ESSENTIAL FACTS
assets and liabilities associated to the company being
49,207,873 shares where recorded, totally subscribed
absorbed into the absorbing company.
to and paid for. Within the following days, Elesur S.A.
will solicit that the company and its shares be recorded
5. To inform that, in accordance with the stipulations in
in the Santiago Stock market.
Articles 69 and 70 of Public Company Law 18,046,
the approval of the merger by the Extraordinary
2. Record in the Santiago Stockmarket
General Shareholders Meeting will concede the right
Dated February 21, 2006, the company informed the
for dissenting shareholders, to retire from Chilectra
following: On February 21, 2006, the company Elesur
S.A. and be paid the value of their shares.
S.A. was recorded in the Bolsa de Comercio de Santiago
Renewal of the Board of Directors and Committee
of Directors
stock market, whereby its shares where officially listed
as of February 23 under the ticker ELESUR.
In the Ordinary Shareholders Meeting dated March 21, 2006,
3. Board of Directors Agreements
the designated Company Directors were:
Dated February 23, 2006, the company informed the
1. Jorge Rosenblut Ratinoff.
2. José Manuel Fernández Norniella.
3. Hernán Felipe Errázuriz Correa.
4. Pedro Buttazzoni Alvarez.
5. Alberto Martín Rivals.
6. Marcelo Llévenes Rebolledo.
7. Antonio Cámara Eguinoa.
following: On February 22, 2006, the Chilectra S.A.
Board of Directors (former Elesur S.A.) adopted the
following agreements with the aim of presenting to
its shareholders, the eventual merger (by absorption)
of Chilectra S.A. with Chilectra S.A. (former Elesur
S.A.), with their registered agencies in the Cayman
Islands, whereby the former will be dissolved and
totally incorporated into the latter, including the hole
equity of Chilectra S.A. in Chilectra S.A. (former Elesur),
Also, in the Board of Directors Extraordinary Session
constituted in the Cayman Islands, will absorb as well
N° 4/2006 dated March 21, 2006, Mr. Jorge Rosenblut
the agency of Chilectra S.A., constituted in the same
Ratinoff was named President of the Board of Directors and
place:
Mr. José Manuel Fernándes Norniella was named Vice-
President. Further, in said session Jorge Rosenblut Ratinoff,
1. Approve for effects or the merger, the Chilectra S.A.
Hernán Felipe Errázuriz Correa and Alberto Martín Rivals
and Chilectra S.A. (former Elesur S.A.) audited financial
were named members of the Committee of Directors (as
statements (as of December 31, 2005) that are relevant
stipulated in the S.V.S Circular N° 1,526).
to the merger, and submit these for approval by the
Dividends
Shareholders Meeting’s that will approve the merger. A
copy of the aforementioned is attached to the present
It was agreed upon in the General Ordinary Shareholders
communication.
Meeting dated March 21, 2006, that a definitive dividend of
$10.00 per share will be distributed (charged to the 2005
2. Submit the expert report on the economic value of
profits).
the Chilectra S.A. (former Elesur S.A.) and Chilectra
S.A. equity as well as the determinations stipulated
CHILECTRA S.A. (FORMER ELESUR S.A.)
in the exchange equation of shares pertaining to said
1. Records in the Value Registry
company’s was published on January 31, 2006. The
report was made by Mr. Eduardo Walker Hitschfeld, to the
Dated February 14, 2006, the company informed about
knowledge and under the approval of the Extraordinary
the following: Dated February 13, 2006, the company
General Shareholders Meeting so that they are aware
Elesur S.A. was recorded in the Commercial Registry
the merger. A copy of said expert report is attached to
put into effect by the S.V.S. Also on the same date,
the present communication.
84
| Annual Report 2006
3. A meeting will take place on March 31, 2006 in the
2. Approve the merger of Chilectra S.A. (former Elesur
General Ordinary and Extraordinary Shareholders
S.A.) and Chilectra S.A. through the absorption of
Meeting’s of Chilectra S.A. (former Elesur S.A.) located in
the latter, by the former, whereby Chilectra S.A. will
the Auditorium (Santa Rosa N° 76, mid level, Santiago),
absorbed by Chilectra S.A. (former Elesur S.A.)
where the shareholders will get to know, and decide
and Chilectra S.A. (former Elesur S.A.) will be the
upon, the following items:
absorbent company, as well as their Cayman Islands
Agencies, where Chilectra S.A. Cayman Islands
General Ordinary Shareholders Meeting of Chilectra S.A.
Agency will be absorbed and Chilectra S.A. (former
(former Elesur S.A.):
Elesur) Cayman Islands Agency the absorbent
company, as well as the rest of aspects and conditions
1. Approval of the Report, Balance, Financial Statements
of the company. Due to the merger, Chilectra S.A.
and Inquiries External Auditors corresponding to
will be dissolved in order to incorporate to Chilectra
exercises finalized on December 31, 2005.
S.A. (former Elesur S.A.), so that shareholders of
Chilectra, will become shareholders of Chilectra
2. Distribution of profits and distribution of dividends.
S.A. (former Elesur). This is due to the increase in
3. Dismissal and election of the Board of Directors.
shares, whereby Chilectra S.A. (ex Elesur) acquired
capital, which corresponds to the exchange equation
4. Designation of the Committee of Directors, settling
achieve it with regard to all its rights, obligations and
their remuneration and the expenses related to the
permits. With regard to the merger, the total assets,
all assets and liabilities relating to Chilectra S.A. and
function of the Committee.
liabilities, obligations and rights relating the Chilectra
S.A. Cayman Islands Agency will be incorporated
5. Report on Board of Directors expenses.
and acquired by the Chilectra S.A. (former Elesur)
Cayman Islands Agency. The effects produced by
6. Designation of Independent External Auditors.
the Merger will take effect as of April 1, 2006.
7.
Exposure of Company Policies regarding Dividends
3. Approve the following records which will be used as
and information about the proceedings that are
the fundament for the proposed merger:
realized in the distribution of Dividends.
8. Information regarding Board of Director agreements
Statements (as of December 31, 2005), audited
related to the activities and contracts that fall under
by Deloitte & Touche Company of Auditors and
Article 44 and 93 of Law N 18,046.
Consultants Limited.
a) Chilectra S.A. (former Elesur S.A.) Financial
9. Other subjects that are of public interest and under
b) Expert report (dated January 31, 2006), made by
the authority of Ordinary Shareholders Meeting.
expert Mr. Eduardo Walker Hitschfeld who was
contracted for the report by Chilectra S.A. (former
General E x traordinar y Shareholders Meeting of
Elesur S.A.).
Chilectra S. A. (former Elesur S.A.)
1. A pprove the reductions in social c apital by
December 31, 2005), audited by KPMG Auditor
c) Chilectra S.A. Financial Statements (as of
Ch$1,047,103,444,673 with the purpose of absorbing
Consultants Limited.
company losses, without having to return capital to
shareholders and maintaining the same number of
d) Expert report (dated January 31, 2006), made by
shares.
expert Mr. Eduardo Walker Hitschfeld contracted
for the report by Chilectra S.A.
Annual Report 2006 | 85
ESSENTIAL FACTS
4. Increase Chilectra S.A. (former Elesur S.A.) social
instruments esteemed necessary (mainly to facilitate
capital by Ch$302,578,793,634, for which approval
the legalization, materialization and completion of
of Chilectra S.A. (former Elesur S.A.) by-laws will
merger agreements) and to authorize and authorize
be needed, in the following areas: (a) modification
and subscribe to, the instruments required to
of the Fourth article which deals with social capital,
declare the merger has been carried out, and to
by increasing the capital amount through emission of
perfect the transfer of the total assets and liabilities
1,110,471,933 payable shares (and other conditions
associated to the company being absorbed to the
dictated by the Shareholders Meeting), or an
absorbing company.
alternate amount determined by the Extraordinary
Shareholders Meeting. These will be emitted by the
8. To inform that, in accordance with the stipulations in
Chilectra S.A. Board of Directors and distributed as
Articles 69 and 70 of Public Companies Law 18,046,
payment relating to the merger, to the Chilectra S.A.
the approval of the merger by the Extraordinary
shareholders; the shares will be distributed at a rate
General Shareholders Meeting will concede the right
of 3.0337 Chilectra S.A. (former Elesur S.A.) share
for dissenting shareholders, to retire from Chilectra
for every one Chilectra S.A. share. These shares will
S.A. (former Elesur S.A.) and be invoiced the value
be understood as paid through the proprietorship of
of their shares. The dissenting shareholders may only
Chilectra S.A. which will be absorbed by Chilectra
exercise their retirement right within a time limit of
S.A. (former Elesur S.A.) through the merger,
30 days (counted from the Shareholders Meeting
and (b) modification of the First Transit article, so
date) and for only the totality of their shares listed
that it reflects the modifications mentioned in the
in the Company’s Shareholders Registry (as of the
aforementioned subheading (a).
5th working day before the Shareholders Meeting).
The cost of the shares payable to the dissenting
5. Approve (i) the reform of Chilectra S.A. (former Elesur
shareholders correspond to the market value of the
S.A.) statutes by modifying the following articles: (a)
shares, determined under the norms in Article 79
modification of the First article, so as to replace the
of the Public Company Regulations in the Supreme
Chilectra S.A. (former Elesur S.A.) company name
Decree N° 587.
for that of Chilectra S.A., (b) modifying the Third
article, to adjust the social objectives of Chilectra
The Chilectra S.A. (former Elesur S.A.) General
S.A. (former Elesur S.A.) for those of Chilectra S.A.
Ordinary Shareholders Meeting will take place at 8:30
(c) modify the Fourth and First Transitory article, to
am, in the Auditorium (located in Santa Rosa N° 76, mid
reflect the increase in capital produced in the merger,
level, Santiago), and the Chilectra S.A. (former Elesur
in the terms indicated in the prior subheading, (d)
S.A.) Extraordinary General Shareholders Meeting
modify the Ninth article, stating that Directors will be
will take place after the formational Ordinary General
remunerated, (e) modify the Eight and Tenth-Quarter
Shareholders Meeting.
articles, to eliminate all reference to the existence
of Director substitutes; (ii) approve and set the
The positive effects estimated in the absorbed company’s
resummarized and updated social statute text of the
results will increase to approximately Ch$100,000 million,
absorbing company.
during the next few years, mainly due to the optimization
of the tributary structure and the reduced expenses in
6. Approve and set the remuneration of the Board
operating and financial areas. In consideration of current
of Directors.
accounting norms, the central part of the aforementioned
sum, foreseeable corresponds to the optimization of
7. Adopt whatever other agreement that may effect or
the tributary structure, recognizable as an accountable
be necessary for the Merger agreements referred to
profit at the moment the merger is perfected. Despite
in the prior headings, as also to authorize the use of
this, the economic result associated with monetary
86
| Annual Report 2006
effects will extend over various exercises, as indicated
1° In today’s Elesur (denominated Chilectra S.A. from
below; this has been done before by the company,
March 31, 2006) General Ordinary Shareholders
given the impossibility of foreseeing precisely how the
Meeting, it was agreed to dismiss the current Board
merged company’s profits will behave in future. Using
of Directors and redesignate those positions to:
this hypothetical base, the merged company could
Jorge Rosenblut Ratinoff, José Manuel Fernández
quantify Ch$10,000 million, per year, and as such, the
Norniella, Pedro Buttazzoni Álvarez, Antonio
effect would extend over approximately 10 years. The
Cámara Eguinoa, Hernán Felipe Errázuriz Correa,
aforementioned effect depends on factors such as the
Marcelo Andrés Llévenes Rebolledo and Alberto
growth of demand, number of company clients, unitary
Martín Rivals.
consumption, applicable tariffs, human resources costs,
operating and maintenance costs, financial expenses,
2° In the Elesur (denominated Chilectra S.A on March
interest rates, exchange rate, etc., and therefore, also,
31, 2006), General Extraordinary Shareholders
the profit the company obtains through each exercise.
Meeting the following was agreed:
With regard to reductions in operating costs and financial
1. To reduce social capital by Ch$1,047,103,444,673
expenses, it has been estimated that in each transaction
with the aim of absorbing company losses
following the completion of the merger, the results of the
of the same sum, without returning capital to
merged company will improve by Ch$820 million. This is
shareholders and therefore maintaining the
due to reduced fixed expenses (by Ch$240 million) and
same number of shares, and to modify the
reduced financial expenses (Ch$580 million).
Fourth article and the First Transitory article of
the statutes, so they reflect this reduction.
4. Expert Report
A copy was sent to the S.V.S (on March 3, 2006), of the
2. The Merger of Chilectra S.A. (former Elesur S.A.)
expert report regarding the economic value of the equity
and Chilectra S.A., through the absorption of
of Chilectra S.A. and Chilectra S.A. (former Elesur S.A.)
the latter by the former. That is, Chilectra S.A.
as also the determinations stipulated in the exchange
(formerly Elesur S.A.), was to absorb Chilectra
equation of shares pertaining to said company’s. The
S.A.; the new Chilectra company agencies
aforementioned report was published on January 31,
where to function through their Cayman Islands
2006, made by Mr. Eduardo Walker Hitschfeld, and
office. Due to the merger, Chilectra S.A. will be
financed by Chilectra S.A. (former Elesur S.A.). This
dissolved in order to incorporate it to Chilectra
expert report and the one financed by Chilectra S.A.
S.A. (former Elesur S.A.), so that shareholders of
through the same expert, published on the same date as
Chilectra, will become shareholders of Chilectra
the former, and sent to the S.V.S ( to annex the essential
S.A. (former Elesur). This is due to the increase
facts sent by Chilectra S.A. on February 27, 2006), will
in capital, which corresponds to the exchange
be subject to the study and approval of the Chilectra S.A.
of assets, whereby Chilectra S.A. (ex Elesur)
Extraordinary General Shareholders (organized for March
acquired all assets and liabilities relating to
31, 2006); said meeting will mainly concern the merger
Chilectra S.A. and succeeded it with regard to
between Chilectra S.A. and Chilectra S.A. (former Elesur
all its rights, obligations and permits. Regarding
S.A.) . A copy of the expert report financed by Chilectra
the merger, the total assets, liabilities, obligations
S.A. is attached to the present communication.
and rights relating the Chilectra S.A. Cayman
5. Ordinary and Extraordinary Shareholders
by the Chilectra S.A. (former Elesur) Cayman
Agreements
Islands Agency. The legal effects of the merger
Dated March 31, 2006, the company informed about
will take effect from the 1st of April 2006.
Islands Agency will be incorporated and acquired
the following:
Annual Report 2006 | 87
ESSENTIAL FACTS
3. A p p r o v a l o f t h e F i n a n c i a l S t a t e m e n t s
6. Inform that, in compliance with the stipulations
c or responding to exercises f inalized on
in Articles 69 and 70 of Public Company Law
December 31, 2005 and expert reports which
18,046, the approval of the Merger, by the
were took in account to the merger.
General Extraordinary Shareholders Meeting,
4. To Increase Chilectra S.A. (former Elesur S.A.)
to retire from Chilectra S.A. (former Elesur
social capital by Ch$302,578,793,634, for which
S.A.) once they are invoiced for the value of
conceded dissenting shareholders the right
approval of Chilectra S.A. (former Elesur S.A.)
their shares.
statutes will be needed, in the following areas: (a)
modification of the fourth article which deals with
3° Having acknowledged that the Merger through
social capital, by increasing the capital amount
absorption of Chilectra S.A. by Elesur S.A. was
through emission of 1,110,471,933 payable
approved by the General Extraordinary Shareholders
shares (and other conditions dictated by the
Meeting of Chilectra S.A., it is appropriate then for
Shareholders Meeting), or an alternate amount
Elesur S.A. to recognize as accounting income in its
determined by the Extraordinary Shareholders
its March 31, 2006 Financial Statement), its right to
Meeting. These will be emitted by the Chilectra
compensate future taxes with tributary losses in past
S.A. Board of Directors and distributed as
exercises by approximately Ch$100,000 million.
payment relating to the merger, to the Chilectra
S.A. shareholders; the shares will be distributed
Exchange of Shares
at a rate of 3.0337 Chilectra S.A. (former Elesur
Through the Board of Directors agreement, dated July 10,
S.A.) share for every one Chilectra S.A. share.
2006, the exchange of Chilectra S.A. titles for those of Elesur
These shares will be understood as paid through
S.A. (today Chilectra S.A.) was perfected.
the proprietorship of Chilectra S.A. which will
be absorbed by Chilectra S.A. (former Elesur
New Organizational Structure
S.A.) through the merger, and (b) modification
In the Chilectra S.A. Ordinary Directory Session Nº 9/2006,
of the First Transit article, so that it reflects the
celebrated on July 25, 2006, a new organizational structure
modifications mentioned in the aforementioned
was approved.
subheading (a).
Consequently, there were accepted the resign of the following
5. Approve (i) the reform of Chilectra S.A. (former
company staff members: Juan Camilo Olavarría Couchot
Elesur S.A.) by-laws by modifying the following
(Operational and Market Administration Manager–position
articles: (a) modification of the First article, so
will no longer exists), Marcelo Silva Iribarne (Regional
as to replace the Chilectra S.A. (former Elesur
Distribution Manager- position will no longer exists), Marcelo
S.A.) campany name for that of Chilectra S.A.,
Castillo Sibilla (Communication Manager–will be replaced
(b) modifying the Third article, to adjust the social
by Juan Pablo Larraín M.) and Klaus Winkler Speringer
objectives of Chilectra S.A. (former Elesur S.A.)
(Planning and New Business Manager- position will no
for those of Chilectra S.A. (c) modify the Fourth
longer exist). Meanwhile, Commercial Management was
and First Transitory article, to reflect the increase
created (dependent on the General Manager) and realized
in capital produced in the merger, in the terms
by Andreas Gebhardt Strobel.
indicated in the prior subheading, (d) modify
the Ninth article, stating that Directors will be
Change of Director
remunerated, (e) modify the Eight and Tenth-
In the ordinary Chilectra S.A. Board of Directors Session
Quarter articles, to eliminate all reference to the
Nº 13/2006, dated November 30, 2006, the resign of Director
existence of Director substitutes; (ii) approve and
Mr. Alberto Martin Rivals was accepted and Mr. José María
set the resummarized and updated social statute
Calvo Ibánez- Martin was named in order to replaced
text of the absorbing company.
him, in conformity with the stipulations of Law N° 18,046,
article 32.
88
| Annual Report 2006
(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:192)(cid:79)(cid:70)(cid:192)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)
(cid:42)(cid:79)(cid:82)(cid:71)(cid:69)(cid:192)(cid:50)(cid:79)(cid:83)(cid:69)(cid:78)(cid:66)(cid:76)(cid:85)(cid:84)(cid:192)
(cid:35)(cid:37)(cid:47)
(cid:50)(cid:65)(cid:70)(cid:65)(cid:69)(cid:76)(cid:192)(cid:44)(cid:215)(cid:80)(cid:69)(cid:90)
(cid:36)(cid:73)(cid:83)(cid:84)(cid:82)(cid:73)(cid:66)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:192)(cid:65)(cid:78)(cid:68)(cid:192)(cid:51)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:192)(cid:50)(cid:69)(cid:71)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:35)(cid:82)(cid:73)(cid:83)(cid:84)(cid:215)(cid:66)(cid:65)(cid:76)(cid:192)(cid:51)(cid:199)(cid:78)(cid:67)(cid:72)(cid:69)(cid:90)
(cid:35)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:42)(cid:85)(cid:65)(cid:78)(cid:192)(cid:48)(cid:65)(cid:66)(cid:76)(cid:79)(cid:192)(cid:44)(cid:65)(cid:82)(cid:82)(cid:65)(cid:210)(cid:78)
(cid:44)(cid:69)(cid:71)(cid:65)(cid:76)(cid:192)(cid:35)(cid:79)(cid:85)(cid:78)(cid:83)(cid:69)(cid:76)
(cid:39)(cid:79)(cid:78)(cid:90)(cid:65)(cid:76)(cid:79)(cid:192)(cid:54)(cid:73)(cid:65)(cid:76)
(cid:35)(cid:79)(cid:77)(cid:77)(cid:69)(cid:82)(cid:67)(cid:73)(cid:65)(cid:76)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:33)(cid:78)(cid:68)(cid:82)(cid:69)(cid:65)(cid:83)(cid:192)(cid:39)(cid:69)(cid:66)(cid:72)(cid:65)(cid:82)(cid:68)(cid:84)
(cid:50)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:192)(cid:65)(cid:78)(cid:68)(cid:192)(cid:37)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:39)(cid:85)(cid:73)(cid:76)(cid:76)(cid:69)(cid:82)(cid:77)(cid:79)(cid:192)(cid:48)(cid:206)(cid:82)(cid:69)(cid:90)
(cid:46)(cid:69)(cid:84)(cid:83)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:37)(cid:78)(cid:82)(cid:73)(cid:81)(cid:85)(cid:69)(cid:192)(cid:38)(cid:69)(cid:82)(cid:78)(cid:199)(cid:78)(cid:68)(cid:69)(cid:90)
(cid:40)(cid:85)(cid:77)(cid:65)(cid:78)(cid:192)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:83)(cid:192)(cid:65)(cid:78)(cid:68)(cid:192)(cid:41)(cid:78)(cid:78)(cid:79)(cid:86)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:35)(cid:82)(cid:73)(cid:83)(cid:84)(cid:73)(cid:199)(cid:78)(cid:192)(cid:40)(cid:69)(cid:82)(cid:82)(cid:69)(cid:82)(cid:65)
(cid:48)(cid:76)(cid:65)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:192)(cid:65)(cid:78)(cid:68)(cid:192)(cid:37)(cid:67)(cid:79)(cid:78)(cid:79)(cid:77)(cid:73)(cid:67)(cid:192)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:82)
(cid:42)(cid:85)(cid:65)(cid:78)(cid:192)(cid:48)(cid:65)(cid:66)(cid:76)(cid:79)(cid:192)(cid:51)(cid:80)(cid:79)(cid:69)(cid:82)(cid:69)(cid:82)
Further, within said session, and in the conformity with the
ENDESA S.A. (HEADQUARTERS)
stipulations in Circular N° 1526 of the S.V.S., the following
members of the Committee of Directors were designated:
The Board of Directors of Empresa Nacional de Electricidad
Jorge Rosenblut Ratinoff, Hernán Felipe Errázuriz Correa
S.A. is informed (on Januar y 27, 2006) that in their
and José María Calvo-Sotelo Ibañez-Martín.
January 26, 2006 session, it agreed to set up an Ordinary
Dividends
Shareholders Meeting at 10:00 March 21, 2006 in the
Sheraton Hotel Santiago, located on Santa María Avenue
The company Board of Directors Session dated July 25,
N° 1742; and an Extraordinary Shareholders Meeting on the
2006, agreed on distributing (starting August 30, 2006), an
same day, in the same place, to proceed immediately after
interim dividend (N° 1) of Ch$18.00 per share, charged to
the Ordinary Shareholders Meeting.
2006 profits.
The Ordinary Shareholders Meeting will deal with and decide
In the Board of Directors session dated October 24, 2006, it
on, the following items:
was agreed to distribute an interim dividend N° 2 starting on
November 30, 2006, valued at Ch$8.00 per share, charged
1. Approval of the Annual Report, Balance, Financial
to the profits of year 2006.
Statements and Inquiries External Auditors corresponding
to exercise ended on December 31, 2005,
Annual Report 2006 | 89
ESSENTIAL FACTS
2. Distribution of profits relating to the exercise and
would effectively establish a new number of articles and
distribution of dividends,
titles in the by-laws; and adequating references has been
made in articles 28 bis, and 36 bis to the other statutory
3. Exposition regarding the Company Dividend Policy and
articles of the new numeration.
information regarding the proceedings to be put in place
in the distribution of the aforementioned;
4. Approve the resummarize of the by-laws;
4. Policies regarding Investments and Financing proposed
5. Adopt all the agreements necessary for creation and
by the Board of Directors;
completion of the aforementioned subheadings.
5. Election of the Board of Directors;
-
It was informed as essential fact on March 1, 2006
6. Settling of the Board of Directors Remuneration;
yesterday agreed, that in completion of the dividend
that the ordinary session of the Board of Directors
7. Settling of the Committee of Directors and Committee
Endesa Ordinary Shareholders Meeting should take
of Auditors Remuneration and the determination of
place (on March 21, 2006) to enable the distribution
policy (corresponding to the exercise of 2005), an
its budget;
of a definitive dividend of above Ch$5.82 per share
to be effective as of March 30 2006, subject to the
8. The Committee of Directors Report;
aforementioned Shareholders Meeting’s approval.
9. Designation of External Auditors;
-
In the Company’s Ordinary and Extraordinary
Shareholders Meeting’s (Dated March 21, 2006), all
10.
Election of two Account Inspectors and two substitutes,
the matters proposed in the table where approved.
as also the determination of their remuneration;
11. Other issues of public interest under the faculties of the
Board of Directors proposition to pay a definitive dividend
Shareholders Meeting, and information regarding the
for 2005 exercise (worth Ch$5.82 per share). Said dividend
transactions referred to in Article 44 of Law N° 18,046;
will be paid since March 30, 2006, to shareholders listed in
In this instance, the Shareholders Meeting approved the
the Shareholders Registry from March 24, 2006.
The Extraordinary Shareholders Meeting will study and
decide regarding the following matters:
The publication of the corresponding article was made on
March 22, 2006 in the Santiago newspaper “El Mercurio”.
1. Amendment of article 28 of the by-laws, with regard to
the matters in the Extraordinary Shareholders Meeting,
-
It was noted as essential fact on March 22, 2006,
and aimed at adequate part (d) to the text of Nº4 article
that in yesterday’s Ordinary Shareholder’s Meeting
57 of Law N° 18,046;
of the Empresa Nacional de Electricidad S.A,
new Company Board of Directors was chosen for
2. Modify the final section within article 36, of the by-laws,
a period of three years, starting from the date of
to make the article adequate to the section 1 of article
said meeting.
7 in Law N° 18,046;
The Board of Directors is now comprised of the following
3. Modify the by-laws, in order to include the norms relative
people:
to the Committee of Directors and the Audit Committee
including the incorporation of title and respective articles,
Jaime Bauzá
(as stipulated in domestic and international laws under
Jaime Estévez
which the Company functions). The aforementioned,
José María Fernández
90
| Annual Report 2006
Enrique García
Héctor López
Antonio Pareja
Luis Rivera
Carlos Torres
Leonidas Vial
constituted, achieved agreements and other legal instruments
that allow the joined development of the Aysén Project.
- On April 26, 2006, in conformity with the agreement
adopted by the Board of Directors in its ordinary session,
the following essential fact was informed:
In the Extraordinary Board of Directors session (of the same
The Board of Directors agreed to authorize the subscription
date), the directors agreed to designate Mr. Luis Rivera Novo
by the Company to an Memorandum of Understanding (MOU)
as President of the company and Board, and Mr. Antonio
with the Colbún S.A. Company, in order to regulate eventual
Pareja Molina as Vice-president.
joint participation in the development and exploitation of the
In the same session, it was also agreed to designate the
Aysén Project.
directors Luis Rivera Novo, Jaime Bauzá Bauzá and Jaime
The documents objective is to stipulate the basic agreements
Estevez Valencia as members of the committee of directors.
and general criteria that have been reached by each party
It was also agreed to designate Jaime Bauzá Bauzá, José
in order to subscribe to the document in the shortest period
María Fernández Olano and Enrique García Alvarez as
possible (mainly prior to August 31, 2006) and before the
members of Audit Committee.
Colbún S.A. due diligence process is carried out concerning
- Due to the information regarding the Aysén Project
permit the joint function of Endesa Chile and Colbún in the
published in the press (Diario La Tercera) on April 12,
development, financing, construction and exploitation of the
the contracts, agreements and other legal instruments that
2006, on the same date the S.V.S was informed of the
Aysén Project.
following:
The MOU oversees that suspension conditions are fulfilled
In fact, for some time until current date, advanced
(as stipulated in the document); one of these conditions
conversations and negotiations have taken place (under
concerns the finalizing of the due diligence process and
confidentiality agreements) between the company’ executive
the agreements referred to in the contribution contracts,
administration and Colbún S.A. with the aim of reaching
shareholders agreements and other relevant contracts.
an Understanding Agreement, which has not happened
Further, the parties will constitute a public company for the
yet, and which would imply additional negotiations during
development and exploitation of the Aysén Project, whereby
a predetermined period, and if successful, create an
Endesa Chile will have shareholder participation equal to 51%
association to conjunctly commit to the development of the
of the public capital, and Colbún S.A. the remaining 49%.
aforementioned Aysén Project. The project consists in the
In consideration to its contribution to the Projects, Endesa
construction of 4 centrals (sizes big and medium), and a
Chile will receive a counterclaim of 12,3% of the energy
support central for works, all with a 2,355MW capacity.
produced by various plants within the Aysén Project for 30
years counted from the sixth month of commercial operation
In the eventuality that the negotiations under current
of all Project centrals.
development do reach the consensus that would allow an
Understanding Agreement to be signed, there is the possibility
The surplus energy produced, after the aforementioned
for directors of both companies to approve the contents and
counterclaim, will be distributed 51% to Endesa Chile and
authorize subscription. Following this, the aforementioned
49% to Colbún S.A..
directors would inform the S.V.S and the market, through the
usual mechanism settled in current legislation.
The public company that will be created for this process
will return 100% of its energy to its shareholders in
A similar information pattern will take place where following
the aforementioned quantities. The shareholders will
the signing of said Understanding Agreement, other related
commercialize the energy in light of their individual and
agreements take place relating to the social vehicle to be
autonomous commercial enterprises, therefore, the company
Annual Report 2006 | 91
ESSENTIAL FACTS
will not commercialize directly with third parties, nor will it
concessions relevant to this type of project, all of which
sell the energy it produces in the spot market.
will be underway and solicited during years 2006 and 2007
(subject to the authorization and decisions of the relevant
Other relevant aspects of the MDE concern the administration
authorities).
of the company, the matters that must be considered in the
future shareholders agreement and the common clauses for
After the finalization of the preparatory activities which
the company, as also the termination of the joined association
precede a final decision regarding the determination to go
and the type of common clauses within these documents.
ahead with the Aysén Project. The decision will be made by
the Shareholders of Aysén Hydroelectric Centrals S.A., and
The company will leave a record of the structure of the joint
be subject to the determinations of the relevant authorities
association with Colbún S.A. and has preferred a system that
and organizations (regarding the issues and matters which
assures transparency and competitiveness in the national
have been presented them).
electric sector, achieved through due consideration regarding
the project centrals as simple productive units which, will
The Endesa Chile Board of Directors, created the company
distribute the total produced energy to Endesa Chile and
constitution once the suspension conditions where fulfilled
Colbún S.A., which in an autonomous and independent
(on which the constitution was pending) and once the
way through the company which has been created. These
company was informed by Colbún S.A. of the finalization
two entities will then commercialize said energy in the
and approval of the due diligence of the Aysén Project. Post
national electric marketplace, in compliance with current
these occurrences, the Endesa Chile Board of Directors,
legislation.
proceeded to approve the contents of the documents (which
had been objected to, and stalled negotiations with Colbún
- The following essential facts are informed on August 31,
S.A. from last April).
2006:
In today’s Empresa Nacional de Electricidad S.A. ordinary
to the S.V.S and to the general market values on April
Board of Directors session, this company agreed to
26, 2006 have been fulfilled with the completion of the
The suspension conditions sent as essential information
the constitution of a new company named Centrales
aforementioned.
Hidroeléctricas de Aysén S.A.. The constitution of said
central is legally proposed for September 2006; Endesa Chile
-
It is informed as essential fact on October 26, 2006, that
will definitely receive 51% and Colbún S.A. the remaining
in today’s ordinary session of the Empresa Nacional de
49%, of the capital.
Electricidad S.A. Board of Directors, it was agreed that
the resignations by the following people will be accepted:
The aforementioned company will be responsible for the
Mr. Luis Rivera Novo (a director, president of the Board
study, development, financing, construction and exploitation
of Directors and member of the Committee of Directors),
of the Aysén Project which consists of a hydroelectric
and of Mr. Antonio Pareja Molina (a director and vice-
generation project in the XI Region; an estimated capacity
president of the Company Board of Directors).
of 2,355 MW has been calculated for the project, through five
hydroelectric centrals, that will use the same line for electric
In the same session, the Board of Directors designated Mr.
transmission. From the date recorded in its constitution, the
Mario Valcarce Durán and Mr. Pedro Larrea Paguaga as
company must continue developing preparatory actions for
new Company directors; these were designated as president
the Project, consisting of (among others), the completion of
and vice-president of the Board of Directors, respectively.
feasibility studies, hydraulics, pre-project engineering and
Additionally, Mr. Mario Valcarce Durán was designated as
environmental impact statements, as also the administration
new member of the Company Committee of Directors.
and achievement of permission, authorizations and
92
| Annual Report 2006
-
In compliance with the stipulations in Circular N° 660 of
6. Designation of Independent External Auditors;
the S.V.S., it was informed on December 1, 2006, that in
a Board of Directors session dating (November 30, 2006)
7. Other subjects that are of public interest and under the
the Empresa Nacional de Electricidad S.A. agreed to pay
authority of Ordinary Shareholder Shareholders Meeting,
a provisory dividend of Ch$2.57 per share (in cash and
and informations about operations referred to article 44
commissioned by profits stemming from 2006 exercise),
of Law N° 18,046.
to shareholders listed in the Shareholders Registry (at
the end of December 16, 2006).
In this instance, the Shareholders Meeting approved the
PEHUENCHE
proposal by the Company Board of Directors to pay a
definitive dividend of the 2005 exercise, which represents
a total payable dividend of Ch$33.581873 per share. Said
- Dated January 26, 2006, the Company informed that
dividend will be paid from April 19, 2006, to the shareholders
the Board of Directors unanimously agreed with the
listed in the Shareholders Registry as of April 11, 2006.
current Company Dividend Policy, proposing a Ordinary
Shareholders Meeting (for March 20 this year), for the
The publication of the corresponding note, took effect on
definitive dividend payment of Ch$33.5811873 per share.
April 10, in the Santiago newspaper, “El Mercurio”.
This proposition is based on the distribution of 100% of
the liquid profit of the yearly exercise (ending December
- On June 30, 2006, the association informed that the
31, 2005), and through it, the proposal will also fulfill the
Company Board of Directors, in their June 29, 2006
Dividend Policy informed by the Board of Directors in
session, approved the distribution of Provisory Dividend,
the Ordinary Shareholders Meeting of April 6, 2005.
corresponding to the exercise of 2006, for a sum of
Ch$17.16 per share. On July 26, 2006, said dividend
Similarly, it was agreed to propose in the Ordinar y
will be paid to the shareholders listed in the Shareholders
Shareholders Meeting set to take place on March 20, 2006,
Registry five working days prior.
that the aforementioned dividend be paid from the April
19, this year to the shareholders listed in the Registry five
On September 29, 2006, the association informed that on
working days before said date.
September 28, 2006, the Board of Directors approved the
As of March 20, 2006, was held the Company’ Ordinary
to the exercise of 2006, for a sum of Ch$25.27 per share.
Shareholders Meeting, which had the objective of know and
Said dividend, will be paid to from October 18, 2006 to
solve about the following matters:
the shareholders listed in the Shareholders Registry from
distribution of a Second Interim Dividend, corresponding
1. Approval of the Report, Balance, Financial Statements
October 12, 2006.
and Inquiries External Auditors corresponding to
-
In conformity with the stipulations in the S.V.S. ‘Official
transactions, finalized on December 31, 2005;
Circular N° 3572, on December 22, 2006, the Company
informed of the resignation of Mr. Leonardo Contreras
2. Distribution of profits of dividends;
Rivera from his position from Company Director as of
December 21, 2006.
3. Exposure of Company Policies regarding Dividends and
information about the proceedings that are realized in
- On December 29, 2006, the Company informed that
the distribution of Dividends,
in their December 28, 2006 session, the Board of
Directors approved the distribution of a Third Interim
4. Designation of the remuneration of the Committee
Dividend corresponding to the fiscal year of 2006, for a
of Directors and the budget related to the function of
sum of Ch$26.72 per share. Said dividend will be paid
the Committee;
5. Report on Board of Directors expenses;
from January 24, 2007, to the shareholders listed in the
Shareholders Registry from January 18, 2007.
Annual Report 2006 | 93
SUBSIDIARIES AND ASSOCIATE
COMpANIES
94
| Annual Report 2006
AGRÍCOLA
DE CAMEROS
Name
Sociedad Agrícola de Cameros Limitada
Kind of Company
Limited Partnership
Tax N°
77.047.280-6
Address
Camino Polpaico a Til-Til, S/N Til-Til.
Telephone
(56 2) 378 4700
Fax
(56 2) 378 4702
External Auditors
Deloitte & Touche
Subscribed and paid capital (M$)
5,738,046
Holding of Enersis (direct and indirect)
57.5%
Corporate Purpose
The society’s objective is the exploitation of a
farmland.
Administration
Complete with the presence of 3 representatives
together.
Executive Officer
Hugo Ayala Espinoza
AGRÍCOLA
E INMOBILIARIA
PASTOS VERDES
Name
Agrícola e Inmobiliaria Pastos Verdes
Limitada
Kind of Company
Limited Partnership
Tax N°
78.970.360-4
Address
Santa Rosa 76, Piso 9, Santiago
Telephone
(56 2) 601 0601
Fax
(56 2) 601 0519
External Auditors
Deloitte & Touche
Subscribed and paid capital (M$)
37,029,390
Holding of Enersis (direct and indirect)
55%
Corporate Purpose
The society’s objectives are the exploitation of
farmland and the development of all types of
real estate activities, including the urbanization,
commercialization, and transfer of lands in any
legal way possible.
Administration
Complete with the presence of 3 representatives
together.
Executive Officer
Bernardo Küpfer Matte
AGUAS SANTIAGO
PONIENTE
Name
Aguas Santiago Poniente S.A.
Kind of Company
Private Company, Held under Public Company
normative
Tax N°
96.773.290-7
Address
Américo Vespucio Nº 0100, Pudahuel,
Santiago
Telephone
(56 2) 601 0601
Fax
(56 2) 601 0519
External Auditors
Deloitte & Touche
Shares
3,996,874
Subscribed and paid capital (M$)
5,643,981
Holding of Enersis (direct and indirect)
55%
Corporate Purpose
To exclusively establish, construct, and exploit
public services that are aimed at producing
enersis06
and distributing drinking water; to collect, treat,
and dispose of sewage water, and to carry out
the other duties that the D.F.L. Nr. 382 of 1998
expressly authorizes and its modifications.
Directors
President
Víctor Manuel Jarpa Riveros
Directors
Cristóbal Sánchez Romero
Andrés Salas Estrades
Luis Felipe Edwards Mery
José Manuel Guzmán Nieto
Executive Officer
Jorge Alé Yarad
AMPLA
Name
Ampla Energia e Serviços S.A.
Kind of Company
Publicly Held Limited Liability Stock Company
Address
Praça Leoni Ramos, N°01 – São Domingos,
Niteroi, Rio de Janeiro, Brasil
Telephone
(55 21) 2613 7031
Fax
(55 21) 2613 7199
P.O. Box
24.210-205
Web site
www.ampla.com
E-mail
arochinha@ampla.com
External Auditors
Deloitte Touche Tohmatsu
Total N° of shares
3,922,515,918,446
Subscribed and paid capital (Br. Real)
998,230,386.65
Holding of Enersis (direct and indirect)
69.88%
Investments as proportion of Enersis assets
1.86%
Corporate Purpose (excerpt)
To study, plan, project, construct, and explore the
production, transmission, conversion, distribution,
and marketing systems of electrical energy, as
well as to provide correlative services that have
2006 Annual Report | 95
SUBSIDIARIES AND ASSOCIATE COMPANIES
been or could be granted; to carry out research
in the field of energy and to participate as a share
holder in other energy sector companies.
Fax
(55 21) 2613 7153
External Auditors
Deloitte Touche Tohmatsu
Subscribed and paid capital (Br. Real)
120,000,000
Holding of Enersis (direct and indirect)
69.88%
Investments as proportion of Enersis assets
0.17%
Corporate Purpose
To study, plan, project, construct, and explore the
production, transmission, conversion, distribution,
and marketing systems of electrical energy, as
well as to lend correlative services that have
been or could be granted; to lend services of
any kind and to participate as a share holder in
other energy sector companies.
Directors
President
Manuel Jorge Correia Minderico
Vice President
Mário Fernando de Melo Santos
Directors
Gonzalo Carbó
João Ricardo de Azevedo Ribeiro
Cristián Herrera Fernández
Marcelo Llévenes Rebolledo
Antonio Basílio Pires e Abuquerque
Martín Serrano Spoerer
Juan Pablo Spoerer Hurtado
Alternate Directors
Joaquim Pedro de Macedo Santos
José Miguel Bandeira Pires Monteiro Lopes
ARA - INGENDESA
Name
Consorcio Ara - Ingendesa Ltda.
Kind of Company
Limited Partnership
Tax N°
77.625.850-4
of plans and construction. Apart from that,
whether it be at its own or at others´ expense,
to provide all types of construction, to set up
and to start, for itself or third parties, all types
of establishments, be they industrial or not, and
the marketing for ourselves or third parties the
goods and services that are produced. In general,
to develop activities that are related directly or
indirectly to the above mentioned operations, all
phases of commercialization, including the buying
and selling of furniture, exporting and importing,
and any business that partners have agreed upon
that relate to the activities pointed out.
Paid Capital (M$)
1,000
Holding of Enersis (direct and indirect)
29.99%
Representatives
Rodrigo Alcaíno Mardones
Alejandro Santolaya de Pablo
Alternate Representatives
Fernando Orellana Welch
Julio Montero Montegu
Elías Arce Cyr
Cristián Araneda Valdivieso
ATACAMA FINANCE
Name
Atacama Finance Co.
Kind of Company
Exent Company
Address
Caledonian House P.O. Box 265 G, George Town,
Grand Cayman, Cayman Islands.
Corporate Purpose
The company’s main objective includes debt
financing in the financial market through credit
agreements and the issuing of coupons and other
documents or through loans to other companies,
particularly those that are involved with the
Atacama Project.
Paid Capital (M$)
3,354,057
Administration
President
Manuel Jorge Correia Minderico
Vice President
Mario Fernando de Melo Santos
Directors
Joao Alves de Azevedo Ribeiro
Marcos da Silva Crespo
Juan Pablo Spoerer Hurtado
Cristián Herrera Fernández
Martín Serrano Spoerer
(Enersis’ Chief financial Officer International)
Antonio Basilio Pires de Carvalho e
Albuquerque
Gonzalo Carbó
Alternate Directors
José Alves de Mello Franco
Fernando Urbina Soto
Joaquim Pedro de Macedo Santos
José Miguel Bandeira Pires Monteiro Lopes
Principal Directors
Director President
Marcelo Llévenes Rebolledo
Regulation Director
José Alves de Mello Franco
Commercial Director
Carlos Alberto Oliveira
Human Resources Director
Carlos Ewandro Naegale Moreira
Energy Losses Director
Claudio Rivera Moya
Administratie-Financial Director
Abel Alves Rochinha
Legal Director
Déborah Meirelles Rosa Brasil
Technical Director
Albino Motta da Cruz
Government Relationships and Environmental
Director
Mario Rocha
AMPLA
INVESTIMENTOS
Name
Ampla Investimentos e Serviços S.A.
Kind of Entity:
Open Corporation
Address
Santa Rosa 76 Piso 10, Santiago, Chile
Holding of Enersis (direct and indirect)
29.99%
Address:
Praça Leoni Ramos, N°01 – parte
São Domingos,Niterói, Rio de Janeiro, Brasil
Telephone
(55 21) 2613 7071
Corporate Purpose
The provision of engineering services that
c ompr ise the projec tion, planning, and
implementation of engineering projects and
studies, consultancy services, granting of
assistance and technical information, and the
administration, inspection, and development
Directors
Tom Miller
Andrés Salvestrini Balmaceda
David Baughman
Vacant
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| 2006 Annual Report
BETANIA
Name
Central Hidroeléctrica de Betania S.A. E.S.P.
construction, installation, operation, and
exploitation of central generators of electrical
energy and the business related to these
activities.
Kind of Company
Public utility Corporation
Paid Capital (Br. Real)
289,339,835.85
Address
KM. 35 Vía Neiva – Yaguará, Colombia.
Holding of Enersis (direct and indirect)
53.36%
Corporate Purpose
T he c ompany ’s main objec tive is t he
production and commercialization of electrical
energy.
Paid Capital (M$)
333,425,742
Holding of Enersis (direct and indirect)
59.98%
Directors
President
José Antonio Vargas Lleras
Directors
Carlos Martín Vergara
Emilio Archiva
Rafael Errázuriz Ruiz-Tagle
Sebastián Fernández
David Yanovich
Carlos Alberto Luna Cabrera
Alternate Directors
Fredy Urrea
Manuel Pesqueira
Patricia Marulanda
Renato Fernández
José Arturo López
Aquiles Mercado Fernández
Fredy Canen Anaya
Principal Directors
Executive Officer
Carlos Alberto Luna Cabrera
CACHOEIRA DOURADA
Directors
President
Francisco Javier Bugallo Sánchez
Directors
Aurelio de Oliveira
Guilherme Gomes Lencastre
Principal Directors
Executive Officer
Francisco Bugallo Sánchez
Commercial and Trading Manager
Manuel Herrera Vargas
Technical Officer
José Ignacio Pires
Human Resources Officer
Raimundo Câmara Filho
CAM
Name
Compañía Americana de Multiservicios
Ltda.
Kind of Company
Limited Partnership.
Tax N°
96.543.670-7
Address
Bulnes N° 1238, Santiago.
Telephone
(56 2) 389 7300
Fax
(56 2) 389 7342
Name
Centrais Elétricas Cachoeira Dourada S.A.
Web site
www.camchile.cl
Kind of Company
Closed Capital Publicly Held Liability Stock
Company
E-mail
cam@cam.enersis.cl
Address
Rodovia GO 206, Km 0, Cachoeira Dourada
Goiania, Goiás, Brasil.
Corporate Purpose
The company’s corporate purpose is
the carr ying out of studies, planning,
External Auditors
Deloitte & Touche Soc. de Auditores
y Consultores Ltda.
Subscribed and Paid Capital (M$)
2,572,038
Holding of Enersis (direct and indirect)
100%
enersis06
Investments as proportion of Enersis assets
1.10%
Corporate Purpose (excerpt)
The company’s corporate purpose is to carry
out on its own or through third parties and/or
third-party associates, in the country as well
as abroad, services in general, real estate
services and immovable asset construction, the
importation, exportation, and distribution of all
types of products.
Representatives and Senior Executives
Representatives
Cristóbal Sánchez Romero
Klaus Winkler Speringer
Alternate Representatives
Gonzalo Mardones Pantoja
Eduardo López Miller
Principal Directors
Executive Officer
Klaus Winkler Speringer
Chief Operations Officer
Gonzalo Mardones Pantoja
Chief Administration and Human Resources
Officer
Raúl Mella Varas
Chief Economic and Control Officer
Pedro Carrizo Polanco
Chief Quality Officer
Eduardo Villalobos Abad
Executive Officer CAM Brasil
Tomás Casanegra Rivera
Executive Officer CAM Perú
Ricardo Camezzana Leo
Executive Officer CAM Colombia
Carlos A. Zarruk Gómez
Executive Officer CAM Argentina
Daniel Strizinec
CAM ARGENTINA
Name
Compañía Americana de Multiservicios
(CAM) S.R.L.
Kind of Company
Limited Partnership
Address
Av. Vélez Sarsfield 1160, Capital Federal,
Argentina
Telephone
(54 11) 4302 2951/58
Fax
(54 11) 4302 2951/58
Total N° of Shares (quotes)
The capital is $1,000,000 divided into 1,000,000
shares.
2006 Annual Report | 97
SUBSIDIARIES AND ASSOCIATE COMPANIES
Subscribed and Paid Capital
The social capital is completely subscribed and
integrated.
Holding of Enersis (direct and indirect)
100%
Corporate Purpose (excerpt)
The company’s corporate purpose is to present
professional and technical services to companies
and national and international organizations,
public and private, and to provide advice,
technical assistance, staging, process control,
systems set up and maintenance, machinery
and equipment, transport and distribution
network maintenance, and everything related to
production, transport, and distribution of electric
energy, among other objectives.
Principal Directors
Titular Manager
Daniel Strizinec
CAM COLOMBIA
Name
Compañía Americana de Multiservicios
Limitada Colombia
Kind of Company
Limited Partnership
Address
AV. Carrera 68 No. 5-21, Bogotá, Colombia
Telephone
(57 1) 4173000
Fax
(57 1) 5651012
External Auditors
Deloitte & Touche Ltda.
Total N° of Shares
1,615,500
CAM BRASIL
Subscribed and Paid Social Capital (Col. $)
1,615,500,000
Name
Cam Brasil Multiserviços Limitada
Holding of Enersis (direct and indirect)
100%
Kind of Company
Limited Partnership
Address
Av José Mendonça de Campos, 680
São Gonçalo – RJ, Brasil
Telephone
(55 21) 2702-8001
Fax
(55 21) 2702-8000
P.O. Box
24.450-700
External Auditors
Deloitte Touche Tohmatsu.
Corporate Purpose
To carry out on its own, or through third parties
and/or through third-party associates, in the
country as well as abroad, the following activities:
Services: the offering of professional and
technical services to national and international
businesses and organizations, public and
private; construction and real estate services
through the construction and refurbishment
of all types of furniture, and project execution;
The importation and exportation of all types of
material; and marketing through the purchasing,
sales exchange, dividing of, consignment, and
distribution of all types of material.
Principal Directors
Executive Officer
Carlos Alberto Zarruk Gómez
Subscribed and Paid Capital (R$)
14,327,826
CAM PERÚ
Holding of Enersis (direct and indirect)
100%
Corporate Purpose
The offering of electrical engineering services,
network and big job construction, and utility
large-scale commercial services.
Principal Directors
General Director
Tomás Casanegra Rivera
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| 2006 Annual Report
Name
Compañía Americana de Multiservicios del Perú
S.R.L.
Kind of Company
Limited Partnership
Address
Jr. Teniente César López Rojas 201, Piso 3,
Maranga, San Miguel, Lima, Perú
Telephone
(0511) 5611604
Paid Capital (M$)
88,150,545
Fax
(0511) 4523007
External Auditors
Gris y Hernández y Asociados S.AC. – Deloitte
& Touche.
Total N° of Shares
5,220,000
Subscribed and Paid Capital (Per. New Sun)
5,220,000
Holding of Enersis (direct and indirect)
100%
Corporate Purpose
The company’s corporate purpose is to carry out
on its own or through third-party professional
and technical services the management and
purchasing of materials or equipment for
electrical, water, gas, or communication services,
among others.
Principal Directors
Executive Officer
Ricardo Mario Camezzana Leo
CELTA
Name
Compañía Eléctrica Tarapacá S.A.
Kind of Company
Private Company
Tax N°
96.770.940-9
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
The company’s main corporate purpose is
the production, transport, distribution, and
supply of electric energy, nationally as well
as internationally, and as such, to obtain,
acquire, and enjoy its respective favors and
concessions. Additionally, another objective with
the intention of seeing it through to completion,
is the construction of a thermoelectric station,
the construction and operation of a wharf
or maritime installations, for the loading and
unloading of supplies and other products in
the area known as Punta de Patache, south of
Iquique, in the I Region. Likewise, the objective
includes the transmission line construction with
its substations between the main station and the
Doña Inés de Collahuasi copper mine; as well
as the reinforcing of the interconnected system
of Norte Grande.
Holding of Enersis (direct and indirect)
59.98%
Directors
President
Alejandro Wendling Aliaga
Directors
Alan Fischer Hill
Liones Roa Burgos
Executive Officer
Eduardo Soto Trincado
CEMSA
Name
Comercializadora de Energía del
Mercosur S.A.
Kind of Company
Public Company
Address
Pasaje Ing. E. Butty 220, Piso 16, Buenos Aires,
Argentina
Corporate Purpose
The company’s main corporate purpose is the
wholesale buying and selling of electric energy
produced by third parties and to be consumed
by third parties, including the importation
and exportation of electric energy and the
commercialization of royalties, as well as the
provision and/or carrying out of related services
of the above mentioned goals, in accordance with
existing regulations. The company could carry
out, as such, all subsidiary and complementary
activities that are linked with its corporate purpose,
having full legal power to acquire rights and to
enter into obligations and exercise any activity
that is not prohibited by law or this statute.
Paid Capital (M$)
7,489,700
Holding of Enersis (direct and indirect)
26.99%
Directors
President
José María Hidalgo Martín-Mateos
Vice President
José Agustín Venegas Maluenda
Fernando Antognazza
Alternate Directors
Arturo Pappalardo
Roberto José Fagan
Pedro Cruz Viné
Principal Directors
Executive Officer
Juan Carlos Blanco
CENTRALES
HIDROELÉCTRICAS
DE AYSÉN S.A.
Name
Centrales Hidroeléctricas de Aysén S.A.
Kind of Company
Private Company
Tax N°
76.652.400-1
enersis06
Tax N°
96.800.570-7
Address
Santa Rosa N°76, Piso 8, Santiago, Chile
Telephone
(56 2) 675 2000
Fax
(56 2) 675 2999
P.O. Box
1557 Santiago
Address
Miraflores 383, oficina 1302, Santiago, Chile
Web site
www.chilectra.cl
Corporate Purpose
The company’s main corporate purpose is
the development, financing, ownership and
exploitation of an hydroelectric project located
on Eleventh Region of Aysén, which comprises an
estimated capacity of 2,355 MW distributed within
five hydroelectric plants, which is denominated
“Aysén Project”. In order to fulfill its objective, its
line of business comprises the following activities:
a) electricity production and transportation; b)
supplying and commercialization of electricity
towards its shareholders; c) administration,
operation ans maintenance of hydraulic works,
electrical systems and hydroelectric generation
plants d) delivery of services related with its
corporate purpose. The aforementioned activities
could be carried out by it own or by third parties’
own. In order to compliance its purpose, the
company could obtain, buy and make use of the
concessions and permissions that required.
Paid Capital (M$)
19,920,000
Holding of Enersis (direct and indirect)
30.59%
Directors
President
Antonio Albarrán Ruiz-Clavijo
Rafael Mateo Alcalá
Juan Benabarre Benaiges
Rafael Errázuriz Ruiz-Tagle
Bernardo Larraín Matte
Luis Felipe Gazitúa Achondo
Principal Directors
Executive Officer
Hernán Salazar Zencovich
CHILECTRA
Name
Chilectra S.A.
Kind of Company
Publicly Held Limited Liability Stock Company
E-mail
comunicacion@chilectra.cl
Secutiries Register Inscription
N°0931
External Auditors
KPMG Auditores Consultores Ltda.
Total N° of Shares
1,159,679,806
Subscribed and paid capital (M$)
326,416,749
Holding of Enersis (direct and indirect)
99.09%
Investments as proportion of Enersis assets
19.23%
Corporate Purpose (excerpt)
To exploit in the countr y and abroad, the
distribution and sale of energy, be it electric,
hydraulic, thermal, caloric, or of any other form,
as well as the distribution, transport, and sale of
all kinds of fuel, supplying said energy or fuels to
the greater consuming public directly or through
other companies.
Directors
President
Jorge Rosenblut Ratinoff
Vice President
José M. Fernández Norniella
Directors
Pedro Buttazzoni Álvarez
José María Calvo-Sotelo Ibañez-Martín
Antonio Cámara Eguinoa
Hernán F. Errázuriz Correa
Marcelo Llévenes Rebolledo
Principal Directors
Executive Officer
Rafael López Rueda
Comunications Manager
Juan Pablo Larraín Medina
2006 Annual Report | 99
SUBSIDIARIES AND ASSOCIATE COMPANIES
Legal Counsel
Gonzalo Vial Vial
Distribution and Services Regional Manager
Cristóbal Sánchez Romero
Economic and Planning Manager
Juan Pablo Spoerer Hurtado
Innovation and Human Resources Manager
Cristián Herrera Fernández
Energy and Regulation Manager
Guillermo Pérez del Río
Chief Commercial Officer
Andreas Gebhardt Strobel
Networks Manager
Enrique Fernández Pérez
CHILECTRA INVERSUD
Name
Chilectra Inversud S.A.
Tax N°
99.573.910-0
Kind of Company
Private Company
Address
Santa Rosa 76, piso 8°, Santiago
Telephone
(562) 675 2000
Fax
(562) 675 2000
External Auditors
KPMG Auditores Consultores Ltda.
Total N° of Shares
89,200
Paid Capital (US$)
569,020,000
Holding of Enersis (direct and indirect)
99.09%
Corporate Purpose
To exploit the business of sales and distribution
of electric energy abroad, either on its own or
through third parties. Likewise, the company
could invest in foreign companies, as well as
invest in all types of commercial tools such
as in payments, vouchers, bonds, credit,
negotiable furnishing values, and other financial
or commercial documents, all with the vision of
receiving its earned and unearned income. As for
the preceding, the company could form, modify,
dissolve, and liquidate foreign companies, while
being able to also develop all the other activities
that would be complementary and/or related to
previous transfers.
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| 2006 Annual Report
Directors
President
Cristóbal Sánchez Romero
Vice President
Juan Pablo Spoerer Hurtado
Director
José Luis Acuña Velasco
Principal Directors
Executive Officer
José Luis Acuña Velasco
CHOCÓN
Name
Hidroeléctrica El Chocón S.A.
Kind of Company:
Publicly Held Limited Liability Stock Company
Address:
Av. España 3301, Buenos Aires; Argentina
Corporate Purpose
The company’s objective is the production and
commercialization of electric energy.
Paid Capital (M$)
180,063,881
Holding of Enersis (direct and indirect)
28.46%
Directors
President
Rafael Mateo Alcalá
Vice President
Bernardo J. Velar de Irigoyen
José Miguel Granged Bruñen
Miguel Ortiz Fuentes
Julio Valbuena Sánchez
Eduardo Adrián Carbajo
José Luis Mazzone
Enrique Díaz Riva
Alternate Directors
Fernando Antognazza
Francisco Domingo Monteleone
José María Hidalgo Martín-Mateos
José Luís Sierra
Luís A.Acuña
Carlos Arturo Principi
Aldo Luis Evitan
Vacant
Principal Directors
Executive Officer
Fernando Claudio Antognazza
CIEN
Name
Compañía de Interconexión Energética S.A.
Kind of Company
Public Company
Address
Praia de Flamengo, 200 -12º andar-parte, Río de
Janeiro, R.J. 22.210.030 - Brasil
Corporate Purpose
The company’s corporate purpose is electrical
energy’s production, industrialization, distribution,
and commercialization performance, including
the area of imports and exports.
Paid Capital (Br. Real)
285,044,682
Holding of Enersis (direct and indirect)
53.57%
Directors
President
Marcelo Llévenes Rebolledo
Vice President
Francisco Javier Bugallo Sánchez
Director
José Venegas Maluenda
Principal Directors
President Manager
Francisco Javier Bugallo Sánchez
Planning and Accounting Manager
Aurelio Ricardo Bustillo de Oliveira
Financial Manager
Guilherme Gomes Lencastre
Technical Manager
José Ignácio Pires Medeiros
Trading and Commercialization
Manuel Rigoberto Herrera Vargas
Human and Administrative Resources
Manager
Raimundo Câmara Filho
CODENSA
Name
Codensa S.A. E.S.P.
Kind of Company
Public Company
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 & Touche Ltda.
Total N° of Shares subscribed and paid
132,093,274
Subscribed and Paid Capital (Col $)
13,209,327,400
Holding of Enersis (direct and indirect)
21.73%
Investments as proportion of Enersis assets
1.84%
Corporate Purpose (excerpt)
The distribution and commercialization of
electric energy, as well as the implementation
of all activities that are common, similar,
complementary, and related to energy distribution
and commercialization, job execution, electrical
engineering design and consultancy, and product
marketing benefiting its clients.
Directors
President
Andrés Regué Godall
Directors
Carlos Bello Vargas
Orlando Cabrales Martínez
Alfredo Ergas Segal
(Chief Regional Finance Officer)
Astrid Martínez Ortiz
Pedro Rodríguez Tobo
Cristóbal Sánchez Romero
Alternate Directors
José Inostroza López
Henry Navarro Sánchez
Roberto Ospina Pulido
Luis Rueda Silva
Antonio Sedán Murra
Juan Pablo Spoerer Hurtado
Héctor Zambrano Rodríguez
Luis Larumbe Aragón
Legal Manager
Alvaro Camacho Borrero
Chief Planning and Control Officer
Roberto Ospina Pulido
Chief Human Resources Officer
Carlos Alberto Niño Forero
Chief Regulation Officer
Omar Serrano Rueda
Chief Auditing Officer
Alba Urrea Gómez
COELCE
Name
Companhia Energética do Ceará
Kind of Company
Foreign Publicly Held Liability Stock Company
Address
Av. Barão de Studart, 2917/83, Bairro Dionísio
Torres, Fortaleza, Ceará, Brasil
Telephone
(55 85) 3216 1350
Fax
(55 85) 3216 1247
Web site
www.coelce.com.br
E-mail
investor@coelce.com.br
External Auditors
Deloitte Touche Tohmatsu
Total N° of shares
155,710,600,088
Subscribed and paid capital (Br. Real)
433,057,722.64
Holding of Enersis (direct and indirect)
34.90%
Corporate Purpose (excerpt)
To explore the distribution of electric energy and
similar services in the state of Ceará.
Principal Directors
Chief Executive Officer
José Inostroza López
Chief Commercial Officer
David Acosta Correa
Chief Communications Officer
María Alexandra Velez Henao
Chief Distribution Officer
Margarita Olano Olano
Chief Financial and Administration Officer
Directors
President
Mario Fernando de Melo Santos
Vice President
Marcelo Llévenes Rebolledo
Directors
Luis Gastão Bittencourt da Silva
Irã da Silva Cardoso
José Alves de Mello Franco
Joao Ricardo de Azevedo Ribeiro
Fernando de Moura Avelino
enersis06
Jorge Parente Frota Júnior
Luis Carlos Ortins Bettencourt
Cristóbal Sánchez Romero
Gonzalo Vial Vial
Alternate Directors
Luciano Alberto Galasso Samaria
José Nunes de Almeida Neto
Antônio Basílio Pires e Albuquerque
José Miguel Bandeira Pires Monteiro Lopes
Juarez Ferreira de Paula
Nelson Ribas Visconti
José Caminha Alencar Araripe Júnior
Abel Alves Rochinha
José Renato Ferreira Barreto
Vladia Viana Regis
Principal Directors
Director President
Cristián Fierro Montes
Vice President Institutional and Comunicational
Projects Director
José Nunes de Almeida Neto
Commercial Director Vice President
Luciano Galasso Samaria
Technical Director Vice President
José Távora Batista
Strategic Planning and Control Director
Vice President
Abel Pérez Claros
Organization and Human Resources Director
Vice President
José Ferreira Barreto
Financial and Investor Relations Director
Vice President
Antonio Osvaldo Alves Teixeira
COMPAÑÍA PERUANA
DE ELECTRICIDAD
Name
Compañía Peruana de Electricidad S.A.C.
Kind of Company
Private Company
Address
Jr. Teniente César López Rojas 201, Maranga,
San Miguel, Lima, Perú
Telephone
(51 1) 561 1604
Fax
(51 1) 452 3007
P.O. Box
32, Lima, Perú
External Auditors
Gris y Hernández y Asociados S.AC. – Deloitte
& Touche.
2006 Annual Report | 101
SUBSIDIARIES AND ASSOCIATE COMPANIES
Total N° of Shares
98,538,403
Subscribed and Paid Capital (Per. New Sun)
98,538,403
CONSTRUCCIONES
Y PROYECTOS
LOS MAITENES
COSTANERA
Name
Endesa Costanera S.A.
Holding of Enersis (direct and indirect)
50.54%
Name
Construcciones y Proyectos Los Maitenes S.A.
Kind of Company
Public Company
Corporate Purpose
The company’s objective is to make investments
in general, especially those involving the
distribution and production of electric energy.
Kind of Company
Private Company
Tax N°
96.764.840-K
Address
Av. España 3301, Buenos Aires, Argentina.
Corporate Purpose
The company’s objective is the production and
commercialization of electric energy en masse.
Address
Américo Vespucio Nº 0100, Pudahuel,
Santiago
Paid Capital (M$)
86,247,712
Directors
Private Company without Directors
Principal Directors
Executive Officer
Ignacio Blanco Fernández
CONO SUR
Name
Compañía Eléctrica Cono Sur S.A.
Kind of Company
Public Company
Telephone
(56 2) 601 0601
Fax
(56 2) 601 0519
External Auditors
Deloitte & Touche
Total N° of Shares
295,100
Address
Edificio Omega. Av. Samuel Lewis y Calle 53,
Apartado Postal 4493, Panamá 5, República de
Panamá.
Corporate Purpose
a) The construction of all types of civil works,
installations, buildings, housing, offices, etc., on
its own or by third parties, on company or third-
party land that is developed or not.
b) The sale or disposal of such works and
structures by any means necessary.
c) The study and development of plans for
such structures, including the engineering,
architecture, financing, commercialization, etc.
In the development of the company’s actions, the
company could always act on its own or through
third parties, be it directly or in participation with
partnerships, communities, companies, and legal
representatives of any kind, of which the company
could even take on the administration.
Subscribed and paid capital (M$)
4,029,525
Holding of Enersis (direct and indirect)
55%
Corporate Purpose
a) The construction of all types of civil works,
installations, buildings, housing, offices, etc.,
on its own or by third parties, on company or
third party land that is developed or not. b) The
sale or disposal of such works and structures
by any emans necessary. c) The study and
development of plans for such structures,
including the engineering, architecture, financing,
commercialization, etc. In the development of the
company’s actions, the company could always act
on its own or through third parties, be it directly or
in participation with partnerships, communities,
companies, and legal representatives of any
kind, of which the company could even take on
the administration.
Paid Capital (M$)
912,959,220
Holding of Enersis (direct and indirect)
59.98%
Directors
President
Manuel Irarrázaval Aldunate
Andrés Salvestrini Balmaceda
Alfredo Ergas Segal
(Chief Regional Finance Officer)
Carlos Martin Vergara
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| 2006 Annual Report
Directors
President
Cristóbal Sánchez Romero
Directors
Victor Manuel Jarpa Riveros
Andrés Salas Estrades
Luis Felipe Edwards Mery
José Manuel Guzmán Nieto
Principal Directors
Executive Officer
Bernardo Küpfer Matte
Holding of Enersis (direct and indirect)
38.54%
Directors
President
Rafael Mateo Alcalá
Vice President
Máximo Bomchil
Julio Valbuena Sánchez
César F. Amuchástegui
José María Hidalgo Martín-Mateos
Miguel Ortiz Fuentes
Juan Rivera Palma
Eduardo J. Romero
Vacant
Alternate Directors
Francisco Monteleone
Fernando C. Antognazza
Jorge Burlando Bonino
Roberto Fagan
Sergio Schmois
Gabriel Cerdá
Bernardo Iriberri
José Cox Donoso
Alfredo Mauricio Vítolo
Principal Directors
Executive Officer
José Miguel Granged Bruñen
Chief Administration and Finance Officer
Gabriel Cerdá Apalategui
Chief Human Resources Officer
Rigoberto Allendes Verdugo
Chief Planning and Control Officer
Jorge Burlando
Chief Comercial Officer
Sergio Schmois
Chief Production Officer
Francisco Monteleone
CTM
Name
Compañía de Transmisión del Mercosur S.A.
Kind of Company
Public Company
Holding of Enersis (direct and indirect)
50.93%
Address
Bartolomé Mitre 797, Piso 13, Buenos Aires,
Argentina.
Corporate Purpose
To provide high-tension electrical energy
transport services, whether they be involving
national or international electrical systems, in
accordance with existing legislation, to which
end the company could participate in national
or international bids, turning it into a public
service licensee in transporting national or
international high-tension electrical energy
and carrying out any and all duly related
activities.
Paid Capital (Ar. $)
14,176,000
Holding of Enersis (direct and indirect)
53.56%
Directors
President
José María Hidalgo Martín-Mateos
Francisco Javier Bugallo Sánchez
Arturo Plácido Miguel Pappalardo
Alternate Directors
José Agustín Venegas Malvenda
Juan Carlos Blanco
Roberto José Fagan
Principal Directors
Executive Officer
Francisco Javier Bugallo Sánchez
DISTRILEC INVERSORA
Name
Distrilec Inversora S.A.
Kind of Company
Foreign Private Company
Address
San José N° 140 (C1076AAD)
Buenos Aires, Argentina
Telephone
(54 11) 4370 3700
Fax
(54 11) 4381 0708
External Auditors
Deloitte & Co. Sr. L.
Subscribed and Paid Capital (Ar $)
497,612,021.
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Corporate Purpose
The company’s main objective is to dedicate
itself, in general, to its own activities of creating
electrical energy. The company could likewise
carry out civil, industrial, and commercial
activities and operations, and of any other
kind that are related and conducive to its main
corporate purpose.
Paid Capital (M$)
459,893,164
Holding of Enersis (direct and indirect)
19.83%
Directors
President
Rafael Mateo Alcalá
Vice President
Javier García Burgos Benfield
Juan Benabarre Benaiges
Fritz Du Bois Freund
Reinaldo Llosa Barber
Ricardo Harten Costa
Alfonso Bustamante Canny
Alternate Directors
Julián Cabello Yong
Arrate Gorostidi Aguirresarobe
Francisco García Calderón Portugal
Roberto Cornejo Spickernagel
Alberto Triulzi Mora
Jaime Zavala Costa
Joseph Lessard Meath
Principal Directors
Executive Officer
José Griso Ginés
Christian Schroder Romero
Chief Legal Assesment Officer
Milagros Noriega Cerna
Chief Finance Officer
Julián Cabello Yong
Chief Exploitation Officer
Robert Cornejo Spickemagel
Chief Commercial Officer
Investments as proportion Of Enersis’ Assets
1.98%
Corporate Purpose (excerpt)
The company’s sole objective is investing capital
in established companies or ones that will be
established, whose main purpose is electrical
energy distribution or who participate directly
or indirectly in companies that do so through
carrying out all types of financial and investment
activity, except for those provided by laws dealing
with finance companies, the buying and selling
of public and private documents, bonds, shares,
negotiable obligations, granting of loans, and
the deposit of its funds in any type of bank
account.
Directors
President
Joao Ferreira Becerra de Souza
Vice President
Rafael López Rueda
Directors
Alan Arntsen
Daniel Casal
Fermín Demonte
Mariano Florencio Grondona
Rigoberto Mejía Aravena
Luis Miguel Sas
Marcelo Silva Iribarne
Gonzalo Vial Vial
Alternate Directors
Pedro Eugenio Aramburu
Manuel María Benites
Santiago Daireaux
Esteban Diez Peña
Mónica Diskin
Roberto José Fagan
Martín Mandarano
Luis Ríos
Enrique Rosello
Jorge Vugdelija
Principal Directors
Executive Officer
José María Hidalgo Martín-Mateos
EDELNOR
EDEGEL
Name
Edegel S.A.A.
Kind of Company
Public Company
Name
Empresa de Distribución Eléctrica de Lima Norte
S.A.A.
Kind of Company
Foreign Publicly Held Liability Stock Company
Address
Jr. Teniente Cesar López Rojas 201 Urb.
Maranga, San Miguel, Lima, Perú
Address
Av. Víctor Andrés Belaúnde N° 147, edificio real 4,
piso 7, Centro Empresarial Camino Real, San
Isidro, Lima, Perú.
Telephone
(51 1) 561 2001
2006 Annual Report | 103
SUBSIDIARIES AND ASSOCIATE COMPANIES
Fax
(51 1) 561 0451
Web site
www.edelnor.com.pe
E-mail
enlinea@edelnor.com.pe
External Auditors
Gris, Hernández y Asociados, S.C.- Deloitte &
Touche
Total N° of Shares
738,563,900
Kind of Company
Foreign Publicly Held Liability Stock Company
Address
San José 140 (1076), Capital Federal,
Argentina
Telephone
(54 11) 4370 3700
Fax
(54 11) 4381 0708
Web site
www.edesur.com.ar
Subscribed and Paid Capital (Per. New Sun)
738,563,900
E-mail
emailservicio@edesur.com.ar
Holding of Enersis (direct and indirect)
33.4%
External Auditors
Deloitte & Co. S.R.L.
Corporate Purpose (excerpt)
To dedicate itself to its own activities of providing
electrical energy distribution, transmission, and
creation services.
Directors
President
Reynaldo Llosa Baber
Vice President
Ignacio Blanco Fernández
Directors
Fernando Bergasa Cáceres
Róger Espinosa Reyes
Rafael López Rueda
Emilio Recoder de Casso
Guillermo Jesús Morales Valentín
Ricardo Vega Llona
Principal Directors
Executive Officer
Ignacio Blanco Fernández
Chief Commercial Officer
Carlos Solís Pino
Chief Organization and Human Resources
Manager
Rocío Pachas Soto
Chief Technical Officer
Walter Sciutto Brattoli
Chief Administration and Control Officer
Juan Pablo Harrison Calvo
Chief Legal and Regulation Officer
Luis Salem Hone
Chief Communication Officer
José Otárola Luna
Chief Energy and Regulation Management Officer
Alfonso Valle Cisneros
EDESUR
Name
Empresa Distribuidora Sur S.A.
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| 2006 Annual Report
Total N° of Shares
898,585,028
Subscribed and Paid Capital (Ar. $)
898,585,028
Holding of Enersis (direct and indirect)
65.39%
Investments as proportion of Enersis assets
2.07%
Corporate Purpose (excerpt)
The distribution and commercialization of electric
energy and related operations.
Directors
President
Rafael López Rueda
Vice President
Joao Bezerra de Souza
Directors
Rafael Arias Salgado
Miguel Beruto
Juan Pablo Larraín Medina
Rigoberto Mejía Aravena
Marcelo Silva Iribarne
Gonzalo Vial Vial
Jorge Volpe
Alternate Directors
Pedro Aramburu
Alan Arntsen
Manuel Benites
Luis Ríos
Santiago Daireaux
Roberto Fagan
Daniel Casal
Mariano Grondona
Pablo Lepiane
Principal Directors
Executive Officer
José María Hidalgo Martín-Mateos
Chief Environmental Quality and Sustainable
Development Officer
José María Gottig
Chief Communication Officer
Daniel Martini
Chief Internal Auditing Officer
Jorge Lukaszczuk
Legal Director
Álvaro Estivariz
Human Resources Director
Héctor Ruiz Moreno
Commercial Director
Sandro Rollan
Distribution Director
Daniel Colombo
Services Director
Daniel Alasia
Planning and Economic Control Director
Juan Garade
Administration and Finance Director
Juan Verbitsky
ELECTROGAS
Name
Electrogas S.A.
Kind of Company
Private Company
Tax N°
96.806.130-5
Address
Evaristo Lillo Nº 78, piso 4, oficina Nº41,
Santiago, Chile.
Corporate Purpose
The company’s objective is to provide natural
gas and other fuel transport services on its
own and through third parties, whereby it could
construct, operate, and maintain gas pipelines,
oil pipelines, poly-pipelines, and complementary
installations.
Paid Capital (M$)
11,321,888
Holding of Enersis (direct and indirect)
25.49%
Directors
President
Claudio Iglesis Guillard
Pedro Gatica Kerr
Felipe Aldunate Hederra
Carl Weber Silva
Rosa Herrera Martínez
Alternate Directors
Enzo Quezada Zapata
Víctor Briazo Peralta
Jaime Fuenzalida Alessandri
Jorge Bernardo Larraín Matte
Vacant
Principal Directors
Executive Officer
Carlos Andreani Luco
EMGESA
Name
Emgesa S.A. E.S.P.
Kind of Company
Public Service Publicly Held Limited Liability
Stock Company.
Address
Carrera 11 Nº 82-76, Piso 4 Santa Fe de Bogotá,
D.C. Colombia.
Corporate Purpose
The company’s objective is the creation and
commercialization of electric energy, as well as
the carrying out of all activities that are related,
similar, connected, complementary, and involved
with the production of energy.
Paid Capital (M$)
577,355,128
EMPRESA ELÉCTRICA
DE COLINA
Name
Empresa Eléctrica de Colina Limitada
Kind of Company
Limited Partnership
Tax N°
96.783.910-8
Address
Chacabuco N°31, Colina, Santiago, Chile
Telephone
(562) 844-4280
Fax:
(562) 844-4490
External Auditors
KPMG Auditores Consultores Ltda.
Paid Capital (M$)
88,222
Holding of Enersis (direct and indirect)
14.07%
Holding of Enersis (direct and indirect)
99.09%
enersis06
Holding of Enersis (direct and indirect)
59.97%
Directors
President
José Miguel Granged Bruñen
Vice President
Néstor José Belgrano
Director
Francisco Martín Gutiérrez
Alternate Directors
José María Hidalgo Martín-Mateos
Patricio Alberto Martín
Marcelo A. Den Toom
ENDESA BRASIL
Name
Endesa Brasil S.A.
Kind of Company
Public Company
Address
Praia do Flamengo, 200 – 16º andar –Rio de
Janeiro, Brasil
Directors
President
Andrés Regué Godall
Astrid Martínez Ortiz
Lucio Rubio Díaz
Claudio Iglesis Guillard
María Fernanda Lafourie
Enrique Borda Villegas
Camilo Sandoval Sotelo
Alternate Directors
Fernando Gutiérrez Medina
Henry Navarro Sánchez
David Post
Mónica Cheng Arango
Martha Veleño Quintero
Manuel Jiménez Castillo
Héctor Zambrano Rodríguez
Principal Directors
Executive Officer
Lucio Rubio Díaz
Andrés Caldas Rico
Legal Director
Gustavo López
Chief Administration and Finance Officer
Alvaro Pérez Uz
Chief Control Officer
Carlos Alberto Luna
Chief Production Officer
Fernando Gutiérrez Medina
Chief Commercial Officer
Maria Celina Restrepo
Chief Communications Officer
Corporate Purpose
The exploitation, production, transpor t,
distribution, and buying and selling of energy and
electric equipment, as well as the implementation
of electrical installations.
Telephone
(55 21) 3607 9500
Fax
(55 21) 3607 9555
Principal Directors
Executive Officer
Leonel Martínez Garrido
ENDESA ARGENTINA
Name
Endesa Argentina S.A.
Kind of Company
Public Company
Address
Suipacha 268, piso 12, Buenos Aires,
Argentina.
Corporate Purpose
The company’s corporate purpose is to invest
in businesses focused on the production,
transport, distribution, and commercialization of
electric energy, as well as to carry out financial
transactions, with the exception of those reserved
by law exclusively for banks.
Paid Capital (M$)
31,470,587
Corporate Purpose
The company’s corporate purpose is:
(i) Participation in the share capital of other
companies and corporations that act or will be
set up to act directly or indirectly in any electrical
segment sector, including service-providing
companies to acting companies in such a sector,
in Brazil or abroad, as a member, or stock holder,
like as in legally permitted limits and, when the
case is warranted, subject to the securing of
mandatory regulation approval.
(ii) The participation, individually or through a
joint venture, company, consortium, or other
similar forms of association, in bids, plans, and
initiatives to carry out the services mentioned in
the preceding article.
External Auditors
Deloitte Touche Tohmatsu
Independent Auditors
Total N° of Shares
170,877,378 Ordinary voting shares
Subscribed and paid capital (Br. Real)
916,878,914
Holding of Enersis (direct and indirect)
53.57%
2006 Annual Report | 105
SUBSIDIARIES AND ASSOCIATE COMPANIES
Investments as proportion of Enersis assets
5.82%
Directors
President
Mario Fernando de Melo Santos
Directors
Ignacio Antoñanzas Alvear
(Enersis Chief Executive Officer)
José María Calvo-Sotelo Ibañez Martín
Antonio Basilio Pires de Carvalho e
Albuquerque
Rafael Mateo Alcalá
Rafael López Rueda
Héctor López Vilaseco
Principal Directors
Executive Officer
Marcelo Llévenes Rebolledo
Vice-CEO
Francisco Bugallo
CFO and Investor Relations
Abel Alves Rochinha
Planning and Control
Aurelio De Oliveira
Institutional Relationships
Eugenio Cabanes
Legal
Antonio Basilio Pires e Albuquerque
ENDESA BRASIL
PARTICIPACOES
LIMITADA
Name
Endesa Brasil Participacoes Limitada
Kind of Company
Limited Partnership
Address
Praia do Flamengo 200, 12º andar, Rio de
Janeiro, Brasil
External Auditors
Ernst & Young
Subscribed and Paid Capital (Th.$)
$ 643,330
Holding of Enersis (direct and indirect)
59.97%
Corporate Purpose
The corporate purpose is comprised in other
companies, as in being a member, share holder
or quotist; the offering of services, including the
management of owned and third-party goods
related to the electric sector; and the detection
and study of new markets and investment
alternatives, particularly in the electric sector.
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| 2006 Annual Report
Attorneys
Francisco Javier Bugallo Sánchez
Guilherme Gomes Lencastre
Aurelio Ricardo Bustillo de Oliveira
Manuel Rigoberto Herrera Vargas
ENDESA CHILE
Name
Empresa Nacional de Electricidad S.A.
Kind of Company
Publicly Held Limited Liability Stock Company
Tax N°
91.081.000-6
Address
Santa Rosa N°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
Secutiries Register Inscription
N°114
Directors
Jaime Bauzá Bauzá
Héctor López Vilaseco
Enrique García Álvarez
Carlos Torres Vila
José María Fernández Olano
Jaime Estévez Valencia
Leonidas Vial Echeverría
Principal Directors
Executive Officer
Rafael Mateo Alcalá
Chief Communications Officer
Renato Fernández Baeza
Legal Counsel
Carlos Martín Vergara
Chief Administration and Finance Officer
Manuel Irarrázaval Aldunate
Chief Human Resources Officer
Juan Carlos Mundaca Álvarez
Chief Planning and Control Officer
Julio Valbuena Sánchez
Chief Trading and Commercialization Officer
José Venegas Maluenda
Chief Energy Planning Officer
Rafael Errázuriz Ruiz-Tagle
Chief Production and Transportation Officer
Juan Benabarre Benaiges
Chief Endesa Chile Generation Officer
Claudio Iglesis Guillard
ENDESA CHILE
INTERNACIONAL
Name
Endesa Chile Internacional S.A.
External Auditors
Ernst & Young Serv. Prof. de Auditoría Ltda.
Kind of Company
Exent Company
Total N° of Shares
8,201,754,580
Subscribed and paid capital (M$)
1,138,620,063
Holding of Enersis (direct and indirect)
59.98%
Investments as proportion of Enersis assets
30.31%
Corporate Purpose (excerpt)
The production and supply of electric energy, the
sale of consultancy and engineering services in
the country and abroad and the construction and
exploitation of infrastructure construction.
Directors
President
Mario Valcarce Durán
Vice President
Pedro Larrea Paguaga
Address
Caledonian Bank & Trust Limited, Caledonian
House, Mary Street P.O. Box 1043, George Town,
Grand Cayman, Cayman Islands.
Corporate Purpose
The company’s objective is to carry out all
business or activity in accordance with Cayman
Islands legislation. Basically, business dealings
and activities are referring to financial matters,
with the exception of those that the law reserves
for banks and those that prohibit doing business
with firms or people residing in Cayman Islands.
Change of Name
Changing name from Endesa Chile Overseas
Co. to Endesa Chile Internacional was adopted
by shareholder agreement, with date August
16, 2001. This resolution is under the protocol
N° 138, August 20, 2001 in the notary’s office
Fernando Opazo Larraín. Santiago.
enersis06
Address
Rodovia 422, Km 1 s/nº, Complexo Industrial e
Portuário de Pecém Caucaia – Ceará, Brasil
ENDESA MARKET
PLACE
Paid Capital (M$)
391,773,372
Holding of Enersis (direct and indirect)
59.98%
Directors
Manuel Irarrázaval Aldunate
Carlos Martín Vergara
Andres Salvestrini Balmaceda
Alfredo Ergas Segal
(Enersis’ Regional Chief Finance Officer)
ENDESA ECO
Name
Endesa Eco S.A.
Kind of Company
Private Company
Tax N°
76.313.310-9
Address
Santa Rosa 76 piso 12, Santiago, Chile
External Auditors
Ernst & Young
Corporate Purpose
The objective of this company is to promote and
develop plans that have to do with renewable
energy, such as with minihydro, eolian, geothermic,
solar, biomass, and others; to identify and develop
Mecanismo de Desarrollo Limpio (Clean Growth
Mechanism) projects and act as receiver and
promoter of the emission reduction certificates
that are obtained in said projects.
Paid Capital (M$)
582,980
Holding of Enersis (direct and indirect)
59.98%
Directors
Juan Benabarre Benaiges
Manuel Irarrázaval Aldunate
Renato Fernández Baeza
Principal Directors
Executive Officer
Wilfredo Jara Tirapegui
P.O. Box
61600-000
Telephone
(55 85) 3464-4100
Fax
(55 85) 3464-4197
E-mail
arebello@endesabr.com.br
External Auditors
Ernst & Young Auditores Independentes S/S
Corporate Purpose (excerpt)
(i) To study, project, construct, and explore
production, transmission, distribution, and
commercialization systems of electrical energy
that are awarded, permitted, or authorized
by any legal title, such as the exercising of
other activities associated with the offering of
any services related to the above mentioned
activities.
(ii) The acquisition, obtaining, and exploration of
any rights, concessions, and privileges related
to the activities mentioned above, as well as
the practice of all other business and activities
necessary to attain its objective; and
(iii) The participation in the share capital of other
companies and corporations, as a share holder,
member, or participant, whatever its objectives
are.
Total N° of Shares
151,935,778
Subscribed and paid capital (M$)
151,935,779
Holding of Enersis (direct and indirect)
53.57%
Directors
President
Francisco Bugallo Sánchez
Director Vice President
Marcelo Llévenes Rebolledo
Director
Guilherme Gomes Lencastre
ENDESA FORTALEZA
Name
CGTF -Central Geradora Termeléctrica
Fortaleza S.A.
Kind of Company
Closed Capital Publicly Held Liability Stock
Company
Principal Directors
Executive Officer
Manuel Herrera Vargas
Chief Human Resources and Administrative
Officer
Raimundo Câmara Filho
Chief Financial Officer
Guilherme Gomes Lencastre
Chief Technical Officer
José Pires Medeiros
Chief Planning, Control and Accounting Officer
Aurélio Bustillo de Oliveira
Name
Endesa Market Place en Liquidación S.A.
Kind of Company
Foreign Publicly Held Liability Stock Company
Address
Ribera de Loira, 60 CEP 28042, España
Telephone
(34 91) 213 1000
Fax
(34 91) 213 4199
External Auditors
Deloitte, S.L.
Subscribed and Paid Capital (euros)
6,743,800
Holding of Enersis (direct and indirect)
15.00%
Corporate Purpose (excerpt)
B2B and new technologies.
Liquidator
Ramón Cabezas Navas
Principal Directors
Liquidator
Ramón Cabezas Navas
ENERGEX
Name
Energex Co.
Kind of Company
Exent Company
Address
Caledonian House P.O. Box 265 G, George Town,
Grand Cayman, Cayman Islands.
Corporate Purpose
The company’s objective is to carry out all
business or activity in accordance with Cayman
Islands legislation. In the case of business and
activities referring to finances, the exceptions
would be those that the law reserves for banks.
It is also prohibited to do business with firms or
people residing on Cayman Islands.
Paid Capital (MS$)
5,324
Holding of Enersis (direct and indirect)
29.99%
2006 Annual Report | 107
SUBSIDIARIES AND ASSOCIATE COMPANIES
Directors
Tom Miller
Andrés Salvestrini Balmaceda
David Baughman
Vacant
ENIGESA
Name
Endesa Inversiones Generales S.A.
Kind of Company
Private Company
Tax N°
96.526.450-7
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
The company’s objective is the acquisition,
sale, management, and exploitation, on its
own account or through third parties, all types
of furniture goods, properties, furniture values,
and other business items; to carry out studies
and consultancy; to offer all types of services;
to participate in all types of investment and
especially those related to the energy business;
to participate in all types of companies and
to carry out all operations, actions, and
contracts that relate to the above mentioned
objectives.
Paid Capital (M$)
2,612,752
Corporate Purpose
a) The administration and management of the
Gasoducto Atacama Chile Limitada corporations,
Gasoducto Atacama Argentina Limitada,
Gasatacama Generación Limitada, and the other
companies that the members agree on;
b) The investment of its resources, on its own
account or through third parties, in all types of
furniture goods or properties, physical or non-
physical, securities, stocks and business items.
Paid Capital (M$)
155,183,214
Holding of Enersis (direct and indirect)
29.99%
Directors
President
Rafael Mateo Alcalá
Tom Miller
David Baughman
Vacant
Alternate Directors
Juan Benabarre Benaiges
Claudio Iglesis Guillard
Fernando Gallino
Dan Dexter
Principal Directors
Executive Officer
Rudolf Araneda Kauert
GASATACAMA
GENERACIÓN
Holding of Enersis (direct and indirect)
59.96%
Name
Gasatacama Generación S.A.
Directors
Manuel Irarrázaval Aldunate
Juan Carlos Mundaca Álvarez
Jaime Montero Valenzuela
Principal Directors
Executive Officer
Juan Carlos Mundaca Álvarez
GASATACAMA
Name
Gasatacama S.A.
Kind of Company
Private Company
Tax N°
96.830.980-3
Address
Isidora Goyenechea 3365, Piso 8, Santiago,
Chile
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| 2006 Annual Report
Kind of Company
Private Company
Tax N°
78.932.860-9
Address
Isidora Goyenechea 3365, Piso 8, Santiago,
Chile.
Corporate Purpose
a) To exploit the production, transmission,
purchasing, distribution, and sales of electric
energy or of any other type. b) The purchasing,
extraction, exploitation, processing, distribution,
commercialization, and sale of solid, liquid,
and gas fuels. c) The sale and offering of
engineering ser vices; d) The securing,
transfer, purchasing, renting, obligation, and
exploitation, by any means, of the concessions
that the general law of electrical services,
maritime concessions, and water (of any
source) exploitation rights refers to. e) To invest
in all types of goods, physical or non-physical,
furniture or properties; f) The organization and
setting-up of any type of company, whose
objectives are related or involved with energy
in any of its forms or that mainly supply electric
energy or that have to do with any of the
activities defined above.
Paid Capital (M$)
64,364,694
Holding of Enersis (direct and indirect)
29.99%
Directors
President
Rafael Mateo Alcalá
Tom Miller
David Baughman
Vacant
Alternate Directors
Juan Benabarre Benaiges
Claudio Iglesis Guillard
Fernando Gallino
Dan Dexter
Principal Directors
Executive Officer
Rudolf Araneda Kauert
GASODUCTO ATACAMA
ARGENTINA
Name
Gasoducto Atacama Argentina S.A.
Kind of Company
Private Company
Tax N°
78.952.429-3
Address
Isidora Goyenechea 3365, Piso 8, Las Condes,
Santiago, Chile.
Corporate Purpose
The company’s objective is the transport of
natural gas on its own account, through outside
sources or in conjunction with third parties
within Chilean territory or in other countries,
including the construction, emplacement, and
exploitation of gas pipelines and other activities
related directly or indirectly to said objective. This
company established an agency in Argentina
under the name; “Gasoducto Cuenca Noroeste
Limitada Sucursal Argentina”, whose purpose is
the implementation of the gas pipeline between
the locality of Cornejo in the Salta Province and
the Argentine-Chilean border near the Jama Pass
in the 2nd. Region.
Paid Capital (M$)
56,182,414
Holding of Enersis (direct and indirect)
29.99%
Principal Directors
Executive Officer
Rudolf Araneda Kauert
Directors
President
Rafael Mateo Alcalá
Tom Miller
David Baughman
Vacant
Alternate Directors
Juan Benabarre Benaiges
Claudio Iglesis Guillard
Fernando Gallino
Dan Dexter
Principal Directors
Executive Officer
Rudolf Araneda Kauert
GASODUCTO ATACAMA
CHILE
Name
Gasoducto Atacama Chile S.A.
Kind of Company
Private Company
Tax N°
78.882.820-9
Address
Isidora Goyenechea 3365, Piso 8, Las
Condes, Santiago, Chile.
Corporate Purpose
The company’s objective is the transport
of natural gas on its own, or in conjunction
with third parties within Chilean territory or
in other countries, including the construction
and emplacement of gas pipelines and other
activities related directly or indirectly with said
objective.
Paid Capital (M$)
34,140,865
Holding of Enersis (direct and indirect)
29.99%
Directors
President
Rafael Mateo Alcalá
Tom Miller
David Baughman
Alternate Directors
Juan Benabarre Benaiges
Claudio Iglesis Guillard
Fernando Gallino
Dan Dexter
enersis06
Corporate Purpose
The company’s objective is to carry out activities
related to the production of electric energy,
directly and/or through companies set up for
this purpose.
GASODUCTO TALTAL
Paid Capital (M$)
192,651,221
Name
Gasoducto Taltal S.A.
Kind of Company
Private Company
Tax N°
77.032.280-4
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
The company’s objective is to transpor t,
commercialize, and distribute natural gas on its
own, through outside sources, or in conjunction
with third parties, within Chilean territory,
especially between the localities of Mejillones
and Paposo in the 2nd. Region , including the
construction, emplacement, and exploitation of
gas pipelines and other activities related directly
or indirectly with said objective.
Paid Capital (M$)
15,000,978
Holding of Enersis (direct and indirect)
29.99%
Directors
Rudolf Araneda Kauert
Pedro de La Sotta Sánchez
Rafael Zamorano Chaparro
Eric Bongardt Boettiger
Alternate Directors
Luis Cerda Ahumada
Alejandro Sáez Carreño
Gustavo Venegas Castro
Luis Vergara Aguilar
Principal Directors
Executive Officer
Rudolf Araneda
Holding of Enersis (direct and indirect)
35.77%
Directors
President
Rafael Mateo Alcalá
Vice President
Javier García Burgos Benfield
Juan Benabarre Benaiges
José María Hidalgo Martín-Mateos
Mario Valcarce Durán
José Chueca Romero
Ignacio Blanco Fernández
Joseph Lessard Meath
Alberto Triulzi Mora
Alternate Directors
Juan Cabello Yong
Juan Antonio Rozas Mori
José María Hidalgo Martin Mateos
Fritz Du Bois Freund
Stephen Mitchell Pearlman
Milagros Noriega Cerna
Roberto Cornejo Spickernagel
Guillermo Lozada Pozo
Principal Directors
Executive Officer
José Griso Ginés
Milagros Noriega Cerna
Chief Finance Officer
GNL CHILE
Name
GNL Chile S.A.
Kind of Company
Private Company
Tax N°
76.418.940-K
GENERANDES PERÚ
Address
Isidora Goyenechea 3477, piso 19,
Las Condes, Santiago
Name
Generandes Perú S.A.
Kind of Company
Public Company
Address
Av. Víctor Andrés Belaúnde N°147, Torre Real,
Piso 7, San Isidro, Lima, Perú.
Corporate Purpose
The company will have as its sole objective
the provision of management, administration,
logistical, and coordination services as a
contractor or agent of the group of companies
that promotes a plan to secure the supply of liquid
natural gas, its re-gasification, and delivery in
Chile’s central area.
2006 Annual Report | 109
SUBSIDIARIES AND ASSOCIATE COMPANIES
Paid Capital (M$)
$10,210
Holding of Enersis (direct and indirect)
14.14%
Roberto Fagan
Gabriel Cerdá
Rigoberto Allendes Verdugo
Sergio Falzone
Leonardo Katz
Vacant
Directors
President
Enrique Dávila Alveal
Rafael Mateo Alcalá
Eduardo Morandé Montt
Bernardo Larraín Matte
Felipe Cerón Cerón
Alternate Directors
Paula Hidalgo Mandujano
Claudio Iglesis Guillard
Gonzalo Palacios Vásquez
Felipe Aldunate Hederra
Héctor Rojas Brito
Principal Directors
Executive Officer
Antonio Bacigalupo Gittins
HIDROINVEST
Name
Hidroinvest S.A.
Kind of Company
Public Company
INGENDESA
Name
Empresa de Ingeniería Ingendesa S.A.
Kind of Company
Private Company
Tax N°
96.588.800-4
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
The company’s objective is the provision of
engineering services, job inspection, receiving and
inspection of equipment and materials, a laboratory,
industrial studies, business management in different
fields, environment consultancy, including the carrying
out of environmental impact studies, and consulting
services in general in every field, in the country as well
as abroad, be it directly, associated with or through
third parties, by which the company could form, or
incorporate itself with other companies, corporations,
foundations, or consortiums of any kind.
Address
Av. España 3301, Buenos Aires; Argentina.
Paid Capital (M$)
2,037,888
Corporate Purpose
The provision of engineering services which
comprise the projection, planning and carrying out
of engineering plans and studies, consultancy offices,
granting of technical information and assistance,
and work and design development. Additionally,
the company offers on its own account, or through
outside sources, all types of works, the setting up and
initiating of all types of establishments for itself or third
parties, industrial or non-industrial, commercializing
for itself or third parties the goods and services
produced. In general, to develop activities related
directly or indirectly with the operations mentioned,
all types of commercial activity, including the buying
and selling of furniture, exports and imports, and
all business that the members agree on and that
are related to the activities indicated. Besides what
has been mentioned, a special objective of the
company is the awarding and carrying out of the
Fiscal Inspection Consultancy Contract and the
Concession Contract Justice Center of Santiago.
Paid Capital (M$)
1,000
Holding of Enersis (direct and indirect)
29.99%
Representatives
Rodrigo Alcaíno Mardones
Alejandro Santolaya de Pablo
Alternate Representatives
Cristian Araneda Valdivieso
Elías Arce Cyr
Julio Montero Montegu
Fernando Orellana Welch
Corporate Purpose
The company’s objective is to acquire and
maintain a principal share in Hidroeléctrica El
Chocón S.A.
Paid Capital (M$)
10,735,404
Holding of Enersis (direct and indirect)
41.94%
Directors
President
Rafael Mateo Alcalá
Vice President
Bernardo J. Velar de Irigoyen
Directors
Miguel Ortiz Fuentes
José Miguel Granged Bruñen
Fernando Claudio Antognazza
Julio Valbuena Sánchez
Francisco Domingo Monteleone
Carlos Principi
Alternate Directors
Daniel Garrido
José María Hidalgo Martín-Mateos
110
| 2006 Annual Report
Holding of Enersis (direct and indirect)
59.98%
INGENDESA BRASIL
Directors
President
Juan Benabarre Benaiges
Rafael de Cea Chicano
Aníbal Bascuñán Bascuñán
Principal Directors
Executive Officer
Rodrigo Alcaíno Mardones
INGENDESA - ARA
Name
Sociedad Consorcio Ingendesa - Ara Ltda.
Kind of Company
Limited Partnership
Tax N°
76.197.570-6
Name
Ingendesa do Brasil Ltda.
Kind of Company
Limited Partnership.
Address
Av. Rio Branco 115, pavimento 10, sala 1005,
Centro, Río de Janeiro, Brasil.
Corporate Purpose
The corporate purpose comprises the provision
of engineering services, studies, plans, technical
consultancy, administration, work control and
supervision, inspection and receiving of materials
and equipment, skills and laboratory services, as
well as other services that legal authorities permit
in practice regarding engineering, architecture,
agronomy, geology, and meteorology, in all of its
specializations, in the country and abroad, directly
or indirectly, whereby the company could participate
in companies or consortiums of any kind.
Address
Santa Rosa 76 Piso 10, Santiago, Chile
Paid Capital (M$)
3,628
Holding of Enersis (direct and indirect)
59.98%
Osvaldo Dinner Reich
Carlos Freire Canto
Attorney
General Director
Sergio Campos Ribeiro
INGENDESA
MINMETAL
Name
Consorcio Ingendesa–Minmetal Ltda.
Kind of Company
Limited Partnership
Tax N°
77.573.910-k
Address
Santa Rosa N° 76, Santiago, Chile
Corporate Purpose
The corporate purpose comprises the provision
of engineering services which include the
projection, planning and carrying out of
engineering plans and studies, consultancy
services, the granting of technical information
and assistance, and the administration,
inspection, and development of works and
projects. The company could also carry out on
its own account, or through outside sources, all
types of works, set up and initiate all types of
establishments on its own account or through
third parties, industrial or non-industrial,
commercializing for itself or third parties the
goods and/or services produced. In general,
the company could develop all the activities
related directly or indirectly with the operations
mentioned, all types of commercial activity,
including the buying and selling of furniture,
imports and exports, and all other business
that members agree on that relate to the
activities already mentioned. Apart from what
has already been stated, a special objective of
the company is the awarding and carrying out
of the construction and engineering jobs that
constitute the contract named LD-14.1 Technical
and Administrative Consultancy regarding the
Fiscal Inspection of the Construction Contract
LD-4.1 of the Laja Project – Diguillín.
Paid Capital (M$)
2,000
Holding of Enersis (direct and indirect)
29.99%
Representatives
Rodrigo Muñoz Pereira
Juan Benabarre Benaiges
Alternate Representatives
Rodrigo Alcaíno Mardones
Fernando Orellana Welch
INMOBILIARIA MANSO
DE VELASCO
Name
Inmobiliaria Manso de Velasco Limitada.
Kind of Company
Limited Partnership.
Tax N°
79.913.810-7
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
Corporate Purpose (excerpt)
The acquisition, transfer, commercialization,
and exploitation of real estate and an investment
company.
Subscribed and paid capital (M$)
25,916,800
Holding of Enersis (direct and indirect)
100%
Investments as proportion
of Enersis assets
1.04%
Attorneys
Join Together Attorneys
Cristóbal Sánchez Romero
Andrés Salas Estrades
Alternate
Jorge Alé Yarad
Alfonso Salgado Menchaca
Principal Directors
Executive Officer
Andrés Salas Estrades
Legal Asessor
Alfonso Salgado Menchaca
Chief Real Estate Development Officer
Gustavo Cardemil Dávila
Chief ENEA Project Officer
Bernardo Küpfer Matte
enersis06
INVERSIONES
DISTRILIMA
Name
Inversiones Distrilima S.A.
Kind of Company
Foreign Publicly Held Liability Stock Company
Address
Jr. Teniente César López Rojas Nº 201,
Maranga, San Miguel,
Lima, Perú
Telephone
(51 1) 561 1604
Fax
(51 1) 452 3007
P.O. Box
32, Lima, Perú
External Auditors
Gris y Hernández y Asociados S.A.C. – Deloitte
& Touche
Total N° of Shares
394,150,505 acciones
Subscribed and Paid Capital (Per. New Sun)
394,150,505
Holding of Enersis (direct and indirect)
55.90 %
Investments as proportion en activos de
Enersis
0.67%
Corporate Purpose (excerpt)
The company’s objective is to make investments
in general, especially those that are involving the
distribution and production of electric energy.
Directors
President
Ignacio Blanco Fernández
Vice President
Reynaldo Llosa Barber
Directors
Fernando Bergasa Cáceres
Rafael López Rueda
Emilio Recoder de Casso
Alternate Directors
Cristina Ávila García
Ricardo Camezzana Leo
Fernando Fort Marie
Walter Néstor Sciutto Brattoli
Zoila Patricia Mascaró Díaz
Principal Directors
Executive Officer
Ignacio Blanco Fernández
2006 Annual Report | 111
SUBSIDIARIES AND ASSOCIATE COMPANIES
INVERSIONES
ELECTROGAS
Name
Inversiones Electrogas S.A.
Kind of Company
Private Company
Tax N°
96.889.570-2
Address
Apoquindo 3076, Oficina 402, Las Condes,
Santiago, Chile
Corporate Purpose
The company’s objective is to buy, sell, invest in
and keep stocks in the Electrogas S.A. closed
public corporation.
Paid Capital (M$)
11,282,994
Holding of Enersis (direct and indirect)
25.49%
Directors
President
Claudio Iglesis Guillard
Pedro Gatica Kerr
Felipe Aldunate Hederra
Carl Weber Silva
Rosa Herrera Martínez
Alternate Directors
Enzo Quezada Zapata
Víctor Briazo Peralta
Jaime Fuenzalida Alessandri
Jorge Bernardo Larraín Matte
Vacant
Principal Directors
Executive Officer
Carlos Andreani Luco
Corporate Purpose
The company’s objective is to make investments
in energy projects in the north of Chile that are
connected with Gasoducto Atacama Compañía
Ltda., Gasoducto Cuenca Noroeste Ltda., and
Noroeste Pacífico Generación de Energía Ltda.;
as well as in Administradora Proyecto Atacama
S.A.; or its legal successors.
Paid Capital (M$)
79,149,068
Holding of Enersis (direct and indirect)
59.98%
Directors
President
Manuel Irarrázaval Aldunate
Rafael Mateo Alcalá
Andrés Salvestrini Balmaceda
Alternate Directors
Claudio Iglesis Guillard
Juan Benabarre Benaiges
Raúl Arteaga Errázuriz
Principal Directors
Executive Officer
Juan Benabarre Benaiges
INVERSIONES
GASATACAMA
HOLDING
Holding of Enersis (direct and indirect)
29.99%
Directors
Rafael Mateo Alcalá
Alfredo Ergas Segal
(Enersis’ Regional Chief Finance Officer)
Tom Miller
Francisco Mezzadri
Alternate Directors
Juan Benabarre Benaiges
Claudio Iglesis Guillard
David Baughman
David Kehoe
INVESTLUZ
Name
Investluz S.A.
Kind of Company
Foreign Publicly Held Liability Stock Company
Address
Av. Barão de Studart N° 2917, Bairro Dionísio
Torres Fortaleza, Ceará, Brasil.
Telephone
(55 85) 3216 1350
Fax
(55 85) 3216 1247
Name
Inversiones Gasatacama Holding Limitada
External Auditors
Deloitte & Touche Tohmatsu
Kind of Company
Limited Partnership
Tax N°
76.014.570-k
Address
Santiago, Chile
Total N° of Shares
100,461,895,427
Subscribed and paid capital (Br. Real)
954,618,954
Holding of Enersis (direct and indirect)
59.51%
Corporate Purpose (excerpt)
To par ticipate in the share capital of the
Companhia Energetica do Ceará and other
companies in Brazil and abroad as a member
or stock holder.
Directors
Non Directors Society administrated by an
executives Committee which President is Cristián
Fierro Montes.
In addition, said Committee its comprised by:
Antonio Osvaldo Alves Teixeira
Silvia Pereira Cunha
José Renato Ferreira Barreto
Luciano Alberto Galasso Samaria
Abel Pérez Claro
João Ricardo de Azevedo Ribeiro
INVERSIONES ENDESA
NORTE
Name
Inversiones Endesa Norte S.A.
Kind of Company
Private Company
Tax N°
96.887.060-2
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
A) The direct or indirect participation through
any type of association in companies whose
objectives include one or more of the following
activities: i) The transport of natural gas in all
of its forms; ii) The production, transmission,
purchasing, distribution, and sale of energy; iii)
The financing of the activities indicated in i) and
ii) a precedent developed by related third parties;
B) The receipt and investment of the goods that
are invested. The corporate purpose comprises
all lucrative activities related to the ones already
mentioned and other business that the members
agree upon.
Paid Capital (M$)
177,562,499
112
| 2006 Annual Report
LUZ ANDES
Name
Luz Andes Limitada
Kind of Company
Limited Partnership
Tax N°
96.800.460-3
Address
Santa Rosa 76 Piso 5, Santiago, Chile
Telephone
(562) 634-6310
Fax
(562) 634-6370
External Auditors
KPMG Auditores Consultores Ltda.
Paid Capital (pesos)
1,224,348
Holding of Enersis (direct and indirect)
99.09%
Corporate Purpose
The distribution and sale of electric energy. The
exploitation, production, transport, distribution,
and buying and selling of energy and electrical
equipment, and the implementation of electrical
installations.
Principal Directors
Executive Officer
Claudio Inzunza Díaz
LUZ DE RÍO
Name
Luz de Río Limitada
Kind of Company
Limited Partnership
Address
Praça Leoni Ramos, nº 01, bloco 1,
Planta 7 (parte) Niterói, Rio de Janeiro
Telephone
(55 21) 2613 7071
Fax
(55 21) 2613 7153
P.O. Box
24.210-205
E-mail
lbettencourt@ampla.com
Not applicable Securities Register Inscription
External Auditors
Deloitte Touche Tohmatsu
Total Number Quotes:
755,000
Subscribed and paid capital (Br. Real)
755,000
Holding of Enersis (direct and indirect)
99.48%
Corporate Purpose (excerpt)
To develop activities related to the electric
sector, above all the importation, transmission,
production, distribution, commercialization, and
exploration of electric energy, and, (if permitted),
to participate in other electric-sector companies
as a member or stock holder.
Directors
President
Marcelo Llévenes Rebolledo
Director Financiero
Abel Alves Rochinha
Institutional Relationships Director
Eugenio Cabanes Durán
Legal Director
Ana Cláudia Gonçalves Rebello
PANGUE
Name
Empresa Eléctrica Pangue S.A.
Kind of Company
Private Company
Tax N°
96.589.170-6.
Address
Santa Rosa 76, Santiago, Chile.
Corporate Purpose
The company’s corporate purpose is to exploit
the production, transport, distribution, and supply
of electric energy of the Pangue head office of
the Biobío river basin.
Paid Capital (M$)
77,840,789
Holding of Enersis (direct and indirect)
56.97%
Board of Directors
President
Claudio Iglesis Guillard
Vice President
Alan Fischer Hill
Director
Alejandro Wendling Aliaga
Principal Directors
Executive Officer
Lionel Roa Burgos
enersis06
PEHUENCHE
Name
Empresa Eléctrica Pehuenche S.A.
Kind of Company
Publicly Held Limited Liability Stock Company
Tax N°
96.504.980-0
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
The company’s objective is the production,
transport, distribution, and supply of electric
energy, by which the company could acquire and
enjoy the respective favors and concessions.
Paid Capital (M$)
171,273,442
Holding of Enersis (direct and indirect)
55.57%
Board of Directors
President
Claudio Iglesis Guillard
Vice President
Alan Fischer Hill
Directors
Enrique Lozán Jiménez
Alejandro Wendling Aliaga
Osvaldo Muñoz Díaz
Pedro Gatica Kerr
Vacant
Executive Officer
Lucio Castro Márquez
PROGAS
Name
Progas S.A.
Kind of Company
Limited Partnership
Tax N°
77.625.850-4
Address
Isidora Goyenechea 3356, 8° Piso, Santiago,
Chile
Corporate Purpose
To develop the following lines of business in the
first, second and third regions of the country: a)
The acquisition, production, storage, transport,
distribution, transformation, and commercialization
of natural gas; b) The acquisition, production,
storage, transport, distribution, transformation,
and commercialization of other oil derivatives
and other fuels in general; c) The provision of
2006 Annual Report | 113
SUBSIDIARIES AND ASSOCIATE COMPANIES
services, fabrication, commercialization of
equipment and materials and the implementation
of jobs related to the aforementioned objectives
or that are necessary for their implementation and
development. d) All other necessary activities or
activities that are conducive to the performance
of the aforementioned objectives.
Paid Capital (M$)
1,228
Holding of Enersis (direct and indirect)
29.99%
Directors
Rudolf Araneda Kauert,
Luis Cerda Ahumada
Pedro de La Sotta Sánchez
Principal Directors
Executive Officer
Alejandro Sáez Carreño
SACME
Name
Sacme S.A.
Kind of Company
Private Company
Address
Avda. España 3251 – Ciudad Autónoma de
Buenos Aires, Argentina
Telephone
(54 11) 4361 5107
Fax
(54 11) 4307 0701
adequately develop, in virtue of the fulfilment
distribution and commercialization services of
electric energy for the concessionary companies
in the Capital Federal and Greater Buenos Aires,
all in accordance with what is stipulated in the
Public International Tender for the sale of class
A stocks from Edenor S.A. and Edesur S.A. and
its applied regulations.
Directors
President
Mario Nicolás Covacich
Vice President
Daniel Héctor Colombo
Directors
Eduardo Maggi
Leandro Ostuni
Executive Officer
Osvaldo Ernesto Rolando
SAN ISIDRO
Name
Compañía Eléctrica San Isidro S.A.
Kind of Company
Private Company
Tax N°
96.783.220-0.
Address
Santa Rosa 76, Santiago, Chile.
Corporate Purpose
The company’s corporate purpose is the
production, transport, distribution, and supply
of electric energy.
External Auditors
Estudio Alonso Hidalgo & Asociados
Paid Capital (M$)
33,350,180
Total N° of Shares
12,000
Subscribed and Paid Capital (Arg. $)
12,000
Holding of Enersis (direct and indirect)
32.69%
Corporate Purpose (excerpt)
To carry out the management, supervision, and
control of the production, transmission, and
subtransmission system of electric energy for
the Federal Capital and Greater Buenos Aires
and the interconnections with the Argentine
Interconection System (AIS). To represent
Edenor S.A. and Edesur S.A. companies in the
operational management before the Wholesale
Electricity Market Administration Company
(CAMMESA). In general, to carry out all types
of activities that allow its management to
114
| 2006 Annual Report
Holding of Enersis (direct and indirect)
59.98%
Directors
President
Alejandro Wendling Aliaga
Vice President
Alan Fischer Hill
Claudio Iglesis Guillard
Pedro Gatica Kerr
Ricardo Santibáñez Zamorano
Alternate Directors
Alejandro García Chacón
Carlo Carvallo Artiga
Osvaldo Muñoz Díaz
Claudio Betti Pruzo
Sergio Díaz Caro
Principal Directors
Executive Officer
Claudio Iglesis Guillard
SISTEMAS SEC
Name
Sistema SEC S.A.
Kind of Company
Private Company
Tax N°
99.584.600-4.
Address
Miraflores 383, Of. 1004, piso 10, Santiago,
Chile.
Corporate Purpose
To develop the engineering, supply, setting
up, testing, installation and maintenance of
signalling, electrification, and communication
systems, for the areas of Alameda – Chillán.
Hualqui – Talcahuano, and Concepción – Lomas
Coloradas, which implies the development of all
activities and provision of all services that are
the objectives of the Provision of Signalling,
Electrification, and Communication Systems
Contract, in the process of a public bidding which
was awarded by the Empresa de Ferrocarriles
del Estado (State Railroad Company), as well
as the activities and services permitted by said
contract.
Paid Capital (M$)
2,065,048
Holding of Enersis (direct and indirect)
49.00%
Directors
President
Cristóbal Sanchez Romero
Directors
Ángel Aguilar Bueno
Pantaleón Calvo García
Jaime Godoy Cifuentes
Francisco Fernández Ávila de Inza
Principal Directors
Executive Officer
Jaime Pino Cox
Technical Officer
Sergio Zúñiga Rojo
Production Officer
Gerardo Zecca
SYNAPSIS
Name
Synapsis Soluciones y Servicios IT Limitada
Kind of Company
Limited Partnership
Tax N°
96.529.420-1
Address
Miraflores 383 Piso 27, Santiago
Fax
(00 54) 11 4021 8300
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 capital (M$)
3,943,580
Holding of Enersis (direct and indirect)
100%
Investments as proportion in Enersis’ assets
0.32%
Corporate Purpose (excerpt)
The supply and commercialization of services
and equipment related to the computing, data
processing, telecommunications systems, and
control systems for public service and other
national and international companies.
Attorneys and Principal Directors
Join Together Attorneys:
Cristóbal Sánchez Romero
Claudio Guzmán Porras
Alternate
Eduardo López Miller
Rodrigo Morelli Urrutia
Principal Directors
Executive Officer
Claudio Guzmán Porras
Chilean Business Officer
María Agustina Letelier Reyes
SYNAPSIS ARGENTINA
Name
Synapsis Argentina S.R.L.
Kind of Company
Limited Partnership
Address
Alicia Moreau de Justo 1750 3 “C”, Capital
Federal
Telephone
(00 54)11 4021 8300
Securities Register Inscription
Subscribed at General Justice Inspection,
dated November 10, 1992, under N°10842,
Book 112, Section A of Public Companies. The
transformation into a limited partnership was
registered at the General Justice Inspection,
dated September 3, 202, under N°4839, Book
116, of SRL.
External Auditors
Deloitte & Co SRL
Total N° of Shares (quotas)
466,129
Subscribed and Paid Capital (Arg. $)
466,129
Holding of Enersis (direct and indirect)
100%
Corporate Purpose (excerpt)
The company’s principal objective is to provide
services related to computing, data processing,
and other telecommunications and control
computing services, as well as to provide training
in related activities with services provided, among
others.
Principal Directors
Titular Officers
Claudio Rafael Guzmán Porras
José María Gil Bueno
Javier Sampayo Vázquez
Alternative Officer
Mariano Florencio Grondona
Executive Officer
José María Gil Bueno
Chief Administration Finance and Human
Resources Officer
Javier Sampayo Vázquez
SYNAPSIS BRASIL
Name
Synapsis Brasil Limitada
Kind of Company
Limited Partnership
Address
Av. das Américas 3434, Bloco 2, Sala 403, Barra
da Tijuca, Rio Janeiro, Brasil - Cep: 22640-102
Telephone
(55 21) 3431-3850
Fax
(55 21) 3431-3851
External Auditors
Deloitte Touche Tohmatsu
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Subscribed and paid capital (Br. Real)
4,241,890
Holding of Enersis (direct and indirect)
100%
Corporate Purpose
The providing of consultancy services and
technical assistance related to the computing
and data processing sector for Brazilian or
foreign companies; computing programs and
systems development; the commercialization
of computing equipment and data processing;
the fabrication, purchasing, sales, importation,
exportation, representation, consignment, and
distribution of all types of goods, mobile or non-
mobile, connected with the object described in
the topics mentioned; and the participation in
other companies, civil or commercial, national
or foreign, that operate in the computing, electric
energy, or, that still operate in the administration
and/or public service operations of electric
energy, telecommunications, water for domestic
or industrial and sanitary sewage use, as a share
holder, quotist, or member; consortiums and
companies in participation accounts.
Directors
President
Leonardo Miguel Covalschi
Principal Directors
Executive Officer
Leonardo Miguel Covalschi
Deputy Chief Administration
and Finance Officer
Jacqueline Gomes da Silva
Deputy Chief Human Resources Officer
Marcia Caporazzo
SYNAPSIS COLOMBIA
Name
Synapsis Colombia Limitada
Kind of Company
Limited Partnership
Tax N°
830.054.730-1
Address
Carrera 11 No. 82-76 Piso 6° Bogotá, D.C.
Telephone
(57-1) 607 6000
Fax
(57 1) 636 4606
External Auditors
Deloitte Colombia Ltda.
Subscribed and Paid Capital (Col. $)
238,446,000
Holding of Enersis (direct and indirect)
100%
2006 Annual Report | 115
SUBSIDIARIES AND ASSOCIATE COMPANIES
Corporate Purpose
To supply and commercialize services and
equipment related to computing and data
processing for public service and other national
or international companies.
Administrators
President
Claudio Rafael Guzmán Porras
Executive Officer
Robin Barquín Pardo
Chief Business Officer
Martha Helena Rico Henao
Chief Administration and Finance Officer
Edgar Enrique Martínez Niño
Chief Commercial Officer
Jesús Antonio Vallejo Gómez
Chief Consulting Officer
José Ivorra Valero
Principal Directors
Executive Officer
Claudio Escudero Alzamora
Deputy Human Resources and Administration
Officer
Jessenia Quevedo Fudino
Chief Consultant Officer
Eduardo Bedoya Arromatari
Chief Sales Officer
Mario Nieto Bejar
Deputy Chief Solutions Officer
Claudio Sánchez Alegría
Deputy Chief Outsourcing Officer
Pedro Luna Delgado
Deputy Chief Quality and Process Control
Officer
Carlos Castillo Prada
Directors
José Miguel Granged
Fernando Claudio Antognazza
Milton Gustavo Tomás Pérez
Jorge Aníbal Rauber
Gustavo Mariani
Guillermo Luis Fiad
Fermín Oscar Demonte
Alternate Directors
José María Vázquez María
María Gabriela Roselló
Francisco D. Monteleone
Roberto José Fagan
Iván Diego Duronto
Omar Ramiro Algacibiur
Gustavo Alberto Matta y Trejo
Sergio Raúl Sánchez
Benjamín Roberto Guzmán
SYNAPSIS PERÚ
Name
Synapsis del Perú S.R.L
Kind of Company
Limited Partnership
TERMOELÉCTRICA
JOSÉ DE SAN MARTÍN
Name
Termoeléctrica José de San Martín S.A.
Kind of Company
Public Company
Principal Directors
Executive Officer
Florencio Alberto Olmos
Technical Officer
Armando Federico Duvo
Chief Administration and Finance Officer
Daniel Gustavo Isse
Chief Commercial Officer
Marcelo Walter Holmgren
Address
Jr. Teniente César López Rojas 201, Piso 10,
Maranga, San Miguel, Lima, Perú
Address
Suipacha 1111 – Piso 18° - Buenos Aires,
Argentina
Telephone
(05 11) 561 0386
Fax
(05 11) 517 1232
Secutities Register Insription
Does not participate in stock market
External Auditors
Gris y Hernández y Asociados S.AC. – Deloitte
& Touche.
Total N° of Shares
609,200
Subscribed and Paid Capital (Per. New Sun)
609,200
Holding of Enersis (direct and indirect)
100%
Corporate Purpose
The company’s objective is to provide services
related to computing, data processing, and other
telecommunications and control computing
systems, as well as provide training in related
activities with ser vices provided, among
others.
Corporate Purpose
The company’s objective is the production of
electric energy and its mass commercialization
y, particularly, the managing of the equipment
purchasing, construction, operation, and
maintenance of a thermal plant en compliance with
the “Definite agreement for the management and
project operation for the readjustment of the MEM
in the framework of resolution SE Nº 1427/2004”,
approved by resolution SE Nº 1193/2005 (the
“Agreement”). For these purposes the company
could carry out all complementary and subsidiary
activities that involve its corporate purpose, having
full legal capacity to acquire rights and to enter
into obligations and exercise any activity that is
not prohibited by law or these statutes.
Subscribed and paid capital (M$)
86,936
Holding of Enersis (direct and indirect)
6.49%
Directors
President
Horacio Jorge T. Turri
Vice President
Pierre Marie Ranger
TERMOELÉCTRICA
MANUEL BELGRANO
Name
Termoeléctrica Manuel Belgrano S.A.
Kind of Company
Public Company
Address
Suipacha 268 – Piso 12° - Buenos Aires
Corporate Purpose
The company’s objective is the production of
electric energy and its mass commercialization
and, particularly, the managing of the equipment
purchasing, construction, operation, and
maintenance of a thermal plant in compliance
with the “Definite agreement for the management
and project operation for the readjustment of
the MEM in the framework of resolution SE
Nr. 1427/2004”, approved by resolution SE Nr.
1193/2005 (the “Agreement”). For these purposes
the company could carry out all complementary
and subsidiary activities that involve its corporate
purpose, having full legal capacity to acquire
rights and to enter into obligations and exercise
any activity that is not prohibited by law or these
statutes.
Subscribed and paid capital (M$)
86,936
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| 2006 Annual Report
Holding of Enersis (direct and indirect)
6.49%
Directors
President
José Miguel Granged
Vice President
Fernando Antognazza
Directors
Gustavo Mariani
Horacio Jorge T. Turri
Pierre Marie Ranger
Milton Gustavo Tomás Pérez
Jorge Aníbal Rauber
Guillermo Luis Fiad
Fermín Demonte
Alternate Directors
José María Vázquez María
María Gabriela Roselló
Francisco D. Monteleone
Roberto José Fagan
Iván Diego Duronto
Gustavo Alberto Matta y Trejo
Sergio Raúl Sánchez
Benjamín Roberto Guzmán
Vacant
Principal Directors
Executive Officer
Miguel Ortiz Fuentes
Chief Technical Officer
Gustavo Manifesto
Chief Administration and Finance Officer
Oscar Zapiola
Chief Commercial Officer
Daniel Garrido
TESA
Name
Transportadora de Energía S.A.
Kind of Company
Public Company
Address
Bartolomé Mitre N° 797, Piso 13, Oficina 79,
Buenos Aires, República Argentina.
Corporate Purpose
The corporate purpose includes providing high-
tension electric energy transport services, involving
national as well as international electrical systems,
in accordance with existing legislation, to which
end the company could participate in national and
international bids, and become a public service
licensee for the transport of high-tension national
or international electric energy, and carry out
activities necessary for the performance of its goals,
expressly including but not limiting to forming part of
construction, operation, and maintenance contracts
for the commencement and/or extension of electric
energy transport lines, to participate in financing
projects directly or indirectly related with said
undertakings as a borrower and/or moneylender
and/or guarantor and/or endorser, to which purpose
the company could grant guarantees favoring third
parties. Expressly excluded are those activities
included in the financial entity law and any others
that require public savings tendering.
Paid Capital (Arg. $)
55,512,000
Holding of Enersis (direct and indirect)
53.57%
Directors
President
José María Hidalgo Martín-Mateos
Directors
Francisco Javier Bugallo Sánchez
Arturo Pappalardo
Alternate Directors
José Agustín Venegas Malvenda
Juan Carlos Blanco
Roberto José Fagan
Principal Directors
Executive Officer
Francisco Javier Bugallo Sánchez
TRANSQUILLOTA
Name
Transmisora Eléctrica de Quillota Ltda.
Kind of Company
Limited Partnership
Tax N°
77.017.930-0
Address
Santa Rosa 76, Santiago, Chile.
Corporate Purpose
The company’s corporate purpose is the
transport, distribution, and supply of electric
energy on its own account or through third
parties.
Paid Capital (M$)
3,507,137
Holding of Enersis (direct and indirect)
29.99%
Attorneys
Representatives
Felipe Aldunate Hederra
Gabriel Carvajal Menególlez
Eduardo Morel Montes
Ricardo Santibáñez Zamorano
Alternate Representatives
Alfonso Bahamondes Morales
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Alejandro Larenas Mantellero
Enrique Sánchez Novoa
Ricardo Sáez Sánchez
TÚNEL EL MELÓN
Name
Sociedad Concesionaria Túnel El Melón S.A.
Kind of Company
Private Company
Tax N°
96.671.360-7
Address
Santa Rosa 76, Santiago, Chile
Corporate Purpose
The implementation, construction, and exploitation
of the public work named the Melón Tunnel and
the providing of complementary services that the
ministry of public works authorizes.
Paid Capital (M$)
9,448,138
Holding of Enersis (direct and indirect)
59.95%
Directors
President
Manuel Irarrázaval Aldunate
Jorge Ale Yarad
Renato Fernández Baeza
Principal Directors
Executive Officer
Maximiliano Ruiz Ortiz
2006 Annual Report | 117
DECLARATION
OF RESPONSIBILITY
118
| 2006 Annual Report
The directors of Enersis and the Chief Executive Officer signatories to this declaration swear to the truth of all information contained in
this annual report, in accordance with general rule N°30 of the Superintendency of Securities and Insurance.
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Chairman:
Pablo Yrarrázaval
Tax Nº: 5,710,967-K
Vice-Chairman:
Rafael Miranda
Tax Nº: 48,070,966-7
Director:
Juan Ignacio de la Mata
Tax Nº: 48,101,910-9
Director:
Hernán Somerville
Tax Nº: 4,132,185-7
Director:
Rafael Español
Tax Nº: 48,101,912-5
Director:
Eugenio Tironi
Tax Nº: 5,715,860-3
Director:
Patricio Claro
Tax Nº: 5,206,994-7
Chief Executive Officer:
Ignacio Antoñanzas
Tax Nº: 22,298,662-1
2006 Annual Report | 119
CONSOLIDATED FINANCIAL STATEMENTS
120
| 2006 Annual Report
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CONSOLIDATED
FINANCIAL STATEMENTS
INDEPENDENT ACCOUNTANT´S REPORT
123
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS
OF OPERATIONS
CONSOLIDATED STATEMENTS
OF CASH FLOWS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
MANAGEMENT’S ANALYSIS
OF THE CONSOLIDATED FINANCIAL
STATEMENTS
124
126
127
129
239
2006 Annual Report | 121
CONSOLIDATED FINANCIAL STATEMENTS
122
| 2006 Annual Report
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2006 Annual Report | 123
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos of December 31, 2006)
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
As of December 31,
2006
ThCh$
2005
ThCh$
99,794,219
282,125,166
9,113,927
839,114,373
7,468,202
102,348,625
13,564,970
65,908,585
42,272,428
51,443,419
61,556,350
66,656,313
72,873,740
265,352,164
5,421,998
648,182,799
3,643,961
64,188,527
11,519,571
72,098,351
51,785,668
35,854,421
55,124,100
42,770,237
Total current assets
1,641,366,577
1,328,815,537
PROPERTY, PLANT AND EQUIPMENT
Land
Buildings, infrastructure and works in progress
Machinery and equipment
Other plant and equipment
Technical appraisal
Accumulated depreciation
Total property, plant and equipment, net
OTHER ASSETS
Investments in related companies
Investments in other companies
Goodwill, net
Negative goodwill, net
Long-term receivables
Amounts due from related companies
Long-term deferred taxes
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
The accompanying notes are an integral part of these consolidated financial statements.
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| 2006 Annual Report
132,604,494
10,935,962,744
1,987,188,305
607,486,494
186,062,190
(5,761,866,828)
129,843,148
10,561,484,247
1,757,852,219
438,828,494
183,406,562
(5,264,657,883)
8,087,437,399
7,806,756,787
115,267,451
24,091,667
655,061,997
(37,016,317)
137,479,691
90,523,990
12,249,242
90,759,417
(54,801,394)
299,989,563
100,968,106
41,511,402
716,131,962
(37,460,588)
144,623,436
91,713,359
-
83,533,722
(49,440,338)
253,851,127
1,333,605,307
1,345,432,188
11,062,409,283 10,481,004,512
LIABILITIES AND SHAREHOLDERS´EQUITY
CURRENT LIABILITIES:
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 debt to other institutions
Dividends payable
Accounts payable
Short-term notes payable
Miscellaneous payables
Amounts payable to related companies
Accrued expenses
Withholdings
Income taxes payable
Unearned income
Other current liabilities
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As of December 31,
2006
ThCh$
2005
ThCh$
134,258,949
98,481,794
113,207,598
34,022,985
74,686,578
369,730,359
15,726,703
111,387,344
29,862,520
79,350,634
99,986,616
142,911,425
5,020,454
90,851,517
112,817,457
120,043,940
526,349,244
30,733,269
17,868,511
289,487,672
14,664,751
86,510,753
48,465,331
75,536,120
75,497,909
68,101,613
4,157,316
49,901,747
Total current liabilities
1,399,485,476
1,520,135,633
LONG-TERM LIABILITIES:
Due to banks and financial institutions
Bonds payable
Long-term notes payable
Sundry accounts payable
Amounts payable to related companies
Accrued expenses
Long-term deferred income taxes
Other long-term liabilities
Total long-term liabilities
MINORITY INTEREST
SHAREHOLDERS´ EQUITY:
Paid-in capital
Additional paid-in capital
Other reserves
RETAINED EARNINGS
Retained earnings
Net income (loss) for the year
Provisional dividends
Deficit of subsidiaries in development stage
Total shareholders´ equity
905,942,537
2,195,520,795
112,388,525
153,786,083
11,250,360
324,947,002
-
219,243,648
565,455,648
2,044,245,014
107,816,634
48,841,187
13,520,056
408,707,679
87,433,198
175,623,314
3,923,078,950
3,451,642,730
2,869,962,948
2,858,841,421
2,415,284,412
172,124,214
(238,342,306)
2,415,284,412
172,124,214
(241,698,626)
271,279,769
285,960,366
(36,242,795)
(181,751)
235,229,509
69,445,219
-
-
2,869,881,909
2,650,384,728
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
11,062,409,283 10,481,004,512
The accompanying notes are an integral part of these consolidated financial statements.
2006 Annual Report | 125
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENTS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos of December 31, 2006)
OPERATING INCOME:
SALES
COST OF SALES
GROSS MARGIN
As of December 31,
2006
ThCh$
2005
ThCh$
3,892,064,732
(2,594,444,056)
3,293,142,666
(2,234,185,846)
1,297,620,676
1,058,956,820
ADMINISTRATIVE AND SELLING EXPENSES
(229,578,225)
(230,312,754)
OPERATING INCOME
1,068,042,451
828,644,066
NON-OPERATING INCOME AND EXPENSE:
Interest income
Equity in income of related companies
Other non-operating income
Equity in loss of related companies
Amortization of goodwill
Interest expense
Other non-operating expenses
Price-level restatement, net
Exchange difference, net
NON-OPERATING EXPENSE, NET
INCOME BEFORE INCOME TAXES, MINORITY INTEREST
AND AMORTIZATION OF NEGATIVE GOODWILL
INCOME TAXES
INCOME (LOSS) BEFORE MINORITY INTEREST AND
AMORTIZATION OF NEGATIVE GOODWILL
MINORITY INTEREST
124,791,200
5,164,292
110,552,625
(125,352)
(55,908,079)
(390,708,744)
(209,276,211)
1,216,801
5,327,511
87,944,510
14,767,445
72,463,652
(7,879,946)
(56,344,563)
(358,032,727)
(161,394,104)
(5,048,829)
(6,373,029)
(408,965,957)
(419,897,591)
659,076,494
408,746,475
(109,407,874)
(182,050,674)
549,668,620
226,695,801
(269,785,811)
(173,072,574)
INCOME (LOSS) BEFORE AMORTIZATION OF NEGATIVE GOODWILL
279,882,809
53,623,227
AMORTIZATION OF NEGATIVE GOODWILL
NET INCOME FOR THE YEAR
6,077,557
15,821,992
285,960,366
69,445,219
The accompanying notes are an integral part of these consolidated financial statements.
126
| 2006 Annual Report
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos of December 31, 2006)
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Net income for the year
GAIN (LOSSES) FROM SALES OF ASSETS:
Losses (gain) on sale of property, plant and equipment
Losses (gain) 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 charges to income which do not represent cash flows
Changes in assets which affect operating cash flows (increase) decrease:
Trade receivables
Inventory
Other assets
Changes in liabilities which affect operating cash flows (decrease) increase:
Acounts payable associated with operating results
Interest payable
Income tax payable
Other accounts payable not associated with operating results
Net value added tax and other similar taxes payable
Income attributable to minority interest
As of December 31,
2006
ThCh$
285,960,366
(18,843,715)
(18,572,796)
(270,919)
540,406,807
414,616,755
7,859,387
26,064,041
(5,164,292)
125,352
55,908,079
(6,077,557)
(1,216,801)
(5,327,511)
(15,191,289)
68,810,643
(273,097,873)
(180,592,346)
4,666,559
(97,172,086)
58,196,944
146,132,574
27,925,255
(30,613,805)
(36,931,047)
(48,316,033)
269,785,811
2005
ThCh$
69,445,219
840,657
1,110,490
(269,833)
546,271,218
375,344,080
8,486,578
56,939,695
(14,767,445)
7,879,946
56,344,563
(15,821,992)
5,048,829
6,373,029
(27,093,600)
87,537,535
(71,913,036)
(79,262,927)
(20,295,362)
27,645,253
119,431,472
18,135,149
36,917,739
45,716,876
42,469,679
(23,807,971)
173,072,574
Net cash flows provided by operating activities
862,408,340
837,148,104
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans obtained
Proceeds from bond issuances
Other sources of financing
Dividends paid
Distribution of capital in subsidiary
Payment of debt
Payment of bonds
Payment of loans obtained from related companies
Payment of bond issuance costs
Other disbursements for financing
Net cash used in financing activities
The accompanying notes are an integral part of these consolidated financial statements.
(297,089,863)
1,274,208,005
166,644,978
-
(178,608,453)
(85,522,851)
(989,096,582)
(468,853,343)
(8,077,906)
(500,059)
(7,283,652)
(764,261,264)
409,207,785
170,583,174
691,355
(123,960,197)
(281,707,042)
(804,952,563)
(112,873,490)
(2,633,414)
(916,513)
(17,700,359)
(297,089,863)
(764,261,264)
2006 Annual Report | 127
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos of December 31, 2006)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment
Sales of other investments
Sale of permanent investments
Payments received from notes receivable from related companies
Other receipts from investments
Additions to property, plant and equipment
Permanent investments in related companies
Other investment disbursements
Net cash used in investing activities
POSITIVE NET CASH FLOW FOR THE PERIOD
As of December 31,
2006
ThCh$
(503,559,780)
44,550,554
-
49,394
2,790,737
1,912,389
(517,768,346)
(22,550,433)
(12,544,075)
2005
ThCh$
(337,667,076)
6,221,648
1,703,530
-
8,038,327
7,242,722
(324,115,605)
(33,837,526)
(2,920,172)
(503,559,780)
(337,667,076)
61,758,697
(264,780,236)
EFFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
10,457,783
(21,406,173)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
72,216,480
(286,186,409)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
367,873,902
654,060,311
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
440,090,382
367,873,902
The accompanying notes are an integral part of these consolidated financial statements.
128
| 2006 Annual Report
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos of December 31, 2006)
As of and for the years ended December 31, 2006 and 2005
NOTE 01.
REGISTERED UNDER SECURITIES REGISTER
a. 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 Comission.
b. The Company’s subsidiaries Chilectra S.A., Chilectra S.A. (formerly
Elesur S.A.) and Empresa Nacional de Electricidad S.A. (“Endesa”)
are registered in the Securities Register under Nos. 0321, 931 and
0114, respectively.
NOTE 02.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Reporting period
These financial statements reflect the Company’s financial position as
of December 31, 2006 and 2005, and the results of its operations, the
changes in its shareholders’ equity and its cash flows for the twelve
months period ended December 31, 2006 and 2005.
b. Basis of preparation
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 include the assets, liabilities, net income and cash flows
of the subsidiaries of which it has control.
c. Basis of presentation
On June 1, 2006, Empresa de Generación Termoeléctrica Ventanilla
S.A. – Etevensa (a company indirectly related through common owner)
was upstream merged into Edegel S.A. (a subsidiary of Endesa Chile),
as agreed in the Shareholders’ Meetings of the two companies on
January 17, 2006. Thus, the financial statements and amounts indicated
in the notes as of December 31, 2006 incorporate Etevensa S.A.
The financial statements as of December 2005 and their accompanying
notes have been adjusted off the books by 2.1%, which represents
the change in the Chilean consumer price index, in order to allow
comparison with the financial statements as of December 31, 2006.
RECLASSIFICATIONS
For purposes of comparison, the following reclassifications were made
in the 2005 financial statements:
From
Trade accounts receivable
Prepaid expenses
Long-term provisions
Technical revaluation
Withholdings
From
Financial income
Other non-operating income
Other non-operating expenses
Financial expenses
Balance sheet reclassifications
To
ThCh$
(5,683,903)
(1,451,226)
6,631,306
(368,441,249)
-
-
-
(12,086,774)
Due from related companies
Other current assets
Long-term creditors
Land
Building and infrastructure
Machinery and equipment
Other fixed assets
Other long-term assets
Statement of operations reclassifications
ThCh$
(6,814,406)
(2,999,000)
683,018
2,731,475
To
Sales
Cost of sales
Administrative and selling expenses
ThCh$
5,683,903
1,451,226
(6,631,306)
4,158,060
265,229,615
98,857,837
258,978
12,023,533
ThCh$
9,813,406
-
(3,106,694)
(307,799)
2006 Annual Report | 129
CONSOLIDATED FINANCIAL STATEMENTS
d. Basis of consolidation
All significant transactions and balances between the consolidated companies have been eliminated and the proportional part corresponding to
minority interests of the subsidiaries, is included in the minority interest item of the general balance sheet and the income statement.
The consolidated financial statements have been prepared in agreement with the norm established in the Technical Bulletin N° 72 (that partially
replaced Technical Bulletin N° 42) of the Chilean Institute of Accountants and in the ‘circular’ N°1,697 (that replaced the ‘circular’ N° 368) of the
Superintendency of Securities and Insurance.
The financial statements of the foreign companies as of December 31, 2006 and 2005 have been prepared according to the norm established in the
Technical Bulletins Nº 72, Nº 64 and N° 42 of the Chilean Institute of Accountants.
These consolidated financial statements include the assets, liabilities, results and cash flows of the parent company and the following
subsidiaries:
Tax Payer
Number
Company
96.524.320-8 Chilectra S.A.(*)
96.529.420-1 Synapsis Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
96.543.670-7 Cía. Americana de Multiservicios Ltda.
91.081.000-6 Endesa Chile S.A.
96.800.570-7 Chilectra S.A. (*)
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Enersis Internacional Ltda.
Inversiones Distrilima S.A.
Empresa Distribuidora Sur S.A. (Edesur)
Codensa S.A. (**)
Investluz
Ampla Energía e Serviços S.A.
Ampla Investimentos e Serviços S.A.
Compañía de Interconexión Energética S.A. (Cien) (***)
Central Geradora Termeléctrica Fortaleza S.A. (***)
Endesa Brasil S.A. (***)
Percentage participation as of December 31,
Direct
%
2006
Indirect
%
Total
%
-
-
-
99.99
99.99
99.99
59.98
99.08
-
30.14
31.35
12.47
22.77
24.02
24.02
22.06
22.06
22.06
0.01
0.01
0.01
-
0.01
-
100.00
100.00
100.00
59.98
99.09
-
25.54
34.04
9.26
36.74
45.86
45.86
31.51
31.51
31.51
55.68
65.39
21.73
59.51
69.88
69.88
53.57
53.57
53.57
2005
Total
%
98.24
100.00
100.00
100.00
59.98
99.99
100.00
55.68
65.39
21.66
59.51
69.88
69.88
53.57
53.57
53.57
(*)
In the extraordinary meeting of shareholders of Elesur S.A., held on March 31, 2006, it was agreed to change the name of Elesur S.A. to Chilectra S.A..
The merger of Chilectra S.A. (former Elesur) and Chilectra S.A., approved in general meetings of their shareholders held on March 31, 2006, became
effective on April 1, 2006.
(**) Codensa S.A. is consolidated because of the majority presence on the board of directors, obtained through the shareholders’ agreement of January 27,
2004, between Endesa Internacional and subsidiaries of Enersis S.A.
(***) As a result of the creation of the Brazilian holding company, Endesa Brasil S.A. (“Endesa Brasil”) (see Note 11.l), these companies were included in the
consolidated financial statements of Enersis S.A. To allow a better understanding of these financial statements, we show below a Pro Forma income statement,
which consolidates for the year 2005 the subsidiaries Compañía de Interconexión Energética S.A. (Cien) and Central Geradora Térmica Fortaleza S.A.
130
| 2006 Annual Report
The pro forma statement of income is as follows (1):
OPERATING INCOME
Sales
Cost of sales
Gross profit
Administrative and selling expenses
Operating income
NON OPERATING LOSS
Income before income taxes
Income taxes
Income before minority interest
Minority interest
Net Income
Amortization of negative goodwill
Net income of the year
enersis06
As of December 31,
2006
ThCh$
2005
ThCh$
3.892.064.732
(2.594.444.056)
3.373.127.876
(2.251.953.631)
1.297.620.676
1.121.174.245
(229.578.225)
(233.676.571)
1.068.042.451
887.497.674
(408.965.957)
(460.979.489)
659.076.494
426.518.185
(109.407.874)
(203.125.049)
549.668.620
223.393.136
(269.785.811)
(169.769.909)
279.882.809
53.623.227
6.077.557
15.821.992
285.960.366
69.445.219
(1) To allow comparison with the current year, results for the entire year 2005 are shown for the companies listed above.
e. Price level restatement (Monetary correction)
The consolidated financial statements 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 24).
f. Assets and liabilities in foreign currencies
Assets and liabilities denominated in foreign currencies are detailed in Note 31. These amounts have been stated at the observed exchange rates
reported by the Central Bank of Chile as of each December 31, as follows:
United States dollar (as reported by Chilean Central Bank)
Euro
Yen
Sterling pound
Colombian peso
Peruvian new sol
Argentine peso
Brazilian real
Unidad de Fomento (UF)
December 31
2006
2005
Units per US$1 Units per US$1
1.00
0.76
119.09
0.51
2,238.79
3.196
3.06
2.14
0.03
1.00
0.85
118.04
0.58
2,284.22
3.43
2.91
2.34
0.03
2006
Ch$
532.39
702.08
4.47
1,041.86
0.24
166.58
173.87
249.01
18,336.38
2005
Ch$
512.50
606.08
4.34
880.43
0.22
149.42
181.92
219.02
17,974.81
2006 Annual Report | 131
CONSOLIDATED FINANCIAL STATEMENTS
g. Time deposits and marketable securities
Time deposits are presented at original placement plus accrued interest
and UF indexing 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 indexing or redemption value as appropriate (Note 4).
h. Inventories
Inventory of materials in transit, and operation and maintenance
materials on hand, are valued at the lower of price-level restated cost
or net realizable value.
The costs 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 Institute of Accountants and are included
in current assets as their realization is expected in the short-term.
i. Allowance for doubtful accounts
The estimates for the allowance for doubtful accounts have been made
considering the aging and nature of the accounts receivables. 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). The allowance for doubtful accounts
amounted ThCh$ 134,859,609 (ThCh$133,423,704 in 2005). In addition,
the total sum owed by companies that have gone into bankruptcy
amounting to ThCh$1,258,119 (ThCh$1,595,109 in 2005) is included
in the bad debt allowance estimation.
j. 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 period of construction.
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 Nos. 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 and its subsidiary
has evaluated the recoverability of its property, plant and equipment
as required by Technical Bulletin No.33 of the Chilean Institute of
Accountants. As a result of these evaluating the Company has not
identified impairments in the net book values of its property, plant and
equipment.
132
| 2006 Annual Report
k. Depreciation
Depreciation expense is calculated on the revalued balances using the
straight-line method over the estimated useful lives of the assets.
The debit to income from the year’s depreciation amounts to
ThCh$414,616,755 (ThCh$375,244,080 in 2005). It is classified in
costs of sales of ThCh$402,853,125 (ThCh$362,089,059 in 2005)
and in selling and administrative expense of ThCh$11,763,630
(ThCh$13,255,021 in 2005).
l. 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.
m. 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.
n. Intangibles, other than goodwill
Intangibles, other than goodwill, correspond mainly to easements,
rights of way, water rights, and parent company contributions, which are
recorded and amortized in accordance with Technical Bulletin No.55
of the Chilean Institute of Accountants.
o. 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.
Investments in foreign affiliates are recorded in accordance with
Technical Bulletins N°64 and 72 (which partially revoked Technical
Bulletin N°42) of the Chilean Institute of Accountants.
The Company and its subsidiaries has evaluated at December 31, 2005
and 2006, the recoverability of the book value of its investments abroad
in accordance with Technical Bulletin N°72 of the Chilean Institute of
Accountants. As a result of this evaluation no adjustments have been
determined that affect the book values of its investments.
p. Investments in other companies
Investments in other companies are presented at acquisition cost adjusted
for price-level restatement, as they do not trade in an organized market
and because the Company does not excecise significant influence.
q. Goodwill and negative goodwill
Goodwill and negative goodwill are determined according to Circular
No.1697 of the SVS (which revoked Circular 368 at December 30, 2003).
Amortization is determined using the straight-line method, considering
the nature and characteristic of each investment, foreseeable life of the
business and investment return, not to exceed 20 years.
The Company and its subsidiaries has evaluated at December 31,
2005 and 2006, the recoverability of the book value of its goodwill in
accordance with Technical Bulletin No. 72 of the Chilean Institute of
Accountants. As a result of this evaluation no adjustments have been
determined that affect the book values of its goodwill.
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.
s. 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.
t. Income tax and deferred income taxes
For the years ended December 31, 2006 and 2005, the Company
recorded current tax expense determined in accordance with the laws and
regulations in each country in which it operates of ThCh$251,486,468 and
ThCh$134,787,206, respectively and, additionally, it recorded deferred tax
credit of ThCh$142,078,594 in 2006 and ThCh$47,263,468 in 2005.
The Company records deferred income taxes in accordance with
Technical Bulletin N°60 of the Chilean Institute of Accountants, and with
circulars N°1,466 and N°1,560 issued 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.
u. Severance indemnities
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 6.5% in 2006 and 2005 and assuming an average employment span
which varies based upon years of service with the Company.
enersis06
unbilled at each year-end. Revenues are valued using rates in effect
when services are provided to customers. Accrued unbilled revenues are
presented in current assets as trade receivables and the corresponding
cost is included in cost of sales.
The Company also recognizes revenues for amounts received from
highway tolls for motorized vehicles, income related to computer
advisory services, engineering services, sale of materials and sale
of real estate.
y. Financial derivative contracts
As of December 31, 2006 and 2005 the Company and its subsidiaries
have forward contracts, currency swaps, and interest rate swaps and
collars with several financial institutions, to hedge against mainly
foreign currency and interest risk exposures, which are recorded
according to Technical Bulletin No.57 of the Chilean Institute of
Accountants.
z. Research and development costs
Costs incurred by the Company in research and development relate
mainly to water-level studies, hydroelectric research, and sismic activity
surveys which are expensed as incurred. Costs incurred in performing
studies related to specific construction projects are capitalized.
aa. Statements of cash flows
Investments considered as cash equivalents, as indicated in point 6.2 of
Technical Bulletin N°50 issued by the Chilean Institute 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.
ab. Cost of share issue
Costs incurred to date associated with issuing and placing shares are
recorded according to the provisions of Circular N°1370 of 1998 of
the Superintendency of Securities and Insurance. A breakdown of the
costs is shown in Note 26.
v. Accrued vacation expense
In accordance with Technical Bulletin No.47 issued by the Chilean
Institute of Accountants, employee vacation expense is recorded on
an accrual basis.
NOTE 03.
CHANGE IN ACCOUNTING PRINCIPLES
w. 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, and using
an annual discount rate of 6.5%.
x. Revenue recognition
The Company’s revenues are primarily derived from electric power
generation and distribution services, and include energy supplied and
No accounting changes have occurred in 2006 that could affect
comparisons with the prior year.
Change in reporting entity
In accordance with notes 11(g) and 22(e), as of June 1, 2006, Etevensa
(indirectly related through the same majority shareholder) was
upstream merged into Edegel S.A. (a subsidiary of Endesa Chile),
as agreed to in the Shareholders’ Meetings of the two companies
held on January 17, 2006.
2006 Annual Report | 133
CONSOLIDATED FINANCIAL STATEMENTS
The above transaction has been recorded in conformity with Technical Bulletin N°72 of the Chilean Institute of Accountants, as a business combination
under common control, based on the pooling of interest methodology.
As a result of this reorganization of entities under common control, the shareholding of Endesa Chile S.A. in its subsidiary Edegel S.A. decreased to
55.44%, causing a decrease of ThCh$5,757,792 (see note 22e) in shareholders’ equity that is shown in the item Other Reserves. In addition, as from
June 1, 2006, the merged financial statements involved incorporating assets and liabilities of ThCh$140,370,073 and ThCh$97,826,807, respectively.
NOTE 04.
TIME DEPOSITS
Time deposits as of each year end are as follows:
Tax Payer Number Financial Institution
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
ABN Amro
Alfa mix
Alianza Valores
AV villas
Banco Bilbao Vizcaya
Banco Colpatria
Banco Continental
Banco Crédito
Banco Davivienda
Banco de Galicia
Banco do Brasil
Banco do Estado do Ceará
Banco Frances
Banco Itau
Banco Lloyds
Banco Mellon Brascan
Banco Nationale de Paris
Banco Nordeste
Banco Pactual
Banco Paribas luxembourg
Banco Real
Banco Rio de la Plata
Banco Santander Central Hispano
Banco Sudameris
Banco Wiese Sudameris
Banco Unión
Banco Votorantim
Bancolombia
Banistmo Colombia S.A.
Bank Boston
Bank of America
BNB
Bradesco
Cdt
Citibank N.Y.
Comafi
Corficolombiana
Correval
Corredores Asociados
Credit Bank
Encargo Fiduciario Banco Santander
FAM Fondo Ganadero
Fiduciaria Helm Trust
Fiducolombia
Fiducomercio
Fiduoccidente
Fiduvalle
Fiduciaria Banco de Bogotá
Fondeos
Fondo Sumar
Fondo Surgir
Fondo Surenta
HSBC - Bamerindus
Panamericano
Porvenir
Serfinco
Standard Bank London
Suvalor
Other time deposits
Unibanco
Total
134
| 2006 Annual Report
Annual
Rate %
-
1.11%
8.10%
-
7.45%
1.24%
4.97%
4.43%
1.00%
6.34%
-
-
4.08%
4.09%
5.65%
1.60%
3.34%
1.17%
1.10%
6.67%
0.10%
8.74%
2.76%
7.80%
-
-
1.17%
6.58%
7.00%
5.14%
4.76%
1.18%
7.06%
8.68%
4.19%
9.97%
6.39%
7.99%
7.85%
-
7.00%
6.72%
6.01%
6.80%
5.46%
5.93%
5.99%
-
7.32%
6.48%
5.09%
6.90%
1.27%
1.10%
-
7.89%
5.29%
7.32%
-
8.83%
Scheduled Maturity
-
02.01.07
02.01.07
-
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
-
-
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
31-01-07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
-
-
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
-
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
-
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
02.01.07
-
02.01.07
17-01-07
02.01.07
-
02.01.07
As of December 31,
2006
ThCh$
-
2,507,181
1,300,014
-
105,150
3,592
8,409,664
1,175,824
136
1,899,867
-
-
3,935,683
13,159,451
225
4,119,984
59,116
145,648
62,820
4,331,936
1,763,347
11,589,120
14,543,061
6,265,436
-
-
16,666,843
72
700,941
2,171,201
10,068,547
5,972,283
66,181,869
241,517
42,249,678
997,529
11,464,636
861,342
729,111
-
260,604
792
79
6,630,055
51
234,006
1,474,367
-
2,937,750
223,214
2,194,192
2,622,708
4,983,847
169,706
-
641,603
3,320,614
13,330,763
-
9,417,991
2005
ThCh$
747,015
-
-
3,481,534
3,814,991
-
5,427,374
2,143,099
-
1,891,460
1,361,170
1,487,039
5,651,785
36,117,388
2,938,164
9,038,314
7,615,052
114,962
49,694
-
3,935,344
14,854,083
20,151,836
13,518,032
1,143,826
50,471
28,494,945
-
-
3,990,069
7,667,815
-
15,493,287
1,604
23,134,105
1,228,019
-
1,415,787
-
1,916,263
4,011,541
-
-
1,443
-
750,145
5,801,594
3,826
-
-
-
-
17,950,729
136,574
515,766
155,497
2,320,479
-
4,833,899
9,996,144
282,125,166
265,352,164
enersis06
NOTE 05.
ACCOUNTS, NOTES AND OTHER RECEIVABLES
a. 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
Long term
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
As of December 31,
Account receivable
869,466,114
689,339,476
90,538,606
85,459,845 960,004,720
839,114,373
774,799,321
Allowance for doubtful accounts
(50,422,157)
(48,857,565)
(70,468,190)
(77,758,957)
(120,890,347)
-
(126,616,522)
Notes receivable
7,187,368
3,860,141
Allowance for doubtful accounts
(354,275)
(654,413)
786,335
(151,226)
577,682
7,973,703
7,468,202
4,437,823
(139,449)
(505,501)
-
(793,862)
-
-
-
-
-
-
-
-
Other receivables (1)
97,156,662
48,122,343
11,946,073
19,689,059
109,102,735 102,348,625
67,811,402
144,189,342
147,013,881
Allowance for doubtful accounts
(4,009,993)
(1,146,820)
(2,744,117)
(2,476,055)
(6,754,110)
-
(3,622,875)
(6,709,651)
(2,390,445)
Total
Country
Chile
Peru
Argentina
Colombia
Brazil
Panama
Total
948,931,200 716,015,287 137,479,691 144,623,436
As of December 31,
2006
2005
ThCh$
240,403,400
62,532,559
135,088,425
229,987,240
418,399,267
-
%
22.13%
5.76%
12.43%
21.17%
38.51%
0.00%
ThCh$
175,965,223
47,287,258
86,123,198
151,687,014
394,687,045
4,888,985
%
20.45%
5.49%
10.01%
17.62%
45.86%
0.57%
1,086,410,891
100.00%
860,638,723
100.00%
(1) This includes ThCh$29,089,378 (ThCh$19,709,125 in 2005) relating to other generating companies’ debt payable to Endesa S.A. and generating subsidiaries,
as a result of the collection of tolls due to the application, since March 13, 2004, of Law N°19,940.
2006 Annual Report | 135
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 06.
BALANCES AND TRANSACTIONS WITH RELATED COMPANIES
The balances of accounts receivable and payable with related companies are as follows at December 31, 2006 and 2005:
a. Notes and accounts receivable due from related companies:
Tax Payer
Number
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
77.573.910-K
78.932.860-9
78.882.820-9
77.032.280-4
76.197.570-6
77.625.850-4
Foreign
99.584.600-4
77.017.930-0
Company
Atacama Finance Co. (1)
Com. de Energía del Mercosur S.A.
Empresa Eléctrica Piura S.A.
Endesa España
Endesa Europa
Endesa Internacional S.A.
Etevensa
Fundación Endesa
Consorcio Ingendesa - Minmetal Ltda.
Gas Atacama Generación Ltda.
Gasoducto Atacama Chile
Gasoducto Tal Tal Ltda.
Sociedad Consorcio Ara Ltda.
Consorcio Ara-Ingendesa Ltda.
Sacme
Sistemas Sec S.A.
Transmisora Eléctrica de Quillota Ltda.
As of December 31,
Short-term
Long-term
2006
ThCh$
61,561
6,193,659
132,203
275,023
878
343,059
-
-
-
61,365
283,820
1,973
7,928
147,575
1,547
6,051,495
2,884
2005
ThCh$
21,654
3,821,437
53,464
261,384
-
552,739
307,821
160,590
8,511
21,026
179,951
32,847
17,461
69,704
2,339
5,683,903
324,740
2006
ThCh$
90,523,990
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2005
ThCh$
91,713,359
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
13,564,970
11,519,571
90,523,990
91,713,359
(1) The balance receivable from Atacama Finance Co. relates to the loans granted by Compañía Eléctrica Cono Sur S.A. to finance the work in construction
of Gasoducto Atacama Argentina S.A., Gasoducto Atacama Chile S.A. and Gas Atacama Generación S.A. The loans are expressed in US dollars, accrue
interest at a rate of 7.5% per annum and are due in September 2008.
b. Notes and accounts payable due to related companies:
Tax Payer
Number
Foreign
77.625.850-4
77.573.910-K
96.806.130-5
Foreign
Foreign
Foreign
78.932.860-9
Foreign
77.017.930-0
Company
Com. de Energía del Mercosur S.A.
Consorcio Ara-Ingendesa Ltda.
Consorcio Ingendesa - Minmetal Ltda.
Electrogas S.A.
Empresa Eléctrica Piura S.A.
Endesa Internacional S.A.
Etevensa
Gas Atacama Generación S.A.
Sacme
Transmisora Eléctrica de Quillota Ltda.
As of December 31,
Short-term
Long-term
2006
ThCh$
24,620,706
153,015
-
223,051
1,332,476
2,830,515
-
644,376
58,381
-
2005
ThCh$
15,280,697
-
1,582
204,122
416,359
32,479,176
11,902
-
45,577
25,916
2006
ThCh$
2005
ThCh$
-
-
-
-
-
-
-
-
-
-
11,250,360
13,520,056
-
-
-
-
-
-
-
-
Total
29,862,520
48,465,331
11,250,360
13,520,056
136
| 2006 Annual Report
c. Transaction
Company
Tax Payer
Number Relationship
Atacama Finance Co.
Foreign
Affiliate
Consorcio ARA-Ingendesa
Consorcio Ingendesa Minmetal Ltda.
Com. de Energía del Mercosur S.A.
Foreign
Affiliate
Affiliate
Affiliate
Nature of transaction
Interest
Monetary correction
Exchange difference
Services
Services
Sale of energy
Purchase of energy
Services
Empresa Eléctrica Piura S.A.
Foreign Member of Controling Group Sale of energy
Electrogas S.A.
Endesa España
Affiliate
Parent company
Endesa Servicios
Foreign
Parent company
Endesa Internacional S.A.
Foreign
Parent company
Purchase of energy
Services
Purchase of gas
Interest
Exchange difference
Exchange difference
Monetary correction
Interest
Services
Exchange difference
Monetary correction
Etevensa
Foreign Member of Controling Group Sale of energy
Fundación Endesa
Gastacama Generación S.A.
Sacme
Sistemas SEC S.A
Soc. Consorcio Ingendesa Ara Ltda.
Transmisora Eléctrica de Quillota Ltda.
Purchase of energy
Services
Foreign Member of Controling Group Services
Services
Services
Services
Services
Interest
Services
Affiliate
Affiliate
Affiliate
Affiliate
Affiliate
Foreign
enersis06
As of December 31
2006
2005
Amount
ThCh$
6,495,898
1,886,303
1,643,119
800,048
63,059
5,843,513
5,019,836
5,910,737
678,308
11,795,737
205,474
1,967,300
3,198,774
46,493
146
145
2,132,796
4,122,187
12,693
60,276
-
-
-
94,712
970,233
399,009
469,428
164,767
26,887
5,118
800,048
63,059
Income
Income
(Expense)
Amount
(Expense)
ThCh$
ThCh$
ThCh$
4,924,252
4,924,252
6,495,898
3,863,870
1,886,303
3,863,870
(12,609,487)
1,643,119 12,609,487
1,926,343
1,926,343
106,440
106,440
5,843,513 11,260,086 11,260,086
(7,106,860)
7,106,860
(5,019,836)
1,206,991
1,206,991
5,910,737
722,645
722,645
678,308
(5,257,305)
5,257,305
(11,795,737)
132,718
132,718
205,474
(1,585,550)
1,585,550
(1,967,300)
-
-
(3,198,774)
-
-
46,493
-
-
146
-
(145)
-
(564,448)
564,448
(2,132,796)
-
-
(4,122,187)
-
-
(12,693)
-
(60,276)
-
1,026,031
1,026,031
-
(171,886)
171,886
-
955,477
955,477
-
101,508
101,508
94,712
147,268
147,268
970,233
(364,214)
364,214
(399,009)
(7,573)
7,573
469,428
219,092
219,092
164,767
61,924
61,924
26,889
4,901
4,901
5,118
The most significant transactions and their effects in income (expense) for
each year ended December 31 are 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.
NOTE 07.
INVENTORIES
Inventories include the following items and are presented net of an allowance for obsolescence amounting to ThCh$3,865,739 and ThCh$3,251,465
as of December 31, 2006 and 2005, respectively:
Real estate under development
Materials in transit
Operation and maintenance material
Fuel
Total
As of December 31,
2006
ThCh$
12,176,293
2,425,443
39,225,020
12,081,829
2005
ThCh$
15,452,755
420,382
39,409,541
16,815,673
65,908,585
72,098,351
2006 Annual Report | 137
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 08.
DEFERRED INCOME TAXES
a. Income taxes (recoverable) payable as of each year-end are as
follows:
Income tax provision - current
Recoverable tax credits
As of December 31,
2005
2006
ThCh$
ThCh$
149,547,441
259,128,302
(81,445,828)
(116,216,877)
Total
142,911,425
68,101,613
b. Tax loss carryforwards
The parent Company had tax loss carryforwards that during the
year ended December 31, 2006 amounted to ThCh$325,202,670
(ThCh$388,694,437 in 2005).
c. The net effect of recording the deferred tax in 2006 was a net credit
of ThCh$ 142,078,594 (net charge of ThCh$7,263,468 in 2005).
d. In accordance with BT N°.60 and 69 of the Chilean Association of
Accountants, and Circular N°1,466 of the SVS, the Company and its
subsidiaries have recorded consolidated deferred income taxes as of
December 31, 2006 and 2005 as follows:
As of December 31, 2006
As of December 31, 2005
Asset
Liability
Asset
Liability
Description
Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Allowance for doubtful accounts
16,631,379
50,916,006
693,720
1,542,496
-
-
1,147,149
-
-
-
-
-
-
-
-
12,822,825
44,076,950
1,076,847
700,342
1,314,987
-
1,053,846
464,611
-
-
-
-
-
-
-
966,263
-
560,949
-
-
-
34,614,105
789,178
442,674,315
639
-
1,677,822
2,716,255
145,408
400,056,299
475
-
1,761,264
5,760,844
5,342,971
2,296,439
3,076,910
1,493,957
5,285,281
278,200
3,691,749
8,630,826
76,646,343
7,471,990
72,528,830
-
-
-
-
-
-
702,591
-
-
-
-
-
141,442
1,337,058
-
-
-
8,420,626
15,353,914
3,756,520
-
-
-
-
562,219
3,373,758
1,604,532
-
-
102,542
-
-
142,001
1,567,290
-
-
-
8,498,040
13,254,965
4,148,807
611,338
3,921,623
-
10,500,328
351,596
2,191,170
-
-
-
4,013,859
-
-
-
-
-
-
-
-
811,521
474,148
Tax losses
53,654,994
188,163,151
Provision real state project
Sie2000A project
-
-
2,367,831
-
Provision for employee benefits
2,483,126
3,065,119
Operating fees
Energy in measurers
Regulated assets
Capitalized expenses
Fixed assets
Exchange difference
Complementary account-net
-
-
-
-
-
-
-
-
-
-
-
-
-
2,317,635
10,552,279
-
-
-
-
18,421,701
2,130,360
-
18,678,406
(10,800,717)
- (193,572,033)
-
11,830,729
309,921
2,060,233
-
-
-
3,781,606
56,476,969
188,355,469
-
-
2,460,812
-
2,480,983
3,543,641
1,519,060
-
-
-
-
-
-
-
-
-
23,800,779
-
-
(10,831,559)
-
-
-
-
-
-
-
-
-
2,573,088
-
-
857,794
-
-
-
425,977
-
-
-
14,970,953
14,149,146
-
-
-
-
-
20,816,953
- (201,390,555)
-
-
Valuation allowance
(11,840,683)
(28,157,575)
-
-
(12,089,337)
(165,173,665)
Total
78,215,542 340,405,726
16,659,192 328,156,484
73,845,088 185,853,365
18,720,988 273,286,563
138
| 2006 Annual Report
Unearned income
Vacation accrual
Leased assets
Fixed assets depreciation
Severance indemnities
Other
Contingencies
Bond discount
Cost of studies
Finance cost
Imputed interest on construction
Deferred charges
Actuarial deficit (Brazil)
Obsolescence
Materials used
Imputed salaries on construction
Income tax benefit (expense) for the year ended December 31, 2006 and 2005 is as follows:
Item
Current income tax expense - income tax provision:
Adjustment for tax expense - prior year
Deferred tax (expense) benefit:
Benefits for tax losses (reversal)
Effect from amortization of complementary accountsof deferred assets and liabilities
Effect on assets or liabilities for deferred tax due to change in valuation allowance (*)
Other charges or credits
Total
enersis06
As of December 31
2006
ThCh$
(259.128.302)
6.060.692
19.619.937
1.581.142
(8.564.282)
131.022.939
-
2005
ThCh$
(149.547.441)
780.413
(22.392.657)
13.979.822
(5.945.853)
(17.725.293)
(1.199.665)
(109.407.874)
(182.050.674)
(*) During 2006, the valuation provision has been reversed as a consequence of the merger approved in Extraordinary Shareholders’ Meetings of Chilectra
S.A. (formerly Elesur S.A.) and Chilectra S.A. and the sale of the offices of the former Elesur S.A., whose proceeds, Th$129,771,116 (historic values) were
credited to net income for tax purposes.
NOTE 09.
OTHER CURRENT ASSETS
Other current assets are as follows:
Forwards contracts
Guaranties and indemnities
Deferred expenses
Post-retirement benefits
Deposits for commitments and guarantees
Deferred expenes for bond placement
Assets available for sale
Bond discount
Fair value derivatives contracts
Reverse repurchase agreements (1)
Other
Total
Balance as of December 31
2006
ThCh$
-
228.911
176.085
247.554
8.015.123
180.002
4.737.696
973.620
1.965.181
48.872.100
1.260.041
2005
ThCh$
19.244
218.529
639.798
247.784
6.984.605
7.768.838
975.562
650.026
22.061.590
3.204.261
66.656.313
42.770.237
2006 Annual Report | 139
CONSOLIDATED FINANCIAL STATEMENTS
(1) The detail of reverse repurchase agreements is as follows:
Code
Date
Start
End
Financial institution
Currency
Document
As of December 31, 2006
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
26-12-2006
26-12-2006
26-12-2006
26-12-2006
26-12-2006
26-12-2006
26-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
27-12-2006
27-12-2006
27-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
28-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
29-12-2006
02-01-2007 Corpbanca
02-01-2007 Banco Central de Chile
02-01-2007 Banco Estado
02-01-2007 Citibank
02-01-2007 Banco Crédtio e Inversiones
02-01-2007 Banco Santander Santiago
02-01-2007 Banco Chile
02-01-2007 BBVA Banco BHIF
02-01-2007 Banco Central de Chile
02-01-2007 Banco Santander Santiago
02-01-2007 Banco Crédtio e Inversiones
03-01-2007 Banco Central de Chile
03-01-2007 BBVA Banco BHIF
03-01-2007 BBVA Banco BHIF
04-01-2007 Banco Chile
04-01-2007 Banco Santander Santiago
04-01-2007 Banco Central de Chile
04-01-2007 Banco Boston
04-01-2007 Banco Santander Santiago
04-01-2007 Banco Crédtio e Inversiones
02-01-2007 Banchile C.de B.
02-01-2007 Banchile C.de B.
02-01-2007 Banchile C.de B.
02-01-2007 Banchile C.de B.
02-01-2007 Banchile C.de B.
02-01-2007 Banchile C.de B.
02-01-2007 Banchile C.de B.
Inv Boston C. de B.
02-01-2007
Inv Boston C. de B.
02-01-2007
Inv Boston C. de B.
02-01-2007
02-01-2007
Inv Boston C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BHIF C. de B.
02-01-2007 BBVA BANCO BHIF
02-01-2007 Banco Santander Santiago
02-01-2007 Banco Chile
02-01-2007 Banco Estado
02-01-2007 Banco Crédtio e Inversiones
02-01-2007 BBVA Banco BHIF
02-01-2007 Security
02-01-2007 Scotiabank
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
UF
UF
UF
UF
UF
UF
UF
UF
D.P.F.
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
CERO
D.P.F.
D.P.F.
CERO
D.P.F.
D.P.R.
L.H.
L.H.
CERO
D.P.F.
D.P.F.
D.P.F.
L.H.
L.H.
L.H.
L.H.
BONO
L.H.
L.H.
D.P.F.
CERO
D.P.F.
D.P.F.
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
D.P.R.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
D.P.R.
Interest
rate
%
0.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.51%
0.51%
0.51%
0.51%
0.53%
0.53%
0,53%
0,52%
0,52%
0,54%
0.54%
0.54%
0.54%
0.52%
0.52%
0.52%
0.52%
0.35%
0.35%
0.35%
0.48%
0.48%
0.48%
0.48%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
Current
amount
ThCh$
2,207,276
2837
4,485,879
2,577,679
3,402,863
1,383,106
2,090,097
2,899
162
1,946,087
65,737
2,838
7,436,726
111,078
3,901,603
2,926
11,167
69,871
5,411,354
1,511,388
106,492
1,019,081
400,580
192,181
115,399
254,838
203,112
150,306
38,612
279,469
503,923
881
1,877,005
201,088
146,945
298,166
25,489
158,440
206,457
6327
2,086,973
512,294
505,435
1,087,578
729,817
629,001
512,638
Nominal
ThCh$
2,205,438
2,835
4,482,144
2,575,532
3,400,030
1,381,954
2,088,356
2,898
161
1,945,426
65,715
2,836
7,431,474
110,999
3,899,575
2,925
11,161
69,833
5,408,433
1,510,572
106,437
1,018,551
400,372
192,081
115,372
254,778
203,065
150,258
38,600
279,380
503,762
881
1,876,367
201,019
146,895
298,065
25,480
158,386
206,387
6,325
2,086,264
512,120
505,263
1,087,208
729,569
628,787
512,464
Fair value
ThCh$
2,207,276
2,837
4,485,879
2,577,679
3,402,863
1,383,106
2,090,097
2,899
162
1,946,087
65,737
2,838
7,436,726
111,078
3,901,603
2,926
11,167
69,871
5,411,354
1,511,388
106,492
1,019,081
400,580
192,181
115,399
254,838
203,112
150,306
38,612
279,469
503,923
881
1,877,005
201,088
146,945
298,166
25,489
158,440
206,457
6,327
2,086,973
512,294
505,435
1,087,578
729,817
629,001
512,638
Total
48,872,100
48,842,436
48,872,100
Code
Date
Start
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
29-dec-05
29-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
30-dec-05
12-dec-05
End
Financial institution
Currency
Document
As of December 31, 2005
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
2-jan-06
19-jan-06
Banco Central de Chile
Banco Central de Chile
Banco Central de Chile
Corpbanca
Banco Estado
Banco Central de Chile
Banco Santander Santiago
Banco del Desarrollo
Banco Chile
Banco Boston
Banco Central de Chile
Banco Boston
Valores Security
$
$
$
$
$
$
$
$
$
$
$
$
$
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
P.R.C.
Interest
rate
%
0.50%
0.50%
0.42%
0.42%
0.42%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.09%
Current
amount
ThCh$
18,519
5,393,871
318,792
3,862
27
3,184
921,545
51,785
1,854,651
209,686
1,308
418,087
12,866,273
Nominal
ThCh$
18,513
5,392,073
318,747
3,862
27
3,184
921,387
51,777
1,854,335
209,650
1,308
418,017
12,829,708
Fair value
ThCh$
18,525
5,356,033
318,881
3,863
27
3,186
921,858
51,802
1,855,282
209,757
1,309
418,230
12,902,837
Total
22,061,590
22,022,588
22,061,590
140
| 2006 Annual Report
NOTE 10.
PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment is as follows:
As of December 31, 2006
Gross Fixed Assets
Land
Buildings and infrastructure
Distribution and transmission lines and public lighting
Less: third party contributions
Sub-total
Machinery and equipment
Other fixed assets
Work in progress
Construction materials
Leased assets (*)
Furniture and fixtures, tools, and computing equipment
Vehicles
Equipment in transit
Other assets
Sub-total
Technical appraisal
Buildings and infrastructure
Machinery and equipment
Total technical appraisal
Total property plant and equipment
Depreciation
Accumulated depreciation at beginning of year
Buildings and infrastructure
Machinery and equipment
Other assets
Accumulated depreciation at beginning of year of technical appraisal
Buildings and infrastructure
Machinery and equipment
Other assets
Total accumulated depreciation at beginning of year of technical appraisal
Depreciation for the year (cost of sales)
Depreciation for the year ( administrative and selling expenses)
Total accumulated depreciation at the end of year
Total property, plant and equipment, net
(*) Leased assets
enersis06
Balance as of December 31
2006
ThCh$
2005
ThCh$
132,604,494
6,546,069,336
4,495,375,612
(105,482,204)
129,843,148
6,330,456,250
4,314,627,499
(83,599,502)
10,935,962,744 10,561,484,247
1,757,852,219
1,987,188,305
282,997,996
50,950,519
99,127,980
80,397,713
7,278,032
13,226,605
73,507,649
607,486,494
171,584,764
47,230,684
28,742,014
84,829,123
7,262,119
7,545,663
91,634,127
438,828,494
185,762,956
299,234
186,062,190
183,107,327
299,235
183,406,562
13,849,304,227 13,071,414,670
(4,427,593,232)
(784,484,184)
(80,599,386)
(5,292,676,802)
(54,164,397)
(291,994)
(116,880)
(54,573,271)
(402,853,125)
(11,763,630)
(4,108,596,188)
(684,780,097)
(50,003,980)
(4,843,380,265)
(45,644,528)
(289,010)
(45,933,538)
(362,089,059)
(13,255,021)
(414,616,755)
(375,344,080)
(5,761,866,828)
(5,264,657,883)
8,087,437,399
7,806,756,787
a. In Endesa Chile the amount of ThCh$29,363,992 corresponds to a contract for power transmission lines and installations (Ralco-Charrúa 2X220 KV)
between Empresa Nacional de Electricidad S.A. and Huepil S.A. This contract has a 20-year maturity and earns interest at a 6.5% annual rate.
b. In the Peruvian subsidiary Edegel S.A., the amount of ThCh$69,763,988 relates to contracts to finance the project of converting the thermo-electric
plant to combination cycle (former Etevensa), being carried out by the Company and the financial institutions Banco de Crédito del Perú, BBVA
- Banco Continental and Citibank. These contracts have a life of eight years and accrue interest at an annual rate of Libor + 3.65%.
The Company and its foreign subsidiaries have insurance contracts that include blanket, earthquake, and machinery failure policies up to a
MUS$200,000 limit. This coverage includes losses due to business interruption. Premiums prepaid associated with these policies are recorded in
prepaid expenses and charged to income over the life of the policy.
2006 Annual Report | 141
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11.
INVESTMENT IN RELATED COMPANIES
a. Investments in related companies as of December 31, 2006 and 2005 are as follows:
Tax Payer
Related
Number
Companies
Country
Reporting
origin
currency
Number
of shares
Percentage
Shareholders’ equity
owned
of investee
Net income
of investees
Equity in income
Investment book value
2006
2005
2006
ThCh$
ThCh$
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
Foreign
Cía. de Interconexión Energética S.A. (5)
78.932.860-9
Gasatacama Generación S.A.
78.952.420-3
Gasoducto Atacama Argentina S.A.
78.882.820-9
Gasoducto Atacama Chile S.A.
96.889.570-2
Inversiones Electrogas S.A.
Brazil
Chile
Chile
Chile
Chile
US dollar
US dollar
US dollar
US dollar
-
-
-
-
-
45.00%
-
-
-
(17,497,116)
-
(7,873,702)
-
-
0.05%
0.05%
0.05%
0.05% 25,992,826 40,700,209
(15,417,047)
(10,285,893)
0.05% 73,302,051
61,743,533
10,544,902
8,645,600
0.05% 80,930,367
68,369,574
11,304,767
12,203,699
(7,709)
5,272
5,652
(5,143)
4,323
6,101
12,996
36,651
40,465
20,350
30,872
34,185
Chilean Peso
425
42.50%
42.50% 17,159,888
17,939,876
4,393,321
4,203,589
1,867,161
1,786,525
7,292,952
7,624,447
Foreign
Cía. de Energía del Mercosur S.A. (2)
Argentina US dollar
6.305.400
45.00%
45.00% 8,257,640
8,114,350
1,749
113,039
787
50,867
3,715,938
3,651,457
77.017.930-0
Transmisora Eléctrica de Quillota Ltda.
Chile
Chilean Peso
-
50.00%
50.00% 6,901,090
6,468,906
428,224
350,385
214,112
175,192
3,450,545
3,234,453
Foreign
Sacme
96.806.130-5
Electrogas S.A.
77.625.850-4
Consorcio ARA- Ingendesa
76.197.570-6
Sociedad Consorcio Ingendesa Ara Ltda (1)
77.573.910-K
Consorcio Ingendesa - Minmetal Limited (1)
96.830.980-3
Gasatacama S.A.
76.014.570-K
Inversiones Gas Atacama Holding Ltda.
Chile
Chile
Chile
Chile
Chile
Chile
Chilean Peso
Chilean Peso
Chilean Peso
Chilean Peso
Chilean Peso
Chilean Peso
85
0.021%
0.021% 15,853,446
16,525,445
4,531,558
4,313,870
-
-
-
50.00%
50.00%
323,546
863,643
50.00%
50.00%
154,620
50.00%
50.00%
29,154
136,862
183,176
186,142
117,360
147,002
299,310
125,513
219,558
1.147 0.00115% 0.00115% 179,364,050 170,025,373
6,373,709
12,340,047
1,774
963
93,071
58,680
73,501
73
(1,101)
917
149,655
62,757
109,779
142
38,322
3,369
36,260
3,511
161,773
431,822
77,310
14,577
2,057
68,432
91,588
1,950
-
50.00%
50.00% 178,505,773 169,777,794
5,686,489
12,697,243
2,843,246
6,348,622
89,252,887 84,888,897
Argentina US dollar
12.000
50.00%
50.00%
76,644
72,520
3,548
(2,203)
Foreign
Central Geradora Termelectrica Fortaleza S.A. (5)
Brazil
US dollar
20.246.908
-
48.82%
-
-
- 12,349,939
-
6,029,241
-
-
99.584.600-4
Sistemas SEC S.A. (3)
Chile
Chilean Peso
500.006
49.00%
49.00%
192,951
1,653,295
(240,088)
88,413
(117,643)
43,324
945,676
810,114
Foreign
Foreign
Termoeléctrica José de San Martín S.A. (4)
Argentina US dollar
500.006
23.10%
23.10%
Termoeléctrica Manuel Belgrano S.A. (4)
Argentina US dollar
1.020.000
23.10%
23.10%
78,364
78,359
76.652.400-1
Centrales Hidroelécticas de Aysen S.A. (6)
Chile
Chilean Peso
-
51.00%
-
19,972,020
85,966
85,966
-
-
-
-
-
-
-
-
-
-
-
-
18,102
18,101
- 10,185,730
19,884
19,884
Total
5,038,940
6,887,499 115,267,451 100,968,106
(1) Related companies of subsidiary Ingendesa Ltda.
(2) Related company of subsidiary Endesa Argentina S.A.
(3) Related company of subsidiary CAM Chile Ltda.
(4) Related companies of subsidiaries Endesa Costanera S.A. and Hidroeléctrica El Chocon S.A.
(5) See Note 11-1.
(6) Related company of parent company Endesa (organization and development stage)
b. Income and (losses) recognized by Enersis S.A. based on the
interest in the related companies as of December 31, 2006, amounted
to ThCh$5,164,292 (ThCh$14,767,445 in 2005) and ThCh$125,352
(ThCh$7,879,946 in 2005) respectively.
c. In accordance with Technical Bulletin No.64 of the Chilean Institute
of Accountants for the years ended December 31, 2006 and 2005, the
Company has recorded foreign exchange gains and losses on liabilities
related to net investments in foreign countries that are denominated in the
same currency as the functional currency of those foreign investments.
Such gains and losses are included in the cumulative translation
adjustment account in shareholders’ equity, and in this way, act as a
hedge of the exchange risk affecting the investments. As of December
31, 2006 and 2005 the corresponding amounts are as follows:
2006
Company
Edesur S.A.
Ampla Energía e Servicos S.A.
Central Hidroeléctrica Betania S.A.
Edegel S.A.
Hidroeléctrica El Chocón S.A.
Comercializadora de Energia del Mercosur S.A.
Endesa Brasil S.A.
Endesa Costanera S.A.
Country
of origin
Argentina
Brazil
Colombia
Peru
Argentina
Argentina
Brazil
Argentina
Investment
ThCh$
Reporting
currency
Liability
ThCh$
158,353,824
151,159,521
331,103,269
140,498,360
176,190,422
3,715,938
470,347,245
82,724,307
US$
US$
US$
US$
US$
US$
US$
US$
57,081,416
139,525,671
244,249,312
112,553,841
78,476,027
2,490,419
403,724,902
48,643,241
Total
1,514,092,886
1,086,744,829
142
| 2006 Annual Report
enersis06
2005
During the second quarter of 2004, Enersis (Parent Company) has contracted instruments (swap) redenominating to UF that debt, reason why debt
is no longer hedge with the instrument.
Company
Edesur S.A.
Ampla Energía e Servicos S.A.
Central Hidroeléctrica Betania S.A.
Edegel S.A.
Hidroeléctrica El Chocón S.A.
Comercializadora de Energia del Mercosur S.A.
Endesa Brasil S.A.
Endesa Costanera S.A.
Country
of origin
Argentina
Brazil
Colombia
Peru
Argentina
Argentina
Brazil
Argentina
Investment
ThCh$
Reporting
currency
Liability
ThCh$
163.594.644
140.816.971
319.463.341
153.272.201
159.724.269
3.651.457
436.521.148
82.679.287
US$
US$
US$
US$
US$
US$
US$
US$
78.362.197
137.133.588
240.501.705
117.491.638
74.213.758
2.581.450
402.005.030
52.664.511
Total
1.459.723.318
1.104.953.877
d. The investments in related companies made by Enersis S.A. and
its subsidiaries for the years ended December 31, 2006 and 2005,
amounted to ThCh$22,550,433 and ThCh$33,837,526, respectively,
which are detailed as follows:
Balance as of December 31
2006
ThCh$
2005
ThCh$
Company
Inversiones Lo Venecia Ltda. (San Isidro S.A.)
Ingendesa S.A.
-
-
8.536.140
61.879
Centrales Hidroeléctricas de Aysen S.A. (Endesa S.A)
10.159.200
Pangue (Endesa S.A.)
Sistemas Sec S.A. (Cam)
Chilectra S.A. (ex Elesur S.A.) (1)
-
-
9.152
258.372
429.112
12.123.709
24.810.395
Total
22.550.433
33.837.526
(1) The payments made for the purchase of Chilectra S.A. (formerly Elesur
S.A.) in May 2004 to Endesa International relate to partial disbursements
made in June 2005 and March 2006. The balance outstanding is shown
in long-term accounts payable to related companies.
e. Due to a corporate restructuring carried out in Colombia, on
January 30, 2006, the company Capital de Energía S.A. (Cesa) was
liquidated.
As a result of such restructuring, and in accordance with Technical
Bulletin No. 72 of the Chilean Institute of Accountants, for this transaction
carried out by companies under common control, a ThCh$1,912,820
increase in reserves has been recognized under shareholders’ equity
(see note 22e).
f. On April 1, 2006, the subsidiaries Chilectra S.A. (formerly Elesur
S.A.) and Chilectra S.A. merged, as was approved in a Meeting of
Shareholders held on March 31, 2006. As a result of the merger
and according to Technical Bulletin N°72 of the Chilean Institute of
Accountants, this business combination subject to common control
was recorded under the pooling of interests methodology, causing an
increase of ThCh$3,019,591 in shareholders’ equity (see note 22e).
g. In Peru, on June 1, 2006, Empresa de Generación Termoeléctrica
Ventanilla S.A. (Etevensa) was upstream merged into the subsidiary
Edegel S.A.
As a result of the merger and in accordance with Technical Bulletin N°
72 of the Chilean Institute of Accountants, this business combination
subject to common control was recorded under the pooling of interests
methodology and led to decreasing the interest in Edegel S.A. to 55.44%
and recognizing a reduction in other reserves, under shareholders’
equity, by Th$5,757,792 (See note 22e).
h. On September 4, 2006, Endesa Chile and its subsidiary Endesa
Inversiones Generales S.A. executed the incorporation deed that gave
birth to a new subsidiary, whose name is Centrales Hidroeléctricas
de Aysén S.A. and whose objective is the development, financing,
ownership and operation of a hydroelectric project in the 11th Region
(Aysen). The capital of the company is one million Chilean pesos divided
into 100 ordinary, single-series, nominative, equivalent, no par-value
shares. Endesa Chile subscribed 99 shares, representing 99% of the
capital, and paid the total amount, a sum of ThCh$990, while Endesa
Inversiones Generales S.A. subscribed one share, representing 1% of
the capital, and paid in Th$10 for it.
On September 21, 2006 the First General Extraordinary Shareholders’
Meeting of Centrales Hidroeléctricas de Aysén S.A. was held and in it
the increase in the paid-in capital of the Company to the new sum of
ThCh$20,000,000 divided into 2 million nominative, single-series, no
par value shares, was approved. This will be subscribed and paid in
within three years of the date of the above mentioned First Extraordinary
General Shareholders’ Meeting. In this way, of the 1,999,900 shares
corresponding to the increase in paid-in capital, Endesa Chile would
subscribe 1,019,900 shares, representing 51% of the increase in capital
and 50.99995% of the new capital of the Company, while the new
2006 Annual Report | 143
CONSOLIDATED FINANCIAL STATEMENTS
shareholder Colbún S.A. would subscribe 980,000 shares, representing
49% of the increase in paid-in capital and 49% of the new paid-in capital.
Endesa Inversiones Generales S.A. will not exercise its preferential
subscription right, and therefore its interest in the paid-in capital of the
Company will be 0.00005%.
On October 10, 2006, Endesa Chile subscribed 1,019,899 shares,
paying in a total of Ch$10,158,194,040 for them, or $10,000 per share,
a sum equivalent to the placement value agreed to in the First General
Shareholders’ Meeting of Centrales Hidroeléctricas de Aysén S.A..
At the same time, it subscribed 1 share, paying in a total of $10,000
for it, equivalent to the placement value agreed to in the First General
Extraordinary Shareholders’ Meeting of Centrales Hidroeléctricas de
Aysén S.A.. However, the payment of this share was made in accordance
with the terms set out in the public deed of “Payment of Shares
Subscribed for Transfer of Bare Title and the Constitution of Usufruct
on the Rights to Use the Water”, which was executed by the parties as
of the same date, and according to which Ch$9,955 were paid in cash,
plus a contribution, valued at Ch$5, of the ownership of the bare title to
the rights to use the water that are identified in the above deed.
i. Through a Memorandum of Understanding signed on October 5,
2004, the Corporación Financiera del Valle will stop being shareholder
of the Central Hidroeléctrica de Betania S.A. through an asset exchange
operation which will take place between the Corfivalle Group and Endesa
Group when the legal processes defined by both parties prior to the
delivery of the titles to the assets involved are completed. On December
29, 2006 the writ of the splitting of Betania was protocolized, and with
that the transfer of ownership of the assets forming part of the Corfivalle
group was formalized.
With this operation, the Endesa Chile Group gave to Corfivalle the
electricity Sub-station of Betania S.A. E.S.P. and 3.81% of the ownership
in Empresa de Energía de Bogotá S.A. E.S.P., in exchange for a 14.3%
interest in Central Hidroeléctrica de Betania S.A. E.S.P which at that date
was owned Corfivalle; thus Endesa Chile Group increased its interest in
Central Hidroeléctrica de Betania S.A. E.S.P from 85.62% to 99.99%.
In accordance with Technical Bulletin N° 72 of the Chilean Institute of
Accountants and Circular N°1697 of the Superintendency of Securities
and Insurance, the Company evaluated the assets and liabilities acquired
from Central Hidroeléctrica de Betania S.A. at their respective fair market
values. As a result of this evaluation it was concluded that the fair market
values do not differ substantially from the book values.
As a result, the above mentioned purchase of the minority interest was
recorded in conformity with Technical Bulletin No. 72 of the Chilean
Institute of Accountants and involved recognizing negative goodwill
amounting to Th$7,314,475. (See note 13b).
j. Business Structure - As a result of the reduction of available capacity
for power generation and the physical guarantee of energy and
associated wattage, Companhia de Interconexão Energética (CIEN) is
struggling to focus its business on a different compensation structure
which would not be dependant on the energy coming from Argentina and
Brazil for purchases and sales of power across borders. In this regard,
144
| 2006 Annual Report
CIEN is renegotiating its existing contracts for supplying energy while
seeking at the same time a compensation that would be compatible with
its position of transporter of energy across countries. CIEN expects to
define its new business structure in the course of 2007.
k. On April 18, 2005, Endesa Chile and its subsidiary Enigesa executed
the incorporation deed of a new subsidiary, bearing the corporate name
of Endesa Eco S.A. and whose purpose will be to promote and develop
projects associated with renewable energies. Endesa Eco S.A.’s capital
amounts to ThCh$580,000 and is divided into 5,800,000 nominative, no
par value shares. Endesa Chile subscribed 5,799,420 shares, representing
99.99% of the corporate capital and paid in ThCh$179,982, representing
1,799,820 shares while Enigesa subscribed 580 shares, representing
0.01 of the corporate capital and paid in ThCh$18, representing 180
shares. Each shareholder will pay in its part of the balance of the capital
over three years as from the date of incorporation.
l. On June 10, 2005, Endesa Brasil S.A. was incorporated; its purpose
is to acquire paid-in capital in other companies operating, or that may
be incorporated to operate, directly or indirectly, in any segment of the
electrical sector, transmission, distribution, generation and marketing
of electrical energy, in Brazil and other countries. Endesa Brasil S.A.
was created as an energy holding concentrating all the electrical assets
of Endesa Group in Brazil.
-Endesa Brasil S.A. holds ownership percentages in the following
companies: Compañía de Interconexión Energética S.A. (CIEN), Central
Generadora Termeléctrica Fortaleza S.A. (CGTF), Companhia Energetica
Do Ceara (COELCE), Ampla Energia e Servicos S.A. (formerly, Cerj),
Ampla Investimentos e Servicos S.A., Ampla Generación S.A., Investluz
and Centrais Eléctricas Cachoeira Dourada S.A. (CDSA).
Endesa Brasil’s interest in these investees were contributed on October
25, 26 and 27, 2005 by Enersis S.A., Endesa Chile S.A., Chilectra S.A.
and Endesa Internacional.
Contributions made by Enersis S.A. and its subsidiaries are detailed
as follows:
• Endesa Chile S.A., through its subsidiaries Edegel S.A. and
Compañía Eléctrica Cono Sur S.A., contributed its investment in
Centrais Eléctricas Cachoeira Dourada S.A. (99.61%) and Compañía
de Interconexión Energética S.A. (Cien) (45.00%), receiving in
exchange an interest in Endesa Brasil S.A.: 4.18% for Edegel S.A.
and 36.27% for Compañia Eléctrica Cono Sur S.A.
• Chilectra S.A., through its subsidiaries Chilectra Inversud S.A. and
Luz de Río S.A., contributed its investments as follows:
- Chilectra S.A. contributed 10.33% of its investment in Ampla
Energia e Servicos S.A., receiving in exchange a 4.65% interest
in Endesa Brasil S.A.
- Chilectra Inversud S.A. contributed 10.42% of its investment in
Investluz S.A., receiving in exchange a 2.37% interest in Endesa
Brasil S.A.
enersis06
- Luz de Río S.A. contributed 7.76% of its investment in Ampla
Energia e Servicos S.A., receiving in exchange a 3.49% interest
in Endesa Brasil S.A.
• Enersis S.A., contributed to Endesa Brasil S.A. the following
investments:
-
-
-
Its 48.82% interest in Central Generadora Termeléctrica
Fortaleza S.A., receiving in exchange an 8.84% interest in Endesa
Brasil S.A.
Its 15.61% interest in Investluz S.A., receiving in exchange a
3.55% interest in Endesa Brasil S.A.
Its 18.10% interest in Ampla Energia e Servicos S.A., receiving
in exchange an 8.15% interest in Endesa Brasil S.A.
To summarize the above, Enersis S.A. has a direct and indirect interest
in Endesa Brasil S.A. amounting to 53.57%.
m. On August 11, 2005, the Company and its subsidiary Endesa
Inversiones Generales S.A. acquired 99.999% and 0.001% of the
ownership rights in Inversiones Lo Venecia Ltda., for ThCh$8,360,472
and ThCh$82, respectively. Inversiones Lo Venecia Ltda. is the indirect
owner of 25.001% of the paid-in capital in Compañía Eléctrica San Isidro
S.A., and as a result Endesa Chile S.A. has become, considered directly
and indirectly, the owner of 100% of the stock capital in Compañía
Eléctrica San Isidro S.A.
In accordance with Technical Bulletin N°.72 of the Chilean Institute of
Accountants and Circular N°.1697 of the Superintendency of Securities
and Insurance, the Company appraised the assets and liabilities
acquired in Compañía Eléctrica San Isidro S.A. at July 31, 2005 at
their respective fair values.
The difference determined by the Company between the fair value and
the book value of the shareholders’ equity in Compañía Eléctrica San
Isidro S.A. at the acquisition date amounted to ThCh$6,645,776 and
is due to the greater economic value of the fixed assets relative to their
book value. The amount allocated to fixed assets will be depreciated
over 18 years, which is the remaining useful life of such assets.
As a result, the assets and liabilities of Compañía Eléctrica San
Isidro S. A. stated at book value (for 74.999% of the interest) and at
fair values (for 25.001% of the interest) which have been included in the
consolidation of the Company at December 31, 2005, are as follows:
ASSETS
Total current assets
Total property, plant and equipment net
Total other assets
TOTAL ASSETS
LIABILITIES
Total current liabilities
Total long-term liabilities
Total shareholders’ equity
TOTAL LIABILITIES
Book
value
ThCh$
Proportional
difference
ThCh$
Adjusted
value
ThCh$
14,128,702
86,866,792
4,503,545
-
1,659,591
-
14,128,702
88,526,383
4,503,545
105,499,039
1,659,591
107,158,630
37,923,949
29,604,165
37,970,925
-
281,640
1,377,951
37,923,949
29,885,805
39,348,876
105,499,039
1,659,591
107,158,630
The methodology applied in acquiring 25.001% of Compañía Eléctrica San Isidro S.A. was the purchase method.
2006 Annual Report | 145
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12.
INVESTMENTS IN OTHER COMPANIES
Investments in other companies at December 31, 2006 and 2005 are as follows:
Tax Payer
Number
77.286.570-8
77.345.310-1
Foreign
Foreign
80.237.700-2
Foreign
Foreign
88.272.600-2
Foreign
Foreign
Foreign
Company
CDEC-SIC Ltda.
CDEC-SING Ltda.
Club de la Banca y Comercio
Club Empresarial
Cooperativa Eléctrica de Chillán
Electrificadora de la Costa Atlántica
Electrificadora del Caribe
Empresa Eléctrica de Aysen S.A.
Empresa Eléctrica de Bogotá S.A.
Financiera Eléctrica Nacional S.A.
Dardanelos Participacoes S.A.
Number
of shares
-
-
1
1
-
6,795,148
42,784,058
2,516,231
2,124,047
4,098
-
Percentage
owned
14.84%
7.83%
-
1.00%
-
0.19%
0.71%
-
2.10%
0.10%
-
Balance as of December 31
2006
ThCh$
136,234
152,709
2,060
23,044
14,135
91,500
1,212,261
2,158,060
20,188,918
110,256
2,490
2005
ThCh$
226,109
109,131
1,891
5,365
14,135
23,330
1,249,998
2,168,431
37,604,403
108,609
-
Total
24,091,667
41,511,402
NOTE 13.
GOODWILL AND NEGATIVE GOODWILL
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, 2006 and 2005, as follows:
Tax Payer
Number
96.800.570-7
Foreign
Foreign
Foreign
96.783.910-8
96.589.170-6
91.081.000-6
78.882.820-9
Foreign
Company
Chilectra S.A. (ex Elesur)
Codensa S.A.
Edegel 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.
Inversiones Distrilima S.A.
Balance as of December 31
2006
2005
Amortization
for the year
ThCh$
(6,806,528)
(913,713)
(30,390)
(724,050)
(202,788)
(183,157)
(47,041,116)
(5,226)
(1,111)
Goodwill
Net Balance
ThCh$
89,151,363
9,898,552
329,224
7,846,896
1,977,185
2,854,198
542,932,105
63,583
8,891
Amortization
for the year
ThCh$
(6,806,450)
(898,047)
(29,869)
(1,176,818)
(202,788)
(183,157)
(47,041,116)
(5,225)
(1,092)
Goodwill
Net Balance
ThCh$
95,957,890
10,626,895
353,449
13,924,538
2,179,973
3,037,355
589,973,222
68,809
9,831
Total
(55,908,079)
655,061,997
(56,344,563)
716,131,962
146
| 2006 Annual Report
enersis06
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, 2006 and 2005 as follows:
Tax Payer
Number
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
96.529.420-1
Company
Endesa Costanera S.A.
Central Hidroeléctrica Betania S.A. (*)
Edegel S.A.
Edelnor S.A.
Emgesa S.A.
Inversiones Distrilima S.A.
Synapsis Soluciones y Servicios IT Ltda.
Balance as of December 31
2006
2005
Amortization
ThCh$
2,578,829
1,681,106
1,693,940
-
83,585
23,326
16,771
Goodwill
Net Balance
ThCh$
(7,091,791)
(7,314,475)
(22,162,386)
-
-
(359,616)
(88,049)
Amortization
for the year
ThCh$
2,534,616
5,415,785
7,495,788
150,346
185,759
22,927
16,771
Goodwill
Net Balance
ThCh$
(9,504,823)
(1,703,645)
(23,447,324)
-
(2,226,482)
(376,377)
(201,937)
Total
6,077,557
(37,016,317)
15,821,992
(37,460,588)
(*) See Note 11i)
NOTE 14.
OTHER ASSETS
Other assets as of each year end are as follows:
Bond discount
Bond issuance cost
Deferred expenses
Bank fees and interest expense
Post-retirement benefits
Security deposits for judicial obligations
Presumed minimum income and taxes
Reimbursable contributions
Investment in Empresa Eléctrica de Bogotá S.A. (1)
Regulatory assets
Fair value derivative contracts
Other
Total
(1) See note 11i).
As of December 31,
2006
ThCh$
14,824,231
5,172,084
5,421,634
7,767,199
2,893,528
58,939,499
72,208,739
815,229
-
71,047,279
57,378,238
3,521,903
2005
ThCh$
18,122,213
5,903,514
23,493,248
16,294,953
2,997,785
47,111,510
31,194,724
1,007,208
39,598,937
61,672,226
189,294
6,265,515
299,989,563
253,851,127
2006 Annual Report | 147
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15.
DUE TO BANKS AND FINANCIAL INSTITUTIONS
a. Short-term debt due to banks and financial institutions:
Rut
Financial Institution
US$
Other foreign currency
$ Readjusted
Ch$
As of December 31,
Foreign currency
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Foreign
Foreign
Foreign
Foreign
ABN Amro Bank
Banco Av Villas
Banco Bayerische Landes
Banco BBVA
97.032.000-8 Banco BBVA Bhif
Foreign
Foreign
Foreign
Foreign
Bnp Paribas
Banco Continental
Banco Credicoop
Banco Crédito Perú
-
-
14,716
-
-
-
-
-
-
6,772,464
7,681,959
-
-
-
-
68,004,765
24,111,715
9,256,354
-
-
23,608
-
-
2,184
2,355,647
13,918,596
12,638,085
-
-
97.006.000-6 Banco Crédito e Inversiones
147,767
Foreign
Banco de Bogotá
97.004.000-5 Banco de Chile
-
-
Banco de Galicia y Buenos Aires
591,097
570,880
Banco de la Ciudad de Buenos Aires
Banco de la Nación
-
-
-
-
Banco de la Provincia de Buenos Aires
1,347,575
1,241,702
Banco do Brasil
2,532,469
27,996
Banco do Nordeste do Brasil
97.030.000-7
Banco Estado
-
71,274
-
-
-
-
-
-
-
-
172,258
-
10,065,018
8,444,052
-
19,712,752
-
-
-
-
-
-
2,102,568
2,116,073
22,647
-
-
94,087
-
69,841
-
-
-
-
-
-
Banco Santander Central Hispano
115,767
113,782
4,566,626
2,955,910
97.036.000-K Banco Santander Santiago
139
8,530
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Banco Hipotecario
Banco Itau
Banco Lloyds
Banco Real
Banco Río de la Plata
Banco Safra
97.053.000-2 Banco Security
Foreign
Foreign
Foreign
Foreign
Foreign
Bank Boston
Bancolombia
Barings
Bladex
Citibank N.A.
97.008.000-7
Citibank (Agencia Chile)
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Comafi
Compagnie Belge de la Webstlb
Deutsche Bank
Interbank
JP Morgan
Standard Bank
Scotiabank - Perú
Unibanco
1,023,677
1,217,109
685,710
957,931
-
-
-
-
-
-
-
-
7,233,759
-
11,705
245,649
245,920
732,477
-
-
-
-
-
-
4,951
-
-
-
7,410
-
-
-
51,175
39,757
12,169,227
-
-
-
-
605,415
2,439,560
615,357
-
-
-
9,917,513
343,784
-
-
19,625
7,178
3,789
2,834
-
-
-
-
1,335,224
103,287
34,747
30,722
-
-
-
-
-
3,908,078
-
978,383
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
785
-
200,409
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
6,772,464
7,681,959
14,716
-
-
-
24,111,715
77,261,119
1
23,608
9
-
-
13,920,780
14,993,732
172,258
-
-
10,065,018
8,444,052
14,459
148,552
14,459
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,712,752
200,409
-
-
591,097
570,880
2,102,568
2,116,073
22,647
-
1,347,575
1,241,702
2,532,469
27,996
94,087
71,274
69,841
-
-
-
1,709,387
2,175,040
7,233,759
-
11,705
245,649
245,920
732,477
-
-
4,682,393
3,069,692
2,089
128
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,237
3,673
652
9,084
4,465
3,673
9,310
9,084
-
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
23
-
-
-
-
-
-
-
-
39,757
51,175
12,169,227
-
-
605,415
2,439,560
615,357
9,922,464
343,784
1
19,625
-
7,410
1,335,224
103,287
23
7,178
3,789
2,834
-
-
34,747
30,722
3,908,078
-
-
978,383
Total
8,333,333
74,849,703 125,716,421
37,943,399
2,089
128
207,106
24,227 134,258,949 112,817,457
Total principal
5,334,404
67,364,733 123,534,971
27,964,088
-
-
Weighted average annual interest rate
6.80%
4.73%
3.00%
3.00%
3.00%
0.30%
-
-
24,227 128,869,375 95,353,048
9.00%
7.85%
5.10%
Percentage of liabilities in foreign currency
Percentage of liabilities in local currency
Total
As of December 31,
2006
99.84%
0.16%
2005
99.98%
0.02%
100.00%
100.00%
148
| 2006 Annual Report
b. Current portion of long-term debt due to banks and financial institutions:
enersis06
US$
Euros
Other foreign currency
Ch$
$ no Readjusted
As of December 31
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
Foreign currency
Rut
Financial Institution
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Bancafe
Banco Abn Amro Bank
Banco Alfa
Banco Bayerische Landes
Banco BBVA
Bnp Paribas
Banco Colpatria
Banco Continental
Banco de Crédito (Perú)
Banco Corfinsura
Banco Davivienda
Banco do Brasil
Banco do Nordeste do Brasil
97.090.00-7
Banco Estado
36,246
929,278
-
-
661,430
8,026,740
115,122
1,602
3,508,128
-
1,326,929
-
-
-
-
-
-
-
-
-
-
-
-
1,323,854
80,060
-
-
11,608,238
-
-
175
-
3,493,888
-
-
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Banco Europeo de Investimentos
6,925,976
Banco Interamericado de Desarrollo
Banco Itau
Banco Medio Crédito
Banco Monte Paschi
Banco Nacionale del Lavoro
Banco Nacionale de Paris
Banco Pactual
Banco Safra
-
-
-
12,427
-
-
-
-
Banco Santander Central Hispano
112,752
3,668,581
Bancolombia
Banesto
Bank Boston
Bank of Tokio - Mitsubishi
Bndes
Bradesco
Caja de ahorros de galicia
Caja de Ahorros y Monte de Piedad de Madrid
-
-
4,413,387
4,391,905
-
-
89,507
1,212
-
-
24,853
129,578
-
-
-
20,143
Compagnie Belge de la Webstlb
3,863,683
2,110,853
Conavi
Credit Suisse First Boston
Deutsche Bank A.G.
Dresdner
Export Develop. Corp.
Granahorrar
Hsbc
Instituto crédito oficial
-
11,218
-
-
238,637
3,492,458
24,854
505
1,800,708
1,733,770
-
72,492
36,246
-
1,602
1,602
International Fiance Corporation
4,725,494
J.P. Morgan Chase Bank
13,405,136
93,751
Kreditanstal Fur Weideraubau
San Pedro IMI S.P.A.
Scotiabank
Skandinaviska Enskilda Banken
Standard Bank
Unibanco
West LB
300,064
8,273,583
86,990
1,212
-
-
882,607
1,737,851
123,515
-
-
1,085,185
2,308,262
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,224,653
1,203,288
-
-
-
1,012,536
-
106,411
-
-
-
816,521
802,193
9,829,342
10,125
3,937
3,034
3,265,742
3,208,770
2,836,477
2,419,275
1,586,684
227,096
-
-
-
-
-
-
-
793,790
-
1,856,924
2,028,368
1,841,361
-
-
-
606,534
1,243,640
422,279
370,907
-
770,794
1,152,921
1,380,034
4,456,393
3,208,770
-
-
-
-
5,028,227
-
8,675,850
26,727,120
28,739
887,144
-
-
-
-
-
614,905
-
-
-
-
-
-
-
-
2,041,089
2,005,482
-
-
-
-
-
-
1,224,653
1,203,288
-
-
-
-
-
-
91,477
-
-
-
-
-
-
-
-
-
-
-
8,466,259
9,511,991
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
386,869
1,825,596
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,224,653
1,203,288
36,246
929,278
-
106,411
661,430
8,026,740
1,127,658
3,508,128
1,602
-
816,521
802,193
11,156,271
10,125
3,937
3,034
3,265,742
3,208,770
2,836,477
2,419,275
1,586,684
1,550,950
-
80,060
386,869
1,825,596
6,925,976
793,790
-
-
11,608,238
1,856,924
2,028,368
1,841,361
12,427
175
-
-
606,534
4,737,528
422,279
370,907
-
770,794
1,265,673
5,048,615
4,456,393
3,208,770
4,413,387
4,391,905
-
5,028,227
89,507
1,212
8,675,850
26,727,120
28,739
24,853
887,144
-
129,578
20,143
823,824
728,517
355
2,249,817
1,365
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
614,905
-
-
3,863,683
2,110,853
2,041,089
2,005,482
11,218
-
238,637
3,492,458
24,854
505
1,800,708
1,733,770
1,224,653
1,203,288
72,492
36,246
4,725,494
1,602
1,602
-
13,405,136
93,751
300,064
8,273,583
86,990
91,477
1,212
-
882,607
1,737,851
123,515
-
8,466,259
10,597,176
2,308,262
-
Caixa General de Depósitos
-
-
823,824
728,517
Citibank N.A.
2,249,817
1,010
97.008.000-7
Citibank (Agencia en Chile)
Comafi
-
-
-
-
Total
47,486,058
52,074,462
823,824
728,517
49,785,013
65,410,010
386,869
1,825,596
30
355
98,481,794 120,043,536
Total principal
36,701,521
49,475,489
823,821
725,426
49,785,013
46,795,927
386,869
1,643,036
355
87,695,224
98,640,233
Weighted average annual interest rate
7.85%
10.27%
4.03%
3.45%
10.92%
11.66%
9.00%
9.00%
0,30%
9.37%
11.06%
Percentage of liabilities in foreign currency
Percentage of liabilities in local currency
Total
As of December
2006
2005
99.61%
98.48%
0.39%
1.52%
2006 Annual Report | 149
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16.
LONG-TERM PORTION OF DEBT DUE TO BANKS AND FINANCIAL INSTITUTIONS
The detail is as follows:
Foreign
97.030.000-7 Banco Estado
Financial
Institution
Currency
Banco Crédito Perú
Bancafe
ABN Amro Bank
Banco Colpatria
Banco Continental
Banco Alfa
Banco Bayerische Landes
Banco BBVA
Banco Pactual
Banco Río de la Plata
Bancolombia
Banco Santander Central Hispano
Banco Europeo de Investimentos
Banco Davivienda
Banco de la Provincia de Buenos Aires
Banco do Brasil
Banco do Nordeste do Brasil
Banco Hipotecario
Banco Interamericado de Desarrollo
Banco Itau
Banco Medio Crédito
Banco Monte Paschi
Banco Nacionale de Paris
Col. $
US$
Arg $
Rs
US$
US$
Col. $
Col. $
US$
Per. Sun
Per. Sun
US$
Readj. Ch$
US$
Col. $
US$
US$
Rs
Rs
Arg $
US$
Rs
Arg $
US$
US$
Arg $
Rs
Arg $
Col. $
US$
Col. $
Rs
US$
Arg $
US$
US$
Rs
Rs
Bradesco
Caja de Ahorro de Galicia
US$
Caja de Ahorros y Monte de Piedad de Madrid US$
Euro
Caixa General de Depósitos
US$
Citibank N.Y.
US$
Compagnie Belge de la Webstlb
Arg $
Comafi
Col. $
Conavi
Col. $
Corfinsura
US$
Credit Swiss First Boston
US$
Deutsche Bank A.G.
US$
Dresdner
US$
Export Develop. Corp.
Col. $
Granahorrar
US$
HBSC
US$
ING Bank
US$
Instituto de Crédito Oficial
US$
International Finance Corporation
US$
J.P.Morgan Chase Bank
Arg $
US$
US$
Per. Sun
US$
US$
US$
Rs
US$
Kreditanstal Fur Weideraubau
San Pablo IMI S.P.A.
Scotiabank
Skandinaviska Enskilda Banken
Standard Bank
The Royal Bank of Scotiand
Unibanco
West LB
Banesto
Bank Boston
Bank Tokio - Mitsubishi
BNDES
As of December 31, 2006
After 1 year After 2 years After 3 years After 5 years
but within
2 years
ThCh$
but within
3 years
ThCh$
but within
5 years
ThCh$
but within
10 years
ThCh$
-
6,876,704
-
-
658,833
22,341,366
-
-
-
-
16,990,017
-
-
-
-
-
198,064
8,228
-
-
-
-
2,022,063
2,357,727
3,301,077
-
-
-
-
14,019,603
-
-
2,168,434
7,822,874
16,504,090
-
42,561,499
-
4,715,456
22,341,366
-
22,341,366
-
304,223
-
-
4,565,624
27,666,584
4,715,454
1,535,300
-
13,753,408
-
6,876,704
4,824,505
-
-
436,853
16,504,090
8,326,400
-
13,753,407
-
10,056,608
-
-
-
1,158,944
-
3,074,552
-
19,620,308
-
10,257,565
-
-
-
-
4,436,583
7,502,299
-
198,064
1,480,913
4,100,034
2,468,551
-
-
2,022,063
-
2,623,467
834,440
-
8,692,082
23,071,588
-
22,337,554
-
-
-
-
-
4,593,240
-
-
-
-
10,647,800
-
579,472
-
-
9,126,686
12,870,052
-
1,535,300
-
-
-
-
5,174,478
-
3,650,674
-
-
-
6,211,218
-
8,137,099
8,518,240
-
1,885,548
579,472
-
-
5,656,644
-
-
8,656,800
-
-
549,027
-
-
-
-
-
-
-
-
-
-
-
-
-
8,873,168
8,873,167
-
-
-
-
235,237
307,650
4,841,762
2,961,826
-
-
-
1,234,276
-
-
-
-
-
3,033,467
3,484,113
-
-
2,540,641
-
417,220
-
7,723,508
-
4,346,041
-
-
-
7,004,256
-
-
- 149,407,800
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,286,675
-
-
-
-
32,535,843
-
-
-
-
-
-
-
-
12,887,636
-
399,293
-
5,872,925
8,311,056
24,492,649
-
10,670,762
2,941,455
-
7,004,256
-
289,736
-
-
2,279,390
18,811,113
-
2,909,218
-
3,771,096
7,240,504
2,684,134
11,502,298
-
1,825,337
-
4,525,315
-
-
17,302,675
399,293
8,957,085
-
Total
Long-term portion
2006
ThCh$
Annual
interest
rate
average
After 10 years
Years
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,478,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,481,777
-
-
-
-
-
-
-
-
-
-
-
8,762,252
1,738,416
-
3,733,385
27,998,010
19,620,308
-
18,914,365
-
16,990,017
549,027
-
22,182,918
7,502,299
-
2,417,215
9,292,729
4,100,034
3,702,827
-
-
7,077,593
2,357,727
11,949,298
1,251,660
7,723,508
13,038,123
23,071,588
21,023,859
22,337,554
149,407,800
2,567,727
7,822,874
22,377,015
8,311,056
71,647,388
10,670,762
4,715,456
25,282,821
-
39,993,422
-
1,173,431
-
-
15,971,700
59,347,749
4,715,454
8,266,493
-
17,524,504
7,240,504
9,560,838
60,518,901
-
5,476,011
436,853
21,029,405
8,326,400
-
37,267,300
399,293
40,038,428
8,518,240
-
5.74%
13.25%
-
8.61%
5.70%
9.07%
-
5.00%
-
5.00%
5.71%
-
18.33%
9.07%
0.00%
4.31%
16.25%
8.61%
13.25%
-
-
1.75%
5.75%
5.89%
13.25%
15.58%
13.25%
9.07%
6.72%
9.07%
14.84%
6.66%
14.05%
5.74%
17.75%
13.80%
14.91%
5.75%
5.75%
-
5.81%
-
13.25%
-
-
11.12%
7.65%
5.75%
6.42%
-
5.74%
5.71%
5.74%
7.81%
-
13.25%
4.85%
5.74%
6.75%
-
8.81%
5.71%
9.99%
6.45%
Total
long-term
portion - 2005
ThCh$
1,145,385
15,800,986
-
6,706,488
-
14,380,375
-
763,591
-
8,998,102
6,329,174
-
971,845
26,163,125
2,290,771
523,263
-
11,526,891
1,711,559
-
71,633,668
22,181,363
8,209,989
635,393
14,204,026
-
6,669,085
-
3,253,820
29,475,836
-
-
6,393,772
-
11,250,145
-
67,537,292
8,941,983
-
10,298,927
725,880
12,209,458
3,793,653
1,207,860
1,908,976
3,054,361
15,697,875
8,985,785
1,853,221
8,652,627
1,145,405
11,546,034
10,883,860
8,711,698
-
13,081,563
-
42,756,680
11,250,144
-
864,649
10,465,249
-
38,663,816
-
Rut
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Totals
300,547,927 184,923,266
197,959,133 214,552,234
21
7,959,977
905,942,537
565,455,648
Percentage of liabilities in foreign currency
Percentage of liabilities in local currency
Total
As of December 31,
2006
97.21%
2.79%
2005
97.29%
2.71%
100.00%
100.00%
150
| 2006 Annual Report
enersis06
The operation was carried out without warranties, endorsements, or
investment or indebtedness restrictions.
NOTE 17.
OTHER CURRENT LIABILITIES
Other current liabilities are as follows:
Advances and guarantee on construction
Taxes payables
Contingencies - third party claims
Reimbursable contributions
Energy efficiency program (Brazil)
Azopardo provision
Accrued employees benefits - other
Forward contracts and swaps
Fair value - derivative contracts
Emergency energy provision (Brazil)
Obligations of payment to third parties
Other current liabilities
As of December 31,
2005
2006
ThCh$
ThCh$
47,394
2,545,150
23,406,960
1,049,136
28,103,397
2,834,863
2,716,016
4,180,744
1,965,181
7,863,307
10,961,026
5,178,343
43,233
1,411,849
7,048,506
1,743,750
-
3,422,683
1,977,599
16,859,856
8,807,763
3,896,892
-
4,689,616
90,851,517 49,901,747
In November 2004 the Company obtained a syndicated loan amounting
to MUS$350 through overdraft (revolving) lines. In 2005, the amount
of MUS$265 was prepaid; and MUS$80 were prepaid in 2006, leaving
a balance of MUS$5.
In November 2006, the Company made a second withdrawal, this
time of MUS$310, from the revolving line. The MUS$315 balance is
due in November 2008. It is possible to prepay and draw down funds
throughout the contract period. The interest (spread) depends on the
corporate rating given by S&P. Currently, at BBB-, the interest spread
is 0.375%.
On November 10, 2004, Endesa Chile entered into a new credit for
MUS$250 million, with which it prepaid the loan entered into on February
4, 2004.
The new Endesa Chile loan matures on November 11, 2010, and has
a 0.375% Libor spread.
The operation was carried out without warranties, endorsements, or
investment or indebtedness restrictions.
On January 26, 2006, Endesa Chile entered into a Revolving Facility
for MUS$200, of which it has withdrawn MUS$85 at September 30,
2006.
On December 7, 2006, Endesa Chile entered into a Revolving Facility for
MUS$200, of which it has withdrawn MUS$0 at December 31, 2006.
Total
In the case of Endesa Chile’s revolving overdraft lines, it is possible to
prepay and draw down funds throughout the contract period. These
revolving overdraft lines mature on July 26, 2011 and on December 7,
2007, and have 0.300 and 0.250% Libor spreads, respectively.
2006 Annual Report | 151
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18.
BONDS PAYABLE
a. Details of the current portion of bonds payable are as follows:
Instrument
Bond N°269 - Enersis
Bond N°269 - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds II - Enersis
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Codensa
Bonds Codensa
Bonds Codensa
Bonds Edesur
Bonds Edesur
Bonds Ampla
Bonds Ampla
Bonds Ampla
Bonds Coelce
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa Chile Internacional
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Betania
Total
152
| 2006 Annual Report
Series
B-1
B-2
One
Two
Three
One
One
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
B3
B5
B8
Five
Six
1° serie
2° serie
Unit
Unit
E-1 y E-2
F
G
H
One
Two
Three
One
One
144A
144A
Unit
One
Two
Three
Three A
Three B
Four A
5 A 2° issue
6 A 2° issue
6 B 2° issue
7 A 2° issue
8 A 2° issue
8 b 2° issue
9 A 2° issue
10 A 2° issue
11 A 2° issue
13 A 2° issue
14 A 2° issue
15 A 2° issue
A-1
B-7
B-10
B-10
C-10
C-10
B-1 2° issue
B-1
A-10
A-1
B
Face value
outstanding
Currency
Interest
rate
Maturity
date
28,356
1,935,000
300,000,000
350,000,000
858,000
350,000,000
4,981,900
80,000,000
100,000,000
18,570,000
40,000,000
30,000,000
20,000,000
20,000,000
20,000,000
20,000,000
40,000,000
30,000,000
30,000,000
20,000,000
4,000,000
18,000,000
20,000,000
27,200,000
19,250,000
15,000,000
15,000,000
15,000,000
15,000,000
50,000,000,000
200,000,000,000
250,000,000,000
40,000,000
80,000,000
290,000,000
110,000,000
370,000,000
88,500,000
6,000,000
1,500,000
4,000,000
4,000,000
230,000,000
220,000,000
200,000,000
400,000,000
400,000,000
400,000,000
200,000,000
150,000,000
30,000,000
30,000,000
30,000,000
50,000,000
50,000,000
50,000,000
10,000,000
30,000,000
20,000,000
10,000,000
22,370,000
25,700,000
70,000,000
35,000,000
20,000,000
25,000,000
25,000,000
30,000,000
15,000,000,000
19,500,000,000
229,825,000,000
60,000,000,000
8,928,433,000
15,889,565,000
50,000,000,000
85,000,000,000
210,000,000,000
15,000,000,000
400,000,000,000
UF
UF
US$
US$
US$
US$
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Col. $
Col. $
Col. $
Arg $
Arg $
Br. Real
Br. Real
Br. Real
Br. Real
UF
UF
UF
UF
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Per. Sun
Per. Sun
Per. Sun
US$
Per. Sun
Per. Sun
US$
Per. Sun
Per. Sun
Per. Sun
Per. Sun
US$
Per. Sun
Per. Sun
Per. Sun
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
5.50%
5.75%
6.90%
7.40%
6.60%
7.38%
9.61%
VAC + 7.5%
VAC + 6.9%
VAC + 6.2%
4.47%
5.86%
6.25%
VAC + 5.4%
8.56%
VAC + 6.5%
VAC + 6.5%
7.38%
8.75%
7.31%
7.84%
8.16%
7.06%
8.00%
6.63%
6.79%
7.56%
7.22%
6.66%
8.84%
10.05%
10.24%
8.50%
10.41%
CDI+1.2%aa
IGP-M+11.4%
DI + 0.85% aa
CDI + 16%
6.20%
6.20%
4.80%
6.20%
7.33%
8.13%
7.75%
8.50%
8.35%
8.63%
8.63%
108.63%
8.41%
8.75%
3.75%
5.88%
5.88%
8.50%
6.00%
6.47%
6.91%
6.72%
3.71%
6.47%
6.09%
6.16%
3.71%
6.47%
6.09%
6.16%
9.36%
10.25%
10.62%
10.33%
10.33%
10.33%
10.25%
10.62%
10.33%
10.33%
10.70%
06-15-2009
06-15-2022
12-01-2006
12-01-2016
12-01-2026
12-01-2014
02-01-2011
07-01-2006
10-10-2006
04-26-2007
09-11-2007
01-15-2008
01-15-2012
04-22-2014
06-01-2009
06-01-2014
06-01-2014
05-10-2010
06-08-2009
01-05-2011
01-05-2013
01-05-2016
02-01-2011
02-01-2016
03-17-2009
05-22-2009
05-22-2013
08-31-2016
10-06-2013
03-15-2099
03-15-2011
03-15-2014
04-05-2006
10-05-2007
03-01-2008
03-01-2010
08-01-2012
02-20-2012
08-01-2006
08-01-2022
10-15-2010
10-15-2008
02-01-2027
02-01-2037
01-02-2097
07-15-2008
01-04-2009
01-08-2013
01-08-2015
01-04-2006
03-06-2006
02-14-2007
06-13-2007
04-09-2006
10-30-2006
12-12-2006
01-26-2009
02-27-2008
06-18-2006
07-26-2009
10-03-2006
03-31-2008
01-06-2009
10-21-2010
11-18-2012
10-29-2013
10-21-2010
11-27-2011
01-26-2007
02-23-2007
09-10-2009
10-11-2009
09-10-2009
09-10-2009
07-29-2006
07-26-2006
02-23-2015
07-26-2006
10-11-2011
As of December 31,
2006
ThCh$
799,912
903,634
-
1,025,253
2,512
6,298,562
6,779
-
-
3,458,582
6,752,532
131,616
93,435
35,637
16,641
13,129
7,489
20,476
24,293
118,428
25,406
118,884
97,386
150,027
60,782
17,803
19,946
60,125
38,808
58,262
266,338
338,869
-
10,436,461
3,288,428
2,663,888
5,369,066
-
-
699,850
724,858
933,132
3,604,972
3,574,778
785,969
7,564,374
4,525,315
7,409,094
3,826,553
-
-
16,480,993
16,042,565
-
-
-
85,404
100,281
10,223
167,150
68,296
69,212
67,088
75,057
75,311
52,365
44,397
28,193
190,202
-
-
94,157
50,992
1,156,693
-
-
579485
-
1,401,250
2005
ThCh
162,304
780,002
157,881,378
816,622
2,469
6,190,577
5,271
13,681,226
16,744,396
35,002
83,322
123,474
87,655
33,089
15,965
12,405
7,883
19,689
23,360
-
-
-
-
-
-
-
-
-
-
61,851
274,893
349,342
5,546,761
3,456,707
4,027,908
2,338,356
-
3,767,092
112,915,513
700,457
725,487
933,940
3,537,645
3,513,491
734,801
7,434,687
4,447,731
7,282,070
3,760,949
79,902,184
15,806,229
503,052
71,032
7,726,866
7,687,466
7,643,621
83,940
91,840
9,363
126,819
62,547
63,386
61,441
68,739
73,979
-
-
-
54,716
3,529,370
1,136,232
182,356
85,905
46,530
12,707,360
1,054,346
4,467,004
19,471,554
1,115,597
113,207,598
526,349,244
b. Details of the long-term portion of bonds payable are as follows:
Instrument
Bond N°269 - Enersis
Bond N°269 - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds II - Enersis
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Edelnor
Bonds Codensa
Bonds Codensa
Bonds Codensa
Bonds Edelsur
Bonds Ampla
Bonds Ampla
Bonds Ampla
Bonds Coelce
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Endesa
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Edegel
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Emgesa
Bonds Betania
Total
Series
B-1
B-2
Two
Three
One
One
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
I° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
II° Prog.
B3
B5
B8
Six
1° serie
2° serie
Unit
Unit
F
G
H
One
Dos
Two
One
One
144A
144A
Two
Three
5 A 2° issue
6 A 2° issue
6 B 2° issue
7 A 2° issue
8 A 2° issue
8 B 2° issue
9 A 2° issue
10 A 2° issue
11 A 2° issue
13 A 2° issue
14 A 2° issue
15 A 2° issue
B-10
B-10
C-10
C-10
A-10
B
Face value
outstanding
Currency
Interest
rate
Maturity
date
28,356
1,935,000
350,000,000
858,000
350,000,000
4,891,900
18,570,000
40,000,000
30,000,000
20,000,000
20,000,000
20,000,000
20,000,000
40,000,000
30,000,000
30,000,000
20,000,000
4,000,000
18,000,000
20,000,000
27,200,000
19,250,000
15,000,000
15,000,000
15,000,000
15,000,000
50,000,000,000
200,000,000,000
250,000,000,000
80,000,000
290,000,000
110,000,000
370,000,000
88,500,000
1,500,000
4,000,000
4,000,000
230,000,000
220,000,000
200,000,000
400,000,000
400,000,000
400,000,000
200,000,000
30,000,000
30,000,000
10,000,000
30,000,000
20,000,000
10,000,000
22,370,000
25,700,000
70,000,000
35,000,000
20,000,000
25,000,000
25,000,000
30,000,000
229,825,000,000
60,000,000,000
8,928,433,000
15,889,565,000
250,000,000
400,000,000,000
UF
UF
US$
US$
US$
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Per. Sun
Col. $
Col. $
Col. $
Arg $
Br. Real
Br. Real
Br. Real
Br. Real
UF
UF
UF
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Per. Sun
Per. Sun
US$
Per. Sun
Per. Sun
Per. Sun
Per. Sun
US$
Per. Sun
Per. Sun
Per. Sun
Col. $
Col. $
Col. $
Col. $
Col. $
Col. $
5.50%
5.75%
7.40%
6.60%
7.30%
9.61%
VAC + 6.2%
4.47%
5.86%
6.25%
VAC + 5.4%
8.56%
VAC + 6.5%
VAC + 6.5%
7.38%
8.75%
7.31%
7.84%
8.16%
7.06%
8.00%
6.63%
6.75%
7.56%
7.22%
6.66%
8.84%
10.05%
10.24%
10.41%
CDI + 1.2% aa
IGP-M+11.4%
DI + 0.85% aa
CDI + 16%
6.20%
4.80%
6.20%
7.88%
7.33%
8.13%
7.75%
8.50%
8.35%
8.63%
8.41%
8.75%
3.75%
5.88%
5.88%
8.50%
6.00%
6.47%
6.91%
6.72%
3.71%
6.47%
6.09%
6.16%
10.30%
9.87%
10.25%
10.62%
10.33%
10.70%
15-06-2009
15-06-2022
01-12-2016
01-12-2026
01-12-2014
01-02-2011
26-04-2007
11-09-2007
15-01-2008
15-01-2012
22-04-2014
01-06-2009
01-06-2014
01-06-2014
10-06-2010
08-06-2009
05-01-2011
05-01-2013
05-01-2016
01-02-2011
01-02-2016
17-03-2009
22-05-2009
22-05-2013
31-08-2016
06-10-2013
15-03-2009
15-03-2011
15-03-2014
05-10-2007
01-03-2008
01-03-2010
01-08-2012
20-02-2012
01-08-2022
15-10-2010
15-10-2008
01-02-2027
01-02-2037
01-02-2097
15-07-2008
01-04-2009
01-08-2013
01-08-2015
14-02-2007
13-06-2007
26-01-2009
27-02-2008
18-06-2008
26-07-2009
10-03-2008
30-03-2008
01-06-2009
21-10-2010
18-11-2012
20-10-2013
21-10-2010
27-11-2011
09-10-2009
10-11-2009
09-10-2009
09-10-2009
26-07-2006
10-11-2011
enersis06
As of December 31,
2006
ThCh$
441,770
33,165,013
132,955,886
456,791
186,336,500
814,893
-
-
4,997,403
3,331,602
3,469,712
4,997,403
3,462,470
6,912,916
4,997,403
3,331,602
3,331,602
666,320
2,998,442
3,331,602
4,530,979
3,206,667
2,498,702
2,498,702
2,498,702
2,498,702
11,890,128
47,560,513
59,450,640
-
28,583,054
72,213,798
92,134,846
-
27,504,570
73,345,520
73,345,520
109,608,986
117,125,800
21,517,074
212,956,000
212,956,000
212,956,000
106,478,000
-
-
5,323,900
4,995,840
3,330,560
5,323,900
3,725,230
4,279,769
11,656,960
5,828,480
10,647,800
4,163,200
4,163,200
4,995,840
54,652,729
14,268,154
2,243,172
3,992,085
59450686
95,121,057
2005
ThCh
442,153
34,815,550
130,676,437
448,959
183,141,875
746,283
3,085,553
6,102,188
4,576,640
3,051,093
3,129,532
4,576,640
3,123,001
6,235,159
4,576,640
3,051,093
-
-
-
-
-
-
-
-
-
-
11,453,855
45,815,421
57,269,275
10,353,091
24,717,299
64,829,378
-
14,842,630
27,528,422
73,409,124
73,409,124
107,729,807
115,117,750
21,148,177
209,305,000
209,305,000
209,305,000
104,652,500
15,697,875
15,697,875
5,232,625
4,575,306
3,050,204
5,232,625
3,411,653
3,919,512
10,675,714
5,337,857
10,465,250
-
-
-
52,647,645
13,744,473
3,686,110
2,071,243
48,106,194
68,723,204
2,195,520,795
2,044,245,014
2006 Annual Report | 153
CONSOLIDATED FINANCIAL STATEMENTS
18.1 CURRENT BONDS ARE AS FOLLOWS :
18.1.1 Domestic Bonds
On September 11, 2001, the Superintendency of Securities and
Insurance registered the issue of adjustable bearer bonds of Enersis
S.A. date June 14, 2001 in the Securities Register under No. 269. This
placement was made in two series, 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
1,000
300
1,000
150
Face value
In UF
1,000
10,000
1,000
10,000
The scheduled maturity of the Series B-1 bonds is 8 years, with no
grace period; interest and principal are payable semi-annually. Annual
interest is 5.5%, 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.
18.1.2 International Bonds (Yankee Bonds)
On November 21, 1996, the Company, acting through its agency in
the Cayman Islands, issued and placed Yankee Bonds for US$800
million in the US market. This placement was made in three series,
as follows:
Series
1
2
3
Total amount
in US$
300,000,000
350,000,000
150,000,000
Years to
maturity
10
20
30
Stated annual
interest rate
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 have a pre-redemption option in
year seven, which was exercised by nearly all holders in November
2003 for US$149,142,000.
During the second quarter of 2004, UF/US$ swap contracts were
entered into for US$100,000,000 associated with the series 1 bond
and US$250,000,000 associated with series 2.
During November, 2006 US$ 300 million from series one of the Yankee
Bonds were amortized. This operation meant liquidating swap for US$
100 million associated with this bond.
During November, 2001, Enersis Internacional made a Tender Offer
for total or partial cash purchase of the series 2 Yankee Bonds, with a
face value of ThUS$ 350,000 maturing at 20 years in 2016, issued by
the agency of the parent Enersis S.A.
154
| 2006 Annual Report
As a result of this offer, which expired on November 21, 2001, series 2 bonds
for ThUS$ 95,536, with a face value of ThUS$ 100,266, were purchased.
As a result of the liquidation of Enersis Internacional S.A. on September
21, 2006, the Agency of the parent Enersis S.A. was allocated the
assets and liabilities, which included such bond repurchase among
is assets.
Given the above, at December 31, 2006 the bonds are presented net
of the repurchase.
18.1.3 International Bonds (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$350 million. This placement was made in a single tranche, whose
features are as follows:
Series
1
Total amount
in US$
350.000.000
Years to
maturity
10
Stated annual
interest rate
7.375%
Interest is paid semi-annually and amortization of capital is a single
installment at the end of the term.
During the second half of 2004, debts have been re-denominated
through US$/UF swap contracts for the total of this issue.
18.1.4 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.
18.1.5 Edelnor Bonds (Subsidiary of Distrilima S.A.)
First issue
Date of Issue
: March 1, 1996
Number of bonds subscribed : 48,919 bonds.
Face value
Redemption term
Interest rate
Interest payment
Principal amortization
: S/. 100 (100 new soles) each
: 15 years
: 9.61% annual.
: Annually, on coupon maturity
: Amortization of total principal upon
maturity
FIRST PROGRAM OF CORPORATE BONDS
First issue
Date of Issue
Number of bonds subscribed : 146,300 bonds
Face value
Redemption term
Interest rate
Interest payment
: 30,000 new soles each
: 5 years
: 7.50% annual
: Semi-annual
: October 29, 2001
: October 19, 2001
Second issue
Date of Issue
Number of bonds subscribed : 20,000 bonds.
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 5 years
: 6.9% VAC + annual
: Semi-annual
enersis06
Tenth issue
Date of issue
: June 9, 2004.
Number of bonds subscribed : 4,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 5 years.
: 8.56%.
: Semi-annual.
Eleventh issue
Date of issue
: June 9, 2004.
Number of bonds subscribed : 4,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 10 years.
: VAC + 6.50%.
: Semi-annual.
: March 1, 2003
Fifth issue
Date of issue
Number of bonds subscribed : 3,714 bonds.
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 4 years
: 6.2 % VAC + annual
: Semi-annual
: September 12, 2003
Sixth issue
Date of issue
Number of bonds subscribed : 8,000 bonds.
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 4 years
: 4.47% annual
: Semi-annual
: January 16, 2004.
Seventh issue
Date of issue
Number of bonds subscribed : 6,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 4 years.
: 5.86%.
: Semi-annual.
: January 16, 2004.
Eighth issue
Date of issue
Number of bonds subscribed : 4,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 8 years.
: 6.25%.
: Semi-annual.
: April 22, 2004.
Ninth issue
Date of issue
Number of bonds subscribed : 4,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 10 years.
: VAC + 5.4%.
: Semi-annual.
: June 24, 2004.
Twelfth issue
Date of issue
Number of bonds subscribed : 8,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 10 years.
: VAC + 6.50%.
: Semi-annual.
: June 10, 2005.
Thirteenth issue
Date of issue
Number of bonds subscribed : 6,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 10 years.
: 7.38%.
: Semi-annual.
: June 10, 2005.
Fourteenth issue
Date of issue
Number of bonds subscribed : 6,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 15 years.
: 8.75%.
: Semi-annual.
SECOND PROGRAM OF CORPORATE BONDS
First issue
Date of Issue
Number of bonds subscribed : 4,000 bonds.
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 5 years
: 7.31%
: Semi-annual
: January 5, 2006
: January 5, 2006
Second issue
Date of Issue
Number of bonds subscribed : 800 bonds.
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 7 years
: 7.84%
: Semi-annual
2006 Annual Report | 155
CONSOLIDATED FINANCIAL STATEMENTS
: January 5, 2006
Third issue
Date of issue
Number of bonds subscribed : 3,600 bonds
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 10 years
: 8.16%
: Semi-annual
: February 1, 2006
Fourth issue
Date of issue
Number of bonds subscribed : 4,000 bonds
Face value
Redemption term
Interest rate
Interest payment
: 5,000 new soles each
: 5 years
: 7.06%
: Semi-annual
: February 1, 2006.
Fifth issue
Date of issue
Number of bonds subscribed : 5,440 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 10 years.
: 8.00%.
: Semi-annual.
: March 17, 2006.
Sixth issue
Date of issue
Number of bonds subscribed : 3,850 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 3 years.
: 6.63%
: Semi-annual.
Seventh issue
Date of issue
: May 22, 2006.
Number of bonds subscribed : 3,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 3 years.
: 6.75%.
: Semi-annual.
Eight issue
Date of issue
: May 22, 2006.
Number of bonds subscribed : 3,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 7 years.
: 7.56%.
: Semi-annual.
: August 31, 2006.
Third issue – Series B
Date of issue
Number of bonds subscribed : 3,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 10 years.
: 7.22%.
: Semi-annual.
156
| 2006 Annual Report
: October 6, 2006.
Tenth issue – Series B
Date of issue
Number of bonds subscribed : 3,000 bonds.
Nominal value
Term
Interest rate
Interest payment
: 5,000 new soles each.
: 7 years.
: 6.66%.
: Semi-annual.
18.1.6 Codensa S.A. issued bonds on March 11, 2004.
First Issue
Issuer
Issued securities
Amount issued
1st principal payment
Nominal interest rate
Interest payment
2nd principal payment
Nominal interest rate
Interest payment
3rd principal payment
Nominal interest rate
Interest payment
18.1.7 Edesur S.A.
: Codensa.
: Securities negotiable in Colombian
pesos.
: 500,000,000,000 Colombian pesos.
: Maturity in 2009 for 50,000,000,000
Colombian pesos.
: 8.84% average annual rate.
: Quarterly.
Interest accrued at year end is
ThCh$58,262 (ThCh$61,851 in 2005),
and it is presented in
current liabilities.
: Maturity in 2011 for
200,000,000,000 Colombian
pesos.
: 10.05% average annual rate.
: Quarterly.
Interest accrued at year end is
ThCh$266,338 (ThCh$274,893 en
2005), and it is presented in current
liabilities.
: Maturity in 2014 for
250,000,000,000 Colombian
pesos.
: 10.24% average annual rate.
: Quarterly.
Interest accrued at year-end is
ThCh$338,869 (ThCh$349,342 in
2005), and it is presented in the
current liabilities.
On October 5, 2004, under its medium-term certificate of indebtedness
issue program, the Company issued negotiable bonds in Argentinean
pesos for a total of ThUS$40,302 in two series - 18 month (class 5)
and 3 years (class 6), respectively.
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
: Edesur S.A.
: Negotiable bonds in Argentinean
pesos.
: ThUS$13,434.
: Maturity in 2006.
: 8.50% average annual rate.
: Semi-annual.
This issue has been redeemed through payment at December, 2006
enersis06
Series E-1 and E-2 were totally redeemed through payment at July
31, 2006.
• On November 26, 2002, it registered the fifth bond issue of U.F.
8,000,000 under Nos. 317 and 318 and then amended it on October
2, 2003; this issue was totally placed at December 31, 2003.
Risk rating of the last two bond issues is as follows at the date of these
financial statements is as follows:
- Feller-Rate Clasificadora de Riesgo Ltda.
- Comisión Clasificadora de Riesgo
- Fitch Chile Clasificadora de Riesgo Ltda.
Category
A+
A+
A+
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
: Edesur S.A.
: Negotiable bonds in Argentinean
pesos.
: ThUS$26,868.
: Maturity in 2007.
: 10.41% minimum annual nominal rate.
: Quarterly.
18.1.8 Ampla Energía e Servicos S.A.
On March 01, 2005, the Company issued bonds in reales for a total
amount of R$400,000,000 in two series.
First Series
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
Principal due
Second Series
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
Principal due
: Ampla Energía e Servicos S.A.
: Negotiable bonds in Brazilian reales.
: R$290,000,000.
: Maturity in 2008.
: CDI + 1,2% per annum
: Semi-annual.
: Maturity in 2008.
: Ampla Energía e Servicos S.A.
: Negotiable bonds in Brazilian reales.
: R$110,000,000.
: Maturity in 2010.
: IGP - M + 11.4% per annum
: Annual.
: Maturity in 2010.
One August 1, 2006, the Company issued bonds in reales for
R$370,000,000.00 in a single series.
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
18.1.9 Coelce S.A.
: Ampla Energía e Servicos S.A.
: Negotiable bonds in Brazilian reales.
: R$370,000,000.
: Maturity in 2012
: DI + 0.85% per annum
: Semi-annual.
ISSUANCE TERMS
Fourth Issue
Issuer
Securities issued
Issuance Value (1)
Adjustment base
Amortization period
Early redemption
Nominal interest rate
Placement period
Security
On February 29, 2004, the Company issued bonds in reales for a total
amount of MR$88,500 in a 12-year term series.
Interest payment
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
: Coelce S.A.
: Negotiable bonds in Brazilian reales.
: ThR$88,500.
: Maturity in 2012.
: CDI average annual rate 16%.
: Semi-annual.
18.1.10 Endesa Individual
Fifth Issue
Issuer
Securities issued
At December 31, 2006, the following bond issues are current on the
domestic market:
Amount of issue
• On August 9, 2001, it registered the fourth bond issue of U.F. 7,500,000
under No.264; this was totally placed at December 31, 2001.
: Empresa Nacional de Electricidad S.A.
: Bearer bonds in local currency,
denominated in Unidades de Fomento
(UF-Inflation Index-linked Units of
Account)
: Up to seven and a half million
(UF7,500,000) divided into:
Series E-1: 1,000 bonds at UF1,000 each.
Series E-2: 500 bonds at UF10,000 each.
Series F: 150 bonds at UF10,000 each.
: Variation in the UF
: Series E-1 and E-2: August 1, 2006.
Series F: August 1, 2022.
: Only for Series F, beginning February
1, 2012.
: 6.20% annually, compounded semi-
annually and effective on the outstanding
principal adjusted for the value of the
Unidad de fomento. The semi-annual
interest rate will be 3.0534%.
: 36 months from the registration date
in the Chilean Securities Register of
the Superintendency of Securities and
Insurance
: There is no specific security, other than
the general security of all the issuer’s
properties
: Interest will be paid semi-annually each
August 1 and February 1, starting August
1, 2001. Accrued interest at year end
is ThCh$699,850 (ThCh$3,502,284
in 2005) and it is presented in current
liabilities.
: Empresa Nacional de Electricidad S.A.
: Dematerialized bearer bonds in local
currency, expressed in Unidades de
Fomento (UF-Inflation Index-linked Units
of Account)
: 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.
2006 Annual Report | 157
CONSOLIDATED FINANCIAL STATEMENTS
Adjustment base
Amortization period
Early redemption
Nominal interest rate
Placement deadline
Security
Interest payment
: Variation in Unidad de Fomento.
: Series G: October 15, 2010.
Series H: Semi-annually and successively
as of April 15, 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
principal not fully paid adjusted by the
value of the Unidad de Fomento. The
interest rate to be applied every six
months will be 2.3719%.
: Series H: 6.2% per year, compounded
every six months and effective on the
principal not fully paid adjusted by the
value of the Unidad de Fomento. The
interest rate to be paid every six months
will be 3.0534%.
: 36 months as of date of registration
in Securities Register of the
Superintendency of Securities and
Insurance.
: No specific security, except for general
security of all the issuer’s properties.
: Interest will be paid semi-annually, due
on April 15 and October 15 of each
year starting from April 15, 2004. Interest
accrued at year-end is ThCh$1,657,990
(ThCh$1,659,429 in 2005) an it is
presented in current liabilities.
a.2 The Company has issued and placed four public offerings of bonds
in the international market as follows:
The risk ratings of these bond issues at the date of these financial
statements is as follows:
-Standard & Poor’s
-Moodys Investors Services
-Fitch
First Issue
Issuer
Securities issued
Issuance Value
Adjustment
Rating entity
Category
BBB-
Ba1
BBB-
: Empresa Nacional de Electricidad S.A.
: Marketable bonds denominated in US$
(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 in relation to
the Chilean peso
158
| 2006 Annual Report
Amortization period
Nominal interest rate
Interest Payments
Second Issue
Issuer
Securities issued
Issuance Value
Adjustment
Principal due
Nominal interest rate
Interest Payment
Third Issue
Issuer
Securities issued
Issuance Value
Adjustment
Principal due
Nominal interest rate
Interest Payment
Fourth Issue
Issuer
Securities issued
: Series 1 matures on February 1, 2027:
Series 2 matures on February 1, 2037
(Put Option on February 1, 2009, on
which date the holders may redeem
100% of bonds plus accrued interest).
Series 3 matures on February 1, 2097.
: Series 1: 7.88% annually
Series 2: 7.33% annually
Series 3: 8.13% annually
: Interest will be paid semi-annually on
February 1 and August 1 every year,
starting January 27, 1997. Accrued
interest at year end is ThCh$11,197,384
(ThCh$11,005,411 in 2005), and it is
presented in current liabilities.
: Empresa Nacional de Electricidad S.A.
: Marketable bonds denominated in US$
(Yankee bonds) in the US market.
: Four hundred million US Dollars
(US$400,000,000)
: Variation in the US Dollar in relation to
the Chilean peso
: Series 1 matures on July 15, 2008
: Series 1: 7.75% annually
: Interest will be paid semi-annually on
January 15 and July 15 of each year,
starting January 15, 1999. Accrued
interest at year end is ThCh$7,564,374
(ThCh$7,434,687 in 2005), and it is
presented in current liabilities.
: Empresa Nacional de Electricidad S.A.
: Marketable bonds denominated in US$
(Yankee bonds) in the US market.
: Four hundred million US Dollars
(US$400,000,000).
: Variation in the US Dollar in relation to
the Chilean peso
: Series 1 matures on April 1, 2009.
: Series 1: 8.50% annually
: Interest will be paid semi-annually
on October 1 and April 1 of each year,
starting October 1, 1999. Accrued
interest at year end is ThCh$4,525,315
(ThCh$4,447,731 2005), and it is
presented in current liabilities.
: Empresa Nacional de Electricidad S.A.
: Electronic bonds expressed in US dollars
on the American and European markets,
under “Rule 144A” and “Regulation S”.
enersis06
Amount of issue
Adjustment
Principal due
Nominal interest rate
Payment of interest
: Six hundred million US dollars
(US$600,000,000) divided into:
Series August 1, 2013: US$400,000,000
Series August 1, 2015: US$200,000,000
: Variation in US dollar.
: Series of ThUS$400 total maturity on
August 1, 2013.
: Series of ThUS$200 total maturity on
August 1, 2015.
: Series of ThUS$400 8.35% per year.
Series of ThUS$400 8.63% per year.
: Interest will be paid semi-annually
on February 1 and August 1 each
year starting from July 23, 2003.
Interest accrued at year-end was
ThCh$11,235,647 (ThCh$11,043,019
in 2005) and it is presented in current
liabilities.
Interest Payment
Security
: Interest will be paid semi-annually
in arrears starting October 1, 1996.
Accrued interest at year end is ThCh$
(ThCh$1,412,809 in 2005).
: Security from Empresa Nacional de
Electricidad S.A.
This issue has been fully redeemed through payment at December
31, 2006.
b2. Edegel S.A. has made twenty bond issues on June 4, 1999,
February 15, 2000, June 14, 2000, November 27, 2000, August 22,
2001, June 6, 2003, September 4, 2003, October 29, 2003, December
12, 2003, January 26, 2004, February 27, 2004, June 18, 2004, July
26, 2004, March 10, 2005, March 30, 2005, June 1, 2005, October
21, 2005, November 18, 2005, and the last three issues on November
18, 2006.
REPURCHASE OF ENDESA CHILE INTERNACIONAL
BONDS
This Company, 100% a subsidiary of Endesa Chile, made a tender offer
in November 2001, for the total or partial purchase, in cash, of the first
issue of the following bond series in US dollars (Yankee Bonds).
• 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 3 bonds, for ThUS$21,324 and ThUS$134,828, respectively,
were purchased, whose nominal values amounted to ThUS$24,119 and
ThUS$159,584 for each series.
18.1.11 Subsidiaries of Endesa Chile S.A.
b.1 Endesa Chile Internacional issued Yankee Bonds on April 1,
1996.
Risk rating of the bond issue is as follows at the date of these financial
statements:
- Standard & Poor’s
- Moodys Investors Services
Category
BBB-
Ba 1
CURRENT ISSUES ARE AS FOLLOWS:
Terms of Issue
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payment
: Edegel S.A.
: Marketable bonds in US$ (110,000 bonds).
: One hundred and ten million US dollars
(US$110,000,000)
: June 3, 2006, February 14, 2007,
June 13, 2007, and November 21, 2005,
respectively.
: 8.75%, 8.41%, 8.75% and 8.44% per year
: Interest will be paid semi-annually,
starting December 3, 1999. Accrued
interest at year end is ThCh$708,922
(ThCh$682,437), and it is presented in
current liabilities.
: Edegel S.A.
: Marketable bonds in new soles (10,000
bonds).
: Fifty million New Soles (NS50,000,000)
: Maturity at September 4, 2006.
: 4.13% annually
: Interest will be paid semi-annually.
Accrued interest at year end is ThCh$0
(ThCh$101,356 in 2005) and it is
presented in current liabilities.
ISSUE TERMS
First Issuance
Issuer
Securities issued
Issuance Value
Principal due
Nominal interest rate
: Endesa Chile Internacional.
: Marketable bonds denominated in US$
(150,000 bonds).
: One hundred and fifty million US Dollars
(US$150,000,000):
: Maturity as of April 1, 2006
: 7.2 % per year in arrears.
At December 31, 2006, this issue has been fully redeemed through
payment.
Issuer
Securities issued
Amount of issuance
Principal due
: Edegel S.A.
: Negotiable Bonds in New Peruvian Soles
(10,000 bonds)
: Fifty million new Peruvian soles
(NS50,000,000).
: Total maturity at October 30, 2006.
2006 Annual Report | 159
CONSOLIDATED FINANCIAL STATEMENTS
Nominal interest rate
Interest payment
: 4.88% per year.
: Interests will be paid semi-annually.
Interest accrued at year-end is
ThCh$0 (ThCh$61,956 in 2005) and it
is presented in current liabilities.
Principal due
Nominal interest rate
Interest payment
At December 31, 2006, this issue has been fully redeemed through
payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
: Edegel S.A.
: Negotiable bonds in new Peruvian soles
(10,000 bonds)
: Fifty million new Peruvian soles
(NS50,000,000).
: Total maturity at December 12, 2006.
: 4.75% per year.
: Interests will be paid semi-annually.
Interest accrued at year-end is ThCh$0
(ThCh$18,110 in 2005) and it is presented
in current liabilities.
At December 31, 2006, this issue has been fully redeemed through
payment
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
Issuer
Issued securities
Amount issued
: Edegel S.A.
: Negotiable bonds in US dollars (10,000
bonds.)
: Ten million US dollars (US$10,000,000.)
: Total maturity on January 26, 2009.
: 3.75% per year
: Semi-annual. Interest accrued at year
end is ThCh$85,404 (ThCh$83,940
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Negotiable bonds in new Peruvian soles
(6,000 bonds.)
: Thirty million new Peruvian soles (NS
30,000,000.)
: Total maturity on February 27, 2008.
: 5.88% per year
: Semi-annual. Interest accrued at year
end is ThCh$100,281 (ThCh$91,840
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Negotiable bonds in new Peruvian soles
(4,000 bonds.)
: Twenty million new Peruvian soles (NS
20,000,000.)
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
: Total maturity on June 18, 2008.
: 5.88% per year.
: Semi-annual. Interest accrued at
year end is ThCh$10,223 (ThCh$9,363
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Negotiable bonds in US dollars (10,000
bonds.)
: Ten million US dollars (US$10,000,000.)
: Total maturity on July 26, 2009.
: 8.5% per year.
: Semi-annual. Interest accrued at year
end is ThCh$167,510 (ThCh$126,819
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Marketable bonds in new Peruvian soles
(4,474 bonds)
: Twenty two million three hundred
seventy thousand new Peruvian soles
(NS22,370,000).
: Total maturity on March 10, 2008.
: 6.00% per year.
: Semi-annual. Interest accrued at year-
end is ThCh$68,296 (ThCh$62,547
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Marketable bonds in new Peruvian soles
(5,140 bonds)
: Twenty five million seven hundred
thousand new Peruvian soles
(NS25,700,000).
: Total maturity on March 30, 2008.
: 6.47%
: Semi-annual. Interest accrued at year-
end is ThCh$69,212 (ThCh$ 63,386
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Marketable bonds in new Peruvian soles
(14,000 bonds)
: Seventy million new Peruvian soles
(NS70,000,000).
: Total maturity on June 1, 2009.
: 6.91%
160
| 2006 Annual Report
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
Nominal interest rate
Interest payment
Issuer
Securities issued
Amount of issue
Principal due
: Semi-annual. Interest accrued at
year-end is ThCh$67,088 (ThCh$61,441
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Marketable bonds in new Peruvian soles
(7,000 bonds)
: Thirty five million new Peruvian soles
(NS35,000,000).
: Total maturity on October 21, 2010.
: 6.72%
: Semi-annual. Interest accrued at year-
end is ThCh$75,057 (ThCh$68,739
in 2005) and it is presented in current
liabilities.
: Edegel S.A.
: Marketable bonds in US dollars (20,000
bonds)
: Twenty million US dollars
(US$20,000,000).
: Total maturity on November 18, 2012.
: 3.71%
: Semi-annual. Interest accrued at year-
end is ThCh$75,311 (ThCh$73,979 in
2005) and it is presented in current
liabilities.
: Edegel S.A.
: Marketable bonds in new Peruvian soles
(5,000 bonds)
: Twenty Five million new Peruvian soles
(NS25,000,000).
: Total maturity on October 20, 2013.
: 6.47%
: Semi-annual. Interest accrued at year-
end is ThCh$52,365 and it is presented
in current liabilities.
: Edegel S.A.
: Marketable bonds in new Peruvian soles
(5,000 bonds)
: Twenty five million new Peruvian soles
(NS25,000,000).
: Total maturity on October 27, 2010.
: 6.09%
: Semi-annual. Interest accrued at year-
end is ThCh$44,397 and it is presented
in current liabilities.
: Edegel S.A.
: Marketable bonds in Peruvian Soles
(6,000 bonds)
: Twenty five million Peruvian Soles (S/.
30,000,000).
: Total maturity on November 27, 2011.
enersis06
Nominal interest rate
Interest payment
: 6.16%
: Semi-annual. Interest accrued at year-
end is ThCh$28,193 and it is presented
in current liabilities.
b.3 Emgesa S.A. has made three bond issues on October 8, 1999,
July 9, 2001 and February 23, 2005, which completes the first issue,
and on February 26, 2003 for the second and February 23, 2005 for
the third:
First Issue
Issuer
Securities issued
Issuance Value
Principal due
Interest nominal rate
Interest payment
Second Issue
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payment
: Emgesa S.A.
: Marketable bonds in Colombian pesos
: $Col 530,000,000,000
: Maturities between 2004 and 2009
amounting to Col$449,554,880.000
: 8.97% per year average rate
: Interest will be paid on a quarterly and
yearly basis. Accrued interest at year
end is ThCh$1,492,044 (ThCh$1,598,953
in 2005) and it is presented in current
liabilities.
: Emgesa S.A.
: Marketable bonds in Colombian pesos
: $Col 50,000,000,000
: Maturity on July 26, 2006.
: 12.43% annual average rate
: Interest will be paid annually.
Accrued interest at year end is ThCh$
(ThCh$1,784,508 in 2005) and it is
presented in current liabilities.
At December 31, 2006, this issue has been fully redeemed through
payment.
Third Issue
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payment
: Emgesa S.A.
: Marketable bonds in Colombian pesos
: $Col 250,000,000,000
: Maturity at February 23, 2015.
: Consumer Price Index + 5.04% per
quarter (10.33%)
: Interest will be paid annually. Accrued
interest at year end is ThCh$579,485
(ThCh$523,342 in 2005) and it is
presented in current liabilities.
2006 Annual Report | 161
CONSOLIDATED FINANCIAL STATEMENTS
b4 Central Hidroeléctrica Betania S.A. E.S.P. hás made a bond issue
on November 11, 2004, completing the first issue.
b. Long-term accruals:
First issue
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
: Central Hidroeléctrica Betania S.A. E.S.P.
: Bonds in Colombian pesos.
: 400,000,000,000 Colombian pesos.
: Maturity between 2009 and 2011, for
400,000,000,000 Colombian pesos.
: Consumer Price Index + 6.29% (10.70%)
per annum.
: Quarterly. Interest accrued at year
end is ThCh$1,401,205 (ThCh$1,115,596
in 2005) and it is presented in current
liabilities.
Post-retirement benefits-local
subsidiaries
Employee and retired personnel
benefits (Ampla-Coelce)
Severance indemnity
Legal, labor and tax contingencies
(Ampla, Coelce and Cien)
Post-retirement benefits-foreign
subsidiaries
Regulatory contingencies (Brazil)
Other
As of December 31,
2005
2006
ThCh$
ThCh$
15,916,543
15,763,109
32,796,639 30,760,217
14,618,570 13,450,029
166,933,247 254,401,205
71,761,136 68,441,868
21,759,376 24,353,683
1,537,568
1,161,491
Deduction of the bond placements of Enersis and subsidiaries has
been deferred in the same period as the respective issues. The
long-term deferred value at December 31, 2006 is ThCh$14,824,231
(ThCh$18,122,213 in 2005) and it is presented in Other Long Term
Assets (Note 14). The balance for deductions in short term bond
placements classified under Other current assets is ThCh$973,620
(ThCh$975,562 in 2005) (Note 9)
NOTE 19.
ACCRUED EXPENSES
a. Short-term accruals:
As of December 31,
2006
ThCh$
2005
ThCh$
Bonus and other employee benefits
Litigation and other contingencies
Energy purchases from others
Post-retirement benefits foreign subsidiaries
Post-retirement benefits local subsidiaries
Suppliers and services
Other
-
39,434,992 35,332,828
11,942,680 13,292,127
822,448
9,058,164 17,489,940
991,044
1,109,950
5,763,474
15,969,804
1,844,259
1,835,044
Total
79,350,634 75,536,120
Total
324,947,002 408,707,679
During 2006, ThCh$1,038,574 worth of bad debt (ThCh$3,348,355 in
2005) was written off.
NOTE 20.
SEVERANCE INDEMNITIES
Long-term accruals include employee severance indemnities, calculated
in accordance with the policy described in Note 2u. An analysis of the
changes in the accruals in each year is as follows:
Opening balance as of January 1
Increase in accrual
Transfer to short-term
Payments during the period
2006
ThCh$
13,450,029
3,396,098
(186,306)
(2,041,251)
2005
ThCh$
11,648,577
2,781,974
(47,310)
(933,212)
Total
14,618,570 13,450,029
162
| 2006 Annual Report
NOTE 21.
MINORITY INTEREST
a. Minority shareholders’ participation in the shareholders’ equity of the Company’s subsidiaries is as follows:
enersis06
Company
Aguas Santiago Poniente
Ampla Energía e Servicos S.A.
Ampla Investimentos
Cam Argentina S.A.
Cam Brasil S.A.
Cam Colombia S.A.
Capital de Energía S.A.
Central Hidroeléctrica Betania S.A.
Central Cachoeira Dourada
Chilectra S.A.
Cía. Peruana de Electricidad S.A.
Codensa S.A.
Comercial Mercosur S.A.
Companhia Energetica Do Ceara - Coelce
Constructora y Proyectos Los Maitenes S.A.
Edegel S.A.
Edelnor S.A.
Edesur S.A.
Chilectra S.A.
Emgesa S.A.
Empresa Eléctrica Pangue S.A.
Endesa S.A.
Endesa Argentina S.A.
Endesa Brasil
Central Costanera S.A.
Generandes Perú S.A.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Inversiones Distrilima S.A.
Pehuenche S.A.
Soc. Agrícola de Cameros Ltda.
Soc. Agrícola Pastos Verdes Ltda.
Túnel El Melón S.A.
Equity
ThCh$
4,465,413
481,905,893
40,805,135
317,868
3,306,198
2,964,877
-
338,438,193
330,607,802
689,197,708
21,352,538
524,261,128
11,069,163
456,001,503
(1,477,728)
464,027,142
141,565,767
458,422,125
-
618,289,529
116,788,312
1,794,309,851
39,793,197
1,005,342,841
139,758,763
235,060,927
188,190,814
76,517,705
78,665,631
216,563,914
7,366,591
69,880,794
(8,966,075)
As of December 31, 2006
Participation
%
21.12%
8.07%
8.07%
0.001%
0.0001%
0.001%
Total
ThCh$
Total
ThCh$
943,299
38,874,897
3,291,711
4
5
40
20,448
1,302,991
6,270,631
10,462,743
409,895,674
1,018
187,584,584
(672,375)
Equity
ThCh$
2,175,170
448,933,206
36,019,322
333,667
861,876
2,169,447
- 360,943,855
374,886,708
331,584,644
481,233,183
22,076,683
569,255,183
8,970,421
442,881,698
(1,783,821)
206,758,769 440,365,430
147,162,202
56,626,307
473,552,393
156,337,020
17,483,801
-
595,283,825
473,281,467
97,690,887
5,858,335
718,066,218 1,676,746,264
41,485,034
933,041,318
143,443,519
256,441,790
171,383,120
68,639,517
88,364,078
212,394,646
7,406,552
66,719,139
(10,732,330)
3,979
286,346,373
49,949,665
94,891,793
65,509,222
23,008,874
24,866,206
15,917,374
3,130,801
31,446,358
(4,483)
As of December 31, 2005
Participation
%
45.00%
8.09%
8.07%
0.001%
0.0001%
0.001%
49.00%
14.38%
0.39%
1.76%
49.00%
78.19%
0.02%
41.14%
45.00%
36.44%
40.00%
34.11%
0.001%
51.52%
5.02%
40.02%
0.01%
28.48%
35.74%
40.37%
34.81%
30.07%
31.61%
7.35%
42.50%
45.00%
0.05%
978,827
36,215,022
2,905,645
4
1
29
176,862,489
53,900,461
1,306,841
8,406,794
10,817,575
445,074,460
145
182,187,512
(802,719)
160,485,896
58,864,881
161,499,865
188
306,671,773
4,900,370
671,018,358
4,148
265,753,122
51,259,409
103,523,037
59,658,465
20,639,903
27,931,883
15,611,006
3,147,784
30,023,613
(5,366)
-
0.01%
0.39%
0.92%
49.00%
78.19%
0.02%
41.14%
45.00%
44.56%
40.00%
34.11%
-
76.55%
5.00%
40.02%
0.01%
28.48%
35.74%
40.37%
34.81%
30.07%
31.61%
7.35%
42.50%
45.00%
0.05%
Total
2,869,969,948
2,858,841,421
2006 Annual Report | 163
CONSOLIDATED FINANCIAL STATEMENTS
b. Minority shareholders’ participation in the net (income) or loss of the Company’s subsidiaries is as follows:
As of December 31, 2006
As of December 31, 2005
Company
Net income Participation
Aguas Santiago Poniente
Cía. do Electricidade do Río do Janeiro
Ampla Investimentos
Cam Argentina S.A.
Cam Brasil S.A.
Cam Colombia S.A.
Capital de Energía S.A.
Central Hidroeléctrica Betania S.A.
Central Cachoeira Dourada
Chilectra S.A.
Cía. Peruana de Electricidad S.A.
Codensa S.A.
Compañía de Transmisión del Mercosur S.A.
Companhia Energetica Do Ceara - Coelce
Constructora y Proyectos Los Maitenes S.A.
Edegel S.A.
Edelnor S.A.
Edesur S.A.
Elesur S.A.
Emgesa S.A.
Empresa Eléctrica Pangue S.A.
Endesa
Endesa Argentina S.A.
Endesa Brasil S.A.
Central Costanera S.A.
Generandes Perú S.A.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Inversiones Distrilima S.A.
Inversiones Eléctricas Quillota S.A.
Investluz
Pehuenche S.A.
Soc. Agrícola de Cameros Ltda.
Soc. Agrícola Pastos Verdes Ltda.
Túnel El Melón S.A.
ThCh$
100,158
(25,141,747)
(4,157,513)
21,619
662,012
(757,588)
-
(1,013,673)
(34,674,029)
(232,037,916)
(1,251,375)
(87,150,758)
(1,942,266)
(72,820,430)
(289,656)
(8,637,978)
(8,469,675)
23,390,653
-
(62,646,331)
(38,948,354)
(189,541,318)
2,413,625
(92,224,764)
6,186,904
(6,372,945)
(13,818,182)
(6,679,741)
(4,850,516)
-
-
(67,661,976)
39,962
(4,909,487)
(1,766,256)
%
41.70%
8.07%
8.07%
0.001%
0.0001%
0.001%
-
0.01%
0.39%
0.92%
49.00%
78.19%
0.02%
41.14%
45.00%
44.56%
40.00%
34.11%
-
76.55%
5.00%
40.02%
0.01%
28.48%
35.74%
40.37%
34.81%
30.07%
31.61%
-
-
7.35%
42.50%
45.00%
0.05%
Total
ThCh$
41,767
(2,028,162)
(335,383)
-
1
(10)
-
(61)
(136,657)
(1,320,540)
(613,174)
(68,139,171)
(338)
(29,956,020)
(130,345)
(3,848,865)
(3,387,870)
7,976,982
-
(47,953,824)
(1,953,727)
(75,852,684)
241
(26,267,882)
2,210,884
(2,572,695)
(4,810,109)
(2,008,598)
(1,533,248)
-
-
(4,973,155)
16,984
(2,209,269)
(883)
Net income Participation
ThCh$
87,119
8,256,002
(1,403,437)
127,172
(851,349)
(19,783,507)
(2,480,263)
(25,535,210)
(79,516,682)
(2,783,688)
(68,194,303)
213,391
(13,586,759)
428,061
(35,247,397)
(18,416,541)
17,908,558
4,550,191
(41,236,222)
(19,783,241)
(112,946,076)
9,716,647
(32,452,492)
11,048,688
(29,805,937)
(2,638,290)
122,186
(11,174,458)
10,268,767
(8,571,935)
(61,448,069)
66,402
(1,542,661)
1,823,705
%
45.00%
37.50%
8.07%
0.001%
0.001%
49.00%
14.38%
0.39%
1.76%
49.00%
78.19%
0.02%
40.96%
45.00%
36.44%
40.00%
34.11%
0.001%
51.52%
5.02%
40.02%
0.01%
28.48%
35.74%
40.37%
34.81%
30.07%
31.61%
50.00%
13.68%
7.35%
42.50%
45.00%
0.05%
Total
ThCh$
39,203
3,096,128
(113,215)
1
(11)
(9,693,918)
(356,608)
(100,639)
(1,389,098)
(1,364,007)
(53,317,991)
202
(5,564,953)
192,628
(12,845,491)
(7,366,616)
6,107,518
49
(21,243,623)
(992,367)
(45,199,975)
972
(9,243,268)
3,948,239
(12,032,365)
(918,388)
36,742
(3,532,247)
5,134,383
(1,172,360)
(4,516,433)
28,220
(694,198)
912
Total
(269,785,811)
(173,072,574)
164
| 2006 Annual Report
enersis06
NOTE 22.
SHAREHOLDERS’ EQUITY
a. Consolidated statements of changes in shareholders’ equity.
Paid-in
capital
ThCh$
Share
Other
Retained
subsidiaries in
Interim
(loss) for
premium
reserves
earnings
development stage
dividends
the year
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Total
ThCh$
Deficit of
Net income
Balances at December 12, 2004
2,283,404,124
162,725,821
(122,588,994)
194,378,259
(2,673,664)
-
44,307,596 2,559,553,142
-
41,633,932
2,673,664
-
(44,307,596)
-
Distribution of prior year income
Investment equity variations
Final dividend Nº 72
Reserve Technical Bulletin No. 72 (1)
Reserve cumulative translation adjustment
-
-
-
-
-
-
-
-
-
-
(5,851,418)
-
-
(13,600,517)
(6,197,072)
(97,676,664)
-
-
Price-level restatement of capital
82,202,548
5,858,130
(4,413,204)
7,979,618
Net income for the year
-
-
-
-
Balance at December 31, 2005
2,365,606,672
168,583,951
(236,727,352) 230,391,292
Price-level restatement
49,677,740
3,540,263
(4,971,274)
4,838,217
Restated balance at December 31, 2005
2,415,284,412 172,124,214
(241,698,626) 235,229,509
Historic balance at December 12, 2005
2,365,606,672
168,583,951
(236,727,351)
230,391,292
Distribution of prior year income
Investment equity variations
Accumulated deficit of subsidiaries
in development stage
Final dividend 2005 Nº 73
Reserve Technical Bulletin No. 72 (1)
Cumulative translation adjustment reserve
Price-level restatement
Provisional dividend Nº 74
Net income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
68,016,865
(10,585,093)
-
-
(825,381)
14,766,794
-
-
(32,651,166)
-
-
49,677,740
3,540,263
(4,971,275)
5,522,778
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(181,751)
-
-
-
-
-
-
-
-
-
-
(5,851,418)
(13,600,517)
(6,197,072)
(97,676,664)
91,627,092
68,016,865
68,016,865
- 68,016,865 2,595,871,428
-
1,428,354
54,513,300
-
69,445,219 2,650,384,728
-
68,016,865 2,595,871,429
-
(68,016,865)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10,585,093)
-
(181,751)
(32,651,166)
(825,381)
14,766,794
53,769,506
(36,242,795)
-
(36,242,795)
-
- 285,960,366
285,960,366
Balance at December 31, 2006
2,415,284,412 172,124,214
(238,342,306)
271,279,769
(181,751)
(36,242,795) 285,960,366 2,869,881,909
b. Dividends
These are no restrictions to pay dividends.
d. Subscribed and paid in capital is as follows:
Number of
dividend
72
73
74
Payment
Date
Apr-05
Mar-06
Nov-06
Historic
Value
0.41654
1.000
1.110
Type of
dividend
Final 2004
Final 2005
Final 2006
Series
Single
As of December 31,
2006
ThCh$
2,415,284,412
2005
ThCh$
2,415,284,412
c. Number of shares.
Number of
Subscribed
Shares
32,651,166,465
As of December 31, 2006
Number of
Paid-in
Shares
32,651,166,465
Number of
Voting
Shares
32,651,166,465
Series
Single
2006 Annual Report | 165
CONSOLIDATED FINANCIAL STATEMENTS
e. Other reserves
Reserve for entities using remeasurement method
Reserve for accumulated conversion differences
Reserve for Technical Bulletin No. 72 (1)
Initial
balance at
January 1, 2006
ThCh$
(21,771,808)
(226,284,354)
6,357,536
Reserve
for the period
ThCh$
(10,585,093)
14,766,794
(825,381)
Final balance at
December 31, 2006
ThCh$
(32,356,901)
(211,517,560)
5,532,155
Total
(241,698,626)
3,356,320
(238,342,306)
(1)
In the Jan-Dec 2006 period, Other Reserves diminished owing to the corporate restructuring conducted by generation companies subject to common control
in Colombia and Peru, which had a net effect of ThCh$3,844,972, offset by ThCh$3,019,591 resulting from the Chilectra S.A. merger.
Other reserves at December 31, 2006 are composed of the following:
Cumulative translation adjustment
Initial
balance at
January 1, 2006
ThCh$
(226,284,354)
Reserve
for assets
ThCh$
18,731,782
Reserve for
liabilities
ThCh$
(3,964,988)
Reserve for
the period
ThCh$
14,766,794
Final balance at
December 31, 2006
ThCh$
(211,517,560)
Total
(226,284,354)
18,731,782
(3,964,988)
14,766,794
(211,517,560)
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.
Ampla Energia e Servicios S.A.
Ampla Investimentos e Servicios S.A.
Codensa S.A.
Investluz S.A.
Central Geradora Termelétrica Fortaleza S.A.
Synapsis de Colombia S.A.
Endesa Market Place
Endesa Argentina S.A.
Endesa Chile Internacional S.A.
Endesa Brasil S.A.
Ingendesa Do Brasil Ltda.
Endesa Costanera S.A.
Conosur S.A.
Emgesa S.A.
ThCh$
(26,483,840)
(11,039,298)
(1,362,734)
(36,273,768)
(48,068,771)
2,820,689
(39,106,966)
(6,260,384)
(6,425,742)
(963,768)
397,933
(2,742,948)
(3,202,893)
(19,561,981)
(139,262)
(773,235)
(12,307,502)
(23,090)
Total
(211,517,560)
166
| 2006 Annual Report
NOTE 23.
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 and materials
Received compensations
Services - projects and inspections
Penalties charged to contractors and suppliers
CDEC-SING power settlement gain
Cost recoveries
Reversal of contingencies provision and other provisions
Fiscal benefits for Brazilian subsidiaries
Effect of application of BT 64
Indemnities and commissions
Dividend from investees
Other
Total
b. Other non-operating expenses are as follows:
Adjustments to investments in related companies
Loss on sale of fixed assets and materials
Obsolescence provision and write-off of fixed assets
Effect of application of BT 64
Contingencies and litigation
SIC power settlement loss
Pension plan expense
Index UFIR Brazilian subsidiaries
Penalties and fines
Other taxes Colombia
Other taxes Argentina and Brazil
Other taxes Perú
Energy efficiency Brazilian subsidiaries
Write-off of Copel and other contracts (Brazil)
Other
enersis06
Year ended December 31,
2006
ThCh$
1,551,942
23,532,274
-
504,588
3,125,137
9,039,962
4,960,900
17,392,103
22,501,782
11,645,105
8,909,405
922,070
6,467,357
2005
ThCh$
229,888
9,719,125
4,669,263
1,876,364
3,147,849
7,695,386
3,465,839
2,529,525
8,464,117
20,401,508
1,201,071
2,265,474
6,798,243
110,552,625
72,463,652
Year ended December 31,
2006
ThCh$
1,075,222
1,861,962
12,838,033
47,155,146
34,256,885
10,521,560
4,311,452
3,263,258
21,002,355
4,952,418
9,167,270
3,215,074
12,244,926
30,518,164
12,892,486
2005
ThCh$
5,381,566
7,229,865
11,163,472
45,793,460
36,110,799
8,691,477
3,276,820
3,166,191
7,627,894
6,821,778
10,411,316
1,016,548
-
-
14,702,918
Total
209,276,211
161,394,104
2006 Annual Report | 167
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24.
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
Non-monetary liabilities
Price-level restatement of the income statement
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.
I.P.C.
U.F.
I.P.C.
I.P.C.
U.F.
I.P.C.
Year ended December 31,
2006
ThCh$
2005
ThCh$
2,389,811
9,112,369
463,698
48,406,222
1,825,882
2,076,719
13,885,080
53,681,349
4,777,433
10,824,096
2,502,066
10,751,606
452,012
83,773,671
3,863,870
7,037,490
24,745,919
120,151,816
6,310,909
1,355,133
147,442,659
260,944,492
(53,769,506)
(42,846,521)
(20,406,848)
(13,431,629)
(344,193)
-
(15,427,161)
(93,551,261)
(102,062,662)
(37,206,833)
(22,836,797)
(838,830)
(67,400)
(9,429,538)
Net charge-liabilities and shareholders’ equity accounts
(146,225,858)
(265,993,321)
Net credits (charge) to income
1,216,801
(5,048,829)
168
| 2006 Annual Report
Liabilities
Currency
NOTE 25.
EXCHANGE DIFFERENCES
The (charge) credit to income for foreign currency translation is as follows:
Assets
Currency
Cash and banks
Time deposits
Notes receivable (net)
Other receivables (net)
US$
Otras
US$
US$
Others
US$
2006
ThCh$
426,778
(2,576)
72,963
69,525
11,599
251,948
2005
ThCh$
2,064,363
-
(234,743)
(961,188)
-
(22,532)
-
(749,527)
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
Others
(9,060)
(22,397)
- Accounts payable
Prepaid expenses
Other current assets
Amounts due from related companies
US$
US$
Others
US$
574
-
249,351
(2,472)
1,677,065
Miscellaneous payables
- Accrued expenses
(6,634,958)
(22,934) Deferred income
(156,439) Other current liabilities
Amounts due to related companies
Non-current assets
Long-term receivables
Other long-term assets
Amounts due from related companies
Forward contracts
US$
US$
US$
US$
6,222,449
209,375
-
22,030
Long-term liabilities
(2,862,090) Due to banks and
financial institutions
-
-
-
(23,582,940) Bonds payable
(12,458,654) Miscellaneous payables
- Other long-term liabilities
Forward
enersis06
Year ended December, 31
2006
ThCh$
(23,315)
20,093
(1,764,564)
(190,750)
1,852
(158,658)
(5,427)
-
(548,241)
(11,009)
-
320,952
(1,038,055)
-
-
(474,916)
-
2005
ThCh$
5,071
-
(3,245,814)
(51,283)
1,264
(30,922)
9,949,604
(498,415)
(1,876,197)
-
120
(10,013)
20,523
16,215
1,263,049
3,439
53
15,696,935
65,769
5,390
42,099
19,376,577
-
3,130,240
(238,321)
(4,354,373)
US$
US$
Yen
Euro
Libra
US$
US$
US$
Others
US$
US$
Others
US$
US$
US$
US$
Yen
Euro
Libras
US$
US$
US$
US$
US$
Total gain (loss)
9,199,549
(45,644,039)
Total gain (loss)
(3,872,038)
39,271,010
Exchange difference - net income (loss)
5,327,511
(6,373,029)
NOTE 26.
SHARE ISSUANCE COSTS
NOTE 27.
CASH FLOW STATEMENT
a. Expenses incurred for issuing and placing debt instruments incurred
each year in placing bonds are as follows:
a. Other financing disbursements:
Bank commissions
As of December 31
2005
2006
ThCh$
ThCh$
916.513
500.059
Total
500.059
916.513
Commissions on debt refinancing
Derivates contracts
Reimbursables contributions
Others
These expenses are registered in other assets, and will be amortizated
in the corresponding bond period.
Total
As of December 31
2005
2006
ThCh$
ThCh$
592,597
6,171,736
473,114
46,205
-
16,610,130
1,074,908
15,321
7,283,652
17,700,359
2006 Annual Report | 169
CONSOLIDATED FINANCIAL STATEMENTS
b. Other investment receipts:
c. Other investment disbursements:
Receipts from loans granted to former subsidiary
Margin Call Premiums
Capital reduction Company Energy of Bogotá
Others
As of December 31
2005
2006
ThCh$
ThCh$
2,106,789
542,842
-
405,546
5,135,933
456,401
-
507,600
Payments associated with derivative contracts
Intangible assets
Other
As of December 31
2005
2006
ThCh$
ThCh$
10,840,312
1,197,015
506,748
-
2,920,172
-
Total
12,544,075
2,920,172
Total
1,912,389
7,242,722
NOTE 28.
FINANCIAL DERIVATIVES
As of December 31, 2006 the Company and its subsidiaries held the following financial derivative contracts with financial institutions with the objective
of decreasing exposure to interest rate and foreign currency risk, as follows:
Derivative
Type
Nominal
Date of
Sales/
Hedged
Type
Contract
Amount
Maturity
Item
Purchase Item
US$
CCTE
CCTE
CCTE
CCTE
CCTE
CCTE
CCTE
10,005,950 III quarter 07
Interest rate
90,000,000 IV quarter 12
Interest rate
26,070,991 II quarter 14
Interest rate
21,389,734 IV quarter 15
Interest rate
125,000,000 III quarter 08
Interest rate
2,468,231 IV quarter 08
Interest rate
350,000,000 I quarter 14
Interest rate
COPE
250,000,000 IV quarter 16
Interest rate
50,000,000 II quarter 12
Interest rate
50,000,000 IV quarter 07
Interest rate
120,000,000 IV quarter 08
Interest rate
C
C
C
C
C
C
C
C
C
C
C
60,000,000 III quarter 09
Interest rate
50,000,000 IV quarter 09
Interest rate
40,000,000 III quarter 10
Interest rate
C/V
C
C/V
CCTE
CCTE
CCTE
CCTE
CCTE
CCTE
S
S
S
S
S
S
S
S
OE
OE
OE
OE
OE
OE
Amount
Hedged
Accounts
Assets / Liabilities
Income
Amount
ThCh$
item
Account
Amount
Realized
Unrealized
ThCh$
ThCh$
ThCh$
ThCh$
Bank obligations
8,878,446
8,878,446 Other assets l/t
41,632
50,928
Bank obligations
47,915,100
47,915,100 Other assets l/t
Bonds
13,879,935
13,879,935 Other liabilities s/t
Bank obligations
11,387,680
11,387,680 Other liabilities l/t
Bonds
66,548,750
66,548,750 Other assets l/t
Bank obligations
1,314,061
1,314,061 Other liabilities l/t
524,416
19,698
219,355
184,062
(901,468)
-
-
-
-
-
636
524,416
22,360
219,355
(61,309)
(901,468)
Bonds
Bonds
186,336,500
186,336,500 Other liabilities l/t
(77,962,451)
(855,631)
(108,931)
133,097,500
133,097,500 Other liabilities l/t
(64,414,666)
(470,600)
(915,686)
Bank obligations
26,619,500
26,619,500 Other liabilities l/t
(3,317,305)
Bank obligations
26,619,500
26,619,500 Other liabilities l/t
-
-
-
Bank obligations
63,886,500
63,886,500 Other liabilities l/t
42,282
23,366
Bank obligations
31,943,400
31,943,400 Otros act lp / Otros pas lp
17,528
Bank obligations
216,619,500
26,619,500 Other liabilities l/t
-
-
-
(3,317,305)
-
1,473
17,528
-
Bank obligations
21,295,600
21,295,600 Other assets l/t
(43,242)
(385)
(43,242)
NOTE 29.
COMMITMENTS AND CONTINGENCIES
a. The detail of guarantees given by Enersis and its subsidiaries as of December 3i, 2006 and 2005 is the following
Collateral held by third parties:
Guarantee
Subsidiary
Type
guarantee
Banco Acreedores
Banco Estado
Argentina
Mitsubishi
Credit Suisse First Boston
Miscellaneous Payable
Miscellaneous Payable
Deutsche Bank
Miscellaneous Payable
Miscellaneous Payable
International Finance Corporation CGT Fortaleza S.A.
Bndes
Pangue S.A.
Tunel el Melón
Costanera
Endesa Costanera
Endesa Costanera
Endesa Matriz
Edegel S.A.
Enersis
Ampla S.A.
Coelce S.A.
Cachoeira Dourada S.A. Pledge
Mortgage and pledge
Pledge over 45% of operating income
Pledge
Pledge
Pledge
Bank bond
Pledge
Deposits accounts
Pledge over collections and others
Pledge over collections and others
Mortgage and pledge
Type
Red estate, properties
Shares
Combined cycle
Combined cycle
Red estate, properties
Deposits accounts
Red estate, properties
Commited assets
Book value
Currency of collateral Currency
Balance payable of related debt
at December 31.
2005
2006
ThCh$
ThCh$
7,108,191
4,403,734
2,797,441
386,869
9,105,961 10,051,350
30,130,080 20,383,142
21,295,600 20,930,500
109,820
84,298,633 62,581,672
-
39,415,282
-
24,473,045
-
78,286,545
-
652,406,200
-
36,106,450
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
5,610,319
Release of
guarantees
2007
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
91,220,201
2,064,958
72,580,273
84,241,470
24,978,865
-
124,837,126
4,008,541
10,001,535
61,842,491
213,152,560
2,055,776
170
| 2006 Annual Report
Guarantees of subsidiary obligations:
Guarantee
Subsidiary
guarantee
Type
of collateral
Currency
2006
ThCh$
2005
ThCh$
2006
ThCh$
2007
2008
2009
ThCh$
ThCh$
ThCh$
Commited assets
Balance payable of related debt
Type
Book value
at December 31.
Release of guarantees
enersis06
J.P. Morgan & Co. y C.S.F.B.
Endesa Chile Internacional
Guarantees
2° Juzgado Civil de Quillota
Cía. Eléctrica San Isidro
Compañía Vestas
Vestas Elóicas S.A.U.
Endesa Eco S.A.
Endesa Eco S.A.
Guarantees
Guarantees
Guarantees
ThCh$
ThCh$
ThCh$
ThCh$
-
10,000
6,601,636
5,439,682
Bco. Español de Crédito
Cía. Eléctrica Tarapacá S.A.
Filial
M$
6,581,821
M$
M$
M$
M$
M$
-
78,489,375
-
10,000
6,601,636
5,439,682
-
-
-
6,581,821
10,785,677
100,000
6,601,636
- 5,439,682
-
6,581,821
-
-
-
-
-
-
-
-
-
-
-
b. Litigation and other legal actions:
ENERSIS S.A.
Plaintiff
: Enersis S.A., Chilectra S.A., Empresa Nacional
de Electricidad S.A.
: The Republic of Argentina
Defendant
Court
: CIADI Arbitration Panel
Case/Identification : (CIADI Case ARB/03/21)
Compensation for losses caused to the Plaintiff’s investment in the
Republic of Argentina is requested in connection with the participation
of the power distribution concessionaire Edesur S.A. on the grounds
of violation of the Investment Protection and Promotion Agreement
entered into by the Republics of Chile and Argentina, and the Argentinean
Government behavior through the passing of Public Emergency Law
25,561, dated January 6, 2002. The said behavior has also seriously
affected the economic and financial balance of the Concession Contract
between Edesur S.A. and the Argentinean National State. The said Law
authorized a re-negotiation process of the Concession Contracts with
the purpose of re-composing the economic-financial equation affected
by the conversion to pesos, at US$1 = $1, of tariff values calculated in
American dollars, and the prohibition to apply biased tariff updating. In
the practice, this process has not been promoted by the Government,
and no measures to prevent losses for the Plaintiff have been formalized.
Edesur S.A. has been deprived of receiving the tariffs indicated in the
regulations and in the said Concession Contract, therefore being harmful
to the investment the Plaintiff companies have made.
Process status: On October 18, 2004, a copy of the lack of jurisdiction
petition filed by the Republic of Argentina was received. On December
17, 2004 the said petition was answered and confirmation of the CIADI
jurisdiction was requested.
On April 6, 2005, the allegations of the parties regarding this jurisdiction
issue took place. The court decided to accept the re-complaint and
re-answer of the parties, setting a brief term for them. And the parties
met the term. On June 15, 2005, Edesur S.A. entered with the Unit for
Renegotiation and Analysis of Public Services Contracts (UNIREN)
into an Understanding Letter within the framework of the process
for renegotiating Edesur S.A.’s Concession Contract, envisaged
in Law No.25,561 and supplementary regulation. As a result of the
Understanding Letter, on August 29, 2005, the Minutes of Agreement
for the Adequacy of the Concession Contract for the Public Service of
Distribution and Marketing of Electric Energy were entered into. At the
request of the Argentine Government, the Minutes of Agreement were
executed again, on the same terms and conditions, on February 15,
2006, to include the new female Minister of Economy and Production.
The Minutes envisage a Transitional Rate Regimen, retroactively effective
beginning on November 1, 2005; require approval of the authorities for
paying dividends during the life of the transitional regime; and include
other aspects associated with investments, quality of service, penalties
applied to Edesur, and unpaid penalties. Also, it establishes a Full Rate
Revision, by which a new rate regime is to be set, which was scheduled
to become effective on November 1, 2006, and for the next 5 years,
under the supervision of the Ente Nacional Regulador de la Electricidad
(ENRE), in accordance with law 24,065.
In addition, the Understanding Letter imposes the obligation of initially
suspending, and subsequently dropping, all actions filed against the
Argentinean State by Edesur S.A. and its shareholders. Such requirement
would cause Enersis S.A. to suspend the international arbitration started
on April 25, 2003 with the International Center for the Settlement of
Disputes regarding Investments between States and Nationals of Other
States (CIADI).
After publication in the Official Gazette of the Republic of Argentina of
the resolution approving the rates arising from the Full Rates Revision,
Enersis S.A. and its subsidiaries Chilectra S.A., Empresa Nacional de
Electricidad S.A. and Elesur S.A. (currently, Chilectra S.A.) would drop
the abovementioned international arbitration started with the CIADI.
On September 16, 2005 the Republic of Argentina made a filing
requesting the suspension of the proceedings. It was answered on
September 22, 2005 by the plaintiffs, who opposed the suspension.
On September 30, 2005 the court rejected the Argentinean request, for
lack for consent. On October 7, 2005, Argentina made a new filing on
the same issue, which the court communicated to us on October 11,
2005, and we answered the filing on October 18, 2005.
On March 28, 2006, the court ordered the suspension of the proceedings
for a term of 12 months, after which it will call on the parties to report on
the status of the negotiation conducted in accordance with the Minutes
of Agreement for the Adequacy of the Concession Contract for the Public
Service of Distribution and Marketing of Electric Energy. Subsequently,
the court will decide whether or not the proceedings should continue.
The Minutes of Agreement for the Adequacy of the Concession Contract
for the Public Service of Distribution and Marketing of Electric Energy,
2006 Annual Report | 171
CONSOLIDATED FINANCIAL STATEMENTS
after being approved by the Congress of the Argentine Nation, were
ratified by the Executive National Argentine Power through decree 1959
of 2006, published on the Official Gazette on January 8, 2007, and now
only their regulation by the ENRE is pending.
Amount involved: US$574,739,550.
CHILECTRA S.A.
Plaintiff
: Enersis S.A., Chilectra S.A., Empresa Nacional
de Electricidad S.A., Elesur S.A.
: The Republic of Argentina
Defendant
Court
: CIADI Arbitration Panel
Case/Identification : CIADI Case ARB/03/21
Compensation of losses caused to the Plaintiff’s investment in the
Republic of Argentina is requested in connection with the participation
in the power distribution concessionaire Edesur S.A. on the grounds of
non-fulfillment of the Investment Protection and Promotion Agreement
entered into by the Republics of Chile, and Argentina and the Argentinean
Government behavior through the passing of Public Emergency Law
25,561, dated January 6, 2002. The said behavior has also seriously
affected the economic and financial balance of the Concession Contract
between Edesur S.A. and the Argentinean National State. The said Law
authorized a re-negotiation process of the Concession Contracts with
the purpose of re-composing the economic-financial equation affected
by the conversion to pesos, at US$1 = $1, of tariff values calculated in
American dollars, and the prohibition to apply biased tariff updating. In
the practice, this process has not been promoted by the Government,
and no measures to prevent losses for the Plaintiff have been formalized.
Edesur S.A. has been deprived of receiving the tariffs indicated in the
regulations and in the said Concession Contract, therefore being harmful
to the investment the Plaintiff companies have made.
Process status: On October 18, 2004, a copy of the lack of jurisdiction
petition filed by the Republic of Argentina was received. On December
17, 2004 the said petition was answered and confirmation of the CIADI
jurisdiction was requested.
On April 6, 2005, the allegations of the parties regarding this jurisdiction
issue took place. The court decided to accept the re-complaint and
re-answer of the parties, setting a brief term for them. And the parties
complied with the term.
On June 15, 2005, Edesur S.A. entered with the Unit for Renegotiation
and Analysis of Public Services Contracts (UNIREN) into an
Understanding Letter within the framework of the process for renegotiating
Edesur S.A.’s Concession Contract, envisaged in Law No.25,561 and
supplementary regulation. As a result of the Understanding Letter, on
August 29, 2005, the Minutes of Agreement for the Adequacy of the
Concession Contract for the Public Service of Distribution and Marketing
of Electric Energy were entered into. At the request of the Argentine
Government, the Minutes of Agreement were executed again, on the
same terms and conditions, on February 15, 2006, to include the new
female Minister of Economy and Production. The Minutes envisage a
Transitional Rate Regimen, retroactively effective beginning on November
1, 2005; require approval of the authorities for paying dividends during
172
| 2006 Annual Report
the life of the transitional regime; and include other aspects associated
with investments, quality of service, penalties applied to Edesur, and
unpaid penalties. Also, it establishes a Full Rate Revision, by which a
new rate regime is to be set, which was scheduled to become effective
on November 1, 2006, and for the next 5 years, under the supervision of
the Ente Nacional Regulador de la Electricidad (ENRE), in accordance
with law 24,065.
In addition, the Understanding Letter imposes the obligation of initially
suspending, and subsequently dropping, all actions filed against the
Argentinean State by Edesur S.A. and its shareholders. Such requirement
would cause Enersis S.A. to suspend the international arbitration started
on April 25, 2003 with the International Center for the Settlement of
Disputes regarding Investments between States and Nationals of Other
States (CIADI).
After publication in the Official Gazette of the Republic of Argentina of
the resolution approving the rates arising from the Full Rates Revision,
Enersis S.A. and its subsidiaries Chilectra S.A., Empresa Nacional de
Electricidad S.A. and Elesur S.A. (currently, Chilectra S.A.) would drop
the abovementioned international arbitration started with the CIADI.
On September 16, 2005 the Republic of Argentina made a filing
requesting the suspension of the proceedings. It was answered on
September 22, 2005 by the plaintiffs, who opposed the suspension.
On September 30, 2005 the court rejected the Argentinean request, for
lack for consent. On October 7, 2005, Argentina made a new filing on
the same issue, which the court communicated to us on October 11,
2005, and we answered the filing on October 18, 2005.
On March 28, 2006, the court ordered the suspension of the proceedings
for a term of 12 months, after which it will call on the parties to report on
the status of the negotiation conducted in accordance with the Minutes
of Agreement for the Adequacy of the Concession Contract for the Public
Service of Distribution and Marketing of Electric Energy. Subsequently,
the court will decide whether or not the proceedings should continue.
The Minutes of Agreement for the Adequacy of the Concession Contract
for the Public Service of Distribution and Marketing of Electric Energy,
after being approved by the Congress of the Argentine Nation, were
ratified by the Executive National Argentine Power through decree 1959
of 2006, published on the Official Gazette on January 8, 2007, and now
only their regulation by the ENRE is pending.
Amount claimed by Chilectra S.A.: US722,969,910.
Plaintiff
Defendant
: Chilectra S.A.
: S u p e r i n t e n d e n c y o f S e c u r i t i e s a n d
Insurance
Court
Case/Identification : 4394-97
: 10th Civil Court of Santiago
Summary of proceedings: On October 31, 1997, the Superintendence of
Insurance and Securities (“SVS”) sanctioned Elesur S.A., today Chilectra
S.A., with UF 100,000 and interest to the benefit of the state, for the
use of privileged information contained in clause six of the Strategic
Agreement subscribed by Enersis S.A. and Endesa España, on August
2, 1997.
Process status: On November 17, 2000, the first instance court admitted
Elesur’s claim and annulled the fine imposed by the SVS. The sentence,
in brief, sustained that there had not been use of privileged information
because it was information belonging to one of the contracting parties. The
SVS appealed requesting procedural annulment and against the sentence.
On June 6, 2006, the Santiago Court of Appeals, rejected the annulment of
the procedure, but accepted the sentence appeal, revoking the sentence
that annulled the fine imposed by the SVS. In opposition to the sentence of
the Court of Appeals, on June 23 2006, an appeal was presented requesting
procedural annulment and against the sentence, the resolution of which
corresponds to the Supreme Court. Management believes, based on the
opinion of the lawyer Pedro Hernán Aguila, from the Ortúzar, Aguila & Cía
law firm, in charge of the case, that the lawsuit will probably be won.
Amount involved: UF 100,000 (approximately US$3.5 Million)
EDESUR S.A.
Plaintiff
: Asociación Coordinadora de Usuarios
Consumidores y Contribuyentes - Ente
Nacional Regulador de la Electricidad
(ENRE).
Defendant
Court
: Edesur S.A.
: N°2 Federal Civil and Commercial First
Instance Court, Registry of the Court N° 6,
La Plata
Case/Identification : 38676/03
Summary of proceedings: The said institution filed a measure through
which it expects ENRE and EDESUR to be ordered to suspend cabling
works in Quilmes, Province of Buenos Aires, as well as the company’s
“Sobral” sub-station due to the damage the installations may cause to
the population’s health.
Process status: After a hearing convened by the court and another
hearing at the ENRE, which were attended by the parties and the other
entities mentioned in the preceding paragraph, a number of technical
measures were implemented to diminish the CEM values, even below
the values set in the applicable norms. No new developments have
occurred in this trial ever since.
Amount: Undeterminable
Plaintiff
: Users affected by a mass power outage in
Buenos Aires
Defendant
Court
: Edesur S.A.
: Courts and Civil and Commercial Courts of
the Federal Capital of Buenos Aires
Case/Identification : (Various processes)
Summary of proceedings: As a result of a prolonged outage in February,
1999, which affected 160,000 clients, a large number of claims for
damages caused to such users began to be received as of mid 2000.
Process status: This involves several proceedings, started on different
dates, so each is at its own procedural step depending on its degree of
progress. Currently, 3496 proceedings are being handled.
Amount involved: US$7,983,931
enersis06
Plaintiff
Defendant
Court
: Edesur S.A.
: Transportes Metropolitanos Gral. Roca.
: First Instance National Commercial Court,
Case/Identification : 87934/03
Registry of the Court N° 1
Summary of proceedings: Edesur promoted an action to declare settlements
in public property free-of-charge, taking into consideration that the company
Transportes Metropolitanos General Roca S.A. (T.M.R.) intends to charge
an annual rent for every crossing or power line wiring along the rails
(existing or future) over land designated as railroad service property.
Process status: Edesur obtained from the corresponding Court a
precautionary measure through which the company is not obliged to
pay rent while the procedure is pending resolution. The proceedings
returned to the Federal Court of La Plata and the trial is in the status in
which the judge must issue a first instance sentence.
Amount: Undeterminable
Plaintiff
Defendant
Court
: Users and Consumers Union.
: Edesur S.A.
: N° 11 Federal Administrative First Instance
National Court, Registry of the Court N° 21.
Case/Identification : 142321/02
Summary of proceedings: The Users and Consumers Union wants a
modification of the type of rate applied to the many condominium owners
consortiums existing in the City of Buenos Aires and EDESUR users.
This would imply an important reduction of the values to be invoiced in
the future to these consortiums, as well as the obligation for retrospective
reimbursement of “unduly” received amounts.
Process status: Evidence stage. Court is to issue ruling.
Amount: Undeterminable
Plaintiff
Defendant
Court
: Edesur S.A.
: National State (Ministry of Economy)
: N° 3 Federal Administrative First Instance
National Court, Registry of the Court N° 5.
Case/Identification : 1856/97
Summary of proceedings: In accordance with a provision in Power Law 24065,
the power sector concessionaire companies must pay a significant rate to the
Power Regulating National Agency (ENRE) with the purpose of financing its
controlling and regulating activities (the rate is paid by EDESUR, among other
concessionaires.) These expenses must not exceed annually the amount of the
rate paid, thus giving rise to a financial surplus which, instead of being allocated to
the Argentinean government, must be refunded to the companies. In this regard,
the action was filed to nullify a resolution of the General Agency for Management
of the Economy Ministry, which allocates to the Argentinean Treasury these
financial surpluses. Obviously, this resolution is confiscatory in nature, because
the rate must always be a payment for a service provided, and no portion of it
must become income for the government.
Process status: An extraordinary recourse was filed.
Amount: Undeterminable.
2006 Annual Report | 173
CONSOLIDATED FINANCIAL STATEMENTS
Plaintiff
Defendant
Court
: Edesur S.A.
: Municipality of Berazategui
: N ° 2 F e d e r a l A d m i n i s t r a t i v e F i r s t
Instance Court for Civil, Commercial and
Administrative Trials, Registry of the Court
N° 5. in La Plata
Case/Identification : 11,859/05
Summary of proceedings: Legal action was taken against the Municipality
of Berazategui, to the effect of declaring the right of Edesur S.A. to
continue the necessary works to construct the “Rigolleau” Substation,
located in the department of Berazategui, which were suspended by the
sued Municipality through Decree N° 758/05, whose unconstitutionality
and unenforceability is requested in the lawsuit.
Process status: The Court accepted the request for a protection measure,
suspending the application of Decree N.° 758/05 and ordering Municipal
authorities to not impede the laying of the connections for the “Rigolleau”
Substation, as well as its updating and remodeling. This protection
measures has been appealed by the Chamber. On the other hand, the
Municipality of Berazategui answered the demand. The file passed to
the Chamber for it to resolve regarding the appeal against the protection
measure favorable to Edesur S.A.
Amount: Undeterminable.
Plaintiff
Defendant
: Edesur S.A.
: Secretaría de la Política Ambiental de la
Court
: N° 2 Federal Civil, Commercial and Administrative
First Instance National Court, Registry of the
Court N° 5, La Plata.
Case/Identification : 11.893/05
Summary of proceedings: A lawsuit was filed against the Municipalidad
de Berazategui, so that it allows Edesur S.A. to render public services
consisting in distributing electricity, for which it must install an underground
electrical line under the western sidewalk of street 5, between Avenida
Mitre and Calle 146, in Berazategui. The installation was suspended
by the defendant through Decree No.1207/05, of which the plaintiff is
seeking that it be pronounced unconstitutional and inapplicable. Also, an
injunction was requested from the court. The court granted the injunction,
suspending the application of Decree No. 758/05, and ordering the district
authorities to refrain from stopping the development and/or completion
of the installation of the underground 132-Kw line linking the sub-station
located there, as well as the adequacy and remodeling of the line.
Process status: Given that the injunction has satisfied the plaintiff’s
petition, a filing was made suggesting that, if the judge issues a ruling
favorable to the plaintiff’s complaint, the injunction be upheld.
Amount: Undeterminable.
Plaintiff
Defendant
Court
: Edesur S.A.
: Buenos Aires City Government (“GCBA”)
: N° 7 Administrative and Tax Court of Buenos
Aires City, Registry of the Court N° 13
Provincia de Buenos Aires
Case/Identification : 2955/00
Court
: N° 2 Federal Civil, Commercial and
Administrative First Instance National Court,
Registry of
the Court N° 5, La Plata.
Case/Identification : 9335/05
Summary of proceedings: An injunction petition was filed, in accordance
with Law PBA No.7166, against the Secretaría de la Política Ambiental
(SPA) de la Provincia de Buenos Aires, in connection with several
infractions committed by this entity, which affect rights and guarantees
established in the Argentinean Constitution, in particular, articles 14,
17, 18 and 31 of the Argentinean Constitution, as well as National Law
No.25,760, because the provincial regulations (in particular Resolution
SPA No.1118/02) have envisaged caps for PCB concentration in
transformers which are not consistent with Argentinean or international
standards.
Process status: The court accepted the plaintiff’s petition, ordering
Secretaría de la Política Ambiental to refrain from implementing
Resolution SPA No.1118/02 and all the other measures related to it,
and to suspend all proceedings already started and the execution of
sanctions, if any, derived from them, until a final ruling is passed in the
trial. The defendant appealed against this court resolution, and the trial
is at the stage following the answer to the complaint.
Amount: Undeterminable.
Summary of proceedings: The provision through which the Buenos Aires
City Government tries to charge an annual rent for each underground
transformation center installed by Edesur in public roads is contested.
At the same time, the provision tries to force Edesur to cover the costs
resulting from the removal of the said centers whenever removal is
necessary. The contested provision violates the Concession Contract.
Process status: First instance favorable ruling was appealed against
by the GCBA.
Amount: Undeterminable
Plaintiff
Defendant
Court
: Edesur S.A.
: Buenos Aires City Government (GCBA)
: N° 7 Administrative and Tax Court of the City
of Buenos Aires, Registry of the Court N°
13.
Case/Identification : 2956/01
Summary of Proceedings: To contest a GCBA provision through which
payment of procedure expenses on permits requested by Edesur for
the installation of its lines is demanded, as well as payment for the
corresponding inspections carried out by the GCBA, in addition to a rent
for using public roads with power systems for the provision of power
distribution public utilities.
Plaintiff
Defendant
: Edesur S.A.
: Municipalidad de Berazategui.
Process status: Court to issue ruling.
Amount: Undeterminable
174
| 2006 Annual Report
AMPLA ENERGíA E SERVIçOS S.A. (AMPLA)
Plaintiff
: Meridional S/A Servicios, Emprendimientos
y Participaciones
Defendant
Court
: Ampla
: 9th Chamber of Rio de Janeiro Public
Case/Identification : 98.001.048296-8
Finance
Summary of Proceedings: Mistral and Civel, represented by Meridional,
claim they are creditors of the former state electricity distribution
company CELF, owing to the existence of contracts of jobs undertaken
for said company. Meriodional in its representation demands payment
of invoices supposedly outstanding and the payment of contractual fines
for rescission of the contracts for the above mentioned jobs, for the sum
of R$136,085,087.02.
Process status: The Plaintiff filed a recourse of appeal, and then Ampla
was required to submit its allegations. On September 25, 2006, Ampla
submitted its allegations and appealed.
Amount US$118,007,521.02
Plaintiff
Defendant
Court
: Enertrade - Comercializadora de
Energía S. A
: Ampla
: Getulio Vargas Foundation Chamber for
Conciliation and Arbitration
Case/Identification : Arbitration procedure No. 03/2005
Summary of Proceedings: On December 22, 2002, Ampla and
ENERTRADE signed a 20-year electric energy sales contract (40MW
average). This contract was sent to ANEEL (Agencia Nacional de
Energía Eléctrica) (National Electric Energy Agency) for its evaluation
and resulting official approval. ANEEL approved the contract because
certain conditions were fulfilled, among them, a 25% reduction in the
price of the contracted energy (from R$ 97,4 t R$ 72,6/MWh). Given
this determination, Ampla only paid the value authorized by ANEEL.
ENERTRADE sustained that the contract was tacitly approved by ANEEL
due to the passage of time and obtained, through judicial demand nº
2003.34.00.023785-2 against ANEEL. a provisional judicial measure that
suspended the effects of the condition imposed by ANEEL, declaring
the contract tacitly approved by that entity.
ANEEL has not yet been able to have this provisional measure
annulled. With the purpose of confirming the right assured by the
provisional measure, ENERTRADE, in December 2005, established
an arbitration procedure against AMPLA, under nº 3/2005 in the Cámara
de Conciliación y Arbitraje of the Fundación Getúlio Vargas/RJ. Ampla
continued to pay the reduced rate because, in addition to not being
part of the process, it was not authorized to transfer the full cost to its
tariffs.
Process status: On July 17, 2006, Enertrade presented its first arguments,
sustaining that Ampla is delinquent in its payments of the amounts owed,
according to the electric energy sales contract signed and that Ampla has
been paying for the contracted electric energy at the price established
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in the official letter nº 696/2003, from ANEEL, while it should have paid
the contract price, since due to the provisional measure obtained by
ENERTRADE, the effects of the ANEEL official letter are suspended.
On August 17, 2006, Ampla presented its answer; sustaining: a) the
question is not subject to arbitration; b) that the provisional measure does
not produce any effect in relation to it, since it is not part of the judicial
demand; c) that it cannot pay for energy at a higher price than the price
authorized by ANEEL, under the risk of violating the economic-financial
equilibrium of the concession.
Amount involved: US$ 91,070,534.13
Plaintiff
Defendant
: Ampla
: Enertrade - Comercializadora de Energía
S.A
Court
: Getulio Vargas Foundation Chamber for
Case/Identification : Arbitration procedure No. 04/2006
Conciliation and Arbitration
Summary of Proceedings: Counterclaim by Ampla against ENERTRADE.
The facts of this procedure are the same as arbitration procedure
03/2005. Bearing in mind that the arbitration rules of this Chamber do
not consider counterclaims, Ampla petitioned for a new arbitration to
be established, with a view to decreeing the nullity of the contract or,
alternatively, its avoidance. In this case, the same arbitration court has
jurisdiction for hearing the case, which shall be processed together with
the other proceeding.
On August 28, 2006, Ampla petitioned in the arbitration court for the
nullity of the contract entered into with ENERTRADE, or, alternatively,
its avoidance, maintaining simply that the contract is null and void,
since it was not ratified by ANEEL, as stipulated in the law, which was
an essential condition for entering into the contract; also null and void
because it infringes Law 8.884/94; it was entered into in unfair terms and
conditions, typifying the abuse of the power of control; and the contract
fails to comply with its business function.
Process status: Ongoing proceedings, the plea period has been
concluded and it is now in the period allowed for producing evidence.
Bearing in mind that this proceeding shall be heard together with No.
03/2005, the pleadings of both parties regarding the submission of
evidence will also be applied to this proceeding.
Amount involved: US$ 18,742,278.79.
Plaintiff
: C i b r a p e l S / A I n d u s t r i a d e P a p e l y
Embalajes
Defendant
Court
Case/Identification : 1998.073.000018-6
: Ampla
: Single Chamber of Guapimirim County
Summary of Proceedings: 1) Plaintiff asks the court to order Ampla to
indemnify the material and other damages caused by the poor quality
of the services rendered by Ampla between the years 1991 and 1998.
2) Plaintiff asks the court to order Ampla to refund the amounts paid
as a result of the price increase implemented following administrative
resolutions 38 and 45 of 1986, which have been considered illegal, both
by the government and by the courts.
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CONSOLIDATED FINANCIAL STATEMENTS
Process status: On September 18, 2006, Ampla submitted a filing making
observations about the report of the expert appointed by the court. On
November 14, 2006, the court issued a resolution requiring the parties
to submit final allegations within 10 days.
Amount involved: US$ 31,347,290.86.
Plaintiff
Defendant
: AFCONT – Asociación Fluminense del
Consumidor y Trabajador y ANACONT
– Nacional de Asistencia al Consumidor y
al Trabajador
: AMPLA, LIGHT, ANEEL, Unión Federal,
Eletropaulo Metropolitana de São Paulo,
CEMIG Compañía Energética de Minas
Gerais.
Plaintiff
: Qualita’s Tecnología y Servicios Ltda and
Symon de Souza Coury
Defendant
Court
Case/Identification : 2005.002.024695-9
: Ampla
: 4th Civil Court of Niteroi County
Court
: 7° Juzgado Federal de la Comarca de Río de
Case/Identification : 2004.51.01010086-9.
Janeiro.
Summary of Proceedings: The plaintiff brought this suit pleading that
it had been created to serve Ampla since October, 1999 and that this
contract should be in force until March 31, 2009, being able to be
extended. The plaintiff petitioned for redress for material damages and
moral prejudice caused by an alleged unilateral annulment of the contract
by Ampla, which would have caused the plaintiff damages of about R$
54,000,000 (fifty four million reales).
Summary of Proceedings: Civil Class Action brought on June 1, 2004
petitioning the review of the Defendants’ tariffs, by reason of the ruling
by the Official Auditing Office of la Unión, which ruled that the tax benefit
generated by the distribution of interest on the corporate equity should
not be considered for tariff review purposes. The suit is for restitution
of twice the amounts paid for supply tariffs as of 11/2003, as well as
compensation for moral prejudice.
Process status: On September 15, 2006, Ampla filed a petition stating
that it intended to produce expert accounting evidence, evidence of
witnesses and supplementary proof of private documents. On November
14, 2006, Ampla lodged an appeal against the terms of the decision
rejecting the preliminary petitions (delaying actions) brought in its first
plea for the defense.
Amount involved: US$ 27.367.908,14
Plaintiff
Defendant
Court
Case/Identification : 2000.004.012307-7
: General Attorney’s Office
: Ampla and the Municipality of Sao Goncalo
: 4th Civil Court of Sao Goncalo County
Summary of Proceedings: Towards the end of 2002, there was a charge
for financing street lighting of the municipalities, called “Street Lighting
Charge” (TMIP). Ampla had signed agreements with municipalities inside
its concession area with a view to collecting this TMIP charge, including it
in its bills. The constitutional validity of this charge has been challenged,
so Ampla, who is simply the collector, has been involved as a defendant
in this proceeding, in which the charge is being challenged. Consistent
with the above, Ampla alleges in the proceeding that it is simply the
collector of this charge, and is not liable.
Process status: On July 1, 2005 and August 8, 2005, the letters of
summons of Eletropaulo Metropolitana de São Paulo S.A. (Eletropaulo)
and Compañía Energética de Minas Gerais (CEMIG), respectively,
were attached. Eletropaulo raised a plea of Lack of Jurisdiction, which
was admitted, and the decision was handed down for the proceeding
involving Eletropaulo to be continued in the 11th Federal Court of São
Paulo. On September, 6, 2006, the court records were remitted to the
Public Prosecutor’s Office and returned on September 11, 2006.
Amount involved: Undeterminable.
Plaintiff
: Association of Townspeople of Recanto dos
Arcanjos-Amora
Defendant
Court
: Ampla
: 1st Civil Chamber of the Town of Saint
Case/Identification : 2002.004.003639-2
Gonzalo
Summary of Proceedings: The people of Recanto dos Arcanjos-Amora,
through their Association of Inhabitants, launched this action requiring
that Ampla carry out the installation of an electricity network for all
inhabitants currently without electricity in the Recanto dos Arcanjos
housing development.
Process status: Ampla was ruled to not be liable. The ruling declared
the charge of the Street Lighting Maintenance Tariff (TMIP) to be
illegal, determining that the Municipality of São Gonçalo should
abstain from collecting the tax via Ampla. On July, 27, 2005, the
Public Prosecutor’s Office requested that the court records of the
6th Civil Court of the Region of São Gonçalo should be sent to it.
The judge determined that Ampla should abstain from including the
TMIP or other charges, taxes or services in the monthly invoices of
the consumers of São Gonçalo without the express authorization of
each consumer individually. Ampla was enjoined to comply with the
ruling of the Courts of Law. On July 13, 2006, Ampla’s injunction was
attached to the court records.
Amount involved: Undeterminable.
Process status: On May 22, 2006, the court handed down a ruling
rejecting the recourse of appeals filed by Ampla and upholding instead
the lower court ruling. On July 12, 2006, the court ordered the compliance
with the ruling against which Ampla appealed. Afterwards, the plaintiff
started the execution of a penalty for late compliance. On November 6,
2006 the proceedings were remitted to the Attorney General’s Office and
returned to the court on November 16, 2006 with a decision favorable
to Ampla.
Amount: Undeterminable
Plaintiff
: Consumer Defence Commission of the
Legislative Assembly of the State of Rio de
Janeiro
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Defendant
Court
: Ampla
: 8th Business chamber of the County of Rio
Case/Identification : 2002.001.115854-5
de Janeiro
Summary of Proceedings: Plaintiff launched this action stating that on
September 7, 2002, there was a wind storm in the entire state of Rio de
Janeiro that affected the supply of electrical energy and caused damaged
to the population. It charges that Ampla failed to provide adequate service
due to the storm, but that this event cannot be considered Force Majeure
because it was perfectly predictable. Plaintiff demands that Ampla pay its
consumers the amount of 1/30 of the basic rate multiplied by the No.of
days (three) in which service was not provided, as well as that Ampla be
ordered to pay all damages suffered by consumers, including the pain
caused to them by the inability to function with electricity.
Process status: Plaintiff filed a Special Recourse which entered the
court under No. 2006.135.11857. On August 31, 2006 Ampla filed its
allegations against the Special Recourse. On November 23, 2006, the
Special Recourse was dismissed.
Amount: Undeterminable
supply was shut off and refrain from further electric energy shut-offs of
any user or consumer due to illegal actions performed by them (whether
stealing of energy or fraud) or because of the fact that they may be late
in payments, if no ordinary administrative or legal proceedings have
been started in connection with them; (iii) no collection of debts from
consumers, unless they arise out of a regular court trial.
Process status: Ampla appealed against the decision that did not accept
attachments on July 17, 2006, and the appeal was rejected. Against
such court decision, Ampla filed a Special Recourse on August 28,
2006. On September 19, 2006, the court called on the Plaintiff to submit
allegations. On October 27, 2006, the recourse went to “Procuraduría
General de Justicia”. On December 6, 2006, the recourse is sent to the
3rd Vice President, who must decide whether or not the recourse meets
the requirements to be discussed by the court.
Amount: Undeterminable
Plaintiff
Defendant
Court
: Consumer Defence Commission of the
Legislative Assembly of the State of Rio de
Janeiro
: Ampla
: 7th Business chamber of the State of Rio de
Plaintiff
: Núcleo de Defensa do Consumidor -
Janeiro
NUDECON
Case/Identification : 2005.001.084370-8
Defendant
Court
Case/Identification : 1999.001.168990-1
: Ampla and Light
: 8th Chamber of Rio de Janeiro Commercial
Summary of Proceedings: Group civil action launched on December 13,
1999, with the objective of preventing the cut of the electrical supply
to consumers late in payment of their bills, as well as consumers who
have stolen electricity.
Process status: The actions submitted to the higher courts: Extraordinary
injunction 2004.134.02040 and Special Injunction 2004.135.04122.
The Extraordinary Injunction was not accepted by the Court of Justice
of Rio de Janeiro. This decision was appealed by means of Instrument
2004.136.06485, by Ampla, to get the injunction accepted. While this
appeal is awaiting resolution, the Special Injunction was admitted and
redirected to the high court of justice on March 15, 2005 and is also
awaiting judgement. On March 7, 2006, the Special Injunction sent to
the high court of justice was voted upon, and a unanimous decision
pronounced as illegitimate the NUDECON.
Amount: Undeterminable
Plaintiff
: Brazilian Consumer Defence Association
(ADCON)
Summary of Proceedings: This is a Public Civil action launched in
order to prevent the installation of electronic measurement meters.
The plaintiff states that this modernisation’s only purpose is to prevent
theft of electricity and would actually deprive consumers of their right
to information. Plaintiff argues that it is Ampla’s responsibility to detect
electricity theft in other ways and not put the burden on the consumer.
Process status: Ampla submitted allegations against the Appeal filed
by the Plaintiff and the proceedings were then remitted to the Justice
Court. The Appeal entered the court under No. 2006.001.22785 and
was distributed to the 15th civil chamber of the court. The court, by
unanimous decision, rejected the appeal, which was published on
August 16, 2006. The Plaintiff then filed a Special Recourse, with the
proceedings being remitted to the 3rd Vice-presidency of the court. On
October 16, 2006 Ampla submitted its allegations. On October 25, 2006,
the proceedings were remitted to the “Procuraduria General de Justicia”
and were returned on November 22, 2006.
Amount: Undeterminable
Plaintiff
Defendant
Court
: State Attorney General’s Office
: Ampla
: 2nd Civil Chamber of Town of Saint
Defendant
Court
: Ampla
: 8th Business chamber of the County of
Case/Identification : 2003.004.034117-9
Gonzalo
Case/Identification : 2004.001.017223-0
Brasilia
Summary of Proceedings: (i) No registration of consumers late in
payments on records of Services for Credit Protection, and removal
of registrations already made, while proceedings continue at court of
law; (ii) the restoration of electric energy supply to all consumers whose
Summary of Proceedings: Plaintiff launched the Public Civil Action
requesting first that Ampla be ordered to “supply the regular consumers
of Saint Gonzalo a quality electrical energy service without interruptions,
and take all measures necessary to prevent such interruptions, even if in
order to achieve this it must restructure all of its equipment; in the event
it is absolutely necessary to interrupt the supply, then the restoration of
2006 Annual Report | 177
CONSOLIDATED FINANCIAL STATEMENTS
supply must be immediate or the fine shall be R$10,000 a day.
until the case is decided.
Process status: The Ampla appeal was accepted by the court, which
called upon the plaintiff to submit allegations against it. On November
6, 2006, the plaintiff’s allegations were added to the proceedings., which
were sent to the judge since November 28, 2006.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case/Identification : 2003.023.041682-7
: Town of Itaborai
: Ampla
: 2nd Civil Chamber of County of Itaborai
Summary of Proceedings: The Town of Itaborai filed a Public Civil Action
against Ampla so that the Defendant (i) refrains from interrupting the
supply of electrical energy of the consumers of this Town, even if they are
in debit, because this is an essential and continuous service, compelling
Ampla to forthwith take measures necessary to provide continuity and
reliability of the supply service in the entire town, under penalty of a fine
of R$200 (200 reales) per day for each consumer inconvenienced; (ii)
be ordered to pay a fine of R$10,000 for each day that it fails to comply
with the sentence in (i).
Process status: Court to hand down its ruling.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case/Identification : 2000.002.007345-7
: Town of Niterói
: Ampla
: 6th Civil Chamber of Niterói County
Summary of Proceedings: The Town of Niterói launched this action
requiring the removal of posts situated in places that are supposedly
inadequate. At issue is the question of paying for the removal of the
posts.
Process status: On April 10, 2006, the proceedings returned from the
court of appeals to its original lower court. On May 29, 2006 the order
requiring that the court decision appealed against be complied with, was
published. On August 29, 2006, the proceedings were remitted to the
Attorney General’s Office and were returned on September 21, 2005.
Amount: Undeterminable
Plaintiff
: Anacont National Association of Consumer
and Worker Assistance
Defendant
Court
: Ampla and Town of Angra dos Reis
: 2nd Civil Chamber of the County of Angra
Process status: Ampla and the Plaintiff filed Appeals. The court has not
yet issued a resolution regarding those appeals.
Amount: Undeterminable
Plaintiff
: National Association of Consumer and Worker
Assistance
Defendant
Court
: Ampla
: 1st Civil Chamber of the County of Angra dos
Case/Identification : 2003.003.003327-0
Reis
Summary of Proceedings: Plaintiff required Ampla to give early
warning to its customers in the event of shut-off of electric supply due
to default in payments, asking the court to set a daily fine to ensure
effectiveness.
Process status: On November 7, 2006 a resolution was issued denying
jurisdiction to the Federal Justice, given the obvious interest of ANEEL
in the suit.
Amount: Undeterminable
Plaintiff
Defendant
Court
: National Consumer and Worker Assistance
Association and Attorney General’s Office
: Ampla and Town of Cachoieras de Macacu
: 2nd Civil Chamber of the County of Cachoieras
Case/Identification : 2004.012.000013-9
de Macacu
Summary of Proceedings: The plaintiff launched this action requiring the
suspension of the CIP (Contribución de Iluminación Pública) charge and
that the Defendants be ordered to refund amounts charged.
Process status: The appeal filed the General Attorney’s Office entered
the court under No. 2006.001.26010. The proceedings have already
been sent to the judge.
Amount: Undeterminable
Plaintiff
Defendant
: Marcos Enrique Sousa de Magalhães
: Ampla, State of Rio de Janeiro, EDP
- Electricidade de Portugal S/ A (EDP),
Sociedad Panameña de Electricidad S. A.,
Endesa Desarrollo S.A., and Empresa
Eléctrica de Panamá S.A.
Court
: 2nd Public Finance Chamber of the County
of Brasilia
Case/Identification : 2002.003.001624-5
dos Reis
Case/Identification : 1996.001.128021-4
Summary of Proceedings: This is a Public Civil Action in which the
plaintiff requires that Ampla be condemned to refrain from charging a
fee for the public lighting of the Town of Angra dos Reis, as well as to
refund double the amount paid by the consumers for the inappropriate
charge. It bases its petition on the illegality and unconstitutionality of
the charge and requires the suspension of the charge for public lighting
Summary of Proceedings: The plaintiff objects to the sale by the state of
Rio de Janeiro of its shares in the equity of the former Cerj and requests
the annulment of the edict, the suspension of the sale of the shares
and the declaration of nullity of the bidding as well as the sentencing
of the Defendants to compensate the public treasury for the damages
it has suffered.
Process status: The Securities Commission answered the court order,
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reporting that, since a closely-held company is involved, it has no
way of knowing its address, because it only oversees publicly-traded
corporations. The court called on the parties to discuss the Securities
Commission report. On September 27, 2006 the proceedings were
remitted to the General Attorney’s Office.
Amount: Undeterminable
Plaintiff
: Macao Consumer and Worker Defence
Association
Defendant
Court
: Ampla
: Single Chamber of the County of Río das
to reimburse double the amount received for this charge, and that the
Defendants pay the costs related to the trial.
Process status: On July 17, 2006, Ampla informed the court that it was
not interested in a conciliation hearing. The judge called on the General
Attorney’s Office to decide on the granting of power in advance. On
September 11, 2006, the proceedings were remitted to the General
Attorney’s Office. On October 31, 2006 a ruling was handed down
denying the plaintiff’s petitions.
Amount: Undeterminable
Case/Identification : 2004.068.001287-1
do Janeiro
Ostras
Plaintiff
: General Attorney’s Office of the State of Rio
Summary of Proceedings: The plaintiff launched this action requesting
partial power in advance to prevent the Defendant from charging the
TMIP (“Tasa Municipal de Iluminación Pública”), and requesting that
Ampla be required to refund the amounts wrongly charged and pay the
costs of the trial.
Process status: The court called on the plaintiff to make a filing regarding
the answer filed by Ampla.
Amount: Undeterminable
Plaintiff
: National Citizen and Consumer Defence
Institute (INDECCON)
Defendant
Court
: Ampla
: Single Chamber of the County of Río das
Case/Identification : 2005.001.069542-2
Ostras
Summary of Proceedings: The plaintiff launched this action requesting
that the bill for the consumption of electricity be sent to the customer
with two different bar codes, one referring to the actual consumption
and the other for the levying of the CIP. It requested power in advance
with erga omnes effect for the whole state of Rio de Janeiro, the input
of the Attorney General’s Office as well as a list of cities that levy the
CIP collected by Ampla.
Process status: On August 1, 2006, Ampla alleged that INDECCON
does not have legitimacy, adding to the trial a report stating some courts
which have pronounced INDECCON’s illegitimacy to file public actions.
On November 27, 2006, the proceedings were remitted to the General
Attorney’s Office.
Amount: Undeterminable
Plaintiff
: National Institute of Defence of Citizen
Consumer - INDECCON
Defendant
Court
: Ampla and Light
: 7th Business Chamber of the County of Rio
Case/Identification : 2005.001.073480-4
de Janeiro
Summary of Proceedings: The plaintiff launched this action requesting
power in advance to order the suspension of the charge of a fee for
normal reconnection, or any fee with this intention, with effect erga omnes
for the entire state of Rio de Janeiro, the ordering of the Defendants
Defendant
Court
Case/Identification : 2005.002.024755-1
: Ampla
: 5th Civil Court of Niteroi County
Summary of Proceedings: The plaintiff launched this action requesting
that the bill for the consumption of electricity be sent to the customer
with two different bar codes, one referring to the actual consumption
and the other for the levying of the CIP. It requested power in advance
so that bills allow to pay the consumption of electricity separately from
the CIP.
Process status: On March 8, 2006 the court accepted Ampla’s
argumentation regarding the interest of the State in the issue. As a
result, on March 8, 2006, a decision was published that denies the
jurisdiction of that court in favor of the 6th Civil Court of the Niteroi
County/Ministry of Finance, given the interest of the State in the issue.
The General Attorney’s Office objected to this decision, which was
rejected, a resolution published in the Official Gazette of May 9, 2006.
Amount: Undeterminable.
Plaintiff
: Commission for the Defense of Consumer in
the Legislative Assembly of the State Rio de
Janeiro
Defendant
Court
Case/Identification : 2006.51.01.003191-1
: Ampla and ANEEL
: 5th Federal Court of Rio de Janeiro
Summary of Proceedings: The plaintiff requests: 1) That the Authorizing
Resolution nº 201, of May 30, 2005, which authorized the installation of
electronic metering, be revoked, for Ampla to return to the use of the old
consumption metering system. 2) That Ampla be prohibited to suspend
the supply of electric energy to those clients that stop paying the invoices
sent after the implementation of the electronic metering system due to
differences between the consumption measured during this period with
their previous consumption. 3) The granting of a protective measure
inhibiting the cutting of supplies to those clients that cease to pay the
invoices sent after the implementation of the new electronic metering
system. 4) The setting of a daily fine to insure compliance with the
protective measure if it were granted. 5) Condemn Ampla to publish
the sentence ruling in two large circulation newspapers in the Capital.
6) Condemn Ampla to pay back twice the amounts overcharged the
clients. 7) That Ampla be condemned to pay for material and moral
harm suffered by the clients.
Process status: On September 4, 2006, Ampla presented its reply,
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CONSOLIDATED FINANCIAL STATEMENTS
arguing, in brief, the efficiency of the electronic metering system and
constitutionality of the ANEEL resolution, which authorized Ampla to
implement the electronic metering system. On September 29, 2006, the
resolution denying the protective measure requested, was published.
Amount: Undeterminable.
Plaintiff
: General Attorney’s Office of the State of Rio
do Janeiro
Defendant
Court
Case/Identification : 2005.011.005968-1
: Ampla
: 1st Civil Court of Cabo Frío County
Summary of Proceedings: The plaintiff filed this lawsuit requesting that
in anticipation of protection, that Ampla perform an enquiry among all
electric energy consumers, for them to authorize the joint charge for
the electric energy tariff and the Contribution for Public Lighting (CPL)
in the consumption invoices, or opt for the separate payment of each
of these.
Process status: On July 26, 2006, Ampla answered arguing that it does
not choose the way CPL is charged, ant that it is merely the collection
agent for the tax. On October 30, 2006, the plaintiff answered. On
November 17, 2006, a resolution was published for the parts to present
evidence. On November 24, 2006, Ampla presented a request stating
that it does not plan to submit evidence.
Amount: Undeterminable.
Plaintiff
: Centro Comunitario de los Residentes y
Asistencia Social del Apolo y Adyacencias
Itaboraí
Defendant
Court
Case/Identification : 2005.023.009672-2
: Ampla
: 1st Civil Court of Itaboraí County
Summary of Proceedings: The plaintiff filed this lawsuit to request: 1) The
granting of the protective measure for Ampla to not withdraw the meters
from the homes of consumers. 2) The confirmation of the protective
measure, condemning Ampla to not withdraw the meters. 3) As an
alternative request, that Ampla be obliged to restitute twice the amount
consumers had to pay for the purchase of new meters. 4) Condemn
Ampla to perform the substitution of the new meters by the old meters,
without cost to the consumer. 5) Condemn Ampla to publish the sentence
ruling in two large circulation newspapers in the Capital.
Process status: On January 27, 2006, was published a resolution
accepting the protective measure and ordering Ampla to abstain from
disconnecting the meters already installed in the homes of the consumers
which are proven members of the plaintiff. Process in the instruction
stage. On October 24, 2006, Ampla presented a request informing that
it plans to submit oral and documentary supplementary evidence.
Amount: Undeterminable.
Plaintiff
: General Attorney’s Office of the State of Rio
do Janeiro
Defendant
Court
: Ampla and Municipality of Paraty
: Single Court of Paraty County
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Case/Identification : 2005.041.001008-9
Summary of Proceedings: The plaintiff brought this suit petitioning, by
way of advanced tutelage, sentencing of the Municipality of Paraty to
abstain from collecting the Contribution for Street Lighting (CIP), under
penalty of a fine of R$ 50,000.00 (US$23,277.46) and, additionally,
that Ampla should be compelled to collect the CIP separately, although
on the same energy consumption bill, using different bar codes, under
penalty of a fine of R$ 10,000.00 (US$ 4,666.79).
Process status: Ampla submitted its plea for the defense on July 4, 2006,
pleading preliminarily the lack of legitimacy of the Public Prosecutor’s
Office to bring this suit, and that the Public Criminal Indemnification
Action is not the appropriate medium for discussing collection of the tax.
It also proved that it was not infringing Resolution 456/2000.
Amount: Undeterminable.
Plaintiff
Defendant
Court
Case/Identification : 2005.041.001124-0
: Municipality of Paraty
: Ampla
: Single Court of Paraty County
Summary of Proceedings: The plaintiff brought this suit petitioning
for: 1) Acceptance of the precautionary measure for Ampla to abstain
from shutting off the power supply services, under penalty of a fine of
R$10,000.00 (US$4,666.79) to be applied to each non-compliance of
the delegated order, without detriment to any other possible penalties;
2) That Ampla should maintain the regularity of the system of supply and
maintenance of the power transmission grid in satisfactory conditions for
the users; 3) That Ampla should be sentenced to submit and execute
within a reasonable period of time a project to modernize the grid,
consisting of improvements to the power transmission equipment and
lines in the area of the Municipality of Paraty; 4) the injunction for the
Public Prosecutor’s Office to be a party to or to act in the case as custos
legis; and 5) The injunction of the Granting Power in the case, the State
of Río de Janeiro, to express an interest in the case through its legal
representative.
Process status: On November 10, 2006, the court records were remitted
to the lawyer’s office of the Municipality and returned on November
13, 2006. The court records are expected to be remitted to the Public
Prosecutor’s Office.
Amount: Undeterminable.
Plaintiff
: Núcleo de Primer Atendimiento de la
Defensoría Pública de la Comarca de Três
Rios
Defendant
Court
Case/Identification : 2003.063.009822-6
: Ampla and Light
: 1st Civil Court of Tres Rios County
Summary of Proceedings: The Plaintiff petitions for: a) Articles 75
and 76 of Resolution DNAEE No. 466 of November 12, 1997, which
stipulate the causes for suspension of the power supply, to be declared
unconstitutional; b) specific granting of advanced tutelage to (1) determine
the immediate reestablishment of power to consumers with the above
service cut off; (ii) suspend collection of debts imposed unilaterally by
the Defendants in light of the verification of irregularities in consumption,
and (iii) exclusion of the name of delinquent consumers from the record
of debtors; c) that the petition to make the granting of advanced tutelage
definitive should be deemed admissible.
Process status: On May 29, 2006, the sentence deeming the petition
admissible was decreed, determining that the Defendants should abstain
from suspending or interrupting the power supply.
Amount: Undeterminable.
Plaintiff
: Brazilian bar of lawyers, Section of the Rio
Defendant
: Municipality of Conceicao of Macabu and
de Janeiro State, Subsection 15th
Court
: Single Court of Conceicao of Macabu
Ampla
Case/Identification : 1998.018.000024-9
County
Summary of Proceedings: The Plaintiff brought this suit petitioning for a
precautionary measure to determine that the Municipality of Conceição
de Macabu should be compelled to not enforce collection of charges for
Urban Services and Street Lighting, and on the intrinsic rights determined
by substance rather than form for the precautionary measure to be
ratified, with Ampla being notified to abstain from incorporating the Street
Lighting Charge (TIP) into its electricity bills.
Process status: On November 13, 2006, the sentence was handed
down stating that the proceeding involving the petition to cease
collecting the TIP had abated due to a lack of any surviving procedural
interest (insofar as the question of the TIP has already been ruled on
by the Courts), determining the petition made to declare the collection
of the TSU improper to be admissible and to consider the proceeding
to have been abated, without analyzing the rights and wrongs of the
substance of the case, based on article 267, VI of the CPC, with regard
to Ampla.
Amount: Undeterminable.
Plaintiff
: Organization of the Society of Angra dos Reis
(OSCAR)
Defendant
Court
: Ampla and Town of Angra dos Reis
: 2nd Civil Chamber of the County of Angra
Case/Identification : 2002.003.005590-1
dos Reis
Summary of Proceedings: In this action the plaintiff requires the
suspension of the charging of the “Tasa de Iluminación Pública” (TIP)
incorporated in the electricity consumption bills of the consumers of the
Town of Angra dos Reis, starting on the date on which the defendant is
summoned to the court, and that the court pronounce that the charge
is not effective.
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Defendant
Court
Case/Identification : 2006.017.000168-5
: Ampla
: Single Court of Casimiro de Abreu County
Summary of Proceedings: The Plaintiff asks for: a) concession of
guarantee so that AMPLA can grant in the electricity accounts of
registered consumers in the City of Casimiro de Abreu, to be issued
and in those that were already issued, and in which they were issued
but not paid, a discount of 50% of the price to pay for energy supply, until
they finish the work of connection with the Silva Jardim Sub-station or
a Casimiro de Abreu sub-station is built, to minimize the problems from
which the population suffers from the blackouts and power fluctuations; b)
the application of a daily fine of R$10,000 (US$ 4,666.79), to be reverted
to the Plaintiffs for the improvement or enlargement of the network of
electrical energy within the City’s jurisdiction, until the conclusion of the
work of connection with the Silva Jardim sub-station; and c) the finding of
indemnification of damages to property exiting until the end of the suit.
Process status: Trial in evidence presenting stage. On November 21,
2006, Ampla presented an answer pointing out, in summary, that the
connection work of the Silva Jardín and Rocha León sub-stations were
finished in August, for which reason the said action lost its objective.
Amount: Undeterminable
Plaintiff
: Organization of the Society of Angra dos Reis
(OSCAR)
Defendant
Court
: Ampla
: 1st Civil Chamber of the County of Angra dos
Case/Identification : 2003.003.010569-4
Reis
Summary of Proceedings: In this action the plaintiff requires that the court
prohibits Ampla to suspend the supply of electrical power to consumers
late in payments, and that it condemns Ampla to a penalty of 1,000 reales
for each consumer late in payments to whom the electricity supply has
been cut off.
Process status: Court is examining complaint. On November 21, 2006,
a ruling was handed down pronouncing that the facts invoked no longer
exist.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case/Identification : 2005.004.074298-1
: Jorge Luiz Gasco
: Ampla
: 4th Civil Court of Sao Goncalo County
Summary of Proceedings: The Plaintiff presented this action requiring the
concession of a guarantee so that Ampla could interrupt the operation
of substitution of the electricity consumption meters in the City of São
Gonçalo and that such substitution be declared illegal.
Process status: On November 14, 2006, the proceedings were remitted
to the General Procurator’s Office so that they hand down a ruling.
Amount: Undeterminable
Process status: On July 26, 2006, sentence was handed down and the
trial was declared finished.
Amount involved: Undeterminable.
Plaintiff
: Casimiro de Abreu Municipal Chamber
Plaintiff
: ASOBRAEE – Brazilian Association of
2006 Annual Report | 181
CONSOLIDATED FINANCIAL STATEMENTS
Consumers of Water and Electricity
Defendant
Court
Case/Identification : 2006.002.002621-4
: Ampla
: 5th Civil Court of Niteroi County
Summary of Proceedings: The Plaintiff presented this action requiring
that the DNAEE nº 038 and 045 Resolutions of 1986 be declared null.
These resolutions established the rate adjustment, for which AMPLA
may be condemned to the restitution of the improper charge, equivalent
to 20% of what it would have charged all the consumer in the period
from March to November 1986, as well as to force Ampla to present the
complete schedule of payments made for all of the consumers in the
period from March to November 1986.
Process status: The Plaintiff was required to respond to the answer
offered by Ampla.
Amount involved: Undeterminable.
Plaintiff
: ANDEC – National Association of Credit
Consumers
Defendant
Court
: Ampla
: 3rd Business Court of Rio de Janeiro
Case/Identification : 2006.001.024920-5
County
Summary of Proceedings: The Plaintiff presented this action requiring the
condemnation of Ampla in the return to all the consumers who fall into
the definition of “consumer” contained in art. 2º of the CDC, the amounts
paid in excess for the use of electrical energy in the period between
February 27, 1986 until November 27, 1986, on account of the presumed
illegal increase imposed by the Ports DNAEE nº 038 045 of 1986, duly
increased with statutory interest and inflation adjustment; “the settlement
and carrying out of the sentence, as well as the reversion of the Fund,
created by Law nº 7347/85, will be performed in accordance with the
rules established by the CDC and in the Law of Civil Public Action.
Process status: Awaiting the requirement for the parties to present their
evidence.
Amount involved: Undeterminable.
Plaintiff
: ANDEC – National Association of Credit
Consumers
with the rules established by the CDC and in the Law of Civil Public
Action.
Process status: Awaiting the requirement for the parties to present their
evidence.
Amount involved: Undeterminable.
Plaintiff
Defendant
Court
Case/Identification : 2002.002.025734-2
: Consumer Defense Association
: Ampla
: 5th Civil Court of Niteroi County
Summary of Proceedings: This is a Collective Civil Indemnification Action
promoted by the Consumer Defense Association, with a view to receiving
refunds of the amounts paid in excess by their associates for use of
electricity from February 27, 1986 to November 27, 1986, by reason of
the allegedly illegal increase as a result of Resolution DNAEE 038 045
of 1986, duly increased by legal interest and monetary correction.
Process status: Ampla was summoned on November 28, 2006, and,
after attaching the certificate of due compliance with the summons in
the court records, such will be picked up from the Notary Public’s Office
so that it can presents its defense.
Amount involved: Undeterminable.
Plaintiff
Defendant
: Ampla
: Cooperativa de Electrificación Rural
Sanjoanense (CERSAN)
Court
Case/Identification : 99.020.8621-7
: 1st Federal Chamber of Niterol County
Summary of Proceedings: This action seeks rescission of the electrical
energy supply contract and federal permit of the Rural Electrification
Co-operative, because service is to customers in the Ampla Concession
area, and because monthly bills are overdue for electrical energy supplied
for the past few years and which add up to R$ 15 million. There are
other actions to collect the debt from the Co-operative that have been
launched by Ampla before the State justice system.
Process status: Court is to hand down ruling.
Amount: Undeterminable
Defendant
Court
: Ampla
: 2nd Business Court of Rio de Janeiro
Plaintiff
Defendant
: Ampla
: Teresópolis-Friburgo Electrification Co-
Case/Identification : 2006.001.024911-4
County
Summary of Proceedings: The Plaintiff presented this action requiring
the condemnation of Ampla in the return to all the consumers who do
not fall into the definition of “consumer” contained in art. 2º of the CDC,
the amounts paid in excess for the use of electrical energy in the period
between February 27, 1986 until November 27, 1986, on account of the
presumed illegal increase imposed by the Ports DNAEE nº 038 045 of
1986, duly increased with statutory interest and inflation adjustment; “the
settlement and carrying out of the sentence, as well as the reversion of
the Fund, created by Law nº 7347/85, will be performed in accordance
operative (CERTEF)
Court
Case/Identification : 2000.51.02.000030-1
: 1st Federal Chamber of Niteroi County
Summary of Proceedings: This action seeks rescission of the electrical
energy supply contract and federal permit of the Rural Electrification
Co-operative, because service is to customers in the Ampla Concession
area, and because monthly bills are overdue for electrical energy supplied
for the past few years and which add up to R$ 9 million. There are other
actions to collect the debt from the Co-operative that have been launched
by Ampla before the State justice system
Process status: The ANEEL informed the court that it is interested in the
182
| 2006 Annual Report
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issue and that it is finishing a report with the findings of the examination
of CERTEF. The court is becoming acquainted with the proceedings.
Amount: Undeterminable
Defendant
Court
: Federal Union
: 2nd Federal Chamber and 4th TRF Chamber
Case/Identification : Ordinary Action No.96.0035653-0 and Civil
of the 2nd Region
Plaintiff
: Co-ordination of Consumer Defence -
Appeal No.98.02.21000-5 (d.1)
CODECON/SG
Defendant
Court
: Ampla
: 4th Civil Chamber of the Town of Saint
Case/Identification : 2003.004.043260-4
Gonzalo
Summary of Proceedings: This is the Public Civil Action in which CODECON/
Saint Gonzalo required that AMPLA be prohibited from suspending the
supply of electrical energy to the consumers of Saint Gonzalo when they
fail to pay their monthly bill, under penalty of a fine of R$ 500 per day, and
that Ampla be ordered to refrain from suspending the supply of electrical
energy to the consumers of Saint Gonzalo for delay in payment of their
monthly bill. Input is required from the Attorney General’s Office.
Summary of Proceedings: Plaintiff is asking from the court the following:
1) The declaration of Ampla’s immunity from payment of the tax called
COFINS; and 2) That the Federal Union be ordered to refund payments
made under COFINS in the past five years, adjusted and increased as
statutorily required and based on the ruling of the court handed down
in trial No.92.0113589-4.
Process status: On December 6, 2006, the court decision rejecting
Ampla’s recourse was published. On December 11, 2006, a filing was
made asking the court to clarify its omission of the second point of
Ampla’s petition.
Amount: US$ 36,741,510.19
Process status: On July 6, 2006, a ruling was handed down, rejecting the
petition contained in the Public Civil Action, on the grounds that Ampla is
under no obligation of performing its operations free of charge.
Amount: Undeterminable
: Federal Union
Plaintiff
: Ampla
Defendant
: Special Body of TRF in the 2nd Region
Court
Case/Identification : Rescission Action No.97.02.09655-3 (d.2)
Plaintiff
: Union of Workers in the NiteróI Electrical
Energy Industry representing a class action
suit by 2841 employees
Defendant
Court
Case/Identification : Labour Complaint 884/1989
: Ampla
: Niterói Work Chamber
Summary of Proceedings: In April 1989, the Niterói Union, in
representation of 2841 employees, launched an action claiming salary
differences of 26.05% since February 1989 that were related to the
economic plan instituted by Decree Law 2.335/87, or “Summer Plan”.
Process status: Ordinary proceedings have finished. The current
discussion centers around the execution of the ruling, because in this
regard a filing has been made arguing that the ruling has already been
executed.
Amount: US$18,735,556.27
Plaintiff
Defendant
Court
ID Number
: Selma de Souza and 122 other plaintiffs
: Ampla
: 2nd Employment Chamber of Niterói
: Work Complaint No.3142/1995
Summary of Proceedings: The plaintiffs were fired by the Company
and demand to be reinstated and to have their right of employment
stability recognized.
Process status: Through an Unnamed Incidental Precautionary Action,
filed in Rio de Janeiro, it was possible to carry out the termination of
these employees, which occurred on December 7, 2005.
Amount: US$ 27,278,537.53
Plaintiff
: Ampla
Summary of Proceedings: The Federal Union filed a rescission action
against Ampla with the TRF 2nd region, in order to rescind the decision
(passed in trial No.92.0113589-4) that recognized Ampla’s immunity from
the requirement to withhold the COFINS tax. The lower court ruling in
the rescission action was favorable to Ampla. If the higher court grants
the rescission action of the Federal Union, Ampla would have to pay in
all the COFINS that it did not pay over as a result of the ruling passed
in trial No.92.01134894, which recognized Ampla’s immunity from the
requirement to withhold the COFINS tax.
Process status: On November 3, 2005, the resolution of the Rio de
Janeiro Tribunal was published (TRF – decision of Dec/03) that rejected
the rescission action filed by the Ministry of Finance meant to repeal
the ruling favorable to Ampla that granted the latter immunity from the
COFINS tax. The publication of this resolution was critical if the Federal
Union was to appeal against it with the Superior Tribunal of Justice
in Brasilia. On December 1, 2005, the Ministry of Finance filed, with
the Rio de Janeiro Tribunal, a recourse seeking a clarification of the
resolution.
Amount: US$ 217,963,885.95
Plaintiff
Defendant
Court
: Ampla
: Federal Union
: 4th Federal Chamber of Niterói and 4th Group
of the TRF of the 2nd Region
Case/Identification : Ordinary Action No.96.0035387-5 and Civil
Appeal No.1999.02.01.047064-8 (d.4)
Summary of Proceedings: Ampla seeks to obtain the declaration that
the tax-legal relationship (tax immunity) does not exist as regards the
payment of the tax called FINSOCIAL, which would have an impact on
its gross monthly revenue. It also seeks to have the Federal Union forced
2006 Annual Report | 183
CONSOLIDATED FINANCIAL STATEMENTS
to refund the total amount collected in the last five years, starting from
October 1996 and, if the foregoing is not possible, that the Federal Union
be made to refund the difference between the amount paid in accordance
with Laws 7,787/89 , 7,784/89 and 8,147/90, and that due in accordance
with Decree Law No.1.940/82, in the same period referred to above.
Process status: The lower court’s decision declared without grounds the
request for immunity, but accepted the petition to declare unconstitutional
the increases in the FINSOCIAL tax rate above 0.5% and the right to
offset the said excess in current and future taxes due. The appeals of
Federal Union and Ampla were filed. The proceedings were sent to
Federal Regional Court where they are currently awaiting a judgement
on the two appeals.
Amount: US$ 15,295,482.56
Plaintiff
Defendant
Court
: Ampla
: Federal Union
: 3rd Group – Federal Regional Court of the 2nd
Region and 1st Federal Court of Niterói.
Case/Identification : Lawsuit 98.02.07129-3 and Appeal against
Lawsuit 1998.51.02.207129-6 (d.5) Lawsuit
98.02.02033-8 and Appeal against Lawsuit
2000.02.01.055412-5 (d.6).
Summary of Proceedings: Compensation of Tax Losses – This is about a
lawsuit against the Commissary in charge of collection of federal income
taxes in Niterói, that seeks to ensure that Ampla has the right to recover
wholly the tax losses in order to determine the calculation basis for its
income tax on a legal person and the negative calculation basis for the
purposes of the Corporate Contribution on Net Profit for the years 1993,
1995 and 1996, with the profits generated in the base-years 1998 and
following, without submitting to the limit of 30% of the taxable profit.
Process status: On December 14, 2006 the decision by the Regional
Federal Court of the 2nd Region on one of the two lawsuits was
published. This decision was unfavorable to Ampla. From this time, a
period of 30 days commenced, which ended on January 12, to pay the
difference in taxes to the Brazilian treasury without applying the fine of
20%. The amount associated with this process was R$ 234.9 million
(US$ 109.3 million).
However, given the unlikelihood of being successful in the superior courts
of justice, the decision of Ampla was to pay the total sum associated
with the two lawsuits initiated by Ampla, which amounted to R$ 240.7
million (US$ 111.9 million) with the purpose of ending the contingency
involved in the to trials and all the records of infraction against the tax
code already reported. On January 11, 2007 Ampla paid to the Brazilian
government the sum of R$ 240.7 million (US$ 111.9 million).
Amount: U$ 111,949,118,37
Plaintiff
: Secretary of the Federal Collecion Tax
(Brazilian IRS)
Defendant
Court
Case/Identification : Infraction Proceeding No.00218 and
Administrative Trial No.10730.002007/99-24.
: Ampla
: Federal Income Tax Commissary
Summary of Proceedings: A demand for tax credit relating to the PIS
184
| 2006 Annual Report
contribution, with the objective of preventing the prescription of amounts
entered judicially plus interest due on arrears.
Process status: On June 7, 1999, Ampla presented its opposition to the
Infraction Proceeding, which was accepted by the Federal Collecion
Tax court. As a result of this, Ampla tabled a voluntary action, which
was partially recognized by the 3rd Chamber of the 2nd Council of
taxpayers of the Ministry of Finance, at least to exclude the interest
charged on arrears by the Federal Collecion Tax (IRS) Court. Currently
the proceedings are in the Federal Collecion Tax court of Niteról.
Amount: US$ 23,814,436.91
Plaintiff
: Secretary of Federal Collecion Tax (Brazilian
Defendant
Court
ID Number
IRS)
: Ampla
: Commissariat of the Niterói Federal Collecion
Tax
: Infraction Proceeding 0710200/00112/05 and
Administrative Trial 10730.003110/2005-55
Summary of Proceedings: Sanction action filed by the Federal Tax
Collection Office (SRF) on July 1, 2005 for the alleged failure to withhold
and collect the Income Tax on remittance of amounts abroad. The SRF
filed such sanction action, as it considered that the mutual contracts
entered into by Ampla and Cerj Overseas are a simulation of what
actually is the payment (amortization) of Fixed Rate Notes (FRN’S).
Accordingly, the SRF concluded that the average term required by law
of 96 months for the application of the aliquot of zero income tax was
not complied. Ampla is obliged to withhold and pay the income tax on
the remittances abroad as an amortization of the FRN’s.
Process status: March 8, 2006: Ampla was notified in regard to the
judicial decision of administrative first instance, which maintained the
decision against it. April 5, 2006: The Company filed an appeal at the
Tax Payers Council (second administrative instance). For this purpose,
the Company indicated assets for 30% of the updated minute..
Amount: US$ 242,196,158.70.
Plaintiff
Defendant
Court
Case/Identification : Trial No.2002.001.110494-9
: Ampla
: State of Rio de Janeiro
: Superior Court of Justice
Summary of Proceedings: Lawsuit filed with the aim that the authorities
refrain from taking any action to collect the ICMS tax established by
Decree No.31.632/02.
Process status: On September 2, 2002 Ampla filed a claim and
obtained a preventive measure; however, such measure was nullified
by the judicial decision that considered such claim as inadmissible.
Ampla filed an appeal, which was also rejected by the 15th Civil
Chamber. Finally, the Company filed special and extraordinary
appeals, which were originally admitted but subsequently rejected
by the Judge at the Supreme Court. On December 15, 2005 the
decision made by Judge João Otávio of Noronha was published.
This decision refused Ampla´s request regarding the appeal being
urgently ruled, as the emergency need was not considered as such.
On September 21, 2006 the Minister of Economy decided the closing
of the administrative proceeding and the start of the judicial collection
of the debt, based on Rio de Janeiro State Prosecuting Attorney’s
opinion that states that this proceeding cannot follow its normal steps,
as Ampla had filed a claim before against the law of the State that
decided the prepayment of the tax.
Amount: US$ 50,760,861.41
COELCE S.A.
Plaintiff
Defendant
Court
Case/Identification : 2000.01122.6248-0/0
: Inácio Nunes Arruda & Others.
: Coelce.
: 2nd Court of Public Finance - Ceará
Summary of proceedings: Popular action whose objective is to
cancel the sales process of Coelce. The plaintiffs allege that in the
process of privatization of Coelce there was no participation of the
employees of Coelce; shares were not offered to the employees
in sufficient numbers, and thus they were prevented from gaining
control of the Company; that the bidding terms and conditions favored
the participation of foreign companies and removd the incentive for
employees of the Company; that there was insufficient pulicity in
the bidding; that the public stockholders’ equity of Fortaleza was
damaged; etc.
Process status: Faced with the activation of the process there was no
protest of any kind by the plaintiffs. The trial awaits the judge’s verdict.
Amount: Undeterminable.
Plaintiff
Defendant
Court
Case/Identification : 2000.0013.4212-7 (Court of appeals) –
: Libra - Ligas Do Brasil S/A.
: Coelce.
: Court of Ceara State, in Brazil
1997.02.22643-0 (lower court)
Summary of proceedings: This is a “Trial for Tarifazo”, that
corresponds to the different trials begun as a result of the
dictation of rate decrees 38, 45 and 153 of 1986, by the National
Department of Water and Electrical of Brazil (formerly ANEEL),
which enabled the different electricity companies of Brazil to
increase their rates considerably between the months of March
and November 1996.
Process status: The trial returned to the lower court for the performance
of an expert investigation, for which Coelce was ordered to show certain
documents. Now it is waiting for the resolution signaling the beginning
of the investigation.
Amount: US$ 16,029,263.37
Plaintiff
Defendant
Court
Case/Identification : None
: Bar of Lawyers of Brazil and Others
: Coelce.
: Supreme Court of Justice
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of preventing the application of the rate adjustment (percentage 23.59%)
authorized by ANEEL in April 2005.
Process status: The Supreme Court judge suspended on October 7,
2005 the guarantee that prevented the adjustment from being applied.
Thereby, the concessionaire may apply from that date on the above
mentioned adjustment. Coelce had to suspend the retroactive collection
of the installments generated by the time in which the guarantee made
it impossible to put the adjustment into effect. The guarantees are
expected to be annulled and Coelce will be able to re-begin collecting
the remaining installments.
Amount: US$ 44,000,000
COMPAñíA DE INTERCONEXION ENERGéTICA S.A.
Plaintiff
Defendant
: Maximiliano Nagl Garcez and Aldino Beal
: Companhia Paranaense de Energia (COPEL),
Companhia de Interconexao Energética
(CIEN), Governor of Paraná: Jaime Lerner,
State of Paraná, Agencia Nacional de Energía
Eléctrica (ANEEL).
Court
Case/Identification : 2001.70.00.039775-7
: 8ª Federal Court of Curitiba - PR
Summary of proceedings: A politically motivated lawsuit presented October
22, 2001 (i) to pay for the privatization of COPEL and (ii) to annul the
contracts signed with CIEN for the sale of 800 MW with the following data:
The reasons presented by the Plaintiffs to back up their claims are, among
others, the following: (i) The contracts between Cien and COPEL bring
significant losses to COPEL and also the real intention of the parties to
the contract were to obtain, via a contract for the purchase of energy, the
financing of private companies; (ii) COPEL supplies the energy at a lower
price that that stated in the contract with CIEN; (iii) The energy supplied
by Cien through 20 years is not necessary, because in Paraná there is
an energy surplus; (iv) The fine specified in case of rescission is illegal,
providing a great advantage to Cien and none to COPEL; (v) There was
no bidding for contract that was awarded to Cien; (vi) Absolutely no public
objective existed; (vii) Although the government of the State of Paraná
recognized that COPEL is a highly productive and competitive company,
the only justification for privatizing it was that its potential share value was
at an all time high; (viii) The advantages of controlling COPEL are much
greater than any other program that the government can carry out.
Process status: The lawsuit was launched on December 7, 2001. On
March 1, 2006 the judge declared the trial at an end, without a resolution
and without awarding fines, since (i) the privatization process of Copel
was cancelled and (ii) there was a renegotiation of the contracts, implying
the loss of a reason to sue. Copel and the plaintiffs presented an appeal,
respectively, July 12 and 18 of 2006, and on August 14, 2006. Copel
asked in its request for the case to be thrown out of court, while the
plaintiffs presented a recourse asking for the respondent (Copel) to be
required to pay settlement and costs. On October 23, 2006 the trial
was remitted to the Regional Federal Court of the 4th Region. A second
instance decision is expected.
Amount involved: US$227,893, 917.10.
Summary of proceedings: Civil public action launched with the objective
Plaintiff
: Municipality of Garruchos
2006 Annual Report | 185
CONSOLIDATED FINANCIAL STATEMENTS
Defendant
: Companhia de Interconexao Energética
(CIEN)
Court
: 1st Civil Chamber of the Court of the State
Case/Identification : 70013356134
of Rio Grande do Sul
11, 2005 free justice was finally awarded to the plaintiffs. On November
4, 2005 the decision was published in the government press. The
return of the court proceedings to the lower court is expected, so that
the suit can continue.
Amount involved: Undeterminable
Summary of proceedings: Appeal for “agravio de instrumento” (where
case is remitted to another court without being ended) with application
for guarantee launched by City of Garruchos against the decision
handed down in the Ordinary Lawsuit nº 10500005929, presented in
July 2005 against Cien and against the State of Rio Grande do Sul,
which decided to send the case to the Law Judge of the district of Itá
- Santa Catarina for the verdict, according to the decision of the Code
of Brazilian Civil Trial, considering that the lawsuits are connected (with
identical objectives).
Process status: August 15, 2006 - Cien presented an appeal for the
case to be thrown out on a technicality with a request for attribution
of the moderating effects, questioning the active legitimacy of the City
of Garruchos in the absence of the necessary “interest in suing” and
of the legal impossibility of the initial request for the ordinary lawsuit
and, therefore, the total rejection of the suit. On October 4, 2006, the
request by Cien for the case to be thrown out was deemed inappropriate.
Considering that Cien is already a respondent in the case, the Company
is now deciding whether or not to appeal against this decision.
Amount involved: None.
Plaintiff
Defendant
: Municipality of Cachoeira Dourada
: Centrais Elétricas Cachoeira Dourada S.A.
– CDSA
Court
Case/Identification : 200503342330
: Public Finance Court of Itumbiara County
Summary of proceedings: Treasury Action: Payment by Cdsa of the tax
on the transmission of real estate already argued judicially and won by
Cdsa, with sentence in judicial suit Nº 9801713704.
Process status: On November 14, 2006 the judge handed down a
decision rejecting the defense of Cdsa, respecting the wishes of the
public prosecutor in the sense that the tax collected is not the same
collected in the Treasury Action of 2000, whose decision was favorable
to our company. Cdsa asked for this decision to be thrown out on a
technicality and, failing that, might still launch “Debtor Embargos” as
defense in the execution by presenting guarantees in the trial.
Amount involved: R$200.000.000.
Plaintiff
Defendant
: Municipality of Cachoeira Dourada
: Centrais Elétricas Cachoeira Dourada S.A.
CENTRAIS ELéCTRICAS CACHOEIRA DORADA S.A.
– CDSA
Plaintiff
Defendant
: Wildson Sebastiao Fraga Guimaraes
(shareholder of Centrais Elétricas de Goias
(CELG) and chairman of the “Sindicato dos
Trabalhadores nas Industrias Urbanas no
Estado de Goias”.
: State of Goias, Centrais Elétricas de Goias
(CELG), Centrais Elétricas Cachoeira
Dourada S/A (CDSA).
Court
: 3rd Court of Public Finance of the County of
Case/Identification : 97009045073
Goiania
Summary of proceedings: Politically motivated lawsuit launched on
September 23, 1997, asking for the cancellation of the public auction
to privatize Cdsa. This lawsuit has been presented against the State of
Goiás, CELG and Cdsa. The plaintiff asks also for free justice.
Process status: The suit was launched on September 23, 1997 against
the State of Goiás, which required the participation of CELG and
of Cdsa as necessary co-litigants. On March 12, 2001 CELG took
exception to the value initially given to its case, and its request was
granted. Cdsa presented a response and the plaintiff presented a reply.
On August 29, 2003 ordered the plaintiff to prove his state of poverty,
and accordingly, the plaintiff presented proof of his state. On July 18,
2005, the Justice Daily Newspaper published the decision giving the
plaintiffs free access to the justice system. On July 27, 2005 a resource
was presented against the decision granting free justice. On October
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Court
Case/Identification : None
: Municipal Secretary of Finance
Summary of proceedings: Administrative (Infraction notification). The
city of Cachoeira Dourada has informed CDSA through an “Infraction
notification” that this Company owes the city the tax on services for the
generation of electrical energy.
Process status: An administrative appeal is launched, considering that the
federal constitution prohibits the incidence of tax o services to be applied
to electrical energy. The City is expected to answer our defense.
Amount involved: R$ 23.640.824,59
CENTRAL GERADORA TERMELECTRICA FORTALEZA S.A.
Plaintiff
Defendant
Court
: Secretariat of the Federal Collection Office
: CGTF
: 3rd Fiscal Region: Alfândega do Porto de
Case/Identification : 0317600/00212/04
Fortaleza
Summary of proceedings: “Infraction notification” launched to prevent the
loss of the right to charge import tax and tax on industrialized products in
importation, imposed on the assets imported for the construction of the
generating station. The import tax was not accepted, due to the incorrect
recording on the declaration of import of the government classification
of machines, systems and equipment. This Infraction notification refers
to the tax not accepted by virtue of the guarantee granted for these
procedures in the Ordinary Lawsuit nº 2002.81.00.020687-1.
Process status: On January 31, 2006 the Infraction Notification was
learned about. On February 24, 2006 – an appeal against it was
launched. Management will speak up about this only after a verdict
is reached.
Amount involved: R$ 56,696,112.50
Plaintiff
: CGTF - Central Geradora Termelétrica
Defendant
Court
Case/Identification : 2002.81.00.020687-1
Fortaleza S.A.
: Federal Union
: 1st Federal Court of Ceará
Summary of proceedings: CGTF presented a lawsuit against Federal
Union, objecting to the issue of only one declaration of imports for
the two functional units composed of gas turbo-generators and for
the functional unit composed of steam turbo-generators and other
equipment, as well as to proceed to the partial customs dispatch,
the early delivery of the imported equipment and the treasury
classification as electrogenic group (portion 0% of import tax and tax
on industrialized products, which means a tax saving of approximately
US$ 15 million.
Process status: In the main lawsuit: Cgtf required the verdict ahead of
time because it considers there was already enough evidence in the
case. In the case “Declaratória Incidental” (declaration of the existence
of a right) : The Union presented resource and the proceedings have
been finished since June 24, 2004. Second instance verdict is expected
for the appeal launched by he Union from June 24, 2005, against the
resolution that was favorable to Cgtf.
Amount involved: R$ 147.483.066,71
COMERCIALIZADORA DE ENERGIA DEL MERCOSUR S.A.
(CEMSA)
Plaintiff
Defendant
Court
Case/Identification : 718/06
: Central Piedra Buena S.A.
: CEMSA
: Buenos Aires Stock Exchange
Summary of proceedings: On November 17, 2006, CPB sued Cemsa
for the damages caused by the rescission of the agreement of 250MW,
(supposedly) exclusively the responsibility of Cemsa. The amount asked
for is US$ 12,225,525 plus interest for damages, plus the cessation of
profits, an indeteterminate sum.
For damages, CPB means the price of the 250 MW of firm energy
committed in the agreement for 250 MW and that CIEN did not pay
and that Cemsa has invoiced partially to CIEN in virtue of considering
exclusively the technical availability of the CPB power plant,less than
the 250 MW committed, and the price of the totality of the energy that
was supplied from the month of April 2005 until the date of this report,
and which was not paid, with more contractual interest on the amount
unpaid.
As for cessation of profits, CPB demands for the rescission of the
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agreement of250 MW of firm power, owing to Cemsa’s responsibility,
and not being able to sell in the futures market or in other exporting
operations, the power committed in the agreement. The suit also asks
for the declaration of rescission of the agreement for 250 MW from
February 1st, 2006 and that a direct order be issued to CAMMESA so
that the energy from the generating units of CPB be removed from the
export to Brazil and CPB may sell it them in the futures market.
CPB also accuses Cemsa of gravely illegal conduct by charging a
commission and breaking the rules set by CPB when it charged CIEN
for amounts of energy that did not match, in the opinion of CPB, what
was indicated in the agreement for 250 MW and what was instructed by
CPB. It also states that Cemsa gave priority to its own personal interests
and to the interests of third parties who form part of the group of control
of Cemsa over the interests of the client (CPB) when it did not sue and
thus favored CIEN.
Process status: On November 22, 2006, Cemsa answered the suit
rejecting it in all its terms and launched a counter suit against CPB for
the damages it suffered from the untimely ending of the contractual
relationship. Similarly, it formulated reservations to demand the possible
damages that could stem from CPB’s attitude.
Amount involved: US$12,225,525 plus interest on damages and
undetermined cessation of profits.
TRANSPORTADORA DE ENERGíA S.A. (TESA)
Plaintiff
Defendant
Court
Case/Identification : T-53/03
: Transportadora de Energía S.A. (Tesa)
: Province of Corrientes
: Supreme Court of the Nation
Summary of proceedings: Tesa initiated a statement of certainty action
against the Province of Corrientes, for the Supreme Court to declare that
the activity carried out by the company in the province is under federal
jurisdiction and therefore exempt from the Gross Business Income Tax
that the Province of Corrientes currently demands.
It also requested an injunction, to order the General Revenue Department
of the Province of Corrientes to abstain from demanding Tesa the
payment of the mentioned tax.
Process status: The Supreme Court (the “Court”) on July 15, 2003,
resolved
(i) That it was competent to see the cause;
(ii) Notify the Province of Corrientes of proceedings;
(ii) Issue the injunction requested by Tesa (to not innovate) in relation
to the payment of the gross business income tax included in the Fiscal
Code of the Province of Corrientes with regard to the activity carried
our by Tesa, in the following terms: “Decree the injunction requested,
and consequently, orders the Province of Corrientes to abstain from
pursuing the fiscal execution of the gross business income tax regarding
the contract signed on July 12, 2002 between the National State and
2006 Annual Report | 187
CONSOLIDATED FINANCIAL STATEMENTS
Transportadora de Energía S.A. for the construction, operation and
maintenance of the second circuit for electric energy transport of the
Nodo Rincón de Santa María-Nodo Frontera Garabí section (Province
of Corrientes).
On August 29, 2003, the Government of Corrientes was notified by
official letter of the injunction granted by the Court.
After being notified, the Province of Corrientes answered the demand
stating that the Provincial Revenue Department had made no current
and concrete requirement to Tesa for the payment of the Gross Business
Income Tax and therefore there was no controversy between the parts
that entitled the intervention of the Court.
In spite of the Province having stated in their reply that it corresponded
charging Tesa the Gross Business Income Tax to the activity performed
by Tesa, the Court stated that no there was no case, since the there is
no requirement from the Provincial Revenue Department demanding the
payment of the Gross Business Income Tax. Once there is a requirement
to pay the Gross Business Income Tax, the demand can be raised again.
Notwithstanding the archiving of the demand, the Court regulated fees
in favor of the lawyer for the Province of Corrientes for $37.600, amount
that has already been paid by Tesa. On July 6, 2005, the lawyer for the
Province of Corrientes presented a letter of payment in favor of Tesa and
manifesting that he had no further claim. In the case that the Provincial
Revenue Department makes a concrete requirement that Tesa pay the
Gross Business Income Tax, the demand must be reopened. Until that
happens, this is the last report regarding this lawsuit.
Amount involved: Undeterminable
COMPAñíA DE TRANSMISIóN DEL MERCOSUR S.A. (CTM)
Plaintiff
: Compañía de Transmisión del Mercosur S. A.
(CTM)
Defendant
Court
Case/Identification : C-222/03
: Province of Corrientes (in Argentina)
: Supreme Court of the Nation
Summary of proceedings: Ctm initiated a statement of certainty action
against the Province of Corrientes, for the Supreme Court to declare that
the activity carried out by the company in the province is under federal
jurisdiction and therefore exempt from the Gross Income Tax that the
Province of Corrientes currently demands. It also requested an injunction,
to order the General Revenue Department of the Province of Corrientes
to abstain from demanding Ctm the payment of the mentioned tax.
Process status: The Supreme Court (the “Court”) on August 21, 2003,
resolved
(i) That it was competent to see the cause;
(ii) Notify the Province of Corrientes of proceedings;
(ii) Issue the injunction requested by Ctm (to not innovate) in relation
to the payment of the gross business income tax included in the Fiscal
Code of the Province of Corrientes with regard to the activity carried
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our by Ctm, in the following terms: “Decree the injunction requested,
and consequently, orders the Province of Corrientes to abstain from
pursuing the fiscal execution of the gross business income tax regarding
the contract signed on June 14, 2000 between the National State and
Compañía de Transmisión del Mercosur S.A. for the construction,
operation and maintenance of the second circuit for electric energy
transport of the Nodo Rincón de Santa María-Nodo Frontera Garabí
section (Province of Corrientes). The Province of Corrientes was notified
of the demand and answered stating that there was no current and
concrete requirement for the payment of the gross business income
tax.
Likewise, it stated that according to express dispositions of the
Provincial Fiscal Code, it corresponded that CTM S.A. pay the
Gross Business Income Tax and the inapplicability Federal Pact for
Employment, Production and Growth by which some provinces, including
Corrientes, had committed to eliminate the Gross Business Income Tax.
CTM S. A. rebutted each of the arguments invoked by the province in
its presentation.
Later, the Province of Corrientes requested the lifting of the injunction,
presentation that was opportunely answered by Ctm S.A. On April 5,
2005, the Court rejected the request for the lifting of the injunction.
On September 9, 2005, Ctm S.A. requested the cause be opened to
evidence and the CSJN set the conciliation audience for November
9, 2005.
In the mentioned audience, the parts manifested that it was not possible
to achieve conciliation. As a result, the case was opened to evidence.
On March 13, 2006 the Court certified that the term for evidence was
expired without any evidence pending and it instructed the parts to
present their arguments regarding the evidence presented.
CTM argued on the evidence produced. The proceedings passed to
the Attorneys Office on September 8, 2006. At December 27, 2006, the
proceedings had not returned from the Attorneys Office.
Amount involved: Undeterminable
CODENSA S.A.
Plaintiff
: Roberto Ramírez Rojas (Class action
lawsuit).
Defendant
: Codensa, Bogotá Capital District and Alcaldía
Zonal de San Cristóbal.
Court
: Cundinamarca Administrative Court, Third
Case/Identification : Case file 03-1473.
Section - Sub-section “B”.
Summary of proceedings: The Circo Victoria transmission line I and
II was built by Empresa Eléctrica de Bogotá in 1962, when the site in
which the towers holding it are located, was not populated. However,
when Codensa was born as a legal entity, on October 23, 1997, one of
those towers (No.731) was surrounded by buildings put up after 1983
but prior to 1996. The plaintiff demands protection for the following
collective rights: a healthy environment; sanitization, security and
prevention of technically foreseeable disasters; that buildings abide by
statutory regulations.
Plaintiff
Defendant
: Maria Elena Teresa Sola Ruedi
: E n d e s a , M i n i s t e r o f E c o n o m y, a n d
Superintendent of Electricity and Fuels.
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Process status: The State Council is to decide on the appeals filed by
each party.
Amount: Undeterminable.
Plaintiff
: Conjunto Residencial Iguazú (Class act-like
lawsuit).
Defendant
Court
: Codensa and Soacha City Government.
: Cundinamarca Administrative Court, Fourth
Case/Identification : 03-01342.
Section - Sub-section “B”.
Summary of proceedings: Codensa S.A. ESP was providing the service
of public lighting to the Soacha district since the inception of the company
(on October 23, 1997). The public lighting infrastructure in the Soacha
district is mostly owned by Codensa, through a contribution from Empresa
Eléctrica de Bogotá (together with other assets).
Soacha district called on bidders for the service of public lighting,
the winner being “Soacha Ciudad Luz”, a temporary entity with
which district representatives entered into concession contract
No.004 on January 19, 1999. Codensa did not take part in the
concession contract. However, after that contract had been
executed, Sociluz hired Codensa to supply electricity, and rented
the Codensa infrastructure, billing and collection systems. These
are the conditions under which Codensa is related to the rendering
of public lighting services in Soacha.
Process status: The State Council is to decide on the appeals filed by
all the parties.
Amount: Undeterminable.
Plaintiff
: Jorge Ernesto Salamanca Cortés y Luis
Alejandro Montero.
Defendant
: Codensa, Nación – Ministerio de Minas
– Unidad de Planeación Minero Energética.
: 3rd Administrative Court of Bogotá Circuit
Court
Case/Identification : 05-2357
Summary of proceedings: In 14 areas of Bogotá there are at least 35
built-up quarters more than 25 years old where the high and medium
voltage grid is “located in an anti-technical manner at several points,
including in the front gardens of several houses”, so that people
are seen to be exposed to the risk of electrocution. The players
consider that, as it is laid out, the grid creates a huge risk to which
Condensa has not paid sufficient attention. Consequently, they are
petitioning the Constitutional Judge to order the Company to lay
the grid underground.
Process status: It is in the period allowed for producing evidence.
Amount: Undeterminable.
ENDESA S.A. (PARENT)
Court
Case/Identification : 4340-2004
: Santa Barbara Court of First Instance
Summary of proceedings: The demand is to change the easement
regime for expropriation, and payment for a larger flooded surface. If
the foregoing fails, re-assessment of the indemnity amount paid for the
easement is demanded.
Process status: The court rejected Endesa’s allegations that the court
was incompetent and the plaintiff had abandoned the proceedings.
Endesa appealed against this court resolution.
Amount: Undeterminable.
Plaintiff
Defendant
: Jaime Arrieta Correa and others
: Treasury of Chile, General Direction of Water
and Endesa S.A.
Court
Case/Identification : 198-2005
: First Civil Court of Valdivia
Summary of proceedings: The annulment by operation of public law is
requested of the resolution No.134, of March 22, 2000, issued by the
General Direction of Water, which constitutes in favor of Endesa a right
to use water to carry out the Neltume Power Plant project, with payment
of damages. Failing the foregoing, plaintiffs request payment of damages
supposedly caused to them, namely the fact that their properties no
longer are located on the shores of Lake Pirehueico and the deterioration
of their value.
Process status: Endesa made pleas for its defense, whereas the Treasury
of Chile made a filing requesting the court to correct the proceedings, in
connection with which the court asked the submission of evidence.
Amount: Undeterminable
Plaintiff
Defendant
: Inversiones M.D. Ltda. and others
: Treasury of Chile, General Direction of Water
and Endesa S.A.
Court
Case Identification : 7957-2005
: 24th Civil Court of Santiago
Summary of proceedings: The annulment by operation of public law is
requested of the resolution No.134, of March 22, 2000, issued by the
General Direction of Water, which constitutes in favor of Endesa a right
to use water to carry out the Neltume Power Plant project, with payment
of damages. Failing the foregoing, plaintiffs request payment of damages
supposedly caused to them, namely the fact that their properties no
longer are located on the shores of Lake Pirehueico and the deterioration
of their value.
Process status: The court issued a resolution prohibiting that contracts
or other legal actions be executed in connection with Endesa’s water
rights associated with the Neltume Project. The court suspended the
proceedings until it decides whether or not the case must be accumulated
with the following: Lawsuit of the 9th Civil Court, case No. 15279-2005,
2006 Annual Report | 189
CONSOLIDATED FINANCIAL STATEMENTS
called “Arriega vs. Treasury of Chile and Others”; and the lawsuit in the
10th Civil Court, case No. 1608-2005, called “Jordan vs. Treasury of Chile
and Others”. As to the proceedings themselves, now comes the stage
when the court will have to call on the parties to produce evidence.
Amount: Undeterminable
Plaintiff
Defendant
: José Manuel Jordán Barahona and others
: Treasury of Chile, General Direction of Water
and Endesa S.A.
Court
Case Identification : 1608-2005
: 10th Civil Court of Santiago
Summary of proceedings: The annulment by operation of public law is
requested of the resolution No.134, of March 22, 2000, issued by the
General Direction of Water, which constitutes in favor of Endesa a right
to use water to carry out the Neltume Power Plant project, with payment
of damages. Failing the foregoing, plaintiffs request payment of damages
supposedly caused to them, namely the fact that their properties no
longer are located on the shores of Lake Pirehueico and the deterioration
of their value.
Process status: Endesa is yet to appeal against the court resolution
that resolved on the petitions, submitted by the parties, requesting that
the proceedings be corrected. The court issued a resolution indicating
the points about which the parties can produce evidence. The term for
submitting evidence has been suspended, however, because the court
has not yet decided on Endesa’s petition that the notification made to
it of the resolution indicating the points about which the parties can
produce evidence, be declared null and void.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case Identification : 13084-04
: Endesa Pangue S.A. and Pehuenche S.A.
: Treasury of Chile
: Ninth Civil Court of Santiago
Summary of proceedings: The annulment by operation of public law
is requested of ministerial resolution No.35, dated June 15, 2004,
issued by the Minister of Economy, Development and Reconstruction,
in which the latter authority pronounces on an issue that was originally
not contentious, that of instructing CDEC-SIC to determine the times of
day with the highest probability of loss of electric current.
Process status: The court summoned the parties to hear the
judgement.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case/Identification : 4563
: Luis Danús Covian and other fifteen people
: Endesa and Pangue S.A.
: Santa Bárbara lower court
Summary of proceedings: A lawsuit was filed calling on the court to
declare that over Fundo Ralco (Ralco Ranch) there is a commonwealth
of which plaintiffs and defendants are members and on which they all
have co-owners’ rights.
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Process status: Endesa and Pangue S.A. dropped the request that
the lawsuit be notified to approximately 600 people as co-plaintiffs,
because the court ruled that Endesa and Pangue S.A. had to pay for
these notifications. The defendants made filings requesting the court
to correct the proceedings.
Amount involved: Undeterminable.
Plaintiff
Defendant
Court
: Endesa
: YPF
: Arbitration Court of the International Chamber
Case Identification : 14210/CCO
of Commerce (CCI)
Summary of proceedings: Compensation for damages caused to Endesa
is being claimed by reason of non performance by YPF of contracts for
the supply of natural gas signed by the parties for the Tal Tal Power
Station.
Process status: On October 5, the court issued Procedural Order No. 1,
which sets the calendar for the proceedings and the rules for producing
evidence, with this period for producing evidence now ongoing.
Amount involved: The current damages to Endesa at December,
2005 are estimated at US$ 31,442,461 and future damages are
assessed at US$ 322,412,217.
PANGUE S.A.
Plaintiff
Defendant
Court
Case Identification : 13084-04
: Endesa, Pangue S.A. and Pehuenche S.A.
: Treasury of Chile
: Ninth Civil Court of Santiago
Summary of proceedings: The annulment by operation of public law
is requested of ministerial resolution No.35, dated June 15, 2004,
issued by the Minister of Economy, Development and Reconstruction,
in which the latter authority pronounces on an issue that was originally
not contentious, that of instructing CDEC-SIC to determine the times of
day with the highest probability of loss of electric current.
Process status: The court summoned the parties to hear the
judgement.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case/Identification : 4563
: Luis Danús Covian and other fifteen people
: Endesa and Pangue S.A.
: Santa Bárbara lower court
Summary of proceedings: A lawsuit was filed calling on the court to
declare that over Fundo Ralco (Ralco Ranch) there is a commonwealth
of which plaintiffs and defendants are members and on which they all
have co-owners’ rights.
Process status: Endesa and Pangue S.A. dropped the request that
the lawsuit be notified to approximately 600 people as co-plaintiffs,
because the court ruled that Endesa and Pangue S.A. had to pay for
these notifications. The defendants made filings requesting the court
to correct the proceedings.
Amount involved: Undeterminable.
PEHUENCHE S.A.
Plaintiff
: Endesa, Pangue S.A. and
Pehuenche S.A.
: Treasury of Chile
: Ninth Civil Court of Santiago
Defendant
Court
Case Identification : 13084-04
Summary of proceedings: The annulment by operation of public law
is requested of ministerial resolution No.35, dated June 15, 2004,
issued by the Minister of Economy, Development and Reconstruction,
in which the latter authority pronounces on an issue that was originally
not contentious, that of instructing CDEC-SIC to determine the times of
day with the highest probability of loss of electric current.
enersis06
termination and archiving of the proceedings will be ordered.
Amount: Undeterminable.
Plaintiff
Defendant
: 380 people of different locations
: Central Hidroeléctrica de Betania S.A.
E.S.P.
Court
: Several courts in the departments of Huila
Case/Identification : Non-contractual civil liability
and Tolima
Summary of proceedings: Central Hidroeléctrica de Betania S.A. ESP.
is being sued for its liability in the floods occurring in 1986, 1989, 1994
and 1999, which allegedly swept away and damaged crops and lands
of the various plaintiffs.
Process status: Some lawsuits have already received their first
appealable judgment; others are in the evidence state, and in others
the pleas for the defense are being made; in other words, they are in
the initial stage.
Amount involved: US$8.909.980
Process status: The court summoned the parties to hear the
judgement.
Amount: Undeterminable
EMGESA S.A.
CENTRAL HIDROELéCTRICA DE BETANIA S.A.
of Sibaté
Plaintiff
Defendant
: Fariel San Juan
: Central Hidroeléctrica de Betania S.A.
Defendant
: Emgesa S.A. ESP. Empresa de Energía
de Bogotá S.A. ESP.- EEB-Corporación
Autónoma Regional - CAR -
E.S.P.
Court
: Administrative Court of Cundinamarca - First
Plaintiff
: Orlando Enrique Guaqueta and Inhabitants
: 3th and 4th Civil Courts of Neiva Circuit
Court
Case/Identification : Class action motivated by the impact that
the construction of the dam will have on the
economy of the region.
Summary of proceedings: Construction of system that would allow transit
of fish at mating season.
Keeping water at equitative level and ordering Central Hidroeléctrica de
Betania S.A. to conduct compensatory development projects, such as
a fish processor and packing.
Process status: The proposed compliance agreement was submitted
to the 3rd Court on April 18 of this year. This agreement was approved
by the judge by means of a judicial writ issued on September 25,
2006. This activity is already being carried out through the Company’s
Environmental Division. Once the commitments acquired have been
complied with, the termination of the proceedings and filing of the case
records will be decided.
The compliance agreement hearing was held last August 30, 2006 in
the Fourth Court. The resulting obligation for the Company involves
undertaking two studies for developing tourist projects in the region,
which shall be developed by the municipality of Yaguará and/or by the
Governor’s Office of Huila. The deadline for submitting the studies is
February 1, 2007. This compliance agreement was approved by judicial
writ on September 8, 2006. Once the studies have been delivered, the
Case/Identification : Class Action
Section
Summary of proceedings: The claim was filed so that the Entities are
severally liable for the damage caused by the pollution in El Muña dam,
as a result of the pumping by Emgesa S.A. ESP of polluted waters from
the river Bogotá.
Process status: In a resolution of August 9, 2006, notified to the parties
on August 10, 2006, the court decided to accumulate this lawsuit with
the class action of Miguel Angel Chávez.
Amount: US$1,200,000,000
Plaintiff
Defendant
: Gustavo Moya
: Emgesa S.A. ESP, Empresa de Energía
de Bogotá S.A. ESP, the Capital District
of Bogotá, Empresa de Acueducto y
Alcantarillado de Bogotá, the City Hall of
Sibaté and other plants and government
agencies that presumably contribute to the
pollution of the river Bogotá by action or
omission.
Court
: Administrative Court of Cundinamarca -
Case/Identification : Class Action
Fourth Section
Summary of proceedings: That the entities being sued should be declared
liable for damages caused to the environment as a result of storing raw
2006 Annual Report | 191
CONSOLIDATED FINANCIAL STATEMENTS
sewage above the El Muña Reservoir. This proceeding was added to
the proceedings addressing the pollution of the Bogotá River.
Process status: Via judicial writ dated November 30, 2006, Section
One of the State Council, in a tutelage decision of November 30 of
the same year, confirmed the decision of Section Five of the same
body, which rejected the tutelage suite instituted by the Ministry of the
Environment, Housing and Territorial Development against the Magistrate
Nelly Villamizar, who forms part of Subsection “B” of Section Four of the
Administrative Court of Cundinamarca, as being unfounded.
Amount involved: Undeterminable.
Plaintiff/Tax Creditor :
Defendant/Taxpayer : Corporación Autónoma Regional de
Cundinamarca - CAR
Emgesa S.A. ESP.
Court
: Administrative Court of Cundinamarca – First
Section
Case/Identification : Action seeking nullification of decrees and
then re-establishment of right
Summary of proceedings: That the administrative decrees issued by
the CAR (Resolution 506 of March 28, 2005 and 1189 of July 8, 2005)
should be declared null and void and Emgesa’s rights, which had been
violated by their issue, since they impose works to be performed in
the Muña reservoir, on whose effectiveness maintenance of the water
concession depends, should be reestablished. The grounds for dissent
are: (i) Imposition of the obligations of others on the Company. (ii)
Imposition of a nonexistent community of interests. (iii) Disregard and
obligatory jurisdiction of court decisions. (iv) It imposes a countervailing
measure in favor of the Municipality of Sibaté unjustly and without any
legal foundation.
Process status: On October 6, 2006, the defendant was ordered to
proceed to defend the suit, after which such defendant took exception
to all the plaintiff’s claims.
Amount involved: US$ 70,700,000 (approx.)
EDEGEL S.A.
Plaintiff/Tax Creditor :
Defendant/Taxpayer : Edegel
Court
Case/Identification : n/n
: Sunat
Sunat
Summary of proceedings: Tax Note - 2000 Supervision - 2000 Fiscal
Year Income Tax
Process status: Court is yet to issue a resolution.
Amount involved: US$24,511,109.38
ENDESA COSTANERA S.A.
On July 25, 1990 the Italian Government authorized Banco Medio
Crédito Centrale to grant the Argentinean Government a loan up to
US$93,995,562 intended for financing the acquisition of assets and the
rendering of Italian source services, used in the reconditioning of four
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| 2006 Annual Report
groups of the steam-electric powerplant owned by Servicios Eléctricos
del Gran Buenos Aires (“SEGBA”). Such loan financed the acquisition
of assets and services indicated in the Work Order No.4322 (the Order)
issued by SEGBA on behalf of a trust leaded by Ansaldo S.P.A., an
Italian company.
In virtue of the terms in the “Agreement regarding the Work Order
No.4322”: i) SEGBA granted Endesa Costanera S.A. a mandate through
which it administered the rendering of the services included in the Order
and performed the work and services that corresponded to SEGBA, in
conformity with the Order; and ii) Endesa Costanera S.A. was obliged to
pay the Energy Department the capital installments and interest related
to the loan granted by Medio Crédito Centrale, at a 1.75% annual rate
(the Agreement).
To guarantee the compliance with the financial obligations assumed
by Costanera S.A., the buyers (holders of class “A” shares of Endesa
Costanera S.A.) pledged all their own class “A” shares. In the event
of non-compliance resulting in executing the guarantee, the Energy
Department could immediately sell the pledged shares through public
bidding and could exercise the political rights applicable to pledged
shares.
In accordance with Law No.25,561, decreee No.214/02 and regulatory
provisions, the payment obligation of Endesa Costanera S.A. as a
result of the Agreement has become “pesified” to the peso exchange
rate equivalent to one US dollar, plus the application of the reference
stabilization coefficient and maintaining the original interest rate of the
obligation.
On January 10, 2003 the National Executive issued decree No.53/03,
which modified decree 410/02 and added subsection j) in Article 1.
In conformity with this regulation, the “pesification” is not applied to
the obligation of the provincial states, city halls, private and public
companies of giving sums of foreign money to the National Government
as a result of subsidiary or other loans and guarantees, originally
financed by multilateral credit entities, or as a result of liabilities
assumed by the National Treasury and refinanced by other external
creditors.
Endesa Costanera S.A. considers that the loan resulting from the
Agreement does not agree with any of the assumptions include in
Decree No.53/03 and even though in the assumption that it agrees, there
are strong arguments that determine the unconstitutionality of Decree
No.53/03, because it would violate the principle of equality and the right
of property established by the National Constitution. The most significant
contingency that could result, if the aforementioned assumption becomes
real at September 30, 2006, would be a shareholders’ equity decrease,
net of tax effects, of approximately US$20 million. To date the Energy
Department has not filed a claim for the “pesified” payments made by
Endesa Costanera S.A.
At December 31, 2006, Costanera S.A.’s debt in regard to the Agreement
on account of the principal and interest is US$17,103,426.
Enersis S.A. and its Subsidiaries are the plaintiffs or defendants in other
minor suits with the risk of eventual or reasonably possible loss, whose
individual effects, in the event of an adverse resolution, are not significant
in these consolidated financial statements.
The financial covenants for loans entered into in January 2006 are less
strict than those indicated above.
enersis06
Restrictions:
ENERSIS S.A.
The Company’s loan agreements establish an obligation to comply with
the following financial ratios, on a consolidated level:
• Ratio of debt and cash flow for four quarters of Enersis and its Chilean
subsidiaries does not exceed 6.5 in 2006, ending at 6.00 in 2008;
• The ratio of consolidated debt to consolidated EBITDA for four
consolidated quarters, does not exceed 4.5 in 2006, ending at 3.00
in 2008;
• The ratio of Enersis and its Chilean subsidiaries cash flow to financial
expenses for four quarters, not less than 1.80 in 2006, ending at 2.20
in 2008;
• The consolidated debt to shareholders’ equity plus minority interest
does not exceed 77.5% in 2006, ending at 70% in 2008;
• No less than 50% of the total consolidated assets of Enersis S.A.,
steadily until 2008, should belong to companies whose business is
regulated;
• Minimum shareholders’ equity at least equal to U.F.27 million
As of December 31, 2006 and 2005 all these obligations have been
met.
CHILECTRA S.A.
The Company did not have any restrictions nor financial covenants
during the periods ended December 31, 2005 and 2006.
ENDESA S.A. (PARENT COMPANY)
On a consolidated level, Endesa Chile must comply with financial
covenants and requirements derived from loan agreements with financial
institutions, among which are the following:
• Ratio between debt and cash flow for four quarters of Endesa
Chile and its Chilean subsidiaries does not exceed 9.25x in
2006, which evolves up to 7.5X in 2010;
• The ratio of consolidated debt to consolidated EBITDA for four
consolidated quarters, not exceeding 5.90x in 2006, which
evolves up to 4.2X in 2010;
• The ratio of Endesa Chile and its Chilean subsidiaries cash
flow to financial expenses for four quarters, not less than 1.5x
in 2006, which evolves up to 2.00X in 2010;
• The ratio of consolidated debt to shareholders’ equity plus
minority interest not exceeding 107% in 2006, which evolves
up to 100% in 2010;
• 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 U.F.45
million.
As of December 31, 2006 all these obligations have been met.
PEHUENCHE S.A.
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 UF9,500,000.
As of December 31, 2006 all these obligations have been met.
ENDESA COSTANERA S.A.
In virtue of the arrangement in Annex VI-A of the International Public
Tender for the Sale of shares of Central Costanera S.A., the ownership
of Central Costanera S.A.’s land was transferred subject to the condition
that it must be 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 that purpose during the indicated years, its ownership 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 Chilean State.
The most demanding requirements in respect to financial coefficients
are those contained in the loan, as amended at September 30,
2005, with CSFBi, which are the following: The long-term debt with
third parties may not exceed US$215 million (excluding short-term
debt, commercial debt, inter-company loans and balance of debt
with MedioCrédito Italiano); the debt for less than 180 days may
not exceed US$10 million. There are, also, clauses restricting the
change of control of the company and clauses that restrict payments
to shareholders, including subjecting the related debt to meeting
certain financial indicators.
As of December 31, 2006 these obligations have been met.
EL CHOCóN S.A.
The loan obtained on September 7, 2006 requires the Company to
comply with the following financial covenants:
ratio of Ebitda to financial expenses not lower than 3.5, debt to Ebitda
not greater than 3.0; net shareholders’ equity not lower than 690 million
Argentine pesos.
As of December 31, 2006 these obligations have been met.
2006 Annual Report | 193
CONSOLIDATED FINANCIAL STATEMENTS
EDEGEL S.A.
At December 31, 2006, these obligations and restrictions have been
fully observed.
NOTE 30.
SURETIES OBTAINED FROM THIRD PARTIES
Enersis S.A.
The Company has received certificates of deposit for ThCh$20,451 at
December 31 2006 (ThCh$108,076 in 2005).
Chilectra S.A.
The Company presents among its current liabilities, deposits received in
cash for the use of temporary connections by customers of the company
for ThCh$33,675 and ThCh$34,541 at December 31, 2006 and 2005,
respectively.
Inmobiliaria Manso de Velasco Ltda.
The Company has received guarantees from third parties to guarantee
obligations incurred in the acquisition of assets of ThCh$3,578,240 as
of December 31, 2006 (ThCh$583,812 in 2005).
Compañía Americana de Multiservicios Ltda.
The Company has delivered bank bonds for ThCh$4,742,666
(ThCh$8,520,446 in 2005) and has received bank bonds for
ThCh$276,020 (ThCh$735,733 in 2005).
Endesa S.A. (Parent Company)
The Company has received performance bonds from contractors and
third parties to guarantee jobs and construction (mainly the Ralco
Project), for ThCh$1,593,331 as of December 31, 2006 (ThCh$5,348,795
in 2005).
Compañía Eléctrica de Tarapacá S.A.
The Company has received documents in guarantee for ThCh$302,744
as of December 31, 2006 (ThCh$0 in 2005).
Enigesa S.A.
The Company has received guarantee documents amounting to
ThCh$63,623 as of December 31, 2006 (ThCh$ 56,230 in 2005).
Financial indicators originated by credit contracts, Bonds Programsand
Short-term instruments:
• Debt ratio no greater than 0.90
As of December 31, 2006 these obligations have been met.
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 1.3
• Cash Flows plus Dividend Payments/Senior Financial Debt no less
than 1.4
• Shareholders’ Equity/Senior Debt no less than 2.5.
At December 31, 2006 these covenants have been fully met.
Other restrictions
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, a significant percent of Enersis S.A.’s consolidated liabilities
might eventually become due on demand.
Non-payment, after any applicable grace period, of these companies’
debts or of those corresponding to some of their most relevant
subsidiaries for an individual amount exceeding the equivalent of 30
million dollars, would cause advanced payment of syndicated credits
contracted in 2004. In the credits contracted by Endesa Chile in January
and December of 2006, and by Enersis S.A in December 2006, the
threshold is 50 million US dollars. Also, non-payment, after any applicable
grace period, of these companies’ debts or of those corresponding to any
of their subsidiaries for individual amounts exceeding the equivalent of
30 million dollars, would cause advanced payment of Yankee bonds. In
addition, some credit agreements contain provisions according to which
certain events different from non-payment in these companies or in any of
their most relevant subsidiaries, such as bankruptcy, insolvency, adverse
executed legal sentences for amounts larger than US$ 50 million, and
expropriation of assets, may cause those credit acceleration clauses
to be in effect.
There are no clauses in the credit agreements through which changes
in these companies corporate or debt classification by risk classification
agencies may cause an obligation to make debt prepayments. However,
according to the Standard & Poor (S&P) risk classification agency, a
variation in the foreign currency debt risk classification produces a
change in the applicable margin of syndicated credits contracted in
2004.
194
| 2006 Annual Report
enersis06
NOTE 31.
FOREIGN CURRENCIES
As of December 31, 2006 and 2005, foreign currency denominated assets and liabilities are as follows:
a. Current assets,
Account
Cash and banks
Time deposits
Marketable securities
Accounts receivable, net
Notes receivable
Other receivables
Currency
Not readj. Ch$
US$
Euro
Yen
Col. $
Per. Sun
Arg $
Br. Real
US$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Readj. Ch$
Not readj. Ch$
US$
Euro
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
US$
Per. Sun
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Euro
Col. $
Per. Sun
Arg $
Br. Real
As of December 31,
2006
ThCh$
2,191,957
3,600,298
6,467
226
23,362,312
7,416,124
2,228,412
60,988,423
59,861,548
53,629,271
9,981,878
22,196,015
136,456,454
3,900
2,101,620
4,399,346
832,640
1,776,421
-
176,292,058
2,324,931
-
201,719,237
53,613,613
70,816,003
334,348,531
2,526,021
131,722
49,173
19,786
4,741,500
108,279
31,448,255
12,920,727
-
21,777,269
5,802,174
863,783
29,428,138
2005
ThCh$
2,756,165
1,473,361
-
595
14,771,565
3,136,272
2,008,767
48,727,015
43,946,339
37,985,578
6,680,800
26,208,710
150,530,737
3,901
2,375,415
3,855
1,906,378
1,132,449
2,145,497
144,505,269
5,946,084
4,944
133,690,798
34,498,389
57,793,252
269,598,566
884,914
64,903
17,638
19,640
2,656,866
668,416
23,861,154
5,148,189
4,570
13,261,915
4,831,051
705,197
15,708,035
2006 Annual Report | 195
CONSOLIDATED FINANCIAL STATEMENTS
a. Current assets, continued
Account
Amounts due from related
companies
Inventories, net
Income taxes recoverable
Prepaid expenses and other
Deferred income taxes
Other current assets
Currency
Not readj. Ch$
US$
Not readj. Ch$
Per. Sun
Arg $
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
As of December 31,
2006
ThCh$
6,495,675
741,886
-
132,203
6,195,206
36,358,647
1,821,376
9,681,693
15,154,427
1,547,713
1,344,729
19,620,499
612,350
598,004
149,010
955,545
20,337,020
-
913,609
836,873
1,700,751
2,551,861
891,188
44,549,137
44,331,741
174,704
6,918,174
10,131,731
6,255,485
44,501,683
4,008,541
2005
ThCh$
581,006
1,069,602
5,683,903
361,285
3,823,775
48,006,439
-
9,078,082
9,433,077
3,118,033
2,462,720
31,254,058
-
198,383
77,664
5,046,562
15,209,001
25,674
838,852
613,336
850,235
1,142,647
645,914
31,737,763
49,987,797
467,274
4,669,029
-
1,528,313
30,184,853
1,047
-
-
233,633
185,087
11,471,884
252,758
160,405
10,642,861
Total current assets
1,641,366,577
1,328,815,537
196
| 2006 Annual Report
b. Property, plant and equipment
Account
Land
Building, infrastructure and
work in progress
Machinery and equipment
Other plant and equipment
Technical appraisal
Accumulated depreciation
enersis06
Currency
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Br. Real
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
As of December 31,
2006
ThCh$
54,557,590
26,321,229
11,127,621
7,227,372
33,370,682
4,065,765,666
2,498,284,958
1,219,914,400
1,361,086,320
1,790,911,400
66,803,411
30,658,273
559,522,797
633,075,377
697,128,447
176,236,751
9,122,302
118,572,568
94,049,268
209,505,605
31,416,737
54,383,639
100,261,814
(1,979,929,855)
(827,701,103)
(908,746,260)
(1,080,089,592)
(965,400,018)
2005
ThCh$
54,286,322
24,978,117
11,629,522
7,251,626
31,697,561
3,933,280,052
2,403,356,496
1,169,622,760
1,315,357,590
1,739,867,349
62,733,741
28,690,807
439,825,114
601,876,650
624,725,907
145,166,531
16,187,648
39,438,784
90,748,711
147,286,820
31,412,411
53,451,264
98,542,887
(1,878,445,735)
(740,014,382)
(803,881,427)
(984,610,843)
(857,705,496)
Total property, plant and equipment
8,087,437,399
7,806,756,787
2006 Annual Report | 197
CONSOLIDATED FINANCIAL STATEMENTS
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
Deferred taxes
Other long-term assets
Total other assets
Total assets by currency
Currency
Not readj. Ch$
US$
Not readj. Ch$
US$
Col. $
Per. Sun
Br. Real
Not readj. Ch$
US$
Col. $
Not readj. Ch$
US$
Col. $
Per. Sun
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
US$
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
As of December 31,
2006
ThCh$
76,386,876
38,880,575
2,469,103
20,188,918
1,406,052
25,104
2,490
636,978,434
10,236,667
7,846,896
(7,179,840)
(7,674,091)
-
(22,162,386)
9,264,695
887,532
2,049,292
6,415,588
151,270
63,094,185
55,617,129
90,523,990
12,249,242
226,049
93,761,617
109,628
19,744,847
3,788,440
26,685,970
191,631,035
2005
ThCh$
97,155,214
3,812,892
2,517,805
22,009,610
16,936,962
7,257
39,768
691,217,248
10,990,175
13,924,539
(9,609,642)
(2,177,140)
(2,226,482)
(23,447,324)
1,057,385
1,032,539
2,095,347
4,591,576
428,507
27,353,846
108,064,236
91,713,359
-
584,435
44,253,365
49,593
58,212,149
2,861,715
21,152,382
160,830,872
1,333,605,307
1,345,432,188
Readj. Ch$
Not readj. Ch$
US$
Euro
Yen
Col. $
Per. Sun
Arg $
Br. Real
15,854,508
3,582,838,067
243,276,851
6,467
226
2,143,525,268
1,078,110,290
1,219,722,233
2,779,075,373
6,009,720
3,513,548,162
189,131,065
9,514
595
2,088,397,426
898,822,867
1,184,461,695
2,600,623,468
Total assets by currency
11,062,409,283 10,481,004,512
198
| 2006 Annual Report
enersis06
d. Current liabilities
Account
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 long-term
notes payable
Dividends payable
Accounts payable
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Others
Not readj. Ch$
Readj. Ch$
US$
Euro
Col. $
Per. Sun
Arg $
Br. Real
Readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
US$
Br. Real
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Euro
Col. $
Per. Sun
Arg $
Br. Real
Within 90 days
91 day to 1 year
As of December 31. 2006
Average
Rate
Amount
As of December 31. 2005
Average
Rate
Amount
As of December 31. 2006
Average
Rate
Amount
As of December 31. 2005
Average
Rate
Amount
ThCh$
2,089
207,106
6,915,738
92,133,225
29,249,563
550,956
1,196,452
499,785
30
-
17,830,678
-
18,030,985
9,930,944
310,682
3,789,554
1,703,546
40,177,750
4,136,248
1,699,161
3,482,796
-
1,576
20,404,380
-
1,553,261
58,710,662
2,100,067
1,980
12,320,608
35,478
88,560,521
11,706,722
1,073,737
53,426,857
30,731,784
58,321,901
80,565,796
0.30%
0.96%
10.49%
8.35%
5.62%
13.70%
16.58%
2.80%
-
-
11.05%
-
9.85%
5.00%
12.11%
17.86%
5.63%
5.38%
10.15%
6.55%
10.43%
-
-
7.42%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ThCh$
128
24,227
71,312,447
12,556,049
21,082,137
7,178
2,181,962
3.00%
-
4.62%
6.85%
4.87%
7.23%
5.51%
-
-
355
1,825,596
12,967,592
4.41%
9.00%
9.38%
-
-
-
-
6,971
2,803,527
20,361,376
942,306
16,665,051
44,537,056
54,288,006
5,677
10,133,356
4.41%
6.86%
12.99%
5.75%
7.00%
11.15%
6.98%
7.50%
19.93%
-
-
13,477,672
2,447,267
1,619,729
3,630,030
72,719
1,448
1,594,314
27,379
63,379,838
8,625,682
926,272
38,058,132
20,983,113
52,191,858
105,295,398
7.42%
5.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
ThCh$
-
-
1,417,595
-
-
2,086,440
-
-
-
386,869
29,655,380
823,824
-
-
2,332,591
15,390,257
2,357,840
31,291,055
-
10,084,155
6,953,665
11,321,382
-
10,858,626
2,758,403
-
-
-
-
-
-
-
495,519
-
-
2,047,513
-
42,764,531
-
-
6.94%
-
-
8.72%
-
-
-
9.00%
8.68%
4.23%
-
-
3.10%
15.45%
5.61%
8.22%
-
7.19%
10.43%
14.53%
-
7.42%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ThCh$
-
-
3,537,256
-
-
2,116,073
-
-
-
-
39,111,870
728,517
14,051,066
-
5,916,236
22,270,834
115,275,397
275,504,604
-
-
8,997,791
-
14,808,330
-
5,190
-
-
-
10,945,081
-
-
-
-
-
-
-
-
-
-
6.10%
-
-
9.50%
-
-
-
-
6.09%
3.45%
12.17%
-
8.22%
18.28%
6.19%
7.34%
-
-
8.12%
-
-
7.42%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2006 Annual Report | 199
CONSOLIDATED FINANCIAL STATEMENTS
d. Current liabilities, continued
Account
Currency
Within 90 days
91 day to 1 year
As of December 31. 2006
Average
Rate
Amount
As of December 31. 2005
Average
Rate
Amount
As of December 31. 2006
Average
Rate
Amount
As of December 31. 2005
Average
Rate
Amount
Short-term notes payables
Miscellaneous payables
Amounts payable to related
companies
Accrued expenses
Withholdings
Income tax payable
Reimbursable financial contributions
Aportes financieros reembolsables
Other current liabilities
Total current liabilities by currency
US$
Br. Real
Not readj. Ch$
US$
Euro
Col. $
Per. Sun
Arg $
Br. Real
Others
Not readj. Ch$
US$
Per. Sun
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Others
Not readj. Ch$
Col. $
Per. Sun
Arg $
Br. Real
Not readj. Ch$
Col. $
Readj. Ch$
Not readj. Ch$
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Euro
Col. $
Per. Sun
Br. Real
Arg $
Others
ThCh$
-
3,029,446
5,348,856
14,063,409
568
14,388,375
17,520,303
75,262
26,156,922
6,745
1,020,442
2,830,515
1,332,476
24,679,087
-
-
13,563,503
2,254,459
12,214,947
6,597,027
5,017,288
7,967,636
10,396,763
2,993,292
6,348,709
13,404,157
33,877,889
-
315,481
30,863,810
11,185,703
3,959,378
15,018,189
3,408,981
905,939
1,436
7,465
-
16,184
1,086,926
15,154,212
543,128
29,028,494
27,943,766
ThCh$
2,922,136
8,835,601
9,086,776
356,916
-
11,444,931
9,256,138
104
47,339,350
-
230,573
32,479,176
428,260
15,326,275
1,047
1,597
12,669,277
2,027,550
6,705,600
2,229,021
3,876,734
26,369,675
8,849,811
2,646,017
5,278,772
11,780,985
46,934,709
4,560
191,341
29,821,382
8,004,824
1,664,326
28,419,740
3,453,219
18,696
1,307
8,088
-
105,753
1,117,013
3,679,476
44,471
9,423,031
20,394,144
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,742,549
124,400,169
117,270,577
1,074,305
302,958,552
117,238,865
211,866,258
138,831,981
506,530
2,798,313
-
99,618,987
-
161,951,235
-
-
926,272
- 153,097,369
- 121,674,432
- 320,307,940
97,081,143
-
4,560
-
ThCh$
-
12,697,257
-
779,663
-
-
201,839
-
32,845,402
-
-
-
-
-
-
1,244,597
17,907,374
34,523
-
242,483
-
12,306,797
-
-
134,516
-
32,831,290
-
32,571,130
-
-
707,546
48,290,188
705,534
-
4,309
1,035,926
61,309
79,886
-
-
-
-
15,888,476
4,054,924
52,299,850
74,532,361
823,824
-
12,710,506
227,093,983
12,080,242
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ThCh$
2,907,014
-
-
9,026,537
-
-
-
-
-
-
-
-
-
-
80,585
19,728,544
267,524
-
1,577,692
-
2,321
-
-
-
3,055
-
-
-
-
-
-
-
685,401
-
3,920
1,730,435
13,262,749
131,348
12
-
-
-
-
128,622,651
22,280,918
345,163,147
728,517
14,051,066
1,577,692
33,218,236
17,033,155
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total current liabilities
1,015,889,786
957,460,123
383,595,690
562,675,382
200
| 2006 Annual Report
e. Long-term liabilities as of December 31, 2006
Account
Currency
Amount
Average
Rate
Amount
Average
Rate
Amount
Average
Rate
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Amount
Average
Rate
enersis06
Due to banks and financial
institutions
Bonds payable
Long-term notes payable
Miscellaneous payable
US$
Arg $
Col. $
Per. Sun
Br. Real
Readj. Ch$
US$
Col. $
Per. Sun
Br. Real
US$
Arg $
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Arg $
Br. Real
Amounts payable to related companies US$
Accrued expenses
Reimbursable financial contributions
Other long-term liabilities
Readj. Ch$
Not readj. Ch$
Col. $
Br. Real
Readj. Ch$
Not readj. Ch$
Per. Sun
Readj. Ch$
Not readj. Ch$
US$
Col. $
Arg $
Br. Real
ThCh$
287,130,020
29,555,386
72,531,749
25,316,417
70,937,621
73,787,290
436,559,800
87,046,268
43,688,534
28,583,054
29,803,192
3,884,430
37,802,048
-
7,682,647
30,695,575
218,658
17,079,788
11,250,360
128,245
3,504,925
72,789,491
221,494,153
13,272
1,237,759
518,558
2,309,877
157,883,821
304,111
5,512,899
18,030,688
15,046,748
6.80%
11.89%
9.07%
5.58%
12.61%
6.20%
8.08%
10.04%
6.63%
14.90%
7.42%
10.61%
11.50%
-
-
11.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
Total long-term liabilities
by currency
Readj. Ch$
Not readj. Ch$
US$
Col. $
Per. Sun
Arg $
Br. Real
76,238,684
170,309,152
795,743,058
237,880,407
69,523,509
51,689,162
390,943,412
9.44%
-
-
-
14.95%
7.85%
10.29%
8.88%
14.10%
-
-
10.61%
-
-
6.50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.01%
10.87%
-
-
13.91%
4.80%
-
10.48%
6.97%
15.70%
7.42%
-
10.61%
-
-
9.50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ThCh$
131,427,754
11,725,549
-
-
54,805,830
73,345,520
-
142,681,570
23,299,820
72,213,798
23,455,926
-
8,411,125
-
-
36,413,334
245,890
4,263,725
-
-
3,358,560
-
-
-
616,087
37,015
1,539,918
727,152
592,493
-
3,672,070
-
74,885,438
4,701,799
191,889,507
142,681,570
23,336,835
15,643,509
139,694,478
ThCh$
47,415,036
-
-
-
167,137,198
-
649,374,186
118,901,326
44,526,549
92,134,846
-
-
7,488,215
-
-
33,728,660
16,071
9,195,707
-
-
8,309,725
-
-
-
467,933
61,693
3,400,637
30,290
-
-
7,240,627
3,400,637
8,807,948
730,517,882
118,901,326
44,588,242
7,256,698
275,955,966
ThCh$
7,959,977
-
-
-
-
60,669,583
248,708,651
-
-
-
-
-
1,543,589
130,779
-
14,115,249
-
-
-
-
15,361,903
-
-
-
-
-
-
-
-
-
-
-
60,800,362
15,361,903
270,783,877
-
-
-
1,543,589
8.51%
-
-
-
-
5.95%
7.64%
-
-
-
-
-
10.61%
-
-
6.50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total long-term liabilities
1,792,327,384
592,833,136
1,189,428,699
348,489,731
2006 Annual Report | 201
CONSOLIDATED FINANCIAL STATEMENTS
f. Long-term liabilities as of December 31, 2005
Account
Currency
Amount
Average
Amount
Average
Amount
Average
Amount
Average
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Rate
Rate
Rate
Rate
ThCh$
ThCh$
ThCh$
ThCh$
Due to banks and financial
Readj. Ch$
971,845
Bonds payable
Readj. Ch$
73,409,124
institutions
US$
Euro
Arg $
Col. $
Per. Sun
Br. Real
Long-term notes payable
Miscellaneous payable
US$
Col. $
Per. Sun
Arg $
Br. Real
US$
Br. Real
Readj. Ch$
Not readj. Ch$
US$
Br. Real
Amounts payable to related companies US$
Accrued expenses
Readj. Ch$
-
184,424
7,166,487
18,748,985
13,520,056
128,355
Not readj. Ch$
3,423,253
Col. $
Br. Real
69,203,641
303,969,650
Deferred income taxes
Not readj. Ch$
27,535,615
Reimbursable financial contributions
Readj. Ch$
12,074
Other long-term liabilities
Not readj. Ch$
1,565,050
Per. Sun
Readj. Ch$
697,212
1,852,706
Not readj. Ch$
-
Arg $
Br. Real
17,442,874
11,209,500
Total long-term liabilities
Readj. Ch$
76,374,104
by currency
Not readj. Ch$
32,708,342
US$
Euro
Col. $
Per. Sun
Arg $
Br. Real
470,464,658
725,880
69,403,099
44,745,543
32,652,790
462,259,760
164,631,448
725,880
4,856,825
199,458
15,327,275
9.00%
6.61%
3.06%
3.11%
7.25%
5.51%
-
-
-
-
74,080,158
7.51%
122,800,406
5.89%
-
-
-
-
3,648,964
1.75%
912,060
1.75%
13,362,850
12.10%
-
-
-
-
-
-
65,544,532
16.67%
77,717,970
13.84%
20,675,977
17.38%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
240,700,750
6.20%
7.86%
73,851,277
219,770,250
4.80%
8.39%
-
-
62,343,972
507,564,625
7.96%
375,121,130
5.95%
7.56%
-
-
83,603,327
10.76%
219,914,093
10.91%
28,721,056
10,353,091
5.65%
7.00%
25,166,851
7.25%
19,336,161
7.83%
-
-
-
-
24,717,299
20.64%
64,829,378
18.02%
14,842,630
23.16%
44,445,917
7.42%
-
-
9,350,701
7.42%
-
-
-
-
-
-
-
-
-
-
38,069,794
10.61%
6,624,267
10.61%
9,113,086
10.61%
212,869
10.61%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,794,801
-
-
-
3,111,726
305,585
1,081,460
3,977,446
6,958
723,207
45,540
221,845
137,688
9,975,310
827,279
74,080,080
7,950,067
295,645,209
-
97,271,762
25,212,391
13,624,274
151,080,354
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,612,872
-
-
-
7,557,188
-
3,244,380
16,883,181
-
514,587
502,102
-
-
6,557,389
-
-
24,954,956
645,328,604
-
219,914,093
19,838,263
7,469,449
47,876,073
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
109,717
-
15,223,901
-
-
-
15,458,434
-
1,224,007
39,036,956
-
11,913
-
-
122,712,020
608,060
-
62,453,689
177,219,323
390,345,031
-
-
-
608,060
1,436,876
Total long-term liabilities
1,189,334,176
664,864,137
965,381,438
632,062,97
202
| 2006 Annual Report
enersis06
NOTE 32.
SANCTIONS
Chilectra S.A.
NOTE 33.
ENVIRONMENT
Chilectra S.A.
a . On A pril 27, 20 0 4, through E xempt resolution 814, the
Superintendency of Electricity and Fuel (S.E.C.) penalized the Company
for a total amount of 1,830 UTA (ThCh$665,564), as a result of the
blackout which occurred on January 13, 2003, that affected the area
between Tal Tal and Santiago. On May 7, 2004, the Company filed an
appeal whose jurisdiction and solution belongs to the Superintendency
of Electricity and Fuel (S.E.C.). The S.E.C. rejected the appeal and a
claim petition was filed with the Santiago Court of Appeals.
The Company has made disbursements during the year of ThCh$
909,939, mainly for the following items:
INVESTMENTS:
• Implementation of Environmental Management System, ISO Standard
14.001.
• Reforestation, installation of acustic panels and preparation of
Environmental Impact Statement.
• “Space cape” and pre-assembling for maintenance and improvement
The resolution issued by the Santiago Court of Appeal can be appealed
against in the Supreme Court.
of installations.
To this date, the Company cannot exactly forecast the effects the final
resolution will have on its financial statements.
b. Summary trial to complain about the fine imposed by the
Superintendency of Securities and Insurance, 10th Civil Court of
Santiago (Case No. 4394-97). This summary trial was brought by
Chilectra S.A. (formerly Elesur S.A.) according to the regulations of
Statutory Decree 3538 (Basic Law on the Superintendency of Securities
and Insurance) against such Superintendency, and its purpose is to
petition for the fine imposed by such inspection agency via exempt
resolution No. 337 of October 31, 1997 (U.F. 100,000 – 100,000 inflation
index-linked units of account) to be declared null and void. On November
17, 2000, the court ruled an appealable judgment endorsing the claim
by Chilectra S.A. (formerly Elesur S.A.), declaring the fine imposed by
the Superintendency null and void. The ruling states, in sum, that there
was no use of privileged information since it was one of the parties to
the contract’s own information. The Superintendency lodged an appeal
for annulment of the ruling (case number 82-2001). On June 6, 2006,
the Santiago Court of Appeal revoked the ruling, maintaining all parts
of Exempt Resolution 337 of the Superintendency. On June 23, 2006,
appeals for annulment in form and substance were lodged with the
Supreme Court, and these are on the weekly lists of cases for hearing
and sentencing.
The Company and the Board of Directors have not been the target of any
other sanctions by the SVS or by any other administrative authorities.
ExPENSES:
• For handling hazardous wastes controlled through the Management
System.
• Environment-related, to meet current regulations.
• In cleaning and order, which is associated with the preparation for
environmental audits.
• In pruning and cutting, associated with the need for clearing the area
around the lines.
Endesa S.A.
During the year from January 1 to December 31, 2006, the Company
and its subsidiaries have made disbursements for a value of
ThCh$2,563,363, which mainly correspond to:
Operation expenses: They correspond to laboratory studies, monitoring,
follow-up and analysis, which were treated as fiscal year expenses of
ThCh$ 2,339,416. And environmental protection at Hidroeléctrica El
Chocón and Endesa Costanera S.A. (Updating of standards, cleaning
of hydrocarbon separator chambers, measurement of gas emissions,
Nitrogen oxide and sulphur dioxide, ISO 9001, 14001 and 18001)
equivalent to ThCh$ 84,570.
Investments related to the following projects, which have been
capitalized in the amount of ThCh$139,377:
• El Toro Power Plant: Environmental liabilities recovery and works
required for SGA certification under ISO 14.001.
• San Isidro- Certification of CO2 cilinders and maintenance of
certifications.
• Bocamina Power Plant: Certification of environmental management
system under ISO 14.001.
• Tarapacá: Control on line for particulate material, normalization of gas
analyzer and 2nd stage in the power plant’s landscape project.
• Huasco: Construction of a profile against fuel spillovers.
• Sauzal: Recover of environmental liabilities.
2006 Annual Report | 203
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 34.
SUBSEQUENT EVENTS
On January 15, 2007, the Company was notified of Decree 7-2006 dated
January 12, 2007, issued by the Panel of Experts provided for in the
General Electrical Services Law, settling the discrepancies arising by
reason of the Technical Report containing observations and corrections
to the studies for determining the Annual Value of the Subtransmission
System, together with the respective rate formulas, approved by the
National Energy Committee in Exempt Resolution 695 of October 31,
2006.
This Decree, which basically rejected the discrepancies set forth by the
Company, will mean that the subtransmission rate setting process will
result in a decrease of about Ch$28 thousand million per year, before
tax, in income from the sale of energy and power. This, in turn, will result
in a decrease of about 4.6% per year in such income.
The above notwithstanding, Chilectra S.A. is studying actions and
remedies that might apply with regard to such Decree.
In the period between January 1, 2007 and the date of issuance of
these financial statements, no other significant events have occurred
that could affect their presentation.
JUAN CARLOS WIECZOREK
Deputy Chief Accounting Officer
IGNACIO ANTOñANZAS
Chief Executive Officer
204
| 2006 Annual Report
APPENDIX US GAAP
DIFFERENCES BETWEEN CHILEAN AND UNITED
STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
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 shareholders’ equity. References below to “SFAS”
are to Statements of Financial Accounting Standards issued by the
Financial Accounting Standards Board in the United States.
(a) Inflation accounting
The cumulative inflation rate in Chile as measured by the Consumer
Price Index for the three-year period ended December 31, 2006 was
approximately 8.2%. Pursuant to Chilean GAAP, the Company’s
financial statements recognize certain effects of inflation. 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.
(b) Reversal of revaluation of property, plant and
equipment
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 prohibited under U.S.
GAAP. The effects of the reversal of this revaluation, as well as of
the related accumulated depreciation and depreciation expense are
included in paragraph (cc) below.
(c) Depreciation of property, plant and equipment
enersis06
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 (cc) below.
The company has considered the factors which could be considered
changes in circumstances which would trigger an impairment review
and, in accordance with SFAS No. 144, “Accounting for the Impairment
or Disposa1 of Long-Lived Assets” beginning in 2002, the Company
evaluates 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 grouping of assets at
the lowest level which generates cash flow. 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 the excess
carrying amounts of long-live assets (or asset group) over fair value.
There were no impairment charges recorded under Chilean GAAP
and U.S. GAAP.
(d) Intangibles
Under Chilean GAAP, the intangible assets correspond mainly to
rights of way. Additionally the Company had recorded an intangible
asset relating to the transfer of revalued assets which originated in the
predecessor company, “Compañía Chilena de Distribución Eléctrica
S.A.” at the time of the Company’s formation. Under U.S. GAAP,
the balance of this intangible asset would have been recorded at the
Predecessor Company’s carrying value which was zero. In 2004, this
intangible asset was charged to income under Chile GAAP thereby
zeroing out the GAAP difference for this item. Since this effect had
already been adjusted in prior years under US GAAP, the effect recorded
by the Company must be eliminated, as shown in the 2004 reconciliation
to shareholders’ equity in paragraph (cc) below.
The estimated amortization expense for the intangible assets with
definite lives, which now mainly consist of rights of way for US GAAP
purposes (which is equivalent under Chile GAAP) for each of the five
succeeding fiscal years is as follows:
Under Chilean GAAP, certain costs related to the 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 have been included in the purchase price
and 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.
Year
2007
2008
2009
2010
2011
Amortization
ThCh$
5,547,991
4,986,896
4,499,388
1,920,840
2,394,384
2006 Annual Report | 205
CONSOLIDATED FINANCIAL STATEMENTS
(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 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 against the deferred tax assets and liabilities recognized
as of January 1, 2000. Such complementary assets and liabilities are
being amortized to income over the estimated average reversal periods
of the underlying temporary differences to which the corresponding
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 to financial accounting and reporting for income taxes, using
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 recognized prior to the period in which such
changes are enacted into law.
iii. Deferred tax assets are reduced by a valuation allowance, to the
extent that, based on the weight of available evidence, it is deemed more
likely than not that 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 between U.S. GAAP and Chile GAAP relates
to the reversal of the complementary assets and liabilities recorded as
a transitional provision for unrecorded deferred tapes as of January 1,
2000 and their corresponding amortization into income. Additionally,
under U.S. GAAP, temporary differences arising in connection with
fair value adjustments on business combinations result in deferred
taxes and a corresponding adjustment to goodwill. An adjustment is
required in the reconciliation to U.S. GAAP to record goodwill arising
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from deferred tax liabilities related to past business combinations (see
note 36 II (c)). When required, the income tax effects of U.S. GAAP
adjustments are recorded in our reconciliations to U.S. GAAP. The
effect of these differences on the net income and shareholders’ equity
of the Company is included in paragraph (cc) below.
(f) Severance indemnity
As described in Note 2 n, under the Company’s employment contracts,
it has committed to provide a lump sum payment to each employee in its
Chilean entities at the end of their employment, whether due to death,
termination, resignation or retirement. Until December 31, 2003, those
obligations are calculated based on the present value of the liability
determined at each year-end based on the current salary and average
service life of each employee.
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 of all benefits
attributed by the severance indemnity benefit formula to employee
service rendered through the balance sheet date. The vested benefit
obligation is measured using assumptions as to future compensation
levels. For U.S. GAAP purposes, 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.
The Company recognizes actuarial gains and losses immediately for
severance indemnity plans for both Chilean GAAP and U.S. GAAP.
Since 2004, there are no differences between Chilean and US GAAP
as regards the accounting for severance indemnities. The effects of
accounting for severance indemnity benefits accumulated up to the year
2003 under US GAAP have been presented in paragraph (cc).
(g) Pension and post-retirement benefits accounting
The Company has obligations related to post-retirement benefits as
stipulated in collective bargaining agreements and pension obligations
as stipulated by contract for its subsidiaries 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:
• 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 are less
than 10% of the higher of the projected benefit obligation or fair value
of plan assets.
• The changes effected for the discount rate in Chile GAAP and US
GAAP and their timing as described in (f) were also instituted for
post-retirement benefits.
In addition, during 2006, the Company adopted FAS 158 “Employer’s
Accounting for Defined Pension and Other Postretirements Plans
– an amendment of FASB Statements N°87, 88, 106 and 132 (R)”.
This statements required the recognition of the funded status of a
benefit plan in the statement of financial position. It also requires the
recognition as a component of other comprehensive income (OCI),
net of tax, of the gains or losses and prior service costs or credits
that arise during the period, but are not recognized as components
of net periodic benefit cost pursuant to statements 87 or 106. The
adoption resulted in the recognition through OCI for accumulated
effect through the 2006 year – end of prior service costs and related
plan assets in the balance sheet of the certain Brazilian subsidiaries.
The effects of the adoption of SFAS 158 are presented in paragraph
(cc) below.
The effects of accounting for post-retirement benefits under US GAAP
have been presented in paragraph (cc).
(h) Investments in related companies
Under Chilean GAAP, until December 31, 2003 for all investments
accounted for by the equity method, the proportionate net book value of
the investee company was recorded as an investment and the difference
between the cost of investment and the proportionate net book value of
the investee was recorded as goodwill. The goodwill is to be amortized
to income over a maximum period of twenty years. The investment
account is adjusted to recognize the investor’s share of the earnings or
losses of the investee determined under Chilean GAAP subsequent to
the date of the purchase. Technical Bulletin No. 72 issued by Chilean
Association of Accountants requires using fair value of acquired assets
and liabilities for the accounting for all acquisitions after January 1,
2004 and recording the differential between the cost and the fair value
as goodwill/negative goodwill as well as prospectively designating all
investments of 20% to 50% as having significant influence rather than
the 10% to 50% level previously defined as having significant influence
in Chilean GAAP. No retroactive changes or cumulative effects of
changes in accounting principles were required under Technical Bulletin
No. 72.
Under US GAAP, in accordance with Accounting Principles Board
Opinion No. 18, The Equity Method for Accounting for Investment in
Common Stock” (“APB No. 18”), the carrying amount of an investment
accounted for under the equity method is initially recorded at cost and
shown as a single amount in the balance sheet of the investor. It is
adjusted to recognize the investor’s share of the earnings or losses of
the investee determined under US GAAP subsequent to the date of
investment. The investment reflects adjustments similar to those made
in preparing consolidated financial statements, including adjustments
to eliminate inter-company gains and losses and to account for the
differences, if any, between the investor’s cost and the underlying equity
in net assets of the investee at the date of investment. The investment
is also adjusted to reflect the investor’s share of change in the investee
capital accounts.
The Company’s equity share of the effect of the adjustments from
Chilean GAAP to U.S. GAAP for equity method investees is included in
paragraph (cc) below. The principal U.S. GAAP adjustments affecting
the Company’s equity investees are as follows:
enersis06
(i) Reversal of capitalized foreign currency exchange differences related
to capitalized interest.
(ii) Reversal of complementary accounts (asset or liability) recorded
as a transitional provision in connection with the adoption of Technical
Bulletin N°60 as of January 1, 2000.
(iii) Organizational costs deferred under Chilean GAAP that, under U.S.
GAAP, should have been included in income.
(iv) The recording of derivative instruments in accordance with SFAS
No. 133.
(v) The deferred income tax effects of adjustments (i), (iii) and (iv).
(i) Goodwill
(i) Under Chilean GAAP, for acquisitions completed through December
31, 2003 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 from 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. 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 are included in paragraph (cc) below.
Technical Bulletin No. 72 issued by Chilean Association of
Accountants requires using fair value of acquired assets and
liabilities for the accounting for all acquisitions after January 1,
2004, and consequently after that date difference in accounting
treatment related to the allocation of purchase consideration over
assets acquired and liabilities assumed between Chilean GAAP
and US GAAP no longer exists.
(ii) Under Chilean GAAP and US GAAP, the Company evaluates
the carrying amount of goodwill for impairment. The Company
determines the impairment losses using a discounted cash flow
approach and recent comparable transactions in the market.
In order to estimate recoverable value, the Company makes
assumptions about future events that are highly uncertain at the time
of estimation. The results of this analysis showed no impairment of
goodwill for the years ended December 31, 2005 and 2006.
The following effects are included in the net income and
shareholders’ equity reconciliation to US GAAP under paragraph
(cc) below:
(i) differences in the amount of the impairment under US GAAP
related to basis differences in the original determination and
2006 Annual Report | 207
CONSOLIDATED FINANCIAL STATEMENTS
subsequent amortization methodology between Chilean GAAP
and US GAAP;
(ii) the reversal of negative goodwill impairment under Chilean GAAP,
as under US GAAP negative goodwill is treated as an adjustment to
the net book value of the related fixed assets to their fair value;
(iii) the reversal of goodwill amortization recorded under Chilean
GAAP.
(j) Negative Goodwill
Under Chilean GAAP, until December 31, 2004, 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. Technical Bulletin No. 72 issued by Chilean Association of
Accountants requires using fair value accounting for all acquired assets
and liabilities for all acquisitions after January 1, 2004. Technical
Bulletin No. 72 states that whenever the negative goodwill exceeds
the fair value of identified non-monetary assets, the excess must be
recognized immediately as income.
Under U.S. GAAP, the fair value of the net assets acquired in excess
of the purchase price is allocated proportionately to reduce the values
assigned to long-lived assets. If the allocation reduces the long-
lived assets to zero, the remainder of the excess is recorded as an
extraordinary gain to income.
The effect of reduced depreciation expense on the long-lived assets (for
which no circumstances changed requiring an impairment test under
SFAS N°144) to which negative goodwill had been allocated under U.S.
GAAP net of reversals of both amortization and write-offs of negative
goodwill recorded in Chilean GAAP (over the appropriate useful lives as
defined in the first paragraph) are included in paragraph (cc) 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.
Under U.S. GAAP, the capitalization of interest on qualifying assets
under construction is required, regardless of whether interest is
associated with debt directly related to a project to the extent that
interest cost would have been avoided 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 (cc)
below.
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(l) Accumulated deficit during the development stage
Under Chilean GAAP, the losses incurred during the development
stage of subsidiary companies are recorded directly in the parent
company’s equity. Under U.S. GAAP, such costs must be charged to
income as incurred. As of December 31, 2004 and 2005, no company
was classified as a development stage company. For the year ended
December 31, 2006, the effects of the adjustment are included in
paragraph (cc).
(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. Net income related to the amortization
of negative goodwill can only be distributed as an additional dividend
by the approval of the shareholders, and accordingly, is not included
in the calculation of the minimum dividend to be distributed. 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 (cc)
below to reflect the unrecorded dividend liability for 2005 and 2006.
(n) Capitalized general and administrative expenses
Under Chilean GAAP, Endesa-Chile and certain Brazilian subsidiaries
capitalize 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. Under
Chilean GAAP the Company has also capitalized other administrative
expenses into other long-term assets, which under US GAAP would
not be allowed. The effects of eliminating capitalized general and
administrative expenses and the related depreciation and amortization
for U.S. GAAP purposes are shown below under paragraph (cc).
(o) Involuntary employee termination benefits
Under Chilean GAAP, the Argentine subsidiaries, Central Costanera and
Hidroelectricidad, recorded an accrual of certain involuntary employee
termination benefits related to the restructuring plan announced in
1997. Since that date employees have continued to be made redundant
pursuant to this plan. Additionally, during 2003 the Company increased
the amount of the accrual recorded under Chilean GAAP. In accordance
with U.S. GAAP, in order to recognize a liability at the balance sheet
date for the cost to terminate employees involuntarily, there must have
been a plan that specifically include notification of such employee prior
to the balance sheet.
The net effect of eliminating the accrued liability recognized under Chile
GAAP is presented in paragraph (cc) below.
(p) Revenue recognition in Edesur
During 2005, Edesur reached final agreement with the relevant
Argentinean authorities regarding an increase in tariffs related to
electricity distribution services. This increase is currently pending
ratification via formal decree by the executive power of the Argentinean
government (PEN). At December 31, 2005 the Company believed were
probable that the economic benefits associated with the tariff increase
will flow to the enterprise, and that all other revenue recognition criteria
established by Chilean GAAP has been met. Accordingly, the effects of
the rate increase were included in 2005 revenues under Chilean GAAP.
During 2006 there have been no ratification regarding the increase in
tariffs; hence, the initial probable belief of the Company was reassessed
and is not longer considered. Therefore, under Chilean GAAP the
effects of the rates tariffs recognized as of December 31, 2005 has
been adjusted and recognized in income for the current year. However,
the effects of the increase in tariffs have not been included in revenues
under U.S. GAAP, because management believes that the persuasive
evidence of an arrangement criterion under SAB Topic 13 is not met
until the agreement is formally ratified by the PEN.
The effect on shareholders’ equity and net income for the years
presented is included in (cc) below.
(q) Elimination of capitalized interest in Brazil
Until 1999, 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 by
crediting 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
(cc) 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 (cc) below.
(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
enersis06
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 amounts of foreign exchange losses included in income that is
attributable to operations in unstable countries because these amounts
have been remeasured into US dollars were ThCh$60,236,680,
ThCh$25,391,952 and ThCh$35,510,041 for the years ended December
31, 2004, 2005 and 2006, respectively (See Note 23).
Company’s Management believes that, foreign currency translation
procedures described above are part of the comprehensive basis of
preparation of price-level adjusted financial statements required by
Chilean GAAP. Inclusion of inflation and translation effects in the
financial statements is considered appropriate under the inflationary
conditions that have historically affected the Chilean economy, and
accordingly, are not eliminated in the reconciliation to U.S. GAAP as
permitted by Form 20-F.
(t) Derivative instruments
The Company engages in derivative activity for hedging certain risks.
These derivatives are considered accounting hedges under Chilean
GAAP. Under Chilean GAAP the accounting treatment of hedging
activity is similar to the accounting treatment of fair value hedges
and cash flow hedges under SFAS 133. The documentation and
hedge effectiveness requirements under Chilean GAAP though are
not as burdensome as under SFAS 133. Under SFAS 133, to qualify
for hedge accounting strict requirements need to be met, including
hedge documentation and effectiveness tests. As of December 31,
2004, certain cross-currency swaps had by Enersis with a fair value
of ThCh$(53,221,524) as of that date, qualified for hedge accounting
under SFAS 133 since all the documentation and hedge effectiveness
requirements were fulfilled. All foreign currency and interest rate hedging
instruments entered into during 2005 and 2006 (total estimated fair
value of ThCh$101,348,563 and ThCh$145,208,861 as of December
31, 2005 and 2006) fulfill the documentation and hedge effectiveness
requirements to qualify for hedge accounting.
2006 Annual Report | 209
CONSOLIDATED FINANCIAL STATEMENTS
The Company has designated under Chilean GAAP certain non-
derivative financial instruments as hedges of the foreign currency
exposure of net investments in foreign operations. The gain or loss
on the non-derivative financial instrument that is designated as a hedge
is reported as a translation adjustment to the extent it is effective as
a hedge, any ineffectiveness is recorded in earnings. This accounting
treatment is consistent with SFAS 133.
adequate supply of energy at reasonable, 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 not regulated are not applicable, except for the Company’s
operations in Brazil as described below.
SFAS 133 also requires that certain embedded derivatives be separated
and reported on the balance sheet at fair value and be subject to the
same rules as other derivative instruments. 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 under Chilean GAAP.
The effects of the adjustment with respect to financial derivatives,
commodity derivatives, and embedded derivatives for the years ended
December 31, 2004, 2005 and 2006 are included in the net income
and shareholders’ equity reconciliation to US GAAP under paragraph
(cc) below.
(u) Fair value of long-term debt assumed
As part of the purchase of the majority ownership interest in Endesa-
Chile, a portion of the purchase price was allocated to the fair value of
long-term debt. 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.
The effect on shareholders’ equity and net income for the years
presented is included in paragraph (cc) below.
(v) 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 amortized over the life of
the related service contract. This adjustment reverses the gain under
Chilean 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 (cc) below.
(w) Regulated assets and deferred costs
The electricity sector in Chile and other Latin American countries is
regulated pursuant to applicable laws. Most of the Company’s sales
are subject to node price regulation, which is designed to ensure an
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As a result of changes in Brazilian Electricity Laws and Regulations,
the Company’s distribution subsidiaries in Brazil, Ampla Energia e
Serviços S.A. (AMPLA, ex 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 Electric 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
approximately over a period of five years, from the balance date.
Accordingly, the Company capitalizes incurred costs as deferred
regulatory assets when it is probable 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 fixes costs or VPA costs, which
each distribution company is permitted to defer and pass on to 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 uncertainty 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 EITF 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 (cc) below.
(x) Reorganization of subsidiaries
This adjustment corresponds to the reorganization of the Company’s
subsidiaries Endesa Costanera S.A. and Central Buenos Aires (CBA)
during 2001, in which Endesa Costanera acquired the minority interest
in CBA from third parties and exchanged shares with Endesa Argentina
S.A. During 2006, the Company’s subsidiary Edegel was merged with
Etevensa, an entity which was controlled by Endesa Internacional
S.A., the Company’s parent company. This reorganization included a
purchase of a minority interest portion in exchange for shares of Edegel
and cash. On April 1, 2006 the Company’s subsidiaries Chilectra S.A.
was merged with Elesur S.A. (currently Chilectra S.A.) which is 99.09%
owned by Enersis S.A. This reorganization included a purchase of a
minority interest portion by cash.
Under Chilean GAAP, the Company recorded these transactions under
the pooling of interests method, using the book values of the net assets
acquired under merger accounting as proscribed by Technical Bulletin
72 for reorganizations under common control.
Under US GAAP the exchange of shares between entities under
common control is recorded at book values. However, to the extent
that shares in CBA, Etevensa and Chilectra S.A. were acquired from
third parties, the identifiable assets acquired and liabilities assumed
are recorded at fair value using purchase accounting together with the
shares issued by the subsidiaries Endesa Costanera S.A., Edegel S.A
and Chilectra S.A. The difference in property, plant and equipment basis
between Chilean GAAP and US GAAP results in a greater depreciation
expense to be recorded under US GAAP over the remaining estimated
useful life.
The effect of this adjustment is included in the net income and
shareholders’ equity reconciliation to US GAAP under paragraph (cc)
below.
(y) Effects of minority interest on the U.S. GAAP
adjustments
The net income and shareholders’ equity under Chilean GAAP is
adjusted in 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 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.
The effect of this adjustment is included in net income and shareholders’
equity reconciliation to US GAAP under paragraph (cc) below.
(z) Amortization of bond discount and deferred debt
issuance costs
Under Chilean GAAP the company amortized bond discounts and
deferred debt issuance costs using the straight line method over the
estimate maturity of the related debt.Under U.S. GAAP, deferred debt
enersis06
issuance costs and bond discounts have to be amortized using the
effective interest method. The effect of this adjustment included in the
net income and shareholders equity reconciliation to US GAAP under
paragraph (cc) below.
(aa)
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. This standard requires the Company
to record the fair value of the legal obligation it has to make certain
environmental restorations upon closure of its facilities. The fair value of
the liability is estimated by discounting the future estimated expenditures
related to the restoration. The Company then measures changes in
the liability due to passage of time by applying an interest method of
allocation to the amount of the liability at the beginning of the period.
The interest rate used to measure that change is the credit-adjusted risk-
free rate that existed when the liability, or portion thereof, was initially
measured. That amount is recognized as an increase in the carrying
amount of the liability and the expense is classified as an operating item
in the statement of income, referred to as accretion expense.
At the same time the standard requires the Company to capitalize the
new asset retirement obligation costs arising as the result of additional
liabilities incurred, such as the activation of a new generation facility, and
subsequently allocate that asset retirement cost to expense over the life
of the plant based on the useful life of the plant. At December 31, 2004,
2005 and 2006, the adjustment to US GAAP income from continuing
operations represents the accreted interest expense and depreciation
of the costs capitalized for the asset retirement obligations.
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 of this U.S. GA AP adjustment on net income and
shareholders’ equity are presented in note (cc) below.
(bb)
Creation of Endesa Brasil
On September 30, 2005, certain Brazilian affiliates under common
control were reorganized under a newly created holding company,
Endesa Brasil S.A. In connection with this reorganization, Enersis
transferred its interest in certain investees to Endesa Brasil in exchange
for a 53.61% direct and indirect interest therein (see Note 1l). The
Company began accounting for Endesa Brasil as a consolidated
subsidiary as of that date. The difference between net assets
contributed and received generated a difference if ThCh$6,327,211
presented as reserve in equity. Although the transaction received the
same accounting treatment under both Chilean GAAP and US GAAP,
2006 Annual Report | 211
CONSOLIDATED FINANCIAL STATEMENTS
as a result of the existing adjustment to US GAAP in the subsidiaries which were the subject of the reorganization, an incremental charge to equity
of ThCh$1,322,212 was recorded.
The effect of this adjustment is included in the net income and shareholders’ equity reconciliation to US GAAP under paragraph (cc) below.
(cc) Effect of conforming to U.S. GAAP
The reconciliation of reported net income required to conform with U.S. GAAP is as follows:
Net income in accordance with Chilean GAAP
2004
ThCh$
46,866,624
As of December 31,
2005
ThCh$
69,445,219
2006
ThCh$
285,960,366
Reversal of amortization of revaluation of property, plant and equipment (paragraph b)
1,955,277
1,123,624
940,087
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 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)
Depreciation 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)
Revenue recognition Edesur (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)
Deferred income (paragraph v)
Regulated assets (paragraph w)
Reorganization of subsidiaries (paragraph x)
Effects of minority interest on the U.S. GAAP adjustments (paragraph y)
Deferred tax effects on the U.S. GAAP adjustments
Amortization of bond discount and deferred debt issuance cost (paragraph z)
Staff severance indemnities (paragraph f)
Asset retirement cost - (paragraph aa)
Asset retirement obligations - liabilities (paragraph aa)
(2,323,226)
1,067,360
12,612,586
(5,736,710)
(1,091,989)
(1,124,997)
-
-
3,507,010
1,533
1,549
(33,823,190)
56,882,043
55,757,931
1,267,005
8,348,959
(2,292,471)
(6,182,165)
261,423
900,014
11,526,719
(1,689,013)
6,659
493,599
-
-
2,953,118
(1,769)
(2,995,173)
(17,268)
-
(3,983,074)
518,351
489,552
(7,115,723)
16,710,560
(146,231)
242,761
12,056,423
(262,369)
23,374,626
459,424
3,695,633
33,692,028
(1,919,538)
(978,245)
128,342
12,320,216
(232,852)
(6,988,163)
(710,466)
(14,505,746)
-
(189,069)
566,123
(674,105)
-
-
(64,469)
148,420
8,255,112
155,497
4,773,424
55,324,188
17,753,365
11,902,604
(2,037,571)
31,411
495,731
(303,015)
(2,930,771)
(21,295)
4,071,920
466,907
2,384,966
1,058,984
(85,113)
(27,371)
130,581
(3,562,711)
(236,914)
(7,211,572)
(15,198,481)
2,338,553
-
(12,090)
(1,140,190)
Net income in accordance with U.S. GAAP
160,540,036
124,917,651
362,151,605
Net income in accordance with U.S. GAAP
Other comprehensive income (loss):
160,540,036
124,917,651
362,151,605
Cumulative translation adjustment determined under Chilean GAAP net of minority interest
(101,836,006)
(105,702,172)
15,780,715
Cumulative translation adjustment related to U.S GAAP adjustments net of
minority interest
Fair value change of hedging instruments used in cash flow hedges, net of deferred tax
Adoption of FAS 158, Brazilian subsidiaries, net of deferred tax
13,171,282
-
-
21,138,761
1,317,498
(3,334,313)
(44,746,077)
-
10,393,599
Comprehensive income in accordance with U.S.GAAP
71,875,312
41,671,738
340,245,529
212
| 2006 Annual Report
The reconciliation to conform shareholders’ equity amounts to U.S. GAAP is as follows:
Shareholders’ equity in accordance with Chilean GAAP
enersis06
As of December 31,
2005
ThCh$
2,650,384,728
2006
ThCh$
2,869,881,909
Reversal of revaluation of property, plant and equipment net of accumulated
amortization revaluation of property, plant and equipment (paragraph b)
(10,179,636)
(9,238,334)
Depreciation of property, plant and equipment and difference in fixed asset value
at acquisition date (paragraph c)
Deferred income taxes (paragraph e)
Pension and post-retirement benefits liabilities long term (paragraph g)
Investments in related companies (paragraph h)
Goodwill (paragraph i)
Goodwill gross amount (paragraph i)
Negative goodwill (paragraph j)
Capitalized interest (paragraph k)
Exchange difference (paragraph k)
Minimum dividend (paragraph m)
Capitalized general and administrative expenses (paragraph n)
Reversal of accrual of certain involuntary employee termination benefits (paragraph o)
Revenue recognition Edesur (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 x)
Deferred income (paragraph v)
Regulated assets (paragraph w)
Effects of minority interest on the U.S. GAAP adjustments (paragraph y)
Deferred tax effects on the U.S. GAAP adjustments
Amortization of bond discount and deferred debt issuance cost (paragraph z)
Asset retirement cost (paragraph aa)
Asset retirement obligations - liabilities (paragraph aa)
(8,986,279)
(10,008,427)
(294,941,836)
(290,128,352)
(16,368,212)
(6,946,111)
8,057,678
(2,293,661)
421,820,730
479,559,912
89,858,301
88,417,514
(354,124,446)
(339,386,151)
68,157,399
(20,328,830)
(16,086,968)
(26,240,459)
59,128
(3,983,074)
(5,438,791)
(10,037,395)
19,558,830
191,592
3,721,443
(2,053,473)
2,996,725
204,336,006
114,447,475
79,211,332
(19,905,733)
(47,710,019)
(29,373,265)
38,865
-
(5,066,755)
(7,827,515)
(33,346,865)
164,221
13,816,196
(1,958,711)
(513,714)
191,122,226
100,059,125
-
2,338,553
567,187
(998,688)
547,154
(2,139,121)
Shareholders’ equity in accordance with U.S. GAAP
2,799,385,346
3,034,318,062
The changes in shareholders’ equity in U.S. GAAP as of each year-end are as follows:
As of December 31,
2004
ThCh$
2005
ThCh$
2006
ThCh$
Shareholders equity in accordance with U.S. GAAP - January 1
2,724,074,973
2,786,704,619
2,799,385,346
Dividends paid during the year
Reversal of dividends payable as of previous balance sheet date
Minimum dividend payable (paragraph m)
Reorganization under common control (paragraph x and bb)
Fair value change of hedging instruments used in cash flow hedges, net of deferred tax
Adoption of FAS 158, Brazilian subsidiaries, net of deferred tax
Cumulative translation adjustment
Capital increase
Net income in accordance with U.S. GAAP for the year
-
-
(8,631,508)
-
-
-
(13,886,128)
8,631,508
(16,086,968)
(7,649,423)
1,317,498
(68,893,961)
16,086,968
(47,710,019)
(4,795,801)
(44,746,077)
-
10,393,599
(88,664,724)
(84,563,411)
12,446,402
(614,158)
-
-
160,540,036
124,917,651
362,151,605
Shareholders equity in accordance with U.S.GAAP - December 31
2,786,704,619
2,799,385,346
3,034,318,062
2006 Annual Report | 213
CONSOLIDATED FINANCIAL STATEMENTS
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, 2005 and 2006,
respectively:
Goodwill
Less: accumulated amortization
Goodwill, net
Negative goodwill
Less: accumulated amortization
Negative goodwill, net
Amortization expense under Chile GAAP is disclosed in Note 13.
(b) Basic and diluted earnings per share:
Chilean GAAP earnings per share
U.S. GAAP earnings per share
As of December 31,
2005
ThCh$
1,806,704,228
(1,090,572,266)
2006
ThCh$
1,801,542,342
(1,146,480,345)
716,131,962
655,061,997
(469,806,762)
432,346,174
(475,440,048)
438,423,731
(37,460,588)
(37,016,317)
For the year ended December 31,
2005
Ch$
2.13
3.83
2004
Ch$
1.44
4.92
2006
Ch$
8.76
11.09
Basic and diluted U.S. GAAP earnings per share
4.92
3.83
11.09
Total number of common outstanding shares at December 31,
32,651,166
32,651,166
32,651,166
Weighted average number of common shares outstanding (000’s)
32,651,166
32,651,166
32,651,166
(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.
214
| 2006 Annual Report
enersis06
(c) Income taxes:
The provision (benefit) for income taxes charged to the results of operations determined in accordance with U.S. GAAP is as follows:
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
2004
Income tax provision under Chilean GAAP
Current income taxes as determined under Chilean GAAP
(6,110,475)
(272,789)
(18,550,941)
(5,332,042)
(69,327,978)
(99,594,225)
Deferred income taxes as determined under Chilean GAAP
12,770,470
(24,173,507)
(27,780,,981)
(2,526,996)
(3,862,472)
(45,573,486)
Total income tax provision under Chilean GAAP
6,659,995
(24,446,296)
(46,331,922)
(7,859,038)
(73,190,450)
(145,167,711)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
1,536,490
8,820,314
2,814,136
(558,354)
-
12,612,586
Deferred tax effect of adjustments to U.S. GAAP
(332,152)
1,570,741
3,022,940
(3,499,615)
(1,472,380)
(710,466)
U.S. GAAP reclassifications (1)
628,403
-
-
-
1,507,553
2,135,956
Total U.S. GAAP adjustments:
1,832,741
10,391,055
5,837,076
(4,057,969)
35,173
14,038,077
Total Income tax provision under U.S. GAAP
8,492,736
(14,055,241)
(40,494,846)
(11,917,007)
(73,155,277)
(131,129,635)
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
2005
Income tax provision under Chilean GAAP
Current income taxes as determined under Chilean GAAP
(12,757,343)
(6,081,363)
(24,595,823)
(30,249,268)
(75,083,231)
(148,767,028)
Deferred income taxes as determined under Chilean GAAP
(28,135,999)
(6,060,321)
(2,138,607)
2,577,728
473,553
(33,283,646)
Total income tax provision under Chilean GAAP
(40,893,342)
(12,141,684)
(26,734,430)
(27,671,540)
(74,609,678)
(182,050,674)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
(414,414)
150,177
5,655,585
(1,884,338)
-
3,507,010
Deferred tax effect of adjustments to U.S. GAAP
(9,755,096)
1,726,862
(1,137,194)
(5,259,431)
(80,887)
(14,505,746)
U.S. GAAP reclassifications (1)
1,626,755
-
-
4,226,268
1,600,673
7,453,696
Total U.S. GAAP adjustments:
(8,542,755)
1,877,039
4,518,391
(2,917,501)
1,519,786
(3,545,040)
Total Income tax provision under U.S. GAAP
(49,436,097)
(10,264,645)
(22,216,039)
(30,589,041)
(73,089,892)
(185,595,714)
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
2006
Income tax provision under Chilean GAAP
Current income taxes as determined under Chilean GAAP
(48,613,763)
(4,507,845)
(33,745,695)
(80,992,242)
(85,208,065)
(253,067,610)
Deferred income taxes as determined under Chilean GAAP
83,652,728
(10,880,034)
(8,186,970)
55,665,414
23,408,598
143,659,736
Total income tax provision under Chilean GAAP
35,038,965
(15,387,879)
(41,932,665)
(25,326,828)
(61,799,467)
(109,407,874)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
5,728,815
135,227
(577,332)
2,968,402
-
8,255,112
Deferred tax effect of adjustments to U.S. GAAP
(6,978,720)
(3,588,034)
(977,017)
(1,263,702)
(2,391,008)
(15,198,481)
U.S. GAAP reclassifications (1)
86,038
-
-
14,085,351
182,224
14,353,613
Total U.S. GAAP adjustments:
(1,163,867)
(3,452,807)
(1,554,349)
15,790,051
(2,208,784)
7,410,244
Total Income tax provision under U.S. GAAP
33,875,098
(18,840,686)
(43,487,014)
(9,536,777)
(64,008,251)
(101,997,630)
(1) Certain tax-related expenses under Chilean GAAP are classified as non-operating, but under US GAAP would be classified as income taxes.
2006 Annual Report | 215
CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets (liabilities) as of balance sheet dates are summarized as follows:
SFAS No. 109
SFAS No. 109
2005
2006
Applied to
SFAS No.
Total
Applied to
SFAS No.
Total
Chilean
109 applied
Deferred
Chilean
109 applied
Deferred
GAAP
to U.S. GAAP
Taxes under
GAAP
to U.S. GAAP
Taxes under
Balances
Adjustments
SFAS No. 109
Balances
Adjustments
SFAS No. 109
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
28,899,953
131,313,976
160,213,929
2,739,244
101,989,597
104,728,841
56,899,775
11,830,729
2,015,328
2,460,812
-
-
-
-
-
3,038,592
1,053,846
-
-
5,565,192
243,459,396
80,000,821
3,781,606
-
-
-
-
1,394,076
56,899,775
11,830,729
2,015,328
2,460,812
3,038,592
1,053,846
5,565,192
67,547,385
10,500,328
2,236,216
2,367,831
-
-
-
-
-
9,184,618
1,147,149
-
243,459,396
241,818,145
80,000,821
3,781,606
1,394,076
85,277,169
4,013,859
-
67,547,385
10,500,328
2,236,216
2,367,831
9,184,618
1,147,149
-
241,818,145
85,277,169
4,013,859
-
-
-
-
-
-
-
(178,272,879)
(940,389)
(179,213,268)
(39,998,258)
(1,104,621)
(41,102,879)
12,376,001
6,024,624
804,107
-
13,180,108
6,024,624
14,349,812
5,548,245
1,247,333
(2,739,611)
15,597,145
2,808,634
Deferred income tax assets:
Property, plant and equipment
Allowance for doubtful accounts
Actuarial deficit (companies in Brazil)
Deferred income
Provision real estate projects
Derivative contracts
Vacation accrual
Post retirement benefits
Tax loss carryforwards (1)
Contingencies
Salaries for construction-in progress
Revenue recognition Edesur
Valuation allowance
Others
Provision for employee benefits
Total deferred income tax assets
270,530,012
141,175,554
411,705,566
397,547,125
108,577,316
506,124,441
Deferred income tax liabilities:
Property, plant and equipment (2)
400,201,707
99,843,560
500,045,267
411,588,632
83,812,317
495,400,949
Severance indemnities
Regulated assets
Finance costs
Derivative contracts
Bond discount
Cost of studies
Imputed interest on construction
Materials used
Exchange difference
Capitalized expenses
Capitalized interest
Others
1,761,264
29,120,098
13,254,965
-
1,018,886
-
-
7,042,386
1,709,291
8,498,040
4,532,961
857,794
20,816,953
-
-
12,645,033
1,761,264
30,138,984
13,254,965
7,042,386
1,709,291
8,498,040
4,532,961
857,794
1,677,822
28,973,980
15,353,914
-
1,478,500
8,420,626
3,756,520
811,521
20,816,953
18,678,406
-
2,130,360
-
-
-
-
-
-
-
1,677,822
(174,663)
28,799,317
-
15,353,914
4,889,361
397,554
-
-
-
-
-
4,889,361
1,876,054
8,420,626
3,756,520
811,521
18,678,406
2,130,360
26,922,740
13,670,485
23,173,516
32,571
23,173,516
12,677,604
-
26,922,740
13,642,567
27,918
Total deferred income tax liabilities
493,398,106
131,110,919
624,509,025
506,512,848
115,875,227
622,388,075
Net deferred assets (liabilities)
(222,868,094)
10,064,635
(212,803,459)
(108,965,723)
(7,297,911)
(116,263,634)
Complementary Account
190,558,996
(190,558,996)
-
182,771,316
(182,771,316)
-
Net deferred assets (liabilities)
(32,309,098)
(180,494,361)
(212,803,459)
73,805,593
(190,069,227)
(116,263,634)
(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.
(2)
In September 2004, the Peruvian tax court ruled invalid the tax basis of certain assets held by Edegel S.A. Based on this ruling, the Company has increased
the long-term deferred tax liability ThCh$80,429,245, in order to reflect the write-off of the corresponding tax-basis assets held in Peru. As such estimate
of future deductible amounts was determined prior to the acquisition of Edegel in connection with the acquisition of Endesa-Chile in 1999, the Company
has adjusted goodwill by a corresponding amount in accordance with SFAS No. 109 “Accounting for Income Taxes” (“SFAS No. 109”) and EITF 93-7
“Uncertainties Related to Income Taxes in a Business Combination”.
216
| 2006 Annual Report
enersis06
A reconciliation of the U.S. GAAP Statutory Income Tax rate to the Company’s effective tax rate on net income is as follows:
Statutory US GAAP tax
Effect of higher foreign tax rates
Increase (decrease) in rates resulting from:
Price-level restatement not accepted
for tax purposes
Non-taxable items
Non-deductible items (2)
Prior years income tax
Other
2004
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
(55,978,322)
2,198,715
(20,188,626)
(177,024)
(26,039,812)
(100,185,069)
-
3,526,043
(19,384,976)
10,540,274
(31,758,912)
(37,077,571)
(158,725)
(3,260,306)
(9,134,554)
-
(7,798,630)
(20,352,215)
35,091,466
(14,671,010)
(8,667,228)
(19,240,519)
(6,371,390)
(13,858,681)
27,204,360
1,300,938
1,133,032
(3,346,512)
1,598,587
27,890,405
(1,280,114)
-
-
-
-
(1,280,114)
2,985,668
(3,149,621)
15,747,506
306,774
(4,292,673)
11,597,654
US GAAP reclassifications (1)
628,403
-
-
-
1,507,553
2,135,956
Tax (benefit) expense at effective tax rate
8,492,736
(14,055,241)
(40,494,846)
(11,917,007)
(73,155,277)
(131,129,635)
Statutory US GAAP tax
Effect of higher foreign tax rates
Increase (decrease) in rates resulting from:
Price-level restatement not accepted
for tax purposes
Non-taxable items
Non-deductible items (2)
Effect of change in valuation allowance
Prior years income tax
Other
US GAAP reclassifications (1)
2005
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
(30,843,549)
7,236,194
(14,242,625)
(16,049,611)
(30,765,133)
(84,664,724)
-
7,661,853
(13,823,723)
(14,624,618)
(36,329,724)
(57,116,212)
4,557,943
(6,680,885)
-
-
114,226
(2,008,716)
13,581,428
1,981,745
9,437,281
12,733,699
8,930,895
46,665,048
(37,594,487)
(19,075,945)
(2,330,001)
(16,854,574)
(14,975,140)
(90,830,147)
(627,216)
780,413
-
-
-
-
-
-
1,348,200
-
720,984
780,413
(917,384)
(1,387,607)
(1,256,971)
(20,205)
(3,013,889)
(6,596,056)
1,626,755
-
-
4,226,268
1,600,673
7,453,696
Tax (benefit) expense at effective tax rate
(49,436,097)
(10,264,645)
(22,216,039)
(30,589,041)
(73,089,892)
(185,595,714)
Statutory US GAAP tax
Effect of higher foreign tax rates
Increase (decrease) in rates resulting from:
Price-level restatement not accepted
for tax purposes
Non-taxable items
Non-deductible items (2)
Effect of change in valuation allowance
Prior years income tax
Other
US GAAP reclassifications (1)
2006
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
(54,195,284)
(2,250,914)
(10,474,694)
(26,981,297)
(34,486,586)
(128,388,775)
-
(2,383,321)
(10,166,614)
(26,981,296)
(43,615,390)
(83,146,621)
(5,306,699)
(6,090,435)
-
-
23,819,730
12,422,596
16,426,968
5,524,094
1,604,352
40,260,656
3,896,349
67,712,419
(63,104,687)
(13,626,074)
(24,538,926)
(15,456,493)
(14,913,918)
(131,640,098)
130,922,325
6,060,692
2,985,745
86,038
-
-
-
-
-
-
(58,155)
130,864,170
-
6,060,692
9,764,376
(14,036)
88,868
5,536,302
1,167,497
-
-
14,085,351
182,224
14,353,613
Tax (benefit) expense at effective tax rate
33,875,098
(18,840,686)
(43,487,014)
(9,536,777)
(64,008,251)
(101,997,630)
(1) 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.
(2) This represents mainly deductible temporary differences related to investments in subsidiaries that are permanent in nature for which deferred tax asset
are not recognized.
2006 Annual Report | 217
CONSOLIDATED FINANCIAL STATEMENTS
(d) Segment disclosures
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:
• Generation
• Distribution
• Engineering Services and Real Estate
• 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 electricity-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 - Operating Revenues
Revenue is recognized when energy and power 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:
2004
Generation
Transmission Distribution
real estate
and other
Eliminations Consolidated
Engineering
services and
Corporate
ThCh$
ThCh$
ThCh$
1,975,320,611
15,389,646
ThCh$
18,997,389
13,487,262
ThCh$
ThCh$
ThCh$
51,147,903
(3,957,563)
2,822,931,552
107,853,629
(360,755,821)
65,323,795
1,990,710,257 32,484,651
159,001,532
(364,713,384) 2,888,255,347
294,748,608
1,529,056
1,107,915
5,593,036
691,697,866
(20,161,300)
275,703
139,481,433
(106,695,637)
32,944,744
222,094,781
1,763,525
57,721,804
-
446,782,332
5,383,514,858
118,908,566
4,316,359,635
(4,310,603,765)
11,096,859,935
174,379,204
341,021
5,205,542
-
281,293,659
Sales to unaffiliated customers
Intersegment sales
781,423,212
289,349,079
Total revenues
1,070,772,291 -
Operating income
388,719,251
Participation in net income of
affiliate companies
20,044,545
Depreciation and amortization
165,202,222
Identifiable assets including
investment in related companies
5,588,680,641
Capital expenditures
101,367,892
-
-
-
-
-
-
-
218
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Engineering
services and
Corporate
2005
Generation
Transmission Distribution
real estate
and other
Eliminations Consolidated
Sales to unaffiliated customers
Intersegment sales
ThCh$
ThCh$
ThCh$
885,593,542
285,394,924
13,088,320
2,264,900,754
15,525,130
17,304,838
ThCh$
21,073,868
12,977,309
ThCh$
64,780,472
ThCh$
ThCh$
385,645
3,249,822,601
114,233,574
(402,115,710)
43,320,065
Total revenues
1,170,988,466
28,613,450
2,282,205,592
34,051,177
179,014,046
(401,730,065)
3,293,142,666
Operating income
421,610,853
13,338,963
392,373,848
3,170,830
(470,967)
(1,379,461)
828,644,066
Participation in net income of
affiliate companies
13,709,598
-
3,173,550
155,382
153,395,823
(163,546,854)
6,887,499
Depreciation and amortization
163,867,174
2,762,088
197,684,077
2,047,397
57,992,494
-
424,353,230
Identifiable assets including
investment in related companies
5,529,152,941
499,883,129
4,837,653,506
108,462,482
4,912,851,951
(5,419,086,272)
10,468,917,737
Capital expenditures
61,309,432
328,473
256,061,777
1,437,230
4,978,693
-
324,115,605
Engineering
services and
Corporate
2006
Generation
Transmission Distribution
real estate
and other
Eliminations Consolidated
Sales to unaffiliated customers
1,148,304,162
80,025,138
2,529,416,905
Intersegment sales
330,777,812
63,874,769
18,960,499
ThCh$
ThCh$
ThCh$
ThCh$
33,904,941
15,871,165
ThCh$
66,484,924
ThCh$
ThCh$
-
3,858,136,070
133,553,160
(529,108,743)
33,928,662
Total revenues
1,479,081,974
143,899,907
2,548,377,404
49,776,106
200,038,084
(529,108,743) 3,892,064,732
Operating income
583,966,319
(758,516)
483,463,309
9,865,975
(9,611,537)
1,116,901
1,068,042,451
Participation in net income of
affiliate companies
42,138,395
-
20,916,594
117,573
390,506,117
(448,639,739)
5,038,940
Depreciation and amortization
189,730,359
13,555,986
206,673,313
2,255,417
60,091,589
-
472,306,664
Identifiable assets including
investment in related companies
5,817,728,024
460,656,686
5,332,487,512
118,831,802
4,876,485,024
(5,543,779,765) 11,062,409,283
Capital expenditures
173,512,065
1,893,683
335,867,636
1,631,388
4,863,574
-
517,768,346
A summary of activities by geographic area is as follows:
2004
Total revenues
Long lived assets (net) (1)
2005
Total revenues
Long lived assets (net) (1)
2006
Total revenues
Long lived assets (net) (1)
Chile
ThCh$
953,247,486
2,369,681,055
Argentina
ThCh$
347,706,629
1,161,390,679
Perú
ThCh$
305,657,073
973,037,235
Brasil
ThCh$
707,503,624
1,562,259,410
Colombia
ThCh$
574,140,535
2,062,298,139
Total
ThCh$
2,888,255,347
8,128,666,518
1,089,380,399
2,353,816,519
402,590,119
995,511,199
300,264,933
855,959,997
901,123,363
1,816,089,978
599,783,852
1,785,379,094
3,293,142,666
7,806,756,787
1,238,222,497
2,422,172,672
503,975,086
1,014,877,458
367,619,243
999,784,191
1,117,460,724
1,861,638,455
664,787,181
1,788,964,623
3,892,064,732
8,087,437,399
(1) Long-lived assets include property, plant and equipment.
2006 Annual Report | 219
CONSOLIDATED FINANCIAL STATEMENTS
(e) Concentration of risk:
(f) Schedule of debt maturity:
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, 2004, 2005 and 2006.
Following is a schedule of debt maturity in each of the next five years
and thereafter:
2007
2008
2009
2010
2011
Thereafter
Total
As of December 31, 2006
ThCh$
379,971,326
634,872,297
501,655,473
354,435,129
368,596,613
1,354,292,344
3,593,823,182
(g) Disclosure regarding interest capitalization:
2004
ThCh$
Year ended December 31,
2005
ThCh$
2006
ThCh$
Interest expense incurred
Interest capitalized under Chilean GAAP
Interest capitalized under U.S. GAAP
380,690,839
7,619,740
15,968,699
358,032,727
-
11,526,719
390,708,744
5,783,642
17,686,246
(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.
Marketable securities under Chile GAAP qualify as cash flow equivalent, whereas under U.S. GAAP they are classified as available – for –sale
securities (See note 36 II (q))
Cash flow from operating activities - Chile GAAP and US GAAP
653,699,031
837,148,104
862,408,340
Cash flow from financing activities - Chile GAAP and US GAAP
(200,047,308)
(764,261,264)
(297,089,863)
As of December 31,
2004
ThCh$
2005
ThCh$
2006
ThCh$
Cash flow investing activities Chile GAAP
Differences between Chilean GAAP and US GAAP:
Purchase of marketable securities during period
Sale of marketable securities during period
Cash flow investing activities US GAAP
Net cash flow
(205,104,786)
(337,667,076)
(507,680,720)
(13,033,179)
12,095,052
(5,421,998)
13,033,179
(9,019,778)
5,421,998
(206,042,913)
(330,055,895)
(511,278,500)
247,608,810
(257,169,055)
54,039,977
14,578,723
68,618,700
Effect of price-level restatement and foreign exchange differences
(28,574,426)
(21,406,173)
Net increase (decrease) in cash and cash equivalent
219,034,384
(278,575,228)
Cash and cash equivalent at beginning of the year
346,776,012
565,810,396
362,451,904
Additional cash resulting from creation of Endesa Brasil
-
75,216,736
-
Cash and cash equivalent at end of the year
565,810,396
362,451,904
431,070,604
220
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enersis06
(ii) The reconciliation of cash and cash equivalents from Chilean GAAP to U.S. GAAP as of December 31, 2004, 2005 and 2006 is as follows:
Cash and cash equivalent under Chilean GAAP
Elimination of marketable securities
2004
ThCh$
578,843,575
(13,033,179)
Year ended December 31,
2005
ThCh$
367,873,902
(5,421,998)
2006
ThCh$
440,090,382
(9,019,778)
Total cash and cash equivalents under US GAAP
565,810,396
362,451,904
431,070,604
(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 leases
2004
ThCh$
333,041,786
93,108,247
29,084,335
Years ended December 31,
2005
ThCh$
295,157,898
100,024,223
2006
ThCh$
299,160,341
155,915,573
-
-
(iv) Under US GAAP, cash and cash equivalents includes all highly liquid debt instruments purchased with a maturity of three months or less:
Cash
Time deposits and repurchase agreements
2004
ThCh$
59,757,305
506,053,093
Years ended December 31,
2005
ThCh$
72,873,740
289,578,164
2006
ThCh$
99,794,219
331,276,385
Total cash and cash equivalents under US GAAP
565,810,398
362,451,904
431,070,604
(i) Disclosures about fair value of financial instruments
The following methods and assumption were used to estimate the fair
value of each class of financial instruments as of December 31, 2005
and 2006 for which it is practicable to estimate that value:
• Cash
The fair value of the Company’s cash is equal to its carrying
value.
• Time deposits
The fair value of time deposits is equal to its carrying value due to its
relatively short-term nature.
• Marketable securities
The fair value of marketable securities is based on quoted market prices
of the mutual money market funds held and is equal to its carrying
value.
• Long-term accounts receivable
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.
• Long-term debt
The fair value of long-term debt was based on rates currently available to
the Company for debt with similar terms and remaining maturities.
• Derivative instruments
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 quality
of the assumptions used.
2006 Annual Report | 221
CONSOLIDATED FINANCIAL STATEMENTS
The estimated fair values of the Company’s financial instruments compared to Chilean GAAP carrying amounts are as follows:
2005
2006
Carrying
amount
ThCh$
72,873,740
265,352,164
5,421,998
648,182,799
3,643,961
64,188,527
11,519,571
144,623,436
(375,457,796)
(113,031,828)
(3,507,461,206)
(126,228,655)
Fair
Value
ThCh$
72,873,740
265,352,164
5,421,998
648,182,799
3,643,961
64,188,527
11,519,571
144,623,436
(375,457,796)
(113,031,828)
(3,737,751,214)
(126,086,146)
Carrying
amount
ThCh$
99,794,219
282,125,166
9,113,927
839,114,373
7,468,202
102,348,625
13,564,970
137,479,691
(587,328,362)
(136,440,740)
(3,593,823,183)
(146,110,329)
Fair
Value
ThCh$
99,794,219
282,125,166
9,113,927
839,114,373
7,468,202
102,348,625
13,564,970
137,479,691
(587,328,362)
(136,440,740)
(3,940,785,000)
(146,110,329)
Cash
Time deposits
Marketable securities
Accounts receivable
Notes receivable, net
Other accounts receivable, net
Amounts due from related companies
Long-term accounts receivable
Accounts payable and other
Notes payable
Long-term debt
Derivative instruments
(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 has policies and procedures in place to manage
the 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 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 Note 36 I 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 derivative contracts as of December 31, 2005 and 2006.
Embedded derivatives
Commodity derivatives
Financial derivatives
Investment in related companies
Distribution
ThCh$
2,347,356
-
(112,685,697)
(110,338,341)
-
2005
Generation
ThCh$
38,569,674
(21,500,709)
(13,400,449)
3,668,516
(4,559,772)
Total
ThCh$
40,917,030
(21,500,709)
(126,086,146)
(106,669,825)
(4,559,772)
Derivative instruments U.S.GAAP Shareholders equity adjustment
(110,338,341)
(891,256)
(111,229,597)
Embedded derivatives
Commodity derivatives
Financial derivatives
Distribution
ThCh$
5,166,861
-
(146,500,484)
2006
Generation
ThCh$
23,111,274
(7,731,630)
390,155
Total
ThCh$
28,278,135
(7,731,630)
(146,110,329)
Derivative instruments U.S.GAAP Shareholders equity adjustment
(141,333,623)
15,769,799
(125,563,824)
222
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The following is the reconciliation of the Company’s derivative contracts from Chile GAAP to US GAAP:
Embedded derivatives
Commodity derivatives
Financial derivatives
Chile GAAP
ThCh$
-
-
(126,228,655)
2005
Adjustment
ThCh$
40,917,030
(21,500,709)
142,509
US GAAP
ThCh$
40,917,030
(21,500,709)
(126,086,146)
Shareholders equity adjustment
(126,228,655)
19,558,830
(106,669,825)
Embedded derivatives
Commodity derivatives
Financial derivatives
Chile GAAP
ThCh$
-
-
(92,216,959)
2006
Adjustment
ThCh$
28,278,135
(7,731,630)
(53,893,370)
US GAAP
ThCh$
28,278,135
(7,731,630)
(146,110,329)
Shareholders equity adjustment
(92,216,959)
(33,346,865)
(125,563,824)
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 are 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 not 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 has commodity contracts that are unique, due to their
long-term nature and complexity. In establishing the fair value of
contracts management makes assumptions using available market
data and pricing models. Factors such as commodity price risk are also
included in the fair value calculation. Inputs to pricing models include
estimated forward prices of electricity and natural gas, interest rates,
foreign exchange rates, inflation indices, transmission costs, and others.
These inputs become more difficult to predict and the estimates are less
precise, the further out in time these estimates are made. As a result,
fair values are highly sensitive to the assumptions being used.
Until December 31, 2005 the Company’s Argentine generation entities
had access to the Brazilian energy market through an interconnection
system between those two countries. Due to action taken by Argentine
Regulation Authorities, the exportations of energy from Argentina to
Brazil were limited, resulting in a default of most energy supply contracts
the Company had entered into. However, during 2006 the Brazilian
regulator issued a statement that allowed these interconnection
contracts to reduce their amounts of power and energy to be delivered,
and to accelerate their maturity date to December 2007. As a result
of action taken by Argentine and Brazilian regulation authorities, the
contracts the Argentine subsidiaries had entered into ceased to exist
as of the December 31, 2006.
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 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.
2006 Annual Report | 223
CONSOLIDATED FINANCIAL STATEMENTS
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.
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 US GAAP purposes the Company has met all the requirements for
designating all the derivative instruments subscribed during 2005 and
2006 as “hedges” as well as the cross currency swaps held by Enersis
since 2004. These derivative instruments are recorded at fair value in
the balance sheet with any gain and/or losses being recorded according
to fair value or cash flow hedge accounting as stated in SFAS 133.
NET LNVESTMENT HEDGES
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 accounting treatment for such operations is the same under Chile
GAAP and U.S. GAAP.
(k) Presentation to U.S. GAAP
Certain reclassifications and adjustment would be made to the Chilean
GAAP income statement in order to present the amounts in accordance
with U.S. GAAP. For example, certain non-operating income and
expenses under Chilean GAAP would be included in the determination
of operating income under U.S. GAAP. Such reclassifications from non-
operating to operating income and expense include the following:
• Losses arising from contingencies and litigation, and reversals
thereof
• Gains and losses from disposals of fixed assets
• Taxes, other than income taxes
• Pension plan expenses
• Penalties and fines
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
In addition to the above, recovered taxes included in other non-operating
revenues under Chilean GAAP would be recorded as part of income tax
expense under U.S. GAAP, and equity in net income or loss of related
companies included in non-operating results under Chilean would be
presented after income taxes and minority interest under U.S. GAAP.
The following reclassifications and adjustment disclose amounts in accordance with U.S. GAAP presentation:
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Chilean
GAAP
ThCh$
691,697,866
(410,811,934)
(145,167,711)
(106,946,525)
U.S. GAAP
Reclassification
ThCh$
(56,879,565)
39,893,792
2,135,956
-
-
18,094,928
32,944,745
(18,094,928)
2004
Sub-total
ThCh$
634,818,301
(370,918,142
(143,031,755)
(106,946,525)
32,944,745
U.S. GAAP
Adjustments
ThCh$
68,013,899
10,381,218
11,902,120
23,374,626
1,549
U.S. GAAP
ThCh$
702,832,200
(360,536,924)
(131,129,635)
(83,571,899)
32,946,294
-
-
-
Net income
46,866,624
-
46,866,624
113,673,412
160,540,036
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Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Chilean
GAAP
ThCh$
828,644,066
(419,897,591)
(182,050,674)
(173,072,574)
U.S. GAAP
Reclassification
ThCh$
(96,382,051)
97,862,848
7,453,696
-
-
15,821,992
6,887,499
(15,821,992)
2005
Sub-total
ThCh$
732,262,015
(322,034,743)
(174,596,978)
(173,072,574)
6,887,499
U.S. GAAP
Adjustments
ThCh$
109,912,898
(2,630,377)
(10,998,736)
(6,988,163)
(33,823,190)
U.S. GAAP
ThCh$
842,174,913
(324,665,120)
(185,595,714)
(180,060,737)
(26,935,691)
-
-
-
Net income
69,445,219
-
69,445,219
55,472,432
124,917,651
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Chilean
GAAP
ThCh$
1,068,042,451
(408,965,957)
(109,407,874)
(269,785,811)
-
6,077,557
U.S. GAAP
Reclassification
ThCh$
(118,827,218)
105,512,222
14,353,613
-
5,038,940
(6,077,557)
2006
Sub-total
ThCh$
949,215,233
(303,453,735)
(95,054,261)
(269,785,811)
5,038,940
U.S. GAAP
Adjustments
ThCh$
83,359,474
2,516,297
(6,943,369)
(7,211,572)
4,470,409
U.S. GAAP
ThCh$
1,032,574,707
(300,937,438)
(101,997,630)
(276,997,383)
9,509,349
-
-
-
Net income
285,960,366
- 285,960,366
76,191,239
362,151,605
Certain reclassifications and adjustments would be made to the Chilean
GAAP balance sheet in order to present Chilean GAAP amounts in
accordance with 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. Additionally, the
regulated asset recorded during 2001 by Coelce and Ampla, 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. Assets
and liabilities related to financial derivatives have been recorded in
the balance sheet at their gross amounts for Chilean GAAP purposes,
whereas under US GAAP unrealized derivative gains and losses are
recorded in earnings or directly to shareholders’ equity for qualifying
cash flow hedges. Under U.S. GAAP, negative goodwill is allocated
to long-lived assets instead of a separate line term in the other assets.
These reclassifications exclude consolidation of development stage
companies, the effect of which is immaterial.
The effect of the reclassifications and adjustment discloses amounts using a U.S. GAAP presentation:
Current assets
Property, plant and equipment, net
Other assets
Chilean
GAAP
ThCh$
1,328,815,537
7,806,756,787
1,345,432,188
U.S. GAAP
Reclassification
ThCh$
(44,216,371)
(37,460,588)
61,720,620
2005
Sub-total
ThCh$
1,284,599,166
7,769,296,199
1,407,152,808
U.S. GAAP
Adjustments
ThCh$
(3,983,074)
(2,449,410)
147,289,248
U.S. GAAP
ThCh$
1,280,616,092
7,766,846,789
1,554,442,056
Total assets
10,481,004,512
(19,956,339) 10,461,048,173
140,856,764
10,601,904,937
Current liabilities
Long-term liabilities
Minority interest
Shareholder’s equity
1,520,135,633
3,451,642,730
2,858,841,421
2,650,384,728
(1,644,832)
(18,311,507)
-
-
1,518,490,801
3,433,331,223
2,858,841,421
2,650,384,728
(20,723)
196,212,875
(204,336,006)
149,000,618
1,518,470,078
3,629,544,098
2,654,505,415
2,799,385,346
Total liabilities and shareholders’ equity
10,481,004,512
(19,956,339) 10,461,048,173
140,856,764
10,601,904,937
2006 Annual Report | 225
CONSOLIDATED FINANCIAL STATEMENTS
Current assets
Property, plant and equipment, net
Other assets
Chilean
GAAP
ThCh$
1,641,366,577
8,087,437,399
1,333,605,307
U.S. GAAP
Reclassification
ThCh$
(52,915,315)
(37,016,317)
7,995,325
2006
Sub-total
ThCh$
1,588,451,262
8,050,421,082
1,341,600,632
U.S. GAAP
Adjustments
ThCh$
-
6,165,972
231,772,581
U.S. GAAP
ThCh$
1,588,451,262
8,056,587,054
1,573,373,213
Total assets
11,062,409,283
(81,936,307) 10,980,472,976
237,938,553
11,218,411,529
Current liabilities
Long-term liabilities
Minority interest
Shareholder’s equity
1,399,485,476
3,923,078,950
2,869,962,948
2,869,881,909
(2,938,801)
(78,997,506)
-
-
1,396,546,675
3,844,081,444
2,869,962,948
2,869,881,909
(3,246,469)
267,871,095
(191,122,226)
164,436,153
1,393,300,206
4,111,952,539
2,678,840,722
3,034,318,062
Total liabilities and shareholders’ equity
11,062,409,283
(81,936,307) 10,980,472,976
237,938,553
11,218,411,529
(l) Employee Benefit Plans
benefits maintained by employees of Enersis. This benefit expires at
the time of death of the pensioner.
Enersis S.A. and its subsidiaries sponsor various benefit plans for
its current and retired employees. A description of such benefits
follows:
iii) Supplementary pension benefits
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 6.5% for the years ended December 31, 2004,
2005 and 2006, and an estimated average service period based on
the years of services for the Company.
BENEFITS FOR RETIRED PERSONNEL
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.
ii) Medical benefits
This benefit provides supplementary health insurance, which covers
a portion of health benefits not covered under the institutional health
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 (cc), 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.
226
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enersis06
Assets and obligations
Accumulated benefit obligation
Plan assets at fair value
Pension Benefits
Non Contributory
Other Benefits
Contributory
Total
Total
At December 31, 2005
(58,065,099)
-
(204,562,870)
182,018,314
(262,627,969)
182,018,314
(51,078,797)
-
Unfunded accumulated benefit
(58,065,099)
(22,544,556)
(80,609,655)
(51,078,797)
Changes in benefit (obligations)
Benefit (obligations) at January 1
Price-level restatement
Foreign exchange effect
Net periodic expense
Benefits paid
Company contributions
Effect of exchange adjustment
(57,665,992)
(1,444,699)
3,632,203
(7,934,975)
5,348,364
-
-
(62,906,646)
2,185,946
4,344,922
(2,724,248)
(6,225,185)
17,317,971
(4,821,341)
(120,572,638)
741,247
7,977,125
(10,659,223)
(876,821)
17,317,971
(4,821,341)
(53,668,943)
147,962
2,666,728
(4,627,758)
3,485,837
(1,234,377)
1,400,772
Benefit (obligations) at December 31
(58,065,099)
(52,828,581)
(110,893,680)
(51,829,779)
Funded Status of the Plans
Projected Benefit Obligation
Fair value of the plans assets
Funded Status
Unrecognized loss (gain)
Unrecognized net prior service cost
(58,065,099)
-
(58,065,099)
(209,279,991)
182,018,313
(27,261,678)
(267,345,090)
182,018,313
(85,326,777)
-
-
-
-
(25,566,904)
(25,566,904)
(54,228,413)
-
(54,228,413)
-
2,398,635
Net liability recorded under U.S. GAAP
(58,065,099)
(52,828,582)
(110,893,681)
(51,829,778)
Change in the plan assets
Fair value of the plan assets, beginning
Foreign exchange effect
Actual return on the plan assets
Employer contributions
Plan participant contributions
Benefits paid
-
-
-
-
-
-
137,576,219
12,060,795
31,095,794
14,384,960
2,953,647
(16,053,101)
137,576,219
12,060,795
31,095,794
14,384,960
2,953,647
(16,053,101)
Fair value of plans assets, ending
-
182,018,314
182,018,314
-
-
-
-
-
-
-
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of transition asset
(592,565)
(6,375,991)
-
(966,419)
-
859,211
(3,974,837)
1,277,410
479,003
(1,365,035)
266,646
(10,350,828)
1,277,410
(487,416)
(1,365,035)
(136,121)
(4,270,515)
-
(221,122)
-
Net periodic expenses
(7,934,975)
(2,724,248)
(10,659,223)
(4,627,758)
Assumptions as of December 31, 2005
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
Brazil
10.2%
4.0%
10.2%
4.0%
Colombia
11.2%
6.1%
-
6.1%
Chile
6.5%
4.0%
-
2.5%
Other Benefits
Brazil
11.2%
-
-
6.1%
Colombia
10.2%
-
-
4.0%
Chile
6.5%
4.0%
-
2.5%
2006 Annual Report | 227
CONSOLIDATED FINANCIAL STATEMENTS
Assets and obligations
Accumulated benefit obligation
Plan assets at fair value
At December 31, 2006
Pension Benefits
Non Contributory
Other Benefits
Contributory
Total
Total
(60,792,793)
-
(251,324,115)
240,748,561
(312,116,908)
240,748,561
(56,184,086)
-
Unfunded accumulated benefit
(60,792,793)
(10,575,554)
(71,368,347)
(56,184,086)
Changes in benefit (obligations)
Benefit (obligations) at January 1
Price-level restatement
Foreign exchange effect
Net periodic expense
Benefits paid
Company contributions
Effect of exchange adjustment
Recognized net prior service cost (application SFAS 158)
(58,065,099)
1,194,287
(3,774,906)
(6,665,640)
6,352,917
-
-
-
(52,828,581)
1,086,582
(2,007,564)
(344,901)
(7,409,385)
19,552,581
(2,570,910)
27,686,366
(110,893,680)
2,280,869
(5,782,470)
(7,010,540)
(1,056,468)
19,552,581
(2,570,910)
27,686,366
(51,829,776)
1,066,038
(867,908)
(8,779,014)
3,629,464
1,654,136
(1,145,703)
(3,136,309)
Benefit (obligations) at December 31
(60,958,441)
(16,835,811)
(77,794,252)
(59,409,071)
Funded Status of the Plans
Projected Benefit Obligation
Fair value of the plans assets
Funded Status
Unrecognized loss (gain)
Unrecognized net prior service cost
(60,958,441)
-
(60,958,441)
(257,584,373)
240,748,562
(16,835,811)
(318,542,814)
240,748,562
(77,794,252)
(59,409,071)
-
(59,409,071)
-
-
-
-
-
-
-
-
Net liability recorded under U.S. GAAP
(60,958,441)
(16,835,811)
(77,794,252)
(59,409,071)
Change in the plan assets
Fair value of the plan assets, beginning
Foreign exchange effect
Actual return on the plan assets
Employer contributions
Plan participant contributions
Benefits paid
-
-
-
-
-
-
181,750,303
21,311,462
38,166,830
16,006,512
3,414,838
(19,901,384)
181,750,303
21,311,462
38,166,830
16,006,512
3,414,838
(19,901,384)
Fair value of plans assets, ending
-
240,748,562
240,748,562
-
-
-
-
-
-
-
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of transition asset
(387,040)
(6,428,734)
-
150,134
-
981,823
(3,998,016)
3,339,360
6,493,179
(7,161,247)
594,783
(10,426,750)
3,339,360
6,643,313
(7,161,247)
(22,221)
(5,983,796)
-
(2,772,997)
-
Net periodic expenses
(6,665,640)
(344,901)
(7,010,541)
(8,779,014)
Assumptions as of December 31, 2006
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
Brazil
12.0%
5.8%
14.1%
4.7%
Colombia
10.4%
5.3%
-
5.3%
Chile
6.5%
3.5%
-
3.0%
Other Benefits
Brazil
10.4%
-
-
4.5%
Colombia
12.3%
-
-
5.3%
Chile
6.5%
3.5%
-
3.0%
228
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The following presents the impact of applying the provisions os SFAS 158 on the balance sheets of Enersis as of December 31, 2006:
Liabilities and Equity:
Accrued Pension Cost
Other Benefits Cost
Deferred taxes – long term
Accumulated Other Comprehensive Income, net of tax
Before SFAS 158
ThCh$
(105,480,618)
(56,272,762)
(107,916,615)
(194,776,448)
Adjustment SFAS 158
ThCh$
27,686,366
(3,136,309)
(8,347,019)
16,203,038
After SFAS 158
ThCh$
(77,794,252)
(59,409,071)
(116,263,634)
(178,573,410)
Following is a schedule of estimated pay-out of pension benefits in each of the next five years:
2007
2008
2009
2010
2011
Thereafter
Total
As of December 31,
2006
ThCh$
2,716,016
30,117,741
30,681,598
31,616,466
32,152,437
147,313,928
274,598,186
The following data present some supplementary information regading Enersis’s pension plans in Brazil:
Defined benefit pension plan assets allocations at Decemer 31, 2005 and 2006, by assets category are as follows:
Asset Category
Equity securities
Debt securities
Real estate
Other
(m) Comprehensive income (loss)
2005
Plan asset
22.00%
71.74%
4.70%
1.56%
2006
Plan asset
22.11%
70.75%
4.80%
2.34%
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, 2004, 2005 and 2006 (in thousands of constant
Chilean pesos as of December 31, 2006).
Beginning balance
Credit (charge) for the period
Ending balance
2004
Effect of U.S. GAAP
adjustments
on cumulative
translation
adjustment
ThCh$
39,826,041
13,171,282
52,997,323
Accumulated other
comprehensive
income (loss)
ThCh$
15,243,303
(88,664,724)
(73,421,421)
Chilean GAAP
cumulative
translation
adjustment
ThCh$
(24,582,738)
(101,836,006)
(126,418,744)
2006 Annual Report | 229
CONSOLIDATED FINANCIAL STATEMENTS
2005
Effect of U.S. GAAP
adjustments
on cumulative
translation
adjustment
ThCh$
52,997,323
21,138,761
74,136,084
Fair value
of financial
instruments used
in cash flow hedge
ThCh$
-
1,317,498
1,317,498
Chilean GAAP
cumulative
translation
adjustment
ThCh$
(126,418,744)
(105,702,172)
(232,120,916)
Accumulated other
comprehensive
income (loss)
ThCh$
(73,421,421)
(83,245,913)
(156,667,334)
2006
Chilean GAAP
cumulative
translation
adjustment
ThCh$
(232,120,916)
15,780,715
(216,340,201)
Effect of U.S. GAAP
adjustments on
cumulative
translation
adjustment
ThCh$
74,136,084
(3,334,313)
70,801,771
Application
of SFAS 158 in
Ampla and Coelce
see Note 36 I g
ThCh$
-
10,393,599
10,393,599
Fair value
of financial
instruments used
in cash flow hedge
ThCh$
1,317,498
(44,746,077)
(43,428,579)
Accumulated other
comprehensive
income (loss)
ThCh$
(156,667,334)
(21,906,076)
(178,573,410)
Beginning balance
Credit (charge) for the period
Ending balance
Beginning balance
Credit (charge) for the period
Ending balance
The Company does not recognize deferred tax assets associated
with cumulative translation reclassification as the investment they are
associated with is permanent in nature.
(n) Goodwill and intangible assets
As discussed in Note 36 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 ins
2002 of SFAS No. 142, due to changes in circunstances, the Company
recognized a non-cash charge of ThCh$650,931,949 to reduce the
carrying value of goodwill.
In calculating the impairment charge, the fair value of the impaired
reporting units’ goodwill underlying the segments were estimated
using discounted cash flow methodology. The ThCh$650,931,949
goodwill impairment is associated entirely with goodwill associated with
investments in Argentina and Brazil. The impairment reflects the decline
in the Company’s revenues and forecasted cash flows in their Argentina
and Brazilian subsidiaries and the increase in inflation and interest rates
and decreasing expectations of the currencies in Argentina and Brazil.
Prior to performing the review for impairment, SFAS 142 required that
all goodwill deemed to be related to the entity as a whole be assigned
to all of the Company’s reporting units, including the reporting units
of the acquirer.
A summary of the changes in the Company’s goodwill under U.S. GAAP
during the year ended December 31, 2005 and 2006, by country of
operation and segment is as follows:
2005:
Goodwill by Country
Chile
Colombia
Perú
Total
January 1,
ThCh$
1,165,258,375
45,183,742
17,479,019
1,227,921,136
Acquisitions
(Disposals)
ThCh$
-
-
-
-
2005
Translation
adjustment
ThCh$
-
(5,083,283)
(1,966,433)
Impairment
ThCh$
December 31,
ThCh$
1,165,258,375
40,100,459
15,512,586
-
-
-
(7,049,716)
-
1,220,871,420
230
| 2006 Annual Report
enersis06
January 1,
ThCh$
1,071,651,161
156,201,391
68,584
Acquisitions
(Disposals)
ThCh$
-
-
-
2005
Translation
adjustment
ThCh$
(4,635,851)
(2,413,865)
-
Impairment
ThCh$
-
-
-
December 31,
ThCh$
1,067,015,310
153,787,526
68,584
1,227,921,136
-
(7,049,716)
-
1,220,871,420
Goodwill by Segment
Generation
Distribution
Other
Total
2006:
Goodwill by Country
Chile
Colombia
Perú
January 1,
ThCh$
1,165,258,375
40,100,459
15,512,586
2006
Acquisitions
(Disposals)
ThCh$
Translation
adjustment
ThCh$
Impairment
ThCh$
Reclassification
(1)
ThCh$
December 31,
ThCh$
-
-
3,194,340
699,490
270,175
-
-
-
(8,473,153)
- 1,165,258,375
32,326,796
18,977,101
-
Total
1,220,871,420
3,194,340
969,665
-
(8,473,153)
1,216,562,272
Goodwill by Segment
Generation
Distribution
Other
January 1,
ThCh$
1,067,015,310
153,787,526
68,584
Acquisitions
(Disposals)
ThCh$
3,194,340
-
-
2006
Translation
adjustment
ThCh$
637,434
332,231
-
Impairment
ThCh$
-
-
-
Reclassification
(1)
ThCh$
(8,473,153)
-
-
December 31,
ThCh$
1,062,373,931
154,119,757
68,584
Total
1,220,871,420
3,194,340
969,665
-
(8,473,153)
1,216,562,272
(1) See Note 11 e).
The Company’s intangible assets were ThCh$83,533,722 and
ThCh$90,759,417 and related accumulated amortization were
ThCh$49,440,338 and ThCh$54,801,394 as of December 31, 2005
and 2006, respectively. There is no difference between Chilean and
U.S. GAAP in the amortization of intangible assets because all of the
Company’s intangible assets are subject to amortization, since they
relate to finite contracts or concessions.
(o) Asset retirement obligations
As discussed in Note 36 paragraph (aa), the Company adopted SFAS
No. 143 effective January 1, 2003. The following table describes all
changes to the Company’s U.S. GAAP asset retirement obligation
during the year ended December 31, 2005 and 2006:
Balance as of January 1,
Cumulative Translation Adjustment
Liabilities incurred in the period
Accretion expense
As of December 31,
2006
2005
ThCh$
ThCh$
(998,688)
(1,201,519)
(243)
54,411
(819,317)
(320,873)
148,420
-
(p) Capital lease obligations
Minimum lease obligations for capital lease are presented net of
interest expense, and as of December 31, are summarized as
follows:
Short-term:
Lease obligations
Less: interest expense
Year ended December 31,
2005
ThCh$
2006
ThCh$
2,093,050
(1,373,523)
15,354,959
(9,547,254)
Net short-term lease obligations
719,527
5,807,705
Long-term:
Lease obligations
Less: interest expense
37,214,877
(13,000,900)
123,292,061
(40,669,984)
Net long-term lease obligations
24,213,977
82,622,077
Balance as of December 31,
(998,688)
(2,139,121)
Weighted-average interest reate
6.50%
8.47%
2006 Annual Report | 231
CONSOLIDATED FINANCIAL STATEMENTS
Future payments under capital leases are summarized as follows:
Year ended
December 31, 2006
ThCh$
15,354,959
27,512,877
13,857,691
14,741,976
67,179,517
a) permits fair value re-measurement of any hybrid financial instrument
that contains an embedded derivative that otherwise would require
bifurcation;
b) clarifies which interest-only strips and principal-only strips are not
subject to the requirements of SFAS 133, “Accounting for Derivative
Instruments and Hedging Activities”;
c) establishes a requirement to evaluate interests in securitized financial
assets to identify interests that are freestanding derivatives or that
are hybrid financial instruments that contain an embedded derivative
requiring bifurcation;
d) clarifies that concentrations of credit risk in the form of subordination
2007
2008
2009
2010
2011 and thereafter
Total
138,647,020
are not embedded derivatives; and
(q) Available for sale securities
Under US GAAP, the company classifies marketable securities as
available for sale securities
Realized gains and losses are determined using the proceeds from
sales less the cost of the investment identified to be sold. Gross gains
and losses realized on the sale of available for-sale securities for the
years ended December 31, 2004, 2005 and 2006 are as follows:
Gross
unrealized
gains
ThCh$
Fair
value
ThCh$
Cost
ThCh$
Securities available for sale at December 31, 2004 13,033,179
Securities available for sale at December 31, 2005
5,421,998
Securities available for sale at December 31, 2006
9,019,778
- 13,033,179
- 5,421,998
- 9,019,778
Information on sales of available for sale securities during the three
years in the period ended December 31, 2004, 2005 and 2006 is as
follows:
Proceeds from sales
2004
ThCh$
12,095,052
2005
ThCh$
13,033,179
2006
ThCh$
5,421,998
As of December 2004, 2005 and 2006, the Company has no securities
that are considered to be trading securities or debt securities to be held
to maturity. The cost of available for sale securities is determined using
the average cost method.
(r) Recent accounting pronouncements
The following new accounting standards have been adopted by the
Company during the year-ended December 31, 2006 and the impact of
such adoption, if applicable, has been presented in the accompanying
consolidated financial statements.
In February 2006 the FASB issued SFAS 155, “Accounting for Certain
Hybrid Financia1 Instruments an amendment of FASB Statements No.
133 and 140.” The new statement:
e) amends SFAS 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,” to eliminate
the prohibition on a qualifying special - purpose entity from holding
a derivative financial instrument that pertains to a beneficia1 interest
other than another derivative financia1 instrument.
SFAS 155 generally is effective for al1 financial instruments acquired
or issued after the beginning of an entity’s first fiscal year that begins
after 15 September 2006. The Company does not anticipate that the
adoption of this statement will have a material effect on its financial
position, results of operations or cash flows.
In June 2006, the FASB issued FASB Interpretation (FIN 48),
“Accounting for Uncertainty in Income Taxes - an interpretation of
FASE Statement No. 109”. This interpretation prescribes a recognition
threshold and measurement attribute for the financia1 statement
recognition and measurement of a tax position taken or expected to
be taken in a tax return. The interpretation also provides guidance
on derecognition, classification and other matters. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The Company is
assessing the impact of the adoption FIN 48.
In September 2006, the FASB issued Statement of Financia1 Accounting
Standards No. 157, “Fair Value Measurements”. This statement defines
fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS 157 is effective
for fiscal years beginning after November 15, 2007. The Company
is currently evaluating the impact that will result from the adoption of
SFAS 157.
In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 158, “Employer’s Accounting for Defined Pension and
Other Postretirement Plans – an amendment of FASB Statement No.
87, 88, 106 and 132 (R)”. This Statement requires the recognition
of the funded status of a benefit plan in the statement of financial
position. It also requires the recognition as a component of other
comprehensive income (OCI), net of tax, of the gains or losses and
prior service costs or credits that arise during the period but are not
recognized as components of net periodic benefit cost pursuant to
statement 87 or 106. The statement also has new provisions regarding
the measurement date as well as certain disclosure requirements.
The statement was effective at fiscal year en 2006 and the Company
adopted the statement at that time.
232
| 2006 Annual Report
In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities”. SFAS No. 159 permits measurement of recognized
financial assets and liabilities at fair value with some exceptions.
Changes in the fair value of items for which the fair value option is
elected should be recognized in income or loss. The election to
measure eligible items at fair value is irrevocable and can only be made
recognized in income or loss. The election to measure eligible items at
fair value is irrevocable and can only be made at defined election dates
or events, generally on an instrument by instrument basis. Items for
which the fair value option is elected should be separately presented
or be parenthetically disclosed in the statement of financial position.
SFAS No. 159 also requires significant new disclosures that apply for
interim and annual financial statements. SFAS No. 159 will be effective
for fiscal years beginning after November 15, 2007 with earlier adoption
permitted, if certain conditions are met. The Company is currently
determining the policy of adoption as well as the resulting effect of
SFAS No. 159 on the consolidated financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements”, SAB 108
expresses the SEC’s view regarding the process of quantifying financial
statement misstatements. The bulletin was effective as of the year
beginning January 1, 2006. The implementation of this bulletin had no
impact on our consolidated financial statements and disclosures.
enersis06
In June 2006, the Emerging Issues Task Force, or EITTF, reached a
consensus on Issue No. 06-03, “How Taxes Collected from Customers
and Remitted to Governmental Authorities Should be Presented in the
Income Statement (That Is, Gross versus Net Presentation)”. EITF
06-03 relates to any tax assessed by a governmental authority that
is directly imposed on a revenue-producing transaction. EITF 06-03
states that the presentation of the taxes, either on a gross or net basis,
is an accounting policy decision that should be disclosed pursuant to
Accounting Principles Board Opinion No. 22, “Disclosure of Accounting
Policies”, if those amounts are significant. EITF 06-03 should be applied
to financial reports for interim and annual reporting periods beginning
after December 15, 2006 (January 1, 2007 for us). We are currently
evaluating the impact of this standard on our consolidated financial
statements and disclosures.
Rule 4-08 of the Securities and Exchange Commission require
presentation of basis financial statements of the parent Company
when restricted net assets, defined as not to be transferred to the
parent Company in the form of loans, advances or cash dividends of
the subsidiary without the consent of a third parties.
Following are the parent company Chilean balance sheets as of
December 31, 2005 and 2006 and results of operations and cash flows
for the years ended December 31, 2004, 2005 and 2006.
2006 Annual Report | 233
CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEETS
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006 and thousands of US dollars)
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
2005
ThCh$
As of December 31,
2006
ThCh$
121,111
-
752
19,368,022
25,951,697
7,764,556
633
44,968,049
5,922,650
162,935
6,949,540
737
8,167,902
95,297,378
3,914,901
21,075
36,240,045
11,100,923
2006
ThUS$
306
13,053
1
15,342
178,999
7,353
40
68,070
20,851
Total current assets
104,097,470
161,855,436
304,015
PROPERTY, PLANT AND EQUIPMENT:
Buildings and infraestructure
Machinery and equipment
Other assets
Technical appraisal
Sub - total
Less: accumulated depreciation
22,554,028
2,677,301
1,045,214
35,928
22,553,982
2,957,880
748,512
35,915
26,312,471
(14,081,250)
26,296,289
(15,116,748)
42,364
5,556
1,406
67
49,393
(28,394)
Total property, plant and equipment, net
12,231,221
11,179,541
20,999
2,260,486,518
13,956,895
691,959,988
(578,314)
359,398,768
1,559,002
(615,481)
7,452,939
2,357,240,064
12,408,630
637,700,908
(447,665)
482,649,439
1,559,002
(693,579)
59,813,862
4,427,657
23,307
1,197,808
(841)
906,571
2,928
(1,303)
112,350
3,333,620,315
3,550,230,661
6,668,477
3,449,949,006
3,723,265,638
6,993,491
OTHER ASSETS:
Investments in related companies
Investment in other companies
Goodwill, net
Negative goodwill, net
Amounts due from related companies
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
234
| 2006 Annual Report
enersis06
BALANCE SHEETS
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006 and thousands of US dollars)
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
Other current liabilities
2005
ThCh$
As of December 31,
2006
ThCh$
2006
ThUS$
12,479
166,146,106
56,071
370,422
44,267
34,633,984
22,063,178
111,060
1,194,830
870,783
9,029,873
15,563
369,676
155,577
35,887,882
23,539,813
60,099
1,086,926
1,636
16,961
29
694
292
67,409
44,215
113
2,042
Total current liabilities
224,632,397
71,016,192
133,391
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
44,477,313
401,990,412
-
2,804,580
2,947,556
122,712,020
167,702,850
353,355,960
100,962,578
3,130,568
2,567,976
154,647,605
315,000
663,716
189,639
5,880
4,823
290,478
Total long-term liabilities
574,931,881
782,367,537
1,469,536
SHAREHOLDERS´ EQUITY:
Paid-in capital, no par value shares
Additional paid-in capital
Other reserves
Retained earnings
Net income for the year
Provisional dividends
Deficit of subsidiaries in development stage
2,415,284,412
172,124,214
(241,698,626)
235,229,509
69,445,219
-
-
2,415,284,412
172,124,214
(238,342,306)
271,279,769
285,960,366
(36,242,795)
(181,751)
4,536,683
323,305
(447,684)
509,551
537,126
(68,076)
(341)
Total shareholders´ equity
2,650,384,728
2,869,881,909
5,390,564
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
3,449,949,006
3,723,265,638
6,993,491
2006 Annual Report | 235
CONSOLIDATED FINANCIAL STATEMENTS
INCOME STATEMENT
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006 and thousands of US dollars)
OPERATING INCOME:
SALES
COST OF SALES
GROSS PROFIT
Years ended December 31,
2004
ThCh$
2005
ThCh$
2006
ThCh$
4,688,939
(1,165,089)
4,684,439
(1,168,385)
4,696,347
(1,320,685)
2006
ThUS$
8,821
(2,481)
3,523,850
3,516,054
3,375,662
6,340
ADMINISTRATIVE AND SELLING EXPENSES
(18,314,915)
(17,405,985)
(16,852,806)
(31,655)
OPERATING LOSS
(14,791,065)
(13,889,931)
(13,477,144)
(25,315)
NON-OPERATING INCOME SELLING ExPENSES:
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
32,277,277
166,628,832
10,572,293
(22,057,188)
(54,225,363)
(75,759,667)
(16,881,795)
(2,255,046)
5,391,199
25,900,988
176,922,137
12,572,511
(23,541,240)
(54,356,183)
(57,730,417)
(2,920,264)
(1,653,344)
(6,675,764)
26,511,641
397,786,664
6,579,819
(9,668,736)
(54,365,152)
(49,274,578)
(2,999,139)
(755,593)
(4,436,146)
49,798
747,172
12,359
(18,161)
(102,115)
(92,554)
(5,633)
(1,419)
(8,333)
NON-OPERATING RESULT
43,690,542
68,518,424
309,378,780
581,114
INCOME (LOSS) BEFORE INCOME TAXES AND
AMORTIZATION OF NEGATIVE GOODWILL
28,899,477
54,628,493
295,901,636
555,799
INCOME TAX
17,924,544
14,777,028
(9,981,367)
(18,748)
INCOME (LOSS) BEFORE AMORTIZATION
OF NEGATIVE GOODWILL
46,824,021
69,405,521
285,920,269
537,051
AMORTIZATION OF NEGATIVE GOODWILL
42,603
39,698
40,097
75
NET INCOME FOR THE YEAR
46,866,624
69,445,219
285,960,366
537,126
236
| 2006 Annual Report
enersis06
STATEMENTS OF CASH FLOWS
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2006 and thousands of US dollars)
CASH FLOWS FROM OPERATING ACTIVITIES :
Net income (loss) for the year
GAIN (LOSSES) FROM SALES OF ASSETS:
Gain on sale of investments
Charges (credits) to income which do not represent cash flows:
Depreciation
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 charges to income which do not represent cash flows
Changes in assets which affect cash flows:
Decrease in dividends receipts
Decrease (increase) in trade receivable
Decrease in 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
As of December 31,
2004
ThCh$
2005
ThCh$
2006
ThCh$
2006
ThUS$
46,866,625
69,445,219
285,960,366
537,126
-
-
-
-
1,115,925
78,097
(166,628,832)
22,057,188
54,225,363
(42,604)
2,255,046
(5,391,199)
(915,099)
30,668,634
70,316,217
461,966
(9,453,276)
(4,460,429)
6,149,084
(19,171,282)
(20,424,928)
40,217
1,118,537
78,097
(176,922,137)
23,541,240
54,356,183
(39,698)
1,653,344
6,675,764
(4,762,484)
7,312,730
1,270,523
78,097
(397,786,664)
9,668,736
54,365,152
(40,097)
755,593
4,436,146
(125,661)
2,805,359
87,849,013
-
-
-
2,386
147
(747,172)
18,161
102,115
(75)
1,419
8,333
(236)
5,269
-
-
-
-
(2,551,565)
115,748,695
217,413
(4,396,430)
(966,827)
(9,409,654)
(38,490)
(307,675)
(12,500,564)
6,085,743
11,210,273
(19,814,541)
42,567
-
-
(23,480)
11,431
21,057
(37,218)
80
Net cash flows provided by operating activities
7,746,713
52,635,167
62,159,723
116,756
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of shares
Loans obtained
Proceeds from bond issuances
Other loans obtained from related companies
Loans obtained from related companies
Other sources of financing
Dividends paid by related company
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
-
79,609,984
-
-
89,663,745
13,374,721
-
(62,506)
(176,610,595)
(142,415)
(90,172,184)
(12,101,961)
-
-
-
-
-
163,847,648
307,759
-
-
1,178,526
25,763,034
453,506
(8,637,264)
(5,706,970)
(152,622,147)
(147,886)
-
(39,484,097)
33,486,296
9,322,986
62,898
17,512
-
-
-
-
(69,571,809)
(42,885,724)
(159,582,715)
(11,680,095)
(130,678)
(80,553)
(299,748)
(21,939)
-
-
-
-
-
-
-
-
(2,869,086)
(5,967,572)
Net cash used in financing activities
(99,310,297)
(185,170,870)
(77,063,413)
(144,750)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of property, plant and equipment
Proceeds from sales of long-term investments
Proceeds from loans granted to related companies
Proceeds from other loans granted to related companies
Long-term investments
Sales of other investment
Additions to property, plant and equipment
Other loans to related companies
Loans granted to relates companies
Other disbursement for investments
Other receipts from investment
-
-
114,971,918
103,894,064
(363,825)
-
(99,462)
-
(105,134,269)
(24,810,395)
1,106,324
(148,437)
(9,435,501)
(137,957,317)
-
-
2,244,700
57,095,671
-
-
187,482
-
352
-
221,784,153
22,891,224
42,997
-
-
-
(12,123,709)
(22,772)
-
-
(181,166)
(6,153,842)
(205,536)
(502,413)
24,028,675
(340)
(11,559)
(386)
(944)
45,134
Net cash provided by investing activities
115,513,126
107,634,498
27,940,715
52,482
NET CASH FLOW FOR THE YEAR
23,949,542
(24,901,205)
13,037,025
24,488
EFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
(331,672)
(205,833)
24,402
46
NET INCREASE IN CASH AND CASH EQUIVALENTS
23,617,870
(25,107,038)
13,061,427
24,534
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
1,610,278
25,228,149
121,111
227
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
25,228,148
121,111
13,182,538
24,761
2006 Annual Report | 237
CONSOLIDATED FINANCIAL STATEMENTS
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$
Other
reserves
ThCh$
Retained
earnings
ThCh$
Deficit of
subsidiaries in
development stage
ThCh$
Interim
dividens
ThCh$
Net income
(loss) for
the year
ThCh$
Total
ThCh$
As of January 1, 2004
Capital increase
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
Price-level restatement of capital
Net income for the year
(25,671,685)
2,227,711,340 159,323,362
-
(563,714)
-
-
-
-
-
-
(4,435,524)
- (103,832,123)
-
11,992,130
-
-
(641,792)
3,966,173
55,692,784
-
-
-
176,016,726
-
13,629,822
-
-
-
4,731,711
-
(1,455,716)
-
(1,161,959)
-
-
-
(55,989)
-
-
-
-
-
-
-
-
12,467,863 2,548,391,890
(563,714)
-
-
(12,467,863)
-
(4,435,524)
- (103,832,123)
11,992,130
-
63,692,887
-
44,307,596
44,307,596
As of December 31, 2004
2,283,404,124 162,725,821
(122,588,994) 194,378,259
(2,673,664)
-
44,307,596 2,559,553,142
As of December 31, 2004 (1)
2,415,284,412 172,124,214
(129,669,244) 205,604,769
(2,828,084)
-
46,866,624 2,707,382,691
As of January 1, 2005
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Dividend paid
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
Price-level restatement of capital
Net income for the year
2,283,404,124 162,725,821
-
-
-
-
-
-
-
-
-
-
5,858,130
82,202,548
-
-
(122,588,994) 194,378,259
41,633,932
-
(13,600,517)
-
-
7,979,618
-
-
(5,851,418)
-
(97,676,664)
(6,197,072)
(4,413,203)
-
As of December 31, 2005
2,365,606,672 168,583,951
(236,727,351) 230,391,292
As of December 31, 2005 (1)
2,415,284,412 172,124,214
(241,698,626) 235,229,509
As of January 1, 2006
Transfer of prior year income to retained earnings
Changes is equity of affiliates
Accumulated deficit of subsidiaries in development stage
Final dividend 2005
Reserve Technical Bulletin No. 72
Cumulative translation adjustment
Price-level restatement
Interim dividend
Net income for the year
2,365,606,672 168,583,951
-
-
-
-
-
-
-
-
-
-
-
-
3,540,263
49,677,740
-
-
-
-
(236,727,351) 230,391,292
68,016,865
-
-
(32,651,166)
-
-
5,522,778
-
-
-
(10,585,093)
-
-
(825,381)
14,766,794
(4,971,275)
-
-
(2,673,664)
2,673,664
-
-
-
-
-
-
-
-
-
-
-
(181,751)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,307,596 2,559,553,142
-
(44,307,596)
(5,851,418)
-
(13,600,517)
-
(97,676,664)
-
(6,197,072)
-
91,627,093
-
68,016,865
68,016,865
- 68,016,865 2,595,871,429
- 69,445,219 2,650,384,728
-
-
-
-
-
-
-
-
68,016,865 2,595,871,429
-
(68,016,865)
(10,585,093)
-
(181,751)
-
(32,651,166)
-
(825,381)
-
14,766,794
-
53,769,506
-
(36,242,795)
-
285,960,366
- 285,960,366
(36,242,795)
As of December 31, 2006
2,415,284,412 172,124,214 (238,342,306)
271,279,769
(181,751)
(36,242,795)
285,960,366 2,869,881,909
As of December 31, 2006 (2)
4,536,683
323,304
(447,684) 509,551
(341)
(68,076)
537,127
5,390,564
(1) Restated in thousands of constant Chilean pesos as of December 31, 2006.
(2) Expressed in thousands of US$ as of December 31, 2006.
The accompanying notes are an integral part of these consolidated financial statements.
The following table presents the dividends received by Enersis individual in the years ended December 31, 2004, 2005 and 2006:
Dividends received
2004
ThCh$
70,316,217
Years ended December 31,
2005
ThCh$
87,843,005
2006
ThCh$
127,505,099
238
| 2006 Annual Report
enersis06
MANAGEMENT’S ANALYSIS OF THE CONSOLIDATED
FINANCIAL STATEMENTS
ENERSIS GROUP, FOR THE YEAR ENDED DECEMBER 31, 2006
ECONOMICAL- FINANCIAL SUMMARY
ENERSIS RESULTS
The most important items (among others), stemming from 2006, are
summarized in the following synthesis:
• Net Income rose by 312%, reaching Ch$285,960 million.
• Sales rose 18,2% (or Ch$3,892,064 million), due to the increased
revenue received from business in generation and distribution
areas.
• The Operating Margin rose by 22.5%, reaching Ch$1,297,620
million.
• Operating Income increased by 28.9%, reaching Ch$1,068,042
million. The increase, per country, was as follows:
Chile
Argentina
Brazil
Colombia
Peru
31.4%
94.4%
52.6%
9.6%
10.7%
• The EBITDA increased by 22.9% to Ch$1,490,519 million.
• Coverage for Financial Expenses improved by 14.9% to 4.16
times.
• The Return on Equity was equal to 9.96%.
• Consolidated physical sales continue to increase (in distribution by
5.5% and in generation and transmission by 19.0%).
• Distribution clients continued to increase, this time by more than 360
thousand.
The Net Results for 2006 reached Ch$285,960 million, revealing a
significant growth of 311.8%. The aforementioned is mainly due to
the excellent operating result which the company obtained during this
period, which increased by 28.9%, as well as the non operating results,
which improved by 2.6%, and the positive effect of deferred taxes in
Chilectra (worth Ch$107,170 million), product of the merger with Elesur
in April 2006.
The 28.9% more significant increase in Operating Income, are due
mainly to a strong increase in operating revenue (by 18.2%), related
to increased product sales stemming from growing demand. This
revenue far outweighs that of energy purchases and other associated
operating costs, which increased by 16.1%, making possible an increase
in operating margin to 33% from 32%.
This important operating improvement made possible to increase
EBITDA by 23%, reaching Ch$1,490,519 million. That is approximately
US$2,800 million.
On the other hand, the Non Operating Income registered a small
decrease of losses by 2.6%.
These good results have been recognized and integrated by the market,
with an appreciated increase in share prices of 52.6% and a 45.6%
increase in ADR prices.
• The price per share increased by 52.6% and the ADR by 45.6%,
reaching Ch$169.68 and US$16.00, respectively.
• The market capitalization of the Enersis Group, reached Ch$5,540,249
In this sense that the stock market value of the Enersis Group has
increased significantly in the last twelve months, reaching Ch$5,540,249
million by the end of 2006.
million.
• Moody’s elevated the classification of the senior Enersis debt to
Baa3, from Ba1, with a stable tendency; this is equal to an Investment
Grade level.
• S&P put the Enersis classification under positive revision, considering
its better financial profile.
During 2006, the two main businesses of to the Enersis Group have
shown very positive results due to the good economic conditions
that have been registered in the five countries within which the group
operates. This has stimulated significantly energy consumption.
In effect, the aggregate demand per country has increased by a
significant 6.4%. This is reflected in the increased need for energy
generation in 2006, in order to meet customer demand.
(cid:57)(cid:90)(cid:88)(cid:35)(cid:21)(cid:37)(cid:42)
(cid:56)(cid:93)(cid:25)(cid:21)(cid:40)(cid:33)(cid:43)(cid:40)(cid:37)
(cid:73)(cid:93)(cid:35)(cid:21)(cid:98)(cid:94)(cid:97)(cid:97)(cid:94)(cid:100)(cid:99)
(cid:32)(cid:42)(cid:39)(cid:35)(cid:43)(cid:26)
(cid:57)(cid:90)(cid:88)(cid:35)(cid:21)(cid:37)(cid:43)
(cid:56)(cid:93)(cid:25)(cid:21)(cid:42)(cid:33)(cid:42)(cid:41)(cid:37)
(cid:73)(cid:93)(cid:35)(cid:21)(cid:98)(cid:94)(cid:97)(cid:97)(cid:94)(cid:100)(cid:99)
Also, transaction levels in the domestic and New York market (via
ADR’s) continue to reflect a positive perception of our companies due
to the great liquidity of our papers. International risk classification rating
agencies have also taken note of this solid operating and commercial
financial condition. This past December 14, Moody’s raised the Enersis
and Endesa Chile risk classification to an Investment Grade, from ‘Ba1’
to ‘Baa3’, with ‘stable tendencies’. This improvement is in line with
the greater financial flexibility achieved by both companies; Enersis
2006 Annual Report | 239
CONSOLIDATED FINANCIAL STATEMENTS
is unanimously classified as an Investment Grade company by Fitch,
Standard & Poor’s and Moody’s.
In this context, this past December 15, Standard & Poor’s placed Enersis
and its subsidiary Endesa Chile, under revision with the a positive
perspective, based on the best coverage ratios and greater financial
flexibility. The results of this review will probably come to light in the
first quarter of 2007.
ANALISIS BY BUSINESS LINE AND COUNTRY
Of note, regarding the generation line of business, the consolidated
production level was 12.4%, greater than that of the year prior. Similarly,
the sale of energy reached 70,337 GWh, which represents a 19.2%
increase. On the other hand, installed power reached 13,299 MW, as a
result of the incorporation of 199 MW in Termocartagena, 387 MW due
to the merger of Etevensa and Edegel and 70 MW due to the second
combined-cycle of Ventanilla.
The distribution business, revealed a significant increase in sales
(5.5%) similar to results in past periods, due to the sustained growth
of demand in the concession area belonging to the Enersis Group.
As such, the losses in energy continued to decrease, this time by 0.5
percentage points less than that of the prior year, reaching consolidated
terms equal to 11.3%. The aforementioned reflects the effectiveness
of the plans to reduce losses pertaining to all subsidiaries. Upon the
closing of transactions, more than 360 thousand new clients appeared
which is one of the significant factors explaining the stable nature of
flow within this business.
Regarding our country by country business situations, these can be
summarized as follows:
Argentina
In generation, an increased exploitable margin can be observed,
stemming from growth in average sales prices, related to the recognition
of major expenditure for energy within the system.
In the case of El Chocón, a greater operating margin can be observed,
principally explained by an improved purchase-production mix, due
to increased hydro electric generation. El Chocón, not only benefited
from the improved hydrology, but also increased its physical sales by
26.2%.
In distribution, Edesur reported a 5.8% increase in the sale of
energy, resulting from the increased demand in the concession zone,
a significant reduction in the loss of energy and over thirty one thousand
new clients, all positive structural elements for company distribution.
Despite this, the operating income decreased due to increased spending
in the administration and sales areas.
Of note, under reasonable criteria, as of September 2006, the
administration decided to reverse income stemming from adherence
to the terms agreed upon in the August Act Agreement (signed between
the company and the Ministers for Economy, Production and General
Planning. All this, considering that at that date, the said act was still
pending agreement by the executive (which only came about on
December 28, 2006).
In effect, on January 8, 2007, through Decree 1,959/06 published in
the Official Bulletin, said Act Agreement was approved. This brought
about an increase by 23% in the Aggregate Distribution Value, more
than 5% of which was destined to specific works; which could not reflect
an adjustment any greater than 15% to the final rates to industrial and
commercial users (in comparison, residential sectors will not experience
any increase). Pending for the application of the rate increase is that
ENRE publish their tariff rates, and that the standards for retro-active
charging be established. The increase in rates supposes increased
revenue for Edesur of approximately US$45 million per annum.
Regarding the Argentine market, there were record levels of energy
consumption during December, showing an increase by 9.1% when
compared to the same month the year prior (whereby December was
the highest month registered for 2006). National consumption reached
97,198 GWh, that is 5.6% above the 92,037 GWh used in 2005.
Chile
In generation, Endesa Chile, showed a greater operating income
of 74.3%, associated to increased sales and greater regulated and
average spot price resulting from the higher cost of generation (due to
the increased demand, and the natural gas restrictions in Argentina).
As such, the good hydrology and the good dam levels, has permitted
increased distribution of hydroelectricity.
Dated January 2, 2007, the new node price was finally published (which
reached US$67.31 (+7.76%). This price will be in place from November
1° 2006, to April 30, 2007.
As such, Endesa Costanera shows a greater operating margin, due
to increased sales and higher sales prices (Ch$16.9 per kWh as of
December 2006, compared to Ch$12.7 per kWh in December 2005),
which compensated for the significant cost increase in the purchasing
of energy due to the recognition of increased generation costs in the
system.
Regarding the first tendering of energy process, Endesa Chile, was
awarded 100% of that offered, a total of 6,395 GWh/ per annum (2,400
GWh/per annum by Chilectra, 618.5 GWh/per annum of Chilquinta,
1,500 GWh/per annum by Saesa, 876.5 GWh/per annum by Emel and
1,000 GWh/per annum pertaining to CGE Distribution), at an average
sales price of energy at the point of supply of 52.3 US$/MWh, which
is equal to the monomial price of 65.0 US$/MWh.
Of note during 2006, historical maximums in generation were produced
in the Costanera, with 8,940 gross GWh generated (3% increase over
2005) and El Chocón which in total produced 5,041 GWh of energy, a
figure never before reached (28% increase over 2005).
Of note, electric generation by the Endesa Chile Plants reached a
historic annual production record in 2006. The production during 2006
was 20,239 GWh (85% hydraulic) an 11.4% more than the 18,909 GWh
(84% hydraulic) generated in 2005.
240
| 2006 Annual Report
In distribution, Chilectra reported an operating income of Ch$117,137
million, which reflects a decrease by 0.4% due to major expenditure in
the administration and sales areas. However, this was compensated
by the increase in physical sales by 4.4% due to the increased energy
demand at a time where losses where reduced slightly, which indicates
greater efficiency reached by this subsidiary in the administration of its
network. Additionally, there was an increase in clients (by 33 thousand
new inscriptions).
Of further note, as a consequence of the increase in node price, the
final rates to clients increased by 11.7%. This charge has been applied
retroactively from November 1°, 2006.
Regarding the first tendering of energy process, Chilectra tendered a
total of 4,500 GWh/per annum for the period 2010-2022. 900 GWh/per
annum was awarded to Guacolda, 2,400 GWh/per annum to Endesa,
and 1,200 GWh/per annum with AES Gener for an average price of
53.59 MWh.
The second process of the tendering of energy is planned for August
2007.
The energy demand in SIC increased by 6.3% as of December 2006,
which reflects a positive comparison with the increase occurring on the
same date the year before (which reached 4.5%). As such, in SING,
the demand reached 4.8% versus 2.8% in 2005.
Colombia
In the area of generation, Emgesa generated 6.1% more than in 2005.
The aforementioned is basically due to the good hydrological conditions
prevailing in the first semester of the year. However, this increased
hydraulic production contributed to decrease market prices, decreasing
the company margins; a tendency which has been reversed in the last
quarter of this year. Betania registered a reduced operating income
by Ch$4,675 million. The aforementioned is basically due to the fall of
sales prices despite the fact that this subsidiary increased production
by 4.9%.
Regarding the regulatory framework, from the end of 2006 a new
methodology was adopted to remunerate power based on the charge
by Confidence in the Wholesale Energy Market. In distribution,
Codensa reported a 6.5% increase in the sale of energy resulting from
the increased domestic demand and a small reduction in loss of energy.
Additionally, it reported a greater purchase- sales margin due to the
lower purchase cost (which in turn stemmed from good hydrology). This
operating income reached Ch$13,352 million which is a 23% increase
compared to December 2005.
Peru
In the generation business, Edegel registered an improved operating
income associated to a 47.1% increase in physical sales, a reality that
was partially compensated for by the fall of average sales prices by
4.2% (due to the availability of natural gas from Camisea). On the
other hand, the operating costs increased due to the cost of fuels used
enersis06
in the increased thermal generation taking place in the simple-cycle
Ventanilla Plant.
Consequently, the purchase of electricity, as power or as energy, rose
from Ch$22.7 per kWh in 2005, to Ch$37.3 in 2006.
Regarding the regulatory plan, dated December 16, the Urgent
Decree N° 035-2006 was issued by the Ministry of Energy and Mines.
Through this decree, the electricity market contingency is resolved,
which originated from the lack of contracts of electricity supply between
generators and distributors for 2006.
Consequently, as of December 18 energy tenders were successfully
developed called for by Luz del Sur and Distriluz for the period 2007-
2010. The first was awarded 113 MW and the second 31 MW for Edegel.
The awarded prices were similar to the re gulated rates and will be
maintained for the life of the contracts (4 years).
The Edegel-Etevensa merger was in effect on June 1st. Accountably,
this takes effect from January 1st. Consequently, the group has become
consolidated as leading generator in Peru in a system where regulation
is well adapted and demand is increasing. This merger increases the
balance between the thermal and hydraulic capacities of the company,
thus improving the generation mix.
In distribution, Edelnor reported a significant 29.8% increase in their
operating income (reaching Ch$38,578. This great progress is due to
the combination of higher sales and improved margins.
In effect, a 7.6% increase in energy sales was registered due to
increased domestic demand at a time where a slight reduction in energy
loss was also registered.
Additionally, a greater purchase-sale margin was reported, due to the
lower purchase cost (stemming from lower market prices thanks to
good hydrology).
Additionally, this subsidiary saw a client increase by 27 thousand, rapidly
reaching 1 million consumers. It now has 952 thousand subscribers
to its network.
Brazil
In generation, the operating income of Cachoeira increased by 23.6%,
basically deriving from an 8.0% increase in physical sales which
reached 4,177 GWh (due to better hydrology in the central region).
This decreased the need for the purchase of energy and power. This
positive set of circumstances partially compensated for the decrease
in sales margins, as well as the increased costs for the transportation
of energy.
The Fortaleza Thermo Generation Plant (CGTF), saw a slight decrease
in its operating income due to the lower average sales price, which could
not be compensated by the very slight increase in the level of physical
sales (which only increased by 0.6%).
Regarding CIEN, a negative operating income can be seen of Ch$759
million. This loss is due fundamentally, to a decrease in physical sales
2006 Annual Report | 241
CONSOLIDATED FINANCIAL STATEMENTS
mainly due to the lack of supply from Argentina, as well as a decrease
in the average sales margins in 2006.
Considering the energy situation of Argentina and Brazil, CIEN is in the
process of redesigning its business in order to become independent from
the availability of energy in both countries, and to be able to carry out
purchases and/or sales with each other. Additionally, it seeks adequate
remuneration as an international energy transporter. On the other hand,
it is renegotiating contracts that will make current commercial conditions
more flexible.
In this context, CIEN, in December, reduced the energy contract it had
with Copel, signing on January 3, 2007 an agreement in which it was
stipulated that only 175MW would be supplied in 2007.
In distribution, Ampla registered an increase of 34.5% in its operating
income, reaching Ch$110,008 million. The aforementioned is the result
of increased physical sales by 6.0%, better buy-sell margins, fewer
energy losses and increased unitary margins associated with the rate
readjustment that took place in March 2006 (by 2.9%); as well as the
incorporation of 100 thousand new clients in 2006.
Regarding the plan to reduce Ampla losses, the losses for December
were of 19.9%, while the losses this year have reduced by 1.7
percentage points, reaching 21.9%. To date we have 362 thousand
clients connected to DAT technology, thus reaching the establish
goal.
Coelce, saw increased operating incomes by 75.9% by Ch$86,549
million. This significant increase is mainly due to the 2.9% increase in
physical sales, as well as the improved purchase-sale margin. In this
light Coelce saw a significant reduction in energy loss (which went from
14.0% to 13.0%). On the other hand, there was also an increase in new
clients by 105 thousand.
In 2006, there was an overall rate readjustment (of 10.0%) which was
granted in April, which is directly reflected in the positive variation by
21.8% of income from energy sales. In this sense, and of note, Coelce,
will have its next rate revision in April 22, 2007 and this will be the first
company to calculate its 2007-2009 tariffs under the new WACC as
defined by ANEEL of a 9.98% after taxes.
Of note, last October a third new energy tender took place for a total
amount of tendered energy of 1,104 MW. This resulted in an average
price of R120.86 for hydroelectricity and R$137.44 for thermoelectricity
in 30 and 15 year respective terms (distribution starting in 2011).
INVESTMENTS
The Enersis Group considers the compliance of high standard and
quality services in the distribution of electric energy as an essential
part of its strategy. To reach this objective, permanent investment
is required so that different consumer segments, industrial, public
illumination, commercial and residential, do not have their daily
processes altered.
242
| 2006 Annual Report
The maintenance investment plan (Capex) for the period 2007-2009
reaches approximately MMCh$1,900 and is totally financed by its
respective subsidiaries, and contributes to the trustworthy and timely
supply of electric energy to satisfy more than 360 thousand clients that
are added each year, and form part of the Enersis Group; a key factor
for the stable flows coming from this line of business.
In conjunction with this plan, the Enersis Group plans to invest in new
projects that contribute to the development of different countries within
which it functions. Regarding Chile, our subsidiary Endesa Chile is
currently developing the following projects:
Expansion
Investments
MMUS$
Installed
Capacity (MW)
Investment
Amount
(US$ app.)
Operation
beginning date
Combustible
utilized
San Isidro II
Palmucho
Aysén
Canela
Ojos de Agua
377
32
2400
30
20
* Open Cycle
** Combined Cycle
210
44
2400
30
20
Apr 07* - Mar 08**
Thermal
II Sem. 2007
Hydraulic
2012
Hydraulic
II Sem. 2007
Eolic
2008
Hydraulic
Likewise the company is actively participating in the initiative sponsored
by the government, the GNL project, with 20% of the property of the
new re-gasification terminal, where it participated alongside Enap,
Metrogas and British Gas (the last being the provider of gas). The GNL
Chile S.A. Company has finalized the conditions for the development
of the project ‘Project Development Agreement’ (PDA) with British
Gas. In September, Electrogas, a company formed by Endesa Chile
(42.5%), the Matte group (42.5%) and ENAP (15.0%) announced their
intention to construct an oil pipeline in the V Region, which will run from
Concón to Lo Venecia (where the combined cycles of both generators
are located). This will imply an investment of US$6 million, with its
operation is set to begin May 2007.
In Argentina, Foninvemem, an investment fund created to normalize the
wholesale electricity market, financed the construction of the combined
cycles of 800MW each. In December 2005, two generation companies
where constructed in this way, of which Endesa Chile has a 26.2% share
(through its subsidiary Argentina). These companies are Thermoelectric
José de San Martín S.A. and Thermoelectric Manuel Belgrano S.A. In
October, the supply of equipment of both cycles was awarded to the
Siemens Company for a total of 1,650 MW. The preset date for the
beginning operation is January 2009, from which point the companies
will begin to recover their balance with flows generated by the project
through a sales contract of their production to MEM (CAMMESA) for
10 years.
enersis06
MARKET WITHIN WHICH THE COMPANY OPERATES
The commercial activities pertaining to Enersis take place through the affiliated companies that operate in the various businesses within which the
company is present. The more relevant business for Enersis is Distribution, Generation and Electricity Transmission. The following tables show the
evolution of key indicators pertaining to the company in the different countries in which it operates.
Generation and Transmission Business
Country
Endesa Chile (1)
Endesa Costanera
El Chocón
Edegel (2)
Emgesa
Betania
Cachoeira Dourada
CGTF (3)
CIEN (3)
Total
Markets in
which operates
SIC y SING Chile
SIN Argentina
SIN Argentina
SICN Peru
SIN Colombia
SIN Colombia
SICN Brazil
SICN Brazil
SICN Brazil
Energy Sales
(GWh)
Market
Share
Dec-05
Dec-06
Dec-05
Dec-06
20,731
8,466
4,113
4,600
12,358
2,737
3,867
678
1,467
20,923
8,816
5,191
6,767
12,311
3,054
4,177
2,705
6,394
59,017
70,337
43.7%
9.6%
4.7%
23.6%
17.9%
4.0%
0.9%
0.1%
0.3%
41.6%
8.9%
5.3%
30.4%
17.4%
4.3%
1.2%
0.8%
1.8%
Includes Endesa Chile and its generation subsidiaries in Chile.
Includes sales whithin January and December 2006 of Etevensa, company merged with Edegel as of June 1, 2006.
(1)
(2)
(3) Includes sales whithin January and December 2006. In year 2005, includes sales for the period within October and December 2005, since the companies
are being consolidated since October 1, 2005, through Endesa Brasil.
Distribution Business
Company
Chilectra
Río Maipo
Edesur
Edelnor
Ampla
Coelce
Codensa
Total
Energy Sales
(GWh) ( * )
Energy Losses
(%)
Clients
(Thousands)
Clients / Employees
Dec-05
11,851
Dec-06
12,377
-
-
14,018
14,837
4,530
8,175
6,580
4,874
8,668
6,769
10,094
10,755
Dec-05
Dec-06
5.5%
0.0%
11.4%
8.6%
22.4%
14.0%
9.4%
5.4%
0.0%
10.5%
8.2%
21.9%
13.0%
8.9%
Dec-05
1,404
Dec-06
Dec-05
1,437
1,972
Dec-06
2,030
-
-
-
-
2,165
925
2,216
2,438
2,073
2,196
952
2,316
2,543
2,138
926
1,726
1,671
1,848
2,239
912
1,737
1,639
1,937
2,289
55,248
58,280
11.8%
11.3%
11,221
11,582
1,568
1,582
(*) Includes sales to final clients, tolls and intercompany sales.
2006 Annual Report | 243
CONSOLIDATED FINANCIAL STATEMENTS
I. ANALYSIS OF FINANCIAL
STATEMENTS
1. ANALYSIS OF THE I NCOME STATEMENT
The results of the company as of the 31st December 2006, amounted
to Ch$285,960 million, which represented a considerable increase from
the 311.8% of the prior year, in which a result of Ch$69,445 million was
obtained, which represents a greater profit of Ch$216,515 million, which
is primarily the result of an increase in operating incomes obtained by
the company during 2006, which increased by 28.9%,(or its equivalent
Ch$239,398 million), to the better non-operating incomes achieved in
the period of Ch$10,932 million and to the recognition of the positive
effect of deferred taxes in Chilectra (ex Elesur S.A.), resulting from the
merger with Chilectra.
It is also important to point out that in 2005, starting from October,
with the creation of the Endesa Brasil Holding Company, the income
statements of Enersis and the companies Central Geradora Termelétrica
Fortaleza (CGTF) and Companhia de Interconexão Energética (CIEN). If
a comparison is made in homogeneous terms, and the pro forma income
statements are compared (see note 2) in which both companies where
added to the Enersis consolidation in fiscal year 2005, the operational
growth result increases by 20.3%.
A comparison of each item in the income statements can be seen in
the following:
Income Statement (Million Ch$)
Operating Revenues
Operating Costs
Operating Margin
Selling and Administrative Expenses
Operating Income
Net Income from Related Companies
Net other Non Operating Income (Expense)
Net Interest (Expense)
Positive Goodwill Amortization
Price Level Restatement
Foreign Exchange Effect
Non Operating Income
Net Inc before Taxes
Income Tax
Extraordinary Items
Minority Interest
Negative Goodwill Amortization
Net Income
Dec-05
3,293,143
(2,234,186)
1,058,957
(230,313)
828,644
6,887
(88,930)
(270,088)
(56,345)
(5,049)
(6,373)
(419,898)
408,746
(182,051)
Dec-06
3,892,064
(2,594,444)
1,297,620
(229,578)
1,068,042
5,039
(98,723)
(265,918)
(55,908)
1,217
5,327
(408,966)
659,076
(109,408)
Var. Dec 06 - 05
Var. % Dec 06-05
598,921
(360,258)
238,663
735
239,398
(1,848)
(9,793)
4,170
437
6,266
11,700
10,932
250,330
72,643
18.2%
(16.1%)
22.5%
0.3%
28.9%
(26.8%)
11.0%
1.5%
0.8%
(124.1%)
183.6%
(2.6%)
61.2%
39.9%
-
-
-
-
(173,072)
15,822
69,445
(269,786)
6,078
285,960
(96,714)
(9,744)
216,515
331,007
6,63
55.9%
(61.6%)
311.8%
25.5%
311.8%
Net Inc b. Taxes, Min Int and Neg Goodwill Amort.
Earnings per Share Ch$
1,295,885
2,13
1,626,892
8,76
a.- Operating Income:
The operating income as of the 31st of December, 2006, reveals growth
amounting to Ch$239,398 million relative amount to the period of time
equal to that of the prior year, and reaching Ch$1,068,042 million,
equivalent to an increase of 28.9%.
If a comparison is made pro forma, in homogenous terms, within the
consolidation framework, the operating income increases by 20.3%
between both periods. Further, if the effect of the devaluation of the
Chilean Peso with regard to the dollar is incorporated (which devalued
by 3.9% between 31 December 2005 and the same date in 2006, going
from Ch$512.50 to Ch$532.39 pesos respectively), the operating income
increases by 18.3%
The Generation and Transmission line of business reveals an
increase in operating income of Ch$148,204 million (equivalent to
34.1%). This is primarily the result of significant growth in the operating
income in Chile and Argentina. The physical sales increased by
19.2%, growing from 59,017GWh in December 2005 to 70,337 GWh
in December 2006.
Chile:
In Chile, the operating income reached Ch$288,460 million in December
2006, compared to Ch$190,863 million the year before, that is a 51.1%
increase. This is due to a favorable hydrology in Chile, mainly during
the period from June to September in 2006, and to the favorable
accumulation of snow in the mountain reserves, which led to an increase
in the results through the more abundant generation of hydroelectricity
244
| 2006 Annual Report
(by 8.8%) as also a better set of prices during 2006. An increase by
6% of demand and the constant cutting in supply of natural gas from
Argentina has put pressure on the electric system which has had to
stretch its installed capacity. In 2006, Endesa Chile and its subsidiaries
in Chile carried out sales within the market for 4,991 GWh, with the
average market price being around US$44.8 per MWh. Meanwhile, the
physical sale of energy to regular clients, which are subject to a new
energy matrix recognized in the tariffs settler system, has increased
by 1.7%, reaching 10,756 GWh. The increase in the sale of energy
reflects an increase of 12.7% in the average sale price which went
from Ch$25.3 per kWh in 2005 to Ch$28.5 per kWh in 2006, due to
the recorded increases in market prices. Alternatively, the greatest
thermal generation during the last quarter of 2006 stemming from the
strong cutbacks to the supply of natural gas from Argentina, have made
the cost of fuel and other fixed costs increase in spite of the favorable
hydrology within the year, this value was compensated for through
lower costs in the purchasing of energy and power. The cost of the
purchase of electricity, regarding energy and capacity, went down from
Ch$66,772 million in 2005 to Ch$53,789 million in 2006, mainly due to
a decrease in the purchasing of physical energy (by 42.0%); Meanwhile,
the average sale price went from Ch$29.4 per kWh in 2005 to Ch$40.9
per kWh in 2006.
Brazil:
In Brazil, the operating income of our subsidiary Cachoeira Dourada,
throughout the year 2006, reached Ch$ 29,547 million, which compares
favorably with the Ch$23,896 million reached during 2005 (representing
an increase by 23.6%). This is mainly due to the increase in the physical
sales by 8.0% (reaching 4.77 GWh), which was partially compensated
for by the lower sales margin within this period and an increase in the
cost of transporting energy. Additionally, a favorable hydrology west
of the southeast-center has permitted the increase of production in
Cachoeira, which decreased the need to purchase energy, allowing for
the reduction of costs for the purchase of energy and power.
Since October, 2005, with the forming of Endesa Brasil, Enersis
consolidates the companies Central Geradora Termelétrica Fortaleza
and Companhia de Interconexão Energética.
During 2006, the operating income of CGTF reached Ch$52,531
million, showing a decrease of 2.8% in comparison the 2005 in which
a operating income of Ch$54,018 million was obtained. This decrease
is mainly due to the lower average price of sale during 2006, which was
in part compensated by the decrease in the cost of fuel and transport.
The physical sales reached 2,705 GWh in December 2006 (2,690 GWh
in December 2005).
As for CIEN, it showed losses in its operating income for the period in
question of over Ch$759 million (comparatively, in same period of the
year prior- it reached a profit of Ch$33,858 million). The aforementioned
is due to the decrease of physical sales stemming from the lack of
supply from Argentina to Brazil, which reached 6,394 GWh in December
2006 (6,567 GWh in December 2005). Significantly, CIEN is aiming to
refocus their business so that it does not have to depend on Argentine
and Brazilian energy to carry out purchases and sales between these
countries. In this context it has been renegotiating its existing contracts
relating to the supply of energy while at the same time seeking a
enersis06
remuneration that is compatible with its function as an international
transporter of energy. The company aims to have a redefined business
structure from the year 2007.
Argentina:
The operating income in Argentina increased due to the improved
transaction of our subsidiaries within that country. Endesa Costanera
registered an operating profit of Ch$4,893 million compared to the loss
of Ch$2,132 million in 2005, due principally to the energy price increase
which occurred in recognition of the higher cost related to energy within
the system. Similarly, the hydroelectric central El Chocón registered an
increase in the operating income of Ch$30,309 million in the current
year, resulting from better hydrology, which together with the increase
in market prices, enhanced the operating income.
The El Chocón hydroelectric plant has continued to capitalize on the
increased demand for electricity within the Argentine market, (which
borders on 10% thanks to good hydrology in the Comahue region). Its
sales have reached 5,191 GWh in December 2006, revealing a 26.2%
increase when compared to the prior year. The better hydrology has
made allowed the increase of hydro-energy production by 1,111 GWh
when compared to the prior year, (reaching 5,041 GWh, which was
largely predestined to the spot market). Additionally, an increase in the
price of energy has been noted, due to the recognized higher cost of fuel
for the system, which simultaneously creates better energy sale margins
for the current year. In Endesa Costanera, the physical sale of energy
increased to 4.1% during 2006, reaching 8,816 GWh when compared
to that of the prior year (8,466 GWh). This is due to the greater demand
for electricity and the company’s capacity to generate liquid fuel.
Also, an increase in energy prices has been noted, due to the recognized
higher costs of fuel within the system. The company’s average sale price
increased by 33.1% from Ch$12.7 for kWh in 2005, to Ch$16.9 for
kWh in 2006. The cost of fuel increased by Ch$45,281 million, mainly
attributable to the generation of electricity produced using liquid fuel
(oil); this is the principal reason for the increase in costs associated
with Argentina. The increased use of liquid fuel was a consequence of
the scarcity of natural gas in Argentina.
Peru:
In Peru, Edegel registered a greater operating income of Ch$582 million,
reaching Ch$55,536 million in December 2006. This is mainly due to
the increase in physical sales of energy by 2,167GWh equivalent to a
47.1% growth, which partially compensated for the decreased average
sales price (by 4.2%) which resulted from the availability of Camisea
natural gas in the Peruvian electric system. The average sale price
decreased from Ch$25.8 per kWh in 2005 to Ch$24.7 for kWh in 2006.
The operating costs in Peru increased by 78.2%, going from Ch$56,569
million in 2005 to Ch$100.804 million in 2006. This increase is mainly
due to an increase by Ch$25.043 million in fuel costs, related to the
greater simple-cycle thermal generation by the Ventanilla Thermal Plant,
as well as an increase in fixed costs. The purchase of electricity with
regard to energy in the form of power, increased by Ch$4,625 million
during 2006 which is mainly attributable to the rise in the average
purchase price (from Ch$22.7 per kWh in 2005 to Ch$37.3 per kWh
in 2006). Also of note, regarding the aforementioned, the figures for
2006 incorporate the effects stemming from the merger of Edegel with
Etevensa which took place on the 1st of June this year.
2006 Annual Report | 245
CONSOLIDATED FINANCIAL STATEMENTS
Colombia:
In Colombia, the operating income of Emgesa reached Ch$109,077
million during 2006. This is Ch$2,924 million more than what was
obtained within the same period of the prior year. The high level of
hydrology in the country in the first half of the year inspired the decrease
in the price of hydraulic production which simultaneously brought about
through smaller sales margins. This tendency began to reverse itself
during the last quarter (due to the expected “Niño” phenomenon).
Emgesa production increased by 6.1%, reaching a generation of 10,360
GWh. Physical sales reached 12,311 GWh (12,358 GWh in December
2005).
On the other hand, Betania revealed a decrease in its operating income
by Ch$4,675 million with regard to the same period within the prior
year and reaching Ch$12,252 million this year. Betania increased its
production by 4.9%, reaching 2,204 GWh. Sales, as of the 31st of
December, were 3,054 GWh, reflecting an increase of 11.6% relative to
the same period in the prior year (2005). Notwithstanding, the operating
income decreased by Ch$3,201 million (8.0% recorded December 2005)
as a consequence of falling sales prices.
In the Line of Business pertaining to Distribution, our subsidiaries in
the region continue to present important increases in physical sales and
client numbers. In this sense physical sales have increased by 5.5% (or
3,032 GWh); reaching sales of 58,280 GWh as of the 31st of December
2006. On the other hand, client numbers increased by 3.2%, (that is 361
thousand new clients reaching a total amount of 11.6 million).
Brazil:
In Brazil, our Distributor subsidiary Ampla, showed an operating income
of Ch$110,008 million as of the 31st of December 2006; an increase
by 34.5% (or Ch$28,213 million). This is notable when compared to
the results of the same period the year before. This more favorable
result is primarily due to an increase in the demand for energy which
simultaneously caused a 6.0% rise in physical sales, reaching 8,668
GWh during the period January- December of 2006. It is also due to
the better buy-sell margins during this period, and the decrease in lost
energy by 0.5 percentage points (reaching 21.9% this year and 22.4%
in December 2005). Ampla client numbers increased by 100 thousand
and currently reach 2.32 million clients.
Coelce is also showing an increase in its operating income by Ch$37,360
million, reaching Ch$86,549 million in December 2006. This increase is
due to the growth of the demand for energy which increased physical
sales by 2.9% (which reached 6,769 GWh for the period January-
December 2006). It is also due to the more favorable buy-sell margins
throughout the period, stemming from the significant reduction in energy
losses by 1.0 pp (equivalent to 7.1%), going from 14% in December 2005
to 13.0% in December 2006. Client numbers as of December 2006
reached 2.54 million, reflecting an increase by 105 thousand clients
(4.3%) compared to the same period in the prior year (2005).
Argentina:
Our subsidiary in Argentina, Edesur, has noted a decrease in operating
income of Ch$7,815 million; it went from an operating profit of Ch$3,738
million recorded in December 2005 to an operating loss occurring in
the present period of Ch$4,077 million. This is basically the result of
increased operating expenses and the maintenance of the administrative
and sales areas.
246
| 2006 Annual Report
This meager operating income, despite the fact that all the main
indicators of the electric distribution company have improved. In this
sense, the physical sales increased by 819 GWh (5.8 %) due to the
increase in demand for energy (reaching 14,837 GWh in December
2006). The energy losses decreased by 0.9 pp, reaching 10.5% in
December 2006, and client numbers increased by 31 thousand,
reaching 2.20 million clients. Of note, in September 2006 (under
prudential criteria), the company administration decided to reverse
the accrued income derived from the transitional rate system; foreseen
in the Agreement Act signed in August 2005 between the Company and
the Economy and Production and General Planning, Public Investment
and Services Ministries since as at this date, the Agreement Act was
pending of ratification by the National Executive (ratification occurred
on the 28th of December 2006 through Decree N° 1,959). To date,
is pending the approval of E.N.R.E of the new rate system and the
transferal through invoicing of the agreed upon transitional increases,
notwithstanding the need for the adaptation of the previous time tables
for implementing the Overall Rate Revision (RTI).
Colombia:
In Colombia, Codensa reached a operating income of Ch$135,352
million in December 2006, (an increase of 23.0% compared to the same
period the year before). This increase is mainly due to a better energy
buy-sell margin, through an energy loss decrease by 0.5 pp, as well as
the increase in demand implied higher physical sales of energy by 6.5%
(reaching 10,755 GWh), and to growth in the earnings related to other
operating services. Client numbers have increased by 65 thousand,
reaching 2.14 million clients in December 2006. The energy losses went
from 9.4% in December 2005 to 8.9% in December 2006.
Peru:
Our subsidiary in Peru, Edelnor, shows an operating income of
Ch$38,578 million, exceeding by Ch$8,847 million the result obtained
in the same period the year before (which was Ch$29,731 million). This
is partially due to the greater demand for energy and the better margins
on individual sales. The increase in the demand made the physical
sale of energy rise by 7.6% (reaching 4,874 GWh in December 2006).
Client numbers increased by 27 thousand, reaching a total amount od
952 thousand on the 27th of December 2006. Energy losses decreased
by 0.4 pp, reaching 8.2% in December 2006 compared to 8.6% within
the same period in 2005.
Chile
Our subsidiary in Chile, Chilectra, shows a slightly reduced operating
income by Ch$460 million for the period January - December 2006, (or
0.4% when compared to the same period in the prior year), reaching
Ch$117,137 million. This decrease is mainly due to the increase
administration and sales expenses by Ch$3,387 million, partially
compensated by the increase in the operating margin by Ch$2,928
million, due to the increase in physical sales by 4.4% reaching 12,377
GWh, which reflects the current state of economic activity within the
country, and due to a better buy-sell margin in the current period,
resulting from reductions in the loss of energy. Client numbers in Chile
increased by 33 thousand as of December 2006, reaching a total of
1.44 million clients. Energy losses decreased as of December 2006 to
5.4%, compared to 5.5% recorded in December 2005.
The operating revenues and costs, as well as the administration
and sales expenses by subsidiary companies of the Enersis group
in the exercises ended December 2005 and 2006, are shown in the
following:
OPERATING INCOME DETAILS
(In Million Ch$)
Companies (million Ch$)
Endesa S.A.
Cachoeira Dourada (*)
CGTF (**)
Cien (**)
Chilectra S.A.
Edesur S.A.
Edelnor S.A.
Ampla (former Cerj)
Coelce
Codensa
Cam Ltd.
enersis06
December 2005
December 2006
Operating
Revenues
Operating
Costs
Selling and
Administrative
Expenses
Operating
Income
Operating
Revenues
Operating
Costs
Selling and
Administrative
Expenses
Operating
Income
1,146,623
(704,081)
(39,388)
403,154
1,337,121
(793,260)
(39,386)
504,475
12,592
30,923
28,614
(6,461)
(14,758)
(13,957)
(1,195)
(480)
(1,318)
4,936
15,685
13,339
66,844
100,193
(30,992)
(46,091)
143,900
(139,072)
606,015
(444,798)
(43,620)
117,597
664,957
(500,814)
(6,305)
(1,571)
(5,587)
(47,006)
(35,574)
(19,966)
(17,189)
29,547
52,531
(759)
117,137
(4,077)
38,578
110,008
86,549
239,469
(205,917)
197,489
(149,600)
485,791
(381,422)
343,491
(242,305)
409,953
(281,186)
127,792
(108,434)
(29,814)
(18,158)
(22,574)
(51,997)
(18,765)
(8,052)
(2,103)
(7,557)
29,731
81,795
49,189
1,058
3,532
3,738
248,394
(216,897)
214,271
(155,727)
552,631
(425,434)
418,314
(297,489)
(34,276)
110,002
449,811
(301,258)
(13,201)
135,352
11,306
141,080
(121,469)
21,659
54,262
4,695
(11,762)
(44,992)
(2,396)
(9,837)
(2,626)
(10,364)
(20,666)
9,774
7,271
(1,094)
(18,367)
Inmob. Manso de Velasco Ltd.
Synapsis Soluc.y Servicios Ltd.
Holding Enersis and Investmenmt Company
11,356
46,513
4,706
(8,195)
(35,424)
(2,264)
(17,425)
(14,983)
Consolidation Adjustments
(398,184)
364,616
32,133
(1,435)
(526,068)
493,209
33,976
1,117
Total Consolidated
3,293,143
(2,234,186)
(230,313)
828,644 3,892,064 (2,594,444)
(229,578) 1,068,042
(*) Consolidated by Endesa Chile until September 30th, 2005. Since October 1st, it is consolidated by Enersis through Endesa Brasil.
(**) Since October 1st, 2005, these subsidiaries are consolidated by Enersis through Endesa Brasil.
OPERATING INCOME PER LINE OF BUSINESS
The operating revenues and costs, broken down by line of business for the periods ending the 31st of December 2005 and 2006, are shown as
follows:
Business (Million Ch$)
Generation and
Transmission (1)
Distribution
Engineering and
Real State
Headquarters and
Other Services
Eliminations
Total
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Operating Revenues
1,199,547
1,622,319 2,282,206 2,548,377
34,051
49,776
179,014
200,038
(401,675)
(528,446)
3,293,143 3,892,064
Operating Costs
Operating Margin
(722,503)
(986,445)
(1,705,225)
(1,897,619)
(27,484)
(36,137)
(146,127)
(168,858)
367,153
494,615
(2,234,186) (2,594,444)
477,044
635,874
576,981
650,758
6,567
13,639
32,887
31,180
(34,522)
(33,831) 1,058,957 1,297,620
Selling and Administrative Expenses
(42,041)
(52,667)
(184,607)
(167,295)
(3,396)
(3,773)
(33,358)
(40,791)
33,089
34,948
(230,313)
(229,578)
Operating Income
435,003
583,207
392,374
483,463
3,171
9,866
(471)
(9,611)
(1,433)
1,117
828,644 1,068,042
(1)
Includes Operating Income for the period January - December 2006 from Etevensa, CGTF and CIEN. For the year 2005, includes Operating Income for
the period October - December 2005 from CGTF and CIEN.
b. Non Operating Income
On the 31of December 2006, the company revealed losses in the
operational period of over Ch$408,966 million, which reflects an
improvement of Ch$10,932 million with regard to the non- operating
income obtained on the same date in 2005, where losses where of
Ch$419,898 million.
The net interest expenses reveal a 1.5% decrease (equivalent to
Ch$4,170 million), going from a net expense of Ch$270.088 million in
December 2005 to a net expense of Ch$265,918 million. The reduced
expenditure is the result of greater financial earnings, mainly stemming
from placements using cash surpluses and to a containment if average
debt between the two periods. The aforementioned occurred despite the
consolidation of the debt from two new companies during 2006 (CIEN y
CGTF) versus a consolidation period of only three months of 2005.
Income from investments in related companies show a net decrease
of Ch$1,848, going from a net profit of Ch$6,887 million in December
2005 to one of Ch$5,039 million, presently. The reduced profit mainly
stems from the reduced profit seen in the investment in Gas Atacama
(by Ch$3,505 million); partially compensated by the decreased losses in
2006 Annual Report | 247
CONSOLIDATED FINANCIAL STATEMENTS
CIEN (by Ch$7,874 million) and the CGTF profit of Ch$6,029 million. With
the compensating effect of the other two companies as of December
2005, the net loss was of Ch$1,844 million; and that at this period the
equity value attributable to equity value for each company is zero, as
both have been consolidated within Enersis as of October 2005.
Amortization of positive goodwill does not reveal significant variation
and reached a sum of Ch$55,908 million decreasing by Ch$437 million,
or 0.8%, as of the 31st of December 2006.
Net Other Operating Income reveal greater net losses of Ch$9,793
million, going from a net loss of Ch$88,930 million in December 2005,
to one of Ch$98,723 million, presently. The principal reasons for this
variation in the results are detailed in the following:
• Penalties for accounts receivable in CIEN due to contract
renegotiation with Copel Ch$30,518 million.
• Greater expense, by Ch$12,245 million, relating to energy efficiency
for Brazilian subsidiaries.
• Net losses of Ch$10,118 million resulting from adjustments pertaining
to conversion to Chilean norms; mainly corresponding to subsidiaries
in Colombia, Brazil and Peru, in the application of the Technical
Bulletin N° 64.
The aforementioned was compensated in part by:
• Greater profit in the sale of fixed assets by Ch$19,181 million primarily
from the sale of Ampla generation assets.
• Lower expenses relating to provisions and contingencies, by
Ch$16,716 million.
Price level restatement reveals a positive variation of Ch$6,266
million, due primarily to the effect of inflation (by 3.6% in the period
January- December 2005, and by 2.1% in the same period this year)
within monetary and non-monetary assets and liabilities, mainly
debt, calculated in U.F; It is also due to the updating of our income
statement.
Foreign Exchange Effect show a positive net variation of Ch$11,700
million in December 2006, relative to the same period the year before,
moving from a loss of Ch$6,373 million in 2005 due to exchange
differences where Chilean peso was revaluated by 8.1%, at a profit
of Ch$5,327 million in the current year, with a 3.9% devaluation of
Chilean peso. The aforementioned is the result of the company’s active
mismatch of dollar positions in both transactions.
Income Tax and Deferred Tax as of December 2006 reveals an
expense of Ch$109,408 million, compared to the expenses recorded
in December 2005 of Ch$182,051 million, shows a positive variation
of Ch$72,643 million.
INCOME TAX AND D EFERRED TAX
Item (Million Ch$)
Income Tax
Deferred Tax
Dec-05
(134,787)
(47,264)
Dec-06
(251,486)
142,078
Variations
(116,699)
189,342
Total
(182,051)
(109,408)
72,643
248
| 2006 Annual Report
Expenses related to income tax increased by Ch$116,699 million. This is
primarily the result of greater income tax provisions by our subsidiaries,
Coelce by Ch$25,746 million, Endesa by Ch$17,240 million, CGTF
by Ch$16,493 million, Pehuenche by Ch$15,093 million, Codensa by
Ch$10,973 million, and Edelnor by Ch$9,804 million. Partially offset
with lower expenses in Edesur by Ch$5,719 million and Chilectra by
Ch$4,014 million.
Regard the deferred tax, which does not count as cash flow, there is
a noted positive variation by Ch$189,342 million. It principally stems
from Chilectra (Ch$129,771 million) due to the significant recognized
effect (worth Ch$107,170 million) of the merger of Elesur with Chilectra.
The merger brought about the reversal of the valuation provision that
it applied over its tributary losses that were accumulated from past
exercises. Added to this are the effects of CIEN (by Ch$28,835 million),
as well as those of Ampla (by Ch$17,329 million), Coelce (by Ch$14,106
million), Emgesa (by Ch$12,586 million, Pehuenche (by Ch$11,021
million) and Codensa (by Ch$10,348 million). This was compensated, in
part, by the negative variation in Edegel (by Ch$12,916 million), Enersis
(by Ch$9,398 million) and Endesa (by Ch$5,282 million).
Negative Goodwill Amortization reached Ch$6,078 million on the
31st of December 2006, revealing a decrease by Ch$9,744 million in
comparison to the equivalent period the year prior. The lower redemption
is the result of the balance being paid off in Edegel, and to the first
purchase in Betania, whose effect is a smaller amortization of Ch$3,735
and Ch$5,802 million, respectively.
ANALYSIS OF INTEREST RATES AND RISKS OF EXCHANGE
The company has a portion of its loans held in dollars, since a portion
of sales in the different markets within the Company operates, index
in this currency particularly. Nevertheless, the Brazilian, Colombian
and Argentine markets index the dollar to a lesser extent; subsidiaries
within these countries therefore, are willing to take greater debt in local
currency. Regarding financing in Argentina, the dollar has gradually
been replaced with local currency, as far as term conditions and market
rates allows it.
Notwithstanding this natural exchange rate coverage, in a scenario of
high dollar volatility, the Company has continued its strategy of partially
covering its liabilities in dollars in order to cushion fluctuations affecting
the results through exchange rate variations.
Considering the significant reduction in accounting mismatches within
former; which have led to more prudent levels today. As a result, the
company has modified its dollar-peso coverage policies and created
a cash flow coverage policy; establishing a maximum in permissible
accounting mismatches through which coverage transactions are
realized.
As of the 31st of December 2006, the company has coverage in Chile
through Swap dollar-UF contracts (for a sum of US$600 million) and
Swap dollar-peso contracts (for a sum of US$125 million); in consolidated
terms, which allow the compliance with the said coverage policy within
US$100 million expired in 2006.
Regarding interest rate risks, the company has consolidated the terms
under which a portion of its loans under fixed interest (70.8%) and a
portion under variable interest (29.2%) as of December 2006. The
percentage of loans under fixed interest has decreased in comparison
enersis06
to the prior year balance where 81.8% was fixed interest and 18.2% was
variable. This is due to the refinancing by some companies within the
group of expired loans, and the shifting of these loans from fixed interest
to variable. Despite this, risk levels for these companies continue to
maintain within the coverage levels established by the group.
Operating Income for each country is shown in the following figure which
compares the December 2006 results with those of December 2005.
Country (Million Ch$)
Chile
Argentina
Brazil (1)
Peru (2)
Colombia
Eliminations
Total
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Dec-05
Dec-06
Operating Revenues
1,089,939 1,240,633
411,728
507,669
901,123
1,117,461
300,265
367,619
599,784
664,787
(9,696)
(6,105)
3,293,143 3,892,064
% r / consolidated
33%
32%
12%
13%
27%
29%
9%
9%
18%
17%
Operating Costs
(709,799)
(758,956)
(357,981)
(426,298)
(646,162)
(783,996)
(191,005)
(244,127)
(339,170)
(387,509)
9,931
6,442
(2,234,186) (2,594,444)
% r / consolidated
32%
29%
15%
16%
29%
30%
9%
9%
15%
15%
Operating Margin
380,140
481,677
53,747
81,371
254,961
333,465
109,260
123,492
260,614
277,278
235
337
1,058,957 1,297,620
% r / consolidated
36%
37%
5%
6%
24%
26%
10%
10%
25%
21%
Selling and Administrative Expenses
(69,313)
(73,372)
(34,166)
(43,305)
(79,156)
(65,187)
(23,864)
(29,000)
(24,864)
(18,847)
1,050
133
(230,313)
(229,578)
% r / consolidated
30%
32%
15%
19%
34%
28%
10%
13%
11%
8%
Operating Income
310,827
408,305
19,581
38,066
175,805
268,278
85,396
94,492
235,750
258,431
1,285
470
828,644 1,068,042
(1) Year 2006 includes Operating Income for perios January - December 2006 from CGTF and CIEN. Year 2005 includes Operating Income from period
October - December 2005 from CGTF and CIEN.
(2) Year 2006 includes Operating Income for the period January - December 2006 from Etevensa, merged with Edegel.
OTHER RISKS
As commonly practiced in bank loans and market transactions regarding
capital, a portion of the financial debt of Enersis and its subsidiary
Endesa Chile, is subject to cross default covenants. Where certain
breaches by relevant subsidiaries are not corrected, it could result in
a cross default at levels of Enersis and Endesa Chile, in which case
certain company liabilities may be required.
or more) by the company or its relevant subsidiaries, could give place
to the anticipated payment of Yankee bonds.
Further, some loan agreements contain stipulations under which
nonpayment due to certain events experienced by the company or
its relevant subsidiaries (such as bankruptcy, insolvency and adverse
judicially passed sentences involving over 50 million dollars, assets
expropriation) can lead to an accelerated return of credit.
Once the grace period has expired, the nonpayment of debt (specifically
individual amount of 30 million dollars or more) by the company or its
relevant subsidiaries, could give place to the anticipated payment of
syndicated loans subscribed to in 2004. The loans subscribed to by
Endesa (in January and December 2006) and by Enersis (in December
2006), the minimum increases to 50 million dollars.
There are no clauses within the contracts with creditors that oblige
them to pay-off acquired debt, in anticipation, as a result of corporate
classification changes or variances in company debt classifications as
determined by risk classifying agencies. Notwithstanding this, variation
in the risk classification for foreign currency debt, changes the applicable
margins for syndicated loans.
Analogously, following the applicable grace period, where debt remains
unpaid (specifically regarding individual amounts of 30 million dollars
The liabilities that could become due where loan payments go unfulfilled
and the respective subsidiary creditor are detailed as follows:
Bank Loans
Enersis
Endesa Chile
Total
Sindicated
315
100
415
Potentially active events of default in subsidiaries that World generate a cross – default to the Parent Company.
Enersis
Effect on the Parent
1. Default Debt -> 30 MMUS$ (1)
2. Bankruptcy or Cessation of Payments
3. Substantial Adverse Effects Defaults
4. Governmental Action (2)
415 MMUS$
The noted grounds only produce on the parent if occurring in what are called Relevant
Subsidiaries. Judgments in otehr subsidiaries have no effect on the parent. The Relevant
Subsidiaries are qualified o the basis of financial statements of the last fiscal year under the U:S:
GAAP. are based on financial statements as of December 31, 2005, and are Relevant Subsidiaries
of Enersis: Endesa Chile, Endesa Brasil, Chilectra and Cono Sur.
2006 Annual Report | 249
CONSOLIDATED FINANCIAL STATEMENTS
Endesa Chile
Efecto en la Matriz:
1. Default Debt -> 30 MMUS$ (1)
2. Bankruptcy or Cessation of Payments
3. Substantial Adverse Effects Defaults
4. Governmental Action (2)
100 MMUS$
The noted grounds only produce on the parent if occurring in what are called Relevant
Subsidiaries. Judgments in otehr subsidiaries have no effect on the parent. The Relevant
Subsidiaries are qualified o the basis of financial statements of the last fiscal year under the U:S:
GAAP. are based on financial statements as of December 31, 2005, and are Relevant Subsidiaries
of Endesa Chile: Cono Sur, Betania, Pehuenche, Pangue and C.E. Tarapacá.
Notes:
(1) At an operational level of individual debt.
(2) Nacionalization, expropriation, dissolution, etc.
International Yankee Bonds
Amounts in US$ million as of December 31, 2006.
Enersis
Endesa Chile
Total
Yankee Bonds
601
1,866
2,467
Non-fulfillment events potentially active in Subsidiaries (those which would cause cross default in the parent company).
Enersis
Effect on the Parent
1. Default Debt -> 30 MMUS$ (1)
2. Initiation of the Bankruptcy Process
Endesa Chile
Effect on the Parent
Default on Enersis debt or Subsidiaries. Enersis’ Subsidiaries that hold at current date, debt with
third parties for over US$30 million are: Ampla, Endesa, Betania, Endesa Costanera, Codensa,
Coelce, Edegel, Edelnor and Emgesa.
In Enersis or in Relevant Subsidiaries of Enersis, based on financial statements as of December,
31, 2005. Under US GAAP, Relevant Subsidiaries are: Chilectra, Endesa Chile, Endesa Brasil and
Codensa. Under Chilean GAAP, Codensa is not included.
1. Default Deuda -> 30 MMUS$ (1)
Default on Endesa Chile debt or Subsidiaries. Endesa Chile’ Subsidiaries that hold at current date, debt
with third parties for over US$30 million are: Betania, Endesa Costanera, Edegel and Emgesa.
2. Initiation of the Bankruptcy Process
In Endesa Chile or in Relevant Subsidiaries of Endesa Chile, based on financial statements as of
December, 31, 2005. Under US GAAP, Relevant Subsidiaries are: Cono Sur, Endesa Chile Internacional
and San Isidro, under US GAAP as well as Chilean GAAP.
Notes:
(1) At an operational level of individual debt.
Local Bonds
Payments in US$ million as of December 31, 2006.
Enersis
Endesa Chile
Total
Local Bonds
66,2
327,2
393,4
The Enersis bond ahs cross default only if its own debt exceeds 3% of its assets.
Non-fulfillment events potentially active in Subsidiaries (those which would cause cross default in the parent company).
Endesa Chile
1. Insolvency or unable to pay debts
2. Default Debt >= 2 MMUF
3. Initiation of the Bankruptcy Process
250
| 2006 Annual Report
Relevant Subsidiaries
Cono Sur
Subsidiaries
Other Subsidiaries
(in parenthesis costs affected MMUS$)
yes (326)
no
yes (326)
no
no
no
enersis06
2. ANALYSIS OF THE B ALANCE SHEET
As of the 31st of December 2006 total assets show an increasing of
Ch$581,404 million respect previous year, mainly due to:
The total company liabilities have increased by Ch$581,404 million
when compared to the year prior, this is mainly due to:
Assets (Million
Ch$)
Dec-05
Dec-06
Var.
Dec 06-05
Var. %
Dec 06-05
Liabilities (Million
Ch$)
Dec-05
Dec-06
Var.
Dec 06-05
Var. %
Dec 06-05
Current Assets
1,328,816 1,641,367
312,551
23.5%
Fixed Assets
7,806,757 8,087,437
280,680
3.6%
Current Liabilities
1,520,136 1,399,485
(120,651)
(7.9%)
Long Term Liabilities
3,451,643 3,923,079
471,436
13.7%
Minority interest
2,858,841 2,869,963
11,122
0.4%
8.3%
Other Assets
1,345,432 1,333,605
(11,827)
(0.9%)
Equity
2,650,385 2,869,882
219,497
Total Assets
10,481,005 11,062,409
581,404
5.5%
Total Liabilities
10,481,005 11,062,409
581,404
5.5%
• Current assets have increased by Ch$312,551 million, equivalent to
23.5% due principally to:
Long term liabilities have increased by Ch$471,436 million (or 13.7%),
for the following reasons:
• An increase in accounts receivable by Ch$190,932 million, mainly
due to the increase in the invoices by the distributor subsidiaries
Condensa (by Ch$61,179 million), Ampla (by Ch$25,302), CIEN
(by Ch$18,549 million), Cachoeira Dourada (by Ch$14,038 million),
Chilectra (by Ch$13,897 million), Edegel (Ch$12,490 million),
Costanera (by Ch$10,433 million), Endesa (by Ch$10,042 million)
and Emgesa (by Ch$6,716 million).
• Increase in other accounts receivable by Ch$38,160 million due mainly
to increases in Chilean generators stemming from the reliquidation
of tolls by Ch$9,380 million, in Codensa by Ch$8,678 million, and in
Endesa by Ch$4,844 million.
• Increase in other current assets by Ch$23,886 million, mainly due
to the increase in instruments with retro sale agreements in the
subsidiary Endesa Chile, by Ch$27,428 million.
• Increase in time deposits over time by Ch$16,773 million, due to cash
surplus found mainly in Emgesa by Ch$31,079 million, Cono Sur
by Ch$15,173 million, and Enersis by Ch$6,950 million, which was
compensated in part, by the rescue by Betania (Ch$15,122 million),
Codensa (Ch$9,124 million) and Costanera (Ch$4,119 million).
• Increase in fixed assets by Ch$280,680 million (or 3.6%) due
principally to the addition of fixed assets during the year, by
approximately Ch$520,000 million, the incorporation of fixed assets
associated with the consolidation of Etevensa (by Ch$126,807 million)
and to exchange rate effects on fixed asses of foreign company’s
due to the method of keeping non monetary assets in historic
dollars (as stipulated in Technical Bulletin N° 64) in subsidiaries
in unstable countries of Ch$91,502 million. The aforementioned is
compensated in part by the depreciation of fixed assets of one year
(by approximately Ch$415,000 million), and the sale of fixed assets
(worth Ch$44,550 million).
• Obligations with banks and financial institutions has increased
by Ch$340,487 million, explained by the growth of Enersis
worth Ch$123,226 million, CTGF by Ch$60,519 million, Betania
by Ch$59,168 million, El Chocón by Ch$53,239 million, CIEN
by Ch$37,216 million and Edesur by Ch$36,897 million. The
aforementioned was compensated, in part, by reductions in Ampla
worth Ch$23,922 million, Endesa worth Ch$18,496 million and
Pehuenche by Ch$13,082 million.
• An increase in bonds payable, worth Ch$151,276 million, due mainly
to new issues made in Ampla worth Ch$93,018 million, Edelnor worth
Ch$27,103 million, Betania worth Ch$23,690 million and Emgesa
worth Ch$9,512 millions.
• An increase in other accounts receivable by Ch$104,945 million as
consequence of the growth of Edegel by Ch$58,846 million, Endesa
Brasil by Ch$27,647 million and CIEN by Ch$11,709 million.
• Decrease in Provisions by Ch$83,761 million due to the decrease in
provisions for labor and third parties contingencies in CGTF, Ampla,
Coelce and CIEN (by Ch$87,468 million)
The current liabilities have reduced by Ch$120,651 million (or 7.9%),
mainly due to:
• Decrease in current portion of bonds payable by Ch$413,142 million
for payments to Enersis by Ch$157,881 million, and Endesa Chile by
Ch$112,916 million, Endesa Chile International by Ch$79,902 million
and Emgesa by Ch$1,786 million.
• Increases in accounts payable due by Ch$80,243 million as a
consequence of the increase in Codensa by Ch$18,923 million, CIEN
by Ch$18,369 million, Endesa Chile by Ch$15,572 million, Coelce
by Ch$9,720 million and Chilectra by Ch$7,889 million.
• Increase in payable dividends by Ch$56,818 million, mainly in
Codensa by Ch$21,180 million and payable dividends payable to
Endesa International of Ch$22,794 millions (Distrilima, Codensa,
Emgesa, Endesa Brasil).
2006 Annual Report | 251
CONSOLIDATED FINANCIAL STATEMENTS
• Increase in various creditors by Ch$24,877 million, due to the increase
in Coelce by Ch$15,441 million and Edegel by Ch$12,843 million.
• An increase in income tax by Ch$74,810 million, where some
companies stands out such as Ampla revealing an increase of
Ch$53,761 million, Edelnor of Ch$7,987 million and Codensa
Ch$5,858 million.
The minority interest reached Ch$2,869,963 million, without significant
variations; it only varied 0.4%, equivalent to Ch$11,122 million.
Respect the equity, it increased by Ch$219,497 million within the equity,
in December 2005. This variation is mainly due to the increased in
accumulated profits of Ch$36,050 million and the increase of the
prior period by Ch$216,515 million, compensated for, in part, by the
distribution of provisional dividends worth Ch$36,243 million.
The evolution of the principal financial indicators is as follows:
Indicator
Liquidity
Current Ratio
Acid Test (1)
Working capital
Debt
Debt Ratio
Short-term debt
Long-term debt
Interest Coverage (2)
Profitability Return on Equity
Return on Assets
Unit
Times
Times
MM Ch$
Times
%
%
Times
%
%
Dec-05
Dec-06
Var.Dec 06-05 Var. % Dec 06-05
0.87
0.80
1.17
1.09
0.30
0.29
(191,320)
241,882
433,202
0.90
0.31
0.69
3.62
2.62%
0.66%
0.93
0.26
0.74
4.16
9.96%
2.58%
0.03
(0.05)
0.05
0.54
7.34%
1.92%
34.5%
36.3%
n.a.
3.3%
(16.1%)
7.2%
14.9%
280.2%
290.9%
As of December 2006, the liquidity index reached 1.17 times, which
indicates an increase by 0.30 times (or 34.5%) when compared to the
same period in 2005; this reveals a significant improvement where the
index that year was 0.87 times. The aforementioned, reflects a continued
liquidity position for the company, which is decreasing its obligations
with banks through cash excesses and an adequate timeline for the
deadlines of debt.
The reason for debt can be seen at 0.93 times as of the 31st of
December 2006, maintaining a similar level compared to the same
period in 2005 (increasing slightly by 3.3%).
The coverage of financial expenses has improved by 0.54 times
(equivalent to 14.9%), going from 3.62 times in December 2005, to 4.16
times in the current period. The aforementioned is due to the increase
in operating income obtained by the Enersis Group in the course of
the current year and has more than compensated for the increase in
financial expenses.
On the other hand, the profitability on equity reached 9.96%; in the same
period the year prior it reached 2.62%. This increase is directly related
to the growth in results obtained for the period, The profitability of these
assets went from 0.66% in December 2005 to 2.58% in December
2006; this also, is a reflection of the improved results obtained for the
period.
252
| 2006 Annual Report
enersis06
3. CASH FLOW
The company generated a positive net flow during the period of
Ch$61,759 million, shown in the following caption:
The aforementioned was compensated, in part, by:
Cash Flows (Million Ch$)
Dec-05
Dec-06
Dic-05
Dec-06
Operating
Financing
Investment
837.148
862.408
25.260
3,0%
(764.261)
(297.090)
467.171
61,1%
(337.667)
(503.559)
(165.892)
(49,1%)
Net Cash fow for the year (264.780)
61.759 326.539
123,3%
Operational activities generated a positive net flow of Ch$862,408
million, which is higher by Ch$25,260 million compared to that obtained
at the same date the year prior, mainly due to the excellent operating
income for the company. As of the 31st of December 2006, operating
flow is mainly composed of:
Profits for the period of Ch$285,960 million, including:
• Charges made to results that do not represent cash flow (of
Ch$540,407 million) which mainly correspond to depreciation within
the period (by Ch$414,617 million), penalties and provisions (worth
Ch$26,064 million), positive goodwill amortization (worth Ch$55,908
million) intangible amortization (worth Ch$7,859 million), losses in
permanent investments (worth Ch$125 million) and other charges
that do not represent flow (worth Ch$68,810 million), within which
a negative conversion effect has occurred with foreign subsidiaries
regarding the BT64 (worth Ch$47,155 million).
• Variation in net liabilities that affect cash flow by Ch$58,196
million.
• Payments that do not indicate cash flow (worth Ch$15,191 million),
of which Ch$11,645 million correspond to the positive conversion
effect pertaining to foreign subsidiaries.
• Net income in the sale of assets (worth Ch$18,844 million).
• Profit stemming from investments in related company’s, (worth
Ch$5,164 million).
• Amortization of the greater value of investments (worth Ch$6,078
million).
• Variation in net assets which affect operating flow (by Ch$273,098
million).
The financing activity originated a negative net flow of Ch$297,090
million, mainly due to loan payments of Ch$989,097 million, payments
related to bonds payable of Ch$468,853 million, payment of dividends
(worth Ch$178,608 million) and capital distributions from subsidiaries
by Ch$85,523. The aforementioned is compensated, in part, by loans
of Ch$1,274,208 million and the allocation of bonds worth Ch$166,645
million.
The investment activities generated a negative net flow of Ch$503,560
million, showing an increase by Ch$165,892 million (49.1%) compared
to the same period the year prior. These disbursements mainly
correspond to the incorporation of fixed assets (worth Ch$517,768
million), permanent investments (worth Ch$22,550 million) and other
disbursements (worth Ch$12,544 million), compensated in part by the
collection of Ch$44,551 million through the sale of fixed assets, and
other investment revenue worth Ch$1,912 million.
2006 Annual Report | 253
CONSOLIDATED FINANCIAL STATEMENTS
II. ECONOMIC VALUE OF ASSETS
AND BOOK VALUE
Assets expressed in foreign currency, are shown in the exchange rate
at the end of the revised period.
Investments in financial instruments with pacts are shown in light of
their purchase value plus the corresponding interests in conformity with
the rates implicit within each transaction.
The accounts and documents yet to be charged to related companies are
classified by their long or short-term expiration date. The transactions
are adjusted to conditions of equality, similar to those prevalent in the
market.
In summary, assets are shown valued in accordance with generally
accepted accounting principles and norms and specific instruction
stipulated by the S.V.S., as explained in Note 2 of the Financial
Statements.
The following is noteworthy with regard to significant assets:
The value of goods as fixed assets, are adjusted in compliance with the
accounting criteria established by the SVS, in the Circulars N. 550 and
566 of 1985. Regarding the foreign company Inversiones Distrilima S.A.
fixed asset values where adjusted in compliance with exception criteria
stipulated in the Technical Bulletin N° 45 of the Chilean Accountants
Association A.G., a norm in practice at the date the investment was
made and which was not modified by Technical Bulletin N° 51 (which
replaced the former).
Depreciation is calculated over the updated value of goods according to
their remaining useful life. Investments in related companies are shown
valued through their proportional equity value. For the case or foreign
companies, the application of this method in financial statements in
compliance with the norms stipulated in the Technical Bulletin N° 72 and
64 of the Chilean Accountants Association A.G. The intangible values
associated with the aforementioned have been monetarily corrected
and are amortized as indicated by the norms in Technical Bulletin N°
55 of the Chilean Accountants Association A.G. In accordance with
the S.V.S Office Circular N° 150 of January 31, 2003. In finalizing year
2006 financial statements, the company has evaluated the recoverability
of assets linked to investments; this is in accordance with the norms
established in Technical Bulletin N° 72 of the Chilean Accountants
Association A.G.
254
| 2006 Annual Report
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2006 Annual Report | 255
UNCONSOLIDATED FINANCIAL STATEMENTS
256
| 2006 Annual Report
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UNCONSOLIDATED
FINANCIAL STATEMENTS
INDEPENDENT ACCOUNTANT´S REPORT
259
UNCONSOLIDATED BALANCE SHEET
260
UNCONSOLIDATED INCOME STATEMENT
262
UNCONSOLIDATED STATEMENTS
OF CASH FLOWS
NOTES TO THE UNCONSOLIDATED
FINANCIAL STATEMENTS
ESSENTIAL FACTS
MANAGEMENT’S ANALYSIS
OF THE UNCONSOLIDATED FINANCIAL
STATEMENTS
263
265
288
289
2006 Annual Report | 257
UNCONSOLIDATED FINANCIAL STATEMENTS
ACCOUNT INSPECTOR’S REPORT
In accordance with the stipulations of law N° 18,046 on corporations, and in compliance with the mandate conferred by the
Ordinary General Shareholders Meeting held on March 21, 2006, we have proceeded to examine the Financial Statements of
Enersis S.A. for the fiscal year starting January 1, 2006, and ending on December 31, 2006.
Our work focused on the verification, on a selective basis, of the match between the figures expressed on financial statements
and those on the official registers of the Company, and to this end we compared the figures presented in the general ledger
against the grouping and classification spreadsheets, in order to subsequently verify that these amounts, which represented
the totals of the accounts under one item, coincided with those included in the financial statements. We have no observations
on this review.
Roberto Lausen
Account Inspector
Luis Bone
Account Inspector
Santiago, January 23, 2007
258
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2006 Annual Report | 259
UNCONSOLIDATED FINANCIAL STATEMENTS
UNCONSOLIDATED BALANCE SHEETS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2006)
As of December 31,
2006
ThCh$
2005
ThCh$
162,935
6,949,540
737
8,167,902
95,297,378
3,914,901
21,075
36,240,045
11,100,923
121,111
-
752
19,368,022
25,951,697
7,764,556
633
44,968,049
5,922,650
161,855,436
104,097,470
22,553,982
2,957,880
748,512
35,915
26,296,289
(15,116,748)
22,554,028
2,677,301
1,045,214
35,928
26,312,471
(14,081,250)
11,179,541
12,231,221
2,357,240,064
12,408,630
637,700,908
(447,665)
482,649,439
1,559,002
(693,579)
59,813,862
2,260,486,518
13,956,895
691,959,988
(578,314)
359,398,768
1,559,002
(615,481)
7,452,939
3,550,230,661
3,333,620,315
3,723,265,638
3,449,949,006
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
Property, plant and equipment, gross
Less: accumulated depreciation
Total property, plant and equipment, net
OTHER ASSETS:
Investments in related companies
Investment in other companies
Goodwill, net
Negative goodwill, net
Amounts due from related companies
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
260
| 2006 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
Other current liabilities
Total current liabilities
LONG -TERM LIABILITIES:
Due to banks 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 for the year
Provisional dividends
Deficit of subsidiaries in development stage
Total shareholders´ equity
enersis06
As of December 31,
2006
ThCh$
2005
ThCh$
870,783
9,029,873
15,563
369,676
155,577
35,887,882
23,539,813
60,099
1,086,926
12,479
166,146,106
56,071
370,422
44,267
34,633,984
22,063,178
111,060
1,194,830
71,016,192
224,632,397
167,702,850
353,355,960
100,962,578
3,130,568
2,567,976
154,647,605
44,477,313
401,990,412
-
2,804,580
2,947,556
122,712,020
782,367,537
574,931,881
2,415,284,412
172,124,214
(238,342,306)
271,279,769
285,960,366
(36,242,795)
(181,751)
2,415,284,412
172,124,214
(241,698,626)
235,229,509
69,445,219
-
-
2,869,881,909
2,650,384,728
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
3,723,265,638
3,449,949,006
2006 Annual Report | 261
UNCONSOLIDATED FINANCIAL STATEMENTS
UNCONSOLIDATED INCOME STATEMENT
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2006)
OPERATING INCOME:
SALES
COST OF SALES
GROSS PROFIT
ADMINISTRATIVE AND SELLING ExPENSES
OPERATING LOSS
NON-OPERATING INCOME SELLING EXPENSES:
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
2006
ThCh$
2005
ThCh$
4,696,347
(1,320,685)
4,684,439
(1,168,385)
3,375,662
3,516,054
(16,852,806)
(17,405,985)
(13,477,144)
(13,889,931)
26,511,641
397,786,664
6,579,819
(9,668,736)
(54,365,152)
(49,274,578)
(2,999,139)
(755,593)
(4,436,146)
25,900,988
176,922,137
12,572,512
(23,541,240)
(54,356,183)
(57,730,418)
(2,920,266)
(1,653,344)
(6,675,762)
309,378,780
68,518,425
INCOME BEFORE INCOME TAXES AND AMORTIZATION OF NEGATIVE GOODWILL
295,901,636
54,628,494
INCOME TAx
(9,981,367)
14,777,027
INCOME BEFORE AMORTIZATION OF NEGATIVE GOODWILL
285,920,269
69,405,521
AMORTIZATION OF NEGATIVE GOODWILL
NET INCOME FOR THE YEAR
40,097
39,698
285,960,366
69,445,219
262
| 2006 Annual Report
UNCONSOLIDATED STATEMENTS OF CASH FLOWS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31, 2006)
enersis06
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the year
Changes (credits) to income wihch do not represent cash flows:
Depreciation
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 charges to income which do not represent cash flows
Changes in assets which affect cash flows:
Dividends receipts
Other assets
Decrease in other assets
Changes in liabilities which affect cash flows:
Decrease in accounts payable associated with operating results
Increase (decrease) in interest payable
Decrease in income tax payable
Decrease in other accounts payable associated with non-operating results
Net increase (decrease) in value added tax and other similar taxes payable
2006
ThCh$
2005
ThCh$
285,960,366
69,445,219
1,270,523
78,097
(397,786,664)
9,668,736
54,365,152
(40,097)
755,593
4,436,146
(125,661)
2,805,359
115,748,695
(12,500,564)
6,085,743
11,210,273
(19,814,541)
42,567
1,118,537
78,097
(176,922,137)
23,541,240
54,356,183
(39,698)
1,653,343
6,675,762
(4,762,484)
7,312,730
87,849,013
-
(2,551,565)
(4,396,430)
(966,827)
(9,409,654)
(38,490)
(307,675)
Net cash flows provided by operating activities
62,159,723
52,635,164
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans obtained
Other loans obtained
Loans obtained from related companies
Other sources of financing
Dividends paid to related companies
Dividends paid
Payment of loans
Payment of bonds
Payment of loans granted by related companies
Payment of other loans obtained from related companies
Other disbursements for financing
Net cash used in financing activities
CHASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from loans granted to related companies
Proceeds from other loans granted to related companies
Other loans to related companies
Sales of other investments
Long-term investments
Additions to property, plant and equipment
Loans granted to related companies
Other receipts from investments
Other disbursements from investments
Net cash provided by investing activities
NET CASH FLOW FOR THE YEAR
163,847,648
33,486,296
9,322,986
-
(69,571,809)
(42,885,724)
(159,582,715)
-
(11,680,095)
-
1,178,526
25,763,034
453,506
(8,637,264)
(5,706,970)
(152,622,147)
(147,886)
(39,484,097)
-
-
(5,967,572)
(77,063,413)
(185,170,870)
22,891,224
187,482
(6,153,842)
-
(12,123,709)
(181,166)
(205,536)
24,028,675
(502,413)
221,784,153
-
(9,435,502)
1,106,324
(24,810,395)
(148,433)
(137,957,317)
57,095,671
-
27,940,715
107,634,501
13,037,025
(24,901,205)
EFFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
24,402
(205,833)
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
13,061,427
(25,107,038)
121,111
25,228,149
13,182,538
121,111
2006 Annual Report | 263
UNCONSOLIDATED FINANCIAL STATEMENTS
ENERSIS S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY
(Expressed in thousands of historical Chilean pesos, except as stated)
As of January 1, 2004
Capital increase
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
Paid-in
capital
ThCh$
Additional
paid-in
capital
ThCh$
Deficit of
Net income
Other
Retained
subsidiaries in
(loss) for
reserves
earnings
development stage
the year
ThCh$
ThCh$
ThCh$
ThCh$
Total
ThCh$
2,227,711,340
159,323,362
(25,671,685)
176,016,726
(1,455,716)
12,467,863 2,548,391,890
-
-
-
-
-
(563,714)
-
-
-
-
-
-
(4,435,524)
(103,832,123)
11,992,130
-
-
-
(563,714)
13,629,822
(1,161,959)
(12,467,863)
-
-
-
-
-
-
-
-
-
-
-
(4,435,524)
(103,832,123)
11,992,130
63,692,887
Price-level restatement of capital
55,692,784
3,966,173
(641,792)
4,731,711
(55,989)
Net income for the year
-
-
-
-
-
44,307,596
44,307,596
As of December 31, 2004
2,283,404,124
162,725,821
(122,588,994)
194,378,259
(2,673,664)
44,307,596 2,559,553,142
As of December 31, 2004 (1)
2,365,606,672
168,583,951
(127,002,198)
201,375,876
(2,769,916)
45,902,669 2,651,697,054
As of January 1, 2005
2,283,404,124
162,725,821
(122,588,994)
194,378,259
(2,673,664)
44,307,596 2,559,553,142
-
41,633,932
2,673,664
(44,307,596)
-
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Dividend paid
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
-
-
-
-
-
-
-
-
-
-
(5,851,418)
-
-
(13,600,517)
(97,676,664)
(6,197,072)
-
-
Price-level restatement of capital
82,202,548
5,858,130
(4,413,204)
7,979,618
Net income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,851,418)
(13,600,517)
(97,676,664)
(6,197,072)
91,627,092
68,016,865
68,016,865
As of December 31, 2005
2,365,606,672
168,583,951
(236,727,352)
230,391,292
-
68,016,865 2,595,871,428
As of December 31, 2005 (2)
4,615,818
328,944
(461,907)
449,544
-
132,716
5,065,115
As of January 1, 2006
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Dividend paid
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
Price-level restatement of capital
Net income for the year
As of December 31, 2006
-
-
-
-
-
-
As of December 31, 2006 (2)
-
-
-
-
-
-
-
-
-
-
(1) Restated in thousands of constant Chilean pesos as of December 31, 2006.
(2)
Expressed in thousands of US$ as of December 31, 2006
The accompanying notes are an integral part of these consolidated financial statements.
264
| 2006 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
(Restated for general price-level changes and expressed in thousands of constant Chilean pesos as of December 31,
2006)
enersis06
NOTE 01.
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 publicly
registered 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.
NOTE 02.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Years covered
These financial statements reflect the Company’s financial position
as of December 31, 2006 and 2005 and the results of its operations,
the changes in its shareholders’ equity and its cash flows for the years
ended December 31, 2006 and 2005.
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.
These financial statements have been prepared only for stand-alone
analysis of the Company and they should be read along with the
consolidated financial statements required by accounting principles
accepted in Chile.
These financial statements include assets, liabilities and result of the
agency established in 1996 by Enersis S.A. in Cayman Islands.
c. Basis of presentation
For comparative purposes the 2005 financial statements and the
amounts disclosed in the related notes have been restated by 2.1%,
purchasing power. 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, 2006 and 2005. The effects of these off-the-books
restatements are shown in Note 22.
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:
Currency
United States dollar (Observed)
Euro
Unidad de Fomento (UF)
Symbol
used
US$
€
UF
2005
Ch$
2006
Ch$
532.39
702.08
18,336.38 17,974.81
512.50
606.08
f. Time deposits
Time deposits are presented at original placement plus accrued interest
and indexation adjustments at each year end.
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.
At December 31, 2006, 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 Institute of Accountants.
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$1,270,523 and ThCh$1,118,537 in
2006 and 2005, respectively.
Intangibles
i.
Intangibles are mainly easements recorded at acquisition cost and
restated price level adjustment, such assets are amortized over their
estimated useful lives in accordance with Technical Bulletin N°55 of
the Chilean Institute of Accountants.
Investments in related companies
j.
Investments in related companies are presented under the equity
method of accounting, on the basis of the corresponding financial
statements of the invested.
2006 Annual Report | 265
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.
r. 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 6.5%.
s. Revenue recognition
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.
t. Financial derivative contracts
As of December 31, 2006 and 2005 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 Institute of Accountants.
u. Software
Software has been acquired by the Company as computing packages
and are presented as other fixed assets.
v. Research and development costs
During 2006 and 2005 there have been no expenses under this caption
which require footnote disclosure as required by Circular No. 981 of
SVS dated December 28, 1990.
w. Statements of cash flows
Investments considered as cash equivalents, as indicated in point 6.2 of
Technical Bulletin N°50 issued by the Chilean Institute of Accountants,
include cash, time deposits and repurchase agreements classified as
other current assets.
For classification purposes, cash flows from operations include
collections and payments to related companies for services and
dividends paid.
x. Reclassification
Do not reclassification was made for the December 31, 2005, financial
statements.
UNCONSOLIDATED FINANCIAL STATEMENTS
Investments in foreign affiliates are recorded in accordance with
Technical Bulletins No. 64 and 72 (which partially revoked Technical
Bulletin No. 42) of the Chilean Institute of Accountants.
The Company evaluate the recoverability of their investments as required
by Technical Bulletin No.72 of the Chilean Institute of Accountants.
At December 31, 2006 and 2005, the Company has not identified
impairments in the net book values of its investments.
k. Investment in other companies
Investment in other companies are presented at acquisition cost adjusted
for price-level restatement, and it corresponds to the investment in
Empresa de Energía de Bogotá.
l. Goodwill and negative goodwill
Goodwill and negative goodwill are determined according to Circular
N°1697 (which revoked Circular N°368 at December 30, 2003 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.
The Company has evaluated at December 31, 2006 and 2005, the
recoverability of the book value of its investments abroad in accordance
with Technical Bulletin N°72 of the Chilean Institute of Accountants. As
a result of this evaluation no adjustments have been determined that
affect the book values of its investments.
m. 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.
n. 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.
o. Income tax and deferred taxes
At December 31, 2006 and 2005, 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.
p. 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 6.5% and assuming an average employment span which varies based
upon years of service with the Company.
266
| 2006 Annual Report
enersis06
NOTE 03.
ACCOUNTING CHANGES
a. Changes in Accounting Principles
There were no changes in accounting principles during the year ended
December 31, 2006 that would affect the comparison with the prior
year financial statements.
b. Changes in the Reporting Entities
Effective June 1, 2006, Etevensa (indirectly related through the same
majority shareholder) was upstream merged into Edegel S.A. (a
subsidiary of Endesa Chile), as agreed to in the Shareholders’ Meetings
of the two companies held on January 17, 2006.
to 55.44%, causing a decrease of ThCh$5,757,792 (see note 22e)
in shareholders’ equity that is shown in the item Other Reserves.
In addition, as from June 1, 2006, the merged financial statements
involved incorporating assets and liabilities of ThCh$140,370,073 and
ThCh$97,826,807, respectively, in prior years Etevensa was not required
to be consolidated.
NOTE 04.
TIME DEPOSITS
Time deposits as of each year end are as follows:
The above transaction has been recorded in conformity with Technical
Bulletin N°72 of the Chilean Institute of Accountants, as a business
combination under common control, based on the pooling of interest
methodology.
Financial
Institution
Annual
Rate
%
Citibank N.A.
5.07
Scheduled As of December 31,
2006
Maturity
ThCh$
6,949,540
2005
ThCh$
2/1/07
-
As a result of this reorganization of entities under common control, the
interest of Endesa Chile S.A. in its subsidiary Edegel S.A. decreased
Totals
6,949,540
-
NOTE 05.
SHORT AND LONG-TERM RECEIVABLES
Details of the current and long-term other accounts as receivable, net is as follows at each year end:
Item
Notes receivable, net
Doubtful allowance
Others accounts receivable, net
Doubtful allowance
Totals
More than 90 days
Until 90 days
up to 1 year
Total current
Long term
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
737
-
752
-
8,167,902 19,368,022
-
-
-
-
-
-
752
737
-
-
-
-
- 8,167,902 19,368,022
-
-
-
8,168,639 19,368,774
-
-
-
-
-
-
-
-
-
-
2006 Annual Report | 267
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 06.
TRANSACTIONS WITH RELATED COMPANIES
Balances of accounts receivable and payable are as follows at December 31, 2006 and 2005
a. Notes and accounts receivable:
Company
Synapsis, Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
RUT
96.524.320-8 Chilectra S.A.
96.529.420-1
79.913.810-7
96.543.670-7 Cía. Americana de Multiservicios Ltda.
Enersis Internacional
Foreign
Foreign
Chilectra S.A. (Agencia en Islas Cayman)
96.764.840-K Construcciones y Proyecto Los Maitenes S.A.
Foreign
Foreign
Foreign
Foreign
Foreign
91.081.000-6
96.800.570-7
Foreign
96.588.800-4
96.671.360-7
96.770.940-9
Foreign
Foreign
96.504.980-0 Pehuenche S.A.
96.773.290-7
Edelnor S.A.
Ampla Energia e Serviços S.A (Ex Cerj)
Edesur S.A.
Luz de Rio Ltda.
Codensa S.A.
Endesa S.A. (Chile)
Elesur S.A.
Inversiones Distrilima S.A.
Ingendesa S.A.
Túnel el Melón S.A.
Compañía Eléctrica Tarapacá S.A. (Celta)
Endesa S.A. (España)
Endesa Internacional S.A.
Aguas Santiago Poniente S.A.
As of December 31 ,
Short-term
Long-term
2006
ThCh$
1,564,585
4,143,569
109,224
335,877
-
1,365,467
1,006
51,211
48,670,436
47,454
38,289,244
10,889
122,363
-
488
1,226
748
28,677
272,825
271,120
969
10,000
2005
ThCh$
19,037,980
3,249,848
39,069
385,751
1,563,141
39,715
1,027
50,333
15,688
46,640
12,538
10,702
635,099
21,537
498
1,735
81,862
29,674
261,384
383,607
659
83,212
2006
ThCh$
137,076,072
2005
ThCh$
154,551,532
-
-
-
-
-
-
2,071,461
-
255,254,745
167,641,896
-
-
90,318,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,133,879
-
-
-
-
-
-
-
-
-
-
-
Total
95,297,378
25,951,699
482,649,439
359,398,768
b. Notes and accounts payable:
RUT
Company
Synapsis, Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
96.524.320-8 Chilectra S.A.
96.529.420-1
79.913.810-7
96.543.670-7 Cía. Americana de Multiservicios Ltda.
Foreign
Foreign
91.081.000-6
Foreign
Foreign
96.800.570-7
96.671.360-7
Foreign
96.588.800-4
Foreign
Foreign
96.526.450-7
Ampla Energia e Servicos S.A.
Enersis Internacional
Endesa S.A. (Chile)
Edelnor S.A.
Edesur S.A.
Elesur S.A.
Túnel el Melón S.A.
Endesa Internacional S.A.
Ingendesa S.A.
Chilectra Internacional
Chilectra S.A. ( Agencia en Islas Cayman )
Endesa Inversiones Generales S.A.
As of December 31 ,
Short-term
Long-term
2006
ThCh$
336,900
111,238
10,197,566
3,049,633
22,088,079
-
80,079
12,495
11,892
-
-
-
-
-
-
-
2005
ThCh$
290,640
64,446
2,890,731
2,002,976
-
1,179,757
515,039
12,281
11,688
-
192
27,613,899
1,085
36
26,753
24,461
2006
ThCh$
-
-
-
-
100,962,578
-
-
-
-
-
-
-
-
-
-
-
2005
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
35,887,882
34,633,984
100,962,578
268
| 2006 Annual Report
enersis06
c. Effects in income (expense) in each year are as follows:
Company
Relationship
Nature
of transaction
Chilectra S.A.(Ex Elesur S.A.)
Affiliate
Loans
December 31, 2006
Income
(expense)
ThCh$
5,305,953 172,532,959
December 31, 2005
Income
(expense)
ThCh$
2,368,175
ThCh$
137,373,033
ThCh$
Property rental
4,696,347
4,696,347
4,684,439
4,684,439
Inmobiliaria Manso de Velasco Ltda.
Affiliate
Services
Loans
3,518,587
3,518,587
4,105,545
4,105,545
(10,121,479)
(455,046)
(2,869,046)
Property rental
(215,689)
(215,689)
(328,137)
(620,811)
(328,137)
Compañía Americana de Multiservicios Ltda. Affiliate
Services
Loans
Materials
Services
84,347
(2,926,307)
(2,765)
296,185
84,347
40,041
(2,765)
-
-
178,676
(6,703)
(38,828)
(6,703)
296,185
333,248
333,248
Property maintenance
(362,967)
(362,967)
(704,494)
(704,494)
Synapsis, Soluciones y Servicios IT Ltda. Affiliate
Empresa Distribuidora Sur S.A.
Endesa S.A. (Chile)
Affiliate
Affiliate
Loans
Services
Services
Loans
Services
Ingendesa S.A.
Related to affiliate
Services
4,091,417
314,910
3,193,425
89,998
(304,508)
(304,508)
(280,199)
(280,199)
87,346
-
783,452
1,300
87,346
185,325
783,452
1,300
95,595
(412,421)
782,730
-
95,595
405,540
782,730
-
Endesa Inversiones Generales S.A.
Related to affiliate
Property rental
(934,432)
(934,432)
(1,056,331)
(1,056,331)
Chilectra S.A. (Agencia en Islas Cayman) Affiliate
Luz de Río
Enersis Internacional
Ampla Energia e Servicos S.A.
Related to affiliate
Affiliate
Affiliate
Endesa Chile Internacional
Related to affiliate
Endesa Agencia
Empresa Distribuidora Sur S.A.
Chilectra Internacional
Compañía Eléctrica Cono Sur
Affiliate
Related to affiliate
Related to affiliate
Related to affiliate
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
Loans
255,254,745
14,005,218 167,641,896
19,611,478
24,979,713
2,932,007
24,551,451
2,058,734
59,357
423
4,625,178
119,505
(10,643,957)
(790,797)
-
-
-
-
-
-
(477,999)
(3,003)
44,824,235
101,398
-
-
(2,465)
-
-
-
29,062,250
44,302
(8,832,359)
(1,329)
-
-
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.
d. Conditions of the long-term receivables and payables are as follows:
Type
Due date
Currency
Capital
Company
Chilectra S.A.
Chilectra S.A.
Throught agencies:
Chilectra S.A.( Agencia en Islas Cayman )
Chilectra S.A.( Agencia en Islas Cayman )
Ampla Energia e Servicos S.A.
Ampla Energia e Servicos S.A.
Account receivable
Account receivable
Account receivable
Account receivable
Account receivable
Account receivable
2010
2010
2010
2010
2010
2010
UF
UF
UF
UF
US$
US$
Interest
rate
5.93%
3.96%
3,568,405.98
2,907,228.40
326,231,803.29
153,218,872.23
169,647,479.55
189,640,260.29
7.01%
5.91%
11.20%
11.37%
2006 Annual Report | 269
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 07.
CURRENT AND DEFERRED INCOME TAXES
a. Income taxes recoverable as of each year-end are as follows:
As of December 31,
2005
2006
ThCh$
ThCh$
7,763,024
3,891,797
20,104
3,000
Credits for absorbed profits
Value added tax
PPM, donations, training expense
1,532
-
b. The Company has tax losses of ThCh$325,202,670 and
ThCh$388,694,437 for the years ended December 31, 2006 and 2005,
respectively.
c. In accordance with BTs N°60 and 69 of the Chilean Institute of
Accountants, and Circular N°1,466 of the SVS, the Company has
recorded deferred income taxes as of December 31, 2006 and 2005
as follows:
Total income taxes recoverable
3,914,901
7,764,556
As of December 31, 2006
As of December 31, 2005
Asset
Liability
Asset
Liability
Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term
ThCh$
ThCh$
ThCh$
Vacation accrual
Depretiation
Severance indemnities
Provisions
Bond discount
Deferred charges
Tax losses
Other events
Complementary account, net
Valuation allowance
ThCh$
142,396
-
-
702,591
-
-
47,251,670
133,792
-
(11,840,683)
-
-
-
-
-
-
-
145,543
-
-
-
- 1,618,458
123,356
-
-
-
1,002,868
141,442
8,144
93,696
-
135
-
-
676
(125,535)
ThCh$
127,021
-
-
558,431
-
-
- 56,476,969
120,589
-
- (12,089,337)
ThCh$
ThCh$
ThCh$
-
-
-
-
-
-
-
132,810
-
-
-
-
- 1,744,980
90,611
-
-
-
1,146,378
142,001
234,653
83,485
-
-
691
138
(136,948)
-
-
-
Total
36,389,766
145,543
149,721 2,713,519 45,193,673
132,810
225,624 3,080,366
d. Income tax expense for the years ended December 31, 2006 and 2005 is as follows:
Income tax provision
Tax expense art.21
Adjustment for tax expense - prior year
Effect on deferred tax assets or liabilities for the year
Benefits for tax losses
Amortization of complementary accounts
Total
As of December 31,
2006
ThCh$
(7,475,548)
(379,307)
(3,250,798)
1,132,881
(8,595)
-
2005
ThCh$
14,009,652
-
-
12,862,970
(6,257)
(12,089,337)
(9,981,367)
14,777,027
270
| 2006 Annual Report
NOTE 08.
OTHER CURRENT ASSETS
Other current assets as of each year-end are as follows:
Deferred costs-loans
Post-retirement benefits
Deferred expense Collar contracts
Bond discount (see note 17 d)
Guarantee deposits (see note 26a)
Reverse repurchase agreements (*)
Others
Total
(*) The detail of reverse repurchase agreements is a follows:
enersis06
As of December 31,
2006
ThCh$
47,903
796
-
973,620
4,008,541
6,070,063
2005
ThCh$
326,116
813
134,953
842,437
4,473,894
-
-
144,437
11,100,923
5,922,650
Code
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
Date
start
Date
end
Financial Institution
Currency
Document
29/12/06
29/12/06
29/12/06
29/12/06
29/12/06
29/12/06
29/12/06
29/12/06
02/01/07 BBVA C. BOLSA BHIF S.A.
02/01/07 SANTANDER
02/01/07 CHILE
02/01/07 ESTADO
02/01/07 CREDITO
02/01/07 BBVA BANCO BHIF
02/01/07 SECURITY
02/01/07 SCOTIABANK
UF
UF
UF
UF
UF
UF
UF
UF
D.P.R.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
D.P.R.
Interest
rate
%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
0.51%
Current
amount
ThCh$
6,330
2,087,683
512,468
505,607
1,087,948
730,066
629,214
512,812
Nominal
ThCh$
6,325
2,086,264
512,120
505,263
1,087,208
729,569
628,787
512,464
Fair
value
ThCh$
6,327
2,086,973
512,294
505,435
1,087,578
729,817
629,001
512,638
Total
6,072,128
6,068,000
6,070,063
NOTE 09.
PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment as of each year-end is as follows:
Buildings and infraestructure:
Distribution lines, transmission
Total constructions and buildings
Machinery and equipment
Other assets
Total fixed assets
Technical appraisal
Buildings and infraestructure
Total technical appraisal
Total property, plant and equipment
Depreciation
Accumulated depreciation at beginning of year:
Buildings and infraestructure
Machinery and equipment
Other assets in transit
Total accumulated depreciation at beginning of year
Accumulated depreciation at beginning of year- technical appraisal of buildings and infraestructure
Total depreciation accumulated by technical retasation
Depreciation of the year (cost of sales)
Depreciation (selling and administrative expenses)
Total depreciation with charge or operation
Total accumulated depreciation at end of year
As of December 31,
2006
ThCh$
22,553,982
22,553,982
2,957,880
748,512
748,512
35,915
35,915
26,296,289
(11,915,369)
(1,079,910)
(822,589)
(13,817,868)
(28,357)
(28,357)
(1,242,588)
(27,935)
(1,270,523)
(15,116,748)
2005
ThCh$
22,554,028
22,554,028
2,677,301
1,045,214
1,045,214
35,928
35,928
26,312,471
(11,288,573)
(1,000,314)
(646,651)
(12,935,538)
(27,175)
(27,175)
(1,090,288)
(28,249)
(1,118,537)
(14,081,250)
Total property, plant and equipment, net
11,179,541
12,231,221
2006 Annual Report | 271
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 10.
INVESTMENT IN RELATED COMPANIES
a. Investments as of each year-end are as follows:
Related Companies
País de
origen
Number of
shares
Percentage
owned
2006
%
2005
%
Shareholders´equity
of investee
2006
ThCh$
2005
ThCh$
Net income
of investees
Equity
in income
Share
of equity
Unrealized
income
Investment
book value
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
Foreign
Foreign
Foreign
Foreign
Foreign
4,919,488,794
59.98%
59.98% 1,794,309,851 1,676,746,264
189,541,318
112,946,076
113,688,648
67,746,109
1,076,243,762 1,005,728,029
- 1,076,243,762 1,005,728,028
91.081.000-6
Empresa Nacional de Electricidad S.A.
96.524.320-8 Chilectra S.A.
Chile
Chile
Enersis Internacional
Islas Caymán
360,557,685
100.00%
-
-
98.24%
100.00%
-
-
481,233,184
275,934,319
-
79,516,682
-
78,117,065
13,786,817
(9,952,170)
13,786,817
(9,952,170)
-
-
472,762,734
275,934,318
1,417,861
(22,695,109)
1,417,861
(4,106,735)
65,923,712
3,748,313
(17,908,558)
(3,748,313)
(2,869,817)
73,461,384
75,885,984
232037916
(4,550,191)
230,688,444
(4,550,142)
682,842,317
17,483,613
-
12,349,939
-
6,029,241
-
2,741,026
2,442,807
2,741,026
2,442,589
57,274,124
49,585,558
(18,305,673)
(13,418,203)
38,968,451
36,167,356
2,322,579
2,604,689
(2,322,579)
2,604,429
12,468,833
9,863,069
(1,181,924)
(1,263,794)
11,286,909
8,599,274
-
-
532,075
683
-
-
-
-
-
6,732
5,582,057
23,716
532,075
683
-
-
-
-
-
-
-
-
92,224,764
32,452,492
18,950,647
6,668,442
206,581,147
191,724,307
1,200
1,036,772
1,200
-
1,035
-
2,368
-
2,184
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
472,762,734
275,934,318
65,923,712
73,461,384
75,885,984
70,244,070
54,537,633
37,011,827
36,624,163
23,709,821
14,076,397
682,842,317
17,483,613
-
-
-
6,732
5,582,057
23,716
206,581,147
191,724,307
2,368
-
2,184
-
65,351,791
70,960,526
-
-
-
-
-
-
-
Total
388,117,928
153,380,897
2,376,727,661
2,275,168,515
(19,487,597)
(14,681,997) 2,357,240,064
2,260,486,517
Equity in income
Equity in loss
397,786,664
176,922,137
(9,668,736)
(23,541,240)
Ampla Energía e Servicos S.A. (ex-Cerj)
Brasil
536,591,907,867
Empresa Distribuidora Sur S.A.
Argentina
143,996,758
13.68%
16.02%
18.10%
481,905,893
-
16.02%
458,422,124
473,552,394
Investluz S.A.
Distrilec Inversora S.A.
Brasil
-
-
15.61%
-
-
-
3,122,123
-
487,359
-
Argentina
135,321,264
27.19%
20.43%
258,305,995
266,890,384
(3,597,844)
(10,092,635)
(3,597,844)
(2,062,376)
70,244,070
54,537,633
79.913.810-7
Inmobiliaria Manso de Velasco Ltda.
Foreign
Inversiones Distrilima S.A.
96.800.570-7
Chilectra S.A.(ex Elesur S.A.)
Chile
Perú
Chile
Foreign
Central Geradora Termelétrica Fortaleza S.A. (*) Brasil
96.543.670-7
Compañía Americana de Multiservicios Ltda.
96.529.420-1
Synapsis, Soluciones y Servicios IT Ltda.
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Endesa Market Place (3)
Synapsis Argentina Ltda.
Ampla Investimentos
Compañía Peruna de Electricidad S.A.
Endesa Brasil (b)
Synapsis Colombia S.A.
Luz de Río Ltda.(1)
Codensa S.A.
(1) Company with negative equity (note 18)
Chile
Chile
Brasil
Argentina
Brasil
Perú
Brasil
Colombia
Brasil
Colombia
29,462,253
100.00%
100.00%
37,011,840
36,624,176
3,983,070
2,545,014
3,983,070
2,545,013
37,011,827
36,624,163
95,363,337
30.14%
15.93%
78,665,630
88,364,078
1,132,412
11,174,458
1,132,412
1,780,091
23,709,821
14,076,397
1,140,128,044
-
33,821,693
10,569,721
-
540
1,641,574,700
98,539
34,163,243
238
-
99
-
99.99%
99.99%
0.00%
0.12%
13.48%
0.10%
20.55%
0.10%
100.00%
689,197,708
17,483,801
48.82%
99.99%
99.99%
-
-
57,279,221
49,589,971
12,470,080
9,864,055
-
-
-
-
-
5,816,810
40,805,136
23,716,104
-
-
-
-
20.55% 1,005,342,841
933,041,318
0.10%
2,372,781
2,188,268
-
-
-
-
16,466,029
12.47%
12.47%
524,261,126
569,255,184
10,863,781
68,194,303
10,863,781
8,500,764
65,351,791
70,960,526
b. Endesa Brasil
On June 10, 2005, Endesa Brasil S.A. was incorporated; its purpose
is to acquire paid-in capital in operating companies, or that may be
incorporated to operate, directly or indirectly, in any segment of the
electrical sector, transmission, distribution, generation and marketing of
electric energy, in Brazil and other countries. Endesa Brazil S.A. was
created as a holding concentrating all the electrical assets of Endesa
Group in Brazil.
Endesa Brasil S.A. holds ownership percentages in the following
companies: Compañía de Interconexión Energética S.A. (CIEN), Central
Geradora Termelétrica Fortaleza S.A. (CGTF), Companhia Energetica
Do Ceara (COELCE), Ampla Energia e Servicos S.A. (formerly, Cerj),
Ampla Investimentos e Servicos S.A., Ampla Generación S.A., Investluz
and Centrais Eléctricas Cachoeira Dourada S.A. (CDSA).
Endesa Brasil’s interest in these investees were contributed on October
25, 26 and 27, 2005 by Enersis S.A., Endesa Chile S.A., Chilectra S.A.
and Endesa Internacional.
Enersis S.A., contributed to Endesa Brasil S.A. the following
investments:
• Its 48.82% interest in Central Generadora Termelétrica
Fortaleza S.A., receiving in exchange an 8.84% interest in
Endesa Brasil S.A.
• Its 15.61% interest in Investluz S.A., receiving in exchange a 3.55%
interest in Endesa Brasil S.A.
• Its 18.10% interest in Ampla Energia e Servicos S.A., receiving in
exchange an 8.15% interest in Endesa Brasil S.A.
To summarize the above, Enersis S.A. has a direct and indirect interest
in Endesa Brasil S.A. amounting to 53.57%.
272
| 2006 Annual Report
enersis06
NOTE 10.
INVESTMENT IN RELATED COMPANIES
a. Investments as of each year-end are as follows:
Related Companies
País de
origen
Number of
shares
Percentage
owned
2006
%
2005
%
Shareholders´equity
of investee
2006
ThCh$
2005
ThCh$
Net income
of investees
Equity
in income
Share
of equity
Unrealized
income
Investment
book value
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
91.081.000-6
Empresa Nacional de Electricidad S.A.
4,919,488,794
59.98%
59.98% 1,794,309,851 1,676,746,264
189,541,318
112,946,076
113,688,648
67,746,109
1,076,243,762 1,005,728,029
96.524.320-8 Chilectra S.A.
Enersis Internacional
Islas Caymán
360,557,685
100.00%
98.24%
100.00%
-
-
481,233,184
275,934,319
-
79,516,682
-
78,117,065
13,786,817
(9,952,170)
13,786,817
(9,952,170)
-
-
472,762,734
275,934,318
Ampla Energía e Servicos S.A. (ex-Cerj)
Brasil
536,591,907,867
18.10%
481,905,893
1,417,861
(22,695,109)
1,417,861
(4,106,735)
65,923,712
-
Empresa Distribuidora Sur S.A.
Argentina
143,996,758
16.02%
458,422,124
473,552,394
3,748,313
(17,908,558)
(3,748,313)
(2,869,817)
73,461,384
75,885,984
Investluz S.A.
Distrilec Inversora S.A.
Argentina
135,321,264
27.19%
20.43%
258,305,995
266,890,384
(3,597,844)
(10,092,635)
(3,597,844)
(2,062,376)
70,244,070
54,537,633
15.61%
-
-
3,122,123
-
487,359
-
-
79.913.810-7
Inmobiliaria Manso de Velasco Ltda.
29,462,253
100.00%
100.00%
37,011,840
36,624,176
3,983,070
2,545,014
3,983,070
2,545,013
37,011,827
36,624,163
95,363,337
30.14%
15.93%
78,665,630
88,364,078
1,132,412
11,174,458
1,132,412
1,780,091
23,709,821
14,076,397
1,140,128,044
100.00%
689,197,708
17,483,801
232037916
(4,550,191)
230,688,444
(4,550,142)
682,842,317
17,483,613
-
12,349,939
-
6,029,241
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1,076,243,762 1,005,728,028
-
-
-
-
-
-
-
-
-
-
-
-
472,762,734
275,934,318
65,923,712
-
73,461,384
75,885,984
-
-
70,244,070
54,537,633
37,011,827
36,624,163
23,709,821
14,076,397
682,842,317
17,483,613
-
-
2,741,026
2,442,807
2,741,026
2,442,589
57,274,124
49,585,558
(18,305,673)
(13,418,203)
38,968,451
36,167,356
2,322,579
2,604,689
(2,322,579)
2,604,429
12,468,833
9,863,069
(1,181,924)
(1,263,794)
11,286,909
8,599,274
16,466,029
12.47%
12.47%
524,261,126
569,255,184
10,863,781
68,194,303
10,863,781
8,500,764
65,351,791
70,960,526
-
-
532,075
683
-
-
-
-
-
-
532,075
683
-
-
-
-
-
6,732
5,582,057
23,716
-
-
-
-
92,224,764
32,452,492
18,950,647
6,668,442
206,581,147
191,724,307
1,200
1,036,772
-
-
1,200
-
1,035
-
2,368
-
2,184
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,732
5,582,057
23,716
-
-
-
-
206,581,147
191,724,307
2,368
-
2,184
-
65,351,791
70,960,526
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Inversiones Distrilima S.A.
96.800.570-7
Chilectra S.A.(ex Elesur S.A.)
Foreign
Central Geradora Termelétrica Fortaleza S.A. (*) Brasil
96.543.670-7
Compañía Americana de Multiservicios Ltda.
96.529.420-1
Synapsis, Soluciones y Servicios IT Ltda.
Compañía Peruna de Electricidad S.A.
Endesa Market Place (3)
Synapsis Argentina Ltda.
Ampla Investimentos
Endesa Brasil (b)
Synapsis Colombia S.A.
Luz de Río Ltda.(1)
Codensa S.A.
Chile
Chile
Brasil
Chile
Perú
Chile
Chile
Chile
Brasil
Brasil
Perú
Brasil
Argentina
Colombia
Brasil
Colombia
-
-
-
33,821,693
10,569,721
1,641,574,700
98,539
34,163,243
-
540
238
-
-
-
13.68%
16.02%
99
-
99.99%
99.99%
0.00%
0.12%
13.48%
0.10%
20.55%
0.10%
-
-
-
-
-
-
-
-
57,279,221
49,589,971
12,470,080
9,864,055
48.82%
99.99%
99.99%
-
-
-
-
-
-
5,816,810
40,805,136
23,716,104
20.55% 1,005,342,841
933,041,318
0.10%
2,372,781
2,188,268
-
-
-
(1) Company with negative equity (note 18)
Total
388,117,928
153,380,897
2,376,727,661
2,275,168,515
(19,487,597)
(14,681,997) 2,357,240,064
2,260,486,517
Equity in income
Equity in loss
397,786,664
176,922,137
(9,668,736)
(23,541,240)
c. Chilectra S.A.
d. Enersis Internacional
On April 1, 2006, the subsidiaries Chilectra S.A. (formerly Elesur
S.A.) and Chilectra S.A. merged, as was approved in a Meeting of
Shareholders held on March 31, 2006. As a result of the merger
and according to Technical Bulletin N°72 of the Chilean Institute of
Accountants, this business combination subject to common control
was recorded under the pooling of interests methodology, causing an
increase of ThCh$3,019,591 in shareholders’ equity .
As a result, of the previous operation Chilectra S.A. (formerly Elesur
S.A.) proceeded to reverse the valuation allowance over taxable losses
for an amount of ThCh$107,673.319.
On September 21, 2006, Enersis Internacional ceased to exist. Its
assets and liabilities were awarded to Agencia Enersis. Due to the
above, the following investments in related companies were awarded
to Agencia Enersis: 33.336.890 shares of Distrilec Inversora S.A.,
equivalent to 6,76%; 56.008.787 shares of Inversiones Distrilima
S.A., equivalent to 12,21%; 98.539 shares of Cía. Peruana de
Electricidad S.A., equivalent to 0,1%; 536.591.907.867 shares of
Ampla Energia e Serviços S.A., equivalent to 13,68%; 1.641.574.700
shares of Ampla Investimentos e Serviços S.A., equivalent to
13,68%, and 450 rights of Synapsis Argentina S.R.L, equivalent
to 0,12%.
2006 Annual Report | 273
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 11.
GOODWILL AND NEGATIVE GOODWILL
a. In accordance with current standards, recognition has been given to the excess of purchase price over the equity in net assets acquired (goodwill)
in the purchase of shares as of December 31, 2006 and 2005, as follows:
Company
Empresa Nacional de Electricidad S.A.
Chilectra S.A.
Inversiones Distrilima S.A.
Codensa S.A.
As of December 31,
2006
2005
Amortization
ThCh$
(47,041,116)
(6,800,928)
(1,111)
(521,997)
Net balance
ThCh$
542,932,105
89,104,948
8,891
5,654,964
Amortization
ThCh$
(47,041,117)
(6,800,927)
(1,092)
(513,047)
Net balance
ThCh$
589,973,222
95,905,875
9,831
6,071,060
Total
(54,365,152)
637,700,908
(54,356,183)
691,959,988
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, 2006 and 2005 as follows:
As of December 31,
2006
2005
Amortization
ThCh$
23,326
16,771
Net balance
ThCh$
(359,616)
(88,049)
Amortization
ThCh$
22,927
16,771
Net balance
ThCh$
(376,378)
(201,936)
40,097
(447,665)
39,698
(578,314)
As of December 31,
2006
ThCh$
43,911
3,980
5,885,354
53,880,617
2005
ThCh$
712,617
4,063
6,736,259
-
59,813,862
7,452,939
Company
Inversiones Distrilima S.A.
Synapsis Soluciones y Servicios IT Ltda.
Total
NOTE 12.
OTHERS
Other assets as of each year-end are as follows:
Deferred commissions on foreign currency loans
Post-retirement benefits
Bond discount
Unrealized loss derivative contracts
Total
274
| 2006 Annual Report
NOTE 13.
DUE TO BANKS AND FINANCIAL INSTITUTIONS
a. Current portion of long-term debt due to banks and financial institutions:
US$
Other foreign
U.F.
ThCh$
As of December 31,
Currency
enersis06
Financial Institution
Banco Bilbao Vizcaya Argentaria S.A.
Citibank, N.A., acting through its International Banking Facility
Citibank N.A.
Caja de Ahorros y Monte de Piedad de Madrid, Caja Madrid
Banco Santander Central Hispano
Deutsche Bank AG. New York Branch
ABN Ambro Bank
Bank of Tokyo -Mitsubishi
Sao Paulo USA
Caja de Ahorros de Galicia
Banca Monte Paschi
Banco HSBC London
Dresdner Bank
Instituto de Crédito Oficial
Total
Total principal
2006
ThCh$
115,122
115,122
115,122
29,167
115,122
36,246
86,990
86,990
24,853
12,427
72,492
24,854
36,246
2005
ThCh$
1,602
1,010
-
1,602
693
404
505
1,212
1,212
-
175
1,602
505
1,602
870,753
12,124
-
-
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
2006
ThCh$
2005
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
355
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2006
ThCh$
115,122
115,122
30
115,122
29,167
115,122
36,246
86,990
86,990
24,853
12,427
72,492
24,854
36,246
2005
ThCh$
1,602
1,010
355
1,602
693
404
505
1,212
1,212
-
175
1,602
505
1,602
30
355
870,783
12,479
-
-
-
-
Weighted average annual interest rate
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
As of December 31,
2006
%
99.99
00.01
2005
%
97.00
3.00
100.00
100.00
NOTE 14.
LONG-TERM PORTION OF DEBT DUE TO BANKS AND FINANCIAL INSTITUTIONS
Years to maturity
After 1 year After 2 year After 3 year After 5 year
but within
but within
but within
but within
R.U.T.
Financial Institution
Currency
Foreign Banco Bilbao Vizcaya Argentaria S.A.
Foreign Citibank, N.A., acting through its International Banking Facility
Foreign Caja de Ahorros y Monte de Piedad de Madrid, Caja Madrid
Foreign Banco Santander Central Hispano S.A.
Foreign Deutsche Bank AG. New York Branch
Foreign Banco HSBC London
Foreign Dresdner Bank
Foreign
Foreign ABN Ambro Bank
Foreign Bank of Tokyo -Mitsubishi
Foreign Sao Paulo USA
Foreign Banca Monte Paschi
Foreign Caja de Ahorros de Galicia
Instituto de Crédito Oficial
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Total
2 years
ThCh$
22,341,366
22,341,366
22,341,366
6,033,753
22,341,366
13,753,408
4,715,454
6,876,704
6,876,704
16,504,090
16,504,090
2,357,727
4,715,456
167,702,850
Percentage of debt in foreign currency:
As of December 31,
2005
2006
%
%
100.00
100.00
3 years
ThCh$
5 years
ThCh$
10 years
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
long-term
portion-
2006
ThCh$
- 22,341,366
- 22,341,366
- 22,341,366
-
6,033,753
- 22,341,366
- 13,753,408
4,715,454
-
6,876,704
-
-
6,876,704
- 16,504,090
- 16,504,090
2,357,727
-
4,715,456
-
Average
annual
interest
rate
%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
Total
long-term
portion-
2005
ThCh$
5,877,359
3,706,442
5,877,359
2,541,561
1,482,577
5,877,359
1,853,221
5,877,359
1,853,221
4,447,731
4,447,731
635,393
-
- 167,702,850
44,477,313
In November 2004 the Company obtained a syndicated loan amounting to MUS$350 through overdraft (revolving) lines. In 2005, the amount of US$265
million was prepaid; and US$80 million were prepaid in 2006, leaving a balance of US$5 million.
In November 2006, the Company made a second withdrawal, this time of US$310 million, from the revolving line. The US$315 million balance is due
in November 2008. It is possible to prepay and draw down funds throughout the contract period. The interest (spread) depends on the corporate rating
given by S&P. Currently, at BBB-, the interest spread is 0.375%.
2006 Annual Report | 275
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 15.
OTHER CURRENT LIABILITIES
NOTE 16.
OTHER LONG-TERM LIABILITIES
Other current liabilities at each year-end are as follows:
Derivative contracts (swap collar)
Others
As of December 31,
2005
2006
ThCh$
ThCh$
1,117,013
1,024,621
77,817
62,305
As of December 31,
2005
2006
ThCh$
ThCh$
Derivative contracts - fair value
Unrealized gain - swap at fair value
Others
141,352,496 100,262,539
8,843,103
13,606,378
-
13,295,109
Total
1,086,926
1,194,830
Total
154,647,605 122,712,020
NOTE 17.
BONDS PAYABLE
Details of the current portion of bonds payable is as follows at each year-end:
Bonds long-term - short-term portion
Instrument
Series
Face value
outstanding Currency
Interest
rate
Maturity
date
As of December 31,
2005
2006
ThCh$
ThCh$
Yankee Bonds
Yankee Bonds
Yankee Bonds
Yankee Bonds
Bond N° 269
Bond N° 269
1
2
3
3
B-1
B-2
300,000,000
249,734,000
858,000
350,000,000
28,536
1,935,000
US$
US$
US$
US$
U.F.
U.F.
6.90%
7.40%
6.60%
7.38%
5.50%
5.75%
Semi annual 01/12/2006
Semi annual 01/12/2016
Semi annual 01/12/2026
Semi annual 01/12/2014
Semi annual 15/06/2009
Semi annual 15/06/2022
- 157,881,379 Foreign
1,129,375 Foreign
2,469 Foreign
6,190,577 Foreign
162,304 Local
780,002 Local
1,025,253
2,512
6,298,562
170,644
1,532,902
Total short-term portion
9,029,873 166,146,106
Details of the long-term portion of bonds payable is as follows at each year-end:
Maturity
date
As of December 31,
2005
2006
ThCh$
ThCh$
132,955,886 183,141,875 Foreign
Semi annual 01/12/2016
448,959 Foreign
Semi annual 01/12/2026
Semi annual 01/12/2014 186,336,500 183,141,875 Foreign
Semi annual 15/06/2009
Semi annual 15/06/2022
442,153 Local
34,815,550 Local
272,126
33,334,657
456,791
353,355,960 401,990,412
Bonds long-term
Instrument
Series
Face value
outstanding Currency
Interest
rate
Yankee Bonds
Yankee Bonds
Yankee Bonds
Bond N° 269
Bond N° 269
Total long-term
2
3
3
B-1
B-2
249,734,000
858,000
350,000,000
28,536
1,935,000
US$
US$
US$
U.F.
U.F.
7.40%
6.60%
7.38%
5.50%
5.75%
276
| 2006 Annual Report
a. Bonds payable are comprised of the following:
i. Enersis S.A. Local Bonds
On September 11, 2001, the Superintendency of Securities and
Insurance registered the issue of adjustable bearer bonds of Enersis
S.A. date June 14, 2001 in the Securities Register under No. 269. This
placement was made in two series, 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
1,000
300
1,000
150
Face value in
UF
1,000
10,000
1,000
10,000
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.
ii. Yankee Bonds (Foreign)
On November 21, 1996, the Company, acting through its agency in the
Cayman Islands, issued corporate notes in United States of America
(Yankee Bonds) for US$800 million in three series, as follows:
Series
Total amount
in US$
Years to
maturity
Stated annual
interest rate
1
2
3
300,000,000
350,000,000
150,000,000
10
20
30
6.90%
7.40%
6.60%
Interest is payable on a semi-annual basis and principal is due upon
maturity. The Series 3 bond holders have a pre-redemption option in
year seven, which was exercised by nearly all holders in November
2003 for US$149,142,000.
During the second quarter of 2004, UF/US$ swap contracts were
entered into for US$100,000,000 associated with the series 1 bond
and US$250,000,000 associated with series 2.
During November, 2006 US$ 300 million from series one of the Yankee
Bonds were amortized. This operation meant liquidating swap for US$
100 million associated with this bond.
During November, 2001, Enersis Internacional made a Tender Offer
for total or partial cash purchase of the series 2 Yankee Bonds, with a
face value of ThUS$ 350,000 maturing at 20 years in 2016, issued by
the agency of the parent Enersis S.A.
As a result of this offer, which expired on November 21, 2001, series
2 bonds for ThUS$ 95,536, with a face value of ThUS$ 100,266, were
purchased.
enersis06
As a result of the liquidation of Enersis Internacional S.A. on September
21, 2006, the Agency of the parent Enersis S.A. was allocated the
assets and liabilities, which included such bond repurchase among
is assets.
Given the above, at December 31, 2006 the bonds are presented net
of the repurchase.
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$350 million. This placement was made in a single Series, whose
features are as follows:
Series
1
Total amount in
US$
350,000,000
Years to
maturity
10
Stated annual
interest rate
7.375%
Interest is paid on a semi-annual basis and principal is due upon
maturity.
During the second half of 2004, second half, debts have been re-
nominated through US$/UF swap contracts for the total of this
issuance.
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, 2006 amounts to ThCh$5,885,354
(ThCh$6,736,259 in 2005), are included in “Other assets” (note 12)
and ThCh$973,620 (ThCh$842,437 in 2005) are included in “Other
current assets” (note 8).
2006 Annual Report | 277
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 18.
ACCRUED EXPENSES
b. Long-term accruals:
Accrued expenses included in long term liabilities as of each year-end
are as follows:
a. Short-term accruals:
Accrued expenses included in current liabilities as of each year-end
are as follows:
Negative equity of investments (*)
Profit sharing and other employee benefits
Notes receivable provision
As of December 31,
2005
2006
ThCh$
ThCh$
17,633,630
18,517,023
2,575,226
2,648,206
1,854,322
2,374,584
Total
23,539,813
22,063,178
Severance indemnities
Post-retirement benefits
Total
NOTE 19.
SEVERANCE INDEMNITIES
As of December 31,
2005
2006
ThCh$
ThCh$
2,023,346
2,274,432
781,234
856,136
3,130,568
2,804,580
(*) Provision for ownership in negative equity of Luz de Rio Limitada and
Endesa Market Place for ThCh$18,277,350 (ThCh$17,403,330 in 2005)
and ThCh$ 239,673 (ThCh$230,300 in 2005) respectively.
Include employee severance indemnities, determined in accordance
with the policy described in Note 2p, post-retirement benefits and others.
An analysis of the changes in the accruals in each year is as follows:
During 2006 and 2005 there were no write-offs of assets.
Opening balance as of January 1
Increase in accrual
Payments during the year
As of December 31,
2005
2006
ThCh$
ThCh$
1,835,496
1,981,730
505,038
387,463
(317,188)
(94,761)
Total
2,274,432
2,023,346
NOTE 20.
SHAREHOLDERS’ EQUITY
a. During 2006 and 2005, the equity accounts movements are as follows:
As of January 1, 2005
Transfer of prior year loss to retained earnings
Changes in equity of affiliates
Dividend paid
Reserve Technical Bulletin No. 72
Cumulative translation adjustment
Price-level restatement of capital
Net income for the year
Paid-in
capital
M$
2,283,404,124
-
-
-
-
-
82,202,548
-
Additional
paid-in
capital
M$
162,725,821
-
-
-
-
-
5,858,130
-
Other
reserves
M$
(122,588,994)
-
(5,851,418)
-
(6,197,072)
(97,676,664)
(4,413,204)
-
Retained
earnings
M$
194,378,259
41,633,932
-
(13,600,517)
-
-
7,979,618
-
Deficit of
subsidiaries in
development
stage
M$
(2,673,664)
2,673,664
-
-
-
-
-
-
Balances as of December 31, 2005
Price-level restated balances
As of December 31, 2005
2,365,606,672
49,677,740
2,415,284,412
168,583,951
3,540,263
172,124,214
(236,727,352)
(4,971,274)
(241,698,626)
230,391,292
4,838,217
235,229,509
As of January 1, 2005
Transfer of prior year loss to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in development affiliate
Dividend paid 2005 N°73
Reserve Technical Bulletin No. 72
Cumulative translation adjustment
Price-level restatement of capital
Provisional dividend N°74
Net income for the year
2,365,606,672
-
-
-
-
-
-
49,677,740
-
-
168,583,951
-
-
-
-
-
-
3,540,263
-
-
(236,727,352)
-
(10,585,093)
-
-
(825,381)
14,766,794
(4,971,274)
-
-
230,391,292
68,016,865
-
-
(32,651,166)
-
-
5,522,778
-
-
-
-
-
-
-
-
(181,751)
-
-
-
-
-
-
Provisional
dividends
M$
Net income
for the year
M$
Total
M$
2,559,553,142
-
(5,851,418)
(13,600,517)
(6,197,072)
(97,676,664)
91,627,092
68,016,865
44,307,596
(44,307,596)
-
-
-
-
-
68,016,865
68,016,865 2,595,871,428
54,513,300
69,445,219 2,650,384,728
1,428,354
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(36,242,795)
-
68,016,865 2,595,871,428
-
(68,016,865)
(10,585,093)
-
(181,751)
-
(32,651,166)
-
(825,381)
-
14,766,794
-
53,769,507
-
(36,242,795)
-
285,960,366
285,960,366
Balances as of December 31, 2006
2,415,284,412
172,124,214
(238,342,306)
271,279,769
(181,751)
285,960,366 2,869,881,909
278
| 2006 Annual Report
b. Dividends
There are no restrictions to pay dividends
Dividend Payment
Number date
72
73
74
April 2005
March 2006
December 2006
Historical
value ($)
0.41654
1.00
1.11
Type of
Dividend
Final 2004
Final 2005
Provisional 2006
c. Number of shares
Number of shares
subscribed
32,651,166,465
As of December 31, 2005
Number of shares
paid
32,651,166,465
Number of shares
with voting rights
32,651,166,465
d. Subscribed and paid in capital is as follows:
As of December 31, 2005
Subscribed in capital
ThCh$
2,415,284,412
Paid in capital
ThCh$
2,415,284,412
e. Other information
Detail of other reserves is as follows:
Reserve for entities using
remeasurement method
Reserve for accumulated conversion
differences
Reserve for Technical Bulletin No.
72 (1)
Initial balance at
Reserve for
Final balance at
January 1, 2006
the period
December 31, 2006
ThCh$
ThCh$
ThCh$
(21,771,808)
(10,585,093)
(32,356,901)
(226,284,354)
14,766,794
(211,517,560)
6,357,536
(825,381)
5,532,155
Total
(241,698,626)
3,356,320
(238,342,306)
(1)
In the Jan-Jun 2006 period, Other Reserves diminished owing to the
corporate restructuring conducted by generation companies subject
to common control in Colombia and Peru, which had a net effect of
ThCh$3,844,972, offset by ThCh$3,019,591 resulting from the Chilectra
S.A. merger.
Detail of changes in the reserve for accumulated conversion differences
are as follows for the year ended December 31, 2005:
Initial
Final
balance at
Reserve
Reserve for
Variation
balance at
January 1, 2006
for assets
liabilities
of the year
December 31, 2006
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
(226,284,354)
18,731,782
(3,964,988)
14,766,794
(211,517,560)
Cumulative
translation
adjustment
Total
(226,284,354)
18,731,782
(3,964,988)
14,766,794
(211,517,560)
enersis06
The detail of the accumulated conversion difference reserve at
December 31, 2006 is as follows:
ThCh$
(36,273,768)
(26,483,840)
(11,039,298)
(1,362,734)
(48,068,771)
2,820,689
(19,561,981)
(39,106,966)
(6,260,384)
(6,425,742)
(963,768)
397,933
(2,742,948)
(3,202,893)
(139,262)
(773,235)
(12,307,502)
(23,090)
(211,517,560)
Edesur S.A.
Distrilec Inversora S.A.
Inversiones Distrilima S.A.
Cía. Peruana de Electricidad S.A.
Ampla Energia e Servicios S.A. (ex Cerj)
Ampla Investimentos e Servicios S.A.
Endesa Brasil
Codensa S.A.
Investluz
Central Geradora Termelétrica Fortaleza S.A.
Synapsis de Colombia S.A.
Endesa Market Place
Endesa Argentina S.A.
Endesa Chile Internacional
Ingendesa Do Brasil Ltda.
Endesa Costanera S.A.
Cono Sur S.A.
Emgesa S.A. E.S.P.
Total
NOTE 21.
OTHER INCOME AND EXPENSES
a. The detail of other non-operating income in each year is as follows:
As of December 31,
2006
ThCh$
2005
ThCh$
Adjustments to investment in related companies
125,661
5
Project administration, maintenance and construction
5,865,908
7,078,164
Dividends on EEB
Compensation received
Others
Total
361,771
755,038
-
4,669,263
226,479
70,042
6,579,819 12,572,512
b. Other non-operating expenses in each year are as follows:
As of December 31,
2006
ThCh$
2005
ThCh$
Adjustments to investment in related companies
-
735,359
Accrued negative equity
Foreign taxes
Others
Total
888,131
-
1,479,339
1,112,838
631,669
1,072,069
2,999,139
2,920,266
2006 Annual Report | 279
Index
I.P.C.
I.P.C.
U.F.
I.P.C.
U.F.
I.P.C.
I.P.C.
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.
I.P.C.
U.F.
I.P.C.
I.P.C.
As of December 31,
2006
ThCh$
275,018
(172,873)
41,212
3,930,953
3,104,735
37,071,989
8,438,381
14,222,385
1,179,013
6,622,751
181,876
2005
ThCh$
488,017
15,723
603
10,846,414
3,987,058
67,013,992
12,729,580
25,942,958
86,620
14,816,812
423,856
74,895,440
136,351,633
(53,769,507)
-
204,665
(199,687)
(3,536,250)
(7,597,089)
(357,953)
(10,234,929)
-
(160,283)
(75,651,033)
(93,551,261)
(133,846)
-
(14,359,035)
(6,146,338)
(4,124,111)
(528,351)
(18,718,791)
(1,792)
(441,451)
(138,004,976)
(755,593)
(1,653,343)
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 22.
PRICE-LEVEL RESTATEMENT
The (charge) credit to income for price-level restatement as of each year-end is as follows:
Assets
Property, plant and equipment
Accounts receivable from subsidiaries short-term
Accounts receivable from subsidiaries long-term
Investment in subsidiaries
Investment in other companies
Amortization of goodwill
Current assets
Other assets
Credit for cost and expense accounts
Net credit-assets
Liabilities and Shareholders´ equity
Shareholders’ equity
Accounts payable to subsidiaries short-term
Accounts payable to subsidiaries long-term
Due to banks and financial institutions short-term
Bonds payable short-term
Bonds payable long-term
Non monetary liabilities
Current liabilities and long-term
Charge to income accounts
Net charge-liabilities and shareholders’ equity
Net charge to income
280
| 2006 Annual Report
enersis06
NOTE 23.
EXCHANGE DIFFERENCES
The (charge) credit to income for foreign currency translation as of each year-end is as follows:
Assets
Current assets
Currency
Cash
Time deposits
Other current assets
Amounts due from related companies
Other accounts receivable
Non-current assets
Amounts due from related companies
Investment in other companies
US$
US$
US$
US$
US$
US$
US$
As of December 31 ,
Liabilities
2006
ThCh$
201
512,253
341,016
197,290
Current liabilities
2005
ThCh$
316,245 Due banks and financial institutions
(2,843,446) Amount payable to related companies
(167) Forward
(1,174,537) Other liabilities
(574,053) Miscellaneous payable
As of December 31 ,
Currency
US$
US$
US$
US$
US$
2006
ThCh$
(1,396,500)
1,025,576
-
-
(989)
2005
ThCh$
-
599,589
(393,972)
-
579,882
(650,223)
Long-term liabilities
(31,814,475) Due banks and financial institutions
(7,292) Bonds payable
US$
US$
(3,454,255)
9,260,225
(1,590,397) 19,956,121
Total gain (loss)
980,419 (36,097,725) Total gain (loss)
(5,416,565) 29,421,963
Exchange difference- net income (loss)
(4,436,146)
(6,675,762)
NOTE 24.
CASH FLOW STATEMENT
Other financing disbursements
Collar and collateral derivative contracts premiums
Forward contract settlement
Total
Other financing receipts
Forward contract settlement
Total
Other income of investments
Equity negative Chilectra S.A.
Decrease in investment Codensa
Decrease in equity Distrilima
Premius of margin call
Total
Other disbursements from investments
Others
Total
As of December 31
2006
ThCh$
-
-
2005
ThCh$
5,111,847
855,725
-
5,967,572
As of December 31
2006
ThCh$
-
2005
ThCh$
453,506
-
453,506
As of December 31
2006
ThCh$
12,719,821
-
10,903,308
405,546
2005
ThCh$
24,882,941
2,798,204
29,414,526
-
24,028,675
57,095,671
As of December 31
2006
ThCh$
502,413
502,413
2005
ThCh$
-
-
2006 Annual Report | 281
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 25.
FINANCIAL DERIVATIVES
As of December 31, 2006 the Company held the following financial derivative contracts with financial institutions with the object of reduce exposure
to interest rate and foreign currency risk, as follows, which have been valued according to the note 2t:
Type
Nominal
Date of
Sales/
Hedged
Amount
Hedged
Accounts
Assets / Liabilities
Income
Type
Contract
Amount
Maturity
Item
Purchase
Item
Amount
item
Account
Amount
Realized
Unrealized
US$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
S
S
OE
OE
OE
CCTE
350,000,000
I- 2014
CCTE
250,000,000
IV-2016
CCTE
50,000,000
IV-2007
CCTE
100,000,000
IV-2008
CCTE
50,000,000
IV-2009
Exchange
rate
Exchange
rate
Interest
rate
Interest
rate
Interest
rate
C
C
C
C
C
Bonds payable
186,336,500
186,336,500
Bonds payable
133,097,500
133,097,500
Bank
obligations
Bank
obligations
Bank
obligations
26,619,500
26,619,500
53,239,000
53,239,000
26,619,500
26,619,500
Other liabilities
long-term
Other liabilities
long-term
Other liabilities
short-term
Other liabilities
long-term
Other liabilities
long-term
(77,962,451)
(855,631)
(108,931)
(64,414,666)
(470,600)
(915,686)
-
-
-
-
-
-
-
-
-
(1) S = SWAP, OE = OPTIONS
NOTE 26.
COMMITMENTS AND CONTINGENCIES
a. Collateral held by third parties:
Guarantee
Subsidiary
guarantee
Type
Currency
Type
Book value of
collateral
Commited assets
Balance payable of related debt
at December 31.
Release of guarantees
Currency
2006
2005
2006
2007
2008
ThCh$
ThCh$ ThCh$ ThCh$ ThCh$
Deutsche Bank Enersis S.A. Deposits account Deposit account
ThCh$
4,008,541
ThCh$
39,415,282
-
-
-
-
b. Litigation and other legal actions:
Plaintiff
: Enersis S.A., Chilectra S.A., Empresa
Nacional de Electricidad S.A.
: The Republic of Argentina
Defendant
: CIADI Arbitration Panel
Court
Case/Identification : (CIADI Case ARB/03/21)
Compensation for losses caused to the Plaintiff’s investment in the
Republic of Argentina is requested in connection with the participation
of the power distribution concessionaire Edesur S.A. on the grounds of
violation of the Investment Protection and Promotion Agreement entered
into by the Republics of Chile and Argentina, and the Argentinean
Government behavior through the passing of Public Emergency Law
25,561, dated January 6, 2002. The said behavior has also seriously
affected the economic and financial balance of the Concession Contract
between Edesur S.A. and the Argentinean National State. The said Law
authorized a re-negotiation process of the Concession Contracts with
the purpose of re-composing the economic-financial equation affected
by the conversion to pesos, at US$1 = $1, of tariff values calculated in
American dollars, and the prohibition to apply biased tariff updating. In
practice, this process has not been promoted by the Government, and
no measures to prevent losses for the Plaintiff have been formalized.
Edesur S.A. has been deprived of receiving the tariffs indicated in
the regulations and in the said Concession Contract, therefore being
harmful to the investment the Plaintiff companies have made.
Process status: On October 18, 2004, a copy of the lack of jurisdiction
petition filed by the Republic of Argentina was received. On December
17, 2004 the said petition was answered and confirmation of the CIADI
jurisdiction was requested.
On April 6, 2005, the allegations of the parties regarding this jurisdiction
issue took place. The court decided to accept the re-petition and
re-response of the parties, setting a brief term for them. And the
parties met the term. On June 15, 2005, Edesur S.A. entered with
282
| 2006 Annual Report
enersis06
On March 28, 2006, the court ordered the suspension of the proceedings
for a term of 12 months, after which it will call on the parties to report on
the status of the negotiation conducted in accordance with the Minutes
of Agreement for the Adequacy of the Concession Contract for the Public
Service of Distribution and Marketing of Electric Energy. Subsequently,
the court will decide whether or not the proceedings should continue.
The Minutes of Agreement for the Adequacy of the Concession Contract
for the Public Service of Distribution and Marketing of Electric Energy,
after being approved by the Congress of the Argentine Nation, were
ratified by the Executive National Argentine Power through decree 1959
of 2006, published on the Official Gazette on January 8, 2007, and now
their regulation by the ENRE is pending.
Amount involved: US$574,739,550.
c. Restrictions:
c.1 The Company’s loan agreements establish an obligation to comply
with the following financial ratios:
• Enersis’s ratio between debt and cash flow for four quarters and that
of its Chilean subsidiaries did not exceed 6.5 in 2006,ending at 6.00
in 2008
• The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 4.5 in 2006, ending at 3.00 in 2008
• The ratio of Enersis and its Chilean subsidiaries cash flow to financial
expenses for four quarters, not less than 1.80 in 2006 ending at 2.20
in 2008
• The ratio of consolidated debt to shareholders’ equity plus minority
interest not exceeding 77.5% in 2006, ending at 70% in 2008
• Assets corresponding to companies whose business is regulated,
is not to be less than 50% of the total consolidated assets, steadily
until 2008
• Minimum shareholders’ equity at least equal U.F.27 million.
As of December 31, 2006 and 2005 all these obligations have been
met.
the Unit for Renegotiation and Analysis of Public Services Contracts
(UNIREN) into an Understanding Letter within the framework of the
process for renegotiating Edesur S.A.’s Concession Contract, envisaged
in Law No.25,561 and supplementary regulation. As a result of the
Understanding Letter, on August 29, 2005, the Minutes of Agreement
for the Adequacy of the Concession Contract for the Public Service
of Distribution and Marketing of Electric Energy were entered into. At
the request of the Argentine Government, the Minutes of Agreement
were executed again, on the same terms and conditions, on February
15, 2006, to include the new Minister of Economy and Production. The
Minutes envisage a Transitional Rate Regimen, retroactively effective
beginning on November 1, 2005; require approval of the authorities for
paying dividends during the life of the transitional regime; and include
other aspects associated with investments, quality of service, penalties
applied to Edesur, and unpaid penalties. Also, it establishes a Full Rate
Revision, by which a new rate regime is to be set, which was scheduled
to become effective on November 1, 2006, and for the next 5 years,
under the supervision of the Ente Nacional Regulador de la Electricidad
(ENRE), in accordance with law 24,065.
In addition, the Understanding Letter imposes the obligation of initially
suspending, and subsequently dropping, all actions filed against
the Argentinean State by Edesur S.A. and its shareholders. Such
requirement would cause Enersis S.A. to suspend the international
arbitration started on April 25, 2003 with the International Center for
the Settlement of Disputes regarding Investments between States and
Nationals of Other States (CIADI).
After publication in the Official Gazette of the Republic of Argentina of
the resolution approving the rates arising from the Full Rates Revision,
Enersis S.A. and its subsidiaries Chilectra S.A., Empresa Nacional de
Electricidad S.A. and Elesur S.A. (currently, Chilectra S.A.) would drop
the abovementioned international arbitration started with the CIADI.
On September 16, 2005 the Republic of Argentina made a filing
requesting the suspension of the proceedings. It was answered on
September 22, 2005 by the plaintiffs, who opposed the suspension.
On September 30, 2005 the court rejected the Argentinean request,
for lack for consent. On October 7, 2005, Argentina made a new filing
on the same issue, which the court communicated to us on October 11,
2005, and we answered the filing on October 18, 2005.
2006 Annual Report | 283
UNCONSOLIDATED FINANCIAL STATEMENTS
NOTE 27.
SURETIES OBTAINED FROM THIRD PARTIES
As of December 31, 2006, the Company has received sureties as follows:
Operation
Contractor
Relation
Support contract
Contract of Sit. and Srv. Corp.
Contract of Sit. and Srv. Corp.
Contract of Sit. and Srv. Corp.
Contract of Sit. and Srv. Corp.
Others
Total
ARC S.A.
Novell Chile S.A.
Proveedores Integrales Prisa S.A.
Clasificadora de riesgo Humphreys
Felle-Rate Clasificadora de Riesgos
As of December 31, 2005, the Company has received sureties as follows:
Third
Third
Third
Third
Third
Third
Operation
Contractor
Relation
Gtd Teleductos S.A.
Telmex Chile Networks Sa
Smartcom S.A.
Empresa Nacional de Telecomunicaciones
Aguas Andinas S.A.
Telefónica Móviles Chile
ARC S.A.
Resguardo
Proveedores Integrales Prisa S.A.
Third
Third
Third
Third
Third
Third
Third
Third
Third
Third
Support contract
Seriousness of supply
Support contract
Support contract
Support contract
Contract of Sit. and Srv. Corp.
Support contract
Finish contract
Support contract
Others
Total
NOTE 28.
FOREIGN CURRENCIES
As of December 31, 2006 and 2005, foreign currency denominated assets and liabilities are as follows:
Amount
ThCh$
8,031
6,307
3,500
688
688
1,238
20,452
Amount
ThCh$
18,352
18,352
18,352
17,640
9,176
9,176
8,038
3,047
2,450
3,493
108,076
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
284
| 2006 Annual Report
As of December 31,
Currency
Ch$
US$
US$
Ch$
Ch$
US$
Ch$
US$
U.F.
Ch$
Ch$
Ch$
Ch$
US$
2006
ThCh$
86,966
75,969
6,949,540
737
1,931,474
6,236,428
5,876,797
89,148,129
272,452
3,914,901
21,075
36,240,045
7,092,382
4,008,541
2005
ThCh$
46,057
75,054
-
752
15,094,727
4,273,295
23,205,019
2,501,257
245,421
7,764,556
633
44,968,049
5,922,650
161,855,436
104,097,470
b. Property, plant and equipment
Account
Buildings and infraestructure
Machinery and equipment
Other fixed assets
Technical appraisal
Depretiation
Total property, plant and equipment
c. Other assets
Account
Investment in related companies
Investment in other companies
Negative goodwill, net
Goodwill, net
Other receivables
Amount due from related companies
Intangibles
Less: Accumulated amortization
Other assets
Total other assets
Total assets by currency
Total
enersis06
As of December 31,
2006
ThCh$
22,553,982
2,957,880
748,512
35,915
2005
ThCh$
22,554,028
2,677,301
1,045,214
35,928
(15,116,748)
(14,081,250)
11,179,541
12,231,221
As of December 31,
2006
ThCh$
2005
ThCh$
1,846,353,266
1,853,301,670
510,886,798
407,184,848
12,408,630
13,956,895
632,037,053
685,879,097
5,663,855
(88,049)
(359,616)
345,573,366
137,076,073
1,559,002
(693,579)
59,813,862
6,080,891
(104,819)
(473,495)
-
202,775,775
156,622,993
1,559,002
(615,481)
7,452,939
3,550,230,661
3,333,620,315
2,605,325,473
2,656,706,072
980,591,640
636,374,520
137,348,525
156,868,414
3,723,265,638
3,449,949,006
Currency
Ch$
Ch$
Ch$
Ch$
Ch$
Currency
Ch$
US$
US$
Ch$
US$
Ch$
US$
Ch$
US$
U.F.
Ch$
Ch$
Ch$
Ch$
US$
U.F.
2006 Annual Report | 285
UNCONSOLIDATED FINANCIAL STATEMENTS
d. Current liabilities
Account
Currency
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
ThCh$
%
ThCh$
%
ThCh$
%
ThCh$
%
Within 90 days
91 days to 1 year
As of December 31, 2006
As of December 31, 2005
As of December 31, 2006
As of December 31, 2005
Due to banks and financial institutions
Due to banks and financial institutions short-term
Due to banks and financial institutions long-term - short-term portion
Bonds payable
Dividends payable
Accounts payable
Miscellaneous payable
Accrued expenses
Income tax payable
Deferred income
Other current liabilities
Total current liabilities
US$
US$
US$
Ch$
U.F.
US$
Ch$
Ch$
Ch$
Ch$
US$
Ch$
Ch$
Ch$
US$
Ch$
U.F.
Ch$
US$
870,753
30
1,703,546
7,326,327
15,563
369,676
155,577
13,775,416
24,387
5,022,790
60,099
-
1,086,926
-
1,703,546
19,399,151
9,308,393
-
-
-
-
-
-
-
-
-
-
-
12,124
355
942,306
-
56,071
370,422
44,267
- 33,403,470
-
-
-
-
-
-
134,285
4,429,548
111,060
-
1,117,012
77,818
942,306
38,493,011
1,263,421
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 22,088,079
- 18,517,023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 165,203,800
-
-
-
-
-
-
-
-
-
1,096,229
- 17,633,630
-
-
-
-
-
-
-
-
-
18,517,023
22,088,079
17,633,630
166,300,029
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total current liabilities
30,411,090
40,698,738
40,605,102
183,933,659
e. Long-term liabilities, December 31, 2006
Account
Currency
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Due to banks and financial institutions
Bonds payable
Accrued expenses
Amounts due from related companies
Deferred income taxes
Other liabilities
Total long-term liabilities by currency
ThCh$
167,702,850
5,144,268
-
-
%
49.10%
5.73%
0.00%
100,962,578
11.37%
2,567,976
154,647,605
5,144,268
157,215,581
268,665,428
US$
U.F.
US$
Ch$
US$
Ch$
Ch$
U.F.
Ch$
US$
ThCh$
%
ThCh$
%
ThCh$
%
3,732,902
5.75%
11,380,312
5.75%
13,349,301
-
-
-
-
-
3,732,902
-
-
0.00%
-
- 319,749,177
856,136
6.50%
2,274,432
-
-
-
11,380,312
856,136
-
-
-
-
13,349,301
2,274,432
319,749,177
5.75%
7.39%
6.50%
Total current liabilities
431,025,277
3,732,902
12,236,448
335,372,910
f. Long-term liabilities, December 31, 2005
Account
Currency
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
ThCh$
%
ThCh$
%
ThCh$
%
ThCh$
%
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Due to banks and financial institutions
Bonds payable
Accrued expenses
Deferred income taxes
Other liabilities
Total long-term liabilities by currency
4.91
5.72
-
-
-
-
US$
U.F.
US$
Ch$
Ch$
US$
U.F.
Ch$
US$
44,477,313
3,336,384
-
-
2,947,556
-
3,336,384
2,947,556
44,477,313
-
-
-
-
3,434,118
-
-
-
-
-
-
-
3,434,118
5.74
10,185,214
5.75
18,301,987
-
- 366,732,709
781,234
6.50
2,023,346
-
-
-
-
- 122,712,020
10,185,214
123,493,254
-
-
-
-
-
18,301,987
2,023,346
366,732,709
-
5.75
7.39
6.50
-
-
Total current liabilities
50,761,253
3,434,118
133,678,468
387,058,042
286
| 2006 Annual Report
enersis06
NOTE 29.
SANCTIONS
The Company and its directors has not been the subject to sanctions
by the SVS nor by any other administrative authorities.
NOTE 30.
SUBSEQUENT EVENTS
On January 15, 2007, the Company was notified of Decree 7-2006 dated
January 12, 2007, issued by the Panel of Experts provided for in the
General Electrical Services Law, settling the discrepancies arising by
reason of the Technical Report containing observations and corrections
to the studies for determining the Annual Value of the Subtransmission
System, together with the respective rate formulas, approved by the
National Energy Committee in Exempt Resolution 695 of October 31,
2006.
This Decree, which basically rejected the discrepancies set forth by the
Company, will mean that the subtransmission rate setting process will
result in a decrease of about Ch$28 thousand million per year, before
tax, in income from the sale of energy and power. This, in turn, will result
in a decrease of about 4.6% per year in such income.
The above notwithstanding, Chilectra S.A. is studying actions and
remedies that might apply with regard to such Decree.
No other significant events that might affect these financial statements
have occurred in the period from January 1, 2007 to their date of
issue.
NOTE 31.
ENVIRONMENT
As of December 31, 2006, the Company has not incurred in
environmental expenses.
JUAN CARLOS WIECZOREK
Deputy Chief Accounting Officer
IGNACIO ANTOñANZAS
Chief Executive Officer
2006 Annual Report | 287
UNCONSOLIDATED FINANCIAL STATEMENTS
SSENTIAL
FACTS
DIVIDENDS
As agreed upon in the General Ordinary Shareholder’s Meeting held
on March 21st 2006, agreement was reached to pay a final dividend Nº
73 of 60% of the liquid Company profits, which is $0.9651 per share,
rounded off to the closest whole number, the result of which is $ 1.00
per share.
This represents a disbursement reaching M$ 32,651,166 charged to
the results of December 31 2005.
The aforementioned modifies the effect of the dividend policy on this
subject, which provided a proposed disbursement of a final dividend
of 50% of the liquid Company profits.
For this reason, a minimum obligatory dividend of $ 0.48256 will be
paid, and an additional dividend of $ 0.51744 per share, which together
make up the Definitive Dividend Nº 73.
CHANGES IN THE BOARD
In the Board Meeting held on March 29th 2006, Mr. Pablo Yrarrázaval
Valdés was elected as President of the Board and the Company, and
Mr. Rafael Miranda Robredo was elected as Vice President, and Mr.
Domingo Valdés Prieto as Secretary. As a result, the Board elected in
the General Ordinary Shareholder’s Meeting on the 21st of March is
established as follows:
Pablo Yrarrázaval (President)
Rafael Miranda (Vice President)
Juan Ignacio de la Mata
Rafael Español
Hernán Somerville
Eugenio Tironi
Patricio Claro
Domingo Valdés (Secretary)
Likewise, in the aforementioned Board Meeting the designation of the
Directors Committee established in Article 50 Bis of Law 18.046, was
carried out, which is made up of Mr. Pablo Yrarrázaval Valdés, Mr.
Hernán Somerville Senn, and Mr. Patricio Claro Grez. In compliance
with that established in Circular Nº 1.526 of the SVS (Chilean Securities
and Exchange Commission), it is informed that the Director, Mr. Patricio
Claro Grez was elected by votes distinct from those of the controller,
its members, or any related persons.
Next, the Directors Committee designated as President Mr. Pabli
Yrarrázaval Valdés, and as Secretary Mr. Domingo Valdés Prieto.
Also the Board of Enersis S.A., in compliance with that provided in the
Company’s Social Statutes, in the session held on March 29th 2006, the
new members of the Audit Committee were designated, a body created
288
| 2006 Annual Report
by the demands of the Sarbanes Oxley Law of the United States of
America. The Audit Committee of Enersis S.A. is composed of Mr. Juan
Ignacio de la Mata Gorostizaga, Mr. Rafael Español Navarro, and Mr.
Hernán Somerville Senn, all of whom fulfill the requirements provided
in the Sarbanes Oxley Law and its complementary norms.
Finally, it is important to inform that the Board has designated Mr.
Rafael Español Navarro as Financial Expert of the mentioned Audit
Committee.
MERGER ELESUR - CHILECTRA
The Extraordinary Shareholders General Meeting of the subsidiaries
Elesur S.A. (called Chilectra S.A. as of 31.03.06) and Chilectra S.A.,
both held on the 31st of March 2006, informs that it has been agreed
upon by the shareholders of each company that, among other things,
Elesur S.A. and Chilectra S.A. shall merge by the absorption of the
last by the first, Chilectra being the merged company or absorbed
by Elesur S.A. the absorbing company, merging its agencies in the
Cayman Islands, which is Chilectra S.A. Cayman Islands Agency, the
one which is absorbed, and Elesur S.A. Cayman Islands Agency the
one that absorbs the former.
Due to the merger, Chilectra S.A. will dissolve, incorporating itself into
Elesur S.A. so that the shareholders of Chilectra S.A. will become
shareholders of Elesur S.A. a product of a its capital increase and the
exchange of corresponding shares acquired by Elesur S.A. the totality
of the assets and liabilities of Chilectra S.A., conceding all of its rights,
permits and obligations. Likewise as a result of the merger, all of the
assets and liabilities of Chilectra S.A. Cayman islands Agency shall
be incorporated and acquired by Elesur S.A. Cayman Islands Agency,
which shall take over all of the rights and obligations of Chilectra S.A.
Cayman Islands Agency. The legal effects of the merger will occur as
of April 1st 2006. The exchange conversion will be to the amount of
3.0337 shares of Elesur for each share of Chilectra S.A. According
to current accounting regulations Elesur S.A. will recognize as of
31.03.2006, an accountable profit of near Ch$100,000 million, for the
right to compensate future taxes with tributary losses from previous
fiscal years. Enersis S.A. through the consolidation of this subsidiary
will take in to its Financial Statements on that date the accountable
profit proportional with its participation.
CHANGE OF ADMINISTRATION
In the session held on October 25th 2006, the Board received and
accepted the resignation of the General Manager, Mr. Mario Valcarce
Durán, effective as of October 26th 2006, and the said Board, in the
same meeting has designated Mr. Ignacio Antoñanzas Alvear as General
Manager, who will assume his duties on October 26th 2006.
INTERIM DIVIDEND
In the session held on November 29th 2006, the Board agreed to
declare an Interim Dividend Nº 74 of $ 1.11 per share, dated December
26th 2006, charged to the results of the fiscal year 2006, which
corresponds to 14.91% of the liquid profits calculated on October 31st
2006, in compliance with the Company’s dividend policy.
enersis06
EMANAGEMENT’S ANALYSIS OF THE UNCONSOLIDATED
FINANCIAL STATEMENTS
ENERSIS GROUP FOR THE YEAR ENDED DECEMBER 31, 2006
1. INCOME STATEMENTS ANALYSIS
The profit obtained by the Company as of December 31st 2006, comes to $ 285,960 million which means an increase of $ 216,515 million compared
with the previous year, in which the profits obtained reached $ 69,445 million.
The comparison and variations in each item of the Income Statements of the results are presented in the following table:
INCOME STATEMENT (MILLION Ch$)
Dec-05
Dec-06
Variation Dec
06-05
%Variation Dec
06-05
Sales
Cost of Sales
Operatinmg Margin
Administration and Selling Expenses
Operating Income
Income (loss) on investments in related companies
Non operating income & expenses, net
Financial margin, net
Goodwill amortization
Price.level restatements
Exchange differences
Non Operating Result
Income Tax
Amortization negative goodwill
Net income for the year
R.A.I.I.D.A.I.E. (*)
Earnings per share
4,684
(1,168)
3,516
(17,406)
(13,890)
153,381
9,652
(31,830)
(54,356)
(1,653)
(6,676)
68,518
14,777
40
69,445
158,259
2.13
4,696
(1,320)
3,376
(16,853)
(13,477)
388,118
3,581
(22,763)
(54,365)
(756)
(4,436)
309,379
(9,982)
40
285,960
397,310
8.76
12
(152)
(140)
553
413
234,737
(6,071)
9,067
(9)
897
2,240
240,861
(24,759)
-
216,515
239,051
6.63
0.3%
13.0%
(4.0%)
(3.2%)
(3.0%)
153.0%
(62.9%)
(28.5%)
0.0%
(54.3%)
(33.6%)
351.5%
(167.6%)
0.0%
311.8%
151.1%
311.3%
(*)
Income before tax, interests, depreciation, amortization, and extraordinary items.
The operating income reached a positive variation of $413 million;
the said variation is explained mainly by a reduction in administrative
costs and sales through general expenses and services with related
companies.
The non operating income company results increased by
$240,861 million, equivalent to a 351.5%, going from a profit of
$68,518 million in the year 2005, to a profit of $309.379 million
en the year 2006.
This is explained by the following variations:
The net financial expenses of financial income reached a positive
variation of $9,067 million compared with the same period the year
before. This is due to lower financial expenses with financial institutions
for the amount of $11.661 million, and for income of $611 million,
compensated with greater financial expenses with related companies
for $3.025 million.
The income on investments in related companies show, as of
December 31st 2006, a net profit of $388,118 million, which compared
with the same period last year registered a profit of $153,381
million, representing an increase of $234,737 million, and is due to
the results of greater investments in Chilectra S.A., Endesa S.A.,
Enersis Internacional, Endesa Brasil, Ampla Energía e Serviços
S.A., Codensa S.A., Inmobiliaria Manso de Velasco Ltda., Ampla
Investimentos, Cam Ltda., Cía Peruana de Electricidad S.A. and
Synapsis Colombia Ltda. for $249.242 millon, compensated with CGTF,
Synapsis Soluciones y Servicios IT Ltda., Distrilec Inversora S.A.,
Edesur S.A., Inversiones Distrilima S.A., Investluz S.A., for $14.505
millon.
2006 Annual Report | 289
UNCONSOLIDATED FINANCIAL STATEMENTS
The amortization of goodwill does not represent important variations
with the year before.
FOREIGN EXCHANGE AND INTEREST RATE ANALYSIS
The other non-operating income and expenses (net) reached a profit
of $3,581 million as of December 2006, which compared with the $9,652
million of profit that there was on the same date of 2005, shows a negative
variation of $6,071 million. This effect is mainly explained by:
• A reduction of $4,669 million in compensations received (Tax returns
from SII to Elesur).
• A reduction of $823 million in incomes for the administration of projects,
maintenance and construction.
• A reduction of incomes financed by related companies for $389
million.
Price level restatement and exchange differences underwent
a net, positive variation of $3,137 million compared with the
same period the year before, going from a loss of $8,329 million
in December 2005, to a loss of $5,192 million as of December
2006. This is due to a strengthening of the foreign exchange
position.
Income tax and deferred taxes show a negative variation of
$24,759 million due to a reduction in tributary losses the effect of
which on the expense for deferred tax is $9,778 million, and for
the recognition of lower benefits for absorbed profits by $14,981
million.
The amortization of goodwill doesn’t show variations with the year
before.
The Company has a percentage of its credits denominated in dollars
since part of its income flows are in that currency. Despite this natural
economic coverage, the company is exposed to a high dollar volatility,
and has continued with its strategy to partially cover its accountable
mismatch between assets and liabilities in dollars, in order to ease the
effect of the fluctuations and their effect on results due to variations
in the exchange rate.
Considering the important reduction in the mismatch in the accounting
in recent years, reaching prudent levels, the company has modified its
dollar-peso coverage policy to establish a policy of cash flow coverage,
together with the maximum permissible accounting mismatch, upon
which coverage operations are carried out. As of December 31st 2006,
in individual terms, the company maintained dollar-UF Swap contracts
for the amount of US$600 million. On the same date the year before,
the company had contracted US$700 million in dollar-UF SWAP, as
part of the establishment of the new, previously mentioned coverage
policy, of which US$100 million matured in 2006.
In terms of interest rate risk, the company has a debt relation in fixed
interest and variable interest of 90%/10% fixed/variable as of December
2006. This risk relation has diminished if compared with the same date
the year before, in which period the relation fixed/variable was 100%
/ 0%, due mainly to refinancing debt maturities, with the new debt at a
variable rate. Despite this, risk levels have been maintained at levels
within the range established by coverage policies of the company.
290
| 2006 Annual Report
2. BALANCE SHEET ANALISYS
Assets (million
Ch$)
Dec-05
Dec-06
Variation
Dec 06-05
%Variation
Dec 06-05
Current Assets
104,097
161,855
57,758
55.5%
Fixed Assets
12,232
11,180
(1,052)
Other Assets
3,333,620
3,550,231
216,611
(8.6%)
6.5%
Total Assets
3,449,949
3,723,266
273,317
7.9%
The total assets of the company show an increase of $273,317 million
compared with the same period the year before. This is due mainly to:
• An increase in the accounts receivable from related companies
of short and long term for $192,595 million, principally with Ampla
Engeria e Serviços S.A. and Chilectra Agency, this last company
was product of the awarding of the assets and liabilities by Enersis
Agency, due to the liquidation of Enersis Internacional.
• An increase in investments in related companies for the net amount
of $96,754 million, mainly for positive variations in Chilectra S.A.,
Endesa S.A., Ampla Energia e Serviços S.A., Distrilec Inversora
S.A., Endesa Brasil, Distrilima S.A., Ampla Investimentos e Serviços
S.A., CAM Ltda., Synapsis Soluciones and Servicios IT Ltda.,
Inmobiliaria Manso de Velasco Ltda., Cía. Peruana de Electricidad
S.A., Synapsis Argentina S.R.L. and Synapsis Colombia Ltda. for
$380,721 million, compensated with reductions in the companies
Enersis Internacional, Codensa, Edesur S.A. for $283,967 million.
Because of the dissolution of Enersis Internacional, Enersis Agencia
was awarded investments in Enersis Internacional. Enersis Agencia
was awarded investments in Distrilec Inversora S.A., Inversiones
Distrilima S.A., Cía. Peruana de Electricidad S.A., Ampla Energia e
Serviços S.A., Ampla and Investimentos e Serviços S.A. y Synapsis
Argentina S.R.L.
• An increase in the short and long term assets by $57.539 million,
mainly for the loss not made by derivative contracts.
• A reduction of positive goodwill by $54,259 million, mainly with
Endesa S.A. and the corresponding amortization of one year.
enersis06
Liabilities (million
Ch$)
Dec-05
Dec-06
Variation
Dec 06-05
%Variation
Dec 06-05
Current Liabilities
224,632
71,016
(153,616)
(68.4%)
Long-term liabilities
574,932
782,368
207,436
Shareholders’ Equity 2,650,385
2,869,882
219,497
36.1%
8.3%
Total Liabilities
3,449,949
3,723,266
273,317
7.9%
Liabilities increased by $53,820 million, compared with December of
2005, which is the equivalent of 6.7% and principally explained by:
• An increase in the short and long term accounts payable due to
related companies for $102,216 million, mainly with Ampla Energia
e Serviços S.A. for $121,093 million, debt incurred by the dissolution
of Enersis Internacional, which originated that Enersis Agency held
the assets and liabilities of Distrilec Inversora S. A., Inversiones
Distrilima S.A., Cía. Peruana de Electricidad S.A., Ampla Energia e
Serviços S.A., Ampla Investimentos e Serviços S.A. and Synapsis
Argentina S.R.L., besides an increase in the commercial current
accounts with CAM Ltda. e Inmobiliaria Manso de Velasco Ltda.
for $5,857 million, compensated by the payment made to Endesa
Internacional for $12,922 million.
• An increase in the obligations with banks and financial institutions
for $123,225 million due to the 2nd revolving line of credit withdrawal
of US$ 310,000 million, plus the exchange rate effect.
• A reduction of the short and long term obligations with the public
for $205,751 million, for the payment of 1st segment of the Yankee
Bonds for $159,183 million (US$ 300 million), beside, as a result of
the liquidation of Enersis Internacional, the Enersis Agency held
the repurchase of the said bonds of this company, those which
show net obligations with the public for $50,185 million, besides the
amortization of the national bonds for the amount of $856 million,
compensated for the exchange rate effect.
• An increase on the long term liabilities for $31,932 million for the
adjustment of fair value in SWAP contracts for $41,090 million,
compensated with a reduction in unrealized profits of fair value for
$8,843 million.
Regarding equity, it should be pointed out that this had a positive
variation of $219,497 million compared with December 2005. This is
explained largely by the increase in profits for the fiscal year of $285,960
million, plus the reserves for the period of $2,431 million, compensated
with the diminishing of dividends paid for $68,894 million.
2006 Annual Report | 291
UNCONSOLIDATED FINANCIAL STATEMENTS
Main Indexes
Indicator
Liquidity
Current Liquidity
Acid Test (1)
Working Capital
Indebtedness
Debt Ratio
Short-Term Debt
Long-Term Debt
unit
Times
Times
MM Ch$
Veces
%
%
Financial Expenses Coverage (2)
Times
Profitability
Return on Equity
Return on Assets
(1) Current Asset net of advance costs
(2) RAIIDAIE divided by financial expenses
%
%
The evolution of main financial indexes has been the following:
The liquidity index as of December 2006 reached 2.28 times that
shows and increase of 1.82 points compared with the same date the
year before, this given mainly by the paying of the 1st segment of the
Yankee Bonds.
Dec-05
Dec-06
Variation Dec
06-05
0.46
0.46
2.28
2.28
1.82
1.82
(120,535)
90,839
211,374
0.30
0.28
0.72
2.74
2.62%
2.01%
0.30
0.08
0.92
8.06
9.96%
7.68%
-
(0.20)
0.20
5.32
7.34%
5.67%
%Variation Dec
06-05
395.7%
395.7%
(175.4%)
0.0%
(71.4%)
27.8%
194.2%
280.2%
282.1%
The debt rate is placed at 0.30 times that of December 2006 which
when compared with the same period of 2005 does not show variations,
despite the awarding of assets and liabilities by Enersis from the
liquidation of Enersis Internacional. This meant an increase the accounts
payable to related companies and to net the obligations to the public
with the repurchase of bonds.
Regarding the profitability index, the net worth reaches 9.96%, which
on the same date the year before it reached 2,62%. This increase of
7,34% is due to a greater recognition in the results compared to the
same period the year before.
3. MAIN CASH FLOW
During the period, the Company generated a net possitive flow of $15.935 million, performed as follows:
Cash Flow (Millions Ch$)
Operations
Financing
Investment
Net Cash Flow of the year
Dec-05
52,635
(185,171)
107,635
(24,901)
Dec-06
62,159
(77,063)
27,941
13,037
Variation Dec 06-05 %Variation Dec 06-05
9,524
108,108
(79,694)
37,938
18.1%
(58.4%)
(74.0%)
(152.4%)
The operational activities generated a positive net flow of $62.159
million. This flow is mainly composed of profits for the fiscal year of
$285.960 million, plus the positive variation of assets and liabilities
which affect the operational flow by $100,772 million, compensated
by the charges to the results which do not represent the cash flows of
$324.573 million.
The financing activities generated a negative net flow of $77.063 million,
due mainly to the paying of Yankee Bonds of $159.582 million, the
paying of dividends of $69,572 million, the paying of bank loans of
$42.886 million, compensated with the obtaining of bank loans for the
revolving line of credit of $163.848 million and the obtaining of loans
of related companies of $33.486 million.
The investment activities generated a positive net flow of $27.941 million
which is largely explained by other investment activities of $26.800
million, for the collection of documented loans from related companies
for $22.891 million, compensated by permanent investments of $12,124
million, and by other loans granted to related companies for $6,154
million and other investment outlays for $3,274 million.
292
| 2006 Annual Report
enersis06
II. BOOK VALUE AND ECONOMIC VALUE
OF THE ASSETS
Regarding the most important assets, it’s important to note the
following:
The value of fixed asset goods are adjusted according to the accounting
criteria established by the SVS en Circulars Nº 550 and 566 of 1985.
This case of the foreign company Inversiones Distrilima S.A. its fixed
asset values were adjusted according to the exceptional criteria
indicated in the Technical Bulletin Nº 45 of the Chilean Accountants
Association A.G., regulations which were in effect at the moment the
investment was made, and which has not been modified by Technical
Bulletin Nº 51, which replaced the former.
The depreciation is calculated over the updated value of the good
according to the years left in the normal life span of each item.
The investments in related companies are shown valued at their
proportional patrimonial value. In the case of foreign companies,
the application of this methodology has been carried out on the
financial statements prepared following the regulations established
in Technical bulletins Nº 72, and Nº 64 of the Chilean Accountants
Association A.G., and the intangible values are found with monetary
correction and are amortized in compliance with the regulations
found in Technical Bulletins Nº 55, of the Chilean Accountants
Association A.G.
According to the Oficial Circular Nº 150 of January 31st 2003 of the
S.V.S the Company has evaluated the closing of its financial statements
for the year 2002 the recoverability of its investments retated assets,
applying the generally accepted accounting principals in Chile which are
the Technical Bulletin Nº 33 for fixed assets and by the scale defined
in the Technical Bulletin Nº 56 and has applied the NIC 36 for greater
and lesser values related to these investments.
The assets expressed in foreign currency show the exchange rate in
effect at the closing of the period.
The investments in financial instruments with agreements are shown
according to their purchase value plus the proportion of corresponding
interest with the implicit rate in each transaction.
The accounts and documents receivables from related companies
are classified according to their short and long term due dates. The
operations comply with the equity conditions similar to those prevailing
on the market.
In summary, the assets are show valued according to the accounting
principals and regulations generally accepted and the relevant
instructions issued by the SVS, shown on Note 2 of the Financial
Statements.
2006 Annual Report | 293
UNCONSOLIDATED FINANCIAL STATEMENTS
294
| 2006 Annual Report
enersis06
FINANCIAL STATEMENTS
OF SUBSIDIARIES
SUMMARIZED BALANCE SHEETS
BY SUBSIDIARY
SUMMARIZED INCOME STATEMENTS
BY SUBSIDIARY
SUMMARIZED CASH FLOW STATEMENTS
BY SUBSIDIARY
296
296
296
2006 Annual Report | 295
UNCONSOLIDATED FINANCIAL STATEMENTS
SUMMARIZED BALANCE SHEETS BY SUBSIDIARY
As of December 31, 2006 and 2005 in thousands of Chilean Pesos
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Long Term Liabilities
Minority Interest
Shareholders Equity
CHILECTRA
SYNAPSIS
2006
2005
2006
2005
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
147,943,067
463,038,606
607,665,047
138,348,157
419,876,506
521,151,669
21,563,721
9,493,597
31,335
20,964,452
8,365,016
59,392
31,182,749
36,689,626
7,129,477
23,939,265
43,420,147
5,642,574
69,591,394
14,272,042
3,136,718
65,644,598
13,597,571
2,420,164
40,718,772
-
346,731,975
41,656,984
288,876,236
2,577,423
35,276,265
281,608,889
2,025,025
72,572,373
558,805,112
8,598,590
66,490,966
560,787,224
7,766,262
418,324,915
4,150,576,272
715,785,600
290,918,234
3,992,211,914
693,704,608
235,513,143
679,734,841
18,710,562
165,965,783
673,413,198
9,787,102
660,284,941
1,894,422,419
490,821,560
557,092,467
1,816,090,298
480,280,149
1,218,646,720
1,079,376,332
31,088,653
29,388,860
75,001,852
73,001,986
87,000,154
81,662,333
387,450,747
333,110,643
318,910,179
639,976,075
635,044,452
5,284,686,787
4,976,834,756
933,958,546
849,166,083
3,045,528,920
2,853,462,914
127,338,877
409,878,189
(7,768,054)
689,197,708
104,311,380
482,889,218
(6,541,249)
498,716,983
16,512,141
2,095,427
11,004
12,470,081
18,118,760
1,396,229
9,816
9,864,055
2,383,709
594,969
34,848,083
37,175,091
2,300,178
566,875
33,347,506
36,787,427
22,611,258
7,109,625
49
25,671,337
6,400,989
34
57,279,222
49,589,973
12,284,792
103,522,927
-
271,643,028
82,039,509
115,779,196
56,626,307
78,665,631
78,755,192
92,926,187
58,864,938
88,363,862
93,917,685
87,636,265
91,904,779
69,587,110
-
-
458,422,125
473,552,563
461,617,399
2,093,571,094
935,188,443
1,794,309,851
538,847,579
1,807,729,320
953,511,592
1,676,746,265
237,824,866
171,872,554
110,796,648
169,114,254
-
-
634,452,594
939,213,638
466,519,847
524,261,126
569,255,181
1,005,342,841
640,918,073
838,432,399
441,071,043
933,041,399
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
1,218,646,720
1,079,376,332
31,088,653
29,388,860
75,001,852
73,001,986
87,000,154
81,662,333
387,450,747
333,110,643
318,910,179
639,976,075
635,044,452
5,284,686,787
4,976,834,756
933,958,546
849,166,083
3,045,528,920
2,853,462,914
SUMMARIZED INCOME STATEMENTSS BY SUBSIDIARY
As of December 31, 2006 and 2005 in thousands of Chilean Pesos
OPERATING INCOME
Operating Revenues
Operating Costs
Administrative and Selling Expenses
CHILECTRA
SYNAPSIS
2006
2005
2006
2005
I. MANSO DE VELASCO
2006
2005
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
664.957.299
(500.813.595)
(47.005.935)
606.014.895
(444.798.511)
(43.618.748)
54.261.890
(44.991.907)
(10.363.721)
46.512.974
(35.424.558)
(7.557.414)
21.659.308
(11.762.042)
(2.626.602)
11.355.154
(8.194.927)
(2.103.221)
141.079.847
(121.468.511)
(9.837.376)
127.792.077
(108.433.636)
(8.051.337)
214.271.061
(155.726.612)
(19.965.790)
197.488.163
(149.600.225)
(18.159.825)
244.438.883
(216.897.461)
(35.574.393)
239.469.513
(205.917.399)
(29.814.974)
1.337.120.927
(793.260.032)
(39.385.780)
1.146.622.685
(704.080.979)
(39.387.634)
449.810.665
(301.258.158)
(13.200.958)
401.711.238
(278.455.186)
(18.764.717)
1.125.728.588
(784.000.850)
(68.741.047)
258.878.889
(166.998.704)
(36.886.343)
NET OPERATING INCOME
117.137.769
117.597.636
(1.093.738)
3.531.002
7.270.664
1.057.006
9.773.960
11.307.104
38.578.659
29.728.113
(8.032.971)
3.737.141
504.475.115
403.154.072
135.351.549
104.491.335
272.986.691
54.993.842
NON OPERATING INCOME
Non-Operating Revenues
Non-Operating Expenses
Price.Level Restatement and Exchange Rate Difference
39.284.306
(38.023.205)
262.630
23.960.318
(47.026.792)
3.725.599
412.781
(855.012)
133.707
626.738
(346.277)
(199.780)
2.369.367
(2.710.468)
123.668
4.088.909
(1.994.947)
64.777
2.007.960
(2.260.804)
429.161
1.448.492
(5.607.078)
(875.503)
16.439.320
(8.343.925)
5.691.422
25.159.862
(12.744.682)
(22.367.350)
5.056.246
(21.391.659)
-
9.310.933
(9.579.890)
-
8.756.618
(19.829.838)
-
7.446.549
(22.699.651)
-
87.255.538
(216.554.715)
5.095.463
71.680.252
(246.623.864)
16.559.508
9.111.748
(21.076.310)
20.973.408
(21.659.405)
161.021.709
(273.177.500)
-
-
47.676.016
(51.990.839)
-
NET NON OPERATING INCOME
1.523.731
(19.340.875)
(308.524)
80.681
(217.433)
2.158.739
176.317
(5.034.089)
13.786.817
(9.952.170)
(16.335.413)
(268.957)
(11.073.220)
(15.253.102)
(124.203.714)
(158.384.104)
(11.964.562)
(685.997)
(112.155.791)
(4.314.823)
Income Tax
Extraordinary Items
Minority Interest
Negative Goodwill Amortization
113.118.106
-
258.310
-
(21.853.528)
-
(1.436.742)
-
(997.251)
-
(5.081)
-
(1.512.339)
-
(4.607)
-
(789.297)
(236.586)
(2.320.830)
(1.432.751)
(14.004.860)
(11.068.572)
(4.284.462)
(6.392.698)
(130.856.751)
(93.885.428)
(36.236.229)
(35.611.676)
(22.951.195)
(3.776.385)
(2.280.863)
(434.145)
-
-
-
-
-
(9)
-
-
(10)
-
(3.387.870)
-
-
-
(7.366.489)
150.176
-
-
-
-
-
-
-
(65.910.792)
6.037.460
-
(53.570.412)
15.631.948
-
-
-
-
-
-
-
-
(45.654.941)
(14.449.894)
-
-
NET INCOME (LOSS) FOR THE PERIOD
232.037.916
74.966.491
(2.404.594)
2.094.737
3.983.071
2.545.014
7.629.438
4.840.254
13.786.817
(9.952.170)
4.850.516
11.174.271
(23.390.653)
(17.908.659)
189.541.318
112.946.076
87.150.758
68.193.662
92.224.764
32.452.740
-
-
-
-
-
-
-
-
SUMMARIZED CASH FLOW STATEMENTS BY SUBSIDIARY
As of December 31, 2006 and 2005 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
2006
142.118.884
(79.574.779)
(66.573.283)
2005
169.260.837
(140.483.631)
(23.699.145)
NET POSITIVE (N EGATIVE) CASH FLOW FOR THE PERIOD
Effect of the inflation on cash and cash equivalent
(4.029.178)
31.640
5.078.061
(506.748)
2006
2.212.879
1.712.890
(2.969.749)
956.020
(51.482)
2005
(154.594)
5.034.447
(3.461.882)
1.417.971
(91.405)
2006
6.020.504
(3.399.624)
(2.648.219)
(27.339)
308.875
2005
(6.059.370)
1.479.480
3.499.959
(1.079.931)
(418.608)
2006
4.239.617
(38.684.849)
34.366.653
2005
8.158.651
(12.107.790)
2.495.637
2006
42.423.083
(19.918.340)
(21.145.648)
2005
38.450.898
(20.362.760)
(16.879.925)
2006
26.790.893
11.722.567
(35.814.594)
2005
35.481.384
(4.731.340)
(29.234.676)
2006
420.100.772
(136.166.481)
(200.382.110)
2005
276.617.083
(374.771.957)
(56.275.095)
2006
97.443.752
(64.500.116)
(42.250.355)
2005
113.216.737
(254.650.405)
(7.176.545)
2006
185.858.038
(64.031.617)
(160.860.197)
2005
117.573.944
(22.463.659)
(50.791.521)
(78.579)
433
(1.453.502)
15.614
1.359.095
1.208.213
2.698.866
1.515.368
-
-
-
-
83.552.181
(11.112.397)
(154.429.969)
(5.651.512)
(9.306.719)
528.268
(148.610.213)
(27.579.073)
(39.033.776)
28.764.985
44.318.764
(15.339.964)
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
NET VARIATION OF CASH AND CASH EQUIVALENT
(3.997.538)
4.571.313
904.538
1.326.566
281.536
(1.498.539)
(78.146)
(1.437.888)
1.359.095
1.208.213
2.698.866
1.515.368
72.439.784
(160.081.481)
(8.778.451)
(176.189.286)
(10.268.791)
28.978.800
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
14.363.807
9.792.494
3.447.619
2.121.053
32.388
1.523.648
3.022.187
83.176
1.520.901
1.811.197
571.926
23.091.742
21.180.096
83.073.421
243.154.902
29.079.418
204.769.884
215.854.328
183.174.841
FINAL BALANCE OF CASH ANS CASH EQUIVALENT
10.366.269
14.363.807
4.352.157
3.447.619
50.780
1.805.184
1.523.648
5.030
83.013
3.170.292
1.780.139
25.790.608
22.695.464
155.513.205
83.073.421
20.300.967
28.580.598
205.585.537
212.153.641
2006
13.500.168
(5.221.887)
(8.310.757)
2005
7.597.568
(14.465.528)
6.880.864
12.904
5.488
18.392
(32.476)
291
(32.185)
50.780
18.595
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(*) Since October 1st, 2005 consolidates the societies of Ampla, Coelce, Cachoeira Dourada, Endesa Fortaleza and CIEN.
296
| 2006 Annual Report
CHILECTRA
SYNAPSIS
2006
2005
2006
2005
I. MANSO DE VELASCO
2005
2006
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
Current Liabilities
Long Term Liabilities
Minority Interest
Shareholders Equity
LIABILITIES AND SHAREHOLDERS EQUITY
147,943,067
463,038,606
607,665,047
138,348,157
419,876,506
521,151,669
21,563,721
9,493,597
31,335
20,964,452
8,365,016
59,392
31,182,749
36,689,626
7,129,477
23,939,265
43,420,147
5,642,574
69,591,394
14,272,042
3,136,718
65,644,598
13,597,571
2,420,164
1,218,646,720
1,079,376,332
31,088,653
29,388,860
75,001,852
73,001,986
87,000,154
81,662,333
127,338,877
409,878,189
(7,768,054)
689,197,708
104,311,380
482,889,218
(6,541,249)
498,716,983
16,512,141
2,095,427
11,004
12,470,081
18,118,760
1,396,229
9,816
9,864,055
2,383,709
594,969
34,848,083
37,175,091
2,300,178
566,875
33,347,506
36,787,427
22,611,258
7,109,625
49
57,279,222
25,671,337
6,400,989
34
49,589,973
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
1,218,646,720
1,079,376,332
31,088,653
29,388,860
75,001,852
73,001,986
87,000,154
81,662,333
-
-
-
-
-
-
-
-
-
40,718,772
-
346,731,975
41,656,984
288,876,236
2,577,423
35,276,265
281,608,889
2,025,025
72,572,373
558,805,112
8,598,590
66,490,966
560,787,224
7,766,262
418,324,915
4,150,576,272
715,785,600
290,918,234
3,992,211,914
693,704,608
235,513,143
679,734,841
18,710,562
165,965,783
673,413,198
9,787,102
660,284,941
1,894,422,419
490,821,560
557,092,467
1,816,090,298
480,280,149
387,450,747
333,110,643
318,910,179
639,976,075
635,044,452
5,284,686,787
4,976,834,756
933,958,546
849,166,083
3,045,528,920
2,853,462,914
12,284,792
103,522,927
-
271,643,028
82,039,509
115,779,196
56,626,307
78,665,631
78,755,192
92,926,187
58,864,938
88,363,862
93,917,685
87,636,265
-
91,904,779
69,587,110
-
458,422,125
473,552,563
461,617,399
2,093,571,094
935,188,443
1,794,309,851
538,847,579
1,807,729,320
953,511,592
1,676,746,265
237,824,866
171,872,554
110,796,648
169,114,254
-
-
634,452,594
939,213,638
466,519,847
524,261,126
569,255,181
1,005,342,841
640,918,073
838,432,399
441,071,043
933,041,399
387,450,747
333,110,643
318,910,179
639,976,075
635,044,452
5,284,686,787
4,976,834,756
933,958,546
849,166,083
3,045,528,920
2,853,462,914
OPERATING INCOME
Operating Revenues
Operating Costs
Administrative and Selling Expenses
664.957.299
(500.813.595)
(47.005.935)
606.014.895
(444.798.511)
(43.618.748)
54.261.890
(44.991.907)
(10.363.721)
46.512.974
(35.424.558)
(7.557.414)
21.659.308
(11.762.042)
(2.626.602)
11.355.154
(8.194.927)
(2.103.221)
141.079.847
(121.468.511)
(9.837.376)
127.792.077
(108.433.636)
(8.051.337)
NET OPERATING INCOME
117.137.769
117.597.636
(1.093.738)
3.531.002
7.270.664
1.057.006
9.773.960
11.307.104
-
-
-
-
-
-
-
-
214.271.061
(155.726.612)
(19.965.790)
197.488.163
(149.600.225)
(18.159.825)
244.438.883
(216.897.461)
(35.574.393)
239.469.513
(205.917.399)
(29.814.974)
1.337.120.927
(793.260.032)
(39.385.780)
1.146.622.685
(704.080.979)
(39.387.634)
449.810.665
(301.258.158)
(13.200.958)
401.711.238
(278.455.186)
(18.764.717)
1.125.728.588
(784.000.850)
(68.741.047)
258.878.889
(166.998.704)
(36.886.343)
38.578.659
29.728.113
(8.032.971)
3.737.141
504.475.115
403.154.072
135.351.549
104.491.335
272.986.691
54.993.842
CHILECTRA
SYNAPSIS
2006
2005
2006
2005
I. MANSO DE VELASCO
2005
2006
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
NON OPERATING INCOME
Non-Operating Revenues
Non-Operating Expenses
Price.Level Restatement and Exchange Rate Difference
39.284.306
(38.023.205)
262.630
23.960.318
(47.026.792)
3.725.599
412.781
(855.012)
133.707
626.738
(346.277)
(199.780)
2.369.367
(2.710.468)
123.668
4.088.909
(1.994.947)
64.777
2.007.960
(2.260.804)
429.161
1.448.492
(5.607.078)
(875.503)
16.439.320
(8.343.925)
5.691.422
25.159.862
(12.744.682)
(22.367.350)
5.056.246
(21.391.659)
-
9.310.933
(9.579.890)
-
8.756.618
(19.829.838)
-
7.446.549
(22.699.651)
-
87.255.538
(216.554.715)
5.095.463
71.680.252
(246.623.864)
16.559.508
9.111.748
(21.076.310)
20.973.408
(21.659.405)
161.021.709
(273.177.500)
-
-
47.676.016
(51.990.839)
-
NET NON OPERATING INCOME
1.523.731
(19.340.875)
(308.524)
80.681
(217.433)
2.158.739
176.317
(5.034.089)
13.786.817
(9.952.170)
(16.335.413)
(268.957)
(11.073.220)
(15.253.102)
(124.203.714)
(158.384.104)
(11.964.562)
(685.997)
(112.155.791)
(4.314.823)
Income Tax
Extraordinary Items
Minority Interest
Negative Goodwill Amortization
113.118.106
(21.853.528)
(997.251)
(1.512.339)
258.310
(1.436.742)
-
-
-
-
(5.081)
-
-
(4.607)
-
-
(789.297)
-
(2.280.863)
-
(236.586)
-
(434.145)
-
(2.320.830)
-
(9)
-
(1.432.751)
-
(10)
-
-
-
-
-
-
-
-
-
(14.004.860)
-
(3.387.870)
-
(11.068.572)
-
(7.366.489)
150.176
(4.284.462)
(6.392.698)
(130.856.751)
(93.885.428)
(36.236.229)
(35.611.676)
(22.951.195)
(3.776.385)
-
-
-
-
-
-
-
(65.910.792)
6.037.460
-
(53.570.412)
15.631.948
-
-
-
-
-
-
(45.654.941)
(14.449.894)
-
-
-
-
NET INCOME (LOSS) FOR THE PERIOD
232.037.916
74.966.491
(2.404.594)
2.094.737
3.983.071
2.545.014
7.629.438
4.840.254
13.786.817
(9.952.170)
4.850.516
11.174.271
(23.390.653)
(17.908.659)
189.541.318
112.946.076
87.150.758
68.193.662
92.224.764
32.452.740
Net Positive (negative) Cash flow from Operating Activities
Net Positive (negative) Cash flow from Financing Activities
Net Positive (negative) Cash flow from Investment Activities
2006
142.118.884
(79.574.779)
(66.573.283)
2005
169.260.837
(140.483.631)
(23.699.145)
NET POSITIVE (N EGATIVE) CASH FLOW FOR THE PERIOD
(4.029.178)
Effect of the inflation on cash and cash equivalent
31.640
5.078.061
(506.748)
2006
2.212.879
1.712.890
(2.969.749)
956.020
(51.482)
2005
(154.594)
5.034.447
(3.461.882)
1.417.971
(91.405)
CHILECTRA
SYNAPSIS
NET VARIATION OF CASH AND CASH EQUIVALENT
(3.997.538)
4.571.313
904.538
1.326.566
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
14.363.807
9.792.494
3.447.619
2.121.053
FINAL BALANCE OF CASH ANS CASH EQUIVALENT
10.366.269
14.363.807
4.352.157
3.447.619
I. MANSO DE VELASCO
2006
2005
7.597.568
13.500.168
(14.465.528)
(5.221.887)
6.880.864
(8.310.757)
12.904
5.488
18.392
(32.476)
291
(32.185)
50.780
18.595
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
6.020.504
(3.399.624)
(2.648.219)
(27.339)
308.875
2005
(6.059.370)
1.479.480
3.499.959
(1.079.931)
(418.608)
2006
4.239.617
(38.684.849)
34.366.653
2005
8.158.651
(12.107.790)
2.495.637
2006
42.423.083
(19.918.340)
(21.145.648)
2005
38.450.898
(20.362.760)
(16.879.925)
2006
26.790.893
11.722.567
(35.814.594)
2005
35.481.384
(4.731.340)
(29.234.676)
2006
420.100.772
(136.166.481)
(200.382.110)
2005
276.617.083
(374.771.957)
(56.275.095)
2006
97.443.752
(64.500.116)
(42.250.355)
2005
113.216.737
(254.650.405)
(7.176.545)
2006
185.858.038
(64.031.617)
(160.860.197)
2005
117.573.944
(22.463.659)
(50.791.521)
(78.579)
433
(1.453.502)
15.614
1.359.095
1.208.213
2.698.866
1.515.368
-
-
-
-
83.552.181
(11.112.397)
(154.429.969)
(5.651.512)
(9.306.719)
528.268
(148.610.213)
(27.579.073)
(39.033.776)
28.764.985
44.318.764
(15.339.964)
281.536
(1.498.539)
(78.146)
(1.437.888)
1.359.095
1.208.213
2.698.866
1.515.368
72.439.784
(160.081.481)
(8.778.451)
(176.189.286)
(10.268.791)
28.978.800
32.388
1.523.648
3.022.187
83.176
1.520.901
1.811.197
571.926
23.091.742
21.180.096
83.073.421
243.154.902
29.079.418
204.769.884
215.854.328
183.174.841
50.780
1.805.184
1.523.648
5.030
83.013
3.170.292
1.780.139
25.790.608
22.695.464
155.513.205
83.073.421
20.300.967
28.580.598
205.585.537
212.153.641
enersis06
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
Current Liabilities
Long Term Liabilities
Minority Interest
Shareholders Equity
LIABILITIES AND SHAREHOLDERS EQUITY
OPERATING INCOME
Operating Revenues
Operating Costs
Administrative and Selling Expenses
CHILECTRA
SYNAPSIS
2006
2005
2006
2005
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
147,943,067
463,038,606
607,665,047
138,348,157
419,876,506
521,151,669
21,563,721
9,493,597
31,335
20,964,452
8,365,016
59,392
31,182,749
36,689,626
7,129,477
23,939,265
43,420,147
5,642,574
69,591,394
14,272,042
3,136,718
65,644,598
13,597,571
2,420,164
40,718,772
-
346,731,975
41,656,984
288,876,236
2,577,423
35,276,265
281,608,889
2,025,025
72,572,373
558,805,112
8,598,590
66,490,966
560,787,224
7,766,262
418,324,915
4,150,576,272
715,785,600
290,918,234
3,992,211,914
693,704,608
235,513,143
679,734,841
18,710,562
165,965,783
673,413,198
9,787,102
660,284,941
1,894,422,419
490,821,560
557,092,467
1,816,090,298
480,280,149
1,218,646,720
1,079,376,332
31,088,653
29,388,860
75,001,852
73,001,986
87,000,154
81,662,333
387,450,747
333,110,643
318,910,179
639,976,075
635,044,452
5,284,686,787
4,976,834,756
933,958,546
849,166,083
3,045,528,920
2,853,462,914
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
1,218,646,720
1,079,376,332
31,088,653
29,388,860
75,001,852
73,001,986
87,000,154
81,662,333
387,450,747
333,110,643
318,910,179
639,976,075
635,044,452
5,284,686,787
4,976,834,756
933,958,546
849,166,083
3,045,528,920
2,853,462,914
127,338,877
409,878,189
(7,768,054)
689,197,708
104,311,380
482,889,218
(6,541,249)
498,716,983
16,512,141
2,095,427
11,004
12,470,081
18,118,760
1,396,229
9,816
9,864,055
2,383,709
594,969
34,848,083
37,175,091
2,300,178
566,875
33,347,506
36,787,427
22,611,258
7,109,625
49
25,671,337
6,400,989
34
57,279,222
49,589,973
12,284,792
103,522,927
-
271,643,028
82,039,509
115,779,196
56,626,307
78,665,631
78,755,192
92,926,187
58,864,938
88,363,862
93,917,685
87,636,265
91,904,779
69,587,110
-
-
458,422,125
473,552,563
461,617,399
2,093,571,094
935,188,443
1,794,309,851
538,847,579
1,807,729,320
953,511,592
1,676,746,265
237,824,866
171,872,554
110,796,648
169,114,254
-
-
524,261,126
569,255,181
634,452,594
939,213,638
466,519,847
1,005,342,841
640,918,073
838,432,399
441,071,043
933,041,399
CHILECTRA
SYNAPSIS
2006
2005
2006
2005
I. MANSO DE VELASCO
2006
2005
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
664.957.299
(500.813.595)
(47.005.935)
606.014.895
(444.798.511)
(43.618.748)
54.261.890
(44.991.907)
(10.363.721)
46.512.974
(35.424.558)
(7.557.414)
21.659.308
(11.762.042)
(2.626.602)
11.355.154
(8.194.927)
(2.103.221)
141.079.847
(121.468.511)
(9.837.376)
127.792.077
(108.433.636)
(8.051.337)
214.271.061
(155.726.612)
(19.965.790)
197.488.163
(149.600.225)
(18.159.825)
244.438.883
(216.897.461)
(35.574.393)
239.469.513
(205.917.399)
(29.814.974)
1.337.120.927
(793.260.032)
(39.385.780)
1.146.622.685
(704.080.979)
(39.387.634)
449.810.665
(301.258.158)
(13.200.958)
401.711.238
(278.455.186)
(18.764.717)
1.125.728.588
(784.000.850)
(68.741.047)
258.878.889
(166.998.704)
(36.886.343)
NET OPERATING INCOME
117.137.769
117.597.636
(1.093.738)
3.531.002
7.270.664
1.057.006
9.773.960
11.307.104
38.578.659
29.728.113
(8.032.971)
3.737.141
504.475.115
403.154.072
135.351.549
104.491.335
272.986.691
54.993.842
NON OPERATING INCOME
Non-Operating Revenues
Non-Operating Expenses
Price.Level Restatement and Exchange Rate Difference
39.284.306
(38.023.205)
262.630
23.960.318
(47.026.792)
3.725.599
412.781
(855.012)
133.707
626.738
(346.277)
(199.780)
2.369.367
(2.710.468)
123.668
4.088.909
(1.994.947)
64.777
2.007.960
(2.260.804)
429.161
1.448.492
(5.607.078)
(875.503)
16.439.320
(8.343.925)
5.691.422
25.159.862
(12.744.682)
(22.367.350)
5.056.246
(21.391.659)
-
9.310.933
(9.579.890)
-
8.756.618
(19.829.838)
-
7.446.549
(22.699.651)
-
87.255.538
(216.554.715)
5.095.463
71.680.252
(246.623.864)
16.559.508
9.111.748
(21.076.310)
20.973.408
(21.659.405)
-
161.021.709
(273.177.500)
-
47.676.016
(51.990.839)
-
NET NON OPERATING INCOME
1.523.731
(19.340.875)
(308.524)
80.681
(217.433)
2.158.739
176.317
(5.034.089)
13.786.817
(9.952.170)
(16.335.413)
(268.957)
(11.073.220)
(15.253.102)
(124.203.714)
(158.384.104)
(11.964.562)
(685.997)
(112.155.791)
(4.314.823)
Income Tax
Extraordinary Items
Minority Interest
Negative Goodwill Amortization
113.118.106
(21.853.528)
(997.251)
(1.512.339)
(789.297)
(236.586)
(2.320.830)
(1.432.751)
258.310
(1.436.742)
-
-
-
-
(5.081)
-
-
(4.607)
-
-
(2.280.863)
(434.145)
-
-
-
-
-
(9)
-
-
(10)
-
-
-
-
-
(14.004.860)
(11.068.572)
(3.387.870)
-
-
-
(7.366.489)
150.176
(4.284.462)
-
-
-
(6.392.698)
-
-
-
(130.856.751)
-
(65.910.792)
6.037.460
(93.885.428)
-
(53.570.412)
15.631.948
(36.236.229)
-
-
-
(35.611.676)
-
-
-
(22.951.195)
-
(45.654.941)
-
(3.776.385)
-
(14.449.894)
-
NET INCOME (LOSS) FOR THE PERIOD
232.037.916
74.966.491
(2.404.594)
2.094.737
3.983.071
2.545.014
7.629.438
4.840.254
13.786.817
(9.952.170)
4.850.516
11.174.271
(23.390.653)
(17.908.659)
189.541.318
112.946.076
87.150.758
68.193.662
92.224.764
32.452.740
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net Positive (negative) Cash flow from Operating Activities
Net Positive (negative) Cash flow from Financing Activities
Net Positive (negative) Cash flow from Investment Activities
2006
142.118.884
(79.574.779)
(66.573.283)
2005
169.260.837
(140.483.631)
(23.699.145)
NET POSITIVE (N EGATIVE) CASH FLOW FOR THE PERIOD
(4.029.178)
Effect of the inflation on cash and cash equivalent
31.640
5.078.061
(506.748)
2006
2.212.879
1.712.890
(2.969.749)
956.020
(51.482)
2005
(154.594)
5.034.447
(3.461.882)
1.417.971
(91.405)
2006
6.020.504
(3.399.624)
(2.648.219)
(27.339)
308.875
2005
(6.059.370)
1.479.480
3.499.959
(1.079.931)
(418.608)
2006
4.239.617
(38.684.849)
34.366.653
2005
8.158.651
(12.107.790)
2.495.637
2006
42.423.083
(19.918.340)
(21.145.648)
2005
38.450.898
(20.362.760)
(16.879.925)
2006
26.790.893
11.722.567
(35.814.594)
2005
35.481.384
(4.731.340)
(29.234.676)
2006
420.100.772
(136.166.481)
(200.382.110)
2005
276.617.083
(374.771.957)
(56.275.095)
2006
97.443.752
(64.500.116)
(42.250.355)
2005
113.216.737
(254.650.405)
(7.176.545)
2006
185.858.038
(64.031.617)
(160.860.197)
2005
117.573.944
(22.463.659)
(50.791.521)
(78.579)
433
(1.453.502)
15.614
1.359.095
1.208.213
2.698.866
1.515.368
-
-
-
-
83.552.181
(11.112.397)
(154.429.969)
(5.651.512)
(9.306.719)
528.268
(148.610.213)
(27.579.073)
(39.033.776)
28.764.985
44.318.764
(15.339.964)
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
ENDESA BRASIL (*)
NET VARIATION OF CASH AND CASH EQUIVALENT
(3.997.538)
4.571.313
904.538
1.326.566
281.536
(1.498.539)
(78.146)
(1.437.888)
1.359.095
1.208.213
2.698.866
1.515.368
72.439.784
(160.081.481)
(8.778.451)
(176.189.286)
(10.268.791)
28.978.800
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
14.363.807
9.792.494
3.447.619
2.121.053
32.388
1.523.648
3.022.187
83.176
1.520.901
1.811.197
571.926
23.091.742
21.180.096
83.073.421
243.154.902
29.079.418
204.769.884
215.854.328
183.174.841
FINAL BALANCE OF CASH ANS CASH EQUIVALENT
10.366.269
14.363.807
4.352.157
3.447.619
50.780
1.805.184
1.523.648
5.030
83.013
3.170.292
1.780.139
25.790.608
22.695.464
155.513.205
83.073.421
20.300.967
28.580.598
205.585.537
212.153.641
2006
13.500.168
(5.221.887)
(8.310.757)
2005
7.597.568
(14.465.528)
6.880.864
12.904
5.488
18.392
(32.476)
291
(32.185)
50.780
18.595
2006 Annual Report | 298
Production and Design: Leaders S.A. / Photography: Carlos Quiroga / Printing: Quebecor World
SANTIAGO STOCK EXCHANGE ENERSIS
NEW YORK STOCK EXCHANGE ENI
LATIN AMERICAN STOCK EXCHANGE OF MADRID STOCK EXCHANGE (LATIBEX) XENI
ENERSIS S.A. WAS CONSTITUTED WITH THE NAME OF COMPAÑÍA CHILENA METROPOLITANA
DE DISTRIBUCIÓN ELÉCTRICA S.A., AND ON AUGUST 1, 1988, THE COMPANY BECAME
KNOWN AS ENERSIS S.A.. THE CAPITAL OF THE COMPANY AMOUNT TO TH.CH$2,415,284,412,
DIVIDED INTO 32,651,166,465 SHARES. ENERSIS SHARES ARE TRADED IN CHILEAN STOCK
EXCHANGES, NEW YORK STOCK EXCHANGE IN THE FORM OF AMERICAN DEPOSITARY
RECEIPTS (ADR) AND IN THE LATIN AMERICAN STOCK EXCHANGE OF MADRID STOCK
EXCHANGE (LATIBEX). THE OBJECTS OF THE COMPANY ARE TO EXPLORE, DEVELOP,
OPERATE, GENERATE, DISTRIBUTE, TRANSMIT, TRANSFORM AND/OR SELL ENERGY IN
ANY OF ITS FORMS OR NATURE, IN CHILE OR ABROAD, EITHER DIRECTLY OR THROUGH
OTHER COMPANIES, AND ACTIVITIES IN TELECOMMUNICATIONS AND THE PROVISION
OF ENGINEERING IN CHILE OR ABROAD, AND ALSO HAS THE OBJECT OF INVESTING
AND MANAGING ITS INVESTMENTS IN SUBSIDIARY AND ASSOCIATE COMPANIES. ITS
TOTAL ASSETS WERE TH.CH$11,062,409,283 AT DECEMBER 31, 2006. ENERSIS CONTROL
A GROUP WHO OPERATE IN THE ELECTRICITY MARKET ON FIVE COUNTRIES IN LATIN
AMERICA. IN THE YEAR 2006 OBTAINED A NET INCOME OF TH.CH$285,960,366 AND AN
OPERATING INCOME OF TH.CH$805,366,156. EMPLOYEES: AT THE END OF 2006 IT GAVE
DIRECT OCCUPATION TO 11,784 PEOPLE, THROUGH ITS SUBSIDIARIES COMPANIES OVER
LATIN AMERICA.
ENERSIS MANAGEMENT
CHAIRMAN
PABLO YRARRÁZAVAL
PHONE (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
IGNACIO ANTOÑANZAS
PHONE (56-2)353 4510
COMMUNICATIONS OFFICER
JOSÉ LUIS 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
REGIONAL ACCOUNTING OFFICER
FERNANDO ISAC
PHONE (56-2) 353 4685
REGIONAL CHIEF FINANCIAL OFFICER
ALFREDO ERGAS
PHONE (56-2) 630 9130
REGIONAL PLANNING AND CONTROL OFFICER
MACARENA LAMA
PHONE (56-2) 353 4684
INVESTOR AND SHAREHOLDER RELATIONS
CHIEF INVESTMENTS AND RISKS OFFICER
RICARDO ALVIAL
PHONE (56-2) 353 4682
CITIBANK NY
RICARDO SZLEZINGER
PHONE (1-212) 816 6852
SANTANDER CENTRAL HISPANO INVESTMENT
ENRIQUE ROMERO
PHONE (34-91) 289 3943
S A N T A R O S A 7 6 , S A N T I A G O , C H I L E / T E L . ( 5 6 2 ) 3 5 3 4 4 0 0 , 3 7 8 4 4 0 0 / W W W . E N E R S I S . C O M
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