6-K 1 enipr3q11_6k.htm ANNOUNCES CONSOLIDATED RESULTS enipr3q11_6k.htm - provide by MZ Technologies

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of October, 2011

Commission File Number: 001-12440

ENERSIS S.A.
(Translation of Registrant’s Name into English)

Santa Rosa 76
Santiago, Chile
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  [X]   Form 40-F  [   ]

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes    [  ]      No    [X]

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes    [  ]      No    [X]

Indicate by check mark whether by furnishing the information
ontained in this Form, the Registrant is also thereby furnishing the
information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes    [  ]      No    [X]

If °;Yes” is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A

 
 

ENERSIS

ANNOUNCES CONSOLIDATED RESULTS

FOR THE PERIOD ENDED ON SEPTEMBER 30, 2011

 

 

Highlights for the Period

 

Summary

 

Ø  The first nine months of the year confirmed the strong growth in demand for electricity in the countries where we operate, as a result of the dynamic economic activity in these markets.

 

Ø  Regarding the distribution business, it is important to note the improvement in our Peruvian and Chilean operations, with growth in electricity demand of 7.6% and 4.9% respectively.

 

Ø  In the generation business, operating revenues fell 3.1% mainly due to lower sales average prices, partially offset by higher physical sales in Peru and Argentina.

 

Ø  Our Bocamina I coal-fired thermal plant damaged by the Chilean earthquake in February 2010, started operating once again. This has permitted us to provide the Chilean Central Interconnected System (“SIC”) with a stable and secure source of energy during a dry year.

 

Ø  The Company’s EBITDA showed a decrease of Ch$ 165,706 million, primarily due to Ch$ 24,910 million in higher costs related to power purchases in the generation business, mainly in Chile. This decrease was partially compensated by lower purchase prices in other countries. Additionally, Enersis accounted for the full impact of the equity tax reform in Colombia, for taxes payable throughout the 2011-2014 period. This non-recurring factor affected operating income of our Colombian operations (both distribution and generation subsidiaries) by Ch$ 59,558 million. Results in our Brazilian and Peruvian generation companies and in our Chilean and Peruvian distribution companies partly offset the lower results in other countries and business segments.

 

Ø  EBITDA for the Enersis Group was very balanced in terms of business segment:

 

•     Generation and Transmission:           54%

•     Distribution:                                      46%

 

Ø  Our distribution business customer base increased by around 355,000 customers, which confirms the natural growth of this business, an important stabilizing factor for our cash flows.

 

Ø  Operating income for the period amounted to Ch$ 1,199,430 million, representing a decline of 7.0% compared to the same period in 2010.

 

 

 

 

Pg. 1

 

 

Distribution Business

 

Consolidated figures for the distribution businesses are detailed as follows:

 

Ø  Operating revenues rose by 3.3% to Ch$ 3,289,889 million.

 

Ø  The cost of sales was Ch$ 2,135,763 million, a 5.8% increase over the same period of the previous year.

 

Ø  EBITDA in the period amounted to Ch$ 698,325 million, a reduction of 6.8% compared to the same period in 2010, principally due to the reduced results of our businesses in Argentina, Colombia and Brazil, partially compensated by improvements in Chile and Peru.

 

The factors influencing this lower distribution business EBITDA are:

 

In Chile, EBITDA grew by Ch$ 18,057 million, mainly explained by:

Ø  A better energy sales margin related to 4.9% higher physical energy sales, which was reflected in higher sales volume in every market segment.

Ø  Greater non-energy revenues as a result of higher economic activity, which impacted revenues from other businesses.

 

In Peru, EBITDA rose by Ch$ 4,677 million as a result of:

Ø  A 7.6% increase in physical sales, as well as greater revenues from other businesses.

Ø  Lower procurement and services costs mainly from synergies in technology and information systems, partially compensated by increases in energy purchases.

 

In Argentina, EBITDA decreased by Ch$ 34,368 million, mainly explained by:

Ø  A reduced energy sales margin explained mainly by lower industrial and commercial client sales margins, and by increased wages under collective bargaining agreements, partly offset by,

Ø  Higher residential consumption, which reflects growth in the number of clients and lower temperatures during this winter season in relation to last year’s.

 

In Brazil, EBITDA decreased by Ch$ 10,629 million as a result of:

Ø  Reduced sales margin, both in Ampla and in Coelce, and higher fixed costs in Ampla, partly offset by,

Ø  Higher revenues in Ampla due to greater physical sales.

 

In Colombia, EBITDA decreased by Ch$ 28,773 million, principally as a result of:

Ø  The effect of the Colombian government equity tax reform, which implied recording on January 1st, 2011 the entire tax payable for this concept within 2011-2014.

Ø  This effect more than offset the positive operating results registered in the period.

 

 

 

 

 

 

 

Pg. 2

 

Generation and Transmission Business

 

Ø   Consolidated physical sales increased by 1.2% to 47,857 GWh, led by increases in Argentina and Peru, partially offset by decreases in Chile, Brazil and Colombia.

 

Ø   Operating revenues decreased 3.1% to Ch$ 2,012,421, mainly explained by lower sales prices, partially offset by higher physical sales in Peru and Argentina.

 

Ø   Procurement and services costs rose by 1.4% to Ch$ 1,023,462 million as a result of higher energy purchase costs in Chile and higher fuel consumption in Argentina.

 

Ø   EBITDA amounted to Ch$ 822,178 million, a decrease of 11.8% compared with the nine‑month period ending September 30, 2010.

 

Ø   Consolidated hydroelectric generation declined by 7.0%, explained by Chile, Argentina and Brazil, partially offset with Colombia y Peru.

 

The factors affecting these results are:

 

In Chile, EBITDA decreased by Ch$ 111,408 million, mainly due to:

Ø   Higher energy purchase costs of Ch$ 62,675 million,

Ø   Lower sales revenues of Ch$ 56,950 million due to lower water availability which impacted sales to the spot market.

Ø   Partially compensated by lower fuel consumption of Ch$ 16,600 million and lower transport expenses of Ch$ 17,666 million and,

 

In Colombia, EBITDA fell by Ch$ 23,793 million, mainly due to:

Ø   An increase in other fixed operating costs of Ch$ 38,958 million, mainly explained by the non-recurring effect of the equity tax reform which implied the booking on January 1, 2011 of the full amount payable in the period 2011-2014.

Ø   Reduced energy sales revenues of Ch$ 24,867 million due to 5.0% lower average sales prices and a decrease of 1.4% in physical sales, partially compensated by

Ø   A reduction in cost of energy purchases of Ch$ 39,881 million, explained by lower thermal dispatch because of higher hydro generation.

 

In Peru, EBITDA increased by Ch$ 21,440 million due to:

Ø   Higher energy sales revenues of Ch$ 15,193 million explained by higher generation from both thermal and hydro facilities, and

Ø   Lower personnel expenses by Ch$ 9,724 million and a decrease in the cost of energy purchases by Ch$ 1,460 million, partially compensated by

Ø   Higher fuel consumption cost of Ch$ 2,095 million and an increase in transport expenses of Ch$ 1,896 million, linked to the higher thermal dispatch.

 

In Argentina, EBITDA decreased by Ch$ 13,913 million due to:

Ø   A higher fuel consumption cost of Ch$ 43,166 million, and an increase in transport expenses of Ch$ 3,896 million related to higher thermal dispatch.

Ø   Higher energy purchases costs of Ch$ 4,500 million, and an increase in personnel expenses of Ch$ 4,222 million, explained by increased wages under collective bargaining agreements, partially offset by

Ø   Higher energy sales of Ch$ 44,989 million, linked to a 7.4% increase in sales volume.

 

 

 

Pg. 3

 

 

In Brazil, EBITDA rose by Ch$ 18,205 million due to:

Ø   Increase of Ch$ 14,016 million in contribution margin due to the recognition of CIEN as a regulatory asset by local authorities since April 2011, thereby allowing the billing of toll revenues according to the RAP system (permitted annual revenue.)

Ø   Lower fuel consumption of Ch$ 3,137 million, due to a 69% lower generation in Fortaleza. The latter increased its power purchases in the spot market, taking advantage of the low price of the energy, thus increasing its margin. This was partially offset by a 3.3% lower sales volume in Cachoeira Dourada.

 

 

Financial Summary

 

Ø  The average interest rate increased, from 8.4% up to 9.3%, mainly because of inflationary effects.

 

Ø  Liquidity, a key consideration in our financial management, continues to be in a very solid position, as shown below on a consolidated basis for Enersis:

 

·         Cash and cash equivalents amount to US$ 1,797 million.

·         Committed  credit lines for US$ 792 million.

·         Non-committed credit lines available for US$ 1,789 million available on a consolidated basis.

 

Ø  Within this context, it is important to highlight the successful issuance of an unsecured bond in local currency by Emgesa, our Colombian generation subsidiary, in the international capital markets, for the Colombian peso equivalent of US$ 400 million. This break-through deal, the first bond issued in local currency by a private sector Colombian company in the international markets, was rated “Investment Grade” by Fitch Ratings and Standard and Poor’s.

 

Ø  Additionally, as of June 2011, Ampla finished a successful issuance of local bonds (debentures) for the equivalent of US$ 160 million, maturing in 5 and 7 years, allowing the extension of its debt’s duration.

 

Ø  Coverage and protection: In order to mitigate exchange rate and interest rate risks, Enersis has established strict internal rules to protect our cash flows and balance sheet from fluctuations in these variables.

 

·         Our exchange rate policy is based on cash flows and we strive to maintain a balance between US dollar indexed flows, and assets and liabilities in such currency. In addition to this policy, we have contracted cross currency swaps for a total amount of US$ 1,365 million and forwards for US$ 287 million.

·         In order to reduce financial results’ volatility due to changes in market interest rates, we seek to maintain an adequate balance in our debt structure. Thus, we have contracted interest rate swaps (from variable to fixed rates) for US$ 318 million.

 

 

 

 

Pg. 4

 

 

 

Market Summary

 

Ø  Chilean Stock Exchange main index, IPSA, has shown an important decrease in the last 12 months (-19.04%). This has been consistent with the global economic scenario and the behavior of the principal stock exchanges. In Latin America, all the countries where the group has presence have shown negative numbers: BOVESPA (Brazil): -25.49%; COLCAP (Colombia): -10.30%; MERVAL (Argentina): -7.11% and ISBVL (Peru): -3.43%.  In more developed countries, the performance of the stock exchanges have also been negative during the last 12 months: IBEX: -18.22%, UKX: -8.30%; FTSE 250: -7.30%; S&P 500: -1.29% and Dow Jones Industrial: +0.77%.

 

Ø  Enersis’ share price has decreased considerably during last 12 months. The price as of September 30, 2011 was $180.1, which represents a -21.63% variation in comparison with October 1, 2010 price, when it reached $229.8. This low performance is explained mainly by the negative global economic scenario and also by the drought that affected Chile this year, reducing the results of its affiliates in Generation.

 

Ø  During the last 12 months, Enersis’ ADS has lost 29.22% of its value. The price fell from US$23.9 on October 1, 2010, to US$16.9 on September 30, 2011. The global economic situation and the Chilean drought affected the value, but there’s also an impact caused by the Chilean Peso devaluation against US Dollar during the last months. The exchange rate as of  September 30, 2010 was Ch$ 483.55 and as of September 30, 2011 was Ch$ 521.76, which represents a -11.5% devaluation.

 

Ø  During the last twelve months period, Enersis continued to be among the most actively traded companies in the local market (Santiago Stock Exchange and Chilean Electronic Exchange), with a daily average trading volume of US$ 8.7 million.

 

 

 

 

Source: Bloomberg

 

 

 

 

 

Pg. 5

 

 

 

Risk Rating Classification Information

 

Enersis’ current ratings are supported by our well diversified asset portfolio, strong credit metrics, adequate debt structure and solid liquidity. Enersis’ geographic diversification in Latin America provides the company a natural hedge against different regulations and weather conditions. Most of their operating subsidiaries are financially strong and have leading market positions in the countries where we operate.

 

On July 12, 2011, Feller Rate confirmed the “AA” local rating of Enersis’ solvency, bonds and bond program. At the same time, it confirmed the “1st Class Level 1” rating for its shares and the “1st Class +A/AA” rating for its commercial papers program. Rating perspectives continue to be “Stable”.

 

The current international risk ratings are:

 

Enersis

S&P

Moody’s

Fitch

Corporate

BBB+ / Stable

Baa2 / Stable

BBB+ / Stable

 

The domestic ratings (for securities issued in Chile):

 

Enersis

Feller Rate

Fitch

Shares

1st Class Level 1

1st Class Level 1

Bonds

AA / Stable

AA / Stable

 

 

 

 

 

 

Pg. 6

 

 

Table of Contents 

 

 

   

Summary. 1

  
1

Distribution Business. 2

  
2

Generation and Transmission Business. 3

  
3

Financial Summary. 4

  
4

Market Summary. 5

  
5

Risk Rating Classification Information. 6

  
6
   

Table of Contents . 7

  
7
   

General Information.. 9

  
9
   

Simplified Organizational Structure. 10

  
10

Market Information. 11

  
11

Equity Market. 11

  
11

Debt Market. 14

  
14

Consolidated Income Statement Analysis. 15

  
15

Net Income. 15

  
15

Operating Income. 15

  
15

Net Financial Income. 17

  
17

Sale of Assets. 17

  
17

Taxes. 17

  
17

Consolidated Balance Sheet Analysis. 18

  
18

Assets Under IFRS.. 18

  
18
   

Book Value and Economic Value of Assets. 20

  
20
   

Liabilities and Shareholders’ Equity Under IFRS.. 21

  
21

Debt Maturity with Third Parties, Thousand US$. 23

  
23

Debt Maturity with Third Parties, Million Ch$. 23

  
23

Evolution Of Key Financial Ratios. 24

  
24

Under IFRS.. 25

  
25

Cash Flow Received From Foreign Subsidiaries by Enersis, Chilectra and Endesa Chile. 26

  
26
   

The Principal Risks associated to the activities of the Enersis Group    28

  
28
   

Argentina.. 33

  
33
   

Generation. 33

  
33

Endesa Costanera. 33

  
33

El Chocon. 34

  
34

Distribution. 35

  
35

Edesur. 35

  
35
   

Brazil.. 36

  
36
   

Endesa Brasil. 36

  
36

Generation. 36

  
36

Cachoeira. 36

  
36

Fortaleza (cgtf)  37

  
37

Transmission. 38

  
38

CIEN.. 38

  
38

Distribution. 39

  
39

Ampla. 39

  
39
   

 

 

 

 

Pg. 7

 

Coelce. 40

  
40
   

Chile.. 41

  
41
   

Generation. 41

  
41

Endesa Chile. 41

  
41

Distribution. 42

  
42

Chilectra. 42

  
42
   

Colombia.. 44

  
44
   

Generation. 44

  
44

Emgesa. 44

  
44

Distribution. 45

  
45

Codensa. 45

  
45

Generation. 46

  
46

Edegel  46

  
46

Distribution. 47

  
47

Edelnor. 47

  
47
   

Conference Call Invitation.. 49

  
49
   

Disclaimer. 50

  
50

 

 

 

 

 

 

Pg. 8

 

  

 

General Information

 

(Santiago, Chile, Wednesday, October 26, 2011.) Enersis S.A. (NYSE: ENI), announced today its consolidated financial results for the nine months period of 2011. All figures are in Chilean pesos (Ch$) and in accordance with International Financial Reporting Standards (IFRS). Variations refer to comparison between the period ended on September 30, 2010 and September 30, 2011.

 

Figures as of September 30, 2011 are additionally translated into US$, merely as a convenience translation, using the exchange rate of US$ 1 = Ch$ 521.76 as of September 30, 2011 for the Balance Sheet, and the average exchange rate for the period of US$ 1 = Ch$ 474.35 for the Income Statement, Cash Flow Statements, Capex and Depreciation values.

 

The consolidation includes the following investment vehicles and companies,

a)    In Chile: Endesa Chile (NYSE: EOC)*, Chilectra, and Inmobiliaria Manso de Velasco.

b)    Others than Chile: Distrilima (Peru), Endesa Brasil (Brazil)**, Edesur (Argentina) and Codensa (Colombia).

 

In the following pages you will find a detailed financial statement analysis, a brief explanation for the most important variations and comments on main items in the P&L and Cash Flow Statements compared to the information as of September 30, 2011.

 

*    Includes Endesa Chile Chilean subsidiaries (Celta, Pangue, Pehuenche, San Isidro, and Tunel El Melon), non Chilean subsidiaries (Endesa Costanera, El Chocon, Edegel and Emgesa) and jointly controlled companies (Gas Atacama, Transquillota and Hidroaysen.)

** Includes Endesa Fortaleza, CIEN, Cachoeira Dourada, Ampla and Coelce.

 

 

 

 

 

Pg. 9

 

  

Simplified Organizational Structure

 

 

 

 

 

 

 

Pg. 10

 

  

 

 Market Information

 

Equity Market

New York Stock Exchange (NYSE)

 

The charts below show the performance of Enersis’ ADS (“ENI”) price at the NYSE, compared to the Dow Jones Industrials and the Dow Jones Utilities indexes over the last 12 months, as well as the trading volume, both in the NYSE.

 

 

 

 

Source: Bloomberg

 

 

 

Pg. 11

 

  

 

Santiago Stock Exchange (BCS)

 

The charts below show the performance of Enersis’ Chilean stock price over the last 12 months compared to the Chilean Selective Stock Index (IPSA), as well as the daily average aggregate trading volume in the Santiago and Chilean Electronic Stock Exchange:

 

 

 

 

Source: Bloomberg

 

 

 

Pg. 12

 

  

 

Madrid Stock Exchange (Latibex) - Spain

 

The charts below show Enersis’ share price (“XENI”) at the Latibex over the last 12 months compared to the local stock index (IBEX), as well as the daily average trading volume in the Latibex.

 

 

Source: Bloomberg

 

 

 

 

Pg. 13

 

  

Debt Market

 

Yankee Bonds Price Evolution

 

The following chart shows the pricing of two of our Yankee Bonds over the last 12 months compared to the Ishares Iboxx Investment Grade Corporate Bond Fund Index:

 

 

Source: Bloomberg

 

(*) Ishares Iboxx Investment Grade Corporate Bond Fund Index is an exchange traded fund incorporated in the U.S.A. The Index measures the performance of a fixed number of investment grade corporate bonds.

 

 

 

 

 

 

 

Pg. 14

 

  

 

Consolidated Income Statement Analysis

Net Income

 

Enersis’ Net Income attributable to the Owners of the Company for the cumulative period as of September 30, 2011 reached Ch$ 319,026 million, representing a 6.8% decrease over the same period 2010, which was Ch$ 342,141 million.

 

Under IFRS

 

CONSOLIDATED INCOME STATEMENT

(Million Ch$)

  

(Thousand US$)

 

9M 2010

9M 2011

Var 2010-2011

Chg %

  

9M 2011

Sales

4,616,738

4,645,608

28,870

0.6%

  

9,793,629

Energy sales

4,217,515

4,323,338

105,823

2.5%

  

9,114,237

Other sales

34,862

20,770

(14,093)

(40.4%)

  

43,786

Other services

364,360

301,500

(62,860)

(17.3%)

  

635,606

Other operating income

213,634

203,192

(10,443)

(4.9%)

  

428,358

Revenues

4,830,372

4,848,799

18,428

0.4%

  

10,221,987

             

Energy purchases

(1,140,692)

(1,309,276)

(168,584)

(14.8%)

  

(2,760,147)

Fuel consumption

(572,987)

(595,644)

(22,657)

(4.0%)

  

(1,255,706)

Transportation expenses

(334,410)

(303,241)

31,168

9.3%

  

(639,278)

Other variable costs

(517,334)

(475,038)

42,296

8.2%

  

(1,001,451)

Procurements and Services

(2,565,424)

(2,683,200)

(117,776)

(4.6%)

  

(5,656,582)

 

 

 

 

 

  

 

Contribution Margin

2,264,948

2,165,600

(99,349)

(4.4%)

  

4,565,404

             

Other work performed by entity and capitalized

30,864

35,665

4,801

15.6%

  

75,187

Employee benefits expense

(267,176)

(269,352)

(2,176)

(0.8%)

  

(567,834)

Other fixed operating expenses

(351,283)

(420,266)

(68,983)

(19.6%)

  

(885,982)

Gross Operating Income (EBITDA)

1,677,353

1,511,647

(165,706)

(9.9%)

  

3,186,776

Depreciation and amortization

(355,185)

(313,265)

41,920

11.8%

  

(660,409)

Reversal of impairment profit (impairment loss) recognized in profit or loss

(32,617)

1,048

33,665

103.2%

  

2,210

Operating Income

1,289,551

1,199,430

(90,121)

(7.0%)

  

2,528,577

             

Net Financial Income

(229,117)

(194,141)

34,976

15.3%

  

(409,278)

Financial income

101,475

134,089

32,614

32.1%

  

282,678

Financial costs

(327,496)

(320,468)

7,028

2.1%

  

(675,594)

Gain (Loss) for indexed assets and liabilities

(12,414)

(17,038)

(4,624)

(37.2%)

  

(35,919)

Foreign currency exchange differences, net

9,319

9,277

(42)

(0.4%)

  

19,557

Gains

60,649

68,060

7,411

12.2%

  

143,480

Losses

(51,331)

(58,783)

(7,452)

(14.5%)

  

(123,924)

Share of profit (loss) of associates accounted for using the equity method

1,348

5,848

4,500

333.8%

  

12,328

Net Income From Other Investments

139

376

237

171.1%

  

792

Net Income From Sale of Assets

3,044

(7,172)

(10,215)

(335.6%)

  

(15,119)

             

Net Income Before Taxes

1,064,965

1,004,341

(60,623)

(5.7%)

  

2,117,300

Income Tax

(283,192)

(316,550)

(33,358)

(11.8%)

  

(667,334)

NET INCOME ATTRIBUTABLE TO:

781,773

687,791

(93,982)

(12.0%)

  

1,449,966

Owners of parent

342,141

319,026

(23,115)

(6.8%)

  

672,553

Non-controlling interest

439,632

368,766

(70,866)

(16.1%)

  

777,413

             

Earning per share (Ch$ /share and US$ / ADR)

10.5  

9.8

(0.7)

(6.8%)

  

1.0

 

 

Operating Income

 

Operating income decreased by Ch$ 90,121 million, or 7.0% when compared to September 2010.

 

Below we present operating revenues and costs breakdown by business line for the period ending on September 30, 2010 and 2011 are:

 

 

 

Pg. 15

 

 

Table 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income by Businesses

Generation and Transmission

Distribution

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

 

Operating Revenues

2,076,441

2,012,421

 

(3.1%)

 

4,242,482

 

3,184,955

3,289,889

 

3.3%

 

6,935,572

 

Operating Costs

(1,330,803)

(1,320,909)

 

(0.7%)

 

(2,784,671)

 

(2,625,969)

(2,771,712)

 

5.6%

 

(5,843,179)

 

Operating Income

745,638

691,513

 

(7.3%)

 

1,457,811

 

558,987

518,177

 

(7.3%)

 

1,092,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income by Businesses

Eliminations and Others

 

Consolidated

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

 

Operating Revenues

(431,024)

(453,510)

 

5.2%

 

(956,067)

 

4,830,372

4,848,799

 

0.4%

 

10,221,987

 

Operating Costs

415,950

443,251

 

6.6%

 

934,439

 

(3,540,821)

(3,649,369)

 

3.1%

 

(7,693,410)

 

Operating Income

(15,074)

(10,259)

 

(31.9%)

 

(21,627)

 

1,289,551

1,199,430

 

(7.0%)

 

2,528,577

 

 

 

Generation and transmission business showed an Operating income of Ch$ 691,513 million, representing a Ch$ 54,126 million decrease from the same period 2010, or 7.3%. Physical sales increased 1.2% amounting to 47,857 GWh as of September 2011 (47,313 GWh for the same period in 2010).

 

Operating income for generation and transmission business line, detailed by country is shown in the following table:

 

Table 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Generation & Transmission

Chile

 

Argentina

 

Brazil

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

Operating Revenues

984,721

908,325

 

(7.8%)

 

1,914,884

 

302,320

341,325

 

12.9%

 

719,565

 

238,660

223,042

 

(6.5%)

 

470,206

% of consolidated

47%

45%

 

 

 

45%

 

15%

17%

 

 

 

17%

 

11%

11%

 

 

 

11%

Operating Costs

(634,822)

(662,966)

 

4.4%

 

(1,397,630)

 

(264,808)

(315,891)

 

19.3%

 

(665,946)

 

(128,428)

(56,285)

 

(56.2%)

 

(118,657)

% of consolidated

48%

50%

 

 

 

50%

 

20%

24%

 

 

 

24%

 

10%

4%

 

 

 

4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

349,900

245,360

 

(29.9%)

 

517,254

 

37,513

25,434

 

(32.2%)

 

53,619

 

110,232

166,757

 

51.3%

 

351,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Generation & Transmission

Peru

 

Colombia

 

Consolidated

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

Operating Revenues

161,205

174,349

 

8.2%

 

367,554

 

390,201

365,899

 

(6.2%)

 

771,370

 

2,076,441

2,012,421

 

(3.1%)

 

4,242,482

% of consolidated

8%

9%

 

 

 

9%

 

19%

18%

 

 

 

18%

 

100%

100%

 

 

 

 

Operating Costs

(106,219)

(94,801)

 

(10.7%)

 

(199,853)

 

(197,192)

(191,486)

 

(2.9%)

 

(403,682)

 

(1,330,803)

(1,320,909)

 

(0.7%)

 

(2,784,671)

% of consolidated

8%

7%

 

 

 

7%

 

15%

14%

 

 

 

14%

 

100%

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

54,986

79,549

 

44.7%

 

167,700

 

193,008

174,413

 

(9.6%)

 

367,688

 

745,638

691,513

 

(7.3%)

 

1,457,811

 

 

 

Distribution business showed a Ch$ 40,810 million lower operating income, totaling Ch$ 518,177 million. Physical sales amounted to 51,942 GWh, representing an increase of 1,879 GWh, or 3.8%. Our customer base increased by 355 thousand new clients approximately, amounting to 13.5 million customers.

 

Operating Income for distribution business line, detailed by country, as follows:

 

Table 4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution

Chile

 

Argentina

 

Brazil

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

Operating Revenues

723,062

778,005

 

7.6%

 

1,640,150

 

222,307

205,924

 

(7.4%)

 

434,119

 

1,416,243

1,471,515

 

3.9%

 

3,102,171

% of consolidated

23%

24%

 

 

 

24%

 

7%

6%

 

 

 

6%

 

44%

45%

 

 

 

45%

Operating Costs

(641,481)

(680,096)

 

6.0%

 

(1,433,742)

 

(209,263)

(226,226)

 

8.1%

 

(476,919)

 

(1,155,564)

(1,211,564)

 

4.8%

 

(2,554,157)

% of consolidated

24%

25%

 

 

 

25%

 

8%

8%

 

 

 

8%

 

44%

44%

 

 

 

44%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

81,581

97,909

 

20.0%

 

206,407

 

13,044

(20,302)

 

(255.6%)

 

(42,800)

 

260,678

259,950

 

(0.3%)

 

548,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution

Peru

 

Colombia

 

Consolidated

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

 

9M 2010

9M 2011

 

 

 

9M 2011

Operating Revenues

230,578

238,636

 

3.5%

 

503,081

 

592,765

595,808

 

0.5%

 

1,256,052

 

3,184,955

3,289,889

 

3.3%

 

6,935,572

% of consolidated

7%

7%

 

 

 

7%

 

19%

18%

 

 

 

18%

 

100%

100%

 

 

 

 

Operating Costs

(181,152)

(183,991)

 

1.6%

 

(387,880)

 

(438,508)

(469,835)

 

7.1%

 

(990,481)

 

(2,625,969)

(2,771,712)

 

5.6%

 

(5,843,179)

% of consolidated

7%

7%

 

 

 

7%

 

17%

17%

 

 

 

17%

 

100%

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

49,426

54,646

 

10.6%

 

115,201

 

154,257

125,974

 

(18.3%)

 

265,571

 

558,987

518,177

 

(7.3%)

 

1,092,394

 

 

 

 

 

Pg. 16

 

  

Net Financial Income

 

The Company’s net financial income as of September 30, 2011 was negative Ch$ 194,141 million, representing an improvement of 15.3% over the same period 2010. The latter is mainly explained by: (i) Higher financial income by Ch$ 32,614 million, mainly as a result of the increase in pension plan assets in Brazil by Ch$ 20,151 million and higher time deposits during the period mainly explained by Chilectra and Endesa Brasil and (ii) Lower expenses by Ch$ 7,028 million mainly explained by the effect of the exchange rate prevailing during this period and partially offset by a higher average debt.

 

The latter was partially offset by higher loss for indexed assets and liabilities of Ch$ 4,624 million, as a result of to the negative impact of inflation over U.F. denominated debt in Chile. The U.F., a non-transaction currency linked to the inflation in Chile, increased its value by 2.6% during the current period, when compared to the 1.9% increase registered during the same period 2010.

 

Sale of Assets

 

The net income from sale of assets registered a decrease of Ch$ 10,215 million, explained by the recognition of the loss generated due to the sale of CAM.

 

Taxes

 

Income tax net expense increased by Ch$ 33,358 million at the end of September 2011. The latter is explained by decreases in: CIEN by Ch$ 24,305 million; Enersis by Ch$ 7,734 million; Endesa Chile by Ch$ 7,366 million; San Isidro by Ch$ 6,730 million; Coelce by Ch$ 5,879 million; Ampla by Ch$ 5,279 million; Pangue by Ch$ 3,693 million, Edegel by Ch$ 3,417 million and Emgesa by Ch$ 2,068 million.

 

The latter was partially offset by decreases in Edesur by Ch$ 12,283 million; Pehuenche by Ch$ 10,262 million; Chocón by Ch$ 6,759 million and Celta by Ch$ 3,144 million.

 

 

 

 

Pg. 17

 

 

  

Consolidated Balance Sheet Analysis

 

Assets Under IFRS

 

 

Table 5

 

 

 

 

 

 

ASSETS

(Million Ch$)

 

(Thousand US$)

 

As of Dec 31, 2010

As of September 30, 2011

Var 2010-2011

Chg %

  

As of September 30, 2011

 

 

 

 

 

 

  

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

961,355

937,454

(23,901)

(2.5%)

 

1,796,715

Other current financial assets

7,818

45,362

37,544

480.3%

 

86,940

Other current non-financial assets

35,993

37,648

1,655

4.6%

 

72,155

Trade and other current receivables

1,038,098

1,082,709

44,611

4.3%

 

2,075,109

Accounts receivable from related companies

20,472

23,077

2,606

12.7%

 

44,230

Inventories

62,652

82,873

20,221

32.3%

 

158,833

Current tax assets

137,987

127,924

(10,063)

(7.3%)

 

245,179

Non-current assets (or disposal groups) classified as held for sale

73,893

-

(73,893)

(100.0%)

 

-

Total Current Assets

2,338,268

2,337,047

(1,221)

(0.1%)

 

4,479,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets

62,969

40,648

(22,320)

(35.4%)

 

77,906

Other non-current non-financial assets

103,736

119,819

16,083

15.5%

 

229,644

Trade accounts receivables and other receivables, net

319,568

405,243

85,675

26.8%

 

776,685

Investment accounted for using equity method

14,102

14,131

29

0.2%

 

27,083

Intangible assets other than goodwill

1,452,586

1,489,738

37,152

2.6%

 

2,855,217

Goodwill

1,477,022

1,492,543

15,521

1.1%

 

2,860,593

Property, plant and equipment, net

6,751,941

7,268,063

516,122

7.6%

 

13,929,897

Investment properties

33,019

34,249

1,230

3.7%

 

65,642

Deferred tax assets

452,634

434,862

(17,773)

(3.9%)

 

833,451

Total Non-Current Assets

10,667,577

11,299,297

631,720

5.9%

 

21,656,119

 

 

 

 

 

 

 

TOTAL ASSETS

13,005,845

13,636,343

630,498

4.8%

 

26,135,279

 

 

Total Assets increased Ch$ 630,498 million, mainly due to:

 

Ø  Ch$ 631,720 million increase in non-current assets, or  5.9%, as a result of:

 

v  Ch$ 516,122 million increase in Property, Plant and Equipment, explained by the net effect resulting from the translation of financial statements from local currencies to Chilean pesos by Ch$ 384,480 million, and additions for the period in approximately Ch$ 358,967 million. The latter was partially offset by the depreciation for the period of Ch$ 237,833 million.

 

v  Ch$ 37,152 million increase in intangible assets other than goodwill, due to exchange rates variations, explained by: the translation effect of Ch$ 21,435 million; and additions for the period of Ch$ 134,020 million. The latter was partially offset by the depreciation for the period of Ch$ 75,432 million.

 

v  Ch$ 85,675 million increase in trade accounts receivables and other receivables, mainly due to the increase in Ampla by Ch$ 57,655 million and Coelce by Ch$ 10,678 million, by the appliance of IFRIC 12 interpretation, related to service concession arrangements.  Also due to increases in Costanera and Chocón for a total consideration of Ch$ 24,005 million due to FONINVEMEN II. Partially offset by decrease in Cachoeira Dourada by Ch$ 5,371 million and Chilectra by Ch$ 3,172 million.

 

v  Ch$ 15,521 million increase in goodwill related to fluctuation of local currency against Chilean peso.

 

 

 

 

Pg. 18

 

 

  

v  Ch$ 16,083 million increase in other non-current non financial assets, mainly explained by an increase of liens in Cachoeira by Ch$ 5,551 million and Coelce by Ch$ 9,542 million.

 

v  Decrease of Ch$ 22,230 million in other non-current non financial assets, mainly explained by drop in Endesa Chile by Ch$ 20,405 million, due to MTM of derivatives and diminish in Enersis by Ch$ 2,565 million in Deutsche Bank’s deposits.

 

v  Decrease of Ch$ 22,320 million in other non-current non financial assets, mainly explained by drop in Endesa Chile by Ch$ 20,405 million, due to MTM of derivatives and diminish in Enersis by Ch$ 2,565 million in cash collateral.

 

Ø  Ch$ 1,222 million of decrease in current assets or 0.1% decrease, mainly due to:

 

v  Ch$ 73,893 million decrease in non-current assets classified as held for sell, related to the selling process of the former subsidiaries CAM and Synapsis, that took place in the first quarter.

 

v  Ch$ 23,901 million decrease in Cash and Cash Equivalent, primarily explained by decreases in: Endesa Chile by Ch$ 179,808 million due to debt amortizations and dividend payments; Endesa Brasil by Ch$ 92,311 million explained by a payment made to IFC and Chilectra by Ch$ 51,988 million linked to lower amount of time deposits; Edelnor by Ch$ 16,264 million; Edesur by Ch$ 8,177 million due to decreases in time deposits and Codensa by Ch$ 5,169 due to debt amortization. The above was partially compensated by increases in: Enersis by Ch$ 131,477 million, Emgesa by Ch$ 95,527 million, Cachoeira Dourada by Ch$ 38,792 million; Gas Atacama by Ch$ 17,566 million, Ampla by Ch$ 28,706 million, Edegel by Ch$ 12,339 million and Coelce by Ch$ 10,310 million.

 

v  Increase in trade and other accounts receivables by Ch$44,611 million mainly due to increases in Fortaleza by Ch$78,131 million, in San Isidro by Ch$21,302 million, in Emgesa by Ch$ 14,83 million, in Endesa Chile by Ch$12,828 million and in Edelnor by Ch$8,218 million; partly offset by decreases in Coelce by Ch$43,397 million, in Chilectra bye Ch$34,765 million, in Ampla by Ch$8,959 million and in GasAtacama by Ch$8,948 million.

 

v  Increase in other current financial assets by Ch$37,544 million, mainly explained by increases in Fortaleza’s time deposits held until maturity by Ch$38,971 million.

 

v  Increase in inventory by Ch$20,221 million, mainly due to increases in Edelnor by Ch$4,927 million, in Codensa by Ch$3,359 million, in Enersis by Ch$2,423 million, in Celta by Ch$2,301 million, in Endesa Chile by Ch$1,913 million, in Edegel by Ch$1,528 million and in Edesur by Ch$1,347 million.

 

 

 

 

 

 

Pg. 19

 

  

 

Book Value and Economic Value of Assets

 

Regarding the more important assets, the following should be mentioned:

 

Properties, Plants and Equipment are valued at their purchase cost, net of the corresponding accumulated depreciation and impairment loss they have been subject to. Properties, Plants and Equipment, net of their residual value, if applicable, are linearly depreciated by distributing the cost of their different elements along the estimated years of useful life, which is the period that the companies expect to use them. The useful life is reviewed regularly.

 

The goodwill value generated by consolidation represents the acquisition cost surplus on the Group’s stake in terms of the reasonable value of assets and liabilities, including the identifiable contingent liabilities of a subsidiary at the time of acquisition.  Goodwill is not amortized. Instead, at the closing of each accounting period an assessment is made of whether any impairment has occurred during the period that could reduce its recoverable value to an amount below the registered net cost, proceeding in this event to make a timely impairment adjustment (See Note 3.e to the Consolidated Financial Statements).

 

Throughout the fiscal year and in particular at the date of closing, an assessment is made as to any indication of possible loss due to the impairment of any asset. In the event of any such indication, an estimate of the recoverable sum of said asset is made to determine, if applicable, the depreciated amount. If this involves identifiable assets that do not originate independent cash flows, the recoverability of the Cash Generating Unit that the asset belongs to is estimated, understanding as such the smaller group of identifiable assets that generate independent cash incomes.

 

Assets expressed in foreign currency are expressed at the prevalent exchange rate at the closing of the period.

 

Notes and accounts receivable from related companies are classified according to their short and long term maturities.  These operations are adjusted according to prevalent market equity conditions.

 

In summary, assets are valued according to the International Financial Reporting Standards, whose criteria are expressed in Note 3 of the Consolidated Financial Statements.

 

 

 

 

 

Pg. 20

 


 

 

Liabilities and Shareholders’ Equity Under IFRS

 

 

Table 6

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

(Million Ch$)

 

(Thousand US$)

 

As of Dec 31, 2010

As of September 30, 2011

Var 2010-2011

Chg %

  

As of September 30, 2011

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Other current financial liabilities

665,598

705,358

39,760

6.0%

 

1,351,883

Trade and other current payables

1,224,490

1,152,080

(72,410)

(5.9%)

 

2,208,065

Accounts payable to related companies

148,202

125,704

(22,498)

(15.2%)

 

240,923

Other short-term provisions

115,449

101,832

(13,617)

(11.8%)

 

195,171

Current tax liabilities

147,667

158,883

11,217

7.6%

 

304,514

Current provisions for employee benefits

5,450

-

(5,450)

(100.0%)

 

-

Other current non-financial liabilities

35,791

73,491

37,700

105.3%

 

140,851

Liabilities (or disposal groups) classified as held for sale

64,630

-

(64,630)

(100.0%)

 

-

Total Current Liabilities

2,407,277

2,317,348

(89,929)

(3.7%)

 

4,441,407

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Other non-current financial liabilities

3,014,956

3,291,067

276,110

9.2%

 

6,307,626

Non-current payables

37,237

22,897

(14,340)

(38.5%)

 

43,885

Accounts payable to related companies

1,084

-

(1,084)

(100.0%)

 

-

Other-long term provisions

225,522

213,814

(11,708)

(5.2%)

 

409,795

Deferred tax liabilities

555,924

562,265

6,341

1.1%

 

1,077,631

Non-current provisions for employee benefits

215,819

228,376

12,557

5.8%

 

437,703

Other non-current non-financial liabilities

33,997

89,782

55,785

164.1%

 

172,075

Total Non-Current Liabilities

4,084,540

4,408,201

323,661

7.9%

 

8,448,714

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Issued capital

2,824,883

2,824,883

-

0.0%

 

5,414,142

Retained earnings (losses)

2,103,690

2,210,958

107,269

5.1%

 

4,237,500

Share premium

158,760

158,760

-

0.0%

 

304,277

Other equity changes

-

-

-

 

 

-

Reserves

(1,351,787)

(1,297,803)

53,984

4.0%

 

(2,487,357)

 

 

 

-

 

 

 

Equity Attributable to Shareholders of the Company

3,735,545

3,896,797

161,253

4.3%

 

7,468,563

Equity Attributable to Minority Interest

2,778,483

3,013,997

235,514

8.5%

 

5,776,596

Total Shareholders' Equity

6,514,028

6,910,794

396,766

6.1%

 

13,245,159

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

13,005,845

13,636,343

630,498

4.8%

 

26,135,279

 

 

The Company’s total liabilities and shareholders’ equity increased by Ch$ 630,498 million, when compared to the period ended on December 31, 2010, due to Ch$ 323,661 million increase in non-current liabilities and the Ch$ 396,766 million increase in shareholders’ equity. The latter was partially offset by the Ch$ 89,929 million decrease of current liabilities. The detail is explained as follows:

 

Ø  Non-current liabilities increased by Ch$ 323,661 million, or 7.9%, mainly due to:

 

v  Other non-current financial liabilities (financial debt and derivatives) increased by Ch$276,110 million, mainly in Emgesa by Ch$155,746 million, due to the issuance of a bond in local currency in the international capital market, in Endesa Chile by Ch$69,215 million, due to the effect of debt in US$ and UF, in Ampla by Ch$36,340 million, in Codensa by Ch$23,007 million, in Costanera by Ch$18,974 million, in Edegel by Ch$15,942 million and in Edesur by Ch$9,376 million. This increase was partially offset by the decrease in Cien by Ch$28,345 million following a loan repayment, and in Coelce by Ch$20,188 million.

 

v  Other non-current non-financial liabilities increased by Ch$55,785 million, mainly in Emgesa and Codensa by Ch$22,023 million and Ch$14,393 million respectively, due to the recording of the equity tax impact as of January 2, 2011. Also due to increases in Cien of Ch$5,294 million, Cachoeira Dourada of Ch$3,499 million and in Ampla of Ch$2,658 million.

 

 

 

 

 

Pg. 21

 

 

Ø  Current liabilities declined by Ch$89,929 million, equivalent to 3.7%, mainly explained by the following changes:

 

v  Decrease in current trade and other accounts payable for Ch$72,410 million, basically relating to decreases in Ampla of Ch$72,457 million, in Endesa Chile of Ch$54,393 million, in Codensa of Ch$53,706 million, in Emgesa of Ch$35,639 million, in Cien of Ch$27,078 million and in Enersis of Ch$19,146 million. This was partially offset by increases in CGTF of Ch$135,130 million, Edesur of Ch$53,732 million, Costanera of Ch$12,955 million and Edelnor of Ch$1,526 million.

 

v  Reduction in liabilities included in groups of assets for disposal classified as held for sale, of Ch$64,630 million, as a result of the sale of the liabilities of CAM and Synapsis during the third quarter of 2011.

 

The above was partially offset by:

 

v  An increase in other financial liabilities, current, (financial debt and derivatives) of Ch$39,760 million, mainly in Emgesa by Ch$104,803 million, due to the transfer from long term and bond issued, in Ampla by Ch$19,043 million and in Edelnor by Ch$16,427 million. This was partially compensated by the decrease in Endesa Brasil by Ch$51,906 million due to the payment to IFC, in Codensa by Ch$39,502 million following the repayment of domestic bonds and in Edegel by Ch$12,887 million.

 

Equity increases by Ch$396,766 million with respect to December 2010:

 

v  The equity attributable to owners of the controller increases by Ch$161,252 million, mainly explained by the effect of the comprehensive result for the period of Ch$349,778 million, primarily driven by the result of the dominant of Ch$319,026 million, positive translation reserves of Ch$75,876 million, negative hedge reserve of Ch$44,527 million and negative other reserves of Ch$597 million, less dividends of Ch$193,034 million.

 

v  Non-controller participations increase by Ch$235,514 million, mainly explained by the effect of the comprehensive result for the period of Ch$499,654 million, principally driven by the result for the period of the non-controllers of Ch$368,766 million and other comprehensive results of the period of Ch$130,888 million, partially offset by the reduction in other equity movements of Ch$264,140 million.

 

 

 

 

 

 

 

 

 

Pg. 22

 

 

 

Debt Maturity with Third Parties, Thousand US$

Table 7

 

 

 

 

 

 

 

 

(Thousand US$)

2011

2012

2013

2014

2015

2016

Balance

TOTAL

Chile

12,049.5

84,967.5

425,062.5

736,164.9

225,839.6

421,594.3

1,127,076.6

3,032,754.7

Enersis

2,116.4

4,414.4

4,668.3

541,517.4

5,220.5

404,862.1

37,411.0

1,000,210.1

Chilectra

16.4

-

-

-

-

-

-

16.4

Endesa Chile

9,916.7

80,553.1

420,394.2

194,647.5

220,619.1

16,732.2

1,089,665.6

2,032,528.3

Argentina

61,841.4

112,069.4

97,783.1

60,490.4

35,175.0

-

17,077.1

384,436.4

Edesur

8,096.8

25,120.4

43,957.5

7,152.6

-

-

-

84,327.3

Costanera

53,469.6

56,320.2

24,994.8

27,960.0

27,341.9

-

17,077.1

207,163.5

Chocón

-

30,628.7

28,830.9

25,377.8

7,833.2

-

-

92,670.6

Hidroinvest

275.0

-

-

-

-

-

-

275.0

CTM

-

-

-

-

-

-

-

-

TESA

-

-

-

-

-

-

-

-

Peru

27,836.6

127,679.0

146,015.0

104,561.5

82,369.8

95,300.8

160,938.0

744,700.7

Edelnor

7,389.0

67,815.9

95,299.0

54,781.6

48,651.3

37,937.3

32,455.8

344,329.9

Edegel

20,447.6

59,863.0

50,716.0

49,780.0

33,718.5

57,363.5

128,482.2

400,370.9

Brazil

142,833.6

531,173.7

222,341.7

156,983.6

102,760.4

99,978.7

145,193.0

1,401,264.7

Endesa Brasil

-

-

-

-

-

-

-

-

Coelce

21,642.8

119,688.5

98,466.5

96,491.8

10,621.6

10,474.5

33,092.9

390,478.6

Ampla

58,556.7

287,928.6

109,507.7

45,083.6

75,614.4

81,835.2

99,926.1

758,452.2

Cachoeira

-

-

-

-

-

-

-

-

Cien

56,278.8

110,159.6

-

-

-

-

-

166,438.4

Fortaleza

6,355.3

13,397.0

14,367.5

15,408.3

16,524.4

7,669.0

12,174.1

85,895.6

Colombia

161,871.4

176,872.8

125,842.0

204,511.5

130,541.5

75,714.1

992,950.8

1,868,304.0

Codensa

-

17,607.4

125,842.0

130,541.5

-

75,714.1

246,201.2

595,906.2

Emgesa

161,871.4

159,265.3

-

73,970.0

130,541.5

-

746,749.5

1,272,397.8

TOTAL

406,432.5

1,032,762.3

1,017,044.3

1,262,712.0

576,686.4

692,587.8

2,443,235.5

7,431,460.6

Debt Maturity with Third Parties, Million Ch$

Table 7.1

 

 

 

 

 

 

 

 

(Million Ch$)

2011

2012

2013

2014

2015

2016

Balance

TOTAL

Chile

6,287

44,333

221,781

384,101

117,834

219,971

588,063

1,582,370

Enersis

1,104

2,303

2,436

282,542

2,724

211,241

19,520

521,870

Chilectra

9

-

-

-

-

-

-

9

Endesa Chile

5,174

42,029

219,345

101,559

115,110

8,730

568,544

1,060,492

Argentina

32,266

58,473

51,019

31,561

18,353

-

8,910

200,584

Edesur

4,225

13,107

22,935

3,732

-

-

-

43,999

Costanera

27,898

29,386

13,041

14,588

14,266

-

8,910

108,090

Chocón

-

15,981

15,043

13,241

4,087

-

-

48,352

Hidroinvest

143

-

-

-

-

-

-

143

CTM

-

-

-

-

-

-

-

-

TESA

-

-

-

-

-

-

-

-

Peru

14,524

66,618

76,185

54,556

42,977

49,724

83,971

388,555

Edelnor

3,855

35,384

49,723

28,583

25,384

19,794

16,934

179,658

Edegel

10,669

31,234

26,462

25,973

17,593

29,930

67,037

208,897

Brazil

74,525

277,145

116,009

81,908

53,616

52,165

75,756

731,124

Endesa Brasil

-

-

-

-

-

-

-

-

Coelce

11,292

62,449

51,376

50,346

5,542

5,465

17,267

203,736

Ampla

30,553

150,230

57,137

23,523

39,453

42,698

52,137

395,730

Cachoeira

-

-

-

-

-

-

-

-

Cien

29,364

57,477

-

-

-

-

-

86,841

Fortaleza

3,316

6,990

7,496

8,039

8,622

4,001

6,352

44,817

Colombia

84,458

92,285

65,659

106,706

68,111

39,505

518,082

974,806

Codensa

-

9,187

65,659

68,111

-

39,505

128,458

310,920

Emgesa

84,458

83,098

-

38,595

68,111

-

389,624

663,886

TOTAL

212,060

538,854

530,653

658,833

300,892

361,365

1,274,783

3,877,439

 

 

 

 

 

 

 

 

 

Pg. 23

 

 

Evolution Of Key Financial Ratios

 

 

Table 8

 

 

 

 

 

Indicator

Unit

As of Dec 31, 2010

As of September 30, 2011

Var 2010-2011

Chg %

Liquidity

Times

0.97

1.01

0.04

4.1%

Acid ratio test *

Times

0.94

0.96

0.02

2.1%

Working capital

Million Ch$

(69,010)

19,698

88,708

128.5%

Working capital

Thousand US$

(132,263)

37,754

170,016

128.5%

Leverage **

Times

1.00

0.97

(0.03)

(3.0%)

Short-term debt

%

37.0

34.0

(3.00)

(8.1%)

Long-term debt

%

63.0

66.0

3.00

4.8%

* (Current assets net of inventories and prepaid expenses) / Current liabilities

** Total debt / (equity + minority interest)

 

 

 

 

 

 

Table 8.1

 

 

 

 

 

Indicator

Unit

9M 2010

9M 2011

Var 2010-2011

Chg %

Financial expenses coverage *

Times

5.07

4.61

(0.47)

(9.2%)

Op. income / Op. rev.

%

26.70

24.74

(1.96)

(7.3%)

ROE **

%

12.96

12.19

(0.76)

(5.9%)

ROA **

%

7.70

7.53

(0.17)

2.5%

* EBITDA / Financial costs

** Annualized figures

 

 

The current ratio at September 2011 was 1.01:1, a slight increase of 0.04 times, equivalent to 4.1%, with respect to December 2010. This reflects a company with a solid liquidity position, maintaining its bank debt, financing its investments with cash generation and a satisfactory debt maturity structure.

  

The debt ratio is 0.97:1 as of September 30, 2011, reducing by 3.0% with respect to December 2010.

  

The financial cost coverage shows a fall of 0.47 times, equivalent to 9.2%, passing from 5.07:1 at September 2010 to 4.61:1 at September 2011. This is the result of the fall in the company’s EBITDA in this current period.

  

The profitability indicator, being operating income over ordinary revenues, declined by 7.3% to 24.7% at September 2011.

  

On the other hand, the annualized return on equity of the owners of the controller (dominant) is 12.2%, with a fall of 5.9% with respect to September 2010 when it was 13.0%. This was the result of the lower result reported for the period, added to the increase of the equity of the owners.

  

The annualized return on assets passed from 7.7% as of September 2010 to 7.5% in September 2011 as a result of the decline in the result for the present period and the increase in assets.

 

 

 

Pg. 24

 

 

Consolidated Statements of Cash Flows Analysis

 

Under IFRS

   

 

Table 9

            

CASH FLOW

(Million Ch$)

 

(Thousand US$)

 

9M 2010

9M 2011

Var 2010-2011

Chg %

  

9M 2011

 

 

 

 

 

 

 

Net Income

781,773

687,791

(93,982)

(12.0%)

  

1,449,966

             

Adjustments to reconcile net income

            

Income tax expense

283,192

316,550

33,358

11.8%

  

667,334

Decrease (increse) in inventories

13,709

(11,103)

(24,813)

(181.0%)

  

(23,407)

Decrease (increase) in trade accounts receivable

(184,575) 

(25,996)

158,578

85.9%

  

(54,804)

Decrease (increase) in other operating accounts receivable

(101,475) 

(121,111)

(19,636)

(19.4%)

  

(255,319)

Decrease (increase) in trade accounts payable

(6,585) 

(153,940)

(147,355)

(2237.8%)

  

(324,527)

Decrease (increase) in other operating accounts payable

339,910  

324,528

(15,382)

(4.5%)

  

684,154

Depreciation and amortization expense

355,185

313,265

(41,920)

(11.8%)

  

660,409

(Reversal of) Impairment losses

32,617

(1,048)

(33,665)

(103.2%)

  

(2,210)

Provisions

(10,822)

(21,619)

(10,797)

(99.8%)

  

(45,576)

Unrealized foreign currency exchange differences

(9,319) 

(9,277)

42

0.4%

  

(19,557)

Non-distributed gains from associates

(1,348) 

(5,848)

(4,500)

(333.8%)

  

(12,328)

Minority interest

-

-

-

   

-

Other non-cash

(13,744)

115,111

128,856

937.5%

  

242,672

Total adjustments to Reconcile to Operating Income

696,746  

719,513

22,767

3.3%

  

1,516,839

             

Dividends paid

-

-

-

   

-

Dividends received

-

-

-

   

-

Payments of interest classified as operating

-  

-

-

   

-

Proceeds of interest received classified as operating

-  

-

-

   

-

Income taxes refund (paid)

(341,634)

(312,802)

28,832

8.4%

  

(659,433)

Other inflows (outflows) of cash

(1,139) 

(21,941)

(20,802)

(1825.9%)

  

(46,256)

 

            

NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

1,135,745  

1,072,561

(63,184)

(5.6%)

 

2,261,117

 

 

 

 

 

 

 

Net Cash Flows provided by (used in) Investing Activities

 

 

 

 

 

 

Cash flows from loss of control of subsidiaries or other businesses.

-

12,662

12,662

 

 

26,694

Acquisitions of associates

-

-

-

 

 

-

Cash flows used for the purchase of non-controlling

-

-

 

 

 

 

Loans to related companies

-

-

-

 

 

-

Proceeds from sales of property, plant and equipment

4,129

3,579

(550)

(13.3%)

 

7,545

Purchase of property, plant and equipment

(302,451)

(355,826)

(53,375)

(17.6%)

 

(750,134)

Proceeds from sales of intangible assets

1,414

7,591

6,177

437.0%

 

16,003

Acquisitions of intangible assets

(124,451)

(133,280)

(8,829)

(7.1%)

 

(280,974)

Proceeds from other long term assets.

-

 

 

 

 

 

Purchase of other long-term assets

-

-

-

 

 

-

Proceeds from prepayments reimbursed and third party loans

-

-

-

 

 

-

Prepayments and third party loans

-

(1,259)

(1,259)

 

 

(2,653)

Dividends received

2,545

4,013

1,468

57.7%

 

8,459

Interest received

5,871

15,456

9,584

163.2%

 

32,583

Other inflows (outflows) of cash

(7,244)

6,291

13,535

186.8%

 

13,261

NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES

(420,188) 

(440,774)

(20,585)

(4.9%)

 

(929,216)

 

 

 

 

 

 

 

Cash Flows provided by (used in) Financing Activities

 

 

 

 

 

 

Proceeds from long-term borrowings

202,432

491,956

289,524

143.0%

 

1,037,116

Repayments of borrowings

-

-

-

 

 

-

Payments of loans

(549,880)

(448,529)

101,351

18.4%

 

(945,566)

Payments of finance lease liabilities

(20,834)

(8,640)

12,194

58.5%

 

(18,215)

Repayment of loans to related companies

-

-

-

 

 

-

Dividends paid

(455,921)

(566,338)

(110,417)

(24.2%)

 

(1,193,923)

Interest paid

(197,875)

(186,251)

11,625

5.9%

 

(392,644)

Other financing proceeds (payments)

(81,046)

(5,251)

75,795

93.5%

 

(11,070)

NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

(1,103,125) 

(723,053)

380,072

34.5%

 

(1,524,303)

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS BEFORE EFFECTS OF EXCHANGE RATE

(387,568) 

(91,266)

296,302

76.5%

 

(192,401)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

6,371

67,365

60,993

957.3%

 

142,015

Net Increase (Decrease) in Cash and Cash Equivalents

(381,196) 

(23,901)

357,295

93.7%

  

(50,387)

Cash and cash equivalents at end of period

1,134,901

961,355

(173,546)

(15.3%)

 

2,026,679

Ending Balance of Cash and Cash Equivalents

753,705  

937,454

183,749

24.4%

 

1,976,292

 

 

 

Pg. 25

 

 

 

The company generated a negative net cash flow during the period of Ch$91,266 million, comprising the following:

  

Operating activities to September 30, 2011 generated a net positive flow of Ch$1,072,561 million, a fall of 5.6% compared to the same period of the year before. This flow comprises mainly the earnings for the period of Ch$687,791 million, which is adjusted to reconcile the result of Ch$514,120 million. This adjustment includes the amortization, depreciation and impairment of assets of Ch$312,217 million and interest expenses of Ch$203,418 million. This is partly compensated by the reduction in working capital of Ch$185,682 million.

  

Investment activities generated a negative net cash flow of Ch$440,774 million, representing a reduction in cash of 4.9% or Ch$20,586 million compared to the same period of 2010. These disbursements relate mainly to the acquisition of properties, plant and equipment of Ch$355,826 million and the incorporation of intangible assets (IFRIC 12) of Ch$133,280 million, compensated partly by the net cash flow from the sale of CAM and Synapsis of Ch$12,662 million.

  

Financing activities generated a net negative cash flow of Ch$723,053 million, principally the payment of dividends for Ch$566,338 million, loan repayments of Ch$448,529 million and interest payments of Ch$186,251 million. This is partially offset by loan drawings of Ch$491,956 million.

 

Cash Flow Received From Foreign Subsidiaries by Enersis, Chilectra and Endesa Chile

 

Table 10

 

 

 

 

 

 

 

 

 

 

Cash Flow

Interest Received

Dividends Received

Capital Reductions

Others

Total Cash Received

(Thousand US$)

 

9M 2010

9M 2011

9M 2010

9M 2011

9M 2010

9M 2011

9M 2010

9M 2011

9M 2010

9M 2011

Argentina

1,481.6

1,293.5

8,663.3

-

-

-

-

-

10,144.9

1,293.5

Peru

-

-

46,892.5

61,600.7

-

-

-

-

46,892.5

61,600.7

Brazil

-

-

178,619.5

172,779.9

-

-

-

-

178,619.5

172,779.9

Colombia

-

-

141,036.6

27,664.4

59,462.9

-

-

-

200,499.5

27,664.4

Others

-

-

-

-

-

-

-

-

-

-

Total

1,481.6

1,293.5

375,211.8

262,045.0

59,462.9

-

-

-

436,156.4

263,338.6

 

Source: Internal Financial Report

 

 

 

Pg. 26

 

 

 

 

 

 

Table 11

 

 

 

 

 

 

 

 

 

 

Payments for Additions of Fixed Assets

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

Million Ch$

 

Thousand US$

 

Million Ch$

 

Thousand US$

 

9M 2010

9M 2011

 

9M 2011

 

9M 2010

9M 2011

 

9M 2011

Endesa Chile

174,729

195,400

 

411,932

 

148,127

124,390

 

262,233

Cachoeira

4,701

1,799

 

3,793

 

5,501

5,538

 

11,675

Endesa Fortaleza

1,870

5,521

 

11,639

 

6,007

6,072

 

12,801

Cien

1,884

1,450

 

3,057

 

23,587

7,876

 

16,604

Chilectra S.A.

23,091

18,445

 

38,885

 

15,824

16,151

 

34,049

Edesur

34,787

57,399

 

121,006

 

10,572

9,729

 

20,510

Edelnor

15,435

24,056

 

50,714

 

15,383

14,596

 

30,771

Ampla (*)

71,820

89,003

 

187,631

 

40,179

42,547

 

89,695

Coelce (*)

53,535

41,739

 

87,992

 

28,385

30,212

 

63,691

Codensa

38,305

48,078

 

101,356

 

44,082

44,550

 

93,918

Cam Ltda.

702

46

 

97

 

1,316

294

 

620

Inmobiliaria Manso de Velasco Ltda.

521

1,922

 

4,052

 

214

198

 

417

Synapsis

2,237

488

 

1,029

 

2,343

478

 

1,008

Enersis holding and investment companies

174

777

 

1,638

 

575

886

 

1,868

Total

423,791

486,123

 

1,024,819

 

342,095

303,517

 

639,859

(*) Includes concessions intangible assets.

 

 

 

Pg. 27

 

 

The Principal Risks associated to the activities of the Enersis Group

 

Commercial and Regulatory Risk

 

The Group’s activities are subject to a broad range of governmental standards and environmental regulations. Any modification of such standards and regulations may affect the Group’s activities, economic situation and operating results.

 

The Group’s distribution activity is subject to a wide range of rules regarding tariffs and other issues that govern their activities in each of the countries where it operates and which could modify distribution subsidiaries operating results.

 

The Group’s generation activity is subject to existing hydrological and weather conditions in the geographic zones in which the Group’s hydroelectric generating plants are located. Commercial policies have been planned in order to moderate the possible impact of changes in these variables.

 

Group’s activities are subject to certain environmental regulation which Enersis fulfills constantly. Modifications applied on such regulations may affect the operations, economic condition or the results of these operations.

 

Enersis and its operating subsidiaries are subject to environmental regulations which, among other things, require the company to conduct environmental impact studies for future projects, obtaining permits, licenses and other authorizations and the fulfillment of all requirements of those licenses, permits and norms. As any other regulated company, Enersis cannot guarantee:

 

·        The approval from regulators of environmental impact studies.

·        That public opposition may not cause delays or modifications to any proposed project and

·        That laws or regulations may not change or be interpreted in a manner that could adversely affect the operations or the plans for companies in which Enersis or its subsidiaries hold investments.

 

The group’s commercial activity has been planned to moderate possible impacts resulting from changes in hydrological conditions.

 

Enersis group’s operations include hydroelectric generation and therefore depend on the hydrological conditions at any time in the broad geographical zones where its hydroelectric generation installations are located. If hydrological conditions produce droughts or other conditions that negatively affect hydroelectric generation, the results could be adversely affected. Enersis has therefore defined as an essential part of its commercial policy not to contract 100% of its total capacity. The electricity business is also affected by atmospheric conditions like average temperatures which govern consumption. The different weather conditions can produce differences in the margin obtained by the business.

 

Financial situation and the results from operations could be adversely affected if risk exposure weren’t efficiently managed in regards to interest rates, prices of commodities, and exchange rates.

 

Interest Rate Risk

 

Interest rate variations modify the fair value of those assets and liabilities that accrue a fixed interest rate, as well as the future flows of assets and liabilities pegged to a variable interest rate.

 

 

 

Pg. 28

 

 

In compliance with our current interest rate hedging policy, the portion of fixed and/or hedged debt to the total net debt was 55% as of September 30, 2011 on a consolidated basis.

             

Depending on the Group’s estimates and debt structure objectives, hedging transactions take place hiring derivatives that mitigate these risks.

 

The structure of Enersis’ financial debt sort by fixed, protected and variable interest rate, and after derivatives, is as follows:

 

Net Position:

 

Sep. 30th 2011

Sep. 30th 2010

%

%

Fixed Interest Rate

55%

51%

Variable Interest Rate

45%

49%

Total

100%

100%

 

 

Exchange Rate Risk

 

The exchange rate risks are mainly related to the following transactions:

  • Foreign currency debts raised by Group’s companies.
  • Payments to be made on international markets for the acquisition of projects related materials.
  • Group companies’ incomes directly linked to the evolution of the dollar, and
  • Incoming cash flows from our subsidiaries abroad exposed to exchange rate fluctuations.

 

In order to mitigate exchange rate risks, Enersis’ exchange rate hedging policy is based on cash flows and it strives to maintain a balance between dollar indexed flows and the asset and liability levels in such currency.  Cross currency swaps and exchange rate forwards are the instruments currently used in compliance with this policy. Likewise, the policy looks to refinance debts in each company’s functional currency.

   

Commodities Risk

 

Enersis is exposed to the price fluctuation risk on some commodities, basically through

  • Fuel purchases for the electricity generation and also,
  • Energy transactions in the local markets.

 

In order to reduce risks in extreme drought conditions, the company has designed a trading policy that defines sales commitment levels consistent with its generating plants’ firm energy in a dry year, including risk mitigation clauses in some unregulated clients’ contracts.

 

In view of the operative conditions by the electricity generation market in Chile has experienced, like extreme drought and rising oil prices, the company has decided to hire a derivative to place a cap on the Brent price for consumption As of September 30th 2011 there are no outstanding coverage instruments and instruments taken in the past have been specific and for no considerable monetary amounts. Market and operative conditions will be constantly analyzed to adjust the volume hedged or take new hedges for the following months.

 

 

 

Pg. 29

 

 

 

Liquidity Risk

 

In engaging committed long term credit facilities and short term financial investments the Group maintains a consistent liquidity policy, for the amounts required to support projected needs for the period, contingent with the situation and the expectations in the debt and capital markets.

 

As of September 30, 2011, the Enersis Group held liquidity in the amount of Ch$ 937,454 million in Cash and Cash Equivalent and Ch$ 385,060 million in committed long term credit lines. As of December 31st, 2010, the Enersis Group held liquidity in the amount of Ch$ 961,355 million in Cash and Cash Equivalent and Ch$ 242,750 million in committed long term credit lines.

 

Credit Risk

 

Credit risk in accounts receivable, originating from trading activities, has been historically very limited given that the short term collection conditions with customers doesn’t allow them to individually accumulate significant amounts. Additionally, in the case of the so-called “unregulated clients” of our electricity generation and distribution business, a formal procedure is applied to control the credit risk, using a systematic evaluation of our counterparties, index definition and credit risk factors by virtue of which the contracts are approved or additional guarantee requirements are defined.

 

Furthermore, in our electricity generating business, in the event of non-payment, some countries allow power supply cut-offs, and in almost all contracts a lack of payment is established as cause for contract termination. For this purpose, credit risks are constantly monitored and the maximum amounts exposed to payment risks are measured, which are limited.

 

In turn, in our electricity distribution business, the energy supply cut-off is a power held by our companies in case of default by our customers, applied in accordance with the applicable regulation in each country, enabling the credit risk evaluation and control process, which is also limited.

 

Surplus cash flow investments are placed in prime national and foreign financial entities (with an investment grade equivalent risk rating) with limits set for each entity.

 

In the selection of banks for investment, the Group considers those that hold two investment grade classifications, according to the three main international risk agencies (Moody’s, S&P and Fitch Ratings).

 

Positions are backed up by treasury bonds from the country of operations and instruments issued by the most reputable banks, favoring, wherever possible, the first ones. 

 

Derivatives are engaged with highly solvent entities; about 90% of operations are conducted with entities that hold an A or higher rating.

 

Risk Measurement

 

The Enersis Group measures the Value at Risk (VaR) of its debt and financial derivatives positions in order to guarantee that the risk taken by the company remains consistent with the risk exposure defined by Management, thus restricting the volatility of its financial results.

The positions portfolio used in the calculations of the current Value at Risk is comprised of debt and financial derivatives.

 

 

 

Pg. 30

 

 

The calculated Value at Risk represents the possible value loss of the aforementioned positions portfolio over one day time horizon with 95% of confidence. 

 

The volatility of the risk variables that affect the value of the positions portfolio has been studied, including:

  • The U.S. dollar Libor interest rate.
  • The usual banking local indexes for debts, taking into account the different currencies our companies operate under, and
  • The exchange rates of the different currencies involved in the calculation.

 

The calculation of VaR is based on generating possible future scenarios (at one day) of market values (both spot and term) for the risk variables, using Bootstrapping methodology. The number of scenarios generated ensures compliance with the simulation convergence criteria. A matrix of volatilities and correlations between the various risk variables calculated based on the historical values of the logarithmic price return, has been applied to simulate the future price scenario.

 

Once the price scenarios have been obtained, the fair value of the portfolio is calculated using such scenarios, obtaining a distribution of possible values at one day. The one-day 95% confidence VaR number is calculated as the 5% percentile of the potential increases in the fair value of the portfolio in one day.

 

The various debt positions and financial derivatives included in the calculation have been valued consistently using the financial capital calculation methodology reported to Management.

 

Taking in consideration the above mentioned hypotheses, the breakdown for VaR in every mentioned type of positions is the following:

 

Financial Positions

Sep. 30th

2011

Sep. 30th

2010

Th Ch$

Th Ch$

Interest Rate

58,886,502

38,847,459

Exchange Rate

2,003,543

539,575

Correlation

(3,497,613)

(2,695,024) 

Total

57,392,432

36,692,010

 

 

 

Other Risks

 

A portion of Enersis and Endesa Chile’s debt is subject to cross default provisions.  If certain defaults in debt of certain specific subsidiaries are not remedied within specified grace periods, a cross default could affect Endesa Chile and Enersis, and under certain scenarios, debts at the holding company level could be accelerated.

 

Nonpayment – after any applicable grace period – of the debts of Enersis and Endesa Chile, or their so-called Relevant Subsidiaries, with an individual principal amount outstanding in excess of US$ 50 million (or its equivalent in other currencies), and with a missed payment also in excess of US$ 50 million, could give rise to a cross default of several bank revolving debt facilities at the Endesa Chile and

 

 

 

Pg. 31

 

 

 

 

 

Enersis levels. Furthermore, some of these debt facilities are also subject to cross acceleration provisions in the event of a default in other Relevant Subsidiary debt, for reasons other than payment default, for events such as bankruptcy, insolvency proceedings, and materially adverse governmental or legal actions, in all cases for amounts in excess of US$ 50 million dollars.

 

Similarly, nonpayment – after any given applicable grace period - of the debts of these companies or any of their Chilean subsidiaries, in single indebtedness in default with a principal in excess of US$ 30 million dollars, could potentially give rise to a cross default of Enersis and Endesa Chile Yankee bonds. 

 

There are no clauses in the credit agreements by which changes in the corporate or debt classification of these companies from risk classification agencies could trigger prepayments. Nevertheless, a modification in the Standard & Poor’s (S&P) debt risk classification in foreign currency could trigger a change in the margin applicable to determine the interest rate, in the credit loans executed in 2006, and in local credit lines executed in 2009.

 

 

 

 

 

 

Pg. 32

 

 

Argentina

 

Generation

 

In Argentina, operating income to the close of September 2011 was Ch$25,435 million, which represents a reduction of 32.2% compared to the previous year. This is basically explained by higher fuel costs, energy purchases and transport expenses. This is partly compensated by larger revenues which grew by 12.9% due to a 7.4% rise in physical sales.

  

 

Endesa Costanera

 

The operating income of Endesa Costanera reached Ch$9,930 million to September 2011, 28.7% greater than the result for the same period of the previous year. This increase is mainly explained by a 20.2% increase in physical sales, partially offset by a rise in the costs of fuel consumption.

  

The effect of translating the financial statements from the Argentine peso to the Chilean peso in both periods produces a fall in Chilean pesos of 12.4% at September 2011, with respect to September 2010.

 

 

Table 12

 

 

 

 

 

 

Endesa Costanera

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

252,614

306,738

54,124

21.4%

 

646,650

Procurement and Services

(220,925)

(271,307)

(50,382)

(22.8%)

 

(571,955)

Contribution Margin

31,689

35,432

3,743

11.8%

 

74,695

Other Costs

(12,596)

(15,637)

(3,040)

(24.1%)

 

(32,964)

Gross Operating Income (EBITDA)

19,093

19,795

702

3.7%

 

41,731

Depreciation and Amortization

(11,380)

(9,865)

1,515

13.3%

 

(20,796)

Operating Income

7,713

9,930

2,217

28.7%

 

20,935

Figures may differ from those accounted under Argentine GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 12.1

 

 

 

 

 

 

Endesa Costanera

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

5,910

7,090

1,181

20.0%

 

 

GWh Sold

5,957

7,158

1,201

20.2%

 

 

Market Share*

7.2%

8.2%

1.0 pp.

 

 

 

(*)As percentage of total sales of the system

            

 

 

 

 

 

 

 

 

Pg. 33

 

 

El Chocon

 

The operating income of El Chocón was Ch$16,533 million to September 2011, reflecting a fall of 37.7% compared to the same period of 2010. This is mainly explained by a 21.4% reduction in physical sales.

  

The effect of translating the financial statements from the Argentine peso to the Chilean peso in both periods produces a fall in Chilean pesos of 12.4% at September 2011, with respect to September 2010.

 

 

Table 13

 

 

 

 

 

 

El Chocón

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

45,381

34,696

(10,685)

(23.5%)

 

73,145

Procurement and Services

(12,840)

(12,643)

196

1.5%

 

(26,654)

Contribution Margin

32,541

22,053

(10,488)

(32.2%)

 

46,491

Other Costs

(3,642)

(3,425)

216

5.9%

 

(7,221)

Gross Operating Income (EBITDA)

28,900

18,627

(10,272)

(35.5%)

 

39,269

Depreciation and Amortization

(2,357)

(2,095)

263

11.1%

 

(4,416)

Operating Income

26,543

16,533

(10,010)

(37.7%)

 

34,854

Figures may differ from those accounted under Argentine GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 13.1

 

 

 

 

 

 

El Chocón

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

2,395

1,703

(692)

(28.9%)

 

 

GWh Sold

2,646

2,079

(567)

(21.4%)

 

 

Market Share*

3.2%

2.4%

(0.8) pp.

 

 

 

(*)As percentage of total sales of the system

            

 

 

 

 

 

 

 

Pg. 34

 

 

Distribution

Edesur

 

In Argentina, our subsidiary Edesur saw a decline in its operating income of Ch$33,346 million, from Ch$13,044 million to September 2010 to a loss of Ch$20,302 million in the present period. This is mainly explained by the increase in personnel costs of Ch$17,954 million, principally related to wage increases under labor agreements, and an increase in other fixed operating costs of Ch$6,515 million, partially offset by an increase in physical sales which rose by 3.5% to 13,064 GWh to September 2011. Energy losses remained at 10.6% and the number of customers passed 2.3 million.

  

The effect of translating the financial statements from the Argentine peso to the Chilean peso in both periods produces a fall in Chilean pesos of 12.4% to September 2011 compared to the same period of last year.

 

 

Table 14

 

 

 

 

 

 

Edesur

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

222,307

205,924

(16,383)

(7.4%)

 

434,119

Procurement and Services

(107,637)

(103,825)

3,812

3.5%

 

(218,877)

Contribution Margin

114,670

102,100

(12,570)

(11.0%)

 

215,242

Other Costs

(89,482)

(111,280)

(21,798)

(24.4%)

 

(234,596)

Gross Operating Income (EBITDA)

25,188

(9,181)

(34,368)

(136.4%)

 

(19,354)

Depreciation and Amortization

(12,143)

(11,122)

1,022

8.4%

 

(23,446)

Operating Income

13,044

(20,302)

(33,346)

(255.6%)

 

(42,800)

Figures may differ from those accounted under Argentine GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 14.1

 

 

 

 

 

 

Edesur

9M 2010

9M 2011

Var 2010-2011

Chg%

  

 

Customers (Th)

2,354

2,367

13

0.6%

 

 

GWh Sold

12,623

13,064

441

3.5%

 

 

Clients/Employee

898

830

(67)

(7.5%)

 

 

Energy Losses %

10.6%

10.6%

0.0%

 

 

 

 

 

 

 

Pg. 35

 

 

Brazil

Endesa Brasil

Operating Income amounted to Ch$ 420,987 million, 14.4 % higher than the Ch$ 367,843 million reported as of September 30, 2010.

 

 

 

Table 15

 

 

 

 

 

 

Endesa Brasil

(Million Ch$)

 

 

(Thousand US$)

 

9M 2010

9M 2011

Var 2010-2011

Chg %

 

9M 2011

Sales

1,423,250

1,460,357

37,108

2.6%

 

3,078,649

Other operating income

138,814

142,014

3,200

2.3%

 

299,387

Total Revenues

1,562,063

1,602,371

40,308

2.6%

 

3,378,036

Procurements and Services

(866,676)

(914,674)

(47,998)

(5.5%)

 

(1,928,268)

Contribution Margin

695,387

687,697

(7,690)

(1.1%)

 

1,449,767

Other Costs

(199,364)

(186,769)

12,594

6.3%

 

(393,738)

Gross Operating Income (EBITDA)

496,023

500,928

4,904

1.0%

 

1,056,030

Depreciation and Amortization

(128,181)

(79,941)

48,239

37.6%

 

(168,528)

Operating Income

367,843

420,987

53,144

14.4%

 

887,502

Net Financial Income

(69,411)

(43,681)

25,730

37.1%

 

(92,085)

Financial income

73,769

99,981

26,212

35.5%

 

210,775

Financial expenses

(142,249)

(149,171)

(6,922)

(4.9%)

 

(314,475)

Income (Loss) for indexed assets and liabilities

-  

-

-

 

 

-

Foreign currency exchange differences, net

(931) 

5,510

6,441

691.6%

 

11,615

Gains

27,012

16,085

(10,927)

(40.5%)

 

33,910

Losses

(27,944)

(10,576)

17,368

62.2%

 

(22,295)

Net Income from Related Comp. Cons. by the Prop. Eq. Method 

-

-

-

 

 

-

Net Income from Other Investments

-  

-

-

 

 

-

Net Income from Sales of Assets

12  

-

(12)

(100.0%)

 

-

Net Income before Taxes

298,444

377,306

78,862

26.4%

 

795,417

Income Tax

(50,843)

(85,916)

(35,073)

(69.0%)

 

(181,124)

NET INCOME

247,601

291,390

43,789

17.7%

 

614,293

Net Income Attributable to Owners of the Company

163,584  

208,569

44,985

27.5%

 

439,695

Net Income Attributable to Minority Interest

84,017  

82,821

(1,196)

(1.4%)

 

174,598

 

 

Generation

In Brazil, the operating income of our subsidiaries amounted to Ch$166,757 million, which is 51.3% higher than in the same period of the year before when operating income was Ch$110,232 million.

 

Cachoeira

 

The operating income of our subsidiary Cachoeira Dourada increased by Ch$4,442 million, principally due to a 7.9% increase in average sale prices, expressed in local currency. Physical energy sales declined by 98 GWh to 2,848.8 GWh to September 2011.

  

The effect of translating the financial statements from the Brazilian real to the Chilean peso in both periods produces a fall in Chilean pesos of 0.5% at September 2011, with respect to September 2010.

 

 

 

 

Pg. 36

 

 

Table 16

 

 

 

 

 

 

Cachoeira

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

86,727

90,531

3,805

4.4%

 

190,854

Procurement and Services

(19,598)

(19,653)

(55)

(0.3%)

 

(41,432)

Contribution Margin

67,129

70,878

3,750

5.6%

 

149,422

Other Costs

(4,848)

(4,084)

764

15.8%

 

(8,610)

Gross Operating Income (EBITDA)

62,281

66,794

4,514

7.2%

 

140,812

Depreciation and Amortization

(5,524)

(5,595)

(71)

(1.3%)

 

(11,795)

Operating Income

56,757

61,199

4,442

7.8%

 

129,017

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 16.1

 

 

 

 

 

 

Cachoeira

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

2,490

2,047

(443)

(17.8%)

 

 

GWh Sold

2,947

2,849

(98)

(3.3%)

 

 

Market Share*

1.0%

0.9%

(0.1) pp.

 

 

 

(*)As percentage of total sales of the system

            

 

 

 

Fortaleza (cgtf)

 

The operating income of Endesa Fortaleza (CGTF) was Ch$39,723 million, a reduction of Ch$5,309 million with respect to the same period of 2010. This reduction is mainly due to lower sale prices and a fall in physical sales which declined by 198 GWh to 2,012.3 GWh to September 2011.

 

The effect of translating the financial statements from the Brazilian real to the Chilean peso in both periods produces a fall in Chilean pesos of 0.5% at September 2011, with respect to September 2010.

 

 

Table 17

 

 

 

 

 

 

Fortaleza

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

109,832

98,999

(10,833)

(9.9%)

 

208,705

Procurement and Services

(53,299)

(48,573)

4,726

8.9%

 

(102,398)

Contribution Margin

56,533

50,427

(6,106)

(10.8%)

 

106,307

Other Costs

(5,474)

(4,583)

891

16.3%

 

(9,662)

Gross Operating Income (EBITDA)

51,059

45,844

(5,215)

(10.2%)

 

96,646

Depreciation and Amortization

(6,027)

(6,120)

(93)

(1.5%)

 

(12,903)

Operating Income

45,031

39,723

(5,308)

(11.8%)

 

83,743

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 17.1

 

 

 

 

 

 

Fortaleza

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

1,121

348

(773)

(69.0%)

 

 

GWh Sold

2,210

2,012

(198)

(8.9%)

 

 

Market Share*

0.7%

0.6%

(0.1) pp.

 

 

 

(*)As percentage of total sales of the system

            

 

 

 

 

 

Pg. 37

 

 

 

 

Transmission

CIEN

 

On the other hand, Cien produced an increase in operating income of Ch$56,930 million to reach Ch$68,631 million at September 2011. This is basically due to the start of the toll charge (RAP) in Cien from April 2011 and reduced depreciation, amortization and impairment of assets in the period.

  

The effect of translating the financial statements from the Brazilian real to the Chilean peso in both periods produces a fall in Chilean pesos of 0.5% at September 2011, with respect to September 2010.

 

Table 18

 

 

 

 

 

 

Cien

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

46,455

38,860

(7,595)

(16.4%)

 

81,922

Procurement and Services

(496)

21,116

21,612

4357.4%

 

44,515

Contribution Margin

45,959

59,975

14,016

30.5%

 

126,437

Other Costs

(8,734)

(4,362)

4,372

50.1%

 

(9,195)

Gross Operating Income (EBITDA)

37,225

55,614

18,388

49.4%

 

117,242

Depreciation and Amortization

(25,525)

13,017

38,542

151.0%

 

27,442

Operating Income

11,701

68,631

56,930

486.6%

 

144,684

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Pg. 38

 

Distribution

In Brazil, the operating income of our distribution subsidiaries was Ch$259,951 million, which is 0.3% lower than that obtained to September 2010.

Ampla

 

The operating income of Ampla was Ch$128,331 million, representing an increase of Ch$14.214 million in the same period of the previous year. This increase is mainly due to a higher unit energy sale margin of 2.0% in local currency, an increase of 4.3% in physical sales to 7,627 GWh and a reduced charge for depreciation, amortization and impairment of Ch$14,037 million. Energy losses declined by 1.3 p.p., moving from 21.1% to 19.8%. The number of customers of Ampla rose by 67 thousand to over 2.6 million.

 

The effect of translating the financial statements from the Brazilian real to the Chilean peso in both periods produces a fall in Chilean pesos of 0.5% to September 2011 compared to the same period of 2010.

  

 

Table 19

 

 

 

 

 

 

Ampla

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

766,439

829,718

63,279

8.3%

 

1,749,169

Procurement and Services

(490,011)

(555,716)

(65,704)

(13.4%)

 

(1,171,531)

Contribution Margin

276,428

274,003

(2,425)

(0.9%)

 

577,638

Other Costs

(100,823)

(98,219)

2,603

2.6%

 

(207,061)

Gross Operating Income (EBITDA)

175,606

175,783

178

0.1%

 

370,578

Depreciation and Amortization

(61,489)

(47,452)

14,037

22.8%

 

(100,036)

Operating Income

114,117

128,332

14,215

12.5%

 

270,542

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 19.1

 

 

 

 

 

 

Ampla

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

Customers (Th)

2,554

2,621

67

2.6%

 

 

GWh Sold

7,309

7,627

318

4.4%

 

 

Clients/Employee

2,189

2,197

8

0.4%

 

 

Energy Losses %

21.1%

19.8%

(1.3) pp.

 

 

 

 

 

 

 

 

 

 

Pg. 39

 

 

Coelce

 

On the other hand, the operating income of Coelce decreased by 10.2% or Ch$14.941 million, to Ch$131,620 million. This fall in operating income is due principally to the lower unit energy sale margin of 4.2% in local currency and a higher charge for depreciation, amortization and impairment of Ch$4,136 million. Physical sales rose by 0.2% to 6,566 GWh at September 2011. Energy losses increased to 12.0% at September 2011. The number of customers in Coelce rose by 131 thousand, almost reaching a total of 3.2 million.

 

The effect of translating the financial statements from the Brazilian real to the Chilean peso in both periods produces a fall in Chilean pesos of 0.5% to September 2011 compared to the same period of 2010.

 

 

Table 20

 

 

 

 

 

 

Coelce

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

649,803

641,796

(8,007)

(1.2%)

 

1,353,002

Procurement and Services

(401,428)

(409,831)

(8,402)

(2.1%)

 

(863,984)

Contribution Margin

248,375

231,966

(16,410)

(6.6%)

 

489,018

Other Costs

(72,429)

(66,826)

5,603

7.7%

 

(140,878)

Gross Operating Income (EBITDA)

175,947

165,140

(10,807)

(6.1%)

 

348,139

Depreciation and Amortization

(29,385)

(33,521)

(4,136)

(14.1%)

 

(70,668)

Operating Income

146,562

131,619

(14,943)

(10.2%)

 

277,472

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 20.1

 

 

 

 

 

 

Coelce

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

Customers (Th)

3,059

3,190

131

4.3%

 

 

GWh Sold

6,555

6,566

10

0.2%

 

 

Clients/Employee

2,353

2,468

114

4.9%

 

 

Energy Losses %

11.9%

12.0%

0.0 pp.

 

 

 

 

 

 

 

Pg. 40

 

Chile

 

Generation

Endesa Chile

 

Consolidated Income Statement of Endesa Chile

 

Table 21

 

 

 

 

 

 

Endesa Chile

(Million Ch$)

 

 

(Thousand US$)

 

9M 2010

9M 2011

Var 2010-2011

Chg %

 

9M 2011

Sales

1,816,390

1,791,612

(24,778)

(1.4%)

 

3,776,983

Other operating income

32,870

12,368

(20,502)

(62.4%)

 

26,073

Total Revenues

1,849,260

1,803,980

(45,280)

(2.4%)

 

3,803,056

Procurements and Services

(935,999)

(977,776)

(41,778)

(4.5%)

 

(2,061,297)

Contribution Margin

913,261

826,203

(87,058)

(9.5%)

 

1,741,759

Other Costs

(125,676)

(161,788)

(36,112)

(28.7%)

 

(341,073)

Gross Operating Income (EBITDA)

787,585

664,416

(123,170)

(15.6%)

 

1,400,686

Depreciation and Amortization

(151,359)

(133,754)

17,605

11.6%

 

(281,973)

Operating Income

636,227

530,662

(105,565)

(16.6%)

 

1,118,713

Net Financial Income

(92,347)

(101,126)

(8,779)

(9.5%)

 

(213,188)

Financial income

7,705

10,185

2,480

32.2%

 

21,472

Financial expenses

(108,658)

(100,967)

7,691

7.1%

 

(212,853)

Income (Loss) for indexed assets and liabilities

(3,086) 

(3,880)

(794)

(25.7%)

 

(8,180)

Foreign currency exchange differences, net

11,691  

(6,464)

(18,155)

(155.3%)

 

(13,626)

Gains

24,373

12,339

(12,034)

(49.4%)

 

26,012

Losses

(12,682)

(18,802)

(6,121)

(48.3%)

 

(39,638)

Net Income from Related Comp. Cons. by the Prop. Eq. Method 

67,543

90,136

22,594

33.5%

 

190,021

Net Income from Other Investments

139  

376

237

171.1%

 

792

Net Income from Sales of Assets

833  

711

(122)

(14.7%)

 

1,499

Net Income before Taxes

612,394

520,759

(91,635)

(15.0%)

 

1,097,837

Income Tax

(148,961)

(149,693)

(733)

(0.5%)

 

(315,576)

NET INCOME

463,434

371,066

(92,368)

(19.9%)

 

782,262

Net Income Attributable to Owners of the Company

351,525  

278,006

(73,519)

(20.9%)

 

586,078

Net Income Attributable to Minority Interest

111,909  

93,060

(18,849)

(16.8%)

 

196,184

 

 

*Includes generation subsidiaries in Chile, Argentina, Colombia and Peru.

 

Chilean Operations

 

The operating income in Chile to September 30, 2011 amounted to Ch$ 245,359 million, representing a fall of 29.9% compared to the same period of the year before. This is mainly explained by a 7.8% reduction in operating revenues and a 5.8% increase in procurement and service costs, mainly due to higher energy purchase costs, partially compensated by reduced fuel consumption costs and transport expenses.

  

Revenues declined due principally to a 1.9% reduction in physical sales as a result of the lower hydroelectric availability which produced fewer sales on the spot market, partially offset by larger sales to non-regulated customers, plus a 3.9% reduction in average energy sale prices expressed in pesos.

  

 

 

 

Pg. 41

 

 

The EBITDA of the Chilean business, or gross operating margin, amounted to Ch$ 313,057 million to September 30, 2011, which represents a fall of 26.2% compared to the same period of 2010.

Table 22

 

 

 

 

 

 

Chilean Electricity Business

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

984,721

908,325

(76,396)

(7.8%)

 

1,914,884

Procurement and Services

(500,645)

(529,538)

(28,893)

(5.8%)

 

(1,116,344)

Contribution Margin

484,076

378,788

(105,289)

(21.8%)

 

798,541

Other Costs

(59,612)

(65,730)

(6,119)

(10.3%)

 

(138,569)

Gross Operating Income (EBITDA)

424,465

313,057

(111,408)

(26.2%)

 

659,971

Depreciation and Amortization

(74,565)

(67,698)

6,868

9.2%

 

(142,717)

Operating Income

349,900

245,360

(104,540)

(29.9%)

 

517,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 22.1

 

 

 

 

 

 

Chilean Electricity Business

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

15,431

14,499

(932)

(6.0%)

 

 

GWh Sold

16,005

15,697

(308)

(1.9%)

 

 

Market Share*

39.6%

36.4%

(3.2) pp.

 

 

 

(*)As percentage of total sales of the system

            

 

 

Distribution

Chilectra

 

In Chile, our subsidiary Chilectra reports operating income of Ch$97,909 million which represents an increase of Ch$16,328 million over the same period of the year before, or the equivalent of 20.0%. This is mainly explained by a higher energy business margin of Ch$20,888 million as a result of greater demand for electricity in the current period and a larger margin from other businesses associated with the reduced activity during 2010, especially with large customers, and businesses of network transfers following the earthquake of February 27, 2010. This is partially offset by an increase in personnel costs of Ch$2,729 million related to a larger payment in variable remuneration. Energy losses declined by 0.6 p.p. with respect to the same period of 2010, reaching 5.4%. Physical energy sales fell by 4.9% to 10,223 GWh to September 2011. The number of customers rose by 24 thousand, exceeding 1.6 million in the current period.

 

 

 

 

Pg. 42

 

 

 

Table 23

 

 

 

 

 

 

Chilectra

(Million Ch$)

 

 

(Thousand US$)

 

9M 2010

9M 2011

Var 2010-2011

Chg %

 

9M 2011

Sales

713,320

769,463

56,143

7.9%

 

1,622,142

Other operating income

9,742

8,542

(1,200)

(12.3%)

 

18,007

Total Revenues

723,062

778,005

54,943

7.6%

 

1,640,150

Procurements and Services

(555,336)

(592,284)

(36,948)

(6.7%)

 

(1,248,621)

Contribution Margin

167,726

185,721

17,995

10.7%

 

391,528

Other Costs

(63,846)

(63,785)

61

0.1%

 

(134,468)

Gross Operating Income (EBITDA)

103,880

121,937

18,057

17.4%

 

257,061

Depreciation and Amortization

(22,299)

(24,027)

(1,728)

(7.7%)

 

(50,653)

Operating Income

81,581

97,909

16,329

20.0%

 

206,407

Net Financial Income

(531)

8,005

8,536

1608.4%

 

16,876

Financial income

7,026

12,510

5,483

78.0%

 

26,373

Financial expenses

(6,245)

(3,934)

2,311

37.0%

 

(8,294)

Income (Loss) for indexed assets and liabilities

9  

2

(7)

(79.2%)

 

4

Foreign currency exchange differences, net

(1,321) 

(572)

748

56.7%

 

(1,206)

Gains

673

698

26

3.8%

 

1,472

Losses

(1,993)

(1,270)

723

36.3%

 

(2,678)

Net Income from Related Comp. Cons. by the Prop. Eq. Method 

49,934

47,616

(2,318)

(4.6%)

 

100,383

Net Income from Other Investments

-  

-

-

 

 

-

Net Income from Sales of Assets

(3) 

2

5

164.0%

 

5

Net Income before Taxes

130,981

153,533

22,552

17.2%

 

323,671

Income Tax

(21,237)

(22,105)

(868)

(4.1%)

 

(46,601)

NET INCOME

109,744

131,428

21,684

19.8%

 

277,070

Net Income Attributable to Owners of the Company

109,743  

131,428

21,684

19.8%

 

277,069

Net Income Attributable to Minority Interest

 

 

 

 

 

 

             

Table 23.1

 

 

 

 

    

Chilectra

9M 2010

9M 2011

Var 2010-2011

Chg%

    

Customers (Th)

1,606

1,630

24

1.5%

    

GWh Sold

9,749

10,223

473

4.9%

    

Clients/Employee

2,202

2,286

84

3.8%

    

Energy Losses %

6.0%

5.4%

(0.6) pp.

 

    

 

 

 

 

Pg. 43

 

 

Colombia

 

 

Generation

 

Emgesa 

 

The operating result in Colombia was Ch$174,413 million to the close of September 2011, representing a 9.6% fall compared to the same period of 2010. The principal impact is from the reform of the equity tax promulgated by the Colombian government, which meant the booking on January 1, 2011 of the whole amount payable for this concept over the period 2011-2014, including a surcharge of 25%, resulting in the effective tax rate rising from 4.8% to 6% of liquid capital as of January 1, 2011. This affected operating income by Ch$39,900 million.

  

In addition, there was the effect of reduced revenues of Ch$24,302 million, explained by a 10.9% fall in the average energy sale price in local currency and a decline in physical sales of 158 GWh due to reduced thermal generation,  compensated partially by higher hydroelectric generation. The latter produced a positive effect on the costs of energy purchases and fuel consumption which fell by Ch$39,881 and Ch$2.871 million respectively.

  

The EBITDA, or gross operating margin, in Colombia, declined by 10.6% in the period to September 2011 to reach Ch$ 200,502 million, mainly explained by the negative impact of the government measures mentioned above.

  

The effect of translating the financial statements from the Colombian peso to the Chilean peso in both periods produces a fall in Chilean pesos of 4.4% at September 2011, with respect to September 2010.

 

 

 

Table 24

 

 

 

 

 

 

Emgesa

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

390,201

365,899

(24,302)

(6.2%)

 

771,370

Procurement and Services

(140,646)

(101,373)

39,273

27.9%

 

(213,710)

Contribution Margin

249,554

264,526

14,972

6.0%

 

557,660

Other Costs

(25,259)

(64,024)

(38,764)

(153.5%)

 

(134,972)

Gross Operating Income (EBITDA)

224,295

200,502

(23,793)

(10.6%)

 

422,688

Depreciation and Amortization

(31,286)

(26,089)

5,197

16.6%

 

(55,000)

Operating Income

193,008

174,413

(18,596)

(9.6%)

 

367,688

Figures may differ from those accounted under Colombian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 24.1

 

 

 

 

 

 

Emgesa

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

8,519

8,616

96

1.1%

 

 

GWh Sold

11,200

11,041

(158)

(1.4%)

 

 

Market Share*

18.3%

18.6%

0.3 pp.

 

 

 

(*)As percentage of total sales of the system

            

 

 

 

 

 

 

 

 

Pg. 44

 

 

Distribution

 

Codensa

 

In Colombia, the operating income of Codensa during this period was Ch$125,974 million, which represents a fall of Ch$28,283 million. The principal effect comes from the impact of the reform of the equity tax by the Colombian government which implied the booking on January 1, 2011 of the whole amount payable for this concept during the period 2011-2014, including a surcharge of 25%, with which the tax passed from an effective rate of 4.8% to 6% over the liquid capital at January 1, 2011. This situation affected operating income by Ch$19,239 million. There was also an increase in other fixed operating costs of Ch$5,270 million. This is partially compensated by an increase in physical sales of 3.1% to 9,568 GWh in the present period. Energy losses fell by 0.4 p.p. and the number of customers rose by 73 thousand to 2.6 million at September 2011.

  

The effect of translating the financial statements from the Colombian peso to the Chilean peso in both periods produces a fall in Chilean pesos of 4.4% to September 2011 compared to September 2010.

 

 

 

 

Table 25

 

 

 

 

 

 

Codensa

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

592,765

595,808

3,043

0.5%

 

1,256,052

Procurement and Services

(324,334)

(328,112)

(3,778)

(1.2%)

 

(691,708)

Contribution Margin

268,431

267,697

(734)

(0.3%)

 

564,344

Other Costs

(65,718)

(93,757)

(28,039)

(42.7%)

 

(197,653)

Gross Operating Income (EBITDA)

202,713

173,940

(28,773)

(14.2%)

 

366,692

Depreciation and Amortization

(48,456)

(47,966)

490

1.0%

 

(101,120)

Operating Income

154,257

125,974

(28,283)

(18.3%)

 

265,571

Figures may differ from those accounted under Colombian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 25.1

 

 

 

 

 

 

Codensa

9M 2010

9M 2011

Var 2010-2011

Chg%

  

 

Customers (Th)

2,525

2,598

73

2.9%

 

 

GWh Sold

9,276

9,568

292

3.1%

 

 

Clients/Employee

2,362

2,353

(9)

(0.4%)

 

 

Energy Losses %

8.6%

8.2%

(0.4) pp.

 

 

 

 

 

 

 

 

 

Pg. 45

 

 


 

Generation

Edegel

 

In Peru, the operating income amounted to Ch$79,549 million, which represents a 44.7% increase over that reported to September 30, 2010. This growth is mainly explained by an increase of Ch$13,145 million in sales revenues as a result of 10.6% higher sales partially compensated by a 2.8% fall in the average energy sale price in local currency. In addition, there were lower operating costs of Ch$11,418 million.

  

The EBITDA of the business in Peru, or gross operating margin, was Ch$105,770 million to September 30, 2011, representing an increase of 25.4% compared to the same period of 2010.

  

The effect of translating the financial statements from the Peruvian sol to the Chilean peso in both periods produces a fall in Chilean pesos of 7.0% at September 2011, with respect to September 2010.

 

 

 

Table 26

 

 

 

 

 

 

Edegel

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

161,205

174,349

13,145

8.2%

 

367,554

Procurement and Services

(60,798)

(63,001)

(2,204)

(3.6%)

 

(132,816)

Contribution Margin

100,407

111,348

10,941

10.9%

 

234,738

Other Costs

(16,077)

(5,578)

10,499

65.3%

 

(11,760)

Gross Operating Income (EBITDA)

84,330

105,770

21,440

25.4%

 

222,978

Depreciation and Amortization

(29,344)

(26,221)

3,123

10.6%

 

(55,278)

Operating Income

54,986

79,549

24,563

44.7%

 

167,700

Figures may differ from those accounted under Peruvian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 26.1

 

 

 

 

 

 

Edegel

9M 2010

9M 2011

Var 2010-2011

Chg%

 

 

GWh Produced

6,229

6,775

547

8.8%

 

 

GWh Sold

6,349

7,021

672

10.6%

 

 

Market Share*

29.0%

29.5%

0.6 pp.

 

 

 

 

 

 

 

 

 

 

 

Pg. 46

 

 

Distribution

Edelnor

 

In Peru, our subsidiary Edelnor shows operating income of Ch$54,645 million, Ch$5,219 million more than that obtained in the same period of the year before, when it reached Ch$49,426 millions. This increase is mainly due to higher energy sales which rose by 7.6% to 4,895 GWh in the present period, plus the higher unit sale margin and reduced fixed costs of Ch$1,877 million. Energy losses remained at 8.2% in the period. The number of customers increased 46 thousand, exceeding 1.1 million customers.

  

The effect of translating the financial statements from the Peruvian sol to the Chilean peso in both periods produces a fall in Chilean pesos of 7.0% to September 2011 compared to the same period of 2010.

 

 

 

Table 27

 

 

 

 

 

 

Edelnor

Million Ch$

 

 

Thousand US$

 

9M 2010

9M 2011

Var 2010-2011

Chg%

 

9M 2011

Operating Revenues

230,578

238,636

8,058

3.5%

 

503,081

Procurement and Services

(140,739)

(145,997)

(5,259)

(3.7%)

 

(307,784)

Contribution Margin

89,840

92,639

2,799

3.1%

 

195,297

Other Costs

(23,811)

(21,934)

1,877

7.9%

 

(46,240)

Gross Operating Income (EBITDA)

66,028

70,705

4,677

7.1%

 

149,057

Depreciation and Amortization

(16,602)

(16,059)

543

3.3%

 

(33,855)

Operating Income

49,426

54,646

5,219

10.6%

 

115,201

Figures may differ from those accounted under Peruvian GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

Table 27.1

 

 

 

 

 

 

Edelnor

9M 2010

9M 2011

Var 2010-2011

Chg%

  

 

Customers (Th)

1,086

1,132

46

4.2%

 

 

GWh Sold

4,550

4,895

345

7.6%

 

 

Clients/Employee

1,939

2,028

85

4.4%

 

 

Energy Losses %

8.2%

8.2%

0.0 pp.

 

 

 

 

 

 

 

Pg. 47

 

 

Operating Income by Subsidiary

 

Summary of operating revenues, operating costs (including procurements, services and other costs) and operating income of all Enersis’ subsidiaries, for the period ended in September 30, 2010 and September 30, 2011, detailed as follows:

 

 

 

Table 28

 

 

 

 

 

 

 

9M 2010

9M 2011

Million Ch$

Operating Revenues

Operating Costs

Operating Income

Operating Revenues

Operating Costs

Operating Income

Endesa Chile (*)

1,849,260

(1,213,033)

636,227

1,803,980

(1,273,318)

530,662

Cachoeira (**)

86,727

(29,970)

56,757

90,531

(29,332)

61,199

Fortaleza (***)

109,832

(64,800)

45,032

98,999

(59,276)

39,723

Cien (**)

46,455

(34,754)

11,701

38,860

29,771

68,631

Chilectra

723,062

(641,481)

81,581

778,005

(680,096)

97,909

Edesur

222,307

(209,263)

13,044

205,924

(226,226)

(20,302)

Distrilima (Edelnor)

230,578

(181,152)

49,426

238,636

(183,991)

54,645

Ampla

766,439

(652,322)

114,117

829,718

(701,387)

128,331

Coelce

649,803

(503,242)

146,561

641,797

(510,177)

131,620

Codensa

592,765

(438,508)

154,257

595,809

(469,835)

125,974

CAM Ltda.

86,587

(87,980)

(1,393)

15,739

(17,179)

(1,440)

Inmobiliaria Manso de Velasco Ltda.

4,507

(3,704)

803

4,576

(3,806)

770

Synapsis Soluciones y Servicios IT Ltda.

50,497  

(52,895)

(2,398)

6,693

(6,556)

137

ICT

970

(489)

481

4,026

(3,926)

100

Enersis Holding and other investment vehicles

11,792  

(26,467)

(14,675)

27,240

(40,214)

(12,974)

Consolidation Adjustments

(601,209)

599,239

(1,970)

(531,734)

526,179

(5,555)

Total Consolidation

4,830,372

(3,540,821)

1,289,551

4,848,799

(3,649,369)

1,199,430

Table 28.1

 

 

 

      
 

9M 2011

      

Thousand US$

Operating Revenues

Operating Costs

Operating Income

      

Endesa Chile (*)

3,803,057

(2,684,343)

1,118,714

     

Cachoeira (**)

190,853

(61,836)

129,017

     

Fortaleza (***)

208,705

(124,963)

83,742

     

Cien (**)

81,923

62,762

144,684

     

Chilectra

1,640,150

(1,433,743)

206,407

     

Edesur

434,118

(476,918)

(42,800)

      

Distrilima (Edelnor)

503,080

(387,880)

115,200

     

Ampla

1,749,168

(1,478,628)

270,541

     

Investluz (Coelce)

1,353,003

(1,075,529)

277,474

     

Codensa

1,256,054

(990,482)

265,572

     

CAM Ltda.

33,180

(36,216)

(3,036)

      

Inmobiliaria Manso de Velasco Ltda.

9,647

(8,024)

1,623

     

Synapsis Soluciones y Servicios IT Ltda.

14,110  

(13,821)

289

     

ICT

8,487

(8,277)

211

     

Enersis Holding and other investment vehicles

57,426  

(84,777)

(27,351)

      

Consolidation Adjustments

(1,120,974)

1,109,263

(11,711)

      

Total Consolidation

10,221,986

(7,693,410)

2,528,576

     

 

 

 

(*) Since January 1st, 2009, includes Gas Atacama, Transquillota e HydroAysén                                 

(**) Consolidated by Endesa Chile until September 30th, 2005. Since October 1st, 2005 is

 consolidated by Enersis through Endesa Brasil.                                   

(***) Since October 1st, 2005, these subsidiaries are consolidated by Enersis through Endesa Brasil.                                  

                         

 

 

 

 

Pg. 48

 

 

Ownership of the Company as of September 30, 2011

 

 

 

Conference Call Invitation

 

 

Enersis is pleased to invite you to participate in a Conference Call with the management to review the results for the period, on Wednesday, October 26, 2011, 16:00 PM EST (17:00 PM Local Chile Time.) There will be a question and answer session following management's comments. Representing Enersis will be Mr. Alfredo Ergas, Chief Financial Officer and the Investor Relations Team.

 

To participate, please dial +1 (617) 213 4864 or +1 (888) 713 4211 (toll free USA), approximately 10 minutes prior to the scheduled start time, Passcode ID: 70446719.

 

To access the phone replay, please dial +1 (617) 801 6888 or +1 (888) 286 8010 (toll free USA) Passcode ID: 94432584.

 

For this Conference Call you can access previously to the pre-registration site at

 

https://www.theconferencingservice.com/prereg/key.process?key=PCB4GHMFN

and make your registration quicker. If not, please connect approximately 15 minutes prior to the scheduled start time. You can also access to the conference call replay through our Investor Relations website at http://www.enersis.cl.

 

 

 

Pg. 49

 

Contact Information

 

For further information, please contact us:

 

 

Ricardo Alvial

Investments and Risks Director

mlmr@enersis.cl

(56-2) 353 4682

Denisse Labarca

Head of Investor Relations

denisse.labarca@enersis.cl

(56-2) 353 4576

 

Nicolas Donoso

Investor Relations Associate

ndo@enersis.cl

(56-2) 353 4492

 

 

Jorge Velis

Investor Relations Associate

jgve@enersis.cl

(56-2) 353 4552

Carmen Poblete

Shares Department Representative

cpt@enersis.cl

(56-2) 353 4447

 

Maria Luz Muñoz

Investor Relations Assistant

mlmr@enersis.cl

(56-2) 353 4682

 

       

 

Disclaimer

 

This Press Release contains statements that could constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this announcement and include statements regarding the intent, belief or current expectations of Enersis and its management with respect to, among other things: (1) Enersis’ business plans; (2) Enersis’ cost-reduction plans; (3) trends affecting Enersis’ financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere; (4) supervision and regulation of the electricity sector in Chile or elsewhere; and (5) the future effect of any changes in the laws and regulations applicable to Enersis’ or its subsidiaries. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets of the United States or Chile, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere and other factors described in Enersis’ Annual Report on Form 20-F. Readers are cautioned not to place undue reliance on those forward-looking statements, which state only as of their dates. Enersis undertakes no obligation to release publicly the result of any revisions to these forward-looking statements.

 

 

 

 

 

 

 

Pg. 50

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  ENERSIS S.A. 
   
  By: /s/  Ignacio Antoñanzas Alvear  
  -------------------------------------------------- 
   
  Title: Chief Executive Officer 

Date: October 27, 2011