6-K 1 enipr3q12_6k.htm EARNINGS RELEASE 3Q12 enipr3q12_6k.htm - Generated by SEC Publisher for SEC Filing

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 November, 2012

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 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2012

 

 

Highlights for the Period

 

Ø  Operating revenues increased 1.0%, reaching Ch$ 4,896,311 million, mainly due to higher energy sales revenues by Ch$ 67,720 million, in line with important increases in demand for electricity, as follows,

·        Chile                5.9%

·        Brazil               4.6%

·        Peru                 5.9%

·        Colombia          3.9%

·        Argentina          3.5%

 

Ø  Physical sales in distribution increased 2,372 GWh, or 4.6%, while in generation, physical sales increased 2,182 GWh, or 4.6%.

 

Ø  Additionally, the number of clients increased by 380 thousand during the last twelve months, considering the six distribution companies, more than offsetting the lower average energy sale price in generation.

 

Ø  Procurement and Services costs increased by 3.5%, reaching Ch$ 2,775,882 million, due to higher energy purchases of Ch$ 63,577 million, increased transportation cost of
Ch$ 56,581 million, and higher fuel consumption by Ch$ 6,457 million. As it has been informed, these higher costs are heavily influenced by more than two years of sustained drought in Chile; however, this situation has been slightly improving since June 2012.

 

Ø  The Company’s EBITDA decreased 2.0%, reaching Ch$ 1,481,124 million, which shows the benefits of being properly diversified.

 

Ø  Financial result was Ch$ 237,603 million loss, 22.4% worse than the same period of 2011. This negative behavior is mainly explained by lower financial revenues due to lower cash availability, and to the effect of the appreciation of the  Chilean peso against the U.S. Dollar.

  

Ø  Net Income before taxes decreased 10.3%, reaching Ch$ 901,360 million. 

 

Ø  Taxes decreased by Ch$ 49,599 million, equivalent to 15.7%, due to lower tax effects over companies.

 

Ø  Net income decreased 7,8%, reaching Ch$ 634,409 million.

 

Ø  Net income of the parent company decreased 17,1% or Ch$ 54,468 million.

 

Ø  The diversified portfolio of Enersis Group, allowed us to maintain a well balanced contribution to our EBITDA, by business segment,

 

•     Distribution:                                      49%

•     Generation and Transmission:           51%

 

Pg.1

 

Distribution Business

 

Consolidated figures for the distribution businesses are detailed as follows:

 

Ø  Operating revenues rose 1.9% to Ch$ 3,350,890 million.

Ø  Procurement and service costs were Ch$ 2,170,719 million, 1.6% higher than for the same period of 2011.

Ø  EBITDA of the period amounted to Ch$ 730,321 million, 4.6% higher than for the same period of 2011.

Ø  Energy sales by clients’ segment for each of our distribution companies were the following:

 

% Physical Sales

Chile

Argentina

Peru

Brazil

Colombia

TOTAL

9M 2012

Chilectra

Edesur

Edelnor

Ampla

Coelce

Codensa

 

 

 

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

Residential

26%

26%

43%

43%

37%

37%

38%

40%

33%

30%

35%

35%

35%

35%

Industrial

23%

21%

8%

7%

19%

19%

11%

9%

15%

11%

7%

7%

13%

12%

Commercial

27%

29%

25%

25%

22%

22%

18%

20%

19%

16%

16%

16%

22%

22%

Others

25%

24%

25%

24%

22%

22%

33%

31%

33%

43%

42%

42%

30%

31%

TOTAL

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

                             

 

EBITDA in the Distribution business, by country, was as follows:

 

In Chile, EBITDA grew by Ch$ 7,904 million, mainly explained by:

Ø  Higher operating margin of Ch$ 6,771 million, due to a better mix of clients and higher demand of 5.4%, as a consequence of the increase in the economic activity.

 

In Argentina, EBITDA decreased by Ch$ 14,906 million, mainly explained by:

Ø  Increase of Ch$ 30,618 million in higher energy purchases costs and greater personnel expenses of  Ch$ 6,752 million, explained by salary increases under union agreements.

Ø  Increase of Ch$ 14,624 million in other fixed operating costs due to higher costs in inputs and services hired for grid repair.

Ø  This was partially offset by higher revenues of Ch$ 32,014 million, due to a higher demand for electricity and higher average sale price.

 

In Colombia, EBITDA increased by Ch$ 62,440 million, mostly as a result of:

Ø  The lower comparison base, due to the effect of the Colombian government equity tax reform, which implied recording in the first half of 2011 the entire tax payable during the period 2011-2014, which amounted to Ch$ 28,298 million.

Ø  Higher energy sales income of Ch$ 58,125 million, an 11.7% increase, explained by a 3.3% increase in physical sales.

Ø  This was partially offset by higher procurement and service costs of Ch$ 32,921 million.

 

In Peru, EBITDA increased by Ch$ 794 million as a result of:

Ø  Increase of Ch$ 7,438 million, or 8.0%, in operating margin, due to 5.1% higher demand and higher average energy sales price.

Ø  This was partially offset by an increase of Ch$ 7,019 million in personnel expenses, due to the one time effect of a provision reversal registered last year.

 

In Brazil, EBITDA decreased by Ch$ 24,235 million as a result of:

Ø  Lower operating revenues of Ch$ 26,735 million in Ampla, due to a lower average energy sales price, in Chilean pesos, partially offset by an increase of 4.1% in physical sales.

Ø  Lower operating revenues in Coelce of Ch$ 34,391, mainly explained by a Ch$ 13,364 million decrease in other operating revenues due to the construction of fixed assets (IFRIC 12), and to lower average energy sales prices, in Chilean pesos, partially offset by an increase of 10.7% in physical sales.

Pg.2

 

Ø  This was partially offset by a decrease of Ch$ 51,375 million in other operating costs.

 

 

Generation and Transmission Business

 

Ø   Operating revenues remained almost constant reaching Ch$ 2,003,838 million, due to a lower average energy sale price that more than offset the greater physical sales.

Ø   Procurement and services costs increased by 5.3% to Ch$ 1,078,049 million as a result of increases in all of its lines, especially in transportation expenses of Ch$ 20,511 million and other operating costs of Ch$ 15,250 million.

Ø   EBITDA amounted to Ch$ 756,002 million, 8.0% lower compared to the same period of last year.

Ø   Consolidated electricity generation grew 8.5% to 44,574 GWh, basically explained by better performance in Colombia, Brazil and Chile.

Ø   Consolidated physical sales increased 4.6% to 50,039 GWh, mainly because of Colombia, Brazil and Chile.

 

EBITDA in the Generation business, by country, was as follows:

 

In Chile, EBITDA decreased by Ch$ 121,734 million, mainly due to:

Ø   Lower energy sale revenues of Ch$ 115,906 million due to a 15.0% reduction in average energy sale price, even though energy generation and physical sales increased by 5.5% and 1.8%. respectively.

Ø   Higher fuel consumption costs of Ch$ 33,524 million, and higher transportation costs of Ch$ 16,306 million.

Ø   This was partially offset by a reduction of Ch$ 29,344 million in energy purchases as a consequence of higher hydro generation and lower thermal dispatch.

 

In Argentina, EBITDA decreased by Ch$ 13,246 million due to:

Ø   Lower operation revenues of Ch$ 50,142 million as a consequence of a reduction in average energy sale prices in pesos, partly explained by the non-renewal of regulatory improvements obtained in 2010.

Ø   Higher personnel expenses of Ch$ 3,899 million mainly due to union agreements and larger personnel staff.

Ø   This was partially offset by lower fuel consumption cost of Ch$ 39,397 million due to lower thermal generation.

 

In Colombia, EBITDA grew by Ch$ 85,565 million, mainly due to,

Ø   Lower comparison base in other fixed operation costs due to non-recurring effect of the equity tax imposed by the Colombian government, which implied booking on the first quarter of 2011 the full amount payable in the period 2011-2014 of Ch$ 43,067 million.

Ø   Increase in operating revenues of Ch$ 65,926 million due to a 6.0% increase in the average energy sale price in pesos and an 11.4% increase in physical sales due to higher hydro generation.

Ø   This was partially offset by higher procurement and services costs of Ch$ 19,685 million, mainly explained by higher energy purchases costs of Ch$ 7,078 million and greater fuel consumption costs of Ch$ 5.874 million.

 

Pg.3

 

In Peru, EBITDA decreased by Ch$ 1,336 million due to:

Ø   Increase of Ch$ 14,202 million in personnel expenses due to a non-recurring effect registered in June 2011, which implied to reclassify a provision that originated a one-time benefit in personnel expenses.

Ø   Higher energy purchases costs of Ch$ 9,415 million and higher fuel consumption of Ch$ 8,211 million partly due to higher thermal generation with diesel.

Ø   The latter was partially offset by a Ch$ 36,785 million grow in operating revenues mainly explained by an 18.0% increase in average sale energy price and higher physical sales of 2.0%.

 

In Brazil, EBITDA decreased by Ch$ 15,425 million due to:

Ø   Higher procurement and services costs of Ch$ 43,853 million, mainly explained by higher energy purchases costs of Ch$ 27,189 million, both, in Central Fortaleza and Cachoeira Dourada, and by higher other variable costs of Ch$ 17,358 million.

Ø   This was partially offset by higher energy sale revenues of Ch$ 18,518 million, due to higher demand in Fortaleza, higher hydraulic availability in Cachoeira Dourada and the increase of Ch$ 15,738 million in other services revenues, reflecting the increase in toll charges in CIEN

 

 

 

Financial Summary

 

Ø  The average nominal interest rate decreased from 9.6% to 8.6%, mainly explained by a lower inflation rate in Chile and better rate conditions in the countries where we operate.

 

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                      US$ 1,655 million

·         Committed credit lines available               US$   897 million

·         Non-committed credit lines available        US$  1,869 million

 

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 currencies. In addition to this policy, we have contracted cross currency swaps for a total amount of US$ 1,474 million and forwards for US$ 110 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$ 351 million.

 

 

Pg.4

 

Market Summary

 

Ø  During the period from October 2011 to September 2012, the Chilean Stock Exchange’s index for the most important 40 shares, “IPSA”,  showed a 12.4% increase. Latin American markets where the company operates recorded positive results: BOVESPA (Brazil): 16.5%; Merval (Argentina): 7.0%; COLCAP (Colombia): 8.4%, and ISBVL (Peru) : 28.0%. In Europe, the main Stock Exchanges showed a mixed performance over the last 12 months: IBEX: -7.7%, UKX: 13.3% and FTSE 250: 20.3%. On the other hand, the U.S. market performed positively in line with its economic recovery: S&P 500: 31.1% and Dow Jones Industrial: 26.1% (all yields measured in local currency).

 

Ø  Enersis’ share price dropped from Ch$177.7 in October 3, 2011 to Ch$154.9 in September 30, 2012, which represents a 12.8% decrease for the period. This change is mainly attributable to the impact of the capital increase process announced in July 25, 2012, the negative global economic scenario and the poor hydrology suffered in Chile until the third quarter of 2012.

 

Ø  Enersis’ ADR remained almost flat during the last 12 months. The price fell from US$ 16.6 on October 3, 2011, to US$ 16.4 on September 30, 2012. The global economic situation, as well as the drought affecting Chile and the aforementioned impact of the undergoing capital increase process, affected the equity’s value.

 

Ø  During the last twelve months, Enersis was again 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$ 8.3 million.

 

 

Source: Bloomberg

 

 

 

 

Pg.5

 

Risk Rating Classification Information

 

The key considerations, among others, for the current risk rating are:

·         Its well diversified asset portfolio

·         Strong credit metrics

·         Adequate debt structure

·         Solid liquidity

 

The Company’s geographic diversification in Latin America provides a natural hedge against different regulations and weather conditions. Most of Enersis’ operating subsidiaries are financially strong and have leading market positions in the countries where Enersis operates.

 

Among the main events of 2012, we can highlight the following:

 

Ø  Fitch Ratings (January 5, 2012) and Standard & Poor’s (May 2, 2012) affirmed the international credit risk rating for Enersis at “BBB+”, with stable outlook.

 

Ø  On June 18, 2012, Moody's affirmed the “Baa2 with stable outlook” senior unsecured rating of Enersis.

 

Ø  Moreover, on July 13, 2012, Feller Rate ratified the “AA” local rating of Enersis bonds, shares and commercial papers program.

 

Ø  On September 26, 2012, Humphreys assigned “AA” to Enersis local bonds, “AA/Level 1+” to the commercial papers program and “First Class Level 1” to the company’s shares.

 

Ø  Finally, on October 19, 2012, Standard & Poor's confirmed the international credit risk rating for Enersis of "BBB+" with stable Outlook. This took place on the occasion of the reviews of both Enel SpA and Endesa Spain in previous days, in which both credit risk ratings were affirmed with a downgrade in both Outlook from stable to negative, due to the downgrade applied to Spain.

 

 

Current international risk ratings are:

 

Enersis

S&P

Moody’s

Fitch

Corporate

BBB+ / Stable

Baa2 / Stable

BBB+ / Stable

 

 

Local ratings (for securities issued in Chile):

 

Enersis

Feller Rate

Fitch

Humphrey’s

Shares

1st Class Level 1

1st Class Level 1

1st Class Level 1

Bonds

AA / Stable

AA / Stable

AA / Stable

 

 

Pg.6

 

Table of Contents 

 

Generation and Transmission Business  3 
Distribution Business  2 
Financial Summary  4 
Market Summary  5 
Risk Rating Classification Information  6 
TABLE OF CONTENTS  7 
 
GENERAL INFORMATION  9 
SIMPLIFIED ORGANIZATIONAL STRUCTURE  10 
CONSOLIDATED INCOME STATEMENT ANALYSIS  11 
NET INCOME  11 
NET FINANCIAL INCOME  13 
SALE OF ASSETS  13 
TAXES  13 
CONSOLIDATED BALANCE SHEET ANALYSIS  14 
ASSETS UNDER IFRS  14 
BOOK VALUE AND ECONOMIC VALUE OF ASSETS  16 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY UNDER IFRS  17 
DEBT MATURITY WITH THIRD PARTIES, THOUSAND US$  19 
DEBT MATURITY WITH THIRD PARTIES, MILLION CH$  19 
EVOLUTION OF KEY FINANCIAL RATIOS  20 
UNDER IFRS  21 
CASH FLOW RECEIVED FROM FOREIGN SUBSIDIARIES BY ENERSIS, CHILECTRA AND ENDESA CHILE  22 
THE PRINCIPAL RISKS ASSOCIATED TO THE ACTIVITIES OF THE ENERSIS GROUP  23 
 
ARGENTINA  28 
GENERATION  28 
Endesa Costanera  28 
El Chocón  29 
DISTRIBUTION  30 
Edesur  30 
BRAZIL  31 
ENDESA BRASIL  31 
GENERATION  31 
Cachoeira Dourada  31 
Fortaleza (cgtf)  32 
TRANSMISSION  33 
CIEN  33 
DISTRIBUTION  35 
Ampla  35 
Coelce  36 
CHILE  37 
GENERATION  37 
 

Pg.7

 
Endesa Chile  37 
DISTRIBUTION  39 
Chilectra  39 
 
COLOMBIA  40 
GENERATION  40 
Emgesa  40 
DISTRIBUTION  41 
Codensa  41 
GENERATION  42 
Edegel  42 
DISTRIBUTION  43 
Edelnor  43 
 
MARKET INFORMATION  45 
EQUITY MARKET  45 
CONFERENCE CALL INVITATION  49 
DISCLAIMER  50 

 

Pg.8

 

General Information

 

(Santiago, Chile, Tuesday, November 6, 2012.) Enersis S.A. (NYSE: ENI), announced today its consolidated financial results for the nine month period ended September 30, 2012. All figures are in Chilean pesos (Ch$) and in accordance with International Financial Reporting Standards (IFRS). Variations refer to the period between September 30, 2011 and September 30, 2012.

 

Figures as of September 30, 2012 are additionally translated into US$, merely as a convenience translation, using the exchange rate of US$ 1 = Ch$ 473.77 for the Balance Sheet, and the average exchange rate for the period of US$ 1 = Ch$ 489.50 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).

 

*   Includes Endesa Chile Chilean subsidiaries (Endesa Eco, Celta, Pehuenche, San Isidro, merger between San Isidro and Pangue, and Tunel El Melón), non Chilean subsidiaries (Endesa Costanera, El Chocón, Edegel and Emgesa) and jointly controlled companies (GasAtacama, Transquillota and HidroAysén.)

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

 

 

Pg.9

 

Simplified Organizational Structure

 

 

Pg.10

 

 

Consolidated Income Statement Analysis

Net Income

 

Enersis’ Net Income attributable to the owners of the controller for the cumulative period as of September 30, 2012 reached Ch$ 264,557 million, representing a 17.1% decrease compared to the same period of 2011, which was Ch$ 319,026 million. This is mainly explained by more than two years of sustained drought in Chile; however, this situation has been slightly improving since June 2012.

 

Under IFRS

 

Table 1

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

(Million Ch$)

 

(Thousand US$)

 

9M 2011

9M 2012

Var 2011-2012

Chg %

 

9M 2012

Sales

4,645,608

4,713,328

67,720

1.5%

 

9,628,863

Energy sales

4,323,338

4,368,869

45,530

1.1%

 

8,925,166

Other sales

20,770

21,221

451

2.2%

 

43,352

Other services

301,500

323,239

21,739

7.2%

 

660,346

Other operating income

203,192

182,982

(20,209)

(9.9%)

 

373,815

Revenues

4,848,799

4,896,311

47,511

1.0%

 

10,002,677

 

 

 

 

 

 

 

Energy purchases

(1,309,276)

(1,372,853)

(63,577)

(4.9%)

 

(2,804,602)

Fuel consumption

(595,644)

(602,101)

(6,456)

(1.1%)

 

(1,230,032)

Transportation expenses

(303,241)

(359,822)

(56,581)

(18.7%)

 

(735,082)

Other variable costs

(475,038)

(441,106)

33,932

7.1%

 

(901,135)

Procurements and Services

(2,683,200)

(2,775,881)

(92,682)

(3.5%)

 

(5,670,851)

 

 

 

 

 

 

 

Contribution Margin

2,165,600

2,120,429

(45,170)

(2.1%)

 

4,331,827

 

 

 

 

 

 

 

Other work performed by entity and capitalized

35,665

36,027

362

1.0%

 

73,600

Employee benefits expense

(269,352)

(302,481)

(33,129)

(12.3%)

 

(617,939)

Other fixed operating expenses

(420,266)

(372,852)

47,414

11.3%

 

(761,699)

Gross Operating Income (EBITDA)

1,511,647

1,481,124

(30,523)

(2.0%)

 

3,025,789

Depreciation and amortization

(313,265)

(331,392)

(18,127)

(5.8%)

 

(677,000)

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

1,048

(22,722)

(23,770)

(2267.8%)

 

(46,419)

Operating Income

1,199,430

1,127,010

(72,421)

(6.0%)

 

2,302,369

 

 

 

 

 

 

 

Net Financial Income

(194,141)

(237,603)

(43,462)

(22.4%)

 

(485,399)

Financial income

134,089

122,017

(12,072)

(9.0%)

 

249,268

Financial costs

(320,468)

(338,726)

(18,258)

(5.7%)

 

(691,985)

Gain (Loss) for indexed assets and liabilities

(17,038)

(6,876)

10,162

59.6%

 

(14,047)

Foreign currency exchange differences, net

9,277

(14,017)

(23,294)

(251.1%)

 

(28,635)

Gains

68,060

46,089

(21,971)

(32.3%)

 

94,156

Losses

(58,783)

(60,106)

(1,323)

(2.3%)

 

(122,791)

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

5,848

7,754

1,906

32.6%

 

15,841

Net Income From Other Investments

376

746

370

98.6%

 

1,524

Net Income From Sale of Assets

(7,172)

3,453

10,625

148.1%

 

7,054

 

 

 

 

 

 

 

Net Income Before Taxes

1,004,341

901,360

(102,981)

(10.3%)

 

1,841,389

Income Tax

(316,550)

(266,951)

49,599

15.7%

 

(545,354)

NET INCOME ATTRIBUTABLE TO:

687,791

634,409

(53,382)

(7.8%)

 

1,296,036

Owners of parent

319,026

264,557

(54,468)

(17.1%)

 

540,465

Non-controlling interest

368,766

369,852

1,086

0.3%

 

755,571

 

 

 

 

 

 

 

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

9.8

8.1

(1.7)

(17.1%)

 

0.8

 

Operating income decreased by Ch$ 72,421 million, 6.0% lower than 9M 2011.

 

Operating revenues and costs breakdown by business line for the nine months period ended September 30, 2011 and September 30, 2012 are:

Pg.11

 

 

 

Table 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income by Businesses

Generation and Transmission

Distribution

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

 

Operating Revenues

2,012,421

2,003,838

 

(0.4%)

 

4,093,643

 

3,289,889

3,350,890

 

1.9%

 

6,845,536

 

Operating Costs

(1,320,909)

(1,408,300)

 

6.6%

 

(2,877,017)

 

(2,771,712)

(2,812,754)

  

1.5%

 

(5,746,177)

 

Operating Income

691,513

595,539

 

(13.9%)

 

1,216,626

 

518,177

538,136

 

3.9%

 

1,099,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income by Businesses

Eliminations and Others

 

Consolidated

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

 

Operating Revenues

(453,510)

(458,418)

 

1.1%

 

(936,502)

 

4,848,799

4,896,311

 

1.0%

 

10,002,677

 

Operating Costs

443,251

451,753

 

1.9%

 

922,886

 

(3,649,369)

(3,769,301)

  

3.3%

 

(7,700,308)

 

Operating Income

(10,259)

(6,665)

 

(35.0%)

 

(13,616)

 

1,199,430

1,127,010

 

(6.0%)

 

2,302,369

 

 

Generation and transmission business evidenced an operating income of Ch$ 595,539 million, representing a Ch$ 95,974 million decrease from the same period of 2011. Physical sales increased 4.6%, amounting to 50,039 GWh in this period.

 

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

 

Table 3

4

3

 

 

 

 

 

6

5

 

 

 

 

 

8

7

 

 

 

 

Generation & Transmission

Chile

 

Argentina

 

Brazil

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

Operating Revenues

908,325

815,382

 

(10.2%)

 

1,665,746

 

341,325

291,183

 

(14.7%)

 

594,859

 

223,042

254,847

 

14.3%

 

520,628

% of consolidated

45%

41%

 

 

 

41%

 

17%

15%

 

 

 

15%

 

11%

13%

 

 

 

13%

Operating Costs

(662,966)

(687,833)

 

3.8%

 

(1,405,174)

 

(315,891)

(284,625)

 

(9.9%)

 

(581,460)

 

(56,285)

(125,665)

 

123.3%

 

(256,722)

% of consolidated

50%

49%

 

 

 

49%

 

24%

20%

 

 

 

20%

 

4%

9%

 

 

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

245,360

127,550

 

(48.0%)

 

260,571

 

25,434

6,559

 

(74.2%)

 

13,399

 

166,757

129,182

 

(22.5%)

 

263,906

 

12

11

 

 

 

 

 

10

9

 

 

 

 

 

 

 

 

 

 

 

Generation & Transmission

Peru

 

Colombia

 

Consolidated

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

Operating Revenues

174,349

211,135

 

21.1%

 

431,327

 

365,899

431,825

 

18.0%

 

882,175

 

2,012,421

2,003,838

 

(0.4%)

 

4,093,643

% of consolidated

9%

11%

 

 

 

11%

 

18%

22%

 

 

 

22%

 

100%

100%

 

 

 

 

Operating Costs

(94,801)

(135,856)

 

43.3%

 

(277,540)

 

(191,486)

(174,855)

 

(8.7%)

 

(357,212)

 

(1,320,909)

(1,408,300)

 

6.6%

 

(2,877,017)

% of consolidated

7%

10%

 

 

 

10%

 

14%

12%

 

 

 

12%

 

100%

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

79,549

75,279

 

(5.4%)

 

153,787

 

174,413

256,969

 

47.3%

 

524,963

 

691,513

595,539

 

(13.9%)

 

1,216,626

 

 

Distribution business showed a Ch$ 19,959 million higher operating income, totaling Ch$ 538,136 million. Physical sales amounted to 54,316 GWh, representing an increase of 2,373 GWh, or 4.6%. Our clients base increased by 380 thousand of new clients approximately, amounting over 13.9 million customers.

 

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

 

Table 4

4

3

 

 

 

 

 

6

5

 

 

 

 

 

8

7

 

 

 

 

Distribution

Chile

 

Argentina

 

Brazil

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

Operating Revenues

778,005

744,752

 

(4.3%)

 

1,521,455

 

205,924

241,862

 

17.5%

 

494,100

 

1,471,515

1,410,390

 

(4.2%)

 

2,881,287

% of consolidated

24%

22%

 

 

 

22%

 

6%

7%

 

 

 

7%

 

45%

42%

 

 

 

42%

Operating Costs

(680,096)

(639,100)

 

(6.0%)

 

(1,305,618)

 

(226,226)

(277,864)

 

22.8%

 

(567,649)

 

(1,211,564)

(1,179,323)

 

(2.7%)

 

(2,409,240)

% of consolidated

25%

23%

 

 

 

23%

 

8%

10%

 

 

 

10%

 

44%

42%

 

 

 

42%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

97,909

105,652

 

7.9%

 

215,837

 

(20,302)

(36,002)

 

77.3%

 

(73,549)

 

259,950

231,067

 

(11.1%)

 

472,047

 

12

11

 

 

 

 

 

10

9

 

 

 

 

 

 

 

 

 

 

 

Distribution

Peru

 

Colombia

 

Consolidated

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

 

Million Ch$

 

Chg%

 

Th. US$

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

 

9M 2011

9M 2012

 

 

 

9M 2012

Operating Revenues

238,636

288,591

 

20.9%

 

589,563

 

595,808

665,295

 

11.7%

 

1,359,132

 

3,289,889

3,350,890

 

1.9%

 

6,845,536

% of consolidated

7%

9%

 

 

 

9%

 

18%

20%

 

 

 

20%

 

100%

100%

 

 

 

 

Operating Costs

(183,991)

(235,452)

 

28.0%

 

(481,004)

 

(469,835)

(481,015)

 

2.4%

 

(982,667)

 

(2,771,712)

(2,812,754)

 

1.5%

 

(5,746,177)

% of consolidated

7%

8%

 

 

 

8%

 

17%

17%

 

 

 

17%

 

100%

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

54,646

53,139

 

(2.8%)

 

108,558

 

125,974

184,280

 

46.3%

 

376,465

 

518,177

538,136

 

3.9%

 

1,099,359

 

 

 

Pg.12

 

Net Financial Income

 

The Company’s net financial income as of September 30, 2012 totaled a loss of Ch$ 237,603 million, 22.4% higher than for the same period of 2011. The latter is mainly explained by:

 

Higher financial expense of Ch$ 18,258 million, mainly due to increases in Edesur of Ch$ 8,828 million for higher average debt and higher fines, in Edegel of Ch$ 7,627 million by updating a contingency with SUNAT and in Costanera of Ch$ 2,817 million for higher average debt cost in this period.

 

Higher exchange rate expense of Ch$ 23,294 million, mainly explained by losses due to exchange rate variation in cash and cash equivalent of Ch$ 10,407 million and in debtors and other accounts receivable of Ch$ 15,261 million. This was partially offset by gains in commercial accounts and other accounts payable of Ch$ 8,259 million.

 

Lower financial revenues of Ch$ 12,073 million as a result of lower revenues from cash deposits of Ch$ 6,683 million and from pension plans’ assets in Brazil of Ch$ 3,347 million.

 

The latter was partially offset by:

 

Lower adjustment units expenses of Ch$ 10,162 million due to the effect of the UF1 change mainly over UF denominated debt in some companies in Chile. This as a result of the nine month period of 2012 where the UF increased its value by 1.3% compared with an increase of 2.6% in the same period of last year.

 

 

Sale of Assets

 

The net income from sale of assets registered an increase of Ch$ 10,625 million, explained by the recognition in 2011 of the loss generated due to the sale of CAM and Synapsis of Ch$ 9,897 million.

 

Taxes

 

Income tax net expense decreased by Ch$ 49,599 million at the end of September 2012. This is explained by decreases in: Endesa Chile by Ch$ 82,573 million, Enersis by Ch$ 28,271 million, Cien by Ch$ 15,041 million, Ampla by Ch$ 3,713 million and Endesa Brasil by  Ch$ 2,871 million. This was partially offset by increases in Pehuenche by Ch$ 42,689 million, Emgesa by Ch$ 19,782 million, Codensa by Ch$ 9,213 million, Edesur by Ch$ 5,940 million and Gas Atacama by Ch$ 2,366 million.

 

 

1Unidad de Fomento: Chilean inflation-indexed, peso-denominated monetary unit

Pg.13

 

Consolidated Balance Sheet Analysis

 

Assets Under IFRS

 

 

Table 5

 

 

 

 

 

 

ASSETS

(Million Ch$)

 

(Thousand US$)

 

As of Dec 31, 2011

As of September 30, 2012

Var 2011-2012

Chg %

  

As of September 30, 2012

 

 

 

 

 

 

  

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

1,219,921

782,663

(437,258)

(35.8%)

 

1,651,989

Other current financial assets

939

1,476

537

57.2%

 

3,116

Other current non-financial assets

72,466

100,539

28,073

38.7%

 

212,211

Trade and other current receivables

977,602

837,819

(139,784)

(14.3%)

 

1,768,408

Accounts receivable from related companies

35,283

33,580

(1,702)

(4.8%)

 

70,879

Inventories

77,926

99,842

21,917

28.1%

 

210,740

Current tax assets

141,828

135,212

(6,616)

(4.7%)

 

285,396

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

-

-

-

 

 

-

Total Current Assets

2,525,965

1,991,131

(534,834)

(21.2%)

 

4,202,738

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Other non-current financial assets

37,355

68,865

31,510

84.4%

 

145,355

Other non-current non-financial assets

109,501

88,601

(20,901)

(19.1%)

 

187,012

Trade accounts receivables and other receivables, net

443,328

475,096

31,767

7.2%

 

1,002,798

Investment accounted for using equity method

13,193

12,387

(806)

(6.1%)

 

26,145

Intangible assets other than goodwill

1,467,398

1,146,094

(321,304)

(21.9%)

 

2,419,093

Goodwill

1,476,404

1,394,214

(82,190)

(5.6%)

 

2,942,808

Property, plant and equipment, net

7,242,731

7,085,451

(157,280)

(2.2%)

 

14,955,465

Investment properties

38,056

38,332

276

0.7%

 

80,908

Deferred tax assets

379,939

445,617

65,678

17.3%

 

940,576

Total Non-Current Assets

11,207,906

10,754,655

(453,250)

(4.0%)

 

22,700,161

 

 

 

 

 

 

 

TOTAL ASSETS

13,733,871

12,745,787

(988,084)

(7.2%)

 

26,902,900

 

 

Total Assets decreased Ch$ 988,084 million, mainly due to:

 

Ø  Ch$ 534,834 million decrease in current assets, equivalent to 21.2%, as a result of:

 

v  Decrease in cash and cash equivalents of Ch$ 437,258 million mainly due to: in Enersis,  dividend payment of Ch$ 187,734 million and interest payments associated to dollar denominated bonds of Ch$ 18,579 million and other payments of Ch$ 8,556 million; in Endesa Chile, payment of UF bonds series F and K of Ch $ 121,210 million and dividend payment to third parties by Ch$ 88,467 million; in Emgesa, dividend payment of Ch$ 91,478 million and income taxes of Ch$ 73,934 million and in Codensa, dividend payment of Ch$ 33,771 million. This was partially offset by proceeds from loans of Ch$ 29,852 million in Ampla, received dividens of Ch$ 27,704 million in Endesa Brasil, Ch$ 13,018 million in Cachoeira Dourada and higher revenues from customers of Ch$ 4,710 million in Coelce.

 

v  Decrease in trade receivables of Ch$ 139,783 million, explained by decreases in Endesa Costanera of Ch$ 35,270 million, due to the reduction of the account receivable to CAMMESA; in Endesa Chile of Ch$ 34,121 million, due to lower customer billing; in Ampla of Ch$ 21,010 million due to less revenues, in Pehuenche of Ch$ 18,285 million due to lower customer billing and in CIEN of Ch$ 17,294 million. This was partially offset by increase in Coelce of Ch$ 12,428 million and Chilectra of Ch$ 3,945 million.

 

 

The latter was partially offset by:

 

Pg.14

 

v  Increase in other current non financial assets of Ch$ 28,073 million, primarily due to increases in Coelce of Ch$ 16,900 million, due to higher investment in R&D programs, and in Ampla of Ch$ 10,845 million.

 

 

Ø  Ch$ 453,250 million decrease in non-current assets equivalent to 4.0%, mainly due to:

 

 

v  Decrease in non-tangible assets other than goodwill of Ch$ 321,304 million, mainly explained by the effect of the reclassification of accounts receivable of Ch$ 111,327 million, because in the second quarter of 2012 the Brazilian electricity regulator, changed the depreciation period for the assets of the electricity distribution concessions, the decrease of Ch$ 69,454 million, due to amortization of the period, and the conversion effect of Ch$ 217,618 million. This was partially offset by new investments of Ch$ 115,071 million.

 

v  Decrease in property, plant and equipment of Ch$ 157,280 million, mainly due to depreciation for the period of Ch$ 261,937 million and to the effect of converting to Chilean pesos subsidiaries whose functional currency is not the Chilean peso by approximately Ch$ 266,299 million. This was partially offset by additions for the period of Ch$ 358,025 million.

 

v  Reduction of goodwill of Ch$ 82,190 million, corresponding mainly to the effect of conversion from local currencies to the Chilean peso.

 

This was partially offset by:

 

v  Increase in deferred tax assets of Ch$ 65,678 million primarily from increases in Endesa Chile of Ch$ 54,143 million; Enersis of Ch$ 20,126 million and CIEN of Ch$ 7,931 million. Partially offset by decreases in Coelce for Ch$ 10,277 million and Ampla of Ch$ 9,924 million.

 

v  Increase in non-current fees receivable Ch$ 31,767 million, mainly due to increases in Coelce of Ch$35,221 million, Ampla of Ch$ 27,658 million due to modification in the payback period and new fixed assets acquisitions, partially offset by decrease in Endesa Cachoeira of Ch$ 18,225 million, due to transfers to short-term and in Costanera of Ch$ 12,543 million.

 

 

Pg.15

 

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.16

 

Liabilities and Shareholders’ Equity Under IFRS

 

 

Table 6

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

(Million Ch$)

 

(Thousand US$)

 

As of Dec 31, 2011

As of September 30, 2012

Var 2011-2012

Chg %

  

As of September 30, 2012

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Other current financial liabilities

672,082

642,951

(29,131)

(4.3%)

 

1,357,095

Trade and other current payables

1,235,064

977,065

(258,000)

(20.9%)

 

2,062,319

Accounts payable to related companies

157,178

155,554

(1,624)

(1.0%)

 

328,332

Other short-term provisions

99,703

87,343

(12,360)

(12.4%)

 

184,357

Current tax liabilities

235,853

162,110

(73,743)

(31.3%)

 

342,170

Current provisions for employee benefits

-

-

-

 

 

-

Other current non-financial liabilities

60,653

87,407

26,753

44.1%

 

184,492

Liabilities (or disposal groups) classified as held for sale

-

-

-

 

 

-

Total Current Liabilities

2,460,534

2,112,429

(348,104)

(14.1%)

 

4,458,765

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Other non-current financial liabilities

3,271,355

2,847,453

(423,902)

(13.0%)

 

6,010,202

Non-current payables

14,305

12,176

(2,128)

(14.9%)

 

25,701

Accounts payable to related companies

-

-

-

 

 

-

Other-long term provisions

202,574

199,892

(2,681)

(1.3%)

 

421,919

Deferred tax liabilities

508,438

547,894

39,456

7.8%

 

1,156,457

Non-current provisions for employee benefits

277,526

246,937

(30,589)

(11.0%)

 

521,217

Other non-current non-financial liabilities

102,985

70,383

(32,603)

(31.7%)

 

148,559

Total Non-Current Liabilities

4,377,183

3,924,736

(452,447)

(10.3%)

 

8,284,054

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Issued capital

2,824,883

2,824,883

(0)

(0.0%)

 

5,962,562

Retained earnings (losses)

2,232,969

2,343,297

110,328

4.9%

 

4,946,064

Share premium

158,760

158,760

-

0.0%

 

335,099

Other equity changes

-

-

-

 

 

-

Reserves

(1,320,883)

(1,530,811)

(209,928)

(15.9%)

 

(3,231,126)

 

 

 

-

 

 

 

Equity Attributable to Shareholders of the Company

3,895,729

3,796,129

(99,600)

(2.6%)

 

8,012,598

Equity Attributable to Minority Interest

3,000,425

2,912,492

(87,933)

(2.9%)

 

6,147,482

Total Shareholders' Equity

6,896,154

6,708,621

(187,533)

(2.7%)

 

14,160,080

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

13,733,871

12,745,787

(988,084)

(7.2%)

 

26,902,900

 

The Company’s total liabilities and shareholders’ equity decreased by Ch$ 988,084 million, compared to the period ended on December 31, 2011, due to Ch$ 452,446 million decrease in non-current liabilities, Ch$ 348,105 million in current liabilities and Ch$187,533 million in shareholders’ equity.

 

Ø  Current liabilities decreased by Ch$ 348,105 million, equivalent to 14.1%, mainly due to:

 

v  Decrease in trade and other current payables by Ch$ 258,000 million due to decreases in accounts payable for goods and services of Ch$ 174,509 million, power purchase providers of Ch$ 60,164 million, fuel suppliers of Ch$ 10,925 million and liabilities for social programs of Ch$ 11,081 million. The above was partially offset by increases in liabilioties for R&D of Ch$ 4,760 million and maintenance contracts suppliers of Ch$ 4,035 million.

 

 

v  Decrease in current tax liabilities of Ch$ 73,743 million mainly due to declining in Emgesa of Ch$ 15,141 million; Codensa of Ch$ 12,632 million, Coelce of Ch$ 18,021 million; Cachoeira of Ch$ 14,987 million; Chilectra of Ch$ 6,343 million, Edegel for Ch$ 11,245 million; CIEN of Ch$ 5,226 million, and Endesa Chile of Ch $ 4,836 million, partially offset by an increae in Pehuenche of Ch$ 27,360 million.

 

 

Ø  Non-Current liabilities decreased by Ch$ 452,447 million, equivalent to 10,3%, mainly explained by:

 

Pg.17

 

v  Decrease in other financial liabilities (financial debt and derivatives) of Ch$ 423,802 million, mainly in Endesa Chile of Ch$ 330,717 million for transferring UF-nominated Bond to the short term and to exchange rate effect; in Coelce of Ch $ 68,788 million due to transfer to short-term and conversion effect; in Costanera of Ch$ 61,767 million due to transfers to short-term, in Edegel of Ch$ 33,020 million for the transfer to the short term, in Codensa of Ch$ 26,411 million as the result of conversion effect and transfer to the short term, in Edelnor of Ch$ 13,814 million for transfer to short-term and for new loan, in Edesur of Ch$ 10,555 million for conversion effect and transfer to the short term and in Fortaleza of Ch$ 6,773 million. This is partially offset by increases in Emgesa of Ch$ 71,260 million for the refinancing loan from short term to long term and Ampla of Ch$ 57,316 million for the issuance of new bond and bank loan.

 

v  Decrease in other non-current non-financial liabilities of Ch$ 32,603 million, mainly due to the decreases in Emgesa of Ch$ 11,066 million due to transfer to short term of the equity tax payment; in Codensa of Ch$ 7,114 million; in Cien of Ch$ 3,883 million; in Cachoeira of Ch$ 1,714 million; in Ampla of Ch$ 1.600 million and in Gas Atacama of Ch$ 3.191 million.

 

 

Equity decreased by Ch$ 187,533 million with respect to the same period of 2011:

 

v  The equity attributable to shareholders of the Company decreased by Ch$ 99,600 million, mainly explained by the effect of the comprehensive result for the period of Ch$ 56,685 million, primarily driven by the result of the parent of Ch$ 264,557 million, negative conversion reserves of Ch$ 239,461 million, positive hedge reserve of Ch$ 30,358 million and other reserves of Ch$ 230 million, less dividends of the period of Ch$ 154,460 million.

 

v  Non-controlling interest decreased by Ch$ 87,933 million, mainly explained by the effect of the comprehensive result for the period of Ch$ 188,105 million, principally driven by the result for the period of the non-controllers of Ch$ 369,852 million, negative other comprehensive results of the period of Ch$ 181,747 million, and by the reduction in other equity movements of Ch$ 276,038 million.

 

 

 

Pg.18

 

Debt Maturity with Third Parties, Thousand US$

 

Table 7

 

 

 

 

 

 

 

(Thousand US$)

2012

2013

2014

2015

2016

Balance

TOTAL

Chile

14,603.2

439,248.9

751,618.6

225,826.8

473,335.6

983,904.1

2,888,537.1

Enersis

2,536.6

5,276.2

612,038.8

5,900.4

457,621.6

42,171.2

1,125,544.8

Chilectra

2.2

-

-

-

-

-

2.2

Endesa Chile

12,064.4

433,972.6

139,579.8

219,926.4

15,714.0

941,732.8

1,762,990.1

Argentina

81,407.3

138,054.1

70,726.0

34,745.0

34,267.1

-

359,199.4

Edesur

7,087.3

59,437.7

6,403.4

-

-

-

72,928.3

Costanera

57,900.6

50,274.3

40,313.8

27,410.0

34,267.1

-

210,165.8

Chocón

16,419.5

28,342.0

24,008.8

7,335.0

-

-

76,105.3

Hidroinvest

-

-

-

-

-

-

-

CTM

-

-

-

-

-

-

-

TESA

-

-

-

-

-

-

-

Peru

55,241.6

115,613.6

114,039.9

85,646.9

90,158.0

268,264.9

728,964.9

Edelnor

22,771.6

62,468.5

63,086.6

51,928.4

32,794.5

138,568.1

371,617.8

Edegel

32,470.0

53,145.1

50,953.2

33,718.5

57,363.5

129,696.8

357,347.2

Brazil

163,919.7

217,289.3

158,928.1

134,705.3

205,974.0

443,475.8

1,324,292.2

Endesa Brasil

-

-

-

-

-

-

-

Coelce

21,590.1

92,659.6

90,713.8

36,116.0

86,958.9

137,691.7

465,730.1

Ampla

86,302.3

111,719.4

52,885.6

80,767.2

111,346.1

293,610.0

736,630.6

Cachoeira

-

-

-

-

-

-

-

Cien

49,246.9

-

-

-

-

-

49,246.9

Fortaleza

6,780.4

12,910.3

15,328.7

17,822.1

7,669.0

12,174.1

72,684.6

Colombia

-

133,850.2

217,526.0

161,434.8

103,118.4

1,180,362.7

1,796,292.2

Codensa

-

133,850.2

138,848.8

-

80,532.3

261,868.8

615,100.1

Emgesa

-

-

78,677.3

161,434.8

22,586.1

918,493.9

1,181,192.1

TOTAL

315,171.8

1,044,056.0

1,312,838.6

642,358.81

906,853.1

2,876,007.5

7,097,285.8

 

Debt Maturity with Third Parties, Million Ch$

 

Table 7.1

 

 

 

 

 

 

 

(Million Ch$)

2012

2013

2014

2015

2016

Balance

TOTAL

Chile

6,919

208,103

356,094

106,990

224,252

466,144

1,368,502

Enersis

1,202

2,500

289,966

2,795

216,807

19,979

533,249

Chilectra

1

-

-

-

-

-

1

Endesa Chile

5,716

205,603

66,129

104,195

7,445

446,165

835,252

Argentina

38,568

65,406

33,508

16,461

16,235

-

170,178

Edesur

3,358

28,160

3,034

-

-

-

34,551

Costanera

27,432

23,818

19,099

12,986

16,235

-

99,570

Chocón

7,779

13,428

11,375

3,475

-

-

36,056

Hidroinvest

-

-

-

-

-

-

-

CTM

-

-

-

-

-

-

-

TESA

-

-

-

-

-

-

-

Peru

26,172

54,774

54,029

40,577

42,714

127,096

345,362

Edelnor

10,789

29,596

29,889

24,602

15,537

65,649

176,061

Edegel

15,383

25,179

24,140

15,975

27,177

61,446

169,300

Brazil

77,660

102,945

75,295

63,819

97,584

210,106

627,410

Endesa Brasil

-

-

-

-

-

-

-

Coelce

10,229

43,899

42,977

17,111

41,199

65,234

220,649

Ampla

40,887

52,929

25,056

38,265

52,752

139,104

348,993

Cachoeira

-

-

-

-

-

-

-

Cien

23,332

-

-

-

-

-

23,332

Fortaleza

3,212

6,117

7,262

8,444

3,633

5,768

34,436

Colombia

-

63,414

103,057

76,483

48,854

559,220

851,029

Codensa

-

63,414

65,782

-

38,154

124,066

291,416

Emgesa

-

-

37,275

76,483

10,701

435,155

559,613

TOTAL

149,319

494,642

621,984

304,330

429,640

1,362,566

3,362,481

 

 

Pg.19

 

Evolution Of Key Financial Ratios

 

 

Table 8

 

 

 

 

 

Indicator

Unit

As of Dec 31, 2011

As of September 30, 2012

Var 2011-2012

Chg %

Liquidity

Times

1.03

0.94

(0.09)

(8.7%)

Acid ratio test *

Times

0.99

0.88

(0.11)

(11.1%)

Working capital

Million Ch$

65,431

(121,298)

(186,729)

(285.4%)

Working capital

Thousand US$

138,108

(256,027)

(394,135)

(285.4%)

Leverage **

Times

0.99

0.90

(0.09)

(9.1%)

Short-term debt

%

36.0

35.0

(1.00)

(2.8%)

Long-term debt

%

64.0

65.0

1.00

1.6%

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

** Total debt / (equity + minority interest)

 

 

 

 

 

 

Table 8.1

 

 

 

 

 

Indicator

Unit

9M 2011

9M 2012

Var 2011-2012

Chg %

Financial expenses coverage *

Times

4.6

4.1

(0.49)

(11%)

Op. income / Op. rev.

%

24.7

23.0

(1.7)

(6.9%)

ROE **

%

12.2

11.2

(1.0)

(8.0%)

ROA **

%

7.5

7.9

0.4

5.3%

* EBITDA / Financial costs

 

 

 

 

 

** Annualized figures

 

  

 

 

 

 

The liquidity ratio at September 30, 2012 was 0.94 times, showing no variation with respect to December 31, 2011. This reflects a stable company with a solid liquidity position, fulfilling its financial liabilities, financing its investments with cash generation and a comfortable debt maturity structure.

  

The leverage ratio is 0.90 times as of September 30, 2012, reducing by 9.1% compared to December 31,  2011.

  

The financial expenses coverage shows a fall of 0.49 times, equivalent to 10.7%, moving from 4.61 times as of September 30, 2011 to 4.12 times as of September 30, 2012. This is the result of the increase in the company’s financial cost in this period and the decrease in EBITDA.

  

The profitability indicator, operating income over operating revenues, fell 6.9% to 23.0% as of September 30, 2012.

  

On the other hand, the annualized return on equity of the shareholders of the Company is 11.2%, with a fall of 8.0% with respect to September 30, 2011 when it was 12.2%. This was consequence of the lower result reported for the annualized period, compensated by the increase of the equity of the owners.

  

The annualized return on assets passed from 7.5% as of September 30, 2011 to 7.9% in September 30, 2012 as a result of the decline in the company’s assets, partially offset by a lower result for the annualized present period.

Pg.20

 

Consolidated Statements of Cash Flows Analysis

Under IFRS

Table 9

 

 

 

 

 

 

CASH FLOW

(Million Ch$)

 

 

 

 

(Thousand US$)

 

9M 2011

9M 2012

Var 2011-2012

Chg %

 

9M 2012

 

 

 

 

 

 

 

Collection classes provided by operating activities

 

 

 

 

 

Proceeds from sales of goods and services

5,749,516

5,782,966

33,450

0.6%

 

11,814,026

Cash receipts from royalties, fees, commissions and other revenue

60,940

65,797

4,856

8.0%

 

134,416

Receipts from contracts held for purposes of dealing or trading

-

-

-

 

 

-

Receipts from premiums and claims, annuities and other benefits from policies written

-

-

-

 

 

-

Other cash receipts from operating activities

243,435

259,047

15,613

6.4%

 

529,208

Types of payments

 

 

 

 

 

 

Payments to suppliers for goods and services

(3,097,168)

(3,194,537)

(97,369)

(3.1%)

 

(6,526,123)

Payments from contracts held for dealing or trading

3

-

(3)

(100.0%)

 

-

Payments to and on behalf of employees

(277,900)

(310,205)

(32,305)

(11.6%)

 

(633,719)

Payments for premiums and claims, annuities and other policy benefits underwritten

(3,195)

(4,696)

(1,501)

(47.0%)

 

(9,593)

Other payments for operating activities

(1,094,030)

(1,030,025)

64,005

5.9%

 

(2,104,239)

Dividends paid

-

-

-

 

 

-

Dividends received

-

-

-

 

 

-

Payments of interest classified as operating

-

(0)

 

 

 

 

Proceeds of interest received classified as operating

-

(0)

(0)

 

 

(0)

Income taxes refund (paid)

(328,794)

(377,590)

(48,797)

(14.8%)

 

(771,379)

Other inflows (outflows) of cash

(180,246)

(183,926)

(3,680)

(2.0%)

 

(375,742)

Net cash flows from (used in) operating activities

1,072,561

1,006,831

(65,730)

(6.1%)

 

2,056,856

 

 

 

 

 

 

 

Cash flows from (used in) investing activities

 

 

 

 

 

 

Cash flows from losing control of subsidiaries or other businesses

12,662

-

(12,662)

(100.0%)

 

-

Cash flows used for control of subsidiaries or other businesses

-

-

-

 

 

-

Acquisitions of associates

-

-

-

 

 

-

Other cash receipts from sales of equity or debt instruments of other entities

-

-

-

 

 

-

Other payments to acquire equity or debt instruments of other entities

-

-

-

 

 

-

Other proceeds from the sale of interests in joint ventures

-

-

-

 

 

-

Cash flows used for the purchase of non-controlling

-

-

-

 

 

-

Loans to related companies

-

-

-

 

 

-

Proceeds from sales of property, plant and equipment

3,579

400

(3,178)

(88.8%)

 

818

Purchase of property, plant and equipment

(353,971)

(374,535)

(20,564)

(5.8%)

 

(765,138)

Proceeds from sales of intangible assets

7,591

-

(7,591)

(100.0%)

 

-

Acquisitions of intangible assets

(133,280)

(142,114)

(8,833)

(6.6%)

 

(290,324)

Proceeds from other long term assets.

-

-

-

 

 

-

Purchase of other long-term assets

(1,855)

(2,347)

(492)

(26.5%)

 

(4,794)

Other inflows (outflows) of cash

-

-

-

 

 

-

Prepayments and third party loans

(1,259)

-

1,259

(100.0%)

 

-

Proceeds from prepayments reimbursed and third party loans

-

-

-

 

 

-

Payments arising from futures contracts, forwards, options and swap

-

(0)

(0)

 

 

(0)

Cash receipts from futures contracts, forwards, options and swap

-

(0)

(0)

 

 

(0)

Proceeds from related

-

-

-

 

 

-

Dividends received

4,013

6,848

2,836

70.7%

 

13,990

Proceeds of interest received classified as operating

15,456

43,027

27,571

178.4%

 

87,900

Income taxes refund (paid)

-

-

-

 

 

-

Other inflows (outflows) of cash

6,291

(24,312)

(30,603)

(486.5%)

 

(49,667)

Net cash flows from (used in) investing activities

(440,774)

(493,031)

(52,258)

(11.9%)

 

(1,007,214)

Proceeds from shares issue

-

-

-

 

 

-

Proceeds from issuance of other equity instruments

-

-

-

 

 

-

Payments to acquire or redeem the shares of the entity

-

-

-

 

 

-

Payments for other equity interests

-

-

-

 

 

-

Total loan amounts from

491,956

331,334

(160,622)

(32.6%)

 

676,883

Proceeds from term loans

58,077

238,473

180,396

310.6%

 

487,177

Proceeds from short-term loans

433,879

92,861

(341,017)

(78.6%)

 

189,707

Repayments of borrowings

-

0

0

 

 

0

Payments of loans

(448,529)

(540,161)

(91,632)

(20.4%)

 

(1,103,496)

Payments of finance lease liabilities

(8,640)

(7,417)

1,223

14.2%

 

(15,153)

Repayment of loans to related companies

0

(0)

(0)

(146.9%)

 

(0)

Proceeds from government grants

-

-

-

 

 

-

Dividends paid

(566,338)

(437,637)

128,701

22.7%

 

(894,049)

Payments of interest classified as operating

(186,251)

(203,679)

(17,428)

(9.4%)

 

(416,096)

Income taxes refund (paid)

-

-

-

 

 

-

Other inflows (outflows) of cash

(5,251)

(21,937)

(16,685)

(317.7%)

 

(44,814)

Net cash flows from (used in) financing activities

(723,053)

(879,497)

(156,444)

(21.6%)

 

(1,796,726)

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents, before the effect of changes in the exchange rate

(91,266)

(365,697)

(274,432)

(300.7%)

 

(747,084)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

67,365

(71,561)

(138,926)

(206.2%)

 

(146,192)

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

(23,901)

(437,258)

(413,357)

(1729.5%)

 

(893,276)

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

961,355

1,219,921

258,566

26.9%

 

2,492,178

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

937,454

782,663

(154,791)

(16.5%)

 

1,598,903

               

 

Pg.21

 

The company generated a negative net cash flow during the period of Ch$ 365,697 million, compounded by the following:

  

Operating activities for this period generated a net positive flow of Ch$ 1,006,831 million, a fall of 6.1% compared to the same period of the previous year. This flow is mainly composed of cash receipts from sales and royalties of Ch$ 5,782,966 million and other operating flows of Ch$ 324,844 million, offset by payments to suppliers of Ch$ 3,194,537 million, payment to employees of Ch$ 310,205 million and other operation payments of Ch$ 1,596,237 million.

 

Investment activities generated a negative net cash flow of Ch$ 493,031 million, a decrease in cash of 11.9% or Ch$ 52,258 million compared to the same period of 2011. These disbursements relate mainly to the acquisition of properties, plant and equipment of Ch$ 374,135 million,  the incorporation of intangible assets (IFRIC 12 in Brazil) of Ch$ 142,114 million, and other  investment disbursements of Ch$ 26,658 million, partially compensated by interests received of Ch$ 43,027 million and other investment amounts of Ch$ 6,848 million.

  

Financing activities generated a net negative cash flow of Ch$ 879,497 million, mainly for the payment of dividends of Ch$ 437,637 million, loan payments of Ch$ 540,161 million, interest payments of Ch$ 203,679 and other financing disbursements of Ch$ 29,354 million. This was partially offset by loan drawings of Ch$ 331,334 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 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

9M 2011

9M 2012

Argentina

101.8

-

-

-

-

-

-

-

101.8

-

Peru

-

-

61,600.7

10,339.1

-

-

-

-

61,600.7

10,339.1

Brazil

-

-

172,779.9

-

-

-

-

-

172,779.9

-

Colombia

-

-

27,664.4

27,754.5

-

-

-

-

27,664.4

27,754.5

Others

-

-

-

-

-

-

-

-

-

-

Total

101.8

-

262,045.0

38,093.6

-

-

-

-

262,146.8

38,093.6

                             

Source: Internal Financial Report

Pg.22

 

 

Table 11

 

 

 

 

 

 

 

 

 

 

Payments for Additions of Fixed Assets

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

Million Ch$

 

Thousand US$

Million Ch$

 

Thousand US$

 

9M 2011

9M 2012

 

9M 2012

 

9M 2011

9M 2012

 

9M 2012

Endesa Chile

195,400

173,558

 

354,562

 

124,390

136,959

 

279,794

Cachoeira

1,799

4,261

 

8,705

 

5,538

4,627

 

9,453

Endesa Fortaleza

5,521

2,681

 

5,477

 

6,072

5,133

 

10,486

Cien

1,450

2,498

 

5,103

 

7,876

10,913

 

22,294

Chilectra S.A.

18,445

35,167

 

71,843

 

16,151

17,510

 

35,771

Edesur

57,399

68,867

 

140,688

 

9,729

10,498

 

21,446

Edelnor

24,056

35,613

 

72,754

 

14,596

16,805

 

34,331

Ampla (*)

89,003

83,683

 

170,956

 

42,547

44,894

 

91,714

Coelce (*)

41,739

58,246

 

118,991

 

30,212

24,236

 

49,512

Codensa

48,078

50,990

 

104,168

 

44,550

47,918

 

97,892

Cam Ltda.(**)

46

-

 

-

 

294

-

 

-

Inmobiliaria Manso de Velasco Ltda.

1,922

175

 

358

 

198

185

 

378

Synapsis (***)

488

 

 

-

 

478

-

 

-

Enersis holding and investment companies

777

1,224

 

2,501

 

886

975

 

1,992

Total

486,123

516,963

 

1,056,104

 

303,517

320,653

 

655,062

(*) Includes concessions intangible assets.

 

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

Pg.23

 

·        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.

 

In compliance with our current interest rate hedging policy, the portion of fixed and/or hedged debt to the total net debt was 57% as of September 30, 2012 on a consolidated basis.

 

Depending on the Group’s estimates and debt structure objectives, hedging transactions take place hiring derivatives that mitigate these risks. Instruments currently used to accomplish the policy, are interest rate swaps.

 

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

 

Net Position:

 

September 30 2012

Dec. 31 2011

%

%

Fixed Interest Rate

57%

62%

Variable Interest Rate

43%

38%

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.

Pg.24

 

 

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 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 30, 2012 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.

 

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, 2012, the Enersis Group held liquidity in the amount of Ch$ 782,663 million in Cash and Cash Equivalent and Ch$ 212,812 million in committed long term credit lines. As of December 31st, 2011, the Enersis Group held liquidity in the amount of Ch$ 1,219,921 million in Cash and Cash Equivalent and Ch$ 238,832 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.

 

Pg.25

 

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 established 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 rating 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 80% 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.

 

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.

 

Pg.26

 

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

 

Financial Positions

Sept. 30

2012

Dec. 31

2011

Th Ch$

Th Ch$

Interest Rate

18,614,609

41,560,004

Exchange Rate

4,479,041

3,602,591

Correlation

(225,220)

(310,050)

Total

22,868,430

44,852,545

 

 

 

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, and in the case of Enersis, its subsidiaries Endesa Chile and Chilectra, 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 Enersis levels. Furthermore, some of these debt facilities are also subject to cross acceleration provisions in the event of a default in other debt of the companies mentioned above, 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.

 

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

 

Finally, in the case of local bonds of Enersis and Endesa Chile, prepayment is triggered only as a result of a default of the Issuer.

 

There are no clauses in the credit agreements by which changes in the corporate or debt classification of these companies from risk rating agencies could trigger prepayments. Nevertheless, a modification in the Feller Rate and Fitch Ratings Chile local debt risk classification could trigger a change in the applicable margin to determine the interest rate, in the local committed credit lines executed in 2009.

 

Pg.27

 

Argentina

 

Generation

 

In Argentina, the operating income for the period amounted to Ch$ 6,559 million, representing a 74.2% drop in relation to the same period of 2011. This is primarily explained by lower operating income of Ch$50,142 million, due to a 15.9% reduction in average energy sale price. The foregoing was partially offset by a Ch$ 45,055 million reduction in procurement and service costs, mainly explained by a decrease of 9.2% in energy purchases costs and 15.2% decrease in fuel consumption.

 

EBITDA from operations in Argentina amounted to Ch$ 24,572 million; namely, 35.0% lower compared to that recorded in 9M 2011. 

 

Endesa Costanera

 

Endesa Costanera’s operating income decreased by Ch$ 28,210 million, showing a negative result of Ch$ 18,279 million in the 9M 2012 period. This is explained by a 19.1% reduction in operating revenues, due to lower energy sales revenues of Ch$ 58,481 million and by a 13.4% reduction in the average energy sale price. This was partially offset by a Ch$ 42,297 million reduction in procurement and service  costs, mainly due to a 15.2% reduction in fuel consumption and a reduction of Ch$ 3,433 million in transportation costs. Physical sales reached 6,686 GWh, 6.6% lower than same period of 2011.

 

The net effect of translating the financial statements from Argentine pesos to Chilean pesos in both periods led to a 5.5% decrease in Chilean pesos as of September 2012, when compared to September 2011.

 

 

Table 12

 

 

 

 

 

 

Endesa Costanera

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

306,738

248,232

(58,507)

(19.1%)

 

507,113

Procurement and Services

(271,307)

(229,009)

42,297

15.6%

 

(467,843)

Contribution Margin

35,432

19,222

(16,209)

(45.7%)

 

39,269

Other Costs

(15,637)

(21,878)

(6,242)

(39.9%)

 

(44,695)

Gross Operating Income (EBITDA)

19,795

(2,656)

(22,451)

(113.4%)

 

(5,426)

Depreciation and Amortization

(9,865)

(15,624)

(5,759)

(58.4%)

 

(31,917)

Operating Income

9,930

(18,279)

(28,210)

(284.1%)

 

(37,343)

Figures may differ from those accounted under Argentine GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 12.1

 

 

 

 

 

 

Endesa Costanera

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

7,090

6,573

(517)

(7.3%)

 

 

GWh Sold

7,158

6,686

(471)

(6.6%)

 

 

Market Share

8.2%

7.4%

(0.8) pp.

 

 

 

                     

 

 

Pg.28

 

El Chocón

 

El Chocón’s operating income reached Ch$ 22,301 million, reflecting a 34.9% increase when compared to the same period of 2011. This result is mainly explained by 16.4% higher energy sales revenues, due to higher physical sales in the spot market, and a 27.4% decrease in energy purchases costs.

 

The net effect of translating the financial statements from Argentine pesos to Chilean pesos in both periods led to a 5.5% decrease in Chilean pesos as of September 2012, when compared to September 2011.

 

Table 13

 

 

 

 

 

 

El Chocón

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

34,696

40,384

5,688

16.4%

 

82,501

Procurement and Services

(12,643)

(10,585)

2,058

16.3%

 

(21,625)

Contribution Margin

22,053

29,799

7,746

35.1%

 

60,876

Other Costs

(3,425)

(5,510)

(2,085)

(60.9%)

 

(11,257)

Gross Operating Income (EBITDA)

18,627

24,289

5,661

30.4%

 

49,619

Depreciation and Amortization

(2,095)

(1,987)

107

5.1%

 

(4,060)

Operating Income

16,533

22,301

5,768

34.9%

 

45,560

Figures may differ from those accounted under Argentine GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 13.1

 

 

 

 

 

 

El Chocón

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

1,703

2,341

638

37.5%

 

 

GWh Sold

2,079

2,603

524

25.2%

 

 

Market Share

2.4%

2.9%

0.5 pp.

 

 

 

                     

 

 

Pg.29

 

Distribution               

Edesur

 

Our distribution subsidiary, Edesur, showed a 77.3% drop in operating income, showing for this period losses of Ch$ 36,002 million. The negative evolution of the company results are the consequence of increased operating costs derived from the country’s inflation rate, without the corresponding tariff increases because of the delay in fulfilling certain clauses of the Minutes of Agreement executed with the National Government of Argentina, especially the semi-annual recognition of tariff adjustments incorporated into the Cost Monitoring Mechanism (MMC, in its Spanish acronym) and the implementation of an Integral Tariff Review (RTI, in its Spanish acronym) as provided in such Minutes, all of which is heavily impacting Edesur’s financial balance.

 

 

Operating revenues increased by Ch$ 35,937 million, 17,5% higher compared to the same period of last year. This is mainly explained by the increase in the average energy sales price. The latter was offset by a Ch$ 30,618 million increase in energy purchases and a Ch$14,624 increase in other operation fixed costs.

 

Physical sales increased by 1.9% reaching 13,308 GWh. The energy losses in this period were 10.7% and the number of clients grew 1.1%, exceeding 2.39 million.

 

The net effect of translating the financial statements from Argentine pesos to Chilean pesos in both periods led to a 5.5% decrease in Chilean pesos as of September 2012, when compared to September 2011.

 

 

Table 14

 

 

 

 

 

 

Edesur

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

205,924

241,862

35,937

17.5%

 

494,100

Procurement and Services

(103,825)

(133,292)

(29,467)

(28.4%)

 

(272,302)

Contribution Margin

102,100

108,570

6,470

6.3%

 

221,797

Other Costs

(111,280)

(132,656)

(21,376)

(19.2%)

 

(271,004)

Gross Operating Income (EBITDA)

(9,181)

(24,087)

(14,906)

(162.4%)

 

(49,206)

Depreciation and Amortization

(11,122)

(11,916)

(794)

(7.1%)

 

(24,343)

Operating Income

(20,302)

(36,002)

(15,700)

(77.3%)

 

(73,549)

Figures may differ from those accounted under Argentine GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 14.1

 

 

 

 

 

 

Edesur

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

Customers (Th)

2,367

2,392

26

1.1%

 

 

GWh Sold

13,064

13,308

244

1.9%

 

 

Clients/Employee

830

834

4

0.5%

 

 

Energy Losses %

10.6%

10.7%

0.1%

 

 

 

 

Pg.30

 

Brazil

Endesa Brasil

Operating Income amounted to Ch$ 358,790 million, 14.8% lower than the Ch$ 420,987 million reported in the same period of 2011.

 

Table 15

 

 

 

 

 

 

Endesa Brasil

(Million Ch$)

 

 

 

(Thousand US$)

 

9M 2011

9M 2012

Var 2011-2012

Chg %

 

9M 2012

Sales

1,460,357

1,464,144

3,786

0.3%

 

2,991,100

Other operating income

142,014

117,580

(24,434)

(17.2%)

 

240,204

Total Revenues

1,602,371

1,581,723

(20,648)

(1.3%)

 

3,231,304

Procurements and Services

(914,674)

(936,116)

(21,442)

(2.3%)

 

(1,912,392)

Contribution Margin

687,697

645,608

(42,090)

(6.1%)

 

1,318,912

Other Costs

(186,769)

(180,118)

6,651

3.6%

 

(367,963)

Gross Operating Income (EBITDA)

500,928

465,490

(35,438)

(7.1%)

 

950,949

Depreciation and Amortization

(92,664)

(90,206)

2,458

2.7%

 

(184,282)

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

12,723

(16,493)

(29,216)

(229.6%)

 

(33,694)

Operating Income

420,987

358,790

(62,196)

(14.8%)

 

732,973

Net Financial Income

(43,681)

(66,325)

(22,644)

(51.8%)

 

(135,495)

Financial income

99,981

79,940

(20,041)

(20.0%)

 

163,310

Financial expenses

(149,171)

(144,769)

4,403

3.0%

 

(295,748)

Income (Loss) for indexed assets and liabilities

-

-

-

 

 

-

Foreign currency exchange differences, net

5,510

(1,496)

(7,006)

(127.2%)

 

(3,057)

Gains

16,085

3,111

(12,974)

(80.7%)

 

6,355

Losses

(10,576)

(4,607)

5,968

56.4%

 

(9,412)

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

-

(0)

(0)

 

 

(0)

Net Income from Other Investments

-

0

0

 

 

0

Net Income from Sales of Assets

-

2,032

2,032

 

 

4,152

Net Income before Taxes

377,306

294,498

(82,808)

(21.9%)

 

601,630

Income Tax

(85,916)

(64,650)

21,266

24.8%

 

(132,074)

NET INCOME

291,390

229,848

(61,542)

(21.1%)

 

469,556

Net Income Attributable to Owners of the Company

208,569

171,087

(37,483)

(18.0%)

 

349,513

Net Income Attributable to Minority Interest

82,821

58,761

(24,060)

(29.1%)

 

120,043

 

 

 

Generation

 

In Brazil, the operating income of our subsidiaries amounted to Ch$ 129,182 million, 22.5% lower than for the same period of 2011, when operating results amounted to Ch$ 166,757 million.

 

Cachoeira Dourada

 

The operating income of Cachoeira Dourada was Ch$ 71,741 million, 17.2% higher than for 9M 2011. This is mainly explained by 19.5% of higher energy sales revenues, reaching Ch$ 108,176 million and 3,178 GWh sold, and higher average sale price of 7.1%. This was partially offset by an increase in energy purchases costs of Ch$ 7,171 million.

 

The effect of converting these financial statements from Brazilian reals to Chilean pesos in both periods was to generate a 12.3% reduction in Chilean pesos in September 2012 when compared to September 2011.

Pg.31

 

 

Table 16

 

 

 

 

 

 

Cachoeira

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

90,531

108,192

17,661

19.5%

 

221,026

Procurement and Services

(19,653)

(27,459)

(7,806)

(39.7%)

 

(56,097)

Contribution Margin

70,878

80,733

9,855

13.9%

 

164,929

Other Costs

(4,084)

(4,305)

(221)

(5.4%)

 

(8,795)

Gross Operating Income (EBITDA)

66,794

76,428

9,633

14.4%

 

156,134

Depreciation and Amortization

(5,595)

(4,687)

908

16.2%

 

(9,575)

Operating Income

61,199

71,741

10,542

17.2%

 

146,559

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 16.1

 

 

 

 

 

 

Cachoeira

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

2,047

2,755

708

34.6%

 

 

GWh Sold

2,849

3,178

329

11.6%

 

 

Market Share

0.9%

1.0%

0.1 pp.

 

 

 

 

 

Fortaleza (cgtf)

 

The operating income of Endesa Fortaleza (CGTF) amounted to Ch$ 32,880 million, evidencing a 17.2% decrease as compared to the same period of the previous year. This is mainly explained by an increase in energy purchases costs of 106.1%, due to a 155.6% increase in average energy purchase price. This was  partially offset by a decrease in other operating costs of Ch$ 9,281, a 144.0% lower when compared to 9M 2011.

 

Physical sales of the period reached 2,124 GWh, 5.5% more than the same period of last year.

 

The effect of converting these financial statements from Brazilian reals to Chilean pesos in both periods was to generate a 12.3% reduction in Chilean pesos in September 2012 when compared to September 2011.

 

Table 17

 

 

 

 

 

 

Fortaleza

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

98,999

97,422

(1,577)

(1.6%)

 

199,024

Procurement and Services

(48,573)

(53,809)

(5,236)

(10.8%)

 

(109,926)

Contribution Margin

50,427

43,614

(6,813)

(13.5%)

 

89,098

Other Costs

(4,583)

(5,549)

(966)

(21.1%)

 

(11,335)

Gross Operating Income (EBITDA)

45,844

38,065

(7,779)

(17.0%)

 

77,763

Depreciation and Amortization

(6,120)

(5,185)

936

15.3%

 

(10,592)

Operating Income

39,723

32,880

(6,843)

(17.2%)

 

67,171

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 17.1

 

 

 

 

 

 

Fortaleza

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

348

789

441

126.7%

 

 

GWh Sold

2,012

2,124

112

5.5%

 

 

Market Share

0.6%

0.6%

(0.0) pp.

 

 

 

 

 

 

Pg.32

 

 

 

 

Transmission

CIEN

 

Our transmission subsidiary, CIEN, showed a decrease in operating income of Ch$ 41,533 million, reaching Ch$ 27,098 million. This is explained because 2011 results were positively impacted by a provision reversal for accounts receivable considered not recoverable for Ch$20.936 million and another one, amounting to Ch$27.827 million, corresponding to sales tax that does not apply in 2012.

 

Operating revenues increased by Ch$ 14,255 million, due to the fully registration of toll charges during this year (RAP – Permitted Annual Remuneration) of Ch$ 53,115 million, whereas 2011 figures only include this item since the end of April.

 

The effect of converting these financial statements from Brazilian reals to Chilean pesos in both periods was to generate a 12.3% reduction in Chilean pesos in September 2012 when compared to September 2011.

Pg.33

 

Table 18

 

 

 

 

 

 

Cien (*)

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

38,860

53,115

14,255

36.7%

 

108,508

Procurement and Services

21,116

(8,680)

(29,796)

(141.1%)

 

(17,733)

Contribution Margin

59,975

44,434

(15,541)

(25.9%)

 

90,774

Other Costs

(4,362)

(6,381)

(2,019)

(46.3%)

 

(13,036)

Gross Operating Income (EBITDA)

55,614

38,053

(17,561)

(31.6%)

 

77,738

Depreciation and Amortization

(7,919)

(10,955)

(3,036)

(38.3%)

 

(22,380)

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

20,936

-

(20,936)

(100.0%)

 

-

Operating Income

68,631

27,098

(41,533)

(60.5%)

 

55,359

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

                     

 

 

Pg.34

 

Distribution

 

In Brazil, the operating income of our distribution subsidiaries amounted to Ch$ 231,067 million, which is 11.1% lower than that obtained in the same period of the previous year.

 

Ampla

 

Ampla’s operating income amounted to Ch$ 118,731 million, which compared to previous year,  represents a decrease of 7.5%.  This lower result is mostly due to lower energy sales revenues of Ch$ 12,053 million and higher transportation costs of Ch$ 29,329 million. This was partially offset by Ch$ 19,176 million reduction in energy purchases costs and Ch$ 25,923 million in other operating costs.

 

Physical sales grew by 4.2%, reaching 7,943 GWh. Energy losses dropped by 0.4 p.p., going from 19.8% to 19.4%.  The number of Ampla’s clients increased by 70 thousand, thus exceeding 2.69 million clients.

 

The effect of converting these financial statements from Brazilian reals to Chilean pesos in both periods was to generate a 12.3% reduction in Chilean pesos in September 2012 when compared to September 2011.

 

Table 19

 

 

 

 

 

 

Ampla

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

829,718

802,983

(26,735)

(3.2%)

 

1,640,415

Procurement and Services

(555,716)

(539,945)

15,770

2.8%

 

(1,103,055)

Contribution Margin

274,003

263,038

(10,965)

(4.0%)

 

537,360

Other Costs

(98,219)

(87,394)

10,825

11.0%

 

(178,537)

Gross Operating Income (EBITDA)

175,783

175,644

(139)

(0.1%)

 

358,824

Depreciation and Amortization

(42,547)

(44,893)

(2,346)

(5.5%)

 

(91,713)

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

(4,904)

(12,020)

(7,116)

(145.1%)

 

(24,556)

Operating Income

128,332

118,731

(9,601)

(7.5%)

 

242,555

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 19.1

 

 

 

 

 

 

Ampla

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

Customers (Th)

2,621

2,691

70

2.7%

 

 

GWh Sold

7,627

7,943

317

4.2%

 

 

Clients/Employee

2,197

2,312

115

5.2%

 

 

Energy Losses %

19.8%

19.4%

(0.3) pp.

 

 

 

 

 

Pg.35

 

Coelce

 

Coelce’s operating income decreased by 14.7% reaching Ch$ 112,336 million. This  performance is mostly due to a Ch$ 34,391 million decrease in  operating revenues, mainly due to lower other operating revenues explained by Ch$ 13,364 million due to the construction of fixed assets (IFRIC 12) and a 12.1% reduction in average energy sale price. This was partially offset by an increase of 10.7% in physical sales.

 

Physical sales increased by 10.6%, amounting to 7,265 GWh.  Energy losses increased by 0.4 p.p. up to 12.4%.  Coelce’s number of clients expanded by 121 thousand, reaching 3.3 million clients.

 

The effect of converting these financial statements from Brazilian reals to Chilean pesos in both periods was to generate a 12.4% reduction in Chilean pesos in September 2012 when compared to September 2011.

 

Table 20

 

 

 

 

 

 

Coelce

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

641,796

607,406

(34,390)

(5.4%)

 

1,240,871

Procurement and Services

(409,831)

(395,675)

14,155

3.5%

 

(808,326)

Contribution Margin

231,966

211,731

(20,234)

(8.7%)

 

432,546

Other Costs

(66,826)

(70,687)

(3,861)

(5.8%)

 

(144,406)

Gross Operating Income (EBITDA)

165,140

141,044

(24,096)

(14.6%)

 

288,140

Depreciation and Amortization

(33,521)

(28,708)

4,813

14.4%

 

(58,648)

Operating Income

131,619

112,336

(19,282)

(14.7%)

 

229,492

Figures may differ from those accounted under Brazilian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 20.1

 

 

 

 

 

 

Coelce

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

Customers (Th)

3,190

3,311

121

3.8%

 

 

GWh Sold

6,566

7,265

699

10.6%

 

 

Clients/Employee

2,468

2,551

83

3.4%

 

 

Energy Losses %

12.0%

12.4%

0.4 pp.

 

 

 

                     

 

 

   

Pg.36

 

Chile

 

Generation

Endesa Chile

 

Consolidated Income Statement of Endesa Chile

 

 

Table 21

 

 

 

 

 

 

Endesa Chile

(Million Ch$)

 

 

 

 

(Thousand US$)

 

9M 2011

9M 2012

Var 2011-2012

Chg %

 

9M 2012

Sales

1,791,612

1,749,767

(41,845)

(2.3%)

 

3,574,601

Other operating income

12,368

4,317

(8,051)

(65.1%)

 

8,818

Total Revenues

1,803,980

1,754,084

(49,896)

(2.8%)

 

3,583,419

Procurements and Services

(977,776)

(989,211)

(11,434)

(1.2%)

 

(2,020,859)

Contribution Margin

826,203

764,873

(61,330)

(7.4%)

 

1,562,560

Other Costs

(161,788)

(154,366)

7,422

4.6%

 

(315,354)

Gross Operating Income (EBITDA)

664,416

610,507

(53,908)

(8.1%)

 

1,247,206

Depreciation and Amortization

(129,427)

(141,094)

(11,667)

(9.0%)

 

(288,242)

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

(4,327)

(29)

4,298

99.3%

 

(59)

Operating Income

530,662

469,384

(61,277)

(11.5%)

 

958,906

Net Financial Income

(101,126)

(108,802)

(7,676)

(7.6%)

 

(222,271)

Financial income

10,185

13,314

3,128

30.7%

 

27,198

Financial expenses

(100,967)

(113,136)

(12,169)

(12.1%)

 

(231,125)

Income (Loss) for indexed assets and liabilities

(3,880)

(896)

2,984

76.9%

 

(1,831)

Foreign currency exchange differences, net

(6,464)

(8,084)

(1,620)

(25.1%)

 

(16,514)

Gains

12,339

13,104

765

6.2%

 

26,770

Losses

(18,802)

(21,187)

(2,385)

(12.7%)

 

(43,284)

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

90,136

76,722

(13,414)

(14.9%)

 

156,736

Net Income from Other Investments

376

672

297

78.9%

 

1,373

Net Income from Sales of Assets

711

25

(686)

(96.4%)

 

52

Net Income before Taxes

520,759

438,003

(82,757)

(15.9%)

 

894,796

Income Tax

(149,693)

(135,825)

13,868

9.3%

 

(277,477)

NET INCOME

371,066

302,177

(68,888)

(18.6%)

 

617,318

Net Income Attributable to Owners of the Company

278,006

166,367

(111,639)

(40.2%)

 

339,872

Net Income Attributable to Minority Interest

93,060

135,810

42,750

45.9%

 

277,447

 

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

 

Chilean Operations

 

The operating income in Chile for this period amounted to Ch$ 127,550 million, a  decrease of 48.0% compared to the same period of 2011. This is mostly explained by a decrease in energy sales revenues of Ch$ 115,906 million, and increases of 12.9% in fuel consumption and 16.8% in transportation costs. This was partially offset by a reduction of 17.5% in energy purchases costs.

 

The foregoing was also affected by a 14.7% reduction in the average energy sale price expressed in Chilean pesos. Physical sales grew 1.8% reaching 15,981 GWh.

 

EBITDA of the business in Chile, or gross operating result, was Ch$ 191,323 million in this period, which represents a 38.9% decrease when compared to same period of 2011.

Pg.37

 

Table 22

 

 

 

 

 

 

Chilean Electricity Business

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

908,325

815,382

(92,943)

(10.2%)

 

1,665,746

Procurement and Services

(529,538)

(543,815)

(14,278)

(2.7%)

 

(1,110,961)

Contribution Margin

378,788

271,567

(107,221)

(28.3%)

 

554,785

Other Costs

(65,730)

(80,244)

(14,514)

(22.1%)

 

(163,931)

Gross Operating Income (EBITDA)

313,057

191,323

(121,734)

(38.9%)

 

390,854

Depreciation and Amortization

(67,698)

(63,773)

3,925

5.8%

 

(130,282)

Operating Income

245,360

127,550

(117,810)

(48.0%)

 

260,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 22.1

 

 

 

 

 

 

Chilean Electricity Business

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

14,499

15,296

797

5.5%

 

 

GWh Sold

15,697

15,981

284

1.8%

 

 

Market Share

36.4%

35.1%

(1.3) pp.

 

 

 

 

  

 

 

Pg.38

 

Distribution

Chilectra

 

In Chile, our subsidiary Chilectra showed an operating income of Ch$ 105,652 million, which represents an increase of 7.9% compared to 9M 2011.  This better performance is mainly due to Ch$ 46,553 million lower energy purchases costs. The above was partially offset by a decrease in operating revenues of Ch$ 33,253 million, a 4.3% less than in 2011, which is explained by a 5.3% decrease in energy sales.

 

Energy losses were 5.4%, an increase of 0.1 p.p when compared to same period of 2011. Physical energy sales increased by 5.4%, reaching 10,775 GWh.

 

The number of clients expanded by 21 thousand clients, reaching more than 1.65 million during the present period.

 

Table 23

 

 

 

 

 

 

Chilectra

(Million Ch$)

 

 

 

(Thousand US$)

 

9M 2011

9M 2012

Var 2011-2012

Chg %

 

9M 2012

Sales

769,463

738,043

(31,420)

(4.1%)

 

1,507,748

Other operating income

8,542

6,709

(1,832)

(21.5%)

 

13,707

Total Revenues

778,005

744,752

(33,253)

(4.3%)

 

1,521,455

Procurements and Services

(592,284)

(552,260)

40,024

6.8%

 

(1,128,211)

Contribution Margin

185,721

192,493

6,771

3.6%

 

393,244

Other Costs

(63,785)

(62,652)

1,132

1.8%

 

(127,993)

Gross Operating Income (EBITDA)

121,937

129,840

7,904

6.5%

 

265,251

Depreciation and Amortization

(19,117)

(20,479)

(1,362)

(7.1%)

 

(41,837)

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

(4,910)

(3,708)

1,201

24.5%

 

(7,576)

Operating Income

97,909

105,652

7,743

7.9%

 

215,837

Net Financial Income

8,005

7,964

(41)

(0.5%)

 

16,270

Financial income

12,510

8,226

(4,284)

(34.2%)

 

16,805

Financial expenses

(3,934)

(1,097)

2,837

72.1%

 

(2,241)

Income (Loss) for indexed assets and liabilities

2

961

959

53718.5%

 

1,964

Foreign currency exchange differences, net

(572)

(126)

447

78.1%

 

(256)

Gains

698

516

(182)

(26.1%)

 

1,054

Losses

(1,270)

(641)

629

49.5%

 

(1,310)

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

47,616

32,654

(14,962)

(31.4%)

 

66,710

Net Income from Other Investments

-

-

-

 

 

-

Net Income from Sales of Assets

2

(79)

(82)

(3807.2%)

 

(162)

Net Income before Taxes

153,533

146,192

(7,341)

(4.8%)

 

298,655

Income Tax

(22,105)

(20,717)

1,388

6.3%

 

(42,323)

NET INCOME

131,428

125,475

(5,953)

(4.5%)

 

256,332

Net Income Attributable to Owners of the Company

131,428

125,474

(5,953)

(4.5%)

 

256,331

Net Income Attributable to Minority Interest

-

-

-

-

 

-

Table 23.1

 

 

 

 

 

 

Chilectra

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

Customers (Th)

1,630

1,651

21

1.3%

 

 

GWh Sold

10,223

10,775

552

5.4%

 

 

Clients/Employee

2,286

2,252

(34)

(1.5%)

 

 

Energy Losses %

5.4%

5.4%

(0.1) pp.

 

 

 

               

 

 

 

Pg.39

 

Colombia

 

Generation

 

Emgesa 

 

The operating income of our generation subsidiary in Colombia amounted to Ch$ 256,969 million in this period, increasing by Ch$ 82,557 million or by the equivalent of 47.3% compared to the same period of 2011. The main effect comes from the impact of the one-time effect of the Equity Tax, which entailed registering –on January 1, 2011- the total amount payable under this concept during the entire 2011-2014 periods.

 

Operating revenues also showed a good performance, reaching Ch$ 431,825 million, a 18% increase compared to the same period of 2011, mainly explained by a 18.3% increase in energy sales revenues. This was partially offset by a Ch$ 19,685 million increase in procurement and services costs, 19.4% higher than for the same period of the last year, mainly due to higher energy purchases of Ch$ 7,078 million and higher fuel consumption of Ch$ 5,874 million, representing a 31.2% and 31.6% increase respectively compared to 9M 2011.

 

Physical energy sales grew by 11.4% reaching 12,305 GWh and EBITDA in Emgesa grew by 42.7% in the period, reaching Ch$ 286,068 million.

 

The net effect of translating the financial statements from Colombian pesos to Chilean pesos in both periods was positive, resulting in a 4.8% increase in Chilean pesos as of September 2012, when compared to September 2011.

 

Table 24

 

 

 

 

 

 

Emgesa

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

365,899

431,825

65,926

18.0%

 

882,175

Procurement and Services

(101,373)

(121,058)

(19,685)

(19.4%)

 

(247,310)

Contribution Margin

264,526

310,766

46,240

17.5%

 

634,865

Other Costs

(64,024)

(24,699)

39,325

61.4%

 

(50,457)

Gross Operating Income (EBITDA)

200,502

286,068

85,565

42.7%

 

584,408

Depreciation and Amortization

(26,089)

(29,098)

(3,009)

(11.5%)

 

(59,445)

Operating Income

174,413

256,969

82,557

47.3%

 

524,963

Figures may differ from those accounted under Colombian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 24.1

 

 

 

 

 

 

Emgesa

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

8,616

10,249

1,633

19.0%

 

 

GWh Sold

11,041

12,305

1,263

11.4%

 

 

Market Share

18.6%

19.4%

0.8 pp.

 

 

 

 

 

Pg.40

 

Distribution

 

Codensa

 

In Colombia, Codensa’s operating income during this period was Ch$ 184,275 million, an increase of Ch$ 58,302 million, equivalent to 46.3%. The main effect arose from the impact of the reform on Equity Taxes, which entailed registering –on January 1, 2011- the total amount payable under this concept during the entire 2011-2014 period. Additionally, during the period operating revenues increased 11.7%, reaching Ch$ 665,295 million, explained by Ch$ 58,125 million higher energy sales revenues, a 11.7% increase compared to same period 2011.

 

The latter was partially offset by higher operating costs, mainly explained by a 11.0% increase in energy purchases costs.

 

Physical sales grew by 3.3%, reaching 9,882 GWh in the period. Energy losses dropped by 0.4 p.p. to 7.7% and the number of clients increased by 91 thousand, exceeding 2.68 million.

  

The net effect of translating the financial statements from Colombian pesos to Chilean pesos in both periods was positive, resulting in a 4.8% increase in Chilean pesos as of September 2012, when compared to September 2011.

 

Table 25

 

 

 

 

 

 

Codensa

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

595,808

665,295

69,487

11.7%

 

1,359,132

Procurement and Services

(328,112)

(361,033)

(32,921)

(10.0%)

 

(737,554)

Contribution Margin

267,697

304,263

36,566

13.7%

 

621,578

Other Costs

(93,757)

(67,887)

25,870

27.6%

 

(138,686)

Gross Operating Income (EBITDA)

173,940

236,376

62,436

35.9%

 

482,893

Depreciation and Amortization

(47,966)

(52,101)

(4,134)

(8.6%)

 

(106,437)

Operating Income

125,974

184,275

58,302

46.3%

 

376,456

Figures may differ from those accounted under Colombian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 25.1

 

 

 

 

 

 

Codensa

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

Customers (Th)

2,598

2,689

91

3.5%

 

 

GWh Sold

9,568

9,882

314

3.3%

 

 

Clients/Employee

2,353

2,373

20

0.8%

 

 

Energy Losses %

8.2%

7.7%

(0.4) pp.

 

 

 

                     

 

 

 

 

Pg.41

 

Peru

 

Generation

Edegel

 

In Peru, the operating income of our generation subsidiary amounted to Ch$ 75,279 million in this period,  a 5.4% decrease when compared to that registered in the same period of 2011.  This lower result is explained mainly by an increase in payroll expenses of Ch$14,202 million, due to a provision reversion made on June 2011 which caused a positive result of Ch$ 5,084 million in payroll expenses in 9M 2011 period, compared to the negative result of Ch$9,118 million in this period. The provision reversion was due to the transition to IFRS.

 

Operating revenues showed a 21.1% growth compared to the same period of 2011, mainly due to a Ch$ 35,111 million increase in energy sales. This was partially offset by higher energy purchases of Ch$ 9,415 million and higher fuel consumption of Ch$ 8,211 million, which represents 82.8% and 23.0% increases respectively.

 

Physical sales grew by 2.0% reaching 7,162 GWh. EBITDA of the business in Peru amounted to Ch$ 104,434 million in this period, representing a decrease of 1.3% when comparing it to the same period of 2011.

 

The net effect of translating the financial statements from Peruvian sol to Chilean peso in both periods resulted in a 7.5% increase in Chilean pesos as of September 2012, when compared to September 2011.

 

Table 26

 

 

 

 

 

 

Edegel

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

174,349

211,135

36,785

21.1%

 

431,327

Procurement and Services

(63,001)

(84,824)

(21,823)

(34.6%)

 

(173,287)

Contribution Margin

111,348

126,311

14,963

13.4%

 

258,040

Other Costs

(5,578)

(21,877)

(16,298)

(292.2%)

 

(44,692)

Gross Operating Income (EBITDA)

105,770

104,434

(1,336)

(1.3%)

 

213,348

Depreciation and Amortization

(26,221)

(29,155)

(2,934)

(11.2%)

 

(59,561)

Operating Income

79,549

75,279

(4,270)

(5.4%)

 

153,787

Figures may differ from those accounted under Peruvian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 26.1

 

 

 

 

 

 

Edegel

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

GWh Produced

6,775

6,572

(204)

(3.0%)

 

 

GWh Sold

7,021

7,162

141

2.0%

 

 

Market Share

29.5%

28.6%

(0.9) pp.

 

 

 

                     

 

 

 

Pg.42

 

Distribution

Edelnor

 

Our subsidiary Edelnor showed an operating income of Ch$ 53,139 million, 2.8% lower than same period in 2011. Just as in the case of Edegel, this is mainly explained by an increase in payroll expenses, due to a provision reversion made on June 2011, making payroll expenses to pass from Ch$ 5,663 million in 9M 2011, to Ch$ 12,833 million in this period, which is an increase of 126.6%.

 

 

Operating revenues showed a 20.9% growth compared to 2011, mainly due to a Ch$ 47,350 million increase in energy sales. This was partially offset by higher energy purchases of Ch$ 35,337 million.

 

Energy losses decreased by 0.1 p.p. reaching 8.1% in the current year. The number of clients expanded by 52 thousand, exceeding 1.18 million clients.

 

The net effect of translating the financial statements from Peruvian sol to Chilean peso in both periods resulted in a 7.5% increase in Chilean pesos as of September 2012, when compared to September 2011.

 

Table 27

 

 

 

 

 

 

Edelnor

Million Ch$

 

 

Thousand US$

 

9M 2011

9M 2012

Var 2011-2012

Chg%

 

9M 2012

Operating Revenues

238,636

288,591

49,955

20.9%

 

589,563

Procurement and Services

(145,997)

(188,514)

(42,517)

(29.1%)

 

(385,116)

Contribution Margin

92,639

100,077

7,438

8.0%

 

204,447

Other Costs

(21,934)

(28,579)

(6,645)

(30.3%)

 

(58,384)

Gross Operating Income (EBITDA)

70,705

71,498

793

1.1%

 

146,063

Depreciation and Amortization

(16,059)

(18,359)

(2,300)

(14.3%)

 

(37,506)

Operating Income

54,646

53,139

(1,507)

(2.8%)

 

108,557

Figures may differ from those accounted under Peruvian GAAP.

 

 

 

 

 

 

 

 

 

 

 

Table 27.1

 

 

 

 

 

 

Edelnor

9M 2011

9M 2012

Var 2011-2012

Chg%

 

 

Customers (Th)

1,132

1,184

52

4.6%

 

 

GWh Sold

4,895

5,142

247

5.1%

 

 

Clients/Employee

2,028

1,964

(65)

(3.2%)

 

 

Energy Losses %

8.2%

8.1%

(0.1) pp.

 

 

 

                     

 

 

 

Pg.43

 

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, 2011 and September 30, 2012, detailed as follows:

 

Table 28

 

 

 

 

 

 

 

9M 2011

 

 

9M 2012

 

 

Million Ch$

Operating Revenues

Operating Costs

Operating Income

Operating Revenues

Operating Costs

Operating Income

Endesa Chile (*)

1,803,980

(1,273,318)

530,662

1,754,084

(1,284,699)

469,384

Cachoeira (**)

90,531

(29,332)

61,199

108,192

(36,451)

71,741

Fortaleza (***)

98,999

(59,276)

39,723

97,422

(64,542)

32,880

Cien (**)

38,860

29,771

68,631

53,115

(26,017)

27,098

Chilectra

778,005

(680,096)

97,909

744,752

(639,100)

105,652

Edesur

205,924

(226,226)

(20,302)

241,862

(277,864)

(36,002)

Distrilima (Edelnor)

238,636

(183,991)

54,646

288,591

(235,452)

53,139

Ampla

829,718

(701,387)

128,332

802,983

(684,253)

118,731

Coelce

641,796

(510,178)

131,619

607,406

(495,070)

112,336

Codensa

595,808

(469,835)

125,974

665,295

(481,020)

184,275

CAM Ltda.

15,739

(17,179)

(1,439)

-

-

-

Inmobiliaria Manso de Velasco Ltda.

4,576

(3,806)

770

9,233

(3,706)

5,527

Synapsis Soluciones y Servicios IT Ltda.

6,693

(6,556)

137

-

-

-

ICT

4,026

(3,926)

100

4,011

(4,263)

(251)

Enersis Holding and other investment vehicles

27,241

(40,215)

(12,974)

30,975

(42,959)

(11,984)

Consolidation Adjustments

(531,734)

526,180

(5,555)

(511,611)

506,095

(5,516)

Total Consolidation

4,848,799

(3,649,369)

1,199,430

4,896,311

(3,769,302)

1,127,009

 

 

 

 

 

 

 

Table 28.1

 

 

 

 

 

 

 

9M 2012

 

 

 

 

 

Thousand US$

Operating Revenues

Operating Costs

Operating Income

  

 

 

Endesa Chile (*)

3,583,419

(2,624,514)

958,906

 

 

 

Cachoeira (**)

221,026

(74,467)

146,559

 

 

 

Fortaleza (***)

199,024

(131,854)

67,171

 

 

 

Cien (**)

108,508

(53,149)

55,359

 

 

 

Chilectra

1,521,455

(1,305,618)

215,837

 

 

 

Edesur

494,100

(567,649)

(73,549)

 

 

 

Distrilima (Edelnor)

589,563

(481,006)

108,557

 

 

 

Ampla

1,640,415

(1,397,861)

242,555

 

 

 

Investluz (Coelce)

1,240,871

(1,011,379)

229,492

 

 

 

Codensa

1,359,132

(982,676)

376,456

 

 

 

CAM Ltda.

-

-

-

 

 

 

Inmobiliaria Manso de Velasco Ltda.

18,861

(7,571)

11,290

 

 

 

Synapsis Soluciones y Servicios IT Ltda.

-

-

-

 

 

 

ICT

8,195

(8,708)

(513)

 

 

 

Enersis Holding and other investment vehicles

63,279

(87,761)

(24,482)

 

 

 

Consolidation Adjustments

(1,045,171)

1,033,902

(11,269)

 

 

 

Total Consolidation

10,002,679

(7,700,310)

2,302,368

 

 

 

               

 

(*) Since January 1st, 2009, includes Gas Atacama, Transquillota and 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.44

 

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.45

 

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 Exchanges:

 

 

 

 

 

 

 

Source: Bloomberg

Pg.46

 

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 Debt Market

Pg.47

 

 

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.48

 

Ownership of the Company as of September 30, 2012

 

TOTAL SHAREHOLDERS: 7,338

 

 

 

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, November 7th, 2012, at 10:00 am ET (12:00 pm Local Chile Time). There will be a question and answer session following management's comments. Representing Enersis will be Mr. Eduardo Escaffi, Chief Financial Officer and the Investor Relations Team.

 

To participate, please dial +1 (617) 213 4863 or +1 (888) 713 4209 (toll free USA), approximately 10 minutes prior to the scheduled start time, Passcode ID: 13880113.

 

 

To access the phone replay, please dial +1 (617) 801 6888 (International)  or +1 (888) 286 8010 (toll free USA) Passcode ID: 41002593.

 

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

Melissa Vargas

Investor Relations Associate

emvb@enersis.cl

(56-2) 353 4555

 

 

Javier Hernández

Investor Relations Associate

jaha@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: November 6, 2012