2009 Financial Statements

Transcription

Financial Statements and Notes,
ISA´s and consolidated
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Additional information:
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Linear infrastructure systems that promote the continent’s development
Annual Report 2009
INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
DECEMBER 2009 - DECEMBER 2008
(In millions of Colombian pesos)
NOTES
2009
2008
464,228
552,594
1,086,065
89,810
146,183
377,376
267,489
782,578
57,423
124,451
2,338,880
1,609,317
374,493
874,503
55,542
3,064,246
7,511,552
2,830,160
72,990
610,031
60,891
3,539,150
6,105,302
2,442,009
Total non-current assets
14,710,496
12,830,373
Total assets
17,049,376
14,439,690
3,419,788
1,888,460
3,580,929
2,129,477
Assets
Current assets
Cash
Marketable investments
Accounts receivable – net
Inventories – net
Deferred charges and other assets
(5)
(5)
(7)
(8)
(10)
Total current assets
Non-current assets
Long-term investments – net
Inventories – net
Property, plant and equipment – net
Reappraisals
Memorandum accounts
Debit
Credit
(6)
(7)
(8)
(9)
(10)
(11)
(19)
(19)
See accompanying notes to Consolidated Financial Statements.
Luis Fernando Alarcón M.
Chief Executive Officer
John Bayron Arango V.
Chief Accounting Officer
T.P. No. 34420-T
Alba Lucía Guzmán L.
Statutory Auditor
T.P. 35265-T
(See attached report of March 4 of 2010)
Designated by Ernst & Young Audit Ltda. TR-530
2
14/03/2010
Annual Report 2009
NOTES
2009
2008
(12)
(13)
(14)
(15)
(16)
(17)
85,660
805,837
584,134
32,274
254,266
344,004
188,915
675,902
351,619
35,300
141,266
199,546
2,106,175
1,592,548
2,667,771
1,020,838
398,608
1,740
806,364
389,305
2,468,211
1,321,299
229,882
1,461
772,928
335,024
Total non-current liabilities
5,284,626
5,128,805
Total liabilities
7,390,801
6,721,353
Minority interests
3,481,539
2,777,292
36,916
1,445,509
504,965
57,152
592,019
2,405,688
819,909
314,878
35,866
1,062,361
431,872
131,782
612,192
2,185,306
245,073
236,593
6,177,036
4,941,045
17,049,376
14,439,690
1,888,460
3,419,788
2,129,477
3,580,929
Liabilities and shareholders' equity
Current liabilities
Outstanding bonds
Financial liabilities
Accounts payable
Labor liabilities
Accrued liabilities and estimated provisions
Other liabilities
Total current liabilities
Non-current liabilities
Outstanding bonds
Accounts payable
Labor liabilities
Other liabilities
Shareholders’ equity
Subscribed and paid share capital
Capital surplus
Reserves
Cumulative translation adjustment
Equity revaluation
Revaluation surplus
Surplus from equity method
Net income
(12)
(13)
(14)
(15)
(16)
(17)
(18)
Total shareholders’ equity
Total liabilities, minority interests and shareholders’ equity
Memorandum accounts
Credit
Debit
(19)
(19)
3
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
Annual Report 2009
CONSOLIDATED INCOME STATEMENTS
NOTES
2009
2008
2,807,710
292,056
39,852
27,988
100,102
39,356
2,659,505
269,967
32,369
29,061
109,209
64,930
3,307,064
3,165,041
1,042,259
521,267
1,000,637
448,256
Total operating costs and expenses
1,563,526
1,448,893
Operating income
1,743,538
1,716,148
864,972
(1,235,149)
793,867
(1,261,921)
(370,177)
(468,054)
1,373,361
(483,980)
1,248,094
(434,723)
Income before minority interests
889,381
813,371
Minority interests
574,503
576,778
Net income
314,878
236,593
Operating revenues
Electric energy transmission services
Connection charges
Dispatch and CND-MEM coordination
MEM Services (STN, SIC, SDI)
Telecommunications
Other operating revenues
(20)
Total operating revenues
Operating costs and expenses
Operating costs
Administration expenses
Non-operating revenues (expenses)
Non-operating revenues
Non-operating expenses
Income before taxes
Income tax provision
(21)
(22)
(23)
(16.2)
4
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
Annual Report 2009
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Capital surplus
Balances at December 31, 2007
Reserves
Additional
paid-in
capital
Received
for works
Total
Legal
35,866
1,044,980
17,381
1,062,361
17,009
208,847
46,600
39,871
925
6,216
(8,500)
83,469
Transfers approved by the Shareholders’ Meeting
For
dividend
payment
Total
Retained
earnings
Equity
revaluation
Surplus from
revaluation and
equity method
Total
37,435
6,682
356,444
195,147
632,366
1,520,262
3,802,446
0
(6,682)
75,428
(75,428)
-
(150,593)
(150,593)
162,656
162,656
Reserve for
Reserve for Reinforcement
For tax
rehabilitation
of equity
purposes repurchase of
and replacement
shares
mandatory
of STN assets
Subscribed
and paid
share
capital
Dividend payment at $140 per share on
1,075,661,374 outstanding shares payable in four
quarterly installments in April, July and October of
2008, and January of 2009
Variation in equity revaluation
(20,174)
Increase in surplus from equity method
Increase in re-appraisals of the year
Net income year 2008
35,866
1,044,980
17,381
1,062,361
17,934
215,063
38,100
383,148
37,435
0
47,606
25,487
1,050
123,340
431,872
368,375
73,093
(73,093)
26,331
883,786
883,786
236,593
612,192
2,430,379
4,941,045
-
383,148
384,198
(163,500)
(163,500)
(74,630)
(74,630)
(20,173)
(20,173)
574,836
574,836
220,382
220,382
Net income year 2009
314,878
36,916
1,428,128
17,381
1,445,509
17,934
240,550
38,100
170,946
5
26,331
236,593
Issuance of 32,016,520 shares at $12,000 per share
formalized by the Board of Directors on December 4,
2009
(20,174)
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
37,435
0
504,965
372,030
314,878
592,019
3,225,597
6,177,036
Annual Report 2009
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flow from operating activities
Net income
Add (less) – Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interests
Depreciation of property, plant and equipment
Amortization of deferred charges and other assets
Amortization of retirement pensions and fringe benefits
Allowance for doubtful accounts
Provision for inventory protection
Investment allowance
Loss (gain) on sale and retirement of property, plant and equipment
Exchange difference (revenue) expense
Hedging operations valuation expense (revenue)
Recovery of provisions
Interest and commissions accrued
Changes in operating assets and liabilities
Accounts receivable
Inventories
Accounts payable
Labor liabilities
Collections in favor of third parties
Minority interests
Other liabilities
Cash flow in other operations
Payment of retirement pensions
Payment of taxes
Net cash provided by operating activities
Cash flow from investment activities
Decrease in long-term investments
Decrease (acquisition) of property, plant and equipment
Net cash used in investment activities
Cash flow from financing activities
Interest received in cash
Interest paid in cash
Cash dividends paid
Increase in financial liabilities
Bond issues
Payment of financial liabilities
Bond payment/decrease
Share issues
Equity variations
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents - Net
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
2009
2008
314,878
236,593
574,503
194,949
365,031
29,690
5,020
6,860
9,891
483,980
15,885
(382,332)
428,498
(2,473)
373,368
2,417,748
576,778
172,575
333,771
29,341
3,391
374
434,723
(11,922)
391,346
(204,521)
(4,766)
387,148
2,344,831
(373,359)
(33,898)
(399,831)
669,540
(2,747)
(456,089)
276,238
(416,142)
(91,088)
(119,939)
(7,153)
199,085
16,783
(16,188)
(441,085)
182,763
(808,851)
(183,404)
(21,976)
(387,345)
1,181,051
(26,190)
(215,240)
925,412
106,706
(173,559)
(66,853)
151,537
(261,631)
(110,094)
16,483
(336,172)
(160,274)
571,381
278,001
(974,590)
(353,499)
384,198
(167,769)
(742,241)
371,957
644,865
1,016,822
38,709
(369,944)
(147,373)
779,883
104,500
(914,939)
(360,092)
(88,343)
(957,599)
(142,281)
787,146
644,865
6
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
Annual Report 2009
Notes to the Consolidated Financial Statements
AT DECEMBER 31, 2009 AND 2008
(Amounts expressed in millions of Colombian Pesos and original currencies)
I. GENERAL NOTES
NOTE 1: CORPORATE PURPOSE OF PARENT COMPANY
AND SUBSIDIARIES
Parent Company Interconexión Eléctrica S.A. E.S.P. –ISA– was incorporated by
public deed No. 3057 of the Notary Public Office No. 8 of Bogotá on
September 14, 1967.
The Company was split off by Public Deed No. 230 of the Single Notary Public
Office of Sabaneta, dated April 4, 1995.
On December 1, 1995, by public deed No. 808 of the Single Notary Public
Office of Sabaneta, and according to the provisions of the Domiciliary Public
Utilities Law (Law 142 of 1994) the corporation changed its legal nature and
became a state public utility corporation constituted by state institutions, of
national order, ascribed to the Ministry of Mines and Energy, and subject to
the legal regime established by Law 142 of 1994. Based on Law 142 of 1994,
the Company changed its name to Interconexión Eléctrica S.A. E.S.P.; it can
also use the initials ISA S.A. E.S.P.
On November 22, 1996, by Public Deed No. 746 of the Single Notary Public
Office of Sabaneta, ISA changed its legal nature to a mixed-ownership public
utility corporation of the national order, ascribed to the Ministry of Mines and
Energy, and subject to the legal regime established by Law 142 of 1994. This
process was completed on January 15, 1997, with the arrival of private
investment.
As provided by the Constitutional Court in decision C-736 of September 19,
2007, ISA has a special legal nature and is defined as a decentralized mixedownership public utility company that is part of the executive branch under a
special legal regime of private law.
7
14/03/2010
Annual Report 2009
ISA’s main corporate purpose is:
1 The operation and maintenance of its own transmission network.
2 The expansion of the national interconnection grid.
3 The planning and operation coordination of the resources of the National
Interconnection System.
4 The administration of the financial settlement system and trading of
energy in the wholesale energy market.
5 The development of telecommunications systems, activities and services.
6 The direct and indirect participation in activities and services related to the
transport of other energy sources, except for those restricted by law.
7 The provision of technical services in activities related to its corporate
purpose and professional services required by the group’s companies.
8 The development for third parties of any other activity related to the
provision of electric power and telecommunications services within the
regulation in force.
9 The direct and indirect participation in activities, services and investments
related to engineering works.
Branches
Peru ISA Branch
On September 4, 2002, ISA established a branch in Peru to execute the
operation and maintenance agreement for the 220 kV Carhuamayo-ParagshaVizcarra and 138 kV Aguaytía-Pucallpa transmission lines subscribed between
ISA and ISA Perú S.A. according to the requirements of the concession
agreement subscribed with the Peruvian government. The branch’s term is
indefinite; it has no legal personality and does not carry out any activities
independently from ISA. It is an extension of the Company in Peru.
Argentina ISA Branch
ISA established a branch in Argentina on January 24, 2007. The proceedings
were carried out at the General Justice Inspection, an official body in charge
of Mercantile Register. Creation of this branch originated in the fact that
corporations incorporated outside of Argentina willing to have a business
presence in that country, must have a registered office there. This branch is
not in commercial operation.
ISA and its businesses
In October 2001, the Company was filed as economic group with the
Mercantile Register of the Chamber of Commerce of Medellín. For such effect
the parent company is Interconexión Eléctrica S.A. E.S.P. –ISA– and its
subsidiaries are:
ISA Capital do Brasil S.A., and its affiliate Companhia de Transmissão de
Energía Elétrica Paulista –CTEEP–; TRANSELCA S.A. E.S.P, Interconexión
Eléctrica ISA Perú S.A., Red de Energía de Perú S.A., Consorcio TransMantaro
S.A., Interconexión Eléctrica ISA Bolivia S.A, XM, Compañía de Expertos en
Mercados S.A. E.S.P., Proyectos de Infraestructura del Perú –PDI–, INTERNEXA
S.A. E.S.P., and INTERNEXA, its affiliate in Peru.
8
Annual Report 2009
Following is a detail for each subsidiary of its date of incorporation, corporate
purpose, and main domicile, as well as the participation of ISA's companies:
INVESTMENTS IN THE ELECTRIC POWER TRANSPORT BUSINESS
ISA Capital Do Brasil S.A.
ISA Capital Do Brasil Ltda. was established on April 28, 2006 as an investment
vehicle with registered office located in São Paulo. Its corporate purpose
includes participation in the capital of other corporations and in other
undertakings either as partner or as shareholder, as party in a joint venture, as
member of a consortium, or under any other type of business cooperation.
On September 19, 2006, the Company was made into a public corporation.
ISA has 99.99% participation. The corporation's term is indefinitie.
Companhia de Transmissão de Energia Elétrica Paulista -CTEEPLocated in the State of São Paulo, CTEEP is a public corporation authorized to
work as a concessionaire of the electric energy service. The term of the
corporation is indefinite; its main activities include planning, construction
and operation of electric energy transmission systems, execution of research
and development programs related to energy transport and other activities
in connection with currently available technology.
In August of 2009, CTEEP increased its capital by 1,371,525 shares of which,
574,927 corresponded to its controlling company ISA Capital do Brasil; as a
result of this increase, ISA now owns 56,499,392 shares, or 37.50% of capital
stock and 89.40% of voting shares.
TRANSELCA S.A. E.S.P.
It is a mixed-ownership utility company, incorporated on July 6, 1998, whose
activities include the provision of energy transmission services, coordination
and control of the Regional Dispatch Center, connection to the National
Transmission System and provision of telecommunication services. Its main
offices are located in Barranquilla and its term is indefinite. ISA participates
with 99.99% of ownership.
Interconexión Eléctrica ISA Perú S.A.
ISA Perú is a Peruvian corporation with main offices in the city of Lima. It was
incorporated on February 16, 2001 and its main activities are the transmission
of electric energy and the operation and maintenance of transmission grids.
The corporation's term is indefinitie. ISA owns 28.07%, while other
individuals own 54.85%.
Red de Energía del Perú S.A. -REPREP was incorporated on July 3, 2002, with the participation of ISA,
TRANSELCA and Empresa de Energía de Bogotá –EEB–. Its main corporate
purpose is the transmission of electric power from generating companies and
provide maintenance for the electric infrastructure of the Peruvian
Transmission Systems. Its legal domicile is in Lima, Peru. ISA owns 30%, and
TRANSELCA 30%. The corporation's term is indefinitie.
9
Annual Report 2009
Consorcio TransMantaro S.A. -CTMEstablished in Peru in January of 1998. Its main activity is the transmission of
electric energy from generating companies. It also provides operation and
maintenance services to a mining enterprise. its main domicile is located in
the city of Lima, Peru. Since December 13, 2006 ISA directly owns 60% of
TransMantaro’s capital stock. The term is indefinite.
Interconexión Eléctrica ISA Bolivia S.A.
ISA Bolivia is a Bolivian corporation with main offices in the city of Santa Cruz.
It was incorporated on July 14, 2003 for an indefinite term and its main
activities are the transmission of electric energy and the construction,
operation and maintenance of transmission grids. ISA directly owns 51.00%
of the capital stock and additional 48.99% and 0.01% indirectly through
TRANSELCA and INTERNEXA.
INVESTMENTS IN THE BUSINESS OF MARKET OPERATION AND
ADMINISTRATION
XM, Compañía de Expertos en Mercados S.A. E.S.P.
XM is a Colombian mixed-ownership utility with main offices in the city of
Medellín. It was established on September 1 of 2005, and started operations
on October 1, 2005. The term of the corporation is indefinite and its purpose
are activities related to operation planning and coordination of the resources
of the National Interconnected System, administration of the Commercial
Settlement System in the wholesale energy market, settling and clearing of
charges for use of the National Interconnected System’s grid, the
administration of financial derivative markets with electric energy and gas as
underlying assets, including settling systems, and ancillary and value added
activities related thereto. ISA directly owns 99.73% of XM’s capital stock.
INVESTMENTS IN THE BUSINESS
OF CONSTRUCTION OF INFRASTRUCTURE PROJECTS
Proyectos de Infraestructura del Perú S.A.C. –PDI–
PDI is a Peruvian corporation with main offices in the city of Lima. Established
on November 15, 2007. Its term is indefinite and its purpose is the execution
of all kinds of activities related to the construction of transmission lines and
electricity projects, and in general, any activity in the construction sector. It
started operations in March of 2008. ISA owns 99.97% directly, and indirectly
through TRANSELCA, additional 0.03%. The corporation’s capital was
increased in March of 2008 by PEN. 299,000.
INVESTMENTS IN THE ELECTRIC POWER
TRANSPORT BUSINESS
INTERNEXA S.A. E.S.P.
INTERNEXA is a Colombian utility with main offices in the city of Medellín.
Internexa was incorporated on January 4, 2000 for an indefinite term. Its
corporate purpose is the organization, administration, trading and rendering
of telecommunications services. It is currently engaged in development and
promotion of the telecommunications transport business locally and
internationally. ISA owns 99.27% of capital.
10
Annual Report 2009
INTERNEXA S.A. (in Peru)
INTERNEXA S.A. is a Peruvian corporation with main offices in the city of
Lima. It was established on October 12, 2006 and its term is indefinite. Its main
of telecommunications services such as carrier, IP-based and value added
services. The company started service delivery in the first semester of 2008.
INTERNEXA S.A. E.S.P-, in Colombia owns 99.99% of this company.
RELEVANT INFORMATION
In compliance with external circular letter 002 of 1998 issued by the Securities
Superintendency, the following table shows the senior level staff and other
personnel together with their associated expenses, for the parent company
and the controlled companies included in the consolidation of the financial
statements:
2009
Senior-level staff
Parent Company / Subsidiaries
ISA S.A. E.S.P.
ISA Bolivia S.A.
ISA Capital do Brasil S.A.
Companhia de Transmissão de Energia Elétrica
Paulista –CTEEP–
ISA Perú S.A.
REP S.A.
Consorcio TransMantaro S.A.
Proyectos de Infraestructura del Perú –PDI–
Total
N° of people
481
15
190
4
124
2
2
Value
57,471
3
19,395
600
10,738
401
1,560
Otros
N° of people
196
178
2
23
3
1
Total
Value N° of people *
677
17,060
193
13
192
114
27
549
124
5
101
3
70
1,348 121,437
3
47
324
22,425
24
389
2,102 162,205
8,619
20
203
2
6,219
24
158
2
527
6
872 105,894
Value
74,531
16
19,509
1,149
10,738
502
1,630
1,368 130,056
5
250
348
28,644
2
158
30
916
2,974 268,099
2008
Senior-level staff
Parent Company / Subsidiaries
ISA S.A. E.S.P.
ISA Bolivia S.A.
TRANSNEXA S.A. E.M.A
Companhia de Transmissão de Energia Elétrica
ISA Perú S.A.
REP S.A.
Total
N° of people
460
15
19
4
17
2
2
2
Valor
69,441
2,624
3,646
532
2,763
472
259
1,180
22
5
24
2
1
575
6,453
356
5,980
96
114
93,916
Other
N° of people
216
142
160
14
98
3
2
1
*The figure for 2008 and 2009 includes retired personnel who worked less than twelve months in the year.
11
Total
Valor
21,487
10,852
13,731
276
7,274
304
91
53
1,298
83,879
314
22,309
13
173
2,261 160,429
N° of people *
676
157
179
18
115
5
4
3
Value
90,928
13,477
17,376
808
10,037
775
350
1,233
90,332
1,320
356
5
28,290
338
96
2
287
14
2,836 254,345
Annual Report 2009
NOTE 2: BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
2.1 CONSOLIDATION OF FINANCIAL STATEMENTS
2.1.1 CONSOLIDATION PRINCIPLES
The consolidated financial statements include the accounts of Interconexión
Eléctrica S.A. E.S.P. (parent company), ISA Capital do Brasil S.A., Companhia
de Transmissão de Energía Elétrica Paulista –CTEEP–, TRANSELCA S.A. E.S.P,
ISA Perú S.A., Red de Energía de Perú S.A. –REP–, Consorcio TransMantaro
S.A., ISA Bolivia S.A., XM, Compañía de Expertos en Mercados S.A E.S.P.,
Proyectos de Infraestructura del Perú S.A.C. –PDI–, INTERNEXA S.A. E.S.P,
INTERNEXA S.A. in Perú, corporations in which the parent company has direct
and indirect stakes (hereinafter the subsidiaries).
All significant balances and operations between ISA and the subsidiaries
were eliminated during consolidation. Consolidation is made through the
global integration method for the controlled companies; minority interests
corresponding to equity and the period’s results are recognized and
presented in the consolidated financial statements. Up to December of 2008,
investment in Transnexa S.A. E.M.A. was consolidated through the
proportionate consolidation method; for the year 2009, the results of this
subsidiary are put together through the equity method, as established by
international standards.
Investments in foreign subordinated companies are recorded on the basis of
their financial statements at December 31 of each year, homologated to the
accounting standards applicable to ISA and translated into Colombian pesos,
as provided by International Accounting Standard 21, using the United States
Dollar as functional currency previously defined.
The exchange rates used were:
Currency
Code
2009
2008
US Dollar
Euro
Nuevo sol
Boliviano
Brazilian Real
USD
EUR
PEN
BOB
BRL
2,044.23
2,933.27
707.35
289.14
1,174.04
2,243.59
3,119.04
711.24
317.34
961.68
The following figures were taken from the financial statements of ISA and its
subsidiaries at December 31, reported in accordance with regulations in force
in each country and homologated to Colombian standards.
12
Annual Report 2009
2009
Financial Information 2009
Company
IISA (parent company)
INTERNEXA S.A E.S.P.
REP S.A.
ISA Perú S.A.
Proyectos de Infraestructura del Perú S.A.C.
ISA Bolivia S.A.
ISA Capita do Brasil
CTEEP
INTERNEXA S.A. in Peru
Liabilities
2,401,248
449,330
161,669
265,508
492,485
52,442
283,108
63,216
105,399
1,619,174
1,926,579
36,096
Assets
8,521,132
1,223,661
286,150
288,393
866,872
105,404
421,788
67,435
167,271
2,832,357
7,272,006
45,120
Equity
6,119,884
774,331
124,481
22,885
374,387
52,962
138,680
4,219
61,872
1,213,183
5,345,427
9,024
Income (Loss)
314,878
40,270
-3,171
713
10,570
9,514
24,383
2,237
6,920
76,417
893,350
-2,546
2008
Financial Information 2009
Company
ISA (Matriz)
INTERNEXA S.A E.S.P.
REP S.A.
ISA Perú S.A.
ISA Bolivia S.A.
Isa Capital do Brasil
CTEEP
Proyectos de Infraestructura del Perú -PDIINTERNEXA en Perú
Transnexa
Liabilities
2,518,435
490,321
179,784
186,709
492,291
61,944
217,329
125,014
1,541,371
1,232,388
22,172
34,176
5,571
Assets
7,327,697
1,093,761
323,027
210,395
892,306
116,246
344,163
185,720
2,241,946
5,398,067
24,878
40,617
5,857
Equity
4,809,262
603,440
143,243
23,686
400,015
54,302
126,834
60,706
700,575
4,165,679
2,706
6,441
286
Income (Loss)
236,593
37,043
5,583
1,909
34,745
6,882
19,161
3,279
-9,627
885,846
2,136
-8,116
35
2.1.2 CONSOLIDATION EFFECTS ON ASSETS, LIABILITIES,
EQUITY AND RESULTS OF ISA
2009
Assets
Liabilities
Equity
Minority interests – Equity
Minority interests – Results
Total year’s results
Figures before
consolidation
8,521,132
2,401,248
6,119,884
314,878
314,878
2008
Figures after
consolidation
17,049,376
7,390,801
6,177,036
3,481,539
889,381
574,503
314,878
Figures before
consolidation
7,327,697
2,518,434
4,809,263
236,593
236,593
2.1.3 RECONCILIATION BETWEEN ISA’S NET INCOME AND
CONSOLIDATED NET INCOME
Below is the reconciliation between ISA’s net income and consolidated net
income at December 31:
13
Figures after
consolidation
14,439,690
6,721,353
4,941,045
2,777,292
813,371
576,778
236,593
Annual Report 2009
Parent Company’s net income
Subsidiaries’ net results
Total net income of Parent Company and subsidiaries
Elimination of amounts affecting consolidated results
Equity method
Minority interests
Consolidated net income
2.2
2009
2008
314,878
1,058,657
1,373,535
236,593
978,846
1,215,439
(484,154)
(574,503)
314,878
(402,068)
(576,778)
236,593
CLASSIFICATION OF ASSETS AND LIABILITIES
Assets and liabilities are classified according to their use or degree of
realization, demand or liquidation, in terms of time and value.
Accordingly, current assets and liabilities (short-term) are understood as such
amounts that will be realizable or demandable, respectively, within a term
not longer than one year.
2.3 ADJUSTMENTS FOR INFLATION
Until December 31, 2000, non-monetary assets and liabilities and
shareholders’ equity, except for the surplus from revaluation of assets and
Income Statement accounts, were monetarily updated on a prospective basis,
using general consumer-price index (or Tax Year's Adjustment Percentages
–PAAG, for its Spanish initials–). The respective adjustments were recorded in
the income statement’s monetary correction account. As of January 1, 2001
the Colombian General Accounting Office –CGN–, through Resolution No.
364 of November 29, 2001, suspended the system of integral inflation
adjustments for accounting effects, without reverting the inflation
adjustments accounted until December 31, 2000.
According to Resolution No. 041 of 2004 and to External Circular Letter No.
056 of 2004, issued by the Colombian General Accounting Office, inflation
adjustment accounts were eliminated from the General Plan of Public
Accounting as part of the cost, thereby obligating to incorporate
accumulated amounts for adjustments until 2000. In order to comply with
regulations in force, since 2001, integral inflation adjustments continue to be
applied for tax effects, giving rise to differences that are recorded in the tax
memorandum accounts. Law 1111 of 2006 derogated integral inflation
adjustments for tax effects beginning in fiscal year 2007. (See Note 16.2).
2.4
MATERIALITY
Recognition and presentation of economic facts are made according to their
relative importance.
An economic fact is material when due to its nature or amount, knowing or
not knowing it, considering the circumstances, could significantly change the
economic decisions of the users of that information.
In preparing the consolidated financial statements, it was determined for
presentation purposes that an event would be material if it represented 5%
of total assets, current assets, total liabilities, current liabilities, working
capital, equity, or income.
14
Annual Report 2009
NOTE 3: SUMMARY OF MAIN ACCOUNTING POLICIES AND
PRACTICES
For the preparation and presentation of its financial statements, the
Company, as required by law, observes the Public Accounting General Plan
defined by the Colombian General Accounting Office –CGN–, the accounting
regulations issued by the Superintendency of Domiciliary Public Utilities
–SSPD– and other applicable regulation.
For keeping, preservation and custody of the accounting books and
supporting documents, the regulation applicable to support documents,
vouchers, and accounting books, established by the Colombian General
Accounting Office, is observed.
The Company’s Consolidated Financial Statements are identified, classified,
registered, valued, prepared and disclosed in accordance with the accounting
principles of the CGN contained in Resolutions No. 354, 355 and 356 of
September 5 of 2007, through which the Public Accounting Regime was
implemented to apply the criteria of international accounting standards
currently being adopted by the CGN.
Following is a description of the main accounting policies and practices
adopted by the Company:
3.1
FOREIGN CURRENCY TRANSLATION AND BALANCES
Transactions in foreign currency are recorded at the applicable exchange
rates in force on the date of the transaction. At the close of each year,
balances of assets and liabilities accounts are adjusted to current exchange
rates (See Note 4). Exchange differences resulting from asset balances (other
than controlled investments abroad) are recorded in the Income Statement.
With regard to liability accounts, only exchange differences that are not
imputable to costs of acquisition of assets are recorded in the Income
Statement. Exchange differences imputable to the acquisition cost of assets
include exchange differences while such assets are under construction or
installation, and until they become operational.
3.2
CASH EQUIVALENTS
For purposes of preparing the statement of cash flows, marketable
investments redeemable within the next 90 days are considered to be cash
equivalents.
3.3
INVESTMENTS
Investments are recorded at cost and are updated in accordance with the
intention of realization, the availability of market information, and the
degree of control held over the issuing entity by applying methodologies
suitable to their economic reality. Methodologies to update their value
include stock exchange quotes, net present value to determine market price
or the security’s internal rate of return, the equity method, and the cost
method.
According to the new Public Accounting Regime, the Company’s investments,
for matters of their valuation, are classified in three categories: i) liquidity
management, including debt titles and securities, intended for profiting
from short-term price fluctuations; ii) investments with a political purpose,
including debt titles kept until maturity, or at least for one year from
purchase date; iii) and equity investments, including securities in controlled
and non-controlled companies.
15
Annual Report 2009
In the Consolidated Financial Statements, investments are classified as
marketable and long-term, and they are reported respectively within current
and non-current assets. The former include investments for liquidity
management, and the latter for equity investments in controlled and noncontrolled companies.
Investments for liquidity management
Liquidity management investments in debt titles and securities, as well as
derivatives intended for liquidity management, are initially recorded at cost
and are updated monthly through methodology of the Colombian Financial
Superintendency. Changes arising from each valuation made in investments
for liquidity management are recognized in the income statement.
Financial derivative instruments
In order to reduce exposure to exchange rate and interest rate fluctuations of
financial liabilities with local and international commercial banks and
multilateral agencies and of bond issues, among others, the ISA’s companies
use derivative instruments such as swaps, forwards and options.
According to the rules issued by the Colombian General Accounting Office,
derivative instruments for hedging purposes are recognized for the amount
of the right or of the liability on the date of commencement of the contract,
are monthly updated using methodologies of recognized technical value,
and the difference is recorded as derivative valuation revenue or expense, as
the case may be.
Brazilian Comissão de Valores Mobiliários –CVM– issued 15 accounting rules
that must be applied by companies in Brazil by the end of 2008; changes must
be implemented by April 30, 2009 at the latest. Among other things, these
rules provide that swaps must be valued considering the prices of the market
where such financial instruments operate. Given the restrictions and duties
imposed by CVM regarding derivatives in Brazil, ISA carried out the valuation
of such swap considering that it is a right obtained with the purpose of
hedging rather than speculation.
Investments with a political purpose
Investments with a political purpose include debt securities issued by local or
foreign entities acquired in compliance with macroeconomic policies or the
Company’s internal policies.
Investments for compliance with macroeconomic policies correspond to debt
titles acquired under agreed or mandatory subscription.
Investments to comply with the entity’s internal policies include investments
held to maturity and investments for sale, the latter understood as
investments held for at least one (1) year. In both cases, the intention to hold
the securities during the stated term, as well as the legal, contractual,
financial and operative capacity, are required.
Investments held to maturity are updated on the basis of the internal rate of
return foreseen in the methodologies adopted by the Colombian Financial
Superintendency.
16
Annual Report 2009
EQUITY INVESTMENTS
a. Equity investment in controlled companies
Equity investments in controlled companies include investments made in
order to exercise or share control, as well as those in which the Company has
substantial influence, and long-term investments in which the public sector
holds over 50% direct or indirect participation. These investments are
accounted through the equity method, according to CGN Resolution No. 356
of 2007, amended by Resolution 145 of 2008. Under the equity method,
investment in subsidiaries and affiliates is recognized at cost, and is adjusted
through:
a) Credit or charge to the investment’s cost equal to the participation of the
Company in profits and losses of the subsidiary, with a matching entry in
the income statement.
b) Credit or charge to the investment equal to the participation of the
Company in the subsidiary’s equity variation with a matching entry in the
surplus from equity method account, in the event of an increase; in the
event of a decrease, as surplus from equity method until its exhaustion, and
the remaining difference in the income statement.
c) Credit or charge to the investment equal to the amount of dividends
received from the subsidiary that correspond to periods during which, ISA
applied the equity method.
If the difference between intrinsic value and book value of the investment
recorded on equity basis is:
a) Positive, re-appraisal of assets is increased, and the revaluation surplus
included in the equity accounts is credited.
b) Negative, re-appraisal of assets is reduced with a charge to the revaluation
surplus up to the amount available; any difference is recorded as a charge
to equity surplus, until exhaustion. Any additional deficit is recognized in
the income statement as a loss.
Investments in subordinated companies abroad are recorded on the basis of
their financial statements at December 31 of each year, translated into
Colombian pesos, using the United States dollar as functional currency,
applying the provisions of International Accounting Standard 21. Translation
of financial statements into Colombian pesos was conducted in compliance
with the following principles: Balance sheet items are calculated using the
closing exchange rate; income statement items are calculated using the
accumulated average exchange rate for each month closing; net effect with
respect to closing rate is recognized as translation adjustment.
b. Equity investments in non-controlled companies
The other variable-income equity investments in non-controlled companies
that are not listed in stock exchanges are recorded at cost plus the dividends
received in shares. If at year’s end, the intrinsic value of investments is greater
or lower than the book value, a charge is recorded in the re-appraisals
account with a contra entry in re-appraisal surplus in equity, or a provision is
charged to the income statement, respectively.
17
Annual Report 2009
3.4 ALLOWANCE FOR DOUBTFUL ACCOUNTS
On each quarter’s closing date, the associated credit risk of the accounts
receivable from customers and other debtors is examined in order to
determine the respective provisions, which include percentages between
10% and 100%, according to aging analysis and evaluations of the collection
of individual accounts.
3.5
INVENTORIES
Inventories are recorded at cost, and at end of the year, through a provision
charged to the income statement, are reduced to their sale value, if it is lower
than their book value. Spare parts, materials and other consumables are
valued by the weighted average method.
3.6
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost, which, where relevant,
may include:
a) financing costs associated to acquisition and construction of assets not in
operational conditions and b) until year 2000, inflation adjustments on costs,
excluding capitalized exchange differences and the portion of capitalized
interest corresponding to inflation.
Sales and retirements of such assets are discharged at their respective net
adjusted cost, and differences between sale price and net adjusted cost are
recorded in the income statement.
In 2009, the Company concluded and implemented the study of useful life by
components, so as to comply with the attachment of Resolution 356 of 2007
of the Colombian General Accounting Office, establishing that depreciation
and amortization must be calculated for each asset individually considered;
however, when its components or parts have different useful lives, or provide
economic or potential service benefits of different rhythms, depreciation
shall be applied to each component. For the same year, TRANSELCA expanded
the technical study on useful and remaining lives for each component or
productive asset.
Definition of components of the energy transmission system:
A component of a fixed asset is an element that can be regarded as a part of
another asset, but due to its own features, because of the function it serves,
and the type of strategies or activities developed along its technical service
life, can be treated as an independent asset.
Materials with high inventory turnover shall not be classified as fixed assets.
Based on CIGRE (International Council of Large Electric Systems) reference
statistics and ISA’s experience in terms of transmission grid, the average useful
life of transmission lines is estimated at a maximum of 63 years (2008: 40
years).
Depreciation is calculated over the asset’s cost by the straight-line method,
based on the estimated useful life of assets. For the purpose of depreciation
calculations, following is a list with the assets’ estimated useful life:
18
Annual Report 2009
Asset / Component
Useful life
Transmission lines
Buildings
Fiber optic
Machinery and equipment
Telecommunications equipment
Furniture, office equipment, laboratory equipment
Communications equipment
Transport, traction and lifting equipment
Supervision and Switching Center's equipment
Computer equipment and accessories
63
50
25
15
15
10
10
10
6
5
Substation Components
Lines (Substations’ grounding nets)
Power transformer
PT
Breaker
CT
Lightning arrester
Diesel Plant
SVC reactors
Main breaker
Reactor
Mobile substation
FS
Battery Bank
Charger
SAS component
Condensers
SVC condensers
Series compensation control
SVC control
Converter
Inverter
Telephone exchange
PLC
Sequence of events recorder
Protection relays
RTU
Thunderstorm and lightning information system -SID
Teleprotection
SVC thyristor valve
VQ
63
40
38
32
30
30
30
30
30
27
25
20
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
Maintenance expenditures of these assets are charged to the Income
Statement, while improvements and additions are added to their costs, since
they increase useful life, expand productive capacity and operational
efficiency, improve service quality, and permit significant cost reduction.
Repairs required because of attacks to the electric infrastructure are recorded
as extraordinary expenses in the period when the attacks occur and do not
increase the useful life originally assigned to the assets. Due to the difficulties
to insure this type or risk, these damages are accrued in the financial
statements as they occur and are not recorded on estimate basis.
Real property intended for generation of revenues from rent is recorded as
investment property.
19
Annual Report 2009
Assets not being used in operations are classified as non-exploited assets, and
their depreciation is suspended.
3.7
DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets include prepaid expenses, deferred
charges and other assets. Prepaid expenses include mainly monetary items
such as insurance premiums and interest, which are amortized as they accrue.
Deferred charges and other assets include goodwill from acquisition of longterm investments, cost of acquisition of software, easements, tax to preserve
democratic security, bond underwriting commissions, legal stability
agreement premium, licenses and rights, from which future and quantifiable
economic benefits are expected to be obtained. It also includes deferred
taxes resulting from temporary differences between net income and tax
income.
Software is amortized on a straight-line basis over a maximum of three years.
Goodwill, bond underwriting commissions, legal stability agreement
premium, licenses and rights are amortized on a straight-line basis during the
periods over which their benefits are expected to be received, according to
the feasibility studies for their recovery.
Charges for studies and research of projects in pre-operational stage will be
treated as expenses and are not capitalized even when a subsequent decision
is made as to execute the project and when the project is intended for
internal purposes.
Useful life of intangibles can be indefinite or finite; it is indefinite when
there is no foreseeable limit for the period in which the asset is expected to
generate future economic benefits; it is finite when the period during which
economic benefits or service potential will be received can be estimated (see
note 10).
3.8
RE-APPRAISALS
Re-appraisals that are part of equity include:
3.8.1 The excess of the valuation (appraisals) of the main components of
property, plant and equipment over per-books net cost. Such appraisals
were determined by independent appraisers, in the case of real-estate
property; by their market value, in the case of transport equipment;
and based on technical studies developed by employees of the
Company, in the case of other assets. These valuations shall be made at
least every three years, or when market conditions indicate that such
amounts have materially changed (See Note 11).
3.8.2 The excess of intrinsic value (equity value) of long-term investments
over their net cost.
3.9
CURRENT INCOME TAX AND DEFERRED TAX
Income tax provision is calculated on the period’s ordinary net taxable
income, which is obtained from relevant revenues, costs and expenses.
The credit deferred tax is the lesser current tax calculated during the period,
resulting from the excess of tax depreciation and amortization over perbooks depreciation and amortization, when useful life, depreciation and
amortization methods for tax purposes differ from accounting ones, for
which differences are expected to be reverted in the future.
20
Annual Report 2009
The debit deferred tax represents the temporary differences that have
generated a higher amount of current income tax. Basically, this includes
inflation adjustments on non-monetary depreciable and amortizable assets,
balances of provisions for doubtful accounts, retirement payments to
pensioners, and health, education and other benefits, among others, for
According to opinion No. 20061-57086 of CGN of January 31, 2006, the
Company has autonomy in defining the accounting principles regarding
deferred tax. Accordingly, ISA has considered, among others, inflation
adjustments recognized only for tax effects of depreciable fixed assets, as
temporary differences that result in the accrual of deferred tax, since these
generate a greater monetary correction income tax, increasing the income
tax payable, and are subsequently recovered during the following years as
the fixed assets are depreciated.
For Brazilian subsidiaries, interests on own equity are part of the income
statement and are shown directly under net fiscal equity. For tax effects, they
are treated as financial expenses, reducing the basis for income tax and social
contributions for the period.
3.10 LABOR LIABILITIES
Labor liabilities are adjusted at the end of each period on the basis of legal
provisions and labor agreements in force. An actuarial study is conducted
every year to determine pension liability, future health and education
benefits and retirement payments to pensioners. Retirement pension
payments are charged to the actuarial estimate account.
With respect to amortization of retirement pension liabilities for Colombian
subsidiaries, it must correspond to the value resulting from dividing the total
actuarial estimate pending amortization by the number of years remaining
to complete the term set by regulation in force, applicable to each particular
entity, and counted from the actuarial estimate closing date. For ISA,
maximum time provided for by regulation is 30 years starting on December
31, 1994.
Regarding the methodology to amortize benefits and aids, the Company
amortizes 100% of actuarial liabilities, closely following international
accounting standards, as is the intention of the CGN.
Accounting records for recognition of this liability and associated expenses
are carried out in accounts different from those in which actuarial estimates
are included.
3.11 SENIORITY COMPENSATION
According to the legislation in force, seniority compensation of the personnel
of the Energy Transmission Centers –CTE– of the subsidiaries Interconexión
Eléctrica ISA Perú S.A. and Red de Energía del Perú S.A. –REP– is computed for
all employees, for the amount of the indemnity rights and should be
deposited in financial entities selected by the employee.
3.12 RECLASSIFICATIONS IN THE FINANCIAL STATEMENTS
Certain amounts included in the consolidated financial statements at
December 31, 2008 were reclassified to conform to the presentation of the
consolidated financial statements for 2009.
21
Annual Report 2009
3.13 MEMORANDUM ACCOUNTS
Memorandum accounts include loans contracted but not disbursed,
contingencies resulting from claims and lawsuits, and guarantees granted
under loan agreements. They also include temporary and permanent
differences between accounting and tax amounts, which will be reasonably
reverted in time, and allow preparation of specific-purpose reports,
respectively.
Non-monetary memorandum accounts were adjusted for inflation until
December 31 of 2000, with charge to a contra memorandum account.
3.14 RECOGNITION OF REVENUE, COSTS AND EXPENSES
Revenue, costs and expenses are recorded on an accrual basis. Revenue from
service provision is recognized during the contractual period or when services
are rendered.
At ISA, amounts received to remunerate recovery of investments in UPMES, as
well as usage rights not accrued because their respective costs have not been
yet incurred or because the related services have not been rendered yet, are
recognized as deferred revenue. This deferred revenue is amortized over the
periods along which it accrues.
For XM, according to the provisions of laws 142 and 143 of 1994, it is the duty
of the Energy and Gas Regulatory Commission -CREG- to approve revenue
from CND, ASIC and LAC services to be billed to market agents.
Along the year 2008, resolutions 110 of 2006 and 048 of 2008 were applied
until the month of May and as of the month of June, respectively.
CREG Resolution 110 of 2006 provides for annual recognition of revenue
from operation and investment costs necessary for service delivery, and
remuneration of shareholders’ equity. CREG Resolution 048 establishes
remuneration for the regulated services of XM S.A. E.S.P., for the next five
years, defining, for each month, the Regulated Maximum Revenue as equal
to the total of the following monthly items: operating expenses, investments,
adjustment due to regulatory changes or to deviation in investment
execution, and equity’s return margin.
CREG Resolution 048 of 2008 entered into force in 2009, adjusted as of June
by Resolution 071 of 2009, approving recognition of adjustment to maximum
regulated income for higher expenses and investments coming from
regulatory changes, legal fees expenses, and the effect on income tax of
working capital recognized in the previous fiscal period.
3.15 USE OF ESTIMATES
The preparation of financial statements according to accounting principles
generally accepted in Colombia requires some estimates that affect the
values of assets, liabilities, revenues, costs and expenses reported for such
periods. The actual result of certain items may differ from such estimates.
3.16 OPERATING AND ADMINISTRATIVE LIMITATIONS AND
DEFICIENCIES
During 2009 and 2008, no operating or administrative limitations or
deficiencies were found that would significantly affect the normal
accounting processes, or the consistency and reliability of the accounting
figures.
22
Annual Report 2009
3.17 CONTINGENCIES
On the date financial statements are issued certain contingent conditions
may exist which might result in a loss for the companies but are only resolved
in the future when events actually take place. These contingencies are
estimated by the management and its legal counsels. The estimation of loss
contingencies is necessarily a matter of judgment and opinion. When
estimating contingent losses in legal processes, legal counsels assess the merit
of claims, related decisions, and the current state of processes, among other
issues.
If evaluation indicates that a material loss has probably occurred and the
amount of the liability can be estimated, it is then recorded in the financial
statements. If evaluation indicates that loss is improbable but the result is
uncertain, or if it is probable but its amount is impossible to estimate, then
the nature of the contingency is disclosed in a note to the financial
statements together with an estimate of the probable loss. Generally, loss
contingencies estimated as remote are not recorded or disclosed.
23
Annual Report 2009
II. SPECIFIC NOTES
NOTE 4: VALUATION OF ACCOUNTING INFORMATION
FOREIGN-CURRENCY OPERATIONS
Current regulations permit free negotiation of foreign currencies through
banks and other financial intermediaries, at exchange rates that fluctuate in
accordance with supply and demand. Debts, indebtedness transactions and
debt management operations in foreign and local currency require the
approval of the Ministry of Finance and Public Credit in the case of ISA parent
company.
Operations and balances in foreign currency are translated at the exchange
rates in force, as certified by the Financial Superintendency, previously known
as Banking Superintendency. The exchange rates used for the preparation of
the consolidated financial statements at December 31, 2009 and 2008,
expressed in Colombian pesos, were as follows:
Currency
Code
2009
2008
US Dollar
Euro
Nuevo sol
Boliviano
Brazilian Real
USD
EUR
PEN
BOB
BRL
2,044,23
2,933,27
707,35
289,14
1,174.04
2,243,59
3,119,04
711,24
317,34
961,68
The application of accounting standards regarding exchange differences
gave rise to the following exchange rate differences in Colombian Pesos,
which were accounted as shown below:
Revenue
Expenses
Total exchange difference net
24
2009
2008
529,605
(121,344)
408,261
378,908
(719,057)
(340,149)
Annual Report 2009
NOTE 5: CASH AND MARKETABLE INVESTMENTS
Cash and marketable investments on December 31 included:
Cash
Cash and deposits in banks, other financial institutions and trusts
Fixed-income investments
Other investments
Hedging operations
2009
2008
(1)
464,228
377,376
(2)
(3)
493,124
59,470
-
268,737
(1,248)
552,594
267,489
1,016,822
644,865
Total marketable investments
Total cash and marketable investments
(1) Includes $226,807 (2008: $151,304) of funds from agents for administration of the wholesale energy market,
managed by XM, Compañía de Expertos en Mercados S.A. E.S.P. Use of these sums is restricted to transactions in
the energy pool, as provided by current regulations. It also includes $21,772 (2008: $100,235) of CTEEP’s financial
applications, represented by bank time deposits and $100,132 of repos of ISA (parent company) (2008: $42,562).
Banking reconciliations are prepared monthly and there are no significant reconciliation amounts pending.
(2) Includes ISA’s temporary investments amounting to $477,359 (2008: $196,778), deposits of installments by REP
$31,991 (2008: $12,117) and TransMantaro $28,301 (2008: $33,853).
(3) Corresponds mainly to reclassification of cash accounts into trust investments by ISA, amounting to $53,809.
NOTE 6: LONG-TERM INVESTMENTS – NET
Below is the information of the companies where ISA has a participation:
Interconexión Eléctrica Colombia – Panamá S.A. –ICP–
ICP is a Panamanian corporation with main offices in Panama City. It was
established on May 14, 2007 and its term is indefinite. Its main activities are
electric power transmission, operation and maintenance of electricity lines
and grids and infrastructure for associated voltage transformation,
telecommunications services, data transmission services, technical services,
and consulting services in such areas and in general engineering matters. ISA
owns 50.00% stake at this corporation. This corporation is not in commercial
operation.
Interligação Elétrica Pinheiros S. A. –IEPinheiros–
IEPinheiros is a Brazilian corporation with main offices in the city of São
Paulo. Established on July 22, 2008 to exploit concession of the electric
energy transmission service, delivered through implementation,
construction, operation, and maintenance of electric power transmission
facilities, lines, substations, control centers and respective infrastructure;
particularly the transmission lines and substations of groups E, H and K of
ANEEL’s public bidding No. 004 – 2008, Interlagos-Piratininga II transmission
line, and Piratininga II, Mirassol II, Getulina, Araras and Atibada II substations.
CTEEP has 99.99% stake. This corporation is not in commercial operation and
its term is indefinite.
25
Annual Report 2009
Interligação Elétrica Serra Do Japi S.A.
Serra Do Japi is a Brazilian corporation with main offices in the city of São
Paulo. Established on June 1, 2009 to exploit concession of the electric energy
transmission service, delivered through implementation, construction,
operation, and maintenance of electric power transmission facilities, lines,
substations, control centers and respective infrastructure; particularly the
construction of substations of Jandira and Salto. CTEEP has 99.99% stake. This
corporation is not in commercial operation and its term is indefinite.
Interligação Elétrica Norte e Nordeste S.A. –IENNE–
IENNE is a Brazilian corporation with main offices in the city of São Paulo that
was established on December 3, 2007 to exploit concession of the electric
power transmission service, particularly the transmission lines Colinas
(Tocantins) - Riveiro Gonzalves (Piauí) and Riveiro Gonzalves – São João do
Piauí (Piauí). CTEEP owns 25.00% participation in this company. This
corporation is not in commercial operation and its term is indefinite.
Interligação Elétrica de Minas Gerais S.A. –IEMG–
IEMG is a Brazilian corporation with main offices in São Paulo, incorporated
on December 13 of 2006 to exploit concession of the electric energy
transmission service, delivered through implementation, construction,
operation, and maintenance of electric power transmission facilities,
including support and management services, supply of equipment and
reserve materials, programming, metering, and other supplementary services
necessary for energy transmission; in particular, the Neves 1-Mesquita
transmission line. In compliance with the shareholders’ agreement
subscribed with CYMI Holding S.A, in 2008, ISA transferred to this company
40% of its participation and the remaining 60%, to CTEEP, ISA’s subsidiary.
The project started commercial operation in December 2008. Term is
indefinite.
Interligação Elétrica Sul S.A. –IESUL–
IESUL is a Brazilian corporation with main offices in the city of São Paulo that
was established on July 23, 2008 to exploit concession of the electric power
transmission service, particularly the transmission lines Nova Santa
Rita–Scharlau and Scharlau substation, transmission lines Joinville NorteCuritiba, Jorge Lacerda B-Siderópolis and Forquilhinha substation. Under a
shareholders agreement entered with CYMI Holding S.A, in 2009, CTEEP
transferred to this company 49.9% of its participation, the remaining 50.1%
belonging to CTEEP. This corporation is not in commercial operation and its
term is indefinite.
Interligação Elétrica do Madeira S.A. –IEMADEIRA–
IEMadeira is a Brazilian corporation with main offices in Rio de Janeiro,
established on December 18, 2008 to execute the electric power transmission
projects Porto Velho (Rondônia) - Araraquara 2 (São Paulo) HVDC
transmission line awarded in November 2008. CTEEP has 51.00%
shareholding. This corporation is not in commercial operation and its term is
indefinite.
ICP is an Ecuadorian corporation with main offices in Quito. It was
established on November 29, 2002. This corporation has as its corporate
purpose the organization, administration, commercialization and delivery of
26
Annual Report 2009
telecommunication services and activities, such as carrier, IP-based and value
added services, as well as ancillary activities, and in general, any service or
activity in the telecommunications sector. INTERNEXA S.A. E.S.P. has 50.00%
participation. Its term is 99 years.
INTERNEXA S.A. (in Chile)
INTERNEXA (Chile) is a Chilean corporation with main offices in Santiago.
On November 27 of 2009, INTERNEXA S.A. E.S.P., bought from CMET
Telecomunicaciones S.A. 90.00% of Comunicaciones Intermedias S.A. shares.
The Corporation has indefinite term and its main activity is the installation,
operation, exploitation, organization, administration, trading and rendering
of all kinds of telecommunications services. On January 7 of 2010, the
SSpecial Shareholders’ Meeting of Comunicaciones Intermedias S.A.
approved changing the company’s name to INTERNEXA Chile S.A. This
company is in pre-operating stage.
INTERNEXA Participações S.A.
INTERNEXA Participações is a Brazilian corporation with main offices in the
city of São Paulo. It was established on July 21, 2008 and its corporate
purpose includes: i) management of telecommunications assets in different
forms and modalities; ii) study, development, implementation and
administration of telecommunications initiatives in different forms and
modalities; (iii) assistance and consulting services for telecommunications
initiatives; and (iv) participation, as partner or shareholder, in other
corporations, consortiums, and commercial initiatives of any kind. The
corporation's term is indefinitie.
In the years 2008 and 2009, the company’s shareholders made capital
contributions for R$217,310 and R$300,000, respectively. At close of 2009,
INTERNEXA S.A. E.S.P., directly owned 99.979% of social stock and
INTERNEXA S.A. in Perú, 0.002%. This corporation is not in commercial
operation.
OTHER INVESTMENTS
Financiera Energética Nacional –FEN–
FEN is a financial institution of national order established by Law 11 of 1982 as
a state-owned corporation ascribed to the Ministry of Mines and Energy with
the purpose of acting as financial and credit organism for the Colombian
power sector. Until April 2008, ISA had 33.160 shares of FEN equivalent to
0.7884% participation. As of December 31, 2009 and 2008, the investment is
represented by nine shares equivalent to 0.00069% participation.
Empresa Propietaria de la Red S.A. –EPR–
EPR is a Panamanian corporation with main offices in San Jose de Costa Rica.
Established in 1998 it is a company ruled by private law that has the
endorsement of the “Parent Treaty of Central America’s Power Market” and
its protocol, through which, each government grants the corresponding
permission, authorization or concession, as fits construction and exploitation
of the first regional electric interconnection system that will link Honduras,
Guatemala, El Salvador, Nicaragua, Costa Rica and Panama. ISA owns 5,625
common shares equivalent to 11.11% participation. During 2008, it carried
out USD625,000 capitalization. It is in pre-operational stage.
Electrificadora del Caribe S.A. E.S.P. –ELECTRICARIBE–
ELECTROCARIBE is the company that delivers electric energy distribution and
trading services in the Colombian Caribbean. ISA has 0.48072666%
participation. These shares were received by ISA as payment.
27
Annual Report 2009
Cámara de Riesgo Central de Contraparte de Colombia S.A. –CRCC–
CRCC is an Colombian corporation with main offices in Bogotá. Established in
October 03, 2007, Its main purpose is to administer the Operations Settling
and Clearing System, that is the organized array of activities, agreements,
counterparties, agents, third parties, accounts, rules, procedures,
mechanisms and technological components for accepting, settling and
clearing operations with assets, either as a counterparty or not. XM owns
5.85% of this corporation capital stock.
Below is the detail of long-term investments, net, at December 31:
Investments in shares
FEN S.A.
Cámara de Riesgo Central de Contraparte de Colombia S.A.
ELECTRICARIBE
Interconexión Eléctrica Colombia - Panamá -ICPInterligaçao Elétrica de Minas de Gerais -IEMGInterligação Elétrica Norte Nordeste S. A. - IENNEInterligação Elétrica Pinheiros S. A. - IEPINHEIROSInterligação Elétrica Sul S. A. -IESUL Interligação Elétrica Madeira -IEMadeiraSerra do Japi
INTERNEXA (in Chile)
Other investments
Long-term investment allowance
(1)
(2)
(3)
(3)
(3)
(3)
(3)
(3)
(4)
(5)
Total investments in shares
Other long-term investments
In trust rights
Total long-term investments
(6)
2009
2008
3
13,017
236
1,735
12,114
1,012
55,237
55,063
149,303
8,026
61,791
11,979
15,270
342
(12,700)
3
12,620
0
1,586
12,114
0
25,753
14,667
6,395
1,587
0
0
0
354
(3,066)
372,428
72,013
2,065
977
374,493
72,990
(1) Corresponds to shares received by ISA (Parent Company) as payment.
(2) Capital contributions from ISA (Parent Company) to ICP along 2009; this company is in pre-operating stage.
(3) Capital contributions by CTEEP.
(4) During 2009, INTERNEXA S.A. E.S.P., in Colombia, made capital contributions to INTERNEXA S.A. in Chile.
(5) Corresponds mainly to the following provisions: in ISA (Parent Company), ELECTRICARIBE for $2,489 (2008:
$3,062), ISA Bolivia S.A., $2,045 and Consorcio TransMantaro S.A., $5,459. In TRANSELCA, to the $2,169 provision
made in ISA Bolivia. Provisions in subsidiaries and affiliates correspond to negative variation of exchange difference
of investment abroad generated by application of Resolution 356, chapter I, number 14 of CGN, stating that if
surplus from equity method cannot absorb equity decrease accumulated in equity entries other than results, excess
must be recorded as provision expenditure until book value of investment equals zero.
(6) Corresponds to trust estate established by ISA to guarantee payment of independent engineering of the UPME 02 of
2008 – El Bosque and UPME 01 of 2007 – Porce projects.
28
Annual Report 2009
NOTE 7: ACCOUNTS RECEIVABLE – NET
Following is the balance of accounts receivable, net as of December 31:
Customers
Energy service
Telecommunications
Market Administration
Constructions
Other technical services
(1)
Total customers
Interest receivable
From customers
Other interest receivable
Total interest receivable
Loans extended
Prepayments and advances
Taxes and contributions
To suppliers
For purchase of goods and services
Per-diem and travel expenses
Advance payment for share issues
Other
(2)
(3)
(4)
Total prepayments and advances
Other accounts receivable
Loans to employees
Deposits made
Accounts receivable from Brazilian Gov. - Law 4819
Account receivable Celepsa leasing
Deposit for payment of bond interest
Miscellaneous accounts receivable
Total other accounts receivable
Total accounts receivable
Less – Allowance for doubtful accounts
Total accounts receivable - net
Total long-term accounts receivable
Total short-term accounts receivable
(5)
(6)
(7)
2009
2008
658,473
43,517
9,427
7,371
4,106
578,091
56,537
8,001
20,552
605
722,894
663,786
121
967
1,230
96
1,088
1,326
578
459
330,194
2,195
25,581
525
2,637
88,585
4,143
1,611
2,801
8,773
192
361,132
106,105
21,748
52,268
676,791
33,102
47,968
61,587
19,920
50,646
456,243
110,165
893,464
636,974
1,979,156
(18,588)
1,960,568
1,408,650
(16,041)
1,392,609
874,503
610,031
1,086,065
782,578
1) Along the year 2009, ISA invoiced construction services that had been recognized as estimates in 2008, and the
closing of these accounts receivable was carried out with funds delivered by the customer as advance payment.
2) Includes mainly in CTEEP a positive tax balance of $249,732 2008: $3,024), corresponding to application of Law No.
11941 of May 27, 2009, under which payments of contributions to PIS and COFINS of the years 2004 to 2007 were
revised. It also includes income tax advance payment of ISA Capital do Brasil for 15% withholding on interests of
own capital in CTEEP, for $37,743 2008: 23,689) and advances and positive balances on CTEEP taxes for $8,795
2008: $3,024) and TRANSELCA $5,912 2008: $10,248).
3) Includes prepayments from Proyectos de Infraestructura del Perú –PDI– for $16,749 2008: $586) and from REP for
$5,518 2008: $ 0).
4) In 2008, corresponds to advance for future share capitalization by CTEEP in the company Control y Montajes
Industriales –CYMI–, an investment partner in companies like IENNE, IEMG, IESUL.
29
Annual Report 2009
5) Includes CTEEP's accounts receivable from the Brazilian Government for labor benefits Law 4819 of 1958). No
monetary updating whatsoever is applicable to this balance and no return is recorded until approved by the
Government of the São Paulo State for payment to the company.
6) Corresponds in TransMantaro to transfer of fixed assets to accounts receivable of CELEPSA contract according to
International Financial Reporting Standard –IFRS– number 17, for meeting leasing requirements.
7) Deposits in Bank of New York to guarantee interest payment on bonds of ISA Capital do Brasil.
The composition of receivables from customers and shareholders' (capital
only) on December 31 is as follows:
Customers
Shareholders
Empresas Públicas de Medellín -EPMEmpresa de Energía de Bogotá -EEBEmpresa Colombiana de Petróleos -ECOPETROLTotal shareholders
Other customers
Total accounts receivable from customers
2009
2008
11,634
34
-
14,493
254
74
11,668
711,226
722,894
14,821
648,965
663,786
Classification of accounts receivable from customers according to maturity
date:
Current
Overdue
Between 1 and 90 days
More than 360 days
Total overdue
Total
2009
2008
690,325
559,151
20,649
2,770
2,823
6,327
21,442
1,318
52,707
29,168
32,569
104,635
722,894
663,786
Accounts receivable are mostly from power sector companies in the countries
where the group has coverage, and correspond mainly to services of use and
connection of the National Transmission System. Interests are invoiced on
past due accounts at the highest rate allowed by law.
Power sector companies, ELECTRIBOLÍVAR, Caucasia and ELECTROTOLIMA,
all undergoing liquidation processes initiated by the Superintendency of
Public Utilities –SSPD–, owed ISA as of December 31, 2009 and 2008, $3.728;
these overdue accounts receivable are 100% provisioned.
30
Annual Report 2009
NOTE 8: INVENTORIES-NET
Inventories at December 31 included:
Short-term inventories
Materials to render services
Inventories in transit
Provision
(1)
(2)
Total short-term inventories
Long-term inventories
Provision
Total long-term inventories
Total inventories - net
(3)
2009
2008
68,532
22,048
(770)
58,572
54
(1,203)
89,810
57,423
61,392
(5,850)
60,891
-
55,542
60,891
145,352
118,314
Because of the nature of fixed assets and their spare parts, many of which are
not easily obtainable in the market and have long delivery terms, large stocks
are necessary in order to guarantee continuity of service and compliance with
the system’s availability indicators.
The economic group’s companies conduct actions to guarantee adequate
preservation and safeguarding of inventories, and take periodic stock count
with no significant differences found.
1) The main variation is explained by record made by CTEEP in 2009 of inventories corresponding to materials
remaining from works.
2) Increase in inventories in transit is accounted for by Proyectos de Infraestructura del Perú -PDI-, amounting to
$22,048, corresponding to imports of the Centro project.
3) In 2009, as part of the scope of the Lean Six Sigma project, ISA conducted a study to increase efficiency of
inventories logistics, identifying surplus materials and other obsolete assets, especially parts for recovery of
damages due to attacks on the infrastructure.
31
Annual Report 2009
NOTE 9: PROPERTY, PLANT AND EQUIPMENT – NET
The net balance of property, plant and equipment at December 31, included:
Property, plant and equipment
Networks, lines and cables
(1)
Plants and ducts
Buildings
Land
Computer and communications equipment
Equipment and materials under deposit and goods in warehouse
Furniture, fixtures and office equipment
Roads
Subtotal property, plant and equipment
Less – Accumulated depreciation
Less – Provisions
Total property, plant and equipment in operation
Constructions in progress
Machinery, plant and equipment in assembly
Machinery and equipment in transit
Total property, plant and equipment-Net
2009
2008
2,398,001
2,072,619
77,885
26,670
81,336
44,814
11,498
16,151
265
2,832,351
2,073,352
74,099
28,804
74,792
42,565
118
12,075
15,524
265
4,729,239
(1,797,977)
(11,118)
5,153,945
(1,759,918)
(9,978)
2,920,144
3,384,049
100,546
31,235
12,321
109,266
40,066
5,769
3,064,246
3,539,150
1) The variation corresponds mainly to TransMantaro and ISA Perú, who owned, as of December 31 of 2008,
machinery and equipment related to the concession of electric transmission systems in the item property, plant and
equipment that were reclassified as intangibles by CINIIF 12 “Agreement of Services Concession”. Additionally,
the transfer to accounts receivable of the leasing with CELEPSA in TransMantaro as provided by IFRS 17, is included.
Assets have no restrictions, pledges or guarantees for obligations.
32
Annual Report 2009
NOTE 10: DEFERRED CHARGES AND OTHER ASSETS
The balance of deferred charges and other assets, at December 31 included:
Deferred charges and other short-term assets
Prepaid expenses
Deferred taxes
Other deferred charges
(1)
Total deferred charges and other short-term assets
Deferred charges and other long-term assets
Deferred charges
Deferred taxes
Goods received as payment (Foreclosed assets)
Bond issues discounts
Studies and research
(1)
Total deferred charges
intangibles
Software
Licenses
Easements
Rights
Goodwill and trademarks
Less – Amortization of intangible assets
Total intangible assets
Actuarial financial reserve
Miscellaneous
Total deferred charges and other long-term assets
(2)
(3)
(4)
(5)
2009
2008
31,840
114,295
48
20,382
103,358
711
146,183
124,451
104,685
19,395
13,616
278
31,082
102,403
17,975
14,449
226
25,101
169,056
160,154
68,618
60,073
71,656
10,254,025
1,211,779
(4,334,338)
61,618
56,465
59,461
7,891,882
1,173,800
(3,312,242)
7,331,813
5,930,984
480
10,203
447
13,717
7,511,552
6,105,302
1) Includes mainly $77,060 2008, $92,477), ISA Parent Company for $115,7072008: $84,592), CTEEP and $19,467
2008: $23,227), TRANSELCA.
2) This increase is due mainly to operation start-up of software version change at XM Control Center.
3) Easements correspond to the rights of way acquired by ISA’s companies for its operation assets, mainly
transmission lines. Their amortization was stopped as of 2009, given that they were acquired at perpetuity, that is,
no deadline or limit contract exists, and the right remains along time.
4) Includes CTEEP's right for $8,832,622 2008: $6,940,992), according to concession contract with the Government of
Brazil through ANEEL subscribed on June 20, 2001 and extended for 20 years as of July 08, 1995, for exploitation of
the public utility of electric power transmission, including the basic grid and transmission facilities. According to
articles 63 and 64 of Decree No. 41019 of February 26, 1957, assets and facilities used in transmission are allocated
to such services and cannot be retired, sold, assigned or given as mortgage collateral, without prior express
authorization of the regulator. ANEEL Resolution No. 20/99 sets rules for de-allocation of assets of the electric
energy public utility concessions and grants prior authorization to de-allocate unproductive assets.
5) Includes: CTEEP’s goodwill for $207,503 2008: $279,248) generated by fiscal optimizing of ISA Capital Do Brasil’s
goodwill, through corporate restructuring with CTEEP of ISA Participaçoes; ISA Capital’s goodwill for $770,095
2008: $656,217, generated by CTEEP purchase; and ISA’s goodwill for $103,631 2008: $103,631), generated by
purchase of 60% of TransMantaro S.A. It also includes loan for $126,312 2008: $126,312) to purchase 34% of
TRANSELCA S.A. E.S.P. through share exchange with Ecopetrol which is not amortized according to CGN regulation,
and because TRANSELCA is an indefinite term company.
Assets have no restrictions, pledges or guarantees for obligations other than
those indicated in Notes 12, 19.2 and 19.3.
33
Annual Report 2009
NOTE 11: RE-APPRAISALS
Re-appraisal balance as of December 31, included:
investments
Total re-appraisals
(1)
(2)
2009
2008
269
2,829,891
10
2,441,999
2,830,160
2,442,009
1) Re-appraisal of Empresa Propietaria de la Red -EPR-.
2) Economic appraisal was conducted in 2008 in ISA and TRANSELCA for main components of property, plant and
equipment, in compliance with the provisions of the Public Accounting Regime - Resolution 354 of September 5 of
2007.
Technical appraisals of operational assets for Colombian subsidiaries were
made by using the technically recognized Straight-line Depreciated
Replacement Cost method approved by the Colombian General Accounting
Office as stated in number 18 of accounting procedure for recognition and
disclosure of facts related to property, plant and equipment, issued by
Resolution 356 of September 5, 2007. The methodology consists of
determining the present value of operational equipment , based on the
actual cost of an asset with the same characteristics that provides the same
service (the as-new replacement value –VRN–1), proportionally affected by
the remaining time of service (remaining useful life) with respect to the
useful life initially established. This criterion is applied to every specialized
asset2 that ISA has in operation for energy transmission (use and connection).
Market value is used for non-specialized3 assets such as vehicles.
1
2
3
Values determined according to regulation applicable to their remuneration.
Assets not frequently offered or demanded in the market.
Assets frequently offered and demanded in the market.
34
Annual Report 2009
NOTE 12: OUTSTANDING BONDS
Characteristics and balances of outstanding bonds at December 31 are
detailed below:
Issue
First
First
Second
Second
Second
Second
Third
First
First
First
First
First
First
Second
Third
Third
Fifth
Third
Third
Fourth
Eleventh
Fifteenth
Program Tranche 1
Program Tranche 2
Program Tranche 3
Program Tranche 4 Batch 1
Program Tranche 5
Program Tranche 6
Program Tranche 6
Program Tranche 1
Program Tranche 2
Capitalized interest
Bond coverage
Series
Currency
Term
(years)
Interest
rate
Maturity
2009
2008
A
B
A
B
C
D
Única
C
C
A
A
B
A
Única
A
B
A
A
B
A
A
A
USD
USD
USD
USD
COP
COP
COP
COP
COP
COP
COP
COP
USD
PEN
USD
USD
USD
USD
USD
USD
USD
USD
COP
COP
COP
COP
COP
COP
COP
COP
USD
USD
8
9
8
9
10
10
10
10
10
7
7
12
10
10
12
12
10
12
12
12
3
7
7
10
15
20
7
18
6
9
5
10
8.13%
8.34%
6.00%
6.25%
DTF + 2.5%
IPC + 10%
IPC + 8.10%
IPC + 7.50%
IPC + 7.50%
IPC + 7.00%
IPC + 6.14%
IPC + 6.95%
5.75%
VAC + 5.13%
7.75%
7.63%
Libor + 2.56%
5.88%
6.19%
Libor + 0.75%
4.50%
6.50%
IPC + 7.00%
IPC + 7.30%
IPC + 7.19%
IPC + 4.58%
IPC + 4.84%
IPC + 4.58%
IPC + 4.99%
IPC + 5.90%
7.88%
8.80%
2009
2010
2011
2012
2009
2009
2011
2012
2012
2009
2011
2016
2013
2013
2016
2017
2014
2019
2019
2019
2012
2016
2011
2016
2019
2026
2013
2026
2015
2018
2012
2017
30,663
20,442
20,442
130,000
35,000
62,000
50,000
50,000
32,894
32,949
21,390
8,774
30,663
14,612
55,752
36,959
24,531
40,885
100,000
150,000
108,865
118,500
110,000
104,500
150,000
59,500
408,846
723,657
21,607
33,654
33,654
22,436
22,436
59,700
30,879
130,000
35,000
62,000
16,000
50,000
50,000
43,444
39,604
26,124
10,671
42,067
17,770
67,308
43,264
100,000
150,000
108,865
118,500
110,000
104,500
449,489
795,591
12,359
-128,189
2,753,431
85,660
2,667,771
2,657,126
188,915
2,468,211
A
B
Total
Less current portion
Total long-term
Bonds accrued interests during 2009 for $264,671 (2008: $275,275), which
were recorded as financial expenses.
35
Annual Report 2009
Below is the detail of maturities for outstanding bonds:
Year
2010
2011
2012
2013
2014 onwards
Total
Capital
Coverage
Total
64,490
331,944
582,321
141,502
1,611,567
21,170
437
85,660
331,944
582,321
141,502
1,612,004
2,731,824
21,607
2,753,431
ISA’s bonds issues were used as follows:
The third issue, for an initial value of $130,000, was used to substitute
domestic and foreign currency loans to reduce exchange risk exposure and
expand the portfolio’s average maturity.
The bond program for $450,000 whose initial issuance took place in 2004, was
expanded to $850,000 in 2006 and to $1,200,000 in 2008. Tranche 4 was
offered in 2006, at 20-year term for $380,000 with the following placements
in 2008: $104,500 maturing in April of 2026. The sixth tranche (Series A and B)
was underwritten in 2009, for a total value of $209,500. 50% will be
earmarked for debt management operations and the remaining 50% to
financing cash flow and investments.
Affiliate TRANSELCA S.A. E.S.P., duly authorized by the Shareholders’
Meeting and by the Colombian Financial Superintendency, issued bonds
during 2002 and 2004 for $113,000 and $100,000, respectively, to finance
expansion projects, working capital and corporate cash flows; the bonds
were paid during 2009: $16,000.
The bonds issued by subsidiary Red de Energía del Perú S.A. –REP– have the
following characteristics:
First Corporate Bond Issue Program:
The first issue of 30,000 Series-A corporate bonds with USD1,000 unit par
value and 10-year redemption term was placed in the financial market in July
2003 at 5.75% yearly nominal rate.
The second issue of 20,000 Single Series bonds with PEN 3,477 unit par
value and 10-year redemption term was placed in the financial market in
November 2003 at 5.125% yearly nominal rate. Balance pending
amortization is adjusted with the constant actual value.
The third issue of 14,200 Series-A and 5,800 Series-B corporate bonds with
USD1,000 unit par value and 12-year redemption term was placed in the
financial market in July and August 2004 at 7.75% and 7.625% yearly nominal
rate, respectively.
The fourth bond issue was de-listed.
The fifth issue of 30,000 series-A bonds with USD1,000 unit par value and
12-year redemption term was placed in the financial market in December
2004 at 3-month Libor + 2.5625%.
36
Annual Report 2009
Second Bond Program:
The third issue of 8,500 series-A bonds and 30,000 series-B bonds had a par
value of USD1,000 and 12-year redemption term. These bonds were placed in
the financial market in February and October 2007, at 5.875% and 6.1875%
annual nominal interest, respectively.
The fourth issue of 21,500 Series-A bonds had a par value of USD1,000 and
12-year redemption term. These bonds were placed in the financial market in
February 2007, at 3-month Libor + 0.75% interest.
On May 15 of 2009, REP carried out its eleventh and fifteenth bond issues
for USD12,000 and USD20,000 million, maturing in 3 and 7 years, respectively,
accruing interest at 4.50% and 6.50% fixed-rate to be paid quarterly in
arrears with 100% amortization on expiration of the issuance term.
These bonds are guaranteed by first mortgage collateral on the transmission
lines concession.
ISA Capital Do Brasil's bond issue had the following characteristics:
January 29, 2007 issue, for USD554 million. The issue was carried out in two
tranches: a first one for USD200 million, at 5-year term and 7.88% yearly
interest rate with Call option in the years 2010 and 2011; the second for
USD354 million at 10-year term and 8.80% yearly interest rate with Call
option during the bonds’ term. Of the total bonds issued, 60% were placed in
the USA, 36% in Europe, 2% in Latin America, and 2% in Asia.
On November 4 of 2009, ISA Capital do Brasil requested that holders of
international bonds of 2012 and 2017 modify the covenants, in order to make
viable the growth strategy in Brazil. Modification will allow: CTEEP
subsidiaries to hire financing; ISA Capital do Brasil to issue guarantees related
to previous financing in those cases where CTEEP cannot meet that obligation
as the direct shareholder of the subsidiaries; and expand CTEEP’s
indebtedness capacity, consolidated up to 3.5 times EBITDA.
TransMantaro's bond issue has the following characteristics:
First Corporate Bond Program:
First series-A and Series-B issue for USD15 each, placed in November 2201,
with 8.13% and 8.34% interest rate and maturity in November 2009 and
2010, respectively. Second series-A and Series-B issue for USD10 each, placed
in November 2003, with 6.00% and 6.25% interest rate and maturity in
November 2011 and 2012, respectively.
These bonds are guaranteed by first mortgage collateral on the transmission
lines concession.
37
Annual Report 2009
NOTE 13: FINANCIAL LIABILITIES
The balance of financial liabilities at December 31 included:
Credit line
Domestic financial liabilities
BBVA
BBVA
Bancolombia
Davivienda
BBVA
Banagrario
BBVA
Banagrario
BBVA
Occidente
Bancolombia
Banco de Bogotá
Banco de Occidente
Davivienda
BBVA
Bancolombia
Banco de Bogotá
Banco de Crédito
Currency
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
COP
Interest rate
2009
2008
DTF + 4.00%
DTF + 3.40%
DTF + 2.60%
DTF + 3.88%
DTF + 3.89%
DTF + 3.00%
DTF + 4.25%
DTF + 4.50%
DTF + 4.25%
DTF + 4.00%
DTF + 3.50%
DTF + 3.50%
DTF + 4.75%
DTF + 3.00%
DTF + 2.50%
DTF + 1.93%
DTF + 4.73%
DTF + 4.50%-5.00%
66,668
70,000
25,000
75,000
21,000
837
727
6,000
7,000
10,000
27,596
20,000
43,993
96,638
100,000
70,000
25,000
75,000
30,000
52,000
21,000
837
727
3,495
7,000
6,000
10,667
15,000
42,332
20,000
44,000
373,821
619,696
588,200
89,701
48,653
53,675
40,029
23,470
374
1,779
24,308
58,127
212,150
582,130
127,593
61,146
56,176
41,679
28,489
26,923
1,184
5,676
29,123
72,302
112,180
96,575
212,150
96,575
40,802
59,436
39,754
-
1,452,854
1,826,675
805,837
1,020,838
1,377,505
1,997,201
675,902
1,321,299
Total Foreign financial
liabilities
Foreign financial liabilities
BNDES
BIRF-3955-CO.
Banco de Crédito del Perú BCP
BID
CAF
IFC
Scotiabank
BIRF-3954-CO.
Mediocrédito - Artigiancassa
BBVA Banco Continental
BNP Paribas
ABN Amro y JPMorgan
HSBC
BRL
USD
USD
USD
USD
USD
USD
USD
EUR
USD
USD
USD
BRL
ITAÚ
BRL
Banco Real
BCP
UBS
BRL
USD
BRL
Total Foreign financial
liabilities
Hedging operations
Total financial liabilities
Total long-term
38
TJLP + 2.30%
Libor + 0.28%
Libor + 2.13%
Libor + 4.00%
Libor + 5.00%
6.10%
7.20%
6.32%
1.75%
Libor + 1.45%
Libor + 0.35%
Libor + 1.00%
106.50% - 119.50%
CDI
106.50% - 119.50%
CDI
CDI + 6.50%
6.61%
106.5% CDI
Annual Report 2009
At December 31, financial liabilities included balances denominated in the
following currencies:
Balance in original currency (1)
Currency
US Dollar
Euro
Brazilian Real
Colombian Pesos
2009
185,467
608
913,036
373,821
2008
248,171
1,820
848,967
619,696
Balance in local currency
2009
379,138
1,779
1,071,937
373,821
2008
556,795
5,676
815,034
619,696
1,826,675
1,997,201
1) Amounts in original currency, other than the Colombian peso are expressed in thousands.
Maturity of financial liabilities at December 31, 2009:
Year
2010
2011
2012
2013
2014 onwards
Total
Total
805,837
189,111
196,233
219,558
415,936
1,826,675
COMMITMENTS RELATED TO LOANS
ISA has agreed to comply with the following covenants during the term of the
loans:
ABN Amro and JP Morgan Bank:
ISA subscribed financial commitments for the USD200 million loan obtained
from ABN Amro and JP Morgan banks, as follows: a) The ratio net
debt/EBITDA must be equal to or lower than 5.50 for 2006, 5.00 for 2007, 4.5
for 2008 and 2009. b) The ratio EBITDA/interest must be equal to or greater
than 2.25 for 2006 and 2007, and 2.50 for the period 2008-2009.
As of December 31 of 2008 and 2007, the Company had satisfactorily met the
above commitments.
In January of 2009, the ABN Amro and JP Morgan Bank loan was repaid,
meaning there are no outstanding commitments related to loans.
39
Annual Report 2009
NOTE 14: ACCOUNTS PAYABLE
The balance of accounts payable at December 31 included:
2009
2008
115,070
101,435
165,942
50,457
168,673
381,165
90,545
96,762
52,432
43,054
156,138
142,570
Total accounts payable
982,742
581,501
Total long-term accounts payable
398,608
229,882
Total short-term accounts payable
584,134
351,619
Suppliers
Financial expenses
Creditors
Dividends
Other accounts payable
Taxes
(1)
(2)
(3)
1) Includes mainly $126,369 of CTEEP, corresponding to taxes or social charges payable and to provision for tariff
adjustment according to ANEEL’s Regulatory Resolution No. 386/09 that entered into force on July 1 of 2009.
Likewise, it includes $23,925 of commercial accounts payable by Proyectos de Infraestructura del Perú.
2) Includes in ISA $28,743 (2008: $7,997) for funds received under delegated administration and advance revenue
received by INTERNEXA for $118,829 (2008: $129,034). These advances include:
Customer
Skyonline - Columbus Network de Colombia
Telefónica
Columbus Network de Colombia
Orbitel
Ufinet
TRANSELCA
ETB
Telmex Colombia S.A.
Comunicación Celular S.A.
Sprint International Colombia Ltda.
Fondo Financiero de Proyectos de Desarrollo
Other
Total advances received
Total non-current
Year advance is
received
Term
(years)
2001
2005
2004
2004
2005
2005
2005
2006
2006
2007
2008
15
8
25
10
25
15
15
22
22
15
1
2009
2008
1,809
1,710
9,378
7,648
643
466
894
736
523
492
402
361
1,168
1,066
37,048
43,293
64,463
53,715
2,037
1,890
6,255
3,766
4,414
3,686
118,829 129,034
12,481
13,376
105,453 116,553
3) Corresponds basically in CTEEP to application of Law No. 11.941 of May 27 of 2009, through which payments of
contributions to PIS and COFINS for the years 2004 to 2007 were revised.
40
Annual Report 2009
NOTE 15: LABOR LIABILITIES
Labor liabilities at December 31 included:
Severance payments and interest
Vacations
Agreed fringe benefits
Early retirement plan provision
Other
(1)
Total labor liabilities
Less – long-term portion
Short-term labor liabilities
2009
2008
5,327
17,169
9,878
212
1,428
4,763
9,664
6,262
13,994
2,078
34,014
1,740
32,274
36,761
1,461
35,300
(1) Decrease is explained by the fact that for 2006 CTEEP had 2,737 employees; in October of that same year it
approved a voluntary early retirement program, which attracted 1,534 associates between November 21 and 30 of
2006. This retirement plan was in force between 2007 and 2009.
As of December 31 of 2009, there is a pending balance of an associate whose retirement is still incomplete. The
value corresponds to provision for medical and dental assistance, which pensioners are entitled to for 36 months
after retirement.
NOTE 16: ACCRUED LIABILITIES AND ESTIMATED PROVISIONS
Accrued liabilities and estimated provisions at December 31 included:
Retirement pensions
Provision for income tax and surtax
Provision for contingencies
Actuarial estimate of fringe benefits for pensioners
Other estimated liabilities and provisions
Total estimated liabilities and provisions
Total short-term estimated liabilities and provisions
(1)
(2)
(3)
2009
2008
142,394
88,842
683,837
87,800
57,757
138,654
46,578
612,723
83,826
32,413
1,060,630
806,364
254,266
914,194
772,928
141,266
(1) Corresponds to the amortized present value of pension liabilities at December 31 of 2009 and 2008, according to
actuarial studies.
(2) Includes mainly $415,298 (2008: $332,148) to be paid by ISA Capital Do Brasil to Secretaría de Fazenda, Gobierno
de Brasil, as payment commitment for the difference between the purchase price of the shares of CTEEP and
pension payments established in Law 4819 of 1958 in case CTEEP is exonerated, and in CTEEP $197,052 (2008:
$169,521), mainly for provisions for liability over labor suits in the partial assignment of Compañía Energética de
São Paulo –CESP– and Compañía Paulista de Transmisión de Energía Eléctrica S.A. –EPTE–.
(3) Estimated liabilities of ISA and TRANSELCA, to show present value of future health, education and aging benefits
recognized to pensioners.
16.1 RETIREMENT PENSIONS AND AGREED LABOR BENEFITS
Retirement pensions
Under collective bargaining agreements and labor contracts, ISA,
TRANSELCA S.A. E.S.P. and XM, Compañía de Expertos en Mercados S.A. E.S.P.,
are required to pay pensions to employees who satisfy certain conditions of
age and length of service. However, the Social Security Institute –ISS– and the
pension management funds have assumed the greater part of this obligation
upon compliance with certain legal requirements.
41
Annual Report 2009
Since the year 2005, ISA and TRANSELCA, in prudent anticipation of
application of International Financial Reporting Standards –IFRS–, conducted
a study with the help of a specialized actuarial firm to determine the
companies' liabilities regarding agreed labor benefits enjoyed by retirees,
different from monthly pension payment.
Present value of this estimate stands for ISA, at $37,307 (2008: $35,002), and
for TRANSELCA, at $50,492 (2008: $48,825), which are fully amortized.
The main estimates used in the actuarial calculation were as follows:
2009
Actual interest rate
Future increase of pensions
and salaries
Number of people covered
by the plan
2008
ISA
4.80%
TRANSELCA
4.80%
XM
4.80%
ISA
4.80%
TRANSELCA
4.80%
XM
4.80%
6.48%
6.48%
6.48%
5.15%
5.15%
5.15%
433
190
19
444
189
19
As of December 31, 2009, ISA had amortized 73.50% of the pension liability
projected to cover monthly pension payments; amortization is calculated
with methodology set forth in Resolution No. 356 of September 5 of 2007
issued by CGN.
The movements in the actuarial estimate and the deferred liability at
December 31, 2009 are as follows:
Projected
liability
Deferred
cost
165,704
12,353
(24,454)
(6,907)
Balance at December 31, 2007
Increase in actuarial estimate
Pension payment expense during the year
Commuted
Pension Liability
141,250
5,446
18,148
23,594
Total pension expenses in Income Statement
Pension payment
Partially commuted pension liability
Increase in actuarial estimate
Pension payment expense during the year
178,057
(31,361)
15,685
(9,532)
(8,042)
(8,042)
(18,148)
(8,042)
138,654
6,153
19,563
Total pension expenses in Income Statement
Pension payment
Increase in partially commuted pension liability
Net
liability
25,716
193,742
(40,893)
(2,413)
(10,455)
(19,563)
(2,413)
142,394
Agreed Fringe Benefits
The calculation of pension liabilities for ISA, XM and TRANSELCA included
agreed fringe benefits received by pensioners in addition to those required
by legal regulations. This practice was adopted in 2005 as a prudent policy
seeking alignment with International Financial Reporting Standards –IFRS–
The calculation included fringe benefits agreed in individual and collective
labor agreements to which present and future pensioners are entitled, such
42
Annual Report 2009
as: education and health (supplementary plans and aid for health expenses)
and pension contributions.
16.2 INCOME TAX
Income tax and surtaxes
Liabilities for taxes, liens and duties are made up mainly of income tax,
calculated according to local regulation applicable to the parent company
and its subordinates.
Tax regulations applicable to the Colombian companies provide:
a. Taxable income is subject to 33% rate.
b. The basis to determine income tax for the year shall not be lower than 3%
of net fiscal equity on the last day of the preceding taxable year, refined
with the items duly authorized by tax regulations in force.
c. Law 863 of 2003 established that income tax payers could deduct 30% of
the effective investments made only in productive real fixed assets.
According to changes made in Law 1111 of 2006, starting 2007, the
percentage is 40% and its application does not result in income taxable for
shareholders. After applying this regulation, and based on investments
made by the Company during the year, the period’s ordinary net taxable
income was decreased by $28,869 (2008: $16,922).
d. As of 2004, income tax payers performing transactions with foreign related
or associated parties and/or with residents of countries considered as tax
haven, are required, for income tax purposes, to determine their ordinary
and extraordinary revenues, costs and deductions, assets and liabilities,
taking into consideration for these transactions the prices and profit
margins of the market. At this time, the Company’s management and its
counsels have not concluded the updating study for 2009; however, based
on the satisfactory results of the study conducted for 2008, their opinion is
that no significant additional income tax provisions shall be required as a
result of the study.
e. As a result of application of CGN Resolution No. 356 of September 5 of 2007
(to be applied retroactively as of January 1 of 2007), change arises in
accounting treatment of equity investments of controlled entities on
which the corporation has important influence, particularly for recording
of updating through equity method, according to which, all exchange
difference variations are considered equity variations until disposal of
investment, therefore affecting equity instead of fiscal year's results.
Pursuant to the provisions of fiscal regulation of investment in foreign
currency, application of the above accounting rule generates a conciliatory
entry between accounting and fiscal results, arising from the exchange
difference from investments in foreign currency in controlled entities.
f. In 2005, Decision 578 of the Andean Community of Nations –CAN– entered
into force. This decision seeks to avoid double taxation of the income
earned in any of the member countries using an exoneration mechanism.
Based on this decision and on the opinions of tax advisors, the income
earned in CAN member countries are considered to be tax exempt.
g. On June 27, 2008, ISA and the Ministry of Mines and Energy subscribed the
legal stability agreement for the activity of electric energy transmission
43
Annual Report 2009
during 20 years. The agreement provides for legal stability regarding
income tax regulations, among which: income tax rate, deduction of
inflation component of financial expenses, special 40% deduction for new
investments in new productive real fixed assets, tax discount on VAT paid in
import of machinery for energy transport, presumptive income equal to
3% of net fiscal equity, and transitoriness of equity tax.
This agreement guarantees that, in the event of adverse modification to
the regulations stabilized under the agreement, unmodified regulations
shall continue to apply during the term of the agreement.
h. On September 2 of 2007, TRANSELCA S.A. E.S.P. filed a claim against DIAN
with the Administrative Tribunal of Atlántico for official calculation of
income tax return of fiscal year 2002, where the Tax Administration
disavows tax deductions for $4,616 and calculates tax in excess of $1,616.
The claim was accepted by the tribunal on February 5, 2008. TRANSELCA
presented final pleadings on September 15, 2008. On the date of this
report, this claim was in the tribunal pending judgment.
Regarding the action related to income tax return for 2002, the Company’s
management and its fiscal counsels consider that the arguments set forth
reasonably support deductibility of the expenses denied by DIAN.
i. As of December 31, 2009, INTERNEXA S.A. E.S.P- posted fiscal loss of
$34,605 (2008: $27,426) to compensate for, originating in the years 2003 to
2009. According to fiscal regulation in force, fiscal losses generated
between 2003 and 2006 can be fiscally readjusted and compensated for
with taxable income of the next eight years without exceeding 25% of loss
annually, without limitation upon presumptive income of fiscal year.
Losses originating after fiscal 2007 can be compensated for and/or fiscally
readjusted without percentage limitation at any time, with taxable income
without limitation upon presumptive income of fiscal year. The losses of
the corporations cannot be transferred to their shareholders. Fiscal losses
from revenues that do not constitute income or incidental income and
from costs and deductions not originating taxable income cannot be offset
with net taxable income of the taxpayer.
At December of 2009, the company shows presumptive income excess over
regular income of $27,559 generated during the years 2005 to 2009.
According to fiscal regulation in force, presumptive income excess over
regular income obtained as of fiscal 2003 can be compensated for with
taxable income within the next 5 years, and/or readjusted fiscally.
Equity tax
Under Law 1111 of 2006, equity tax was established for fiscal years 2007,
2008, 2009 and 2010, payable by individuals, legal entities and
unincorporated associations who pay income tax. For matters of this tax,
wealth is equivalent to the obligor’s total net fiscal equity that exceeds $3,000
million.
This tax is calculated on the basis of net fiscal equity as of January 1 of 2007, at
a rate of 1.2%.
During the first semester of 2009 and 2008, management, based on article 25
of Law 1111 of 2006, and with approval of the Shareholders' Meeting of
March 30 of 2007, authorized recording the equity tax of years 2009 and 2008
for $20,173 in ISA, $4,547 in TRANSELCA, $212 in XM, and $1,882 in
44
Annual Report 2009
INTERNEXA, against the equity revaluation account, for each year.
Tax Law Amendment of 2009
Law 1370 of December 30 of 2009, amended tax law as follows:
a) A new tax was levied for the year 2011, valid until 2014, to be paid by legal
persons and individuals, and by unincorporated associations who pay
income tax. For matters of this tax, wealth is equivalent to the obligor’s
total net fiscal equity that exceeds $3,000 million. This tax’s rate is 2.4%
when the taxpayer’s net fiscal equity ranges between three and five
thousand million pesos ($3,000 – $5,000) and 4.8% when it exceeds five
thousand million pesos ($5,000). The tax corresponding to each taxpayer
is to be paid between the years 2011 and 2014.
b) The amount of the special deduction for investment in real, productive,
fixed assets included in article 158-3 of the Tax Law was reduced from
forty (40%) to thirty percent (30%).
Considering that ISA has subscribed a legal stability agreement stabilizing,
among others, the above mentioned rules for energy transmission activities,
it must only comply with the provisions of the tax law amendment in those
activities different from energy transmission.
Tax regulations applicable to the companies in Bolivia provide:
According to Law No. 843 (as in force) and Supreme Decrees No. 24051 and
29382 of June 29 of 1995 and December 20 of 2007 respectively, every
corporation is subject to Corporate Income Tax –IUE– at the rate of 25% on
taxable earnings of each fiscal year, resulting from adjusting the accounting
income in accordance with the criteria defined in the above-mentioned
provisions. This tax, which is calculated and paid every year, is compensated
with the Transactions Tax –IT– of the following fiscal year, until its exhaustion,
or until the IUE is due again.
ISA Bolivia conducts accounting recording as provided by Decision on
Auditing and Accounting No. 41 issued by the National Technical Council of
Auditing and Accounting.
At December 31 of 2009 and 2008, provisions of Bs17,031,037 ($4,924) and
Bs31,757,595 ($10,078) respectively, were established with a charge to the
account “Tax on Corporations’ Earnings” (Loss).
Tax regulations applicable to the companies in Peru provide:
Income tax rate is 30%, calculated after determining workers bonuses of 5%
of pre-tax income.
Tax regulations applicable to the companies in Brazil provide:
Income tax rate is 15%, and an additional 10% surtax is determined on
annual taxable income exceeding BRL 240,000. An additional 9% must also
be paid for social contribution on taxable income.
45
Annual Report 2009
NOTE 17: OTHER LIABILITIES
Balance of other liabilities at December 31:
Other short-term liabilities
Advance revenue
Other
(1)
(2)
Total other short-term liabilities
Other long-term liabilities
Deferred taxes
Deferred income
Other
Total other long-term liabilities
(3)
(4)
2009
2008
276,238
67,638
128
182,763
16,783
-
344,004
199,546
218,219
111,400
59,686
201,070
66,813
67,141
389,305
335,024
(1) Includes: in XM $226,944 (2008: $151,304), and in CTEEP $46,658 (2008: $27,520) for collections in favor of energy market
agents, and for regulatory trust.
(2) Includes mainly, $39,423 of Proyectos de Infraestructura del Perú and $17,803 of XM for advances received from customers.
(3) Mainly in ISA, deferred revenue from the National Transmission System STN $80,341 (2008: $34,281) and infrastructure use
rights $28,722 (2008: $32,532).
(4) Includes $58,162 (2008: $63,675) of subsidiary CTEEP for other liabilities related to goodwill liability from purchase of 49% of
common shares of Empresa Paulista de Transmisión de Energía S.A. –EPTE–, incorporated in November of 2001 to CTEEP. Monthly
amortization of this goodwill liability is done under the straight-line methodology along the concession period of EPTE until
December of 2012.
46
14/03/201
Annual Report 2009
NOTE 18: SHAREHOLDERS’ EQUITY
SUBSCRIBED AND PAID-IN CAPITAL
Subscribed and paid-in capital of ISA (Parent Company) at December 31 was
distributed as follows:
2009
Shareholder
State investors
Ministry of Finance and Public Credit
Empresas Públicas de Medellín –EPM–
Subtotal
Public and private capital investors
Empresa Colombiana de Petróleos -ECOPETROLEmpresa de Energía de Bogotá -EEBSubtotal
Subtotal
Private investors
Fondo de Pensiones Obligatorias Protección
Fondo de Pensiones Obligatorias Porvenir
Fondo de Pensiones Horizonte
Fondo de Pensiones Obligatorias Colfondos
ING Fondo de Pensiones
Fondo de Pensiones Obligatorias Skandia S.A.
Abu Dhabi Investment Authority
Fondo de Pensiones Protección
Fiducolombia - ISA ADR Program
Fondo de Cesantías Porvenir
Other shareholders
Subtotal
Total outstanding subscribed capital
Repurchased own shares
(2)
Total subscribed and paid-in capital
Number of Shares
Value
% Participation (1)
569,472,561
112,605,547
682,078,108
18,679
3,693
22,372
51.411
10.166
61.577
58,925,480
18,448,050
77,373,530
1,933
605
2,538
5.320
1.665
6.985
759,451,638
24,910
68.562
54,621,241
51,130,021
35,629,587
28,248,455
20,022,106
9,207,793
2,635,195
2,604,383
1,924,700
1,669,417
140,533,358
1,792
1,677
1,169
927
657
302
86
85
63
55
4,609
4.931
4.616
3.217
2.550
1.808
0.831
0.238
0.235
0.174
0.151
12.687
348,226,256
11,422
31.438
1,107,677,894
17,820,122
1,125,498,016
36,332
584
36,916
100.000
(1) Participation percentage on outstanding shares.
(2) Shares initially held by CORELCA, reacquired in August of 1998. To date, all rights inherent to these shares have been suspended; consequently, they do not participate in
dividend distributions nor are they taken into account for establishing quorum to deliberate and decide.
47
Annual Report 2009
2008
Shareholder
State investors
Subtotal
Empresa Colombiana de Petróleos –ECOPETROL–
Empresa de Energía de Bogotá –EEB–
Subtotal
Subtotal
Private investors
Inversionistas extranjeros
Other shareholders
Subtotal
(2)
Number of Shares
Value
% Participation (1)
569,472,561
109,350,775
678,823,336
18,679
3,587
22,266
52.942
10.166
63.108
58,925,480
18,448,050
77,373,530
1,933
605
2,538
5.478
1.715
7.193
756,196,866
24,804
70.301
53,266,156
32,377,490
28,004,084
24,552,489
22,390,518
9,925,575
7,581,304
2,950,825
138,416,067
1,747
1,062
919
805
734
326
249
97
4,538
4.952
3.010
2.603
2.283
2.082
0.923
0.705
0.274
12.867
319,464,508
10,477
29.699
1,075,661,374
17,820,122
1,093,481,496
35,281
585
35,866
100.000
(2) Shares initially held by CORELCA, reacquired in August of 1998. To date, all rights inherent to these shares have been suspended; consequently, they do not participate in
dividend distributions nor are they taken into account for establishing quorum to deliberate and decide.
ISA can issue common and preferred shares, and shares with preferred
dividend but without voting rights. All shares are registered and circulate
either in a materialized or dematerialized manner, as decided by the Board of
Directors in the corresponding ruling.
Outstanding shares are common, registered and dematerialized. Depósito
Centralizado de Valores de Colombia –DECEVAL S.A.– is the entity where
securities are deposited for their administration and custody, to facilitate and
expedite the market agents' work.
SHARE ISSUE 2009
In December of 2009, ISA carried out the fourth underwriting of common
shares, according to decision of the Shareholders’ Meeting held on November
24 of 2006 to issue and underwrite by tender offer 88,410,731 common
shares, of which, 56,394,211 were successfully underwritten at the end of
2007 and the remaining 32,016,520 in December of 2009.
This offer was carried out through book building process, which was
approved by the Colombian Financial Superintendency by Decree 3780 of
October 1 of 2007. Under such scheme, investors proposed both the price and
the amount of shares they will be interested in buying. The issue was 2.8x
overbooked.
ISA's Board of Directors, in special meeting No. 686 of December 04, 2009,
formalized the public offer of the Company's shares and defined a
subscription price of $12,000 Pesos per share.
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Annual Report 2009
Funds obtained along this process will be earmarked 40% to capitalization of
affiliates and 60% to acquisitions and new business.
Underwritten shares were purchased by 541 existing shareholders and 1,257
new shareholders, for total 1,798 shareholders taking part in this
underwriting.
CAPITAL SURPLUS
Additional paid-in capital
The additional paid-in capital is the excess of the sales price over the par value
of the subscribed shares. In 2009 it increased by $383,148, corresponding to
share issuance held on December 09, 2009.
Received for works
This account represents amounts delivered by the National Government for
the construction of the first circuit of the 500-kV line to the Caribbean Coast.
RESERVES
Legal reserve
The law requires the Company to appropriate 10% of annual net income as a
legal reserve until the balance of the reserve is equal to 50% of subscribed
capital. This mandatory reserve may not be distributed prior to the
liquidation of the Company, but may be used to absorb or reduce net losses of
the year. Any balance of the reserve in excess of 50% of subscribed capital is at
the disposal of the shareholders.
Mandatory reserve for tax purposes
The Shareholders’ Meeting approved appropriation of this reserve from net
income, in compliance with Article 130 of the Tax Law, in order to obtain tax
deductions for depreciation in excess of book depreciation. As legally
provided, this reserve can be released whenever subsequent accounting
depreciation exceeds tax depreciation, or when the assets giving rise to the
incremental amount deducted are sold.
Reserve for repurchase of shares
Includes a special reserve for acquisition of Company’s own shares owned by
EPM worth $38,100.
Reserve for reinforcement of equity
In compliance with Article 47 of the bylaws, the Shareholders’ Meeting
approved an occasional reserve, so that the Company could retain its solid
financial position and maintain the financial indicators required by the rating
agencies, in order to obtain the investment degree and comply with
contractual commitments to financial entities.
Reserve for rehabilitation and replacement of STN assets
The Shareholders Meeting held on March 30, 2000, approved $24,933 reserve
for the rehabilitation and replacement of assets of the National Transmission
System, and on March 18, 2002, approved an additional reserve of $12,502.
EQUITY REVALUATION
Inflation adjustments on equity accounts recognized until December 31,
2000, have been credited to this account and charged to the income
statement. This amount cannot be distributed as dividend, but can be used to
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Annual Report 2009
increase subscribed capital.
As of year 2007, and according to regulations in force, the tax on equity is
accrued by decreasing this account.
SURPLUS FROM EQUITY METHOD
Contra entry of equity variations of investments in subsidiaries as a
consequence of application of the equity method (See Note 3.3).
NOTE 19: MEMORANDUM ACCOUNTS
The balance of memorandum accounts at December 31 was:
Debit
Fiscal-over-accounting excess
Other contingent rights
Other debit control accounts
Effect application of Resolution N° 364/2000
(1)
(2)
Total debit memorandum accounts
Credit
Claims and lawsuits (See Note 20.1)
Guarantees granted
Fiscal
Optic fiber availability agreement
Other credit control accounts
Total credit memorandum accounts
(3)
(4)
2009
2008
57,880
88,477
466,937
2,806,494
62,090
108,925
453,611
2,956,303
3,419,788
3,580,929
441,786
491,488
615,454
326,682
13,050
771,050
334,070
661,946
345,538
16,873
1,888,460
2,129,477
(1) Includes, mainly, collections for third parties by XM, Compañía de Expertos en Mercados S.A. E.S.P, the affiliate in charge, since
October 1, 2005, of the duties of Administrator of the Commercial Settlement System –ASIC–.
(2) Represents differences with accounting, resulting from application of inflation adjustment system for tax effects and differences in
accounting and tax deductions to determine ordinary net taxable income.
(3) ISA and its subsidiaries currently appear as party, as a defendant, plaintiff or as an intervening third party, of judicial processes of
administrative, civil and labor nature. None of the processes in which they appear as a defendant or as an intervening third party
could affect the stability of ISA’s companie. The companies’ management and their legal counsels consider remote any loss as a result
of such claims and lawsuits.
Likewise, ISA’s companies, in their own name, brought the legal actions necessary to carry out their corporate purpose and to defend
their interests (See Note 20).
(4) Includes agreement for optic-fiber capacity availability under which ISA granted Internexa S.A. E.S.P. availability over the capacity of
its own fiber optic installed on its own infrastructure and on third parties’ infrastructure, and those under usufruct. The agreement
was subscribed in order to allow INTERNEXA S.A. E.S.P. to meet the coverage, quality, reliability and capacity requirements of
telecommunications carriers and other customers.
19.1 CLAIMS AND LAWSUITS
Interconexión Electrica S.A. E.S.P. –ISA–
ISA currently appears as party, as a defendant, plaintiff or as an intervening
third party, of judicial processes of administrative, civil and labor nature.
None of the processes in which the Company appears as a defendant or as an
intervening third party could affect its stability. In its own name, it has taken
the necessary judicial measures to carry out its corporate purpose and the
defense of its interests.
Below is the information regarding the judicial processes which the Company
is a party to:
a. At December 31, 2006, ISA has filed administrative claims against:
50
Annual Report 2009
Electrificadora del Atlántico, Electrificadora de Bolívar and Compañía de
Energía de Magangué for default interest on accounts for the use of STN
and Energy Pool, for $14,854.
b. It has filed a civil claim against Sistep Ltda. and Aseguradora de Fianzas S.A.
–Confianza–, at the Circuit Civil Court No. 10 of Medellín, for USD1,936,618
plus $1,175, as a result of the delay in the delivery of equipment to the
Yumbo and La Esmeralda substations and resulting damages. Additionally,
ISA is claiming payment of the performance policy by Confianza.
c. Cundinamarca Administrative Tribunal, first Section. ISA has sued the
Superintendency of Public Utilities for $1,425 as a result of issuing
administrative acts that prevent ISA (ASIC) from exercising its rights to limit
power supplies and the collection of billings to Empresas Públicas de
Caucasia.
d. Administrative Tribunal of Antioquia. ISA has filed a nullity and redress
lawsuit against the tax authorities (Dirección de Impuestos y Aduanas
Nacionales –DIAN–), for $4,780, related to default interest in favor of ISA,
resulting from the non-timely reimbursing excess income tax paid in 1995.
The process is currently awaiting judgment from the Tribunal.
e. Administrative Tribunal of Antioquia. ISA challenged Resolution 1233 of
2001, by which the Municipality of San Carlos requested payment of taxes
by the public space occupation for $1,839 for the year 2000.
f. Nullity and redress process No. 064. Flores III LTDA & CIA. S.C.A. E.S.P., has
sued the State – Ministry of Mines and Energy, CREG, ISA and
Electrificadora del Caribe S.A. E.S.P.,– Claim: Declaration of nullity of CREG
Resolution 031 of July 22, 1999, by which the appeal presented by
ELECTRICARIBE S.A. was accepted, releasing the Company from paying
amounts invoiced by ISA for the restriction of the 220-110 kV
autotransformer. Declaration of nullity of alleged administrative act
resulting from failure to answer within the legal term a request for direct
repeal of the foregoing resolution and award payment of $2,343.
g. Administrative Tribunal of Antioquia. Termocandelaria has filed a nullity
and redress lawsuit against ISA, the Nation, the Ministry of Mines and
Energy, and CREG, in the amount of $20,794 regarding CREG Resolutions
034, 038 and 094 of 2001.
h. Administrative Tribunal of Antioquia. Central Hidroeléctrica de Betania
S.A. E.S.P., has filed nullity and redress lawsuits against ISA, the State, the
Ministry of Mines and Energy, and CREG, in the amount of $58,598 and
USD15,373,890, for capacity charges - CREG Resolutions 077 and 111 of
2000.
i Administrative Court of Antioquia. Emgesa S.A. E.S.P., has filed nullity and
redress lawsuits against ISA, the State, the Ministry of Mines and Energy,
and CREG, in the amount of $198,662 and USD82.4 million, and against
XM, the State, the Ministry of Mines and Energy, and CREG, in the amount
of $47,890 regarding application of CREG Resolutions 077 and 111 of 2000.
j. Administrative Court of Antioquia. Chivor S.A. E.S.P., has filed nullity and
and CREG, in the amount of $92,008 and USD32.5 million, and against XM,
the State, the Ministry of Mines and Energy, and CREG, in the amount of
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Annual Report 2009
$24,780 for capacity charges, regarding application of CREG Resolutions
077 and 111 of 2000.
k. Administrative Court of Antioquia. Proelectrica & Cia S.C.A. E.S.P., has filed
nullity and redress lawsuits against ISA, the State, the Ministry of Mines
and Energy, and CREG, in the amount of $9,207 regarding application of
CREG Resolutions 034 and 038 of 2001.
l. Administrative Court of Antioquia. Termotasajero S.A. E.S.P., has filed
The lawsuits for application by ISA, as the Administrator of the Commercial
Settlement System –ASIC–, of CREG Resolutions 077 and 111 of 2000,
capacity charges, correspond to CREG’s change in calculation
methodology, which according to the plaintiff companies caused them
damages; the same happens with Resolutions 034 and 038 of 2001. The
agents consider that these provisions considerably reduce their income. In
such transactions, ISA acted as the agent of third parties, and in this way its
own equity would not be at stake in said processes. According to legal and
technical analysis, ISA has enough grounds to consider that it will be
released in these processes, because of as Administrator of the Commercial
Settlement System it should have applied CREG regulations, duties from
which it could not be released. Invoices billed and resolutions issued by ISA
to answer the appeals, strictly comply with the aforementioned
resolutions; therefore, they cannot be the cause of alleged damages
claimed by the plaintiffs. Eventually, in case of negative results, ISA could
request compensation or account settling between the market agents
taking part in these transactions, which would permit the Company’s
equity to remain unharmed. This claim also applies to XM subordinate,
the current Administrator of the Commercial Settlement System –ASIC–.
m.Gómez Cajiao y Asociados has filed a contractual lawsuit in the amount of
$2,000 requesting the nullity of act awarding Public Bid C002, the nullity of
BL98 contract, and redress of its right as proponent.
n. Empresas Públicas de Medellín has filed a nullity and redress lawsuit
against ISA, the State, the Ministry of Mines and Energy, and CREG, in the
amount of $947 for recording of customer metering points.
o. Ninth Circuit Civil Court, Barranquilla. Claudia Andrea Córdoba and
Fabiana Zanín Córdoba have filed a tort claim against ISA and other for
$4,000 for the accident of a family member during the performance of a
contract.
p. Administrative Court of Antioquia. UTE APS has filed a contractual liability
claim against ISA for breach of contract in the amount of $32,018.
q. Administrative Court of Cundinamarca. KENZO JEANS S.A. and DIKAR S.A.
have filed a $7,000 claim against ISA for damages related to de-facto
easement.
r. Cundinamarca Administrative Tribunal, first section. ISA has sued the
Superintendency of Public Utilities for $923 for resolutions SSPD20082400007415 of March 26 of 2008 and SSPD-20082400018105 of June
18 of 2008, which imposed and confirmed a fine against ISA for the event
happened on April 26, 2007.
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Annual Report 2009
s. State Court, Fifth Delegated Prosecutor’s Office. ISA has filed a request to
be accepted as civil claimant in the criminal case against Orlando Antonio
Salas Villa for $7,418.
As of December 31, 2009, there exist other labor, civil and administrative
claims pending decision for a total amount close to $2,500 that are related to
the normal course of operations of ISA and TRANSELCA for $8,977. The
companies’ management and its legal counsels consider remote the
possibility of loss as a result of such claims
Administrative Court of Antioquia. Emgesa S.A. E.S.P., has filed nullity and
redress lawsuits against XM S.A. E.S.P., the State, the Ministry of Mines and
Energy, and CREG, in the amount of 47,890.
Administrative Court of Antioquia. Central Hidroeléctrica de Betania has
filed nullity and redress lawsuits against XM S.A. E.S.P., the State, the Ministry
of Mines and Energy, and CREG, in the amount of $16,094.
Administrative Court of Antioquia. AES Chivor Cía. S.C.A. E.S.P., has filed
nullity and redress lawsuits against XM S.A. E.S.P., the State, the Ministry of
Mines and Energy, and CREG, in the amount of $24,780.
Administrative Court of Antioquia. Fiduciaria La Previsora has filed nullity
and redress lawsuits against XM S.A. E.S.P., the State, the Ministry of Mines
and Energy, and CREG, in the amount of $911.
19.2 GUARANTEES IN FORCE
At 2009 year’s end the following bank guarantees were in force for ISA
(Parent Company):
a. Leasing payment liability; infrastructure leasing granted in 2004 by Leasing
de Crédito to Flycom Comunicaciones S.A. E.S.P., and subsequently
transferred in 2007 by this latter company to INTERNEXA S.A. E.S.P., The
balance as of December of 2009 is $1,115 and is in force until September 17,
2016.
b. Performance guarantee by ISA, for liabilities under ETESA GG-123-2007ISA4500033541 agreement whose purpose is the preparation of predesign and engineering for the Colombia-Panama Electric Interconnection
in HVDC, and technology transfer for ISA and ETESA, maturing in January
28, 2010.
c. Guarantee of compliance with the obligations corresponding to ISA, in
accordance with UPME-01-2007-PORCE III Public Bid, in force until
September 30 of 2010.
d. Guarantee of validity, effectiveness, and compliance with the offer
presented by ISA in the El Bosque Project UPME 02-2008 public bid, in force
until January 15, 2010.
e. Guarantee of compliance with the obligations incurred by ISA in the El
Bosque Project UPME 02-2008 public bid, in force until August 20, 2011.
f. Pledge by ISA for 100% value of current and future shares in subordinates Red
de Energía de Perú and ISA Perú, and to ISA Bolivia, granting of power, as loan
payment guarantee in favor of lenders. The term equals that of the loans.
53
Annual Report 2009
g. Joint and several guarantee signed on June 29 of 2007 between ISA as
guarantor and Banco Centroamericano de Integración Económica –BCIE–
as beneficiary; guarantees EPR’s liabilities under loan agreement with BCIE
for USD40 million related to SIEPAC project financing. The guarantee must
be valid until total principal is paid off (June 29 of 2027).
h. ISA guaranteed payment of two loans granted to its investments in Brazill:
USD22 million, long-term loan extended by BNDES to Interligação Elétrica
de Minas Gerais –IEMG–, and BRL58 million loan extended under similar
terms to Interligação Elétrica Norte e Nordeste –IENNE– by Bradesco. Such
guarantees mature in March of 2010.
REP’s in force guarantees:
Letters of guarantee and promissory notes with local financial institutions for
USD9,277,545 and USD24,650,000, respectively (2008: USD5,376,792 and
USD39,200,000, respectively) related to liabilities incurred with third parties.
ISA Capital Do Brasil’s in force guarantees:
ISA Capital do Brasil, established two (2) guarantees to back up loans
extended to Interligação Elétrica de Minas Gerais –IEMG– and Interligação
Elétrica Norte e Nordeste –IENNE–, CTEEP’s companies. For the first case a
BRL39 million standby letter of credit to back up long-term loan hired with
BNDES bank.
For IENNE, a similar structure worth BRL58 million to
guarantee the bridging loan hired with Bradesco bank. Such guarantees
mature in March of 2010.
ISA Capital pledged approximately 56.49 million common shares it owns in
CTEEP as guarantee for the Bonds.
19.3 COMMITMENTS
At 2009 year’s end the following commitments were in force:
ISA Capital do Brasil’s commitments derived from concession contract with
CTEEP:
Not transferring, assigning, or selling the controlling shares of CTEEP
without previous authorization from ANEEL.
As the guarantor of concession contract, ISA Capital do Brasil jointly and
severally assumes every obligation established.
ISA Capital do Brasil and ISA commit themselves to making capital
contributions necessary to make up for insufficient funds.
ISA Capital do Brasil and ISA are bound not to transfer, assign or sell direct
control capital participations, nor to change thereby the corporate
structure of CTEEP.
Any change in CTEEP’s control shall be reported to ANEEL.
CTEEP’s commitments derived from concession contract:
Financial coverage of special obligations is backed up by remuneration on
shareholders’ capital.
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Annual Report 2009
ISA Capital do Brasil and ISA shall be responsible for covering expenses
arising from Law 4819/58, as well as adjustment payments in the event of
negative contingency against the concessionaire.
ISA’s commitment derived from its affiliate ISA Bolivia:
“Support and Guarantee Agreement” under which ISA and TRANSELCA are
bound, among other things, to guarantee the loan granted by IDB and CAF
until loan contract expiration date. Likewise, ISA and TRANSELCA are bound
to pay balance pending with IDB and CAF, in case of Government intervention
or as of the moment the license is revoked.
ISA’s commitment derived from its affiliate ISA Perú:
Share Retention Agreement with ISA, TRANSELCA and IFC, which sets the
following limitations on transfers of the company’s shares: During the ten
(10) years following the closing date, as such term is defined in the concession
contract, ISA cannot transfer any share, if, as a result of the transfer, its
ownership is less than 25% of the corporation’s shares, except as otherwise
provided in Clause 2.1 (b) of the agreement.
Commitments by REP S.A.:
On August 29, 2002, a trust agreement for cash flows was subscribed by the
subsidiary (trustor), Banco Continental (beneficiary) and Bank Boston,
Peruvian Branch (trustee) to guarantee compliance of the obligations in
favor of the preferential creditors (Banco Continental and Citibank N.A.
Lima Branch). On March 31, 2005, the assignment of contractual position in
the Bank Boston, Peruvian Branch Trust Agreement of Cash Flows in favor
of Banque BNP Paribas Andes S.A. was signed. Then on June 28, 2006,
Banque BNP Paribas Andes S.A. assigned its contractual position in such
agreement to Banco Internacional del Perú S.A.
On February 15 of 2006, the company subscribed a loan contract with
Banco de Crédito del Perú S.A., for USD34,000,000.
The company has established the following guarantees for this loan:
- First mortgage collateral on the transmission system concession right
and on assets under concession.
- Pledge on shares belonging to the shareholders of Interconexión
Eléctrica S.A. E.S.P., TRANSELCA S.A. E.S.P., and Empresa de Energía de
Bogotá S.A. E.S.P.
Commitments acquired by ISA Perú:
The loan contract subscribed with International Finance Corporation –IFC– on
June 24 of 2002, for up to USD18 million, contains a commitment restricting
capacity to distribute dividends to the parent company unless it achieves a
minimum Debt Service Coverage –DSCR– of 1.20, value to be calculated on
the previous year’s audited Consolidated Financial Statements. In case
declaring dividends is called for on the basis of non-audited intermediate
Consolidated Financial Statements, the indicator shall be calculated taking
into account the last four quarters of the year, and a waiver must be issued by
the financial entity. Maturity date of this loan is April 15 of 2016.
Commitments by Consorcio TransMantaro:
On August 6 of 2009, TransMantaro subscribed a loan contract with Banco de
Crédito del Perú, for up to USD20,6 million. Among its provisions, this loan
establishes that TransMantaro must abstain from distributing dividends,
55
Annual Report 2009
reducing capital stock, or any other type of earnings distribution (i) during
the Chilca-La Planicie-Zapallal transmission line construction period, (ii)
whenever it is in default on its contractual obligations with it or any of its
financial creditors; (iii) whenever it incurs in any event of default, as
determined in the contract. Loan expiration date is May 15 of 2017. Such
restriction also applies to bond issues by TransMantaro.
Commitments acquired by ISA Bolivia:
Covenants and commitments related to loans with IDB and CAF include the
following:
Expansion of transmission assets, distribution of dividends subject to
achieving certain milestones regarding completion of projects, compliance
with certain financial tests and not having incurred in events of default.
Compliance with environmental laws, regulations and issues: any fact
constituting breach of laws and regulations could be considered an event of
default under IDB and CAF contract.
The corporation may not hire new loans other than those with IDB and CAF,
except those expressly authorized by the financers. Cash flow related to
operation and earmarked for liability payment shall be managed through
trust subscribed with Banco de Crédito de Bolivia S.A.
Commitments acquired by INTERNEXA S.A. E.S.P.:
Inter-institutional agreement with ISA
INTERNEXA gave continuity to the inter-institutional agreement through
which ISA provides it with services in the areas of computer science, human
talent management, organizational development, logistics, finance,
investment banking, corporate image, legal, financial and results control,
and in the energy transmission centers (ETCs). As to charges for services
rendered, it has been defined that the rate be equivalent to service-related
costs, which can be fixed or variable. The agreement became valid as of the
operations start-up date. Costs accrued as a result of it along 2009 came up to
$2,237 (2008: $2,144).
Fiber optics capacity availability agreements with ISA:
In December 2004, the company subscribed agreement with ISA under which
this company granted INTERNEXA S.A. E.S.P., for value, availability over the
capacity of its own fiber optic installed on its own infrastructure and on third
parties’ infrastructure, and those under usufruct. The agreement was
subscribed in order to allow INTERNEXA S.A. E.S.P., to meet the coverage,
quality, reliability and capacity requirements of telecommunications carriers
and other customers. During 2009, both parties agreed to modify the annual
billing basis, starting on January of 2010.
On December 4 of 2007 an agreement for a term of 20 years and one month
was signed, under which ISA grants INTERNEXA S.A. E.S.P., availability of
capacity of the fiber optic network of its ownership, installed on its
infrastructure and on that of third parties, as long as these latter expressly
authorize so, between the Substations of Copey-Valledupar, ValleduparCuestecita, and between Cuestecita-Venezuelan Border, and Valledupar
Substation-Caja Agraria Building in Valledupar.
Also in 2007, an agreement was subscribed under which ISA grants
INTERNEXA S.A.E.S.P., availability of the fiber optic network of its ownership,
installed on its infrastructure and on that of third parties, as long as these
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Annual Report 2009
latter expressly authorize so, in different links located between the Pailón
Substation and Buenaventura, between Las Vegas and Buenaventura,
between Bogotá and Villavicencio, between Tolú and Sincelejo, between
Cuestecita Substation and Riohacha, between Palos and Bucaramanga
Substations, and the connections from the electric substations to
INTERNEXA’s PDPs in Riohacha, Tolú, Sincelejo, Tunja, Montería and
Villavicencio Additionally, between Santa Marta and Rioacha, between
Villavicencio and Tunja, between Sincelejo and Montería, and the
connections from the electric substations to INTERNEXA'S PDPs in Riohacha,
Sincelejo, Montería, Tunja, Villavicencio and Santa Marta. This agreement
answers INTERNEXA’s infrastructure needs for complying with the
commitments agreed with its customer Telmex-Comcel. During 2009, both
parties agreed to modify the annual billing basis, starting on January of 2010.
Lastly, on December 09, 2008, an agreement was subscribed under which ISA
grants INTERNEXA S. A. E.S.P., for value, availability over the capacity of its
own fiber optic installed on its own infrastructure and on third parties’
infrastructure, in the Sabanalarga Substation – Derivation Tower links in
Baranoa and Derivation Tower in Baranoa-PDP Nogales.
Agreement between Empresa de Telecomunicaciones de Bogota S.A. E.S.P.,
INTERNEXA S.A. E.S.P., and ORBITEL S.A. E.S.P., (today EPM
Telecomunicaciones S.A. E.S.P.) for use of infrastructure:
On January 7, 2003, the company signed an agreement for the use of
infrastructure with Empresa de Telecomunicaciones de Bogotá S.A. E.S.P., and
ORBITEL S.A. E.S.P. (today, EPM Telecomunicaciones S.A. E.S.P.), for
constructing, equipping and providing a fiber-optic ring on the Atlantic Coast
for the joint use, operation and maintenance by the three companies, which
will determine the bases for its free commercial use. On March 17, 2008, the
parties subscribed Amendment 5 to such agreement, with the following main
changes: determination of a fixed monthly payment to INTERNEXA, whose
amount is independent of the traffic on the ring; the possibility for each party
to furnish the ring in an autonomous way; and the assumption by INTERNEXA
of the administration, operation and maintenance (preventive and
corrective) of the Northeast Branch, while the Northwest Branch
responsibility is assumed by ETB and UNE.
Agreement on the Use Rights for the Submarine Cable “ARCOS 1”
INTERNEXA S.A. E.S.P., participates with 1.041666% in this cable through an
ownership agreement. This submarine cable, denominated ARCOS, has been
designed with a ring-shaped topology that through 8,600 km of fiber optic
connects the United States, Bahamas, Turks & Caicos, Dominican Republic,
Puerto Rico, Curaçao, Venezuela, Colombia, Panama, Costa Rica, Nicaragua,
Honduras, Guatemala, Belize and Mexico. The initial investment was USD400
million.
TRANSNEXA S.A. E.M.A agreement:
Transnexa S.A. E.M.A. was established on November 29, 2002 in Quito,
Ecuador, together with Ecuadorian company Transelectric S.A.; INTERNEXA
S.A. E.S.P., participates with 50% of capital and Transelectric S.A., with the
remaining 50%. Commercial operation started in June of 2005.
Interconexión Eléctrica ISA Bolivia S.A. agreement:
ISA and TRANSELCA jointly took part on July 16, 2003, in the establishment of
Interconexión Eléctrica ISA Bolivia S.A. Participation in this corporation
stands at 0.01%.
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Annual Report 2009
Agreement on provision of carrier services between Internexa S.A. E.S.P. and
ETB:
On November 2004 the company signed an agreement to provide fiber optic
connection service under the national carrier scheme with rights of use for
fifteen years.
Services will be provided by INTERNEXA, offering ETB one Lambda, a
maximum 2.5 Gbps capacity optical channel, or STM1 capacity channels
configured as a fiber optics physical ring connecting Bogota, Medellin and
Cali.
Internexa S.A., agreement in Peru:
INTERNEXA S.A. E.S.P., was incorporated by public deed of October 13, 2006
and registered at the National Superintendency of Public Registry on
November 3, 2006. INTERNEXA S.A. E.S.P., participation is 99.99%; the other
shareholder is Genaro Garcia Domiguez with 0.01% participation. During
2009, INTERNEXA S.A. E.S.P., has done contributions to INTERNEXA S.A. in
Peru for $6,654 (USD2,749,218) and has extended credits for $796
(USD400,000).
Contract between INTERNEXA S.A. E.S.P., and Telefonica Moviles Colombia
S.A. for information transmission capacity provisioning rights:
On December 21, 2005, the company subscribed an agreement to supply
information transmission capacity provisioning up to 32 STM-1 and to
provide management, operation and preventive and corrective maintenance
services to the associated information transmission networks, with 8-year
duration.
Irrevocable rights for Comcel S.A. and Telmex Colombia S.A. to use the fiber
optics:
On December 5, 2006, Internexa S.A. E.S.P., received from Comcel S.A. and
Telmex Colombia S.A., a purchase order for the irrevocable rights of use over
three optic-fiber pairs for a total length of 4,394.73 kilometers and for the
provision of operation and maintenance services for a period of 20 years.
First contract between INTERNEXA S.A. E.S.P., and Colombia Movil S.A. E.S.P
for information transmission capacity provisioning rights:
On February 2, 2009 was commissioned the information transmission capacity
provisioning right of one Lambda, at STM-1 level, in a nationwide ring
configuration between Bogota, Cali, Medellin, Sincelejo, Barranquilla,
Valledupar and Bucaramanga, with 15-year duration. The contract includes
last-mile connections to the customer premises in each city provided by third
parties.
Second contract between INTERNEXA S.A. E.S.P., and Colombia Movil S.A.
E.S.P for information transmission capacity provisioning rights:
On December 1, 2009 was commissioned the second information
transmission capacity provisioning right of one Lambda at STM16 level, in a
regional ring configuration between Riohacha, Valledupar and Cuestecitas
with 10-year duration. The contract includes last-mile connections to the
customer premises in Riohacha and Valledupar and co-hosting in Cuestecitas,
contracted with third parties in order to implement customer’s radio links.
Transport capacity indefeasible right of use for Comcel S.A., and Telmex
Colombia S.A.:
On December 5, 2006, the company received from Comcel and Telmex a
purchase order for transport capacity indefeasible right of use and operation
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Annual Report 2009
and maintenance service provisioning of INTERNEXA’s capacity transport
network with 20-year duration. During 2009, three Lambdas, at 10 Gbps over
the DWDM optical network, were implemented for these customers.
Contract for the leasing of the Cartagena-Riohacha stations for the Arcos
project:
On June 16, 2004, the company subscribed a leasing contract with New
Network de Colombia Ltda., under which, INTERNEXA commits to offering
space in the Cartagena and Riohacha facilities in advance lease for 25 years.
Contract between TRANSELCA S.A. E.S.P., and INTERNEXA S.A. E.S.P. for fiber
optics leasing:
On December 7, 2004, the company signed a leasing contract for one pair of
dark fiber optic cables of INTERNEXA´s network from Nueva Barranquilla
Substation to Sabanalarga substation, with 15-year duration.
Contract between Unisys de Colombia S.A., and INTERNEXA S.A. E.S.P for
technology platform support:
On October 30, 2009, INTERNEXA S.A. E.S.P signed a contract with Unisys,
whose object is to support the technology platform, including planning,
supply, incorporation, administration, maintenance and support of
technology elements and services required to fulfill corporate and company
requirements, with 7-year duration. This contract was signed following ISA’s
advice to all its affiliates and subsidiaries, according to the Interadministrative group assessment that carried out the selection process.
Fiber optics right of use and network rights purchased to third parties:
On October 27, 2008, INTERNEXA S.A. E.S.P received from TIGO the awarding
to the Private Offer Invitation for Service Purchase CM-VR-023-08.
Among the activities needed to fulfill the contracted obligations it was
necessary to purchase IRUs (Indefeasible Rights of Use) for ringed dark fiber
optics and circulating capacities, for 15-year duration. These rights are:
(millions)
Supplier total
Amount contracted
Contract term
COP 3,024
COP 2,040
COP 1,900
15 años
15 años
15 años
MEDIA COMMERCE
PROMITEL
BTLATAM
Infrastructure leasing obligation
In 2002 and 2005, the company subscribed an infrastructure leasing to
finance the purchase of telecommunications assets. The first operation was
conducted through syndicated leasing with Leasing Bancolombia, Helm
Leasing S.A., and Leasing de Occidente; the second one with Leasing
Bancolombia. Los valores pagados afectan directamente el Estado de
Resultados como gasto de arrendamiento, ya que tiene la característica de
leasing operativo.
19.4 AGREEMENT FOR LEGAL STABILITY
Interconexión Eléctrica S.A. E.S.P. –ISA–
On June 27, 2008, ISA and the Ministry of Mines and Energy subscribed the
during 20 years. The agreement provides for legal stability regarding income
tax regulations, among which: income tax rate, deduction of inflation
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Annual Report 2009
component of financial expenses, special 40% deduction for new
investments in new productive real fixed assets, tax discount on VAT paid in
import of machinery for energy transport, presumptive income equal to 3%
of net fiscal equity, and transitoriness of equity tax.
This agreement guarantees that, in the event of adverse modification to the
regulations stabilized under the agreement, unmodified regulations shall
continue to apply during the term of the agreement.
ISA Perú S.A.
On March 29, 2001, the company subscribed a legal stability agreement with
the Peruvian Government under Decrees 662 and 757 and Law 27342. The
agreement comes into force concurrently with the concession agreement,
and continues throughout the term of the concession agreement.
During the term of this agreement, the Peruvian Government is committed to
guarantee the legal stability for the company in the following terms:
Stability in the tax regime related to income tax, thus maintaining the
regulations that were in force at the time of subscription of the
agreement.
Stability in the contracting regime of the company’s employees.
Income tax rate is 22%.
As permitted by Article 87 of the TAx Code, and upon compliance with the
provisions of Supreme Decree No. 151-2002-EF, as of January 1 of 2005, the
company has kept its accounting records in US dollars.
The Fiscal Administration has the power to revise, and if the case so
deserves it, correct the Income Tax determined by the company during the
last four years starting on January 1st of the year following that of
submission of corresponding income tax forms (years subject to control).
The years 2003 to 2008 are subject to fiscal control.
REP S.A.
On July 26, 2002, the subsidiary subscribed a legal stability agreement with
the Peruvian Government to be in force along the concession term. The
agreement is related to the capital contributions to be made by shareholders
in the amount of USD20 million which were fully paid in December 31, 2002.
The agreement offers the following guarantees to investors and the
investment recipient:
Stability in the tax regime related to income tax
Stability in the contracting regime of the company’s employees.
TransMantaro S.A.
On February 24, 1998, the company subscribed a legal stability agreement
with the Peruvian Government to be in force along the concession term. The
in the amount of USD50 million, which were fully paid in December 31, 1999.
The agreement offers to investors and the investment recipient stability in
the tax regime related to income tax and stability in the contracting regime of
the company’s employees.
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Annual Report 2009
On May 16, 2004, the company subscribed an addendum to the legal stability
agreement with the Peruvian Government, clarifying that the required
capital contributions in the amount of USD50 million were to be in force
during the construction of the transmission line and, that starting October 8,
2000, commissioning date of electric transmission services, the determination
of the capital amount was to be subject only to the requirements, conditions
and limitations established in the company’s bylaws and in the General Law
of Corporations.
On October 27, 2006, the company subscribed an addendum to the legal
stability agreement with the Peruvian Government, under which,
clarification was made as to the actual amount of capital contributions being
USD43,005,250.
INTERNEXA S.A. in Peru
On December 10, 2007, the company subscribed a legal stability agreement
with the Peruvian Government to be in force during ten years. The
in the amount of USD5 million, which were fully paid in December 31, 2009.
The agreement offers to investors and the investment recipient stability in
the tax regime related to income tax and stability in the contracting regime of
the company’s employees.
NOTE 20: OPERATING REVENUE
This is revenue from services delivered by ISA’s companies for: Transmission of
electric power (use of the STN), connection to the National Transmission
System, Energy Transport ancillary services (management, operation, and
maintenance, specialized technical services, special studies, infrastructure
availability, and project management), organization, administration, trading
and delivery of telecommunications services, any activities related to
construction of transmission lines, any electricity project, and in general, any
activity in the construction sector.
Red de Energía del Perú –REP– Concession contract
On June 5, 2002 the Peruvian government awarded Interconexión Eléctrica
S.A. E.S.P. –ISA– the concession for the electric transmission systems operated
by Empresa de Transmisión Eléctrica Centro-Norte S.A. –ETECEN– and
Empresa de Transmisión Eléctrica del Sur S.A. –ETESUR–. Once the project was
awarded, the company was established to start operations on September 05,
2002; on the same date the agreement under which ISA transfers to the
company its concession rights was signed. The concession agreement defines
the rights and obligation of the parties, as well as the rules and procedures
that govern the procurement of goods and services, the exploitation of the
transmission line, the provision of the service, and the transfer of all the assets
to the state, upon the lapse of the concession. The concession term is thirty
years as of September 05, 2002.
Additional clauses to the concession agreement were approved in March and
July of 2006 providing execution of two expansions, as follows: Expansion 1:
Construction of Chilca-REP Substation and expansion of several lines (final
investment audited on April 18, 2008: USD36,808,819) and Expansion 2:
construction of the second circuit of Zapallal – Paramonga Nueva – Chimbote
1 transmission line, and expansion of associated substations. Commissioning
of the project took place in March of 2008; total audited investment as of
November 24, 2008 was USD35,020,600.
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Annual Report 2009
Additional clauses to the concession agreement were approved in May of
2007 providing execution of Expansion 3: for Ica, Marcona and Juliaca
substations, the date set was February of 2009. As of September 30, 2009, the
company had invested USD16,517,865, according to closing audit. Expansion
4: capacitive compensation for the Lima region: Santa Rosa and Chavaría
substations both at 60 kV, start of operations was January of 2009 and total
audited investment as of May 31, 2009 USD4,843,151.
Expansion 5: Includes expansion of Quencoro, Azangaro, Trujillo Norte, Piura
Oeste, Tingo María, Independencia substations and installations necessary
for connection of Bellavista-Tocache project at Tingo María, Aucayacu y
Tocache substations. Initial budget was USD26,695,693; however, according
to bids received, such budget would be raised to USD38,926,127. As of
December 31, 2009 investment totaled USD6,491,612.
Concession Contract of Interconexión Eléctrica ISA Perú
On February 16, 2001, ISA was awarded the International Public Bidding in
the integral project modality for concession to the private sector of the
Oroya-Carhuamayo, Paragsha-Derivación Antamina and Aguaytía-Pucallpa
power lines (the project). On April 26, 2001, the affiliate and the Peruvian
State, through the Ministry of Energy and Mines, subscribed the concession
contract for design, procurement of goods and services, construction and
exploitation of electric transmission lines as well as delivery of electricity
service for a period of thirty-two (32) years, including a two-year period for
construction. During the term of the contract, the subsidiary will be the
owner of the assets of the concession that it has procured, and may use the
concession’s assets for delivery of electricity transmission services.
Concession Contract of Consorcio Transmantaro S.A.
On June 17, 2008, ISA, in association with Empresa de Energía de Bogotá, won
the international public bidding conducted by Agencia de Promoción de la
Inversión Privada de Perú –PROINVERSIÓN– to design, finance, construct,
operate and maintain one substation and two energy transmission lines that
will connect Chilca with Zapalla for a 30-year period. As of December 31 of
2009, investment totaled USD39,125,638.
In June of 2009, TransMantaro subscribed with the Ministry of Energy and
Mines an addendum to the concession contract to expand transmission
capacity of the Mantaro-Socabaya line, so as to meet power demand growth
in the South of the country. As of December 31 of 2009, investment totaled
USD1,984,565.
Ica-Independencia Concession
The Investment Committee of the Ministry of Mines and Energy awarded ISA
the Reinforcement of the Mid-south Transmission System project:
Independencia - Ica Transmission Line" at 220 kV. The bid for USD9,100,237
investment cost included the commitment to carry out the work in 18 months;
concession will last 30 years. As of December 31 of 2009, investment totaled
USD479,732.
Zapallal-Trujillo Concession
ProInversión awarded ISA (Parent Company) the Zapallal (Lima)-Trujillo (La
Libertad) transmisión line; Consorcio TransMantaro S.A. will be in charge of
the project.
ISA offered a total service cost of USD25,819,000 per year that guarantees
lower tariffs for the transport of energy to several regions in the country. ISA
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Annual Report 2009
will invest USD250 million to construct the transmission line and operate it
along 30 years; transmission capacity will be 600 MW and the line's length,
530 km. As of December 31 of 2009, investment had not started yet.
CELEPSA – Private Contract
El Platanal transmission line that integrates El Platanal Substation located at
El Platanal generation plant, property of customer CELEPSA, started
operations in August of 2009. It is located in Lima, in the Cañete Province,
and Chilca Substation, owned by Red de Energía del Perú S.A. This line
permits interconnection between the CELEPSA generator and the National
Interconnected Electric System –SEIN–; work cost is USD16.4 million; it has 220
MW capacity, and it will bring the Company an additional USD2 million per
year. As of December 31 of 2009, project cost was USD16,379,665; final
project cost closing, as well as approval by CELEPSA are pending.
Miski-Mayo – Private Contract
Under contract subscribed on March 6, 2009, the company is bound to
provide the electric transmission service to Miski Mayo mining company. As a
result, TransMantaro is bound to construct a 138 kV transmission line and a
220/138 kV substation to connect the Bayovar mining project, in Piura, to the
National Electric Interconnected System.
Contract term is 20 years, and annual revenue includes annual investment,
administration costs, operating costs, maintenance and reinvestment costs
for changes or facilities substitution; such revenue shall be updated yearly
through the Finished Goods Less Food and Energy index published by the
Labor Department of the United States of America. As of December 31 of
2009, USD6,734,765 has been invested.
Concession Contract of INTERNEXA in Peru
On July 03, 2007, INTERNEXA S.A. was authorized by the Ministry of Transport
and Communications of Peru to deliver, under concession, national and
international long-distance carrier services during a 20-year term.
License Contract of Interconexión Eléctrica ISA Bolivia
On July 31, 2003, the corporation signed with the Superintendency of
Electricity the license contract to exploit the electric industry in the activity of
transmission for the Santiváñez-Sucre, Sucre-Punutuma and Carrasco-Urubó
lines at 230 kV, for a term of thirty (30) years starting on the commencement
of commercial operation of the lines. This document was filed with the State
Notary on August 29, 2003.
On September 17, 2005, ISA Bolivia S.A. was authorized as agent for the
Wholesale Electricity Market through Resolution No. 186/2005-5 of CNDC.
Expansion of the Interconnection Trunk System –STI– with incorporation of
the Arboleda 230/115 kV Substation was approved through Resolution No.
371/2006 dated November 24, 2006. The substation was concluded on June
23, 2008 and commercial operation started in July 2008.
Concession Contract of Companhia de Transmissão de Energia Elétrica
Concession contract with the Government of Brazil through ANEEL
subscribed on June 20, 2001 and extended for 20 years as of July 08, 1995, for
exploitation of the public utility of electric power transmission, including the
basic grid and transmission facilities. According to articles 63 and 64 of
Brazilian Decree No. 41.019 of February 26, 1957, assets and facilities used in
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Annual Report 2009
transmission are allocated to such services and cannot be retired, sold,
assigned or given as mortgage collateral, without prior express authorization
of the regulator. ANEEL Resolution No. 20/99 sets rules for de-allocation of
assets of the electric energy public utility concessions and grants prior
authorization to de-allocate unproductive assets.
According to the concession contract, every four years after its subscription,
ANEEL will revise the Permitted Annual Income –RAP– related to energy
transmission for authorized project’s facilities that started commercial
operation after December 31, 1999, as a measure to promote efficiency and
tariff changes in accordance with specific ruling to be issued by ANEEL.
NOTE 21: OPERATING COSTS
Operating costs for the years-ended December 31 are detailed as follows:
Personnel expenses
Materials and maintenance
Cost of construction services for third parties
Fees
Insurance
Rentals
Utilities
Advertising and publications
Miscellaneous
(1)
Total operating costs before depreciation,
amortization and transfers
Depreciation
Amortization
Total depreciation, amortization and transfers
Total operating costs
2009
2008
250,742
81,650
6,972
149,175
3,566
11,290
14,585
73,770
882
19,347
239,828
69,303
21,523
142,360
6,188
12,079
12,815
68,970
870
35,285
611,979
609,221
176,816
253,464
164,110
227,306
430,280
391,416
1,042,259
1,000,637
(1) Decrease in cost of constructions services for third parties with respect to 2008 is due to important advancement of contracted
projects achieved in such year.
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Annual Report 2009
NOTE 22: ADMINISTRATION EXPENSES
Administration expenses at December 31 consisted of:
2009
2008
172,080
13,240
35,049
13,658
9,807
6,931
11,638
4,102
59,635
163,222
12,509
22,726
21,645
11,214
3,346
5,849
4,624
69,587
326,140
314,722
18,133
111,567
65,427
8,465
106,465
18,604
Total depreciation, amortization and
provisions
195,127
133,534
Total administration expenses
521,267
448,256
Personnel expenses
Fees
Insurance
Rentals
Utilities
Miscellaneous
(1)
Total administration expenses before
depreciation, amortization and provisions
Depreciation
Amortization
Provisions
(2)
(1) Variation corresponds to lower valuation of ISA Capital’s swap associated to devaluation of Brazilian Real versus the US Dollar.
(2) Corresponds basically to $107,249 in CTEEP for tax credit balance originated by application of Law No. 11941 of May 27 of 2009,
through which payments of contributions to PIS and COFINS for the years 2004 to 2007 were revised.
TOTAL OPERATING COSTS AND EXPENSES
The following table details total operating costs and expenses for 2009 y
2008:
Personnel expenses
Cost of construction services for third parties
Fees
Insurance
Rentals
Utilities
Miscellaneous
Total costs and expenses before depreciation,
amortization and provisions
Depreciation
Amortization
Provisions
Total depreciation, amortization and provisions
Total costs and expenses
2009
2008
422,822
94,890
6,972
184,224
17,224
21,097
21,516
85,408
4,984
78,982
403,050
81,812
21,523
165,086
27,833
23,293
16,161
74,819
5,494
104,872
938,119
923,943
194,949
365,031
65,427
172,575
333,771
18,604
625,407
524,950
1,563,526
1,448,893
No internal or external advisors with the main function of processing affairs
with public or private entities, or advice on or prepare studies for such effect
were hired in 2009.
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Annual Report 2009
NOTE 23: NON-OPERATING REVENUES AND EXPENSES
Non-operating revenues at December 31 included:
2009
2008
16,245
23,571
113,773
42,666
38,406
209,924
4,791
7,118
196,255
260,239
20,623
8,222
5,625
4,711
3,182
487,242
37,521
10,663
13,676
4,231
3,728
309,089
Total exchange difference
529,605
378,908
Total financial revenues
725,860
639,147
534
1,093
81,893
2,214
1,494
51,884
3,589
823
31,287
5,492
12,910
100,619
Total extraordinary revenues and others
139,112
154,720
Total non-operating revenues
864,972
793,867
Financial revenue
Interest
On overdue accounts receivable and other loans
Investment valuations
Commercial, conditioned and agreed discounts
Monetary variation (Brazil)
(1)
(2)
Total intereses
Exchange difference
Cash
Accounts receivable
Investments abroad
Other assets
Accounts payable
Extraordinary revenues and others
Indemnities
Rentals
Recoveries
Revenue from prior years
Gain on sale of property, plant and equipment
Other
(3)
(1) Variation corresponds to lower valuation of ISA Capital’s swap associated to devaluation of Brazilian Real versus the US Dollar.
(2) Corresponds basically to $107,249 in CTEEP for tax credit balance originated by application of Law No. 11941 of May 27 of 2009,
through which payments of contributions to PIS and COFINS for the years 2004 to 2007 were revised.
(3) Increase corresponds basically to CTEEP, from recovery of provision for retirement pensions with the CESP foundation, amounting to
$52,127.
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Annual Report 2009
Non-operating expenses for years-ended December 31 included:
Financial expenses
Interest and commissions
On financial liabilities
Interest on bonds
Commissions
Administration of security issues
Loss from valuation and sale of investments
Miscellaneous
(1)
(2)
Total interest and commissions
Exchange difference
Assets
Investments
Accounts payable
Total financial expenses
Extraordinary expenses and others
Losses on casualties
Loss from retirement of assets
Other
Total extraordinary expenses and others
Prior years adjustments
Total other expenses
Total non-operating expenses
(3)
2009
2008
124,942
264,671
171,116
2,263
430,388
24,127
150,279
275,275
13,950
1,983
7,174
35,492
1,017,507
484,153
10,253
8,003
9,070
94,018
7,333
18,570
19,192
673,962
121,344
719,057
1,138,851
1,203,210
5,482
17,379
30,490
11,481
23,371
19,768
53,351
42,947
96,298
54,620
4,091
58,711
1,235,149
1,261,921
(1) Increase in bank fees corresponds basically to CTEEP for the amount of $149,774, related to debt increase.
(2) Increase corresponds to the loss resulting from SWAP exchange rate variation of ISA Capital do Brasil for the year 2009, which
amounted to $428,498.
(3) Includes mainly $17,953 of CTEEP corresponding to adjustments to intangible assets amortization for the previous years, and
$17,443 of REP for application of NIC 37 for overhaul works.
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Annual Report 2009
NOTE 24: FINANCIAL INDICATORS
Some financial indicators at December 31:
2009
2008
RETURN ON ASSETS
Net income/Total assets (%)
1.8%
1.6%
RETURN ON EQUITY
Net income / Equity (accounting income) (%)
5.1%
4.8%
6.18
5.34
111.03%
101.05%
43.3%
46.5%
119.6%
136.0%
INDICATOR
EBITDA/ Operating interest (times)
LIQUIDITY (%)
Current assets/ current liabilities
INDEBTEDNESS (%)
Liabilities / Assets
LEVERAGE (%)
Liabilities / Equity
RETURN ON ASSETS: Results explained mainly by better results obtained by
the affiliates.
RETURN ON EQUITY: Results explained mainly by better results obtained by
the affiliates and subsidiaries.
EBITDA/ OPERATING INTEREST (TIMES): Better EBITDA resulting from
increased revenues and optimization of expenses as well as lower interest
associated to drop in debt.
LIQUIDITY: Increase is due to increased marketable investments and reduced
short-term debt, resulting from share issuances.
Noteworthy is the fact that the electric energy transport business is supported
by a strong physical infrastructure; therefore, a large percentage of its
expenses (depreciation, provisions and amortization) do not imply cash
expenditure, which allows for coverage of short-term liabilities with cash
flow from the business.
INDEBTEDNESS: Reduction explained by debt payment and increased longterm investments, cash and marketable investments.
LEVERAGE: Decrease corresponds to increased equity resulting from share
issuance of ISA (Parent Company).
NOTE 25: CORPORATE CHANGES
ISA CAPITAL DO BRASIL S.A.
On February 28, 2008, the special shareholders’ meetings of ISA’s companies
ISA Participações do Brasil Ltda. and Companhia de Transmissão de Energia
Elétrica Paulista –CTEEP–, approved the incorporation of ISA Participações do
Brasil into CTEEP. Such corporate restructuring will permit improved cash
flow for CTEEP through availing of the fiscal benefit generated by
amortization of goodwill in CTEEP.
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Annual Report 2009
NOTE 26: SUBSEQUENT EVENTS AND RELEVANT ISSUES
Tariff revision
At the beginning of the year 2009, CREG issued Resolution 011, to revise,
among other issues, the transmission activity remuneration scheme,
generating a reduction of unit costs recognized for the different
constructive units (nearing 14%), an increase in the useful life of each one
of them (from 25 years to 30 years for substation equipment and 40 years
for transmission lines), a remuneration rate increase (from 9% to 11.5%
annually in real terms before taxes), and a radical change in AOM expenses
remuneration (going from a fixed as-new replacement value –VRN–
percentage of assets to a scheme that aims to recognize efficient costs and
expenses incurred by the transmission companies).
Similarly, in the year 2008, CREG issued resolution 097, that modifies the
distributors’ remuneration scheme, and changes parameters relevant for
determining connection charges paid by distributors to the owners of the
connection assets (among them ISA and TRANSELCA).
These resolutions are not in force yet, (or only for some distributors), but they
are expected to become binding in the first semester of 2010, when they will
affect the Company’s financial situation: Resolution 011, because it will
directly apply to the revenue for use of the STN received by ISA, and
Resolution 097, because it becomes a reference to negotiate connection
contracts and the charges the energy distributors pay us.
Even though both resolutions will affect the company, their impact is not
expected to be significant.
The periodic tariff revision in CTEEP previously foreseen by ANEEL for July
of 2009 was postponed until July of 2010, according to Regulatory
Resolution No. 386. However, its application is retroactive as of July 1° of
2009.
Accounting model – convergence to IFRS
For the second quarter of 2010, the Superintendency of Domiciliary Public
Utilities –SSPD– has foreseen issuance of the resolution that will
incorporate the General Accounting Model in convergence with
international financial reporting standards. Such model might generate
important changes in the recognition, valuation, and disclosure of
financial information. The above notwithstanding, ISA S.A. E.S.P.,
TRANSELCA S.A. E.S.P., XM S.A. E.S.P., and INTERNEXA S.A. E.S.P., must
comply with the Public Accounting Regime established by Colombia’s
General Accounting Office.
In Brazil, laws 11638/07 and 11941/09 modified and introduced new
provisions to the law of corporations to enable the process of convergence
with international accounting standards in that country.
Autopistas de la Montaña Project
The State, represented by Instituto Nacional de Concesiones –INCO–, and
ISA, subscribed on January 28, 2010, the Inter-administrative agreement
that will permit development of the Autopistas de la Montaña Project.
Under such document ISA is bound to conduct engineering,
environmental, traffic, legal and financial studies as well as to construct,
operate, maintain and commercially exploit four road corridors with an
approximate length of 1,251 km.
69
Annual Report 2009
According to preliminary studies carried out by ISA, the project’s estimated
cost is $5,600,000 million, which shall be financed with contributions from:
the National Government ($1,000,000 million) according to CONFIS
document of January 27, 2010; the Antioquia Province Government
($600,000 million) as approved by the Antioquia Province Legislature; and the
City of Medellín ($400,000 million) as approved by the city Council.
Remaining $3,600,000 million will come from ISA’s capital contributions and
financing to be obtained for the project.
New Projects
On September 15, 2009, the Mining and Energy Planning Unit –UPME– under
public bidding awarded ISA the construction of works for electric
interconnection of El Bosque project. ISA will be responsible for
constructions, assembly, putting into operation, administration, operation
and maintenance of El Bosque 220 kV substation and associated transmission
lines. The project’s expected date for start of operations is May of 2011.
Road concessions in Chile
At the end of 2009, ISA reached an agreement with Spanish Cintra
Infraestructuras to acquire 60% of the interest such company held in Cintra
Chile Ltda., a company that controls five road concessions in Chile. The
transaction for the 60% amounts to 7,150,000 Unidades de Fomento,
equity value, equivalent to approximately USD300 million (exchange rate
and UF as of December 22 to be updated upon closing). ISA has a purchase
option and Cintra a sale option for the remaining 40% of capital.
The effectiveness of such transaction is subject to the notices,
authorizations and registrations required in Spain, Colombia, Chile and
any other jurisdiction in which the participants are present.
Authorization to establish DERIVEX S.A.
In Resolution 2001 of 2009, the Colombian Financial Superintendency has
authorized ISA’s affiliate, XM, and the Colombian Stock Exchange to establish
Administradora de Sistemas de Negociación de Valores “DERIVEX S.A.”, a
corporation whose purpose will be the negotiation and recording of
operations with financial derivatives with electric energy, gas, fuel and/or
other energy commodities as underlying assets.
New Political Constitution of the Bolivian State
A New Political Constitution was promulgated on February 07, 2009.
Among other issues, the new constitution provides that “it is the duty of
the State, at all government levels, to provide basic services through
public, mixed-economy, cooperative or communal entities. In the case of
electricity, service can be provided under agreements with the private
sector. Service provision must be effected under criteria of universality,
responsibility, accessibility, continuity, quality, efficiency, efficacy,
equitable tariffs, necessary coverage, participation and social control.
The New Political Constitution of the State shall be implemented through
promulgation of regulatory legal provisions. To date, it is not possible to
determine the effect of the New Constitution, if any, on the future
activities of the corporation.
Bond issues in CTEEP
On December 19, 2009, CTEEP issued through book building, 54,860 bonds in
two series for a total of BRL 548,600. Funs were actually received in January of
2010. Interest for the two series shall be paid semiannually on December 15
and July 15 of each year, beginning on July 15, 2010.
70
Annual Report 2009
Dividend payment in CTEEP
On January 11, 2010, CTEEP’s Administration Council approved payment of
BRL 161 in dividends corresponding to earnings of 2009, which will be paid as
of January 22, 2010.
Restructuring of ISA Capital do Brasil Bonds
On February 05, 2010, the Board of Directors of ISA approved restructuring
of the foreign-currency debt of its affiliate ISA Capital do Brasil, and as part
of the process, to present tender offer to repurchase bonds maturing in
2017 for up to USD354 million.
On March 08, 2010 ended the tender offer to repurchase bonds maturing
in 2017 issued by ISA Capital do Brasil abroad for USD354 million (8.800%
Senior Notes due 2017). 91.06% of total bonds were redeemed, equivalent
to USD322.3 million.
At the Special Shareholders’ Meeting held on March 09, 2010, the
following issues were approved in the terms of the proposal of the
Administration Council dated March 08, 2010: (i) Increase the Company’s
capital stock by BRL 840,000,017.43 of which, BRL 420,000.01 will be
earmarked for capital stock and BRL 839,580,017.42 for the Company's
capital reserve account, through creation and issuance of 415,691,162
redeemable preferred shares entitled to accumulated fixed dividend,
which were subscribed and paid for on such date. The capital stock
increases then from BRL 839,778,000.00 to BRL 840,198,000.01, divided
into 1,256,316,162 shares; (ii) reduce the mandatory dividend; (iii) The
change in the company’s bylaws in order to include the above-mentioned
modifications was carried out through a Shareholders Agreement
between the company’s preferred and regular shareholders.
Increase in capitalizations
An increase in capital stock of Empresa Propietaria de la Red –EPR– was
subscribed in Panama, on December 10, 2009, through minute No. 8 of the
Board of Directors. To ISA, holder of a ninth of shares, it means an increase of
875 shares for a total of 6,500. Such variation implies USD875,000 capital
contribution, for which a payment term until March 31 of 2010 was agreed.
Interconexión Eléctrica Colombia-Panamá -ICPCapital increase for ICP in the amount of USD875,000 was carried out in
February of 2010.
71
Annual Report 2009
ABBREVIATIONS
ACOLGEN:
ASIC:
BRL:
CAN:
CIGRE:
CVM:
CGN:
CND:
COP:
CRD:
CREG:
CFO:
CT:
DIAN:
ECA:
EPR:
ETECEN:
FAER:
FAZNI:
FOES:
HVDC:
JPY: J
LAC:
MEM:
NDF:
PLC:
PRONE:
PT:
REP:
RTU:
SAC:
SIC:
FS:
SID:
STE:
STN:
UPME:
USD:
VQ:
72
Asociación Colombiana de Generadores (Colombian
association of generators)
Administration of the Commercial Settlement System
Brazilian Real
Andean Community of Nations
International Council on Large Electric Systems
Comissão de Valores Mobiliários (Brazil)
National General Accounting Office:
National Dispatch Center
Colombian Pesos
Regional Dispatch Center
Energy and Gas Regulatory Commission
Dark Fiber
Current Transformer
Dirección de Impuestos y Aduanas Nacionales
Export Credit Agency
Empresa Propietaria de la Red
Empresa de Transmisión Eléctrica Centro Norte S,A,
Support Fund for the Electrification of Interconnected Rural
Areas
Support Fund for the Electrification of Non-Interconnected
Areas
Social Energy Fund
High Voltage Direct Current
apanese Yen
Settling and Clearing of Accounts
Wholesale Energy Market
Non-Delivery Forward
Power Line Carrier
Network Standardization Program
Power Transformer
Red de Energía del Perú S.A.
Remote Terminal Unit
South American Crossing
Commercial Settlement System
Fire System
Thunderstorm and lightning information system
Energy Transport Service
National Transmission System
Mining and Energy Planning Unit
United States Dollar
Voltage Quality
73
74
75
Annual Report 2009
Special report on transactions
with subsidiary companies
In compliance with Article 29 of Law 222 of 1995 and given the existence of
ISA and its companies, we present to the Shareholders’ Meeting the special
report on the economic relationships with ISA’s companies during 2009 and
2008 that have been directed and coordinated by the parent company,
INTERCONEXIÓN ELÉCTRICA S.A. –ISA– E.S.P.
Commercial transactions carried out during 2009 and 2008 among ISA’s
companies, either directly or indirectly, abide by the provisions of Law 788
regarding transfer prices in force since January 1st 2004.
The main transactions between ISA and its subsidiaries correspond to:
Project management
Sale of operation and maintenance services
Lease of facilities for operation
Sale of services of installation and setting up of information systems
Consulting on process reorganization and area operation
Cash flow loans
Other associated services
Delivery of dividends
It is important to highlight that none of the items below has taken place
among ISA and its companies during the same period:
Offset free-of-charge services
Loans without any interest or consideration by the mutuary
Loans that impose upon the mutuary an obligation not corresponding to
the essence or nature of the agreement
Loans with interest rates different from those paid by or charged to third
parties
Operations whose characteristics differ from those carried out with third
parties
As to equity participation, ISA updates investments in the subsidiaries
through application of the equity method, after homologating accounting
rules and practices and translating the financial statements into Colombian
pesos with the United States Dollar as reference currency.
76
14/03/2010
The financial information of ISA and its companies is consolidated through
the global integration methodology, according to which, significant balances
and transactions between ISA and the subsidiaries are eliminated, and
minority interests corresponding to equity and the results of the period, are
recognized and presented in the Consolidated Financial Statements.
The main balances and transactions with related parties during 2009 and
2008 are:
Balance Sheet
Equity investments
ISA Capital do Brasil
REP S.A.
TransMantaro S.A.
ISA Perú S.A.
ISA Bolivia S.A.
Proyectos de Infraestructura del PERÚ -PDIInterconexión Colombia-Panamá -ICPAccounts receivable
ISA Perú S.A.
REP S.A.
ISA Bolivia S.A.
Proyectos de Infraestructura del PERÚ -PDITransnexa S.A E.M.A.
Accounts payable and financial liabilities
REP S.A.
Proyectos de Infraestructura del PERÚ -PDIINTERNEXA (en Perú)
77
2009
2008
774,305
1,217,155
112,481
123,578
83,968
15,056
31,744
22,823
4,333
1,012
603,420
701,933
118,534
142,204
74,479
15,106
30,730
23,622
2,372
-
554
4,703
155
2,072
1,833
424
842
31
149
4,970
111
1,892
1,735
396
1,103
29
255,018
48,662
3,310
131
697
98
-
231,005
61,324
4,375
68
814
279
247
Annual Report 2009
2009
Equity transactions
Dividends declared in favor of ISA
26,489
4,988
1,594
ISA Perú S.A.
1,500
Transactions related to results
Revenue
1,626
21,589
2,055
ISA Perú S.A.
934
ISA Bolivia S.A.
3,013
REP S.A.
2,755
17
TransMantaro S.A.
4,666
Proyectos de Infraestructura del PERÚ -PDI35
INTERNEXA (en Perú) (Ingresos operacionales)
INTERNEXA (en Perú) (Ingresos no operacionales - Reintegro ingresos de ejercicios anteriores)
761
Transnexa S.A. E.M.A.
Expenses
24,015
5,745
7,926
1,065
REP S.A.
2,215
179
Proyectos de Infraestructura del PERÚ -PDI-
2008
18,297
18,122
2,089
753
1,243
19,841
1,819
1,914
3,548
2,753
205
1,410
146
(894)
562
21,907
7,508
6,411
1,868
3,616
297
The decisions of major significance that the controlled corporation has made
or has omitted to make because of influence or in interest of the controlling
corporation, as well as the decisions of major significance that the controlling
corporation has made or has omitted to make because of influence or in
interest of the controlled corporation during 2009, are as follows:
CTEEP
On June 1st of 2009, Companhia de Transmissão de Energia Elétrica
Paulista –CTEEP– established the company Interligação Elétrica Serra Do
Japi S.A., whose main activity is the exploitation of concessions of
transmission services delivered through implementation, construction,
operation and maintenance of electric energy transmission facilities, lines,
substations, control centers and respective infrastructure; in particular, the
construction of Jandira and Salto substations. CTEEP owns 99.99%.
In 2009, CTEEP transferred 49.9% of its participation in Interligação
Elétrica Sul S.A. –IESUL– to CYMI Holding S.A., as provided by the
shareholders agreement; CTEEP’s participation is then 50.1%.
IENNE
On April 24, 2009, ISA’s Board of Directors authorized management to
guarantee IENNE for up to 25% of CTEEP’s participation in such corporation,
in the loan to be granted by Brazilian financial bodies.
78
Annual Report 2009
ISA CAPITAL DO BRASIL S.A.
In 2008 took place the fiscal optimization through corporate restructuring
of ISA Participaçoes with CTEEP and ISA Capital do Brasil for BRL 656,217
resulting from CTEEP purchase; accordingly, in 2009 participation of ISA
Capital do Brasil in CTEEP increased from 37.46% to 37.50% through
capitalization of goodwill amortized along 2008.
On February 27, 2009, ISA’s Board of Directors authorized management to
support ISA Capital do Brasil in granting of stand-by guarantee in favor of
BNDES.
On November 4, 2009, ISA Capital do Brasil requested international
bondholders of years 2012 and 2017, an amendment of the covenants in
order to make viable the growth strategy in Brazil. The modification will
permit CTEEP’s companies to hire financing; ISA Capital do Brasil to issue
certain guarantees related to such financing in the cases when CTEEP
cannot meet such obligation as direct shareholder of the companies; and
to expand CTEEP’s indebtedness capacity consolidated up to 3.5 times
EBITDA.
XM, COMPAÑÍA DE EXPERTOS EN MERCADOS S.A. E.S.P. –XM–
In Resolution 2001 of 2009, the Colombian Financial Superintendency
authorized ISA’s affiliate, XM, and the Colombian Stock Exchange to establish
Administradora de Sistemas de Negociación de Valores “DERIVEX S.A.”, a
corporation whose purpose will be the negotiation and recording of
operations with financial derivatives with electric energy, gas, fuel and/or
other energy commodities as underlying assets.
On November 27 of 2009, INTERNEXA S.A. E.S.P. purchased from Chilean
CMET Telecomunicaciones S.A., 90.00% of shares of Comunicaciones
Intermedias S.A., owner of the fiber optics infrastructure that connects
major Chilean cities. On January 7 of 2010, the Special Shareholders’
Meeting of Comunicaciones Intermedias S.A. approved changing its name
to INTERNEXA Chile S.A.
Along 2009, INTERNEXA S.A. E.S.P. made capital contributions to
INTERNEXA S. A. (Peru) of PEN 8,584,871.
On February 27, 2009, ISA’s Board of Directors approved increasing by USD 4.5
million the guarantee granted for additional costs incurred by EPR
Transmission Project in Central America, where ISA holds 11.11%.
79
Annual Report 2009
Supplementary Information
Consolidated Financial Statements - US Dollars
(In thousands of US Dollars translated at the exchange rate on closing dates)
2009
2008
227,092
270,319
531,283
43,933
71,510
168,202
119,224
348,806
25,594
55,470
Non-current assets
Inventories – net
Reappraisals
1,144,137
717,296
183,195
427,791
27,170
1,498,973
3,674,514
1,384,463
32,533
271,900
27,140
1,577,450
2,721,219
1,088,438
7,196,106
5,718,680
Total assets
8,340,243
6,435,976
1,672,898
923,800
1,596,071
949,138
Assets
Current assets
Cash
Inventories – net
Memorandum accounts
Debit
Credit
80
14/03/2010
Annual Report 2009
2009
2008
41,903
394,201
285,748
15,788
124,382
168,280
84,202
301,259
156,722
15,734
62,964
88,940
1,030,302
709,821
1,305,022
499,375
194,992
851
394,459
190,441
1,100,117
588,922
102,462
651
344,505
149,325
2,585,140
2,285,982
Total liabilities
3,615,442
2,995,803
Minority interests
1,703,105
1,237,879
18,059
707,117
247,020
154,033
27,958
289,605
1,176,819
401,085
15,986
473,509
192,491
105,453
58,737
272,863
974,022
109,233
3,021,696
2,202,294
Total liabilities, minority interests and
shareholders’ equity
8,340,243
6,435,976
923,800
1,672,898
949,138
1,596,071
Current liabilities
Outstanding bonds
Accounts payable
Labor liabilities
Other liabilities
Outstanding bonds
Accounts payable
Labor liabilities
Other liabilities
Shareholders’ equity
Capital surplus
Reserves
Net income
Equity revaluation
Revaluation surplus
Memorandum accounts
Credit
Debit
81
Annual Report 2009
CONSOLIDATED INCOME STATEMENTS
2009
2008
1,373,480
142,868
19,495
13,691
48,968
19,252
1,185,379
120,328
14,427
12,953
48,676
28,940
1,617,754
1,410,703
509,854
254,994
445,998
199,794
764,848
645,792
Operating income
852,906
764,911
423,129
(604,212)
353,838
(562,456)
(181,083)
(208,618)
Income before taxes
671,823
(236,754)
556,293
(193,762)
435,069
362,531
Minority interests
281,036
257,078
Net income
154,033
105,453
Operating revenues
Connection charges
Dispatch and CND-MEM coordination
MEM Services (STN, SIC, SDI)
Telecommunications
Operating costs
82
Annual Report 2009
CONSOLIDATED STATEMENTS OF CASH FLOWS
Net income
provided by operating activities:
Minority interests
Loss (gain) on sale and retirement of property, plant and equipment
Exchange difference (revenue) expense
Hedging operations valuation expense (revenue)
Accounts receivable
Inventories
Accounts payable
Labor liabilities
Minority interests
Other liabilities
Payment of taxes
Acquisition of property, plant and equipment
Dividends paid
Bond issues
Bond payment/decrease
Share issues
Equity variations
Increase (decrease) in cash and cash equivalents - Net
Initial balance translation effect
83
2009
2008
154,033
105,453
281,036
95,365
178,567
14,524
2,456
3,356
236,754
7,771
(187,030)
209,613
(1,210)
182,645
1,182,718
257,078
76,919
148,766
13,078
1,511
167
193,762
(5,314)
174,428
(91,158)
(2,124)
172,557
1,045,123
(182,640)
(16,582)
(195,590)
327,527
(1,344)
(223,110)
135,131
(203,569)
(44,559)
(53,459)
(3,188)
88,735
7,480
(7,215)
(196,598)
81,460
(360,516)
(81,746)
(10,750)
(189,482)
577,750
(11,673)
(95,936)
412,467
52,199
(84,902)
(32,703)
67,542
(116,613)
(49,071)
8,063
(164,449)
(78,403)
279,509
135,993
(476,752)
(172,925)
187,943
(82,070)
(363,091)
181,956
287,426
28,029
497,411
17,253
(164,889)
(65,686)
347,605
46,577
(407,798)
(160,498)
(39,376)
(426,812)
(63,416)
350,842
287,426
Annual Report 2009
Financial Statements
BALANCE SHEETS
NOTES
2009
2008
(5)
(5)
(7)
(8)
(10)
107,823
477,359
183,723
2,596
83,812
45,326
196,778
201,828
1,872
97,230
855,313
543,034
2,411,165
23,056
55,542
2,434,389
335,979
2,405,688
1,735,050
29,017
60,891
2,442,825
331,574
2,185,306
7,665,819
6,784,663
Total assets
8,521,132
7,327,697
2,514,672
1,105,044
2,681,805
1,268,655
Assets
Current assets
Cash
Investments and derivatives
Inventories – net
Non-current assets
Long-term accounts receivable
Inventories – net
Reappraisals
Memorandum accounts
Debit
Credit
(6)
(7)
(8)
(9)
(10)
(11)
(20)
(20)
See accompanying notes to Financial Statements.
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
84
14/03/2010
Annual Report 2009
BALANCE SHEETS
NOTES
2009
2008
(12)
(13)
(15)
(16)
(17)
(18)
174,698
134,570
6,566
104,249
10,576
102,938
269,695
125,807
6,495
51,708
1,189
430,659
557,832
1,031,365
232,950
267,537
47,686
1,609
120,819
268,623
821,865
518,876
259,768
42,753
1,323
121,136
194,881
1,970,589
1,960,602
Total liabilities
2,401,248
2,518,434
36,916
1,445,509
504,965
2,405,688
819,909
592,019
314,878
35,866
1,062,361
431,872
2,185,306
245,073
612,192
236,593
6,119,884
4,809,263
Total liabilities and shareholders’ equity
8,521,132
7,327,697
1,105,044
2,514,672
1,268,655
2,681,805
Current liabilities
Outstanding bonds
Accounts payable
Labor liabilities
Other liabilities
Outstanding bonds
Related parties
Accounts payable
Labor liabilities
Other liabilities
(12)
(13)
(13)
(15)
(16)
(17)
(18)
(19)
Equity
Capital surplus
Reserves
Revaluation surplus
Equity revaluation
Net income
Memorandum accounts
Credit
Debit
(20)
(20)
85
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
Annual Report 2009
INCOME STATEMENTS
(In millions of Colombian pesos except for net income per share
that is expressed in Colombian pesos)
NOTES
2009
2008
802,436
76,415
15,309
18,445
19,502
779,776
72,186
27,290
16,403
18,689
932,107
914,344
357,755
102,419
365,971
73,989
460,174
439,960
Operating income
471,933
474,384
219,176
(230,760)
253,198
(396,802)
(11,584)
(143,604)
460,349
145,471
330,780
94,187
314,878
236,593
292.18
219.95
Operating revenues
Connection charges
Infrastructure projects
Telecommunications
(21)
Operating costs
(22)
(23)
(24)
(24)
Non-operating loss
Income before taxes
(17.2)
Net income
Net income per share
86
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
Annual Report 2009
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(In millions of Colombian pesos, except share value and dividend per share that are expressed in pesos)
Capital surplus
Subscribed
and paid
share
capital
Additional
paid-in
capital
35,866
1,044,980
Received
for works
Reserves
Total
Legal
17,381 1,062,361
Transfers approved by the Shareholders’
Meeting
For
For tax
Reserve for Reinforcement Reserve for
rehabilitation dividend
of equity
purposes repurchase of
and replacement payment
mandatory
shares
of STN assets
17,009
208,847
46,600
39,871
925
6,216
(8,500)
83,469
37,435
Equity
Surplus from
revaluation equity method
6,682
356,444
226,021
(6,682)
75,428
(75,428)
-
(150,593)
(150,593)
632,366
218,742
(20,174)
883,786
Net income at December of 2008
35,866
1,044,980
17,381 1,062,361
17,934
215,063
38,100
1,050
383,148
37,435
-
47,606
25,487
Issuance of 32,016,520 shares at $12,000 per share
formalized by the Board of Directors on December 4,
2009
123,340
431,872
236,593
73,093
(73,093)
612,192
245,073
2,185,306 4,809,263
384,198
383,148
(163,500)
(163,500)
Dividend payment at $152 per share on 1,075,661,374
outstanding shares payable in four quarterly installments
in April, July and October of 2009, and January of 2010
(20,173)
(20,173)
574,836
574,836
220,382
1,428,128
17,381 1,445,509
17,934
240,550
38,100
170,946
T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
37,435
-
504,965
314,878
220,382
314,878
314,878
Net income at December of 2009
36,916
883,786
236,593
236,593
87
26,331
26,331
1,301,520 3,833,320
(20,174)
Total
Net income
Revaluation
surplus
Total
592,019
819,909
2,405,688 6,119,884
Annual Report 2009
STATEMENTS OF CASH FLOWS
2009
2008
314,878
236,593
110,354
6,008
11,847
1,071
6,860
7,169
(145,471)
2,515
(10,170)
(140,487)
180,026
344,600
105,319
7,241
12,851
1,255
374
(2,324)
(94,187)
2,773
35,015
(62,521)
187,576
429,965
21,853
(1,075)
(2,235)
13,750
203,305
357
198,012
83,129
(19,399)
(3,970)
(3,455)
518
115,072
1,379
120,774
35,469
Payment of taxes
(12,164)
(207,981)
641,551
(10,737)
(187,238)
478,378
Acquisition of long-term investments
Decrease in long-term investments - dividends received
Sale of property, plant and equipment
Acquisition of property, plant and equipment
Additions to deferred charges and other assets
(1,125)
34,571
(1,088)
6,365
(110,798)
(10,413)
(82,488)
(13,315)
39,261
24,377
143
(79,105)
(17,590)
(46,229)
3,419
(199,545)
(160,273)
106,562
(358,115)
7,769
384,198
(215,985)
343,078
242,104
585,182
3,587
(182,570)
(147,379)
203,000
104,500
(373,592)
(137)
1,413
(391,178)
40,971
201,133
242,104
Net income
Provided by operating activities:
Investment allowance (recovery)
Loss on sale and retirement of property, plant and equipment
Exchange difference (expense) revenue
(Income) from equity method
Accounts receivable
Receivables write-offs
Inventories
Accounts payable
Labor liabilities
Other liabilities
Dividends paids
Bond issues
Decrease in hedging operations
Decrease in related parties loans
Increase in equity - share issue
Increase in cash and cash equivalents – Net
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T.P. No. 34420-T
Statutory Auditor
T.P. 35265-T
Annual Report 2009
Notes to the Financial Statements
AT DECEMBER 31, 2009 AND 2008
(Amounts expressed in millions of Colombian Pesos and original currencies)
I. GENERAL NOTES
NOTE 1: CORPORATE PURPOSE
Interconexión Eléctrica S.A. E.S.P., –ISA– was incorporated by public deed No.
3057 of the Notary Public Office No. 8 of Bogotá on September 14, 1967.
The Company was split off by Public Deed No. 230 of the Single Notary Public
Office of Sabaneta, dated April 4, 1995.
On December 1, 1995, by public deed No. 808 of the Single Notary Public
Office of Sabaneta, and according to the provisions of the Domiciliary Public
Utilities Law (Law 142 of 1994) the corporation changed its legal nature and
became a state public utility corporation constituted by state institutions, of
national order, ascribed to the Ministry of Mines and Energy, and subject to
the legal regime established by Law 142 of 1994. Based on Law 142 of 1994,
the Company changed its name to Interconexión Eléctrica S.A. E.S.P.; it can
also use the initials ISA S.A. E.S.P.
On November 22, 1996, by Public Deed No. 746 of the Single Notary Public
Office of Sabaneta, ISA changed its legal nature to a mixed-ownership public
utility corporation of the national order, ascribed to the Ministry of Mines and
Energy, and subject to the legal regime established by Law 142 of 1994. This
process was completed on January 15, 1997, with the arrival of private
investment.
As provided by the Constitutional Court in decision C-736 of September 19,
2007, ISA has a special legal nature and is defined as a decentralized mixedownership public utility company that is part of the executive branch under a
special legal regime of private law.
ISA’s main corporate purpose is:
1. The operation and maintenance of its own transmission network.
2. The expansion of the national interconnection grid.
3. The planning and operation coordination of the resources of the National
Interconnection System.
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Annual Report 2009
4. The administration of the financial settlement system and trading of
energy in the wholesale energy market.
5. The development of telecommunications systems, activities and services.
6. The direct and indirect participation in activities and services related to
the transport of other energy sources, except for those restricted by law.
7. The provision of technical services in activities related to its corporate
purpose and professional services required by the group’s companies
8. The development for third parties of any other activity related to the
provision of electric power and telecommunications services within the
regulation in force.
9. The direct and indirect participation in activities, services and investments
related to engineering works.
Branches
Peru ISA Branch
On September 4, 2002, ISA established a branch in Peru to execute the
operation and maintenance agreement for the 220 kV CarhuamayoParagsha-Vizcarra and 138 kV Aguaytía-Pucallpa transmission lines
subscribed between ISA and ISA Perú S.A. The branch’s term is indefinite; it
has no legal personality and does not carry out any activities independently
from ISA. It is an extension of the Company in Peru.
Argentina ISA Branch
ISA established a branch in Argentina on January 24, 2007. The proceedings
were carried out at the General Justice Inspection, an official body in charge
of Mercantile Register. Creation of this branch originated in the fact that
corporations incorporated outside of Argentina willing to have a business
presence in that country, must have a registered office there. This branch is
not in commercial operation.
NOTE 2: BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
2.1 INDIVIDUAL FINANCIAL STATEMENTS
The individual financial statements of ISA are the basis for dividend
distributions and other appropriations; assets, liabilities, equity or results of
subsidiaries are not consolidated. However, for legal reasons the Company is
required to present separate consolidated financial statements to the annual
Shareholders’ Meeting for approval.
2.2 CLASSIFICATION OF ASSETS AND LIABILITIES
Assets and liabilities are classified according to their use or degree of
realization, demand or liquidation, in terms of time and value.
Accordingly, current assets and liabilities (short-term) are understood as such
amounts that will be realizable or demandable, respectively, within a term
not longer than one year.
2.3 ADJUSTMENTS FOR INFLATION
Until December 31, 2000, non-monetary assets and liabilities and
shareholders’ equity, except for the surplus from revaluation of assets and
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Annual Report 2009
Income Statement accounts, were monetarily updated on a prospective basis,
using general consumer-price index (or Tax Year's Adjustment Percentages
–PAAG, for its Spanish initials–). The respective adjustments were recorded in
the income statement’s monetary correction account. As of January 1, 2001
the Colombian General Accounting Office –CGN–, through Resolution No.
364 of November 29, 2001, suspended the system of integral inflation
adjustments for accounting effects, without reverting the inflation
adjustments accounted until December 31, 2000.
According to Resolution No. 041 of 2004 and to External Circular Letter No.
056 of 2004, issued by the Colombian General Accounting Office, inflation
adjustment accounts were eliminated from the General Plan of Public
Accounting as part of the cost, thereby obligating to incorporate
accumulated amounts for adjustments until 2000. In order to comply with
regulations in force, since 2001, integral inflation adjustments continue to be
applied for tax effects, giving rise to differences that are recorded in the tax
memorandum accounts. Law 1111 of 2006 derogated integral inflation
adjustments for tax effects beginning in fiscal year 2007 (See Note 17.2).
2.4 MATERIALITY
Recognition and presentation of economic facts are made according to their
relative importance.
An economic fact is material when due to its nature or amount, knowing or
not knowing it, considering the circumstances, could significantly change the
economic decisions of the users of that information.
In preparing the financial statements, it was determined for presentation
purposes that an event would be material if it represented 5% of total assets,
current assets, total liabilities, current liabilities, working capital, equity, or income.
NOTE 3: SUMMARY OF MAIN ACCOUNTING POLICIES
AND PRACTICES
For the preparation and presentation of its financial statements, the
Company, as required by law, observes the Public Accounting General Plan
defined by the Colombian General Accounting Office –CGN–, the accounting
regulations issued by the Superintendency of Domiciliary Public Utilities
–SSPD– and other applicable regulation.
For keeping, preservation and custody of the accounting books and
supporting documents, the regulation applicable to support documents,
vouchers, and accounting books, established by the Colombian General
Accounting Office, is observed.
The Company’s Financial Statements are identified, classified, registered,
valued, prepared and disclosed in accordance with the accounting principles
of the CGN contained in Resolutions No. 354, 355 and 356 of September 5 of
2007, as amended, through which the Public Accounting Regime was
implemented in order to harmonize its provisions with the criteria
established by international accounting standards.
Following is a description of the main accounting policies and practices
adopted by the Company:
3.1 FOREIGN CURRENCY TRANSLATION AND BALANCES
Transactions in foreign currency are recorded at the applicable exchange
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Annual Report 2009
rates in force on the date of the transaction. At the close of each year,
balances of assets and liabilities accounts are adjusted to current exchange
rates (See Note 4). Exchange differences resulting from asset balances (other
than controlled investments abroad) are recorded in the Income Statement.
With regard to liability accounts, only exchange differences that are not
imputable to costs of acquisition of assets are recorded in the Income
Statement. Exchange differences imputable to the acquisition cost of assets
include exchange differences while such assets are under construction or
installation, and until they become operational.
3.2 CASH EQUIVALENTS
For purposes of preparing the statement of cash flows, marketable
investments redeemable within the next 90 days are considered to be cash
equivalents.
3.3 INVESTMENTS
Investments are recorded at cost and are updated in accordance with the
intention of realization, the availability of market information, and the
degree of control held over the issuing entity by applying methodologies that
approximate its value to economic reality. Methodologies to update their
value include stock exchange quotes, net present value to determine market
price or the security’s internal rate of return, the equity method, and the cost
method.
According to the new Public Accounting Regime, the Company’s investments,
for matters of their valuation, are classified in three categories: i) liquidity
management, including debt titles and securities, intended for profiting
from short-term price fluctuations; ii) investments with a political purpose,
including debt titles kept until maturity, or at least for one year from
purchase date; iii) and equity investments, including securities in controlled
and non-controlled companies.
In the Financial Statements, investments are classified as marketable and
long-term, and they are reported respectively within current and non-current
assets. The former include investments for liquidity management, and the
latter for equity investments in controlled and non-controlled companies.
Investments for liquidity management
Liquidity management investments in debt titles and securities, as well as
derivatives intended for liquidity management, are initially recorded at cost
and are updated monthly through methodology of the Colombian Financial
Superintendency. Changes arising from each valuation made in investments
for liquidity management are recognized in the income statement.
Financial derivative instruments
In order to reduce exposure to exchange rate and interest rate fluctuations of
financial liabilities with local and international commercial banks and
multilateral agencies and of bond issues, among others, the Company uses
derivative instruments such as swaps, forwards and options.
According to the rules issued by the Colombian General Accounting Office,
derivative instruments for hedging purposes are recognized for the amount
of the right or of the liability on the date of commencement of the contract,
are monthly updated using methodologies of recognized technical value,
and the difference is recorded as derivative valuation revenue or expense, as
the case may be.
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Annual Report 2009
Investments with a political purpose
Investments with a political purpose include debt securities issued by local or
foreign entities acquired in compliance with macroeconomic policies or the
Company’s internal policies.
Investments for compliance with macroeconomic policies correspond to debt
titles acquired under agreed or mandatory subscription.
Investments to comply with the entity’s internal policies include investments
held to maturity and investments for sale, the latter understood as
investments held for at least one (1) year. In both cases, the intention to hold
the securities during the stated term, as well as the legal, contractual,
financial and operative capacity, are required.
Investments held to maturity are updated on the basis of the internal rate of
return foreseen in the methodologies adopted by the Colombian Financial
Superintendency.
EQUITY INVESTMENTS
a. Equity investment in controlled companies
Equity investments in controlled companies include investments made in
order to exercise or share control, as well as those in which the Company has
substantial influence, and long-term investments in which the public sector
holds over 50% direct or indirect participation. These investments are
accounted through the equity method, according to CGN Resolution No. 356
of 2007, amended by Resolution 145 of 2008. Under the equity method,
investment in subsidiaries and affiliates is recognized at cost, and is adjusted
through:
Credit or charge to the investment’s cost equal to the participation of the
Company in profits and losses of the subsidiary, with a matching entry in
the income statement.
Credit or charge to the investment equal to the participation of the
Company in the subsidiary’s equity variation with a matching entry in the
surplus from equity method account, in the event of an increase; in the
event of a decrease, as surplus from equity method until its exhaustion,
and the remaining difference in the income statement.
Credit or charge to the investment equal to the amount of dividends
received from the subsidiary that correspond to periods during which, ISA
applied the equity method.
If the difference between intrinsic value and book value of the investment
recorded on equity basis is:
Positive, re-appraisal of assets is increased, and the revaluation surplus
included in the equity accounts is credited.
Negative, re-appraisal of assets is reduced with a charge to the revaluation
surplus up to the amount available; any difference is recorded as a charge
to equity surplus, until exhaustion. Any additional deficit is recognized in
the income statement as a loss.
Investments in subordinated companies abroad are recorded on the basis of
their financial statements at December 31 of each year, translated into
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Annual Report 2009
Colombian pesos, using the United States dollar as functional currency,
applying the provisions of International Accounting Standard 21. For the
translation of the Financial Statements the following is taken into account:
Balance sheet items are calculated using the closing exchange rate; income
statement items are calculated using the accumulated average exchange rate
for each month closing; net effect with respect to closing rate is recognized as
translation adjustment.
b. Equity investments in non-controlled companies
The other variable-income equity investments in non-controlled companies
that are not listed in stock exchanges are recorded at cost plus the dividends
received in shares. If at year’s end, the intrinsic value of investments is greater
or lower than the book value, a charge is recorded in the re-appraisals
account with a contra entry in re-appraisal surplus in equity, or a provision is
charged to the income statement, respectively.
3.4 ALLOWANCE FOR DOUBTFUL ACCOUNTS
On each quarter’s closing date, the associated credit risk of the accounts
receivable from customers and other debtors is examined in order to
determine the respective provisions, which include percentages between
10% and 100%, according to aging analysis and evaluations of the collection
of individual accounts, in accordance with the following criteria:
Description
Maturity
% Provision
A
Low-risk accounts receivable
90-180 days
181-360 days
>= 360 days
10
40
100
B
Doubtful accounts
31-90 days
91-180 days
>= 180 days
20
50
100
Type
For the debts of companies subject to reorganization or under liquidation,
the provision for accounts receivable must be adjusted to one hundred
percent (100%) of non-performing accounts receivable, regardless of the
provision recorded for debt age.
3.5 INVENTORIES
Inventories are recorded at cost, and at end of the year, through a provision
charged to the income statement, are reduced to their sale value, if it is lower
than their book value. Spare parts, materials and other consumables are
valued by the weighted average method.
3.6 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost, which, where relevant,
may include:
a) financing costs associated to acquisition and construction of assets not in
operational conditions and,
b) until year 2000, inflation adjustments on costs, excluding capitalized
exchange differences and the portion of capitalized interest
corresponding to inflation.
Sales and retirements of such assets are discharged at their respective net
adjusted cost, and differences between sale price and net adjusted cost are
recorded in the income statement.
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Annual Report 2009
In 2009, the Company concluded and implemented the study of useful life by
components, so as to comply with the attachment of Resolution 356 of 2007
of the Colombian General Accounting Office, establishing that depreciation
and amortization must be calculated for each asset individually considered;
however, when its components or parts have different useful lives, or provide
economic or potential service benefits of different rhythms, depreciation
shall be applied to each component.
Definition of components of the energy transmission system:
A component of a fixed asset is an element that can be regarded as a part of
another asset, but due to its own features, because of the function it serves,
and the type of strategies or activities developed along its technical service
life, can be treated as an independent asset.
Materials with high inventory turnover shall not be classified as fixed assets.
Based on CIGRE (International Council of Large Electric Systems) reference
statistics and ISA’s experience in terms of transmission grid, the average useful
life of transmission lines is estimated at a maximum of 63 years (2008: 40
years). 40 años) para los circuitos de transmisión de energía.
Depreciation is calculated over the asset’s cost by the straight-line method,
based on the estimated useful life of assets. For the purpose of depreciation
calculations, following is a list with the assets’ estimated useful life:
Asset / Component
Useful Life
Transmission lines
Buildings
Optic fiber
Telecommunications equipment
Furniture, office equipment, laboratory equipment
Communications equipment
Supervision and Switching Center's equipment
Computer equipment and accessories
63
50
25
15
15
10
10
10
6
5
Substation Components
Lines (Substations’ grounding nets)
Power transformer
PT
Breaker
CT
Lightning arrester
Diesel Plant
SVC reactors
Main Breaker
Reactor
Mobile substation
FS
Battery Bank
Charger
SAS component
Condensers
SVC condensers
Series compensation control
SVC control
Converter
Inverter
Telephone exchange
PLC
Sequence of events recorder
Protection relays
RTU
Thunderstorm and lightning information system -SID
Teleprotection
SVC thyristor valve
VQ
63
40
38
32
30
30
30
30
30
27
25
20
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
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Annual Report 2009
Maintenance expenditures of these assets are charged to the Income
Statement, while improvements and additions are added to their costs, since
they increase useful life, expand productive capacity and operational
efficiency, improve service quality, and permit significant cost reduction.
Repairs required because of attacks to the electric infrastructure are recorded
as extraordinary expenses in the period when the attacks occur and do not
increase the useful life originally assigned to the assets. Due to the difficulties
to insure this type or risk, these damages are accrued in the financial
statements as they occur and are not recorded on estimate basis.
Management, in accordance with their historical experience of losses by
attacks and the country’s political and security circumstances, includes in the
annual budget the resources considered enough to cover these losses.
Real property intended for generation of revenues from rent is recorded as
investment property.
Assets not being used in operations are classified as non-exploited assets, and
their depreciation is suspended.
3.7 DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets include prepaid expenses, deferred
charges and other assets. Prepaid expenses include mainly monetary items
such as insurance premiums and interest, which are amortized as they accrue.
Deferred charges and other assets include goodwill from acquisition of longterm investments, cost of acquisition of software, easements, tax to preserve
democratic security, bond underwriting commissions, legal stability
agreement premium, licenses and rights, from which future and quantifiable
economic benefits are expected to be obtained. It also includes deferred
taxes resulting from temporary differences between net income and tax
income.
Software is amortized on a straight-line basis over a maximum of three years.
Goodwill, bond underwriting commissions, legal stability agreement
premium, licenses and rights are amortized on a straight-line basis during the
periods over which their benefits are expected to be received, according to
the feasibility studies for their recovery.
Charges for studies and research of projects in pre-operational stage will be
treated as expenses and are not capitalized even when a subsequent decision
is made as to execute the project and when the project is intended for
internal purposes.
Useful life of intangibles can be indefinite or finite; It is indefinite when
there is no foreseeable limit for the period in which the asset is expected to
generate future economic benefits. it is finite when the period during which
economic benefits or service potential will be received can be estimated (see
note 10).
3.8 RE-APPRAISALS
Re-appraisals that are part of equity include:
3.8.1 The excess of the valuation (appraisals) of the main components of
property, plant and equipment over per-books net cost. Such appraisals
were determined by independent appraisers, in the case of real-estate
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Annual Report 2009
property; by their market value, in the case of transport equipment;
and based on technical studies developed by employees of the
Company, in the case of other assets. These valuations shall be made at
least every three years, or when market conditions indicate that such
amounts have materially changed. (See Note 11).
3.8.2 The excess of intrinsic value (equity value) of long-term investments
over their net cost.
3.9 CURRENT INCOME TAX AND DEFERRED TAX
Income tax provision is calculated on the period’s ordinary net taxable
income, which is obtained from relevant revenues, costs and expenses.
The credit deferred tax is the lesser current tax calculated during the period,
resulting from the excess of tax depreciation and amortization over perbooks depreciation and amortization, when useful life, depreciation and
amortization methods for tax purposes differ from accounting ones, for
The debit deferred tax represents the temporary differences that have
generated a higher amount of current income tax. Basically, this includes
inflation adjustments on non-monetary depreciable and amortizable assets,
balances of provisions for doubtful accounts, retirement payments to
pensioners, and health, education and other benefits, among others, for
According to opinion No. 20061-57086 of CGN of January 31, 2006, the
Company has autonomy in defining the accounting principles regarding
deferred tax. Accordingly, ISA has considered, among others, inflation
adjustments recognized only for tax effects of depreciable fixed assets, as
temporary differences that result in the accrual of deferred tax, since these
generate a greater monetary correction income tax, increasing the income
tax payable, and are subsequently recovered during the following years as
the fixed assets are depreciated (See Notes 10 and 17.2).
The rates used for calculation of deferred taxes are the same as those at which
temporary differences are expected to be reverted.
3.10 LABOR LIABILITIES
Labor liabilities are adjusted at the end of each period on the basis of legal
provisions and labor agreements in force. An actuarial study is conducted
every year to determine pension liability, future health and education
benefits and retirement payments to pensioners. Retirement pension
payments are charged to the actuarial estimate account.
With respect to amortization of retirement pension liabilities for Colombian
subsidiaries, it must correspond to the value resulting from dividing the total
to complete the term set by regulation in force, applicable to each particular
entity, and counted from the actuarial estimate closing date.
For ISA,
maximum time provided for by regulation is 30 years starting on December
31, 1994.
Regarding the methodology to amortize benefits and aids, the Company
amortizes 100% of actuarial liabilities, closely following international
accounting standards, as is the intention of the CGN.
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Annual Report 2009
Accounting records for recognition of this liability and associated expenses
are carried out in accounts different from those in which actuarial estimates
are included.
3.11 NET INCOME PER SHARE
Net income per share is calculated on the annual weighted average number
of outstanding shares. In 2009, 1,077,678,853 (in 2008:1,075,661,374).
3.12 RECLASSIFICATIONS IN THE FINANCIAL STATEMENTS
Certain amounts included in the financial statements at December 31, 2008
were reclassified to conform to the presentation of the financial statements
for 2009.
3.13 MEMORANDUM ACCOUNTS
Memorandum accounts include loans contracted but not disbursed,
contingencies resulting from claims and lawsuits, and guarantees granted
under loan agreements. They also include temporary and permanent
differences between accounting and tax amounts, which will be reasonably
reverted in time, and allow preparation of specific-purpose reports,
respectively.
Non-monetary memorandum accounts were adjusted for inflation until
December 31 of 2000, with charge to a contra memorandum account.
3.14 RECOGNITION OF REVENUE, COSTS AND EXPENSES
Revenue, costs and expenses are recorded on an accrual basis. Revenue from
service provision is recognized during the contractual period or when services
are rendered. Amounts received to remunerate recovery of investments in
UPMES, as well as usage rights not accrued because their respective costs have
not been incurred or because the related services have not been rendered yet,
are recognized as deferred revenues. This deferred revenue is amortized over
the periods along which it accrues.
3.15 USE OF ESTIMATES
The preparation of financial statements according to accounting principles
generally accepted requires some estimates that affect the values of assets,
liabilities, revenues, costs and expenses reported in such periods. The actual
result of certain items may differ from such estimates.
3.16 OPERATING AND ADMINISTRATIVE LIMITATIONS AND
DEFICIENCIES
During 2009 and 2008, no operating or administrative limitations or
deficiencies were found that would significantly affect the normal
accounting processes, or the consistency and reliability of the accounting
figures.
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Annual Report 2009
II. SPECIFIC NOTES
NOTE 4: VALUATION OF ACCOUNTING INFORMATION
FOREIGN-CURRENCY OPERATIONS
Current regulations permit free negotiation of foreign currencies through
banks and other financial intermediaries, at exchange rates that fluctuate in
accordance with supply and demand. Debts, indebtedness transactions and
debt management operations in foreign and local currency require the
approval of the Ministry of Finance and Public Credit.
Operations and balances in foreign currency are translated at the exchange
rates in force, as certified by the Financial Superintendency, previously known
as Banking Superintendency. The exchange rates used for the preparation of
the financial statements at December 31, 2009 and 2008, expressed in
Colombian pesos, were as follows:
Currency
Code
US Dollar
Euro
Nuevo sol
Boliviano
Brazilian Real
USD
EUR
PEN
BOB
BRL
2009
2008
2,044.23
2,933.27
707.35
289.14
1,174.04
2,243.59
3,119.04
711.24
317.34
961.68
At December 31, ISA had the following foreign-currency assets and liabilities,
expressed in thousands of equivalent US Dollars:
2009
Assets
Current assets
Cash
Fixed-yield investment
Accounts receivable
9,300
449
43,105
11,932
9,415
55,486
727,173
455,897
727,173
455,897
Total assets
736,588
511,383
18,604
2,830
142,159
2,195
21,434
144,354
54,764
23,800
53
0
23,800
3,728
78,617
27,528
100,051
171,882
636,537
339,501
Non-current assets
Foreign currency investments
Liabilities
Current liabilities
Current portion of financial liabilities
Accounts payable
Long-term liabilities
Related parties
Accounts payable
Total liabilities
Net monetary position
99
2008
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Annual Report 2009
With respect to foreign-currency liabilities, for 2009 and 2008, the Company
had no hedging operations contracted.
The application of accounting standards regarding exchange differences
gave rise to the following exchange rate differences in Colombian Pesos,
which were accounted as shown below:
Financial revenues (See Note 24)
Financial expenses (See Note 24)
Total exchange difference net generated
2009
2008
41,164
(20,986)
20,178
152,937
(165,580)
(12,643)
NOTE 5: CASH AND MARKETABLE INVESTMENTS
Cash and marketable investments on December 31 included:
Account
Cash
Cash and deposits in banks
Funds sold including repurchase agreement
(1)
(2)
Total cash
CDs, bonds and securities
Other Fixed-yield investments
Hedging operations
Trusts
(3)
(4)
Total marketable investments
(5)
Total cash and marketable investments
2009
2008
2009 Rate
2008 Rate
7,691
100,132
2,764
42,562
5.66% (COP)
2.67% (COP)
8.78% (COP)
9.19% (COP)
107,823
45,326
423,550
53,809
101,316
96,710
(1,248)
-
3.45% (COP)
-
9.60% (COP)
2.45% (USD)
4.37% (COP)
-
477,359
196,778
585,182
242,104
(1) Banking reconciliations are prepared monthly and there are no significant reconciliation amounts pending.
(2) Trust funds were reclassified in 2009, from cash to marketable investments; these funds were worth $37,706 by December 31 of 2009 (2008: $8,161) that may only
be used for the delegated administration of the IPSE, FAER and FAZNI projects.
(3) Includes: CDs $343,225 (2008: $91,837), Bonds $64,583 (2008: $9,479) and Securities $15,742.
(4) No hedging operations existed at December 31, 2009. Includes in 2008 a Non–delivery forward derivative instrument for Dollars sale established to reduce cash
flow variability associated to calculation of revenues from UPME 01 and 02 of 2003.
During 2008, forwards were closed for USD10.8 million, aimed at stabilizing the flows against fluctuations of the exchange rate dollar/ peso.
At 2008 close, a forward sales operation worth USD3.6 million, which had been negotiated to cover dollar/peso exchange rate fluctuations, remained open. These
generated an exchange difference of $1,248.
The operation is described below:
Nominal
USD3,600,000
Forward type
Forward rate pesos
NDF
(5) The increase in cash and marketable investments is due mainly to the share issue conducted in December 2009.
100
$1,881.01
Annual Report 2009
NOTE 6: EQUITY INVESTMENTS – NET
Below are a description of the corporate purpose and other relevant
information of the affiliate companies with which the equity method was
applied as well as other significant investments:
TRANSELCA is a mixed-ownership utility with main offices in the city of
Barranquilla. It was incorporated on July 6, 1998 and is engaged in the
provision of energy transmission services, coordination and control of the
Regional Dispatch Center and connection to the National Transmission
System. The corporation's term is indefinitie.
In late December of 2006, ISA increased by 34.99% its participation in
Transelca S.A. E.S.P., through a stock exchange operation with Ecopetrol for a
total participation of 99.99%.
Interconexión Eléctrica ISA Perú S.A.
ISA Perú is a Peruvian corporation with main offices in the city of Lima. It was
incorporated on February 16, 2001 and its main activities are the transmission
of electric energy and the operation and maintenance of transmission grids.
The corporation's term is indefinitie. ISA owns 28.07% of the capital stock of
ISA Perú, and indirectly, through TRANSELCA, 54.85%, in this way ISA controls
ISA Perú.
Red de Energía del Perú S.A. –REP–
REP is a Peruvian corporation with main offices in the city of Lima. It was
established on July 03, 2002 and its term is indefinite. REP provides services of
electric power transmission, ancillary services such as operation and
maintenance of energy transmission and transport facilities, and specialized
technical services. ISA owns 30% of the capital stock of ISA Perú, and
additional 30% indirectly through TRANSELCA, thus controlling ISA Perú.
Consorcio TransMantaro –CTM–
TransMantaro is a Peruvian corporation with main offices in the city of Lima. It
was established in January of 1998 and was a subsidiary of Canadian HydroQuebec Internacional, Inc. Since December 13, 2006 ISA directly owns 60% of
TransMantaro’s capital stock. The term is indefinite; its main activities are the
transport of electric energy from generating companies as well as the
provision of operation and maintenance services for different facilities.
In August of 2009, ISA won the International Public Bidding "Reinforcement
of the Mid-south Transmission System: Independencia -- Ica Transmission
Line". The project will be carried out by TransMantaro. The concession will
last 30 years starting on the commissioning date and includes the design,
financing, construction, operation and maintenance of the second
Independencia – Ica transmission line at 220 kV, approximately 55 km long.
In November of 2009, ISA won in Lima an international public bidding
promoted by Proinversion, to construct a transmission line that will link the
city of Trujillo with the Zapallal district. The project will be carried out by
TransMantaro. The concession term is for 30 years starting on commissioning
of the work and will permit designing, financing, constructing, operating and
maintaining a 543km energy transmission line and associated substations,
works which will be energized at 500kV.
101
Annual Report 2009
Interconexión Eléctrica ISA Bolivia S.A.
ISA Bolivia is a Bolivian corporation with main offices in the city of Santa Cruz.
It was incorporated on July 14, 2003 for an indefinite term and its main
activities are the transmission of electric energy and the construction,
operation and maintenance of transmission grids. ISA owns 51.00% of the
capital stock of ISA Bolivia, and additional 48.99% and 0.01% indirectly
through TRANSELCA and INTERNEXA, thus controlling the company.
ISA Capital do Brasil is a Brazilian corporation with main offices in the city of
São Paulo. It was established as investment vehicle on April 28, 2006. Its
corporate purpose includes participation in the capital of other corporations
and in other undertakings, either as partner or as shareholder, as party in a
joint venture, as member of a consortium, or under any other type of business
cooperation. On September 19, 2006, the Company was made into a public
corporation. The corporation's term is indefinitie. Operations in Brazil are
consolidated through ISA Capital do Brasil, the owner of 89.40% of voting
shares of CTEEP and 37.50% of the total capital stock of CTEEP ISA owns
directly 99.99% of the capital stock of ISA Capital do Brasil.
In August and October of 2008, ISA made capital increases in ISA Capital do
Brasil of USD3.9 million and USD2.2 million, respectively, equivalent to
BRL11,510,800.
Fiscal optimization took place in the year 2008 through the corporate
restructuring of ISA Participaçoes with CTEEP and ISA Capital for $656,217
generated by acquisition of CTEEP, as a result of which, participation of ISA
Capital in CTEEP increased from 37.46% to 37.50% through capitalization of
the goodwill amortized along fiscal 2008.
Interconexión Eléctrica Colombia – Panamá S.A. –ICP–
ICP is a Panamanian corporation with main offices in Panama City. It was
established on May 14, 2007 and its term is indefinite. Its main activities are
electric power transmission, operation and maintenance of electricity lines
and grids and infrastructure for associated voltage transformation,
telecommunications services, data transmission services, technical services,
and consulting services in such areas and in general engineering matters. ISA
owns 50.00% stake at this corporation, and has shared control. This
corporation is not in commercial operation.
INVESTMENTS IN THE BUSINESS OF MARKET OPERATION AND
ADMINISTRATION
XM is a Colombian mixed-ownership utility with main offices in Medellín. It
was incorporated on September 1, 2005, and started operations on October
1, 2005. The term of the corporation is indefinite and its purpose are activities
related to operation planning and coordination of the resources of the
National Interconnected System, administration of the Commercial
Settlement System in the wholesale energy market, settling and clearing of
charges for use of the National Interconnected System’s grid, the
administration of financial derivative markets with electric energy and gas as
underlying assets, including settling systems, and ancillary and value added
activities related thereto. ISA directly owns 99.73% of XM’s capital stock.
102
Annual Report 2009
INVESTMENTS IN THE BUSINESS OF CONSTRUCTION OF
INFRASTRUCTURE PROJECTS
Proyectos de Infraestructura del Perú S.A.C. –PDI–
PDI is a Peruvian corporation with main offices in the city of Lima. Established
on November 15, 2007. Its term is indefinite and its purpose is the conduction
of all kinds of activities related to the construction of transmission lines and
electricity projects, and in general, any activity in the construction sector. It
started operations in March of 2008. ISA owns 99.97% directly, and indirectly
through TRANSELCA, additional 0.03%.
The capital of the corporation was increased by PEN 299,000 in March of 2008.
INVESTMENTS IN THE TELECOMMUNICATIONS TRANSPORT BUSINESS
INTERNEXA is a Colombian utility with main offices in the city of Medellín.
Internexa was incorporated on January 4, 2000 for an indefinite term. Its
of telecommunications services. It is currently engaged in development and
promotion of the telecommunications transport business locally and
internationally. ISA has control over this company and owns directly 99.27%
of the capital stock.
The merger of INTERNEXA and Flycom Comunicaciones S.A. E.S.P., was
formalized on November 30, 2007; it was part of the economic group’s
business strategy to attain leadership and recognition as the largest energy
and data transporter in Latin America.
OTHER INVESTMENTS
Financiera Energética Nacional –FEN–
FEN is a financial institution of national order established by Law 11 of 1982 as
a state-owned corporation ascribed to the Ministry of Mines and Energy with
the purpose of acting as financial and credit organism for the Colombian
power sector. Until April 2008, ISA had 33.160 shares of FEN equivalent to
0.7884% participation. As of December 31, 2008 and 2009, the investment is
represented by nine shares equivalent to 0.00069% participation.
EPR is a Panamanian corporation with main offices in San Jose de Costa Rica.
Established in 1998 in Panama City, Empresa Propietaria de la Red S.A. -EPR- is
a company ruled by private law that has the endorsement of the “Parent
Treaty of Central America’s Power Market” and its protocol, through which,
each government grants the corresponding permission, authorization or
concession, as fits construction and exploitation of the first regional electric
interconnection system that will link Honduras, Guatemala, El Salvador,
Nicaragua, Costa Rica and Panama. ISA owns 5,625 common shares
equivalent to 11.11% participation after USD625,000 capitalization made in
2008. The corporation is in pre-operational stage.
Electrificadora del Caribe S.A. E.S.P. - ELECTRICARIBE
ELECTRICARIBE is the company that delivers electric energy distribution and
trading services in the Colombian Caribbean ISA has 0.48072666%
participation. These shares were received by ISA as payment.
103
Annual Report 2009
Below is the detail of long-term investments, net, at December 31:
NOTES
Investments in shares
REP S.A.
ISA Bolivia S.A.
ISA Perú S.A.
Interconexión Colombia – Panamá –ICP–
FEN S.A.
ELECTRICARIBE
2009
2008
774,305
1,217,155
112,481
89,427
33,790
22,823
15,056
4,571
123,578
1,012
13,017
3
12,114
603,420
701,933
118,534
74,479
30,730
23,622
15,106
2,371
142,204
12,620
3
12,114
2,419,332
1,737,136
(6)
2,065
977
(7)
2,421,397
(10,232)
2,411,165
1,738,113
(3,063)
1,735,050
(1)
(2)
(3)
(4)
(5)
Total equity investments
Other investments
In trust rights
Long-term investment allowance
(1) The increase corresponds to surplus from fixed assets revaluation.
(2) Variation of investment corresponds mainly to better results attained and to the effect of revaluation of the Colombian Peso vs. the
Brazilian Real.
(3) Equity decrease is accounted for by recognition of provision for owrhaul in application of IFRIC 12 and NIC 37 conducted by that
company.
(4) Contribution to Interconexión Colombia - Panamá -ICP-, company which is not in commercial operation.
(5) Corresponds to shares received as payment.
(6) Corresponds to trust estate constituted to guarantee payment of the independent engineering auditing services of the UPME 02 of
2008 and UPME 01 of 2007 projects.
(7) Provision on investments of ELECTRICARIBE $2,489 (2008: $3,062), FEN $1 (2008: $1), ISA Bolivia S.A., $2,045, Proyectos de
Infraestructura del Perú S.A.C., $238, Consorcio TransMantaro S.A., $5,459.
104
Annual Report 2009
The following table includes financial information of the affiliates and
subsidiaries with which ISA applies the equity method:
2009
Financial information
ISA Participation
Company
ISA Perú S.A.
REP S.A.
ISA Bolivia S.A.
XM Compañía de Expertos en Mercados S.A. E.S.P.
ISA Capital do Brasil (1)
Proyectos de Infraestructura del Perú -PDI-
Shares
1,809,679,227
18,586,446
21,648,000
34,302,597
95,638
14,789,000
828,267,196
85,382,555
299,900
%
99.9967
28.0723
30.0000
99.2745
51.0000
99.7303
99.9999
60.0000
99.9670
Assets Liabilities
1,223,661
105,404
866,872
286,150
167,271
288,393
2,832,357
421,788
67,435
449,330
52,442
492,485
161,669
105,399
265,508
1,619,174
283,108
63,216
Equity
774,331
52,962
374,387
124,481
61,872
22,885
1,213,183
138,680
4,219
Income
(Loss)
40,270
9,514
10,570
(3,171)
6,920
713
76,417
24,383
2,237
2008
ISA Participation
Company
ISA Perú S.A.
REP S.A.
ISA Bolivia S.A.
XM Compañía de Expertos en Mercados S.A. E.S.P.
ISA Capital do Brasil (1)
Proyectos de Infraestructura del Perú -PDI-
Shares
1,809,679,227
18,586,446
21,648,000
34,302,597
95,638
14,789,000
828,267,196
85,382,555
299,900
%
99.9967
28.0723
30.0000
99.2745
51.0000
99.7303
99.9999
60.0000
99.9670
Financial information
Assets Liabilities
1,093,761
116,246
892,306
323,027
185,720
210,395
2,241,946
344,163
24,878
490,321
61,944
492,291
179,784
125,014
186,709
1,541,371
217,329
22,172
Equity
603,440
54,302
400,015
143,243
60,706
23,686
700,575
126,834
2,706
Income
(Loss)
37,043
6,882
34,745
5,583
3,279
1,909
(9,627)
19,161
2,136
(1) Liabilities Include $402,131 (2008, $332,148) to be paid to Secretaría de Fazenda, Brazil gobernment, as payment commitment for the difference between the purchase
price of the shares of CTEEP and pension payments established in Law 4819/58, in case CTEEP is exonerated.
105
Annual Report 2009
Application effect of the equity method
The effect of the application of the equity method generated variations in
the investments, which are shown in the results and equity, as loss or income.
Revenues from equity method
REP S. A.
ISA PERÚ S.A.
ISA Bolivia S. A.
Net income from equity method
(1)
(2)
(3)
(4)
(5)
2009
2008
(3,148)
40,269
3,171
2,671
2,236
711
3,530
76,417
14,630
5,542
37,042
10,423
1,932
2,136
1,904
1,673
(9,627)
11,496
140,487
62,521
(1) To record the equity method, revenues and expenses resulting from reciprocal transactions are deleted in the affiliates. (See
Note 26).
(2) The loss is explained especially by lower income and expenses arising from exchange difference on loans extended.
(3) Earnings reduction is explained by recognition of overhaul provision.
(4) Lower yield from non-regulated business.
(5) Investment variation corresponds mainly to better results reached and effect of revaluation of the Colombian Peso vs. the
Brazilian Real.
106
Annual Report 2009
NOTE 7: ACCOUNTS RECEIVABLE – NET
Following is the balance of accounts receivable, net as of December 31:
2009
2008
159,831
13,028
7,284
3,514
159,069
17,939
22,851
3,927
183,657
203,786
577
92
599
166
3,732
2,217
319
153
12
5,200
4,128
46
165
-
6,433
9,539
2,429
11,558
10,888
2,429
11,125
12,060
24,875
25,614
215,634
(8,855)
206,779
239,704
(8,859)
230,845
7,296
9,393
2,429
3,938
14,950
9,516
4,551
Total long-term accounts receivable
23,056
29,017
Total short-term accounts receivable
183,723
201,828
Customers
Energy transport service
Telecommunications
Infrastructure Projects
Technical services
(1)
(2)
Total customers
Interest receivable
Loans extended
Prepayments and advances
To suppliers
For purchase of goods and services
Advances and prepayments of per-diem and travel expenses
Other
(3)
Total prepayments and advances
Related parties
Loans extended
Miscellaneous accounts receivable
(4)
Total other accounts receivable
Total accounts receivable
Less – Allowance for doubtful accounts
Total accounts receivable - net
Long-term accounts receivable
Customers
Loans extended
Related parties
(5)
(1) Corresponds to accounts receivable for the rights of use billed to members of the alliance established in 1997 between ISA and
telecommunications companies to undertake joint development of a fiber optic network between Bogotá, Medellín and Cali, to
improve the national telecommunications system.
(2) Along the year 2009, construction services that had been recognized as estimates in 2008 were invoiced, and the closing of these
accounts receivable was carried out with funds delivered by the customer as advance payment.
(3) Includes $660(2008: $3,496) for sales tax paid on nationalization of goods associated with energy transport that will be discounted
from income tax as established by Article 258-2 of the Tax Law; it also includes estimated prepayment of turnover tax $1,274 (2008:
$828) and estimated credit balance for tax claims in favor of the Company that are being discussed in court $876 (2008: $876).
(4) Employee receivables correspond to housing loans, vehicle-purchase loans and other loans granted at 5% and 7% interest rates, and
terms of 5 years for vehicles and others, and 13 and 15 years for housing.
(5) The provision for doubtful accounts as of December 31 of 2009 was adjusted to the value of $8,855 (2008: $8,859) affected by the
following movements: additions with charge to period’s results for $1,071 (2008: $1,255) corresponding to the following
movements: Hada, Coldecom, Energen, Emcali and Montelíbano. No receivables were recovered in 2009 (2008:$230). Also, $1,075
receivables were written off corresponding to pension portions (recalculations of debt in 2008 and payment agreements that
decreased provision by $3,740).
107
Annual Report 2009
The composition of receivables from customers and shareholders’ (capital
only) on December 31 is as follows:
Customers
Shareholders
Empresas Públicas de Medellín (EPM )
Empresa de Energía de Bogotá ( EEB)
Empresa Colombiana de Petróleos (ECOPETROL)
Total shareholders
Other customers
2009
2008
11,634
34
-
14,493
254
74
11,668
171,989
183,657
14,821
188,965
203,786
Classification of accounts receivable from customers according to maturity
date:
Current
Overdue
More than 360 days
Total overdue
2009
2008
176,483
198,776
1,323
70
1,647
4,134
1,353
253
20
3,384
7,174
5,010
183,657
203,786
Maturity of accounts receivable from long-term customers at December 31:
Year
2011
2012
2013
Total accounts receivable from long-term customers
Value
3,638
1,829
1,829
7,296
Accounts receivable are mostly from electric distribution companies to whom
ISA mainly provides a service of connection to and use of the National
Transmission System. The Company invoices for interest on past due accounts
at the highest rate allowed by law; for December of 2009 and 2008 the rates
were 25.92% and 31.53%, respectively.
Power sector companies, Electribolívar, Caucasia and Electrotolima, all
undergoing liquidation processes initiated by the Superintendency of Public
Utilities –SSPD–, owed as of December 31, 2009, $3,728 (2008, $3,728). These
overdue amounts are 100% provisioned.
Emcali is under intervention by SSPD; in 2009 it paid $223 (2008, $168), for
liabilities that were supported on payment agreements.
108
Annual Report 2009
NOTE 8: INVENTORIES, NET
Inventories at December 31 included:
2009
2008
2,679
(83)
2,431
(559)
2,596
1,872
61,392
(5,850)
60,891
-
Total long-term inventories
55,542
60,891
Total inventories
58,138
62,763
Short-term inventories
Provision
Total short-term inventories
Long-term inventories
Provision
(1)
(2)
(1) Because of the nature of ISA's fixed assets and their spare parts, many of which are not easily obtainable in the market and have
long delivery terms, it is necessary large stocks in order to guarantee continuity of service and compliance with the system's
availability indicators.
(2) In 2009, as part of the scope of the Lean Six Sigma project, a study was conducted to increase efficiency of inventories logistics,
identifying surplus materials and other obsolete assets for the Company, especially parts for recovery of damages due to attacks
on the infrastructure.
The Company conducts actions to guarantee adequate preservation and
safeguarding of inventories, and takes periodic stock count with no
significant differences found; additionally, inventories are insured under a
combined material damage policy.
109
Annual Report 2009
NOTE 9: PROPERTY, PLANT AND EQUIPMENT – NET
The net balance of property, plant and equipment at December 31, included:
Property, plant and equipment in operation
Networks, lines and cables
Plants and ducts
Buildings
Computer and communications equipment
Furniture, fixtures and office equipment
Land
Subtotal property, plant and equipment in operation
Less – accumulated depreciation
Less – provisions
(2)
(2)
2,070,898
1,416,409
57,390
30,239
21,915
1,824
12,733
19,697
3,631,105
1,265,754
444
2,352,552
2,364,907
3,532
1,386
3,532
1,310
2,146
2,222
71
1,411
8,895
10,377
8,748
71
8,895
8,966
8,748
1,629
218
66,323
11,739
51,956
23,522
2,434,389
2,442,825
(4)
(5)
Total non-productive assets
Constructions in progress
Machinery, plant and equipment in assembly
2,097,962
1,470,477
59,657
35,189
23,772
1,845
12,892
19,697
3,721,491
1,368,495
444
(3)
Total investment property
Non-productive assets
Land
Buildings
Constructions received as payment
Subtotal non-productive property
Less – provisions
2008
(1)
Total property, plant and equipment in operation
Investment property
Buildings
Less – accumulated depreciation
2009
(6)
Total property, plant and equipment-Net
Assets have no restrictions, or pledges or guarantees for obligations.
(1) Along 2009, the following projects were activated: increase of short circuit level of San Carlos substation for $31,320; increase of
short circuit level of Chivor substation for $14,584; Ancón Sur-La Esmeralda project, circuits 1 and 2 for $3,111 (Lines $2,878,
easements $231); Los Palos-Arauca fiber optic for $4,970. Likewise, capitalizations were made for the projects Primavera-Bacatá
for $7,465 (Lines $6,578, easements $886); Primavera-Bolívar for $12,049 (Lines $11,545, easements $504); Copey Valledupar
line for $1,084.
Additions to substation equipment for $21,901; also retirements for $13,737. Retirements and sales of property, plant and
equipment during the year resulted in net loss of $2,515 (2008: $2,773).
(2) The movement in accumulated depreciation during 2009 corresponds to the accrual of depreciation expense for $110,354 (2009:
$105,319), charged to the results of the year. Additionally, retirements of depreciation were made for $7,537 (2008: $6,774).
(3) Blocks II and V of ISA’s headquarters, leased to affiliates XM and INTERNEXA, respectively.
(4) Pailitas land plot and constructions received as payment of Global Crossing, assets which are for sale. The increase in land and
buildings is explained by the fact that on March 27 of 2009, ISA and the buyer of Manizales-Manitex S.A. facilities, agreed to
1
rescind sale contract of May 2006, due to default on payment.
(5) Provision of constructions received as payment by Global Crossing .
(6) On September 15, 2009, the Mining and Energy Planning Unit –UPME– in public bidding awarded Interconexión Eléctrica S.A.
E.S.P. –ISA– the construction of works for electric interconnection of El Bosque project. ISA will be responsible for constructions,
assembly, putting into operation, administration, operation and maintenance of El Bosque 220 kV substation and associated
transmission lines. The project’s expected date for start of operations is May of 2011.
Also, development is underway of the Porce III project awarded on July 2 of 2008 for construction, assembly, commissioning,
management, operation and maintenance for 25 years of Porce 500kW Substation and two 500kW, 22-km each, line circuits to
interconnect the Porce III project to the National Transmission System. The project’s expected commissioning date is June of 2010.
1
Mutually agreed release of obligations that leaves without effect a legal act and mutually restitutes the parties as required.
110
Annual Report 2009
ISA contracts insurance for Combined Material Damages, Terrorism, and
Consequential Loss every year to cover against all risk of damage to the
company's fixed assets. This policy reports as insured value the as-new
replacement value of the assets insured, which is determined on the basis of
asset information of the National Transmission System of ISA classified in
Constructive Units, their corresponding as-new value being estimated as
provided in regulations, and the respective refining and adjustment for
insurance effects.
NOTE 10: DEFERRED CHARGES AND OTHER ASSETS
The balance of deferred charges and other assets, at December 31 included:
Deferred charges and other short-term assets
Prepaid expenses
Deferred taxes
Total deferred charges and other short-term assets
Deferred charges and other long-term assets
Deferred charges
Studies and research
Total deferred charges
Intangibles
Software
Licenses
Easements
Rights
Goodwill
Less – Amortization of intangible assets
Total intangibles assets
Miscellaneous
Total deferred charges and other long-term assets
Total deferred charges and other assets
(1)
(2)
2009
2008
6,752
77,060
4,754
92,476
83,812
97,230
25,086
34
25,302
25,086
25,336
30,743
11,170
67,083
44,025
234,095
(79,742)
30,743
11,170
57,124
43,244
238,247
(78,021)
307,374
3,519
335,979
302,507
3,731
331,574
419,791
428,804
(1) Easements correspond to the rights of way acquired by the Company for its operation assets, mainly transmission lines. As of
2009, their amortization was suspended, because they were acquired perpetually, that is no expiration date or time limit exists,
and the right remains along time; effect of this change was $1,483, as a lower expense in fiscal year results, as compared to 2008.
(2) Corresponds mainly to goodwill for $103, 631, generated in the purchase of 60% of Consorcio TransMantaro S. A. amortized along
the concession term, and $126,312 generated in the purchase of 34% of TRANSELCA S.A. E.S.P., through exchange of shares with
ECOPETROL; the latter is not amortized because TRANSELCA is a company of indefinite term.
111
Annual Report 2009
NOTE 11: RE-APPRAISALS
Re-appraisals at December 31 included:
(1)
(2)
Investments
Total re-appraisals
2009
2008
269
2,405,419
2,185,306
2,405,688
2,185,306
(1) Re-appraisal of Empresa Propietaria de la Red -EPR-.
(2) Economic appraisal was conducted in 2008 for main components of property, plant and equipment, in compliance with the
provisions of the Public Accounting Regime - Resolution 354 of September 5 of 2007.
Technical appraisals of operational assets for Colombian subsidiaries were
made by using the technically recognized Straight-line Depreciated
Replacement Cost method approved by the Colombian General Accounting
Office as stated in number 18 of accounting procedure for recognition and
disclosure of facts related to property, plant and equipment, issued by
Resolution 356 of September 5, 2007. The methodology consists of
determining the present value of operational equipment , based on the
actual cost of an asset with the same characteristics that provides the same
service (the as-new replacement value –VRN–2), proportionally affected by
the remaining time of service (remaining useful life) with respect to the
useful life initially established. This criterion is applied to every specialized3
asset that ISA has in operation for energy transmission (use and connection).
Market value is used for non-specialized4 assets such as vehicles.
The following table details the re-appraisal of property, plant and
equipment:
2009
2008
Assets
Transmission lines
Transmission lines
Land
Buildings
Telecommunications usufruct
Vehicles
CSM
Total
Appraisal
2,771,605
1,642,905
98,722
154,006
97,431
1,681
462
Accounting
balance Net Re-appraisal Adjustment
1,283,279
1,488,326
263,587
915,248
727,657
-44,010
19,697
79,025
1,061
44,971
109,035
-555
97,431
305
1,376
30
462
-
4,766,812
2,361,393
2,405,419
220,113
Accounting
Appraisal balance Net Re-appraisal
1,286,072
2,510,811
1,224,739
928,421
1,700,088
771,667
19,697
97,661
77,964
43,997
153,587
109,590
97,369
97,369
332
1,678
1,346
4,561,194
Of the total valuation of ISA’s operating assets, STN’s assets are 87.0%,
connection assets 5.3%, land and buildings 5.3%, telecommunications 2%,
and vehicles represent the smallest percentage with respect to total.
2
3
4
Values determined according to regulation applicable to their remuneration.
Assets not frequently offered or demanded in the market.
Assets frequently offered and demanded in the market.
112
2,375,888
2,185,306
Annual Report 2009
4.3% increase in re-appraisal in 2009 with respect to 2008, corresponds
basically to:
Re-appraisal of National Transmission System use and connection assets is
due mainly to the study of useful life by components, given that in 2008,
average useful life was 30 years for yard equipment, 14 years for protection
and automation, and 40 years for transmission lines. Average in 2009 was 34
years for yard equipment, 15 years for protection and automation systems,
and 63 years for transmission lines.
In land and buildings, re-appraisal corresponds to the incorporation of the
Manizales facilities to the accounting system. Asset returned by Manitex.
The Supervision and Maneuvers Center was fully depreciated in 2008;
investment was made in 2009 in workstations, mimic panel, and office
furnishings.
NOTE 12: OUTSTANDING BONDS
Characteristics and balances of outstanding bonds at December 31 are
detailed below:
Issue
Series
Term (years)
Interest rate
2009
2008
Maturity
C
D
A
10
10
10
7
12
15
20
7
17
6
9
DTF + 2.5%
IPC + 10%
IPC + 8.10%
IPC + 7.0%
IPC + 7.3%
IPC + 7.19%
IPC + 4.58%
IPC + 4.84%
IPC + 4.58%
IPC + 4.99%
IPC + 5.90%
130,000
100,000
150,000
108,865
118,500
110,000
104,500
150,000
59,500
-
59,700
30,879
130,000
100,000
150,000
108,865
118,500
110,000
104,500
12,359
Apr-13-09
Apr-13-09
Jul-16-11
Feb-20-11
Feb-20-16
Dec-07-19
Apr-07-26
Sep-21-13
Apr-07-26
Apr-02-15
Apr-02-18
Total outstanding bonds
1,031,365
924,803
Total long-term outstanding bonds
1,031,365
821,865
-
102,938
Second
Second
Third
Program Tranche 1
Program Tranche 2
Program Tranche 3
Program Tranche 4
Program Tranche 5
Program Tranche 6 Series A
Program Tranche 6 Series B
Capitalized interest
A
B
Total short-term outstanding bonds
Bonds accrued interests during 2009 for $120,609(2008: $106,601), which was
recorded as financial expense. (See Note 24).
Below is the detail of maturities for outstanding bonds:
Year
2011
2012 onwards
113
Capital
230,000
801,365
1,031,365
Annual Report 2009
The second issue was cancelled in April 2009 for total capital and interest of
$102,938, as contracted.
The third issue, for an initial value of $130,000, was used to substitute
domestic and foreign currency loans to reduce exchange risk exposure and
expand the portfolio’s average maturity.
The $450,000 bond program (initial issue February 2004) was expanded to
$850,000 in 2006 and to $1,200,000 in 2009.
In year 2006 the Company offered Tranche 4 with 26-year term for $380,000,
of which $104,500, maturing in April 2026, was placed in 2008. Tranche 6 of
Series A for $150,000 maturing in April of 2015 and Tranche 6 of Series B for
$59,500, were placed in 2009; 50% of this program is earmarked for debt
management operations and 50% for cash flow and investment financing.
NOTE 13: FINANCIAL LIABILITIES
The balance of financial liabilities at December 31 included:
Credit line
Currency
Interest rate
2009
2008
COP
COP
COP
COP
COP
DTF + 0.90%
DTF + 1.50%
DTF + 2.60%
DTF + 3.88%
DTF + 3.89%
DTF + 3.00%
DTF + 4.25%
DTF + 4.50%
66,667
70,000
25,000
75,000
21,000
96,638
100,000
70,000
25,000
75,000
30,000
52,000
21,000
Domestic financial liabilities
BBVA
BBVA
BANCOLOMBIA
DAVIVIENDA
BBVA
BANAGRARIO
BBVA
BANAGRARIO
EUR
USD
USD
USD
USD
Fixed rate 1.75%
Fixed Rate Tranches (6.32%)
Libor 6 M + Spread
Libor 6 M + 0.345%
Libor 6 M + Spread
1,779
374
89,701
58,127
-
5,675
1,184
127,593
72,301
112,180
Total foreign financial liabilities
149,981 318,933
Less - short-term portion
Total long-term financial liabilities
407,648 788,571
174,698 269,695
232,950 518,876
(1) Loans in foreign currency are guaranteed by the Nation.
(2) Unsecured.
Financial liabilities accrued interest in 2009: $62,814, (2008: $84,727), which
was recorded as financial expense. (See Note 24). Besides, interest of loan
hired with Banco Agrario de Colombia for the Porce III UPME project
amounting to $2,446, was capitalized in 2009.
There is a BNP-PARIBAS loan outstanding with German Export Credit Agency
–ECA– for financing substations' assets and supplies. This USD37.9 million
loan at Libor + 0.345% and 10-year term has political and commercial risk
coverage from German ECA Euler Hermes; along 2009, USD3.8 million (2008:
114
Oct-10-10
Sep-27-10
Nov-29-10
Jul-18-13
Jul-18-13
Oct-21-09
Nov-10-09
Dec-30-12
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
Jun-19-10
Feb-15-11
Oct-15-12
May-15-17
Jul-18-09
(1)
(1)
(1)
(2)
(2)
257,667 469,638
Total domestic financial liabilities
Foreign financial liabilities
MEDIO CRÉDITO CENTRALE
BIRF-3954-Co.
BIRF-3955-Co.
BNP PARIBAS
ABN_AMRO Y JPMORGAN
Latest payment Guarantee
Annual Report 2009
USD3.8 million); remaining balance payable is USD28.4 million that will be
paid in 15 equal semi-annual installments.
Along 2009, funds were obtained by bonds underwriting worth $209,500,
used to cover cash flow for $112,862, and loan prepayment for $96,638.
Additionally, domestic loans amounting to $82,000 were prepaid with cash
surpluses. Payments to foreign loans for USD67 million and EUR 1.2 million,
corresponding to installments contractually agreed and a final payment of
USD50 million to ABN_AMRO and JP MORGAN banks.
At December 31, financial liabilities included balances denominated in the
following currencies:
Balance in original currency (1)
Currency
US Dollar
Euros (formerly Liras)
Colombian Pesos
Interest rate
Libor + Spread BIRF
Fixed rate 1.75%
DTF + 2.60% a DTF + 4.5%
2009
72,497
607
257,667
2008
139,623
1,820
469,638
Balance in local currency
2009
148,202
1,779
257,667
407,648
(1) Amounts in original currency, other than the Colombian peso are expressed in thousands.
Maturity of long-term financial liabilities at December 31:
Year
2011
2012
2013
2014
2015 onwards
Total long-term liabilities
Value
37,658
92,415
60,750
10,750
31,377
232,950
COMMITMENTS RELATED TO LOANS
The Company has agreed to comply with the following covenants during the
term of the loans:
ABN Amro and JP Morgan Bank:
ISA subscribed financial commitments for the USD200 million loan obtained
from ABN Amro and JP Morgan banks, as follows: a) The ratio net
debt/EBITDA must be equal to or lower than 5.50 for 2006, 5.00 for 2007, 4.5
for 2008 and 2009. b) The ratio EBITDA/interest must be equal to or greater
than 2.25 for 2006 and 2007, and 2.50 for the period 2008-2009.
As of December 31 of 2008 and up to repayment of debt in January 2009, the
Company satisfactorily met the above-mentioned commitments.
In January of 2009, the ABN Amro and JP Morgan Bank loan was repaid,
meaning there are no outstanding commitments related to loans.
115
2008
313,257
5,676
469,638
788,571
Annual Report 2009
TRANSACTIONS WITH RELATED PARTIES
Financing with related parties at December 31 included:
2009
Affiliate
Maturity
Interest rate
Loans from local affiliates
30-Dic-12
26-Dic-13
07-Dic-12
27-Dic-12
07-Nov-12
30-Ene-13
Fixed rate DTF AE December 31 of former year
Total loans with local affiliates
Loans from foreign affiliates
Valuation exchange difference
28-Dic-14
Libor 6M + 3%
Total loans with foreign affiliates
Total loans with affiliates
Capital Interest payable
balance
balance
28,500
31,908
72,642
12,537
60,798
12,500
2,603
32
17,707
3,015
11,294
1,050
218,885
35,701
53,153
(4,501)
9
48,652
9
267,537
35,710
2008
Affiliate
Maturity
Interest rate
Loans from local affiliates
30-Dic-12
26-Dic-09
07-Dic-12
27-Dic-12
07-Nov-12
Total loans with local affiliates
Loans from foreign affiliates
28-Dic-14
Libor 6M + 3%
Total loans with foreign affiliates
Total loans with affiliates
On January 30 of 2009, ISA was granted by TRANSELCA a new loan of $12,500,
maturing on January 30 of 2013, at a FTD EA rate.
On December 26 of 2009, upon authorization of the Ministry of Finance and
Public Credit, and through agreement between ISA and TRANSELCA, the
$31,908 loan that expired on that date, was extended for an additional 4
years. Interest accrued for the four years were paid by ISA to TRANSELCA.
116
Capital Interest payable
balance
balance
28,500
31,908
72,642
12,537
60,798
5,191
11,073
1,870
5,742
206,385
23,876
53,383
8,171
53,383
8,171
259,768
32,047
Annual Report 2009
NOTE 14: HEDGING OPERATIONS
At December 31 of 2009 and 2008, no liabilities hedging operations existed.
NOTE 15: ACCOUNTS PAYABLE
The balance of accounts payable at December 31 included:
2009
2008
35,710
27,940
19,752
6,461
40,876
10,789
28,743
11,985
34,350
20,870
35,874
1,251
37,648
11,693
7,997
18,877
182,256
168,560
Total long-term accounts payable
47,686
42,753
Total short-term accounts payable
134,570
125,807
Related parties
Suppliers and contractors
Financial expenses
Creditors
Dividends
Other taxes
Deposits received administration
Sales prepayments
Total accounts payable
(1)
(2)
(3)
(4)
(1) Includes interest on loans to TRANSELCA for $35,701 (2008: $23,876) and ISA Capital do Brasil $9 (2008: $8,171).
(2) Reduction of financial expenses is explained by advanced payment of several commercial banking loans, payment of loans
abroad, and reduction of FTD, CPI and LIBOR interest rates.
(3) Corresponds mainly to funds received for implementation of the projects: FAZNI- Cauca-Nariño Pacific Coast Interconnection and
FAER-Construction of power distribution lines in rural areas of Sucre Province municipalities.
(4) Corresponds mainly to advanced payments on sale of construction services for $8,915 (2008: $15,280) and usufruct $2,900
(2008: $3,597).
117
Annual Report 2009
NOTE 16: LABOR LIABILITIES
Labor liabilities at December 31 included:
2009
2008
3,581
1,845
2,192
557
3,098
1,514
2,100
1,106
Total labor liabilities
8,175
7,818
1,609
1,323
Short-term labor liabilities
6,566
6,495
Labor liabilities
Severance payments and interests
Vacations
Agreed fringe benefits
Other
NOTE 17: ACCRUED LIABILITIES AND ESTIMATED PROVISIONS
Accrued liabilities and estimated provisions at December 31 included:
Retirement pensions
Other provisions for agreed labor benefits
Provision for income tax and surtax
Provision for contingencies
Other estimated liabilities and provisions
Total estimated liabilities and provisions
Total short-term estimated liabilities and provisions
(1)
(2)
(3)
(4)
(5)
2009
2008
83,512
37,307
73,682
12,409
18,158
86,134
35,002
24,554
2,220
24,934
225,068
172,844
120,819
121,136
104,249
51,708
(1) Corresponds to the amortized present value of pension liabilities at December 31 of 2009 and 2008, according to actuarial studies
(See Note 17.1).
(2) Estimated liabilities to show present value of future health, education and aging benefits recognized to pensioners.
(3) (See Note 17.2).
(4) Includes $7,436 for eventual easement contingencies and $4,335 financial expenses provision thereon.
(5) Includes $8,464 of FAER provision (2008: $7,559), PRONE provision 5,639 (2008: $9,021), infrastructure projects estimated costs
$731 (2008: $2,100), incentives for results of variable compensation $1,526 (2008: $1,228) and payroll provision of $310 (2008:
$1,623).
17.1 RETIREMENT PENSIONS AND AGREED LABOR BENEFITS
Retirement pensions
Under the labor agreements (individual and collective) subscribed, the
Company is required to pay pensions to employees who satisfy certain
conditions of age and length of service. However, the Social Security Institute
–ISS– and the pension management funds have assumed the greater part of
this obligation upon compliance with certain legal requirements.
118
Annual Report 2009
The present value for pension liability as of December 31, 2009 and 2008 was
determined using actuarial calculations that comply with the law and
specifically with labor contracts and collective bargaining agreements. The
main estimates used in the actuarial calculation were as follows:
Actual interest rate
Future increase of pensions and salaries
Number of people covered by the plan
2009
2008
4.80%
6.48%
433
4.80%
5.15%
444
On December 31, 2009, the Company had 619 (2008: 619) active employees,
of whom 31 (2008, 64) are covered by the pension plan provided in the
collective and individual agreements, while the remaining 588 (2008, 555) are
under the jurisdiction of Law 100 of 1993. The actuarial estimate covers active
personnel (31), retired personnel (343), surviving spouse pension benefit
substitutions (43), pension portion for which ISA is accountable (12) and
contingent personnel – retired personnel with more than 20 years of service
(4).
As of December 31, 2008, ISA had amortized 69.52% (2008: As of December
31, 2008, ISA had amortized 76.08% (2007, 76.08%) of the pension liability
projected to cover monthly pension payments; amortization is calculated
with methodology set forth in Resolution No. 356 of September 5 of 2007
issued by CGN.
Amortization corresponds to the value resulting from dividing the total
to complete the term set, counted from the actuarial estimate closing date.
The movements in the actuarial estimate at December 31 are as follows:
Projected liability
Deferred cost
Net liability
Plus increase in actuarial estimate
99,099
4,971
15,652
3,754
83,447
1,217
Plus increase in actuarial estimate
104,070
9,141
19,406
7,671
84,664
1,470
Plus (less) increase in actuarial estimate
113,211
6,920
27,077
9,542
86,134
(2,622)
120,131
36,619
83,512
During 2009, pension payments totaled $12,164(2008: $10,737).
Agreed Fringe Benefits
In the calculation of pension liabilities, the Company included agreed fringe
benefits received by pensioners in addition to those required by legal
regulations. This practice was adopted in 2005 as a prudent policy seeking
alignment with International Financial Reporting Standards –IFRS-.
The calculation included fringe benefits agreed in individual and collective
labor agreements to which present and future pensioners are entitled, such
119
Annual Report 2009
as: education and health (supplementary plans and aid for health expenses)
and pension contributions. Amounts and amortization are as follows:
Total liabilities 2009 Total liabilities 2008
Pension payments
Study aid
Health aid
Total
Total amortized Dec-09
Total amortized Dec-08
3,987
2,172
31,148
3,975
2,183
28,844
3,987
2,172
31,148
3,975
2,183
28,844
37,307
35,002
37,307
35,002
100%
100%
Amortization percentage
Benefits and aids were 100% amortized, closely following international
accounting standards. Accounting records for recognition of this liability and
associated expenses are carried out in accounts different from those in which
actuarial estimates are included.
17.2 INCOME TAX
Income tax and surtaxes
Tax regulations applicable to the Company provide:
a. Taxable income is subject to 33% rate.
b. The basis to determine income tax for the year shall not be lower than 3%
of net fiscal equity on the last day of the preceding taxable year, refined
with the items duly authorized by tax regulations in force.
c. Law 863 of 2003 established that income tax payers could deduct 30% of
the effective investments made only in productive real fixed assets.
According to changes made in Law 1111 of 2006, starting 2007, the
percentage is 40% and its application does not result in income taxable
for shareholders. After applying this regulation, and based on
investments made by the Company during the year, the period’s ordinary
net taxable income was decreased by $28,868 (2008, $16,904).
d. As of 2004, income tax payers performing transactions with foreign
related or associated parties and/or with residents of countries
considered as tax haven, are required, for income tax purposes, to
determine their regular and special revenues, costs and deductions, assets
and liabilities, taking into consideration for these transactions the prices
and profit margins of the market. At this time, the Company’s
management and its counsels have not concluded the updating study for
2009; however, based on the satisfactory results of the study conducted
for 2008, their opinion is that no significant additional income tax
provisions shall be required as a result of the study.
e. As a result of application of Resolution No. 356 of September 5 of 2007 of
Colombia’s General Accounting Office, exchange rate fluctuations, in
updating through equity method of equity investments in controlled
entities, are considered equity variations until disposal of the investment,
and therefore, affect equity; however, when surplus from equity method
cannot absorb equity decreases accumulated in equity entries different
from results, the excess must be recognized as expense in the form of
provision until the book value of the investment is equal to zero.
120
Annual Report 2009
Pursuant to the provisions of fiscal regulation on investment in foreign
currency, as of application of the above accounting rule, a conciliatory
entry between accounting and fiscal results is produced arising from the
exchange difference of investments in foreign currency in controlled
entities.
f.
In 2005, Decision 578 of the Andean Community of Nations –CAN–
entered into force. This decision seeks to avoid double taxation of the
income earned in any of the member countries using an exoneration
mechanism. Based on this decision and on the opinions of tax advisors,
the income earned in CAN member countries are considered to be tax
exempt.
g. On June 27, 2008, ISA and the Ministry of Mines and Energy subscribed the
during 20 years. The agreement provides for legal stability regarding
income tax regulations, among which: income tax rate, deduction of
inflation component of financial expenses, special 40% deduction for
new investments in new productive real fixed assets, tax discount on VAT
paid in import of machinery for energy transport, presumptive income
equal to 3% of net fiscal equity, and transitoriness of equity tax.
This agreement guarantees that, in the event of adverse modification to
the regulations stabilized under the agreement, unmodified regulations
shall continue to apply during the term of the agreement.
The reconciliation between accounting income and taxable income for 2009
and 2008 is as follows:
Income before taxes
Plus – items that increase distributable income:
Investments exchange difference
Amortization of goodwill
Write-off and tax provision for accounts receivable
Net cost of assets sold
Cash dividends received
Non-deductible provisions
Non-deductible costs and expenses
Less – items that decrease distributable income
Excess of depreciation and amortization
Additional depreciation/amortization for tax inflation adjustment
Equity method
Non-taxable dividends and participations
Special deduction of productive real fixed assets
Other
Total ordinary income
Taxable income
Less tax-exempt income
Taxable income
Tax rate
Income tax
121
2009
2,008
2008
460,349
330,780
160,746
-168
454
34,571
15,946
3,133
31,306
4,318
457
687
39,222
1,169
-90,756
-58,618
-7,425
-140,487
-30,031
-28,868
-12,789
-35,873
-43,237
-10,571
-62,521
-26,134
-16,904
-4,395
306,057
208,304
306,057
306,057
33%
208,304
-1,260
207,044
33%
100,999
68,325
Annual Report 2009
Net tax effect on the results of the year:
Income tax
Deferred taxes net, income adjustment preceding years
CAN countries tax
Net charge to income
2009
2008
100,999
42,704
1,768
68,325
24,367
1,495
145,471
94,187
Reconciliation between accounting and taxable equity at December 31:
Accounting equity
Plus:
Investments increased fiscal value
Non-deductible provisions
Credit deferred tax
Monetary correction effect
Less:
Accounting re-appraisals
Debit deferred tax
Excess of tax depreciation of fixed assets
Excess of amortization of deferred charges and intangible assets
Total taxable equity
2009
2008
6,119,884
4,809,263
(567,162)
77,006
156,368
533,792
(32,627)
65,942
126,617
591,257
2,405,688
77,060
429,855
17,069
2,185,306
92,476
338,977
26,600
3,390,216
2,917,093
The following temporary differences generated a deferred tax liability for tax
years ended December 31:
Credit deferred tax
2009
2008
429,855
25,879
18,110
473,844
33%
338,977
26,600
18,110
383,688
33%
156,368
126,617
2009
2008
Provision for accounts receivable
Estimated liabilities
Retirement pensions
Inflation adjustments
Excess of notional income
Total deferred tax basis
Tax rate
Debit deferred tax
Branch’s deferred tax
3,896
44,887
-5,434
189,812
233,161
33%
76,943
117
3,191
41,056
6,840
211,595
17,065
279,747
33%
92,316
160
Total debit deferred tax
77,060
92,476
Excess of tax depreciation
Excess of tax amortization
Equity method
Total deferred tax basis
Tax rate
Credit deferred tax
Debit deferred tax
122
Annual Report 2009
The income tax returns for 2008 and 2007 are subject to the review and
approval by the tax authorities. The Company’s management and its legal
counsels consider that the amounts accounted as income tax payable suffice
to pay any liability that could be determined for such years.
Equity tax
Under Law 1111 of 2006, equity tax was established for fiscal years 2007,
2008, 2009 and 2010, payable by individuals, legal entities and
unincorporated associations who pay income tax. For matters of this tax,
wealth is equivalent to the obligor’s total net fiscal equity that exceeds $3,000
million.
This tax is calculated on the basis of net fiscal equity as of January 1 of 2007, at
a rate of 1.2%.
During the first semester of 2009, the management, based on article 25 of
Law 1111 of 2006, and with approval of the Shareholders’ Meeting of March
30 of 2007, authorized recording the equity tax of year 2009 and 2008 for
$20,173 against the equity revaluation account.
Tax Law Amendment of 2009
Law 1370 of December 30 of 2009, amended tax law as follows:
a. A new tax was levied for the year 2011, valid until 2014, to be paid by legal
persons and individuals, and by unincorporated associations who pay
income tax. For matters of this tax, wealth is equivalent to the obligor’s
total net fiscal equity that exceeds $3,000 million. This tax’s rate is 2.4%
when the taxpayer’s net fiscal equity ranges between three and five
thousand million pesos ($3,000 – $5,000) and 4.8% when it exceeds five
thousand million pesos ($5,000). The tax corresponding to each taxpayer is
to be paid between the years 2011 and 2014.
b. The amount of the special deduction for investment in real, productive,
fixed assets included in article 158-3 of the Tax Law was reduced from forty
(40%) to thirty percent (30%).
Considering that ISA has subscribed a legal stability agreement stabilizing,
among others, the above mentioned rules for energy transmission
activities, it must only comply with the provisions of the tax law
amendment in those activities different from energy transmission.
NOTE 18: OTHER LIABILITIES
Balance of other liabilities at December 31:
Total other short-term liabilities
Other long-term liabilities
Deferred taxes
Deferred revenue and others (1)
Total other long-term liabilities
2009
2008
10,576
1,189
156,368
112,255
126,617
68,264
268,623
194,881
(1) Mainly, deferred revenue from the National Transmission System STN $80,341 (2008: $34,281) for bidding assets and infrastructure
use rights for $28,722 (2008: $32,536).
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Annual Report 2009
NOTE 19: EQUITY
SUBSCRIBED AND PAID-IN CAPITAL
Subscribed and paid-in capital at December 31 was distributed as follows:
2009
SHAREHOLDER
State investors
Subtotal
Empresa Colombiana de Petróleos –ECOPETROL–
Empresa de Energía de Bogotá –EEB–
Subtotal
Subtotal
Private investors
Abu Dhabi Investment Authority
Fondo de Pensiones Protección
Fondo de Cesantías Porvenir
Other shareholders
Subtotal
(2)
Number of Shares
Value
% Participation (1)
569,472,561
112,605,547
682,078,108
18,679
3,693
22,372
51.411
10.166
61.577
58,925,480
18,448,050
77,373,530
1,933
605
2,538
5.320
1.665
6.985
759,451,638
24,910
68.562
54,621,241
51,130,021
35,629,587
28,248,455
20,022,106
9,207,793
2,635,195
2,604,383
1,924,700
1,669,417
140,533,358
1,792
1,677
1,169
927
657
302
86
85
63
55
4,609
4.931
4.616
3.217
2.550
1.808
0.831
0.238
0.235
0.174
0.151
12.687
348,226,256
11,422
31.438
1,107,677,894
17,820,122
1,125,498,016
36,332
584
36,916
100.000
124
14/03/2010
Annual Report 2009
2008
SHAREHOLDER
State investors
Subtotal
Empresa Colombiana de Petróleos -ECOPETROLEmpresa de Energía de Bogotá –EEB–
Subtotal
Subtotal
Private investors
Foreign investors
Other shareholders
Subtotal
(2)
Number of Shares
Value
% Participation (1)
569,472,561
109,350,775
678,823,336
18,679
3,587
22,266
52.942
10.166
63.108
58,925,480
18,448,050
77,373,530
1,933
605
2,538
5.478
1.715
7.193
756,196,866
24,804
70.301
53,266,156
32,377,490
28,004,084
24,552,489
22,390,518
9,925,575
7,581,304
2,950,825
138,416,067
1,747
1,062
919
805
734
326
249
97
4,538
4.952
3.010
2.603
2.283
2.082
0.923
0.705
0.274
12.867
319,464,508
10,477
29.699
1,075,661,374
17,820,122
1,093,481,496
35,281
585
35,866
100.000
(2) Shares initially held by CORELCA, reacquired in August of 1998. To date, all rights inherent to these shares have been suspended; consequently, they do not
participate in dividend distributions nor are they taken into account for establishing quorum to deliberate and decide.
ISA can issue common and preferred shares, and shares with preferred
dividend but without voting rights. All shares are registered and circulate
either in a materialized or dematerialized manner, as decided by the Board of
Directors in the corresponding ruling.
Outstanding shares are common, registered and dematerialized. Depósito
Centralizado de Valores de Colombia –DECEVAL– is the entity where
securities are deposited for their administration and custody, to facilitate and
expedite the market agents' work.
SHARE ISSUE 2009
In December of 2009, ISA carried out the fourth underwriting of common
shares, according to decision of the Shareholders’ Meeting held on November
24 of 2006 to issue and underwrite by tender offer 88,410,731 common
shares, of which, 56,394,211 were successfully underwritten at the end of
2007 and the remaining 32,016,520 in December of 2009.
This offer was carried out through book building process, which was
approved by the Colombian Financial Superintendency by Decree 3780 of
October 1 of 2007. Under such scheme, investors proposed both the price and
the amount of shares they will be interested in buying. The issue was 2.8x
overbooked.
125
Annual Report 2009
ISA's Board of Directors, in special meeting No. 686 held on December 4 of
2009, formalized the public offer of the Company's common shares and
defined a subscription price of $12,000 pesos per share.
Funds obtained along this process will be earmarked 40% to capitalization of
affiliates and 60% to acquisitions and new business.
Underwritten shares were purchased by 541 existing shareholders and 1,257
new shareholders, for total 1,798 shareholders taking part in this
underwriting.
CAPITAL SURPLUS
Additional paid-in capital
The additional paid-in capital is the excess of the sales price over the par
value of the subscribed shares. In 2009 it increased by $383,148,
corresponding to share issuance held on December 09, 2009.
Received for works
This account represents amounts delivered by the National Government
for the construction of the first circuit of the 500-kV line to the Caribbean
Coast.
RESERVES
Legal reserve
The law requires the Company to appropriate 10% of annual net income as
a legal reserve until the balance of the reserve is equal to 50% of
subscribed capital. This mandatory reserve may not be distributed prior to
the liquidation of the Company, but may be used to absorb or reduce net
losses of the year. Any balance of the reserve in excess of 50% of subscribed
capital is at the disposal of the shareholders.
Mandatory reserve for tax purposes
The Shareholders’ Meeting approved appropriation of this reserve from
net income, in compliance with Article 130 of the Tax Law, in order to
obtain tax deductions for depreciation in excess of book depreciation. As
legally provided, this reserve can be released whenever subsequent
accounting depreciation exceeds tax depreciation, or when the assets
giving rise to the incremental amount deducted are sold.
Reserve for repurchase of shares
Includes $38,100 special reserve to acquire own shares held by EPM.
Reserve for reinforcement of equity
The Shareholders’ Meeting approved an occasional reserve in accordance
with Article 47 of the bylaws. This reserve was ordered so that the
Company could retain its solid financial position and maintain the financial
indicators required by rating agencies, in order to obtain the investment
degree and comply with contractual commitments to lenders.
Reserve for rehabilitation and replacement of STN assets
The Shareholders Meeting held on March 30, 2000, approved $24,933
reserve for the rehabilitation and replacement of assets of the National
Transmission System, and on March 18, 2002, approved an additional
reserve of $12,502.
126
Annual Report 2009
EQUITY REVALUATION
Inflation adjustments on equity accounts recognized until December 31,
2000, have been credited to this account and charged to the income
statement. This amount cannot be distributed as dividend, but can be used to
increase subscribed capital.
As of year 2007, and according to regulations in force, the tax on equity is
accrued by decreasing this account.
SURPLUS FROM EQUITY METHOD
Relates to the contra entry of equity variations of investments in subsidiaries,
NOTE 20: MEMORANDUM ACCOUNTS
The balance of memorandum accounts at December 31 was:
Debit
Tax debit memorandum accounts
Other contingent rights
Other debit control accounts
(1)
Total debit memorandum accounts
Credit
Claims and lawsuits (See Note 20.1)
Guarantees and commitments in force (See Note 20.2)
Tax credit memorandum accounts
Other credit control accounts
Total credit memorandum accounts
(2)
2,009
2009
2,008
2008
2,481,375
33,297
-
2,616,806
54,834
10,165
2,514,672
2,681,805
615,554
383,765
105,075
650
946,470
215,842
99,425
6,918
1,105,044
1,268,655
(1) Represents differences with accounting, which result from applying the inflation adjustment system for tax effects and differences in
accounting and tax deductions to determine ordinary net taxable income.
(2) Discloses the net effect of the year's monetary correction on the period's distributable income and the accounting and tax difference
on liabilities.
20.1 CLAIMS AND LAWSUITS
ISA currently appears as party, as a defendant, plaintiff or as an intervening
third party, of judicial processes of administrative, civil and labor nature.
None of the processes in which the Company appears as a defendant or as an
intervening third party could affect its stability. In its own name, it has taken
the necessary judicial measures to carry out its corporate purpose and the
defense of its interests.
Below is the information regarding the judicial processes which the Company
is a party to:
a. At December 31, 2006, ISA has filed administrative claims against:
Electrificadora del Atlántico, Electrificadora de Bolívar and Empresa de
Energía de Magangué for default interest on accounts for the use of STN
and Energy Pool, for $14,854.
127
Annual Report 2009
b. It has filed a civil claim against Sistep Ltda and Aseguradora de Fianzas S.A.
–Confianza–, at the Circuit Civil Court No. 10 of Medellín, for USD1,936,618
plus $1,175, as a result of the delay in the delivery of equipment to the
Yumbo and La Esmeralda substations and resulting damages. Additionally,
ISA is claiming payment of the performance policy by Confianza.
c. Cundinamarca Administrative Tribunal, first Section. ISA has sued the
Superintendency of Public Utilities for $1,425 as a result of issuing
administrative acts that prevent ISA (ASIC) from exercising its rights to limit
power supplies and the collection of billings to Empresas Públicas de
Caucasia.
d. Administrative Tribunal of Antioquia. ISA has filed a nullity and redress
lawsuit against the tax authorities (Dirección de Impuestos y Aduanas
Nacionales –DIAN–), for $4,780, related to default interest in favor of ISA,
resulting from the non-timely reimbursing excess income tax paid in 1995.
The process is currently awaiting judgment from the Tribunal.
e. Administrative Tribunal of Antioquia. ISA challenged Resolution 1233 of
2001, by which the Municipality of San Carlos requested payment of taxes
by the public space occupation for $1,839 for the year 2000.
f. Nullity and redress process No. 064. Flores III LTDA & CIA. S.C.A. E.S.P., has
sued the State – Ministry of Mines and Energy, CREG, ISA and
Electrificadora del Caribe S.A. E.S.P.– Declaration of nullity of CREG
Resolution 031 of July 22, 1999, by which the appeal presented by
Electricaribe S.A. was accepted, releasing the Company from paying
amounts invoiced by ISA for the restriction of the 220-110 kV
autotransformer. Declaration of nullity of alleged administrative act
resulting from failure to answer within the legal term a request for direct
repeal of the foregoing resolution and award payment of $2,343.
g. Administrative Tribunal of Antioquia. Termocandelaria has filed a nullity
and redress lawsuit against ISA, the Nation, the Ministry of Mines and
Energy, and CREG, in the amount of $20,794 regarding CREG Resolutions
034, 038 and 094 of 2001.
h. Administrative Tribunal of Antioquia. Central Hidroeléctrica de Betania
S.A. E.S.P., has filed nullity and redress lawsuits against ISA, the State, the
Ministry of Mines and Energy, and CREG, in the amount of $58,598 and
USD15,373,890, for capacity charges - CREG Resolutions 077 and 111 of
2000.
i Administrative Court of Antioquia. Emgesa S.A. E.S.P., has filed nullity and
redress lawsuits against ISA, the Nation, the Ministry of Mines and Energy,
and CREG, in the amount of $193,662 and USD82.4 million regarding
application of CREG Resolutions 077 and 111 of 2000.
j. Administrative Court of Antioquia. Chivor S.A. E.S.P., has filed nullity and
and CREG, in the amount of $92,008 and USD32.5 million for capacity
charges - CREG Resolutions 077 and 111 of 2000.
k. Administrative Court of Antioquia. Proelectrica & Cia S.C.A. E.S.P., has filed
128
Annual Report 2009
l. Administrative Court of Antioquia. Termotasajero S.A. E.S.P., has filed
The lawsuits for application by ISA, as the Administrator of the Commercial
Settlement System –ASIC–, of CREG Resolutions 077 and 111 of 2000,
capacity charges, correspond to CREG's change in calculation
methodology, which according to the plaintiff companies caused them
damages; the same happens with Resolutions 034 and 038 of 2001. The
agents consider that these provisions considerably reduce their income. In
such transactions, ISA acted as the agent of third parties, and in this way its
own equity would not be at stake in said processes. According to legal and
technical analysis, ISA has enough grounds to consider that it will be
released in these processes, because of as Administrator of the Commercial
Settlement System it should have applied CREG regulations, duties from
which it could not be released. Invoices billed and resolutions issued by ISA
to answer the appeals, strictly comply with the aforementioned
resolutions; therefore, they cannot be the cause of alleged damages
claimed by the plaintiffs. Eventually, in case of negative results, ISA could
request compensation or account settling between the market agents
taking part in these transactions, which would permit the Company's
equity to remain unharmed.
m. Gómez Cajiao y Asociados has filed a contractual lawsuit in the amount of
$2,000 requesting the nullity of act awarding Public Bid C002, the nullity of
BL98 contract, and redress of its right as proponent.
n. Empresas Públicas de Medellín has filed a nullity and redress lawsuit
against ISA, the State, the Ministry of Mines and Energy, and CREG, in the
amount of $947 for recording of customer metering points.
o. Ninth Circuit Civil Court, Barranquilla. Claudia Andrea Córdoba and
Fabiana Zanín Córdoba have filed a tort claim against ISA and other for
$4,000 for the accident of a family member during the performance of a
contract.
p. Administrative Court of Antioquia. UTE APS has filed tort claim against ISA
for contract breach for 32,018.
q. Administrative Court of Cundinamarca. UTE APS has filed KENZO JEANS
S.A. and DIKAR S.A. have filed a $7,000 claim against ISA for damages
related to easement.
r. Cundinamarca Administrative Tribunal, first section. ISA has sued the
Superintendency of Public Utilities for $923 for resolutions SSPD20082400007415 of March 26 of 2008 and SSPD-20082400018105 of June
18 of 2008, which imposed and confirmed a fine against ISA for the event
happened on April 26, 2007.
s. State Court, Fifth Delegated Prosecutor's Office. ISA has filed a request to
be accepted as civil claimant in the criminal case against Orlando Antonio
Salas Villa for $7,418, corresponding to amount payable for easement.
As of December 31, 2009, there exist other labor, civil and administrative
claims pending decision for a total amount close to $2,500 that are related to
the normal course of operations of ISA.
129
Annual Report 2009
The Company's management and its legal counsels consider remote the
possibility of loss as a result of such claims.
20.2 GUARANTEES AND COMMITMENTS IN FORCE
At 2009 year's end the following guarantees and commitments were in force:
a. Leasing payment liability; infrastructure leasing granted in 2004 by Leasing
de Crédito to Flycom Comunicaciones S.A. E.S.P., and subsequently
transferred in 2007 by this latter company to INTERNEXA S.A. E.S.P. The
balance as of December of 2009 is $1,115 and is in force until September 17,
2016.
b. Performance guarantee by ISA, for liabilities under ETESA GG-123-2007ISA4500033541 agreement whose purpose is the preparation of predesign and engineering for the Colombia-Panama Electric Interconnection
in HVDC, and technology transfer for ISA and ETESA, maturing in January
28, 2010.
c. Guarantee of compliance with the obligations corresponding to ISA, in
accordance with UPME-01-2007-PORCE III Public Bid, in force until
September 30 of 2010.
d. Guarantee of validity, effectiveness, and compliance with the offer
presented by ISA in the El Bosque Project UPME 02-2008 public bid, in force
until January 15, 2010.
e. Guarantee of compliance with the obligations incurred by ISA in the El
Bosque Project UPME 02-2008 public bid, in force until August 20, 2011.
f. Pledge to lenders of 100% value of current and future shares in
subordinate companies Red de Energía de Perú and ISA Perú, and power to
ISA Bolivia S.A., as loan payment guarantee in favor of lenders; the term is
that of the loans.
g. Joint and several guarantee signed on June 29 of 2007 between ISA as
guarantor and Banco Centroamericano de Integración Económica –BCIE–
as beneficiary; guarantees EPR's liabilities under loan agreement with BCIE
for USD40 million related to SIEPAC project financing. The guarantee must
be valid until total principal is paid off (June 29 of 2027).
h. Interconexión Eléctrica S.A. E.S.P., guaranteed payment of two loans
granted to its investments in Brazill: USD22 million, long-term loan
extended by BNDES to Interligação Elétrica de Minas Gerais –IEMG–, and
BRL58 million loan extended under similar terms to Interligação Elétrica
Norte e Nordeste –IENNE– by Bradesco. Such guarantees mature in March
of 2010.
ISA's commitment derived from its affiliate ISA Bolivia:
Support and Guarantee Agreement under which, ISA and TRANSELCA are
bound, among other things, to guarantee the loan granted by IDB and CAF
until loan contract expiration date. Likewise, ISA and TRANSELCA are bound
to pay balance pending with IDB and CAF, in case of Government intervention
or as of the moment the license is revoked.
130
Annual Report 2009
ISA's commitment derived from its affiliate ISA Perú:
Share Retention Agreement with ISA, TRANSELCA and IFC, which sets the
following limitations on transfers of the company's shares: During the ten
(10) years following the closing date, as such term is defined in the concession
contract, Interconexión Eléctrica S.A. E.S.P., ISA cannot transfer any share, if,
as a result of the transfer, its ownership is less than 25% of the corporation's
shares, except as otherwise provided in Clause 2,1 (b) of the agreement.
NOTE 21: OPERATING REVENUE
Remuneration for services rendered by the Company for transmission of
electric power (Use of the STN), connection to the National Transmission
System and energy transport ancillary services (administration, operation,
and maintenance, specialized technical services, special studies,
infrastructure availability, and infrastructure projects). Services were
rendered to the following customers:
EPM
Codensa
ELECTRICARIBE
Isagen
Emcali
Emgesa
Epsa
Other customers with invoicing less than 5% of total
2009
2008
126,001
116,647
102,171
52,481
42,205
31,485
23,445
437,672
126,395
112,133
91,696
53,518
42,229
30,290
22,992
435,091
932,107
914,344
Includes revenues from construction of assets for third parties, for $7,657
(2008: $22,617).
131
Annual Report 2009
NOTE 22: OPERATING COSTS
Operating costs for the years-ended December 31 are detailed as follows:
2009
2008
47,154
43,121
6,972
8,653
1,771
6,437
10,729
3,159
5,400
448
57
1,512
8,147
104,005
45,257
42,871
21,523
8,117
2,205
6,343
9,370
3,076
4,808
560
34
611
6,178
108,796
247,565
259,749
108,500
1,690
103,301
2,921
Total depreciation and amortization
110,190
106,222
Total operating costs
357,755
365,971
Personnel expenses
Cost of constructions services for third parties
Fees
Rentals
Insurance
Services
Intangibles
Environment and social – ISA Región
Communications
Advertising, prints and publications
Studies
Miscellaneous
(1)
(2)
(3)
Operating costs before depreciation and amortization
Depreciation
Amortization
(4)
(1) Decrease in cost of constructions services for third parties with respect to 2008 is due to important advancement of contracted
projects achieved in such year.
(2) Increase from hiring of support and surveillance services.
(3) Increase in studies after proceedings carried out in the Interconexión Colombia – Panamá study.
(4) Decrease explained by suspension of amortization of easements classified as indefinite-life intangible assets.
The following table summarizes total operating costs detailing capitalization
expenses and/or cost assignation:
2009
Operating costs before depreciation and
amortization
Depreciation and amortization
Total
132
2008
Total
Capitalized
Net
Total
Capitalized
Net
253,271
110,190
(5,706)
-
247,565
110,190
264,228
106,222
(4,479)
-
259,749
106,222
363,461
(5,706)
357,755
370,450
(4,479)
365,971
Annual Report 2009
NOTE 23: ADMINISTRATION EXPENSES
Administration expenses at December 31 consisted of:
2009
2008
52,860
1,025
3,898
380
530
6,223
2,638
370
1,125
3,357
3,275
741
45,671
1,070
3,619
656
587
5,632
2,315
453
1,167
392
2,396
643
Administration expenses before depreciation, amortization and provisions
Provisions
(5)
Depreciation
Amortization
76,422
19,825
1,854
4,318
64,601
3,050
2,018
4,320
Total provisions, depreciation and amortization
25,997
9,388
102,419
73,989
Personnel expenses
Fees
Rentals
Insurance
Fees
Intangibles
Communications
Studies
Miscellaneous
(1)
(2)
(3)
(4)
Total administration expenses
(1) Increase in the number of pensioners in 2009, total amortization of agreed fringe benefits of 2009 included in pension liabilities, and transfer of some
workers from the common fixed regime to integral salary regime.
(2) Reduction in rentals, specifically the rental of computing and communications equipment, contractually determined to reduce after third year of use of
equipment.
(3) Increase in this item is explained by higher hiring levels for consulting for prospective business in Chile and the Autopistas de la Montaña project.
(4) Increase from the Company’s contribution to the Fiftieth Meeting of IBD Governors, and the Twenty Fourth Meeting of the Governors of the InterAmerican Investment Corporation.
(5) In 2009 includes mainly: provision for exchange difference on investments abroad: $7,724; inventory provision $6,860; contingency provision $4,335.
The following table summarizes total administration expenses, detailing
expenses capitalization and/or assignation:
2009
Administration expenses before
depreciation, amortization and provisions
Depreciation and amortization
Provisions
Total
133
2008
Total
Capitalized
Net
Total
Capitalized
Net
77,488
6,172
19,825
(1,066)
-
76,422
6,172
19,825
65,273
6,338
3,049
(671)
-
64,602
6,338
3,049
(1,066) 102,419
74,660
(671)
73,989
103,485
Annual Report 2009
TOTAL OPERATING COSTS AND EXPENSES
The following table details total operating costs and expenses for 2009 and
2008:
2009
2008
100,014
44,147
6,972
12,551
2,151
6,967
16,952
5,797
5,400
818
1,182
4,869
11,421
104,746
90,928
43,941
21,523
11,736
2,861
6,930
15,002
5,391
4,808
1,013
1,201
1,003
8,574
109,439
Administration expenses before depreciation,
amortization and provisions
Provisions
Depreciation
Amortization
323,987
324,350
19,825
110,354
6,008
3,050
105,319
7,241
Total provisions, depreciation and amortization
136,187
115,610
460,174
439,960
Personnel expenses
Cost of constructions services for third parties
Fees
Rentals
Insurance
Fees
Intangibles
Environment and social – ISA Región
Communications
Studies
Miscellaneous
In 2009, to record operating and production costs (Class 7) and sales costs
(Class 6), the Company used costing methods and procedures established in
Resolution No. 20051300033635 of 2005 of the Superintendency of
Domiciliary Public Utilities.
The costing system is the “Activities-Based Costing”, where the products
offered by each service or business are the result of a series of operating
processes that interact sequentially, for which reason its structure or costs
map will call for observation of the progressive flow of operations or tasks to
constitute activities, the former to conform processes, and the latter to
deliver a utility.
This system considers that expenses accrued in each area of administrative
responsibility should be assigned to the business or service unit in accordance
with the activities (support process) developed by these areas.
No internal or external advisors with the main function of processing affairs
with public or private entities, or advice on or prepare studies for such effect
were hired in 2009.
134
Annual Report 2009
NOTE 24: NON-OPERATING REVENUES AND EXPENSES
Non-operating revenues at December 31 included:
2009
2008
3,397
2,307
8,998
564
3,752
1,759
4,977
309
15,266
10,797
4,780
5,490
5,625
332
1,484
23,453
11,242
8,805
13,676
231
2,325
116,658
41,164
152,937
Total financial revenues
56,430
163,734
Revenues from equity method
143,635
72,148
146
9,685
923
3,850
4,507
3,372
115
10,101
1,303
143
2,282
19,111
17,316
219,176
253,198
Financial revenue
Interest
On overdue accounts receivable and other loans
Monetary readjustment yields
Investment valuations
Commercial, conditioned and agreed discounts
Total interest
Exchange difference
Cash
Accounts receivable
Investments abroad
Other assets
Accounts payable
Extraordinary revenue and others
Indemnities
Rentals
Recoveries
Revenues from prior years
Revenue from sale of property, plant and equipment
Other
Extraordinary revenues and others
Total non-operating revenues
135
Annual Report 2009
Non-operating expenses for years-ended December 31 included:
Financial expenses
Interest and commissions
On financial liabilities (See Note 13)
Interests and commissions on bonds (See Note 12)
Administration of security issues
Loss from valuation and sale of investments
Miscellaneous
Total interest and commissions
Exchange difference
Accounts receivable
Investments
Accounts payable
Total financial expenses
Expense from equity method
Losses on casualties
Loss from retirement of assets
Other
Prior years adjustments
Total non-operating expenses
(1)
(2)
2009
2008
62,814
120,609
3,090
2,263
1,832
835
84,727
106,601
2,973
1,983
6,949
779
191,443
204,012
7,685
78
12,578
645
6,145
32,876
126,559
20,986
165,580
212,429
369,592
3,148
9,627
5,245
6,365
1,314
2,259
10,826
2,917
2,733
1,107
15,183
17,583
230,760
396,802
(1) During 2009 and 2008, the Company was affected by terrorist attacks to the electric infrastructure, which implied incurring
extraordinary expenses for its recovery, including personnel expenses related thereto.
(2) Retirement of substation assets, mainly.
136
Annual Report 2009
NOTE 25: FINANCIAL INDICATORS
Some financial indicators at December 31:
2009
2008
RETURN ON ASSETS
Operating income/Total assets (%)
3.70%
3.23%
RETURN ON EQUITY
Net income /average equity (accounting income) (%)
5.15%
4.92%
3.41
3.15
198.61%
97.35%
28.18%
34.37%
76
77
EBITDA/ operating interest (times)
LIQUIDITY
Current assets/ Current liabilities (%)
INDEBTEDNESS
Liabilities / Assets
ACCOUNTS RECEIVABLE TURNOVER (days)
Average receivables customers / Operating revenues
RETURN ON ASSETS: Results explained mainly by better results obtained
by the affiliates.
RETURN ON EQUITY: Results explained mainly by better results obtained
by the affiliates.
EBITDA/OPERATING INTEREST (TIMES): Improved due to Better EBITDA
resulting from increased revenues and optimization of expenses as well as
lower interest associated to drop in debt.
LIQUIDITY: Increase is due to increased marketable investments and
reduced short-term debt, resulting from share issuances.
Noteworthy is the fact that the electric energy transmission business is
supported by a strong physical infrastructure; therefore, a large
percentage of its expenses (depreciation, provisions and amortization) do
not imply cash expenditure, which allows for coverage of short-term
liabilities with cash flow from the business.
INDEBTEDNESS: Reduction is explained by debt payment and increase in
long-term investments, cash and marketable investments.
ACCOUNTS RECEIVABLE TURNOVER: Its improvement is due to the
decrease in accounts receivable from construction services customers.
137
Annual Report 2009
NOTE 26: TRANSACTIONS WITH RELATED PARTIES
The main balances and transactions with related parties during 2009 and
2008 are:
2009
2,008
2008 2,009
Balances
Equity investments
REP S.A.
TransMantaro S.A.
ISA Perú S.A.
ISA Bolivia S.A.
Interconexión Colombia – Panamá –ICP–
774,305
1,217,155
112,481
123,578
83,968
15,056
31,744
22,823
4,333
1,012
603,420
701,933
118,534
142,204
74,479
15,106
30,730
23,622
2,372
-
Accounts receivable
ISA Perú S.A.
REP S.A.
ISA Bolivia S.A.
554
4,703
155
2,072
1,833
424
842
31
149
4,970
111
1,892
1,735
396
1,103
29
Accounts payable and financial liabilities
REP S.A.
INTERNEXA (In Peru)
255,018
48,662
3,310
131
697
98
-
231,005
61,324
4,375
68
814
279
247
26,489
4,988
1,594
1,500
18,297
18,122
2,089
753
1,626
21,589
2,055
934
3,013
2,755
17
4,666
35
1,243
19,841
1,819
1,914
3,548
2,753
205
1,410
146
761
(894)
562
24,015
5,745
7,926
1,065
2,215
179
21,907
7,508
6,411
1,868
3,616
297
419
6,095
1,152
509
1,761
353
5,351
1,066
406
1,623
Equity transactions
Dividends declared in favor of ISA
ISA Perú S.A.
Transactions related to results
Revenue
ISA Perú S.A.
ISA Bolivia S.A.
REP S.A.
TransMantaro S.A.
INTERNEXA (in Peru) (operating revenues)
INTERNEXA (in Peru) (Non-operating revenues - Preceding
years revenue reimbursement)
Expenses
REP S.A.
Administrators
Board of Director’s fees
Managers’ salaries and benefits
Managers’ bonuses
Aids to managers and others
Loans receivable from managers
138
(1)
Annual Report 2009
(1) The detail of amounts received by managers is:
2009
Item
Integral salary
Benefits (education and health)
Bonuses (temporary transfers, results, directive
position)
Vacations
Other (sick leaves and non-variable per-diems)
Total earned
Loans balance
Directors (*)
Managers (**)
Total
3,365
232
2,384
62
5,749
294
568
224
139
584
122
76
1,152
346
215
4,528
3,228
7,756
1,067
694
1,761
Directors (*)
Managers (**)
Total
3,141
194
1,900
57
5,041
251
585
180
88
481
130
67
1,066
310
155
4,188
2,635
6,823
848
775
1,623
2008
Item
Integral salary
Benefits (education and health)
Bonuses (temporary transfers, results, directive
position)
Vacations
Other (sick leaves and non-variable per-diems)
Total earned
Loans balance
(*) "Directors" includes 26 executives of the Company, whose posts are as follows:
Operating Audit Director
Northwest CTE Director
Central CTE Director
Organizational Development Director
Road Concessions Director
Maintenance Management Director
Information Director
Legal Director
New Businesses Director
Financial and Tax Planning Director
Corporate Image Director
Social and Environmental Director
Panama Interconnection Project Director
Accounting and Costs Director
Southwest CTE Director
East CTE Director
Project Execution Director
Affiliates Management Director
Human Talent Management Director
Project Engineering Director
Logistics Director
Corporate Planning Director
Business Integral Management Director
Financial Resources Director
Operation Management DirectorDeputy
Technical Manager
(**) “Managers" includes 8 executives, whose posts are as follows: Chief Executive Officer, Secretary General, Corporate Auditor,
Corporate Finance Manager, Corporate Strategy Manger, Project Infrastructure Manager, Energy Transport Manager and
Administrative Manager.
Covenants or contracts with subsidiaries for the acquisition of goods and
services take into account the terms, conditions and costs generally used by
ISA with non-related third parties, i.e. the market conditions.
Application of transfer pricing introduced by Law No 788 of December of
2002, started in January 1, 2004. This law states that transactions with related
parties abroad should be priced at the same prices that would be applied to
independent third parties.
139
Annual Report 2009
NOTE 27: SUBSEQUENT EVENTS
At the beginning of the year 2009, CREG issued Resolution 011, to revise,
among other issues, the transmission activity remuneration scheme,
generating a reduction of unit costs recognized for the different
constructive units (nearing 14%), an increase in the useful life of each one
of them (from 25 years to 30 years for substation equipment and 40 years
for transmission lines), a remuneration rate increase (from 9% to 11.5%
annually in real terms before taxes), and a radical change in AOM expenses
remuneration (going from a fixed as-new replacement value –VRN–
percentage of assets to a scheme that aims to recognize efficient costs and
expenses incurred by the transmission companies).
Similarly, in the year 2008, CREG issued resolution 097, that modifies the
distributors’ remuneration scheme, and changes parameters relevant for
determining connection charges paid by distributors to the owners of the
connection assets (among them ISA).
These resolutions are not in force yet, (or only for some distributors), but
they are expected to become binding in the first semester of 2010, when
they will affect the Company’s financial situation: Resolution 011, because
it will directly apply to the revenue for use of the STN received by ISA, and
Resolution 097, because it becomes a reference to negotiate connection
contracts and the charges the energy distributors pay us.
Even though both resolutions will affect the company, their impact is not
expected to be significant.
For the second quarter of 2010, the Superintendency of Domiciliary Public
Utilities-SSPD- has foreseen issuance of the resolution that will incorporate
the General Accounting Model in convergence with international
financial reporting standards. Such model might generate important
changes in the recognition, valuation, and disclosure of financial
information. The above notwithstanding, ISA must comply with the Public
Accounting Regime established by Colombia’s General Accounting Office.
The State, represented by Instituto Nacional de Concesiones –INCO–, and
ISA, subscribed on January 28, 2010, the Inter-administrative agreement
that will permit development of the Autopistas de la Montaña Project.
Under such document ISA is bound to conduct engineering,
environmental, traffic, legal and financial studies as well as to construct,
operate, maintain and commercially exploit four road corridors with an
approximate length of 1,251 km.
According to preliminary studies carried out by ISA, the project’s estimated
cost is $5,600,000 million, which shall be financed with contributions from:
the National Government ($1,000,000 million) according to CONFIS
document of January 27, 2010; the Antioquia Province Government
($600,000 million) as approved by the Antioquia Province Legislature; and
the City of Medellín ($400,000 million) as approved by the city Council.
Remaining $3,600,000 million will come from ISA’s capital contributions
and financing to be obtained for the project.
At the en of 2009, ISA reached an agreement with Spanish Cintra
Infraestructuras to acquire 60% of the interest such company held in
Cintra Chile Ltda., a company that controls five road concessions in Chile.
The transaction for such 60% amounts to 7,150,000 Promotion Units,
140
Annual Report 2009
equity value, that equal, approximately, USD300 million (USD exchange
rate and UF as of December 22, to be updated at closing); ISA has a
purchase option and Cintra a sale option for the remaining 40% of capital.
The effectiveness of such transaction is subject to the notices,
authorizations and registrations required in Spain, Colombia, Chile and
any other jurisdiction in which the participants are present.
141
Annual Report 2009
ABBREVIATIONS
ACOLGEN:
ASIC:
BRL:
CAN:
CIGRE:
CVM:
CGN:
CND:
COP:
CRD:
CREG:
CFO:
CT:
DIAN:
ECA:
EPR:
ETECEN:
FAER:
FAZNI:
FOES:
HVDC:
JPY:
LAC:
MEM:
NDF:
PLC:
PRONE:
PT:
REP:
RTU:
SAC:
SIC:
FS:
SID:
STE:
STN:
UPME:
USD:
VQ:
142
Asociación Colombiana de Generadores (Colombian
association of generators)
Administration of the Commercial Settlement System
Brazilian Real
Andean Community of Nations
International Council on Large Electric Systems
Comissão de Valores Mobiliários (Brazil)
National General Accounting Office:
National Dispatch Center
Colombian Pesos
Regional Dispatch Center
Energy and Gas Regulatory Commission
Dark Fiber
Current Transformer
National Tax and Customs Direction
Export Credit Agency
Empresa Propietaria de la Red –EPR–
Empresa de Transmisión Eléctrica Centro Norte S.A.
Support Fund for the Electrification of Interconnected Rural
Areas
Support Fund for the Electrification of Non-Interconnected
Areas
Social Energy Fund
High Voltage Direct Current
Japanese Yen
Settling and Clearing of Accounts
Wholesale Energy Market
Non-Delivery Forward
Power Line Carrier
Network Standardization Program
Power Transformer
Red de Energía del Perú S.A.
Remote Terminal Unit
South American Crossing
Commercial Settlement System
Fire System
Thunderstorm and lightning information system
Energy Transport Service
National Transmission System
Mining and Energy Planning Unit
United States Dollar
Voltage Quality
143
144
145
Annual Report 2009
Certification of Financial Statements
and other relevant reports
Medellín, February 23, 2010
ATo the shareholders of Interconexión Eléctrica S.A. E.S.P.
In connection with the 2009 annual report of ISA economic group, the
undersigned, legal agent and chief accounting officer of Interconexión
Eléctrica S.A. E.S.P., in compliance with Article 37 of Law 222 of 1995, Law 964
of 2005, and Resolution 356 of 2007 of the Colombian General Accounting
Office, hereby certify that:
1. The Consolidated Financial Statements and the Individual Financial
Statements of ISA as of December 31, 2009 and 2008, have been faithfully
taken from the books, and before making them available to you and to third
parties, we have verified the following assertions therein contained:
a) That facts, transactions and operations have been recognized and
carried out during the accounting period.
b) That the economic facts are disclosed in compliance with the provisions
of the Public Accounting Regime.
c) That the total value of assets, liabilities, equity, revenues, expenses, costs
and memorandum accounts has been disclosed in the basic accounting
statements up to the closing date.
d) That assets represent potential services or future economic benefits
while liabilities represent past facts that imply an outflow of resources in
execution of its activities.
146
14/03/2010
2. That the financial statements and other reports relevant to the public
related to the fiscal years ended December 31, 2009 and 2008, do not contain
defects, inaccuracies or errors that prevent ascertaining the true financial
position and operations of the Group.
Luis Fernando Alarcón Mantilla
147
T.P. No. 34420-T
Annual Report 2009
Certification of Compliance with Intellectual
Property and Copyright Regulations
The undersigned legal agent and information director of Interconexión
Eléctrica S.A. E.S.P., in compliance with Article 1 of Law 603 of 2000,
Certify:
1.
That the corporation complies with all regulations regarding
intellectual property and copyrights, and that all software used is legal
and the rights to use it have been paid for, either through purchases,
usage licenses, or assignments. Supporting documents can be found at
our central archives.
2.
That the Information Direction of the Corporation carries an inventory
of all software used and controls its installation according to the type of
license purchased.
3.
That in accordance with corporate policies and institutional guidelines,
employees are bound to observe all regulations regarding intellectual
property and copyrights.
Luis Fernando Alarcón Mantilla
148
Olga Lucía López Marín
Information Director

2009 Financial Statements

Transcription

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